##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 Or
 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
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Or
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report: N/A
 Commission File No. 333-8880
 Satélites Mexicanos, S.A. de C.V.
 Mexican Satellites, a Mexican Company of Variable Capital
(Translation of the Registrants Name into English)
Rodolfo Gaona No. 86, 4° Piso
Col. Lomas de Sotelo
11200 Mexico, D.F.
Mexico
(52) 55-2629-5800
Jurisdiction of incorporation: Mexico
Securities for which there is a reporting obligation pursuant to Section 15 (d)
of the Act: not applicable.
 The number of outstanding shares of capital stock as of December 31, 2007 was:
9,166,667 Class I Series A Shares
333,334 Class I Series B Shares
7,166,667 Class II Series B Shares
812,498 Class I Series N Shares
29,395,833 Class II Series N Shares
  o þ
  o þ
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
  U.S. GAAP þ
    
    International Financial Reporting Standards o
    
    Other oas issued buy the International Accounting Standards Board o
  o þ
  o þ
  þ o




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TABLE OF CONTENTS
 PagePART IITEM 3. Key Information
    
    
    1ITEM 4. Information on the Company
    
    
    17ITEM 4A. Unresolved Staff Comments
    
    
    39ITEM 5. Operating and Financial Review and Prospects
    
    
    39ITEM 6. Directors, Senior Management and Employees
    
    
    55ITEM 7. Major Shareholders and Related Party Transactions
    
    
    61ITEM 8. Financial Information
    
    
    63ITEM 9. Markets
    
    
    64ITEM 10. Additional Information
    
    
    64ITEM 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    65PART IIITEM 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    67ITEM 14. Material Modifications to the Rights of Security Holders
    
    
    67ITEM 15T. Controls and Procedures
    
    
    67ITEM 16A. Audit Committee Financial Expert
    
    
    68ITEM 16B. Code of Conduct
    
    
    68ITEM 16C. Principal Accountant Fees and Services
    
    
    69PART IIIITEM 18. Financial Statements
    
    
    70ITEM 19. Exhibits
    
    
    70All other items have been omitted because they are not applicable or are not requiredExhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2
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PART I
 
 ITEM 3. Key Information
 SELECTED FINANCIAL DATA
  Financial Reporting by
Entities in Reorganization under the Bankruptcy Code
 Successor Registrant
    
    
    Predecessor RegistrantYear Ended
    
    
    December 1 to
    
    
    January 1 toDecember 31,
    
    
    December 31,
    
    
    November 30,
    
    
    Years Ended December 31,2007
    
    
    2006
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(Amount in millions of U.S. dollars)Statement of Operations Data:Revenue
    
    $
    102.2
    
    
    $
    6.8
    
    
    $
    88.3
    
    
    $
    69.9
    
    
    $
    71.7
    
    
    $
    78.8Operating loss
    
    
    (5.9
    )
    
    
    (3.9
    )
    
    
    (10.6
    )
    
    
    (11.1
    )
    
    
    (5.4
    )
    
    
    (7.6
    )Loss before income taxes
    
    
    (55.8
    )
    
    
    (8.3
    )
    
    
    (54.8
    )
    
    
    (70.6
    )
    
    
    (58.9
    )
    
    
    (43.4
    )Income taxes (expense) benefit
    
    
    (0.9
    )
    
    
    (0.3
    )
    
    
    (18.7
    )
    
    
    (0.2
    )
    
    
    4.4
    
    
    
    21.3Net loss
    
    
    (57.5
    )
    
    
    (8.7
    )
    
    
    (73.5
    )
    
    
    (70.8
    )
    
    
    (54.5
    )
    
    
    (64.7
    )Net loss applicable to common
shareholders(1)
    
    
    (57.5
    )
    
    
    (8.7
    )
    
    
    (74.7
    )
    
    
    (72.3
    )
    
    
    (56.0
    )
    
    
    (66.3
    )Other Data:Depreciation and amortization
    
    $
    53.1
    
    
    $
    6.2
    
    
    $
    51.8
    
    
    $
    47.9
    
    
    $
    48.1
    
    
    $
    48.4Capital expenditures
    
    
    2.4
    
    
    
    1.5
    
    
    
    45.9
    
    
    
    8.3
    
    
    
    1.4
    
    
    
    37.9Balance Sheet Data (at end of
period):Total assets
    
    $
    470.2
    
    
    $
    508.1
    
    
    $
    883.1
    
    
    $
    925.3
    
    
    $
    953.4
    
    
    $
    977.1Current maturities of
long-term debt (excluding
accrued interest)
    
    
    
    
    
    
    
    
    
    
    527.7
    
    
    
    527.7
    
    
    
    523.4
    
    
    
    523.6Long-term debt
    
    
    393.2
    
    
    
    378.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shareholders (deficit) equity
    
    
    (19.4
    )
    
    
    38.0
    
    
    
    102.7
    
    
    
    178.6
    
    
    
    249.4
    
    
    
    303.9
 
 (1)
    
    Net loss applicable to common shareholders comprises our net loss for the year less our
preferred stock dividend. This information only applies for Predecessor Registrant. EXCHANGE RATES
   3




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CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
  Factors Relating to Satmex
 As a result of our concurso mercantil and the implementation of our plan of reorganization (the
Plan of Reorganization) filed with the U.S. Bankruptcy Court for the Southern District of New
York (the U.S. Bankruptcy Court) in our bankruptcy case under Chapter 11 of Title 11 of the U.S.
Bankruptcy Code, our financial information after November 30, 2006 is not comparable to our prior
years financial information.
 concurso mercantil Ley de
Concursos Mercantiles usufructo
 We have a history of significant net operating losses and we may not be able to improve
successfully our performance or obtain profitability.
  Our ability to obtain additional financing and to refinance the notes in the future may be limited.
   4




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We have incurred significant indebtedness, including secured indebtedness, to acquire and launch
our satellites that may limit our cash flow for capital expenditures and other expenses.
   
    
    limited cash flow available for capital expenditures, acquisitions, working capital
and other general corporate purposes as a result of dedicating a substantial portion
of our cash flow from operations to servicing our debt;
 
    
    increased our vulnerability to general adverse economic and industry conditions;
 
    
    limited our flexibility in planning for, or reacting to, competitive and other
changes in our business and the industries in which we operate;
 
    
    placed us at a relative disadvantage to our competitors that have less debt and
greater operating and financing flexibility than we do;
 
    
    made us vulnerable to interest rate increases because approximately 61% of our
indebtedness is, and will continue to be, subject to variable rates of interest;
 
    
    exposed us to increased interest expense to the extent we refinance existing debt
with higher cost debt; and
 
    
    limited, through covenants in our indebtedness, our ability to borrow additional
funds.
  
    
    adversely affect our relationship with customers and suppliers; and
 
    
    limit future increases in the value, or cause a decline in the value of our equity,
which could limit our ability to raise additional capital by issuing equity.
    5




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We may not have sufficient funds to be available to redeem our First Priority Notes and Second
Priority Notes upon a change of control.
  The value of the collateral securing the Notes may not be sufficient to satisfy our obligations
under the Notes.
  The agreements and instruments governing our debt contain restrictions and limitations that could
significantly affect our ability to operate our business, as well as significantly affect our
liquidity.
  
    
    incur additional debt or amend the terms of existing debt;
 
    
    repurchase or redeem equity interests and debt;
 
    
    issue equity;
 
    
    merge or consolidate with any other person or enter into a change of control
transaction (see We may not have sufficient funds to be available to redeem our First
Priority Notes and Second Priority Notes upon a change of control);
 
    
    spend excess cash flow or insurance proceeds;
 
    
    make certain investments, loans, guaranties or acquisitions;
 
    
    pay dividends or make other distributions;
  6




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
    
    create restrictions on the payment of dividends or other amounts;
 
    
    sell, assign, transfer, lease or otherwise convey certain of our assets;
 
    
    enter into related party transactions;
 
    
    enter into new lines of business; and
 
    
    grant liens and pledge assets.
  Investors in the Notes may not be able to find a purchaser should they need to dispose of their
investment prior to maturity.
  Our in-orbit satellites are vulnerable to failure.
  
    
    component failure;
 
    
    loss of power or fuel;
 
    
    inability to control positioning of the satellite;
 
    
    solar and other astronomical events; and
 
    
    collisions with space debris.
  
    
    station-keeping fuel consumption to maintain a satellites position in orbit;
 
    
    the quality of manufacture;
 
    
    gradual degradation of solar panels or other systems or components; and
 
    
    the durability of components.
  7




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If we are unable to finance, build and successfully launch our proposed Satmex 7 satellite our
ability to grow our business will be materially and adversely affected.
   We may not be able to renew our insurance policies for our satellites at commercially reasonable
rates, if at all, when they expire, and our existing insurance coverage has, and our future
insurance coverage will likely have, significant exceptions.
   9




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A small number of customers account for a large portion of our revenues, and the loss of one or
more of these significant customers would adversely affect our revenues.
  We operate in a competitive environment.
   10




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The Mexican government has economic rights with respect to us and may exercise influence in respect
of 55% of our series A shares. As a result, the Mexican government may cause us to pursue certain
macroeconomic and social objectives that may have an adverse effect on our results of operations
and financial condition.
  Our future success depends on our ability to fill vacant senior management positions, retain our
key employees and adapt to technological changes.
   11




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Technological advances may require us to make significant expenditures to maintain and improve the
competitiveness of our service offerings for which our ability to compete is limited by our lack of
funds.
  You may not be able to effect service of process in the U.S.A. upon our officers or our Mexican
directors.
  We may not have sufficient funds available to redeem our First Priority Notes and Second Priority
Notes upon a change of control.
  The recent enactment of the Ley del Impuesto Empresarial a Tasa Única increases our tax burden and
could affect our operations.
 Ley del Impuesto Empresarial a Tasa Única
 amparo amparo
  12




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Factors Relating to Regulatory Environment
 Our business is regulated, causing uncertainty and additional costs.
   Coordination results may adversely affect our ability to use a satellite at a given orbital slot
for our proposed service or coverage area.
  If we do not maintain satellites in orbital slots we currently use, those orbital locations may
become available for other satellite operators to use.
  Our government concessions may be revoked under certain circumstances.
  
    
    the term of any such Orbital Concession expires;
 
    
    we resign our rights under any such Orbital Concession;
  13




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
    
    the Mexican government, through the Secretaría de Comunicaciones y Transportes (the
Ministry of Communications and Transportation or the SCT), terminates such Orbital
Concession through a proceeding called Rescate;
 
    
    we become subject to liquidation (quiebra); and
 
    
    the SCT revokes such Orbital Concession.
  
    
    unjustified or unauthorized interruption of our operations or the services that may
be provided under such Orbital Concession, whether in whole or in part;
 
    
    our taking any action or refraining from taking any action that affects the rights
of other licensees or concessionaires;
 
    
    our failure to satisfy the terms or conditions set forth in the Orbital Concession
titles (including failure to deliver the free satellite capacity reserved for the
Mexican government);
 
    
    our unjustified failure to interconnect other concessionaires or licensees that have
the right to provide telecommunications services;
 
    
    change of our nationality; and
 
    
    our assignment, transfer or encumbrance of rights granted under the Orbital
Concession titles in contravention of the terms of applicable Mexican law.
   Rescate Rescate Ley General de Bienes Nacionales Rescate
 Ley
Federal de Telecomunicaciones,
  14




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Requisa Requisa Requisa Requisa
 COFETEL
and the SCT are in the process of auctioning segment capacity in the 3.6  3.7 GHz
frequency band in Mexico and the use of this capacity could interfere with our satellite
transmissions, which could affect our operations.
 3.4  3.7GHz
 Comisión Federal de Telecomunicaciones
 Enlaces requires capacity on the Ku-band frequency in order to grow its business, which capacity
may not be available to it on commercially reasonable terms.
  Enlaces operates from one facility, without a back-up location, and a natural disaster or antenna
failure could significantly disrupt its business.
  We are subject to different corporate disclosure requirements than U.S. companies, which may limit
the information available to our investors.
   15




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Compliance with the Sarbanes-Oxley Act increases our operating expenses.
  In connection with the preparation of our financial statements under U.S. GAAP for inclusion into
this 20-F, we identified a material weakness in our internal controls over financial reporting,
and if we fail to remediate this material weakness and to achieve and maintain an effective system
of internal controls, we may not be able to accurately report our U.S. GAAP financial results on a
timely basis.
   Factors Relating to Mexico
 Economic developments in Mexico may adversely affect our business.
    16




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Political Events in Mexico Could Affect Mexican Economic Policy and Our Business, Financial
Condition and Results of Operations.
 Partido Acción Nacional
   Currency devaluations may impair our ability to service our debt.
  Payment of judgments against us would be in pesos.
 Ley Monetaria de los Estados Unidos Mexicanos, Banco de México
 
 ITEM
4. Information on the Company
 General Description
 Sociedad Anónima de Capital Variable.
 Telecomunicaciones de México,
  17




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Our Restructuring
  concurso mercantil concurso mercantil
  Our Satellites
    18




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Solidaridad 2
       Satmex 5
     19




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usufructo usufructo usufructo
 Satmex 6
 36-MHz transponders,
36
     20




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usufructo usufructo usufructo
 Satmex 7
       21




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Capital Investments
     Orbital Coordination
    22




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Landing Rights
    Satellite Control Centers and Property Concession
   
    
    telemetry, tracking and control (TT&C) systems;
 
    
    an equipment maintenance area;
 
    
    a communications signal monitoring area;
 
    
    a dynamic simulator, which allows for the simulation of spacecraft dynamics and
control maneuvers; and
 
    
    antennas for satellite control and carrier monitoring.
    23




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Indice Nacional de Precios al Consumidor Secretaría de la Función Pública
 Properties
  Insurance
     
    
    military or similar actions;
 
    
    anti-satellite devices;
 
    
    governmental actions;
 
    
    nuclear reaction or radiation contamination;
 
    
    willful or intentional acts of us or our contractors;
 
    
    loss of income, indirect and consequential damages; and
 
    
    third-party claims against us.
  24




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Services
  Telecommunications Transmission Services
     Integrators
   25




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Broadband Internet Service Providers
  Broadcasting and Video Distribution Services
     Alterna TV
     26




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Enlaces
    America
  Business Strategy
  Enhance Our Regional Presence
  27




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Strengthen Our Customer Base and Offer Value-Added Services
 Aggressively Market Available Inventory and Increase Renewal Rates
 Further grow the Alterna TV Service  Digital Distribution Platform for Latin American
Programming
 Further Grow Enlaces Services
 Customers
   28




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2007
    
    
    2006 (1)
    
    
    2005(In thousands)Mexico
    
    $
    42,333
    
    
    $
    26,403
    
    
    $
    29,315U.S.A.
    
    
    47,558
    
    
    
    36,269
    
    
    
    34,692Other
    
    
    12,310
    
    
    
    9,421
    
    
    
    5,865Total
    
    $
    102,201
    
    
    $
    72,093
    
    
    $
    69,872
 
  Sales and Marketing
 Sales Force
     Pricing
      29




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Contracts
     Industry, Competition and Markets
 Consolidation in the Fixed Satellite Services Industry
   Competition
   30




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New Satellite Capacity
  Domestic Market
     31




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U.S. Market
   Latin American Market
    REGULATION
 Regulatory Framework within Mexico
 Comisión Nacional de Inversiones
Extranjeras
 Rescate Ley General del Equilibrio Ecológico y Protección al Ambiente Ley Federal de Competencia Económica Ley de Vías Generales de Comunicación
  32




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The Orbital and Property Concessions
  
    
    the Orbital Concessions providing the right to occupy each of three orbital slots
(one concession per orbital slot) and use associated C- and Ku- band radio-frequency
spectra, and
 
    
    the Property Concession providing the right to use the buildings and areas in which
the control centers are located.
 Comisión Federal de Competencia
 Telecomunicaciones de México L-band
   
    
    carry out research and development in Mexico;
 
    
    maintain satellite control centers within the territory of Mexico and preferentially
staff them with Mexican nationals; and
 
    
    maintain satellite services continuously and efficiently.
  33




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
    
    pay an annual fee in an amount equal to 7.5% of the assessed property value; and
 
    
    maintain the premises in good condition.
 Indice
Nacional de Precios al Consumidor Secretaría de la Función Pública
   
    
    the term of any such Orbital Concession expires;
 
    
    we resign our rights under any such Orbital Concession;
 
    
    the Mexican government, through the SCT, terminates such Orbital Concession through
a proceeding called Rescate;
 
    
    we become subject to liquidation (quiebra); and
 
    
    the SCT revokes such Orbital Concession.
  34




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
    
    unjustified or unauthorized interruption of our operations or the services that may
be provided under such Orbital Concession, whether in whole or in part;
 
    
    our taking any action or refraining from taking any action that affects the rights
of other licensees or concessionaires;
 
    
    our failure to satisfy the terms or conditions set forth in the Orbital Concession
titles, including failure to deliver the free satellite capacity reserved to the
Mexican government;
 
    
    our unjustified failure to interconnect other concessionaires or licensees that have
the right to provide telecommunications services;
 
    
    change of our nationality; and
 
    
    our assignment, transfer or encumbrance of rights granted under the Orbital
Concession titles in contravention of the terms of applicable Mexican law.
  Rescate Rescate
 Requisa Requisa Requisa Requisa
  
    
    the Property Concession term expires;
 
    
    we resign our rights to any of the Concessions;
 
    
    the Orbital Concessions are terminated;
 
    
    the purpose for which the Property Concession is granted no longer exists;
 
    
    the Mexican government decrees a Rescateon the Property Concession for reasons of
public interest; or
 
    
    the Property Concession is revoked.
  
