GRUPO BIMBO, S.A.B. DE C.V. - MZGroup · GRUPO BIMBO, S.A.B. DE C.V. Annual Report filed pursuant...

ANNUAL REPORT OF

GRUPO BIMBO, S.A.B. DE C.V.

Annual Report filed pursuant to the general provisions applicable to securities issuers and other participants in the securities’ market (disposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores) for the fiscal year ended on December 31, 2009. Name of the issuer: Grupo Bimbo, S.A.B. de C.V. Domicile: Prolongación Paseo de la Reforma No. 1000, Colonia Peña Blanca Santa Fe, C.P. 01210, México, D.F. The address of Grupo BImbo, S.A.B. de C.V. in the Internet is www.grupobimbo.com, provided, however, that the information contained therein is not part of this Annual Report. Outstanding shares: the authorized capital stock of Grupo Bimbo, S.A. de C.V. consists of Series “A” common shares, ordinary, nominative, without expression of nominal value, registered under the Securities Section of the National Securities Registry and listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de C.V.) Ticker Symbol: “BIMBO”. The registration in the National Securities Registry does not constitute a certification as to the investment quality of the securities, the solvency of the issuer, or the accuracy or veracity of the information contained in this Annual Report, nor does it validate the acts, if any, that were performed in violation of the laws. Mexico City, Federal District, June 25, 2010

RELEVANT INFORMATION WITH RESPECT TO THE CERTIFICADOS BURSATILES ISSUED

BY GRUPO BIMBO, S.A.B. DE C.V.

Ticker Symbol BIMBO 02-2 BIMBO 09 BIMBO 09-2 BIMBO 09U

Amount

$750,000,000

$5,000,000,000 $2,000,000,000 706,302,200 UDIS

Number of series in

which the issuance

is divided

N.A.

N.A. N.A. N.A.

Issuance Date May 17, 2002 June 5, 2009 June 5, 2009 June 5, 2009

Maturity Date May 3, 2012 June 9, 2014 June 6, 2016 June 6, 2016

Issuance Period 3,639 days 1,820 days 2,548 days 2,548 days

Interest rate

Fixed gross annual interest on their face value at an interest rate of 10.15%

Gross annual interest on their face value

which shall be calculated by adding

1.55 percentage points to the 28 day term

Interbank Equilibrium Interest Rate (Tasa de Interés Interbancaria

de Equilibrio)

Fixed gross annual interest on their face

value at an interest rate of 10.60%

Fixed gross annual interest on their face value at an interest

rate of 6.05%.

Periodicity in

payment of interest

Aproximately every six months, beggining on November 14, 2002

Every 28 days beggining on July 13,

2009

Every 182 days beggining on

December 14, 2009

Every 182 days beggining on

December 14, 2009

Place and manner

of payment of

principal and

Interest

The principal and interest due will be paid in cash at the relevant maturity date, and on each of the interest payment dates respectively, by electronic funds transfer, at the registered office of S.D. Indeval, S.A. de C.V., Institución para el Depósito de Valores, upon delivery of the certificate issued by the depositary or, as the case may be, at the Company’s offices.

The principal and interest due will be paid on their maturity date, by electronic funds transfer, at the registered office of S.D. Indeval

Institución para el Depósito de Valores, S.A. de C.v., or at the registered office of the Issuer.

Subordination of

the certificates N.A. Lien limitations / Pari Passu status

Amortization and

prepayment.

The amortization of the Certificados Bursátiles

shall be in a single payment on the maturity date, upon delivery of the

certificate or evidence issued by S.D. Indeval,

S.A. de C.V., Institución

A single payment on the relevant maturity

date.

A single payment on the relevant maturity date. The Company shall have the right to

prepay, all (but not less) than all of the Certificados Bursátiles on any date, before the Maturity Date, as defined in the Supplement

(Make-Whole).


para el Depósito de Valores.

Guarantee

The Certificados Bursátiles are unsecured; therefore they do not have any specific guarantee. On

June 5, 2009, Grupo Bimbo and its subsidiaries

Bimbo, S.A. de C.V., Barcel, S.A. de C.V.,

Bimbo Bakeries USA, Inc. and Bimbo Foods, Inc.,

entered into an agreement (Estipulación a Favor de Terceros) whereby they

agreed to guarantee, jointly and severally,

unconditionally and irrevocably (except if the consent of the majority of

the holders of the Certificados Bursatiles present in terms of the

relevant certificate and the applicable law is met) the full and punctual payment of any principal or interest

payable under the Certificados Bursátiles.

See “Recent Events” following described in this

Annual Report.

The Certificados Bursátiles are unsecured and shall be guaranteed (avalados) by the following subsidiaries Bimbo, S.A. de C.V., Barcel, S.A. de C.V., Bimbo Bakeries USA, Inc. and Bimbo Foods, Inc. The Certificados Bursátiles must be guaranteed (avalados) by Subsidiaries

of Grupo Bimbo that, individually or jointly, reach the Minimum Guarantors Requirement. At any time during the effectiveness of the Certificados Bursátiles and without the consent of the Holders of the Certificados Bursátiles or the Common Representative, Grupo Bimbo may release any Guarantor of its payment obligations pursuant to the Certificados Bursátiles, as well as substitute any Guarantor or include new Guarantors, as long as after such release, addition or substitution,

the Minimum Guarantors Requirement is met, based on the most recent available audited annual consolidated financial statements.

For purposes of the above, “Minimum Guarantors Requirement” means, as of the last day of each fiscal year, that the Guarantor’s EBITDA represents at least seventy five percent (75%) of Grupo Bimbo´s

Consolidated EBITDA for such fiscal year. The abovementioned will be calculated based on the most recent available audited annual

consolidated financial statements of Grupo Bimbo.

Trustee N.A.

Rating

Standard & Poor’s, S.A. de C.V. “mxAA+”

Fitch México, S.A. de C.V. “AA+(mex)”

Standard & Poor’s, S.A. de C.V. “mxAA+”

Fitch México, S.A. de C.V. “AA+(mex)”

Moody´s de México, S.A. de C.V. “Aa1.mx”

Common

Representative

Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotia Inverlat

Banco INVEX, S.A., Institución de Banca Múltiple, INVEX

Depositary S.D. Indeval, S.A. de C.V., Institución para el Depósito de Valores

Tax treatment

The withholding rate of the income tax applicable with respect to the interests paid

in accordance with the Certificados Bursatiles is subject to, for individuals and entities considered as

residents of Mexico for tax purposes in: (i) Mexico, article second transitory, paragraph LXXII, and

article 160 of the Income Tax Law (Ley del Impuesto Sobre la Renta); and (ii) abroad, article 195 of the

The withholding rate of the income tax applicable, as of the date of the Supplement, to the interest paid in accordance with the Certificados Bursatiles is subject to: (i) for individuals and entities considered as residents of Mexico for tax purposes, to the provisions of articles 58, 160 and other applicable provisions of the Income Tax Law (Ley del

Impuesto Sobre la Renta) in effect; and (ii) for individuals and entities considered as non-Mexican residents for tax purposes, to the provisions of articles 179, 195 and other applicable provisions of the Income Tax Law in effect. Potential investors shall consult their tax advisors with respect to the tax consequences of their investment in the Certificados Bursatiles, including the application of specific rules applicable to their particular situation. The current fiscal regime may be amended during

the term of the Program and while the Issuance is in effect.


Income Tax Law.

TABLE OF CONTENTS

Página 1) GENERAL INFORMATION

a) Summary of Terms and Definitions……………………………………….……. b) Executive Summary………………………………………………………………… c) Risk Factors………………………………………………………………… d) Other Securities…………………………………………………………………..… e) Relevant Changes to the Security Rights Registered in the RNV…...… f) Use of Proceeds…………...………………………………………………… g) Public Documents…………………………………………………

1 4

10 18 21 21 21

2) THE COMPANY

a) Company’s History and Development………………………………………………. b) Business Description……………………………………………………………

i) Principal Activity………………………...……………………………… ii) Distribution Channels.…………………………………………...…….. iii) Patents, Trademarks, Licenses and other Contracts ……………………….. iv) Main Customers………………………..……………..………………. v) Applicable Legislation and Tax Situation…………………………… vi) Human Resources………………………..…………………………… vii) Environmental Performance……….………………………………...… viii) Market Information…………………..…………………………….. ix) Corporate Structure…………………………………………………… x) Main Assets Description.………………………………………………. xi) Judicial, Administrative or Arbitration Processes………………………. xii) Shares Representing the Capital Stock………… …………………… xiii) Dividends………………………………………………………………….

22 32

32 49 51 53 53 59 60 61 66 66 71 72 72

3) FINANCIAL INFORMATION

a) Selected Financial Information……………………………………………. b) Financial Information per Business, Geographic Zone and Exportation

Sales…………………………………………………………………………. c) Report on Significant Debt…………………………………………….……. d) Management’s Discussion and Analysis of the Company’s Financial Conditions and

Results of Operation……………………………….. i) Results of Operation…………………………………………….. ii) Financial Position, Liquidity and Capital Resources………………... iii) Internal Control……………………………………………………………..

e) Critical Accounting Policies…………………………

74

82 82

85

85 90 92

93

4) ADMINISTRATION

a) Independent Auditors……………………………………………………………… b) Transactions with Related Persons and Conflicts of Interests……………. c) Administrators and Shareholders…………………………………………………….

96 96 97

TABLE OF CONTENTS

Página d) Corporate Bylaws and Other Agreements……………………………………………

108

5) Capital Market

a) Share Holding Structure……………………………………………………………… b) Share Behavior in the Securities Market…………………………... c) Market Maker............................................................................................

113 113 114

6) RESPONSIBLE PERSONS

Responsible Persons...…………………………………………………………...………

115

7) SCHEDULES

a) Audited Committee Opinion with respect to the General Director’s Report

corresponding to the year ended as of December 31, 2009 b) Financial Audited Statements for the years ended as of December 31, 2009 and

2008....................................................................................................... c) Audited Committee Report corresponding to the year ended as of December 31, 2009

No underwriter, person appointed as an attorney-in-fact to carry out operations with the public, or

any other person, has been authorized to disclose any information or make any representation that is

not contained in this Annual Report. As a consequence of the above, any information or

representation that is not contained in this Annual Report must be understood as not authorized by

Grupo Bimbo, S.A.B. de C.V.

In addition, unless otherwise indicated, the Company’s information contained herein is reported as

of December 31, 2009

1) GENERAL INFORMATION

a) SUMMARY OF TERMS AND DEFINITIONS

Unless otherwise indicated by the context, for purposes of this Annual Report, the following terms shall have the meaning attributed thereto as follows, which shall be applicable both to singular and plural:

Terms Definitions

“Principal Shareholders” Group of shareholders holding the majority of BIMBO’S capital stock shares,

which are Normaciel, S.A. de C.V., Promociones Monser, S.A. de C.V., Banco Nacional de Mexico, S.A. as trustee, Philae, S.A. de C.V., Distribuidora Comercial Senda, S.A. de C.V., and Marlupag, S.A. de C.V.

“AIB” American Institute of Baking.

“BASC” Business Anti-Smuggling Coalition.

“BBU” BBU, Inc., (Bimbo Bakeries USA), subsidiary of Grupo Bimbo that consolidates transactions in the United States of America.

“BIMBO”, “Company”, “Issuer”, “Group” or “Grupo Bimbo”

Grupo Bimbo, S.A.B. de C.V., and, when the context so requires, including its consolidated subsidiaries.

“BIMBO XXI” Project for the implementation of a rationalization of resources system ERP (Enterprise Resource Planning), data base and support systems.

“BMV” Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de C.V.)

“Bushel” English capacity measure for grains and other solid products.

“Notes” / “Certificados Bursatiles”

Negotiable instruments issued by the Company in accordance with the Securities Market Law, under the Notes Program (Programa de Certificados Bursátiles) and which are outstanding.

“CETES” or “Cetes” Federal Treasury Certificates.

“CFC” Federal Antitrust Commission.

“China” Popular Republic of China.

“CIF” or “Integral financial result”

Integral Financing Cost.

“CINIF” Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera, A.C. Body responsible for the operation and in charge of issuing the NIF.

“CNBV” National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores).

“Fast food” Food ready to be eaten.

“Board of Directors” or “Board”

Board of Directors of BIMBO.

“Datamonitor” An independent corporation engaged in the analysis of information and markets.

“DNV” Det Norske Veritas.

2

Terms Definitions

“Dollars” or “dollars” Currency legal tender in the USA

“USA” United States of America.

“El Globo” Gastronomía Avanzada Pastelerías, S.A. de C.V.

“ERP” Enterprise Resource Planning.

“Audited Financial Statements”

The Company’s consolidated financial statements, audited as of December 31, 2009 and 2008, which were prepared in accordance with the Financial Reporting Standards, as well as the respective notes, which are attached to this Annual Report.

“Corporate Bylaws” Corporate Bylaws of BIMBO as amended from time to time.

“Europe” Countries of the European Union where BIMBO carries out transactions.

“FDA” Food and Drug Administration, a USA governmental agency.

“George Weston” George Weston Bakeries, Inc., Entenmann’s Products Inc., Entenmann’s, Inc. an Entenmann’s Sales Company, Inc. (TSX: WN)

“GFTC” Guelph Food Technology Centre.

“GMP” Good Manufacturing Practices.

“GYRU” Galaz, Yamazaki, Ruiz Urquiza, S.C., member of Deloitte Touche Tohmatsu, the Company’s Independent Auditors.

“HACCP” Hazard Analysis and Critical Control Point.

“IETU” Unique Rate Corporate Tax (Impuesto Empresarial a Tasa Única).

“IFC” International Finance Corporation.

“IMNC” Instituto Mexicano de Normalización y Certificación, A.C.

“Indeval” S.D. Indeval Institución para el Depósito de Valores, S.A. de C.V.

“INPC” National Consumer Price Index (Índice Nacional de Precios al Consumidor).

“ISO” International Organization for Standardization.

“ISR” Income Tax (Impuesto sobre la Renta).

“IVA” Value Added Tax (Impuesto al Valor Agregado).

“KPMG” Klynveld, Peat, Marwick and Goerdeler Cárdenas Dosal S.C., the Company’s Independent Auditors for the subsidiaries located abroad in 2007 and 2006, except for Central America, as well as for the subsidiary company Tecebim, S.A. de C.V.

“Latin America” Central and South America; comprises the countries of this geographical area where BIMBO carries out transactions.

“Libor” London Interbank Offered Rate.

“LMV” Securities Market Law (Ley del Mercado de Valores).

“m2” Square meters.

“Mexico” United Mexican States.

“MFRS” Financial Reporting Standards (Normas de Información Financiera) issued by CINIF.

“NOM” Mexican Official Standard (Norma Oficial Mexicana).

3

Terms Definitions

“OLA” Organización Latinoamérica, division in charge of coordinating the Group’s

transactions in Argentina, Brazil, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela.

“Packaged bread” Sliced and packed bread.

“Cake” Cake in individual presentation.

“Pesos”, “pesos” or “$” Currency of legal tender in Mexico.

“GDP” Gross Domestic Product.

“PROFEPA” Federal Environment Protection Advocate (Procuraduría Federal de Protección al Ambiente).

“PTU” Employee Profit Sharing (Participación de los Trabajadores en las Utilidades).

“Annual Report” This Issuer’s Annual Report, prepared in accordance with the general provisions applicable to securities issuers and other participants in the securities’ market (disposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores) issued by CNBV.

“RNV” National Securities Registry (Registro Nacional de Valores).

“TIIE” Interbanking Equilibrium Interest Rate (Tasa de Interés Interbancaria de Equilibrio).

“NAFTA” North America Free Trade Agreement.

“EBITDA” EBITDA represents income after general expenses plus depreciation and amortization. The Company’s management uses this measure as an indicator of our operating results and financial condition; however it shall not be taken into consideration in isolation, as an alternative to net income, as an indicator of the operating performance or as a substitute for analysis of the results as reported under MFRS, since, among others: (i) it does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; (ii) it does not reflect changes in, or cash requirements for, the working capital needs; (iii) it does not reflect our interest expense; and (iv) it does not reflect any cash income taxes we may be required to pay; Because of the above, the EBITDA measure should not be considered a measure of discretionary cash available to invest in the growth of the Company’s business or as a measure of cash that will be available to us to meet the Company’s obligations. EBITDA is not a recognized financial measure under MFRS and it may not be comparable to similar titled measures presented by other companies in our industry because not all companies use the same definition. As a result, it shall be relied primarily on the MFRS results and use EBITDA measurement only as a supplement.

“USDA” Food Safety and Inspection Service of the U.S. Department of Agriculture, a governmental agency of the USA

“WFI” Weston Foods, Inc., bakery business in the USA that was owned by George Weston Limited and which BIMBO acquired on January 21, 2009.

4

Unless otherwise specified, the financial information contained in this document is expressed in million Mexican pesos and was prepared in accordance with MFRS in Mexico.

b) EXECUTIVE SUMMARY This chapter contains a brief summary of the information provided for in this Annual Report. Since it is a summary, it is not intended to contain all substantial information contained in such Report. 1. The Company Grupo Bimbo is one of the largest bakery companies in the world and one of the largest food companies in the American continent. The Company is engaged in the production, distribution and commercialization of sliced and packaged bread, sweet bread, home-made type cakes, cookies, cereal bars, candies, chocolates, sweet and salted snacks, wheat tortillas, tostadas, goat milk caramel “cajeta” and fast food, among others. Likewise, the Company has one of the world’s most extensive distribution networks, with more than 39,000 routes and a workforce exceeded 100,000 collaborators. Through the development of brands, fresh and quality products and continuous innovations, the Group has obtained a leading participation in the bakery products market in the USA, Mexico and the majority of the Latin America countries in which it operates. As indicated by Datamonitor y and the Groups internal market surveys, as of 2008, the Group was ranked first or second in its main markets (USA, Mexico and Latin America) in all its categories: sliced and packaged bread, sweet bread, cakes, cookies, salted snacks, confectionery goods, tostadas and wheat tortillas. The Group operates in 17 countries, including USA, Mexico, Latin America and, to a lesser extent, China. Currently, the Group operates 98 production plants worldwide, with capacity to produce commercial amounts of a variety of products in its principal markets. Averagely, in the USA the Group produces 126 million muffins of the Thomas’ brand on monthly basis and in Mexico it produces more than 35 million Gansitos (cakes) on a monthly basis, two of its most significant brands. In order to ensure the freshness and quality of its products, the Group has developed an extensive direct distribution network that has one of the largest distribution fleets in the American continent. As of December 31, 2009, the Group’s direct distribution network included more than 39,000 distribution routes, spread in more than 1,000 distribution centers and that reached more than 1.3 million sale points. The Group considers that this distribution network is one of its principal competitive advantages. The following table shows certain lines of the audited consolidated financial statements of Grupo Bimbo upon closing of each of the years indicated:

As of December 31,

2009 2008 2007

Net Sales 116,353 82,317 72,294

Profit after General Expenses 12,054 7,328 6,408

EBITDA 15,837 9,829 8,647

Majority Net Profit 5,956 4,320 3,811

Note: Figures in million pesos. The Group’s general strategy is based on its corporate mission, that is, the development of its brands’ value, and fundamentally, in the commitment to be a highly productive company and fully human, as well as innovative, competitive, oriented to its clients’ and consumers’ satisfaction, leader at an international level in the bakery industry and with a long term vision. See “The Company – Business Description” below.

5

Since 1980, Grupo Bimbo shares are traded in the BMV under the ticker symbol “BIMBO”. 2. Financial Information

The Audited Financial Statements have been prepared in accordance with MFRS in Mexico. Unless otherwise indicated, all information contained in the Audited Financial Statements included in this Annual Report has been expressed in million pesos. Figures corresponding to 2009 and 2008 are shown in nominal pesos of the date when generated, except for figures of some countries the inflation of which in the preceding three years was considered as hyper-inflationary and that, consequently, require to be re-stated at the closing currency and exchange rate. The updating of this figures effects are not relevant on the consolidated financial statements or on the information shown in this Annual Report. On the other hand, figures corresponding to 2007 are expressed in constant purchasing power pesos as of December 31, 2007. For a better comprehension, the summary on financial information shown herein below shall be reviewed together with the Audited Financial Statements and the Updated Audited Financial Statements and the respective notes thereof. Likewise, such summary shall be reviewed with all the explanations provided by the Group’s Administration in the section “Financial Information” of this Annual Report especially in the section “Management’s Discussion and Analysis of the Company’s Financial Condition and Results of Operation”.

Consolidated Statement of Income

As of December 31 of: 2009 2008 2007 Net sales (1) 116,353 82,317 72,294

Cost of Sales 54,933 40,293 34,095

Gross Profit 61,420 42,024 38,199 0 0 0

Distribution and Selling Expenses 41,724 29,621 27,128

Administrative Expenses 7,642 5,075 4,663

General Expenses 49,366 34,696 31,791

Income After General Expenses 12,054 7,328 6,408 0 0 0

Other Income (Expenses) Net (613) (8) 72

Employee Profit Sharing 563 467 467

Other Total Income and (Expenses) Net (1,176) (475) (395)

Net Interests (2,318) (461) (462)

Exchange (Loss) Income 207 (153) (106)

Monetary Position Gain 99 75 334

Consolidated Financial Statement (2,012) (539) (234) 0 0 0

Equity in Income of Associated Companies 42 24 60

Income befote Income Taxes 8,908 6,338 5,839 0 0

Income Tax 4,041 2,099 1,692

Deferred Income Tax (1,214) (205) 233

Provisions 2,827 1,894 1,925 0 0

Income before Discontinued Operations 6,081 4,444 3,914 0 0

Net Income 6,081 4,444 3,914 0 0 0

Controlling Stockholders 5,956 4,320 3,811

Non Controlling Stockholders 125 124 103

Basic Earnings per Common Shares 5. 5.07 3.6 3.67 3 3.24 Dividend per Share 5. 0.46 3 0.46 3 0.40

Income before Financing, Interests, Depreciation and Amortization

15,837 9,829 8,647

(1) During 2009,2008 and 2007, the net sales of Bimbo, S.A. de C.CV., and Barcel, S.A. de C.V., in Mexico represented

approximately 45%, 63% and 64%, respectively, of the consolidated net sales (see Note 2 of the Audited Financial Statements).

Consolidated Balance Sheet

As of December 31 of: 2009 2008 2007

Cash and Cash Equivalents 4,981 7,339 3,902

Accounts and Notes Receivable – Net 9,605 6,874 4,818

Inventory, Net 2,969 2,573 1,845

Payments in Advance 499 431 521

Derivative Financial Instruments 177 204 92

Total Current Assets 18,231 17,421 11,178

Notes receivable from independent operators 1,940 451

Property, Plant and Net Equipment 32,763 26,039 23,504

Stock Investments in Associated Companies and Liabilities 1,479 1,416 1,157

Deferred Income Taxes 635 1,417 1,078

Goodwill - Net 20,394 6,313 3,890

Intangible Assets, Net 19,602 4,951 3,491

Intangible Assets for Employees Retirement Benefits 298

Other Assets Net 1,669 498 647

Total Assets 96,713 58,506 45,243

Payable Accounts to Suppliers 5,341 4,881 4,296

Short Term Debt and Current Outstanding Portion of Long

Term Debt 4,656 2,054 2,605

Other Accounts Payable and Accrued Liabilities 2,798 1,499 1,560

Payable Accounts to Related Parties 238 584 470

Income Tax 3,272 1,941 1,470

Employee Profit Sharing 1,242 524 467

Derivative Financial Instruments - 47 -

Total Outstanding Debt 17,547 11,530 10,868

Long Term Debt (1) 32,084 9,079 3,419

Employees Benefits and Social Security 4,644 982 1,099

Employee Profit Sharing Deferred 290 351 29

Deferred Income Taxes (2) 266 1,257 1,289

Other Long Term Debt 925 333 42

Total Liabilities 55,756 23,532 16,746


Non – Controlling Stockholders 853 710 581

Total Capital Stock 40,957 34,974 28,497

Consolidated Balance Sheet Notes

(1) Some financial institutions debt provides certain restrictions and obligations to the Company’s financial structure (see Note 11 of the Audited Financial Statements).

(2) See Note 17 of the Audited Financial Statements.

8

Other Financial Data

As of December 31 of: 2009 2008 2007

Depreciation and Amortization 3,783 2,501 2,239

Resources Generated by Operating Activities - - 6,030

Resources Used in Financing Activities - - (3,012)

Resources Used in Investment Activities - - (4,806)

Balance at the End of the Year - - 3,902

Net Cash Flows from Operating Activities 13,912 8,850 -

Net Cash Flows from Investment Activities (38,398) (7,160) -

Net Cash Flows from Financing Activities 22,143 1,734 -

Cash and Cash Equivalents at the End of Period 4,981 7,339 -

Margin After General Expenses 10.4% 8.9% 8.9%

EBITDA Margin 13.6% 11.9% 12.0%

Net Margin 5.2% 5.4% 5.4%

Assets Return 6.3% 7.6% 8.7%

Return on Invested Capital 12.0% 12.0% 13.2%

EBITDA 15,837 9,829 8,647

Total Debt / EBITDA 2.32 1.13 0.70

Net Debt / EBITDA 2.01 0.39 0.25

EBITDA / Interest Expense 4.84 12.07 9.60

3. Capital Markets

The authorized capital stock of Grupo Bimbo consists of Series “A” common shares, nominative, without expression of nominal value, registered in the Securities Section of the RNV. Such shares were publicly traded in the BMV on February 1980, when the Company carried out its initial public offering. Since February 1, 1999 BIMBO is part of the Price and Quotation Index (Índice de Precios y Cotizaciones) of the Mexican Stock Exchange (BMV). As of the date of this Annual Report, BIMBO share is classified as high trading volume, in accordance with the Trading Activity Index published by the Mexican Stock Exchange (BMV). The following table shows the maximum, minimum and closing adjusted quoting prices in pesos, as well as the operation volume of BIMBO’S Series “A” shares in the BMV, during the indicated periods.

9

Year ended on

December 31

Pesos per share Serie “A” Operation volume of

Series “A” shares Maximum Minimum Closing

2005 38.70 26.00 37.04 144,711,400 2006 54.99 30.44 54.00 177,063,600 2007 81.69 45.51 65.05 115,845,600 2008 71.98 49.80 58.32 115,294,300 2009 91.96 39.90 86.55 209,962,000

Source: Bloomberg.

10

RISK FACTORS

The risks factors following described may adversely affect the development, financial condition and/or results of operations of the Company, as well as affect the price of any securities of the Company.

Risks Related to the Company’s Business and Industry

Increases in prices and shortages of raw materials, fuels and utilities could cause our costs to increase.

Raw materials, including, among others, wheat flour, sugar, plastics used to package the Group’s products and edible oils and fats, are subject to substantial price and supply fluctuations. The prices for raw materials are influenced by a number of factors, including the weather, crop production, transportation and processing costs, government regulation and policies and worldwide market supply and demand for raw materials. The prices of many commodities have recently been at record levels, and commodity markets are experiencing unprecedented volatility. Any substantial increase in the prices of raw materials that is not reflected as an increase of the price of the Company’s products may adversely affect the Group’s financial condition, results of operations and cash flows. Any reduction in sales revenue as a result of competitive pressures would negatively affect profit margins and, if the Group’s sales volumes fail to grow sufficiently to offset any reduction in margins, the Group’s results of operations will suffer.

In addition, the Group’s also relies on utilities to operate its business. For example, the Group’s bakeries and other facilities use natural gas, liquefied petroleum gas and electricity to operate. In addition, the Company’s distribution operations use gasoline and diesel fuel to deliver our products. For these reasons, substantial future increases in prices for, or shortages of, these fuels or electricity could adversely affect the Group’s financial condition, results of operations and cash flows.

The Group enters into wheat, natural gas and other hedging arrangements to cover its exposure from increases in prices. These contracts could cause the Group to pay higher prices for raw materials than those available in the spot markets.

Competition could adversely affect our results of operations.

The baked goods industry is highly competitive and increased competition could reduce the market share or force the Group to reduce prices or increase promotional spending in response to competitive pressures, all of which would adversely affect the results of operations of the Company. Competitive pressures may also restrict the Group’s ability to increase prices, including in response to commodity and other cost increases. Competition is based on product quality, price, customer service, brand recognition and loyalty, effective promotional activities, access to retail outlets and sufficient shelf space and the ability to identify and satisfy consumer preferences.

The Group competes with large national and transnational companies, local traditional bakeries, smaller regional operators, small family owned bakeries, supermarket chains with their own bakeries, grocery stores with their own in-store bakery departments or private label products and diversified food companies. To varying degrees, the Group’s competitors may have strengths in particular product lines and regions as well as greater financial resources. The Group expects that it will continue to face strong competition in all of the Group’s markets and anticipate that existing or new competitors may broaden their product lines and extend their geographic scope.

In particular, from time to time, the Group experiences price pressure in certain of its markets as a result of the competitors’ promotional pricing practices, which could be exacerbated by excess industry capacity. As a result, the Group may need to reduce the prices for some of its products to respond to competitive and customer pressures and to maintain market share. Such pressures also may restrict the ability to increase prices in response to raw material and other cost increases. The Group’s competitors may also improve their competitive position by introducing new products or products that can be substituted for the Group’s products, improving manufacturing processes or expanding the capacity of manufacturing facilities. If the Group is unable to maintain its pricing structure and keep pace with its competitors’ product and manufacturing process initiatives, the results of operations and financial condition could be materially adversely affected.

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The reputation of the brands and intellectual property rights are key to the Group’s business.

The substantial majority of the Group’s net sales derive from sales of products under brands that the Group owns. The brand names are a key asset of the Group business. Maintaining the reputation of the brands is essential to our ability to attract and retain retailers, consumers and associates and is critical to the Group’s future success. Failure to maintain the reputation of the brands could have a material adverse effect on the Group’s business, results of operations and financial condition. If we fail, or appear to fail, to deal with various issues that may give rise to reputational risk, it could harm the business prospects. These issues include, but are not limited to, appropriately dealing with potential conflicts of interest, legal and regulatory requirements, safety conditions in operations, ethical issues, money-laundering, privacy, record-keeping, sales and trading practices and the proper identification of the legal, reputational, credit, liquidity and market risks inherent in the Group’s business.

The principal trademarks are registered in the countries in which the Group uses such trademarks. While the Group intends to enforce its trademark rights against infringement by third parties, the actions to establish and protect the Group’s trademark rights may not be adequate to prevent imitation of its products by others or to prevent others from seeking to block sales of the Company’s products on grounds that the Group’s products violate their trademarks and proprietary rights. If a competitor were to infringe on the Group’s trademarks, enforcing our rights would likely be costly and would divert resources that would otherwise be used to operate and develop the Group’s business. Although we intend to actively defend the brands and trademark rights, the Group may not be successful in enforcing our intellectual property rights. See “The Company – Business Description – Patents, Licenses, Brands and Other Contracts.”

The Group relies on retailers and if they perform poorly or give preference to competing products, the

financial performance of the Group could be negatively affected.

The Group derives significant operating revenues from sales to retailers. The Group sells its products to non-traditional retailers, such as supermarkets and hypermarkets, and to traditional retailers, such as small family-owned stores. These retailers, in turn, sell the Group’s products to consumers. Any significant deterioration in the business performance of the major customers could adversely affect the sale of products. Retailers also carry products that directly compete with the Group’s products for retail space and consumer purchases. There is a risk that retailers may give higher priority to products of, or form alliances with, the Group’s competitors or their own private labels other than with respect to products that the Group produces for such private labels. If retailers fail to purchase the Group’s products, or provide our products with promotional support, our financial performance could be adversely affected.

Inability to anticipate changes in consumer preferences may result in decreased demand for products.

Our success depends in part on our ability to anticipate the tastes and dietary habits of consumers and to offer products that appeal to their preferences. Changes in consumer preferences combined with our failure to anticipate, identify or react to these changes could result in reduced demand for our products, which could in turn adversely affect our financial condition, results of operations and cash flows. In particular, demand for our products could be impacted by the popularity of trends such as low carbohydrate diets and by concerns regarding the health effects of trans fats, sugar content and processed wheat.

In addition, the Group’s success depends in part on its ability to enhance product portfolio by adding innovative new products in fast growing, profitable categories as well as increasing market share in the existing product categories. Introduction of new products and product extensions requires significant research and development as well as marketing initiatives. If the Group’s new products fail to meet consumers’ preferences, then the return on that investment will be less than anticipated and the Group’s strategy to grow net sales and profits may not be successful.

Further consolidation in the retail food industry may adversely impact profitability.

As supermarket chains continue to consolidate and as mass merchants gain scale, the Group’s larger customers may seek more favorable terms for their purchases of our products, including increased spending

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on promotional programs. Sales to the Group’s larger customers on terms less favorable than the current terms could adversely affect the Group’s financial condition, results of operations and cash flows.

Health and product liability risks related to the food industry could adversely affect the Group’s

business, results of operation and financial condition.

We are subject to risks affecting the food industry generally, including risks posed by contamination or food spoilage, evolving nutritional and health-related concerns, consumer product liability claims, product tampering, the availability and expense of liability insurance and the potential cost and disruption of product recalls. We may also become involved in lawsuits and legal proceedings if it is alleged that the consumption of any of the Group’s products causes injury, illness or death. A product recall or an adverse result in any such litigation could adversely affect the Group’s financial condition, results of operations and cash flows.

Any actual or perceived health risks associated with the Group’s products, including any adverse publicity concerning these risks, could cause customers to lose confidence in the safety and quality of the Group’s products. Even if the products are not affected by contamination, the industry may face adverse publicity if the products of other producers become contaminated, which could result in reduced consumer demand for the Group’s products in the affected category. In addition adverse publicity about the safety and quality of certain food products, such as the publicity about foods containing genetically modified ingredients, whether or not valid, may discourage consumers from buying the Group’s products or cause production and delivery disruptions.

We maintain systems designed to monitor food safety risks throughout all stages of the production process. However, the Group’s systems and internal policies may not be fully effective in mitigating risks related to food safety. Any product contamination could have a material adverse impact on the Group’s business, results of operations and financial condition.

Changes in health-related regulations could have a negative impact on the Group’s business.

The Group’s U.S. products and packaging materials are regulated by the U.S. Food and Drug Administration, or FDA, or, for products containing meat or poultry, the Food Safety and Inspection Service of the U.S. Department of Agriculture, or USDA. These agencies enact and enforce regulations relating to the manufacturing, distribution and labeling of food products. In addition, various states regulate the Group’s U.S. operations by licensing plants, enforcing federal and state standards for selected food products, grading food products, inspecting plants and warehouses, regulating trade practices related to the sale of food products and imposing their own labeling requirements on food products.

The Group’s operations in Mexico are subject to extensive laws, rules, regulations and standards of hygiene and quality regulation and oversight by designated authorities such as the Secretary of Health (Secretaría de Salud), the Secretary of Agriculture, Farming, Rural Growth, Fish and Food (Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación), the Federal Commission for Protection from Sanitary Risks (Comisión Federal para la Protección contra Riesgos Sanitarios) and the Secretary of the Economy (Secretaría de Economía) and other authorities regarding the processing, packaging, labeling, storage, distribution and advertising of the Group’s products.

The Group is subject to comparable hygiene and quality local laws and regulations in other countries in which we operate. Government policies and regulations in the United States, Mexico and the Group’s other markets may adversely affect the supply of, demand for, and prices of, our products, restrict our ability to do business in existing and target local and export markets and could adversely affect the Group’s results of operations and financial condition. In addition, if the Group is required to comply with future material changes in food safety or health-related regulations, the Group could be subject to material increases in operating costs and also be required to implement regulatory changes on schedules that cannot be met without interruptions in the Group’s operations. Increased governmental regulation of the food industry, such as proposed requirements designed to enhance food safety, impose health-related requirements or to regulate imported ingredients, could increase the Group’s costs and adversely affect the profitability.

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The Group may not achieve the targeted cost savings and efficiencies from cost reduction initiatives.

The Group’s success depends in part on its ability to be an efficient producer in a highly competitive industry. The Group periodically makes investments in its operations to improve the production facilities and reduce operating costs.

The Group may experience operational issues when carrying out major production, procurement, or logistical changes and these, as well as any failure by us to achieve the planned cost savings and efficiencies, could have a material adverse effect on the Group’s business and consolidated financial position and on the consolidated results of the Group’s operations and profitability.

Disruption of the Group’s supply chain and distribution network could adversely affect operations.

The Group’s operations depend on the continuous operation of the supply chain and distribution network. Damage or disruption to manufacturing or distribution capabilities due to weather, natural disaster, fire, electricity shortages, terrorism, pandemics, strikes, disputes with, or the financial and/or operational instability of, key suppliers, distributors, warehousing and transportation providers, or other reasons could impair the Group’s ability to manufacture or distribute its products.

To the extent that the Group is unable, or it is not financially feasible, to mitigate interruptions in its supply chain, whether through insurance arrangements or otherwise, or their potential consequences, there could be an adverse effect on the Group’s business and results of operations, and additional resources could be required to restore the supply chain.

The Group may be subject to unknown or contingent liabilities related to recent and future acquisitions.

The Group’s recent and future acquisitions of assets and entities, including, among others, the acquisition of Weston Foods Inc., or WFI, in 2009, may be subject to unknown or contingent liabilities for which the Group may have no recourse, or only limited recourse, against the former owners. Although in some of the Group’s acquisitions the former owners agreed, or may agree, to indemnify the Group for certain breaches of their representations and warranties, such indemnification obligations in some cases may be subject to various materiality thresholds, and in some cases such obligations may have expired. As a result, the Group may not recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with the acquired assets and entities may exceed the Group’s expectations, plus the Group may experience other unanticipated adverse effects, all of which may adversely affect the business, results of operations and financial condition.

The Group’s future growth opportunities through mergers, acquisitions or joint ventures may be

impacted by antitrust laws, access to capital resources and other challenges in integrating significant

acquisitions.

The Group may pursue further acquisitions in the future. The Group does not know if it will be able to successfully complete any acquisitions or whether we will be able to successfully integrate any acquired business into its business or retain key personnel, suppliers or distributors. The Group’s ability to successfully grow through acquisitions depends upon its ability to identify, negotiate, complete and integrate suitable acquisitions and to obtain any necessary financing. These efforts could be expensive and time consuming, disrupt the ongoing business and distract management. If the Group is unable to integrate any acquired businesses effectively, including WFI, the Group’s business, financial condition and results of operations will be materially adversely affected. The Group may be unable to successfully expand operations into new markets.

If the opportunity arises, the Group may expand its operations into new markets. Each of the risks applicable to the Group’s ability to successfully operate in the Group’s current markets is also applicable to the Group’s ability to successfully operate in new markets. In addition to these risks, the Group may not possess the same level of familiarity with the dynamics and market conditions of any new markets that the Group may enter, which could adversely affect its ability to expand into or operate in those markets. The Group may be unable to create similar demand for the products and business, which could adversely affect the Group’s profitability. If the Group is unsuccessful in expanding its operations into new markets, it could adversely affect its business, financial condition and results of operations.

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The current global economic crisis may adversely affect the Group’s business and financial

performance.

The global economic slowdown and its lingering effects could negatively affect the Group’s business, results of operations or financial condition. When general economic conditions deteriorate, the demand for the Group’s products may experience declines, and we may suffer reductions in its sales and profitability. In addition, the financial stability of our customers and suppliers may be affected, which could result in decreased, delayed or canceled purchases of the Group’s products, increases in uncollectible accounts receivable or non-performance by suppliers. The Group may also find it more costly or difficult to obtain financing to fund operations or investment or acquisition opportunities, or to refinance its debt in the future.

The global economic slowdown has also negatively affected local credit markets and resulted in an increased cost of capital, which may negatively impact the ability of companies, including the Group’s customers, to meet their financial requirements. If the global economy continues to deteriorate, the Group’s business and financial performance may be adversely affected.

The Group’s business and financial performance may be adversely affected by risks inherent in

international operations.

The Group currently maintains production facilities and operations in the United States, Mexico, Argentina, Brazil, Colombia, Costa Rica, Chile, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela and China. The Group’s ability to conduct and expand its business and its financial performance is subject to the risks inherent in international operations. The Group’s liquidity, results of operations and financial condition may be adversely affected by trade barriers, currency fluctuations and exchange controls, political unrest, high levels of inflation and increases in duties, taxes and governmental royalties, as well as changes in local laws and policies of the countries in which the Group conducts business, including changes to environmental laws that could affect its manufacturing facilities or to health safety laws that could affect the Group’s products. The governments of the countries in which the Group operates, or may operate in the future, could take actions that materially adversely affect it, including the taking, expropriation or condemnation of the Group’s assets or subsidiaries.

The Group may be subject to interruptions or failures in information technology systems.

The Group relies on sophisticated information technology systems and infrastructure to support its business, including process control technology. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures and similar events. The failure of any of the Group’s information technology systems may cause disruptions in its operations, adversely affecting its net sales and profitability. The Group has business continuity plans in place to reduce the negative impact of information technology system failures on its operations, but these plans may not be effective.

Failure to maintain the relationships with labor unions may have an adverse effect on financial results.

The majority of the Group’s workforce is represented by labor unions. While we have enjoyed satisfactory relationships with all of the labor organizations that represent the Group’s associates and the Group believes its relationships with labor organizations will continue to be satisfactory, labor-related disputes may still arise. Labor disputes that result in strikes or other disruptions could also cause increases in operating costs, which could damage the Group’s relationships with its customers and adversely affect its business and financial results.

In addition, the Group’s results may be materially and adversely impacted as a result of increases in labor costs. A shortage in the labor pool or other general inflationary pressures or changes in applicable laws and regulations could increase labor cost, which could have a material adverse effect on the Group’s consolidated operating results or financial condition.

The Group’s labor costs include the cost of providing benefits for employees. We sponsor a number of defined benefit plans for employees in the United States and Mexico, including pension, retiree health and welfare, active health care, severance and other post employment benefits. We also participate in a number of multiemployer pension plans for certain of our manufacturing locations. The annual cost of benefits can

15

vary significantly from year to year and is materially affected by such factors as changes in the assumed or actual rate of return on major plan assets, a change in the weighted-average discount rate used to measure obligations, the rate or trend of health care cost inflation, and the outcome of collectively-bargained wage and benefit agreements.

The Group depends on the expertise of senior management and skilled personnel, and the Group’s

business may be disrupted if it loses their services.

The Group’s senior management team possesses extensive operating experience and industry knowledge. The Group depends on its senior management to set its strategic direction and manage its business and believes that their involvement in the Group is crucial to the Group’s success. Furthermore, the Group’s continued success also depends upon its ability to attract and retain experienced professionals. The loss of the services of its senior management or its inability to recruit, train or retain a sufficient number of experienced personnel could have an adverse effect on the Group’s operations and profitability. The Group does not maintain any key person insurance on any of its senior management or associates. The Group’s ability to retain senior management as well as experienced personnel will in part depend on having in place appropriate staff remuneration and incentive schemes. The remuneration and incentive schemes the Group has in place may not be sufficient in retaining the services of its experienced personnel.

Political events in the markets in which the Group operates may result in disruptions to its business

operations and decreases in sales and revenues.

The governments of the markets in which the Group operates exercise significant influence over many aspects of the economy of such markets. As a result, government action concerning the economy of such markets and the regulation of certain industries could have a significant effect on private segment entities, including the Group, and on market conditions, prices of and returns on securities from such markets.

The government of a market in which the Group operates may implement significant changes in laws, public policy and/or regulations that could affect such market’s political and economic situation, which could adversely affect the Group’s business. Social and political instability in such markets or other adverse social or political developments in or affecting such markets could affect the Group and its ability to obtain financing. It is also possible that political uncertainty in territories in which the Group operates may adversely affect financial markets.

Future political developments in the markets in which the Group operates, over which it has no control, may have an unfavorable impact on its financial position or results of operations.

Compliance with environmental and other governmental laws and regulations could result in added

expenditures or liabilities.

The Group’s operations in the United States, Mexico and other markets are subject to federal, state and municipal laws, regulations and official standards, relating to the protection of the environment and natural resources. In the United States, the Group is subject to federal, state and local laws and regulations relating to the protection of the environment. These laws and regulations include the Clean Air Act, the Clean Water Act and the Resource Conservation and Recovery Act and Superfund, which imposes joint and several liability on each responsible party. The Group has specific programs across its business units designed to meet applicable environmental compliance requirements.

