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SECURITIES AND EXCHANGE COMMISSION
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 001-33750
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
Col. Centro de Ciudad Santa Fe
México, D.F., 01210
(Address of principal executive offices)
Director of Investor Relations
Tel. + (52) 55 4770-1170
Fax. + (52) 55 5147-3820
juan.sotomayor@maxcom.com
Maxcom Telecomunicaciones, S.A.B. de C.V.
Col. Centro de Ciudad Santa Fe
México, D.F., 01210
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Certificates (Certificados de Participación Ordinarios) (“CPOs”), each CPO representing
three (3) Series A Common Stock, without par value, registered with the New York Stock Exchange Euronext
None
11% Senior Notes due 2014, not registered on an exchange
(Title of Class)
o Large accelerated filer | o Accelerated filer | þ Non-accelerated filer |
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F-9 | ||||
Table of Contents
Maxcom Telecomunicaciones, S. A. B. de C. V.:
KPMG Cárdenas Dosal, S. C. | ||
/s/Manuel Jimenez Lara | ||
Manuel Jimenez Lara | ||
Mexico City, Mexico | ||
June 25, 2009 |
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Maxcom Telecomunicaciones, S. A. B. de C. V.:
KPMG Cárdenas Dosal, S. C. | ||
/s/Manuel Jimenez Lara | ||
Manuel Jiménez Lara | ||
Mexico City, Mexico | ||
June 25, 2009 |
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Maxcom Telecomunicaciones, S. A. B. de C. V. and subsidiaries
(formerly Maxcom Telecomunicaciones, S. A. de C. V. and subsidiaries)
PricewaterhouseCoopers, S. C. | ||
/s/ Humberto Pacheco Soria | ||
Humberto Pacheco Soria | ||
Audit Partner | ||
Mexico City, March 4, 2008, except for Note 21 which the date is May 30, 2008. |
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2008 | 2007 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,591,405 | 2,539,535 | |||||
Accounts receivable: | ||||||||
Customers, net of allowance for doubtful accounts of $161,936 and $107,652 for 2008 and 2007, respectively | 716,203 | 517,254 | ||||||
Value added tax recoverable | 164,448 | 198,583 | ||||||
Other accounts receivable | 77,650 | 54,676 | ||||||
958,301 | 770,513 | |||||||
Inventory — Net | 40,876 | 33,249 | ||||||
Prepaid expenses — Net | 30,778 | 40,341 | ||||||
Total current assets | 2,621,360 | 3,383,638 | ||||||
Long lived assets: | ||||||||
Telephone network systems and equipment — Net (Note 7) | 4,684,413 | 4,188,946 | ||||||
Intangible assets — Net (Note 8) | 209,683 | 208,802 | ||||||
Preoperating expenses — Net | 50,863 | 77,902 | ||||||
Frequency rights — Net (Note 9) | 66,716 | 80,930 | ||||||
Other assets: | ||||||||
Intangible asset derived from employee benefits (Notes 6b. and 14) | — | 17,650 | ||||||
Deferred income taxes — Net (Note 19) | 148,114 | — | ||||||
Prepaid expenses — Net | 15,381 | 21,289 | ||||||
Guaranty deposits | 8,315 | 6,943 | ||||||
Derivative financial instruments (Notes 5o. and 13) | 105,270 | 13,475 | ||||||
Other assets | 6,357 | 14,525 | ||||||
Total assets | $ | 7,916,472 | 8,014,100 | |||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 469,328 | 489,486 | |||||
Accruals | 45,505 | 24,109 | ||||||
Current installments of obligations under capital leases | 4,354 | 8,087 | ||||||
Customer deposits | 2,518 | 2,801 | ||||||
Other taxes payable | 61,048 | 67,182 | ||||||
Accrued interests (Note 11) | 13,920 | 11,172 | ||||||
Total current liabilities | 596,673 | 602,837 | ||||||
Long-term liabilities : | ||||||||
Senior notes (Note 11) | 2,707,660 | 2,173,240 | ||||||
Obligation under capital leases, excluding current installments | — | 4,686 | ||||||
Other accounts payable | 80,872 | 78,174 | ||||||
Derivative financial instruments (Notes 5o. and 13) | 8,472 | — | ||||||
Deferred income taxes — Net (Note 19) | — | 97,742 | ||||||
Labor obligations upon retirement (Note 14) | 21,626 | 26,582 | ||||||
Total long-term liabilities | 2,818,630 | 2,380,424 | ||||||
Total liabilities | 3,415,303 | 2,983,261 | ||||||
Shareholders’ equity (Notes 15 and 16) | ||||||||
Capital stock | 5,410,244 | 5,410,251 | ||||||
Additional paid-in capital | 816,443 | 888,056 | ||||||
Deficit | (1,705,231 | ) | (1,267,468 | ) | ||||
Repurchase of shares | (20,287 | ) | — | |||||
Total shareholders’ equity | 4,501,169 | 5,030,839 | ||||||
Commitments and contingencies (Note 20) | ||||||||
Total liabilities and shareholders’ equity | $ | 7,916,472 | 8,014,100 | |||||
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2008 | 2007 | 2006 | ||||||||||
Net revenues (Note 17) | $ | 2,683,229 | 2,345,719 | 1,741,692 | ||||||||
Operating costs and expenses: | ||||||||||||
Network operating costs | (1,120,167 | ) | (976,979 | ) | (676,977 | ) | ||||||
Selling, general and administrative expenses (Note 6) | (819,642 | ) | (722,618 | ) | (607,505 | ) | ||||||
Depreciation and amortization | (551,889 | ) | (370,227 | ) | (300,468 | ) | ||||||
Total operating costs and expenses | (2,491,698 | ) | (2,069,824 | ) | (1,584,950 | ) | ||||||
Operating income | 191,531 | 275,895 | 156,742 | |||||||||
Other expenses: | ||||||||||||
Other expenses | (12,616 | ) | (12,819 | ) | (18,777 | ) | ||||||
Restructuring charges (Notes 5n and 14) | (49,491 | ) | — | — | ||||||||
Impairment of long-lived assets (Notes 5(h), 5(i), 7, 8 and 9) | (532,315 | ) | — | — | ||||||||
Employees’ statutory profit sharing (Notes 6 and 19) | (1,173 | ) | (3,257 | ) | — | |||||||
Other expenses, net | (595,595 | ) | (16,076 | ) | (18,777 | ) | ||||||
Comprehensive financing cost — Net (Note 18) | (267,393 | ) | (126,641 | ) | (107,182 | ) | ||||||
(Loss) income before income taxes | (671,457 | ) | 133,178 | 30,783 | ||||||||
Income taxes (Note 19): | ||||||||||||
Current tax expense | (12,162 | ) | (50,700 | ) | — | |||||||
Deferred tax benefit (expense) | 245,856 | (46,282 | ) | (60,050 | ) | |||||||
Total income tax benefit (expense) | 233,694 | (96,982 | ) | (60,050 | ) | |||||||
Net (loss) income for the year | $ | (437,763 | ) | 36,196 | (29,267 | ) | ||||||
(Loss) earnings per share (Note 5t): | ||||||||||||
Basic (loss) earnings per common share (pesos) | $ | (0.55 | ) | 0.06 | (0.07 | ) | ||||||
Diluted (loss) earnings per common share (pesos) | $ | (0.53 | ) | 0.06 | (0.06 | ) | ||||||
Weighted average basic shares (thousands) | 789,819 | 560,176 | 442,928 | |||||||||
Weighted average diluted shares (thousands) | 829,337 | 606,144 | 467,628 |
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Additional | Retained | Total | ||||||||||||||||||
Capital | paid-in | earnings | Repurchase | stockholders’ | ||||||||||||||||
stock | capital | (deficit) | of shares | equity | ||||||||||||||||
Balances as of December 31, 2005 | $ | 2,963,206 | 237,114 | (1,274,397 | ) | — | 1,925,923 | |||||||||||||
Increase in capital stock (Note 15) | 364,276 | — | — | — | 364,276 | |||||||||||||||
Stock options plans (Note 16) | — | 15,982 | — | — | 15,982 | |||||||||||||||
Comprehensive net loss | — | — | (29,267 | ) | — | (29,267 | ) | |||||||||||||
Balances as of December 31, 2006 | 3,327,482 | 253,096 | (1,303,664 | ) | — | 2,276,914 | ||||||||||||||
Increase in capital stock (Note 15) | 2,082,769 | 597,836 | — | — | 2,680,605 | |||||||||||||||
Stock options plans (Note 16) | — | 37,124 | — | — | 37,124 | |||||||||||||||
Comprehensive net income | — | — | 36,196 | — | 36,196 | |||||||||||||||
Balances as of December 31, 2007 | 5,410,251 | 888,056 | (1,267,468 | ) | — | 5,030,839 | ||||||||||||||
Decrease in capital stock (Note 15) | (7 | ) | — | — | — | (7 | ) | |||||||||||||
Stock options plans (Notes 15 and 16) | — | (71,613 | ) | — | — | (71,613 | ) | |||||||||||||
Repurchase of shares (Note 15) | — | — | — | (20,287 | ) | (20,287 | ) | |||||||||||||
Comprehensive net loss | — | — | (437,763 | ) | — | (437,763 | ) | |||||||||||||
Balances as of December 31, 2008 | $ | 5,410,244 | 816,443 | (1,705,231 | ) | (20,287 | ) | 4,501,169 | ||||||||||||
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2008 | ||||
Cash flows from operating activities: | ||||
Loss before taxes | $ | (671,457 | ) | |
Items related to investing activities: | ||||
Depreciation and amortization | 551,889 | |||
Impairment of long lived assets | 532,315 | |||
Loss on sale of telephone network systems and equipment | 82,496 | |||
Items related to financing activities: | ||||
Financial instruments | (83,323 | ) | ||
Interest expense | 217,210 | |||
Subtotal | 629,130 | |||
Customer accounts receivable | (198,949 | ) | ||
Recoverable value added tax | 34,135 | |||
Other accounts receivable | (22,974 | ) | ||
Inventory | (7,627 | ) | ||
Prepaid expenses | 9,563 | |||
Trade accounts payable, provisions and other acumulated liabilities | 1,238 | |||
Income taxes paid | (7,320 | ) | ||
Customer deposits | (283 | ) | ||
Other liabilities and taxes payable | (3,436 | ) | ||
Changes in employees benfits and provisions | 12,694 | |||
Net cash provided by operating activities | 446,171 | |||
Cash flows from investing activities: | ||||
Capital expenditures (including interest capitalized in the amount of $62,029 in 2008) | (1,631,001 | ) | ||
Proceeds from sale of telephone network systems and equipment | 4,364 | |||
Increase in other non-current assets | 12,704 | |||
Net cash used in investing activities | (1,613,933 | ) | ||
Cash flows from financing activities: | ||||
Bonds payable | 534,420 | |||
Decrease in capital stock | (7 | ) | ||
Stock options plans | (71,613 | ) | ||
Interest paid | (214,462 | ) | ||
Capital lease, payment of credits | (8,419 | ) | ||
Repurchase of shares | (20,287 | ) | ||
Net cash provided by financing activities | 219,632 | |||
Net decrease in cash and equivalents | (948,130 | ) | ||
Cash and cash equivalents: | ||||
At beginning of year | 2,539,535 | |||
At end of year | $ | 1,591,405 | ||
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2007 | 2006 | |||||||
Operating activities: | ||||||||
Net income (loss) | $ | 36,196 | (29,267 | ) | ||||
Add charges (deduct credits) to operations not requiring (providing) funds: | ||||||||
Depreciation and amortization | 370,227 | 300,468 | ||||||
Deferred income taxes | 46,282 | 60,050 | ||||||
Stock options plan | 37,124 | 15,982 | ||||||
Accelerated amortization of debt | — | 17,671 | ||||||
Employee benefits | 5,752 | 4,642 | ||||||
Net financing from (investing in) operating accounts: | ||||||||
Accounts receivable | (285,004 | ) | (251,021 | ) | ||||
Inventories | 2,540 | (19,160 | ) | |||||
Prepaid expenses | 4,109 | 18,414 | ||||||
Restricted cash and other current assets and liabilities | 85,932 | (29,881 | ) | |||||
Resources provided by operating activities | 303,158 | 87,898 | ||||||
Financing activities: | ||||||||
Capital stock increases | 2,643,369 | 364,276 | ||||||
Proceeds from loans and bonds payable, net of payments and capitalizations | 126,160 | 1,092,993 | ||||||
Derivative financial instruments | (24,036 | ) | (5,217 | ) | ||||
Resources provided by financing activities | 2,745,493 | 1,452,052 | ||||||
Investing activities: | ||||||||
Telephone network systems and equipment, net of dispositions | (1,160,359 | ) | (1,130,118 | ) | ||||
Acquisition of subsidiaries | (33,576 | ) | (101,173 | ) | ||||
Intangible assets | (54,472 | ) | 190,425 | |||||
Other assets | — | (1,011 | ) | |||||
Resources used in investing activities | (1,248,407 | ) | (1,041,877 | ) | ||||
Increase of cash and cash equivalents | 1,800,244 | 498,073 | ||||||
Cash and cash equivalents: | ||||||||
At beginning of year | 739,291 | 241,218 | ||||||
At end of year | $ | 2,539,535 | 739,291 | |||||
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a. | Acquisition of Sierra Comunicaciones Globales: |
Net assets | ||||||||||||
Book Value | recognized at | |||||||||||
of net assets as | fair value as of | |||||||||||
of November 15, | Goodwill | November 15, | ||||||||||
2007 | allocation | 2007 | ||||||||||
Assets: | ||||||||||||
Current assets | $ | 45 | — | 45 | ||||||||
Fixed assets | 10,935 | 21,814 | 32,749 | |||||||||
10,980 | 21,814 | 32,794 | ||||||||||
Liabilities: | ||||||||||||
Current liabilities | (112 | ) | — | (112 | ) | |||||||
Net acquired assets | 10,868 | 21,814 | 32,682 | |||||||||
Net assets fair value | (32,682 | ) | — | (32,682 | ) | |||||||
Cost in excess of book value of subsidiaries | $ | (21,814 | ) | 21,814 | — | |||||||
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b. | Acquisition of Grupo Telereunion: |
Net assets | ||||||||||||
Book value of | Negative | recognized at | ||||||||||
net assets as of | goodwill | fair value as of | ||||||||||
June 30, 2006 | allocation | June 30,2006 | ||||||||||
Assets: | ||||||||||||
Current assets | $ | 56,530 | — | 56,530 | ||||||||
Fixed assets | 421,572 | (166,944 | ) | 254,628 | ||||||||
Intangible assets | 224,844 | (224,844 | ) | — | ||||||||
Deferred taxes | 37,467 | (37,467 | ) | — | ||||||||
740,413 | (429,255 | ) | 311,158 | |||||||||
Liabilities: | ||||||||||||
Current liabilities | (211,278 | ) | — | (211,278 | ) | |||||||
Net acquired assets | 529,135 | (429,255 | ) | 99,880 | ||||||||
“Net assets fair value” | (99,880 | ) | — | (99,880 | ) | |||||||
Book value in excess of cost of subsidiaries (negative goodwill) | $ | 429,255 | (429,255 | ) | — | |||||||
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Net revenues | $ | 88,414 | ||
Cost | (61,223 | ) | ||
Expenses | (1,259 | ) | ||
Depreciation | (10,418 | ) | ||
Operating income | $ | 15,514 | ||
Net income | $ | 26,755 | ||
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Subsidiary company | % | Line of business | ||||
Corporativo en Telecomunicaciones, S. A. de C. V. | 99.9 | Technical personnel services | ||||
Maxcom Servicios Administrativos, S. A. de C. V. | 99.9 | Administrative personnel services | ||||
Maxcom SF, S. A. de C. V. | 99.9 | Financial services | ||||
Outsourcing Operadora de Personal, S. A. de C. V. | 99.9 | Technical personnel services | ||||
TECBTC Estrategias de Promoción, S. A. de C. V. | 99.9 | Technical personnel services | ||||
Maxcom TV, S. A. de C. V. * | 99.9 | Cable television services |
Subsidiary company | % | Line of business | ||||
Maxcom USA, Inc. * | 100.0 | International telecommunications services | ||||
Telereunion, S. A. de C. V. | 99.9 | Long distance and infrastructure leasing | ||||
Telscape de México, S. A. de C. V. | 99.9 | Real estate services | ||||
Sierra USA Communications, Inc. | 100.0 | International telecommunication services | ||||
Sierra Comunicaciones Globales, S. A. de C. V. | 99.9 | Infrastructure leasing |
* | Dormant companies. |
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a. | Recognition of the effects of the inflation |
Inflation | ||||||||||||
December 31, | NCPI | Year | Accumulated | |||||||||
2008 | 133.761 | 6.53 | % | 18.85 | % | |||||||
2007 | 125.564 | 3.76 | % | 11.56 | % | |||||||
2006 | 121.015 | 4.05 | % | 7.52 | % | |||||||
2005 | 116.301 | 3.33 | % | 3.33 | % |
b. | Cash and cash equivalents |
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c. | Inventories |
d. | Telephone network systems and equipment |
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e. | Intangible assets |
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f. | Concessions |
g. | Frequency rights |
h. | Preoperating expenses |
i. | Impairment of long lived assets. |
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j. | Liabilities and accruals |
k. | Transactions in foreign currencies |
l. | Income Tax (IT), Asset Tax (AT), Flat Rate Business Tax (IETU), and Employees’ Statutory Profit Sharing (ESPS) |
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m. | Employees’ Statutory Profit Sharing (“ESPS”) |
n. | Employee benefits |
o. | Derivative financial instruments |
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p. | Revenue recognition |
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q. | Business and credit concentration |
r. | Stock-options compensation |
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2007 | 2006 | |||||||
Volatility of expected price per share | 30.00 | % | 30.00 | % | ||||
Risk-free interest rate | 4.89 | % | 5.00 | % | ||||
Expected life of options | 3.25 | 3.50 |
s. | Information by segments |
business, public telephony, wholesale and others.