    
    failure to use the Property Concession for the purpose for which it was granted;
 
    
    failure to comply with the terms of the Property Concession;
 
    
    activities taking place on the premises for which the Property Concession was
granted, without prior permission of the SCT, that interfere with satellite operations;
and
 
    
    under terms and conditions generally applicable to Property Concessions of this type
under applicable Mexican law.
  35




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Rescate
 Enlaces Concession and Value Added Services Certificate
     Rescate quiebra Rescate
   U.S. and ITU Regulation
 FCC Regulation of Satellite Services and Foreign Ownership of FCC Licenses
   36




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
    
    participating in a U.S. space station processing round;
 
    
    having a U.S. earth station operator apply for authority to communicate with the
non-U.S. satellite; or
 
    
    applying to be listed on the Permitted Space Station List of non-U.S. licensed
satellites that any U.S.-authorized earth station with an ALSAT designation may
communicate with, subject to any condition the FCC may impose.
  International Telecommunication Union Regulation
       37




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Status of Our Satellites
     Treaties and International Accords
 Reciprocity Agreement Between the U.S.A. and Mexico
  Direct-to-Home Protocol
   38




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Fixed Satellite Services Protocol
  Reciprocity Agreement Between Canada and Mexico
   Argentine Agreement
  Empresa Argentina de
Soluciones Satelitales, (
 
 ITEM
4A. Unresolved Staff Comments
  
 ITEM
5. Operating and Financial Review and Prospects
 The information in this section should be read in conjunction with the financial statements
beginning on page F-1. Our financial statements are published in U.S. dollars and prepared in
conformity with accounting principles generally accepted in the U.S., which we refer to as
U.S. GAAP. We maintain our accounting books and records in both Mexican pesos and U.S. dollars.
Our functional currency is the U.S. dollar. Monetary assets and liabilities denominated in pesos
are translated into U.S. dollars using current exchange rates. The exchange gain or loss is
reflected in the results of operations as a component of net income. Non-monetary assets and
liabilities originally denominated in pesos are translated into U.S. dollars using the historical
exchange rate at the date of the transaction. Common stock is translated at historical exchange
rates in effect at the date of contribution or on the date of change to common stock. Certain
amounts presented in this annual report may not sum due to rounding.
 We adopted fresh-start reporting as of November 30, 2006, in accordance with Statement of
Position No. 90-7, Financial Reporting of Entities in Reorganization Under the Bankruptcy Code
(SOP 90-7). Accordingly, our financial information disclosed under the heading Successor
Registrant for the year ended December 31, 2007 and for the period from December 1 to December 31, 2006 is presented on a basis different
from, and is therefore not comparable to, our financial information disclosed under the heading
Predecessor Registrant for the period from January 1 to November 30, 2006 (the date on which we
adopted fresh-start reporting) and for the year ended December 31, 2005.
  39




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Recent Tax Developments
 amparo
 Successor Registrant
    
    
    
    
    
    
    Predecessor RegistrantYear ended
    
    
    December 1 to
    
    
    Year ended,
    
    
    January 1 to
    
    
    Year endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    November 30,
    
    
    December 31,2007
    
    
    2006
    
    
    2006
    
    
    2006
    
    
    2005Revenues
    
    $
    102,201
    
    
    $
    6,751
    
    
    $
    95,093
    
    
    $
    88,342
    
    
    $
    69,872Operating expenses:Satellite operating cost
    
    
    28,468
    
    
    
    2,748
    
    
    
    37,866
    
    
    
    35,118
    
    
    
    13,184Selling and administrative
expenses
    
    
    26,509
    
    
    
    1,687
    
    
    
    13,735
    
    
    
    12,048
    
    
    
    19,884Depreciation
    
    
    37,282
    
    
    
    2,934
    
    
    
    42,884
    
    
    
    39,950
    
    
    
    35,022Amortization
    
    
    15,824
    
    
    
    3,332
    
    
    
    15,162
    
    
    
    11,830
    
    
    
    12,905108,083
    
    
    
    10,701
    
    
    
    109,647
    
    
    
    98,946
    
    
    
    80,995Operating loss
    
    
    (5,882
    )
    
    
    (3,950
    )
    
    
    (14,554
    )
    
    
    (10,604
    )
    
    
    (11,123
    )Reorganization expenses
    
    
    
    
    
    
    
    
    
    
    (33,447
    )
    
    
    (33,447
    )
    
    
    (7,666
    )Interest expense
    
    
    (51,672
    )
    
    
    (4,333
    )
    
    
    (23,485
    )
    
    
    (19,152
    )
    
    
    (48,375
    )Interest income
    
    
    1,650
    
    
    
    103
    
    
    
    2,814
    
    
    
    2,711
    
    
    
    2,315Net foreign exchange gain (loss)
    
    
    145
    
    
    
    (123
    )
    
    
    5,567
    
    
    
    5,690
    
    
    
    (5,722
    )Loss before income tax,
minority interest and preferred
stock dividends
    
    
    (55,759
    )
    
    
    (8,303
    )
    
    
    (63,105
    )
    
    
    (54,802
    )
    
    
    (70,571
    )Income tax
    
    
    893
    
    
    
    311
    
    
    
    19,037
    
    
    
    18,726
    
    
    
    238Minority interest
    
    
    802
    
    
    
    140
    
    
    
    140
    
    
    
    
    
    
    
    Consolidated net loss
    
    
    (57,454
    )
    
    
    (8,754
    )
    
    
    (82,282
    )
    
    
    (73,528
    )
    
    
    (70,809
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    1,130
    
    
    
    1,130
    
    
    
    1,507Consolidated net loss
applicable to common
shareholders
    
    $
    (57,454
    )
    
    $
    (8,754
    )
    
    $
    (83,412
    )
    
    $
    (74,658
    )
    
    $
    (72,316
    )
 Overview
   40




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##### Table of Contents



Financial Restructuring
  concurso mercantil concurso
mercantil
   Industry Overview and Trends
    41




---



##### Table of Contents




    
    the important role satellites play in reducing the social digital breach by
servicing governmental communications networks such as E-Mexico in Mexico, Compartel in
Colombia, and G-SAC in Brazil;
 
    
    the continued development of data and voice communication technology in emerging
markets where terrestrial communication facilities and service coverage areas may be
more limited;
 
    
    increased demand worldwide for enterprise-level regional and global public Internet
and private networking services, including broadband internet access, voice-over
Internet Protocol (VoIP), and managed data services, including government sponsored
connectivity programs for remote communities;
 
    
    expansion of broadcast video applications such as HDTV, and a continued increase in
the number of channels broadcast;
 
    
    continued growth of the DTH market and demand for ethnic and religious channels
requiring continental coverage; and
 
    
    general economic growth in our region.
 Results of Operations for the Year ended December 31, 2007 Compared to the Year ended December 31,
2006
 Revenues
  Operating Expenses
   42




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##### Table of Contents



Satellite Operating Costs
  Selling and Administrative Expenses
  Depreciation and Amortization
   Operating Loss
  Interest Expense
 concurso mercantil
 Net Foreign Exchange Gain/Loss
 unidades de inversión
  43




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##### Table of Contents



Income Tax
  Net Loss Applicable to Common Shareholders
  Results of Operations for the Year Ended December 31, 2006 Compared to the Year ended December 31,
2005
 Revenue
  Operating Expenses
  Satellite Operating Cost
   44




---



##### Table of Contents



Selling and Administrative Expenses
  Depreciation and Amortization
  Operating Loss
  Reorganization Expenses
 concurso mercantil convenio concursal
 Interest Income
  Interest Expense
 concurso mercantil
 Net Foreign Exchange Gain/Loss
   45




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##### Table of Contents



Income Tax
  Preferred Stock Dividend Requirement
  Net Loss Applicable to Common Shareholders
  Inflation and Foreign Exchange Fluctuations
 Índice Nacional de Precios al Consumidor
 Capital Expenditures
    46




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##### Table of Contents



Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands of U.S. dollars)Acquisition of property, furniture and equipment
    
    $
    2.4
    
    
    $
    2.1
    
    
    $
    2.4Acquisition and launch of Satmex 6
    
    
    
    
    
    $
    45.3
    
    
    $
    5.9Total
    
    $
    2.4
    
    
    $
    47.4
    
    
    $
    8.3
   Total Debt
  Liquidity and Capital Resources
     47




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##### Table of Contents



Sources and Uses of Cash
 Year ended December 31, 2007 compared to the year ended December 31, 2006
  Operating Activities
  Investing Activities
  Year ended December 31, 2006 Compared to the Year ended December 31, 2005
  Operating Activities
  Investing Activities
    48




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##### Table of Contents



Contractual Obligations and Other Commercial Commitments
  Payments Due By PeriodLess than
    
    
    
    
    
    
    
    
    
    
    After 5Contractual Obligations
    
    Total
    
    
    One Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    YearsDebt and related interest accrued as of December 31, 2007(1)
    
    $
    629,860
    
    
    $
    33,548
    
    
    $
    67,769
    
    
    $
    271,536
    
    
    $
    257,007Operating leases(2)
    
    
    278
    
    
    
    253
    
    
    
    25
    
    
    
    
    
    
    
    Other long-term obligations(3)
    
    
    5,030
    
    
    
    503
    
    
    
    1,006
    
    
    
    1,006
    
    
    
    2,515Total contractual cash obligations
    
    $
    635,168
    
    
    $
    34,304
    
    
    $
    68,800
    
    
    $
    272,542
    
    
    $
    259,522Other Commercial Commitments:Maintenance
    
    $
    5,717
    
    
    $
    1,811
    
    
    $
    2,158
    
    
    $
    1,748
    
    
    $
    
 
 (1)
    
    Variable interest on the First Priority Notes is calculated using projected interest rate,
approximately 12.5% over the five-year life of the notes. For the Second Priority Notes, we
have calculated interest at an annual fixed rate of 10.125% taking into consideration
capitalized interest (in-kind in 2007 and in cash and in-kind until 2011).(2)
    
    Represents future minimum payments under non-cancelable operating leases with initial or
remaining terms of one year or more.(3)
    
    Represents payments to the Mexican government under the Property Concession. The First Priority Notes
 pari passu pari passu
  
    
    incur additional indebtedness;
 
    
    pay dividends or make other distributions;
 
    
    make certain loans, guarantees or investments, including investments in unrestricted
subsidiaries;
 
    
    enter into interest rate and currency hedges;
 
    
    apply the proceeds of insurance payments or asset sales (and use the proceeds
thereof);
 
    
    create or suffer to exist liens;
  49




---



##### Table of Contents




    
    enter into negative pledge agreements;
 
    
    enter into businesses other than the satellite telecommunications business;
 
    
    transfer or dispose of concessions and other assets;
 
    
    enter into certain transactions with shareholders or affiliates;
 
    
    issue preferred stock, or permit the issuance of stock of restricted subsidiaries;
 
    
    enter into sale and leaseback transactions;
 
    
    merge, consolidate or transfer substantially all of our assets; and
 
    
    make investments in unrestricted subsidiaries.
  The Second Priority Notes
   
    
    incur additional indebtedness;
 
    
    pay dividends or make other distributions;
 
    
    make certain loans, guaranties or investments, including investments un unrestricted
subsidiaries;
 
    
    enter into interest rate and currency hedges;
  50




---



##### Table of Contents




    
    apply the proceeds of insurance payments or asset sales (and use the proceeds
thereof);
 
    
    create or suffer to exist liens;
 
    
    enter into negative pledge agreements;
 
    
    enter into businesses other than the satellite telecommunications business;
 
    
    transfer or dispose of concessions and other assets;
 
    
    enter into certain transactions with shareholders or affiliates;
 
    
    issue preferred stock, or permit the issuance of stock of restricted subsidiaries;
 
    
    enter into sale and leaseback transactions;
 
    
    merge, consolidate or transfer substantially all of our assets; and
 
    
    make investments in unrestricted subsidiaries.
  Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Business Combinations
  51




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##### Table of Contents



Useful Lives of Satellites
   Solidaridad 2
    
    14.5 yearsSatmex 5
    
    15 yearsSatmex 6
    
    15 years
   Valuation of Satellites and Long-Lived Assets
  Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets
   52




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##### Table of Contents



Income Tax
  Revenue Recognition
 1. AlternaTV
  2. Sales of antennas and installation services
  Allowance for Doubtful Accounts
  Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes
  53




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##### Table of Contents



Fair Value Measurements
 Employers Accounting for Defined Benefit
Pensions and Other Postretirement Plans,  an amendment of FASB Statements No. 87, 88, 106, and 132
 The Fair Value Option for Financial Assets and
Financial Liabilitie
 Noncontrolling Interests in Consolidated
Financial Statements-an amendment of ARB No. 51. S
 Business Combinations-a replacement of
FASB No. 141
  54




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging
Activities
 The Hierarchy of General Accepted Accounting
Principles
   EITF Abstracts
   Determination of the Useful Life of
Intangible Assets
 
 ITEM 6. Directors, Senior Management and Employees
 Directors
 SeriesName
    
    Position
    
    Age
    
    
    Period of Service
    
    RepresentingLuis Rebollar Corona
    
    Chairman of the Board and Director
    
    
    71
    
    
    Since November 30, 2006
    
    AVicente Ariztegui Andreve
    
    Director
    
    
    54
    
    
    Since November 30, 2006
    
    AErwin Starke Fabris
    
    Director
    
    
    54
    
    
    Since November 30, 2006
    
    AJosé Manuel Canal Hernando
    
    Director
    
    
    68
    
    
    Since September 19, 2007
    
    ARichard Mastoloni
    
    Director
    
    
    43
    
    
    Since November 30, 2006
    
    BDavid Meltzer
    
    Director
    
    
    48
    
    
    Since September 19, 2007
    
    BJames Duplessie
    
    Director
    
    
    49
    
    
    Since September 19, 2007
    
    BLuis Alfonso Nicolau Gutiérrez
    
    Alternate Director
    
    
    50
    
    
    Since September 19, 2007John H. Stevens
    
    Alternate Director
    
    
    60
    
    
    Since November 30, 2006
  55




---



##### Table of Contents



Non-Members
 Name
    
    Position
    
    Age
    
    
    Period of ServiceThomas S. Heather Rodríguez
    
    Secretary of the Board of Directors
    
    
    53
    
    
    Since September 19, 2007Francisco Fernández Cueto González de Cosío
    
    Alternate Secretary of the Board of Directors
    
    
    38
    
    
    Since November 30, 2006Daniel del Barrio Burgos
    
    Statutory Examiner
    
    
    54
    
    
    Since September 19, 2007
 Senior Management
 Name
    
    Position
    
    Age
    
    
    Period of ServicePatricio E. Northland
    
    Chief Executive Officer
    
    
    53
    
    
    Since May 2008Guillermo Reyes Bustamante
    
    Acting Chief Financial Officer
    
    
    64
    
    
    Since June 2008Dionisio Manuel Tun Molina
    
    Vice President of Engineering andSatellite Operations
    
    
    45
    
    
    Since May 2006Clemente Humberto Cabello Alcérreca
    
    Executive Director of AlternaTV and Enlaces
    
    
    38
    
    
    Since August 2007Alonso Arturo Picazo Díaz
    
    Executive Director of Regulatory and Legal Branch
    
    
    45
    
    
    Since August 2007Carlos Roberto Durán Martínez
    
    Internal Audit Director
    
    
    56
    
    
    Since February 2007
       Luis Rebollar Corona
  56




---



##### Table of Contents



Vicente Ariztegui Andreve
 Erwin Starke Fabris
 José Manuel Canal Hernando
 Richard Mastoloni
 David Meltzer
  57




---



##### Table of Contents



James Duplessie
 Luis Alfonso Nicolau Gutiérrez
 John H. Stevens
 Thomas S. Heather Rodríguez
 Francisco Fernández Cueto González de Cosío
 Daniel del Barrio Burgos
 Patricio E. Northland.
  58




---



##### Table of Contents



Dionisio Manuel Tun Molina
 Guillermo Reyes Bustamante.
 Clemente Humberto Cabello Alcerreca
 Alonso Arturo Picazo Díaz
 Carlos Roberto Durán Martinez
  59




---



##### Table of Contents



Audit and Compensation Committee
 Comité Único de Auditoría y
Compensaciones
  Compensation
        Employees
    60




---



##### Table of Contents



Share Ownership
  SharesMinimum Fixed Capital
    
    
    Variable CapitalClass I
    
    
    Class IIShareholders
    
    Series A
    
    
    Series B
    
    
    Series N
    
    
    Series B
    
    
    Series N
    
    
    %Deutsche Bank México, S.A., Institución de Banca Múltiple,
División
Fiduciaria, as
trustee under that
certain Irrevocable
Administration
Trust Agreement No.
F/589, for the
benefit of
Servicios
Corporativos
Satelitales, S.A.
de C.V. and/or the
Federal Government
of the United
Mexican States
    
    
    7,500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45% Equity Voting Rights; 16% Equity Financial RightsDeutsche Bank México, S.A., Institución de Banca Múltiple,
División
Fiduciaria, as
trustee under that
certain Irrevocable
Administration
Trust Agreement No.
F/589, for the
benefit of Loral
Skynet Corporation
    
    
    
    
    
    
    221,667
    
    
    
    401,770
    
    
    
    
    
    
    
    
    
    
    1.33% Equity Voting and Equity Financial RightsDeutsche Bank México, S.A., Institución de Banca Múltiple,
División
Fiduciaria, as
trustee under that
certain Irrevocable
Administration
Trust Agreement No.
F/589, for the
benefit of
Principia, S.A. de
C.V.
    
