AR 2006.indd 2-3 4/24/07 8:10:49 AM AR 2006.indd 4-5 4/24/07 8:11:09 AM Operating expenses, which consist of production cost, general and administrative Non-cash operating expenses, composed primarily of depreciation and expenses, cost of sales and services, and agency commission declined by 2% amortization, went down by 14% to P2,075 million in 2006 from P2,407 million to P15,724 million in 2006. Cash operating expenses were flat while non-cash in the same period last year. Bulk of the decline can be attributed to lower operating expenses declined by 14% YoY. If we strip-out the non-recurring charges, amortization costs which dropped by 23% to P904 million as the Company already Management Discussion and Analysis of Financial Condition and Results of total opex went up by 5% to P15,257 million. completed the amortization of deferred subsidies on the decoder boxes of existing Operations for 2006 US DTH subscribers in 2005. Amortization of program rights, on the other hand, Production cost was almost flat YoY at P5,714 million. Excluding non-cash charges increased by 7% to P887 million as the Company accelerated the amortization of ABS-CBN Broadcasting Corporation’s (ABS-CBN) net income in 2006 more than such as depreciation and amortization of program rights, cash production cost movies based on their commercial viability. doubled to P741 million from P252 million in 2005. Despite an industry wide ABS-CBN Global 3,749 3,131 618 20 increased slightly to P4,344 million. Talent fees, which account for 42% of total slowdown in ad spending particularly in 2H06, airtime revenues grew by 3% to production cost, declined by 4% to P2,412 million as a result of a more efficient P10,663 million in 2006. In addition, revenues were boosted by license fees from Other subsidiaries 1,328 1,117 211 19 Total sale of services 5,077 4,248 829 20 production planning which led to lesser number of taping days. Other program the migration of DTH (direct-to-home) subscribers in North America to DIRECTV’s expenses, on the other hand, went up by 16% to P1,098 million due to expenses platform. Expense growth, on the other hand, remained controlled due to more related to the Pacquiao fights coupled with increased marketing activities in the prudent production cost spending coupled with lower employee cost. provinces to enhance the Company’s leadership nationwide. Other subsidiaries’ sale of services, on the other hand, went up by 19% to P1,328 Revenues million due primarily to a 26% increase in ABS-CBN Films’ revenues. Depreciation 1,235 (64) (5) 1,170 Amortization 904 1,172 (268) (23) Gross revenues, which consist of gross airtime revenues, sale of services, license ABS-CBN Films released nine movies in 2006 compared to five movies the prior Non-cash expenses 2,407 (332) (14) fees, and sale of goods rose by 2% year on year (YoY) to P17,386 million for 2006. year. Out of the nine movies released, ticket sales of four movies namely Don’t 2,075 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 Personnel expenses and 2,412 2,513 (101) (4) Depreciation expense, on the other hand, decreased by 5% to P1,170 million given million at the box office, making it the highest grossing local movie in Philippine controlled capital spending. talent fees history. Facilities related expenses 833 840 (7) (1) Operating Income Other program expenses 1,098 946 152 16 Meanwhile, sale of goods which refers to revenues arising from the sale of Airtime revenues 10,663 10,334 329 3 Sub-total - cash production cost 4,344 4,300 1 consumer products such as magazines, audio, video products and phonecards, 44 With revenues growing faster than operating expenses, operating income improved Sale of services 5,077 4,248 829 20 Non-cash production cost 1,370 1,391 (1) dropped by 37% to P529 million in 2006. (20) by 58% from P1,051 million to P1,661 million as of December. Consequently, License fees 1,117 1,619 (502) (31) Total production cost 5,714 5,691 24 0 operating margin went up to 10% as against 6% in the same period last year. Sale of goods 529 846 (317) (37) ABS-CBN Global’s sale of goods, which contributed 46% of total, dropped by 51% Gross revenues 2 17,386 17,047 339 to P244 million after it stopped selling prepaid phonecards in the United States Net Income to concentrate on its core business of content distribution. Sale of goods of other Consolidated general and administrative expenses (GAEX) dropped by 12% YoY to subsidiaries, on the other hand, declined by 17% due mainly to lower sales of audio P5,135 million from P5,847 million the previous year. Excluding non-cash charges Other expenses declined by 60% to P252 million in 2006 from P623 million in Consolidated gross airtime revenues improved by 3% to P10,663 million. Parent products by Star Records as there were fewer hit music records in 2006. such as depreciation and amortization, consolidated cash GAEX likewise declined 2005. Net finance costs decreased by 10% to P648 million on the back of lower airtime revenues, which consist of revenues from Channel 2, AM and FM radio, and by 7% to P4,630 million. However, without the non-recurring charges, total outstanding debt as of December. Other income, on the other hand, increased by the regional network, likewise went up by 3% to