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t. | (Loss) earnings per share |
u. | New accounting standards |
(i.) | The obligation to consolidate special purpose entities (SPEs) when controlled. |
(ii.) | The possibility, under certain rules, of presenting unconsolidated financial statements when the parent is, in turn, a subsidiary with no minority interest or when the minority stockholders do not object to the fact that consolidated financial statements are not issued. |
(iii.) | Consideration is given to the existence of potential voting rights that might be exercised or converted in favor of the entity as parent and that may change its involvement in decision making at the time of assessing the existence of control. |
(iv.) | Additionally, regulations relating to the valuation of permanent investments have been transferred to a different bulletin. |
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(i) | Equity method of accounting is required for SPEs where significant influence is exercised. |
(ii) | Consideration is given to the existence of potential voting rights that might be exercised or converted in favor of the entity as parent and that may change its involvement in decision making at the time of assessing the existence of significant influence. |
(iii) | A specific procedure and a limit for recognizing the associated entity’s losses are provided. |
(i) | The definition of intangible assets is narrowed to establish that separability is not the only condition for the intangible asset to be identifiable; |
(ii) | Subsequent outlays for research and development projects in progress should be expensed as earned if they are part of the research phase or as an intangible asset if they meet the criteria to be recognized as such; |
(iii) | Greater detail is provided to account for the exchange of an asset, in accordance with the provisions of international standards and other NIF; |
(iv) | The presumption that an intangible asset may not exceed a useful life of twenty years was eliminated; |
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(i) | Recognition of the effects of inflation — An entity operates in a) an inflationary economic environment when cumulative inflation over the immediately preceding 3-year period is equal to or greater than 26%; and b) non-inflationary economic environment, when inflation over the aforementioned period is less than 26%. |
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(ii) | Price index — the use of the National Consumer Price Index (NCPI) or the change in the value of the Investment Unit (UDI) may be used for determining the inflation for a given period. |
(iii) | Valuation of inventories and of foreign machinery and equipment — The possibility of using replacement costs for inventories and specific indexation for foreign machinery and equipment is no longer allowed. |
(iv) | Equity adjustment for non-monetary Assets — On the effective date of this NIF, the unrealized portion of the equity adjustment for non monetary assets, which is maintained in stockholders’ equity, should be identified to be reclassified to earnings of the year when the originating item is realized. The realized portion or when is not practical to identify the unrealized portion, the realized and unrealized portions should be reclassified to retained earnings. |
(v) | Monetary Position Gains or Losses (included in Deficit/Excess in Equity Restatement) will be reclassified to retained earnings on the effective date of this NIF. |
(i) | Elimination of the recognition of an additional liability and the related intangible asset or any comprehensive item as a separate element of stockholders’ equity. |
(ii) | Employee benefits are classified in four principal categories; direct short-term and long term, termination and post-employment benefits. NIF D-3 establishes a maximum five-year period for amortizing unrecognized/unamortized items while actuarial gains or losses may be recognized as earned or incurred. Unlike termination benefits, post-employment benefits actuarial gains or losses may be immediately recognized in results of operations or amortized over the expected service life of the employees. |
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(iii) | The use of nominal rates and the incorporation of the term salary increases due to promotions. |
(iv) | ESPS, including deferred ESPS, shall be presented in the statement of income as ordinary operations, preferably within “other income and expenses”. Furthermore, NIF D-3 establishes that the asset and liability method should be used for determining deferred ESPS; any effects arising from the change in method shall be recognized in retained earnings, without restatement of prior years’ financial statements. |
(i) | the balance of the cumulative IT effects resulting from the initial adoption of Bulletin D-4 in 2000 is reclassified to retained earnings, unless identified with any other comprehensive item pending reclassification. On January 1, 2008 there were no IT effects reclassified to retained earnings. |
(ii) | the accounting treatment of ESPS (current and deferred) is transferred to NIF D-3, as mentioned in paragraph (b) above. |
(i) | Instead of the statement of changes in financial position, the financial statements shall include the statements of cash flows for all the periods presented comparatively with those of the current year, except for financial statements of periods prior to 2008; |
(ii) | Cash inflows and cash outflows are reported in nominal currency units, thus not including the effects of inflation; |
(iii) | Two alternative preparation methods (direct and indirect) are established, without stating preference for either method. Furthermore, cash flows from operating activities are to be reported first, followed by cash flows from investing activities and lastly by cash flows from financing activities; |
(iv) | Captions of principal items are to be reported gross, with certain exceptions and require disclosure of the composition of items considered cash equivalents. |
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(i) | Replacing integrated foreign operation and foreign entity concepts by those of recording, functional and reporting currencies, requiring that translation be made based on the economic environment in which the entity operates, regardless of its dependency on the holding company. | |
Includes translation procedures for instances where the recording and reporting currencies differ from the functional currency and provides for the option not to conduct such translation in companies not subject to consolidation or valuation based on the equity method. |
(ii) | The accounting changes produced by the initial application of this standard shall be recognized based on the prospective method; that is, in a non-inflationary economic environment, without modifying the translation already recognized in the consolidated financial statements of prior periods, at the time of issue. |
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Estimated | ||||||||||||
useful | ||||||||||||
2008 | 2007 | life (years) | ||||||||||
Telecommunications network and equipment | $ | 3,440,327 | $ | 2,944,366 | 17 | |||||||
Public telephony equipment | 582,734 | 377,916 | 8 | |||||||||
Leasehold improvements | 1,076,420 | 821,883 | 10 | |||||||||
Radio equipment | 397,444 | 330,736 | 30 | |||||||||
Line installation cost | 533,473 | 402,306 | 20 | |||||||||
Electronic equipment | 266,047 | 266,047 | 25 | |||||||||
Capitalized expenses due to construction of networks | 425,636 | 337,159 | 30 | |||||||||
Capitalized comprehensive financing cost | 241,235 | 66,525 | 10 | |||||||||
Computer equipment | 222,413 | 147,703 | 5 | |||||||||
Transportation equipment | 65,138 | 52,112 | 4 | |||||||||
Office furniture | 39,661 | 26,863 | 10 | |||||||||
Other | 28,179 | 20,476 | 10 | |||||||||
Engineering equipment | 20,450 | 13,227 | 10 | |||||||||
Subtotal | 7,339,157 | 5,807,319 | ||||||||||
Accumulated depreciation and amortization | (2,566,889 | ) | (2,082,785 | ) | ||||||||
Impairment charge (See note 5i) | (500,684 | ) | — | |||||||||
Subtotal | 4,271,584 | 3,724,534 | ||||||||||
Construction in progress | 412,829 | 464,412 | ||||||||||
$ | 4,684,413 | $ | 4,188,946 | |||||||||
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2008 | 2007 | |||||||
Transportation equipment | $ | 4,740 | 3,534 | |||||
Total | $ | 4,740 | 3,534 | |||||
Useful | ||||||||||||
2008 | 2007 | life (years) | ||||||||||
Infrastructure rights | $ | 178,964 | $ | 178,964 | 30 and 15 | |||||||
Debt issuance costs | 62,283 | 60,340 | 8 | |||||||||
Software licenses | 273,941 | 213,543 | 3.3 | |||||||||
515,188 | 452,847 | |||||||||||
Accumulated amortization | (285,238 | ) | (244,045 | ) | ||||||||
Impairment charges for intangible assets (See note 5i) | (20,267 | ) | — | |||||||||
$ | 209,683 | $ | 208,802 | |||||||||
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2008 | 2007 | |||||||
Frequency rights | $ | 155,309 | $ | 155,309 | ||||
Less — Accumulated amortization | (82,144 | ) | (74,379 | ) | ||||
Impairment charges (See note 5i) | (6,449 | ) | — | |||||
$ | 66,716 | $ | 80,930 | |||||
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2008 | 2007 | 2006 | ||||||||||
Commission and administrative services paid to: | ||||||||||||
BBG Wireless (1) | $ | 7,709 | — | — | ||||||||
Electromecánica de Guadalajara, S. A. de C. V. (2) | 5,697 | 7,425 - | ||||||||||
Automotriz Rio Sonora (3) | 5,122 | — | — | |||||||||
Road Telco & Consulting, S. A. de C. V. (5) | 1,975 | 2,309 | 1,639 | |||||||||
GS Comunicación (6) | 1,063 | — | — | |||||||||
Autokam Regiomontana, S. A. de C. V. (3) | 844 | 343 | — | |||||||||
Ingeniería Avanzada en Construcción, S.A. de C.V. (7) | 765 | — | — | |||||||||
Vázquez Eduardo (8) | 480 | 459 | — | |||||||||
Vázquez Gabriel Agustín (8) | 480 | 459 | — | |||||||||
Solís Gilberto (6) | 332 | — | — | |||||||||
Bank of America, Co. (9) | 315 | 378 | 397 | |||||||||
Inmobiliaria Radio Centro (8) | 264 | — | — | |||||||||
MG Radio (4) | 101 | — | — | |||||||||
Inmobiliaria AutoKam, S. A. de C. V. (8) | 101 | 98 | — | |||||||||
Aguirre Adrián (10) | 31 | — | — | |||||||||
Sierra Madre Automotriz, S. A. de C. V. (3) | — | 318 | — | |||||||||
Comercializadora Road el Camino, S. A. de C. V. (11) | — | — | 323 | |||||||||
Advertisement services provided by Difusión Panorámica, S. A. de C. V. (4) | — | — | 22 | |||||||||
Total | $ | 25,279 | $ | 11,789 | $ | 4,351 | ||||||
Revenues from telephony services collected from related parties | $ | 966 | $ | 1,020 | $ | 940 | ||||||
(1) | Corresponds to cluster construction. | |
(2) | Corresponds to interest payments and a portion of the capital pertaining to a loan to settle Telereunion’s debt with the Comisión Federal de Electricidad (CFE). See note 20. | |
(3) | Corresponds to costs related to the purchase of vehicles. | |
(4) | Corresponds to advertising services. | |
(5) | Mr. Adrián Aguirre (Maxcom shareholder) is also a shareholder of Road Telco & Consulting, S. A. de C. V. The transactions correspond to administrative services and sale of telephone lines. |
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(6) | Corresponds to payments regarding marketing consulting services. | |
(7) | Corresponds to the installation of public telephones. | |
(8) | Corresponds to lease of sites and offices owned by a relative of a Maxcom shareholder. | |
(9) | Corresponds to expenses related to the debt restructuring and travel expenses of Bank of America (Maxcom shareholder). | |
(10) | Corresponds to expenses reimbursed. | |
(11) | Mr. Adrián Aguirre (Maxcom shareholder) is also a shareholder of Comercializadora Road el Camino, S. A. de C. V. Transactions correspond to administrative services and sale of telephone lines. |
2008 | 2007 | |||||||
Accounts Receivable: | ||||||||
Porcelanatto, S. A. de C. V. | $ | 29 | — | |||||
Guijarro de Pablo y Asociados, S.C. | 21 | — | ||||||
Difusión Panorámica, S. A. de C. V. | 15 | — | ||||||
Proa Mensaje y Comunicación, S. A. de C. V. | 11 | — | ||||||
Road Telco & Consulting, S. A. de C. V. | 9 | — | ||||||
Sport and Therapy Center, S. A. de C. V. | 8 | — | ||||||
Safe Iberoamericana, S. A. de C. V. | 1 | — | ||||||
Shareholder María Guadalupe Aguirre Gómez | 1 | — | ||||||
Shareholder María Elena Aguirre Gómez | 1 | — | ||||||
Shareholder Gabriel Vazquez | 1 | — | ||||||
Shareholder Ricardo Arevalo Ruíz | — | 2 | ||||||
$ | 97 | 2 | ||||||
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2008 | 2007 | |||||||
Accounts Payable: | ||||||||
Electromecánica de Guadalajara, S. A. de C. V. | $ | 36,091 | 36,370 | |||||
Autokam Regiomontana, S. A. de C. V. | 441 | — | ||||||
GS Comunicación, S. A. de C. V. | 244 | — | ||||||
Automotriz Río Sonora, S. A. de C. V. | 236 | — | ||||||
Ingenieria Avanzada en Construcción, S. A. de C. V. | 112 | — | ||||||
Nexus Partners | 30 | — | ||||||
Inmobiliaria Radio Centro | 25 | — | ||||||
Shareholder Adrián Aguirre Palme | 22 | — | ||||||
Shareholder Eduardo Vazquez | — | 36 | ||||||
Shareholder Gabriel Vazquez | — | 36 | ||||||
Road Telco & Consulting, S. A. de C. V. | — | 23 | ||||||
Inmobiliaria Autokam, S. A. de C. V. | — | 8 | ||||||
$ | 37,201 | 36,473 | ||||||
2008 | 2007 | |||||||
Long term: | ||||||||
Senior Notes maturing in 2014, bearing interest at a fixed annual rate of 11%, payable semiannually as from June 15, 2007. | $ | 2,707,660 | $ | 2,173,240 |
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F-39
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2008 | 2007 | |||||||
Assets | 121,987 | 223,278 | ||||||
Liabilities | (221,164 | ) | (223,196 | ) | ||||
Net (liabilities) assets in dollars | (99,177 | ) | 82 | |||||
Exchange rate at end of the year ($1 to the 1.00 dollar) | $ | 13.54 | $ | 10.87 | ||||
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Effects in operations | ||||||||||||
Counter-party | Notional | Basic conditions | 2008 | 2007 | ||||||||
Bank Morgan | 75,000 | Interest Received: 11% | (52,820 | ) | (4,563 | ) | ||||||
Stanley AG | USD | Periodicity: Semi-annual | ||||||||||
Maturity: December 15, 2010 | ||||||||||||
(808,200) | Interest Paid: 11.505% (Fixed) | |||||||||||
MXP | Periodicity: Semi-annual | |||||||||||
Maturity: December 15, 2010 | ||||||||||||
Merrill Lynch | 75,000 | Interest Received: 11% | (52,450 | ) | (4,352 | ) | ||||||
Capital Markets | USD | Periodicity: Semi-annual | ||||||||||
AG | Maturity: December 15, 2010 | |||||||||||