    
    
    
    
    
    111,667
    
    
    
    202,395
    
    
    
    
    
    
    
    
    
    
    0.67% Equity Voting and Equity Financial RightsDeutsche Bank México, S.A., Institución de Banca Múltiple,
División
Fiduciaria, as
trustee under that
certain Irrevocable
Administration
Trust Agreement No.
F/589, for the
benefit of The Bank
of New York
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,166,667
    
    
    
    29,395,833
    
    
    43% Equity Voting Rights; 78% Equity Financial RightsNacional Financiera, S.N.C., Institución de Banca de
Desarrollo, Trust
Division, as
trustee under that
certain Irrevocable
Trust Agreement No.
80501
    
    
    1,666,667
    
    
    
    
    
    
    
    208,333
    
    
    
    
    
    
    
    
    
    
    10% Equity Voting Rights; 4% Equity Financial RightsTotal
    
    
    9,166,667
    
    
    
    333,334
    
    
    

812,498
    
    
    
    7,166,667
    
    
    
    29,395,833
 
 ITEM 7. Major Shareholders and Related Party Transactions
 Major Shareholders
   61




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##### Table of Contents



Shareholders Equity
    
    
    Voting: 55% of total common voting rights
    
    Preemptive Rights: Equity calls
  
    
    Voting: 45% of total common voting rights
    
    Preemptive Rights: Equity calls
  
    
    Voting: Limited voting rights; may vote only with respect to extension of term,
conversion or anticipated dissolution, amendment to Satmexs corporate purpose or
change of Satmexs nationality
    
    Preemptive Rights:
    
    Equity calls
 Related Party Transactions
 Mexican Government
 Indice Nacional de
Precios al Consumidor Secretaría de la Función Pública
   62




---



##### Table of Contents



Loral Usufructo
 usufructo usufructo
 usufructo
 
 ITEM 8. Financial Information
 Legal Proceedings
      Ley del Impuesto Empresarial a Tasa Única amparo amparo
 Dividend Policy
    63




---



##### Table of Contents



ITEM 9. Markets
  
 ITEM 10. Additional Information
 th
 Articles of Incorporation
  Material Contracts
  Exchange Controls
  TAXATION
     64




---



##### Table of Contents



Taxation of Interest and Principal
 (casas de bolsa) (Registro National de Valores) (Secretaría de Hacienda y Crédito Público)
      Taxation of Dispositions
  Transfer and Other Taxes
  
 ITEM 11. Quantitative and Qualitative Disclosures About Market Risk
   65




---



##### Table of Contents



Exchange Rate Risk
  Interest Rate Risk
    66




---



##### Table of Contents



PART II
 
 ITEM 13. Defaults, Dividend Arrearages and Delinquencies
 The First Priority Notes
   The Second Priority Notes
   
 ITEM
14. Material Modifications to the Rights of Security Holders
  
 ITEM
15T. Controls and Procedures
 Disclosure Controls and Procedures
    67




---



##### Table of Contents



Managements Annual Report on Internal Control Over Financial Reporting
     
 ITEM 16A. Audit Committee Financial Expert
 Comité
Único de Auditoría y Compensación
  
 ITEM 16B. Code of Conduct
 www.satmex.com
  68




---



##### Table of Contents



ITEM
16C. Principal Accountant Fees and Services
  2007
    
    
    2006
    
    
    2005(Amounts in thousands)Audit fees (1)
    
    $
    797
    
    
    $
    377
    
    
    $
    286Tax fees (2)
    
    
    85
    
    
    
    82
    
    
    
    71Total fees
    
    $
    882
    
    
    $
    459
    
    
    $
    357
 (1)
    
    Audit fees:Audit fees in the above table are the aggregate fees billed by GYRU in
connection with the audit under U.S. GAAP and Mexican NIF (Normas de Información Financiera) of our
annual financial statements and statutory and regulatory audits. Audit fees include $408 related to
audit procedures with respect to Satmexs financial restructuring and the application of
fresh-start reporting.(2)
    
    Tax fees:Tax fees in the above table are fees billed by GYRU in connection to financial
statements for tax purposes.   69




---



##### Table of Contents



PART III
 
 ITEM 18. Financial Statements
 Please refer to Item 19.
 
 ITEM 19. Exhibits
 (a) Index to Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    
    F-3Consolidated Statements of Operations for the year ended December 31,
2007 and for the periods from December 1 to December 31, 2006
(Successor Registrant), from January 1 to November 30, 2006 and for
the year ended December 31, 2005 (Predecessor Registrant)
    
    
    F-4Consolidated Statements of Shareholders (Deficit) Equity for the
year ended December 31, 2007 and for the period from December 1 to
December 31, 2006 (Successor Registrant), from January 1 to
November 30, 2006 and for the year ended December 31, 2005
(Predecessor Registrant)
    
    
    F-5Consolidated Statements of Cash Flows for the year ended December 31,
2007 and for the periods from December 1 to December 31, 2006
(Successor Registrant), from January 1 to November 30, 2006 and for
the year ended December 31, 2005 (Restated) (Predecessor Registrant)
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Valuation and Qualifying Accounts
    
    
    F-35
 (b) Index to Exhibits
 Exhibit No.
    
    Description1.1
    
    Estatutos Sociales(bylaws) of Satélites Mexicanos, S.A. de C.V.1.2
    
    Estatutos Sociales(bylaws) of Satélites Mexicanos, S.A. de C.V. (English translation).2.1
    
    Indenture, dated as of November 30, 2006, between Satélites Mexicanos, S.A. de C.V., each
of the First Priority Guarantors named there in, as First Priority Guarantors, and HSBC
Bank USA, National Association, as First Priority Indenture Trustee.2.2
    
    First Priority Collateral Trust Agreement among Satélites Mexicanos, S.A. de C.V., each of
the First Priority Guarantors named therein, HSBC Bank USA, National Association, as
Indenture Trustee, and HSBC Bank USA, National Association, as Collateral Trustee, dated
as of November 30, 2006.2.3
    
    Intercreditor Agreement, dated as of November 30, 2006, by and among Satélites Mexicanos,
S.A. de C.V., as the Company, HSBC Bank USA, National Association, as the First Priority
Collateral Trustee and as the First Priority Indenture Trustee, and Wells Fargo Bank,
National Association, as the Second Priority Collateral Trustee and as the Second Priority
Indenture Trustee.2.4
    
    Registration Rights Agreement, dated as of November 30, 2006, by Satélites Mexicanos, S.A.
de C.V., for the benefit of certain holders of its First Priority Senior Secured Notes due
2011.2.5
    
    First Priority Mortgage in and over the Mortgaged Assets to secure the First Priority
Obligations granted by the Company in favor of, and/or for the benefit of, HSBC Bank USA,
National Association, in its capacity as First Priority Collateral Trustee under the First
Priority Collateral Trust Agreement for the benefit of the beneficiaries of the First
Priority Collateral Trust Agreement.
  70




---



##### Table of Contents



Exhibit No.
    
    Description2.6
    
    Equity Interest Pledge Agreement, as of November 30, 2006, by and between Satélites
Mexicanos, S.A. de C.V. as Pledgor, HSBC Bank USA, National Association, as First Priority
Collateral Trustee, for itself and for the benefit of the First Priority Holders pursuant
to the Collateral Trust Agreement, as Pledgee, and Enlaces Integra S. de R.L. de C.V., as
the Company.2.7
    
    Equity Interest Pledge Agreement, as of November 30, 2006, by and between Satélites
Mexicanos, S.A. de C.V. as Pledgor, HSBC Bank USA, National Association, as First Priority
Collateral Trustee, for itself and for the benefit of the First Priority Holders pursuant
to the Collateral Trust Agreement, as Pledgee, and SMVS-Servicios Tecnicos, S. de R.L. de
C.V., as the Company.2.8
    
    Equity Interest Pledge Agreement, as of November 30, 2006, by and between Satélites
Mexicanos, S.A. de C.V. as Pledgor, HSBC Bank USA, National Association, as First Priority
Collateral Trustee, for itself and for the benefit of the First Priority Holders pursuant
to the Collateral Trust Agreement, as Pledgee, and SMVS-Administracion, S. de R.L. de
C.V., as the Company.2.9
    
    Floating Lien Pledge Agreement, as of November 30, 2006, by and between SMVS-Servicios
Tecnicos, S. de R.L. de C.V., as Pledgor, and HSBC Bank USA, National Association, as
First Priority Collateral Trustee for itself and for the benefit of the First Priority
Holders, as the Pledgee.2.10
    
    Floating Lien Pledge Agreement, as of November 30, 2006, by and between
SMVS-Administracion, S. de R.L. de C.V., as Pledgor, and HSBC Bank USA, National
Association, as First Priority Collateral Trustee for itself and for the benefit of the
First Priority Holders, as the Pledgee.2.11
    
    Indenture, dated as of November 30, 2006, between Satélites Mexicanos, S.A. de C.V. a
Issuer, each of the Second Priority Guarantors named therein as Second Priority
Guarantors, and Wells Fargo Bank, National Association, as Trustee.2.12
    
    Second Priority Collateral Trust Agreement, among Satélites Mexicanos, S.A. de C.V., each
of the Second Priority Guarantors named therein, Wells Fargo Bank, National Association,
as Indenture Trustee, and Wells Fargo Bank, National Association, as Collateral Trustee,
dated as of November 30, 2006.2.13
    
    Registration Rights Agreement, dated as of November 30, 2006, by Satélites Mexicanos, S.A.
de C.V., for the benefit of certain holders of its Second Priority Senior Secured Notes
due 2013.2.14
    
    Second Priority Mortgage in and over the Mortgaged Assets of Satélites Mexicanos, S.A. de
C.V. to secure the Second Priority Obligations granted by the Company in favor of, and/or
for the benefit of, Wells Fargo Bank, National Association, in its capacity as Second
Priority Collateral Trustee under the Second Priority Collateral Trust Agreement for the
benefit of the beneficiaries of the Second Priority Collateral Trust Agreement.2.15
    
    Equity Interest Pledge Agreement, as of November 30, 2006, by and between Satélites
Mexicanos, S.A. de C.V., as the Pledgor, and Wells Fargo Bank, N.A., as Second Priority
Collateral Trustee and for the benefit of the Second Priority Holders pursuant to the
Second Collateral Trust Agreement, as the Pledgee, and Enlaces Integra, S. de R.L. de
C.V., as the Company.2.16
    
    Equity Interest Pledge Agreement, as of November 30, 2006, by and between Satélites
Mexicanos, S.A. de C.V., as the Pledgor, and Wells Fargo Bank, N.A., as Second Priority
Collateral Trustee and for the benefit of the Second Priority Holders pursuant to the
Second Collateral Trust Agreement, as the Pledgee, and SMVS-Administración, S. de R.L. de
C.V., as the Company.2.17
    
    Equity Interest Pledge Agreement, as of November 30, 2006, by and between Satélites
Mexicanos, S.A. de C.V., as the Pledgor, and Wells Fargo Bank, N.A., as Second Priority
Collateral Trustee and for the benefit of the Second Priority Holders pursuant to the
Second Collateral Trust Agreement, as the Pledgee, and SMVS-Servicios Técnicos, S. de R.L.
de C.V., as the Company.2.18
    
    Floating Lien Pledge Agreement, as of November 30, 2006, by and between
SMVS-Administracion, S. de R.L. de C.V., as Pledgor, and Wells Fargo Bank, N.A., as Second
Priority Collateral Trustee for itself and for the benefit of the Second Priority Holders,
as the Pledgee.2.19
    
    Floating Lien Pledge Agreement, as of November 30, 2006, by and between SMVS-Servicios
Técnicos, S. de R.L. de C.V., as Pledgor, and Wells Fargo Bank, N.A., as Second Priority
Collateral Trustee for itself and for the benefit of the Second Priority Holders, as the
Pledgee.
  71




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##### Table of Contents



Exhibit No.
    
    Description2.20
    
    Irrevocable Administration Trust Agreement No. F/589, dated as of November 28, 2006, by
and between Satélites Mexicanos, S.A. de C.V. as the Company, in its capacity as Settlor
and Beneficiary, and Deutsche Bank Mexico, S.A., Institution de Banca Multiple,
Division Fiduciaria, in its capacity as Trustee.2.21
    
    Agency Agreement, dated as of November 30, 2006, between Satélites Mexicanos, S.A. de C.V.
and The Bank of New York, as Agent, for the benefit of holders of Trust Interests.2.22
    
    Registration Rights Agreement, dated as of November 30, 2006, by Satélites Mexicanos, S.A.
de C.V. for the benefit of certain holders of Beneficial Interests in the Irrevocable
Administrative Trust Agreement No. F/0 598, dated November 28, 2006.4.1
    
    Satellite Concession 116.8 degrees W. L.4.2
    
    Satellite Concession 116.8 degrees W. L.(English Translation)4.3
    
    Satellite Concession 113.0 degrees W. L.4.4
    
    Satellite Concession 113.0 degrees W. L.(English Translation)4.5
    
    Satellite Concession 109.2 degrees W. L.4.6
    
    Satellite Concession 109.2 degrees W. L.(English Translation)4.7
    
    Property Concession4.8
    
    Property Concession (English Translation)4.9
    
    Amended and Restated Membership Agreement, dated as of August 21, 1998 among Loral SatMex
Ltd., Ediciones Enigma, S.A. de C.V. and Firmamento Mexicano, S. de R. L. de C.V.4.10
    
    Agreement between Hughes Electronics Corporation, through its division, Hughes Network
Systems and Satélites Mexicanos, S.A. de C.V., dated as of January 20, 2000, the Tenth
Amendment thereto, dated December 1,2005 and the Twelfth Amendment thereto, dated
February 1, 2006.***4.11
    
    Thirteenth Amendment, dated September 15, 2006, to Agreement between Hughes Electronics
Corporation, through its division, Hughes Network Systems and Satélites Mexicanos, S.A. de
C.V., dated as of January 20, 2000.**12.1
    
    Section 302 Certification of Patricio Northland, Chief Executive Officer.*12.2
    
    Section 302 Certification of Guillermo Reyes Bustamante, Acting Chief Financial Officer.*13.1
    
    Section 906 Certification of Patricio Northland, Chief Executive Officer.*13.2
    
    Section 906 Certification of Guillermo Reyes Bustamante, Acting Chief Financial Officer.*
 
 
    
    Incorporated by reference from the registrants Registration Statement on Form F-4 filed on
November 9, 1998 (File No. 333-8880).
    
    Incorporated by reference from the registrants Form 6-K for the month of December, 2006.
    
    Portions of exhibit have been omitted pursuant to Satmexs Confidential Treatment Request,
submitted to the Commission on the date of the filing of this Form 20-F.
    
    Incorporated by reference from the registrations Amendment to Form T-3 filed on November 22,
2006 (File No. 022-28822).***
    
    Incorporated by reference from the registrants Form 20-F for the fiscal year ended
December 31, 2005.**
    
    Incorporated by reference from the registrants Form 20-F for the fiscal year ended
December 31, 2006.*
    
    Filed herewith.  72




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SIGNATURES
  SATÉLITES MEXICANOS, S.A. DE C.V.By:
    /s/  GUILLERMO REYESGuillermo ReyesActing Chief Financial Officer   73




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##### Table of Contents



SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES
PART III
INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    F-3Consolidated Statements of Operations for the year ended December 31,
2007 and for the periods from December 1 to December 31, 2006
(Successor Registrant), from January 1 to November 30, 2006 and for
the year ended December 31, 2005 (Predecessor Registrant)
    
    F-4Consolidated Statements of Shareholders (Deficit) Equity for the
year ended December 31, 2007 and for the periods from December 1 to
December 31, 2006 (Successor Registrant), from January 1 to November
30, 2006 and for the year ended December 31, 2005 (Predecessor
Registrant)
    
    F-5Consolidated Statements of Cash Flows for the year ended December 31,
2007 and for the periods from December 1 to December 31, 2006
(Successor Registrant), from January 1 to November 30, 2006 and for
the year ended December 31, 2005 (Predecessor Registrant)
    
    F-6Notes to Consolidated Financial Statements
    
    F-7Valuation and Qualifying Accounts
    
    F-35




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##### Table of Contents



REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors and Shareholders of
Satélites Mexicanos, S. A. de C. V. and Subsidiaries
    Financial Reporting by Entities in Reorganization Under the Bankruptcy Code
 
   
  F-2




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##### Table of Contents



Satélites
Mexicanos, S. A. de C.V. and Subsidiaries
 
 Consolidated Balance Sheets
As of December 31, 2007 and 2006
(Thousands of U. S. dollars)
 Successor Registrant2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    37,176
    
    
    $
    24,528Accounts receivable  net
    
    
    8,181
    
    
    
    6,892Due from related parties
    
    
    579
    
    
    
    630Guarantee deposits
    
    
    
    
    
    
    705Inventories
    
    
    338
    
    
    
    805Prepaid insurance
    
    
    4,054
    
    
    
    4,269Deferred income taxes
    
    
    709
    
    
    
    192Total current assets
    
    
    51,037
    
    
    
    38,021Satellites and equipment  net
    
    
    290,428
    
    
    
    325,452Concessions  net
    
    
    42,419
    
    
    
    43,831Intangible assets  net
    
    
    52,860
    
    
    
    67,238Guarantee deposits and other assets
    
    
    936
    
    
    
    911Deferred income taxes
    
    
    
    
    
    
    109Goodwill
    
    
    32,502
    
    
    
    32,502Total
    
    $
    470,182
    
    
    $
    508,064Liabilities and Shareholders (Deficit) EquityCurrent liabilities:Accrued interest
    
    $
    1,351
    
    
    $
    4,109Accounts payable and accrued expenses
    
    
    20,851
    
    
    
    11,248Due to related parties
    
    
    116
    
    
    
    1,439Deferred revenue
    
    
    2,344
    
    
    
    2,344Income tax payable
    
    
    59
    
    
    
    29Total current liabilities
    
    
    24,721
    
    
    
    19,169Debt obligations
    
    
    393,171
    
    
    
    378,237Deferred revenue
    
    
    67,698
    
    
    
    70,043Labor obligations
    
    
    453
    
    
    
    329Accrued expenses
    
    
    280
    
    
    
