Fomento Economico Mexicano de CV : Registration of securities of foreign private issuers pursuant to section 12(b) or (g)

Table of Contents

As filed with the Securities and Exchange Commission on April 24, 2019

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

Commission file number 001-35934

Fomento Económico Mexicano, S.A.B. de C.V.

(Exact name of registrant as specified in its charter)

Mexican Economic Development, Inc.

(Translation of registrant's name into English)

United Mexican States

(Jurisdiction of incorporation or organization)

General Anaya No. 601 Pte.

Colonia Bella Vista

Monterrey, NL 64410 Mexico

(Address of principal executive offices)

Juan F. Fonseca

General Anaya No. 601 Pte.

Colonia Bella Vista

Monterrey, NL 64410 Mexico

(52-818)328-6167

[e-mail]

(Name, telephone, e-mail and/or facsimile number and

address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class:			Name of each exchange on which registered:
American Depositary Shares, each representing 10 BD Units, and each			New York Stock Exchange
BD Unit consisting of one Series B Share,
two Series D-B Shares and two Series D-L Shares,
without par value
2.875% Senior Notes due 2023			New York Stock Exchange
4.375% Senior Notes due 2043			New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

2,161,177,770 BD Units, each consisting of one Series B Share, two Series D-B Shares and two Series D-L Shares, without par value. The BD Units represent a total of 2,161,177,770 Series B Shares, 4,322,355,540 Series D-B Shares and 4,322,355,540 Series D-L Shares.

1,417,048,500 B Units, each consisting of five Series B Shares without par value. The B Units represent a total of 7,085,242,500 Series B Shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☒ Yes

☐ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934.

☐ Yes

☒ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). N/A

☐ Yes

☐ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be file by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes

☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" and emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to

Section 13(a) of the Exchange Act.

☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐	International Financial Reporting Standards as issued by the International Accounting Standards	Other ☐
	Board ☒

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17

☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes

☒ No

Table of Contents

INTRODUCTION		1
References		1
Currency Translations and Estimates		1
Forward-Looking Information		1
ITEMS 1-2.	NOT APPLICABLE	2
ITEM 3.	KEY INFORMATION	2
Selected Consolidated Financial Data		2
Dividends		4
Risk Factors		5
ITEM 4.	INFORMATION ON THE COMPANY	18
Overview		18
Corporate Background		19
Ownership Structure		21
Significant Subsidiaries		21
Business Strategy		22
Coca-Cola FEMSA		23
Overview		23
Business Strategy		25
Coca-Cola FEMSA's Territories		26
Coca-Cola FEMSA's Products		26
Packaging		27
Sales Volume and Transactions Overview		27
Seasonality		29
Marketing		30
Product Sales and Distribution		30
Principal Competitors		31
Raw Materials		33
FEMSA Comercio		35
Proximity Division		35
Health Division		39
Fuel Division		41
Heineken Investment		43
Other Businesses		43
Description of Property, Plant and Equipment		43
Insurance		44
Capital Expenditures and Divestitures		45
Regulatory Matters		45
ITEM 4A.	UNRESOLVED STAFF COMMENTS	54
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	54
		i

Table of Contents
Overview of Events, Trends and Uncertainties		54
Recent Developments		55
Effects of Changes in Economic Conditions		55
Operating Leverage		56
Critical Accounting Judgments and Estimates		56
Future Impact of Recently Issued Accounting Standards not yet in Effect		60
Operating Results		63
Liquidity and Capital Resources		74
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	83
Directors		83
Senior Management		91
Compensation of Directors and Senior Management		94
EVA Stock Incentive Plan		95
Insurance Policies		96
Ownership by Management		96
Board Practices		96
Employees		97
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	98
Major Shareholders		98
Related-Party Transactions		99
Voting Trust		99
Interest of Management in Certain Transactions		100
Business Transactions between Coca-Cola FEMSA, FEMSA and The Coca-Cola Company		101
ITEM 8.	FINANCIAL INFORMATION	102
Consolidated Financial Statements		102
Dividend Policy		102
Legal Proceedings		102
Significant Changes		103
ITEM 9.	THE OFFER AND LISTING	103
Description of Securities		103
Trading Markets		104
Trading on the Mexican Stock Exchange		104
ITEM 10.	ADDITIONAL INFORMATION	104
Bylaws		104
Taxation		111
Material Contracts		114
Documents on Display		121
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	122
Interest Rate Risk		122
	ii

Table of Contents
Foreign Currency Exchange Rate Risk		127
Equity Risk		131
Commodity Price Risk		131
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	131
ITEM 12A.	DEBT SECURITIES	131
ITEM 12B.	WARRANTS AND RIGHTS	131
ITEM 12C.	OTHER SECURITIES	131
ITEM 12D.	AMERICAN DEPOSITARY SHARES	131
ITEMS 13-14.	NOT APPLICABLE	132
ITEM 15.	CONTROLS AND PROCEDURES	132
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	133
ITEM 16B.	CODE OF ETHICS	133
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	133
ITEM 16D.	NOT APPLICABLE	134
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	134
ITEM 16F.	NOT APPLICABLE	135
ITEM 16G.	CORPORATE GOVERNANCE	135
ITEM 16H.	NOT APPLICABLE	136
ITEM 17.	NOT APPLICABLE	136
ITEM 18.	FINANCIAL STATEMENTS	136
ITEM 19.	EXHIBITS	137
	iii