Corporación Interamericana de Entretenimiento, S.A.B. de C.V.

Transcription

AV. INDUSTRIA MILITAR S/N, PUERTA 2, ACCESO A, PISO 1
COLONIA RESIDENCIAL MILITAR, C.P. 11600, DELEGACIÓN MIGUEL HIDALGO,
MEXICO CITY, FEDERAL DISTRICT, REPUBLIC OF MEXICO
TICKER SYMBOL ON THE BMV: “CIE”
To date, CIE's subscribed and paid-in capital is Ps. 3,398,674,294.00 (THREE BILLION, THREE
HUNDRED AND NINETY-EIGHT MILLION, SIX HUNDRED AND SEVENTY-FOUR THOUSAND, TWO HUNDRED AND NINETY-FOUR AND 00/100 HISTORICAL MEXICAN PESOS).
This is comprised of a total of 559,369,806 (FIVE HUNDRED AND FIFTY-NINE MILLION,
THREE HUNDRED AND SIXTY-NINE THOUSAND, EIGHT HUNDRED AND SIX) common
shares, nominative, Series B, with full voting rights, no par value, fully subscribed and paid in, of
which 30,955,386 (THIRTY MILLION, NINE HUNDRED AND FIFTY-FIVE THOUSAND,
THREE HUNDRED AND EIGHTY-SIX) shares are Series B Class I shares, representing fixed
capital, and 528,414,420 (FIVE HUNDRED AND TWENTY-EIGHT MILLION, FOUR HUNDRED AND FOURTEEN THOUSAND, FOUR HUNDRED AND TWENTY) shares corresponding
to Series B Class II shares, representing the variable portion of CIE’s capital.
CIE’s outstanding shares are listed on the Mexican Stock Exchange under the ticker symbol
“CIE.” The Issuer has been listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores –
BMV) since December 1995, and its shares are registered with the National Securities Registry
(Registro Nacional de Valores – RNV), under the National Banking and Securities Commission
(Comisión Nacional Bancaria y de Valores – CNBV). Registration with the RNV does not mean
certification of the value of the security, the solvency of the issuer, or the accuracy or truthfulness
of the information contained in this report, nor does it validate any acts that might have occurred
in violation of the law.
Registration of the securities does not imply certification of the value of the security, the solvency of the issuer, or the accuracy or truthfulness of the information
contained in the prospectus, nor does it validate any acts that may have occurred
in violation of the law. In addition, this Document does not represent nor does it
intend to constitute an offer of CIE’s securities on the Mexican stock market or any
securities market abroad.
This Annual Report, dated April 30, 2013, is submitted pursuant to Article 33 of the General
Provisions Applicable to Issuers of Securities and Other Participants in the Securities Market for
the fiscal year ended December 31, 2012.
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INFORMATION REGARDING THE UNSECURED NOTES ISSUED BY
CORPORACIÓN INTERAMERICANA DE ENTRETENIMIENTO
WITH THE TICKER SYMBOL CIE 00113
On the date of presentation of this Annual Report, Corporación Interamericana de
Entretenimiento, S.A.B de C.V. has an issuance of Short-Term Unsecured Notes in circulation on
the Mexican stock market. These debt instruments are listed on the Mexican Stock Exchange
under the ticker symbol CIE 00113. The issuance is part of the Revolving Dual Unsecured Notes
Program, for which CIE was authorized by the CNBV on November 30, 2012, under authorization
number 153/9102/2012. This issuance also corresponds to the first issuance that CIE has made
under this program.
The issuer used the funds obtained through this issuance to refinance its Debt; on April 16, 2013
it paid down unsecured notes CIE 05, CIE 06 and CIE 08 early, whose original expiration dates
were in 2014.
Number of unsecured notes:
9,910,000 Unsecured Notes to the bearer, with nominal value of Ps. 100.00 (one hundred and
00/100 Mexican pesos) each, for a total of Ps. 991,000,000.00 (nine hundred and ninety-one
million and 00/100 Mexican pesos)
Issuance date:
April 15, 2013
Expiration date:
July 15, 2013
Term of the issuance:
91 (ninety-one) days
Interest and calculation procedure:
The discount rate on the securities on their nominal value is 6.72374651% (six point seventy-two
thirty, and six forty-six, fifty-one percent). The yield rate is 6.84% (six point eighty-four percent).
Frequency of interest payment:
Interest will be paid on the expiration date of the securities.
Location and method of paying interest and principal:
At the domicile of Indeval, located at Paseo de la Reforma 255, 3er piso, Colonia Cuauhtémoc,
Postal Code 06500, Mexico City, Federal District, by electronic funds transfer.
Subordination of the securities:
Does not apply.
Payment and early payment:
One single payment of the principal amount on the expiration date.
Guarantee:
The instruments are unsecured, therefore they do not have a specific guarantee.
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Qualification granted by a rating agency:
HR3, granted by HR Ratings de México, S.A. de C.V.
Common representative:
Banco Invex, Sociedad Anónima, Institución de Banca Múltiple, Invex Grupo Financiero, Fiduciary
Depositary:
S.D. Indeval Institución para el Depósito de Valores, S.A. de C.V.
Tax System:
The applicable withholding rate with respect to interest paid on these unsecured notes is subject
to: (i) individuals and companies that reside in Mexico for tax purposes are subject to Article 160
and other applicable articles from the Income Tax Law; and (ii) individuals and companies that
are residents abroad for tax purposes are subject to Article 195 and other applicable articles from
the Income Tax Law, and it will depend on the actual beneficiary of the interest.
(Note: For more information about these securities, the reader may access the web sites of the
BMV and the CNBV).
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INFORMATION ON THE COMPANY’S 10-YEAR BONDS THAT ARE LISTED AND
TRADING ON THE LUXEMBOURG STOCK EXCHANGE
Unsecured securities to the Bearer (“Senior Unsecured Notes”) listed on the Luxembourg Stock
Exchange (“Bourse de Luxembourg”). The CUSIP (“Committee on Uniform Security Identification Procedures”) number of the securities under Rule 144A is 21988JAA8, while their ISIN
identification number (“International Securities Identifying Number”) under Rule 144S is
USP3142LAN93. The securities are registered with the RNV.
After the repurchase of approximately 93.0% (ninety-three percent) of the securities issued by
CIE in 2008, the remaining balance is 13,650 Securities, which is equal to US$ 13,650,000.00
(thirteen million, six hundred and fifty thousand United States dollars).
Number of shares:
200,000 securities to the bearer with nominal value of US$ 1,000.00 (one thousand and 00/100
United States dollars) each, for a total of US$ 200,000,000.00 (two hundred million United
States dollars) on the issuance date.
Issuance date:
June 14, 2005
Expiration date:
June 14, 2015
Term of the issuance:
10 years
Interest and calculation procedure:
The interest rate that was agreed to is established at 8.875% (eight point eight hundred and
seventy-five percent) per year. The interest is paid in cash every six months. The interest on the
securities is calculated based on one year consisting of 360 days, which is also consistent with 12
months of 30 days each.
Frequency of interest payment:
Payment of interest is every six months, occurring on June 14 and December 14 of each year,
throughout the life of the securities.
Location and method of paying interest and principal:
The principal on the securities is paid upon expiration of the issuance. The Bank of New York
(Luxembourg) S.A. is the institution appointed to act as the Principal Payment Agent, both for
payment of the securities on their expiration, as well as the interest paid every six months. In all
cases, this debt will be serviced in dollars from the United States of America.
Subordination of the securities:
NA.
Payment and early payment:
The principal amount of the securities is paid on their expiration date, that is, on June 14, 2015.
Under the terms and conditions of the issuance, the securities may be partially or totally re-
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deemed as of June 14, 2010, at the discretion of CIE, taking into consideration the original
redemption prices agreed to at the time of the offer.
Guarantee:
Does not apply
Trustee:
The Bank of New York
Qualification granted by a rating agency:
Standard & Poor’s: BMoody’s:
B3
Common representative:
The Bank of New York (Luxembourg) S.A.
Depositary:
Dexia Banque Internationale a Luxembourg
Tax System:
The securities are subject both to tax regulation in Mexico, as well as taxes in the United States of
America, which include their purchase, ownership and disposal. In addition, tax treaties between
the two countries regulate the payment of interest, principal, and other earnings with respect to
the securities. (For more information, the reader should refer to the securities placement prospectus, dated June 7, 2005).
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TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
NOTES ON PRESENTATION OF FINANCIAL INFORMATION
I. GENERAL INFORMATION
1. Glossary of Terms and Definition
2. Executive Summary
3. Recent Events
4. Risk Factors
5. Other Securities Registered in the National Securities Registry
6. Documents in the Public Domain
II. THE COMPANY
1. History and Development of the Company
1.1.
General Information
1.2.
Evolution of the Company
1.3.
The Company’s Main Investments (2010-2012)
2. Description of the Business
2.1.
Principal Activity
2.2.
Distribution Channels
2.3.
Patents, Licenses, Trademarks and Other Contracts
2.4.
Main Clients
2.5.
Applicable Legislation and Tax Status
2.6.
Human Resources
2.7.
Environmental Performance
2.8.
Market Information
2.9.
Corporate Structure
2.10. Description of the Main Assets
2.11. Judicial, Administrative or Arbitration Proceedings
2.12. Shares Representing Share Capital
2.13. Dividends
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III. FINANCIAL INFORMATION
1. Selected Financial Information
2. Financial Information by Business Line, Geographical Area and Export Sales
3. Report on Relevant Loans
4. Management’s Discussion and Analysis of the Company’s Operating Results and Financial
Position
4.1.
Operating Results for Fiscal Year 2012
4.2.
4.3.
4.4
Financial Position, Liquidity and Capital Resources
4.5.
Devaluation and Inflation
4.6.
Internal Control
5. Critical Accounting Estimates
IV. ADMINISTRATION
1. Outside Auditors
2. Transactions with Related Parties and Conflicts of Interest
3. Administrators and Shareholders
4. Corporate By-Laws and Agreements
V. STOCK MARKET
1. Shareholder Structure
2. Share Performance on the Stock Market
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VI. MANAGERS
1. Verification of Compliance issued by CIE’s Chief Executive Officer, the Corporate Director of
Administration and Finance, the Assistant Director of the Corporate Legal Area, and the Head of
the Legal Department
2. Verification of Compliance prepared by the Auditing Partner and Legal Representative of PwC
3. Report on Operations and Activities of CIE’s Audit and Corporate Practices Committee
VII. ANNEX
Opinion of the Outside Auditors and Audited Consolidated Financial Statements at December 31,
2012 and 2011, and at January 1, 2011 of Corporación Interamericana de Entretenimiento, S.A.B. de
C.V. and its Subsidiaries.
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FORWARD-LOOKING STATEMENTS
This document includes and incorporates forward-looking statements as reference. These forward-looking
statements relate to analyses and information that is based on forecasts of future results and estimates of
amounts not yet determinable. These statements also relate to the future prospects, developments and
business strategies of the Company. You are cautioned not to place undue reliance on these forwardlooking statements. In addition, forward-looking statements are identified throughout the Document by
various terms such as “anticipate,” “consider,” “believe,” “estimate,” “expect,” “plan,” “may,” “predict,”
“intend,” “project,” among many others, including reference to certain assumptions, and they include, but
are not limited to, the following projects and skills of Corporación Interamericana de Entretenimiento and
its subsidiaries and associated companies:

Geographic expansion through strategic alliances;

Expansion of the vertically integrated model;

Continued expansion of its product and service offerings in existing markets;

Successful production of live events, and attaining its financial and other goals;

Continued management of its business and corporate units, in terms of their financial and operational profitability;

Adaptation to changes in the regulatory environment; and

Maintaining or improving its competitive position in each of its different business lines, including
the partial or total sale of assets that the Company considers to be non-strategic for its future plans.
In addition to other industry-related risks, the transactions and the jurisdiction in which the Company
participates or is located, are described in greater detail in Section 4 “Risk Factors” in Chapter I “General
Information” in this Annual Report. If one or more of these risks materialize, or if certain underlying
assumptions prove to be incorrect, the actual results of CIE and/or its subsidiary and affiliated companies
may vary materially from the expected, estimated or projected results. Accordingly, the Company is not
obligated to update its forward-looking statements or the risk factors described in this Document, or other
additional risk factors, in order to reflect future events or certain circumstances.
The use of registered trademarks and trade names in this Document is exclusively for illustrative purposes
and is not intended to violate copyrights and/or intellectual property legislation applicable in the countries
where CIE, its affiliates, its subsidiaries and those companies or individuals with which CIE has or has had
any type of business or trade relationships, operate.
This Document does not constitute an offer of securities for sale in the United States of America or in the
United Mexican States, or in any other country, of CIE, its subsidiaries, associated and/or affiliated
companies, or companies or individuals with which it has or expects to have some type of commercial or
business relationship. Similarly, the sources of information used to create this Document are considered to
be correct, trustworthy and reliable in terms of reference to certain information contained herein.
In order to make it easier for the reader to understand certain information and facts discussed throughout
this Document, we suggest that the reader use the references made herein with regard to such information
and facts, which are an integral part of this document. Similarly, and for the same purpose, the Company
suggests that the reader access relevant events and other information and documentation regarding CIE
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that it has provided to the BMV and the CNBV, which is published on the following websites:
www.cie.com.mx, www.bmv.com.mx and www.cnbv.gob.mx, respectively.
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NOTES ON PRESENTATION OF FINANCIAL INFORMATION
The financial information contained in this Document has been prepared in accordance with IFRS and its
interpretations ("IFRIC") issued by the International Accounting Standards Board (IASB), subject to
certain exemptions and transition exceptions. The Company has consistently applied the accounting
policies used in preparing its opening statement of financial position under IFRS on January 1, 2011
throughout all periods presented, as if these policies had always been in force.
The consolidated financial statements have been prepared using the historical cost basis, except for the
lines of derivative financial instruments, which are recognized at their fair market value with impacts on
the results of the year. The financial statements were prepared on the basis of the business under way.
The lines included in the financial statements of each of the entities that comprise the Group are stated in
the currency of the primary economic environment where each entity operates, that is to say, its "functional
currency." The Mexican peso is the currency in which the Company’s consolidated financial statements are
presented.
Transactions in foreign currency are converted to the functional currency using the exchange rates in force
on the date of the transactions or the amount when the lines are revalued. Income and losses due to
exchange rate differences that result from such transactions and from conversions using exchange rates at
the end of the year for monetary assets and liabilities denominated in foreign currency, are recognized as
exchange rate fluctuation in the financing costs on the income statement.
The preparation of the consolidated financial statements in accordance with IFRS requires Management to
make judgments, estimates and assumptions that affect the application of the accounting policies and the
amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. The
areas that involve a higher degree of judgment, or that have more complexity, or the areas in which there
are assumptions and estimates, are significant for the consolidated financial statements.
Critical estimates and assumptions are reviewed on a regular basis. Revisions of accounting estimates are
recognized in the period in which the estimate is reviewed and in any future period that is affected.
(For a more detailed explanation of the above, the reader is referred to Section 5. “Critical Accounting
Estimates” in Chapter III, “Financial Information,” of this Document).
The Audited Consolidated Financial Statements (and their respective Notes) at December 31, 2012, 2011
and January 1, 2011, attached to this document, were prepared by the Company and audited by the firm
PricewaterhouseCoopers, S.C., and they form an integral part hereto. The financial information included in
this Document for the fiscal years ended December 31, 2011 and 2012, should always be analyzed, and to
the extent possible, together with the Audited Consolidated Financial Statements that accompany it (or
those referenced in this Annual Report) for the fiscal years ended on those same dates.
The financial information corresponding to the fiscal year ended December 31, 2010 will be analyzed
considering that it was prepared in accordance with Financial Reporting Standards applicable in Mexico,
which accounting principles were in force at the time of their preparation and authorization. This financial
information may be found in the audited financial statements contained in the Company’s Annual Report
for fiscal year 2010.
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12
GLOSSARY OF TERMS AND DEFINITION
Unless otherwise specified, the terms “Corporación Interamericana de Entretenimiento,” the “Group,”
“CIE,” the “Company,” the “Corporation,” “CIE Group,” the “Issuer” and/or the “Company” always refer to
Corporación Interamericana de Entretenimiento, S.A.B. de C.V. and its subsidiaries and affiliated companies. Other terms contained in this Annual Report may be defined in the sections in which they appear, and
their meaning may be applied generally throughout this Document, unless otherwise specified.
A glossary of certain terms and definitions used throughout this Document is provided below, with the
understanding that some terms that appear with an initial capital letter are defined in other sections
herein. The terms defined in this Annual Report may be used in the singular or plural, interchangeably.
“BANK CREDITORS”
“BOND CREDITORS”
“AMH”
“BMV”
“BINGO”
“UNSECURED NOTES” OR “UNSECURED NOTES TO THE BEARER”
“SOLE CIRCULAR OF THE ISSUERS”
“CNBV”
“CODERE”
“COFECO”
“RESTRUCTURED DEBT”
“DLS.,” “DOLLAR,” “U.S. DOLLAR” OR
“US$”
“DOCUMENT” OR "ANNUAL REPORT"
“EMISNET”
“OUT-OF-HOME ENTERTAINMENT”
“BY-LAWS”
“USA” OR “UNITED STATES”
“FOUNDATION”
Those banking institutions that are CIE lenders.
Holders of the unsecured bonds: CIE 05, CIE 06 and CIE 08, issued
by the Issuer.
Administradora Mexicana de Hipódromo, S.A. de C.V., an associated
company of CIE.
Bolsa Mexicana de Valores, S.A.B. de C.V.
A game of chance based on numbers and/or symbols. Term in small
letters.
Credit instruments known as “certificados bursátiles” (unsecured
notes) issued by CIE.
General provisions applicable to securities issuers and to other
securities market participants, issued by the CNBV.
The Mexican National Banking and Securities Commission
(Comisión Nacional Bancaria y de Valores), or the competent
authority or authorities in Mexico that may succeed or replace it.
Compañía de Recreativos S.A., a company associated with CIE in the
CIE Las Américas division, through its Mexican subsidiary Codere
México, S.A. de C.V.
Comisión Federal de Competencia de México (Federal Competition
Commission of Mexico).
Debt that CIE contracted as a result of restructuring its debt, which it
did in December 2009 with its Bank and Stock Market Creditors,
which has been modified from time to time.
Legal tender in the United States of America.
The annual report of Corporación Interamericana de
Entretenimiento, S.A.B. de C.V. for the year ended December 31,
2012.
The Electronic Communication System with Securities Issuers of the
BMV (Sistema Electrónico de Comunicación con Emisoras de
Valores de la BMV).
Entertainment that cannot be provided inside the home, not related
to television, video games and other recreational activities.
The Company’s by-laws.
United States of America or “USA.”
The CIE Foundation (Fundación CIE), a not-for-profit civil associa-
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“GOVERNMENT” OR “MEXICAN
GOVERNMENT”
“GRUPO MÁGICO” OR “MÁGICO”
“LAS AMÉRICAS RACETRACK”
“IFRS” OR “NIIFS”
“INBA”
“INDEVAL”
“ENTERTAINMENT PROPERTIES”
“ISR”
“LIVE NATION”
“LMV”
“MEXICO”
“BROADWAY-TYPE MUSICALS, PLAYS
OR PRODUCTIONS”
“NIF”
“OCESA”
“THEME PARK”
“PESO,” “PS.,” “M.N.” OR “$”
“PWC”
“CCF”
“RNV”
“SOUVENIR" OR “SOUVENIRS”
“T4F”
“TIIE”
“TICKETMASTER”
“EBITDA”
tion within the Group.
The Federal Government of Mexico.
Grupo de Mantenimiento de Giros Comerciales Internacional, S.A.
de C.V.; a subsidiary of CIE.
The horseracing track authorized to operate by the Mexican government, located in Mexico City and operated by AMH.
International Financial Reporting Standards.
Instituto Nacional de Bellas Artes de México (National Institute of
Fine Arts).
S.D. Indeval, Instituto para el Depósito de Valores S.A. de C.V. de
México.
Amphitheaters, arenas, theaters, racecar tracks, rooms, or any other
venue within which live events are staged. Generically known as
“Show Venues.”
Income tax.
Live Nation, Inc., a live entertainment company, global leader and
owner of “Ticketmaster Corp,” a ticket-selling company.
The Securities Market Law in force in Mexico (Ley del Mercado de
Valores).
The United Mexican States.
Events, theater plays or musicals lavishly produced according to the
terms and specifications of a bidder.
Financial Reporting Standards (Normas de Información Financiera
– NIF).
Ocesa Entretenimiento, S.A. de C.V., a subsidiary of CIE.
An amusement center with specific features of a particular type.
Legal tender in Mexico, or National Currency.
PricewaterhouseCoopers, S.C.; an external auditing firm.
Comprehensive Cost of Financing.
Registro Nacional de Valores (National Securities Registry).
Promotional objects that are mementos of live events marketed in
CIE’s show venues during the realization of those events.
T4F Entretenimiento S.A. is the largest live entertainment company
in South America, with current operations in the markets of Brazil,
Chile and Argentina.
The Interbank Equilibrium Interest Rate in Mexico (Tasa de Interés
Interbancaria de Equilibrio).
The registered trademark owned by Ticketmaster Corp.
Operating Income Before Other Net Expenses plus Depreciation and
Amortization.
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2. EXECUTIVE SUMMARY
General
The following information should be read together with the information included in Section 2 “Description
of the Business” in Chapter II “The Company,” in this Annual Report. The reader should also refer to
Section 1. “History and Development of the Company” in the same chapter, for more information in that
regard.
CIE is a publicly traded, variable capital company, formed in accordance with the laws of Mexico on August
21, 1995. The Company’s principal place of business is Avenida Industria Militar S/N, Puerta 2, Acceso A,
Piso 1, Colonia Residencial Militar, Delegación Miguel Hidalgo, Postal Code 11600, in Mexico City, Federal
District, in the Republic of Mexico. The Company’s main telephone number is (01-55) 5201-9000 and its
fax number is (01-55) 5201-9401. CIE’s corporate website is www.cie.com.mx, and it contains a special
section with information for the investing public.
The Company’s Series B shares have been listed on the BMV since December 1995 under the ticker symbol
“CIE,” and they have been traded continually since that initial placement date. It also has debt securities
that trade on the Mexican Stock Exchange and on the Luxembourg Stock Exchange, as described in the
Title Page of this Document, and as described later in this section.
CIE believes that it is the leading company in the out-of-home entertainment market in Mexico, and one of
the most notable participants in Latin America and worldwide in the entertainment industry. Together
with its partners and strategic allies, such as Televisa, Live Nation and Ticketmaster, CIE offers a wide
gamut of entertainment options for a variety of audiences and budgets, in large- and medium-sized cities
with high economic potential and population growth in the Mexican market. That range of options includes
concerts, theatrical productions, commercial fairs and expos, as well as sporting, special and corporate
events, among others, and to a lesser extent, development of an amusement park and a water park in
Colombia.
The out-of-home entertainment industry provides the market with entertainment alternatives for leisure time
that may be devoted to, among other things, movies, cultural events and locations, trade fairs and conventions, theatrical works, concerts, attractions and amusement parks, and sporting events. The out-of-home
entertainment industry is subject to many factors, such as general economic conditions, and changes in
consumers’ discretionary spending habits.
Throughout Mexico the Company offers the design, implementation and execution of integrated out-ofhome marketing strategies tailored for its clients (advertisers, organizations, institutions and governments), which are focused on connecting their brands and advertising, promotional and institutional
messages with their key markets or audiences. This is done through the marketing of advertising sponsorships for events, naming and signage rights at show venues, and advertising space on tickets and in
different vehicles such as airports, pedestrian overpasses, public transportation systems, convenience
stores, malls, professional soccer stadiums and teams, and newspaper and magazine kiosks. The Company
also organizes and produces special and corporate events, and it develops web applications, activations and
promotions, telemarketing, and it promotes commercial fairs and expos. CIE believes that it is the only
company in Mexico that has continuously and increasingly offered, in recent years, a wide range of the
best-quality recreational and out-of-home services. Therefore, it only faces direct competition in a frag-
15
mented manner, that is, at the level of the different business segments in which it participates. Its direct
competition includes a large number of competitors that are specialized in certain specific activities. CIE
also competes indirectly with all types of recreational facilities and types of entertainment that exist in its
geographic markets, such as museums, sporting events, restaurants and travel, among others, as well as
local and regional advertising media, such as newspapers and magazines, and local radio, television, paid
television and cable stations.
CIE’s activities are generally focused on providing a wide variety of out-of-home entertainment options.
The main markets in which CIE currently operates in the Mexican market are Mexico City, Monterrey and
Guadalajara. However, the Company has intensified growing its activity in the main medium-sized cities in
Mexico, fundamentally through marketing a growing number of commercial properties and vehicles, as
well as promoting and producing national and foreign entertainment events. In addition, and in line with
its expansion strategy, the Company has strengthened its out-of-home entertainment presence in the main
cities in Colombia, and it has initiated operations in certain markets in Central America, where it has
presented large-scale events.
For the year ended December 31, 2012, CIE reported consolidated revenues and EBITDA of Ps. 6,715.3 and
Ps. 951.4, respectively. At the close of the year 2012, the Company’s workforce was comprised of 1,632
workers.
The following shows the business units into which CIE is organized on the date of this Annual Report, as
well as at December 31, 2012:

CIE ENTERTAINMENT, in association with Televisa, promotes and produces musical concerts,
theater productions, family shows, and other forms of live entertainment. It also operates
entertainment venues in Mexico (including food, beverage and souvenir concessions), and it sells
automated tickets for live entertainment events and entertainment venues using the Ticketmaster
system. In 2012, the division recorded revenues of Ps. 4,584.3 and EBITDA of Ps. 420.8.
 CIE COMMERCIAL provides its corporate clients (companies, organizations, governments) with a
wide variety of out-of-home promotional and advertising channels for their advertising campaigns,
including naming rights, advertising space in entertainment venues, at field level in professional
soccer stadiums in Mexico, and advertising spaces on pedestrian overpasses, airports, convenience
stores and commercial centers, public transportation, and at kiosks where newspapers and magazines are sold in the Mexican market, among others. This division develops telemarketing programs for clients in Mexico and abroad, it organizes and produces special and corporate events,
and it supports its clients’ campaigns through the use and application of state-of-the-art technology
and web-based applications and development. In 2012, CIE’s commercial division recorded revenues of Ps. 1,940.8 and EBITDA of Ps. 479.2.
 CIE AMUSEMENT PARKS (OR “OTHER BUSINESSES”) operates the complex known as El Salitre
inside the Simón Bolívar Metropolitan Park in the city of Bogotá, Colombia, which includes an
amusement park known as Salitre Mágico, and the water park known as Cici Aquapark. CIE’s
amusement parks in 2012 reported revenues of Ps. 190.2 and EBITDA of Ps. 51.4.
The following table shows CIE’s relevant financial data and information for the fiscal years ended December 31, 2010, 2011 and 2012(1):
16
2010
2011
2012
Information from the Income Statement:
Net sales
EBITDA
EBITDA margin
Operating income
Operating margin
10,193.7
1,963.8
19.3%
1,092.7
10.7%
6,790.2
971.5
14.3%
577.2
1
8.5%
6,715.3
951.4
14.2%
645.6
9.6%
Net interest paid
Income not from the Controller
503.4
275.6
464.3
261.9
276.1
125.1
Net consolidated income
Net margin
108.8
1.1%
111.8
1.6%
195.4
2.9%
Cash and cash equivalents
1,268.9
1,694.7
648.8
Other current assets
5,648.4
4,815.3
4,739.8
Property, plant and equipment, net
6,564.8
6,116.7
1,025.3
Deferred assets and other assets
Total assets
Bank and bond debt
1,965.0
15,447.1
6,807.2
1,773.3
14,400.0
6,185.4
8,695.5
2,283.6
3,287.1
3,303.7
3,277.8
10,094.3
2,897.2
2,455.6
5,352.8
9,489.1
2,596.7
2,314.6
4,911.3
5,561.4
2,671.1
463.0
3,134.0
559.3
6.86
3,837.0
9,375.3
3.9x
4.8x
559.3
6 5.90
3,300.3
7,791.0
2.2x
8.0x
599.3
7.70
4,307.1
5,941.9
4.2x
6.2x
Information from the Balance Sheet:
Other liabilities
Total liabilities
Controlling stake
Non-controlling stake
Shareholders’ equity
Other Information and Relevant Financial Ratios:
Average weighted number of shares (2)
Share price at the close of the year (3)
Capitalization value (4)
Value of the Company (5)
EBITDA / Interest paid, net (6)
Value of the Company / EBITDA (7)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
2,281.6
The numbers presented in this table are for fiscal years 2010, 2011 and 2012 and are expressed in millions of nominal pesos. See the Section "Note on presentation of
Financial Information" to understand the accounting bases and criteria on which this was prepared.
For fiscal years 2010, 2011 and 2012, the number of shares considered for these calculations was 559,330,813 (five hundred and fifty-nine million, three hundred and
thirty thousand, eight hundred and thirteen) shares.
The information on the annual closing price of CIE’s shares on the BMV was taken from the SI Bolsa system of the Mexican Stock Exchange
Calculated based on the Average Weighted Number of Shares multiplied by the Share Price at the Close of the Year, information contained in this table for each fiscal
year indicated. Numbers not audited by PwC.
Calculated based on the Capitalization Value minus the mathematical difference between Bank Debt and Bond Debt, and the Cash and Cash Equivalents Account, for
each fiscal year indicated in the table. Numbers not audited by PwC.
Mathematical ratio, expressed in times, attained by dividing the EBITDA by Interest Paid, Net, which accounts are contained in this table.
Mathematical ratio attained by dividing the Value of the Company and the EBITDA, expressed in times, which information is contained in this table.
17
CIE’s consolidated revenues during 2012 were Ps. 6,715.3 in comparison with Ps. 6,790.2 recorded in the
prior year. On the other hand, during 2012 the Group recorded consolidated EBITDA of Ps. 951.4, which is
2.1% lower than the number recorded in fiscal year 2011.
The following table shows the Company’s consolidated revenues by division for the fiscal years ended
December 31, 2011 and 2012 (numbers stated in millions of Mexican pesos):
Division
2011
2012
Entertainment
4,815.8
4,584.3
Commercial
Other Businesses
1,802.6
1,940.8
171.8
190.2
Total
6,790.2
6,715.3
The table below shows CIE's consolidated EBITDA by division for the same fiscal years under discussion
(numbers stated in millions of Mexican pesos).
Division
2011
2012
Entertainment
505.4
420.8
Commercial
436.4
479.2
29.7
51.4
971.5
951.4
Other Businesses
Total
EBITDA margin over consolidated revenues and by division is shown below, for the same fiscal years.
Division
2011
2012
Entertainment
10.5%
9.2%
Commercial
24.2%
24.7 %
Other Businesses
17.3%
27.0%
14.3%
14.2%
Total
The Company's level of consolidated debt at the end of 2012 was Ps. 2,283.6, while on December 31, 2011,
the Group's consolidated debt was Ps. 6,185.4.
18
As of the date of this Annual Report, CIE had an issuance of unsecured notes trading on the Mexican Stock
Exchange under the ticker symbol CIE 00113. This issuance of 9,910,000 securities with nominal value of
Ps. 100.00 (one hundred pesos and 00/100 Mexican pesos) occurred on April 15, 2013, with an expiration
date of July 15, 2013. The securities pay a discount rate of 6.72374651% (six point seventy-two thirty, and
six forty-six, fifty-one percent) upon expiration.
The issuance for Ps. 991.0 million is protected under the Revolving Dual Unsecured Notes Program that
was authorized for the Group by the National Banking and Securities Commission on November 30, 2012,
under authorization number 153/9102/2012.
In December 2010, CIE issued unsecured notes for Ps. 280.0 million expiring in May 2011, which were
listed and trading on the Mexican Stock Exchange under the ticker symbol CIE 00110. These debt instruments have been paid and cancelled, therefore they are not in circulation.
The Company’s has its 10-year bonds (“Senior Unsecured Notes) in the original amount of US$ 200.0
registered and trading on the Euro MTF ("Multilateral Trading Facility") market of the Luxembourg Stock
Exchange; they were originally issued in the Regulated Market of that stock exchange on June 14, 2005,
and they expire on June 14, 2015.
At the close of fiscal year 2012, the unpaid balance of the issuance is nearly US$ 13.7, which is equal to Ps.
177.0, after the repurchase offer that CIE made in 2008, and through which it acquired from the holders of
those bonds approximately 93.0% (ninety-three percent) of the debt securities in circulation. The securities
are identified with CUSIP number 21988JAA8 under Rule 144A, while its ISIN identification number
under Rule 144S is USP3142LAN93.
At December 31, 2012, CIE had 122 subsidiaries and associated companies through which it has performed
operations in its relevant markets. In general, as mentioned in other sections at the start of this Document,
at the close of 2012 the Company was organized into three strategic business units: CIE Entertainment, CIE
Commercial, and CIE Amusement Parks (or "Other Businesses”).
The following page shows the Company's main subsidiaries and associated companies with shareholder
ownership as of the date of publication of this Annual Report.
19
Shareholder
structure of CIE
Name
Ocesa Entretenimiento, S.A. de C.V.
("OCEN”)
Operadora de Centros
de Espectáculos, S.A. de C.V.
Grupo Automovilístico Nacional
y Deportivo, S. de R.L. de C.V.
Venta de Boletos por Computadora,
S.A. de C.V. (“VBC”)
CIE Internacional, S.A. de C.V.
Principal
or subsidiaries
60.00%
Main Activity
Market
Holder of shares in conversion of 40.00% with
Televisa Entretenimiento, S.A. de C.V.
Mexico
100.00%
through OCEN
Manager of event facilities and shareholder.
Mexico
50.01%
through OCEN
Promotion and operation of sports races.
67.00%
through OCEN
Automated ticket sales.
Mexico
Shareholder of various subsidiaries.
Latin America
and the USA
9.724%
(directly and
indirectly)
Promotion and operation of live entertainment
events in Argentina, Brazil and Chile.
Brazil, Chile
and Argentina
Impulsora de Centros de Entretenimiento
de las Américas, S.A.P.I. de C.V.
(“ICELA”)
15.20%
Shareholder of the companies that operate
racetracks, exhibition centers, numbers- and
symbols-based games and performance venues
with sports betting.
Grupo Mantenimiento de Giros
Comerciales Internacional,
S.A. de C.V.
100.00%
Amusement parks operator.
BConnect Services, S.A. de C.V.
(Previously Grupo Sitel de México, S.A. de
C.V.)
100.00%
Provider of telemarketing services.
Mexico
Creatividad y Espectáculos, S.A. de C.V.
100.00%
Organization of special, corporate and
government events.
Mexico
Make Pro, S.A. de C.V.
100.00%
Markets sponsorship rights and advertising
promotion rights.
Mexico
T4F Entretenimiento S.A.
(Previously CIE Brasil, S.A.)
100.00%
Mexico
20
Mexico
Colombia
Competitive Advantages
Market position
the most notable participants in Latin America and worldwide in the entertainment industry. Together
with its associated companies and strategic allies, CIE offers a wide gamut of entertainment options for a
variety of audiences and budgets, in large- and medium-sized cities with high economic potential and
population growth in the Mexican market. This estimate is based on the number of events that the Company promotes and produces, and on the inventory of show venues that it operates, whether directly or
indirectly, and through strategic associations and/or joint ventures.
Throughout Mexico, the Company offers the design, implementation and execution of integrated out-ofhome marketing strategies that are tailored for its clients, focusing on connecting their brands and key
messages to their key markets or audiences, through various promotional spaces and vehicles and digital
technology, among others. This capacity and reach have made CIE an important leader in advertising,
promotional and commercial investment in the Mexican market.
Diversification of operations
The Group offers a wide variety of out-of-home entertainment options to a broad range of socio-economic
classes, and demographic groups and budgets, which gives it great flexibility to adapt to changing economic
conditions and to the varying demands of its customers in the markets in which it operates.
Geographic scope
CIE regularly organizes and presents live entertainment events in Mexico and in several countries in Latin
America through alliances and joint ventures (such as with the South American company, T4F), and to a
lesser degree, in certain Spanish-speaking markets in the United States. This geographic scope gives CIE an
advantage in producing tours of performing artists, covering large swaths of the Spanish- and Portuguesespeaking world, making CIE a particularly attractive company to the best international artists and to local
artists whose artistic potential and identification with their fans projects them into the Latin American
region.
Wide variety of promotional and advertising channels
CIE offers a wide variety of promotional and advertising channels to its corporate clients, including naming
rights for properties, advertising sponsorships for live entertainment events; advertising at show venues, in
entertainment guides and on tickets; advertising on pedestrian overpasses, convenience stores, commercial
centers, airports, public transportation, urban furniture, and at professional soccer stadiums; and telemarketing services, among others that are more closely related to technological and web applications. CIE also
participates in the sector of organization and promotion of special and corporate events in Mexico. The
Company believes that this broad range of promotional and advertising channels, along with the experience
21
and reputation it has obtained, allow it to position itself as a company that is particularly attractive to
clients who want to develop major advertising and promotional campaigns, such as companies, organizations and governments. In addition, thanks to this positioning, the Group is a major recipient of marketing
budgets in the Mexican market.
Strategic partnerships and alliances
Throughout its history, CIE has established joint ventures and long-term strategic alliances with partners
with excellent reputations. This includes Ticketmaster, the global leader in automated ticket sales, which
today is owned by Live Nation; Codere, a Spanish multinational company active in private gaming, whose
business focuses on managing gaming terminals, bingo halls, betting parlors, casinos and greyhound and
horseracing tracks in Spain, Italy and Latin America; T4F, the leading live entertainment company in
Brazil, Chile and Argentina; and Grupo Televisa, the largest Spanish-language media company in the
world. (For a more detailed explanation, see Section 2. “Description of the Business – Corporate Structure”
in Chapter II, “The Company” in this Document).
Through these vehicles CIE has been able to gain access to top theatrical productions, artists, events and
performance venues, and it has also benefited from its reputation, technology, operating experience,
proprietary content, geographical markets and socio-demographics, and the financial strength of its
partners, among other attributes. The following table shows the principle collaborative arrangements with
third parties that have led to joint ventures for strategic associations (as of the publication date of this
Document):
Company Created
Partner
OCESA Entretenimiento
Televisa
The largest Spanish-language
media company in the world.
Impulsora de Centros
de Entretenimiento
de las Américas(1)
Codere
A Spanish multinational, a
leader in the private gaming
sector that manages
recreational machines, bingo
halls, casinos, racetracks and
sports betting parlors.
Automated Ticket Sales (2)
T4F Entretenimiento
Partner Description
Purpose of the Partnership
CIE’s Equity
Stake
Promotion and production of
live entertainment events in
Mexico.
Development and expansion
of the Sports Books and Yaks
business, as well as the Las
Américas complex.
60.00%
15.20%
Ticketmaster
New Ventures Ltd
Global leader in automated
sales of tickets to events and
performance venues, owned by
the company Live Nation Inc.
Computerized ticket sales for
events and entertainment
venues in Mexico and other
Latin American markets.
67.36%
F.A. Comércio e
Participações S.A.
(in which CIE holds
49.8509%),
Fernando Luiz
Alterio and GIF-II
Fundo de
Investimento em
Participacões, S.A
One of the leading operators of
live entertainment venues and
event promoters in Brazil. The
second partner is a major
investment fund.
Promotion of live events in
Brazil, Chile and Argentina.
9.724%
__________
(1) In February 2012, CIE signed off on the sale of 38.5% of the shares of ICELA to Codere México, S.A. de C.V., with which Codere increases its minority stake from 49.0% to a
majority financial stake of 84.8% in ICELA, and CIE has adjusted its stake from the original 51.0%, which it has held since 2007, to a 15.2% minority stake,
(2) Subsidiaries of OCESA Entretenimiento, S.A. de C.V. As of August 2005, OCESA Entretenimiento, S.A. de C.V. owns 67.36% of the shares of Venta de Boletos por
Computadora, S.A. de C.V.
22
Operation of and access to the main performance venues
CIE operates the main performance venues for concerts, theatrical events, family shows and live events,
among others, in Mexico City, Guadalajara and Monterrey. CIE’s access to these performance venues
allows it to plan live events more easily than its competitors. CIE is also hired to manage public and private
show venues with different formats, on a temporary basis, or specific projects, which are located in medium- and large-sized cities in Mexico, in recognition of the Company’s proven experience and trajectory.
(For a more in-depth understand by the reader regarding the network of show venues that CIE operates,
see Section 2.10 “Description of the Main Assets” in Chapter II “The Company” in this Document).
Growth potential due to favorable demographic development in Mexico and due to the lower
expected cost of capital
According to the 2009 Demographic Dynamics National Survey, carried out by the National Council on the
Population of Mexico, the group of people in the age range of 20 to 49 years comprises a population of 45.8
million people, of which 47.6% (forty-seven point six percent) are male and 52.4% (fifty-two point four
percent) are female. This sector of the population is the main segment of CIE's market. Given the annual
historical growth in this segment, CIE believes that its audience level will increase. At the same time, the
capital investment requirements for CIE’s current asset base are expected to be lower in the near future, in
comparison with the amount invested in the past. CIE believes that this combination will allow it to
increase its net cash flow in the future.
Vertical integration in live event operations
The unique vertically integrated model that CIE uses to conduct its live event operations allows the Group
to capture a higher percentage of the total revenues generated by the events, and to obtain a lower breakeven point in terms of attendance, which differentiates CIE from its competitors, who generally act only as
promoters of live events. In addition, CIE’s ability to provide a greater number of services, such as ticket
sales and the operation of performance venues, allows CIE to take advantage of events to which the
Company does not hold promotional rights.
Experience, reputation and successful trajectory
Experience, reputation and a successful trajectory are key factors for success in the out-of-home entertainment industry. CIE has been part of the out-of-home entertainment business since 1990, and since that
time it has remained at the forefront of nearly all aspects of the industry in Mexico and the region. The
Company believes that its strong reputation and operating history make it the preferred promoter for the
most outstanding artists touring the region, and for the government authorities that own the leading
performance venues.
23
Strategies
CIE’s expansion into its markets in order to consolidate its leadership is based on the following strategies:
Expanding advertising and promotional channels for its clients
The Company seeks to provide its advertisers with an increasing variety of promotional and advertising
channels. Included in these options are billboards located in pedestrian overpass structures; advertising at
airports and in public transportation systems; advertising on outdoor furniture; advertisements on digital
screens in convenience stores; advertising in shopping malls; digital agency services (Ad Network); advertising in movie theaters, including on-screen advertisements and advertisements in other places in movie
theaters; and advertising rights with professional soccer teams and soccer stadiums. It also seeks to expand
its organization and production of special and corporate events. The Group plans to continue expanding its
advertising and promotional channels in order to offer its advertisers better products and geographic
coverage.
Expanding its product offering for live entertainment events
The Group is always seeking to expand the content of its live entertainment events. Since the time the
Company was created, CIE has entered into alliances with content-production companies and with other
third parties, which has given the Company access to Broadway-type theatrical content, sports car racing,
and to special international events, among many other productions. The Company believes that its reputation and experience have facilitated its efforts to introduce these new products to its markets.
Expanding the vertically integrated model to live entertainment events
CIE seeks to consolidate its vertically integrated model in Mexico and other Latin American markets by
continuing to obtain the operating rights for performance venues, which allows the Company to develop
related businesses, such as marketing sponsorship rights, naming rights, and advertising spaces, as well as
concession stands to sell food, beverages and souvenirs.
Continuing to explore opportunities in the out-of-home entertainment business that complement
our current line of business activities
In order to continue taking advantage of attractive opportunities that are a good fit with our existing
operations, CIE has been expanding its out-of-home entertainment offerings from a business perspective.
CIE plans to continue exploring opportunities as they arise. With this goal in mind, CIE has considered
forming associations with highly reputable partners with which CIE can create operational and financial
synergies. The alliances and long-term joint ventures that CIE has established in the past have been
beneficial, thanks to the reputation, technology, operating experience and financial strength of its partners.
24
3. RECENT EVENTS
The following is a discussion of the events that occurred within the Company during 2012 and as of the date
of presentation of this Annual Report and which, due to their level of significance, we believe may directly
or indirectly impact the Group’s activity, financial situation or operating results, among other business
variables affecting the Company and the industry in which it operates.
Other recent events related to the company, its finances, the business or other matters that, from the
reader’s viewpoint might constitute recent events of interest, are discussed in a more general fashion
throughout this Document, as well as in the audited financial statements that are an integral part of this
Document.
The reader of this Document is referred, if necessary, to other Annual Reports of the Company.
Issuance of notes in Mexico
On the issuance date of April 15, 2013, Corporación Interamericana de Entretenimiento, S.A.B de C.V.
issued a primary public offering of 9,910,000 short-term unsecured notes on the Mexican stock market.
This issuance, which expires on July 15, 2013, with the ticker symbol CIE 00113, is the first realized under
the Revolving Dual Unsecured Notes Program that the CNBV authorized on November 30, 2012, under
authorization number 153/9102/2012. At their maturity, the securities pay a yield rate of 6.84% (six point
eighty-four percent).
The net funds of Ps. 991.0 obtained by the Company were used as early payment on the unsecured notes
that the Company was trading on the BMV under ticker symbols CIE 05, CIE 06 and CIE 08. The foregoing
considers that the destination of the funds includes refinancing the Group’s debt. The securities of these
three issuances had the following characteristics:

CIE 05, issued in October 2005 for the original amount of Ps. 1,400.0 million, and which at the
close of 2012 had an unpaid balance of approximately Ps. 1533.9.