(808,200) | Interest Paid: 11.505% (Fixed) | |||||||||||
MXP | Periodicity: Semi-annual | |||||||||||
Maturity: December 15, 2010 |
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Host Leasing | Effects in operations | |||||||
Contract | Notional | Maturity | 2008 | |||||
MATC Digital | 0.5 | October 2009 | 0.02 | |||||
(San Marcos) | USD | |||||||
MATC Digital | 0.8 | September 2009 | 23 | |||||
(E. Zapata) | USD | |||||||
MATC Digital | 0.3 | June 2009 | 5 | |||||
(Chiquihuite) | USD | |||||||
Grande River | 0.9 | October 2009 | 26 | |||||
Communications | USD | |||||||
Enlace Digital | 2.5 | September 2009 | (34 | ) | ||||
Telecomunicaciones | USD | |||||||
CarrierCOM | 1.5 | February 2009 | 12 | |||||
USD | ||||||||
Grupo Promotor | 151 | December 2012 | 8,440 | |||||
Jomer | USD |
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Benefits | ||||||||||||||||
2008 | ||||||||||||||||
Termination | Retirement | Total | 2007 | |||||||||||||
Net cost for the year: | ||||||||||||||||
Labor cost | $ | 1,552 | 2,983 | 4,535 | 3,629 | |||||||||||
Financial cost | 698 | 2,027 | 2,725 | 1,091 | ||||||||||||
Actuarial loss | 5,899 | — | 5,899 | — | ||||||||||||
Prior service (2007 unamortized items): | ||||||||||||||||
Amortization of prior service cost and plan modifications | 964 | 2,951 | 3,915 | — | ||||||||||||
Amortization of transition liability | — | — | — | 1,032 | ||||||||||||
Net cost for the year | $ | 9,113 | 7,961 | 17,07 | 4 5,752 | |||||||||||
Benefits | ||||||||||||
Termination | Retirement | Total | ||||||||||
Current benefit obligation (CBO) | $ | 11,514 | 25,836 | 37,350 | ||||||||
Unrecognized items: | ||||||||||||
Transition liability | (3,856 | ) | (11,175 | ) | (15,031 | ) | ||||||
Actuarial loss | — | (693 | ) | (693 | ) | |||||||
Projected liability, net | $ | 7,658 | 13,968 | 21,626 | ||||||||
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Benefits obligations | ||||||||
by concept of: | ||||||||
Seniority | ||||||||
Premium | Severance | |||||||
Current benefit obligation (CBO) | $ | 1,283 | 24,906 | |||||
Present liability, net | 1,283 | 24,906 | ||||||
Minus: projected liability, net | (1,283 | ) | (7,256 | ) | ||||
Additional liability | $ | — | 17,650 | |||||
Projected benefit obligation (PBO) | $ | 1,480 | 33,002 | |||||
Unrecognized items: | ||||||||
Transition asset (liability) | 507 | (19,295 | ) | |||||
Actuarial loss | (310 | ) | (6,452 | ) | ||||
Projected liability, net | $ | 1,677 | 7,255 | |||||
Benefits | ||||||||||||
Termination | Retirement | Total | ||||||||||
CBO at the beginning of the year | $ | 33,002 | 1,480 | 34,482 | ||||||||
Current labor cost | 4,049 | 487 | 4,536 | |||||||||
Financial Cost | 2,608 | 118 | 2,726 | |||||||||
Yearly real payments charged to the allowance | (3,939 | ) | (442 | ) | (4,381 | ) | ||||||
Actuarial (loss) gain for the period | (64 | ) | 51 | (13 | ) | |||||||
CBO at the end of the year | $ | 35,656 | 1,694 | 37,350 | ||||||||
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2008 | 2007 | 2006 | ||||||||||
Retirement/Seniority Premium: | ||||||||||||
CBO | $ | 1,694 | 1,480 | 1,125 | ||||||||
Total actuarial loss | 360 | 311 | 246 | |||||||||
Termination: | ||||||||||||
CBO | $ | 35,656 | 33,002 | 25,979 | ||||||||
Total actuarial loss | 6,233 | 6,452 | 1,365 |
Benefits | ||||||||
2008 | 2007 | |||||||
Discount rate reflecting the value of the current obligations | 8.16 | % | 8.16 | % | ||||
Compensation increase rate | 5.56 | % | 5.56 | % | ||||
Employee Remnant Average Labor Life (Applicable to benefits upon retirement) | 29.5 years | 28.90 years |
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• | 6,088,896 Series “A-1” shares to Series “A” shares, at a one to one ratio; | |
• | 10,181,950 Series “B-1” shares to Series “B” shares, at a one to one ratio; | |
• | 220,714,874 Series “N-1” shares to Series “N” shares, at a one to one ratio, and | |
• | 26,867,820 Series “N-2” shares to Series “N” shares, at a one to one ratio. |
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1. | To make a public offering of Ordinary Participation Certificates (CPO) in Mexico, in the form of shares by offering these securities at the Bolsa Mexicana de Valores, S.A. B. de C.V. and other foreign markets in the form of American Depositary Shares (ADS) or other securities or instruments representing the CPOs or the shares of the Company, in accordance with applicable laws, including, without limitation, the US Securities Act of 1933, and upon registration of the corresponding securities with the Securities and Exchange Commission, so that the necessary funds may be raised in order to continue the development and growth of the Company and pay its debts. The CPOs are equivalent to three shares and the ADSs are equivalent to seven CPOs. | |
2. | The conversion and/or reclassification of all the shares under the Series “A”, “B”, and “N”, into new common and registered Series “A” shares with no par value, representing both the fixed and the variable portion of the capital stock, as applicable. | |
3. | Amend the Company’s overall bylaws, including the creation of a number of intermediate management bodies, and other changes required under the Mexican Stock Market Law to convert the Company to a publicly traded company (“Sociedad Anónima Bursátil” or S. A. B.). | |
4. | Cancel 45,768,803 of the Company’s treasury shares. | |
5. | Increase the variable capital stock by issuing up to 260,000,000 common and registered Series “A” shares with no par value, representing the variable portion of the capital stock of the Company and 45,768,803 registered Series “A” shares, with no par value, representing the variable portion of the capital stock, to be kept at the treasury. |
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offering and the over-allotment option was $2,751,713, and the issuance expenses amounted to $100,931, net from tax effects.
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Series and Class of Shares | 2008 | 2007 | 2006 | |||||||||
Issued and outstanding: | ||||||||||||
Series “A” Class I (fixed portion) | 1,528,827 | 1,528,827 | 1,528,827 | |||||||||
Series “A” Class II (variable portion) | 788,290,002 | 788,290,002 | 15,760,793 | |||||||||
Series “A1” Class II (variable portion) | — | — | — | |||||||||
Series “B” Class II (variable portion) | — | — | 16,611,595 | |||||||||
Series “B1” Class II (variable portion) | — | — | — | |||||||||
Series “N” Class II (variable portion) | — | — | 448,433,563 | |||||||||
Series “N1” Class II (variable portion) | — | — | — | |||||||||
Series “N2” Class II (variable portion) | — | — | — | |||||||||
Subtotal | 789,818,829 | 789,818,829 | 482,334,778 | |||||||||
(treasury shares)
2008 | 2007 | 2006 | ||||||||||
Series “A” | 11,000,000 | 307,010 | — | |||||||||
Series “N” | — | — | 45,901,176 | |||||||||
Series “N1” | — | — | — | |||||||||
Subtotal | 11,000,000 | 307,010 | 45,901,176 | |||||||||
Total authorized shares | 800,818,829 | 790,125,839 | 528,235,954 | |||||||||
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2008 | 2007 | |||||||
Capital stock | $ | 4,814,428 | 4,814,435 | |||||
Restatement effect | 595,816 | 595,816 | ||||||
Total capital stock | $ | 5,410,244 | 5,410,251 | |||||
a. | Executive plan — under the aforesaid plan, there were 575,000 stock options available as a grant for officer’s performance for the years of 1998, 1999 and 2000. | |
b. | New stock option plan for executives — As of December 31, 2005, the Board of Directors and shareholders of the Company authorized an aggregate of 17,998,500 options to remunerate officers for the services they rendered during the years 2002, 2003 and 2004. Also, part of these options served as extraordinary remunerations granted to certain key officers in case of a change in the control of the Company. | |
c. | Members of the Board of Directors and members of various committees — For each meeting of the Board or of the different committees of the Company where directors and members of the different committees attend, they receive an option to purchase 2,500 shares at an exercise price of 0.01 dollars per share. The chairman of the Board or of the different committees is entitled to receive options to subscribe 5,000 shares at the same above mentioned exercise price. Options granted in each meeting may be exercised immediately and expire three years after, beginning on the date when granted, except when the same Board or the shareholders’ meeting provides another mechanism. | |
d. | Signing bonuses and other bonuses for officers or directors — From time to time the Company has granted signing bonuses, special bonuses and other bonuses by way of stock options. There was a reserve of 246,215 N1 Series, Class II treasury shares, available so that the management or the Board of Directors may grant options on these shares as part of the signing bonuses negotiated and signed to contract new key officers with the Company. |
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2008 | 2007 | 2006 | ||||||||||||||||||||||
Weighed | Weighed | Weighed | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Options | Price USD | Options | Price USD | Options | Price USD | |||||||||||||||||||
Outstanding at beginning of year | 37,277 | $ | 0.37 | 36,651 | $ | 0.38 | 18,099 | $ | 0.65 | |||||||||||||||
Granted | 552 | 0.01 | 5,151 | 0.25 | 36,076 | 0.24 | ||||||||||||||||||
Exercised | (11,041 | ) | 0.06 | (339 | ) | 0.31 | — | — | ||||||||||||||||
Cancelled | — | — | (4,186 | ) | 0.27 | (17,524 | ) | 0.65 | ||||||||||||||||
Outstanding at the end of the year | 26,788 | 0.31 | 37,277 | 0.37 | 36,651 | 0.38 | ||||||||||||||||||
Options exercisable at the end of the year | 14,751 | 0.31 | 21,208 | 0.41 | 7,112 | 0.99 | ||||||||||||||||||
Weighted average price of options granted during the year (denominated in U.S. dollars) | $ | 0.01 | $ | 0.25 | $ | 0.24 | ||||||||||||||||||
Weighted | ||||||||
average | ||||||||
grant-date | ||||||||
Non vested granted Options | Options | fair value | ||||||
Balance at January 1, 2008 | 13,656 | USD | 0.10 | |||||
Vested | (5,118 | ) | 0.10 | |||||
Forfeited | (5,373 | ) | 0.10 | |||||
Balance at December 31, 2008 | 3,165 | USD | 0.10 |
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2008 | 2007 | |||||||
Granted | 17,916 | 35,272 | ||||||
Granted/Vested | 14,751 | 21,616 | ||||||
Granted nonvested | 3,165 | 13,656 | ||||||
Available | 8,872 | 2,005 | ||||||
Total authorized options | 26,788 | 37,277 |
Weighted | ||||||||
average | ||||||||
grant-date | ||||||||
Granted/Vested Options | Options | fair value | ||||||
Balance at January 1, 2008 | 21,616 | USD | 0.12 | |||||
Granted | 552 | 0.15 | ||||||
Exercised | (11,041 | ) | 0.07 | |||||
Vested | 5,118 | 0.10 | ||||||
Forfeited | (1,494 | ) | 0.12 | |||||
Balance at December 31, 2008 | 14,751 | USD | 0.14 |
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Weighted | Weighted | Weighted | ||||||||||||||||||||||
Stock | average | Directors | average | average | ||||||||||||||||||||
Option | unit price | & | unit price | unit price | ||||||||||||||||||||
Plan | USD | Officers | USD | Total | USD | |||||||||||||||||||
Cash out for share acquisition | 72,450 | 6.6 | 9,384 | 6.3 | 81,834 | 6.5 | ||||||||||||||||||
Cash in from exercised options | (7,082 | ) | (0.6 | ) | (4,079 | ) | (2.7 | ) | (11,161 | ) | (0.9 | ) | ||||||||||||
Total | 65,368 | 5.9 | 5,305 | 3.5 | 70,672 | 5.6 |
Modified plan | Previous | |||||||||||
2007 | 2006 | Plan | ||||||||||
Requisite service period | 3 years | 3 years | 5 years | (*) | ||||||||
Fair value on modification date (dollars) | 0.149 | 0.090 | 0.000 | |||||||||
Exercise price (dollars) | 0.31 | 0.31 | 0.50 | |||||||||
Unrecognized compensation cost in July 2006 (in dollars: 0 x 23,837,331 options) | — | — | N/A |
(*) | At the modification date most options had been already vested. |
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Dollars | ||||
Fair value of modified option at July 2007 | 0.149 | |||
Fair value of modified option at July 2006 | 0.090 | |||
Fair value of original option at July 2006 | 0.000 | |||
Incremental value of modified option at July 2007 | 0.149 | |||
Incremental value of modified option at July 2006 | 0.090 | |||
Incremental value of modified option at July 2007 | 0.149 | |||
Incremental value of modified option at July 2006 | 0.090 | |||
Unrecognized compensation cost for original option | 0.000 | |||
Total compensation cost to be recognized in 2007 | 0.149 | |||
Total compensation cost to be recognized in 2006 | 0.090 | |||
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New | Plan for the | Options for Board | ||||||||||||||
employee stock | Chairman | members and | ||||||||||||||
option plan | of the Board | executives | Total | |||||||||||||
Granted | 17,339,922 | 4,385,781 | 1,827,845 | 23,553,548 | ||||||||||||
Expected forfeitures | (3,467,984 | ) | — | — | (3,467,984 | ) | ||||||||||
Outstanding options authorized | 17,871,587 | — | 1,057,055 | 18,928,642 | ||||||||||||
Options vested during the year | 1,817,543 | 1,330,800 | 9,357,457 | 12,505,800 |
2008 | 2007 | |||||||
Authorized options | 43,961,391 | 44,915,241 | ||||||
Options granted | (25,032,749 | ) | (42,471,437 | ) | ||||
Available options | 18,928,642 | 2,443,804 |
Vesting Period | Volatility | Exercise Price | Risk Free Rate | Fair value | ||||||||||||
3.25 years | 30 | % | 0.31 dollars | 4.89 | % | 0.149 dollars |
Vesting Period | Volatility | Exercise Price | Risk Free Rate | Fair value | ||||||||||||
3.5 years | 30 | % | 0.31 dollars | 5.00 | % | 0.090 dollars |
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A) | Employee Incentive Program. |
a. | The yearly incentive goal, which may be given to the Company’s officers and employees who are eligible under the scope of the Executive Incentive Program, is to reward management for value generation to the Company in a given period of time. | ||
b. | The minimum requirement for the incentives to be awarded is a value generation of 15% year versus year. The following formula is how value generation is calculated: | ||
Value Generation for the year = EBITDA * 8 (eight) — net indebtedness + shareholders’ dividends — shareholders’ increase to the capital stock. | |||
c. | The amount of the yearly incentive is allocated individually and is subject to the yearly performance evaluation. | ||
d. | The yearly incentive is divided into three parts: |
i. | One part will be awarded through cash. | ||
ii. | One part will be awarded through stock options in order to receive ADRs, CPOs or any other instrument whose underlying values represent Maxcom’s capital stock. | ||
