##### 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 1934
 For the fiscal year ended December 31, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission File Number 333-08322
 KANSAS CITY SOUTHERN DE MÉXICO, S.A. 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 Mexico  (Translation of Registrants name into English)
 MÉXICO(State or other jurisdiction of 
incorporation or organization)
    
    (KCSM LOGO)
    
    N/A(I.R.S. Employer
Identification No.)Montes Urales 625
Lomas de Chapultepec 
11000 México, D.F. 
México(Address of Principal Executive Offices)
 + (5255) 9178-5686  (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
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
    DOCUMENTS INCORPORATED BY REFERENCE:




---



##### 



Kansas City Southern de México, S.A. de C.V. and Subsidiaries
2007 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
    
    15Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    15PART IIItem 5.
    
    Market for the Companys Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    15Item 6.
    
    Selected Financial Data
    
    15Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    15Item 7A
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    19Item 8.
    
    Financial Statements and Supplementary Data
    
    22Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    52Item 9A.
    
    Controls and Procedures
    
    52Item 9A(T)
    
    Controls and Procedures
    
    52Item 9B.
    
    Other Information
    
    52PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    52Item 11.
    
    Executive Compensation
    
    52Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    52Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    52Item 14.
    
    Principal Accountant Fees and Services
    
    52PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    53Signatures
    
    
    
    56Amendment No.1 and Waiver No.1 to the Credit AgreementComputation of Ratio of Earnings to Fixed ChargesConsent of KPMG Cardenas Dosal, S.C.Section 302 CertificationSection 302 CertificationSection 906 CertificationSection 906 Certification
  2




---



##### Table of Contents



Cautionary Statement Regarding Forward-Looking Statements
  
 Part I
 
 Item 1. Business
 COMPANY HISTORY
    sociedad de responsabilidad limitada de capital variable
 sociedad de responsabilidad limitada de capital
variable to a sociedad anónima de capital variable (Registro Público de
Comercio)
 3




---



##### Table of Contents



BUSINESS OVERVIEW
  Ferrosur, S.A. de C.V
   Kansas City Southern
   
 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




---



##### Table of Contents




    
    KCSM will have to dedicate a substantial portion of its cash flow from operations to the
payment of principal, premium, if any, and 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 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 U.S. dollar could impact its ability to service debt; and
 
    
    KCSM may be at a disadvantage compared to KCSMs competitors that have less leverage and
greater operating and financing flexibility than the Company does.
 Failure to comply with restrictive covenants in KCSMs existing contractual arrangements could
accelerate KCSMs repayment obligations under its debt.
     Risk
Factors Relating to Ongoing Litigation
  Mancera Proceeding.
  5




---



##### Table of Contents



Risk Factors Relating to KCSMs Business
 KCSM may not be successful at reducing its operating costs and increasing its operating
efficiencies.
  KCSMs Concession is subject to revocation or termination in certain circumstances which would
prevent KCSM from operating its railroad and would have a material adverse effect on its business
and financial condition.
 Secretaría de Comunicaciones y
Transportes
 Comision Federal de Competencia
   6




---



##### Table of Contents



Failure to make capital expenditures could result in the revocation of KCSMs Concession and
adversely affect its financial condition.
    7




---



##### Table of Contents



KCSM
competes against other railroads and other transportation providers.
    Ferrocarril Méxicano, S.A. de C.V.
  8




---



##### Table of Contents



A portion of KCSMs transportation revenues has historically been derived from the automotive
industry, which has had difficulties in recent years.
  KCSM s business strategy, operations and growth rely significantly on agreements with other
railroads and third parties.
  Ferrocarril y Terminal del Valle de México, S.A. de
C.V.
 9




---



##### Table of Contents



st
  Downturns in the U.S. economy, Mexican economy, U.S.-México 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.
    10




---



##### Table of Contents



Traffic congestion or similar problems experienced in the U.S. or Mexican railroad system may
adversely affect KCSMs operations.
  If KCSMs primary fuel supply contract is terminated, or if fuel prices substantially increase,
its financial condition could be materially adversely affected.
 PEMEX Refinación,
 KCSM faces possible catastrophic loss and liability, and its insurance may not be sufficient to
cover its damages or damages to others.
  KCSMs business is subject to environmental, health, and safety laws and regulations that could
require KCSM to incur material costs or liabilities relating to environmental, health, or safety
compliance or remediation.
  Secretaria del
Medio Ambiente y Recursos Naturales,
 11




---



##### Table of Contents



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.
 Sindicato de Trabajadores Ferrocarrileros de la República Mexicana
  KCSMs controlling stockholders interests may be different from KCSMs.
  Risk Factors Relating to México
 Governmental policies and economic developments in México and elsewhere may adversely affect
KCSMs financial condition.
  KCSMs operations are subject to economic and political risks.
  12




---



##### Table of Contents



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.
 Certificados de la Tesorería de la Federación Cetes
  13




---



##### Table of Contents



Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties
  Track
  2007
    
    2006
    
    2005Route milesmain and branch line
    
    
    2,661
    
    
    
    2,645
    
    
    
    2,639Total track miles
    
    
    3,254
    
    
    
    3,242
    
    
    
    3,266Miles of welded rail in service
    
    
    2,258
    
    
    
    2,056
    
    
    
    2,050Main line welded rail percent
    
    
    85
    %
    
    
    78
    %
    
    
    78
    %Cross ties replaced
    
    
    230,963
    
    
    
    214,020
    
    
    
    239,973
   2007
    
    
    2006
    
    
    2005Leased
    
    
    Owned
    
    
    Leased
    
    
    Owned
    
    
    Leased
    
    
    OwnedLocomotives
    
    
    105
    
    
    
    315
    
    
    
    113
    
    
    
    344
    
    
    
    75
    
    
    
    323Rolling Stock:Box cars
    
    
    1,069
    
    
    
    1,107
    
    
    
    1,068
    
    
    
    1,166
    
    
    
    1,278
    
    
    
    1,187Gondolas
    
    
    2,519
    
    
    
    1,771
    
    
    
    2,520
    
    
    
    1,817
    
    
    
    2,922
    
    
    
    1,824Covered hoppers
    
    
    2,360
    
    
    
    562
    
    
    
    2,416
    
    
    
    580
    
    
    
    2,518
    
    
    
    580Flat cars (intermodal and other)
    
    
    111
    
    
    
    552
    
    
    
    262
    
    
    
    557
    
    
    
    261
    
    
    
    557Auto racks
    
    
    1,555
    
    
    
    
    
    
    
    1,552
    
    
    
    
    
    
    
    1,556
    
    
    
    Tank cars
    
    
    503
    
    
    
    69
    
    
    
    522
    
    
    
    71
    
    
    
    611
    
    
    
    71Other
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    55Total
    
    
    8,117
    
    
    
    4,116
    
    
    
    8,340
    
    
    
    4,246
    
    
    
    9,146
    
    
    
    4,274
 Average age (in years):
    
    2007
    
    2006
    
    2005Road locomotives
    
    
    12.4
    
    
    
    16.4
    
    
    
    15.1All locomotives
    
    
    16.2
    
    
    
    18.8
    
    
    
    17.6
 14




---



##### Table of Contents



Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 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. KCSMs 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
     15




---



##### Table of Contents



sociedad de responsabilidad limitada de capital
variable sociedad anónima de capital variable
  Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006
 Revenues (in millions) (in thousands)
 Revenues
    
    
    Carloads and Intermodal UnitsChange
    
    
    
    
    
