##### 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, 2009
 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)
Avenida Paseo de la Reforma 222 Pisos 20 y 21
Colonia Juárez
06600 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, 2009 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 by the International Accounting Standards Board o
  o o
  o þ
  þ o




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TABLE OF CONTENTS
  
 PagePART IITEM 3. Key Information
    
    
    3ITEM 4. Information on the Company
    
    
    25ITEM 4A. Unresolved Staff Comments
    
    
    51ITEM 5. Operating and Financial Review and Prospects
    
    
    51ITEM 6. Directors, Senior Management and Employees
    
    
    68ITEM 7. Major Shareholders and Related Party Transactions
    
    
    75ITEM 8. Financial Information
    
    
    76ITEM 9. Markets
    
    
    77ITEM 10. Additional Information
    
    
    77ITEM 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    79PART IIITEM 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    80ITEM 14. Material Modifications to the Rights of Security Holders
    
    
    80ITEM 15. Controls and Procedures
    
    
    80ITEM 16A. Audit Committee Financial Expert
    
    
    81ITEM 16B. Code of Ethics
    
    
    81ITEM 16C. Principal Accountant Fees and Services
    
    
    82PART IIIITEM 18. Financial Statements
    
    
    83ITEM 19. Exhibits
    
    
    83Exhibit 4.14Exhibit 4.15Exhibit 4.16Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2
    2




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PART I
 
 ITEM 3. Key Information
 SELECTED FINANCIAL DATA
  Satmex adopted fresh-start reporting (fresh-start reporting), pursuant to the Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 852-10
(previously American Institute of Certified Public Accountants Statement of Position No. 90-7,
Financial Reporting by Entities in Reorganization under the Bankruptcy Code), as of November 30,
2006. Accordingly, our consolidated financial information disclosed under the heading Successor
Registrant for the years ended December 31, 2009, 2008 and 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 and the prior year.
   3




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##### Table of Contents



Successor Registrant
    
    
    Predecessor RegistrantDecember 1 to
    
    
    January 1 to
    
    
    Year EndedYears Ended December 31,
    
    
    December 31,
    
    
    November 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2006
    
    
    2005(Amount in millions of U.S. dollars)Statement of Operations
Data:Revenue
    
    $
    125.0
    
    
    $
    114.7
    
    
    $
    102.2
    
    
    $
    6.8
    
    
    $
    88.3
    
    
    $
    69.9Operating income (loss)
    
    
    36.7
    
    
    
    20.3
    
    
    
    (5.9
    )
    
    
    (3.9
    )
    
    
    (10.6
    )
    
    
    (11.1
    )Loss before income taxes
    
    
    (6.5
    )
    
    
    (28.5
    )
    
    
    (55.8
    )
    
    
    (8.3
    )
    
    
    (54.8
    )
    
    
    (70.6
    )Income tax
    
    
    (13.2
    )
    
    
    (6.8
    )
    
    
    (0.9
    )
    
    
    (0.3
    )
    
    
    (18.7
    )
    
    
    (0.2
    )Consolidated net loss
    
    
    (19.7
    )
    
    
    (35.3
    )
    
    
    (56.7
    )
    
    
    (8.7
    )
    
    
    (73.5
    )
    
    
    (70.8
    )Net loss applicable to
controlling
shareholders(1)
    
    
    (20.2
    )
    
    
    (35.6
    )
    
    
    (57.5
    )
    
    
    (8.7
    )
    
    
    (74.7
    )
    
    
    (72.3
    )Other Data:Depreciation and
amortization
    
    $
    47.7
    
    
    $
    59.8
    
    
    $
    53.1
    
    
    $
    6.2
    
    
    $
    51.8
    
    
    $
    47.9Capital expenditures
    
    
    4.2
    
    
    
    6.5
    
    
    
    2.4
    
    
    
    1.5
    
    
    
    45.9
    
    
    
    8.3Balance Sheet Data (at end
of period):Total assets
    
    $
    439.4
    
    
    $
    445.5
    
    
    $
    470.2
    
    
    $
    508.1
    
    
    $
    883.1
    
    
    $
    925.3Current maturities of
long-term debt
(excluding accrued
interest)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    527.7
    
    
    
    527.7Long-term debt
    
    
    420.6
    
    
    
    406.3
    
    
    
    393.2
    
    
    
    378.2
    
    
    
    
    
    
    
    Shareholders (deficit)
equity
    
    
    (72.1
    )
    
    
    (52.4
    )
    
    
    (17.0
    )
    
    
    38.0
    
    
    
    102.7
    
    
    
    178.6
 (1)
    
    Net loss applicable to controlling shareholders comprises our consolidated net loss for the
period less net income attributable to noncontrolling interests and our preferred stock
dividend. This information only applies for Predecessor Registrant. EXCHANGE RATES
  CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
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Factors Relating to Satmex
 We
may not have enough resources to pay the First Priority Senior Secured Notes due 2011 or the
Second Priority Senior Secured Notes due 2013 in full at maturity.
   We may not have enough financial resources to complete the Satmex 8 program.
   We may not be able to finance the construction, launch, and insurance of the launching of Satmex 7
and Satmex 8.
 Concurso Mercantil, Ley de Concursos Mercantiles
 Our financial condition could be materially and adversely affected if we fail to replace Satmex 5
with Satmex 8 on time.
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We have incurred significant indebtedness to acquire and launch our satellites, including secured
indebtedness, which 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 57% of our
indebtedness is, and will continue to be, subject to variable rates of interest;
 
    
    required that we make financial concessions in order to pursue our business
strategy, such as agreeing to an increase in the interest rate on the First Priority
Notes in order to obtain the Waiver signed on May 7, 2010;
 
    
    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.
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If we are unable to finance, build and successfully launch our proposed Satmex 7 and Satmex 8, our
ability to grow our business will be materially and adversely affected.
   Concurso Mercantil Ley de Concursos Mercantiles
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If we are not able to obtain additional financing to complete the Satmex 8 program, or if we are
unable to satisfy or restructure our existing obligations under the Notes, we could be required to
seek relief through a Concurso Mercantil or a filing under the Bankruptcy Code, either through a
prepackaged plan of reorganization or an alternative plan, which could include liquidation.
 Concurso Mercantil
   
    
    Both a Concurso Mercantiland a filing under the Bankruptcy Code would cause us to
incur significant legal, administrative and other professional expenses;
 
    
    Bankruptcy proceedings in general, and the respective rights of debtors and creditors
in particular, differ substantially under the LCM in Mexico as compared to the
Bankruptcy Code in the U.S., and coordinating proceedings in the two jurisdictions would
be complicated and expensive;
 
    
    It is likely that the filing would substantially erode consumers confidence in our
ability to provide service over the long-term and as a result there could be a
significant and precipitous decline in our revenues;
 
    
    Our suppliers might terminate their relationship with us, or might provide goods and
services only on less favorable terms;
 
    
    If we are not able to develop a successful plan for reorganization or if we cannot
secure financing after a bankruptcy commences, we might be forced to liquidate under
Chapter 7 of the Bankruptcy Code or under the LCM; we might also be forced to liquidate
in an involuntary proceeding; and
 
    
    The Mexican government could terminate our Orbital Concessions (as defined below)
pursuant to the Telecommunications Law.
 Concurso Mercantil
 
    
    Holders of our debt obligations could have their claims significantly reduced,
converted into equity or eliminated, depending upon the terms of the restructuring; and
 
    
    The equity interests of our current stockholders could be completely eliminated.
  8




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Rights of holders of the Notes in the collateral may be adversely affected by a Concurso Mercantil.
 Concurso Mercantil oncurso
Mercantil conciliador
  9




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Secretaría de Comunicaciones y Transportes
 Ley Federal de
Telecomunicaciones
 We may not have sufficient funds available to redeem our First Priority Notes and Second Priority
Notes upon a change of control.
     10




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The value of the collateral securing the Notes may not be sufficient to satisfy our obligations
under the Notes.
   Our ability to obtain additional financing and to refinance the Notes in the future may be limited.
  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 available to redeem our Notes upon a
change of control);
  11




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
    
    spend excess cash flow or insurance proceeds;
 
    
    make certain investments, loans, guarantees or acquisitions;
 
    
    pay dividends or make other distributions;
 
    
    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.
  As a result of our previous 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, our financial
information after November 30, 2006 is not comparable to our prior years financial information.
 Concurso Mercantil usufructo
  12




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We have a history of significant net operating losses and we may not be able to improve
successfully our performance or obtain profitability.
  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.
    13




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Our financial condition could be materially and adversely affected if we were to suffer a satellite
loss that is not adequately covered by insurance.
    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.
   14




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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 business is capital intensive, and we may not be able to raise adequate capital to finance our
business strategies.
   15




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Our revenues and profitability may be adversely affected by the current global financial downturn,
and negative global economic conditions may have a material adverse effect on our customers and
suppliers.
  A small number of customers accounts for a large portion of our revenues, and the loss of one or
more of these significant customers would adversely affect our revenues.
 th th th th
   16




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We operate in a competitive environment
   Comisión Federal de Telecomunicaciones
   Enlaces requires capacity on the Ku-band frequency in order to grow its business, and such capacity
may not be available 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.
   17




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Our future success depends on our ability to maintain a strong management team, retain our key
employees and adapt to technological changes.
  Technological advances may require us to make significant expenditures to maintain and improve the
competitiveness of our service offerings, and our ability to make such expenditures may be limited
by our lack of funds.
  Your ability to effect service of process on our directors and officers outside the U.S. and your
ability to enforce U.S. judgments against us or our directors, officers, and assets outside the
U.S. may be limited.
  The recent enactment of the Ley del Impuesto Empresarial a Tasa Única increases our tax burden and
could affect our operations.
 Impuesto Empresarial a Tasa Única
  18




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Amparo Amparo Amparo
 Amparo
 Under certain circumstances, federal and state laws may allow courts to avoid guarantees and liens
securing the Notes and require holders of the Notes to return any payments they receive from the
guarantors.
  
    
    received less than reasonably equivalent value or fair consideration for the
incurrence of indebtedness under its guarantee or the grant of such lien and was
insolvent or rendered insolvent by reason of the incurrence;
 
    
    was engaged in a business or transaction for which its remaining assets constituted
unreasonably small capital; or
 
    
    intended to incur, or believed that it would incur, debts beyond its ability to pay
such debts as they became due.
  
    
    the sum of its debts, including contingent liabilities, was greater than the fair
saleable value of all of its assets;
 
    
    the present fair saleable value of its assets was less than the amount that would be
required to pay its probable liability on its existing debts, including contingent
liabilities, as they became absolute and mature; or
 
    
    it could not pay its debts as they became due.
    19




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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.
   20




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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;
    
    the SCT revokes such Orbital Concession;
 
    
    the Mexican government (through the SCT) terminates such Orbital Concession
through a proceeding called Rescate; or
    
    we become subject to liquidation or bankruptcy (quiebra);
  
    
    unjustified or unauthorized interruption of our operations or the services that
may be provided under such Orbital Concession, whether in whole or in part;
 
    
    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
Concessions (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; or
 
    
    our assignment, transfer or encumbrance of rights granted under the Orbital
Concessions in contravention of the terms of applicable Mexican law.
  Rescate Ley General de Bienes Nacionales Rescate Rescate
   21




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Requisa Requisa Requisa Requisa
   COFETEL and the SCT are preparing the auction of 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.
   If SCT does not approve Enlaces Teleport operation in the Primary Control Center, our financial
performance could be materially and adversely affected.
      22




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We are subject to different corporate disclosure requirements than U.S. companies, which may limit
the information available to our investors.
  Compliance with the Sarbanes-Oxley Act increases our operating expenses.
  We had a material weakness in our internal control over financial reporting as of December 31,
2007. We corrected such material weakness in 2008 and took additional steps to strengthen controls
in 2009, but our ability to accurately report our U.S. GAAP financial results on a timely basis
depends on maintenance of the corrective measures that we implemented and on our ability to achieve
and maintain an effective system of internal controls.
     23