    557Deferred income taxes
    
    
    915
    
    
    
    Total liabilities
    
    
    487,238
    
    
    
    468,335Contingencies and commitments (Note 18)Minority interest in consolidated subsidiaries
    
    
    2,388
    
    
    
    1,719Shareholders (deficit) equity:Common stock
    
    
    46,764
    
    
    
    46,764Accumulated deficit
    
    
    (66,208
    )
    
    
    (8,754
    )Total shareholders (deficit) equity
    
    
    (19,444
    )
    
    
    38,010Total
    
    $
    470,182
    
    
    $
    508,064
 *
    
    See notes to consolidated financial statements.  F-3




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##### Table of Contents



Satélites Mexicanos, S. A. de C.V. and Subsidiaries
 
 Consolidated Statements of Operations
(Thousands of U. S. dollars)
 Successor Registrant
    
    
    Predecessor RegistrantFor the Period
    
    
    For the PeriodYear Ended
    
    
    from December 1
    
    
    from January 1
    
    
    Year EndedDecember 31,
    
    
    to December 31,
    
    
    to November 30,
    
    
    December 31,2007
    
    
    2006
    
    
    2006
    
    
    2005Revenues (see Note 15):Satellite services
    
    $
    80,250
    
    
    $
    4,721
    
    
    $
    82,323
    
    
    $
    66,046AlternaTV
    
    
    6,815
    
    
    
    557
    
    
    
    6,019
    
    
    
    3,826Broadband satellite services
    
    
    15,136
    
    
    
    1,473
    
    
    
    
    
    
    
    102,201
    
    
    
    6,751
    
    
    
    88,342
    
    
    
    69,872Cost and expenses:Satellite services (1)
    
    
    21,421
    
    
    
    2,360
    
    
    
    32,526
    
    
    
    11,606AlternaTV (1)
    
    
    3,223
    
    
    
    213
    
    
    
    2,592
    
    
    
    1,578Broadband satellite services (1)
    
    
    3,824
    
    
    
    175
    
    
    
    
    
    
    
    Selling and administrative expenses (1)
    
    
    26,509
    
    
    
    1,687
    
    
    
    12,048
    
    
    
    19,884Depreciation and amortization
    
    
    53,106
    
    
    
    6,266
    
    
    
    51,780
    
    
    
    47,927108,083
    
    
    
    10,701
    
    
    
    98,946
    
    
    
    80,995Operating loss
    
    
    (5,882
    )
    
    
    (3,950
    )
    
    
    (10,604
    )
    
    
    (11,123
    )Reorganization expenses
    
    
    
    
    
    
    
    
    
    
    (33,447
    )
    
    
    (7,666
    )Interest expense
    
    
    (51,672
    )
    
    
    (4,333
    )
    
    
    (19,152
    )
    
    
    (48,375
    )Interest income
    
    
    1,650
    
    
    
    103
    
    
    
    2,711
    
    
    
    2,315Net foreign exchange gain (loss)
    
    
    145
    
    
    
    (123
    )
    
    
    5,690
    
    
    
    (5,722
    )Loss before income taxes, minority interest and
preferred stock dividends
    
    
    (55,759
    )
    
    
    (8,303
    )
    
    
    (54,802
    )
    
    
    (70,571
    )Income taxes
    
    
    893
    
    
    
    311
    
    
    
    18,726
    
    
    
    238Minority interest
    
    
    802
    
    
    
    140
    
    
    
    
    
    
    
    Consolidated net loss
    
    
    (57,454
    )
    
    
    (8,754
    )
    
    
    (73,528
    )
    
    
    (70,809
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    1,130
    
    
    
    1,507Consolidated net loss applicable to common
shareholders
    
    $
    (57,454
    )
    
    $
    (8,754
    )
    
    $
    (74,658
    )
    
    $
    (72,316
    )
 (1)
    
    Exclusive of depreciation and amortization shown separately below.   F-4




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##### Table of Contents



Satélites Mexicanos, S. A. de C.V. and Subsidiaries
 
 Consolidated
Statements of Shareholders (Deficit) Equity
(Thousands of U. S. dollars, except per share data)
 Common Stock
    
    
    Preferred Stock
    
    
    
    
    
    
    TotalShares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Accumulated
    
    
    ShareholdersIssued
    
    
    Amount
    
    
    Issued
    
    
    Amount
    
    
    Deficit
    
    
    (Deficit) EquityPredecessor RegistrantBalance January 1, 2005
    
    
    10,000,000
    
    
    $
    388,068
    
    
    
    606,730
    
    
    $
    31,886
    
    
    $
    (170,564
    )
    
    $
    249,390Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,809
    )
    
    
    (70,809
    )Preferred stock dividends
    
    
    
    
    
    
    1,507
    
    
    
    
    
    
    
    
    
    
    
    (1,507
    )
    
    
    Balance December 31, 2005
    
    
    10,000,000
    
    
    
    389,575
    
    
    
    606,730
    
    
    
    31,886
    
    
    
    (242,880
    )
    
    
    178,581Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,528
    )
    
    
    (73,528
    )Preferred stock dividends
    
    
    
    
    
    
    1,130
    
    
    
    
    
    
    
    
    
    
    
    (1,130
    )
    
    
    Reduction of common stock
    
    
    (10,000,000
    )
    
    
    (285,652
    )
    
    
    (606,730
    )
    
    
    (31,886
    )
    
    
    317,538
    
    
    
    Debt capitalization
    
    
    46,874,999
    
    
    
    273,779
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    273,779Fresh-start adjustment
    
    
    
    
    
    
    (332,068
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (332,068
    )Balance November 30, 2006
    
    
    46,874,999
    
    
    
    46,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,764Successor RegistrantNet loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,754
    )
    
    
    (8,754
    )Balance December 31, 2006
    
    
    46,874,999
    
    
    
    46,764
    
    
    
    
    
    
    
    
    
    
    
    (8,754
    )
    
    
    38,010Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57,454
    )
    
    
    (57,454
    )Balance December 31, 2007
    
    
    46,874,999
    
    
    $
    46,764
    
    
    
    
    
    
    $
    
    
    
    $
    (66,208
    )
    
    $
    (19,444
    )
   F-5




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##### Table of Contents



Satélites Mexicanos, S. A. de C.V. and Subsidiaries
 
 Consolidated Statements of Cash Flows
(Thousands of U. S. dollars)
 Successor Registrant
    
    
    Predecessor RegistrantFor the Period
    
    
    For the PeriodYear Ended
    
    
    from December 1
    
    
    from January 1
    
    
    Year EndedDecember 31,
    
    
    to December 31,
    
    
    to November 30,
    
    
    December 31,2007
    
    
    2006
    
    
    2006
    
    
    2005Cash flows from operating activities:Consolidated net loss
    
    $
    (57,454
    )
    
    $
    (8,754
    )
    
    $
    (73,528
    )
    
    $
    (70,809
    )Adjustments to reconcile net loss to operating cash flows:Loss on discharge of prepetition liabilities
    
    
    
    
    
    
    
    
    
    
    5,346
    
    
    
    Minority interest
    
    
    802
    
    
    
    140
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    53,106
    
    
    
    6,266
    
    
    
    51,780
    
    
    
    47,927Labor obligations
    
    
    124
    
    
    
    
    
    
    
    329
    
    
    
    Income taxes
    
    
    507
    
    
    
    311
    
    
    
    18,726
    
    
    
    238Deferred revenue
    
    
    (2,345
    )
    
    
    (195
    )
    
    
    (2,023
    )
    
    
    (2,200
    )Interest capitalized in debt obligations (see Note 12b)
    
    
    14,934
    
    
    
    
    
    
    
    
    
    
    
    Profit on sales-type lease arrangement  usufructo
    
    
    
    
    
    
    
    
    
    
    (2,312
    )
    
    
    Exchange rate fluctuation and change of value of notes
payable to reflect amount in UDI in accordance with
concurso mercantil
    
    
    
    
    
    
    
    
    
    
    (5,613
    )
    
    
    5,613Changes in operating assets and liabilities:(Increase) decrease in:Accounts receivable  net
    
    
    (1,289
    )
    
    
    1,614
    
    
    
    (2,915
    )
    
    
    (1,226
    )Due from / to related parties  net
    
    
    (1,272
    )
    
    
    (1,222
    )
    
    
    1,645
    
    
    
    (5,193
    )Inventories
    
    
    467
    
    
    
    (10
    )
    
    
    
    
    
    
    Prepaid insurance
    
    
    215
    
    
    
    (1,492
    )
    
    
    407
    
    
    
    (30
    )Guarantee deposits and others assets
    
    
    680
    
    
    
    (172
    )
    
    
    2,177
    
    
    
    60Increase (decrease) in:Accounts payable and accrued expenses
    
    
    9,356
    
    
    
    (3,203
    )
    
    
    3,400
    
    
    
    1,107Accrued interest
    
    
    (2,758
    )
    
    
    4,109
    
    
    
    18,248
    
    
    
    40,148Net cash flows provided by (used in) operating activities
    
    
    15,073
    
    
    
    (2,608
    )
    
    
    15,667
    
    
    
    15,635Investing activities:Acquisition of equipment  net
    
    
    (2,425
    )
    
    
    (1,528
    )
    
    
    (585
    )
    
    
    (2,436
    )Acquisitions of satellites
    
    
    
    
    
    
    
    
    
    
    (45,299
    )
    
    
    (5,901
    )Liquidity damages for delivery delay of Satmex 6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,500Cash acquired on Enlaces business combination
    
    
    
    
    
    
    
    
    
    
    2,007
    
    
    
    Return of unused deposits restricted for construction of
Satmex 6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000Restricted cash
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    (2,000
    )Net cash flows (used in) provided by investing activities
    
    
    (2,425
    )
    
    
    (1,528
    )
    
    
    (41,877
    )
    
    
    163Cash and cash equivalents:Net increase (decrease)
    
    
    12,648
    
    
    
    (4,136
    )
    
    
    (26,210
    )
    
    
    15,798Cash and cash equivalents  beginning of period
    
    
    24,528
    
    
    
    28,664
    
    
    
    54,874
    
    
    
    39,076Cash and cash equivalents  end of period
    
    $
    37,176
    
    
    $
    24,528
    
    
    $
    28,664
    
    
    $
    54,874Supplemental disclosures:Interest paid
    
    $
    36,900
    
    
    $
    
    
    
    $
    
    
    
    $
    7,412Income taxes paid
    
    $
    340
    
    
    $
    
    
    
    $
    
    
    
    $
    Supplemental non-cash flow information:Exchange for cancellation of the FRN old debt
    
    $
    
    
    
    $
    
    
    
    $
    238,237
    
    
    $
    Exchange for cancellation of the HYB old debt
    
    $
    
    
    
    $
    
    
    
    $
    140,000
    
    
    $
    Debt capitalization
    
    $
    
    
    
    $
    
    
    
    $
    273,779
    
    
    $
    Account receivable exchanged for 75% of Enlaces common
stock
    
    $
    
    
    
    $
    
    
    
    $
    8,493
    
    
    $
    
   F-6




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##### Table of Contents



Satélites Mexicanos, S. A. de C.V. and Subsidiaries
 
 Notes to Consolidated Financial Statements
(Thousands of U.S. dollars)
 1.
    
    Nature of Business
   2.
    
    Organization and Comparative Financial Statements
 a.
    
    The consolidated financial statements include the figures of Satélites Mexicanos,
S. A. de C. V. and its subsidiaries. The activities of the entities in the consolidated
group are as described below:
 
    
    Enlaces Integra, S. de R. L. de C. V. (Enlaces), a 75% owned
subsidiary, was acquired on November 30, 2006. Its main activity is the
installation, operation, control and exploitation of public networks of
telecommunications in Mexico.
    
    SMVS Administración, S. de R. L. de C. V. and SMVS Servicios Técnicos, S.
de R. L. de C. V. (New Service Companies), 99.97% owned subsidiaries, were
incorporated on June 30, 2006 to provide administrative services exclusively to
Satmex.
  b.
    
    In conformity with accounting principles generally accepted in the United States of
America (US GAAP), Satmex adopted fresh-start reporting as of November 30,
2006, in accordance with Statement of Position No. 90-7, Financial Reporting of Entities
in Reorganization under the Bankruptcy Code(SOP 90-7). Accordingly, the consolidated
financial information disclosed under the heading Successor Registrant for the year
ended December 31, 2007 and for the period from December 1 to December 31, 2006, is
presented on a basis different from, and is therefore not comparable to, the financial
information disclosed under the heading Predecessor Registrant for the period from
January 1 to November 30, 2006 and for the year ended December 31, 2005.As a result of Satmexs emergence from Chapter 11 of the U.S. Federal Bankruptcy Law on
October 26, 2006, for financial reporting purposes a new economic entity was established
as Satmex and subsidiaries; however, each of the legal entities preserves its rights and
responds to its obligations individually in accordance with Mexican laws.
  F-7




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##### Table of Contents



3.
    
    Bankruptcy Filings and Reorganization
 a.
    
    BackgroundIn February and March 1998, Satmex issued Fixed Rate Notes (the FRNs) and
variable rate High Yield Bonds (the HYBs). The FRNs issued were $325 million with
interest at LIBOR plus 4.5%, with quarterly payments through March 2004 and a final
payment in June 2004. The HYBs issued were $320 million with interest payable at a fixed
rate of 10.125% and with maturity on November 1, 2004.Payment of the FRNs was demanded in June 2004, but they were not paid. Interest
payments on the HYBs were not made beginning August 2003, and the bonds due in November
2004, were not paid.b.
    
    Shareholders DecisionsOn March 31, 2006, Satmex and approximately 52.8% of the FRNs holders and 71.6% of the
HYBs holders and other interested parties signed a restructuring agreement and agreed to
present to the District Court Judge in Mexico City and the United States of Americas
Bankruptcy Court an appeal and a protection request, respectively.Concurso Mercantil and Reorganization Process according to Chapter 11 of the United
States of America Bankruptcy Code (Chapter 11)
 
    
    Concurso MercantilIn an effort to restructure the outstanding indebtedness of Satmex, on June 29,
2005, Satmex voluntarily filed a petition for concurso mercantil. This proceeding
was sent to the Second District Court (the Court), where it was admitted on June
30, 2005. A concurso mercantilis a Mexican reorganization proceeding based on the
Ley de Concursos Mercantiles, which was enacted in May 2000 (the LCM).On September 7, 2005, the Court declared Satmex to be in concurso mercantilunder
the LCM. Among other things, this order suspended the payment of any of Satmexs
debt obligations as of the date of the order, other than those obligations
necessary for Satmex to continue its ordinary operations, and suspended attachment
or foreclosure procedures against Satmex assets. Accordingly, as of that date the
HYBs no longer accrued interest and were valued and recorded at the Mexican peso
equivalent translated to Investment Units (UDI) using the equivalence issued by
the Banco de México and the fluctuation of the valuation of the UDI was considered
interest. The unpaid FRNs were maintained in their original currency and only
accrued ordinary interest in accordance with the contract.In order to protect the assets of Satmex located outside of the Mexican territory,
on August 4, 2005, Satmex filed an appeal with the United States of Americas
Bankruptcy Court for the Southern District Court of New York (the Bankruptcy
Court), in accordance with Section 304 of the Bankruptcy Code in the United
States. Satmex requested protection of any new lawsuit against its assets in the
USA. As a result of the legal promotion, the Bankruptcy Court ordered the
suspension of any seizure or execution against Satmex assets located in the USA,
during the concurso mercantilprocess.After the concurso mercantildeclaration and as a result of the negotiations among
Satmex, the main bondholders and the shareholders carried out the conciliation
stage. On March 31, 2006, Satmex and the majority of its holders of the FRNs,
approximately two-thirds of the holders of HYBs and its main shareholders;
Servicios Corporativos Satelitales, S. A. de C. V. (Services), Loral Skynet Corp.
(Loral) and Principia, S. A. de C. V. (Principia), executed a restructuring
plan, whose principal terms included the following matters: i) capitalizing a
significant part of the HYBs and the related accrued interest; ii) emission of new
bonds for $140 million to replace the HYBs not capitalized; iii) emission of new
bonds to replace the FRNs (principal and interest); iv) amending Satmexs corporate
by-laws; v) making changes in Satmexs shareholder control; vi) making changes in
Satmexs shareholder voting and financial rights; and vii) making changes to
Satmexs management.
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On May 4, 2006, the terms on the restructuring plan were adopted in the Convenio
Concursal, which was submitted to the holders acknowledged by Satmex, which
agreement was proposed to be signed as established by the LCM. On June 1, 2006,
once it was signed by the required number of holders, the agreement was considered
effective in accordance with the terms of the LCM. The Conciliadorappointed by the
Court submitted the Convenio Concursalfor the approval of the Court.On May 8, 2006, the Board of Directors confirmed and approved the Restructuring
Plan and the Convenio Concursal. As soon as the concurso mercantilprocess ended,
the Board of Directors accepted implementing both legal documents and submitted a
voluntary reorganization form pursuant to chapter 11, title 11 of the United States
of America Bankruptcy Code (Chapter 11) 11 U.S.C. §§ 101-1532.On June 23, 2006, the SCT, as a regulator and the grantor of Satmexs orbital
concessions, stated a motion to the Court that allowed the Convenio Concursalto
proceed on the terms agreed to by Satmexs bondholders.The Convenio Concursalwas approved on July 17, 2006, in the concurso mercantil
proceeding, which became final and not subject to appeal on August 1, 2006.
    