    
    
    
    
    
    ChangeBusiness Sector
    
    2007
    
    
    2006
    
    
    Dollars
    
    
    Percent
    
    
    2007
    
    
    2006
    
    
    Units
    
    
    PercentChemical and petroleum
    
    $
    136.0
    
    
    $
    127.9
    
    
    $
    8.1
    
    
    
    6
    %
    
    
    80.3
    
    
    
    80.4
    
    
    
    (0.1
    )
    
    
    Forest products and metals
    
    
    245.8
    
    
    
    247.9
    
    
    
    (2.1
    )
    
    
    (1
    )%
    
    
    206.1
    
    
    
    235.2
    
    
    
    (29.1
    )
    
    
    (12
    )%Agricultural and mineral
    
    
    208.3
    
    
    
    195.0
    
    
    
    13.3
    
    
    
    7
    %
    
    
    144.6
    
    
    
    145.0
    
    
    
    (0.4
    )
    
    
    Total general commodities
    
    
    590.1
    
    
    
    570.8
    
    
    
    19.3
    
    
    
    3
    %
    
    
    431.0
    
    
    
    460.6
    
    
    
    (29.6
    )
    
    
    (6
    )%Intermodal & automotive
    
    
    179.9
    
    
    
    162.4
    
    
    
    17.5
    
    
    
    11
    %
    
    
    348.5
    
    
    
    312.0
    
    
    
    36.5
    
    
    
    12
    %Coal
    
    
    22.7
    
    
    
    20.8
    
    
    
    1.9
    
    
    
    9
    %
    
    
    25.5
    
    
    
    24.9
    
    
    
    0.6
    
    
    
    2
    %Carloads revenues, units and intermodal units
    
    
    792.7
    
    
    
    754.0
    
    
    
    38.7
    
    
    
    5
    %
    
    
    805.0
    
    
    
    797.5
    
    
    
    7.5
    
    
    
    1
    %Other revenues
    
    
    20.5
    
    
    
    20.0
    
    
    
    0.5
    
    
    
    3
    %Total revenues (i)
    
    $
    813.2
    
    
    $
    774.0
    
    
    $
    39.2
    
    
    
    5
    %(i) Included in revenues:Fuel surcharge
    
    $
    52.6
    
    
    $
    43.7
 16




---



##### Table of Contents



Revenues by commodity 
group for 2007Chemical and petroleum.Revenues increased $8.1 million for the year ended December 31, 2007
compared to the same period in 2006, due to targeted price increases and increases in shipments of soda ash in the chemicals channel and plastic import products, partially offset by a decrease in
volumes in plastic exports.
    
    (PIE CHART)Forest products and metals.Revenues decreased $2.1 million for the year
ended December 31, 2007 compared to the same period in 2006, due to a
reduction of beer export shipments in the other channel, and reductions in
pulp paper as well as lower appliance shipments in the domestic market.
    
    (PIE CHART)Agricultural and mineral.Revenues from agricultural and mineral products
increased $13.3 million for the year ended December 31, 2007 compared to
the same period in 2006. The increase in revenue is a result of targeted
price increases across all channels and increased cross border business due
to higher import shipments of grain and grain products, partially offset
by a reduction in traffic at the ports of Veracruz and Altamira, mainly
impacting the grain channel.
    
    (PIE CHART)
 Intermodal and automotive.
 Coal.
 17




---



##### Table of Contents



Operating Expenses (in millions).
 Change2007
    
    
    2006
    
    
    In Dollars
    
    
    PercentCompensation and benefits
    
    $
    135.0
    
    
    $
    129.2
    
    
    $
    5.8
    
    
    
    4
    %Purchased services
    
    
    106.6
    
    
    
    131.0
    
    
    
    (24.4
    )
    
    
    (19
    )%Fuel
    
    
    119.7
    
    
    
    112.8
    
    
    
    6.9
    
    
    
    6
    %Equipment costs
    
    
    106.8
    
    
    
    97.0
    
    
    
    9.8
    
    
    
    10
    %Depreciation and amortization
    
    
    96.7
    
    
    
    89.3
    
    
    
    7.4
    
    
    
    8
    %Casualties and insurance
    
    
    11.1
    
    
    
    8.5
    
    
    
    2.6
    
    
    
    31
    %Materials and other
    
    
    21.7
    
    
    
    27.4
    
    
    
    (5.7
    )
    
    
    (21
    )%Total operating expenses
    
    $
    597.6
    
    
    $
    595.2
    
    
    $
    2.4
    
    
    
    
 Compensation and benefits.
 Purchased services.
 Fuel.
 Equipment Cost.
 Depreciation and amortization.
 Casualties and insurance.
 Materials and other.
 LIQUIDITY AND CAPITAL RESOURCES
    18




---



##### Table of Contents



3 8 3 8 3 8 3 8 pari passu 3 8 1 2 3 8 3 8 3 8
 1 4 1 2
  KCSMs
minimum capital investments obligation
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risks
  Interest Rate Risk. (in millions).
 19




---



##### Table of Contents



Fixed Rate
    
    
    Variable RateMaturity
    
    Debt(1)
    
    
    Debt(2)2008
    
    $
    
    
    
    $
    2009
    
    
    
    
    
    
    2010
    
    
    
    
    
    
    2011
    
    
    
    
    
    
    20.02012
    
    
    460.0
    
    
    
    30.0Thereafter
    
    
    340.0
    
    
    
    Total
    
    $
    800.0
    
    
    $
    50.0
 
 (1)
    
    Includes $460.0 million principal amount of the 93/8% Senior Notes,
$175.0 million principal amount of the 75/8% Senior Notes, and $165.0
million of the 73/8% Senior Notes.(2)
    
On June 14, 2007, KCSM refinanced its bank Credit Agreement dated
October 24, 2005, with the 2007 Credit Agreement. A hypothetical 100
basis points increase in 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, 2007.  Interest Rate Agreements.
 Foreign Exchange Risks.
    Foreign currency balances.
 Fuel Price Risks.
 Foreign Exchange Sensitivity.
 20




---



##### Table of Contents



Inflation risk.
 21




---



##### Table of Contents



Item 8. Consolidated Financial Statements and Supplementary Data
 Index to Consolidated Financial Statements
 PageConsolidated Financial Statements:Managements Report on Internal Control Over Financial Reporting
    
    
    23Report of KPMG LLP, Independent Registered Public Accounting Firm,
regarding the year ended December 31, 2007
    
    
    24Report of KPMG Cárdenas Dosal, S.C., Independent Registered Public
Accounting Firm, regarding the years ended December 31, 2006, the three months ended March 31, 2005 (Predecessor) and the
nine months ended December 31, 2005 (Successor)
    
    
    25Consolidated Statements of Operations for the year ended December 31,
2007 and 2006, the three months ended March 31, 2005 and the nine
months ended December 31, 2005
    
    
    26Consolidated Balance Sheets at December 31, 2007 and 2006
    
    
    27Consolidated Statements of Cash Flows for the year ended December 31,
2007 and 2006, the three months ended March 31, 2005 and the nine
months ended December 31, 2005
    
    
    28Consolidated Statements of Changes in Stockholders Equity for the
year ended December 31, 2007 and 2006, the three months ended March
31, 2005 and the nine months ended December 31, 2005
    
    
    29Notes to the Consolidated Financial Statements
    
    
    30
 22




---



##### Table of Contents



Managements Report on Internal Control over Financial Reporting
   Internal Control  Integrated Framework
  23