P9,602 million. This can be primarily recurring GAEX is up by 5% or in line with inflation rate. 56% to P449 million from P287 million due to gate receipts from the Pacquiao- attributed to higher revenue contribution from non-traditional advertisements Larios boxing bout organized by the Company in July. Meanwhile, equity losses or creative buys such as product intrusions and product placements. Airtime reached P52 million as against P194 million the prior year, reflecting the continued revenues of other platforms, on the other hand, grew by 9% YoY to P1,060 million improvement in Skycable’s operations. on the back of higher airtime revenues of ABS-CBN Global. As a result of the improvement in operating income and lower other expenses, the ABS-CBN Global 244 501 (258) (51) Company reported a net income of P742 million in 2006, 187% higher YoY. Net of Personnel expenses 2,505 (427) Other subsidiaries 285 344 (59) (17) 2,078 (17) minority interest, net income attributable to equity holders reached P741 million Advertising and promotions 520 503 16 3 Total sale of goods 529 846 (317) (37) in 2006, up 194% YoY from P252 million in 2005. Similarly, earnings before interest, Facilities related expenses 537 496 41 8 taxes, depreciation, and amortization (EBITDA) went up by 19% to P4,188 million, Contracted services 448 404 43 11 translating to an EBITDA margin of 24%. Parent airtime revenues 9,602 9,362 240 3 Taxes and licenses 151 151 0 0 Other platforms 1,060 971 89 9 Expenses Entertainment, amusement 139 119 20 17 Balance Sheet Accounts Gross airtime revenues 10,663 10,334 329 3 and recreation Total expenses went down by 4% to P15,976 million in 2006. However, excluding Other expenses 757 816 (58) (7) Total consolidated assets reached P23,902 million, 4% lower versus end-2005. non-recurring charges of P467 million in 2006 related to DIRECTV marketing Sub-total -cash GAEX 4,630 4,995 (365) (7) Cash and cash equivalents declined by 5% to P1,662 million. Consolidated trade expenses as well as P1,420 million DIRECTV marketing expenses and Special Non-cash GAEX 505 852 (347) (41) and other receivables dropped by 6% to P4,382 million with trade receivables License fees, which represent revenues from the migration of existing US DTH Separation Program (SSP) expenses booked in 2005, total recurring expenses went Total GAEX 5,135 5,847 (712) (12) accounting for 81% of total. Trade receivables increased by 3% to P4,010 million, subscribers to DIRECTV’s platform as well as take up of new subscribers, declined up by 2% to P15,508 million. translating to trade days sales outstanding (DSO) of 84 days or flat versus 2005. by 31% to P1,117 million in 2006 from P1,619 million in 2005 as the migration Less: non-recurring expense 467 1,420 (952) (67) Total recurring GAEX 4,667 4,427 240 5 period for both new and existing US DTH subscribers to DIRECTV’s platform ended Other current assets increased by 28% to P1,011 million due mainly to production last August. expenses of yet to be aired episodes of the Company’s programs particularly soap Cost of sales and services went up by 2% to P2,417 million in 2006. This compares operas as well as upcoming movies of ABS-CBN Films. Since 2005, the Company Sale of services, which refers to revenues derived from cable and satellite against a 10% growth in combined sale of services and sale of goods hence begun the canning or advanced taping of some shows in order to cut location programming services, film production and distribution, interactive media, content reflecting margin improvement of the subsidiaries. ABS-CBN Global, which rentals and maximize efficiencies from production planning. development and programming services, post production, text messaging, etc., accounted for 58% of cost of sales and services, registered a 3% decline in cost Production cost 5,714 5,691 24 0 increased by 20% to P5,077 million in 2006. of sales. Total interest-bearing loans and borrowings declined by 27% to P4,574 million General and administrative 5,135 5,847 (712) (12) from P6,276 million in end-2005 following the payment of P1,798 million in loans Cost of sales and services 2,417 Accounting for 74% of total, ABS-CBN Global registered a 20% growth in sale of 2,374 44 2 in 2006. As a result, net debt to equity ratio declined to 0.21x from 0.34x in 2005. Agency commission, incentives, services to P3,749 million from P3,131 million in 2005. Although DTH subscription Meanwhile, total capital expenditure including program rights acquisition reached & co-prod share revenues in North America were reduced by half following the deal with DIRECTV, 2,458 2,085 373 18 P891 million in 2006, 25% lower versus last year as the Company controlled capital these were offset by higher subscription revenues on the back of robust subscriber Other expenses 252 623 (372) (60) spending to prioritize its loans payments during the year. take-up. Total expenses 15,976 16,620 (644) (4) Less: non-recurring expense 467 1,420 (952) (67) ABS-CBN Global 1,406 1,454 47 (3) As of end-December, total subscriber base of ABS-CBN Global grew by 21% YoY, Total recurring expenses 15,508 15,200 308 2 Other subsidiaries 1,011 920 91 10 equivalent to 1.6 million viewers worldwide. Total cost of sales and 2,417 2,374 44 2 services

