ABS-CBN Broadcasting Corporation

Transcription

1 ABS-CBN Broadcasting Corporation Sgt. Esguerra Avenue, Quezon City, Philippines May 21, 2009 To: Attn: From: Listing & Disclosures Department Philippine Stock Exchange, Inc. Exchange Road, Ortigas Center, Pasig City Ms. Janet A. Encarnacion Head, Disclosure Department ABS-CBN Broadcasting Corporation Tel No.: (632) / Fax No.: (632) Subject: Amended Definitive Information Statement Dated May 21, 2009 Gentlemen / Mesdames: In connection with our disclosure last 19 May 2009 with regard to ABS-CBN Broadcasting Corporation s ( ABS-CBN or the Company ) Definitive Information Statement for the Annual Stockholders Meeting, we are submitting to the Exchange the Company s Amended Definitive Information Statement reflecting the following revisions: 1. Control and Compensation Information, Page 6. We have updated the number of shares beneficially owned by ABS-CBN Holdings Corporation as of April 30, The number previously stated was the number of shares as of March 31, Involvement in Certain Legal Proceedings, Page 14. As prescribed by the Securities and Exchange Commission ( SEC ), our opening statement now reads: For the past 5 years, including the date of this definitive information statement 3. Annex C. Prices of ABS-CBN s common shares and PDRs now reflect the latest practicable trading date of May 20, Further, the SEC has already approved the printing and the distribution of ABS-CBN s Definitive Information Statement to the Company s shareholders. We hope that you find everything in order. Very truly yours, Charles A. Gamo Head, Corporate Planning & Investor Relations

2 COVER SHEET SEC Registration Number A B S - C B N B R O A D C A S T I N G C O R P O R A T I O N (Company s Full Name) A B S - C B N B R O A D C A S T C E N T E R S G T. E S G U E R R A A V E. C O R N E R M O. I G N A C I A S T. D I L I M A N Q U E Z O N C I T Y (Business Address: No. Street City/Town/Province) Rolando P. Valdueza (Contact Person) (Company Telephone Number) Amended 20-IS Month Day (Form Type) Month Day (Fiscal Year) (Annual Meeting) (Secondary License Type, If Applicable) Dept. Requiring this Doc. Amended Articles Number/Section Total Amount of Borrowings 6,848 P=8.4 billion $6 million Total No. of Stockholders Domestic Foreign To be accomplished by SEC Personnel concerned File Number LCU Document ID Cashier S T A M P S Remarks: Please use BLACK ink for scanning purposes. 1

3 ANNUAL STOCKHOLDERS MEETING NOTICE OF ANNUAL STOCKHOLDERS MEETING To: All Stockholders of ABS-CBN Broadcasting Corporation Please take notice that the Annual Meeting of Stockholders of ABS-CBN Broadcasting Corporation will be held on Thursday, June 18, 2009 at 8:00 a.m. at the Dolphy Theater (formerly Studio 1), ABS-CBN Broadcast Center, Sgt. Esguerra Avenue corner Mo. Ignacia St., Diliman, Quezon City, to discuss the following: A G E N D A 1. Call to Order 2. Proof of Service of Notice 3. Certification of Presence of Quorum 4. Approval of the Minutes of the Annual Stockholders Meeting held on June 26, Report of Management 6. Approval of Audited Financial Statements 7. Election of Directors for Ensuing Year 8. Ratification of all acts of the Board of Directors, Executive Committee and Management for the period covering January 1, 2008 through December 31, 2008 adopted in the ordinary course of business. 9. Appointment of External Auditors 10. Amendment of Article II, sec. 1 to change the date of the annual meeting from the last Thursday of May of each year to the third Thursday of June of each year 11. Adjournment For purposes of the meeting, only stockholders of record as of April 15, 2009 are entitled to attend and vote in the said meeting. request. Copies of the minutes of Annual Stockholders' Meeting held on June 26, 2008 will be available upon Should you be unable to attend the meeting in person, you may appoint a Proxy by executing the appropriate form. MANAGEMENT IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND MANAGEMENT A PROXY. For validation, however, please return your proxies to the undersigned at 4/F Benpres Bldg., Meralco Ave. cor. Exchange Rd., Ortigas Center, Pasig City not later than June 8, For your convenience in registering your attendance, please have some form of identification such as a passport, driver s license or voter s I.D. By order of the Board of Directors: MANUEL L.M. TORRES Corporate Secretary 2

4 SECURITIES AND EXCHANGE COMMISSION SEC FORM 20-IS INFORMATION STATEMENT PURSUANT TO SECTION 17.1(b) OF THE SECURITIES REGULATION CODE 1. Check the appropriate box: [ /] Preliminary Information Statement [ /] Definitive Information Statement 2. Name of registrant as specified in its charter: ABS-CBN BROADCASTING CORPORATION 3. Province, Country or other jurisdiction of incorporation or organization QUEZON CITY, PHILIPPINES 4. SEC Identification Number: BIR Tax Identification Number: V 6. Address of Principal Office ABS-CBN Broadcast Center Sgt. Esguerra Avenue corner Mother Ignacia Street Quezon City 1103 Philippines 7. Registrant s telephone no. and area code: (632) up to 22 / Date, time and place of the meeting of security holders Date : June 18, 2009 Time : 8:00 A.M. Place : Dolphy Theater, ABS-CBN Broadcast Center Sgt. Esguerra Avenue corner Mother Ignacia St., Quezon City 1103 Philippines 9. Approximate date of which the Information Statement is first to be sent or given to security holders May 27,

5 10. Securities registered pursuant to Sections 8 & 12 of the Code or Section 4 and 8 of the Revised Securities Act: a. Authorized Capital Stock Php1,500,000,000 (Php1.00 par value) b. Number of Shares Outstanding as of March 31, 2009 Common Shares 779,584,602 shares c. Amount of Debt Outstanding as of March 31, 2009 Short Term & Long Term Debt (current & noncurrent) Php8,714 million 11. Are any or all of these securities listed on the Philippine Stock Exchange? Yes [ / ] No [ ] The Company s common shares have been listed on the Philippine Stock Exchange since

6 ABS-CBN BROADCASTING CORPORATION INFORMATION STATEMENT This information statement is dated May 27, 2009 and is being furnished to stockholders of record of ABS-CBN Broadcasting Corporation (the Company) as of April 15, 2009 in connection with the Annual Stockholders Meeting. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. ======================================================== GENERAL INFORMATION Date, time and place of meeting of security holders Date - June 18, 2009, Thursday Time - 8:00 A.M. Place - Dolphy Theater, ABS-CBN Broadcast Center, Quezon City Principal Office - ABS-CBN Broadcast Center, Sgt. Esguerra Ave., cor. Mo. Ignacia St., Quezon City, Metro Manila Approximate date of which the Information Statement is first to be sent to security holders May 27, 2009 Right of Appraisal A stockholder has a right to dissent and demand payment of the fair value of his share: (i) in case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholders or class of shares or of authorizing preferences over the outstanding shares or of extending or shortening the term of corporate existence; (ii) in case any sale, lease, mortgage or disposition of all or substantially all the corporate property or assets; and (iii) in case of merger or consolidation. The appraisal right may be exercised by a stockholder who has voted against the proposed corporate action, by making a written demand on the Company within 30 days after the date on which the vote was taken for the payment of the fair market value of his shares. There are no matters or proposed corporate actions which may give rise to a possible exercise by security holders of their appraisal rights under Title X of the Corporation Code of the Philippines. Interest of Certain Persons in Matters to be acted upon (a) No Director or Executive Officer of the Company has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon other than election to office. (b) No Director has informed the Company of his opposition to any action to be taken by the registrant at the meeting. 5

7 CONTROL AND COMPENSATION INFORMATION Voting Securities and Principal Holders Thereof (a) The Company has 779,584,602 common shares subscribed and outstanding as of April 30, Every stockholder shall be entitled to one vote for each share of stock held as of the established record date. (b) All stockholders of record as of April 15, 2009 are entitled to notice of and to vote at the Company s Annual Stockholders Meeting. (c) With respect to the election of directors, a stockholder may vote such number of shares for as many persons as there are directors to be elected or he may accumulate said shares and give one candidate as many votes as the number of directors to be elected or he may distribute them on the same principle among as many candidates as he shall see fit; provided, that the total number of votes cast by him shall not exceed the total number of shares owned by him multiplied by the whole number of directors to be elected. (d) Security ownership of certain Record and Beneficial Owners and Management: (1) Security Ownership of Certain Record and Beneficial Owners (of more than 5%) as of April 30, 2009: Title Of class Name and Address of Record Owner Common Lopez, Inc. 5/F Benpres Bldg, Exchange Road corner Meralco Ave., Pasig City Common PCD Nominee Corporation (PCD) G/F Makati Stock Exchange Bldg., Ayala Ave., Makati City (PCD is not related to the Company) Name of Beneficial Owner and Relationship with Record Owner Lopez, Inc. (Oscar M. Lopez, Chairman, is authorized to vote on behalf of Lopez, Inc.) ABS-CBN Holdings Corp. (Oscar M. Lopez, Chairman, is authorized to vote on behalf of ABS-CBN Holdings Corp) Citizenship No. of Shares Held Per cent Owned Filipino 446,231, % Filipino 307,286, % Lopez, Inc. is the holding company of the Lopez family. It is owned by the respective holding companies of the families of Eugenio Lopez, Jr., Oscar M. Lopez, Presentacion L. Psinakis and Manuel M. Lopez. It has issued convertible notes covering the shares in the Company registered and beneficially owned by it in favor of Benpres Holdings Corporation. The Board of Directors of Lopez, Inc. has the power to decide how Lopez Inc. s shares in the Company are to be voted. ABS-CBN Holdings Corporation is a participant of PCD. The 269,800,200 shares beneficially owned by ABS-CBN Holdings Corporation form part of the 307,286,092 shares registered in the name of PCD. ABS-CBN Holdings Corporation is owned 50% by Lopez, Inc. and 50% by Oscar M. Lopez, Manuel M. Lopez, Presentacion L. Psinakis, and Eugenio Lopez III. The shares in the Company registered and beneficially owned by it are covered by Philippine Deposit Receipts (PDR) which gives the holder thereof the right to delivery or sale of the underlying share. The PDRs are listed 6

