Vincent Van Gogh ( ) Cottage with Peasant Coming Home, 1885 oil on canvas 63.5 x 76 cm

Transcription

1 Annual Report 2005

2 Vincent Van Gogh ( ) Cottage with Peasant Coming Home, 1885 oil on canvas 63.5 x 76 cm Contents Financial Highlights Relevant Businesses Report of the Board of Directors Industrial Grupo Condumex Porcelanite Cigatam Infrastructure and Construction CICSA Installation of Telecommunications SWECOMEX Constructora de Infraestructura Latinoamericana Grupo PC Consultores Commercial Grupo Sanborns Sanborns and Sanborns Café Sears Dorian s Mix Up Board of Directors Report of the Auditing, Finance and Planning Committee Report of the Evaluation and Compensation Committee Report of the Statutory Auditors Consolidated Financial Statements

3 Financial highlights Thousands of pesos as of December 31, 2005, except for shares outstanding and earnings per share Sales Operating Income Majority Net Income EBITDA Total Assets Total Liabilities Stockholders Equity Shares Outstanding Earnings per Share ,614,843 7,840,739 2,140,662 10,274,372 71,681,607 39,268,815 32,412,792 2,512,381, ,722,936 8,847,566 6,931,976 11,246,824 78,769,637 41,329,383 37,440,254 2,392,109, ,092,313 9,268,939 8,603,912 11,622,161 83,642,344 37,128,642 46,513,702 2,364,540, * Outstanding shares were restructured, for the 2003 and 2004 years. (Note 10). 12% Increase in consolidated sales % 28.1% 13.7% 4.7% 18.4% 0.1% Grupo Sanborns ($ 27,336) Grupo Condumex ($ 21,951) CICSA ($ 10,708) Porcelanite ($ 3,649) Cigatam ($ 14,344) Other ($ 105) 41.6% 20.9% 14.5% 7.5% 8.5% 7.1% Grupo Sanborns ($ 3,857) Grupo Condumex ($ 1,934) CICSA ($ 1,342) Porcelanite ($ 691) Cigatam ($ 784) Other ($ 661) Sales Contribution by Subsidiary (millions of pesos) Operating Income by Subsidiary (millions of pesos) Sales (billions of pesos) 1

4 GRUPO CARSO Grupo Carso plays an important role in various sectors of the domestic economy. Although its primary business divisions are: Industrial, Construction and Infrastructure, and Commercial, Carso also operates in other sectors such as automotive and mining industries. Industrial COMPANIES Grupo Condumex Porcelanite Cigatam SERVICES / PRODUCTS Copper telephone cable Electronic cable Coaxial cable Power cable Fiber optic cable Design and installation of telecommunication networks Installation of mobile phone radio bases Construction cables Installations Copper products (strips, sheets, coils, tubes, pipes, valves) Aluminum products (strips, coils, extruded shapes, etc.) PVC (tubes, joints, water tanks, etc.) Magnet Wire Transformers Power Plants Ceramic tile Cigarettes 2 MARKETS Fixed and mobile phone companies in Mexico and Latin America Construction industry, from housing to heavy construction Home Remodeling Domestic Energy Related Companies Low and high end segments MAIN BRANDS CONDUMEX CDM SELMEC NACOBRE ALMEXA EQUITER GRUPO PORCELANITE CONTICON PROCISA SINERGIA MICROM MARLBORO

5 Infrastructure and construction COMPANIES Carso Infraestructura y Construcción Swecomex Grupo PC Constructores Constructora de Infraestructura Latinoamericana Precitubo SERVICES / PRODUCTS Oil platform construction Shopping Center, Industrial facilities, Corporate Buildings and Construction Highway construction Water treatment plants Steel tubes MARKETS Domestic oil related companies Retail and Industrial Companies MAIN BRANDS PRECITUBO SWECOMEX Commercial COMPANIES Grupo Sanborns Sanborns Hermanos Sanborns Café Promotora Musical Dorian s SERVICES / PRODUCTS Department Stores Store and Restaurant Restaurant Music Stores MARKETS Middle and high end segments MAIN BRANDS GRUPO SANBORNS SANBORNS MIXUP SEARS DORIAN S 3