AR 2006.indd 6-7 4/24/07 8:11:11 AM AR 2006.indd 8-9 4/24/07 8:11:23 AM AR 2006.indd 10-11 4/24/07 8:11:46 AM AR 2006.indd 12-13 4/24/07 8:11:58 AM AR 2006.indd 14-15 4/24/07 8:12:19 AM STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of ABS-CBN Broadcasting Corporation is responsible for all information and representations contained in the consolidated balance sheets as of December 31, 2006 and 2005 and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2006. The consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the Philippines and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate consideration to materiality.

In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized. The management likewise discloses to the company’s audit committee and to its external auditor: (i) all significant deficiencies in the design or operation of internal controls that could adversely affect its ability to record, process, and report financial data; (ii) material weaknesses in the internal controls; and (iii) any fraud that involves management or other employees who exercise significant roles in internal controls.

The Board of Directors reviews the financial statements before such statements are approved and submitted to the stockholders of the Company. Sycip, Gorres, Velayo & Co., the independent auditors appointed by the stockholders, have audited the parent and consolidated financial statements of the Company in accordance with generally accepted auditing standards in the Philippines and have expressed their opinion on the fairness of presentation upon completion of such examination, in their report to the Board of Directors and stockholders.

EUGENIO L. LOPEZ III Chairman and Chief Executive Officer

MIGUEL JOSE T. NAVARRETE Vice President and Chief Financial Officer

AR 2006.indd 16-17 4/24/07 8:12:20 AM ABS-CBN BROADCASTING CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements December 31, 2006 and 2005 and Years Ended December 31, 2006, 2005 and 2004 and

Independent Auditors’ Report

SyCip Gorres Velayo & Co. Phone: (632) 891-0307 SGV & CO 6760 Ayala Avenue Fax: (632) 819-0872 1226 Makati City www.sgv.com.ph Philippines BOA/PRC Reg. No. 0001 SEC Accreditation No. 0012-FR-1

INDEPENDENT AUDITORS’ REPORT

The Stockholders and the Board of Directors ABS-CBN Broadcasting Corporation Mother Ignacia Street corner Sgt. Esguerra Avenue Quezon City

We have audited the accompanying financial statements of ABS-CBN Broadcasting Corporation and Subsidiaries, which comprise the consolidated balance sheets as at December 31, 2006 and 2005, and the consolidated statements of income, consolidated statements of changes in equity and consolidated statements of cash flows for each of the three years in the period ended December 31, 2006, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of ABS-CBN Broadcasting Corporation and Subsidiaries as of December 31, 2006 and 2005, and their financial performance and their cash flows for each of the three years in the period ended December 31, 2006 in accordance with Philippine Financial Reporting Standards.

SYCIP GORRES VELAYO & CO.