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Factors Relating to Mexico
 Economic developments in Mexico may adversely affect our business.
    The current global recession may affect our customers and suppliers, which could adversely affect
our business, results of operations, and financial condition.
    Social and political developments in Mexico may materially and adversely affect our operations.
   Currency devaluations may impair our ability to service our debt.
   24




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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 ,
         25




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2006 Restructuring Process
  Concurso Mercantil Concurso Mercantil
  2009-2010 Review of Strategic and Restructuring Alternatives
    26




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Concurso Mercantil
     27




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Our Satellites
     Solidaridad 2
       28




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Satmex 5
    usufructo usufructo usufructo usufructo
 XIPS failures
    29




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Other Satmex 5 issues
   Satmex 6
       30




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usufructo usufructo usufructo
 Satmex 7
         31




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Satmex 8
          32




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Capital Investments
    Orbital Coordination
      33




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Landing Rights
   Comisión Nacional de
Comunicaciones Secretaría de Comunicaciones Empresa Argentina de Soluciones Satelitales
 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.
  Indice
Nacional de Precios al Consumidor Secretaría de la Función Pública
  34




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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.
   35




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Services
  Telecommunications Transmission Services
     Integrators
  Broadband Internet Service Providers
   36




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Broadcasting and Video Distribution Services
     AlternaTV (Programming Distribution Services)
       37




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Enlaces
        38




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Instituto Mexicano de
la Propiedad Industrial or Mexican Institute of Industrial Property
 Business Strategy
  Enhance Our Regional Presence
 Strengthen Our Customer Base and Offer Value-Added Services
 Review Processes to Focus on Customer Service and Cost Efficiency.
 Market Available Inventory and Sustain High Renewal Rates
 Further Grow AlternaTVs Services .
 Further Grow Enlaces Services
  39




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Customers
    2009
    
    
    2008
    
    
    2007(In thousands)U.S.
    
    $
    50,742
    
    
    $
    50,285
    
    
    $
    47,558Mexico
    
    
    43,702
    
    
    
    42,032
    
    
    
    42,333Other
    
    
    30,595
    
    
    
    22,402
    
    
    
    12,310Total
    
    $
    125,039
    
    
    $
    114,719
    
    
    $
    102,201
 Sales and Marketing
 Sales Force
      40




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Pricing
     Contracts
     Competition and Markets
 Competition
   41




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New Satellite Capacity
  Domestic Market
     42




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U.S. Market
   Latin American Market
      43




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REGULATION
 Regulatory Framework within Mexico
  Ley General de Bienes
Nacionales Rescate Ley General
del Equilibrio Ecológico y Protección al Ambiente Ley Federal de Competencia
Económica Ley de Vías Generales de Comunicación
   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- radio-frequency bands,
and
 
    
    the Property Concession providing the right to use the buildings and areas in
which the control centers are located.
 Comisión Federal de Competencia
  44




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
    
    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.
     
    
    the term of any such Orbital Concession expires;
 
    
    we resign our rights under any such Orbital Concession;
 
    
    the SCT revokes any such Orbital Concession;
 
    
    the Mexican government, through the SCT, terminates any such Orbital Concession
through a proceeding called Rescate; or
 
    
    we become subject to liquidation or bankruptcy (quiebra).
  
    
    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;
  45




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
    
    our failure to satisfy the terms or conditions set forth in the Orbital
Concessions (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; or
 
    
    our assignment, transfer or encumbrance of rights granted under the Orbital
Concessions in contravention of the terms of applicable Mexican law.
  Rescate Ley General de Bienes Nacionales Rescate Rescate
  Requisa Requisa Requisa Requisa
   
    
    pay an annual fee in an amount equal to 7.5% of the assessed property value; and
    
    maintain the premises in good condition.
 Instituto de
Administración y Avalúos de Bienes Nacionales
  46




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
    
    the Property Concession term expires;
    
    we resign our rights to any of the Concessions;
    
    its purpose or the object of the Property Concession disappears;
 
    
    nullity, revocation or caducity of the Property Concession;
 
    
    the Mexican government decrees a Rescateon the Property Concession for reasons of
public interest
    
    the Orbital Concessions are terminated;
 
    
    the property and the buildings on it are inadequately maintained or are used for
a different purpose than the purpose for which the Property Concession was granted; and
 
    
    under terms and conditions generally applicable to Property Concessions of this
type under applicable Mexican law.
  
    
    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;
or
 
    
    under terms and conditions generally applicable to Property Concessions of this
type under applicable Mexican law.
 Enlaces Concession and Value Added Services Certificate
   47




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##### Table of Contents




    
    its term expires;
 
    
    Enlaces resigns its rights contained therein;
 
    
    the Mexican government, acting through the SCT, decrees a Rescateon the Network
Concession;
 
    
    Enlaces becomes subject to liquidation or bankruptcy, or
 
    
    the SCT revokes the Network Concession (in which case no compensation will be paid to
us).
 Rescate
  U.S. and ITU Regulation
 FCC Regulation of Satellite Services and Foreign Ownership of FCC Licenses
    48




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##### Table of Contents




    
    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
        Status of Our Satellites
   49




---



##### Table of Contents



Treaties and International Accords
 Reciprocity Agreement between the U.S. and Mexico
  Direct-to-Home Protocol
  Fixed Satellite Services Protocol
  Reciprocity Agreement between Canada and Mexico
   50




---



##### Table of Contents



Argentinean Agreement
  Comisión Nacional de Comunicaciones Secretaría de Comunicaciones
 
 ITEM 4A. Unresolved Staff Comments
  
 ITEM 5. Operating and Financial Review and Prospects
  Overview
     51




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##### Table of Contents



Financial Restructuring
  Concurso Mercantil Concurso Mercantil
   Recent Tax Developments
 Impuesto Empresarial a Tasa Única Amparo Amparo Amparo
 Amparo
  
    
    Provide for a temporary increase in the income tax (ISR) rate;
 
    
    Disallow crediting IETU loss credit carryforwards against ISR liabilities; and
 
    
    An increase in VAT (Value-Added Tax) from 15% to 16%.
  52




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##### Table of Contents



Industry Overview and Trends
     
    
    the important role satellites play in reducing the digital divide 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.
  53




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##### Table of Contents



Results of Operations for the Year Ended December 31, 2009 Compared to the Year Ended December 31,
2008
 Revenue
   Year endedDecember 31,2009
    
    
    2008
    
    
    Variances(in thousands of U.S. dollars) Satellite operations
    
    $
    102,061
    
    
    $
    93,248
    
    
    $
    8,813 Programming distribution
services
    
    
    10,594
    
    
    
    8,136
    
    
    
    2,458 Broadband satellite services
    
    
    12,384
    
    
    
    13,335
    
    
    
    (951
    )$
    125,039
    
    
    $
    114,719
    
    
    $
    10,320
  Operating Expenses
  a)
    
    Total satellite operating cost in the year ended December 31, 2009 were $20.4
million compared to $20.5 million in 2008, a decrease of $0.1 million.
 Year endedDecember 31,2009
    
    
    2008
    
    
    Variances(in thousands of U.S. dollars) Satellite operations
    
    $
    12,884
    
    
    $
    14,183
    
    
    $
    (1,299
    ) Programming distribution
services
    
    
    5,331
    
    
    
    4,162
    
    
    
    1,169 Broadband satellite services
    
    
    2,249
    
    
    
    2,186
    
    
    
    63$
    20,464
    
    
    $
    20,531
    
    
    $
    (67
    )
 
    
    Satellite operations cost decreased $1.3 million due to, among other factors, a $0.5
million decrease in satellite insurance costs, a $1.2 million decrease in personnel
cost due to severance provisions in 2008, partially offset by an increase of $0.4
million in other expenses.
 
    
    Since programming distribution contracts contemplate a revenue-sharing model with
content generators, programming distribution services cost increased $1.1 million as a
direct result of an increase in revenue during the year.
 
    
    Broadband satellite services cost increased due to the cost associated with antennas
and teleport maintenance.
  54




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##### Table of Contents



b)
    
    Reversal of Provision for Orbital Incentive
  c)
    
    Selling and Administrative Expenses
  d)
    
    Depreciation and Amortization
   2008
    
    $
    25,3682009
    
    
    13,6892010
    
    
    5,8822011
    
    
    3,0342012
    
    
    2,006Thereafter
    
    
    1,995
 Other Income
  Operating Income
  Interest Expense
  Net Foreign Exchange Gain/Loss
   55




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##### Table of Contents



Income Tax
  Net Loss Attributable to Satmex
  Results of Operations for the Year Ended December 31, 2008 Compared to the Year Ended December 31,
2007
 Revenue
   Year endedDecember 31,2008
    
    
    2007
    
    
    Variances(in thousands of U.S. dollars) Satellite operations
    
    $
    93,248
    
    
    $
    80,250
    
    
    $
    12,998 Programming distribution
services
    
    
    8,136
    
    
    
    6,815
    
    
    
    1,321 Broadband satellite services
    
    
    13,335
    
    
    
    15,136
    
    
    
    (1,801
    )$
    114,719
    
    
    $
    102,201
    
    
    $
    12,518
   56




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##### Table of Contents



Operating Expenses
  a)
    
    Total satellite operating cost in the year ended December 31, 2008 was $20.5
million compared to $28.5 million in 2007, showing a reduction of $8.0 million.
 Year endedDecember 31,2008
    
    
    2007
    
    
    Variances(in thousands of U.S. dollars) Satellite operations
    
    $
    14,183
    
    
    $
    21,421
    
    
    $
    (7,238
    ) Programming distribution
services
    
    
    4,162
    
    
    
    3,223
    
    
    
    939 Broadband satellite services
    
    
    2,186
    
    
    
    3,824
    
    
    
    (1,638
    )$
    20,531
    
    
    $
    28,468
    
    
    $
    (7,937
    )
 
    
    Satellite operations cost decreased $7.2 million due to, among other factors, $6.9 of
an orbital incentive provision recorded in 2007, not in 2008, and a decrease of $0.7
million in satellite insurance premiums, partially offset by an increase of $0.3 million
in personnel cost.
 
    
    Since programming distribution contracts contemplate a revenue sharing model with
content generators, programming distribution services cost increased due to an increase
in revenue.
 