    Chapter 11In order to complete the necessary formalities to implement the restructuring and
to comply with the Board of Directors resolutions approved on May 8, 2006, Satmex
filed a voluntary petition for reorganization under Chapter 11 in the Bankruptcy
Court, on August 11, 2006.Jointly with the voluntary reorganization request, Satmex filed a petition with
the Bankruptcy Court, the plan of reorganization and the supplement plan
documents, duly approved by the shareholders. Subsequently, on September 8, 2006,
Satmex submitted to the Bankruptcy Court the first modification to the
aforementioned documents and on September 13, 2006, the Bankruptcy Court issued an
approval of order that the same documents contained the necessary information to
require the necessary votes from the bondholders in order to approve or reject the
Restructuring Plan.The Restructuring Plan was accepted by the majority of the bondholders and the
holders of each class of shares issued, in accordance with the Bankruptcy Code.
The Bankruptcy Court issued an order (the Confirmation Order) dated October 26,
2006, which became final.After the Confirmation Order became final and not subject to appeal on November
21, 2006, Satmex, the bondholders and the shareholders initiated several actions
to implement the agreements established in the Restructuring Plan, the Convenio
Concursaland Restructuring Agreement. Such agreements were implemented on
November 30, 2006 (the Effective Date), the date on which all the significant
conditions established in the Restructuring Agreement and Convenio Concursal
agreements were satisfied.
 c.
    
    ReorganizationThe main agreements for financial restructuring at the Effective Date were as follows:
 
    
    New Debt and Debt CapitalizationFirst Priority Senior Secured NotesIn exchange for cancellation of the old debt, at the Effective Date the FRNs
holders received new bonds issued by Satmex, named First Priority Senior Secured
Notes (FPSSN) due in November 2011, with a principal amount of $238.2 million
(see Note 12a).
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Second Priority Senior Secured NotesIn exchange for cancellation of the old debt of $413.8 million, at the Effective
Date the HYBs holders received: i) new bonds issued by Satmex, named Second
Priority Senior Secured Notes (SPSSN) due on November 30, 2013, with a principal
amount of $140 million (see Note 12b) and ii) Satmex common stock, exchanged
through the capitalization process, in the amount of $273.8 million (see Note 14).Other Agreements at the Effective Date
 
    
    Satmex entered into a new contract with Space Systems/Loral, Inc. (SSL)
and granted to SSL a Mexican usufructofigure with respect to certain
transponders of the satellites Satmex 5 and Satmex 6. Pursuant to Mexican
law, the usufructofigure grants to SSL the right to use and benefits from
certain transponders until the end of life of the referred satellites. SSL
was not required to post a bond related to the usufructofigure
(see Note 18g).
    
    On November 30, 2006; in exchange for a loan receivable from Enlaces for
$8.4 million, Satmex received 75% of the shares of its common stock.
    
    Satmex made a donation to Enlaces, consisting of a teleport, antenna and
communications equipment, servers, other minor equipments and spare parts,
whose net book value was $675.
    
    The personnel that provided administrative services to Satmex through
Satmex Corporativo, S. de R. L. de C. V., Satmex Administración, S. de R. L.
de C. V. and Satmex Servicios Técnicos, S. de R. L. de C. V. (the Service
Companies), related parties of Satmex through the Effective Date, were
transferred to the New Service Companies. Transferred personnel maintained
their wages and benefits according to Mexican Federal Labor Law.
 4.
    
    Basis of PresentationThe consolidated balance sheets as of December 31, 2007 and 2006 (Successor Registrant balance
sheets), and the related consolidated statements of operations, shareholders (deficit) equity
and cash flows for the year ended December 31, 2007, for the period from December 1 to
December 31, 2006 (Successor Registrant operations), and the related consolidated statements
of operations, shareholders equity and cash flows for the period from January 1 to November
30, 2006, and for the year ended December 31, 2005 (Predecessor Registrant operations), have
been prepared in accordance with US GAAP. All intercompany transactions have been eliminated.
References in these consolidated financial statements to the Predecessor Registrant refer to
Satmex until November 30, 2006, and references to the Successor Registrant refer to Satmex
after November 30, 2006 and after giving effect to the plan reorganization adjustments and to
the adoption of fresh-start reporting.
 a.
    
    Fresh-Start Reporting The accompanying consolidated financial statements for the
Predecessor Registrant have been prepared in accordance with SOP 90-7 and on a going
concern basis, which contemplates continuing operations, realization of assets and
liquidation of liabilities in the ordinary course of business. Moreover, SOP 90-7
requires Satmex to distinguish prepetition liabilities subject to compromise from
postpetition liabilities in Satmexs consolidated balance sheets. The caption
prepetition liabilities subject to compromise reflects the carrying value of
prepetition claims that were restructured in Satmexs Chapter 11 proceedings. In
addition, the consolidated statements of operations portray the results of operations
during the Chapter 11 proceedings. As a result, any revenue, expenses, realized gains and
losses and provision for losses resulting directly from the reorganization and
restructuring of the organization are reported separately as reorganization items.
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As noted in the preceding notes, Satmex emerged from bankruptcy on November 26, 2006 and
pursuant to SOP 90-7 adopted fresh-start reporting as of November 30, 2006. Upon
emergence, Satmexs reorganization enterprise value as determined by the Bankruptcy Court
was approximately $425 million which, after reduction of the debt obligations, results in
a reorganization equity value of approximately $46.7 million. This reorganization
enterprise value was allocated to assets and liabilities (see Note 5). Assets and
liabilities were stated at fair value in accordance with SFAS No. 141, Business
Combinations. In addition, Satmexs accumulated deficit was eliminated, and the new debt
and equity were recorded in accordance with distributions pursuant to the Plan of
Reorganization (POR).b.
    
    Use of Estimates The preparation of the consolidated financial statements in
accordance with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the amounts of
revenues and expenses reported during the periods reported.Such estimates include the allowance for doubtful accounts, the revenue recognition on
AlternaTV, the valuation of long-lived assets and goodwill, the valuation allowance on
deferred income tax assets, and the estimated useful lives of each satellite. Although
management believes the estimates and assumptions used in the preparation of these
consolidated financial statements were appropriate in the circumstances, actual results
could differ from those estimates and assumptions.c.
    
    Reclassifications Through December 31, 2006, the salaries and benefits of
satellite operation employees were presented within selling and administrative expenses.
Companys management considers that such compensation is directly related to satellital
service cost and as a result effective January 1, 2007, the Company reclassified such
compensation to satellite service costs. The effects of such reclassification were
applied retroactively in the accompanying consolidated statements of operations as
follows:
 Retrospectively
    
    
    As PreviouslyAs Reclassified
    
    
    Reclassified
    
    
    ReportedSuccessor RegistrantFor the period from December 1 to December 31, 2006Cost and expenses:Satellite services
    
    $
    2,360
    
    
    $
    154
    
    
    $
    2,206Selling and administrative expenses
    
    
    1,687
    
    
    
    (154
    )
    
    
    1,841Predecessor RegistrantFor the period from January 1 to November 30, 2006Cost and expenses:Satellite services
    
    $
    32,526
    
    
    $
    1,162
    
    
    $
    31,364Selling and administrative expenses
    
    
    12,048
    
    
    
    (1,162
    )
    
    
    13,210For the year ended December 31, 2005Cost and expenses:Satellite services
    
    $
    11,606
    
    
    $
    2,621
    
    
    $
    8,985Selling and administrative expenses
    
    
    19,884
    
    
    
    (2,621
    )
    
    
    22,505
 d.
    
    Foreign Currency Transactions For statutory purposes books and records are
maintained in Mexican pesos, Spanish language and Mexican Financial Reporting Standards.
For US GAAP purposes, Satmex keeps separate accounting records in its functional
currency, the U.S. dollar. Transactions denominated in Mexican pesos and other foreign
currencies are recorded at the rate of exchange in effect at the date of the
transactions. Monetary assets and liabilities denominated in Mexican pesos and other
foreign currencies are converted into
the Companys functional currency at the rate of exchange in effect at the balance sheet
date. The effect of changes in exchange rates is recorded in the results of operations.
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e.
    
    Cash and Cash Equivalents This line item consists mainly of bank deposits in
checking accounts and readily available daily investments of cash surpluses. Cash
equivalents are composed of highly liquid investments with original maturities of three
months or less. This line item is stated at nominal value plus accrued yields, which are
recognized in results as they accrue.f.
    
    Restricted Cash Restricted cash represents returns of amounts previously
deposited to Loral for the construction of Satmex 6. Such cash was held in a trust as of
December 31, 2005, and was restricted for use by Satmex until final approval of Satmex 6
was received, which occurred in February 2006.g.
    
    Concentrations of Credit Risk Financial assets, which potentially subject Satmex
to concentrations of credit risk, consist principally of cash and cash equivalents and
accounts receivable. Satmexs cash and cash equivalents are maintained with high-credit
quality financial institutions. Satmexs customers are several companies of the private
domestic sector and foreign companies. Management considers that its credit evaluation,
approval and monitoring processes combined with negotiated billing arrangements mitigate
potential credit risks with regard to its current customer base.The main customers for Satellite services  broadcasting are Grupo Televisa and
Productora y Comercializadora de Televisión, S. A. de C.V.; Satellite services -
telecommunications are Teléfonos de México, S. A. de C. V. and Telmex Perú, S. A.;
Satellite services  data transmission and Internet is Hughes Network Systems, Inc.;
AlternaTV are Direct TV and Comcast LLC; and Enlaces Integra (Broadband satellite
services) are Wal-Mart and Globalstar.For the year ended December 31, 2007, for the periods from December 1 to December 31,
2006 (Successor Registrant), from January 1 to November 30, 2006 and for the year ended
December 31, 2005 (Predecessor Registrant), the satellite service revenues, AlternaTV
broadband satellite services were obtained from:
 Successor Registrant
    
    
    Predecessor RegistrantDecember 1 to
    
    
    January 1 toDecember 31,
    
    
    November 30,2007
    
    
    2006
    
    
    2006
    
    
    2005%
    
    
    %
    
    
    %
    
    
    %Domestic customers
    
    
    42
    
    
    
    35
    
    
    
    28
    
    
    
    47Hughes Networks Systems, Inc.
    
    
    26
    
    
    
    29
    
    
    
    19
    
    
    
    31Loral
    
    
    2
    
    
    
    1
    
    
    
    27
    
    
    
    2Foreign customers
    
    
    30
    
    
    
    35
    
    
    
    26
    
    
    
    20
 h.
    
    Inventories Inventories consist mainly of antennas and are stated at the lower of
cost or market. Cost is determined using the average cost method.i.
    
    Satellites and Equipment As of November 30, 2006, Satmex adopted fresh-start
reporting, under which its satellites and equipment were recorded at fair values based
upon the appraised values of such assets. Satmex determined the fair value of the
satellites and equipment using the planned future use of each asset or group of assets,
quoted market prices for assets where a market exists for such assets. In our
determination of fair value, Satmex also considered whether an asset would be sold either
individually or with other assets and the proceeds Satmex expected to receive from such
sale.Assumptions relating to the expected future use of individual assets could affect the
fair value of such assets and the depreciation expense recorded related to such assets in
the future. Depreciation is provided on the straight-line method for satellites, related
equipment and other owned assets over the estimated useful lives of the related assets.
Leasehold improvements are amortized over the shorter of the lease term or the estimated
useful life of the improvements. Below are the estimated useful lives of the satellites
and equipment as of December 31, 2007 and 2006:
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Average YearsSatellites in-orbit  estimated useful life is determined
by engineering analysisSolidaridad 2
    
    
    14.5Satmex 5
    
    
    15Satmex 6
    
    
    15EquipmentSatellite equipment
    
    
    3Furniture and mixtures
    
    
    10Leasehold improvements
    
    
    11Teleport, equipment and antennas
    
    
    10
 Depreciation of satellites commences on the date on which the satellite is placed in
orbit. Solidaridad 2, Satmex 5 and Satmex 6 commenced their operation in November 1994,
January 1999 and July 2006, respectively.Costs incurred in connection with the construction and successful deployment of the
satellites and related equipment are capitalized. Such costs include direct contract
costs, allocated indirect costs, launch costs and in-orbit test insurance and
construction period interest.The Company insures its satellites to cover any possible loss, except for that mentioned
in Note 18. The amounts of contracted coverage are based on satellite industry standards.
When a new satellite is launched, Satmex procures insurance to cover both the launch risk
and a period of in-orbit risk. The premium paid for these concepts is capitalized within
the cost of the satellite. The premium paid to renew in-orbit coverage is recorded as a
prepaid expense and amortized over the related policy period.j.
    
    Concessions The concessions are recorded at their fair value and are being
amortized over 40 years using the straight-line method. The concession related to operate
a telecommunications public network is amortized over 23 years, which is the remaining
useful life at the effective date, originally granted for 30 years.k.
    
    Valuation of Satellites and Long-Lived Assets The carrying value of our
satellites, amortizable intangible assets and other long-lived assets is reviewed for
impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. Satmex periodically evaluate potential impairment loss relating to our
satellites, amortizable intangible assets and other long-lived assets, when a change in
circumstances occurs, by assessing whether the carrying amount of these assets can be
recovered over their remaining lives through future undiscounted expected cash flows
generated by those assets (excluding financing costs). If the expected undiscounted
future cash flows were less than the carrying value of the long-lived asset, an
impairment charge would be recorded based on such assets estimated fair value. Changes
in estimates of future cash flows could result in a write-down of the asset in a future
period. Estimated future cash flows from our satellites could be impacted by, among other
things:
 
    
    Changes in estimates of the useful life of the satellite;
    
    Changes in estimates of our ability to operate the satellite at expected levels;
    
    Changes in the manner in which the satellite is to be used;
    
    The loss of one or several significant customer contracts on the satellite.
 l.
    
    Goodwill Goodwill represents the amount by which the Companys reorganization
equity value exceeded the fair value of its net assets (exclusive of debt obligations) in
accordance with the provisions of SFAS No. 141, as of November 30, 2006. Pursuant to the
provisions of SFAS No. 142, Goodwill and Other Intangible Assets, goodwill is not
amortized and is subject to an annual impairment test which the Company performs in the
fourth quarter of each fiscal year. Goodwill was allocated to our reporting unit level
(operating segment or one level below an operating segment). SFAS No. 142 requires the
Company to compare the fair value of the reporting unit to its carrying amount on an
annual basis to determine if there is potential impairment. If the fair
value of the reporting unit is less than its carrying value, an impairment loss is
recorded to the extent that the implied fair value of the goodwill within the reporting
unit is less than its carrying value. The Company completed its annual goodwill
impairment test in the fourth quarter of 2007 and determined that goodwill was not
impaired.
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m.
    
    Intangible Assets The intangible assets consist primarily of customer
relationships, landing rights, contract backlog and internally developed software and
technology, all of which were recorded in connection with the adoption of fresh-start
reporting. The fair values were calculated using several approaches that encompassed the
use of excess earnings, relief from royalty and the build-up methods. The excess
earnings, relief from royalty and build-up approaches are variations of the income
approach. The income approach, more commonly known as the discounted cash flow approach,
estimates fair value based on the cash flows that an asset can be expected to generate
over its useful life. Identifiable intangible assets with finite useful lives are
amortized on a straight-line basis over the estimated useful lives of the assets, except
for contract backlog which is amortized in accordance with the agreements maturity.n.
    
    Labor Obligations Seniority premiums and severance payments are recognized as
costs over employee years of service and are calculated by independent actuaries using
the projected unit credit method. Accordingly, the liability is being accrued which, at
present value, will cover the obligation from benefits projected to the estimated
retirement date of the Companys employees.o.
    
    Provisions The provisions are recognized for current obligations that result of a
past event, are probable to result in the use of economic resources and can be reasonably
estimated.p.
    
    Income Taxes and Statutory Employee Profit Sharing Income taxes and statutory
employee profit sharing are recorded in the results of the year in which they are
incurred. The Company recognizes deferred income tax assets and liabilities for the
future consequences of temporary differences between the financial statement carrying
amounts of assets and liabilities and their respective income tax bases, measured using
enacted rates. The effects of changes in the statutory rates are accounted for in the
period that includes the enactment date. Deferred income tax assets are also recognized
for the estimated future effects of tax loss carryforwards and asset tax credit
carryforwards. A valuation allowance is applied to reduce deferred income tax assets to
the amount of future net benefits that are more likely than not to be realized.Beginning October 2007, the Company must determine whether it will incur regular income
tax (ISR) or the new Business Flat Tax (IETU) in the future and, accordingly,
recognize deferred taxes based on the tax it will pay. Deferred taxes are calculated by
applying the corresponding tax rate to the applicable temporary differences resulting
from comparing the accounting and tax bases of assets and liabilities and including, if
any, future benefits from tax loss carryforwards and certain tax credits.q.
    
    Revenue Recognition Satellite service revenues are recognized as the satellite
capacity is provided according to service lease agreements. Satellite capacity is sold
through permanent and temporary contracts, which stipulate the agreed capacity. Lease
agreements are accounted for either as operating or sales-type leases.Operating lease revenues are recognized on a straight-line basis over the lease term.
Revenues for temporary services are recognized as services are performed.Revenues from end-of-life leases for transponders are usually collected in advance.
Satmex does not provide insurance and/or guarantee of any kind for the related
transponders to these customers. Total revenue and related cost are accounted as
sales-type leases and recognized in income when the risk and rewards of the transponders
are transferred to the customer in accordance with the agreements.On a monthly basis, Satmex estimates the number of subscribers to AlternaTV for each
purchaser of its programming. Satmex applies the contractual value of each subscriber to
calculate the monthly revenue attributable to the purchaser. Approximately 45 to 60 days
after the end of each month, Satmex receives a definitive report from the purchaser and
reconciles the definitive revenue with the estimated amount, issuing an invoice to the
purchaser based on definitive report. Variations between the estimated and actual revenue
amounts are not material.
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The public and private net signal and value-added services (Broadband satellite
services) are recognized when rendered. The sale of antennas and installation services
are recognized in the period which risk and rewards are transferred to the customers,
which generally coincides with the completion of the installation of the antennas. Sales
and installation of antennas are subject to contractual customer acceptance provisions;
consequently, the Company recognizes revenue at the date of customers formal acceptance
of the equipment.r.
    