iii. | One part will be awarded through stock options in order to receive ADR’s, CPO’s or any other instrument whose underlying values represent Maxcom’s capital stock. |
B) | Compensation for Directors and Committee members. |
a. | Directors and Committee members will receive each year options to purchase up to $120 in the form of CPOs, with the exception of the Chairman of the Board who will receive each year options to purchase up to $240 in the form of CPOs. |
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2008 | ||||
Issuance expenses, net | $ | (6,055 | ) | |
Stock option plan cost | 5,114 | |||
Cost of shares acquired for issuance upon exercise of stock options net | (70,672 | ) | ||
$ | (71,613 | ) | ||
Segment | 2008 | 2007 | 2006 | |||||||||
Residential | $ | 1,055,639 | 897,855 | 685,492 | ||||||||
Business | 809,130 | 648,165 | 495,433 | |||||||||
Public Telephony | 428,733 | 386,404 | 253,136 | |||||||||
Wholesale | 359,518 | 376,092 | 262,304 | |||||||||
Others | 30,209 | 37,203 | 45,327 | |||||||||
Total revenues | $ | 2,683,229 | 2,345,719 | 1,741,692 | ||||||||
Operating costs and expenses | (2,491,698 | ) | (2,069,824 | ) | (1,584,950 | ) | ||||||
Operating income | $ | 191,531 | 275,895 | 156,742 | ||||||||
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Metropolitan | Central- | |||||||||||||||
Services | Area | South | North | Total | ||||||||||||
Year ended December 31, 2008: | ||||||||||||||||
Local | $ | 1,558,015 | 726,438 | 20,488 | 2,304,941 | |||||||||||
Long distance | 236,706 | 74,374 | 9,014 | 320,094 | ||||||||||||
Rent of dedicated links | 402 | — | — | 402 | ||||||||||||
Sale of equipment to customers | 8,740 | 1,873 | 77 | 10,690 | ||||||||||||
Capacity leasing | 47,102 | — | — | 47,102 | ||||||||||||
Total revenue | $ | 1,850,965 | 802,685 | 29,579 | 2,683,229 | |||||||||||
Total assets as of December 31, 2008 | $ | 9,578,452 | 1,298,685 | 308,373 | 11,185,510 | |||||||||||
Accumulated depreciation and amortization | (2,949,318 | ) | (232,333 | ) | (87,387 | ) | (3,269,038 | ) | ||||||||
Total assets | $ | 6,629,134 | 1,066,352 | 220,986 | 7,916,472 | |||||||||||
Acquisition of telephone network systems and equipment during 2008 | $ | 1,339,919 | 269,019 | 22,063 | 1,631,001 | |||||||||||
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Metropolitan | Central- | |||||||||||||||
Services | Area | South | North | Total | ||||||||||||
Year ended December 31, 2007: | ||||||||||||||||
Local | $ | 1,398,683 | 517,154 | — | 1,915,837 | |||||||||||
Long distance | 171,308 | 175,234 | 10,375 | 356,917 | ||||||||||||
Rent of dedicated links | 180 | 119 | — | 299 | ||||||||||||
Sale of equipment to customers | 10,698 | 3,646 | — | 14,344 | ||||||||||||
Capacity leasing | 58,322 | — | — | 58,322 | ||||||||||||
Total revenue | $ | 1,639,191 | 696,153 | 10,375 | 2,345,719 | |||||||||||
Total assets as of December 31, 2007 | $ | 8,728,860 | 814,161 | 553,864 | 10,096,885 | |||||||||||
Accumulated depreciation and amortization | (1,735,440 | ) | (71,547 | ) | (275,798 | ) | (2,082,785 | ) | ||||||||
Total assets | $ | 6,993,420 | 742,614 | 278,066 | 8,014,100 | |||||||||||
Acquisition of telephone network systems and equipment during 2007 | $ | 651,006 | 476,519 | 32,834 | 1,160,359 | |||||||||||
Metropolitan | Central- | |||||||||||||||
Services | Area | South | North | Total | ||||||||||||
Year ended December 31, 2006: | ||||||||||||||||
Local | $ | 934,524 | 385,265 | — | 1,319,789 | |||||||||||
Long distance | 220,131 | 121,633 | 28,459 | 370,223 | ||||||||||||
Rent of dedicated links | 342 | 157 | — | 499 | ||||||||||||
Sale of equipment to customers | 6,062 | 8,360 | — | 14,422 | ||||||||||||
Capacity leasing | 36,759 | — | — | 36,759 | ||||||||||||
Total revenue | $ | 1,197,818 | 515,415 | 28,459 | 1,741,692 | |||||||||||
Total assets as of December 31, 2006 | $ | 5,867,306 | 325,527 | 386,778 | 6,579,611 | |||||||||||
Accumulated depreciation and amortization | (1,463,580 | ) | (50,039 | ) | (88 | ) | (1,513,707 | ) | ||||||||
Total assets | $ | 4,403,726 | 275,488 | 386,690 | 5,065,904 | |||||||||||
Acquisition of telephone network systems and equipment during 2006 | $ | 987,954 | 141,454 | 710 | 1,130,118 | |||||||||||
F-59
Table of Contents
2008 | 2007 | 2006 | ||||||||||
Comprehensive financial results: | ||||||||||||
Interest expense and commissions | $ | (317,633 | ) | (285,858 | ) | (178,153 | ) | |||||
Interest income | 53,994 | 55,793 | 8,591 | |||||||||
Exchange gain income (loss) — Net | (261,787 | ) | 4,826 | (6,568 | ) | |||||||
Effect of valuation of financial instruments | 83,323 | 20,421 | 13,324 | |||||||||
Gain on monetary position | — | 42,586 | 33,753 | |||||||||
$ | (442,103 | ) | (162,232 | ) | (129,053 | ) | ||||||
Capitalized in telecommunications equipment and network (Note 7) | $ | 174,710 | 35,591 | 21,871 | ||||||||
Total recorded in results of operations | $ | (267,393 | ) | (126,641 | ) | (107,182 | ) | |||||
F-60
Table of Contents
December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Loss) profit before income tax expense | $ | (671,457 | ) | 133,178 | 30,783 | |||||||
Statutory income tax rate | 28 | % | 28 | % | 29 | % | ||||||
Income tax expense (benefit) | (188,008 | ) | 37,290 | 8,927 | ||||||||
Increase (decrease) on income tax expense resulting from: | ||||||||||||
Inflationary effects | (19,163 | ) | 2,080 | 24,021 |
F-61
Table of Contents
December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Non-deductible expenses | 10,254 | 14,017 | 1,301 | |||||||||
Change in valuation allowance | (34,498 | ) | 39,272 | — | ||||||||
Cancellation of allowance on asset tax for prior years(1) | 31,679 | |||||||||||
Non-taxable income | (2,888 | ) | — | — | ||||||||
Others | 609 | 4,323 | (5,878 | ) | ||||||||
Income tax expense (benefit) | (233,694 | ) | 96,982 | 60,050 | ||||||||
Effective income tax rate | 35 | % | 73 | % | 195 | % | ||||||
(1) | As of December 31, 2005, the Company believed it had possibilities of recovering asset tax paid in prior years, based on the results of legal proceedings initiated and the fact that the prior Asset Tax Law allowed for deduction of liabilities in computing net assets. However, during the last quarter of 2006, the conditions of the legal process changed radically and together with the changes to the Asset Tax Law, effective as from January 1, 2007, which now precludes the inclusion of liabilities in determining the asset tax base, the Company concluded that there were not enough grounds to obtain a favorable resolution, and decided to record a valuation allowance in the total amount of said tax. Asset tax is incurred at the rate of 1.25% over the net amount of certain assets only when this tax exceeds income tax payable. |
F-62
Table of Contents
2008 | 2007 | |||||||||||||||
IT | ESPS | IT | ESPS | |||||||||||||
Deferred assets: | ||||||||||||||||
Allowance for doubtful accounts | $ | 39,372 | — | 21,775 | — | |||||||||||
Labor obligations upon retirement | 6,055 | 2,162 | 2,076 | 741 | ||||||||||||
Derivative financial instruments | 2,372 | — | — | — | ||||||||||||
Provisions | 37,691 | 13,461 | 9,656 | 3,449 | ||||||||||||
Tax credit carryforwards | 39,272 | — | 39,272 | — | ||||||||||||
Tax loss carryforwards | 411,277 | — | 267,420 | — | ||||||||||||
Total gross deferred assets | 536,039 | 15,623 | 340,199 | 4,190 | ||||||||||||
Less valuation allowance | 184,948 | 14,995 | 129,073 | 3,953 | ||||||||||||
Deferred assets, net | 351,091 | 628 | 211,126 | 237 | ||||||||||||
Deferred liabilities: | ||||||||||||||||
Prepaid expenses | 13,190 | 628 | 17,269 | 237 | ||||||||||||
Telephone network system and equipment, frequency rights, intangible assets and preoperating expenses — Net | 189,787 | — | 291,599 | — | ||||||||||||
Total gross deferred liabilities | 202,977 | 628 | 308,868 | 237 | ||||||||||||
Net deferred assets (liabilities) | $ | 148,114 | — | (97,742 | ) | — | ||||||||||
F-63
Table of Contents
2008 | 2007 | |||||||
Net change in deferred income tax asset (liability) | $ | (245,856 | ) | 9,046 | ||||
Tax effect of deductible expenses related to the issuance of shares recorded net in the additional paid-in capital | — | 37,236 | ||||||
Deferred income tax expense (benefit) | $ | (245,856 | ) | 46,282 | ||||
F-64
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Year of | Year of | |||||||
loss | Amount | expiration | ||||||
1999 | $ | 18,109 | 2009 | |||||
2000 | 102,156 | 2010 | ||||||
2001 | 32,292 | 2011 | ||||||
2002 | 282,004 | 2012 | ||||||
2003 | 35,388 | 2013 | ||||||
2004 | 79,533 | 2014 | ||||||
2005 | 132,644 | 2015 | ||||||
2006 | 74,058 | 2016 | ||||||
2007 | 269,142 | 2017 | ||||||
2008 | 443,521 | 2018 | ||||||
$ | 1,468,847 | |||||||
2009 | $ | 73,790 | ||
2010 | 69,590 | |||
2011 | 62,499 | |||
2012 | 58,754 | |||
2013 and thereafter: | 61,146 | |||
$ | 325,779 | |||
F-65
Table of Contents
2009 | $ | 31,710 | ||
2010 | 30,910 | |||
2011 | 29,539 | |||
2012 | 22,329 | |||
2013 and thereafter: | 5,636 | |||
$ | 120,124 | |||
2009 | $ | 4,396 | ||
Total | $ | 4,396 | ||
F-66
Table of Contents
F-67
Table of Contents
i. | Claim brought by the Secretaría de Hacienda y Crédito Público as a result of a tax audit of Telereunion for the fiscal year 2004: |
F-68
Table of Contents
F-69
Table of Contents
Quoted prices | Significant | |||||||||||||||
in active | other | Significant | ||||||||||||||
Balance at | markets for identical | observable | unobservable | |||||||||||||
December 31, | assets | inputs | inputs | |||||||||||||
2008 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Short-term investments(1) | 1,500,270 | 11,702 | 1,488,568 | — | ||||||||||||
Derivative Instruments, (net) | 96,798 | — | 96,798 | |||||||||||||
Total | $ | 1,597,068 | $ | 11,702 | $ | 1,585,366 | $ | — | ||||||||
(1) | Short-term investments are classified in the balance sheet as cash and cash equivalents. The carrying value and fair value of cash and cash equivalents as of December 31, 2008 is $1,591,405, of which $1,500,270 represents the fair value of the short term investments. |
F-70
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F-71
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F-72
Table of Contents
Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Net (loss) income under MFRS | $ | (437,763 | ) | $ | 36,196 | $ | (29,267 | ) | ||||
Adjustments: | ||||||||||||
Amortization of pre-operating expenses (a) | 22,123 | 20,438 | 32,030 | |||||||||
Capitalization of interest (b) | (112,738 | ) | (716 | ) | 49,945 | |||||||
Amortization of capitalized interest (b) | (12,118 | ) | (11,896 | ) | (27,136 | ) | ||||||
Installation revenues and related costs (c) | (2,824 | ) | (6,758 | ) | 858 | |||||||
Installation costs not charged to customers (d) | (154,716 | ) | (60,640 | ) | (213,247 | ) | ||||||
Debt restructuring (e) | — | — | 197,006 | |||||||||
Capitalized internal compensation cost (f) | 143 | 143 | 143 | |||||||||
Impairment charge (g) | 532,315 | — | — | |||||||||
Severance Indemnity liability (h) | 2,405 | (682 | ) | (908 | ) | |||||||
Reversal of SAB 108 (j) | — | — | 3,035 | |||||||||
Recognition of deferred taxes (k) | (76,885 | ) | 184,914 | — | ||||||||
Total US GAAP adjustments | 197,705 | 124,803 | 41,726 | |||||||||
Net (loss) income under U.S. GAAP | $ | (240,058 | ) | $ | 160,999 | $ | 12,459 | |||||
Basic and diluted earnings per share: | ||||||||||||
Numerator: | ||||||||||||
Net (loss) income under U.S. GAAP | $ | (240,058 | ) | $ | 160,999 | $ | 12,459 | |||||
less: preferred stock dividend(1) | — | — | (539,738 | ) | ||||||||
Net (loss) income under U.S. GAAP available for common shareholders, used for basic computation | (240,058 | ) | 160,999 | (527,279 | ) | |||||||
Net (loss) Income under U.S. GAAP available for common shareholders, used for dilutive computation | (240,058 | ) | 160,999 | (527,279 | ) | |||||||
Denominator: | ||||||||||||
Weighted average of common shares used in basic computation (thousand) | 789,819 | 560,176 | 247,853 | |||||||||
Add: dilutive impact of stock options and warrants(2) | — | 45,968 | — | |||||||||
Weighted average of common shares used in dilutive computation (thousand) | 789,819 | 606,144 | 247,853 | |||||||||
Earnings per share, basic | (0.30 | ) | 0.29 | (2.13 | ) | |||||||
Earnings per share, diluted | (0.30 | ) | 0.27 | (2.13 | ) |
(1) | Earnings available to the common shareholders in 2006 were reduced for the fair value of a stock dividend paid to the preferred shareholders in the form of the Company’s common shares in the amount of $ 539.8 million. The weighted average number of shares for 2006 reflects the application of the “two-class method” specified by EITF 03-06. | |
(2) | According to FAS 128. |
F-73
Table of Contents
As of December 31, | ||||||||
2008 | 2007 | |||||||
Shareholders’ equity under MFRS | $ | 4,501,169 | $ | 5,030,839 | ||||
Accumulated adjustments: | ||||||||
Preoperating expenses (a) | (391,951 | ) | (391,951 | ) | ||||
Amortization of preoperating expenses (a) | 336,172 | 314,049 | ||||||
Capitalization of interest (b) | 8,440 | 121,178 | ||||||
Amortization of capitalized interest (b) | (64,465 | ) | (52,347 | ) | ||||
Installation revenues and related costs (c) | (76,805 | ) | (73,981 | ) | ||||
Installation costs not charged to customers (d) | (738,412 | ) | (583,696 | ) | ||||
Capitalized internal compensation cost (f) | (2,000 | ) | (2,143 | ) | ||||
Impairment charge (g) | 532,315 | — | ||||||
Severance Indemnity liability (h) | (11,297 | ) | (1,590 | ) | ||||
SAB 108 initial effects (i) | 7,034 | 7,034 | ||||||
SAB 108 effects for the year (j) | 3,035 | 3,035 | ||||||
Recognition of deferred taxes (k) | 111,420 | 184,914 | ||||||
Total U.S. GAAP adjustments | $ | (286,514 | ) | $ | (475,498 | ) | ||
Shareholders’ equity under U.S. GAAP | $ | 4,214,655 | $ | 4,555,341 | ||||
Year Ended | ||||||||
December 31, | ||||||||
2008 | 2007 | |||||||
Balance at the beginning of the year | $ | 4,555,341 | $ | 1,676,612 | ||||
Net (loss) income under U.S. GAAP | (240,058 | ) | 160,999 | |||||
(Decrease) increase in capital stock | (7 | ) | 2,045,646 | |||||
Increase in premium on issuance of shares | — | 634,960 | ||||||
Stock option plan | (71,613 | ) | 37,124 | |||||
Repurchase of shares | (20,287 | ) | — | |||||
Severance Indemnity liability (FAS 158 effects), net of tax of $3,391 | (8,721 | ) | — | |||||
Balance at the end of the year | $ | 4,214,655 | $ | 4,555,341 |
F-74
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F-75