6 Report of the Board of Directors ECONOMIC PANORAMA In 2005, the Gross Domestic Product reflected a 3.0% increase, to stand at MX.PS.$8 trillion 347 million at year end. The GDP owed its improvement mainly to the construction, communications and service sectors, which reflected growth rates of 3.3% and 4.2%, respectively. Mexico s manufacturing sector was affected by a slowdown of the US economy, which reflected a 3.5% increase in its GDP. Mexico s manufacturing industry reflected a real increase of only 1.2%. The stronger economy allowed for the generation of new jobs; in 2005, the total number of insured in the Mexican Social Security Institute increased by close to 576 thousand. This growth compensated for the entry of new potential workers in the labor market, which in turn reflected in a reduction of the General Unemployment Rate from 3.9% in 2004 to 3.6% in The exchange rate dropped by 4.6% during the year from a parity of Pesos per Dollar at the close of 2004 to Pesos at the close of Direct foreign investment dropped by 2.4% percent in comparison with 2004 to US$17,804 million. Emigrants remittances in 2005 rose by 20.6% over last year, reaching US$20 billion 35 million. The current account deficit stood at US$5 billion 708 million equivalent to.7% of the GDP. The Commercial Balance registered a deficit of US$7 billion 559 million, 14.2% lower than in 2004, mainly the result of a 34.8% increase of oil exports, compensated by a 24.3% increase in the import of consumer goods. The average price of the Mexican Oil Mixture rose by 6.3%. in 2005; that is, US$42.00 in 2005 compared with US$39.50 in The Banco de Mexico met its inflation goal in The National Consumer s Price Index showed an increase of 3.33% in the year, lower than the 5.19% in The continuation of the Banco de México s restrictive monetary policy compensated for the lack of price controls of government services. The underlying inflation was 3.12% in the year, an increase of 3.8% over last year. The rate of 28-day CETES maintained an average level of 9.18% throughout the year. The 28-day CETES closed the year 2005 at an 8.02% rate, mainly the result of end- of-the-year inflationary pressures. Economically speaking, 2005 was a better year for Mexico. In the future, the Country must consolidate the macroeconomic stability it has attained and promote measures to obtain the economic, social and state reforms needed to modernize the country and stimulate the internal market and the generation of jobs. GRUPO CARSO For Grupo Carso, 2005 was another year of consolidation in the strategy to confirm our position as one of the most important Groups in the country. The revenue mixture of Grupo Carso offers our investors a sound diversification and exposure to highly dynamic economic sectors. Grupo Condumex, together with Porcelanite and Cigatam, conform the results of the manufacturing companies; the commercial sector is attended by Grupo Sanborns; lastly, Carso Infraestructura y Construcción, which in 2005 completed its regrouping of assets to become consolidated in the infrastructure sector. The continued restructuring of the Carso assets portfolio, which in 2005 included inter-company purchases and sales, as well as the disposal of non-strategic assets, will give us more flexibility in meeting profitable growth goals. In October, we completed the placement of Carso Infraestructura y Construcción (CICSA). 620 million company shares representing 25.93% of the capital 4 Relevant Economic Figures PIB 4.4% 3.0% INPC 5.19% 3.33% Dollar* Cete* * Annual average