    Deferred Revenue Satmex is required to provide the Mexican federal government, at
no charge, approximately 362.88 MHz of its available transponder capacity for the
duration of the concessions. In 1997, Satmex recorded $88 million as deferred revenue, as
the value of this obligation, and an increase in the value of the concessions by the same
amount. This obligation is being amortized over 40 years as an increase in revenue and
corresponding increase in amortization expense. Amortization of deferred revenue totals
$2.2 million annually for the Predecessor Registrant. As a result of the application of
fresh-start reporting, deferred revenue was adjusted to fair value (see Note 5). Annual
amortization for the Successor Registrant is $2.3 million.s.
    
    Comprehensive Loss Comprehensive loss includes, in addition to net loss, all
other changes in an entitys equity during the period resulting from transactions and
other events and circumstances except those from investments by owners and distributions
to owners. As Satmex did not generate changes in equity from nonowner sources, Satmexs
comprehensive loss includes solely the net loss for each respective year.t.
    
    New Accounting StandardsIn June 2006, the Financial Accounting Standards Broad (FASB) issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of
FASB Statement No. 109(FIN 48). FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in a companys financial statements and prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of tax positions taken or expected to be taken in a tax return. For benefits
to be recognized, a tax position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The amount recognized is measured as the largest
amount of benefit that is greater than 50 percent likely of being realized upon ultimate
settlement. FIN 48 also provides guidance of the recognition, classification, interest
and penalties, accounting in interim periods, disclosure and transition. The Company
adopted FIN 48 effective January 1, 2007; however, there was no material impact.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to define fair
value, establish a framework for measuring fair value in accordance with US GAAP and
expand disclosures about fair value measurements. SFAS No. 157 requires quantitative
disclosures using a tabular format in all periods (interim and annual) and qualitative
disclosures about the valuation techniques used to measure fair value in all annual
periods. The Company adopted the provisions of SFAS No. 157 effective 2007. The
implementation did not have any impact on the Companys financial statements in 2007.In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87,
88, 106, and 132(R). SFAS No. 158 requires an employer to recognize the over-funded or
under-funded status of a defined benefit postretirement plan (other than a multiemployer
plan) as an asset or liability in its statement of financial position, to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income as well as prescribing additional disclosure requirements. The
provisions of this statement were effective for an employer with publicly traded equity
securities, or controlled subsidiaries of such companies, in fiscal years ending after
December 15, 2006. In addition, a company must now measure the fair value of its plan
assets and benefit obligations as of the date of its year-end balance sheet. A company is
no longer permitted to measure the funded status of plans by being able to choose a
measurement date up to three months prior to year end. The adoption of this new
accounting principle had no impact on the financial position or results of operations of
the Company.
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In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS No. 159 expands opportunities to use fair value
measurements in financial reporting and permits entities to choose to measure many
financial instruments and certain other items at fair value. SFAS No 159 will be
effective on January 1, 2008. The Company does not anticipate the adoption of this new
accounting principle will have a material effect on its consolidated financial position,
results of operations and cash flows.In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements-an amendment of ARB No. 51.SFAS No. 160 (a) amends ARB 51 to
establish accounting and reporting standards for the noncontrolling interest in a
subsidiary and the deconsolidation of a subsidiary; (b) changes the way the consolidated
income statement is presented; (c) establishes a single method of accounting for changes
in a parents ownership interest in a subsidiary that do not result in deconsolidation;
(d) requires that a parent recognize a gain or loss in net income when a subsidiary is
deconsolidated; and (e) requires expanded disclosures in the consolidated financial
statements that clearly identify and distinguish between the interests of the parents
owners and the interests of the noncontrolling owners of a subsidiary. SFAS No. 160 must
be applied to transactions prospectively, but the presentation and disclosure
requirements must be applied retrospectively to provide comparability in the financial
statements. Early adoption is prohibited. SFAS No. 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15, 2008. The
Company does not anticipate the adoption of this new accounting principle will have a
material effect on its consolidated financial position, results of operations or cash
flows.In December 2007, the FASB issued SFAS No. 141 (R), Business Combinations-a replacement
of FASB No. 141. SFAS No. 141 (R) requires (a) a company to recognize the assets
acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at
fair value as of the acquisition date; and (b) an acquirer in preacquisition periods to
expense all acquisition-related costs. SFAS No. 141 (R) requires that any adjustments to
an acquired entitys deferred tax asset and liability balance that occur after the
measurement period be recorded as a component of income tax expense. This accounting
treatment is required for business combinations consummated before the effective date of
SFAS No. 141 (R) (non-prospective); otherwise, SFAS No. 141 (R) must be applied
prospectively. The presentation and disclosure requirements must be applied
retrospectively to provide comparability in the financial statements. Early adoption is
prohibited. SFAS No. 141 (R) will be effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. The Company is in the
process of determining the impact of adopting this new accounting principle on its
consolidated financial position, results of operations and cash flows.
 5.
    
    Fresh-Start ReportingOn October 26, 2006, the Bankruptcy Court entered its Confirmation Order confirming the
Companys POR. Satmexs emergence from Chapter 11 proceedings resulted in a new reporting
entity and adoption of fresh-start reporting in accordance with SOP 90-7 as of November 30,
2006, the date on which all material conditions were met, as reflected in the following
financial information. Reorganization adjustments have been made in the consolidated financial
information to reflect the effects of the several agreements in accordance with the
Confirmation Order and the adoption of fresh-start reporting. These adjustments were
determined to recognize the relative fair values the Companys assets and liabilities on the
Effective Date.
  F-16




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##### Table of Contents



Consolidated
Balance Sheet (a)Predecessor
    
    
    
    
    
    
    
    
    
    
    SuccessorRegistrant
    
    
    Plan
    
    
    Fresh-Start
    
    
    RegistrantNovember 30,
    
    
    Reorganization
    
    
    Valuation
    
    
    November 30,2006
    
    

Adjustments
(b)
    
    
    Adjustments
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    26,657
    
    
    $
    2,007
    
    
    $
    
    
    
    $
    28,664Accounts receivable  net
    
    
    6,483
    
    
    
    2,405
    
    
    
    (382
    )(b1)
    
    
    8,506Due from related parties  net
    
    
    8,907
    
    
    
    (8,491
    )       (c)
    
    
    
    
    
    
    416Inventories
    
    
    21
    
    
    
    795
    
    
    
    (21
    )      (d)
    
    
    795Prepaid insurance
    
    
    3,733
    
    
    
    146
    
    
    
    
    
    
    
    3,879Deferred income taxes
    
    
    
    
    
    
    603
    
    
    
    
    
    
    
    603Total current assets
    
    
    45,801
    
    
    
    (2,535
    )
    
    
    (403
    )
    
    
    42,863Satellites  net
    
    
    423,213
    
    
    
    2,312
    (e)
    
    
    (111,389
    )      (e1)
    
    
    314,136Equipment  net
    
    
    13,668
    
    
    
    1,040
    
    
    
    (2,031
    )
    
    
    12,677Concessions  net
    
    
    400,071
    
    
    
    2,248
    (f)
    
    
    (358,371
    )      (f)
    
    
    43,948Intangible assets
    
    
    
    
    
    
    2,128
    (g)
    
    
    68,320
    (g1)
    
    
    70,448Other assets
    
    
    393
    
    
    
    970
    
    
    
    (1,021
    )
    
    
    342Goodwill
    
    
    
    
    
    
    
    
    
    
    32,502
    (h)
    
    
    32,502Total assets
    
    $
    883,146
    
    
    $
    6,163
    
    
    $
    (372,393
    )
    
    $
    516,916Liabilities and shareholders
equityCurrent liabilities:Prepetition liabilities
subject to compromise
    
    $
    652,016
    
    
    $
    (652,016
    )       (i)
    
    $
    
    
    
    $
    Deferred revenue
    
    
    2,200
    
    
    
    
    
    
    
    144
    
    
    
    2,344Other current liabilities
    
    
    14,900
    
    
    
    2,241
    (l)
    
    
    (99
    )
    
    
    17,042Total current liabilities
    
    
    669,116
    
    
    
    (649,775
    )
    
    
    45
    
    
    
    19,386Debt obligations
    
    
    
    
    
    
    378,237
    (i)
    
    
    
    
    
    
    378,237Labor obligations and accrued
expenses
    
    
    681
    
    
    
    60
    
    
    
    
    
    
    
    741Deferred revenue
    
    
    65,918
    
    
    
    
    
    
    
    4,320
    
    
    
    70,238Deferred income taxes
    
    
    44,690
    
    
    
    20
    
    
    
    (44,690
    )
    
    
    20Total liabilities
    
    
    780,405
    
    
    
    (271,458
    )
    
    
    (40,325
    )
    
    
    468,622Minority interest
    
    
    
    
    
    
    1,530
    
    
    
    
    
    
    
    1,530Shareholders equity:Common stock
    
    
    390,705
    
    
    
    (11,873
    )      (j)(k)
    
    
    (332,068
    )
    
    
    46,764Preferred stock
    
    
    31,886
    
    
    
    (31,886
    )
    
    
    
    
    
    
    Accumulated deficit
    
    
    (319,850
    )
    
    
    319,850
    (j)
    
    
    
    
    
    
    Total shareholders equity
    
    
    102,741
    
    
    
    276,091
    
    
    
    (332,068
    )
    
    
    46,764Total liabilities and
shareholders equity
    
    $
    883,146
    
    
    $
    6,163
    
    
    $
    (372,393
    )
    
    $
    516,916
  F-17




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##### Table of Contents



(a)
    
    The condensed consolidated balance sheet reflects a reorganization enterprise
value of $425 million based on the Bankruptcy Courts determination (see Note 3), which,
after reduction of the Debt Obligations (see Notes 10 and 12), results in a
reorganization equity value of approximately $46.7 million. This results in goodwill
equal to the excess of reorganization equity value over fair value of identifiable net
assets.(b)
    
    POR adjustments mainly include the incorporation of Enlaces and the New
Services Companies assets and liabilities at fair value and the restructuring of debt and
common stock.(b1)
    
    This adjustment is to recognize the accounts receivable at fair value.(c)
    
    Reflects the loan receivable from Enlaces for $8,493 which in accordance with
the POR was exchanged for 75% of Enlaces representative shares of its common stock.The purchase price allocation among acquired assets and liabilities are as follows: Balances as ofNovember 30,2006Total current assets
    
    $
    5,956Teleport, antennas and equipment  net
    
    
    1,0416,997Concession
    
    
    2,248Customer relationships
    
    
    2,128Goodwill
    
    
    970Total assets
    
    
    12,343Total liabilities
    
    
    (2,320
    )Minority interest
    
    
    (1,530
    )Net assets acquired
    
    $
    8,493
 (d)
    
    To recognize the inventories at fair value.(e)
    
    Reflects the effect of the capitalization of orbital incentive.(e1)
    
    To recognize the satellites and equipment at fair value.(f)
    
    To recognize the orbital and telecommunications public network concessions at
fair value.(g)
    
    Represents the intangible assets fair value as a result of the acquisition of
Enlaces, in this case identified as customer relationships.(g1)
    
    Reflects the values that arise from Satmexs asset valuation at fair value,
identified as landing rights $60, contract backlog $67,990 and internally developed
software and technology $270.(h)
    
    Reflects goodwill equal to the excess of the reorganization equity value over
the estimated fair value of Satmexs identifiable net assets.(i)
    
    Reflects the discharge of prepetition liabilities in accordance with the POR
and the reclassification of the remaining liabilities subject to compromise to the
appropriate liability accounts in accordance with the POR. Discharge of Satmex
prepetition liabilities is summarized as follows: Predecessor liabilities subject to compromise
    
    $
    652,016Debt capitalization
    
    
    (273,779
    )Exchanged for new debt obligations (Successor
Registrant debt)
    
    $
    378,237
 (j)
    
    Pursuant to a resolution made at the general ordinary shareholders meeting on
November 30, 2006, it was decided to reduce common stock to $5, through the absorption of
accumulated deficit.(k)
    
    Pursuant to a resolution made at the general ordinary shareholders meeting on
November 30, 2006, variable common stock was increased by $273,779 million, through the
capitalization of HYBs.  F-18




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##### Table of Contents



6.
    
    Cash and Cash EquivalentsAs of December 31, consist of:
 2007
    
    
    2006Cash
    
    $
    4,671
    
    
    $
    3,002Cash equivalents
    
    
    32,505
    
    
    
    21,526$
    37,176
    
    
    $
    24,528
 7.
    
    Accounts ReceivableAs of December 31, consist of:
 2007
    
    
    2006Customers
    
    $
    6,887
    
    
    $
    3,738Allowance for doubtful accounts
    
    
    (399
    )
    
    
    (1
    )Value-added tax and tax withholdings
    
    
    1,345
    
    
    
    2,279Prepaid expenses
    
    
    348
    
    
    
    876$
    8,181
    
    
    $
    6,892
 8.
    
    Satellites and EquipmentAs of December 31, consist of:
 2007
    
    
    2006Satellites in-orbit
    
    $
    314,136
    
    
    $
    314,136Equipment for satellites
    
    
    10,561
    
    
    
    9,688Furniture and fixtures
    
    
    4,385
    
    
    
    3,962Leasehold improvements
    
    
    18
    
    
    
    329,100
    
    
    
    327,786Accumulated depreciation and amortization
    
    
    (39,960
    )
    
    
    (2,937
    )289,140
    
    
    
    324,849Other construction in-progress
    
    
    1,104
    
    
    
    573Advances to antenna suppliers
    
    
    184
    
    
    
    30$
    290,428
    
    
    $
    325,452
    F-19




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##### Table of Contents



9.
    
    ConcessionsAs of December 31, consist of:
 2007
    
    
    2006Orbital concessions
    
    $
    41,700
    
    
    $
    41,700Public telecommunications network
    
    
    2,248
    
    
    
    2,24843,948
    
    
    
    43,948Accumulated amortization
    
    
    (1,529
    )
    
    
    (117
    )$
    42,419
    
    
    $
    43,831
  a.
    
    Orbital Concessions and FacilitiesIn October 1997, the Mexican federal government granted to Satmex the rights to three
concessions (the Concesssions) for an initial 20-year term to operate in the orbital
slots 114.9° W.L., 113.0° W.L. and 116.8° W.L. In November 2006, Satmex received
information from the Secretaría de Comunicaciones y Transportes (The Ministry of
Communications and Transportation or the SCT) that the extension of the orbital
concession for an additional 20-year term will be granted at the end of the first 20-year
period without the payment of any additional consideration to the Mexican federal
government.For the orbital concessions extension, Satmex must comply with the obligations mentioned
in the concession documents, requiring the extension before starts the final fifth part
of the concession term, obtain the approval from the SCT of the new satellites technical
and operating characteristics, and guarantee the use of the orbital slot during the
concessions initial term and its extension.The concession grantee, in accordance with the Ley Federal de Telecomunicaciones
(Federal Law of Telecommunications or LFT), is required to maintain the satellite
control centers within Mexican territory.The satellites are controlled and operated through two control centers, one of them is
located in the east side of Mexico City, and the other one is located in Hermosillo,
Sonora. The land and installations of the first control center and the land of the second
control center are the property of the Mexican federal government.The land and installations where the control centers are located were granted through a
concession for a 40-year term, and the Company pays rights of use, which are adjusted
every five years by experts from the Secretaría de la Función Pública (The Ministry of
Public Administration) (see Note 18).b.
    
    Concessions for the Use and Exploitation of a Telecommunications Public NetworkOn January 20, 1997, the Mexican federal government granted to Enlaces a Concession to
Operate, Install, Exploit and use a Public Telecommunications Network within Mexican
Territory at no charge, in order to operate services for private and public networks,
and to provide value-added services. The concession term is for 30 years, with the
possibility for an extension under certain conditions.On November 9, 2000, Enlaces obtained from the SCT a registration of value-added services
certificate, which allows it to offer the internet access services, electronic data
transfer and multimedia services (content deliver to supermarket stands and television
private channels).
  F-20




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##### Table of Contents



The terms of both concessions are subject to some legal provisions regarding assignment or
transfer of rights. According to Mexican Law, it is not allowed to transfer it to any
foreign country or state. If the Mexican federal government expropriates them, the companies
are entitled to liquidation or resignation of its rights.As of December 31, 2007 the Company has fully complied with the obligations established in
the concession titles.10.
    
    Intangible AssetsThe intangible assets recognized in connection with our adoption of fresh-start reporting are
as follows:
 Weighted AverageRemaining
    
    
    2007
    
    
    2006Amortization Period
    
    
    Gross
    
    
    Accumulated
    
    
    Gross
    
    
    Accumulated(Years)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationContract backlog (1)
    
    
    7
    
    
    $
    67,990
    
    
    $
    17,143
    
    
    $
    67,990
    
    
    $
    3,192Customer relationships (1)
    
    
    6
    
    
    
    2,128
    
    
    
    330
    
    
    
    2,128
    
    
    
    8Internally developed software and
technology (2)
    
    
    3
    
    
    
    270
    
    
    
    73
    
    
    
    270
    
    
    
    6Landing rights (1)
    
    
    2
    
    
    
    60
    
    
    
    42
    
    
    
    60
    
    
    
    4$
    70,448
    
    
    $
    17,588
    
    
    $
    70,448
    
    
    $
    3,210
 The valuation methods used were the income approach (1) and cost(2) approach.For the year ended December 31, 2007 and the period from December 1 to December 31, 2006,
amortization expense was $14.4 million and $3.3 million, respectively.Future annual amortization expense for intangible assets is estimated to be as follows:
 2008
    
    $
    25,3682009
    
    
    13,6892010
    
    
    5,8822011
    
    
    3,0342012
    
    
    2,006Thereafter
    
    
    2,881$
    52,860
 11.
    