In Mexico, the Group is subject to various Mexican federal, state and municipal environmental laws and regulations that govern the discharges into the environment, as well as the handling and disposal of hazardous substances and wastes. Environmental laws impose liability and clean-up responsibility for releases of hazardous substances into the environment. The Group is subject to regulation by, among other agencies, the Secretaría de Medio Ambiente y Recursos Naturales, or the Mexican Environmental and National Resources Ministry, the Secretaría del Trabajo y Previsión Social, or the Mexican Labor and Social Security Ministry, the Procuraduría Federal de Protección al Ambiente, the Federal Environmental Protection Bureau and the National Water Commission, the Comisión Nacional del Agua. These agencies may initiate administrative proceedings for violations of environmental and safety ordinances and impose

16

economic penalties on violators. The Mexican government has recently imposed strict environmental and safety regulations.

Modifications of existing environmental laws and regulations or the adoption of more stringent environmental laws and regulations may result in the need for investments that are not currently provided for in the Group’s capital expenditures program and may otherwise result in a material adverse effect on the Group’s business, results of operations or financial condition.

Developments in other countries may result in decreases in the price of the Group’s securities.

The market value of securities of Mexican companies is, to varying degrees, affected by economic and market conditions in other emerging market countries. Although economic conditions in these countries may differ significantly from economic conditions in Mexico, investors’ reactions to developments in any of these other countries may have an adverse effect on the market value of securities of Mexican issuers. In recent years, for example, prices of both Mexican debt securities and Mexican equity securities dropped substantially as a result of developments in Russia, Asia, Brazil and Greece.

In addition, the direct correlation between economic conditions in Mexico and the United States has sharpened in recent years as a result of the North American Free Trade Agreement, or NAFTA, and increased economic activity between the two countries. As a result of the slowing economy in the United States and the uncertainty it could have on the general economic conditions in Mexico and the United States, our financial condition and results of operations could be adversely affected. In addition, due to recent developments in the international credit markets, capital availability and cost could be significantly affected and could restrict the Group’s ability to obtain financing or refinance its existing indebtedness on favorable terms, if at all.

The Group’s international operations exposes to risk of fluctuations in currency exchange rates.

The Group generates significant revenues and incurs operating expenses and indebtedness primarily in Mexican pesos, and to a lesser extent in other local currencies in the countries in which we operate. As of December 31, 2009 and 2008, the portion of the Group’s revenues denominated in Mexican pesos was Ps.54,803 million and Ps.54,329 million, respectively, while the portion of the Group’s revenues generated in currencies other than the Mexican peso was Ps.64,041 million and Ps.29,911 million, respectively. Moreover, as of December 31, 2009 and 2008, our indebtedness denominated in Mexican Pesos was Ps.22,709 million and Ps.2,296 million, respectively, while the Group’s indebtedness denominated in currencies other than the Mexican peso was approximately Ps.14,031 million and approximately Ps.8,837 million, respectively. However, the amount of the Group’s revenues denominated in a particular currency in a particular country typically varies from the amount of expenses or indebtedness incurred by the Group’s operations in that country given that certain costs may be incurred in a currency different from the local currency of that country (i.e. the U.S. dollar). This situation exposes the Group to potential losses resulting from currency fluctuations.

An impairment in the carrying value of goodwill or other acquired intangibles could negatively affect

our consolidated operating results and net worth.

The carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date. The carrying value of other intangibles represents the fair value of trademarks, trade names, and other acquired intangibles as of the acquisition date. Goodwill and other acquired intangibles expected to contribute indefinitely to the Group’s cash flows are not amortized, but must be evaluated by management at least annually for impairment. If carrying value exceeds current fair value, the intangible is considered impaired and is reduced to fair value via a charge to earnings. Events and conditions which could result in an impairment include changes in the industries in which we operate, including competition and advances in technology; a significant product liability or intellectual property claim; or other factors leading to reduction in expected sales or profitability. Should the value of one or more of the acquired intangibles become impaired, the Group’s consolidated earnings and net worth may be materially adversely affected.

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The Group may incur additional indebtedness in the future that could adversely affect its financial

health and its ability to generate sufficient cash to satisfy the Group’s outstanding debt obligations.

After the offering of the notes, the Group may incur additional indebtedness that may have the following direct or indirect effects:

• limit the Group’s ability to satisfy its obligations under the notes and other debt;

• increase the Group’s vulnerability to adverse general economic and industry conditions;

• require the Group to dedicate a portion of its cash flow from operations to servicing and repaying its indebtedness which may place the Group at a competitive disadvantage to its competitors with less debt;

• limit the Group’s flexibility in planning for or reacting to changes in its business and the industry in which operates;

• limit, along with the financial and other restrictive covenants of the Group’s indebtedness, among other things, its ability to borrow additional funds, and

• increase the cost of additional financing.

The Group’s ability to generate sufficient cash to satisfy its outstanding and future debt obligations will depend upon its future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond the Group’s control. If the Group is unable to service its indebtedness, it will be forced to adopt an alternative strategy that may include actions such as reducing or delaying capital expenditure, selling assets, restructuring or refinancing its indebtedness, or seeking equity capital. These strategies may not be instituted on satisfactory terms, if at all.

In addition, certain of the Group’s financing arrangements impose operating and financial restrictions on its business. These provisions may negatively affect its ability to react to changes in market conditions, take advantage of business opportunities we believe to be desirable, obtain future financing, fund needed capital expenditures, or withstand a continuing or future downturn in its business.

In the future, the Group may from time to time incur substantial additional indebtedness. If the Group or its subsidiaries incur additional debt, the risks that it faces as a result of its existing indebtedness could further intensify.

Corporate Structure.

The Group is a holding company which principal assets consist of shares held in its subsidiaries. In addition, it is the owner of the main trademarks of the Group. Pursuant to the above, the Group’s income depends upon the dividends and interests paid by its subsidiaries, as well as the profits regarding any trademark license agreement entered into by the Group.

With respect to the payment of dividends, regardless that as of today all subsidiaries have no contractual limitations for the payments of dividends to the Group, any financial agreement or any other agreement that impose a future restriction to its subsidiaries for the payment of dividends or the payment of any other amounts to the Group, may adversely affect the liquidity, financial situation and operation results of the Group.

Issues regarding Competition

As of December 31, 2009, the Group has not been subject of any disputes before the CFC or any other similar organism in the countries in which the Group operates which have resulted in any sanctions against the Company. In any case, the commercial practices of the Group have not been subject to suspension, correction or any relevant fines by the CFC or any other antitrust authorities in other countries in which the Group operates. Notwithstanding the above, the Group cannot guarantee that the CFC or any other authority will condition or limit in the future, the Group’s expansion by means of acquisitions or compels to suspend, correct or remove any of its commercial practices or future acquisitions, which, in such case, may adversely affect its business, financial situation and operation results.

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d) OTHER SECURITIES

The following securities are registered by Grupo Bimbo in the RNV. a. Authorized capital stock Series “A” common shares, ordinary, nominative, without expression of

nominal value, listed in the BMV since 1980 under ticker symbol “BIMBO”. b. Certificados Bursátiles: - Bimbo 09 – Issued on June 15, 2009 in the aggregate amount of Ps.5,000,000,000 (Five thousand million pesos) maturing on June, 2014. - Bimbo 09-2- Issued on June 15, 2009 in the aggregate amount of Ps.2,000,000,000 (Two thousand million pesos) maturing on June, 2016. - Bimbo 09U- Issued on June 15, 2009 in the aggregate amount of 706,302,200 Investment Units (UDIs or Unidades de Inversión), maturing on June 2016 - Bimbo 02-2- Issued on May 17, 2002 in the aggregate amount of Ps.750,000,000, (Seven hundred and fifty million pesos) maturing on May, 2012 - Bimbo 02-3- Issued on August 2, 2002 in the aggregate amount of Ps.1,150,000,000 (One thousand one hundred and fifty million pesos) maturing on August, 2009. On August 3, 2009, the Company paid in full this certificate. The Company has been complying on time with all of its obligations to disclose any relevant events as well as the legal and financial information required by the applicable laws. The Company is required to disclose to the CNBV and BMV its financial, economic, accounting, administrative and legal information described below. During the last three fiscal years, the Company has delivered all the information that has been required by the regulatory authorities on time.

I. Annual Information:

(a) The third business day following the date of the annual shareholders’ meeting that approves its annual results, which must take place during the first four months of each year,

1. Report given by the board of directors to the shareholders’ meeting referred to

above, certified by the secretary of the board, which in addition includes the report referred to by article 14 Bis 3, paragraph V, subparagraph a) of the Securities Market Law, making reference to the most important accounting politics adopted to elaborate the Company’s financial statements, as well as the terms in which such politics were analyzed and adopted by the Company.

2. Examiner’s report as provided in article 166 of the General Corporations Law,

regarding the veracity, sufficiency and reasonability of the information filed by the board of directors to the shareholders meeting.

A summary of the resolutions adopted at the shareholder’s meeting held pursuant to article 181 of the General

3. The annual financial statements together with the respective external audit opinion, as well as the audited annual financial statements of the associated

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entities, that contribute more than 10% the Company’s earnings or consolidated assets,

4. Letter subscribed by the secretary of the board of directors, stating the current

status of the shareholder’s minutes meetings registry book, minutes of the board of directors book, share registry book and in the event of limited liability of variable capital corporations (sociedades anónimas de capital variable) the capital increase and capital decrease registry book. The aforementioned is not applicable to debt instruments.

5. The independence letter of the external auditor of the Company pursuant to

article 84 of the General Provisions.

(b) No later than June 30 of every year:

1. The annual report corresponding to the fiscal year immediately ended, prepared in accordance with the General Provisions.

2. Report corresponding to the fiscal year immediately ended, regarding the level

of adherence to the Best Corporate Practices Code, pursuant to the General Provisions.

II. Quarterly Information:

Within the 20 business days following the end of the first three calendar quarters and within the 40 business days following the end of the fourth calendar quarter of each fiscal year, the Company must report its financial statements and the economic, accounting and administrative information required by the corresponding electronic formats, comparing, at a minimum, the results for the relevant quarter against the results for the same quarter for the previous fiscal year and an update of the annual report regarding the operating and financial discussions and analysis of the Company’s business.

In addition, the Company shall deliver to the Commission a certificate subscribed by the General Director or the Finance Director, or any other person with a holding a similar title, stating, under oath, that, in the competence of their authority, they prepared the relevant information of the Company contained in the quarterly report, which, as of their knowledge, reflects in a reasonable manner the situation of the Company. Likewise, they should state that they are not aware of any relevant information that is missing in such quarterly report or that the report contains information that could confuse an investor.

III. Legal Information: (a) On the date of their publication, the calls for shareholder’s meetings and the calls of the

holders of the Certificados Bursatiles. Such calls must contain, each and all of the items of the agenda to be discussed during the relevant meeting.

(b) On the business day immediately following the date on which the relevant meeting is

held: 1. A summary of the resolutions adopted at the shareholder’s meeting held

pursuant to article 181 of the General Corporations Law, including the application of profits and, as the case may be, the payment of dividends, number of cupon o cupons against which payment will be made, as well as place and date of payment.

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2. A summary of the resolutions adopted at the shareholder’s meetings other than

the meetings mentioned above, as well as the resolutions adopted by the meetings held by the holders of other securities.

(c) Within the 5 business days following the date of the shareholder’s meeting or of the

holders of other securities meetings, as applicable:

1. A copy, certified by the secretary of the board of directors of the Company or any person authorized thereto, of the shareholder’s meetings minutes, together with the attendance list signed by the examiners appointed for such purposes, stating the number of shares that correspond to each shareholder and, as the case may be, on behalf of whom is acting, as well as the total number of shares represented at the meeting.

2. A copy, certified by the president of the meeting, of the holder’s of the securities

minutes meetings, together with the attendance list signed by the holders of the securities or their representatives and by the examiners appointed for such purposes, stating the number of securities that correspond to each holder of the securities, as well as the total number of the securities represented at the meeting.

3. A copy, certified by the secretary of the board of directors, of the by-laws of the

Company, in the event that any amendments have been approved in the relevant meeting.

(d) On the date on which the Company agrees to, as the case may be, depending on the type

of security:

1. Notice to the shareholders for the exercise of any rights of first offer derived from capital increases and the subsequent issuance of shares, which amount is required to be paid in cash.

2. Notice for the delivery or exchange of shares or other securities.

3. Notice for the payment of dividends, which must incluye the corresponding

amount and the proportion of such dividends or, as the case may be, the payment of interests.

4. Any other notice addressed to the shareholders, holders of other securities or the

general public.

(e) Every 5 years, on June 30, the notarization of the shareholder’s meeting by means of which a restatement (compulsa) of the Company’s by-laws has been approved, including the registration information in the Public Registry of Commerce.

IV. Repurchase of the Company’s shares:

The Company is required to disclose to the BMV, no latter than the next business day following the consummation of any transactions involving the repurchase of the Company’s shares. V. Relevant events:

The Company is required to disclose to the BMV, all material events pursuant to the provisions set forth in the General Provisions Applicable to Issuers of Securities and Other Participants in the Securities’ Market.

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e) RELEVANT CHANGES TO THE SECURITY RIGHTS REGISTERED IN THE RNV

As of the date of this Annual Report, no changes have been carried out by the Company to the security rights registered in the RNV. f) USE OF PROCEEDS

The totality of the net proceeds obtained from the three offerings of the Certificados Bursatiles issued by the Company, during 2009, were used to pay short term financial debt used to finance the acquisition of certain assets in the US, according to the description in the relevant supplements of such offerings. g) PUBLIC DOCUMENTS

In order to request copies of this Annual Report: Grupo Bimbo, S.A.B. de C.V. Prolongación Paseo de la Reforma No. 1000 Col. Peña Blanca Santa Fe México, D.F. C.P. 01210 www.grupobimbo.com Investment Relations Armando Giner Chávez Telephone. (5255) 5268-6924 Facsimile: (5255) 5268-6697 In connection with the public information that has been delivered to the BMV, please consult the following electronic addresses: http://ir.grupobimbo.com www.bmv.com.mx The information available in such addresses is not a part of this Annual Report.

2) THE COMPANY

a) COMPANY’S HISTORY AND DEVELOPMENT

1. Legal backgrounds

Incorporation

The Company was incorporated by public deed number 10670, dated June 15, 1966, granted before Tomás O’Gorman, Public Notary number 96 of the Federal District, the first official transcript of which was filed in the Public Registry of Commerce of the Federal District, in the Commerce section, under number 299, pages 377, volume 636, 3rd book. Corporate Name

The Company was originally incorporated under the corporate name of Promoción de Negocios, S.A. In 1978 it changed its corporate name to Grupo Industrial Bimbo, S.A. and in 1981 it adopted the modality as sociedad anónima de capital variable. On August 24, 1999, the Company changed its corporate name to Grupo Bimbo, S.A. de C.V., and on November 14, 2006, by public deed number 30053, granted before Ana de Jesús Jiménez Montañez, Public Notary number 146 of the Federal District, the first official transcript of which was filed in the Public Registry of Commerce of the Federal District in mercantile folio number 9506, on December 6, 2006, the Company adopted the modality of sociedad anónima bursátil de capital variable. Duration The Company’s duration is indefinite.

Domicile and Telephone Numbers

The Company’s headquarters are located in Prolongación Paseo de la Reforma 1000, Colonia Peña Blanca Santa Fe, C.P. 01210, Mexico, D.F. The telephone number is 5268-6600 and the fax number is 5268-6697. The Company’s web site is: www.grupobimbo.com, in the understanding that the information contained therein is not part nor purpose of this Annual Report.

2. History

All figures shown in this section correspond to historical values on the dates indicated. 1945 Taking advantage of their experience in the bakery industry, Don Lorenzo Servitje Sendra and

Don Jaime Sendra Grimau decided to create an American style packaged bread factory, to which they invited Don Alfonso Velasco, as well as Don Jaime Jorba Sendra and Don José T. Mata to participate as industrial partners. Another founder was Don Roberto Servitje Sendra, who collaborated since the inception as sales supervisor. Even though he did not participate as partner at the Company’s inception, little by little Don Roberto Servitje acquired grater responsibilities and likewise participated in the decision making process. Later on he purchased BIMBO shares and, subsequently, he became General Director, position he left in 1994, when he was appointed chairman of the Board of Directors, in substitution of Don Lorenzo Servitje, who held such position since its foundation. For the creation of the packaged bread factory, the founding partners mainly took care of the needs posted by the market at that time; that is, a periodical and quality attention to the clients, and product freshness. To satisfy such needs, the products to be manufactured and the characteristics of the packing thereof were determined, in addition to putting in place direct distribution systems and the substitution of unsold products every two days. Thus, on December

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2, 1945 Panificación Bimbo was formally founded in Mexico City.

1947-

1952

In 1947 the outside distribution to some cities in the states of Veracruz, Morelos, Hidalgo and Puebla was initiated. By 1952 four plants were already installed in Mexico City and the rolls category was already integrated within the Company’s products. Likewise, the distribution had extended to some of Mexico’s central and northern states.

1956 In May, 1956 the corporation Pasteles y Bizcochos, S.A. was incorporated, currently known as Productos Marinela, S.A., with which the Group ventured in the cake area. As of this date the establishment of plants outside Mexico City began. The first of them were Bimbo de Occidente, S.A. (Guadalajara) and Bimbo del Norte, S.A. (Monterrey). With this development both the distribution geographical coverage and the variety of products offered by the Company were broaden.

1963-

1978

The period comprised between 1963 and 1978 was characterized by a great expansion and diversification. In addition to opening eight more plants in different states of the Mexican Republic, the existing plants were enlarged and other additional cake lines were integrated to those offered by Productos Marinela, S.A. Moreover, it ventured in the candies and chocolates industry, with the establishment of the first Ricolino plant, and in the salted snack market, with what is currently known as Barcel. At that time practically all the states of the country were covered through the Company’s direct distribution system. In such period, with the inauguration of the first jam plant, also the Group’s vertical integration initiated. Not only the other Group’s companies were supplied with these products, but also the line of products offered to the consumers was diversified. In connection with the pastries products, in the seventies decade, BIMBO launched the Suandy line into the market, whose products were prepared based on butter. This line was importantly enlarged in 1981.

1979 In 1979, Tia Rosa was introduced as a house-made bakery image in the domestic market and was rapidly developed with automated systems in some of its production lines.

1983 By this time, the Group already manufactured some equipment and parts thereof, which were used in its plants, therefore, in 1983 the inauguration of the Maquindal, S.A. plant took place, which merged in January 2001 with the corporation Moldes y Exhibidores, S.A. de C.V.

1984 In 1984, BIMBO ventured in the exportation market with the distribution of Marinela products into the USA.

1986-

1990

In 1986, after the crisis faced by Mexico during almost five years, BIMBO acquired Continental de Alimentos, S.A. de C.V., company which produced and commercialized the Wonder brand, until then BIMBO’S direct competitor in bread and cakes. As of 1989, the Group experienced an important expansion through other acquisition and the establishment of plants in the lines both of final consumer products and raw materials, material and equipment for internal consumption.

1992-

1996

Regarding the transactions at an international level, in 1990 the Company acquired a bread and cake producer plant in Guatemala, which marked the beginning of the coverage that the Group has in Latin America. In 1992, BIMBO initiated the acquisition of productive plants in other countries of the region with the acquisition in 1992 of Alesa, S.A. and Cena (currently Ideal, S.A.) in Chile. Afterwards, it extended to Venezuela with the acquisition of Industrias Marinela, C.A. and Panificadora Holsum de Venezuela, C.A. in 1993, merged in 1999 under the name of Bimbo Venezuela C.A. At the same time, productive plants were installed in Argentina, Colombia, Costa Rica, El Salvador and Peru, as well as distribution companies in Honduras and Nicaragua.

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Additionally, the Company importantly expanded in the USA with the establishment and acquisition of several productive plants in different states in the border with Mexico. The following companies were acquired: Orbit Finer Foods, Inc., in 1993; Fabila Foods, Inc. and La Fronteriza, Inc., in 1994; C&C Bakery, Inc. and La Tapatía Tortillería, Inc., in 1995; and Pacific Pride Bakeries, with two plants (Suandy Foods Inc. and Proalsa Trading Co.), in 1996. In 1992, the Company acquired the factory Galletas Lara, which allowed the formal entrance to the traditional cookie market, with “marías” kind and crackers, in which it did not participate with the Marinela trademark.

1998 An important level of investments characterized 1998. In this year the Mrs. Baird’s planning company, sector leader in the state of Texas, USA, was acquired, and in Mexico operations were initiated in the Bimbo plant in La Paz, Baja California. Likewise, BIMBO’S expansion reached the European continent with the establishment in Germany of the confectionery goods distribution company, Park Lane Confectionery. Also that year, in order to focus on its main businesses, BIMBO carried out divestments in the preparation and distribution of ice-creams in Mexico and salted snacks in Chile.

1999 In February, 1999, BIMBO carried out a strategic alliance with the company Dayhoff, in the USA, engaged in the distribution of candies, through an equity interest of 50%. In 2002, BIMBO’S interest increased to 70% and in 2004 it acquired 100% of the shares. In March, 1999, BIMBO associated with Grupo Mac’Ma by acquiring a 51% interest in the companies engaged in pastries manufacturing. In the state of California, USA, it acquired the bakery company Four-S. In 1999, a new bread producing plant was built and began operations in the city of Tijuana, Baja California, with the following production lines: white, integral and sweet bread, rolls, wheat tortillas and tostadas, among others. In July, 1999, BIMBO reinforced its presence in Colombia through the acquisition of assets in the city of Cali. In September of the same year, the Company completed an agreement with the McDonald’s restaurant chain, through which it became the unique supplier of all rolls for this restaurant chain in Venezuela, Colombia and Peru. The unique concession of its rolls contributed to consolidate the Company’s position in Latin America. Further, this exclusivity strengthens the relationship which both companies have since 1985, year when McDonald's was installed in Mexico. In October, 1999, BIMBO completed negotiations with the company Panacea, S.A., located in San Jose, Costa Rica. Such negotiations allowed BIMBO to acquire some of the assets owned by the Costa Rican company and the right to use Tulipán, its leading brand in that country. For an amount of $140.6 million dollars, in December, 1999, BIMBO carried out the sale of its six wheat mills and of the fresh and processed fruits and vegetables business to a group of investors represented by Mr. Roberto Servitje Achútegui. In accordance with the synergies use and operative consolidation strategy, BIMBO initiated in 1999 the administrative and operative merger of its companies in the USA, being consolidated as follows: Mrs. Baird’s Bakeries Business Trust, in the Texas market, and Bimbo Bakeries USA, Inc., in the California market.

2000 In March 2000, BIMBO, Oracle de Mexico, Sun Microsystems and Cap Gemini Ernst & Young agreed the development of the computer program BIMBO XXI. In April 2000, the Company, through Ricolino, inaugurated two plants in the European Union, one in Vienna, Austria, and the other one in Ostrava, Czech Republic see “The Company –

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Business Description – Principal Activity”. Additionally, in November 2000, BIMBO acquired Pan Pyc, the second most important bakery company of Peru, with which its leadership in that country was consolidated. In December it acquired the Guatemalan bakery company La Mejor, with which it reinforced its presence in the Guatemala, El Salvador and Honduras markets.

2001 2001 highlighted the intense activity to consolidate the Group’s presence in the regions where it participated and to make its operations more efficient. In March of that year, BIMBO acquired 100% of the capital stock of Plus Vita, Ltda., one of the largest bakery companies of Brazil, which produced packaged bread, sweet bread, cakes, rolls and toasted bread under brands considered among the most traditional and with the highest prestige in the Brazilian market, such as Pullman, Plus Vita, Ana María, Muffs and Van Mill, among others. Plus Vita operated three plants, located in Sao Paulo, Rio de Janeiro and Recife see “The Company– Business Description – Principal Activity”. Strategy and Strengths”.

On the other hand, and in order to add value to BIMBO’S shareholders equity holding, in August 2001 a public offer to repurchase shares was completed, which achieved the expected purpose of granting to its shareholders the possibility to choose among obtaining immediate liquidity with a premium or keep their investment and participate in the Group’s future results. Finally, 238,803,031 Series “A”, ordinary, nominative, without expression of nominal value shares, representing its capital stock were acquired, at a price of $17.25 per share. In October of that same year, the Company concluded the sale process of its shares in the companies Pastas Cora, S.A. de C.V. and Pastas Cora de la Laguna, S.A. de C.V. to Grupo La Moderna, S.A. de C.V. The companies sold were owned by Grupo Bimbo and Grupo Mac’Ma, S.A. de C.V. and, therefore, the negotiation with La Moderna was jointly carried out. Through this transaction, La Moderna acquired 100% of the shares of Pastas Cora, S.A. de C.V. and Pastas Cora de la Laguna S.A. de C.V., and delivered as payment 4,500,000 shares representing 5.8% of its capital stock, from which 57.4% corresponds to Grupo Bimbo. In November 2001, the Company acquired certain productive assets pertaining to Gruma, S.A. de C.V., related with bread manufacturing and distribution. This acquisition included the fresh bread and frozen bread businesses in Costa Rica, as well as the equipment from the plant which Gruma closed in Escobedo, Nuevo Leon.

2002 As of January 1, 2002 the merger of all operating companies of the Group in Mexico into two big companies: Bimbo, S.A. de C.V. and Barcel, S.A. de C.V became effective. The first one consolidates all the bakery operations, while the second one embraces the salted snacks, confectionery goods and goat milk caramel “cajeta” divisions. The purpose of such merger was to optimize the operations and make its installed capacity and distribution force more effective. On March 4, 2002, the Company acquired, through its subsidiary in the USA, the bakery operations in the USA west region pertaining to the company George Weston Limited. This transaction, with a total price of $610 million dollars, provided Grupo Bimbo with access to leading brands and products in the United States market, such as Oroweat bread, Entenmann’s cakes, English muffin bread type and the Thomas’ bagels, as well as Boboli pizza basis. In accordance with the terms of the agreement, Grupo Bimbo acquired, among other assets, the Oroweat bread trademark; five plants distributed in the states of Texas, Colorado, California and Oregon, and an efficient direct distribution system, with approximately 1,300 routes. Additionally, the Company obtained in the same region the rights related with the Entenmann’s brand products, as well as the distribution rights of the Thomas’ and Boboli brands. This acquisition responded to BIMBO’S strategy to build a leading bakery business in the USA.

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With that, the Group’s position in core markets, such as the states of California and Texas, has become stronger. On December 11, 2002, BIMBO’S General Extraordinary Shareholder’s Meeting agreed the merger of the Company with its subsidiary company Central Impulsora, S.A. de C.V. By virtue of such merger, the Company became holder of the Group’s main trademarks.

2003 In January 2003, BIMBO completed a strategic alliance with Wrigley Sales Company (“Wrigley”), to distribute its products. With this agreement, the Company, through its subsidiary Barcel, S.A. de C.V., became the exclusive distributor in Mexico of the Wrigley chewing gum brands. This transaction incorporated a line of products of the highest quality to the Group’s confectionery goods platform and granted the Company the opportunity to offer Doublemint, Juicy Fruit, Orbit, Spearmint and Winterfresh, the most successful United States chewing gum brands in the industry. In June 2003, the Company, together with its partner Grupo Arteva, S. de R.L., carried out the sale of the company Novacel, S.A. de C.V., engaged in the manufacture of flexible packaging, to Pechiney Plastic Packaging, a subsidiary of the Canadian company Alcan, world leader in package manufacturing. Prior to this sale, BIMBO held an interest of 41.8% in the capital stock, while its partner owned the rest. In this transaction, Grupo Bimbo executed a supplier agreement in commercial terms and conditions in accordance with the industry’s general practices. In July 2003, the Company informed about its participation as minority partner in a consortium headed by the Mexican businessman Fernando Chico Pardo. Such entity acquired certain ownership and debt rights of Compañía de Alimentos Fargo, S.A., of Argentina, and will procure its financial and operative restructuring.

2004 On March 18, 2004, Grupo Bimbo informed that it reached an agreement to acquire the confectionery goods companies Joyco de Mexico, S.A. de C.V., Alimentos Duval, S.A. de C.V. and Lolimen, S.A. de C.V., owned by a group of Mexican shareholders and the Spanish company Corporación Agrolimen, S.A. After having obtained all the necessary approvals, the purchase and sale transaction of the confectionery goods companies concluded on May 2004. Grupo Bimbo invested $290, from which approximately $27 were used for the payment of financial liabilities. Through this investment, settled with its own funds, Grupo Bimbo acquired two production plants and rights on leading trademarks and products in the confectionery goods industry in Mexico, such as Duvalín, Bocadín and Lunetas. These companies registered annual sales near to $500.

2005 On June 9, 2005, BIMBO announced the acquisition of certain assets and trademarks owned by Empresas Chocolates La Corona, S.A. de C.V. and its subsidiaries (“La Corona”), in a transaction that amounted $471, that were settled with the Company’s own funds. La Corona has presence in the Mexican candies market, mainly in the chocolate segment. After the regulatory approval, this transaction was completed on July 29, 2005.

On July 20, 2005, the Company announced the acquisition, through a cash transaction that amounted $1,350, of Controladora y Administradora de Pastelerías, S.A. de C.V., pastries operator “El Globo”. Controladora y Administradora de Pastelerías, through El Globo, produces and commercializes fine pastries products. With this acquisition, Grupo Bimbo for the first time ventured in the retail commercialization of fine pastries products. After the relevant regulatory approval, the transaction was completed on September 23, 2005.

On September 30, 2005, the Company executed a distribution agreement with Arcor, S.A.I.C. (“Arcor”), of Argentina. With this agreement, BIMBO, through its subsidiary Barcel, S.A. de C.V., became the exclusive distributor in Mexico of the “Bon o Bon” candy. This product was incorporated to the Company’s existing candies platform as a line renowned for its high quality.

27

The appearing parties also committed to carry out a joint investment to build in Mexico a plant to produce the Arcor and Barcel candies. On January 30, 2006, BIMBO returns to the bakery market in Uruguay with the acquisition of the Uruguayan companies Walter M. Doldán y Cía. S.A. and Los Sorchantes S.A., positioning itself as the market leader. This transaction amounted $7 million dollars, from which $5.5 million were used for the purchase of 100% of the shares and the rest was used for the payment of financial liabilities. These companies are engaged in the production and commercialization of bakery products, mainly through Los Sorchantes and Kaiser trademarks.

2006 On March 24, 2006, BIMBO initiated operations in Asia with the agreement to acquire the company Beijing Panrico Food Processing Center, subsidiary of the Spanish company Panrico, S.A., located in China, in a transaction that amounted 9.2 million Euros for 98% of the shares, additionally assuming a net indebtedness of 1.3 million Euros. With this transaction, the Company acquired a company that had 800 collaborators, a production plant and a distribution network with an extended portfolio of bakery products, designed and developed for the local market, which have allowed it to achieve an important presence and acknowledgement in the cities of Beijing and Tianjin. On June 19, 2006, BIMBO announced that it reached an agreement to acquire certain assets and trademarks of the “El Molino” pastries, in a transaction that amounted $42, that were settled with the Company’s own funds. El Molino is one of the oldest and most traditional bakeries in Mexico. In the fiscal year ended as of December 2005, its sales amounted $45. This transaction, supplementary with the acquisition of “El Globo” pastries, carried out in July 2005, intended to strengthen the presence of Grupo Bimbo in the retail commercialization of high end pastry products.

2007 On July 31, 2007, BIMBO carried out the purchase of 100% of the share package of Maestro Cubano Florentino Sande S.A. for a sum that amounted $93. The company is located in Uruguay, is the owner of industrial premises engaged in the production and commercialization of cookies, grissines and breadcrumbs. On October 2, 2007, BIMBO announced the acquisition of Temis for a sum that amounted $17. With this acquisition, BIMBO entered into the Paraguay market. On November 5, 2007, Grupo Bimbo announced that, as included in a judicial request dated November 2, 2007, filed by the investment group The Yucaipa Companies, LLC (“Yucaipa”) before the Bankruptcy Court in the West District of Missouri, in Kansas City (the “Court”), Yucaipa, together with BBU, Inc. (“BBU”), subsidiary of Grupo Bimbo, and The International Brotherhood of Teamsters (the “Teamsters”), intended to file a collective proposal for the reorganization of Interstate Bakeries Corporation (“IBC”). IBC is one of the largest bakeries and fresh bread and sweet bread distributor companies of the United States. Among its main trademarks are Wonder®, Merita®, Home Pride®, Baker’s Inn®, Hostess®, Drake's®, and Dolly Madison®. IBC operates more than 40 plants, 650 distribution centers, 6,400 routes and employs near to 25,000 collaborators. It was expected that the Court considers Yucaipa’s request in a hearing foreseen for November 7. In case the Court instructed IBC to grant to Yucaipa and BBU the access required to initiate a purchase audit, Yucaipa and BBU expected to carry out their review expeditiously in order to determine IBC’S status and, if so determined they would submit, together with the Teamsters, the terms and conditions of IBC’S reorganization plan. Grupo Bimbo intended to use such audit to evaluate if IBC represented a feasible opportunity to strengthen and impel its position in the bakery industry in the United States, consolidating at the

28

same time its leadership position in the bakery global industry. Any subsequent decision which implied to continue advancing in this process would require a series of additional steps, including the satisfactory completion of the above mentioned audit, as well as the approval of the reorganization plan by the Court and IBC’S creditors. However, on December 13, 2007, Grupo Bimbo announced that after the audit process carried out to IBC it was not in a position to submit a proposal to acquire IBC. On November 29, 2007, Grupo Bimbo informed that on November 28, Compañía de Alimentos Fargo, S.A. (“Fargo”), Argentinean company in which Grupo Bimbo holds an indirect 30% equity interest, executed an agreement for its reorganization with its main creditors, which represent the majority of the verified indebtedness, the investment funds Rainbow Global High Yield, The Argo Capital Investors Fund SPC, Argo Global Special Situations Fund Segregated Portfolio and The Argo Fund Limited (the “Bond Holders”). The agreement included the payment of 33.81% of the verified unsecured indebtedness amount. Likewise, the Bond Holders committed to collaborate in order for Fargo to attain the culmination of the Meeting of Creditors (Concurso Preventivo) in which it is since June de 2002, as well as not to carry out any legal actions against it.

2008 On January 2, 2008, BIMBO announced the acquisition of Laura, company located in Brazil, for a sum that amounted $202. This way, BIMBO entered into the panettone category and enlarged the cookies portfolio through the wafers line. On February 21, 2008, BIMBO announced the acquisition of Firenze, also in Brazil, for a sum that amounted $185. The integration with Firenze allowed taking advantage of the strength in the light segment and continuing its development through the increase of the physical distribution of Firenze and Plus Vita trademarks. On April 1, 2008, the Company announced the acquisition of Plucky, company located in Uruguay, for a sum that amounted $123. The company produces and commercializes confectionery goods products. With this acquisition, for the first time Bimbo ventures in Latin America in such market. On May 7, 2008, Grupo Bimbo announced that it reached an agreement to acquire 75% of the shares of the Brazilian bakery company Nutrella Alimentos, S.A. (“Nutrella”). This acquisition allowed Grupo Bimbo to place itself as the leader of industrialized bread in Brazil, increasing its geographic scale and presence. Nutrella is a company founded in 1972 that produces and commercializes packaged bread, rolls and cakes, through two production units in the states of Sao Paulo and Rio Grande do Sul. With the trademarks “Nutrella”, “Nhamy” and “Nutrellinhas”, among others, it is positioned as leader in Brazil’s South Region. In 2007, Nutrella, with more than 1,600 collaborators, registered sales for R$150 million and a EBITDA* for R$21 million. This investment responded to Grupo Bimbo’s strategy of consolidating its transactions in the countries where it participates and gave it a stronger position to continue developing a profitable business in Brazil, by complementing its current operation. Likewise, it gave access to one of the regions with more economic activity in the country, with more than 25 million inhabitants.

2009 On January 21 2009, Grupo Bimbo announced that it completed the acquisition of the bakery business in the United States of Weston Foods, Inc. (WFI), owned by Dunedin Holdings S.à r.l., a subsidiary of George Weston Limited (TSX: WN), located in Toronto, as well as the acquisition of the related financial assets, having obtained the relevant regulatory approvals and permits. Such transactions were appraised in $2,380 and $125 million dollars, respectively. The

29

aggregate payment of $2,505 million dollars was made through a financing of $2,300 million dollars, as well as with the Company’s own funds. The consolidated operation in the United States, known as Bimbo Bakeries USA (BBU), became one of the largest bakery companies in the country, with a leading position in the bread, rolls, sweet bread and cake categories. The portfolio includes premium trademarks such as ARNOLD®, BIMBO®, BOBOLI®, BROWNBERRY®, ENTENMANN’S®, FRANCISCO®, FREIHOFER’S®, MARINELA®, MRS BAIRD’S®, OROWEAT®, STROEHMANN®, THOMAS’® and TIA ROSA®. The new operation provides employment to more than 15,000 collaborators, operates 35 plants and distributes its products through more than 7,000 routes. Grupo Bimbo’s consolidated results reflect the integration of WFI transactions as of January 21, 2009. On November 18, 2009, the assets necessary for the production, distribution and sale of healthy corn products under the trademark Sanissimo were acquired.

30

The table below is a summary of the acquisitions carried out by the Company in the last 3 years and the price paid at the relevant time (figures are expressed in million pesos):

Date Company Country Amount

2009

2009

January 21 Weston Foods, Inc. (WFI) USA $ 35,014

Several Several businesses and assets Several 188

Total $ 35,202

2008

May 1 “Galletas Gabi” Assets and Trademarks Mexico $ 256

April 30 and June 16 Nutrella Alimentos S.A. Brazil 1,580

April 2 Plucky, S.A. Uruguay 123

March 25 Lido Pozuelo, S.A. Honduras 227

February 21 “Firenze” Assets and Trademarks Brazil 185

January 2 Panificio Laura, Ltda. Brazil 202

Total $ 2,573

2007

October 31 Temis, S.A. Paraguay $ 17

July 31 El Maestro Cubano Florentino Sande, S.A. Uruguay 93

June 21 Rolly’s Pastelería, S.A. and King Baker Home, S.A. Peru 77

June 12 Pan Catalán, S.A. Uruguay 21

May 30 “Moderna” Assets and Trademarks Panama 57

February 7 Agua de Piedra, S.A. Chile 46

January 31 “La Favorita” Assets and Trademarks Panama 9 Total $ 320

3. Recent Events

All the figures shown in this section correspond to historical values as of the indicated dates.

Below are the relevant events occurred after December 31, 2009:

Grupo Bimbo announces the decision to submit before the relevant authorities the notice to proceed

to is fiscal des-consolidation.

On January 8, 2010, Grupo Bimbo informed that, given the amendments to the Income Tax Law (“ISR”) regarding fiscal consolidation, in effect as of January 1 of this year, and after having realized the relevant analysis, it decided to submit before the relevant authorities the notice in order to proceed to its fiscal des-consolidation, following the alternative proceeding contained in Rule I.3.5.4. of the Omnibus Tax Ruling (Resolución Miscelánea) in effect. Since the accounting provisions which the Company has are substantially sufficient to pay for the effects of the preceding decision, it is estimated that it will have no relevant effects on its results or on its financial status.

Grupo Bimbo announces the increase in the Program’s Total Authorized Amount

On May 14, 2010, Grupo Bimbo announced that it obtained the authorization from the National Banking and Securities Commission to increase the Program’s total amount authorized in an amount of Ps$10,000,000,000.00 (ten million Pesos 00/100 Mexican Currency) or its equivalent in UDIs, to reach

31

Ps.$20,000,000,000.00 (twenty thousand million de Pesos 00/100 Mexican Currency) or its equivalent in UDIs, with revolving nature. Grupo Bimbo announces the acquisition of the Mexican confectionery Vero

On June 22, 2010, Grupo Bimbo announced that on such same date it reached an agreement to acquire the main assets of the Mexican group of confectionery goods Dulces Vero (“Vero”).

Vero, founded in 1952, produces a broad range of candies and confectionery, including candy lollypops, gummies and marshmallows, and the company has broad experience and its own technology for the production of hard candies and products prepared based on chile. Vero has 1,500 collaborators and in 2009 generated sales for approximately Ps.$1,100 million Pesos, as well as a EBITDA of Ps.$220 million Pesos. The acquisition of these assets strengthens Grupo Bimbo’s position in the Mexican confectionery goods market through its subsidiary Barcel, in addition to supporting the Company’s strategy to reach all socio-demographic segments. Together with the sales and costs synergies, Vero’s strength in the wholesale channel, combined with Barcel’s extensive retail distribution, will provide a solid platform for the continuous growth. Likewise, Vero’s products complement Barcel’s portfolio in the United States Hispanic market and represent an opportunity to increase the Company’s presence in that country. This transaction is subject to several conditions precedent, including the authorization from the Federal Antitrust Commission (Comisión Federal de Competencia).

b) BUSINESS DESCRIPTION

i) Principal Activity

1. Strategy and Strengths

The Group’s general strategy is based on its corporate mission, this is, the development of the value of its brands and essentially, its compromise of being a highly productive and entirely human Company, as well as innovative, competitive and aimed at total customer and consumers satisfaction, being an international leader in the baked goods industry and with a long term vision. Likewise, the Company, through its general strategy is aimed at increasing its value, which is reflected in an increased shareholders value. To strengthen the Group’s vision and strategy, the Company follows particular strategies, which include the following elements:

• Develop Innovative New Products. BIMBO has successfully developed and introduced new

products that have increased sales and satisfied consumers and the Company strives to ensure that its products suit the tastes and budget of its consumers according to the customs, needs and trends, as well as providing nutritional value. BIMBO intends to continue to invest in research and development to innovate across its product lines and new product categories, driving consumer demand and incremental revenue opportunities. BIMBO is a global Company that strives to maintain a local character through a constant pipeline of new products that seek to address its diverse customers’ needs and desires and enhance its customer and consumer base. For example, the Company developed a process to add functional ingredients to certain of its products to improve the health of its consumers by lowering cholesterol or enhancing mineral absorption. In addition, it is also one of the first consumer products companies in Latin America to introduce biodegradable packaging technology. the Company believes that the strength of its brands and its low-cost manufacturing base provides it an opportunity for continued expansion of its product

• Continued Development of the Company’s Brands. BIMBO has had a strong track record of

creating, nurturing and managing successful brands, which it believes reflects a deep understanding of consumer preferences and the rigor of its ongoing market research and testing programs. In most of its product categories, the Company’s brands have an extraordinary “top of mind awareness” in the market based on its market research. The Company’s packaged bread is found in virtually every household in Mexico. The Company believes that this experience provides a platform for it to develop new product lines under its existing brands as well as entirely new categories. As it expands into new markets, the Company expects to increase the recognition of its existing brands in those markets (including our Bimbo brand in the United States) and strengthen its brand portfolio with new brands targeted to those markets.

• Increase Market Penetration. To meet the needs of each of its customer segments, the Company

uses a range of analytical tools to divide regions by distribution channel, size, brand and products and continuously develop new channels. The Company’s recent market penetration efforts have resulted in customer base growth in almost every segment in Mexico, increased penetration of the United States convenience store channel and significant growth of its Central and South American customer base. The Company intends to continue its efforts to increase market penetration expand its product base and enhance its brand recognition in the markets in which the Company has gained entrance. For example, in 2009 the customer base in Central and South America increased by approximately 76,000 customers. Building on this success, the Company believes that the strength of its brands and the reach of its distribution network provide a major opportunity for increased market penetration, including into the market for baked goods in the United States and Central and South America.

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• Increase Efficiencies throughout the Company’s Business. BIMBO´s growth has generated valuable economies of scale in production, distribution and marketing as well as dissemination of best practices and innovation. The Company remains focused on driving additional efficiencies and improved profitability in its business. In particular, the Company aims for constant improvement in the use of its production and distribution resources and in periodically reinvesting in its plants and equipment and it strives to maintain a low-cost operation with a focus on effective cost controls. For example, redesigning packaging that is lighter to reduce unit cost and the careful calibration of the use of its distribution network. In addition, the Company frequently evaluates the data generated by its sales force and its data mining techniques to improve execution at the point of sale and refine its inventory management. The Company also monitors its pricing structure in light of raw-material costs and inflationary pressure to maintain the optimal balance.

