##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File
    Number 333-08322
 Kansas City Southern de
    México, S. de R.L. de C.V.
 (formerly known as TFM, S.A. de C.V.)
 (Exact Name of Registrant as
    Specified in Its Charter)
 Kansas City Southern of México
 (Translation of
    Registrants name into English)
  Mexico

4011

N/A(State or Other Jurisdiction
    of
    Incorporation or Organization)

(Primary Standard Industrial
    Classification
    Code Number)

(IRS Employer
    Identification No.)   Montes Urales, 625
 Lomas de Chapultepec
 11000 México, D.F.
 México
 +
    (5255) 9178-5836
 (Address, Including Zip Code,
    and Telephone Number,
 Including Area Code, of
    Registrants Principal Executive Offices)
      Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
  None
  o þ
  þ o
  o o þ
  Regulation S-K Form 10-K Form 10-K. o
   o o þ
  o þ
       DOCUMENTS INCORPORATED BY
    REFERENCE: Not
    applicable.




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##### 



Kansas
    City Southern de México, S. de R.L. de C.V.
    2006
    Form 10-K
    Annual Report
    TABLE OF CONTENTS
  
  PagePART IItem 1.

Business


3Item 1A.

Risk
    Factors


4Item 1B.

Unresolved Staff
    Comments


14Item 2.

Properties


14Item 3.

Legal
    Proceedings


16Item 4.

Submission of
    Matters to a Vote of Security Holders


17PART IIItem 5.

Market for the
    Companys Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


18Item 6.

Selected Financial
    Data


18Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation


18Item 7A

Quantitative and
    Qualitative Disclosures About Market Risk


21Item 8.

Financial
    Statements and Supplementary Data


23Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


54Item 9A.

Controls and
    Procedures


54Item 9B.

Other
    Information


54PART IIIItem 10.

Directors,
    Executive Officers and Corporate Governance


54Item 11.

Executive Compensation


54Item 12.

Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholder
    Matters


54Item 13.

Certain Relationships and Related
    Transactions and Director Independence


54Item 14.

Principal
    Accountant Fees and Services


55PART IVItem 15.

Exhibits and
    Financial Statement Schedules


55Signatures


58Computation of Ratio of Earnings to Fixed Charges302 Certification of President and Executive Representative302 Certification of Chief Financial OfficerSection 906 Certifications   2




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Cautionary
    Statement Regarding Forward-Looking Statements
   Part I  Item 1.
    Business  COMPANY
    HISTORY
  50-year
     3




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BUSINESS
    OVERVIEW
  50-year
        Kansas
    City Southern
  Tex-Mex
    Item 1A.
    Risk
    Factors.  Risk
    Factors Relating to KCSM Debt
  The
    Companys substantial indebtedness could adversely affect
    its financial position and its ability to meet its obligations
    under its debt instruments.
   4




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
    KCSM will have to dedicate a substantial portion of its cash
    flow from operations to the payment of principal, premium, if
    any, or interest on its debt, which will reduce funds available
    for other purposes;
    KCSM may not be able to fund capital expenditures, working
    capital and other corporate requirements;
    KCSM may not be able to obtain additional financing, or to
    obtain it at acceptable rates;
    KCSMs ability to adjust to changing market conditions and
    to withstand competitive pressures could be limited, and the
    Company may be vulnerable to additional risk if there is a
    downturn in general economic conditions or in its business;
    KCSM may be exposed to risks in exchange rate fluctuations
    because any fluctuation of the Mexican peso relative to the
    dollar could impact its ability to service debt; and
    KCSM may be at a competitive disadvantage compared to its
    competitors that have less leverage and greater operating and
    financing flexibility than the Company does.  Failure
    to comply with restrictive covenants in its existing contractual
    arrangements could accelerate its repayment obligations under
    its debt.
       5




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and/or
  Risk
    Factors Relating to Ongoing litigation.
    Disputes
    with Ferromex.
  Disputes Relating to Payments for the Use of Trackage and
    Haulage Rights and Interline Services.
  Disputes Relating to the Exercise of Trackage
    Rights.
  Disputes Relating to the Scope of the Mandatory Trackage
    Rights. Tribunal Federal de Justicia Fiscal
    y Administrativa
  SCT
    Capital Investment Dispute.
    Mancera
    Proceeding.
   6




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Risk
    Factors Relating to KCSMs Business
  KCSM
    may not be successful at reducing its operating costs and
    increasing its operating efficiencies.
    The
    Mexican government may revoke or limit KCSMs concession
    under a number of circumstances.
  50-year Ley Reglamentaria del Servicio Ferroviario
       7




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Failure
    to make capital expenditures could result in the revocation of
    its concession and adversely affect its financial
    condition.
      Significant
    competition from other railroads could adversely affect
    KCSMs financial condition.
         8




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Significant
    competition from trucks could adversely affect KCSMs
    financial condition.
    truck-to-rail
  A
    significant percentage of KCSMs transportation revenues
    has historically been derived from the automotive industry,
    which has had difficulties in recent years.
    The
    rates for trackage rights set by the SCT may not adequately
    compensate the Company.
     9




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Disputes with
    Ferromex
  Downturns
    in the U.S. economy, Mexican economy,
    U.S.-Mexico
    trade, certain cyclical industries in which KCSMs
    customers operate, the global economy or fluctuations in the
    peso-dollar exchange rate could have adverse effects on its
    financial condition.
          The
    Mexican government may restrict KCSMs ability to operate
    its concession on a profitable basis by setting tariffs for rail
    freight services.
     10




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Traffic
    congestion or similar problems experienced in the U.S. or
    Mexican railroad system may adversely affect KCSMs
    operations.
    KCSMs
    business strategy, operations and growth rely significantly on
    third parties.
    If
    KCSMs primary fuel supply contract is terminated, or if
    fuel prices substantially increase, its financial condition
    could be materially adversely affected.
    KCSM
    faces possible catastrophic loss and liability, and its
    insurance may not be sufficient to cover its damages or damages
    to others.
   11