Table of Contents
(a) | The exchange with the primary holder is accounted for as a combination of types as the primary holder received both New Senior Notes and stock in exchange for the Old Senior Notes exchanged. A gain was recorded, as the adjusted carrying value of the Old Senior Notes exchanged was greater than the total future cash payments of the New Senior Notes at the time of the exchange. To calculate the gain on the restructuring, the carrying value of the Old Senior Notes was reduced by the fair value of the equity interest granted as well as all legal and other costs in relation to the restructuring, to determine the adjusted carrying value, which was compared to the gross future cash payments under the terms of the New Senior Notes to determine the gain. | |
(b) | The other holders exchanged Old Senior Notes for New Senior Notes, which is accounted for as a modification of terms under FAS 15 due to the extension of the maturity date and the increase in total interest payments. Since the carrying amount of the Old Senior Notes on October 2004 did not exceed the total future cash payments of the New Senior Notes, no gain on the exchange with the other holders was recognized. |
F-76
Table of Contents
F-77
Table of Contents
2007 | ||||
Labor obligation at retirement asset as of December 31, 2006 | $ | 15,068 | ||
Labor obligation at retirement asset as of December 31, 2007 | 17,650 | |||
Amortization of past service cost | 2,582 | |||
Amortization of variances in assumptions | (992 | ) | ||
Cost reduction under US GAAP* | $ | 1,590 | ||
* | As mentioned previously, for Mexican FRS purposes the Company eliminated the related intangible asset. This effect was reversed for US GAAP purposes, resulting in a Ps. 1,590 increase in net income. |
OCI | AOCI | |||||||
AOCI beginning balance at January 1, 2008 | ||||||||
Net loss | $ | (240,058 | ) | |||||
SFAS 158 effect of the year (net of deferred income tax effect of $3,391) | (8,722 | ) | ||||||
Other comprehensive income | (8,722 | ) | $ | (8,722 | ) | |||
Comprehensive income | $ | (248,780 | ) | |||||
AOCI ending balance at December 31, 2008 | $ | (8,722 | ) | |||||
F-78
Table of Contents
F-79
Table of Contents
Period in which the | Period in which the | Period in which the | ||||||||||||||
Misstatement | Misstatement | Misstatement | ||||||||||||||
Originated (1) | Originated (1) | Originated (1) | Adjustment recorded | |||||||||||||
Year Ended | Year Ended | Year Ended | as of | |||||||||||||
December 31, 2003 | December 31, 2004 | December 31, 2005 | January 1, 2006 | |||||||||||||
Labor liabilities (2) | $ | (15,977 | ) | $ | — | $ | (647 | ) | $ | (16,624 | ) | |||||
Capitalized interest (3) | (4,576 | ) | (1,310 | ) | 613 | (5,273 | ) | |||||||||
Increasing-debt rate (4) | — | (3,682 | ) | (8,321 | ) | (12,003 | ) | |||||||||
Stock-option plan (5) | — | (603 | ) | (2,890 | ) | (3,493 | ) | |||||||||
Embedded derivatives (6) | — | — | 7,292 | 7,292 | ||||||||||||
Debt restructuring (7) | — | 137,597 | 6 | 137,603 | ||||||||||||
Installation costs not charged (7) | — | (111,511 | ) | 1,593 | (109,918 | ) | ||||||||||
Installation revenues and costs (8) | — | — | 11,593 | 11,593 | ||||||||||||
Other (9) | 11,346 | (9,534 | ) | (3,955 | ) | (2,143 | ) | |||||||||
Deferred income taxes (10) | — | — | — | — | ||||||||||||
Impact on net income(11) | $ | (9,207 | ) | $ | 10,957 | $ | 5,284 | |||||||||
Retained earnings(12) | $ | 7,034 | ||||||||||||||
(1) | We previously quantified these errors under the roll-over method and concluded that they were immaterial, individually and in the aggregate. | |
(2) | We were not recognizing this difference for severance indemnity as required by U.S. generally accepted accounting principles (see reconciling item h.). As a result of this error, our severance indemnity expense was understated by $16.0 million in 2003 and by $0.6 million in 2005, no expense recognition is applicable for 2004. We recorded a $16.6 million increase in our liability for severance indemnity as of January 1, 2006 with a corresponding reduction in retained earnings to correct these misstatements. | |
(3) | We incorrectly amortized capitalized interest expenses in 2005 and prior years. As a result of this error, our expenses were understated in 2003 by $4.6 million, in 2004 by $1.3 and overstated by $0.6 million in 2005. We recorded a $5.3 million decrease in our capitalized interest as of January 1, 2006 with a corresponding reduction in retained earnings to correct these misstatements. | |
(4) | We were not adjusting our expenses for increasing-debt rate as required by U.S. generally accepted accounting principles to the interest method. As a result of this error, our interest expense was understated by $3.7 million in 2004 and by $8.3 million in 2005. We recorded a $12.0 million increase in our liability for interest payable as of January 1, 2006 with a corresponding reduction in retained earnings to correct these misstatements (see item j. below for reversal in 2006). | |
(5) | We were not recognizing compensation cost expense as required by U.S. generally accepted accounting principles. As a result of this error, our compensation expense was understated by $0.6 million in 2004 and by $2.9 million in 2005. We recorded a $3.5 million increase in our additional-paid in capital for stock-option plans as of January 1, 2006 with a corresponding reduction in retained earnings to correct these misstatements. |
F-80
Table of Contents
(6) | We were not recognizing the effect in income generated by embedded derivatives as required by U.S. generally accepted accounting principles. As a result of this error in both GAAPs in 2005, our income was understated by $7.3 million. We recorded a $7.3 million increase in our assets as of January 1, 2006 with a corresponding increase in retained earnings to correct these misstatements. This balance does not represent a difference between GAAPs, however for MFRS purposes this effect was immaterial for being adjusted (see item j. below for reversal in 2006). | |
(7) | We were incorrectly presenting the accumulated amortization related to debt restructuring and installation costs not charged to customers. As a result of both reclassification errors, our income was understated by $26.1 million in 2004 and by $1.6 million in 2005 (amounts presented net). We recorded a $27.7 million increase in our assets as of January 1, 2006 with a corresponding increment in retained earnings to correct these misstatements. | |
(8) | We were incorrectly recognizing the effect in income generated by the amortization installation revenues and costs. As a result of this error, our income was understated by $11.6 million in 2005. We recorded a $11.6 million increase in our assets as of January 1, 2006 with a corresponding increment in retained earnings to correct these misstatements. | |
(9) | We incorrectly recorded minor entries representing preoperating expenses, leasehold improvements and revenue recognition. As a result of these errors, our expense was overstated by $11.3 million in 2003 and understated by $9.5 million in 2004 and $4.0 million in 2005. We recorded a $2.2 million increase in the Company’s liabilities for these concepts as of January 1, 2006 with a corresponding reduction in retained earnings to correct these misstatements. | |
(10) | No deferred taxes were calculated in the application of the SAB 108 as those balances would represent a deferred tax asset for the net balance to be adjusted on January 1, 2006, that is not deemed recoverable and should be fully reserved for accounting purposes. | |
(11) | Represents the net over-statement of net income for the indicated periods resulting from these misstatements | |
(12) | Represents the net reduction to retained earnings recorded as of January 1, 2006 to record the initial application of SAB 108. |
December 31, 2006 | ||||
Preoperating expenses | $ | (1,676 | ) | |
Increasing debt rate (1) | 12,003 | |||
Embedded derivatives (2) | (7,292 | ) | ||
$ | 3,035 | |||
(1) | These notes were called in advance during 2006 and thus, outstanding payable balances under U.S. GAAP were eliminated. | |
(2) | In 2006, the Company started recognizing embedded derivatives in their local books, therefore, this reconciling item is reversed. |
F-81
Table of Contents
• | borrow money; | |
• | pay dividends on our capital stock; | |
• | purchase stock or repay subordinated indebtedness; | |
• | sell assets; and | |
• | consolidate or merge into other companies. |
F-82
Table of Contents
Quoted prices | Significant | |||||||||||||||
Fair value at | in active | other | Significant | |||||||||||||
December 31, | markets for | observable | unobservable | |||||||||||||
2008 | identical assets | inputs | inputs | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||||
Senior Notes(1) | $ | 2,044,283 | — | 2,044,283 | — |
(1) | Senior notes are carried at amortized cost and their carrying value as of December 31, 2008 is $2,707,660. The $2,044,283 represents the estimated fair value of the notes. See Note 11 “Bonds Payable”. |
F-83
Table of Contents
F-84
Table of Contents
F-85
Table of Contents
SFAS 109 | SFAS 109 | |||||||||||
Applied to | Applied to | |||||||||||
MFRS | U.S. GAAP | |||||||||||
December 31, 2008: | Balances | Balances | Total | |||||||||
Deferred tax assets | ||||||||||||
Allowance for doubtful accounts | $ | 39,372 | — | $ | 39,372 | |||||||
Labor obligations upon retirement | 6,055 | (1,970 | ) | 4,085 | ||||||||
Derivative financial instruments | 2,372 | — | 2,372 | |||||||||
Provisions | 37,691 | — | 37,691 | |||||||||
Installation revenues | — | 21,505 | 21,505 | |||||||||
Installation costs not charged to customers | — | 206,755 | 206,755 | |||||||||
Tax credit carryforwards | 39,272 | — | 39,272 | |||||||||
Tax loss carryforwards | 411,277 | — | 411,277 | |||||||||
Total gross deferred tax assets | 536,039 | 226,290 | 762,329 | |||||||||
Less valuation allowance | (184,948 | ) | — | (184,948 | ) | |||||||
Net deferred tax assets | $ | 351,091 | 226,290 | 577,381 | ||||||||
Deferred tax liabilities | ||||||||||||
Telephone network equipment and leasehold improvements, frequency rights, intangible assets, impairment and preoperating expenses | $ | (189,787 | ) | (114,870 | ) | (304,657 | ) | |||||
Prepaid expenses | (13,190 | ) | — | (13,190 | ) | |||||||
Total gross deferred tax liabilities | (202,977 | ) | (114,870 | ) | (317,847 | ) | ||||||
Net deferred tax asset | $ | 148,114 | 111,420 | 259,534 | ||||||||
SFAS 109 | SFAS 109 | |||||||||||
Applied to | Applied to | |||||||||||
MFRS | U.S. GAAP | |||||||||||
Balances | Balances | Total | ||||||||||
December 31, 2007: | ||||||||||||
Deferred tax assets: | ||||||||||||
Bad debt allowance | $ | 21,775 | — | $ | 21,775 | |||||||
Tax loss carry forwards | 267,420 | — | 267,420 | |||||||||
Accruals | 51,004 | — | 51,004 | |||||||||
Installation revenues | — | 20,715 | 20,715 | |||||||||
Installation costs not charged to customers | — | 163,435 | 163,435 | |||||||||
Total gross deferred tax assets | 340,199 | 184,150 | 524,349 | |||||||||
Valuation allowance | (129,073 | ) | — | (129,073 | ) | |||||||
Net deferred tax assets | 211,126 | 184,150 | 395,276 | |||||||||
Deferred tax liabilities: | ||||||||||||
Prepaid expenses | (17,269 | ) | — | (17,269 | ) | |||||||
Telephone network equipment and leasehold improvements, frequency rights, intangible assets and preoperating expenses | (291,599 | ) | 764 | (290,835 | ) | |||||||
Total gross deferred tax liabilities | (308,868 | ) | 764 | (308,104 | ) | |||||||
Net deferred tax (liability) asset | $ | (97,742 | ) | $ | 184,914 | $ | 87,172 | |||||
F-86
Table of Contents
F-87
Table of Contents
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Operating activities: | ||||||||||||
Net (loss) income under U.S. GAAP | $ | (240,058 | ) | $ | 160,999 | $ | 12,459 | |||||
Adjustments to reconcile net income (loss) to net cash flow provided by operating activities: | ||||||||||||
Depreciation and amortization | 476,813 | 328,269 | 167,721 | |||||||||
Hedging valuation | (83,323 | ) | (24,036 | ) | (5,217 | ) | ||||||
Allowance for doubtful accounts | 39,956 | 5,318 | 36,556 | |||||||||
Monetary gain | — | (15,533 | ) | (21,503 | ) | |||||||
Deferred income tax | (168,971 | ) | (138,632 | ) | 60,051 | |||||||
Severance indemnity | 14,669 | 6,434 | 4,642 | |||||||||
Stock option plan | 5,114 | 37,124 | 15,982 | |||||||||
Loss on sale of fixed assets | 82,496 | 6,166 | 1,369 | |||||||||
Other | 67,255 | (1,000 | ) | |||||||||
Foreign currency exchange gain (loss) | 534,420 | (47,957 | ) | (90,781 | ) | |||||||
661,116 | 385,407 | 180,279 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | (227,744 | ) | (319,003 | ) | (321,562 | ) | ||||||
Inventory | (7,627 | ) | 2,540 | (19,160 | ) | |||||||
Prepaid expenses | 9,563 | 2,091 | 14,271 | |||||||||
Other assets and liabilities | 3,353 | 93,404 | 25,267 | |||||||||
Cash flow provided by (used in) operating activities | 438,861 | 164,439 | (120,905 | ) | ||||||||
Investing activities: | ||||||||||||
Acquisition of fixed assets | (1,298,619 | ) | (1,126,022 | ) | (772,773 | ) | ||||||
Proceeds on sale of fixed assets | 4,364 | (6,371 | ) | 4,428 | ||||||||
Purchase of Telereunion, net of cash acquired | — | — | (101,173 | ) | ||||||||
Purchase of Sierra, net of cash acquired | — | (33,576 | ) | — | ||||||||
Acquisition of intangible assets | 12,704 | (79,112 | ) | (35,370 | ) | |||||||
Cash flow used in investing activities | (1,281,551 | ) | (1,245,081 | ) | (904,888 | ) | ||||||
Financing activities: | ||||||||||||
Restricted cash | — | 23,462 | (15,179 | ) | ||||||||
Capital (decrease) increase — Net of equity issuance cost | (7 | ) | 2,643,369 | 357,348 | ||||||||
Cost of shares acquired for issuance upon exercise of stock options, and issuance costs | (76,727 | ) | ||||||||||
Bank financing and debt payments | (8,419 | ) | 131,432 | (460,666 | ) | |||||||
Repurchase of shares | (20,287 | ) | — | — | ||||||||
Senior notes issued — Net of debt issuance cost | — | 118,214 | 1,650,241 | |||||||||
Cash flow (used in) provided by financing activities | (105,440 | ) | 2,916,477 | 1,531,744 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | — | (35,591 | ) | (7,878 | ) | |||||||
Net increase in cash and cash equivalents | (948,130 | ) | 1,800,244 | 498,073 | ||||||||
Cash and cash equivalents at beginning of the year | 2,539,535 | 739,291 | 241,218 | |||||||||
Cash and cash equivalents at end of the year | 1,591,405 | 2,539,535 | 739,291 | |||||||||