    
    Broadband satellite services cost decreased primarily due to the reduction in the
cost associated with installation of antennas.b)
    
    Reversal of Provision for Orbital Incentive
  c)
    
    Selling and Administrative Expenses
  d)
    
    Depreciation and Amortization
   2007
    
    $
    13,9522008
    
    
    25,3682009
    
    
    13,6892010
    
    
    5,8822011
    
    
    3,0342012
    
    
    2,006Thereafter
    
    
    1,995
 Other Income
   57




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##### Table of Contents



Operating Income
  Interest Expense
  Net Foreign Exchange Loss/Gain
  Income Tax
  Net Loss Attributable to Satmex
  Inflation and Foreign Exchange Fluctuations
  Liquidity and Capital Resources
   58




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Concurso Mercantil Concurso Mercantil
     59




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##### Table of Contents



Sources and Uses of Cash
 Capital Expenditures
    Year Ended December 31,2009
    
    
    2008
    
    
    2007(in millions of U.S. dollars)Acquisition of property, furniture and equipment
    
    $
    1.8
    
    
    $
    3.0
    
    
    $
    2.0Construction of Satmex 7
    
    
    
    
    
    
    3.5
    
    
    
    0.4Total
    
    $
    1.8
    
    
    $
    6.5
    
    
    $
    2.4
   Total Debt
  Year ended December 31, 2009 compared to the year ended December 31, 2008
  Operating Activities
  Investing Activities
   60




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##### Table of Contents



Year ended December 31, 2008 compared to the year ended December 31, 2007
  Operating Activities
  Investing Activities
   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;
  61




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##### Table of Contents




    
    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;
    
    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;
    
    make investments in unrestricted subsidiaries;
    
    repurchase or redeem equity interests and debt;
    
    issue equity, and
    
    spend excess cash flow or insurance proceeds.
 Form 6-K
  The Second Priority Notes
   62




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##### Table of Contents




    
    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;
    
    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;
    
    make investments in unrestricted subsidiaries;
    
    repurchase or redeem equity interests and debt;
    
    issue equity, and
    
    spend excess cash flow or insurance proceeds.
   63




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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, 2009(1)
    
    $
    587,559
    
    
    $
    44,221
    
    
    $
    307,500
    
    
    $
    235,838
    
    
    $
    Operating leases(2)
    
    
    2,041
    
    
    
    537
    
    
    
    1,011
    
    
    
    493
    
    
    
    Other long-term obligations(3)
    
    
    4,419
    
    
    
    442
    
    
    
    884
    
    
    
    884
    
    
    
    2,209Total contractual cash obligations
    
    $
    594,019
    
    
    $
    45,200
    
    
    $
    309,395
    
    
    $
    237,215
    
    
    $
    2,209Other Commercial Commitments:Maintenance
    
    $
    5,247
    
    
    $
    2,134
    
    
    $
    2,847
    
    
    $
    626
    
    
    $
    
 (1)
    
    Variable interest on the First Priority Notes is calculated using projected interest rate,
approximately 9.03% 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. Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Business
Combinations
 Useful Lives of Satellites
   64




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##### Table of Contents



Solidaridad 2
    
    14.5 yearsSatmex 5
    
    15 yearsSatmex 6
    
    15 years
   Valuation of Satellites and Long-Lived Assets
 Property, Plant, and
Equipment
 Goodwill and Other Intangible Assets
 Business Combinations IntangiblesGoodwill and Other IntangiblesGoodwill and Other Fair Value Measurements and Disclosures
   65




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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
   66




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##### Table of Contents



Accounting Pronouncements
 a)
    
    Recently adopted accounting pronouncements In October 2009, the Company adopted the FASB
ASC 105-10 (SFAS No. 168), The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles. FASB ASC 105-10 establishes the FASB Accounting
Standards Codification (the Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in the preparation
of financial standards in conformity with U.S. GAAP. Upon the adoption of ASC 105-10, all
then-existing non-SEC accounting and reporting standards were superseded, with the exception
of certain items listed in ASC 105-10. The purpose of the Codification is not to create new
accounting and reporting guidance, but rather to simplify user access to all authoritative
U.S. GAAP. Accordingly, the adoption of ASC 105-10 had no effect on the Companys consolidated
financial statements.
 Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly
 Measuring Liabilities at Fair
Value ,
 Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51
 ,
Determination of the Useful Life of Intangible Assets Goodwill and Other Intangible Assets . Business Combinations
 Subsequent Events
 b)
    
    Recently issued accounting pronouncements In October 2009, the FASB issued ASU 2009-13,
which contains new guidance on accounting for revenue arrangements with multiple deliverables.
When vendor-specific objective evidence or third-party evidence for deliverables in an
arrangement cannot be determined, a best estimate of the selling price is required to separate
deliverables and allocate arrangement consideration using the relative selling price method.
The ASU also includes new disclosure requirements on how the application of the relative
selling price method affects the timing and amount of revenue recognition. The guidance in the
ASU will be effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning after June 15, 2010. Early adoption is permitted. The
Company is currently evaluating the effects of adopting this guidance.
  67




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Fair Value
Measurements and Disclosures Compensation  Retirement Benefits
 
 ITEM 6. Directors, Senior Management and Employees
 Directors
 SeriesName
    
    Position
    
    Age
    
    Period of Service
    
    RepresentingLuis Rebollar Corona
    
    Chairman of the Board
and Director
    
    
    73
    
    
    Since November 30, 2006
    
    AVicente Ariztegui Andreve
    
    Director
    
    
    56
    
    
    Since November 30, 2006
    
    AErwin Starke Fabris
    
    Director
    
    
    56
    
    
    Since November 30, 2006
    
    AJosé Manuel Canal Hernando
    
    Director
    
    
    70
    
    
    Since September 19, 2007
    
    ARichard Mastoloni
    
    Director
    
    
    45
    
    
    Since November 30, 2006
    
    BJohn H. Stevens
    
    Director
    
    
    62
    
    
    Since August 26, 2009
    
    BJames Duplessie
    
    Director
    
    
    51
    
    
    Since September 19, 2007
    
    BLuis Alfonso Nicolau Gutiérrez
    
    Alternate Director
    
    
    52
    
    
    Since September 19, 2007
    
    B
  Non-Members
 Name
    
    Position
    
    Age
    
    Period of ServiceLuis Rubio Barnetche
    
    Secretary of the Board of Directors
    
    
    47
    
    
    Since August 4, 2008Bertha Alicia Ordaz Avilés
    
    Alternate Secretary of the Board of Directors
    
    
    37
    
    
    Since August 4, 2008Daniel del Barrio Burgos
    
    Statutory Examiner
    
    
    56
    
    
    Since September 19, 2007
 Senior Management
 Name
    
    Position
    
    Age
    
    Period of ServicePatricio E. Northland
    
    Chief Executive Officer
    
    
    55
    
    
    Since May 2008Luis Fernando Stein Velasco
    
    Chief Financial Officer
    
    
    50
    
    
    Since November 2008Dionisio Manuel Tun Molina
    
    Vice President of Engineering and
Satellite Operations
    
    
    47
    
    
    Since May 2006Clemente Humberto Cabello 
Alcérreca
    
    Vice President Business & Development
    
    
    40
    
    
    Since January 2009Alejandro Camberos Chacón
    
    Director Strategic Planning
    
    
    40
    
    
    Since July 2007Leticia María Concepción 
Soto Walls
    
    Director of Human Resources,
Development & Administration
    
    
    46
    
    
    Since October 2008Pablo Manzur y Bernabeu
    
    General Counsel
    
    
    37
    
    
    Since June 2009John Mays Compton
    
    Chief Executive Officer of Enlaces
    
    
    55
    
    
    Since December 2008
  68




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##### Table of Contents



Luis Rebollar Corona
 Vicente Ariztegui Andreve
 Erwin Starke Fabris
 José Manuel Canal Hernando
  69




---



##### Table of Contents



Richard Mastoloni
 John H. Stevens
 James Duplessie
 Luis Alfonso Nicolau Gutiérrez
 Luis Rubio Barnetche
  70




---



##### Table of Contents



Bertha Alicia Ordaz Avilés
 Daniel del Barrio Burgos
 Patricio E. Northland
 Luis Fernando Stein Velasco
 Dionisio Manuel Tun Molina
 Clemente Humberto Cabello Alcérreca
  71




---



##### Table of Contents



Alejandro Camberos Chacón
 Leticia María Concepción Soto Walls.
 Pablo Manzur Bernabeu. ®
 John Mays Compton
 Audit and Compensation Committee
 Comité Único de Auditoría y Compensaciones
    72




---



##### Table of Contents



Compensation
       Employees
     73




---



##### 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
or any successor or
permitted assignee
    
    
    
    
    
    
    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. or any
successor or
permitted assignee
    
    
    
    
    
    
    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 or any
successor or
permitted assignee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
  74




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##### Table of Contents



ITEM
7. Major Shareholders and Related Party Transactions
 Major Shareholders
  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
      75




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##### Table of Contents



Loral Usufructo
 usufructo usufructo
 usufructo usufructo
 
 ITEM 8. Financial Information
 Consolidated Financial Statements and Other Financial Information
  Legal Proceedings
   Amparo Amparo Amparo
 Amparo
 Amparo
 Dividend Policy
   76




---



##### Table of Contents



Significant Changes
   
 ITEM 9. Markets
  
 ITEM 10. Additional Information
  Articles of Incorporation
  Material Contracts
  Exchange Controls
   77




---



##### Table of Contents



TAXATION
    Taxation of Interest and Principal
 (casas de bolsa) (Registro National de Valores) (Secretaría de Hacienda y
Crédito Público)
     78




---



##### Table of Contents



Taxation of Dispositions
  Transfer and Other Taxes
  
 ITEM 11. Quantitative and Qualitative Disclosures About Market Risk
  Exchange Rate Risk
  Interest Rate Risk
   79




---



##### Table of Contents



PART II
 
 ITEM 13. Defaults, Dividend Arrearages and Delinquencies
  
 ITEM 14. Material Modifications to the Rights of Security Holders
  
 ITEM 15. Controls and Procedures
 Disclosure Controls and Procedures
    Managements Annual Report on Internal Control Over Financial Reporting
    80




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  Remediation of Previously Disclosed Material Weakness
    
 ITEM 16A. Audit Committee Financial Expert
   
 ITEM 16B. Code of Ethics
     81




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##### Table of Contents



ITEM 16C. Principal Accountant Fees and Services
  2009
    
    
    2008
    
    
    2007(Amounts in thousands)Audit fees (1)
    
    $
    683
    
    
    $
    581
    
    
    $
    797Tax fees (2)
    
    
    120
    
    
    
    148
    
    
    
    85Total fees
    
    $
    803
    
    
    $
    729
    
    
    $
    882
 (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 in 2007 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 with financial
statements for tax purposes.   82




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##### 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, 2009 and 2008 (Successor Registrant)
    
    
    F-3Consolidated Statements of Operations for the Years ended December 31, 2009, 2008 and 2007
    
    
    F-4Consolidated Statements of Changes in Shareholders Deficit for the years ended December
31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008, 2007
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Schedule of Valuation and Qualifying Accounts
    
    
    F-30
 (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.
  83




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Exhibit No.
    
    Description2.5
    
    
    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.2.6
    
    
    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. as 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.
  84




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Exhibit No.
    
    Description2.16
    
    
    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.2.20
    
    
    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.2.23
    
    
    Supplemental Indenture, dated as of December 30, 2008, among
Satélites Mexicanos, S.A. de C.V. as Issuer, AlternaTV
Corporation, as New First Priority Guarantor, and HSBC Bank
USA, National Association, as Trustee.****2.24
    
    
    Supplemental Indenture, dated as of January 20, 2009, among
Satélites Mexicanos, S.A. de C.V. as Issuer, AlternaTV
Corporation, as New Second Priority Guarantor, and Wells Fargo
Bank, National Association, as Trustee.****2.25
    
    
    Additional Guarantee Designation, dated December 30, 2008,
delivered to HSBC Bank USA, National Association, as Trustee,
by AlternaTV Corporation, as New First Priority
Guarantor.****2.26
    
    
    Additional Guarantee Designation, dated January 20, 2009,
delivered to Wells Fargo Bank, National Association, as
Trustee, by AlternaTV Corporation, as New Second Priority
Guarantor.****2.27
    
    
    Joinder, dated January 20, 2009, by AlternaTV Corporation.****2.28
    
    
    Pledge Agreement, dated as of December 30, 2008, by and
between Satélites Mexicanos, S.A. de C.V., as Pledgor, and
HSBC Bank USA, National Association, as Trustee.****2.29
    
    
    Pledge Agreement, dated as of January 20, 2009, by and between
Satélites Mexicanos, S.A. de C.V., as Pledgor, and Wells Fargo
Bank, National Association, as Trustee.****
  85




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Exhibit No.
    