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KCSM
    faces potential environmental liabilities.
  Procuraduría Federal de Protección
    al Ambiente Secretaría del Medio Ambiente y Recursos Naturales
    Terrorist
    activities and geopolitical events and their consequences could
    adversely affect KCSMs financial condition.
    Renegotiation
    of terms of the labor agreement and any potential labor
    disruptions could adversely affect its financial
    condition.
   12




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KCSMs
    controlling stockholders interests may be different from
    KCSMs.
    KCSM
    has identified possible discrepancies in data provided by its
    prior information system.
    Risk
    Factors Relating to Mexico
  Governmental
    policies and economic developments in Mexico and elsewhere may
    adversely affect KCSMs financial condition.
    Currency
    fluctuations may adversely affect KCSMs financial
    condition.
     13




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Inflation
    and interest rates may adversely affect KCSMs financial
    condition.
    
    inflation can adversely affect consumer purchasing power,
    thereby adversely affecting demand for the products that KCSM
    transports;
    to the extent inflation exceeds KCSMs price increases, its
    prices and revenues will be adversely affected in
    real terms; and
    if the rate of Mexican inflation exceeds the rate of the
    depreciation of the Mexican peso against the dollar, KCSMs
    dollar-denominated sales will decrease in relative terms when
    stated in constant Mexican pesos.  28-day Certificados de la Tesorería de la Federación Cetes
    Political
    developments may adversely affect KCSMs business,
    financial condition and results of operations.
        Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties   14




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##### Table of Contents



Track
    Under


Track UsageConcession


Rights


Total(In miles)Main track (includes
    143 miles of line with double track)


2,645



541



3,186Sidings under centralized traffic
    control


116







116Spurs, yard tracks and other
    sidings


481







481Total


3,242



541



3,783       Main Line Mexico City toNuevo Laredo


All Lines(In miles)Continuously welded rail


938



2,056Jointed rail


0



589Total


938



2,645Concrete ties installed


830



1,532Wood ties installed


108



1,113Total


938



2,645         Bridges,
    Tunnels and Culverts
     15




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##### Table of Contents



Equipment
        Owned

LeasedLocomotives:Total


344



113   Owned


LeasedRolling Stock:Box cars


1,166



1,068Gondolas


1,817



2,520Covered hoppers


570



2,416Flat cars


557



262Bi-level carriers






1,552Spine cars






Tank cars


71



522Cabooses


51



Open top hoppers


10



Office cars


4



Total


4,246



8,340     Item 3.
    Legal
    Proceedings  Other
    Litigation
  Disputes
    with Ferromex
  Disputes Relating to Payments for the use of Trackage and
    Haulage Rights and Interline Services.
 16




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Disputes Relating to the Exercise of Trackage
    Rights.
  Disputes Relating to the Scope of the Mandatory Trackage
    Rights. Tribunal Federal de Justicia Fiscal
    y Administrativa
  Miscellaneous
    legal proceedings
  SCT Sanction Proceedings.
  Mancera Proceeding.
  Other.
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   17




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PART II  Item 5.
    Market
    for the Companys Common Equity, Related Stockholders
    Matters and Issuer Purchases of Equity Securities      Item 6.
    Selected
    Financial Data    Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation  The following discussion and analysis relates to KCSMs
    consolidated financial condition and results of operations for
    the relevant periods and is based on, and should be read in
    conjunction with, KCSMs consolidated financial statements
    included under Item 8 of this Annual Report,
    Consolidated Financial Statements and Supplementary
    Data. The following discussion and analysis contains
    forward-looking statements that involve risks and uncertainties.
    Its actual results may differ materially from those anticipated
    in these forward-looking statements as a result of a number of
    factors, including those set forth under Item 1A of this
    Annual Report, Risk Factors. See
    Forward-Looking Statements for cautionary statements
    concerning forward-looking statements.
  Results
    of Operations
      Year
    Ended December 31, 2006 Compared to the Year Ended
    December 31, 2005
  Revenues
   18




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##### Table of Contents



Revenues


Carloads and Intermodal UnitsChange








ChangeGeneral Commodities

2006


2005(1)


Dollars


Percent


2006


2005(1)


Units


PercentChemical and petroleum products

$
145.9


$
126.5


$
19.4



15.3
%


102.0



97.0



5.0



5.2
%Forest products and metals


213.0



186.2



26.8



14.4
%


187.5



197.3



(9.8
)


(5.0
)%Agricultural and mineral


232.7



219.2



13.5



6.2
%


196.0



200.1



(4.1
)


(2.0
)%Total general commodities


591.6



531.9



59.7



11.2
%


485.5



494.4



(8.9
)


(1.8
)%Intermodal & automotive


162.4



173.0



(10.6
)


(6.1
)%


312.0



326.8



(14.8
)


(4.5
)%Carloads revenues, units and
    intermodal units


754.0



704.9



49.1



7.0
%


797.5



821.2



(23.7
)


(2.9
)%Other revenues


20.0



12.7



7.3



57.5
%Total

$
774.0


$
717.6


$
56.4



7.9
%     (1)
    
    These figures were reclassified to conform with 2006
    classification.  Chemical and petroleum products.
  Forest products and metals.
  Agricultural and mineral.
  Intermodal and Automotive.
 19




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Operating
    Expenses
    Successor


PredecessorSuccessor





For the


For theFor the


For the


Nine Months


Three MonthsYear Ended


Year Ended


Ended


EndedDecember 31,


December 31,


December 31


March 31


Change2006


2005(1)


2005


2005(1)


In Dollars


Percent(In thousands)Compensation and benefits

$
123,369


$
124,375


$
95,593


$
28,782


$
(1,006
)


(0.8
)%Purchased services


131,004



145,512



108,703



36,809



(14,508
)


(10.0
)%Fuel


112,771



106,333



83,109



23,224



6,438



6.1
%Equipment costs


97,047



102,467



80,925



21,542



(5,420
)