Interest paid | $ | 276,434 | $ | 271,973 | $ | 139,716 | ||||||
Income taxes paid | $ | 7,320 | $ | 25,530 | $ | 1,396 | ||||||
Supplemental disclosures about non-cash activities Optical fiber and links reclassification | — | — | 144,241 | |||||||||
(Decrease) increase on fixed assets acquired Under capital lease | 4,740 | (50,791 | ) | 15,620 |
F-88
Table of Contents
Under U.S. GAAP, such items are considered part of operating income.
F-89
Table of Contents
F-90
Table of Contents
F-91
Table of Contents
F-92
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | SCG | Telereunión | USA | Telscape | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Balance sheet as of December 31, 2008: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents and Current restricted cash | $ | 1,585,470 | 185 | 1,037 | 377 | 225 | 170 | 29 | 112 | 3,800 | 0 | 1,591,405 | ||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable — net | 1,061,998 | 12,140 | 75,368 | 15,948 | 191,314 | 110 | 50 | 2,427 | 212 | 71,902 | 2,609 | 1,163 | (476,940 | ) | 958,301 | |||||||||||||||||||||||||||||||||||||||||
Inventory — net | 40,876 | 40,876 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses | 24,167 | 1,124 | 4,985 | 92 | 22 | 373 | 15 | 30,778 | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment in subsidiaries | 341,530 | 8,820 | (350,350 | ) | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Frequency rights — net | 66,716 | 66,716 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Telephone network system and Equipment net | 4,503,806 | 11,143 | 139,939 | 8,540 | 20,985 | 4,684,413 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Preoperating expenses — net | 50,595 | 268 | 50,863 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets — net | 209,683 | 209,683 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | 2,151 | 406 | 7 | 4,497 | 1,235 | 19 | 8,315 | |||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses long term | 15,381 | 15,381 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | 105,270 | 105,270 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes | 90,996 | 864 | 5,931 | 77 | 16,280 | 1 | 8 | 3,145 | 29,995 | 817 | 148,114 | |||||||||||||||||||||||||||||||||||||||||||||
Other assets | 6,377 | (20 | ) | 6,357 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 8,105,016 | 14,719 | 96,148 | 16,494 | 212,316 | 110 | 319 | 2,627 | 14,529 | 243,556 | 14,963 | 22,965 | (827,290 | ) | 7,916,472 | ||||||||||||||||||||||||||||||||||||||||
Total liabilities | $ | 3,603,847 | 13,777 | 70,834 | 8,633 | 3,394 | 7 | 292 | 1,669 | 111 | 184,491 | 4,565 | 624 | (476,941 | ) | 3,415,303 | ||||||||||||||||||||||||||||||||||||||||
F-93
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | SCG | Telereunión | USA | Telscape | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock and Additional Paid- In Capital | 6,226,687 | 96 | 66 | 55 | 171,497 | 127 | 56 | 54 | 11,308 | 712,814 | 13,044 | 97,874 | (1,006,991 | ) | 6,226,687 | |||||||||||||||||||||||||||||||||||||||||
Accumulated deficit | (1,705,231 | ) | 846 | 25,248 | 7,806 | 37,425 | (24 | ) | (29 | ) | 904 | 3,110 | (653,749 | ) | (2,646 | ) | (75,533 | ) | 656,642 | (1,705,231 | ) | |||||||||||||||||||||||||||||||||||
Repurchase of shares | (20,287 | ) | (20,287 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total shareholders’ equity | 4,501,169 | 942 | 25,314 | 7,861 | 208,922 | 103 | 27 | 958 | 14,418 | 59,065 | 10,398 | 22,341 | (350,349 | ) | 4,501,169 | |||||||||||||||||||||||||||||||||||||||||
Total liabilities and shareholders — equity | $ | 8,105,016 | 14,719 | 96,148 | 16,494 | 212,316 | 110 | 319 | 2,627 | 14,529 | 243,556 | 14,963 | 22,965 | (827,290 | ) | 7,916,472 |
F-94
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | SCG | Telereunión | USA | Telscape | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Total shareholders’ equity under Mexican GAAP | $ | 4,501,169 | 942 | 25,314 | 7,861 | 208,922 | 103 | 27 | 958 | 14,418 | 59,065 | 10,398 | 22,341 | (350,349 | ) | 4,501,169 | ||||||||||||||||||||||||||||||||||||||||
Preoperating expenses | $ | (391,951 | ) | (391,951 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of preoperating expenses | 336,172 | 336,172 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization of interest | 8,440 | 8,440 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of capitalized interest | (64,465 | ) | (64,465 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Installation revenues | (76,805 | ) | (76,805 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Installation costs | (738,412 | ) | (738,412 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized internal compensation cost | (2,000 | ) | (2,000 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment charge | 532,315 | 532,315 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Severance indemnity liability | (11,297 | ) | (11,297 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
SAB 108 initial effect | 7,034 | 7,034 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
SAB effects for the year | 3,035 | 3,035 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognition of deferred taxes | 111,420 | 111,420 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total shareholders’ equity under US. GAAP | $ | 4,214,655 | 4,214,655 |
F-95
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | SCG | Telereunión | USA | Telscape | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Statements of Operations for the year ended December 31, 2008: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 2,676,392 | 80,022 | 502,434 | 90,880 | 17,535 | 213 | 42,644 | 2,535 | 1,164 | (730,590 | ) | 2,683,229 | |||||||||||||||||||||||||||||||||||||||||||
Operating cost and expenses | (2,581,692 | ) | (75,630 | ) | (424,476 | ) | (86,651 | ) | (11 | ) | (11 | ) | (16,725 | ) | (203 | ) | (35,321 | ) | (2,092 | ) | (15 | ) | 731,129 | (2,491,698 | ) | |||||||||||||||||||||||||||||||
Integral (cost) income of financing | (267,025 | ) | (126 | ) | (1,683 | ) | (159 | ) | 17,728 | (35 | ) | 3 | (16,066 | ) | (29 | ) | (1 | ) | (267,393 | ) | ||||||||||||||||||||||||||||||||||||
Other income (expenses) | (265,438 | ) | (3,368 | ) | (51,066 | ) | (999 | ) | 15,284 | (3 | ) | 4 | 3,126 | (18,206 | ) | 74 | (1,590 | ) | (39,719 | ) | (361,901 | ) | ||||||||||||||||||||||||||||||||||
Net (loss) income | $ | (437,763 | ) | 898 | 25,209 | 3,071 | 33,001 | 0 | (14 | ) | 779 | 3,139 | (26,949 | ) | 488 | (442 | ) | (39,180 | ) | (437,763 | ) | |||||||||||||||||||||||||||||||||||
Net (loss) income for the year under Mexican GAAP | $ | (437,763 | ) | 898 | 25,209 | 3,071 | 33,001 | 0 | (14 | ) | 779 | 3,139 | (26,949 | ) | 488 | (442 | ) | (39,180 | ) | (437,763 | ) | |||||||||||||||||||||||||||||||||||
Amortization of preoperating expenses | 22,123 | 22,123 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization of interest | (112,738 | ) | (112,738 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of capitalized Interest | (12,118 | ) | (12,118 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Installation revenues | (2,824 | ) | (2,824 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Installation costs | (154,716 | ) | (154,716 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized internal compensation cost | 143 | 143 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment | 532,315 | 532,315 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Severance indemnity liability | 2,405 | 2,405 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognition at deferred taxes | (76,885 | ) | (76,885 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss (income) for the year Under U.S. GAAP | $ | (240,058 | ) | (240,058 | ) |
F-96
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | SCG | Telereunión | USA | Telscape | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Statement of Cash Flows under U.S. GAAP for the Year Ended December 31, 2008: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) income the year under U.S. GAAP | (240,058 | ) | 898 | 25,209 | 3,071 | 33,001 | 0 | (14 | ) | 779 | 3,139 | (26,949 | ) | 488 | (442 | ) | (39,180 | ) | (240,058 | ) | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 440,104 | 203 | 20,150 | 938 | 15,418 | 476,813 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other adjustments to reconcile net income to cash provided by operating activities | 428,588 | (852 | ) | (1,648 | ) | (76 | ) | (16,280 | ) | (1 | ) | (8 | ) | (3,146 | ) | (29,995 | ) | (817 | ) | 48,596 | 424,361 | |||||||||||||||||||||||||||||||||||
Net change in working capital | (213,818 | ) | (1,258 | ) | (25,367 | ) | (3,053 | ) | (19,295 | ) | 0 | 15 | (840 | ) | (193 | ) | (17,409 | ) | (1,910 | ) | 1,259 | 59,614 | (222,255 | ) | ||||||||||||||||||||||||||||||||
Resources (used in) provided by Operating activities | 414,816 | (1,212 | ) | (1,806 | ) | (58 | ) | (2,574 | ) | 0 | 0 | (69 | ) | 3 | (54,203 | ) | (484 | ) | 0 | 84,448 | 438,861 | |||||||||||||||||||||||||||||||||||
Resources used in financing activities | (102,692 | ) | 10,510 | (13,258 | ) | (105,440 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Resources (used in) provided by investing activities | (1,252,698 | ) | 42,320 | 17 | (71,190 | ) | (1,281,551 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (940,574 | ) | (1,212 | ) | (1,806 | ) | (58 | ) | (2,574 | ) | 0 | 0 | (69 | ) | 3 | (1,373 | ) | (467 | ) | 0 | (0 | ) | (948,130 | ) | ||||||||||||||||||||||||||||||||
Beginning balances | 2,526,044 | 1,398 | 2,842 | 435 | 2,799 | 0 | 239 | 26 | 1,485 | 4,267 | 0 | 0 | 2,539,535 | |||||||||||||||||||||||||||||||||||||||||||
Ending balances | 1,585,470 | 185 | 1,037 | 377 | 225 | 0 | 0 | 170 | 29 | 112 | 3,800 | 0 | (0 | ) | 1,591,405 |
F-97
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | Telereunión | USA | Telscape | SCG | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Balance sheet as of December 31, 2007: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents and Current restricted cash | 2,526,044 | 1,398 | 2,842 | 435 | 2,799 | 239 | 1,485 | 4,267 | 26 | — | 2,539,535 | |||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable — net | 742,528 | 6,338 | 53,419 | 11,748 | 170,804 | 110 | 51 | 1,552 | 16,406 | 14,550 | 2,081 | 19 | (249,093 | ) | 770,513 | |||||||||||||||||||||||||||||||||||||||||
Inventory — net | 33,249 | 33,249 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses | 49,471 | 339 | 1,966 | 9 | 9,830 | 15 | 61,630 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in subsidiaries | 299,637 | 4,969 | (304,606 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Frequency rights — net | 80,930 | 80,930 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Telephone network system and Equipment net | 3,944,727 | 202,410 | 9,478 | 20,985 | 11,346 | 4,188,946 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Preoperating expenses — net | 77,634 | 268 | 77,902 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets — net | 208,802 | 208,802 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations | 1,890 | 15,760 | 17,650 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | 1,038 | 257 | 7 | 4,276 | 1,350 | 15 | 6,943 | |||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | 13,475 | 13,475 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 9,270 | 5,272 | (17 | ) | 14,525 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 7,986,805 | 10,222 | 84,235 | 12,192 | 177,879 | 110 | 319 | 1,791 | 231,481 | 28,325 | 23,066 | 11,391 | 553,716 | ) | 8,014,100 | |||||||||||||||||||||||||||||||||||||||||
Total liabilities | 2,955,966 | 10,178 | 84,130 | 7,402 | 1,958 | 7 | 278 | 1,612 | 151,374 | 18,415 | 400 | 112 | (248,571 | ) | 2,983,261 | |||||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock and Additional Paid- In Capital | 6,298,307 | 96 | 66 | 55 | 171,496 | 127 | 56 | 53 | 702,304 | 13,044 | 97,875 | 11,308 | (996,480 | ) | 6,298,307 | |||||||||||||||||||||||||||||||||||||||||
Accumulated deficit | (1,267,468 | ) | (52 | ) | 39 | 4,735 | 4,425 | (24 | ) | (15 | ) | 126 | (622,197 | ) | (3,134 | ) | (75,209 | ) | (29 | ) | 691,335 | (1,267,468 | ) | |||||||||||||||||||||||||||||||||
Total shareholders’ equity | 5,030,839 | 44 | 105 | 4,790 | 175,921 | 103 | 41 | 179 | 80,107 | 9,910 | 22,666 | 11,279 | (305,145 | ) | 5,030,839 | |||||||||||||||||||||||||||||||||||||||||
Total liabilities and shareholders — equity | 7,986,805 | 10,222 | 84,235 | 12,192 | 177,879 | 110 | 319 | 1,791 | 231,481 | 28,325 | 23,066 | 11,391 | (553,716 | ) | 8,014,100 | |||||||||||||||||||||||||||||||||||||||||
Total shareholders’ equity under Mexican GAAP | 5,030,839 | 44 | 105 | 4,790 | 175,921 | 103 | 41 | 179 | 80,107 | 9,910 | 22,666 | 11,279 | (305,145 | ) | 5,030,839 | |||||||||||||||||||||||||||||||||||||||||
F-98
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | Telereunión | USA | Telscape | SCG | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Preoperating expenses | (391,951 | ) | (391,951 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of preoperating expenses | 314,049 | 314,049 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization of interest | 121,178 | 121,178 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of capitalized interest | (52,347 | ) | (52,347 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Installation revenues | (73,981 | ) | (73,981 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Installation costs | (583,696 | ) | (583,696 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized internal compensation cost | (2,143 | ) | (2,143 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Severance Indemnity liability | (1,590 | ) | (1,590 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
SAB 108 initial effect | 7,034 | 7,034 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
SAB effects for the year | 3,035 | 3,035 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognition of deferred taxes | 184,914 | 184,914 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total shareholders’ equity under US. GAAP | 4,555,341 | 4,555,341 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-99
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | Telereunión | USA | Telscape | SCG | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Statements of Operations for the year ended December 31, 2007: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | 2,339,795 | 56,594 | 409,537 | 78,075 | 3,521 | 42,294 | 6,675 | (590,772 | ) | 2,345,719 | ||||||||||||||||||||||||||||||||||||||||||||||