    Description2.30
    
    
    Supplemental Indenture, dated as of May 21, 2009, among Satélites
Mexicanos, S.A. de C.V. as Issuer, AlternaTV International Corporation,
as New First Priority Guarantor, and HSBC Bank USA, National
Association, as Trustee.****2.31
    
    
    Supplemental Indenture, dated as of May 21, 2009, among Satélites
Mexicanos, S.A. de C.V. as Issuer, AlternaTV International Corporation,
as New Second Priority Guarantor, and Wells Fargo Bank, National
Association, as Trustee.*****2.32
    
    
    Additional Guarantee Designation, dated May 21, 2009, delivered to HSBC
Bank USA, National Association, as Trustee, by AlternaTV International
Corporation, as New First Priority Guarantor.****2.33
    
    
    Additional Guarantee Designation, dated May 21, 2009, delivered to Wells
Fargo Bank, National Association, as Trustee, by AlternaTV
International Corporation, as New Second Priority Guarantor.****2.34
    
    
    Joinder, dated May 21, 2009, by AlternaTV International Corporation.****2.35
    
    
    Pledge Agreement, dated as of May 21, 2009, by and between Satélites
Mexicanos, S.A. de C.V., as Pledgor, and HSBC Bank USA, National
Association, as Trustee.****2.36
    
    
    Pledge Agreement, dated as of May 21, 2009, by and between Satélites
Mexicanos, S.A. de C.V., as Pledgor, and Wells Fargo Bank, National
Association, as Trustee.****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.**
  86




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Exhibit No.
    
    Description4.12
    
    
    Fourteenth Amendment, dated August 1, 2008, 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.****4.13
    
    
    Fifteenth Amendment, dated February 1, 2009, 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.****4.14
    
    
    Sixteenth Amendment, dated September 1, 2009, 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.*4.15
    
    
    Seventeenth Amendment, dated October 1, 2009, 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.*4.16
    
    
    Stock Purchase Agreement, dated February 26, 2010, between EchoStar
Satellite Acquisition L.L.C and Satélites Mexicanos, S.A. de C.V.*12.1
    
    
    Section 302 Certification of Patricio Northland, Chief Executive Officer.*12.2
    
    
    Section 302 Certification of Luis Stein, Chief Financial Officer.*13.1
    
    
    Section 906 Certification of Patricio Northland, Chief Executive Officer.*13.2
    
    
    Section 906 Certification of Luis Stein, 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 to the registrants Form 20-F for the fiscal year ended December 31, 2008.***
    
    Incorporated by reference to the registrants Form 20-F for the fiscal year ended December 31, 2005.**
    
    Incorporated by reference to the registrants Form 20-F for the fiscal year ended December 31, 2006.*
    
    Filed herewith.  87




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SIGNATURES
  SATÉLITES MEXICANOS, S.A. DE C.V.By:
    /s/ LUIS FERNANDO STEIN VELASCOLuis Fernando Stein VelascoChief Financial Officer   88




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##### Table of Contents



SATÉLITES MEXICANOS, S.A. DE C.V. AND SUBSIDIARIES
 PART III
 INDEX TO FINANCIAL STATEMENTS
 Table of contents
    
    PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F-3Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007
    
    
    F-4Consolidated Statements of Changes in Shareholders Deficit for the Years Ended
December 31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Schedules of Valuation and Qualifying Accounts
    
    
    F-30
  F-1




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Report of Independent Registered Public Accounting Firm
 To the Board of Directors and Shareholders of Satélites Mexicanos, S. A.
de C.V. and Subsidiaries
Mexico City, Mexico
    
     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, 2009 and 2008 
(In thousands of U. S. dollars)
 2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    102,393
    
    
    $
    58,207Accounts receivable  net
    
    
    9,543
    
    
    
    17,281Due from related parties
    
    
    464
    
    
    
    385Inventories  net of allowance for obsolescence
    
    
    410
    
    
    
    187Prepaid insurance
    
    
    5,695
    
    
    
    3,706Deferred income taxes
    
    
    
    
    
    
    61Total current assets
    
    
    118,505
    
    
    
    79,827Satellites and equipment
    
    
    235,240
    
    
    
    264,149Concessions
    
    
    39,597
    
    
    
    41,007Intangible assets
    
    
    12,917
    
    
    
    27,294Guarantee deposits and other assets
    
    
    646
    
    
    
    715Goodwill
    
    
    32,502
    
    
    
    32,502Total
    
    $
    439,407
    
    
    $
    445,494Liabilities and Shareholders DeficitCurrent liabilities:Accrued interest
    
    $
    1,641
    
    
    $
    1,560Accounts payable and accrued expenses
    
    
    16,816
    
    
    
    15,844Deferred revenue
    
    
    2,344
    
    
    
    2,344Income tax payable
    
    
    56
    
    
    
    677Deferred income taxes
    
    
    146
    
    
    
    Total current liabilities
    
    
    21,003
    
    
    
    20,425Debt obligations
    
    
    420,615
    
    
    
    406,297Deferred revenue
    
    
    63,010
    
    
    
    65,354Labor obligations
    
    
    735
    
    
    
    461Accrued expenses
    
    
    788
    
    
    
    263Deferred income taxes
    
    
    5,401
    
    
    
    5,091Total liabilities
    
    
    511,552
    
    
    
    497,891Contingencies and commitments (Note 18)Shareholders deficit:Total Satélites Mexicanos, S. A. de C. V. shareholders deficitCommon stock
    
    
    46,764
    
    
    
    46,764Accumulated deficit
    
    
    (121,988
    )
    
    
    (101,834
    )Total Satélites Mexicanos, S. A. de C. V. shareholders deficit
    
    
    (75,224
    )
    
    
    (55,070
    )Noncontrolling interest
    
    
    3,079
    
    
    
    2,673Total shareholders deficit
    
    
    (72,145
    )
    
    
    (52,397
    )Total
    
    $
    439,407
    
    
    $
    445,494
   F-3




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##### Table of Contents



Satélites Mexicanos, S. A. de C. V. and Subsidiaries
 
 Consolidated Statements of Operations
 For the years ended December 31, 2009, 2008 and 2007
(In thousands of U. S. dollars)
 2009
    
    
    2008
    
    
    2007Revenues (see Note 15):Satellite services
    
    $
    102,061
    
    
    $
    93,248
    
    
    $
    80,250Broadband satellite services
    
    
    12,384
    
    
    
    13,335
    
    
    
    15,136Programming distribution services
    
    
    10,594
    
    
    
    8,136
    
    
    
    6,815125,039
    
    
    
    114,719
    
    
    
    102,201Cost and expenses:Satellite services (1)
    
    
    12,884
    
    
    
    14,183
    
    
    
    21,421Broadband satellite services (1)
    
    
    2,249
    
    
    
    2,186
    
    
    
    3,824Programming distribution services (1)
    
    
    5,331
    
    
    
    4,162
    
    
    
    3,223Reversal of provision for orbital incentive
    
    
    
    
    
    
    (6,989
    )
    
    
    Selling and administrative expenses (1)
    
    
    20,217
    
    
    
    25,647
    
    
    
    26,509Depreciation and amortization
    
    
    47,657
    
    
    
    59,807
    
    
    
    53,10688,338
    
    
    
    98,996
    
    
    
    108,083Other income
    
    
    
    
    
    
    4,610
    
    
    
    Operating income (loss)
    
    
    36,701
    
    
    
    20,333
    
    
    
    (5,882
    )Other (expenses) income:Interest expense
    
    
    (43,708
    )
    
    
    (48,498
    )
    
    
    (51,672
    )Interest income
    
    
    480
    
    
    
    1,481
    
    
    
    1,650Net foreign exchange gain (loss)
    
    
    12
    
    
    
    (1,828
    )
    
    
    145Loss before income tax
    
    
    (6,515
    )
    
    
    (28,512
    )
    
    
    (55,759
    )Income tax
    
    
    13,233
    
    
    
    6,829
    
    
    
    893Net loss
    
    
    (19,748
    )
    
    
    (35,341
    )
    
    
    (56,652
    )Less: Net income attributable to noncontrolling interest
    
    
    406
    
    
    
    285
    
    
    
    802Net loss attributable to Satélites Mexicanos,
S. A. de C. V.
    
    $
    (20,154
    )
    
    $
    (35,626
    )
    
    $
    (57,454
    )
 (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
 For the years ended December 31, 2009, 2008 and 2007
(In thousands of U. S. dollars, except share data)
 Common stock
    
    
    
    
    
    
    
    
    
    
    TotalShares
    
    
    
    
    
    
    Accumulated
    
    
    Noncontrolling
    
    
    shareholdersissued
    
    
    Amount
    
    
    deficit
    
    
    interest
    
    
    equity (deficit)Balance, January 1, 2007
    
    
    46,874,999
    
    
    $
    46,764
    
    
    $
    (8,754
    )
    
    $
    1,586
    
    
    $
    39,596Net loss
    
    
    
    
    
    
    
    
    
    
    (57,454
    )
    
    
    802
    
    
    
    (56,652
    )Balance, December 31, 2007
    
    
    46,874,999
    
    
    
    46,764
    
    
    
    (66,208
    )
    
    
    2,388
    
    
    
    (17,056
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (35,626
    )
    
    
    285
    
    
    
    (35,341
    )Balance, December 31, 2008
    
    
    46,874,999
    
    
    
    46,764
    
    
    
    (101,834
    )
    
    
    2,673
    
    
    
    (52,397
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (20,154
    )
    
    
    406
    
    
    
    (19,748
    )Balance, December 31, 2009
    
    
    46,874,999
    
    
    $
    46,764
    
    
    $
    (121,988
    )
    
    $
    3,079
    
    
    $
    (72,145
    )
   F-5




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##### Table of Contents



Satélites Mexicanos, S. A. de C. V. and Subsidiaries
 
 Consolidated Statements of Cash Flows

For the years ended December 31, 2009, 2008 and 2007
(In thousands of U. S. dollars)
 2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (19,748
    )
    
    $
    (35,341
    )
    
    $
    (56,652
    )Adjustments to reconcile net loss to net cash flows provided by operating activities:Net periodic cost
    
    
    274
    
    
    
    8
    
    
    
    124Depreciation and amortization
    
    
    47,657
    
    
    
    59,807
    
    
    
    53,106Write-off of satellite construction costs
    
    
    1,256
    
    
    
    
    
    
    
    (Reversal of) allowance for doubtful accounts
    
    
    (150
    )
    
    
    136
    
    
    
    398Deferred income taxes
    
    
    517
    
    
    
    4,824
    
    
    
    507Deferred revenue
    
    
    (2,344
    )
    
    
    (2,344
    )
    
    
    (2,344
    )Interest accrued to principal on debt obligations (see Note 12b)
    
    
    14,318
    
    
    
    13,126
    
    
    
    14,934Changes in operating assets and liabilities:(Increase) decrease in:Accounts receivable
    
    
    7,888
    
    
    
    (9,236
    )
    
    
    (1,687
    )Due from related parties
    
    
    (79
    )
    
    
    194
    
    
    
    (48
    )Inventories
    
    
    (223
    )
    
    
    151
    
    
    
    467Prepaid insurance
    
    
    (1,989
    )
    
    
    348
    
    
    
    215Guarantee deposits and other assets
    
    
    69
    
    
    
    221
    
    
    
    680Increase (decrease) in:Accounts payable and accrued expenses
    
    
    (1,533
    )
    
    
    (4,554
    )
    
    
    8,131Accrued interest
    
    
    81
    
    
    
    209
    
    
    
    (2,758
    )Net cash flows provided by operating activities
    
    
    45,994
    
    
    
    27,549
    
    
    
    15,073Cash flows from investing activities:Acquisition of equipment
    
    
    (1,808
    )
    
    
    (3,053
    )
    
    
    (2,034
    )Satellite construction in progress
    
    
    
    
    
    
    (3,465
    )
    
    
    (391
    )Net cash flows used in investing activities
    
    
    (1,808
    )
    
    
    (6,518
    )
    
    
    (2,425
    )Cash and cash equivalents:Net increase for the year
    
    
    44,186
    
    
    
    21,031
    
    
    
    12,648Beginning of year
    
    
    58,207
    
    
    
    37,176
    
    
    
    24,528End of year
    
    $
    102,393
    
    
    $
    58,207
    
    
    $
    37,176Supplemental disclosures of cash flow information:Cash paid during the year:Interest paid
    
    $
    28,912
    
    
    $
    32,952
    
    
    $
    36,900Income taxes paid
    
    $
    9,008
    
    
    $
    9,017
    
    
    $
    340Non-cash investing activities:Capital expenditures incurred not yet paid
    
    $
    2,391
    
    
    $
    
    
    
    $
    
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Satélites Mexicanos, S. A. de C. V. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 December 31, 2009, 2008 and 2007
(In thousands of U.S. dollars)
 1.
    