(5.3
)%Depreciation and amortization


89,267



88,875



67,069



21,806



392



0.4
%Casualties and insurance


8,555



16,976



14,736



2,240



(8,421
)


(49.6
)%Employees statutory profit
    sharing


5,857



41,628



41,081



547



(35,771
)


(85.9
)%Other


27,356



47,325



38,485



8,840



(19,969
)


(42.2
)%Total KCSM

$
595,226


$
673,491


$
529,701


$
143,790


$
(78,265
)


(11.6
)%     (1)
    
    These figures were reclassified to conform with 2006
    classification.  Compensation and benefits.
  Purchased services.
  Fuel.
  Equipment Cost.
  Casualties and insurance.
  Employees Statutory profit sharing.
 20




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Other.
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risks    Interest Rate Risk.
  Maturity

Fixed Rate Debt(1)


Variable Rate Debt(2)(In thousands of dollars)2007

$
3,976



20,0142008






26,6862009






Thereafter


815,000



Total

$
818,976


$
46,700     (1)
    
    Includes $460.0 million principal amount of the
    93/8% Notes,
    $180.0 million principal amount of the 2012 Senior Notes
    and $175.0 million principal amount of the 2013 Senior
    Notes.(2)
    
    On October 24, 2005, the Company refinanced the Term Loan
    facility by replacing the 2004 credit agreement with the 2005
    Credit Agreement. A hypothetical 100 basis points increase
    in each of the respective target interest indexes would result
    in additional interest expense of approximately
    $0.5 million on an annualized basis for the floating-rate
    instruments held by KCSM as of December 31, 2006.  Interest Rate Agreements.
  Foreign Exchange Risks.
     21




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##### Table of Contents



Fuel Price Risks.
  Foreign Exchange Sensitivity.
  Inflation risk.
 22




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##### Table of Contents



Item 8.
    Consolidated
    Financial Statements and Supplementary Data  Index
    to Consolidated Financial Statements
  PageConsolidated Financial Statements:Report of
    PricewaterhouseCoopers, S.C., Independent Registered Public
    Accounting Firm, regarding the year ended December 31,
    2004


24Report of KPMG
    Cárdenas Dosal, S.C., Independent Registered Public
    Accounting Firm, regarding the year ended December 31,
    2006, three months ended March 31, 2005
    (Predecessor) and nine months ended
    December 31, 2005 (Successor)


25Consolidated
    Balance Sheets at December 31, 2006 and 2005


26Consolidated
    Statements of Operations for the year ended December 31,
    2006, three months ended March 31, 2005, nine months ended
    December 31, 2005 and for the year ended December 31,
    2004


27Consolidated
    Statements of Cash Flows for the year ended December 31,
    2006, three months ended March 31, 2005, nine months ended
    December 31, 2005 and for the year ended December 31,
    2004


28Consolidated
    Statements of Changes in Stockholders Equity for the year
    ended December 31, 2006, three months ended March 31,
    2005, nine months ended December 31, 2005 and for the year
    ended December 31, 2004


29Notes to the
    Consolidated Financial Statements


30  23




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##### Table of Contents



AUDITOR
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    REPORT OF PricewaterhouseCoopers, S.C.,
     INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          
   24




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Report
    of KPMG Cárdenas Dosal, S. C., 
    Independent Registered Public Accounting Firm                   25




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##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C.V. AND SUBSIDIARIES
    (Formerly known as TFM, S.A. de C.V.)
    Consolidated Balance Sheets  Successor2006


2005(Amounts in thousands of US dollars, except equity parts)ASSETSCurrent assets:Cash and cash equivalents

$
14,434


$
7,146Accounts receivable


151,234



137,610Related company receivable
    (note 11)


34,925



35,843Inventories, net (note 6)


22,755



18,746Other current assets (note 7)


74,613



17,613Total current assets


297,961



216,958Investments held in associate
    company (note 2)


43,940



37,992Property and equipment, net
    (note 9)


681,125



593,364Concession assets, net
    (note 8)


1,303,294



1,319,848Deferred tax asset (note 13)


117,462



147,118Other assets


45,277



54,214Total assets

$
2,489,059


$
2,369,494LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Debt due within one year
    (note 10)

$
26,233


$
4,482Accounts and wages payable


114,230



65,791Related company payable
    (note 11)


45,899



13,299Accrued liabilities


95,692



111,582Total current liabilities


282,054



195,154Other liabilities:Long-term debt (note 10)


849,660



903,744Other noncurrent liabilities and
    deferred credits


113,630



116,072Total other liabilities


963,290



1,019,816Minority Interest (note 2)


(1,392
)


(1,254
)Stockholders equity
    (note 12):Common stock,
    1,107,190,000 equity parts authorized, issued par 10
    Mexican pesos


1,758,882



1,758,882Receivable under agreements with
    parent company (note 11)


(593,565
)


(661,153
)Treasury/parent shares


(561,462
)


(561,462
)Additional paid in capital


205,395



245,369Retained earnings


435,857



374,142Total stockholders equity


1,245,107



1,155,778Commitments and contingencies
    (note 15)Total liabilities and
    stockholders equity

$
2,489,059


$
2,369,494    26




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##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
    (Formerly known as TFM, S. A. de C. V.)
 Consolidated
    Statements of Operations  Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004(Amounts in thousands of US dollars)Transportation Revenues

$
773,989


$
547,547


$
170,088


$
699,224Operating expenses:Compensation and benefits


123,369



95,593



28,782



117,386Depreciation and amortization


89,267



67,069



21,806



87,582Purchased services


131,004



108,703



36,809



165,396Casualties and insurance


8,555



14,736



2,240



12,958Fuel


112,771



83,109



23,224



83,129Equipment Cost


97,047



80,925



21,542



91,775Employees statutory profit
    sharing


5,857



41,081



547



(6,556
)Other


27,356



38,485



8,840



40,350Total operating expenses


595,226



529,701



143,790



592,020Operating income


178,763



17,846



26,298



107,204Equity in net earnings (losses) of
    unconsolidated affiliates (note 2)