    Accounts Payable and Accrued ExpensesAs of December 31, consist of:
 2007
    
    
    2006Orbital incentives
    
    $
    7,989
    
    
    $
    1,095Deposits and customer advances
    
    
    3,753
    
    
    
    3,129Taxes payable
    
    
    2,273
    
    
    
    1,071Professional fees
    
    
    1,858
    
    
    
    624Performance and sale bonuses
    
    
    1,736
    
    
    
    630Sundry creditors
    
    
    1,497
    
    
    
    481AlternaTV provisions
    
    
    1,140
    
    
    
    1,167Suppliers
    
    
    605
    
    
    
    2,644Other
    
    
    
    
    
    
    407$
    20,851
    
    
    $
    11,248
  F-21




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##### Table of Contents



12.
    
    Debt ObligationsThe new bonds named FPSSN and SPSSN present the following amounts, rates and periods, as of
December 31, 2007 and 2006:
 2007
    
    
    2006FPSSN at variable rate (LIBOR + 8.75%) approximately 14.07% and
13.94%, for 2007 and 2006, due in 2011(a)
    
    $
    238,237
    
    
    $
    238,237SPSSN at annual fixed rate of 10.125%, due in 2013 (b)
    
    
    154,934
    
    
    
    140,000$
    393,171
    
    
    $
    378,237
 a.
    
    In exchange for cancellation of the old debt, at the Effective Date the FRNs
holders received new bonds issued by Satmex, named FPSSN, whose main characteristics are
as follows:
 
    
    Maturity is on November 30, 2011.
    
    Quarterly interest at annual LIBOR rate plus 8.75%.
    
    Optional cash prepayments of principal and accrued interest plus 3%, 2%
and 1%, in the first, second and third years, respectively. From the fourth year
on, all payments will be at the stated interest rate.
    
    Holders may request the Company to make prepayments of principal
whenever the Satmexs cash balance exceeds $5 million, based on the formula
established in the contract.
    
    In the event of any change in the share control of Satmex, holders may
redeem all or part of the debentures at 101% of the unpaid balance of principal and
accrued interest.
    
    In the event of debt payment noncompliance and while this situation
prevails, the penalty interest applicable to the unpaid principal balance will be
2% higher than the regular interest rate applicable at that time.
    
    Principal and interest are guaranteed with the assets of Satmex in
first place and precedence stage substantially over all the assets of Satmex per
article 92 and subsequent articles of the Ley de Vías Generales de Comunicación
(Law on General Communications Media), and by a combination of pledges over the
 shares held by Satmex in Enlaces and the New Services Companies.
 b.
    
    As an exchange and cancellation of the old debt, in the Effective Date, the HYBs
holders received new bonds issued by Satmex, named SPSSN, whose main characteristics are
as follows:
 
    
    Maturity is on November 30, 2013.
    
    Quarterly interest at the annual rate of 10.125%.
    
    In the first year, the interest at the annual 10.125% rate will not be
paid but added to the principal amount of the FPSSN; from the second up to the
fifth year, 2% of the 10.125% interest will be paid in cash, and the remaining
8.125% will continue to be added to the principal amount of the FPSSN; and
beginning in the sixth year, total interest will be paid in cash until the FPSSN
have been paid in full.
  F-22




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##### Table of Contents




    
    Holders may request prepayments of principal, once the FPSSN have been
fully paid, and there is available cash in excess of $5 million.
    
    In the event of a change in the share control of Satmex other than that
of a buyer approved under the Restructuring Agreement, and unless approved by
66.66% of the SPSSN holders, the holders may redeem all or part of the debentures
of the unpaid balance of principal and accrued interest, which may take place at
the same time as the change of share control.
    
    Principal and interest are guaranteed with the assets of Satmex in
second place and precedence stage substantially over all the Satmex assets,
supported with a guarantee contract legally valid and linked in the present and in
the future, and a combination of securities over the shares owned by Satmex like
the shares of Enlaces and the New Service Companies securities that are subject to
the bankruptcy protection condition of the FPSSN.
 The contracts related to the new debt obligations issued by Satmex establish positive and
negative covenants, common for this type of transaction. As part of those covenants Satmex is
committed to provide periodic information to the bondholders, through the fiduciary agents
HSBC Bank, N. A. and Wells Fargo Bank, N. A. (First Priority Indenture Trustee and Second
Priority Indenture Trustee, respectively).As of the date of issuance of these consolidated financial statements, the Company has
complied with all aspects of contractual agreements and is timely complying with interest
payments.13.
    
    Labor ObligationsNet periodic cost associated with labor obligations was $124 in 2007 and $226 in 2006. Other
disclosures required by US GAAP are considered immaterial.14.
    
    Shareholders EquitySuccessor Registrant
 a.
    
    The shareholding structure of Satmex consists of ordinary, nominative class I and a
class II shares at no-par value, which are fully subscribed and paid in. The shares are
divided into three series; the shares Series A, which may only be subscribed or acquired
by Mexican nationals under certain mechanisms established in the Companys bylaws, while
the shares Series B and N may be freely subscribed or acquired by anybody, including
foreign investors.As of December 31, 2007 and 2006, the common stock at par value is as follows:
 SharesCommon Stock
    
    
    Variable StockClass I
    
    
    Class II
    
    
    Rights%Series A
    
    
    
    
    Series B
    
    
    Series N
    
    
    Series B
    
    
    Series N
    
    
    Voting
    
    
    Economic7,500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45.00
    
    
    
    16.00
    
    
    
    
    
    221,667
    
    
    
    401,770
    
    
    
    
    
    
    
    
    
    
    
    1.33
    
    
    
    1.33
    
    
    
    
    
    111,667
    
    
    
    202,395
    
    
    
    
    
    
    
    
    
    
    
    0.67
    
    
    
    0.67
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,166,667
    
    
    
    29,395,833
    
    
    
    43.00
    
    
    
    78.001,666,667
    
    
    
    
    
    
    
    
    
    208,333
    
    
    
    
    
    
    
    
    
    
    
    10.00
    
    
    
    4.009,166,667
    
    
    
    
    
    333,334
    
    
    
    812,498
    
    
    
    7,166,667
    
    
    
    29,395,833
    
    
    
    100.00
    
    
    
    100.00
  F-23




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##### Table of Contents



The LFT provides that foreign investors are not permitted by law to hold more than 49% of
the Satmexs common stock, however, in accordance with the Foreign Investments Law, the
neutral investment shares (Series N) that Satmex may issue are not considered when
determining the level of foreign investment participation in common stock.Series A and B shares are ordinary. The Series N shares have limited voting rights and
have no right to a preferred dividend since they are neutral investment shares. All
 shares are in trusts whose constructive possession is held as follows: for the Mexican
federal government, 20% of the economic rights and 55% of the voting rights, and for
Deutsche Bank Mexico, S. A., 80% of the economic rights and 45% of the voting rights.Based on the above events, Satmex obtained authorization form the National Foreign
Investment Commission to issue Series N neutral investment shares, and from the Federal
Anti-Trust Board (Comisión Federal de Competencia or CFC) for the shareholding
concentration derived from the capital increase. Similarly, Satmex obtained authorization
from the SCT to modify its common stock structure as required by the concession titles
granted to occupy geostationary orbital positions.b.
    
    Through the unanimous resolutions approved during the meeting of November 30, 2006,
shareholders agreed to reduce the common stock of Satmex by absorbing accumulative losses
of $317.5 million. Following this reduction, the common stock of Satmex was fully
assigned to minimum fixed stock as required by Mexican General Corporate Law.c.
    
    Similarly, through the unanimous resolutions approved during the meeting of
November 30, 2006, shareholders agreed to increase variable capital by capitalizing the
portion of the principal and interest balance of the HYBs exceeding the principal of the
SPSSN ($140 million). The capitalization process involved the amount of $273.8 million
and resulted in the issuance of 7,166,667 new Class II, Series B ordinary, nominative
 shares without par value and 29,395,833 Class II, Series N ordinary, nominative shares
without par value.As of December 31, 2007 and 2006, the common stock of the Company amounted to $46.7
million.d.
    
    As of the Effective Date, Deutsche Bank Mexico, S. A., Institución de Banca
Múltiple, División Fiduciaria, in its capacity as trustee, is the owner and holder of
 shares representing 96% of common stock with economic rights (including neutral
investment shares) and 90% of the ordinary voting stock of Satmex.e.
    
    Nacional Financiera, S. N. C., Institución de Banca de Desarrollo, Dirección
Fiduciaria, in its capacity as trustee, is currently the registered owner and holder of
 shares representing 4% of the common stock with economic rights (including neutral
investment shares) and 10% of the ordinary voting stock of Satmex.f.
    
    On October 4, 2007, the Board of Directors approved a specific plan for debt
restructuring and capitalization with the purpose of refinancing the terms of the debt
outstanding by replacing it with a new issuance of debt securities with less restrictive
terms, assuring the necessary funds for the construction of the satellite Satmex 7.g.
    
    On February 15, 2008, the Companys Board of Directors authorized the following
through its authorized representatives:To continue the negotiations with one of the most important satellite builders, issuing
an authorization to proceed (ATP), a document specifying the final contract terms and
conditions for the acquisition of the satellite Satmex 7, including the agreements for
its launch, provided the following limitation is fulfilled:The maximum investment allowed in the indentures of the FPSSN and SPSSN will be $3,000
for 2007 and 2008, to carry out the design, marketing, engineering support, and other
activities related to the development of the new satellite.
  F-24




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##### Table of Contents



During 2007, the Company invested $400 for the above mentioned items. Therefore, the
maximum amount authorized by the Board of Directors that Companys management can use as
of the execution of the ATP will be $2,600; which may not be refundable or recoverable if
for any reason, including its inability to obtain the necessary authorizations or
adequate financing, the Company decides to cancel the construction of the Satmex 7.Effective March 1, 2008, the Company was authorized to operate Solidaridad 2 in an
inclined orbit due to the impending transfer to the Mexican federal government. The final
terms of this transaction are in the final phase of the negotiation.h.
    
    Shareholders equity, except restated paid-in capital and tax-retained earnings,
will be subject to income tax at the rate in effect upon distribution. Any tax paid on
this distribution may be credited against annual and estimated income taxes of the year
in which the tax on dividends is paid and the following two fiscal years.i.
    
    As of December 31, 2007 and 2006, the balance of the tax contributed capital
account is $1,878,838, which is higher than shareholders equity according to the
consolidated balance sheets.
 Predecessor RegistrantThe common stock of the Predecessor Registrant was extinguished and deemed canceled, according
to the POR.As of December 31, 2005, common stock at par value was as follows:
 Series A
    
    
    2,601,000Series B
    
    
    2,499,000Series N
    
    
    4,900,000Series C
    
    
    606,73010,606,730
 At December 31, 2005, the common stock and the notional value were as follows:
 Shares
    
    
    AmountCommon stock
    
    
    5,000
    
    
    $
    6Fixed
    
    
    9,995,000
    
    
    
    389,569Variable
    
    
    10,000,000
    
    
    $
    389,575Preferred stockFixed
    
    
    606,730
    
    
    $
    31,886
 As of December 31, 2005, Servicios held 70.71% of the outstanding common stock of Satmex,
Loral held 4.46% in preferred stock; Principia held 1.26% in preferred stock and the Mexican
federal government held 23.57%.
  F-25




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##### Table of Contents



15.
    
    Related Party Transactions
 Successor Registrant
    
    
    Predecessor RegistrantDecember 1 to
    
    
    January 1 toDecember 31,
    
    
    November 30,2007
    
    
    2006
    
    
    2006
    
    
    2005
 a.
    
    Related party transactions performed in the normal course of operations were as
follows:
 Revenues from:Satellite servicesMexican federal government
    
    $
    2,403
    
    
    $
    253
    
    
    $
    2,612
    
    
    $
    3,036Satellite capacity to Mexican
federal government
    
    
    2,344
    
    
    
    195
    
    
    
    2,017
    
    
    
    2,200Loral
    
    
    1,882
    
    
    
    96
    
    
    
    24,071
    
    
    
    1,253Liquidity damages for delivery
delay of Satmex 6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,500EnlacesSatellite services
    
    
    
    
    
    
    
    
    
    
    1,360
    
    
    
    950Expense reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287Lease of teleport and equipment
    
    
    
    
    
    
    
    
    
    
    149
    
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    781
    
    
    
    632Expenses from:Administrative labor  Service
Companies
    
    
    
    
    
    
    
    
    
    
    10,454
    
    
    
    10,622Storage  SSL
    
    
    
    
    
    
    
    
    
    
    105
    
    
    
    1,760Commissions  Loral
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,540Technical assistance  Loral
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164Rent of control centers  Mexican
federal government
    
    
    444
    
    
    
    74
    
    
    
    368
    
    
    
    411Guarantee fees  Servicios and
Firmamento
    
    
    
    
    
    
    1
    
    
    
    53
    
    
    
    55Replacement capacity  Loral
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7Construction Satmex 6  Loral
    
    
    
    
    
    
    
    
    
    
    26,776
    
    
    
    1,651
 b.
    
    Related party receivable and payable balances are as follows:
 Amounts receivable:Loral
    
    $
    264
    
    
    $
    99Mexican federal government
    
    
    315
    
    
    
    318Globalstar México, S. A. de C. V
    
    
    
    
    
    
    213$
    579
    
    
    $
    630Amounts payable:Service Companies
    
    $
    116
    
    
    $
    1,342Loral SpaceCom Corporation
    
    
    
    
    
    
    15Servicios
    
    
    
    
    
    
    10Servicios Corporativos Alcance, S. A. de C. V.
    
    
    
    
    
    
    69Principia
    
    
    
    
    
    
    3$
    116
    
    
    $
    1,439
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##### Table of Contents



16.
    
    Reorganization Expenses Due to Chapter 11 ProcessReorganization expenses due to emergence from bankruptcy were as follows:
 Predecessor RegistrantJanuary 1 toNovember 30,2006
    
    
    2005Professional fees
    
    $
    27,985
    
    
    $
    7,666Loss on discharge of prepetition liabilities
    
    
    5,346
    
    
    
    Others
    
    
    116
    
    
    
    $
    33,447
    
    
    $
    7,666
 17.
    
    Income and Asset Taxes
 a.
    
    Satmex and its subsidiaries are subject to ISR and through 2007, to tax on assets
(IMPAC). The tax result of Satmex was a loss while that of Enlaces was a profit.
Beginning 2007, ISR rate is 28% and in 2006 and 2005, ISR rate was 29% y 30%,
respectively.
 b.
    
    In 2007, IMPAC was calculated by applying 1.25% to the value of the assets of the
year, without deducting any debt amounts. Through 2006, IMPAC was calculated by applying
1.8% on the net average of the majority of restated assets less certain liabilities,
including liabilities payable to banks and foreign entities. IMPAC is payable only to the
extent that it exceeded ISR payable for the same period.
 c.
    
    On October 1, 2007, the Business Flat Tax Law (LIETU) was enacted and went into
effect on January 1, 2008. In addition, the Tax Benefits Decree and the Third Omnibus Tax
Bill were published on November 5 and December 31, 2007, respectively, clarifying or
expanding the transitory application of the law regarding transactions carried out in
2007 that will have an impact in 2008. IETU applies to sales of goods, provisions of
independent services and the grant of the temporary use or enjoyment of goods, in the
terms defined in such law, less certain authorized deductions.IETU payable is calculated by subtracting certain tax credits from the tax determined.
Revenues, as well as deductions and certain tax credits, are determined based on cash
flows generated beginning January 1, 2008. LIETU establishes that the IETU rate will be
16.5% in 2008, 17% in 2009, and 17.5% as of 2010.
 d.
    
    The Asset Tax Law was repealed upon enactment of LIETU; however, IMPAC incurred in
the last ten years may be recovered under certain circumstances, in accordance with the
applicable tax regulations.
 e.
    
    Based on its financial forecasts, Companys management has identified Satmex and
Enlaces as entities that will essentially pay only ISR; accordingly, those companies only
provide for deferred ISR. Also, based on its financial forecasts, Companys management
has identified the New Service Companies as entities that will essentially be IETU
payers; accordingly, those companies only provide for deferred IETU and eliminated the
previously recognized deferred ISR.
 f.
    
    Income taxes consists of the following:
 Successor Registrant
    
    
    Predecessor RegistrantDecember 1 to
    
    
    January 1 toDecember 31,
    
    
    November 30,2007
    
    
    2006
    
    
    2006
    
    
    2005ISR:Current
    
    $
    386
    
    
    $
    29
    
    
    $
    
    
    
    $
    Deferred
    
    
    818
    
    
    
    282
    
    
    
    18,726
    
    
    
    238Deferred IETU
    
    
    (311
    )
    
    
    
    
    
    
    
    
    
    
    $
    893
    
    
    $
    311
    
    
    $
    18,726
    
    
    $
    238
  F-27




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##### Table of Contents



g.
    
    A reconciliation of the statutory income tax rate is as follows:
 Successor Registrant
    
    
    Predecessor RegistrantDecember 1 to
    
    
    January 1 toDecember 31,
    
    
    November 30,2007
    
    
    2006
    
    
    2006
    
    
    2005%
    
    
    %
    
    
    %
    
    
    %Statutory income tax rate
    
    
    28
    
    
    
    29
    
    
    
    29
    
    
    
    30Inflation effects
    
    
    5
    
    
    
    (11)
    
    
    
    13
    
    
    
    (19)Nondeductible expenses
    
    
    (1)
    
    
    
    (2)
    
    
    
    (23)
    
    
    
    Effect of deferred IETU
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Change in valuation
allowance
    
    
    (35)
    
    
    
    (20)
    
    
    
    (53)
    
    
    
    (11)Effective income tax rate
    
    
    (2)
    
    
    
    (4)
    
    
    
    (34)
    
    
    
    
 h.
    
    The significant components of the net deferred ISR asset (liability) are:
 2007
    
    
    2006Current assets:Deferred revenue
    
    $
    1,742
    
    
    $
    1,464Effect of deferred IETU
    
    
    232
    
    
    
    Tax loss carryforwards
    
    
    217
    
    
    
    Other  net
    
    
    3,559
    
    
    
    1,314Total current asset
    
    
    5,750
    
    
    
    2,778Current liabilities:Prepaid insurance
    
    
    (1,095
    )
    
    
    (1,321
    )Valuation allowance
    
    
    (3,946
    )
    
    
    (1,265
    )Net current deferred tax asset
    
    $
    709
    
    
    $
    192Noncurrent assets:Tax loss carryforwards
    
    $
    186,856
    
    
    $
    174,612Concessions  net
    
    
    70,045
    
    
    
    74,410Deferred revenue
    
    
    19,322
    
    
    
    20,002Effect of deferred IETU
    
    
    79
    
    
    
    Other  net
    
    
    123
    
    
    
    191Total noncurrent asset
    
    
    276,425
    
    
    
    269,215Noncurrent liabilities:Satellites and equipment  net
    
    
    (58,252
    )
    
    
    (63,167
    )Intangibles  net
    
    
    (15,060
    )
    
    
    (19,112
    )Valuation allowance
    
    
    (204,028
    )
    
    
    (186,827
    )Net noncurrent deferred tax (liability) asset
    
    $
    (915
    )
    
    $
    109
  F-28




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##### Table of Contents



At December 31, 2007 Satmex has tax loss carryforwards, which are available to offset
future taxable income, as noted below. Due to uncertainties regarding Satmexs ability to
realize the full benefit from these tax loss carryforwards, Satmex has established a
valuation allowance of $208.0 million and $188.1 million as of December 31, 2007, 2006
respectively, against the deferred tax assets.
 Expiration Date
    
    Amount2008
    
    $
    96,8612010
    
    
    148,4652012
    
    
    68,2352013
    
    
    80,0892014
    
    
    29,5082015
    
    
    7752016
    
    
    220,2752017
    
    
    23,910$
    668,118
 18.
    
    Contingencies and CommitmentsSatellite and insurance matters
 a.
    
    The in-orbit insurance for Solidaridad 2 was not renewed primarily because the
satellites life ends in 2008. Any uninsured loss of Solidaridad 2 would have a minor
adverse effect on Satmexs results of operations and financial position.b.
    
    In May 2007, Satmex renewed the in-orbit insurance policy for the Satmex 6, which
expires in May 2008, and provides coverage for $288 million. The insurance companies have
the right to review the terms and conditions of the insurance policy, including the right
to terminate the insurance coverage.The insurance policy terms and conditions are in accordance with current industry
standards. Any uninsured loss of Satmex 6 would have a material adverse effect on
Satmexs results of operations and financial position.c.
    
    In December 2007, Satmex renewed the in-orbit insurance policy for the Satmex 5
satellite, which expires in December 2008, and provides coverage for $90 million. The
insurance companies have the right to review the terms and conditions of the insurance
policy, including the right to terminate the insurance coverage.The insurance policy excludes coverage for the Xenon Ion Propulsion System (XIPS) and
any other anomaly related to this system. Because XIPS has experienced anomalies on
other similar satellites, this exclusion has become a typical feature in insurance
policies for satellites with the same propulsion system. It also has another exclusion
related to the anomaly from the channel 1C.The insurance policy terms and conditions are according to actual industry standards.
Any uninsured loss of Satmex 5 would have a material adverse effect on Satmexs results
of operations and financial position.Since June 2005, the primary XIPS has been used as the operating propulsion system
because the secondary XIPS ceased providing the required inclination control. Use of the
primary XIPS will produce adverse effects such as contamination on the solar arrays and
it will require bipropellant gas supplementary consumptions. Tests suggested by the
manufacturer have been performed on the secondary XIPS; however, the results indicate
that the secondary XIPS is no longer available. Nevertheless the final diagnostic is
still pending.If Satmex 5 experiences a total failure of its XIPS, the remaining useful life with
bipropellant gas would be 3.11 years from April 1, 2008.
  F-29




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##### Table of Contents



Legal matters
 d.
    
    Satmex received a definitive adverse judgment claim by a supplier for the payment
of certain expenses. Such judgment requires the payment of unquantified expenses incurred
by the defendant; however, Satmex management considers it will not have a significant
effect on its financial position or results of operations.e.
    
    In accordance with the principal amendments to the IMPAC law on January 1, 2007,
the IMPAC tax rate was reduced from 1.8% to 1.25% and a new methodology for its
calculation, which is applicable to the total asset value without allowing the reduction
of financial debt, was established. Satmex and Enlaces filed an appeal for legal
protection to challenge the amendment of IMPAC law. As of the date of the accompanying
consolidated financial statements, the Company has not received any response from tax
authorities.f.
    
    Currently there is a lawsuit pending against us that was brought by Nexus
International Broadcasting, Inc. (Nexus). Nexus is asserting a breach of the Exclusive
Distribution Agreement dated March 30, 2005, that Satmex has with Nexus regarding the use
of Nexus NDTV channel as part of Alterna TV programming services in the U.S., and a
violation of the federal trademark laws. Nexus is claiming damages of not less than
$25,000, plus costs and disbursements for its breach of contract claim, and has demanded
an unspecified amount of damages, injunctive relief, costs, profits, disbursements and
attorney fees for its statutory trademark claim. Satmex is currently investigating
Nexuss claim and formulating a litigation strategy, and will vigorously contest Nexuss
claims and protect its rights in connection with this matter.
 Commitments
 g.
    
    Satmex entered into a new contract with SSL and granted to SSL an usufructolegal
figure that grants to SSL the right to use and benefits from certain transponders until
the end of life of the satellites Satmex 5 and Satmex 6. SSL was not required to post a
bond related to the usufructofigure.SSL has the right to receive a percentage (different for each satellite) of the net sale
value of Satmex 5 and Satmex 6 or an amount equal to the market value related to the
transponders granted under the usufructofigure, whichever is higher, determined by a
panel of three experts in satellite valuation, and will not continue if Satmex or the
new shareholders decide to not continue with the usufructofigure.h.
    
    The satellite concessions granted by the Mexican federal government, establish that
Satmex should assign satellite capacity for them in band C and band Ku. The capacity
assigned amounts to approximately 362.88 MHz.i.
    
    Satmex pays rights of usage for the facilities where control centers are located.
Accordingly, with the concession titles it should pay rights during the concession period
for an equivalent of 7.5% of the facilities value determined by experts assigned by the
Mexican federal government and updated periodically. In 2007, 2006 and 2005, the fees
paid for the use of these control centers were $444.
 Other Matters
 j.
    
    Additional taxes payable could arise in transactions with related parties if the
tax authority, during a review, believes that the prices and amounts used by Satmex are
not similar to those used with or between independent parties in comparable transactions.k.
    
    Satmex leases the building where are located its administrative offices. According
with the leasing contract it establishes a mandatory period of three years starting in
June 2005 and concluding in May 2008. Rental expense was $249 in 2007, $248 in 2006,
$19.4 in 2005 under this new lease as well as the previous lease. The minimum future
payments, until the end of the contract, amount to $104.
  F-30




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##### Table of Contents



l.
    
    Future minimum revenues due from customers under non-cancelable operating lease
contracts for transponder capacity on satellites in-orbit as of December 31, 2007, are as
follows:
 Expiration Date
    
    Amount2008
    
    $
    72,1472009
    
    
    36,3052010
    
    
    17,1082011
    
    
    8,7882012
    
    
    6,020Thereafter
    
    
    4,275$
    144,643
 m.
    
    The Primary Control Center is part of a building complex that also houses equipment
owned and used for the Mexican federal governments teleport and mobile
telecommunications services systems. Teleport of Enlaces is also housed at the Primary
Control Center. A request for approval of the operation of Enlaces Teleport in the
Primary Control Center was filed with SCT by Enlaces in August 2000. No official response
has been received as of the date hereof. While we are the only user of the building that
houses the Primary Control Center, Satmex is required to share the water facilities of
this site with the users of the rest of the buildings in the complex.
 19.
    
    Business SegmentsThe Company identifies its reportable segments by three concepts: Satellite services,
AlternaTV and Broadband satellite services (Enlaces), as follows:Successor Registrant
 For the Year Ended December 31, 2007Satellite Services
    
    
    AlternaTV
    
    
    Enlaces
    
    
    Other
    
    
    TotalRevenues
    
    $
    101,178
    
    
    $
    6,815
    
    
    $
    15,318
    
    
    $
    17,675
    
    
    $
    140,986Eliminations
    
    
    (20,928
    )
    
    
    
    
    
    
    (182
    )
    
    
    (17,675
    )
    
    
    (38,785
    )Operating revenues
    
    
    80,250
    
    
    
    6,815
    
    
    
    15,136
    
    
    
    
    
    
    
    102,201Cost and expenses
    
    
    60,228
    
    
    
    4,603
    
    
    
    11,111
    
    
    
    
    
    
    
    75,942Eliminations
    
    
    (17,481
    )
    
    
    (231
    )
    
    
    (3,253
    )
    
    
    
    
    
    
    (20,965
    )42,747
    
    
    
    4,372
    
    
    
    7,858
    
    
    
    
    
    
    
    54,977Depreciation and
amortization
    
    
    52,461
    
    
    
    3
    
    
    
    642
    
    
    
    
    
    
    
    53,106Operating cost and expenses
    
    
    95,208
    
    
    
    4,375
    
    
    
    8,500
    
    
    
    
    
    
    
    108,083Operating (loss) profit
    
    
    (14,958
    )
    
    
    2,440
    
    
    
    6,636
    
    
    
    
    
    
    
    (5,882
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,672
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,650Net foreign exchange gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145Loss before income taxes
and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,759
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    893Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    802Consolidated net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (57,454
    )Capital expenditures
    
    $
    1,736
    
    
    $
    
    
    
    $
    689
    
    
    $
    
    
    
    $
    2,425Total assets
    
    $
    452,774
    
    
    $
    1,857
    
    
    $
    15,119
    
    
    $
    432
    
    
    $
    470,182
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##### Table of Contents



From December 1 to December 31, 2006Satellite Services
    
    
    AlternaTV
    
    
    Enlaces
    
    
    Other
    
    
    TotalRevenues
    
    $
    4,964
    
    
    $
    557
    
    
    $
    1,509
    
    
    $
    1,938
    
    
    $
    8,968Eliminations
    
    
    (243
    )
    
    
    
    
    
    
    (36
    )
    
    
    (1,938
    )
    
    
    (2,217
    )Operating revenues
    
    
    4,721
    
    
    
    557
    
    
    
    1,473
    
    
    
    
    
    
    
    6,751Cost and expenses
    
    
    5,763
    
    
    
    233
    
    
    
    656
    
    
    
    
    
    
    
    6,652Eliminations
    
    
    (1,954
    )
    
    
    (20
    )
    
    
    (243
    )
    
    
    
    
    
    
    (2,217
    )3,809
    
    
    
    213
    
    
    
    413
    
    
    
    
    
    
    
    4,435Depreciation and
amortization
    
    
    6,239
    
    
    
    3
    
    
    
    24
    
    
    
    
    
    
    
    6,266Operating cost and expenses
    
    
    10,048
    
    
    
    216
    
    
    
    437
    
    
    
    
    
    
    
    10,701Operating (loss) profit
    
    
    (5,327
    )
    
    
    341
    
    
    
    1,036
    
    
    
    
    
    
    
    (3,950
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,333
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103Net foreign exchange gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (123
    )Loss before income taxes
and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,303
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    311Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140Consolidated net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,754
    )Capital expenditures
    
    $
    814
    
    
    $
    
    
    
    $
    714
    
    
    $
    
    
    
    $
    1,528Total assets
    
    $
    494,301
    
    
    $
    1,524
    
    
    $
    12,221
    
    
    $
    18
    
    
    $
    508,064
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##### Table of Contents



Predecessor Registrant
 January 1, 2006 through November 30, 2006Satellite Services
    
    
    AlternaTV
    
    
    TotalOperating revenues
    
    $
    82,323
    
    
    $
    6,019
    
    
    $
    88,342Costs and expenses
    
    
    44,574
    
    
    
    2,592
    
    
    
    47,166Depreciation and amortization
    
    
    51,778
    
    
    
    2
    
    
    
    51,780Operating cost and expenses
    
    
    96,352
    
    
    
    2,594
    
    
    
    98,946Operating (loss) profit
    
    
    (14,029
    )
    
    
    3,425
    
    
    
    (10,604
    )Reorganization expenses
    
    
    
    
    
    
    
    
    
    
    (33,447
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (19,152
    )Interest income
    
    
    
    
    
    
    
    
    
    
    2,711Net foreign exchange gain
    
    
    
    
    
    
    
    
    
    
    5,690Preferred stock dividend requirement
    
    
    
    
    
    
    
    
    
    
    (1,130
    )Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    18,726Consolidated net loss
    
    
    
    
    
    
    
    
    
    $
    74,658Capital expenditures
    
    $
    45,884
    
    
    $
    
    
    
    $
    45,884Total assets
    
    $
    881,648
    
    
    $
    1,498
    
    
    $
    883,146
 For the Year Ended December 31, 2005Satellite Services
    
    
    AlternaTV
    
    
    TotalOperating Revenues
    
    $
    66,046
    
    
    $
    3,826
    
    
    $
    69,872Costs and expenses
    
    
    31,490
    
    
    
    1,578
    
    
    
    33,068Depreciation and amortization
    
    
    47,925
    
    
    
    2
    
    
    
    47,927Operating cost and expenses
    
    
    79,415
    
    
    
    1,580
    
    
    
    80,995Operating (loss) profit
    
    
    (13,369
    )
    
    
    2,246
    
    
    
    (11,123
    )Reorganization expenses
    
    
    
    
    
    
    
    
    
    
    (7,666
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (48,375
    )Interest income
    
    
    
    
    
    
    
    
    
    
    2,315Net foreign exchange loss
    
    
    
    
    
    
    
    
    
    
    (5,722
    )Preferred stock dividend requirement
    
    
    
    
    
    
    
    
    
    
    (1,507
    )Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    238Consolidated net loss
    
    
    
    
    
    
    
    
    
    $
    (72,316
    )Capital expenditures
    
    $
    8,335
    
    
    $
    2
    
    
    $
    8,337Total assets
    
    $
    923,995
    
    
    $
    1,276
    
    
    $
    925,271
  F-33




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##### Table of Contents



The following table presents the revenues by country based on customer location for the year
ended December 31, 2007, for the periods from December 1, 2006 to December 31, 2006 and
January 1 to November 30, 2006 and for the year ended December 31, 2005:
 Successor Registrant
    
    
    Predecessor RegistrantDecember 1 to
    
    
    January 1 toDecember 31,
    
    
    November 30,2007
    
    
    2006
    
    
    2006
    
    
    2005United States of America
    
    $
    47,558
    
    
    $
    3,508
    
    
    $
    55,761
    
    
    $
    34,692Mexico
    
    
    42,333
    
    
    
    2,324
    
    
    
    24,079
    
    
    
    29,315Central and South America
    
    
    12,310
    
    
    
    919
    
    
    
    8,502
    
    
    
    5,865$
    102,201
    
    
    $
    6,751
    
    
    $
    88,342
    
    
    $
    69,872
  F-34




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##### Table of Contents



Satélites Mexicanos, S. A. de C.V. and Subsidiaries
 
 Schedule
of Valuation and Qualifying Accounts
Thousands of dollars
 AdditionalBalance at
    
    
    Charged
    
    
    
    
    
    
    Balance atBeginning of
    
    
    (Credited) to
    
    
    
    
    
    
    End ofPeriod
    
    
    Expenses
    
    
    Deductions
    
    
    PeriodAllowance for doubtful accountsSuccessor RegistrantYear ended December 31, 2007
    
    $
    1
    
    
    $
    398
    
    
    $
    
    
    
    $
    399December 1 to December 31, 2006
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Predecessor RegistrantJanuary 1 to November 30, 2006
    
    
    107
    
    
    
    38
    
    
    
    144
    (1)
    
    
    1Year ended December 31, 2005
    
    
    563
    
    
    
    104
    
    
    
    560
    (1)
    
    
    107Allowance for due from related
party accountsSuccessor RegistrantYear ended December 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    December 1 to December 30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Predecessor RegistrantJanuary 1 to November 30, 2006
    
    
    3,500
    
    
    
    (3,500
    )
    
    
    
    
    
    
    Year ended December 31, 2005
    
    
    922
    
    
    
    2,578
    
    
    
    
    
    
    
    3,500Valuation allowance on deferred
income taxesSuccessor RegistrantYear ended December 31, 2007
    
    $
    188,092
    
    
    $
    19,882
    
    
    $
    
    
    
    $
    207,974December 1 to December 31, 2006
    
    
    183,671
    
    
    
    4,421
    
    
    
    
    
    
    
    188,092Predecessor RegistrantJanuary 1 to November 30, 2006
    
    
    88,762
    
    
    
    94,909
    
    
    
    
    
    
    
    183,671Year ended December 31, 2005
    
    
    75,519
    
    
    
    13,243
    
    
    
    
    
    
    
    88,762
 (1)
    
    Write-offs of uncollectible accounts.  F-35




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description12.1
    
    
    Section 302 Certification of Patricio Northland, Chief Executive Officer.*12.2
    
    
    Section 302 Certification of Guillermo Reyes Bustamante, Acting Chief Financial Officer.*13.1
    
    
    Section 906 Certification of Patricio Northland, Chief Executive Officer.*13.2
    
    
    Section 906 Certification of Guillermo Reyes Bustamante, Acting Chief Financial Officer.*
 *
    
    Filed herewith.  74