8 with the Philippine Stock Exchange. The Board of Directors of ABS-CBN Holdings Corporation has the power to decide how ABS-CBN Holdings Corporation s shares in the Company are to be voted. As of April 30, 2009, there are no other participants under PCD account who owns more than 5% of the voting securities. (2) Security Ownership of Directors and Management as of April 30, 2009: As of April 30, 2009, the Company s directors and senior officers owned an aggregate of 1,452,338 shares of the Company, equivalent to % of the Company s total issued and outstanding capital stock. Title of Class Stockholder Name Position Nature of Beneficial Ownership Citizenship No. of Co. Shares Held Percent Held Common Eugenio L. Lopez III Chairman and CEO Direct Filipino 651, % Common Augusto Almeda-Lopez Vice-Chairman Direct Filipino 249, % Common Oscar M. Lopez Director Direct Filipino 61, % Common Presentacion L. Psinakis Director Direct Filipino % Common Federico R. Lopez Director Direct Filipino % Common Ma. Rosario N. Santos-Concio Director, President and Direct Filipino % COO Common Manuel L. Lopez Jr. Director Direct Filipino % Common Angel S. Ong Director Direct Filipino 29, % Common Federico M. Garcia Independent Director Direct Filipino 226, % Common Jose C. Vitug Independent Director Direct Filipino % Common Pedro N. Dy-liacco Independent Director Direct Filipino % Common Rolando P. Valdueza Chief Finance Officer Direct Filipino 11, % Common Ma. Socorro V. Vidanes Managing Director, ABS- Direct Filipino 10, % CBN TV Production* Common Antonio S. Ventosa Head, Corporate Direct Filipino 13, % Marketing and Concurrent Officer-in-Charge, Studio 23** Common Mario Carlo P. Nepomuceno Chief Human Resources Direct Filipino 35, % and Organization and Development Learning Officer Common Vivian Y. Tin Chief Research and Direct Filipino 30, % Business Analysis Officer Common Evelyn L. Javier Chief Information Officer Direct Filipino 10, % Common Raul Pedro G. Bulaong Managing Director, ABS- Direct Filipino % CBN Technical Production Operations Common Leonardo P. Katigbak Head, Special Projects Direct Filipino 58, % Common Louis Benedict O. Bennett Officer-in-Charge, Regional Direct Filipino % Network Group Common Jose Ramon D. Olives Managing Director, Cable Direct Filipino 47, % Channel and Print Media Group*** Common Johnny C. Sy Chief Information Officer Direct Filipino 17, % Security Ownership of all Directors and Officers 1,452, % *Appointed Head of Channel 2 Mega Manila Management effective March 18, 2009 **Appointed Managing Director of Cable Channel and Print Media Group effective April 1, 2009 ***Until April 1, 2009 None of the members of the Company s directors and management owns 2.0% or more of the outstanding capital stock of the Company. 7

9 (e) The Company knows of no person holding more than 5% of common shares under a voting trust or similar agreement. (f) No change of control in the Company has occurred since the beginning of its last fiscal year. Directors and Executive Officers as of April 30, 2009 Nominees for Election as Members of the Board of Directors, Including the Independent Directors The following have been nominated as members of the Board of Directors for the ensuing year: Eugenio L. Lopez III Augusto Almeda Lopez Maria Rosario Santos-Concio Oscar M. Lopez Presentacion L. Psinakis Federico R. Lopez Angel S. Ong Manuel L. Lopez, Jr. Federico M. Garcia (Independent Director) Jose C. Vitug (Independent Director) Pedro N. Dy-liacco (Independent Director) All of the above nominees are incumbent directors. They were formally nominated by a shareholder of the Company, Lopez Inc., through its Chairman, Mr. Oscar M. Lopez. The nominees will serve as directors of the Company for one year from date of election. In 2006, the stockholders approved amendments to the by-laws, which included, among other things, the amendment of Article III, sec. 6 to provide for the qualifications and disqualifications of directors, including independent directors and the procedures for the nominations of directors. As amended, the by-laws provide that nominations shall be submitted in writing to the Board of Directors at least 30 business days before the annual meeting and that the Board or a duly constituted committee shall prescreen the qualifications and prepare a final list of qualified nominee. The entire Board and its Chairman, Mr. Eugenio Lopez III, acts as the Nomination Committee and passes upon the qualifications of the independent director. In this regard, the Board approved the above nominees in a meeting of the Board held on March 26, Below is a summary of the nominees qualifications: The following directors have held their current positions in their respective companies for more than 5 years unless otherwise indicated. Eugenio L. Lopez III, Filipino, age 57 Chairman of the Board of Directors and Chief Executive Officer Mr. Lopez was elected Chairman of the Company s Board of Directors on December 10, 1997, when his father, the late Eugenio Geny Lopez, Jr., turned over the reins of the family-owned company to the younger Mr. Lopez, who had been President since 1993 and Director since He joined the Company in 1986 as Finance Director before he became General Manager in He graduated with a Bachelor of Arts degree in Political Science from Bowdoin College. He has a Masters degree in Business Administration from Harvard Business School. Mr. Lopez is a recipient of various Philippine broadcasting industry awards. 8

10 Augusto Almeda-Lopez, Filipino, age 81 Vice-Chairman Mr. Augusto Almeda-Lopez joined the Company in He has served as Vice Chairman since Mr. Almeda-Lopez is also the Vice-Chairman of First Philippine Holdings Corporation. He also serves as the Chairman of ACRIS Corporation and ADTEL, Inc. while he serves as a Director of various companies in the telecommunications, manufacturing, and service industries, namely First Philippine Industrial Corporation, First Gen Renewables, Inc., First Electro Dynamics Corporation, Philippine Electric Corporation, Bayan Telecommunications, Inc., and Sky Vision Corporation. He is an alumnus of De La Salle College and Ateneo de Manila, is a graduate of the University of the Philippines College of Law class 1952 and he completed the Advanced Management Program course at Harvard University in Ma. Rosario Santos-Concio, Filipino, age 54 Board Member, President and Chief Operating Officer Prior to her appointment as President and Chief Operating Officer, Ms. Santos-Concio was Head of Channel 2 Mega Manila Management where she brought greater synergy between Marketing, Sales, and Production. She was also was in charge of achieving profit margins, nationwide ratings, annual programming strategy and customer development targets of the Company. She is also known as an award-winning actress and an accomplished film and TV producer. Onscreen, Ms. Santos-Concio hosts the network s longest-running drama anthology Maalaala Mo Kaya. As President and COO, she leads the Executive Committee and all subsidiary and division heads report to her. Ms. Santos-Concio graduated cum laude from St. Paul s College in Manila with a Communications Arts degree. In 2007, Ms. Santos- Concio also completed the Advanced Management Program at Harvard Business School. Oscar M. Lopez, Filipino, age 79 Board Member Mr. Oscar M. Lopez has served as Director since He also serves as Chairman and Chief Executive Officer of the First Philippine Holdings Corporation (FPHC), and Chairman of Benpres Holdings Corporation (Benpres) and all member-companies of First Gen Corporation (First Gen), First Gas group of companies and Energy Development Corporation. Through his Chairmanship of FPHC and Benpres, Mr. Lopez serves as Chairman of the Lopez Group of Companies. Mr. Lopez has led FPHC s efforts in other businesses aside from energy and power, including toll road construction, industrial park and real estate development, and electronics manufacturing. Mr. Lopez has a Masters degree in Public Administration from the Littauer School of Public Administration in Harvard University, where he also earned his Bachelor of Arts degree, cum laude. Presentacion L. Psinakis, Filipino, age 74 Board Member Ms. Psinakis has served as a Director of the Company since Ms. Psinakis is the founder and President of Griffin Sierra Travel, Inc. (formerly Sierra Tours, Inc.). She is a member of the Board of Trustees of the Eugenio Lopez Foundation, Inc. and also serves as director of the following companies: Lopez Inc., Benpres Insurance Agency, ADTEL Inc., and Philippine Commercial Capital, Inc. She took a Bachelor of Arts course in St. Scholastica's College. Federico R. Lopez, Filipino, age 48 Board Member Mr. Lopez is a Director of the Company since He is President and CEO of First Gen and Managing Director for Energy of First Philippine Holdings Corporation. He is a member of the boards of First Philippine Holdings Corp., Energy Development Corp., First Private Power Corp., and Bauang Private Power Corp. He also serves as director, President and CEO of First Gen Luzon Power Corporation, FG Bukidnon Power Corp., First Gen Hydro Power Corp., First Gen Geothermal Power Corp., First Gen Visayas Hydro Power Corp., First Gen Mindanao Hydro Power Corp., First Gen Energy Solutions, Inc., First Gen Northern Energy Corp., First Gen Premiere Energy Corp., Red Vulcan Holdings Corp., Prime Terracota Holdings Corp., First Gen Visayas Energy Inc., First Gen Prime Energy Corp., First Gas 9

11 Holdings Corp., First Gas Power Corp., FGP Corp., AlliedGen Power Corp., Unified Holdings Corp., First NatGas Power Corp., FGLand Corp., and First Gas Pipeline Corp. He is also President of First Philippine Conservation, Inc. Mr. Lopez is a graduate of the University of Pennsylvania with a Bachelor of Arts degree in Economics and International Relations, cum laude. Manuel L. Lopez, Jr., Filipino, age 41 Board Member Mr. Lopez, Jr. has served as a Director of the Company from 2000 to 2006 and in He was Assistant Vice President for Affiliate Marketing for ABS-CBN International North America from 1993 to He then joined SkyCable and became a Director and later became Regional Director for Pilipino Cable Corporation from 1999 up to the present. He is currently the Chairman of the Board of Pacifichub Corporation and the Executive Vice-President of Benpres Insurance Agency, Inc. He graduated with a Bachelor of Science degree in Business Administration from the De La Salle University. Angel S. Ong, Filipino, age 58 Board Member Mr. Ong is the President and Chief Operating Officer of Benpres Holdings Corporation since He was Chief Financial Officer of Benpres from 2001 to 2004 and Vice President for Finance from 1998 to He is a member of the Board of First Philippine Infrastructure Development Corporation, Bayan Telecommunications, Inc. and Bayan Telecommunications Holdings Corporation. Mr. Ong received his Bachelor of Science in Commerce degree from the Philippine College of Commerce and a Masters degree in Business Administration from the University of the Philippines. Federico M. Garcia, Filipino, age 65 Board Member Mr. Garcia was president of ABS-CBN from 1998 to Prior to his appointment as President, Mr. Garcia was Executive Vice President and General Manager. He also worked as a TV Sales Executive with ABS-CBN in 1966 until Martial Law. Before rejoining the Company in 1987, he was Executive Vice President of GMA-7, managing its marketing and programming activities. He attended the College of Business Administration at the University of the Philippines. Mr. Garcia is a recipient of various Philippine broadcasting industry awards. Justice Jose C. Vitug, Filipino, age 74 Board Member Justice Vitug was Associate Justice of the Supreme Court from 1993 to He has been a Consultant of the Committee on Revision of the Rules of the Court, Supreme Court of the Philippines since He was Chairman of the Philippine Stock Exchange and the SCCP Securities Clearing Corporation of the Philippines from 2005 to He is currently Chairman of the Angeles University Foundation Medical Center, a post held since He has been an Independent Director of Aboitiz Equity Ventures, Inc. since 2005 and Clark Electric Distribution Corporation since He is the Chairman Emeritus of the Commercial Law Department and Senior Professor of the Philippine Judicial Academy, Supreme Court of the Philippines and a Trustee of Mission Communications Foundation, Inc., since Pedro N. Dy-liacco, Filipino, age 61 Board Member Mr. Dy-liacco started his professional career with Procter & Gamble, Johnson Wax and Ace-Compton Advertising before joining Nestlé Philippines, Inc. in 1977 as an Advertising Manager. He became the Regional Sales Manager of South Minadanao in 1980, worked in Vevey, Switzerland from 1981 to 1982, and became Group Product Manager of Coffee & Beverages Marketing Group, in Mr. Dy-liacco then held various positions in Nestlé Philippines, Nestlé Indonesia, and Nestlé Singapore. He returned to Nestlé Philippines as Director of Communications in 1997, and in 2005, he became Director of Communications & Marketing Services. He is currently a member of the International Chamber of Commerce s Commission on Marketing & Advertising, and is concurrently a Management Consultant. Mr. Dy-liacco graduated with a Bachelor of Arts degree from the University of the Philippines in

12 Independent Directors of the Board The Company s Independent Directors, Mr. Federico M. Garcia, Justice Jose C. Vitug and Mr. Pedro N. Dy-liacco have at least one (1) share of the stock of the Company in their respective names, are college graduates and possess integrity, probity and assiduousness. They are persons who, apart from their fees as directors of the Company, are independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with their exercise of independent judgment in carrying out their responsibilities as directors of the Company. Specifically, Mr. Garcia, Justice Vitug and Mr. Dy-liacco: (i) are not directors or officers or substantial stockholders of the Company or its related companies or any of its substantial shareholders (other than as independent directors of any of the foregoing); (ii) are not relatives of any director, officer or substantial shareholder of the Company, or any of its related companies, or Lopez, Inc., or any of its other substantial shareholders; (iii) are not acting as nominees or representatives of a substantial shareholder of the Company, or any of its related companies, or Lopez, Inc., or any of its other substantial shareholders; (iv) have not been employed in any executive capacity by the Company, or any of its related companies or Lopez, Inc., or by any of its other substantial shareholders within the last two (2) years; (v) are not retained as professional advisers by the Company, or any of its related companies, or Lopez, Inc., or any of its other substantial shareholders within the last two (2) years, either personally or through their firms; (vi) have not engaged and do not engage in any transaction with the Company or with any of its related companies or with Lopez, Inc. or with any of its substantial shareholders, whether by themselves or with other persons or through a firm of which they are partners or companies of which they are directors or substantial shareholders, other than transactions which are conducted at arms length and are immaterial; and (vii) do not own more than two percent of the shares of the Company and/or its related companies and/or Lopez, Inc. or any of its other substantial shareholders. Mr. Garcia, Justice Vitug, and Mr. Dy-liacco do not possess any of the disqualifications enumerated under Section II (5) of the Code of Corporate Governance and Section II (D) of SEC Memorandum Circular No. 16, Series of Executive / Corporate Officers Maria A. Ressa, Filipino, age 46 Managing Director, News & Current Affairs Division and concurrent Managing Director, ANC Ms. Ressa heads ABS-CBN s News & Current Affairs (NCA) division. She is responsible for the overall strategic direction as well as the day-to-day operations of the NCA group. She is also concurrently the Managing Director for ABS-CBN News Channel (ANC), the country s first and only 24-hour news cable channel. Maria graduated cum laude from Princeton University in the United States with a degree in Bachelor of Arts in English Literature, minor in Molecular Biology. She was a scholar for Fulbright Fellowship in the United States. She had an illustrious 17-year stint at Cable News Network (CNN), with her last assignment being the Bureau Chief for Southeast Asia. She was CNN s Manila Bureau Chief in 1988 and CNN s Jakarta Bureau Chief in Ms. Ressa was a recipient of the Asian Television Award in 1999; SAIS-Novartis International Journalism Award in 2000; Ferris Professorship of Journalism in 2001, National Headliner Award for Investigative Journalism and the TOYM (Philippines) in 2002; Outstanding Investigative Journalism from the Emmy Awards in 2003 and Judges Citation from the US Overseas Press Club in She is the author of Seeds of Terror: An Eyewitness Account of Al- Qaeda's Newest Center of Operations in Southeast Asia, published by Simon & Schuster in Ma. Socorro V. Vidanes, Filipino, age 47 Managing Director, ABS-CBN TV Production* Ms. Vidanes held the position of Managing Director for ABS-CBN TV Production from 2001 to She was responsible for the conceptualization, production and management of all TV Entertainment programs on ABS-CBN Channel 2. She has been with ABS-CBN since 1986, starting as an Associate 11

13 Producer and has since then been involved in the production of all types of programs talk shows, variety, reality, game, comedy and drama. Ms. Vidanes obtained her degree of Bachelor of Arts in Communication Arts from the Ateneo de Manila University. *Appointed Head of Channel 2 Mega Manila Management effective March 18, 2009 Jose Agustin C. Benitez, Jr., Filipino, age 49 Head, Channel 2 Sales Mr. Benitez joined the Company in April 2006 as the Company s Head of Channel 2 Sales. He is tasked with establishing strategic long-term partnerships with agencies and advertiser clients by helping them build their businesses and, at the same time, bring in revenues to the Company. He provides sales solutions to clients from a broad range of traditional and non-traditional media products. He was formerly Sales Head of ABC Channel 5 and of GMA Channel 7, and was instrumental in developing the Sales Units of both Companies. He was one of the first Sales Heads who was able to use his media/advertising background to successfully blend science with the selling skills of both teams. Before becoming involved in Broadcast Sales, Mr. Benitez was formerly Media Director and Vice President of Ace Saatchi and Saatchi, where he provided leadership to a media department that handled diverse clients such as San Miguel Corporation, Procter & Gamble Distributing Philippines Inc., Nestle Philippines Inc., Johnson & Johnson Philippines Inc., and Jollibee Foods Corporation. Here he won for the agency the first-ever Agency of Record (AOR) assignment of P&G. He was also formerly President and CEO of Zenith Optimedia, Nestle s independent media agency, and President and CEO of Optimum Media, where he was mainly responsible for winning the Smart AOR business. This Smart win triggered a streak of 14 consecutive new business wins, helping the agency become a formidable force in the industry in a span of 3 months. Antonio S. Ventosa, Filipino, age 47 Head, Corporate Marketing and Concurrent Officer-in-Charge, Studio 23* Mr. Ventosa joined the Company in April 2006 as Head of Marketing. He brings with him several years of experience in marketing, having spent more than two decades honing his skills in understanding and driving strategic marketing communications considerations that build leadership brands. He was an account director at Dentsu Young and Rubicam Malaysia for Colgate Palmolive Singapore and Malaysia, and regional account director at Leo Burnett in Singapore for McDonald s Asia before returning to the Philippines in He was, at one time, the chairman and the president of the Association of Accredited Advertising Agencies of the Philippines or 4A s, and a board director of AdBoard. He is the founding chairman of the Araw Values Awards, and was the director-in-charge of the first 4A s Advertising Summit in Prior to joining the Company, he was managing director of Leo Burnett Manila, where he has worked extensively to expand the agency s capability as a holistic communications organization that provide clients with the most effective communication and brand building programs. He was also responsible for directing the total marketing communications programs for clients whose brands are now leaders in their category. He was also concurrent President of Arc Worldwide Philippines, the newly established marketing services company aligned with Leo Burnett. Mr. Ventosa graduated with a marketing degree from De La Salle University. *Appointed as Managing Director, Cable Channel & Print Media Group effective April 1, 2009 Jose Ramon D. Olives, Filipino, age 46 Managing Director, Cable Channels & Print Media Group* Mr. Olives was appointed Head of Cable Channels & Print Media Group in 2007, spearheading a monumental first in any local broadcasting company to join the print and cable businesses in the synergy of the ABS-CBN Publishing, Inc. and Creative Programs, Inc. This new unit is tasked to 12

14 consolidate and develop cross platform opportunities in new emerging business - niche programming and print. As such, Mr. Olives will be tasked to create new programming and marketing opportunities that were only available to the free to air television distribution media of the Company. In his 20 years with the Company, he held numerous positions to include Senior Vice President for Business Development since He is also credited with the development of The Filipino Channel during his nine year stint as Senior Vice-President for the International Division beginning in 1991, overseeing the operations of The Filipino Channel, the premier cable channel of the Company, in North America, Middle East, Japan and Australia. Mr. Olives joined the Company in 1987 as an assistant to the Administrative Director. He has a Bachelor of Arts degree in Communication Research, magna cum laude, from the University of the Philippines. *Until March 31, 2009 Rafael L. Lopez, Filipino, age 52 Chief Operating Officer, ABS-CBN Global Limited Mr. Lopez assumed the position of Senior Vice President and Chief Operating Officer of ABS-CBN Global Limited in July He concurrently serves as the Managing Director of ABS-CBN International in North America and has held this position since July He started as the Information Technology Head of ABS-CBN International in North America in Prior to this, he spent 12 years working as a systems analyst for Bell Atlantic. He graduated from the San Francisco State University with a Bachelor of Arts degree in Music. He also obtained a degree in computer programming from Control Data Institute and completed the Stanford Business Executive Program for Executives in August Ma. Lourdes N. Santos, Filipino, age 52 Managing Director, ABS-CBN Film Productions Inc. and Star Records, Inc. Ms. Santos holds more than two decades of experience in the local film industry having started as a production assistant for Vanguard Films in She went on to become head of the movie division of Gryk Ortaleza, Inc., an entertainment company, then a line producer for Regal Films in 1986 and the general manager of Vision Films in She joined the company as executive producer for its drama programs. In 1995, she became the Managing Director of Star Cinema Productions, Inc. Concurrent with her current position as ABS-CBN Film Production, Inc. s Managing Director, Ms. Santos was appointed Senior Vice-President of the Television Drama Division for the Company s Entertainment Group in In 2006, she was likewise assigned to handle Star Records, Inc. Ms. Santos graduated cum laude in BS Hotel and Restaurant Management at the University of Santo Tomas. Rolando P. Valdueza, Filipino, age 49 Chief Finance Officer Mr. Valdueza was appointed Chief Finance Officer on April 2, Prior to his appointment as CFO, he was Head of the Regional Network Group (RNG). As Head of RNG, he made a mark by managing RNG to help establish focus on ratings and revenues. He also institutionalized specific strategies to further strengthen local programming and ABS-CBN affinity with the local communities and improved operating efficiencies. Before joining the Company in 1988 as Budge Officer, he was an auditor with SGV & Company and then worked as Finance Manager at National Marine Corporation. He also served as Sky Cable Regional Director for Visayas and Mindanao and later became Managing Director of Pilipino Cable Company. Mr. Valdueza took up BS Accounting at University of the East and graduated magna cum laude in

15 Other members of the Company s senior management team as of 30 April 2009 are as follows: Mario Carlo P. Nepomuceno Vivian Y. Tin Atty. Maximilian T. Uy Ramon R. Osorio Evelyn L. Javier Esperanza M. Bulaong Robert G. Labayen Raul Pedro G. Bulaong Charles A. Gamo Leonardo P. Katigbak Peter A. Musngi Louis Benedict O. Bennett Nelson Edison Aguiflor Carlo Katigbak Consuelo Nolasco-Lopez Luis Paolo M. Pineda Ma. Juanita A. dela Cruz Johnny C. Sy Olivia M. Lamasan Chief Human Resources and Organizational Development and Learning Officer Chief Research & Business Analysis Officer Chief Legal Counsel Chief Government, Corporate Affairs and PR Officer Chief Information Officer Head, Customer Relationship Management Head, Creative Communication Management Managing Director, Technical Production Operations Head, Investor Relations and Corporate Planning Head, Special Projects and Licensing Managing Director, Manila Radio and Sports Officer-in-Charge, Regional Network Group Head, ABS-CBN Global Manila Operations Managing Director, SkyCable Managing Director, ABS-CBN Interactive Head, Business Development Head, Project Digital Terrestrial Television Head, Digital Consumer Devices Senior Vice President, ABS-CBN Film Productions Inc. Involvement of Directors and Officers in Certain Legal Proceedings For the past 5 years, including the date of this definitive information statement, the Company is not aware of any bankruptcy proceedings filed by or against any business of which a director, person nominated to become a director, executive officer, or control person of the Company is a party or of which any of their property is subject. For the past 5 years, including the date of this definitive information statement, the Company is not aware of any conviction by final judgment in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, of any of its director, person nominated to become a director, executive officer, or control person. For the past 5 years, including the date of this definitive information statement, the Company is not aware of any order, judgment, or decree not subsequently reversed, superseded, or vacated, by any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending, or otherwise limiting the involvement of a director, person nominated to become a director, executive officer, or control person of the Company in any type of business, securities, commodities, or banking activities. For the past 5 years, including the date of this definitive information statement, the Company is not aware of any findings by a domestic or foreign court of competent jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic or foreign exchange or electronic marketplace or self regulatory organization, that any of its director, person nominated to become a director, executive officer, or control person has violated a securities or commodities law. Significant Employees The Company considers its entire work force as significant employees. Everyone is expected to work together as a team to achieve the Company s goals and objectives. 14

16 Family Relationships Mr. Oscar M. Lopez is the brother of Mrs. Presentacion L. Psinakis. He is the uncle of Mr. Eugenio L. Lopez III and Mr. Manuel L. Lopez, Jr., and the father of Mr. Federico R. Lopez. Mr. Manuel L. Lopez, Jr., Mr. Eugenio L. Lopez III and Mr. Federico R. Lopez are first cousins. Ms. Consuelo Nolasco-Lopez is the sister-in-law of Mr. Manuel Lopez, Jr. Relationships and Related Transactions There had been no material transactions during the past 2 years, nor is any material transaction presently proposed, to which the Company was or is to be a party in which any director, executive officer of the Company, or security holder of more than 10% of the Company s voting securities, any relative or spouse of any such director or executive officer or owner of more than 10% of the Company s voting securities had or is to have direct or indirect material interest. Furthermore, there had been no material transactions during the past 2 years, nor is any material transaction presently proposed, between the Company and parties that fall outside the definition of related parties under PAS No. 24, but with whom the registrants or its related parties have a relationship (e.g., former senior management of the Company or other parties who have some other former or current relationship with the Company) that enables the parties to negotiate terms of material transactions that may not be availed from other, more clearly independent parties on an arm's length basis. Parent Company Lopez, Inc. is the registered owner of 57.24% of the voting stock of the Company as of December 31, Lopez, Inc. is the holding company of the Lopez family. It is owned by the respective holding companies of the families of Eugenio Lopez, Jr., Oscar M. Lopez, Presentacion L. Psinakis and Manuel M. Lopez. It has issued convertible notes covering the shares in the Company registered and beneficially owned by it in favor of Benpres Holdings Corporation. Resignation of Directors Because of Disagreement with Policies No director has resigned or declined to stand for re-election to the Board of Directors since the date of the last annual meeting of security holders of the Company because of a disagreement with the Company on matters relating to the Company s operations, policies and practices. 15

17 Compensation of Directors and Executive Officers Information as to the aggregate compensation paid or accrued during the last 2 fiscal years and to be paid in the ensuing fiscal year to the Company s chief and 5 other most highly compensated executive officers follow: SUMMARY COMPENSATION TABLE Annual Compensation Name Year Salary (P) Bonus (P) Other Annual Compensation Chief executive and 2009E 64,439,134 most highly compensated ,791,636 41,180,491 0 executive officers: ,934,340 27,389,517 0 Ma. Rosario N. Santos-Concio Ma. Lourdes N. Santos Olivia M. Lamasan Vivian Y. Tin Jose Agustin C. Benitez, Jr. All managers and up 2009E 505,569,298 as a group unnamed ,952, ,052, ,374, ,948,131 0 The directors each receive per diems amounting to P5, for their attendance to board meetings. There are no other arrangements for compensation either by way of payments for committee participation or consulting contracts. No action is to be taken with respect to any bonus, profit sharing, pension/retirement plan, granting of extension of any option, warrant or right to purchase any securities to be given to the Company's directors and executive officers. Independent Public Accountants The principal accountants and external auditors of the Company is the accounting firm of SyCip, Gorres, Velayo & Company (SGV & Co.). The accounting firm of SGV & Co. has been the Company s Independent Public Accountants for the last 5 years. There was no event in the past 5 years where SGV & Co. and the Company had any disagreement with regard to any matter relating to accounting principles or practices, financial statement disclosure or auditing scope or procedure. Up until 2006, the partner in-charge assigned by SGV & Co. as external auditor is Ms. Vivian Cruz-Ruiz. She was replaced by Mr. Jose Joel M. Sebastian in 2007 and by Ms. Haydee M. Reyes in 2008, in compliance with SRC Rule 68, paragraph 3(b)(iv) on the five year rotation of external auditors. SGV & Co. is being recommended for re-election at the scheduled Annual Stockholders Meeting. Representatives of SGV & Co. for the current year and for the most recently completed fiscal year are expected to be present at the Annual Stockholders Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. 16

18 The aggregate fees billed for each of the last 2 fiscal years for professional services rendered by the external auditor are as follows: Audit Fees 5,150,000 4,220,000 The audit committee s approval policies and procedures for the above services from SGV & Co., the external auditors are discussed in Section 7 of the Company s Manual of Corporate Governance filed with the Commission on September 2, ISSUANCE AND EXCHANGE OF SECURITIES Financial and Other Information The Management Discussion and Analysis of Financial Condition and the Results of Operation for the last three fiscal years required under Part IV(c) of Rule 48 are attached hereto as Annex A. The Statement of Management s Responsibility for Financial Statements as of 31 December 2008 as well as the Audited Financial Statements prepared in accordance with SRC Rule 68, as amended and Rule 68.1 are attached hereto as Annex B. The Management Discussion and Analysis of Financial Condition and the Results of Operation for the period January to March 2009 and the Interim Unaudited Financial Statements as of March 31, 2009 of the Company are attached hereto as Annex B-1. The information on market price of securities and dividends paid out are attached hereto as Annex C. Acquisition or Disposition of Property No action is to be taken with respect to the acquisition or disposition of any property. Restatement of Accounts No action is to be taken with respect to the restatement of any asset, capital or surplus account of the Company. OTHER MATTERS Legal Proceedings For the past 5 years, including the date of this definitive information statement, the Company is not a party in any material litigation, i.e. legal proceedings which involves a claim for damages in an amount, exclusive of interest and cost, exceeding 10% of the current assets of the Company. While not deemed material legal proceedings due to the amount of the claims involved, the following legal proceedings involving the Company were the subject of news reports, and therefore generated public interest: 1. "ABS-CBN vs AGB Nielsen Media Research (Philippines), Inc." The Company has a pending case against AGB Nielsen for injunction and breach of contract in connection with the alleged infiltration of panel homes in various areas in the country. The case was docketed as Q , is currently pending before the Regional Trial Court of Quezon City, Branch

19 2. "GMA Network, Inc. vs. ABS-CBN Broadcasting Corporation, et al" The Company also has a pending civil case for libel against it filed by GMA Network, Inc. in connection with the same events covered by the case against AGB Nielsen. The case was filed in 03 January 2008 and docketed as Q , is pending before the Regional Trial Court of Quezon City, Branch 76. GMA's total claim against the Company is P15 million. Management is nevertheless of the opinion that should there be any adverse judgment based on these claims, this will not materially affect the Company s financial position and results of operations. 3. People of the Phils., vs. Santos-Concio, et al. This case, docketed as Criminal Case No , before the Regional Trial Court of Pasig, Branch 261, arose from the incident that transpired during the anniversary celebration of "Wowowee", where a stampede resulted in the deaths of seventy one people and multiple injuries to about two hundred others. Complaints for reckless imprudence resulting in Multiple Homicide and Multiple Physical Injuries were filed against certain officers of the Company including its President & COO, Ma. Rosario N. Santos-Concio and then Managing Director for TV Production, Ma. Socorro V. Vidanes. The Court has dismissed the complaint as against accused Santos-Concio and Vidanes, but remains pending as regards certain other officers of the Company, and has suspended the proceedings pending the completion of the Department of Justice of its investigation on the possible liability of other public officials who are charged with the same offense. Action with Respect to Reports (a) Approval of the Annual Report of Management and the Audited Financial Statements for the year ending December 31, 2008; (b) Approval of the Minutes of the Annual Meeting of the Stockholders held on June 26, 2008, covering the following matters: i) Annual Report of Officers; ii) Approval of Annual Report and Audited Financial Statements for the year ended December 31, 2007; iii) Election of the Members of the Board of Directors, including the Independent Directors; iv) Ratification and approval of all acts and resolutions of the Board of Directors for the fiscal year 2008; v) Ratification of the grant of a special bonus to the directors and officers in June 2007 as part of their performance bonus for 2006 in the form of Philippine Depositary Receipts on the Company s shares; vi) Amendment of Article III by adding a new section to allow directors to participate in profit sharing and bonuses of the Company and to delegate such authority to grant such profit sharing and bonuses to the Board of Directors or a designated committee; vii) Authorizing the Corporation to act as surety or guarantor of the existing or future obligations of its subsidiaries and investee companies; and viii) Appointment of External Auditors Amendment of Charter, By-laws or Other Documents At the stockholders meeting, it will be proposed that Article II, sec. 1 of the Amended By-laws be amended to change the date of the annual meeting from the last Thursday of May of each year to the third Thursday of June of each year. This will allow the Company more time to prepare and send out the materials for the annual stockholders meeting. 18

20 Other Proposed Actions (a) Ratification of all acts of the Board of Directors, Executive Committee and Management for the period covering January 1, 2008 through December 31, 2008 adopted in the ordinary course of business, such as: i) Approval of investments; ii) Treasury matters related to opening of accounts and bank transactions; iii) Appointment of signatories and amendments thereof; (b) Election of the Members of the Board of Directors, including the Independent Directors, for the ensuing calendar year; (c) Election of External Auditors; Matters Not Required to be Submitted No action is to be taken with respect to any matter that is not required to be submitted to a vote of security holders. Voting Procedures (a) Vote Required: Motions in general require the affirmative vote of a majority of the shares of the Company s common stock present and/or represented and entitled to vote. However, certain proposed actions may require the vote of at least a majority or at least two thirds of the outstanding capital stock of the Company. The vote required for the amendment of the by-laws is at least a majority of the outstanding capital stock of the Company. The manner of voting is non-cumulative, except as to the election of directors. (b) Method: Straight and cumulative voting. In the election of directors, the top eleven nominees with the most number of votes will be elected as directors. If the number of nominees does not exceed the number of directors to be elected, all the shares present or represented at the meeting will be cast in favor of the nominees. If the number of nominees exceeds the number of directors to be elected, voting will be done by ballots. On the election of directors, each stockholder may vote such number of shares for as many persons as there are directors to be elected or he may accumulate such shares and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit; provided, that the total number of votes cast by him shall not exceed the number of shares owned by him multiplied by the whole number of directors to be elected. Other than the nominees election as directors, no director, executive officer, nominee or associate of the nominees has any substantial interest, direct or indirect by security holdings or otherwise in any way of the matters to be taken upon during the meeting. The Company has not received any information that an officer, director or stockholder intends to oppose any action to be taken at the Annual Stockholders Meeting. (c) The Corporate Secretary will be responsible for counting votes based on the number of shares entitled to vote owned by the stockholders who are present or represented by proxies at any meeting of the stockholders, in the presence of the Company s external auditor. 19

21 ANNEX A MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR 2008 The consolidated net income of ABS-CBN Broadcasting Corporation, the country s largest multimedia conglomerate, grew 9% in 2008 to P1.39 billion, generated from consolidated revenues of P22.3 billion. Revenues ABS-CBN Broadcasting Corporation s ( ABS-CBN or the Company ) consolidated revenues from airtime and direct sales rose to P22.3 billion with an increase of P2.37 billion or 12% year-on-year, inclusive of gross revenue contribution from Skycable of P2.6 billion for three quarters beginning April Net of the non-recurring license fees of P548 million in 2007, our overall core business revenue growth for 2008 is 15%. Over the past five years, our direct sales businesses have increasingly complemented our airtime revenues, in 2008 reaching 39% of total with the consolidation of Skycable and continued growth in the subscription businesses of ABS-CBN Global. Amounts in million Pesos Consolidated Variance Amount % Airtime revenue 13,419 13,605 (186) (1) Sale of Services 5,784 5, Sale of Goods Core Business 19,716 19, License fees (548) (100) Consolidated revenues before SkyCable 19,716 19,940 (224) (1) Add: SkyCable revenues 2,591-2, Consolidated revenues 22,307 19,940 2, Consolidated airtime revenues for the year totaled P13.5 billion. In the first semester of 2008, consumer spending was constrained by an acute rise in prices of basic food items and fuel, and transportation fares, prompting major advertisers across many consumer goods categories to hold back on advertising and promotions spending. Towards the later part of 2008, as inflation eased and prices reverted towards their previous levels, consumer confidence started to cautiously return and advertisers began to entice their customers back. Our core airtime businesses registered a slight contraction in revenues for the year to P13.4 billion or 1%, despite a 56% growth in cable TV airtime sales. The consolidation of Skycable brought in an additional P92 million of airtime revenues between April and December 2008 to raise consolidated airtime revenues to P13.5 billion. Airtime revenue from parent company s free TV and radio operations contracted by P277 million or 2% to P12.5 billion. Airtime revenue growth of P92 million or 11% in other platforms was driven mostly by cable channels. 20

22 Our core airtime sales registered a 2% growth, however, after netting out P298 million in non-recurring political adspend in Amounts in million Pesos Consolidated Variance Amount % Parent airtime revenue 12,466 12,743 (277) (2) Other platforms Gross airtime revenues 13,419 13,605 (186) (1) Add: SkyCable airtime revenues Consolidated Gross airtime revenues 13,511 13,605 (94) (1) Direct sales from core businesses rose by P510 million to P6.3 billion, a 9% gain over 2007 s P5.8 billion. ABS-CBN Global accounted for about 80% of total direct sales before the consolidation of Skycable. ABS-CBN Global s subscription revenues grew 28% year-on-year in US dollar terms. With continued subscriber growth in the Middle East, Canada and Japan, total viewer count reached an estimated 2 million worldwide. The sale of consumer products such as magazines, and audio and video CDs and DVDs grew 5% in 2008 to P512 million. Of ABS-CBN Film Productions, Inc. s eight film releases in 2008, four films were top-grossers Sakal Sakali Saklolo; Caregiver; A Very Special Love; and For the First Time. Each of these films surpassed the P100 million mark in box-office receipts and pulled in a combined P562 million. Skycable s contribution of P2.6 billion in subscription and other service revenues boosted total direct sales to P8.8 billion, and brought direct sales growth to 52% in Expenses ABS-CBN s continuing efforts to institutionalize financial discipline and spending restraint ensured that expenses in core businesses were kept in check. Consequently, the Company realized savings of P237 million in total expenses from core businesses to bring it down to P17.45 billion, for a slight reduction of 1% from the previous year. Cash expenses of core businesses went down by P429 million or 3% to P14.9 billion for the full year, mostly from savings in production costs and general and administrative expenses. Non-cash expenses of core businesses totaled P2.5 billion, P193 million or 8% higher than in

23 Amounts in million Pesos Consolidated Variance Amount % Production Cost 6,291 6,493 (202) (3) General and Administrative Expenses 5,089 5,360 (272) (5) Cost of Sales and Services 3,396 3, Agency commission, incentives & Co-prod share 2,656 2,701 (45) (2) Other expenses (income) (112) 88 Total Expenses from core businesses 17,447 17,683 (237) (1) Add: Skycable expenses 2,438-2, Total Expenses 19,885 17,683 2, Incorporating the expenses of Skycable, total expenses reached P19.9 billion, P2.2 billion or 12% higher than in Skycable s cash expenses of P1.9 billion increased consolidated total cash expenses to P16.8 billion, while its non-cash expenses of P561 million brings the consolidated total non-cash expense increase to 32% over last year. Total production costs in 2008 of P6.3 billion is 3% lower than last year, with a net savings of P202 million. Personnel expenses and talent fees decreased by P115 million or 4% for the year to P2.7 billion, from P2.82 billion the previous year, while P244 million in savings were derived from production process improvements, tighter control of production crew and equipment deployment, and less equipment rentals. Conscious efforts were made by the production and engineering groups to reduce the number of taping days per program to an optimally cost-effective number without sacrificing production quality. Amounts in million Pesos Consolidated Variance Amount % Personnel expenses and talent fees 2,708 2,823 (115) (4) Facilities-related expenses 1, Other program expenses 955 1,199 (244) (20) Sub-total: Cash production costs 4,755 4,994 (239) (5) Non-cash production cost 1,536 1, Total production cost 6,291 6,493 (202) (3) The total cost of sales and services from core businesses grew by only 13% or P393 million to P3.4 billion. ABS-CBN Global s cost of sales rose by only 10% or P178 million. The main cost drivers for ABS-CBN Global were higher satellite costs in North America, Europe, and Australia, as well as bandwidth and settop box costs in Canada and Japan for IPTV services. The 18% or P216 million increase in total cost of sales and services of other subsidiaries are largely attributable to higher cable channels program amortization and facilities-related expenses. Investments made to build the brand equity and viewer following of the cable channels Maxxx, Balls and Velvet, drove the cost of program acquisitions higher. 22

24 Amounts in million Pesos Consolidated Variance Amount % ABS-CBN Global 1,980 1, Other subsidiaries 1,416 1, Total cost of sales and services 3,396 3, Add: SkyCable cost of sales and services Total Cost of Sales and Services 4,225 3,003 1, Total cost of sales and services amounted to P4.2 billion with Skycable s P829 million cost of sales included, an increase of P1.22 billion or 41% year-on-year. Operating expenses or General and Administrative Expenses (GAEX) of core businesses in 2008 registered a 5% decline to P5.1 billion, as net savings of P271 million were generated mainly by the parent company and ABS-CBN Global. Cash GAEX for the full year of P4.46 billion is P324 million or 7% lower than last year, while non-cash GAEX is slightly up by P53 million, or 9%. The largest contributions to the decline in GAEX came from savings in personnel expenses due to lower employee headcount from natural attrition, limited additional hiring, and incomplete replacement of employees who resigned during the year, as well as from lower advertising and promotions and utilities expenses arising from cost-containment measures. Amounts in million Pesos Consolidated Variance Amount % Personnel expenses 2,385 2,597 (211) (8) Advertising and promotions (30) (20) Facilities-related expenses (60) (11) Contracted services Taxes and licenses Entertainment, amusement and recreation Other expenses (131) (17) Sub-total, Cash GAEX of core businesses 4,462 4,786 (324) (7) Non-cash GAEX of core businesses Total GAEX from core businesses 5,089 5,360 (271) (5) Add: SkyCable GAEX 1,840-1, Total GAEX 6,929 5,360 1, Skycable s incremental contribution to total GAEX for full year amounted to P1.84 billion, of which P1.28 billion are cash GAEX, while P561 million are non-cash GAEX. With Skycable s additional operating expenses, consolidated GAEX amounts to P6.93 billion, P1.57 billion or 29% more than last year. 23

25 Amounts in million Pesos Consolidated Variance Amount % Depreciation Amortization 5 25 (20) (78) Non-cash expenses of core businesses Add: Depreciation and Amortization from SkyCable Non-cash expenses 1, Net Income and EBITDA Net income attributable to shareholders for 2008 is P1.38 billion, a P116.7 million or 9% improvement over last year s net income attributable to shareholders of P1.267 billion that includes P329 million of net income from non-recurring DirecTV license fees. The net income of P1.38 billion includes P77 million from a one-time accounting adjustment to comply with Philippine Financial Reporting Standard 3 that pertains to the recognition of gains from the consolidation of Skycable. Net of the accounting adjustment, core net income for 2008 of P1.307 billion, is 39% higher than the 2007 core net income of P938 million, after removing the non-recurring income from DirecTV license fees recorded in Earnings before interest, taxes, depreciation and amortization (EBITDA) for 2008 reached P6.1 billion, P1.1 billion or 21% higher over last year s P5 billion, and yielding an EBITDA margin of 27.4% for 2008 versus 25.4% a year ago. Core EBITDA net of the corresponding P309 million PFRS 3-related accounting adjustment is P5.8 billion, a 28% increase over 2007 s core EBITDA of P4.55 billion, after removing P509 million of EBITDA contribution from DirecTV license fees in Balance Sheet Accounts As at December 31, 2008, total consolidated assets stood at P32.8 billion, P6.7 billion or 26% higher than year-end 2007 total assets of P26.1 billion. Cash and cash equivalents of P2.52 billion is 18% higher than the year-end 2007 balance. Consolidated trade receivables stood at P4.59 billion, P520 million or 13% higher than as at the end of Days sales outstanding is at 75 days, the same level as it was as at December 31, Total interest-bearing loans increased by about P3.2 billion or 58% to P8.71 billion versus P5.5 billion a year ago. The Company signed loan facility agreements in the 3rd quarter of 2008 for P3 billion in new loans of which P2.0 billion was drawn. The loan facility was obtained to fund current and future capital investment, including production and broadcast equipment, transmission network expansion and upgrades. The remaining increase in indebtedness is primarily attributable to the consolidation of Skycable s debt into ABS-CBN Broadcasting Corporation s balance sheet. Shareholders equity stood at P15.1 billion, a P776 million or 5% increase over the P14.3 billion at the end of The Company s net debt-to-equity ratio increased to 0.41x versus 0.23x at the end of The Company s debt and coverage ratios remain well within the limits prescribed under its loan covenants. 24

26 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR 2007 (not restated) Net income soared to Php1.27 billion in 2007 by Php528 million or 71% year-on-year. Despite another year of a downturn in the TV advertising industry manifested in lower TV advertising minutes, airtime revenue increased Php2.94 billion or 28% from Such growth helped consolidated revenues grow 17% or Php2.87 billion year-on-year. Availability of nationwide ratings and political ads served as a catalyst for airtime revenue growth. The year 2007 marked the end of license fee recognition from the DirecTV purchase of ABS-CBN Global subscribers in exchange for migration and retention income. Total expense growth was Php2.02 billion or 13% year-on-year. Revenues Consolidated revenues in 2007 rose 17% or Php2.87 billion from Php17.02 billion in Consolidated Amounts in million pesos Variance Amount % Airtime revenue 13,605 10,663 2, Sale of services 5,299 4, Sale of goods (90) (17) License fees 548 1,117 (569) (51) Consolidated revenues 19,891 17,020 2, Gross airtime revenue averaged an unprecedented Php1.1 billion per month in 2007 compared to Php889 million per month in Due to declines in license fees and sale of goods, the percentage share of airtime revenue to consolidated revenues increased nearly six percentage points to 68% in Parent airtime revenue, which is derived from Channel 2, AM and FM radio, and the regional network, increased its percentage share to gross airtime revenue from 90% in 2006 to almost 94% in A 33% growth in parent airtime or Php3.1 billion was registered in 2007 compared to In contrast, airtime revenue of other platforms dropped 19% or Php199 million. Consolidated Amounts in million pesos Variance Amount % Parent airtime revenue 12,743 9,602 3, Other platforms 862 1,060 (199) (19) Gross airtime revenue 13,605 10,663 2, License fees in 2007, which represent income from migration of TFC Direct subscribers to DirecTV s platform as well as from retention of migrated subscribers, dropped 51% or Php569 million from The year 2007 marked the end of license fee recognition from the DirecTV agreement. The Company raked in a cumulative total of Php3.3 billion in license fees from 2005 to These licenses fees were generated from subscribers who migrated to the DirecTV platform and continued to remain subscribed for a given period of time. Sale of services posted a 12% expansion or Php587 million in 2007 compared to These services refer to cable and satellite programming services, film production and distribution, interactive media, content development and programming services, post production, text messaging, etc. 25

27 Accounting for over 70% of total sale of services, ABS-CBN Global registered a 13% increase or Php430 million. In dollar terms, revenue growth was 18% on the back of a subscriber growth of 22%. The lower peso revenue growth was due to a strong peso. Amounts in million pesos Variance Amount % ABS-CBN Global 3,814 3, Other subsidiaries 1,485 1, Total sale of services 5,299 4, Other subsidiaries sale of services posted a higher growth rate of 12% or Php157 million year-on-year. Meanwhile, 2007 marked another banner year for ABS-CBN Films as four movies hit the Php150 million mark: Kasal, Kasali, Kasalo; A Love Story; Ang Cute ng Ina Mo; and One More Chance. The overwhelming success of these movies delineated a milestone in the Philippine movie industry and enabled ABS-CBN Films to dominate the local market. ABS-CBN Films sales in 2007 increased almost 14% or Php63 million compared to Average gross receipts in 2007 amounted to Php115 million per movie, 42% higher than in 2006 (Php81M). Sale of goods (consumer products such as magazines, audio, video products and phone cards) continued to decline last year, posting a 17% drop or Php90 million, largely on account of the decline in merchandising revenues of ABS-CBN Global. Dollar revenue from ABS-CBN Global s sale of goods fell 32%, which in peso terms appears as a 39% decline due to a stronger peso. Amounts in million pesos Variance Amount % ABS-CBN Global (96) (39) Other subsidiaries Total sale of goods (90) (17) Expenses Total expenses rose 13% or Php2.02 billion in 2007 compared to Consolidated Amounts in million pesos Variance Amount % Production cost 6,493 5, General and administrative 5,527 5, Cost of sales and services 2,786 2, Agency commission, incentives, & co-prod share 2,701 2, Other expenses (125) (50) Total expenses 17,634 15,610 2, Less: non-recurring expense (421) (93) Total recurring expenses 17,600 15,156 2, The big-ticket expense items are production cost and general and administrative expenses (GAEX). Production cost in 2007 was up 14% or Php778 million versus the earlier year due to a higher number of in-house produced shows. Excluding non-cash charges such as depreciation and amortization of program rights, cash production cost increased 15% or Php650 million in 2007 from the earlier year. 26

28 Consolidated Amounts in million pesos Variance Amount % Personnel expenses and talent fees 2,662 2, Facilities related expenses Other program expenses 1,360 1, Sub-total -cash production cost 4,994 4, Non-cash production cost 1,498 1, Total production cost 6,493 5, Consolidated GAEX in 2007 rose 8% or Php393 million compared to 2006 due to higher personnel and research expenses. Excluding non-cash charges such as depreciation and amortization, consolidated cash GAEX likewise rose 7%. Minus non-recurring charges, total recurring GAEX growth was 17% or Php814 million higher than Apart from personnel expense growth, the increase in GAEX (ex non-recurring charges) can also be partly attributed to the expansion in Canada and Japan. Consolidated Amounts in million pesos Variance Amount % Personnel expenses 2,597 2, Advertising and promotions (347) (67) Facilities related expenses Contracted services Taxes and licenses Entertainment, amusement and recreation (39) (28) Other expenses Sub-total -cash GAEX 4,953 4, Non-cash GAEX Total GAEX 5,527 5, Less: non-recurring expense (421) (93) Total recurring GAEX 5,494 4, Cost of sales and services went up 25% or Php561 million last year compared to ABS-CBN Global, which accounted for nearly 59% of cost of sales and services, registered a 35% increase in cost of sales. This was due to higher marketing expenses and subsidies of set-top boxes (STB) in Canada and Japan. Amount in million pesos Variance Amount % ABS-CBN Global 1,635 1, Other subsidiaries 1,151 1, Total cost of sales and services 2,786 2, Non-cash operating expenses, composed primarily of depreciation and amortization, rose 12% or Php257 million in 2007 versus For the most part, the rise in amortization (up 24%) resulted in the overall increase in non-cash expenses. This can be attributed to the launch of three new cable channels. 27

29 Amount in million pesos Variance Amount % Depreciation 1,210 1, Amortization 1, Non-cash expenses 2,332 2, Depreciation expense had a modest increase of 3%, with its share to total non-cash expenses dropping to 52% last year versus 56% in Operating and Pre-tax Income With consolidated revenues rising faster than total expenses, both operating and pre-tax income had high double-digit growth rates. For instance, pre-tax income in 2007 increased 60% year-on-year or Php847 million to Php2.26 billion. Consequently, pre-tax margin rose to 11% from 8%. The 50% drop in other net expenses last year also helped the Company boost pre-tax income and ultimately net income. Lower finance costs coupled with positive contribution from Sky Cable helped lower other net expenses. Net Income The Company raked in earnings of Php1.27 billion in 2007, up 71% year-on-year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) was at a record high of Php5.06 billion in 2007, up P882 million or 21% year-on-year. The Company s highest EBITDA prior to 2007 was in 2003, Php4.42 billion. Profitability Margins Gross profit margin for the airtime business improved seven percentage points to 32% last year from 25% in This was due to the 28% growth in airtime sales that outstripped the slower blended growth rate of 15% in production costs and revenue deductions (agency commission, incentives, and co-producers share). In absolute terms, gross profit soared 66% or Php1.75 billion year-on-year. While the gross profit margin for direct sales dropped six percentage points, it remained above 50%. Also, the resulting blended gross profit margin for airtime and direct sales still managed to show a two-percentage point improvement. EBITDA margin remained healthy at 25% while net income margin rose to 6% from 4%. Balance Sheet Accounts Total consolidated assets reached Php26.17 billion, 9% higher versus end-2006 level. Cash and cash equivalents reached Php2.15 billion, up 29% versus Consolidated trade and other receivables increased 12% to Php4.92 billion, with trade receivables accounting for 77% of total. Trade receivables dropped 1% to Php4 billion, translating to days sales outstanding (DSO) of 75 days versus 86 days in Other current assets dropped 20% to Php805 million due to lower pre-production expenses. Total interest-bearing loans and borrowings increased 21% to Php5.52 billion from Php4.57 billion since the Company assumed a portion of Sky Cable s obligations to its creditors. As a result, net debt to equity ratio increased from 0.21x in 2006 to 0.24x as of end

30 Causes for any material changes in the Balance Sheet (increase or decrease of 5% or more in the financial statements & other material movements / changes) Cash and cash equivalents increased by 29% to P2,146 million following loans obtained in 2007 and a stronger operating income versus Trade and other receivables increased by 12% to P4,919 million primarily due to higher non-trade receivables. Derivative assets down 100% as the Company refinanced its USD-denominated debt in Other current assets decreased by 20% YoY to P805 million due primarily to smaller prepaid expenses. Long-term receivables from related parties increased 61% to P3,893 million following Parent Company s purchase of debt from an affiliate. Non-current program rights and other intangible assets increased to P1,664 million or 15% YoY due to the opening of three new channels by a subsidiary in Deferred tax assets decreased 39% to P184 million due to lower tax differences. Trade and other payables increased 11% YoY to P5,053 million as the Company obtained favorable payment schemes from its suppliers. Income tax payable increased 86% to P54 million due to higher operating income in Derivative liabilities decreased 100% as the Company refinanced its USD-denominated debt in Current portion of obligation for program rights increased 114% because of shorter payment terms. Current portion of interest-bearing loans and borrowings decreased 72% to P588 million as the Company was able to restructure its debt obligations. Non-current portion of interest-bearing loans and borrowings increased 102% to P4,928 million following the purchase of debt from a related party. Accrued pension obligation increased 43% to P401 million due to additional provision resulting from the latest actuarial valuation. Asset retirement obligation decreased 13% to almost P15 million following fewer asset retirements in the Company s subsidiaries. 29

31 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR 2006 (not restated) ABS-CBN Broadcasting Corp. s (ABS-CBN) net income in 2006 more than doubled to P741 million from P252 million in Despite an industry wide slowdown in ad spending particularly in 2H06, airtime revenues grew by 3% P10,663 million in In addition, revenues were boosted by license fees from the migration of DTH (direct to home) subscribers in North America to DirecTV s platform. Expense growth, on the other hand, remained controlled due to more prudent production cost spending coupled with lower employee cost. Revenues Gross revenues, which consist of gross airtime revenues, sale of services, license fees, and sale of goods rose by 2% year on year (YoY) to P17,386 million for Consolidated Amounts in million pesos Variance Amount % Airtime revenues 10,663 10, Sale of services 5,077 4, License fees 1,117 1,619 (502) (31) Sale of goods (317) (37) Gross revenues 17,386 17, Consolidated gross airtime revenues improved by 3% to P10,663 million. Parent airtime revenues, which consist of revenues from Channel 2, AM and FM radio, and the regional network, likewise went up by 3% to P9,602 million. This can be primarily attributed to higher revenue contribution from non-traditional advertisements or creative buys such as product intrusions and product placements. Airtime revenues of other platforms, on the other hand, grew by 9% YoY to P1,060 million on the back of higher airtime revenues of ABS-CBN Global. Consolidated Amounts in million pesos Variance Amount % Parent airtime revenues 9,602 9, Other platforms 1, Gross airtime revenues 10,663 10, License fees, which represent revenues from the migration of existing US DTH subscribers to DirecTV s platform as well as take up of new subscribers, declined by 31% to P1,117 million in 2006 from P1,619 million in 2005 as the migration period for both new and existing US DTH subscribers to DirecTV s platform ended last August. Sale of services, which refer to revenues derived from cable and satellite programming services, film production and distribution, interactive media, content development and programming services, post production, text messaging, etc., increased by 20% to P5,077 million in Accounting for 74% of total, ABS-CBN Global registered a 20% growth in sale of services to P3,749 million from P3,131 million in Although DTH subscription revenues in North America were reduced by half following the deal with DirecTV, these were offset by higher subscription revenues on the back of robust subscriber take-up. 30

32 As of end-december, total subscriber base of ABS-CBN Global grew by 21% YoY, equivalent to 1.6 million viewers worldwide. Amounts in million pesos Variance Amount % ABS-CBN Global 3,749 3, Other subsidiaries 1,328 1, Total sale of services 5,077 4, Other subsidiaries sale of services, on the other hand, went up by 19% to P1,328 million due primarily to a 26% increase in ABS-CBN Films revenues. ABS-CBN Films released nine movies in 2006 compared to five movies the prior year. Moreover, out of the nine movies released, ticket sales of four movies namely Don t Give up on Us, Close to You, Sukob, and You are the One surpassed the P100 million blockbuster mark. In particular, the horror movie, Sukob, grossed more than P200 million at the box office, making it the highest grossing local movie in Philippine history. Meanwhile, sale of goods which refer to revenues arising from the sale of consumer products such as magazines, audio, video products and phonecards, dropped by 37% to P529 million in ABS-CBN Global s sale of goods, which contributed 46% of total, dropped by 51% to P244 million after it stopped selling prepaid phonecards in the United States to concentrate on its core business of content distribution. Sale of goods of other subsidiaries, on the other hand, declined by 17% due mainly to lower sales of audio products by Star Records as there were fewer hit music records in Amounts in million pesos Variance Amount % ABS-CBN Global (258) (51) Other subsidiaries (59) (17) Total sale of goods (317) (37) Expenses Total expenses went down by 4% to P15,976 million in However, excluding non-recurring charges of P467 million in 2006 related to DirecTV marketing expenses as well as P1,420 million DirecTV marketing expenses and Special Separation Program (SSP) expenses booked in 2005, total recurring expenses went up by 2% to P15,508 million. 31

33 Consolidated Amounts in million pesos Variance Amount % Production cost 5,714 5, General and administrative 5,135 5,847 (712) (12) Cost of sales and services 2,417 2, Agency commission, incentives, & co-prod share 2,458 2, Other expenses (372) (60) Total expenses 15,976 16,620 (644) (4) Less: non-recurring expense 467 1,420 (952) (67) Total recurring expenses 15,508 15, Operating expenses, which consist of production cost, general and administrative expenses, cost of sales and services, and agency commission declined by 2% to P15,724 million in Cash operating expenses were flat while non-cash operating expenses declined by 14% YoY. If we strip-out the non-recurring charges, total opex went up by 5% to P15,257 million. Production cost was almost flat YoY at P5,714 million. Excluding non-cash charges such as depreciation and amortization of program rights, cash production cost increased slightly to P4,344 million. Talent fees, which account for 42% of total production cost, declined by 4% to P2,412 million as a result of a more efficient production planning which led to lesser number of taping days. Other program expenses, on the other hand, went up by 16% to P1,098 million due to expenses related to the Pacquiao fights coupled with increased marketing activities in the provinces to enhance the Company s leadership nationwide. Consolidated Amounts in million pesos Variance Amount % Personnel expenses and talent fees 2,412 2,513 (101) (4) Facilities related expenses (7) (1) Other program expenses 1, Sub-total -cash production cost 4,344 4, Non-cash production cost 1,370 1,391 (20) (1) Total production cost 5,714 5, Consolidated general and administrative expenses (GAEX) dropped by 12% YoY to P5,135 million from P5,847 million the previous year. Excluding non-cash charges such as depreciation and amortization, consolidated cash GAEX likewise declined by 7% to P4,630 million. However, without the non-recurring charges, total recurring GAEX is up by 5% or in line with inflation rate. 32

34 Consolidated Amounts in million pesos Variance Amount % Personnel expenses 2,078 2,505 (427) (17) Advertising and promotions Facilities related expenses Contracted services Taxes and licenses Entertainment, amusement and recreation Other expenses (58) (7) Sub-total -cash GAEX 4,630 4,995 (365) (7) Non-cash GAEX (347) (41) Total GAEX 5,135 5,847 (712) (12) Less: non-recurring expense 467 1,420 (952) (67) Total recurring GAEX 4,667 4, Cost of sales and services, which is the cost related to sale of services and sale of goods, went up by 2% to P2,417 million in This compares against a 10% growth in combined sale of services and sale of goods hence reflecting margin improvement of the subsidiaries. ABS-CBN Global, which accounted for 58% of cost of sales and services, registered a 3% decline in cost of sales. Amount in million pesos Variance Amount % ABS-CBN Global 1,406 1, (3) Other subsidiaries 1, Total cost of sales and services 2,417 2, Non-cash operating expenses, composed primarily of depreciation and amortization, went down by 14% to P2,075 million in 2006 from P2,407 million in the same period last year. Bulk of the decline can be attributed to lower amortization costs which dropped by 23% to P904 million as the Company already completed the amortization of deferred subsidies on the decoder boxes of existing US DTH subscribers in Amortization of program rights, on the other hand, increased by 7% to P887 million as the Company accelerated the amortization of movies based on their commercial viability. Amount in million pesos Variance Amount % Depreciation 1,170 1,235 (64) (5) Amortization 904 1,172 (268) (23) Non-cash expenses 2,075 2,407 (332) (14) Depreciation expense, on the other hand, decreased by 5% to P1,170 million given controlled capital spending. Operating Income With revenues growing faster than operating expenses, operating income improved by 58% from P1,051 million to P1,661 million as of December. Consequently, operating margin went up to 10% as against 6% in the same period last year. 33

35 Net Income Other expenses declined by 60% to P252 million in 2006 from P623 million in Net finance costs decreased by 10% to P648 million on the back of lower outstanding debt as of December. Other income, on the other hand, increased by 56% to P449 million from P287 million due to gate receipts from the Pacquiao-Larios boxing bout organized by the Company in July. Meanwhile, equity losses reached P52 million as against P194 million the prior year, reflecting the continued improvement in Skycable s operations. As a result of the improvement in operating income and lower other expenses, the Company reported a net income of P742 million in 2006, 187% higher YoY. Net of minority interest, net income attributable to equity holders reached P741 million in 2006, up 194% YoY from P252 million in Similarly, earnings before interest, taxes, depreciation, and amortization (EBITDA) went up by 19% to P4,188 million, translating to an EBITDA margin of 24%. Balance Sheet Accounts Total consolidated assets reached P23,902 million, 4% lower vs end Cash and cash equivalents declined by 5% to P1,662 million. Consolidated trade and other receivables dropped by 6% to P4,382 million with trade receivables accounting for 81% of total. Trade receivables increased by 3% to P4,010 million, translating to trade days sales outstanding (DSO) of 84 days or flat vs Other current assets increased by 28% to P1,011 million due mainly to production expenses of yet to be aired episodes of the Company s programs particularly soap operas as well as upcoming movies of ABS- CBN Films. Since 2005, the Company begun the canning or advanced taping of some shows in order to cut location rentals and maximize efficiencies from production planning. Total interest-bearing loans and borrowings declined by 27% to P4,574 million from P6,276 million in end-2005 following the payment of P1,798 million in loans in As a result, net debt to equity ratio declined to 0.21x from 0.34x in Meanwhile, total capital expenditure including program rights acquisition reached P891 million in 2006, 25% lower vs last year as the Company controlled capital spending to prioritize its loans payments during the year. 34

36

37