5,948



(1,466
)






41Interest expense


(92,676
)


(71,597
)


(27,325
)


(112,295
)Debt retirement cost


(2,580
)


(4,442
)






Exchange (loss) gain, net


(10,515
)


3,543



181



435VAT/Put settlement gain, net
    (note 5)






141,035







Other income, net


1,514



1,112



342



514Income (loss) before income taxes
    and minority interest


80,454



86,031



(504
)


(4,101
)Income tax (benefit) expense
    (note 13)


18,874



(1,464
)


(1,420
)


4,535Income (loss) before minority
    interest


61,580



87,495



916



(8,636
)Minority interest


135



212



103



534Net income (loss)

$
61,715


$
87,707


$
1,019


$
(8,102
)    27




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##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
    (Formerly known as TFM, S. A. de C. V.)
 Consolidated
    Statements of Cash Flows  Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004(Amounts in thousands of US dollars)Operating activities:Net income (loss)

$
61,715


$
87,707


$
1,019


$
(8,102
)Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


89,267



67,069



21,806



87,582Deferred income tax


18,874



(1,464
)


(1,420
)


4,535Employees statutory profit
    sharing


5,857



41,081



547



(6,556
)Equity in undistributed (earnings)
    losses of unconsolidated affiliates


(5,948
)


1,466







(41
)VAT/Put settlement gain, net






(141,035
)






Minority interest


(135
)


(212
)


(103
)


(534
)Loss on sale of assets and
    write-off of cost of properties, net






3,662



723



3,704Loss on sale of Mexrails
    shares














12,221Changes in working capital items:Accounts receivable


(13,624
)


48,088



(7,628
)


(4,719
)Accounts receivable from related
    parties


33,517



(13,350
)


106



(14,217
)Other accounts receivableInventories


(5,023
)


6,550



(3,559
)


(5,696
)Other current assets


(9,930
)


3,177



(3,051
)


(5,793
)Accounts payable and accrued
    expenses


(11,996
)


(11,353
)


28,137



(3,911
)Other, net


(7,457
)


(10,898
)


(789
)


29,005Net cash provided by operating
    activities


155,117



80,488



35,788



87,478Investing activities:Proceeds from sale of
    Mexrails shares net of cash














27,147Capital expenditures


(116,089
)


(71,982
)


(9,212
)


(41,143
)Proceeds from sale of equipment


3,115



639



238



420Net cash used in investing
    activities


(112,974
)


(71,343
)


(8,974
)


(13,576
)Financing activities:Proceeds from issuance of
    long  term debt


177,874



602,633







20,000Repayment of long  term
    debt


(204,064
)


(582,757
)


(35,520
)


(81,129
)Debt issuance cost


(8,368
)


(14,040
)






(1,785
)Other


(297
)


(13,329
)


(18
)


(339
)Net cash used in financing
    activities


(34,855
)


(7,493
)


(35,538
)


(63,253
)Cash and cash equivalents:Increase (decrease) in cash and
    cash equivalents


7,288



1,652



(8,724
)


10,649At beginning of the year/period


7,146



5,494



14,218



3,569At end of the year/period

$
14,434


$
7,146


$
5,494


$
14,218Supplemental
    information:Cash paid during the year for
    interest

$
88,825


$
83,561


$
2,012


$
97,604    28




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
    (Formerly known as TFM, S. A. de C. V.)
 Consolidated
    Statements of Changes in Stockholders Equity  Receivable Under





AdditionalCommon


Agreements with


Treasury/parent


Paid in


RetainedStock


Parent Company


Shares


Capital


Earnings


Total(Amounts in thousands of US dollars)Predecessor:Balances at December 31,
    2003

$
1,758,882


$
(661,116
)

$
(256,130
)

$



$
272,123


$
1,113,759Translation effect






(6
)














(6
)Cost of parent shares














(21,395
)


21,395



Net income


















(8,102
)


(8,102
)Balances at December 31,
    2004

$
1,758,882


$
(661,122
)

$
(256,130
)

$
(21,395
)

$
285,416


$
1,105,651Net income


















1,019



1,019Balances at March 31,
    2005

$
1,758,882


$
(661,122
)

$
(256,130
)

$
(21,395
)

$
286,435


$
1,106,670Successor:Translation effect






(31
)














(31
)Cost of shares received from the
    Government related to the VAT/PUT settlement










(305,332
)










(305,332
)Push down of additional basis from
    acquisition by shareholders














254,338







254,338Contribution of capital from parent
    resulting from cancellation of locomotive contract














12,426







12,426Net income


















87,707



87,707Balances at December 31,
    2005

$
1,758,882


$
(661,153
)

$
(561,462
)

$
245,369


$
374,142


$
1,155,778Push down of additional basis from
    acquisition by shareholders






67,588







(39,974
)






27,614Net income


















61,715



61,715Balances at December 31,
    2006

$
1,758,882


$
(593,565
)

$
(561,462
)

$
205,395


$
435,857


$
1,245,107    29




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
    (Formerly known as TFM, S. A. de C. V.)
 Notes to
    Consolidated Financial Statements

(Amounts in thousands of US dollars ($) or thousands

of Mexican pesos (Ps)) Note 1.
    Description
    of the Business  Kansas City Southern de México, S. de R.L. de C.V.
      Arrendadora KCSM S.A. de C.V
  KCSM Servicios, S.A. de C.V. sociedad anónima de capital variable
  KCSM Internacional, S.A. de C.V. sociedad anónima de capital variable
  Mexrail
  step-up
   30




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
          Ferrocarril y Terminal del Valle de México sociedad anónima de capital variable Grupo México, S.A. de C.V.
    Change in
    control
     31




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
   Basis of
    presentation
    Note 2.
    Summary
    of significant accounting policies  Principles of consolidation.
    Use of estimates.
  Segments.
  Foreign currency translation.
    Cash and cash equivalents.
 32