    Nature of business
    2.
    
    Organization
  OwnershipCompany
    
    percentage
    
    
    ActivityEnlaces Integra, S. de R. L. de C. V. (Enlaces)
    
    
    75.00
    %
    
    Acquired on November 30, 2006.
Its main activities are
broadband satellite services
(installation, operation,
control and exploitation of
public telecommunications
networks in Mexico).HPS Corporativo S. de R. L. de C. V. (HPS)
    
    
    99.97
    %
    
    Provides administrative services.AlternaTV Corporation (AlternaTV Corp.)
    
    
    100.00
    %
    
    Incorporated on December 19,
2008, to be a vehicle to
contract with a third party the
procurement of the Satmex 7
satellite.AlternaTV International Corporation (AlternaTV Int.)
    
    
    100.00
    %
    
    Incorporated on May 21, 2009.
This entity is engaged in
programming distribution
services. As of December 31,
2009, AlternaTV Int. has not
operated.SMVS Administración, S. de R. L. de
C. V. and SMVS Servicios Técnicos,
S. de R. L. de C. V. (Service Companies)
    
    
    99.97
    %
    
    Incorporated on June 30, 2006,
to provide administrative and
operating services exclusively
to Satmex.
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3.
    
    Reorganization
 a.
    
    Background
  b.
    
    Shareholders Decisions
  Concurso Mercantil and Reorganization Process according to Chapter 11 of the USA
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 in Mexico (the Court), where it was
admitted on June 30, 2005. A concurso mercantilis a Mexican reorganization
proceeding based on the Ley de Concursos Mercantiles, or Law of Reorganization
(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s 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 related
exchange rate issued by the Banco de México and the fluctuation in the value 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 Mexican territory, on
August 4, 2005, Satmex filed an appeal with the USA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, the
Bankruptcy Court ordered the suspension of any seizure or embargo against Satmex
assets located in the USA, during the concurso mercantilprocess.After the concurso mercantildeclaration and as a result of the negotiations
among the bondholders and Satmex, the main bondholders and the shareholders
carried out a conciliation process. On March 31, 2006, the majority of the
holders of the FRNs, approximately two-thirds of the holders of HYBs and Satmexs
main shareholders, Servicios Corporativos Satelitales, S. A. de C. V.
(Servicios), Loral Skynet Corp. (Loral) and Principia, S. A. de C. V.
(Principia), executed the Restructuring Plan, whose principal terms included
the following matters: i) capitalizing a significant portion of the HYBs
including 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 bylaws; 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 of the restructuring plan were adopted in the Convenio
Concursal, which was submitted to the holders acknowledgedby 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 Conciliador
appointed 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 USA
Bankruptcy Code (Chapter 11) 11 U.S.C. §§ 101-1532.On June 23, 2006, the Secretaría de Comunicaciones y Transportes (The Ministry
of Communications and Transportation or the SCT), as a regulator and the
grantor of Satmexs orbital concessions, filed a motion with 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 mercantilproceeding, which became final and not subject to appeal
effective 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 effective
November 21, 2006, Satmex, the bondholders and the shareholders initiated several
actions to implement the agreements established in the Restructuring Plan, the
Convenio Concursal and 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
Concursalagreements were satisfied.
 c.
    
    ReorganizationThe main agreements for financial restructuring at the Effective Date were as follows:
 
    
    New Debt and Debt Capitalization
 First Priority Senior Secured NotesIn exchange for cancellation of the old debt, at the Effective Date the FRN holders
received new bonds issued by Satmex, named First Priority Senior Secured Notes
(FPSSN), due in November 30, 2011, with a principal amount of $238.2 million (see
Note 12a).Second Priority Senior Secured NotesIn exchange for cancellation of the old debt of $413.8 million, at the Effective Date
the HYB holders received: i) new bond s issued by Satmex, named Second Priority Senior
Secured Notes (SPSSN), due on November 30, 2013, with a principal amount of $140.0
million (see Note 12b) and ii) Satmex common stock, exchanged through the
capitalization process, in the amount of $273.8 million.
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4.
    
    Basis of presentation
  a.
    
    Fresh-start reporting As a result of the aforementioned reorganization process,
Satmex adopted fresh-start reporting as of November 30, 2006. Reorganization adjustments
were made on that date in the consolidated financial information to reflect the effects
of the aforementioned agreements in accordance with the Confirmation Order and adoption
of fresh-start reporting. These adjustments reflected the relative fair values the
Companys assets and liabilities on the Effective Date. 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.b.
    
    Going concern The Companys ability to continue as a going concern, to improve
performance and obtain profitability is dependent on its ability to maintain operating
discipline, improve cost structure, encourage organic growth within operating groups,
capitalize on licensing and sublicensing opportunities, refinance the existing debt, and
construct Satmex 7 and Satmex 8, high-power replacements for Solidaridad 2 and Satmex 5,
respectively.As of December 31, 2009 and 2008, the Companys statutory financial statements show an
accumulated deficit exceeding two-thirds of its paid-in capital. Under Mexican law,
this condition permits the Companys shareholders, creditors or other interested
parties to force the Company into dissolution. The Company is likely to require
additional financing to service or refinance its indebtedness, fund its operations
and/or invest in the growth of the business. Further, as detailed in Note 12, FPSSN are
due in November 2011 and current levels of cash and cash equivalents and operating cash
flows might not be sufficient to repay such obligations. Existing indentures restrict
the ability to incur additional debt unless authorization from bondholders is obtained.
The Company is highly leveraged and it may not be able to access financing, if at all,
on terms acceptable and permitted by the existing indentures. In addition, the
restrictions contained in these agreements governing the indebtedness may impair
Satmexs ability to finance future operation capital needs, or engage in other
activities.However, the Companys management believes that these situations will not affect the
operations in the short term due to the following:
 
    
    Opportunities for the sale and internal restructuring of the Company are being
considered, for which independent experts advisors have been hired.
    
    Different financing alternatives are being pursued with both national and
foreign institutions.
    
    Management is holding conversations with Bondholders to obtain authorization
for the use of cash, to start construction of the replacement of Satmex 5.
    
    Management has obtained approval from the Board of Directors to proceed with
the design and construction of the replacement for Satmex 5; the Company considers
that it will execute an agreement with the contractor for the satellite within the
next six months.
 Therefore, the accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.c.
    
    Foreign currency transactions For statutory purposes, accounting records are
maintained in Mexican pesos, in the Spanish language and under 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 (Mexican pesos per one U.S. dollar as of
December 31, 2009 and 2008, were Ps.13.06 and Ps. 13.54, respectively), with the
resulting effect included in the results of operations.
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##### Table of Contents



5.
    
    Significant accounting policies
  a.
    
    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.b.
    
    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 certain 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 of the Company are as follows: for Satellite services  broadcasting
Grupo Televisa and Productora y Comercializadora de Televisión, S. A. de C.V.; for
Satellite services  telecommunications Teléfonos de México, S. A. de C. V. and Telmex
Perú, S. A. (Telmex); and for Satellite services  data transmission and Internet
Hughes Network Systems, Inc. For Programming distribution services the Companys main
customers are Direct TV and Comcast LLC and the main customers of Enlaces (Broadband
satellite services) are Globalstar de México, S. de R. L. de C. V. and Wal-Mart de
México, S. A. de C. V.For the years ended December 31, 2009, 2008 and 2007, the Satellite service revenues,
Programming distribution services and Broadband satellite services were obtained from:
 2009
    
    
    2008
    
    
    2007%
    
    
    %
    
    
    %Hughes Networks Systems, Inc.
    
    
    20
    
    
    
    23
    
    
    
    26Telmex
    
    
    15
    
    
    
    14
    
    
    
    9Other foreign customers
    
    
    36
    
    
    
    31
    
    
    
    28Other domestic customers
    
    
    29
    
    
    
    32
    
    
    
    37
 c.
    
    Inventories Inventories consist mainly of antennas and are stated at the lower of
cost or market value. Cost is determined using the average cost method.d.
    
    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
and/or quoted market prices for assets where a market exists for such assets. In the
determination of fair value, Satmex also considered whether an asset would be sold
either individually or with other assets and the proceeds Satmex could expect 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, 2009 and 2008:
 Average YearsSatellites in-orbit  original estimated useful life as determined by engineering analysis:Satmex 6
    
    
    15Satmex 5
    
    
    15Solidaridad 2
    
    
    14.5Equipment:Satellite equipment
    
    
    3Furniture and fixtures
    
    
    10Leasehold improvements
    
    
    5Teleport, equipment and antennas
    
    
    10
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Depreciation of satellites commences on the date on which the satellite is placed
in orbit. Satmex 6, Satmex 5, and Solidaridad 2, commenced their operation in July
2006, January 1999 and November 1994 (fully-depreciated), 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, 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 insurance and amortized over the related
policy period.e.
    
    Concessions As of November 30, 2006, Satmex adopted fresh-start reporting,
under which its orbital concessions were recorded at fair value and are amortized over
40 years using the straight-line method. Their remaining useful life at such date was 31
years. The concession to operate a telecommunications public network is amortized over
23 years, which was the remaining useful life at the date of grant to Satmex, originally
granted for 30 years.f.
    
    Valuation of satellites and long-lived assets The carrying value of the
satellites, amortizable intangible assets and other long-lived assets is reviewed for
impairment wherever events or changes in circumstances indicate that the carrying amount
of such assets may not be recoverable. If the expected undiscounted future cash flows
are less than the carrying value of the long-lived assets, an impairment charge is
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.
 g.
    
    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)
on November 30, 2006, in accordance with fresh-start accounting requirements. 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 the reporting unit
level (operating segment or one level below an operating segment). The Company compares
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 2009 and determined that Goodwill was not impaired.h.
    
    Intangible assets Intangible assets consist primarily of contract backlog,
customer relationships, internally developed software and technology and landing rights,
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 maturity of the related agreements maturity.
Intangible assets are also reviewed for impairment using the same methodology as
discussed in insert f. above.
  F-12




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##### Table of Contents



i.
    
    Labor obligationsIn accordance with Mexican Labor Law, the Company provides
seniority premiums benefits to its employees under certain circumstances. These benefits
consist of a one-time payment equivalent to 12 days wages for each year of service (at
the employees most recent salary, but not to exceed twice the legal minimum wage),
payable to all employees with 15 or more years of service, as well as to certain
employees terminated involuntarily prior to the vesting of their seniority premium
benefit.The Company also provides statutorily mandated severance benefits to its employees
terminated under certain circumstances. Such benefits consist of a one-time payment of
three months wages plus 20 days wages for each year of service payable upon involuntary
termination without just cause.Costs associated with these benefits are provided for based on actuarial computations
using the project unit credit method.j.
    
    Provisions 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.k.
    
    Income taxesIncome taxes, calculated as the higher of the regular Mexican
income tax (ISR) or the Business Flat Tax (IETU), are recorded in the results of the
year in which they are incurred. The Company, based on its financial projections,
determines whether it expects to incur ISR or IETU in the future and accordingly
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 ISR or IETU 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.Tax on assets (IMPAC) paid through 2007 that is expected to be recovered is recorded
as an advanced payment of ISR and is presented in the consolidated balance sheets
within the deferred income taxes.l.
    
    Statutory employee profit sharing Statutory employee profit sharing (PTU) is
recorded in the results of the year in which is incurred and presented within operating
expenses in the accompanying consolidated statements of operations. Deferred PTU
liabilities are derived from temporary differences that result from comparing the
accounting and PTU values of assets and liabilities.m.
    