7 stock were placed through a public offer. Grupo Carso maintains the majority ownership of CICSA but through the placement, we offered the market the possibility of investing directly in Carso s Infrastructure sector. CICSA closes the year with a sound financial structure and with very interesting work contracts related to the installation of telecommunications, manufacturing and services for the chemical and petroleum industries, highway construction and water treatment plants, as well as other civil construction projects. In 2005, Grupo Carso completed the refinancing of the Group s liabilities through a syndicated loan of US$700 million, in which 19 financial institutions participated, and the Group obtained very favorable rate and term conditions. The Group s debt at year-end stood at MXPs$15 billion 206 million with a balance in cash and securities of MXPs$8 billion 572 million, resulting in a net debt of MXPs$6 billion 634 million, that is, a 54% reduction in comparison with year-end of We consider that the Group s financial structure is adequate and will allow us to undertake expansion projects in the various subsidiaries. The infrastructure division became consolidated as an important player at the national level, both individually, particularly in the construction of oil platforms, and in the installation of telecommunication networks, jointly with IDEAL (Impulsora para el Desarrollo y el Empleo de América Latina), which had been awarded significant contracts and has granted CICSA works contracts for various projects, among which is the construction of the Tepic Villa Unión highway and the Northern Bypass in Mexico City. On behalf of the Board of Directors, I wish to express my appreciation to the staff of directors of Grupo Carso for their vision and generous participation, fundamental for maintaining the success of the Group; to all our officers and employees for their commitment and efforts in reaching our goals; and to our shareholders, who year after year place their trust in us. We will make every attempt in the future to hold our course and continue contributing to the successful development of our country. Consolidated Group sales reached MXPs$78 billion, a 12% growth in real terms over last year. Operating profit was MXPs$9 billion 268 million, while generation of operating flow (EBITDA) was MXPs$11 billion 622 million. These figures were 4.8% and 3.3%, respectively, higher than 2004 results which too were sound. The 2005 figures reflect, on the one hand, a constant growth of the commercial subsidiaries, which continued to consolidate formats, and the incorporation of new formats with the acquisition of Dorian s. The manufacturing companies faced the year 2005 with significant challenges, such as higher prices of raw materials, energy and fuel and strong competition from domestic and foreign companies, which increased their presence in the country due to the strength of the Peso against the principal currencies. However, thanks to the recognition of our trademarks, Grupo Carso was able to maintain its production volumes and in most cases, the market participation of its principal products. Very truly yours, Carlos Slim Domit Chairman of the Board of Directors 5

8 ndustrial The industrial division maintained the efficiency levels of its principal businesses. 6

9 Sales of this Division amounted to $39,944 million The Grupo Carso industrial division is formed mainly by three subsidiaries: Grupo Condumex, Porcelanite and Cigatam. As part of the strategy to divest non-strategic businesses in order to concentrate on the Grupo Carso divisions, this year Grupo Condumex sold its 66.7% participation in the capital stock of Ferrosur to Infraestructura y Transportes Ferroviarios (ITF), a subsidiary of Infraestructura y Transportes México (ITM), which is a subsidiary of Grupo México. The sale price was MXPs$2 billion173.4 million. Grupo Carso also subscribed a capital stock increase of ITM, becoming the holder of 16.75% of its capital stock. 7

10 GRUPO CONDUMEX Grupo Condumex reported annual consolidated sales of MXPs$21 billion 951 million; in comparison with the MXPs$21 billion 253 million of last year, an increase of 3.3%. The higher price of metals, partially transferred to the sales price, and the good performance of the Mining Division offset the lower volumes in most products lines. The operating margins and EBITDA, however, dropped approximately one percentage point in comparison with 2004, due to highly competitive market conditions during the year. The Telecommunications Division reported lower volumes in copper cable but a significant growth in fiber optic cable. At the end of 2005, the Brazil plant initiated production of cable for telecommunications. The Construction and Energy division reflected lower volumes in energy cable, metals and transformers and integrated projects, in comparison with last year. The Automotive Division reported reductions in volumes of autoparts, automotive cable and harness lines as a result of a lower customer demand. Nacobre reported sales in % higher than 2004, and within an operating margin of 6.3%, 256 basis points power than last year, while the EBITDA margin diminished 320 basis points. The copper and plastics division reflected a volume reduction of 3.4% and 7.6% in 2005, while the aluminum division reported a 2.7% increase in volume. 8

11 21, , Sales (Million Pesos) Operating Margin EBITDA Margin Milling volumes in the mining division rose 65.8% over Minera Tayahua continued its good performance, with higher production volumes and better laws. Division sales rose by 60.3% during the year, while the operating margin rose by 23.9%, 1,410 basis points in comparison with Increased volumes combined with higher prices of metals resulted in higher sales and the improved operating results. Capital investments in the year were approximately US$77 million, used mainly to increase capacity in the mining sector and begin the production of cable for telecommunications in the Brazil plant. 9

12 PORCELANITE In 2005, Porcelanite maintained its participation in the domestic market of above 40%, while strengthening its presence in the US market. During the year, 10.1% of all sales were exports, mainly the result of the opening of a new plant in the northwestern part of the country. Sales of Porcelanite en 2005 were a stable MXPs$3 billion 649 million, in comparison with last year. Operating profit was MXPs$691 million, a 0.7% increase over the previous year due to an increase in the sales margin of 17 basis points in comparison with Operating flow (EBITDA) was MXPs$1 billion 51 million, a growth of 3.2%, while the EBITDA margin was 28.8%, 95 basis points over the figure obtained last year. These results were obtained by the implementation of operating improvements. 3,656 3, The line of adhesives produced by Solutec Soluciones Técnicas para la Construcción, a subsidiary of Porcelanite Holding, continued projecting its image and increasing its participation in the market. In 2005, Porcelanite made capital investments of approximately US$7.8 million, used mainly to complement the equipping and reconversion of the plants. Sales (Million Pesos) Operating Margin EBITDA Margin 10

13 CIGATAM Cigatam, a subsidiary of which Grupo Carso owns 50.01%, is the cigarette manufacturer company that sells all its production to Philip Morris Mexico, an affiliate of which Grupo Carso owns 49.99%, for further commercialization. 14,344 Grupo Carso consolidates Cigatam s results at 100%. During 2005, Cigatam maintained its leadership position in the market, focused in the high price and low price segments. While market volumes decreased 1.5% during the year, Cigatam increased its estimated market share from 60.2% to 62.1%, 190 basis points higher than the previous year. Marlboro remained as the leading brand of the Mexican market, with a 110 basis points market share increase reaching over 46%. As of January 1, 2005, excise tax rates were increased from 100% to 110% for nonfilter cigarettes, while the excise tax rate for filter cigarettes remained in 110%. 12,918 Sales (Million Pesos) 6.6 The contribution to the Fund for Protection Against Catastrophic Expenditures remained in 2.5 cents per cigarette sold in Mexico. Cigatam posted sales of $14,344 million pesos, a 11% increase when compared to 2004; operating margin was 5.5%, 110 basis points lower than the previous year, a result of the higher excise tax rate for non-filter cigarettes and the annual impact of the contribution to the Fund for Protection Against Catastrophic Expenditures. 5.5 During 2005, Cigatam s fixed asset investments reached approximately US$18.6 million dollars, basically from investment in machinery and equipment, and building. Operating Margin EBITDA Margin 11

14 Infrastructure and construction $10,708 million, revenue obtained by CICSA in

15 29.1% Growth in Operating Profit in respect to 2004 On October 2005, Carso Infraestructura y Construcción (CICSA) made a primary public offer of shares through which it placed 620 million shares in the Mexican Securities Exchange, obtaining MXPs$4 billion 712 million. Prior to the public offer, CICSA grouped its businesses into four sectors: Installation of Telecommunications, Manufacturing and Services for the Chemical and Oil Industries, through Swecomex, Infrastructure Projects, to its subsidiary Constructora de Infraestructura Latinoamericana (CICSA) and Civil Construction, through its subsidiary Grupo PC Constructores. Carso Infraestructura y Construcción reported consolidated annual sales of MXPs$10 billion 708 million, 20.7% above 2004 sales. Operating profit was MXPs$1 billion 342 million, a 29.1% growth during the year with a sales margin of 12.5%, while the EBITDA margin stood at 14%. 13

16 CICSA 8,873 10, CICSA used the funds obtained from its public offer for working capital, to pay debt and to construct a new steel pipe plant in Veracruz. At year-end, CICSA had a total debt of MXPs$857 million, with an availability of MXPs$2 billion 719 million. In 2005, CICSA made capital investments of approximately US$80 million, used basically to purchase construction equipment. INSTALLATION OF TELECOMMUNICATIONS The installation of telecommunications sector reported sales of MXPs$5 billion 904 million during the year, 7.5% lower than Operating profit was MXPs$656 Sales (Million Pesos) Operating Margin EBITDA Margin million, 1.2% lower than last year, with a sales margin of 11.1%, 72 basis points higher than Operating flow diminished by 3.2% in comparison with 2004; the EBITDA margin was 12.7%, 58 basis points above At the close of 2005, this sector had contracts for works to be executed in 2006 amounting to MXPs$43 billion 400 million. SWECOMEX The Manufacturing and Services sector for the Chemical and Oil Industries reported revenue of MXPs$3 billion 94 million, 81.1% higher than last year. The operating profit was MXPs$505 million, 77.8% above the 2004 period; on the other hand, operating flow was MXPs$533 million, 77.3% higher than Operating and EBITDA margins of 16.3% and 17.2% respectively diminished 31 and 37 basis points in comparison with the 2004 fiscal year. In 2005, three oil rigs were timely completed and delivered and two production platforms are being constructed and will be finished in

17 Among the works begun in 2006 is a telecommunications platform which is being constructed in the yard of Pueblo Viejo, Veracruz, and a vacuum plant that is being built at the PEMEX facilities in Dos Bocas, Tabasco. In October 2005, an investment was approved of approximately US$40 million to purchase machinery and equipment that will be used for the construction of a structural piping plant for marine platforms and bridges, pressure piping for ducts (poli-ducts and gas ducts). It is expected that this plant will start operating in the first half of At year-end, the backlog in this sector is MXPs$3 billion 49 million. CONSTRUCTORA DE INFRAESTRUCTURA LATINOAMERICANA The CICSA infrastructure projects sector reported sales of MXPs$717 million during the year, with an operating profit of MXPs$47 million. The operating and EBITDA margins were 6.5% and 6.6%, respectively. The main projects in which this CICSA subsidiary is currently participating are the construction of the Tepic Villa Unión highway, the Northeastern Bypass of the Metropolitan zone of Toluca, and the Northern Bypass of Mexico City, as well as the construction of two water treatment plants in Saltillo, Coahuila. At the close of 2005, this sector had an approximate backlog of MXPs$2 billion 600 million. In addition, in January 2006, a contract was signed for the construction of the Mexico City Northern Bypass, for approximately MXPs$2 billion 700 million; consequently, the projects pending at January 31, 2006 represent MXPs$5 billion 303 million. GRUPO PC CONSTRUCTORES Grupo PC Constructores reported annual sales of MXPs$1 billion 201 million, 85.9% higher than last year. Operating profit was MXPs$71 million, 66.8% higher than in Operating flow rose by 67.4%, amounting to MXPs$71 million during the year. Among the works executed is a 90,000 square meter building located in downtown Mexico City, which is the new headquarters of the Foreign Affairs Ministry. At year-end, Grupo PC Construcciones had a backlog of approximately MXPs$1 billion 274 million. Highlighted are the following: the construction of a sports complex in Ciudad Nezahualcoyotl, a new office area and parking lot at the National Palace, and a Triara Data Center in the city of Querétaro. 15

18 ommercial Grupo Sanborns reflected a continued growth of its principal commercial formats. 16

19 18.9% Growth of consolidated Sales The commercial division of Grupo Carso is formed by Grupo Sanborns and its subsidiaries, which jointly operate almost 380 points of sale, with more than 750,000 square meters of sales area. In 2005, consumer activity was more dynamic than in 2004, due to a better economy and despite the fact that unemployment levels remained high and that interest rates tended to rise throughout the year. 17

20 GRUPO 44.6% 33.0% 6.6% 11.0% 4.8% Sears ($ 12,205) Sanborns ($ 9,016) Music Stores ($ 1,815) Dorian s ($ 2,997) Other ($ 1,303) Sales Contribution by Subsidiary (millions of pesos) SANBORNS Annual sales of Grupo Sanborns of MXPs$27 billion 336 million were reported, representing a 19.0% increase over the previous year. Operating profit was MXPs$3 billion 857 million, 13.8% higher than the previous year. The operating margin was reported as 14.1%, 65 basis points lower than 2004, resulting mainly from the consolidation of Dorian s. Operating flow (EBITDA) was MXPs$4 billion 559 million, a 12.7% increase over The EBITDA margin was 16.7%, 94 basis points lower than the EBITDA margin in Greater consumer activity contributed to higher sales, although the consolidation of the Dorian s Tijuana-owned formats resulted in lower operating and EBITDA margins. 22,964 27,336 In 2005, Grupo Sanborns increased the rhythm of organic growth observed in recent years, with the expansion of its principal formats, emphasizing the location of its new units. As part of the expansion plan, in 2005 Grupo Sanborns opened its first establishment outside of Mexico, consisting of a Sanborns store, a Dorian s department store and a Mix-up music store located in a new shopping mall in San Salvador, El Salvador. During the year, Grupo Sanborns sold the chain of El Globo pastry shops to Grupo Bimbo. Grupo Sanborns received MXPs$1 billion 350 million which were used mainly to reduce debt. In addition, Dorian s Tijuana closed the sale of the 23 Solo un Precio stores. Sales (Million Pesos) Grupo Sanborns strengthened its financial structure during the year as a result of its solid generation of cash, combined with the divestiture of assets. At year-end, the company had a total debt of MXPs$3 billion 401 million, which was reduced by MXPs$754 million during the year. The net debt was reduced by MXPs$1 billion 764 million, closing at MXPs$1,641 million at year-end. Operating Margin During the year, Grupo Sanborns made capital investments of US$89 million, with the opening of new points of sales EBITDA Margin

21 SANBORNS AND SANBORNS CAFÉ Combined sales of Sanborns and Sanborns Café were MXPs$9 billion 16 million, 4.4% higher than last year. Same store sales rose by 1.3% during the year. Operating profit was MXPs$940 million, a 4.7% increase over Operating margin remained stable in comparison with Operating flow was MXPs$1 billion 181 million, 3.7% higher than in 2004, with a sales margin of 13.1%, a slight decrease compared with last year. Growth trends of Sanborns continued on its cardholder base, reporting an increase of 15.8% in the number of active accounts during the year. 8,633 9, In 2005, seven Sanborn Hermanos stores were opened, to total 137 units at the close of 2005, including the first store outside Mexico, which was opened in San Salvador, El Salvador. Likewise, 31 Sanborns Café s were in operation at yearend; one was opened during the year while another unit was closed temporarily following the hurricane Wilma. Sales (Million Pesos) Operating Margin EBITDA Margin 19

22 SEARS Sears sales increased by 9.5% during the year, while same store sales increased by 7.6% over Operating margin rose by 16.1%, reaching MXPs$2 billion 32 million, while operating flow, MXPs$2 billion 273 million, rose by 13.8%. Operating and EBITDA margins increased by 94 and 70 basis points, respectively. The Sears credit card held stable as a valuable sales instrument for this chain of stores. At year-end, the number of active accounts was 1,386,061, a 25.6% increase over the previous year; the credit portfolio had a value at the close of 2005 of MXPs$6 billion 599 million, while the level of overdue portfolio remained low and stable throughout the year, closing at 1.43%. In 2005, approximately 63.5% of total sales of Sears were effected with the Sears Credit Card. Throughout the year, two new Sears stores opened their doors, located in Ecatepec, Estado de México, and Monterrey, Nuevo León. At year-end, one store was temporarily closed as a result of the hurricane Wilma; consequently, at December 31, 2005, 50 stores and 1 Pier 1 Boutique were operating. 11,142 12, Sales (million pesos) Operating Margin EBITDA Margin 20

23 DORIAN S During the year, Dorian s reported sales of MXPs$2 billion 997 million; operating profit was MXPs$79 million, with a margin on sales of 2.6%. Operating flow was MXPs$147 million, with an EBITDA margin of 5%. At year-end, Dorian s Tijuana operated 54 units under the Dorian s, Dax and Más formats, including one store in El Salvador. 21

24 MIX-UP In 2005, the music store division of Grupo Sanborns remained the distributor with the greatest and most varied musical supply in the country, complemented by the wide range of entertainment products, among which motion pictures and videogames are significant. Total sales of this division were MXPs$1 billion 815 million during the year, with a 6.5% increase in real terms, while same store sales increased by 2.4% in comparison with Operating profit rose by 5.7%, while EBITDA diminished slightly in real terms during the year , At year-end, this division operated 71 units, including a store in El Salvador under the Mix-up, No Problem, Tower Records and Discolandia formats. 1, Sales (million pesos) Operating Margin EBITDA Margin 22

25 Board of Directors YEARS AS TYPE OF BOARD BOARD MEMBERS POSITION** BOARD MEMBER* MEMBER** CARLOS SLIM HELÚ COB Emeritus - Teléfonos de México SIXTEEN Patrimonial COB Emeritus - Carso Global Telecom Related COB Emeritus- Grupo Financiero Inbursa COB Emeritus - América Móvil COB Emeritus - América Telecom COB Emeritus - Grupo Carso COB - Impulsora del Desarrollo y el Empleo en América Latina COB - Carso Infraestructura y Construcción CARLOS SLIM DOMIT COB - Grupo Carso FIFTEEN Patrimonial COB - Grupo Sanborns Related COB - U.S. Commercial Corp. COB - Teléfonos de México Vicechairman - América Telecom Vicechairman - Carso Global Telecom CEO - Sanborn Hermanos RUBÉN AGUILAR MONTEVERDE Member of National Advisory Board - Banco ONE Independent Nacional de México, S.A. ANTONIO COSÍO ARIÑO CEO - Cía. Industrial de Tepeji del Río FOURTEEN Independent JAIME CHICO PARDO Vicechairman and CEO - Teléfonos de México SIXTEEN Related COB and CEO - Carso Global Telecom Vicechairman - América Telecom ARTURO ELÍAS AYUB Director of Strategical Alliances, Communication EIGHT Related and Institucional Relations - Teléfonos de México CLAUDIO X. GONZALEZ LAPORTE COB - Kimberly Clark de México FIFTEEN Independent RAFAEL MOISÉS KALACH MIZRAHI COB and CEO - Grupo Kaltex TWELVE Independent JOSÉ KURI HARFUSH COB - Janel SIXTEEN Independent JUAN ANTONIO PÉREZ SIMÓN Vicechairman - Teléfonos de México SIXTEEN Independent COB - Sanborn Hermanos AGUSTIN SANTAMARINA VÁZQUEZ Board Member - Santamarina y Steta FOURTEEN Independent PATRICK SLIM DOMIT COB - América Telecom TEN Patrimonial COB - Grupo Telvista Related COB - América Móvil Vicechairman - Grupo Carso Director of Retail - Teléfonos de México FERNANDO SOLANA MORALES CEO - Solana y Asociados, S.C. ONE Independent ALTERNATE BOARD MEMBERS MARCO ANTONIO SLIM DOMIT COB and CEO - Grupo Financiero Inbursa FIFTEEN Patrimonial COB - Inversora Bursátil Related COB - Seguros Inbursa DANIEL HAJJ ABOUMRAD CEO - América Móvil ELEVEN Related CEO - América Telecom JULIO GUTIÉRREZ TRUJILLO Business Consultant ONE Independent ANTONIO COSíO PANDO General Manager - Cía. Industrial de Tepeji del Río FOUR Independent FERNANDO G. CHICO PARDO CEO - Promecap, S.C. SIXTEEN Independent EDUARDO VALDES ACRA Vicechairman - Grupo Financiero Inbursa FOURTEEN Related COB - Banco Inbursa CEO - Inversora Bursátil DAVID IBARRA MUÑOZ CEO - Despacho David Ibarra Muñoz FOUR Independent ALEJANDRO ABOUMRAD GABRIEL COB - Porcelanite FIFTEEN Independent IGNACIO COBO GONZÁLEZ COB - Grupo Calinda FOUR Independent ANTONIO GÓMEZ GARCÍA CEO - Porcelanite TWO Related CEO - U.S. Commercial Corp. ALFONSO SALEM SLIM CEO - Impulsora del Desarrollo y el Empleo FIVE Independent en América Latina JOSÉ HUMBERTO CEO - Grupo Carso FIFTEEN Related GUTIERREZ-OLVERA ZUBIZARRETA CEO - Carso Infraestructura y Construcción COB and CEO - Grupo Condumex CARLOS HAJJ ABOUMRAD CEO - Sears Roebuck de México EIGHT Independent STATUTORY AUDITOR CARLOS FRÍAS LÓPEZ Member - PricewaterhouseCoopers TWO Member - Colegio de Contadores Públicos de México, A.C. Board Member - Patronato del Museo de la Ciudad de México SECRETARY CARLOS SERGIO CASAÑA ESPERÓN Member - PricewaterhouseCoopers TWO TREASURER QUINTÍN HUMBERTO BOTAS HERNÁNDEZ Comptroller - Grupo Condumex THREE SECRETARY SERGIO F. MEDINA NORIEGA Legal Director - Teléfonos de México SIXTEEN PRO-SECRETARY ALEJANDRO ARCHUNDIA BECERRA Legal General Manager - Grupo Condumex FOUR * Years as board member are considered since 1990, year of inscription in the Bolsa Mexicana de Valores. ** Based on Board Members Information. 23