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
   Accounts receivable.
  Inventories.
  Concession rights and related assets.
      Property, machinery and equipment.
    KCSM Depreciation Study.
  Long-lived assets.
 33




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
    Fair value of financial instruments.
    Deferred income taxes.
  Employees statutory profit sharing.
    Debt.
  Pension and seniority premiums.
 34




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##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
      Revenue recognition.
  Leases.
    Minority interest.
  Derivative Instruments.
  Foreign exchange risk.
  Note 3.
    New
    accounting pronouncements  FIN 48.
 35




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
      EITF
    06-3. No. 06-3
  SFAS 158.
  Note 4.
    Change in
    Control      Note 5.
    Push down
    accounting and allocation of purchase price  April 1, 2005  Acquisition
    Agreement.
   36




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
        September 12, 2005 Completion of VAT/Put
    Settlement.
    Resolution
    of pre-acquisition contingencies
     37




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
      VAT/Put
  KCSM
    Acquisition of Mexican government shares
    Purchase
    Price Allocation
     38




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
    Increase in current assets

$
10.6Decrease in property and equipment


(26.9
)Increase in concession assets


288.5Decrease in deferred income tax


(87.0
)Increase in non-current assets


83.6Increase in current liabilities


(15.3
)Increase in non-current liabilities


(111.5
)Total

$
142.0         Current assets

$
268.8Property, plant and equipment


532.6Concession rights


1,335.2Other assets


215.4Total assets acquired

$
2,352.0Current liabilities

$
288.3Long-term debt acquired


802.6Other liabilities


128.2Minority Interest


(1.3
)Total liabilities acquired

$
1,217.8   Deferred
    Assets and Liabilities
   39




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
     Note 6.
    Inventories  2006


2005Materials and supplies

$
22,717


$
20,096Locomotive fuel stock


2,935



2,119Inventory obsolescence reserve


(2,897
)


(3,469
)$
22,755


$
18,746   Note 7.
    Other
    current assets  2006


2005Assets held or sale (locomotives)
    (note 15)

$
47,879


$
Favorable lease asset


11,356



11,356Prepaid expenses


455



2,938Advance to suppliers


13,693



2,154Prepaid insurance premiums


1,230



1,165$
74,613


$
17,613   Note 8.
    Concession
    assets      2006


2005Road properties

$
1,231,393


$
1,227,612Land


135,283



132,812Other


32,279



1,398,955



1,360,424Accumulated amortization


(95,661
)


(40,576
)Concession assets  net

$
1,303,294


$
1,319,848     Note 9.
    Property
    and equipment   40




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
     2006


2005Track improvement

$
324,284


$
262,605Equipment


178,007



174,395Road Properties


161,229



148,029Other


13,583



677,103



585,029Accumulated depreciation


(43,680
)


(21,816
)Net property and equipment


633,423



563,213Construction in progress


47,702



30,151Properties and
    equipment  net

$
681,125


$
593,364     Note 10.
    Long-Term
    Debt  Indebtedness Outstanding.
  2006


2005Long-term debt:Revolving credit facility,
    variable interest rate, due 2008

$



$
26,142Term loan variable interest rate,
    7.475% at December 31, 2006 due 2008


46,700



76,000101/4% Senior
    notes due 2007


3,976



150,00093/8% Senior
    notes due 2012


460,000



460,000121/2% Senior
    notes due 2012


178,635



178,38375/8% Senior
    notes due 2013


175,000



Capital lease


975



1,272865,286



891,797Fair market value adjustment
    related to purchase accounting


10,607



16,429Total


875,893



908,226Less: Debt due within one year


26,233



4,482Long-term debt

$
849,660


$
903,744   Revolving Credit Facility and Term Loans.
 41




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##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
  5 8
  provided
  101/4% Senior
    Notes. 1 4 5 8
  121/2% Senior
    Notes. 1 2
  93/8% Senior
    Notes. 3 8
 42




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
   75/8% Senior
    Notes. 5 8 1 4
    Leases
    and Debt Maturities
    Long-Term


OperatingYears

Debt


Leases


Total2007

$
26,233


$
51,575


$
77,8082008


28,913



45,017



73,9302009


2,227



39,084



41,3112010


1,993



33,833



35,826Thereafter


816,527



158,510



975,037Total

$
875,893


$
328,019


$
1,203,912   Note 11.
    Balances
    and transactions with related parties  2006


2005Accounts receivable:Mexrail

$
587


$
1,337NAFTA(1)


15,061



13,578KCS(2)


19,277



20,928$
34,925


$
35,843Accounts payable:KCS(3)

$
36,989


$
12,897Grupo KCSM(4)


6,777



Terminal Ferroviaria del Valle de
    México, S. A. de C. V.(5)


2,133



402$
45,899


$
13,299     (1)
    
    This amount is comprised primarily of a loan receivable with an
    affiliate, NAFTA Rail, S. A. de C. V.,
    denominated in Mexican pesos of Ps138.7 million
    ($12.8 million) and $1.6 million of interest as of
    December 31, 2006. 43




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
   (2)
    
    This balance is comprised mainly of severance and relocation
    reserves, car and locomotive lease and other railroad services
    as of December 31, 2006.(3)
    
    This balance is comprised mainly of management and legal fees,
    capital expenditures, car and locomotive lease and other
    railroad services as of December 31, 2006.(4)
    
    This balance is the amount payable at December 31, 2006
    related to the US dollar forward contract as described in
    note 16.(5)
    
    This amount comprised mainly railroad services as well as
    ancillary services, including those related to interconnection,
    switching and haulage services.    Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004Transportation revenues


452



346







8,148Terminal service


(24,087
)










(10,713
)Car lease


1,490



394



(91
)


(2,482
)Management fee


(16,307
)






(312
)


(2,500
)Locomotive equipment lease


(4,818
)


5,503







3,638Transition cost






(3,006
)






Severance and Relocation


(3,254
)


15,300







Capital Expenditures






(3,766
)






Other


(123
)


(394
)


(3,244
)


571     Association
    in Participation Agreement       44




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##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
    Locomotive
    Purchase Agreement    Management
    Services Agreement    Note 12.
    Stockholders
    equity      Capital Stock(Expressed in Mexican Pesos)Fix Portion


Variable PortionPartners

Class I


Class II


Number of VotesGrupo KCSM, S.A. de C.V.

$
599,990


$
11,071,300,000



1,107,189,999KCSM Holdings, LLC

$
10







1Subtotal

$
600,000


$
11,071,300,000TOTAL





$
11,071,900,000



1,107,190,000   Note 13.
    Income
    tax, employee statutory profit sharing, asset tax, and tax loss
    carryforwards  Income tax
 45




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
   Tax Expense
  Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004Current:Income Tax

$



$



$



$
7,630Tax on Assets






296







Total current






296







7,630Deferred:Deferred income tax provision
    (benefit)


18,874



(1,760
)


(1,420
)


(3,095
)Total deferred


18,874



(1,760
)


(1,420
)


(3,095
)Total income tax provision
    (benefit)


18,874



(1,464
)


(1,420
)


4,535     Deferred Tax in Additional Paid in
    Capital
  Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004Total income tax in Additional
    Paid in Capital

$
49,716


$
49,774


$



$
These amounts represent income tax
    accrued on purchase accounting adjustments.   Write off of the investment in Mexrail, Inc. 
  Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004Write off of the investment in
    Mexrail, Inc.

$



$



$




(8,034
)  46




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
  Deferred income taxes 
  2006


2005Liabilities:Machinery & Equipment

$
64,336


$
47,708Concession rights


256,664



277,462Other


11,240



Gross deferred tax liabilities


332,240



325,170Assets:Loss carryovers


(416,558
)


(421,753
)Inventories and provisions


(33,144
)


(50,535
)Gross deferred tax assets


(449,702
)


(472,288
)Net deferred tax asset

$
(117,462
)

$
(147,118
)     Tax Rates 
  Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004Income tax provision using the
    Statutory rate in effect

$
21,313


$
25,809


$
(151
)

$
(1,353
)Tax effect of:Inflationary and devaluation
    components


11,310



9,163



1,836



13,783Profit sharing














(1,967
)Tax indexation of depreciation and
    amortization


(1,777
)


(2,262
)


(505
)


(17,574
)Net exchange losses


2,893



8,975



1,199



7,088Inflation and remeasurement of
    loss carryforwards


(17,416
)


(12,526
)


(3,539
)


(24,263
)Non-deductible expenses


743



1,101



10



453Change in tax rates


2,154



306



(447
)


25,437Write off of deferred profit
    sharing






10,105







VAT Settlement






(42,311
)






Tax on Assets






296







Other  Net


(346
)


(120
)


177



2,931Income tax provision (benefit)

$
18,874


$
(1,464
)

$
(1,420
)

$
4,535Effective tax rate


(26
)%


(2
)%


282
%


(111
)%  47




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
  Employees Statutory Profit Sharing 
  Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004Deferred Profit Sharing

$
5,857


$
41,081


$
547


$
(6,556
)   Deferred Profit Sharing in Additional Paid in
    Capital
  Successor


PredecessorNine Months


Three MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


March 31,


December 31,2006


2005


2005


2004Total profit sharing in additional
    paid in capital

$
24,588


$
43,596







       2006


2005Liabilities:Machinery & Equipment

$
27,297


$
23,344Concession rights


21,666



16,661Gross deferred profit sharing
    liabilities


48,963



40,005Assets:Inventories and provisions


(10,451
)


(11,124
)Gross deferred tax assets


(10,451
)


(11,124
)Net deferred profit sharing
    liability

$
38,512


$
28,881     Asset tax
 48




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
   NOL carryforwards
  Inflation-IndexedAmount as ofDecember 31,Year in Which Loss Arose

2006


Year of Expiration1998


342,796



20461999


10,594



20462000


186,860



20462001


80,481



20462002


461,489



20462003


335,641



20462005


30,689



20152006


39,158



2016$
1,487,708       Note 14.
    Pension
    Plan      Net
    Periodic Benefit Cost, Plan Obligation, and Funded
    Status
    December 31,2006


2005Service cost

$
1.7


$
1.1Interest cost


1.0



0.6Actuarial (gain) loss(i)


(2.6
)


0.7Net periodic cost (benefit)
    recognized

$
0.1


$
2.4  49




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
    (i)
    
    Net benefit costs above do not include a component for the
    amortization of actuarial gains or losses as the Companys
    policy is to recognize such gains and losses immediately.    December 31,2006


2005Benefit obligation, beginning of
    year

$
12.4


$
10.0Service cost


1.7



1.1Interest cost


1.0



0.6Actuarial (gain) loss


(2.6
)


0.7Benefits paid, net of retiree
    contributions


(0.4
)


Benefit obligation, end of year

$
12.1


$
12.4     Assumptions
    December 31,2006


2005Discount rate


8.00
%


8.00
%Rate of compensation increase


5.00
%


5.50
%     December 31,2006


2005Discount rate


8.00
%


8.00
%Rate of compensation increase


5.00
%


5.50
%   Cash
    Flows
    ExpectedYear

Payments2007

$
1.02008


0.32009


0.42010


0.52011


0.72012-2016


8.9  50




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
  Note 15.
    Commitments
    and contingencies  Commitments:
  Concession duty.
  Acquisitions of Locomotives.
  Letter of Intent.
  Contingencies:
  Litigation.
     51




---



##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
   Disputes
    with Ferromex
  Disputes Relating to Payments for the use of Trackage and
    Haulage Rights and Interline Services.
  Disputes Relating to the Exercise of Trackage
    Rights.
  Disputes Relating to the Scope of the Mandatory Trackage
    Rights. Tribunal Federal de Justicia Fiscal
    y Administrativa
  Mexican
    Antitrust investigation
    SCT
    Sanction Proceedings
   52




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##### Table of Contents



KANSAS
    CITY SOUTHERN DE MEXICO, S. DE R.L. DE C. V. AND SUBSIDIARIES
  (Formerly
    known as TFM, S. A. de C.
    V.)  (Continued)
  Mancera
    Proceeding
    Income
    Taxes
      Locomotive
    Maintenance Agreement
    Locomotive
    Purchase Agreement
    Note 16.
    Financial
    instruments     53




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##### Table of Contents



Foreign currency balances.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-K
    Item 9B.
    Other
    Information   PART III  Items 10, 11,
    12 and 13.
    Directors,
    Executive Officers and Corporate Governance, Executive
    Compensation, Security Ownership of Certain Beneficial Owners
    and Management, and Certain Relationships and Related
    Transactions  Form 10-K.
 54




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##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services    Year Ended December 31,2006


2005(Figures in thousands of U.S. Dollars)Audit fees(1)

$
1,796.0


$
474.7Audit-related fees(2)






51.0Tax fees(3)






All other fees(4)






38.2Total

$
1,796.0


$
563.9     (1)
    
    Audit fees include fees for services performed by the
    independent accountants for the audit or review of financial
    statements. Audit fees also include fees for services provided
    by the independent accountants in connection with statutory and
    regulatory filings or engagements, comfort letters, statutory
    audits, attest services, consents and assistance with and review
    of documents filed with the SEC.(2)
    
    Audit-related fees include fees for employee benefit plan
    audits, accounting consultations and audits in connection with
    internal control reviews, attest services that are not required
    by statute or regulation and consultation concerning financial
    accounting and reporting standards.(3)
    
    Tax fees include fees for tax compliance, tax planning and tax
    advice. Tax compliance generally involves preparation of
    original and amended tax returns, claims for refund and tax
    payment-planning services. Tax planning and tax advice encompass
    assistance with tax audits and appeals, employee benefit plans
    and requests for rulings or technical advice from taxing
    authorities.(4)
    
    All other fees include fees for services other than those
    described in the above categories. Each of KCSMs and Grupo
    KCSMs board of directors pre-approves annually specific
    audit and non-audit services that may be performed by PWC, as
    well as the budgeted fee levels for each of these services. PWC
    provided for the years ended December 31, 2002, 2003 and
    2004 a report to each of KCSMs and Grupo KCSMs board
    of directors in order for each of KCSMs and Grupo
    KCSMs board of directors to review the services that PWC
    provided , as well as the status and cost of those services.
    KPMG Cárdenas Dosal S.C. its independent accountant is
    providing this services for the year ended December 31,
    2006 and 2005. PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules    (a)(1)
    Financial Statements:
   55




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##### Table of Contents



(a)(2)
    Financial Statement Schedules
  (b)
    Exhibits  Exhibit No.

Exhibit3
.1

Current Corporate By-laws
    (Estatutos Sociales) of Kansas City Southern de México,
    S.A. de C.V. (formerly known as TFM, S.A. de C.V.), as amended
    and restated on December 20, 2006, together with an English
    translation (incorporated by reference to Exhibit 99.1 to
    its Current Report on
    Form 8-K
    filed on December 27, 2006, File
    No. 333-08322)4
.1

Indenture, dated as of
    June 16, 1997, among TFM, Grupo TFM, The Bank of New York,
    as Trustee, and Bankers Trust Luxembourg, S.A., as a Paying
    Agent, covering up to $150,000,000 of TFMs
    10.25% Senior Notes due 2007 (incorporated herein by
    reference to Exhibit 4.1 of its Registration Statement on
    Form F-4,
    File
    No. 333-8322)4
.2

First Supplemental Indenture,
    dated as of May 21, 2002, among TFM, Grupo TFM, S.A. de
    C.V., as guarantor, The Bank of New York, as trustee, and
    Deutsche Bank Luxembourg S.A., as the paying agent, to the
    Indenture, dated June 16, 1997 (incorporated herein by
    reference to Exhibit 2.2 of its annual report on
    Form 20-F
    for fiscal year 2002, File
    No. 333-102222)4
.3

Indenture, dated as of
    June 13, 2002, between TFM and The Bank of New York, as
    Trustee, covering up to $180,000,000 of TFMs
    12.50% Senior Notes due 2012 (incorporated herein by
    reference to Exhibit 4.3 of its Registration Statement on
    Form F-4,
    File
    No. 333-8322)4
.4

Indenture, dated as of
    April 19, 2005, between TFM and The Bank of Nova Scotia
    Trust Company of New York, covering up to $460,000,000 of
    TFMs
    93/8% Senior
    Notes due 2012 (incorporated herein by reference to
    Exhibit 4.2 of its Current Report on
    Form 8-K
    filed on April 25, 2005, File
    No. 333-8322)4
.8

Registration Rights Agreement,
    dated as of April 19, 2005, between TFM and the Placement
    Agents (incorporated herein by reference to its Current Report
    on
    Form 8-K
    filed on April 25, 2005,
    Filed No. 333-08322)4
.9

Second Supplemental Indenture,
    dated as of November 21, 2006, among Kansas City Southern
    de México, S.A. de C.V., as Issuer, The Bank of New York,
    as Trustee, Deutsche Bank Luxembourg S.A. to the Indenture,
    dated June 16, 1997 (incorporated herein by reference to
    Exhibit 4.1 of its Current Report on
    Form 8-K,
    filed November 28, 2006, File
    No. 333-08322)4
.10

Indenture, dated as of
    November 21, 2006, between Kansas City Southern de
    México, S.A. de C.V. and U.S. Bank National
    Association, covering up to $175,000,000 of KCSMs
    7.625% Senior Notes due 2013 (incorporated herein by
    reference to Exhibit 4.2 of its Current Report on
    Form 8-K,
    filed November 28, 2006, File
    No. 333-08322)4
.11