CIE 06, placed in December 2006 for the original amount of Ps. 500.00 million, had an unpaid
balance at December 31, 2012, of approximately Ps. 190.7; and

CIE 08, placed in June 2008 for the original amount of Ps. 650.00 million, and whose unpaid
balance at December 31, 2012 was approximately Ps. 247.9.
(For a more detailed explanation, see the Introduction to this Document, as well as Section 3. “Report on
Significant Loans” in Chapter III “Financial Information” of this Annual Report).
25
Sale of the Media Unit from the CIE Commercial Division
The Company and América Móvil entered into a sale agreement through which AMX may acquire all of the
shares of the Media Unit from CIE's Commercial Division. This agreement establishes an amount of Ps.
1,688.0. The transaction was subject to certain conditions at the closing, including approval from COFECO,
which was obtained on April 18, 2013. Regarding these conditions, both the Board of Directors, in meetings
held on January 15 and February 27, 2013, respectively, as well as the Annual Ordinary General Shareholders' Meeting held on April 29, 2013, approved the respective sale to América Móvil.
The funds, net of certain costs and expenses related to this transaction, will be used by the Company to pay
its debt and to cover its working capital needs.
The Media Unit, the object of the purchase agreement, is comprised of: (i) billboards located on pedestrian
overpass structures; (ii) advertising at airports and in public transportation systems; (iii) advertising on
outdoor furniture; (iv) advertisements on digital screens in convenience stores; (v) advertising in shopping
malls; (vi) digital agency services (Ad Network); (vii) advertising in movie theaters, including on-screen
advertisements and advertisements in other places in movie theaters; and (viii) advertising rights with
professional soccer teams and soccer stadiums.
(For more information regarding this transaction, the reader may refer to the “Statement of Information on
Corporate Restructuring” that the Company published on the websites of the Company, the BMV and the
CNBV, on April 15, 2013).
Change in management in the Finance and Administration Division
On July 2012, the Company announced that its Corporate Director of Administration and Finance, Mr.
Víctor Manuel Murillo Vega, was leaving that division and taking over as Chief Executive Officer of CIE
Commercial. The Administration and Finance Division was taken over by Mr. Jaime José Zevada Coarasa,
who had been acting as Corporate Finance Officer since 2002.
(For more information about the professional path of the two directors mentioned in the above paragraph,
the reader may refer to Section 3. "Administrators and Shareholders" in Chapter IV "Administration" of
this Annual Report).
Divestment from CIE Las Américas
In August 2011, the Company announced the establishment of a purchase operation with its strategic
partner Codere, through which the latter would acquire an additional 35.8% (thirty-five point eight
percent) shareholder stake in Impulsora de Centros de Entretenimiento de Las Américas, the controlling
company of CIE Las Américas. With this, CIE would adjust its stake in the subsidiary from a 51.0% (fiftyone percent) controlling stake, to a minority financial interest of 15.2% (fifteen point two percent) in
ICELA, while Codere’s stake in ICELA would go up to 84.8% (eighty-four point eight percent) in exchange
for financial consideration.
26
Once the suspensive conditions of the agreement were met, including approval by COFECO, Codere
exercised the referenced rights, and with a payment of Ps. 2,657.0 million, increased its stake in CIE Las
Américas in February 2012. Thus, as of that date, Codere will record ICELA’s income statement and
balance sheet in its financial results, including recognition of the bank liability for Ps. 1,198.0 million that
AMH has with Banco Inbursa.
The net funds from this transaction were Ps. 2,630.0 million, which were applied in full to early payment of
bank and stock market liabilities of the holding company CIE, in accordance with the commitments agreed
to by the company in December 2009. In regard to the Company, note that the transaction with Codere was
also authorized by the CIE’s controlling and corporate governance entities, and by its bank and stock
market creditors, under the assumptions inherent to its restructured debt.
CIE granted Codere a purchase option to acquire the remaining 15.2% of the Company’s stake in ICELA.
The price per share of that option will depend on the date it is exercised. Codere may exercise it by the
deadline of June 30, 2014.
(For more information on this transaction, see the Information Statement on Corporate Restructuring
released by CIE to the investing public on November 22, 2011, through the BMV’s Emisnet system and the
CNBV's STIV-2 system).
27
4. RISK FACTORS
In addition to the forward-looking concepts mentioned in this Document and that are included in the
section “Forward-Looking Statements,” whose interpretation by the reader could lead to their interpretation as other risk factors in addition to those mentioned below, the risk factors mentioned in this section
are not the only ones that could directly or indirectly affect the Company’s operations, strategies and other
business variables.
Unforeseen additional risks, or those that are believed will not have an adverse material affect, may damage
the operating, financial and/or managerial performance of the Company’s business, as well as the performance of its securities, among others. The reader is also advised to consult other public documents that the
Company has released in the past, including the Annual Report, in order to read about other risk factors
that CIE, its associated companies, affiliates and subsidiaries, partners and strategic allies, operations and
other business and financing concepts, might contain and that might be of use to the reader.
Factors Related to CIE
Dependence on distributions and cash flows from the Company’s subsidiaries
CIE is a holding company with no independent operations or assets other than those of its subsidiaries and
affiliates. Because its operations are conducted primarily by its subsidiaries and affiliates, the Company
depends on distributions and other cash flows from its operating subsidiaries and affiliates in order to meet
its obligations. In general, Mexican corporations may only pay dividends out of their retained earnings
after their shareholders have approved the related financial statements that reflect those retained earnings.
Shareholders may also approve dividend payments only after the mandatory legal reserve has been funded
and the losses incurred in prior fiscal years have been satisfied. In addition, dividend payments by any of
the Group’s subsidiaries and affiliates that have a joint venture require the consent of the partner, and in
some cases it is subject to complying with certain covenants under certain loans assumed by the Group.
(For a more detailed explanation, see Section 2.13 “Dividends” in Chapter II “The Company,” as well as
Section 3. “Recent Events” in Chapter I “General Information,” both in this Document).
Dependence on strategic partnerships and/or joint ventures
Some of the Group’s key subsidiaries maintain strategic alliances or have entered into joint ventures with
certain companies and individuals in Mexico and abroad. The Company depends on the operating experience, technology, financing and access to content and entertainment venues of these companies and
individuals, among other attributes.
If any of the partners with which CIE has entered into strategic alliances and/or joint ventures decides to
terminate its relationship with the Company, the originally planned goals and their respective strategies
may not be met and/or implemented either alone or with another partner. Some of CIE’s strategic partners
also have certain rights under the joint venture agreements relating to the operation and financing of
certain subsidiaries. Therefore, any disagreements that might arise between the Company and any of its
strategic partners under this arrangement could affect the operation of certain areas of the Group. If CIE is
unable to continue any strategic alliance and/or joint venture, it could suffer material adverse effects to its
28
activity, financial situation and operating results. (For a more detailed explanation, see Section 2. “Executive Summary” in Chapter I, “General Information” of this Document).
Close of entertainment venues and amusement parks due to possible actions by the government
CIE’s role as an operator of entertainment venues is an integral component of its vertically integrated
strategy for its live event operations. It allows CIE to have a lower break-even point for the events that it
produces and promotes in comparison with the break-even points of its competitors, who usually act only
as promoters. Consequently, the Group receives a higher level of earnings from those live entertainment
events that it does not promote. If CIE is unable to secure or maintain the operating rights to those performance venues and the amusement parks that it operates in the markets in which it has a presence (whether
these rights are expressed in the form of leases, concessions, permits, strategic associations or otherwise),
there may be an adverse material affect to its activity, financial situation, and to the Company’s operating
results). In addition, some of the rights held by the Company may be terminated early, either because
certain terms and conditions were not properly met, or for reasons of public policy.
CIE cannot guarantee that in the future it will be able to obtain or renew the rights to operate the performance venues and amusement parks that it operates in the region under terms that are favorable to it.
(For a more detailed explanation, see Section 2. “Description of the Business” in Chapter II, “The Company” in this Document).
Difficulty in properly integrating and optimizing businesses
The strategies of the vertically integrated model and its line of products and services, as well as other
business lines, have generally required the integration of new businesses into CIE’s existing operations, or
dissociation of certain business activities or assets over time, whether in order to comply with financial
agreements, or to optimize the business portfolio and its financial and commercial profitability.
These actions present various risks to the Company, particularly those businesses or initiatives in which
there has been no prior experience. Some examples of this have been with the Buenos Aires City Zoo, and
the Wannado City theme park in Florida (both of which are discontinued operations). However, the Las
Américas Racetrack in Mexico City, and the network of off-site sports betting parlors and playing numbersand symbols-based games in Mexico, as well as the live entertainment operations in Argentina, Chile and
Brazil, have shown a redefinition of strategy and strategic alliances, shareholder participation or joint
ventures with experienced partners (Codere and T4F, recently and respectively).
In general, the Company cannot assure that it will completely eliminate these risks, which include:

The inability to integrate, among other factors, different organizational cultures, business practices, information and communication systems, accounting methodologies, business philosophies and
management strategies;

The ability to hire and retain qualified administrative and operating personnel with the necessary
timeliness;
29

The difficulty in managing and controlling businesses that are geographically far away from the
corporate offices in Mexico, including the management of its economic interests in the businesses
in which it holds minority stakes; and

The likelihood that certain capital investment expenses could exceed the projected investment
amounts and/or that the earnings and cash flows could be significantly less than expected.
If any of these situations were to occur, it could have a material adverse effect on the Company’s activity,
financial situation, and operating results.
Risks inherent to CIE’s international operations
Although the majority of CIE’s business is conducted in Mexico, the Company also engages in activities in
several other Latin American countries, and to a lesser degree, in some Spanish-speaking communities in
the United States.
Specifically, through the long-term strategic partnerships that the Company has with T4F in South America, it participates in the local operations of its partner in the Brazilian, Argentina and Chilean markets for
the development and expansion of live entertainment products and services in those countries. This
includes the promotion of family, special, theater, sporting, Latin and international events, among others,
as well as the sale of entry tickets and the sale of advertising sponsorships to events. In addition, CIE’s
Colombian operation is in the amusement and water parks that it operates in Bogotá, to which it recently
added the promotion and presentation of international live events in Bogotá.
The Company’s international operations may be affected in a materially adverse manner by trade barriers,
currency fluctuations and exchange rate controls, domestic labor stoppages and increases in taxes, rights
and government contributions. Furthermore, changes in the laws and governmental policies that regulate
the Company’s operations abroad could have a material adverse effect on the Company’s international
operations. The governments of the countries in which CIE operates, or in which it intends to establish
operations in the future, could take steps that would materially affect the Group’s operating and financial
performance.
CIE’s international operations may be affected by changes in the manner in which Corporate Governance
practices are conducted in the companies in which the Company holds various economic interests, through
a minority stake or through other commercial activities, with which certain corporate and commercial
rights may be modified, affecting the way the Group conducts its international businesses. In addition,
changes in association agreements with strategic partners may affect the performance of the Company's
international activities.
Close of entertainment venues, entertainment properties, advertising and promotion vehicles,
and amusement parks due to force majeure
A case of force majeure, such as an earthquake, fire, acts of terrorism and vandalism, flooding or an
epidemic, among others, may cause any of CIE’s entertainment venues and/or amusement parks in
Colombia and/or other entertainment properties managed directly, indirectly, or on a shared basis, and/or
advertising and promotional vehicles, to not have adequate capacity to operate temporarily or permanent30
ly. If this were the case, the Company could suffer the temporary closure or interruption of those venues’
activities, which could consequently have a materially adverse effect on CIE’s activity, financial situation
and operating results.
Dependence on key personnel
The Company’s operations are conducted by key personnel whose loss could have a material adverse effect
on CIE. The Company believes that the Group’s success depends in part on its ability to hire and retain
highly qualified and experienced personnel. The competition to hire this type of personnel is particularly
intense in the out-of-home entertainment industry; therefore, the Company cannot guarantee that it has
the capacity to hire and retain the necessary qualified operating and management personnel to ensure that
its activities are properly conducted.
Factors Related to the Entertainment Industry
Significant increase in the level of competition
CIE faces both formal and irregular, highly fragmented competition in each market in which it is active,
fundamentally from those that specialize in one or more specific activities. The Company believes that a
significant increase in competition, such as the emergence of competitors with integrated or novel operations in their business models, could lead to lower revenues and an increase in capital investment costs,
which could have a material adverse effect on the Company’s activity, financial situation and operating
results.
Some of the areas in which the risk of facing greater competition and its possible impact are mentioned
below:

In the primary business of promoting and producing live entertainment events, there is a risk that
local competitors with operations in one or more of the cities in which the Company operates might
gain access to major performance venues and/or specialized ticketing services. Moreover, there is
the possibility that these local competitors might expand by successfully overcoming some of the
barriers to entering the out-of-home entertainment business, such as financial resources, experience in the operation of performance venues, and in some cases, technology;
 In the area of marketing space on advertising and promotional properties and other vehicles in
Mexico, there is the risk that certain advertisers might decide to integrate their advertising strategies and investments by acquiring or having direct access to operation of spaces. There is also the
risk that certain advertisers might decide to provide their telemarketing services directly, or that
they might produce and organize their own special and corporate events;

The primary risk for operating amusement parks in Colombia is the entry of new participants into
the market in which CIE operates in Bogotá and its metropolitan area; and,

In the trade show and convention sector, an established promoter or a new participant could build
a major convention and trade show complex using state-of-the-art technology in Mexico City.
31
In general, technological development in entertainment properties inside and outside the home, and
advertising and promotional vehicles outside the home, may directly affect the Company’s operations by
becoming attractive to the current consumers of out-of-home entertainment products and services and
advertisers.
(For a more detailed explanation, see Section 2.8 “Market Information” in Chapter II, “The Company” in
this Document).
Dependence on the population’s purchasing power
Deterioration in economic conditions in any of the markets in which CIE operates could reduce the amount
of income that consumers typically allocate to their expenditures on out-of-home entertainment activities,
which could in turn materially affect the Group’s earnings. Furthermore, any monetary devaluation or
inflationary effect could increase and make ticket prices for performances by international artists unaffordable to certain sectors of the population, such that presentation of this type of performance might be
temporarily suspended, thereby affecting CIE’s earnings, or the betting amounts placed at the Sports Books
and Yaks outlets could fall as a result of these same factors.
The Latin American markets in which the Company operates have experienced, and may again experience,
economic crises, which have had and may again have a material adverse effect on the Company’s activities,
financial situation and operating results. Even though CIE has developed strategies for overcoming
economic crises by diversifying its entertainment offerings, CIE cannot guarantee that these strategies will
be successful in preventing a material adverse effect on its activities, financial situation and operating
results.
Dependence of the availability of artists and events
The Company’s success and ability to sell tickets are highly dependent on the availability of well-known
musical artists and other popular artists who put on live shows, and also on producing and touring Broadway and other types of shows. The Company believes it is unlikely that these artists, theatrical productions
or other live entertainment events will not be available in the future. The lack of availability of these artists
and productions could have a material adverse effect on the Company’s activities, financial situation and
operating income.
Risk of accidents and disturbances
Due to the high concentration of people at many of the live events and in the operation of the Group’s
affiliates and subsidiaries, and considering the risks inherent to operating different business lines and
units, there is the chance that contingencies could occur that would harm both those attending the events
and the properties operated by CIE, as well as their assets, and that the level of intensity of such contingencies might have a material adverse effect on the Group’s image. Attendance at the Company’s events and
amusement parks could decrease if such accidents were to occur, which would in turn lead to a reduction in
CIE’s revenues and cash flow.
32
Although the Company has not experienced any significant disturbances or accidents at its events, parks or
other entertainment properties or commercial vehicles, the possibility that such incidents might occur in
the future cannot be ruled out. In view of the foregoing, and to supplement the Company’s safety and
prevention programs, and to reduce the possible impact of a contingent event, there is civil liability insurance that meets authorities’ requirements and strengthens the Group’s image and operation.
Weather and seasonal conditions
Because some of the performance venues are outdoors, adverse weather conditions could decrease attendance levels at these live events. If such adverse weather conditions persist for prolonged periods of time or
on weekends, which is when the Company records the highest attendance levels, CIE’s revenues and cash
flow could be negatively affected.
In particular, the business of promoting musical concerts is seasonal to some extent, with less activity
during the summer months in the northern hemisphere (from June to August). This is because international artists are usually on tour in the United States and Europe during this period.
Amusement park operations in Colombia may experience seasonality because they are located in regions
where the weather conditions are usually stable. However, attendance levels tend to increase from June to
August and during the Christmas and Easter holidays because of school vacations. The number of corporate events tends to increase in the latter part of the year, as companies and organizations choose these
dates to launch new products and services, and to hold their year-end events. Advertising in movie theater
exhibition rooms, however, is directly affected by the summer season, which is when blockbuster films tend
to be released. Trade shows and conventions are rarely held in August because of the summer vacation, or
during the Easter holiday. Moreover, the number of social events that are associated with certain trade
shows and conventions tends to increase during the last months of the year.
Due to the seasonal nature of some of CIE’s activities, the occurrence of adverse events, such as a reduction
in the demand for the Company’s products and services at certain times of the year, may have a disproportionate effect on the Group’s revenues, cash flow and operating results. These seasonal variations that
affect the Group may also increase working capital and financing requirements at certain times during the
year. Operating results could also be adversely affected if the Company finds it necessary to substantially
increase its liabilities, or if it is unable to accurately predict its working capital requirements due to the
seasonal nature of some of its business activities.
Factors Related to Mexico
Political and economic factors
CIE is a Mexican company that conducts the vast majority of its business activities in Mexico. Consequently, its businesses, financial condition and operating results may be significantly affected by certain general
conditions of the Mexican economy, such as a devaluation of the Mexico peso, inflation and interest rates in
Mexico, or by other political and economic issues in Mexico.
The Mexican government has exercised and continues to exercise significant influence over the Mexican
economy. The policies and actions of the Mexican government regarding the economy and companies that
are partially owned by the government may have a significant impact on the Mexican business sector in
33
general and on CIE in particular, as well as on market conditions, pricing systems and yields on the
securities of Mexican entities, including those of the Company.
In the past Mexico has experienced economic crises caused by internal and external factors, which have
been characterized by unstable exchange rates, high inflation and interest rates, economic concentration,
reduced flows of international capital, liquidity in the banking sector and unemployment. These economic
conditions considerably reduced the purchasing power of the Mexican population, and as a result, the
demand for out-of-home entertainment in general. Crises such as these could adversely affect CIE’s
financial condition and its operating results, as well as the market value of its securities.
Exchange rate fluctuation
In the past, the value of the Mexican peso has depreciated substantially in relation to the US dollar and
other currencies, and it could do so again in the future, despite the exchange rate stability of recent years.
Declines in the value of the Mexican peso in relation to other currencies could adversely affect CIE’s
business and its financial and operating condition, including its ability to make principal and interest
payments on the portion of its debt that is denominated in foreign currency.
Among other things, a decline in the value of the Mexican peso relative to the US dollar could affect the
feasibility of CIE presenting certain international artists in Mexico because payment for these artists’
services must be remitted in US dollars, and a devaluation of the Mexican peso increases the amount in
pesos of CIE’s dollar-denominated obligations.
(For a more detailed explanation, see Section 4. “Management’s Discussion and Analysis on Operating
Results and Financial Position of the Company” in Chapter III “Financial Information” in this Annual
Report).
Evolution of inflation
In the past, Mexico has experienced high inflation rates. During periods of high inflation, the Company
may not be able to increase the price of its tickets in line with inflation rates, which could lead to a decline
in its gross margins.
(For a more detailed explanation, see Section 4.5 “Devaluation and Inflation” in Chapter III “Financial
Information” of this Annual Report).
Events in other countries
Certain events in other countries may have a material adverse effect on the Company’s securities, especially
events in the United States and in other developed and emerging economies. In particular, Mexican
securities and Mexico’s financial markets are significantly influenced, to varying degrees, by the financial
and economic conditions of other countries. Although economic conditions are different in every country,
34
the reaction of investors in securities and financial markets to events in each country has had, and may
continue to have a significant impact on the prices of securities issued in other countries, including Mexico.
Factors Related to CIE’s Shares on the Mexican Stock Exchange
The shares that represent CIE’s capital are listed on the BMV and are registered with the RNV, with the
understanding that this registration does not imply any certification of the worth of the security or the
solvency of the issuer. Furthermore, even if the Company has fully complied with the requirements to
continue its listing on the BMV and registration with the RNV, it cannot guarantee that in the future it will
be able to continue to do so, nor can it guarantee that its securities will not be affected by price volatility,
lack of liquidity, adverse economic cycles and/or changes in applicable legislation.
Factors Related to Accounting Standards in Mexico
Mexican companies that issue securities and other securities market participants are required to prepare
and release their financial information in conformance with International Financial Reporting Standards,
which may differ materially from accounting standards in other countries, including the United States.
Consequently, the presentation of CIE’s financial statements may differ from the financial statements of
other companies.
35
5. OTHER SECURITIES REGISTERED WITH THE NATIONAL SECURITIES
REGISTRY (RNV)
Note: Different from certain financial information contained in other sections of this Document, which is
stated in millions of Mexican pesos, the financial information shown below is stated in Mexican pesos. The
foregoing is purely for the reader’s convenience.
To date, CIE's subscribed and paid-in capital is Ps. 3,398,674,294.00 (THREE BILLION, THREE HUNDRED AND NINETY-EIGHT MILLION, SIX HUNDRED AND SEVENTY-FOUR THOUSAND, TWO
HUNDRED AND NINETY-FOUR AND 00/100 HISTORICAL MEXICAN PESOS). This is comprised of a
total of 559,369,806 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND SIXTYNINE THOUSAND, EIGHT HUNDRED AND SIX) common shares, nominative, Series B, with full voting
rights, no par value, fully subscribed and paid in, of which 30,955,386 (THIRTY MILLION, NINE HUNDRED AND FIFTY-FIVE THOUSAND, THREE HUNDRED AND EIGHTY-SIX) shares are Series B Class I
shares, representing fixed capital, and 528,414,420 (FIVE HUNDRED AND TWENTY-EIGHT MILLION,
FOUR HUNDRED AND FOURTEEN THOUSAND, FOUR HUNDRED AND TWENTY) shares corresponding to Series B Class II shares, representing the variable portion of CIE’s capital.
At CIE’s General Ordinary Shareholders’ Meeting held on August 13, 2012, an increase to the variable
portion of shareholders’ equity was approved by means of an issuance of 40,669,187 common, nominative
shares, Series B, Class II, no par value, representing the variable portion of the Company's shareholders'
equity.
As the investing public was informed, during the First Subscription Period, 38,993 common, nominative
equity were subscribed and paid in at the price of Ps. 7.00 (seven and 00/100 Mexican pesos) per share,
and in the Second Subscription Period, the Company’s Secretary received requests to subscribe
40,000,000 ordinary nominative shares, Series B, Class II, with no par value, representing the variable
portion of CIE’s shareholders’ equity; therefore, the Company cancelled 630,194 shares that were not
subscribed, which was agreed to in the aforementioned General Shareholders’ Meeting.
Shareholders who stated their wish to subscribe and pay in shares in the Second Subscription Period,
under section (B) of the subscription notice published by CIE on the DOF and EMISNET on August 17,
2012 (the "Notice"), entered into a share subscription contract with CIE, which contains mainly the
following terms and conditions:
Section (B) of the Notice – Deferred and Conditional Payment: within the Second Subscription Period, in
which case the price of subscription will be determined according to the date on which the Shareholder
wishes to realize the subscription, that is:
(i) If the shares are subscribed within the first ten (10) calendar days following the first anniversary of the
date of publication in the Official Gazette of the Notice, the subscription price for each share will be
7.50 Mexican pesos.
(ii) If the shares are subscribed within the first ten (10) calendar days following the second anniversary of
the date of publication in the Official Gazette of the Notice, the subscription price for each share will be
8.00 Mexican pesos.
(iii) If the shares are subscribed within the first ten (10) calendar days following the third anniversary of
8.50 Mexican pesos.
36
In the event that the shares regarding which the shareholder or shareholders have indicated their intention
to subscribe are not paid within any of the aforementioned three periods, the shares will be canceled,
regardless of CIE’s right to demand that the shareholder be compelled to comply with the obligation
established in Article 1846 of the Federal Civil Code.
Except for the aforementioned, there will be no penalty against a shareholder who does not make payment
for the subscribed shares.
CIE delivered the titles of the shares corresponding to the shares subscribed and paid in during the First
Subscription Period.
Any shareholder who has subscribed shares and consequently entered into the share subscription contract
with CIE must notify the Secretary of the Board of CIE of how many of the subscribed shares it will pay in,
indicating the amount to be transferred to CIE’s account as established in the contract, with the understanding that in the event of any discrepancy in payment, the shareholder will have two days to clarify the
amount, and if any amount is missing, the shareholder will have one more day to make due payment.
The shares that have been fully paid in will be the only shares that have the right to receive dividends, and
they will have all corporate and patrimonial rights that pertain to them according to the Company's by-laws
and applicable laws.
The rights and obligations consigned in the share subscription contract may not be granted or transferred
in any way whatsoever without the prior written authorization from the other party.
The update to CIE’s corporate capital was approved by the CNBV through order number 153/8843/2012
dated November 14, 2012.
At the Ordinary General Shareholders’ Meeting held on July 10, 2009, an increase to the variable portion of
the Company’s capital was approved in the amount of Ps. 1,200,000,000.00 Mexican pesos (ONE BILLION, TWO HUNDRED MILLION AND 00/100 MEXICAN PESOS), through the issuance of 200,000,000
(two hundred million) Series B Class II shares, no par value, at a subscription price of Ps. 6.00 Mexican
pesos (SIX AND 00/100 MEXICAN PESOS) per share.
At the General Extraordinary Shareholders’ Meeting held on April 29, 2009, a decrease in the fixed portion
of the Company’s capital was approved in the amount of Ps. 405,879,249.79 Mexican pesos (FOUR
HUNDRED AND FIVE MILLION, EIGHT HUNDRED AND SEVENTY-NINE THOUSAND, TWO HUNDRED AND FORTY-NINE AND 79/100 MEXICAN PESOS) and for the variable portion, the amount of Ps.
4,305,576,159.21 Mexican pesos (FOUR BILLION, THREE HUNDRED AND FIVE MILLION, FIVE
HUNDRED AND SEVENTY-SIX THOUSAND, ONE HUNDRED AND FIFTY-NINE AND 21/100
MEXICAN PESOS): that reduction was made by absorbing the Company's losses and not through cancellation of shares, as those shares have no par value
CIE’s outstanding shares have been listed on the Mexican Stock Exchange under the ticker symbol “CIE”
since December 1995, and its capital is registered with the National Securities Registry (“RNC”), which is
overseen by the National Banking and Securities Commission (”CNBV”). Registration with the RNV does
not mean certification of the value of the security, the solvency of the issuer, or the accuracy or truthfulness
of the information contained in this report, nor does it validate any acts that might have occurred in
violation of the law.
Through Official Document No. 153/89360/2010 dated December 15, 2010, the Company obtained
authorization to register a Program to place the short-term unsecured notes for up to Ps. 600.0 million
(SIX HUNDRED MILLION MEXICAN PESOS), with an expiration period for the Program of two years
from the date of authorization by the CNBV. Under the same Program, the Group issued 2,800,000
unsecured notes on the BMV, equal to Ps. 280,000,000.00 (TWO HUNDRED AND EIGHTY MILLION
37
and 00/100 MEXICAN PESOS) maturing in May 2011, with ticker symbol CIE 00100, which were paid
down early with the net funds that the Company obtained from its divestment from its Brazilian associate,
T4F, and several other debts of CIE were partially paid down, including the issuance of unsecured notes
maturing in 2014 for original placement amounts of Ps. 1,400,000,000.00 (ONE BILLION, FOUR HUNDRED MILLION and 00/100 MEXICAN PESOS), Ps. 500,000,000.00 (FIVE HUNDRED MILLION
and00/100 MEXICAN PESOS and Ps. 650,000,000.00 (SIX HUNDRED AND FIFTY MILLION and
00/100 MEXICAN PESOS). As of the date of presentation of this Annual Report, this issuance is liquidated.
On February 2, 2011, the Company received authorization from the CNBV, through official communication
number 153/30304/2011, to update the registration in the National Securities Registry for CIE 05 unsecured notes underlying 14.0 million unsecured notes, each with a value of Ps. 100.00 (ONE HUNDRED
and00/100 MEXICAN PESOS). These debt instruments were placed on the Mexican securities market on
October 20, 2005, expiring on September 30, 2014. The rate is based on the 28-day TIIE (Balanced
Interbank Interest Rate) plus an applicable margin of 300 basis points. As of the date of presentation of
this Annual Report, this issuance is fully liquidated. Through official communication number
153/516231/2006 dated August 17, 2006 issued by the CNBV, the registration of a Dual Unsecured Notes
Program (short and long term) was authorized for an amount of up to Ps. 3,000,000,000.00 (THREE
BILLION and 00/100 MEXICAN PESOS), or its equivalent in Investment Units, using the value of these
securities on each issuance date as the reference, on a revolving basis, provided that the amount of the
issues in effect on any given date does not exceed the authorized amount. The amount of the short-term
unsecured notes may not exceed Ps. 500,000,000 (FIVE HUNDRED MILLION AND 00/100 MEXICAN
PESOS). As of the date of presentation of this Annual Report, this issuance is liquidated.
Under this Dual Program, on February 2, 2011, the Company obtained authorization from the CNBV to
update the registration in the National Securities Registry for CIE 06 unsecured notes, through official
communication no. 153/30305/2011, underlying 5.0 million unsecured notes, each with a value of Ps.
100.00 (ONE HUNDRED and 00/100 MEXICAN PESOS). These debt instruments were placed on the
Mexican securities market on December 8, 2006, expiring on September 30, 2014. The rate for these
unsecured notes is based on the 28-day TIIE plus an applicable margin of 300 basis points. As of the date
of presentation of this Annual Report, this issuance is liquidated.
Also under this Dual Program, on February 2, 2011, the Company obtained authorization from the CNBV to
update the registration in the National Securities Registry for CIE 08 unsecured notes, through official
communication no. 153/30306/2011, underlying 6.5 million unsecured notes, each with a value of Ps.
100.00 (ONE HUNDRED and 00/100 MEXICAN PESOS). These debt instruments were placed on the
Mexican securities market on June 27, 2008, expiring on September 30, 2014. The rate is based on the 28day TIIE plus an applicable margin of 300 basis points.
On April 15, 2003, the Company issued 9,910,000 Unsecured Notes, with the ticker symbol CIE 00113 and
nominal value of Ps. 100.00 (ONE HUNDRED AND 00/100 MEXICAN PESOS). At their maturity, these
securities will pay a yield rate of 6.84% (six point eighty-four percent), which date is July 15, 2013. The
issuance is part of the Revolving Dual Unsecured Notes Program, for which CIE was authorized by the
CNBV on November 30, 2012, under authorization number 153/9102/2012. The net funds from the
issuances were used as early payment on the Company’s unsecured notes with ticker symbols CIE 05, CIE
06 and CIE 08.
CIE has filed complete reports on a timely basis regarding relevant facts, quarterly and annual reports, and
other information and documentation, with both the BMV and the CNBV since its registration, in compliance with the bulletins and general provisions issued by the CNBV, and respective regulations. In addition,
as a result of its registration on the Luxembourg Stock Market of its debt securities issued in 2005 in a
public offering, and expiring in 2015, CIE is required to deliver its reports on a quarterly and yearly basis,
38
as applicable, to the Luxembourg Stock Exchange and to The Bank of New York Mellon as the latter is the
depositary institution for the issuance, which it had previously delivered to the BMV and the CNBV.
(For more information in regard to this section, see Section 3. “Recent Events” in Chapter I, “General
Information,” of this Annual Report).
39
6. DOCUMENTS IN THE PUBLIC DOMAIN
CIE is making this document available to the financial community and to other interested parties on the
Company’s website www.cie.com.mx, and on the website of the Mexican Stock Exchange
(www.bmv.com.mx) and the National Banking and Securities Commission (www.cnbv.gob.mx). It may also
be obtained by verbal or written request to Conrado M. Ramírez Sordo, Assistant Corporate Director of
Compliance and Investor Relations. He is located at the Company’s corporate offices in Mexico City, at
telephone number (01-55) 5201-9000. He may also be contacted by e-mail at the e-mail address [email protected].
40
II. The Company
1. HISTORY AND DEVELOPMENT OF THE COMPANY
1.1. General Information
Name and corporate purpose
The name of the Company is Corporación Interamericana de Entretenimiento, Sociedad Anónima Bursátil
de Capital Variable.
In accordance with Article II of its by-laws, CIE’s main business purpose is:
a) To promote, create, organize, develop, acquire and participate in the capital or equity of all types of
trade or civil entities, associations or companies, whether they are industrial, commercial, servicerelated or any other type of company, either Mexican or foreign, and to take part in their management or liquidation.
b) To acquire, in any legal capacity, shares, interest, holdings or ownership interest of any type in
trade or civil companies, whether taking part in their creation or through subsequent acquisition,
as well as to sell, dispose of and trade those shares, interests, holdings or ownership interests, including any other security.
c) To receive services from other companies and individuals, and to provide other companies and individuals with the services necessary to achieve their corporate ends or objectives, including the
following: administrative, financial, treasury, auditing, marketing, accounting, development of
programs and manuals, analysis of operating results, assessment of information on productivity
and possible financing opportunities, preparation of studies regarding the availability of capital,
technical assistance, and advisory and consulting services, among others.
d) To obtain, acquire, develop, improve upon, use, grant and receive or dispose of licenses, all types of
patents, trademarks, utility models, industrial designs, industrial secrets, certificates of invention,
notices and trade names, and any other industrial property rights or copyrights, whether in Mexico
or abroad.
e) To obtain all types of financing, loans or credits, issue liabilities, bonds and commercial paper, and
any other debt instruments or debt securities, whether or not secured by a pledge, mortgage, trust
or any other legal instrument, for any purpose the Company may determine, including but not limited to the Company’s own operations and those of its subsidiaries to purchase own stock, to finance dividend payments, to reduce its capital, or to make any other type of distribution to its
shareholders.
f)
To grant any type of financing or loans to individuals, civil or commercial companies, corporations
and institutions with which the Company does business or in which the Company owns interests,
whether or not secured by tangible securities.
g) To grant all types of tangible securities, personal securities and commitment bonds, securities instruments or debt instruments payable by individuals, companies, associations and institutions in
41
which the Company has an interest or stake, or with which the Company has business relationships
as a warrantor, joint and several obligor, guarantor or sponsor of those entities.
h) To subscribe, issue, draw on, accept, endorse and guarantee all types of securities or debt instruments, and to carry out credit transactions and related financial transactions.
i)
To carry out, supervise or contract, on its own behalf or on behalf of third parties, all types of constructions, buildings or facilities for offices or establishments of any kind.
j)
To carry out training and development programs and research projects on its own behalf, or on
behalf of third parties.
k) To lease, as lessor or lessee, and to acquire, hold, exchange, change, transfer, dispose of or burden
the property or ownership of all types of personal and real property, including any real or personal
rights related thereto, which may be necessary or appropriate for achieving its corporate purpose
or for the operations or corporate objectives of commercial or civil companies and institutions in
which the Company has an interest or stake of any type.
l)
To act as broker, mediator, representative or intermediary for any individual or company.
m) The production, transformation, adaptation, marketing, import, export, purchase, sale or disposal
of machinery, parts, raw materials, industrial products, effects and merchandise of any type, in any
legal capacity.
n) To place its own shares, the securities they represent, credit or debt instruments, in domestic or
foreign securities markets upon prior authorization of the competent authorities, including on
stock exchanges or foreign trading systems.
o) To acquire its own shares pursuant to the Law of Securities Markets, and general provisions that
may apply.
p) In general, to carry out all related, ancillary or incidental acts and transactions that may be necessary or appropriate to achieve the abovementioned objectives, and to enter into all types of contracts and agreements with third parties, including with the Company’s shareholders, creating
rights and obligations to be performed by the Company and the counterparties.
Incorporation and duration of the company
CIE was incorporated by public instrument number 38,183 dated August 21, 1995, which was granted
before Roberto Núñez y Bandera, Notary Public Number 1 of the Federal District. The first witness of this
incorporating instrument was recorded in the Public Commerce Registry of the Federal District under
commercial folio number 201,055 on October 25, 1995. The duration of the Company, in accordance with
Clause Four of its corporate by-laws, is 99 years from the date of signature of the reformed corporate bylaws.
42
Address and telephone numbers
The Company’s principal place of business is Avenida Industria Militar S/N, Puerta 2, Acceso A, Piso 1,
Colonia Residencial Militar, Delegación Miguel Hidalgo, Postal Code 11600, in Mexico City, Federal
District, in the Republic of Mexico. Its main telephone number is (01-55) 5201-9000, and its fax number
is (01-55) 5201-9401. CIE’s corporate Internet site is www.cie.com.mx, which contains general,
operating, financial and business information on the Company, as well as ot her sections of interest,
including electronic pages that are specific to several of its businesses and Investor Relations.
43
1.2. Development of the Company
In 1990, the Company commenced operations through its predecessor as a live events promoter and
operator of the Sports Palace in Mexico City, a 21,000-seat indoor arena. It also began selling food, beverages, souvenirs and marketing advertising sponsorships for its live events.
The following year, the Company entered into an agreement with Ticketmaster Corp., the United States
ticket-selling company, today owned by Live Nation, to sell tickets to live events and entertainment venues
in Mexico and the rest of Latin America, using the Ticketmaster name and its system. CIE currently has a
67.0% (sixty-seven percent) ownership interest in the ticketing operation in Mexico through CIE Entertainment.
To maximize its unique, vertically integrated model, from 1993 to 1997, CIE built and began operating a
22,000-seat amphitheater in Monterrey, Nuevo León. It also secured the rights to operate two theaters in
Mexico City, which added seating capacity of 5,335, it built a 60,000-seat forum in Mexico City, which it
later adapted to also serve as a baseball stadium, and it acquired a theater in Buenos Aires, Argentina, with
seating capacity for 2,001.
In 1996, CIE entered into a licensing agreement with Walt Disney Theatrical Worldwide, Inc., to stage
Disney productions in Latin America, Spain and Portugal. This business venture resulted in the staging of
“Beauty and the Beast” in Mexico City in 1997. Since that time, CIE has staged 13 of the most important
Broadway shows in Mexico, Argentina, Brazil and Spain.
Also in 1996, the Group leveraged its commercial experience to market field-level advertising space at
professional soccer stadiums in Mexico through Unimarket, S.A. de C.V., of which the Company currently
owns 100.00%. It also expanded its operations through: (i) billboard advertising on pedestrian overpasses
in Mexico through Publitop, S.A. de C.V., which is 100% (one hundred percent) owned by CIE;
(ii) marketing advertising space at airports in Mexico through Publitop; and (iii) exclusive agreements (no
longer in effect today) with Organización Ramírez and Cinemark to market advertising space inside the
complexes they operate, including cine-minutos. Today the Company sells these types of spaces in certain
rooms of the operator of Cinemex movie theaters for certain clients with an interest in this area of marketing.
In 1997 and 1998, CIE expanded its out-of-home entertainment offering through: (i) the acquisition of the
assets and operation of the largest promoter of rock events in Argentina and Chile; (ii) the establishment of
a co-investment with Divertido, the largest amusement parks operator in Mexico with five parks at that
time; (iii) obtaining the 20-year development rights to develop and operate an amusement park in Bogotá,
Colombia inside an area of eight hectares; and (iv) acquisition of the operator of the Buenos Aires City Zoo.
The Company subsequently added to its operations the amusement parks La Feria de Chapultepec, one of
the largest and most traditional amusement parks in Mexico City, as well as other popular parks in Mexico.
In 2004, it began operating the Wannado City Park, a theme park for children located in Fort Lauderdale,
Florida. In 2009, however, the Group transferred the operation of Feria de Chapultepec, CiCi and Selva
Mágica, and formally closed the park in Florida in the first months of 2011, retaining the El Salitre complex
(an amusement park under the name El Salitre Mágico and a water park called Cici Aquapark) as CIE’s
only projects in that industry.
Also in 1998, its then-subsidiary AMH obtained a 25-year concession from the Mexican government,
renewable for an equal period upon expiration, to operate the Las Américas Racetrack in Mexico City, and a
25-year permit to develop 45 off-track betting and numbers- and symbols-based gaming parlors. It also
obtained a 50-year concession, renewable for an equal period upon expiration, to develop 41.4 hectares
surrounding the racetrack, where it has since developed the Banamex Center, which is a 34,000 square
44
meter state-of-the-art convention and exhibition center, and Granja Las Américas, a theme park for
children. In 2007, the Company obtained 20 licenses in addition to the 45 it already had from the Mexican
government to operate off-track betting and numbers- and symbols-based gaming parlors.
In 1999, the Company expanded its out-of-home entertainment operations to Brazil by acquiring Stage
Empreendimentos, the concession holder for three performance venues in São Paulo, Brazil. Two years
later, the Group commenced operations in Rio de Janeiro by acquiring the operating rights to Claro Hall, a
major performance venue in Rio, with capacity for 6,500 people.
In 2002, CIE entered into a joint venture with Televisa, the largest Spanish-language media company in the
world, which acquired 40% (forty percent) of the live entertainment operation in Mexico. CIE Entertainment, a strategic business unit of the Company, was a product of this joint venture.
In 2007, CIE announced the sale of a portion of the majority stake that it held in the live entertainment
business in Brazil, Argentina and Chile. With this transaction, CIE went from an original stake of 85.0%
(eighty-five percent) in Brazil, 100.0% (one hundred percent) in Chile, and 100.0% (one hundred percent)
of the live entertainment operations in Argentina, to an approximate 24.0% (twenty-four percent) financial
interest in that business segment, which was grouped into a new company. As a result of the transaction,
CIE and the new company (called T4F Entretenimiento S.A., or “T4F”) have a strategic alliance to capitalize
on existing synergies and to strengthen the live entertainment business in South America.
Also in 2007, Codere, S.A. acquired a 49.0% (forty-nine percent) interest in CIE Las Américas to continue
developing the burgeoning gaming industry in Mexico. In that same year, the Mexican authorities modified
the permit that had been granted to AMH to install, operate and develop 20 off-site sports betting and
numbers-and symbols-based betting parlors in addition to the 45 already-existing licenses, under the same
conditions as the initial permit. In 2008, CIE entered into an exclusive distribution agreement for five
years with the largest live music company in the world, Live Nation. The agreement provides exclusive
rights to CIE to promote the tours of Live Nation artists inside Mexico and Central America, and to T4F in
South America.
Continuing with its strategy to focus on its most profitable businesses, in 2009 the Company divested its
parks in Mexico. At the beginning of 2010, CIE concluded the sale of the radio stations that it owned in
Argentina, and it formally ceased operations of its amusement park in Florida in the first half of 2011.
Between April and May 2011, T4F issued a public offering of shares on the São Paulo stock exchange, with
placement efforts in international markets, with which its direct and indirect stake in T4F decreased to a
stake of 9.724% (nine point seven hundred and twenty-four percent), from an approximate shareholder
stake of 24.0% (twenty-four percent) that it had held previously, as explained above.
In August 2011, Codere and CIE established a purchase option contract through which Codere could
acquire an additional 35.8% (thirty-five point eight percent) stake in ICELA by means of a financial
payment, subjecting the exercise of that option to certain suspensive conditions, including approval of the
transaction by COFECO. In February 2012, Codere exercised those rights, and through a payment of Ps.
2,657.0, took its financial interest in CIE Las Américas to 84.8% (eighty-four point eight percent), causing
CIE's stake to fall from 51.0% (fifty-one percent) to 15.2% (fifteen point two percent).
In January 2013, AMX and CIE entered into a purchase-sale agreement for the Media Unit in CIE’s
Commercial division, by which the Company will transfer ownership to AMX of 100.0% (one hundred
percent) of the shares of the companies that comprise the Media Unit, through payment of approximately
Ps. 1,668.3 once the suspensive conditions have been complied with at closure, including authorization of
the Operation by COFECO, which authorization was obtained last April, and the corresponding acts have
been complied with, as explained in certain sections of this Annual Report. In the event that this transaction is finalized, CIE will continue to manage the advertising services that it provides for certain clients, it
45
will organize and produce special and corporate events, and it will also develop telemarketing programs for
third parties in the call centers that it operates.
46
1.3. The Company’s Principal Investments (2010-2012)
The Company recorded investments in fiscal years 2010, 2011 and 2012, as detailed below, which information is taken from the audited consolidated financial statements that are attached to this Annual Report
for the fiscal years ended December 31, 2011 and 2012, as well as the audited consolidated financial
statements attached to the Document corresponding to fiscal year 2010:
Main Investments
2010
2011
2012
-
715.1
-
Investment in property, plant and equipment
(628.7)
(138.2)
(144.5)
Investment in intangible assets and other
amortizable assets
(274.5)
(12.1)
(47.0)
(903.2)
564.9
(191.5)
Investment in permanent stakes
Total
The investments made by the Group during these fiscal years correspond fundamentally to the maintenance of its show venues, amusement parks and advertising and promotional vehicles, as well as to certain
technologies for the modernization of its businesses. Specifically, the investments made in fiscal year 2010
include certain improvements in gaming and raffle activity in Mexico, as well as the opening of gaming
units in that business area, which the Company ran until February 2012.
47
2. DESCRIPTION OF THE BUSINESS
The following section should be read in conjunction with the sections “Executive Summary,” “History and
Development of the Issuer,” and “Management’s Discussion and Analysis of the Company’s Operating
Results and Financial Situation” in Chapter I “General Information,” Chapter II “The Company,” and
Chapter III “Financial Information,” respectively, in this Document, among other information published by
the Company that may be of general interest to the reader.
For the reader’s benefit, the information contained in the following paragraphs should be read together
with the information included above in Section 2 “Executive Summary” in Chapter I “General Information”
of this Annual Report.
Main Activity
the most notable participants in Latin America and worldwide in the entertainment industry.
Together with its partners and strategic allies, CIE offers a wide gamut of entertainment options for a
variety of audiences and budgets in large and medium-sized cities with high economic potential and
population growth. That range of options includes concerts, theatrical productions, commercial fairs and
expos, as well as sporting, special and corporate events, among others, and to a lesser extent, development
of an amusement park and a water park in Colombia. In addition, and in line with its expansion strategy,
the Company has strengthened its out-of-home entertainment presence in the main cities in Colombia, and
it has initiated operations in certain markets in Central America, where it has presented large-scale events.
Throughout Mexico, CIE also offers the design, implementation and execution of integrated out-of-home
marketing strategies tailored for its clients (advertisers, organizations, institutions and governments),
which are focused on connecting their brands and advertising, promotional and institutional messages with
their key markets or audiences. This is done through the marketing of advertising sponsorships for events,
naming and signage rights at show venues, and advertising space on tickets and in different vehicles such
as airports, pedestrian overpasses, public transportation systems, convenience stores, commercial centers,
professional soccer stadiums, and kiosks that carry newspapers and magazines. It also develops initiatives
based on web applications, activations and promotions, organization and production of special and
corporate events, and handling telemarketing programs for third parties, among others.
CIE operates its live entertainment business through a unique vertically integrated model that allows it to
maximize revenues at each event or concert that it puts on.
For the year ended December 31, 2012, CIE reported consolidated revenues and EBITDA of Ps. 6,715.3 and
Ps. 951.4, respectively.
CIE does not have significant reliance on one provider in particular, and in general it faces competition
from a large number of individuals and corporate groups that participate in the various areas that comprise
live entertainment. Certain of the Group’s operations show a degree of seasonality during the year, and may
be affected by weather conditions.
48
In 2012, approximately 3.9 million people attended the 3,132 events that CIE promoted and produced in
Mexico. Of these events, 2,555 were theatrical productions, 327 were musical concerts, and 250 were
family, sporting and cultural events, among others.
Event booking and promotion
CIE books and promotes musical concerts, family-oriented shows, and other live entertainment events,
mainly in Mexico, in some Latin American territories, and to a lesser degree in certain Spanish-speaking
markets in the United States. The Group’s offices are in constant contact with artistic talent agents so that
CIE can be in the loop about possible tours and the artists’ availability. Once the opportunity to book an
artist arises, market research is performed on the potential audience in order to determine the artist’s
likelihood of success in a specific market.
If the research results are favorable, the corresponding contractual negotiations are undertaken. Once the
artist has been booked and the appropriate performance venue has been obtained, a two-part advertising
campaign is launched. The first part consists of the sale of event sponsorship rights to interested companies, which must agree to provide part of the advertising for the event or performance. The second part
consists of a mass-media advertising campaign, mainly using radio stations, digital social media, television
and billboards. The advertising effort is also supported by a monthly entertainment guide that has its own
website, which in turn is linked to the Ticketmaster site. Each site is designed to promote the sale of tickets
to live events and performance venues.
Generally speaking, the business of promoting musical concerts is seasonal to some extent, with less
activity during the summer months in the northern hemisphere (from June to August). This is because
international artists are usually on tour in the United States and Europe during this period. The Company
believes that it can partially reduce the negative impact of that seasonality by booking family-oriented,
Latin and other types of shows during the summer, and by taking advantage of the talent and local content
for regional or local presentation.
CIE has the ability to offer artists an integrated line of promotional and production services to artists that
cover some of the major Spanish- and Portuguese-speaking cities across the globe in Latin America. This
service gives the Company a significant competitive advantage, since artists generally prefer to book their
tours with as few promoters as possible in a determined geographic area.
Production of theatrical events
The Company has obtained licenses to stage theatrical works in Latin America from several theatrical
producers, presenting them in both Spanish and Portuguese. This staging involves hiring talent, the
theatrical director and his team, as well as all of the workers for production design, set construction and
costumes. The production is staged under the close monitoring and supervision of the original producer,
who seeks to preserve the quality of the production. The Company also produces several smaller-scale
theatrical productions on a regular basis in Mexico. These productions are characterized by their dramatic
and musical content, representing a new trend in theater. The production budgets are also smaller, the preproduction periods are shorter, and the operating costs are lower. These productions generally serve as a
major training ground for local actors who subsequently participate in the Broadway-type shows that CIE
49
presents. Revenues from theatrical operations are mainly generated through ticket sales and marketing
advertising sponsorships.
Performance venue operation
As part of its vertically integrated strategy, CIE seeks to operate the main venues in the cities where its
principal markets are located. This key element of vertical integration allows it to have a lower break-event
point than its competitors, which generally act only as promoters. This also allows CIE to receive revenues
from events for which it has no promotional rights.
The Company seeks to operate performance venues over the long term, therefore it enters into leases or
obtains permits or concessions. It has also entered into agreements with owners in which it agrees to build
the performance venues in exchange for more favorable leasing terms (this was the case with its open-air
forums with seating for a very large number of spectators in Mexico City, Guadalajara and Monterrey), or
to remodel or refurbish properties in exchange for better leasing terms, which has been the case with the
Metropolitan Theater in Mexico City. Its current operating agreements have periods ranging from 1 to 50
years.
Since a number of artists perform in certain specific markets that are available during their tours, CIE
competes with various performance venues in the region for available dates for the most popular tours.
It should be noted that the favorable cost structure of venues and their ability to draw fans are often
important success factors in this area of the business, and in artists’ decisions to choose to perform in a
certain venue. CIE also believes that it operates one of the largest networks of performance venues in
Mexico, used primarily for musical concerts and other live events. The aggregate seating capacity of its
performance venues has grown steadily in recent years.
The table on the following page shows information on the performance venues operated by CIE in Mexico:
50
Market and Performance Venue
Year of Incorpora-
Type of Venue
tion
Maximum
CIE’s Rights
Capacity
Mexico City
Foro Sol
1993
Amphitheater / Baseball
60,000
Temporary exclusive revocable
stadium
26,180
administrative permit. (Expires in August
2021).
Estadio Azul (1)
1996
Soccer stadium
36,000
Autódromo “Hermanos Rodríguez”
2001
Car Racetrack
59,248
Operating agreement (expires in December
2013)
Exclusive temporary revocable
administrative permit (expires in August
2021)
Palacio de los Deportes
1990
Indoor arena
21,000
Revocable temporary administrative permit
José Cuervo Salón (2)
2003
Amphitheater
3,500
Lease (expires in May 2013)
Teatro Metropólitan
1996
Amphitheater
3,400
Lease (expires December 31, 2021)
Centro Cultural Telmex I
1996
Theater
2,251
Undefined, with the possibility of the parties
(expires in August 2021)
ending the lease at any time.(3)
Teatro Blanquita
1990
Theater
1,944
Lease (expires in October 2012)
Centro Cultural Telmex II
1996
Theater
1,190
Lease terminated (3)
Foro Polanco (4)
2005
Theater
4,000
Lease (expires in August 2015)
Teatro de los Insurgentes
2006
Theater
950
Auditorio Plaza Condesa
2010
Amphitheater
Teatro Banamex Santa Fe (5)
2009
Theater
Arena VFG
2005
Amphitheater
10,096
Estadio 3 de Marzo
2010
Stadium
25,000
Exclusive scheduling rights to musical events
2,500
389
Lease. (Expires in December 2015).
Lease (Expires in March 2019).
Lease (Expires in February 2016)
Guadalajara, Mexico
and events other than soccer. (Expires in
August 2020).
Monterrey, Mexico
Auditorio Banamex (6)
1994
Amphitheater
22,000
Operating rights. (Expires in October 2048).
(1) This stadium is used mainly for professional soccer games, and occasionally for other special and corporate events.
(2) Previously Vive Cuervo Salón or Salón 21.
(3) Lease contract in the process of renegotiation.
(4) Previously known as Foro Scotiabank.
(5) Previously Zentrika
(6) Previously Auditorio Coca-Cola Fundidora.
In addition to these areas, the Company provides third-party organizers and owners with specialized
services in the administration and temporary operation of properties for their events throughout the
country, which makes the experience, geographic reach and professional recognition of CIE in the area
clear. Among them are the esplanade of the Zócalo in Mexico City, the WTC International Center for
Expositions and Conventions, the Plaza de Toros México, the Siglo XXI Cultural Complex, and the
Cuauhtémoc Stadium in Puebla, the Plaza de Toros Nuevo Progreso and the Foro Alterno of the University
Cultural Center in Guadalajara, and the Tecnológico and Universitario stadiums in Monterrey.
51
Sale of advertising sponsorships
The Group sells local, regional and national advertising sponsorships to companies in a variety of business
lines for the live events that it promotes to companies in various sectors. When a company purchases these
rights, it becomes an official sponsor for the event or tour, which allows the sponsor to associate its trademark with the artist and the event. Sponsorship advertising rights are particularly attractive for companies
whose products or services are directed to the same audience that attends every CIE event.
The sponsor generally pays a commission for advertising sponsorship rights. The sponsor must also
assume certain promotional and advertising expenses for the live entertainment events. Some of the
Company’s sponsors for live events or tours include beverage producers (i.e. Coca-Cola, Cervecería
Cuauhtémoc-Moctezuma, Cervecería Modelo), cigarette producers (i.e. Cigarrera la Moderna or Cigatam),
banks (i.e. Banamex, BBVA-Bancomer, HSBC, Scotiabank Inverlat), telephone and energy companies (i.e.
Telmex, Telcel, Telefónica, Petróleos Mexicanos), airlines (i.e. Aeroméxico), department stores, cement
producers (i.e. Cemex and Cruz Azul), electronics companies (i.e. Honeywell, Samsung, Daewoo, Panasonic, Motorola) and automobile companies (i.e. Ford, General Motors, Toyota, Volkswagen, Daimler Chrysler), among others.
Automated ticket sales
IN 1991, CIE entered into a joint venture with Ticketmaster Corp., Inc. to sell tickets in Mexico and the rest
of Latin America, exclusively using the name "TicketmasterTM" and its computerized ticketing system. The
Company also entered into a strategic partnership with Ticketmaster Corp., Inc. (today owned by Live
Nation) through which it acquired 50.01% (fifty point one percent) of the Mexican operation; and in 2005
CIE increased its stake through its subsidiary Ocesa Entretenimiento, S.A. de C.V., to 67.0% (sixty-seven
percent) ownership.
CIE manages automated ticket sales and their distribution to performance venues and live event promoters. It receives and fills orders through operators in call centers, outlets in off-site centers, and through
Ticketmaster’s Internet portals. The Company markets tickets to the vast majority of live event promoters
and entertainment and performance venues.
Sale of food, beverages and promotional articles
As part of its vertically integrated strategy, CIE operates concessions and local businesses to sell food,
beverages and souvenirs at its performance venues, amusement parks and live events in the areas where it
operates.
Organization and promotion of trade fairs and expos
CIE’s trade fair and expo activities are primarily focused on leasing the space out for those events, rather
than on promoting them. These productions are generally related to specific industries: As a result,
Company personnel are divided into specialized teams in certain specific industries. As a general rule, a
certain exposition must be put on three times before that trade fair or exposition reaches its desired level of
52
profitability. However, events are generally reserved up to one year in advance, and provide relatively
predictable cash flow and earnings through the advance sale of space.
Some events of this type that the Company has organized and promoted include those related to yachts,
automobiles, tourism, management, food, the automobile mechanics sector, concrete, image, breadmaking, logistics, electricity, furniture, advertising and safety. Its main location is the Banamex Center,
which is a leading convention and exposition center, with 34,000 square meters of area for expos, located
inside the Las Américas Complex, where its main exposition area may be divided into four independent
areas. That space has another 6,700 square meters that can be divided into 25 independent rooms for
events, congresses and conventions. The kitchen at the Banamex Center can serve up to 6,000 meals
simultaneously.
Amusement parks
The Group operates the complex called El Salitre in Colombia, which is comprised of the amusement park
El Salitre Mágico and the water park Cici Aquapark. This group received nearly 959,000 visitors in 2012,
and it has been operated continuously by the Company for more than a decade. CIE holds the leasing rights
for 15 years (expiring in 2017) for the operation of this development, which is located inside the Simón
Bolívar Metropolitan Park in the city of Bogotá.
Commercial operations
The Company is able to offer several promotional and advertising vehicles to its clients, including naming
rights for performance venues, sponsorships to live entertainment events, signage rights in performance
venues and airports, advertising in entertainment guides and on tickets, outdoor advertising and soccer,
and it provides call center services and several marketing alternatives to its clients using web-based
technologies. The Company also organizes and produces special and corporate events for its clients. CIE
believes that this wide offering has made it an attractive option for those that seek to develop effective
marketing campaigns or to reach specific market segments for its products and services.
CIE’s ability to offer these services expands its vertically integrated model, which allows it to capture a
higher percentage of the total revenues generated at an event, and to have a lower break-event point than
its competitors, who generally act only as promoters. In addition, this organization allows the Group to
obtain earnings from events put on by third parties.
Event sponsorships
The Company sells local, regional and national corporate sponsorship rights for the events that it promotes
to companies in various lines of business. When a company purchases these rights, it becomes an official
sponsor for the event or tour, which allows the sponsor to associate its trademark with the artist and the
presentation. Sponsorship rights are particularly attractive for companies whose products or services are
directed to the same audience that attends every event.
53
Naming rights
The Company sells its corporate clients the right to associate their names or trademarks with the entertainment venues and other properties that CIE operates. Payment for naming rights may be made in one or
several payments. Naming rights contracts prohibit the sale of advertising space in the performance center
to the competitors of those who have purchased those mentioned rights. However, these naming rights do
not include trademark exclusivity rights to the sale of the purchaser’s products, since these rights must be
acquired separately.
The following table shows information on the naming rights that have been sold in Mexico:
Venue
Foro Sol (Mexico City, D.F.)
Sponsor
Cervecería Cuauhtémoc-Moctezuma,
Maturity
December 2014
for its trademark “Sol”
Centro Banamex (Mexico City, D.F.)
Banamex, a Mexican financial institution
Centro Cultural Telmex I (Mexico City,
Telmex, a Mexican telecommunications company
D.F.)
Centro Cultural Telmex II (Mexico City,
December 2014
Telmex, a Mexican telecommunications company
D.F.)
Vive Cuervo Salón (Mexico City, D.F.)
November 2014
December 2011
Cuervo, a Mexican beverages company
March 2013 (contract
in process of renewal)
Teatro Banamex Santa Fe (Mexico City,
D.F.)
August 2015 (contract
in process of
negotiation)
Auditorio Banamex (Monterrey, N.L.)
June 2020
Advertising space
CIE sells advertising space at its events, entertainment venues and amusement parks, on field-level
rotating advertising panels at professional soccer stadiums, on pedestrian overpasses, public transportation, convenience stores, malls, airports, kiosks where magazines and newspapers are sold, and on tickets
and entertainment guides, and through other promotional and advertising channels, such as digital agency
services.
The following is a brief description of these advertising channels:

Performance and Event Venues. The network of performance venues and the promotion of live
events offer significant opportunities for the sale of advertising space in the performance venues where
those events are held, whether they are operated by CIE or by third parties. Advertising space at the
performance venues operated by CIE is generally sold for a minimum of one year, payable in advance.

Advertising on professional team uniforms and soccer stadiums. CIE markets many types
of advertising spaces on rotating panels, electronic screens and in other areas (including on players'
uniforms) to promote brands and commercial messages for the sport that has the highest television
54
and media penetration in the world. CIE strategically places these messages at field level, within reach
of the television cameras during the sporting events that are held in several stadiums. It also performs
brand activations and promotions.

Outdoor advertising. CIE builds and installs pedestrian overpasses over streets with heavy traffic
volumes in ten cities throughout Mexico. On the pedestrian overpasses that CIE installs at no charge
to the municipalities where they are located, the Company obtains the long-term right to use and market the upper side sections of the bridges for advertising placards based on the agreements made with
the different municipalities. The pedestrian overpasses are located throughout the urban zones of
Aguascalientes, Cuernavaca, Guadalajara, Monterrey, Nuevo Laredo, Puebla, San Luis Potosí and the
State of Mexico. CIE also markets advertising space on public transportation in the city of Guadalajara, namely at the stations of the leading-edge Macrobus system, which runs along Avenida
Independencia in Guadalajara.

Airport advertising. CIE entered into long-term contracts with several airports to market interior
and exterior advertising. Among the products that CIE markets in airports are digital advertising, fixed
advertising, advertising in passenger walkways, billboards and stands, as well as other marketing
products.

Advertising on Outdoor Furniture. The Company offers this platform under a new commercial
concept and a modern, leading-edge structure, through fenced-in kiosks that sell newspapers, magazines and flowers, distributed throughout medium- and large-sized cities throughout the country.

Advertising in Movie Theaters. Through marketing agreements with Cinemex, a movie theater
operator that shows feature films in Mexico, CIE currently offers the most complete platform of integrated advertising products to the movie-going experience, meeting the needs of any communication
and marketing strategy for certain key accounts through the concept known as cine-minutos, which is
advertising that is projected onto movie screens prior to projecting the movie.

Advertising on Tickets and Other Materials. Through its strategic association with Ticketmaster Corp., the company that is owned by Live Nation, CIE is responsible for marketing and operating
an automated ticket sales and distribution system in Mexico. Through this mechanism, CIE can offer
companies the chance to advertise on tickets and envelopes issued by Ticketmaster and in the entertainment guides that are attached to the tickets purchased by clients.

Digital Agency Services. CIE offers its clients novel media platforms that use the most advanced
technology to promote their advertising campaigns. The services include the production of original
digital content, including brands and other marketing concepts and design, and other tailored promotional and advertising channels, and application in traditional and non-traditional entertainment venues and spaces.

Advertising at Convenience Stores and Malls. CIE markets advertising space on digital screens
at OXXO convenience stores, one of the largest convenience store chains in Mexico, which are located
in Mexico City, Guadalajara and Monterrey and their respective greater metropolitan areas. With this
move, the Company has initiated a business relationship that seeks to expand its advertising stake in
one of the largest retail supply chain stores in Mexico with a national presence. CIE also has long-term
rights to market advertising space in the most important business centers in Mexico in terms of their
prestige and affluent customers. Through its participation in malls, the Company serves large- and
medium-sized cities in several states throughout Mexico, including Jalisco, Nuevo León, the Federal
District, and the State of Mexico.
55
Special and corporate events
CIE organizes and produces small, medium large-scale special and corporate events in the Mexican market,
for domestic and international clients. This shows its proven experience in creating “unique" commercial
and institutional concepts for various companies, organizations and governments, as well as its geographic
coverage and technological capabilities, multimedia, and design in its development.
In general, the Company organizes and produces a variety of events as required by its clients. The
Company’s portfolio includes brand-name tours and properties, the realization of galas, and the launch of
products and services, Human Resources events, and special events for governments and international
organizations. It also participates in other properties by means of street marketing, activations, guerrilla
marketing and ambient marketing. CIE also rents and designs temporary stands, and rents out the
equipment for these productions.
Telemarketing
The Company operates several call centers in Mexico City and throughout the state of Mexico, providing
third parties with various telemarketing services in the Spanish, English and Portuguese languages, as well
as other added-value commercial services, such as commercial outsourcing and human resources, professional database management, document collection, performance of marketing surveys, mass distribution of
e-mail, among other digital and digital marketing services.
In particular, marketing activities include technical support programs, answering billing questions,
consumers’ questions on information about products and services, and it provides protection against credit
card fraud. It also provides sales support to handle purchase orders on products, credit card activation, and
order requests.
CIE FOUNDATION
CIE Foundation is a civil association that belongs to CIE. It was created in 2005 to develop a platform that
conceptualizes and brings to fruition projects to support institutions that provide aid, adding the philanthropic concerns of national and international artists to institutional social responsibility efforts of leading
companies, thus causing a multiplier effect.
At the CIE Foundation, “Creamos Alegrías” (We Create Happiness) by placing the magic of emotions,
entertainment and the transformational power of happiness within reach of the most vulnerable sectors of
society, through the following programs:
Creamos Alegrías
We provide unforgettable moments of fun and recreation to those who need it most through different
dynamics and free admission to concerts, plays, exhibitions and conferences in rehabilitation centers,
among other activities.
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Fondo de las Estrellas Program (Star Fund)
The social awareness of artists is promoted through a platform in which they can satisfy their philanthropic
desires, so that they can choose a cause that they wish to support. The CIE Foundation monitors the
progress of selected projects, and follows up on the results to ensure total transparency regarding funds,
reporting on the social impact of each.
Ludotecas Program (Children’s Playrooms)
This program installs playrooms in hospitals, community centers and assistance institutions, and children
find incentive through entertainment. Currently 19 have been installed in hospitals, shelters and community centers.
Cuenta Cuentos Program (Tell A Story)
This program promotes the interaction of artists with children, involving them in reading stories through
Teaching Stories in at-risk communities. We have created a network of "Story-Telling" artists for community centers, homes, orphanages and hospitals, two times per month.
Programa Albergues Escolares Indígenas (School-Housing Program for Indigenous Children)
As a philanthropic platform, the CIE Foundation joins socially responsible companies that are interested in
raising the quality of life of indigenous children in Mexico through School Housing, which provides a
dignified space with sustainable projects for their future, with Miguel Bosé as the sponsor at each one.
CIE has professionally and effectively joined together hundreds of civil organizations that for years have
been working diligently to address various problems that affect children, young people, seniors, people
with disabilities, the sick, and indigenous peoples, seeking to provide them with better opportunities. To
this effort we added the participation of our strategic allies, with donations in cash and kind.
Since the start of activities at the Foundation, through this program we have invited more than 286,749
people from 2,407 institutions to 496 events to benefit abused children, orphans, children with HIV,
homeless children, addicted adolescents in recovery programs, abandoned mothers, abused women,
seniors, Rarámuri, Mazahua, Otomíe, Zapoteca, Chinanteca and Mixe Indian peoples, and people with
disabilities.
Mobilizing funds
In 2012, the CIE Foundation managed to mobilize Ps. 3.8 through donations in cash, and Ps. 3.1 in-kind
donations. The CIE Foundation supplements the effort to experience the magic of out-of-home entertainment with the quality with which the CIE Group has operated over the last 20 years, inviting the most
vulnerable groups of Mexican society to participate.
57
Executive Committee and Operating Team
Name
Luis Alejandro Soberón Kuri
Rodrigo Humberto González Calvillo
Federico González Compeán
Alejandro Valdespino Rivera
Mónica Lorenzo Gutiérrez
Guillermina Pilgram Santos
Francisco Velásquez Córdova
Beatriz G. Crispín Gámez
Karen Argüello Hernández
Felipe Mendoza Atriano
Position
Chairman
Vice Chairman
Board Member
Treasurer
Secretary
Executive Director
Director of Project Development
Manager of Institutional Relations
Manager of Public Relations
Controller
Socially Responsible Company
CIE has been recognized as a Socially Responsible Company since February 28, 2007, with the distinction
of being a Socially Responsible Company (SRC), and this honor was renewed for the seventh time on April
13, 2013, in a special ceremony held at Hotel Camino Real in Mexico City.
Obtaining the Socially Responsible Company Award is based on a process of self-evaluation of 178 indicators, verified by the Mexican Philanthropic Center (Centro Mexicano de la Filantropía – CEMEFI), and
supported by the Alliance for Corporate Social Responsibility in Mexico (Alianza por la Responsabilidad
Social Empresarial en Méxco – AliaRSE).
The SRC Award is granted when the standards proposed in the following areas of Corporate Social Responsibility are met: Management of SRC, Quality of Life at the Company, Corporate Ethics, Responsible Ethics,
Connections to the Community, and Connection with the Environment. The award is currently sought by
only 572 companies.
Since 2005, through its Human Resources area, CIE decided to go down the path of creating optimal
conditions to make our company one of the best places to work in Mexico. Thus, year after year, we have
created new initiatives that have been giving shape to this direction.
We began by creating a tool that would help us measure the performance of all employees, and to align the
business strategy and objectives of all personnel; we continue with special training projects, recognitions,
integration and recreational events, and the creation of a system to give form to a new organizational
culture at CIE, that is, one that will define the values and principles that we should have, the type of
organizational environment and characteristics our talent should have, according to the priorities of our
business. Finally, in addition to this we have designed growth and development plans in some areas.
Cemefi and AliaRSE (an entity of which Coparmex, Aval, Usem, Impulsa, Concamin and the Corporate
Coordination Board) are members, has recognized CIE with the Best Corporate Social Responsibility
Practices award since 2006.
In 2007, OCESA was recognized with the award for the Best Corporate Social Responsibility Practices in
the area of Quality of Life at the Company for the PAE Program (Programa de Atención al Empleado).
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In 2008, the CIE Group also received the award for Best Corporate Social Responsibility Practices, this
time in the Environmental Area, for CIE’s Comprehensive Environmental Program.
Quality of life
Noteworthy in the area of Quality of Life and Human Resources Training is the Group's effort to keep
personnel trained in the skills that we need to develop to encourage teamwork and cooperation. During
2012, therefore, the Company formally developed training plans by business unit in order to standardize a
global training process to provide courses focused on the needs of the business units and their departments. On average, during 2012 there were approximately 449,000 man-hours of training provided during
a total of 483 courses.
Since 2007, CIE’s Human Resources area has implemented Yearly Performance Planning (Planeación
Annual del Desempeño – PAD). PAD is a tool that allows us to align our business strategy and the objectives of all of CIE’s personnel, year after year. It also helps division heads plan development and monitoring
plans in an agreement with their employees.
The environment
Aware of the importance and transcendence of environmental protection, CIE designed its Corporate
Environmental Policy, which formally establishes the commitment to respect the environment while
conducting all of its activities. To comply with this policy, CIE has carried out specific actions in the areas of
Environmental Education, Dissemination and Protection, and it undertakes specific projects to protect the
environment and minimize the consumption of natural resources.
In response to this concern, the Comprehensive Environmental Program was designed, which includes
various activities such as: the campaign Cuidar El Agua es lo de Hoy (Saving Water is Cool), the Environmental Awareness Program, the Educational Program and the Waste Recovery Program, as well as specific
projects to produce energy from solid waste and to recover rainwater for use in services, among other
programs. All employees, providers, clients and the general public are invited to protect this precious
liquid.
Objectives: To encourage each employee, client and provider to understand, be responsible, act and agree
to take into consideration the importance of taking care of and protecting the environment, protecting
water and saving energy while performing their work activities, and carrying out that commitment by
transmitting it to their surroundings.
Since 2006, the Group has implemented a series of permanent policies to preserve and protect the environment, which have contributed to the efficient use of resources and created awareness among its members, clients, and the general public.
59
Other recognition received: Cemefi and AliaRSE recognize CIE
The Mexican Philanthropic Center ("Cemefi"), and the Alliance for Corporate Social Responsibility in
Mexico ("AliaRSE"), an entity of which Coparmex, Aval, Usem, Impulsa, Concamin and the Corporate
Coordination Board (Consejo Coordinador Empresarial) are members, has recognized us with the Best
Corporate Social Responsibility Practices award since 2006.




In 2007, OCESA was recognized with the award for the Best Corporate Social Responsibility Practices in the area of Quality of Life at the Company for the PAE Program (Programa de Atención al
Empleado).
In 2008, the CIE Group also received the award for Best Corporate Social Responsibility Practices,
this time in the Environmental Area, for its Comprehensive Environmental Program.
In 2009, CIE received the Socially Responsible Company Award for the fourth consecutive year,
and Ticketmaster received it for the third consecutive year.
In 2012, CIE again obtained the Socially Responsible Company distinction.
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2.2. Distribution Channels
Taking advantage of the diversity and critical mass of content and entertainment venues throughout the
region, CIE has consolidated a group of businesses that are fully focused on providing an alternative
promotional and advertising vehicle for any type of advertiser, so that they can connect with their various
audiences. The advertisers enter into agreements with CIE under which the Company develops these types
of services and related products in its advertisers’ markets, based on the advertisers’ individual business
needs. These agreements involve investments that will be made in the future, based on the actual execution
of these products and services, and that will be acquired in monthly and/or annual packages paid to CIE in
advance.
The Group believes that it operates the largest network of performance venues in Mexico by means of
leasing, permits and concessions or other rights. These are the means whereby all of the Company’s
products and services are provided, from musical concerts to other live entertainment events, such as
theatrical productions, special and corporate events, family, sports and cultural events, among others. (For
more information about the inventory of performance venues that the Company operates, see Section 2.1
“Main Activity” in Chapter II “The Company,” in this Document.
CIE operates El Salitre Mágico and Cici Aquapark (both inside the Simón Bolívar Metropolitan Park in
Bogotá, Colombia).
CIE organizes and promotes trade fairs and expositions; it sells sponsorships to live events, naming rights
to performance venues, signage rights, advertising space, advertising sponsorships, food, beverages and
souvenirs, as well as field-level rotating advertisements in professional soccer stadiums, advertising in
movie theaters in Mexico, advertising in airports in Mexico and on pedestrian overpasses, business centers,
convenience stores, urban transportation, and outdoor furniture, among other marketing vehicles, call
center services, and digital advertising.
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2.3. Patents, Licenses, Trademarks and Other Contracts
Trademarks and designs
The Company owns several registered trademarks and designs that provide it with brand-name recognition
in the markets in which it operates. Among the most important trademarks, at December 31, 2012, are the
following: “CIE,” “Grupo CIE,” “Make Pro,” “Ocesa,” “Vive Latino,” “Lobo,” “Remex,” “Unimarket,”
“Fundación CIE,” “Creamos Alegrías,” “C-Móvil,” “CIE Comercial,” “CIE Entretenimiento” and “CIE
Internacional.” The industrial design of a structure for an enormous screen, it also holds a license to use
and develop various trademarks, such as the “Ticketmaster” trademark.
Licenses and patents
The Company has entered into several licensing contracts with the producers of medium- and large-scale
Broadway-type theater productions in order to present them in Latin American markets, including: Beauty
and the Beast, Les Misérables, Joseph and the Technicolor Dreamcoat, Phantom of the Opera, Cabaret,
Fiddler on the Roof, Hoy No Me Puedo Levantar (Today I Can’t Get Up), A Chorus Line and Mary Poppins.
It has also entered into consulting contracts.
Through these contracts, CIE has been the owner of the development rights to the works mentioned in the
preceding paragraph, production-design elements and development of promotional items, in exchange for
royalties based on box-office results or on other types of previously established considerations, and they are
renewable through the exercise of options for exploitation in other geographic areas, provided that the
conditions agreed upon in these licenses are met. These licenses are important because it is through them
that the Company’s theatrical offerings can be developed and exploited.
CIE also participates in the staging of various locally produced theatrical pieces, such as: The Vagina
Monologues, and Defending the Caveman, to name a couple.
Because the sale of technology is not CIE’s core activity, the Company has not applied to register any
patents, and therefore it currently does not have patents registered in any country.
Contracts
Regarding discounting and factoring transactions, as of the date of publication of this Document, the Group
is a party to the following contracts, exclusively with Mexican financial institutions:



On October 12, 2011, the subsidiaries Creatividad y Espectáculos, S.A. de C.V., Make Pro, S.A. de
C.V., Publitop, S.A. de C.V. and Unimarket, S.A. de C.V. entered into a financial factoring contract
with resource with Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero
Santander, for an amount of up to Ps. 100.0, expiring in 12 months, with automatic extensions.
On August 22, 2012, it signed an agreement modifying this contract, through which it included the
subsidiary BConnect Services, S.A. de C.V.
The Group has entered into the following contracts for financial derivatives transactions with Mexican financial entities:
62

On March 4, 2008, Corporación Interamericana de Entretenimiento, S.A.B. de C.V. entered into a
master derivatives financial transaction agreement with IXE Banco, S.A. Institución de Banca
Múltiple, IXE Grupo Financiero, for an undetermined period.
On January 10, 2008, Corporación Interamericana de Entretenimiento, S.A.B. de C.V. entered into a
master derivatives financial transaction agreement with Banco Santander S.A., Institución de Banca
Múltiple, Grupo Financiero Santander, for an undetermined period.
On January 4, 2008, the subsidiary Unimarket, S.A. de C.V. entered into a master derivatives financial transaction agreement with Banco Santander, S.A. Institución de Banca Múltiple, Grupo
Financiero Santander, for an undetermined period.
On September 25, 2012, OCESA Promotora, S.A. de C.V. entered into a financial derivatives framework operating agreement with Intercam Casa de Bolsa, S.A. de C.V., for an undetermined period.
On November 8, 2012, OCESA Promotora, S.A. de C.V. entered into a financial derivatives framework operating agreement with HSBC México, S.A. Institución de Banca Múltiple, Grupo Financiero
HSBC, for an undetermined period.
On November 22, 2012, OCESA Promotora, S.A. de C.V. entered into a financial derivatives framework operating agreement Banco Santander, S.A. Institución de Banca Múltiple, Grupo Financiero
Santander, for an undetermined period.





CIE and certain of its subsidiaries have established and continue to have in effect the following credit
contracts with Mexican and foreign financial institutions:



On September 18, 2007, the subsidiary Reforestación y Parques entered into a credit agreement
with Banco de Bogotá for the amount of 10,146.3 Colombian pesos expiring on August 13, 2013.
On December 3, 2009, Corporación Interamericana de Entretenimiento signed a credit contract
with several domestic and foreign credit institutions, consolidating and restructuring its bank and
stock market debt, expiring on September 30, 2014.
On December 3, 2009, CIE signed an irrevocable trust contract for surety and source of payment
with reversal rights with the Bank of New York Mellon, expiring on September 30, 2014.
As a result of the process of restructuring its liabilities through the end of 2009, the Company is limited in
disposing of the lines in the abovementioned contracts. (For a more detailed explanation, see Section 3.
“Recent Events” in Chapter I, “General Information” of this Document).
Several of the Company’s subsidiaries have established leasing contracts, mainly for automobiles and
computer equipment, with the lessors CHG Meridian, GE Capital CEF México and Facileasing. The terms
and conditions of each contract vary.
63
2.4. Main Clients
Through its subsidiaries and affiliates, the Company provides services to the general public, therefore a
high percentage of its income is derived from direct sales to the public, mainly tickets to its live shows, as
well as its amusement parks, performance venues and its other out-of-home entertainment offerings.
Nevertheless, the Company also obtains sizeable income from its commercial activities on behalf of various
clients, some of whom have a strong presence in the markets in which the Company operates. However,
CIE’s client base is highly fragmented, such that historically the Company has not been considered to be
dependent in any way on any individual client or group of clients.
Some of the clients that CIE has worked with over the last few years include the following companies and
brands: Banamex, Telmex, Telcel, Coca-Cola, Cervecería Modelo, Cervecería Cuauhtémoc Moctezuma,
Visa, Phillip Morris, Cemex, Toyota, Ford, Banorte, BlackBerry, Sony, General Motors, Renault, Nestlé,
Volkswagen, Roshfrans, Operadora Wal-Mart, Grupo Salpro, Centro Impulsor de la Construcción y la
Habitación, Expo Comm Events de México, Management Focus, Messe Frankfurt México, Expo Pak,
Exposiciones Gav, Novartis, HSBC, CTI, Grupo Telefónica, Fiat, American Express, Zurich Seguros,
Daimler Chrysler, Microsoft, Blockbuster, Novartis, Continental Airlines, American Express, Heineken,
Fravega, Burger King, Hewlett Packard, Peugeot, Epson, Gillette, Bayer, Sección Amarilla, Aeroméxico,
Bacardí y Cía, Banco Santander Serfín, BBVA-Bancomer, Bimbo, Citibank, Comercial Mexicana, Danone,
FedEx, Grupo Posadas, Hérdez, Hilton, Honda, Honeywell, Kellog’s, LALA, Infonavit, Liverpool,
Maruchan, Mexicana de Aviación, Motorola, Nextel, Nissan, Nokia, Panasonic, PepsiCo, Pfizer, Pirelli,
Quaker State, Sabritas, Samsung, SKY, America Movil, Sony, Unilever, ITESM, Ferrero Roche, UVM, Office
Depot, Petróleos Mexicanos, and Oxxo, among many others.
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2.5. Applicable Legislation and Tax Status
CIE’s operations are subject to local laws and regulations in matters regarding the operation and functioning of the venues that it runs, and laws and regulations regarding putting on shows. Particularly notable is
the legislation governing civil protection and safety, as well as federal and state legislation in matters of
consumer protection and health.
By virtue of the legal provisions that apply to it, CIE and its subsidiaries must and do have functioning or
operating licenses to the performance venues and properties that it operates, as well as to develop and
apply the civil protection plans and standards that are necessary for the safety of attendees to shows
promoted in the development of its activities. In those cases in which CIE has built and/or remodeled
public performance venues, it has also been required to comply with the applicable construction regulations. These regulations are similar to those generally described in the foreign jurisdictions in which CIE
operates.
CIE is subject to provisions in the areas of civil, commercial, industrial property and intellectual property
law, copyrights, criminal, labor and social security law that are applicable in the various countries where
the Company has operations. Moreover, CIE is subject to the various provisions that regulate the operating
of the Mexican Securities Market, and by foreign regulations regarding the Company’s securities that are
registered in markets outside of Mexico. The Company is also subject to the various provisions in matters
of foreign investment applicable in the geographic areas in which it operates or maintains investments
outside of Mexico.
Some of the concessions, licenses and permits that the Company has obtained may terminate in the event
that certain conditions of public utility or other conditions arise. Even if CIE is indemnified for the termination of any of its concessions, licenses or permits, CIE cannot guarantee that such indemnity will be paid
in a timely manner or that it will be sufficient to cover the damages arising from that termination.
Tax system
Regarding the tax system, CIE and its subsidiaries domiciled in Mexico are subject to payment of income
tax, value-added tax, the corporate flat-rate tax, and other general tax provisions that are binding upon
taxpaying legal entities. The Company's main activities, which are those developed by CIE Entertainment
and CIE Commercial, are burdened by local taxes on public shows at a rate that varies between 3.0% (three
percent) and 8.0% (eight percent), depending on the Entity, of the gross income per box office, while they
are exempt from the value added tax. Note that the Company does not consolidate its results for tax
purposes.
Value-Added Tax (VAT Cost)
According to Mexican Legislation in tax matters, the goods and services invoiced inside the country are
burdened at different Value-Added Tax (VAT) rates, depending on the region of the country and the type of
goods or services exchanged. Furthermore, certain transfers and the provision of certain services are
subject to this tax, while others are exempt from the VAT, such as the provision of services relating to
65
public shows per admission ticket, among others, and for the costs and expenses related to this type of
revenue the VAT transferred cannot be credited, thus the VAT cost is created.
Tax on cash deposits (Impuesto sobre Depósitos en Efectivo – IDE)
The Law of the Tax on Cash Deposits, which consists of deposits that are made with institutions in the
financial system, must retain and deliver 3.0% (three percent) to the public treasury for cash deposits
which, accumulated, add up to more than Ps. 15.0 per month. That tax can be credited against the income
tax.
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2.6. Human Resources
As at December 31, 2011 and 2012, the Company employed 10,541 and 1,632 employees, respectively. The
following two tables show the number of people employed by CIE at December 31, 2011 and 2012, broken
down by strategic business unit and country:
2011
CIE
CIE
CIE
CIE
CIE
Entertainment
Las
Américas
Amusement
International
Corporate
Parks
Commercial
10,471
826
6,402
3
3,076
6
158
Argentina
0
0
0
0
0
0
0
Colombia
42
0
0
42
0
0
0
USA
1
0
0
0
0
1
0
10,514
826
6,402
45
3,076
7
158
Employees
Mexico
Total
2012
CIE
CIE
CIE
CIE
CIE
Entertainment
Las
Américas
Amusement
International
Corporate
Parks
Commercial
1,592
880
0
0
559
6
147
Argentina
0
0
0
0
0
0
0
Colombia
40
0
0
40
0
0
0
USA
0
0
0
0
0
0
0
1,632
880
0
40
559
6
147
Country
Mexico
Total
Employees
The variation in the employee base between 2011 and 2012 is fundamentally explained by the sale of the
Las Américas Division, as well as the departure of unionized personnel of BConnect, the CIE subsidiary in
charge of the operation and development of value-added telemarketing services for clients.
At the end of 2012, 100.0% (one hundred percent) of the Group’s workforce were white-collar workers.
As of December 31, 2012, the Company had collective bargaining agreements in the areas where it maintained operations at the close of the year. Those contracts are filed with the competent labor authorities of
each country. As in prior years, salary and contractual reviews established by the regulatory labor framework were conducted satisfactorily, with increases in accordance with the situation in each country, and
with no incidents that affect the good relationships between CIE and the union leaders.
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The agreements that the Company has established with the unions do not include terms and conditions
that are substantially different from standard terms and conditions in the industries in which CIE participates. Under the union agreements, salaries are negotiated on an annual basis, while the other terms and
conditions are negotiated every two years. The Company has never experienced a strike or labor stoppage,
and believes that the relationships it has with its employees are satisfactory.
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2.7. Environmental Performance
As mentioned previously, CIE is aware of the importance and consequences of protecting and preserving
the environment, and in 2006 it approved its Corporate Environmental Policy, which formally establishes
the commitment to respect the environment in all its activities.
In order to ensure compliance with that Policy, the Integral Environmental Program was structured, which
includes various activities and projects with the following objectives:
 To prevent, reduce or, if applicable, mitigate and compensate for adverse environmental impacts
that may arise from the entertainment activities provided by CIE or by the construction, expansion
or maintenance of its facilities.
 To strive for sustainability by minimizing the adverse environmental impacts that its activities generate, by using the Three R formula: REDUCE, REUSE, RECYCLE; and
 To develop Environmental Awareness Campaigns, using in-house communication media, the
Group’s various properties, and the daily “what’s on” section published in the newspapers to promote events.
Since the start of the Integral Environmental Program, the following achievements are worthy of mention:
 Regarding saving water, the operation of the wastewater treatment plan at the Las Américas Complex continues, (which was built by CIE and is currently an asset of the company AMH, in which it
participates and a minority partner), which resulted in approximately 160,000 cubic meters of potable water not being consumed during the year, and further, urinals were replaced with Water Less
equipment at the Group’s main properties.
 Regarding energy savings, the electricity supply at the Las Américas Complex from a high-voltage
substation (which was also built by CIE and is currently an asset of the company AMH, in which it is
a minority partner), reduces physical energy losses considerably in comparison with medium-voltage
supply. The automated climate control system at Centro Banamex also contributed to energy savings,
as did the exchange of ballasts and lights for latest-generation equipment, as well as activation of the
automatic hibernation option for computer equipment.
 Paper savings have been achieved by incorporating information system applications that include
work flows for managing processes, introducing electronic consulting for payroll stubs, the operation
of a solution to digitalize documents (which has decreased photocopies by up to 40.0% (forty percent) in some business units, and by using two sides of sheets of paper for printing. All of this has resulted in saving approximately two million pieces of paper each year, thus directly contributing to
preserving forests.
 At the Group’s properties, collection of trash has been outsourced and separation of the various types
of waste is encouraged, then that waste is delivered to companies that are certified regarding their
disposal and/or recycling. In addition, a gardening company was hired so that most of the organic
waste at the Las Américas Racetrack Complex is used for compost.
 Regarding emissions into the atmosphere, the Ticketmaster program called Ticket Fast (printing
tickets on the Internet) avoids hundreds of thousands of messenger trips per year, and Ticketmaster’s Ticket-to-Ride programs reduce the use of vehicles and promote going to events by bus. The CIE
Group also has a program called CIE Bus, which supports transport of personnel by bus to its main
facilities.
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 With the participation of various NGOs, the program Vive+Verde (Live Green) program was started,
through which we seek to reinforce environmental awareness of those attending Festival Vive Latino
2012, distributing a green list with recommendations regarding the environment, installing a green
wall with environmental messages, obtaining a neutral certificate that offsets emissions from emergency diesel and gas plants at food and beverage stands through the acquisition of a “Neutral Certificate” (for carbon capture) by supporting a reforestation project in the Valley of Oaxaca, as well as in
other areas.
 Reforestation programs sponsored by Centro Banamex were also designed, through which employees at that company are restoring a degraded forest region.
 In addition, steps continue to undertake work that will improve traffic, decreasing emissions into the
atmosphere in the area surrounding the intersection of Avenida Conscripto and Boulevard El Pípila.
 In order to improve environmental education and to spread a culture of respect for the environment,
ongoing campaigns have been created to encourage the rational use and preservation of water, called
“Cuidar el Agua es lo de Hoy” (Saving Water is Cool), and “Cuidar el Ambiente is lo de Hoy” (Preserving the Environment is Cool), using CIE’s own media and media that it outsources. Other institutional programs that include components to encourage preservation of the environment have been
“Tus Ideas Valen” (Your Ideas are Important), “Día de la Comunidad CIE” (CIE Community Day),
the campaign “Rescata a tu Mundo” (Save Your World), and in conjunction with SEMARNAP, the
distribution of 50,000 copies of the brochure “Más de 100 Consejos para Cuidar el Medio Ambiente
desde mi Hogar” (More than 100 Tips to Preserve the Environment from my Home).
 Inclusion of clauses with respect to the environment in the contracts that Grupo CIE signs with its
goods and services providers has meant that the impact of our environmental policies is extended to
other segments of society.
 Finally, other actions that can be mentioned that favor the protection and preservation of the environment are encouraging the use of biodegradable packaging and materials at the various consumption centers, and preparing food and drink, reusing fabrics and banners at events, and incorporating
ecologically friendly equipment and technology in the design, remodeling or construction of new
properties.
Deserving special mention is the fact that since 2010, Centro Banamex has organized a program called
“Actitud Verde” (Green Attitude), in which the leaders of this CIE business unit formed a working team
that, in 2010, was successful in converting that property into the first Latin American organization to
obtain the prestigious international Earthcheck certification for sustainable tourism, which was revalidated
in 2011 and 2012.
It should be noted that Earthcheck is recognized as the largest environmental certification program in the
world that is designed specifically for companies in the tourism sector, such as hotels, spas, golf courses,
theme parks, convention centers, etc. Its methodology is trusted by more than 1000 organizations in 60
countries, and it is used by some of the most important international tourist agencies. Earthcheck also
operates as an independent company, and performs its own comparative evaluations (benchmarking) to
determine, in each case, the level of certification, which it does considering best practices, auditing indicators on protection of resources and the environment, and considering that local legislation and rules are
followed in the country in which certification is being done.
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Environmental policy
Aware of the importance and significance of protecting the environment, CIE has a Corporate Environmental Policy that formally establishes its commitment to respect nature.
The repercussions of this policy among the Company’s personnel are to encourage each employee, client
and provider to understand, be responsible, act and agree to take into consideration the importance of
taking care of and protecting the environment, protecting water and saving energy while performing their
work activities, and carrying out that commitment by transmitting it to their surroundings.
The impact at the Company translates into responsible consumption of natural resources and inputs such
as water, paper, energy and fuel, using them efficiently and in moderation, and inviting others to protect
and preserve them.
The impact on the community consists of increasing sensitization and awareness about the good use of
water and energy, and the search for sustainable practices for a healthier environment, such as adequate
management of trash and reducing contaminant emissions.
Since 2006, the Group has implemented a series of environmental policies and an integral environmental
program with actions to preserve, provide education about and protect the environment, which have
contributed in an ongoing manner to advancing the sustainability of the organization and the ecological
awareness among all of its employees, clients, and the general public.
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2.8. Market Information
Industry
The out-of-home entertainment industry provides the market with entertainment alternatives for leisure time
that may be devoted to, among other things, movies, cultural events and locations, trade fairs and conventions, theatrical works, concerts, attractions and amusement parks, and sporting events. The out-of-home
entertainment industry is subject to many factors, such as general economic conditions, and changes in
consumers’ discretionary spending habits.
CIE’s activities are generally focused on providing a wide variety of out-of-home entertainment options.
The main markets in which CIE currently operates are Mexico City, Monterrey and Guadalajara. However,
the Company has intensified growing its activity in the main medium-sized cities in Mexico, fundamentally
through marketing a growing number of commercial properties and vehicles, as well as promoting and
producing national and foreign entertainment events. Among these cities are Acapulco, Aguascalientes,
Cancún, Culiacán, Durango, Hermosillo, León, Mérida, Morelia, Oaxaca, Pachuca, Puebla, Querétaro, San
Luis Potosí, Sinaloa, Tijuana, Tlaxcala, Torreón, Tuxtla, Veracruz, Villahermosa and Xalapa. The Group is
also strengthening its presence in markets in Central America, such as Costa Rica and Panama, as well as
the major cities in Colombia.
CIE currently participates in some of the most significant segments of the out-of-home entertainment
industry. The following is a description of these segments.
Concert promotion
The concert promotion industry in Mexico and Latin America consists primarily of regional promoters that
generally focus on serving one or two cities. These promoters usually do not have a long operating history
or substantial financial strength. These factors, together with significant economic and foreign exchange
uncertainty over many years, have deterred top international artists from including Latin America in their
tours. This trend began to change in the 1990s, as artists began to discover a significantly large untapped
demand in the region.
Typically, in order to schedule a musical concert or another live event or tour, an agent contracts with an
artist to arrange a venue and date, or series of venues and dates, for the artist’s performance. The agent in
turn contacts one or several promoters in the location or region regarding venues that are appropriate for
the event. The promoter is in charge of marketing the event, selling the tickets, renting or otherwise
providing the venue for the performance, and making the necessary arrangements for the services that will
be required for the local production (such as staging, light, video, data and sound).
The agent generally receives a fixed fee from the artist for its services, or in some cases, a fee based on the
success of the event. The promoter normally will agree to pay the artists a guaranteed amount or a share in
the earnings from ticket sales to the event, whichever is greater. As a result, the promoter often assumes the
risk of the event. The promoter sets ticket prices and advertises the event to be able to cover its expenses
and generate a profit. If the event is unprofitable, the promoter will sometimes renegotiate a lower guarantee to lessen its losses. In some instances the promoter accepts a fee from the agent to pay its services, and
the agent is the one that assumes the risks of the event.
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Theater
Attendance levels to professional theater pieces vary significantly. Generally, professional theater consists
mainly of dramatic productions and musicals, and the development of new plays. Local productions often
have small budgets, short pre-production periods, and low operating costs. They also tend to have shorter
runs. Rarely do local theatrical productions tour in other countries within the region.
Broadway-type shows are not common. Usually a producer of a Broadway-type show first acquires the
rights to the work from the owners, who receive royalty payments in return. The producer then assembles
the cast of the play, hires a director, and arranges for the design and construction of sets and costumes. The
owners of the rights to the work generally supervise the production closely to ensure that the integrity of
the play is maintained.
The producer will then contact a local promoter to stage the production in a specific market. The local
promoter must obtain the venue and provide all the local services, such as ticket sales, hiring local personnel, advertising for the show, and paying a fixed guarantee to the producer of the live show. The promoter
may then recover the amount of the guarantee plus the local costs, from the revenues from ticket sales. Any
excess earnings from ticket sales will be divided between the producer and the promoter.
Corporación Interamericana de Entretenimiento does not face significant competition in the sector of
Broadway-type musicals, as it holds the exclusive rights to produce the majority of these events in Mexico.
In the non-Broadway-type theater sector, CIE has competition from several small producers.
Performance venue operation
A venue operator is normally contracted by a promoter to rent its venue for a specific event on one or
several determined dates. The venue operator provides services such as food and beverage sales, parking,
security and ticketing, and it receives revenues from the sale of food and beverages, souvenirs, sponsorships and parking. The venue operator normally receives a fixed fee, or a percentage of ticket sales for use
of the venue, as well as a percentage of total sales from food, beverages and souvenirs.
Fixed-fee agreements between the operator and the promoter are more common for smaller events, while
arrangements based on a percentage of ticket sales are more commonly used for larger events. The venue
format most used by promoters to put on their events are stadiums, amphitheaters, arenas and theaters,
and their size will generally depend on the estimated number of attendees and the nature of each event.
Since few artists will play in every available market during a tour, there is competition among venues for
dates for those tours. A favorable cost structure, as well as the ability to attract fans, will be deciding factors
for an artist to choose to perform in one venue over another. Therefore, there is competition in markets in
which the Group participates in venue operation, which is based on the location, quality of the venue, and
the services it provides.
The prime venues are generally owned by government authorities, non-profit or private organizations. In
Mexico City, the venues that compete with Foro Sol, a performance venue with seating for 60,000 people,
and with Palacio de los Deportes, with capacity for 21,000 people, are the Auditorio Nacional, with capacity
for 10,000 people, which is owned and operated by the federal government, and the Plaza de Toros México,
with capacity for 45,000 people, which is owned by a private group, and Arena Ciudad de Mexico, which is
a new performance venue in the city with capacity for 22,300 spectators, and which is owned by the
corporate group that operates the Arena Monterrey in the city of Monterrey, Mexico.
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Automated ticket sales
The automated ticket sales industry for tickets to events and entertainment venues involves the receipt and
filling of orders through operator-staffed call centers, websites, outlets in malls, and box offices. Revenues
are generated from convenience charges received by the service provider for tickets sold on its clients’
behalf. Revenues are also received from the sale of sponsorships and advertising, which is delivered during
telephone calls, or on tickets and envelopes.
The service provider’s proprietary inventory control, management and ticketing system, which includes
both hardware and software, is installed in the box office of a client’s facility. This provides a centralized
inventory control management system that is capable of tracking total ticket inventory for all events,
whether sales are made on a seasonal, subscription, group or individual ticket basis.
The business of automated ticket sales has been developed in Mexico where the service has been available
since the 1990s. There are currently other automated ticket providers, and box-office sales continue for the
different events.
Call center services
CIE’s activities in call center services in Mexico include customer service programs, such as technical
support, responding to billing inquiries, answering customer questions on product information and
services, and credit card fraud protection. Sales support is also provided, including handling product
purchase orders, activating credit cards, and order requests.
The industry has grown substantially with the proliferation of toll-free numbers and direct marketing, the
development of new databases, networking and communication technologies, as well as the reduction in
telecommunications costs and the quality of services in the United States. Much of the industry’s recent
growth has also resulted from higher expectations from consumers for accessible customer support and
service. At the same time, the companies have recognized the benefits of communicating directly with their
consumers.
The sector in Mexico has grown significantly since the Company began its telemarketing operations in
1993, as companies have found it more efficient to shift their in-house operations to outsourced providers
of this service. As a result, competition for this outsourced call center service in Mexico has also grown
significantly.
One important factor to point out in the development of the industry is the expansion of telemarketing
services offered through the inclusion of added-value commercial solutions for the party contracting the
services provided. Thus, industry participants have greater capacity to capture their clients’ other needs,
taking advantage of their personal capacities, technologies, and geographic scope. An example of this is
performing surveys, mass advertising mailings, product recovery, home deliveries and collection of documents, among other things.
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Advertising services in Mexico
The advertising services industry in Mexico is highly segmented and is marketed through a large number of
channels, from traditional advertising in mass media such as radio and television, to print media, movie
theaters, outdoor advertising, digital advertising, product launches and activations, and other vehicles, as
well as digital social media.
Trade fairs and expositions in Mexico
The trade fair and exposition industry in Mexico is made up of companies that offer services to promote
and organize these types of events. The companies, associations and other organizations related to specific
industries or activities or event sponsors frequently have events. These events are designed to create
contact with their clients, employees and members, among others. The aforementioned parties may
promote their own events or they may promote them through third parties that can provide promotional
and organizational services, such as CIE. Examples of these events include trade fairs, expositions and
special events that create a place for face-to-face interaction and communication, usually between buyers
and sellers.
The trade fairs and expositions may be owned by one or more operators. They earn their income from
renting space for the exhibition, selling sponsorships, and ticket sales, all paid in advance. When thirdparty managers are involved, they receive a management fee, normally for multi-year contracts, plus a
portion of the revenues collected by the event’s owners. As a general rule, for these annual events to achieve
an adequate level of income, they must be presented on at least three occasions.
The success of an exposition center is defined as a function of the amount of space it sells and the importance of the events held in it. Gallup TNS (in a market study performed by the companies D.F. and
AMCM in March 2005) places Centro Banamex at the top of the market for trade fairs and expos, as it is
the location where the most relevant events are held, with the largest number of square meters occupied in
its exposition halls. That study shows that 99.0% (ninety-nine percent) of top executives surveyed who
have visited Centro Banamex are completely satisfied with the service, and 98.0% (ninety-eight percent)
would recommend leasing it since it is the best-known site in Mexico City.
Amusement parks
The amusement park industry in Latin America is generally divided into traditional amusement parks and
modern theme parks. Traditional amusement parks are primarily family owned, and consist basically of
rides in a carnival-type atmosphere. In contrast, modern amusement parks are designed around one or
several central themes that are consistently applied to all areas, including the rides, attractions, entertainment, food and beverages, and the general atmosphere. Modern theme parks also typically present a
variety of free entertainment and extended operating hours, including nighttime operation, which are
features not found at traditional parks. Theme parks also offer the visitor a wide variety of food and
beverage options in order to extend the time that visitors stay at the park, and to position the park as a
comprehensive entertainment venue that operates the entire day.
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As a result of these differences, theme parks draw attendance from a wider geographic area, and they
attract a larger number of people within a specific market. The theme parks also attract more families and
groups, and the average length of stay and amount spent per person is greater than in traditional parks.
Competition
(For a more detailed explanation of the information and facts related thereto, please see Section 2.8
“Market Information” in this Chapter).
General
CIE believes that it is the only company in Mexico that has continuously and increasingly offered, in recent
years, a wide range of the best-quality recreational and out-of-home services. Therefore, it only faces direct
competition in a fragmented manner, that is, at the level of the different business segments in which it
participates. Its direct competition includes a large number of competitors that are specialized in certain
specific activities. CIE also competes indirectly with all types of recreational facilities and types of entertainment that exist in its geographic markets, such as museums, sporting events, restaurants and travel,
among others, as well as local and regional advertising media, such as newspapers and magazines, and
local radio, television, paid television and cable stations.
Promotion and production of live events
In activities to promote and produce live events, including musical concerts, theater productions, sporting
events and family shows, among others, the Company currently faces competition from small market
participants, because when new competitors enter the market, they require significant sources of financing,
experience knowledge of the medium and access to prime venues.
In the musical concert sector in Mexico and the rest of Latin America, the competition is generally highly
fragmented, and CIE competes with the local promoters in each location. The leading promoters in Mexico
are Zignia, Grupo Fernández, Westwood Entertainment, Showtime, Merensal, Iguana Producciones and
Hard Rock.
In the theater production sector, CIE faces almost no competition in the production of Broadway-type
musicals, as CIE has the exclusive rights to produce these shows in Latin America.
In the non-musical theater production sector, CIE faces competition from numerous small producers in
each market in which it participates. In Mexico, CIE’s major competitors are Instituto Nacional de Bellas
Artes (“INBA”), Teatralidades, Visión Azteca, and Trupeteatros.
In cultural events, the competition faced in the region is heavily managed by government entities, and to a
lesser degree, by government theater companies and by university theater venues.
76
In family events, CIE competes with promoters that hold the rights to international family events for
children and adults. Those promoters include Gou Productores, Internacional Sociedad de Artistas Latinos,
Tycoon Entertainment, and various circuses in Mexico.
CIE entered the sporting events sector in Mexico through Ocesa Entretenimiento, in a 2005 joint venture
with As Deporte, and competes with different promoters that are focused on specific sports. These promoters include Mextenis, Deportes Martí, Sport Marks and Sinergia Deportiva.
CIE does not face competition in the international car racing market in Mexico because CIE holds the
rights to present the Champ Car World Series (formerly known as CART and the Nascar Series. In the local
car racing market in Mexico, CIE organizes the Desafío Corona Series, and competes with various wellpositioned local series such as Copa Super Karts, Copa Roshfrans, Copa Volks Sports, Copa Turismo
México and the Campeonato Mexicanos de Rallies.
Performance venues
Since during tours artists perform in all markets available, CIE competes in its own markets as well as in
other markets for popular tour dates. The Company competes in its own markets with other performance
venues based on location, quality of the facilities, and the services. Competition is segmented according to
the size of the audience.
In Mexico City, CIE’s properties Foro Sol, with seating capacity for 60,000, and Palacio de los Deportes
with seating capacity for 21,000, compete mainly with the National Auditorium, which is owned and
operated by the Mexican federal government, and which is often rented by CIE to stage live concerts. CIE
also faces competition, although to a lesser extent, from Plaza de Toros México, with seating capacity for
45,000. It is privately owned and is used for live concerts. The Company has recently faced competition in
its entertainment center operations, and production and promotion of live events and certain commercial
areas, from Arena Ciudad de México, which began operations in February 2012. This company is operated
by the corporate group that operates Arena Monterrey, which is a direct competitor of CIE in Monterrey,
Nuevo León. The theaters operated by CIE, which have different seating capacities, compete with other
theaters for small concerts and theater productions.
In Monterrey, Auditorio Banamex, with seating capacity for 22,000, faces competition from Arena Monterrey, a performance venue for musical, sporting and cultural events, which started operations just a few
years ago and which forms part of the same corporate group that operates the recently inaugurated Arena
Ciudad de México.
Automated ticketing
In the automated ticketing business for live events and public performance venues, CIE faces competition
from venue operators that sell tickets through their own box offices, as well as from smaller competitors.
CIE has natural competitive and technological advantages due to its alliance with Ticketmaster and to its
market positioning, and to its existing business relationship with the majority of venue operators and
promoters in Mexico. CIE’s current competition is scattered throughout the country; however, the Mexican
ticketing market has experienced an increase in the inventory of formal competitors, such as Superboletos,
Smart Tickets, City Tickets, Arena Tickets, Boleticket and Hot Ticket.
77
Trade fairs and expositions
In the trade fair and expositions sector, there is competition from promoters that operate venues in Mexico
City. CIE believes it is unlikely that significant competition will develop given the need to have access to
adequate locations; however, new complexes may be developed in the future, or competitors that already
exist but that have operations in other cities in Mexico or abroad might offer services whose quality and
scope are similar to those of Centro Banamex. Recognized competitors in terms of portfolios of own and
third-party events are E.J. Krause, a specialized international group, and Tradex, M.S. Frankfurt and
Internacional de Exhibiciones, among others.
Amusement parks
Competition in this sector is fragmented, and in Colombia the competition comes mainly from family
businesses, traditional parks, and temporary and state fairs. The main factors affecting the competition in
this sector are the location, price, quality of food and services, and the quality of the rides and attractions.
After the divestment process that the Company undertook in recent years in its Amusement Parks operation, it retains operations only in Colombia, where its main competitor is the Mundo Aventura Park. This
park is owned by the Chamber of Commerce of the City of Bogotá, which has similar attractions. This park
also faces competition from smaller-sized amusement parks, which are scattered throughout the metropolitan region of Bogotá and throughout Colombia, such as Parque Nacional de Café, a theme park, and Panaca
Quimbaya, a farm-related theme park, both in Quindo; the Pscilago water park in Cundinamarca; and the
Divercity children's theme park in Medellín, among others.
Marketing and advertising
CIE believes that there are no competitors in Mexico in the area of non-traditional marketing and promotional vehicles who can offer the wide variety of advertising channels, the complete line of products and the
national coverage that CIE offers, therefore CIE faces competition based on specific advertising segments
of individuals and local groups. Certain competitors for some of CIE's commercial business segments are
shown below.
In the sector of pedestrian overpasses, CIE mainly faces competition from other operators, such as
Constanza, Keenneex, Puvlicosi, Xtreme Media, and K Medios Integrales, among others. In relation to
advertising in movie theaters, the Company competes directly against the marketing units of the chains
Cinepolis, Cinemax and Cinemark, as well as operators of independent theaters.
In malls, the Company competes against companies such as Zen Media, PM On Street, EMPE, PRM
Mercadeo 3, In-Store, Clear Channel, IMV and VGM. CIE also competes against PRN, Spotbox, Zen Media,
TV Kanal, Vértice, MVS and K Medios Integrales in the operation of convenience stores. In the marketing
segment for advertising spaces on pedestrian overpasses, the Company competes against Medios México,
Rentable, K Medios Integrales, EMPE, and De Haro, among others.
In airport advertising, CIE faces competition at the Mexico City Airport from Unidad de Diseño y
Comunicación and from ISA Corporativo, two small marketing groups that sell advertising space in
78
walkways, baggage claims, and on airport benches, as well as from Publiclean and the marketing units from
other airport operators.
In soccer advertising, CIE competes against the broadcasters TV Azteca and Televisa, as well as Publicidad
Virtual and ESPN-Fox Sports. In turn, Equal, De Haro Publicidad, Mapex and Regiet T are the Group’s
competitors in commercial operation of outdoor furniture in Mexico.
In special and corporate events, CIE competes with a variety of companies, which are identified with
opportunity events. In general, competition in the sector is comprised of recently created companies, as
well as by international companies (such as Instantia, Five Currents and Les Petits Francaise), as well as
other companies that are already established in Mexico, but that have expanded their business to include
special and corporate events. In this last category are Turycon, Mundo Mex and Landucci.
In the call services sector, CIE mainly competes in Mexico with Teleperformance, Atento, Telvista, Teletech
and Atención Telefónica. Competitors generally operate their own call centers in Mexico City. There are
other irregular competitors in the interior of Mexico and abroad that do not offer the quality that CIE does,
or a formal permanence in the Mexican market, given the origin of its operations and the lack of adequate
representation in the country.
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2.9. Corporate Structure
At December 31, 2012, CIE had 122 subsidiaries and associated companies through which it has performed
operations in its relevant markets. As has been mentioned in other sections at the start of this Document, at
the close of 2012 the Company is organized into a holding company and three strategic business units: CIE
Entertainment, CIE Commercial, and CIE Amusement Parks. (For more information in this regard, the
reader should refer to Section 2. "Executive Summary" in Chapter I, "General Information," of this Annual
Report).
The following details CIE’s business units listed above:

CIE ENTERTAINMENT, in association with Televisa, promotes and produces musical concerts,
theater productions, family shows, and other forms of live entertainment. It also operates
entertainment venues in Mexico (including food, beverage and souvenir concessions), and it sells
automated tickets for live entertainment events and entertainment venues using the Ticketmaster
system. In 2012, the division recorded revenues of Ps. 4,584.3 and EBITDA of Ps. 420.8.
 CIE COMMERCIAL provides its corporate clients (companies, organizations, governments) with a
wide variety of out-of-home promotional and advertising channels for their advertising campaigns,
including naming rights, advertising space in entertainment venues, at field level in professional
soccer stadiums in Mexico, and advertising spaces on pedestrian overpasses, airports, convenience
stores and commercial centers, public transportation, and at kiosks where newspapers and magazines are sold in the Mexican market, among others. This division develops telemarketing programs for clients in Mexico and abroad, it organizes and produces special and corporate events,
and it supports its clients’ campaigns through the use and application of state-of-the-art technology
and web-based applications and development. In 2012, CIE’s commercial division recorded revenues of Ps. 1,940.8 and EBITDA of Ps. 479.2.
 CIE AMUSEMENT PARKS (OR “OTHER BUSINESSES”) in association with local entities, operates
the complex known as El Salitre inside the Simón Bolívar Metropolitan Park in the city of Bogotá,
Colombia, which includes an amusement park known as Salitre Mágico, and the water park known
as Cici Aquapark. CIE’s amusement parks in 2012 reported revenues of Ps. 190.2 and EBITDA of
Ps. 51.4.
The Company holds minority stakes in ICELA (previously, CIE Las Américas) and in T4F Entretenimiento.
(For more information, the reader is referred to Section 3. “Recent Events” in Chapter I “General Information,” as well as to Section 1. “History and Development of the Company” in Chapter II, “The Company.”) At December 31, 2012, CIE had 118 subsidiaries and associated companies through which it performs
operations in its relevant markets. As mentioned, at the close of 2012 the Company is organized into three
strategic business units: CIE Entertainment, CIE Commercial, and CIE Amusement Parks (or "Other
Businesses”).
The following table shows the Company's main subsidiaries and associate companies, including their
shareholder ownership as of the date of publication of this Annual Report.
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Shareholder
structure of CIE
Name
Ocesa Entretenimiento, S.A. de C.V.
("OCEN”)
Operadora de Centros
de Espectáculos, S.A. de C.V.
Grupo Automovilístico Nacional
y Deportivo, S. de R.L. de C.V.
Venta de Boletos por Computadora,
S.A. de C.V. (“VBC”)
CIE Internacional, S.A. de C.V.
Principal
or subsidiaries
60.00%
Main Activity
Market
Holder of shares in conversion of 40.00% with
Televisa Entretenimiento, S.A. de C.V.
Mexico
100.00%
through OCEN
Manager of event facilities and shareholder.
Mexico
50.01%
through OCEN
Promotion and operation of sports races.
67.00%
through OCEN
Automated ticket sales.
Mexico
Shareholder of various subsidiaries.
Latin America
and the USA
9.724%
(directly and
indirectly)
Promotion and operation of live entertainment
events in Argentina, Brazil and Chile.
Brazil, Chile
and Argentina
Impulsora de Centros de Entretenimiento
de las Américas, S.A.P.I. de C.V.
(“ICELA”)
15.20%
Shareholder of the companies that operate
racetracks, exhibition centers, numbers- and
symbols-based games and performance venues
with sports betting.
Grupo Mantenimiento de Giros
Comerciales Internacional,
S.A. de C.V.
100.00%
Amusement parks operator.
BConnect Services, S.A. de C.V.
(Previously Grupo Sitel de México, S.A. de
C.V.)
100.00%
Provider of telemarketing services.
Mexico
Corporación de Medios Integrales, S.A. de
C.V.
100.00%
Shareholder in companies that are included
under the Media Unit of CIE's commercial
division.
Mexico
Publitop, S.A. de C.V.
100.00%
Builds pedestrian overpasses and markets
advertising for those pedestrian overpasses.
Mexico and
Panama
Unimarket, S.A. de C.V.
100.00%
Markets fixed and static advertising in soccer
stadiums.
Mexico
Creatividad y Espectáculos, S.A. de C.V.
100.00%
Organization of special, corporate and
government events.
Mexico
T4F Entretenimiento S.A
(Previously CIE Brasil, S.A.)
100.00%
Mexico
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Mexico
Colombia
Make Pro, S.A. de C.V.
100.00%
Markets sponsorship rights and advertising
promotion rights.
Mexico
The principal financial transactions of CIE directly with its subsidiaries are carried out through current
account and loan agreements. In addition, as part of their normal course of business, several of CIE’s
subsidiaries conduct transactions among themselves such as the provision of administrative services,
advertising services, technical assistance, equipment leasing, commercial intermediation and licensing or
sub-licensing of rights, which are performed and evaluated according to market criteria as stipulated in the
tax laws currently in effect.
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2.10. Description of the Company’s Main Assets
The Company’s fixed assets, which represent approximately 11.8% (eleven point eight percent) of the total
assets recorded at the end of 2012, consist mainly of construction and improvements made to those
performance venues and amusement parks over which the Company maintains some type of operating
rights, whether as the concession holder, temporary administrative permit holder or lessor.
In addition, CIE’s fixed asset base includes office furniture and equipment, computer and related equipment, radio and telephone equipment, advertising and billboard structures, and transportation equipment,
as well as betting terminals, theme park rides and attractions, among others in 2011 and 2010.
The following table shows the investment in fixed assets that the Group had at the end of 2010, 2011 and
2012.
For more information, please refer to the audited consolidated financial statements attached to this Annual
Report for the information with respect to 2011 and 2012, as well as the audited financial statements
regarding the 2010 Annual Report for more information in reference to that fiscal year.
Item
2010
2011
Buildings, mainly constructions in
concessioned and permitted properties
Improvements to leased and concessioned
locations
5,222,972
5,097,033
248,431
2,302,029
2,142,442
1,305,576
Equipment for parks, games and attractions
625,825
619,340
297,334
Office furniture and equipment
932,339
989,886
417,990
10
Computer and accessory equipment
676,315
684,892
349,708
30
Structures and billboards
75,401
86,389
0
14 al 33
Transportation equipment
81,278
88,819
58,526
20 y 25
Radio communication and telephony
equipment
Other assets
Accumulated depreciation
Constructions in process
Total (1)
2012
Annual
Depreciation or
Am ortization
Rate (%)
81,217
86,028
98,991
10 y 8
633,746
670,262
384,565
Varias
10,631,122
10,465,091
3,161,121
-3,952,247
-4,372,729
-2,136,084
6,678,875
6,092,362
1,025,037
24288
247
6,116,650
1,025,284
14,703
6,693,578
The Company takes advantage of the inventory of performance venues that it operates to carry out its
activities in Mexico, which inventory is distributed mainly throughout Mexico City, followed by the cities of
Guadalajara and Monterrey. The following page shows the network of those performance venues.
83
Market and Performance Venue
Year of Incorpora-
Type of Venue
tion
Maximum
CIE’s Rights
Capacity
Mexico City
Foro Sol
1993
Amphitheater / Baseball
60,000
Temporary exclusive revocable
stadium
26,180
administrative permit. (Expires in August
2021).
Estadio Azul (1)
1996
Soccer stadium
36,000
Autódromo “Hermanos Rodríguez”
2001
Car Racetrack
59,248
Operating agreement (expires in December
2013)
Exclusive temporary revocable
administrative permit (expires in August
2021)
Palacio de los Deportes
1990
Indoor arena
21,000
Revocable temporary administrative permit
José Cuervo Salón (2)
2003
Amphitheater
3,500
Lease (expires in May 2013)
Teatro Metropólitan
1996
Amphitheater
3,400
Lease (expires December 31, 2021)
Centro Cultural Telmex I
1996
Theater
2,251
Undefined, with the possibility of the parties
(expires in August 2021)
ending the lease at any time.(3)
Teatro Blanquita
1990
Theater
1,944
Lease (expires in October 2012)
Centro Cultural Telmex II
1996
Theater
1,190
Lease terminated (3)
Foro Polanco (4)
2005
Theater
4,000
Teatro de los Insurgentes
2006
Theater
950
Auditorio Plaza Condesa
2010
Amphitheater
Teatro Banamex Santa Fe (5)
2009
Theater
Arena VFG
2005
Amphitheater
10,096
Estadio 3 de Marzo
2010
Stadium
25,000
Exclusive scheduling rights to musical events
2,500
389
Lease. (Expires in December 2015).
Lease (Expires in March 2019).
Lease (Expires in February 2016)
Guadalajara, Mexico
and events other than soccer. (Expires in
August 2020).
Monterrey, Mexico
Auditorio Banamex (6)
1994
Amphitheater
22,000
Operating rights. (Expires in October 2048).
(1) This stadium is used mainly for professional soccer games, and occasionally for other special and corporate events.
(2) Previously Vive Cuervo Salón or Salón 21.
(3) Lease contract in the process of renegotiation.
(4) Previously known as Foro Scotiabank.
(5) Previously Zentrika
(6) Previously Auditorio Coca-Cola Fundidora.
In addition to this network of performance venues, the Company operates the amusement parks El Salitre
Mágico and the Cici Aquapark water park, both of which are located inside the Simón Bolívar Metropolitan
Park in the city of Bogotá, in Colombia.
CIE’s policy is to take out insurance policies with well-known companies with good reputations, solvency
and financial liquidity in the markets in which they operate, and through these policies CIE covers the risks
associated with its asset base,
Specifically, CIE holds insurance policies of the type and for the amounts that it believes to be commercially
reasonable, and that are available in the industry in which it participates, which are taken out with compa84
nies with proven experience and with reasonable ability to cover the risks inherent to the Company’s
operations and administration. AIG Seguros México, S.A. de C.V., Royal & SunAlliance Seguros México,
S.A. de C.V., Qualitas Compañía de Seguros, S.A.B. de C.V., Afianzadora Aserta, S.A. de C.V., Fianzas
Guardiana Inbursa, S.A., MetLife México, S.A. de C.V., Seguros Inbursa, S.A. and Zürich Compañía de
Seguros, S.A. are some of the companies with which the Group has assessed, and in some cases historically
taken out those insurance policies.
The Company’s fixed assets are not used as a guarantee for a bank loan or any type of stock market issuance, either for the Company or for a third party. In that case, as has occurred in the past, certain of the
Company's subsidiaries (or those that met that condition at the time) acted as joint obligors and guarantors
of certain of the Group's debts.
85
2.11. Judicial, Administrative or Arbitration Proceedings
Regulations
The business is subject to extensive regulation by federal, state and municipal authorities with regard to
licenses, approvals and permits, including those related to the operation of public facilities, consumer
protection, and the protection of health and public safety. However, CIE is in compliance with the applicable regulations.
Many of the Company’s concessions, licenses and permits are subject to early termination in the event of
any violation or breach of the conditions established in each case, as well as for reasons of public good or
due to government acts.
Consumer complaints
Although the Company is subject to legal procedures during the ordinary course of its businesses, mainly in
relation to consumer complaints, it does not expect these procedures, either individually or collectively, to
have a significant adverse impact on CIE's activities, financial situation or operating results.
Labor lawsuits
As of December 31, 2012, CIE and some subsidiaries had been sued before the Conciliation and Arbitration
courts. Those lawsuits that are considered to be relevant are discussed specifically in this Annual Report.
The remaining lawsuits total 420, and it is estimated that there could be a joint contingency of up to Ps.
110.9. CIE and its subsidiaries have a contingency provision for labor lawsuits of approximately Ps. 12.5.
Lease of Teatro Orfeón
On September 13, 1996, Operadora de Centros de Espectáculos, S.A. de C.V. (“OCESA”), the subsidiary that
participates in the operation of performance venues, entered into an operating contract with Servicios y
Estacionamientos Públicos, S.A. de C.V. in relation to Teatro Orfeón, a theater in Mexico City with seating
capacity for 2,126. The operating contract granted OCESA the authority to operate for one year, extendable
for one additional six-year period, provided OCESA complies with certain conditions, including renovation
of the theater. OCESA invested approximately Ps. 30.0 million. After the first year, the owner moved to
evict OCESA, alleging that the operating contract had expired because the parties did not execute the
extension. Due to this, on May 21, 1998, OCESA filed a lawsuit against the owner with the 46th Civil Court
of the Superior Court of Justice in the Federal District, arguing that the conditions of the extension had
already been negotiated and had taken effect, even though the extension had not been signed, and the
extension expired in 2003. Due to this lawsuit, on August 8, 1998, OCESA obtained a possession injunction
against that eviction from the Superior Court of Justice in the Federal District.
Pending final resolution of this dispute, CIE has chosen not to use Teatro Orfeón since June 1998, although
the operating agreement establishes payment of rent based on a percentage of box office revenues. The
Company expects the ruling from the legal authority to be in favor of OCESA.
Various actions for dismissal filed by the subsidiary Servicios Compartidos en Factor Humano, S.A. de
C.V. (SECOFAC)
Three dismissal proceedings filed by SECOFAC from June to July 2011, through which various credits
issued by the IMSS were challenged, which in total represented employer contributions payable and fines
86
for Ps. 5.2 million pesos (historical value), are under way in the Regional Metropolitan Courts. The Courts
issued their rulings in favor of the interests of SECOFAC, therefore those proceedings are totally concluded.
Lawsuit for dismissal filed by Operadora de Centros de Espectáculos, S.A. de C.V. (OCESA)
On February 26, 2011, OCESA was notified of the ruling issued by the Local Administrator of Taxpayer
Services in the Northern Federal District, through which OCESA is determined to have tax credits in the
total amount of Ps.4.9 for alleged omissions in payment of the Income Tax, Value Added Tax, and the FlatRate Corporate Tax, supposedly for not having presented the statements for February 2010. That ruling
was challenged by means of a lawsuit for dismissal before the Federal Court of Tax and Administrative
Justice. The judgment of the Courts was to declare complete nullity, therefore the ruling was in favor of the
interests of OCESA, thus the proceeding is totally concluded.
Hazard and performance tax (Change to Reforestación y Parques, S.A.)
On May 13, 2009, a review was started at Reforestación y Parques, S.A. (“RyP”), a Colombian subsidiary, by
the Office of Inspection of the Sub-Division of Taxes on Production and Consumption of the District
Division of Taxation, in order to verify the correct determination of the Hazard and Performance Tax for
the periods January to December of the years 2005, 2006, 2007, 2008 and January to April 2009.
On September 15, 2009, an agreement was issued through which the hazard and public performance taxes,
and the fund for the poor were merged, and it was set at 10.0% (ten percent). On October 29, 2009, the
District Treasury Secretary issued a sanction consisting of a fine on RyP for not declaring and paying the
tax. On December 11, 2009, the District Treasury Secretary issued an official order for payment, determining that RyP should pay the Hazard and Performance Tax for the years 2005, 2006, 2007, 2008 and
January to April of 2009. On February 12, 2010, an appeal for reconsideration regarding the collection
proceeding initiated by the District Treasury Secretary was filed; however, the rulings on sanction and
payment were confirmed, and on February 14, 2011, a demand for nullity and re-establishment of the law
against the rulings issued by the District Taxation Division was filed, and on June 9, 2011, RyP filed an
appeal against the order denying provisional suspension. On May 17, 2012, provisional suspension was
denied, considering that the alleged violation had not been observed from a simple comparison of the rules
with the acts.
Arbitration Proceeding against Reforestación y Parques (RyP), a Colombian Subsidiary
In June 2009, the Colombian companies Recrear LTDA (RECREAR) and Esparcimiento, S.A.
(ESPARCIMIENTO) (previous shareholders of RyP) initiated an arbitration proceeding against
Reforestación y Parques, S.A. de C.V. (RyP) and Mágico, demanding, among other things, declaration of
breach of the share purchase agreement of RyP, because the agreed number of tickets for entry to the water
park had not been delivered, to pay those tickets in cash, and also to refund 1,383 shares of RyP to
RECREAR and 928 shares of RyP to ESPARCIMIENTO. On September 15, 2010, the arbitration demand
was responded to, and on February 2, 2010, a settlement hearing was held, but the parties were unable to
reach an agreement, thus the arbitration proceeding will continue. Through an arbitration ruling dated
September 20, 2010, it was determined that RyP must comply with the obligation to deliver the number of
tickets agreed to without having to pay in cash, and without having to pay delay interest. RyP has already
delivered the tickets for Cici Aquapark to RECREAR and ESPARCIMIENTO, effective for two years starting
on December 31, 2010. ESPARCIMIENTO demands delivery of the tickets but with indemnity for losses,
and it requested a seizure of bank accounts. RyP requested that the Judge establish a surety to prevent
seizure of accounts, and the Judge has already established that surety.
87
Complaint of Promotora Turística de Guerrero against Operadora Nacional de Parques Recreativos
Promotora Turística de Guerrero, a decentralized public entity (PROTUR), has sued Operadora Nacional
de Parques Recreativos, S.A. de C.V. (ONPR), the Government of the State of Guerrero, the Municipality of
Acapulco, and Notary Public Number 10 of the District of Tabares. ONPR was subpoenaed on November
27, 2009, and answered the complaint on December 9, 2009; PROTUR demands dismissal of the operating
and administrative contract for Cici Aquapark as well as its restitution and possession, plus losses and
damages. At this time the Government of the State of Guerrero has not been subpoenaed.
Complaint of Jorge Javier Noble Gómez against Opera Show, S.A. de C.V. (“Opera Show”)
On May 4, 2011, Opera Show was sued in the complaint filed by Jorge Javier Noble Gómez, who claims
moral and patrimonial damage due to the adaptation and “improper” use of the work La Pulquería, which
was staged in the year 1999. The complaint was responded to in a timely manner, orders were issued to
notify the interested third parties, evidence was provided and a judgment was issued through which Opera
Show is absolved of the claims.
Complaint of Creatividad y Espectáculos, S.A. de C.V. (CREA) against Ernesto Raúl García Barberi.
On January 30, 2012, CREA filed a complaint against Ernesto Raúl Farcía Barberi for services that had
been paid for but not provided, in the amount of Ps. Ps.2.1 million. The defendant’s domicile is currently
being sought.
Protection against the Closure of Foro Sol and the Hermanos Rodríguez Racetrack
Operadora de Centros de Espectáculos, S.A. de C.V. (OCESA), presented an action for protection against
the claim of Delegación Iztacalco to close the properties known as Foro Sol and the Hermanos Rodríguez
Racetrack. By means of a ruling dated February 1, 2013, OCESA was granted definitive suspension.
Protection against Non-Renewal of the Contract with the Municipality of San Luis Potosí
The Municipality of San Luis Potosí intends not to renew the contract that the company Publitop, S.A. de
C.V. had to maintain seven pedestrian overpasses, whose consideration was allowing Publitop to install
advertising. On February 16, the Municipality took down the advertising that Publitop had on display.
Therefore, a demand for protection was filed, and on February 19 the Court granted provisional suspension.
Bankruptcy Proceedings
As of the date of this Annual Report, Corporación Interamericana de Entretenimiento, S.A.B. de C.V. does
not fall under any of the assumptions established in Articles 9 and 10 of the Law of Bankruptcy Proceedings
of Mexico.
88
2.12. Shares Representing Share Capital
Note: Contrary to certain financial information contained in other sections of this Document, which is
stated in millions of Mexican pesos, the following financial information is stated in Mexican pesos. The
foregoing is solely for the reader’s better understanding.
HUNDRED AND NINETY-FOUR AND 00/100 HISTORICAL MEXICAN PESOS). It is comprised of a total
of 559,369,806 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND SIXTY-NINE
THOUSAND, EIGHT HUNDRED AND SIX) common shares, nominative, Series B, with full voting rights,
no par value, fully subscribed and paid in, of which 30,955,386 (THIRTY MILLION, NINE HUNDRED
AND FIFTY-FIVE THOUSAND, THREE HUNDRED AND EIGHTY-SIX) shares are Series B Class I shares,
representing fixed capital, and 528,414,420 (FIVE HUNDRED AND TWENTY-EIGHT MILLION, FOUR
HUNDRED AND FOURTEEN THOUSAND, FOUR HUNDRED AND TWENTY) shares corresponding to
Series B Class II shares, representing the variable portion of CIE’s capital.
In a General Ordinary Shareholders Meeting of CIE held on August 13, 2012, an increase to the variable
portion of shareholders’ equity was approved through the issuance of 40,669,187 common, nominative
shares, Series B, Class II, no par value, representing the variable portion of the CIE’s shareholders' equity,
according to the terms approved therein.
shares, Series B, Class II, no par value, representing the variable portion of the CIE’s capital was subscribed
and paid in at the price of Ps. 7.00 (seven and 00/100 Mexican pesos) per share, and in the Second Subscription Period, the Company’s Secretary received requests to subscribe 40,000,000 ordinary nominative
shares, Series B, Class II, with no par value, representing the variable portion of CIE’s capital; therefore,
the Company cancelled 630,194 shares that were not subscribed, which was agreed to in the aforementioned General Shareholders’ Meeting.
The shareholders who stated their wish to subscribe and pay in shares during the Second Subscription
Period, under section (B) of the notice of subscription published by CIE on the DOF and EMISNET on
August 17, 2012 (the “Notice”), entered into a share subscription contract with CIE, which mainly contains
the following terms and conditions:
date of publication in the Official Gazette of the Notice, the subscription price for each share will be Ps.7.50
Mexican pesos.
Ps.8.00 Mexican pesos.
(iii) If the shares are subscribed within the first ten (10) calendar days following the third anniversary of
Ps.8.50 Mexican pesos.
If the shares regarding which the shareholder or shareholders have stated their intention to subscribe are
not paid for within any of the three aforementioned periods, the shares will be cancelled, regardless of
89
CIE's right to demand that the shareholder comply with the obligation established in Article 1846 of the
Federal Civil Code.
CIE delivered the certificates for the shares corresponding to the shares subscribed and paid in during the
First Subscription Period.
Any shareholder who has subscribed to shares and consequently entered into a share subscription contract
with CIE must notify the Secretary of the Board of CIE regarding the shares of those subscribed that it will
pay for, indicating the amount to be transferred to CIE’s account that the contract itself established, with
the understanding that in the event of a discrepancy in payment, the shareholder will have two days to
verify the amount, and if any amount is missing, it will have one more day to pay the amount owed.
in any way whatsoever without prior written authorization from the other party.
At December 31, 1997, CIE’s capital was Ps. 5,508,911.80 (FIVE MILLION, FIVE HUNDRED AND EIGHT
THOUSAND, NINE HUNDRED AND ELEVEN AND 80/100 HISTORICAL MEXICAN PESOS), comprised
of 63,065,764 (SIXTY-THREE MILLION, SIXTY-FIVE THOUSAND AND SEVEN HUNDRED AND
SIXTY-FOUR) shares, of which 4,843,850 (FOUR MILLION, EIGHT HUNDRED AND FORTY-THREE
THOUSAND, EIGHT HUNDRED AND FIFTY) shares are Series BI shares (representing fixed capital),
51,071,914 (FIFTY-ONE MILLION, SEVENTY-ONE THOUSAND AND NINE HUNDRED AND FOURTEEN) are Series BII (*) shares (representing variable capital) and 7,150,000 (SEVEN MILLION, ONE
HUNDRED AND FIFTY THOUSAND) are Series L (*) (shares with restricted voting rights, representing
variable capital). As of April 30, 2013, various acts that have affected CIE’s capital have been verified,
which have been duly approved at the General Shareholders’ Meeting, and which are summarized below:
Series BI
Shares
Act Modifying Corporate Capital
Series BII
Shares (*)
Series L
Shares (*)
Total Shares
Formation of capital on December 31, 1997 ..................................
4,843,850
51,071,914
7,150,000
63,065,764
Split (1 x 2.42) on February 27, 1998 ............................................
11,722,117
123,594,032
17,303,000
152,619,149
Increase of Series L shares on April 24, 1998 ...............................
11,722,117
123,594,032
19,303,000
154,619,149
11,722,117
123,594,032
36,973,374
172,289,523
Conversion of shares from Series BII to Series BI on May 22,
1998 ................................................................................................
17,012,819
118,303,330
36,973,374
172,289,523
17,012,819
118,303,330
40,673,374
175,989,523
Cancellation of Series L shares on July 15, 1999 ...........................
17,012,819
118,303,330
38,495,371
173,811,520
Conversion of shares from Series BII to Series BI on July 15,
1999 ................................................................................................
Increase of Series B shares on July 15, 1999 .................................
18,679,870
116,363,279
38,495,371
173,811,520
18,679,870
146,636,279
38,495,371
203,811,520
Increase of Series BI shares on February 15, 2000 .......................
20,381,152
146,636,279
38,495,371
205,512,802
Reduction of Series BII shares on February 15, 2000 ..................
20,381,152
144,934,997
38,495,371
203,811,520
90
Series BI
Shares
Series BII
Shares (*)
Series L
Shares (*)
Total Shares
183,430,368
-
203,811,520
23,888,752
179,922,768
-
203,811,520
23,888,752
214,998,768
-
238,887,520
Increase of Series BII shares on April 26, 2001 ............................
23,888,752
218,665,101
-
242,553,853
Reduction of Series BII shares on April 26, 2001 .........................
23,888,752
218,298,468
-
242,187,220
Increase of Series BI shares on April 26, 2001 .............................
24,255,385
218,298,468
-
242,553,853
Increase of Series BII shares on October 24, 2001 .......................
24,255,385
285,298,468
-
309,553,853
Conversion of Series BII shares to Series BI shares on October
24, 2001 .........................................................................................
Increase of Series BII shares on May 27, 2005 .............................
30,955,386
278,598,467
-
309,553,853
30,955,386
328,598,467
30,955,386
328,598,467
-
359,553,853
30,955,386
328,598,467
-
359,553,853
30,955,386
328,598,467
359,553,853
30,955,386
328,598,467
359,553,853
30,955,386
528,598,467
559,553,853
30,955,386
568,637,460
599,592,846
Act Modifying Corporate Capital
Conversion of Series L shares to Series BII on February 15, 2000
.........................................................................................................
Conversion of Series BII shares to Series BI on September 18,
2000 ...............................................................................................
Increase of Series BII shares on September 18, 2000 ..................
20,381,152
Increase of the fixed portion of corporate capital in the amount
of Ps. 564,310,244.51 without issuance of shares on April 25,
2006 ...............................................................................................
Increase of the variable portion in the amount of Ps.
5,986,215,694.49 without issuance of shares on April 25, 2006 ..
Decrease to the fixed portion in the amount of
359,553,853
Ps.405,879,249.79 without cancellation of shares,
April 29, 2009
Decrease to the variable portion in the amount of
Ps.4,305,576,159.21 without cancellation of shares, April 29,
2009
Increase to the variable portion in the amount of
Ps.1,200,000,000 through the issuance of 200,000,000 shares
Increase to the variable portion through the issuance of
40,669,187 shares (of which no requests were received to
subscribe 630,194 of those shares, therefore they were
cancelled)
As of the date of this Annual Report, the Company’s capital is distributed as follows:
Series and Class
BI (fixed capital)
Shares
Capital (pesos)
189,386,380.72
Fully subscribed and paid in
528,414,420
Ps. 3,209,287,913.28
Fully subscribed and paid in
BII Treasury
40,223,040
-
Not subscribed and paid in
Total
599,592,846
Ps. 3,398,674,294.00
BII (variable capital)
30,955,386
91
Ps.
Exhibitions
2.13. Dividends
The General Law of Corporations states that Mexican companies may only pay dividends with their
retained earnings included in their financial statements after all the losses from prior years have been
absorbed, and at least 5.0% (five percent) of the net income of the Company is set aside every year to form
a legal reserve fund until that reserve reaches an amount equal to at least 20% (twenty percent) of the
Company’s paid-in capital. The amount to set aside for the legal reserve is determined without reference to
inflationary adjustments to the capital.
Subject to the approval of a General Shareholders Meeting, Mexican companies have the ability to distribute or not to distribute dividends with the product of their net earnings (including retained earnings) after
the losses from prior years have been absorbed in full, and after setting aside the funds required for the
legal reserve. The declaration, amount and distribution of dividends is determined by the majority vote of
the Company’s shareholders who have been summoned to a General Shareholders’ Meeting, and in general,
but not necessarily, upon the recommendation of the Board of Directors.
To date, the Shareholders’ Meeting of Corporación Interamericana de Entretenimiento, S.A.B. de C.V. has
not declared any dividend.
92
III. Financial Information
1. SELECTED FINANCIAL INFORMATION
The following pages contain select financial information from the consolidated income statements and the
consolidated balance sheets for the years ended December 31, 2010, 2011 and 2012, with numbers stated in
thousands of nominal Mexican pesos, and which were prepared based on the bases of preparation explained in the Consolidated Financial Statements attached to this Annual Report for the years 2011 and
2012, as well as in the Section "Notes on Presentation of Financial Information" in this Document. Information on the year 2010 was obtained from the financial information attached to the Annual Report for
fiscal year 2010.
93
2010
2011
2012
Information from the Income Statement:
Net sales
EBITDA
EBITDA margin
Operating income
Operating margin
10,193.7
1,963.8
19.3%
1,092.7
10.7%
6,790.2
971.5
14.3%
577.2
1
8.5%
6,715.3
951.4
14.2%
645.6
9.6%
Net interest paid
Income not from the Controller
503.4
275.6
464.3
261.9
276.1
125.1
Net consolidated income
Net margin
108.8
1.1%
111.8
1.6%
195.4
2.9%
Cash and cash equivalents
1,268.9
1,694.7
648.8
Other current assets
5,648.4
4,815.3
4,739.8
Property, plant and equipment, net
6,564.8
6,116.7
1,025.3
Deferred assets and other assets
Total assets
Bank and bond debt
1,965.0
15,447.1
6,807.2
1,773.3
14,400.0
6,185.4
8,695.5
2,283.6
3,287.1
3,303.7
3,277.8
10,094.3
2,897.2
2,455.6
5,352.8
9,489.1
2,596.7
2,314.6
4,911.3
5,561.4
2,671.1
463.0
3,134.0
559.3
6.86
3,837.0
9,375.3
3.9x
4.8x
559.3
6 5.90
3,300.3
7,791.0
2.2x
8.0x
599.3
7.70
4,307.1
5,941.9
4.2x
6.2x
Information from the Balance Sheet:
Other liabilities
Total liabilities
Controlling stake
Non-controlling stake
Shareholders’ equity
Other Information and Relevant Financial Ratios:
Average weighted number of shares (2)
Share price at the close of the year (3)
Capitalization value (4)
Value of the Company (5) .
EBITDA / Interest paid, net (6)
Value of the Company / EBITDA (7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
2,281.6
The numbers presented in this table are for fiscal years 2010, 2011 and 2012 and are expressed in millions of nominal pesos. See the Section "Note on presentation of
Financial Information" to understand the accounting bases and criteria on which this was prepared.
For fiscal years 2010, 2011 and 2012, the number of shares considered for these calculations was 559,330,813 (five hundred and fifty-nine million, three hundred and
thirty thousand, eight hundred and thirteen) shares.
The information on the annual closing price of CIE’s shares on the BMV was taken from sources that the Company considers to be reliable.
Calculated based on the Average Weighted Number of Shares multiplied by the Share Price at the Close of the Year, information contained in this table for each fiscal
year indicated. Numbers not audited by PwC.
Calculated based on the Capitalization Value minus the mathematical difference between Bank Debt and Bond Debt, and the Cash and Cash Equivalents Account, for
each fiscal year indicated in the table. Numbers not audited by PwC.
Mathematical ratio, expressed in times, attained by dividing the EBITDA by Interest Paid, Net, which accounts are contained in this table.
Mathematical ratio attained by dividing the Value of the Company and the EBITDA, expressed in times, which information is contained in this table.
94
2. FINANCIAL INFORMATION BY BUSINESS UNIT, GEOGRAPHICAL
AREA AND EXPORT SALES
Revenues by Business Unit
(For a more detailed explanation regarding integration of revenues and EBITDA from each of the Group’s
business units, see Section 2. “Description of the Business” in Chapter II, “The Company,” of this Document).
Revenues by Country
CIE maintains regular and permanent business activities in Mexico, its main market, as well as in other
countries such as the United States and Colombia, and to a much lesser degree in Spain. It also conducts
business in Argentina, Chile and Brazil through the stake it holds in its associated company, T4F, whose
results are recorded using the participation method.
(For a more detailed explanation, see Section 3. “Recent Events” in Chapter I, “General Information,” of
this Document).
The following table shows the contribution to the Group’s consolidated revenues by country for the fiscal
years ending December 31, 2010, 2011 and 2012:
2010
Country
Mexico ....................................
(1)
(2)
9,954.7
2011
6,575.0
27.6
2012
6,249.4
United States (1) ......................
-
Colombia ................................
146.4
187.5
466.0
-
Total (2) ..............................
10,101.1
6,790.1
6,715.4
In 2011, the Company discontinued operation of the Wannado amusement park in the state of Florida, due to the close of the park in the first half of 2011, and also
because neither CIE nor any of its subsidiary, associated or affiliated companies holds any shareholder stake whatsoever in that operation. Due to the foregoing, the
Company has made certain reclassifications to its balance sheet. The information shown here is historical, therefore the numbers corresponding to fiscal years 2009
and 2010 are changed to zero. As a result of this accounting impact, the reader should deduct the amounts for each historical fiscal year shown here from the total in
the fiscal year in question, which for 2010 is Ps. 10,101.0.
The total amount includes Ps. 40.0 in fiscal year 2011, which corresponds to Spain, an area which, for practical purposes, is not broken down in this table. Information contained in the Audited Consolidated Financial Statements attached to this Annual Report.
95
3. REPORT ON RELEVANT LOANS
At the end of 2012, the Company’s short- and long-term bank and market liabilities were Ps. 2,283.6, while
consolidated debt at December 31, 2011 was Ps. 6,185.4. At the close of 2010, CIE’s debt was Ps. 6,704.0. In
general, the Company maintains a portion of its contracted liabilities at a variable rate with a fixed spread.
The Company’s 10-year bonds for US$ 200.0 ("Senior Unsecured Notes") are registered and traded on the
Euro MTF ("Multilateral Trading Facility") market of the Luxembourg Stock Exchange; they were originally
issued in the Regulated Market of that stock exchange on June 14, 2005, and they expire on June 14, 2015.
At the close of fiscal year 2012, the unpaid balance of the issuance was nearly US$ 13.7, which is equal to
Ps. 177.0, after the repurchase offer that CIE made in 2008, and through which it acquired from the holders
of those bonds approximately 93.0% (ninety-three percent) of the debt securities in circulation. The
securities are identified with CUSIP number 21988JAA8 under Rule 144A, while its ISIN identification
number under Rule 144S is USP3142LAN93.
At the close of the year, CIE’s market debt included three issuances of unsecured notes that were trading on
the BMV, originally maturing on September 2014. These unsecured notes are listed below:

CIE 05, issued in October 2005 for the original amount of Ps. 1,400.0 million, and which at the
close of 2012 had an unpaid balance of approximately Ps. 1533.9.

CIE 06, placed in December 2006 for the original amount of Ps. 500.00 million, had an unpaid
balance at December 31, 2012, of approximately Ps. 190.7; and

CIE 08, placed in June 2008 for the original amount of Ps. 650.00 million, and whose unpaid
balance at December 31, 2012 was approximately Ps. 247.9.
As explained on the Title Page and in Section 3. “Recent Events” in Chapter I, “General Information,” of
this Annual Report, on April 16, 2013, the Company paid these three bond issuances down early. This was
done by applying the net funds obtained from the issuance of debt securities on April 15, 2013, on the
Mexican stock market.
Based on this, Corporación Interamericana de Entretenimiento, S.A.B de C.V. issued a primary public
offering of 9,910,000 short-term unsecured notes. The issuance, which expires on July 15, 2013, and whose
ticker symbol is CIE 00113, is the first to be carried out under the Revolving Dual Unsecured Notes Program, for which CIE was authorized by the CNBV on November 30, 2012, under authorization number
153/9102/2012. At their maturity, the securities pay a yield rate of 6.84% (six point eighty-four percent).
(For more information, the reader is referred to the two sections mentioned in this paragraph).
The Company has significantly reduced its bank and market debt since the end of 2009, which it has
managed to do through the sale of certain assets in Mexico and South America; these funds, net of certain
costs and expenses, have been applied to debt payment. This includes divestments in its shareholder stake
in ICELA and T4F, under the mechanisms explained in the sections "Recent Events" and "History and
Development of the Issuer" contained in this Annual Report, as well as in other public documents that the
Company has distributed to the investing public from time to time.
96
At this time, the Company is up-to-date on its bank and bond debt service (including the debt securities
that are registered on the Luxembourg stock market) in terms of payment of principal amounts and
payment of interest and/or respective coupons, as well as in the periodic information that CIE is required
to give to its bank and market creditors. The foregoing is in compliance with the documented terms and
conditions agreed to with the respective bank loans and bond holders. CIE is also in compliance with the
periodic delivery of information in accordance with the obligations it has acquired with its bank and market
creditors.
The following page shows the composition of the Company’s debt at December 31, 2010, 2011 and 2012:
Item
2010
2011
2012
Pesos ....................................
5,884.2
5,317.3
1,850.3
Foreign Currency ................
820.0
868.1
433.3
Total ..............................
6,704.2
6,185.4
2,283.6
Bank .....................................
4,308.6
4,030.5
1,147.2
Market .................................
2,395.5
2,154.9
1,136.4
6,704.2
6,185.4
2,283.6
Short Term ..........................
919.7
1,724.3
942.7
Long Term ...........................
5,784.5
4,461.2
1,340.9
6,704.2
6,185.4
2,283.6
CIE .......................................
5,451.9
4,942.7
2,272.7
Subsidiaries .........................
1,252.2
1,242.8
10.9
6,185.4
2,283.6
Currency:
Type:
Total ..............................
Term:
Total ..............................
Contracted by:
Total ..............................
6,704.2
(For more information on the status of the Company’s relevant loans, and a more in-depth explanation
regarding the restructuring of CIE’s debt, see Section 3. “Recent Events” in Chapter I, “General Information” of this Document, and see the Note regarding “Analysis of Bank Loans and Financial Instruments”
in the Audited Consolidated Financial Statements at December 31, 2012 and 2011 attached to this Document, as well as the similar Note included in the Audited Consolidated Financial Statements attached to the
2010 Annual Report, in relation to that fiscal year).
In relation to tax-related credits or debits, see the Audited Consolidated Financial Statements in reference.
97
4. MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE COMPANY’S
OPERATING RESULTS AND FINANCIAL POSITION
The monetary amounts or percentages, as well as the monetary variations and percentages presented
throughout this section may vary due to rounding. The figures in this section are expressed in millions of
Mexican pesos.
The terms the “period,” the “fiscal year” or the “year” always refer to fiscal year 2012, unless otherwise
indicated.
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4.1. Operating Results for Fiscal Year 2012
The financial information presented here is fundamentally taken from the audited consolidated financial
statements at December 31, 2012 and 2011, which are attached to this Document.
Revenues and EBITDA
During fiscal year 2012, the Company’s consolidated revenues decreased 1% to Ps. 6,715, compared with
Ps. 6,790 recorded in the same period of 2011.
Consolidated EBITDA decreased 2% to Ps. 951 during 2012, compared to the Ps. 971.5 reported in the
prior year.
At CIE Entertainment, revenues were Ps. 4,584, which is 5% lower than revenues during the prior year.
The decrease in revenues is due to: (i) a low number of tickets sold to the shows of two artists in particular
in Mexico and South America in the fourth quarter of 2012; (ii) in the fourth quarter of 2011, there was
income due to operation of the properties that hosted the Pan American Games in Guadalajara; and, (iii)
during the same quarter of the prior year, there were major events such as Justin Bieber, and the Cirque
du Soleil family show “Ovo,” which were replaced by other, smaller-scale events such as Alejandro
Fernández, Bruce Springsteen, Emmanuel and Enrique Bunbury in 2012.
EBITDA at CIE Entertainment decreased 17% to Ps. 421 during the period, in comparison with Ps. 505
recorded in the same quarter of the prior year. This decrease is the result of the low attendance levels at
the events mentioned above, which, since they were major events, had high talent and production costs.
The decrease is also due to the lower revenues, as explained previously.
During 2012, the revenues at CIE Commercial increased 8% to Ps. 1,941, in comparison with Ps. 1,803
recorded in the prior year. This growth was due to higher occupancy rates in the advertising spaces sold
during the period, and to the organization of special events during the period, namely: (i) the
Rockampeonato Telcel tour; (ii) organization of the Corona Music Fest; and (iii) participating in the
logistics of G-20 leaders’ summit in the second quarter of 2012.
During 2012, EBITDA for CIE Commercial was Ps. 479, which was 10% higher than EBITDA reported last
year. This increase was the result of the growth in revenues explained above.
Revenues in Other Businesses were Ps. 190, which was 11% higher than the number recorded in the prior
year. This increase was a consequence of the combination of greater attendance at amusement parks in
Colombia, and to the fact that average expenditures of park visitors was higher than it was in 2011.
EBITDA in Other Businesses was Ps. 51, in comparison with Ps. 30 recorded in the prior year. This
increase was mainly due to the higher attendance levels seen at amusement parks, and to an increase in
the average expenditures by visitors, and to efficiencies achieved in costs and expenses.
Financial revenues (expenses)
During 2012, net interest paid totaled Ps. 261, in comparison with Ps. 464 recorded during the previous
year. This decrease was a consequence of the following: 1) early debt payment of Ps. 2,630 made in
February 2012, using the net funds from the sale of 35.8% of CIE Las Américas; and 2) early debt payment of Ps. 638 in the second quarter of 2011, using funds from the decrease in the participation that the
Company had held in T4F.
99
Due to the Company’s assets and liabilities in foreign currency, exchange rate income of Ps. 24 was
recorded during 2012, compared with a loss of Ps. 83 in 2011.
Income tax
During 2012, Income Taxes were Ps. 324 in the provisions for income tax, the flat-rate corporate tax
incurred and the deferred income tax, in comparison with Ps. 345 in 2011.
Net income
Net income in the period was Ps. 195, compared with income of Ps. 112 in 2011. This increase was mainly a
consequence of the lower level of net interest paid during 2012.
Controlling stake in net income
During 2012, Net Income of Ps. 137 in the Controller's Stake was recorded, compared with a loss of Ps.
164 in 2011. This increase was due to a lower level of net interest paid by the Controller due to early
payment of debt in February 2012.
100
(For a more in-depth explanation regarding the financial results for the year 2011, as well as for the
purposes of comparison, see the Audited Consolidated Financial Statements at December 31, 2011, which
are part of the 2011 Annual Report).
101
(For a more in-depth explanation regarding the financial results for the year 2010, as well as for the
purposes of comparison, see the Audited Consolidated Financial Statements at December 31, 2010, which
are part of the 2010 Annual Report).
102
4.4. Financial Position, Liquidity and Capital Resources
Historically, the Company’s sources of liquidity have been: (i) internal generation of funds through its own
operations, including financing through working capital; (ii) bank debt, (iii) market debt, and (iv) issuing
capital.
The principal liquidity and capital resources requirements consist of:

Capital investment expenses for current and future operations;

Debt service requirements for present and future needs; and

Costs and expenses related to running CIE’s businesses.
The Company believes that the resources obtained through its operations, together with those obtained
through the use of lines of credit and other financing methods assumed, are adequate to meet its needs
related to servicing its debt, working capital and short-term capital investment expenses. This situation
may change, however, if the Company enters into new strategic partnerships or joint ventures, or if these
change from time to time. In addition, the future performance of CIE’s operations and its capacity to
service and repay its debt or to pay its loans in advance, are subject to certain economic conditions and in
relation to its competition, in addition to other business and financial factors that may arise in the future.
For the fiscal year ended December 31, 2012, the Company recorded net cash flows from operating activities of Ps. (151.6); net cash flows from investment activities of Ps. 1,950.1; and net cash flows from financing activities of Ps. (1,045.9).
(For more information, including information referring to fiscal years 2010 and 2011, see Section 1.3 "The
Company's Principal Investments" in Chapter II "The Company").
Indebtedness
(For a more detailed explanation, see Section 3. “Report on Significant Loans” in Chapter III “Financial
Information.” In addition, for more information regarding the Company’s tax credits or debts, see the
Audited Financial Statements for December 31, 2012 and 2011, and at January 1, 2011).
Lines of credit
(For more information in this regard, see Section 3. “Recent Events” in Chapter I, "General Information,"
of this Annual Report, as well as the same section in the Document for fiscal year 2011).
On January 4, 2008, Unimarket, S.A de C.V., a wholly owned subsidiary of CIE dedicated to marketing
field-level advertising space in professional soccer stadiums in Mexico, entered into a framework agreement for derivative and regulated financial operations for an undefined period with Banco Santander, S.A.
Institución de Banca Múltiple, Grupo Financiero Santander (“Santander” or the “Institution”). Subsequently, on January 24, 2008, the two parties entered into a foreign purchaser credit agreement in the amount of
1,475,666.60 euros (one million, four hundred and seventy-five thousand, six hundred and sixty six euros
and sixty cents), or Ps. 24,016,456.17 (twenty-four million, sixteen thousand, four hundred and fifty-six
Mexican pesos and seventeen centavos) on the contracting date, which was used to purchase assets and
specialized technological equipment from European providers to strengthen the subsidiary’s commercial
operations and to replace its fixed assets.
103
On February 29, 2008, upon authorization from corporate entities and brokers, and CIE’s internal control,
a financial derivative swap instrument for hedging (not negotiating) exchange rates and interest rates,
which is operated through an independent contract (OTC – Over the Counter) was contracted pursuant to
the conditions described below:
Original Conditions
SWAP Transaction
Notional Amount
1,475,666.60 euros (equal to approximately
24,016.456.17 Mexican pesos)
24,016,456.17 Mexican pesos (equal to 100% of
the original notional amount)
Interest Rate
Euribor 6 months + 100 basis points
9.15% (fixed)
Payment
10 equal payments every six months
10 equal payments every six months
Maturity
December 19, 2012
December 19, 2012
At the close of the fourth quarter of 2012, this loan was completely paid off, with its last six-month payment
made on December 19, 2012. The contracted derivative instrument was also canceled. Throughout its life,
the Unimarket loan from Santander had a marginal contribution of less than 0.01% (zero point one
percent) to CIE's consolidated bank and market debt.
Ocesa Entretenimiento, S.A. de C.V. (“Ocesa”), CIE’s subsidiary dedicated to the production and promotion
of live entertainment events, among other sector-related activities, entered into two financial derivatives
instruments with Santander in the fourth quarter of 2012. The terms and conditions that were agreed to,
which are protected under a framework agreement entered into with Santander for derivative and regulated financial operations in Mexico, with an undefined term, consider the purchase and sale of United States
dollars at a fixed price on a certain date using the non-deliverable forwards method, in other words using
the compensation method. This method means that upon their expiration, the spot exchange rate is
compared with the forward exchange rate, and the unfavorable difference is paid by the corresponding
party.
On December 10, 2012, Ocesa entered into two forwards contracts, each for the amount of US$
4,374,000.00 (four million, three hundred and seventy-four thousand United States dollars and 00/100)
or its equivalent of Ps. 56,638,926 (fifty-six million, six hundred and thirty-eight thousand, nine hundred
and twenty-six Mexican pesos and 00/100) and Ps. 56,862,000.00 (fifty-six million, eight hundred and
sixty-two thousand Mexican pesos and 00/100), each with their own expiration date. Their expiration
dates are February 28, 2013 and April 30, 2013. The contracted forward exchange rate parities they use are
Ps. 12.9490/US$ and Ps. 13.0000/US$, respectively. In both cases, the purpose of these forwards is to
cover the risks that are inherent to the exchange rate volatility between the Mexican peso and the United
States dollar for certain expenses for artistic talent and large-scale event-production projects denominated
in United States currency. Neither Ocesa nor CIE seeks to speculate in foreign currency by means of these
activities. Based on the terms and conditions of the contracts, Ocesa must provide Mexican currency to
Santander in exchange for United States currency, which Santander will give to Ocesa.
(For purposes of clarity for the reader, the spot exchange rates on December 10, 2012 and December 31,
2012 were Ps. 12.8500/US$ and Ps. 12.9658/US$, respectively).
(The reader is advised to read the Company’s financial and operating results for the first quarter of fiscal
year 2013, in order to better understand the derivative financial instruments in force at April 26, 2013, in
relation to its results for the first quarter of 2013).
104
Note that this derivatives operation is not subject to any speculation whatsoever in the open market, as it is
fully regulated based on its own terms and conditions. The notional amounts regarding the derivative
financial instruments reflect the contracted reference volume; however, they do not reflect the amounts at
risk with respect to future flows. The amounts at risk are generally limited to the unrealized profit or loss
due to the market valuation of these instruments, which may vary according to changes in the market value
of the underlying asset, its volatility and the credit quality of the other parties.
Based on the foregoing, Company Management believes that this is not a substantial impact on Ocesa’s
financial structure, cash flow and results, due to the future prices of contracted foreign currency, their short
term, and their low materiality in relation to their amount. In addition, CIE Management believes that
there will not be substantial changes in the exchange rate parity between the Mexican peso and the United
States dollar and in the economic environment; but if changes should occur, they still would not cause a
material adverse impact. The Company also believes that this instrument does not materially impact its
cash flow, results, and financial structure, respectively.
Managing this process is the responsibility of the Company’s Corporate Treasury Department, which
receives support in the control, policies and monitoring from CIE’s Internal Auditing area and Finance
Committee.
Every month the Comptroller’s Corporate Division assesses and records in its financial statements the
economic impact of the derivative financial instruments contracted by the Company, considering their
terms and conditions, as well as in relation to applicable accounting principles in force. For this, the
Company uses International Financial Reporting Standards. Specifically, IAS-39 “Financial Instruments –
Recognition and Measurement” is the standard that describes the accounting treatment to be given to
derivative instruments, and how to record those instruments. It should be noted that given the nature of
the derivative instrument in question (the hedge condition itself), it is not necessary to perform any type of
sensitivity analysis whatsoever, which criteria and practice are followed by Corporación Interamericana de
Entretenimiento.
Management's discussion on the policies regarding the use of derivative financial instruments,
explaining whether those policies allow them to be used only for hedging purposes, or if there
are other goals, such as trading
CIE has internal control practices and criteria that are applied to operations with derivative financial
instruments. In general, the Company has entered into these operations with the objective of reducing the
volatility of the currency exchange rates to which it is exposed. CIE only uses derivative financial instruments for hedging purposes, and does not contract derivative instruments for trading purposes, however,
during their period of effectiveness, and given the requirements to be able to comply with hedge accounting
criteria, the instruments might not qualify as hedge accounting instruments.
The practice that Management has been following consists of derivative financial instrument transactions,
as required, being discussed in CIE's Audit and Company Practices Committee, and/or in the Board of
Directors Meetings.
The derivative financial instruments that the Company has used are mainly foreign currency forwards
contracts, and contracts through which the bilateral obligation to exchange cash flows on pre-established
future dates is established, over a nominal or reference currency value (Cross Currency Swaps), to convert
the currency in which both the principal and interest of an interest-bearing financial liability is denominated.
105
Framework agreements are entered into for derivative financial instruments transactions with domestic
and foreign financial institutions. When contracting derivative financial instruments with foreign parties,
the Company uses the master contract approved by International Swaps and Derivatives Association, Inc.
("ISDA"), and in the cases in which Mexican companies are contracted with, the Company has used the
format approved by the ISDA and the format recommended by the Bank of Mexico. In both cases, the main
conditions or terms are standard in this type of transaction, including mechanisms to appoint calculation
or assessment agents. Also entered into are standard guarantee contracts that determine policies regarding
margins, collateral and lines of credit that must be granted at certain times. The credit limits that the
financial institutions with which the Company enters into derivative framework agreements are established
in these contracts, and they apply in the event of negative fluctuations in the market value of the open
positions in derivative financial instruments. In conformance with the contracts entered into by the
Company, financial institutions establish margin calls in the event that certain limits are exceeded. On
December 31, 2012 and on the date of this Annual Report, as well as in the past, the Company has not had
any margin calls.
The established operations have followed the practice of designating the other party as the calculation or
assessment agent. To date, an independent third party has not been hired specifically to review those
procedures. Nevertheless, the control processes and corresponding records are worked on internally.
Generic description of assessment techniques, distinguishing the instruments that are assessed
at cost or at fair market value in terms of applicable accounting rules, as well as assessment
methods and techniques with relevant reference variables and the assumptions used. There is
also a description of the policies and frequency of assessment, and the actions established as a
function of the assessment obtained
The assets or liabilities resulting from the rights and obligations established in the Company's derivative
financial instruments are recognized at their fair market value, which is initially represented by the agreed
consideration, and subsequently the fair market value of financial assets and liabilities is represented by
the market price. The market price is determined by an independent third party, which is the party with
which the derivative financial instruments have been entered into.
The result of that valuation is recognized in the results for the period, unless it is in relation to a cash flow
hedge in which the effective portion of the gains or losses is recognized within the integral income account
in accounting capital, and the ineffective portion is immediately recognized in the results for the period.
To evaluate the effectiveness of the hedge, the Company verifies that the characteristics of the hedge
instrument and the primary position are equal (notional amount, reference rates for payment and collection, and the related bases, the effectiveness of the contract, the date of establishing the price and payment,
dates of settlement and liquidation, among others).
Management's discussion on the internal and external sources of liquidity that could be used to
meet the requirements related to derivative financial instruments
To date, the Company has complied with all of its obligations in relation to the derivative financial instruments in force. If required, the Company could use internal sources, and it does not expect it will have to
resort to any external source.
106
Explanation of changes in exposure to the main risks identified, and in managing those risks, as
well as contingencies and events that are known of or expected by Management, which may
have an impact on future reports
The financial risks to which the Company is exposed include third party, exchange parity and interest rate
risk. CIE’s Board of Directors and the Management and Finance Board periodically and specifically
monitor those risks. Changes in the exposure of various risks are made in accordance with the instructions
of the Company's Board of Directors, as well as the Management and Finance Board.
At this time, the Company has no knowledge of any event that might modify exposure in future reports. In
addition, it has no knowledge of any movement that significantly impacts its reference variables, and that
could be additionally recognized and revealed in its financial statements.
The effects due to changes in the fair market value of derivative financial instruments at December 31,
2012, are detailed at the start of this document, and are recognized in the breakdown of the main lines on
the income statement.
Turnover of working capital
For the purpose of making working capital turnover at certain of CIE’s subsidiaries more efficient, whose
activities are related to marketing advertising sponsorships for events and performance venues in Mexico,
and field-level rotating advertising at professional soccer stadiums in Mexico, at the end of 2009, discount
operations for accounts receivable were recorded with some Mexican banks. At the close of 2012, the
Company did not have any balance recorded for this type of transaction.
Treasury operations
At present, CIE manages a system of centralized shared services in Mexico (payroll, investment of surpluses, obtaining and managing lines of credit, purchase and sale of foreign currency and other securities, as
well as payments and taxes, among other specialized items), at all times under the control and oversight of
the Group’s Corporate Division, through its corporate treasury and Finance Committee. For this purpose,
general policies and procedures are established and validated by the internal auditing unit of the Corporate
Treasurer’s Office, for each and every service and product used by the Group’s different treasury offices.
In order to adequately manage its excess cash, CIE uses the practice of investment “pools,” by which it
obtains and selects the best investment rates according to specifications of period and type of paper. The
goal of these investment transactions is to obtain the highest return while reducing risk, thus investments
are made exclusively in government paper and bank acceptances from AAA banks, through auctions of cash
surpluses by means of a multi-dealer system, thus ensuring the best available return at that time.
CIE works with solid financial institutions, both local and international, and believes that it has the best
available services dedicated to corporate treasury activities. In addition it has an Electronic Treasury
System comprised of modules (revenues, expenditures, investments, reconciliations, foreign currency
purchase-sale, inter-company operations, financing and cash flow) that allow the Company to manage,
control and record transactions automatically on a single platform. This system also has interfaces with the
107
electronic balconies of the banks with which the Group works, and the ERP of CIE, creating added value to
the processes of control and efficiency in resource management.
In particular, the Company holds cash positions both in Mexican pesos and in foreign currency, mainly
United States dollars.
108
4.5. Devaluation and Inflation
Mexico is the Company’s main market. The Mexican peso has recently experienced substantial temporary
exchange rate volatility against foreign currencies, including the US dollar, as well as low levels of inflation.
Although the Mexican economy has shown great stability in recent years, there may be variations that
could affect the country’s economy, which could translate into a negative impact on the Group’s operations:

A devaluation of the Mexican peso generally results in a significant decrease in the purchasing
power of the Mexican consumer, which translates into a contraction in the demand for live entertainment services and products. CIE seeks to mitigate that impact on demand by modifying the mix
of its products, including a greater number of smaller-scale events, performed with local artistic
talent.

Due to market conditions, as well as the overall state of the Mexican economy, the Company does
not always have the capacity to increase its prices in line with inflation. This negatively affects the
Group’s gross margin. However, that effect is mitigated by the fact that the increase in the royalties
for artistic talent (which is paid in Mexico pesos) generally lags behind inflation.

CIE’s costs and income denominated in United States dollars are generally not substantial when
compared to the Group’s consolidated totals. In a period of significant devaluation of the Mexican
peso, this ratio may negatively affect CIE’s margins, and the Company seeks to mitigate that effect
through the natural coverage provided by the advance sale of entry tickets to its live events, and the
respective income that is obtained in foreign currency to pay for the artistic talent that is hired. CIE
also seeks to mitigate this effect through the sale of certain advertising sponsorships to clients in
United States dollars for live international events.

A net liability position denominated in United States dollars could lead to material exchange rate
losses during periods of devaluation of the Mexican peso against the US dollar. This is because the
appreciation of the US dollar results in an increase in the amount of Mexican pesos to be converted
to US dollars earmarked to pay dollar-denominated liabilities.

Until 2012, the inflationary effect on CIE’s net monetary position denominated in Mexican pesos
could have resulted in a non-monetary gain or loss, depending CIE’s asset or liability position. For
example, a gain on monetary position results from holding net monetary liabilities in Mexican pesos during inflationary periods, as the purchasing power of the Mexican peso declines over time.
The economic conditions resulting from the factors described above have affected and may negatively affect
the Group’s financial condition. At December 31, 2012, approximately 19.0% (nineteen percent) of CIE’s
bank and market liabilities at were denominated in foreign currency; at the close of 2011, the percentage of
bank and market liabilities in foreign currency was closer to 14.0% (fourteen percent). For fiscal year 2010,
this number was approximately 12.2% (twelve point two percent). The Group specifically keeps its debt
denominated in foreign currencies, mainly in US dollars, and to a lesser extent in euros and Colombian
pesos. If anything were to occur to devalue the Mexican peso, the Company’s debt in Mexican pesos would
increase, due to an increase in CIE’s debt service that is denominated in Mexican pesos.
During 2010, 2011 and 2012, there were no relevant unregistered transactions.
109
4.6. Internal Control
General
Through its Administration and Finance Department, CIE continuously improves its internal control to
ensure a trajectory toward its proposed goals and to achieving its mission, by means of an ongoing evolution of the existing information systems and rules, according to the business environment, which promotes
reduction of risks, improving efficiency and the reliability of financial information, ensuring compliance
with the laws and regulations in effect in matters of Corporate Governance, and according to best practices.
The Group has an Internal Audit area that reports to CIE’s Audit and Corporate Practices Committee,
presided over by an independent board member, which in turn reports to the Company’s Board of Directors.
The purpose of Internal Audit is to perform independent and objective evaluations, to provide added value
that promotes efficiency in realizing operations, monitoring the observance of rules, efficacy of risk management processes, control and corporate governance, and to be an advisory area that supports obtaining
the Group’s goals.
Internal Audit is aligned with the Group’s structure (by divisions), and it seeks to create a culture of selfcontrol within the Group.
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5. CRITICAL ACCOUNTING ESTIMATES
Starting on January 1, 2012, in order to prepare its consolidated financial statements, the Company
adopted the accounting framework established in International Financing Reporting Standards (IFRS), in
order to comply with the provisions established by the National Banking and Securities Commission.
The following is a summary of the most significant accounting policies, which have been consistently
applied.
The IFRS require certain estimates and the application of certain criteria by CIE’s management. Those
estimates and application of criteria are based on the Group’s prior experience, current trends, and other
factors considered by CIE’s management to be important in preparing the financial information.
When applying the Company’s accounting policies, Company management must make judgments, estimates and assumptions on the book value of assets and liabilities. The related estimates and assumptions
are based on historical experience and on other factors that are believed to be relevant. Actual results may
differ from those estimates.
Determining income tax
For the purposes of determining deferred income tax, the Company must make tax projections to determine if the Company will cause the Flat Rate Business Tax or Income Tax, and thus consider the tax caused
as the basis for determining the deferred taxes.
Estimation of useful lives and residual values of properties and equipment
The Company reviews the estimated useful life and the residual values of properties and equipment at the
end of each annual period. During the period, it was not determined that the life and residual values must
be modified since, in accordance with management’s assessment, the useful lives and residual values reflect
the economic conditions of the Company’s operating environment.
Commitment and evaluation of contingencies
Company Management has established a procedure to classify its material contingencies into three different categories: (i) likely, (ii) reasonably like, and (iii) remote. The purpose of the foregoing is to identify the
contingencies that require registration or disclosure in the financial statements, and to design and operate
effective control to ensure that they are adequately recognized.
Based on what is stated by the Company’s legal department, at December 31, 2012, registered contingencies
were Ps. 12.5.
Investments in associated companies, with a shareholder stake of less than 20%
CIE analyzes whether it has significant influence over those entities in which it owns less than 20% of the
shares with voting rights, evaluating if it has influence and participates in the processes of establishing
financial and operating policies, if it has representation on the board of directors, or an equivalent managing body in the entity in which it holds a stake, if there are significant transactions between CIE and the
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company in which it holds a stake, an exchange of managing personnel, or supply of essential technical
information. If, from the analysis, CIE determines that it exercises significant influence in these entities,
these are considered to be investments in associated companies, and they are recorded using the equity
method and they are initially recognized at cost
Adopting International Financial Reporting Standards
Starting on January 1, 2012, in order to prepare its consolidated financial statements, the Company
adopted the accounting framework established in International Financing Reporting Standards (IFRS), in
order to comply with the provisions established by the National Banking and Securities Commission.
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IV. Administration
1. OUTSIDE AUDITORS
CIE’s Audit and Corporate Practices Committee, upon analysis and assessment of the function of external
auditing, and taking into account the amount of fees paid for the year transpired from January 1 to December 31, 2012, recommended to the Board of Directors of Corporación Interamericana de Entretenimiento,
that it hire the companies PwC and Crowe Horwath Gossler, which carried out the external auditing work
for fiscal year 2012.
That Committee also confirmed that the requirements of independence and rotation of supervisor staff had
been met. It also reviewed the procedures and scope of audit tests, as well as the auditors’ comments
regarding internal control. It reviewed the Group’s financial statements at December 31, 2012, the auditor’s
report, and the accounting policies used to prepare them, and it complied with the Securities Market Law.
After hearing the comments of the external auditors, it recommended to CIE’s Board of Directors that it
approve the financial statements for consideration at the Shareholders’ Meeting.
For fiscal years 2010, 2011 and 2012, PwC invoiced and charged the Group for accounting auditing services
and services other than auditing services, the amounts of Ps. 17.6, Ps. 19.4 and Ps, 14.7.Specifically, of these
amounts, approximately 49.0% (forth-nine point zero percent), 42.0% (forty-two point zero percent) and
31.0% (thirty-one point zero percent), were for services other than auditing services performed in the three
mentioned fiscal years, respectively, fundamentally in tax and business consulting, and in collaboration in
implementing the IFRS.
Crowe Horwath Gossler invoiced and collected from the Company for accounting auditing services and tax
services the amounts of Ps. 3.8, Ps. 4.5 and Ps. 3.9 for fiscal years 2010, 2011 and 2012, respectively, of
which 1.6% (one point six percent), 0.9% (zero point nine percent) and 0.0% (zero percent) are for services
other than accounting auditing services.
During the Company’s existence, no qualified or negative opinion has been issued by either of the abovementioned firms that perform auditing work for CIE, nor has either firm refrained from issuing an opinion
regarding the financial statements of the Company and its subsidiaries.
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2. TRANSACTIONS WITH RELATED PARTIES AND CONFLICTS OF
INTEREST
As part of its activities in the normal course of business, the Company carries out, and contemplates
continuing to carry out, a series of transactions with related parties, all of which are done in accordance
with prevailing market conditions, therefore it is believed that the terms are no less favorable than those
that could apply to transactions with unrelated third parties. The main transactions between CIE and
related parties are through current account credit agreements that CIE maintains with its subsidiaries.
Based on these agreements, as well as other non-relevant transactions the Company carries out with its
subsidiaries, as of December 31, 2011, there were several accounts payable between CIE and its subsidiaries.
In compliance with the Securities Market Law, the Company has taken the necessary steps to report
transactions with related parties, both to its Board of Directors, as well as to the Audit and Corporate
Practices Committee. Similarly, the Company discloses transactions of that type in its audited financial
statements, which, for the purposes of this Annual Report, are included in the audited financial statements
at December 31, 2012 attached to this Document, mainly in notes 7 and 8 thereto.
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3. ADMINISTRATORS AND SHAREHOLDERS
Pursuant to the provisions of the Securities Market Law published in the Official Gazette on December 30,
2006, administration of companies listed on the stock exchange (Sociedades Anónimas Bursátiles – SAB)
will be entrusted to a Board of Directors and a Chief Executive Officer.
Board Members
CIE’s Board of Directors is currently comprised of nine regular members (there are no alternate members),
of whom one is an owning board member, four are related members, and four are independent board
members. Their functions are stipulated in Clauses Twenty-One and Twenty-Two of the Company’s ByLaws, which form part of this Document. (For more information, see Section 4. “Corporate By-Laws and
Agreements,” in Chapter IV “Administration” in this Document).
The Board of Directors is elected annually at the General Annual Ordinary Shareholders’ Meeting. The
current members of the Board of Directors were named and ratified at the General Annual Ordinary
Shareholders’ Meeting held on April 29, 2013. The members of the Board of Directors do not have to be
shareholders and remain in their position for one year, and may be re-elected. The following is information
on CIE’s current board members:
Name
Position
Date of Birth
Chairman
5 /31 / 1960
Related Board Member
9 / 13 / 1963
Juan Manuel Pérez Díaz
9 / 17 / 1960
8 / 11 / 1963
Leopoldo Escobar Latapí
Independent Board Member
President of the Audit and
Corporate Practices Committee
4 / 21 / 1961
Jorge Fernández de Miguel
Member of the Audit and Corporate
Practices Committee
4/ 13/ 1950
Carlos Elizondo Mayer-Serra
Alternate President of the Audit
and Corporate Practices Committee
2 / 23 / 1962
Bernardo Malpica Hernández
1 / 27 / 1966
Víctor Manuel Murillo Vega
4 / 05 / 1959
Mónica Lorenzo Gutiérrez
Non-Member, Owning Secretary of
the Board of Directors
4 / 26/ 1976
Eduardo Mondragón Mora
Non-Member Alternate Secretary
of the Board of Directors
9 / 26 / 1967
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The following is a brief biography of the members of CIE’s Board of Directors:
Luis Alejandro Soberón Kuri is the founder of CIE and has been the Chairman of the Board of Directors and Executive President of the Group since its inception. In December 2006 he was named CIE’s Chief
Executive Officer. Prior to working as a businessman in the out-of-home entertainment industry, Luis
Alejandro Soberón Kuri was a feature film producer. Mr. Soberón Kuri was a member of the Board of
Directors of Teléfonos de México (Telmex), S.A. de C.V. and Grupo Aeroportuario del Sureste, S.A.B. de
C.V. He is currently a member of the Board of Directors of Banco Nacional de México, S.A., and América
Móvil, S.A. de C.V. Mr. Soberón graduated with a degree in Business Administration from Universidad
Iberoamericana in Mexico City.
Rodrigo Humberto González Calvillo has been a member of CIE's Board of Directors since 2001,
during which time he recently served as Vice President. He is currently a Related Board Member. Mr.
González acts as Chief Executive Officer of CIE Las Américas Rodrigo González joined the Group in 1990
when he started up the operations of Venta de Boletos por Computadora, S.A. de C.V., the company in a
joint venture with Ticketmaster Group, Inc., where he served as Chief Executive Officer until 1994. From
1994 to 2000 he was the Group’s Director of Business Development and for the Entertainment Division.
Subsequently, from 2000 to 2006, he served as Chief Operating Officer of the CIE Group, and from 2006
to 2008 he acted as Deputy Chief Operating officer of the CIE Group. He holds a degree in Business
Administration from the University of Southern California.
Juan Manuel Pérez Díaz has been a Company Board Member since 2009, and he is Commercial
Director of CIE Commercial. Mr. Pérez Díaz joined the Group in 1996, taking over the position of Commercial Director, and subsequently acted as Chief Executive Officer of the subsidiary Make Pro, S.A. de C.V.
Previously, between 1985 and 1994, he acted in various management positions in companies such as
Productos Nacobre, S.A., where he was responsible for the Human Resources and International Sales areas.
He also worked at The American Express Company (Mexico), acting as the Manager of Key Accounts and
the Senior Manager of National Sales. In 1994, Juan Manuel Pérez Díaz was the Commercial Director of
Organización Britania. Manuel Pérez Díaz holds a degree in Industrial Relations from Universidad
Iberoamericana, where he regularly lectured in the Business Department between 1983 and 1991.
Federico González Compeán has been a Board Member of CIE since 1995. Prior to joining CIE, Mr.
González was a television producer, he won the National Journalism Prize in 1987 for the show Hoy en la
Cultura on Channel 11, he was Director of Teatro de la Ciudad, the Auditorio Nacional and Palacio de los
Deportes, and he also acted as Director of Ocesa Presenta. He has produced the Broadway-type musicals
Beauty and the Beast, Phantom of the Opera and, Les Misérables, as well as smaller-format pieces such as
and Mentiras, and Si nos Dejan, among many others. Mr. González Compeán was the Chief Executive
officer of CIE España, Director of the Content Division of CIE, producer of several films for Alta Vista
Films, which was a CIE subsidiary at the time, among which his last production, Arráncame la Vida, was a
standout. He is currently the Director of CIE’s International Division. Mr. González holds a Communications degree from Universidad Autónoma Metropolitana in Mexico City, a degree in Photography from the
University of California at Los Angeles (UCLA), and he has taken various refresher and study courses at the
Panamerican Institute of Upper Management for Companies (Instituto Panamericano de Alta Dirección de
Empresas - IPADE).
Leopoldo Escobar Latapí has been a member of CIE’s Board of Directors since 2009. He was named
Chairman of CIE’s Audit and Corporate Practices Committee during the Shareholders Meeting held on
April 14, 2011. He graduated from Instituto Tecnológico Autónomo de México (ITAM), he is a partner at
the Instituto Mexicano de Contadores Públicos, A.C., the Colegio de Contadores Públicos de México, A.C.,
and a member of the International Tax Association. He has 26 years of experience in tax consulting, both
at international and Mexican firms, and as an independent consultant, heading the firm Escobar Latapí
Consultores, S.C. He has been a member of the Executive Committee of the Colegio de Contadores Público
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de México A.C., and was a member of the Honor Board and the Governing Board of that institution. He is
currently a member of the Finance Committee.
Jorge Fernández de Miguel has been a member of the Board of Directors and a member of CIE’s Audit
and Corporate Practices Committee since 2011. Mr. Fernández has performed his professional work in
recent years at the Academy, and is currently a professor in the Department of Corporate Studies, and a
member of the Technical Board of Masters’ in Business Administration. He is an independent consultant,
has developed strategic planning projects, change administration, and design and development of talentdevelopment programs, among others. He was the Director of the Development Center of Sistema de CocaCola de México, Director of Entertainment and Development for Latin America at The Coca-Cola Company,
and Corporate Director of Human Resources, Planning and Quality for Grupo Kaltex. He graduated with a
Master’s Degree in Business Administration from Universidad Iberoamericana.
Carlos Elizondo Mayer-Serra is a research professor at Centro de Investigaciones y Docencia
Económicas, A.C. (“CIDE”). He has been a member of CIE's Board of Directors since 2001. On April 14,
2011, CIE's Shareholders' Meeting named him Alternate President of the Company’s Audit and Corporate
Practices Committee. Mr. Elizondo has a Master’s and a Doctorate Degree in Political Sciences from Oxford
University.
Bernardo Malpica Hernández has been a Board Member of CIE since 2009. He has been a partner at
Praemia, S.C., an investment banking firm, since the start of 2004. From 2001 to 2003, he headed merger
and acquisition activities in Mexico at ING Bank. Before joining ING Bank, Mr. Malpica acted as the
Finance Director at Artikos, an e-commerce joint venture business between Banamex and Commerce One,
and prior to that he was Director of Investment Banking at Operadora de Bolsa Serfin, where he was
responsible for public offers of shares made by that firm. He has a degree in Business Administration from
Universidad Iberoamericana, and an MBA from the Kellogg Graduate School of Management from Northwestern University in the United States.
Mr. Víctor Manuel Murillo Vega has been the Chief Executive Officer of CIE Commercial since 2012.
From 2001 to 2012, he acted as Corporate Director of Administration and Finance. He has been a Board
Member since 2010. He previously served as Executive Vice President and Regional Director of Banco
Nacional de México for its North America and Latin America Division. He also occupied several management positions in Mexico, the United States and Europe, with the same financial institution. Víctor Murillo
has been a member of the Boards of Directors of Afore Banamex and Seguros Banamex since 2004. Mr.
Murillo has a degree in Business Administration from Universidad Iberoamericana, with a specialty in
Finance from that same institution.
The independence of the independent Board Members was qualified in the General Annual Ordinary
Shareholders’ Meeting held on April 29, 2013. It is important to note that the independent Board Members
do not fall under any of the assumptions stated in Article 26 of the Securities Market Law. In addition, the
biographies of the Owning Secretary and the Substitute Secretary of the Board of Directors of Corporación
Interamericana de Entretenimiento, are shown below:
Mónica Lorenzo Gutiérrez is the Secretary of CIE's Board of Directors. Her appointment was ratified at
the Annual Ordinary General Shareholders’ Meeting held on April 29, 2013. She has worked for CIE’s
corporate and international divisions since March 2002. She has a law degree from Universidad La Salle,
and has taken numerous courses related to Corporate Law and Intellectual Property at Universidad
Panamericana and Universidad Iberoamericana. The courses taken at Universidad Iberoamericana were in
conjunction with Georgetown University.
Eduardo Mondragón Mora is the Alternate Secretary of CIE’s Board of Directors. His appointment
was ratified at the General Annual Ordinary Shareholders’ Meeting on April 29, 2013. He has worked for
CIE since 1998. Mr. Martínez holds a Law Degree from Universidad Intercontinental, he has a specialty in
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Commercial Law from Universidad Panamericana, and he has studied Upper Level Corporate Management
at Instituto Panamericano and Universidad Iberoamericana.
Regarding the Company’s Audit and Corporate Practices Committee presided over by Mr. Leopoldo
Escobar Latapí, see Section 4. “Corporate By-Laws and Other Agreements” in Chapter IV “Administration”
of this Document.
Mr. Leopoldo Escobar Latapí was named Chairman of CIE’s Audit and Corporate Practices Committee, by
the Annual General Ordinary Shareholders' Meeting held on April 29, 2013, replacing Mr. Roberto
Albarrán Campillo. This body functions as a single committee, as stipulated by the Mexican Securities
Market Law.
Chief Executive Officer
The position of Chief Executive Officer is currently held by Mr. Luis Alejandro Soberón Kuri.
Pursuant to the new Securities Market Law and the Company’s current by-laws, the functions of the Chief
Executive Officer will include the following:
(a) To submit the business strategies of the Company and the legal entities that the Company controls
for approval by the Board of Directors, based on the information that they provide.
(b) To comply with the resolutions adopted at the shareholders’ meetings and the Board of Directors,
according to the instructions provided in each case by the shareholders’ meeting or the Board.
(c) To propose the guidelines of the internal control and audit system of the Company and the legal
entities that the Company controls to the committee that will perform audit duties, and to enforce
the guidelines adopted by the Board of Directors to that effect.
(d) To endorse the significant information of the Company together with the Directors responsible for
preparing that information, in the area of their competence.
(e) To distribute the relevant information and events that must be disclosed to the public, in compliance with the provisions of the Securities Market Law.
(f) To comply with the provisions regarding transactions for purchase and placement of the Company’s shares, approved by the Board of Directors.
(g) To file, either itself or through an authorized representative, within the scope of their authority or
upon the instruction of the Board of Directors, the appropriate actions for remediation and liability.
(h) To verify that the capital contributions are made by the partners.
(i) To comply with established legal and statutory requirements, in order to declare dividend payments to shareholders.
(j) To ensure maintenance of the accounting, recording, archiving or information systems of the Company.
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(k) To prepare and present to the Board of Directors the report indicated in Article 172 (ONE HUNDRED AND SEVENTY-TWO) of the General Law of Corporations, with the exception of the report
indicated in section (b) thereof.
(l) To establish the internal mechanisms and controls that will allow ensuring that the actions and
activities of the Company and legal entities controlled thereby are in compliance with applicable
rules, and to track the results of those internal mechanisms and control and to take the measures
necessary, as applicable.
(m) To exercise the actions for liability set forth in the Securities Market Law, against related parties or
third parties that have allegedly caused damage to the Company or to the companies that the Company controls, or in which it has a significant influence, unless it is determined by the Board of Directors and by the opinion of the committee in charge of auditing functions that the damage caused
is not relevant.
(n) To coordinate the performance of all activities inherent to the Company’s purpose, and the companies controlled by it.
(o) To create management committees to assist him in the discharge of his duties, which committees
shall be formed in the manner determined by the Chief Executive Officer.
(p) To grant and revoke general, limited and/or special powers of attorney as directed by the Board of
Directors.
(q) To perform any other duty provided for in the by-laws, the shareholders’ meeting, the Board of Directors, or the special committees.
TWENTY-NINE. POWERS OF THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
Company will have the following general powers in order to perform his functions:
(a) General powers for litigation and collection purposes, including but not limited to, any general or
special authority that must be vested by a special clause pursuant to the law as prescribed by the
first paragraph of Article 2554 (TWO THOUSAND FIVE HUNDRED AND FIFTY-FOUR) of the
Civil Code for the Federal District, the relevant Civil Codes of the entities of the United Mexican
States, and the Federal Civil Code; the Chief Executive Officer will be empowered to do the following, including but not limited to: filing criminal actions, filing criminal reports and granting acquittals to becoming a complainant or co-complainant in criminal proceedings, to abandon actions
filed and lawsuits regarding protection of constitutional rights; to transact, to submit to arbitration,
to pose and answer requests for admission, to make assignments of property; to see to the recusal
of judges, to receive payments and perform any actions expressly prescribed by the law, including
representation of the Company before judicial and administrative authorities, whether civil or
criminal, and before labor authorities and courts;
(b) General powers for acts of administration and ownership pursuant to paragraphs two and three of
Article 2554 (TWO THOUSAND, FIVE HUNDRED AND FIFTY-FOUR) of the Civil Code for the
Federal District, the relevant Civil Codes of the Federal Entities of the United Mexican States, and
the Civil Federal Code, pursuant to the following:
(i) In the case of general powers for acts of administration entailing the exercise of voting rights to
shares, membership interests or securities or rights representing capital, the Chief Executive
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Officer must obtain prior authorization from, or act in accordance with the policies established
by the Board of Directors; and
(ii) To exercise acts of ownership, the powers conferred will be limited as follows: (A) in the event
of sale of properties owned by the Company and shares or stakes in the companies that are
controlled by the Company, it must be signed jointly with those determined by the Board of Directors, or with prior authorization from the Board of Directors or the shareholders' meeting;
(B) in the event of transactions referred to in section (c) of part III (THREE) of Article 28
(TWENTY-EIGHT) of the Securities Market Law, with prior authorization by the Board of Directors; and/or (C) when the transaction in question means an amount that is greater than or
equal to 20.0% (TWENTY PERCENT) of the Company's capital, with prior authorization from
the General Ordinary Shareholders' Meeting;
(c) Powers for acts of administration with specific powers in labor matters, pursuant to Article 2554
(TWO THOUSAND FIVE HUNDRED AND FIFTY-FOUR), paragraphs two and four of the Civil
Code for the Federal District, the corollary Civil Codes of the Federal Entities of the United Mexican States and the Federal Civil Code, and pursuant to Sections 11 (ELEVEN), 692 (SIX HUNDRED AND NINETY-TWO) parts II (TWO) and III (THREE), 786 (SEVEN HUNDRED AND
EIGHTY-SIX), 876 (EIGHT HUNDRED AND SEVENTY-SIX) and relevant provisions of the Federal Labor Law, to appear in his capacity as administrator and thus as a legal representative of the
Company, before any labor authority, related to Article 523 (FIVE HUNDRED AND TWENTYTHREE) of the Federal Labor Law, as well as before the Workers’ National Housing Fund Institute,
the Mexican Social Security Institute, and the National Workers’ Compensation Fund, in all matters related to those institutions and other public entities, and he is empowered to file any lawsuits
and exercise any rights to which the Company may be entitled, with all general and special powers
that must be vested by a special clause pursuant to the law, and he is empowered to reach settlements in conciliation proceedings on behalf of the Company, and to conduct the Company’s labor
negotiations;
(d) To subscribe, grant, endorse and secure all types of credit securities, whenever it is to comply with
the corporate purpose of the Company, pursuant to the terms of Article 9 (NINE) of the General
Law of Securities and Credit Transactions, in the cases that do not require authorization from the
Board of Directors or the Shareholders' Meeting; and
(e) Authority to grant and delegate general and special powers of attorney, to revoke and substitute
them, in whole or in part, in accordance with the powers vested in him, expressly including the authority for those people who have been granted those powers to in turn grant, delegate, substitute
or revoke them, in whole or in part, in favor of third parties.
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Officers and Directors
The following table shows the nine main officers and directors of Corporación Interamericana de
Entretenimiento, S.A.B. de C.V. in their positions as of the date of this Annual Report:
Name
Position
Date of Birth
5 / 31 / 1960
Chief Executive Officer of CIE Las Américas
9 / 13 / 1963
Víctor Manuel Murillo Vega
Chief Executive Officer of CIE Commercial
4 / 05 / 1959
Chief Executive Officer of CIE International
8 / 11 / 1963
Alejandro Garza Díaz
Corporate Director of Planning and
Promotion
Corporate Director of Administration and
Finance
2 / 27 / 1953
Jaime José Zevada Coarasa
11 / 12 / 1969
Juan Manuel Pérez Díaz
Commercial Director of CIE Commercial
9 / 17 / 1960
Eduardo Martínez Garza
Director of Operations of CIE Commercial
1 / 17 / 1965
George González Alvarado
Chief Executive Officer of CIE Entertainment
1 / 06 / 1960
The following are short biographies of the Company’s officers listed above, with the exception of the
biographies of Mr. Soberón Kuri, Mr. González Calvillo, Mr. González Compeán, and Mr. Murillo Vega,
whose biographies appear in the prior section:
Alejandro Garza Díaz is the Chief Executive Officer of OCESA Comercial. Mr. Garza began his career as
a production coordinator for the television program “Siempre en Domingo,” (Always on Sunday), working
for Promovisión Mexicana, a subsidiary of Grupo Televisa, between 1974 and 1985, and from 1985 to 1994
he acted as the Chief Executive Officer of Canto Nuevo, S.A. de C.V. In 1995, Alejandro Garza joined and
acquired a majority stake in RAC Producciones, S.A. de C.V., a live entertainment promoter in Mexico,
which company CIE acquired in 1997. He subsequently served as Corporate Director for the Company’s
Entertainment Division from 1997 to 2001. Mr. Garza holds a degree in Communication from Universidad
Iberoamericana.
Jaime José Zevada Coarasa has been the Group’s Chief Director of Administration and Finance since
2012. Before that he was the Chief Financial Officer, between 2002 and 2012. Between 1998 and 2001 he
acted as CIE’s Director of Investor Services. At the start of his professional career, Mr. Zevada ran his own
marketing business, later working with Bufete Industrial, a Mexican construction company, in the area of
Investor Relations and Corporate Communication between 1995 and 1998. Jaime Zevada studied International Relations at Universidad Nacional Autónoma de México, and has taken continuing education
programs and courses in Upper Management from Instituto Panamericano de Alta Dirección de Empresas.
Juan Manuel Pérez Díaz has been a CIE Board Member since 2009, and Commercial Director of CIE
Commercial. Mr. Pérez Díaz joined the Group in 1996, taking over the position of Commercial Director,
and subsequently acting as Chief Executive Officer of Make Pro, S.A. de C.V. Previously, between 1985 and
1994, he acted in various management positions in companies such as Productos Nacobre, S.A., where he
was responsible for the Human Resources and International Sales areas. He also worked at The American
Express Company (Mexico), acting as the Manager of Key Accounts and the Senior Manager of National
Sales. In 1994, Juan Manuel Pérez Díaz was the Commercial Director of Organización Britania. Mr. Pérez
Díaz holds a degree in Industrial Relations from Universidad Iberoamericana in Mexico City, where he
regularly lectured in the Business Department between 1983 and 1991.
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Eduardo Martínez Garza is the Director of Operations of CIE Commercial. Since joining CIE in 1996,
he has worked at different business units and subsidiaries of the Group, such as the Chief Executive Officer
of B-Connect Services, Chief Executive Officer of Video on Demand, Director of Services for Ticketmaster,
and Chief Executive Officer for Centro Banamex. He currently heads operations at CIE’s Commercial
Division, which includes the business units dedicated to alternative media, production of special events,
call centers, and the Group’s mobile advertising. Mr. Martínez holds a degree in Systems from Universidad
Iberoamericana, and a post-graduate degree in Systems and Procedures from the same university, and he is
also a graduate of Instituto Panamericano de Alta Dirección de Empresas.
George González Alvarado has been the Commercial Director of CIE Entertainment since 2002. From
1991 to 1993, he acted as the Director of Palacio de los Deportes; from 1993 to 1996 he was the Chief
Executive Officer of Operadora de Centros de Espectáculos, S.A. de C.V.; from 1996 to 1998 he was the
Chief Executive Officer of CIE-R&P, S.A.; and from 1998 to 2001 he acted as Regional Director for CIE in
Argentina, Brazil and Chile. Prior to joining the Group, from 1982 to 1991, Mr. González worked at the Los
Angeles Coliseum in California, working in various operating and administrative positions, and acting as a
General Manager. George González is a United States citizen.
Executive Compensation
For the year ended December 31, 2012, Luis Alejandro Soberón Kuri, Rodrigo Humberto González Calvillo,
Víctor Manuel Murillo Vega, Federico González Compeán, Alejandro Garza Díaz, Jaime José Zevada
Coarasa, Juan Manuel Pérez Díaz, Eduardo Martínez Garza and George González Alvarado received total
aggregate compensation of approximately Ps.70.6. This gross amount includes salaries, bonuses, the
Christmas bonus, vacation premiums, vouchers, a savings fund, and additional compensation paid for the
professional services they provided to the Group.
The average age of the Group’s employees and officers is approximately 37.8 years old, and their average
approximate seniority in the Company is seven years. Regarding the management team, the average age is
51.0 years old, with average seniority of 16 years providing professional services directly within the Company.
Stock Plan
The 1999 Plan
The Company has had an executive stock option plan since 1999, which is run under a trust created for that
purpose. Under this plan, the Company issued 882,791 (EIGHT HUNDRED AND EIGHTY-TWO THOUSAND, SEVEN HUNDRED AND NINETY-ONE) Series B Class II shares at a price of Ps. 4.27 (FOUR
MEXICAN PESOS AND 27/100) per share, and 1,573,874 (ONE MILLION, FIVE HUNDRED AND SEVENTY-THREE THOUSAND, EIGHT HUNDRED AND SEVENTY-FOUR) shares for purchase at a price per
share of Ps. 32.20 (THIRTY-TWO MEXICAN PESOS AND 20/100).
All options to acquire the shares under this plan have already been assigned and distributed to the employees, and the vast majority have already been exercised. To date, only 1,369,197 (ONE MILLION, THREE
HUNDRED AND SIXTY-NINE THOUSAND) Series B Class II shares remain in the Trust, which will be
distributed to three of the Company’s executives.
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Mr. Luis Alejandro Soberón Kuri, Chairman of the Board of Directors of CIE, controls distribution of those
shares by the Trust, and has the right to vote those shares directly.
The 2001 Plan
On April 26, 2001, CIE’s shareholders approved the issuance of 3,666,333 (THREE MILLION, SIX HUNDRED AND SIXTY-SIX THOUSAND, THREE HUNDRED AND THIRTY-THREE) Series B Class II shares
as part of a new employee stock plan. Of those shares, 3,310,280 (THREE MILLION, THREE HUNDRED
AND TEN THOUSAND, TWO HUNDRED AND EIGHTY) Series B Class II shares were issued and acquired
by a trust created for that purpose, and to benefit 41 elected executives, with a subscription price of Ps.
19.76 (NINETEEN MEXICAN PESOS AND 76/100) per share. Of the 3,310,280 shares mentioned above,
185,800 (ONE HUNDRED AND EIGHTY-FIVE THOUSAND, EIGHT HUNDRED) shares were sold due to
the resignation of six of the Company’s employees.
Until those shares are distributed to the employees, Mr. Luis Alejandro Soberón Kuri has the right to vote
for the 3,124,480 (THREE MILLION, ONE HUNDRED AND TWENTY-FOUR THOUSAND, FOUR
HUNDRED AND EIGHTY) shares that are currently still in the Trust.
Under this same plan, in January 2006 there was a second assignment through another trust created for
that purpose, of 126,910 (ONE HUNDRED AND TWENTY-SIX THOUSAND, NINE HUNDRED AND TEN)
Series B Class II shares to five employees at the same price; that is, Ps. 19.76 (NINETEEN MEXICAN
PESOS AND 76/100) per share.
Principal Shareholders
Based on CIE’s information, its principal shareholder is its founder, Chief Executive Officer and Chairman
of the Board of Directors, Luis Alejandro Soberón Kuri, who has the authority to vote for the shares
representing 15.45% (FIFTEEN POINT FORTY-FIVE PERCENT) of the Company’s capital. Mr. Rodrigo
Humberto González Calvillo and Mr. Federico González Compeán, who are also founding shareholders,
board members and Senior Directors of CIE, each own approximately 1.25% (ONE POINT TWENTY-FIVE
PERCENT) of CIE’s capital.
According to the information provided by INDEVAL and by the agents who are depositors of INDEVAL for
the purposes of the most recent General Ordinary Shareholders Meeting of the Company, which was held on
April 29, 2013, two different financial brokers, acting on behalf of third parties, appeared at that meeting with
approximately 82.00% (EIGHTY-TWO PERCENT) of CIE’s shares, without being able to list whose those
beneficiary shareholders are for whom those agents were acting who own 5.0% (FIVE PERCENT) or more of
CIE's capital. Luis Alejandro Soberón Kuri, Rodrigo Humberto González Calvillo and Federico González
Compeán are founding shareholders, board members and Senior Directors of CIE. They have had and
continue to have control, executive authority and significant influence with respect to CIE, both individually and through the exercise of the right to vote their shares with other shareholders. They do not own the
majority of the Company’s shares, but in the past, in conjunction with other shareholders, they have
exercised effective control of CIE, and several of the Company’s shareholders have voted their shares in
accordance with the proposals made by the Board, or one or several of the people indicated.
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The General Annual Ordinary Shareholders’ Meeting held on April 20, 2012, approved the payment of Ps.
30,000 (thirty thousand pesos) per meeting to external board members and to members of the Audit and
Corporate Practices Committee who attend the respective meetings.
During fiscal year 2012, the Company paid the board members the approximate total amount of Ps.
750,000.00 (SEVEN HUNDRED AND FIFTY THOUSAND MEXICAN PESOS AND 00/100) for attending
ordinary and extraordinary sessions of CIE’s Board of Directors. In addition, the main officers of the Group
received total aggregate compensation of approximately Ps. 73.4. This gross amount includes salaries,
bonuses, Christmas bonus, vacation premiums, vouchers, savings fund and additional compensation paid.
(For a more detailed explanation, see Section 3. “Executive Compensation” in Chapter IV “Administrators
and Shareholders,” in this Document).
Committees that Aid the Board of Directors in its Duties
The Board of Directors is aided by the Audit and Corporate Practices Committee, which acts as a single
Committee as permitted by the Securities Market Law.
Audit Functions
(a) The committee that performs auditing matters will have the general duty of monitoring and supervising the integrity of the financial information, the process and accounting systems, the control
and registration systems of the Company and the entities that it controls; supervising the technical
ability, independence and function of the company that performs the external auditing function,
the efficiency of the Company's internal control, and assessing financial risks.
(b) Additionally, the committee performing audit duties will have other duties, including, but not limited to, the following:
(i)
To provide advice to the Board of Directors on matters under the scope of its authority pursuant to the Securities Market Law.
(ii)
To evaluate the performance of the external auditor, and to analyze the advice, opinions, reports or statements prepared by the external auditor. To that end, the Committee may require the presence of that auditor whenever it deems advisable, without prejudice to the fact
that it must meet with the auditor at least once per year.
(iii)
To discuss the information in the financial statements with those responsible for its preparation and review, and to give an opinion on that information prior to its presentation to the
Board of Directors.
(iv)
To inform the Board of Directors on the status of the internal control and internal auditing
systems, or of the legal entities controlled thereby, including any irregularities that it may detect.
(v)
To provide support to the Board of Directors in preparing the reports mentioned in Article
28, Section IV, subsections (d) and (e) of the Securities Market Law.
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(vi)
To ensure that the transactions referred to in Section III (THREE) of Clause Twenty-One of
the Company's by-laws and Article 47 (FORTY-SEVEN) of the Securities Market Law, are
conducted in compliance with those provisions, and with the authorizations or guidelines
approved by the Board of Directors or the General Shareholders’ Meeting.
(vii) To ensure compliance with generally accepted accounting rules and procedures that have
been authorized by the stock exchange authorities.
(viii) To request regular meetings with Directors, and to deliver any type of information regarding
internal control and internal auditing of the Company and the legal entities that it controls.
(ix)
To retain legal consulting and advisory, accounting, and financial services, and any other type
of specialty professional service as deemed appropriate to comply with its duties and responsibilities.
(x)
To nominate and determine, for approval by the Board of Directors, the external auditor and
their fees; to supervise the work performed by the external auditor, and if applicable, to approve their removal if the circumstances so justify; and to approve the services that the external auditor provides other than auditing services.
(xi)
To establish a confidential and anonymous complaint system for the workers and employees
with respect to irregular or possibly illegal accounting and auditing matters.
(xii) To receive and handle any denunciations that are received in relation to accounting matters,
internal accounting control, or auditing matters.
(xiii) To prepare an annual report of its activities and present it to the Board of Directors in conformance with Article 43 of the Securities Market Law.
(xiv) To prepare the opinion mentioned in Article 28, Section IV, subsection (c) if the Securities
Market Law regarding the content of the report from the Chief Executive Officer, which must
be prepared in accordance with Article 44, Section XI of the Securities Market Law and submitted for the consideration of the Board of Directors for subsequent presentation to the
Shareholders’ Meeting, supporting, among other items, the external auditor’s report. That
opinion must indicate at least the following:
1.
Whether the accounting policies and information policies and criteria followed by the
Company are adequate and sufficient, considering its specific circumstances.
2. If those policies and criteria have been applied consistently to the information presented
by the Chief Executive Officer.
3. If, as a consequence of numbers 1 and 2 above, the information presented by the Chief
Executive Officer reasonably reflects the financial situation and the results of the Company.
(xv) To ensure that the transactions referred to in Article 28, Section III and Article 47 of the Securities Market Law are conducted in compliance with those provisions, as well as the policies arising therefrom.
(xvi) To seek the opinion of independent experts whenever deemed appropriate, for the proper
performance of its duties or whenever required by the Securities Market Law or general legal
provisions.
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(xvii) To request from the senior managers and other employees of the Company or legal entities
that it controls, reports regarding the preparation of the financial information and any other
type of information as it may deem necessary to perform its functions.
(xviii) To summon Shareholders’ Meetings and seek the inclusion of any item of business it may
deem relevant in the agendas of those meetings.
(xix) To ensure that the Chief Operating Officer complies with the agreements adopted at the
Shareholders’ Meetings and the Board of Directors, according to the instructions provided in
each case by the Shareholders’ Meeting or the Board.
(xx) Any other duties provided for under the Securities Market Law, the administrative provisions
issued in compliance with that law, the corporate by-laws, or by resolution of the Shareholders’ Meeting or the Board of Directors.
(c) In order to support the duties vested of the audit committee, the Company, through the Board of
Directors, will allocate funds as appropriate and requested by the committee in order to pay the
fees of the external auditor, the fees for external advisers retained, and the regular administrative
expenses that the committee incurs in the discharge of its duties, when so requested.
Duties of the Corporate Practices Committee
(a) The committee that performs corporate practices functions will have the general duty of monitoring and attenuating the risks in the conducting of business, or to the benefit of a certain group of
shareholders, subject to the authorizations or policies issued by the Board of Directors; supervising
compliance with the legal provisions and stock market regulations with which the Company must
comply.
(b) Additionally, the corporate practices committee will have the following functions and responsibilities, including, but not limited to:
(i)
To summon the Shareholders’ Meetings and seek inclusion in the Order of the Day of any
points that it deems to be pertinent.
(ii)
To approve, for ratification or correction by the Board, policies for the use or enjoyment of
property owned by the Company.
(iii)
To prepare an annual report on the activities conducted, and to present it to the Board of Directors. The annual report must contain at least the following: (A) Observations with respect
to the performance of senior directors; (B) Transactions with related parties during the fiscal
year under discussion; (C) Integral benefit or remuneration packages of the Chief Executive
Officer and the senior directors of the Company; and (D) The waivers granted by the Board
of Directors for a board member, senior director or manager with powers of representation
under the Securities Market Law, to take advantage of business opportunities for themselves
or to the benefit of third parties, as established in Clause Twenty-One of the corporate bylaws.
(iv)
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(v)
To issue an opinion on the transactions entered into with related parties.
(vi)
To authorize, for ratification or correction by the Board, the compensation package of the
Chief Executive Officer and the policies for determining remuneration of the Directors.
(vii) To provide opinions to the Board of Directors on matters under the scope of its authority
pursuant to the Securities Market Law.
(viii) To seek the opinion of independent experts whenever deemed appropriate, for the proper
performance of duties or whenever required by the Securities Market Law or general legal
provisions.
(ix)
Any other duties provided for under the Securities Market Law, the administrative provisions
The Audit and Corporate Practices Committee is currently comprised as follows:
Member of the Audit and Corporate Practices
Committee
Position
Chairman
Carlos Elizondo Mayer-Serra
Member
Jorge Fernández de Miguel
Member
In the Company’s opinion, all three members of the Committee have proven and sufficient professional
training and experience to act as financial experts, understanding that category to be the one denoted by
their experience and professional training (i.e. external auditor, public accountant, finance director,
controller, or any other position related to the discharge of similar duties). Furthermore, Mr. Carlos
Elizondo Mayer-Serra may replace Mr. Leopoldo Escobar Latapí, if necessary. The Issuer does not have any
intermediary bodies other than the aforementioned.
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4. CORPORATE BY-LAWS AND AGREEMENTS
Amendments to the By-Laws and Other Agreements
On April 14, 2011, CIE’s Shareholders approved a modification to section (a) of clause six in the Company’s
by-laws, adding the number of shares representing CIE’s fixed capital.
On December 22, 2006, the General Extraordinary and Ordinary Shareholders’ Meetings of the Company
decided to completely rewrite the Company's corporate by-laws in order to adapt them to the new provisions of the Securities Market Law, and to the general provisions applicable to securities issuers and other
securities market participants, issued by the National Banking and Securities Commission, which was
published on March 19, 2003, and its modifications were published on September 22, 2006, in the Official
Gazette of the Federation, respectively.
The text of the Company’s current by-laws is transcribed below:
BY-LAWS
SECTION ONE – NAME AND SUPPLEMENTAL PROVISIONS, PURPOSE,
DURATION, NATIONALITY AND FOREIGN SHAREHOLDERS
One. Name and supplemental provisions.
(a) Name. The name of the company is “CORPORACIÓN INTERAMERICANA DE
ENTRETENIMIENTO,” which must be used followed by the words “SOCIEDAD ANÓNIMA BURSÁTIL DE
CAPITAL VARIABLE,” or its abbreviation “S.A.B. de C.V.” (the “Company”).
(b) Supplemental provisions. In all matters not provided for in this these by-laws, (the “by-laws”),
the Company will be governed by the provisions of the Securities Market Law, the administrative provisions issued according to that law, and alternatively, by the provisions of the General Law of Corporations.
Two. Purpose.
The purpose of the Company is:
(a) To promote, create, organize, develop, acquire and participate in the capital or equity of all types of
commercial or civil entities, associations or companies, whether they are industrial, commercial, service or
any other type of company, either Mexican or foreign, and to take part in the management or liquidation
thereof.
(b) To acquire, in any legal capacity, shares, interest, stakes or ownership interest of any type in commercial or civil companies, whether taking part in their creation or through subsequent acquisition, as well
as to sell, dispose of and trade those shares, interests, stakes or ownership interests, including any other
security.
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(c) To receive services from other companies and individuals, and to provide other companies and individuals with the services necessary to achieve their corporate ends or objectives, such as administrative,
financial, treasury, auditing, marketing and accounting services, development of programs and manuals,
analysis of operating results, assessment of information on productivity and possible financing opportunities, preparation of studies regarding the availability of capital, technical assistance, and advisory and
consulting services, among others.
(d) To obtain, acquire, develop, improve upon, use, grant and receive or dispose of licenses, under any
legal title, of all types of patents, trademarks, utility models, industrial designs, industrial secrets, certificates of invention, notices and trade names, and any other industrial property rights or copyrights, whether
in Mexico or abroad.
(e) To obtain all types of financing, loans or credits, issue liabilities, bonds and commercial paper, and
any other debt instruments or debt securities, whether or not secured by a pledge, mortgage, trust or any
other legal instrument, for any purpose the Company may determine, including but not limited to the
Company’s own operations and those of its subsidiaries to purchase own stock, to finance dividend payments, to reduce its capital, or to make any other type of distribution to its shareholders.
(f) To grant any type of financing or loans to individuals, civil or commercial companies, corporations
and institutions with which the Company does business or in which the Company owns a stake, whether or
not secured by tangible securities.
(g) To grant all types of tangible securities, personal securities and commitment bonds, securities instruments or debt instruments payable by individuals, companies, associations and institutions in which
the Company has an interest or stake, or with which the Company has business relationships as a warrantor, joint and several obligor, guarantor or sponsor of those entities.
(h) To subscribe, issue, draw on, accept, endorse and guarantee all types of credit securities or debt instruments, and to carry out credit transactions and derivative financial transactions.
(i) To carry out, supervise or contract, on its own behalf or on behalf of third parties, all types of constructions, buildings or facilities for offices or establishments of any kind.
(j) To carry out training and development programs and research projects on its own behalf, or on behalf of third parties.
(k) To lease, as lessor or lessee, and to acquire, hold, exchange, change, transfer, dispose of or burden
the property or ownership of all types of personal and real property, including any real or personal rights
related thereto, which may be necessary or appropriate for achieving its corporate purpose or for the
operations or corporate objectives of commercial or civil companies and institutions in which the Company
has an interest or stake of any type.
(l) To act as broker, mediator, representative or intermediary for any individual or company.
(m) The production, transformation, adaptation, marketing, import, export, purchase, sale or disposal,
under any legal title, of machinery, spare parts, materials, raw materials, industrial products, effects and
merchandise of any type.
(n) To place its own shares, the securities they represent, credit or debt instruments, in domestic or
foreign securities markets upon prior authorization from the competent authorities, including on stock
markets or foreign trading systems.
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(o) To acquire its own shares pursuant to the Securities Market Law, and general provisions that may
apply.
(p) In general, to carry out all related, accessory or incidental acts and transactions that may be necessary or appropriate to achieve the abovementioned objectives, and to enter into all types of contracts and
agreements with third parties, including with the Company’s shareholders, creating rights and obligations
to be performed by the Company and the counterparties.
Three. Corporate domicile
The Company’s corporate domicile is in Mexico City, in the Federal District, but it may set up agencies
or branches inside and outside Mexico, and agree to conventional domiciles, understanding that this does
not constitute a change of its corporate domicile.
Four. Duration of the company
The duration of the Company is 99 (NINETY-NINE) years, counted from the registration of the
amendments of the By-Laws in the Public Registry of Commerce.
Five. Nationality and foreign shareholders
(a) Nationality of the Company. The Company’s nationality is Mexican.
(b) Foreign Shareholders.
(i)
Foreigners who become shareholders of the Company, due to that sole fact must be considered as Mexican citizens with the Secretary of Foreign Affairs with respect to the shares they
acquire or that they might own, as well as with respect to the assets, rights, concessions, authorizations, stakes or interests held by the Company, or the rights and obligations that arise
from the contracts to which the Company is a party, entered into with Mexican authorities,
and therefore, they may not claim the protection of their governments, otherwise they run
the risk of losing those shares to the benefit of the Mexican government.
(ii) Unless required, through the authorization of the National Foreign Investments Commission, pursuant to Article 9 (NINE) of the Foreign Investment Law, anyone who is considered
to be a foreign investor according to applicable legislation on the matter, may not acquire
more than 49.00% (FORTY-NINE PERCENT) of the Company’s common shares. This includes investors from other countries treated as Mexican nationals under international treaties that Mexico enters into or that it has entered into.
SECTION TWO – SHAREHOLDERS’ EQUITY AND SHARES
Six. Composition of shareholders’ equity.
(a) The Company’s shareholders’ equity is variable. The fixed capital without right to withdrawal is Ps.
189,386,380.72 (ONE HUNDRED AND EIGHTY-NINE MILLION, THREE HUNDRED AND EIGHTY-SIX
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THOUSAND, THREE HUNDRED AND EIGHTY AND 72/100 MEXICAN PESOS), represented by
30,955,386 (THIRTY MILLION, NINE HUNDRED AND FIFTY-FIVE THOUSAND, THREE HUNDRED
AND EIGHTY-SIX) ordinary nominative shares, no par value, fully subscribed and paid in , which will be
identified as Series B, Class I.
(b) The variable portion of shareholders’ equity is unlimited and will also be represented by common,
nominative shares with no par value, which will be identified as Series B, Class II.
(c) Subject to the provisions in Clause Nine of these By-Laws, all common shares will confer equal
rights and obligations to their holders.
(d) Except in the cases and with the requirements stated in Articles 57 (FIFTY-SEVEN), 366 (THREE
HUNDRED AND SIXTY-SIX) and 367 (THREE HUNDRED AND SIXTY-SEVEN) of the Securities Market
Law, legal entities controlled by the Company may not directly or indirectly acquire shares representing the
Company’s Shareholders’ Equity, or credit securities that represent them.
Seven. Variations in shareholders’ equity
(a) Shareholders’ equity may be increased or decreased upon the agreement of the General Shareholders’ Meeting, whether extraordinary or ordinary, according to the manner in which increases or decreases
of fixed or variable capital are handled, respectively, with the exception indicated in section (h), which will
always be upon the authority of the General Extraordinary Meeting.
(b) Increases or decreases to the Company’s minimum fixed capital must be decided by resolution of
the General Extraordinary Shareholders’ Meeting, which also approves the corresponding amendment to
the Company’s by-laws.
(c) Increases or decreases to the variable portion of shareholders’ equity need only be approved by a
resolution of the General Ordinary Shareholders’ Meeting, except as established in Section (h) below, and
the minutes that contain those resolutions must be formalized by a federal notary public, although it is not
necessary to record the respective instrument in the Public Registry of Commerce.
(d) Decreases to the minimum fixed or variable shareholders’ equity that are decreased to absorb losses, will be made without the need to cancel shares, as these shares do not have a par value.
(e) If shareholders’ equity is reduced through reimbursement to shareholders, that reduction will apply
to all shareholders in the proportion that corresponds to their stake, with respect to all shares in circulation.
(f) Shareholders that own the variable portion of the Company’s shareholders’ equity will not have the
withdrawal rights stated in Article 220 (TWO HUNDRED AND TWENTY) of the General Law of Corporations.
(*) Clause Six, Section (a) of CIE’s by-laws, was amended at the General Extraordinary Shareholders’ Meeting held on April 29,
2009, in order to decrease the fixed portion of shareholders’ equity.
(g) No capital increase may be declared if the shares issued previously are not already fully paid in.
When adopting the respective agreements, the General Shareholders’ Meeting that declares an increase, or
any subsequent General Shareholders’ Meeting, will set the terms and conditions on which such an increase will be carried out.
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(h) The shares issued through an increase in the fixed or variable portion of shareholders’ equity, and
that, by resolution of the General Extraordinary Shareholders’ Meeting are to be placed in a public offering,
must remain deposited with the Company, to be delivered as they are subscribed, in accordance with
Article 53 (FIFTY-THREE) of the Securities Market Law, and they may be offered for subscription and
payment by the Board of Directors, according to the powers that the General Extraordinary Shareholders’
Meeting has granted to the Board.
(i) Capital increases may be made through capitalization of retained earnings or surplus pending application, or through payment in cash or kind, or capitalization of any other portion of shareholders’ equity. In
increases made by capitalizing reserves, unapplied profits or surplus, or any other portion of shareholders’
equity, all holders of shares that are subscribed and paid in and in circulation at the time of that increase
will have the right to their proportional share of the new shares that are issued as a consequence of the
capitalization.
(j) In capital increases made through payment in cash or in kind, except as stated in section (h) above,
holders of shares that are subscribed, paid in, and in circulation at the time the increase is determined, will
have the right of first refusal to subscribe the new shares that are issued or placed in circulation, for a
period of 15 (FIFTEEN) calendar days, calculated as of the day following the date the corresponding notice
is published in the Official Gazette of the Federation, which the shareholders designate as the “official
newspaper” of the Company’s corporate domicile, or calculated as of the date that the General Extraordinary Shareholders’ Meeting is held, in the event that all the shares into which the shareholders’ equity is
divided have been represented at that meeting.
(k) If, after expiration of the period during which the shareholders must exercise the right of first refusal granted to them in section (j) of this Clause, there are still unsubscribed shares, these shares may be
offered for subscription and payment, according to the conditions and terms established by the General
Shareholders’ Meeting that declared the capital increase, or pursuant to the terms indicated by the Board of
Directors, if applicable, at a price that may not be less than the price at which those shares were offered to
the Company’s shareholders for subscription and payment.
(l) Shareholders will not have the right of first refusal indicated in the previous sections in the event of:
(i) merger of the Company; (ii) conversion of debentures or other debt instruments; (iii) a public offering
pursuant to the provisions of Article 53 (FIFTY-THREE) of the Securities Market Law; and (iv) placement
of shares acquired by the Company, pursuant to Clause Eight of these by-laws.
Eight. Acquisition of own shares
(a) The Company may acquire shares representing its own shareholders’ equity without the prohibition
established in the first paragraph of Article 134 (ONE HUNDRED AND THIRTY-FOUR) of the General
Law of Corporations applying, as long as the shares are acquired pursuant to Article 56 (FIFTY-SIX) and
other provisions of the Securities Market Law, and the administrative provisions issued in relation to that
law.
(b) The General Ordinary Shareholders’ Meeting must, each year, expressly agree to the maximum
amount of resources that may be allocated to the purchase of own shares, with the only limiting factor
being that the sum of the funds that may be used for that purpose may not in any case exceed the Company’s total net profits, including retained earnings.
(c) As long as the shares are owned by the Company, they may not be represented or voted on at the
General Shareholders’ Meetings, nor may corporate or financial rights of any type be exercised.
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(d) The Company’s own shares, or, where applicable, unsubscribed shares that are kept as the Company’s Treasury shares, may be placed with the investing public without the corresponding shareholders’
equity increase for these cases requiring a resolution by the General Shareholders’ Meeting of any class, or
agreement of the Board of Directors regarding placement of the shares.
(e) Under no circumstance may the operations of acquiring and placing shares result in the percentages
established in Article 54 (FIFTY-FOUR) of the Securities Market Law being exceeded, or in breach of the
requirements for maintaining registration on the stock exchange on which those shares are traded.
(f) The purchase and placement of shares provided for in this Clause, the reports that must be presented to the General Ordinary Shareholders’ Meeting regarding those shares, the rules of disclosure regarding
financial information, as well as the manner and terms in which these operations are reported to the
National Banking and Securities Commission (the “Commission”), to the respective stock exchange and to
the investing public, will be subject to the general provisions that the Commission issues.
Nine. Shares with limited voting rights
(a) The General Shareholders’ Meeting may decide on the issuance of shares with limited, restricted or
no voting rights, including those discussed in Articles 112 (ONE HUNDRED AND TWELVE) and 113 (ONE
HUNDRED AND THIRTEEN) of the General Law of Corporations, as long as the Company has obtained
express authorization from the Commission, and the issuance meets the requirements of the Securities
Market Law and the administrative provisions that are issued in that regard.
(b) Shares with no voting rights will not be included for the purposes of determining a quorum at
shareholders’ meetings, while shares with restricted or limited voting rights will only be included to
determine a quorum, and the resolutions at shareholder meetings to which the holders of those shares
must be summoned in order to exercise their voting rights.
Ten. Stock certificates
(a) Shares will be backed by certificates, which must contain the requirements established in Article
125 (ONE HUNDRED AND TWENTY-FIVE) of the General Law of Corporations, and they must indicate
the corresponding series. The certificates may represent one or more shares, they will be numbered
sequentially, and they will be signed by 2 (TWO) members of the Board of Directors, manually or by
facsimile, in which case the original of their signatures must be filed with the Public Registry of Commerce.
(b) In the event of loss, destruction or theft of one or more certificates or stock certificates, the owner
may request that new ones be issued, subject to the General Law of Securities and Credit Operations. The
expenses related to issuing a new certificate will be borne by the interested party.
(c) Stock certificates must contain a summary of the applicable stipulations from these corporate bylaws.
(d) Shares may be backed by one or several global certificates deposited with a securities depositary
institution in accordance with the Securities Market Law.
Eleven. Stock ledger
(a) The Company will maintain a share registry pursuant to Article 128 (ONE HUNDRED AND
TWENTY-EIGHT) of the General Law of Corporations, whether directly or according to Section VII
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(SEVEN) of Article 280 (TWO HUNDRED AND EIGHTY) and other applicable provisions of the Securities
Market Law, which may be maintained by the Secretary of the Company’s Board of Directors, by a securities depositary institution, or by a lending institution.
(b) The Company will recognize whoever is recorded as the legal owner of the shares in the registry indicated in the preceding paragraph as the legal owner of the shares. At the request of any interested party
and upon any requested verification, the Company must record the share transactions and conversions
made in the mentioned ledger, as stated in Clause Five of these by-laws. The ledger will remain closed from
the day prior to each shareholders’ meeting, until the day following that meeting, during which no registration whatsoever will be made in that ledger.
Twelve. Cancellation of registration in the National Securities Registry
Cancellation of inscription of the Company’s shares in the Securities Section of the National Securities
Registry may be done: (i) upon agreement at the General Extraordinary Shareholders' Meeting, adopted by
a favorable vote of the shareholders, with or without voting rights, representing 95.00% (NINETY-FIVE
PERCENT) of shareholders’ equity; or (ii) by resolution of the Commission. In both cases, the procedure
will be subject to the Securities Market Law and the regulatory or administrative provisions issued in
relation to that law.
SECTION THREE – ADMINISTRATION AND
SUPERVISION OF THE COMPANY
Chapter One – The Board of Directors
Thirteen. Members of the board
(a) Administration of the Company will be entrusted to a Board of Directors and to a Chief Executive
Officer, acting within their respective spheres of competence.
(b) The Board of Directors will be comprised of no less than 5 (FIVE) and a maximum of 21 (TWENTYONE) board members, as determined at the General Ordinary Shareholders’ Meeting, of whom: at least
25.00% (TWENTY-FIVE PER CENT) must be independent, as “independent board member” is defined in
the Securities Market Law, as well as in the stock market regulations that the Company must follow.
(c) The General Shareholders’ Meeting or the Board of Directors will have the authority to appoint the
Chairman of the Board from among their members. The Vice Chairman of the Board of Directors will
replace the Chairman of the Board in the event of temporary absence, as considered appropriate for the
best performance of the Board.
(d) The Board of Directors will meet in the event of resignation or permanent absence of the Chairman,
and the respective meeting will be summoned and presided over by the board member who substitutes for
the Chairman in his temporary absences, in order to appoint the board member who will occupy the
position of Chairman of the Board of Directors.
(e) The Secretary of the Board of Directors and his alternate will be named by the Board. The appointees will not be members of the Board of Directors, regardless of the position or duties that the appointees
have inside or outside the Company.
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Fourteen. Appointment of board members
(a) Members of the Board of Directors will only be appointed, or their appointments ratified, at the
General Ordinary Shareholders’ Meeting that is held to discuss and approve the report indicated in Article
172 (ONE HUNDRED AND SEVENTY-TWO) of the General Law of Corporations, and that Meeting may
appoint a maximum of one-third of the members of the Board of Directors.
(b) The members of the Board of Directors will hold office for a minimum period of three years, or for a
different period if so decided at the shareholders’ meeting, with the approval of 75.00% (SEVENTY-FIVE
PERCENT) of the shares in circulation with full voting rights, and they may not be removed in advance,
except in the following cases: (i) death or disability of the board member; (ii) resignation of the board
member; (iii) a supervening impediment as defined by applicable law; or (iv) due to a serious reason at the
judgment of the Shareholders’ Meeting that is so decided with the vote of 75.00% (SEVENTY-FIVE
PERCENT)of the shares in circulation with full voting rights.
(c) The board members will continue to perform their functions even after expiration of the term for
which they have been appointed, or due to resignation of the position, for a period of up to 30 (THIRTY)
calendar days, failure to appoint an alternate, or when the alternate does not assume their position, without
being subject to Article 154 (ONE HUNDRED AND FIFTY-FOUR) of the General Law of Corporations.
(d) In any of the circumstances described in sections (i) to (iii) of sub-section (b) above, the person
named by the Board of Directors will occupy the position of board member as a provisional owning board
member, until the General Ordinary Shareholders’ Meeting meets to ratify the provisional board member,
or appoints a new regular board member who is to replace that person until the end of the term of the
board member in question.
(e) In the event that the provisional board member also falls under one of the assumptions of sections
(i) to (iii) mentioned in section (b) above, the Board of Directors will appoint an interim board member to
replace him, and that person will remain in that position until the next General Ordinary Shareholders’
Meeting to ratify or designate the new board member who must replace him until the end of the term of the
board member who no longer forms part of the Board of Directors.
(f) If the number of members of the Board of Directors varies within the limits allowed by these bylaws, any increase or decrease must be proportional among the groups of board members according to the
term for which they were appointed, in order to maintain the proportion indicated in section (b) of this
Clause. The new members of the Board of Directors who are appointed to maintain the mentioned proportion will hold office for the remainder of the term of the group of board members they were elected to
replace, but in no case will a decrease in the number of members on the Board of Directors result in
reducing the term of the members of the Board of Directors who are performing their duties at that time.
(g) The General Ordinary Shareholders’ Meeting will be responsible for the staggered appointment of
members of the Board of Directors, pursuant to this Clause, and no shareholder or group of shareholders
will be prevented from exercising their rights as stated in Clause Fifteen of these by-laws. (h) When board
members are appointed, Articles 24 (TWENTY-FOUR) and 26 (TWENTY-SIX) of the Securities Market
Law must be observed at all times.
Fifteen. Right of the minority to appoint board members
(a) At any General Ordinary Shareholders’ Meeting that is held to appoint board members, any minority of shareholders with shares with voting rights, including limited or restricted voting rights, who represent at least 10.00% (TEN PERCENT) of the shareholders’ equity in one or more series or classes of shares,
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will have the right to name a board member. Those who exercise this right may not participate in the
appointment of the remaining board members.
(b) The appointment of a board member or members named by minority shareholders may only be
revoked if the appointment of all other board members is revoked, or if the minority shareholders determine that the board member they have appointed should be revoked. In the latter case, the people who are
replaced may not be named in that capacity for 12 (TWELVE) months immediately following the date on
which their appointment was revoked.
Sixteen. Meetings of the board of directors; integration and voting
(a) The Board of Directors must meet at least 4 (FOUR) times per year. The Board of Directors will
hold valid meetings with the attendance of the majority of its members and its resolutions will be passed by
the majority of votes.
(b) In the event of a tie, the Chairman will have the tiebreaking vote.
Seventeen. Meetings of the board of directors; summons and meeting location
(a) The Chairman of the Board of Directors, 25.00% (TWENTY-FIVE PER CENT) of the board members or the Chairman of the Audit and Corporate Practices Committee or committees of the Company may
summon meetings of the Board of Directors.
(b) The meetings will be held in Mexico City or elsewhere in Mexico, at the location that the Board designates. The summons for those meetings must be sent to the members who must attend, at least 5 (FIVE)
calendar days in advance of the date of the meeting, without prejudice to the fact that the Board must
annually agree to a calendar of ordinary meetings, in which case a prior summons will not be required. The
agenda or the list of matters to be discussed and resolved must be sent with the summons, and if it is not
sent with the summons, the agenda must be distributed sufficiently in advance of the meeting.
Eighteen. Chairman and secretary of the meetings of the board of directors
(a) The Chairman of the Board of Directors will preside over the meetings of the Board of Directors,
and in his absence, the designated board member will preside according to the terms established by the
Board to better run those meetings.
(b) The Secretary of the Board will act as secretary for the meetings. In his absence, he will be replaced
by his alternate, and if both are absent, by the person appointed by the member chairing the meeting.
Nineteen. Minutes of the meetings of the board
Minutes of all meetings of the Board of Directors will be drafted by whoever is acting as secretary of the
meeting, and the minutes will contain the matters discussed and the agreements reached. Those minutes
will be recorded in the respective book of minutes and signed by those who acted as chairman and secretary
of the meeting.
Twenty. Board resolutions made without a meeting
(a) The Board of Directors may adopt resolutions unanimously without the need for a meeting.
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(b) Board members may give their verbal consent to the Chairman or to the members who assist the
Chairman. A board member who gives his consent verbally must confirm it in writing.
(c) Written confirmation must be sent to the chairman and to the secretary using any means that ensures that they will receive it.
(d) The resolutions that are adopted pursuant to this Clause will be transcribed in the respective book
of minutes, and these minutes must be authorized with the signature of the chairman and the secretary,
adding the documents that contain the resolutions that were adopted.
Twenty-One. Powers of the board of directors
The Board of Directors will be responsible for defining the general strategy of the Company’s businesses and the legal entities that it controls, it will supervise the management and running of the businesses, as
well as the performance of the Chief Executive Officer and his Senior Managers, for which it will have the
most far-reaching powers that are not reserved by legal provision or by-laws for another entity, including
but not limited to the following:
(a) To supervise the management and running of the operations related to the purpose of the Company
or that are a direct or indirect consequence thereof, and of the legal entities that it controls, considering the
relevance that the latter have in the financial, administrative and legal situation of the Company, through
the corporate practices and auditing committee or committees the scope of their respective authority;
(b) To oversee the performance of the Chief Executive Officer and the other Senior Managers through
the corporate practices and auditing committee or committees, within the scope of their respective authority;
(c) To approve, with the prior opinion of the appropriate committee:
(i)
The policies and guidelines for the use or enjoyment of the assets that are a part of the Company’s equity and the legal entities that it controls, by related persons, according to the definition of that term in the Securities Market Law.
(ii)
Each individual transaction with related parties that the Company or the legal entities that it
controls intends to enter into. The approval of the Board of Directors will not be required to
enter into the transactions indicated below when the policies and guidelines approved by the
Board are followed:
(A)
Transactions that, because of their amount, are not relevant for the Company or for the
legal entities that it controls;
(B)
Transactions between the Company and the legal entities that it controls or over which
it has a significant influence, or between any of those companies, provided they are
within the regular or habitual course of the business and are deemed to have been
made at market prices or supported by valuations made by specialist external agents;
and
(C)
Transactions made with employees, provided they are carried out under the same conditions as they have been with any client, or as the result of general employee benefits.
(iii) The transactions entered into, whether simultaneously or successively, which, due to their
characteristics, are considered to be a single operation and that the Company or the legal en137
tities that it controls intends to carry out within the period of one year, if they are unusual or
non-recurring, or if their amount represents any of the following, based on the corresponding numbers at the close of the immediately prior quarter:
(A)
The acquisition or disposal of goods whose value is greater than or equal to 5.00%
(FIVE PERCENT) of the Company’s consolidated assets; and
(B)
Granting guarantees or assuming liabilities for an amount greater than or equal to 5%
(FIVE PERCENT) of the Company’s consolidated assets. Investments in debt securities
or bank instruments are excluded, as long as these transactions are conducted according to the policies that the Board approves to that effect.
(iv)
The appointment, election and, where applicable, removal of the Chief Executive Officer of
the Company, their integral payment, as well as the policies to appoint and pay the other Directors. The Chief Executive Officer must be a Mexican citizen, he may be a shareholder,
board member, member of other management entities, or a person outside of the Company.
He will have the powers and duties granted to him under the law and these by-laws, or those
that are granted to him in the act of his appointment;
(v)
The policies for binding the Company or granting loans, or any type of credit or guarantees to
related parties.
(vi)
The waivers to allow a board member, senior manager or attorney-in-fact to take advantage
of business opportunities for himself or in favor of third parties related to the Company or to
the entities that it controls or in which it has a significant influence. Waivers for transactions
whose amount is lower than the amount mentioned in number (iii) above, may be delegated
in the corporate practices committee in charge of the functions in matters of corporate practices.
(vii) Guidelines regarding matters of internal control and internal auditing of the Company and
the legal entities that it controls.
(viii) The accounting policies of the Company, complying with generally accepted accounting principles or those issued by the competent stock exchange authorities through general provisions.
(ix)
The Company’s financial statements; and
(x)
Hiring a legal entity designated by the audit committee that provides external audit services,
and where applicable, the additional or complementary services to external auditing services.
(d) To submit the following at the General Shareholders’ Meeting that is held in order to close the fiscal
year:
(i)
The reports from the chairmen of the corporate practices and audit committee or committees
in connection with the performance of their duties.
(ii)
The report prepared by the Chief Executive Officer pursuant to letter (k) of Clause TwentyEight of these by-laws, with the report of the external auditor attached.
(iii) The opinion of the Board of Directors on the content of the report of the Chief Executive Officer.
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(iv)
The report mentioned in section (b) of Article 172 (ONE HUNDRED AND SEVENTY-TWO)
of the General Law of Corporations, which contains the main accounting policies and criteria
and information followed in preparation of the financial information.
(v)
The report on the transactions and activities in which it has participated pursuant to the provisions of the Securities Market Law.
(e) To monitor the principal risks to which the Company and the legal entities that it controls are exposed, identified by the committees, the Chief Executive Officer and the external auditor, as well as the
accounting systems, internal control and internal audit systems, registration, filing and information of the
Company and its subsidiaries for the conduct of the committee in charge of auditing matters.
(f) To approve the information and communication policies with shareholders and the market, and
with the board members and senior directors, to comply with the provisions of the Securities Market Law.
(g) To determine the actions that need to be taken in order to correct the irregularities of which it has
knowledge and to implement the corresponding corrective measures.
(h) To establish the terms and conditions that the Chief Executive Officer must comply with when exercising his powers to perform acts of domain.
(i) To order the Chief Executive Officer to disclose relevant events of which he knows to the public.
(j) Upon a proposal made by the Chairman of the Board of the Chief Executive Officer, to decide on
matters related to the Company’s acquisition or sale of shares, bonds or securities, or its participation in
other firms or companies, and the acquisition, construction or sale of property.
(k) To decide on the policy and guidelines for acquisition and placement of own shares.
(l) To create the special committees that it deems necessary or appropriate to develop the Company’s
operations, including the audit and corporate practices committee or committees pursuant to the terms of
the applicable provisions of the Securities Market Law.
(m) Such committees may consist of equity advisers, independent board members or employees of the
Company, with the exception of the audit and corporate practices committee or committees, which are
exclusively comprised of independent board members. The members of those committees will be named
when proposed by the Chairman of the Board.
(n) To approve the appointment of the internal auditor, upon the suggestion of the Chairman of the
Board.
(o) To approve the operating expenses of the special committees annually, and from time to time the
internal regulations of each committee.
(p) To approve payment of bonuses granted under employee stock option plans created for the Company’s workers and employees and the entities the Company controls, charged to the results of those entities
and the Company, according to the rules approved at the General Shareholders’ Meeting and the rules of
procedure established by the Board of Directors.
(q) To enforce the agreements made at shareholder meetings, to delegate the powers that may be delegated under applicable legislation to the committees determined by the Board of Directors, or to any of the
board members, the Chairman of the Board, the Chief Executive Officer, the attorneys-in-fact appointed so
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that they will conduct the business or businesses pursuant to the terms and conditions that the Board
indicates; and
(r) To perform any other function set forth in the Securities Market Law, in the Company’s by-laws, or
entrusted to it by the shareholders’ meeting.
Twenty-Two. Additional powers of the board of directors
In addition to the powers listed in the previous Clause, the Board of Directors will have the authority to
guide the Chief Executive Officer in regard to granting or revoking every type of general, special and/or
limited power by the Company, in favor of one of more members of the Board of Directors, employees
and/or workers of the Company and/or its subsidiaries, and in general, any other third party, whether that
third party is an individual or a legal entity, and the authority to delegate and/or replace one of them may
be included in those powers.
Twenty-Three. Powers and duties of the chairman of the board of directors
The Chairman of the Board of Directors will have the following powers:
(a) To represent the Board to any person and authority;
(b) To propose to the Board the strategies for running the business of the Company and the entities
that it controls, as well as the actions that further its company purpose;
(c) To ensure that the Board meets at least once every 3 (THREE) months. He may also summon Board
meetings, in which he will have the tie-breaking vote;
(d) To propose, for approval by the Board, the appointment of interim board members pursuant to the
terms of Article 24 (TWENTY-FOUR) of the Securities Market Law;
(e) To propose, for approval by the Board, the appointment of the independent board members who
must comprise the audit and corporate practices committee or committees, and other committees determined by the Board;
(f) To propose to the Board, for approval by the General Shareholders’ Meeting, the person or persons
who will occupy the position of President of the audit and corporate practices committee or committees;
(g) To propose to the Board of Directors the creation of special committees, the members of those
committees, and the people who will preside over those committees;
(h) To summon Board and Shareholders’ Meetings, and include the points that he determines to be
important in the Order of the Day;
(i) To propose, for approval by the Board, the appointment and removal of the Chief Executive Officer;
(j) To propose to the Board for approval at the General Shareholders’ Meeting, with back-up information that, where applicable, the respective committee prepares, the remuneration or compensation of
the members of the Board;
(k) To propose for approval by the Board and to coordinate the system to select the successor of the
President of the Board and the Chief Executive Officer; and
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(l) The other powers and responsibilities attributed to him by the law, these by-laws, or that are granted to him by the Board of Directors or the Shareholders’ Meeting.
Twenty-Four. Powers and duties of the secretary of the board of directors
The following will be the powers and duties of the Secretary of the Board of Directors or his alternate:
(a) To act as secretary at meetings of the Board and in General Shareholders’ Meetings, or Special
Shareholders’ Meetings;
(b) To keep the corporate books required by law and other books that are necessary, according to these
by-laws, which are not specifically entrusted to another worker or employee of the Company or to another
entity;
(c) To formalize the minutes of the Shareholders’ Meetings and Board Meetings before a notary public
when these Company entities so decide, and when applicable in conformance with the law; to issue certifications, unauthenticated copies, evidence or extracts of minutes of the Shareholders’ and Board Meetings,
as well as the entries that appear in the books of which he is in charge, authorizing them with his signature;
and
(d) The other powers and responsibilities attributed to him by the law, these by-laws, or that are granted to him by the Board of Directors or the Shareholders’ Meeting.
Twenty-Five. Indemnification of board members and employees
The Company will indemnify and hold harmless the board members, Chief Executive Officer, Deputy
Chief Executive Officer, and Significant Managers mentioned in Article 2, Section IV of the Securities
Market Law, as well as the Corporate Secretary for damages that their actions cause to third parties, to the
Company, or to legal entities that the Company controls or in which it has a significant influence, unless
such acts were committed fraudulently or in bad faith, or if they are unlawful according to applicable
legislation. To that end, the Company will take out, and the Board of Directors will ensure that the Company takes out, insurance, sureties or bonds that cover the respective amounts of indemnification included,
where applicable, the commitment to cover any remaining indemnification that exceeds the insured
amount in favor of board members, the Executive President, the Chief Executive Officer, and Significant
Managers, as mentioned in Article 2, Section IV of the Securities Market Law, as well as the Corporate
Secretary.
Twenty-Six. Qualification bond for the board members, chief executive officer and upper
management
(a) Unless otherwise required by the Ordinary General Shareholders’ Meeting appointing them, the
Board Members, Chief Executive Officer and Upper Management will not be required to post a qualification bond.
(b) If the Shareholders’ Meeting decides to guarantee compliance of one or several positions, it will also
establish the amount and conditions of the bond. The determination of the Shareholders’ Meeting must be
the same for each type of office.
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Chapter Two – Chief Executive Officer
Twenty-Seven. Appointment and mandate of the chief executive officer
(a) Subject to the policies and guidelines governing the general business plan of the Company approved
by the Board of Directors, the management, running and performance of the Company’s businesses and the
legal entities that it controls, will be the responsibility of the Chief Executive Officer, who may be a Company employee or a person outside of the Company.
(b) The Chief Executive Officer will remain in that position for an undefined period of time, until revocation of his appointment.
Twenty-Eight. Powers and duties of the chief executive officer
To perform his duties, the Chief Executive Officer will have the powers and obligations established in
the corporate by-laws and in the other applicable legal systems, including, but not limited to, the following:
(a) To submit the business strategies of the Company and the legal entities that the Company controls
for approval by the Board of Directors, based on the information that they provide.
(b) To comply with the resolutions adopted at the Shareholders’ Meetings and the Board of Directors
Meetings according to the instructions provided in each case by the Shareholders’ Meeting or the Board.
(c) To propose the guidelines of the internal control and audit system of the Company and the legal
entities that the Company controls to the committee that will perform audit duties, and to enforce the
guidelines adopted by the Board of Directors to that effect.
(d) To endorse significant information of the Company together with the Directors in charge of preparing that information, in the area of their competence.
(e) To distribute the relevant information and events that must be disclosed to the public, in compliance with the provisions of the Securities Market Law.
(f) To comply with the provisions regarding transactions for purchase and placement of the Company’s
shares, approved by the Board of Directors.
(g) To file, either himself or through an authorized representative, within the scope of their authority or
upon the instruction of the Board of Directors, the appropriate actions for remediation and liability.
(h) To verify that the capital contributions are made by the partners.
(i) To comply with established legal and statutory requirements, in order to declare dividend payments
to shareholders.
(j) To ensure maintenance of the Company’s accounting, registry, archiving or information systems.
(k) To prepare and present to the Board of Directors the report indicated in Article 172 (ONE HUNDRED AND SEVENTY-TWO) of the General Law of Corporations, with the exception of the report indicated in section (b) thereof.
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(l) To establish the internal mechanisms and controls that will allow ensuring that the actions and activities of the Company and legal entities controlled thereby are in compliance with applicable rules, and to
track the results of those internal mechanisms and control and to take the measures necessary, as applicable.
(m) To exercise the actions for liability set forth in the Securities Market Law, against related parties or
third parties that have allegedly caused damage to the Company or to the companies that the Company
controls, or in which it has a significant influence, unless it is determined by the Board of Directors and by
the opinion of the committee in charge of auditing functions that the damage caused is not relevant.
(n) To coordinate the performance of all activities inherent to the Company’s purpose, and the companies controlled by it.
(o) To create management committees to assist him in the discharge of his duties, which committees
shall be formed in the manner determined by the Chief Executive Officer.
(p) To grant and revoke general, limited and/or special powers of attorney as directed by the Board of
Directors.
(q) To perform any other duty provided for in the by-laws, the shareholders’ meeting, the Board of Directors, or the special committees.
Twenty-Nine. Powers of the chief executive officer
The Chief Executive Officer of the Company will have the following general powers in order to perform
his functions:
(a) General powers for litigation and collection purposes, including but not limited to, any general or
special authority that must be vested by a special clause pursuant to the law as prescribed by the first
paragraph of Article 2554 (TWO THOUSAND FIVE HUNDRED AND FIFTY-FOUR) of the Civil Code for
the Federal District, the relevant Civil Codes of the entities of the United Mexican States, and the Federal
Civil Code; the Chief Executive Officer will be empowered to do the following, including but not limited to:
filing criminal actions, filing criminal reports and granting acquittals to become a complainant or cocomplainant in criminal proceedings, to abandon actions filed and lawsuits regarding protection of constitutional rights; to transact, to submit to arbitration, to pose and answer requests for admission, to make
assignments of property; to see to the recusal of judges, to receive payments and perform any actions
expressly prescribed by the law, including representation of the Company before judicial and administrative authorities, whether civil or criminal, and before labor authorities and courts;
(b) General powers for acts of administration and ownership pursuant to paragraphs two and three of
Article 2554 (TWO THOUSAND, FIVE HUNDRED AND FIFTY-FOUR) of the Civil Code for the Federal
District, the relevant Civil Codes of the Federal Entities of the United Mexican States, and the Civil Federal
Code, pursuant to the following:
(i)
In the case of general powers for acts of administration entailing the exercise of voting rights
to shares, membership interests or securities or rights representing capital, the Chief Executive Officer must obtain prior authorization from, or act in accordance with the policies established by the Board of Directors; and
(ii)
To exercise acts of ownership, the powers conferred will be limited as follows: (A) in the case
of the sale of real property owned by the Company and shares or membership interests of
companies controlled by the Company, he must sign either jointly with those designated by
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the Board of Directors or with the prior authorization of the Board of Directors or the Shareholders’ Meeting; (B) in the case of the transactions referred to in Sub-section (c) of Item III
(THREE) of Article 28 (TWENTY-EIGHT) of the Securities Market Law, he will sign with the
prior authorization of the Board of Directors; and/or (C) when the transaction involves an
amount equal to, or in excess of, 20.00% (TWENTY PERCENT) of the Company’s shareholders’ equity, he will sign with the prior authorization of the Ordinary General Shareholders’
Meeting;
(c) For acts of administration with specific powers in labor matters, pursuant to Article 2554 (TWO
THOUSAND FIVE HUNDRED AND FIFTY-FOUR), paragraphs two and four of the Civil Code for the
Federal District, the corollary Civil Codes of the Federal Entities of the United Mexican States and the
Federal Civil Code, and pursuant to Sections 11 (ELEVEN), 692 (SIX HUNDRED AND NINETY-TWO)
parts II (TWO) and III (THREE), 786 (SEVEN HUNDRED AND EIGHTY-SIX), 876 (EIGHT HUNDRED
AND SEVENTY-SIX) and relevant provisions of the Federal Labor Law, to appear in his capacity as
administrator and thus as a legal representative of the Company, before any labor authority, listed in
Article 523 (FIVE HUNDRED AND TWENTY-THREE) of the Federal Labor Law, as well as before the
Workers’ National Housing Fund Institute, the Mexican Social Security Institute, and the National Workers’ Compensation Fund, in all matters related to those institutions and other public entities, and he is
empowered to file any lawsuits and exercise any rights to which the Company may be entitled, with all
general and special powers that must be vested by a special clause pursuant to the law, and he is empowered to reach settlements in conciliation proceedings on behalf of the Company, and to conduct the Company’s labor negotiations;
(d) To subscribe, grant, endorse and guarantee all types of commercial paper, provided they are in furtherance of the purpose of the Company, pursuant to Article 9 (NINE) of the General Law of Securities and
Credit Transactions in those cases that do not require authorization from the Board of Directors or the
Shareholders’ Meeting; and
(e) Authority to grant and delegate general and special powers of attorney, to revoke and substitute
them, in whole or in part, in accordance with the powers vested in him, expressly including the authority
for those people who have been granted those powers to in turn grant, delegate, substitute or revoke them,
in whole or in part, in favor of third parties.
Thirty. Indemnity of the chief executive officer
The Company will indemnify and hold harmless the Chief Executive Officer for the damages that his
actions cause to the Company or to the entities that the Company controls or in which it has a significant
influence, unless those acts are fraudulent or conducted in bad faith, or if they are unlawful in accordance
with applicable legislation. To that end, the Board of Directors will ensure that the Company takes out
insurance, sureties or bonds that cover the respective amounts of that indemnity, including, where applicable, the commitment to cover any remaining indemnity payments that exceed the insurance amount in
favor of the Chief Executive Officer and the Directors, as defined in Article 2, Section IV of the Securities
Market Law.
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Chapter Three – Board Committees
Thirty-One. Composition of the committees
(a) The Board of Directors, at the proposal of its Chairman, will be assisted by one or more committees
that are established for the purpose of performing the functions assigned to them under these by-laws and
applicable legislation.
(b) When the decision is made to create a committee, the Board of Directors must establish the rules
regarding its composition, powers and obligations, operation and other matters related to that committee.
Thirty-Two. Supervision of the Company
Supervision of operations and compliance with the resolutions of Shareholders’ Meetings and the
Board of Directors will be entrusted to one or two committees that perform audit and corporate practices
functions, as well as to the legal entity that performs the external audit.
Thirty-Three. Formation and operation of the committees that perform audit and corporate
practices functions
(a) The audit and corporate practices committee or committees will be comprised exclusively of independent board members, and by a minimum of 3 (THREE) members appointed by the Board of Directors
upon the proposal of its Chairman.
(b) The Chairman of the audit and corporate practices committee or committees will be appointed and
removed exclusively by the General Shareholders’ Meeting at the proposal of the Board of Directors.
Additionally, the people who preside over the audit and corporate practices committee or committees must
comply with Article 43 (FORTY-THREE) of the Securities Market Law and by applicable legal systems.
(c) The Shareholders’ Meeting may at any time determine that the audit and corporate practices functions be performed by an independent committee for each, or by one single committee that performs both
functions.
(d) The internal rules of each committee and, where applicable, the modifications and additions thereto, must be prepared and proposed by the committee in question, for approval by the Board of Directors,
which will have the final authority to ratify or rectify the rules and changes that are proposed.
(e) The audit and corporate practices committee or committees must meet at least 4 (FOUR) times per
year, or as often as the circumstances of its function require. Each work meeting will be attended by the
managers who are summoned, and by the independent auditor, who will participate as guests with right to
voice, but no right to vote. The audit committee must meet periodically with the internal auditor and the
independent auditor in meetings in which Company employees or the legal entities that the Company
controls or over which it has significant influence may participate.
Thirty-Four. Audit functions
(a) The committee that performs audit functions will have the general duty of monitoring and supervising the integrity of the financial information, the process and accounting systems, the control and registration systems of the Company and the entities that it controls; supervising the technical capacity, independ-
145
ence and function of the company that performs the external auditing function, the efficiency of the
Company's internal control, and assessing financial risks.
(b) Additionally, the committee performing audit duties will have other duties, including, but not limited to, the following:
(i)
To provide advice to the Board of Directors on matters under the scope of its authority pursuant to the Securities Market Law.
(ii)
To evaluate the performance of the external auditor, and to analyze the advice, opinions, reports or statements prepared by the external auditor. To that end, the Committee may require the presence of that auditor whenever it deems advisable, without prejudice to the fact
that it must meet with the auditor at least once per year.
(iii) To discuss the information in the financial statements with those responsible for its preparation and review, and to give an opinion on that information prior to its presentation to the
Board of Directors.
(iv)
To inform the Board of Directors on the status of the internal control and internal auditing
systems, or of the legal entities that it controls, including any irregularities that it may detect.
(v)
(vi)
To ensure that the transactions listed in section III (THREE) of Clause Twenty-One of the
corporate by-laws, and Article 47 (FORTY-SEVEN) of the Securities Market Law, are conducted in compliance with the provisions contained therein as well as with the authorizations
or guidelines approved by the Board of Directors or at the General Shareholders’ Meeting.
(vii) To ensure compliance with generally accepted accounting rules and procedures that have
been authorized by the stock exchange authorities.
(viii) To request regular meetings with Directors, and to deliver any type of information regarding
internal control and internal auditing of the Company and the legal entities that it controls.
(ix)
To retain legal consulting and advisory, accounting, and financial services, and any other
type of specialty professional service as deemed appropriate to comply with its duties and responsibilities.
(x)
To nominate and determine, for approval by the Board of Directors, the external auditor and
their fees; to supervise the work performed by the external auditor, and if applicable, to approve their removal if the circumstances so justify; and to approve the services that the external auditor provides other than auditing services.
(xi)
To establish a confidential and anonymous complaint system for the workers and employees
with respect to irregular or possibly illegal accounting and auditing matters.
(xii) To receive and handle any denunciations that are received in relation to accounting matters,
internal accounting control, or auditing matters.
(xiii) To prepare an annual report of its activities and present it to the Board of Directors in conformance with Article 43 of the Securities Market Law.
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(xiv) To prepare the opinion mentioned in Article 28, Section IV, subsection (c) of the Securities
Market Law regarding the content of the report from the Chief Executive Officer, which must
be prepared in accordance with Article 44, Section XI of the Securities Market Law and submitted for the consideration of the Board of Directors for subsequent presentation to the
Shareholders’ Meeting, supporting, among other items, the external auditor’s report. That
opinion must indicate at least the following:
1.
Whether the accounting policies and information policies and criteria followed by the
Company are adequate and sufficient, considering its specific circumstances.
2. If those policies and criteria have been applied consistently to the information presented
by the Chief Executive Officer.
3. If, as a consequence of numbers 1 and 2 above, the information presented by the Chief
Executive Officer reasonably reflects the financial situation and the results of the Company.
(xv) To ensure that the transactions referred to in Article 28, Section III and Article 47 of the Securities Market Law are conducted in compliance with those provisions, as well as the policies arising therefrom.
(xvi) To seek the opinion of independent experts whenever deemed appropriate, for the proper
provisions.
(xvii) To request from the senior managers and other employees of the Company or legal entities
that it controls, reports regarding the preparation of the financial information and any other
type of information as it may deem necessary to perform its functions.
(xviii) To summon the Shareholders’ Meetings and seek the inclusion of any item of business it
may deem relevant in the agendas of those meetings.
(xix) To ensure that the Chief Operating Officer complies with the agreements adopted at the
Shareholders’ Meetings and the Board of Directors, according to the instructions provided in
each case by the Shareholders’ Meeting or the Board.
(xx) Any other duties provided for under the Securities Market Law, the administrative provisions
(c) In order to support the performance of the Audit Committee, the Company, through the Board of
Directors, will allocate funds as appropriate and requested by the committee in order to pay the fees of the
external auditor, the fees for external advisers retained, and the regular administrative expenses that the
committee incurs in the discharge of its duties, when so requested.
Thirty-Five. Corporate practices functions
(a) The committee that performs corporate practices functions will have the general duty of monitoring
and attenuating the risks in the conducting of business, or to the benefit of a certain group of shareholders,
subject to the authorizations or policies issued by the Board of Directors; supervising compliance with the
legal provisions and stock market regulations with which the Company must comply.
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(b) Additionally, the corporate practices committee will have the following functions and responsibilities, including but not limited to:
(i)
To summon the Shareholders’ Meetings and seek inclusion in the Order of the Day of any
points that it deems to be pertinent.
(ii)
To approve, for ratification or correction by the Board, policies for the use or enjoyment of
property owned by the Company.
(iii) To prepare an annual report on the activities conducted, and to present it to the Board of Directors. The annual report must contain at least the following: (A) observations on the performance of the Directors; (B) transactions entered into with related parties during the year
of report; (C) the full compensation or remuneration packages of the Chief Executive Officer
and the Directors of the Company; and (D) the waivers granted by the Board of Directors so
that a board member, significant director or person with mandate powers according to the
Securities Market Law can take advantage of business opportunities for himself or in favor of
third parties, as established in Clause Twenty-One of these by-laws.
(iv)
(v)
To issue an opinion on the transactions entered into with related parties.
(vi)
To authorize, for ratification or correction by the Board, the compensation package of the
Chief Executive Officer and the policies for determining remuneration of the Directors.
(vii) To provide opinions to the Board of Directors on matters under the scope of its authority
pursuant to the Securities Market Law.
(viii) To seek the opinion of independent experts whenever deemed appropriate, for the proper
provisions.
(ix)
Any other duties provided for under the Securities Market Law, the administrative provisions
Thirty-Six. Hiring external auditors and advisers
(a) The audit and corporate practices committee or committees will have the authority to hire legal
counsel and advisory, accounting, financial and any other type of professional specialty that is deemed
necessary or appropriate to comply with their duties and responsibilities. The audit committee will also
have the authority to designate, compensate, retain and supervise the work performed by the independent
auditor, and including their removal if the circumstances so justify, as required.
(b) In order to support the performance of the audit committee, the Company, through the Board of
Directors, will allocate funds as appropriate and requested by the committee in order to pay the fees of the
independent auditor, the fees for external advisers retained, and the regular administrative expenses that
the committee incurs in the discharge of its duties, when so requested.
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SECTION FOUR – SHAREHOLDERS’ MEETINGS
Thirty-Seven. Summons to Shareholders’ Meetings
(a) General Shareholders’ Meetings, whether ordinary or extraordinary, will be held as indicated in the
General Law of Corporations, and the respective summons must be published indicating the location, date
and time of the meeting and the matters to be discussed, in accordance with the Order of the Day, in a
newspaper with major distribution in the city where the Company has its domicile, no fewer than 15
(FIFTEEN) calendar days in advance. Meetings may be held without prior notice when all shareholders are
present at the time of voting. As of the date the summons to the Shareholders’ Meeting is published, the
information and documents related to each point in the Order of the Day must be immediately and freely
available to the shareholders.
(b) Shareholders who own shares with voting rights, including limited or restricted voting rights, who
individually or jointly have 10.00% (TEN PERCENT) of the Company’s Shareholders’ Equity, will have the
right to request the Chairman of the Board of Directors or the chairmen of the corporate practices and
audit committees, at any time, to summon a General Shareholders’ Meeting, and the percentage indicated
in Article 184 (ONE HUNDRED AND EIGHTY-FOUR) of the General Law of Corporations will not apply.
(c) Special Shareholders’ Meetings will be subject to the same requirements that apply to the General
Extraordinary Shareholders’ Meetings.
Thirty-Eight. Supremacy of the General Shareholders’ Meetings
The General Shareholders’ Meeting is the highest body of the Company, and all other entities will be
subject to the resolutions or agreements it reaches.
Thirty-Nine. General Ordinary Shareholders’ Meetings
(a) General Ordinary Shareholders’ Meetings will be held on the date that the Board of Directors indicates, but in all cases they must meet once per year within 4 (FOUR) months following the close of each
fiscal year.
(b) General Ordinary Shareholders’ Meetings will handle the following matters:
(i)
To discuss and resolve the matters listed in Article 181 (ONE HUNDRED AND EIGHTYONE) of the General Law of Corporations, with inclusion of the report referring to the Company’s consolidated and unconsolidated financial statements listed in the general paragraph
in Article 172 (ONE HUNDRED AND SEVENTY-TWO) of the General Law of Corporations,
regarding the Company’s immediately prior fiscal year, when the Company holds 50.00%
(FIFTY PERCENT) or more of the capital of other companies, or by any other means has the
authority to determine its management, as long as that investment is greater than or equal to
20.00% (TWENTY PERCENT) of the Company’s Shareholders’ Equity;
(ii)
To appoint and remove those who preside over the audit and corporate practices committees;
(iii) To rate the independence of the members of the Board of Directors proposed as
independent, and to establish, if applicable, additional requirements to qualify a board
member as independent, in addition to what is stated in the Securities Market Law;
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(iv)
To approve the transactions that the Company or the legal entities that it controls, intend to
carry out during a one-year period, whose amount represents 20.00% (TWENTY PERCENT)
or more of the Company’s consolidated assets, based on the numbers for the close of the
quarter immediately prior to the date on which it intends to enter into the transaction, simultaneously or successively, or in any other manner that, due to its characteristics, may be considered a single transaction;
(v)
To approve, upon the proposal of the Board of Directors, taking out liability insurance for
losses or damages for the members of the Board of Directors, the Chief Executive Officer and
Directors. The approval must include the commitment to make any remaining indemnity
payments that the corresponding insurance does not cover, charged to the results of the
Company;
(vi)
To approve the reports issued by the Audit and Corporate Practices Committees listed in Article 43 of the Securities Market Law;
(vii) To approve the report prepared by the Chief Executive Officer as indicated in Article 44, Section XI of the Securities Market Law, attaching the report of the external auditor;
(viii) To approve the opinion of the Board of Directors on the content of the report of the Chief Executive Officer mentioned in the previous section.
(xix) To approve the report on the transactions and activities in which it has participated pursuant
to the provisions of the Securities Market Law; and
(x)
Any other matter not expressly reserved for the competence of the Extraordinary Shareholders’ Meeting or the Special Shareholders’ Meeting.
(c) General Ordinary Shareholders’ Meetings will meet the requirements for holding and voting, as indicated in the General Law of Corporations, with the exceptions set forth in these by-laws.
Forty. General Extraordinary Shareholders’ Meetings
(a) General Extraordinary Shareholders’ Meetings will convene to discuss any matter indicated in Article 182 (ONE HUNDRED AND EIGHTY-TWO of the General Law of Corporations, and any other matter
that, according to the law or these by-laws, requires the presence of a qualified majority of shareholders.
(b) General Extraordinary Shareholders’ Meetings will meet the requirements for installment and voting, as indicated in the General Law of Corporations, with the exceptions set forth in these by-laws.
Forty-One. Rights of minority shareholders
(a) Shareholders who individually or jointly hold shares with voting rights, including limited or restricted voting rights, or shares without voting rights that represent 5% (FIVE PERCENT) or more of the
Company’s Shareholders’ Equity, may bring liability lawsuits against the directors. The liability resulting
from acts by directors will be the exclusive responsibility of the Company.
(b) Shareholders who hold shares with voting rights, including those with limited or restricted voting
rights, who have at least 10.00% (TEN PERCENT) of shareholders’ equity at a meeting, may make a onetime request to adjourn for three calendar days without the need for a new summons, to vote on any matter
150
regarding which they do not believe they are sufficiently informed, without the percentage indicated in
Article 199 (ONE HUNDRED AND NINETY-NINE) of the General Law of Corporations being applicable.
(c) Shareholders who hold shares with voting rights, including limited or restricted voting rights, who
represent at least 20.00% (TWENTY PERCENT) of shareholders’ equity, may legally oppose the resolutions reached at General Shareholders’ Meetings at which they have the right to vote, without the percentage referred to in Article 201 (TWO HUNDRED AND ONE) of the General Law of Corporations being
applicable.
Forty-Two. Attendance at Shareholders’ Meetings
(a) Shareholders who are recorded in the stock registry kept by the Company as owners of one or more
shares will be admitted to Shareholders’ Meetings. So that the shareholders who are recorded in the
Company’s stock ledger have the right to attend the meetings, they must deposit their shares with a
Mexican institution that is authorized for the deposit of securities, or they must leave them with the
Secretary of the Board at their offices established at the corporate domicile or at any financial institution in
Mexico or abroad.
They must also provide sufficient evidence, in the opinion of the Secretary of the Board of Directors, or
the person designated by him, that the shareholder in question, or where applicable, the beneficiary of the
stock brokerage agreement or respective analogous instrument, complies with the requirements listed in
these by-laws, or if dealing with credit institutions acting as fiduciaries in trusts formed by the Company to
the benefit of its employees or the employees of its subsidiaries, or with altruistic purposes, and credit
institutions acting as fiduciaries in a neutral investment trust formed by the Company and to which shares
of the Company had been contributed as underlying assets to issue securities in Mexico or abroad. If what
is stated in this Clause is not verified, the person in question will not have the right to participate in the
meeting, and consequently may not exercise the corporate rights corresponding to those shares, and the
corresponding provisions of those by-laws will apply.
(b) A deposit held by the Company and verification of compliance with nationality requirements referred to in the preceding paragraph must be made at least one day prior to the date specified for the
Shareholders’ Meeting. An admission card to the Shareholders’ Meeting will be delivered against the
deposited shares; it will state the number of class of underlying shares, the shareholder’s name, and the
number of votes to which that shareholder is entitled. If the deposit is made with a financial institution, an
admission card for the Shareholders’ Meeting will be delivered against the relevant evidence to be submitted to the Company at least one day prior to the date specified for the Shareholders’ Meeting. Once the
Shareholders’ Meeting has been held, the shares and any evidence produced will be returned against
delivery of any ticket that may have been issued.
(c) In addition, those who attend the Shareholders’ Meetings of the Company in representation of other
shareholders, may prove their capacity by means of a power of attorney granted in forms prepared by the
Company, which forms must comply with the following requirements:
(i)
Write the name of the Company conspicuously, and the respective order of the day;
(ii)
Contain space for the instructors by the grantor to exercise the proxy; and
(iii) Any other requirement or information established by the Board of Directors.
(d) Any false information or omission in the form will have the consequence that the votes issued by
the shareholder are nullified.
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(e) During the period indicated in Article 173 (ONE HUNDRED AND SEVENTY-THREE) of the General Law of Corporations, the Company must make proxy forms available to securities brokers who provide
evidence that they represent shareholders of the Company, so that they may forward them in a timely
manner to their clients.
(f) At least 15 (FIFTEEN) calendar days prior to the Shareholders’ Meeting, the Company must make
the information and documents related to each item on the order of the day of the relevant Shareholders’
Meeting freely available at its offices to the securities brokers who provide evidence that they represent
Company shareholders.
(g) The Secretary of the Company’s Board of Directors must monitor compliance with the preceding
paragraphs, and report that information to the Shareholders’ Meeting, which will be recorded in the
respective minutes.
Forty-Three. Officers of the meeting; minutes
(a) Shareholders’ Meetings will be presided over by the Chairman of the Board, and in his absence, by
whoever is appointed by the Meeting. The Secretary of the Board of Directors will serve as Secretary for the
Meeting, and in his absence, by whoever the Chairman or the Meeting appoints.
(b) The Chairman will appoint the inspectors he deems advisable in order to prepare the relevant attendance list and calculation of the corresponding shares.
(c) Minutes of each Shareholders’ Meeting will be prepared and signed by the Chairman of the Meeting,
the person acting as Secretary, and by the inspectors.
(d) The copies, evidence or extracts of the minutes of the Shareholders’ Meetings that must be prepared
for any reason will be authorized by the Secretary of the Board or his alternate, and in his absence by the
Secretary of the Shareholders’ Meeting or by the special delegate appointed by the Shareholders’ Meeting
for that purpose.
SECTION FIVE – FISCAL YEAR AND FINANCIAL STATEMENTS
Forty-Four. Fiscal years
The Company’s fiscal year will be from January 1 to December 31 of each year.
Forty-Five. Financial statements.
(a) At the end of each fiscal year, an audited balance sheet and income statement will be prepared, containing all the necessary data to verify the financial status of the Company at the close of the fiscal year
ended.
(b) The balance sheet and the documents referred to in Article 172 (ONE HUNDRED AND SEVENTYTWO) of the General Law of Corporations must be completed within 4 (FOUR) months of the close of each
fiscal year, and they must be made available to shareholders within the period established in Article 173
(ONE HUNDRED AND SEVENTY-THREE) of the General Law of Corporations and as indicated in these
corporate by-laws, and they must be published in the Official Gazette of the Federation as provided in
Article 104 (ONE HUNDRED AND FOUR) of the Securities Market Law.
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Forty-Six. Profit-sharing
After setting aside the necessary amounts to pay taxes, to create or increase the legal reserve by up to
one-fifth of Shareholders’ Equity, where applicable, the remaining amount will be applied to forming the
reserve for the repurchase of shares or other items that are required, or as resolved by a General Ordinary
Shareholders’ Meeting.
SECTION SIX – DISSOLUTION AND LIQUIDATION OF THE COMPANY
Forty-Seven. Dissolution
The Company will be dissolved under the circumstances set forth in the General Law of Corporations.
Forty-Eight. Liquidation
If the Company is dissolved, it will then be liquidated, which will be conducted by one or several liquidators to be named by the Shareholders’ Meeting.
Forty-Nine. Powers of the liquidator
Unless otherwise provided by the General Shareholders’ Meeting, the liquidator or liquidators will have
the powers assigned to them in Article 242 (TWO HUNDRED AND FORTY-TWO) of the General Law of
Corporations, and they will distribute what remains among the shareholders, subject to the rules established in Articles 113 (ONE HUNDRED AND THIRTEEN), 247 (TWO HUNDRED AND FORTY-SEVEN)
and 248 (TWO HUNDRED AND FORTY-EIGHT) of that same Law and by these by-laws.
Fifty. Registration of liquidators
Pending registration in the Public Registry of Commerce of the appointment of liquidators, and as long
as they have not commenced their duties, the Board of Directors and the Chief Executive Officer of the
Company will continue performing their duties, but they may not initiate new operations after the resolution to dissolve the Company has been approved by the General Shareholders’ Meeting, or the existence of
a legal cause for dissolution has been proven.
TRANSITORY CLAUSE
Sole paragraph
With the exception of what is stated in Clause Fourteen of these by-laws, in the Shareholders’ Meeting
that is called to approve modifications to these by-laws, and in its related General Ordinary Shareholders’
Meeting, the people who will act as board members will be named, even though it is not an Annual General
Ordinary Shareholders’ Meeting as defined in section (a) of Clause Fourteen.
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V. STOCK MARKET
1. SHAREHOLDER STRUCTURE
HUNDRED AND NINETY-FOUR AND 00/100 HISTORICAL MEXICAN PESOS). This is comprised of a
total of 559,369,806 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND SIXTYNINE THOUSAND, EIGHT HUNDRED AND SIX) common shares, nominative, Series B, with full voting
rights, no par value, fully subscribed and paid in, of which 30,955,386 (THIRTY MILLION, NINE HUNDRED AND FIFTY-FIVE THOUSAND, THREE HUNDRED AND EIGHTY-SIX) shares are Series B Class I
shares, representing fixed capital, and 528,414,420 (FIVE HUNDRED AND TWENTY-EIGHT MILLION,
FOUR HUNDRED AND FOURTEEN THOUSAND, FOUR HUNDRED AND TWENTY) shares corresponding to Series B Class II shares, representing the variable portion of CIE’s capital.
In a General Ordinary Shareholders Meeting of CIE held on August 13, 2012, an increase to the variable
portion of shareholders’ equity was approved through the issuance of 40,669,187 common, nominative
shares, Series B, Class II, no par value, representing the variable portion of the CIE’s shareholders' equity,
according to the terms approved therein.
equity were subscribed and paid in at the price of Ps. 7.00 (SEVEN AND 00/100 MEXICAN PESOS) per
share, and in the Second Subscription Period, the Company’s Secretary received requests to subscribe
40,000,000 ordinary nominative shares, Series B, Class II, with no par value, representing the variable
portion of CIE’s shareholders’ equity; therefore, the Company cancelled 630,194 shares that were not
subscribed, which was agreed to in the aforementioned General Shareholders’ Meeting.
The shareholders who stated their wish to subscribe and pay in shares during the Second Subscription
Period, under section (B) of the notice of subscription published by CIE on the DOF and EMISNET on
August 17, 2012 (the “Notice”), entered into a share subscription contract with CIE, which mainly contains
the following terms and conditions:
7.50 Mexican pesos.
8.00 Mexican pesos.
(iii) If the shares are subscribed within the first ten (10) calendar days following the third anniversary of the
8.50 Mexican pesos.
154
If the shares regarding which the shareholder or shareholders have stated their intention to subscribe are
not paid for within any of the three aforementioned periods, the shares will be cancelled, regardless of
CIE's right to demand that the shareholder comply with the obligation established in Article 1846 of the
Federal Civil Code.
CIE delivered the certificates for the shares corresponding to the shares subscribed and paid in during the
First Subscription Period.
Any shareholder who has subscribed to shares and consequently entered into a share subscription contract
with CIE must notify the Secretary of the Board of CIE regarding the shares of those subscribed that it will
pay for, indicating the amount to be transferred to CIE’s account that the contract itself established, with
the understanding that in the event of a discrepancy in payment, the shareholder will have two days to
verify the amount, and if any amount is missing, it will have one more day to pay the amount owed.
in any way whatsoever without prior written authorization from the other party.
At the Ordinary General Shareholders’ Meeting held on July 10, 2009, an increase to the variable portion of
the Company’s capital was approved in the amount of Ps. 1,200,000,000.00 Mexican pesos (ONE BILLION, TWO HUNDRED MILLION AND 00/100 MEXICAN PESOS), through the issuance of 200,000,000
(TWO HUNDRED MILLION) Series B Class II shares, no par value, at a subscription price of Ps. 6.00
Mexican pesos (SIX AND 00/100 MEXICAN PESOS) per share.
At the General Extraordinary Shareholders’ Meeting held on April 29, 2009, a decrease in the fixed portion
of the Company’s capital was approved in the amount of Ps. 405,879,249.79 Mexican pesos (FOUR
HUNDRED AND FIVE MILLION, EIGHT HUNDRED AND SEVENTY-NINE THOUSAND, TWO HUNDRED AND FORTY-NINE AND 79/100 MEXICAN PESOS) and for the variable portion, the amount of Ps.
4,305,576,159.21 Mexican pesos (FOUR BILLION, THREE HUNDRED AND FIVE MILLION, FIVE
HUNDRED AND SEVENTY-SIX THOUSAND, ONE HUNDRED AND FIFTY-NINE AND 21/100
MEXICAN PESOS), which reduction was made by writing off Company losses and not through cancellation
of shares, as those shares have no par value.
The General Ordinary and Extraordinary Shareholders’ Meetings of the Company held on April 25, 2006,
approved an increase to the variable portion of capital in the amount of Ps. 5,986,215,694.49 (FIVE
BILLION, NINE HUNDRED AND EIGHTY-SIX MILLION, TWO HUNDRED AND FIFTEEN THOUSAND,
SIX HUNDRED AND NINETY-FOUR AND 49/100 MEXICAN PESOS) and an increase to the fixed portion
in the amount of Ps. 564,310,244.51 (FIVE HUNDRED AND SIXTY-FOUR MILLION, THREE HUNDRED
AND TEN THOUSAND, TWO HUNDRED AND FORTY-FOUR AND 51/100 MEXICAN PESOS), without
issuing shares through the capitalization of a premium in subscription of shares that were reflected in the
Company’s financial statements as of December 31, 2005.
The General Ordinary and Extraordinary Shareholders’ Meeting of the Company held on May 27, 2005,
approved an increase to the variable portion of capital in the amount of Ps. 50,000,000.00 (FIFTY MILLION AND 00/100 HISTORICAL MEXICAN PESOS) through the issuance of 50,000,000 (FIFTY MIL155
LION) common nominative shares, Series B, Class II, at a subscription price of Ps. 1.00 (ONE MEXICAN
PESO 00/100) plus payment of a share subscription premium of Ps. 21.00 (TWENTY-ONE MEXICAN
PESOS 00/100) per subscribed share.
The General Ordinary and Extraordinary Shareholders’ Meeting held on April 26, 2001, approved an
increase to the variable portion of capital in the amount of Ps. 3,666,333.00 (THREE MILLION, SIX
HUNDRED AND SIXTY-SIX THOUSAND, THREE HUNDRED AND THIRTY-THREE HISTORICAL
MEXICAN PESOS) through the issuance of 3,666,333 (THREE MILLION, SIX HUNDRED AND SIXTYSIX THOUSAND, THREE HUNDRED AND THIRTY-THREE) Series B Class II shares, earmarked for the
Company’s Officers and Employees Stock Option Plan. The General Ordinary and Extraordinary Shareholders’ Meetings of the Company held on October 24, 2001, approved an increase to the variable portion
of capital in the amount of Ps. 67,000,000.00 (SIXTY-SEVEN MILLION HISTORICAL MEXICAN PESOS
AND 00/100) through the issuance of 67,000,000 (SIXTY-SEVEN MILLION) Series B, Class II shares, and
an increase to the fixed portion of the capital in the amount of Ps. 6,700,001.00 (SIX MILLION, SEVEN
HUNDRED THOUSAND AND ONE HISTORICAL MEXICAN PESOS AND 00/10) through the conversion
of 6,700,001 (SIX MILLION, SEVEN HUNDRED THOUSAND AND ONE) Series B Class II shares representing the variable portion of the capital, for the same number of Series B, Class I shares, which represent
the fixed portion of shareholders’ equity. Consequently, the variable capital was decreased by Ps.
6,700,001.00 (SIX MILLION, SEVEN HUNDRED THOUSAND AND ONE HISTORICAL MEXICAN
PESOS AND 00/100).
Regarding the capital increase by virtue of which the 3,666,333 shares were issued, as resolved at the
General Ordinary and Extraordinary Shareholders’ Meeting held on April 26, 2001 mentioned above, on
May 30, 2002, the Notice of Subscription to Shareholders was published in the Official Gazette of the
Federation, so that, in conformance with Article 132 of the General Law of Corporations, the shareholders
could exercise their right of first refusal to subscribe the shares issued due to the increase mentioned above.
When the period for exercising that right elapsed, the shares were made available to participants in the
Share Subscription and Stock Option Plan for Managers and Employees, for subscription and payment at
the same price that the shareholders exercising their right of first refusal paid; that is, Ps. 19.76 (NINETEEN AND 76/100 MEXICAN PESOS) per share; which was published in the newspaper “El Economista”
on June 14, 2002.
On June 14, 2002, INDEVAL reported in writing to the Company’s Secretary that subscription by exercise
of the aforementioned right of first refusal was for a total of 6,103 Series B Class II shares.
Similarly, at a meeting of the Company’s Board of Directors on June 17, 2002, the Chairman of the Board
reported the number of subscription requests received from participants in the Share Subscription and
Stock Option Plan for Managers and Employees, due to which assignment of 3,310,280 (THREE MILLION,
THREE HUNDRED AND TEN THOUSAND, TWO HUNDRED AND EIGHTY) shares was made to employees and managers, likewise resolving that the remaining shares, meaning the 349,950 (THREE
HUNDRED AND FORTY-NINE THOUSAND, NINE HUNDRED AND FIFTY) Series B Class II shares that
were not subscribed by shareholders in their right of first refusal and by the employees, will remain
deposited in the Company’s treasury.
As of this date, there are 559,369,806 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND SIXTY-NINE THOUSAND, AND EIGHT HUNDRED AND SIX) shares outstanding, and
40,223,040 (FORTY MILLION, TWO HUNDRED AND TWENTY-THREE THOUSAND, AND FORTY)
shares in the Company’s Treasury, of which 223,040 (TWO HUNDRED AND TWENTY-THREE THOUSAND AND FORTY) shares are intended for the Share Subscription and Stock Option Plan for Managers
and Employees of CIE, established in 2002.
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The shares that currently represent the Company’s Shareholders’ Equity are distributed as follows:
BI
30,955,386
BII
568,637,460
There are also 40,223,040 (FORTY MILLION, TWO HUNDRED AND TWENTY-THREE THOUSAND
AND FORTY) Series B Class II shares that have not been subscribed, which are deposited in the Company’s
treasury.
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2. SHARE PERFORMANCE ON THE SECURITIES MARKET
The following table shows the performance on the BMV of CIE’s Series B shares for the periods indicated,
including maximum, minimum and closing prices (stated in nominal Mexican pesos), as well as the
approximate volumes traded in the Mexican market for the periods indicated:
Series B Shares
Period
Maximum Minimum
Price
Price
Closing
Price
Volume
2008
30.52
9.45
9.45
3,651
2009
9.45
5.50
6.75
14,678
2010
6.75
5.71
6.86
949
2011
7.00
5.00
5.90
1,492
2012
7.70
5.75
7.70
5,897
1Q 11
6.86
5.00
5.97
193
2Q 11
7.00
6.00
6.10
567
3Q 11
6.50
5.60
6.03
470
4Q 11
6.50
5.60
5.90
259
1Q 12
6.50
5.75
6.00
1,372
2Q 12
6.80
6.00
6.70
4,077
3Q 12
7.00
6.30
6.75
63
4Q 12
7.70
6.50
7.70
385
Dec. 12
7.70
6.90
7.70
201
Jan. 13
9.60
7.70
9.25
1,024
Feb. 13
9.86
8.00
8.92
132
Mar. 13
8.92
8.53
8.69
11
Between 1998 and 2000, CIE kept its Series L shares listed on the BMV. These shares were later merged
with the Series B shares, thus Series L shares are no longer listed.
158
VI. Managers
159
Mexico City, April 30, 2013
National Banking and Securities Commission
General Office of Securities Monitoring
Insurgentes Sur No. 1971, Plaza Inn, Torre Sur, 7th Floor
Col. Guadalupe Inn, CP 01020,
Mexico City
Actuary Carlos Quevedo López
VP Securities Supervision
"The undersigned declare under oath that in the scope of our respective duties, prepared the
information concerning the issuer contained in this Annual Report, which, to our best
knowledge, fairly reflects its situation. Also declare that we have no knowledge of relevant
information that has been omitted or misrepresented in this Annual Report or that it contains
information that could be misleading to investors. "
[SIGNATURE]
____________________________
Mr. Luis Alejandro Soberon Kuri,
[SIGNATURE]
____________________________
Mr. Jaime Jose Zevada Coarasa,
Chief Financial Officer
[SIGNATURE]
____________________________
Mónica Lorenzo Gutierrez,
Head of Legal Affairs
EXTERNAL AUDITOR
The undersigned declare under penalty of perjury, that the financial statements contained in this
annual report for the years 2012 and 2011 were audited dated April 26, 2013 and April 16, 2012, in
accordance with the International Auditing Standards and the Generally Accepted Auditing
Standards in Mexico, respectively.
It also states that it has reviewed this annual report. Based on its reading and within the scope of
the audit work performed, it is not aware of relevant errors or inconsistencies in the information
included and whose source derived from the audited financial statements referred to in the previous
paragraph, or from information that has been omitted or misrepresented in this annual report or that
it contains information that could mislead readers.
However, the undersigned was not hired and did not perform additional procedures in order to
express its opinion regarding other information contained in the annual report from the financial
statements audited.
Mexico City, April 30, 2013.
[SIGNATURE]
CPA Roberto Vargas Flores
Audit Partner
PricewaterhouseCoopers, S. C.
[SIGNATURE]
CPA Humberto Pacheco Soria
Attorney
PricewaterhouseCoopers, S. C.
Mexico City, Federal District, Mexico, April 26, 2013
To the Board of Directors of Corporación Interamericana de Entretenimiento, S.A.B.
de C.V.
Dear Board Members:
I, Leopoldo Escobar Latapí, in my capacity as Chairman of the Audit and Corporate
Practices Committee of Corporación Interamericana de Entretenimiento, S.A.B. de C.V.
(hereinafter "CIE" or the "Company"), submit for your consideration this report on the
operations and activities carried out by the Audit and Corporate Practices Committee of the
Company (hereinafter the "Committee"), during the fiscal year ended December 31, 2012,
pursuant to Article 43 of the Securities Market Law.
Among the Committee's functions and responsibilities is that of reporting the state of the
internal control system of the Company and its subsidiaries. The Committee must describe
its deficiencies and deviations, as well as the areas that need improvement, considering the
opinions, reports, communications and the external auditor's report, as well as reports
issued by independent experts. During fiscal year 2012, the Committee met on four (4)
occasions, on the following dates: February 27, April 20, July 27 and October 22
(hereinafter, the "Committee Meetings"). The Committee Chairman, or in his absence, his
Alternate, presided over those Meetings, and the majority of the members of that
Committee were present, assisted by the Secretary of the Company's Board of Directors,
who prepared the minutes containing the resolutions adopted by the Committee. Also
present at those Committee Meetings were representatives from PricewaterhouseCoopers,
S.C. (hereinafter "PWC"), and Gossler, S.C. (hereinafter "Gossler"), independent external
auditors of the Company, as well as certain Company directors, and the head of CIE's
Internal Audit area, and on occasion third parties were invited to the Committee Meetings. It
is noted that the decisions adopted in the Committee Meetings were duly transcribed in the
corresponding book, which is kept by the Corporate Secretary.
Company management has the basic responsibility of issuing the financial statements
based on Mexican financial reporting standards, and issuing the consolidated financial
statements based on international financial reporting standards, preparing the financial
information and other information to be released to the stock market on which the Company
is currently listed in a timely and proper manner, and establishing internal control systems.
The Committee has reviewed the audited consolidated financial statements of the Company
and its subsidiaries at December 31, 2012. That review included analysis and approval of
the Company's policies, procedures and accounting practices.
Regarding the functions of the Company's Audit Committee, during the fiscal year the
following activities were undertaken:
i.
We reviewed the state of the internal control system and the internal audit system of the
Company and its subsidiaries, considering the relevance of the latter in the overall state
of the former, for which we reviewed the external auditor's report, and we interviewed
the external auditors and several members of management, the head of CIE's Internal
Audit, and certain of the Company’s directors. In that regard we did not find material
deficiencies or deviations to report in addition to those for which the corresponding
measures have already been taken, and regarding which the Board of Directors has
already been informed, as applicable;
ii.
The main accounting policies followed by the Company were reviewed, analyzed and
approved. It is noted that during fiscal year 2012, the Company's accounting policies
were not modified, except for those that were modified by application of international
financial reporting standards;
iii.
We have made comments and suggestions to management and those responsible for
the Company's Internal Audit area regarding taking appropriate preventative and
corrective measures in order to avoid breaching operating and accounting guidelines
and policies of the Company and its subsidiaries;
iv.
The Activities Report prepared by PWC and Gossler, the Company's external auditors,
was evaluated, with the conclusion that it was satisfactory, and the additional services
provided were reviewed and approved, which services are listed in Annex "A," which
forms an integral part of this document. The Committee agreed that it would only
approve the additional services which, because of their amount, were significant, and
those for which Management considers it necessary to have the Committee’s approval.
v.
PWC and Gossler were approved as the Company's external auditors, and their
respective fees were also approved;
vi.
We met periodically with the Company's internal and external auditors to hear their
comments and observations in advance of their work, promoting coordination between
the work of the external auditors and Company management;
vii.
The reports on the results of the external audit of December 31, 2012, presented by the
Company's External Auditor, were reviewed and commented on;
viii.
Certain fees for additional services submitted for consideration by PWC and Gossler,
the Company's external auditors, were authorized, and in that regard the external
auditors stated that those fees did not present an obstacle to their independence;
ix.
We reviewed the remuneration packages of the CEO of the Company, as well as the
remuneration policies of certain directors, which, during 2012, rose overall to the
amount of Ps. 73,435,872.00 (seventy-three million, four hundred and thirty-five
thousand, eight hundred and seventy-two pesos 00/100 Mexican pesos), and in this act
we state that there are no observations regarding the performance of the Relevant
Directors.
x.
The various reports presented by the Company's Department of Administration and
Finance on implementation of internal control mechanisms and the tests conducted on
them were reviewed;
xi.
The financial statements of the Company and its subsidiaries at December 31, 2012,
the auditor’s report, and the accounting policies used in preparation of the financial
statements under discussion were reviewed. After hearing the comments of the external
auditors, who are responsible for stating their opinion on the reasonability of the
financial statements and their conformance with Mexican financial reporting standards
and international financial reporting standards, as applicable, the Committee
recommended to the Board of Directors of the Company that it approve the financial
statements so that those financial statements could be presented for approval at the
Company's General Shareholders Meeting;
xii.
Various transactions that the Company or its subsidiaries entered into during the
ordinary course of business at market prices were reviewed;
xiii.
Agreements to the resolutions adopted in the Company's Shareholder Meetings and in
Meetings of the Board of Directors were reviewed; and
xiv.
No dispensation whatsoever was recommended to the Board of Directors or granted in
use of the faculties delegated to board members, directors, managers or people with
executive authority, pursuant to the terms of Article 28, section III, sub-section (f) of the
Securities Market Law.
Sincerely,
[SIGNATURE]
Chairman of the Audit and Corporate Practices Committee
VII. ANNEX
The following is the Opinion of the Independent Auditors and the Consolidated Financial Statements of
Corporación Interamericana de Entretenimiento, S.A.B. de C.V. and its Subsidiaries for the fiscal years
ended December 31, 2012 and 2011, and at January 1, 2011.
160

Corporación Interamericana de Entretenimiento, S.A.B. de C.V.

Transcription

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