Operating cost and expenses | (2,052,063 | ) | (54,565 | ) | (415,628 | ) | (73,266 | ) | (17 | ) | (7 | ) | (10 | ) | (3,339 | ) | (55,897 | ) | (8,523 | ) | 590,234 | (2,073,081 | ) | |||||||||||||||||||||||||||||||||
Integral (cost) income of financing | (112,592 | ) | (46 | ) | 1,026 | (253 | ) | 391 | (4 | ) | (2 | ) | (22 | ) | (13,541 | ) | (1,520 | ) | (78 | ) | (126,641 | ) | ||||||||||||||||||||||||||||||||||
Other income (expenses) | (138,944 | ) | (890 | ) | 2,553 | (1,360 | ) | 11,889 | (52 | ) | 17,701 | 322 | (400 | ) | (620 | ) | (109,801 | ) | ||||||||||||||||||||||||||||||||||||||
Net (loss) income | 36,196 | 1,093 | (2,512 | ) | 3,196 | 12,263 | (11 | ) | (12 | ) | 108 | (9,443 | ) | (3,046 | ) | (478 | ) | (1,158 | ) | 36,196 | ||||||||||||||||||||||||||||||||||||
Net (loss) income for the year under Mexican GAAP | 36,196 | 1,093 | (2,512 | ) | 3,196 | 12,263 | (11 | ) | (12 | ) | 108 | (9,443 | ) | (3,046 | ) | (478 | ) | (1,158 | ) | 36,196 | ||||||||||||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preoperating expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of preoperating expenses | 20,438 | 20,438 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization of interest | (716 | ) | (716 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of capitalized Interest | (11,896 | ) | (11,896 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Installation revenues | (6,758 | ) | (6,758 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Installation costs | (60,640 | ) | (60,640 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt restructuring | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized internal compensation cost | 143 | 143 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Severance indemnity liability | (682 | ) | (682 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Reversal of SAB 108 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss (income) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognition at deferred taxes | 184,914 | 184,914 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss (income) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the year Under U.S. GAAP | 160,999 | 160,999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-100
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TECBTC | Telereunión | USA | Telscape | SCG | Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Statement of Cash Flows under U.S. GAAP for the Year Ended December 31, 2007: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) income the year under U.S. GAAP | 160,999 | 1,093 | (2,512 | ) | 3,196 | 12,263 | (11 | ) | (12 | ) | 108 | (9,443 | ) | (3,046 | ) | (478 | ) | (1,158 | ) | 160,999 | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 314,601 | 13,668 | 328,269 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other adjustments to reconcile net income to cash provided by operating activities | (93,909 | ) | 414 | (5,200 | ) | (11,958 | ) | (4,499 | ) | 11,291 | (103,861 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Net change in working capital | (246,075 | ) | (1,046 | ) | 12,734 | (2,793 | ) | (954 | ) | 11 | 280 | 121 | 4,273 | 4,527 | 478 | 93 | 7,383 | (220,968 | ) | |||||||||||||||||||||||||||||||||||||
Resources (used in) provided by Operating activities | 135,616 | 461 | 5,022 | 403 | (649 | ) | 268 | 229 | (9,669 | ) | 1,481 | 93 | 31,184 | 164,439 | ||||||||||||||||||||||||||||||||||||||||||
Resources used in financing activities | 2,913,462 | 3 | (927 | ) | 3,939 | 2,916,477 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Resources (used in) provided by investing activities | (1,215,275 | ) | (3,303 | ) | (268 | ) | 7,180 | 1,370 | (67 | ) | (34,718 | ) | (1,245,081 | ) | ||||||||||||||||||||||||||||||||||||||||||
Effect of inflation on cash and cash equivalents | (35,186 | ) | (405 | ) | (35,591 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 1,798,617 | 464 | 1,719 | 403 | (649 | ) | 229 | (3,416 | ) | 2,851 | 26 | 1,800,244 | ||||||||||||||||||||||||||||||||||||||||||||
Beginning balances | 727,427 | 934 | 1,123 | 32 | 3,448 | 10 | 4,901 | 1,416 | — | 739,291 | ||||||||||||||||||||||||||||||||||||||||||||||
Ending balances | 2,526,044 | 1,398 | 2,842 | 435 | 2,799 | — | — | 239 | 1,485 | 4,267 | — | 26 | 2,539,535 | |||||||||||||||||||||||||||||||||||||||||||
F-101
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TET | Telereunión | USA | Telscape | Elimination | Consolidated | ||||||||||||||||||||||||||||||||||||||||
Balance sheet as of December 31, 2006: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents and Current restricted cash | 750,889 | 934 | 1,123 | 32 | 3,448 | 10 | 4,901 | 1,416 | — | 762,753 | ||||||||||||||||||||||||||||||||||||||||||
Accounts receivable — net | 439,423 | 30,098 | 220,461 | 45,443 | 167,741 | 114 | 52 | 673 | 57,386 | 12,833 | 2,159 | (491,126 | ) | 485,257 | ||||||||||||||||||||||||||||||||||||||
Inventory — net | 35,790 | 35,790 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses | 64,412 | 264 | 988 | 10 | 51 | 15 | 65,740 | |||||||||||||||||||||||||||||||||||||||||||||
Investment in subsidiaries | 306,567 | 1,666 | (308,233 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Frequency rights — net | 88,374 | 88,374 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Telephone network system and Equipment net | 3,060,002 | 209,590 | 10,861 | 20,984 | 3,301,437 | |||||||||||||||||||||||||||||||||||||||||||||||
Preoperating expenses — net | 98,340 | 98,340 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets — net | 190,249 | 190,249 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations | 1,600 | 13,468 | 15,068 | |||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | 369 | 391 | 7 | 4,449 | 742 | 15 | 5,973 | |||||||||||||||||||||||||||||||||||||||||||||
Deferred tax | 2,393 | 2,393 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 14,548 | (18 | ) | 14,530 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 5,048,963 | 33,287 | 240,106 | 45,485 | 175,638 | 114 | 52 | 683 | 272,670 | 25,122 | 23,143 | (799,359 | ) | 5,065,904 | ||||||||||||||||||||||||||||||||||||||
Total liabilities | 2,772,049 | 34,338 | 237,491 | 43,890 | 11,979 | — | — | 611 | 182,194 | 12,170 | — | (505,732 | ) | 2,788,990 | ||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock and Additional Paid- In Capital | 3,580,578 | 93 | 66 | 55 | 171,497 | 127 | 55 | 54 | 703,231 | 13,045 | 97,873 | (986,096 | ) | 3,580,578 | ||||||||||||||||||||||||||||||||||||||
Accumulated deficit | (1,303,664 | ) | (1,144 | ) | 2,549 | 1,540 | (7,838 | ) | (13 | ) | (3 | ) | 18 | (612,755 | ) | (93 | ) | (74,730 | ) | 692,469 | (1,303,664 | ) | ||||||||||||||||||||||||||||||
Total shareholders’ equity | 2,276,914 | (1,051 | ) | 2,615 | 1,595 | 163,659 | 114 | 52 | 72 | 90,476 | 12,952 | 23,143 | (293,627 | ) | 2,276,914 | |||||||||||||||||||||||||||||||||||||
Total liabilities and Shareholders — equity | 5,048,963 | 33,287 | 240,106 | 45,485 | 175,638 | 114 | 52 | 683 | 272,670 | 25,122 | 23,143 | (799,359 | ) | 5,065,904 | ||||||||||||||||||||||||||||||||||||||
Total shareholders’ equity under Mexican GAAP | 2,276,914 | (1,051 | ) | 2,615 | 1,595 | 163,659 | 114 | 52 | 72 | 90,476 | 12,952 | 23,143 | (293,627 | ) | 2,276,914 | |||||||||||||||||||||||||||||||||||||
F-102
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TET | Telereunión | USA | Telscape | Elimination | Consolidated | ||||||||||||||||||||||||||||||||||||||||
Preoperating expenses | (391,951 | ) | (391,951 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of preoperating expenses | 293,611 | 293,611 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization of interest | 121,894 | 121,894 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of capitalized interest | (40,451 | ) | (40,451 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Installation revenues | (67,225 | ) | (67,225 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Installation costs | (523,056 | ) | (523,056 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized internal compensation cost | (2,285 | ) | (2,285 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Severance Indemnity liability | (908 | ) | (908 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
SAB 108 initial effect | 7,034 | 7,034 | ||||||||||||||||||||||||||||||||||||||||||||||||||
SAB effects for the year | 3,035 | 3,035 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total shareholders’ equity under US. GAAP | 1,676,612 | 1,676,612 | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-103
Table of Contents
ON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TET | Telereunión | USA | Telscape | Elimination | Consolidated | ||||||||||||||||||||||||||||||||||||||||
Statements of Operations for the year ended December 31, 2006: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | 1,716,316 | 45,170 | 338,295 | 63,114 | 907 | 88,308 | 14,171 | (524,589 | ) | 1,741,692 | ||||||||||||||||||||||||||||||||||||||||||
Operating cost and expenses | (1,585,904 | ) | (43,871 | ) | (334,952 | ) | (61,413 | ) | 4,455 | (886 | ) | (71,801 | ) | (15,167 | ) | 524,589 | (1,584,950 | ) | ||||||||||||||||||||||||||||||||||
Integral (cost) income of financing | (122,543 | ) | 10 | (100 | ) | (114 | ) | 4,360 | (4 | ) | (2 | ) | (3 | ) | 10,488 | 798 | (72 | ) | (107,182 | ) | ||||||||||||||||||||||||||||||||
Other income (expenses) | (37,136 | ) | (308 | ) | 1,811 | (51 | ) | (13,742 | ) | 1 | 29 | (29,431 | ) | (78,827 | ) | |||||||||||||||||||||||||||||||||||||
Net (loss) income | (29,267 | ) | 1,001 | 5,054 | 1,536 | (4,927 | ) | (4 | ) | (2 | ) | 18 | 26,996 | (169 | ) | (72 | ) | (29,431 | ) | (29,267 | ) | |||||||||||||||||||||||||||||||
Net (loss) income for the year under Mexican GAAP | (29,267 | ) | 1,001 | 5,054 | 1,536 | (4,927 | ) | (4 | ) | (2 | ) | 18 | 26,996 | (169 | ) | (72 | ) | (29,431 | ) | (29,267 | ) | |||||||||||||||||||||||||||||||
Preoperating expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of preoperating expenses | 32,030 | 32,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization of interest | 49,945 | 49,945 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of capitalized Interest | (27,136 | ) | (27,136 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Installation revenues | 858 | 858 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Installation costs | (213,247 | ) | (213,247 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt restructuring | 197,006 | 197,006 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized internal compensation cost | 143 | 143 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Severance Indemnity liability | (908 | ) | (908 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Reversal of SAB 108 | 3,035 | 3,035 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss (income) for the year Under U.S. GAAP | 12,459 | 12,459 | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-104
Table of Contents
NON-GUARANTOR | ||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | Maxcom | Sierra | ||||||||||||||||||||||||||||||||||||||||||||||||||
Maxcom | CTE | MSA | OOP | MSF | USA | TV | TET | Telereunión | USA | Telscape | Elimination | Consolidated | ||||||||||||||||||||||||||||||||||||||||
Statement of Cash Flows under U.S. GAAP for the Year Ended December 31, 2006: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) income the year under U.S. GAAP | 12,459 | 1,001 | 5,054 | 1,536 | (4,927 | ) | (4 | ) | (2 | ) | 18 | 26,996 | (169 | ) | (72 | ) | (29,431 | ) | 12,459 | |||||||||||||||||||||||||||||||||
Depreciation and amortization | 159,284 | 8,437 | 167,721 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other adjustments to reconcile net income to cash provided by operating activities | (47,558 | ) | 47,657 | 99 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net change in working capital | (87,032 | ) | (214,152 | ) | (301,184 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Resources (used in) provided by Operating activities | 37,153 | 1,001 | 5,054 | 1,536 | (4,927 | ) | (4 | ) | (2 | ) | 18 | 26,996 | (169 | ) | (72 | ) | (187,489 | ) | (120,905 | ) | ||||||||||||||||||||||||||||||||
Resources used in financing activities | 1,326,567 | 205,177 | 1,531,744 | |||||||||||||||||||||||||||||||||||||||||||||||||
Resources (used in) provided by investing activities | (861,744 | ) | (43,144 | ) | (904,888 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Effect of inflation on cash and cash equivalents | (7,560 | ) | (318 | ) | (7,878 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 494,416 | 1,001 | 5,054 | 1,536 | (4,927 | ) | (4 | ) | (2 | ) | 18 | 26,996 | (169 | ) | (72 | ) | (25,774 | ) | 498,073 | |||||||||||||||||||||||||||||||||
Beginning balances | 233,011 | 8,207 | 241,218 | |||||||||||||||||||||||||||||||||||||||||||||||||
Ending balances | 727,427 | 1,001 | 5,054 | 1,536 | (4,927 | ) | (4 | ) | (2 | ) | 18 | 26,996 | (169 | ) | (72 | ) | (17,567 | ) | 739,291 | |||||||||||||||||||||||||||||||||
F-105
Table of Contents
Amounts expressed in Million of Mexican Pesos ($)
Balance at | Charged to | |||||||||||||||||||
Beginning of | Cost and | Balance at End | ||||||||||||||||||
Period | Expenses | Deductions | of Period | |||||||||||||||||
Allowance for doubtful accounts | 2008 | $ | 107.7 | $ | 106.3 | $ | (52.0 | ) | $ | 161.9 | ||||||||||
2007 | $ | 92.7 | $ | 63.4 | $ | (48.4 | ) | $ | 107.7 | |||||||||||
2006 | $ | 74.3 | $ | 59.6 | $ | (41.2 | ) | $ | 92.7 | |||||||||||
Allowance for obsolete and slow- moving supply inventories | 2008 | $ | 0.3 | (0.3 | ) | $ | — | $ | — | |||||||||||
2007 | $ | 0.3 | — | (0.3 | ) | $ | 0.1 | |||||||||||||
2006 | $ | 0.3 | — | — | $ | 0.3 | ||||||||||||||
Allowance for obsolete and slow- moving network inventories | 2008 | $ | 9.3 | 21.7 | $ | (17.3 | ) | $ | 13.7 | |||||||||||
2007 | $ | 10.0 | — | $ | (0.7 | ) | $ | 9.3 | ||||||||||||
2006 | $ | 10.2 | — | $ | (0.1 | ) | $ | 10.0 |
F-106
Table of Contents
1.1 | Amended and Restated Bylaws(estatutos)of Maxcom Telecomunicaciones, S.A. de C.V. (English translation), filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 13, 2008, is incorporated herein by reference. | |||
