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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 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 |
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 |
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
Colonia Santa Fe
01210 Mexico, D.F.
Mexico
(Address of principal executive offices)
Title of each class | Name of each exchange on which registered | |
A Shares, without par value (“A Shares”) | New York Stock Exchange (for listing purposes only) | |
B Shares, without par value (“B Shares”) | New York Stock Exchange (for listing purposes only) | |
L Shares, without par value (“L Shares”) | New York Stock Exchange (for listing purposes only) | |
Dividend Preferred Shares, without par value (“D Shares”) | New York Stock Exchange (for listing purposes only) | |
Global Depositary Shares (“GDSs”), each representing five Ordinary Participation Certificates(Certificados de Participación Ordinarios)(“CPOs”) | New York Stock Exchange | |
CPOs, each representing twenty-five A Shares, twenty-two B Shares thirty-five L Shares and thirty-five D Shares | New York Stock Exchange (for listing purposes only) |
December 31, 2006 was:
53,564,690,849 B Shares
85,216,495,401 L Shares
85,216,495,401 D Shares
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EX-1.1: ENGLISH TRANSLATION OF AMENDED AND RESTATED BYLAWS | ||||||||
EX-2.9: TENTH SUPPLEMENTAL INDENTURE | ||||||||
EX-8.1: LIST OF SUBSIDIARIES | ||||||||
EX-12.1: CERTIFICATION | ||||||||
EX-12.2: CERTIFICATION | ||||||||
EX-13.1: CERTIFICATION | ||||||||
EX-13.2: CERTIFICATION |
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Year Ended December 31, | ||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | |||||||||||||||||||
(millions of Pesos in purchasing power as of December 31, 2006 | ||||||||||||||||||||||||
or millions of U.S. Dollars)(1) | ||||||||||||||||||||||||
(Mexican GAAP/FRS) | ||||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||
Net sales | Ps. | 25,354 | Ps. | 26,650 | Ps. | 31,519 | Ps. | 33,798 | Ps. | 37,932 | U.S.$3,511 | |||||||||||||
Operating income | 5,469 | 6,838 | 9,201 | 11,241 | 13,749 | 1,273 | ||||||||||||||||||
Integral cost of financing, net(2) | 720 | 695 | 1,630 | 1,854 | 1,100 | 102 | ||||||||||||||||||
Restructuring and non-recurring charges(3) | 991 | 743 | 425 | 239 | 614 | 57 | ||||||||||||||||||
(Loss) income from continuing operations | (463 | ) | 4,003 | 5,989 | 8,028 | 9,174 | 849 | |||||||||||||||||
Income (loss) from discontinued operations | 1,250 | (73 | ) | — | — | — | — | |||||||||||||||||
Cumulative effect of accounting change, net | — | — | (1,098 | ) | (527 | ) | — | — | ||||||||||||||||
Net income | 868 | 4,067 | 4,641 | 6,374 | 8,586 | 795 | ||||||||||||||||||
(Loss) income from continuing operations per CPO(4) | (0.12 | ) | 1.44 | 1.97 | 2.37 | 2.96 | — | |||||||||||||||||
Net income per CPO(4) | 0.30 | 1.41 | 1.60 | 2.19 | 2.96 | — | ||||||||||||||||||
Weighted-average number of shares outstanding (in millions)(4)(5) | 353,906 | 352,421 | 345,206 | 341,158 | 339,776 | — | ||||||||||||||||||
Cash dividend per CPO(4) | — | 0.22 | 1.35 | 1.44 | 0.36 | — | ||||||||||||||||||
Shares outstanding (in millions, at year end)(5) | 221,210 | 218,840 | 341,638 | 339,941 | 337,782 | — | ||||||||||||||||||
(U.S. GAAP)(6) | ||||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||
Net sales | Ps. | 25,597 | Ps. | 26,650 | Ps. | 31,519 | Ps. | 33,798 | Ps. | 37,932 | U.S.$3,511 | |||||||||||||
Operating income | 3,542 | 6,832 | 8,429 | 10,414 | 13,558 | 1,255 | ||||||||||||||||||
Income from continuing operations | 119 | 3,371 | 4,526 | 7,101 | 8,007 | 741 | ||||||||||||||||||
Cumulative effect of accounting change, net | (1,449 | ) | — | — | — | — | — | |||||||||||||||||
Net (loss) income | (1,332 | ) | 3,371 | 4,526 | 7,101 | 8,007 | 741 | |||||||||||||||||
Income from continuing operations per CPO(4) | 0.04 | 1.17 | 1.55 | 2.43 | 2.76 | — | ||||||||||||||||||
Net (loss) income per CPO(4) | (0.45 | ) | 1.17 | 1.55 | 2.43 | 2.76 | — | |||||||||||||||||
Weighted-average number of shares outstanding (in millions)(4)(5) | 353,906 | 352,421 | 345,206 | 341,158 | 339,776 | — | ||||||||||||||||||
Shares outstanding (in millions, at year end)(5) | 221,210 | 218,840 | 341,638 | 339,941 | 337,782 | — | ||||||||||||||||||
(Mexican GAAP/FRS) | ||||||||||||||||||||||||
Balance Sheet Data (end of year): | ||||||||||||||||||||||||
Cash and temporary investments | Ps. | 10,332 | Ps. | 13,870 | Ps. | 17,893 | Ps. | 15,377 | Ps. | 15,811 | U.S.$1,464 | |||||||||||||
Total assets | 66,343 | 73,244 | 79,481 | 78,222 | 83,030 | 7,686 | ||||||||||||||||||
Current portion of long-term debt and other notes payable(7) | 1,457 | 323 | 3,545 | 354 | 986 | 91 | ||||||||||||||||||
Long-term debt, net of current portion(8) | 15,694 | 16,630 | 20,368 | 18,872 | 17,795 | 1,647 | ||||||||||||||||||
Customer deposits and advances | 13,820 | 15,839 | 16,454 | 18,778 | 17,162 | 1,589 | ||||||||||||||||||
Capital stock issued | 8,955 | 9,283 | 10,290 | 10,290 | 10,126 | 937 | ||||||||||||||||||
Total stockholders’ equity (including minority interest) | 25,077 | 31,132 | 29,680 | 31,074 | 36,604 | 3,388 | ||||||||||||||||||
(U.S. GAAP)(6) | ||||||||||||||||||||||||
Balance Sheet Data (end of year): | ||||||||||||||||||||||||
Cash and cash equivalents | Ps. | 10,059 | Ps. | 11,244 | Ps. | 17,103 | Ps. | 15,260 | Ps. | 14,901 | U.S. $1,379 | |||||||||||||
Total assets | 66,286 | 76,530 | 88,548 | 85,510 | 88,446 | 8,188 | ||||||||||||||||||
Current portion of long-term debt and other notes payable(7) | 1,457 | 323 | 3,545 | 354 | 986 | 91 | ||||||||||||||||||
Long-term debt, net of current portion(8) | 15,694 | 16,630 | 20,368 | 18,872 | 17,795 | 1,647 | ||||||||||||||||||
Total stockholders’ equity (excluding minority interest) | 20,765 | 27,351 | 28,113 | 29,481 | 34,469 | 3,191 | ||||||||||||||||||
(Mexican GAAP/FRS) | ||||||||||||||||||||||||
Other Financial Information: | ||||||||||||||||||||||||
Capital expenditures(9) | Ps. | 1,665 | Ps. | 1,204 | Ps. | 2,094 | Ps. | 2,746 | Ps. | 3,225 | U.S.$299 | |||||||||||||
(U.S. GAAP)(6) | ||||||||||||||||||||||||
Other Financial Information: | ||||||||||||||||||||||||
Net cash provided by operating activities | 6,592 | 7,113 | 7,364 | 10,098 | 12,600 | 1,166 |
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Year Ended December 31, | ||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | |||||||||||||||||||
(millions of Pesos in purchasing power as of December 31, 2006 | ||||||||||||||||||||||||
or millions of U.S. Dollars)(1) | ||||||||||||||||||||||||
Net cash provided by (used for) financing activities | 439 | (2,997 | ) | (678 | ) | (9,071 | ) | (4,453 | ) | (412 | ) | |||||||||||||
Net cash used for investing activities | (3,519 | ) | (2,458 | ) | (649 | ) | (2,305 | ) | (7,918 | ) | (733 | ) | ||||||||||||
Other Data (unaudited): | ||||||||||||||||||||||||
Average prime time audience share (TV broadcasting)(10) | 72.4 | % | 70.1 | % | 68.9 | % | 68.5 | % | 69.5 | % | — | |||||||||||||
Average prime time rating (TV broadcasting)(10) | 39.6 | 38.1 | 36.7 | 36.5 | 35.5 | — | ||||||||||||||||||
Magazine circulation (millions of copies)(11) | 137 | 128 | 127 | 145 | 155 | — | ||||||||||||||||||
Number of employees (at year end) | 12,600 | 12,300 | 14,100 | 15,100 | 16,200 | — | ||||||||||||||||||
Number of Innova subscribers (in thousands at year end)(12) | 738 | 857 | 1,003 | 1,251 | 1,430 | — | ||||||||||||||||||
Number of Cablevisión subscribers (in thousands at year end)(13) | 412 | 364 | 355 | 422 | 497 | — | ||||||||||||||||||
Number of Esmas.com registered users (in thousands at year end)(14) | 2,514 | 3,085 | 3,665 | 4,212 | 4,447 | — |
Notes to Selected Consolidated Financial Information: | ||
(1) | Except per Certificado de Participación Ordinario, or CPO, ratio, average audience share, average rating, magazine circulation, employee, subscriber and registered user data. Information in these footnotes is in thousands of Pesos in purchasing power as of December 31, 2006, unless otherwise indicated. | |
(2) | Includes interest expense, interest income, foreign exchange gain or loss, net, and gain or loss from monetary position. See Note 17 to our year-end financial statements. | |
(3) | See Note 18 to our year-end financial statements. | |
(4) | For further analysis of income (loss) from continuing operations per CPO and net income per CPO (as well as corresponding amounts per A Share not traded as CPOs), see Note 21 (for the calculation under Mexican FRS) and Note 24 (for the calculation under U.S. GAAP) to our year-end financial statements. | |
(5) | As of December 31, 2004, 2005 and 2006, we had four classes of common stock: A Shares, B Shares, D Shares and L Shares. For purposes of this table, the weighted-average number of shares for all periods reflects the 25-for-one stock split and the 14-for-one stock dividend from the 2004 Recapitalization, and the number of shares outstanding for all periods reflects the 25-for-one stock split from the 2004 Recapitalization. Our shares are publicly traded in Mexico, primarily in the form of CPOs, each CPO representing 117 shares comprised of 25 A Shares, 22 B Shares, 35 D Shares and 35 L Shares; and in the United States in the form of Global Depositary Shares, or GDS, each GDS representing 5 CPOs. Before March 22, 2006, each GDS represented 20 CPOs. | |
The number of CPOs and shares issued and outstanding for financial reporting purposes under Mexican GAAP/FRS and U.S. GAAP is different than the number of CPOs issued and outstanding for legal purposes, because under Mexican GAAP/FRS and U.S. GAAP shares owned by subsidiaries and/or the trusts created to implement our Stock Purchase Plan and our Long-Term Retention Plan are not considered outstanding for financial reporting purposes. | ||
As of December 31, 2006, for legal purposes, there were approximately 2,528 million CPOs issued and outstanding, each of which was represented by 25 A Shares, 22 B Shares, 35 D Shares and 35 L Shares, and an additional number of approximately 58,927 million A Shares and 2,357 million B Shares (not in the form of CPO units). See Note 12 to our year-end financial statements. | ||
(6) | See Note 24 to our year-end financial statements. | |
(7) | See Note 8 to our year-end financial statements. | |
(8) | See “Operating and Financial Review and Prospects — Results of Operations — Liquidity, Foreign Exchange and Capital Resources — Indebtedness” and Note 8 to our year-end financial statements. | |
(9) | Capital expenditures are those investments made by us in property, plant and equipment, which amounts are first translated from Mexican Pesos into U.S. dollars at historical exchange rates, and the resulting aggregate U.S. dollar amount is then translated to Mexican Pesos at year-end exchange rate for convenience purposes only; the aggregate amount of capital |
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expenditures in Mexican Pesos does not indicate the actual amounts accounted for in our consolidated financial statements. | ||
(10) | “Average prime time audience share” for a period refers to the average daily prime time audience share for all of our networks and stations during that period, and “average prime time rating” for a period refers to the average daily rating for all of our networks and stations during that period, each rating point representing one percent of all television households. As used in this annual report, “prime time” in Mexico is 4:00 p.m. to 11:00 p.m., seven days a week, and “weekday prime time” is 7:00 p.m. to 11:00 p.m., Monday through Friday. Data for all periods reflects the average prime time audience share and ratings nationwide as published by IBOPE Mexico. For further information regarding audience share and ratings information and IBOPE Mexico, see “Information on the Company — Business Overview— Television — Television Broadcasting”. | |
(11) | The figures set forth in this line item represent total circulation of magazines that we publish independently and through joint ventures and other arrangements and do not represent magazines distributed on behalf of third parties. | |
(12) | Innova, our direct to home, or DTH satellite service in Mexico, referred to alternatively as Sky Mexico for segment reporting purposes, commenced operations on December 15, 1996. The figures set forth in this line item represent the total number of gross active residential and commercial subscribers for Innova at the end of each year presented. For a description of Innova’s business and results of operations and financial condition, see “Information on the Company — Business Overview — DTH Joint Ventures — Mexico”. Under Mexican FRS, effective January 1, 2001 and through March 31, 2004, we did not recognize equity in results in respect of our investment in Innova in our income statement, as we recognized equity in losses of Innova up to the amount of our initial investment and subsequent capital contributions in Innova. See “Operating and Financial Review and Prospects — Results of Operations — Equity in Earnings of Affiliates”. Since April 1, 2004, Innova has been consolidated in our financial results. | |
(13) | The figures set forth in this line item represent the total number of subscribers of Cablevisión at the end of each year presented. For a description of Cablevisión’s business and results of operations and financial condition, see “Operating and Financial Review and Prospects — Results of Operations — Cable Television” and “Information on the Company — Business Overview — Cable Television”. | |
(14) | The results of operations of Esmas.com are included in the results of operations of our Other Businesses segment. See “Operating and Financial Review and Prospects — Results of Operations — Other Businesses”. For a description ofEsmas.com, see “Information on the Company — Business Overview — Other Businesses —Esmas.com”. The figures set forth in this line item represent the number of registered users in each year presented. The term “registered user” means a visitor that has completed a profile questionnaire that enables the visitor to use the e-mail service provided by Esmas.com. |
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Period | High | Low | Average(1) | Period End | ||||||||||||
2002 | 10.425 | 9.0005 | 9.663 | 10.425 | ||||||||||||
2003 | 11.406 | 10.113 | 10.7925 | 11.242 | ||||||||||||
2004 | 11.635 | 10.805 | 11.2897 | 11.154 | ||||||||||||
2005 | 11.411 | 10.413 | 10.8938 | 10.6275 | ||||||||||||
2006 | 11.46 | 10.4315 | 10.7055 | 10.7995 | ||||||||||||
2007: | ||||||||||||||||
January | 11.092 | 10.765 | 10.9559 | 11.0381 | ||||||||||||
February | 11.1575 | 10.917 | 10.995 | 11.1575 | ||||||||||||
March | 11.1846 | 11.013 | 11.1144 | 11.0427 | ||||||||||||
April | 11.0305 | 10.924 | 10.9802 | 10.9295 | ||||||||||||
May | 10.931 | 10.738 | 10.822 | 10.738 | ||||||||||||
June (through June 22) | 10.979 | 10.712 | 10.838 | 10.795 |
(1) | Annual average rates reflect the average of the exchange rates on the last day of each month during the relevant period. |
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• | demand for advertising may decrease both because consumers may reduce expenditures for our advertisers’ products and because advertisers may reduce advertising expenditures; and | ||
• | demand for publications, cable television, DTH satellite services, pay-per-view programming and other services and products may decrease because consumers may find it difficult to pay for these services and products. |
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• | inflation can adversely affect consumer purchasing power, thereby adversely affecting consumer and advertiser demand for our services and products; | ||
• | to the extent inflation exceeds our price increases, our prices and revenues will be adversely affected in “real” terms; and | ||
• | if the rate of Mexican inflation exceeds the rate of depreciation of the Peso against the U.S. Dollar, our U.S. Dollar-denominated sales will decrease in relative terms when stated in constant Pesos. |
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• | projections of capital expenditures, dividends, or other financial information; | ||
• | statements of our plans, objectives or goals, including those relating to anticipated trends, competition, regulation and rates; | ||
• | our current and future plans regarding our online and wireless content venture, Televisa Digital; | ||
• | statements concerning our current and future plans regarding our investment in the Spanish television channel “La Sexta”; | ||
• | statements concerning our current and future plans regarding our gaming business; | ||
• | statements concerning our current and future plans regarding the introduction of fixed telephony service by Cablevisión; | ||
• | statements concerning our transactions with and involving Univision Communications, Inc., or Univision; | ||
• | statements concerning our series of transactions with The DIRECTV Group, Inc., or DIRECTV, and News Corporation, or News Corp.; | ||
• | statements about our future economic performance or that of the United Mexican States, or Mexico, or other countries in which we operate or have investments; and | ||
• | statements or assumptions underlying these statements. |
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Year Ended December 31,(1) | ||||||||||||||||
2004 | 2005 | 2006 | ||||||||||||||
(Actual) | (Actual) | (Actual) | ||||||||||||||
(millions of U.S. Dollars) | ||||||||||||||||
Capital expenditures(2) | U.S. $ | 174.6 | U.S. $ | 248.3 | U.S. $ | 298.5 | ||||||||||
Investments in DTH joint ventures(3) | 12.5 | — | — | |||||||||||||
La Sexta(4) | — | 1.4 | 132.4 | |||||||||||||
Other acquisitions and investments(5)(6) | 29.3 | 68.0 | 437.7 | |||||||||||||
Total capital expenditures and investments | U.S. $ | 216.4 | U.S. $ | 317.7 | U.S. $ | 868.6 | ||||||||||
(1) | Amounts in respect of some of the capital expenditures, investments and acquisitions we made in 2004, 2005 and 2006 were paid for in Mexican Pesos. These Mexican Peso amounts were translated into U.S. Dollars at the Interbank Rate in effect on the dates on which a given capital expenditure, investment or acquisition was made. As a result, U.S. Dollar amounts presented in the table immediately above are not comparable to: (i) data regarding capital expenditures set forth in “Key Information — Selected Financial Data”, which is presented in constant Pesos of purchasing power as of December 31, 2006 and, in the case of data presented in U.S. Dollars, is translated at a rate of Ps.10.8025 to one U.S. Dollar, the Interbank Rate as of December 31, 2006, and (ii) certain data regarding capital expenditures set forth under “Operating and Financial Review and Prospects — Results of Operations — Liquidity, Foreign Exchange and Capital Resources — Capital Expenditures, Acquisitions and Investments, Distributions and Other Sources of Liquidity”. | |
(2) | Reflects capital expenditures for property, plant and equipment, as well as general capital expenditures, in all periods presented. Also includes U.S.$35.1 million in 2004, U.S.$51.1 million in 2005 and U.S.$75.9 million in 2006 for the expansion and improvement of our cable business; and U.S.$57.6 million in 2004, U.S.$109.2 million in 2005 and U.S.$91.2 million in 2006 for the expansion and improvement of our SKY Mexico segment. | |
(3) | Includes investments made in the form of capital contributions and loans in all periods. | |
(4) | In 2005 we made capital contributions of approximately U.S.$1.4 million (1.2 million Euros). During 2006, we made additional capital contributions related to our 40% interest in La Sexta in the amount of approximately U.S.$132.4 million (104.6 million Euros). Our projected total investment in La Sexta for 2007 is approximately U.S.$101.0 million (76.5 million Euros). |
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(5) | Additionally, in 2004 and 2005, we made capital contributions in the aggregate amount of U.S.$2.0 million in our pay television joint venture with Univision. In November 2005, we acquired Comtelvi, S. de R.L. de C.V., or Comtelvi, from a third party for an aggregate amount of U.S.$39.1 million. At the time of acquisition, Comtelvi had structured note investments and other financial instrument assets and liabilities, as well as tax losses of approximately Ps.3,445.7 million that were used by us in the fourth quarter of 2005. See “— Business Overview — Univision” and Note 2 to our year-end financial statements. | |
(6) | In the first quarter of 2006, we completed the acquisition of certain operating assets, consisting primarily of trademarks, intellectual property rights and other publishing assets owned by Editora Cinco, a publishing company in Mexico and Latin America, for an aggregate amount of approximately U.S.$15.0 million. In the second quarter of 2006, we acquired part of the minority interest in Innova that was formerly owned by Liberty Media for an amount of approximately U.S.$58.7 million to increase the interest in our Sky Mexico business to 58.7%. |
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• | offering high quality and exclusive programming content, including rights to our four over-the-air broadcast channels, exclusive broadcasts of sporting events, such as the 2006 FIFA World Cup, the Spanish Soccer League and a variety of Mexican Soccer League games, reality shows and other programs produced by us, or with respect to which we have exclusive rights; | ||
• | capitalizing on our relationship with DIRECTV and local operators in terms of technology, distribution networks, infrastructure and cross-promotional opportunities; | ||
• | capitalizing on the low penetration of pay-television services in Mexico; | ||
• | exploring alternatives to expand our DTH services in Central America and the Caribbean; | ||
• | providing superior digital Ku-band DTH satellite services and emphasizing customer service quality; and | ||
• | we plan to continue leveraging our strengths and capabilities to develop new business opportunities and expand through acquisitions. |
• | continuing to offer high quality programming; | ||
• | upgrading its existing cable network into a broadband bidirectional network; |
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• | increasing the penetration of its high-speed and bidirectional Internet access and other multimedia services as well as providing a platform to offer internet protocol, or IP and telephony services; | ||
• | continuing the roll out of digital set-top boxes and the roll out, which began in the third quarter of 2005, of advanced digital set-top boxes which allow the transmission of high definition programming and recording capability; and | ||
• | continuing leveraging our strengths and capabilities to develop new business opportunities and expand through acquisitions. |
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• | Video-on-demand serviceWith this service, internet users can download Televisa and third party video content from the internet either free with advertising sponsorship or through payment. The service will target to build the largest Hispanic video library in Latin America, Canada and the United States with television programs, movies, and music videos, among others. | ||
• | Live online television serviceWith this service our internet users worldwide, except in the United States, can watch a live stream of Televisa’s four broadcast channels, which is enhanced by a 15-day time-shifting archive. | ||
• | Short-video streamingWithin our web pages we launched a new short-clip streaming service with more than 1,500 videos, each less than 5 minutes long. Currently, we are streaming 1.7 million videos per week. | ||
• | TarabuTarabu is the leading Mexican online and wireless digital music store in Latin America. Tarabu utilizes proprietary technology and offers more than 500,000 songs from most of the major labels. Through this website we also cross-promote the artists of our joint venture record label, EMI Televisa Music, post music content, generate social networks and foster interactivity with some of our television programs. | ||
• | Esmas PlayerThis desktop application enables users to manage their music, image, and video libraries and access our podcasting, video, music, and live television services through a simple user interface. Approximately 3.4 million users downloaded the Esmas Player from the Esmas website during 2006. |
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Wholly | ||||||||||||||||||||||||
Owned | ||||||||||||||||||||||||
Mexico City | Wholly | Majority | Minority | |||||||||||||||||||||
Anchor | Owned | Owned | Owned | Independent | Total | |||||||||||||||||||
Stations | Affiliates | Affiliates | Affiliates | Affiliates | Stations | |||||||||||||||||||
Channel 2 | 1 | 124 | 2 | — | 1 | 128 | ||||||||||||||||||
Channel 4 | 1 | — | — | — | — | 1 | ||||||||||||||||||
Channel 5 | 1 | 61 | — | — | 4 | 66 | ||||||||||||||||||
Channel 9 | 1 | 14 | — | — | 14 | 29 | ||||||||||||||||||
Subtotal | 4 | 199 | 2 | — | 19 | 224 | ||||||||||||||||||
Border Stations | — | 1 | — | — | — | 1 | ||||||||||||||||||
Local (Stations) Affiliates | — | 18 | — | 1 | 14 | 33 | ||||||||||||||||||
Total | 4 | 218 | 2 | 1 | 33 | 258 | ||||||||||||||||||
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January 2004 — December 2006(1)
(1) | Source: IBOPE Mexico national surveys. |
January 2004 — December 2006(1)
(1) | Source: IBOPE Mexico national surveys. |
Year Ended December 31, | ||||||||||||
2004(1) | 2005(1) | 2006(1) | ||||||||||
Prime time hours | 31.0 | % | 31.8 | % | 32.8 | % | ||||||
Weekday prime time hours | 32.9 | % | 36.2 | % | 37.3 | % | ||||||
Sign-on to sign-off hours | 29.9 | % | 30.3 | % | 31.8 | % |
(1) | Source: IBOPE Mexico national surveys. |
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Year Ended December 31, | ||||||||||||
2004(1) | 2005(1) | 2006(1) | ||||||||||
Prime time hours | 19.6 | % | 17.4 | % | 16.9 | % | ||||||
Weekday prime time hours | 19.8 | % | 15.9 | % | 14.9 | % | ||||||
Sign-on to sign-off hours | 21.6 | % | 20.1 | % | 19.1 | % |
(1) | Source: IBOPE Mexico national surveys. |
Year Ended December 31, | ||||||||||||
2004(1) | 2005(1) | 2006(1) | ||||||||||
Prime time hours | 6.6 | % | 6.0 | % | 6.1 | % | ||||||
Weekday prime time hours | 7.0 | % | 6.3 | % | 6.5 | % | ||||||
Sign-on to sign-off hours | 8.7 | % | 7.6 | % | 7.5 | % |
(1) | Source: IBOPE Mexico national surveys. |
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Year Ended December 31, | ||||||||||||
2004(1) | 2005(1) | 2006(1) | ||||||||||
Prime time hours | 11.7 | % | 13.4 | % | 13.7 | % | ||||||
Weekday prime time hours | 9.9 | % | 10.6 | % | 11.4 | % | ||||||
Sign-on to sign-off hours | 11.0 | % | 12.2 | % | 12.6 | % |
(1) | Source: IBOPE Mexico national surveys. |
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• | enhanced programming services, including video games; and | ||
• | IP and/or telephony services. |
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• | Innova and DIRECTV Mexico entered into a purchase and sale agreement, pursuant to which Innova agreed to purchase DIRECTV Mexico’s subscriber list for two promissory notes with an aggregate original principal amount of approximately Ps.641.5 million; | ||
• | Innova and DIRECTV Mexico entered into a letter agreement which provided for cash payments to be made by Innova or DIRECTV Mexico based on the number of subscribers successfully migrating to Innova, the applicable sign-up fees for migrating subscribers, or certain migrated subscribers churning shortly after migration, among other specified payments under the agreement; | ||
• | Innova, Innova Holdings and News Corp. entered into an option agreement, pursuant to which News Corp. was granted options to acquire up to a 15% equity interest in each of Innova and Innova Holdings, dependent upon the number of subscribers successfully migrating to Innova; in exchange for the two promissory notes referred above that were delivered to DIRECTV Mexico; | ||
• | DIRECTV and News Corp. entered into a purchase agreement pursuant to which DIRECTV acquired (i) the right (which DIRECTV concurrently assigned to DTVLA) to purchase from News Corp. the options granted to News Corp. by Innova and Innova Holdings to purchase up to an additional 15% of the outstanding equity of each of such entities pursuant to the option agreement described above, and (ii) the right to acquire News Corp.’s 30% interest in Innova and Innova Holdings; | ||
• | DIRECTV and Liberty Media International, Inc., or Liberty Media, entered into a purchase agreement pursuant to which DIRECTV agreed to purchase all of Liberty Media’s 10% interest in Innova and Innova Holdings for U.S.$88 million in cash. DIRECTV agreed that we may purchase two-thirds ( 2/3) of any equity interest in Innova and Innova Holdings sold by Liberty Media; | ||
• | pursuant to the DTH agreement we entered into with News Corp., Innova, DIRECTV and DTVLA, with respect to certain DTH platforms owned or operated by News Corp. or DIRECTV or their affiliates and subject to certain restrictions, we have the right to require carriage of five of our channels on any such platform serving Latin America (including Puerto Rico but excluding Mexico, Brazil and countries in Central America), two of our channels on any such platform serving the United States or Canada, and one of our channels on any such platform serving areas other than the United States and Latin America; | ||
• | we, News Corp., Innova, DIRECTV and DTVLA entered into a DTH agreement that, among other things, governs the rights of the parties with respect to DTVLA’s announced shutdown of its Mexican DTH business, planned shutdown of its existing DTH business in certain countries in Central America, the carriage of certain of our programming channels by Innova and other DTH platforms of DIRECTV, DTVLA, News Corp. and their respective affiliates, and the waiver and potential release of certain claims between certain of the parties; and | ||
• | we and Innova entered into a channel licensing agreement pursuant to which Innova will pay us a royalty fee to carry our over-the-air channels on its DTH service. |
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• | we entered into a purchase and sale agreement with DIRECTV, pursuant to which, among other things, (i) DIRECTV acquired all of our direct equity interests in ServiceCo, (ii) DIRECTV agreed to purchase all of our indirect equity interests in MCOP, and (iii) DIRECTV has agreed to indemnify us for any and all losses arising out of our status as a partner in MCOP; | ||
• | DIRECTV also agreed to purchase each of News Corp.’s, Liberty Media’s and Globopar’s equity interests in TechCo (a U.S. partnership formed to provide technical services from a main uplink facility in Miami Lakes, Florida and a redundancy site in Port St. Lucie, Florida), ServiceCo and MCOP; and | ||
• | PanAmSat Corporation, or PanAmSat, unconditionally released us from any and all obligations related to the MCOP transponder lease. |
• | DIRECTV Holdings exercised its right to acquire News Corp.’s 30% interest in Innova and DTVLA exercised the right to purchase the options granted to News Corp. by Innova and Innova Holdings to purchase up to an additional 12% of the outstanding equity of each of such entities pursuant to the previously disclosed option agreement; | ||
• | DTVLA exercised an option to purchase 12% of Innova and Innova Holdings which was based on the number of subscribers successfully migrating to Innova, by delivering to Innova and Innova Holdings the two promissory notes issued in connection with Innova’s purchase of DIRECTV Mexico’s subscriber list for cancellation in October 2004; | ||
• | DIRECTV Mexico made cash payments to Innova totaling approximately U.S.$2.7 million pursuant to a letter agreement entered into by both parties in October 2004 in connection with the purchase of the DIRECTV Mexico’s subscriber list. The payments were made due to certain ineligible subscribers, applicable sign-up costs, and other costs under the side letter; | ||
• | DIRECTV Holdings purchased all of Liberty Media’s 10% interest in Innova. As described below, we exercised the right to acquire two-thirds of this 10% equity interest acquired from Liberty Media; and | ||
• | we entered into an amended and restated guaranty with PanAmSat, pursuant to which the proportionate share of Innova’s transponder lease obligation guaranteed by us was to cover a percentage of the transponder lease obligations equal to our percentage ownership of Innova. As a result of our acquisition of two-thirds of the equity interests that from Liberty Media, the guarantee has been readjusted to cover a percentage of the transponder lease obligations equal to our percentage ownership of Innova. |
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• | Proof of Mexican nationality. |
• | Submission of a business plan; |
• | Submission of technical specifications and descriptions; |
• | Submission of a plan for coverage; |
• | Submission of an investment program; |
• | Submission of a financial program; |
• | Submission of plans for technical development and actualization; |
• | Submission of plans for production and programming; |
• | Receipt of a guaranty to ensure the continuation of the process until the concession is granted or denied; and |
• | A request for a favorable opinion from the Mexican Antitrust Commission. |
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• | failure to construct broadcasting facilities within a specified time period; |
• | changes in the location of the broadcasting facilities or changes in the frequency assigned without prior governmental authorization; |
• | direct or indirect transfer of the concession, the rights arising therefrom or ownership of the broadcasting facilities without prior governmental authorization; |
• | transfer or encumbrance, in whole or in part, of the concession, the rights arising therefrom, the broadcasting equipment or any assets dedicated to the concessionaire’s activities, to a foreign government, company or individual, or the admission of any such person as a partner in the concessionaire’s business; |
• | failure to broadcast for more than 60 days without reasonable justification; |
• | any amendment to the bylaws of the concessionaire that is in violation of applicable Mexican law; and |
• | any breach to the terms of the concession title. |
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• | unauthorized interruption or termination of service; | ||
• | interference by the concessionaire with services provided by other operators; | ||
• | noncompliance with the terms and conditions of the public telecommunications concession; | ||
• | the concessionaire’s refusal to interconnect with other operators; | ||
• | loss of the concessionaire’s Mexican nationality; | ||
• | unauthorized assignment, transfer or encumbrance, in whole or in part, of the concession or any rights or assets; | ||
• | the liquidation or bankruptcy of the concessionaire; and | ||
• | ownership or control of the capital stock of the concessionaire by a foreign government. |
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• | the failure to use the concession within 180 days after it was granted; | ||
• | a declaration of bankruptcy of the concessionaire; | ||
• | failure to comply with the obligations or conditions specified in the concession; | ||
• | unlawful assignments of, or encumbrances on, the concession; or | ||
• | failure to pay to the government the required fees. |
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• | Raising the thresholds to make a concentration a reportable transaction. |
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• | Empowering the Mexican Antitrust Commission to issue a waiting order before a reported transaction may be closed, if such order is issued within ten business days from the date the transaction is reported to the Antitrust Commission. | ||
• | Requiring the Mexican Antitrust Commission to rule upon a reported transaction that the filing party deems that it does not notoriously restrain competition (attaching the necessary evidence), within 15 business days from the filing date. |
• | An overreaching authority to determine whether competition, effective competition, market power and competition conditions in a specific market exist or not, either such determination is required under the antitrust law or if required under any other statute that requires a determination of market conditions. | ||
• | To issue binding opinions in competition matters whether required by specific statutes, if required by other federal authorities. Such opinions shall also be issued in connection with decrees, regulations, governmental determinations and other governmental acts (such as public bid rules) which may have an anticompetitive effect. | ||
• | It must issue an opinion related to effective competition conditions in a specific market or to the market power of a given agent in a market. | ||
• | Issue an opinion related to the granting of concessions, licenses or permits or the transfer of equity interests in concessionaries or licensees, are to be obtained if so required by the relevant statues or the bid rules. | ||
• | The authority to perform visits to economic agents with the purpose of obtaining evidence of violations to the law, including the ability to obtain evidence of the incurrence of a vertical or horizontal restraint. In all cases, the Mexican Antitrust Commission must obtain a judicial subpoena in order to proceed with the visits. Any agent that is subject to such order is bound to allow such visits and to cooperate fully with the Mexican Antitrust Commission. |
Jurisdiction of | ||||||||
Organization or | Percentage | |||||||
Name of Significant Subsidiary | Incorporation | Ownership(1) | ||||||
Corporativo Vasco de Quiroga, S.A. de C.V.(2)(3) | Mexico | 100.0 | % | |||||
CVQ Espectáculos, S.A. de C.V.(2)(3) | Mexico | 100.0 | % | |||||
Editora Factum, S.A. de C.V.(3)(4) | Mexico | 100.0 | % | |||||
Empresas Cablevisión, S.A.B. de C.V.(3)(5) | Mexico | 51.0 | % | |||||
Editorial Televisa, S.A. de C.V.(3)(6) | Mexico | 100.0 | % | |||||
Factum Mas, S.A. de C.V.(3)(7)(8) | Mexico | 100.0 | % | |||||
Sky DTH, S. de R.L. de C.V.(7) | Mexico | 100.0 | % | |||||
Innova, S. de R.L. de C.V. (Innova)(9) | Mexico | 58.7 | % | |||||
Grupo Distribuidoras Intermex, S.A. de C.V.(3)(10) | Mexico | 100.0 | % | |||||
Campus América, S.A. de C.V.(11) | Mexico | 100.0 | % | |||||
Linking Media, S.A. de C.V.(12) | Mexico | 100.0 | % | |||||
Sistema Radiópolis, S.A. de C.V.(3)(13) | Mexico | 50.0 | % | |||||
Telesistema Mexicano, S.A. de C.V.(14) | Mexico | 100.0 | % | |||||
G-Televisa-D, S.A. de C.V.(15) | Mexico | 100.0 | % | |||||
Televisa, S.A. de C.V.(16) | Mexico | 100.0 | % | |||||
Televisa Juegos, S.A. de C.V.(3)(17) | Mexico | 100.0 | % | |||||
Televisión Independiente de México, S.A. de C.V.(3)(14) | Mexico | 100.0 | % |
(1) | Percentage of equity owned by us directly or indirectly through subsidiaries or affiliates. | |
(2) | One of three direct subsidiaries through which we conduct the operations of our Other Businesses segment, excluding Internet |
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operations. | ||
(3) | While this subsidiary is not a significant subsidiary within the meaning of Rule 1-02(w) of Regulation S-X under the Securities Act, we have included this subsidiary in the table above to provide a more complete description of our operations. | |
(4) | Subsidiary through which we own equity interests in and conduct our Cable Television. | |
(5) | Indirect subsidiary through which we conduct the operating of our Cable Television business. For a description of América Móvil’s sale of its 49% equity interest in this business in April 2002, see “— Cable Television — Mexico City Cable System”. | |
(6) | Direct subsidiary through which we conduct the operations of our Publishing segment. | |
(7) | One of two subsidiaries through which we own our equity interest in Innova. | |
(8) | Direct subsidiary through which we own equity interests in and conduct our Internet business. | |
(9) | Consolidated variable interest entity through which we conduct the operations of our Sky Mexico segment. We currently own a 58.7% interest in Innova. | |
(10) | Direct subsidiary through which we conduct the operations of our Publishing Distribution segment. | |
(11) | Campus leases real property to Apuestas Internacionales, S.A. de C.V., Sistema Radiópolis, S.A. de C.V. and Cablevisión, S.A. de C.V., all of which are subsidiaries of Grupo Televisa. Campus also leases real property to Club de Futbol America, a professional soccer team, for its training facilities. | |
(12) | Grupo Televisa held a majority of its ownership stake of Univision Communications Inc. through Linking. Due to the sale of its shares of Univision, Linking currently has no operations. | |
(13) | Direct subsidiary through which we conduct the operations of our Radio segment. Since we hold a controlling 50% full voting stake in this subsidiary and have the right to elect a majority of the members of its Board of Directors, we will continue to consolidate 100% of the results of operations of this subsidiary in accordance with Mexican FRS. See “Operating and Financial Review and Prospects — Results of Operations — Total Segment Results — Radio” and “Operating and Financial Review and Prospects — Results of Operations — Minority Interest”. | |
(14) | One of two direct subsidiaries through which we conduct the operations of our Television Broadcasting, Pay Television Networks and Programming Exports segments. | |
(15) | Indirect subsidiary through which we conduct certain operations of our Television Broadcasting segment. | |
(16) | Indirect subsidiary through which we conduct the operations of our Television Broadcasting, Pay Television Networks and Programming Exports segments. | |
(17) | Direct subsidiary through which we conduct the operations of our Gaming Business. |
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Number of | ||||||
Operations | Properties | Location | ||||
Television and news activities | ||||||
Owned properties | 1 | San Diego, California | ||||
Leased properties | 5 | Madrid, Spain (2) | ||||
San Diego, California (1) | ||||||
Miami, Florida (1) | ||||||
Zug, Switzerland (1) | ||||||
Publishing activities | ||||||
Owned properties | 1 | Miami, Florida (1) | ||||
Leased properties | 13 | Beverly Hills, California (1) | ||||
New York, New York (1) | ||||||
Medellín, Colombia (2) | ||||||
Cali, Colombia (2) | ||||||
Quito, Ecuador (2) | ||||||
Lima, Perú (1) | ||||||
Santiago, Chile (1) | ||||||
Chacao, Venezuela (1) | ||||||
San Juan, Puerto Rico (1) | ||||||
Publishing distribution and other activities | ||||||
Owned properties | 5 | Buenos Aires, Argentina (1) | ||||
Baranquilla, Colombia (1) | ||||||
Guayaquil, Ecuador (3) | ||||||
Leased properties | 5 | Quito, Ecuador (1) | ||||
Guayaquil, Ecuador (1) | ||||||
Buenos Aires, Argentina (1) | ||||||
Panamá, Panamá (1) | ||||||
Santiago, Chile (1) |
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Year Ended December 31,(1) | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Operating Segment Net Sales | ||||||||||||
Television Broadcasting | 56.9 | % | 55.4 | % | 53.8 | % | ||||||
Pay Television Networks | 2.7 | 3.3 | 3.4 | |||||||||
Programming Exports | 6.4 | 5.6 | 5.4 | |||||||||
Publishing | 7.0 | 7.5 | 7.4 | |||||||||
Publishing Distribution | 5.2 | 1.2 | 1.1 | |||||||||
Sky Mexico(2) | 12.1 | 17.9 | 19.1 | |||||||||
Cable Television | 3.7 | 4.2 | 5.1 | |||||||||
Radio | 1.0 | 1.0 | 1.1 | |||||||||
Other Businesses | 5.0 | 3.9 | 3.6 | |||||||||
Total Segment Net Sales | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Intersegment Operations | (2.4 | ) | (3.1 | ) | (2.8 | ) | ||||||
Total Consolidated Net Sales | 97.6 | % | 96.9 | % | 97.2 | % | ||||||
Total Net Sales | ||||||||||||
Cost of Sales(3) | 50.6 | % | 45.4 | % | 42.7 | % | ||||||
Selling Expenses(3) | 7.5 | 8.2 | 7.9 | |||||||||
Administrative Expenses(3) | 5.6 | 5.7 | 6.1 | |||||||||
Depreciation and Amortization | 7.1 | 7.4 | 7.1 | |||||||||
Consolidated Operating Income | 29.2 | 33.3 | 36.2 | |||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
(1) | Certain segment data set forth in these tables may vary from certain data set forth in our year-end consolidated financial statements due to differences in rounding. The segment net sales and total segment net sales data set forth in this annual report reflect sales from intersegment operations in all periods presented. See Note 23 to our year-end financial statements. | |
(2) | Effective April 1, 2004, we began consolidating Sky Mexico, which is applicable under Mexican FRS NIF A-8, “Supplementary Financial Reporting Standards”. | |
(3) | Excluding depreciation and amortization. |
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Year Ended December 31,(1) | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(millions of Pesos in purchasing power as of December) 31, 2006 | ||||||||||||
Operating Segment Net Sales | ||||||||||||
Television Broadcasting | Ps. | 18,388.2 | Ps. | 19,323.5 | Ps. | 20,972.1 | ||||||
Pay Television Networks | 861.0 | 1,156.2 | 1,329.0 | |||||||||
Programming Exports | 2,061.5 | 1,952.0 | 2,110.9 | |||||||||
Publishing | 2,250.8 | 2,607.1 | 2,885.5 | |||||||||
Publishing Distribution(2) | 1,692.4 | 418.5 | 433.5 | |||||||||
Sky Mexico(3) | 3,910.5 | 6,229.2 | 7,452.7 | |||||||||
Cable Television | 1,212.8 | 1,462.1 | 1,984.7 | |||||||||
Radio | 318.0 | 358.7 | 444.6 | |||||||||
Other Businesses | 1,610.1 | 1,377.8 | 1,408.1 | |||||||||
Total Segment Net Sales | 32,305.3 | 34,885.1 | 39,021.1 | |||||||||
Intersegment Operations | (786.3 | ) | (1,087.5 | ) | (1,089.3 | ) | ||||||
Total Consolidated Net Sales | Ps. | 31,519.0 | Ps. | 33,797.6 | Ps. | 37,931.8 | ||||||
Operating Segment Income (Loss) | ||||||||||||
Television Broadcasting | Ps. | 8,343.8 | Ps. | 9,211.4 | Ps. | 10,598.0 | ||||||
Pay Television Networks | 320.9 | 539.1 | 682.3 | |||||||||
Programming Exports | 786.8 | 695.8 | 869.3 | |||||||||
Publishing | 456.6 | 499.5 | 555.8 | |||||||||
Publishing Distribution | (27.3 | ) | 6.9 | 18.0 | ||||||||
Sky Mexico(3) | 1,439.3 | 2,618.8 | 3,555.5 | |||||||||
Cable Television | 383.4 | 509.4 | 816.8 | |||||||||
Radio | 34.1 | 54.3 | 94.6 | |||||||||
Other Businesses | (137.4 | ) | (187.6 | ) | (311.4 | ) | ||||||
Total Operating Segment Income(4) | 11,600.2 | 13,947.6 | 16,878.9 | |||||||||
Corporate Expenses(4) | (167.7 | ) | (189.9 | ) | (450.9 | ) | ||||||
Depreciation and Amortization | (2,231.0 | ) | (2,517.1 | ) | (2,679.1 | ) | ||||||
Total Consolidated Operating Income(5) | Ps. | 9,201.5 | Ps. | 11,240.6 | Ps. | 13,748.9 | ||||||
(1) | Certain segment data set forth in these tables may vary from certain data set forth in our year-end financial statements due to differences in rounding. The segment net sales and total segment net sales data set forth in this annual report reflect sales from intersegment operations in all periods presented. See Note 23 to our year-end financial statements. | |
(2) | Effective October 1, 2004, we changed certain key terms of substantially all our contracts with publishers for the distribution of magazines, books and newspapers. As a result, we changed our accounting treatment in our Publishing Distribution segment’s net sales and cost of sales, and began recognizing our net sales as the marginal revenue from the products we distribute. Before October 2004, we recognized revenue on a gross basis. | |
(3) | Effective April 1, 2004, we began consolidating Sky Mexico, in accordance with FIN 46, which is applicable under Mexican FRS NIF A-8, “Supplementary Financial Reporting Standards”. |
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(4) | The operating segment income (loss), and total operating segment income data set forth in this annual report do not reflect corporate expenses or depreciation and amortization in any period presented, but are presented herein to facilitate the discussion of segment results. | |
(5) | Total consolidated operating income reflects corporate expenses and depreciation and amortization in all periods presented. See Note 23 to our year-end financial statements. |
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Compared to the Year Ended December 31, 2005
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• | interest income; | ||
• | interest expense, including the restatement of our Mexican Investment Units (Unidades de Inversión) or UDI-denominated notes; | ||
• | foreign exchange gain or loss attributable to monetary assets and liabilities denominated in foreign currencies (including gains or losses from derivative instruments ); and | ||
• | gain or loss attributable to holding monetary assets and liabilities exposed to inflation. |
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• | a Ps.2,508.3 million increase in operating income; | ||
• | a Ps.754.6 million decrease in integral cost of financing, net; | ||
• | a Ps.272.0 million decrease in other expense, net; | ||
• | a Ps.526.6 million decrease in cumulative loss of accounting change; and | ||
• | a Ps.539.8 million decrease in minority interest. |
• | a Ps.375.2 million increase in restructuring and non-recurring charges; | ||
• | a Ps.1,244.8 million increase in income tax and employees’ profit sharing; and | ||
• | a Ps.768.9 million decrease in equity in results of affiliates, net. |
Compared to the Year Ended December 31, 2004
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• | interest income; | ||
• | interest expense, including the restatement of our UDI-denominated notes, as described under “— Liquidity, Foreign Exchange and Capital Resources — Indebtedness” and “— Liquidity, Foreign Exchange and Capital Resources — Interest Expense”; | ||
• | foreign exchange gain or loss attributable to monetary assets and liabilities denominated in foreign currencies (including gains or losses from derivative instruments); and |
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• | gain or loss attributable to holding monetary assets and liabilities exposed to inflation. |
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• | a Ps.2,039.1 million increase in operating income; | ||
• | a Ps.185.8 million decrease in restructuring and non-recurring charges; | ||
• | a Ps.70.7 million decrease in other expense, net; | ||
• | a Ps.462.4 million decrease in income taxes; and | ||
• | a Ps.571.8 million decrease in cumulative loss effect of accounting changes, net. |
• | a Ps.224.1 million increase in integral cost of financing, net; | ||
• | a Ps.494.5 million decrease in equity in earnings of affiliates, net; and | ||
• | a Ps.878.8 million increase in minority interest. |
• | the percentage that the Peso devalued or appreciated against the U.S. Dollar; | ||
• | the Mexican inflation rate; | ||
• | the U.S. inflation rate; and | ||
• | the percentage change in Mexican GDP compared to the prior period. |
Year Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Devaluation (appreciation) of the Peso as compared to the U.S. Dollar(1) | (0.7 | )% | (4.7 | )% | 1.7 | % | ||||||
Mexican inflation rate(2) | 5.2 | 3.3 | 4.1 | |||||||||
U.S. inflation rate | 3.3 | 3.4 | 3.3 | |||||||||
Increase in Mexican GDP(3) | 4.2 | 2.8 | 4.8 |
(1) | Based on changes in the Interbank Rates, as reported by Banamex, at the end of each period, which were as follows: Ps.11.1490 per U.S. Dollar as of December 31, 2004; Ps.10.6265 per U.S. Dollar as of December 31, 2005; and Ps.10.8025 per U.S. Dollar as of December 31, 2006. | |
(2) | Based on changes in the NCPI from the previous period, as reported by the Mexican Central Bank, which were as follows: 112.5 in 2004; 116.3 in 2005; and 121.0 in 2006. | |
(3) | As reported by theInstituto Nacional de Estadística, Geografía e Informática, or INEGI, and, in the case of GDP information for 2004, 2005 and 2006, as estimated by INEGI. |
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• | Advertising and Other Revenues.Inflation in Mexico adversely affects consumers. As a result, our advertising customers may purchase less advertising, which would reduce our advertising revenues, and consumers may reduce expenditures for our other products and services, including pay television services. | ||
• | U.S. Dollar-denominated Revenues and Operating Costs and Expenses.We have substantial operating costs and expenses denominated in U.S. Dollars. These costs are principally due to our activities in the United States, the costs of foreign-produced programming and publishing supplies and the leasing of satellite transponders. The following table sets forth our U.S. Dollar-denominated revenues and operating costs and expenses for 2004, 2005 and 2006: |
Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(millions of U.S. Dollars) | ||||||||||||
Revenues | U.S.$435 | U.S.$385 | U.S.$470 | |||||||||
Operating costs and expenses | 443 | 393 | 529 |
• | Depreciation and Amortization Expense.We restate our non-monetary Mexican and foreign assets to give effect to inflation. The restatement of these assets in periods of high inflation, as well as the devaluation of the Peso as compared to the U.S. Dollar, increases the carrying value of these assets, which in turn increases the related depreciation expense. | ||
• | Integral Cost of Financing.The devaluation of the Peso as compared to the U.S. Dollar generates foreign exchange losses relating to our net U.S. Dollar-denominated liabilities and increases the Peso equivalent of our interest expense on our U.S. Dollar-denominated indebtedness. Foreign exchanges losses, derivatives used to hedge foreign exchange risk and increased interest expense increase our integral cost of financing. |
• | restatement of Mexican non-monetary assets (other than transmission rights, inventories and equipment of non-Mexican origin), non-monetary liabilities and stockholders’ equity using the NCPI; and | ||
• | restatement of all inventories at net replacement cost. |
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• | a Ps.2,905.3 million increase in operating income; | ||
• | a Ps.820.7 million decrease in income and assets taxes and employees’ profit sharing; |
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• | a Ps.752.7 million decrease in integral cost of financing, which was due primarily to a decrease in foreign exchange loss and interest expense; and | ||
• | a Ps.75.0 million decrease in other expense, net. |
• | a Ps.304.2 million increase in restructuring and non-recurring charges. |
• | a Ps.2,325.2 million increase in operating income; and | ||
• | a Ps.117.2 million decrease in other expense, net. |
• | a Ps.1,012.9 million increase in income and assets taxes and employees’ profit sharing; | ||
• | a Ps.208.2 million increase in integral cost of financing, which was due primarily to an increase in foreign exchange loss; and | ||
• | a Ps.24.1 million increase in restructuring and non-recurring charges. |
• | a Ps.2,869.3 million increase in operating income; | ||
• | a Ps.580.1 million decrease in income and assets taxes and employees’ profit sharing; and | ||
• | a Ps.579.7 million decrease in restructuring and non-recurring charges. |
• | a Ps.901.1 million increase in integral cost of financing, which was due primarily to an increase in interest expense and foreign exchange loss; and | ||
• | a Ps.148.4 million increase in other expense, net. |
• | made aggregate capital expenditures totaling U.S.$298.5 million, including U.S.$75.9 million for our cable television segment, U.S.$91.2 million for Sky Mexico, U.S.$22.5 million for gaming, and U.S.$108.9 million in our television broadcasting and other business segments; | ||
• | made investments related to our 40% interest in La Sexta for an aggregate amount of U.S.$132.4 million (€104.6 million), and capital contributions of U.S.$7.5 million in Volaris related to our 25% interest in this venture; |
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• | acquired a 50% interest in TVI, a cable television company in Mexico, in the amount of Ps.769.4 million, which was substantially paid in cash, and provided funding to TVI in the form of a loan in the amount of Ps. 240.6 million; and | ||
• | invested U.S.$258 million in long-term notes convertible, at our option, into 99.99% of the equity of Alvafig S.A. de C.V., which holds 49% of the equity of Cablemás the second largest cable operator in Mexico, with a coupon rate of 8% in the first year and 10% in the four remaining years. |
• | made aggregate capital expenditures for property, plant and equipment of approximately U.S.$248.3 million, which amount includes capital expenditures in the amount of U.S.$51.1 million and U.S.$109.2 million for the expansion and improvement of our Cable Television and Sky Mexico segments, respectively; | ||
• | invested a capital contribution of U.S.$25.0 million inConcesionaria Vuela Compañía de Aviación, S.A. de C.V.,or Vuela, which owns and operates Volaris, a new, low-cost-carrier airline with a concession to operate in Mexico, and made a capital contribution of U.S.$1.4 million (€1.2 million), related to our Spanish venture, La Sexta; and | ||
• | contributed Ps.5.0 million (nominal) to fund our seniority premium obligations. |
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Debt Outstanding(1) | ||||||||||||||||
December 31, | ||||||||||||||||
2006 | Interest | Maturity | ||||||||||||||
Description of Debt | Actual | Rate(2) | Denomination | of Debt | ||||||||||||
Long-term debt | ||||||||||||||||
8% Senior Notes(2)(3) | 777.3 | 8.0 | % | U.S. Dollars | 2011 | |||||||||||
8.5% Senior Notes(2) | 3,240.8 | 8.5 | % | U.S. Dollars | 2032 | |||||||||||
6 5/8% Senior Notes(2)(3) | 6,481.5 | 6.625 | % | U.S. Dollars | 2025 | |||||||||||
Innova’s 9 3/8% Senior Notes(4) | 121.5 | 9.375 | % | U.S. Dollars | 2013 | |||||||||||
UDI-denominated notes(3)(5) | 980.2 | 8.15 | % | UDIs (Peso-Indexed) | 2007 | |||||||||||
Banamex loan(6) | 2,000.0 | 10.35 | % | Pesos | 2010 and 2012 | |||||||||||
Banamex loan(6) | 480.0 | 8.925 | % | Pesos | 2008 | |||||||||||
Banamex loan(6) | 1,162.5 | 9.70 | % | Pesos | 2009 | |||||||||||
Innova’s Santander Serfin loan(4) | 1,400.0 | 8.98 | % | Pesos | 2016 | |||||||||||
Innova’s Banamex loan(4) | 2,100.0 | 8.74 | % | Pesos | 2016 | |||||||||||
Other debt(7) | 37.9 | 6.18 | % | Various | 2007-2010 | |||||||||||
Total debt (including current maturities) | 18,781.7 | — | — | 13.40 years(8) | ||||||||||||
Less: current maturities | 986.4 | — | Various | December 2007 | ||||||||||||
Total long-term debt | 17,795.3 | |||||||||||||||
(1) | U.S. Dollar-denominated debt is translated into Pesos at an exchange rate of Ps.10.8025 per U.S. Dollar, the Interbank Rate, as reported by Banamex, as of December 31, 2006. | |
(2) | These Senior Notes are unsecured obligations of the Company, rank equally in right of payment with all existing and future unsecured and unsubordinated indebtedness of the Company, and are junior in right of payment to all of the existing and future liabilities of the Company’s subsidiaries. Interest on the Senior Notes due 2011, 2025 and 2032, including additional amounts payable in respect of certain Mexican withholding taxes, is 8.41%, 6.97% and 8.94% per annum, respectively, and is payable semi-annually. These Senior Notes may not be redeemed prior to maturity, except in the event of certain changes in law affecting the Mexican withholding tax treatment of certain payments on the securities, in which case the securities will be redeemable, as a whole but not in part, at the option of the Company. The Senior Notes due 2011 and 2032 were priced at 98.793% and 99.431%, respectively, for a yield to maturity of 8.179% and 8.553%, respectively. The agreement of these Senior Notes contains covenants that limit the ability of the Company and certain restricted subsidiaries engaged in Television Broadcasting, Pay Television Networks and Programming Exports, to incur or assume liens, perform sale and leaseback transactions, and consummate certain mergers, consolidations and similar transactions. Substantially all of these Senior Notes are registered with the SEC. | |
(3) | In March and May 2005, the Company issued these Senior Notes in the aggregate amount of U.S.$400.0 million and U.S.$200.0 million, respectively, which were priced at 98.081% and 98.632%, respectively, for a yield to maturity of 6.802% and 6.787%, respectively. The net proceeds of the U.S.$400.0 million issuance, together with cash on hand, were used to fund the Group’s tender offers made and expired in March 2005 for any or all of the Senior Notes due 2011 and the Mexican Peso equivalent of UDI-denominated Notes due 2007, and prepaid principal amount of these securities in the amount of approximately U.S.$222.0 million and Ps.2,935,097 (nominal), respectively, representing approximately 74% and 76% of the outstanding principal amount of these securities, respectively. The net proceeds of the U.S.$200.0 million issuance were used for corporate purposes, including the prepayment of some of the Group’s outstanding indebtedness. | |
(4) | These Senior Notes are unsecured and unsubordinated obligations of Sky Mexico. Interest on these Senior Notes, including additional amounts payable in respect of certain Mexican withholding taxes, is 9.8580%, and is payable semi-annually. The indentures of these Senior Notes contain certain restrictive covenants for Sky Mexico on additional indebtedness, liens, sales and leasebacks, restricted payments, asset sales, and certain mergers, consolidations and similar transactions. Sky Mexico may, at its own option, redeem these Senior Notes, in whole or in part, at any time on or after September 19, 2008 at redemption prices from 104.6875% to 101.5625% between September 19, 2008 through September 18, 2011, or 100% commencing on September 19, 2011, plus accrued and unpaid interest, if any. Additionally, on or before September 19, 2006, Sky Mexico may, at its own option and subject to certain requirements, use the proceeds from one or more qualified equity offerings to redeem up to 35% of the aggregate principal amount of these Senior Notes at 109.375% of their principal amount, plus accrued and unpaid interest. In March and April 2006, Sky Mexico entered into two 10-year loans with Mexican banks in the aggregate principal amount of |
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Ps.3,500,000 to fund, together with cash on hand, a tender offer and consent solicitation made in March 2006 and expired in April 2006 for any or all of the Senior Notes due 2013, and prepaid a principal amount of approximately U.S.$288.7 million or 96.2% of these securities. The total aggregate amount paid by Sky Mexico in connection with this tender offer was of approximately U.S.$324.3 million, which included related consents and accrued and unpaid interest. The 10-year Sky Mexico’s indebtedness is guaranteed by the Company and includes a Ps.2,100,000 loan with an annual interest rate of 8.74% and a Ps.1,400,000 loan with an annual interest rate of 8.98% for the first three years, and the Mexican interbank interest rate or “TIIE” plus 24 basis points for the remaining seven years. Interest on these two 10-year loans is payable on a monthly basis. | ||
(5) | Notes denominated in UDIs, representing 258,711,400 UDIs at December 31, 2005 and 2006, respectively. Interest on these notes is payable semi-annually. The balance as of December 31, 2005 and 2006 includes restatement of Ps.235,581 and Ps.265,578, respectively. The UDI value as of December 31, 2006, was of Ps.3.788954 per UDI. The 8.15% UDI-denominated notes matured on April 13, 2007. | |
(6) | Includes, in 2005 and 2006, outstanding balances of long-term loans in the principal amount of Ps.800,000, Ps.1,162,500 and Ps.2,000,000, respectively, in connection with certain credit agreements entered into by the Company with a Mexican bank, with various maturities through 2012. Interest on these loans is, in a range of 8.925% to 10.35% per annum, and is payable on a monthly basis. Under the terms of these credit agreements, the Company and certain restricted subsidiaries engaged in television broadcasting, pay television networks and programming exports are required to maintain (a) certain financial coverage ratios related to indebtedness and interest expense; and (b) certain restrictive covenants on indebtedness, dividend payments, issuance and sale of capital stock, and liens. | |
(7) | Includes secured notes payable to banks, bearing annual interest rates which vary between 0.11 and 1.25 points above LIBOR. The maturities of this debt at December 31, 2006 are various from 2007 to 2010. | |
(8) | Actual weighted average maturity of long-term debt as of December 31, 2006. |
Year Ended December 31,(1)(2) | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(millions of U.S. Dollars) | ||||||||||||
Interest payable in U.S. Dollars | U.S. | $110.0 | U.S. | $118.0 | U.S. | $95.6 | ||||||
Amounts currently payable under Mexican withholding taxes(3) | 5.0 | 6.3 | 4.2 | |||||||||
Total interest payable in U.S. Dollars | U.S. | $115.0 | U.S. | $124.3 | U.S. | $99.8 | ||||||
Peso equivalent of interest payable in U.S. Dollars | Ps. | 1,435.2 | Ps. | 1,433.6 | Ps. | 1,114.5 | ||||||
Interest payable in Pesos | 632.8 | 754.3 | 783.3 | |||||||||
Restatement of UDI-denominated Notes due 2007 | 185.0 | 33.1 | 39.8 | |||||||||
Total interest expense(4) | Ps. | 2,253.0 | Ps. | 2,221.0 | Ps. | 1,937.6 | ||||||
(1) | U.S. Dollars are translated into Pesos at the rate prevailing when interest was recognized as an expense for each period and restated to Pesos in purchasing power as of December 31, 2006. | |
(2) | Interest expense in these periods includes amounts effectively payable in U.S. Dollars as a result of U.S. Dollar-Peso swaps. | |
(3) | See “Additional Information — Taxation — Federal Mexican Taxation”. | |
(4) | Total interest expense amounts in these periods exclude capitalized and hedged interest expense. |
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Payments Due by Period | ||||||||||||||||||||
Less Than | ||||||||||||||||||||
12 Months | 12-36 Months | 36-60 Months | After | |||||||||||||||||
January 1, | January 1, | January 1, | 60 Months | |||||||||||||||||
2007 to | 2008 to | 2010 to | Subsequent to | |||||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||||||
Total | 2007 | 2009 | 2011 | 2011 | ||||||||||||||||
(thousands of U.S. Dollars) | ||||||||||||||||||||
8% Senior Notes | U.S. | $71,951 | U.S. | $ | U.S. | $ | U.S. | $71,951 | U.S. | $ | ||||||||||
8.5% Senior Notes | 300,000 | 300,000 | ||||||||||||||||||
6.625% Senior Notes | 600,000 | 600,000 | ||||||||||||||||||
Innova’s 9.375% Senior Notes | 11,251 | 11,251 | ||||||||||||||||||
UDI-denominated Notes | 90,742 | 90,742 | ||||||||||||||||||
Banamex loan II | 44,434 | 44,434 | ||||||||||||||||||
Banamex loan III | 107,610 | 107,610 | ||||||||||||||||||
Banamex loan IV | 185,142 | 92,571 | 92,571 | |||||||||||||||||
Innova’s Banamex loan | 194,400 | 194,400 | ||||||||||||||||||
Innova’s Santander Serfín loan | 129,600 | 129,600 | ||||||||||||||||||
Other debt | 3,513 | 567 | 422 | 2,524 | ||||||||||||||||
Long-term debt | 1,738,643 | 91,309 | 152,466 | 167,046 | 1,327,822 | |||||||||||||||
Satellite transponder obligation | 111,696 | 7,978 | 18,973 | 23,854 | 60,891 | |||||||||||||||
Transmission rights(1) | 84,208 | 53,734 | 27,842 | 2,632 | ||||||||||||||||
Total contractual obligations | U.S. | $1,934,547 | U.S. | $153,021 | U.S. | $199,281 | U.S. | $193,532 | U.S. | $1,388,713 | ||||||||||
(1) | This liability reflects our transmission rights obligations related to programming acquired or licensed from third party producers and suppliers, and special events, which are reflected for in our consolidated balance sheet within trade accounts payable (current liabilities) and other long-term liabilities. |
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Payments Due by Period | ||||||||||||||||||||
Less Than | ||||||||||||||||||||
12 Months | 12-36 Months | 36-60 Months | After | |||||||||||||||||
January 1, | January 1, | January 1, | 60 Months | |||||||||||||||||
2007 to | 2008 to | 2010 to | Subsequent to | |||||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||||||
Total | 2007 | 2009 | 2011 | 2011 | ||||||||||||||||
(thousands of U.S. Dollars) | ||||||||||||||||||||
Satellite transponder commitments(1) | U.S. $63,486 | U.S. $14,707 | U.S. $24,375 | U.S. $10,678 | U.S. $13,726 | |||||||||||||||
Capital expenditures commitments(2) | 23,765 | 23,765 | — | — | — | |||||||||||||||
Guarantees(3) | 11,426 | 11,426 | — | — | — | |||||||||||||||
Lease commitments(4) | 161,403 | 9,769 | 17,149 | 15,598 | 118,887 | |||||||||||||||
Other(5) | 141,932 | 101,003 | 40,929 | — | — | |||||||||||||||
Total contractual obligations | U.S. $402,012 | U.S. $160,670 | U.S. $82,453 | U.S. $26,276 | U.S. $132,613 | |||||||||||||||
(1) | Our minimum commitments for the use of satellite transponders under operating lease contracts. | |
(2) | Our commitments for capital expenditures include U.S.$7,900, which are related to improvements to leasehold facilities of our Gaming operations. | |
(3) | In connection with the disposal of our investment in PanAmSat in 1997, we granted collateral to secure certain indemnification obligations. After the expiration of applicable tax statutes of limitations, the collateral will be reduced to a de minimis amount. The collateral agreement is expected to be terminated in 2007. | |
(4) | Our minimum lease commitments for facilities under operating lease contracts, which are primarily related to our Gaming Business, and which relate to leases with maturities between 2021 and 2046. See Note 11 to our year-end financial statements. | |
(5) | We have commitments of capital contributions in 2007 and 2008 related to our 40% equity interest in La Sexta in the aggregate amount of approximately 76.5 million euros (U.S.$101,003) and 31.0 million euros (U.S.$40,929), respectively. |
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Name and Date of Birth | Principal Occupation | Business Experience | First Elected | |||
Emilio Fernando Azcárraga Jean (02/21/68) | Chairman of the Board, President and Chief Executive Officer and President of the Executive Committee of Grupo Televisa | Member of the Board of Banco Nacional de México, S.A., former Member of the Board of Teléfonos de México, S.A.B. de C.V. and former Vice Chairman of the Board of Univision | December 1990 | |||
In alphabetical order: | ||||||
Alfonso de Angoitia Noriega (01/17/62) | Executive Vice President and Member of the Executive Office of the Chairman and Member of the Executive Committee of Grupo Televisa | Former Chief Financial Officer of Grupo Televisa and former Alternate Member of the Board of Univision and Partner, Mijares, Angoitia, Cortés y Fuentes, S.C. (1994-1999) | April 1998 | |||
María Asunción Aramburuzabala Larregui (05/02/63) | Chief Executive Officer of Tresalia Capital, S.A. de C.V. | Vice Chairwoman of the Board and Member of the Executive Committee of Grupo Modelo, S.A.B. de C.V. and Member of the Boards of Grupo Financiero Banamex, S.A. de C.V., Banco Nacional de México, S.A. and América Móvil, S.A.B. de C.V. | July 2000 | |||
Pedro Aspe Armella (07/07/50) | Chairman of the Board and Chief Executive Officer of Evercore/Protego Asesores, S.A. de C.V. | Member of the Boards of The McGraw-Hill Companies and Xignux and former Member of the Board of Vector Casa de Bolsa, S.A. de C.V. | April 2003 | |||
Julio Barba Hurtado (05/20/33) | Legal Advisor to the Board, Member of the Executive Committee and Secretary to the Audit and Corporate Practices Committee of Grupo Televisa | Former Assistant Secretary of the Board and Legal Advisor to Televisa, S.A. de C.V. | December 1990 | |||
José Antonio Bastón Patiño (04/13/68) | Corporate Vice President of Television and Member of the Executive Committee of Grupo Televisa | Former Vice President of Operations of Grupo Televisa, former General Director of Programming of Grupo Televisa and former Member of the Board of Univision | April 1998 | |||
Alberto Bailleres González (08/22/31) | President of Grupo Bal, S.A. de C.V. | Member of the Boards of Valores Mexicanos, Casa de Bolsa, S.A. de C.V., Desc., S.A.B. de C.V., Fomento Económico Mexicano, S.A.B. de C.V. (FEMSA), Grupo Financiero BBVA Bancomer, S.A. de C.V., Industrias Peñoles, S.A.B. de C.V., Grupo Nacional Provincial, S.A.B., Grupo Palacio de Hierro, S.A.B. de C.V., Profuturo GNP, S.A. de C.V., Aseguradora Porvenir GNP, S.A. de C.V. and President of the Board of Governors of the Instituto Tecnológico Autónomo de México, A.C. (ITAM) | April 2005 |
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Name and Date of Birth | Principal Occupation | Business Experience | First Elected | |||
Manuel Jorge Cutillas Covani (03/01/32) | Director of Grupo Bacardi Limited | Member of the Board of Bacardi Limited and former Chairman of the Board of Bacardi Limited | April 1994 | |||
José Antonio Fernández Carbajal (2/15/54) | Chairman of the Board and Chief Executive Officer of Fomento Económico Mexicano, S.A.B. de C.V. and Coca-Cola Femsa, S.A.B. de C.V. | Member of the Boards of BBVA Bancomer, S.A., Grupo Industrial Saltillo, S.A.B. de C.V., Industrias Peñoles, S.A.B. de C.V., and Grupo Industrial Bimbo, S.A.B. de C.V. | April 2007 | |||
Carlos Fernández González (09/29/66) | Chief Executive Officer and Chairman of the Board of Grupo Modelo, S.A.B. de C.V. | Member of the Boards of Anheuser-Busch Companies, Inc., Grupo Financiero Santander, S.A.B. de C.V. and Emerson Electric, Co. Member of the Board and Partner of Finacless Mexico, S.A.B. de C.V. and Partner and CEO of Tenedora San Carlos, S.A. de C.V. | July 2000 | |||
Bernardo Gómez Martínez (07/24/67) | Executive Vice President, Member of the Executive Office of the Chairman and Member of the Executive Committee of Grupo Televisa | Former President of the Mexican Chamber of Television and Radio Broadcasters and Deputy to the President of Grupo Televisa | April 1999 | |||
Claudio X. González Laporte (05/22/34) | Chairman of the Board and Chief Executive Officer of Kimberly-Clark de México, S.A.B. de C.V. | Member of the Boards of Kimberly-Clark Corporation, General Electric Co., Kellogg Company, Home Depot, Inc., Alfa, S.A.B. de C.V., Grupo Carso, S.A.B. de C.V., América Móvil, S.A.B. de C.V. and Investment Company of America, and former President of the Mexican Business Council | April 1997 | |||
Roberto Hernández Ramírez (03/24/42) | Chairman of the Board of Banco Nacional de México, S.A. | Former Chief Executive Officer of Banco Nacional de México, S.A. and Member of the Boards of Citigroup, Inc., Gruma, S.A.B. de C.V., Grupo Financiero Banamex Accival, S.A. de C.V., and the Nature Conservancy and World Monuments Fund | April 1992 | |||
Enrique Krauze Kleinbort (09/17/47) | Director and Partner of Editorial Clío Libros y Videos, S.A. de C.V. | Director and Partner of Editorial Vuelta, S.A. de C.V. | April 1996 | |||
Germán Larrea Mota Velasco (10/26/53) | Chairman of the Board, Chief Executive Officer and President of Grupo México, S.A.B. de C.V. | Chairman of the Board and Chief Executive Officer of Southern Copper Corporation and Grupo Ferroviario Mexicano, S.A. de C.V., former Chairman of the Board and former Chief Executive Officer of Asarco Incorporated and former Member of the Boards of Banco Nacional de México, S.A. and Bolsa Mexicana de Valores, S.A. de C.V. | April 1999 | |||
Gilberto Pérezalonso Cifuentes (03/06/43) | Member of the Audit and Corporate Practice Committee of Grupo Televisa | Former Chief Executive Officer of Aerovias de Mexico, S.A. de C.V., and former Chief Executive Officer of Corporación GEO, S.A.B. de C.V. Former Member of the Boards of Grupo Gigante, S.A.B. de C.V. Southern Peru Copper Corporation and Afore Banamex, S.A. Member of the Boards of Consorcio Aeroméxico S.A.B de C.V. and Telefónica Móviles México | April 1998 | |||
Alejandro Quintero Iñiguez (02/11/50) | Corporate Vice President of Sales and Marketing and Member of the Executive Committee of Grupo Televisa | Stockholder of Grupo TV Promo, S.A. de C.V. and former Advisor to former Mexican President Ernesto Zedillo | April 1998 |
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Name and Date of Birth | Principal Occupation | Business Experience | First Elected | |||
Fernando Senderos Mestre (03/03/50) | Chairman of the Board and Chief Executive Officer of DESC, S.A.B. de C.V. | Member of the Boards of Teléfonos de México, S.A.B. de C.V., Alfa, S.A.B. de C.V., Kimberly-Clark de México, S.A.B. de C.V. and Industrias Peñoles, S.A.B. de C.V. | April 1992 | |||
Enrique Francisco José Senior Hernández (08/03/43) | Executive Vice President and Managing Director of Allen & Company LLC | Member of the Boards of Pics Retail Networks, Coca-Cola Femsa, S.A.B. de C.V., Cinemark USA Inc. and Non Traditional Media | April 2001 | |||
Lorenzo H. Zambrano Treviño (03/27/44) | Chairman of the Board and Chief Executive Officer of Cemex, S.A.B. de C.V. | Member of the Boards of Alfa, S.A.B. de C.V., IBM, Citigroup, Allianz, Grupo Financiero Bancomer, S.A. de C.V. Empresas ICA, Sociedad Controladora, S.A.B. de C.V., Fomento Económico Mexicano, S.A.B. de C.V. and Vitro, S.A.B. de C.V. | April 1999 | |||
Alternate Directors: | ||||||
In alphabetical order: | ||||||
Herbert A. Allen III (06/08/67) | President of Allen & Company LLC | Former Executive Vice President and Managing Director of Allen & Company Incorporated, Member of the Board of Convera Corporation | April 2002 | |||
Juan Pablo Andrade Frich (06/05/64) | Asset Manager of Tresalia Capital, S.A. de C.V. | Former Member of the Boards of Televicentro and Empresas Cablevisión, S.A.B. de C.V. | July 2000 | |||
Lucrecia Aramburuzabala Larregui de Fernandez (03/29/67) | Private Investor | Former employee of Tresalia Capital, S.A. de C.V. and Member of the Board of Grupo Modelo, S.A.B. de C.V. and former Member of the Board of Televicentro | July 2000 | |||
Félix José Araujo Ramírez (03/20/51) | Vice President of Televisa Regional | Former Private Investor in Promoción y Programación de la Provincia, S.A. de C.V., Promoción y Programación del Valle de Lerma, S.A. de C.V., Promoción y Programación del Sureste, S.A. de C.V., Teleimagen Profesional del Centro, S.A. de C.V. and Estrategia Satélite, S.C. | April 2002 | |||
Joaquín Balcárcel Santa Cruz (01/04/69) | Vice President — Legal and General Counsel of Grupo Televisa | Former Vice President and General Counsel of Television, Former Legal Director of Grupo Televisa and former associate at Martínez, Algaba, Estrella, De Haro y Galván-Duque, S.C. | April 2000 | |||
Rafael Carabias Príncipe (11/13/44) | Chief Financial Officer of Gestora de Inversiones Audiovisuales La Sexta, S.A. | Former Member of the Boards of Promecap, S.C. and Grupo Financiero del Sureste, S.A., former Director of Corporate Finance of Scotiabank Inverlat, S.A. and former Vice President of Administration of Grupo Televisa | April 1999 | |||
Francisco José Chévez Robelo (07/03/29) | Retired Partner of Chévez, Ruiz, Zamarripa y Cía., S.C. and Chairman of the Audit and Corporate Practices Committee of Grupo Televisa and Empresas Cablevisión, S.A.B. | Member of the Board of Empresas Cablevisión, S.A.B. de C.V. and former Partner of Chévez, Ruíz, Zamarripa y Cía., S.C. | April 2003 | |||
José Luis Fernández Fernández (05/18/59) | Partner of Chévez, Ruíz, Zamarripa y Cía., S.C. | Former Member of the Boards of Alexander Forbes, S.A. de C.V. and Afore Bital, S.A. | April 2002 |
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Name and Date of Birth | Principal Occupation | Business Experience | First Elected | |||
Salvi Rafael Folch Viadero (08/16/67) | Chief Financial Officer of Grupo Televisa | Former Vice President of Financial Planning of Grupo Televisa, Chief Executive Officer and Chief Financial Officer of Comercio Más, S.A. de C.V. and former Vice Chairman of Banking Supervision of the National Banking and Securities Commission | April 2002 | |||
Leopoldo Gómez González Blanco (04/06/59) | Vice President of Newscasts of Grupo Televisa | Former Director of Information to the President of Grupo Televisa | April 2003 | |||
Jorge Agustín Lutteroth Echegoyen (01/24/53) | Vice President and Corporate Controller of Grupo Televisa | Former Senior Partner of Coopers & Lybrand Despacho Roberto Casas Alatriste, S.C. | April 2000 | |||
Alberto Javier Montiel Castellanos (11/22/45) | Director of Montiel Font y Asociados, S.C. and Member of the Audit and Corporate Practices Committees of Grupo Televisa and Empresas Cablevisión, S.A.B. | Former Tax Vice President of Grupo Televisa and Former Tax Director of Wal-Mart de México, S.A.B. de C.V. | April 2002 | |||
Raúl Morales Medrano (05/12/70) | Partner of Chévez, Ruiz, Zamarripa y Cia., S.C. | Former Senior Manager of Chévez, Ruiz, Zamarripa y Cia., S.C. | April 2002 |
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• | our principals, employees or managers, as well as the statutory auditors, orcomisarios, of our subsidiaries, including those individuals who have occupied any of the described positions within a period of 12 months preceding the appointment; | ||
• | individuals who have significant influence over our decision making processes; | ||
• | controlling stockholders, in our case, the beneficiaries of the Stockholder Trust; | ||
• | partners or employees of any company which provides advisory services to us or any company which is part of the same economic group as we are and that receives 10% or more of its income from us; | ||
• | significant clients, suppliers, debtors or creditors, or members of the Board or executive officers of any such entities; or | ||
• | spouses, family relatives up to the fourth degree, or cohabitants of any of the aforementioned individuals. |
• | our general strategy; | ||
• | with input from the Audit and Corporate Practices Committee, on an individual basis: (i) any transactions with related parties, subject to certain limited exceptions, (ii) the appointment of our Chief Executive Officer, his compensation and removal for justified causes; (iii) our financial statements and those of our subsidiaries, (iv) unusual or non-recurrent transactions and any transactions or series of related transactions during any calendar year that involve (a) the acquisition or sale of assets with a value equal to or exceeding 5% of our consolidated assets; or (b) the giving of collateral or guarantees or the assumption of liabilities, equal to or exceeding 5% of our consolidated assets, (v) agreements with our external auditors; and (vi) accounting policies, within GAAP; |
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• | creation of special committees and granting them the power and authority, provided that the committees will not have the authority which by law or under our by-laws is expressly reserved for the stockholders or the Board; |
• | matters related to antitakeover provisions provided for in our bylaws; and | ||
• | the exercise of our general powers in order to comply with our corporate purpose. |
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Name and Date of Birth | Principal Position | Business Experience | First Appointed | |||
Emilio Fernando Azcárraga Jean (02/21/68) | Chairman of the Board, President and Chief Executive Officer and President of the Executive Committee of Grupo Televisa | Member of the Board of Banco Nacional de México, S.A., former Member of the Board of Teléfonos de México, S.A.B. de C.V. and former Vice Chairman of the Board of Univision | March 1997 | |||
In alphabetical order: | ||||||
Alfonso de Angoitia Noriega (01/17/62) | Executive Vice President and Member of the Executive Office of the Chairman and Member of the Executive Committee of Grupo Televisa | Former Chief Financial Officer of Grupo Televisa, Member of the Board and of the Executive Committee of Grupo Televisa, former Alternate Member of the Board of Univision and Partner, Mijares, Angoitia, Cortés y Fuentes, S.C. (1994-1999) | January 2004 | |||
Félix José Araujo Ramírez (03/20/51) | President of Telesistema Mexicano, S.A. de C.V.; Vice President of Televisa Regional | Former Private Investor in Promoción y Programación de la Provincia, S.A. de C.V., Promoción y Programación del Valle de Lerma, S.A. de C.V., Promoción y Programación del Sureste, S.A. de C.V., Teleimagen Profesional del Centro, S.A. de C.V. and Estrategia Satélite, S.C. | January 1993 | |||
Maximiliano Arteaga Carlebach (12/06/42) | Vice President of Operations, Technical Service and Television Production of Grupo Televisa | Former Vice President of Operations — Televisa Chapultepec, former Vice President of Administration — Televisa San Angel and Chapultepec and former Vice President of Administration and Finance of Univisa, Inc. | March 2002 |
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Name and Date of Birth | Principal Position | Business Experience | First Appointed | ||||
José Antonio Bastón Patiño (04/13/68) | Corporate Vice President of Television of Grupo Televisa | Member of the Board and of the Executive Committee of Grupo Televisa, former Vice President of Operations of Grupo Televisa, former General Director of Programming of Grupo Televisa and former Member of the Board of Univision | February 2001 | ||||
Jean Paul Broc Haro (08/08/62) | Chief Executive Officer of Cablevisión | Former General Manager of Pay Television Networks of Grupo Televisa | February 2003 | ||||
Salvi Rafael Folch Viadero (08/16/67) | Chief Financial Officer of Grupo Televisa | Former Vice President of Financial Planning of Grupo Televisa, Chief Executive Officer and Chief Financial Officer of Comercio Más, S.A. de C.V. and former Vice Chairman of Banking Supervision of the National Banking and Securities Commission | January 2004 | ||||
Bernardo Gómez Martínez (07/24/67) | Executive Vice President and Member of the Executive Office of the Chairman and Member of the Executive Committee of Grupo Televisa | Former Deputy to the President of Grupo Televisa, member of the Board and of the Executive Committee of Televisa and former President of the Mexican Chamber of Television and Radio Broadcasters | January 2004 | ||||
Eduardo Michelsen Delgado (03/03/71) | Chief Executive Officer of Editorial Televisa and Vice President of Editorial Televisa International | Former Vice President of Operations of Editorial Televisa International Former General Director – Grupo Semana Former Project Director – McKinsey & Co. | January 2002 | ||||
Jorge Eduardo Murguía Orozco (01/25/50) | Vice President of Production of Grupo Televisa | Former Administrative Vice President and former Director of Human Resources of Televisa | March 1992 | ||||
Alejandro Quintero Iñiguez (02/11/50) | Corporate Vice President of Sales and Marketing of Grupo Televisa | Member of the Board and of the Executive Committee of Grupo Televisa, Stockholder and Member of the Board of Grupo TV Promo, S.A. de C.V. and former advisor to former Mexican President Ernesto Zedillo | April 1998 | ||||
Francisco Javier Mérida Guzmán (07/31/67) | Chief Executive Officer of Sistema Radiópolis | Former General Director of Cadena SER Former National Sales Manager of Cadena SER | October 2006 | ||||
Alexandre Moreira Penna (12/25/54) | Chief Executive Officer of Innova | Former Vice President of Corporate Finance of Grupo Televisa and former Managing Director of JPMorgan Chase | January 2004 |
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Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Total number of employees | 14,140 | 15,076 | 16,205 | |||||||||
Category of activity: | ||||||||||||
Employees | 14,104 | 15,042 | 16,170 | |||||||||
Executives | 36 | 34 | 35 | |||||||||
Geographic location: |
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Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Mexico | 12,769 | 13,680 | 14,629 | |||||||||
Latin America (other than Mexico) | 965 | 954 | 1,131 | |||||||||
U.S | 398 | 435 | 437 | |||||||||
Spain | 8 | 7 | 8 |
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Aggregate | ||||||||||||||||||||||||||||||||||||
Percentage of | ||||||||||||||||||||||||||||||||||||
Share Beneficially Owned(1)(2) | Outstanding | |||||||||||||||||||||||||||||||||||
A Shares | B Shares | D Shares | L Shares | Shares | ||||||||||||||||||||||||||||||||
Percentage | Percentage | Percentage | Percentage | Beneficially | ||||||||||||||||||||||||||||||||
Identity of Owner | Number | of Class | Number | of Class | Number | of Class | Number | of Class | Owned | |||||||||||||||||||||||||||
Azcárraga Trust(3) | 52,991,825,693 | 43.7 | % | 67,814,604 | 0.1 | % | 107,886,870 | 0.1 | % | 107,886,870 | 0.1 | % | 15.1 | % | ||||||||||||||||||||||
Inbursa Trust(3) | 1,657,549,900 | 1.4 | % | 1,458,643,912 | 2.5 | % | 2,320,569,860 | 2.7 | % | 2,320,569,860 | 2.7 | % | 2.2 | % | ||||||||||||||||||||||
Investor Trust(3) | — | 0.0 | % | — | 0.0 | % | — | 0.0 | % | — | 0.0 | % | 0.0 | % | ||||||||||||||||||||||
Morgan Stanley Investment Management Inc.(4) | 3,677,147,625 | 3.0 | % | 3,235,889,910 | 5.6 | % | 5,148,006,675 | 5.9 | % | 5,148,006,675 | 5.9 | % | 4.9 | % | ||||||||||||||||||||||
Capital Research and Management Co. (5) | 3,250,400,000 | 2.7 | % | 2,860,352,000 | 5.0 | % | 4,550,560,000 | 5.2 | % | 4,550,560,000 | 5.2 | % | 4.3 | % | ||||||||||||||||||||||
Cascade Investment, L.L.C.(6) | 3,173,600,000 | 2.6 | % | 2,792,768,000 | 4.9 | % | 4,443,040,000 | 5.1 | % | 4,443,040,000 | 5.1 | % | 4.2 | % |
(1) | Unless otherwise indicated, the information presented in this section is based on the number of shares authorized, issued and outstanding as of May 31, 2007. The number of shares issued and outstanding for legal purposes as of May 31, 2007 was 62,461,173,050 series A Shares, 54,965,832,284 series B Shares, 87,445,642,270 series D Shares and 87,445,642,270 series L Shares, in the form of CPOs, and an additional 58,926,613,375 series A Shares, 2,357,207,692 series B Shares, 238,595 series D Shares and 238,595 series L Shares not in the form of CPOs. For financial reporting purposes under Mexican FRS only, the number of shares authorized, issued and outstanding as of May 31, 2006 was 60,007,307,400 series A Shares, 52,806,430,512 series B Shares, 84,010,230,360 series D Shares and 84,010,230,360 series L Shares in the form of CPOs, and an additional 52,915,848,965 series A Shares, 186,537 series B Shares, 238,541 series D Shares and 238,541 series L Shares not in the form of CPOs. The number of shares authorized, issued and outstanding for financial reporting purposes under Mexican FRS as of May 31, 2007 does not include: (i) 31,319,122 CPOs and an additional 516,887,975 series A Shares, 20,675,534 series B Shares, 25 series D Shares and 25 series L Shares not in the form of CPOs acquired by one of our subsidiaries, Televisa, S.A. de C.V., substantially all of which are currently held by the trust created to implement our stock purchase plan; and (ii) 66,835,504 CPOs and an additional 5,493,876,435 series A Shares, 2,336,345,621 series B Shares, 29 series D Shares and 29 series L Shares not in the form of CPOs acquired by the trust we created to implement our long-term retention plan. See Notes 2 and 12 to our year-end financial statements. | |
(2) | Except indirectly through the Stockholder Trust, none of our directors and executive officers currently beneficially owns more than 1% of our outstanding A Shares, L Shares or D Shares. See “Management — Share Ownership of Directors and Officers”. This information is based on information provided by directors and executive officers. | |
(3) | For a description of the Stockholder Trust, see “— The Major Stockholders” below. | |
(4) | Based solely on information included in the Report on Form 13F filed on March 31, 2007 by Morgan Stanley Investment Management, Inc. | |
(5) | Based solely on information included in the Report on Form 13F filed on March 31, 2007 by Capital Research and Management Co. | |
(6) | Based solely on information included in the Report on Form 13F filed on March 31, 2007 by Cascade Investment, LLC. |
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• | News Corp. contributed to Innova an account receivable of U.S.$15 million owed to News Corp. by Sky DTH, S. de R.L. de C.V., or Sky DTH; | ||
• | We assigned to Sky DTH an account receivable of U.S.$15 million owed to us by Innova; and | ||
• | Innova, Innova Holdings, News Corp., Liberty Media and Sky DTH agreed that the obligation owed by Innova to Sky DTH and the obligation owed by Sky DTH to Innova would be set off against each other and cancelled. |
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Nominal Pesos per CPO(1) | ||||||||
High | Low | |||||||
2002 | Ps. | 22.31 | Ps. | 12.44 | ||||
2003 | Ps. | 23.56 | Ps. | 12.63 | ||||
2004 | Ps. | 34.93 | Ps. | 22.22 | ||||
First Quarter | 26.35 | 22.22 | ||||||
Second Quarter | 26.74 | 22.73 | ||||||
Third Quarter | 30.15 | 24.82 | ||||||
Fourth Quarter | 34.93 | 30.24 | ||||||
December | 34.86 | 32.71 | ||||||
2005 | Ps. | 44.13 | Ps. | 29.20 | ||||
First Quarter | 36.27 | 31.67 | ||||||
Second Quarter | 34.27 | 29.20 | ||||||
Third Quarter | 39.23 | 33.40 | ||||||
Fourth Quarter | 44.13 | 36.51 | ||||||
December | 44.13 | 41.67 | ||||||
2006 | Ps. | 60.88 | Ps. | 37.67 | ||||
First Quarter | 44.96 | 40.49 | ||||||
Second Quarter | 49.72 | 37.67 | ||||||
Third Quarter | 47.00 | 39.89 | ||||||
Fourth Quarter | 60.88 | 46.17 | ||||||
December | 60.88 | 57.88 | ||||||
2007 (through June 22, 2007) | Ps. | 68.10 | Ps. | 58.50 | ||||
First Quarter | 66.68 | 58.50 | ||||||
January | 64.98 | 58.50 | ||||||
February | 66.68 | 61.10 | ||||||
March | 65.90 | 58.99 | ||||||
Second Quarter (through June 22, 2007) | 68.10 | 58.64 | ||||||
April | 68.10 | 61.50 | ||||||
May | 65.44 | 60.34 | ||||||
June (through June 22, 2007) | 62.06 | 58.64 |
(1) | Source: Mexican Stock Exchange. |
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U.S. Dollars per GDS(1) | ||||||||
High | Low | |||||||
2002 | U.S.$ | 12.1625 | U.S.$ | 6.075 | ||||
2003 | U.S.$ | 10.5675 | U.S.$ | 5.815 | ||||
2004 | U.S.$ | 15.6625 | U.S.$ | 9.8075 | ||||
First Quarter | 11.835 | 10.02 | ||||||
Second Quarter | 11.915 | 9.8075 | ||||||
Third Quarter | 13.225 | 10.8975 | ||||||
Fourth Quarter | 15.6625 | 13.31 | ||||||
December | 15.6625 | 14.3825 | ||||||
2005 | U.S.$ | 20.775 | U.S.$ | 13.1875 | ||||
First Quarter | 16.39 | 14.125 | ||||||
Second Quarter | 15.5225 | 13.1875 | ||||||
Third Quarter | 18.165 | 15.5825 | ||||||
Fourth Quarter | 20.775 | 16.7025 | ||||||
December | 20.775 | 19.935 | ||||||
2006 | U.S.$ | 28.20 | U.S.$ | 16.38 | ||||
First Quarter | 21.35 | 18.77 | ||||||
Second Quarter | 22.87 | 16.38 | ||||||
Third Quarter | 21.51 | 18.11 | ||||||
Fourth Quarter | 28.20 | 21.13 | ||||||
December | 28.20 | 26.65 | ||||||
2007 (through June 22, 2007) | U.S.$ | 31.14 | U.S.$ | 26.35 | ||||
First Quarter | 30.12 | 26.35 | ||||||
January | 29.48 | 27.00 | ||||||
February | 30.12 | 27.23 | ||||||
March | 29.82 | 26.35 | ||||||
Second Quarter (through June 22, 2007) | 31.14 | 26.76 | ||||||
April | 31.14 | 28.05 | ||||||
May | 30.36 | 27.90 | ||||||
June (through June 22, 2007) | 28.87 | 26.76 |
(1) | Source: NYSE. |
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• | a minimum number of years of operating history; | ||
• | a minimum financial condition; | ||
• | a minimum number of shares or CPOs to be publicly offered to public investors; | ||
• | a minimum price for the securities to be offered; | ||
• | a minimum of 15% of the capital stock placed among public investors; | ||
• | a minimum of 200 holders of shares or of shares represented by CPOs, who are deemed to be public investors under the General CNBV Rules, upon the completion of the offering; | ||
• | the following distribution of the securities offered pursuant to an offering in Mexico: (i) at least 50% of the total number of securities offered must be placed among investors who acquire less than 5% of the total number of securities offered; and (ii) no investor may acquire more than 40% of the total number of securities offered; and | ||
• | complied with certain corporate governance requirements. |
• | a minimum financial condition; | ||
• | minimum operating conditions, including a minimum number of trades; | ||
• | a minimum trading price of its securities; | ||
• | a minimum of 12% of the capital stock held by public investors; | ||
• | a minimum of 100 holders of shares or of shares represented by CPOs who are deemed to be public investors under the General CNBV Rules; and | ||
• | complied with certain corporate governance requirements. |
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• | the entering into or termination of joint venture agreements or agreements with key suppliers; | ||
• | the creation of new lines of businesses or services; | ||
• | significant deviations in expected or projected operating performance; | ||
• | the restructuring or payment of significant indebtedness; | ||
• | material litigation or labor conflicts; | ||
• | changes in dividend policy; | ||
• | the commencement of any insolvency, suspension or bankruptcy proceedings; | ||
• | changes in the directors; and | ||
• | any other event that may have a material adverse effect on the results, financial condition or operations of the relevant issuer. |
• | if the issuer does not adequately disclose a material event; or | ||
• | upon price or volume volatility or changes in the offer or demand in respect of the relevant securities, which are not consistent with the historic performance of the securities and could not be explained solely by the information made publicly available under the General CNBV Rules. |
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• | members of a listed issuer’s board of directors, | ||
• | stockholders controlling 10% or more of a listed issuer’s outstanding share capital, | ||
• | advisors, | ||
• | groups controlling 25% or more of a listed issuer’s outstanding share capital and | ||
• | other insiders |
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• | our transformation from one type of company to another; | ||
• | any merger (even if we are the surviving entity); | ||
• | extension of our existence beyond our prescribed duration; | ||
• | our dissolution before our prescribed duration (which is currently December); |
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• | a change in our corporate purpose; | ||
• | a change in our nationality; and | ||
• | the cancellation from registration of the D Shares or the securities which represent the D Shares with the securities or special section of the National Registry of Securities, or NRS, and with any other Mexican or foreign stock exchange in which such shares or securities are registered. |
• | our transformation from one type of company to another; | ||
• | any merger in which we are not the surviving entity; and | ||
• | the cancellation from registration of the L Shares or the securities that represent the L Shares with the special section of the NRS. |
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• | first, to the payment of dividends with respect to the A Shares, the B Shares and the L Shares, in an equal amount per share, up to the amount of the D Share fixed preferred dividend; and | ||
• | second, to the payment of dividends with respect to the A Shares, B Shares, D Shares and L Shares, such that the dividend per share is equal. |
• | accrued but unpaid dividends in respect of their D Shares; plus | ||
• | the theoretical value of their D Shares as set forth in our bylaws. See “— Other Provisions — Dissolution or Liquidation.” |
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• | to be considered as Mexicans with respect to the L Shares and CPOs that they acquire or hold, as well as to the property, rights, concessions, participations or interests owned by us or to the rights and obligations derived from any agreements we have with the Mexican government; and | ||
• | not to invoke the protection of their own governments with respect to their ownership of L Shares and CPOs. |
• | any redemption shall be made on a pro-rata basis among all of our stockholders; | ||
• | to the extent that a redemption is effected through a public tender offer on the Mexican Stock Exchange, the stockholders’ resolution approving the redemption may empower our Board to specify the number of shares to be redeemed and appoint the related intermediary or purchase agent; and | ||
• | any redeemed shares must be cancelled. |
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• | holders of at least 10% of our outstanding capital stock to request our Chairman of the Board or of the Audit and Corporate Practices Committee to call a stockholders’ meeting in which they are entitled to vote; | ||
• | subject to the satisfaction of certain requirements under Mexican law, holders of at least 5% of our outstanding capital stock to bring an action for civil liabilities against our directors; | ||
• | holders of at least 10% of our Shares that are entitled to vote and are represented at a stockholders’ meeting to request postponement of resolutions with respect to any matter on which they were not sufficiently informed; and | ||
• | subject to the satisfaction of certain requirements under Mexican law, holders of at least 20% of our outstanding capital stock to contest and suspend any stockholder resolution. |
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NYSE rules | Mexican rules | |
Listed companies must have a majority of independent directors | The Mexican Securities Market Law requires that listed companies have at least 25% of independent directors. Our stockholder’s meeting is required to make a determination as to the independence of the directors. The definition of independence under the Mexican Securities Market Law differs in some aspects from the one applicable to U.S. issuers under the NYSE standard and prohibits, among other relationships, an independent director from |
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NYSE rules | Mexican rules | |
being an employee or officer of the company or a stockholder that may have influence over our officers, relevant clients and contractors, as well as certain relationships between the independent director and family members of the independent director. In addition, our bylaws broaden the definition of independent director. Our bylaws provide for an executive committee of our board of directors. The executive committee is currently composed of six members, and there are no applicable Mexican rules that require any of the members to be independent. The executive committee may generally exercise the powers of our board of directors, subject to certain exceptions. Our Chief Executive Officer is a member of our board of directors and the executive committee. | ||
Listed companies must have a nominating/corporate governance committee composed entirely of independent directors. | Listed companies are required to have a corporate practices committee. | |
Listed companies must have a compensation committee composed entirely of independent directors. | The Mexican Code of Best Corporate Practices recommends listed companies to have a compensation committee. While these rules are not legally binding, companies failing to comply with the Code’s recommendation must disclose publicly why their practices differ from those recommended by the Code. | |
Listed companies must have an audit committee with a minimum of three members and must be independent. | The Mexican Securities Market Law requires that listed companies must have an audit committee. The Chairman and the majority of the members must be independent. | |
Non-management directors must meet at regularly scheduled executive sessions without management. | Our non-management directors are not required to meet at executive sessions. The Mexican Code of Best Corporate Practices does not expressly recommend executive sessions. | |
Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. | Companies listed on the Mexican Stock Exchange are not required to adopt a code of ethics. However, we have adopted a code of ethics which is available free of charge through our offices. See Item 16B “Code of Ethics” for directions on how to obtain a copy of our code of ethics. Waivers involving any of our executive officers or directors will be made only by our Board of Directors or a designated committee of the Board. |
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• | that owns, directly, indirectly or through attribution, 2% or more of the total voting power or value of our outstanding Underlying Shares (including through ownership of GDSs); | ||
• | that is a dealer in securities, insurance company, financial institution, tax-exempt organization, U.S. expatriate, broker-dealer or trader in securities; or | ||
• | whose functional currency is not the U.S. Dollar. |
• | the tax consequences to the stockholders, partners or beneficiaries of a U.S. Holder; or | ||
• | special tax rules that may apply to a U.S. Holder that holds GDSs, CPOs or Underlying Shares as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment. |
• | the U.S. Internal Revenue Code of 1986, as amended, applicable U.S. Treasury regulations and judicial and administrative interpretations, and | ||
• | the convention between the Government of the United States of America and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, including the applicable protocols, collectively referred to herein as the “tax treaty,” |
• | is also based, in part, on the representations of the depositary with respect to the GDSs and on the assumption that each obligation in the deposit agreement relating to the GDSs and any related agreements will be performed in accordance with their terms. |
• | a citizen or individual resident of the United States; | ||
• | a corporation (or entity treated as a corporation for such purposes) created or organized in or under the laws of the United States, or any State thereof or the District of Columbia; | ||
• | an estate the income of which is included in gross income for U.S. federal income tax purposes regardless of source; or | ||
• | a trust, if either (x) it is subject to the primary supervision of a court within the United States and one or more “United States persons” has the authority to control all substantial decisions of the trust or (y) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a “United States person.” |
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• | is not a resident of Mexico for purposes of the tax treaty; | ||
• | is an individual who has a substantial presence in the United States; | ||
• | is entitled to the benefits of the tax treaty under the limitation on benefits provision contained in Article 17 of the tax treaty; and | ||
• | does not have a fixed place of business or a permanent establishment in Mexico with which its ownership of CPOs, GDSs or Underlying Shares is effectively connected. |
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• | the gain is effectively connected with the beneficial owners’ conduct of a trade or business in the United States; or | ||
• | the beneficial owner is an individual who holds CPOs, GDSs or Underlying Shares as a capital asset, is present in the United States for 183 days or more in the taxable year of the sale or exchange and meets other requirements. |
• | is a corporation or comes within an exempt category; or | ||
• | provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding tax and otherwise complies with the applicable requirements of the backup withholding rules. |
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• | an individual is a Mexican tax resident if the individual has established his home in Mexico. When an individual, in addition to his home in Mexico, has a home in another country, the individual will be a Mexican tax resident if his center of vital interests is located in Mexico. This will be deemed to occur if, among other circumstances, either (i) more than 50% of the total income obtained by the individual in the calendar year is Mexican source; or (ii) when the individual’s center of professional activities is located in Mexico. Unless otherwise proven, a Mexican national is considered a Mexican tax resident. | ||
• | a legal entity is considered a Mexico tax resident if it maintains the main administration of its head office, business, or the effective location of its management in Mexico. | ||
• | a foreign person with a permanent establishment in Mexico will be required to pay taxes in Mexico in accordance with the Mexican Tax Legislation for income attributable to such permanent establishment; and | ||
• | a foreign person without a permanent establishment in Mexico will be required to pay taxes in Mexico in respect of revenues proceeding from sources of wealth located in national territory. |
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Fair Value at December 31, | ||||||||||||
2005 | 2006 | 2006 | ||||||||||
(millions of Pesos in purchasing power as of | ||||||||||||
December 31, 2006 or millions of U.S. Dollars)(1) | ||||||||||||
Assets: | ||||||||||||
Temporary investments(2) | Ps | . 14,810.3 | Ps | . 15,134.9 | U.S.$1,401.0 | |||||||
Liabilities: | ||||||||||||
U.S. Dollar-denominated debt: | ||||||||||||
Long-term debt securities | 60.5 | — | — | |||||||||
Senior Notes due 2011(3) | 932.4 | 849.0 | 78.6 | |||||||||
Senior Notes due 2032(4) | 3,960.7 | 4,034.7 | 373.5 | |||||||||
Innova’s Senior Notes due 2013(5) | 3,662.1 | 128.2 | 11.9 | |||||||||
Senior Notes due 2025(7) | 6,844.8 | 6,795.1 | 629.0 | |||||||||
Peso-denominated debt: | ||||||||||||
UDI-denominated long-term loan facility(8) | 1,043.5 | 996.5 | 92.2 | |||||||||
Long-term notes payable to Mexican Banks(6) | 4,124.8 | 7,323.6 | 677.9 |
(1) | Peso amounts have been converted to U.S. Dollars solely for the convenience of the reader at a nominal exchange rate of Ps.10.8025 per U.S. Dollar, the Interbank Rate as of December 31, 2006. | |
(2) | At December 31, 2006, our temporary investments consisted of fixed rate short-term deposits in commercial banks (primarily Peso- and U.S. Dollar-denominated in 2005 and 2006). Given the short-term nature of these investments, an increase in U.S. and/or Mexican interest rates would not significantly decrease the fair value of these investments. | |
(3) | At December 31, 2006, fair value exceeded the carrying value of these notes by approximately Ps.71.7 million (U.S.$6.6 million). The increase in the fair value of these notes of a hypothetical 10% increase in the quoted market price of these notes would amount to approximately Ps.156.6 million (U.S.$14.5 million) at December 31, 2006. | |
(4) | At December 31, 2006, fair value exceeded the carrying value of these notes by approximately Ps.794.0 million (U.S.$73.5 million). The increase in the fair value of these notes of a hypothetical 10% increase in the quoted market price of these notes would amount to approximately Ps.1,197.5 million (U.S.$110.8 million) at December 31, 2006. | |
(5) | At December 31, 2006, fair value exceeded the carrying value of these notes by approximately Ps.6.7 million (U.S.$0.8 million). The increase in the fair value of these notes of a hypothetical 10% increase in the quoted market price of these notes would amount to approximately Ps.19.5 million (U.S.$2.0 million) at December 31, 2006. | |
(6) | At December 31, 2006, fair value exceeded the carrying value of these notes by approximately Ps.181.2 million (U.S.$16.8 million). At December 31, 2006, a hypothetical 10% increase in Mexican interest rates would increase the fair value of these notes by approximately Ps.913.5 million (U.S.$84.6 million) at December 31, 2006. | |
(7) | At December 31, 2006, fair value exceeded the carrying value of these notes by approximately Ps.313.6 million (U.S.$29.0 million). An increase in the fair value of these notes due to a hypothetical 10% increase in the quoted market price of these notes would amount to approximately Ps.993.1 million (U.S.$91.9 million) at December 31, 2006. | |
(8) | At December 31, 2006, fair value exceeded carrying value of amounts outstanding under this loan by approximately Ps.16.3 million (U.S.$1.5 million). At December 31, 2006, a hypothetical 10% increase in the Mexican inflation rate to 3.6% for the year 2006 would increase principal amounts outstanding under this UDI-denominated long-term loan facility by approximately Ps.115.90 million (U.S.$10.7 million). An inflation rate of less than 4.0% is forecasted by the Mexican government for 2006. We entered into inflation swap agreements to fix the inflation rate on this UDI-denominated facility at an annual rate of approximately 4%, however, we terminated these derivative agreements in March 2005. |
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Year Ended December 31, | ||||||||
2005 | 2006 | |||||||
(in millions of U.S. Dollars) | ||||||||
U.S. Dollar-denominated short-term investments and long-term notes receivable | U.S.$682.9 | U.S. $2,462.5 | ||||||
U.S. Dollar-denominated senior debt securities and other notes payable | 1,563.5 | 1,289.0 | ||||||
880.6 | (1,173.5 | ) | ||||||
Derivative instruments, net | (8.0 | ) | (6.3 | ) | ||||
Net liability (asset) position | U.S.$872.6 | U.S.$(1,179.8 | ) | |||||
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Avenida Vasco de Quiroga
No. 2000,
Colonia Santa Fe, 01210 México, D.F., México.
Telephone: (52) (55) 5261-2000.
2005 | 2006 | |||||||
(in millions of Pesos in purchasing power | ||||||||
as of December 31, 2006) | ||||||||
Audit Fees | Ps. | 41.4 | Ps. | 51.8 | ||||
Audit-Related Fees | 3.6 | 0.9 | ||||||
Tax Fees | 3.9 | 4.8 | ||||||
Other Fees | 12.0 | 21.7 | ||||||
Total | Ps. | 60.9 | Ps. | 79.2 | ||||
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Maximum Number (or | ||||||||||||||||
Total Number of | Appropriate Mexican Peso | |||||||||||||||
CPOs | Value) of CPOs | |||||||||||||||
Total Number | Purchased as part of | that May Yet Be | ||||||||||||||
of CPOs | Average Price | Publicly Announced | Purchased Under the | |||||||||||||
Purchase Date | Purchased | Paid per CPO(1) | Plans or Programs | Plans or Programs (2) | ||||||||||||
January 1 to January 31 | 2,244,100 | 42.490840 | 80,494,600 | Ps. | 1,933,286,837 | |||||||||||
February 1 to February 29 | — | — | 80,494,600 | 1,933,286,837 | ||||||||||||
March 1 to March 31 | 1,434,300 | 41.386854 | 81,928,900 | 1,873,925,671 | ||||||||||||
April 1 to April 30 | — | — | 81,928,900 | 1,873,925,671 | ||||||||||||
May 1 to May 31 | — | — | 81,928,900 | 1,873,925,671 | ||||||||||||
June 1 to June 30 | — | — | 81,928,900 | 1,873,925,671 | ||||||||||||
July 1 to July 31 | 7,670,000 | 41.264132 | 89,598,900 | 1,557,429,764 | ||||||||||||
August 1 to August 31 | 21,373,900 | 41.631392 | 110,972,800 | 667,604,567 | ||||||||||||
September 1 to September 30 | 15,052,700 | 44.488780 | 126,025,500 | �� | 2,293,676,390 | |||||||||||
October 1 to October 31 | 3,400,000 | 46.962657 | 129,425,500 | 2,134,003,451 | ||||||||||||
November 1 to November 30 | 3,310,100 | 54.644110 | 132,735,600 | 1,953,125,988 | ||||||||||||
December 1 to December 31 | 2,900,000 | 59.676881 | 135,635,600 | 1,780,063,039 | ||||||||||||
Total | 57,385,100 | Ps. | 44.337741 | 135,635,600 | Ps. | 1,780,063,039 |
(1) | The values have not been restated in constant Mexican Pesos and therefore represent nominal historical figures. | |
(2) | Our share repurchase program was announced in September of 2002 and is set to expire December 31, 2008. Our share repurchase program is limited to a total amount of U.S.$400 million. The total amount of our share repurchase program was updated in accordance with the resolution of the Grupo Televisa S.A.B.’s general stockholders meeting, held on April 28, 2006. | |
(3) | Table does not include repurchases or purchases by the special purpose trust formed in connection with our stock purchase plan. |
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formed in connection with Stock Purchase Plan(1)
Maximum Number (or | ||||||||||||||||
Appropriate Mexican Peso | ||||||||||||||||
Total Number of | Value) of CPOs | |||||||||||||||
Total Number | CPOs | that May Yet Be | ||||||||||||||
of CPOs | Average Price | Purchased as part of | Purchased Under the | |||||||||||||
Purchase Date | Purchased | Paid per CPO (2) | the Stock Purchase Plan | Stock Purchase Plan(3) | ||||||||||||
January 1 to January 31 | 725,700 | Ps. | 42.801465 | 56,079,000 | ||||||||||||
February 1 to February 29 | 150,000 | 41.624000 | 56,229,000 | |||||||||||||
March 1 to March 31 | 325,000 | 41.609883 | 56,554,000 | |||||||||||||
April 1 to April 30 | 20,000 | 43.150000 | 56,574,000 | |||||||||||||
May 1 to May 31 | — | — | 56,574,000 | |||||||||||||
June 1 to June 30 | — | — | 56,574,000 | |||||||||||||
July 1 to July 31 | 1,100,000 | 41.236002 | 57,674,000 | |||||||||||||
August 1 to August 31 | 1,128,300 | 40.830454 | 58,802,300 | |||||||||||||
September 1 to September 30 | — | — | 58,802,300 | |||||||||||||
October 1 to October 31 | 1,000 | 46.500000 | 58,803,300 | |||||||||||||
November 1 to November 30 | — | — | 58,803,300 | |||||||||||||
December 1 to December 31 | 360,000 | 59.634361 | 59,163,300 | |||||||||||||
Total | 3,810,000 | Ps. | 43.211105 | 59,163,300 |
(1) | See “Directors, Senior Management and Employees – Stock Purchase Plan” for a description of the implementation, limits and other terms of our Stock Purchase Plan. | |
(2) | The values have not been restated in constant Mexican Pesos and therefore represent nominal historical figures. | |
(3) | Since the number of additional shares that may be issued pursuant to our Stock Purchase Plan is affected by, among other things, the number of shares held by the special equity trust, periodic grants made to certain executives, the performance of those executives and the number of shares subject to other employee benefit plans, it would be misleading to imply that there is a defined maximum number of shares that remain to be purchased pursuant to our Stock Purchase Plan. |
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Exhibit | ||||
Number | Description of Exhibits | |||
1.1 | — | English translation of Amended and Restated Bylaws (Estatutos Sociales) of the Registrant, dated as of December 21, 2006. | ||
2.1 | — | Indenture relating to Senior Debt Securities, dated as of August 8, 2000, between the Registrant, as Issuer, and The Bank of New York, as Trustee (previously filed with the Securities and Exchange Commission as Exhibit 4.1 to the Registrant’s Registration Statement on Form F-4 (File number 333-12738), as amended (the “2000 Form F-4”), and incorporated herein by reference). | ||
2.2 | — | Third Supplemental Indenture relating to the 8% Senior Notes due 2011, dated as of September 13, 2001, between the Registrant, as Issuer, and The Bank of New York and Banque Internationale à Luxembourg, S.A. (previously filed with the Securities and Exchange Commission as Exhibit 4.4 to the Registrant’s Registration Statement on Form F-4 (File number 333-14200) (the “2001 Form F-4”) and incorporated herein by reference). | ||
2.3 | — | Fourth Supplemental Indenture relating to the 8.5% Senior Exchange Notes due 2032 between the Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg (previously filed with the Securities Exchange Commission as Exhibit 4.5 to the Registrant’s Registration Statement on Form F-4 (the “2002 Form F-4”) and incorporated herein by reference). | ||
2.4 | — | Fifth Supplemental Indenture relating to the 8% Senior Notes due 2011 between Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg (previously filed with the Securities and Exchange Commission as Exhibit 4.5 to the 2001 Form F-4 and incorporated herein by reference). | ||
2.5 | — | Sixth Supplemental Indenture relating to the 8.5% Senior Notes due 2032 between Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg (previously filed with the Securities and Exchange Commission as Exhibit 4.7 to the 2002 Form F-4 and incorporated herein by reference). | ||
2.6 | — | Seventh Supplemental Indenture relating to the 6 5/8% Senior Notes due 2025 between Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg, dated March 18, 2005 (previously filed with the Securities and Exchange Commission as Exhibit 2.8 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2004 (the “2004 Form 20-F”) and incorporated herein by reference). | ||
2.7 | — | Eighth Supplemental Indenture relating to the 6 5/8% Senior Notes due 2025 between Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg, dated May 26, 2005 (previously filed with the Securities and Exchange Commission as Exhibit 2.9 to the 2004 Form 20-F and incorporated herein by reference). | ||
2.8 | — | Ninth Supplemental Indenture relating to the 6 5/8% Senior Notes due 2025 between Registrant, as Issuer, The Bank of New York and Dexia Banque Internationale à Luxembourg, dated September 6, 2005 (previously filed with the Securities and Exchange Commission as Exhibit 2.8 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2005 (the “2005 Form 20-F”) and incorporated herein by reference). | ||
2.9 | — | Tenth Supplemental Indenture related to the 8.49% Senior Notes due 2037 between Registrant, as Issuer, The Bank of New York and The Bank of New York (Luxembourg) S.A., dated as of May 9, 2007. | ||
2.10 | — | Form of Deposit Agreement between the Registrant, JPMorgan Chase Bank, as depositary and all holders and beneficial owners of the Global Depositary Shares, evidenced by Global Depositary Receipts (previously filed with the Securities and Exchange Commission as an Exhibit to the Registrant’s Registration Statement on Form F-6 (File number 333-99195) (the “Form F-6”) and incorporated herein by reference). | ||
4.1 | — | Form of Indemnity Agreement between the Registrant and its directors and executive officers (previously filed with the Securities and Exchange Commission as Exhibit 10.1 to the Registrant’s Registration Statement on Form F-4 (File number 33-69636), as amended, (the “1993 Form F-4”) and incorporated herein by reference). | ||
4.2 | — | Amended and Restated Collateral Trust Agreement, dated as of June 13, 1997, as amended, among PanAmSat Corporation, Hughes Communications, Inc., Satellite Company, LLC, the Registrant and IBJ Schroder Bank and Trust Company (previously filed with the Securities and Exchange Commission as an Exhibit to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2001 (the “2001 Form 20-F”) and incorporated herein by reference). | ||
4.3 | — | Amended and Restated Program License Agreement, dated as of December 19, 2001, by and between Productora de Teleprogramas, S.A. de C.V. and Univision Communications Inc. (“Univision”) (previously filed with the Securities and Exchange Commission as Exhibit 10.7 to the 2001 Form F-4 and incorporated herein by reference). | ||
4.4 | — | Participation Agreement, dated as of October 2, 1996, by and among Univision, Perenchio, the Registrant, Venevision and certain of their respective affiliates (previously filed with the Securities and Exchange Commission as Exhibit 10.8 to |
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Exhibit | ||||
Number | Description of Exhibits | |||
Univision’s Registration Statement on Form S-1 (File number 333-6309) (the “Univision Form S-1”) and incorporated herein by reference). | ||||
4.5 | — | Amended and Restated International Program Rights Agreement, dated as of December 19, 2001, by and among Univision, Venevision and the Registrant (previously filed with the Securities and Exchange Commission as Exhibit 10.9 to the 2001 Form F-4 and incorporated herein by reference). | ||
4.6 | — | Co-Production Agreement, dated as of March 27, 1998, between the Registrant and Univision Network Limited Partnership (previously filed with the Securities and Exchange Commission as an Exhibit to Univision’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). | ||
4.7 | — | Program License Agreement, dated as of May 31, 2005, between Registrant and Univision (previously filed with the Securities and Exchange Commission as Exhibit 4.7 to the 2005 Form 20-F and incorporated herein by reference). | ||
4.8 | — | Amended and Restated Bylaws (Estatutos Sociales) of Innova, S. de R.L. de C.V. (“Innova”) dated as of December 22, 1998 (previously filed with the Securities and Exchange Commission as an Exhibit to Innova’s Annual Report on Form 20-F for the year ended December 31, 2004 and incorporated herein by reference). | ||
4.9 | — | English translation of investment agreement, dated as of March 26, 2006, between Registrant and M/A and Gestora de Inversiones Audiovisuales La Sexta, S.A. (previously filed with the Securities and Exchange Commission as Exhibit 4.7 to the 2005 Form 20-F and incorporated herein by reference). | ||
4.10 | — | English summary of Ps.1,162.5 million credit agreement, dated as of May 17, 2004, between the Registrant and Banamex (the “May 2004 Credit Agreement”) and the May 2004 Credit Agreement (in Spanish) (previously filed with the Securities and Exchange Commission as Exhibit 4.9 to the 2004 Form 20-F and incorporated herein by reference). | ||
4.11 | — | English summary of amendment to the May Credit Agreement and the amendment to the May 2004 Credit Agreement (in Spanish) (previously filed with the Securities and Exchange Commission as Exhibit 4.10 to the 2004 Form 20-F and incorporated herein by reference). | ||
4.12 | — | English summary of Ps.2,000.0 million credit agreement, dated as of October 22, 2004, between the Registrant and Banamex (the “October 2004 Credit Agreement”) and the October Credit Agreement (in Spanish) (previously filed with the Securities and Exchange Commission as Exhibit 4.11 to the 2004 Form 20-F and incorporated herein by reference). | ||
4.13 | — | English translation of Ps.2,100.0 million credit agreement, dated as of March 10, 2006, by and among Innova, the Registrant and Banamex (previously filed with the Securities and Exchange Commission as Exhibit 4.7 to the 2005 Form 20-F and incorporated herein by reference). | ||
4.14 | — | English summary of Ps.1,400.0 million credit agreement, dated as of April 7, 2006, by and among Innova, the Registrant and Banco Santander Serfin, S.A. (the “April 2006 Credit Agreement”) and the April Credit Agreement (in Spanish) (previously filed with the Securities and Exchange Commission as Exhibit 4.7 to the 2005 Form 20-F and incorporated herein by reference). | ||
4.15 | — | Administration Trust Agreement relating to Trust No. 80375, dated as of March 23, 2004, by and among Nacional Financiera, S.N.C., as trustee of Trust No. 80370, Banco Inbursa, S.A., as trustee of Trust No. F/0553, Banco Nacional de México, S.A., as trustee of Trust No. 14520-1, Nacional Financiera, S.N.C., as trustee of Trust No. 80375, Emilio Azcárraga Jean, Promotora Inbursa, S.A. de C.V., Grupo Televisa, S.A.B. and Grupo Televicentro, S.A. de C.V. (as previously filed with the Securities and Exchange Commission as an Exhibit to Schedules 13D or 13D/A in respect of various parties’ to the Trust Agreement (File number 005-60431) and incorporated herein by reference). | ||
8.1 | — | List of Subsidiaries of Registrant. | ||
12.1 | — | CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated June 26, 2007. | ||
12.2 | — | CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated June 26, 2007. | ||
13.1 | — | CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated June 26, 2007. | ||
13.2 | — | CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated June 26, 2007. |
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GRUPO TELEVISA, S.A.B. | ||||||
By: | /s/ Salvi Folch Viadero | |||||
Name: Title: | Salvi Folch Viadero Chief Financial Officer | |||||
By: | /s/ Joaquín Balcárcel Santa Cruz | |||||
Name: Title: | Vice President — Legal and General Counsel |
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GRUPO TELEVISA, S.A.B.
Page | ||
F-1 | ||
F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 |
Table of Contents
Audit Partner
June 21, 2007
F-1
Table of Contents
Univision Communications Inc.
March 10, 2006
F-2
Table of Contents
As of December 31, 2005 and 2006
(In thousands of Mexican pesos in purchasing power as of December 31, 2006)
(Notes 1 and 2)
2005 | 2006 | |||||||||||
ASSETS | ||||||||||||
Current: | ||||||||||||
Available: | ||||||||||||
Cash | Ps. | 566,655 | Ps. | 675,840 | ||||||||
Temporary investments | 14,810,279 | 15,134,908 | ||||||||||
15,376,934 | 15,810,748 | |||||||||||
Trade notes and accounts receivable, net | (Note 3) | 14,459,545 | 13,597,569 | |||||||||
Other accounts and notes receivable, net | 593,738 | 1,488,340 | ||||||||||
Due from affiliated companies | (Note 16) | 336,273 | 184,814 | |||||||||
Transmission rights and programming | (Note 4) | 3,246,981 | 3,053,174 | |||||||||
Inventories | 664,151 | 772,890 | ||||||||||
Available-for-sale investment | (Note 5) | — | 11,821,932 | |||||||||
Other current assets | 601,498 | 771,083 | ||||||||||
Total current assets | 35,279,120 | 47,500,550 | ||||||||||
Transmission rights and programming, noncurrent | (Note 4) | 4,079,892 | 3,428,848 | |||||||||
Investments | (Note 5) | 7,895,046 | 5,710,663 | |||||||||
Property, plant and equipment, net | (Note 6) | 20,528,184 | 20,975,939 | |||||||||
Intangible assets and deferred charges, net | (Note 7) | 10,419,131 | 5,390,082 | |||||||||
Other assets | 20,528 | 24,408 | ||||||||||
Total assets | Ps. | 78,221,901 | Ps. | 83,030,490 | ||||||||
LIABILITIES | ||||||||||||
Current: | ||||||||||||
Current portion of long-term debt | (Note 8) | Ps. | 354,256 | Ps. | 986,368 | |||||||
Current portion of satellite transponder lease obligation | (Note 8) | 78,668 | 86,176 | |||||||||
Trade accounts payable | 3,074,484 | 3,450,753 | ||||||||||
Customer deposits and advances | 16,168,025 | 16,893,604 | ||||||||||
Taxes payable | 1,098,587 | 1,179,477 | ||||||||||
Accrued interest | 348,171 | 262,064 | ||||||||||
Due to affiliated companies | (Note 16) | 810,655 | 38,133 | |||||||||
Other accrued liabilities | 1,645,009 | 2,047,737 | ||||||||||
Total current liabilities | 23,577,855 | 24,944,312 | ||||||||||
Long-term debt, net of current portion | (Note 8) | 18,872,379 | 17,795,330 | |||||||||
Satellite transponder lease obligation, net of current portion | (Note 8) | 1,235,042 | 1,120,415 | |||||||||
Customer deposits and advances, noncurrent | 2,609,862 | 268,200 | ||||||||||
Other long-term liabilities | 480,074 | 522,047 | ||||||||||
Deferred taxes | (Note 20) | 172,371 | 1,488,778 | |||||||||
Pension plans, seniority premiums and severance indemnities | (Note 10) | 199,949 | 287,035 | |||||||||
Total liabilities | 47,147,532 | 46,426,117 | ||||||||||
Commitments and contingencies | (Note 11) | |||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||
Capital stock issued, no par value | (Note 12) | 10,290,302 | 10,126,212 | |||||||||
Additional paid-in capital | 4,383,180 | 4,383,180 | ||||||||||
14,673,482 | 14,509,392 | |||||||||||
Retained earnings: | (Note 13) | |||||||||||
Legal reserve | 1,871,279 | 2,058,060 | ||||||||||
Reserve for repurchase of shares | 5,977,422 | 4,459,258 | ||||||||||
Unappropriated earnings | 12,313,812 | 16,715,254 | ||||||||||
Net income for the year | 6,373,822 | 8,586,188 | ||||||||||
26,536,335 | 31,818,760 | |||||||||||
Accumulated other comprehensive loss, net | (Note 14) | (3,690,105 | ) | (3,703,701 | ) | |||||||
Shares repurchased | (Note 13) | (7,330,702 | ) | (7,603,171 | ) | |||||||
15,515,528 | 20,511,888 | |||||||||||
Total majority interest | 30,189,010 | 35,021,280 | ||||||||||
Minority interest | (Note 15) | 885,359 | 1,583,093 | |||||||||
Total stockholders’ equity | 31,074,369 | 36,604,373 | ||||||||||
Total liabilities and stockholders’ equity | Ps. | 78,221,901 | Ps. | 83,030,490 | ||||||||
F-3
Table of Contents
For the Years Ended December 31, 2004, 2005 and 2006
(In thousands of Mexican pesos in purchasing power as of December 31, 2006,
except per CPO amounts)
(Notes 1 and 2)
2004 | 2005 | 2006 | ||||||||||||||
Net sales | (Note 23) | Ps. | 31,518,972 | Ps. | 33,797,563 | Ps. | 37,931,841 | |||||||||
Cost of sales (excluding depreciation and amortization) | 15,949,394 | 15,350,340 | 16,182,882 | |||||||||||||
Operating expenses (excluding depreciation and amortization): | ||||||||||||||||
Selling | 2,366,583 | 2,773,497 | 3,016,828 | |||||||||||||
Administrative | 1,770,461 | 1,916,065 | 2,304,171 | |||||||||||||
Depreciation and amortization | 2,231,065 | 2,517,015 | 2,679,066 | |||||||||||||
Operating income | (Note 23) | 9,201,469 | 11,240,646 | 13,748,894 | ||||||||||||
Integral cost of financing, net | (Note 17) | 1,630,188 | 1,854,259 | 1,099,691 | ||||||||||||
Restructuring and non-recurring charges | (Note 18) | 424,977 | 239,220 | 614,354 | ||||||||||||
Other expense, net | (Note 19) | 553,730 | 483,037 | 211,041 | ||||||||||||
Income before income taxes and employees’ profit sharing | 6,592,574 | 8,664,130 | 11,823,808 | |||||||||||||
Income taxes | (Note 20) | 1,257,804 | 781,692 | 2,016,671 | ||||||||||||
Employees’ profit sharing | (Note 20) | 7,009 | 20,714 | 30,502 | ||||||||||||
1,264,813 | 802,406 | 2,047,173 | ||||||||||||||
Income before equity in results of affiliates and cumulative loss of accounting change | 5,327,761 | 7,861,724 | 9,776,635 | |||||||||||||
Equity in earnings (losses) of affiliates, net | (Note 5) | 661,247 | 166,649 | (602,206 | ) | |||||||||||
Cumulative loss of accounting change, net | (Note 1(b)(n)(r)) | (1,098,423 | ) | (526,592 | ) | — | ||||||||||
Consolidated net income | 4,890,585 | 7,501,781 | 9,174,429 | |||||||||||||
Minority interest | (Note 15) | (249,181 | ) | (1,127,959 | ) | (588,241 | ) | |||||||||
Net income | (Note 13) | Ps. | 4,641,404 | Ps. | 6,373,822 | Ps. | 8,586,188 | |||||||||
Net income per CPO | (Note 21) | Ps. | 1.60 | Ps. | 2.19 | Ps. | 2.96 | |||||||||
F-4
Table of Contents
For the Years Ended December 31, 2004, 2005 and 2006
(In thousands of Mexican pesos in purchasing power as of December 31, 2006)
(Notes 1 and 2)
Accumulated | ||||||||||||||||||||||||||||||||
Capital | Other | |||||||||||||||||||||||||||||||
Stock | Additional | Retained | Comprehensive | Shares | Total | Minority | Total | |||||||||||||||||||||||||
Issued | Paid-In | Earnings | Loss | Repurchased | Majority | Interest | Stockholders’ | |||||||||||||||||||||||||
(Note 12) | Capital | (Note 13) | (Note 14) | (Note 13) | Interest | (Note 15) | Equity | |||||||||||||||||||||||||
Balance at January 1, 2004 | Ps. | 9,282,794 | Ps. | 4,383,180 | Ps. | 25,959,456 | Ps. | (2,537,465 | ) | Ps. | (7,175,060 | ) | Ps. | 29,912,905 | Ps. | 1,219,971 | Ps. | 31,132,876 | ||||||||||||||
Dividends | — | — | (4,280,816 | ) | — | — | (4,280,816 | ) | — | (4,280,816 | ) | |||||||||||||||||||||
Stock dividends | 1,007,508 | — | (1,007,508 | ) | — | — | — | — | — | |||||||||||||||||||||||
Repurchase of capital stock | — | — | (138,276 | ) | — | (738,472 | ) | (876,748 | ) | — | (876,748 | ) | ||||||||||||||||||||
Sale of repurchase shares | — | — | (515,169 | ) | — | 1,145,445 | 630,276 | — | 630,276 | |||||||||||||||||||||||
Decrease in minority interest | — | — | — | — | — | — | (1,349,582 | ) | (1,349,582 | ) | ||||||||||||||||||||||
Comprehensive income (loss) | — | — | 4,641,404 | (217,291 | ) | — | 4,424,113 | — | 4,424,113 | |||||||||||||||||||||||
Balance at December 31, 2004 | 10,290,302 | 4,383,180 | 24,659,091 | (2,754,756 | ) | (6,768,087 | ) | 29,809,730 | (129,611 | ) | 29,680,119 | |||||||||||||||||||||
Dividends | — | — | (4,480,311 | ) | — | — | (4,480,311 | ) | — | (4,480,311 | ) | |||||||||||||||||||||
Repurchase of capital stock | — | — | — | — | (1,242,838 | ) | (1,242,838 | ) | — | (1,242,838 | ) | |||||||||||||||||||||
Sale of repurchase shares | — | — | (352,915 | ) | — | 680,223 | 327,308 | — | 327,308 | |||||||||||||||||||||||
Increase in minority interest | — | — | — | — | — | — | 1,014,970 | 1,014,970 | ||||||||||||||||||||||||
Stock-based compensation | — | — | 336,648 | — | — | 336,648 | — | 336,648 | ||||||||||||||||||||||||
Comprehensive income (loss) | — | — | 6,373,822 | (935,349 | ) | — | 5,438,473 | — | 5,438,473 | |||||||||||||||||||||||
Balance at December 31, 2005 | 10,290,302 | 4,383,180 | 26,536,335 | (3,690,105 | ) | (7,330,702 | ) | 30,189,010 | 885,359 | 31,074,369 | ||||||||||||||||||||||
Dividends | — | — | (1,119,749 | ) | — | — | (1,119,749 | ) | — | (1,119,749 | ) | |||||||||||||||||||||
Share cancellation | (164,090 | ) | — | (1,518,164 | ) | — | 1,682,254 | — | — | — | ||||||||||||||||||||||
Repurchase of capital stock | — | — | — | — | (3,107,697 | ) | (3,107,697 | ) | — | (3,107,697 | ) | |||||||||||||||||||||
Sale of repurchase shares | — | — | (586,984 | ) | — | 1,152,974 | 565,990 | — | 565,990 | |||||||||||||||||||||||
Increase in minority interest | — | — | — | — | — | — | 697,734 | 697,734 | ||||||||||||||||||||||||
Benefit from capital contribution of minority interest in Sky Mexico | — | — | 371,627 | — | — | 371,627 | — | 371,627 | ||||||||||||||||||||||||
Loss on minority interest acquisition of Sky Mexico | — | — | (685,540 | ) | — | — | (685,540 | ) | — | (685,540 | ) | |||||||||||||||||||||
Stock-based compensation | — | — | 235,047 | — | — | 235,047 | — | 235,047 | ||||||||||||||||||||||||
Comprehensive income (loss) | — | — | 8,586,188 | (13,596 | ) | — | 8,572,592 | — | 8,572,592 | |||||||||||||||||||||||
Balance at December 31, 2006 | Ps. | 10,126,212 | Ps. | 4,383,180 | Ps. | 31,818,760 | Ps. | (3,703,701 | ) | Ps. | (7,603,171 | ) | Ps. | 35,021,280 | Ps. | 1,583,093 | Ps. | 36,604,373 | ||||||||||||||
F-5
Table of Contents
For the Years Ended December 31, 2004, 2005 and 2006
(In thousands of Mexican pesos in purchasing power as of December 31, 2006)
(Notes 1 and 2)
2004 | 2005 | 2006 | ||||||||||
Operating activities: | ||||||||||||
Consolidated net income | Ps. | 4,890,585 | Ps. | 7,501,781 | Ps. | 9,174,429 | ||||||
Adjustments to reconcile net income to resources provided by (used for) operating activities: | ||||||||||||
Equity in (earnings) losses of affiliates | (661,247 | ) | (166,649 | ) | 602,206 | |||||||
Depreciation and amortization | 2,231,065 | 2,517,015 | 2,679,066 | |||||||||
Write-off of long-lived assets and other amortization | 295,333 | 101,498 | 170,476 | |||||||||
Deferred taxes | 655,647 | (819,707 | ) | 1,245,815 | ||||||||
Loss (gain) on disposition of affiliates | 131,665 | 178,205 | (18,848 | ) | ||||||||
Stock-based compensation | — | — | 235,047 | |||||||||
Cumulative loss effect of accounting changes | 1,098,423 | 526,592 | — | |||||||||
8,641,471 | 9,838,735 | 14,088,191 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||
Decrease (increase) in: | ||||||||||||
Trade notes and accounts receivable, net | 74,533 | (2,384,961 | ) | 861,976 | ||||||||
Transmission rights and programming | 335,693 | 1,016,378 | 749,871 | |||||||||
Inventories | (117,001 | ) | 48,455 | (108,739 | ) | |||||||
Other accounts and notes receivable and other current assets | (397,446 | ) | 828,851 | (1,064,187 | ) | |||||||
Increase (decrease) in: | ||||||||||||
Customer deposits and advances | 579,864 | 2,323,724 | (1,616,083 | ) | ||||||||
Trade accounts payable | (650,988 | ) | 778,642 | 376,269 | ||||||||
Other liabilities, taxes payable and deferred taxes | (187,786 | ) | (772,626 | ) | 540,377 | |||||||
Pension plans and seniority premiums | 68,283 | 77,678 | 87,086 | |||||||||
(294,848 | ) | 1,916,141 | (173,430 | ) | ||||||||
Resources provided by operating activities | 8,346,623 | 11,754,876 | 13,914,761 | |||||||||
Financing activities: | ||||||||||||
Issuance of Senior Notes due 2025 | — | 6,634,328 | — | |||||||||
Prepayments of Senior Notes and UDIs denominated Notes | — | (5,909,836 | ) | — | ||||||||
Prepayments of Senior Notes due 2013 | — | — | (3,195,625 | ) | ||||||||
Other increase in debt | 4,498,598 | — | 3,500,000 | |||||||||
Other decrease in debt | (2,476,846 | ) | (5,598,073 | ) | (856,431 | ) | ||||||
Repurchase and sale of capital stock | (246,474 | ) | (915,528 | ) | (2,541,707 | ) | ||||||
Dividends paid | (4,280,816 | ) | (4,480,311 | ) | (1,119,749 | ) | ||||||
Gain on issuance of shares of investee | 115,983 | — | — | |||||||||
Gain on valuation of available-for-sale investments | — | — | (578,656 | ) | ||||||||
Loss on minority interest acquisition of Sky Mexico | — | — | (685,540 | ) | ||||||||
Benefit from capital contribution of minority interest in Sky Mexico | — | — | 371,627 | |||||||||
Minority interest | (55,290 | ) | (112,988 | ) | 109,493 | |||||||
Translation effect | (52,380 | ) | 116,756 | 16,575 | ||||||||
Resources used for financing activities | (2,497,225 | ) | (10,265,652 | ) | (4,980,013 | ) | ||||||
Investing activities: | ||||||||||||
Due from affiliated companies, net | (39,105 | ) | 556,543 | (621,063 | ) | |||||||
Investments | (257,183 | ) | (1,250,054 | ) | (4,726,247 | ) | ||||||
Disposition of investments | 39,020 | 109,271 | 6,933,725 | |||||||||
Investments in property, plant and equipment | (2,179,428 | ) | (2,849,075 | ) | (3,304,323 | ) | ||||||
Disposition of property, plant and equipment | 159,715 | 329,857 | 513,378 | |||||||||
Investment in goodwill and other intangible assets | (228,575 | ) | (1,725,838 | ) | (1,180,338 | ) | ||||||
Disposition of goodwill and other intangible assets | 281,582 | 702,284 | 5,709,746 | |||||||||
Available-for-sale investment in shares of Univision | — | — | (11,821,932 | ) | ||||||||
Other assets | (105,855 | ) | 121,789 | (3,880 | ) | |||||||
Resources used for investing activities | (2,329,829 | ) | (4,005,223 | ) | (8,500,934 | ) | ||||||
Net increase (decrease) in cash and temporary investments | 3,519,569 | (2,515,999 | ) | 433,814 | ||||||||
Net increase in cash and temporary investments upon Sky Mexico’s consolidation | 503,046 | — | — | |||||||||
Cash and temporary investments at beginning of year | 13,870,318 | 17,892,933 | 15,376,934 | |||||||||
Cash and temporary investments at end of year | Ps. | 17,892,933 | Ps. | 15,376,934 | Ps. | 15,810,748 | ||||||
F-6
Table of Contents
For the Years Ended December 31, 2004, 2005 and 2006
(In thousands of Mexican pesos in purchasing power as of December 31, 2006,
except per CPO, per share and exchange rate amounts)
Company’s | |||||
Consolidated Entities | Ownership(1) | Business Segments(2) | |||
Telesistema Mexicano, S.A. de C.V. and subsidiaries, including Televisa, S.A. de C.V. | 100% | Television Broadcasting | |||
Pay Television Networks | |||||
Programming Exports | |||||
Televisión Independiente de México, S.A. de C.V. and subsidiaries | 100% | Television Broadcasting | |||
Campus América, S.A. de C.V. and subsidiaries, including TuTv, LLC | 100% | Television Broadcasting | |||
(“TuTv”)(3) | Pay Television Networks | ||||
Editorial Televisa, S.A. de C.V. and subsidiaries | 100% | Publishing | |||
Grupo Distribuidoras Intermex, S.A. de C.V. and subsidiaries | 100% | Publishing Distribution | |||
Innova, S. de R. L. de C.V. and subsidiaries (collectively, “Sky Mexico”)(3) | 58.7% | Sky Mexico | |||
Empresas Cablevisión, S. A. B. de C.V. and subsidiaries | 51% | Cable Television | |||
Sistema Radiópolis, S.A. de C.V. and subsidiaries | 50% | Radio | |||
Corporativo Vasco de Quiroga, S.A. de C.V. and subsidiaries | 100% | Other Businesses | |||
CVQ Espectáculos, S.A. de C.V. and subsidiaries | 100% | Other Businesses | |||
Televisa Juegos, S.A. de C.V. and subsidiaries | 100% | Other Businesses |
F-7
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(1) | Percentage of equity interest directly or indirectly held by the Company in the holding entity. | |
(2) | See Note 23 for a description of each of the Group’s business segments. | |
(3) | The Group adopted the guidelines of the Financial Accounting Standards Board Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities,” as permitted under the scope of Mexican FRS NIF A-8, “Supplementary Financial Reporting Standards.” FIN 46, which became effective in 2004, requires the primary beneficiary of a VIE to consolidate that entity. The primary beneficiary of a VIE is the party that absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interest in the entity. In accordance with the guidelines of FIN 46, the Group identified Sky Mexico and TuTv as VIEs and the Group as the primary beneficiary of the investment in each of these entities, and on April 1, 2004, began to include in its consolidated financial statements the assets, liabilities and results of operations of Sky Mexico and TuTv. As a result of adoption of FIN 46, the Group recognized a consolidated cumulative loss effect of Ps.1,098,423, net of income tax in the amount of Ps.332,340, in its consolidated statement of income for the year ended December 31, 2004. TuTv is a 50% joint venture with Univision Communications Inc. (“Univision”), engaged in the distribution of the Group’s Spanish-speaking programming packages in the United States. |
Expiration Dates | ||
Television Broadcasting | In 2021 | |
Sky Mexico | In 2020 and 2026 | |
Cable Television | In 2029 | |
Radio | Various from 2008 to 2016 | |
Gaming | In 2030 |
F-8
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F-9
Table of Contents
• | Advertising revenues, including deposits and advances from customers for future advertising, are recognized at the time the advertising services are rendered. | ||
• | Revenues from program services for pay television and licensed television programs are recognized when the programs are sold and become available for broadcast. |
F-10
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• | Revenues from magazine subscriptions are initially deferred and recognized proportionately as products are delivered to subscribers. Revenues from the sales of magazines are recognized on the date of circulation of delivered merchandise, net of a provision for estimated returns. | ||
• | The revenue from publishing distribution is recognized upon distribution of the products. | ||
• | Sky Mexico program service revenues, including advances from customers for future DTH program services and installation fees, are recognized at the time the DTH service is provided. | ||
• | Cable television subscription, pay-per-view and installation fees are recognized in the period in which the services are rendered. | ||
• | Revenues from attendance to soccer games, including revenues from advance ticket sales for soccer games and other promotional events, are recognized on the date of the relevant event. | ||
• | Motion picture production and distribution revenues are recognized as the films are exhibited. | ||
• | Gaming revenues consist of the net win from gaming activities, which is the difference between amounts wagered and amounts paid to winning patrons. |
F-11
Table of Contents
December 31, 2003 | 106.996 | |||
December 31, 2004 | 112.550 | |||
December 31, 2005 | 116.301 | |||
December 31, 2006 | 121.015 |
F-12
Table of Contents
F-13
Table of Contents
2005 | 2006 | |||||||
Non-interest bearing notes received as customer deposits and advances | Ps | .12,797,785 | Ps | .11,957,311 | ||||
Accounts receivable, including value-added tax receivables related to advertising services | 2,802,946 | 2,672,873 | ||||||
Allowance for doubtful accounts | (1,141,186 | ) | (1,032,615 | ) | ||||
Ps | .14,459,545 | Ps | .13,597,569 | |||||
2005 | 2006 | |||||||
Transmission rights | Ps | .3,914,500 | Ps | .3,586,580 | ||||
Programming | 3,412,373 | 2,895,442 | ||||||
7,326,873 | 6,482,022 | |||||||
Non-current portion of: | ||||||||
Transmission rights | 2,060,483 | 1,880,148 | ||||||
Programming | 2,019,409 | 1,548,700 | ||||||
4,079,892 | 3,428,848 | |||||||
Current portion of transmission rights and programming | Ps | .3,246,981 | Ps | .3,053,174 | ||||
F-14
Table of Contents
Ownership % | ||||||||||||
as of December 31, | ||||||||||||
2005 | 2006 | 2006 | ||||||||||
Accounted for by the equity method: | ||||||||||||
Univision(a) | Ps. | 5,887,752 | Ps. | — | 9.75 | % | ||||||
Ocesa Entretenimiento, S. A. de C. V. (“OCEN”)(b) | 521,043 | 503,868 | 40.0 | % | ||||||||
La Sexta (see Notes 2 and 11) | — | 729,735 | 40.0 | % | ||||||||
Volaris (see Note 2) | 250,212 | 257,298 | 25.0 | % | ||||||||
TVI(c) | — | 97,733 | 50.0 | % | ||||||||
Other | 101,489 | 95,913 | ||||||||||
6,760,496 | 1,684,547 | |||||||||||
Other investments: | ||||||||||||
Convertible debentures due 2011(d) | — | 2,837,331 | ||||||||||
Held-to-maturity debt securities (see Note 1(g))(e) | 931,252 | 906,175 | ||||||||||
Deposit in escrow(f) | 138,593 | — | ||||||||||
Warrants to acquire shares of Univision common stock(a) | 24,612 | — | ||||||||||
TVI(c) | — | 256,727 | ||||||||||
Other | 40,093 | 25,883 | ||||||||||
1,134,550 | 4,026,116 | |||||||||||
Ps. | 7,895,046 | Ps. | 5,710,663 | |||||||||
(a) | Through June 30, 2006, this investment was accounted for under the equity method. Beginning in the third quarter of 2006, the Group announced its intention to have its shares and warrants of Univision common stock cashed out in connection with the merger contemplated by a related agreement entered into by Univision and an acquiring investor group. Accordingly, beginning July 1, 2006, the Group (i) classified its investment in shares of Univison common stock as a current available-for-sale financial asset; (ii) discontinued the recognition of any equity method result related to this investment; (iii) recorded this financial asset at fair value, with unrealized gains and losses included in the Group’s consolidated stockholders’ equity as accumulated other comprehensive result; and (iv) this financial asset is being hedged by the Group’s outstanding Senior Notes due 2011, 2025 and 2032, in the aggregate amount of approximately U.S.$971.9 million (see Notes 1 (c), 9 and 11). As of December 31, 2005 and 2006, the Group owned 16,594,500 shares Class “A” and 13,593,034 shares Class “T” of common stock of Univision. As of December 31, 2005 and 2006, the Group also owned warrants to acquire 6,374,864 shares Class “A” and 2,727,136 shares Class “T” of common stock of Univision, most of which had an exercise price of U.S.$38.261 per share, and expired in December 2017 (see Note 9). The warrants to purchase 9,000,000 shares of Univision common stock were assigned a zero value since they were acquired by the Group as a non-cash consideration for surrendering certain governance rights previously held by the Group in Univision. The warrants to acquire 100,000 shares of Univision common stock were accounted for at acquisition cost and classified as other investments. At December 31, 2006, the carrying value of the 100,000 warrants was written off since the exercise price was greater than the tender offer price. The carrying value of the Group’s net investment in Univision at December 31, 2005, also included goodwill in the amount of Ps.5,701,000 (see Note 7), which in 2006 has been reclassified to become part of the basis of the available-for-sale financial asset. The proposed merger was concluded by Univision on March 29, 2007, and the 30,107,534 shares of Univision common stock owned by the Group were converted, like all shares of Univision common stock, into cash at U.S.$36.25 per share. Also, under the terms of the merger agreement, all of the Group’s warrants to acquire shares of Univision common stock were cancelled. The aggregate cash amount received by the Group in connection with the closing of this merger was of approximately U.S.$1,094.4 million (Ps.11,821,932 at the year-end exchange rate). | |
(b) | OCEN is a majority-owned subsidiary of Corporación Interamericana de Entretenimiento, S. A. de C. V. (“CIE”), and is engaged in the live entertainment business in Mexico. In the third quarter of 2006, OCEN paid dividends to the Group related to its 40% interest in the aggregate amount of Ps.102,573 (see Notes 7 and 16). | |
(c) | Cable television company with a license to operate in the city of Monterrey and surrounding areas, which expires in 2026. In March 2006, in connection with the acquisition of a 50% interest in this venture, the Group provided funding to TVI in the form of a short-term loan in the principal amount of Ps.240,589, with an annual interest rate equal to the Mexican inter-bank rate plus 150 basis points, and maturity in March 2007. The accrued interest receivable from this loan was of Ps.16,138, as of December 31, 2006 (see Note 2). |
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Table of Contents
(d) | Available-for-sale debt securities that are convertible into 2,838 million shares, or 99.99%, of authorized common stock of Alvafig. The Group can convert all or a portion of these debentures into shares of Alvafig common stock (i) when a non-compliance occur with any payment obligation set up in the debenture issuance agreement; or (ii) at any time after the first anniversary of the debt issuance and prior to maturity. The debentures cannot be called before maturity by the issuer, and are secured by substantially all of the outstanding shares of common stock of Alvafig, which are held by a designated trust. This investment is classified as an available-for-sale debt security, and is recorded at fair value, with unrealized gains and losses included in the Group’s consolidated stockholders’ equity as accumulated other comprehensive result (see Note 2). | |
(e) | Held-to-maturity securities represent structured notes and corporate fixed income securities with maturities in 2008. These investments are stated at cost. | |
(f) | In connection with the disposal of an investment of the Group in 1997, the Group granted collateral to secure certain indemnification obligations which consisted, at December 31, 2005 and 2006, of short-term securities of approximately U.S.$12.5 million (Ps.138,593 ) and U.S.$11.4 million (Ps.123,429), respectively. After the expiration of applicable tax statutes of limitations, the collateral will be reduced to a de minimus amount. The Group classified this deposit in escrow as temporary investments in its consolidated balance sheet as of December 31, 2006, since the collateral agreement is expected to be terminated in 2007 (see Note 11). |
2005 | 2006 | |||||||
Buildings | Ps. | 8,287,664 | Ps. | 8,394,388 | ||||
Buildings improvements | 1,646,510 | 1,632,675 | ||||||
Technical equipment | 18,698,870 | 20,118,867 | ||||||
Satellite transponders | 1,702,468 | 1,694,099 | ||||||
Furniture and fixtures | 520,339 | 576,030 | ||||||
Transportation equipment | 1,150,699 | 1,263,059 | ||||||
Computer equipment | 1,471,032 | 1,594,073 | ||||||
33,477,582 | 35,273,191 | |||||||
Accumulated depreciation | (17,870,662 | ) | (19,449,494 | ) | ||||
15,606,920 | 15,823,697 | |||||||
Land | 3,975,677 | 3,988,747 | ||||||
Construction in progress | 945,587 | 1,163,495 | ||||||
Ps. | 20,528,184 | Ps. | 20,975,939 | |||||
F-16
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2005 | 2006 | ||||||||||||||||||||||||||
Gross | Gross | ||||||||||||||||||||||||||
Carrying | Accumulated | Net Carrying | Carrying | Accumulated | Net Carrying | ||||||||||||||||||||||
Amount | Amortization | Amount | Amount | �� | Amortization | Amount | |||||||||||||||||||||
Intangible assets with indefinite lives: | |||||||||||||||||||||||||||
Goodwill | Ps. | 7,491,849 | Ps. | 2,184,945 | |||||||||||||||||||||||
Publishing and TVI trademarks | 473,482 | 580,905 | |||||||||||||||||||||||||
Television network concession | 627,033 | 627,033 | |||||||||||||||||||||||||
Concession TVI | — | 141,778 | |||||||||||||||||||||||||
Intangible assets with finite lives and deferred charges: | |||||||||||||||||||||||||||
Licenses and software | Ps. | 1,180,009 | Ps. | (825,743 | ) | 354,266 | Ps. | 814,611 | Ps. | (458,416 | ) | 356,195 | |||||||||||||||
Subscriber list | 593,152 | (142,812 | ) | 450,340 | 642,196 | (291,099 | ) | 351,097 | |||||||||||||||||||
Other intangible assets | 203,727 | (75,894 | ) | 127,833 | 526,660 | (192,255 | ) | 334,405 | |||||||||||||||||||
Deferred financing costs (see Note 8) | 1,102,532 | (208,204 | ) | 894,328 | 1,046,591 | (232,867 | ) | 813,724 | |||||||||||||||||||
Ps. | 3,079,420 | Ps. | (1,252,653 | ) | Ps. | 10,419,131 | Ps. | 3,030,058 | Ps. | (1,174,637 | ) | Ps. | 5,390,082 | ||||||||||||||
Foreign | ||||||||||||||||||||||||
Balance as of | Currency | Balance as of | ||||||||||||||||||||||
December 31, | Translation | Adjustments/ | Impairment | December 31, | ||||||||||||||||||||
2005 | Acquisitions | Adjustments | Reclassifications | Adjustments | 2006 | |||||||||||||||||||
Goodwill: | ||||||||||||||||||||||||
Television Broadcasting | Ps. | 1,353,012 | Ps. | — | Ps. | — | Ps. | (340 | ) | Ps. | — | Ps. | 1,352,672 | |||||||||||
Publishing Distribution | 24,630 | — | — | (975 | ) | — | 23,655 | |||||||||||||||||
Other Businesses | 37,978 | — | — | — | — | 37,978 | ||||||||||||||||||
Equity-method investees(1) | 6,076,229 | 402,842 | — | (5,708,431 | ) | — | 770,640 | |||||||||||||||||
Ps. | 7,491,849 | Ps. | 402,842 | Ps. | — | Ps. | (5,709,746 | ) | Ps. | — | Ps. | 2,184,945 | ||||||||||||
Trademarks(2): | ||||||||||||||||||||||||
Publishing | Ps. | 473,482 | Ps. | 149,260 | Ps. | 43 | Ps. | — | Ps. | (90,078 | ) | Ps. | 532,707 | |||||||||||
TVI | — | 48,198 | — | — | — | 48,198 | ||||||||||||||||||
Ps. | 473,482 | Ps. | 197,458 | Ps. | 43 | Ps. | — | Ps. | (90,078 | ) | Ps. | 580,905 | ||||||||||||
(1) | See Note 5. | |
(2) | See Notes 2 and 18. |
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Table of Contents
2005 | 2006 | |||||||
U.S.$5.3 million 11.875% Series “B” Senior Notes due 2006 | Ps. | 59,078 | Ps. | — | ||||
U.S.$75.5 million in 2005 and U.S.$72 million in 2006 of 8% Senior Notes due 2011(1)(2) | 834,643 | 777,251 | ||||||
U.S.$300 million 8.50% Senior Notes due 2032(1) | 3,317,164 | 3,240,750 | ||||||
U.S.$600 million 6.625% Senior Notes due 2025(1)(2) | 6,634,328 | 6,481,500 | ||||||
U.S.$300 million in 2005 and U.S.$11.3 million in 2006 of 9.375% Senior Notes due 2013(3) | 3,317,164 | 121,539 | ||||||
Other U.S. dollar debt(4) | 43,767 | 37,532 | ||||||
8.15% UDI-denominated Notes due 2007(2)(5) | 979,214 | 980,246 | ||||||
Mexican peso long-term loans(3)(6) | 4,039,824 | 7,142,460 | ||||||
Other Mexican peso bank loans | 464 | — | ||||||
Other currency debt | 989 | 420 | ||||||
Total long-term debt | 19,226,635 | 18,781,698 | ||||||
Less: Current portion | 354,256 | 986,368 | ||||||
Long-term debt, net of current portion | Ps. | 18,872,379 | Ps. | 17,795,330 | ||||
Satellite transponder lease obligation(7) | Ps. | 1,313,710 | Ps. | 1,206,591 | ||||
Less: Current portion | 78,668 | 86,176 | ||||||
Satellite transponder lease obligation, net of current portion | Ps. | 1,235,042 | Ps. | 1,120,415 | ||||
F-18
Table of Contents
(1) | These Senior Notes are unsecured obligations of the Company, rank equally in right of payment with all existing and future unsecured and unsubordinated indebtedness of the Company, and are junior in right of payment to all of the existing and future liabilities of the Company’s subsidiaries. Interest on the Senior Notes due 2011, 2025 and 2032, including additional amounts payable in respect of certain Mexican withholding taxes, is 8.41%, 6.97% and 8.94% per annum, respectively, and is payable semi-annually. These Senior Notes may not be redeemed prior to maturity, except in the event of certain changes in law affecting the Mexican withholding tax treatment of certain payments on the securities, in which case the securities will be redeemable, as a whole but not in part, at the option of the Company. The Senior Notes due 2011 and 2032 were priced at 98.793% and 99.431%, respectively, for a yield to maturity of 8.179% and 8.553%, respectively. The agreement of these Senior Notes contains covenants that limit the ability of the Company and certain restricted subsidiaries engaged in Television Broadcasting, Pay Television Networks and Programming Exports, to incur or assume liens, perform sale and leaseback transactions, and consummate certain mergers, consolidations and similar transactions. Substantially all of these Senior Notes are registered with the U.S. Securities and Exchange Commission (the “SEC”). | |
(2) | In March and May 2005, the Company issued these Senior Notes in the aggregate amount of U.S.$400.0 million and U.S.$200.0 million, respectively, which were priced at 98.081% and 98.632%, respectively, for a yield to maturity of 6.802% and 6.787%, respectively. The net proceeds of the U.S.$400.0 million issuance, together with cash on hand, were used to fund the Group’s tender offers made and expired in March 2005 for any or all of the Senior Notes due 2011 and the Mexican peso equivalent of UDI-denominated Notes due 2007, and prepaid principal amount of these securities in the amount of approximately U.S.$222.0 million and Ps.2,935,097 (nominal), respectively, representing approximately 74% and 76% of the outstanding principal amount of these securities, respectively. The net proceeds of the U.S.$200.0 million issuance were used for corporate purposes, including the prepayment of some of the Group’s outstanding indebtedness. | |
(3) | These Senior Notes are unsecured and unsubordinated obligations of Sky Mexico. Interest on these Senior Notes, including additional amounts payable in respect of certain Mexican withholding taxes, is 9.8580%, and is payable semi-annually. The indentures of these Senior Notes contain certain restrictive covenants for Sky Mexico on additional indebtedness, liens, sales and leasebacks, restricted payments, asset sales, and certain mergers, consolidations and similar transactions. Sky Mexico may, at its own option, redeem these Senior Notes, in whole or in part, at any time on or after September 19, 2008 at redemption prices from 104.6875% to 101.5625% between September 19, 2008 through September 18, 2011, or 100% commencing on September 19, 2011, plus accrued and unpaid interest, if any. Additionally, on or before September 19, 2006, Sky Mexico may, at its own option and subject to certain requirements, use the proceeds from one or more qualified equity offerings to redeem up to 35% of the aggregate principal amount of these Senior Notes at 109.375% of their principal amount, plus accrued and unpaid interest. In March and April 2006, Sky Mexico entered into two 10-year loans with Mexican banks in the aggregate principal amount of Ps.3,500,000 to fund, together with cash on hand, a tender offer and consent solicitation made in March 2006 and expired in April 2006 for any or all of the Senior Notes due 2013, and prepaid a principal amount of approximately U.S.$288.7 million or 96.2% of these securities. The total aggregate amount paid by Sky Mexico in connection with this tender offer was of approximately U.S.$324.3 million, which included related consents and accrued and unpaid interest. The 10-year Sky Mexico’s indebtedness is guaranteed by the Company and includes a Ps.2,100,000 loan with an annual interest rate of 8.74% and a Ps.1,400,000 loan with an annual interest rate of 8.98% for the first three years, and the Mexican interbank interest rate or “TIIE” plus 24 basis points for the remaining seven years. Interest on these two 10-year loans is payable on a monthly basis. | |
(4) | Includes notes payable to banks, bearing annual interest rates which vary between 0.11 and 1.25 points above LIBOR. The maturities of this debt at December 31, 2006 are various from 2007 to 2010. | |
(5) | Notes denominated in Mexican Investment Units (“Unidades de Inversión” or “UDIs”), representing 258,711,400 UDIs at December 31, 2005 and 2006. Interest on these notes is payable semi-annually. The balance as of December 31, 2005 and 2006 includes restatement of Ps.235,581 and Ps.265,578, respectively. The UDI value as of December 31, 2006, was of Ps.3.788954 per UDI. | |
(6) | Includes in 2005 and 2006, outstanding balances of long-term loans in the principal amount of Ps.800,000, Ps.1,162,500 and Ps.2,000,000, respectively, in connection with certain credit agreements entered into by the Company with a Mexican bank, with various maturities through 2012. Interest on these loans is, in a range of 8.925% to 10.35% per annum, and is payable on a monthly basis. Under the terms of these credit agreements, the Company and certain restricted subsidiaries engaged in television broadcasting, pay television networks and programming exports are required to maintain (a) certain financial coverage ratios related to indebtedness and interest expense; and (b) certain restrictive covenants on indebtedness, dividend payments, issuance and sale of capital stock, and liens. The 2006 balance also includes the Sky Mexico long-term loans discussed in paragraph (3) above. |
F-19
Table of Contents
(7) | Sky Mexico is committed to pay a monthly fee of U.S.$1.7 million under a capital lease agreement entered into with Intelsat Corporation (formerly PanAmSat Corporation) February 1999 for satellite signal reception and retransmission service from 12 KU-band transponders on satellite IS-9, which became operational in September 2000. The service term for IS-9 will end at the earlier of (a) the end of 15 years or (b) the date IS-9 is taken out of service. The obligations of Sky Mexico under the IS-9 agreement are proportionately guaranteed by the Company and the other Sky Mexico equity owners in relation to their respective ownership interests (see Notes 6 and 11). |
2007 | Ps. | 986,368 | ||
2008 | 483,835 | |||
2009 | 1,163,188 | |||
2010 | 1,027,267 | |||
2011 | 777,251 | |||
Thereafter | 14,343,789 | |||
Ps. | 18,781,698 | |||
2007 | Ps. | 220,371 | ||
2008 | 220,371 | |||
2009 | 220,371 | |||
2010 | 220,371 | |||
2011 | 220,371 | |||
Thereafter | 809,023 | |||
1,910,878 | ||||
Less: amount representing interest | 704,287 | |||
Ps. | 1,206,591 | |||
F-20
Table of Contents
2005 | 2006 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Non-derivative financial instruments: | ||||||||||||||||
Assets: | ||||||||||||||||
Available-for-sale investment in Univision (see Note 5) | Ps. | — | Ps. | — | Ps. | 11,821,932 | Ps. | 11,821,932 | ||||||||
Univision warrants (see Note 5) | 24,612 | 1,371,760 | — | — | ||||||||||||
Held-to-maturity securities (see Note 5) | 930,085 | 919,948 | 3,980,140 | 3,980,140 | ||||||||||||
Liabilities: | ||||||||||||||||
Senior Notes due 2011, 2025 and 2032 | Ps. | 10,786,135 | Ps. | 11,737,842 | Ps. | 10,499,501 | Ps. | 11,678,800 | ||||||||
Other long-term debt securities | 3,376,242 | 3,722,646 | 121,539 | 128,203 | ||||||||||||
UDI-denominated long-term securities | 979,214 | 1,043,463 | 980,246 | 996,533 | ||||||||||||
Long-term notes payable to Mexican banks | 4,039,824 | 4,124,783 | 7,142,460 | 7,323,626 | ||||||||||||
Derivative financial instruments: | ||||||||||||||||
Assets: | ||||||||||||||||
Sky Mexico’s interest rate swaps(a) | Ps. | — | Ps. | — | Ps. | 710 | Ps. | 710 | ||||||||
Liabilities: | ||||||||||||||||
Sky Mexico’s interest rate swaps(a) | Ps. | 76,502 | Ps. | 76,502 | Ps. | — | Ps. | — | ||||||||
Foreign currency forwards(b) | 3,502 | 3,502 | — | — | ||||||||||||
Interest rate swaps(c) | 312,660 | 312,660 | 315,634 | 315,634 |
(a) | In February 2004, Sky Mexico entered into coupon swap agreements to hedge a portion of its U.S. dollar foreign exchange exposure related to its Senior Notes due 2013. Under these transactions, Sky Mexico receives semi-annual payments calculated based on the aggregate notional amount of U.S.$11.3 million at an annual rate of 9.375%, and Sky Mexico makes monthly payments calculated based on an aggregate notional amount of approximately Ps.123,047 at an annual rate of 10.25%. These transactions will terminate in September 2008. As of December 31, 2006, Sky Mexico recorded the change in fair value of these transactions in the integral cost of financing (foreign exchange loss). | |
(b) | In 2004 and 2005, the Company entered into forward contracts with diverse financial institutions to buy U.S.$185.0 million of the Senior Notes due 2005 for hedge purposes. The average price fixed in these agreements was Ps.11.73 per U.S. dollar. In the years ended December 31, 2004 and 2005, as a result of the depreciation of the exchange rate of the U.S. dollar in relation to the Mexican peso, the Company recorded a loss for these transactions of Ps.154,992 in 2005, in the integral cost of financing (foreign exchange gain or loss). In addition, as of December 31, 2005, the Group had entered into forward exchange contracts to cover cash flow requirements on a notional amount of U.S.$85.0 million to exchange U.S. dollars and Mexican pesos at an average exchange rate of Ps.10.85 per U.S. dollar in 2006. | |
(c) | In order to reduce the adverse effects of exchange rates on the Senior Notes due 2011, 2025 and 2032, during 2004 and 2005, the Company entered into interest rate swap agreements with various financial institutions that allow the Company to hedge against Mexican peso depreciation on interest payments for a period of five years. Under these transactions, the Company receives semi-annual payments based on the aggregate notional amount U.S.$890 million as of December 31, 2005 and 2006, at an average annual rate of 7.37%, and the Company makes semi-annual payments based on an aggregate notional amount of approximately Ps.9,897,573 as of December 31, 2005 and 2006, at an average annual rate of 8.28%, without an exchange of the notional amount upon which the payments are based. In the years ended December 31, 2005 and 2006, the Company recorded a loss of Ps.383,275 and Ps. 88,233, respectively, in the integral cost of financing (foreign exchange loss) derived of the change in fair value of these transactions. In November 2005, the Group entered into option contracts that allow the counterparty to extend the maturity of the swap agreements for one additional year on the notional amount of U.S.$890.0 million. |
F-21
Table of Contents
2005 | 2006 | |||||||
Seniority premiums: | ||||||||
Actuarial present value of benefit obligations: | ||||||||
Vested benefit obligations | Ps. | 159,316 | Ps. | 140,341 | ||||
Non-vested benefit obligations | 82,921 | 100,999 | ||||||
Accumulated benefit obligation | 242,237 | 241,340 | ||||||
Benefit attributable to projected salaries | 19,233 | 18,963 | ||||||
Projected benefit obligation | 261,470 | 260,303 | ||||||
Plan assets | 468,857 | 528,489 | ||||||
Plan assets in excess of projected benefit obligation | 207,387 | 268,186 | ||||||
Items to be amortized over an average 9-year period: | ||||||||
Transition obligation | 123,224 | 101,957 | ||||||
Unrecognized prior service cost | (113,292 | ) | (111,533 | ) | ||||
Unrecognized net gain from experience differences | (8,700 | ) | (89,095 | ) | ||||
1,232 | (98,671 | ) | ||||||
Net projected asset | 208,619 | 169,515 | ||||||
Pension plans: | ||||||||
Actuarial present value of benefit obligations: | ||||||||
Vested benefit obligations | 284,962 | 306,640 | ||||||
Non-vested benefit obligations | 306,994 | 339,987 | ||||||
Accumulated benefit obligation | 591,956 | 646,627 | ||||||
Benefit attributable to projected salaries | 150,063 | 157,277 | ||||||
Projected benefit obligation | 742,019 | 803,904 | ||||||
Plan assets | 1,014,882 | 1,209,151 | ||||||
Plan assets in excess of projected benefit obligation | 272,863 | 405,247 | ||||||
Items to be amortized over an average 18-year period: | ||||||||
Transition obligation | 128,983 | 116,167 | ||||||
Unrecognized prior service cost | (15,324 | ) | (13,349 | ) | ||||
Unrecognized net gain from experience differences | (492,259 | ) | (621,270 | ) | ||||
(378,600 | ) | (518,452 | ) | |||||
Net projected liability | (105,737 | ) | (113,205 | ) | ||||
Severance indemnities: | ||||||||
Actuarial present value of benefit obligations: | ||||||||
Vested benefit obligations | — | — | ||||||
Non-vested benefit obligations | 276,638 | 330,065 | ||||||
Accumulated benefit obligation | 276,638 | 330,065 | ||||||
Benefit attributable to projected salaries | 26,193 | 26,896 | ||||||
Projected benefit obligation | 302,831 | 356,961 | ||||||
Plan assets | — | — | ||||||
Projected benefit obligation in excess of plan assets | (302,831 | ) | (356,961 | ) | ||||
Items to be amortized over an average 6-year period: | ||||||||
Unrecognized net loss from experience difference | — | 13,616 | ||||||
Net projected liability | (302,831 | ) | (343,345 | ) | ||||
Total labor liabilities | Ps. | (199,949 | ) | Ps. | (287,035 | ) | ||
F-22
Table of Contents
F-23
Table of Contents
Thousands of | ||||
U.S. Dollars | ||||
2007 | U.S.$ | 14,707 | ||
2008 | 13,477 | |||
2009 | 10,898 | |||
2010 | 5,938 | |||
2011 and thereafter | 18,466 | |||
U.S.$ | 63,486 | |||
2007 | Ps. | 105,532 | ||
2008 | 94,105 | |||
2009 | 91,140 | |||
2010 | 86,035 | |||
2011 | 82,467 | |||
Thereafter | 1,284,281 | |||
Ps. | 1,743,560 | |||
F-24
Table of Contents
F-25
Table of Contents
Authorized | Repurchased | Acquired by a | Acquired by a | |||||||||||||||||
and | by the | Company’s | Company’s | |||||||||||||||||
Issued (1) | Company (2) | Trust (3) | Subsidiary (4) | Outstanding | ||||||||||||||||
Series “A” Shares | 123,478,024 | (1,342,667 | ) | (7,164,764 | ) | (1,185,988 | ) | 113,784,605 | ||||||||||||
Series “B” Shares | 59,162,449 | (1,181,547 | ) | (3,806,726 | ) | (609,484 | ) | 53,564,692 | ||||||||||||
Series “D” Shares | 90,372,213 | (1,879,735 | ) | (2,339,243 | ) | (936,741 | ) | 85,216,494 | ||||||||||||
Series “L” Shares | 90,372,213 | (1,879,735 | ) | (2,339,243 | ) | (936,741 | ) | 85,216,494 | ||||||||||||
Total shares | 363,384,899 | (6,283,684 | ) | (15,649,976 | ) | (3,668,954 | ) | 337,782,285 | ||||||||||||
Shares in the form of CPOs(5) | 302,100,601 | (6,283,684 | ) | (7,819,754 | ) | (3,131,390 | ) | 284,865,773 | ||||||||||||
CPOs(5) | 2,582,056 | (53,707 | ) | (66,835 | ) | (26,764 | ) | 2,434,750 | ||||||||||||
(1) | In April 2004, the Company’s stockholders approved a restructuring of the Company’s capital stock (the “Recapitalization”), which comprised the following: (i) a 25-for-one stock split, which became effective on July 26, 2004 (all the Company’s share and per share data in these financial statements are presented on a post-split basis); (ii) the creation of the Series “B” Shares; (iii) a 14-for-25 stock dividend in the amount of Ps. 1,007,508 (nominal of Ps. 906,114); and (iv) an increase in the number of shares represented by each outstanding CPO. The Recapitalization increased the number of the Company’s shares by a factor of 39 on a pre-split basis but did not affect the Company’s total equity or dilute the equity interest of any stockholder. | |
(2) | In 2004, 2005 and 2006, the Company repurchased 1,813,102 thousand, 3,645,463 thousand, and 6,714,057 thousand shares, respectively, in the form of 15,497 thousand, 31,158 thousand, and 57,385 thousand CPOs, respectively, in the amount of Ps. 419,446, Ps. 1,108,338 and Ps. 2,595,366, respectively, in connection with a share repurchase program that was approved by the Company’s stockholders and exercised at the discretion of management. In 2004, the Company resold 468 thousand shares in the form of four thousand CPOs, repurchased under this program, in the amount of Ps. 109. In April 2006, the Company’s stockholders approved (i) the cancellation of 5,888,469.6 thousand shares of capital stock in the form of 50,328.8 thousand CPOs, which were repurchased by the Company under this program in 2004, 2005 and 2006; and (ii) up to 15% of the outstanding shares of the Company’s common stock as the amount of shares that can be repurchased by the Company. | |
(3) | In connection with the Company’s Long-Term Retention Plan described below. | |
(4) | In connection with the Company’s Stock Purchase Plan described below. | |
(5) | In 2004 and 2005, the Company issued an aggregate of 392,841 thousand additional CPOs by combining Series “A” Shares, Series “B” Shares, Series “D” Shares and Series “L” Shares, not in the form of CPOs, which were owned by certain stockholders (312,880 thousand CPOs) or acquired primarily by trusts designated for purposes of the Group’s stock purchase plans (79,961 thousand CPOs). |
F-26
Table of Contents
Stock | Long-term | |||||||||||
Purchase Plan | Retention Plan | |||||||||||
Arrangements: | ||||||||||||
Year of grant | 2003 | 2004 | 2004 | |||||||||
Number of CPOs granted | 2,360 | 32,918 | 46,784 | |||||||||
Contractual life | 3-5 years | 1-3 years | 4-6 years | |||||||||
Assumptions: | ||||||||||||
Dividend yield | 3.00 | % | 3.00 | % | 3.00 | % | ||||||
Expected volatility(1) | 31.88 | % | 21.81 | % | 22.12 | % | ||||||
Risk-free interest rate | 9.35 | % | 6.52 | % | 8.99 | % | ||||||
Expected life of awards (in years) | 4.01 years | 2.62 years | 4.68 years |
(1) | Volatility was determined by reference to historically observed prices of the Group’s CPO. |
F-27
Table of Contents
2005 | 2006 | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Average | Average | |||||||||||||||
CPOs | Exercise Price | CPOs | Exercise Price | |||||||||||||
Stock Purchase Plan: | ||||||||||||||||
Outstanding at beginning of year | 71,262 | 14.36 | 48,182 | 14.99 | ||||||||||||
Granted | 599 | 13.81 | — | — | ||||||||||||
Exercised | (23,455 | ) | 11.42 | (29,050 | ) | 12.39 | ||||||||||
Forfeited | (224 | ) | 14.28 | (716 | ) | 13.07 | ||||||||||
Outstanding at beginning of year | 48,182 | 14.99 | 18,416 | 16.30 | ||||||||||||
Exercisable at end of year | 4,472 | 16.87 | 8,492 | 15.80 | ||||||||||||
Long — Term Retention Plan: | ||||||||||||||||
Outstanding at beginning of year | 45,109 | 13.45 | 46,784 | 12.10 | ||||||||||||
Granted | 2,714 | 12.10 | 1,340 | 11.75 | ||||||||||||
Exercised | — | — | — | — | ||||||||||||
Forfeited | (1,039 | ) | 12.10 | (734 | ) | 11.75 | ||||||||||
Outstanding at beginning of year | 46,784 | 12.10 | 47,390 | 11.75 | ||||||||||||
Exercisable at end of year | — | — | 9,675 | 11.75 | ||||||||||||
F-28
Table of Contents
2004 | 2005 | 2006 | ||||||||||
Net income | Ps. | 4,641,404 | Ps. | 6,373,822 | Ps. | 8,586,188 | ||||||
Other comprehensive (loss) income, net: | ||||||||||||
Foreign currency translation adjustments, net(1) | (208,784 | ) | (185,393 | ) | 574,099 | |||||||
Result from holding non-monetary assets, net(2) | (137,107 | ) | (552,880 | ) | (64,870 | ) | ||||||
Result from available for-sale investments, net(3) | — | — | (578,656 | ) | ||||||||
Gain (loss) on equity accounts of investees, net(4) | 128,600 | (197,076 | ) | 55,831 | ||||||||
Total other comprehensive loss, net | (217,291 | ) | (935,349 | ) | (13,596 | ) | ||||||
Comprehensive income | Ps. | 4,424,113 | Ps. | 5,438,473 | Ps. | 8,572,592 | ||||||
(1) | The amounts for 2004, 2005 and 2006 include the foreign exchange gain (loss) of, Ps.45,850, Ps.433,752 and Ps.(572,738), respectively, which were hedged in connection with the Group’s net investment in Univision as a foreign entity investment through June 30, 2006 (see Notes 1(c), 5 and 17). | |
(2) | Represents the difference between specific costs (net replacement cost or Specific Index) of non-monetary assets and the restatement of such assets using the NCPI, net of deferred tax (provision) benefit of Ps.58,952, Ps.221,285 and Ps.30,300 for the years ended December 31, 2004, 2005 and 2006, respectively. | |
(3) | The amount for 2006 includes a foreign exchange loss of Ps.(97,668), net of foreign exchange gain of Ps.539,563, which was hedged in connection with the Group’s available-for-sale investment in Univision beginning July 1, 2006 (see Notes 1(c), 5 and 17); loss on monetary position of Ps.(434,153); and other fair value loss of Ps.(46,835). | |
(4) | Represents the gains or losses on the dilution of investments in equity investees and the recognition of the components of other comprehensive income recorded by the equity investees. |
Gain | Result from | Cumulative | Cumulative | Cumulative | ||||||||||||||||||||||||
(Loss) on | Available- | Result from | Result from | Effect of | Accumulated | |||||||||||||||||||||||
Equity | Accumulated | For-Sale | Holding Non- | Foreign | Deferred | Other | ||||||||||||||||||||||
Accounts of | Monetary | Financial | Monetary | Currency | Income | Comprehensive | ||||||||||||||||||||||
Investees | Result | Assets | Assets | Translation | Taxes | Loss | ||||||||||||||||||||||
Balance at January 1, 2004 | Ps. | 4,090,044 | Ps. | (33,912 | ) | Ps. | — | Ps. | (1,809,554 | ) | Ps. | (1,676,422 | ) | Ps. | (3,107,621 | ) | Ps. | (2,537,465 | ) | |||||||||
Current year change | 128,600 | — | — | (137,107 | ) | (208,784 | ) | — | (217,291 | ) | ||||||||||||||||||
Balance at December 31, 2004 | 4,218,644 | (33,912 | ) | — | (1,946,661 | ) | (1,885,206 | ) | (3,107,621 | ) | (2,754,756 | ) | ||||||||||||||||
Current year change | (197,076 | ) | — | — | (552,880 | ) | (185,393 | ) | — | (935,349 | ) | |||||||||||||||||
Balance at December 31, 2005 | 4,021,568 | (33,912 | ) | — | (2,499,541 | ) | (2,070,599 | ) | (3,107,621 | ) | (3,690,105 | ) | ||||||||||||||||
Current year change | 55,831 | — | (578,656 | ) | (64,870 | ) | 574,099 | — | (13,596 | ) | ||||||||||||||||||
Balance at December 31, 2006 | Ps. | 4,077,399 | Ps. | (33,912 | ) | Ps. | (578,656 | ) | Ps. | (2,564,411 | ) | Ps. | (1,496,500 | ) | Ps. | (3,107,621 | ) | Ps. | (3,703,701 | ) | ||||||||
F-29
Table of Contents
2005 | 2006 | |||||||
Capital stock | Ps. | 3,944,409 | Ps. | 3,820,887 | ||||
Retained earnings | (3,811,048 | ) | (2,435,414 | ) | ||||
Cumulative result from holding non-monetary assets | (317,491 | ) | (332,534 | ) | ||||
Accumulated monetary result | (885 | ) | (502 | ) | ||||
Cumulative effect of deferred income taxes | (57,585 | ) | (57,585 | ) | ||||
Net income for the year | 1,127,959 | 588,241 | ||||||
Ps. | 885,359 | Ps. | 1,583,093 | |||||
2004 | 2005 | 2006 | ||||||||||
Revenues: | ||||||||||||
Royalties (Univision)(a) | Ps. | 1,181,030 | Ps. | 1,152,054 | Ps. | 1,413,430 | ||||||
Soccer transmission rights (Univision) | 76,564 | 95,362 | 96,062 | |||||||||
Programming production and transmission rights(b) | 235,419 | 96,980 | 35,139 | |||||||||
Administrative services(c) | 55,800 | 76,727 | 53,588 | |||||||||
Interest income | 963 | 1,295 | 16,524 | |||||||||
Advertising(d) | 116,540 | 33,709 | 87,643 | |||||||||
Ps. | 1,666,316 | Ps. | 1,456,127 | Ps. | 1,702,386 | |||||||
Costs: | ||||||||||||
Donations | Ps. | 99,152 | Ps. | 110,474 | Ps. | 102,064 | ||||||
Administrative services(c) | 5,863 | 27,686 | 11,212 | |||||||||
Other | 80,242 | 242,760 | 76,942 | |||||||||
Ps. | 185,257 | Ps. | 380,920 | Ps. | 190,218 | |||||||
(a) | The Group receives royalties from Univision for programming provided pursuant to a program license agreement that expires in December 2017. Royalties are determined based upon a percentage of combined net sales of Univision, which was 9% plus an incremental percentage of up to 3% over additional sales in 2004, 2005 and 2006. | |
(b) | Services rendered to Innova for the three months ended March 31, 2004, and Endemol and other affiliates in 2004, 2005 and 2006. | |
(c) | The Group receives revenue from and is charged by affiliates for various services, such as equipment rental, security and other services, at rates which are negotiated. The Group provides management services to affiliates, which reimburse the Group for the incurred payroll and related expenses. | |
(d) | Advertising services rendered to Innova for the three months ended March 31, 2004, to Univision in 2004, to OCEN in 2004, 2005 and 2006, and Volaris in 2006. |
F-30
Table of Contents
2005 | 2006 | |||||||
Receivables: | ||||||||
CIE (see Notes 5 and 7) | Ps. | 199,030 | Ps. | — | ||||
Univision (see Note 5) | 92,582 | 104,205 | ||||||
Editorial Clío, Libros y Videos, S.A. de C.V. | 14,857 | 6,922 | ||||||
Volaris (see Note 2) | — | 33,129 | ||||||
OCEN (see Notes 5 and 7) | 3,790 | 1,954 | ||||||
Other | 26,014 | 38,604 | ||||||
Ps. | 336,273 | Ps. | 184,814 | |||||
Payables: | ||||||||
DIRECTV (payable in connection with the acquisition of a subscriber list, see Notes 2 and 7) | Ps. | (733,438 | ) | Ps. | — | |||
News Corp. (see Note 2) | (48,191 | ) | (23,513 | ) | ||||
Other | (29,026 | ) | (14,620 | ) | ||||
Ps. | (810,655 | ) | Ps. | (38,133 | ) | |||
2004 | 2005 | 2006 | ||||||||||
Interest expense(1) | Ps. | 2,252,978 | Ps. | 2,221,015 | Ps. | 1,937,591 | ||||||
Interest income | (705,888 | ) | (969,905 | ) | (1,094,266 | ) | ||||||
Foreign exchange loss, net(2) | 99,037 | 757,036 | 190,516 | |||||||||
(Gain) loss from monetary position(3) | (15,939 | ) | (153,887 | ) | 65,850 | |||||||
Ps. | 1,630,188 | Ps. | 1,854,259 | Ps. | 1,099,691 | |||||||
(1) | Interest expense in 2004, 2005 and 2006, includes Ps. 217,713, Ps. 39,620 and Ps. 39,843, respectively, derived from the UDI index restatement of Company’s UDI-denominated debt securities and a net gain from related derivative contracts of Ps. 32,659 |
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and Ps. 6,557, in 2004 and 2005, respectively (see Notes 8 and 9). | ||
(2) | Net foreign exchange loss in 2004, 2005 and 2006, includes a net loss from foreign currency derivative contracts of Ps. 103,500, Ps. 741,128 and Ps. 57,745, respectively. A foreign exchange gain in 2004 and 2005 of Ps. 45,850 and Ps. 433,752, respectively, and a foreign exchange loss of Ps. 33,175 in 2006, were hedged by the Group’s net investment in Univision and recognized in stockholders’ equity as other comprehensive loss (see Notes 1(c) and 14). | |
(3) | The gain or loss from monetary position represents the effects of inflation, as measured by the NCPI in the case of Mexican companies, or the general inflation index of each country in the case of foreign subsidiaries, on the monetary assets and liabilities at the beginning of each month. It also includes monetary loss in 2004, 2005 and 2006 of Ps.195,412, Ps.138,620 and Ps.107,607, respectively, arising from temporary differences of non-monetary items in calculating deferred income tax (see Note 20). |
2004 | 2005 | 2006 | ||||||||||
Restructuring charges: | ||||||||||||
Severance costs | Ps. | 157,324 | Ps. | 43,028 | Ps. | 45,282 | ||||||
Non-recurring charges: | ||||||||||||
Impairment adjustments(1) | 247,298 | 7,740 | 90,078 | |||||||||
Expenses of debt placement(2) | 13,923 | 188,452 | 478,994 | |||||||||
Other | 6,432 | — | — | |||||||||
Ps. | 424,977 | Ps. | 239,220 | Ps. | 614,354 | |||||||
(1) | During 2004, the Group tested for impairment the carrying value of goodwill and other intangible assets. As a result of such testing, impairment adjustments were made to goodwill related primarily to the Group’s Publishing Distribution segment and publishing trademarks in the amount of Ps. 204,178 and Ps. 43,120, respectively. During 2006, the Group tested for impairment the carrying value of certain trademarks of its Publishing segment. As a result of such testing, an impairment adjustment was made to these intangible assets of Ps.90,078. For purposes of the goodwill impairment test, the fair value of the related reporting unit was estimated using appraised valuations by experts. | |
(2) | Related to Senior Notes due 2011 and Notes denominated in Mexican UDIs due 2007 in 2005 and Senior Notes due 2013 in 2006 (see Note 8). |
2004 | 2005 | 2006 | ||||||||||
Loss (gain) on disposition of investments, net (see Note 2) | Ps. | 143,889 | Ps. | 179,269 | Ps. | (18,848 | ) | |||||
Provision for doubtful non-trade accounts and write-off of other receivables | 40,610 | 15,530 | — | |||||||||
Donations (see Note 16) | 177,772 | 124,914 | 130,110 | |||||||||
Financial advisory and professional services(1) | 71,948 | 75,417 | 99,149 | |||||||||
Loss on disposition of fixed assets | 71,361 | 115,593 | — | |||||||||
Other expense (income), net | 48,150 | (27,686 | ) | 630 | ||||||||
Ps. | 553,730 | Ps. | 483,037 | Ps. | 211,041 | |||||||
(1) | Includes financial advisory services in connection with contemplated dispositions and strategic planning projects and professional services in connection with certain litigation and other matters (see Notes 2, 12 and 16). |
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2004 | 2005 | 2006 | ||||||||||
Income tax and asset tax, current | Ps. | 602,157 | Ps. | 1,601,399 | Ps. | 770,856 | ||||||
Income tax and asset tax, deferred | 655,647 | (819,707 | ) | 1,245,815 | ||||||||
Ps. | 1,257,804 | Ps. | 781,692 | Ps. | 2,016,671 | |||||||
% | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Tax at the statutory rate on income before provisions | 33 | 30 | 29 | |||||||||
Differences in inflation adjustments for tax and book purposes | 2 | 1 | — | |||||||||
Hedge | — | 1 | — | |||||||||
Non-deductible items | 3 | — | — | |||||||||
Special tax consolidation items | — | (2 | ) | — | ||||||||
Unconsolidated income tax | 2 | — | — | |||||||||
Minority interest | (4 | ) | (2 | ) | — | |||||||
Excess in tax provision of prior years | (2 | ) | (1 | ) | — | |||||||
Changes in valuation allowances: | ||||||||||||
Asset tax | 4 | — | 3 | |||||||||
Tax loss carryforwards | 5 | (1 | ) | 3 | ||||||||
Foreign operations | (9 | ) | (5 | ) | (2 | ) | ||||||
Recoverable income tax from repurchase of shares | (5 | ) | — | — | ||||||||
Use of tax losses(a) | (10 | ) | (12 | ) | (16 | ) | ||||||
Provision for income tax and the asset tax | 19 | 9 | 17 | |||||||||
(a) | In 2004, this amount represents the effect of the use of tax loss carryforwards arising from the acquisition of certain other subsidiaries in the second half of 2004. In 2005, this amount represents the effect of the use of tax losses in connection with the acquisition of Comtelvi (see Note 2). In 2006, this amount represents the effect of the use of tax deductions related to certain transactions made by the Group inconnection with a corporate reorganization. |
Amount | Expiration | |||||||
Operating tax loss carryforwards: | ||||||||
Unconsolidated: | ||||||||
Mexican subsidiaries(1) | Ps. | 4,226,569 | From 2007 to 2016 | |||||
Non-Mexican subsidiaries(2) | 991,454 | From 2007 to 2025 | ||||||
5,218,023 | ||||||||
Capital tax loss carryforwards: | ||||||||
Unconsolidated Mexican subsidiaries(3) | 403,658 | From 2007 to 2010 | ||||||
Ps. | 5,621,681 | |||||||
(1) | During 2004, 2005 and 2006, certain Mexican subsidiaries utilized unconsolidated operating tax loss carryforwards of Ps. 2,275,247, Ps. 465,795 and Ps. 3,161,005, respectively. In 2005 and 2006, that amount includes the operating tax loss carryforwards related to the minority interest of Sky Mexico. | |
(2) | Approximately the equivalent of U.S.$91.8 million for subsidiaries in Spain, South America and the United States. | |
(3) | These carryforwards can only be used in connection with capital gains to be generated by such subsidiaries. |
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2005 | 2006 | |||||||
Assets: | ||||||||
Accrued liabilities | Ps. | 839,540 | Ps. | 647,742 | ||||
Goodwill | 833,786 | 778,200 | ||||||
Tax loss carryforwards | 1,295,617 | 1,296,464 | ||||||
Allowance for doubtful accounts | 429,424 | 274,974 | ||||||
Customer advances | 1,434,881 | 1,194,001 | ||||||
Other items | 230,409 | 165,163 | ||||||
Liabilities: | ||||||||
Inventories | (225,100 | ) | (618,652 | ) | ||||
Property, plant and equipment, net | (1,040,005 | ) | (1,072,480 | ) | ||||
Prepaid expenses | (1,351,651 | ) | (1,246,859 | ) | ||||
Innova | (1,375,773 | ) | (890,301 | ) | ||||
Deferred income taxes of Mexican companies | 1,071,128 | 528,252 | ||||||
Deferred income taxes of foreign subsidiaries | (58,595 | ) | (115,354 | ) | ||||
Asset tax | 1,440,339 | 1,402,658 | ||||||
Valuation allowances(a) | (2,659,111 | ) | (3,304,334 | ) | ||||
Deferred income tax liability | (206,239 | ) | (1,488,778 | ) | ||||
Effect of change of income tax rates | 33,868 | — | ||||||
Deferred income tax liability, net | Ps. | (172,371 | ) | Ps. | (1,488,778 | ) | ||
(a) | Reflects valuation allowances of foreign subsidiaries of Ps. 292,268 and Ps. 344,792 at December 31, 2005 and 2006, respectively. |
Tax Loss | ||||||||||||||||
Carryforwards | Asset Tax | Goodwill | Total | |||||||||||||
Balance at beginning of year | Ps. | (1,015,642 | ) | Ps. | (809,683 | ) | Ps. | (833,786 | ) | Ps. | (2,659,111 | ) | ||||
Increases | (398,901 | ) | (301,908 | ) | — | (700,809 | ) | |||||||||
Decreases | — | — | 55,586 | 55,586 | ||||||||||||
Balance at end of year | Ps. | (1,414,543 | ) | Ps. | (1,111,591 | ) | Ps. | (778,200 | ) | Ps. | (3,304,334 | ) | ||||
Charge to the gain from monetary position(1) | Ps. | 100,892 | ||
Credit to the result from holding non-monetary assets | (30,300 | ) | ||
Charge to the provision for deferred income tax | 1,245,815 | |||
Ps. | 1,316,407 | |||
(1) | Net of Ps. 107,607, representing the effect on restatement of the non-monetary items included in the deferred tax calculation. |
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2004 | 2005 | 2006 | ||||||||||
Total Shares | 345,205,994 | 341,158,189 | 339,776,222 | |||||||||
CPOs | 2,293,867 | 2,463,608 | 2,451,792 | |||||||||
Shares not in the form of CPO units: | ||||||||||||
Series “A” Shares | 55,524,135 | 52,915,759 | 52,915,849 | |||||||||
Series “B” Shares | 5,305,998 | 108 | 187 | |||||||||
Series “D” Shares | 6,645,321 | 113 | 239 | |||||||||
Series “L” Shares | 6,645,321 | 113 | 239 |
2004 | 2005 | 2006 | ||||||||||||||||||||||
Per Each | Per Each | Per Each | ||||||||||||||||||||||
Per | Series “A”, “B”, | Per | Series “A”, “B”, | Per | Series “A”, “B”, | |||||||||||||||||||
CPO | “D” and “L” Share | CPO | “D” and “L” Share | CPO | “D” and “L” Share | |||||||||||||||||||
Continuing operations | Ps. | 1.97 | Ps. | 0.02 | Ps. | 2.37 | Ps. | 0.02 | Ps. | 2.96 | Ps. | 0.03 | ||||||||||||
Cumulative loss of accounting change | (0.37 | ) | — | (0.18 | ) | — | — | — | ||||||||||||||||
Net income | Ps. | 1.60 | Ps. | 0.02 | Ps. | 2.19 | Ps. | 0.02 | Ps. | 2.96 | Ps. | 0.03 | ||||||||||||
Foreign | ||||||||||||
Currency | ||||||||||||
Amounts | Year-End | Mexican | ||||||||||
(Thousands) | Exchange Rate | Pesos | ||||||||||
Assets: | ||||||||||||
U.S. dollars(1) | 2,424,404 | Ps. | 10.8025 | Ps. | 26,189,624 | |||||||
Euros | 96,971 | 14.2626 | 1,383,059 | |||||||||
Chilean pesos | 8,989,901 | 0.0202 | 181,596 | |||||||||
Colombian pesos | 26,860,038 | 0.0048 | 128,928 | |||||||||
Other currencies | 133,606 | |||||||||||
Liabilities: | ||||||||||||
U.S. dollars(2) | 1,311,638 | Ps. | 10.8025 | Ps. | 14,168,970 | |||||||
Euros | 9,810 | 14.2626 | 139,916 | |||||||||
Chilean pesos | 10,068,233 | 0.0202 | 203,378 | |||||||||
Colombian pesos | 27,710,309 | 0.0048 | 133,009 | |||||||||
Other currencies | 92,805 |
(1) | Includes assets in the amount of U.S.$1,094.4 million and U.S.$262.7 million, related to the available-for-sale investment in shares of Univision and the investment in convertible debentures of Alvafig, respectively, which foreign exchange result is recognized as a gain or loss in accumulated other comprehensive result (see Note 1(c)). | |
(2) | Includes liabilities in the amount of U.S.$971.9 million, related to the Senior Notes due in 2011, 2025 and 2032, which are partially hedging the available-for-sale investment in shares of Univision (see Note 1(c)). |
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Table of Contents
Foreign | ||||||||||||
Currency | ||||||||||||
Amounts | Year-End | Mexican | ||||||||||
(Thousands) | Exchange Rate | Pesos(1) | ||||||||||
Property, plant and equipment: | ||||||||||||
U.S. dollars | 393,405 | Ps. | 10.8025 | Ps. | 4,249,758 | |||||||
Japanese yen | 3,676,743 | 0.0908 | 333,848 | |||||||||
Euros | 17,017 | 14.2626 | 242,707 | |||||||||
Other currencies | 199,484 | |||||||||||
Transmission rights and programming: | ||||||||||||
U.S. dollars | 315,959 | Ps. | 10.8025 | Ps. | 3,413,147 |
(1) | Amounts translated at the year-end exchange rates for reference purposes only; does not indicate the actual amounts accounted for in the financial statements. |
U.S. Dollar | ||||||||||||||||
Equivalent | ||||||||||||||||
of other | ||||||||||||||||
Foreign | ||||||||||||||||
Currency | Total | |||||||||||||||
U.S. Dollar | Transactions | U.S. Dollar | Mexican | |||||||||||||
(Thousands) | (Thousands) | (Thousands) | Pesos(1) | |||||||||||||
Income: | ||||||||||||||||
Revenues | $ | 404,824 | $ | 64,910 | $ | 469,734 | Ps. | 5,074,302 | ||||||||
Other income | 9,662 | 4,146 | 13,808 | 149,161 | ||||||||||||
Interest income | 39,377 | 4,275 | 43,652 | 471,551 | ||||||||||||
$ | 453,863 | $ | 73,331 | $ | 527,194 | Ps. | 5,695,014 | |||||||||
Purchases, costs and expenses: | ||||||||||||||||
Purchases of inventories | $ | 254,217 | $ | 24,026 | $ | 278,243 | Ps. | 3,005,720 | ||||||||
Purchases of property and equipment | 82,440 | 11,831 | 94,271 | 1,018,362 | ||||||||||||
Investments | 339,355 | 138,175 | 477,530 | 5,158,517 | ||||||||||||
Costs and expenses | 383,267 | 65,579 | 448,846 | 4,848,664 | ||||||||||||
Interest expense | 98,442 | 128 | 98,570 | 1,064,802 | ||||||||||||
$ | 1,157,721 | $ | 239,739 | $ | 1,397,460 | Ps. | 15,096,065 | |||||||||
(1) | Income statement amounts translated at the year-end exchange rate of Ps. 10.8025 for reference purposes only; does not indicate the actual amounts accounted for in the financial statements (see Note 1(c)). |
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Intersegment | Consolidated | Segment | ||||||||||||||
Total Revenues | Revenues | Revenues | Profit (Loss) | |||||||||||||
2004: | ||||||||||||||||
Television Broadcasting | Ps. | 18,388,175 | Ps. | 440,734 | Ps. | 17,947,441 | Ps. | 8,343,836 | ||||||||
Pay Television Networks | 861,011 | 120,575 | 740,436 | 320,974 | ||||||||||||
Programming Exports | 2,061,507 | — | 2,061,507 | 786,757 | ||||||||||||
Publishing | 2,250,807 | 5,354 | 2,245,453 | 456,677 | ||||||||||||
Publishing Distribution | 1,692,358 | 8,732 | 1,683,626 | (27,290 | ) | |||||||||||
Sky Mexico | 3,910,479 | 46,227 | 3,864,252 | 1,439,253 | ||||||||||||
Cable Television | 1,212,755 | 3,789 | 1,208,966 | 383,367 | ||||||||||||
Radio | 318,011 | 53,065 | 264,946 | 34,134 | ||||||||||||
Other Businesses | 1,610,148 | 107,803 | 1,502,345 | (137,468 | ) | |||||||||||
Segment totals | 32,305,251 | 786,279 | 31,518,972 | 11,600,240 | ||||||||||||
Reconciliation to consolidated amounts: | ||||||||||||||||
Eliminations and corporate expenses | (786,279 | ) | (786,279 | ) | — | (167,706 | ) | |||||||||
Depreciation and amortization expense | — | — | — | (2,231,065 | ) | |||||||||||
Consolidated total | Ps. | 31,518,972 | Ps. | — | Ps. | 31,518,972 | Ps. | 9,201,469 | (1) | |||||||
2005: | ||||||||||||||||
Television Broadcasting | Ps. | 19,323,506 | Ps. | 570,651 | Ps. | 18,752,855 | Ps. | 9,211,431 | ||||||||
Pay Television Networks | 1,156,214 | 304,920 | 851,294 | 539,072 | ||||||||||||
Programming Exports | 1,951,951 | — | 1,951,951 | 695,785 | ||||||||||||
Publishing | 2,607,052 | 40,134 | 2,566,918 | 499,525 | ||||||||||||
Publishing Distribution | 418,495 | 10,638 | 407,857 | 6,869 | ||||||||||||
Sky Mexico | 6,229,173 | 33,240 | 6,195,933 | 2,618,809 | ||||||||||||
Cable Television | 1,462,098 | 3,001 | 1,459,097 | 509,403 | ||||||||||||
Radio | 358,706 | 53,322 | 305,384 | 54,316 | ||||||||||||
Other Businesses | 1,377,882 | 71,608 | 1,306,274 | (187,682 | ) | |||||||||||
Segment totals | 34,885,077 | 1,087,514 | 33,797,563 | 13,947,528 | ||||||||||||
Reconciliation to consolidated amounts: | ||||||||||||||||
Eliminations and corporate expenses | (1,087,514 | ) | (1,087,514 | ) | — | (189,867 | ) | |||||||||
Depreciation and amortization expense | — | — | — | (2,517,015 | ) | |||||||||||
Consolidated total | Ps. | 33,797,563 | Ps. | — | Ps. | 33,797,563 | Ps. | 11,240,646 | (1) | |||||||
2006: | ||||||||||||||||
Television Broadcasting | Ps. | 20,972,085 | Ps. | 558,579 | Ps. | 20,413,506 | Ps. | 10,597,965 | ||||||||
Pay Television Networks | 1,329,044 | 279,037 | 1,050,007 | 682,251 | ||||||||||||
Programming Exports | 2,110,923 | — | 2,110,923 | 869,289 | ||||||||||||
Publishing | 2,885,448 | 18,997 | 2,866,451 | 555,785 | ||||||||||||
Publishing Distribution | 433,533 | 11,450 | 422,083 | 17,999 | ||||||||||||
Sky Mexico | 7,452,730 | 90,426 | 7,362,304 | 3,555,478 | ||||||||||||
Cable Television | 1,984,743 | 4,857 | 1,979,886 | 816,823 | ||||||||||||
Radio | 444,569 | 42,829 | 401,740 | 94,565 | ||||||||||||
Other Businesses | 1,408,086 | 83,145 | 1,324,941 | (311,316 | ) | |||||||||||
Segment totals | 39,021,161 | 1,089,320 | 37,931,841 | 16,878,839 | ||||||||||||
Reconciliation to consolidated amounts: | ||||||||||||||||
Eliminations and corporate expenses | (1,089,320 | ) | (1,089,320 | ) | — | (450,879 | ) | |||||||||
Depreciation and amortization expense | — | — | — | (2,679,066 | ) | |||||||||||
Consolidated total | Ps. | 37,931,841 | Ps. | — | Ps. | 37,931,841 | Ps. | 13,748,894 | (1) | |||||||
(1) | Consolidated totals represents consolidated operating income. |
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Additions to | ||||||||||||
Segment | Segment | Property, | ||||||||||
Assets | Liabilities | Plant and | ||||||||||
at Year-End | at Year-End | Equipment | ||||||||||
2004: | ||||||||||||
Continuing operations: | ||||||||||||
Television operations(1) | Ps. | 49,815,530 | Ps. | 22,178,189 | Ps. | 898,251 | ||||||
Publishing | 2,136,114 | 310,473 | 57,301 | |||||||||
Publishing Distribution | 1,077,986 | 396,112 | 35,999 | |||||||||
Sky Mexico | 4,866,107 | 7,790,701 | 704,976 | |||||||||
Cable Television | 2,176,705 | 349,102 | 430,549 | |||||||||
Radio | 490,005 | 58,762 | 9,619 | |||||||||
Other Businesses | 3,565,641 | 597,448 | 42,733 | |||||||||
Total | Ps. | 64,128,088 | Ps. | 31,680,787 | Ps. | 2,179,428 | ||||||
2005: | ||||||||||||
Continuing operations: | ||||||||||||
Television operations(1) | Ps. | 48,296,624 | Ps. | 23,234,275 | Ps. | 910,648 | ||||||
Publishing | 2,147,308 | 361,262 | 11,005 | |||||||||
Publishing Distribution | 952,747 | 442,505 | 6,025 | |||||||||
Sky Mexico | 4,738,175 | 6,219,153 | 1,235,508 | |||||||||
Cable Television | 2,427,776 | 488,407 | 579,218 | |||||||||
Radio | 534,605 | 72,520 | 13,863 | |||||||||
Other Businesses | 3,737,771 | 465,158 | 92,808 | |||||||||
Total | Ps. | 62,835,006 | Ps. | 31,283,280 | Ps. | 2,849,075 | ||||||
2006: | ||||||||||||
Continuing operations: | ||||||||||||
Television operations(1) | Ps. | 57,845,063 | Ps. | 23,414,660 | Ps. | 1,108,412 | ||||||
Publishing | 2,106,095 | 351,786 | 35,184 | |||||||||
Publishing Distribution | 966,616 | 456,556 | 15,964 | |||||||||
Sky Mexico | 6,212,452 | 5,416,342 | 1,000,911 | |||||||||
Cable Television | 2,940,073 | 736,171 | 829,343 | |||||||||
Radio | 496,507 | 90,455 | 18,298 | |||||||||
Other Businesses | 4,568,076 | 837,940 | 296,211 | |||||||||
Total | Ps. | 75,134,882 | Ps. | 31,303,910 | Ps. | 3,304,323 | ||||||
(1) | Segment assets and liabilities information is not maintained by the Group for each of the Television Broadcasting, Pay Television Networks and Programming Exports segments. In management’s opinion, there is no reasonable or practical basis to make allocations due to the interdependence of these segments. Consequently, management has presented such information on a combined basis as television operations. |
F-39
Table of Contents
2005 | 2006 | |||||||
Segment assets | Ps. | 62,835,006 | Ps. | 75,134,882 | ||||
Investments attributable to: | ||||||||
Television operations(1) | 12,731,912 | 1,674,503 | ||||||
Other segments | 885,345 | 4,057,367 | ||||||
Goodwill — net attributable to: | ||||||||
Television operations | 1,353,021 | 1,352,642 | ||||||
Publishing distribution | 24,629 | 23,689 | ||||||
Other segments | 391,988 | 787,407 | ||||||
Total assets | Ps. | 78,221,901 | Ps. | 83,030,490 | ||||
(1) | Includes goodwill attributable to equity investments of Ps. 5,722,211 and Ps.39,616 in 2005 and 2006, respectively. |
2005 | 2006 | |||||||
Segment liabilities | Ps. | 31,283,280 | Ps. | 31,303,910 | ||||
Notes payable and long-term debt not attributable to segments | 15,864,252 | 15,122,207 | ||||||
Total liabilities | Ps. | 47,147,532 | Ps. | 46,426,117 | ||||
Additions to | ||||||||||||
Total | Segment Assets | Property, Plant | ||||||||||
Net Sales | at Year-End | and Equipment | ||||||||||
2004: | ||||||||||||
Mexico | Ps. | 26,668,718 | Ps. | 55,515,952 | Ps. | 2,117,738 | ||||||
Other countries | 4,850,254 | 8,612,136 | 61,690 | |||||||||
Ps. | 31,518,972 | Ps. | 64,128,088 | Ps. | 2,179,428 | |||||||
2005: | ||||||||||||
Mexico | Ps. | 29,881,597 | Ps. | 56,175,843 | Ps. | 2,818,179 | ||||||
Other countries | 3,915,966 | 6,659,163 | 30,896 | |||||||||
Ps. | 33,797,563 | Ps. | 62,835,006 | Ps. | 2,849,075 | |||||||
2006: | ||||||||||||
Mexico | Ps. | 33,532,875 | Ps. | 69,584,295 | Ps. | 3,268,797 | ||||||
Other countries | 4,398,966 | 5,550,587 | 35,526 | |||||||||
Ps. | 37,931,841 | Ps. | 75,134,882 | Ps. | 3,304,323 | |||||||
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Table of Contents
2004 | 2005 | 2006 | ||||||||||
Net income as reported under Mexican FRS | Ps. | 4,641,404 | Ps. | 6,373,822 | Ps. | 8,586,188 | ||||||
U.S. GAAP adjustments: | ||||||||||||
(a) Capitalization of financing costs, net of depreciation | 25,649 | 9,772 | 66,267 | |||||||||
(b) Deferred costs, net of amortization | 39,007 | (3,886 | ) | 18,455 | ||||||||
(c) Deferred debt refinancing costs, net of amortization | — | (582,743 | ) | 30,259 | ||||||||
(d) Equipment inflation restatement, net of depreciation | 75,065 | (500,117 | ) | (116,669 | ) | |||||||
(e) Purchase accounting adjustments: | ||||||||||||
Amortization of network affiliation agreements | (6,900 | ) | (6,900 | ) | (6,900 | ) | ||||||
Depreciation of fixed assets | (11,679 | ) | (11,679 | ) | (11,679 | ) | ||||||
Amortization of other assets | (4,601 | ) | (4,852 | ) | (4,822 | ) | ||||||
Amortization of subscribers list | — | — | (100,405 | ) | ||||||||
(f) Goodwill and other intangible assets: | ||||||||||||
Reversal of Mexican FRS impairment of goodwill | 185,770 | — | — | |||||||||
(g) Equity method investees: | ||||||||||||
Innova | 1,401,192 | — | — | |||||||||
SMCP | (488,764 | ) | 1,357,516 | — | ||||||||
(i) Derivative financial instruments(1) | (1,207,403 | ) | (255,780 | ) | (1,347,150 | ) | ||||||
(j) Pension plan and seniority premiums | 24,685 | 34,905 | — | |||||||||