Registration Right Agreement,
    dated as of November 21, 2006, among Kansas City Southern
    de México, S.A. de C.V., Morgan Stanley & Co.
    Incorporated, Banc of America Securities LLC, BBVA Securities
    Inc., BMO Capital Markets Corp., and Scotia Capital (USA) Inc.
    (incorporated herein by reference to Exhibit 4.3 of its
    Current Report on
    Form 8-K,
    filed November 28, 2006,
    File No. 333-08322)10
.1

Concession title granted by the
    Secretaria de Comunicaciones y Transportes (Ministry of
    transportation) (SCT) in favor of Ferrocarril del
    Noreste, S.A. de C.V., (FNE), dated December 2,
    1996, together with an English translation (incorporated herein
    by reference to Exhibit 2.1 of its Registration Statement
    on
    Form F-4,
    File
    No. 333-8322)10
.2

Amendment, dated February 12,
    2001, of Concession title granted by the Ministry of
    Transportation in favor of TFM, formerly known as FNE,
    December 2, 1996, together with an English translation
    (incorporated herein by reference to Exhibit 4.2 from TFM
    and Grupo TFMs Annual Report on
    Form 20-F
    for fiscal year 2000)10
.3

Sale Purchase Agreement respecting
    Capital Stock of FNE, among the United Mexican States (through
    the Ministry of Transportation), FNE and Ferrocarriles
    Nacionales de Mexico, S.A. de C.V. (FNM), dated
    December 2, 1996, together with an English translation
    (incorporated herein by reference to Exhibit 2.2 of its
    Registration Statement on
    Form F-4,
    File
    No. 333-8322)10
.4

Sale Purchase Agreement respecting
    Property and Equipment, among the United Mexican States (through
    the Ministry of Transportation), FNE and FNM, dated
    December 2, 1996, together with an English translation
    (incorporated herein by reference to Exhibit 2.3 of its
    Registration Statement on
    Form F-4,
    File
    No. 333-8322) 56




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##### Table of Contents



Exhibit No.

Exhibit10
.5

Stock Purchase Agreement, dated as
    of August 16, 2004, by and among TFM, KCS and Grupo TMM,
    S.A. de C.V. (incorporated herein by reference to
    Exhibit 4.7 of its annual report on
    Form 20-F
    for fiscal year 2004, File
    No. 333-8322)10
.6

Omnibus Agreement, dated
    June 9, 1997, among Grupo TFM, Caymex Transportation, Inc.,
    TMM Multimodal, S.A. de C.V. and FNM, together with an English
    translation (incorporated herein by reference to
    Exhibit 10.5 of its Registration Statement on
    Form F-4,
    File
    No. 333-102222)10
.7

English translation of the
    Purchase-Sale Agreement, dated July 29, 2002, by and
    between TFM, FNM and Nacional Financiera, S.N.C., Institucion de
    Banca de Desarrollo (incorporated herein by reference to
    Exhibit 10.16 of its Registration Statement on
    Form F-4,
    File
    No. 333-102222)10
.8

Credit Agreement dated as of
    October 24, 2005, among TFM, as Borrower, Arrendora TFM,
    S.A. de C.V., as Guarantor, Bank of America, N.A. as
    Administrative Agent, BBVA Bancomer, S.A. Institucion de Banco
    Multiple, Grupo Financiero BBVA Bankcomer, as Collateral Agent,
    and BBVA Securities, Inc. and Banc of America Securities, LLC as
    Arrangers (incorporated herein by reference to exhibit 10.9
    of its Registration Statement on
    Form S-4,
    File
    No. 333-129566)10
.9

Compliance and Settlement
    Agreement dated as of September 12, 2005 among TFM, Grupo
    TFM, Kansas City Southern, and the Federal Government of the
    United Mexican States (incorporated herein by reference to
    Exhibit 10.1 of its Current Report on
    Form 8-K,
    File
    No. 333-83220)10
.10

Amendment No. 1 and Waiver
    No. 1 to the Credit Agreement, dated as of April 7,
    2006 among KCSM, as Borrower, Arrendaderra TFM, S.A. de C.V., as
    Guarantor, Bank of America, as Administrative Agent, BBVA
    Bancomer, S.A. Institución de Banco Multiple, Grupo
    Financiero BBVA Bancomer, as Collateral Agent, and certain other
    Lenders, is attached hereto as Exhibit 10.10.10
.11

Employment Agreement, dated as of
    April 20, 2006 between Kansas City Southern de México,
    S.A. de C.V. and José Guillermo Zozaya Delano (incorporated
    herein by reference to its Quarterly Report on
    Form 10-Q,
    filed May 10, 2006, File
    No. 333-08322).12
.1

Computation of Ratio of Earnings
    to Fixed Charges is attached hereto as Exhibit 12.131
.1

Certification of José
    Guillermo Zozaya Delano, President and Executive Representative
    of the Company pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002 is attached hereto as
    Exhibit 31.1.31
.2

Certification of Patrick J.
    Ottensmeyer Chief Financial Officer of the Company pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 is attached
    hereto as Exhibit 31.2.32
.1

Certification of José
    Guillermo Zozaya Delano, President and Executive Representative
    of the Company, and Patrick J. Ottensmeyer, Chief Financial
    Officer of the Company, pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002 is attached hereto as
    Exhibit 32.1.  57




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##### Table of Contents



SIGNATURES      By
    /s/  José
    Guillermo Zozaya Delano       Signature

Title

Date/s/  Michael
    R. HavertyMichael
    R. Haverty

President of the Board of Managers

February 26, 2007./s/  Patrick
    J. OttensmeyerPatrick
    J. Ottensmeyer

Chief Financial Officer (Principal
    Financial Officer)

February 26, 2007./s/  Michael
    K. BorrowsMichael
    K. Borrows

Chief Accounting Officer
    (Principal Accounting Officer)

February 26, 2007/s/  Arthur
    L. ShoenerArthur
    L. Shoener

Vice President of the Board of
    Managers

February 26, 2007./s/  James
    R. JonesJames
    R. Jones

Manager

February 26, 2007./s/  Larry
    M. LawrenceLarry
    M. Lawrence

Manager

February 26, 2007.  58