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
 24




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
        25




---



##### Table of Contents



Kansas City Southern de México, S.A. 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
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2005
    
    
    2005(In millions)Transportation Revenues
    
    $
    813.2
    
    
    $
    774.0
    
    
    $
    547.5
    
    
    $
    170.1Operating expenses:Compensation and benefits
    
    
    135.0
    
    
    
    129.2
    
    
    
    136.7
    
    
    
    29.3Purchased services
    
    
    106.6
    
    
    
    131.0
    
    
    
    108.7
    
    
    
    36.8Fuel
    
    
    119.7
    
    
    
    112.8
    
    
    
    83.1
    
    
    
    23.2Equipment Cost
    
    
    106.8
    
    
    
    97.0
    
    
    
    80.9
    
    
    
    21.5Depreciation and amortization
    
    
    96.7
    
    
    
    89.3
    
    
    
    67.1
    
    
    
    21.8Casualties and insurance
    
    
    11.1
    
    
    
    8.5
    
    
    
    14.7
    
    
    
    2.3Materials and other
    
    
    21.7
    
    
    
    27.4
    
    
    
    38.5
    
    
    
    8.9Total operating expenses
    
    
    597.6
    
    
    
    595.2
    
    
    
    529.7
    
    
    
    143.8Operating income
    
    
    215.6
    
    
    
    178.8
    
    
    
    17.8
    
    
    
    26.3Equity in net earnings (losses) of
unconsolidated affiliates
    
    
    5.7
    
    
    
    5.9
    
    
    
    (1.5
    )
    
    
    Interest expense
    
    
    (87.9
    )
    
    
    (92.7
    )
    
    
    (71.6
    )
    
    
    (27.3
    )Debt retirement cost
    
    
    (6.9
    )
    
    
    (2.6
    )
    
    
    (4.4
    )
    
    
    Foreign exchange (loss) gain, net
    
    
    (0.9
    )
    
    
    (10.5
    )
    
    
    3.6
    
    
    
    0.2VAT/Put settlement gain, net
    
    
    
    
    
    
    
    
    
    
    141.0
    
    
    
    Other income, net
    
    
    2.9
    
    
    
    1.5
    
    
    
    1.1
    
    
    
    0.3Income (loss) before income taxes and minority interest
    
    
    128.5
    
    
    
    80.4
    
    
    
    86.0
    
    
    
    (0.5
    )Income tax expense (benefit)
    
    
    30.7
    
    
    
    18.8
    
    
    
    (1.5
    )
    
    
    (1.4
    )Income before minority interest
    
    
    97.8
    
    
    
    61.6
    
    
    
    87.5
    
    
    
    0.9Minority interest
    
    
    
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1Net income
    
    $
    97.8
    
    
    $
    61.7
    
    
    $
    87.7
    
    
    $
    1.0
  26




---



##### Table of Contents



Kansas City Southern de México, S.A. de C.V. and Subsidiaries
(Formerly known as TFM, S.A. de C.V.)
 Consolidated Balance Sheets
 Successor2007
    
    
    2006(In millions, exceptshare amounts)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    16.9
    
    
    $
    14.4Accounts receivable, net
    
    
    109.4
    
    
    
    151.2Related company receivable (note 13)
    
    
    38.4
    
    
    
    34.9Inventories, net (note 7)
    
    
    30.7
    
    
    
    22.8Deferred tax asset (note 16)
    
    
    159.1
    
    
    
    Other current assets (note 8)
    
    
    32.4
    
    
    
    74.6Total current assets
    
    
    386.9
    
    
    
    297.9Investments (note 6)
    
    
    49.6
    
    
    
    43.9Property and equipment, net of accumulated depreciation of $45.8 and
$43.7 at December 31, 2007 and 2006 (note 10)
    
    
    872.8
    
    
    
    681.1Concession assets, net of accumulated amortization of $129.2 and $95.7
at December 31, 2007 and 2006 (note 9)
    
    
    1,215.5
    
    
    
    1,303.3Related company receivable (note 13)
    
    
    3.8
    
    
    
    Deferred tax asset (note 16)
    
    
    
    
    
    
    117.5Other assets
    
    
    40.3
    
    
    
    45.3Total assets
    
    $
    2,568.9
    
    
    $
    2,489.0LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Debt due within one year (note 12)
    
    $
    0.3
    
    
    $
    26.2Accounts and wages payable
    
    
    46.7
    
    
    
    114.2Related company payable (note 13)
    
    
    59.9
    
    
    
    45.9Accrued liabilities (note 11)
    
    
    97.2
    
    
    
    95.7Total current liabilities
    
    
    204.1
    
    
    
    282.0Other liabilities:Long-term debt (note 12)
    
    
    850.4
    
    
    
    849.7Related company payable (note 13)
    
    
    21.8
    
    
    
    Deferred tax liability (note 16)
    
    
    52.8
    
    
    
    Other noncurrent liabilities and deferred credits (note 14)
    
    
    101.1
    
    
    
    113.6Total other liabilities
    
    
    1,026.1
    
    
    
    963.3Minority Interest
    
    
    
    
    
    
    (1.4
    )Commitments and contingencies (note 18)Stockholders equity (note 15):Common stock, 4,785,510,235 shares authorized, issued without par value
    
    
    608.3
    
    
    
    1,758.9Receivable under agreements with parent company
    
    
    
    
    
    
    (593.6
    )Treasury/parent shares
    
    
    
    
    
    
    (561.5
    )Additional paid in capital
    
    
    243.6
    
    
    
    205.4Retained earnings
    
    
    487.6
    
    
    
    435.9Accumulated other comprehensive (loss)
    
    
    (0.8
    )
    
    
    Total stockholders equity
    
    
    1,338.7
    
    
    
    1,245.1Total liabilities and stockholders equity
    
    $
    2,568.9
    
    
    $
    2,489.0
  27




---



##### Table of Contents



Kansas City Southern de México, S.A. 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
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2005
    
    
    2005(In millions)Operating activities:Net income
    
    $
    97.8
    
    
    $
    61.7
    
    
    $
    87.7
    
    
    $
    1.0Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    96.7
    
    
    
    89.3
    
    
    
    67.1
    
    
    
    21.8Deferred income tax
    
    
    30.7
    
    
    
    18.8
    
    
    
    (1.5
    )
    
    
    (1.4
    )Deferred compensation
    
    
    (2.1
    )
    
    
    5.9
    
    
    
    41.1
    
    
    
    0.6Debt retirement cost
    
    
    6.9
    
    
    
    
    
    
    
    
    
    
    
    Equity in undistributed (earnings) losses
of unconsolidated affiliates
    
    
    (5.7
    )
    
    
    (5.9
    )
    
    
    1.5
    
    
    
    VAT/Put settlement gain, net
    
    
    
    
    
    
    
    
    
    
    (141.0
    )
    
    
    Minority interest
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    (0.1
    )Loss (gain) on sale of assets
    
    
    (0.2
    )
    
    
    
    
    
    
    3.7
    
    
    
    0.7Changes in working capital items:Accounts receivable
    
    
    41.9
    
    
    
    (13.6
    )
    
    
    48.1
    
    
    
    (7.6
    )Related parties
    
    
    30.8
    
    
    
    33.5
    
    
    
    (13.4
    )
    
    
    0.1Inventories
    
    
    (7.9
    )
    
    
    (5.0
    )
    
    
    6.5
    
    
    
    (3.6
    )Other current assets
    
    
    57.2
    
    
    
    (10.0
    )
    
    
    3.2
    
    
    
    (3.0
    )Accounts payable and accrued liabilities
    
    
    (66.7
    )
    
    
    (12.0
    )
    
    
    (11.4
    )
    
    
    28.1Other, net
    
    
    (14.6
    )
    
    
    (7.5
    )
    
    
    (10.9
    )
    
    
    (0.8
    )Net cash provided by operating activities
    
    
    264.8
    
    
    
    155.1
    
    
    
    80.5
    
    
    
    35.8Investing activities:Capital expenditures
    
    
    (237.9
    )
    
    
    (116.1
    )
    
    
    (72.0
    )
    
    
    (9.2
    )Proceeds from disposal of property
    
    
    16.9
    
    
    
    3.1
    
    
    
    0.7
    
    
    
    0.2Other, net
    
    
    (9.2
    )
    
    
    
    
    
    
    
    
    
    
    Net cash used for investing activities
    
    
    (230.2
    )
    
    
    (113.0
    )
    
    
    (71.3
    )
    
    
    (9.0
    )Financing activities:Proceeds from issuance of long-term debt
    
    
    221.7
    
    
    
    177.9
    
    
    
    602.6
    
    
    
    Repayment of long-term debt
    
    
    (237.4
    )
    
    
    (204.1
    )
    
    
    (582.8
    )
    
    
    (35.5
    )Debt cost
    
    
    (16.1
    )
    
    
    (8.4
    )
    
    
    (14.0
    )
    
    
    Other, net
    
    
    (0.3
    )
    
    
    (0.3
    )
    
    
    (13.3
    )
    
    
    Net cash used for financing activities
    
    
    (32.1
    )
    
    
    (34.9
    )
    
    
    (7.5
    )
    
    
    (35.5
    )Cash and cash equivalents:Net increase (decrease) during each period
    
    
    2.5
    
    
    
    7.2
    
    
    
    1.7
    
    
    
    (8.7
    )At beginning of the year
    
    
    14.4
    
    
    
    7.2
    
    
    
    5.5
    
    
    
    14.2At end of the year
    
    $
    16.9
    
    
    $
    14.4
    
    
    $
    7.2
    
    
    $
    5.5Supplemental information:Cash payments:Interest
    
    $
    77.5
    
    
    $
    88.8
    
    
    $
    83.6
    
    
    $
    2.0
  28




---



##### Table of Contents



Kansas City Southern de México, S.A. de C.V. and Subsidiaries
(Formerly known as TFM, S. A. de C. V.)
 Consolidated Statements of Changes in Stockholders Equity
 ReceivableUnder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedAgreements
    
    
    Treasury/
    
    
    Additional
    
    
    
    
    
    
    otherCommon
    
    
    with Parent
    
    
    parent
    
    
    Paid in
    
    
    Retained
    
    
    comprehensiveStock
    
    
    Company
    
    
    Shares
    
    
    Capital
    
    
    Earnings
    
    
    loss
    
    
    Total(In millions )Predecessor:Balances at December 31, 2004
    
    $
    1,758.9
    
    
    $
    (661.2
    )
    
    $
    (256.1
    )
    
    $
    (21.4
    )
    
    $
    285.5
    
    
    $
    
    
    
    $
    1,105.7Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    1.0Balances at March 31, 2005
    
    
    1,758.9
    
    
    
    (661.2
    )
    
    
    (256.1
    )
    
    
    (21.4
    )
    
    
    286.5
    
    
    
    
    
    
    
    1,106.7Successor:Cost of shares received from
the Government related to the
VAT/PUT settlement
    
    
    
    
    
    
    
    
    
    
    (305.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305.4
    )Push down of additional basis
from acquisition by
shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    254.3
    
    
    
    
    
    
    
    
    
    
    
    254.3Contribution of capital from
parent resulting from
cancellation of locomotive
contract
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.5
    
    
    
    
    
    
    
    
    
    
    
    12.5Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87.7
    
    
    
    
    
    
    
    87.7Balances at December 31, 2005
    
    
    1,758.9
    
    
    
    (661.2
    )
    
    
    (561.5
    )
    
    
    245.4
    
    
    
    374.2
    
    
    
    
    
    
    
    1,155.8Push down of additional basis
from acquisition by
shareholders
    
    
    
    
    
    
    67.6
    
    
    
    
    
    
    
    (40.0
    )
    
    
    
    
    
    
    
    
    
    
    27.6Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61.7
    
    
    
    
    
    
    
    61.7Balances at December 31, 2006
    
    
    1,758.9
    
    
    
    (593.6
    )
    
    
    (561.5
    )
    
    
    205.4
    
    
    
    435.9
    
    
    
    
    
    
    
    1,245.1Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97.8
    
    
    
    
    
    
    
    97.8Prior services cost, net
of tax of $0.5 million
(note 17)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    (0.8
    )Comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97.8
    
    
    
    (0.8
    )
    
    
    97.0Cancellation of the shares
received from the Mexican
government related to the
VAT/PUT settlement
    
    
    (351.8
    )
    
    
    
    
    
    
    305.4
    
    
    
    46.4
    
    
    
    
    
    
    
    
    
    
    
    KCSM Stockholders cancellation
due to merger
    
    
    (1,407.1
    )
    
    
    593.6
    
    
    
    256.1
    
    
    
    (251.8
    )
    
    
    (435.9
    )
    
    
    
    
    
    
    (1,245.1
    )Grupo KCSM Stockholders
equity as of merger
    
    
    807.0
    
    
    
    
    
    
    
    (256.1
    )
    
    
    320.7
    
    
    
    389.8
    
    
    
    
    
    
    
    1,261.4Grupo KCSM Treasury shares
cancellation due to merger
    
    
    (198.7
    )
    
    
    
    
    
    
    256.1
    
    
    
    (57.4
    )
    
    
    
    
    
    
    
    
    
    
    Adjustments to purchase
accounting assets reflecting
push down from KCS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19.7
    )
    
    
    
    
    
    
    
    
    
    
    (19.7
    )Balances at December 31, 2007
    
    $
    608.3
    
    
    $
    
    
    
    $
    
    
    
    $
    243.6
    
    
    $
    487.6
    
    
    $
    (0.8
    )
    
    $
    1,338.7
  29




---



##### Table of Contents



Kansas City Southern de México, S.A. de C.V. and Subsidiaries
(Formerly known as TFM, S. A. de C. V.)
 Notes to Consolidated Financial Statements
 (Amounts in millions of US dollars ($) or millions
of Mexican pesos (Ps))
 Note 1. Description of the Business
 Kansas City Southern de México, S.A. de C.V. Ferrocarriles
Nacionales de México
  Arrendadora KCSM, S. de R.L. de C.V sociedad de responsabilidad limitada de capital variable
 KCSM Servicios, S.A. de C.V. sociedad anónima de capital variable
 KCSM Internacional, S.A. de C.V. sociedad anónima de capital variable
 KCSM Holdings LLC
 Mexrail, Inc.
   30




---



##### Table of Contents



Ferrocarril y Terminal del Valle de México, S.A. de C.V. (México Valley Railway and Terminal
or FTVM), sociedad anónima de capital variable Ferrocarril Méxicano, S.A. de C.V. Ferrosur, S.A. de
C.V Grupo México, S.A.B. de C.V.
   Change in control
   Basis of presentation
  Note 2. Summary of significant accounting policies
 Principles of consolidation.
  Use of estimates.
 31




---



##### Table of Contents



Segments.
 Foreign currency translation.
  Cash and cash equivalents.
 Accounts receivable.
 Inventories.
 Concession Rights and Related Assets.
  Properties and Depreciation.
  KCSM
Depreciation Review.
 32




---



##### Table of Contents



Computer Software Costs.
 Impairment of Long-Lived Assets.
 Fair value of financial instruments.
  Deferred income taxes.
 KCSM Employees Statutory Profit Sharing.
 Debt.
 Pension and seniority premiums.
 33




---



##### Table of Contents



Revenue recognition.
 Leases.
  Derivative Instruments.
 Foreign exchange risk.
 Note 3. New accounting pronouncement
 SFAS 157
 Note 4. Push down accounting and allocation of purchase price
 April 1,
2005  Acquisition Agreement
 34




---



##### Table of Contents



Summary of Transactions Related to Final Purchase Price
 (in millions)
 Preliminary excess purchase price over the historical book value at the acquisition date:
    
    $
    199.6Payment to TMM related to the VAT/Put Settlement obligation contingent at acquisition date:(1)
    
    
    99.5Increase related to estimates for severance and relocation costs and changes in allocations
of fair value between KCSM and Grupo KCSM:
    
    
    11.6Acquisition of the Mexican governments shares net of adjustment to KCS investment:(2)
    
    
    (56.4
    )Disclosed increase in equity as a result of acquisition by shareholders:
    
    $
    254.3
  (1)
    
    On September 12, 2005, KCS and its subsidiaries, KCSM and Grupo KCSM, along with TMM, entered
into the VAT/Put Settlement with the Mexican government, resolving the controversies and
disputes between the companies and the Mexican government. In accordance with the Acquisition Agreement under which KCS acquired a controlling interest
in KCSM, a payment of additional purchase price of $99.5 million became payable to TMM as a
result of the VAT/Put Settlement. This amount was paid by KCS and
recorded as an increase in the equity of KCSM.
 (2)
    
    As part of the settlement agreement with the Mexican government (disclosed above), KCSM
purchased and retired the 23.9% of KCSM stock owned by the Mexican government, which decreased
the excess of the purchase price, net of adjustments to KCS investment by $56.4 million. This
amount represents the difference between TMMs share of the VAT recovery ($155.9 million) and
the discounted amount paid to TMM by KCS ($99.5 million). KCS share of the VAT recovery, net
of legal costs, was recorded in income in the third quarter of 2005.
 Settlement Agreement with TMM
  35




---



##### Table of Contents



(in millions)
 Increase in current assets
    
    $
    10.6Decrease in property and equipment
    
    
    (29.0
    )Increase in concession assets
    
    
    260.2Decrease in deferred income tax
    
    
    (79.3
    )Increase other assets
    
    
    83.6Increase in current liabilities
    
    
    (15.3
    )Increase in long-term liabilities
    
    
    (108.5
    )Total
    
    $
    122.3
   (in millions)
 36




---



##### Table of Contents



Current assets
    
    $
    268.8Property and equipment
    
    
    530.5Concession rights
    
    
    1,354.8Other assets
    
    
    226.7Total assets acquired
    
    $
    2,380.8Current liabilities
    
    $
    288.3Long-term debt
    
    
    802.6Other liabilities
    
    
    125.2Total liabilities acquired
    
    $
    1,216.1
 Note 5. Legal merger with Grupo KCSM
 sociedad de responsabilidad limitada de capital
variable sociedad anónima de capital variable
 (in millions)
 Balance sheet
 December 31,2006Assets
    
    $
    11.3Debt and capital lease obligation
    
    
    Liabilities
    
    
    (6.4
    )Minority interest
    
    
    1.4Stockholders equity
    
    
    16.3
 37




---



##### Table of Contents



Statement of Income
 Successor
    
    
    PredecessorNine Months
    
    
    Three MonthsEnded
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2005Transportation Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.3
    )Operating income
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.3
    )Income (loss) before income taxes and minority interest
    
    
    6.8
    
    
    
    (0.6
    )
    
    
    (0.3
    )Income tax expense
    
    
    (2.3
    )
    
    
    (0.9
    )
    
    
    (0.3
    )Minority interest
    
    
    
    
    
    
    17.6
    
    
    
    (0.3
    )Net income (loss)
    
    $
    4.5
    
    
    $
    16.1
    
    
    $
    (0.9
    )
 Note 6. Investments
 (in millions)
 PercentageOwnership at
    
    
    Carrying ValueCompany
    
    December 31, 2007
    
    
    2007
    
    
    2006Mexrail
    
    
    49
    %
    
    $
    32.8
    
    
    $
    30.0FTVM
    
    
    25
    %
    
    
    16.8
    
    
    
    13.9Total
    
    
    
    
    
    $
    49.6
    
    
    $
    43.9
 Mexrail, Inc.
  Ferrocarril y Terminal del Valle de México, S.A. de C.V.
  (in millions).
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Mexrail
    
    
    FTVM
    
    
    Mexrail
    
    
    FTVM
    
    
    Mexrail
    
    
    FTVMInvestment in unconsolidated affiliates
    
    $
    32.8
    
    
    $
    16.8
    
    
    $
    30.0
    
    
    $
    13.9
    
    
    $
    27.1
    
    
    $
    10.9Equity in net assets of unconsolidated affiliates
    
    
    31.0
    
    
    
    15.5
    
    
    
    28.2
    
    
    
    12.6
    
    
    
    25.1
    
    
    
    9.6Financial condition:Current assets
    
    $
    3.5
    
    
    $
    61.3
    
    
    $
    5.4
    
    
    $
    46.4
    
    
    $
    18.4
    
    
    $
    35.4Other assets
    
    
    169.6
    
    
    
    28.1
    
    
    
    158.9
    
    
    
    33.9
    
    
    
    132.0
    
    
    
    28.1Assets
    
    $
    173.1
    
    
    $
    89.4
    
    
    $
    164.3
    
    
    $
    80.3
    
    
    $
    150.4
    
    
    $
    63.5Current liabilities
    
    $
    48.7
    
    
    $
    11.8
    
    
    $
    17.6
    
    
    $
    13.5
    
    
    $
    20.6
    
    
    $
    9.3Long-term liabilities
    
    
    61.2
    
    
    
    15.6
    
    
    
    89.3
    
    
    
    16.5
    
    
    
    78.6
    
    
    
    15.8Equity of stockholders and partners
    
    
    63.2
    
    
    
    62.0
    
    
    
    57.4
    
    
    
    50.3
    
    
    
    51.2
    
    
    
    38.4Liabilities and equity
    
    $
    173.1
    
    
    $
    89.4
    
    
    $
    164.3
    
    
    $
    80.3
    
    
    $
    150.4
    
    
    $
    63.5Operating results:Revenues
    
    $
    77.5
    
    
    $
    65.8
    
    
    $
    74.3
    
    
    $
    60.5Expenses
    
    
    71.7
    
    
    
    54.0
    
    
    
    68.1
    
    
    
    45.7Net income (loss)
    
    $
    5.8
    
    
    $
    11.8
    
    
    $
    6.2
    
    
    $
    14.8
 38




---



##### Table of Contents



Successor
    
    
    PredecessorNine Months
    
    
    Nine Months
    
    
    Three Months
    
    
    Three MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    March 31,
    
    
    March 31,2005
    
    
    2005
    
    
    2005
    
    
    2005Mexrail
    
    
    FTVM
    
    
    Mexrail
    
    
    FTVMOperating results:Revenues
    
    $
    56.7
    
    
    $
    43.2
    
    
    $
    16.6
    
    
    $
    12.1Expenses
    
    
    61.9
    
    
    
    34.9
    
    
    
    17.5
    
    
    
    11.0Net income
    
    $
    (5.2
    )
    
    $
    8.3
    
    
    $
    (0.9
    )
    
    $
    1.1
 Note 7. Inventories
 (in millions)
 2007
    
    
    2006Materials and supplies
    
    $
    31.3
    
    
    $
    22.7Locomotive fuel stock
    
    
    3.1
    
    
    
    3.0Inventory obsolescence reserve
    
    
    (3.7
    )
    
    
    (2.9
    )$
    30.7
    
    
    $
    22.8
 Note 8. Other current assets
 (in millions)
 2007
    
    
    2006Deferred profit sharing
    
    $
    16.5
    
    
    $
    Assets held for sale (locomotives)
    
    
    
    
    
    
    47.9Deferred debits related to favorable car lease contracts
    
    
    11.4
    
    
    
    11.4Prepaid expenses
    
    
    0.8
    
    
    
    0.4Advance to suppliers
    
    
    2.2
    
    
    
    13.7Prepaid insurance premiums
    
    
    1.5
    
    
    
    1.2$
    32.4
    
    
    $
    74.6
 Note 9. Concession assets
 (in
millions)
 2007
    
    
    2006Road property
    
    $
    1,179.4
    
    
    $
    1,231.4Land
    
    
    133.1
    
    
    
    135.3Other
    
    
    32.2
    
    
    
    32.3Total
    
    
    1,344.7
    
    
    
    1,399.0Accumulated amortization
    
    
    129.2
    
    
    
    95.7Concession assets, net
    
    $
    1,215.5
    
    
    $
    1,303.3
  39




---



##### Table of Contents



Note 10. Property and equipment
  (in millions)
 2007
    
    
    2006Concession improvements
    
    $
    418.7
    
    
    $
    324.3Equipment
    
    
    252.1
    
    
    
    178.0Road Property
    
    
    164.2
    
    
    
    161.2Other
    
    
    13.9
    
    
    
    13.6Total
    
    
    848.9
    
    
    
    677.1Accumulated depreciation
    
    
    45.8
    
    
    
    43.7Net property and equipment
    
    
    803.1
    
    
    
    633.4Construction in progress
    
    
    69.7
    
    
    
    47.7Properties and equipment  net
    
    $
    872.8
    
    
    $
    681.1
  Note 11. Accrued Liabilities
 (in millions)
 2007
    
    
    2006Purchased services
    
    $
    21.7
    
    
    $
    18.4Locomotive maintenance and overhaul reserve
    
    
    14.6
    
    
    
    12.3Interest payable
    
    
    10.0
    
    
    
    9.5Freight charges due other railroads
    
    
    9.1
    
    
    
    6.6Deferred credits related to unfavorable locomotive leases and maintenance contracts
    
    
    8.8
    
    
    
    9.7Car hire
    
    
    8.7
    
    
    
    18.7Insurance reserve
    
    
    5.9
    
    
    
    7.1Other
    
    
    18.4
    
    
    
    13.4$
    97.2
    
    
    $
    95.7
 Note 12. Long-Term Debt
 (in millions)
 2007
    
    
    2006Long-term debt:Term loan variable interest rate, 7.475% at December 31, 2006 due 2008
    
    $
    
    
    
    $
    46.7Revolving credit facility, variable interest rate, 6.531% at December 31, 2007 due 2011
    
    
    20.0
    
    
    
    Term loan variable interest rate, 7.024% at December 31, 2007 due 2012
    
    
    30.0
    
    
    
    101/4% Senior notes due 2007
    
    
    
    
    
    
    4.093/8% Senior notes due 2012
    
    
    460.0
    
    
    
    460.0121/2% Senior notes due 2012
    
    
    
    
    
    
    178.675/8% Senior notes due 2013
    
    
    175.0
    
    
    
    175.073/8% Senior notes due 2014
    
    
    165.0
    
    
    
    Capital lease obligations, due serially 2011
    
    
    0.7
    
    
    
    1.0850.7
    
    
    
    865.3Fair market value adjustment related to purchase accounting
    
    
    
    
    
    
    10.6Total
    
    
    850.7
    
    
    
    875.9Less: Debt due within one year
    
    
    0.3
    
    
    
    26.2Long-term debt
    
    $
    850.4
    
    
    $
    849.7
 40




---



##### Table of Contents



Revolving Credit Facility and Term Loans. Tasa de
Interes Interbancario de Equilibrio 5 8
  1 4 1 2
  101/4% Senior Notes. 1 4
 41




---



##### Table of Contents



5 8
 121/2% Senior Notes. 1 2 1 2 3 8
 93/8% Senior Notes. 3 8
 75/8% Senior Notes. 5 8 5 8
 73/8% Senior Notes. 3 8 3 8 1 2 3 8 3 8
 pari passu
 Covenants
  42




---



##### Table of Contents



Leases and Debt Maturities
 (in
millions)
 Long-Term
    
    
    OperatingYears
    
    Debt
    
    
    Leases
    
    
    Total2008
    
    $
    0.3
    
    
    $
    65.4
    
    
    $
    65.72009
    
    
    0.3
    
    
    
    60.9
    
    
    
    61.22010
    
    
    0.1
    
    
    
    53.5
    
    
    
    53.62011
    
    
    20.0
    
    
    
    56.3
    
    
    
    76.32012
    
    
    490.0
    
    
    
    41.1
    
    
    
    531.1Thereafter
    
    
    340.0
    
    
    
    217.1
    
    
    
    557.1Total
    
    $
    850.7
    
    
    $
    494.3
    
    
    $
    1,345.0
 Note 13. Balances and transactions with related companies
 (in millions)
 2007
    
    
    2006Related company receivables:KCS(1)
    
    $
    22.1
    
    
    $
    19.3NAFTA Rail(2)
    
    
    15.4
    
    
    
    15.0Mexrail
    
    
    0.5
    
    
    
    0.6Panama Canal Railway Company(3)
    
    
    0.4
    
    
    
    $
    38.4
    
    
    $
    34.9Long term:Panama Canal Railway Company(3)
    
    $
    3.8
    
    
    $
    Total related company receivables
    
    $
    42.2
    
    
    $
    34.9Related company payables:KCS(4)
    
    $
    49.2
    
    
    $
    37.0Superior Tie & Timber(5)
    
    
    6.0
    
    
    
    Panama Canal Railway Company(6)
    
    
    4.2
    
    
    
    Grupo KCSM
    
    
    
    
    
    
    6.8Terminal Ferroviaria del Valle de México, S. A. de C. V.
    
    
    0.5
    
    
    
    2.1$
    59.9
    
    
    $
    45.9Long term:KCS (4)
    
    $
    21.8
    
    
    $
    Total related company payables
    
    $
    81.7
    
    
    $
    45.9
 
 (1)
    
    This balance is comprised mainly of pre-acquisition receivables due to the Settlement Agreement with
TMM, car and locomotive lease and other railroad services as of December 31, 2007.(2)
    
    This amount is comprised primarily of a loan receivable with an affiliate, NAFTA Rail, denominated in
Mexican pesos of Ps.138.7 million ($12.8 million) and $1.6 million of interest as of
December 31, 2007.(3)
    
    This amount is comprised of a loan receivable with an affiliate, the Panama Canal Railway Company
(PCRC), a joint venture company owned equally by KCS and Mi-Jack Products, Inc. 43




---



##### Table of Contents



(4)
    
    This balance is comprised mainly of prepayment freight services, management and legal fees, car and
locomotive lease and other railroad services as of December 31, 2007.(5)
    
    This balance is comprised primarily of ties acquisition by KCSM during 2007.(6)
    
    This amount is comprised of an advance payment with PCRC in regards to the sale of five SD60 locomotives. (in
millions)
 Successor
    
    PredecessorNine Months
    
    Three MonthsYear Ended
    
    Year Ended
    
    Ended
    
    EndedDecember 31,
    
    December 31,
    
    December 31,
    
    March 31,2007
    
    2006
    
    2005
    
    2005Freight revenues
    
    $
    9.8
    
    
    $
    0.4
    
    
    $
    0.3
    
    
    $
    Terminal service
    
    
    (13.8
    )
    
    
    (24.1
    )
    
    
    
    
    
    
    Car equipment lease
    
    
    2.3
    
    
    
    1.5
    
    
    
    0.4
    
    
    
    (0.1
    )Management fee
    
    
    (16.9
    )
    
    
    (16.3
    )
    
    
    
    
    
    
    (0.3
    )Software license fee
    
    
    (3.0
    )
    
    
    
    
    
    
    
    
    
    
    Locomotive equipment lease
    
    
    0.7
    
    
    
    (4.8
    )
    
    
    5.5
    
    
    
    Transition cost
    
    
    
    
    
    
    
    
    
    
    (3.0
    )
    
    
    Severance and relocation
    
    
    
    
    
    
    (3.2
    )
    
    
    15.3
    
    
    
    Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (3.8
    )
    
    
    Other
    
    
    1.5
    
    
    
    (0.1
    )
    
    
    (0.4
    )
    
    
    (3.2
    )
  Software License Agreement
  Prepayment Freight Services Agreement
  Loan Agreement
  Locomotive Purchase Agreement
  44




---



##### Table of Contents



Locomotive Purchase and Sale Agreement
  Management Services Agreement
  Note 14. Other noncurrent liabilities and deferred credits
 (in
millions)
 2007
    
    
    2006Deferred credits related to unfavorable locomotive leases and maintenance contracts
    
    $
    33.7
    
    
    $
    43.7Deferred profit sharing
    
    
    42.5
    
    
    
    38.5Pension
    
    
    13.3
    
    
    
    11.1Other
    
    
    11.6
    
    
    
    20.3$
    101.1
    
    
    $
    113.6
 Note 15. Stockholders equity
  SharesClass I
    
    Class II
    
    Total
    
    %ShareholdersKCSM Holdings LLC
    
    
    
    
    
    
    10
    
    
    
    10
    
    
    
    0.02
    %Kara Sub, Inc.
    
    
    
    
    
    
    1,195,368,147
    
    
    
    1,195,368,147
    
    
    
    24.97
    %KCS Investment I, Ltd.
    
    
    
    
    
    
    1,195,368,147
    
    
    
    1,195,368,147
    
    
    
    24.97
    %Caymex Transportation, Inc.
    
    
    
    
    
    
    49,873,902
    
    
    
    49,873,902
    
    
    
    1.04
    %Nafta Rail, S.A. de C.V.
    
    
    600,000
    
    
    
    2,344,300,029
    
    
    
    2,344,900,029
    
    
    
    49.00
    %TOTAL
    
    
    600,000
    
    
    
    4,784,910,235
    
    
    
    4,785,510,235
    
    
    
    100.00
    %
 Note 16. Income tax, employee statutory profit sharing, asset tax, and tax loss carryforwards
 Income tax
 45




---



##### Table of Contents



Tax Expense (in
millions)
 Successor
    
    
    PredecessorNine Months
    
    
    Three MonthsYear Ended
    
    
    Year Ended
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2005
    
    
    2005Current:Income Tax
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Tax on Assets
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    Total current
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    Deferred:Deferred income tax provision (benefit)
    
    
    30.7
    
    
    
    18.8
    
    
    
    (1.8
    )
    
    
    (1.4
    )Total deferred
    
    
    30.7
    
    
    
    18.8
    
    
    
    (1.8
    )
    
    
    (1.4
    )Total income tax provision (benefit)
    
    $
    30.7
    
    
    $
    18.8
    
    
    $
    (1.5
    )
    
    $
    (1.4
    )
  Deferred income taxes  (in
millions)
 2007
    
    
    2006Liabilities:Property and equipment
    
    $
    62.4
    
    
    $
    64.3Concession rights
    
    
    199.7
    
    
    
    256.7Other
    
    
    
    
    
    
    11.2Gross deferred tax liabilities
    
    
    262.1
    
    
    
    332.2Assets:Loss carryovers
    
    
    (292.6
    )
    
    
    (416.6
    )Inventories and provisions
    
    
    (75.8
    )
    
    
    (33.1
    )Gross deferred tax assets
    
    
    (368.4
    )
    
    
    (449.7
    )Net deferred tax asset
    
    $
    (106.3
    )
    
    $
    (117.5
    )
  Tax Rates  (in millions)
 Successor
    
    
    PredecessorNine Months
    
    
    Three MonthsYear Ended
    
    
    Year Ended
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2005
    
    
    2005Income tax provision using the Statutory rate in effect
    
    $
    36.0
    
    
    $
    21.3
    
    
    $
    25.8
    
    
    $
    (0.1
    )Tax effect of:Inflationary and devaluation components
    
    
    8.7
    
    
    
    11.3
    
    
    
    9.2
    
    
    
    1.8Tax indexation of depreciation and amortization
    
    
    (4.3
    )
    
    
    (1.8
    )
    
    
    (2.3
    )
    
    
    (0.5
    )Net exchange losses
    
    
    3.0
    
    
    
    2.9
    
    
    
    8.9
    
    
    
    1.2Inflation and remeasurement of loss carryforwards
    
    
    (13.0
    )
    
    
    (17.4
    )
    
    
    (12.5
    )
    
    
    (3.5
    )Non-deductible expenses
    
    
    0.5
    
    
    
    0.7
    
    
    
    1.1
    
    
    
    Change in tax rates
    
    
    
    
    
    
    2.1
    
    
    
    0.3
    
    
    
    (0.5
    )Write off of deferred profit sharing
    
    
    
    
    
    
    
    
    
    
    10.1
    
    
    
    VAT Settlement
    
    
    
    
    
    
    
    
    
    
    (42.3
    )
    
    
    Tax on Assets
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    Other  Net
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    (0.1
    )
    
    
    0.2Income tax provision (benefit)
    
    $
    30.7
    
    
    $
    18.8
    
    
    $
    (1.5
    )
    
    $
    (1.4
    )Effective tax rate
    
    
    24
    %
    
    
    26
    %
    
    
    (2
    )%
    
    
    282
    %
 46




---



##### Table of Contents



Employees Statutory Profit Sharing  (in millions)
 Successor
    
    
    PredecessorNine Months
    
    
    Three MonthsYear Ended
    
    
    Year Ended
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2005
    
    
    2005Deferred Profit Sharing
    
    $
    (2.1
    )
    
    $
    5.9
    
    
    $
    41.1
    
    
    $
    0.5
 (in
millions)
 2007
    
    
    2006Liabilities:Property and equipment
    
    $
    17.1
    
    
    $
    27.3Concession rights
    
    
    25.4
    
    
    