(k) Employee stock-based compensation | (331,330 | ) | 45,448 | — | ||||||||
(l) Production and film costs | (71,057 | ) | 318,146 | 271,106 | ||||||||
(m) Deferred income taxes and employees’ profit sharing: | ||||||||||||
Deferred income taxes (1) | 352,411 | 259,142 | 74,461 | |||||||||
Deferred employees’ profit sharing(1) | (71,504 | ) | 74,198 | 9,968 | ||||||||
(n) Maintenance reserve | 1,558 | 5,151 | (2,645 | ) | ||||||||
(o) Reversal of hedge accounting for investment in Univision | — | — | 539,563 | |||||||||
(p) Minority interest on U.S. GAAP adjustments | (27,683 | ) | (10,832 | ) | 1,093 | |||||||
Net income under U.S. GAAP | Ps. | 4,525,820 | Ps. | 7,101,311 | Ps. | 8,007,090 | ||||||
(1) | Net of inflation effects |
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2005 | 2006 | |||||||
Total stockholders’ equity under Mexican FRS | Ps. | 31,074,369 | Ps. | 36,604,373 | ||||
U.S. GAAP adjustments: | ||||||||
(a) Capitalization of financing costs, net of accumulated depreciation | (884,322 | ) | (818,055 | ) | ||||
(b) Deferred costs, net of amortization | (127,834 | ) | (109,379 | ) | ||||
(c) Deferred debt refinancing costs, net of amortization | (582,743 | ) | (552,484 | ) | ||||
(d) Equipment inflation restatement, net of depreciation | 382,069 | 258,689 | ||||||
(e) Purchase accounting adjustments: | ||||||||
Broadcast license and network affiliation agreements | 133,393 | 126,493 | ||||||
Fixed assets | 64,229 | 52,550 | ||||||
Other assets | 50,951 | 45,811 | ||||||
Goodwill on acquisition of Bay City | (1,064,817 | ) | (1,064,817 | ) | ||||
Goodwill on acquisition of minority interest in Editorial Televisa | 1,309,215 | 1,309,215 | ||||||
Subscribers list | — | 502,023 | ||||||
Goodwill on acquisition of minority interest in Innova | — | 83,112 | ||||||
(f) Goodwill and other intangible assets: | ||||||||
Reversal of Mexican FRS goodwill amortization | 775,993 | 135,294 | ||||||
Reversal of Mexican FRS amortization of intangible assets with indefinite lives | 106,003 | 106,003 | ||||||
(g) Equity method investees: | ||||||||
Others | (2,357 | ) | (2,357 | ) | ||||
(h) Univision investment: | ||||||||
Equity method adjustment | 113,486 | — | ||||||
Goodwill on acquisition of additional interests | (634,024 | ) | — | |||||
Adjustment to gain on sale of music recording business | (312,276 | ) | — | |||||
(i) Derivative financial instruments | 1,347,150 | — | ||||||
(j) Pension plan and seniority premiums | 59,589 | 617,123 | ||||||
(l) Production and film costs | (1,754,030 | ) | (1,482,924 | ) | ||||
(m) Deferred income taxes and employees’ profit sharing: | ||||||||
Deferred income taxes | 454,671 | 374,901 | ||||||
Deferred employees’ profit sharing | (120,828 | ) | (110,860 | ) | ||||
(n) Maintenance reserve | 23,859 | 21,214 | ||||||
(p) Minority interest | (930,406 | ) | (1,627,047 | ) | ||||
Total U.S. GAAP adjustments, net | (1,593,029 | ) | (2,135,495 | ) | ||||
Total stockholders’ equity under U.S. GAAP | Ps. | 29,481,340 | Ps. | 34,468,878 | ||||
Changes in U.S. GAAP stockholders’ equity | 2005 | 2006 | ||||||
Balance at January 1, | Ps. | 28,112,748 | Ps. | 29,481,340 | ||||
Net income for the year | 7,101,311 | 8,007,090 | ||||||
Repurchase of capital stock | (1,242,838 | ) | (3,107,697 | ) | ||||
Dividends | (4,480,311 | ) | (1,119,749 | ) | ||||
Sale of capital stock under stock-based compensation plan | 327,308 | 565,990 | ||||||
Stock based compensation | 291,200 | 235,047 | ||||||
Benefit from capital contribution of minority interest in Sky México | — | 371,627 | ||||||
Other comprehensive income: | ||||||||
Changes in other comprehensive income of equity investees | (197,077 | ) | 576,369 | |||||
Net unrealized loss on available-for-sale financial asset, net of tax | — | (1,446,642 | ) | |||||
Result from holding non-monetary assets, net of tax | (248,496 | ) | (69,702 | ) | ||||
Foreign currency translation adjustment | (182,505 | ) | 573,781 | |||||
Adjustment to initially adopt FASB Statement 158, net of tax(1) | — | 401,424 | ||||||
Balance at December 31, | Ps. | 29,481,340 | Ps. | 34,468,878 | ||||
(1) | 2006 Comprehensive Income does not include the adjustment to initially adopt FASB Statement 158. |
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2005 | 2006 | |||||||
Consolidated subsidiaries: | ||||||||
Television Broadcasting | Ps. | 325,222 | Ps. | 324,882 | ||||
Publishing | 1,340,173 | 1,339,198 | ||||||
Other segments | 66,489 | 149,601 | ||||||
Equity method investees (1) | 5,834,058 | 834,068 | ||||||
Ps. | 7,565,942 | Ps. | 2,647,749 | |||||
2005 | 2006 | |||||||
Trademarks (2) (3) | Ps. | 490,816 | Ps. | 598,238 | ||||
Television network concession (2) | 715,702 | 715,702 | ||||||
TVI concession(4) | — | 141,778 | ||||||
Network affiliation agreements (2) | 115,569 | 115,569 | ||||||
Licenses and software | 354,266 | 356,195 | ||||||
Subscriber list | 450,340 | 853,120 | ||||||
Deferred financing costs | 311,585 | 261,240 | ||||||
Broadcast license | 17,824 | 10,924 | ||||||
Lease hold improvements | — | 147,388 | ||||||
Other TVI | — | 77,639 | ||||||
Ps. | 2,456,102 | Ps. | 3,277,793 | |||||
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(1) | Beginning July 1, 2006, the Group’s investment in Univision both for Mexican FRS and U.S. GAAP purposes, no longer qualifies for accounting under the equity method since the Group’s ability to exercise significant influence over operating and financial policies of Univision no longer exists. The carrying value of the Group’s net investment in Univision at December 31, 2005 included goodwill in the amount of Ps. 5,395,406, which in 2006 has been reclassified to become part of the basis of the available-for-sale financial asset. | |
(2) | Indefinite-lived | |
(3) | Includes translation effect, impairment adjustments and acquisitions (see Note 7) | |
(4) | Represents a cable television company with a license to operate in the city of Monterrey and surrounding areas. The license expires in 2026. The Group acquired a 50% interest in this venture. |
Year ended December 31, 2004 | ||||||||||||
Other | ||||||||||||
Equity | Total Equity | |||||||||||
Univision | Investments | Investments | ||||||||||
Net sales | Ps. | 21,420,908 | Ps. | 5,892,423 | Ps. | 27,313,331 | ||||||
Total expenses | 16,380,673 | 6,258,779 | 22,639,452 | |||||||||
Income (loss) before income taxes and minority interest | 5,040,235 | (366,356 | ) | 4,673,879 | ||||||||
Income tax provision | (1,972,834 | ) | (175,056 | ) | (2,147,890 | ) | ||||||
Income (loss) before minority interest | 3,067,401 | (541,412 | ) | 2,525,989 | ||||||||
Minority interest | — | (3,246 | ) | (3,246 | ) | |||||||
U.S. GAAP net income (loss) | Ps. | 3,067,401 | Ps. | (544,658 | ) | Ps. | 2,522,743 | |||||
Televisa’s equity in net income (losses) of equity investees, under U.S. GAAP | Ps. | 291,768 | Ps. | (148,855 | ) | Ps. | 142,913 | |||||
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Year ended December 31, 2005 | ||||||||||||
Other | ||||||||||||
Equity | Total Equity | |||||||||||
Univision | Investments | Investments | ||||||||||
Net sales | Ps. | 21,589,552 | Ps. | 3,525,695 | Ps. | 25,115,247 | ||||||
Total expenses | 17,507,427 | 3,718,229 | 21,225,656 | |||||||||
Income (loss) before income taxes and minority interest | 4,082,125 | (192,534 | ) | 3,889,591 | ||||||||
Income tax provision | (2,012,446 | ) | (41,652 | ) | (2,054,098 | ) | ||||||
Income (loss) before minority interest | 2,069,679 | (234,186 | ) | 1,835,493 | ||||||||
Minority interest | — | — | — | |||||||||
U.S. GAAP net income (loss) | Ps. | 2,069,679 | Ps. | (234,186 | ) | Ps. | 1,835,493 | |||||
Televisa’s equity in net income (losses) of equity investees, under U.S. GAAP | Ps. | 199,631 | Ps. | (32,981 | ) | Ps. | 166,650 | |||||
Condensed Balance Sheets | ||||||||||||
As of December 31, 2005 | ||||||||||||
Other Equity | Total Equity | |||||||||||
Univision | Investments | Investments | ||||||||||
Current assets | Ps. | 7,005,850 | Ps. | 2,571,701 | Ps. | 9,577,551 | ||||||
Non-current assets | 82,870,894 | 1,777,551 | 84,648,445 | |||||||||
Total assets | Ps. | 89,876,744 | Ps. | 4,349,252 | Ps. | 94,225,996 | ||||||
Current liabilities | Ps. | 10,056,768 | Ps. | 1,355,690 | Ps. | 11,412,458 | ||||||
Non-current liabilities | 23,528,809 | 287,745 | 23,816,554 | |||||||||
Stockholders’ equity | 56,291,167 | 2,705,817 | 58,996,984 | |||||||||
Total liabilities and stockholders’ equity | Ps. | 89,876,744 | Ps. | 4,349,252 | Ps. | 94,225,996 | ||||||
Televisa’s investment in and advances to equity investees at cost plus equity in undistributed earnings since acquisition (net) | Ps. | 6,001,239 | Ps. | 909,312 | Ps. | 6,910,551 | ||||||
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2004 | 2005 | 2006 | ||||||||||
Service cost | Ps. | 69,119 | Ps. | 64,470 | Ps. | 65,931 | ||||||
Interest cost | 37,032 | 35,531 | 38,382 | |||||||||
Expected return on plan assets | (47,905 | ) | (57,827 | ) | (78,088 | ) | ||||||
Net amortization and deferral | 8,220 | (15,196 | ) | 6,261 | ||||||||
Net cost under U.S. GAAP | 66,466 | 26,978 | 32,486 | |||||||||
Net cost under Mexican FRS | 91,151 | 61,883 | 32,486 | |||||||||
Reduction of net cost that would be recognized under U.S. GAAP | Ps. | (24,685 | ) | Ps. | (34,905 | ) | Ps. | — | ||||
2004 | 2005 | 2006 | ||||||||||
Weighted average discount rate | 4 | % | 4 | % | 4 | % | ||||||
Rate of increase in future compensation levels | 2 | % | 2 | % | 2 | % | ||||||
Expected long-term rates of return on plan assets | 5 | % | 5 | % | 9 | % |
2005 | 2006 | |||||||
Projected benefit obligation | Ps. | 1,003,489 | Ps. | 1,064,207 | ||||
Plan assets | (1,483,739 | ) | (1,737,640 | ) | ||||
Funded status | (480,250 | ) | (673,433 | ) | ||||
Unrecognized prior service cost | (61,191 | ) | — | |||||
Unrecognized net loss | 378,969 | — | ||||||
317,778 | — | |||||||
Prepaid pension asset | (162,472 | ) | (673,433 | ) | ||||
Severance indemnities — projected benefit obligation | 302,831 | 343,345 | ||||||
Balance sheet liability (asset) | Ps. | 140,359 | Ps. | (330,088 | ) | |||
Change in benefit obligation: | ||||||||
Projected benefit obligation at beginning of year | Ps. | 931,046 | Ps. | 1,003,489 | ||||
Service cost | 64,470 | 65,931 | ||||||
Interest cost | 35,531 | 38,382 | ||||||
Actuarial gain | 938 | (25,725 | ) | |||||
Benefits paid | (28,496 | ) | (17,870 | ) | ||||
Projected benefit obligation at end of year | Ps. | 1,003,489 | Ps. | 1,064,207 | ||||
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2005 | 2006 | |||||||
Change in plan assets: | ||||||||
Fair value of plan assets at beginning of year | Ps. | 1,201,495 | Ps. | 1,483,739 | ||||
Actual return on plan assets | 294,377 | 293,811 | ||||||
Plan asset contributions | 5,273 | — | ||||||
Benefits paid | (17,406 | ) | (39,910 | ) | ||||
Fair value of plan assets at end of year | Ps. | 1,483,739 | Ps. | 1,737,640 | ||||
2005 | 2006 | |||||||
Equity securities | 65.9 | % | 72.5 | % | ||||
Fixed rate instruments | 34.1 | % | 27.5 | % | ||||
Total | 100.0 | % | 100.0 | % | ||||
Before | After | |||||||||||
Application | Application | |||||||||||
of SFAS 158 | Adjustments | of SFAS 158 | ||||||||||
Consolidated Balance Sheet Data | ||||||||||||
Prepaid pension plans and seniority premiums | Ps. | — | Ps. | 330,088 | Ps. | 330,088 | ||||||
Other assets | 88,116,251 | — | 88,116,251 | |||||||||
Total assets | Ps. | 88,116,251 | Ps. | 330,088 | Ps. | 88,446,339 | ||||||
Deferred income taxes | Ps. | 5,428,054 | Ps. | 156,110 | Ps. | 5,584,164 | ||||||
Pension plans and seniority premiums | 227,446 | (227,446 | ) | — | ||||||||
Other liabilities | 46,766,250 | — | 46,766,250 | |||||||||
Total liabilities | 52,421,750 | (71,336 | ) | 52,350,414 | ||||||||
Minority interest | 1,627,047 | — | 1,627,047 | |||||||||
Total stockholders’ equity | 34,067,454 | 401,424 | 34,468,878 | |||||||||
Total liabilities and stockholders’ equity | Ps. | 88,116,251 | Ps. | 330,088 | Ps. | 88,446,339 | ||||||
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Net gain, net of income tax | Ps. | 437,690 | ||
Prior service costs, net of income tax | (36,266 | ) | ||
Ps. | 401,424 | |||
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December 31, | ||||||||
2005 | 2006 | |||||||
Net deferred income tax liability recorded under Mexican FRS on Mexican FRS balances (see Note 20) | Ps. | (172,371 | ) | Ps. | (1,488,778 | ) | ||
Reclassification of non-current taxes related to non-wholly owned subsidiaries (Innova) | 1,375,772 | 890,301 | ||||||
Net deferred income tax amount under SFAS 109 applied to Mexican FRS balances | 1,203,401 | (598,477 | ) | |||||
Impact of U.S. GAAP adjustments: | ||||||||
Capitalization of financing costs | 247,610 | 229,056 | ||||||
Deferred costs | 35,793 | 30,626 | ||||||
Equipment inflation restatement | (106,979 | ) | (72,433 | ) | ||||
Purchase accounting adjustments | (69,601 | ) | (62,961 | ) | ||||
Adjustment of gain on sale of music recording business | 87,438 | — | ||||||
Pension plan and seniority premiums | (16,685 | ) | (172,795 | ) | ||||
Derivative financial instruments | (377,202 | ) | — | |||||
Production and film costs | 491,129 | 415,219 | ||||||
Maintenance reserve | — | (5,940 | ) | |||||
Subscriber list | — | (140,566 | ) | |||||
Deferred premiums, net of amortization | 163,168 | 154,695 | ||||||
454,671 | 374,901 | |||||||
Net deferred income tax asset (liability) under U.S. GAAP | 1,658,072 | (223,576 | ) | |||||
Less: | ||||||||
Deferred income tax amount under SFAS 109 applied to Mexican FRS balances | 1,203,401 | (598,477 | ) | |||||
Net deferred income tax adjustment required under U.S. GAAP | Ps. | 454,671 | Ps. | 374,901 | ||||
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2006 | ||||
Charge to the provision for deferred income tax | Ps. | (1,757,717 | ) | |
Credit to the result from holding non-monetary assets | 32,179 | |||
Charge to the provision for deferred income tax to initially adopt FASB Statement 158 | (156,110 | ) | ||
Ps. | (1,881,648 | ) | ||
December 31, | ||||||||
2005 | 2006 | |||||||
Deferred EPS liability: | ||||||||
Current: | ||||||||
Inventories | Ps. | 2,130 | Ps. | 2,047 | ||||
Noncurrent: | ||||||||
Property, plant and equipment | (120,080 | ) | (113,264 | ) | ||||
Deferred costs | (59,845 | ) | (57,291 | ) | ||||
Pension plan and seniority premiums | 78,433 | 76,152 | ||||||
Other | (21,466 | ) | (18,504 | ) | ||||
Total deferred EPS liability | Ps. | (120,828 | ) | Ps. | (110,860 | ) | ||
2004 | 2005 | 2006 | ||||||||||
Current: | ||||||||||||
Mexican | Ps. | 538,293 | Ps. | 1,083,409 | Ps. | 92,228 | ||||||
Foreign | 4,362 | 207,276 | 193,157 | |||||||||
542,655 | 1,290,685 | 285,385 | ||||||||||
Deferred: | ||||||||||||
Mexican | 29,016 | (757,939 | ) | 1,754,658 | ||||||||
Foreign | 1,381 | 2,070 | 3,059 | |||||||||
30,397 | (755,869 | ) | 1,757,717 | |||||||||
Ps. | 573,052 | Ps. | 534,816 | Ps. | 2,043,102 | |||||||
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Year ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Net sales | Ps. | 31,518,972 | Ps. | 33,797,563 | Ps. | 37,931,841 | ||||||
Cost of providing services (exclusive of depreciation and amortization) | 15,995,768 | 14,992,139 | 15,914,421 | |||||||||
Selling and administrative expenses | 4,932,879 | 5,262,633 | 5,544,317 | |||||||||
Depreciation and amortization | 2,161,000 | 3,128,435 | 2,915,217 | |||||||||
Income from operations | 8,429,325 | 10,414,356 | 13,557,886 | |||||||||
Integral result of financing, net | (2,803,480 | ) | (2,743,828 | ) | (2,207,078 | ) | ||||||
Other (expense) income, net | (393,021 | ) | 937,739 | (111,262 | ) | |||||||
Income before income taxes, minority interest and equity in earnings or losses of affiliates | 5,232,824 | 8,608,267 | 11,239,546 | |||||||||
Income tax and assets tax – current and deferred | (573,052 | ) | (534,816 | ) | (2,043,102 | ) | ||||||
Income before minority interest and equity in earnings or losses of affiliates | 4,659,772 | 8,073,451 | 9,196,444 | |||||||||
Minority interest | (276,865 | ) | (1,138,790 | ) | (587,148 | ) | ||||||
Equity in earnings (losses) of affiliates | 142,913 | 166,650 | (602,206 | ) | ||||||||
Net income | Ps. | 4,525,820 | Ps. | 7,101,311 | Ps. | 8,007,090 | ||||||
Weighted average common shares outstanding (in millions) | 345,206 | 341,158 | 339,776 | |||||||||
2004 | 2005 | 2006 | ||||||||||||||||||||||
Series “A” | Series “A” | Series “A” | ||||||||||||||||||||||
and “B” | and “B” | and “B” | ||||||||||||||||||||||
CPO | Shares | CPO | Shares | CPO | Shares | |||||||||||||||||||
Basic EPS | ||||||||||||||||||||||||
Income from continuing operations available to common shareholders | 3,552,769 | 814,647 | 5,984,597 | 1,101,231 | 6,760,300 | 1,246,779 | ||||||||||||||||||
Net income available to common shareholders | 3,552,769 | 814,647 | 5,984,597 | 1,101,231 | 6,760,300 | 1,246,779 | ||||||||||||||||||
Weighted average number of common shares outstanding | 2,293,867 | 60,830,133 | 2,463,608 | 52,915,867 | 2,451,792 | 52,916,036 | ||||||||||||||||||
Basic earnings per share (continuing operations) | Ps. | 1.55 | Ps. | 0.01 | Ps. | 2.43 | Ps. | 0.02 | Ps. | 2.76 | Ps. | 0.02 | ||||||||||||
Basic earnings per share (net income) | Ps. | 1.55 | Ps. | 0.01 | Ps. | 2.43 | Ps. | 0.02 | Ps. | 2.76 | Ps. | 0.02 | ||||||||||||
Diluted EPS | ||||||||||||||||||||||||
Dilutive Potential Shares | 64,150 | — | 63,064 | — | 47,354 | — | ||||||||||||||||||
Total Diluted weighted average common shares outstanding | 2,358,017 | 60,830,133 | 2,526,672 | 52,915,867 | 2,499,146 | 52,916,036 | ||||||||||||||||||
Diluted earnings per share (continuing operations) | Ps. | 1.51 | Ps. | 0.01 | Ps. | 2.37 | Ps. | 0.02 | Ps. | 2.71 | Ps. | 0.02 | ||||||||||||
Diluted earnings per share (net income) | Ps. | 1.51 | Ps. | 0.01 | Ps. | 2.37 | Ps. | 0.02 | Ps. | 2.71 | Ps. | 0.02 | ||||||||||||
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December 31, | ||||||||
2005 | 2006 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | Ps. | 15,259,794 | Ps. | 14,901,209 | ||||
Other investments | 117,140 | 909,539 | ||||||
Trade notes and accounts receivable, net | 14,459,545 | 13,597,569 | ||||||
Other accounts and notes receivable, net | 593,738 | 1,488,340 | ||||||
Due from affiliated companies | 307,247 | 441,541 | ||||||
Transmission rights and programming | 3,246,981 | 3,053,174 | ||||||
Inventories | 664,151 | 772,890 | ||||||
Available-for-sale investments | – | 11,821,932 | ||||||
Current deferred taxes | 4,052,295 | 2,344,365 | ||||||
Other current assets | 601,498 | 771,083 | ||||||
Total current assets | 39,302,389 | 50,101,642 | ||||||
Non-current assets: | ||||||||
Transmission rights and programming | 2,325,862 | 1,945,924 | ||||||
Investments | 6,910,551 | 1,708,073 | ||||||
Property, plant and equipment, net | 20,090,160 | 20,469,123 | ||||||
Goodwill, net | 7,565,942 | 2,647,749 | ||||||
Intangible assets, net | 2,456,102 | 3,277,793 | ||||||
Deferred taxes | 4,344,273 | 4,152,222 | ||||||
Derivative financial instruments | 2,304,181 | 3,743,506 | ||||||
Prepaid pension and seniority premiums | — | 330,088 | ||||||
Other assets | 210,069 | 70,219 | ||||||
Total assets | Ps. | 85,509,529 | Ps. | 88,446,339 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | Ps. | 354,256 | Ps. | 986,368 | ||||
Current portion of satellite transponder lease obligation | 78,668 | 86,176 | ||||||
Trade accounts payable | 3,074,484 | 3,450,753 | ||||||
Customer deposits and advances | 16,168,025 | 16,893,604 | ||||||
Taxes payable | 1,098,587 | 1,179,477 | ||||||
Current deferred taxes | 1,351,652 | 1,246,859 | ||||||
Accrued interest | 348,171 | 262,064 | ||||||
Other accrued liabilities | 1,621,150 | 2,026,523 | ||||||
Due from affiliated companies | 781,629 | 38,133 | ||||||
Total current liabilities | 24,876,622 | 26,169,957 | ||||||
Non-current liabilities: | ||||||||
Long-term debt | 18,872,379 | 17,795,330 | ||||||
Satellite transponder lease obligation | 1,235,042 | 1,120,415 | ||||||
Customer deposits and advances | 2,609,862 | 268,200 | ||||||
Other long-term liabilities | 1,855,847 | 1,412,348 | ||||||
Deferred taxes | 5,507,672 | 5,584,164 | ||||||
Pension plans and seniority premiums | 140,359 | — | ||||||
Total liabilities | 55,097,783 | 52,350,414 | ||||||
Commitments and contingencies | ||||||||
Minority interest | 930,406 | 1,627,047 | ||||||
Total stockholders’ equity | 29,481,340 | 34,468,878 | ||||||
Total liabilities and stockholders’ equity | Ps. | 85,509,529 | Ps. | 88,446,339 | ||||
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2004 | 2005 | 2006 | |||||||||||
Operating activities: | |||||||||||||
Net income under U.S. GAAP | Ps. | 4,525,820 | Ps. | 7,101,311 | Ps. | 8,007,090 | |||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||
Equity in (income) loss of affiliates | (142,913 | ) | (166,650 | ) | 602,206 | ||||||||
Minority interest from continuing operations | 276,865 | 1,138,790 | 587,148 | ||||||||||
Depreciation and amortization | 2,161,000 | 3,128,435 | 2,915,217 | ||||||||||
Amortization of deferred debt refinancing | — | — | (30,259 | ) | |||||||||
Impairment adjustments | 61,528 | 7,741 | 90,078 | ||||||||||
Pension plans and seniority premiums | 66,466 | 329,809 | — | ||||||||||
Deferred income tax | 101,901 | (755,869 | ) | 1,757,717 | |||||||||
Loss (gain) on disposal of investment | 131,665 | (1,179,310 | ) | (18,848 | ) | ||||||||
Unrealized foreign exchange gain, net | (76,779 | ) | (633,736 | ) | (327,345 | ) | |||||||
Employee stock option plans | 331,330 | 291,200 | 235,047 | ||||||||||
Maintenance reserve | (1,558 | ) | (5,151 | ) | 2,645 | ||||||||
Loss (income) from monetary position | 161,419 | (185,529 | ) | (56,422 | ) | ||||||||
Changes in operating assets and liabilities: | |||||||||||||
Decrease (increase) in: | |||||||||||||
Trade notes and accounts receivable and customer deposits and advances, net | 55,871 | (456,559 | ) | (1,317,735 | ) | ||||||||
Inventories | (117,515 | ) | 48,455 | (108,739 | ) | ||||||||
Transmission rights, programs and films and production talent advances | 410,841 | 689,527 | 477,525 | ||||||||||
Other accounts and notes receivable and other current assets | (436,838 | ) | 724,626 | (1,110,745 | ) | ||||||||
(Decrease) increase in: | |||||||||||||
Trade accounts payable | (439,064 | ) | 861,285 | 499,658 | |||||||||
Other liabilities and taxes payable | 293,650 | (840,032 | ) | 309,089 | |||||||||
Pension plan and seniority premiums | — | — | 87,086 | ||||||||||
Net cash provided by operating activities | 7,363,689 | 10,098,343 | 12,600,413 | ||||||||||
Financing activities: | |||||||||||||
Issuance of Senior Notes due 2025 | — | 6,925,573 | — | ||||||||||
Prepayments of Senior Notes and UDIs denominated Notes | — | (5,660,730 | ) | — | |||||||||
Prepayment of Senior Notes due 2013 | — | — | (2,924,600 | ) | |||||||||
Other increase in debt | — | — | 3,500,000 | ||||||||||
Deferred debt refinancing costs | — | 582,743 | — | ||||||||||
Other changes in notes payable | 2,845,776 | (4,685,031 | ) | — | |||||||||
Derivative financial instruments | 1,097,118 | (724,847 | ) | (1,476,605 | ) | ||||||||
Repurchase of capital stock | (876,748 | ) | (1,242,838 | ) | (3,107,697 | ) | |||||||
Sale of repurchased shares | 630,276 | 327,308 | 565,990 | ||||||||||
Dividends paid | (4,280,816 | ) | (4,480,311 | ) | (1,119,749 | ) | |||||||
Minority interest | (93,217 | ) | (112,989 | ) | 109,493 | ||||||||
Net cash used by financing activities | (677,611 | ) | (9,071,122 | ) | (4,453,168 | ) | |||||||
Investing activities: | |||||||||||||
Other investments | 1,836,001 | 647,531 | (796,962 | ) | |||||||||
Due from affiliated companies, net | (57,756 | ) | 556,730 | (862,246 | ) | ||||||||
Equity investments and other advances | (191,290 | ) | 538,379 | (2,605,902 | ) | ||||||||
Investments in property, plant and equipment | (2,015,848 | ) | (2,530,918 | ) | (2,783,265 | ) | |||||||
Intangible assets and other assets | (220,346 | ) | (1,517,166 | ) | (870,004 | ) | |||||||
— | |||||||||||||
Net cash used for investing activities | (649,239 | ) | (2,305,444 | ) | (7,918,379 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 6,036,839 | (1,278,223 | ) | 228,866 | |||||||||
Translation effect on cash and cash equivalents | 6,642 | (13,159 | ) | 6,966 | |||||||||
Effect of inflation on cash and cash equivalents | (687,936 | ) | (551,600 | ) | (594,417 | ) | |||||||
Net increase in cash and temporary investments of Innova’s consolidation | 503,045 | — | — | ||||||||||
Cash and cash equivalents at beginning of year | 11,244,186 | 17,102,776 | 15,259,794 | ||||||||||
Cash and cash equivalents at end of year | Ps. | 17,102,776 | Ps. | 15,259,794 | Ps. | 14,901,209 | |||||||
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2004 | 2005 | 2006 | ||||||||||
Interest | Ps. | 1,760,556 | Ps. | 2,077,980 | Ps. | 1,825,717 | ||||||
Income taxes and/or assets tax | 773,947 | 557,348 | 1,091,387 |
2004 | 2005 | 2006 | ||||||||||
Note receivable related to customer deposits | Ps. | 10,981,229 | Ps. | 12,797,785 | Ps. | 11,957,311 |
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Balance at | Balance at | |||||||||||||||
Beginning | End | |||||||||||||||
Description | of Year | Additions | Deductions | of Year | ||||||||||||
Continuing operations: | ||||||||||||||||
Reserve for damage, obsolescence or deterioration of inventory: | ||||||||||||||||
Year ended December 31, 2004 | Ps. | 12,864 | Ps. | 1,815 | Ps. | (5,647 | ) | Ps. | 9,032 | |||||||
Year ended December 31, 2005 | 9,032 | 2,437 | — | 11,469 | ||||||||||||
Year ended December 31, 2006 | 11,469 | — | (4,753 | ) | 6,716 | |||||||||||
Allowances for doubtful accounts (1): | ||||||||||||||||
Year ended December 31, 2004 | Ps. | 1,002,809 | Ps. | 560,987 | Ps. | (272,490 | ) | Ps. | 1,291,306 | |||||||
Year ended December 31, 2005 | 1,291,306 | 323,578 | (357,851 | ) | 1,257,033 | |||||||||||
Year ended December 31, 2006 | 1,257,033 | 571,057 | (621,838 | ) | 1,206,252 |
(1) | Include allowances for trade and non-trade doubtful accounts. |
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