• Continued Growth. The Company believes that it has benefited from its acquisition and

integration of new brands and products and its expansion into new markets. BIMBO seeks to continue to expand its geographic reach through organic growth and to pursue selective strategic acquisitions in regions and categories that provide a platform for growth and acquisition of strong brands that complement its existing portfolio and increase the penetration of its brands. Given the fragmented nature of the food industry, BIMBO will continue to evaluate its expansion through organic growth as well as acquisition opportunities. The Company believes its presence in various markets around the world will provide it a platform for it to identify selective growth opportunities.

• Social Strategy. The Group has been dedicated to become a fully human Company. The Company

has insisted and will continue to insist on an integration of managers and employees guided by the mission to serve, meet and fully satisfy the client needs. Also, the Company has led and will continue to develop in the future, a work environment that facilitates the integration and personal identification with the Company. Its objective in this matter is that the worker starts developing in the Company and thereby conducive a productive performance and personal satisfaction. This is how the Group seeks to match it’s commitment for responsibility both externally and internally, not only in the economical but also in a social manner. According to the surveys conducted by the Mexican magazine “Expansion”, BIMBO has been pointed out as one of the most admired companies; see “Business Description – Principal Activity – Human Resources.”

Regardless that the Company’s management considers that the administration of the strategies described herein is the most convenient, it cannot guaranty that the strategies will have the expected effects on BIMBO’s operations or that the same strategies will be maintained in the future, since the management reviews periodically the orientation and impact of said strategies.

Strengths

The Group has grown rapidly over the last five years and believes its business strengths will allow it to continue to grow and successfully fulfill its strategy:

• Leading Market Position. BIMBO is one of the largest baked goods companies in the world

and one of the largest food companies in the Americas, with a diversified portfolio of approximately 7,000 products and more than 150 renowned brands, which allows the Company to reach all market categories in most of the countries in which it operates. BIMBO is the number-one or number-two market participant in its primary markets (the United States, Mexico and Central and South America) in all its categories: bread and rolls, cakes and pastries, cookies, salted snacks, confectionery goods, tostadas and wheat tortillas. The other product lines are also top players in their respective markets. As an example, in the United States, its packaged bread is purchased by approximately 50% of the households and Thomas’ is a highly recognized brand in the English muffins subcategory. In Mexico, Marinela is the market leader in the cakes and pastries category, and Barcel and Ricolino are the number-two market participants in the salted snacks and fragmented confectionery market, respectively.

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• Strong Brand Recognition. The Company’s brands are leaders in market recognition in the United States, Mexico and Central and South America. The Company believes its understanding of the need and preferences of its consumers allows it to offer them superior quality products at competitive prices. They believe their strong brands give them a competitive advantage and allow them to more effectively leverage its new product launches in the markets in which they operate. Through the acquisition of WFI significantly strengthened the brand portfolio in the United States with brands including Thomas’, Arnold and Entenmann’s. Each of the Company’s brands is targeted to a specific audience and supported by a comprehensive marketing plan. Some of the brand symbols, such as the Bimbo bear, the Gansito goose and the Paleta Payaso clown have developed iconic status and are immediately recognizable to millions of consumers.

• Extensive Direct-Distribution Network. The Company has developed an extensive direct-

distribution network, which fields one of the largest sales fleets in the Americas and represents a major competitive advantage. its network allows it to distribute products from its 98 plants, distribution centers and warehouses to more than 1.3 million points of sale every day to ensure the freshness and quality of its products and to meet the needs of every type of customer from hypermarkets to small convenience stores. The Company also maintains a highly efficient and sophisticated logistics operation to address distribution requirements across the markets it serves. Through the acquisition of WFI, the Company significantly extended its United States distribution network into the Northeast. BIMBO has also developed strong relationships with its customers that enable it to tailor its approach and response to their diverse and changing needs, including with respect to frequency of delivery, in a cost-effective manner. BIMBO believes this result in strong customer loyalty.

• Market Intelligence and Consumer Satisfaction. BIMBO offers its consumers, through its

different brands, a wide variety of baked goods spanning a broad range of product types, pricing levels, flavors and sizes. The Company frequently expands and creates innovative product lines to address specific needs and desires of consumers, based on a unique understanding of their needs and preferences in the markets in which the Company operates. BIMBO has gained this unique understanding by continuously conducting market research and retrieving and analyzing key information from its consumers, including through the use of sophisticated technology by its sales force its market intelligence allows it to target the right products to each point of sale at the right time. BIMBO believes it is the leading innovator within its product categories and has consistently introduced new products that have been well received by consumers.

• Experienced Management Team. The strong management team of the Company has proven

industry expertise, with an average of 26 years with it and over 342 years of collective experience in the baked goods industry. They have successfully developed and consolidated its market leadership by focusing on its baked goods business and by their effective and rapid response to the constantly changing consumer demands and competitive environment in the markets in which it operates. They have completed and integrated 32 acquisitions over the past nine years and disseminated innovative ideas and best practices in manufacturing and distribution across Grupo Bimbo.

• Strong Corporate Culture. BIMBO places great emphasis on its relationship with its associates

and seek to align their interests with its corporate goals and customer satisfaction policies. BIMBO is committed to the safety and health of its associates and consumers and practices a preventive approach to well-being. The Company believes that a high level of workforce satisfaction leads to a more productive business environment as well as customer and consumer loyalty.

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2. Main Operations

Grupo Bimbo is one of the largest baked goods companies in the world and one of the largest food companies in the Americas. The Company produces, distributes and markets a wide variety of baked goods, sweet and salted snacks, wheat tortillas, tostadas, cookies, confectionary goods, chocolates, goat milk caramel “cajeta,” confectionery goods, fast food and packaged foods it also carries renowned brands such as: Bimbo, Marinela, Tia Rosa, Lara, El Globo, Thomas’, Arnold, Stroehmann, Freihofer, Dutch Country, Maier’s, D’Italiano, Brownberry, Oroweat, Mrs. Baird’s, Entenmann’s, Thomas, Francisco, Old Country Barcel, Ricolino, Coronado, La Corona, Milpa Real, Del Hogar, Ideal, Plus Vita, Pullman, Holsum, Nutrella, Firenze, Laura, Europa y Monarca, among many others. BIMBO has manufacturing operations in México, the United States, Argentina, Brasil, Chile, Colombia, Costa Rica, El Salvador, Honduras, Guatemala, Panamá, Paraguay, Perú, Uruguay, Venezuela y China, and a distribution center in Nicaragua. Grupo Bimbo is organized in two divisions: (i) baked goods, and (ii) sweet and salted snacks. Under baked goods is Bimbo, S.A. de C.V., which includes brands such as Bimbo Marinela, y El Globo, among others; BBU, which incorporates the operative companies in the United States; and OLA, which includes all the operations in Latin America. Also, from March 2006, the Company ventured in the Asian market through the acquisition of Beijing Panrico Food Processing Center in China. On the other hand, the sweet and salted snacks operation is found grouped in Barcel, S.A. de C.V., which includes Barcel, Ricolino and Coronado brands. The Company operates in the following regions: México, the United States, Latin America y Asia.

Net Sales* As of December 31

2009 2008 2007

México (1) 55,388 54,845 49,713

EE.UU. 49,850 18,049 16,565

Latinoamérica 13,606 11,346 7,600

Consolidated** 116,353 82,317 72,294

* Figures in million pesos. **In the consolidated statements, operations between regions have been eliminated. (1) Includes operations in Europe and Asia.

a. Baked Goods Division

This sector comprises the following business units: Bimbo, S.A. de C.V.

This Company produces all the baked goods in México and its main brands are Bimbo and Marinela. Bimbo. Dedicated to the production, distribution and marketing of packaged bread, sweet bread, cereal bars, packaged wheat tortillas, tostadas and fast food. Regarding packaged bread, historically, Bimbo has managed to grow above the population and GDP index, due to a growing a major change in the preference and needs of consumers, in the sense of acquiring packaged bread, whose duration is greater than the traditional bread. Additionally this division has been very active in the introduction of new products with features that have managed to meet consumer’s needs. Regarding to sweet bread, Bimbo has not only pursued a strategy of production, distribution and marketing of traditional Mexican bakery but also has sought to differentiate itself by offering new options that meet different consumption moments. These products, sold in different varieties and presentations, represent, like the packaged bread, an excellent choice for consumers. We must emphasize the consolidation of the Company in the category of cereal bars, such as, Bran Frut, Multigrano, Doble Fibra, and Plus Vita, a category of bars with less than 100 calories, ideal for the consumers that look for alternatives more adequate to their healthy life style. These new products have consolidated the leadership of Bimbo in this category during 2009.

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With respect to wheat tortilla and tostadas division, in the recent years it has experienced a significant annual growth. As a result of the above on 2009, Bimbo acquired the Sanissimo, which strengthened its position on the of tostadas and totopos modern market. The main brands under which Bimbo commercializes its products are:

* Licensed use of trademark in México. Marinela. This brand was founded in 1965 in Mexico City with the production of snack cakes on individual portions. In 1992 the Company acquired Galletas y Pastas Lara, S.A. de C.V., which allowed Marinela to approach in an important manner the traditional cookie sectors such as “marías”, salad crackers and popular cookies. In 2008 the Company acquired Galletas Gabi, which strengthen its position in the luxury cookies segment on the modern market. Currently, Marinela is dedicated to the production, distribution and marketing of various pastries, pies and cookies, mainly under the following brands:

Product Line Brands

Bakery Marinela, Suandy, Wonder Cookies Marinela, Lara, Suandy, Tia Rosa, Gabi,

Bimbo Together with Bimbo, Marinela has a preferential place on the counters of most of Mexico’s small businesses and convenience stores. Healthy Beverages. In 2008 the Company ventured in the category of milk beverages with Leche Negrito for its sale in the retail channel. The purpose is to participate in new categories using the Company’s top brands in order to increase value. El Globo. Is a pastry company founded in 1884 and acquired by Grupo Bimbo in September 2005. This Company is recognized as a leader Company and one of the most traditional, with a history of 125 years in the field of high-end pastries and artisanal bread in México. The Company keeps control of all the stages of the business: procurement, production, distribution and marketing, through over a net of 263 points of sale with different formats, traditional stores, coffee houses and carts. The products consists high-end pastries and artisanal bread and is aimed to the market’s superior levels. The principal categories of products are cakes, sweet and salted bread, yellows, canapés, cookies, chocolates, ice cream, pastas, prepared foods, and coffee-sandwich, these products are commercialized under the following brands:

Product Line Brands

Packaged bread (white, wheat bread, specialized)

Bimbo, Sunbeam*, Wonder, Oroweat, Breddy

Sweet bread Bimbo, Tia Rosa Home Made bread Del Hogar Wheat Tortillas Tia Rosa, Del Hogar, Gonder Tostadas and Totopos Milpa Real, Del Hogar, Kodyz, Sanissimo Cereal Bars Bran Frut, Doble Fibra, Multigrano, Plus Vita Fast Food Lonchibon

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Product Line Brands

High-end pastries, artisanal bread, yellow, cookies, pastas, canapés, chocolates, ice cream y prepared foods, cafes, drinks

El Globo

French high-end pastries, artisanal bread La Balance Specialized bread Delibrot Sandwich-coffee Breadhaus Cakes, bread and cookies El Molino

BBU, Inc.

This Company controls the operations of Grupo Bimbo in the United States. Such operations consist mainly in the manufacture, distribution and marketing of bread and tortillas, as well as the distribution of products with Mexican brands in the bread segment, which are imported from México and are focused in the Hispanic market. Today, BBU operates 34 production plants in the United States. Additionally, BBU has its own distribution system in the states of California, South Carolina, North Carolina, Colorado, Kansas, Nebraska, Oregon and Washington, and distributes through other distributors in Arizona, Illinois, Nevada, New Jersey, New York, Pennsylvania and Texas. The Company distributors in Alaska, Florida, Georgia, Hawaii, Idaho and Utah as well. International expansion in this country has allowed BIMBO a major capital investment; such is the case of Mrs. Baird’s acquisition in Texas in 1998 and Four-S in California in 1999. Likewise, in 2002 the Company bought from George Weston the Oroweat Entenmann’s operations in the west of the United States. In 2009 the Company achieved its major investment in this country with the acquisition from George Weston of all of its operations in the east of the United States. See “The Company – History and Development of the Company – History”.

This acquisitions have contributed to the consolidation of Grupo Bimbo in the United States and allowed to amplify it’s presence in the Anglo-Saxon population. Also this has made possible the consolidation of the Company’s operation with important Mexican brands in this country, where the Hispanic population has grown in a significant way over the past years. All of the above has given Grupo BIMBO more strength because a great part of the assets of the Company is out of the Mexican territory and the input of this operations to BIMBO´S sales is important, wherewith the risks for fluctuations has been reduced. See “The Company – Business Description – Principal Activity – Strengths and Strategy” and see “General Information – Risk Factors”. Main brand under which BBU commercializes its products:

Product Line Brands

Packaged Bread and pastries Oroweat, Mrs. Baird’s, Weber’s*, Bimbo, Thomas**, Francisco**, Old Country**, Bohemian Heart*, Roman Meal*

Sweet bread, cakes and cookies. Mrs. Baird’s, Entenmann’s**, Bimbo, Marinela Tortillas

Tia Rosa, Bimbo

* licensed use of trademark in California. ** licensed use of trademark west of United States.

OLA.

Organization in charged of coordinating all the operations of Grupo BIMBO in Latin America.

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These operations started through the Company’s construction of its own plants of production, strategic associations and acquisitions on certain countries. It’s operations located in Argentina, Brazil, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panamá, Paraguay, Peru, Uruguay and Venezuela represent a potential market of more than 360 millions of consumers. In this contrast BIMBO has devolved particular distribution systems for each country’s market attending to their social, geographical, policyal, labor and economical conditions of each country. OLA´s main Brands under which it comercializes it’s products are:

Product Line Brands

Packaged Bread and pastries Bimbo, Bontrigo, Breddy, Cena, Europa, Firenze, Fuch’s, Holsum, Ideal, La Mejor, Los Sorchantes, Maestro Panadero, Monarca, Morán, Nutrella, Pan Todos, Pullman, Plus Vita, Pyc, Tradiçao, Trigoro, Tulipán, Wonder, Mamá Inés, Guadalupe

Sweet bread Bimbo, Ideal, Laura, Pullman, Plus Vita Cookies and cakes Ana María, Lagos del Sur, Maestro Cubano,

Marinela, Marisela, Agua de Piedra Confectionary goods Ricard, Ricolino

BIMBO decided to participate in the Latin American markets due to the great growth potential that they represent in the consumption relation between traditional bread and packaged bread, also because of the consumption tendencies observed in the last years; there has been a growth in the consumption of packaged bread due to the growth in the labor force participation of woman in the productive life of different countries. See “The Company – Business Description – Principal Activity”. The next table shows the share of packaged bread and traditional bread in some of the countries in the region:

Up to December 31 2009

Argentina Brazil Chile Colombia Peru Uruguay Venezuela

Traditional bread 93% 93% 98% 80% 99% 97% 99% Packaged bread 7% 7% 2% 20% 1% 3% 1%

Source: Latin Panel.

China.

Coordinates the operations of Grupo BIMBO in Asia. Mainly, it concentrates the operation of the Beijing Panrico Food Processing Center, which was acquired in March 2006 and today is called Bimbo Beijing Food Company. Bimbo Beijing is dedicated to the manufacture, distribution and marketing of packaged bread, sweet bread, cakes and confectionary goods under the brand: BIMBO. Through the acquisition of the brand Million Land in 2009, it also commercializes ready-to-eat foods and Chinese baked goods. Bimbo Beijing operates one production plant and 11 distributions centers, of which six are located in Beijing and five in the surrounding cities. It has a portfolio of over 70 products, which are distributed and commercialized through its own distribution network of over 180 routes in the cities of Beijing and the surrounding cities to the Norwest of China. The principal markets of Bimbo Beijing are the cities of Beijing, Tianjin, Langfang, Baoding, Shijiazhuan, Taiyuan, Jinan y Handan. It is worth to mention the leverage of distributors and the long life products has permitted that the products have reached Chinese provinces such as: Inner Mongolia, Guandong, Xinjian and Heilongjiang.

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b. Salted Snacks and Confectionary Division.

Barcel, S.A. de C.V.

Barcel concentrates all the salted snacks, confectionary goods and chocolates in México and its main brands are Barcel, Ricolino, Coronado and La Corona. Barcel. Its operations started with the acquisition of a snack factory in the City of Querétaro in 1977, this gave birth to Productos Nubar, S.A. de C.V. Subsequently, two plants for production and commercialization of salted snacks were constructed in México. In 1999 the Company started operating in Mexicali, Baja California, with a new line for the production of corn products. In 2004 a plant was built in Mérida, Yucatán, afterwards Barcel took control of the operations of the tortillas and corn tostadas in Atitalaquia, Hidalgo, which was formerly operated by Bimbo, S.A. de C.V. Likewise, new lines of production were installed in Hermosillo in order to meet the increased demand for Barcel´s products. Today, Barcel exports products to the United States, achieving a good acceptance with consumers of both origins, Anglo-Saxon and Hispanic. The main brands under which Barcel commercializes its products are:

Product Line Brands

Chips Línea Chips, Ondas, Toreadas Wheat Línea Takis, Runners, Chipotles, Tostachos, Quezas Extruded Chicharrón de cerdo y de harina, Valentones,

Spirrones Peanuts Hot Nuts, Golden Nuts, Kiyakis Popcorn Karameladas pop

Ricolino. Produces, distributes and sells chocolates, chocolate coverings, confectionary goods, gum and gummy candies, acidulated tablets, caramels, lolly-pops, milk modifiers, traditional candies and goat milk caramel “cajeta”, through seven plants of production and tree collection centers, all of them located in México. Likewise, Ricolino has important operations in the United States, Central and South America. In Europe, through the brand Juicee Gummee, which is dedicated to the distribution of confectionary goods. From Europe it sells its products in European countries, in Asia and Australia. In February 1999 Barcel, S.A. de C.V. associated with the Dayhoff, in the United States, by acquiring an initial participation of 50%. In 2002 its participation increased to 70% of the capital stock and in 2004 Barcel acquired the totality of the shares. With this acquisition, Barcel, S.A. de C.V. obtained distribution channels and well known brands which allows Barcel to manufacture and distribute products with and important added value. In virtue of the agreement reached in January 2003 between Wrigley Sales Company and Ricolino, the later became the exclusive distributor of Wrigley’s gum products such as, Winterfresh, Orbit, Spearmint, Juicy Fruit and Doblemint. See “The Company – History and Development of the Company – History”. This agreement terminated in April 2008. In 2004, Ricolino became the exclusive distributor of Bon o Bon de Arcor, leading Company of confectionery goods in Latin America. Also in May of the same year, Barcel, S.A. de C.V. acquired Joyco de México, owner of the brands Duvalín, Bocadín, Lunetas and Duvaletas. In 2005 Ricolino acquired Chocolates La Corona; this Company commercializes brands like Paletón La Corona, Huevitos, Canasta and Chutazo. With this acquisition, the brand Ricolino established itself as one of the leading companies in the chocolate sector in México.

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During 2006, the plant Mundo Dulce in the City of Toluca was inaugurated, this plant operates as a Joint Venture with Arcor. In this plant lolly-pops, caramels and gums of both companies are produced. The main brands under which Ricolino commercializes its products are:

Product Line Brand

Goat Milk Caramel “Cajeta” Coronado, Yopi Confectionary goods Chiclosos Coronado, obleas Coronado, Duvaletas,

paletas Coronado, Just Juicee Chocolates and figures La Corona, Figuras de chocolate, Chocosorpresa,

Bocadín, Barra Payaso, Bon-o-bon* Candied Chocolates Lunetas, Chocoretas, Almendras Marshmallow Chocolates Paleta Payaso, Bubulubu, Paletón La Corona Chocolate covering Kranky, Pasitas Chocolate cookies Bocadin Chocolates spread Duvalín Gum Chick’s, Chiclub, Skidder, Star Gum, Mas K Gummies Panditas, Moritas, Dulcigomas, Gomilocas, Just

Fruttie, Park Lane, Dayhoff, Frutigomas Acidulated tablets Pecositas Milk Modifiers Choco Kiwi, Choco Kinder

* Product manufactures by Arcor, S.A.

3. Products

As of December 31, 2009, BIMBO produced more than 7,000 products under 150 renowned brands. Its business has always focused on a large array of products tailored to the local markets spanning from bread products, pastries and cakes to salted snacks and confectionery goods. Demand for the majority of its products varies depending on the season.

As part of its marketing program and to enhance its brand recognition and market penetration, its various brands have distinctly different packages designed to cater to the desires and expectations of consumers in each market according to its market research. The most representative are the individual packages, the family packages, packages for the institutional customers and the breadboxes and the cookie boxes for wholesale. a. Development of new products.

The innovation of products is highly important to the Company; therefore the Company has searched for alternate products that contribute to a better choice for the consumers. . Innovation provides an informed consumer a choice of alternative products, particularly those that should be included in a healthy diet where bread has a predominant place.

BIMBO strive to find the proper balance between nutrition and taste in its products. Therefore, in 2008, the Company became a member of International Food and Beverage Alliance to implement the Global Strategy of the World Health Organization on Diet, Physical Activity and Health, with five fundamental commitments:

• Developing of products: improving the nutritional value of current products, introducing new products with healthier nutritional values, controlled portions, improving guidelines in the countries in which the Company operates

• Adopting responsible publicity and marketing for children under the age of 12 years.

• Providing nutritional information to consumers through clear and user-friendly labeling.

• Promoting physical activity and healthy life styles.

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• Making alliances with health organizations and research institutions.

Additionally, the Company compromised to comply with self regulation programs setting health and nutritional advertising standards (Código PABI – Publicidad de Alimentos y Bebidas), to instill positive nutritional values to children in our markets, discourage over-consumption and avoid deceptive marketing.

Through its innovative products, BIMBO continues to implement and consolidate strategies focused on diversifying its brands and products in the regions in which the Company operates. BIMBO´s goal is to take advantage of trends and opportunities in its markets. BIMBO has developed innovative products with unique nutritional features such as lowering cholesterol, fat, salt and sugar to address the needs of different demographics.

It should be noted that in order to promote the competitiveness of the Company’s products in an international and domestic level, Grupo Bimbo participates constantly and works together with the Consejo Nacional de Ciencia y Tecnología in Mexico and with Strategic Alliances and Innovations with universities and research centers to develop new technologies for its product development program.

On the other hand, the programs and agreements are improved with strategic suppliers, institutes, research centers and universities participating together in the developments of research projects.

BIMBO has also formed specialized groups for the development of new products and has opened six innovation and nutrition institutes, two in Mexico, three in the United States and one in Brazil. Additionally, the Company has laboratories and facilities engaged in the production of prototypes and the testing and validation of new ingredients, as well as conducting functionality studies and evaluating new products. Newly developed products are approved by committees and evaluated through market testing. Significant results from our innovation and nutrition centers include: (i) the launch of biodegradable packaging technology which, unlike normal polyethylene, is degraded in five years instead of 100 years; (ii) the development of products with whole grains, to provide consumers the full nutritional benefits of grains regularly used in bread manufacturing (such as wheat, oats and rye); and (iii) the improvement of the nutritional value in certain product lines and the reduction of fat, salt and sugar and the elimination of trans fat in products in all categories. Regarding the task of consumer education, the Company has continued to provide information regarding nutrition and healthy diet through printed publications, radio, television and the Internet and actively participate in consumer education programs. We also promote physical activity in our advertisements and in sporting events, and we distribute free brochures that encourage a balanced diet and a healthy life style. The purpose of the above is that the consumer will be able to choose, in an informed manner, between a large variety and alternatives of products for its diet. b. Seasonality

In most of the categories the products of the Company show a seasonal behavior, with larger levels of consumption in holiday seasons, rain season, and low temperature seasons. The low levels are presented during summer due to school vacations, and in high temperature seasons. In order to stabilize the demand for its products BIMBO has developed various promotions and advertising campaigns and new products, which launches during the periods of lower consumption in the different operations, which do not coincide due to the geographical coverage of Grupo BIMBO. See “The Company – Business Description- Principal Activity – Promotion and Publicity”.

4. Production Process a. Production Process

BIMBO´s plants use state-of-the-art technology and equipment. The Company has adopted and implemented modern automated production processes for each of its lines of business and maintain strict operation and control systems, resulting in efficiencies throughout its production processes within a competitive cost structure. Some of its manufacturing plants may be programmed to manufacture a variety

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of products also contributing to production efficiencies. The production process of its products has slight variations between one another, but generally include the mixing of ingredients, baking, slicing, packaging and distribution of the products.

As part of its strategy to respond to the changing needs of the market, BIMBO has implemented and continuously updates innovative systems to increase the capacity, quality, and production potential of its manufacturing lines. To that end, BIMBO has redesigned its current facilities and incorporated new technology (either developed by us or acquired from third parties), significantly increasing capacity and reducing production costs.

As a result of productivity improvements, and to take advantage of the resources of its production plants, each plant carries out its own analysis of its production processes and, together with the corporate support areas, BIMBO implements appropriate improvements. For example, in 2009 the Company closed six plants. Three of these six operations were relocated to existing plants to reduce unnecessary expenses and improve profitability. The below chart, is an example of some process lines of packaged bread, sweet bread, frozen bread, and salted snacks. Its worth mentioning that the diagrams correspond to the main productive processes, which means that the production of other foods such as tortillas, chocolates and goat milk caramel “cajeta” etc. are different.

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PACKAGED BREAD

Sweet Bread

Frozen Bread

Start

Raw material Reception

Raw material Wharehouse

Ingredients Mixture

Molding and Division

Molds Placement

Fermentation andBakery

Cooling andSlizing

Distribution andSale Client

End

Packaging Process



Dough preparation

Paste Molding and Division

DecorativeProcess

Cooling andSlizing

Packaging Process

Distribution andSale

Client

Start

End

Start



Ingredients Mixture

Molding andDivision

Frozing

Delivery at salePoints

Bakig and Cooling

Distribution andSale

Client

End

Packaging Process

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SALTED SNACKS

.

b. Raw Materials

The quality and continuous supply of BIMBO´s raw materials are critical factors in its production process. BIMBO has adopted rigorous supply policies under which the Company requires its suppliers to adhere to detailed specifications for raw materials and to provide quality control certificates for their products. The Company also conducts laboratory testing on raw materials supplied by third parties and routinely inspects its suppliers’ production plants and facilities.

The Company has long-standing relationships with suppliers who adhere to its high quality standards. BIMBO seeks to maintain low supply costs without sacrificing quality of raw materials.

Wheat flour is its main raw material. Wheat is generally traded in U.S. dollars and subject to price fluctuations depending upon factors such as weather, crop production and worldwide market supply and demand. BIMBO routinely reviews and revises its relationship with its wheat flour suppliers and the Company continuously enters into hedging arrangements to manage its exposure to price fluctuations of its key raw materials. See “Risk Factors – Increases in prices and shortages of raw materials, fuels and utilities could cause our costs to increase.”

Other important raw materials for BIMBO´s lines of business are wheat flour, sugar, edible oils and fats and eggs, as well as plastics used to package its products. The next table shows four of the most important raw materials and its major supplier in the markets they operate:

Raw

Material

Mexico

USA

Central and South America

Wheat Flour Grupo Altex Harinera La Espiga Horizon Milling (Cargill) Harinera de Irapuato Harinera de Chihuahua Molinera del Valle

Archer Daniels Midland Bay State Milling Company Cereal Food Processors Conagra Inc Horizon Milling LLC Miller Milling Company

Bunge Alimentos Canepa Hermanos Cargill Los Globo Agroindrustrial Do Brazil Molino Santa Mara Nolston



Mixing andCutting

Formed and Expanded Through Heat

Baked And fried

Flavored andPackaged Process

Flavored andPackaged Process

Cutting, Frying andBaking

Washing and Peeling Process

Cleaned andStored Process

Raw material Reception Sales and

Distribution

Client

End

Start

Start

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Raw

Material

Mexico

USA


Sugar Beta San Miguel Cargill de México EDF & Man de Comercio Confitados Finos de México

Amalgamated Sugar Company LLC. American Sugar Refinning Company Indiana Sugar Inc. Lawrence Foods, Inc. United Sugar Corp. Domino Sugar Co.

Copersucar Coop Prod A Alc Est SP ED&F/Man Chile S.A. Riopaila Castilla S.A. Distribuidora Molina A y Asoc C.A. Sucden Perú S.A. Mayagüez S.A. Industria Azucarera Santa Clara Dulcini S.A. Lodiser S.A. Ing y Ref San Martin del Tabacal S.R.L. Ingenio Risaralda, S.A.

Raw Material

Mexico

USA


Edible Oils and

Fats Aarhuskarlshamn Cargill de México Ragasa Industrias Proteínas y Oléicos Industrializadora Oleofinos

Aarhuskarishamn ADM Bunge Cargill Refined Oils Perdue Loders Croklaan

Aceites y Grasas Vegetales S.A. Acegrasas S.A. Cargill Bunge Alimentos S.A. Camilo Ferron Chile S.A. Alicorp S.A.A. Industrial Alpamayo S.A. Empresa Carioca Productos Químicos Comercial Venser S.A. Alimentos Polar Comercial C.A. Grasas y derivados S.A. Grades S.A. Molino Cañuelas SACIFIA

Liquid and

Powdered Eggs Ovoplus Alimentos de la Granja Granjas Orespi Michael Foods Procesadora de Alimentos Mex Alimentos Deshidratados

Debell Michael Foods Papetti’s National Egg/Rose Acre Sonstegard Rembrandt Ballas Primera Foods

DMR Distribuidora Productos Alimenticios Ingredientes Trading Ovo Productos del Sur Patrimonio Autónomo FC-Granjas Buenos Aires

BIMBO holds minority interests in some of its major suppliers of wheat flour, eggs and sugar. In addition to these raw materials, the Company also purchases plastic packaging from a number of suppliers. The Company currently is not dependent on any single supplier in any market in which it operates.

BIMBO is not aware of any price controls in effect by any governmental authority with respect to any of its raw materials.

BIMBO´s raw materials are managed using the first-in first-out method to preserve the freshness of its products. Due to the nature of its products, its inventories of raw materials, mainly perishable products, have a high turnover rate. The Company receives most of its supplies on a continuous basis, in some cases, with daily deliveries. Its corporate offices lead the negotiations of our main raw materials with its suppliers while its inventories are directly managed by each plant and storage facility. Local plants and storage facilities also manage and directly place orders of raw materials that may be obtained locally. c. Energy Consumption

The main energetic that BIMBO consumes is electric energy, natural gas, liquefied petroleum gas, gasoline and diesel. In most of the productive installations, the Company has a generator of alternate electric energy for emergencies, in order to ensure the energy supply. In this way, it guarantees the security of its workers and its equipment, as a consequence of this, it minimizes the impact of any problem in the energy supply that the plant may have in the clients and consumers services. Today, projects of electricity generation form renewable sources are been evaluated to contribute to sustainable development.

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According to the Company’s vehicle replacement program, every year the most efficient delivery and transportation units are incorporated to the fleet. In case of requiring the transportation services of another supplier, the Company verifies that the supplier satisfies the standards established by the Group. With respect to diesel and gasoline, used by the fleet of transportation and distribution, BIMBO has gas stations in its installations which are supplied regularly. Also BIMBO has a number of vehicles which run with LP gas and diesel instead of gasoline which are used in the large cities, in order to help the environment. In spite of having a large number of installations and vehicles working in a continued way, the energetic consumption does not represent a considerable expenditure in relation to its costs, due to the efficiency in the design of the distribution routs and the control of the operation. d. Inventory

Raw Materials According to Grupo BIMBO´s policys of keeping its products fresh in the market and considering that these are perishable, BIMBO manages at an operative level the totality of its inventories using the last-in-first-out method to assign costs to inventory. Because of the nature of the products that BIMBO produces, it maintains high inventory turnover rates of production input, primarily those perishable products to a greater extent, as the necessary inputs, for the development of packaged bread, sweet bread, cakes and cookies. In this case most of the inventories are managed by the provider and are supply to BIMBO on a recurring basis, even with a daily delivery rate. The inventory administration of the production inputs is done through the classification of it according to its logistics: • Locals. Those which negotiation is realized in a corporative manner, but its request and its storage are

directly managed by each plant. • Centralized and imported. Those which negotiation and orders are handled in a corporative manner

and only the storage is realized in each plant.

Finished Products

BIMBO has strategically located production plants and distribution centers, which allows it to consolidate its operations in each region and to efficiently distribute its products. In addition, the Company has successfully implemented an interconnected system that allows it to synchronize its production capabilities with consumer demands, resulting in optimal levels of customer order management and thus, very low inventories of its finished products.

Once finished, the baked goods are immediately shipped to the Company’s distribution centers and points of sale. Inventories of salted snacks and confectionery goods have an average turnover rate of three days. Inventories of dried products, such as toasted bread and breadcrumbs, cookies, candies and chocolates, have a longer turnover rate, due to the nature of the products and the use of certain preservation technologies. BIMBO´s high inventory turnover rate is driven by its customers needs based on daily orders and consumer behaviors.

e. Quality Control System

Quality is essential for BIMBO. The Company has implemented a quality control system tailored to its individual needs and has adopted the highest international standards, driven by our commitment to ensure the satisfaction of its customers and consumers. This system involves quality control assurance and food safety, providing enhanced customer service, promoting and preserving a healthy labor environment and

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respecting the environment to contribute to the overall development of the community. Given the importance of food quality and safety, one part of its quality control system is aimed at controlling and continuously improving the quality of consumables, processes and finished products. With the implementation of its quality control system BIMBO has won several awards, including the Premio Nacional de Calidad Mexicano in 2007.

BIMBO has earned the loyalty of its customers and consumers by its adherence to the most rigorous international standards in the food industry, certified by independent organizations and agencies with a recognized international reputation. For example, in Mexico as of March 2010, 27 of BIMBO´s plants have obtained the International Organization for Standardization 9001-2000 certification, or ISO 9001-2000, 37 of its plants have obtained the Hazard Analysis & Critical Control Points certification, or HACCP, and six of its exporting plants have also obtained Business Alliance for Secure Commerce certification, or BASC. ISO 9001-2000 is a series of international standards that provide guidelines for a quality management system and HACCP is a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of finished products. BASC certification addresses and seeks to prevent the risks associated with narcotics, terrorism and merchandise smuggling, by controlling operating processes, personnel, access, infrastructure, suppliers, and even customers.

f. Productivity

As part of BIMBO´s strategy to respond to the changing needs of the market, it has implemented and continuously updated innovative systems to increase the capacity, quality, and production potential of its manufacturing lines. To that end, the Company has redesigned its current facilities and incorporated new technology (either developed by BIMBO or acquired from third parties), significantly increasing capacity and reducing production costs.

As a result of productivity improvements, and to take advantage of the resources of its production plants, each plant carries out its own analysis of its production processes and, together with the corporate support areas, the Company implements appropriate improvements. For example, in 2009 BIMBO closed six plants. Three of these six operations were relocated to existing plants to reduce unnecessary expenses and improve profitability. 5. Prices

The Company’s general policies regarding the prices of its products is based primarily in the general conditions of the market and in the input costs of production. BIMBO works to maintain low prices and offering their consumers and clients more competitive prices according to the Company’s system for optimization of the processes. The rise of the prices in the Group is not only because of the eventual costs rise. Other factors are taken into account such as, market and competition, product sensibility and its market, a general research of the environment (mainly economical) and the no repercussion of inefficiencies by BIMBO in the consumer price. In this manner the Company estimates a system of prices that allows it to locate itself as one of the leaders in the industry.

Its worth mentioning that practically none of BIMBO´s products is under any price controls in effect by any governmental authority of the countries where the Company operates. See “Risk Factor- Increases in prices and shortages of raw materials, fuels and utilities could cause the Group’s costs to increase”.

6. Publicity and Promotion

Through the calendar year, the Company carries out diverse publicity and promotion campaigns aimed at: (i) maintaining the image and growth of its leader products (ii) supporting the new products that have been launched to the market (iii) supporting specific products whose demand has decreased. BIMBO uses

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publicity agencies and independent media centers to develop and broadcast its advertising campaigns. Television is the most used media by BIMBO but also the Company uses other such as external advertising, radio and magazines as well as mobile publicity (labeling various vehicles where their products are transported). Additionally Turing the last years, the Company has emphasized the use of graphic materials and exhibitors at the selling points. As a part of BIMBO´s policy the image portrayed to the audience must be mainly familiar and promoting of a physical activity. This is why BIMBO is present in the television programs that are consistent with these policies as well as in Sports and Entertainment programs. During 2009 BIMBO executed a agreement for health and nutritional advertising standards for children under 12 years old (Código PABI – Publicidad de Alimentos y Bebidas), which entered into force on January 1st. Likewise, the Company accepted to compromise with the World Health Organization. Therefore the Company has paid special attention to its advertising which is focused to this part of the population not only in México but also in all of its world wide operations, promoting good values and good eating and health habits as well as physical activity. Each line of products establishes its own advertising budget according to its needs, which is determined by a fixed percentage over their particular sales. 7. Technology and information systems

a. Technology

Trough its own line of investigation and development, the Company focuses itself to the applied technology that specialized groups of baked goods, salted snacks and confectionary goods, use. Some of their most important research areas are: Langer life for products on the shelf, new products development, extensions of various products, healthy and ethnic products, improving quality of the products, developing new ingredients and the optimization in the use of these, research for the improving of agricultural products, quality assurance, process changes, processes automatization, lines of production analysis and packages changes. Due to the every day increase in demanding markets and consumers, the used technologies have had to evolution continuously to gain the improvements in the processes and in the produced products. This is why functional ingredients such as fiber, whole grains, trans fatty acids, the inclusion of vitamins, prebiotics, inclusion on the products which has represented a technological challenger which had to be overcome in the various markets. Generally the productive processes of baked goods are not paid by royalties or bonuses for technical assistance or Technologies transferences. The contracts in relation to these aspects are fundamentally agreements with several universities and research institutions and centers as well as the development with providers. The agreements referent to the extent, compromises, technology property, confidentiality, Publications, and responsibilities are determined through specified and particular agreements. All of the above is realized with the finality of finding innovative and vanguard technologies on the baked goods, tortillas, and other type of foods, types. Regarding the machinery supply, BIMBO has very selective providers policy. Various criteria are contemplated in order to acquire new machinery, such as, specialization, sophistication, fabricants technique, top technology, labor conditions, and special emphasis on their security levels, their technical services supplied after the acquisition, price and payment conditions. Said criteria are aimed to guarantee the rigorous levels of efficiency, productivity and environment friendly policies, as well as the high levels of quality in all BIMBO products. The Company develops many designs of the related technology and automatisms; moreover regarding the fabrication of the machinery the Company uses third parties. In this case with the purpose of protecting the property of the created design the Company signs confidentiality agreements with the providers. BIMBO´s

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technological developments are patented or secured properly before the IMPI (Instituto Mexicano de la Propiedad Industrial) see “The Company – Business Description - Patents, Licenses, Brands and Other Contracts”. BIMBO considers that the Company does not depend exclusively on any of its technology providers or technical assistance, due to the existence of various providers in these services. b. Information Systems

BIMBO uses automatized information systems for both, operative levels as well as management levels, which have been developed in various stages. The operational information systems link their processes from the reception of production input up to the sale process, this has resulted in more control and efficiency. On the other hand, the manager information systems have a synthesis of the operative information that has been concentrated in the various plants and agencies in all the business sectors. One of the principal purposes of the integration of both information systems mentioned above, is that inside the organizational structure of Grupo BIMBO it may be as much delegation as possible in each of its members, including the lower levels of the organization chart. In this manner the Company can count with a decentralized system for the decision making. See “The Company- Business Description- Human Resources”. Since 2001, BIMBO operates a business solution integrated by an ERP system, over a data base with the capacity to manage large volumes of information. This has allowed BIMBO to have a standardized and centralized business model which simplifies the information, installed on a modern and robust technology infrastructure that enables the integration into all operations of the Company. As of December 31, 2008, the system had been installed and operating in all of the Company’s operation. During 2009 the manner of operating al the northwestern operations of the Unites States was designed due to the acquisitions from George Weston in January of that same year, these operations would operate in the same manner as the rest of the operations of the Company. During the second semester of 2010 the implementation of this system would be taking place in such regions. China’s operation works under the concept of on-demand services through a system of outsourcing, for both, infrastructure and applications. ERP services in China are attended from Austin, Texas, and functional support is received from Mexico. Barcel’s wholesale channel operates under the concept of “Software as a Service”. On the other hand, El Globo operates under a new retail system. ii) Distribution Channels

1. Distribution and Sales Process

Within BIMBO´s strategies, direct distribution to points of sales has been one of the key factors of its success; this is why in the commercial area more than 50,000 people are employed. The Company has developed one of the largest fleets in the American continent with approximately 40,000 owned units, 33,000 in delivery, 6,000 in transportation and around 2,0000 supervision units, in addition to the outsourced distribution units and/or independent operators both in the United States and in Central and South America.

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Every day, the sales department is in charged of visiting more than a million eight hundred thousand points of sale, leaving the plants, agencies and warehouses. They can keep more than one brand in their installments. The Company has 869 distribution agencies, each of which depends in an operative manner of one or more plants, even if they are not located near each other. The delivery vehicles fleet consists mainly in units called “Vanette” and “Nissan”, as well as large sized units (rabones), for distribution to institutional customers. The primarily transportation; the fabric or agency transportation, is performed through loaded semi-trailers, which can be single or double, depending on the applicable laws of each country. As of December 2009, the vehicles used by Grupo Bimbo all around the world were distributed according to the following:

Vehicles Distribution

Agencies Delivery Transporta

tion Supervision Total

33,444 6,044 2,021 41,628 869

The fleet has an average age of 4 years, 89% are models between 2000 and 2009. Every year, new units are been incorporated due to replacement or expansion in order to improve the Company’s services to its customers and optimize the operation costs.

T R AN SP O RT AC IO N Y D I ST RI B UC IO N DE LT RA N SP OR TA C IO N Y D I ST RI B UC IO N D E L

PR O DU C TOPR O DU CT O

�� TRANSPORTETRANSPORTE

PRODUCT TRANSPORTATION AND DISTRIBUTION

T R A N S P O R T A T IO N

D E L IV E R Y

S T A TI O N

F A C T O R Y

T R A N S P O R T A T IO N

D E LI V E R Y

CO M E R C E S

D EL I V E R Y

ST A T I O N

A G E N C Y

R ET U R N I N G

D E LI V E R Y

C A G ES W I TH

R E T U R N E D

P R O D U C T S

2. Transportation

Orders are placed a week in advance by the Company’s sales force and may be adjusted three to five days before being delivered to a distribution center, depending on the line and product. The Company’s finished products are delivered to the dispatch area and are inspected to confirm compliance with our quality standards and loaded on semi-trailers for delivery. At the agency, the fresh products, which are accommodated in cages or tubes, are downloaded from the trailers and are grouped in the delivery area and subsequently will be distributed on the sales vans.

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At the same time, the trailers which are going back to the fabric are loaded with some empty cages or tubes and other returned products. These are delivered at the concessionaries stores that sale products packages at reduced prices. 3. Sales

The sales force distributes the Company’s products to its customers from distribution centers according to predetermined itineraries. Currently, all of its routes can both deliver products and pick-up returned products from its customers on each visit. Products may be returned by the customers if they were not sold and are replaced by fresh products without cost to the client. The products that are picked up when they are considered no longer fresh although they could be consumed on the date on which they are retrieved.

Returned products are handled by: (i) delivering the product for sale to outlets that sell “yesterday’s bread,” where the product is offered for sale from two to four days at a lower price (these outlets may be owned and operated by BIMBO or operated by third parties); or (ii) selling the product by weight for use as cattle feed.

Each product is displayed for sale in accordance with its shelf life, which varies from seven days, in the case of bread, or several months, in the case of chocolates, cookies and snacks

Each of BIMBO´s salesmen visit an average between 30 or 45 customers of the traditional channel, in the case of larger customers the daily average visits are between 4 and 8 customers. Based on its production and sale levels, visits to each customer may be daily, every three days, two times a week or weekly. The Company classifies its customers according to their purchase volume, type of distribution channel and by individual characteristics. The Company’s customers include supermarkets, convenience stores, institutional customers, fast food chains, schools, customers with vending machines and traditional customers (such as grocery stores). It should be noted that the later represents a 70% of the total sales volume. See “The Company – Business Description- Main Customers” In the United States due to the markets characteristics regarding type of clients and distances, the visit average is between 15 and 20 clients daily. BIMBO´s sales are made principally with cash, even though credit schemes exist for the clients in the traditional channel. The credit and discounts given to medium and large clients varies according to the product and the client or supermarket chain. iii) Patents, Trademarks, Licenses and other Contracts.