2.1 | Senior Note Indenture, dated December 20, 2006, among Maxcom Telecomunicaciones, S.A. de C.V., Maxcom Servicios Administrativos, S.A. de C.V., Outsourcing Operadora de Personal, S.A. de C.V., Técnicos Especializados en Telecomunicaciones, S.A. de C.V., Corporativo en Telecomunicaciones, S.A. de C.V., Maxcom SF, S.A. de C.V., Maxcom TV, S.A. de C.V., Maxcom USA, Inc. and Deutsche Bank Trust Company Americas, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 26, 2007, is incorporated herein by reference. | |||
2.2 | First Supplemental Indenture, dated September 5, 2007, among Maxcom, the guarantors a party thereto and Deutsche Bank Trust Company Americas, as trustee, filed as an exhibit to our registration statement on Form F-1/A (No. 333-145800), filed with the SEC on November 1, 2007, is incorporated herein by reference. | |||
2.3 | Second Supplemental Indenture, dated January 25, 2008, among Sierra Comunicaciones Globales, S.A. de C.V., the existing guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 13, 2008, is incorporated herein by reference. | |||
2.4 | Form of Deposit Agreement among Maxcom, the Depositary named therein and all holders of American Depositary Shares issued thereunder, filed as an exhibit to our registration statement on Form F-1/A (No. 333-144771), filed with the SEC on October 2, 2007, is incorporated herein by reference. | |||
2.5 | Form of Registration Rights Agreement by and among Maxcom, Nexus-Maxcom Holdings I, LLC, BASCFC-Maxcom Holding I, LLC, BAS Capital Funding Corporation, BankAmerica Investment Corporation and the other stockholders party thereto, filed as an exhibit to our registration statement on Form F-1/A (No. 333-144771), filed with the SEC on October 2, 2007, is incorporated herein by reference. | |||
2.6 | Third Amended and Restated Securityholders Agreement, dated July 20, 2006, among Maxcom Telecomunicaciones, S.A. de C.V. and certain of its shareholders, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 26, 2007, is incorporated herein by reference. | |||
3.1 | CPO Trust Agreement effective April 25, 2002 among Maxcom., its shareholders and Banco Nacional de México, S.A., Institución de Banca Múltiple, Grupo Financiero Banamex Accival, as trustee, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on July 1, 2002, is incorporated herein by reference. | |||
3.2 | CPO Trust Agreement, dated October 17, 2007, among Maxcom Telecomunicaciones, S.A. de C.V., its shareholders and Nacional Financiera, S.N.C. (English translation), filed as an exhibit to our registration statement on Form F-1/A (No. 333-144771), filed with the SEC on October 17, 2007, is incorporated herein by reference. | |||
3.3 | CPO Deed, dated October 17, 2007, among Nacional Financiera, S.N.C., Institución de Banca de Desarrollo, Monex Casa de Bolsa, S.A. de C.V., Grupo Financiero Monex and Comisíon Nacional Bancaria y de Valores (English translation), filed as an exhibit to our registration statement on Form F-1/A (No. 333-144771), filed with the SEC on October 17, 2007, is incorporated herein by reference. | |||
4.1 | Agreement for the use of infrastructure and installation of fiber optic cable on the highways between Puebla and México, dated August 18, 1998, between Amaritel, S.A. de C.V. (the predecessor of Maxcom Telecomunicaciones, S.A. de C.V.) and Iusatel, S.A. de C.V., filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.2 | Interconnection Agreement for long-distance services, dated January 22, 1999, between Amaritel and Teléfonos de México (Telmex) valid for an initial period of two years between February 1, 1999 and January 1, 2001, and in effect thereafter in accordance with article 42 of the Mexican Telecommunications law, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.3 | Local Interconnection Service Agreement, dated November 24, 1998, between Amaritel, S.A. de C.V. and Teléfonos de México, S.A. de C.V., filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. |
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4.4 | Amendment to Local Interconnection Service Agreement, dated February 25, 1999, between Amaritel, S.A. de C.V. and Teléfonos de México, S.A. de C.V., originally entered into on November 24, 1998, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.5 | Metropolitan Network Capacity Sale Agreement, dated April 28, 2000, between Maxcom Telecomunicaciones, S.A. de C.V. and Metro Net, S.A. de C.V., as amended on December 21, 2000, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 29, 2001, is incorporated herein by reference. | |||
4.6 | Telecommunications Service Agreement, dated November 15, 1999, between Maxcom and Teléfonos de México, S.A. de C.V. , filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.7 | Telecommunications Service Agreement, dated March 9, 1999, between Maxcom and Bestel S.A. de C.V., pursuant to which Bestel will provide long-distance and private call services to Maxcom, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.8 | Concession for the installation and operation of telecommunications services granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on December 20, 1996, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.9 | Amendment to Concession for the installation and operation of telecommunications services granted to Amaritel by the Secretary of Telecommunications and Transport on December 20, 1996, dated September 8, 1999, extending the coverage of such concession to include various additional municipalities of the State of Mexico, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.10 | Amendment to Concession for the installation and operation of telecommunications services granted to Amaritel by the Secretary of Telecommunications and Transport on December 20, 1996, dated December 7, 1999, authorizing Maxcom to employ whatever technologies it deems appropriate in providing telecommunications services to various municipalities, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.11 | Amendment to Annex A and B of Concession for the installation and operation of telecommunications services granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on December 20, 1996, dated September 27, 2001, extending the coverage of such concession to include all of Mexico, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.12 | Concession for a public telecommunications network in telecommunications regions 3, 5 and 8 granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on April 29, 1998, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.13 | Concession for the operation of point-to-multipoint microwave telecommunications services in Region 5 granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on April 23, 1998, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.14 | Concession for the operation of point-to-multipoint microwave telecommunications services in Region 3 granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on April 23, 1998, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.15 | Concession for the operation of point-to multipoint microwave telecommunications services in Region 8 granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on April 29, 1998, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.16 | Concessions for the nationwide operation of point-to-point microwave telecommunications services using five frequency bands in the 56 MHz bandwidth, each granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on June 4, 1998, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. |
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4.17 | Concessions for the nationwide operation of point-to-point microwave telecommunications services using two frequency bands in the 100 MHz bandwidth, each granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on June 4, 1998, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.18 | Amendment to Concession for the operation of point-to-multipoint telecommunications services in Regions 3, 5, 8 granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on April 1, 1998, dated October 12, 1999, regarding the start date for the initiation of services, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.19 | Amendment to Concession for the installation and operation of telecommunications services granted to Amaritel, S.A. de C.V. by the Secretary of Telecommunications and Transport on December 20, 1996, dated September 24, 1999 eliminating financial restrictions, filed as an exhibit to our registration statement on Form F-4 (No. 333-11910), filed with the SEC on May 5, 2000, is incorporated herein by reference. | |||
4.20 | Warrant Agreement, dated as of March 17, 2000, between Maxcom Telecomunicaciones, S.A. de C.V. and The Bank of New York, as warrant agent, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 29, 2001, is incorporated herein by reference. | |||
4.21 | Dark Fiber Optic Purchase Agreement, dated as of August 13, 2002, between Maxcom Telecomunicaciones, S.A. de C.V. and Bestel S.A. de C.V., filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2003, is incorporated herein by reference. | |||
4.22 | Transactional Lease Termination Agreement, dated as of May 20, 2003, among Maxcom Telecomunicaciones, S.A. de C.V. and Jacobo Zaga Romano, Jacobo Zaga Buzali, et.al., filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2003, is incorporated herein by reference. | |||
4.23 | Capacity Sale Agreement, dated as of October 15, 2003, between Maxcom Telecomunicaciones, S.A. de C.V. and Axtel, S.A. de C.V., filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 24, 2004, is incorporated herein by reference. | |||
4.24 | Credit Agreement, dated April 28, 2004, by and among Banco Santander Mexicano, S.A., Institución de Banca Mútiple Grupo Financiero Santander Serfin, as lenders, and Maxcom, as borrower, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2005, is incorporated herein by reference. | |||
4.25 | Credit Agreement, dated April 13, 2005, by and among Ixe Banco, S.A., Institución de Banca Mútiple, Ixe Grupo Financiero., as lenders, and Maxcom, as borrower, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2005, is incorporated herein by reference. | |||
4.26 | Amendment dated August 5, 2004 to Exhibit B of the Master Agreement to Supply Local Interconnection Services, dated February 25, 1999, between Maxcom and Telefonos de México, S.A. de C.V., filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2005, is incorporated herein by reference. | |||
4.27 | Credit Agreement, dated April 13, 2005, by and among Ixe Banco, S.A., Institución de Banca Múltiple, Ixe Grupo Financiero, as lenders, and Maxcom, as borrower, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2006, is incorporated herein by reference. | |||
4.28 | Credit Agreement, dated October 25, 2005, by and among Ixe Banco, S.A., Institución de Banca Múltiple, Ixe Grupo Financiero, as lenders, Maxcom, as borrower and Maxcom SF, S.A. de C.V. as joint and several obligor, and amendment dated December 13, 2005, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2006, is incorporated herein by reference. | |||
4.29 | Credit Agreement, dated October 21, 2005, by and among Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte, as lenders and Maxcom, as borrower, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2006, is incorporated herein by reference. | |||
4.30 | Irrevocable Trust Agreement, dated November 21, 2005, by and among Maxcom, as settlor, Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte and Ixe Banco, S.A., Institución de Banca Múltiple, Ixe Grupo Financiero, as trust beneficiaries and HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Trust Division, as trustees, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2006, is incorporated herein by reference. |
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4.31 | Minutes of Maxcom Shareholders Meeting dated August 31, 2005 approving the spin-off, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2006, is incorporated herein by reference. | |||
4.32 | Stock Purchase Agreement, dated November 22, 2005, by and among Maxcom and Maxcom SF, S.A. de C.V., as sellers and Tiendas Comercial Mexicana, S.A. de C.V. and Controladora Comercial Mexicana, S.A. de C.V., as buyers, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2006, is incorporated herein by reference. | |||
4.33 | Supply and Installation Agreement of Video Through DSL (IPTV) System dated December 15, 2006 by and among Maxcom Telecomunicaciones, S.A. de C.V., Alcatel Bell N.V. and Alcatel México, S.A. de C.V., filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 26, 2007, is incorporated herein by reference. | |||
4.34 | The First Executive Stock Option Plan, which includes a Trust Agreement, dated May 31, 1999, among Maxcom Telecomunicaciones, S.A. de C.V. and Banco Nacional de México (English translation) , filed as an exhibit to our registration statement on Form F-1/A (No. 333-144771), filed with the SEC on September 12, 2007, is incorporated herein by reference. | |||
4.35 | Second Executive Stock Option Plan, dated July 17, 2006 (English translation), filed as an exhibit to our registration statement on Form F-1/A (No. 333-144771), filed with the SEC on September 12, 2007, is incorporated herein by reference. | |||
6.1 | Computation of earnings per share, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2009, is incorporated herein by reference. | |||
7.1 | Computation of ratio of earnings to fixed charges, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2009, is incorporated herein by reference. | |||
8.1 | Subsidiaries of the Registrant, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2009, is incorporated herein by reference. | |||
11.1 | Maxcom’s Code of Ethics adopted March 2006, filed as an exhibit to our annual report on Form 20-F, filed with the SEC on June 30, 2006, is incorporated herein by reference. | |||
12.1 | * | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a). | ||
12.2 | * | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a). | ||
13.1 | * | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350. | ||
13.2 | * | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
* | Filed herewith. |
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MAXCOM TELECOMUNICACIONES, S.A.B. DE C.V. | ||||
By: | /s/ Jose Antonio Solbes | |||
José Antonio Solbes | ||||
Chief Financial Officer |
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12.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a). | |||
12.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a). | |||
13.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350. | |||
13.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |