)

~~ THECOVER

ABOlrr

AElS-CEliNI B:roadlC'astiniOl CorporatCo:n,Is the le~din; informO!~iQnand eill'tertainmE!~t med~OIIwll'l!'lome~ il'l~ne Pl'IllllP'Ilines" Thrnugl'i various d i~~rioo&1'I pn~lformll [,t IIlms, to, bring contll'rIit to, Fiillplnos, artlY!)l1d the globe. lit «JfI~t<!ntily flnd~ w~ W anticipate and ovetrCCII1n!l!1 tile rnameng!!!!i of a falSt evoMng and inc:re~slr:lr.ily compeMtl\lf: ~nvi f'OInme;nt to emer;ge'!n even ~tronger <Inc!better o;)m~Jijy. AElS-CEliNI 'Qon:mntl'Y IIUllnova~=Its, ~nterrt C~Ntr,04'1I and di5bl1ib~tiQn capabi'liitie5 W 'ge!1erate and hOI nE!SS F breakltiiJmLlQns tiila'tef\SU:i'e Its rereVa.It>Ol!1 ttl i~ lIudl'fl!nees, lin keepolnlii wibl'l Itn, Imli_on to IIlways b~ in the service .~ the Fiilipino.

MESSAGE 'FROM T'tIIE CHAIRMAN

.I

,I

..

; ,-

I I.

CORPORATE

INFORMATION

OORPORAlfE

BACKG ROIUN

I[)

both AIBS-OBN's

ViS~OIllI nd passicn, The key th rusts a

of

.AA]f,time,..

.<llD'!!w:l'te~

ilD'<llD'V device

£II'"'

nted~m'. <

As OUlf audien ees .d!emallllldl'greater

cOllllibm~O!!i,eThO~)l ,a'l:lc"

OIU oontinuedl r

relevance by dustrliiblul:inlgl our centent

r

in

the wndlest array

of pMfo.nmsttlhat

technCl~bg¥

wi~ al~~ow"

Ou r allJidli:ell'1lCeS III he alMe to reach us ,a'II]'1lJim~,at ,allJl¥ wi placeIn all'1l'l'rn>eclium.

cities

of th e Philippines

.• ABS-CBNI

prov~d!es news and

enlren:ain ment

IPlmglfamming

fur IIllilille ehannels on ca b~,e the pmclucltiolill process" the mediu

IlI'II

TV end Opell'<ltes, the COUllllltTy'SIlargest eeble W service provic:le~, The Corn p<lny also owns the leadi n,g cinema

used to. access

cmllllllitry. It Ibllings il~s eentent

Iowo.rklwude

,OJ udienees

remain

aonsr.aIM.

We wilill COIlllIJiII'1lW:l bUlilciing on, our eere

The Compa

I'I'{

has ulntewestsin

eontent

developmelnt

menchallllldl~ingi

end licensinq, mob~~e: and ollillilille

:synergies;..ppss~Me beooeel'jl our 'ODlnteint end disiblibulJion / husu nesse'" We wi!11cOIl!OOious~y eperete mOine iefficuently

..

"

.> end co:st-'e,fiFectiv,ely •.as we deliver Qw!e<llrel- a IlIJ1e v

lLeallJIJIWII!IItik

We !exilSt u~ldhe service

of IFii~upunloiS, wlDdchvide., as we'!l as

of alll~hiulmallllikind,,,

content

fur .,my diistriibuitiorl p~aUot1rn"

We take personal
<llndl decusuon.

aeeou ntahiTily

flOf 01:] r ro lie, output

We prernete the best in fi~ii pillllO tah:mtt, <In:dlreflect true sentiment

the

of the IFullipun:o.

UORIPORAliE

VALUBS

[1111 <I,c:hi'e:vungou r corporate

vLlSnon, OIlJ~' vOlluelS, gluuoe

("

'p~ \.,

througlh

thie jO!!Jlmey.

'?#

INle:riiltouacy We believe u~ 'c:aring~or

OILlI'

peop~e. We believe

in '!Nle deliver on O!!JlfcommiIDIlentiS. We speak O!!Jlt<l1~dl~\j\e

good

peilforl'1l'll<lnae"

lE)!'Ce!lllel!1l'Pe

eestte <lIiDtaUl1lI best retu

ni'1IS"

We eontinuously

!explbre

nlew ways

of doing

thiinglS.

w>etalke alctionl basedl On! <I eerefu I essessmentthat

ABS-CBN ANNUAL REPORT 2009

_ IHIGHLI'GHTS

IFINIAIN. C.E.AL

1005

2006

2/007

2/ooa

(ol'lsumer 'S>lI1es (11'1 P miillions)

EBITDA (in P millions]

10,386

2005

2006

2007

201.

2009

--

Net I~ncome Un P mUlion,s)

E.a mings per Sll'uu'e(Pesos]'

1.702
2.23

252

2005

2006

2007

20U

21005

2006

2007

1,008

2109

ABS-CBN ANNIIJIl.~ REPORT 21l09

Cas'h alild Equivalents

{illl, ,p milliiolll50}

20<15

2iOG6 2007

2008

2009
-----

lot;!!1 U.biIWH (i n P mi IIions)

Long Term Debt (in P m i:llio nsl

11,599

~IO,224

'1'1,779 ~~II~
I,
c

6,2.76
Book Vatue per Share (Pesosl,

Stockho'ider's Equity Un P mmions)

13,2:2:4

2008

21009

2,005

,2006

21007

2008

210M

AJt the beginning dim amidst

of the ye;;IIr,. the mlltiJooik fur .20Q9was lenvimlfllment loca!~y and ¥,our products under such an envumnlmem-,

<IIwelClk business

glloballWy. lBut even

,;;!nIdi services,

compa ny onee a.g!1l~11'II IPlmvedltth<li~ e)!cell!ent rollJlnde,d! on <IIpassi:onate business results I[h:l~i\r!elseund times" The F~lipinos, a!lready mired ~n: poverity,

df~\re to serve

eV,eil'lldminglitJl'ying

ex;per~elfllcedl

lexful'~a:oll'rlin<llryca lemities, the str'e'ri!gthi .of each other r,esilienc:y O'ftthe Filipino da rk fimes, dur~ngl these

Faoed w~th established! lea rned to relly .on to o,vercome. shone

ilnstitllJllJions IlJlnlabhelJo he~p,. they people

The

Iluke <IIbeaeen

As wutll o~[her difficult >QOIUlIl'lltrymen.In these inlJernet,. wh~chfllow

yealrs,~ve tryuIl'IIg times,

journeyedl

with

oUlr

the wi:d!e: and .glmwuIl'IIg

<lnillY of OllJlr1PII<IItrorms uln freetelevision, ca ble, sate'l rite, m.ob~ll,e, magazines" OIUl mest r ~-a,dli:o and c~n;ema!tlhlmllJlglh servedthe world. n eeds compel I~1Il:g1 eontent

of OIUlroeu ntrymeliliwell PO!l.!'\l\ellful~ooIFllte\nt brought the soory of en ill'llnocent ("lBro

n ),

here .md aroundthe

hope end ~IFIIspir,ati:onas weml as boy <l11Il:dl nlielll:dlship' with his Gm:!

fun <Ind re~~ef. if1hlmllJlglhprogr,a rns sllJlch as May B!J.A:-as Pal

our vi,ewers experi:em::edltthe pOwe.r of hope and <IIfl'a~~:m)g~':ams, i~f~"Tlllatio'n cltlzem'~ to astthey

ralilttlh"ihrou!gh ~\f\ehelped ensure

OIUlrnews <IIndl~t empo>wea- the Fil~..8ith ani edllLllcated alllll~i I"If~:ed

viewers na tionwide and

..
aud ience reach and when they wa nt to experi
content showed

used cable, sateliite and tlie

oDnte nt choices as well

But the eve nts

'Of

how such an

un

Ako Al'lg Simula

volunteers

for; increaaed

..
'

engaged

vigilarlce fDr

'.

truili and active pa rticipation shape the country,

in

FiliRinm; from a II ove n th e

OJ!>

it fared all the

del ivered music that stirred Uie enlivened the you:tlii.

periods.

B,y .strii'lli og to keepthe

overs,ea,s lFullipnno

'Ito home alndl to thei r ,ABS~C:BINJ loila l's CillbJ,e,sarellire G

con nected

loved ones,
.and IPiIlI

sUhsoript'iOlflS increased by doulble-diiglit rates, rleaching es many <lIS 2.2 millien vilewelrs by the end of the yeall-... S:i'milariy, a.dvertisen. we remained sensitive

to the needs. of
weathel-

depressed
increases

To help our reqular advertisers bUlSi'llless conditions, we deferred

rate

to

AUlgust.a nd offe'redl mm-e slyn:e'rgistic

media

ailld haln::l-working creative exeeutiena aiCf"OS.Smo platforms to guve them ·gln::alrer val!ule fur

mlo·ney.
IOIlJ r talent and emplovees, We continued to 'invest in creative telent and employees th rough (lOlfltinlJlous trail'lli!'lg and dev,elopment. al precess w:e Stillrted yean; ago bUilt continue to refine

We rem auned true to

alndl expand" So, despite what Vii.as initi'ally

expeeted to bea bad

year, eonaolidated gmss revenues reaehed P24.'9 billlionlJi'lll 2.009, POS!tUlllgl ]1%, growth ove:r lest y,ear. Adv,eilti:gers. reoognnzedl the u ",'i'que vakae we oUelr ,and om- advertisi n gl revenues glre~!1by 7% te P14.5 billion, helpedto some ·exrent lby political advocacy spending ...Our consumer sales, meam'l'l1Iiie, rese hy H!% to hil: Pi0,4 billliorr, Cost conta,inment and pmdim::itivil:y impmvemen~ 23°/D imptrOvement in net income" We look to the future with solid confidence, rleardv to, rneeta ny challenqe, Ou r determination our audience, ensure to be faithfu I to the need's or customera .and ad\i'erlbiserg, will~ ledl to a

our Cooolrlluedl strenqth

in the mariket,

The dhtanges. we have I nstituted to sbrengrihen organizailtiona I capa bilifies and impmve opereti ng effi'oiencies. prepere' resiilienoe. us for greatel' business

We are ready to meet challenqesand fOllWardlto opporlbunihes to continue

look

to

serve th e IFiInpiin,ow'berever the'y may be, whaJitever thejr station ilfl life." Whalrever that the futme mal'!" brillllgl, '~'Il'e know supreme.

ilagether

'We will remain

Basta ,sama-,sama, kaY<J'llg-kaya, Kapam#ya!

CrealJi I'1IgiI.eiairt-w,armingl .lII'iI d e:m,pDwenng co I'iltel'1l.lt neither routine nor textboek; it isn~t is merely a mall'1lufad!ulred [pmduct lthlirt call'1lhe bO'ljght O'ff a gmoorysihelf., The SljCOOSSof a concept transcends wihat one sees, hears Dr reads, lihes:e stories must be deli~catE1l;ywoven aad intill11!arnlly presented fur irt to teueh lblhe \I1el)" oore of its audience •.A!l'iId tJllliis us what ABs~aBN Ollal'illl'iliel 2: [Entertainment has dillligentJlly worked on in 1t!lhe past yeialFS. Cha[I[lengiing oneself is diiffltcult., It is much easier to celebrate PClcstsuecessesaad hope that it wiH [lead to future trjumphs, But, as we are very muC:h aware,. this is net agluarantee .. lFaoodwulthlagglressi\l1e' cempetition, we [Imew that we had to work hard ill Iuve up to our audience's expectations. And their overwhel mingl responsa eml[y inspires us.

Channal[ :2 enhanced tilhie pri meti me .e'Xipenenoo by delovenng [plriilmetime-ca[1 iber proglrams earll[ier at 6PM. Bays OV'er Rowers, a KOlrealmJ'vela abourt how 1i:lheerilduriung lave of a .slumpl[e glirl transfcrrned tlhi!e'storilY heart oiF alril affll[u,ent boy, a nd J{amrse, an lLJ[plliiffi drama rillg abDut the jou may of a gi n1 whO' rose above the dlhial[llenges of beingl a 1been<lge mother, altered teillBvisUO'I'lI liieWiunghabits and reminded V us' hDW lave can overcome al[l[ odds .. In primetirne, ·Olhianne[12: focused on stones of love, hope and respect - all oontrat tilhiemes to OIJ r aljcdiirE!iriloes' eeds. The story n of SalrilIDUrm'S ilrilirilooorn fai1i:lhand fnendshi[p. with Bra iul'1ll May .Bukas Pa sO'undhl ireso:riIalt,ed the E!induriulllig hqpe of al[l[ Ftliliupiunos fo:r a better I~fe, whi[lle Hille' glFcmriI.d-b"ea~iingl familily dillams J:fl!}'IDRq Da<iawa' kept vliiewers on edge as 1i:lheybore wilbr1less ill the u ril1f:dlldling! cootlicts and liinterllllal silJrugglles of two brothers flgthtting over famuly and the [llo:ve of tilhie same WiOman. l1he powerful [)ahil May lsang Jkaw revealed 1i:lhedlhisl[lienges faced by unreten1iiul'1lcg love, fa mily and plinci[p[l;es. With iilts highliirglhts of rea! -[Iife victolnirBS and slbrugg[l,es of fel[low A[I[i[pii !lIOS, Maalaa!.a .MoI Kayaoontinued to, upl[ift alliid ilrilspl~re viirBwelrs.. J W1II'e B'e;tty .La· .FetJ rerniaded UiS, oiFthe meaning of milll beauty aad Only You si'll.owedl us how passion us mfil!octed ~n~ood and [1[i1fie'.

to do better,

1 A.S5-(;I!ID\I lJl.i' "A.mO~ WOI'ILD 3<1.<1 53

.2
3: 4

GMA
A.S5-(;I!ID\I GMt!.

1II ORA:S
IlANlDn..A 5AKSl UGA WI> KArom~ 1!.ll.fW\'GHI\lJ

23U;
7.7 5_:3

36
38 40 'I

Qni

1.9

lr~,e ad!aptafuilOinlof Agim:alt: Ang NgtJ Atrl1lltnf'ilt ni Ramo.n RcelVilil1llalnld 'IJ~e Kiomiks Presents seJr~es c:aptJljred t~.e e~us~ve Imo,iilesand }I\QILJtlh,fiiilllling theJilr SawulrGa/yevlenilnlgs \i\lUlt~, thrilllll~ngallild action-pacjkjedi adlvenl;wulres.. C:~,annelll 2 revita~~zoo Gayfuiime vii,ewi nlgwi1D~ illillnlOVall:~ve eoncepts. ShoL\\'l!;time soli~dified l~,e noontime bllm::k, as lilt s~.o\i\lc:ased Ute extra.o:rGI~nllalry1ta1~eli'iillj:s peitfomlantces of and omlinary Fililipiinlos. Kambl1ll' Sa Umifj and the Pf;ecio[Js HeQ.rfs norrnmOE'Soorii,es keptvlilewers aw.ayfimm thsi II'" afltemoon siestas lt~'FoILJgha glriiPipiinlg talle of aoooptranoo <lI1'll.da series of c:.alp:t~val:illilg Illight mmanoo." Gom:plletilnlg 1Dhe aften,oonll5' perkineas were a heaithy diose of Bantlil'lifj Split .D.f}i:iy Servings and Pino'y Big ~~~:;,.Double Up Uber:.

Bome out of or,ealDiIViity.ilnllnlovaltiveness and haml work, ()~annl,ell 2 has reaped praises and acooiliades from var~oJljs groups and circles .. IEvlen more gra/tifyilnlg ~sthe PlCIltronlllaglea1ifumied it by tJ~e IPub~uG. :ayllo, rNiell:sclnlI 1 Sofres rNlatlionalll P~,illupp~ne'.5l11e1lievisnonll .AJLid~,enoo MleiCllSiLJIPemenlll attested! to Chi:annelll .2.'s lli'iidltionallllI,eadelrS~;~piinll hEal1 dlay "m,d pirimetilme.wi1D~ a ltot:a~ dalY aJljGlileJliloe hara of 45°tc,ror 2~[J()9. s Clhanlnlell 2. a~so aooounlbed!f:olr 13 oult of 1Dhe top ]5 proglll'"am:s, unldud~li'ii.g9 of tJ~e top 10..Its stmlllgl:lh liin c:re!03ltillllg COnltenil: is SOOnll cross alill a program tYIPes, \;\IIn, Channelll .2. pirograms lI,e;adl~ngev,e:ry Ir,ell,evanltgleilillr,eliin ralJillllgs. We are weillI aware of 1Dhle c:~:a~leJnlges1D~atII~e I ahead." B~1t., as Il0nl:gas we rernsin trua to our:se~\fes alnld our audiellll:c:es, we IkrltOW lt~,at our or,eCillt~OIi'iiS cOnl1TIi w~1111 li'iil~eto touch, inspire and bnilnlg 1Dhle best oull: of every HlllilP~ • rllO

.ABS-GBINI4S%

,rntlilielr.s;lO/o
S,lillllllili1o.23 Sollalr TV

Otlheirs l'D1O Stlllldliio 23 11 Qnll1 .2% Solall!'nI/

I RIPIN 9

QTV

nlS,

..

RlPNI9' 2.% TV'S SOlo

[)fUlnungthe day of the wO!rslt typhoon to hilt tha caIP:iltall. AlBS-CBINI News braved jjjhie dalniger:s to galthi,er steries airnd mach-aeeded inifolrmatlion. llhmuglhi, Illilve upd!atB:S lun.ABS-OBN s m~llltiple Ipllatlf:olrms, they monitored thi,e si1buatucm Inion-stop to hi,ellpalilleviarte GOrillooms and de~iv8ir vilta~ ni.ews.,
1

AllIIover ti'll.e WiOlrilidl, eomlll,elilook to rll,e\;\lSf:olr p unformaltion am] ·eniabilieiment:. .lin a society sUlchi as O~ lI'S.. Im:!wsas a source of empowenmen'lt O!nian ,even greater lmealnililng. bydeepenilingl pO!vsrty due to .n"~~',~"~.n prices, laiClk of jOib, oppOlli!unl~has and ed~ca1iJilo!ni,.jjhe Fli~ilPii j nilDfaced a yei3lr ·with 'glrfe!artelrtu m10U~, hiiiltby dlesIJmatliv,e natural CA31!amil:ii,es.Nlew:shas beoome arlil ilnlooglrldllpaint r of ~Iirfeas peOlpll,e 1bulmto .ABS-CBrNl INiews arll,d OUlrll"8inilt lffalurs for news ill equlup them to rope A wijjjh macro socuo-eoonOimuc and IPollirtucal1 dham,;Jes as wellias liinrkmmatucm: to rna ni!i3lgie jjjhie dal'y-to-day Illuf:e thi,eilr famulu,es. of lin a oorunl:ry whiere tmth can be hasd to eorne b,y, till,ey rn~yoini ni,ew:s organlilZ<3ltions to be vug~~arllit ilni ,eX!poSiu~,g the liJmlthi,., IBS-CBINI News., A ttllmugh lilts BotD 1140 .iF:a:tf:oi /!!fo: Aka Ang Simu/ifj campa uglrlll vY'glillan;oo, first bmlk!e jjjhie for ni,ews of tJhie IM!agluilnidani!i3lo massacre. Conoomed Boto PauoJters sent ABS~CBINI News emails and pictures of thi,e grusilly incudle:nt on jjjhie same dalY thi,at lit hapipell1iiedl.,

With 1Dhie untimely delmuoo of thl,e cmm1bry's moral Iliei3ldielr,fOirmer PresidEmlt 'Coralzon Aq~ ino, AIBS-CBINI News led thi,e ~ialtion in rnmeim'beniilnig and givungl henor to the iate president, thimugh speJ:~all COoVEairidges and documelniltan,es, chmnudilnig hi,ow Glnie hOo~sewirfe restored democracy to the nation, AIBS-CBINI News covered allII1Dhieseh~stOiriC evenrm, burt irltgav'e jjjhie lFiiluIP:Uni,o I mO!r,e tJhian just metre sequlenice ofeveililts, ilt gave him oppolrtulrIllirtires lto he~p lrelbuilld a nation.

IPrornoltungl a c~'llture of citizen joumaillism sinee .20i(~4, ABS-CBN News ,enoourag,ed lFiilii .. piilrI:OSto Ibecome more vu,glularlilialnid in droves, jjjhey came .. llhrouglhi, the .ow;Bn f;1atr;Di ani,d the BoliO'1140, iPfltrol 1140 campauglns, .ABS-CBN News caIP:irtalluZ!edi the use of exiistlini.g techi·niologlues on and the prevall,enoe of :sooi!alllmediato builld communutlies off re~ponSiilblle alnid Ipatriotic citizens, lNio way wii IIIthey a Illow atmoiities or allillY wmlill,gdoungl to 9100 unreported, ner any alccOo~niltabiililty to baforqotten or p~shedasudle. rNlow, with IPIPesudlenl:iialeil,eduonis liloomiiII1ig, AIBS-CBINI News is morn than ,ev'er ready help a lniah::m: standi up Onilits feet thm~!gh empowelnungl news and unifOirma1iJilo:ni.

10 Ra even in times of Reliable

)

"e~~re~~

Cam'manding Office.,., fJivis.io.n Tr:aining Unit .2~d .Infant,.y Division, P'hilippine,A,.m'V

He endured more tha n 24 hou rs o~ retrieval alma rescue operanoos, 'I•.I ana p ~Iysicalexhausnen, alii in the na me of hel p~ng h~lsfellIo·w F~II no. ~IP~

IMajor NI,HllrioTopacie

Ofild'OV struck and hielip was needed, he was one of the ~iilrstmien,to respond ,.

0·' ...
..

etwo
Just a week Illater however, Typl'ilnon Pepe:ng wmaked havoc in North allid Gentral Luzon, ThH bNin 1typI'ilOOn!iS, deliver;ed a stu IlIllllinglblow; ou r Ir,egionalllstalJionswere m1iot spared fremthe deillu:ge,. or most, irt walSthai r darn:est hour. F But it is in these moments w~en our true cheraeter as a peopille surfaces, Allild IRING; wiithi!Stood1Dhe s~rg,e and served asa Iiglhthiouse,. RNG continued to dleliilvervital news dun ng the OI'iHslauglht ofthe typhoons, iknowingltlhalt what we bmadcasteould salve more lives .. RNG provided immediate mJlliefand gave our ,counil:rymen lreason to hope. More impDrtantlly, RNG facGliiitatedstpenglthi,and inJi51PG amongl rati:OIn! alillof us to' rise up, moui lid aad move IQ,n. By doing good and previdmqservice, RNG has been rewanted wiith E!X!ooptiol'llEll busi ness results, as lrevenues surpassed Pl bilillion in 2009,. Whillie the mad ahead might be 1iillled wilth trials, RNG wlilll be there to em::oulrag and toserve our regional co~ mltrymen.,

U
Rising above challenges
As the primary canter for assistaaceand aid of our regiimllal family and ABS-CBN's direct liink to mhieproViinoes, the Regional Netwo:rk Group (IRNG) has strnngtlhen!ed ABS-OBN's llrEiIabolns~;ip wiithi,the peOiP~,e' mmmil:too IDO it serve., This endlHing bond has been nurtured and ta ken! 'c.alffi.of IDhrouglhRNG's empowering and em'llight€ln!i local p!rograms and 'genuine ng IPubllicservice, Ev,en as tYiphoons, drought, landsliildes, and mhieconstant threat .of Vloll,c.alnic pti:mus affect ern mhecountry y'ealr iinand Yeillr out, we lesmad to harden! our resolve and foster wimhii'iII I ourselves a spiriirt of ~niirty deslPite physicalll, culrural and ethnicdiiffeir,e:noes., Whelil Metro M!anililabore the brunt of the destruction brought about by Typhoon Ond'ny laiSt September; our regionall countrymen wasted no time eorni ng to mheaid of Manil,a. No matter how lime mhey had, donations and relief goods ke;pt ipoming in to our Ir;egionall stations, It w,as such an o'Verwhe1llmiln!g act .of sell'llessmess alll,d RNG became theeonda it fnr it;

2 active youth Keeping up with the

Wih~ thl,e Irhum'bell 13 ~s oOlnsude;red unllucky by lie some, Stuidluo 23 1fllo!JJIrisherl lilts ]. 3'IJhyear on ami:dist rising competutlioln amollll.g thlie smaner TV p~alyers. SpolrIDilngthe caolest allilld ~lriippest umagie amongl a~~flr,ee W dha nnels, Studio 23 rnvo~ultioni2!edlW 'l.!'ii:ewungl OIlll:OO again as it inl:irodu:ood the 'oo!JJIIlll.1bry's first-lever 'c:<lltm-!JJIp 1\1' servuce onl~ lIll,e:. -rml'roLJgih www.s·l:iudio23.tv •.1Dhie ever-moibilile and e\l\er-ltlUlsy y'oul:h can :c:a1bdhp on 1Dheuralvoni1te u f .ABC 011[)iisney selni:es <lI1Ill:d 10Ci3lllly-produoed proglrams on~~IIll.e nytime, al'lllywlhere, a day a aliter thl,eyam ai red. studiio 23 ailioo IUll1lll:roduoed allillothieir progllidmmungl ~11Ill11l1l0VclltUOIl1l:, a 1.5-m~li'imte "short" alP1Dly nltitlled Quiic-E andlThe Wr;illp., e Q.llik-E dellli'!J1elrsDhie 1 Ilatest ~ technmllogy, 1Ill: gladg:ets, 'gamillrng and everytihilllllg 1Dhiat'sho1i:O!IIll thi,e wellJ,wlhillle The wrap' dliislhies !JJIp hat's w essellll:lia IIluneli'iitertainmellll,1i:.,music, sperts alli'ildg~!gs. 2![):[)'9WCl:5 ano1Dhielibanllll,elr yearror sports, as Studio 23 filllledQulr days wi1!jhadJiIO!Ii'il-packed sports pirogrammung, andhiornd by 1Dhemost bl[llnkab~eoolillegialte Ileagues, thi,e IIL!I!AAP' and the NCAA,. UFC, thi,e premier mixed malrIDilallarts lleague, tBli'illli'illiiS majors and the U.MP volllleybiCIllll 'games exceeded E!:xpectatiionswi'IJhi higlh ratinqs andtha upoomilli'ilg 2,010 HFA WO.dal'CUp williI surelythri IIIthe m!JJIIlll,1bry's growung number o.v footbalill rall'iliEitics. Conltinu~lli'ilg irtsaward~wii 1Ill'lrnlungslbr,eak, Studio 23-prOOuoed 111 Sper'Jk and Us Girls reaped praises and rnoog lI'iI;irtion from award~gliIVlilrll.gbodiesand ulli'il~VerSi~tues 1Dhmruglhout Ute COUlIi'iltiry 2009, proof that Studio 23 lUi'll: mma~ 1i'ii!S to be the bendhmank amolng Ira~dheflr,ee TV IP~ayers..

1IIIIIiI_1III"'" .ABS-CBrNl's C..Ib~eClhalnllillellsarlld Pir~nt If'oi1~edia GmulP' (CC:PiM:G) is in an eXlbremeilly competiitilve indUisfury, wutJhialll~pllla)l\ern vyii lI'iIig tJhie for a1thm.fuiIOiIill I:lheeliJ,elr-evo~VI~ng allilld hlilgihilily of .ooph~stjj:Galtedcalb~,e,enlte:rtaillillmenlt ali1lidgl~ossy mag<3!ZI~rIl,e marke1t. Competingl net just agailnst 10(:::<311 colmterlparts b~1t 'gIlobi311iridllilldsas wellll, b CClPMG was up 1:£1 I:he dhaWI,enrgle its pursuit of unr brillillging ,enrridh~ Iill.gcolillltenit 1:£1 its Ip:aiSs~olilllat'E! viewers allilld m:adern. ElilliS!uln~ng that it w~1111 be ~OiSt I~nl:lhedllufier off not irmllev,anoe 1Dhiat ther cabille dhali1llrltelsalill,d e maga!Ziiilill,eshave ended up ~n, OClPMG further dielived I~nto ~ Iill,dersltandingl 1Dheevelr-evollv~nrgl taste of its patrons 1:0 momefifuatnveilly respond to thi,eilr ~ rIlsafui!alb~,e appetite foroLIIl:Jtlillillg~edge and 8O{tridord~1ill!i3lryono:m1t. o Orlllthe 1C"<3lbllle ,enterlaii Iillmelnt side. CCPMIG ,oontinued to offier I:he moot unique alillid ~oCdlny rellevallill1tloolillltent:. ,a~nremlalOne remal~ned as thi,e mo:st-wa1tched calbll,echanllille~ I~nr the oountry, bestingl otJhier fumilglrlll movie channellsalnld evelilll thi,ose on free-te-sir. IMryx and IHlerGare 1Dhe tDjP' pllayers in 1Dheirrespectiv'e ca1teg:olniies,.

lhe uf:estyle INlet.wmikallilld VeillVlE!1toelebrid1ted anro1Dhier Ulocess1f~IIyear of dlelliverii Iillg s IProgress~ve,ellillrudhilingallilld passienata Iproglrammillillg to ulPsca~e femailies Wlilth IProglramsSi!Jchil as MarmoT Jmil1 Chef.. How Do J
Look, So You Think Yo!:.! ca:l'i ,[)Gnce, AmericaFs

Next Tap Madej and H. Hot to be Ileft Ibehi;~nidl, CCPMG~s malle dhialillilill,els,.Mi1xxx and Balis, soillid~f1edthei" Inlli:dhie positions tlhrou:g hilrolClit~ngl and thri Illiing inever,elnt andS1Polts oontBnl1t. llha1t is wihy CC:PiM:G'scabille dhar;mels heisted ano1DhierIbalilllli'il.er year, adhi~,eVi~ngl 27%, adlvert~sungl r,e'Ven~,e 'gmw1Dhiun .2.009. CCPMIG's mag!i3IZi~neS fared just as weill!. DeS1P~1be an overidlill dedllillille ilnl advertisi m,;J :5lpelilld~lnlg n o gllossy ma,g!i3IZi~neS 2009, ()]PMG managed to iiIilll grow its magaZiiine adveribisillillg irE:\I\enue by 5'% as ~t II!eve;ragled on 1Dhie equiity of ~ts magaZi~ne fu~tlles. Metro oemelillited its status as tJhieIlle:a,dl~nrgl . fashiluolilliand Ilifestyll,e maglazilnle .. 'Wo.r:king .Mom prcrneted a Iba~aIill.ced Ilife fur enrl!erlpr~Si~ngl Ipamnlts" Food and .Foodie fuidklled our readers' pallettes wi1DhiscruJmlPt~o~s and deillectable : culli Iillialtycreations. ehafk and tL1yx ireptyourIlger readers abir,e:ast w~tlh 1Dhie Ilartest ~ well ~,alllmo:st n, every1Dhiii .Btiir SrudifJ' and ThE)' Buzz 'galve Iillg CIIW:aIY passes intD I:he wOirld of .shiow VIP Ibusuness. K Mag pmv,ed IKriiiS Aquilnlo's Ibali1ltkab~ across any p~i3rtlOirm."Weddings and ~i1ty n:Jme &. En.t;e~iil1iflg :showed 1Dhiat ll'il,e O csn pllaln a wedldl~nrglor desuglnl a home just as well IIas: ailillY prefessional would.

Despiilte 'It~.eIprevalerrliiOOof cheap piratoo [JVDs, I:he avai ~abiii~~'lty free ainllunediowinllioadis, of increased competil:lian from commelrcialalnld urndependlelnt prod~,ootr:s, and Ilowetr dU51PO!Sabilie ilnlcom:e, star (Junem<31 rerneins to be tJ~e domunalnl1t piliayer ilnlt~ie IllocalllmOVli:e induiSl:lty Ib,y oonl:ilmJOUiSllly IP:mvuding lilts .audienliIOOwu'It~, heilglMened ernmuolmallro:pel'iilenOe, Onl.ethat olm'lly star Cunem<31 sn dellilvetr,. c [jnlspired by ilts ,arleatiive paSSlilOnl,staltr Cinema prod~ced nlluneq ~allity flilims in 2;OI()9,. an an'll.choroo Ib,y afirles~,alnld vilbrranlt sltary fllilled wiiUll Ililm lessons and relartable chtiararcters portraryed by the bastactras and aetresses of em tr genl.eratuonll.,These niinlefiiilms cernered 60®/.c, of 1Dhelccel fliilrm malrrket based on gross Ibox offi:oo r,eoeiIP:tSas Stair Cilniema aooounted fairalill of 1Dhe I:op 5 hughest~grosS!unglllocall rnevies for
2009,.

IMloviegoers alse ~augrhed and ,orued in tJ~e heart-pinchungl, yet: l'iibl~l:ickiliung,·()ItJ1t-of-tJ~e-box famii~y drama In tL1y life", T1~ese four movies 011111 surpassed ~hpWO mi~lllion iill11lglm:ss ox offioe b IPeoeiIPl:s.whi~,e yo~ Chiiangled Mly uf:e and Ang Ta.ngiog 100 lII'1foog Llf100t breached 1D~e Php200 mililliion mark. Gi'!)\en tJ~e deillugle of infalrmalJion comingl from mametingl rnevies became more challl~EmgIUn'll.g. 2009 was a mille:stx:me year fotr Starr Cunema as it slttr!:mgl:lhenied i1tsl:lradilJilolnall marlkefui lI11ig whilile advalnlcilnlg lilts rrli,on-trr:;adli'ltuoll11~all marketingl appima;d~ tJ~m'!Jgh matxlumized usa o1fl:lheweb i31111,d mobiule technroillogu,es to ilnlcrnase aUlduenlce: aiwalremass arll.d ,englagemelnt.

W., 1D~e iiII11teme1t.,. otJ~er media, and

Vuewelrs experiell11lood ilt,eii'gho:med kiJig ilnl'It~.e 2009 box office iTiit Ybu Ci0.nged My life", Famililies and friends Iborll,ded togethelralnld eni]loy,ed Ang Ta.ogi'og Ina Nyaog LIf1n:at,the IM~el:mMlalnluialFii~mFesltuval's tOIP-'grrosoor, arrliid Best .Friends .Fo,r;ev;er, 'whuc~,featured a unique casltungl oorm'b~ lI11!E11tion."

To oontilnlue to surpass Iprrevli:o'IJs laurels, Star Cunema works orrlilon'7graniza1iJiIOnlal exoeilllem:::e:'It~H)!!Jgh COnl1iJUrrlil~loiUS leamingl .. T1~e lDilr,ec:tolr's Tlraun'lliungi Proglrarmalnld ether pmd~dlilotn-trella1tedl worikslhops were instifuutoo all11ld ,oonrdl~ded via formalll al1l,donl-the-job lJrailnllirngrnedules, prmvudilnlg a deepetr ~evel of II,eamilnlg fatr the ClrleiOlrlJiive team . lKey prod uction people aliso palrtiioipalted lunoOlrIPorarl!e-dri'!)\en pmgltrams to ,elnhaltrlae'It~.eilroverr:;alll~ ana.gemell11,1t m skiiUs.. IMlovingl fOirwalrd, asf 11m vuewurllg spreadsout beyond tJ~e bug screen, Sltaltr OJ nerna, wil:lh lilts d~ver:se pool of pasSlilOnlalte:and creative peOiP~lle, us well IIeql~ upped 1to oo:trll:ii 1m:!Jousilly mspo:nld tn 1Dhe dihanglilnlg lirnd~stry landscape alnld transcaad its oo:trll:en11I'1t m~,er ,emerglilnlg aecess poi nll'1t!5 ilnll:o w~ere oons~mp1iJi:oinlusevoillvulI11ignro.. u

s a Reco
nc •
landscape: lihe music liln the has suglrlllHfii;carlitlychangied indus1bry druven blV mobule and

In
from Ipres1ti:gluo~sawaml-g~vilrng alll'iidcompulation bodies Novelty a~bums such

,
,&

Bravely crossing boundaries

Star R!eoords a~so 'garnered awalms Awalms. mo:r,e jjj~an a dozenl

past

five yle~lrs.lFimm~lnl

IbV phrysucall retai ~s~llies, it ~!EliS beeflllglra,duany shiftungl UnlitO one: t~iat lilSdri\l\en onlliine tedhnologlues. lIGodai\,{,rnusieean be h~ve dosed down,

such as t~ie Stair .Awalmis ro.r IMluiSUGndl:lhe: .Awut a as Willl~i,e!Revilillame's 19i1ing-giJ~ng, lk.aw Nfl N:ga, l<irus.Aqulull1m& Baby James' 'We.Am 1. alrnd
GalrY Vallienlciarll.o's 25 Ihighlly sought Streetbnys'

aloquu red onll une and e~si~y sh~lred.. BecalUIOOof lD~lii5., sm~llller IffitailloylDllets Iliealvlufllig thice Ipillayinglfieilid

Tribute

.Albumwere

to

large: retalilll oUltllets.

arflter,whulle

V1~ongl Navanro

loca~ rncordilnlgl 111~bells have:

O[ptOO

to ei1D~er

Let's' DI:lnre,.

Bu:goy Drillio:nl's Pa:ano lDhe young:elr

close shOIP'air mergie wutlh 1fo:r'EH'glnl labels whose m~:5uc IIlibrary previdasa wider rnasic seiliectu0ll11i5nd artists. a unrfa,vor<:llbll,eIOOnl,dlirtuom~., Armedlwd~, artists Star and a !Records of h~glhly-talefllitedl composers, a variety aSSOITmenlt of

Nfl :iCflVa, Tomi GOnliZ::aga's Love Is, and Yenlg COlnstalnltii1I'ii,o's'OLl'J'J]lsy J mass market .. ilnl t~.e lliocaill du'glilta~

reached

lFacungl:lhese a strong

Wih!ule Iniidlinglo~t the devellopmenl:.s musie music ~Inldustry, star diistrilbutlion

Stair lRacordis mmalilnlS undaunted. roster dlilvel'"OOpool off rnasic conl!5tan1Dllydehvers

R!eoolrds has 'giradualilly

estabillis~.edl its 1footilnlg lunl:lheglwwilnlg uII1l:ID d~,gliitalldistnilbulJion Aplpll,e's IPop~'llalr iTunes Sungl's braadad memory

business, mt has expanded

lD~mugh deals wiith rnasic serviic8:.. MlaguG

of hit :seliections S ones,

lD~at deillights Filllip~llI'iios.IFor 2009,. Stall" !Recordls IP:mduoodi arlid reiliealsed 13 golld albums, Ipil!alJi flI:umalllb~ ms and .2.doublle Ibiy far t~ie most number amorll.g locall recordlingl outfiits platinum

lkalraolke dhilPS, and co-braaded Star Reoords digutal

cards fur MP3 pll:aIYeirsand/or

of top-seill~~fllg allbums liln theoounlhy.

mUSUC-C<:llpabille mo!bii lie phones,

aliso ~.eld suocessfUl~ dlilglitalll premieres, tlhmulglh its oflll~ilnlesto:r,erfir01nlE, www . stalrrecO!mis ..plhl.

ex!dlluSiiives and str<:llilglhillt~tD-d~'glilta~ rellei3lses"",""jII!-j

Be~ng away flrolm home liis lili:Otan easy decisien. .lLJilVu ~n a fo:re~glnl eeu nl,wry, distalnlt from one's ng fiam~ly allli.d ffii:em:lis,. and s~rvuvilnlg unltsnse 1ii00ll1lelii are just some of tJhie sacrifices oUir aass COLilnlwrymem abroad ,endure., Whill,e 1Dhieymay IhlCllveadapted to the~r nl.ew enlvl~rrms, the;r>e rerneins a longl~nglf:otrwlhat theyc:.m calll~tJhieir own, Ollli,e1Dhiatus d~:stilnlctly Fli~iIP~II1I,O. That is wlhiy ABS-ClBN G~oballl lilSthi.ere for them. To ikee:P'tJhiem cOinlnsated to hi,olme, to mmuntdl 1Dhiemof tJhieilr molts,allil.d to aocompli3rnry tharn ~n 1Dhieur mey for a bettEir Iliife.,Whilile tJhie need of jem our ov,etrS9aS fini:Emdsfor inS1P:~llilll1lg to~dh~llI1Ig and COill1lterlllt FOlVed to be lr>es~s1tantevell1l to thi.e p greatest of reeessiens, .AB:S~OBN GllollJa~went b:adk towlhat it does l~eiSt- brilll1lglilnlg1Dhie glloballl Pil'loy:s doser home - alll1ldI~nso doilnlg ensured that it w~111 rr~dleoLlit dl~ffic~'llt g~oballl eoonOim~c: 'oonrdl~l:iions.

lin its 151DhY8lalr, .,AHS-'OBN Gllolba~ focusedon deluverilnlg IIJllI1lmatdhiedoListomer :servlirCE!i tlhrou:g hil ilts irmf,estmelnts in customer lr,e~ations1hl~p managemell1l,t and on be~nglatlLlned to thiie needs of 1Dhie overneas Fi~II~pl~no liimpFOlVu its by rllg aoquliiSiit~olllilalll1l.d dliiStln~b~t~mlll wrategy., Realll~z~ng s tJhie .d~ffEmilll1lg lI1I.eedsof our overseas 'ClO~ n1i,wrymen, ABS-CSrNl G~obi3llexpi3rndled 1~lI1Illbo ether IPeglion-specil'ii:c duslbribultion platforrns, ABS-CBINI G~Ob81's f1lagls1h~ pOhall1llll1lle~., l1hle IRi iIP:~r;1:O ~ (::ihianllli,ellOirlIiFC. call1llnow be accessed tlhmulglhlr s.alteilll~te antdl Imobile ii11111 ]apalll1l, and tlhmugli'llr mornc:alblle systems in ,canada. l1hiese ·effortsenlsurred thi:at lFill~pin0.5w~111 always be ooinlneated to hiolme allld ,enabilled ABS~CBINI Gllb~~i3I~ grow ~ffiSilJlbsan~betr base b,y 13°t'o., to tre.i3ldhiliill1l,g 2",16 mill~~on OVerneiaiS .1F~i~p~nos wOirlldwide,. ABS-CBINI G~Ob81 is oomm~ttoo to COill1ljjj~II1II~,e to bir~ngl IRill~pi~noo am~ lI1I,dhi,e wotrlldl doser mgietlher t tJhimugh Ihleart-wanm~n;g stories, 'ClOmpelllllilll1lg lI1Iews. essemjjji!aliloveffieas se;rvices,alll1ld slPectacUl~ar on-qround evell1l,ltsan.d theatricailis.

e
I

Delivering premium service despite obstecies

.A!midst oruroouruhy's firailll eOOll1l,Omy peopille from allIIwall ks of Illif:ehalve startad feel ingl the p~m:lhi.lhe aooo~ell'dlDiing prices of 'goods amil oorui:oos hav'e dr~ven IRiih piiino censumers 1:0 tuglhrten 1Dhleirbelts and stalrt ~oolkunglf:olr allili!elrlnlaltiv'eswithi, beUe:r '\!,allue or ,aflfc:nd!able pricing to Ibealb~,e to c01pe. To an ordinclll'Y Pilll!Jjr'. ,even thaeest of s~bsoription services such as a cabll,e TV or Ibroadbarllid intemet hialve beoome quite a s1traiinl,.,
i

Skye

Ie

SlkyC<llbll,e aliso eontinues to Ir,edefiine cable W wu1Dhi thiie I~nltmduct~on of 1Dhie la calrte Gabille a dhianll'iliellSiLJlbsan~p1tuonll year. lH~elr,e,ffi(ist~ngl last SkyCalb~,e IPos~paud su bsoribers are gUV8nl thi,e O1ptliGnto alvai~ irnduvuduall chalnllnle~s o1f 1Dheir dhioice on top of thi.eilll base p,ackage., PiJ""iemU~m dhiannl,ells sUldhi as tha DiISiCOV8iryClhanl'nlel and the History (::ihanllnlelwere aliso made alvai~able ilnl hi'ilglhi, de.fiini1bi:Oinl arll;oth8lrl'iiirst iililltha CO~ nl1TIry. To oreate better vallllj,e for urn.current ipremuum Offi:!rilnlgS, nl,ew dhanmels that sOph~s1t~CClited, upcsca~,esubiScrilbeffiwo~ lid su mlly ,enjoy W8Ir,e added to 1Dhie~ne-up .. II arena, SlkyBlroadlbanlid rnmal~rili5 to !be tlheOill1lliy bim;ad bandooru~oe provider with the falstecst ~I'litemiet COinllnleatliGn, ofifenllnlg 6 rnhps and 12 mbiPS downll~oad speeds." AJllthi,oruglh lrellalti';)\elly younlger thalll'ill broadband he'<llVywe~!glhiffi such as those of the tsl,eoommmlll:CClltuOnll OOm;pillnlIUeS, Ik.yiBmadbalnld S started to. ma Ike a marik, parlDi:oullalrillyamongl the YOUll'ilg, tedhi-salvvy I~nlte:met mar1k!et~ orll'lly a year aTher its re-~a~ nch iinll 2008 .. It also. boasts of a ]01% 'gmlNlDhi in subscrilber IbilCS€! we~ IIasa as 70% free trial 'oonlvernilOinl rate,wlh~ch Clfties1t:s its high qualuty COinllll1eatiiGn and o~rnt:alnldunl.g OLJstomer ,e;.qpelliienoo wilth tlhe:oorui:oo ..

In 1Dhie face of a hiluglh~yprice-conscious

marnet. more affum!ab~e cOimpetitlive o1iferilnlgs. andl:lhe perennuall problem of ilillega~ Gabille conllnl,ecfuiIOnl!:;, SlkyC<l!bII,ehas comfortablly staved off its eompetitors and kept its rnsrket IllelCltdielrShip I~n
2I[)i[)i9.,

In 1Dhie breadhaad

.AJIUll,OUglh Iknl.oWlnlur lilts pirem~um services, f SlkyC<lIMe has rnmaii nlledlJrue 1:£1 its commitment of beulnlg mOlr,e Irealdhiabilleto thi,e Filllip~lnlomaSCSe5,. To s'IJpp~ement lilts ,eXlilslDiing pffiipaud! service, SkY'calb~e ilnl1TIroduoodthe lowest-lever-priced pDs~paid calbll,eW SlLJbscl'i~pIDilOinl tJhie OO'LJntry,. StartHlnlg at only in J:l280 per mOlnltlh,oonSlLJmetrS csn ,enjoy quallilty progillamm~ngi thrcm'gh mOire thi:an 2.0. ,eXlCilDiing alnldim~st-hi!Ellve ca!blle chalnlne~s.

Sky hias trulv remainedto be aheilid of .1 glame by Gons1ti3lrilltllyleadillllig liin I' ilnlnOlVat~or1lsand pmvudl~nlg . I'· pir1QaII,lC;!IS.J,"ij,.n;:;..-=..... thei r custerners nlieed.

Nlalri

lu,allnlen'go

Propr.;,etr;ess, Perfect .Match Shoes and Ties

She was retrenched t1mml her regular job, but tha1t did nolt stop her from looking for ether ways tn esrna livingl. Sh,e esta blllshed her OWltlli btlsi ne:S;S-CI!JIIS~Om brid all shoes, izi ngl [or hier start -u p bust ness, she decided to sell her ttems on the iilt1lternet. In j!LJIIslt year's time, her business has ffllour~5hed. a

decades of service, Two decades of devello,P:ul'iligcare allld respect for eaeh otlmr. decades ,(}11' d:Otllllllg ,ass1tewamis fur fue

ronment,

With liitssmcujfas1t response to childcare, envi ffil'l'ment~education and disaster manaqement, ABS-OBN Foundation (AR) is now uIP'for iilts newest chalillel'ilge- saving tJhe Pasig RiiveL Ka piit IBisig pa ra sa I~og IPasi,g
([inking Reviving
Am1S

alii ready h,eilped reduce solidwasta load to 1Dhe wat,erw,ays I~,yputl:!unglup iMlaterials IRecove:ry Facillli1biies (MlRFs) in Marldaiuycngl, the Polytec~ln'lIuL Universi1ty of t)m,e Phil ippines eampus, sta. AO'I:a, aseco pont Area, San B AinmnuoaD'ld the' Paco Marl<!et. Informal settlersalse conl:lnilbute to the worsening of the Pasig Riirveras waste is dumped dilu:ectly into the waterways,. "l1he key to ,dl!eanthe P:a!5li'9 iver ils relocation ..Andtlhe R key to good relloca1bi:olrl agood resettlement is siirte, said AIR Managi rig Diumci:orGilrla Lopez., " In Mlay 2.009, KBiPIP inCllu:gulI:amd itsfirst offi:oiialll resetlilemfmlt site, BaYifmijuan sa ca!a'Uan,a UJ7-lheatarn5iite in tha .5lubunosof Me1bIr'O Manila. A month later, KBP'jJ[P took on the dhall,enge of relocatingl tha info:rmalll settlers liilvin1lg ,along Estero de Paoo', a three-kilometer s1breochou:eek tJhatoonnects to the Pasig R:iver,. To date, 936 farmiliies have been resettilled iin Ca~,aualnalrld un famil ies iunthe PiRRCsite iin Monitailiban, Ruza~., With funds from 'genellGusdlOirlors,. houses have been bu ul1t and mmmu nal faoiilitues Illik!e' nungl 1brai and Illi\l\elihood centers .•basketball courts" and health centers have, been ennstructed.

Kapil: Bisig para :sa flog Pa:sig (KB!PlP) has

far .Pas~g Rj'IIAsr) the .l.iteline .of oW'" 1'IiabQ,'O

The Pa5:i~gl RnV1er sa 27-killlometE!1Ibody of water u 1Dhatraverses across Mletm Mlal'l'ula t arid connects l<l.guna de Bay to Mlaniila Bay. Once a major transport route', source of wate:r and tJhriviilngecosystem, liltis one of the most IPon uted and toxic riiver syst,ems in the Phililippines 1tod!ay", !lin 2008, AIFilland tha [)e;partment of IElmfuronmEm1t and ri>JJatural Reoouroes (IMEIPI.I R) 1Dhmuglhtlhe Pasli~gl RiV1erRehabillli1taltuol'iI' Commis9iorll (PiRRC) joi ned forces tn revlilve the Pasig Riiveu,.The goall is m realm zero toxic liinpu1tnto the P'asli'gRuver and its trjbutaries by i con1bIlO'II~i pollllurtiolFlt its source. The Pa5ii'gl n1Ig at ltiver has 47 tributaries lecated lilnthe cities of Quezon City. Mallildaluyongr. Tagluig, Mak:ati, Mlaniilla,Man kina, Pa!5i'9and San J Llan.

In ,emiuringl a sQ..lst:llinalbl,ecOIlTlImunity, ongoin'llg training and education for Illi\l1ellihoodl, peace and order, andwaste manag,emEln'IIlt fur 1iJne new residents. wem· Ilaunched. TESDA tU<:lliiningl WClIiS. 'giirven'lll residents, wiirt.nlskililis such as to '[;aJrlpen'll:1bry, ellectrical wiriingl, ..and plurmJbin'IIlg. Oull:-of-schooll youll:h <lil'1ld wOImen also did their part by oraflbi I'1Igand seililin'IIgframes, bags, and otiner items firom Irecydab~lle materials .. In partnership wi1Dhthe Metm Manila Development AuthOirity and the Armed Fornes of 1iJnePhiillipplines, various dean'lll-up adivi1biies am n'II.owbeing implemented alll(lln'llg 1iJnestretch .of Estern de Paco. Bimemediation is also bein'll.g dlo:n'IIe remOVH thH toxic chemicals found in to the waters of 1iJhecreek. In November 2009., the fiund-U<:lii1siingand aw.areness[;aJmpaiilgn Riun fur tiille Pasig River silJccessfiully unfolded at 1tiilleQuirino GU<:lndstand, wi1DilI total of 23,000 lrunners .. a With the support of everyone, the dream of Elln'lljoyingla dean lPasig River has rneved a step dlloser wliithin reach,

Dantayr 18,altal:63, (Child Watch) Upholding the righ:ts of the child

AFlI's natiol'1lilldhliild-'CCllring IP:mgram,
~lnl;";;9

Bala 163, receiirved aad acted upo\n'II1 ... eases na1bi.onwii:dle·. further ensure lJ To BaUt 163'sacoessibii lily, An Ilaundhed an SMS-based hn!:line nalJi,onwiiide last Junie .2009. In 2009, with the aims .of Iproviidingl a holistic proglram for dhillid-calr:e· and nurturlilngl, Ban:ffiy Bata, 163' deilliveredl medical services to 4,974 dillliildren, rescued 72 children from abusive Eln'IIvironmen'ti:s,ein'llmlle.d 344 .scho!l!alrs., and oondu:ornd feeding Iprograms benefltJin'll.g S:,S27 dhmldren., Tn.e dhiliidren'll's ViiIlagl€, Bantay Balta J 63's sanc1buary for rE!SDueddhiildrren. nad 48 mo.re residents whill,e tJne ChiMIlrEiI1's HOlme iin Davao had 24. Bantay Bata 16Ys legal services aS5iils.ted 432 childrr:en with their families ..

6~.'·I~t~=~'

E-IMle-dia

Pioneering in ,000rntiona'i television Salg iJIl IKalpailll iIlya .Pf;owdingtimeiy response

For more Ullan adlecade., E-M:edia has. oomm'irtted tn assist ellementalry sonools iln'llills t alillevial:ion of q Q..Ialiilty feducaticn 1tinmugh the o production of eduCClltiol1lal1TV (IEiliV) pmglU<:lllllS, distribution of video librcary and ,oondiuot of teaoher 1br.ainingl and 'WOIrrkshop.. It ,oontiinu:es to provide remote and poor .SChODls access to multi -medina leamingl in an ·effort 1bo equalli!Z'e educationsl .oPiportulnibes aln'lldmake Fillipin05 'glllo!baily ·oompe1birtivH. To, date., E-Media has distributed ETV packagies to. S,5.2.3 schools nationwide, from as far as Bat:lnes in 1tinenorth 1bo ifawi-tawii in the south. From mere distribution o.f lEiIiV packages, E:'_Medinais now rocuSiingl On1l1 bQ..l n'IIgmodell schools .of ildi ~cen,ence ...Inspired by 1tiille SiUGOOSS of its pilot Ipn)glrams iln'll ssisti n'II.g a :select public schools iintlhe developmen'llt of educational materials and faoulli1ty 1brcag ningl, E-IM'edia iies now expanding to other pQ..lblllic schoo1lis nati onllWiidE'.

.[;0'

,emergencies

Sept,ember .26, 2009 ...It would have been an otlillerwilse r,elaxiing Sarturday Q..I flood W<llt,errs nIDi11 rose to unprecedented levels brought about by the continulOIus rai n'IIS IMleitro Manliilla.. S~p lin
f

Kapamilya', AH's. disaster response team,

illTllmediateilly Imobililized and provided relli:ef to those vidimi2!ed by the flood. To-date, a to.ta~ .of 753,082 t:i3lmilllies o:r more thaa 3 millliiO\n'II iln'lldiV'idua~s were served 2m.d p(mvided willih food, water, d.otlhilllDg and other basic needs. Realiziing tine i mrnense im;paat of preparedness illl av.oiiding disast,ers, Sagip Kapamily.a alSIO worked to educate people en wha1t to do iiln times .of calamities. It has provided disaster risk reduction activities in the schoels and volunrners, Sagip K;apamilya a 100 limplemen'llted rehilbilllit:lrtiol'1l1 projects in differelilrI alreilS na1bilo:m,!;Jjiidle ensure 1tiillatthere is hOjpe. tn

eommuaities ...Through donations a nd

post-disaster ..
Siince its linceptil(lln'll, Sagip .Ka.pamiJya has found ways to alilleviate the suffering!!> .of our disaster-stricken ·oountrymen, and wilill eontinue to. reach out and make' a difference.

the' O~:IS North

ABS-CBN

ANNUAL

REPORT 20U!:)

CORIPORATE ·..A··.N N GOVER___CE ..

of mana,g'elmenlit:'s decusiions .md~he ,e~ecjul:i,oll'llof the srrategies. ]1111 adldlu!tJionro hlllfilling its obllr,g'ati:ons for inereesed s.toclklh:ol,dilel'valiUle<.,the lBoanl has r'eslPon!Siililillil[y to the Company's cusoome'rs,emIP~oy,ees, siJppllie:rs ,anidi the: com m u nily.

A B5 -C BN recoqnizes th e- importance of corporate govema nee- ilnl enha nang stekeholde rs' interests in the Cornpa ny and th e Board of Directo rs commits itself to. the principles of gooc:l corporate governance. The prjn ci pies fur corporate g()"lflel'na nee of ABS-CBN are contained in 'its Articles of Incorporation, By-I!aws, as a me-nded, its Ma m.l!aI of Corporate Governa nee drl cornplia nee with SIEC Memora nd u m Circu lar 2, Series of 2002 w itha ,00p':I of the manual subrn itted Ito the: n Securitiea and Excha In g e Com mission C5 EC ) un th e same year. As an orga n ization, ABS-CBN reeff rrns its mission of boeing in the service of the Filipino, and espouses that there is no dichotemv betwee n doing gCtDd business and prscti Ding th e right velues. Th rough values cascading w~th~n the 0 rga nizatro n r the Company h as identified th e core values necessary to gU9de its Ieaders and employees in forrnulatinq and rnekjn g business decisions, which un the end must always remain consistent with this mission and goal of

if HIE BO.ARD

OIF l[}IRlECifORS

service,
A BS -CBN'g cornrn ibne nt to ad here to best corporate govemanoepractices was recoqnjzed last April 2.2, 2.009 by' the Institute of Corporate Directors C Ic:D~) in their Chairpersons" C~rde event by naming the: Company as one of the top 1S hiqhest-scorinq cornpa ni es a nd the on~y publ icly-listed media organtzat[o.n to ,garner a score of 90~t~or h~gher in the 2.'008 Corporate Governance Scorecerd, a survey of corp orate 'gov,ema n ee practices emo ng 172. publiclv-listed companies in llie countrv, ECD further h ig h~rghted that the: top 15 oompa rues were at pa r wi1Dh corporate governance practices of companies in more advanced econ ornies, The KD con d ucted the SILH'vey ~f'I pa rtn e rship with the PhDliipp~ne Srock Exch aFige CPS En), the SEC, and the Areneo Sch 001 of Law. They jiudg ed publicly-listed companies based on a questionnaire that: measured corporate governance pra ctices wh~ch include shareholder rights, treatment of shareholders, the role of stakeholders, disclosure p'oli,e;ies and tra nsparency. a nd boa rd responsub~~ity. The SEC rna n.dated th e pa rtic~patio n of publidy-lijsted rompani'e,s in I!he: gUlrVey,

The Boa I'd consists of :11 rn embers, eleeted by sha reho~d!elrs du ri ng the 11i3Js1t n !tl!allStoclkhokier:s,' .An Meeting", for the 'fealr 2:Q09 to 211lO, these directors alr,e Euglenio ILolpez HI, Ci.hi3Jirrnallll<mdl Chief lEj()ecullbi'!,!le: OflllC!er; AluglustoAllmedal-lopez. Viae ChairmalrlJ, Ma" R)osalrio SalllltoiSl-Conlcuo, OSC1llr M" Lepee, Prese'ntaciol'll L IPsin!akis, Fedi,ernoo IR", lopez:" IFedenico M. Ga,fCUBJ, ngel S. Ong,. Millnuell L. lopez,. Jr.,. Ju!Stiioe A Jose C" VitUlgl,. and Pedro N", Dy-·lia.OOD", In rnmpllua Fl.ae 'I!l'il:h the SEC's. requirement to have independent dir,ecoors '~vHtlh11110 mateillaill rlelaltJionshup willtlh the Company corn priisillig alt least 2001% oflJhiie Board, three indepelilloenlit dir'I'N::<tOll'S Messll'S. Gar,cia illnd Lly-lia,ooo, _. alnldl J ustiee VUItJLlg wer,e elected, These diir,ecrors alre inc:lependenllt of mana,g:emenl[,. alndl free firnm all'lly r'ellatiollllshiplJhiat may illitelifere wi~h theilr ]ulc:lgmelrlt.

The Boa rd it:se~f LIS respensible, unl[act as well as pl'lacedllJlrle, for screening uts o~vnl members aln:dlin f'ecomrnlellidill'llg them for e~ectiolill by the s,toclkhol deli'S. The Ci.hi3Jirrnal'llalnldl Chief IExE:cullDi'!,!le: Offi:oell' lilJas,direct input ilill the: scr,eenling pmce-ss" The fii [ja~ alpproval for the nominees as dureclloll'Sis ch::terminled by the: liu~~ Board.]1IlI case of va.c:ancie-s "1111 the lBoan:l be.twelen alnlml1aI stoekholder meetings, the B.oi3Jrd may elect directers to serve ILInllill the: next an n uel meetin g'.

!Mix ·offlD1i liectors

There is a mil( of executive, nonl~e:>i!eiCIutuve.a nd indep;elilldenl~ direeters on the IBoa rd, S,elilluor ma nagemell'llt lelrecu!Jiv_es. ether thaln~e a'hairrn.alill alndl Cl.hnef IExE:curtive Offi:Gelr ,aad the: Chief .olPerating Offiiaer atit:enldl Boam meel:ing·s on al reg!IJlllar Ibi3JSiis ven e tih>olUghthey are not membew:s of the: lBaan:!.., 011'1 matters of rnrporailte goveilTla,n:oe, wihille~he Bm,u'l(j assumes deaiiSuons~"!liin be ma.de lby theindependent lJli'rectors., input ilill any policy form u ~atiion end disGussul,m from dir,eclloll'S who are emplbyees iis wellcom:e: and expeeted unless thoe nssule' "n'!,!lolves an a,ct.!IJ!amnflicE of ull'llrerlest I with such directers,

111-11MIISSION OIF THE .ABS-C;o.1NI BOARD E

IHRECfORS

Of

CJniteliiamli Im:l!epend!em::e fOIi Independent IDiirectors

The Boa rei assessesthe und!eiPemlenCE of eaeh direetor alndl of each il'lloivudlU!aI nlominal~edl fer electionte the lEi<oar,dl alrlJin:d!elPen:d!ent direcoo[:,A.g, part of thus as aln:alysilS,. the Boa rd must r,efVie~v end conc!.ude w!heltJ'her each nomi;n:ee~or illlldepeiFldlimt direecor satisn:es the requirements of the ru les of the SIEC, the by-lawlS alndl the Mian ua~ of CoII'Porare GOlll,ema n ee, Under the Manual~ of Corpoll<lte Govemance.,independ!ell'llt direetors 0)1 are not durledors er offik:ers or SIJ bsl:all'lll:iall sroclkiholders of the Compa ny or its rellate,di corn pall'llues

Th,e .ABS-CBINI lBoa rd of [)iretDtors (~he ~Boardi~)1 repr,eselnts~e SEakehelders" iilFite'rest iinl PUlrslU~ll'IIlg a successful business, indulClung op.furn ilzing finaneia I returns, The lBoall'rl's: rnissioF1l is, to en!S1J 1Hhat th e re Corporaltionl ilS m.ma.g)ed in sUlch a WalY that wii~1de~uver this rlesul~t wihulle ad h,e~lng~D~e Ila1.!'i!'S ancl ru les of ]Iulrisdlictionlsin whuchit operates,. obselrvinig the lhugiheslt stendards of cOI1Porabe gover,lllance and oO,slerv" ng hig h ethical norms, The Boa rill esta blishes the ol!o!'ell'<lll glD<lllls,. trBlbegies, <lml poli!ci,es of the Corn palilly. The s Boa rd strives to rieglu~ar~y monlulocw the ,eifeatirveness

·.
01'" any O'fits

su biS'tatntila~sh.m::lholde:rs (o~'her tha til as directors of any of the'rpl'egoing); (iii are not 11::latl:iv,esof atny diredm, ofl%c:el' er substantial shalr,ehO'~dier of the: Com!I!'a I:1Y;,O'I[ ny. a of its, related companies er ,any' of its slubst:al'!ba~ sthar'elhollderg.;. r(iilii) are not alcltiitllg as nominees O'r representetives .of a sutOsta ntiali sAa~~hollder of the Company, . .or any of its related ,oonrtlpanliie.s,01' alllY of its substantial shalr!ehO'lldiers; (iv) Rav,e not been empt'G)r'eciI in atny executive C<3Jpaiaitylby the: Compar:p{ e or any , of its. related companies er by anlY of uts s!JJJhsta[ntiai~ slharelhollders wilthili1ltlle: ~ast 2 yeatl~; (v) <Ire: not' retained as ~m)fessiiona~ advisers by the Company, atny of ilts related cO'm penies 011' any of its iSUbiS!taiiltilall shareheldees withili1ltthe: ~ast 2. yea9'S, ,eiltheir persona 11'1" m"lJhiro!IJJQtht theilr ffitiTIlS, ('IlIi) IhaVE: not engagedl al'!d dO' not etngag'e iitn <In'll [r<lnsa,aholn with 1llhe Compa ny 0'1[ willi allliY ofitts r,elattedl companies O'r with ,any O'fits substantial shalrlehO'~d!ers,~vhether lbylliemselv,es .or willi other persons O'r throlLIIgl'1l almnm of whuch they all[,e pal'ttlnerg. 01' oompalli1liies of whtuch they are dill',ecooll'S 011' substantial shalrehO'lldie'rs, ether thatl'! tl[<lnsaotiolns wl1i~ch are oondudedl at arms length and a re ilmmatetlial~; 011'110 (viii)! dO' not owtn morethan 2% of the shares of the Compatny andlm" ir!bsr,e~abed 'oo:mlPalli1lies01" atny of its. subsr.alli1l~ial shereholders, Mil:',Gatl'"C~al.,ustiee J Vitug, and MI'". [)y-lLiaccO' do not possess atny of the di:sqILllilllificatiiO'ns. enumerated! u nder SectiotrIJ ]:[ (5) of the Code of GO'rpol'ate Go¥!emallJoe and Section ]:[ (ID). .of SEC Memotl'<lnd u rn Circu 1.011' No", 16, Series of 2002",

independent

Membeil'S of the !Boatl'rl each recenV"e pelr dnems almQlUlntilngl to' PS,000.. 00 fOlr~heil' ,attendlatnlaem Board IlI'llee:lting[s. lih ere are no. other errenaements for remuneretien eUttlher hy wa;y of paymlents. for oommiUee pa rtilcipal:io:n or 'ootnsull:in,g eontrsets.

IROAR.) OOMMIIlTEES
There ,are seven lBoan::l ,oommitteeslliai[ ha,ve beeli1l esta bTislhedoo address anlY issues req uiriitng the directers' atttenition" The IPirO<gratmm~ling COnllililnile;e defiberates O'Ii1I the pro gtrammitng issu:es alndl strategies, ofthe trlJetwO'rik, alnrdlis. IPtlima rUlly,a business stratreglY cemmittee, It is oO'mlPose;d[ or Foolel'iioo 1M. Gillrcia, MOl" Rosall[io Sa ntosCO'noio alli1ldl edi ro N" Dy-ll..JiaooO'. P The ICom~jlilensilti1o:1i1 COlil1li1i1illree rlevilew;S. any recommetndat~lions .on if']c:enl~i\JIeschemes atnd issu!a niCiE: of s!Doclk optilo.ns. to. emp~o.yeles", ]t LS rompoiSed .of AU!gUS'DO' Almeda-lopez i(Chalirnnan), Justice JIOSil:l . C Vitug and inederi:CiO R. !Lopez", The SiIII!lJCe.8Si:o:mPlla:mlilillJJg[ICotlll1lmtlliHee enlsulrles~lhait there is al p:ip.eiutnern !key posibions nnlthe .orgalli1lizatno:n, alndl thatthere illr!e readv replaeaments fotr any key positioli1!S that .a re suddenly vac:abed" It O'versees. the r,eiPllilloemeli1t1t: Iplillli1lli1li1ng 1t.alblle: ofthe .organizatilO'Ii1I,. atnd idlentifies. suceessors alndl galPs in su eeessien, as welill as allliY measures neededlmmt~~ sueh gaps. Itis cO'm posed of AlI'IIge~ s. OIi1Ig!(Cha~ttma n), Ped!re N. lDy-l..Jiaooo and AI,]lgUS!Do. Alme1d!a-lopez" li11i1.e 'Co:lII1Ipe:msatiiolili C:om~lmitteefotr 1the 'Cbaili"lliIiIOiIIili a:ndthe CIllti1ef lE~ec!l!I1Dive Offiiceli" is, com posed! of Au!gus!to Almeda-lopez t(Chalilrman), fedieuicO' Mi", Giltl'"Cua., alndl J ustiee jose: C" Vitug", The Audi1t C:Om~lliIilittee ~'"eVie~vsthe ~ f1Ial/lcial~reports alndl risks, lexamil'lles ,internal oO'ntml, systems, OIVlElrsee:..s, the a,[]d'it precess as we~ll as the, IOOlT1pa ny's. cO'm pi nam:e with Laws, alli1ldl va~ll:lIates .fl:le: oomp.a l'iIyf,:;:, e business oond uet, litis com pased! qf IReOl"O'NI. ny-Lia.GCO,. Alngel S. OtrlJgl nd Au:gtu!sto Almedia-ILopez. e

BOAIiU)

PIERIFO:RMlANlc;E

if1h,e Board negtuiliatily meets mO'nthlv, as m u:an as PQssiiMe, to' i'"evuew~he perferrrrenee ofthe CO'nnlPalnlY end its. subsiidlua ries, appreve atny per~iitnent pllali1ls, hud'gets,. alndlffi natncial~ statements, set .gIuludiellines fer matnagennenl:,. and d,gcuss any v<lJrnO'us. mat~etrs neqlulilrin:gt Board atltJbetntio:nand .a ppmvalL Any member of the BO'ard may ask m,atnagemlent to' gil'!,lle special reeerts end altrlJa I'ysis en certain issues. IFm:m J<lnlu!ary 1, 2009 to DecemlbeF3], 2009, the BO'aI'd had 8: regullar mee.tilli1lgiS. The r,ecord of attendance of the direetors atthe Board meel:itrlJgs, met the req uinem ents efthe SEC of at ~eiilJs1t 50% attenidialllce:::

Total No. of Beard Meetk,gs AttE!:flded

EUiGEINIrO l. I.fl~EZ II[ MA. ROSARIO SA.iNfTOS-CONCIO OSCA!R M. !LOPEZ B B

No, of Boaro Meetk,gs AttE!:flded

B

Percentage of Atteooaoce 10.0%,

75%,

Atte.nded Arm~1 stockholders

Meeting? Y Y 'f Y Y Y Y Y Y Y Y (YIN)

6
B

8 8 8 8 8 8 8 8 8 JR.

100%
75%,

AUGUSTO .A!UMEDA-lOlPEZ
PRiBSIBNiTAClO:NI IL, psmAKfS,

6 7 7
5 5

00% 00% 63% 6.3% 00% 88%

81'1%

AJNJG:BL

s. ooG

lFiEDEIHCO R. l:O~EZ MAJNUEL L lOPEZ

lFiEDER[GO M" GAIRC!LA ]lOSE ]lISTICE VTIUG

7 7 7

c.

PE[):RD Nt" DY"I..JlAlCCO

MS-CBN

ANNUAL REPORT 2009

[IFIIMan:h 2.010, the B01:mJl approcvei[iI the cn'~!i3llii'OIFil two of new corn mitteeste impml!o!'e cerperste gov,enl!anre: a Risk r>-11a nagemeiFlit CommiittteealFlio i3JNominlatuon ami EI:ecbiDIFil om mittee, G

ests blisihiilnlg an ,enrec!tiv,e fQllllmi'il-·up siystem on rei abed implle'Finenlti3JlJiloWII" The [Intemal~ Arudit [)iviisiIoIFII, wlhidh is eomposed (]if cel'!tifiedl pu bl ic aooouintaints, certifiedi inbemal euditers, eertitied i:nlformar!tionl systems euditers alndl,elngiIFllee,rs,. r'eiPor~sltJottlhe AJudut Comm il~ee. Regulalf audits ofthe 'Compa ny a nd its SlUlbsidialri,es a re oond ueted based onl a 3-'!(lealf audit cyde i3Jnldl annuel en alllJldli:t lan alPIPf'O,vediby 1llhe Aludit Comm i:tbee. Sipecia~ p alllJldlir~s re aliso IlJlnclelrta~eiFilas nieCeS<Sary" ,a Inl 2Cl09,ttlhie Intelmal Audiit [)u\lusuo.n presented to the Audit 'Committee a,utdiit SE(llruS IlJlpdiates, highluglhts, alndl p'nE:SeIFlitatl:onson Oo.r1TlIP~eredl am:! on-gloun:gl audit a,ct~vitie.s, UIFII <lIOoolll::la,[I!De ith the AllJidilECorn mitteew alppmv,ed untemiSill audit plan, The Internal Audit duvisuo.n a~so \iV,o.rlked dQSlel'f~viittlhi the GO:rjnl~<my's ],n\!1es,tolr R!elalbions and Corporate IPlallllnli:n:gl gmiu pi ilFilI'llrepanngttlhe 'Compaln:y'g responses to the 2009 Corporate Govem<ltnoe Soo.necalrd for publiclv listed 'OOtmpalnlues" Con1lplliallfUJe

To Iiltiglhllighit the importanlce

of risk mi3Jnla:gement amon:gl the Compa ny's, strategi<c: prierities, the lBoall'd of [)ir,eotors crearltedl the Riislk rM'Iallil,ag:emelliit Com liIiIiUJee to Dl!o!'e~'Se,elJhefo.rmu~<llltJionaln:dlestabllishmelnt of om enterprise-wide risk manag'emenlit sy:s,tem,. inclluding the revnlew, alFlialysig, and r,ecom mendation I'lo~icue:s" fr<llmewofks,. strategues end sys,tems ~)i) be used hy 'Ilhie rompa ny .~)i) rnalnagle risks, thrlea~s a mil I'ialbulliti:es", It is oomposed.of Angle!1 S,,' Ongl (dhairmaWII), IFiedienico M" Galfaa, alndl J usti:oe Jose COl Vitug",

or

Th,e ~olil~lilil,a1tj]o:1iI and lEileCitJiolili 'CoIiI~tnliHee: wi~ I nevi,ew alndl ,e!Va~luabelJhe qllJlalifieatiens (]if a!11persens nomimll!t:edlltJoithe BoalrG and ether appointmeifll[.s that neqlllJli:r!e lBoalnd a PlPlmvali, alFliGaSll<ess the ,eifeDtiven:ess Dr the Board's precesses ,aIFliG procedures in the ellectien 03' r'eiP~aoemenlit of directers, It is eomposed of ElLIge!nio !Lopez m: (Cha~IITIl!a n], Mia. lil:.oSlaruoSanloos-CoIFliCio, J ustiee Jose COl Vitug ,and IPe,dim N", Dy-ui3Joool"

Ofticelr

AI!lUlIT

mh,e principal aeeeuntents and external euditers of the CompalFilY LIS the eceeu nti:ngnlrm of Sy'cip', Gonres., Vie~ayo &. GomlPi3JIlIY{5GV &. Go.). The ,alGCOllJlnlitJilFlig 'of firm SGV &. Co. has belen the Go.r1TlPi3JIlIY's ]lnGependilent IPublic AcOo.Urrta ntsfo~"lJhe Ilast 5 yea rs, Thene~\I\as no eVle'F1t in the PiCIS[S y>ei3Jffi, wth,en'~'55V &. Go." andttlhe Compaln:y had allllY disalgneemenlt with r,ega.rd to, any maitJt'elr ne~atinQl tID aeceunti rig p~incupf,es or p'ra.cti:oes,fimlinlcia~ s,tatemenl[ dlisdoslu~'"e on" auditing seope or pmoedlllJlrle. mh,e a,gg reg'ate: fees binedl~o A!BS-OBN alnldl u!ts slulbsidlialri,es~o.r each ofthe ~1lst 2. fiseal yeall'S~o.r prefessiona I services i'<mdiell'edl bylb'hie external auditor are as follows:

The CompalFilY has alppo~ nted i3JComlPlii3Jnloe Offi:oelrfor Corporate Gio.CV'enni3Jllloe: w[ho isr.askedl to. ensure the: GomlPany's .observance of OOfPo.rate gov;ellTlaln:ae best practices end pmcvicie reeemmendetiensto the BOiCIrd I'm conlitJimmus i:rnprovementlbowams full Oo.nnIP~~<ltnOe: alndl adeptien of g IDibali best IP~':;:l>Dtnoes", Corn plienee The: O1flliCierfOIl' Gmporabe GO'\I'ellTlallJOei3Jf!so. issues <In an n ulall oertifieatien otrlttihe oomplialnloe ofithe Board wutht~he GomlP<llny's 'CoII'Po.r<ll~1El Gov;eman<De Mi3Jnuali. Fbr 2009, the ComlP~iianoe Offioeir for COrpOII'<lte Governance is Mlr. Alh·,e<t:ilo lBellTlalrGO",The Corn palFII'f su bmitted to. the: fl" SEC a ,oelrtifiiC<ll~lion of the Boa rd's oompllna nee wilJh the GOFinlPany's CoII'Po.r<llit:e Gov,emanae Mi3Jnual~Ilast JalnlllJla 26, 20 HI,., ry

eODIE OF eOINlIIlIlJlC:r
The CompalFilY ,alse Iiltas, <I ODele .of Conidulct" The Codie defii nesthe De!havi,olrsithill[ alr,e a=p~<lblle 01" nlot aocepitaMe withinlJhe .organizatuon. lit detailsthe (]ififelnses, versusthe aompall'1lY's or a person's p~'"(Ipe't"ity, the sohedule .of penalties fer ei3Jch offense aoc:ordinlgl ro its gra!Vility,. ,alFlidthe QI,'ue">ll1ll'1lce pmceS<S, <mdl .die1fiIFlies the rcles .of the different Ipeopl'e iIFllvo~">IIe<t:il lin disci:p~inary a,ctiiont. The Gooe oovers aH directors, emp~oyees, ccnsulterrts, product alnldl service providie~'S,iSilnd i3JIilIYlDne whoaots UIFII the WII<lmeof ABS-CBN" Ass~:stinlg illl the disserninstien alnldlirn pll,ementationl (]if this Code .of Con:dlulct LIS the Ethics Comrnitbee, which fOCiuses en conlfllict-Df-nlntelrest sitllJlation!S. The Gommittee he~ps l'iFIIalla:: deiaisions end datiify sta nds ilFil cases of personal OIl' prefessienal oo.nfiliot, . .or in wh~ch the emplovee OIl'the GomlPi3JnlYstands~og!au n IU nfalirlly frern alnl a nl'<lIFligemeiFllt,rlelarttJionshi:p, OIl' pr'Ocedlulre" ESSlelntnal1 the idea of good i3Jnd,ethioall con:dlulct i:s the to. upho~dlin:gl of corn FiJ10neerporete aln:dlin:d'iviidlu<lllv<llue-s" which a re di!S<Semunla.tedithtmlugih a preeess of vailiules casc;a,dlinlgl.

] 9,228,910
NOIlli-AI!I:d it IFees

5.,5;7'9,881

mhe .Audit 'Oommittee's <llppmvall polliciies aln:dl procedures fer the ebove servi'Des kom SGV ,St Co"' the 1E:l(rerlnal alllJidli:ltJorsl',e, discussed unl S'ecttlion 7 of the a Compa ny'g INialFillualof COI'Po.ra,te Govern!alFliCemllea with the SEC .on September 2, 20Q2.

Intterillilil Am:lliit
mhe Internal .Audit Divisi:onl pmvi,di,es iindie'pem:lient assulranoe <lInd aldivismy seilvioesltJottlhe 'Company's Boa rd of [)ull'"ecto.rslJhmllJlglilt i:ts Au,diit 'Committee by evallmlllJilng the i3JdieqlJi3Jcy, rJectiveness e ,and effi:ci:elncy of the GomlP<llny's unllt:ernall conlitr.ol sys~em, o,ev;elopuntg nlecessary I',emmmem:lal~ionsfm' its impmcv,elmEmt, <llntdl

I[}eallii Ill.gs
R1SiK. IMAINIA.GEM lENT
AIBS·-CBN's 1B0aird of Dir·eato.rs .arid mi3Jnlag!em~l"It .an:: mindful ofthe potelFlitiia liFifllIPi3JCEOf(a rieus ris'ks [olihe.... \ Compa ny's i3Jbii~ity~iD.diell~ve.rqualiirty CQIFlItelnl: cross a t:iF1Iullt~plle IP~i3llfurms and DOnlSeql[Jlelffit~y,asa [e8IU It .of its eperatiens, value to sherehelders, In 2Q09, thie Audit Com mitree oflJhie iB.'Oalrdl nir,ecoor:S'IProvirdedl of oV'ell'SirglhiE onl Enlterp·nise Risk MalnlagemelFlit to ensure that OJ II releva nt risks ~lhii31[ mary imp!'IiDt the Compa ny's: hus~IFlIesSles.are pmlPerly identified, assessed and monitored, and that all neoessalry poiircires alFlid oOintmll1 sylS1terns i3Jr,eiln plaeete prevent .or minimi2!e the QCClIJlrrenoe ofthese risks, if1h,e RilSk Mana.g:emenllt Committee formedl irnl Mia rch 20 JI.O i3JSSU rnes the respolFlisirlbiliity of orversight for Enlterp·t1ise Risk Malnaigeme,nt,ttalik~ n,g overfremthe Audit Committee. Also. in Mlanch 20Jl.O, the lBoalrd.of Dil··eato.rs .of the Com palFlly applmvedl the appoirnl~ment of Mr. John 1"1'1 Sy es Chiref Risk Mianagement Offioer, repo.rtiin:gl direcitJy to the Board of Dirlne~o.rs, ceneurrent 1.!'IliitJl his respo.ns~ biilities <lIS!Hle.:u'!,Diiglirttal~Q:jIFllsumer Devuces. As Chi,ef Rusk Mana.g:elmenllt Offi:oer, hiewirll providelJhie .ove.ri3Jlm ~eader's!hiirlP,. iiSiolfll i3JllJdl v dir!ec~on fer errterprjse iisk malnalglement by establishing end imp~et:iF1lenbilFlig inregrabed risk ma nagem'ent an fralrneworkro· cover all aspects of risks aeressthe Comp.a ny's or·galnirz<IIbion,. aln:dliFiflip:mveitJle Company's risk l:iI'lana.g·emellll[ reediness, if1hi,eGo.FiflIIPi3JnIY's ooll'Po.ralre strabegy furm IIJI~atijo.n end business deci!Sion- FiflIi3Jkinig proeesses a~waysttalike into acoo.unlE po.tential~ risks alnd the steps and costs nece-SS<llry to. minimir2!e, if nOE ellim irnIOlte.,such riisks .. As parI!: of il~ s!:e1.!'Ilan:lshiip respo.nsnlb~i~ty andl ·oommirbmenlE to. delirvelr op~imum valllJ:e~D i~s s~;a."".eho.lde;lcs, .AJBS~CBN ensures that .it hag. the pr.op,er eentrel S:Y's,tems irn place, endtothe extent possirMe, <ldoptedi gllolballl best pradiroes,.ro identify and assess, anal~yze .alFlidmihgabe FifIIal'iketr operalting,. financiall, lneg Id latony, ClDmmulnlilty, replIJl~~ionali, ..a nd other risks.

ii111Secillriittiie5

ABS-·CBINI neqllJliirles.aII FiflIembeil'S.of the lBoalrd .of ni rectors and principal offiicers to. report alny p·urchsse, sa lie or dhanglein their sha reho~dlirn:gs ofthe Co.FiflItpi3Jnry·'s common shall'"eS 01' PhiTiP!I!}ine D8IPosiltary Rleceipts wiUi in five trading days,. irnlDomplialrlloe w~th the SEC's. alnldl the IPSE's. requirement full' sueh disclosure ...

SiHiAIREIHIOLDER. A!NID' II NIVESTOR. IRE1LA"ifIm~S

ABS-CBINI f;u 11'1" espects sharehelder r rights <lInd eernplies with regllJl~atory.a rrd ~,eQlali requirementsthat enlfo.nce alndl,elnsuH~ that such iights alr,e respeeted .. These requirements include dUle and proper IFlIobfiiC'alfuion for general~ meffiiWIIgs and IProvusion .of adlelJjuete, tra nSpii3JI··eIFlit OjIFlld I:imely inlfQIITIlla.tionl due shalreholldiell'S ... As i3JplIJlbllirdy ~irsbecloo.rtpor<llholn, ABiS-CB·NI i!Ssubject te r·e'Pm·~iiIFligequirements r prescribed by r!egulaloory alulitJloriities,indiludirlng the SEC endthe PSIE, am.ong oitJlers .. ABiS-CB·NI i!SODmp~nant ~nlsuhFil'l~tmilFlig timely s~l'Udu~'"ed! and non-stru ctlJlrled reperts and diselosu re filing required byitlhe SEC alndl the IPSE,

170 com pl:emenltlJhiese: dirsdosu res, AIBS-OBN's Investor

RielalltJions .group alllllo· holds regula r .maliyst and priess: brue,l'ilngs oo.ineitd!ent with fits qUla·ftedy end alnl!lJ!IJlareport I sl!Jlbmiss~onsthallt further eJ(plairIFll,elalboll'<lte OIFli lnrdl a oontex(uallirz.e the Comp.a ny's. operalijlng perfermence alllJdlfiinanlcial~ eondition and results .. ABiS-CB·NI's Chief Finalnce Offioelr,.ils Chief R'esealrch anld IBIIJ!Sinress An.a~ysis Offioe1r,. end its: Head .of Investor Relatuons. alllJdlCorpo.ra,1t:e P~anning are always present at these inv,esEOI:; alna Iys:t <llnid press hriiemln:giSto. address alllJYquest~Of']S that may he rairsedl enncermnq the GOI:il'lIPii3Jny"s .operal:ingl end finaln:cia~ results, Inl additien, AIEIS-CIBNI's Chief FirnaF}CleOffi'ClE:I, its Chief R'eseal'"Ch end lBu!sin:ess Alnalysis. OFfioel'" andits !Hlead of [IFlI'I,IIeSOOlr Relation!S end Go,rtporate P~a1"1nin gl, meet with representativ;es.of i'l:'Isbru~i!OIFlialimres:rors and inve~lmenlt funds UpOni req uest anti at va'r'i,ous in\l\es:oor cenferenees thr.ougholl.lit the yealrfp,r more infi mate a nd detai~ed discussions about the CompaIFllY's, businesses, opeil'<lting .and I'iIFllii3Jncual' 'resu~ts:~ bllJ!sirn,ess pmspem;,!;S alndl IOlng-tellTilI p~a ns; Ir.lqlJliries frem ilFlistiitul~onall .alFlid indivi:d:ua~ irlnV'esboll'"lll reeeived, hy rlegul<llr m: ·el·ecbrcmic mail are also duly a.cknowlea!gied an dl addr·essedlin al tiFiflle~y and bi'<lnstpar·eiFllt lmIanne~; ABS-CBINI maintains ani n,veg,j)O!rr.e!!.a6olflls wehsite that oo.ntain!Sinformaho.n OIFlih,e hisjDry' and ltiu!Sinesses [ of the Compa 1"1'1',. iits Bo<llml of Dirrlecoors and senier managemenlt exeeutives, IllnaDci:alinful'm.ati:o.n and reports .and disclosu res ftled wil:h the SIEC OJ nd the IPSE., sha re price pelifornFII<lnoe i3Jnddivlidencl hirs~my, alndl inv,esoor relaltions eentaet ilnfurmatiron. ABS-CBINI's ].nVe8,to.r Relabions http::!Ii:f:.albs-Q'bnl.com webs~te ma,y be fOlulFlidon

IHSCl..;©1S11JI RES AINID IFIIN1AN:CIAILRIEPORUINIG

AIEIS-CBN's I'iIFlli3JncHa I stetemeots ·oompl'l~vil~lhi Philippirne Acoou ntirng) Sta ndards and Pihir!iippirne IFirnJOi liilcial R.epoll1Ji g st.anda rdsthat iln tllJlm conform n with [IFlitemallticma I Aooo.u ntirng S<ta[]Id!anfs. if1hi,eann IIJ!OI~ con!Slo.lidabed finlancial SEalbemeiFlll:sp:mvitdie infoUTll!atiron OIFlihe l'inarllcuall contdil~on alndl resllJlll~s t of opelra.tions of the bllJlsirnes:ses.of ABS-{:BN and its su bsidiaeies ...The'semlnla neial sttal~E:mlelnts ilFlla1lude detai~edl irlillfoll'1nationl .on the to.ta I assets, total li.albilliitiie's end shia reho~diell'S' ·eqlu~ty, reven ues, costs and elCpenises, olPer<llbilFlig~Income <llndl irn:oome before tax, net inoome i3J~.blii:lllJlt;a to. shalreholcleilcs of ABS-CBINI alnd! bile nn~lnmiity irnlrerlest, eanF1l~ [j,gs per shalre, aln:dl EBITDA ... Business. seg nnent irIFlirormal:i'[lln ~s lik;ewise provi,diled fo.r FiflIajo.r business. categmies and indu:dies. inrormalti:OlFli sluch as rE:VE:nue.s.,operallbilng alntdi 1"1e,tin oome, assets alFlid lii3Jbii~ilfuies,. ·capita~ e)ltpentdiir~ull'"e'-S i3Jnd.diep:recial:ioln anld almOlltiz:albion eXlPen!Sles...

ABs-eRN

ANNUAL

REPORT 20(109

IIREVIEW
Millnlagelmelr:llt's Dii5ClJlssiio:n illll'uilA!Ilillysii5 of IFiuiI mdalCondiittiion €I md Result5 of Oiper,trtiomsJor' 2009
Mianagemell'lltis plessedte relPortlllhat fur the calentdii:llr y,ealr ended! lDerembelr 31, 2009, despite a wea k first qU!alrtel- and i3J si:M-month deferral (]if eirti me rare incrleaiSleS~)i) Aug ust .2DO'9, as we~~ as. weakened! I-Hlluseho.ld spen:din:gl affectun:gl rnall'llV of its subscribers loC<3JUy nd in major' ,econ:omi,es overseas a n AB.S"OBIlIJ Broadcasting Cm'PoralJion (" AlBS-OBN OF th~ ~Compa ny~) diel ilver,ed oo.n:soliidaredl revenues fimrn adv,e~1lis~ll'lIgalrlJdlconsumer sa lies of P24.85 billien pDslJi~g an _incrlea,se of P2.S4 biHiOl1'll F 11.% year~on:O yealr IndiJ!Sllve of liulll-y,eilil" g ross revenue eentributien from Sky CalMe of P3.72 bill uo.n. Sky Ca hie oo.ntriib!JJmedl P'3.58 billl iol'1liln conlSU mel- sales and Pi3:7. 90 mill~ion:inl a~II1li me revenues, Ad!lfemsing Reve\l:i!Je5 EnlJ,amJary 20009., g loIb<l~ recession womies pmmpitedl mejor advertisers to redl!JJloetheir ,an n uel <JJdlvertisi:ng budgets end r,eqlues:it for i3Jsnl!!-mtonlillh rare im:I'e;al§e mo.railt)l)rUulrn.,which Wie grall'llted in oo.n:s~deratiloll'1lof Ibn gl§it.<llndli:nglDusi ness relarltionlShiips. Despibe <I weak sta rt to. the y,ealr, weinve:s,ted onl 'f!JJlrther impm,ving ou r conmenllt:. ABS-'CBINI sustained ii~s dOom~ll'lI<JJnoe: [Ioca I tel,eviision in with ~'ealrt-'IIl!'amllnng ,and ill'llslPiring dramas, I~glht end ~IrnUS!lll'llgcomedy shews, a nd enga.ginglrea liIY IpmglfamlS inthe afternoens end onl p.nimetirne, such illS the Precious H.eift,rls .R'omances dlrama mini-series, Kilmbai SEl' Uma,May Bl!Jkas PoiJ,.Tayotl@ Dalawa, KatCl.f"S€, ,SJuJ1wmz l'li'ews .liJgayCl.\I:i,Ba\l'iana Split. end Piinoy Big . Broth~r DCI.!JbleUp, a~ong with the: Iiong-nmning daily noentune shew 'Wow,owee all'lld S!JJIn:diayrn !JJ!Si'C<3J1 v<lrue.ty proglf"am ASAP' •

..tJ.d¥e:rIiSlng II'e,veml.!E!!l
C:~m5!llITfierSales -$aie or$ell'\l,fees Sale or Gemd'o> Ro!IIIO!nues before sq' c~'b:le Mal Sik;y Cable "",;,;emwe!l

6,_~a,3 52l 3,72!

24",il50

5,7>0~

2l1L,~,:i:!l< 1:9,>634

'5U

5$1 8
lIL,4,!l5

~O ~
III

COi\'SGiidatedl f'elo!eillJe<~

</

OIUll'ta:s.t-gmwing censumer s<JJ~Js, Ibusi~s:ses eontin ued to ralLlS1e their ,oo:ntri'hutionltt(l~oit;ali revenues, fle;a,chil'lg 41,2,%, of oo.lJ:so~~d<llredl e\l\enluesin2!OOi9~vu~lh r dO!JJIMe,digit ,gmwthin the :s!Ulbscriptionl busi nesses of AIBS,-CBN Globa I end inthe oo.ntributionl of Siky Calb~e.,. A. ti,glht eentrol of olPeratin,g experrses ami pmd,ent TIl r::Iall'llcial~ mal1li3Jg:elrnenlltresulted iln core net' income readhif:lig IPL79 billion in 2009, 37'l<b or P4S11 million highelr~lhan~he P].31 billi:on posltedl unl 2008.,. Niet inoome aUrub!JJlr.aMe to shareholdess for 2000'9' welnt up' h'l 23% yea r-en-year OF P:3],8:.93 mil lien, to PL70 b~~llio!)lI'1I, from 2008's net un:oomeatlblib!lJltablle to sharehelders of P].3.8: bi'ilion, efter en IPSS.,.25 million eeeou nting adjustrnent n:iIJI ired !LIn:dielrPhiiiiippin:e u lFinaln:cia~ lR!elPorting Sta nderd 3,. Eamings berorle interest, F.<IllIJes., depreeietion alndl amortiizati:on. (IEB~[)A) reached IP6.,.Sl billion, yi'elding all'll IEIBKilDA mi3JrgIn of 26% for 2009, and is 7%, .or P'40S .6,5 millien Ibe~tel'!th<m 2QOS IEB[mA of We enabled the nlatuon to. moul'rlJltog'ether aiS w,elll aiS to re:l'ive end celebrate the spuriit of u nitv with O!J r speclill~ 'ooVle,lra,gleof the walke: <In:dlfu n eral mriteg:e of former PU'"e.SlldentCOrill2!o.n Aquino un:AJuglust 2009'. fm~ late: Septemi:Jer U"m)luglh ea rily Oiatoi:Jer,. the m!JJI~IJI-IP~i3Jtfurrn speeial coverage of typhoo.ns o.ndoy ~'ntdll¥:p.en9 on OiJlf te~,ev'isiO!)II'lI <mdl ril!duo n!etwo.rlk,illhe mlJemetal"l.di on mohil,e, kept the: public informed and oon n,eclJed '~lhrou:glho.utWhe ha nm~vunlglordea[I., i3Jnd enabled !JJ!S to. harness aln:dl ehannejfhe ,g)ell'llems~ty alndl voIll.lll'1lteerLlSm of~e~~ow IFilupinlos i3Jnidl 'oolrpo.rill~ions~mvard alfi',ecred '~amilies and corn munities th rough ABS-'CBN fmmdiationi's Sagip' l(ilprtmilya. . Ih!ith sueh oo.l'1I'!lpelmingOi enga:ging eentent, the 1'i11'S[ nd ~lne .of thieTop llO and fourteen of the Top 20 programs In 2009 were hom ABiS-CBNI.

(//1'\ \\~ 'V

22:,:3011'

2,.~~:

_~jil~

~
lIL1

2,54,:3;

Po,.II II billien,

ABS-CBN ANNIIAl.

REPORT 20 [)9

AIBS,-CBN solidifted its naltJionali lealdership pOlSitiion based on Tay~or INI,elsonlSofr,es NallJionali Philippi nes irelle'Visuonl Audienroe MeaiSU remellllt,~vhruch sta rted in inelblrUary 2009", .Audii:elillce shares for the: period! inelblrUary to Dleoe!fiIlIl:Jer 2:0019 av,eu':EIlgled 4,9%' 'in prime:time('o<pm bo t tpm) aln:dl45% fOlridtal Clay ~ (,Gam to 12mn)" leaduIllig our nearest comp,etittof':i;V,Ttli comfortalblle rna~lIins of Jl4 and U, pe!rce~nta,'ge,poi(!l~:S in prirnefime and! total da,y, I"e'slpectiv,ely. [1fl peidE:~belr 2009, A!BS-OBN posted! a SO% prjmetime <lulclfle'rice share ami 48%fm'toi:b1 !1i!l\VI~ i3J16 and 17 pereentaae _ ~ I dl {"\ <1'.> " pomr ei3Jorv'er OJZ~""ijI~J71!:_c~m petltm" , _~? W? _ iBa,ckedl hy SitJ"CH:l!g affunlJo~1I'I andl p,nirnefime pmgram raitilligs a rrd au[lie~~ge, ,sha~~,~we weI"':: i3JMe to implement; ri3ll:Er~l:Iiqj~a~~s~i~g,ust as recession eoneerns easedi, wi'jh §orne:\a-dvertiiSlers le1,!lelill inareasuIllig tbeir ,sp,ellldi'iilg-'with ABS,-CBN beyondl their comrnuitInents" The oO[ifllb~lllIledairtume revenues of Channell 2, Mlalnlulla!Radio an:dltthe Regluonal N,etwolrk Grou p g re~v by P4 71.",97 millionl or Jl6'l1b y'e'3Jr-!OIFl-y'e!aJrtto P'3.5 L Ibu~lliollllln the fcmrtnr qUia rter; i Consolidated a,dlvertisulligi revenues g re~v by P95L'9'7' millien or 7% yealr-onl-yealr to P14.46 buillion, witth 92% OOI1l1l~lllIg 1'1'011111 Chalnllllel 2, MianiJa !Rad~o alndl the RegiolFlal t4eMlDrk Gmlu I'}"

fm the: liulll 'fear end by 2'9%,in 2009,.

the fuur~lh quarter

of

Giam'al Olher ~ubsi~I~~le~ 'Oon:5UlHer l!>ale~

~C6N

5,2664,!5IEiB

~,:5a3
'6,!l1i!1!4

1,6.47

1l9S
(109) 5!119-

15
(7)

~r;e: sky ,eable Add: $lty cable consumerS!31e~

'OI!IH~o:iidBte.l!i 'IlMl~Um;!!r':!1aIe!!l

1!i1,>i:!I:7'

3,:5M

6,215

2,SI!l 8,796

l,,oClZ
lL"S9-1,

Sky Gable's full~year cOllltJlibuliion of P'3.S:S: billien SUIO:salipbDIlI i3Jndlothe:r service ~-eveIlJUles is PI. 00 bunionl or 39% morethan its~h ree-euarter f'e:v,e'l'lue oontl'i:o!lJltion 'of P2 .58 billien in 2008"

in!

P'a~ell~ aErl;kne tEyeml.es

Otiher Wl~}rorrns

t3~3~~ 14,325 438 14,463

l,O~3

AdiVe~~l'sinl!lfe\",e~.lje~ Il!!efere 5,~,y c'abie AIlkI~'$iky 'i!ible afi'~l'fiIe r;~eRIJ~ Consoildilil'ed "d",e~~I'siHQIRe¥el'llH!s

~2i4G16 953
13,4,lt9-

8<115

,gO

7 Ii '1 SCI '1

'!lO6 45 '!l!1ii;:il

'13,SlIL1

.J

~'\\

CG\~:!HJmle\l" ates S ~ "'" ::::::- J _ Consulrn eir sa lies ulliithefom1:h qlUaf.reFGT 200~~H;oS!e by P354.4!7 million or ]5% to P2"72:.:0ilJ,io;h1/.D,urast-,. I .. " .. . ,_ __ _ _,--- - _.' . ,.~ / 11\ _}._~-..... groWing censumer sallies Ibuslnes;seSj,oo!1i.~iIIIu:~d ",!Db._r 'ih®;e1lse. ilieur eontribution to tota I're4eni'uds irll:.200'9, , l:e~d.hiin~ 42'% oroolFlsolidatedi neven~~' ilh' 201019, .ith w '~,ou~h;:-dli:glit: grolJl'!lth inthe su bscrjption bUIsun:elSses of ,/ AIBS-C'BN Global a ndin the: contribution of Siky CaIMe:. ConslLlmelr sa lies unl 2009 rese by PL S9 billionlro Pl0.39 billierr, an :18% rig,e over 20018 eonsemer sales of P8.80 bunionl. A!BS-OBt4 G~obarg eontribution shaee to to1lEl~censumer sales a meuntedto S L 'lib, wlh~~e Sky Calb~e's ,oolilltributioni shareinereased to 34%, Wlltth its fu II-y'ealr OOlllltributi:on:, from 29%, unl 20Q8~vith only three qUia rters of con,su l1I1Ier sales eontributien, lI)esp:ite: weallk: eeenemieeonditiees alnldl depressed eonsemer speilllduIllig iln maDiolr ,emnorni,es worldwild!,e, ol!olleu':EIll vie:~\IIer cou nit increased by 13:% to en estimated 2.]6 million wOllid~vid!e hy year-end. Dui1,l1eilll StrOIFlg Iby G>oulble-dli:glit: sUlbscrilber gm~v~lh ~11lI the Uin~ted SffiliteS" the r-llididme:E'als[,..Australia, 'Calllli3Jdaandthe I A.sua-Pacific, AIEIS-CIBN Globi3Jl's, subseri pti:on and otther service revenues g~'e!.!V8%, yealr-on-yealr in US deller terrns aiS it ,dierivered 19% 9rowthJi I') sale of services in the fou mth q uerter of 2009" In pesoterrns, A~S-CEM:\l1G~oba I's subseriptien ,alilld service revemne:s increased Iby ] 6%,

M I fif"

/' ~

Sky Cable expallllded iilts product IPorttfoll~o wiithlJh,e lalulncn of Sity BlI',(}'OI>dI'band,~he~OI:s't'est esidentiel r brcadband service Wllth speeds of IUIPto 12 mops, and Sky 'i,ll'Qiiae,~he most affmdable internetienal voicecall in gl service, tofu rther emhiOlllllceutts proOtict porUo~r,o whille 'oomplemenl:ilillgits pDstp!aJid ,01 nd p:repaid cahl',e TV serviees, lib i3Jdidlress the: c'aolle: enirerit:arunrmelillt n:eedls of ,a breeder seg rnent ofthe mall-kiet, Sky Cabl:e introduced ills low-prioed postpaid C81bi'e: \1' package at olllily P2S0 1 al [iflIOIllll:h-,- Sky Cabl,e Se~ecit:" Thl'ou,ghi d~g~tOl~uz:aJlJion alnldl the roll-Glut of [ne Di:glioo'x" Siky CaIMe: is alMe to offer irs sUlbsaiiber's the option: to add mor,e cnra.rme!ls Or! en <I Iial ca rte basis, Sky CaMe ,alse ofl\e~-edl the: cO!llnlJn/sfir:st prepaid eeble 1\1' pad::ag:es a ndl the rnlrst IRII) ca btl,eTV I cerrtent with Sky Ca btl,e HID.

170,ta expellllse:s glrew hy P2.52 billilioni or 13% y,ealr-olllI yealr to P22AO billiorr, drjven mo.stliy by highelr 'OOlSt of sales and semi:oes ,OJ rrd genleralll ,alnldli3Jdlrn iinlLstfal:ive expenses (GAIEX)!" wi~h an ,ad>d!iitr,ona~ quarter of expenses frem Sky 'Cable. 170,ta expelillses, IPlrior to Sky COlb:1:e'sronsol'iid!al:ion, I rose by IPL38 billion or 8'l1b to IP1S.,.99 billion un 2009, mOlSt~y limrn inereeses ~n cost of sales and sellvioes, ollier~J('~e~ses" and frem gen:elt<ll and ad FiFl~lllIi:strarlbi\f\e: i:le. n:.lJds ilia rtlf::u,'lalliy, p;efS>DIIlIIllIel expenses a nidi ~'·''',.II I' L) " ~ I\It -~p~CII'... .I~~. The illllcre!aJse_ilillpersonnel @~:~r(jii!iEn~o CBA-I',elabeo mcreases, stJrucru~':EI1 U:s,t,',_ 6is:i:Ol~eep cernpensatien Ipa,ckag:es

~~t7"'~'"~
~v

P,rad!ut;tiOm 'L'I!lStB General amd MllliIml5t!1all ... ,~~penSe!l e Co:sto~$ale~ ~oo Sel'V,l~s AgenE'jlE(jI'llI'l'iI~, t~Eenl!l\fe~81.

5,18'
5i~95
4,11199 ::t,8!9

S,:l~5<I
'1/1074 3,7'l9'

l33

::l:

n2
370 l.~3

IS
10 5 3 13
:f! 50

irlheB%, .or P132,,'s8 millionl i:ncreaiSle intotal cost .of Si3J~es and services of other su bsidierieste Pl.7S billiliollJ -- lower than 2008's iIFlcf,e!aJseof 18% -- is Ialrge~y attribut;abl,elJo red u,cedlcai:JIechalrllnells program ri,g !-its amortilzatiion endfeeilities-related expenses,

Ca-prod'smre,

Other e;>:J!lenseg. {1I\Wme) IEl!:pens.e~ li!lefore .s'~Ijf(:abil!, Ad)d~ Sk~ 'Cablee~pense!> Total ,eJtpe~:5O!g

Ulii~:B:f! 3,415 ~2:,40~,

isa

~,57S
~?4 1i!,606 ~,2ll3

19,889

1".a.S,2 4,1~ 2,,514

~~~bal

,mhli!t'9l!Ib.;[dI0l1Ies
rub~~:
!ii!!triikH

Sky C<lble'sful~l~year expense coooibuliion of P3A2: bu~lli:onis IP1.13 billion or 50% more than its
P2. bumli:onexpense contribution ov,elr~lhlree qualrte:rs in 2008, aOoming limm hi'gher eest of sa~,es un Iline: with sllJlhS>aliplJion reven ue gromh,. as, it ,e:xpa nded uts prelPillud cable TV illnid i:mJaldlbalFu::iserviees busiaesses, Prcu:mctio,f) Costs Totall pmdiuctnon eests in 2009 rose by only PH].04 rn ullll~on01'" 2% to P6,.29 biiilli:on. Tlil:e i3JddilitJionCl'f Im::;a,i~Y-lPmd:u eed aOFil'lledly,dra FiI'IIill, ,and entertei n menl[ Il'IIe~vsp,rograms iin the efternoen and prirnetime Modks resllJl~redlin p.e~'SonF1l,el expenses and !:alent fees ullicreaiSing by 1fI]9] ,,94 rni'll uon or .on 1'1" '% 7 yealr-on-yealr to P2,,90 Ibi:lliiion,.from P2:",71 billion UIlJ 2008" fa:ciTities.- related expenses 11i:lkewiseuncreaiSled by onl~Y 7% '!(le<lf-OII'll-y'e!i3lfo Pl. I t EffQorl:s to conrl:<lin Cl'f tap:irlig d<llYs br'iJ,u~Jbl:bthe~i\II:Mt!Ci ICI'we'r by P79 .38 v'e~:l'r;!"'Qih~:i'U,e'aIfW P875.44 rn iilmion, bip:F1e[rt:il'!g'fJ:;;tri{1~jIllr~l:[Jj;~~H:t::Ii!l~i!o~:ss.

,t-m(~ C(f!;t or sale:!! MIl be1'o.rre Sky 't-mbl~,

alMl 5et'11lf:e!l

2,338 1;~S

~,~iK5
4,IZS

l33 U1

14 lm

rtDl1"I2S~~o:!.t(!"sateg.

za

,oIs;ai~~and 9I!ft!"Hl:H beIorre Sky 't-mbl~1 AfI~: Sq. Cable !lost~' salesand se!!Ylce,;, Co.~!dldaled ros,tolgje~~nd !ii!!II'IIkH
Ccn,t

~e1ol'e ~~ Ca:ble

",ill~>!I :'I,n:!!, 37.1l1!1l 2,645 :tI,,~ 676 3\!1 ,5,j!',4<1 5,6i91!, :lL"N5 '18,

reached PiQ,,'?4Ibi:!llioIFl, an inereaee of 1fI].OS bi'llluOon 18%year-on~year er Wlltlil: Sky Ca bl,e's IP2.6.5 billion cest of sal~es alndl services irreluded, Slky CaMe:'s eest of sallies and services eontributien ill'll 2009 is. for the: ~u~11 ),'e!<llf ilillidl is 35Wa or P675,,74 milhen higher than the IP1.97 billion eest of sales and! services forthree quarters (2l1u::ioo 4th )in :WOIS.

irCl'It".a~ Clost of sales and services

I'elfS!llmel'eJqlen5e!>~ !;alen~~'ee~ F'afiilliE!S~~ted,e((pem~es Odler pl'ogram e:>;penses s~~IoIBI: Cash pi'~on _ NDm-~s~ pI'O!liWEtIOm, Ofil5tB t-on:s6lldiail'ed pifO{II.1(J!jm m.s't£

::t,900 1170 4,945, ,!l,2;(!ii!'

~,7M
1,M~ 9.5:6 ,4,~s& 6,154

-'igS;

4,:3'1~

I,m

19:;): 78 (at) 189

(~)

7' 7 .(8) 4 :lJ

133

('0

Non-caslh IPII'Odiuoti:ol:'lcosts are also 4% P].34 bi:mli:on. dueto lower amortizal:ioll'll rughts.

ICI'wer alit of program

Cost of Sales iJi'uiJ Services Cos,t of sa les ,and services, IbefQore Slky Ci3JMe:g~'"ffii'l!' y h OIlJ~ JlO% er P36'9.8.S F1Fl~ Ili,DII'IIo IP4.,.lO billion, t ABS-CBN Globall's eost of sales rose hy P233.3<O rniilmion 01'" ll% in pesoterens well below the 'Qlmwth: .of its. sal~e:of sellvuoes ,a11.01 goodls. In US dD~~i3JI" terms, cest of sa les OTAIBS,-CBN GI.olbi3J1 went up by only 4%, .• whi,eh is aittnilb~l:aMero ihuglher prcduetion an,dl sate~lli:te: transmissien costs, offset by ICI'we'r mercha,nidlisJe costs and terrninati:on cos~sfor rele:commllJlllJicati:on services.

If'ersElmmei xpen9!!l e and (N'0malions AIlI"ertl~ ~lInleS"rela~ expenses Conif'a~ ~eM~es "fo3:>:e~ and llioenses Entel'talnment, al'l11usement am.dreEllei!l~!ZIn 'O<tMer IlPemses B sub"l'otall: ,Cash GAEl!: bemrre. Sky ,Cable f!!an"Ci!lsh GJil!;:>; be1Gi<e~ky Ca!JIE! GAEl( before sq C'a!jl~. AllIdl:'$l<;y Cable GJ(~!Ii: COI'II£dlida.te!l ~:"EX

2,,7152
l.33 <1<6~ 000 P7' 6415

2"lU

5<1;9 (a} (l.CI)

471 5~0
l!.S:l

~21

1~

SO

~O (2) (S)

25

15

90

63~, 4~246, 6.~$ 4,;8:1'4

wO<

(l!:D}

(HI} 2 15

4,.870' 1'25
S:.Sl~f5,

6Z4, 97
'7'2l1L

15,

rna, 754 ,6.r~.4.g, ,5,,5:12

56
'TJ"1

15 S
14,

:Sky Ca hl,erS ~ulll-¥'e!<ll"eontri hution to. tQot!i3l~ GAlE);; ameu nilledl to P753. 9] rnillien, of which P59Q.8:9 miHion are cash GAlE);;, wih~le P6l.02 rn ~llIlnon are norr-essh. W'itlil: Sky Ca bil,ers.illd!dliIJional~OlPeratinig expenses, con!lro~iidi3/lJed GAEX illrn.OIU nted to IP6",35 billion, P776.40 mull~ionl OIl' ]4% hi,gherllialnl i:1lJ 2008",

/l.fc}fI-c:ilsh Expe'flses Non-cash expenses, rose sliiglhl:Jy by 3% or P6,5.73; rnillll&on, to 1P2,,59 billien. Depreciation inereased hy' JI.5'% 1'"eS,U Itiing from invesonents inl pruduetien equipment <lllJd broa.dcast l'Ietworik: inf~<ls,truQjjulr'e,,, ,Al'll'lorlilizafltion went -dlo,wn hy 12% or IP142:1I::2 miUliol'l_ man 1"1 Iy alS a result ef reduced pmgram"a,cqlU"sihDns~for

8alance As

SliJJee1i: {JCDun1i:!i, A 31, 2009, totali-coflsoli:dated assets.

et

Deoember

steod at P,34 ..S2 oilll&o'n, PL78 billion or 5:010" hiighel-1iIhan )l'eal--.e,ndi 200\'3, total I assets of P3i3),J14 billion .. ,

cable ehannels,

IJ;epilli!!!:laliDIi
Amill'l~l[o"

Irt_s:h I!iIpI!ft!IS IIetiore SIq]o e.tllie Adid: rt,l]Ii-~~ e:;:PI!IlSI!S III Sky Cable OIIngOijlds~d nQH"es9h ,e"ipenHls

1,349 1,174 2.-592 2l-':l.s

J,m3;1,

1,S58

,-*5

2M 151 (lo1~) (12) 607 3:

Coil'i"q,lidab~d~liarl,e rieaeilvablies stoodl ,at P'S.Tl billion, Ptr"7~.~:9,rlffij1Ij{1I1 01- 13'% hi'ghel-I:han as ali the end of 20(}8:.,
r

x-, \

S~,

183 33
8

~r887

8)11<8:;1"

2511

[)a,ys sales outsta,ndi'n,gl of 70 da,ys iis just 1 day lenqer than the 69 days. as at [)ecembe'r 31,2008, even as trade accounts reeeieables of 1P4 79 billion is ... 1P600.40 million or 14'% higher thanthe M.19 billlon trade acco,u nts reeeiva bles et '!the end of 2008 .. , Total inl:ter,est-i:Jeariil'lg loans, increased bl!f ebeut P249.63 million or .3'% to 1P8.96 billion versus P8.71lbuUUon aryear ag:o. oftlhus amount, 1"400.001 mumlOll alre short term bank Iloans with a bout 5Wo annual inll:ter,est, whilie P2.63 bililiolll are ,amortising loans. The remainder of about PS ..93 billion ere bullet , payment loa,M falling due .betweellJ 20ll and 2'014. ABS-CB,INI borrowed P400 ..00 millionl fer , WIOliGi g capital needs ,and paid ,diown P'33S .;0.0 million n 'ow short-term ban k loa ns, wlhi le Sky Cable "D.olrnlwed 1P500.00 muillion of lo,ng-te'nmfi.lfldls fin- 'capita~ expenditu res and lPalidl dowll iP212.31 mililiion of thei r outsta ndi ng debt. Shar,eholdiers' 'e>[ju'ity stood at P16.15 b-'illio-n, Pl.01lbii~uon or 7%, hi,glher than the P15.1S biHiO:f1 shareholders' equity Oil: the end of 2'008,. The ,oompa,nr(s net debt-te-equitv rallJio improved to 0.35'>:rrol'll'l 0.41>: at the 'end of 2008 as a result h i"gher cash and eash equivalents .. The eornpanv's , debt an~dl,ooverage reties remainl 'l;'IIell within the limits p:l"eSiCllibecl u nder ilm 10aWII cO"llellJants,

Gore net 'inoome reached Pl.79 hi Ilion 'i1"1 .2.'00.9, 37%, or IP481 million higher than the Pl.31 billion posted in 2008. After deciu,l)tillJgl 011'1 1P8S.25 million a,ccollnrl:ing .. adjustment required IIJlnde'r Phiilippiin.e: lFinam::ial Repmtiingl Standard ,3 (relating to the recoglnlmon of amortised intangible assets relalDnglJo' the consolidetion of Sky Ca ble in Ap'ril 20(8), net ineome attributable to shareholders for' .2.009 ("ai't:er minorily inl:tef"est)is IPL.70 billion",alr]l ~m-~rmlern;ell'llt of 23% or P,31B.93 rn illion oV'~'I~OO,8's neit'lnJiOme attributa hie to sha reholders of Pl: 3'8 billion. '

In 2009,

before 'intere.st; taxes, de-p'reciation amortizetion (EBIID'AJ reacfte!tPI6.51Ibill'i-o~,

Eamiings P405.~~ ~illion bet_te-r'~h¥l'~ 2008 IEI~l!QAl PG.U .. blllllOn, and Ylieildlll"lg an EBn;n'A, ~a for 2009.

*'\

IfYT
'~

b.!",. ...._J.;
V

and 7% or

e~_2'5 /D
0

~ --..,
-, ~

or

Capiita'i

Expendi1i:ures

,.-

---~,

~a~~t.a' experu Itures 011'1 ' m an .. ~'w0gVBJm',t]lg,~~s a,cqll]ljsufiom;;, ill'll 2009 ammmteril to 1P2" 5' I~im(bn, just 9 P33::~Z3 million or 1% higher y,ear-tOl'I-,('ea.:;, X:alPitall expenditu res Increased by P232,,03 million or H'% y-ear-o-n-y,earto P2 •.35 b-illio-n, for- preduction equipment IJlPgrades and rieplaoement, broadcast network infrastructure upgrade and expansion, digital media asset an:hiving and maneqernerrt equipment, cable nletwork conversion to diglil:al~ si',gnel deliivery' alnd brcadba nd services ex pension, Film alndl p-rogram rig hts acquisitlcns wen1t downl by 2S"tD or IP198 .80 mililion, '00 PS84",82 minionl ill 2009 man 1"1 Iy alS a result ef lower IPFogralrn acquisittions fer

d,

di

dHI

_.o.//"J

,-II..

cable ebannels,

AI:lS-CHNANNUAL Ktf'OIu

2009

---

ADS CBN
-

l'he rna naglE!menlt of AIBS-CB N Bro:al~at StiiliI,g Corpora1i:10 n is reslPolHli b llil f~)r a III info rmatiionand rel(!l!'Issel'1lt~tii'onsoonta iined in the~i ri!1;'Inclia IIstatem ents fur the yea rs ended December 311 2009 and 2008. lhefii GIlanda I statit!:1il1Iants h ave belen prepares ~ oonfonmiity with gl1mer-aUy a ecepted aocmmtiin 9 GIl prin(;~ples iin tihe Pill illi pp i nes a iild Iill!fh~Clt: emou nts tihat a 00 based' on th!f.l beset !i!stirnalt~s a nd informed ju d'9menc of m anagemelirl: witJhan alpp~l:l'li'r~are co nsideliatiQn to mete ria Ility, In thisreglard, mana'gement maintains a sys"tem of acoolJlnltingi ami reporting which provides for the necessa ry int!f.lflil,al controls to E! su Fe th at tnansaaii(H1S alre prop etly aUlth 0 riZied' and recorded, assets n i[:Ire safegluarded a'gSlinst unautihon:;,:ed use 0'" disposio}onr and U~lbillities are lieoogni:;!':ed. The mana gemellllt IHcewus:e d~:sc:h)iSes the Com pany's audit oommitt,ee and to its external au d irto,: (~) a II to $~,gnlificaat di,erici sncles i'n thE! dj,esirg'nor ap!i!lfaltion of ilnl~!i!lfrlallcontrols th at: ,could a cjV!i!lrse~y aff'€!ict its ability to record, process, alnd! report: flirnanclal datal; (ii) mat~nclll wE!:aiknessl1ls in the inrtl1!lfnalloontrolls; ~nd "Hi) any fra ud that ~ nvelves managem ent oretner employees who, exercise ~5~'g nifica ~t roles ill'1l inltE'l al eontrels, m ~he IBoard of Dliredo liS reviews th eft nanOi·all starte meres before such $t~tem,ents submitted to, the steckhelders o,jfthe Com pe ny, a reepproved sind

Sy'Cip, Ganes, Velayo & co., the i~dep,endlent arl!i Iiito!fsappo intedl by the stockholders, d ha sexamil n,ed the fina !ilciarl statements of the Company in~or;;olrd·an()e with gelii'f;lra Uy a,cceptedi;lud ioiIii!'£lstalii!danils in the Phi~ippines and h as expressed rts opl nion on the faJimess of pre:sent!irtion IJIPO cDmple1tirolii! M such n exam~ martian, in iits repore to sto cknolcersa nd 1liheBoa rd of D irE!CU)!fS· nd stockholdlE!rs. a

EUG

Chairman and Chief Execu!rv~ Officer

DO P. VALDUIEZA.

iIi1heA~d1i~: Commilttee: re(pll'es€:!1!its !nd assists~hEl Boaf1d of Direc,tors infulfilll irilg its oversighit responsibillitlies as a regards,: • the integrity of t!he Comlpamy's ffJnlaJrlci!alslt~temlen~s" the eHiolency of nnaJl1Idal reportingl process, mI8n18igeII1llEmt lof fi:nl8irildal risks, endsoundness ,of ~rntemall' control env~ror1ltmeli1t:; " the ~1il;d8[penden:cealil;dlr8JdeqllJa.cy int.emalau:dit 'fUIilC1icUilISnd pr,009sses; of a " ~he qU!aJIUficatiolils andlf,ees of~h;e Comlpalil!y's rriujeiPEwlden~ externall aljG itors, th,eilrann uall review 'Of ~he Com pamy's fifill8n11cials~alemeMiltsi3Jndl1e~r ~ndepende!1i;ce in conducting oitheraudiit services; and, .~he Comparny':s Ie;Q,aJII ;a!rldregularuory loo:mlplllf!ii3'fii,ce. Ani AlJdii~ Comm mee Oharrter, as approVie~1 Ibymhe BCaird ,of Dir,actors, defiif'l,es ~he roles and responsiibiiiiUes of fleAl,Idlit Go.mmiiiOOe. Illnoom pliancew~~h~heAl~difl: Commiitlee Charter, we confirm for 2009 that • An independent Diil~eoto:r chairs tha Audit Cotllllrll1itIttee; • Four mee~ing$ were heid dUrlril'Qi he yeat .. All the Commlittee membersattended I the four meeti rngs iIi.eild~tlle Boardroom~ I~anp:res IB!iJI ~ldilili9; • Wfifi. hc!!l,IIa diiSCUS$~d Mel approved ~hle IO\lllel!iaJIlllscopeaind aL.l!oiitpilaF!~ oflhe Iintemal Au:d iit includingl the manpower l!ieS01L.1!rC~S 'COmlPE!,tem::i:es 1!fIIleoessary 10 ,carry ,g~t ~he gl!)lCit as plla~ riH~'d; and .. We I~aveweviEfwedand ,dl~Soo$$ed~haalJi.tjiH!&d arnnuaJI fi!l1!.an(;lal stat~ments of the Comlp9nyand its SutJ'sidiarlh!!lswli~h ~~e maJiI~g,e:l1llent" iinlt:emaJa'i,JI(jlirtorsand extemall audJiwrs wiU~iin tie oont~xj (i) tnai Iffianagiement lilS nll,spcmSible mr~ihe reom p8!tiI~l·s flin.aJl'lloial tatements s andl the relrateo~t:emle!1t~ of financual !oQrildlitf:cmand results offop8ira~io:nls:,and I(~Othat sev & CO'., the 9xJtemalJal!J!dTtor. j~ respcmsible f'or l€lxpl1essing ralr! oplin~Q'n on t~,e IOOl'llltmm of ~hEi Company's illy 8Juditedl ffilrn.andiall st~temle!l1!tswMh, ~~,e Phn~IPpline Ifina!1lrtia~ IFrle)p>oritingStal'lld1a.rds; .' We have ooVtle'!Ned and approved thre ~1n1l~OM"l31t"O:n 8.acur,f:ty Ass.es:sm9ri1t, a non-au:drt~lrvjce provid~d by SGV& Co. to the CampaJ'illll a!l'ld~ihe lrell:at:edf€;€'sther,eto, in aocor(Jiar1lce wll~h standards, po~icies and regullailoryr lrequil'le:melt'ilts teensure Un'atthe non"'\~'IlJ:ditactMl:ies willi be independient arnd will not be in co~flliclt witih its~unotliQ'ns as [independent ,e;xtel1ri1all ,8J~dlito:rs; and, • We hal"'!;! revlewed jne repotritts ,of the in:terill,alil ,audi~ors and ensulred,U1Irough discu:ssiran wil~h managemenH aJnd~he ~nrenllal .au:(ffiitor:s, Irn,at alii! trn,e I!i1JiE:~cessaryeerreotlve and Ire~evant actions have
ooen~alketliiamJ!dl irffiIPll!f!itrleirUed." li~}asedl from t~e~orlegIQr.r1I:g and the loollated disCI!JsSto.r1Is !!Jlt1Idelr'itaken. and subject to the liimitatiions on
Q~ r

an,d!resp[msi~b~lities,the Audit Co:tiI1mijrnee r,essrilts t~js Report~o tI1reBoard olf [)'ilrectors, p

rdes

~'IL.'~
Mr. P€olro N, rry-li1acco
Clh!2i!ilrman

"11111.11111111111111111111111111'"' '
1

3J ERNST

$GV&CO
& YOUNG

SyC (ifl Go iii'85 V~I ayo .& CD"

671:10A~:alll Avenue 1226 Mak8i1i Ciliy PhllipplnM

Pile n e: {632 ~ B9<l Q3lD7 Fax, {632) B19 0B72 ...............~~V,ODI'1'1.!l h

'80AIPF! C Reg. NQ, 000'

SEC At<tradi1a1ioo Nil_ 0012'-FRI-2

111t4ID:EPElt4ID:ENT AU D'ITO RS' RIEPOFrlT

TIlle' S~ocktl:old,e~s and Ule Board ollJ~~ec~or5 ASS-CBrN Broadcastingl Corpmatio!'1 Vii@ have audited Uw ;i!OCOimpanyiillglllinanclial $tatem@iIllso~ ABS·CBrN Bro<,!d~asli I1IgCorpor",~ion and S<I.d~:$!idiarie$, hich w comp~isel,he oOonso:ltda:too stal.ernefli!sorrinanoial position 00, at [December 31, :2009 and 2008" and thie' consolidated statemen~5 of irJcome', eenselidated stai"emems of comprelnenslil,le income, oonsolidated statements of changes ineCjuiiy and consolidatoo statemenlsol cash Uowslor each or ~he three yea~5 lin the penl00 efl:d,ed I)ooember 31. 20090, and <I soumrnary of signiticanl accou !lIiing polioie>s and other e_xplanatory notes.

MM~9@ment is· respoil$ible fOl the prepara!lio,il and f",ir pre$eilll:aliioil QI th~e fil1lailld81 stalelfl1lel1it$ lin8ccordance \iil:h tPhiilipp'inre Fi nanciallR;eporlling Standar,ds, This resp0!lisibillity incllu.de;s: desiglningl" lim,p(Ie<nn~mti and mlaintain~ng iirvternal ng corUrol relevan~~ollhe pr'ep,aration :;md fair present81tionoflinanciial $talem:en~s thallllre heefNJm materlial mli$$:l:atemen~i' whether due to frau:do~ error: seJlecting and appJJyingl ~propriate aceou mung pOJicies; and mal\.ing aocolJrvti!'1lglesti mates thaJ ar~ reasonahle in the dr(lum$"!anc~" Ai!l!l!dlltors' [Iii!esponslb'm~v Our responsi'bilUy ts to express. an opJnlononl,hese flrlMolal sl2itemenlS based on our audits, We oOfidooted our audil.s ~n accor·dance \vilifl I?hillippine Stanaru"ds on Aludi~iin:g., Those .$"IJanaar·dsre'[ ulrs tlnat we oomply with g~:hical reqUlir'elfl1,el1it$and plan and petform the audit to obtain rea:Ml"lable assuranoe Whether ~he ·liil'lan-cM.1 statements, a.relree hOlM malerlal misstalelfl1lent An ",u:di~ in""olves perior'ming proced ures tQQbta'in i!l;l.IIditeviidence abou~ the amou ills anddis>clQ:$ul"¢:$ in theliinlllncial state'!'Iletl~5, The proceGl.!res selecled depend onihe aJJ,dih~(s j'udgll'll:ern, in.clud.ing the assessmeru 01 the !l5!kiS of mla!erial mis$tal;em:el1llol tine fin",ncial $1:atemen~:$, \vnether due' lo fraud or errOL lin 'iTla1o;i ilgl~ho$e ri$ik as$~$men~:$, the llIU:dlilor oOtlsidercS, itnernal Mflltm!1 rei evanl. tOlheenltity's p~eparB!tlon Mdlalr presentatlonoi the tl nanctal slatemenlS in meier W de$;ign audit pr·ocedu!re$ that an;;: approprliateinllhe cirGums~ame$i' oul,iIlot for ~he purpo$e af e-xpressling anopi ilion on tine eriootlV'Elne55 or ~he en!iily'5 intemal oOon!rol. Pm audit also lncludes evalualilng the apiPra.p~ialeness or ooooUlntlfl:g pclleles lk'Sed a!'1ld~he' rsasen a.bleness of accounting es~ijmates made by rnanaqement, as well asev<ilu<lJtin:g the overal'l presentation or the financlla'i stel:emeflils.,

In ouropinlion,1M oon::;,;~lidated financial$taternen~:$. present fairly, in all mal-erial respeGW,tne financ~al poslilfiol1l QI ABS-CB N Broadcasiing Corporation and 8u'bsidiariies as 01 Dooember 31, 2009' and .2008, ·and their financial performance and their cas h ~Iow$ for eac h of lhe Mlree y~ars linlhe period ended Dece moer 81 i' 2008' in aroord",nce with Philippine IFlinancial Heporllln.g StMdards.,

SYCII[P GOIFtRlE8 VIEILAYO 8t CO,.

Ald~in M., Cer~a.do Partner CIflA Certificate ~o.86735 SEC Accred:il:ation No. Qo1·11hA~·2 Tax Ildellilifi(:<'!liio,iIl NQ, 1294$3·768 PT1R; ~o. 2087399', January 4. 201 0" Malkaili City March 1t, 2010

so

(An1IOL!llni~S

~n Tlhousarndls)

CU~I'~~mJlt As$¢,l$

C.~_sh and cash ¢qUlivalents (N Q~e 6) Trade and other rooeivables • nst (N oi:es 7 and 23} Il1Ivemori@$ (Nolie 8) IProgmm Inlglh~5, a.n:dOlher imangiWe, assets - Gurrel'1lt (N ores 4 and 13) Othercurr~n~ assets (N o~es 9 and 33) fota'i Current AS5~ IPrOperty and ¢qUlipmem - net (N Ole$ 4, 11, 19 aM 31 ) GooctWilli (Notes 4 and 17) Irwedm~mt prq~erlije>s (~ote 12} IPragramrliglnW ando~her i("dangible OiIS$¢tiii-nOifilcurr:eml (rNlol~ 4 and 13} Availab!le·for-I$·ale ~nveslfflen~s (rNlotesM and 19') I riVeS~iTlenw in aiiisOGii~le$ (NQ.te 15) Dele~~ootax a5:s,e!s(Nate 2'9} .o~her nonCllmen~ 8S$~ (No~e 1 6) ifata'i Nonourrent Assel:S
~!O!,!Ci~ ufjE!rn!J1: ssets A

e3,337,,751

5,119\532 9<1<9',273 1,W03,~165

189',119'

e.2~524L,:254
5,,040,1 39'

225,6Em
1.,439,876

890,310

ffi4l,7ffi4,,4i2®1

14,7$5,,554
t,906,,:t!11 66,,276

2,nll,1631 63,.2:59
2,:524,:258 420\465 4®\9'71

2~170,856
37t,4,14 4:],3(n 603,,19"1

'642,1511 :3,(101,053

3,026\ 183

l~i,AIBIIL.I!il~~S Air:.:llDEjQUlm'!i' Cur)je.m: Llablmies frad,e a.nd other payab~les (rNates4" 18 and 23) ,Iilll;:arnelax p~yable . ,Irueres!-bearingl loans rult:! bO«O\!'!iiln:gs- current portion (~oles Obliglaliions for ~rOll~am riQlhbs• current porhon (N o[e' 2Q) T ota'i GUJrref1lt Llabillities. Liabi!llilies I rd'ares1-bearingl loans and bO!TOWiin:gs- nat oi cur~em portion (No~es 10., i 1, 14 and 19} ObllgaiJions for program riglhts • nei ,of current rrorlion (N me 20) ADcrued peillsion obil~ationl (rNo~:e $0') I)elierroo tax ~iab'llltl,es (N ole 2;9i) O~her nonCll,llrrerU Ili",bi:lities (Note$ 4, 21 and 28~ fota'i NQrmu~rellit Liabilities
~!om;;~~fjem!rt

1 n, 11, 14 and 19}

~6,.399~.30®1 '1II86,9G®1 '6~Ek28®1

~5,,849,626

489',968
1.,131,783 1.,063,,265

96!'l,:2:11~1

8,338,75.2

132',10114 5,12,958 2141

7,562,621 151,994,

'79®\218

791,9136
632,60n

,4,1'6,299'

2111,8135

l~quityAl1Jrl[blJla~ble~Q Ili1iqlWl'iil,y HQ!lldeli'$Qf~jlilie IPI3:~eltl CQmplilml¥ Capital 51.oo:k (Note 22} Additional paid·~n c<lf)ital Oumulla:t""~ ~ratli5lation adj us~menl'S (~ole 33) Unreal~zed ,gain on a'l,lailalble-for·sale in'l,lestmerns (No~e 14) IPielai ned eal1i11ing$(Nole 22) IPhllll;lfle' d o:sl~o~ rooei i1.'5, conver~ible to common shares .'

719~,583 72!:l,21e 98,2~3 ~5,.136,301ll

(136~602)

779,583 725,,276 (193.,351)

23,,838
14,12],884 (376,,324

1 5"
Total E9liiiy

otm., 3:56,
67',046

S1

COINSOUDATEn

ST Al"IEMIENTS OF INCOIME

(Aniiloilllnils in TlholIISillildls" IEx.oe,pt~er Slhare' Amol!Jllilts)

GfiJOSS R ~V\elMUIe:S Airtime (rMOI:e23) Sa'ie 0:1 serviioes( Notes ;,13and 31 } Sale of glOOOS Licen$e~ee$ (Note :;:1') IILIESS AGiENCY CGMIMliS:SIIONS, ItIl:CENIIVES CO-PRO([!lUCERS' SIHAAlel (No,te 24) ~Ef R ~VI~t\IIUe (Notes 11,. 13" 23,25,.30 and .31} AND'

e·~,4,,46.2,95B
9~865~296,

521,.12a

9 1$.,51 O',9~!6< SSl83,,372 512,501 22:,3061,869 2,676,,:237

91 3,604,5191
5,,:298,.481 489',159'

548,.218

22,'0!3~2!7'
(6,286,787)

19,630:, 6~2 (6,153,,746)

17,,239<,,587 (6",t92 ,8(6)

'RiClD~:CTilON {:061'8

OOSl' OFSAI.IES .AN D SERVIICIES (N Q~~ 1] ,l 3, :23,. 26, 30 and 31) GII1i;OSS PROFlli General and ad minll;;~rative e~:pense5 (NQ~~ 7, 1],1:2, 13, 16, .2$, .27" $O<'ind 31) [Hnance costs (N'OI!E~5 19', 28 and 33) IInleresl ineorna (fliJoIes 6,. 1 0,2:3 and 28) [F"oreiglneXChange ,gal n ([loss) - net IEquity in net ear,,"~ing;s(Ios,ses) 'o~ assooliates (Note 15} Othier income - Imet (rNQ~i6S. 10',19, 23, 2~:h·31 and 33) INC'OME. BIEFOIl1lE l~caME.IAX .'ROVIISIO~ FOIR I NCOM E fAX ( N(lte 29) 7,744,185

(6,:hl!S,.7~9') t912~911)

93,291

90~n9' (2,3$0)

(5,.572,319') (72:2,117) 90,,·~20 (:i,lS\,133) 5,,064

524,:604 2,,443,,441
'684,'055,

868,729

(5,360.,.298) (581.,859') .~1 '~,866 197,553 11,9194· 133,794 2~:2S 7,:235 986\,,470

2~421,776, t,G32l~75

~~rib'~!tab!~e· to; IEquity holde~s of~he Parent CompIOlny (rNote34} Mi nOini~yin~er€$:~$

e1,.102,397

56,9189'

"'1,,:383,.464

6\237

1'!'1,266,,70H 4,021

BasiclD;Uuled ~arnil~}i!s pe~' 9!hal'1e,<rtlribu~aJble ~Q E91uitilf Hd~l:h~r$ the Parent (!Qrnlpalmlty (NOlte 34) Qi~

S2

COINSOUDATEn

ST Al"IEMIENTS OF COMlPR.E.HE.N:SIVEINICOMIE

(Aniiloilllnils in TlholIIsilrndls)

fIllEllNCOMIE O'THEFI COMIPREIHENSIIVE IINOOME 1~X(:;hange diilfe~etloe.s on ~raJ'lt5llaJtiorl tlme.igltl ope~aJtiorttS o Unreallized fai~ value ,gain (110010) availlab!Ie<·for-sale investmenis on (NQ~~U4) Cashllow hedges (N me 33) Iincome 1>"':>: efl~ Am:o!lliization ~f initiaJ cU!'lllulalii\'!e~ra!lslaitionadjluslme<n~( Illrllcorne I{'I:>: efl~t Note33}

el ,:27Q,765

ion., "1M
(11,761)

131,154
T01".AL COMPR.E HENSIIVE.IINCOME, M~ribl~~:li'Ibll!e·110: l~qiUity holders of ~he Pan,mt Company Mi noni~·.·interesls NET OF TAX.

88,,348

e], 171, 127

e1,833~551
81

53

CQ,NSQUDAT'ED' STAT[EM[ENTS OF CH[AN'GES, [liN EOUITY F'O'R EACH[ ,OIF TIHE YEARS E,ND'En DECEMBER. 31[, 2009', 2006" and 200'{
(Amo~nts
hlll

nousali!ds)

Capital SUlek
('Not~22)

Adld'i~ional Pald~iI'!i!
C:aRi~al e725,27fjl

Total co:rnprernensive irliooillie Doorease ~I'! mlnQi'~W itw~re$1S ,(tiJOI>e 4} Cash dMdands dG'Cla:rG'd Acqu1tsilio:l1iS Ol' PDRs Iissuances o~ PDRis,

At JanIUl¥Y

1, 2009'

Cl.!ilitlula~ive Trnnsla~iolfl A<llusl~m;e!i!ll:S (No~e3m (e19B,35,1) 5S,ri!9

l!i!1iI1'19ali2l!ld'Gairnl Oiifl AfitaJulable.

1'Or·Sall:e ImrestmentiS (No~e 14L

11:!2!),838

74,i!Gt5

At JarJ11Iap{ 1. 2008 Total co:mprernen!:iive irlioome (lOSs) Iincrease lif! mlnQ:~W iitllterests, (No~e 4) C<JSh dMd€lnd$ decl<J:rw .A.egu~iti(!(11iS oj PDR!:i

(S;293,46Q) 100,109

9'35.599 (11.76~)

P725,271S
At Jan1i,lary 1, 2007 Total Mmprernensive irliMme (Ioos) Decrease ~n minority irliterest$ Cash dMderJds doola:roo Acquii$i(iO:lli$ of PDR$ II$smlll£:~ o~ PDRs At 1:J.et:ember31" 2007 11'!7Q6;047 (~17'9,32a)

(~~4,132)

1'?21,105 14.494

S4

Mlilil:ollii1y [1'I1!~erE'-S'I;$
rilllilililQpin!l D!ilP'O!Sii1iOry

iotal Equilj!_________

U!ll,app~,o;prlatedl
(NOl!.J2?) eS.l,S21,33<1

Fteceipts(PDRs) CO!ilfl!l\ertlble to CO!!lnlllnollllShares

(M~;iji 22) Total

11,710.2,300'

le15,oa.o,B56' 1,1300,561
(613,7,tli27)

1E!'67,046
5El,9a9

e115.•1U,4(l2

llB9O!,i5otO

(20,005)
(11l3,S23) 11.123

('1rS,S23) 1,123

Eilft,300,000

1iI'5,081 ,026 U,383,464

(643,156)

9'14,304,057 t,4n,812 (ENS,156) (52,357) ~1 5,090,356

9'45,894 6,~37 14,9Hi

IiIH,349',,951 1,478,049 14,915

(643,Hi6)

(5~.357)

(~37tM24)
~4,165,094 1,266,744 (350,912)
(162,258) (1'?177,621)

1'?13,614,860

1'?63,OQ7

~13,'677,:sg7

1,167.106 ,(350,812) (18:2,.258)

55,141

4,02~ (21 ,1M)

1.171,l27 (~t, ~34) (35(},a~ 2)

(162,258)

35,91.2 1il8,3oo,000 95,081 ,,0126

55.141 ;45,894

;14,304,057

55

COINSOUDATEn ST Al"IEMIENTS OF CAS,H FLOWS

(Aniiloilllnils in TlholIIsilrndls)

mceme tax paid

CASH FLOWS IFFlO:MOPERAlltll:G1 AClllViITllES IInCOO'Ie belme income lax AdjuiStlitl1eflt$ for: IDeprecia~lon an:d amortization (N o~e5 11 and 12) Amorliization (If: IProgmm Inlghts atlid ,o~her Imangibles (Mote 13) Oehlmed chaJfQles (Note~ 6) Debt ii$$uec:osW (fNIole 28} InlereSIe(:(perus,e( Mote 28) N.el urtr€:allizedforeigne';o;charllge ~OSs(9ailtt$) Im.eres~ lnoorne (NG~e 28) ICqluity in net 1106665(eamil1g6)o~ associiales Gai n on sale 01 property and eqlUlpmetll Mark"-to-lilllarl'::_e'I loss '0[11 dle~ivruliye inslruments • ,net (~o~e 28) Gain on~cquii$itiolfl8J1;d e~chanlge of debl (No.tes :26) Loss on derecognltlonof ,debt (NOIe 28) Illncome belQre worki iIlg c~pihll ,ch1il_rl:ges IPm\{lislonsfor: Dotlb:tfu~ acQotlnts (rNJote27} IPeill$ion ~);pen$e (fNIcte 3D} O~her employee berle-ti~s iD'eclinle in va;lul!i) 01' inveo~Qry IDecrease( I nO~OO5,e)11'1: Trade and othe~ rooeivabl,es O~her curreat assets Oec~ease in: Trade and Qtmer pa:yab:les Obliig<lliio.ns fo~ fm:lQ~am .righ~s O~hier nOMurren~ Ili~billitie$ E!Y1menlS of aceruad penslonoblilgatlon ( Mote 30} Net cash .generated from operations N e1 casn provided by operating <'Wliivities

~2',257,,235 t,841,973 1,:210,190 1,:270.487 40,2167 102~101 ,405,,108 (108,67.2)

1,286,~ 7'9' 4a,,5;~'®' 31,10175 862,712 (122,44®~ (93~291) (1.,3199 1,2$3

t.409',964
30.,0.74 :23,687 672:,558

4,658

2,330'

1)

(90:,120.) (5,064) (3,,4,98}

(11Ul66) (1t,994)
348,,887 (205,6S3) 16,,2::21

2H3
(309',107)

29.2,41'.2 135,919' 123,213 5,.406 (366,742)

194,541
261,986 44,'188

102;401
]95,282 44,663 14,880' (177,,806) 242;455 (694,371) (284,,268) {2,202} (38,,218) 'Ml15,,057 (92]A60l

21,591
(59.2)310) (2'40.,656) (154,:298) (385,,194) (26,440.) (98,,030') 5.,022,490 (1.0(m.39H

~967,:4(1)

350\,486 (111,9:316;) U7',1®64) (~1,:795,) '6,~OB,232 ~637,.7619')

CASH FLOWS 'FROM INVESTiING A.cflVlrfiles Additiorlslo: IPrOperty and equlipmeflt (Nio~e$ 1]~Jl;d 35) lP~og~am .r~Qlh~s o~her irnangible assets (N'mes 13 and 25) and C$h acqu~r~ ~rom bUSline$$ combination (N o~e 4) AOQll.lisiililon 01 minority inte~ests (N me 4) Dec~ease (inmease) in: O~her nonCilmetl!. assets Long-term ~eceivatlJ&slrom ~eJlated parties IPrQGeecl$ froml $a;le o.f: lP~opet'ty and eqt!ipmern Ill1vestmenl in band$ ,Imeresl. received .N e~ cash used in inv&stingl activii~iies

(2,361,,435)

fl'*~M37)

(2,,1:29',4(04)

(954,060)
836\657 (1 ,:354,,2::;17)

P'05,,497) (1 ,073., 186) (35,,904.) 267',320 (1 ,,2:5~J12) 33,,325

(193,752)

(685,,015)

:21,;342 108,123

8914:84

70.,838

111,882

S6

CASH FLOWS IFROM FI~AflJjCIING A£ifIVlrJiiIES

Pwceeds fmm:
L(;lItg-terml debt Sank loans IPao/iTlent$ of: I meres! eSOID\liDOID'

400,'000'

e2~049',896
7061,250 (580.,486) (387.,500) (627,497) (307.,869 (203,161) (52,357)
1 )

e.2~895,498
400,000 (452,656) (277,,859)

t903~(I95,)

Bank loans
IDiivideMs

(7S7,60®t)
~6a2,9BID~ (2~911691) (11S',8aID~

Lml:g-temll debt
IFinance llease AoqlU15 1111otl ollPlhilippine depository' receJpts (IPDFts} (No,te 22:) 8ettleme!1l~ot ,de~iva.llive6 (NOlte 33') Iisslianoes olIPDRs (Note 2~} IIncrease(doorease} ~nnl1in:o!lny iirlterests IPao/:ITi\l!n~IQr~h~' termination of crlQS$·Cl,Jrrlijncy $W<IIp$ and int~res:t rate SWQjpS (Nole 33)
1

(347,$27)
(2,,280.,487)

(176,523) W4,990 M23

1

(t52~S20)
(1812,:;!58)

181)',005

(5,,2'90) (39M80i)

(1,565,.'704)
IEFfiECTS Of EXCtFilANGIE R.ATE OIAN'GIE;S m:ANSLA 'F110N A!DJ USTMENlS O~ CASH AND, (!AS!H EQUIVALENTS .AN D

378,,476 CA.SH AlND CAS'H EClUIVALEiNTS AT BEGI NNIINGOF YIEAR 2~145',778

57

INOTES COINSQUDATED FIIINANCI.Al. STATEIMIENITS (Aniiloilllniis in TlholIIsilrndis Unless Otlherwi:sQ :Speciified)

ro

ABS~CBIN li3roadcasting Corpor.aJtion f"AiBS-C:BNI" or "lParerllt Company") is inoorporated tn the lP~ilI~pine's on July 11~, 11946. The Pamn~ ComparliY's core buslnsss IS television and ~adio broad~ca$tingl. lts sulb<sidiall'iesand asacclates ar,e Involved in the follQVIII g relatedl bus~nesses: calb!,e n and dlrecHo-~ome {DThl) televislOrll distrl butionandl tel,ecommunlcatlons services ov,elfseas, movi,e producl:iorll, audllo r,ecomirllg and diSltlributiorll, vld~eojaudio post produaion,andlfilm dis,t~lbution. Other activities of the su!bsidiarl es irnclud!em e'!i"Charildisingl, ntemet and m o!bile se·Nioes and publish Ing. I

The common shares of AIBS-OBNwere the Phlli~pjrlle Stook ExcMnge (PSE}"

Ilsted beginn ing JluIy 8, 1992 and have sl nee been traded in

The registered orfiiO€ adldmss of the Parent Com palny is Moth®w Ilg,mJ8!cia Sh'\®el corner Sgt. Esg uerra Avenue, Que;z,on City. The aeecm panying consolidated fi nancial statements we weapproved and au~:horizoo tor issue by the IBoard of Di rectors {SOD) on MaJrch 111, 20110.

IB_.a:;;iS.J)f rematiJID P

The consol idlaledlfinamcial ::;:,y.altementst ASS-CIB,N and all its subsidli aries (collectiv~y referred to as o "the Com paJny") have been prepared on a historical COS] basis, except for derivative fi ~anci,al instruments and ,a;v·ail.able-fof-sale (AfS) lnvestmeots flat have been measured ail fair v,alue. The oonsolldiatedlflnanClal sta~eme'rIIts ar,e p:re'sen~ed tn PhillppJrne P,eso, whiic~ Is the functlotilalandl pr,ese'rIItaUon currency of the IPar,ent GomparilY. All val ues ·alre IfOU Me<d to the nearest thousand, exce~ when ot~erwl se irndicaited. StalElm'e!nLQLCQmJlJ~iruJcOO The consolidatoo fi ~anci.c:ds,tatements of ~:heCompany were prepared in com pi iance with Philippi ne Fi nenel al F%eporiling StandlaJrdis (PFRS) issued by the Ph ilippi ne Finardal Ae)po!1ing Standards Oouncil. Charngesl n Accountl ng IPlOlici,es,DIsci otSures arlld Plfes,enla~iOrll Thie Go:mparllY's aoooun~1ng pol iCles ·ail'eecns: stent with t~ose of the pnwious fi rIIanclaJ year, exceiPtfor the adoption of the fall owi rngamendedl PFRS 'Which the Company adopted SiMi rngJ1arlluar-y1, 20019:
I~

Amendments to Ph iii p;pa ne Acoounti n9 St~nd!aJrd (~AS) 1jPr;eJ!senfatiort of

Financial Statements

These amendments if1twoducea. new S1:a:tem ot comprehensive income that com oi nes all items eflt ot lneorne and expenses weoognized inthe pwfit or loss togemer ~th "Qther comprehensive lneeme." Entities may ohcesete present ~II items lnone statement, or to present 1two linked $ta~:ements,.a. sep.aJrate Inoeme $ta~emerlltandl a staltement of compreherllsive inoome, 11Mse am e'Mments also pms:cnlbe additional reqUI~emenil:S i rII the pr,ese,rgta!tlon of the sta~:eme'rIIt of firaancial po<siMril and oWll1ef's equity as well asaddlitional disclosure's·. l~e ComparilY e·lected to

S8

present two IInlk!edsltatemen~$" a selperate st;8!te,ment of inccmeand statemen~ of comprehemsiv,e incoms. The fi rIIanclaI s:t8!temen:l;s, ~['€! pmpafOO under the Irevlsed ,di,SCIO$LJ requ Irem ernts. w re
I~

J\!menaments, to f'F R~~a7"r Finanoia} ' Financial Jns,truments

Instrument5'LI~ Disclosures

- improvifJ{}' Disclosure,s

SLoout

These amend'men!l:S, In~roclluce en~anced disclosulfes, ,about f'ai r val ue mea:sur,emen~ ,andl liqu Idil[y Ifisk. The amenalment\S to IPF IRS j mqui m fai~ \I',alue measur,emen~s for each cl ass 'of fi rilandal I nstruments to' be'ali sci O'5ed1 by the sou~ceof irnput\S", sl ng t~e foll'owing! thme-I,e-:vel hleraJrch;y: u {a) quotedl pnees {urila.dljlu,s,tedl)In active ma~k!e'tsfO'r Id~entical assets or liabilities {Leve'l 1); {b) irilput'Sother than ,quoted prices incl uded In leve,1 1 that are observabl,efor tMasset or Iiab:!Ii'~y, eithe,rdllrectly (as prlces) 'orrInd~~eC1ly {d~e~lvedfr'om p:floes) {Level 2); and (c) Inputs for the asset or liability that am not based en obse,[valble ma~k!et diata {Urilobservable, inputs) {Level 3,). The I,e-:vel ithl n wlhiclh thefailf val ue measu~ement Is caltegolfizedl mu~ Ibe ba$e,dlon the I'ow'€!~ lev e,lof w IrIIput to' t~e Ins,twumenfs valuati'on tMt is sl9r1iflcarllt to thlefal r value m easu rem erilt In its ,enti~e!l,y. In ,addlltiorilI' reconcl Ii atl'on lbetween tM begi nningl 81M endi rilg Ibalanoefor Lev,el S,fai r value measuremen!l:S is requi~oo,. as wella$ sl9r1iflcarllt tran:s,fielfS lbetween levels in t~efan r value hieran:hy. The amendments alsa clalrify the requi rements for Iiquidity risk discloslIlre.s with respect to deriv:8!tive transacdons andfinardal assets used for liquidity managemenrt Ilhef:8!i r value measur,emenrt disclosures alre prese nlt.ediin Note 33,. The I iquidity risk disdosuJre.s alre net sign ificanlUy 1mpac.t.@dilby amendmenrts and ere pr,®sentedi in Not.e 32. the Adopti onotthe followi ng new, rev iSled and! am ended P fAS and Philippi ne IInf:elrpreta1iionsfrom ~ntema~im~al Fi flanoi aI F%eporting~ flte~p:retation5' Com miUee (IHUG) did net have impacton the I Oompany:
II I!I!

II

II I!I! Ii II

PAS 2.3, .Borrowing Cosfs (Revis€!d) Am endm ent to PAS 32, Finanoial instruments;· Pres,entaJion. alld ~AS 1, Presentation of Ftnanr;iaJ Statem~nts ~ Puttabfe Finanr;iar lnstrum'eints and Obli:gatio.ns .A.rlsing on Lfquida,tiof) Am enldm ent to IPFRS 1, FirsMim8 Adbprion of PFRS, snd PAS 27, Consolidated and Separate Ftnanoiar StatemS'nts - Cost of an InlVestm~nt in a Soos/wary, Jointry CorMroUed Entity or Associate .Amefldm ent to IP'F IRS 2, Share-bas8d .P.aym~nr - Vesfin{j' Comillion$ and Canemlations P fAS 8, 0pflraUng Segments Philippi ne Inte'rpreta~ien IIF IRIC 13,. Gus,tomer Loyarty Programme.s Philippi ne Interpretation IIF IRIe 16, Hedges of a Nst Investment in 8 Foreign Oper:arion Philippine, ~nterprela1iion IIFR~C 1,8~Tr:ans'fels otAssets from CtrsJomers

Impmvements to PFRS. Theadepfion of the followi ng imprevsrnents to PFRS rssu Iteo in changes in aoooun~i ng policl es but did not hav:e lm PEIICtOril financial position or pertom1lanee 'of the Company: the
I~

f'AS 16 Pr::operty~,Plant ,and EquJpment~ repl aces the 'term "net sel nng, prioe'~ 'Nith "rai r val us Iess to sell," to be corHsis,tentwith PFRS 5, Nono,urrent Assets Held loW'Sareand DisconUmJecd OperaUOoo. and PAS 36, Impairment o.f Asse~s, Item s of p:roperly., pi arlit and equ Ipment lheldlfor weflltalthatare routi flely sold inthe owdinalrY course of business after rental ,arre trarHsfen,ed to i~ventoJry when we~tal ceases and ~hey are held tor sale. ~roceedso,f such sales are subsequently sho,wfl as revenue. Oash payments on initial Jrecognitio,~ ot suchr items, the cash receipts from rents and subsequent sales are all shown as cash fl ollNSfwomoper31tingiactivities. ,
j

COSTS

PAS 1:8, RevBnu8 adds guidaflc@ {which accompanies. the stat'ildalld) to d!et.ermifle whether an en~lty is aell ng as a p:rinclpal orasan agent. Theteatures to consld~elfalfe w~ethelf U'ne e'riitity (t) has prl m.alfy m~ponsl bl lityfo:r previall ng the goods or selrvlce; (2) ~as Inv:entory ri,sk; {3,) has
1,

59

dlscr,e,ti'On irII es:tabliShing prices; and (4} bears Ulie cmdlit Irisk. The Com panyassessed Its, IreiVemueanrarllgements against these criteri a. The revenue Irecognition policies were updated according Iy.
Iii

PAS1! 9,rimproyee Ben'etits, revises the de,fir1Iitionof "pasts,elVice costs" to I rIIcludle r,eductions irII benefits reletedte past services (~nega1iive past service OOiSI1S") and to exclude reductions ifli benefits releted to tUlttulreservl cesihat arise from plan am endments, Amend'mentsto pians ti1aJt wesult ina reduction in benefits related to futu re services are aooounted fo'r as a cl!!1ailm ef1!t The improvement also revises the diefi ni1iion o,f ~reilum on plan assets" to ,exd ude plan adm inistrati O'fli cests if they have been inel uded if1! the aetuari al assu mpttens used to measure the dienfledllbenefit obi iga1iion. ittu rther revl sesthe det! fliition o,f "short -jerm" and "ether long-te1rm" em ~oyee benefits to focus onthe point in ti me at which the Iialbility is due to be seUI ed. It else del etes the reference to the recogMi'On of conti ngen~ liabilities 1''0 ensure conSis,tency wiU'ii PAS 37, Pmvisiooo, Contingent Uabiiit~s and Contingent Assets. The Comparlills pension cost and Ilabi lity \iVE!'ffi com putedbased on the fowegoi n9 revl Sleddetinitions. PAS 36, impairment of .Assets, provides tna!t when discou nted cash flowsaJr€: used to €stim:arte "fair value less cost to sell," additional disclosuJr@is Jr€quimo about UUl: discount r.a!te,cOnlsistenlt with dli@cloour,esrequired when the discounted c:arshflows are used to estimate ·''value it'll uss."

Other im provements to PF~S that did net have impact on the aecountl ng poll oi es.flnanclal pOi5i1iioncw perlermance of the Oo:mpaf1!Yare as follow: •
I~

Iii 'ii

•
I~

Iii

•
I~

Iii

!PAS 1, Pres9ntation o.r Finam::ia,f S1a~;em9nts F'AS 20~ Accou(Jlting lor ,Go've\mmel1 t Grants anti ,Diso/osures IQ,' G'overnment Assfstance PAS 23., Sorrowing Costs PAS 28, Invest.ments in Associatecs !PAS 29 Financia~ Reporting in Hyperinliationary Economies ~AS 311,Interests in JOiA'i Ventures PAS 38, fntangib.re .Assets !PAS 39 Financial Instruments: Recognifiofl ,ami M~asuremBnr f'AS 40~ InllVe,stment Property PAS 41" AgYicUUu.re
l 1 ,
1 ,

Change in .PresenJationot Consolidated StatemenJot Inoome. IIn 2009, the Company chalng1edthe pr,es€:~t:artionof its eonsol idlalted statement of incom e to present gmss pmfit The 21008 and 2[)07 consolida!ted sta~ements Qif income were r€vised to contorm with the 2;D09'[p:resenrtation. IB,asis of QqnsaHdaOO!!1 The coni5olidated fi f1!anciaI statements inel ude thetimmcial statemerns efthe Parent Compa~y and its, subsidiaJries as ot December 31' each y'ear. Co ntlfo,1 is norm a! Iy evidenced when the ~'aJfe~t Cornipa~y OVlI'rIIS" eitMr dir,ectly or irlldirectly, mere than 50''/.:,of tM voti ng ri gl~t.$of an e'riltity'sciBipital stock. Foil owl n1gis a Ilst of nne subsidiari €;s or companies, which .AIBS-CSNI Gontlrols as of lD€oetmber 311, 2[)09, 2J008amil ,2007:
Place> (11' lI'Ic;mpo~al\lon
AlBS"C8N (,Iobal Utll HOkiing oolfrlpalilY

FlNlc~mnl ClffrooCY
Ulillitad 8!8188 Dol18r 110D\JO' 1100!!CI1

~'AB&OBN(3Iobal) (II) QJ M6S"CBN EW·Olle LH:L {A8S.CBrN ~ropQ) \III~H~ AJBS.CBrNJapan.rfIC, ~~ 1

{A8S--C8N Japan} . . .~ ~FQrW131d~

lOn!n
100',0
lOU,U

lOn!n
100',0
lOU,U

Cable a.:ndsa~e!lile pJ'ogr.aR1ffilng s~ces Cable> aM, sal81~I!Q

pr<D~alfrlminQ aeIVi.C>9s

~UiSD) Great E!!ril~jf! IFloU'ndi {ClSP) Japaoose Yoo (JPY)

~OO,.o,

60

AiBS·CBN Mi(kjl(;l East FZ·ILLC {ABS·C8N Middi~ IEaSI)PO)(1) AlBS,G8N Mi(jjle East lLG ~ ~I E-MolE~ IPIu-S,Inc .. ft.) . ABS-CBN GllobaJ Hungary IKft {A!Bk~CBN 1911i1l!}aJ"~'~ Inl (el1U A!6~H;B~ !ritemaliooa]1 ~ 1'1 AiBS.CBrN A~1falla IPty, Udl ~A8S'C8N AuslI'.aJiaj OH'IIIII AlBS,G8N Telsccm iNorlh Alfrisric8J, Inc, OH'lton) . M6S,CBN OS_I'lfIOO,ULC {ABS.C8rN Canada) OH~I~I' AiBS.CBrN Global Mel11tl'l'lands 8'\/, {A8&C8N Ne1liiBrlanli$} (O~!II (<0 AE:S-GBN CWOWJ FtE!!niti.'<lJ;Jce Inc. (.HW!"!)((D AlBS~8N Cslil1~r for GolfrlmulflicaliOO ""'ItS, 100, I9l M6S,CBN (~Ioba! Os_ruo,OO!llOffi~On l"oJ AiBS.CBrN Film Prcduclloos. !ric, {A8~C8N Films) AlBS,.G8N Interl3!t1i1l8, me, {AB&CBN Interac~~) M6S,CBN Mu!1ime(i!a, Inc, IABS'CBN MLiI~medla) (h] AlBS-G8N Integ;tsisti 8Jm::! 1rralsgic S Proparl~ HOltiin~, 11fI¢. M6S-CBN Pub!ishif1g, Inc. ~ABs"CBN PlJiblijshing) Cil'lIMr)' Publlca1ions. Inc. ~I AIBS.CBN SnaJ"scl Servlca Ce;nter PTiE, Uti .. iI! (0) IjJI Clfaaliys' PrQg~.arn8, 11fI¢. CPIO ( Pf,o~essional Se!"\iiees ~O:r Television & Radia, Inc, Sanmaook N~ N9'I.wCil'k, Inc. Star Fteoordi~" Inc.

Piac:e 01 !noo, o~O!'l Doom, UAE [)tmail, LlAE Philippines Bltidapest. HUliilgary Camo~i8J, lJSA

Cabla al'ld'.satelli!e pJ'ogr.aR1ming st;ftl.oices Hsling U9D 8ar'!lic8$ - lfrIoney rsR'li~:3.TIcs, Philippine Holding cern PaJiijY !J8D Cable andl :s1Ue!me pr'o~aJnmiin9 sec""';oes Cabla andl :satQiil!e, p.ro~.art1ming SQ1\oices Telec_u!fjca!iD1\S. Cable a:ndsa.~e!lile pJ'ogr.art1ming st;ftl.oices IrI~GmlMlale 11c.\c1ing .aOO iiMncing OIJR'lpalily 5slf!..iees - moliley remi1.ls_"lee EducaliQnaio1[aining Noo·vesse! qpe'l,sJioos WlDllon carner Me>'I1eprocluclioo USD

Paso'

11001.0, 10n,n 11001.0, 10n!n '1100\!CI' '1100\!CI'

10n,n 10n!n

98",0,
9B,U

9M'
9B,U

AouslI'allall Dollar
{AU!))

~OO'_O'
110M 1100\!CI,

U9D Ca:nadlS_ll1[ld!!a;r {CAll) ElJircvean MO~81aJ"y Urfijlil ~EUR) U;S,D PhiIDppine Paso USD Philippint;l Peso Paso Pes-o,

98,n

98,n

Camilla AmSLerd!!m. Ne1liiBrlan& Gamomi8J, USA Philippin$S flt!i!lppines, Philippin~ Phili,PPin$S

98,0'

98,0'

~OO'_o,
110M, 110M, 1100\!CI' lOn!n lOn!n

100!.0'
~oM'

100~Qo

100~Qo

Ser'!lices - int8n3.01i\.!B,m,;.:li8J Philippine [ligilsJ electr,on!c content dislflblJil'ion R.;gls8Iais, flt!i!ippine

lOn!Oo

lOn!Oo

1100\!CI, 10M 110M, lO00!n

10M
lO00!n

PhiIDppine Paso Phi!ippine Pefio,

flt!i!lppines, Philippin~ S:inqap@18 Pllilippin$$ Pl1i!ippines, Pi'lilippinoo Pl1i!ippines, Phil~ppinoo Pl'iiiippinoo Pllil~ppines

Pfint pub!ist!i!l)'J Ptiffi pooli&iir,g Serv1coo • suppo:rt Cooten! d8"!.!'83opnlslfl1 :3J'ItI: fN,o~,s_rrnm!in9sen.ires Services, - fN,oooction Coolienl dGmopmQffi andl pioI:I(JISlfriming 8eJ1.oi08s ~dio and video fN,oduClioo and'disll"icUli:Qn M!1ISic publishing Coolienl dGmopmQffi andl pi\I:I(J1Slfrlming 8eJ1.oi08s [)igi~sl' iilmslfOOiwng 8:tIdi Cerlt>ra]1!HbffiIy, oomerlt !ioensingaoo !ransmissloo Services· restauran! and !ooo $Br'!lices - pbM prol':iuicliiolil Cable le!'e'o'isioo seiVloes Cabl(;l tGle~sloo s0rJces CBbI", Isle¥i~ioo sar¥lc8E Gabl", !sIEi¥isioo $Br¥ics8 Cable le!:e~sioo serWoes Cabl(;l tGle~sloo s0rJces Cabl(;ll.el:e'oisloo s.erJCQS Gabl", !sIEi¥isioo $Br¥ics8 C8IJle IslewsiOO $8r¥ics8 Cable le!:e~sioo serWoes Hokling 'OO!i1lPany Gabl", !sIEi¥isioo Cable Islawsioo Cable le!:e~sioo Cable le!'ewsioo Cablt;ll.el~;,isloo $Br¥ics8 $.erwcs8 serWoes serWoes s.eMeQS

1100\!CI' 100'.0

100'.0
70~Qo

Philippint;l Peso SlnqapCill8 DollaJ" ~\SGD} Pllili,ppine Paso' F11i!ilppine Peso Pl1ii~ppin9 Peso flt!i!ippine Pes-o,

~OO!.O' ~OO'_O'
110M'

100~Qo 100yQi

lOn!D-

lOn!D-

1100\!CI' 100'.0

100'.0
100yQo

1100,0'

100yQo

1100\!CI, 10M

10M
100~Qi 100yQo

Stm SOtl(ls. 100, S1udio 23. loc, (S1J1dio 23) Tlls' 8i,g ,Djppar i:lig,itaIGoIfl1!$'flt &. [)$Siglil, !nc, ~6i9 [lipp~l) TV IFood COOl's, Inc, Roatll11llnner NiSI\!liJlik, me, {Roadnrfln!$'i) ~ CaJile OO!lpoffitlion Wk.)' Ctlble) {s.eQ' Mo!e 4) etlg'ht Moon Gablt;l Natwct'ks. Inc. ill Ga"';le Cabl", Ca.rPQl8,1iQn ~ Cepsill Goosulla;nc1soo MSMg;E!m.;oflt Co:r,PO'I,sJiOll'! W HM Cs_ble· t'4e~o~!!s" !ric, W HM CATV,. Inc. ~j HCilfII. 1~1. fIla.c.II~e, S,vs!ems, ~oo, ~ I$Is. Csols' TV., Inc.)] Satellite 03bl'~ TV, lnc, ~ &JnvisiQn Oa.b!e, !~,ID ~n Os_Ole Hc4diftgS, !nC(l'lpo:r.a~ed {SCHI~ III TariM Gable T.;\Is¥i~i!litlINBtw9rk, lnc, IjI JMY Ad ...slil1a'!je CCIi,pt:otslioo ·tt SlIb~ban Oa.b!e t'4e~O'Ik, ~nc, UJ [liseomtel~ Cable" lne, ~I Homa-t.lpa Cabl~,. Inc, ~I
{F'ot .... tdJ m

Phliippint;l Peso, Pl1il~ppln9 Peso Philippine Pa~o

~OO'_O' ~OO,O'
110M,

100~Qi 100yQo

1000!D-

1000!D-

PflII!ppint;l Peso Phil~ppin", Peso Pf!ilippine Perlo Pflllippint;l Peso Philippine Pa~D Phil~ppin", Peso Pl1i!jppine PfllIlppint;l Pflilippln9 Phil~ppin", Philippin", Phi!ippine Pl1i!ippine Phil~ppin", Philippine Phi!ippine Pl'ii!ippine PfliI~ppi@ Per.o Peso Peso, Peso Paso' Per.o Pe:.o, Peso Peso Per.o Pe:.o, Peso,

~OO'_O' 98.9,
7'9,9,

100yQi

100yQi

Phili,~nes Phi!ippines Phil~ppinQ<!; P'hil~ppin8S Phili,~nes Philippines Phil~ppinQ<!; Pl'iilippinoo Phili,~nes Phillppin$S Philippines Ptii!ipplnes Phili,~nes PllillPpine-s Philippines flt!i!ippines Philippinoo

98:9'

65..3
65,i.j
65"8 65"8

98:9'

79'.3 i'9,a,
79,a
7'9~9,

79'.3 79'.3
1'9,a 7g,~
7'9~9, 7'9(9,

65,3
65,a 65.a
65"8 65"8

65,3 65.3
65"8

79,a
7'9.7'

7.~;a
!!~,5,

62!D-

60'.7
46."
39k~

4'7',6

61

Piliploo Oat!l~ Cor~m11on (PCC) Blsay.a Cable, TQiewsioo NeLwork.

"I

Im:.m(iil MQotjns8,1: Gsbls' T.;.ls,.oiSion, lnc, «I ~I SlJn Cable S'ySlems, [laNaQ, I~, ill ~I,) T'el0010ndlaJ Hc4cIi~s. Inc, ID 00

Pl1ilippin~ Phiilppin&1
Philippino;lS

Cablt;l Mewsloo serwces Cablt;l !el!e'o1siooserJees

G8Ilie Isle'o'i~ioo :s.erwcsS

FIJI!ctiooo! CWrer!cy PhlllPpil19 Peso PhIl~ppln9 Peso

Philippine Pa$D'

7U 79'.3
{,9,<j,

65,a

ss.a
65,8

First ~ocandic;l CATV, ioc,

~,(I)

Pl1i!ippines Pl1ilippin~ Pi'lii\ppin&1

Philippines Philippino;lS

[)aWQ GsblElWfirlti rNetwmk, lnc, ~I~I PaciMGATV, roc. (paMi.::)- ~I Cffiu Os_Ole T ele~siGT!,. Inc. ~)~) ~I

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G8Ilie Isle'o'i~ioo :s.erwcsS

Pl1i!ippine Peflo, PhlllPpil19 Peso PhlllPpln9 Peso

Philoppine PaEiD Philippine Pa$D'

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Phi!ippjnes Pl1il\ppines, TiliiwaiJ

Cable le!'e'oiisioo seMoes Cable le!e~sioo servioes

Phi!ippine Peflo, Phi!ippine PeriO

39'_2' 59'-" 4U S9'A·

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~Viflj bra~$ ir'lll'a~jt and SpSo'n SubsidiaryMABS-CBN E.urope lftC~led a!'!Gl' Sl~r;lC;fNf!mf:rcreJ opf:nWor!s if! 2().(!9 Tflro.iJgh A!i!lS-06N HIffl!J8f)l' if! 2()@, t.l:irOlJgll AoSS-OBIV Gifobw i!J 2f'J()8 .~

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~Vim ,03' brarten in L[I~d\!}r:g ~i#et/ ir'l2008 and ,$ fa rtro romlTI6'fGi~ aperalioos in 2009 ~W!tr.1I regiof!fI/ operafif!\'} he.m;(qtlarlef5 in the' PMlippines

~J 8ubs1r11~ry
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Subsidi allies are fully consolidat€dfmm th:€ da~€ of aoquisition, b€i ng th€ daniEl n which the Comparny o obtai rns control. Corntlf'ol is achieved wh:®n the Compan¥ has the pow,€r to gOllJem the fi nandal and operati ng pol icies of an entity SOH to obtai n !benefits from its activiti es, The fi flIandal statements, ot the subsidiaJries awe p:rejpared for the same reportl ng year as me Parent Com pElny using' consistent aocountingl po! lei es. All sign Ifica~t Intra-gro'up !balanoes, transactions, inceme and expenses and profits and losses resulfi flig from In~ra-gro'l.!p transaenons that are ~eoogni.zed in assetaand Iia!biliti,es, a~e el im inatedl inJuli on censot id1altion. U rillreialilied gains and leases are elimina'~ed w1lless costs cannot be mCOi!lemd,
j

Consolid:tlition of subsidiaJries ceases wh,€n control is tmnsfen,®d out of the Co:mparny" The results of subsidialf'ies aoqui red or disposed of ouri ng th€ yeaJl' are incl uded irnthe Dornsolid:tlitoo statem ernt of inccme from thedlaJt@af aoquisition or ulPto the dlaJteofdli sposal, as aPlP:rqp:ri:tlite. As a re'sult of the eorwerslon ot the eerwerti bl e note if1! Sky Cabl e In 2008,the rei ated accounts of Sky Cabl e and subsidiarl es have been Inel uded In the QO'flisolioatedti fliancial statemenv.s, eUecttlve IMarch 115. 2008 (see: Note 4), IMinority II te~ests. n IMinority inte~es:ts mpmse rIItthe portion of prOofitor loss and net assets not ~eld Iby the COompany and are p:re;sen~edseparately in tlheoor1lsOolid1aJtedi statement of ineem e and within the equ ity section of the conf$olidated staJtemerllt Ooffina~cial position, separ,ately from equity atUibutable to equ ity ~oldiers of the Parent Com palny. This irncilJldi€sthe equity int€lr€'sts iHI ROi8drunn€lr amil Sky Galble8lndl its subsidialf'ies. Acquisition O'f m InOlrlty interest is aooo'untoo fo,r usingl the parent ,entity extension method, wheweby, the diUerence betweefll the fair va.!ue of the oO'flisideration and net book val ue ot the share in the flI'et assets aequired is presented as goodwil L

62

Arr,y IOISSeS SiPplicable to a. m inonity shareholder in a corr,solida~:ed:su~bs!diaJry excess of the mi rr,oriiy i r1I sh!aIl'EM'nolder"s equity ir1I the sulbsidiary are chaw,giedegai nst Ulle m Ino~lty irr,terest to the erxterr,tthat the minority s~areMI dle~has til ndi rr,golblIglalion to,and Is atll e to, makegoodl of the losses . .IBJ.!sine~ OJlfllbi n~tk!n oodLG'!:lod~ II. Business com oi!TGlltioni5' accounted for usingl the purchase aooo,untingi method ,lhis are invo,lves· weoognizingl iden1iifiable assets {includli ng pr,eviously unreoognized! in'i:3ngibl,e assets) and IialbiIities {includi fllg conti ngent liabilities and e,x,cludu g future restructu ring) of the aequ ired !business at fai r ~ value.lransactionooi5!ts diwedy ailributable to t:he acquisition fO!fmed part o,f the aOq!uisition costs, The minowity lnterest is measured at the proponlonate share ot the aoquilree's identifiable net assets, 18USinecs,som til nations aoh I€!Ved in stagecs.are acoounted f:o~a.s separ.ate steps. c acqui red share of Inter,estdloes not affect previously moogn lzed goodwl II. Any additional

Goodwill acqui red ina. bus! ness combina~ion is initially messured at cost, bei ~g the e~ce.ss oif the COiSt of tlhe Ibusiness comlbhl:fl!tion over Une Companry'g interest in the net tal r va! lie Orf Une acquinll!e's iden~ifiaible assets, Ii,abilities and conti ~ge~t. liabilities. Followingl i~iUal recogl~ition, goodwin is measured at cost less any aceum ulaJt.edl impai lim enlt.losses" For impairment te~i ng. goodwi II aJcqllin'lld

irJia business oomlbi ~ati o,~ is, from the aequ isitl O'rJi date, all oeetedte each otthe Oompany's. cashgefleralti ng units or group of cash-g'eneratingl un its that are expeetedte benetlt from me synefgies ot the com bi ~ation, iwrespec.tive Qf whether a,ther assets or Iialbilijjj,esof the Com pany are assig!fled! to these !.mits·or glrou,pi5. t un its. Each un it or group ot un its to wh ichi goodwi II is allocated represents o the lowes!t level wi~hin me Com pany at which goodwill is monito'redl tor internal m amagement pu rposes, Wherre goodwill 'fOm1ls part of a ca.shi-ge~er.ati~g unit (or ,glffiup of cMhi-getiler.atirlig unit'S) and pan Of the OiperaMn within that i,mit Is di~po$OO of, the gooowl.llasoociaJtedl with the opefationdli~po$e'dlo'f is i~cl uded In the carrying: amoun~ of the opelra~ion In detenmi ~ingl the gal n or loss orr, dll~posal of the opelraM~. Goodm 1.1 disposed of in th IS oircum stanoe' is measured basedon the relative va! uesot the operanon disposed of and the portion of the cas~~g,ener.atirIIg u ~it r,etained. When sulbsidiari esalre sold, me diHerence be,tween the selling priee-and the net assets plus cum ulative trani5laltion adj ustments and goodwi II is recognized in the oonsol idat:ed s'lialtement Qf

lneeme.

F.unctiona.r and ,Presenta.tion Cu.rrenc:y.

The censol idialed fi nanel al statements

are presented

i~

Phili~pine PieSO, which is the Par:ent Gompany's functional and p:resenrmtion curreney, Each entity deti€wm ines its own funeti o~al currency, wh ich is the euIiIre~cy th:a!t best r@nects the economic subsitanoe of the undl€wlying ev,ents and ci rcums,tanoes rel,€vant to lhalt en~tl.y ,and! items i ~d uded in the fi nanci a.! is!h~llt€m@nts each entity are measured usl ng that functional currency, of

The funoti o'flal currency of aU me su!bsidiari es, 'except foreign sulbsidiari es, is the ~hilippine Peso, The funoti o'~al eurrenci es ot the foreign subsi dliaries are disclosed underthe Basi S o,f Oonsolidation seetl on. As of fi ~anci aJ wejporn date, the assets and Iialbilities of fo:reig'~ subsi dliaries eretranslated ~g into the pmsenta~1o~ currency of tfile Company (t'~e Phil I~plne Peoo) at the ra!te of ,excMnge ru Ii ngat fi ~ancial repor;tingld1aJte and, tfilei~ stat:em ents of irr,comeare transl a'~ed at the' weightedaverag,e excharr,ge rate's tor the year. The exclha~ge differenoes aJrIsing;0 n the ~mnsla~iom are takerr, di~eC'lJ to y ~Exclha~ge differenceso~ transl a~io~of foreign operationeS~ i ntlhe consolidated statern e·tilt of com pmhenslve income and "Cum uIativ,e '~mnslaMn adjustments"aCCOll mtwith In the equ ity sed:i orr,of the oonool Idatedl statemen~ offinarr,cial position. Upon disposal of any of thesefoml 9'~ sulbsidiarl ss,

63

tlhe defii!lrred cum uiative am ount reoognl.zed in equity relali ng to thaJt pani oulall' for,eign ,entity will be Ireoogn lzed irIIthe consolida~ed st:atementof inoome. Foreign Gurrency~denoo1inated Transactions.lransactions i~h.Jr'eign currencies ere initially recorded in the fu nctional currency ecx:ci1ange rate ruling' at the date of the transactions" Monetary assets and Iialbilities denem lnated if!! foreigr~ currencies ere Irewam;ilated at the tunc1ional currency closing exchange rate at financial repolrting date, Alldli,",e~e~cesall'e' taken to the consct id1aJtedi sitatemem of income. rNJonmonet!;all'Y items th:alt are measured In terms of hi storrical cost In a fOll'e,1 glrllCU~encyall'e t~arllslated US!rug the exc~ange rates at the dates of the initl al trarilsacM~s. INonmonetawy items measu~ed at fair value, i rII afomign currency are tlrarllslated usl ng the exclharllge rates at t~edlalte w~en U~efa! r val ue was determ ined. Cash and Cash Equivalents Cash inel udes cash on hamiland in !bank'S", Cash equiv,wenls aJrlll<hort-tenn, highly liquid inveslments s tlhat are readu Iy cervern Ole to known amounts of cash with orig~mlalma!tu liities of three months or less and thatare wbj:€ct to amiinsig mlificanl:liiskolf change in IIalue.

Date-of Reoognftfon Fiflan!Ci I lnstrum ents are wecognized in the consolidated statement ot fi flanci a! a pOlSitiem when the GompamlY becomes a. party '1:0 'l:he con'l:ro1l!ctualprovision:s. of the instlf'Ument. Purchases ow sal es of financisl assets that requ ire del ivery of assets: with in tihe time tram e establisihed by w€gula!tion or convention in 'l:he m arketpiace are reoognized using trade daJte accouni:i ng ,. lDeriva1ivies are r,ecoglmliz.edomlrade da!te aecou mlting. t Inma' R'ooog'nitirm ot Financial /f}$,trU.ments. All fi rIIanclall nSltlrumenil$ are irIIitiallY recog1rllizedlatfal r value. The initial measurement of fi nancial instrum ents ifldud!esttranSac1i O'fl costs, except tor securltles at fair valuethroug'h prrom or loss (fV~L). The Company classifies its financial assets ifl thetollowi ng oatego'n'es: fi flancial assets at FVPL, held-to-m atulrit:y (HrlrM) investm ents, loans and reeelvsbles and! AFS iniVestments. finaf!!cial liabll ities are classified! as either fi flanci aJ Ii.abilities alt f\Wl or other fi nancial IialbiliUes all amortized! cost The dassificafion depends on the purpose tor wh ich UlIe inveslmems were aoqui n~dlarlld whether they am ,quoted irII an aCl:ive m.ElI~k!et,Marllag.,emen~ I detelrm Inss the class!fl ca~ion of its irIIveS'lmems ,alt inlti a! recogtrllition and, wi!here allowed ,ElInd a~p:rOiP:riate,m·,evalualtes such desiglruationalt eve'[yfinancial reportirllg date" Determination of .FaJ:rValue., The fair value of financial instruments traded! in org.anized!tinafldal mal1Kets lsdeterm ined !by ref.ewlll<mlce uoquotoo m aliket bld prices air dealer pri ce quotations. (Ibid prioe for longl pOisi'l:i and ask pri ce tor short. positions), without anyd!educti on for tlf'amlsac'l:i coats, U'naJt ens on ere active at th®:close arf business a!tfinanci.a1 If'€]porting dalte. When eu IfIf'lll<nt amidask! ng pnces are bid no,~available, ~he price OlfUn€:: most recent transaction is used since it provides widemlc€:: Orf cUIflf'lll<nl fair value as longl as 'l:her.ehas not beeml sign ificant changie in economic cil'Cum stances since the time of th®:transaction.
fQf all othertinaflc!aJ insnurnents net listed if!! an active ma~kertjthetai r val ue is die,termined! by US! fig a~p[roiP:riateval uatlonteehaiqoes. Such tecnniques i!lei ude usi ng reference to similar instruments tor which observ,able prlces exist,discourlltedl cash flows analyses,andl otMr lI'elevall1tvaluaMril models.

Day 1 .Profit. Whelre the transaetl O!f!! rice if!! a non-active market is din'er'ent from the fal r val ue ot p other observable current maJrke'l: tranlSactions. in nne same imlslrumen'l: air based Oml at vaJua!tion technique whose variables include omlly d1aitafrom oibserv,able malike'l:, the Company roc;ognizes the difference between the transaedon p:riceandfair value (a Day 1 prom) in the oOmlso,lidated stai:emen1

64

ot inoorn e. In cases where use is made of data, which is not oOslervabl e, the diff,eweflice between the transacn on price and model value is o'flly reoognizedl in the eonsol idlalted statement at ineeme when the inputs become oibsewable Of when ~:he instrumem: is der!eCO'glfli,;;>:)ed. eachtransaetlon, FO'r the Com pany d!e,termines theappropria.te method of Ireoog~iz.ing the [)ay1, profit amount. FinanoiaJ Assets and Li.abili(ies at FllPL. IFimmcial assets and liabilities ail fV ~t i~clud!eti f1!ancial asseits and Ii8!bilitj,es held for urading andfinam::ial assets and liabilities desig'rnatoo UP0nl initial trerogn iti onas at tV PL, Fi nlanci 8J assets and ll 8!biliu,es ar,e cl assifi ed as hel dtor lritdi ng if they are aoqui red fair U'nepUlrpclse of sellingl in the near term" [leriva1iives are also cl assif ed under fi nancial assets or Ii6Jbili'lies at FVPL, unless they ere d!esigna'IJed as hed~gi g instrum ents in an effective hed~ge. ~ Finarllcial ,assets or liabiliti,es may be desl glrllated Iby man.agement at initial Ireoogn IMril as at IFVPt. if any of the followl ng ClrltNia are met: • The designation el imi flatesor significantly reduces the inoonlsistenlt. trestm ent that would o:thetMi se ari sstrom measuring, the as®ets or reoo.gtnizinggai ijS or losses on them on a dliffere:nt basis; The assets ,and IIaJbilH:I am part of a group ot f nancl alasssts, Iiabil iMs or oo,th which are es managed and their pMOl1manoe are eva1L.lated on atal r value Ibasls In accordance with ,a documen~:ed risk m arllag,emerRtstraltegly; or The fi nancial instrum enlt contai ns an em bedded deriva~.ive, unless the emb€ddoo dletrivative does nO'I significantly modify the cash flows or it is dear, with IiUle or no analysi s that it would nO'I be s€;paraJtely recorded,

Iii

I.

IFinaflicial assets or liabi Iltles at IFV~t are recorded in the consclldsred statement offinaflcial pesitl on at fair value" Subsequent changes in faiwvalue are wecognized directly in the eonsolldaied statement ot lneome. lnterest earned air incurred is recorded as interest lneeme o'r expense, respectively, while dividend income is reoorded as ciher inoome aooo~ding to me terms Qf the contract, or whef1!the rigl~M of pa.yment has, been establ lshed, The OO'mpany!'s,embedded derivative instruments are classifi<ed underthis ooltegowy (see Note 33}. Loans and Receivables" Loans and receivables are nOijderivativ€fi mandal asseta with fixed or de,telrmInable paym ents that are not quo~:ed in an active ma~ket They am not entered into with the irntenll10nof imm ediate' O~ snert-term resal e andl are not classifl ed as at FVPIL, ,d~esigna.tedas .A.FS irIIveSlmems or HTM inve!stm ents, After irIIitial measur,ement, loansandl receivables am su bseQuently caniM at aJmlortil!ed cost usingl the effec~ive ill1l:e~el$tm e'Ullodi, less arlly allowance tcr Impail1ment Gainsandl IO\$seS9lI'e recognizedl In the oonoolid1atoo statement inoome when UlIe loans and reoeiv,ablesare der,ecogrllil!ed or im paired." as, weH as ~:hrough the arniorli2aMn p:roooss. iLo,aJnsamil treceivabl€sam inle!uded in currentassets if m a~lItrity is with in 12 rnomhs from fi nlanci.al tr€:po:rli date" Otherwise, these alre cI asslfted as nOflcurrent assets, ng This cartego~y includes UlIe Company's, cashandl weoeiv,ables (se;e INote i'). cas~ €lQulvalerilts (see ~ote 6) and! trad!e and oth,e~

HTM ifJ'tVestmS'nts, Quotedl nO!fldefivative flnanclal assets, with fLx.oo or determ ineble pa!ymems and fixed m.aturities are classifi,ed as IHTM irnvestmenrts when the Company's m.anagement has the

6S

pOlsitive inte,mtion and ability to hoi dl to maMity. IInv,esl:ments imtendedl to Ibe ~eld for an undefined period are not incl uded In this category. .Afte,r inlti al measu rem e'rllt, IIFITMilmte,s,tments am m easu mdlat am ortizedl cost. T~iscOlst is com puted!as th,e amou mt initially ~eoogn lzed min us pri mcipel r,epaV1rnen!l$ .• plus or minus the cumula:l.iv€amoiiilizaJti om us! mg the eifeC'l.iv€ int€::r'€st method of ,any difier'€nce between the ini'li.ally l'1ecogniz.€dam ount aJI1d1he maturity amount, less allow.ance for imp~irmenrt t Th is cal eu latton includes all fees paid or received ibetween patties to the centract that ar'€ am inrt€gral pan of the eff>ective imter€st ralte, tJraNisact.ioncosts and all other premi urn sand disceunta, Gains and losses are reoog rdZied inihe consolidated statem efl!t of income w'hefl! the lnvestments are de,reoognizedl owimpaiwed, as \lVeH as through the amorlh:.a:t!on precess,

AFS !'rnre'stme!Tts. AfS investm ents are those nonderlvatlve f nanci al assets that ere designaJtedias AFS or are not cl assifi ed in amy of the thwee p:nlloeding Cal€gotri€S. After initi al m easurern ernt, AFS it'lIvestm.ents are m€aJsutnlK1at fair value, witlh unr€alizoogai n1S or Iosses Ibeingl n500gn i z®d as omer com prehensive incom €I urntil 1he investm ent is del'iecoglfllizi€d or determined 1'0 be impliliiwed. at wh ich time the cum ulativeg,ai n or Iass prey iously n5port€d in the other comprehensive incom €I is ind uded in the oonsol id!aJtedi sltatement at incom e. AFS imteSlmen'!:S are Incl uded irII CU rrsnt assets if m amagem e'rllt intetilds to siell t~esefi rIIancial assets 'iMthin 1:2 mo~tlhs h"Omfina~cial repomtingdlate. OthrelMlse. these am classified as rIIoncunent assets. The Oompanry's AFS iflIvesimenrts includle inveSIDmenis in olrdlinaJrYcommon shares (see Note 14)" Other Financial Uabilitif)S.. financial liabilitiesaJre cl assifi,ed in this category if these ar€ not held for t~adi rIIg Olr mot designa'~edas ,at FVPIL upon UlIe irIIceptlom of the Ii albility" These irIIeluds liabil Itiers arl slngflromOjperaJtions or OOlrrowings,,, Otherfinam:ial liabll ities ar,e irnitially l'1ecogniz,€d atfai r val ue of the consideli'B!tion rsceived, Iessdli r€c<tly aUriiblUtaib!€ transaction OOiStS. After initi al recogn ition, ether fi rnanci aI !labi Iities am su bSlequently measured at amortizedl OOi5<l using the effeotiv'e interest m ethodl. Amorli.;;:,oed cost is calculated !by taking into aooountany related issue costs, diseeu flit or prem iurn, Gai ns and losses are wecognlzed i~ the consolidated stltemem at i noorn e when me Iialbilifl'es are dereoognizedl, as well asthrouglh the amolrtizati O'fli process.
r

ExpendlltUlres i neurred in connection W'i'~~ aVa! Imell1'l:Sof long ..term debtarre defe'rired and am ortized usl ng ,eff:ecWe In~:elre!stmethod ove,r '~~eterm of the loam$. Debt i,ssu.e costs ar,e rIIettedagal nst t~e ~e,1'~ed IOrllg·telrm debt allocated oonespond:1 ngly to the au rrre'riltand nOrllcurmn~ pomon. a CI,assified under other tirnancial lialbiliti€s ar€ trade and other payables (see Note 18). inThetre.s!t~bearing loans and bOlnrDlWings{see INote1 9), obligaJtionsfor p:rDgr,am rigrhts (see Note 210)and dlu,e to a related party and cust'Omers' deposits {it'llcludled under ~Other noreurrent liabilities~ account} {see NOll€ 21) .. ,EmbeddOO [)eriva:!jYI~§ AflI embedded deriva~ive is separatedfrom the host contract and accounted for as dielrivaltive if all the foUOViIlngcondlitiorliS are met (a) ~:he eoonemlo clharact:e~i$tlcs and Irisk:so:f the e,mlbeddedldierivatllve ar,e not cl asely Irelarted!to tIM econem IochaJracl:e~1sii c of the hOrStconilract; (b) a sepail'a'~e instrum erllt with the same term s as the emlbeddedl derlva~iv,e would meet ~:~ed!efi rllition of thedielriva!!ive; and 0( c) the ~ybri 0101' com OJ meolin:Sltlrurnren~ not rnsasu red at FVPIL. is

66

The CompafllY assesses whether em bedded derivatives are requi red to be separated from host contracts when the Com palnyfirst becomes party to the contract. ~e-assessment o.rdyoccurs if there is a oha,flge in the terms, etthe ocntracrthat significanmy modiifies the cashflows thatwou Id otherwise be requiredl. ~m Ifm €wnt Financial As~ts. pal oif The Company assesses at each fi nam:ial w8[porli g date whethslr t!here is olbj,sc,tiv,sevidence that a n fi ~andal a8s~t or group of fi ~ancial assets is impailroo, L,oanes and R'eceivooJes. Forr loans and rece;ivabl,es carrl ed at amOrl1zed cost, the Company 'first assesses whet:her an olb}ective evidence of impai nnent ex i515 indivioually tor fi nanel al assets that are iflidividually significam, or colloc1ively fQr fi nand aI assets that ere not ifldividlually sigl~ificant If it is, determ ined that no objective evldenoeot impai mil ef1ftexists fQr em individually assessed financial asset, wf1ie,tiher ign iticant or net, the asset ,tog'e,ther with the other assets that are not i~dividually s sign ificaflt and were tl1us net ifldividually assessed tor impai rment, is iflcludJed ina gwup oft! ~anci,aI assets with 5imil ar clredit rl sk eharaeteti s'liC:S, that g~oup Qf Ii nanei al assets is collectively assessed and for impai rment. Assets that are iflidividuaHyasse's:sedi for impaiwmern and tor wl1ich an impairment loss 1 or co~ti ~ue's to be ~ecogn I.ZOO not incl uded 1 a coil ective a'ssessment of impai rment. s are rII ~f tlh~~m;l is 8JiI obj,ectiv€< evidence that an im pai rmem IOiSSon lcens and recelvebles earrled ,8Jt am mtized GOiSt as been ineurrsd, the amount Orf the loss is measured as the diffielre~ce be'l.'weern h the asset's calrrying ,amount and the present value of e.stimat;ed future cash flows (excluoi~gfutme clredit lossesthat have not been incurired) (bcau nted at the fi ~ancial asset's migi ~al effective inielr€'iS!t Irati€) {I.e., the ,effective interest mte computed at i~iUal wscogrniuon). The caJrry!1!gamountefthe f asset is reduced either dhec1:ly o,rthrouglh useol an allowamce acoount and the amou~t of the 10i5sis !recognized in the oo,~sQlid!atedstatement ot lneeme. Interest income cont:in ueste be accrued on the reduced carryi flig amount based on the o,rigi~al effective interest rate ettheasset. if i~ ease-the rece'ivabl e has proven to have no r'ealisUc prospect ef futu re r'ecove~y a~y allo~famce provi ded fer such receivable is wif'iUen o,ff ag:ainst the carrying value efthe im paked
j

~eoeiv,able.

if in a subseqllent year, the amou nt of the e,s,tim ate:d impai rimlent loss increases or decreases because of an eve~t cecum rng ,after the im pailrment was Irocognized, the previousl y recognized impai rme~t loss is i ncreassd or rlllO uced by adj lIstingl theallowa~ce aeeount, If a future w,rite-off is la:ter rseovered, the reoolV,eryis reoognized in the oo.~solioaJtedsta'l.'em of incom e. Any subsequent e~t reversal of an impai rimlenrt10iSS is reoognized in the eonsol idiaited s'l:a:tem of ineorne, to. the extent e~t that the canyi rngval ue of the asset does not exceed its amorf zoo cost at the r,eversal dati€). , A provlsion fo'r impairment is made when there is olbJective evidence (such as the probalbility ot inso,lvency or sigfllificalnl fi nsnel al difficulties of me debtor) therthe Compamy will not be able to coil oct all of the amounts due under ~:heoriginal terms of ~:heiwoi ce.fhe carryingl amount of the rooeivabl e is reduced t:hwoughuse of an allowance aecount. Impaired debts are dierecogn ized when they are assessed as, unooll ectilble. ILikewise, for other receivables, it was. also ,established that accounts oLJtsta~dinglfor less than a ye.aJr should have no provisi on for im pairment but accounts o.utsta~dinglfor over th ree ye.aJf's shou ld have a 100% provlsiort, wh ieh was alfll'ived ,aitafter assessi ng individually sign ificant balances,. Provisi on tor i~dividually no~~sig'nificant bal anees was made o.~ a portfolio or group bssi s ilift.er perlolfm ing the regular review of the .age andl status of the im:iividual aooounrts and po.rtfolio/group at aooounrts Irelalive to histori cal collecti ons, changes in pl9iyment tenn s an d other factors that may affect abi lity to collect payments.

67

Assets Carried at C-ost ~t there is an o!b~'ective evidence thalt an im paiwmem loss on an U ~quoted equity instrum erilt that is not carried at.lai r value because its fair va.!ue cannot be r,eliably measurred, or on a.delriv,atrve asset that. is linked to and must be settled !by dielivetry :Of such an urilquort:edequity instrument has been ineu fired, the amou flit ot the loss is measured as the differenoe between the assail's canyifllg amount and the present valUre of estima~ed future cash flows discounted at the current market rate ot return tor asl milaJrfi nanei al asset. AFS Investm8nls. Fm AFS investmrents, the Com pany assesses aJt each finaijcial Ir€iPorting date whlethe,r tMre isa~b}ective evidenoe that a.fi nail1cial asset orr'groulP of fi rilancialasserts is im pal redl" ~n case of €quity investmerats classified as AFS, an objective evidence of impairment includes a sign ificaijt Orrprol QrnJged dlec!ine inthe fai r val ue oi1the investm enrts below its cost Where the Ire is evideijce oi1impai rment, the cum ulative IOfSS, m easu red as the difference !between the acquisition cost and 1he current fai r value, Iess amy im pal rment loss :0 n uhatfinam::ial asset p:reviously reoogniz€d in the eonsol idal:ed stau:elmenrU income, is removed from the other cornpreheneive income and Orf Irocogn ized in the con:solidal€d s'i;altemenl of ineeme. IImpairment losses on squ ity inveslmenls are net weverr8edthrough uhe eonsol idated s!tatement of incom e. Increases ifiliai r value afl':ewimpai rmenrl are Ireoognlzed directly lnoiher comprehensive income.

Finanoial Assets" AfinanciaJas5!ert (or, whewe ap;p!icalbl'e a, part Qf a financialasset or pM of a group of simi Iar 1in:ancial assets) is d!ew€cognized whelre:

I~

the (Jompan~,. reltains the riglht to receive cash Ilows from the asset ~ but has assu med an obi iga1iionto pay them infull without materiel del,ay to a th irei party under a 'pass-thwugh' arrangem e,~u;or
J

,~

the Company has transferred its wights,to receive cash flows from the asset and either (a) has, transferred Sll.!ils!tanti ally all the risks and rewards o,f the asset, or (Ib) has neither translened nor wetained subs!tanti ally all the rl sks and wewaJrdsof the asset, but hastransferred cO'flItro!elthe asset

translerred nor r,etained substanti all y ,aUthe ~isk:sand rew,all'dlsof the asset nor tr,ansfe~oo COriltlrolof
the asset, the asset is recog,riIized to U~eexte'rlit of the CampanilI's, con~inUlng invah"em e'rlt in the asset. Conti n LJi rilg irIIvolvemern that ta!~e$ t~e form of a. guamn~ee over the trarilsferredl asset is measured at the lowell' of olriginaJcanryi ng smou rIItof t~e asset an dlthe maximum am ount of conSider,aMn that thle Com pany Gould be Ir€quired to repay" Financial UabiliUeoS. Afinarilcial liabil ity isd~ell'eoogni.zed when t~e o~bHgation under the ll alba is Iiry diseharrg:ed,cancejledor has e,xplred Wherre an erxiS'lj ngfi nail1ciru liabi lily is r,eplaced by a~olhe~ hum the same Ie'riIde'rQrrllsubstantially different terms, or the terms of an exis:tirilg liability a["'esultJ;s:tan~i y modufi,ed, such an exchrail1gleor all mcldUficaMn is tmatedas! ,d~elrecognition of the orig~~al liability and the recogr~ition of ,a.new Iiabil ity, and the diiffer,ence irIIthe r,espectivre canrying amoures is ~ecognizedl in the COriisolda~ed sltatement of i

Where t~e Com pany has transf,elrred its rights to receive cash f 01N$ 'from an asset and has neither

tneome.

68

OUsetll rIIg Fi rIIancial ~nS'l:ruments lFinarlicial assetl!s arlldfinancial liabJlit! es are offset wiUn UlIe netamount reperted in UlIe conooHd!atedi statemen~ offina~ci,al posltlorll if, and only if, there lsa curmn~ly enforceable legal rlg:rnt to off'set the rerogn ized amounts and there is am intention '1.0 seUh5 om a. net basis, or '1.0 trealize th€ asset and settle the liabi lily sim ultan€ously. This is not gen€rally the case with master netti ng ag'reements, and the rei au:edassets and Iialba!u,€s are pres€ntoo gross in the consolid:a!too stau:ement of fi mand a! positi on" i Inventori es Inventories ar,e v,alued at the Io.wer of cost or net realizable value, Cost is detelflInin€d using weight:ed average method. rNj,€:trealiz,abl€I value of inventori,€s lhalt al'lefor sale is th€ s€lling, prl ce in the t ordhnary cou rse of business, less the cost of m ameti ng and distlributi on" INet real izalb!,e val us of inrvenr'l.otri nO'I held tor sal,€ is the curreni tr€p!acement cost IJrnwealizable inv€motriesaw€< written! off. es
~reWJQctlcliQln EKR,erti_Sgl',§

~reprod!uction expenses, ineluded undler "O~hiercurrent assets" aecou nt inthe oonsol id~ltedistatement ot fi nenclal position, represent costs ineurred pri cw to, the aiwing' ot the proglram s or epi sedes, These COSTSinel ude tal ent tees, ot arti S1:sand production SltaiU and ether costs diwectly attribuf.abl e to produeti Ofll at p:roglrams. These are chatr'g:ed to expense uponal riflig ot the rei ated program or epi scdes, Oosts r,elaled! to previously teped eplsedes determ ined net to be ai red! are charged to expense. Property a~d Eguipm e~t Property and equipmem, erxcept land, are cani,ed at cost (i~cl uding capitali.zoo inte'lfesU" ~xcludd rIIg th,e costs ofd1ay-'to·day sellVici ~g, lessaccum u Iatedld~epr,eciaMn, amOlitizati o~aII1dl im pal m:J,entin value. Such cost Inel udes tM cost of IrEljplaciIIg partt of such prrOipel1y and equipmen~ when tMt cost is r incurred If UlIe r,ecog,~iMn c[-iteri·a ar,e met Iba~d Isstatso alt eost, whl chr Ind udss i~i~,al pu rehase prioe and othercost d~recti y attribu~abl e In lorrl rIIg such asset to its work:ingl condlition, lsss ·any impal I1me~t ngi tn value. Subscnloer's initial InstallaM~cos.ts, Includingr matewla!s, Ialoor andOiIJ'e[lhaad costs are c~pitalizedas part of di striibuti o.n equipm ent {ind uded in the "T €Ievi sion, radio, movie and aLixiliaJrY €quipm€nt" aooount) and deprsei au:ed over a period no. longer than the d!€pl'I€ci.a!tion period of the distrilbiuti on equipment The OOiStSof subsequent disoOflineetion and recon neetion al'l€ chaJrg:€d to eu rwent operati ons, Unis(m€d sp1aJr€: parts and su~p! ies tr€p:rl5'8€ntmajor spar,€ parts Ih8it can be used only in con neeti on with the distri bunon equipment. Uni ssued spare lParl'.sand suppli,es are not o.epr'ecialtedllbut testedter impaiffillefllt until these become available fOlr uS!e.These are included! in the "Other equipment" aocount When each maj:of inspeetl o'n is pertorm ed, its cO$1:is reoognized! in the carryi ng ,amount elthe property and equipm efllt as a. wejplaoement if the reoogniti Olfllcriteria are satisfied. Depreciation and! am o,rtizatiO'fll are computed O'fll a sltraiglhHine methodoser the useful lives at prope,rty and equip:men~. The useful lives of the Com pany's properl:y ·a_ndl Ipment ·aJe,esUmated as, equ follO\!lls: land improvements EluIIdllngs and im provemenll;S. relevisi on, radio, movie atndlw>::jliary equipm e'nt OUller ,equIpment 5 to ~O
~O to 40 10 to 15
;3

to ~O

69

The Oompany determ ined depreciatl en and ,amorlh:ation tor each siglfllificam pari: of an item of property and equilPment. The propertyandl equipm e,rat.'s resi dlual va! ues, useful lives and method OofdEliP:reci ationandl amortizati om are r,evi,ewed, and :a:dljiuste:di appropriate, at each 1inancial y€ar,·end" if Consltn.!cti o'n in ptrogwess represents equipment undJerinstall ation ano buildi ng under consltn.!cti o,~ and is sla1iiedat cost which includes cost of construcilen and other direct COSltS. Construct' o~ in progress is not dep:reeiated u~til such ti me tM!t the 001ev ant assets ,aJre completed and become availatll e' tcr ope'r'atio~al use, Am it'€m oi1 P:n:lP€::rl.Y and squ ipment is detroc;ogn izoo upon disposal or wh,en no fuuutre econornie bem€::fitsare expected from its use or disposal, Any gain or loss ,aJrising om d€::recogtnitiom of the: asset {cal cul,ait€::das the diffetremc€:: !betwe€::n the net disposal p:n:loe€::dlsand the calilryingl amount of the asset) is included in the conoolidlait€::d stal:ement of income in the year the asset is diewoc;ogni.zoo" A.sse.1s Inta~gible assets acquiwed separa:tely are measured on i~iti,al recogn i1iion at cost The cost ot i~tallgilble assets acquired in a business eomblnatlen is the fair value as at the da1iieof acquisition, F 0011 Qi!Ni rIIginiti al recoglrllition, i~tangilble asse,tstlwe carrl ed at COSltess ,aJrlyaccumulated amOrllza:tiOn in l the case of intarllgible' assets W'iU'nfinite lives" ,aJrldl rlly aocumula~ed impail1me,~t losses" The llsleful a I iveSOof'inta~gibl e assets are assessed to Ibe eit~er finite O~ IMeti nite. irnaJrlgitil e assets w1t~ finite lives amamorUzed over the useful eeonemlc life and assessed for impai[m.ent Wthemevelr'~~er,eIS an i~dica~iQo~that '~~e intarllgibl e asset may be Impai red. T~e amorlizaMn pelriodl and m e-thoo ter an i~tangilb!e asset with a firllite useful life is reviewed at Ie.ast at eaeh finarllcial yeialr·,endl. 'G~anges in t~e expected use1fullife O~ '~~e,expected paUe'li1rl f cOorilsumption of future eeonorrac bene,flt'S e'mlbodJ,edin o the asse't isaccou ~tedlfOorby changi ng the am Qor:tiLa~i pelriodl or method, asapproprialte, and tr,eated o~ as chianges in aoooun~ing as'limates, Thie amorli2aMn on intl:aJrlgilbl,e assets with fl ~ite live,s is Irecognized IrII the (;onsolida~ed stElitementof income in the expe'rilse caltegOIrY CQorllsiste'~t ith the w funC'lio~ of theintangilble asset
lotaJlgi,l:lle

Inta~gible assets with inoe-finite usefu I lives are tested the ca;s!h-generati ng unit level, Such ifltangibl es are asset with an indef nite life is reviewed anflluallyto continues to be supportalb!:e. ~fnot, ~:hechangle lnthe made on a. prospective basis.

tor impai rment ann ually either iflidividuaJly or alt not am ortizedi. The u5!eful life ot an imang i~:e detennlne whether inoe-tinite life assessm ent useful lite assessment from indefinite to finite is,

A sum m.awyof 'the poll oies a~pl ied to the Corn pany'sacqu ired int!:angiblEl'assets is as flOliows:
1'l1I1Ilpainnelli1lt I,esting!

Ilnltangilble.Asset

iUsefullll.!ives F~nite~Iioel'llseterm
Or ecol1lomic IHe,

Amo!i1iizalio!ii! Melhod U!5ed

IReco~erab1!e Arnoliiltlit l,estiiiilgi

If he' .rerlliainilng expeGtoolbene1iit period lis shorter than tM Compan.y's

Cwrf\ent ami Non;clu~n!!rrrt Cllassifj:ca~ioliil

whidhever is S:h.Orl€~')

prog ram Ir,ights of C'PI! whichilis amQrtized on a straight·1Iilil€ m€~hod over the Ilicense

Amoril)izedem the baSiisof pmg~am usage, eX:GeP:t ~'or

Based on the
eSltiinnatedl year of I,l~ge except CPI, wliiiCih, iis lbased on license tsrm

initiall est~nnaites,lhe

Comparw

acc~lerat€s am ortiz:atiion o:f thl1l'

70

Iln[tangible .Asset

Amoni~atlo~
Method U:sed term or eoo1nomi:c, Iir<e" Whidhever ils $!horte~, I~ilrool program rig hrs arerlully ammli2ed on ~he' date of exp~ry. IlJflIaired progrsm !jig hts \I'I,J',ith IiIO deli nita expiiratiOin daJt~ are amor~i:ed <lIfter 5 years hom acquis<i~ion dSite (il.e" , eqt!alilly ove:r th~ Illextfiive YeaJrs)"

1'li1IIlpainnem J:esUng!

[Reco~erabl:e

CliJlrf\ent ami

Amo!l)lrlit 1,estili1lQI purchase price or license~e~. !Program ri:ghts 1JJm Wl'iiUefllo1W when no h.nureeconomic benffiits 8!rs expec4oo1to ~llow hom~he asselS.

Non;CIune!i1lt

CllassiiJh::atiolf'l

S~i;lry, MlUsia ·Slnd

lP!ulbilicatlion IRiigh'~s

F~nite (use1ul ecenern i:c booe~lt)

Amo~ized em ~he basis Cif~he I!Jserlul eoofllom II;) life

If~he' rerlliainilng e)o:~peotool enefit b period lis shorter ~li'!an ~MCompany's iniliall est~nnate.s,lhe CompSlrw

e~MlimaJtedl ear of y u~ge

Based en the

ac:c~lerates
OOiSl.

am orliz:atiion o:f thl1l' Fiinite No 8!nnortiizatimll, reoog nized SIS €)(~peose tlpon s!hQw,ingI If the ILGnammtizc€d Based] 0111 tliie est~tlI'Ialted year of usage

mm eost ,is less[h>arll

the: f·air value (llf the: fi Im,the asset iis wl'iiUefli down to' il~s Iffhen~mai expeoltool . period lis sherter than the Company's ilililiall es~ii!in<i!t,*"lhe Comp1l!ny aooelera~e$ am orlizaJti:on ~f~he

recoverablle srncu nt,

Vlidreo Ri:~mts and !Reoord M!aster

comes

Fiinit.e (silx months m 10,000 oo;pies$Qlld of v,idll1lodiscs and tSiPetS, whi:ohever

fi~~t)

A.mortiz-€d (m tliie ba.sis of nlUtlI'Iberro1 w(pies wid

coot. C!Js:~om~r
Relli31tiOinSihips; (see NQte4) A.moniizedon a straighrt",lillle basis over the e$~imaJted

ou:soomer servi:ce

me:

If~hei remainling expeotedl bene~it period lis shorter ~haJ!lh~ Comp.a:ny's t illiitial] restimate.s, the Comp~ny a.cc~lerates amorIi2:atio<n' of ~hi1l'

cost.

71

I'lilillpai~meliilt 1,esUng! Amoli1iizatioiii'l IlntangilbleAsset Cabl€ C!h:an nels· CPI UsefiulllLives

Method Utsed

IRecov>erablle

Cl:llrr,en1: a!iild
NOn~I.I~lfeiirt

AmOllJllnt lestimgl An n ua!lly and mOire frequently when an i!iidi:catio~ of impa!irmern 6.'o.1ists

Cilassifiioatioliil

Plrocll(la~iOfllS!ndl DisMiibutio!ii IBusiiness ~ Middle lEast

Amlol'li)ized on a sU'aigtU·'li!ii€ basi$ OV€f the per~od of 25yeS!rrs

Ir~he Iremainilngl €KP€C,tedl ben€fi~ pe[iod 'is s!horiter ~hS!n~he Compan~ls i!iiitiall esti,m<::l!tes,lhe CompS!oy <loc~lefates am Glrtizaitiion o:f ~he
OOtSt

.lnveslmentJlroRe!di_e,§ ~nves1ment propertl es, except land, are measured alt cost, i~cludllI1g transaction costs, less accumUlatedd!epreciaMn and a~y imlPallimen~ in value. T~e carrying amount i~clud~esthie cost of we;p!.aci partotsn ng exis:tin1ginvestment property at 1ihetime the cost is ineu mreo if the reoogniti on erlteria are melt, and exel udes d1a.y-to!-day servid rlg ctan Investm ent property. land is stated at cost less ,any impai[me'rlt In \!',alue. Transfers are made to ifllves1ment property wihefl, and only when, there Is a,clharlge In use, evidenced by e~dingl of own,e~·occupation, oommenoeme~t of an OiperEliti~g lease to another party or endllng of constlrUc1io~ or d!evelop:ment Transfers are made frern lrwestment property when, and only when, there Is a change In uSle,evldenoed !by eornm eneement of owner-occupation or com mencemernot deve,lopme'riltwith a: vieewto sale.
FQf a transter from Inv,estment property to owner~oooupi'ed property or inv€<f1!tori!es, the cost of prope,mty'for subseQuem aoooun~ing I$I it'Scamrylng val ueat th,edlate of c~ange In use, Ilft~e p:ropel1y occupi,ed by 1he CompanlY as an own,er·occupieo property becomes an investment prope l1y. the Com palily aecou ~ts for such property i~ accordance with the pol Iey stated under "~ropertyoodl equipmenf' acceunt up to the da'~eof chiange in use"
l

Inves'lment prope!1j'es are dlereoogn Ized whefll either mey have been dl Siposed ot or when me im/estmen~ p:ro;perl.yIs permail1e'~tly withdlraw~ from Ursa and no futUlre ,economic be'~efit is erxpected frcrn its disposal. .Alny gains or losses on Une retilrement or dispolSal ort an inve$ltm €<rnt pmp€trty are rocogn Ized irl the consolidated s'lialtemeliltof income i n ~iheyear of ret! rement or dispoisaL IImres1ments in AsS()ci,a'tes The Company's investm ents in associates are accou nted for U n1derthe €quity method of accou ntingl. Pm associate is ani enltity over whiclh the Com patny has sign ificant infl uenoe but not oOnltm!,gienerally accompanryi n1ga slhareholdi n1g beu'W€:enl O'f 20% and 50% of the votingi liights" Undletr the equity method, Investmelilt illl associ ates is, carried illl the oonsoHdated staltemem of fi rlandal position at cost plus post -aequ Isitlon ohalllgies irl t:he Com pany's share In net assets of the associate. GoodWi II rei aUrlg to anassocl ate Is ililoluded inthe oaflrylng amount of the Il1iVestm and em is, not amo!1ized.fheoonsol idated staltemerItof income reflects the share onthe finaneial

72

penlOlrmance of an assoctate, When .ABS-08.rNJ's. hall'e of losses In an associate ,equals or exceeds s i~'S inte['€!st in UleassociaIe, Inel uding' any other unsecured ffice·ivabl es, .AI8.S·GBNI's do es not Ireoogn lzefu rther losses, u ~I,ess it has Incurred obi igiationsor made paymeni!:s. on be·~alf of the sssoclate, Where there has been at change rocogn i.zed ditrectly in the equity of the associ al€, the Com pany l'1ecoglnizes its sihare in afilY changes and discloses this, when 8IPplicable, in the consolid:a!ted stau€ment of changes in equ ity. The reportl flg dates of the associates and the GompafliY are identi cal and the associ ates' aecou nti ng policies oOf~fowm to those used by me Company for lilke transactions and! events in si mil ar ci reumstanees, Unreal ized imercoffipany proms. ari sing from the transactions with the associ ate are eliminated to the ecxtent olthe interest in the associate. T ax Cmdli~;s Tax crooits from govennmental rtime saJ.esavaii ed under Plrecsiden~1 D:ecre'e (PD) INo. ~352 are al rreoognl.zed i rII the books upon actual aill'ingt of govemment co:mmelf'clalsandladvel1isem ents, T~ese are i nd uded und~elr"'Othelf' no~curffin~ a6se·ts" accou m i n t~e con,solidated s,tatemen~ of fi ~anoial pO<$3tio~. ~mpairme'rIIl of !Nonfinancial Assets The Gom pa"ny asse·sse's alt ea.clhfi rIIanci·alIrelPorIlng date w~ethe~ there Isan indllcaMrii that IP:rOiPer~y and eqUipment, i~vestmenl~ p:roper~i,es,prog ram nghll:sand other intarllgibl eassets w1t~finite live's" and tax credits may be impal red, if arlly such Indication ex.1 or when arllnual impal rment t.est)rIIgfor an sts asset Is If'equill'oo.,'~:~eCompany mak:esa"n es,timate· of '~:~eassefs recov,en!llble amount. An asset's Ireoov,elf'albl,e amount is the highe·r of an asse·t's or ca$h·genelra~lng unit's fair v·alue le,sscosrtrs to sell and its val ue irII use ·andl is ,die.term Ined tor an i~dlvidual a6Se1, unl ess the asset does not gerller.alte cash inflows that am Iargely indiepe·~de·rlltof those fromo~:~er assets or groups of assets. Where the carryi rIIgamount of ·an asset exceeds ii!:sfficOiVem!ille am ount, the asset Is com;;idemdl lm pai ffidl and is written down to its l'1ecoverableamollnt.. II assessi ng vallie in use, nne es'lim:a!too future c:a!shflows n are aliSCQunrt€dto thei r pre~enl value usi ng a pre-tax discounlt rau€ th:8it refl €lets ell lfIf'eijt market assessments of the 'lime val He of money and the ri(fIks.specific to the ass~t.. II pal rment losses are m w€cognized in the consolid:a!teo statem ent oif income in those expemlle categories consi sl€nl with the funcli on of the impai red asStll<t for assets €ixcluagng goodwill, an assessment is made at eachf nanci ru l'1eponting, date as to wihe1hetr tlhere is .any indi cation that p:reviously w€cognizl€d im pairrn emitlosses may no longer exist or may have decreased. !If such indicati On! exi sts, the recov,ew8!b!,e amount is esti mated, A previously recogl~izedl Impairmen~1 O<$S reversedl orilly I'fthell'e has been a cha~ge in the es,tima[es is used tlOd~etermIne ~:t1eassef,s recovenalbl,e amolmt ,sinee t~e ISisti ffipairment loss was reoogn lzed, If that Is t~ecase, the carryingl amount of tlheasset is increased to Its recove'mbl,e amoun~. The i~ctreiased amount cannot exceedl ~:t1ecartryinglamount that wuuld have been deterrl1lined., net!: of deiP:reclaM~ and am Miza~ion, had no impal I1men~loss been reoognizedlfor tlheasset In prlor years·. Such reversal is r,ecoglrilil!ed ln the oonsolI dlatedl stateme'~t of income. After SlJC~ a IrevelrsaJ, the deiP:reclaM~atndl amor!izaMn am adljlus,tedlin futur,e pe'nods to allocate t~e asset's Irevised catnylng amount, less ·all1yresidual value, on a system.atic basls over its r,emaln~~g useful life. Thefollowi ng eriteria are also 8!Pplied in assessing, impai rment of ~pecific nonfinancial assets: Goodwm and Cable' Cnannefs, GoodlNlll arid calble channel S are revi'ewed for impakment, annually or chang'ss in elrcurnstanees ifldicalte tha:t me CEllrryi ng value may be impai red lrnpai rm ent is detelrmi flied!tor goodwi II and cabl e ehannel s by assess! ng me reoorverable amount elthe casih-genewati ng units, to wh ichi the goodiwi II and! calble charmets weiates, Wherethe recoverable ,amount of the oash-generalti flg un it {O'f glroup o,i cash-generating units} is Iessthan the '
more freqJJen~ly if ,svemsor

73

canyi ~g emountot the cash-ge~!ewating unit (or group off cash-generating, uflills) to which the !goodiwiII and cabl e charmels has been ,;;11 Iooalted, an impai rm ent loss is reoognizedl in the oOf~solidated statement: of lneome. Impairment losses relating to will cannot be reversed tor sulbseqvent inereaaes in Its rscoverablesm ount ir1I future pelrioda e Com pany perfortns its anrllual Impal I1men~ te~ 'of goodwill and cabl e' clharllnels as of Deoem belr 31 'Ofeach year. In'lVestments in Associates. AUe,r appl ioa1iionot the equity method, the Company determ lnes whethelr it is rnecessary to recognize ,rimy additional impai limen! loss wiU'n respect to U'ne CompanlY's net inlvestm€lrri:in the associate. The CompanlY det€lrm ires at each financial Irepor!.inlgdlate wh€tlher there is any objective 'Elvidem::ethat th:€ iflIves'iments i n associates are imlP~ired, lfthis is the case, th€ Com partly cal cula!tes the amount of im pailrm€nt as bei ng the diff,€rem::e b€twe€n th€ Ir€roverabl€ amount of inves1Jtlllent in associate and the acquisiti Onl cost and recognizes the srnou flit. in th€ consolidatoo sta~€ment of incom €I" Revenue ~even ue is r!ecoglflizied whem it is probable thatthe eeonomie benefits asscelated with the transaction will now to the Company and the amount of the revenue can be measured! rel ialb!y.lhe Company assesses its revenue alfTalF'lg!ements ag:ai ~st specific criteria in orderte dsterml ne it it is acting as pri nci pal or ag1ent Ai rtlrne revenue is reoognizedl as income on t:he dates the adverf sem eflts are aired. Such revenues ar,e adj ustsdtor aglency eemm Isslens, irIIcen~ive's arlld co·produoelrs' snare tor prese'rlltatlon irII the con,solidated staJtemsnt of Ineem e. The tal r va! ues of baJrte,r '~mnsactions from adve'~ising tim e excharllgedfor proglram materials, melrchandli se or seNi ceare irIIclud!ed In ailrtlme rev,enue and the re,1 a~ed aooounts. P,ayments rooeived Ibefore broadicast {pay befOlre' broadcast) for customers wlth'out clredit term s are ir1Iclud!edas pari: of "Defe'r1red revenue" under "lIradle and otMr payable'S" account irII UlIe oonsoHd!ated ,statement of fi rIIanCI I positi'On. These ar,e 8!Ppli,ed ag1alrIISlt a ~eoeiv,able uponailrlng and reoognitiQ.r11 rela~ed r,e:ver1lue. Pay Ibefore broadcast fOlf customers w1U'n of creolt terms al'1€cl'1€dited direotly to "Trade receiva!b!,€s" under u1ilrad€ and other l'1€ceivable.s~ a.ccou~t i n nne eonsol idat€d statem e~t offina~dal positi on, These are r€COgnized as incom €I orn the dl8!testh€ adiventisem€nts rilll'eailred,
irIIitially r,ecoglrilizedl as IIalbility andsre

a.

Subscr!pUon fees are recoglnizedl as f.oH ows:

OTH Subscribers and Cab~ Opera.rors, $ulbscrlption fees awe recognizedl und!elrthe accrual basis, irIIaccordance with the tsrms of ~:t1Je :a,glreem ents,
Share in DirBcTV S.ubscri,ption Revenue" Subsclription revenue from subsclii!bers of Din~cTV who sulbscribe to U'ne"The FIlipi no Channel" is recognized i rII aoooirdlaince W'ittn the !Delal IMie,m'01r3r11du m as discussed irIIINote 31.
Subscription Revenue from ASS-CBN Now. Sub5ICr!ptio'~revenue from onl lne stream ing services of Filipino,·ori eflted content and pIrOg mi nlg is received in advanlce {incl uded as uDefenroo ram weveflue" under "Trade and omer payalbl!e's,~account in the oo'~solidated statement ottinaflciaJ pOt5Wo~)and is deterred and reoognized! as revenue over the peri od dwi nlg which the servi ce is, perlormed,

CabJa SuDsc.rioo.i'8" Su!bscri pii ornf€€!s are r€cogn izoo under the aecrusl !basis in aocolrda~ce with the telrm s 'Of the a,glreements,. Subscnptionfaes blll,ed or collected irIIadivarllce arediefened and

74

shown as "[)eferredl revenue" undlelr "Trade and oU'ner pa.yalb!,es"accQurBt tn the, oonsoHd!atedi statemen~ of fi nancl al posltton and n~oogn I.zed as [we'rllue when service Is rendered,
b,

Tel scorn m uni ca~jons reven ue is rl€cog,m1izled hen earned, These are stated net of tlhe share of w theother teleecmmunlcanons earriers, if any, under existing correspondence and lnterconneetlon agreements. Imerconneenon telecornm I.! nicati O'f1!Sarrlers. c fees and charges are based on ,agr'e'ed rates wlth the ether

pos~M~,
c.

Inoome from p:reipald p!horAecardaare mal ized based on actual usage hourn or expl rsnon of thle unused val ue of t~ecaro, w~ic~ever comes aall'li,e~" I ncomefrern prepaid card sal es fo~ whic~ the Irelated services Mve not been rendered as of 'flnancl al mportl ng date, IS presented as "Othe,r payables" uMer "Tradeand other payabl es"accou rIIt i n thleco~sol idated sltatemenl~ of fi ~andal

Clhamlnel lease revenue is l1ecoglniz!€das income on a s~raighrf.-linebasis over the Iease term, lnocme from film ex hilbition is weoognlzed, net of t:heaf:er shares, onthe dates the films are shown. Incomefmm TV rights and cabl e rl9h!ts are mcog rAilied on the dates the 'film s am pe,nmiUedIto be pulb!IcJY showrll as S11 pulaltedl I n the ag1mement.

d. e.

ILicencS€,; fees earned from OireeTV is noc:ognizsd upo~ mign~rl.ionof the DTIH :suosclribers of ASS·Cl8N Intemational to lDirocTV" The additionallicernsefe€',s, for each miglraled subscriber that will remain for 14 eonsecudve months from the date of activation will be recoglnized on the 14th month {(flee NOlte 311),. Sal,e of goods is recogrnized when delivery has taken place and transfer of wi ks and wewaJrdls, s has been oompleted .fhe5!e are stated net of sales diseeu flits, retums and allowances. Income and related costs pertaining to irllstalla~on of decodlelrs and set-top boxes which! Ms no stand alone value, without 'the subscrl pti O~ revenue are agg~egla.tedland reoogn I.zed raltabl y over UlIe IOrllge,r of subscription eernract term or the estimated customer servi ce life. These aJI'€: presented as pari: of ~Other nonculfIf'€<m1t assets" account (und@r "Deferred charges") and ~Tr.~:dleand! other paiya!bl,es~ aocount (under "Def@rred! revenue"}, respectively, in the concSolidaJt€dstatement of financial pooi~ioml. Short-m essagi flIg-sysltemltext -based revenue, sale of news materials and Oo,mpany-produoed programs incl uded under "Sal e of services" aooo,unt if1l the oO'f1!soHdJaltedl statem efllto,f lnoorne are weoogni zed upon dielivelry. Royalty Income, Includoo as par~ of ":gale of servic€!'s~ account In t~e cornsolidated statemen~ of
i~come, is r,ecogtilized upon rendle~ingl of ser!/ice based on t~e te'm'ilsof the aglmement and is reduced

to the extent of t~e shail'eof the com pose'rn orco-pulb! Is~ers of the songs· p:roducoo for o~iglna! sou ~d il'eoo~,dli ng. Con nection/reconn€c~i on/dliscormecrion fees" ind uded as pal1 of ''Otlher incorne" acoount in the consolida!ted sta1isment of incom €I, are recog!nized when ~he servlces are rendered" IMarilagiemen~ fees, incl udedl as parto,f "Othe'r income" acceunt in the consol Idlatedsltatemen~o,f income, am reCQgl~ilied based on tt'iJeterms of the m,ana,geme'rilt aglmemen~"

7S

lDividlendls,are trecogni

zoo when the shareholdess'

rig ht to rec€:ive payment is ,esta!b!shed. i

8,gency Com misf:ions. Irilcen1iviElsarild C()·produoen;' Sham These' repmserilt deductions fll'Om gross ,ai rtim e reve'~u~ in the consolida~ed statement of income. Agency com missions ar,e trecognlzed at a standard wate of 15% {s€<eINote ,2~). Incentives inelude eaJrly pa,ymefllt and ealfly piaoem efllt di sccunts as we~I as com missions, paid to the Oom pElny's account executlves and cable operators, Early pa,yment discoLmt iis recogtfliized upon payment. EaJrlypla.cemem di soount, which represents di soountg lven to agenci es and advertisers as a resu It of early rsquest for telecast order, is Jreoognized upon ai ri flig.

Chanlnel Li cerilse Fees Chanlnel license fees iflic!uded under '''Cost of sales and services" aecou nt ifli the eonsol idlrilitedl statement of incorns air€< chatrgoo to o[per,aitions in the yealr these fees are ineu tnrOO"
ILstas_flS;

The de,~ewmi orn wheths'r an ,an,ang,emen~ is. or con~ainsa. I,ease is based on the sulbsltanoo of the riI~l!t1 armngem arnt at t~e InoepMr1I date o:f w~ethelr the fulII 11m emto,f the ,an,ang,emen~ is dependent on the use of a ~pecific asset o~ the arrangem emt cOrilveys ,a"Irigl~tto use the asset.
Company ssa Lessee

finaflic€: leases, which transfer to the CompanlY substantially all ~he risks and benefits iflicidenrtal to ownlewship of the Ieasoo item, are capimliz.ed at ~he iflic€:ptiOfli of the lease at the faitr val ue of the leased property or, if lewer, at the present val us arf the mi tIIimum lease paymenrts. Lease payments ar,e apportioned belwe~~mthefi tIIanoe charges and rscuctlen of ~h€:lease liability so as t'O achieve a constanrt rate of inrt:ewe.sit the remaini ng balance of 1h€: Iiabil itl'. Fhnanoe chaJrges alre charg€:d Ofli diwectly .agai net the consolida!ted statement oif income, Capital lzed Ieased assets are depreciated over the shorter of the estlm ated useful life of the asset and t~e I,ease term, If the~e, is no rel9$onable certa! rilty ~hatthe Gomparily will obtai n ol!Nln€!'r'slhipy the b end of the lease term, Operating lease payments. are recognized as expense in the consol idat€d st:a!tement of income on a straight·line basis over the lease term"
Company

as a Lessor

Leases where the Company retains substantially all the ri sks and benefltsol o\lvnership of the asset are elasslfled as eperaf ng leases. Initial direc1 costs lneu rred ifli negotiati ng an operatingi Iease are added! to the cawyingl arnou flit of the Ieased asset and recog'nized over me lease term on ~:hesame basis as rental inoom e. Cos'l:andl EXt;lEl'rIISe Hecog;rIIi~1rns o Co~ and expe,rnses am decreases in economic benefits dUlring' thea.cCOLJnt!ngt pe~iod in ~~efOm1l of ouUI O'!N$ erdscrease of assets or lnou nrel'rllceof liabilities that re'sult in decrease in equity. ot~er tlharil

76

those relati r1Igto diSltlrl ution to eQuitv parlidpan~. Cost and erxpenses other than those with ~pecific b pol icies ·a_lI'e recognizedl ir1Ihe consolidated statem e·rlltof income In i~e year t:~ese are ineurred, t 1P'lfovisions !Provisions are reoognizedl when t:he CompafllY has a. present obi igati o,~ (I,egal or COntS,tlructiv,e} a as wesult ot a past event, it is p:rolbable mat an outtlow of resources embodyi ~g eeonomic benefill.swill be required to seU:1 the oibligati o'~ and a r,eiiable estim ate can be made of the amou ~t of theolbligati on. e ~t the effect at the ti me valueo,f money is maiterial, provisions are determ ined by disoountingl the expected futtulre cash flows at: a pre-tax rate thet relleets cu we~t market assessm ents ot the flme value ot mo,ney and, where ilippropriate, the risksspeclficte the liability. Where disoounting is used, the increase in the provisi o,~due to the passage of time is reoognizedl as an interest expense. Customers.' [)eoosi1\S. Customers' deposits, includ~ed as pM of "Other rIIoncunre'rllt IiabJlItIe's" account irII t~e consolidated sta·~ement o:ffinarllcial position, ar,e In~tially r,ecogl~ized at fair v·alue. The discount is f.!S!Cog,rllil.eda.s de'fe·~redrevenueandl amortized oil/elI'the estl m.ated rem ai rillragt.enmof t~e deposit usl rIIgt~e ,effeClive irIIter,estmethod. 8£s.eLBetj rem.enUJlbligOO:Qrl The net present val ue o,f Iegal obi ig'altio!l!s. ssoci awed with the re.tiwement ot an item at property and a equipment thalt resulted from the acqui sitiorr, oonsnuctlon or development and the nO!1malcperatlens ot property and equipment is reoognized in the period in which it is ineurred and a reesenable estimate ot me obliga1i1ancan be madle.lhis is i~cludled as pan: of "Other noncurrent Ii,abilities" aooount inthe censol idlaitedlstatement of fi ~anci aI pOi5iti n, The rel ated asset retlrement Clost is o capital ized undler "!Property and equipment" account in the consolidated stalement of fi ~anci,al pOi5iti ,~and ls bel ng depreciated on a straight -Ii ne basis. o IBonowing Costs IBonowing! ecsta eli reclly attnlb:utalble 10 theacQu Isltl on, conSlttructlQorll produC!1on of an asset that Olr nooessari Iy ·takes a subs!tan~ial period of time to get roodiyfor its irIItendedl use or saIe are capitall.zed as part of the cost of respectiveassets. All other iborrowing costs are ,€xpense:d itil the period they occur. Borrowing costs consist of interest and other costs tn:flJtan enUty incurs ln connection with the bOjrirowl tIIgof fu nds,
~e_nSiii:lj"l C.!:Is:f,s The Com pany's pension pians are funded (Parent Com pany and Sky Cabl e) and u~fundled (other subtSidi.awies) etined benefit pension plaos, exeept fer ABS-CiBN II uernatlenel, which has a deli ned d r contributi o,~ pensi O~ pian" The cost of prev id~ beneflts under the defined benefit plans is ng determ ined S!eparately toreaeh pian usi ng the projected un it oredit actuarial va! uati o'n me,t:hod. Actuarial gal nsand losses are r'ecoginizedas income ow expense when the net cumulative unreoognizedl aotuawialg!ains and losses for each indlividual pian at the end of the previous Ire)po!1ing year exeeeded 1oPk of me hi9lher Oof the defined benefit obligat:ionand the fair valueo,f plain assets at that date. These gains or losses are recogl~i,;::.'edver the expected average wemaining VII'Owlkingl o lives of the employees palrt!cipati rIIgIn t~e plans"

Th€ pas!t service COSltis nllcogni.z€d as an expens€ on a. straight-lin€ basis. over the aVlerage period until the: iben€fits. becom e ve:sl€d., U the: iben€fits. areal ready vesl€d imm€dia:tel y foUowing th€ introdueti em of, owchange:s t'O a.p€nsi om plan, past service cost is recognized imm €diat€ly.
I'

The defined !benefit Iialbility iSo theaggreg'a:te efthe present val ue of the defined !benefit obligation and actuaJrialgai as and losses net recogn lzed, reduced by past service OOtSt ot yet reoogn lzed and the n fair val ue of pian assets out ot wh ich the dbl ig'altions are to' be settloo diwooMy. If such agglreg'alte is negativ,e, the asset is meMU red atthe lower of such agglreg'alte orthe agglregale Qf cumulative

77

unrecognized net acluarial losses and pas1t se'N Ice costand t~e pmsent VallH!! of arlly economic be'rilefitsavailabi El'irII'the fo.m1Iof r,efundsfrom the' plan or ~oouctiOns in i~e fut:Ulrecontributions to t~e
plaos,

few AIBS-GBN Intemati onel, the definoo oo!ntwibu1iiO'nension plan is composed ot the co,~twibutio,~ of p ABS-OBIN II ternetlenal Of empl oy'ee (or bo'~J~}to' me employee's individual aooo'untlheS!e n con~rilbutiol~s generally are invested on behalf of ~he emplO'yee through .Aimerican fu~ds. Employees ultimately receive t:he balanoe inthel f aooount, wtlich is based on oontrl bunons plus Qr minus, ifllVestment gains or losses, The value at each account wi II fll!otua~e due to ohanges in t:he val ue of ifllVestmer.vs.
The amoun~ of the Gompa~y'$ oontrl bution to t~e defined contrl bution pension plan Is Irecognizedl as expe'rilse In t~e pelrlod incu rrsd.

Current Tax., Cunent tax assetsand Iiabil itlss tcr t~e cunent and pnor periods am rneasured at the amQunt expected to be recovered from or pai dI to the taxeutherity, The tax rates and tax Iaws used to computethe amount are th05lethat are enacted or substantively enacted! as at: fi nanci al reporting date, Current incom e tm. risl:a!ti to items r€coglnizl€d di rectly in equ ity is weiCOgn ng izoo in equity and not in the consolidaJted stat:ement of incom e,. D-e.f:erred Tax. DlJS!fienedIneem e t8iX Is providedl, usl ng the liability me,thod, o.r11 temporary all diUerences at fi nanei al reporti ng date be1i:weeflithe tax bases cf assets and Iialbilitires and thel r canrying amounts fO'W nanei aI reportl ng pu rpcses, 1i Deferredl irIIcome tax liabilities are recogirilizedfor all taxable tern polrarydli'H,en!mces, irIIC! ng asset udl revel uatio.rIIs. Delfem!ll~ incom e tax assets are ~eoogn lzed tor alld!educti ble tem po~ary diHe,renoes and carryfolVl!'aro berllefits of unused tax clrooitsfrom excess minim urn co.[po.rate' income tax {MGIT) over the regu Iar eorporats Ineeme ta::( {RClll)andl urIIUSOO ope'raIting loss canryover (rNJOlCO), to. the net extent 'that It is, probable~:Mt sufficient fWu~e taxable profit will be' avru Ialbleagal nest w~ic~ 'the deductible temporary differenoes and calilryforwaro ben®fits of uflus®d tax clredits from exo®ss Me IT over RC~Tand unused NOleO can be uulizi€d., Drefenroo income lax, hOiwev1ew, not reoognizoo is wh€ n it ari ses from the initial wecogniti on of an asset or liabi lity iflat 'l:ran~ction that is not a busi ness com blfl:a!ti n and, :aituhe Ii me 0 1the tlraflsacli Ofl, :aJfflecits o fleither th®:aocounting! nor tm.a!ble profit.
1

Deterred! income tax liabi Iities are ncr providedl on no'~taxabl etemporary dilferenees asscelsted with i~vestments in dem esdc sulbsidiari es arid associates. With respect to' inves'lments in ciher sulbl5idiaJriesand associ ates, defemred inoom e tax IialbiliUes are reoognizedl e,xcejpt where the tim ing O'f the reversal of me temporary dinerenoe cain be eentrcll ed and it is probablethat the tem porary differenoe will net reverse in the foreseeable future. The canyi ~g amou ~t O'fdleferredl irIIcome tax assets, Is r,evi,e~ at each f rIIanolal repol'tl ng date and wElducedto the extent that It is no longer probalbl,e that sufficient tutu m taxalbl,e profit will be avail aJble to allow all 01'I'M of tlhedlefermdl income tax asaet to be uti llzsd. U r11l'eoogn lzed defenroo Incom e tax assets ari€ messured at each financial weporlingdlaite alnd all'e reoognized to the €::d€nt U'nat it has become p:roibable th:8it suffici€nl:futuwe ta!.'!<8!bl€ p:rofit will allow the def€n,€d irilcom€ tax to be
recovered.

78

Deterred ineom e tax assets and Iiabi Iities ere m easu red at the tax ratesihat are expeetedte ap;p!y in the period when the asset is real ized or the liability is settloo, based on tax rates andtax laws that have been enaeted or substantively enacted as 31ttinafllcial repcwUngdate. !Deferred in!com€ taD< r,elating, to it.ems mrogn iz€d outside profit and loss is recognized in correlaticn to the un!deiiJyi g transaction either in ether comp:rehensive incom e or di recti y in equity and nO'I in the n consolidOil!too sta~€ment of incom e. Deterred income tax assets a~d Iiabi lilies are offset, if a I,egally enforceable figi1.t exi stts to onset current tax assets ag ai!list current tax Iialbll i1ii,esa~d the deferred! taxes relate to' the same taxable entity and the same tax autilo,rlty. Varu8-Addsd Tax (VAT). Reven us, expe~ses and assets are Irecogn ized net Orf theamou nit.of VAl, except
'Ii

wi1:€welhe tax incu rred on .8 pu rehase Oir asS€im or services is not w€C0verable 'from the tax authority, in which case the tax is recognized as part of the cost of acqu isiti om of th€ asset air as part of the expense item as applicaol e; and

The net arnou nit of VAT recoverabl e from, or pa.yabl e t:o, the tax authority is included as paJrtof ''Other curren'l:asse'l:s~ account or 'Trade aijd olther paya!b!,®s" accou nit in the oonsol idated statem®nt ()if fi n!anrCiaipo!SitiOn!. . eaid-in GaRillQil. The Oo,mpany has issued par value capital stock ~:hat is olasslfled as ,equity. lnerementsl costs directly attri butabl'eto the issue ot new capital stodk are shown in equ ity as a deduction, netol tax, from the proceeds, When ihe Company issues its par val ue shares.fhe proceeds shall be eredited to the 'Io,apital stock" account In the eonset Idlatedl $ta'~emen~af fi rIIanrel po<s~MrIIo the exten~ of UlIe par v·alue, with ·any aJ t excess beirllg mfleal!edas "Additional paid~ln"capltal" account ln the oonso!I d1artedlstatemerllt of fi rIIanrCial positi Orll. Where UlIe Company purchases its capitalsltock: {recordeJda:s "1P~ili~pariledepository mce·lpts. convertibl e to common shaJres~a.ccou nt in UlIe oonsolidlatedl statem ent of fl na"nclal posmon), the consideration paid., irllcludirllg arlly direcllyaJtriloutalb!,e increme'rlltal costs (rlletof ~pplicable taxes) ts cleductoofrom equ It.y <Mt:[ibutableto the equity holders of the Parent Com pa"ny urnll the- shaJres are cano€lloo or r@issu€dl. Where such shares are suos®queijUy reissued, any considi€rati On!r®ceiv€:'.di, net olf any di l1€ctly aUriibuta!ble irnc!f'l~mentaltransaction costs and the rei au:edtax ,enects, is includ:®d in equity .attrilbutab!,€to the equ ity ~olders olf the Parent Company. lFIetain€d Eami mJs The amoun'l: inel ud@d in r,etainoo earn ings incl udes profit aUribut:able to the equ ity holders of the !Parent Company alnd reduced by divideijds on caJpital stock. lR@tain€d @amings m.ay also inel ude effoclt of C!ha~ge.sin accou nti nlg pol icy as may be requ ired by the standard's transitlenel prwisions.

79

,rlivigle!ndi5,on (lQ!Iil_mQ!!lJ3I1:W!Jf~s gUhe PawJP:rlLGoU!lP)ili!J!j( Dividlendls,on common shares are weoognlzed as Ii albiliW and deducted from equity when a~p:rovedlby the BOD of the P3Jrent Com pany. Dividends torthe y,ear that are approved ,alter fi fllanci aI reportl ng da~:eare deaH:with as an ~v,enl:,aUe,rfinarlicial repo.rting date. Eam Ings Per Shawe (~PS}aUrilbutaJb!,e to. the EJquit.yl!Holders of the PaJl'emt ompany C lB.asic ~PS amounil.'s ar,e cal CU~EIJtedl dlvidl ng the net Incom e' aUrilbutaJble to. ,equity hoi d!eJl's'of the Iby P,aJreriltComparilY for Ule year Oii,!',elr we,lglh!tedlarvemg,e numbe,r of common shares ou~Mandllng tM dtHi rIIgthe year, with rmroactiv,e ad] ustm e'riltsfor arlly stock divide'rildsandl stock: ~plit. OJ Iuted EPSam ounts we computed In Ule same m,anner, adj usted for the dilutive, effect 'of any portential common shares. As the Com pmy has ijodi Iul:iv®:portenti aI common ehares outstan diing, basic and oi Iuledi EPS ar:€ stated at the sam €I amount Conti ngenci es Conti ngenr11 iaibiliU€s are not n~rogni:z.€d in the Gom301 idaJte:df nanei al sta!tement:s", Thes€ are diselassd in nne notes to consol idiatedi 1inancial stali€m ents un Iess the possi oility of an outflow of resources em bodyi ng economic bet'il~fits is remote, ,A" oOijting:ent assert is net reoognized in the eonsol idali€d fi nandaJ statements but disclosed in the notes to oonsoHda:tr:edtinarJ!c!alsrtate:ment.swhen .00 inflow of eoonom i C benefits is probable. ,~verllts after finarllcial Aeporlirllg IDawe ArilY everltafter fi nancial reportl ng alate tMt provides additional irIIfol1ma~1 aJbout the ComparllY's o.r11 firllanrCial pooitiQ.r11 firilanclaJ IrEliPortlng date (adjustlrlg everlts)alf'e reflected In the consolid1atedl a~ fi rIIanrCialstatements. ~ve'rilts afte,r fi rIIanclaI reporti rIIgda~e thiat ar,e not adljlustirIIgev,ents are disclosed irIIthe no~es to. consolid1atedl fi rIIancial sta'~emerlts, wtlen mate,naL S€gm ent Reiporti ng For m aijag:eme:nt purposes, the Company's op€rati ng !businesses are orgaijized and managed s€par'a!tely into tntr€o€bu siness activities. Such business seg ments are th€ bases upon wh ieh the Compan¥ reports its operatingt segment inform aden, Th€ Company aper'a!tes in th tree geograph ical area where it derives its reven ue, fi nancial infermatlon on segment r,epo,rting is preseeted in ~ote 5. Future Clharllge,sirll Aoooun~irllg Policies Thle Com pany will adopt 'the foU'owingt s1:aJndlalrdsnd Intl!elrpmtaMrils enumerated bel'ow wtherll '~h!ese a become effective. Except as othelrwise indllcated, the Companydioes not expect the ,adopti'on af these newandl am e,Med starllda[usandl irIIte~p:re''l:aJtions Mve slgnificarllt im pact 'on Its cOrilsoMated to finarllcial statements.

'ii

PF IRS :3 {Revi sed), BUSiness Combinations, and PAS 27 {Revisedl). CcmsoNdated and Separate Financial Statements (effective tor firllanolal yeaws begirllning on or after Jtuly 1, 20(l!9), $upe~sede the exlsti ng PFRS 3 and PAS 27 res:pectively, with earUer ,applica11ionpe!1mittoo. PfRS 3, {Revi Sled) introdluces a nu mlber of clharJ!ges inthe aecou flit! ng fQr busl ness combina1iions mat wi II impac1 ~:he amount of goodwi II recog:nized, the reported results ifll me period i~ which an aoquiMi o.meocu rs, and futu~e reported re'sults. PAS in (R.~viesedl)requirelS, thata. clharllge' In ttle owrll,e~sh!ipIn~e~es,t'of a" subs~diaJrY IS acco.unted tor as an equity transaction. Th!er,efor,e, such! clharllge wi II have no Impacto.r11goodwill, nor will it give rise to a 'glaln or IOlS$. Ful1tlenmore, the am e,Med $rtandard chianges tIM aoooun~:ing fo.r losses lnou nred b~ U~e sulbsidiary as well as the loss o.f conilrol ota subsidiawy. The chang,es IrIItlroduced by PFRS 3 {Rev Ised) m ust Ibe a~p! I00 prospectively wh IIe PAS 27 {Revl sed) must be, appl iedl ~etro~peClivel y sub] eC'~ to eertal n excep:~ons. These w111 rfi,ectfutur,e aoquisitionsall1dl tramsaC'l:i a ons with mi rIIorlty irIIterest.
j

80

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Amendment to PAS 39, Flnanr;i8' fnstruments:Rer:ognJtio.n and JL.1e.as,urem~n.r " Eligible Hedged items (effeC'liv:e for fi rIIandal !le,alrs begi rIIningi on or after July t, 20(19), dawlfl es thaJt an e,rlltity is,
permitted to, designate a portion ot the fair value cihaJng!es cash flow vaJriaibili~.yof a fif1!ancial or instrumentas a. hedgedl item. This also CO'I/>E!IfS desl g,rll;;l!tionof inrl a~on as a hedged nisk or the

portion In parlicular sjtua~ions,

I~

f'hUip;pine Iraterprret.Edion IFR~C 9~ Reassels'$'ment of' Embe.cJcJ'e·dClertvatfves and jp'AS 39 F~nana_ial fnstrumenU;': and Meas,uremenJ- Embedcied Derivatives >( effective tortl nanda! y'ears begi nning' on or 8!fter J lily 1, 20(9), requires ani enltity to assess whether an emib@dldediderivative must be s€'p8!raltedifmm a hOl8,teentraet when the enltity reel assifi,es a. hybridfinam::ial asset out Q1f the FVPt caJlegory"
1,

IPhill~pine' Iinrueq)mtation ~FRJG iii', lNsrrit;,utiollcS 0.( Non~cashAsse(s to Owners {eff>iS!ctivefor fi flancial years beginn ing on or after July 1, 20(9), provides, guida~ce on how to account few noncash distri budons to ownelrs, clarifi es when to reoognize a liabi Iity, how to measure it and me asooda,tedlasset.s, andwlhe~todereoog!l i ze me assetand IiaOlIit)!'. Am@ndment to PFR:S ,2, Share-based P~yment -Group Cash-s,@'ttI(f).d hare-based P~yment S Transactions {effective fortinandal yeafS begi flning' on or after ,Jlafluary 1, 201 0), 01 annes the scope and the aJooountingl fowglmulP cas~~8eUled s~al'ie~basedi paym ent transacnons,

lP'~iI i p;pine I rnterjptreta:tion IF IR~C 15, Agreements f'Orthe COl1struc#on o.r Real E'slate {eff€dv,efor fi rIIandal years IbegInrllirIIg on or aHe,r Jarlluary 11,20~ 2), covers aoooun~1nqtor ~ev:enue and aSOOCi,a,tedl expe'rIIse's by entities tha'~ unden:ake t~e conS'lUlction of mal ,estatedn recti y or throug,~ su!bcontraotO>fS. TIM Inte~preta~ion ~equir:es tha'~ revenue oneonstruenon of r'eal e'sta!te be Ireoogn lzed only upon completion, :excep:~w~en such con~ract Qualines as: oonstrucnon comraet to be accounted for under PAS 111, C()n~fructf()11 Contracts, or ilnvolves renderi ng of servl ees, in which case, revenue is r,eCOglrllil!edbased on stage of comp1,etion. Contracts Invoivirllg provislorll of service;s with the cons:tlrucMrII malterials and wtler,e the rlsk:s and re\l'l,rar'dof aWrllers:~ip, are tlrarnsfem~d to the buy,elr on a continucus basis will also be aceouoted tor bas€d on stage of com pl,etion.

Improvements to PFRS (2009). T~e omrilibusamendme'rAts to PIFRS issued tn 2009 wer,e Issued primari Iy with a view of rem 0!!,1! flg iflco!ltsistenci es and clarifyi flg wo,roingl. The am endm ents are effecUve fo'rtinafldal years beginn in9 on or afterJlafliuaJry 11,2010. except aso,thiefW"ise stated. The Oompany has not yet adopted the following' amendments and antiei pates tha!t these chianges will ha;ve no material effect on its fi flanci aI statements.

,.

PFIRS 2, Share-based PaymfiJ'nt (eUocuv,eforfinarncial years b€git'llningl on or after Jluly 1" 2ij09)" clarrl'fias tha'~~:heOOrlltlrl bunon of a. businel$$ onform a'Uonof a joint verlltur,e and comlbina~ions U ndsr com mon OOrlltrolarre not withi rII the scope of IPFRS 2: :e:~/>Eln thougl~ the-y we out of soope of lRevised IPFIRS :3.
disclosures requ ired if1!respect of non-current assets and disposal groups, 01 asslf eo as held tor sal e or di soontinued eperatlons are onlythose set out in PF~S 5. The diselesure reql.!irerneots ot other PFASs only apply if specifically reql.!ired fer such non-eu rtref1!tassets o'r dliscontim.!'ed ope IratiO'f1!S.

I~

f'F IRS; 5, !Vorl-current' AS.sets Held' ,for Sa~e and Dlsoo,n,tifJf.J'fWl OperatiQ,ns~ clarifi es 1:hat the

81

PF IRS B, Oper:a#n!} Segments, darifi es thait segm e~t ass€<ts and liabilities need emly be n~jporl.€d whe rII~:~osea:s:sets anid Iiabil itiesa_lI'e inel uded in m easurss thaJt ,alI'eused by the c~i,ef operating! deci sio.rIIm a%elI'. PAS 1, .P~senratio.n o{ Financial Statements, cl arifies ~:Mt the terms of a liabi Iity that could Ire,sult. at any ti me, ifl its se1i:l1 ernent by the issuance ot equity insnu merits at t:he opti o,~ ot the cou ~terpa!1y do not affect its classiticati on, PAS 7, StaJemoot of CasJJ ,Flows, €lxpliciUy state.sthat only @xpenditulre that resu Its in a Irecogni.zed asset can be cla,ssified as a ca'slh flaw from infveS'l:ingactivities.
f'AS·~ 7~ leases~ removes the, speclfle ,guidanoe, on classifyirng land as, La, lease, Prior to the am endment, leases 011 land were 01assifled asoper.8Jting, leases. Thearnendm e~t mm requ ires that leases of Iand awe classified as €lither 'f naoce' or 'operati ng' in aecordence with the gen eral principles oif PAS 17.

,ii

I~

ii

PAS 3 6 Impairment ort .Assets, clarifi.es tMt t~e larrg,e$t unit pelrm i[ted for allocati rIIg goodwill, " aoqui red! ina. bus! ness oo,mbi~ati en, is the eperatl n9 segment as defined in !PfAS 8 before
1

aggwegation for repo,rtingl purposes,

,~

!PAS 38, Inta:ng.ibte- Assets (effec4iv'e ferfinancisl years. beginn ing Q~ O'f after July 11, 2(09), daJrifies th:fl!t if an inrtangibl,e8Sset acqu ired in a bus! ness combi fl:fl!ti n is id!entifialb!e on Iy with o anotlher intang ibl €I asset, the acqu irer may wecognize the group~)if intangible assets as a. singl€l asset p:rolVidoo the individual assets have simi Iar useful Iives, It also d.aJrifi s that the vaiuati O~ e tech~ique.s pr'€:Sie ted for deteliffi ini ng the failr value of i~tangib!eassets acqu ired ina. lbiusiness n com bl ij:fl!tiO~ tlhataJr€: net traded in active maJr~ets are on Iy exam pi es and ar€l not restri etlve on the methods that can be used.

that a pmpaym snt eptlon is censl d~elI'ed ooely rela~:edto. the host ccntraet wlherll tfile exercise cl pri ee' of a pmpaym ent opti o.rIImi mlourses the Ie·rllder up to the ~pproxima~:e p:re!sent val ue of lost inl:ere!Stfor tM remainingl term of U'behost contract;
that the scope exempti o,~ torcomraots between an acquirer and ,8. vendor i~ a busl ness com OJ flati o~ to buy or sell an aeqeiree alt a. futur'e daf}e appl ieso'~ly to oi nolngl fo,f'l.lVaro contracts, and not dlewivative contracts where fu ~her actions !by either party are 5tilito be take~; and

that gains 01I' looses en cash flow hedgecs of a 'fo.recaslt tr·aII1sa.ctionth.at sulOSE!q entl y resu Its in u the r,ecoglrlition O'f afinarllcial instrum Gmt 01I' on easlhfloW' hedges of recognizedfinarllcial instruments shou 101 be mclassified i rII the periodl that the hedg,oofor,ecast cash flOI!N$affect profit or loss"
I~

f'hilip;pine ~nterpreitatio!rD IIFR~C 91~ Reassessment of EmbedcJecJ De[iva'lives (effective for firaanciaJ years begi nningl on or afli€lr Jlu!y 1, 2[)09), cl arifies that it does not a~ply to possi bl e reassessm ent :ail the d:fl!te of aoquisition, to embedded detrivativ:es in contracts aoquin~d in a. busi ness com OJ ~:fl!ti betwo€en enUties: or businesses undlew common control or the form:fl!ti O~ of jiol~t o~
venture.

Phil ippine Interpl'1eit:fl!ti II 'RIG 16, Hedges of a Net Investment in a Foreign OpB,ra'tion {@ffective o~ F f'olrfi rIIanciaI years beginn ing on or after July 1, 20(19), states· that irIIa hedgle O'fa ne·t im.teS'lmen!~ rII i

82

a foreign operati ONi"qualifyh'ng h®dg ing instruments may be heldlib,y any entity owerntiti@swithi n the group, including thefor,®ign op®ra~iONi itself, as long as the designation, documentation and @if€C'l.ivenessrequ irements of PAS 39 th:aJtr,®late to a net investment hedlge are s8Jtisfi,®d" Ma:rnagemslIllt's Us,e,of JlildlgmslIllls arndl Estima,tn The Company's consolidated finam::ial statements prepaJl'oo under PIFRS require m.ooagement to
make jud~gments and! esti mates that arffeot amou nts reported in the consol idialed fi nsncial statements, and n~'1ted notes. Futu re events mayoocur which will cause the judgments and assumptions used in a

3.,

anivifli9 at the es.uma~!es to chang'e. The effecJts of any changle in jludgments and esrlmates are refl eoted inthe consol idiatedfinafliciaJ statem efllts as they become reasonably deterrn inabl e. Judgmenrtsandl e,stimatE!!'sare COrllt!nually e-valuat:ed and are- based on hi S!'Olrioalexpelrienoeandl Oottner factors, Inol uding expeotatl Oom:;of'fU'lu~e, events thatarre be,1 i.wed tOo be reasorllabl e' under the oi mums'tanOI1!S. Judgmenls In ~he process of ,applying ~he Company'saccow'ilti fligl pol ides, maJnag€im€im:has made the fonowing joogm€inl:s, atparrl:rom tlhose involving eslima:tions, which have the most signJificant effect on tlhe amounts f Ireoognized inJ tiheoon8olid~tedfinl!lJflici aI statements: D:eterm.inatio.n ot ruoctfonal Cu,rrel1cy~l1he ParemrtCompany anJdall other subsidiaries and associ ate.s, ~)(ce,pt forrOfel grnsubsidnaries. have dete-nminoo Ulla~ r functional cunrE!\ncyis this! Ph~li~pine P'esOo.The t~el Phi lipplrne PesOoIs t~e CUfr'erilCY ~he primary ,l1!oOr1lomiC of envircmm,ent in which t~e Pare'rllt ComparilY and all other sulbsldial'lesaoo associates" ,exceptfo:r forelgrll subsidiaries, ope;rate. The lPihillppJne Peso is, also l~ecurre'm;v ~hat mainly Irilf1ueracesthe sale of goodsaoo seMcee as, well as, the OO<5ts selling of such goodlsaoo prO\!'iding sueh sE!{Nioes,. Eaoh foreign suibsidiary determ ines its functional cUrln5 m:y (i ,.e,.,IJSID, GB!P, J PY, AUD, CAD, EUR. or SGD). Thus, the :accounts of foreigrn subs!dialries wel'le trnns!,at®d io Philippi ne Peso for purposes. of conSGnd~tion to the AlI3:S~CBrNJ Group's accounts.
i

Lii3SecS, The e:valuatio:n of whether arllan'Emg:ement oontains a lease is Ibasedl on I'~'$, substarllce, Aril an'3ngemem is, or eentsl ns a lease when the fultillmem ctthe aJrrangemem depends on a S1poofic asset or assets a~d the ,arrra~gement oolnve'ys t~e lright to use, theasset,

The Oompamry has €ril~el~®d into lease anranQememrtsas a lessor and as a. lessee, Such comraets ,are accoumed for as o;per'BItingleases whenJ the Company ,as a lessee, has det:erminoo tihat the lessor l1®tains substamrtial rri~k'Sand ibenJefitsof owil1®w~iP olf these properties, anJd as a lessor, the Company l1®tains suibsmntially all ~h® wi ks aJnd ibefliefits of oWiI1€irship of ~he assets due to the following s circumstaNices::
1111

the lease term is only for a limited number of years; lease Is re-ne'Walblebut there Is no plH'C~ase opli(m ata sign~fical1~,discount as of date; andl the lease payments represents so~elyoompeflisa:tio:n for use of asset Irather ~haJnfor pu rchase of tlhe asset:s.,

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nne Company has also ente'red into lease ag!reemerllts roverl rIIglcertain prqperty and equipmerllt. SUC~ co:nt1f'acts al'e' accounted for as finance leases wlhen the Company has ,dietenminedl ~at it Ibears, substantially ,all ~he nieik:sandl benefi~s IrIIClderiitalto ownenslhlp of said prope:rlies due to the followi rIIg: ~
Iii

the lease term represents substantially 'this,full econom lc ~ife,irb years, olile

asset under lease:

the lease is, ~e;ne,w-a'bleandl '~ere is, cur~rently a purchase optiorll a~ a s!grllificant dl sc:ourn wt'iJic~ the Company Is liklJS!ly erxeroise; and to

1~220minion as of Deoember 31, OO(]l9aoo 2008, wespecmveJy(see INot.e'111).

The oartryi~gl amount of pJOpertyai!1d equipmem u ndlerfi!la~oe

lease amounted! to 1~155 mill ional1d

Financial Assets not CJoorro in an ,Aciiv:e MafflBr; The Company cl assifif)S financial assets by evail1ati rilgl, amorllg! oM1€l\rs,w~e.flhelr the asset is quoted or not in an active ma[~t. Iinciudedl in the evaluation Orll wMt~er a financial asset isquo,too in an active ma[ket Is the detemil IrIIaMrlloril w~eM1e:rqflloted prloesar,e ~,eadiIYEl1oo ~,egula[lyaV'aiiable, and w~eM1e:rtMse prloes represe'riitactualand reg.ularly OCCUltlng ma[k:et transactions Orllanarm'g..I,ength basi s. iEslim8!tes The key assumptions oo:noeming fulure and other key 001.1 roes at eslimatio:n a~ the financial w epo!1ting date,that ha;ve a significant risk. of causi ng a material adjustment to the cQIrying amounts at assets and liabiliUes wiWhi the next financialltear QIEldiscussed below. fl
i

R8'V8nua Recognition. The Company's 1€I€:COm mUrilications reverilue r,ecognitio:n pol ides r€quilre the use O'f estimates aoo S,SsumptioriiS tlhat m.ayaffecl: the ~portedamOlmts O'f revenue aMI ~ecelvabl,es, lRev,enue Is staredl net of ~Ihesherre of the othler ~el,eco:mmunicatio:ns canie:rs, but '~~ediefiniteamotmts of the net shar,e are dete'm1iIriled sulbseQuerilt tofinarllclal reipo:rI]rIIgl,dlale. Thus, the- Comparny initially estim.ates theamOlmts based on hi story of sharing. The duffet~en:oo between the emount irilitially INlloogriliz€d and aotual s€!llIl€1memltor actual billing is Ireoognized in the next period, IHowever, there is no assurance 1!h8!tsuch uS€: of ~.stimates wll! rilo1w~.sult in ma;t€lrial adJuslm€1m:siriI futur,e periods,

Fair 'Valoo 0.( Fimmciar Instruments. PFRS Irequir,es that ceirtainfinlllirncial assets iimdl liabi Iiues (including deri\!"atlv:e Instruments} be carried! at fal r val ue, wh~clh r,equires t~e use O'facoourlltl rIIg estimates"llhefair val uss of 'hnancial IrII$1irum€l\nt'$:f sho~Henm na~une arldl tMse tMt am subjlec'l.'edIto mOrllth!y r,epricl ~g.,are o estim,atedl 'ro i9iPproxlmate tJheircanrying:amou rIIts, For oertel rIIflna_nCliaiIm~tJrUmernswhldh are rIIO'~uoted q in an aC'b~vemark/et, fair values are assessed 'ro 00 t~e present value of ~mated fulu~,ecash flows, dl's.oountoo at Mk~free mtes i9iPplcable to. t~e finMciaJ instrumerllt l
The fair values of Ii rilmal assets alndlliabi Ii'li@ssre set oui: in Note 33.,

Ariow:3noo l:or DoobtfMlAccounrs. The Company reviews its IOians,ar1ldlreceivables, ilncludnngl U rit':Nlloo receivables, at each financial r~porti ~g da~e to assess whether an allowance for impai rment should be recorded in ~he oonsel idated statemetm of lneorne. ~nparticular, judgmeflft by managem'ent is required i~ the estimation Qf fle amou flit a~d ti ming of fuluve oashtlows when determining the level of ,allowaJrloe wequired!, Such esti ma~.esare based on assumpMons ,about!a numbe~ o,ffactors and actual results may dlfter, IresultlrIIgin fUlU["echange's in t~e allO\illariloe.

84

The CompMy evaluates specific balances where mafNlg'em!ent has information tha~ certain amounts, may not be oo!lec4ib!'e. In 1hese cases, the COmpany uses j udgm!elnt, based on a,vallable facts and ciroumS!ta~ces, alfld a wevie'!Nof 1IJhefactorsflat aJfoot the oollectllbility of the accou fIts including, Ibw not limited to, the ~ge andl status of the reoeivables,ooUection expe~I'Emcearlldl past loss experierllce. The If,e-:view made by maJllagementOril a cOrlltlrlluingbasis to Ide,mify acOOUrlits be provid;oo VIIlthallowsrlloe, is to These spedfic reserves are, re-evaluatedl aMI adjll..Jstedas addatlonal IrIIfo:rmaMril reCelv,edlaffects, the amount estimated. ~n addition to speolflc allow,alllOOagal nst iMyv Idually slgniflcarllt recelvabl,es the Co:mpanry also makes a: collective impal rment allowance against ID:JlO'sures,whldh, ,alt~oLJg~ not specifically identified as reqfIJl ing a ~pecific alh)'!;varllce.have a gma:te:f risk: of default than w~erll migl rIIaJly r gmrllted. This oollective allowance is based on historical ,d~efault,experierllce', ouli1l'en~ economic trends, changes in customer parymlet'llttenms and other 'faC'~Dm tha~ mary affect t~e (;ompanry's ablUty to collect pa:ymerllts. Ihe amOlmt and ~ming of reeerded expenses for ,anryperiod ilol'llOUldl differ if the Company made diffe;fent Judgments or utilizedl differe;l1~metMdologl,es. An increase inailowance'fo:r doubtfu~ account'S would irIIcmase t~e ~ecoro'~edl qperaJting expenses and decrease current andl nonc.unrem assets.
j

The allowam:e is €sta!b!ished !by c!harges '1.'0 income in the form of provision for doubtful accoun'l.:s,. rProvision fo'v doubtful aeeeu ~ts am cunted to 1f.l'2'92 IO'f!! I' 1f.l'1195 IIIIo,~ and 1~'1 02 mill IO'f!! In 210091, mill m 2008 and 2007, respecUv,ely (sele Note 27). Trade and other recelvables, net ot allowalnceior doubtful aecou flits, amounted to 1f.l'5,720million and ~5, 0<i0 mill IO'f!! as o,f December 31, 2009 and 2008, respectively (see Note Allowance iQf do'ubtiul acecums as Qf Deeernber 311,2009 and 2008 amounted to 1~531 milllo'~ and ~440 million, re5ipectively (see INote?).

Ner ReaUz:abie Va1u@ ot in'llffmtories" Invenu'Olriesarl€ carried ait net Ireaiiza!b!,evalue wtIe~ev€lr net rrealiza!ble value of Inrvento~ies becomes 10W'e'rthan ecst due, to dam ~ge, pthyslcal detelfior,aMn, obsolesce'~ce,chall1g,es, In price level s or oUler causes. Tlhe allowanoe' aooounl~ Is ['evi,ew"E!d0111 a rregular basis to ~e.fl o! the accurate valuation irIIthe IInancl al records. Ir1iven~'OlfY e items identifi,ed to be obsolete ,andlUIl1Uable are w[IUen off and cha['ged as ,expense in U~eyeat such losses are ide'rlltified. s Provision for decl ine in! valu€: of inventtory amouoted to f!5 million, f!22 mill ion and R15 million in 2009, 2008 and 2007, respeotively. II vento'nes at net real izable value amounted to' J;l'1 69mill Io,~ and n ~:226 milllo'fli as ot December 31, 2009 a~d 2008, re~pectively (see INote 8).
1,

Estima.roo Usetul Lives oWPropB.rty and Equi:pmfjn.r and Intangible AS8G'tS. The us®ful life {)if each item of ~~e Corn pany's property and equ Ipment and irIItangibleassets wllhfinite life is es,timated based Orll the pe~iodIOi!Jelr which theasset Is e'xpectedl to Ibe avallabl,e fOlr use. Estl ma:tionfo:r prope,rtyall1dl equip:men~ Is based on a coll,ective assessment of iMus'l:ry p:faC'lice, imemal tec~nical evaluanon and expe,rienoe w1t~similaf assets wh Ilefor Intang Ibl,eassets Mt~fl nite life., ,estImatedl life Is basedl OrllUlle life of ag~eem ent OOi!J'e~1 such Intangilbles. T~e estl mated useful lif:e of each ,asset is revievllied ng pe,riodically and updlatedl if expectatiOns diff:e~from pn~vious estimate's due to. physical wearalldl tear, teohrllical or commercial obsol,escerilce and legal or other lim ltson ~:~euse of these assets. lFIow'ever, it Is possi bl61'that futu refinarllcial pe,rtormanoe cou Id Ibe m ate~1 y affected Iby c~anges in the all eS'ljm ates brougl~t about Iby clh;arllges irII the storem 6!\l1tioned 'factors. The amounts and timi ~g of wocolrdii the depreciati On!and amorti.zauon for amy y€:alf',with reg,aJrdl 0 the p:roperl.y and equipm erllt ng 1 and intaJngible assets would be affected by changes in these fadars, and elrcunstances. A reducti on in! the es,timated useful life: of an!y pmpelrty and equipment or intangi!b!,e assets wou Idl inerease the: recorded expenses and dectrease nancy nrentassem"

85

There is no cl100gie in the estima~ed usefu I lives of propetrty and equipment, investm en! propetrti es and intangibl e assets duri ng the year. The carryi ng val ues ot property and equipment, im/eS'Ilment properties and intangible assets with finite life are as tollollNS (see Nlotes 11, 12 andl13):
,2008

iP'mperty 8Jnd€quipment ._net iP'mgtram rights Customer rei auoll1ships _ net iP'mduc,tion and dts!tlribuuon business _ Middle East Iitwestmenrt prcpetties _ net IMloll,li in-prncess e Stolry, mus:i c a~d publica1.iom riglhts Video rights: and record master

814" 714,420

2,377,Ot5 492,577

99',830

'6:3,,259' 35,313 7,492

11,336

R14,735,554 ,2,4([)8.,Bfl4 538,4113 108,9M 66,27e 816,96.2 5,4(6.2 ,2,0919

fmpafrmemofAFS fnv~stments. The Comparny ~,eartsAFS investments as impal ['E!dwrnernU'Rerehas beern a. slgnificarrt or prolongedd!ecl irne in the fai r value below its cost or where t~e,re' is objective evide:noe tha~ Impairmenl: exists. Thed:etermina~ion of wMt is '\sigrnificant" or '''prolonged'' ~eQuitr,es joogme:nt The ComparilY treats "s;1 nlflcarll(" genEl\rally as 2QP/o or more of thle o:rlginal cost of inve$'lment, g anld ''proIOtIlgOO·' s greate,rthan 112 months. In additiorn, the Compamy evaluates O'Ilhe:rfactor,s, including a t!lOrmlaJvolatuity in ,share pricefo:r q~oted equl~es and tne future caslhflows ,and discount facto:rs for urnQuotediequitie's,

As of Deoembeir.3 1, 2009 and ,20G8, the carrying value arnd R.371 million, respectively {$€I®< Not@ 14),.

011 AFS

investments amou nted 10 R42D mill lon

Asoot Rir!ftjrement Obligation. [)eteti1lilIming asset retlrem,ent obligation requires; es,timation of the eosts of dismamling installations, and restorl ng leased prepettiestc ffiheltrofiginai condition. While it is bel leved that the assumptions used ifl the esti marjjo~ of such costs ere weaoonable, sig'f1!iticant chaf1!ges if1!these assumplicms; may ma~enally affect the recor;d!edlID:lpe,m~e o:robligation in fu!um pe;rlods. M@et m1iremernt oblig8Jtionamou nled ~o~'18 millkmas of !December 31, ,2009 and 200S. (see Note 21) ,.
1

impaIrment of Nonfirrancia/ Assets. The Companly assesses impaitrmenlt on nlOrlifinanlcl assets aI {en umeratedl if1!he table below) whenever events or du:mg'es iij circumstances indkare thiatthe cawrying t amount of a~ asset mail! not be recoverable, The fa.ctors that the Company considers imporitam which oould ~rigger an impaiwme~t wevi,EWIi' include the followi ijg:

significant changes in the manner of use of the acquilred assets or the smrategyfo:r oveirall busi ness;

amd

I~

significant negative induswy or eeenemie tlJyends~

The Company reoogrlliz@',san Impailimerl'~ !OISS wM,rnever thle carrying amount of an asset exceeds Its, reoo,vera:ble amount The Irecoll,llemble amount is computed usi ~g the v.alue in use: 8iPpro,I!Jch ,. lRecoveir.ab1e amou mlts are ,estimated for individual assets or, if it is net possible, for the cas!h-gienerati ~gl u~it ~Dwhich the asset belongs.

86

T~e canyi rIIg v,alues Of rIIo:ncummt assets ~lhatanS!subJ/ectoo to impainmerl'~ testing whem impairme:ru itooicators are' presentare as fOIlQ'iNS {see INotes11t, 12, ~3,1! 5 am 1, 6): ~roperty and equipment- net Tax credit.swith tax cwedit certificates (f()Os) ~rogtram rights Customer reia1iionships - net ~rodiuction and distwibu1iionbusiness - Middle Eas!t Inves'lment properties - net Inves'lments in associ awes MO!!,1j e ia-precess

En 4~71I4~420'
:2~5611~200' 11 ~467,779' 492~517'

9'9~8S0' '63~259'
4(I'~9711

2008 ~ 14,735,554 2,681,185 1,055,0111 538,41'3 108,964 43,301 3,1012

66,27'6

4~1'04

~n2(lOS. Sky COOI,eprovided arll impai rment IOtSSfo:rtax creditsamOUriti rig to ,!;3100milliOrll (tSee INO'I.e1I,o)" INo impantrmerntloss for nonounrentt assets was ~ecogni£edl in .&009 ,aJoo200f.
Impafrment .of GoCJdwifl and Cable Channels. The Comparny performs impainme:i1ttte'sti rIIg annually or more frequently when there ere indications Qf impakmef1ft for good~n and intangilble assets, wiWhirJItinite lives. The Company has idemified ~ihat calble channels of e~~j ima~gibl'eas5!ets, have an inti flIite life. Impakmenttesti ~g' requires afl esti marlio~ at Whevalue i~ use at 1Jhecash-ge~erarjjng units to which go 00wiII and the cable channel s are allocated. Estimating the value i~ use reqUlires the Company to make afl estimate Qfthe expected future cash flowstrom the cash-ge~efaJting uflIits and to make use of .;3, suitabl e discount rateto caku~ate the present value at ilose futur'e cash flo\l1fS,

The impaim1l,ento:n~he goodmll arndlcaJble ch!amlleltSis delenminoo by oompafing: (a) ~M carrying amoom of ~Ihecash"g,enerati rilgt unit; aMI (b} the present val ue of theanrilual pro~,ectedlcash flows 'for five yeaJrS· am:! ~lhe present val UE!' of ~hetenminal value computed urncfer thediscourlted cash fiow method, The r,ecoverable aJf11tount the, cash"g,eneraMgt unit has beerlldB'~enminoo oosed on a v,alue in use calculatiorll of using cash flow p:rojootions which ware based on financial lbudg:ets 8!PpmlV€diby senior man!agem,ent ()if the suosidlaliies oov€:wing a.fhle·y,ear period.. 'The ~ey assumptions us®d iij fie impairm€wlIt test of goodWill aJijdcajole chanlmllis ars as fonows:

a.

Gmss Revenue On the averagejgtross reven ue olthe subsidiaries over the next live years were proieeted to grow in Iifie with the economy or with nom ina! Gross Domestic ~rodiuct fhi s assurn es that the market share of the subsidi.:3ries if1ithel r re5lpective industries wi II be nat on the assumption mat the industries also gwow at par with the economy. Hiisto,rjcally, aoverlisif1ig5lpendi~ggtroVl!l:h had a dlif,eet ootrrelation with econorn ic g~Cl'With. A. ()i·5%, petrpeW ity growth ~ate was assum ed at the end of ~hefive"YE!laJrforecast pNiodl.

b.

Operatingt Expenses On the average, operati ng expanses were proj,ectedi to increase aJt a. si ngl,e-dig it growth Irate and aJt a s!ower pace than Ireveijue.

87

Th€ d'isoounri ral'€ used '1.0 alflf'iv€ at tlhe present v,alue alf futur,e cash floM was the Company's Weighted .Average Cost of Capital (WACO), WACO was based on the appropriate weights of debt and equ ity, which were m u~jjjplied with the assumed COSTS o,f debt and equity. The diseeu flit rate ap;pli!ed to the cash flow proieetions were 9.63%, and 10.38%, ifli 2(')09 and 21008, reS1peotively.
1

T~e carrying amount of goodlw'ill amrourllted toe2, 135 milliorll andi31 ,906 milliorll as of December 3~, ~G09 andl ~G08, r€!'spectively (see Note 17). The canryirllgr amount of t~e caJble channels amourntoo 9460 minion as of Decemlber 31, 200r9aoo 2008 (see INote ~3). Goodwill pertaini ng to an investm ent in a sulbsidiary amounti ng to ~23 million was fully provided with an allo,wanoe for impaifITilef1t 105!s in 2007. There wer'e no other impaiwment losses recogrlized in 2(')09 and 2008. Present Vail.le orfPemswn Obligation. The cost of deii flied benetit o~igation is detewminedl us! f1ig' actuatri,al valuatio:ns" The actuarial Ilaluail.h:wn invowes making assumptions. aibout discount rates, e~IP€'Ctedrates o,f I'€tun'non plan assets, and future salary increases.. Due 1"0the long-term mrtur,e of ~h€se plans,J such estimates are sulbjeot 1"0 uncertaimy. The expecWed rate at renirn on plan assets was based on averagie his,torical preml urn on plain assets. The assumed disoount rates were determined using the market yields on Philippine bends wi~h terms contSis,tent wi~:hthe expected e:mploy!ee benefit payout as Qf fi nanel al reporti ng date >( see NJo.te30). As of Deoem be~ 31, 2n09 and 20018.,t~e preserllt value of the perilsEono!b!igatJo.rII of the ComparilY amounted to e1, /162 million and 13569million, ~e-spectively {SEl;eNote 30).. Unreoognized net actuarial lossamOlmtedl to ~3i62 minion as of [)ecemlber 311, 2009 wfili Ie unreoognizedl nel~ actuarialg,ai rII amounted to ,i3S79 milliOrll as of [)ecembe'r 311,2008 (see rNJote IG). 3 R:ecognd.icm of .Deferred Tax' Assets. The oanyirllg amount of deferred tax assets is re:viewed a~ eac~ financial reporting date and reduced to the extent ~ih8itit is no longer probalble that sutflcient futuretaLx,able prom will be available to ,allow all or palmQf the deterroo tax assets to 00 utiIi.;;::OO. lReoognizedld!ef,ened tax assets as of [)ecemlber 311,21()09and 2008 amoun~ed to e1l,029 million and 9'943, million, Irespective4y. Unreoognizedld!ef,enM tax assets of sulbfi;idiaries as of Deoember 311, 2009 and 0008amrourlltedl to 971.9 million ,andl eS38 million, :respeCl:ively (see INote 29). Contfngmof.es. The OompafliY is cl!lrrently invelved in various, legal proceedings. The Company's esti mate of the p:rabablie costs for the m.so!ution of these claims has beern devlElloped in oonsultation wlth outside counsel handling defernse in tihe.se mati:em and is based upon an analysis of potential results,.. The Company cUlrmntly does: not believe these p:raceedi ngcSVIllI!hawe a material adverse €fiect em its eonsol idatoo financial position aijd perfmm.ance.. It is possibire, however, that future fi rnaJncial pelifa:rmarnce could be materially affected by dhaJng.esin the esti mates or in the ,eff€ctivene.ss of stral'€gi:€s rei atiflg to these proceedings (see Note 36).

8S

a.

Conversion of INme and Advanoes On June 30, 2004, Sky Cable {~llssueli") issu€d a cOrilvertibl,® note {~the NOlt:e~)to the Parent Com pany amou ~ting to US$30 ,,0mill iO~ r(R': ,5811 million). The Note was sulb~'ectto interest of 1;2LOO!o oo:mpoundled amllually and matured on JlufJ!e3 11, .2006, The pri fJ!dpal and accrued intewest as Qf m a~:urit date ism afldatorily converted into common shalres of the Issuer, based Orrn pr,evailIng tIM to lP~ilI~pine· Peso exchange rate on matu nw date. at a convelrslom p:rice equival erllt to a. 2(lP/o discount of: (.a)rhe mar,ket value of tIM shares, in t the- ave·rntof a pulblic offering of the tssuer lbefore maturity date; (b) t'~e valuation of the shams by an indlepe·rnderrllt t:hi palrty ~pprai,ser that lsa mcognized Ibanklng fi 1iTIiI, securltl es undlerwntelr or one of the bi91tt1J~ee intemationalaccou rntinglfi rm S or tlhelr Ph~ ~pineaffiliate joi rilly ~ppol nl~:ed Ii by LOipez, tnc, and Be·rnpr,es. IHoldings Corpor.ation (collectively re·fened to as Benp:res Group) and IPhili~pine long [)istarnce Telephone Companil/andl Uediaquest Hloldurngs, Iinc. (collectively ~efenred to as Pt.[)T Group) pursu.ant to tfile Master Consolidation Agmemen~ dated JUly 118, 2(l()1, as am erllded or su~pl,emented.
1

ro

The INote does nO'Ispocifi call y state that interest shall accrue aft:ewJune 30, 2;006 in the event that the rNJot@ net cOrlfVerTed a~y treason,. Thus, no itmewes!t as charged an®wJu ne 3n, 2;006. is for w As· of [)ecemlber 311,2007, the conversion priee of the Nbte had not yet been determ ined. Based on t~e provislons of '~:~eNlo,te. tM conve~sl Orrn the INota cannot Ibe oompl,etedl 'lNit:~out ~~e of de·telrmInaMn of the conve'mion pMe, whl ch in tu m d€lipends.on the valuation of Sky Gable by an Irnd€lipendentth Iro pan.y" Thus, the Parrent Com pany didl not eorwsrt the Note at tlha'~'tIme 'lNit~out such val usnon, The convemion date was €!'Hectiv,elyextendedl urntil th,e fi rnal valuation O'f Stky Cable. On Mary .20,200S, the Benp:res Group, and the PLOT Group, aclouMl'loogoo the fainness and weaso~ablen:ess of nne val nation for Sky C8!ble effective IMarch 15, 2;008. Bas®d on th is final valuauon of Sky C8!b!,e,the Note arnou ~ting to~'1,,58 ~ mill ion, accrued interest on the INote from June 30, .20014to Jlu~e 30, .2006 amounting, to ,if;!459'millio~ and ABS~CBIN's advances to Sky Cabl €I amounthng to 1~459 mill iom can be eorwerted into 269,645,8218 Sky Cabl €I shares, n~iP:resenli '65.31% efiocuv,® interest in Sky Cable. ng Consequentl y,for fi ~ancial repotrting pu rposes, eHecmve March 115,2008, Sky Gabl e was considered as a su!btSidiaJrY the ~,aJreflt Qf Com pany with a. 65.3%· effective intewesL On Deoember 23, 20(l!8, the Pamn~ (;iompar!Y, Sky Vision Go~polraMm {Sky VIslom)rand Sky Cabl €I @ntered into am .Assig'~m@ntAgr€ement, wh®tr€by the Parent Company assigned the Note, accrued imerest receivable and! advances to, S!ky Oalb!e totaling' to ~2,499 millon to Sky Vi si Of~ ln consider·ation of Philippi ne IDEliposltory Reoeipts {P [) IRs) conrvertilble irnto und~elrlyinglStky Cabl e sbares to be issusd by Sky 'Vision upon a:pproval by the Phi Iipp:lme S€culriti es and Exchange Com mission (SEC) of the increase inthe autiho<riz.ed capital stock o,f Sky Cable. Pu rsuant to this Assignment A.glreemen~, Sk:y Vis!on is contractually bound to issue the PDRs to the· Parent Com pany upon the issua~ce oif the u~derlyi mg Sky Calbl,®sharss to Sky Vision .. The IPDH wi II glrarntthe lP8Irernt ompaniV the ["ight, upon paym snt of t~e eXrE!lrcl prl ce and sulb~,ect G se to eertal n other conditi ons, the delivewy of Sky Calble shares or the sal €I of and delivery of the proceeds ot such sale ot Sky Oalble shaJres·.lhe ~[) A may be exerei Sled at any time by the lP8Ire·riIt;'Ompamy., thus, pmviding potenti aJ vO'lIng right'S to '~~e Pamn~ Company. A.rny cash ( dividends or other cashdi s'l:riibuti ons in respect of the underJying Siky Cabl €I shares alre received

89

by Sk:y Vis!on. Ane,rd~educti rilgadmi rIIis:tlrativ,e eXlPem~;es ter the manriltenall1ce of the PUR struenne, Sky Vision shall distribute the preeesds to the lPawent Compliliny. WMe Sky ViSlon is the legia!owne,r of the sub:sCtriptioril to thie 65.3%. €!IffecUve inte'rest in S!ky Cabl €I, effootivl®ly, the Parent Company has the eeonom ic interest ()'I,!'IeJr underlyingl shares by the vi ttue of the P DAS.lhe voting' riglhts remain wit:h SIk.y Vision as legal owner but ~:he Paren~: Com pany has, eeoncmlc benefits O:V'El,rthe- urndEl,r1yi ng Sk:y Cabl e shares,. T~e lPa~Ellnt Gompa~y will have U'nevoti n!g rights upon ex.ercise of the PDRs. The 2169,645,828 Sky Gable shares welre' issued to Sk:y Vision In Oct'ober 0009. Hlow(!velr, as of IMarcht~, 20~ 0, tfile P [)lRsof SKY Vi siOrilhav,e not yet been lssued to the lPare'riltComparilY. ThE) conveJrsi On! of the NOll€ is oO¥i1sideredas a busi ness com bi nation and accounted for usingl purchase method. Accordingly, the conslderetlen of 1~:2.49!9 million was allocated to the identifi alble assets end Ii,abilities based on the fah val ues all conversion d!a:te.lhetai r values of the id!entifiabl!e assets and liabiliUes of Sky CaUe at the dste 0'. conversion and the correspondi ng carryi ng ameu nts immedia:tely before the acquisition were: Fair Valu'e A,ecogrdz!ed Q~ Acgu isiti o'~ ~8316,657

Cash and cash equ ivalents Tradeand other receivables ~repaid expenses and ether cu went assets ~roperty and equipment Customer reiationships Other nOrllcurmn~ assets Tradeand othe,r curmn~ liabilities ILorilg-telrm debt Due to Ire,1tedl par!i,es a Defermdl tax- Ii ablity Other nOrllcurmn~ liabilities INet assets Acquked owner.sihip interest INet assets aequ ired Goo~willaJrising, on acgui siti Oril

3913,921
60'3,186
1

Carryi ng Val ue ~8316.657

3913,921
603,186

4,959,81 6

3,54'7,71 '7
~,469.63!O (2,562,55<0)-

60'7,166 ~,378,03!Cl (2 ,552,5~O} (2 ,91!9.,,270} (674.,582)(61: 4.,965)(2113,45~):

(2,9119,210)(674.,582): (2t3"A5~):

~ .,79i3.,958 ===~=48"",d"",.,2"",58"",,=. 65,.3% 1,171,,275 1,327,696

There is no Gash outflow on the acquisition. fromt!he date of conversion ot me Note up to December 31', 2008 Sky Cabl!e has eontributed ~:29 million to the net income of the Company. ~tthe oombi naition hadtakem place at the begi nning' of 0008, the net income of the Com panytor the year ended Decemlber 31, 2008 \IVO!uld have been ~1 ,441 million and revenue would have been ~25,868 miUio'n.
j

On F,ebruary ~9,2009, t~e 80 [) of ABS~C8IN a~p:rol!led the .addlitional colrlVe'r$ion of ~'1,798 million loan! to Sky CaJble and f!90(] mill iOn! a.dvances to Sky Vi siOn! to PDRs coveringl 278,588,814 Sky Cable shaJr€'·sat conversion pliice of R9.<69 pelf shawe {see rNjot.e 110),. The conversion was cons:id!€lfed as :a:cq]uisitiornof minority int.er,E')st.Upon corwersion of the fOlregoing loan and a.dv:a:noos, the effective interest of ABS~CBIN increased from 66,.3% to 79.3010.
1

90

On March 2, 20(J9, Iby virtue ctaseparate ASSignme,rllt Ag~eeme'mt, A8S~C8N assigned t~e e 1,798 million lOranto S~y Vision. .As a oons.deratlon for t~e aSSlgnm ent, S!k:yVI SIOom aglreed to issue A8S~C8IN PORes,whiclh shall be conve,rtible In~'OS!ky Gable s~':llf>es. The terms of the agnH~ment are sim ilar to the Assignm®ntAgreement aliseussed in the foregoi mg. As of MaI'ch 11, 2J010, nne additional P!DlFls of Sky Vision ha.lve net ye~t ibeeij issued to the P,aI'emt Company. On Malrch 2,2009, the effrE5cltive int.errE5st AlBS·GBN in Sky Ca!b!,®increased from of
6<5,,3% to 7'9"3%.,, b.

Acquisition

at

Mi ijoritry Interest in ~CG

On IMay 23, 2008, S!ky Vision acquired the mi mority In~e1l'esltn PCC t~lrough the purc~ase of an I tlhe common shEiJrE!'S inandl convertible rIIO'ttesandladivarllces of Sun Cabl e' l!FIoldli ngs, Irilcorpora tedl {SO!FI~}for a cash paymentOof 1,248 mill ion andl an assum ptlonof tIM outstandli ng loan obJiglaMn of Tel emondial Holding,s" I no, (THlI) In theam aunt of E!~ 00 minion. SrCHI owns THill, wh Ich in tum O'WriiS the mi ~oriW interest itil PCC. On t~esam e date, Sky Visionandl S!ky Cabl e aglreed that suc~ shams anddebt sMIl be transf,elrr,ed to S:ky Cable. Consequen!lly, 'for financial reportingl purposes, POe. became a wholly owmedl subsldllary of Sky Calbleas af tMt da~e. rQr~ !Decemiber ,23,20018, Siky Vision assigned all its common snares in SCH I tD Sky Ca!bl,epuwsuant to this :a:g reement, The difference betM!entihefai r value of the considerflltion transfe!rred and IiaJbility assum 00 and the calilrying, val ue oif the m inowity int:ere.st in poe, ,ammmting! to ~558 millioNl, is recogmized as goodiwill {(fI®eNOI~® 17)"

c.

Acquisition of Mi ~oritry interest in ABS-OBNI II temational n In [)ecembe,r 2009, the Paren~ Compa~yacCiu Ired from Baya~ Irel €loomm unl cations, II co n {Ba.ya~tel} Its 2%. In~e~e'st tn ABS·CBN IlntemaMnal to If US$6 million (E!2i1 millio~)r w~ichi is payable ovelra pelriodl of three' yearn beginni ng Jlamuary 20~ 0 U nti I Decemlber 201'2 or as maybe extendedlfor a. longlelr period as ag~$ed Iby both parl:l es, Tlhe pMi,es also agr,eedl that the P,aretilt Com pany s:~all have tM opMrII to pay the QOr~sideratiOn Iby way of threfoilowl ng products and se'n.r'i of t~e Par,ent Corn pany whic~ may Ibe availedl by Ba.ya~tel du~ingl the payment '[e~m: ces
I~

I~

I~

I~

com merei W !i3,dvertisingl airti me for Bayentel 's products and services; sponsQ!rs!hip iij various ABS-CIEHj'~-produoed progr,ams anoJor ,,AISS-GSNI-owg:anizedl special events; eo-branded mar'keltingl andprcrneti Q¥QalcaJmpaignsj and , other media-rel at!ed proj eets.

Tlhe- excess Qrft~e DOnSI ielfaMril ovelr t~e carryi rIIg value of t~e mi ~ority imelre'st in ABS·OI3·rNJ d Irntema.rtionalam auntl ng to' ~228 million was Irecognizedl as goMwi II in tlhe oonso! Idatedl slta.rtement offinamcial position (see Note 17)r. As of Dec@miber 311, 2)009', payable arising! from the tlf',aJI1sadionamounted to R277 mllllcn. The current porf om amounti mg to R92 mill iom was presented as part olf" !Due to related parties' in the "Trade and other payables" account (see INot.e 18) while the noncurrent portion amounting! to R1185 mill iom was pr,®sent:ed as Pal't of" !Due to a rei ated palfily~ in the "Othew nOijcurrenrt Ii,abilities" aecou flit r( see Nlote 211). II [)ece'mlber 2009, the Parent ClOmpa~y as:signed its :2 shiare in ABS.·CII3N InteliTnatiQrr!altOo n ABS.·OS.rNJ rlo~balin ,exchange fQrraddlitiQrr!al common sMres in ABS·Cl8.rNJGrloibal. CQrmseque,mtly, G ABS·OB.rNJG Iofbal became the 1 001"/0 ow~er of .AIBS·(;!I3rNJ ~elrna.tional. This ass~gnm e~t. Ms no II n Impact on the con,solidat:ed financial startements.
%

91

On JaNluary 7, 21009',AB8~CBIN Hungary was incorporated to Ibe the holdunlg companly of certsln int.em:a!tionlalsulbsidiaries. On May 19, .2000 and JUnie 19, .2000, ABS-CBIN Hungary inoOliporatoo ASS-OBIN Nletherioodis and estalb!ished a branch i~ Luxem oourg, respectively, wI1 ichi are ifltendedi to conduct the management ot ether busi ness enterprises withi nthe ASS-OBIN GJroup. In D'ecemlber 20[)l9, .AISS·ClS.1NJ Global transfe'rred 1t$1, 00% owil1ers~ilP inte·reS'! in ABS·CSIN Inte·rrnaMrilal to .ABS·Cl8.1NJ IHungary in exc~angefor t~e Issue of a. US$81 mil IIOrllequity rIIote and the assu mption 'of an ,existing[ US$5 m llnon rIIote Iby A!i3$··Cl8.[NJ Hunglall'y. COrllseque~tly, ASS~CSIN IHungary became the new Mldll ng company for ASS-C8NI II temaMnai as 'of [)ecembe·r Si[, 2009. n

5. Segtment. Iinfoirmalion

18usiness 8®9m ents For manageimlenr1 purposes, 1he Com pany is organ ized into th ree business activit!>€s - br'Oadcastingr, cabl €land sat€1lite, and 'Other businesses., This s€gm e~tation is the Ibasis upon wh ieh the Compl1l!ny treports lts pri malry segment informati on, ,~ • IBroadcasti ng segm ent is prj ~cipally the tel evl sion and radi 0' broadcasting ge'rlleractesrecv,enuefr'om sal,e of m3!tlOrlial nd ~egionalad~'e,r;tising' time" a activiti es which

Cabl €I and satell ite business p:rimarily diev€:lops .and produces programs tor cabl,€ u:elevision, i~d udi ng del Ivery of tel €<vi sion progrram mi ~g outside the Philippines through lts IDTHI sa~€11 lte servi ee, cable tel evi sion channel s and blocked 'l.i e 'Onlei evi sion sta1ions, In .20018 ,as a. wesult 'Of m the conversion of the INote in Sky C8!b!,e{see NOiU:e}, the cable and satellite business includes 4 cabl €I u:elevision services of Sky Ca!b!,€ and its subsidiaries in Metro IMianlil.aand i~ cernain pr'Ovinidal ar,€a.sin the Phil i~pines,

Geog[rapihical Segmen~'S. Althoug hi tM Com PMY Is o[r99[l1izedl In~:o three busi ness act [villes, it ope'mtes In th['ee major goograph Ical areas, ~nthe Phi Ii ~pi riles, Its hom e counl[~y.• the Compar!Y is In,volvedl In broadcastl ng., cabl €I operati ONiS and other IblLlsi neeses, II the United Stat€s snd in other 10cati'Ons {which includ® n IMiiddl€I E,ast, Europe, Austlf'alia, Canada and .JaJpan), the Compa~y opewau€s its ca!b!,€ and sat€11 lte op€tra'l.i ns to bring, t.elevisi on program mi ~g outside the !Phili~pines,. o

IDter-ooqment ''frarusamiom

Segm ent revenue, segment expenses and eperaf ng resu Its i~d ude translers amo~g lbiusi ess n segments and among goograph ical 5!egmefllts.fhe translers are accounted for at com petitive market pri ces charged to unrelated customers few similar servl ces. Such transfers are eli mi flIated upon consolidation.

IMarilaglemen~ monitors ope'mUngr results of i1$. Ibusines:s segm ents separatel y for tlhe· pu[rpose of makl ngdiecisions about resou~ce' allocation and pe~fOlmanoe assessment. Segment pertormsnce IS· evaluatedl based on operatir1lg profit or loss and is measured consistently with ope[ra~lng profit and loss In thie oOrilsolidatedfl nancl al statemenil:$.

92

On a con®olidlatedlbasis, U1eCompanry's pellfotrmance is evaluau:ed based on con!solidatoo net income tor the ye.aJr,Gore net income, e.amin!gs betore irnterest, taxes and depreciation and amol1izati On! {EIBITD.A) and EIBIIDA margin. Net income tor the year is rneasured con 5is~entwith consol idau:ednet income aJttrilbiIJtalbl·eto equity holder.;; of the Par~nt OO'ffipa!llY ln the co!ltsolidated fi fllanci a! s'i:a:tements. EBlllD·A margin pertai ns to EBI11D·A dividedllb:y Qlross reven ues, Con!! net Ineome for the 'Y·earIS measUlroo as co~,solidated net Ineom eatt~1butabl e to equity hold~e~sof the Paren~ (;iompa~y befom adj ustments mqui redl undler !PFFlS 3 wh ich relate to theamortizaJtion of customer IrelaMnsihips and d!epreciaJtion andl amortization of fai~ value I ncreass in properlY and equipment, gain on acquisition and exc~ange of debt and el Im Ination of inte·res'l:Income pe·rtainl ng to the accretion of recelvalb!·e ·dli scount, net of related tax e.ff·ect, ali'I Ing 'from t~eacCiU IMlo~ of 8!ky S Cable" The fonowing talbl.® shows the nllconcili.ation oif uhe core net income to eonsol idated net incom €I attriiblUtaibleto equity holders.of tlhe PaJrentComparilY fair years ended !December :3 1, 2009, .2008 and
2007:

Core· net i:noonne PfRS 3 s'dl'ustments: DepreciaJtiion and amortiza!tion Amoritization of eustom er relaJtion!$hips Galin on aoql.li$itlion Md e:o::dh.an,gi€: of dli1lbt Inl:eres~ Iincome Ineom e tax deal Consolidated netlinoQme a!Uj1ibut:albile~oeqrl.!ity Ih;Olde~$ of the IParent 0ompl3!ny

2009 (153,287)· ~45,836)· 121.,879

{44~5~O)·

2(l08 131.,306,474 (1M.geS}

(68,i53}

2(l(l1

131.,266,744

30 H,107
i

(30,720)

36,535

(17,679) 131 ,383,464 131 ,266,744

Thefoilawl ng tabl eslhows the recorllci Ii amonof the COrilsolId!ated EElilinA to consolidated ne·t irIIcome aUributa!ble to equity holders of the lPaJre'rllt ComparilY l'Ow y·ears·e·rllded [)ece·mlber 311, 2009,2008 and 20(Ji':
ConsOlidated EBI1DA lDepreciatiloo afild amortization Amoritization o:f irutangiblle assets" F~nSinae oosW·· I nOOfest tneome IPiroviision for lneems tax Consolidated O~~ .i neome atb1ibuWJle to eqru holders ity of the P.a!renrtQomipSiny

2009 86,,513,997 (2,257 ~g68) (1.,019,681). (863,787). 93~2'91 ~684j055).

2008 B6,108,352
{1.841,973}

2007
85.,055,/23

(1,244,715) (696,245) 90.120 (1 ,032,075)

(1.210,190) ('l,137,003) (566,332) (986,470)

111.866

·Exc.liJdtng OIfflOmzo;!ti.o.n of $tol)'. fflU$ii;; .;ind P.t!bIic<JtiOfl rigllts, ··Exc/Wjng bank $(i!1'Vfo~ chOll'g.~$-

fI10~

.frJ·proc,fI$$

81.,266,/44 81,383,464 .and' 'VW!;lO' .rfgh.rs OIndr.r:cord fflOil~~~!:

93

m :::; c >

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I~ ~ I ~

I~

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<> SN

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... '" .. ....
~

~~ ~ ~~~
t.;.

...
0 I~

",

...

.... 01

",

!t2 ~g'(j -:"""wm'hi

I

~,~

~;';')2

"'''' oc aco ~ffi

0>-

-..101

m ,'"
'0

I~!

.;DO

..

o,.J~ru(D

~~~,M

~W~_

'"

'" .,::.!

Ttl •

"I
I~

Ttl ,

ldi
I

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ro <> <>
I I I

...

'" '"

I~
I~

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-,L

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~U:Ji

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'0

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,,

TIl

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U1U:!

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6"

Cash and Cash EqUliiV'a~elilts

Cash on hand and in lban'ks Cash equival ents

18'11,656,,1311 11.6811,600'

20~)8 ~'~.396,79<t 1.127.461(~

Cash irnbarnks €lams interest at the res;pectil'(,ebook d!epolSit rates. Cash equ ivai e~ts are short-term placementiS, wh ieh are made for vaJrying periods of up to th ree monlHnsd!eperndinglon the imm,ediat€l cash requirements of th€l Company, and! €lam interest at the respective short-term placement rates, Int€H'est eaJI'nedfJI'om cash and cas~ eQu ivai e'rllts amoun~ed to 11293 illion, 51 60million and m
1

~7j'

million

I rII 2009, 2!008andl 2007, re,specWely {see Note 28).

7"

Tta,de

and O~li1er Reoeivables

,2008

Trade: Airtime Subscriptions Adv,ance,$ to suppliers Adv,ance,s, to employ,eesandl ~al,ents Due from rei ated pawliss (see No'~:e 23)

183~170'~267'

OtMm

7MIjS33
408'17,84. 2i11~3i18 ,63'1627 293,AOO'

~:2.537.684
99:2,103 ~,,06;0.,765 27'3,83,2
11'8.,09'2

11 t3i17't8OO'

OtMm

Less allowarncefor doubtful accou nts

6,2510,7,49' 5311,217'
18:5.7119',532

123,903 3113.,866 :5A~OO,2--45 4(4i(]., 106

Trade r,eceivablecs ,EiJre nonintemsr·be,ail'ingl and are gene'lfallyorll ,50 to 90d1ays term upon receipt o.f irIIvoice by t~e customer. AdivanC€!fs to. :suppll,elrs, employees and tal,ents and o.t~er IreceivaJbles are usually seWed within one y,ear. For terms and condlitiOriis JI'e,1 ng to due from JI'e,1 parties, reter to ati atedl INote 23.

Tot:a!11

1, 2008 Pir'OVi~io:ns (s,ee Nate 27) BalanC!l al

D~e:mb~r

Balance'

al. Jan~¥y

~4;87E
55,274

1'?61,048
117,64:5 1 ,47.8,,893

~1,3'19'

1E.f!ectof business cambilf'latio:f'I Note 4) (see Wrll~Or'~S and OIihers P1FQVi$iQ:rt$ (s@~ Not~ 27) Wrile,of!s arne C4ihers

(13,39>1)

34,528

f1 ,563)77S} (~53,513'}

{161 ,743}

U48,101 00,029 32,.270

18,352

1'?31,786
(24,814)

28,942

3,270

1'?318,8&1
194\,54~ ~,6'90,464

31, 2006

281;086 93,193
(35,79'7)

93,808 '158,216

(0,1'22)

39,18S 13,793
{329)

(U'63,7'29) 440,100 292,47:2

(2Q1.36~)

1.47,647

96

Ai rtlme receivebles incl ude u~bill,ed al mme ansi ~g from a.dverbem ents which have been ai red duri I1g the year but blll ing or aoceptanoe !by the customer has been delayed due to ti me lag in eempletl ng all required doeum ents, IInvoicing ~ormally takes arou nd seven days from ai ring!. SUbscription recelva!bl,esi ncl ude urnbilledl subsCII'ipMn, whe~e revenue has beenaccwed based on tlhe rates in the sulbecri pti ornagreem e'rllte multi pl I ed Iby ~he e's,tim.atedl number O'f sulb<sclfibe'mbased on the latest report frcm the cable provid:elfS. Bini rng has been delayed due to 30 to 60 days lag In ~:t1Je sulbmission of actual $ulbecrl bers mpolftfromcalble provldle~s" The o1g I ng analysis O'f ~:t1JerIIbiliedl mceivables fOUQVJIs: U Less than 30 days 311-60 days B 11-90 days

eS93,7.65
146,215 15,502

.2008
j;!705,345

12:0,088 63,779
j;!B89 ,211.2

8. Iinventoli11es
.2008 At net realizable value: Material s, sll~pl i es and spare pails lMien)handise i nV€<rlfto,ry OUke sll9P1i es e95~8116 lea~568 4.7115

~46,849
177,143 1,.668

IMlate~ials, su~p! I es and ,s:pare parts. com prise m at:elflals arlld su~p! tss O'f the Pamn~ Gomparny, cabl e, concS<tndiO~ and install ation suppl ies of Sky Cable. Merclhandise inveijtmy consists m al nly of records and other consum er products held for sale by oither sulbsidiari es, The cost oif ilnveijtori,es earrted .8!t net realiz8!ble value .amoun!t.ed t.o ~:367 million! and RMO million as of Dooember 31, 0009 and 20(]8, respectively.,

.20018 Prepmduc,tion expenses Cmoitable withholdi ng and prepaid t:a!.'K.e.s. !Derivative assets {see rNJote3:3) Prepaid expenses. and others

e4t2,110
366,534

j;!374.,348 287,32.8

304,5211
IEn.10a,116i5

11>6,,22:3

21.2,4\111
~890.3110

97

On September .20, 21007, relaJtoo to the acqui siti On!!by the Parent Compan!Y of e6% of Sky Cable De'.bt from th ird party cred~tolf's as discussed in Note 19, Sky CaJb!,eissued lVlilOProm issory INotes to the PaIf'€:n!t ompan!Y in the .a.ggn~g.ril!tem ount of R1,798 million th LIS, making the Parent Companry the C a eventual lender on record of Sky CaJbl,e..The loan! parys monthly interest at 3m PDST·F' plus 1,Iyo with at fi n!al m atulrity in September .2011. as am ended on IF e ~b:mary 21, .2008 {see NOiU'e19). The Prom issolry INO'tesare tu!1hergovemed! by the terms and! eonditlens of the Facility Agr!eemeflft dated July 2, 2004. In 2008 and 2007, imerest ineeme amounted to' ~ 13, mi IIiO'fli and! ~25 mill iO'fl, respec1ive!y (see Nio'te 28). In 0009 no intelres!t lnocme was aecrued slnee the longlcterm receivables were already eenverted to Sky VisiO'n PDAs.
1,

Th is amount of 5UPPO'rt ot the Com pany to Sky Oalble was i~ oomlP!iance with the Senior Cn:loit Agreement (SOA) and the Fi rst Il.imendm ent Agreement daf:ed Septemiber 14, 0007 be1i:weefliam:! amofllg the Parent Company and the relevant pElJrti of me SOA, wl1ich inereased prevlous threshold es of adv·aII1cesand guaJI'srilteecs that can be e:xtend:ed by the' Pamn~ Gompall1Yto Sky Cablefmm ~400 million to l82,2.50 million. In Decem ber .2000, the Parent Com paJny purchased a.ddlilion!al Sky Cable D,eht for a consid€ra~i On!oif ~~ 03 million or 55% olf the pri rilcipal amount of R18:8 mill ion.. The IrooeivaJblefrom Sky Cabl e pays monthly imi€lresl aJt3m PDS1~F pi us. 1% with fi nal m a~ulritry n September 20 16. i The long:·t.erm r>eceivabl,esfrom Sky CaJbl,ewere initiallry measured and r>ecoglmiz.ed their fai r val ue at aJtinception daJte.. !Disoounts, which r,epresen~ the difference !between the nomi nal val ue andrai r 'Value of the 1f'000h/abl,es,amoumt!ng to RB5 million and R374i million in 20GB and 2007, If'€'spectivelry, aJr@ accreted over the term ot the reeeivebles usi ng the effective intelrest method. Aoolre1iion O'f the disoo,unts, included as part of interest income, amounted to! ~91 m illiO'n and !~10 million in 2008 and 20137 respectively" see Nlote 28).
j

~n 2008, UPO'flleenselidatlen ot Sky Cabl'etO' .AIBS-CIBN,the long'cterm reooivaol esfrom Sky Cabl'e totaling ~1 ,546 million were ellmlnsted and the dijffe~eflice bet:weefl the cawyingl v,alue O'fSky Cable's debt and the canyi ng val ue ot AIBS-CIBN'5·IO'ng-tem'! recelvablestrom Sky Gable amQunti ng to! ~30e million was recO'glflized as gain (see INote 28). As discussed in Nlo~e4, on Februa[y ~9, 2(l09, the BOD ofAIB8·{:BN ~pproved the'COrllversion of the 9~ ,1'918 million loan and 9900 miliiorll advElil1ces to 278.,588.,,8114 Sky Vision PDRs oovelringl 278,588,81,4 Sky Calbl,e s~aresalt a conve'[];ion pnee of eg!A59 per shall'e upon conve~si onot the fo~egoing loan all1d1dvsrllces. a On MatCh 2,. 2009, by viJI'tu.e of a sepamte Assi g,rIImen~Agreemen~, A8S~CBIN assignoo ·~~e ~'~,798 mill iO¥~ loan to Sky Vi sion" .As a consideretion for th€ .assignment, Sky Vi siOn!a,greedl to issue to ABS~CBIN 1B5,'662,775 P DIRs wh ieh shall b€ converf b4,€inrio ~B5,e62,715 Sky Cable sihares.. The terms of U1e aglr€:em€:~t. are similaJrto the Assignm erntAglreement d~scusg,€d in thefor>ego! n!g. The rem al ni n!g Ion!g4elrm receivaJb~e from Sky CaJb~eas of December 311,2009 of R1113mill iOn!was eliminated upon! consolioaJtion of Sky CaJbleto ABS~CBN.

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