1. Brands and Logos

The Company’s most important brands, slogans and logos are protected by trademarks in the countries in which BIMBO operates and in many other countries. It manufactures and/or commercializes more than 5,000 products under well-known brands, including, among others, Bimbo, Barcel, Marinela, Tía Rosa, Lara, El Globo, Oroweat, Mrs Baird’s, Lonchibón, Ricolino, Coronado, La Corona, Milpa Real, Del Hogar, Suandy, Ideal, Plus Vita, Pullman, Monarca, Entenmann’s, Thomas’ and Boboli, among others, BIMBO is holder of the in México and in the rest of the world. Said brands are relevant because their products or group of profucts represent and important sales volume. Currently, BIMBO has approximately 4,500 brand files and registries in Mexico and more than 9,000 abroad. The Company has brands registries in Africa, North and South America, Asia, Europe and the Middle East. However, the trademark for Bimbo is held by others in Chile and certain European countries, including Spain, and the trademark for Marinela is held by third parties in El Salvador, Honduras and Colombia. Therefore, BIMBO´s products in those countries are sold under the brands Ideal and Marisela, respectively, notwithstanding that it uses its designs and packages in those countries. BIMBO also operates registered websites targeting consumers in each of the geographies in which it operates.

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Grupo Bimbo uses its brands in the national market through its subsidiaries (Bimbo, S.A. de C.V. y Barcel, S.A. de C.V., among others), and abroad through its subsidiaries in each country where BIMBO operates. Therefore the most important brands of the Company are registered to each of the subsidiaries through its respective contracts. As well, some of the subsidiaries of the Company abroad have their own brands which they use in a direct manner. The Company has not invested meaningful quantities to the research and development of products over the last 3 years. 2. Patents and Copyright

Patents

The protection of the Company’s inventions through patents is of paramount importance to it. BIMBO operates primarily with machinery developed with state-of-the-art technology and its Research and Development Department regularly requests patent protection in Mexico and abroad for new technology.

As of April 26, 2010, the Company has 106 issued patents in Mexico and 138 abroad, mainly in the United States, Argentina, Chile, China, Colombia, Korea, Costa Rica, El Salvador, the Philippines, Guatemala, India, Peru, the Czech Republic, Taiwan, Turkey, Venezuela and the European Union.

Copyright

The major characters, publications, computer systems, logos and package designs used by the Company in its operations are protected by copyrights in Mexico and abroad.

Legal Proceedings

As of December 2009 there are currently no legal, governmental or arbitration proceedings against us or any of our subsidiaries or involving any of our property or our subsidiaries’ property which we believe that, if adversely determined, will have a material adverse effect on our business, financial condition or results of operations. See “The Company – Business Description – Judicial, Administrative or Arbitration Processes”. 3. Contracts

BIMBO has several contracts, among such contracts the following are the most important:

• Licensing agreements to use software with IBM, Microsoft, Oracle and Sybase, among others, all them for indefinite time. Likewise, in June 2007, BIMBO signed an amendment agreement with EDS for technological information services for a period of five years with two potential extensions of two years each, in order to improve the costs structure of the provision of services

• Some contracts with providers: Cp Ingredients S.A. de C.V., Bemis Packaging S.A. de C.V., AgroIndustrias Unidas de Cacao, Agrícola Malú, Rockwell Automation Inc., Adm Cocoa Div, Dipasa de México S.A. de C.V., Intermec, Softek, Oracle, NCR and Capgemini, the terms of the agreements depend on the specific Project.

• Machinery manufacturing contracts with Mexican Companies and foreign: F.M.C., Stewart, Meinke, Record, Sasib Packaging, I.J. White y A.P.V., all indefinite. The Company signed an association agreement with Pan Glo for the cleaning and maintenance of the Company’s molds for the production of bread. Supply Agreements for long-term supply in order to have a timely supply of some of its raw materials.

Grupo BIMBO has the policy of registering before the relevant authority all of the brands and patents licenses agreements with its subsidiaries, in order to regulate and legitimate the use of the brands and patents of the Company by said subsidiaries

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Additionally, BIMBO executes the necessary agreements for the ordinary course of it business. iv) Main Customers

BIMBO has more than 1.3 million points of sales in its operations. The Company has strong relationships with its customers and strives to understand and meet their specific needs. It has a diverse client base among and within the countries in which it operates that range from large institutional customers to small family-owned businesses.

In the United States, more than half of its customers are supermarket chains, followed by price clubs, restaurant chains, institutional customers and convenience stores. Among its main customers in the United States are Basha’s, Denny’s, H.E.B., Kroger, Costco, Publix, Raley’s, Safeway, Sam’s, Supervalu, Target, Wal-Mart, Wegmans, 7 Eleven and the U.S. Army.

In Mexico, most of its customers are small family-owned convenience stores, but the Company also has a solid base of large institutional customers, including large retail stores, supermarkets, warehouses, price clubs, convenience stores and government-owned supermarkets, such as Arterli, Al Super, Calimax, Casa Ley, Chedraui, Círculo K, Comercial Mexicana, Extra, HEB, Oxxo, 7 Eleven, Soriana, Smart and Wal-Mart. We also serve large fast food chains and other large institutional customers, such as Burger King, KFC, McDonald’s, Sistema Integral para el Desarrollo Integral de la Familia and hospitals belonging to the Mexican Social Security Institute (Instituto Mexicano del Seguro Social).

In South America, more than half of its sales are to supermarket chains and hypermarkets. Among its main customers in the region are Carulla, Carrefour, Cativen, CBD, Cencosud, Central, Disco, Éxito Coto, Olímpica, Santa Isabel, Selectos, Supermercados Peruanos, Vivero and Wal-Mart. None of these clients represents over 10% of the Company’s sales; therefore BIMBO does not depend on any of them.

v) Applicable Legislation and Tax Situation

The development of BIMBO´s business is regulated by several laws, rules and regulations, and general government regulations, which regulate the correct performance. The rules relating to the environment, health, advertising and intellectual property are particularly relevant to the results of the Company. In México some of the main applicable laws to BIMBO and its operations are the commerce, corporative government and environmental regulation such as Commerce Code (Código de Comercio), General Corporations Law (Ley General de Sociedades Mercantiles), Securities Market Law (Ley del Mercado de Valores), General Law of Ecological Equilibrium and Environmental Protection (Ley General del Equilibrio Ecológico y Protección al Ambiente), the National Water Law (Ley de Aguas Nacionales) and the General Law on the Prevention and Integrated Water Management (Ley General para la Prevención y Gestión Integral de los Residuos). Also, the following laws: General Health Law (Ley General de Salud), Federal Law of Consumer Protection (Ley Federal de Protección al Consumidor), Federal Law on Metrology and Standardization (Ley Federal sobre Metrología y Normalización), Federal Labor Law (Ley Federal del Trabajo), Social Security Law (Ley del Seguro Social), Federal Rights Law (Ley Federal de Derechos), Customs Law (Ley Aduanera) and Industrial Property Law (Ley de la Propiedad Industrial). In the same way, the Company is obligated to take the necessary actions to abide the following regulations and NOMs: Regulation of the General Law of Ecological Equilibrium and Environmental Protection in the Field of Environmental Impact (Reglamento de la Ley General de Equilibrio Ecológico y Protección al Ambiente en Materia de Impacto Ambiental); Regulation of the General Law of Ecological Equilibrium and Environmental Protection on Prevention and Control of Air Pollution (Reglamento de la Ley General del Equilibrio Ecológico y Protección al Ambiente en Materia de Prevención y Control de la Contaminación de la Atmósfera); Regulation of the General Law of Balance Ecological Environmental Protection in the

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Register of Emissions and Pollutant Transfer (Reglamento de la Ley General del Equilibrio Ecológico y la Protección del Ambiente en Registro de Emisiones y Transferencias de Contaminantes); Regulation of the General Law on the Prevention and Integral Management of Wastes (Reglamento de la Ley General para la Prevención y Gestión Integral de los Residuos); Regulation of the National Waters Act (Reglamento de la Ley de Aguas Nacionales); Regulations for the Protection of the Environment against Pollution caused by Noise Emissions (Reglamento para la Protección del Ambiente contra la Contaminación originada por la Emisión de Ruido); Regulation of Sanitary Control of Products and Services General Law (Reglamento de la Ley General de Salud en Materia de Publicidad); Rules of the Federal Comission For Protection Against Health Risks (Reglamento de Control Sanitario de Productos y Servicios de la Ley General de Salud); Rules of the Federal Commission for Protection Against Health Risks (Reglamento de la Comisión Federal para la Protección contra Riesgos Sanitarios); Rules of the General Health Law Sanitary Control in the Field of Activities (Reglamento de la Ley General de Salud en Materia de Control Sanitario de Actividades), Establishments, Products and Services; Rules of Procedure of the Ministry of Health (Reglamento Interior de la Secretaría de Salud);NOM-030-SCFI-2006, Commercial Information-declaration of quantity on the label-specifications (Información comercial- Declaración de cantidad en la etiqueta) NOM-050-SCFI-2004, Commercial Information Products general labeling (Información comercial- Etiquetado general de productos); NOM-051-SCFI-1994 – General Requirements for food-labeling and pre-packaged soft-drinks (Especificaciones generales de etiquetado para alimentos y bebidas no alcohólicas preenvasados); NOM-186-SSA1/SCFI-2002, Products and derivates, Cocoa products and derivates I. Cacao. II Chocolate. III Derivates, Health Specifications Trade Name (Productos y servicios: Cacao, productos y derivados, I. Cacao. II Chocolate. III Derivados, Especificaciones Sanitarias Denominación comercial); NOM-015-SCFI-2007, Commercial Information Labaling of Toys (Información comercial- Etiquetado para juguetes); NOM-247-SSA1-2008, Products and Services. Cereals and their Products. Cereals, cereal flour, meal or semolina, Based Foods, grains, edible seeds, flour, meal or semolina or mixtures thereof. Bakery Products. Provisions and Sanitary and nutritional specifications (Productos y servicios. Cereales y sus productos. Cereales, harinas de cereales, sémolas o semolinas. Alimentos a base de: cereales, semillas comestibles, de harinas, sémolas o semolinas o sus mezclas. Productos de panificación. Disposiciones y especificaciones sanitarias y nutrimentales. Test Methods, NOM-028-SCFI-2007, Commercial Practices information elements collectable promotions and/or promotions through sweepstakes and contests (Prácticas comerciales-Elementos de información en las promociones coleccionables y/o promociones por medio de sorteos y concursos) among others. Regarding environmental regulation, the Company has to fulfill the following regulation: operating license manifest, hazardous waste generating firm, clear delivery, transportation and disposal of hazardous waste, risk assessment study for high-risk activities and, in the case of new plants or expansions, environmental impact study and risk analysis, land use permits, permits for wastewater discharges, concession titles for the use and exploitation of national water, among others. Furthermore, the following regulations are also applicable to the operations of Grupo BIMBO: The Customs Law (Ley Aduanera), The Law for the Institute of the National Housing Fund For Workers (Ley del Instituto del Fondo Nacional de la Vivienda para los Trabajadores), The Law of Roads, Bridges and Federal Motor Carriers Act (Ley de Caminos, Puentes y Autotransporte Federal) The Mexican Social Security Institute Law (Ley del Instituto Mexicano del Seguro Social), The Federal Tax Code (Código Fiscal de la Federación),the Public Service Act Power and their respective rules (Ley del Servicio Público de Energía Eléctrica y sus respectivos reglamentos) as well as provisions of state and municipal orders. In the United States, the Company must stand by the following regulations the Clean Water Act, the Storm Water Act; the Safe Drinking Water Act; the Clean Air Act, for which the Company has to install oxidative catalytic converters in the factories that require it; Toxic Substances, Control Act, Toxic Release Inventory RCRA Hazardous Waste, Occupational Safety and Health Act, regulated by the Occupational Safety and Health Administration (OSHA), and Bioterrorism Act among others. In Latin America, Grupo BIMBO has to stand by the following environmental regulation: operating license or a certificate of environmental qualifications, land use certificate, registration of potentially polluting

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activities, precursor chemical and controlled substances, noise emission, environmental impact statement, licensess for water discharge, certificate of water exploitation, environmental licensing in the case of new plants or expansions (Colombia), COA (cédula de operación annual), inventory of emission into the atmosphere, control of air emissions and installations of sampling ports and platforms, management of special waste, hazardous and hospital. In Brazil, among other legislations, the Company must comply with Decree number 4,680, regarding information of food ingredients. Grupo BIMBO´s plants satisfy all the rules, regulations and procedures established. Due to the variations of the law, the Company establishes actualizations with respect to the normative changes, and adequates to applicable laws in different countries, states, and municipalities where the Company’s plants are located. It should be noted that BIMBO´s internal policy covers a series of additional requirements. BIMBO´s operations are also held to specific technical regulations; the following are the most relevant:

• NOM-001-SEMARNAT-1996. Maximum permissible limits of pollutants in wastewater discharges of national assets.

• NOM-002-SEMARNAT1996. Maximum permissible limits of pollutants to urban or municipal sewage Systems.

• NOM-052-SEMARNAT-1993. Defines the characteristics of hazardous waste, the list of them, the limits that makes a waste hazardous by its toxicity to the environment.

• NOM 085- SEMARNAT-1994. For stationary sources that use fossil fuels, solid, liquid or gaseous, or any combination thereof, this establishes maximum permissible levels of emissions to the atmosphere.

• NOM 043–SEMARNAT-1993. Sets the maximum permissible levels of emissions, to the atmosphere of particulate matter from stationary sources.

• NOM-002-STPS-2000. Safety, prevention and protection and fire fighting policies. • NOM-015-SCFI-2007. Commercial Information- Toys labeling. • NOM-050-SCFI-2004, Commercial Information Products general labeling • NOM-051-SCFI-1994. General Requirements for food-labeling and pre-packaged soft-drinks • NOM-087-ECOL-SSA1-2002. Environmental Protection – Environmental Health – Biological-

infectious hazardous waste – classifications and managing specifications. • NOM-247-SSA1-2008, Products and Services. Cereals and their Products. Cereals, cereal flour,

meal or semolina, Based Foods, grains, edible seeds, flour, meal or semolina or mixtures thereof. Bakery Products. Provisions and Sanitary and nutritional specifications Test Methods

• NOM-186-SSA1/SCFI-2002. Services and Products. Cacao, Products and derivates. • NOM-012-SCT-2-2008. On the weight and maximum dimensions that can move the motor carrier

vehicles that travel trough the general means of communication of the federal jurisdiction. • NOM-043-SSA2-2005. Basic health services, promotion and health education in relation to food.

Criteria for counseling.

Tax Situation

Grupo Bimbo and its subsidiaries companies are taxpayers and legal entities which are bound to comply with the tax provisions of each of the countries where they are established. Income Taxes in México.

The Company is subject to ISR and IETU.

ISR – The rate for 2009, 2008 and 2007 was 28% and will be 30% for 2010 to 2012, 29% for 2013, and 28% for 2014 and thereafter. The Company pays ISR, together with its subsidiaries on a consolidated basis.

IETU – Revenues, as well as deductions and certain tax credits, are determined based on cash flows of each fiscal year. The IETU rate was 17% and 16.5% in 2009 and 2008, respectively, and will be 17.5% as of

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2010. The Asset Tax Law was repealed upon enactment of the IETU Law; however, under certain circumstances, IMPAC paid in the ten years prior to the year in which ISR is paid, may be recovered, according to the terms of the law. In addition, as opposed to ISR, the parent and its subsidiaries will incur IETU on an individual basis. Income tax incurred will be the higher of ISR and IETU.

Based on its financial projections, the Company determined that some of its Mexican subsidiaries will pay ISR in certain fiscal years, while in others, will pay IETU. Accordingly, the Company calculated both deferred ISR and deferred IETU and recognized the larger of the two liabilities in each subsidiary.

In its other subsidiaries, based on its financial projections the Company determined that they will basically pay only ISR. Therefore, the enactment of IETU did not have any effects on the financial information for these subsidiaries, since they continue to recognize deferred ISR.

Grupo Bimbo, S. A. B. de C. V. is subject until 2009 to ISR on a consolidated basis with its Mexican subsidiaries, in the proportion held of the voting stock of its subsidiaries at year-end.

Due to changes in the tax law with respect to tax consolidation, the Company elected to deconsolidate for tax purposes beginning in 2010, recognizing the effects in the financial information of 2009 of such deconsolidation, applying some of the effects against retained earnings in accordance with the rules of INIF 18, Recognition of the Effects of the 2010 Tax Reform on Income Taxes. The effect of tax deconsolidation in the results of 2009 is minimal considering the effects on deferred taxes that result from the tax deconsolidation.

Income taxes in other countries The foreign subsidiaries calculate income taxes on their individual results, in accordance with the regulations of each country. The subsidiaries in the United States have authorization to file a consolidated income tax return.

The tax rates applicable in other countries where the Company operates and the period in which tax losses may be applied, are as follows:

Statutory Income Tax Rate (%) Period of

2009 2008 Expiration

Austria 25.0 25.0 (a) Argentina 35.0 35.0 (b) 5 Brazil 34.0 34.0 (c) Colombia 33.0 33.0 (d) Costa Rica 30.0 30.0 3 Chile 17.0 17.0 (e) China 25.0 25.0 5 El Salvador 25.0 25.0 (f) Spain 30.0 30.0 15 EUA (g) 35.0 (g) 35.0 20 Guatemala (h) 31.0 (h) 31.0 (f) Holland 25.5 25.5 9 Honduras (i) 25.0 (i) 25.0 (j) Hungary 16.0 16.0 (e) Luxemburg 21.0 21.0 (e) Nicaragua 30.0 30.0 3 Paraguay 10.0 10.0 (j) Peru 30.0 30.0 (k) Check Republic 21.0 21.0 (l) Uruguay 25.0 25.0 (m) Venezuela 34.0 34.0 (n)

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(a) Losses generated after 1990 may be applied indefinitely but can only be offset each year up to an amount equal to 75% of the net taxable profit for the year.

(b) Tax losses from sale of share or other equity investments, can only be offset against income of the same nature. Same for the loss of derivatives. Foreign source tax losses can only be amortized with income from foreign sources.

(c) Tax losses may be applied indefinitely, but may only be offset each year up to an amount equivalent to 30% of the net taxable profit for the year.

(d) Tax losses generated in 2003, 2004, 2005 and 2006 may be amortized within the following 8 years, but can only be up to 25% of the income tax of each year. Since 2007, tax losses may be amortized on an unlimited basis with no limit on the value and unlimited in time.

(e) No expiration date. (f) Operating losses cannot be amortized and capital losses can only be amortized against capital gains in

the following 5 years that the loss was generated. (g) Should add a percentage of state tax to this percentage, which varies in each state of the U.S. The

weighted average statutory rate for 2009 and 2008 was 38.3% and 38.2%, respectively. (h) The general scheme is 5% but the tax base is calculated as follows: Total gross income less non

taxable income. The optional scheme has a rate of 31% but the tax basis is different: Net income less nontaxable income plus nondeductible expenses less other deductions.

(i) It is a flat tax, and in case of a taxable income greater than 1 million Lempiras an additional 5% must be paid.

(j) Cannot be amortized. (k) There are two alternatives allowed for tax loss amortization: 1) 4 years or 2) unlimited amortization

up to 50% of the value of each year. Once made, an election cannot be changed, until the accumulated losses of previous years are applied.

(l) Tax losses generated since 2004 can be amortized in the following 5 years. Tax losses prior to 2004 in the following 7 years.

(m) Tax losses generated after 2007 can be amortized in the following 5 years. Prior to 2007 only over the following 3 years.

(n) The amortization period can change based on their nature: 1) Operating losses, over the following 3 years, 2) Losses from the adjustment for inflation tax, 1 year; 3) Overseas, which can only be amortized to earnings from abroad, over the following 3 years and 4) Losses from jurisdictions with preferential tax regulations only applied to profits in such jurisdictions, on the following 3 years.

(o) 30% is federal tax and 3% local tax. (p) Operations in Paraguay began in 2007.

Operations in Argentina, Colombia, Guatemala and Nicaragua are subject to minimum payments of income tax or tax based on assets.

Operations in Brazil and Venezuela are subject to profit sharing payments according to certain rules based on accounting income. During 2009 and 2008, there were no profit sharing payments in that country.

Detail of provisions, effective rate and deferred effects

a. Consolidated taxes on income are as follows:

2009 2008

ISR: Current $ 3,964 $ 1,887 Differed (1,203) (246)

$ 2,761 $ 1,641 IETU:

Current $ 77 $ 212 Differed (11) 41

$ 66 $ 253 $ 2,827 $ 1,894

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b. The reconciliation of the statutory and effective ISR rates expressed as a percentage of income before taxes on income for the years ended December 31, 2009, 2008 is as follows:

2009

2008

Statutory rate in Mexico ............................................................................................. 28.0 28.0 Inflationary effects in the monetary balance sheet accounts ................................ 5.3 2.0 Nondeductible expenses, nontaxable revenues and other ................................ 4.9 (1.5) Difference in tax rates and currency of subsidiaries in different tax

jurisdictions ................................................................................................ 2.2 (0.1) Inflationary tax effect of fixed assets ................................................................ (1.9) (2.5) IETU .......................................................................................................................... 0.7 4.0 Reversal of allowance of deferred taxes ................................................................ (7.4) — Effects of increase in Mexican income tax rate in deferred taxes .............................. (0.1) —

Effective rate .............................................................................................................. 31.7 29.9

The main items originating a deferred ISR asset are:

2009

2008

Advances from customers ................................................................ $ (8) $ (12) Allowance for doubtful accounts ................................................................ (89) (37) Inventories ................................................................................................ 52 26 Property, plant and equipment ................................................................ 2,894 2,773 Intangible assets .......................................................................................... 3,803 (131) Other reserves .............................................................................................. (2,839) (884) Current and deferred PTU ................................................................ (460) (244) Tax loss carryforwards ................................................................................ (4,602) (2,237) Valuation allowance of tax loss carryforwards ................................ 788 580 Asset tax ................................................................................................ — — IETU ............................................................................................................ 190 201 Effect of translation ..................................................................................... (59) (221) Other items ................................................................................................ (39) 26

Total asset, net ...................................................................................$ (369) $ (160)

The net deferred income tax asset has not been offset in the acCompanying consolidated balance sheet as they result from different taxable entities and tax authorities. Gross amounts are as follows:

2009

2008

2007

Deferred income tax asset .......................................................................$ (635) $ (1,417) $ (1,078) Deferred income tax liability ................................................................ 266 1,257 1,289

Total asset, net ...............................................................................$ (369) $ (160) $ 211

c. Since the Company’s tax losses are mainly derived from its transactions with the USA and some countries of OLA, certain tax losses will not be recoverable before their expiration date. Consequently, the Company has recognized a valuation allowance for a portion of such losses. d. Tax loss carry forwards for which the deferred ISR asset has been recorded may be recovered subject to

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certain conditions. Tax losses generated in countries and expiration dates are:

Years

Amount

2011 ................................................................................................................................$ 5,789 2012 ................................................................................................................................ 27 2013 ................................................................................................................................ 88 2014 ................................................................................................................................ 47 2015 ................................................................................................................................ 5 2016 and thereafter ................................................................................................ 7,724

13,680

Tax losses included in the valuation allowance ................................................................ (2,490)

Total ................................................................................................................................$ 11,190

vi) Human Resources From its foundation BIMBO has a personnel policy aimed to harmonize the Company’s interest with those of its workers; this has led to the consolidation of a good working relationship. This situation has been recognized not jus be coworkers but also by the business and academic community. The Company has sought to extend this philosophy to the companies that start integrating Grupo Bimbo. This has been endorsed with BIMBO´s recognition as one of the top five leading companies in México, according to the surveys conducted by HayGroup and the magazine, “Gestión de Negocios”. The participation of the employees in the decisions concerning the operation of the Company has been a key factor for successful development. This has been achieved through the creation of a climate of trust, management by objectives, team organization, and training and development of leaders at all levels. The Company pays special attention on the selection of its staff, which the Company seeks to keep informed about the financial and operational situation of the Group. BIMBO also makes periodic assessments of performance, directs and channels the concerns of its partners, promotes training (inter alia, through programs to support education at all levels of schooling) and promotes a full and integral development within the Company. The following table shows the number of Group employees, unionized and nonunionized, over the past three years:

As of December 31

2009 2008 2007

Unionized 71,885 76,898 65,830

Nonunionized 30,501 21,286 25,459

Total 102,386 98,184 91,289

In 2009, the lumber of workers increased in a 4.3%. BIMBO attends a series of guidelines that allow it to maintain a positive relationship with unionized staff. Most of the Group’s companies have a collective bargaining agreement, which is reviewed annually in relation to the tab of wages and every two years for the rest of its content. It should be noted that since its inception, the Group has been marked to promote and preserve a healthy work environment. Therefore, BIMBO has earned several times Company recognition as an admirable Company by the Confederation of Workers of Mexico (CTM) and the Mexican labor authority itself.

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The majority union group has a record, as authorized by the Ministry of Labour and Social Welfare (STPS), as an External Enabler Agent, which endorses his guidance and interest in designing courses and training to their members. The main trade unions with which BIMBO maintains employment in Mexico are: • National Union of Flour, Bakers, Transport and Allied of Mexico (CTM). • National Union of Food Industry and Allied of Mexico (CTM). Of the total BIMBO unionized workers, 75% are affiliated with the unions. Internationally, it should be noted that the relations in the countries where BIMBO operates have pursued the same policies of cooperation. In some countries, including the Company's labor model has served as a role model. vii) Environmental Performance

The Company recognizes the natural resource management as one of its priorities to achieve its social and economic purposes. That is why since 1995, Grupo Bimbo has shown its concern and interest in efforts for the environment, through its Environmental Management System which is committed to working in a responsible manner by identifying and controlling the factors that affect the environment, compliance with legal requirements and the Company’s, always looking to improve their environmental performance. November 16, 2007, Grupo BIMBO´s project began with "Committed to the environment" in order to strengthen environmental actions in each of the areas of the organization to carry and implementation throughout the Company. This project focuses on five action lines: 1) energy saving, 2) integrated waste management, 3) sustainability of water, 4) reducing emissions, and 5) corporate social responsibility on environmental issues. In each of this, the Company, has the following objectives: 1) implement the use of alternative energies to the Group's operations and the standardization of energy saving programs, 2) ensuring water treatment systems to achieve discharge zero in all the group's plants, 3) the maximum reuse of treated water, 4) reduce water consumption in plants, 5) reduce emissions to the atmosphere, 6) reduce, reuse and / or recycle the waste of its products and services, 7) create an ecological culture in people, and 8) replicate the best practices of environmental stewardship to all floors Said lines of action have been implemented in both production facilities and in the distribution fleet. Currently, the Group has various certifications, including certificates in Mexico’s "Clean Industry" in thirty-three of its facilities, as well as two awards for Environmental Excellence issued by PROFEPA, decentralized agency of the Ministry of Environment and Natural Resources (SEMARNAT), who gives this certificate to the companies that demonstrate compliance with all applicable rules concerning environmental protection. Some of the results obtained in 2009 are: • 6% decrease in consumption of electricity, 9% in gas consumption and 10% in water consumption per unit of output. • 9% decrease in fuel consumption in the fleet. • 44% Reuse of treated water in processes such as irrigation of green areas, toilets and washing cars. • Introduction of biodegradable packaging by reducing the degradation period of 100 years packing three to five years. • Recycling 84% of total waste generated in the plants of Mexico. • 9% decrease in the amount of waste generated in the plants. Additionally, to help improve the environment, Grupo Bimbo has developed programs for the conservation and maintenance of protected areas, reforestation, with the foundation of Reforestamos Mexico, AC which mission is to preserve and restore the trees and forest ecosystems of Mexico, through the promotion of

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sustainable forest management, environmental culture and the participation of all sectors of society, the benefit of the people and the environment through five lines of action: conservation of natural areas, reforestation of areas that have lost its forest cover, community forestry, promotion of forestry education and combating climate change. In 2009, Reforestamos Mexico received the National Award of Merit given by the Forestry National Forestry Commission and the Honorable Mention Recognition in the Conservation of Nature, which gave the Ministry of Environment and Natural Resources, through the Commission National Protected Natural Areas. Grupo Bimbo believes that its operations do not impose a significant environmental risk.

viii) Market Information

Unless otherwise stated, references to market size, consumption, market shares and other references in the next section, are based on information from Datamonitor, which the Company believes are reasonable. In most product lines, the Company holds a significant market because it maintains competitive advantages; among others, the most extensive distribution network in the country, costs and competitive pricing, comprehensive customer service, more points sales, operating efficiency, image and sound leadership position and market growth. Should also be mentioned that although there is a strong competition and, in some cases, direct competition between the same business group, this is not a negative aspect. The Company believes that, at all times, this situation has been a healthy competition and at the same time, each organization has led the best results, both in operations and sales, provided under a scheme of mutual respect between product lines and between organizations belonging to the Company.

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1. Bakery’s Industry General Overview

Mexico

Bread industry in Mexico comprises, in first place, the traditional bread, which receives several names depending on the relevant geographical region. This industry produces a great variety of bread manufactured in approximately 40 thousand traditional bakeries in Mexico. In this same sector, during the last years, a great number of supermarket chains have integrated their own in-store bakery departments. In second place, the bakery industry includes the cookie segment. In 2009, this sector reached a value of $1,823 million dollars. BIMBO has a strong recognition in this category, through its Marinela, Lara, Gabi, Bimbo, Tía Rosa and Suandy brands. There are several competitors in this market, but the main one is Gamesa, a company pertaining to PepsiCo, which has a market penetration of more than 50%, while BIMBO is second-ranked, with 33%. The bakery industry in Mexico, including bread, cakes and cookies, has a market value of $13,737 million dollars, while the per capita consumption amounts 41 kilos per year and the expense used for this concept is $123 dollars. It is worth to mention that such consumption is located under the one corresponding to cornmeal, which is approximately 6 million tons on an annual basis and that it is concentrated in only one product: tortilla see “Industry and Tortilla General Program”). Given that the packaged bread manufactured by BIMBO has more than 60 years of existence in the market, it has achieved to penetrate in the households of practically all Mexican families. It should be added to the foregoing that it is foreseen that the demand of this kind of product will continue increasing due to the growing incursion of women in the labor market. The country’s rural areas are not distant from this way of life therefore, thanks to the enlargement of the road network BIMBO can arrive to a great number of homes in the countryside, thus, collaborating with the feeding of this population sector. Currently there are several competitors in the packaged bread market, whose brands have a local presence, such as: Dulcipán, S.A. de C.V., which prepares products under the Don Toño brand in Mexico City, and El Panqué, S.A. de C.V., with El Panqué brand, in central Mexico specially in the state of Durango. Additionally, in the cities of Mexico and Mérida, through self service stores, the competitors are: Pan Filler, S.A. de C.V. which produces, under the Pan Filler brand, specialties bread (black, rye and German bread); Industrializadora de Alimentos del Sureste, S.A., with the packaged bread Boni Bon brand, and Panadería El Cometa, S.A. de C.V., with the packaged bread Don Rico brand, there is also La Superior brand competing in the state of San Luis Potosí. In Sinaloa there is Pan Panama and in the country’s northern border there are the following brands which import packaged bread and rolls: Nature’s Own and Butter Krust, produced by Flowers Foods, Inc. and Hill Country produced by the supermarket chain H.E.B. Likewise, in the border of Baja California Norte there is packaged bread under the Bontri, Pantry Select and Sara Lee brands, mainly. In the case of Ciudad Juarez, there is competence from Flowers Foods with products imported from the USA BIMBO holds a share in the bakery market (which includes traditional bread and packaged bread) of approximately 26%. The foregoing allows supposing that the Company has a broad growth potential. In the bars category with less than a development decade, competence has been strong, seeking for alternatives to provide the consumers that wish to have a healthier feeding. In 2009, Bimbo kept its leadership in this category through innovation. Its main competitors in this segment are Kellogg’s, Quaker and other importation bars.

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It is important to highlight, however, that the main competence faced by Bimbo in respect to its bakery lines is integrated with nearly 40 thousand traditional bakeries and in the considerable presence of bakeries in the supermarket chains, which during 2009 gave a special impulse to their private label packaged bread. United States

In USA, the bread industry market value, including bread, sweet bread and cookies, is of approximately $44,145 million dollars, which equals the 39 kilo per capita consumption per year. BIMBO participates in USA through BBU, engaged in the production, distribution and commercialization of bread and packaged tortilla, and distributes more than 150 products which are exported and commercialized under the Bimbo and Marinela brands. Additionally, with the acquisitions of Mrs. Baird’s, Oroweat and Weston Foods, Inc., BIMBO participates with highly renowned brands in the USA. The main packaged bread, rolls, sweet bread and cakes brands under which the products are commercialized include: Thomas’, Arnold, Stroehmann, Freihofer, Dutch Country, Maier’s, D’Italiano, Brownberry, Oroweat, Mrs. Baird’s, Entenmann’s, Thomas, Francisco and Old Country. Roman Meal and Weber’s brands are distributed under a utilization license in California. BBU is one of the most important industry players in this country. Some of its competitors are: Flowers Foods, Sara Lee, Hostess Brands and Pepperidge Farm, in addition to the private brand products. Latin America The Group actively participates in Latin America, where the consumers’ behavior and preferences are very similar to those observed in Mexico. The Latin American countries where the Company operates are: Argentina, Brazil, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela. In the case of Nicaragua, even though it has no factories, it distributes its products through strategically located agencies. Herein below is the Company’s market participation in Latin America in 2009, as well as the most important competitors in each country of the region where it operates:

Total Bakery 2009(1)

Argentina 1%

Some competitors: Fargo and La Salteña

Brazil 2% Some competitors: Panco, Seven Boys and Wickbold

Chile 1% Some competitors: Pierre and Los Castaños

Colombia 4%

Some competitors: Comapan, Guadalupe and Ramo

Costa Rica 28% Some competitors: Girasol, Konig and Ruiseñor

El Salvador 16% Some competitors: Aladino and Lido

Guatemala 9% Some competitors: Americana and Victorias

Honduras 19% Some competitors: Bambino, Hawitt , La Popular and Tabora

Nicaragua 19% Some competitors: Aurora, Puropan and Corazón de Oro

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Total Bakery 2009(1)

Panama 35% Some competitors: Tasty Choice and Rimith

Paraguay 4% Some competitors: Bimbi, Fargo and My friend

Peru 1% Some competitors: Costa and Unión

Uruguay 2%

Some competitors: own brands

Venezuela 1% Some competitors: Bread Central and Puro y Simple

(1) Includes white bread, whole-wheat bread, special breads, rolls, tostadas and other breads. Source: Latin Panel

Asia

After a long investigation and analysis period, in 2006, Grupo Bimbo initiated operations in the Asian continent. China was selected as the country which offers the best economic and potential growth conditions in the region, therefore, through the acquisition of a bakery company with a strong presence in the city of Beijing, BIMBO ventured in this market. 2. Industry and Tortilla General Program

BIMBO participates in the wheat tortilla market, which it commercializes under the Tortillinas Tia Rosa, Wonder and Del Hogar brands, among others. The main competitor in this sector is Maseca, with the Paninas, Tortiricas and Misión brands, in wheat tortillas. In the country’s northern region there are a great number of competitors, which prepare hose-made tortillas to satisfy the local tastes and that represent a small market percentage. In USA, the packaged tortilla market reports one of the highest growths within the food sector in that country. Both wheat and corn tortillas, present more varieties, sizes and amounts than in the Mexican market. Additionally, it is foreseen that, at a medium term, the Hispanic population will be the largest foreign community in the USA. That added to the GDP generated by such community (calculated in 30 million persons), which is equal to the GDP generated in Mexico, make the tortilla a line of business with a growing potential in that country. In this market, the corn and wheat tortillas produced and commercialized under Tia Rosa brand have an important presence in the western and southwest regions in the USA and are oriented both to the Hispanic and the Anglo-Saxon market. In this field, Tia Rosa faces the Gruma Corp. competence, as well as of a great number of small producers. 3. Snack Industry General Overview

At 2009 closing, the snack industry in Mexico, including the peanut category, had an estimated market value of $4,900 million dollars, which represented an 8% increase compared with the preceding year. It is calculated that 80% of people have consumed snacks (corn, potato and extruded) in the preceding month. Likewise, the average consumption of snacks and peanuts is of at least once per week. The purchase of salted snacks, for consumption both inside and outside home, is made impulsively (even in supermarkets), that is, in more than half of the cases it is not a planned purchase. Likewise, regardless of the amount of packages or presentations, snacks which are purchased are consumed in one day.

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It is worth to mention that, even when it is not a category susceptible to advertisement and promotions, there is a high level of loyalty towards the preferred or habitual brand. Barcel has 32 years of history in the salted snacks market and as part of the Group. It is a 100% Mexican corporation with international presence. The distribution of its products has a national coverage, in addition to having presence in the USA with the Takis, Churritos, Chip-otles, Quezas, Toreadas and Hot Nuts brands. Barcel is second-ranked in the salted snacks market in Mexico, after Sabritas, company owned by PepsiCo. and second-ranked in peanuts. Taking into account that BIMBO initiated in 1977 its participation in these segments, it has achieved a very good position within these markets, because it has built its brand image from differentiated products. It is important to mention that in 2009 both in the salted snack segment and in the peanut segment, the presence of regional, low-cost brands was importantly increased. In these segments, the brands that compete with Barcel are: Boka-2, Encanto, Leo, Mafer (Sabritas), Nishikawa and Snaky, among others. 4. Confectionery Goods Industry General Overview The confectionery industry in Mexico is highly diversified and competitive, since it is conformed of more than 650 players, which comprise both small companies and large world-wide competitors. This market is comprised on three large segments: (i) chewing gums(19% of the total volume), which includes the sugar and sugar-less chewing gums segment; (ii) chocolates (23% of the total volume), which includes, mainly, national and imported bar chocolate, marshmallow covered with chocolate, surprise, spread and fine filled chocolates; and (iii) candies (58% of the total volume), which includes hard candy lollipops, gummies, wrapped hard candies and covered candies. The estimated value of this sector in Mexico is of $3,250 million dollars. Additionally, it is estimated that 15% of the sales corresponds to small “home-made” manufacturers, that produce and distribute no-brand products and in very concentrated regions, mainly in northern and central Mexico. The per capita consumption of confectionery goods products in Mexico is of three kilos per year, lower than in countries such as Argentina, Brazil, USA and, specially, Europe, where the annual average exceeds 8 kilos. The sugar candy segment is fragmented into 18 categories, including chewing gum, hard candy lollipops, tablets and gummies. The chocolate category is divided into ten different segments. It is important to mention that 65% of the candies and chocolates distribution in Mexico is made through the whole sale channel and 35% is made in the modern and detail channel. The great diversity of products in this market is due to a strong and constant innovation and new short-life products. And because the main characteristic of the confectionery goods products is that they are based in “fashion” and in a mainly child and youth market, which has dramatically changed its preferences in the last years. Ricolino participates in all the confectionery goods segments and is second-ranked in the market. The main competitors faced by Ricolino are: Adams, Canels, Ferrero, Mars, Hershey’s, Dulces Vero, De la Rosa, Nestlé, Sonric’s, EFFEM and Turin.

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ix) Corporate Structure BIMBO is a holding company which, as of December 31, 2009 was a direct or indirect owner of shares in 87 subsidiaries and associates. The table shown below lists the most important corporations, their main activity and the equity holding percentage held by BIMBO in each of them.

Subsidiary Companies Main Activity Holding

Tecebim, S.A. de C.V. Commerce actions 100%

Bimbo, S.A. de C.V. Panning 97%

Barcel, S.A. de C.V. Candies and snacks 97%

Bimbo Bakeries USA, Inc. Bakery 100%

x) Main Assets Description

1. Premises

a. Productive Premises

As of December 31, 2009, BIMBO had 108 manufacturing premises in Mexico, Argentina, Brazil, Chile, Colombia, Costa Rica, El Salvador, Honduras Guatemala, Panama, Paraguay, Peru, Uruguay and Venezuela, in respect to Latin America; regarding the United States of America it has productive plants in the states of California, Colorado, Oregon, Texas, Wisconsin, North Carolina, Indiana, Florida, Pennsylvania, New York, Maryland; and Beijing in China. The premises include lines of packaged and sweet bread, rolls, wheat and corn packaged tortillas, tostadas, cakes, cookies, fast food, chewing gum, confectionery goods, snacks and other akin manufactures. Together, the plants have a construction area of 1,446,620 m2, on a total surface of 3,556,470 m2, in addition to having a land reserve of 619,820 m2. It is worth to mention that, from the above mentioned total assets, approximately 95% is owned by BIMBO and the rest corresponds to premises leased from third parties. See “Business Description – Principal Activity – Production Process”. Historically, including during 2009, the Company has made capital investments equal to the depreciation amount shown in its financial statements. For 2010, the Company expects to make capital investments for approximately US$ 300 million dollars, which may be financed with own funds or with loans from third parties. Such capital investments will mainly consist in the construction of new production plants. The location of the Company’s main assets per geographic area is shown below.

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MEXICO

METROPOLITAN MEXICO CITY

68

USA

CENTRAL AMERICA

69

SOUTHAMERICA

70

The following table shows the utilization percentage of the major capital investment lines’ installed capacity as of December 31, 2009:

Organization and kind of product Bimbo, S.A. de C.V.

Bread, rolls, doughnuts, sponge cakes, toasted, cookies, cakes, suavicremas, wheat tortillas

50%

BBU Bread, rolls, doughnuts, sponge cakes, pies, tortillas, tostadas and chips 68% OLA

Bread, rolls, doughnuts, sponge cakes, toasted, cakes, cookies, Swiss roll, puff pastry and tortillas

50%

Asia

Bread, sweet, rolls, doughnuts, puff pastry and cakes 35% Barcel, S.A. de C.V.

(1)

Snack and confectionery goods 60%

(1) Includes operations in Europe.

ASIA

EUROPA

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The utilized capacities were calculated based on 150 productive hours per week. Hours are used as measuring parameter because the mixture of the different products of each line implies the utilization of different volumes and weight, which impedes the direct comparison of all products and lines capacities. b. Agencies

As an important part of its distribution process, the Company has 869 distribution agencies, each of which operatively depends on a specific plant, even though it is not located nearby. 2. Asset Maintenance

In order for BIMBO’S operations no to be suddenly affected, there is a policy to have preventive predictive maintenance programs, applied to all its assets, including several equipment and vehicular fleet. The purpose is that all the Group’s premises and equipment present optimal operation and appearance conditions, and that they not only comply with the governmental rules and regulations, but that, in first instance, they maintain a welfare and safety environment for the personnel. When the situation so requires, the corrective maintenance is used. However, such situation occurs eventually and, therefore, it does not represent a habit in the Company. In this regard, the Company allocates approximately 2% of the net sales to preventive, predictive and corrective maintenance previously described. Likewise, it is important to mention that during the last two years, the Company has allocated between 1.5 and 2.5 additional percent points in investments to support the growth, equipment modernization and productivity of its lines. All these resources have been financed with the Company’s own funds. 3. Guaranties on Assets

On the date of this Annual Report, the Company has not created liens on its important assets. 4. Insurance

Aligned with the industry’s standards, BIMBO has formal insurance policies that adequately cover its properties in case of fire, explosion, earthquake, flood and hurricanes, among other risks. In the case of the vehicular plant, BIMBO’s policy is not to resort to a conventional insurance therefore, it created a “self-insurance” program, based both on the available cash flows and on its vehicle maintenance and handling policy. On the other hand, for some operations abroad civil liability insurances have been purchased. Likewise, the Company has workshops to carry out the vehicles repairs. In accordance with a research, such repairs result more economic than paying an insurance policy, considering the proportion they represent in connection with the total amount invested in a vehicular fleet. It is worth to mention that the Company’s road accident index is very low in comparison with the number of transportation and distribution vehicles comprised in the fleet. xi) Judicial, Administrative or Arbitration Processes

BIMBO and some of its subsidiaries face certain judicial processes as a consequence of their ordinary course of business. As of December 31, 2009, there was no knowledge that the Group or its subsidiaries, its directors, principal shareholders or key officers are involved in judicial, administrative or arbitration processes that have had or might have a material adverse effect on the Company’s or its subsidiaries’ operation results and financial condition. Under the provisions set forth in “Annex N” of the General Provisions applicable to Securities Issuers and other Participants in the Securities Market, as of the date of this Annual Report, the Company does not fit

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any of the hypothesis established in Articles 9 and 10 of the Bankruptcy Law (Ley de Concursos Mercantiles) and has not been rendered nor may be render bankrupt. xii) Shares Representing the Capital Stock

As of the date of this Annual Report, BIMBO’S capital stock at nominal value amounts $1,902, represented by 1,175,800,000 outstanding Series “A” common nominative shares, without expression nominal value, fully subscribed and paid, all of them representing the minimum fixed portion without right of withdrawal of the capital stock (see Note 14 to the Audited Financial Statements). BIMBO was incorporated on June 15, 1966 with a minimum fixed capital stock of $50,000,000.00 nominal pesos, represented by 50,000 shares, with a nominal value of $1,000.00 each. Since its incorporation, BIMBO has had several modifications to its capital stock structure. As of 1998, the modifications were as follows: In accordance with the Corporate Bylaws, the capital stock is variable. The capital stock shall be represented with Series “A” common nominative without nominal value expression shares. Additionally, the Company may issue non-voting and/or limited-voting, nominative, without nominal value expression shares, which shall be denominated with the series name determined by the Meeting which approves the issuance thereof. In no case shall the non-voting and/or limited-voting shares may represent more than twenty five percent (25%) of the total capital stock placed among the investing public or of the total shares placed therein. However, the National Banking and Securities Commission (CNBV) or, otherwise, the competent authority, may extend the above mentioned limit up to an additional twenty five percent (25%), provided that this percentage is represented by non-voting shares, with the limitation of another corporate rights, or by restricted voting shares, which shall be convertible into common shares within a term not exceeding five (5) years, computed as of their placement see “Administration – Corporate Bylaws and Other Agreements”). In the three last fiscal years, the Company has made no share issues. xiii) Dividends

The information set forth herein below refers to the Company’s outstanding shares as of the date of this Annual Report (see 2) b) xii) “Shares Representing the Capital Stock”).

The decree, amount and payment of dividends to the holders of BIMBO’S Series “A” shares is proposed by the Board of Directors and approved by the General Shareholders’ Meeting. Dividends paid during 2010, 2009 and 2008 amounted:

Year

Number of outstanding

Series “A” shares

(thousand)

Dividend per Series

“A”

share

Total amount of

dividends paid

(million pesos)

2008 (April) 1,175,800 0.46 $541

2009 (April) 1,175,800 0.46 $541

2010 (April) 1,175,800 0.50 $587

Historically, the Company has paid dividends derived from profits generated during each period. The Company’ administration considers that this situation will continue in the future, however, it may not assure that this will happen (see Note 14 to the Audited Financial Statements).

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Retained profits include the legal reserve. In accordance with the General Corporation and Partnership Law, from the fiscal year net profits minimum 5% shall be separated to form the legal reserve, unit the amount thereof represents 20% of the capital stock at nominal value. The legal reserve may be capitalized, but it shall not be distributed unless the company is dissolved, and shall be reconstituted when it decreases due to any reason. As of December 31, 2009 and 2008 it amounts $500 at nominal value. The net worth distribution, except for the updated amounts of corporate capital stock contributed and of the retained taxable profits, shall cause the income tax on dividends to be discharged by the Company at the rate in effect upon the distribution. Taxes paid for such distribution may be credited against the income tax of the fiscal year in which the tax on dividends is paid and in the two immediately subsequent fiscal years, against the fiscal year tax and the provisional tax payments thereof. The net worth fiscal accounts balances as of December 31 are:

2009 2008

Contribution capital account $ 8,132 $ 7,843 Net tax profit account 32,830 27,522 Total $ 40,962 $ 35,365

Dividends on shares that are held through Indeval shall be distributed by BIMBO also through Indeval. Dividends on shares represented by certificates or physical certificates shall be paid upon presentation of the relevant coupon. In case provisional certificates exist at the time when the dividend is decreed, and if such provisional certificates have no coupons attached, the dividend shall be paid against the relevant receipt.

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3) FINANCIAL INFORMATION

a) SELECTED FINANCIAL INFORMATION

The attached consolidated financial statements comply with the Mexican Financial Reporting Standards (“NIF”). Their preparation requires that the Company’s administration carries out some estimates and uses certain hypothesis to asses some of the financial statements entries and in order to effectuate the disclosures required therein. However, the actual results might differ from such estimates. The Company’s administration, applying the professional judgment, considers that the estimates and hypothesis used were adequate given the circumstances. The main accounting policies followed by the Company are the following ones: a. Accounting changes As of January 1, 2009, the Company adopted the following new MFRS and Interpretations of the Financial Reporting Standards (“INIF”): MFRS B-7, Business acquisitions, requires assessing the uncontrolled interest (formerly the minority interest) at its fair value on the acquisition date and recognizes the whole goodwill also based on the reasonable value. It establishes that both the purchase expenses and the restructuring expenses shall not be part of the consideration nor be recognized as a liability assumed due to the acquisition, respectively. Until 2008, expenses associated with acquisitions were capitalized. MFRS B-8, Consolidated or combined financial statements, establishes that those entities with a specific purpose, on which control is exercised, shall be consolidated; establishes the option, upon the satisfaction of certain requirements, to submit unconsolidated financial statements for the intermediate holding companies and requires considering the potential voting rights when analyzing the existence of control. MFRS C-7, Investments in affiliates and other permanent investments, requires the assessment, through the participation method, of investments in entities with specific purpose on which a significant influence is exercised. Requires that the potential voting rights are considered when analyzing the existence of significant influence. Establishes a specific procedure and a limit for the recognition of losses in affiliates and requires that the investments in affiliates caption is presented including the relevant goodwill. MFRS C-8, Intangible Assets, requires that the unamortized balance of pre-operative costs as of December 31, 2008 is cancelled affecting retained profits. Likewise, it issues specific provisions on the recognition of relationships with clients in a business acquisition. IMFRS 18, Recognition of the effects due to the fiscal amendment 2010 on taxes on profits, clarifies the subject contemplated in MFRS D-4, in respect to the recognition of the subjects included in the Decree published in the Official Gazette of the Federation on December 7, 2009, in which several tax provisions are amended, supplemented and derogated (Tax Amendment 2010), which becomes effective on January 1st, 2010. The scope of this MFRS is focused on the treatment of the following relevant subjects:

a. Changes to the fiscal consolidation regime. Clarifies the Income Tax (“ISR”) treatment derived from changes to the fiscal consolidation regime stipulated in the Tax Amendment 2010, regarding tax losses, losses due to share conveyances, special consolidation concepts, dividends distributed among consolidating entities not derived from net fiscal profit accounts (“CUFIN”) and CUFIN differences.

b. Changes to the ISR rate. Explains how should changes to the ISR rate are to be recognized, in accordance with the Tax Amendment 2010 changes, which establishes that such rate shall be 30% for fiscal years 2010 to 2012, 29% for fiscal year 2013 and 28% for fiscal years 2014 onwards.

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c. Elimination of the possibility to credit the losses to be amortized of the Unique Rate Business Tax (Impuesto Empresarial de Tasa Única) (“IETU”) against ISR.

b. Recognition of inflation effects – Accumulated inflation in Mexico and in the majority of the countries where the Company operates, of the three preceding fiscal years is lower than 26% consequently, the economic environment qualifies as non inflationary. As of January 1, 2008 the Company suspended the recognition of the inflation effects on the consolidated financial statements, except for those that correspond to the subsidiaries that operate in inflationary environments; however, assets, liabilities and net worth as of December 31, 2009 and 2008 include the restatement effects recognized in all the transactions until December 31, 2007. Inflation of the three preceding fiscal years in the countries the environment of which is inflationary and due to which the inflation effects were recognized in 2009 and 2008 are as follows:

2009 2008

Argentina 28% 34% Costa Rica 38% 38% Guatemala 26% Not applicable Honduras 27% Not applicable Nicaragua 49% 43% Paraguay 28% 31% Uruguay 26% Not applicable Venezuela 87% 64%

Until December 31, 2007 for all the subsidiaries and as of January 1, 2008 only for those under inflationary environment, such recognition mainly resulted in gains or losses due to inflation on non monetary and monetary entries, which are shown in the financial statements under the two following headings: c. Insufficiency in net worth updating – The result is integrated per accumulated monetary position until the first updating and the loss due to the holding of non monetary assets that represents the change in the prices specific level that was increased below the inflation. d. Result per monetary position – Represents the erosion of the purchasing power of the monetary entries originated by the inflation; it is calculated using factors derived from the National Consumer Prices Index (Índice Nacional de Precios al Consumidor) (“INPC”) to the monthly net monetary position. Gain is originated from maintaining a net passive monetary position. On January 1, 2008, the Company reclassified the total amount of the insufficiency balance in the net worth updating to retained profits, because it determined that it was impractical to identify the result for non monetary asset holding corresponding to the unrealized assets as of that date. e. Cash and cash equivalents – Mainly consist in bank deposits in check accounts and investments in short term securities, of great liquidity, easily convertible into cash and subject to little significant change of value risks. Cash is shown at nominal value and the equivalents are assessed at their reasonable value. Fluctuations in its value are recognized in the period’s Financing Integral Result (Resultado Integral de Financiamiento) (RIF). Cash equivalents are mainly represented by investments in money desks. f. Inventories and sales cost – Inventories of entities that operate in non-inflationary economic environments are assessed at the lowest between their cost or realization value. Until December 31, 2007 and in those subsidiaries that operate in inflationary economic environments, inventories were assessed at average costs that were similar to their replacement value without exceeding their realization value, and the sale cost at the last actual production cost, that was similar to the replacement cost at the time of its sale. g. Real estate properties, machinery and equipment – Are recorded at the acquisition cost in the entities under non inflationary economic environments. Balances derived from acquisitions carried out until

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December 31, 2007 in all the subsidiaries, and actually of those derived from the subsidiaries that operate in inflationary economic environments, were updated using factors derived from the INPC until that date. Depreciation is calculated under the straight line method based on the following depreciation rates:

Buildings 5 Manufacturing equipment 8,10 and 35 Vehicles 10 and 25 Office equipment 10 Computer equipment 30

h. Investment in affiliates shares and others – As of 2009, permanent investments in the entities in which a significant influence is exercised, are initially recognized based on the net fair value of the entity’s identifiable assets and liabilities as of the acquisition date. Such value is adjusted after the initial recognition by the relevant portion both of the affiliate’s integral profits or losses and the profit distribution or capital reimbursements thereof. When the fair value of the consideration paid is greater than the value of the investment in the affiliate, the difference shall correspond to goodwill, which is presented as part of the same investment. When the fair value of the consideration paid is lower than the investment value, the latter shall be adjusted to the fair value of the consideration paid. Until December 31, 2008, investment in affiliate shares is assessed based only on the participation method. In case any impairment of the investments in affiliates appear the same shall be subject to impairment tests. Permanent investments made by the Company in entities in which it has no control, joint control, nor significant influence shall be registered at the acquisition cost and dividends received are recognized in the period’s results unless if derived from profits of periods prior to the acquisition, in which case they are decreased from the permanent investment. i. Impairment of long-lived assets in use - The Company reviews the carrying amounts of long-lived assets in use when an impairment indicator suggests that such amounts might not be recoverable, considering the greater of the present value of future net cash flows or the net sales price upon disposal. Impairment is recorded when the carrying amounts exceed the greater of such amounts. The impairment indicators considered for these purposes are, among others, the operating losses or negative cash flows in the period if they are combined with a history of losses or projected future losses, depreciations and amortization charges to results, which in percentage terms in relation to revenues are substantially higher than in previous fiscal years, obsolesce effects, reduction in the demand for the products manufactured, competition and other legal and economic factors. As of December 31, 2009 the Company recognized impairment in the operation of the Czech Republic for $56. This operation was sold in January 2010. The sale value is not representative for Grupo Bimbo. j. Financial risks management policy – The Company, within the framework of its daily operations is exposed to inherent risks to several financial variables, as well as to variations in the price of some raw material quoted in international formal markets. As a result, the Company uses derivative financial instruments to mitigate the possible impact of fluctuations in such variables and prices on its results. The Company considers that such instruments provide flexibility which results in more stable income and better visibility and certainty regarding future costs and expenses. The design and implementation of the derivative financial instruments contracting strategy formally falls on two bodies: 1) The Financial Risk Committee, in charge of the interest rate and exchange rate risk management and, 2) The Raw Materials Market Risk Sub-Committee, in charge of managing raw materials risk. Both bodies continuously report their activities to the Business Risks Corporate Committee, which is in charge of issuing the general guidelines of the Company’s risk management strategy, as well as of establishing the limits and restrictions to the transactions which they may carry out. The Business Risks Corporate Committee, reports the Company’s risk positions to the Audit Committee and to the Directive Committee. The Company’s policy on entering derivative financial instruments is that there are only for hedging purposes. That is, the eventual entering into derivative financial instrument shall necessarily be associated to a primary position representing some risk. Consequently, the notional amounts of one of all the

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derivative financial instruments entered into for hedging certain risk will be consistent with the amounts of the primary positions that represent a risk position. The Company does not carry out transactions in which the intended benefit or purpose aimed to are premium earnings. If the Company decides to carry out a hedging strategy in which options are combined, the net payment of the associated premiums shall represent a disbursement by the Company. k. Derivative financial instruments - The Company records all derivatives at fair value on the balance, regardless of the purpose for the holding thereof. If such instruments are not traded, the fair value is determined by applying recognized valuation techniques accepted in the financial environment. Hedging derivatives recognize valuation changes in accordance with the relevant hedging kind: (1) for fair value hedges, changes in the derivative instrument and the hedged item are recognized in current earnings; (2) for cash flow hedges, changes in the effective portion are temporarily recognized in other comprehensive income and reclassified to current earnings when affected by the hedged item; the ineffective portion is immediately recognized in current earnings; (3) for hedges of an investment in a foreign subsidiary, the effective portion is recognized in other comprehensive income as part of the cumulative translation adjustment; the ineffective portion of the gain or loss on the hedging instrument is recognized in current earnings, if it is a derivative financial instrument and if not, it is recognized in other comprehensive income until the investment is sold or transferred. To manage its exposure to interest rate and foreign currency fluctuations, the Company principally uses interest swaps and foreign currency forward contracts; as well as futures and options contracts to fix the purchase price of raw materials. The Company formally documents all hedging relationships, describing the objectives and risk management strategies to carry out derivatives transactions. Derivative instrument trading is performed only with reputable institutions and limits have been established for each institution. Hedging derivative financial instruments are recorded as an asset or liability without setting them off with the hedged item. l. Goodwill- Is recorded at acquisition cost, except for those subsidiaries operating in inflationary economic environments, where they are updated by applying the INPC. Goodwill is not amortized but is subject, at least once every year, to impairment tests.

m. Intangible assets – Is primarily comprised of trademarks, rights of use and costumer-relationships. Are recorded at acquisition cost, except for those entities or in subsidiaries operating in inflationary economic environments, where they are restated using NCPI. This caption mainly derives from the acquisition of the business in the USA and certain trademarks in South America. Trademarks and rights of use are not amortized; however, the carrying values are subject to impairment tests at least annually. Costumer-relationships have an estimated useful life of 18 years and are amortized on a straight-line basis based on their useful life. As of December 31, 2009 the amortization recorded both on a cumulative basis and for the year related to intangible assets with finite lives was $257. n. Provisions – Are recognized when there is a present obligation as the result of a past event that is likely to result in the use of economic resources that can be reliably estimated. o. Direct employee benefits – Are calculated based on the services rendered by employees, considering their current salaries and liability is recognized as it accrues. These benefits include mainly accrued employee profit sharing (“PTU”), compensated absences, such as vacations and vacation premiums, and incentives and are shown in Other accounts payable and accrued liabilities caption. q. Employee benefits from to termination, retirement and social prevision – The liability for seniority premiums, pensions and termination benefits is recorded as accrued and is calculated by independent actuaries based on the Projected Unit Credit method using nominal interest rates. The social prevision liability corresponds to the insurance risks corresponding to the self-insurance created in the USA, for the general insurance, automobile insurance and compensation to employees under

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coverage subject to specific limits defined in a program. The liability for this program is recorded based on the Company’s historical information in accordance with actuarial calculations. r. Employee profit sharing – Employee profit sharing (“PTU”) is recorded in the year results in which it is incurred and presented under other expenses caption in the attached statements of income. Deferred PTU is determined from the temporary differences that in 2009 resulted from comparing the accounting and tax basis of assets and liabilities. s. Tax on profits - ISR and IETU are recorded in the results of the year when accrued. In order to recognize deferred taxes it is determined if, based on financial projections, the Company will incur ISR or IETU taxes and recognizes the deferred tax corresponding to the tax to be essentially paid. Deferred tax is recognized by applying the rate corresponding to the temporary differences resulting comparing the accounting and tax basis of assets and liabilities and, as the case may be, the benefits from tax losses to be amortized and from certain fiscal credits are included. The active deferred tax is recorded only when a high probability exists that it may be recovered. Under MFRS D-4, Taxes on Profits, the balance of the Deferred income tax initial accumulated effect caption, was restated in the accrued profits on January 1, 2008.

t. Tax on assets – The tax on assets (“IMPAC”) expected to be recovered, is recorded as a tax credit and is shown in the balance sheet under deferred taxes.

u. Foreign currency transactions – Foreign currency transactions are recorded at the applicable exchange rate in effect on the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Mexican currency at the exchange rate in effect on the balance sheet date. Exchange fluctuations are recorded in the results, except for those transactions which have been designated as foreign investment hedge.

v. Revenue recognition – Revenues for sales are recognized at the time in which the products risks and benefits are transferred to the customers who acquire them, which generally occurs when these products are delivered to the customer and the latter assumes the responsibility thereon. The Company deducts from sales commercialization expenses such as promotional expenses. w. Earnings per share – Basic earnings per common share are calculated by dividing net majority income by the weighted average number of shares outstanding during the fiscal year. For a better comprehension, the financial information summary shall be reviewed together with the financial statements and their respective notes. Likewise, such summary shall be reviewed with all the explanations provided by the Group’s Administration throughout chapter 3) “Financial Information”, specially in section 3) d) “Administration Comments and Analysis on the Company’s Operative Results and Financial Status”.

Consolidated Statement of Income

As of December 31 of: 2009 2008 2007 Net sales (1) 116,353 82,317 72,294

Cost of Sales 54,933 40,293 34,095

Gross Profit 61,420 42,024 38,199 0 0 0

Distribution and Selling Expenses 41,724 29,621 27,128

Administrative Expenses 7,642 5,075 4,663

General Expenses 49,366 34,696 31,791

Income After General Expenses 12,054 7,328 6,408 0 0 0

Other Income (Expenses) Net (613) (8) 72

Employee Profit Sharing 563 467 467

Other Total Income and (Expenses) Net (1,176) (475) (395)

Net Interests (2,318) (461) (462)

Exchange (Loss) Income 207 (153) (106)

Monetary Position Gain 99 75 334

Consolidated Financial Statement (2,012) (539) (234) 0 0 0

Equity in Income of Associated Companies 42 24 60

Income befote Income Taxes 8,908 6,338 5,839 0 0

Income Tax 4,041 2,099 1,692

Deferred Income Tax (1,214) (205) 233

Provisions 2,827 1,894 1,925 0 0

Income before Discontinued Operations 6,081 4,444 3,914 0 0

Net Income 6,081 4,444 3,914 0 0 0


Non Controlling Stockholders 125 124 103

Basic Earnings per Common Shares 5. 5.07 3.6 3.67 3 3.24 Dividend per Share 5. 0.46 3 0.46 3 0.40

Income before Financing, Interests, Depreciation and Amortization

15,837 9,829 8,647

(1) During 2009,2008 and 2007, the net sales of Bimbo, S.A. de C.CV., and Barcel, S.A. de C.V., in Mexico represented

approximately 45%, 63% and 64%, respectively, of the consolidated net sales (see Note 2 of the Audited Financial Statements).

Consolidated Balance Sheet

As of December 31 of: 2009 2008 2007

Cash and Cash Equivalents 4,981 7,339 3,902

Accounts and Notes Receivable – Net 9,605 6,874 4,818

Inventory, Net 2,969 2,573 1,845

Payments in Advance 499 431 521

Derivative Financial Instruments 177 204 92

Total Current Assets 18,231 17,421 11,178

Notes receivable from independent operators 1,940 451

Property, Plant and Net Equipment 32,763 26,039 23,504

Stock Investments in Associated Companies and Liabilities 1,479 1,416 1,157

Deferred Income Taxes 635 1,417 1,078

Goodwill - Net 20,394 6,313 3,890

Intangible Assets, Net 19,602 4,951 3,491

Intangible Assets for Employees Retirement Benefits 298

Other Assets Net 1,669 498 647

Total Assets 96,713 58,506 45,243

Payable Accounts to Suppliers 5,341 4,881 4,296

Short Term Debt and Current Outstanding Portion of Long

Term Debt 4,656 2,054 2,605

Other Accounts Payable and Accrued Liabilities 2,798 1,499 1,560

Payable Accounts to Related Parties 238 584 470

Income Tax 3,272 1,941 1,470

Employee Profit Sharing 1,242 524 467

Derivative Financial Instruments - 47 -

Total Outstanding Debt 17,547 11,530 10,868

Long Term Debt (1) 32,084 9,079 3,419

Employees Benefits and Social Security 4,644 982 1,099

Statutory employee profit sharing in Deferred Income 290 351 29

Deferred Income Taxes (2) 266 1,257 1,289

Other Long Term Debt 925 333 42

Total Liabilities 55,756 23,532 16,746


Non – Controlling Stockholders 853 710 581

Total Capital Stock 40,957 34,974 28,497

Consolidated Balance Sheet Notes

(3) Some financial institutions debt provides certain restrictions and obligations to the Company’s financial structure (see Note 11 of the Audited Financial Statements).

(4) See Note 17 of the Audited Financial Statements.

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Other Financial Data

As of December 31 of: 2009 2008 2007

Depreciation and Amortization 3,783 2,501 2,239

Resources Generated by Operating Activities - - 6,030

Resources Used in Financing Activities - - (3,012)

Resources Used in Investment Activities - - (4,806)

Balance at the End of the Year - - 3,902

Net Cash Flows from Operating Activities 13,912 8,850 -

Net Cash Flows from Investment Activities (38,398) (7,160) -

Net Cash Flows from Financing Activities 22,143 1,734 -

Cash and Cash Equivalents at the End of Period 4,981 7,339 -

Margin After General Expenses 10.4% 8.9% 8.9%

EBITDA Margin 13.6% 11.9% 12.0%

Net Margin 5.2% 5.4% 5.4%

Assets Return 6.3% 7.6% 8.7%

Return on Invested Capital 12.0% 12.0% 13.2%

EBITDA 15,837 9,829 8,647

Total Debt / EBITDA 2.32 1.13 0.70

Net Debt / EBITDA 2.01 0.39 0.25

EBITDA / Interest Expense 4.84 12.07 9.60

b) FINANCIAL INFORMATION PER BUSINESS, GEOGRAPHIC ZONE AND EXPORTATION

SALES Grupo Bimbo, through its main subsidiaries, is mainly engaged in the production, distribution and commercialization of packaged bread, sweet bread, home-made type cakes, cookies, cereal bars, candies, chocolates, sweet and salted snacks, packaged wheat tortillas, tostadas, goat milk caramel “cajeta” and fast food. The Company manufactures more than 7,000 products. The sale of such products constitutes Grupo Bimbo’s only line of business. The division between bakery products, and salted snacks and confectionery goods referred to in this Annual Report is an organizational division the only purpose of which is to achieve administrative efficiencies and which derives from historical reasons. In some cases, such division is shown exclusively in order to differentiate the market for such products. On one hand, Grupo Bimbo has no significant export sales. The following table shows certain financial information of Grupo Bimbo per geographic zone for the three preceding fiscal years:

As of December 31, (1)

2009 2008 2007

Net Sales

Mexico (1) 55,388 54,845 49,713 USA 49,850 18,049 16,565 Latin America 13,606 11,346 7,600

Profit After General Expenses

Mexico (1) 7,499 6,854 5,892 USA 4,261 124 206 Latin America 301 431 267

EBITDA

Mexico (1) 9,166 8,504 7,450 USA 5,727 539 559 Latin America 951 867 595

Total Assets

Mexico (1) 33,782 36,529 29,554 USA 53,336 14,221 11,791 Latin America 13,562 11,360 6,524

(1) Includes transactions in Europe and Asia.

c) REPORT ON SIGNIFICANT DEBT

The Company’s relevant loans are described herein below, that is, those which represent 10% or more of its total liabilities. See Note 11 of the Audited Financial Statements.

As of the date of this Annual Report, the Group is current in the payment of principal and interests of all its relevant loans.

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1. Notes (Certificados Bursátiles)

The Company issued notes (certificados bursátiles) (payable upon maturity) to refinance short-term debt contracted for the acquisition of certain assets in the USA, such issues are structured as follows: - Bimbo 09- Issued on June 15, 2009 for $5,000,000,000 (Five thousand million pesos) maturing on June 2014 with an interest rate applicable to such issue of 28-day TIIE plus 1.55 percent points. This issue is secured by Grupo Bimbo’s four main operative subsidiaries. - Bimbo 09-2- Issued on June 15, 2009 for $2,000,000,000 (Two thousand million pesos) maturing on June 2016 with an interest rate of 10.60%. This issue is secured by Grupo Bimbo’s four main operative subsidiaries. - Bimbo 09U- Issued on June 15, 2009 for 706,302,200 Investment Units (UDIS) maturing on June 2016, earning a 6.05% fixed interest rate of. The UDI value as of December 31, 2009 is $4.3401 per UDI. This issue is secured by Grupo Bimbo’s four main operative subsidiaries. - Bimbo 02-2- Issued on May 17, 2002 for $750,000,000 (Seven hundred fifty million pesos) maturing on May 2012, with a 10.15% fixed interest rate of; As of June 5, 2009 this issue is secured by Grupo Bimbo’s four main operative subsidiaries.

2. Committed Revolving Multicurrency Line-of-Credit

On July 20, 2005, the Company entered into an amendment agreement to the committed revolving line-of-credit agreement dated May 21, 2004 in an original amount of $250 million dollars, maturing on May 2008. The line’s amount after having executed such amendment agreement is of $600 million dollars, up to 50% being available in Mexican currency, while the transaction term is of 5 years, thus, its maturity date is July 2010. The applicable financial conditions are: for dollar draw-downs, the Company shall pay Libor plus 40 basis points until the third anniversary and Libor plus 45 basis points during the remaining period, while, in the case of the Mexican currency draw-downs, it shall pay TIIE plus 35 basis points until the third anniversary and TIIE plus 40 basis points as of such anniversary and until maturity. As of January 21, 2009, this credit line is secured by the Group’s main subsidiaries. The balance under this line-of-credit is 300 and 200 million dollars as of December 31, 2009 and March 31, 2010 respectively. The foregoing results from prepayment of 300 and 100 million dollars made on November 2009 and March 2010, respectively. 3. New Committed Revolving Multicurrency Line

On April 26, 2010, the Company contracted with six financial institutions a new committed multicurrency line in an amount of up to 750 million dollars, from which up to 75% is available in pesos and dollars. The maturity date of this line is July 31, 2012. For dollar draw-downs under this line, the Company shall pay interests at Libor + 1.50%, while the interest rate applicable for peso draw-downs shall be TIIE + 1.25%. This line-of-credit is secured by the Group’s main subsidiaries. Upon closing on May 2010, there is no draw-down under this line. 4. Multicurrency bridge loan

On January 15, 2009, the Company contracted a multicurrency bridge loan in an amount equal to 600 million dollars, in which BBVA Bancomer S.A. Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer participated as leading agent together with another five financial institutions. This loan maturing

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on January 2010 was founded in equal portions in Mexican currency and US dollar and fully repaid on June 17, 2009

5. Bank loan

On January 15, 2009 the Company contracted a long-term bank loan in an amount equal to 1,700 million US dollars, in which BBVA Bancomer S.A. Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer participates as leading agent and a bank syndicate as of this date comprised of fifteen institutions. The loan is comprised of two tranches, the first one maturing on January 2012 (Tranche A) and the second one maturing semi-annually from July 2012 until January 2014 (Tranche B). As of December 31, 2009 40% of Tranche A and 67% of Tranche B were denominated in Mexican pesos and the rest in US dollars. On Tranche A, Grupo Bimbo must pay a LIBOR/TIIE interest rate plus 2.75 percent points, while regarding Tranche B it must pay a LIBOR/TIIE interest rate plus 3.25 percent points. The total amount of funds obtained through this financing, in addition to those obtained in the multicurrency bridge loan were used by Grupo Bimbo to partially pay for the acquisition of. On June 26, 2009 the Company carried out a prepayment equal to 135 million US dollars of Tranche A. This loan balance as of December 31, 2009 is of $21,250 million pesos. 6. Other Loans

Some of the Group’s subsidiaries have contracted direct loans mainly to cover their working capital needs; none of such loans represents more than 10% of the Company’s consolidated liabilities.

d) MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE COMPANY’S FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read together with the Audited Financial Statements, including the notes thereto, contained elsewhere in this annual report. Unless otherwise stated, all amounts herein are expressed in Mexican Pesos and were prepared according to MFRS. Consolidated figures include the effects of intercompany eliminations.

i) Results of Operations

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

Net Sales

Net sales for 2009 increased 41.3%, to Ps.116,353 million as compared to 2008. The increase in net sales was primarily a result of the integration of BBU East and, to a lesser extent, by a two-digit increase in sales in Latin America.

Net Sales 2009 2008 % Change

Mexico 55,388 54,845 1.0

USA 49,850 18,049 ›100

Latin America 13,606 11,346 19.9

Consolidated 116,353 82,317 41.3

In Mexico, net sales remained stable, reaching Ps.55,388 million, mainly as a result of new product launches, which offset a weak consumption environment. By category, snacks had an outstanding performance as well as sales in modern channels.

In the United States, net sales almost tripled as compared with 2008, reaching Ps.49,850, primarily as a result of the integration of BBU East, healthy volume performance, the successful launching of new products and the initiation of national distribution for certain brands that were regional brands.

In Latin America, net sales increased 19.9%, reaching Ps.13,606 million, primarily as a result of volume growth generated by the continued expansion of our distribution network. In 2009, our customer base increased by approximately 76,000 new customers primarily through the traditional channels. The most solid results were registered in Brazil and Colombia.

Gross Margin

Gross margin for 2009 increased by 1.7% to 52.8%, as a result of a reduction in raw materials costs compared to peak commodity prices in 2008 as well as more stable exchange rates.

In Mexico, gross margin for 2009 increased by 1.7% to 55.1%, mainly as a result of a reduction in the raw material costs, a more stable Mexican Peso to U.S. dollar exchange rate and the implementation in 2009 of cost saving programs that lowered indirect production costs.

In the United States, gross margin for 2009 increased by 6.5% to 50.5%. The foregoing was a result of a series of factors, including: i) the incorporation of BBU East and its more efficient cost structure, ii) lower commodity and energy prices as compared to 2008, iii) greater manufacturing productivity in BBU West, including the benefit of a plant closure, and iv) improved absorption of fixed expenses resulting from higher sales volumes.

In Latin America, gross margin from our Central and South America remained unchanged at 42.2%. The more favorable raw material cost environment was offset by an increase in labor costs in some of the Company’s operations in the region.

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General Expenses

General expenses for 2009 represented 42.4% of net sales, an increase of 0.3% as compared to 2008. This was primarily due to: i) lower absorption of fixed expenses in Mexico, ii) higher distribution expenses in Latin America resulting from the Company’s efforts to increase the penetration of packaged bread in that region, and iii) a non-cash charge of approximately US$20 million for the amortization of certain intangible assets included in the acquisition of BBU East.

The foregoing factors more than offset the benefits of a more efficient distribution structure in Mexico and better results in the United States related to: i) the integration of BBU East and its more efficient expense structure, ii) ongoing initiatives at BBU West, such as route consolidation, iii) and a better expense absorption derived from higher sales volume.

Income After General Expenses

On a consolidated basis, income after general expenses for 2009 increased by 64.5% to Ps.12,054 million, with a record margin of 10.4%, which equals an increase of 1.5% as compared to 2008.

Income After General

Expenses

2009 2008 % Change

Mexico 7,499 6,854 9.4

USA 4,261 124 ›100

Latin America 301 431 (30.2)

Consolidated 12,054 7,328 64.5

In Mexico, margin increased 1.0% to 13.5%, notwithstanding the minor increase in sales, less absorption of fixed expenses and promotional and publicity efforts to increase consumption. Higher gross margin and ongoing efficiency improvements in our distribution, including route consolidation and the closure of distribution centers, contributed to such increase.

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In the United States, income after general expenses was Ps.4,261 million from Ps.124 million for 2008, while gross margin increased from 0.7% in 2008 to 8.5% in 2009. The foregoing was the result of: i) the improvement in gross margin, ii) the integration of BBU East, iii) the benefits of ongoing productivity initiatives at BBU West, including the optimization of assets, routes and administrative expenses; and iv) sharing best practices between regions.

Finally, in Latin America, gross margin after general expenses for 2009 was 2.2%, which resulted in a decrease of 1.6% as compared to 2008, mainly due to higher sales and distribution expenses associated with the efforts to increase market penetration of packaged bread in the region, as well as higher labor costs. It is important to mention that although the operational performance in several countries resulted in positive results during 2009, mainly in Brazil, such improvement was offset by the significant deterioration of the results of operations in Venezuela.

Comprehensive Financing Costs

Comprehensive financing costs for 2009 were Ps.2,012, due to higher interest expense accrued on the debt incurred in January 2009 to finance our acquisition of BBU East. Income Tax Expense

During 2009, the effective income tax rate was 31.7%. It is important to mention that, as a result of the Company’s decision to deconsolidate for tax purposes in Mexico, which was announced in January of 2010, fourth quarter results had a net tax effect of Ps168 million.

Net Income of Controlling Stockholders

Net income of controlling stockholders for 2009 amounted Ps.5,956 million, an increase of 37.9% and compared to 2008, while gross margin remained unchanged, at 5.1%. The foregoing is due to: i) an increase in other expenses, ii) an increase in comprehensive financing costs, and iii) a net tax impact derived from the Company’s decision to deconsolidate for tax purposes in Mexico. Such factors more than offset the increase in the margin afte general expenses during 2009.

EBITDA

EBITDA for 2009 increased 61.1%, to Ps.15,837 million, while gross margin was 13.6%, 1.7% higher than 2008. The difference between the increase in EBITDA margin and the increase of gross margin after general expenses is due to the amortization charge in the United States, which was incorporated to EBITDA.

EBITDA 2009 2008 % Change

Mexico 9,166 8,504 7.8

USA 5,727 539 ›100

Latin America 951 867 9.7


Financial Structure

As of December 31, 2009, cash and cash equivalents of the Company were Ps4,981 million, as compared to Ps7,339 million in 2008. Such decrease was mainly due to the prepayment of US$300 million corresponding to the Company’s revolving line due in July 2010, which reflects the solid cash generation of the United States operations as well as the continued strength of the flows of the Mexican operations.

As a result of the financing of the Company in the local debt markets in June of 2009, coupled with a solid cash flow generation, net debt at the end of 2009 amounted Ps36,740 million, with an average tenor of 3.2 years; short-term debt represented only 13% of total debt, while long-term debt represented 87% of total debt. With respect to currency mix, 62% was Mexican Pesos and 38% was US dollars.

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In 2009, net debt was Ps31,759 million, as compared to Ps3,739 in 2008. This increase was due to debt incurred to finance the acquisition of BBU East in January 2009, which resulted in major changes to the Company’s balance sheet.

The Company’s decision to proceed with the deconsolidation for tax purposes in Mexico, announced on January 8, 2010, had no material consequences in its financial position.

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

Net Sales

Net sales for 2008 increased 13.9%, to Ps.82,317 million, as compared with 2007. The increase was primarily a result of solid performance by the Mexican and U.S. operations as well as an approximate 50% growth in Latin America.

In Mexico, net sales for 2008 increased 10.3%, to Ps.54,845, mainly as a result of higher average prices and new product launches. Likewise, non-traditional distribution channels had a positive performance during the year.

In the United States, net sales for 2008 increased 9.0%, in Peso terms, to Ps.18,049 million, while sales in U.S. dollars were of US$1,564 million, an increase of 6.8% as compared to 2007. The foregoing was a result of several price increases during 2008, growth at national retailers and positive performance of new product launches in Oroweat, Mrs. Bairds and certain Mexican brands.

In Latin America, net sales increased 49.3%, to Ps.11,346 million. All countries had a solid performance, derived from the integration of new operations, double-digit growth in sales volume, higher average product prices and new product launches. Excluding acquisitions, increase in net sales would have been 33.8% during 2008.

Net Sales 2008 2007 % Change

Mexico 54,845 49,713 10.3

USA 18,049 16,565 9.0

Latin America 11,346 7,600 49.3

Consolidated 82,317 72,294 13.9

Gross Margin

Gross margin for 2008 decreased by 1.8% to 51.1%, due to increases in the prices of the main raw materials used by the Company and the additional impact of the depreciation of several Latin American currencies against the U.S. dollar at the end of the year. A more efficient mix of products, the absorption of fixed costs derived from increased sales and price increases during 2008 were not sufficient to offset such negative factors.

In Mexico, gross margin decreased by 1.5% to 53.4% as a result of an increase in raw material costs during the first nine-months of the year coupled with the impact of the Peso devaluation against the U.S. dollar at a double-digit rate.

In the United States, gross margin decreased 2.0% to 44.0%, as a result of higher raw material and energy costs partially offset by i) price increases during the year, and ii) lower labor and indirect production costs.

In Latin America, gross margin decreased 1.3% to 42.2%, as a result of an increase in the cost of raw materials and the impact of the currencies devaluation with respect to the U.S. dollar, mainly in Argentina, Brazil, Colombia and Chile. The foregoing offset the benefits obtained by the fixed cost absorption derived from increased sales and a better mix of products.

General Expenses

Operating expenses for 2008 represented 42.1% of net sales, which was 0.2% less than 2007. The foregoing was due to a combination of higher volume and prices, a better mix of products and a higher efficiency in distribution costs. Distribution costs decreased 0.2% with respect to 2007, notwithstanding a

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significant expansion of the distribution network in Latin America and the United States and the investments made in the distribution network in Mexico. Operating expenses, as a percentage of net sales, remained stable.

Income After General Expenses

On a consolidated basis, income after general expenses for 2008 increased 14.4%, to Ps.7,328 million, which represented a margin of 8.9%, similar to the margin for 2007. Margin remained stable with respect to 2007 in spite of the pressure in the cost of sales mentioned above.

Income After General

Expenses

2008 2007 % Change

Mexico 6,584 5,892 16.3

USA 124 206 (39.8)



In Mexico, margin increased 0.7% in 2008 with respect to 2007 to 12.5%, as a result of the absorption of expenses due to higher sales volumes and operating improvements that more than offset the pressure in the cost of sales during the year.

In the United States, margin was 0.7%, which was 0.6% less than margin during 2007, as a result of increased raw materials cost, which offset improved pricing conditions for certain raw materials in the fourth quarter and continued discipline in operating expenses.

In Latin America, margin increased by 0.3% from 2007, to reach 3.8%, due to the operating leverage derived from the significant growth in the scale of the operation that more than offset the reduction in gross margin. The operations in Brazil recorded significant improvements due to the incorporation of Nutrella in the second quarter of 2008.

Comprehensive Financing Costs

Comprehensive financing costs for 2008 increased by Ps.305 million, to Ps.539 million, as compared to 2007, primarily due to i) changes in MFRS which required us to discontinue the recognition of inflation in the monetary position, which amounted approximately Ps.259 million during 2008, and ii) an increase in foreign exchange loss, mainly in Latin America.

Net Income of Controlling Stockholders

Net income of controlling stockholders for 2008 increased by 13.4%, to Ps.4,320 . Net margin reached 5.2% in 2008, similar to net margin for 2007.

EBITDA

Consistent with the operating performance, EBITDA for 2008 increased by 13.7%, to Ps.9,829 million, as compared to 2007. Margin remained unchanged at 11.9%.

EBITDA 2008 2007 % Change

Mexico 8,504 7,450 14.1

USA 539 559 (3.6)



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Financial Structure

As of December 31, 2008, cash and cash equivalents of the Company were Ps.7,339 million, as compared to Ps3,902 million in 2007. Such increase was mainly due to the disbursement, in July 2008, of the remaining US$475 million under a US$600 revolving facility that the Company obtained in July 2004.

Net debt increased to Ps.3,739 in 2008, 78.8% higher than in 2007, while the net debt to net worth ratio was 0.11 times, as compared to 0.07 times for 2007. This ratio changed substantially, on a pro forma basis, to 1.1 times, considering the acquisition of Weston Foods Inc. in the United States.

ii) Financial Position, Liquidity and Capital Resources

a. Internal and External Liquidity Sources

BIMBO depends of traditional internal and external liquidity sources. The Company’s liquidity is based in its operations and, historically has had sufficient levels of capital. The Company has had access to bank financings and to the domestic capital market.

Likewise, BIMBO has obtained several lines of credit from several financial institutions which, in the majority of cases, have remained unused. Notwithstanding the foregoing, the Company cannot assure that it will have access to the sources of capital mentioned above. BIMBO has not had any cyclical credit requirements.

b. Debt Levels

The table of Selected Financial Information contains information of the Company’s debt at the end of the last three fiscal years. See “Selected Financial Information”. There is no cyclicality in the Company’s credit requirements.

Significant Indebtedness

Certificados Bursátiles

In 2002 and in 2009 the Company issued medium-term notes (certificados bursátiles) to refinance short-term debt incurred to acquire certain assets in the United States. See “Financial Information – Report on Significant Debt”.

Dual-Currency Committed Revolving Facility

On July 20, 2005, the Company restructured some terms of the original revolving facility obtained on May 21, 2004. Among such changes, the line increase from US$250 million to US$600 with a new maturity in July 2010. See “Financial Information – Report on Significant Debt”.

Bank Loan

On January 15, 2009, the Company obtained a long-term bank loan for an amount equivalent to US$1.7 billion. The proceeds of such loan, together with the funds obtained from a dual-currency bridge loan, were used by the Company to pay a portion of the purchase price for BFI.

Other Loans

Some of the Group’s subsidiaries have contracted loans to finance their own working capital needs.

Liquidity

Liquidity represents the ability of the Group to generate sufficient cash flows from operating activities to meet its obligations as well as its ability to obtain appropriate financing. Therefore, liquidity cannot be considered separately from capital resources that consist primarily of current and potentially available funds for use in achieving its objectives.

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Currently, the Group’s liquidity needs arise primarily from working capital requirements, debt payments, capital expenditures and dividends. In order to satisfy its liquidity and capital requirements, the Group primarily relies on its own capital, including cash generated from operations, and committed credit facilities. The Group believes that its cash from operations, its existing credit facilities, and its long-term financing will provide sufficient liquidity to meet its working capital needs, planned capital expenditures, future contractual obligations and payment of dividends.

Commitments

At December 31, 2009, the Company and certain of its subsidiaries have guaranteed, through letters of credit, commercial obligations and contingent risks related to the labor obligations of certain subsidiaries. The value of such letters of credit, plus other letters of credit to guarantee obligations of third parties derived from long-term supply contracts executed by the Company, totals US$99.5 million, of which a liability of US$99 million has already been recorded for employment benefits in the United States (see note 19 to the Audited Financial Statements).

Likewise, the Company has guaranteed certain contingent obligations of associated companies for the amount of US$3 million at December 31, 2009. Similarly, the Company has issued guarantees for third-party obligations derived from the sale of assets in prior years, for the amount of US$14 million (see note 19 to the Audited Financial Statements).

c. Treasury Policies

The Company maintains treasury policies consistent with its financial obligations and operating requirements and maintains its financial resources invested in highly-liquid, non-speculative and low-risk instruments. The Company maintains several currencies in its treasury, specially currencies of such countries in which the Company operates.

d. Tax Credits and Obligations

As of the date of this Annual Report, the Company does not have any tax credits or obligations, other than in the normal course of business, derived from ISR and VAT, calculated in the Company’s annual tax return.

e. Material Committed Capital Expenditures

As of the date of this Annual Report, the Company did not have any material committed capital expenditures.

f. Changes in the Balance Sheet

Below is information on the cash flows generated by the operations, investments and financing activities during 2009, 2008 and 2007. The table in “Selected Financial Information” includes certain financial ratios that show changes in the financial condition of the Company during such years.