    21.7Gross deferred profit sharing liabilities
    
    
    42.5
    
    
    
    49.0Assets:Inventories and provisions
    
    
    (16.5
    )
    
    
    (10.5
    )Gross deferred tax assets
    
    
    (16.5
    )
    
    
    (10.5
    )Net deferred profit sharing liability
    
    $
    26.0
    
    
    $
    38.5
  Asset tax
 NOL carryforwards (in millions)
 Inflation-IndexedAmount as ofDecember 31,
    
    
    Year ofYear in Which Loss Arose
    
    2007
    
    
    Expiration2000
    
    
    176.5
    
    
    
    20462001
    
    
    83.1
    
    
    
    20462002
    
    
    452.8
    
    
    
    20462003
    
    
    308.7
    
    
    
    20462006
    
    
    44.5
    
    
    
    2016$
    1,065.6
   47




---



##### Table of Contents



Note 17. Pension Plan
   Net Periodic Benefit Cost, Plan Obligation, and Funded Status
 (in
millions)
 2007
    
    
    2006Service cost
    
    $
    1.4
    
    
    $
    1.7Interest cost
    
    
    0.9
    
    
    
    1.0Actuarial (gain) loss(i)
    
    
    (0.5
    )
    
    
    (2.6
    )Net periodic cost (benefit) recognized
    
    $
    1.8
    
    
    $
    0.1
 
 (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. (in millions)
 2007
    
    
    2006Benefit obligation, beginning of year
    
    $
    12.1
    
    
    $
    12.4Service cost
    
    
    1.4
    
    
    
    1.7Interest cost
    
    
    0.9
    
    
    
    1.0Actuarial (gain) loss
    
    
    (0.5
    )
    
    
    (2.6
    )Benefits paid, net of retiree contributions
    
    
    (0.9
    )
    
    
    (0.4
    )Prior services cost
    
    
    1.3
    
    
    
    Benefit obligation, end of year
    
    $
    14.3
    
    
    $
    12.1Funded status
    
    $
    (14.3
    )
    
    $
    (12.1
    )
  Assumptions
  2007
    
    2006Discount rate
    
    
    8.00
    %
    
    
    8.00
    %Rate of compensation increase
    
    
    4.50
    %
    
    
    5.00
    %
 48




---



##### Table of Contents



Cash Flows
 (in millions)
 ExpectedYear
    
    Payments2008
    
    $
    0.32009
    
    
    0.42010
    
    
    0.62011
    
    
    0.82012
    
    
    1.22013-2017
    
    
    14.0
 Note 18. Commitments and contingencies
 Commitments:
 Concession duty.
 Locomotive Acquisition.
    Contingencies:
 Litigation.
  49




---



##### Table of Contents



Disputes with Ferromex
 Disputes Relating to Payments for the Use of Trackage and Haulage Rights and Interline
Services. Ferrocarril Mexicano, S.A. de C.V Secretaria de Comunicaciones y Transportes st
 Disputes Relating to the Scope of the Mandatory Trackage Rights.
 Mexican Antitrust investigation
 Comisión Federal de Competencia
 SCT Sanction Proceedings
  50




---



##### Table of Contents



Mancera Proceeding
  Income Taxes
   Note 19. Financial instruments
  Foreign Exchange Contracts
    Foreign currency balances.
 51




---



##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
  
 Item 9A(T). Controls and Procedures
 (a) Disclosure Controls and Procedures
  (b) Change in Internal Control over Financial Reporting
  (c) Internal Control over Financial Reporting
  
 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
  
 Item 14. Principal Accountant Fees and Services
 (in millions)
 Year Ended December 31,2007
    
    
    2006Audit fees
    
    $
    3,681.7
    
    
    $
    4,345.0Audit-related fees(1)
    
    
    465.5
    
    
    
    675.8Tax fees
    
    
    50.0
    
    
    
    1.4All other fees
    
    
    
    
    
    
    Total
    
    $
    4,197.2
    
    
    $
    5,022.2
 (1)
    
    Primarily reflects fees related to debt offering documents
and related to SEC filings, as well as certain benefit plans. 52




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
  (a)(1) Financial Statements:
  (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 101/4% 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 121/2% 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 75/8% 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
    
    Indenture, dated as of May 14, 2007, between KCSM and U.S. Bank National
Association, as trustee and paying agent, covering up to $165,000,000 of KCSMs 73/8%
Senior Notes due 2014 (incorporated herein by reference to Exhibit 4.1 of its
Current Report on Form 8-K filed on May 17, 2007, File No. 333-08322)4.12
    
    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)4.13
    
    Registration Rights Agreement, dated as of May 16, 2007, between KCSM and Morgan
Stanley & Co. Incorporated, Banc of America Securities LLC, BBVA Securities Inc.,
BMO Capital Markets Corp. and Scotia Capital (USA) Inc.
 53




---



##### Table of Contents



Exhibit No.
    
    Exhibit(incorporated herein by
reference to Exhibit 4.2 of its Current Report on Form 8-K filed on May 17, 2007,
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
México, 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)10.5
    
    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., Institución 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, Arrendadora
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 Bancomer, 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, Arrendadora 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).10.12
    
    Credit Agreement, dated as of June 14, 2007, among KCSM as Borrower, Arrendadora
KCSM, as Guarantor, and Bank of America, N.A., as administrative agent (incorporated
herein by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the
second quarter 2007 filed on July 27, 2007, File No. 333-08322)10.13
    
    Amendment No. 1 and Waiver No. 1, dated as of December 19, 2007 to the Credit
Agreement dated as of June 14, 2007 among KCSM, as Borrower, Arrendadora KCSM, as
Guarantor, certain lenders and Bank of America, N.A., as administrative agent
(incorporated herein by reference to Exhibit 10.1 of its Current Report on Form 8-K
filed on December 26, 2007, File No. 333-08322)
 54




---



##### Table of Contents



Exhibit No.
    
    Exhibit12.1
    
    Computation of Ratio of Earnings to Fixed Charges is attached hereto as Exhibit 12.123.1
    
    Consent of KPMG Cárdenas
Dosal, S.C. is attached to this Form 10-K as Exhibit 23.131.1
    
    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, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
attached hereto as Exhibit 32.1.32.2
    
    Certification of Patrick J. Ottensmeyer, Chief Financial Officer of the
Company, pursuant to Section 906 of the Sarbanes-Oxley Act 2002 is attached to hereto as Exhibit 32.2.
 55




---



##### Table of Contents



SIGNATURES
  Kansas City Southern de México, S.A. de C.V.By
    /s/  José Guillermo Zozaya DelanoJosé Guillermo Zozaya DelanoPresident and Executive Representative  Signature
    
    Title
    
    Date/s/ Michael R. Haverty
    
    President of the Board of Directors
    
    February 15, 2008.Michael R. Haverty/s/ Arthur L. Shoener
    
    Vice President of the Board of Directors
    
    February 15, 2008.Arthur L. Shoener/s/ Patrick J. Ottensmeyer
    
    Chief Financial Officer
    
    February 15, 2008.Patrick J. Ottensmeyer
    
    (Principal
Financial Officer)/s/ Michael K. Borrows
    
    Chief Accounting Officer
    
    February 15, 2008.Michael K. Borrows
    
    (Principal
Accounting Officer)/s/ James R. Jones
    
    Director
    
    February 15, 2008.James R. Jones/s/ Larry M. Lawrence
    
    Director
    
    February 15, 2008.Larry M. Lawrence
 56