    Revenue recognition Fixed satellite service revenues are recognized as the
satellite capacity is provided according to service lease agreements. Satellite
transmission 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.The public and private network signal and value-added services (Broadband satellite
services) are recognized when rendered.The sale of antennas and installation services represent separate deliverables. 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; the installation and testing of the antennas takes
a few hours and occurs in the same day as delivery 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, which generally occurs on the same day as delivery and
installation is completed.On a monthly basis, Satmex estimates the number of subscribers to programming
distribution services 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.
  F-13




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##### Table of Contents



n.
    
    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. As a result of the application of
fresh-start reporting, deferred revenue was adjusted to fair value. Annual amortization
is $2.3 million.o.
    
    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 of programming
distribution services, the valuation of long-lived assets and goodwill, the valuation
allowance on deferred income tax assets, the scheduling of reversal of the temporary
differences under different tax regimes 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.p.
    
    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.q.
    
    Reclassifications Certain amounts in the consolidated financial statements as
of and for the years ended December 31, 2008 and 2007 have been reclassified in order to
conform to the presentation of the consolidated financial statements as of and for the
year ended December 31, 2009. Such reclassifications consist of (i) separate disclosure
of changes in the allowance for doubtful accounts within the reconciliation of net
income in the statements of cash flows, rather than within the change in the accounts
receivable balance and (ii) presentation of noncontrolling interest within equity in the
balance sheets, and within consolidated net loss in the statements of operations and
statements of cash flows.r.
    
    Recently adopted accounting pronouncements In October 2009, the Company adopted
the Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) 105-10 (SFAS No. 168), The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles. FASB ASC 105-10 establishes the
FASB Accounting Standards Codification (the Codification) as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial standards in conformity with US
GAAP. Upon the adoption of ASC 105-10, all then-existing non-SEC accounting and
reporting standards were superseded, with the exception of certain items listed in ASC
105-10. The purpose of the Codification is not to create new accounting and reporting
guidance, but rather to simplify user access to all authoritative US GAAP. Accordingly,
the adoption of ASC 105-10 had no effect on the Companys consolidated financial
statements.In July 2009, the Company adopted ASC 820-10 (FASB Staff Position FAS No. 157-4,
Determining Fair Value When the Volume and Level of Activity for the Asset or Liability
Have Significantly Decreased and Identifying Transactions That Are Not Orderly), which
provided further guidance on how to determine the fair value of assets and liabilities
when there is no active market or where the price inputs being used to determine fair
value represent distressed sales. ASC 820-10 was considered in the valuation of the
Companys debt for purposes of disclosures of the fair value of financial assets and
liabilities not recognized in the financial statements at their fair value, but did not
have a material impact on the accompanying consolidated financial statements.
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In September 2009, the Company adopted FASB ASC 820-10 (FASB Accounting Standards
Update (ASU) 2009-5, Measuring Liabilities at Fair Value), which provides guidance on
measuring the fair value of liabilities for which a quoted price in an active market
for the identical liability is not available. The adoption of this standard did not
have a material impact on the consolidated financial statements.In January 2009, the Company adopted ASC 810-10 (SFAS No. 160, Noncontrolling Interests
in Consolidated Financial Statements  an amendment of ARB No. 51) which establishes
the accounting and reporting standards for the noncontrolling interest in a subsidiary
and the deconsolidation of a subsidiary, and also amends certain consolidation guidance
for consistency with revised standards regarding business combinations. The
presentation and disclosure requirements of this new guidance were adopted in 2009 and
applied retrospectively, while the accounting provisions were applied prospectively as
of January 1, 2009, and did not have a material effect on the accompanying consolidated
financial statements.In January 2009, the Company adopted ASC 350-30 (FASB Staff Position FAS No. 142-3,
Determination of the Useful Life of Intangible Assets) which amends the factors that
should be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under ASC 350-10 (SFAS No. 142,
Goodwill and Other Intangible Assets). The objective of ASC 350-30 is to improve the
consistency between the useful life of a recognized intangible asset and the period of
expected cash flows used to measure the fair value of the asset under ASC 805-10 (SFAS
No. 141(R), Business Combinations). The adoption of this guidance did not have a
material impact on the accompanying consolidated financial statements and related
disclosures.In July 2009, the Company adopted ASC 855-10 (SFAS 165, Subsequent Events). ASC 855-10
establishes accounting and reporting standards for events that occur after the balance
sheet date but before financial statements are issued or are available to be issued. In
February 2010, the FASB issued Accounting Standards Update (ASU) 2010-09, which
exempts filers with the Securities and Exchange Commission from disclosing the date
through which subsequent events have been evaluated.s.
    
    Recently issued accounting pronouncements In October 2009, the FASB issued ASU
2009-13, which contains new guidance on accounting for revenue arrangements with
multiple deliverables. When vendor specific objective evidence or third party evidence
for deliverables in an arrangement cannot be determined, a best estimate of the selling
price is required to separate deliverables and allocate arrangement consideration using
the relative selling price method. The ASU also includes new disclosure requirements on
how the application of the relative selling price method affects the timing and amount
of revenue recognition. The guidance in the ASU will be effective prospectively for
revenue arrangements entered into or materially modified in fiscal years beginning after
June 15, 2010. Early adoption is permitted. The Company is currently evaluating the
effects of adopting this guidance.On January 21, 2010, the FASB issued ASU 2010-06. The ASU amends ASC 820, Fair Value
Measurements and Disclosuresto add new requirements for disclosures about transfers
into and out of Levels 1 and 2 and separate disclosures about purchases, sales,
issuances, and settlements relating to Level 3 measurements. It also clarifies existing
fair value disclosures about the level of disaggregation and about inputs and valuation
techniques used to measure fair value. This ASU amends guidance on employers
disclosures about postretirement benefit plan assets under ASC 715, Compensation -
Retirement Benefits, to require that disclosures be provided by classes of assets
instead of by major categories of assets. The guidance in the ASU is effective for the
first reporting period (including interim periods) beginning after December 15, 2009,
except for the requirement to provide the Level 3 activity of purchases, sales,
issuances, and settlements on a gross basis, which will be effective for fiscal years
beginning after December 15, 2010, and for interim periods within those fiscal years.
In the period of initial adoption, entities will not be required to provide the amended
disclosures for any previous periods presented for comparative purposes. However, those
disclosures are required for periods ending after initial adoption. Early adoption is
permitted.
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6.
    
    Cash and cash equivalents
  2009
    
    
    2008Cash
    
    $
    44,442
    
    
    $
    44,360Cash equivalents (1)
    
    
    57,951
    
    
    
    13,847$
    102,393
    
    
    $
    58,207
 (1)
    
    The Companys cash equivalents consist mainly of treasury bills with original
maturities less than 20 days. 7.
    
    Accounts receivable
  2009
    
    
    2008Customers
    
    $
    8,078
    
    
    $
    10,220Allowance for doubtful accounts
    
    
    (360
    )
    
    
    (510
    )7,718
    
    
    
    9,710Recoverable IETU
    
    
    125
    
    
    
    5,600Value-added tax and tax withholdings
    
    
    1,058
    
    
    
    1,595Other
    
    
    642
    
    
    
    376$
    9,543
    
    
    $
    17,281
 8.
    
    Satellites and equipment
  2009
    
    
    2008Satellites in-orbit
    
    $
    314,136
    
    
    $
    314,136Equipment for satellites
    
    
    11,986
    
    
    
    11,440Furniture and fixtures
    
    
    5,836
    
    
    
    4,807Leasehold improvements
    
    
    1,527
    
    
    
    1,256333,485
    
    
    
    331,639Accumulated depreciation and amortization
    
    
    (104,119
    )
    
    
    (72,524
    )229,366
    
    
    
    259,115Advance payment for construction of Satmex 7
    
    
    2,600
    
    
    
    3,856Other construction in-progress
    
    
    3,274
    
    
    
    1,178$
    235,240
    
    
    $
    264,149
 The Satmex 6 satellite was launched on May 27, 2006 and commenced operations in July
2006.The Satmex 5 satellite was launched on December 5, 1998 and commenced operations in January
1999.Solidaridad 2 concluded its depreciation period based upon its estimated useful life during
2009.For the years ended December 31, 2009, 2008 and 2007, depreciation and amortization expense
related to satellites and equipment was $31.8 million, $32.8 million, and $37.3 million,
respectively.
  F-16




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9.
    
    Concessions
  2009
    
    
    2008Orbital concessions
    
    $
    41,700
    
    
    $
    41,700Public telecommunications network
    
    
    2,248
    
    
    
    2,24843,948
    
    
    
    43,948Accumulated amortization
    
    
    (4,351
    )
    
    
    (2,941
    )$
    39,597
    
    
    $
    41,007
 For the years ended December 31, 2009, 2008 and 2007, amortization expense related to
concessions was $1.4 million, for each of the three years.
 a.
    
    Orbital Concessions and FacilitiesIn October 1997, the Mexican federal government granted to Satmex the rights to three
concessions (the Concessions) for an initial 20-year term to operate in the orbital
slots 113.0° W.L., 116.8° W.L., and 114.9° W.L. In November 2006, Satmex received
information from 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.In order to extend the orbital concession term, Satmex must comply with the obligations
established by the concession documents, and solicit extension of the concession before
the beginning of the fifth term of the concession (i.e. before the last four years of
the original concession term), and must obtain approval from the SCT of the technical
and operating characteristics of any new satellites, as well as guarantee the
occupation and use of the orbital slot during the concessions original and extended
terms.The concessionaire 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 related facilities of the first control center and the land of the
second control center are the property of the Mexican federal government.Use of the land and facilities where the control centers are located that are property
of the Mexican federal government was granted to the Company through a concession for a
40-year term, for which the Company pays a fee, which is adjusted every five years by
the Secretaría de la Función Pública (The Ministry of Public Administration) (see Note
18h).b.
    
    Concessions for the Use and Exploitation of a Telecommunications Public NetworkOn January 20, 2000, 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 provide 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 internet access services, electronic
data transfer and multimedia services (content delivery to kiosks and private
television channels).The terms of both concessions are subject to certain legal provisions regarding
assignment or transfer of rights. According to Mexican Law, Satmex is not allowed to
transfer the concessions to any foreign country or state. If the Mexican federal
government expropriates them, the companies are entitled to liquidation or resignation
of their rights. As of December 31, 2009, the Company has fully complied with the
obligations established in the concession titles.
  F-17




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10.
    
    Intangible assets
  Weightedaverageremaining
    
    
    2009
    
    
    2008amortization
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    Accumulatedperiod (years)
    
    
    Gross amount
    
    
    amortization
    
    
    Gross amount
    
    
    amortizationContract backlog (1)
    
    
    6
    
    
    $
    67,990
    
    
    $
    56,268
    
    
    $
    67,990
    
    
    $
    42,333Customer relationships (1)
    
    
    4
    
    
    
    2,128
    
    
    
    1,003
    
    
    
    2,128
    
    
    
    634Internally developed software and
technology (2)
    
    
    2
    
    
    
    270
    
    
    
    209
    
    
    
    270
    
    
    
    140Landing rights (1)
    
    
    1
    
    
    
    60
    
    
    
    51
    
    
    
    60
    
    
    
    47$
    70,448
    
    
    $
    57,531
    
    
    $
    70,448
    
    
    $
    43,154
 The valuation methods used were the income approach (1) and cost approach
(2).For the years ended December 31, 2009, 2008 and 2007, amortization expense for these
intangible assets was $14.4 million, $25.6 million, and $14.4 million, respectively. Future
annual amortization expense for intangible assets is estimated to be as follows:
 2010
    
    $
    5,8822011
    
    
    3,0342012
    
    
    2,006Thereafter
    
    
    1,995$
    12,917
 11.
    
    Accounts payable and accrued expenses
  2009
    
    
    2008Guarantee deposits and customer advances
    
    $
    5,349
    
    
    $
    4,044Professional fees
    
    
    1,440
    
    
    
    3,438Performance and sale bonuses
    
    
    1,600
    
    
    
    2,389Taxes payable
    
    
    2,520
    
    
    
    2,003Programming provisions
    
    
    2,534
    
    
    
    1,881Suppliers
    
    
    2,371
    
    
    
    1,704Sundry creditors
    
    
    1,002
    
    
    
    385$
    16,816
    
    
    $
    15,844
 12.
    
