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

Transcription

(BMV: CIE)
Av. Industria Militar s/n, Puerta 2, Acceso A
Colonia Residencial Militar, C.P. 11600, Delegación Miguel Hidalgo,
Mexico City, Federal District, Republic of Mexico
As of today’s date, CIE’s subscribed and paid-in capital is Ps. 3,398,401,343.00 (THREE
BILLION, THREE HUNDRED AND NINETY-EIGHT MILLION, FOUR HUNDRED AND ONE
THOUSAND, THREE HUNDRED AND FORTY-THREE HISTORICAL PESOS 00/100), comprised of a total of 559,330,813 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND THIRTY THOUSAND, EIGHT HUNDRED AND THIRTEEN) common nominal
Series B shares with full voting rights and 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) are Series B Class I, representing the fixed share capital, and
528,375,427 (FIVE HUNDRED AND TWENTY-EIGHT MILLION, THREE HUNDRED AND
SEVENTY-FIVE THOUSAND, FOUR HUNDRED AND TWENTY-SEVEN) are Series B Class II
shares, representing the variable portion of CIE’s share capital.
CIE’s outstanding shares are listed on the Mexican Stock Exchange under the ticker symbol
“CIE.” CIE 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 imply
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.
Corporación Interamericana de Entretenimiento has three issues of Debt-Denominated Securities to the Bearer registered with the Securities Section of the National Securities Registry,
trading on the Mexican Stock Exchange under the ticker symbols "CIE 05," "CIE 06" and "CIE
08," each with different amounts and characteristics. The Company also currently has its Senior
Unsecured 10-Year Notes registered on the Euro MTF (Multilateral Trading Facility) market on
the Luxembourg Stock Exchange, totaling US$ 200,000,000.00 (TWO HUNDRED MILLION
UNITED STATES DOLLARS) issued in June 2005 and expiring in June 2015, with a total
amount in circulation of US$ 13,650,000.00 (THIRTEEN MILLION, SIX HUNDRED AND FIFTY
THOUSAND UNITED STATES DOLLARS).
1
The information regarding these four debt instruments, as well as other information thereto, is
described in greater detail for the reader’s benefit, in the section entitled “Information on Relevant Credits” in Chapter III “Financial Information” of this Document.
This Annual Report, dated April 30, 2012, 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, 2011.
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.
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TABLE OF CONTENTS
Forward-Looking Statements
Notes on Presentation of Financial Information
I. GENERAL INFORMATION
1. Glossary of Terms and Definitions
2. Executive Summary
3. Recent Events
4. Risk Factors
5. Other Securities Registered in the National Securities Registry
6. Public Documents
II. THE COMPANY
1. History and Development of the Company
1.1.
General Information
1.2.
Evolution of the Company
1.3.
Main Capital Expenditures of the Company (2009-2011)
2. Description of the Business
2.1.
Main 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 Main Assets
2.11. Judicial, Administrative or Arbitration Proceedings
2.12. Shares Representing Capital Stock
2.13. Dividends
78
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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 Significant Loans
4. Management’s Discussion and Analysis of the Company’s Operating Results and Financial
Position
4.1.
Operating Results for Fiscal Year 2011
4.2.
Operating Results for Fiscal Year 2010
4.3.
Financial Position, Liquidity and Capital Resources
4.4.
Devaluation and Inflation
4.5.
Internal Control
5. Critical Accounting Estimates
IV. ADMINISTRATION
1. External Auditors
2. Transactions with Related Parties and Conflicts of Interest
3. Administrators and Shareholders
4. By-Laws and Agreements
V. STOCK MARKET
1. Shareholder Structure
2. Share Performance on the Securities Market
VI. MANAGERS .................................................................................................................................
VII. ANNEX
Audited Consolidated Financial Statements as of December 31, 2011 and 2010
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FORWARD-LOOKING STATEMENTS
This document includes and incorporates forward-looking statements as reference. These forwardlooking 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 forward-looking statements. In addition, throughout the document terms are used such as “anticipate,” “consider,” “believe,” “estimate,” “expect,” “plan,” “may,” “predict,” “intend,” and “project,” among
many others, including references to certain assumptions, and they include, but are not limited to, the
following projects and capabilities of Corporación Interamericana de Entretenimiento and its subsidiaries
and affiliated companies:

Geographic expansion through strategic alliances;

Expansion of the vertical integration 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 operations and jurisdictions in which the Company participates or is located are described in greater detail in the section “Risk Factors” in this chapter. 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 subsidiaries and affiliated companies may vary materially from the expected,
estimated or projected results. Accordingly, the Company does not undertake to update its forwardlooking 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 laws 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, associates and/or affiliates 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 Annual Report, 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 author access relevant events and other information and
documentation on CIE that it has provided to the BMV and the CNBV, which is published on their web-
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sites, www.bmv.com.mx and www.cnbv.gob.mx, respectively, as well as on the Company's website at
www.cie.com.mx.
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NOTES ON PRESENTATION OF FINANCIAL INFORMATION
The financial information contained in this document has been prepared in accordance with Mexican
Financial Reporting Standards (Normas de Información Financiera – NIF).
Pursuant to the guidelines of NIF B-10 “Effects of Inflation,” the Mexican economy is in a noninflationary environment, because its accumulated inflation for the last three years has been less than
26% (maximum limit to define that an economy must be considered non-inflationary), accordingly, as of
January 1, 2008, recognition of the effects of inflation on financial information was suspended (discontinuation of inflation accounting).
Consequently, the numbers at December 31, 2011 and 2010 disclosed in the financial statements
included herein, are shown in historical Mexican pesos, adjusted for the effects of inflation on the financial
information, recognized through December 31, 2007.
(For a more detailed explanation of the above, the reader is referred to the Section “Critical Accounting Estimates” in Chapter III, “Financial Information,” of this document).
Unless otherwise indicated, the financial information expressed in US dollars in this document was
converted to US dollars from Mexican pesos solely for the convenience of the reader. The exchange rate
used to that end at December 31, 2011, was Ps. 13.9476 pesos per U.S. dollar, in accordance with the
rate published in the Official Gazette of Mexico.
The monetary amounts or percentages, as well as the monetary variations and percentages presented throughout this document, may vary due to rounding. Furthermore, unless otherwise indicated, all
monetary sums are expressed in millions of Mexican pesos.
The Audited Consolidated Financial Statements (and their respective Notes) at December 31, 2011
and 2010, 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 information included in this document
should always be analyzed, and to the extent possible, with the Audited Consolidated Financial Statements that accompany it (or those referenced in this Annual Report) for the fiscal years ended on December 31, 2011, 2010 and 2009.
Certain historical financial information that may be indicated in this Annual Report may differ as a result of the accounting treatment given to certain divestments and adjustments that the Company has
made in recent years, which is the result of adjustments in accounting for discontinued operations. Based
on the foregoing, the financial numbers for the fiscal year ended December 31, 2010 contained in this
Document, are from the audited consolidated financial statements that are part of this Annual Report.
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I. GENERAL INFORMATION
1. GLOSSARY OF TERMS AND DEFINITIONS
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 document may be defined in the sections in which they appear, and
their meaning may be applied generally throughout this document, unless specified otherwise.
A glossary of certain terms and definitions used throughout this Annual Report is presented 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 document may be used in the singular or plural, interchangeably.
“BANK CREDITORS”
“STOCK MARKET CREDITORS”
“AMH”
“BANAMEX”
“BMV”
“BINGO”
“BTL”
“CENTRO BANAMEX”
“PERFORMANCE VENUES”
“DEBT-DENOMINATED SECURITIES”
OR “DEBT-DENOMINATED SECURITIES
TO THE BEARER”
“CIE,” “THE COMPANY" OR "THE
GROUP"
“CIE ENTERTAINMENT,” “CIE LAS
AMÉRICAS,”
“CIE AMUSEMENT PARKS,” AND “CIE
COMMERCIAL”
“CINIF”
“SOLE CIRCULAR FOR ISSUERS”
“CNBV”
“CODERE”
Those banking institutions that are CIE creditors.
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.
Banco Nacional de México, S.A., a member of the Banamex
Financial Group.
Bolsa Mexicana de Valores, S.A.B. de C.V.
A game of chance based on numbers and/or symbols. Term in small
letters.
Marketing technique consisting of the use of non-mass forms of
communication, directed to specific segments.
The exhibition and convention center located in the Las Américas
Complex in Mexico City.
Structures and facilities outfitted to present live events.
Credit instruments known as “certificados bursátiles” (debtdenominated securities) issued by CIE.
These terms will have the meaning given to them individually in
Chapter I, “General Information” in the “Executive Summary” section
of this document.
Mexican Council for Research and Development of Financial
Information Standards (Consejo Mexicano para la Investigación y
Desarrollo de Normas de Información Financiera)
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.
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“COFECO”
“COL.”
“LAS AMÉRICAS COMPLEX”
“RESTRUCTURED DEBT”
“D.F.”
“DLS.,” “DOLLAR,” “U.S. DOLLAR” OR
“US$”
“DOCUMENT,” OR "ANNUAL REPORT"
“EMISNET”
“OUT-OF-HOME ENTERTAINMENT”
“BY-LAWS”
“USA” OR “UNITED STATES”
“BROCHURE”
“FOUNDATION”
“GOVERNMENT” OR “MEXICAN
GOVERNMENT”
“GOSSLER”
“GRUPO MÁGICO” OR “MÁGICO”
“LAS AMÉRICAS RACETRACK”
“IFRS”OR “NIIFS”
“INBA”
“INDEVAL”
“ENTERTAINMENT PROPERTIES”
“ISR”
“JACK POT”
“LIVE NATION”
“LMV”
“MEXICO”
“BROADWAY-TYPE MUSICALS, PLAYS
OR PRODUCTIONS”
“NIF”
Comisión Federal de Competencia de México (Federal Competition
Commission of Mexico).
Colombian pesos, legal tender in Colombia.
This term will have the meaning assigned to it in Chapter I, “General
Information” in the “Executive Summary” section of this document.
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.
Federal District, the federative entity of Mexico.
Legal tended in the United States of America.
The annual report of Corporación Interamericana de Entretenimiento,
S.A.B. de C.V. for the fiscal year ended December 31, 2011.
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.”
Declaration of Information on Corporate Restructuring presented by
CIE to the BMV and CNBV on November 22, 2011.
The CIE Foundation (Fundación CIE), a not-for-profit civil association
within the Group.
The Federal Government of Mexico.
Gossler, S.C., an external auditing firm.
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 Information 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
area within which live events are put on. Generically known as “Show
Venues.”
Income tax.
One of the commercial names owned by AMH by which the parlors
operated by AMH are known, where numbers- and symbols-based
games are played under the permit granted to that subsidiary by the
Mexican government, and with operations mainly in the northern part
of Mexico.
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 (or Normas de Información
9
“OCESA”
“THEME PARK”
“PESO,” “PS.,” “M.N.” OR “$”
“PwC”
“CCF”
“RNV”
“ROYAL YAK”
“SPORTS BOOK”
Financiera, NIF according to its acronym in Spanish).
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).
A commercial name owned by AMH by which the parlors operated by
AMH in certain locations in the Mexican market are known, under a
concept of high quality in service and the broadest range of games
offered.
One of the trade names owned by AMH, designating the parlors
operated by AMH where sports betting takes place under the license
granted to this subsidiary by the Mexican government.
“SOUVENIR” OR “SOUVENIRS”
Promotional objects that are mementos of live events marketed in
CIE’s show venues during the realization of those events.
“T4F”
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.
Earnings before Interest, Taxes, Depreciation and Amortization.
A theme park for children operated between 2004 and the first
months of 2011 by Mágico, located in Fort Lauderdale, Florida, USA.
One of the trade names owned by AMH, designating the parlors
operated by AMH where sports betting takes place under the license
granted to this subsidiary by the Mexican government.
“TIIE”
“TICKETMASTER”
“EBITDA”
“WANNADO CITY”
“YAK”
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2. EXECUTIVE SUMMARY
General
CIE believes it is the leading company in the out-of-home entertainment market in Mexico, and one of
the best-known participants in Latin America and worldwide in the events industry. In conjunction with its
associates and strategic allies, such as Televisa and Ticketmaster, CIE offers a wide range 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 gamut of options includes concerts, theatrical
productions trade fairs and expositions, sporting, special and corporate events, and to a lesser extent the
development of an amusement park in Colombia.
CIE also offers throughout Mexico the design, implementation and execution of integrated out-ofhome marketing strategies tailored for tis clients (advertising, 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 transport lines, convenience stores,
commercial centers, professional soccer stadiums, and kiosks that carry newspapers and magazines. It
also develops initiatives based on BTL marketing, web applications, activations and promotions, and
telemarketing, among others.
The Company has participated actively, along with its strategic partner Codere, in developing the
gaming industry in Mexico, through the operation of a network of off-site sports betting centers, and
numbers- and symbols-based games distributed throughout the country. It also has access to the state-ofthe-art technology of third parties in the manufacturing of electronic terminals and equipment related to
gaming operations, fundamentally from abroad. CIE has the only professional horseracing track with
betting authorized by the Mexican Government to operate in Mexico City, and to develop a theme park for
children known as Granja Las Américas, and it operates the Banamex Center, which is an important
space for commercial fairs, expos, conventions and social events in Mexico City.
In addition to other business activities to be discussed in this Annual Report, 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, 2011, CIE reported consolidated
revenues and EBITDA of Ps. 11,466.6 and Ps. 2,227.2, respectively.
The following shows the business units into which CIE is organized:

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, owned by Ticketmaster. In 2011, the division recorded income of Ps. 4,815.8 and EBITDA
of Ps. 505.4.

CIE LAS AMÉRICAS, focuses on the operation and development of the Las Américas Racetrack in
Mexico City in association with Codere, which includes the Las Américas Racetrack (the only professional horseracing track with betting authorized by the Mexican government to operate in Mex-
11
ico City), along with the operation of remote sports betting parlors and numbers- and symbolsbased gaming outlets throughout the country. This division also includes the Granja Las Américas
theme park and the Centro Banamex convention and exposition. In 2011, CIE Las Américas reported income of Ps. 4,676.4 and recorded EBITDA of Ps. 1,255.7.
CIE COMERCIAL 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 transport, and at kiosks where newspapers and
magazines are sold in the Mexican market, among others. This division also develops call center
programs for clients in Mexico and abroad, and it supports client campaigns through the use and
application of state-of-the-art technology, BTL marketing, and web applications and development.
In 2011, the division recorded income of Ps. 1,802.6 and EBITDA of Ps. 436.4.
 CIE PARQUES DE DIVERSIONES, operates the complex known as El Salitre inside the Metropolitan
Simón Bolívar Park in the city of Bogotá, Colombia, in association with the local entities which includes an amusement park known as Salitre Mágico, and a water park named Cici Aquapark. The
operation of CIE’s amusement parks showed revenues of Ps. 171.8 and EBITDA of Ps. 29.7 in
2011. This business unit is classified in the audited consolidated financial statements attached to
this Annual Report, as well as in other sections of the Annual Report under “Other Businesses.”
In 2011, approximately 5.5 million people attended 4,963 events that CIE produced. In addition, approximately 1.4 million visited the amusement parks in Colombia and Granja Las Américas, and an
estimated 429,000 people attended the 1,784 horse races held at the Las Américas Racetrack. Also
during the year, the network of off-site betting parlors and numbers- and symbols-based game halls
received approximately 15.3 million visitors.
The table on the following page shows CIE’s relevant financial information for the fiscal years ended
(1)
December 31, 2009, 2010 and 2011;
12
2009
2010
2011
9,283.6
1,633.1
17.6%
812.4
820.7
8.8%
(820.7)
697.6
47.3
(145.8)
(956.8)
N.A.
10,101.0
1,981.0
20.0%
852.7
1,128.3
11.0%
(549.0)
503.4
(86.3)
275.6
108.8
1.0%
11,466.6
2,227.2
19.04%
944.3
1,283.0
11.0%
(603.6)
461.1
(26.3)
274.5
112.4
1.0%
1,646.7
5,681.0
6,540.9
2,301.4
16,170.0
7,033.2
3,684.7
10,717.9
3,052.6
2,399.5
5,452.0
1,242.2
5,571.3
6,432.8
2,200.8
15,447.1
6,807.2
3,287.1
10,094.3
2,897.2
2,455.6
5,352.8
1,694.7
4,854.0
6,022.5
1,637.1
14,208.4
6,251.6
2,919.3
9,170.9
2,680.5
2,356.9
5,037.5
(1.72)
(0.45)
(0.24)*
Net loss per share .................................. ………...…………………………….
(1.78)
(0.30)
(0.30)*
559.3
6.86
3,837.0
9,375.3
3.90
4.77
559.3
5.90
3,300.1
9,551.7
4.40
4.29
Information from the Income Statement:
Net Sales
EBITDA
EBITDA Margin
Depreciation and Amortization
Operating Income
Operating Margin
Comprehensive Cost of Financing
Interest Paid, net
Discontinued Operations
Non-Controlling Stake
Net Income
Net Margin
Information from the Balance Sheet:
Cash and Cash Equivalents
Other Current Assets
Property, Furniture and Equipment, net
Deferred and Other Assets
Total Assets
Bank and Stock Market Debt
Other Liabilities
Total Liabilities
Controlling Stake
Shareholders’ Equity
Loss per share before discontinued operations
Other information and relevant financial ratios:
(2)
Average Weighted Number of Shares
(3)
Share Price at the Close of the Year
(4)
Capitalization Value
(5)
Value of the Company
(6)
EBITDA / Interest Paid, net
(7)
Value of the Company / EBITDA
454.7
6.75
3,069.0
8,455.5
2.34
5.18
__________
(1)
(2)
(3)
(4)
(5)
(6)
(7)
The unaudited numbers presented in this table correspond to fiscal years 2009, 2010 and 2011. They are expressed in millions of nominal pes os, and they have
been prepared in conformance with prevailing Financial Information Standards in Mexico.
Unaudited numbers in millions. For the fiscal years 2010 and 2011, the number of shares considered for these calculations was 559,330,813.
Information, stated in Mexican pesos, taken from the section ”Shareholder Structure,” located in Chapter V, “Shareholder Market” in this document.
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.
Calculated based on the Capitalization Value minus the mathematical difference between Bank Debt and Stock Market Debt, and the Cash and Cash Equivalents
Account, for each fiscal year in the table indicated.
Mathematical ratio, expressed in times, attained by dividing the EBITDA and 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.
CIE’s consolidated revenues in 2011 increased 13.5% over consolidated revenues in the prior year.
Also during 2011, the Group recorded consolidated EBITDA that was 12.4% higher than what was
recorded in 2010, mainly attributable to increased attendance levels and growth in the average expendi13
tures of visitors to the Gaming parlors, combined with greater profitability of the mix of live events produced by CIE Entertainment during the year.
The following table shows the Group’s consolidated revenues by division for the fiscal years ending
December 31, 2010 and 2011:
Division
Entertainment
Commercial
Las Américas
Other Businesses
Total
2010
2011
Var. %
3,628.6
2,062.0
4,255.2
155.3
4,815.8
1,802.6
4,676.4
171.8
32.7%
(12.6%)
9.9%
10.7%
10,101.0
11,466.6
13.5%
The table below shows CIE's consolidated EBITDA by division for the same fiscal years under discussion.
Division
Entertainment
Commercial
Las Américas
Other Businesses
Total
2010
2011
Var. %
466.2
425.6
1,059.8
29.4
505.4
436.4
1,255.7
29.7
8.4%
2.5%
18.5%
1.3%
1,981.0
2,227.2
12.4%
EBITDA margin on consolidated revenues and by division is shown below, for the same fiscal years.
Division
Entertainment
Commercial
Las Américas
Other Businesses
Total
2010
2011
Var. %
12.9%
20.6%
24.9%
18.9%
10.5%
24.2%
26.9%
17.3%
(2.4)
3.6
2.0
(1.6)
19.6%
19.4%
(0.2)
(For a more detailed explanation regarding financial performance in the fiscal years ended December 31, 2009, 2010 and 2011, see Chapter III, “Financial Information,” and the Audited Consolidated
Financial Statements included in this document, as well as the Audited Consolidated Financial Statements included in this document and the 2009 Annual Report).
14
In recent years, the Group initiated the divestment process of various assets that it held in Mexico,
and certain markets in South America. The net funds that have resulted from these operations have been
applied directly to service the Company's Restructured Debt in terms of payment and early payments.
(For a more detailed explanation, see Chapter I, “General Information – Recent Events” of this Document).
The Company’s Series B shares have been listed on the Mexican Stock Exchange (BMV) since December 1995, under the ticker symbol CIE. (For a more detailed explanation, see “Share Performance in
the Stock Market” in Chapter V, “Stock Market” of this Document).
The company has its 10-year, US$ 200.0 bonds, issued in 2005 and expiring in 2015 (“Senior Unsecured Notes”) listed on the Luxembourg Stock Exchange, of which approximately US$ 13.7 is in circulation as a result of the repurchasing process that CIE has undertaken in recent years, which allowed it to
acquire approximately 93.0% of the securities that were originally issued. During the second half of 2011,
the Company moved the registration and trading of its bonds from the Regulated Market system to the
Euro MTF market (“Multilateral Trading Facility”) on the Luxembourg Stock Exchange, which process is
allowed under applicable regulation and pursuant to the terms and conditions of the securities. The
foregoing is due to the fact that the changes made in European financial directives following the issuance
in 2005, made maintaining the 10-year securities in the Regulated Market burdensome and restrictive.
The CUSIP number of the securities under Rule 144A is 21988JAA8, while its ISIN identification number
under Rule 144S is USP3142LAN93.
However, CIE continues to hold three senior unsecured notes, which are traded on the Mexican Stock
Exchange, which expire in September 2014, with the following ticker symbols and characteristics:

CIE 05, issued in October 2005 for the original amount of Ps. 1,400.0, has an unpaid balance
of approximately Ps. 1,096.9;

CIE 06, placed in December 2006 for the original amount of Ps. 500.0, had an unpaid balance at December 31, 2011, of approximately Ps. 391.7; and

CIE 08, placed in June 2008, for the original amount of Ps. 650.0, whose unpaid balance is
Ps. 509.2 at the close of the prior fiscal year.
The reduction of the amount in circulation of these three issuances is the product both of own funds
arising from the Company’s cash flow, as well as early payments on its principle made with net funds from
the sale of certain of CIE’s assets in Mexico and Latin America in recent years which, under the obligations that the Group acquired in 2009 with its Banks Creditors and Stock Market Creditors, are applied
directly to reducing bank and stock market liabilities of the Holding Company.
In December 2010, CIE issued unsecured notes for Ps. 280.0, expiring in May 2011, which were
listed and traded 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.
(For a more detailed explanation, see the section “Report on Significant Loans” in Chapter III “Financial Information” of this document).
15
Competitive Advantages
Market Position
CIE believes that it is the leading company in the –out-of-home entertainment market in Mexico, and
one of the best-known players in Latin America and worldwide in the show industry. In conjunction with its
associates and strategic allies, such as Televisa and Ticketmaster, CIE offers a wide variety 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, CIE offers the design, implementation and execution of integrated out-of-home
marketing strategies that are tailored for its clients, which focus on connecting their brands and key
messages to their key markets or audiences, through various promotions spaces and vehicles, BTL
marketing 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.
numbers- and symbols-based games distributed throughout the country. In addition, the Las Américas
Racetrack is the only professional horseracing track with betting authorized by the Mexican Government
to operate in Mexico City. It also contains a theme park for children and families known as Granja Las
Américas, and it operates the Banamex Center, which is an important space for commercial fairs, expos,
conventions and social events in Mexico City.
Diversified Operations
The Group offers a wide variety of out-of-home entertainment options to a broad range of socioeconomic 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 to large swaths of the Spanish- and
Portuguese-speaking world, making CIE a particularly attractive company to the best international artists.
Broad Range 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 and in entertainment guides and on tickets; advertising on pedestrian overpasses, convenience
stores, commercial centers, airports, public transport, newspaper and magazine kiosks, and at professional soccer stadiums; and telemarketing services, among others that are more closely related to BTL
marketing and technological and web applications. CIE believes that this broad range of promotional and
16
advertising channels, along with the experience 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.
Strategic Partnerships and Alliances
CIE has created joint ventures and strategic alliances with highly reputable partners, including Live
Nation’s Ticketmaster Corp., the global leader in automated ticket sales; Codere, a Spanish multinational
company active in private gaming whose business focuses on managing gaming terminals, bingo halls,
betting parlors, casinos and dog- and horseracing tracks; 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 the section entitled “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 the reputation, technology, operating
experience, proprietary content, geographical markets and socio-demographics, and 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 association (as of the publication date of this document):
Company Created
Partner
Partner Description
Purpose of the Association
CIE’s Equity
Stake
OCESA Entretenimiento
Televisa
The largest Spanish-language media Promotion and production of live
company in the world.
entertainment events in Mexico.
60.00%
Impulsora de Centros
de Entretenimiento
de Las Américas(1)
Codere
Spanish multinational, a leader in the Development and expansion of the
private gaming sector that manages Sports Books and Yaks business, as
recreational machines, bingo halls,
well as the Las Américas complex.
casinos, racetracks and sports
betting parlors.
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
Participações 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.
9.79%
Automated Ticket Sales
T4F Entretenimiento
(2)
__________
(1) In February 2012, CIE signed off on the sale of 38.5% of the shares representing ICELA to Codere México, S.A. de C.V., with which Codere increases its minority stake from
49.0% to a majority 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.
17
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.
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% are male and 52.36% 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 break-even 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 major
performance venues.
Strategies
CIE’s expansion into its markets in order to consolidate its leadership is based on the following strategies:
To Expand Advertising and Promotional Channels for its Clients
The Company seeks to provide its advertisers with an increasing variety of promotional and advertising channels, such as advertising on tickets and in entertainment guides, on billboards on pedestrian
walkways, on field-level rotating signage at professional soccer stadiums, in airports, convenience stores,
18
business centers, magazine and newspaper kiosks, and through telemarketing services and new BTL
marketing proposals, and based on web services, among others. The Group plans to continue expanding
its advertising and promotional channels in order to offer its advertisers better products and greater
geographic coverage.
To Expand 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.
To Expand 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.
To Continue Exploring Opportunities in the Out-Of-Home Entertainment Business that
Complements 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 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.
19
3. RECENT EVENTS
The following is a discussion of the events that occurred at the Company in 2010, 2011 and the first
months of 2012 and that, due to their level of significance, we believe may, directly or indirectly, have or
might have a significant impact on CIE’s activity, financial situation or operating results, among other
business variables affecting the Company and the industry in which it operates. These events are not
listed in chronological order in this document.
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, essentially in Chapters I, II and III (“General Information,” “The Company,” and
“Financial Information,” respectively), as well as in the audited financial statements that are an integral
part of this document.
Issuance of Notes in Mexico
The Company has three senior unsecured notes trading on the Mexican Stock Exchange, which expire in September 2014, with the following ticker symbols and characteristics:

CIE 05, issued in October 2005 for the original amount of Ps. 1,400.0, has an unpaid balance
of approximately Ps. 1,096.9;

CIE 06, placed in December 2006 for the original amount of Ps. 500.0, had an unpaid balance at December 31, 2011, of approximately Ps. 391.7; and

CIE 08, placed in June 2008, for the original amount of Ps. 650.0, whose unpaid balance is at
December 31, 2011, was approximately Ps. 509.2 at the close of the prior fiscal year.
The reduction of the amount in circulation of these three issuances is the product both of own funds
arising from the Company’s cash flow, as well as early payments made with net funds from the sale of
certain of CIE’s assets in Mexico and Latin America in recent years which, under the obligations that the
Group acquired in 2009 with its Banks Creditors and Stock Market Creditors, are applied directly to
reducing bank and stock market liabilities.
In December 2010, CIE issued unsecured notes for Ps. 280.0, expiring in May 2011, which were
listed and traded on the Mexican Stock Exchange under the ticker symbol CIE 00110. These certificates
are authorized by the CNBV in Official Document No. 153/89360/2010 dated December 15, 2010, which
allows the Company to register a Program to place the short-term unsecured notes for up to Ps. 600.0,
with an expiration period for the Program of two years from the authorization date. This particular market
debt was paid early, using net funds obtained from CIE’s divestment from T4F. The ticker symbol for the
issuance is CIE001100.
(For a more detailed explanation, see the section “Report on Significant Loans” in Chapter III “Financial Information” of this document).
20
10-Year Bonds
The company has its 10-year, US$ 200.0 bonds, issued in 2005 and expiring in 2015 (“Senior Unsecured Notes”) listed on the Luxembourg Stock Exchange, of which approximately US$ 13.7 is in circulation as a result of the repurchasing process that CIE has undertaken in recent years. With that process,
CIE acquired approximately 93.0% of the securities that were originally issued.
During the second half of 2011, the Company moved the registration and trading of its bonds from the
Regulated Market system to the Euro MTF market on the Luxembourg Stock Exchange, which process is
allowed under applicable regulation and pursuant to the terms and conditions of the securities. The
foregoing is due to the fact that the changes made in European financial directives following the issuance
in 2005, made maintaining the 10-year securities in the Regulated Market burdensome and restrictive.
This change was reported to the BMV and the CNBV through the mechanism known as “taking note.”
The CUSIP number of the securities under Rule 144A is 21988JAA8, while its ISIN identification
number under Rule 144S is USP3142LAN93.
Sale of Radios in Argentina
In January 2010, CIE concluded the sale of the radio frequencies the Company operated in Argentina
to a local investor. The sale was made for approximately US $12. CIE retains certain rights to sell air time
on those frequencies for a period of six years, starting in 2010.
Financial Restructuring
In December 2009, CIE finished restructuring the holding company’s debt with the majority of its bank
and stock market creditors, with the same terms and conditions for both: In the bank portion of the debt,
the participating institutions were Banco Inbursa and Banco Nacional de México, and the banks that led
this process were Scotiabank Inverlat and Credit Suisse. The total amount of restructured debt was
Ps.5,555.0 pesos, which is equal to approximately 97.0% of the holding company's debt, and to 84.0% of
the Group's consolidated debt. In addition, certain guarantees regarding the shares of CIE’s subsidiaries
and the adherence to and observance of covenant limits were considered in that restructuring.
Specifically, CIE must comply with the conditions indicated below. However, consent was obtained
from its bank and stock market creditors regarding whether to abstain or to carry out some of these
conditions:
1.
2.
3.
4.
Undertaking certain asset divestments
Making early debt payments
Contracting additional debt
Making capital investments up to an established amount
In reference to the credit established between Banco Inbursa, S.A. and Administradora Mexicana de
Hipódromo, in which CIE acts as the guarantor, certain covenants were established, once of which is a
minimum amount of the borrower’s shareholders’ equity, as well as its guarantee; neither entity has
complied with this obligation. CIE obtained the corresponding waiver from the lender. It is important to
mention that as part of the divestment process in CIE Las Américas, Codere will consolidate the liability
mentioned herein and CIE will cease to grant the corresponding guarantee.
21
As of the restructuring date of its liabilities, the Company has substantially reduced its level of indebtedness, which is Ps. 6,521.6 at the close of 2011, in comparison with what was recorded in December
2009, at the time of the restructuring. Due to an early payment made using the net funds obtained from
the sale of its stake in ICELA to Codere in February 2012, and the divestment of the liabilities contracted
to Banco Inbursa by AMH, the pro forma consolidated debt of the Group is approximately Ps. 2,335.0
million at the close of 2011, meaning a 67.0% reduction in comparison with the number at the close of
2009.
Sale of Parks in Mexico and Close of Park in Florida
In recent years, the Group started the process of divesting the amusement park assets that it operated in Mexico and the United States. At the end of fiscal year 2009, it sold the operation of its Mexican
parks, La Feria de Chapultepec, CICI and Selva Mágica, which are in Mexico City, Acapulco and Guadalajara. Similarly, at the beginning of 2011, the Company formally ceased operating the Wannado City
theme park in Fort Lauderdale, Florida, which, at this time, is not owned by any CIE subsidiary.
Today the Group only operates amusements parks in Bogotá, Colombia, in the El Salitre complex,
which is comprised of the El Salitre Mágico amusement park and the CiCi Aquapark water park. These
developments are located in the Simón Bolívar Metropolitan Park. During 2011, El Salitre recorded an
attendance level of approximately 958,000 visitors. The Company has classified this operation under the
line “Other Businesses” throughout this Document, as well as in the audited consolidated financial
statements attached hereto.
Divestment from T4F Entretenimiento S.A.
In April 2011, T4F initiated the process of share placement through a public offering on the
BM&FBOVESPA of Sao Paulo, with placement efforts in international markets for qualified investors. This
transaction, which concluded in May 2011, allowed T4F to obtain resources for the expansion and
development of its activities in its markets, as well as the advance of its institutionalization strategy. T4F
placed approximately 31.4 million shares, equal to 45.4% of its capital, at a placement price of R$16.00
(sixteen Brazilian reais 00/100) per share. The ticker symbol assigned to T4F on the Sao Paulo Stock
Exchange is SHOW3.
Due to this operation, CIE, which has held 24.0% in the South American company since 2007, now
holds a minority stake of 9.8% in the capital of T4F. As a result, CIE obtained net funds of Ps. 638.0,
which were applied directly to early payment of the holding company’s bank and stock market debt, in
compliance with the terms and conditions of the agreements with its providers, due to the restructuring of
its debt in December 2009, and the subsequent agreement in 2010. (For a more detailed explanation, see
the section “Financial Restructuring” in this section).
The Company will continue recording the results of T4F in its accounting under the participation
method, in accordance with accounting standards in force.
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 acquired an additional 35.8% stake in Impulsora de Centros de
Entretenimiento de Las Américas, the controlling company of CIE Las Américas. With this, CIE’s partici-
22
pation in the subsidiary goes from a 51.0% controlling stake, to a minority financial interest of 15.2% in
ICELA, while Codere’s stake in ICELA goes to 84.8% in exchange for financial consideration.
Once the suspensive conditions of the agreement were met, including approval by the COFECO,
Codere exercised the referenced rights, and with a payment of Ps. 2,657.0, increased its stake in CIE Las
Américas in February 2012. Thus, as of this date, Codere will consolidate ICELA’S income statement and
balance sheet, including recognition of the bank liability for Ps. 1,198.0 that AMH has with Banco Inbursa.
The net funds from this transaction were Ps. 2,630.0, which were applied in full to early payment of
bank and stock market liabilities of the holding company of CIE, in accordance with the commitments
agreed to by the Company in December 2009. In respect to the Company, note that the transaction with
Codere was also authorized by the controlling entities and corporate governance of CIE, and by its bank
and stock market lenders, under the assumptions inherent to its restructured debt.
CIE granted Codere a purchase option to acquire 15.2% of the Company’s remaining stake in ICELA.
The price per share for that option will depend on the date it is exercised. Codere may exercise it, with the
limit to do so being June 30, 2014.
(For a more in-depth explanation in this regard, see the Information Statement on Corporate Restructuring released by CIE to the investing public on November 22, 2011, through the Emisnet systems of the
BMC, and the STIV-2 system of the CNBV).
23
4. RISK FACTORS
In addition to the forward-looking concepts in this document and included in the section “ForwardLooking Statements,” whose interpretation by the reader may cause them to be interpreted as further 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 Brochure, 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 or 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 payment only after the mandatory legal
reserved have been funded and the losses incurred in prior fiscal years have been covered. 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 taken by the Group.
(For a more detailed explanation, see the “Dividends” section in Chapter II “The Company,” as well as
the “Recent Events” section in Chapter I “General Information,” both in this Document).
Dependence on Strategic Alliances 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 activity, financial situation and operating results.
24
(For a more detailed explanation, see “Executive Summary” in Chapter I, “General Information” of this
document).
Closure 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 the section entitled “Description of the Business” in Chapter II,
“The Company” in this document).
Termination, Expropriation and Revocation of Concessions and Permits
Under Mexican law, the concession granted to AMH to operate the Las Américas Racetrack in Mexico
City may be revoked for reasons of public interest. In that case, even though Mexican law provides a right
to indemnification and specifies the basis on which this indemnity would be calculated, no specific terms
for payment of the indemnity have been established. Furthermore, the concession for the Racetrack may
be revoked due to non-compliance with the obligations imposed by the concession. On the other hand,
the permit granted to AMH to operate off-site betting parlors and to play numbers- and symbols-based
games may be canceled by the Mexican Government in the event of breach of the obligations stated in
that permit, or its operation might be suspended due to reasons of public interest.
Both the revocation of the concession for the Las Américas Racetrack, and cancellation of the permit
for off-site sports betting and numbers- and symbols-based gaming in Mexico, could cause an adverse
effect on the Company’s activity, financial situation and operating results, considering for that possible
impact, the minority shareholder stake of 15.2% that CIE holds as of February 2012 in these operations.
(For a more detailed explanation, see the section entitled “Recent Events” in Chapter I, “General Information,” in this Document).
Difficulty to Properly Integrate and Optimize New Businesses
The strategies of the vertical integration 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.
25
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
numbers- and symbols-based games in Mexico, as well as live entertainment operations in Argentina,
Chile and Brazil, have experienced a redefined strategy and strategic appliances, 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;

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 probability 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 association that it has with the
Company T4F in South America, CIE participates in the local operations of its partner in the Brazilian,
Argentine and Chilean markets in the development and expansion of live entertainment products and
services. These include promoting family, special, theater, sporting, Latin and international events, among
others, as well as the sale of tickets, and marketing advertising sponsorship for events. In addition, CIE’s
Colombian operation is in amusement and water parks in Bogotá, to which it has recently added the
promotion and presentation of live international events, also 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
26
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 permanently. 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 competition from companies and individuals 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 a 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 and Gaming;

In the sector of off-site sports betting and playing numbers- and symbols-based games, AMH
could experience additional competition is the Mexican government grants new operating permits,
or allows new gaming technology and modalities;
27

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.

The primary risk for operating amusement parks in Colombia is the entry of new participants into
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.
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 the section entitled “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 Gaming
parlors 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 of
diversifying its entertainment offerings to overcome economic crises, CIE cannot guarantee that these
strategies will be successful in preventing a material adverse effect on its activities, financial situation and
operating results.
Dependence on the Availability of Artists and Events
The Company’s success and ability to sell tickets are highly dependent on the availability of wellknown 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.
Dependence on the Availability of Locations to Open Gaming Parlors
The success of the growing number of visitors to AMH's off-site sports betting parlors and numbersand symbols-based game halls depends on the locations of those parlors. One of the Group’s strategies
has always been to find safe and accessible locations, with parking, preferably inside of business centers
in large- and medium-sized cities in Mexico. As developers of this type of property are delaying their
28
construction, as has been seen many times in recent years, it is possible that AMH will take longer to find
a location that meets all of its requirements as a result of the market's growth in supply and demand of
spaces in these commercial centers, both competitors of AMH in certain areas, and third parties not
involved in the gaming branch, as well as the cost of the property and rent for the spaces.
Risk of Accidents and Disturbances
Due to the high concentration of people at many of CIE’s 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 those inside the facilities 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.
Although the Company has not experienced any significant disturbances or accidents at its events,
parlors, 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. Also,
even though the horse-racing season at the Las Américas Racetrack is nearly the entire year, most
events are on certain days of the week, principally the weekends. However, gaming rooms operate 365
days per year with variable hours that encompass broad hours of operation.
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
29
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 businesses
in 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 contraction, 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 “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. In 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.
30
(For a more detailed explanation, see “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, 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 in 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 in 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 are required to prepare and release their financial information in conformance
with Mexican 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.
According to general provisions applicable to securities issuers and other securities market participants, which states that for fiscal year 2012 securities issuers in Mexico must present their financial
information in accordance with IFRS, the Company evaluated and reviewed the effects that adopting
those rules could have on the financial information, and consequently it has implemented the measures
and systems for those rules.
(For a more detailed explanation, see the section ”Critical Accounting Estimates” in Chapter III "Financial Information" in this Annual Report, as well as quarterly financial information released to the
investing public in recent fiscal years).
31
5. OTHER SECURITIES REGISTERED IN 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 solely for facility of the reader.
As of today’s date, CIE’s subscribed and paid-in capital was Ps. 3,398,401,343.00 historical pesos
(THREE BILLION, THREE HUNDRED AND NINETY-EIGHT MILLION, FOUR HUNDRED AND ONE
THOUSAND, THREE HUNDRED AND FORTY-THREE HISTORICAL PESOS 00/100), comprised of a
total of 559,330,813 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND THIRTYTHOUSAND, EIGHT HUNDRED AND THIRTEEN) common nominal Series B shares with full voting
rights and 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) are Series B Class I,
representing the fixed share capital, and 528,375,427 are Series B Class II shares, representing the
variable portion of CIE’s share capital.
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 $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.
CIE’s updated share capital was approved in 2011 through official document no. 153/30937/2011 datth
ed December 14 .
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 “RNV”),
which is overseen by the National Banking and Securities Commission (“CNBV”). Registration with the
RNV 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 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 (TWO
BILLION, EIGHT HUNDRED THOUSAND) unsecured notes on the BMV, equal to Ps. 280,000,000.00
(TWO HUNDRED AND EIGHTY MILLION MEXICAN PESOS) maturing in May 2011, with ticker symbol
CIE 00100, which were paid early with the net funds that the Company obtained from its divestment from
its Brazilian associate T4F, as several other debts of CIE were partially paid down, including the issuance
32
of unsecured notes maturing in 2014 for original placement amounts of Ps. 1,400,000,000.00 (ONE
BILLION, FOUR HUNDRED MILLION MEXICAN PESOS), Ps. 500,000,000.00 (FIVE HUNDRED
MILLION MEXICAN PESOS and Ps. 650,000,000.00 (SIX HUNDRED AND FIFTY MILLION MEXICAN
PESOS).
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 million unsecured notes, each with a value of Ps. 100.00 (ONE HUNDRED 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.
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 MEXICAN PESOS), billion 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. 500,000,000.00
(FIVE HUNDRED MILLION MEXICAN PESOS).
Under this Dual Program, on February 2, 2011, the Company obtained authorization from the CNBV
of the update to the registration in the National Securities Registry for CIE 06 unsecured notes, through
official communication no. 153/30305/2011, underlying 5 million unsecured notes, each with a value of
Ps. 100.00 (ONE HUNDRED MEXICAN PESOS). These debt instruments were placed on the Mexican
securities market on December 8, 2006, expiring on September 30, 2014. The rate is based on the 28day TIIE plus an applicable margin of 300 basis points.
Also under this Dual Program, on February 2, 2011, the Company obtained authorization from the
CNBV of the update to 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 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
28-day TIIE plus an applicable margin of 300 basis points.
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 inscription, 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 Senior Unsecured Notes
issued in 2005 in a public offering, and expiring in 2015 for a total of US$ 200,000,000.00 (TWO HUNDRED MILLION UNITED STATES DOLLARS), which today is just US$ 13,650,000.00 (THIRTEEN
MILLION, SIX HUNDRED AND FIFTY THOUSAND UNITED STATES DOLLARS) in circulation, CIE is
required to deliver its reports to that stock exchange and to The Bank of New York Mellon on a quarterly
and annual basis, as applicable, 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, refer to "Recent Events" in Chapter I, "General Information," of this Annual Report).
33
PUBLIC DOCUMENTS
CIE is making this document available to the financial community and to other interested parties
through its disclosure 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 oral or written requested to Mr. Ricardo Rodríguez
Vázquez, Corporate Director of Financial Planning, Mr. Antonio Alducin Pérez-Cuellar, Corporate Deputy
Director of Financial Planning, Mr. Conrado M. Ramírez Sordo, Corporate Director of Compliance and
Investor Relations, and/or Mr. Héctor Tapia Rivera, Corporate Manager of Compliance. These four people
are at the Company’s corporate offices in Mexico City, at telephone number (01-55) 5201-9000. They
may be contacted by e-mail at the e-mail address [email protected].
34
II. THE COMPANY
1. HISTORY AND DEVELOPMENT OF THE COMPANY
1.1 General Information
Name and Company 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 assets of all types
of trade 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, 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 from other companies and individuals, and to provide other companies and individuals
with the services necessary to achieve their corporate ends or objectives, services such as the
following: administrative, financial, treasury, auditing, marketing, accounting, program and manual
development, analysis of operating results, assessment of productivity information and possible
financing, 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 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 payment, 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 trading companies, corporations and
institutions with which the Company does business or in which the Company owns interests,
whether or not secured by tangible securities.
35
g) To grant all kinds 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 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 the 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, possess, 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, executed before
Roberto Núñez y Bandera, Notary Public Number 1 of the Federal District. The first official copy of this
instrument was recorded with the Public Registry of Commerce of the Federal District on commercial
page number 201,055, on October 25, 1995. The duration of the Company, in accordance with Article
Four of its corporate by-laws, is 99 years from the date of signature of the amendment to its by-laws.
Address and Telephone Numbers
The Company’s principal place of business is Avenida Industria Militar S/N, Puerta 2, Acceso A, Colonia Residencial Militar, Delegación Miguel Hidalgo, Postal Code 11600, in Mexico City, in the Federal
District, Republic of Mexico. Its main telephone number is (01-55) 5201-9000, and its fax number is
36
(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 other sections of interest, including
electronic pages that are specific to several of its businesses.
1.2 Evolution 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% 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 to operate a 22,000-seat amphitheater in Monterrey, Nuevo León, it 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%. It also expanded its operations through: (i) billboard advertising on pedestrian
overpasses in Mexico through Publitop, S.A. de C.V. (“Publitop”), which is 100% 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, S.A. de C.V. and Cinemark de México, S.A. de C.V., to
market advertising space inside the complexes they operate, including cineminutos. Today, the Company
markets this type of space in certain Cinemex movie theaters for certain clients with an interest in this
type of marketing.
In 1997 and 1998, CIE continued expanding its out-of-home entertainment options through: (i) acquiring the assets and operation of the largest promoter of rock events in Argentina and Chile; (ii) creating a
joint venture with Divertido, S.A. de C.V., the largest amusement park operator in Mexico with five parks
at that time; (iii) securing the rights for 20 years to develop and operate an eight-hectare amusement park
in Bogotá, Colombia; and (iv) acquiring the operations 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.
37
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 (as of
the date of this Document, CIE had 54 Gaming parlors operated by AMH throughout the country). 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
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, S.A., 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% of the live entertainment operation in Mexico. From this association, CIE
Entertainment was created.
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% in
Brazil, 100.0% in Chile and 100.0% of live entertainment operations in Argentina, to a 24.0% 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.) 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 49.00% interest in CIE Las Américas to continue developing
the burgeoning gaming industry in Mexico. In that same year the Mexican authorities modified the permit
granted to AMH to install, operate and develop 20 off-site betting and numbers- and symbols-based
gaming centers, which was in addition to the 45 already-existing licenses, under the same conditions as
the initial permit. In 2008, CIE entered into an exclusive five-year distribution agreement 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 also concluded the sale of the radio stations that it
owned in Argentina, and it formally ceased operations of its 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 stake in T4F fell to nearly 9.8%.
In August 2011, Codere and CIE established a purchase option contract through which Codere could
acquire an additional 35.8% stake in ICELA by means of a financial payment, and subjected 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%, causing CIE's stake to fall from 51.0% to 15.2%. The net funds
that the Company obtained from the transactions mentioned in this paragraph of Ps. 2,633.0 were applied
directly to early payment of the restructured debt of the holding company. CIE also ceased to consolidate
the debt of Ps. 1,997.6 taken by AMH from Banco Inbursa in its consolidated financial statements.
(For a more detailed explanation regarding recent historical events, see, among others, the section
"Recent Events" in Chapter I, "General Information" of this document, and also refer to the section
"Statements on Future Consequences" of Chapter I, "General Information" of this document).
38
1.3 The Company’s Main Capital Expenditures (2009-2011)
The Company made the following capital investments in fiscal years 2009, 2010 and 2011, as shown
below. This information (expressed in millions of pesos) is from the audited consolidated financial statements attached to this Annual Report, and from the audited consolidated financial statements attached to
the 2009 Document:
Main Investments
2009
2010
2011
Investment in permanent shares
(79.8)
-
715.1
Investment in property, plant and equipment
(297.8)
(628.7)
(352.1)
Investment in intangible assets and other
amortizable assets
(153.1)
(274.5)
(290.9)
Total
(530.7)
(903.2)
72.1
The investments made by the Group during these years were mainly for expanding and maintaining
its network of off-site sports betting and numbers- and symbols-based gaming parlors in Mexico, and to
maintain its show venues, amusement parks and advertising and promotional vehicles, as well as certain
technologies to modernize its businesses.
39
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 might be of general interest to the reader.
2.1 Main Activity
CIE believes it is the leading company in the out-of-home entertainment market in Mexico, and one of
the best-known participants in Latin America and worldwide in the events industry. In conjunction with its
associates and strategic allies, Televisa and Ticketmaster, CIE offers a wide range 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 gamut of options includes concerts, theatrical
productions, off-track betting on sports and numbers-based gaming, trade fairs and expositions, sporting,
special and corporate, and other live events.
Throughout Mexico CIE also offers the design, implementation and execution of integrated out-ofhome marketing strategies tailored for tis clients (advertising, 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 transport lines, convenience stores,
commercial centers, professional soccer stadiums, and kiosks that carry newspapers and magazines. It
also develops initiatives based on BTL marketing, web applications, activations and promotions, and
telemarketing, among others.
numbers- and symbols-based games distributed throughout the country. CIE also has the only professional horseracing track with betting authorized by the Mexican Government to operate in Mexico City,
and to develop a theme park for children known as Granja Las Américas, and it operates the Banamex
Center, which is an important space for commercial fairs, expos, conventions and social events in Mexico
City.
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, 2011,
CIE reported consolidated revenues and EBITDA of Ps. 11,466.6 and Ps. 2,227.2, respectively. CIE does
not depend on any supplier in particular to any significant extent. Certain of the Group’s operations show
a degree of seasonality during the year, and may be affected by weather conditions.
(For a more detailed explanation, see the section “Factors Related to the Entertainment Industry” in
Chapter I, “General Information” of this document). (For a more detailed explanation about revenues,
EBITDA, Operating Income and Total Assets for each of CIE’s strategic business units, please see the
Audited Consolidated Financial Statements at December 31, 2011 and 2010, attached to this document;
and for those referring to fiscal year 2009, please refer to the 2009 Annual Report).
40
In 2011, approximately 5.5 million people attended the 4,963 events that CIE promoted and produced
in Mexico, of which 3,600 were theatrical productions, 1,075 were musical concerts, and 290 were family,
sporting and cultural events, among others. Some of the events that CIE has presented in recent years
include:

Musical concerts, presenting international and Latin artists such as: KISS, PIXIES, Metallica, Bon
Jovi, Massive Attack, Iron Maiden, Keane, Cut Copy, Simply Red, Peter Gabriel, Goldfrapp,
Scorpions, AIR, Placebo, Kings of Leon, The Killers, Depeche Mode, Kenny G, Jonas Brothers,
Moby, AC/DC, Pet Shop Boys, The Ting Tings, Moderatto, Edith Marquez y Maria Jose,
Belanova, PXDX, La Barranca, Chayanne, Moenia, Cecilia Toussaint, Alejandro Sanz, El Gran
Silencio, Enrique Iglesias, Yuri, Wisin y Yandel, Bunbury, Raphael, La Quinta Estación, Ricardo
Arjona, Los Fabulosos Cadillacs, Moenia, Ha-Ash, Gloria Trevi, Silvio Rodriguez, Marco Antonio
Solís, Paty Cantú, Gustavo Cerati, Laura Pausini, Joan Sebastian, Rodrigo y Gabriela, Juan Luis
Guerra, Jarabe de Palo, Jaguares, the Latin music festival “Vive Latino,” and the “Corona Capital”
festival, among many others;
 Broadway-type theater productions such as “La Línea del Coro” and “Mamma Mia.” Smallerformat productions included “Catholic Girls,” “The Vagina Monologues,” “Defending the Caveman,” “Confessions of Women over 30,” “Orgasms–The Comedy,” “El pelón en sus tiempos de
cólera,” “Mentiras,” “Toc Toc,” and “Gorda,” among others; and
 Family and special productions, such as “WWE Fights,” several Cirque du Soleil productions,
Cirque Eloise “Rain,” “Xtreme Fights Society,” “Mundial de Base Ball,” “Slavas Snow Show,”
“Nascar Corona Series,” “Disney on Ice Cars,” “La Fura dels Baus,” “Momias de Guanajuato,”
“Monster Jam” and “Yamato Drummers of Japan,” among many 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 Spanishspeaking 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 artists’ tours and their 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, 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, among other initiatives.
41
CIE has the ability to offer artists an integrated line of promotional and production services that cover
some of the major Spanish- and Portuguese-speaking cities across the globe. 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.
The primary source of income from booking and promoting live events is the sale of tickets and marketing advertising sponsorships for those events. Conversely, the highest costs are talent fees, production
costs, operating expenses (which includes rent when the Company uses third-party facilities), advertising
and insurance costs.
Event Production
THEATER. 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 Group’s first production, “Beauty and
the Beast,” an original work of Walt Disney Theatrical Worldwide, Inc., ran for 14 months in Mexico, and
was subsequently presented in Spain, Argentina and Brazil from 1999 to 2002. Since that time, the
Company has established licensing agreements with theatrical producers such as Cameron Mackintosh
and Andrew Lloyd Webber, among others, to stage their various works in the region. In addition to Beauty
and the Beast, the Company has presented productions such as Fiddler on the Roof, Joseph and the
Amazing Technicolor Dreamcoat, Les Misérables, Bésame Mucho, My Fair Lady, Rent, Chicago, The Man
of La Mancha, Cats, Phantom of the Opera, Jesus Christ Superstar, Cabaret, Mamma Mia, Hoy No Me
Puedo Levantar, The Producers, and Sweet Charity, among others.
The Group 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 pre-production 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 presents. Some of these smaller-scale
productions that the Company has staged include Confessions of Women in their 30s, Defending the
Caveman, The Grönholm Method, The Vagina Monologues, Orgasms, Catholic Girls, etc. Revenues from
theatrical operations are mainly generated through ticket sales and marketing advertising sponsorships.
CIE also obtains additional income from concession stands that sell food, beverages and souvenirs.
Conversely, the costs associated with theatrical tours involve artistic talent, rents, advertising and royalties. The costs of talent are generally fixed once the theatrical production is under way. Royalties are
usually paid as a percentage of gross box-office revenues, net of certain expenses.
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 breakevent 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, so it enters into leases or
obtains permits or concessions. It has also entered into agreements with owners in which it agrees to
build performance venues in exchange for more favorable leasing terms (this was the case with its openair forums with seating capacity for a significant number of spectators in Mexico City, Guadalajara and
42
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 original 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:
43
Market and
Year of
Performance Venue
Incorporation
Type of Venue
CIE’s Rights
Maximum
Capacity
Mexico City
Foro Sol
1993
Amphitheater / Baseball
60,000
Ten-year exclusive temporary revocable administrative permit.
stadium
26,180
(Expires in September 2021).
Estadio Azul (1)
1996
Soccer stadium
36,000
Five-year operating contract. (Expires in December 2013).
Autódromo “Hermanos Rodríguez”
2001
Car Racetrack
59,248
Ten-year exclusive temporary revocable administrative permit.
(Expires in September 2021).
Palacio de los Deportes
1990
Indoor arena
21,000
José Cuervo Salón (2)
2003
Amphitheater
3,500
Ten-year temporary revocable administrative permit. (Expires in
September 2021).
Ten-year lease.
(Expires in 2013).
Teatro Metropólitan
1996
Amphitheater
3,400
Five-year lease.
(Expires in December 2013).
Centro Cultural Telmex I
1996
Theater
2,251
Teatro Blanquita
1990
Theater
1,944
Undefined, with the possibility of the parties ending the lease at
any time. (3)
Three-year lease.
(Expires in October 2012).
Centro Cultural Telmex II
1996
Theater
1,190
Fair Pavilion
N/A (4)
Pabellones Feriales
Lease terminated (3)
Temporary and revocable administrative permit – Leased). Land
1992
del Palacio de los Deportes
lease expires in September 2021, and the structure lease expires
in February 2029.
Foro Polanco (5)
2005
Theater
4,000
Teatro de los Insurgentes
2006
Theater
950
Auditorio Plaza Condesa
2010
Amphitheater
Teatro Banamex Santa Fe (6)
2009
Theater
Arena VFG
2005
Amphitheater
10,096
Lease. (Expires in August 2020).
Estadio 3 de Marzo
2010
Stadium
25,000
Exclusive scheduling rights to musical events and events other
2,500
389
Ten-year lease. (Expires in August 2015).
Lease. (Expires in December 2015).
Lease. (Expires in March 2029).
Lease. (Expires in February 2016).
Guadalajara, Mexico
than soccer. (Expires in August 2020).
Monterrey, Mexico
Auditorio Banamex(7)
1994
Amphitheater
22,000
Operating rights for 50 years.
(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) The two fair pavilions together cover an area of 9,000 square meters.
(5) Previously known as Foro Scotiabank.
(6) Previously Zentrika
(7) 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
44
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.
The revenues from operating performance venues come mostly from marketing advertising space
and concession stands for selling food, beverages and souvenirs, as well as parking and other similar
services As a performance venue operator, for each event CIE typically receives a fixed amount of
percent of the box office revenues corresponding to use of the performance venue. The operating costs
for performance venues include fixed costs related to leasing and concession payments, and variable
costs and expenses related to repairs, cleaning and payments to part-time workers (security, ushers and
ticket sellers).
Sale of Advertising Sponsorships
The Company 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) automobile companies (i.e. Ford, General Motors, Toyota, Volkswagen,
Daimler Chrysler), and radio stations, among others.
IN 1991, CIE entered into a joint venture with Ticketmaster Corp., Inc. to sell tickets in Mexico and the
TM
rest of Latin America, exclusively using the name "Ticketmaster " and its computerized ticketing system.
The Company also established a strategic association with Ticketmaster Corp., Inc through which it
acquired 50.01% of the Mexican operation, and in 2005 CIE increased its stake through its subsidiary
Ocesa Entretenimiento, S.A. de C.V., to 67% ownership. At the end of 2011, CIE was selling tickets
through Ticketmaster’s automated system, as well as through Ticketmaster’s Internet portals in Mexico. In
2011, CIE sold approximately 22.9 million tickets, both for its own events as well as for third-party events
through the Ticketmaster system.
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. Revenues are generated by charges received for sales made by
telephone, online, and at outlets that are set up at businesses and in department stores, as well as
advertising sales during telephone sales, or advertisements that are printed on tickets and in entertainment guides.
45
The Company markets tickets to the vast majority of live event promoters and entertainment and performance venues.
(For a more detailed explanation, see the section “Competitive Advantages” in Chapter I, “General
Information” of this document).
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.
Las Américas Complex
Pursuant to the Company’s objective to participate in a wide range of recreational and entertainment
businesses, in 1998 AMH obtained a 25-year concession renewable for another 25 years, to operate the
Las Américas Racetrack, an entertainment center with horse racing and betting. The complex encompasses an area of 10.3 hectares in Mexico City. CIE also has a 25-year permit from the Mexican government to operate up to 65 outlets for off-track betting and for numbers- and symbols-based gaming. In
conformance with the strategy to ensure the best entertainment venues, CIE also obtained a concession
for 50 years, renewable for another 50 years, as long as – just as with the racetrack – it complies with the
terms and conditions of the concession, which authorizes the use of 41.4 hectares that surround the
racetrack.
In this area, which is located in a zone that has great potential in Mexico City, the Company has developed a top-tier exhibition and convention center called Centro Banamex, an off-track sports betting unit
(Sports Book), a top-line numbers- and symbols-based gaming unit (a concept known as “Royal Yak”),
and a children’s theme park, known as Granja Las Américas.
LAS AMÉRICAS RACETRACK. The Las Américas Racetrack is the only horse racetrack with betting authorized by the Mexican government to operate in Mexico City. As it is the main attraction at the Las
Américas Complex, AMH has improved the racetrack and refurbished the seating areas, both preferred
seating and general admission, and it has also refurbished the stables.
CIE re-inaugurated the Las Américas Racetrack in March 2000. In 2011, the Las Américas Racetrack
held 1,784 professional horse races, and received nearly 429,000 visitors during the regular racing
season, which normally covers a significant part of the year, with the exception of January and December,
when maintenance and repairs take place.
Revenues from the Las Américas Racetrack come mainly from betting and entry tickets, from the sale
and marketing of concessions for food and beverages, marketing advertising sponsorships, as well as
transfer rights for the horse races that are run at its facilities, and from commissions from off-track betting
in third-party locations. The latter does not present a financial risk to CIE.
SPORTS BOOK, ROYAL YAK, YAK Y JACK POT. Sports Books are establishments where clients’ bets are
placed on national and international horse races, greyhound races and other professional sporting events
such as soccer, American football, baseball, basketball, car racing and boxing, among others. An electronic Yak is a numbers- and symbols-based game that is played electronically at electronic terminals in
AMH’s parlors. There is also a business line under AMH's same permits, which have the commercial
46
name Jack Port, whose parlors are located mainly in the northern part of Mexico, and where all electronic
Gaming operations also take place. The Royal Yak is comprised of a select number of top-tier parlors in
which electronic Gaming operations and higher level of service quality are offered.
AMH initiated its Gaming room activities in 1999. Today it has 54 parlors (of the 65 licenses that it
has) throughout Mexico, including in Mexico City and its greater metropolitan area. The permit does not
establish requirements regarding where and when these outlets should be opened, which gives AMH the
flexibility to expand its network and maximize revenues.
AMH has entered into contracts with professional sports betting audio and video signal transmitters
for its Sports Books. These service contracts include the provision of specialized software and hardware
to operate Sports Books, and to provide value-added services such as advising on betting limits for
clients, which helps to considerably reduce operating risks and associated financial risks. It has also
entered into leasing agreements for gaming terminals with several of the most important, professional and
recognized equipment providers in the industry, which are duly regulated and certified by the appropriate
authorities.
Revenues from the Sports Books, Yaks and Jack Pots come mainly from: (i) the commission paid by
third parties, known as sports book runners, on the amounts bet in AMH’s off-site betting rooms (Sports
Books), and (ii) from a portion that is retained on the amounts operated during numbers-based gaming at
the Yaks, plus (iii) the sale of food and beverages at the outlets. The main expenses for these operations
are mostly for payroll, audio, video and data transmission rights, rents from locations leased, and gaming
consumables.
In order to minimize the risks associated with money laundering and financing of illegal activities at
the units at the Las Américas Racetrack and in its Gaming network, several initiatives have been implemented with effective control systems that are monitored by Internal Auditing practices. (For a more
detailed explanation, see “Internal Control” in Chapter III, “Financial Information” of this Document).
ORGANIZATION AND PROMOTION OF TRADE FAIRS AND EXPOSITIONS. CIE’s trade fair and exposition 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, thus Company personnel is 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 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,
bread-making, 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 surface area,
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.
The Banamex Center is the largest, most modern exposition space of its type in Mexico. In 2011, it
housed 55 expositions, 398 national conventions, 30 international conventions, and 34 social events,
which translates into nearly 7.2 million square meters of operation during the year, for an estimated 2.5
million people housed in that area. The second most important exhibition space is Palacio de los
Deportes, comprised of the “Domo,” which operates as an arena for live shows, as an exposition and
conventions center, and the Pabellones Feriales, which, combined, have an exposition area of 9,000
square meters.
47
As the host of trade fairs and conventions, the revenues from this activity come mainly from the lease
of exhibition spaces or property rental, the sale of advertising sponsorships, advertising and tickets, which
are all paid in advance. CIE receives additional revenues from the sale of food and beverages. Variable
costs, which are recorded as costs for services, mainly include marketing expenses and salaries that are
directly related to the trade fair or exposition. Operating expenses include administrative, maintenance
and salary expenses.
GRANJA LAS AMÉRICAS. Granja Las Américas is an educational theme park where children learn, in a
fun and interactive way, how different products from the country are created. The park, which opened its
doors in July 2004, currently has more than 150 animals of 15 different species, a zoo of mascots, a farm,
and an extreme sports zone. It is located inside the Las Américas Complex, and covers an area of
approximately 1.4 hectares, with nearly 9,740 square meters of built-out area. In 2011, Granja received
nearly 483,000 visitors.
The revenues from theme park operations come mainly from the sale of entry tickets, food and beverages, as well as marketing advertising space and sponsorships in the pavilions that comprise Granja
Las Américas, which are vehicles that are normally sold to companies. The costs associated with this
operation are relatively fixed, and essentially include payroll, maintenance, consumable items and
insurance.
In particular, none of CIE’s concessions impose minimum construction and investment requirements.
Amusement Parks
In recent years the Company started the process of divesting the amusement park assets that it operated in the region. At the end of fiscal year 2009, it sold the operation of its Mexican parks, La Feria de
Chapultepec, CICI and Selva Mágica, which are in Mexico City, Acapulco and Guadalajara. The Company also formally ceased operating the Wannado City theme park in Fort Lauderdale, Florida, which, at this
time, is not held by any CIE subsidiary.
Today, 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 complex received nearly
958,000 visitors in 2011, and has been operated continuously by the Company for more than a decade.
CIE holds the leasing rights for 15 years (expiring in 2017) for operation of this development, which is
located inside the Simón Bolívar Metropolitan Park in the city of Bogotá.
Although their business contribution is small, the revenues from CIE’s Colombian parks come mainly
from entry tickets, participation in mechanical games, activities and attractions, parking services, marketing to corporate sponsors, and the sale of food, beverages and souvenirs. The main costs, which include
salaries, advertising, maintenance, consumable items and insurance, are relatively fixed and do not vary
significantly depending on the attendance level. As a result, an increase in the attendance level results in
a decrease in fixed costs per visitor and greater profit, while a reduction in the attendance level results in
higher fixed costs and lower profitability.
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 it provides call center services and several BTL marketing alternatives to its clients using web-based
technologies. CIE believes that this wide offering makes it an attractive option for its clients that seek to
48
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.
Revenues from the Group’s commercial operations come mainly from the sale of sponsorship packages. The most important cost is sales commission, along with costs related to executing programs for
clients. Other operating costs related to marketing and advertising include office and equipment rental,
professional services, and research and development of applications that are tailor made for clients.
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.
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
Sponsor
Expiration
Foro Sol
(México, D.F.)
Cervecería Cuauhtémoc-Moctezuma,
for its trademark “Sol”
(Expires in December 2014)
Centro Banamex
(México, D.F.)
Banamex, a Mexican financial institution
(Expires in November 2014)
(México, D.F.)
Telmex, a
company
Mexican
telecommunications
(México, D.F.)
Telmex, a
company
Mexican
telecommunications
Vive Cuervo Salón
(México, D.F.)
Cuervo, a Mexican beverages company
(expires in December 2013)
Auditorio Banamex
(Monterrey, N.L.)
Banamex, a Mexican financial institution
(Expires in 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, commercial centers, airports, kiosks where magazines and
newspapers are sold, and on tickets and entertainment guides, and through other promotion and advertising channels, such as mobile and digital advertising. The sale of advertising space through these chan49
nels generates additional revenues to the Company’s main activities. The following is a brief description
of these advertising channels:
 Performance venues and events. 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 Team Uniforms and Professional Soccer Stadiums. CIE markets many types
of advertising spaces on rotating panels, electronic screens and other areas (including on players'
uniforms) to promote brands and commercial messages for the sport that has the highest television 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. The teams and the stadiums for the teams where these concepts are displayed are in Monterrey, Pachuca, Toluca, Atlas, Cruz Azul, Morelia, Tijuana, Querétaro, Puebla, Tigres,
Santos, Pumas, América, San Luis and Estudiante.
 Outdoor Advertising. CIE builds and installs pedestrian overpasses over streets with heavy
traffic volumes in ten cities in 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 more than 220 pedestrian overpasses are distributed through 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 27 of the stations in the leading-edge Macrobus system, which runs along
Avenida Independencia in Guadalajara.
 Airport Advertising. In 2002, CIE entered into long-term contracts with several airports that are
subsidiaries of Grupo Aeroportuario Centro Norte, S.A.B. de C.V., to market interior and exterior advertising. Among the products that CIE markets in airports are digital advertising, fixed advertising, passenger
walkways, billboards and stands, as well as various BTL products. The airports served are in the cities of
Acapulco, Ciudad Juárez, Culiacán, Chihuahua, Durango, Mazatlán, Mérida Monterrey, Reynosa, San
Luis Potosí, Zihuatanejo, Tampico, Torreón and Zacatecas.
 Kiosk advertising. In an alliance with Urbano Publicidad Exterior S.A. de C.V., the Company
offers the platform of kiosk advertising under a novel business and structural concept that is modern and
leading-edge, through nearly 600 kiosks distributed throughout Mexico City, Guadalajara, Monterrey,
Toluca, Acapulco, León, San Luis Potosí and Veracruz.
 Movie Advertising. Through marketing agreements with Cinemex, an 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 and governments, through the concept known as cineminutos, 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 Live Nation’s
Ticketmaster Corp., 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.
50
 Digital and Mobile Advertising. 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. CIE’s market scope in this area is estimated to be 100 million cellular telephones and
social media accounts (such as Twitter, LinkedIn and Facebook, mainly).
 Advertising at Convenience Stores and Business Centers. CIE markets advertising space
on digital screens at more than 1,100 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 on one of the largest retail supply chain stores in Mexico, with 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 business
centers, the Company serves large- and medium-sized cities in 25 states throughout Mexico, including
Jalisco, Nuevo León, the Federal District, and the State of Mexico.
 Call Center Services. The Company provides telemarketing services for third-party companies
in Mexico and abroad, whether in Spanish or in another language. Through its telephone centers located
in Mexico City (Palacio de los Deportes and Torre Latinoamericana), and at Gómez Palacio, Durango (the
Torreón area, Coahuila), CIE provides ongoing consulting services for contact centers, commercial
outsourcing and human resources, professional database management, document collection, marketing
surveys, mass distribution of e-mails, among other digital services and digital marketing. It also provides
technical support programs, it answers 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.
International Operations
CIE’s international expansion commenced in 1998 with the acquisition of the assets and operations of
the largest promoter of live rock concerts in Argentina and Chile, and the concession holder of the
Buenos Aires City Zoo. The following year, CIE acquired the concession holder of the main performance
venues in São Paulo, Brazil, and it subsequently began operating Claro Hall in Río de Janeiro, Brazil, and
developing theater operations in Spain (discontinued today). Those acquisitions gave CIE the ability to
produce tours for international artists in the largest markets in Latin America.
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% in
Brazil, 100.0% in Chile and 100.0% of live entertainment operations in Argentina, to a 24.0% financial
interest in that business segment, which was grouped into a new company. As a result of this transaction,
CIE and the new company (called T4F Entretenimiento S.A.) have a long-term strategic alliance to
capitalize on existing synergies and to strengthen the live entertainment business in South America.
Between April and May 2011, T4F issued a public offering of shares on the São Paulo stock exchange, with placement efforts in international markets. The result of this sale of shares, whose purpose
was to obtain resources to expand the business of T4F in its South American markets and to achieve its
corporate institutionalization, was CIE’s stake dropping to 9.8%, and CIE obtaining net resources that it
has applied in full to early payment of the holding company’s debt. (For a more detailed explanation, see
“Recent Events” in Chapter I, “General Information” of this Document).
51
Radio Operations
CIE sold the operation of the radio stations that it owned in Argentina at the beginning of 2010. (For
more detail, see the “Recent Events” section in Chapter I “General Information” of this Document).
CIE FOUNDATION
Fundación CIE 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 Fundación CIE, “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 entry to concerts, plays, exhibitions and conferences in rehabilitation centers, among
other activities.
Fondo de las Estrellas Program (Star Fund)
The social awareness of artists is promoted through a platform through 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, Fundación CIE joins socially responsible companies that are interested in
railing 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.
52
Since the start of activities at the Foundation, through this program we have invited more than 235,000
people from 1,795 institutions to 325 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 2011, Fundación CIE managed to mobilize Ps. 6.4 through donations in cash, and Ps. 2.8 in inkind donations. Fundación CIE 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.
Executive Committee and Operating Team
Name
Position
Luis Alejandro Soberón Kuri
Rodrigo Humberto González Calvillo
Federico González Compeán
Alejandro Valdespino Rivera
Mónica Lorenzo Gutiérrez
Chairman
Vice Chairman
Board Member
Treasurer
Secretary
Guillermina Pilgram Santos
Francisco Velásquez Córdova
Beatriz G. Crispín Gámez
Karen Argüello Hernández Felipe Mendoza Atriano
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 sixth time
on March 14, 2012, 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 Socially Responsible Company 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 given to 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.
53
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 Antención al
Empleado).
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
Particularly worth noting under Quality of Life and Human Resources training is the CIE Group’s effort to train its personnel so they have the skills required to foster teamwork and cooperation. Thus,
training plans for each business unit were formally developed in 2011 to standardize a global training
process to provide courses that focus on the requirements of business units and their divisions. This year
we had an average of approximately 627,000 man-hours of training, for a total of 431 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 developments 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 Company designed the Comprehensive Environmental Program,
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 others, inviting its employees, providers, clients and the general public to protect this
precious liquid.
Objectives: To encourage every employee, client and provider to understand, be responsible, act and
to consider how important preserving and protecting the environment is, protecting water sources and
54
saving energy in their working activities, and taking that commitment home and putting it into practice
around them.
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.
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 Quality of Life at the Company for the PAE Program (Programa de Antención al
Empleado – PAE).
In 2008, the CIE Group also received the award for Best Corporate Social Responsibility Practices, this time in the Environmental Area, for its CIE Comprehensive Environmental Program.
In 2009, CIE received the Socially Responsible Company Award for the fourth consecutive year,
and Ticketmaster for the third consecutive year.
In 2012, CIE again obtained the Socially Responsible Company distinction.
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.
As a result, the Group believes that it operates the largest network of entertainment venues in Mexico, through leases, 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
the Section “Main Activity” in Chapter II, “The Company” in this Document.
Since the end of the 1990s, AMH has been developing the Las Américas Complex in Mexico City,
which is operating regularly, and comprises the Las Américas Racetrack, the Banamex Center, which is
an exhibition and convention center, and Granja Las Américas, which is a theme park for children. Also as
part of the development of that complex, and due to having obtained a license from the Mexican government to operate up to 65 Sports Books and Yaks outlets in Mexico, AMH has 54 parlors for off-site sports
betting under the name Sport Book, and numbers- and symbols-based games under the brands Royal
Yak, Yak, and Jack Pot in Mexico.
55
At the close of 2011, CIE operated El Salitre Mágico and CIE Aquapark (both inside the Simón Bolívar Metropolitan Park in Bogotá, Colombia). It should be noted that the Company sold the Mexican
operation of its amusement parks in Mexico City, Guadalajara and Acapulco in 2009, and recently, in the
first half of 2011, it formally ceased activities of the Wannado City theme park located in Fort Lauderdale,
Florida, USA, which is no longer owned by any CIE subsidiary.
CIE organizes and promotes trade fairs and expositions; it sells sponsorships to live events, naming
rights to performance venues and amusement parks, 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 in Mexico, business centers, convenience stores, urban transportation, kiosks that
sell newspapers and magazines in Mexico, among other BTL-based vehicles, call center services, and
digital advertising.
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,
2011, are the following: “Sports Book,” “Yak,” “AMH Hipódromo de las Américas,” “Granja Las Américas,”
“La Triple Corona,” “CIE,” “Grupo CIE,” “Make Pro,” “Ocesa,” “Vive Latino,” “Lobo,” “Remex,” “Unimarket,”
“Fundación CIE,” “Creamos Alegrías,” “C-Móvil,” “CIE Comercial,” “CIE Entretenimiento,” “CIE Las
Américas,” 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 largescale 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), and A Chorus Line.
The Company has also entered into consulting and licensing contracts with developers of management
systems for horse racing.
Through these contracts, CIE has owned the development rights to the works mentioned in the preceding paragraph, as well as to use production-design elements and development of promotional items in
exchange for royalties based on box-office results or on other types of previously established consideration, 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, The Producers, and Defending the Caveman, to name a few.
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.
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Contracts
CIE maintains trademark-use licensing agreements, franchise agreements, technology exchange or
technical assistance agreements with Ticketmaster Corp., which basically consist of licenses to use
Ticketmaster’s computer systems, brand name and trademark. This license authorizes the computerized
sale of tickets through this system in all of its territories.
The Company does not have, nor has it entered into other relevant contracts that would conflict with
its normal business activities. Regarding the contracts that are consistent with its line of business, it
should be noted that the lease contract for Centro Cultural Telmex, a facility that consists of two theater
auditoriums with combined seating capacity for 3,441 people, is currently under negotiation.
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, valid for 12 months, with automatic extensions.
The Group has entered into the following contracts for financial derivatives transactions with Mexican
financial entities:
• On March 4, 2008, Corporación Interamericana de Entretenimiento, S.A.B. de C.V. entered into a
framework 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 framework 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 framework derivatives
financial transaction agreement with 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 January 24, 2008, the subsidiary Unimarket, S.A. de C.V. entered into a framework derivatives financial transaction agreement with Banco Santander, S.A. for nearly 1.5 euros, expiring on
December 12, 2012.
•
On September 18, 2007, the subsidiary Reforestación y Parques entered into a credit agreement with Banco de Bogotá for the amount of Col.10,146.3 (millions of Colombian pesos) expiring on
August 13, 2013.
•
On January 21, 2007, the subsidiary Reforestación y Parques entered into a credit agreement
with Banco de Occidente for the amount of Col.270.0 (millions of Colombian pesos) expiring on December 26, 2011.
57
• On May 30, 2008, AMH entered into a credit agreement with Banco Inbursa, S.A., Institución de
Banca Múltiple, Grupo Financiero Inbursa, for an amount of up to Ps.1,300.0, expiring on May 30, 2015.
On February 23, 2009, the First Amendment to the agreement was signed.
• On December 3, 2009, Corporación Interamericana de Entretenimiento signed a credit contract
with several domestic and foreign 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, which was done until the end of 2009, the
Company is limited in disposing of the lines in the abovementioned contracts. (For a more detailed
explanation, see the section “Recent Events” in Chapter I, “General Information” of this Document).
Several of the Company’s subsidiaries have established leasing contracts – mainly automobile and
computer equipment – with the lessors The Capita Corporation de México, GE Capital CEF México,
Facileasing, Sinergia Soluciones Integrales, Arrendadora Financiera Inbursa and Leasing Operations de
México. The terms and conditions of each contract vary.
2.4 Main Clients
Through its subsidiaries and affiliates in Mexico and abroad, the Company provides services to the
general public, such that a high percentage of its income is derived from direct sales to the public,
consisting primarily of tickets for its live performances, as well as CIE’s amusement parks, performance
venues and 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, Sony, General Motors, Renault, Nestlé,
Volkswagen, 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, HSBC, CTI, Grupo Telefónica, Fiat, Zurich Seguros, Daimler Chrysler, Microsoft, Blockbuster,
Novartis, Continental Airlines, American Express, Heineken, Fravega, Burger King, Hewlett Packard,
Peugeot, Epson, Gillette, Bayer, Aeroméxico, Bacardí y Cía, Banco Santander Serfín, BBVA-Bancomer,
Bimbo, Citibank, Comercial Mexicana, Danone, FedEx, Grupo Posadas, Hérdez, Hilton, Honda, Honeywell, Kellog’s, LALA, Liverpool, Maruchan, Mexicana de Aviación, Motorola, Nextel, Nissan, Nokia,
Panasonic, PepsiCo, Pfizer, Pirelli, Quaker State, Sabritas, Samsung, SKY, América Movil, Sony, Unilever, ITESM, Ferrero Roche, UVM, Office Depot, Petróleos Mexicanos, and Oxxo, among many others.
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
58
notable is the legislation governing civil protection and safety, as well as federal and state legislation in
matters of consumer protection and health.
Pursuant to the applicable legal provisions, CIE and its subsidiaries must and do have licenses to run
and operate the performance venues and properties that it operates, and to develop and apply the civil
protection rules and plans necessary for the safety of those attending the shows promoted in the course
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 also subject to the
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 geographic areas 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 principal activities, namely those conducted by CIE Las
Américas and CIE Entertainment, are burdened, in the case of the former with local taxes on raffles and
gaming at a rate that varies between 2.0% and 12.0%, depending on the city, and in the latter, with local
taxes on public shows at a rate that varies between 3.0% and 8.0%, depending on the city, gross boxoffice revenues, but they are exempt from paying the added-value 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. This is the case with the provision of
services relating to admission tickets for public performances, and for the sale of tickets and other
vouchers that allow participation in lotteries, raffles, drawings, or betting games and contests of all types,
among others. For the costs and expenses related to this type of revenue, the VAT transferred cannot be
credited, thus the VAT cost is created.
Special Tax on Production and Services (Impuesto Especial sobre Producción y Servicios –
IEPS)
At CIE Las Américas, betting and lottery games have the Special Tax on Games and Lotteries tax
levied on them at the rate of 30.0%.
Tax on Cash Deposits (Impuesto sobre Depósitos en Efectivo – IDE)
59
The Special Tax on Cash Deposits, which consists of deposits that are made with institutions in the
financial system, must retain and deliver 3.0% to the public treasury for cash deposits which, accumulated, add up to more than Ps. 15,000.00 (FIFTEEN THOUSAND MEXICAN PESOS) per month. That tax
can be credited against the income tax.
Human Resources
As of December 31, 2009, 2010 and 2011, the Company employed 8,605, 10,892 and 10,514 employees, respectively. The following three tables show the number of personnel employed by CIE at
December 31, 2009, 2010 and 2011, broken down by strategic business unit and country:
2009
País
México .......................
Argentina...................
País
Colombia ...................
Estados
Unidos.......................
.......
México
Total
...................
Argentina...................
Colombia ...................
Estados Unidos .......
Total ...................
Empleados
CIE
CIE
Entretenimiento
Las Américas
8,026
242
Empleados
50
287 8,026
8,605 242
50
287
8,605
CIE
CIE
CIE
Parques ***
Corporativo
Comercial
Internacional
de Diversiones
2009
773
5,080
132
1,762
7
272
CIE
CIE
CIE
CIE
CIE
0
0
0
0
242
0
Parques ***
Corporativo
Entretenimiento
Internacional
0
0Las Américas
50
0 Comercial
0
0
de Diversiones
0
0 5,080
286 132
0 1,762
1
0
773
7
272
773
5,080 0
468
1,762 0
250 242
272
0
0
0
0
0
50
0
0
0
0
0
286
0
1
0
773
5,080
468
1,762
250
272
2010
País
México .......................
Argentina...................
País
Colombia ...................
Estados
Unidos.......................
.......
México
Total
...................
Argentina...................
Colombia ...................
Total ...................
Empleados
CIE
CIE
Entretenimiento
Las Américas
10,550
0Empleados
44
298 10,550
10,892 0
44
298
10,892
México .......................
Argentina...................
País
Colombia ...................
Estados
Unidos.......................
.......
México
Total
...................
Argentina...................
Colombia ...................
Total ...................
CIE
CIE
Comercial
Internacional
800 CIE
6,727 CIE
5
2,846 CIE
CIE
0
0
0 Parques
0
Entretenimiento
0
0Las Américas
44 Diversiones 0 Comercial
de
0
0 6,727
297
0 2,846
800
5
800
6,727 0
346
2,846 0
0
0
0
0
44
0
0
0
297
0
800
6,727
346
2,846
2011
CIE
País
CIE
Parques
2010
de Diversiones
Corporativo
6
166
CIE
0
0Corporativo
Internacional
0
0
1
0
6
166
7
166
0
0
0
1
7
0
0
166
CIE
CIE
CIE
CIE
Parques
Corporativo
Entretenimiento Las Américas
Comercial
Internacional
2011
de Diversiones
10,471
826 CIE
6,402 CIE
3
3,076 CIE
6
158
CIE
CIE
0Empleados
0
0
0 Parques
0
0
0Corporativo
Entretenimiento
Comercial
Internacional
42
0
0Las Américas
42
0
0
0
de Diversiones
1 10,471
0
0 6,402
0
0 3,076
1
0
826
3
6
158
10,514 0
826
6,402
45
3,076
7
158
0
0
0
0
0
0
Empleados
42
1
10,514
0
0
826
0
0
6,402
42
0
45
0
0
3,076
0
1
7
0
0
158
The variation in the employee base between the years 2010 and 2011 is essentially explained by (i)
hiring personnel for B-Connect Services, the CIE subsidiary in charge of operating and developing valueadded telephone services for clients, various adjustments in the workforce at the Gaming parlors, and (ii)
close of operations at the Wannado amusement park in the United States.
60
In turn, the margin variation seen in the employee base between the years 2009 and 2010 is fundamentally explained by (i) the hiring of personnel at the call center operation, as well as expansion of the
workforce at the Gaming parlors, due to the incorporation of new business lines and new parlors opening;
(ii) the sale of the Mexican operation of amusement parks; and (iii) removal of certain personnel from the
radio station operations in Argentina, since that business was sold; and (iv) for certain restructuring
measures in CIE’s Corporate workforce in September 2009.
For 2011, 56.4% of the Group’s employees were white-collar workers, while 43.6% were unionized
personnel. For 2010, 55.1% of the Group’s employees were white-collar workers, while 44.3% were
unionized personnel, and only 0.5% were temporary personnel. For 2009, 56.5% of the Group’s employees were white-collar workers, while 43.2% were unionized personnel, and only 0.3% were temporary
personnel.
As of December 31, 2011, 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.
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.
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 designed 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 my minimizing the adverse environmental impacts that its activities generate, by using the Three Rs 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 worth mention:

Regarding saving water, the operation of the wastewater treatment plan at the Las
Américas Complex continues, 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.
61

Regarding energy savings, the electricity supply at the Las Américas Complex from a
high-voltage substation 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 latestgeneration equipment, as well as activation of the automatic hibernation option for computer equipment.

Paper has been saved through the incorporation of information system applications that
include workflows for process management, electronic consulting of payroll receipts has
been introduced, a solution to digitalize documents has been implemented (which has
decreased photocopies by up to 40% at some business units), and by using both sides of
paper when printing. All of this has resulted in saving approximately two million pieces of
paper each year, thus directly contributing to preserving forests.

At the properties of the CIE Group, 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 issuances 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.

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 2011, distributing a green list with recommendations regarding the environment, installing a green wall with environmental messages, obtaining a
neutral certificate offsetting 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, among other areas.

Reforestation programs sponsored by Centro Banamex were also designed, through
which employees at that company rescue a degraded forest region.

In addition, an analysis was done to undertake work that improves 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 environmental
awareness, 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 es lo de Hoy" (Preserving the Environment is Cool), using its own
media and media that the CIE Group 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).
62

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 may be cited in favor of protecting and preserving the environment, are encouraging the use of biodegradable containers and ingredients in the various
consumption centers and areas where food and drink are prepared, reusing canvases
and materials at events, and incorporating ecologically friendly equipment and technologies, from the design, remodeling or construction of new properties.
Deserving special mention is that since 2010, Centro Banamex has organized a program called
“Actitud Verde” (Green Attitude), in which the leaders of this business unit comprised 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.
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, among others. 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.
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 is to encourage every employee,
client and provider to understand, be responsible, act and to consider how important preserving and
protecting the environment, protecting water sources and saving energy are in their working activities,
and taking that commitment home and putting it into practice around them.
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.
63
Since 2006, Group CIE has implemented a series of environmental policies and an integral
environmental program with actions to save, educate and preserve the environment, which are ongoing
and have contributed to increasing sustainability of the organization, and to increasing the ecological
awareness of all of its members, clients, and the general public.
2.8 Market Information
Industry
The out-of-home entertainment industry provides the market with entertainment alternatives for free
time that may be devoted to, among other things, movies, cultural events and locations, trade fairs and
conventions, theaters, 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 directed towards 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.
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 Latin America consists primarily of regional promoters that generally focus on 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 markets the event, sells the tickets, rents or otherwise provides
the event venue for the performance, and makes 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.
64
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. 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 for10,000 people, owned and operated by the federal government, and the Plaza de Toros
México, with capacity for 45,000 people, owned by a private group, and the Mexico City Arena, a new
show venue in the city with capacity for 22,300 spectators, which is owned by the same operator that
owns Arena Monterrey located in the northern part of the country.
65
The automated ticket sales industry 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. It also provides sales support to handle purchase orders on
products, credit card activation, 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 industry in Mexico has grown significantly since the Company began its call center 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.
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 BTL vehicles.
Remote Sports Betting and Numbers- and Symbols-Based Games in Mexico
The gaming industry in Mexico includes remote betting, jai-alai, numbers-based raffles, and other
games based on numbers, symbols and lotteries. The industry has been regulated by the Mexican
government. The Ministry of the Interior is the government entity that has the authority to issue licenses
for the operation of Sports Books and numbers- and symbols-based gaming in Mexico.
Like other regular participants in the industry in Mexico, CIE operates its off-site sports-betting rooms
and numbers- and symbols-based gaming locations throughout the country, reaching geographically
66
scattered audiences from various socio-economic segments. In 2005, the Mexican government granted
other groups permits to carry out these types of activities, and these new groups maintain and develop
operations, thus they are formally part of the industry. CIE faces greater competition as a result of the
foregoing. The division is also facing competition from groups and individuals that participate informally
throughout the country, whether temporarily or permanently running their operations.
Horse Racing in Mexico
The operation of professional horse racetracks with betting in Mexico requires a government concession. The Las Américas Racetrack, operated by AMH, is the only professional horse racetrack authorized
and regulated by the Mexican government to operate in Mexico City. There are other horse racetracks in
the country that operate temporarily or sporadically, but none in Mexico City or its metropolitan area.
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 are 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
third-party 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. This study shows that 99% of top executives surveyed who have visited Centro
Banamex are completely satisfied with the service, and 98% 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.
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
67
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 the section
“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. Direct competition is comprised of 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 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 driven by government entities, and to
a lesser degree, by theater companies. 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
well-positioned local series such as Copa Super Karts, Copa Roshfrans, Copa Volks Sports, Copa
Turismo México and the Campeonato Mexicanos de Rallies.
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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 of Foro Sol, with seating capacity for 60,000, and Palacio de los
Deportes with seating capacity for 21,000, compete mainly with Auditorio Nacional, 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 operations of entertainment centers, and production and promotion of live events and certain commercial areas, from Arena Ciudad de México, which began operations in February 2012, and it is operated by
the corporate group that operates Arena Monterrey, which is a direct competitor of CIE in the city of
Monterrey, in the northern part of Mexico. 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 is part of the same corporate group that recently inaugurated the Mexico City
Arena.
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 technological and competitive advantages from its alliance with Ticketmaster, plus its market
positioning and its existing business relationship with the majority of venue operators and promoters in
Mexico, CIE’s current competition in Mexico. CIE’s current competition in Mexico is Pazale, Súper
Boletos, Smarticket, and E-Ticket, among others.
Horse Racing
The operation of horse racetracks in Mexico requires a concession from the Mexican government.
The Las Américas Racetrack, operated by AMH under a long-term federal concession that was granted in
the 1990s, is the only professional horse racetrack authorized and regulated by the Mexican government
to operate in Mexico City. There are other horse racetracks in the country, but none located in Mexico
City. As content for off-site betting centers, the Las Américas Racetrack competes with other horse and
greyhound racetracks, mainly in the United States. The Las Américas Racetrack competes indirectly with
several horse racetracks where betting is done, which often operate in various rural or urban areas
throughout the country, including the center itself (the area of influence of the Las Américas Racetrack).
Remote Sports Betting and Numbers- and Symbols-Based Games in Mexico
In the business of off-site betting and playing numbers- and symbols-based games, concepts known
as Sports Book, Yak, Royal Yak and Jack Pot, AMH faces competition from certain permit holders that
obtained permits to operate similar concepts from the Mexican government, under specific terms and
conditions, throughout the country. AMH also competes with illegal betting brokers that perform their
activities in a non-regulated manner in Mexico, as well as those who operate regularly with legal protection and little regulation. Starting in 2005, when the Mexican government granted various groups permits
to carry out this type of activity, AMH began to experience more competition; however, the majority of the
69
permit-holders have few licenses, locations, little infrastructure and the know-how necessary to increase
their share in this market.
Trade Fairs and Expositions
In the trade fair and expositions sector, there is competition from promoters that operate venues in
Mexico City. AMH 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 e 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 part also faces competition from smaller-sized amusement parks, which are scattered throughout
Colombia.
Marketing and Advertising
CIE believes that there are no competitors in Mexico in the area of non-traditional marketing and
promotion that can offer the wide variety of advertising channels that CIE offers, thus CIE faces competition based on specific advertising segments from 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 commercial centers, the Company competes against companies such as Zen Media, Marcadeo 3,
In-Store, Clear Channel and VGM. CIE also competes against PRN, Spotbox, Zen Media, Vértice, MVS
and K Medios Integrales in the operation of convenience stores.
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
walkways, baggage claims, and on airport benches, and from Publiclean and the units that market spaces
of other airport operators.
In soccer advertising, CIE competes against the broadcasters TV Azteca and Televisa, as well as
Publicidad Virtual. In turn, Equal, De Haro Publicidad and Regiet T are the Group’s competitors in
commercial operation of newspaper and magazine kiosks in Mexico.
In the call services sector, CIE mainly competes in Mexico with Atento, Teleperformances, Telemark,
Top Tel, Megadirecta and Teletech. 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
70
CIE does, or the formal permanence in the Mexican market, given the origin of its operations and the lack
of adequate representation in the country.
2.9 Corporate Structure
At December 31, 2011, CIE had 121 subsidiaries through which it has carried out operations in its
relevant markets. As has been mentioned in other sections at the start of this Document, at the close of
2011 the Company was organized as a holding company with five strategic business units: CIE Entertainment, CIE Commercial, CIE Las Américas, CIE International, and CIE Amusement Parks (or "Other
Businesses”).
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 to live entertainment events and entertainment venues using the Ticketmaster
system, which is owned by Live Nation. In 2011, the division recorded revenues of Ps. 4,815.8 and
EBITDA of Ps. 505.4.

CIE LAS AMÉRICAS focuses on the operation and development of the Las Américas Racetrack in
Mexico City in association with Codere, which includes the Las Américas Racetrack (the only professional horseracing track authorized by the Mexican government to operate in Mexico City with
betting), and the operation of remote sports betting parlors and numbers- and symbols-based
gaming outlets throughout the country. This division also includes the children’s theme park,
Granja Las Américas, and the Centro Banamex convention and exposition center. In 2011, CIE
Las Américas had revenues of Ps. 4,676.4 and EBITDA of Ps. 1,255.7.
 CIE COMERCIAL 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 transport, and at kiosks where newspapers and
magazines are sold in the Mexican market, among others. This division also develops telemarketing programs for clients in Mexico and abroad, and it supports client campaigns through the use
and application of state-of-the-art technology, BTL marketing, and web-based applications and
development. In 2011, CIE’s commercial division recorded revenues of Ps. 1,802.6 and EBITDA
of Ps. 436.4.
 CIE PARQUES DE DIVERSIONES operates the complex known as El Salitre inside the Metropolitan
Simón Bolívar Park in the city of Bogotá, Colombia, which includes an amusement park known as
Salitre Mágico, and a water park named Cici AquaPark. The operation of CIE’s amusement parks
showed revenues of Ps. 171.8 and EBITDA of Ps. 29.7 in 2011. This business unit is classified in
the audited consolidated financial statements attached to this Annual Report, as well as in other
sections hereto, under “Other Businesses.”
As a result of a series of divestments and organizational restructuring that the Company has been
involved in, it is grouped under the following structure: CIE Entertainment, CIE Commercial, Other
Businesses (which represents the operation of amusement parks in Bogotá, Colombia). The Company
also holds minority stakes in Impulsora de Centros de Entretenimiento de las Américas (previously, CIE
71
Las Américas) and in T4F Entretenimiento. (For a more detailed explanation, see “Recent Events” in
Chapter I, “General Information.”)
The following shows the Company’s main entities with shareholder ownership as of the date of this
publication:
Shareholder
Structure of CIE or
Name
Ocesa Entretenimiento, S.A. de C.V.
("OCEN”) ....................................................
Principal
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.
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”) ...................................
Mexico
Mexico
Shareholder
structure of CIE or
Name
CIE Internacional, S.A. de C.V. ...................
100.00%
T4F Entretenimiento, S.A (previously CIE
Brasil, S.A.) ................................................
9.79%
Impulsora de Centros de Entretenimiento
de las Américas, S.A.P.I. de C.V.
(“ICELA”) ....................................................
Principal
subsidiaries
(Directly and
indirectly)
15.20%
Main Activity
Market
Shareholder of various subsidiaries.
Latin America
and the USA
Promotion and operation of live entertainment
events in Argentina, Brazil and Chile.
Brazil, Chile
and Argentina
Shareholder of the companies that operate
racetracks, exhibition centers, numbers- and
symbols-based games, and performance venues
with sports betting.
Mexico
Grupo Mantenimiento de Giros
Comerciales Internacional,
S.A. de C.V. .................................................
100.00%
Amusement parks operator.
BConnect Services, S.A. de C.V.
100.00%
Provider of telemarketing services.
(previously Grupo Sitel de México, S.A. de
C.V.) ............................................................
72
Colombia
Mexico
Publitop, S.A. de C.V. ..................................
100.00%
Builds pedestrian overpasses and markets
Mexico and
advertising for those pedestrian overpasses.
Panama
Unimarket, S.A. de C.V. ..............................
100.00%
Markets fixed and static advertising in soccer
stadiums.
Mexico
Make Pro, S.A. de C.V. ...............................
100.00%
Markets sponsorship rights and advertising
promotion rights.
Mexico
__________
The principal financial transactions performed by CIE directly with its subsidiaries are done 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.
2.10 Description of Main Assets
The Company’s fixed assets, which represent approximately 42.4% of the total assets recorded at the
end of 2011, consist mainly of construction and ongoing 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.
La siguiente tabla, la cual igualmente se encuentra exhibida en la Sección “Descripción del Negocio”
del Capítulo II “La Compañía” en este Documento, describe los centros de espectáculos que la Compañía ha incorporado a partir de la década de los 90 en el mercado mexicano bajo los esquemas de operación mencionados en el párrafo anterior.
Market and Performance
Year of
Venue
Incorporation
Type of Venue
Maximum
Capacity
73
CIE’s Rights
Mexico City
Foro Sol
1993
Amphitheater /
60,000
Ten-year exclusive temporary revocable
Baseball stadium
26,180
administrative permit. Expires in
Soccer stadium
36,000
September 2021.
Estadio Azul (1)
1996
Five-year operating contract. Expires in
December 2013.
Autódromo “Hermanos
2001
Car Racetrack
59,248
Rodríguez”
Ten-year exclusive temporary revocable
September 2021.
Palacio de los Deportes
1990
Indoor arena
21,000
Ten-year temporary revocable
September 2021.
José Cuervo Salón (2)
2003
Amphitheater
3,500
Teatro Metropólitan
1996
Amphitheater
3,400
Ten-year lease.
Expires in 2013.
Five-year lease.
Expires in December 2013.
1996
Theater
2,251
Teatro Blanquita
1990
Theater
1,944
Undefined, with the possibility of the
parties ending the lease at any time. (3)
Three-year lease.
Expires in October 2012.
1996
Theater
1,190
Fair Pavilion
N/A (4)
1992
Pabellones
Feriales
Lease terminated (3)
Temporary and revocable administrative
permit – Leased). Land lease expires in
September 2021, and the structure lease
del Palacio de los Deportes
expires in February 2029.
Foro Polanco (5)
2005
Theater
4,000
Ten-year lease. (Expires in August
Teatro de los Insurgentes
2006
Theater
950
Auditorio Plaza Condesa
2010
Amphitheater
Teatro Banamex Santa Fe (6)
2009
Theater
Arena VFG
2005
Amphitheater
10,096
Lease. (Expires in August 2020).
Estadio 3 de Marzo
2010
Stadium
25,000
Exclusive scheduling rights to musical
2015).
2,500
389
Lease. Expires in December 2015.
Lease. (Expires in March 2029).
Lease. (Expires in February 2016).
Guadalajara, Mexico
events and events other than soccer.
(Expires in August 2020).
Monterrey, Mexico
Auditorio Banamex(7)
1994
Amphitheater
22,000
Operating rights for 50 years. 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) The two fair pavilions together cover an area of 9,000 square meters.
(5) Previously known as Foro Scotiabank.
(6) Previously Zentrika
(7) Previously Auditorio Coca-Cola Fundidora.
The Company operates an amusement park and a water park in Bogotá called El Salitre Mágico and
CiCi AquaPark, respectively, which are located inside the Simón Bolívar Metropolitan Park. In addition,
CIE’s fixed asset base includes office furniture and equipment, computer and related equipment, radio
and telephone equipment, advertising structures, and transportation equipment, as well as betting
terminals, theme park rides and attractions, among others.
74
The following table is taken from the audited consolidated financial statements for the fiscal years
ended December 31, 2011 and 2010, attached to this Document. It reflects the accounting treatment
based on Financial Reporting Standards shown at the start of this Document, and it shows the investment
in fixed assets that the Group had at the end of 2010 and 2011, including depreciation or amortization
rates, as applicable. It also includes information that is in the Annual Report for fiscal year 2009, and in
the respective consolidated income statements of CIE for that same year.
Annual
depreciation or
amortization
rate (%)
December 31
Purpose
2009
2011
2010
Buildings, mainly constructions on properties
with concessions and permits
5,360.2
5,281.5
5,155.5
Leasehold and concession improvements
2,079.2
1,890.6
1,989.8
Office furniture and equipment
798.9
932.3
989.9
10
Computer and related equipment
707.6
676.3
684.9
30
84.7
81.2
86.0
14 to 33
Transportation equipment
Radio communication and telephone
equipment
100.3
75.4
86.4
20 and 25
77.5
81.3
Other Assets
367.6
633.7
Structures and advertisements
Accumulated Depreciation
88.8
9,911.7
10,502.3
10,307.9
(3,460.9)
(3,952.2)
(4,372.7)
6,450.8
6,550.1
5,998.3
90.1
14.7
24.3
6,540.9
6,564.8
6,022.5
Construction in process
Total (1)
10 and 8
670.3
Various
__________
(1)
As a result of the discontinuation of certain operations, fundamentally those related to the amusement parks business, the classification for 2010 changed. The
breakdown shown here for fiscal years 2009 and 2010 corresponds to those published in the audited consolidated financial statements that were part of the annexes to
the 2010 and 2009 Annual Reports, therefore, for the purpose of comparing fiscal years 2011 and 2010, the reader should refer to the audited consolidated financial
statements attached to this Document.
In reference to the table shown above, depreciation for the line Buildings, mainly properties with concessions and permits, is determined based on the terms of the leasing agreement or permit. For the line
Improvements to leaseholds and concessions, reserves are included for deterioration of long-term assets
in the amounts of Ps. 377.6 and Ps. 347.4 for the years 2011 and 2010, and Ps. 347.4 in 2009.
One of the most important expansion projects that AMH has undertaken is in relation to the network
of Gaming parlors in Mexico, which it began in 1999 with the opening of the first off-site betting parlors
and numbers- and symbols-based gaming parlors in the Las Américas Racetrack in Mexico City. As of the
date of this Annual Report it had 54 of units.
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 it operates, and through these policies CIE covers the
risks associated with its asset base,
CIE specifically maintains insurance of the type and in the amounts that it considers to be commercially reasonable, and that are available for contracting in the industry in which it participates. The
Company takes out insurance from companies with proven experience with reasonable ability to cover
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the risks inherent to the Company’s operations and administration. Chartis Compañía de Seguros, Royal
Sun Alliance, Qualitas, Fianzas Aserta, Met Life, and Seguros Inbursa, are among the companies that the
Group has evaluated, and in some cases in the past it has taken out insurance policies with those
companies.
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.
(For more information, see the section “Recent Events" in Chapter I “General Information,” and the
sections “History and Development of the Company" and "Description of the Business," both included in
Chapter II “The Company” of this Document).
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 proceedings during the ordinary course of its business, particularly in relation to consumer complaints, these proceedings, whether individually or collectively, are
not expected to have a material adverse effect on CIE’s activity, financial situation or operating results.
Labor Lawsuits
As of February 2012, CIE and some of its subsidiaries had been sued before the Conciliation and
Arbitration Boards. Those proceedings deemed to be relevant are specifically mentioned in this Annual
Report, and the remaining 420 cases are estimated to have a joint contingency of up to Ps. 139. CIE and
its subsidiaries have established a provision for contingencies arising from labor lawsuits of approximately
Ps. 12.8.
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 the 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. 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 the foregoing, on May 21, 1998, OCESA filed a lawsuit against the
owner with the Superior Court of Justice No. 36 of the Federal District, arguing that the terms of the
76
extension had already been negotiated, and that the extension was in effect even if it had not been
signed. The extension expired in 2003. On August 8, 1998, OCESA obtained an injunction against
eviction from the Superior Court of Justice of 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.
Proceedings for Revocation of Two Concessions of the Las Américas Racetrack
On March 10, 2006, Order DGPIF/DCAR.-1016/2006 was issued and signed by the General Directorate of Federal Real Property, which determines that the two 50-year concessions granted in favor of
the company Calle de Entretenimiento las Américas, S.A. de C.V., a CIE subsidiary, are appropriate, for a
surface area of 2,305.72 square meters and another for 94.22 square meters located inside the federally
owned property, identified as the Las Américas Racetrack.
In order to specify the amount that will serve as the basis for determining the rights that the mentioned company must pay to the federal government for the use, enjoyment and development of the
assets granted in concession to it, two valuation reports were issued, providing the amount of Ps. 62.0 as
the value of the real property where the store/restaurant/bar Sanborns is located, and Ps. 3.4 with respect
to the real property where the Banamex S.A. branch is located.
Because the Company believes that those amounts were too high and unrealistic, on September 11,
2006, it filed an Appeal for Review under the Federal Law for Administrative Procedure.
By Order P/159/2007 dated October 17, 2007, the President of the Institute for Administration and
Valuation of National Assets decided to set aside the valuations in question and ordered that new, duly
founded and motivated valuations be issued.
Through the resolutions dated May 27, 2008, the new values of the property in question were determined for the purpose of paying for the rights provided for in Article 232 of the Federal Law of Rights in
the amounts of Ps. 62.0 for Sanborns, and Ps. 3.4 for the Banamex branch.
Calle de Entretenimiento de las Américas filed another appeal for review on July 14, 2008 against the
valuations listed in the preceding paragraph, with the President of the Institute for Administration and
Valuation of National Assets.
On June 29, 2009, the company Calle de Entretenimiento Las Américas was notified of the ruling
confirming the valuations listed above.
On September 15, 2009, the company Calle de Entretenimiento Las Américas filed a complaint for
dismissal against the ruling listed in the preceding paragraph, with the Federal Court of Tax and Administrative Proceedings, which was transferred to the Sixth Regional Metropolitan Court under case number
23894/09-17-06-2.
By means of an agreement dated September 18, 2009, the Sixth Regional Metropolitan Court of the
Federal Court of Tax and Administrative Proceedings admitted for processing the complaint for dismissal,
to which the legal authority responded. The authorities being sued already filed their response to the
complaint, the expert evidence has been provided, and we are awaiting the corresponding judgment.
77
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, through
which various credits issued by the IMSS were challenged, which in total represented employer contributions payable and fines for Ps. 5.2 million pesos (historical value), are under way in the Regional Metropolitan Courts.
Lawsuit for Nullity 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 tax credits in the
total amount of Ps. 4.9 for alleged omissions in payment of the Income Tax, Value Added Tax, and the
Flat-Rate Corporate Tax, supposedly for not having presented the corresponding statements for February
2010. That ruling was challenged by means of a lawsuit for dismissal before the Federal Court of Tax and
Administrative Justice.
Administrative Proceeding in Customs Matter filed Administradora Mexicana de Hipódromo, S.A. de
C.V. (“AMH”)
On September 22, 2011, AMH was notified of an order issued by the Local Administration of Tax Auditing for the Northern Federal District, through which it was notified of a visit order to inspect 143 gaming
terminals, 41 of which it seized as a precautionary measure, as it considered that 38 of them did not
comply with Official Mexican Standard NOM/024-SCFI-1998, and the other three did not comply with
Official Mexican Standard NOM/001-SCFI-1993. AMH made the strategic decision to pay the fine for the
violation in the amount of Ps. 106,000, thus recovering the terminals that had been seized by the tax
authority, which were regularized, thus the matter was fully concluded.
Hazard and Performance Tax (Change to Reforestación y Parques, S.A.)
On May 13, 2009, the Office of Taxation of the Department of Taxes on Production and Consumption,
of the District Taxation Department initiated a review of Reforestación y Parques, S.A., a Colombian
subsidiary (RyP), in order to verify that the Hazard and Performance Tax had been correctly determined
from January to December for the years 2005, 2006, 2007 and 2008, and from January to April 2009. On
September 15, 2009, an agreement was issued merging the hazard tax, the public performance tax, and
the fund for the disadvantaged, establishing it at 10%. On October 29, 2009, the District Treasury Secretary imposed a penalty on RyP for not declaring and paying the tax; on December 11, 2009, the District
Treasury Secretary issued official liquidation of appraisal, determining that RyP must pay the Hazard and
Performance Tax for the years 2005, 2006, 2007 and 2008 and from January to April 2009; on February
12, 2010, an appeal for reconsideration was filed regarding the process initiated by the District Treasury
Secretary. However, the rulings for penalty and liquidation of appraisal were confirmed, therefore, on
February 14, 2011, a complaint for dismissal and re-establishment of the right against rulings issued by
the District Tax Authority was filed. On June 9, 2011, RyP filed an appeal against the order that denies
provisional suspension.
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 items, 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
78
RECREAR and 928 shares of RyP to ESPARCIMIENTO. On September 15, 2009, the arbitration demand was answered; on February 2, 2010, the conciliation hearing was held, but the parties were unable
to reach an agreement, thus the arbitration proceeding continues. On September 20, 2010, the arbitration
opinion was issued, and 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 moratory interest. RyP has
already delivered the tickets for the CICI Aqua Park to RECREAR and ESPARCIMIENTO, effective for
two years starting on December 31, 2010. ESPARCIMIENTO demands delivery of the tickets but with
indemnity for losses.
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 the CICI water park, 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 summoned by a demand filed by Jorge Javier Noble Gómez, who
claims moral and patrimonial damages for the adaptation and "improper" use of the work La Pulquería,
which was staged in 1999. The response to the demand was answered in a timely manner, and edicts to
notify interested third parties were published.
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. 2.1. Admission of the complaint is currently being
awaited.
Bankruptcy Proceedings
As of the date of filing this Annual Report, none of the situations described in Articles 9 and 10 of the
Commercial Bankruptcy Law of Mexico is applicable to Corporación Interamericana de Entretenimiento.
2.12 Shares Representing Capital Stock
Note: Different than 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 solely for facility of the reader.
As of now, CIE’s subscribed and paid-in capital is Ps. 3,398,401,343.00 (THREE BILLION, THREE
HUNDRED AND NINETY-EIGHT MILLION, FOUR HUNDRED AND ONE THOUSAND, THREE HUNDRED AND FORTY-THREE HISTORICAL MEXICAN PESOS 00/100), comprised of a total of
559,330,813 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND THIRTY THOUSAND, EIGHT HUNDRED AND THIRTEEN) common nominal Series B shares with full voting rights and
no par value, fully subscribed and paid in, of which 30,955,386 (THIRTY MILLION, NINE HUNDRED AND
79
FIFTY-FIVE THOUSAND, THREE HUNDRED AND EIGHTY-SIX) are Series B Class I, representing the
fixed share capital, and 528,375,427 (FIVE HUNDRED AND TWENTY-EIGHT MILLION, THREE HUNDRED AND SEVENTY-FIVE THOUSAND, FOUR HUNDRED AND TWENTY-SEVEN) are Series B Class
II shares, representing the variable portion of CIE’s share capital.
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 $1,200,000,000.00 Mexican pesos (ONE
$Ps.6.00 Mexican pesos (SIX AND 00/100 MEXICAN PESOS) per share.
The update to CIE’s capital was approved by the CNBV through order number 153/30937/2011 dated
December 14, 2011.
As of this date, there are 559,330,813 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND THIRTY THOUSAND, EIGHT HUNDRED AND THIRTEEN) shares in circulation, of which
30,955,386 (THIRTY MILLION, NINE HUNDRED AND FIFTY-FIVE THOUSAND, THREE HUNDRED
AND EIGHTY-SIX) shares are Series B Class I, no par value, representing the fixed portion, and the
remainder of the shares, 528,375,427 (FIVE HUNDRED AND TWENTY-EIGHT MILLION, THREE
HUNDRED AND SEVENTY-FIVE THOUSAND, FOUR HUNDRED AND TWENTY-SEVEN) are Series B
Class II, with no par value, representing the variable portion of CIE’s capital. Also as of this date, 223,040
(TWO HUNDRED AND TWENTY-THREE THOUSAND AND FORTY) shares are deposited as treasury
shares, as on January 10, 2010, five employees were assigned 126,910 Series B Class II shares of the
349,950 (THREE HUNDRED AND FORTY-NINE THOUSAND, NINE HUNDRED AND FIFTY) Series B
Class II shares deposited in the Company’s treasury, which were subscribed and paid in by the Fiduciary
at the same price, that is, at Ps. 19.76 (NINETEEN AND 76/100 MEXICAN PESOS), and they constitute a
second assignment in accordance with the same Plan for Share Subscription and Options for Workers
and Employees of the Company, established in 2002.
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, 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, 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 June 30, 2010, 24 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
Formation of capital on December 31, 1997 ..............................
4,843,850
80
Series BII
Shares (*)
51,071,914
Series L
Shares (*)
7,150,000
Total Shares
63,065,764
Series BI
Shares
Act Modifying Corporate Capital
Series BII
Shares (*)
Series L
Shares (*)
Total Shares
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 ..........................................................................................
18,679,870
116,363,279
38,495,371
173,811,520
Increase of Series B shares on July 15, 1999 ............................
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
Conversion of Series L shares to Series BII on February 15,
2000 ..........................................................................................
20,381,152
183,430,368
-
203,811,520
Conversion of Series BII shares to Series BI on September 18,
2000 ..........................................................................................
23,888,752
179,922,768
-
203,811,520
Increase of Series BII shares on September 18, 2000 ...............
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 ....................................................................................
30,955,386
278,598,467
-
309,553,853
Increase of Series BII shares on May 27, 2005 ..........................
30,955,386
328,598,467
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 ..........................................................................................
30,955,386
328,598,467
-
359,553,853
Increase of the variable portion in the amount of Ps.
5,986,215,694.49 without issuance of shares on April 25, 2006 .
30,955,386
328,598,467
-
359,553,853
Decrease to the fixed portion in the amount of
Ps.405,879,249.79 without cancellation of shares,
April 29, 2009
30,955,386
328,598,467
359,553,853
Decrease to the variable portion in the amount of
Ps.4,305,576,159.21 without cancellation of shares,
April 29, 2009
30,955,386
328,598,467
359,553,853
Increase to the variable portion in the amount of
Ps.1,200,000,000 through the issuance of 200,000,000
shares
30,955,386
528,598,467
559,553,853
359,553,853
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
Ps. 6.00 Mexican pesos (SIX AND 00/100 MEXICAN PESOS) per share.
81
Series and Class
BI (fixed capital)
BII (variable capital)
BII Treasury
Total
Shares
Capital (pesos)
Exhibitions
30,955,386
528,375,427
223,040
Ps. 189,386,380.72 Fully subscribed and paid in
Ps. 3,209,014,962.28 Fully subscribed and paid in
Not subscribed and paid in
559,553,853
Ps. 3,398,401,343.00
The update to CIE’s corporate capital was approved by the CNBV through order number
153/30937/2011 dated December 14, 2011.
2.13 Dividends
The Mexican 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 5.00% 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% of the paid-in capital of the
Company. The amount to set aside for the legal reserve is determined without reference to inflationary
adjustments to the capital.
Subject to approval at a General Shareholders’ Meeting, Mexican companies have the authority to
distribute dividends or not to distribute dividends, from the product of their net earnings (including retained
earnings) after 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, 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.
82
III. FINANCIAL INFORMATION
1. SELECTED FINANCIAL INFORMATION
The following is the General Consolidated Balance Sheet for the fiscal years ended December 31,
2009, 2010 and 2011, with numbers stated in thousands of nominal Mexican pesos.
2011
2010
2009
Cash and cash equivalents
1,694,685
1,242,247
1,646,708
Accounts receivable, net
Inventory of products for sale and internal
consumption
2,015,779
2,631,116
2,651,074
37,673
28,356
32,291
Cost of events to be held and paid in advance
2,800,582
2,883,322
2,897,574
28,504
100,100
6,548,719
6,813,545
7,327,747
Long-term accounts receivable
138,626
148,151
298,289
Investment in shares of associated companies
126,552
96,105
57,146
6,022,543
6,432,813
6,540,853
Expenses to be amortized and other assets
Surcharge on the accounting value of shares in
subsidiary companies
828,804
1,676,738
1,612,830
Deferred income tax
543,130
Assets
CURRENT ASSETS
Discontinued operations
Sum of current assets
Property, furniture and equipment, net
301,720
279,719
Sum of assets
31,373
14,208,374 15,447,071 16,169,958
Liabilities and Shareholders’ Equity
SHORT-TERM LIABILITIES
Maturity of short-term bank loans
1,760,593
959,178
311,414
Providers
1,064,840
1,127,342
1,641,039
809,564
1,137,895
852,051
Various creditors
83
Revenues from events to be held and
advances from clients
596,602
366,017
218,440
Taxes payable
130,414
62,276
99,068
4,801
81,815
Sum of short-term liabilities
4,362,013
3,657,509
3,203,827
Maturity of long-term bank loans
4,491,051
5,847,978
6,721,821
61,351
80,176
416,177
236,504
217,557
174,310
161,319
173,358
24,489
20,190
105,260
8,231
6,436,779
7,514,087
Various creditors
Employee benefits
Deferred income tax
Deferred flat-rate corporate tax
19,979
Sum of long-term liabilities
4,808,885
Sum of liabilities
9,170,898 10,094,288 10,717,914
SHAREHOLDERS’ EQUITY
Capital
4,056,758
4,056,758
4,056,758
91,331
91,331
91,331
-1,133,558
-971,468
-810,995
-334,412
-276,757
-286,318
420
-2,673
1,798
Controlling stake
2,680,539
2,897,191
3,052,574
Non-controlling stake
2,356,937
2,455,592
2,399,470
Total shareholders’ equity
5,037,476
5,352,783
5,452,044
Premium in share subscription
Shortfall
Accumulated effect by conversion of foreign
entities
Recognition in valuation of financial instruments
Total liabilities and shareholders’ equity
14,208,374 15,447,071 16,169,958
The following is the Consolidated Income Statement for the same fiscal years with numbers stated in
thousands of nominal Mexican pesos.
Net Sales
Cost of sales
Gross income
Operating expenses
Operating Income
84
2011
2010
2009
11,466,574
9,073,329
2,393,245
10,101,040
7,697,922
2,403,118
9,283,628
7,107,262
2,176,366
1,110,262
1,282,983
1,274,830
1,128,288
1,355,680
820,686
Other Expenses
85,320
603,634
172,138
549,035
521,277
820,724
Effects of stake in investment
in shares of associated companies
-57,689
-39,639
16,736
0
0
76,903
651,718
446,754
-614,954
379,601
133,483
513,084
274,663
149,553
424,216
126,706
167,900
294,606
138,634
22,538
-909,560
26,255
-86,266
47,261
112,379
108,804
-956,821
-162,090
-274,469
-166,780
-275,584
810,995
-145,826
112,379
108,804
956,821
Extraordinary Items
Earnings (loss) before taxes
on earnings
Provisions for:
Tax on income caused and deferred
Tax on flat-rate corporate tax caused and deferred
Income (Loss) before results in
discontinued operations
Net consolidated income (loss) for the year
Net consolidated distribution of income (loss)
for the year:
Controlling stake
The financial information in these two tables is taken from the Company's consolidated financial
statements attached as annexes to CIE's annual reports for the years 2011 and 2010.
85
2. FINANCIAL INFORMATION BY BUSINESS LINES, 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 the section “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. 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 the section “Recent Events” in Chapter I,
“General Information,” of this Document.
The following table shows the contribution by country to the Group’s consolidated revenues for the
fiscal years ended December 31, 2009, 2010 and 2011:
Country
Mexico
United States (1)
Colombia
Total (2)
(1)
(2)
2009
2010
2011
Ps. 9,069.8
91.1
122.8
Ps. 9,954.7
146.4
Ps.11,251.4
27.6
187.5
9,283.6
10,101.4
11,466.6
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 hold 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 effect, the reader should deduce the amounts for each historical fiscal year shown here,
from the total in the fiscal year in questions, 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.
86
3. REPORT ON SIGNIFICANT LOANS
At year-end 2011, the Company’s short- and long-term bank and market liabilities, stated in millions of
Mexican pesos, were Ps. 6,251.6, while the debt at December 31, 2010 was Ps. 6,807.1. CIE’s level of
interest-bearing debt at the end of 2009 was Ps. 7,033.2 In general, the Company contracts a portion of
its liabilities at a variable rate with a fixed spread.
At the end of 2011, the Company’s consolidated debt included the circulating portion of its 10-year
bonds for US$ 200.0 issued in June 2005 by CIE in international markets and registered in the Euro MTF
(“Multi Trading Facility”) Market on the Luxembourg Stock Exchange, equal to approximately US$ 13.7,
as well as three unsecured notes that are currently being traded on the BMV, maturing in September
2014. The Group’s bond debt is equal to approximately 35.0% of its total debt for the end of fiscal year
2011, while the remaining constitutes bank loans contracted mainly in Mexico. CIE is current in providing
information and documentation as per the general provisions applicable to issuers in Mexico, and for the
respective bank loans and bond debt with its creditors, ordinary representatives, bondholders, fiduciary,
and other parties, as applicable. Similarly, in relation to the Company’s 10-year bond registered in
Luxembourg, CIE is also current with respect to providing information and documentation, in the time
periods and in the formats that European financial directives establish (which, for the case of the CIE
bond, through the Euro MTF market on which it trades, are the same as those in Mexico).
At this time, the Company is current on its bank and bond debt service (including the debt securities
that are registered on the Luxembourg stock market) in terms of paying principal amounts and paying
interest and/or respective coupons. The foregoing is in compliance with the documented terms and
conditions agreed to with the respective bank loans and bond holders.
The following table shows the composition of the Company’s debt at December 31, 2009, 2010 and
2011, stated in millions of Mexican pesos:
2009
2010
2011
Currency:
Pesos
Foreign Currency
Total
6,119.8
913.5
7,033.2
5,967.7
839.5
6,807.2
5,377.4
874.2
6,251.6
Type:
Bank
Stock Market
Total
4,304.9
2,728.4
7,033.2
4,360.7
2,446.5
6,807.2
4,063.3
2,188.3
6,251.6
Term:
Short Term
Long Term
Total
311.4
6,721.8
7,033.2
959.2
5,848.0
6,807.2
1,760.6
4,491.1
6,251.6
Contracted by:
CIE
Subsidiaries
Total
5,752.5
1,280.7
7,033.2
5,554.9
1,252.2
6,807.2
5,008.9
1,242.8
6,251.6
Item
87
Bank Loans
(For more information regarding the Group’s bank loans, see Note 9, “Analysis of Bank Loans and
Financial Instruments” in the Audited Consolidated Financial Statements at December 31, 2011 and
2010, attached to the Document, as well as the same Note included in the Audited Consolidated Financial
Statements at December 31, 2010 and 2009).
10-Year Bonds
CIE’s 10-year bonds were issued on June 14, 2014, for a total of US$ 200.0, with the offer equaling
200,000 shares with a value of one thousand dollars each, and expiring on June 14, 2015. These bonds,
duly registered with the Special Registration Section of the CNBV, pay a coupon every six months that is
referenced to an annual interest rate of 8.875%, and payment of its principal occurs upon its maturity. The
net funds obtained by the Company through this international issuance were mainly used to pay and
cancel short-term and long-term bank loans and bond debt in Mexico.
The 10-year bonds, which may be redeemed early by the Company, were originally registered in the
regulated market of the Luxembourg Stock Exchange at the time of their offering. During the second half
of 2011, the Company moved the registration and trading of its bonds from this type of market to the Euro
MTF market (Multilateral Trading Facility) on the Luxembourg Stock Exchange, which process is allowed
under applicable regulation and pursuant to the terms and conditions of the securities. In addition, at the
end of 2007, the Company started a process to repurchase these securities, which concluded in the first
months of 2008, with CIE acquiring and later cancelling a substantial portion of these instruments, whose
total amount in circulation is US$ 13,650,000.00 (THIRTEEN MILLION, SIX HUNDRED AND FIFTY
THOUSAND AND 00/100 MEXICAN PESOS).
Dexia Banque Internationale a Luxembourg acted as the listing agent. The Bank of New York acts as
the fiduciary, principal paying agent, transfer agent, and registration entity. In addition, The Bank of New
York (Luxembourg) S.A. acts as the transfer agent and payment agent. Standard & Poor’s and Moody’s
rated the bonds B- and B3, respectively.
These debt instruments are identified under CUSIP number 21988JAA8 for investors qualified under
Rule 144A, while their identification under their ISIN number under Rule 144S is USP3142LAN93.
Unsecured Bonds
The Company has three issuances of Unsecured Bonds duly authorized by the CNBV and registered
and trading on the Mexican Stock Exchange. These issuances are from a short- and long-term revolving
Dual Unsecured Bonds Program, up to the amount of Ps. 300.0 million, authorized on August 17, 2006 by
the CNBV. Under this system the Company’s issuances are identified with tickers CIE 05, CIE 06 and CIE
08.

CIE 05 was issued on October 20, 2005 for the original amount of 1,400.0 (equal to 14.0 million securities), with its expiration date on September 30, 2014. At the close of 2011, there is
an unpaid balance of approximately Ps. 1,096.9. The interest payable every 28 days on this
instrument is referenced at the TIIE rate plus an applicable margin of 300 basis points. Early
amortization and payment of the instruments is projected (regarding the former, 12 equal
consecutive and successive quarterly payments starting on December 30, 2011). The ordinary issuance representative is Banco Invex, S.A.; the fiduciary for the guarantees granted
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through an irrevocable guarantee trust with reversal rights is Bank of New York Mellon, S.A.;
and its depositary and payment agent is Indeval. The issue is rated by Fitch and Moody’s,
and the ratings granted are BB- and Ba3, respectively.

The CIE 06 securities were issued on December 8, 2006. The offering on the BMV included
5.0 million Unsecured Bonds, equal to Ps. 500.0, which mature on September 30, 2014. At
the close of 2011, the unpaid balance on the issue was Ps. 391.7. The interest payable every
28 days on this instrument is referenced at the TIIE rate plus an applicable margin of 300 basis points. Early amortization and payment of the instruments is projected (regarding the former, 12 equal consecutive and successive quarterly payments starting on December 30,
2011). The ordinary issuance representative is Deutsche Bank, S.A.; the fiduciary for the
guarantees granted through an irrevocable guarantee trust with reversal rights is Bank of
New York Mellon, S.A.; and its depositary and payment agent is Indeval. The issue is rated by
Fitch and Moody’s, and the ratings granted are BB- and Ba3, respectively.

CIE 08 was issued on June 27, 2008, and matures on September 30, 2014. The offering of
the securities on the BMV included the issuance of 6.5 million Unsecured Bonds, equal to Ps.
650.0. At the close of 2011, the unpaid balance on the issue was Ps. 509.2. The interest is
payable every 28 days; it is referenced at the TIIE rate plus an applicable margin of 300 basis
points. Early amortization and payment of the instruments is projected (regarding the former,
12 equal consecutive and successive quarterly payments starting on December 30, 2011).
The ordinary issuance representative is Deutsche Bank, S.A.; the fiduciary for the guarantees
granted through an irrevocable guarantee trust with reversal rights is Bank of New York
Mellon, S.A.; and its depositary and payment agent is Indeval. The issue is rated by Fitch and
Moody’s, and the ratings granted are BB- and Ba3, respectively.
The reduction of the amount in circulation of these three unsecured bond issuances is the product of
both the Company’s own business, as well as early payments made with net funds from the sale of
certain of CIE’s assets in Mexico and Latin America in recent years which, under the obligations that the
Group acquired in 2009 with its Bank Creditors and Bondholders, are applied directly to reducing bank
loans and bond liabilities.
In December 2010, CIE issued unsecured bonds for Ps. 280.0 million, expiring in May 2011, which
were listed and traded on the Mexican Stock Exchange under the ticker symbol CIE 00110. The Company
does not currently have these securities in circulation in the market.
The debt instruments are subject to certain tax provisions, including, among others, those related to
the nationality of the holder, whether Mexican or foreign, as well as regarding the ownership, acquisition
and disposal by the holder of those instruments. Mexican bondholders are subject to the Income Tax Law,
while foreign bondholders must comply with specific tax provisions that are applicable in their home
domiciles. In all cases there are tax treaties between Mexico and other countries that avoid double
taxation on certain interest payments, payments on the principal amount, among other related items.
(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 the Section “Recent Events” in Chapter I, “General
Information” of this Document, and see Note 9, "Analysis of Bank Loans and Financial Instruments" in the
Audited Consolidated Financial Statements at December 31, 2011 and 2010 attached to this Document,
as well as the Note included in the Audited Consolidated Financial Statements at December 31, 2010 and
2009. In relation to tax-type credits or debits, see the Audited Consolidated Financial Statements at
December 31, 2011 and 2020, mentioned in this paragraph).
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4. MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE COMPANY’S
OPERATING RESULTS AND FINANCIAL POSITION
Unless otherwise indicated, the annual financial figures for fiscal years 2010 and 2011 in this section
have been prepared in accordance with Mexican Financial Reporting Standards, and are based on the
financial statements for the fiscal years ended December 31, 2011 attached to this Report. The financial
numbers for 2009 are in the Audited Consolidated Financial Statements at December 31, 2010, attached
to the 2010 Annual Report. 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.
According to the guidelines of NIF B-10 “Effects of Inflation,” (NIF B-10), starting on January 1, 2008,
recognition of inflationary impacts on the financial information was suspended (disconnection from
inflationary accounting). Consequently, the numbers at December 31, 2010 and 2011 are presented in
historical pesos modified by the effects of inflation on the financial information recognized until December
31, 2007.
The terms ‘the period,” “the fiscal year” or “the year” always refer to fiscal year 2011, unless otherwise
indicated.
(For more detail regarding how CIE’s financial information is presented, see the section “Note on
Presentation of Financial Information.” Also see the sections “Forward-Looking Statements” and “Notes
on Presentation of Financial Information,” as well as the “Risk Factors” section in Chapter I “General
Information,” and other information in this section).
4.1 Operating Results for Fiscal Year 2011
General
CIE’s consolidated revenues during 2011 were Ps. 11,466.6, which is an improvements over the Ps.
10,101.0 recorded in the prior year. This favorable 13.5% in the Group's consolidated revenues is due to
an increase in the attendance levels and to the growth in the average expenditure per visitor to the
Gaming rooms, whose number of rooms increased in 2011 in comparison with the prior year. Also, the
increase in the number of attendees at the live entertainment events that the Company put on in Mexico
in 2011 contributed to the change in this line.
The Group recorded EBITDA in the period of Ps. 2,227.2, 12.4% higher than the Ps. 1,198.10 that
was recorded in 2010. This favorable change is mainly attributable to increased attendance levels and
growth in the average expenditures of visitors to CIE Las Américas Gaming rooms, combined with greater
profitability of the mix of live events produced by CIE Entertainment during the year.
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Revenues and EBITDA by Division
In 2011, CIE Entertainment had a calendar of events that was characterized by a mix of lower operating profitability than in the prior year, despite an increase of 32.7% with respect to the same period of
2010, climbing from Ps. 3,628.6 in the same period of the prior year to Ps. 4,815.8 in 2011. Similarly,
EBITDA for the division was Ps. 505.4 in 2011, which is an improvement over the EBITDA of Ps. 466.2
recorded in the prior year, which is an increase of 8.4% in the period.
Revenues at CIE Las Américas were Ps. 4,676.4, and EBITDA was Ps. 1,255.7 in 2011, which compare favorably to revenues of Ps. 4,255.2 and EBITDA of Ps. 1,059.8 in the prior year. The 9.9% increase
in revenues is due to a larger number of visitors to the network of Gaming rooms, along with higher
average expenditures by attendees during the year. In turn, EBITDA increased 18.5% in the division,
which is explained by the increase in revenues mentioned previously, and by the composition of fixed and
variable costs in the division, the majority of which are fixed.
CIE Commercial revenues of Ps. 1,802.6 in 2011, compared with the Ps. 2,062.0 recorded in the
same period of the prior year. This 12.6% drop in the division’s revenues is the product of a change in the
manner of recording the division's revenues, which arises from the marketing to third parties of some of
CIE’s advertising and promotional products and services, mainly focused on recording the commission
earned by the division. In turn, the EBITDA of CIE Commercial increased 2.5%, rising from Ps. 425.6 in
fiscal year 2010, to Ps. 436.4 in 2011. This change in the margin is a product of more activity in special
events for third parties, and to an increase in the number of clients in the division.
CIE’s amusement parks (Other Businesses) recorded revenues of Ps. 171.8 in fiscal year 2011, and
Ps. 155.3 in 2010, a 10.7% increase, which is the product of a higher level of consumption per capita by
visitors inside the parks. The parks, in turn, experienced a 1.3% increase in EBITDA, rising from Ps. 29.4
in 2010, to EBITDA of Ps. 29.7 during 2011. The marginal variation in the EBITDA is a consequence of
the increase in revenues, which were offset by the registration of certain extraordinary expenses.
In fiscal year 2011, the Company recorded Ps. 603.6 as the CCF, compared with the Ps. 549.0 seen
in the previous fiscal year. The 9.9% change is fundamentally explained by the combined effect of (i) a
favorable reduction of 7.4% in the line "net interest paid," (which includes bank commissions), which
dropped from Ps. 547.1 in fiscal year 2010, to Ps. 506.4 in 2011; along with (ii) an increase in the Company's net exchange rate loss, which was Ps. 97.3 during the year, compared with the net loss of Ps. 1.9
recorded in 2010.
It is important to note that the reduction in net interest paid arises from CIE’s lower debt level, which
is a consequence of the prepayments on debt the Company made during the fourth quarter of 2010 and
the second quarter of 2011, for approximately Ps. 152.0 and Ps. 638.0, respectively; the latter is a product
of CIE's divestment of its shareholder stake in T4F. In turn, the adjustment seen in the net exchange rate
loss is a product of variations in the exchange rate parity between the Mexican peso and the United
States dollar, which affected the Company’s foreign currency position.
Tax Provision
CIE provisioned Ps. 513.1 for taxes in fiscal year 2011, and Ps. 424.2 in the previous year. The 2011
number includes Ps. 379.6 in income tax incurred and deferred, and the flat-rate corporate tax for Ps.
133.5 that was incurred and deferred. In 2010, the Company provisioned Ps. 274.7 as income tax
incurred and deferred, and Ps. 149.6 as the incurred and deferred flat-rate corporate tax.
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The Company recorded earnings of Ps. 274.5 in 2011, which is similar to the earnings of Ps. 275.6
recorded as a non-controlling stake in the prior year.
Controlling Stake
In 2011, the Company’s Controlling Stake account reflected a loss of Ps. (162.1), a drop of 2.8% in
comparison with the loss of Ps. (166.8) recorded in the prior fiscal year. This is the product of a higher
level of taxes provisioned during the year (mainly income tax), along with the record of a higher exchange
rate loss during the year.
4.2 Operating Results for Fiscal Year 2010
CIE’s consolidated revenues during 2010 were Ps. 10,101.8, which is an improvement over the Ps.
9,283.6 recorded in the prior year. This favorable 8.8% change in the Group's consolidated revenues is
due to an increase in the attendance levels and to the growth in the average expenditure per visitor to the
Sports Books and Yaks network, whose number of rooms increased in 2010 in comparison with the prior
year. Also, the increase in the number of attendees at the live entertainment events that the Company put
on in Mexico in 2010 contributed to the change in this line.
The Group recorded EBITDA of Ps. 1,981.0, which was 21.3% higher than the number recorded in
2010, mainly due to the increased attendance levels and growth in the average expenditures of visitors to
CIE Las Américas Sports Books and Yaks gaming room parlors, combined with greater profitability in the
mix of live events produced by CIE Entertainment during the year, as mentioned in the previous
paragraph.
Revenues and EBITDA by Division
During 2010, CIE Entertainment had a calendar of events that was characterized by a mix with higher
operating profit. This translated into a 3.8% increase in revenues over the same period of the prior year
and a 24.3% increase in EBITDA, to end the year with Ps. 466.2.
Revenues at CIE Las Américas during 2010 increased 10.3% to Ps. 4,255.2, compared with revenues of Ps. 3,680.3 recorded in 2009. This is explained by an increase in the number of visitors to the
Sports Books and Yaks network, as well as to the increase in the average expenditures by visitors at
existing and new gaming parlors. As a result of diversification in the technological mix plus the operating
efficiencies implemented, and the progress made in adapting some outlets of our Sports Books and Yaks
network, an increase of 30.8% was recorded in EBITDA for this division, increasing from Ps. 810.6 in
2009 to Ps. 1,059.8.
CIE Commercial recorded revenues that were 10.3% higher in the period, compared with those seen
in the previous year, ending 2010 at Ps. 2,062.0. During the year, in turn, EBITDA decreased 15.3% to
Ps. 425.6, compared to the Ps. 502.5 seen in the prior year.
The operation of the Group’s amusement parks resulted in revenues of Ps. 155.3 in the year, compared with the Ps. 236.4 seen in the same period of the prior year. EBIDA for the division was Ps. 29.4,
which compares favorably to the negative result of Ps. (52.5) reported in 2009.
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CCF
The Comprehensive Cost of Financing, which was Ps. (820.7) in 2009, decreased Ps. 271.6 to Ps.
(549.0), which is the result of recognizing lower net interest paid compared with 2009, due to a decrease
in the interest rate paid by the Company, and to a lesser extent, to a lower level of the Group's indebtedness, along with a decrease in the exchange rate loss due to the variation in the exchange rate and the
Company's positions in foreign currency.
Tax Provision
The tax provision for 2010 includes the Flat-Rate Corporate Tax (Impuesto Empresarial a la Tasa
Única – IETU) levied and deferred for approximately Ps. 149.6. At December 31, 2009, the amount
provisioned for this purpose was Ps. 167.9. The Income Tax levied and deferred for 2010 was Ps. 274.7,
compared with Ps. 126.7 for 2009.
The non-controlling stake recorded in 2010 was a profit of Ps. 275.6, which compares with a loss in
2009 of Ps. 145.8, due to the net results attributable to the shareholder stake of third parties, mainly at
the CIE Entertainment and CIE Las Américas divisions.
Controlling stake
In 2010, the Company's Controlling Stake account showed a net majority loss of Ps. 166.8, which
compares with Ps. (811.0) seen in 2009, which is mainly a result of a higher tax provision during the year.
4.3 Financial Position, Liquidity and Capital Resources
Historically, the Company’s sources of liquidity have been: (i) internal generation of resources through
its own operations, including financing through working capital; (ii) bank debt, (iii) market liabilities, 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 relative to its competition, in addition to other business and financial factors that may arise in the
future.
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For the fiscal year ended December 31, 2011, the Company recorded net cash flows from operating
activities of Ps. 1,928.7, net cash flows from investment activities for Ps. 145.0, and net cash flows from
financing activities for Ps. 1,621.3.
(For a more detailed explanation, including information on fiscal years 2010 and 2009, see the section “The Company’s Principal Investments” in Chapter II “The Company”).
Indebtedness
(For a more detailed explanation, see the section “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, 2011 and 2010).
Lines of credit
(For a more detailed explanation, see Chapter I, “General Information – Recent Events” of this
Document).
On January 4, 2008, Unimarket, S.A de C.V., a wholly owned subsidiary of CIE dedicated to selling
field-level advertising space in professional soccer stadiums in Mexico, entered into a framework agreement for derivative financial operations for an undefined period with Banco Santander, S.A. Institución de
Banca Múltiple, Grupo Financiero Santander. Subsequently, on January 24, 2008, both parties entered
into a foreign purchaser credit contract 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), which was used to purchase
furniture and specialized technological equipment to strengthen the subsidiary’s commercial operations
and to replace its fixed assets.
At December 31, 2011, as detailed and explained below, the unpaid balance in euros of this transaction was 295,133.10 euros (two hundred and ninety-five thousand, one hundred and thirty-three euros
and ten cents), or 20% of its initial amount, expiring on December 19th of this year.
This particular credit operation has had a low contribution (less than one percent) to the Group’s level
of total consolidated debt, from the time it was entered into and throughout its existence.
On February 29, 2008, upon authorization from corporate entities and brokers, and CIE’s internal
control, a financial derivative swap instrument for hedging exchange rates and interest rates was entered
into to cover the risk associated with the credit agreement between Unimarket and Santander, pursuant
to the conditions described below:
Original Conditions
SWAP Transaction
Notional Amount
1,475,666.60 euros
24,016,456.17 Mexican pesos
Interest Rate
Euribor + 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
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At the end of 2011, the unpaid balance of the referenced covered credit was Ps. 5,343,086.69 (FIVE
MILLION, THREE HUNDRED AND FORTY-THREE THOUSAND, EIGHTY-SIX PESOS AND 69
CENTS), equal to 295,133.10 euros (TWO HUNDRED AND NINETY-FIVE THOUSAND, ONE HUNDRED AND THIRTY-THREE EUROS AND TEN CENTS).
As of today’s date, all obligations to which Unimarket is committed with the financial derivative instrument in effect have been complied with. At this time, this is the only hedge held by Corporación
Interamericana de Entretenimiento, S.A.B. de C.V. and its subsidiary companies. If required, the Company has the internal financial resources available to handle any financial responsibility arising from this
financial instrument in a timely and proper manner. If this situation were to occur, it would not be considered material given the low contribution of that derivative in the Company’s financial structure, as indicated in the previous paragraph, therefore it is estimated that there would not be any effect due to significant
variations in its valuation due to unusual movements in the exchange rate between the euro and the
Mexico peso, which is different than what is occurring in the economic situation in the European market,
which may increase or restrict the parity between the two currencies.
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 may 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.
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 the 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 Banco de México. In both cases, the
main conditions or terms are standard in this type of transaction, including mechanisms to appoint agents
or to calculate valuation. Also entered into are standard guarantee contracts that determine the 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, 2011 and on the date of this Annual Report, as well as in the past, the Company has not
had any margin calls.
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The established operations have followed the practice of designating the other party as the calculation or assessment agent. To date, a specific independent third party has not been hired 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 the obligations to which it has committed in relation to
current derivative financial instruments. If necessary, the Company could use internal funds, but it does
not anticipate the need to use any external funds.
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, 2011, are detailed at the start of this document, and are recognized in the breakdown of the main
lines on the income statement.
97
Rotation 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
2011, 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 term specifications 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 operates 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 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.
4.4 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.
98

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 2011, 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, 2011, approximately 14% of CIE’s bank and
stock market liabilities were denominated in foreign currencies; at the close of 2010, the percentage of
bank and stock market liabilities in foreign currency was close to 12.0%. 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 devaluate 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 2009, 2010 and 2011, there were no relevant unregistered transactions.
4.5 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,
which in turn reports to the Company’s Board of Directors, which is presided over by an independent
board member.
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
99
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
self-control within the Group.
Prevention and Detection of Money Laundering and Operations with Funds from Illegal
Sources at CIE Las Américas
AMH’s upper management works proactively and is aware of its responsibility to prevent money laundering and financing of terrorism. In that regard, the Company has a series of structures and tools
oriented toward internal control for compliance with the regulatory framework. Thus it has installed a
Compliance Program that is upheld by a series of policies and procedures applied to the products and
services that it offers. Its Compliance Program is formalized through a Compliance area, with a person
who is appointed to ensure that the Compliance Program is enforced, and with generating policies to
prevent money laundering.
The Compliance Unit of CIE Las Américas is responsible for ensuring that the Compliance Program is
followed, and it reports directly to the Audit Committee and to the General Management of CIE Las
Américas in requests for projects, and also for maintaining communication with CIE’s Corporate Director
of Administration and Finance, thus creating a transparent procedure both regarding the supervisory
position as well as prevention activities.
Through an annual review program, this Unit performs a rationality analysis on the operations in order
to determine the level of regularity and feasibility of reporting to the authorities. Also included among the
functions of the Compliance Unit are, including but not limited to, are enforcing the training program,
updating rules, designing new procedures, implementing corrective actions formulated by SEGOB, and
following up on recommendations issued through internal audits and independent reviews as a commitment to continuous improvement to detected control issues.
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5. CRITICAL ACCOUNTING ESTIMATES
The Group’s financial information is prepared in accordance with Mexican Financial Reporting Standards (Normas de Información Financiera - NIF). The NIF establishes that International Financial Reporting
Standards (Normas Internacionales de Información Financiera - NIIF), International Accounting Standards (Normas Internacionales de Contabilidad - NIC), Interpretations of International Financial Reporting
Standards (Interpretaciones a las Normas Internacionales de Información Financiera - INIF) and the
Interpretations Committee (Comité de Interpretaciones - SIC) are supplemental to the NIF, when the
absence of NIF so requires.
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 (Normas
Internacionales de Información Financiera – NIIF, or IFRS in English), 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 NIF 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.
CIE believes that the following accounting policies are highly complex and require that management
uses its judgment. These Critical Accounting Policies have been applied using the same criteria to all the
Group’s business segments.
Property, Plant and Equipment
CIE’s fixed assets are mainly comprised of constructions and improvements to entertainment centers,
including those properties to which the Company holds a right of use under concession, revocable
temporary administrative permits, and leases.
Property, plant and equipment are stated as follows: (i) acquisitions made as of January 1, 2008 at
historical cost, and (ii) acquisitions made until December 31, 2007, at their actualized values determined
by applying factors arising from the INPC to their acquisition costs until December 31, 2007. The depreciation of buildings, equipment and other depreciable assets is basically determined using the straight-line
method according to the useful life of the assets or the terms of the concessions, temporary revocable
permits, or lease periods. The expenses that substantially improve or increase the useful life of buildings
are capitalized. Maintenance and repair costs are recorded when they are incurred. Gains and losses
from write-offs of fixed assets are recognized in the income statement when they occur.
Long-term tangible and intangible assets are subject to a deterioration assessment in light of events
or changes in certain circumstances that indicate that the amount of a group of assets may not be
recoverable. Asset recovery is measured by comparing the actual amount of a group of assets and the
current estimate of their future net discounted cash flows. If the value of a group of assets exceeds the
value of its future discounted cash flows, impairment is recognized for the amount by which the value of the
assets exceeds their adjusted value.
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Key factors in the fixed asset policy include estimating the useful life of the various types of assets
that CIE has, the choice of using the straight-line method to record depreciation, the Group’s criteria
regarding the capitalization or recognition of expenses related to the fixed asset, and determination of the
impairment of a fixed asset or assets of the Company. Estimating the useful life of fixed assets impacts
the level of expense for the annual depreciation that is recorded.
The assessment of whether an expense related to the fixed asset substantially improves or increases
the useful life of an asset, and which is appropriately capitalized in addition to the asset’s cost basis, or if
it is recorded as a consequence of maintenance or repair activities, may also significantly affect the
operating results in a given period, as well as the Company’s financial position.
Intangible Assets
Other assets represent intangible assets recognized on the balance sheet, since they are identifiable,
provide future economic benefits, and there is control over those benefits. Intangible assets with a defined
life are systematically amortized based on the best estimate of their useful life, which is determined
according to the expectation of future economic benefits. The value of these assets is subject to an
annual evaluation over their recoverable value to determine the existence of losses due to impairment in
their value. Amortization is calculated using the straight-line method based on the useful life of the assets.
The value of these assets is subject to an annual evaluation of impairment.
Trademarks and patents represent payments made for usage rights to them, and amortization is calculated as described above.
CIE frequently hires outside experts to validate the methodology and assumptions considered in the
assessment of the abovementioned analyses.
Deferred Income Tax and the Deferred Flat-Rate Corporate Tax
With respect to the deferred Income Tax and the deferred Flat-Rate Corporate Tax, the Company
complies with the criteria in NIF D-4 (“Income tax”), upon which basis the Deferred Income Tax and the
Deferred Flat-Rate Corporate Tax are determined and recorded based on the comprehensive assets and
liabilities method, which requires that a deferred tax effect is recognized for all the temporary differences
between the accounting and tax values of the assets and liabilities that are expected to materialize in the
future. These differences result in the creation of deferred assets and liabilities, which have been included
in our consolidated financial statements. A valuation reserve has also been determined that is based on
our estimates of the taxes that will be levied in the future and the on the period for which they will be
recoverable.
CIE believes that the application of certain criteria is required to determine the provisions for Income
Tax, the Flat-Rate Corporate Tax, Deferred Income Tax, and the Deferred Flat-Rate Corporate Tax.
Valuation of reserves is based on the Company’s estimates of earnings before taxes, and on the period
for which the active deferred tax is recoverable. If actual results differ from these estimates, or if the
Company makes adjustments in future periods, it will be necessary to establish additional valuation
provisions, which could materially affect the Company’s financial position and results.
Employee Profit-Sharing
The Company pays Employee Profit-Sharing (Participación de los Trabajadores en la Utilidad –
PTU), which is calculated according to the procedures established by the Income Tax Law. The taxable
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base of the PTU defers the accounting result mainly so that for accounting purposes actualized depreciation and the exchange fluctuation is recognized, while for PTU purposes, historical depreciation and the
exchange rate fluctuation are recognized when required, for differences in time in which some lines are
accumulated or deducted in the books for PTU purposes, as well as for those lines that only affect the
accounting result or the PTU for the year.
Consolidation Method and Valuation of Permanent Investments in Shares
In accordance with NIF B-8 (“Consolidated or Combined Financial Statements”) issued by the CINIF,
the companies in which CIE has direct or indirect control are incorporated via financial statement consolidation. The conclusion about whether or not the Company has control with respect to a Specific Purpose
Company or Specific Purpose Entity (SPC) depends on the assessment of various factors that require, in
certain cases, Management’s judgment regarding the terms and conditions of the investment, including
analysis of the majority representation in the Board of Directors of the company and the shareholder
structure.
The entities over which CIE exercises significant influence but not control are recognized using the
equity accounting method in conformance with NIF C-7 “Investments in associated companies and other
permanent investments” issued by the CINIF. The condition for determining whether or not CIE exercises
significant influence over a certain company depends on several factors, including, among others, its
representation on the Board of Directors of that company and the shareholder structure.
The financial statements of foreign subsidiaries are updated using the National Consumer Price Index
(Índice Nacional de Precios al Consumidor – INPC) of the country in which the entity reports its operations and, subsequently, they are converted at the exchange rate in effect at year end. The effect of
exchange rate fluctuations is included directly in the shareholders’ equity in the line “Accumulated effect
due to conversion of foreign entities.”
Liabilities, Provisions, Contingencies and Commitments
CIE’s liabilities represent a current obligation, and the liability provisions recognized on the balance
sheet represent current obligations for which the outlay of financial resources to liquidate them is probable. These provisions have been recorded for accounting purposes using the best reasonable estimate
made by Management to liquidate the current obligation. However, actual results may differ from the
provisions recognized.
Derivative Financial Instruments
All derivative financial instruments classified for trading or hedges for market risk are recognized on
the balance sheet as assets and/or liabilities at their fair value.
Fair value is determined based on recognized market prices.
In cash flow hedges, the effective portion is temporarily placed in total earnings, inside capital stock,
and it is reclassified to results when the position that it hedges affects results, the ineffective portion, is
immediately recognized in results.
The Company suspends recording hedges for accounting purposes when the derivative has expired,
has been sold, is cancelled or exercised, when the derivative is not highly effective in offsetting the
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changes in fair value or effective cash flows of the hedged item, or when the entity decides to cancel
designation of the hedge.
Upon suspension of recording hedges for accounting purposes, in the case cash flow hedges, the
amounts accumulated in shareholders’ equity as part of total profits, remain in the capital until the time
that the effects of the projected transaction or firm commitment affect the results.
Recognition of Income
(See Note 3 “Summary of Significant Accounting Policies” in the Audited Consolidated Financial
Statements for December 31, 2011 and 2010, attached to this Document).
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 (Normas
Internacionales de Información Financiera – NIIF, or IFRS in English), in order to comply with the provisions established by the National Banking and Securities Commission.
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IV. ADMINISTRATION
1. EXTERNAL AUDITORS
After analyzing and assessing the external audit function and considering the amount of fees paid
during the fiscal year from January 1 to December 31, 2011, CIE’s Audit and Corporate Practices Committee recommended that the Board of Directors of Corporación Interamericana de Entretenimiento hire
the Companies PwC and Gossler, which performed the outside auditing work for fiscal year 2011.
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, 2011,
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 2009, 2010 and 2011, PwC invoiced and charged the Group for accounting auditing
services and services other than auditing services, the amounts of Ps. 15.6, Ps. 17.6 and Ps. 19.4. Of
these amounts, 33.0%, 49.0% and 42.0% 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 and training in IFRS for 2011.
The company Gossler invoiced and collected from the Company for accounting auditing services and
tax services the amounts of Ps. 3.8, Ps. 3.8 and Ps. 4.5 for fiscal years 2009, 2010 and 2011, respectively, of which 2.9%, 1.6% and 0.9% are for services other than accounting auditing services.
During the Company’s existence, no qualified or negative opinions have 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 Company’s financial statements.
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2. OPERATIONS WITH RELATED PARTIES AND CONFLICTS OF INTEREST
As part of its activities during the normal course of business, the Company carries out, and plans to
continue carrying out, a series of transactions with related parties, all of which are done according to
prevailing market conditions, therefore the terms of these transactions are deemed to be no less favorable than those that could be applied 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-significant transactions the Company
carries out with its subsidiaries, as of December 31, 2011, there were several accounts payable between
CIE and its subsidiaries.
During 2011, the Company hired the law firm González Calvillo, S.C., a law firm in which Mr. Enrique
Arturo González Calvillo is a partner on a regular basis to provide legal advisory services. He is the
brother of Mr. Rodrigo Humberto González Calvillo, who is currently a Board Member on CIE’s Board of
Directors. In 2011, this law firm billed the Group approximately Ps. 2.2. Mr. Enrique Arturo González
Calvillo acted as a non-member Secretary of the Board of Directors until the fourth quarter of 2011, and
does not carry out any Corporate Governance duties within the Company.
It is important to note that within the operations with related parties related to companies with an interest in the Company, the only relevant transactions are those with Grupo Financiero Inbursa, S.A. de
C.V. and some of its affiliated companies, which, through Seguros Inbursa S.A. and Fianzas Guardiana
Inbursa, S.A., companies that provide the Group with various services, represented an approximate
billing volume of Ps. 21.1 and US$ 0.2, which does not include the loans obtained by the Company with
Banco Inbursa. Seguros Inbursa and Fianzas Guardiana Inbursa are part of the insurance and bonding
companies that the Group usually hired for its risk-management needs.
In compliance with the Securities Market Law, the Company has taken the necessary measures to
report transactions with related parties, both to its Board of Directors, as well as to the Audit and Corporate Practices Committee.
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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 Operating 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 By-Laws, which form part of this Document. (For more information, see the section “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 appointed and approved at the General Annual
Ordinary Shareholders’ Meeting held on April 20, 2012. The members of the Board of Directors do not
have to be shareholders and remain in their position for one year, and may be reelected. 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 -
Substitute Chairman of the Audit and
Corporate Practices Committee
Bernardo Malpica Hernández
1 / 27 / 1966
Víctor Manuel Murillo Vega
Member of the Audit and Corporate
Practices Committee
4 / 05 / 1959
Mónica Lorenzo Gutiérrez
Non-Member, 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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223 / 23 / 1962
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. 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 the Board of Directors of CIE since
2001, on which, until recently, he acted as Vice Chairman. He is current a Related Board Member. Mr.
González is the Chief Operating 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 Operating 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 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, 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, among 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 by the Shareholder’s Meeting held on April
14, 2011. He graduated from Instituto Tecnológico Autónomo de México (ITAM), 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 Fiscal 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
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Contadores Público de México A.C., and was a member of the Honor Board and the Governing Board of
that institution. He is currently the Chairman of the By-Laws Commission at the same institution.
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 talent-development programs, among others. He was the Direct of the Development Center of
Sistema de Coca-Cola 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 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 Substitute President of the Company’s Audit and Corporate Practices Committee. Mr. Elizondo has a Masters and a Doctorate in Political Sciences from Oxford
University.
Bernardo Malpica Hernández has been a Board Member of CIE since 2009, and 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 he has an MBA from the Kellogg Graduate School of Management
at Northwestern University in the United States.
Víctor Manuel Murillo Vega has been the Corporate Director of Administration and Finance at CIE
since 2001, and 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 director positions both in Mexico and in 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 at the General Annual Ordinary
Shareholders’ Meeting held on April 20, 2012. 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 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 20, 2012. 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 Substitute Secretary of CIE’s Board of Directors. His appointment
was ratified at the Annual Ordinary General Shareholders’ Meeting on April 20, 2012. He has worked at
CIE since February 1998. He has a Law Degree from Universidad Intercontinental, with a specialty in
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Commercial Law from Universidad Panamericana, and he has taken several courses at IPADE and
Universidad Iberoamericana.
Regarding the Audit and Corporate Practices Committee of the Company, presided over by Mr.
Leopoldo Escobar Latapí, see the section “Company 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 20, 2012, 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 disseminate 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 to purchase and place 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 payment
to shareholders.
(j) To ensure maintenance of the accounting, recording, archiving or information systems of the
Company.
(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 monitoring 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 bring any liability actions prescribed by the Securities Market Law against related parties or
third parties that would have presumably damaged the Company or the legal companies controlled by the Company or over which it has significant influence, unless the damage caused is
not significant, as determined by the Board of Directors with the prior opinion of the Audit Committee.
(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 Company’s Chief Executive Officer shall
be vested with the following general powers in order to perform his duties:
(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 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
the Board of Directors or with the prior authorization of the Board of Directors or the Share111
holders’ 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, 20.0% (twenty percent) of the Company’s shareholders’ equity, he
will sign with the prior authorization of the Ordinary General 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 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) Powers to execute, deliver, endorse and guarantee as surety 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.
Officers and Directors
The following table shows the nine main officers and directors of Corporación Interamericana de
Entretenimiento, in their positions as of the date of this Annual Report:
Name
Víctor Manuel Murillo Vega
Alejandro Garza Díaz
Jaime José Zevada Coarasa
Juan Manuel Pérez Díaz
Eduardo Martínez Garza
George González Alvarado
Position
Date of Birth
Chief Executive Officer of CIE Las Américas
Corporate Director of Finance and
Administration
Chief Executive Officer of CIE International
Corporate Director of Planning and
Promotion
Corporate Finance Officer
Commercial Director of CIE Commercial
Director of Operations of CIE Commercial
Chief Executive Officer of CIE Entertainment
5 / 31 / 1960
9 / 13 / 1963
4 / 05 / 1959
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8 / 11 / 1963
2 / 27 / 1953
11 / 12 / 1969
9 / 17 / 1960
1 / 17 / 1965
1 / 6 / 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 Communications from Universidad Iberoamericana.
Jaime José Zevada Coarasa has been the Group’s Corporate Finance Officer since 2002. He previously worked in CIE’s Investor Relations Department from 1998 to 2001.At the start of his professional
career, Mr. Zevada carried out corporate marketing activities, later working with Bufete Industrial, a
Mexican construction company, in the Investor Relations and Corporate Communications Area. Between
1995 and 1998, Jaime Zevada studied International Relations at Universidad Nacional Autónoma de
México, and he has taken study and refresher 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.
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, 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 BTL
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.; 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.
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Executive Compensation
For the year ended December 31, 2011, 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. 66.8. 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 32 years old, and the average approximate seniority in the Company is three years. Regarding the management team, the average
age is 50 years old, with average seniority of 15 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 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 PESOS 20/100).
All options to acquire the shares under this plan have already been assigned and distributed to the
employees, and the vast majority has already been exercised. To date, only 1,369,197 (ONE MILLION,
THREE HUNDRED AND SIXTY-NINE THOUSAND, ONE HUNDRED AND NINETY-SEVEN) Series B
Class II shares remained in the trust, which will be distributed to the Company’s executives.
Mr. Luis Alejandro Soberón Kuri, Chairman of the Board of Directors of CIE, controls distribution of
those shares by the trust, and has to vote directly on those shares.
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 PESOS AND 76/100) per share. Of the 3,310,280 (THREE
MILLION, THREE HUNDRED AND TEN THOUSAND, TWO HUNDRED AND EIGHTY) shares mentioned
above, 185,800 (ONE HUNDRED AND EIGHTY-FIVE THOUSAND AND 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, AND
FOUR HUNDRED AND EIGHTY) shares that are currently still in the trust.
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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 AND NINE HUNDRED
AND TEN) Series B Class II shares to five employees at the same price; that is, Ps. 19.76 (NINETEEN
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 brokers that are depositors with Indeval for
the purpose of the Company’s most recent Ordinary General Shareholders’ Meeting, which was held on
April 20, 2012, two different financial brokers, acting on behalf of third parties, appeared with approximately
97.98% (NINETY-SEVEN POINT NINETY-EIGHT PERCENT) of CIE’s shares at that Meeting. It was not
possible to establish who the beneficiary shareholders are for whom those agents are acting and who hold
5.0% (FIVE PERCENT) or more of the capital stock of CIE. 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.
The Annual Ordinary General Shareholders’ Meeting held on April 20, 2012, approved the payment of
Ps. 30,000 (THIRTY THOUSAND PESOS AND 00/100) per meeting to external board members and to
members of the Audit and Corporate Practices Committee who attend the respective meetings.
During fiscal year 2011, the Company paid the board members the approximate total amount of Ps.
960,000.00 (NINE HUNDRED AND SIXTY THOUSAND 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. 66.7 (SIXTY-SIX POINT SEVEN MILLION PESOS).
This gross amount includes salaries, bonuses, Christmas bonus, vacation premiums, vouchers, savings
fund and additional compensation paid.
(For a more detailed explanation, see the section “Executive Compensation” in Chapter III “Administrators and Shareholders” of 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.
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Audit functions
(a) The committee that performs auditing functions will have the general duty to oversee and supervise the integrity of the financial information, the accounting process and systems, control and
registration of the Company and the legal entities that it controls, to supervise the technical capacity, independence and function of the legal entity that performs external auditing duties, the efficiency of the Company’s internal control, and to assess 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.
(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.
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(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 draft the opinion indicated in Article 28, Section IV, subsection (c) of the Securities Market Law, regarding the contents of the report from the Chief Executive Officer that must be
prepared in conformance with Article 44, Section XI of the Securities Market Law, and to
submit it for consideration by the Board of Directors, for its subsequent presentation at the
Shareholders’ Meeting, based, among other items, on the report of the external auditor.
That opinion must at least indicate 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.
(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 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 performance of duties vested in 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.
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Corporate Practice Duties
(a) The general functions of the committee performing corporate practices duties will be to oversee
and reduce any risks in the execution of business or to the benefit of a certain group of shareholders, subject to the authorizations or policies issued by the Board of Directors; to supervise
compliance with legal provisions and stock exchange regulations that are mandatory for the
Company.
(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
fiscal year being reported; (C) full compensation or remuneration packages payable to the
Chief Operating Officer and the Company’s Directors; and (D) the waivers granted by the
Board of Directors for an adviser, Directors or any other person with management powers
in terms of the Securities Market Law to benefit from the opportunities of a business for
himself or third parties, pursuant to Article Twenty-One of the Company’s 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
(ix)
The Audit and Corporate Practices Committee is currently comprised as follows:
Member of the Audit and Corporate Practices Committee
Carlos Elizondo Mayer-Serra
Jorge Fernández de Miguel
Position
Chairman
Member
Member
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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
Amendment 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’ Meeting of the Company resolved to completely revise the Company’s by-laws in order to adapt them to the new provisions of
the Securities Market Law and to the provisions generally applicable to securities issues and other stock
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.
The text of the Company’s current by-laws is transcribed below:
BY-LAWS
SECTION ONE – NAME AND ALTERNATE PROVISIONS, PURPOSE, DURATION,
NATIONALITY AND FOREIGN SHAREHOLDERS
One. Name and Alternate 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) Alternate 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 trade 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, 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.
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(c) To receive from other companies and individuals, and to provide other companies and individuals
with the services necessary to achieve their corporate ends or objectives, services such as the following:
administrative, financial, treasury, auditing, marketing, accounting, development of programs and manuals, analysis of operating results, assessment of productivity information and possible financing, 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, to issue liabilities, bonds and commercial paper,
and any other debt instruments or debt securities, whether or not secured by 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 the operations of its subsidiaries, to purchase own stock, to finance
dividend payment, 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 trading 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 real guarantees, 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 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, possess, 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.
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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 may 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, not to claim the protection of the 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. Fixed capital without withdrawal rights 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), backed by 30,955,386
(THIRTY MILLION, NINE HUNDRED AND FIFTY-FIVE THOUSAND, THREE HUNDRED AND EIGHTYSIX) common, nominative shares, with no par value, fully subscribed and paid in, which will be identified
as Series B, Class I.
(b) The variable portion of the 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 acquire, directly or indirectly, 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, 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.
(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
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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 has 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.
(d) The Company’s own shares, or unsubscribed shares that are kept as 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.
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(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 voting, 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 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 twentyeight) of the General Law of Corporations, whether directly or according to Section VII (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.
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(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 Inscription 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 their 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.
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
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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% 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, 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 deter127
mine 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 should 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.
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(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
entities 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.
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(iii)
The opinion of the Board of Directors on the content of the report of the Chief Executive Officer.
(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 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) To decide, upon the proposal of the Chairman of the Board of the Chief Executive Officer, regarding the 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.
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(q) To carry out 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 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;
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(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
(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. Indemnity Payments to 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 indemnity payments included, where applicable, the commitment to cover any remaining indemnity payments that
exceed the insurance 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.
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(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.
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 Company’s internal control and auditing system 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 in charge of
preparing that information, in the area of their competence.
(e) To disseminate 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 to purchase and place 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, where applicable.
(i) To comply with established legal and statutory requirements, in order to declare dividend payment
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 monitoring 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 bring any liability actions prescribed by the Securities Market Law against related parties or
third parties that would have presumably damaged the Company or the legal companies controlled by the
Company or over which it has significant influence, unless the damage caused is not significant, as
determined by the Board of Directors with the prior opinion of the Audit Committee.
(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 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 domain according to the second and third paragraphs of Article 2554 (two thousand, five hundred and fifty-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,
as follows:
(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
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(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 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) 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 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) Powers to execute, deliver, endorse and guarantee as surety 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 bylaws 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 auditing functions will have the general duty to oversee and supervise the integrity of the financial information, the accounting process and systems, control and registration
of the Company and the legal entities that it controls, to supervise the technical capacity, independence
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and function of the legal entity that performs external auditing duties, the efficiency of the Company’s
internal control, and to assess 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 draft the opinion indicated in Article 28, Section IV, subsection (c) of the Securities Market Law, regarding the contents of the report from the Chief Executive Officer that must be
prepared in conformance with Article 44, Section XI of the Securities Market Law, and to
submit it for consideration by the Board of Directors, for its subsequent presentation at the
Shareholders’ Meeting, based, among other items, on the report of the external auditor.
That opinion must at least indicate 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
(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 issued in compliance with that law, the corporate by-laws, or by resolution of the
(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 corporate practices committee will have the general duty of overseeing and attenuating risks
during the course of business or to the benefit of a determined group of shareholders, subject to the
authorizations or policies issued by the Board of Directors; to supervise compliance with the legal provisions and stock market regulations that the Company must respect.
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(b) Additionally, the corporate practices committee will have the following functions and liabilities, 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
(ix)
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 assistance, 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 hold shares with voting rights, including limited or restricted voting rights, who
individually or jointly have 10.0% (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 eighty-one) 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 50.0% (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 20.0%
(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 20.0% (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) if 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 10.0% (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
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matter 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 20.0% (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 to 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 Shareholder’s 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 Year
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 seventy-two) 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 bylaws, 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 in the events 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
SHAREHOLDER STRUCTURE
As of today, CIE’s subscribed and paid-in capital is Ps. 3,398,401,343.00 (THREE BILLION, THREE
HUNDRED AND NINETY-EIGHT MILLION, FOUR HUNDRED AND ONE THOUSAND, THREE HUNDRED AND FORTY-THREE HISTORICAL MEXICAN PESOS 00/100), comprised of a total of
559,330,813 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE HUNDRED AND THIRTY THOUSAND, EIGHT HUNDRED AND THIRTEEN) common nominal Series B shares with full voting rights and
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) are Series B Class I shares, representing the fixed share capital, and 528,375,427 (FIVE HUNDRED AND TWENTY-EIGHT MILLION, THREE
HUNDRED AND SEVENTY-FIVE THOUSAND, FOUR HUNDRED AND TWENTY-SEVEN) are Series B
Class II shares, representing the variable portion of CIE’s share capital.
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 (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.
portion of the Company’s capital was approved in the amount of Ps. 405,879,249.79 (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 (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 update to CIE’s Shareholders’ Equity was approved by the CNBV through official document
number 153/30937/2011.
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
MILLION) common nominative shares, Series B, Class II, at a subscription price of Ps. 1.00 (ONE
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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 issue of 3,666,333 (THREE MILLION, SIX HUNDRED AND SIXTY-SIX
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 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 (THREE MILLION, SIX HUNDRED
AND SIXTY-SIX THOUSAND, THREE HUNDRED AND THIRTY-THREE) 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 Plan to Subscribe Shares and Options for Company Officers 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 (SIX THOUSAND, ONE HUNDRED
AND THREE) 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 Plan to Subscribe
Shares and Options for Company Officers 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.
Also as of this date, there are 559,330,813 (FIVE HUNDRED AND FIFTY-NINE MILLION, THREE
HUNDRED AND THIRTY THOUSAND, EIGHT HUNDRED AND THIRTEEN) shares in circulation, and
223,040 (TWO HUNDRED AND TWENTY-THREE THOUSAND AND FORTY) in the Company’s treasury,
and on January 10, 2006, the 126,910 (ONE HUNDRED AND TWENTY-SIX THOUSAND, NINE HUNDRED AND TEN) of the 349,950 (THREE HUNDRED AND FORTY-NINE THOUSAND, NINE HUNDRED
AND FIFTY) Series B Class II shares deposited in the Company’s treasury were assigned to five employees, which were subscribed and paid in by the Fiduciary at the same price, that is, Ps.19.76 (NINETEEN
147
AND 76/76 MEXICAN PESOS), and they constitute a second assignment in accordance with the same
Plan to Subscribe Shares and Options for Company Officers and Employees established in 2002.
The shares that currently represent the Company’s Shareholders’ Equity are distributed as follows:
BI
30,955,386
BII
528,598,467
There are also 223,040 (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.
148
2. SHARE PERFORMANCE ON THE SECURITIES MARKET
The following table (which information was obtained from several information distributers, including
the SI Exchange of the Mexican Stock Exchange) shows the performance on the BMV of CIE 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
(thousands of
shares)
2006
2007
2008
2009
33.50
34.90
30.52
9.45
16.80
26.00
9.45
5.50
33.50
30.50
9.45
6.75
32,738
22,000
3,651
14,678
2010
6.75
5.71
6.86
949
2011
7.00
5.00
5.90
1,492
1Q 10
2Q 10
3Q 10
4Q 10
1Q 11
2Q 11
3Q 11
4Q 11
6.75
6.67
6.50
6.72
6.86
7.00
6.50
6.50
6.10
6.01
5.75
5.71
5.00
6.00
5.60
5.60
6.63
6.50
6.10
6.86
5.97
6.10
6.03
5.90
155
176
184
434
193
567
470
259
Dec 11
Jan.12
Feb.12
Mar 12
6.50
6.50
6.50
6.50
5.90
5.70
5.75
6.00
5.90
6.00
6.19
6.00
161
24
206
1.143
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.
149
VI. RESPONSIBLE PARTIES
Mexico City, April 30, 2012
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. Víctor Manuel Murillo Vega,
Chief Financial Officer
and Head of Legal Affairs
150
Mexico City, April 30, 2012
We declare under penalty of perjury that the consolidated financial statements of
CORPORACION INTERAMERICANA DE ENTRETENIMIENTO, S.A.B. DE C.V. as of
December 31, 2011 and 2010 contained in this Annual Report were audited in accordance with
Generally Accepted Auditing Standards in Mexico. Furthermore, we report that, within the
scope of the work performed to prepare the financial statements referred to above, we have no
knowledge of relevant financial information of any financial information omitted or
misrepresented in this Annual Report or that it contains financial information that could mislead
investors. The undersigned express no opinion regarding any financial information related to
any interim period included in the Annual Report.
Sincerely,
[SIGNATURE]
____________________________
CPA Roberto Vargas Flores
Partner,
PricewaterhouseCoopers, S. C.
[SIGNATURE]
____________________________
CPA Humberto Pacheco Soria
Partner and Legal Representative,
PricewaterhouseCoopers, S. C.
151
Mexico City, Federal District, Mexico, April 20, 2012
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, 2011, 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.
Thus, during fiscal year 2011, the Committee met on six (6) occasions on the
following dates: January 25, February 28, April 14, July 11, August 15 and
October 24 (hereinafter the "Committee Meetings"). The Committee Chairman,
or in his absence, his Substitute, presided over those Meetings, and the
majority of the members of that Committee were present, assisted by the
Secretary and/or the Substitute Secretary of the Company's Board of Directors,
who prepared 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, as well as the head of CIE's Internal Audit area,
and on occasion third parties were invited to the Committee Meetings. It is
noted that the resolutions 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, 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
implanting internal control systems. On behalf of the Board of Directors, the
Committee has reviewed the audited, consolidated financial statements of the
Company and its subsidiaries at December 31, 2011. 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 directors of the Company. 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 2011, the
Company's accounting policies were not modified.
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, and it was concluded 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, 2011,
presented by the Company's External Auditor, were reviewed and
commented on;
viii.
Certain fees for complementary 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 Company’s Chief Executive
Officer, as well as the remuneration policies of certain directors, which,
during 2011, rose overall to the amount of $66,786,000.60 (sixty-six million,
seven hundred and eighty-six thousand and 60/100 Mexican pesos), and in
this act we state that there are no observations regarding the performance
of the 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, 2011, 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, 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,
Chairman of the Audit and Corporate Practices Committee
VII. ANNEX
152

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

Transcription

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