Cash Flows from Operating Activities

Years ended December 31, 2009 and 2008

For the year ended December 31, 2009, net cash flows from operating activities increased by Ps.5,062 million to Ps.13,912 million in 2009 as compared to Ps.8,850 million in 2008, primarily as a result of improvements in the operations in the United States.

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For the year ended December 31, 2008, net cash flows from operating activities increased by Ps.2,820 million to Ps.8,850 million in 2008 as compared to Ps.6,030 million in 2007, primarily as a result of the increase in income after general expenses.

Net Cash Flows from Investing Activities


For the year ended December 31, 2009, net cash used in investing activities increased by Ps.31,238 million to Ps.38,398 million as compared to Ps.7,160 million in 2008, primarily as a result of the resources used for the acquisition of WFI during 2009.


For the year ended December 31, 2008, net cash used in investing activities increased by Ps.2,354 million to Ps.7,160 million as compared to Ps.4,806 million in 2007, primarily as a result of the resources used for acquisitions during 2008.

Net Cash Flows from Financing Activities Years ended December 31, 2009 and 2008

For the year ended December 31, 2009, net cash from financing activities increased by Ps.20,409 million to Ps.22,143 million as compared to Ps.1,734 million in 2008, primarily as a result cash obtained under the credit facilities secured to finance the acquisition of WFI.

During 2009, the Company paid a dividend of Ps.0.46 per share totaling Ps.541 million.


For the year ended December 31, 2008, net cash from financing activities was Ps.1,734 million compared to Ps.3,012 million used for financing activities in 2007. This change was primarily due to a borrowing in July 2008 of US$475 million from the revolving credit facility described above.

During 2008 and 2007, the Company paid dividends of Ps.0.46 and Ps.0.40 per share, respectively, totaling Ps.541 million and Ps.483 million, respectively.

g. Off-Balance Sheet Transactions

As of December 31, 2009, the Company had no significant transaction that was not recorded in the Audited Financial Statements.

iii) Internal Control

The Company has an Audit Committee that performs the activities set forth in the LMV, as well as such other corporate practices activities set forth therein and by the Company’s board of directors. The Audit Committee is comprised by 3 independent members appointed by the board of directors or the shareholders meeting. The chairman of the committee is appointed by the shareholders meeting.

Likewise, the Company has a Corporate Practices Committee that performs the activities set forth in the LMV, except for those attributed to the Audit Committee or any other committee by the board of directors of the Company. The Corporate Practices Committee is comprised by 3 independent members appointed by the board of directors or the shareholders meeting. The chairman of the committee is appointed by the shareholders meeting.

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e) CRITICAL ACCOUNTING POLICIES

The Audited Financial Statements that form a part of this Annual Report comply with MFRS. Their preparation requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from such estimates. The Company’s management believes that such estimates and assumptions were adequate considering the circumstances under which they were made.

The notes to the Audited Financial Statements contain a description of the most significant accounting policies of the Company, including the following:

1. Inventories and cost of sales. Inventories are stated at the lower of average cost or net realizable value for those entities operating in noninflationary economic environments. Until December 31, 2007, for those subsidiaries operating in inflationary economic environments, inventories are stated at average cost which is similar to their replacement value at year end, without exceeding net realizable value, and cost of sales is stated at latest production cost which is similar to replacement cost at the time goods are sold.

2. Property, plant and equipment. Property, plant and equipment are recorded at acquisition cost for those entities operating in noninflationary economic environments. Balances from acquisitions made through December 31, 2007 for all entities were restated for the effects of inflation by applying factors derived from the NCPI through that date. Balances that arise from subsidiaries operating in an inflationary environment continue to restate their balances by applying the NCPI. Depreciation rates are calculated using the straight-line method based on the remaining useful lives of the related assets, as follows:

Buildings 5 Manufacturing equipment 8, 10 and 35 Vehicles 10 and 25 Office furniture and fixtures 10 Computers 30

3. Impairment of long-lived assets in use. The Company reviews the carrying amounts of long-lived assets in use when an impairment indicator suggests that such amounts might not be recoverable, considering the greater of the present value of future net cash flows or the net sales price upon disposal. Impairment is recorded when the carrying amounts exceed the greater of the amounts mentioned above. Impairment indicators considered for these purposes are, among others, operating losses or negative cash flows in the period if they are combined with a history or projection of losses, depreciation and amortization charged to results, which in percentage terms in relation to revenues are substantially higher than that of previous years, obsolescence, reduction in the demand for the products manufactured, competition and other legal and economic factors. As of December 31, 2009 the Company recognized an impairment in the Czech Republic subsidiary for $56. This subsidiary was sold in January 2010 for an immaterial amount. The sale price is not representative for Grupo Bimbo. 4. Financial risk management policy. The daily activities carried out by the Company expose it to a number of inherent risks from different variables of a financial nature, as well as variations in the price of certain materials traded in international markets. Fur such reason, the Company uses derivative financial instruments to mitigate the potential impact of fluctuations in such variables and prices on its financial results. The Company believes that these instruments provide flexibility that allows greater stability of income and better visibility and certainty with regard to costs and expenses to which it will be exposed in the future. The design and implementation of the strategy of derivative financial instruments is formally supervised by two committees: 1) The Financial Risk Committee, responsible for risk management of interest and exchange rates and 2) the Subcommittee of Risk Commodity Markets, which supervises commodity risk. Both committees continuously report their activities to the Corporate Business Risk Committee, who is responsible for issuing general guidelines for the risk management strategy of the Company, and for establishing limits and restrictions on the operations they can perform. Likewise, the Corporate Business

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Risk Committee reports the risk positions of the Company to the Audit and Executive Committees of the Board of Directors. The Company’s policy is to enter into derivative financial instruments only for hedging purposes. Therefore, entering into a contract of a derivative financial instrument must necessarily be associated with a primary position that represents a certain risk. Consequently, the notional amounts of one or all derivative financial instruments contracted to hedge a certain risk will be consistent with the amounts of the primary positions that represent the risk position. The Company does not enter into derivatives for speculative purposes. If the Company decides to undertake a hedging strategy where options are combined, the net payment of premiums associated must represent an expense for the Company. 5. Derivative financial instruments. The Company states all derivatives at fair value in the balance sheet, regardless of the purpose for holding them. Fair value is determined using prices quoted on recognized markets. If such instruments are not traded, fair value is determined by applying recognized valuation techniques. Changes in the fair value of derivative instruments designated as hedges are recognized as follows; (1) for fair value hedges, changes in both the derivative instrument and the hedged item are recognized in current earnings; (2) for cash flow hedges, changes in fair value of the effective portion are temporarily recognized as a component of other comprehensive income and then reclassified to current earnings when affected by the hedged item; the ineffective portion is immediately recognized within results; (3) for hedges of an investment in a foreign subsidiary, the effective portion is recognized as a component of other comprehensive income as part of the cumulative translation adjustment. The ineffective portion of the gain or loss on the hedging instrument is recognized in current earnings, if it is a derivative financial instrument. If not, it is recognized as a component of other comprehensive income until the investment is sold or transferred. To manage its exposure to interest rate and foreign currency fluctuations, the Company principally uses interest rate swaps and foreign currency forward contracts, as well as futures to fix the purchase price of raw materials. The Company formally documents all hedging relationships, including their objectives and risk management strategies to carry out derivative transactions. Derivative trading is performed only with institutions of recognized solvency, and limits have been established for each institution. The hedging derivative instruments are recorded as assets or liabilities without offsetting them against the hedged items. 6. Goodwill. Goodwill is recorded at acquisition cost, except for those entities operating in inflationary economic environments, where it is restated using the NCPI. Goodwill is not amortized and, at least once a year, is subject to impairment tests. 7. Intangible assets. These are primarily comprised of trademarks, rights of use and customer relationships and are recorded at acquisition cost, except for those entities operating in inflationary economic environments, where they are restated using the NCPI. They are derived mainly from the acquisition of the business in the United States of America and certain trademarks in South America. Trademarks and rights of use are not amortized; however, the carrying values are subject to impairment tests at least annually. Customer relationships have an estimated useful life of 18 years and are amortized on a straight-line basis based on such useful life. As of December 31, 2009, the amortization recorded both on a cumulative basis and for the year related to intangible assets with finite lives was $257. 8. Direct employee benefits. Direct employee benefits are calculated based on the services rendered by employees, considering their current salaries. The liability is recognized as it accrues. These benefits include mainly accrued statutory employee profit sharing, compensated absences, such as vacation and vacation premiums, and incentives and are presented in the other accounts payable and accrued liabilities caption.

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9. Employee benefits from termination, retirement and other. The liability for seniority premiums, pensions and termination benefits is recorded as accrued and is calculated by independent actuaries using the projected unit credit method using nominal interest rates. Other employee benefits relate to the insurable risks such as self-insurance in the USA, general liability insurance, automobile insurance and other employee compensation subject to program specified limits. The liability for such program is determined using the Company’s historical data according to actuarial calculations. 10. Statutory employee profit sharing. Statutory employee profit sharing (“PTU”) is recorded in the results of the year in which it is incurred and presented under other expenses in the accompanying consolidated statements of income. Deferred PTU is derived from temporary differences that in 2009 and in 2008 resulted from comparing the accounting and tax basis of assets and liabilities and in 2007 resulted from comparing the accounting result and income for PTU purposes. 11. Income taxes. Income taxes (“ISR”) and the Business Flat Tax (“IETU”) are recorded in the results of the year in which they are incurred. To recognize deferred income taxes, based on its financial projections, the Company determines whether it expects to incur ISR or IETU and accordingly recognizes deferred taxes based on that expectation. Deferred taxes are calculated by applying the corresponding tax rate to the applicable temporary differences resulting from comparing the accounting and tax bases of assets and liabilities and including, if any, future benefits from tax loss carry forwards and certain tax credits. Deferred tax assets are recorded only when there is a high probability of recovery. According to MFRS D-4, Income Taxes, the balance of the initial cumulative effect of deferred income taxes was reclassified to retained earnings (accumulated deficit) as of January 1, 2008. See the Audited Financial Statements and the notes thereto, which are part of this Annual Report.

4) ADMINISTRATION

a) INDEPENDENT AUDITORS

The external auditor selection is entrusted to the Audit Committee, the retaining of which is recommended to the Board of Directors. The Board of Directors is the body that approves the retaining of the corporation that shall provide the external audit services and, as the case may be, of services additional or supplementary to the external audit services. The Audit Committee carries out a bid of the external audit services every 5 years, regardless of considering the possibility of doing it within a shorter periodicity. The Committee selects among the firms which due to their backgrounds, reputation, partners, international coverage, methodology and technology, better cover the expectations and needs of the Board of Directors, the Committee and the Company’s Administration. In some cases, given the results on the services evaluation of the selected firm, the Audit Committee may consider sufficient to change the partner of the relevant firm, for which it requests a slate of three candidates and chooses the one that will be in charge of auditing the Company’s Financial Statements, in which case the relevant bidding process will not be carried out. As of 2002, the firm Galaz, Yamazaki, Ruiz Urquiza, S.C. (GYRU), firm which is member of Deloitte Touche Tohmatsu, has been in charge of auditing the Company’s Consolidated Financial Statements. Until 2007, it supported its opinion, through other independent auditors’ report. Likewise, as of 2008, GYRU carried out the Financial Statements audit without being based in other firms’ opinions. In the different reviews and reports which have been periodically made to the Group’s Financial Statements, such auditors firm has issued no opinion with a qualification or a negative opinion, nor has it refrain from issuing an opinion in connection thereto.

During 2008, the GYRU firm rendered to the Company services other than audit, consisting in surveys on transfer prices, preparation of statements for the VAT return and tax advisory services. For the rendering of such services, the Company paid $16 to GYRU, amount that represented 57% of the total disbursements made to such firm in Mexico. As of 2003 and until 2007, the review of the Financial Statements of the subsidiary corporation Tecebim, S.A. de C.V. domiciled in Mexico, as well as the Financial Statements of the Group’s subsidiaries located abroad, except for Central America were in charge of the accountants firm KPMG, Cárdenas Dosal, S.C.

b) TRANSACTIONS WITH RELATED PERSONS AND CONFLICTS OF INTERESTS

In the ordinary course of its activities, BIMBO carries out commercial transactions with some associate or affiliate corporations. BIMBO contemplates to continue carrying out transactions with its associate and affiliate companies in the future. Transactions with related companies are entered into on an arm’s length basis therefore the Group considers that the terms are not less favorable than those which may be obtained in a comparable transaction with an unrelated company (see Note 16 of the Audited Financial Statements). a. Transactions with related parties performed in the Group’s ordinary course of business were the

following ones:

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2009 2008 2007

Income for: Interests collected $76 -- --

2009 2008 2007

Disbursements for: Purchase of raw materials $4,403 $5,158 $4,101 Terminated products $575 $769 $262 Office supplies, uniforms and others $312 $473 $445

b. Net balances payable to related parties are:

2009 2008 2007

Beta San Miguel, S.A. de C.V. 89 74 96 Efform, S.A. de C.V. 18 23 8 Frexport, S.A. de C.V. 14 41 37 Grupo Altex, S.A. de C.V. 29 229 200 Industrial Molinera Montserrat, S.A. de C.V: 14 32 25 Industrial Molinera San Vicente de Paul, S.A. de C.V. 19 15 Makymat, S.A. de C.V. 5 8 5 Ovoplus del Centro, S.A. de C.V. 13 30 24 Pan-Glo de Mexico, S. De R.L. de C.V. 1 4 3 Paniplus, S.A. de C.V. 21 27 16 Proarce, S.A. de C.V. 22 36 18 Fábrica de Galletas La Moderna, S.A. de C.V. 4 11 10 Mundo Dulce, S.A. de C.V. 5 39 Uniformes y Equipo Industrial, S.A. de C.V. 3 11 13 Total $ 238 $ 584 $ 470

c) ADMINISTRATORS AND SHAREHOLDERS

Board of Directors

In accordance with the Corporate Bylaws, the Company’s administration is in charge of a Board of Directors and a General Director (Chief Executive Officer) that shall perform the duties established by the Securities Market Law. The Board of Directors shall be comprised of minimum (5) and maximum twenty one (21) regular directors, from which at least twenty five percent (25%) shall be independent directors. For each regular director the respective alternate director shall be appointed, it being understood that the alternate Directors of the independent Directors shall have this same nature. The members of the Board of Directors may be shareholders or persons outside the Company. Independent Directors shall be those persons which are not impeded to perform their duties free from conflicts of interest and that satisfy the requirements set forth in the Securities Market Law to be considered as such, the provisions derived there from, and in the jurisdiction laws and regulations and stock exchanges or markets in which the Company’s securities are traded, as the case may be. The Board of Directors appointed and ratified during the General Ordinary Shareholders Meeting held on April 14, 2010, shall be comprised of seventeen (17) regular directors and seventeen (17) alternate directors, which shall remain in their positions until the persons appointed to substitute them take

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possession. The following table shows the names of the members of the Board of Directors and the period during which they have acted as directors:

Regular Directors Seniority in

the Board Position Alternate Directors

Roberto Servitje Sendra 34 Director / Chairman Jaime Chico Pardo Henry Davis Signoret 10 Director Paul Davis Carstens José Antonio Fernández Carbajal 10 Director Federico Reyes García Arturo Fernández Pérez 2 Director Alejandro Hernández Delgado Ricardo Guajardo Touché 6 Director Francisco Zambrano Rodríguez Agustín Irurita Pérez 5 Director Guillermo Irurita Piñero Luis Jorba Servitje 2 Director Mireya Jorba Aliacar Mauricio Jorba Servitje 15 Director Ramón Pedroza Meléndez Francisco Laresgoiti Hernández 14 Director María del Pilar Mariscal Servitje Nicolás Mariscal Servitje - Guillermo Lerdo de Tejada Servitje José Ignacio Mariscal Torroella 22 Director Raúl Obregón Servitje María Isabel Mata Torrallardona 3 Director Javier de Pedro Espínola Raúl Obregón del Corral 14 Director Francisco Laresgoiti Servitje Roberto Quiroz Montero 14 Director Rosa María Mata Torrallardona Alexis E. Rovzar de la Torre 9 Director Vicente Corta Fernández Lorenzo Sendra Mata 30 Director Jorge Sendra Mata

Daniel Servitje Montull 17 Director / Alternate

Chairman Pablo Elizondo Huerta

Luis Miguel Briola Clement(1) 4 Secretary Pedro Pablo Barragán Barragán(2) (1) and (2) regular Secretary and alternate Secretary of BIMBO and are not part of the Board of Directors . Daniel Servitje Montull is nephew of Don Roberto Servitje Sendra and cousin of Luis and Mauricio Jorba Servitje. The latter are sons of Don Jaime Jorba Sendra (RIP). Lorenzo Sendra Mata is cousin of Don Roberto Servitje Sendra.

Herein below are the companies where the Directors are working as key executives or as members of boards of directors:

Roberto Servitje Sendra is member of the Board of Directors of Chrysler de Mexico, Fomento Económico Mexicano (FEMSA), Grupo Altex, Escuela Bancaria y Comercial, Memorial Hermannn International Advisory Board (Houston, Texas) and Grupo Aeropuertario del Sureste. Henry Davis Signoret is the President of Promotora DAC. Is member of the Board of Directors of Grupo Financiero IXE, Grupo Aeropuertuario del Pacífico, Kansas City Southern and Telefónica Móviles Mexico. José Antonio Fernández Carbajal is Chairman of the Board of Directors and Chief Executive Officer of Fomento Económico Mexicano (FEMSA), Chairman of the Board of Coca-Cola FEMSA, Vice-Chairman of the Board of Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) and Co-Chairman of the Board of Woodrow Wilson Center Mexico Institute. Is a member of the Board of Directors of Grupo Financiero BBVA Bancomer, Industrias Peñoles, Grupo Televisa, Volaris and Xignux. Arturo Manuel Fernández Pérez is the Dean of Instituto Tecnológico Autónomo de Mexico (ITAM) and member of the Board of Directors of Crédito Afianzador; Fomento Económico Mexicano (FEMSA); Fresnillo, Grupo Financiero BBVA Bancomer; Grupo Nacional Provincial; Grupo Palacio de Hierro; Industrias Peñoles; and Valores Mexicanos, Casa de Bolsa.

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Ricardo Guajardo Touché is member of the Board of Directors of Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM), Fomento Económico Mexicano (FEMSA), Coca-Cola FEMSA, Grupo Financiero BBVA Bancomer, Grupo Industrial Alfa, El Puerto de Liverpool, Grupo Aeroportuario del Sureste (ASUR), Grupo Coppel y Nacional Monte de Piedad. Is President of BBVA Holding U.S.A., SOLFI and Chairman of Fondo para la Paz. Agustín Irurita Pérez is member of the Board of Directors of Grupo ADO. Is for life member of the Board of Directors of the Cámara Nacional de Autotransporte de Pasaje y Turismo, as well as member of the Board of Directors of Afianzadora Aserta, Fincomún Servicios Financieros Comunitarios, Grupo Comercial Chedraui and national director and member of the Executive Commission of the Confederación Patronal de la República Mexicana. Luis Jorba Servitje is Chief Executive Officer of Frialsa Frigoríficos, Chairman of the Board of Directors of Efform and member of the Board of Directors of Texas Mexico Frozen Food Council, of International Association of Refrigerated Warehouses and of the World Food Logistics Organization. Mauricio Jorba Servitje is Chief Executive Officer of Operación Europa and member of the Board of Directors of VIDAX. Francisco Laresgoiti Hernández is Chief Executive Officer of Grupo Laresgoiti and member of the Board of Directors of Fundación Mexicana para el Desarrollo Rural and of Grupo Financiero Aserta. Nicolás Mariscal Servitje is Chief Executive Officer of Grupo Marhnos. Is Vice-Chairman of Comité Empresarial Mexico-Guatemala - COMCE and member of the Board of Directors of Fundación Mexicana para el Desarrollo Rural. José Ignacio Mariscal Torroella is President of Grupo Marhnos, Chairman of UNIAPAC Internacional, of Comité por Una Sola Economía del Consejo Coordinador Empresarial, Vice-Chairman of Fincomún Servicios Financieros Comunitarios. Is member of the Board of Directors of Sociedad de Inversión de Capital de Posadas de MéxicoGrupo Calidra, Aserta and of the Executive Commission of Confederación USEM. María Isabel Mata Torrallardona is General Director of Fundación José T. Mata and member of the Board of Directors of Tepeyac. Raúl Obregón del Corral is Managing Partner of Alianzas, Estrategia y Gobierno Corporativo, and the Managing Partner of Proxy Gobernanza Corporativa. Is member of the Board of Directors of Industrias Peñoles; Grupo Palacio de Hierro, Envases y Laminados, Invermat, Altamira Unión de Crédito y Comercializadora Círculo CCK. Is an independent member of the sub-committee on evaluation and financing of Fondo Nacional de Infraestructura and member of the Government Board of Instituto Autónomo de Mexico. Roberto Quiroz Montero is Chairman and Chief Executive Officer of Grupo Industrial Trébol. Is member of the Board of Directors of Grupo Altex, Grupo Invermat, Grupo Valacci, Fundación J.T.M. and Consulting Director of Grupo Financiero Banamex. Alexis E. Rovzar de la Torre is member of Latin American Practice of White & Case based in New York, USA and member of the Board of Directors of Coca-Cola FEMSA, Fomento Económico Mexicano (FEMSA), The Bank of Nova Scotia, Grupo Acir, Grupo Comex, Endeavor Mexico, Appleseed Mexico, Provivah, Council of the Americas, Procura and Qualitas of Life Foundation. Lorenzo Sendra Mata is Chairman of the Board of Directors of Proarce. Is member of the Board of Directors of Fundación Ronald McDonald, Fomento de Nutrición y Salud, Fundación Mexicana para el Desarrollo Rural and of Financiera Promotora para el Desarrollo Rural.

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Daniel Servitje Montull is member of the Board of Directors of Grupo Financiero Banamex, Coca-Cola FEMSA and Grocery Manufacturers of America (USA). In the ordinary course of business, the Company has entered into transaction with some of the companies in which the members of its Board of Directors work or in which its relevant officers work. Such transactions have been entered into on an arm’s length basis and the Company considers that none of them is relevant.

Board of Directors Powers

El Board of Directors is the Company’s legal representative, and has the broadest powers for the administration of the Company’s businesses, with general power of attorney for lawsuits and collections, administrate properties and exercise acts of ownership, without any limitation, in order to appoint and remove the General Director, directors, managers, officers and attorneys-in-fact, and to determine their attributions, work conditions, compensations and guaranties and, particularly, to grant powers to managers, officers, attorneys and any other persons in charge of the Company’s labor relationships. Likewise, the Board of Directors has the power to approve the Company’s budgets and any amendments to the budget taking into account the results being reported, as well as to authorize extraordinary entries. The Company’s Board of Directors has also powers to approve any transfer of the Company’s shares, when such transfer implies more than 3% of the voting shares. Likewise, for the performance of its duties, the Board of Directors shall be aided by an Audit Committee, a Corporate Practices Committee, an Evaluation of Results Committee and a Finance and Planning Committee, the duties and integration of which are described herein below. See “Administration– Intermediate Administration Bodies”. Key Executive Officers

The following table shows the names of the Group’s key executive officers as of the date of this Annual Report, their current position and their seniority in the Company:

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Name Position Age

Years in

the

Group

Roberto Servitje Sendra Chairman of the Board of Directors 82 64 Daniel Servitje Montull Chief Executive Officer Grupo Bimbo 51 32 Guillermo Quiroz Abed Chief Financial and Administration Officer 56 11 Reynaldo Reyna Rodríguez Vice President of Strategic Analysis and Information 56 9 Javier Millán Dehesa Chief Human Relations Officer 61 32 Luis Rene Martínez S. Director Corporate Affairs 43 2 Guillermo Sánchez Arrieta Director of Auditing 56 31 Javier A. González Franco President of Bimbo, S.A. de C.V. 54 32 Miguel A. Espinoza Ramírez Commercial Manager of Bimbo, S.A. de C.V. 53 30 Ricardo Padilla Anguiano Administration and Services Director of Bimbo, S.A. de

C.V. 56 28

Gary Prince President of BBU 58 1 Alfred Penny Executive Vice President BBU 53 1 Pablo Elizondo Huerta Assistant Chief Executive Officer Grupo Bimbo 56 33 Alberto Díaz Rodríguez General Manager of OLA 55 11 Alejandro Pintado López Assistant General Manager of OLA 42 21 Gabino Gómez Carbajal President of Barcel, S.A. de C.V. 51 28 Jorge Zarate Lupercio Organization Director Asia 45 23 Fortino Reyes García Manager Central America Region 42 20

Roberto Servitje Sendra is Chairman of the Board of Directors of BIMBO since 1994. He joined the Company in 1945. He is an officer in the Group since 1956, serving as Bimbo’s General Manager in Guadalajara, Monterrey and Mexico City; and Bimbo Vice President during nine years. Daniel Servitje Montull serves as BIMBO’S Chief Executive Officer since 1997. He holds a degree in Business Administration from Universidad Iberoamericana, in Mexico. In 1987 he obtained the Master of Business Administration degree from Stanford University, in California, USA. He is an officer of the Group since 1978, serving positions such as Executive Officer of Organización Bimbo, Chief Executive Officer of Organización Marinela and Vice-President of BIMBO. Guillermo Quiroz Abed is in charge of the Financial, Comptroller and Legal departments of BIMBO, since February 1999. He obtained a degree in Actuarial Studies from Universidad Anáhuac, in Mexico, and an MBA degree from IPADE. He is a member of the Board of Directors of Grupo Altex. Reynaldo Reyna Rodríguez serves as Vice President of Strategic Analysis and Information since January 2010. He studied Industrial and Systems Engineering in ITESM and holds a masters degree in Operations, Analysis and Finance from Wharton, in the University of Pennsylvania, USA. In May 2001 he joined the Group and served as Corporate General Manager, BBU’S General Manager and Executive Vice-President of BBU West. Javier Millán Dehesa serves as BIMBO’S Chief Human Relations Officer since 1979. He holds a degree in Philosophy and Business Administration from Universidad Iberoamericana, in Mexico. He holds an MBA degree from IPADE. He is a member of the Board of Directors of Asociación Mexicana en Dirección de Recursos Humanos. He is the Chairman of Reforestamos Mexico, created by the Group in 2002. He has served in several positions in the Company, such as: Chief Development Officer, Personnel Manager in Productos Marinela and Development Corporate Manager.

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Luis Rene Martínez Souvervielle Gorozpe is Corporate Affairs Director since September 2007. He holds a law degree from Escuela Libre de Derecho in Mexico and a specialization in Political Theory and Analysis. Guillermo Sánchez Arrieta serves as Director of Auditing since 1998. He holds a degree in Accounting from Universidad Autónoma de Hidalgo and studied an MBA in IPADE. He joined the Group in 1978, and among his main positions are the following ones: Productos Marinela Comptroller, Corporate Comptroller of Organización Bimbo and Barcel, and General Manager of Ricolino and Barcel Mexico. Javier Augusto González Franco serves as President of Bimbo, S. A. de C.V. since January 2008. He holds a degree in Chemical Engineering from UNAM and an MBA from Universidad Diego Portales, in Chile. He joined the Group in 1977 and has served different positions, such as Assistant General Manager of OLA, Assistant General Manager of Organización Bimbo and president of Barcel, S.A. de C.V. Miguel Ángel Espinoza Ramírez is Commercial Director of Bimbo, S.A. de C.V. since January 2002. He holds a degree in Industrial Engineering from Instituto Tecnológico de Chihuahua, he studied the D-1 Business Administration program in IPADE and the Advanced Management Program in the University of Harvard. He joined the Group in 1981 and has served positions such as General Manager of Dulces y Chocolates Ricolino, General Manager of Barcel del Norte, Chief Administrative Officer of Organización Barcel and Chief Executive Officer of the same corporation. Ricardo Padilla Anguiano is Services Director of Bimbo, S.A. de C.V. since December 2001. He holds a degree in Accounting from Universidad de Guadalajara and an MBA from IPADE. He joined the Group in 1981 and has served several positions such as: General Manager of Bimbo Noroeste, Bimbo Golfo and Bimbo San Luis. Gary Prince serves as President of Bimbo Bakeries USA since January 2009. Gary Prince joined George Weston Limited in July 1974. He served as President of Stroehman Bakeries, L.C. in USA until July 2001. He was appointed President of Weston Foods and George Weston Bakeries that year, after the acquisition made by such company of Best Foods Baking Company from Unilever. In January 2009, when Grupo Bimbo acquired Weston Foods Inc., he was appointed President of BBU. Fred Penny is Executive Vice-President of BBU since March 2010. From 1987 to 1997 he was part of Kraft Baking serving as Comptroller in North East USA, Strategic Planning and Productivity Manager, as well as General Manager of the Intermountain region. In 1997 he was appointed Vice-President and Chief Executive Officer of Entenmann’s, Inc. In 2007, he was appointed Executive Vice-President of George Weston Bakeries Inc. In January 2009, when Grupo BIMBO acquired Weston Foods Inc., he was appointed Executive Vice-President of BBU. Pablo Elizondo Huerta serves as Assistant Chief Executive officer of Grupo Bimbo since January 2008. He holds a degree in Chemical Engineering from Universidad Nacional Autónoma de Mexico (UNAM). He joined the Group in 1977 and served several positions such as General Manager of Wonder in Mexico City, General Manager of Bimbo in Hermosillo, Director of Organización Latinoamérica, General Central Corporate Manager, General Corporate Manager of Bimbo, S.A. de C.V. and General Director of Bimbo, S.A. de C.V. Alberto Díaz Rodríguez serves as President of Organización Latinoamérica since January 2004. He holds a degree in Industrial Engineering and obtained a Master in Management from the University of Miami. He joined the Group in 1999 and has served as General Manager of Bimbo de Venezuela and Assistant Director of Organización Latinoamérica. Alejandro Pintado López serves as Assistant Director of Organización Latinoamérica. He holds a degree in Business Administration from ITESM and holds a post-graduate degree in ADL School of Management (Boston College). He joined the Group in 1989. He was founder and General Manager of Bimbo de Perú, as well as Sales Director in Mexico. Gabino Gómez Carbajal serves as President of Barcel, S.A. de C.V. since January 2008. He holds a degree in Marketing from ITESM, and MBA from IPADE and the University of Miami. He joined the Group in

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1981, and among his previous positions are: Vice-President of the Business Development Division, Assistant General Manager of Organización Bimbo, General Manager of OLA and General Manager of Bimbo, S.A. de C.V. Jorge Zarate Lupercio serves as Director of Organización Asia since October 2006. He holds a degree in Biochemical Engineering from ITESM, Mexico; he holds a degree in Baking Science & Technology from AIP, USA, an MBA from IAE, Argentina; and a post-graduate degree in Strategic Marketing from UCA, Argentina. He joined the Group in 1987 and has served positions such as Manufacturing Manager in Bimbo del Noroeste, Operations Manager in Bimbo and Marinela, Planning Corporate Manager and General Manager of Bimbo in Argentina. Fortino Reyes García serves as Regional Director for Central America since March 2007. He holds a degree in Mechanical Industrial Engineering from Instituto Tecnológico de Pachuca, Mexico. He holds a degree in post-graduate studies in Total Quality, Administration for Quality, Business Administration, Strategic Planning, Marketing and Corporate Finance. He joined Grupo Bimbo in 1990 serving positions as Total Quality Corporate Manager, Commercial Manager of Bimbo in Chile, Planning and Business Development Corporate Manager, as well as Sales Manager. The following is an organization chart of the Group’s key officers, in effect as of the date of this Annual Report:

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Compensation Compensation to the Directors and members of the Company’s Committees is determined by the General Ordinary Shareholders’ Meeting. Such compensation, as of the General Ordinary Shareholders Meeting held on April 14, 2010, is as follows: Directors receive $40,000 per meeting attended. The members of the Corporate Practices, Finance and Planning, and Evaluation and Results Committees receive $25,000 per meeting attended. Members of the Audit Committee receive 50,000. The Company’s officers who are also Directors and/or members of any of the Committees shall not be entitled to receive any compensation. In 2009, the total amount corresponding to the compensation mentioned in this paragraph amounted approximately $4.5. Compensations paid to key officers for the fiscal year ended as of December 31, 2009 amounted approximately $192, which represented 0.39% of the Company’s total consolidated general expenses. Such amount includes payments for salaries, vacation bonus, legal year-end bonus, bonus for goal achievement and annual results bonus. Bonuses paid by the Company are determined based on the individual performance of its collaborators, while the annual results bonus also contemplates a factor which is determined by the financial results achieved by the Company. The above mentioned amount includes the allocation of BIMBO shares made to the main officers for achieving the financial goal of the Economic Added Value. Likewise, the amount accrued by the Company and its subsidiaries for the key officers’ pension plans amounts the sum of $230.

RICARDO PADILLA Director de Administración

y Servicios

FORTINO REYES Director

Región Centroamérica

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Executives and Directors Share Plan

As of 2004, the Share Plan (“Plan Acciones por VEAB (Valor Económico Agregado BIMBO”)) for executive officers and directive officers is in effect. Based on this plan, an annual allocation of Grupo Bimbo shares is granted, which may fluctuate from 40 to 240 base salary-days of the executive officer or directive officer, depending on the position in the Company. Shares are acquired at their market value and remain deposited in a trust during 30 months and are released for their full disposal upon the expiration of such term. The allocation amount, which is made at market value, depends on the Company’s financial results. Intermediate Administration Bodies

The Company has the following committees, which are in charge of assisting the Board of Directors in the Company’s administration: Audit Committee

El Audit Committee is comprised of a minimum of three independent directors appointed by the Board of Directors or the Shareholders’ Meeting. The chairman of the Audit Committee shall be appointed and/or removed from his position, exclusively, by the General Shareholders’ Meeting. The Audit Committee performs the audit activities established by the Securities Market Law, as well as those corporate practices activities established by the same law and determined by the Board of Directors. The Audit Committee performs, among others, the following activities: a) provide an opinion to the Board of Directors on matters of its competence under the Securities Market Law; b) evaluate the performance of the corporation that renders the external audit services, as well as to analyze the report, opinions and information prepared and subscribed by the external auditor; c) discuss the Company’s Financial Statements with the persons responsible for the preparation and review thereof, and based thereon, recommend or not the approval thereof to the Board of Directors; d) inform the Board of Directors the status of the Company’s internal control and external audit or those of the corporations controlled by the Company; e) prepare the opinion referred to in Article 28, paragraph IV, clause c) of the Securities Market Law and submit it to the consideration of the Board of Directors for its subsequent presentation to the Shareholders’ Meeting; f) support the Board of Directors in the preparation of the reports referred to in Article 28, paragraph IV, clauses d) and e) of the Securities Market Law; g) overview that the transactions referred to in Articles 28, paragraph III and 47 of the Securities Market Law, are carried out in accordance with the provisions set forth to that effect in such articles, as well as to the policies derived therefrom; h) request the opinion from independent experts in the cases it deems it convenient, for the adequate performance of its duties or when requested under the law; i) request from the Company’s key officers and other employees or from the corporations controlled thereby, reports regarding the preparation of financial information and of any other kind which it deems necessary for the performance of its duties; j) investigate the possible defaults of which it is aware, to the transactions, guidelines and operation policies, internal control system and internal audit and accounting recording, whether of the same Company or of the corporations controlled thereby; k) receive opinions from the shareholders, directors, key officers, employees and, generally, from any third party, in respect to the matters referred to in the preceding clause, as well as to carry out the actions deemed admissible at its judgment, in connection with such opinions; l) request periodical meetings with the relevant officers, as well as the delivery of any kind of information in connection with the Company’s internal control and internal audit or of the corporations controlled by the Company; m) inform the Board of Directors of the relevant irregularities detected when performing its duties and, as the case may be, of the corrective actions adopted or to propose those to be applied; n) call Shareholders’ Meetings and request that the items deemed pertinent are included in such meetings’ agenda; o) overview that the General Director complies the resolutions of the Company’s Shareholders’ Meetings and Board of Directors’ Meetings, in conformity with the instructions which, as the case may be, are issued by the relevant meeting; and p) overview that mechanisms and internal controls which allow to verify the

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Company’s actions and transaction and those of the corporations controlled thereby established are aligned to the applicable regulations, as well as to put in place methodologies which allow to review the fulfillment of the above mentioned. The General Ordinary Shareholders Meeting held on April 14, 2010, ratified the following persons as members of the Audit Committee: Arturo Fernández Pérez, Agustín Irurita Pérez, Alexis E. Rovzar de la Torre, and Henry Davis Signoret as chairman. Based on the professional profiles of the members of the Audit Committee, the Company considers that such members can be deemed financial experts. Corporate Practices Committee

El Corporate Practices Committee is comprised of a minimum of three independent directors appointed by the Board of Directors or the Shareholders’ Meeting. The chairman of the Corporate Practices Committee shall be appointed and/or removed from his position, exclusively, by the General Shareholders’ Meeting. El Corporate Practices Committee performs the corporate practices activities set forth in the Securities Market Law, except for the corporate practices activities which the Board of Directors grants to the Audit Committee or to the other committees that satisfy the requirements and obligations provided for in the Securities Market Law for the committees that perform duties regarding corporate practices. The Corporate Practices Committee performs, among others, the following activities: a) provide the Board of Directors with an opinion in connection with the matters of its competence under the Securities Market Law; b) grant waiver in order for a Director, relevant officer or person with command power, to take advantage of business opportunities for such person or in favor of third parties, that correspond to the Company or to its subsidiaries or in which such person has a significant influence, for transactions the amount of which does not exceed five percent (5%) of the Company’s consolidated assets; c) support the Board of Directors when preparing the report on accounting policies and criteria, and the report on the activities and transactions in which the Board of Directors participated, in accordance with the provisions set forth in the Securities Market Law; d) request the independent experts’ opinion in the cases it deems convenient, for the adequate performance of its duties or when requested under the Securities Market Law or under general provisions; e) request from the Company’s or its subsidiaries’ relevant officers and other collaborators, reports regarding the preparation of financial information and of any other kind which is deemed necessary for the performance of its duties; and f) call Shareholders’ Meetings and request that the items deemed pertinent are included in such meetings’ agenda. The General Ordinary Shareholders Meeting held on April 14, 2010 ratified the following persons as members of the Corporate Practices Committee: Henry Davis Signoret, José Antonio Fernández Carbajal, and Ricardo Guajardo Touché as chairman. Based on the professional profiles of the members of the Corporate Practices Committee, the Company considers that several of such members may be deemed as financial experts. Evaluation and Results Committee

The Evaluation and Results Committee is comprised by members of the Board of Directors, who are appointed by the Board of Directors or the Shareholders’ Meeting. This Committee is in charge of: a) analyzing and approving the structure and any form of compensation made to all the Company’s and its subsidiaries’ officers and collaborators, as well as the general compensation policies for the Company’s and its subsidiaries’ officers and collaborators, including increases, reductions or modifications to compensations, whether general or individual, except for the one corresponding to the General Director and its relevant directive officers, powers which are entrusted to the Board of Directors, with the Corporate Practices Committee’s prior opinion; b) evaluating the Company’s and its subsidiaries’ results, as well as the repercussion thereof in the compensation to the Company’s officers and collaborators; c) analyzing

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and, as the case may be, issue an opinion in connection with wages tables applicable to the Company’s and its subsidiaries’ officers and collaborators, including annual compensation and promotion plans, and criteria for the pension plans; d) requesting the independent experts’ opinion in the cases it deems it convenient, for the adequate performance of its duties; e) requesting to the Company’s or its subsidiaries’ relevant directive officers and other collaborators, any kind of report deemed necessary for the performance of its duties; f) acting as consultation body for the Board of Directors in connection with everything pertaining to the Company’s and its subsidiaries’ personnel; and g) coordinating activities related to the Company’s other committees, when the case so requires. Through a Board of Directors meeting held on April 22, 2010 the following persons were ratified as members of the Evaluation and Results Committee: Roberto Servitje Sendra, Javier de Pedro Espínola, José Antonio Fernández Carbajal, Roberto Quiroz Montero, Daniel Servitje Montull, and Raúl Obregón del Corral as chairman. Based on the professional profiles of the members of the Evaluation and Results Committee, the Company considers that several of such members may be deemed as financial experts. Finance and Planning Committee The Finance and Planning Committee is comprised of members of the Board of Directors, who are appointed by the Board of Directors or by the Shareholders’ Meeting. The Finance and Planning Committee has the following powers: a) to analyze and submit to the Board of Directors’ approval the evaluation of the long-term and budget strategies, as well as the Company’s main investment and finance policies; b) by the Board of Directors’ express delegation, it may approve: (i) transactions which imply the acquisition or conveyance of properties with a value equal to or lower than three percent of the Company’s consolidated assets; (ii) the granting of guaranties or the assumption of liabilities in an amount equal to or lower than three percent of the Company’s consolidated assets; (iii) investments in debt securities or in banking instruments, exceeding three percent of the Company’s consolidated assets, provided however that the same are made in conformity with the policies approved to that effect by the Board; c) propose and, as the case may be, evaluate and periodically review policies for the handling of the Company’s and its subsidiaries’ treasury; d) request the opinion from independent experts in the cases it deems it convenient, for the adequate performance of its duties; e) request to the Company’s or its subsidiaries’ relevant directive officers and other collaborators, reports regarding the preparation of the financial information and of any other kind deemed necessary for the performance of its duties; f) act as consultation body for the Board of Directors in everything pertaining to the above mentioned duties, including financial matters, as well as in connection with the review and recommendation of investment projects and/or diversification of the Company and its subsidiaries, observing their congruence and profitability. Likewise, it shall coordinate activities related to the Company’s other committees, when the case so requires. Through a Board of Directors meeting held on April 22, 2010, the following persons were ratified as members of the Finance and Planning Committee: Ricardo Guajardo Touché, Mauricio Jorba Servitje, Raúl Obregón del Corral, Guillermo Quiroz Abed, Lorenzo Sendra Mata, Daniel Servitje Montull, and José Ignacio Mariscal Torroella as chairman. Based on the professional profiles of the members of the Finance and Planning Committee, the Company considers that several of such members may be deemed as financial experts.

Principal Shareholders

As of the date of this Annual Report 1,175,800,000 Series “A”, ordinary, nominative, without expression of nominal value shares, representing the capital stock are authorized, and registered in the RNV (National Securities Registry) and listed on the BMV (Mexican Stock Exchange) since 1980 under the ticker symbol “BIMBO”.

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Except for Mr. Roberto Servitje Sendra, none of the Company’s shareholders or relevant directive officers has an individual direct interest in BIMBO’S capital stock exceeding 1%. The companies mentioned herein below hold an interest of approximately 67% in BIMBO’S capital stock. The following table shows the information referring to the Principal Shareholders’ interest, in accordance with the Company’s Stock Transfer Book as of April 14, 2009:

Name No. of shares Capital stock %

Normaciel, S.A. de C.V. (1) 439,128,285 37.3 Promociones Monser, S.A. de C.V. (2) 134,854,636 11.5 Banco Nacional de Mexico, S.A. as trustee 65,654,753 5.6 Philae, S.A. de C.V. 58,173,026 5.0 Distribuidora Comercial Senda, S.A. de C.V. 43,740,000 3.7 Marlupag, S.A. de C.V. 40,303,384 3.4 Total 781,854,084 66.5%

a. Without being independently verified, to BIMBO’S knowledge this is a company controlled by Mr. Daniel Servitje Montull, Chief Executive Officer of Grupo Bimbo, and his family members.

b. Without being independently verified, to BIMBO’S knowledge this is a company controlled by the Jorba Servitje family.

To BIMBO’S knowledge and based in the foregoing information, no person exercises control, significant influence or command power (as such concepts are defined in the Securities Market Law) in BIMBO, except for Roberto Servitje Sendra, Chairman of the Board of Directors, and Daniel Servitje Montull, Chief Executive Officer.

d) CORPORATE BYLAWS AND OTHER AGREEMENTS

As of December 30, 2005 the new Securities Market Law was published in the Official Gazette of the Federation (Diario Oficial de la Federación), which became effective on June 28, 2006, and in accordance with which BIMBO’S Corporate Bylaws were amended by virtue of an Extraordinary Shareholders’ Meeting held on November 14, 2006. Among other thing, in such meeting the total amendment to the Corporate Bylaws was approved, which was notarized by public deed No. 30,053 dated November 16, 2006, granted before Ana de Jesús Jiménez Montañez, Public Notary number 146 of the Federal District, and filed in the Public Registry of Commerce of this city under mercantile folio No. 9506, dated December 6, 2006. With the amendment to the Corporate Bylaws, the Company adjusted to the securities law in effect. Among the most relevant amendments are the ones regarding the creation of a regime applicable to the sociedades anónimas bursátiles (the shares of which are traded in the BMV) to improve their organization and functioning, as well as their responsibilities regime. 1. Rights Granted by Shares

Holders of Series “A” shares are entitled to one vote in the General Ordinary and Extraordinary Shareholders’ Meetings. Without any shares of this kind existing as of this date, the Company may issue, under the Securities Market Law, non-voting and/or limited voting shares. As the case may be, holders of Series “A” shares may not attend the Special Meetings held by the holders of non-voting and/or limited voting shares and neither have they voting rights in the Special Meetings held by the holders of non-voting and/or limited voting shares.

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As the case may be, the holders of limited voting shares, shall be entitled to attend and vote at a rate of one vote per each share, only and exclusively in the Special Meetings held by the holder of such shares and in the General Extraordinary Shareholders’ Meetings held to discuss any of the following matters: a) transformation of the Company; b) merger with another company or companies, when the Company is the merged party; c) cancellation of the limited voting shares filing in the RNV and in domestic and foreign stock exchanges in which the same are registered, except in quoting systems or other markets not organized as stock exchanges; and d) any other provided for in the Securities Market Law. As the case may be, holders of limited voting shares may not attend General Ordinary Meetings, except in the events expressly provided for in the Securities Market Law. Neither may they attend the General Extraordinary Shareholders’ Meetings held to discuss matters in which they have no voting rights. Additionally, shareholders holding limited or restricted voting shares, which individually or collectively hold ten percent (10%) of the Company’s capital stock shall have the rights conferred in the Corporate Bylaws and the General Corporation and Partnership Law. Shareholders holding non-voting shares shall have the rights granted by the Securities Market Law. 2. Pre-emptive Rights and Capital Stock Increases

In capital stock increases, the Company’s shareholders shall have, in proportion to the number of shares owned by such shareholders of a series in respect to the total number of shares issued and subscribed of such series prior to the increase, a pre-emptive right to subscribe a number of shares sufficient in order to keep their equity holding, except for: (i) share issues made under Article 53 of the Securities Market Law; (ii) own shares acquired which become treasury shares and are placed among the investing public under such Law; (iii) those resulting from the conversion of debentures or any other debt instruments, capital instruments or which have features of both issued by the Company in shares, with the General Extraordinary Shareholders’ Meetings prior approval; (iv) the Company’ merger; and (v) the event of any capital stock increase due to subscription and payment in cash or in kind or due to the capitalization of liabilities, in which the Company shall not be required to obtain that the shares or any series or kind, or any foreign securities which represent them, are registered before other than the securities authorities of the United Mexican States and, in that regard, the Company shall not be required to accept the subscription and payment made by shareholders if such acceptance results in any obligation to be discharged by the Company under the indicated terms. The pre-emptive right set forth in the preceding paragraph shall be exercised by the shareholders within a period not than 15 calendar days following the date when the Meeting’s resolution which decrees the capital stock increase is published in the Official Gazette of the Federation (Diario Oficial de la Federación) and any other daily newspaper of major circulation in the corporate domicile. This pre-emptive right shall be exercised in accordance with the provisions established to that effect by the Board of Directors. The Company may not issue new shares until the preceding ones have not been fully paid, without prejudice of the provisions applicable to the issuance of shares which are not subscribed, and unless the previously issued shares are to be used, in terms of a resolution of the Meeting which approved the issuance thereof, to satisfy any obligations to be discharged by the Company and approved by the Shareholders. The Board of Directors is empowered to offer for subscription and payment to third parties shares which are not subscribed by the Shareholders after the expiration of the term set forth in the preceding paragraphs in order to exercise the pre-emptive right, in the capital stock increases decreed, it being understood that the Price at which such shares will be offered may not be lower than the one at which they have been offered to the Company’ Shareholders for their subscription and payment.

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3. Shareholders’ Meetings and Voting Rights

In terms of the Corporate Bylaws, the Shareholders’ Meetings may be Extraordinary, Ordinary and Special. The General Extraordinary Shareholders’ Meetings are those held to discuss any of the matters referred to in Article 182 of the General Corporation and Partnership Law or those held to discuss the cancellation of the Company’s shares filing in the RNV and in other domestic or foreign stock exchanges in which they are quoted, except quoting systems or other markets not organized as stock exchanges. General Ordinary Meetings are all those held to discuss matters which are not of the General Extraordinary Meetings’ competence and specifically those held to discuss the matters referred to in Articles 180 and 181 of the General Corporation and Partnership Law. Special Meetings are those held to discuss matters which might affect the rights of one single share series and shall be subject to the provisions applicable to the General Extraordinary Meetings. General Ordinary Meetings, as well as, as the case may be, Special Shareholders meetings regarding limited voting shares, shall be held at least once annually, and in the case of Special Meetings, they shall be held prior to holding the Annual General Ordinary Shareholders’ Meeting. General Extraordinary Meetings shall be held whenever it is necessary to discuss any of the subject matters of such Meetings. In terms of the provisions set forth in the Corporate Bylaws and in the Mexican law, in order for a Ordinary Shareholders Meeting to be deemed as legally held upon first call, at least fifty percent (50%) of the ordinary shares shall be represented in the Meeting and resolutions thereof shall be valid if adopted by the majority vote of the shares represented in the Meeting. In case of second or subsequent call, the General Ordinary Shareholders’ Meetings may be validly held regardless of the number of ordinary shares represented in the Meeting and resolutions shall be valid when adopted by the majority vote of the shares represented in the Meeting. In order for General Extraordinary Shareholders’ Meetings held to discuss matters in which limited voting shares have no voting rights, to be validly held upon first call, at least seventy five percent (75%) of the ordinary shares shall be represented therein and resolutions shall be valid if adopted by the affirmative vote of shares representing at least fifty percent (50%) of the Company’s ordinary shares. In case of second or subsequent call, Extraordinary Shareholders’ Meetings held to discuss matters in which the limited voting shares have no voting rights, may be validly held if at least fifty percent (50%) of the Company’s ordinary shares is represented therein and resolutions shall be valid when adopted by the affirmative vote of the shares representing, at least, fifty percent (50%) of the Company’ ordinary shares. In order for, as the case may be, a Special Meeting called to discuss matters concerning to limited voting shares to be deemed legally held upon first call, at least seventy five percent (75%) of the limited voting shares shall be represented therein, and resolutions shall be valid when adopted by the affirmative vote of shares representing fifty percent (50%) of the limited voting shares. In case of second or subsequent call, Special Shareholders’ Meetings may be validly held if at least fifty percent (50%) of the limited voting shares is represented, and resolutions shall be valid when adopted by the affirmative vote of shares representing, at least fifty percent (50%) of the limited voting shares. Calls to the Shareholders’ Meetings shall be made by the Chairman of the Board of Directors or of the committees performing duties regarding corporate practices and audit, or by the Secretary of the Board of Directors or the substitute thereof. However, holders of shares with voting rights, even limited or restricted voting rights, representing at least ten percent (10%) of the capital stock may request that a General Shareholders’ Meeting is called under the terms set forth in Article 50 of the Securities Market Law. Any shareholder or share owner shall have the right to request in writing to the Board of Directors or to the chairmen of the committees that carry out audit and corporate practices duties, to call a General Shareholders’ Meeting in any of the events referred to in Article 185 of the General Corporation and Partnership Law. If the call is not made within 15 days following the request, such call shall be made by a competent judge of the Company’s domicile, having previously notified the relevant request to the Board of Directors. The Shareholders or their representatives who, at least forty eight (48) hours prior to the date and time set for the Meeting, computed in business days, show their share certificates and/or evidences on the share

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certificates deposited in a duly authorized institution for the deposit of securities, in terms of the Securities Market Law shall be admitted in the Meetings. Such evidences shall be exchanged for a certificate issued by the Company in which the name and number of shares represented by the Shareholder shall be indicated. Such certificates shall serve as admission cards for the Meetings. Members of the Board of Directors, the general director and the individual appointed by the corporation providing external audit services, may attend the Company’s Shareholders’ Meetings. The Company’s Shareholders may be represented in the Shareholders’ Meetings by persons evidencing their legal capacity through the proxy forms prepared by the Company and made available through the securities market intermediaries or in the same the Company, at least fifteen (15) calendar days prior to each Meeting. Such forms shall satisfy all the requirements determined by the Securities Market Law and the supplementary provisions thereof. 4. Minority Shareholders’ Rights

All minority holders shall have the rights which, as such, are conferred by the General Corporation and Partnership Law, the Securities Market Law and the Corporate Bylaws. Shareholders holding voting right shares, even limited or restricted voting rights, which individually or collectively own ten percent (10%) of the Company’ capital stock shall be entitled to: a) appoint one director in a General Shareholders’ Meeting and the respective alternate director thereof. Such appointment may only be revoked by the other Shareholders when at the same time the appointment of all other Directors is revoked, in which case the substituted persons may not be appointed with such capacity during twelve months subsequent to the revocation date; b) require the Chairman of the Board or of one of the committees carrying out the duties regarding corporate practices and audit, at any time, to call a General Shareholders’ Meeting, without the percentage set forth in Article 184 of the General Corporation and Partnership Law being applicable, c) request to adjourn the voting for three (3) calendar days of any matter in respect to which they are not sufficiently informed, observing the terms and conditions set forth in Article 50 of the Securities Market Law. 5. Limitation to acquire shares

The corporations controlled by BIMBO, in terms of the Securities Market Law, may not directly or indirectly acquire shares representing the Company’s capital stock to which they are linked or negotiable instruments representing those shares. 6. Repurchase by BIMBO of its own shares

Under its Corporate Bylaws, BIMBO may acquire shares representing its own capital stock through the stock Exchange, at the current market price, in terms of Article 56 of the Securities Market Law. Own shares owned by the Company or, as the case may be, treasury shares, without prejudice of the provisions set forth in the General Corporation and Partnership Law, may be placed among the investing public, in this last case, without the capital stock increase corresponding to the Shareholders’ Meeting requiring a resolution of any kind, nor a resolution of the Board of Directors, regarding the placement thereof.

7. Cancellation of Shares Filing

Cancellation of the Company’s shares filing in the RNV, whether request by the same Company or by resolution adopted by the CNBV, shall be carried out under the terms set forth in the Securities Market Law and the supplementary provisions thereof.

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8. Administration Intermediate Bodies

Under the Corporate Bylaws, the Company has four different administration intermediate bodies, which support the Board of Directors in the Company’s administration. Such bodies are: the Audit Committee, the Corporate Practices Committee, the Finance and Planning Committee, and the Evaluation and Results Committee see “Administration – Administrators and Shareholders”. 9. Other Contracts and Agreements

In accordance with the Company’s Corporate Bylaws and the General Corporation and Partnership Law, any transfer of shares representing three percent (3%) or more of voting shares issued by the Company intended to be carried out by a shareholder or in addition to previous transactions, or by a group of shareholders linked among them, may only be carried out with the Board of Directors’ prior approval. In case the Board of Directors denies such approval, it shall designate one or more purchasers for the shares, which shall pay to the interested party the price recorded in the BMV. In case the shares are not filed in the RNV, the price to be paid shall be determined in conformity with the market current price, in accordance with the General Corporation and Partnership Law . On April 9, 2008 the Company informed the investing public that it received a notice from its shareholders Normaciel, S.A. de C.V., Marlupag, S.A. de C.V., Promociones Monser, S.A. de C.V., Distribuidora Comercial Senda, S.A. de C.V., and Philae, S.A. de C.V., owners of approximately 61% of the Company’s shares outstanding, reporting that Shareholders Agreements have been executed, through which the reciprocally grant to each other, during the subsequent seven years, the right of first refusal for the acquisition of Grupo Bimbo shares which they own. Likewise, Normaciel, S.A. de C.V., grants to the other above mentioned companies, the joint sale right, in the event of selling its shares to a third party. As of the date of this Annual Report among the shareholders there are no other agreements the effect of which is to delay, prevent, differ or making the Company’s change of control more onerous, or agreements such as those set forth in Article 16, paragraph VI of the Securities Market Law, nor limiting the corporate rights conferred by the shares. Likewise, as of the date of this Annual Report, there are no corporate bylaws clauses or agreements among shareholders limiting or restricting the Company’s Board of Directors or its shareholders.

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5) CAPITAL MARKET

a) SHARE HOLDING STRUCTURE As of the date of this Annual Report, shares representing the Company’s capital stock are Series “A” common, ordinary, nominative, without expression of nominal value shares, which are filed in the Securities Section of the RNV. Such shares began being quoted in the BMV in February 1980, when the Company carried out its initial public offer. Since February 1, 1999 BIMBO is part of the Price and Quotation Index (Índice de Precios y Cotizaciones) of the Mexican Stock Exchange (BMV)., As of the date of this Annual Report, BIMBO share is classified as high trading volume, in accordance with the Trading Activity Index published by the Mexican Stock Exchange (BMV).

b) SHARE BEHAVIOR IN THE SECURITIES MARKET

The following tables show the maximum, minimum and closing adjusted quoting prices of BIMBO’S Series “A” shares in the BMV, during the indicated periods.

Annual Pesos per Series “A” share Volume of Series “A”

shares traded Maximum Minimum Closing

2004 29.20 21.10 28.16 145,987,100 2005 38.70 26.00 37.04 144,711,400 2006 54.99 30.44 54.00 177,063,600 2007 81.69 45.51 65.05 115,845,600 2008 71.98 49.80 58.32 115,294,300 2009 91.96 39.90 86.55 209,962,000

Quarterly Pesos per Series “A” share Volume of Series “A”


1T07 57.82 45.51 55.54 44,314,300 2T07 81.69 54.69 66.67 23,422,900 3T07 67.45 56.00 61.07 24,536,900 4T07 67.02 54.80 65.05 23,571,500 1T08 67.51 55.21 64.00 26,104,600 2T08 71.98 62.99 67.18 30,778,800 3T08 71.50 61.00 68.73 19,567,800 4T08 68.80 49.80 58.32 38,843,100 1T09 60.10 39.90 52.60 55,396,900 2T09 72.44 51.98 69.97 50,834,900 3T09 77.64 63.99 75.03 46,691,200 4T09 91.96 72.86 86.55 57,039,000

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Monthly Pesos per Series “A” share Volume of Series “A”


December 2008 62.39 55.81 58.32 10,747,300 January 2009 60.10 48.35 51.41 14,666,800 February 2009 51.41 39.90 43.03 17,856,200 March 2009 54.14 41.84 52.60 22,873,900 April 2009 65.84 51.98 62.43 21,874,900 May 2009 72.44 62.43 69.89 18,453,000 June 2009 71.99 66.36 69.97 10,507,000 July 2009 74.80 63.99 73.88 17,786,400

August 2009 77.64 72.12 77.64 13,251,900 September 2009 76.51 71.11 75.03 15,652,900 October 2009 80.79 72.86 76.81 19,270,400

November 2009 84.51 76.81 82.42 20,085,200 December 2009 91.96 85.01 86.55 17,683,400

Source: Bloomberg.

c) MARKET MAKER The Company has no market maker or has had one.

7) ANEXXES

a) Opinion of the Audit Committee with respect to the contents of the report of the Chief

Executive Officer on the financial position and results of operation of the Company for the year ended December 31, 2009.

b) Audited Financial Statements of Grupo Bimbo, S. A. B. de C. V. and subsidiaries as of

December 31, 2009 and 2008. c) Report about the activities undertaken by the Audit Committee during the year ended

December 31, 2009

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Mexico City, March 10, 2010.

To the Board of Directors of


In my capacity as Chairman of the Audit Committee (the “Committee”) of Grupo Bimbo, S.A.B. de

C.V., (the “Company”) and in compliance with the statutes in paragraph e), section II of Article 42

of the Securities Market Law, I hereby submit the opinion of the Committee with respect to the

contents of the report of the Chief Executive Officer on the financial position and results of

operation of the Company for the year ended December 31, 2009.

In the opinion of the Committee, the accounting policies and criteria used by the Company and

considered in the preparation of the consolidated financial information are appropriate and

sufficient, and were applied in a consistent manner in accordance with Mexican Financial

Reporting Standards. Accordingly, the consolidated financial information presented by the Chief

Executive Officer reasonably reflects the financial position and results of operation of the

company at December 31, 2009.

Sincerely,

Henry Davis

Chairman of the Audit Committee


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Independent Auditors’ Report to the Board of Directors and Stockholders of Grupo Bimbo, S. A.

B. de C. V.

We have audited the accompanying consolidated balance sheets of Grupo Bimbo, S. A. B. de C. V. and subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Mexico. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and that they are prepared in accordance with Mexican Financial Reporting Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the financial reporting standards used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As mentioned in Note 3, beginning January 1, 2009, the Company adopted the following new financial reporting standards and its interpretations: NIF B-7, Business Acquisitions; NIF B-8, Consolidated or Combined Financial Statements; C-7, Investments in Associated Companies and Other Permanent Investments; C-8, Intangible Assets; and INIF-18 Recognition of Effects of the 2010 Tax Reform on Income Taxes. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Grupo Bimbo, S. A. B. de C. V. and subsidiaries as of December 31, 2009 and 2008, and the results of their operations, changes in their stockholders’ equity and their cash flows for the years then ended in conformity with Mexican Financial Reporting Standards. The accompanying consolidated financial statements have been translated into English for the convenience of users. Galaz, Yamazaki, Ruiz Urquiza, S. C. Member of Deloitte Touche Tohmatsu

C. P. C. Jorge Alamillo Sotomayor March 12, 2010

Grupo Bimbo, S. A. B. de C. V. and Subsidiaries

Consolidated Statements of Income

For the years ended December 31, 2009 and 2008

(In millions of Mexican pesos)

2009 2008

Net sales $ 116,353 $ 82,317 Cost of sales 54,933 40,293 Gross profit 61,420 42,024

General expenses: Distribution and selling 41,724 29,621 Administrative 7,642 5,075

49,366 34,696 Income after general expenses 12,054 7,328 Other expenses, net 1,176 475 Net comprehensive financing cost: Interest expense, net 2,318 461 Exchange (gain) loss, net (207) 153 Monetary position gain (99) (75)

2,012 539 Equity in income of associated companies 42 24 Income before income taxes 8,908 6,338 Income tax expense 2,827 1,894 Consolidated net income for the year $ 6,081 $ 4,444 Net income of controlling stockholders $ 5,956 $ 4,320 Net income of noncontrolling stockholders $ 125 $ 124

Basic earnings per common share $ 5.07 $ 3.67

Weighted average number of shares outstanding (000´s) 1,175,800 1,175,800 See accompanying notes to consolidated financial statements.


Consolidated Statements of Cash Flows For the years ended December 31, 2009 and 2008 (In millions of Mexican pesos) 2009 2008

Operating activities:

Income before income taxes $ 8,908 $ 6,338

Items related to investing activities: Depreciation and amortization 3,783 2,501 Loss on sale of property, plant and equipment 183 101 Equity in income of associated companies (42) (24) Impairment of long live assets 56 -

Items related to financing activities: Interest expense 3,269 814 Interest income (76) (63) Unrealized exchange loss on long-term debt 198 1,527

Changes in current assets and liabilities: Accounts and notes receivable (188) (1,574) Inventories 39 (628) Prepaid expenses (68) 173 Trade accounts payable (361) 726 Other accounts payable and accrued liabilities (1,302) 1,050 Due to related parties 134 114 Income tax payable (2,350) (2,266) Derivative financial instruments 401 (255) Statutory employee profit sharing 657 44 Employee labor obligations and workers’ compensation 671 272

Net cash flow from operating activities 13,912 8,850 Investing activities: Acquisition of property, plant and equipment (3,613) (3,989) Proceeds from sale of property, plant and equipment 457 160 Acquisition of trademarks and other assets (83) (416) Dividends received 10 4 Investments in shares of associated companies (29) (239) Acquisition of business net of cash received (35,140) (2,743)

Interest received - 63 Net cash flow from investing activities (38,398) (7,160)

Excess cash to apply to financing activities (24,486) 1,690 Financing activities: Proceeds from long-term debt 42,397 5,852 Payment of long-term debt (16,262) (2,605) Interest paid (3,205) (830) Payments of interest rate swaps (246) (68) Dividends paid (541) (615)

Net cash flow from financing activities 22,143 1,734

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2009 2008

Adjustments to cash flows due to exchange rate fluctuations (30) 20 Adjustments to cash flows due to inflationary effects 15 (7)

Adjustments due to variations in exchange rates and inflationary effects (15) 13

Net (decrease) increase in cash and cash equivalents (2,358) 3,437 Cash and cash equivalents at the beginning of the year 7,339 3,902 Cash and cash equivalents at the end of the year $ 4,981 $ 7,339 See accompanying notes to consolidated financial statements.

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Notes to Consolidated Financial Statements For the years ended December 31, 2009 and 2008 (In millions of Mexican pesos) 1. The Company

Grupo Bimbo, S. A. B. de C. V. and subsidiaries (“Grupo Bimbo” or the “Company”) are engaged in the manufacture, distribution and sale of bread, cookies, cakes, candies, chocolates, snacks, tortillas and processed foods. The Company operates in the following geographical areas: Mexico, the United States of America (“USA”), Central and South America (“OLA”), Europe and China. Due to its insignificance, the financial information of the European and Chinese regions is aggregated with Mexico. In 2009, a very significant business acquisition was made and is detailed in Note 2.

2. Basis of presentation

a. Explanation for translation into English - The accompanying consolidated financial statements have been translated from Spanish into English for use outside of Mexico. These consolidated financial statements are presented on the basis of Mexican Financial Reporting Standards (“MFRS”). Certain accounting practices applied by the Company that conform with MFRS may not conform with accounting principles generally accepted in the country of use.

b. Monetary unit of the financial statements - The financial statements and notes as of December 31, 2009 and 2008 and for the years then ended include balances and transactions denominated in Mexican pesos of different purchasing power.

c. Consolidation of financial statements - At December 31, 2009 and 2008, the consolidated financial statements include those of Grupo Bimbo, S. A. B. de C. V. and its subsidiaries, of which some of the more significant are shown below:

Subsidiary

Ownership

percentage Principal Business

Bimbo, S. A. de C. V. 97 Bakery Bimbo Bakeries USA, Inc. (“BBU”) 100 Bakery Barcel, S. A. de C. V. 97 Candies and snacks Bimbo do Brasil, Ltda. 100 Bakery Bimbo Venezuela, C.A. 100 Bakery Ideal, S. A. (Chile) 100 Bakery Gastronomía Avanzada Pastelerías, S.A. de C.V. (“El Globo”) 100 Bakery and cakes

All significant intercompany balances and transactions have been eliminated in these consolidated financial statements. The Company’s investment in shares of associated companies is valued by the equity method or historical costs, depending on the shareholding percentage. Associated companies are not consolidated in these financial statements as the Company does not have control over such entities. During 2009 and 2008, net sales of Bimbo, S. A. de C. V. and Barcel, S. A. de C. V. in Mexico represented approximately 45% and 63%, respectively, of consolidated net sales.

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d. Acquisitions - During 2009 and 2008, the Company acquired the following businesses:

2008: Acquisitions of businesses and trademarks Brazil $ 1,967 Several Assets and trademarks Mexico 256 May 1 Business acquisition Honduras 227 March 25 Business acquisition Uruguay 123 April 2 $ 2,573

Acquisition of Bimbo Foods, Inc. On December 10, 2008, Grupo Bimbo entered into an agreement with Dunedin Holdings, S.A.R.L, Glendock Finance Company, and other legal entities, all subsidiaries of George Weston Limited, in which Grupo Bimbo agreed to acquire the common shares of WFI, as well as other assets, including trademarks and trade receivables related to the operations of WFI, which is a group of companies engaged in the production and distribution of bread in the eastern United States of America. The contract was settled on January 21, 2009, after complying with certain requirements included therein. This transaction is aligned with Grupo Bimbo’s growth strategy to consolidate its global platform and its vision of becoming a global leader in the bakery segment and a relevant company in the food global segment. Goodwill generated by the acquisition, which has no income tax effects, amounted to $13,775 and is attributable to synergies that are expected to be obtained by combining WFI with Grupo Bimbo’s existing business in the United States of America (“USA”). The agreement establishes certain indemnifications for both the buyer and the seller. Among those are a net working capital adjustment final settlement paid by the buyer to the seller for $380 and an indemnification from the seller to the buyer for $519 if certain contingencies materialize. The purchase price of the shares and certain assets of WFI amounted to US$2,505 million. Sources of Financing For this acquisition, the Company obtained financing in the amount of US$2,300 million that was structured with a one-year bridge loan for the equivalent of US$600 million that was paid in June 2009 with the proceeds the issuance of local bonds on the Mexican Stock Exchange, and a long-term loan for the equivalent of US$1,700 million, comprised of US$900 and US$800 million that mature in three and five years, respectively (see Note 10, Long-term debt). The remainder of the purchase price of US$205 million was paid with available funds.

Company Country Acquisition cost Date

2009: Bimbo Foods, Inc. (Before Weston Foods, Inc. (WFI))

USA $ 35,014

January 21

Acquisitions of other businesses and trademarks Various 188 Several

$ 35,202

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The various contracts that formally document the financing include certain limitations on the incurrence of additional liabilities and other financial restrictions; additionally, the repayment obligations of Grupo Bimbo under such contracts are secured by the pledge of certain of its subsidiaries. Accounting for the Transaction The acquisition was recorded in conformity with Financial Reporting Standard NIF B-7, Business Acquisitions. Fair value determination of net assets acquired was concluded as of December 31, 2009. The following table presents condensed information of the assets acquired and liabilities assumed recognized by the purchase made on January 21, 2009 at the exchange rate applicable at the transaction date: Purchase price $ 35,014 Amounts recognized for identifiable assets and liabilities assumed -

Accounts receivable 2,987 Inventories 433 Property, plant and equipment, net 7,823 Deferred income taxes 752 Identified intangible assets 15,932 Other assets 2,415 Total identifiable assets 30,342 Goodwill 14,570 44,912

Current liabilities 4,283 Deferred income taxes (long-term) 1,217 Long-term liabilities 4,398 Total liabilities 9,898

Acquired assets, net $ 35,014 The following table presents condensed information of Bimbo Foods, Inc. transaction for the year ended December 31, 2009 compared to the consolidated information. Since the acquisition was made on a date near the beginning of the year, the proportion of BFI figures shown below are similar to the annual figures that the Company represents:

December 31, 2009

Consolidated Bimbo Foods,

Inc. Net sales $ 116,353 $ 28,424 Income after general expenses $ 12,054 $ 3,447 Net income of controlling stockholders $ 5,956 $ 2,462 Depreciation and amortization $ 3,783 $ 972 Income after general expenses, plus depreciation and amortization (“EBITDA") $ 15,837 $ 4,419

Total assets $ 96,713 $ 44,377 Total liabilities $ 55,756 $ 17,648

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Management of the Company engaged independent specialists to assist with the identification of intangible assets with finite and indefinite lives, as well as to determine the useful lives and fair values of acquired assets, considering the valuation rules of MFRS. The goodwill generated in 2009 and 2008 resulting from these acquisitions amounted to $13,775 and $1,634, respectively.

e. Translation of financial statements of foreign subsidiaries - To consolidate the financial statements of foreign subsidiaries (located principally in the USA and other Latin American countries, which represent 55% and 35% of consolidated net sales and 65% and 37% of consolidated total assets in 2009 and 2008, respectively), the accounting policies of the foreign entities are converted to MFRS using the currency in which transactions are recorded, except for the application of NIF B-10, when the foreign entity operates in an inflationary environment, for which those reported figures are adjusted by inflation to currency of purchasing power of yearend, and then translated into pesos by using yearend exchange rate. The financial statements are subsequently translated to Mexican pesos considering the following methodologies:

Foreign operations that operate in a noninflationary environment translate their financial statements using the following exchange rates: 1) the closing exchange rate in effect at the balance sheet day for assets and liabilities; and 2) historical exchange rates for stockholders’ equity, revenues, costs and expenses. Through 2007, the financial statements of all foreign subsidiaries that operated independently of the Company in terms of finances and operations recognized the effects of inflation of the country in which they operate and were then translated to Mexican pesos using the closing exchange rate in effect at the balance sheet date. In both 2009 and 2008, translation effects are recorded in stockholders’ equity. Foreign operations that operate in an inflationary environment first restate their financial statements in currency of purchasing power as of the date of the balance sheet, using the price index of their country, and subsequently translate those amounts to Mexican pesos using the closing exchange rate in effect at the balance sheet date for all items. In both 2009 and 2008, translation effects are recorded in stockholders’ equity.

The Company’s risk management policy regarding exchange risks consists of hedging expected cash flows, principally those associated with future purchases of raw materials, which meet the requirements to be considered exposures associated to “highly probable” forecasted transactions for purposes of hedge accounting. The Company has certain permanent investments in foreign subsidiaries whose functional currency is other than the Company’s and, therefore, the net investment is exposed to the risk derived from changes in exchange rates. Hedging the exposure to this foreign currency translation risk is mitigated by designating one or more loans denominated in these non-functional currencies as exchange rate hedges, according to the hedge accounting model for net investments in foreign subsidiaries.

f. Comprehensive income (loss) and other comprehensive income (loss) - Comprehensive income (loss) presented in the accompanying statement of changes in stockholders’ equity represents the changes in stockholders’ equity during the year for items that are not distributions or movements of contributed capital and

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includes consolidated net income for the year plus other items that represent a gain or loss for the same period, which, in conformity with MFRS, are recorded directly in stockholders’ equity without affecting the results of operations. The items of other comprehensive income (loss) consist of the unrealized accrued effects of derivative instruments and the translation and restatement effects of foreign subsidiaries and in 2009 only, the impact of tax effects related to the tax reform applicable to tax consolidation, plus in 2008 the cumulative effects of deferred employee profit sharing due to a change in accounting method and for the cancelation of the additional liability from retirement benefits. When assets and liabilities included in other comprehensive income are realized, those amounts are recorded in income.

g. Classification of costs and expenses - Costs and expenses presented in the consolidated statements of income were classified according to their function because this is the practice of the sector to which the Company belongs.

h. Income after general expenses - Income after general expenses is the result of

subtracting cost of sales and general expenses from net sales. While NIF B-3, Statement of Income, does not require inclusion of this line item in the consolidated statements of income, it has been included for a better understanding of the Company’s economic and financial performance.

i. Reclassifications- The financial statements for the year ended December 31, 2008

have been reclassified in certain items to conform its presentation used in 2009. 3. Summary of significant accounting policies

The accompanying consolidated financial statements have been prepared in conformity with MFRS, which require that management make certain estimates and use certain assumptions that affect the amounts reported in the financial statements and their related disclosures; however, actual results may differ from such estimates. The Company’s management, upon applying professional judgment, considers that estimates made and assumptions used were adequate under the circumstances. The significant accounting policies of the Company are as follows: c. Accounting changes

In 2009, the Mexican Board for Research and Development of Financial Information Standards (“CINIF”) issued the following NIFs and Interpretations of Financial Reporting Standards (“INIF”), which became effective for fiscal years beginning on January 1, 2009:

NIF B-7, Business Acquisitions, requires valuation of noncontrolling interest (formerly minority interest) at fair value, as of the date of acquisition, and recognition of the total goodwill at fair value. NIF B-7 also establishes that transaction expenses should not form part of the purchase consideration and restructuring expenses should not be recognized as an assumed liability. Through December 31, 2008, the direct expenses associated with acquisitions were capitalized. NIF B-8, Consolidated or Combined Financial Statements, establishes that special purpose entities over which the Company has control should be consolidated. It also establishes the option of presenting separate financial statements for intermediate controlling entities, provided certain requirements are met. NIF B-8 also requires consideration of potential voting rights to analyze whether control exists.

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NIF C-7, Investments in Associated Companies and Other Permanent Investments, requires valuation, through the equity method, of investments in special purpose entities over which the Company has significant influence. It also requires consideration of potential voting rights to analyze whether significant influence exists. NIF C-7 establishes a specific procedure and sets a limit for the recognition of losses in associated companies, and requires that the investment in associated companies include the related goodwill. NIF C-8, Intangible Assets, requires that any unamortized balance of preoperating costs as of December 31, 2008 be cancelled against retained earnings. INIF 18, Recognition of the Effects of the 2010 Tax Reform on Income Taxes, establishes the accounting treatment of the items included in the decree published in the Federal Official Register and amends, complements and supersedes various tax regulations (2010 Tax Reform), which goes into effect on January 1, 2010. The scope of this interpretation is focused on the treatment of the following significant relevant topics:

a) Income tax derived from changes in the tax consolidation rules. The 2010 Tax Reform establishes that the income tax consolidation benefits obtained since 1999 must be repaid in installments during the sixth to tenth years subsequent to that in which such benefits were received.

b) Changes in the income tax rate. The 2010 Tax Reform establishes that such

rate will be: for fiscal years 2010 to 2012: 30%; for fiscal year 2013: 29%; and for fiscal years 2014 and later: 28%.

c) Business flat tax (“IETU”) credits for tax losses. The 2010 Tax Reform

eliminates the possibility of compensating unamortized IETU tax loss credits against its own income tax.

b. Recognition of the effects of inflation - For the three fiscal years ended December

31, 2008 and 2007, the cumulative inflation in Mexico and in most of the countries in which the Company operates was less than 26%, so the economic environments are considered non-inflationary under MFRS. Accordingly, effective January 1, 2008, the Company discontinued recognition of the effects of inflation in its financial statements, except for those foreign entities operating in inflationary economic environments; however, assets, liabilities and stockholders’ equity as of December 31, 2009 and 2008, include the restatement effects recognized through December 31, 2007 for all entities. The cumulative inflation for the three fiscal years ended December 31, 2008 and 2007, for those foreign entities operating in inflationary economic environments was as follows:

2009 2008

Argentina 28% 34% Costa Rica 38% 38% Guatemala 26% N/A Honduras 27% N/A Nicaragua 49% 43% Paraguay 28% 31% Uruguay 26% N/A Venezuela 87% 64% N/A = cumulative three-year inflation of less than 26%.

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Through December 31, 2007 for all entities and in 2009 and 2008 only for those foreign entities operating in inflationary economic environments, recognition of the effects of inflation results mainly in inflationary gains or losses on nonmonetary and monetary items that are presented in the consolidated financial statements under the following two line items: • Insufficiency in restated stockholders´ equity - Represents the

accumulated monetary position result through the initial restatement of the consolidated financial statements and the loss from holding nonmonetary assets which resulted from restating certain nonmonetary assets below inflation utilizing appraisal values.

• Monetary position result - Monetary position result, which represents the

erosion of purchasing power of monetary items caused by inflation, is calculated by applying National Consumer Price Index (NCPI) factors to monthly net monetary position. Gains result from maintaining a net monetary liability position, respectively.

On January 1, 2008, the Company reclassified the total amount of the insufficiency in restatement of stockholders’ equity to retained earnings, since it was considered impractical to determine the result from holding nonmonetary assets corresponding to unrealizable assets as of that date.

c. Cash and cash equivalents - Cash and cash equivalents consist mainly of bank deposits in checking accounts and readily available daily investments of cash surpluses. Cash and cash equivalents are stated at nominal value plus accrued yields, which are recognized in Comprehensive Financing Cost (CFC) as they accrue. Cash equivalents are primarily represented by investments in Mexican Treasury Certificates and investment funds.

d. Inventories and cost of sales - Inventories are stated at the lower of average cost

or realizable value for those entities operating in noninflationary economic environments. Beginning January 1, 2008 date for those foreign entities operating in inflationary economic environments, inventories are stated at average cost which is similar to their replacement value at year end, without exciding net realizable value, and cost of sales is stated at latest production cost which is similar to replacement cost at the time goods are sold.

e. Property, plant and equipment - Property, plant and equipment are recorded at

acquisition cost for those entities operating in noninflationary economic environments. Balances from acquisitions made through December 31, 2007 for all entities were restated for the effects of inflation by applying factors derived from the NCPI through that date. Balances that arise from subsidiaries operating in an inflationary environment, continue to restate its balances by applying NCPI . Depreciation rates are calculated using the straight-line method based on the remaining useful lives of the related assets, as follows:

Buildings 5 Manufacturing equipment 8,10 and 35 Vehicles 10 and 25 Office furniture and fixtures 10 Computers 30

f. Investment in shares of associated companies and other permanent

investments - Beginning in 2009, permanent investments in entities where significant influence exists are initially recognized based on the net fair value of the entities’ identifiable assets and liabilities as of the date of acquisition. Such value is subsequently adjusted for the portion related both to comprehensive income (loss) of the associated company and the distribution of earnings or capital reimbursements

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thereof. When the fair value of the consideration paid is greater than the value of the investment in the associated company, the difference represents goodwill, which is presented as part of the same investment. Otherwise, the value of the investment is adjusted to the fair value of the consideration paid. Through December 31, 2008, investment in shares of associated companies is valued only according to the equity method. If impairment indicators are present, investment in shares of associated companies is subject to impairment testing. Permanent investments made by the Company in entities where it has no control, joint control, or significant influence, are initially recorded at acquisition cost, and any dividends received are recognized in current earnings, except when they are taken from earnings of periods prior to the acquisition, in which case, they are deducted from the permanent investment.

g. Impairment of long-lived assets in use - The Company reviews the carrying

amounts of long-lived assets in use when an impairment indicator suggests that such amounts might not be recoverable, considering the greater of the present value of future net cash flows or the net sales price upon disposal. Impairment is recorded when the carrying amounts exceed the greater of the amounts mentioned above. The impairment indicators considered for these purposes are, among others, the operating losses or negative cash flows in the period if they are combined with a history or projection of losses, depreciation and amortization charged to results, which in percentage terms in relation to revenues are substantially higher than that of previous years, obsolescence, reduction in the demand for the products manufactured, competition and other legal and economic factors. As of December 31, 2009 an impairment was recognized in the Czech Republic subsidiary for $56. This subsidiary was sold in January 2010 at a not material amount.

h. Financial risk management policy - The daily activities carried out by the Company expose it to a number of inherent risks of different variables of a financial nature, as well as variations in the price of some materials traded in formal international markets. Due to above, the Company uses derivative financial instruments to mitigate the potential impact of fluctuations in such variables and prices on its financial results. The Company believes that these instruments provide flexibility that allows greater stability of income and better visibility and certainty with regard to costs and expenses that will be faced in the future. The design and implementation of the strategy of derivative financial instruments is formally supervised by two committees: 1) The Financial Risk Committee, responsible for risk managing of interest and exchange rates and 2) the Subcommittee of Risk Commodity Markets, that supervises commodity risk. Both committees continuously report their activities to the Corporate Business Risk Committee, who is responsible for issuing general guidelines for the risk management strategy of the Company, and for establishing limits and restrictions on the operations they can perform. Likewise, the Corporate Business Risk Committee reports the risk positions of the Company to the Audit and Executive Committees of the Board of Directors. The Company’s policy is to enter into derivative financial instruments only for hedging purposes. Therefore, entering into a contract of a derivative financial instrument must necessarily be associated with a primary position that represents some risk. Consequently, the notional amounts of one or all derivative financial instruments contracted for hedge coverage of certain risk will be consistent with the amounts of the primary positions that represent a risk position. The Company has no operations in which the desired purpose are benefits intended

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on premium income. If the Company decides to undertake a hedging strategy where options are combined, the net payment of premiums associated must represent an expense for the Company.

i. Derivative financial instruments - The Company states all derivatives at fair value in the balance sheet, regardless of the purpose for holding them. Fair value is determined using prices quoted on recognized markets. If such instruments are not traded, fair value is determined by applying recognized valuation techniques.

Changes in the fair value of derivative instruments designated as hedges are recognized as follows; (1) for fair value hedges, changes in both the derivative instrument and the hedged item are recognized in current earnings; (2) for cash flow hedges, changes are temporarily recognized as a component of other comprehensive income and then reclassified to current earnings when affected by the hedged item; (3) for hedges of an investment in a foreign subsidiary, the effective portion is recognized as a component of other comprehensive income as part of the cumulative translation adjustment. The ineffective portion of the gain or loss on the hedging instrument is recognized in current earnings, if it is a derivative financial instrument. If not, it is recognized as a component of other comprehensive income until the investment is sold or transferred. To manage its exposure to interest rate and foreign currency fluctuations, the Company principally uses interest rate swaps and foreign currency forward contracts, as well as futures to fix the purchase price of raw materials. The Company formally documents all hedging relationships, including their objectives and risk management strategies to carry out derivative transactions. Derivative trading is performed only with institutions of recognized solvency, and limits have been established for each institution. The hedging derivative instruments are recorded as assets or liabilities without offsetting them against the hedged items.

j. Goodwill - Goodwill is recorded at acquisition cost, except for those entities

operating in inflationary economic environments, where it is restated using the NCPI. Goodwill is not amortized and, at least once a year, is subject to impairment tests.

k. Intangible assets - These are primarily comprised of trademarks, rights of use and

customer relationships and are recorded at acquisition cost, except for those entities operating in inflationary economic environments, where they are restated using the NCPI. They are derived mainly from the acquisition of the business in the United States of America and certain trademarks in South America. Trademarks and rights of use are not amortized; however, the carrying values are subject to impairment tests at least annually.

Customer relationships have an estimated useful life of 18 years and are amortized on a straight-line basis based on such useful life. As of December 31, 2009, the amortization both cumulative and for the year recorded for intangible assets with finite lives was $257.

l. Provisions - Provisions are recognized when there is a present obligation as the result of a past event that is likely to result in the use of economic resources and that can be reliably estimated.

m. Direct employee benefits - Direct employee benefits are calculated based on the services rendered by employees, considering their current salaries. The liability is

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recognized as it accrues. These benefits include mainly accrued statutory employee profit sharing, compensated absences, such as vacation and vacation premiums, and incentives and are presented in other accounts payable and accrued liabilities caption.

n. Employee benefits from termination, retirement and other - The liability for

seniority premiums, pensions and termination benefits is recorded as accrued and is calculated by independent actuaries using the projected unit credit method using nominal interest rates.

Other employee benefits relate to the insurable risks such as automobile self-insurance in the USA, general liability insurance, automobile insurance and other employee compensation subject to program specified limits. The liability for such program is determined using the Company’s historical data according to actuarial calculations.

o. Statutory employee profit sharing - Statutory employee profit sharing (“PTU”) is recorded in the results of the year in which it is incurred and presented under other expenses in the accompanying consolidated statements of income. Deferred PTU is derived from temporary differences that in 2009 resulted from comparing the accounting and tax basis of assets and liabilities.

p. Income taxes - Income taxes (“ISR”) and the Business Flat Tax (“IETU”) are recorded in the results of the year in which they are incurred. To recognize deferred income taxes, based on its financial projections, the Company determines whether it expects to incur ISR or IETU and accordingly recognizes deferred taxes based on the tax it expects to pay. Deferred taxes are calculated by applying the corresponding tax rate to the applicable temporary differences resulting from comparing the accounting and tax bases of assets and liabilities and including, if any, future benefits from tax loss carryforwards and certain tax credits. Deferred tax assets are recorded only when there is a high probability of recovery. According to NIF D-4, Income Taxes, the balance of the initial cumulative effect of deferred income taxes was reclassified to retained earnings (accumulated deficit) as of January 1, 2008.

q. Tax on assets - The tax on assets (“IMPAC”) that is expected to be recovered is

recorded as a tax credit and is presented in the balance sheet under deferred taxes.

r. Foreign currency transactions - Foreign currency transactions are recorded at the applicable exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Mexican pesos at the applicable exchange rate in effect at the balance sheet date. Exchange fluctuations are recorded as a component of results of the period, except for those transactions that have been designated as a hedge of a foreign investment.

s. Revenue recognition - Revenues are recognized in the period in which the risks and rewards of the products are transferred to the customers who purchased them, which generally occurs when these products are delivered to the customer. The Company deducts certain marketing expenses, such as promotion expenses, from sales.

t. Earnings per share - Basic earnings per share is calculated by dividing

consolidated net majority income by the weighted average number of shares outstanding during the year.