    Debt obligations
  2009
    
    
    2008FPSSN at variable rate (LIBOR + 8.75%) approximately 9.03% and 12.51%, for 2009 and 2008, due in 2011(a)
    
    $
    238,237
    
    
    $
    238,237SPSSN at annual fixed rate of 10.125%, due in 2013 (b) (asof December 31, 2009 and 2008, the
aggregate interest accrued to the principal of the debt obligation is $42,378 and $28,060, respectively)
    
    
    182,378
    
    
    
    168,060$
    420,615
    
    
    $
    406,297
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ASC 820, Fair Value Measurements and Disclosures(SFAS No. 107), requires disclosures of
the fair value of debt unless such estimates are impracticable.As of December 31, 2009, the par value of Satmex bonds is $100 dollars per title. During the
second quarter of 2009, a total volume of 55,186 FPSSN titles were traded with an average
price of $87 dollars per title and a total volume of 42,088 SPSSN titles were traded with an
average price of $47 dollars per title, for the same period.However, the traded volume accounts for 2.3% of the total debt and therefore it is not
considered by Company management to represent an active market with respect to the fair value
of these bonds.Managements believes that alternative methods of estimating the fair value of its debt are
not practicable because there are no bonds that are comparable to those issued by Satmex and
valuation techniques cannot take into account the economic, political, business and other
risk associated with Satmex.
 a.
    
    The main characteristics for the FPSSN 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.
    
    Contain covenants that require the redemption of notes to the extent that the
Companys excess cash flow in any quarter exceeds $5.0 million based on the
formula established in the contract and impose limits on our spending for capital
expenditures.
    
    In the event of any change in the 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, the penalty interest rate
applicable to the unpaid principal balance until such situation is remedied will
be 2% higher than the regular interest rate applicable at that time.
    
    Principal and interest are guaranteed by a first priority lien on substantially
all of the assets of Satmex per article 92 and subsequent articles of the Ley de
Vías Generales de Comunicación (Law of General Communications Media), and by a
combination of guarantees over the shares held by Satmex in Enlaces, Services
Companies, AlternaTV Corp. and AlternaTV Int.
 b.
    
    The main characteristics for the SPSSN 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 SPSSN; 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 SPSSN; and beginning in the
sixth year, total interest will be paid in cash until the SPSSN have been paid in
full.
    
    Contain covenants that require the redemption of notes once the FPSSN have been
fully paid, to the extent that the Companys excess cash flow in any quarter
exceeds $5.0 million based on the formula established in the contract and impose
limits on our spending for capital expenditures.
    
    In the event of a change in control of Satmex resulting from a buyer which is not
included in the list of approved buyers in the Restructuring Agreement, unless
such buyer is approved by 66.66% of the SPSSN holders, the holders may redeem all
or part of the unpaid balance of principal and accrued interest of the bonds,
which may take place at the same time as the change of control.
    
    Principal and interest are guaranteed by a second priority lien on
substantially all the assets of Satmex per article 92 and subsequent articles of
the Law of General Communications Media. Additionally, Satmex executed certain
guarantees over the shares it holds in Enlaces and the New Service Companies. Such
guarantees are subject to the bankruptcy protection condition of the FPSSN.
  F-19




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##### Table of Contents



The contracts related to the debt obligations issued by Satmex establish other affirmative
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 U.S. Bank National Association and Wells Fargo Bank, N. A. (First Priority Indenture
Successor Trustee and Second Priority Indenture Trustee, respectively).As of December 31, 2009, the Company has complied with all aspects of contractual agreements
and is timely complying with interest payments.
 13.
    
    Labor obligations
  14.
    
    Shareholders equity
 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: Series A, which may only be subscribed or acquired by Mexican
nationals under certain mechanisms established in the Companys bylaws; Series B and
Series N, which may be freely subscribed or acquired by anybody, including foreign
investors.As of December 31, 2009 and 2008, the authorized, issued and outstanding common stock is
as follows:
 Common Stock  SharesFixed Capital
    
    
    
    
    
    
    Variable CapitalClass 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
 The LFT provides that foreign investors are not permitted 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.
  F-20




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Based on the above events, Satmex obtained authorization from 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 described in c. below. 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 shareholders meeting on
November 30, 2006, the shareholders agreed to reduce the common stock of Satmex by
absorbing accumulated 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 shareholders
meeting on November 30, 2006, the 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, 2009 and 2008, the common stock of the Company amounted to $46.8
million.d.
    
    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.
    
    Shareholders equity, except restated tax contributed 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.g.
    
    As of December 31, 2009, the balance of the tax contributed capital account is
$1,716,132, which is higher than shareholders deficit according to the consolidated
balance sheets.
 15.
    
    Related party transactions and balances
 a.
    
    Related party transactions performed in the normal course of operations were as
follows:
 2009
    
    
    2008
    
    
    2007Revenues from:Satellite services Mexican federal government
    
    $
    2,633
    
    
    $
    1,966
    
    
    $
    2,403Satellite capacity to Mexican federal government
(see Notes 5n and 18g)
    
    
    2,344
    
    
    
    2,344
    
    
    
    2,344Loral
    
    
    1,089
    
    
    
    2,018
    
    
    
    1,882Expenses from:Rent of control centers Mexican federal government
    
    
    434
    
    
    
    504
    
    
    
    444Capital expenditures from:Construction Satmex 7- Loral
    
    
    
    
    
    
    2,600
    
    
    
    
  F-21




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b.
    
    Related party receivable balances are as follows:
 2009
    
    
    2008Amounts receivable:Loral
    
    $
    33
    
    
    $
    68Mexican federal government
    
    
    431
    
    
    
    317$
    464
    
    
    $
    385
 16.
    
    Other income
  17.
    
    Income taxes
 a.
    
    Income tax expense (benefit) was comprised as follows:
 2009
    
    
    2008
    
    
    2007ISR:Current
    
    $
    275
    
    
    $
    959
    
    
    $
    386Deferred
    
    
    37
    
    
    
    98
    
    
    
    818IETU:Current
    
    
    12,441
    
    
    
    1,046
    
    
    
    Deferred
    
    
    480
    
    
    
    4,726
    
    
    
    (311
    )$
    13,233
    
    
    $
    6,829
    
    
    $
    893
 b.
    
    The significant components of the net deferred asset (liability) are:
 2009
    
    
    2008Current assets:Deferred revenue
    
    $
    1,880
    
    
    $
    1,759Other  net
    
    
    418
    
    
    
    2,051Valuation allowance
    
    
    (885
    )
    
    
    (2,777
    )Total current asset
    
    
    1,413
    
    
    
    1,033Current liabilities:Prepaid insurance
    
    
    (1,559
    )
    
    
    (972
    )Net current deferred tax (liability) asset
    
    $
    (146
    )
    
    $
    61Noncurrent assets:Tax loss carryforwards
    
    $
    161,731
    
    
    $
    154,905Concessions  net
    
    
    33,311
    
    
    
    34,801Deferred revenue
    
    
    12,124
    
    
    
    12,323Other  net
    
    
    26
    
    
    
    Valuation allowance
    
    
    (163,587
    )
    
    
    (159,232
    )Total noncurrent asset
    
    
    43,605
    
    
    
    42,797Noncurrent liabilities:Satellites and equipment  net
    
    
    (45,582
    )
    
    
    (41,676
    )Intangibles  net
    
    
    (3,424
    )
    
    
    (6,212
    )Total noncurrent liabilities
    
    
    (49,006
    )
    
    
    (47,888
    )Net noncurrent deferred tax liability
    
    $
    (5,401
    )
    
    $
    (5,091
    )
  F-22




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c.
    
    A reconciliation of the statutory income tax rate is as follows:
 2009
    
    
    2008
    
    
    2007%
    
    
    %
    
    
    %Statutory income tax rate
    
    
    28
    
    
    
    28
    
    
    
    28Tax inflation effects
    
    
    45
    
    
    
    79
    
    
    
    5Nondeductible expenses
    
    
    (10
    )
    
    
    (5
    )
    
    
    (1
    )Effect of IETU tax
    
    
    (191
    )
    
    
    (20
    )
    
    
    1Change in valuation allowance
    
    
    (75
    )
    
    
    (106
    )
    
    
    (35
    )Effective income tax rate
    
    
    (203
    )
    
    
    (24
    )
    
    
    (2
    )
 d.
    
    Enacted tax law changes in 2009 On December 7, 2009, Mexico enacted new tax laws
that become effective January 1, 2010 (the 2010 Tax Reform). Among other things, the
new laws:
 
    
    Provide for a temporary increase in the ISR rate.
    
    Disallow crediting IETU loss credit carryforwards against ISR liabilities.
 Statutory income tax rates Mexican companies are subject to a dual tax system
comprised of ISR and IETU. Mexican entities pay the greater of the corporate flat tax
or regular income tax and therefore determine their deferred income taxes based on the
tax regime expected to be paid to in the future.For 2009, 2008 and 2007, the ISR rate was 28%. As a result of the 2010 Tax Reform, the
ISR rate will be 30% from 2010 to 2012, 29% for 2013 and 28% for 2014 and thereafter.
Taxpayers who file tax reports and meet certain requirements may obtain a tax credit
equivalent to 0.5% or 0.25% of taxable income.The IETU rates were 16.5% in 2008 and 17% in 2009, and will be 17.5% in 2010 and
thereafter.Based on its projections, the Company determined that in certain fiscal years it will
pay ISR, while in others, it will pay IETU. Accordingly, the Company scheduled the
reversal of the temporary differences for both ISR and IETU purposes, determined by
year, and applied the respective rates to temporary differences.e.
    
    As of December 31, 2009, Satmex has tax loss carryforwards, which are available
to offset future taxable income, as follows:
 Expiration Date
    
    Amount2010
    
    $
    104,7372012
    
    
    62,6332013
    
    
    73,5132014
    
    
    27,0862016
    
    
    202,1902017
    
    
    21,8852018
    
    
    70,526$
    562,570
 The amounts presented above have been adjusted for Mexican inflation as permitted
by Mexican tax law.Due to uncertainties regarding Satmexs ability to realize the full benefit from these
tax loss carryforwards, Satmex has established a valuation allowance of $164 million
and $162 million as of December 31, 2009 and 2008 respectively, against the deferred
tax assets.
  F-23




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##### Table of Contents



18.
    
    Contingencies and commitments
 Satellite and insurance matters
 a.
    
    The in-orbit insurance for Solidaridad 2 was not renewed primarily because the
satellites useful life ended in 2009. Any uninsured loss of Solidaridad 2 would have a
minor adverse effect on Satmexs results of operations and financial position.b.
    
    In December 2009, Satmex renewed the in-orbit insurance policy for the Satmex 6,
which expires on December 4, 2010, 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 2009, Satmex renewed the in-orbit insurance policy for the Satmex 5
satellite, which expires on December 4, 2010, 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 (see Note 20).The insurance policy terms and conditions are according to current industry standards.
Any uninsured loss of Satmex 5 would have a material adverse effect on Satmexs results
of operations and financial position.Legal mattersd.
    
    Management is not aware of any pending litigation against Satmex or its assets
are subject to any legal action other than those that arise in the normal course of
business. The liability for all legal actions or other claims against Satmex prior to
October 15, 1997 has been retained by the Mexican Government.e.
    
    On January 1, 2008, the IETU Law went into effect. Satmex, on the one hand, and
Enlaces, the Service Companies and HPS, on the other hand, have submitted amparoswrit
against the IETU Law to minimize the Companys tax burden. On February 9, 2010, the
Supreme Court of Justice notified that such amparoswere denied considering that IETU
Law is constitutional.Commitmentsf.
    
    Satmex entered into a new contract with Satmex and Space Systems/Loral, Inc.
(SSL) and granted to SSL a usufructolegal structure that grants it the right to use
and benefit from certain transponders until the end of the life of the Satmex 6 and
Satmex 5 satellites. SSL was not required to post a bond related to the usufructo
arrangement.In the event that Satmex or a new stockholder decides not to continue with the
usufructoarrangement, SSL has the right to receive the higher of a percentage 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 usufructoarrangement.g.
    
    The orbital concessions granted by the Mexican federal government establish that
Satmex should assign, during the extension of the orbital concessions, satellite
capacity to the Mexican federal government in band C and band Ku. The capacity assigned
amounts to approximately 362.88 MHz.h.
    
    Satmex pays rights of use for the facilities where control centers are located
which are the property of the Mexican federal government. Accordingly, it is required to
pay during the term of the concession, an equivalent of 7.5% of the value of the
facilities determined by experts assigned by the Mexican federal government and updated
periodically. In 2009, 2008 and 2007, the fees paid for the use of these control centers
were $434, $504 and $444, respectively.
  F-24




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##### Table of Contents



i.
    
    On June 20, 2008, SSL entered into an Authorization to Proceed (ATP), by means of
which Satmex wished to procure and SSL wished to provide, the SATMEX 7 satellite. The
termination date of the ATP shall be upon the earliest to occur of: (i) execution and
delivery by the parties of the contract; (ii) December 20, 2009.On October 2, 2009: (i) Satmex assigned the ATP to AlternaTV Corp.; (ii) AlternaTV
Corp. accepted the assignment of the ATP; (iii) SSL authorized and approved the
assignment of the ATP from Satmex to AlternaTV Corp.; and (iv) Satmex agreed to be
jointly and severally liable for AlternaTV Corp.s obligations under the ATP and
unconditionally guaranteed to SSL the due and timely performance by
AlternaTV Corp.
of all the present and future undertakings and obligations to SSL under the ATP.On December 18, 2009, AlternaTV Corp. and SSL, entered into the First Amendment to the
ATP, by means of which, the term of the ATP was extended to December 31, 2010.j.
    
    Satmex leases two floors in the building where its headquarters are located. The
corresponding lease agreement establishes a mandatory period of five years and three
months beginning October 2008 and ending in December 2013. Rental expense was $541 in
2009, $394 in 2008, and $307 in 2007. The minimum future payments are as follows:
 Years
    
    Amount2010
    
    $
    4932011
    
    
    4932012
    
    
    4932013
    
    
    491$
    1,970
 k.
    
    Future minimum revenues due from customers under non-cancelable operating lease
contracts, which include a penalty clause against customers in case of early
termination, for transponder capacity on satellites in-orbit as of December 31, 2009,
are as follows:
 Years
    
    Amount2010
    
    $
    87,9362011
    
    
    64,6822012
    
    
    42,6302013
    
    
    25,5262014
    
    
    3,980$
    224,754
 Other Matters
 l.
    
    Additional taxes payable could arise in transactions with related parties if the
tax authorities, during a review, believe that the prices and amounts used by Satmex are
not similar to those used with or between independent parties in comparable
transactions.m.
    
    The primary and alternate control centers used by Satmex to operate its
satellites form part of a building complex that also houses equipment owned and used by
the Mexican federal governments teleport and mobile satellite services systems. Under
its Property Concession, Satmex can only use these control centers for the operation of
satellites. However, the teleport of Enlaces is also housed at the primary control
center. A request for approval to use the control center for the operation of Enlaces
teleport was filed with SCT in July 2000. In March 2009, Enlaces provided the SCT with a
detail of the equipment and antennas being used at the control center that are
independent of Satmexs satellite operations. No official response regarding the
authorization to use the control centers for other than satellite operations has been
received as of the date of these consolidated financial statements.
  F-25




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##### Table of Contents



19.
    
    Business segments information
  a.
    
    The following table presents the operating income (loss) items and assets
information by reportable segment:
 As of and for the year ended December 31, 2009Broadband
    
    
    ProgrammingSatellite
    
    
    satellite
    
    
    distribution
    
    
    Intercompanyservices
    
    
    services
    
    
    services
    
    
    eliminations
    
    
    TotalRevenues
    
    $
    107,183
    
    
    $
    12,396
    
    
    $
    10,594
    
    
    $
    13,172
    
    
    $
    143,345Eliminations
    
    
    (5,122
    )
    
    
    (12
    )
    
    
    
    
    
    
    (13,172
    )
    
    
    (18,306
    )Operating revenues
    
    
    102,061
    
    
    
    12,384
    
    
    
    10,594
    
    
    
    
    
    
    
    125,039Cost and expenses
    
    
    41,647
    
    
    
    9,898
    
    
    
    7,442
    
    
    
    
    
    
    
    58,987Eliminations
    
    
    (12,534
    )
    
    
    (5,220
    )
    
    
    (552
    )
    
    
    
    
    
    
    (18,306
    )29,113
    
    
    
    4,678
    
    
    
    6,890
    
    
    
    
    
    
    
    40,681Depreciation and amortization
    
    
    46,800
    
    
    
    853
    
    
    
    4
    
    
    
    
    
    
    
    47,657Operating cost and expenses
    
    
    75,913
    
    
    
    5,531
    
    
    
    6,894
    
    
    
    
    
    
    
    88,338Operating income
    
    
    26,148
    
    
    
    6,853
    
    
    
    3,700
    
    
    
    
    
    
    
    36,701Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,708
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    480Net foreign exchange gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Loss before income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,515
    )Income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,233Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,748
    )Less: Net income attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406Net loss attributable to Satélites Mexicanos, S.A. de C.V.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (20,154
    )Capital expenditures
    
    $
    3,522
    
    
    $
    677
    
    
    $
    
    
    
    $
    
    
    
    $
    4,199Total assets
    
    $
    418,644
    
    
    $
    16,493
    
    
    $
    3,340
    
    
    $
    930
    
    
    $
    439,407
  F-26




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##### Table of Contents



As of and for the year ended December 31, 2008Broadband
    
    
    ProgrammingSatellite
    
    
    satellite
    
    
    distribution
    
    
    Intercompanyservices
    
    
    services
    
    
    services
    
    
    eliminations
    
    
    TotalRevenues
    
    $
    98,074
    
    
    $
    13,470
    
    
    $
    8,136
    
    
    $
    15,420
    
    
    $
    135,100Eliminations
    
    
    (4,826
    )
    
    
    (135
    )
    
    
    
    
    
    
    (15,420
    )
    
    
    (20,381
    )Operating revenues
    
    
    93,248
    
    
    
    13,335
    
    
    
    8,136
    
    
    
    
    
    
    
    114,719Cost and expenses
    
    
    49,587
    
    
    
    10,277
    
    
    
    6,810
    
    
    
    
    
    
    
    66,674Eliminations
    
    
    (14,893
    )
    
    
    (4,826
    )
    
    
    (777
    )
    
    
    
    
    
    
    (20,496
    )34,694
    
    
    
    5,451
    
    
    
    6,033
    
    
    
    
    
    
    
    46,178Reversal of provision for orbital incentive
    
    
    (6,989
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,989
    )Depreciation and amortization
    
    
    59,083
    
    
    
    722
    
    
    
    2
    
    
    
    
    
    
    
    59,807Operating cost and expenses
    
    
    86,788
    
    
    
    6,173
    
    
    
    6,035
    
    
    
    
    
    
    
    98,996Other income
    
    
    4,610
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,610Operating income
    
    
    11,070
    
    
    
    7,162
    
    
    
    2,101
    
    
    
    
    
    
    
    20,333Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,498
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,481Net foreign exchange loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,828
    )Loss before income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,512
    )Income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,829Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,341
    )Less: Net income attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285Net loss attributable to Satélites Mexicanos, S.A. de
C.V.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (35,626
    )Capital expenditures
    
    $
    6,192
    
    
    $
    326
    
    
    $
    
    
    
    $
    
    
    
    $
    6,518Total assets
    
    $
    426,114
    
    
    $
    16,064
    
    
    $
    2,157
    
    
    $
    1,159
    
    
    $
    445,494
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##### Table of Contents



As of and for the year ended December 31, 2007Broadband
    
    
    ProgrammingSatellite
    
    
    satellite
    
    
    distribution
    
    
    Intercompanyservices
    
    
    services
    
    
    services
    
    
    eliminations
    
    
    TotalRevenues
    
    $
    83,503
    
    
    $
    15,318
    
    
    $
    6,815
    
    
    $
    17,675
    
    
    $
    123,311Eliminations
    
    
    (3,253
    )
    
    
    (182
    )
    
    
    
    
    
    
    (17,675
    )
    
    
    (21,110
    )Operating revenues
    
    
    80,250
    
    
    
    15,136
    
    
    
    6,815
    
    
    
    
    
    
    
    102,201Cost and expenses
    
    
    60,228
    
    
    
    11,111
    
    
    
    4,603
    
    
    
    
    
    
    
    75,942Eliminations
    
    
    (17,481
    )
    
    
    (3,253
    )
    
    
    (231
    )
    
    
    
    
    
    
    (20,965
    )42,747
    
    
    
    7,858
    
    
    
    4,372
    
    
    
    
    
    
    
    54,977Depreciation and amortization
    
    
    52,461
    
    
    
    642
    
    
    
    3
    
    
    
    
    
    
    
    53,106Operating cost and expenses
    
    
    95,208
    
    
    
    8,500
    
    
    
    4,375
    
    
    
    
    
    
    
    108,083Operating (loss) income
    
    
    (14,958
    )
    
    
    6,636
    
    
    
    2,440
    
    
    
    
    
    
    
    (5,882
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,672
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,650Net foreign exchange gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145Loss before income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,759
    )Income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    893Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56,652
    )Less: Net income attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    802Net loss attributable to Satélites Mexicanos, S.A. de C.V.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (57,454
    )Capital expenditures
    
    $
    1,736
    
    
    $
    689
    
    
    $
    
    
    
    $
    
    
    
    $
    2,425Total assets
    
    $
    452,774
    
    
    $
    15,119
    
    
    $
    1,857
    
    
    $
    432
    
    
    $
    470,182
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##### Table of Contents



b.
    
    The following table presents revenues by region based on the locations of customers to
which services are billed for the years ended December 31, 2009, 2008 and 2007:
 2009
    
    
    2008
    
    
    2007United States of America
    
    $
    50,742
    
    
    $
    50,285
    
    
    $
    47,558Mexico
    
    
    43,702
    
    
    
    42,032
    
    
    
    42,333Central and South America
    
    
    30,595
    
    
    
    22,402
    
    
    
    12,310$
    125,039
    
    
    $
    114,719
    
    
    $
    102,201
 20.
    
    Subsequent event
    F-29




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##### Table of Contents



Satélites Mexicanos, S. A. de C.V. and Subsidiaries
 
 Schedules of Valuation and Qualifying Accounts
 AdditionalBalance at
    
    
    charged
    
    
    
    
    
    
    Balance atbeginning of
    
    
    (credited) to
    
    
    
    
    
    
    ending ofperiod
    
    
    expenses
    
    
    Deductions
    
    
    period(In thousands of U.S. dollars)Allowance for doubtful accountsYear ended December 31, 2009
    
    $
    510
    
    
    $
    (150
    )
    
    $
    
    
    
    $
    360Year ended December 31, 2008
    
    
    399
    
    
    
    136
    
    
    
    25
    (1)
    
    
    510Year ended December 31, 2007
    
    
    1
    
    
    
    398
    
    
    
    
    
    
    
    399Valuation allowance on deferred income taxesYear ended December 31, 2009
    
    $
    162,009
    
    
    $
    2,463
    
    
    $
    
    
    
    $
    164,472Year ended December 31, 2008
    
    
    207,974
    
    
    
    (45,965
    )
    
    
    
    
    
    
    162,009Year ended December 31, 2007
    
    
    188,092
    
    
    
    19,882
    
    
    
    
    
    
    
    207,974
 (1)
    
    Write-offs of uncollectible accounts.   F-30