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4. Accounts and notes receivable

2009 2008

Customers and agencies $ 7,059 $ 5,139 Allowance for doubtful accounts (290) (130) 6,769 5,009 Notes receivable 513 137 Value-added tax and other recoverable taxes - 180 Sundry debtors 1,002 807 Bismark Acquisition, L. L. C., related party - 306 Sanalp 2005, S. L., related party 1,178 432 Madera, L. L. C., related party 143 - Officers and employees - 3 $ 9,605 $ 6,874

5. Inventories

2009 2008

Finished products $ 768 $ 817 Orders in-process 75 111 Raw materials, containers and wrapping 1,725 1,303 Other 102 84 Allowance for slow-moving inventories (3) (3) 2,667 2,312 Advances to suppliers 41 144 Raw materials in-transit 261 117 $ 2,969 $ 2,573

6. Long-term notes receivable from independent operators The Company has sold certain equipments and distribution rights in the USA to former employees and some third parties (collectively, the “independent operators”). The Company finances 90% of the sales price paid by certain independent operators. The notes bear an annual interest rate range from 9.75% to 10.75% and are payable in 120 monthly installments.

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7. Property, plant and equipment

2009 2008 Buildings $ 12,893 $ 9,279 Manufacturing equipment 28,915 23,615 Vehicles 8,070 8,488 Office furniture and fixtures 593 496 Computers 1,815 1,720 52,286 43,598 Less- Accumulated depreciation (23,411) (21,247) 28,875 22,351 Land 2,717 2,526 Construction in-progress and machinery in-transit 1,171 1,162 $ 32,763 $ 26,039

8. Investment in shares of associated companies and other permanent investments

At December 31, 2009 and 2008, the investment in shares of associated companies and other is as follows:

Associated companies

% ownershi

p

2009

2008 Beta San Miguel, S. A. de C. V. 8 $ 327 $ 292 Bismark Acquisition, L. L. C. 30 - 17 Congelación y Almacenaje del Centro, S. A. de C. V. 15 79 78

Fábricas de Galletas La Moderna, S. A. de C. V. 50 261 255

Fin Común, S. A. de C. V. 30 71 55 Grupo Altex, S. A. de C. V. 11 70 104 Grupo La Moderna, S. A. de C. V. 3 140 122 Innovación en Alimentos, S. A. de C. V. 50 25 (13) Mundo Dulce, S. A. de C. V. 50 320 340 Ovoplus, S. A. de C. V. 25 54 50 Pierre, L. L. C. 30 15 15 Productos Rich, S. A. de C. V. 18 72 63 Others Various 45 38 $ 1,479 $ 1,416

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9. Intangible assets

The following is an analysis of the balance of intangible assets by geographical area: 2009 2008

Mexico $ 1,039 $ 913 United States of America 17,532 3,067 Central and South America 1,031 971 $ 19,602 $ 4,951

At December 31, 2009 and 2008, the breakdown of intangible assets is as follows: Average life 2009 2008

Trademarks Undefined $ 15,533 $ 4,937 Rights of use Undefined 38 14 $ 15,571 $ 4,951 Customer relationships 18 years 4,009 $ - Licensing agreements and software 8 and 2 years 261 - Non-compete agreements 5 years 18 - 4,288 - Accumulated amortization (257) - 4,031 - $ 19,602 $ 4,951

During 2009 and 2008, the changes in trademarks were as follows:

2009 2008

Balance as of January 1 $ 4,937 $ 3,477 Acquisitions 10,668 865 Disposals (6) - Reclassifications (175) - Adjustments do to variations in exchange rates 109 595 Balance as of December 31 $ 15,533 $ 4,937

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10. Goodwill

The following is an analysis of the balance of goodwill by geographical area: 2009 2008

Mexico $ 753 $ 715 United States of America 17,871 4,253 Central and South America 1,770 1,345 $ 20,394 $ 6,313

During 2009 and 2008, the changes on goodwill were as follows:

2009 2008

Balance as of January 1 $ 6,313 $ 3,890 Acquisitions 13,775 1,638 Reclassifications 175 - Adjustments do to variations in exchange rates 131 785 Balance as of December 31 $ 20,394 $ 6,313

11. Long-term debt

2009 2008 Committed Revolving (Multi-currency) Line-of-Credit

– On July 20, 2005, the Company entered into an agreement to amend its committed revolving line-of-credit dated May 21, 2004 with an original amount of US$250 million maturing in May 2008.

The new amount of the line is US$600 million, of which 50% is available in Mexican pesos. To date six financial institutions participate in the line. The term of the line is five years, maturing in July 2010.

On November 24, 2009, the Company prepaid US$300 million, resulting in a balance of US$300 million and US$600 million as of December 31, 2009 and 2008, respectively.

The financial terms applicable are as follows: For US dollar borrowings, the Company must pay LIBOR plus 0.40% until the third anniversary and LIBOR plus 0.45% during the remaining term, while in case of Mexican peso borrowings, the Company must pay the TIIE rate plus 0.35% until the third anniversary and TIIE rate plus 0.40% thereafter until maturity.

Weighted average rates on this credit line for the years ended December 31, 2009 and 2008 were 0.7000% and 2.0490%, respectively. $ 3,918 $ 8,123

138

Local bonds – During 2009 the Company issued local bonds (payable upon maturity) to refinance short-term liabilities contracted early in 2009 to acquire BFI. As of December 31, 2009, such bonds and those from prior years are structured as follows:

- Bimbo 09- Issued June 15, 2009, maturing in June 2014, with interest at the TIIE 28-day rate plus 1.55%. 5,000 -

- Bimbo 09-2- Issued June 15, 2009, maturing in

June 2016, with a fixed interest rate of 10.60%. 2,000 - - Bimbo 09U- Issued June 15, 2009 in the amount of

706,302,200 Investment Units (UDIS), maturing in June 2016, with a fixed interest rate of 6.05%. The UDI value at December 31, 2009 is $4.3401 per UDI. 3,066 -

- Bimbo 02-2-Issued in May 17, 2002, maturing in

May 2012, with a fixed interest rate of 10.15%. 750 750 - Bimbo 02-3-Issued in August 2, 2002, maturing in

August 2009, with a fixed interest rate at 11%. The Company paid this amount in August 3, 2009. - 1,150

2009 2008 - Bank loan – On January 15, 2009, the Company

contracted a long-term bank loan in the amount of the equivalent of US$1,700 million, in which BBVA Bancomer S.A. Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer as lead agent, and a bank syndicate to date comprised of 15 institutions participate. The loan consists of two tranches, the first maturing in January 2012 (Tranche A) and the second with semiannual maturities from July 2012 to January 2014 (Tranche B). As of December 31, 2009, 40% of Tranche A and 67% of Tranche B are denominated in Mexican pesos. For Tranche A Grupo Bimbo must pay interest at LIBOR/TIIE plus 2.75%, while for Tranche B it must pay interest at LIBOR/TIIE plus 3.25%.

All proceeds obtained from this financing, plus those obtained from the multicurrency bridge loan, were used by Grupo Bimbo to partially pay for the acquisition of BFI. On June 26, 2009, the Company prepaid the equivalent of US$135 million of Tranche A. 21,250 -

Other - Certain subsidiaries have contracted other direct loans maturing from 2009 to 2012, at various interest rates. 756 1,110

36,740 11,133 Less - Current portion of long-term debt (4,656) (2,054) Long-term debt $ 32,084 $ 9,079

139

At December 31, 2009, long-term debt matures as follows:

2011 $ 15 2012 13,804 2013 5,467 2014 7,732 2016 5,066 $ 32,084

The loan agreements establish certain covenants and also require that the Company maintain determined financial ratios based on consolidated financial statements. At December 31, 2009 and 2008, the Company has complied with all the obligations established in the loan agreements.

12. Derivative financial instruments

Were comprised as follows: 2009 2008 Assets Swaps $ 68 $ - Forwards 2 - Future contracts Fair value of wheat and soybean oil (30) 2 Fair value of natural gas and diesel 57 - Forwards and options 11 108 Total value of financial instruments 108 110 Warranty account 69 94

Total assets $ 177 $ 204

2009 2008 Liabilities Swaps $ - $ 47 Total liabilities $ - $ 47 Total value of financial instruments of cash flows $ 108 $ 110 Closed contracts for unused futures (149) (314) (41) (204) Differed ISR 7 41 Total stockholders’ equity $ (34) $ (163)

Interest rate hedges - The Company entered into interest rate swaps to modify its debt profile in Mexico. The derivatives were designated as cash flow hedges and since their inception were assumed to have no ineffectiveness. Derivative instruments as of December 31, 2009 are as follows: With respect to the first draw on the revolving line of credit in the amount of US$125, on July 23, 2008 the Company entered into a two-year swap to convert the variable interest rate to a fixed rate of 3.82%. In connection with the issuance of the Bimbo 09-2 local bonds, on June 26, 2009 the Company entered into an interest rate swap for $2,000 that converts the variable rate to a

140

fixed rate of 7.43% effective July 13, 2009. In connection with the issuance of the Bimbo 09U local bonds, between June 10 and 24, 2009, the Company entered into two foreign currency swaps for $1,000 and $2,000 that together cover the entire Bimbo 09 issue and convert the debt from UDIs to Mexican pesos at a fix rate of 10.54% and 10.60%, respectively. To cover the interest rate risk on the dollar portion of Tranche A of the Bank Loan, between May 27 and 29, 2009, the Company entered into three swaps that total US$300 million and fix the one-month Libor at an average of 1.64%. To cover the interest rate risk on the dollar portion of Tranche B of the Bank Loan, on May 27, 2009, the Company entered into a swap for US$150 million that fixes the one-month Libor rate at 2.33%. To cover the interest rate risk on the Mexican peso portion of Tranche A of the Bank Loan, on June 5, 2009, the Company entered into a swap for $1,500 that fixes the 28-day TIIE rate at 6.51%. To cover the interest rate risk on the Mexican peso portion of Tranche B of the Bank Loan, on June 5, 2009, the Company entered into a swap for $1,500 that fixes the 28-day TIIE rate at 7.01%. As of December 31, 2009, the operating characteristics and the fair value of the above hedging instruments were as follows:

Amounts as of December 31, 2009 Date of Notional

Amount Interest rate Fair

Commencement Maturity Floating (collected)

Fixed (paid) Value

Swaps that fix the revolving credit line rate in U.S. dollars

July 23, 2008 July 23, 2010 125

(*) 3.82% 0.73% $ (37)

Swaps that modify local bond rates June 26, 2009 June 9, 2014 $ 2,000 7.43% 4.95% (8) June 10, 2009 June 6, 2016 $ 1,000 10.54% 6.05% 55 June 24, 2009 June 6, 2016 $ 2,000 10.60% 6.05% 104

Swaps that fix the rate of the long-term credit line in U.S. dollars

May 27, 2009 January 13, 2012 100 (*) 1.63% 0.23% (6)

May 29, 2009 January 13, 2012 100 (*) 1.66% 0.23% (7)

May 29, 2009 January 13, 2012 100 (*) 1.63% 0.23% (6)

May 27, 2008 January 15, 2014 150 (*) 2.33% 0.23% (10)

Swaps that fix the rate of the long-term credit line in Mexican pesos

June 5, 2009 January 13, 2012 $ 1,500 6.51% 4.87% (8) June 5, 2009 January 15, 2014 $ 1,500 7.01% 4.87% (9) $ 68

(*) Amounts in millions of US dollars

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As of December 31, 2008, derivative financial instruments were as follows: With respect to the revolving line of credit in the amount of US$475, on August 5, 2008 the Company entered into a US$50 million interest and exchange rate swap that was to expire in February 2009. The Company decided to early terminate the swap on October 22, 2008, which resulted in a gain of $143 that is included in CFC. With respect to the issuance of local bonds Bimbo 02-2 for $750, on May 8, 2008 the Company entered into a one-year swap to convert the fixed interest rate of 10.15% to a variable rate of the 28-day TIIE plus 2.43%. Such swap expired in May 2009. As of December 31, 2008, the characteristics of these hedging instruments and their fair value at the contract date were as follows:

Amounts as of December 31, 2008

Date of Notional

Amount

Interest rate Fair

Commencement Maturity Floating

(collected)

Fixed (paid) Value

Swaps that fix the revolving credit line rate

July 23, 2008 July 23, 2010 125 (*) 4.28% 3.82% $ (51) Swaps that modify local bond rates May 8, 2008 May 8, 2009 $750 11.22% 10.15% 4 $ (47)

(*) Amounts in millions of US dollars Cross currency “Forwards” – As of December 31, 2009, the Company had contracted forwards to hedge the cash flows of operating and financial liabilities denominated in foreign currency. These instruments cover a notional amount of 25.3 million Euros that fix the exchange rate for the purchase of foreign currency at an average of $18.6680 Mexican pesos per Euro. As of December 31, 2008 the Company had entered into forwards to hedge the cash flows related to foreign currency denominated operating and/ or financing liabilities. These instruments cover a notional amount of US$100 million and fixes the buying exchange rate at $13.6350 Mexican pesos per U.S. dollar.

Hedges of wheat, natural gas prices and other commodities- The Company enters into wheat, natural gas and other commodities futures contracts to minimize the risk of variation in international prices of both consumables. Wheat, which is the primary component of flour and is the main input used by the Company, together with natural gas are used in the manufacture of its products. The transactions are carried out in recognized commodity markets, and through their formal documentation are designated as cash flow hedges of forecasted transactions. The other comprehensive income at December 31, 2009 and 2008 includes closed contracts that have not been transferred to cost of sales due to the fact that the wheat under these contracts has not been used for flour consumption.

142

As of December 31, 2009 and 2008, the contracted futures and their main characteristics were:


Date of Commencement Position

Contracts Fair value

Number Maturity Region

Futures contracts to fix the purchase price of wheat and soybean oil August through November 2009

Long 814

Between March and May 2010

Mexico $ (11)

June through September 2009 Long 1,196

March 2010 USA (24)

July through November 2009

Long 170

Between March and July

2010

OLA (1)

Various (Soybean oil) Long 135

Various USA 6

$ (30) Futures contracts to fix the purchase price of natural gas and diesel Various (Natural gas)

Long 170 Various Mexico 8

Various (Diesel) Long 128 Various USA 50 Various (Natural gas)

Long 193 Various USA (1)

$ 57

Amounts as of December

31, 2008

Date of

Commencement Position Contracts Fair

value Number Maturity Region

Futures contracts to fix the purchase price of wheat September through November 2008

Long 1,938

Between May and December

2009 Mexico $ (17) September through December 2008

Long 1,040

Between March and December

2009 USA 18 September through November 2008

Long 274

Between March and September

2009 OLA 1 $ 2

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Hedges of currency “Forwards” for purchase of wheat- During 2009, the Company entered into exchange rate call options, which were designated as hedges of possible exchange rate fluctuations of the U.S. dollar, the foreign currency in which the majority of purchases of wheat flour are made. The covered purchases are from January to March of 2010.


Date of

Commencement Maturity

Amount in

USD

Contracted

exchange

rate Amount Fair value

August through December, 2009

Between January and March, 2010

50,000,000 Between 12.8295

and 13.2695

$ 647 $ 11

During September 2008, the Company entered into exchange rate call options, which were designated as hedges of possible exchange rate fluctuations of the U.S. dollar, the foreign currency in which the majority of purchases of wheat flour are made. The covered purchases are for April and May 2009.


Date of

Commencement Maturity

Amount in

USD

Contracted

exchange

rate Amount Fair value

September 2008 April and May 2009 35,000,000

Between 10.7365 and

10.9050 $ 380 $ 117

As of December 31, 2008, the exchange rate call represented a gain of $117, less premiums paid of $9 and the net of $108 is recognized as a current asset.

Embedded derivative instruments - At December 31, 2009 and 2008, the Company does not have any contracts with embedded derivatives.

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13. Long-term employee benefits

Long term net projected liabilities of employee and welfare benefits plan, by geographical area, are as follows: 2009 2008

Net projected liability in Mexico: Retirement $ 745 $ 728 Termination 56 (1)

$ 801 $ 727 Net projected liability in USA and OLA: Retirement $ 2,584 $ (211) Termination 220 - Workers’ compensation in USA 1,039 466

$ 3,843 $ 255 a. Mexico –

The Company has a defined benefit pension and seniority premium plan; it also has a termination benefits obligations. The funding policy of the Company is make discretionary contributions. During 2009 and 2008, the Company made contributions of $200 and $0, respectively, to such plans. Seniority premiums consist of a one-time payment of 12 days for each year worked based on the final salary, not exceeding double the minimum wage established by law for all its personnel, as stipulated in the respective employment contracts. Such benefits vest for employees with 15 or more years of service. Employment termination benefits primarily include the estimate for settlement payments equivalent to 3 months of salary per year of service worked, which are paid to all workers that cause involuntary leave. The related liability and annual benefits costs are calculated by an independent actuary in conformity with the bases defined in the plans, using the projected unit credit method. The following table presents the amounts recognized for the pension, seniority and termination premium plans, as well as the status of the fund shown in the balance sheet at December 31, 2009 and 2008:

2009 2008

Vested benefit obligation $ 514 $ 479 Defined benefit obligation 5,504 5,069 Less- Plan assets (fund in trust) 4,360 3,753

Unfunded status 1,144 1,316 Items to be amortized: Actuarial gain (451) (726) Transition liability 19 25 Past service costs and changes to the plan 115 141 Unamortized past services for changes in methodology (26) (29)

Total items to be amortized (343) (589) Net projected liability $ 801 $ 727

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Net period costs are as follows:

2009 2008

Cost of services for the year $ 329 $ 301 Amortization of transition asset (6) (6) Amortization of past services and changes to the plan

(12) (25)

Actuarial (gain) loss (87) 132 Cost of financing for the year 408 378 Less – yield on fund assets (321) (365) Net cost of the period $ 311 $ 415

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The nominal rates used in the actuarial calculations are: 2009 2008

Discount of projected benefit obligation at present value 8.16% 8.16%

Wage increases 5.05% 5.05% Yield on plan assets 8.67% 8.67%

The unamortized amounts of retirement obligations for the transition asset are applied to results over a period of five years beginning in 2008, and for past services and actuarial gains and losses are applied to results over the remaining labor life of employees expected to receive plan benefits. Changes in present value of the defined benefit obligation:

2009 2008 Present value of the defined benefit obligation as of January 1 $ 5,069 $ 4,810

Service cost 329 301 Interest cost 408 378 Actuarial gain on the obligation (111) (248) Benefits paid (191) (172) Present value of the defined benefit obligation as of December 31 $ 5,504 $ 5,069

Changes in fair value of plan assets: 2009 2008 Plan assets at fair value as of January 1 $ 3,753 $ 4,256 Expected yield 321 365 Actuarial gain (loss) 240 (723) Company contributions 200 - Benefits paid (154) (145) Plan assets at fair value as of December 31 $ 4,360 $ 3,753

Categories of plan assets:

Expected yield

Actual yield

Equity instruments 10.0% 36.9% Debt instruments 7.7% 8.3%

Amounts of the current and previous four years: 2009 2008 2007 2006 2005 Defined benefit obligation 5,504 5,069 4,810 4,495 4,017 Less- Fair value of plan assets 4,360 3,753 4,256 4,192 3,739

Funded status 1,144 1,316 554 303 278 Actuarial (gain) loss for estimation of defined benefit obligation (111) (248) (27) 120 (143)

Actuarial gain (loss) for estimation of fund 240 (723) (72) 147 36

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b. USA - The Company has established a defined benefit pension plan that covers eligible employees. Effective January 1, 2009, the benefits of the plan were frozen. The Company’s funding policy is to make discretionary contributions. During 2009 and 2008, the Company made contributions to such plan of $471 and $115, respectively.

The following table sets forth the amounts recognized for the pension plan and the status of the fund in the consolidated balance sheets, as well as the liability for workers’ compensation, as of December 31, 2009 and 2008: 2009 2008 Vested benefit obligation $ 1,993 $ 1,919 Defined benefit obligation $ 7,528 $ 2,248 Less- Plan assets 4,183 1,154

Unfunded status 3,345 1,094 Items to be amortized: Actuarial gain (770) (1,423) Past service costs and plan modifications 9 118

Total items to be amortized (761) (1,305) Net projected (liability) asset $ 2,584 $ (211)

Net pension cost includes the following components:

2009 2008

Cost of services for the year $ 139 $ 73 Financing cost of the year 403 120 Return on plan assets (259) (120) Amortization of past services and plan modifications

45 30

Effect on anticipated severance obligations (84) - Net cost of the period $ 244 $ 103

The nominal interest rates used in the actuarial calculations are: 2009

Nominal 2008 Real

Weighted average discount rates 5.75% 6.00% Rates of increase in compensation levels 3.75% 3.75% Expected long-term rate of return on plan assets 7.50% 7.50%

Changes in present value of the defined benefit obligation:

2009 2008 Present value of the defined benefit obligation as of January 1 $ 2,248 $ 1,631

Service cost 139 73 Interest cost 403 120 Actuarial (gain) loss on the obligation (46) 570 Past services for plan modifications (3) - Business acquisition 5,184 - Benefits paid (397) (146) Present value of the defined benefit obligation as of December 31 $ 7,528 $ 2,248

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Changes in fair value of plan assets:

2009 2008

Plan assets at fair value as of January 1 $ 1,154 $ 1,254 Expected yield 259 120 Actuarial gain (loss) 490 (189) Company contributions 471 115 Business acquisition 2,206 - Benefits paid (397) (146) Plan assets at fair value as of December 31 $ 4,183 $ 1,154

Categories of plan assets:

Expected yield Actual yield Equity instruments 13.0% 29.2% Debt instruments 3.5% 6.0%

Amounts of the current and previous four years:

2009 2008 2007 2006 2005 Defined benefit obligations 7,528 2,248 1,631 1,640 1,654

Less- Fair value of plan assets 4,183 1,154 1,254 1,191 928

Funded status 3,345 1,094 377 449 726 Actuarial (gain) loss for estimation of defined benefit obligation (46) 570 - (64) 217

Actuarial gain (loss) for estimation of fund 490 (189) 10 (33) 39

Post retirement welfare benefit plans USA The Company maintains post retirement welfare benefit plan that covers certain eligible employees´ post retirement medical expenses. As of December 31, 2009 and 2008, this liabilities were $1,293 and $466, respectively, of which the following amounts are classified in the long term:

2009 2008

Welfare benefit plans $ 1,039 $ 466 OLA - The Company has liabilities for termination benefits in accordance with the local legislation of each country. The related liability and annual cost of the benefits is calculated by an independent actuary using the projected unit credit method. As of December 31, 2009 and 2008, the registered liabilities are $220 and $0, respectively. Other disclosures required by NIF were considered not significant in this geographic segment.

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14. Stockholders’ equity

a. At December 31, 2009, stockholders’ equity consists of the following:

Number of

shares Par value

Restatement /

translation

effect Total

Fixed capital Series “A” 1,175,800,000 $ 1,902 $ 6,104 $ 8,006 Series “B” - - - -

Total 1,175,800,000 $ 1,902 $ 6,104 $ 8,006 Reserve for repurchase of shares 600 159 759

Retained earnings 22,823 7,875 30,698 Other items of accumulated other comprehensive income - 675 675

Financial instruments (34) - (34)

Noncontrolling interest in consolidated subsidiaries 719 134 853

Total $ 26,010 $ 14,947 $ 40,957

Capital stock is fully subscribed and paid and represents fixed capital. Variable capital cannot exceed 10 times the amount of minimum fixed capital without right of withdrawal and must be represented by Series “B”, ordinary, nominative, no-par shares and/or limited voting, nominative, no-par shares of the Series to be named when they are issued. Limited voting shares cannot represent more than 25% of non-voting capital stock.

b. Dividends paid in 2009 and 2008 were:

Value at Mexican pesos

per December 31,

share Total par value 2009 Approved at the stockholders’ meeting of:

April 15, 2009 $ 0.46 $ 541 $ 541 April 9, 2008 $ 0.46 $ 541 $ 541

c. Retained earnings include the statutory legal reserve. Mexican General Corporate

Law requires that at least 5% of net income of the year be transferred to the legal reserve until the reserve equals 20% of capital stock at par value (historical pesos). The legal reserve may be capitalized but may not be distributed unless the entity is dissolved. The legal reserve must be replenished if it is reduced for any reason. At December 31, 2009 and 2008, the legal reserve, in historical pesos, was $500.

150

d. Stockholders’ equity, except restated paid-in capital and tax retained earnings, will be subject to income taxes payable by the Company at the rate in effect upon distribution. Any tax paid on such distribution may be credited against annual and estimated income taxes of the year in which the tax on dividends is paid and the following two fiscal years.

e. The balances in the stockholders’ equity tax accounts at December 31 are:

2009 2008 Paid-in capital $ 8,132 $ 7,843 Net after-tax income 32,830 27,522 Total $ 40,962 $ 35,365

15. Foreign currency balances and transactions

a. At December 31, 2009 and 2008, the foreign currency monetary position in millions of U.S. dollars, for the Mexican entities only, is as follows:

2009 2008

Current assets 67 437 Liabilities- Short term (342) (47) Long term (745) (600)

Total liabilities (1,087) (647) Liability position, net (1,020) (210) Mexican peso equivalent $ (13,320) $ (2,843)

b. The Company has significant operations in the USA and OLA as indicated in Note

21. c. The transactions in millions of U.S. dollars, for the Mexican entities only, after

elimination of the transactions between consolidated subsidiaries, were as follows:

2009 2008 Export sales 12 13 Import purchases of raw materials 46 91 Purchases of fixed assets from foreign countries 27 30

d. The exchange rates in effect at the dates of the balance sheets and of issuance of

these financial statements, respectively, were as follows:

December 31, March 12,

2009 2008 2010

Pesos per one U.S. dollar 13.0587 13.5383 12.6192

151

16. Transactions and balances with related parties

a. Transactions with related parties, carried out in the ordinary course of business,

were as follows:

2009 2008

Interests income $ 76 $ - Expenses on purchases of: Raw materials $ 4,403 $ 5,158 Finished products $ 575 $ 769 Supplies, uniforms and other $ 312 $ 473

b. The net balances due to related parties are:

2009 2008

Beta San Miguel, S. A. de C. V. $ 89 $ 74 Efform, S. A. de C. V. 18 23 Frexport, S. A. de C. V. 14 41 Grupo Altex, S. A. de C. V. 29 229 Industrial Molinera Montserrat, S. A. de C. V. 14 32 Industrial Molinera San Vicente de Paul, S. A. de C. V.

- 19

Makymat, S. A. de C. V. 5 8 Ovoplus del Centro, S. A. de C. V. 13 30 Pan-Glo de México, S. de R. L. de C. V. 1 4 Paniplus, S. A. de C. V. 21 27 Proarce, S. A. de C. V. 22 36 Fábrica de Galletas La Moderna, S. A. de C. V. 4 11 Mundo Dulce, S. A. de C. V. 5 39 Uniformes y Equipo Industrial, S. A. de C. V. 3 11 $ 238 $ 584

c. Employee benefits granted to Company key management were as follows:

2009 2008

Short and long-term direct benefits $ 290 $ 264 Share-based payments 71 27 Severance benefits 368 356

152

17. Tax environment Income taxes in Mexico

The Company is subject to ISR and IETU. ISR - The rate for 2009 and 2008 was 28% and will be 30% for 2010 to 2012, 29% for 2013, and 28% for 2014 and thereafter. The Company pays ISR, together with subsidiaries on a consolidated basis. IETU - Revenues, as well as deductions and certain tax credits, are determined based on cash flows of each fiscal year. The IETU rate is 17% and 16.5% in 2009 and 2008, respectively, and 17.5% as of 2010. The Asset Tax Law was repealed upon enactment of the IETU Law; however, under certain circumstances, IMPAC paid in the ten years prior to the year in which ISR is paid, may be recovered, according to the terms of the law. In addition, as opposed to ISR, the parent and its subsidiaries will incur IETU on an individual basis. Income tax incurred will be the higher of ISR and IETU. Based on its financial projections, the Company determined that some of its Mexican subsidiaries will pay ISR in certain fiscal years, while in others, they will pay IETU. Accordingly, the Company calculated both deferred ISR and deferred IETU and recognized the larger of the two liabilities in each subsidiary. In its other subsidiaries, based on its financial projections the Company determined that they will basically pay only ISR. Therefore, the enactment of IETU did not have any effects on the financial information for these subsidiaries, since they continue to recognize deferred ISR. Grupo Bimbo, S. A. B. de C. V. is subject until 2009 to ISR on a consolidated basis with its Mexican subsidiaries, in the proportion held of the voting stock of its subsidiaries at year-end. Due to changes in the tax law with respect to tax consolidation, the Company elected to deconsolidate for tax purposes beginning in 2010, recognizing the effects on the financial information of 2009 of such deconsolidation, applying some of the effects against retained earnings in accordance with the rules of INIF 18, Recognition of the Effects of the 2010 Tax Reform on Income Taxes. The effect of tax deconsolidation in the results of 2009 is minimal considering the effects on deferred taxes that result from the tax deconsolidation. Income taxes in other countries The foreign subsidiaries calculate income taxes on their individual results, in accordance with the regulations of each country. The subsidiaries in the USA have authorization to file a consolidated income tax return. The tax rates applicable in other countries where the Company operates and the period in which tax losses may be applied, are as follows: Statutory Income Tax Rate (%) Period of 2009 2008 expiration Austria 25.0 25.0 (a) Argentina 35.0 35.0 (b) 5 Brazil 34.0 34.0 (c) Colombia 33.0 33.0 (d) Costa Rica 30.0 30.0 3

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Chile 17.0 17.0 (e) China 25.0 25.0 5 El Salvador 25.0 25.0 (f) Spain 30.0 30.0 15 USA (g) 35.0 (g) 35.0 20 Guatemala (h) 31.0 (h) 31.0 (f) Honduras (i) 25.0 (i) 25.0 (j) Hungary 16.0 16.0 (e) Luxembourg 21.0 21.0 (e) Netherlands 25.5 25.5 9 Nicaragua 30.0 30.0 3 Paraguay 10.0 10.0 (j) Peru 30.0 30.0 (k) Czech Republic 21.0 21.0 (l) Uruguay 25.0 25.0 (m) Venezuela 34.0 34.0 (n)

(a) Losses generated after 1990 may be applied indefinitely but can only be offset each

year up to an amount equal to 75% of the net taxable profit for the year. (b) Tax losses from sale of share or other equity investments, can only be offset against

income of the same nature. Same for the loss of derivatives. Foreign source tax losses can only be amortized with income from foreign sources.

(c) Tax losses may be applied indefinitely, but may only be offset each year up to an amount equivalent to 30% of the net taxable profit for the year.

(d) Tax losses generated in 2003, 2004, 2005 and 2006 may be amortized within the following 8 years, but can only be up to 25% of the income tax of each year. Since 2007, tax losses may be unlimited amortized with no limit on the value and unlimited in time.

(e) No expiration date. (f) Operational losses cannot be amortized and capital losses can only be amortized

against capital gains in the following 5 years that the loss was generated. (g) To this percentage should be added a percentage of state tax, which varies in each

state of the U.S. The weighted average statutory rate for 2009 and 2008 was 38.3% and 38.2%, respectively.

(h) The general scheme is 5% but the tax base is calculated as follows: Total gross income less non taxable income. The optional scheme has a rate of 31% but the tax basis is different: Net income less nontaxable income plus nondeductible expenses less other deductions.

(i) It is a flat tax, and in case of a taxable income greater than 1 million Lempiras an additional 5% must be paid.

(j) Cannot be amortized. (k) There are two alternatives allowed for tax losses amortization: 1) 4 years or 2)

unlimited amortization up to 50% of the value of each year. Once made, an election cannot be changed, until the accumulated losses of previous years are applied.

(l) Tax losses generated since 2004 can be amortized in the following 5 years. Tax losses prior to 2004 in the following 7 years.

(m) Tax losses generated after 2007 can be amortized in the following 5 years. Prior to 2007 only until the following 3 years.

(n) Based on their nature can change the amortization period: 1) Operating losses, following 3 years, 2) Losses from the adjustment for inflation tax, 1 year; 3) Overseas, which can only be amortized to earnings from abroad, following 3 years and 4) Losses from jurisdictions with preferential tax regulations only applied to profits in such jurisdictions, following 3 years.

154

Operations in Argentina, Colombia, Guatemala and Nicaragua are subject to minimum payments of income tax or tax based on assets.

Operations in Brazil and Venezuela are subject to profit sharing payments according to certain rules based on accounting income. During 2009 and 2008, there were no profit sharing payments in that country. Detail of provisions, effective rate and deferred effects

a. Consolidated taxes on income are as follows:

2009 2008

ISR: Current $ 3,964 $ 1,887 Deferred (1,203) (246)

$ 2,761 $ 1,641

IETU: Current $ 77 212 Deferred (11) 41

66 253 $ 2,827 $ 1,894

b. The reconciliation of the statutory and effective ISR rates expressed as a percentage

of income before taxes on income for the years ended December 31, 2009 and 2008 is:

%

2009 2008 Statutory rate in Mexico 28.0 28.0 Inflationary effects in the monetary balance sheet accounts 5.3 2.0 Nondeductible expenses, nontaxable revenues and other

4.9 (1.5)

Difference in tax rates and currency of subsidiaries in different tax jurisdictions 2.2 (0.10) Inflationary tax effect of fixed assets (1.9) (2.5) IETU 0.7 4.0 Reversal of allowance of deferred taxes (7.4) - Effects of increase in Mexican income tax rate in deferred taxes (0.1) - Effective rate 31.7 29.9

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The main items originating a deferred ISR asset are:

2009 2008

Advances from customers $ (8) $ (12) Allowance for doubtful accounts (89) (37) Inventories 52 26 Property, plant and equipment 2,894 2,773 Intangible assets 3,803 (131) Other reserves (2,839) (884) Current and deferred PTU (460) (244) Tax loss carryforwards (4,602) (2,237) Valuation allowance of tax loss carryforwards 788 580 IETU 190 201 Effect of translation (59) (221) Other items (39) 26 Total asset, net $ (369) $ (160)

The net deferred income tax asset has not been offset in the accompanying consolidated balance sheet as they result from different taxable entities and tax authorities. Gross amounts are as follows:

2009 2008

Deferred income tax asset $ (635) $ (1,417) Deferred income tax liability 266 1,257 Total asset, net $ (369) $ (160)

c. Since the Company’s tax losses are mainly derived from its transactions with USA

and some countries of OLA, certain tax losses will not be recoverable before their expiration date. Consequently, the Company has recognized a valuation allowance for a portion of such losses.

d. Tax loss carryforwards for which the deferred ISR asset have been recorded may be

recovered subject to certain conditions. Tax losses generated in countries and expiration dates are:

Years Amount

2011 $ 5,789 2012 27 2013 88 2014 47 2015 5 2016 and thereafter 7,724 13,680 Tax losses included in the valuation allowance

(2,490)

Total $ 11,190

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18. Other Expenses, net

a. They are comprised as follows:

2009 2008

PTU $ 563 $ 467 Prior year labor cost 150 - Tax incentives (46) - Loss on sale of fixed assets 183 101 Other 326 (93) $ 1,176 $ 475

b. PTU is comprised as follows:

2009 2008

Current $ 624 $ 563 Deferred (61) (96) $ 563 $ 467

19. Commitments

Guarantees and/or guarantors

a At December 31, 2009, Grupo Bimbo, S. A. B. de C. V. and certain subsidiary companies have guaranteed bonded issued letters of credit to guarantee commercial obligations and contingent risks related to the labor obligations of certain subsidiaries. The value of such letters of credit totals US$99.5 million, of which a liability of US$99 million has already been recorded for employment benefits in the USA.

b The Company has guaranteed certain contingent obligations of associated companies for the amount of US$3 million at December 31, 2009. Similarly, the Company has issued guarantees for third-party obligations derived from the sale of assets in prior years, for the amount of US$14 million.

Lease commitments

a. The Company has long-term commitments under operating leases, principally for the

facilities used to produce, distribute and sell its products. These commitments vary from 3 to 14 years, with a renewal option of between one and five years. Certain leases require the Company to pay all related expenses, such as taxes, maintenance and insurance for the term of the contracts. The total amount of lease commitments is as follows:

Year Amount

2010 $ 1,209 2011 873 2012 659

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2013 494 2014 376 2015 and thereafter 1,892 Total $ 5,503

20. Contingencies

The vast majority of the Company´s contingencies are related to non significant labor, legal and civil matters. The Company follows their practice of expensing these amounts as they materialized. There are a few large contingencies for which the Company has evaluated as remote, probable or possible, and the amounts that have been defined as probable have been accrued in the caption of long term liabilities.

22. New accounting principles As part of its efforts to converge Mexican standards with international standards, in 2009 the Mexican Board for Research and Development of Financial Information Standards (“CINIF”) issued the following Mexican Financial Reporting Standards (NIFs), Interpretations to Financial Information Standards (INIFs) and improvements to NIFs applicable to all but not-for profit entities, which become effective as follows: a) For fiscal years that begin on January 1, 2010:

Some of the most important changes established by these standards are: NIF C-1, Cash: changes the “cash” concept to be consistent with the definition in NIF B-2, Statement of Cash Flows, and introduces definitions for restricted cash, cash equivalents and readily available investments. Improvements to NIFs for 2010 – The main improvements generating accounting changes that must be recognized retroactively are:

NIF B-1, Accounting Changes and Correction of Errors: Requires further disclosures in case the Company applies a particular standard for the first time. NIF B-2, Statement of Cash Flows: Requires recognition of the effects of fluctuations in exchange rates used for translating cash in foreign currencies, and changes in fair value of cash in the form of precious metal coins, and other cash items, at fair value, in a specific line item. NIF B-7, Business Acquisitions: Requires that, when intangible assets or provisions are recognized because the acquired business has a contract whose terms and conditions are favorable or unfavorable with respect to market, it only applies when the acquired business is the lessee in an operating lease. This accounting change should be recognized retroactively but not further back than January 1, 2009. NIF C-7, Investments in Associated Companies and Other Permanent

Investments: Modifies how the effects derived from increases in equity percentages in an associated company are determined. It also establishes that the effects due to an increase or decrease in equity percentages in associated companies should be recognized under equity in income (loss) of associated companies, rather than in the non-ordinary line item within the statement of income. NIF C-13, Related Parties: Requires that, if the direct or ultimate controlling entity of the reporting entity does not issue financial statements available for public use, the reporting entity should disclose the name of the closest, direct / indirect, controlling entity that issues financial statements available for public use.

b) For fiscal years that begin on January 1, 2011:

Some of the most important changes established by these standards are:

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NIF B-5, Segment Financial Information: Uses a managerial approach to disclose financial information by segments, as opposed to Bulletin B-5, which, although based on a managerial approach, required that the financial information be classified by economic segments, geographical areas, or customer groups. NIF B-5 does not require different risks among business areas to separate them. It allows areas in the preoperating stage to be classified as a segment, and requires separate disclosure of interest income, interest expense and liabilities, as well as disclosure of the entity’s information as a whole with respect to products, services, geographical areas and major customers. Like the previous bulletin, this standard is mandatory only for public companies or companies in the process of becoming public. NIF B-9, Interim Financial Information: As opposed to Bulletin B-9, this Standard requires presentation of the statement of changes in stockholders’ equity and statement of cash flows, as part of the interim financial information. For comparison purposes, it requires that the information presented at the closing of an interim period contain the information of the equivalent interim period of the previous year, and in the case of the balance sheet, presentation of the prior yearend balance sheet.

At the date of issuance of these consolidated financial statements, the Company has not fully assessed the effects of adopting these new standards on its financial information.

23. International Financial Reporting Standards

In January 2009, the Mexican National Banking and Securities Commission published changes to the Issuers Official Bulletin to establish that beginning in 2012 all listed companies in Mexico will have to file their financial information under International Financial Reporting Standards, with early adoption allowed.

24. Financial statement issuance authorization

The issuance of the consolidated financial statements was authorized by Lic. Daniel Servitje Montull, Chief Executive Officer, and the Board of Directors of the Company on March 12, 2009. These consolidated financial statements are subject to the shareholder approval at the General Stockholders’ meeting, who may modify the financial statements, based on provisions set forth by the General Corporate Law.

* * * * * *

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Mexico City, March 10, 2010. To the Board of Directors of Grupo Bimbo, S.A.B. de C.V. In compliance with the provisions of the Securities Market Law, the bylaws of the Company and the Regulations of the Audit Committee, I hereby inform you of the activities undertaken by the Audit Committee during the year ended December 31, 2009. In carrying out our work, we have taken into consideration the recommendations established by the Code of Best Corporate Practices. The Committee in full met on five sessions during the year and, as per our work plan, undertook the following activities: EXTERNAL AUDIT As part of the negotiation that took place in 2008, the external auditor contracted to perform the audit of the financial statements for 2009 remains the same and is the only firm for all the operations and countries in which Grupo Bimbo has a presence. We verify and confirm that the contracted firm has maintained its independence. We also analyze their approach, work program and areas of interaction with Grupo Bimbo’s Internal Audit department. On an ongoing basis we maintained direct communication with the external auditors and they kept us informed periodically on the progress of their work and any observations they had; we took note of their comments on the quarterly and annual financial statements. We were informed in a timely manner about their conclusions and reports on the annual financial statements. After analyzing the time and fees incurred, we authorized payment to the external auditors for auditing and other approved services. We are assured that their independence from the Company was not compromised. INTERNAL AUDIT We reviewed and approved the annual work plan and budgeted activities for the year. We received and approved the periodic reports on the state of progress of the approved work plan. We followed up on the comments and suggestions made, as well as on their implementation. We verified that there was an annual training program in place and verified that it was effective.

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FINANCIAL INFORMATION AND ACCOUNTING POLICIES We reviewed the quarterly and annual financial statements of the Company with the personnel responsible for their preparation, recommended their approval by the Board of Directors, and authorized their publication. Throughout the process we took the opinions and comments issued by the external auditors into consideration. With the support of the internal and external auditors, in issuing our opinion on the financial statements we verified that the accounting policies and criteria and the information utilized by management in the preparation of the financial statements was appropriate and sufficient and had been applied in a manner that was consistent with the prior year. As a result, the information presented by management fairly reflects the financial position, results of operations and cash flows of the Company. We approved the adoption of the new accounting procedures and standards that went into effect in 2009 which were issued by the organization responsible for accounting standards in Mexico. INTERNAL CONTROLS We verified that management has established general guidelines for internal control, as well as the necessary procedures to implement and comply therewith. In addition, we followed up on the comments and observations made by the external and internal auditors in this regard during the course of their work. COMPLIANCE WITH APPLICABLE REGULATORY STANDARDS AND LAWS; CONTINGENCIES With the support of the internal and external auditors, we confirmed the existence and reliability of the controls established by the Company to assure compliance with the various legal statutes to which it is subject, and assured that there was adequate disclosure in the financial information. We periodically reviewed the Company’s numerous tax, legal and labor contingencies and confirmed that appropriate procedures were in place to identify and address such contingencies. CODE OF ETHICS With the support of those responsible at the Company, we verified the existence of the Code of Ethics for associates as well as the instructions to be reviewed by everyone prior to signing their agreement to the document annually. In addition, we suggested to management that establishment of a communication or whistle-blower line for Grupo Bimbo’s associates, which will be implemented next year. COMPLIANCE WITH OTHER OBLIGATIONS We held meetings with executives and officers as considered necessary to remain informed about the progress of the Company and any relevant or unusual activities and events. We obtained information about significant matters that could involve possible non-compliance with operating policies, the internal control system and policies on accounting records, and we were also informed of corrective measures taken in each such instance and found them satisfactory.

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We did not deem it necessary to request advice or opinions from independent experts, because the issues addressed in each meeting were duly supported by the necessary relevant information; as such the conclusions we reached were satisfactory to Committee members. In my capacity as Chairman of the Audit Committee, I reported quarterly to the Board of Directors on the activities conducted within the Committee. The work that we conducted was duly documented in minutes prepared for each meeting, which were reviewed and approved at the time by the members of the Committee. Sincerely,

Henry Davis Chairman of the Audit Committee Grupo Bimbo, S.A.B. de C.V.

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