Maria Vivian C. Ruiz Partner CPA Certificate No. 83687 SEC Accreditation No. 0073-AR-1 Tax Identification No. 102-084-744 PTR No. 0266539, January 2, 2007, Makati City

March 28, 2007

SGV & Co is a member practice of Ernst & Young Global ABS-CBN BROADCASTING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in Thousands)

December 31 2005 (As restated - 2006 Note 2) ASSETS Current Assets Cash and cash equivalents (Notes 5 and 26) P=1,661,832 P=1,751,730 Trade and other receivables (Notes 6, 14, 24 and 26) 4,382,530 4,651,900 Derivative assets (Note 26) 12,438 193,305 Program rights - current (Notes 10, 12, 18 and 19) 773,290 807,134 Other current assets - net (Note 7) 1,011,222 790,767 Total Current Assets 7,841,312 8,194,836 Noncurrent Assets Long-term receivable from a related party (Notes 8 and 26) 2,423,392 2,357,413 Property and equipment - net (Notes 9, 15 and 24) 9,724,640 10,287,599 Noncurrent program rights and other intangible assets (Notes 10, 12, 18 and 19) 1,444,468 1,519,859 Deferred tax assets (Note 22) 301,779 322,426 Other noncurrent assets - net (Notes 11, 12 and 26) 2,165,923 2,141,712 Total Noncurrent Assets 16,060,202 16,629,009 P=23,901,514 P=24,823,845

LIABILITIES AND EQUITY Current Liabilities Trade and other payables (Notes 13, 14 and 26) P=4,553,915 P=4,528,983 Income tax payable 28,816 28,150 Derivative liabilities (Note 26) 357,920 103,912 Obligations for program rights - current (Note 26) 347,879 360,624 Interest-bearing loans and borrowings - current (Notes 8, 9, 11, 15, 24, 25 and 26) 2,137,139 1,766,144 Total Current Liabilities 7,425,669 6,787,813 Noncurrent Liabilities Interest-bearing loans and borrowings - net of current portion (Notes 8, 9, 11, 15, 24, 25 and 26) 2,436,951 4,509,640 Obligations for program rights - net of current portion (Note 26) 64,065 61,778 Accrued pension obligation (Note 23) 279,816 238,535 Asset retirement obligation 17,126 1,698 Total Noncurrent Liabilities 2,797,958 4,811,651 Equity Capital stock (Note 16) 779,583 779,583 Capital paid in excess of par value 706,047 706,047 Cumulative translation adjustments (Notes 11 and 26) (158,223) 153,194 Retained earnings (Note 16) 12,465,094 11,724,542 Philippine depository receipts convertible to common shares (Note 16) (177,621) (200,000) Total Equity Attributable to Equity Holders of Parent Company 13,614,880 13,163,366 Minority Interest 63,007 61,015 Total Equity 13,677,887 13,224,381 P=23,901,514 P=24,823,845

See accompanying Notes to Consolidated Financial Statements. ABS-CBN BROADCASTING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, Except Per Share Amounts)

Years Ended December 31 2005 2004 (As restated - (As restated - 2006 Note 2) Note 2) REVENUES Airtime revenues (Note 14) P=10,662,767 P=10,333,677 P=11,086,442 Sale of services (Notes 14 and 24) 5,076,780 4,248,144 3,930,321 License fees (Note 24) 1,116,978 1,619,367 – Sale of goods (Note 14) 529,108 845,888 754,569 17,385,633 17,047,076 15,771,332 EXPENSES (INCOME) Production costs (Notes 14, 18, 23 and 24) 5,714,518 5,690,784 5,468,148 General and administrative (Notes 11, 14, 20, 23 and 24) 5,134,682 5,847,218 4,129,996 Cost of sales and services (Notes 14, 19, 23 and 24) 2,417,127 2,373,606 2,384,522 Agency commission, incentives and co-producers’ share (Note 17) 2,457,824 2,084,747 2,196,662 Finance costs (Notes 15 and 21) 1,363,383 1,001,990 910,730 Finance revenue (Notes 8, 14 and 21) (543,342) (332,263) (152,897) Equity in net losses of associates (Notes 8 and 11) 51,853 193,651 47,325 Foreign exchange loss (gain) - net (171,681) 47,161 2,347 Other income (Notes 14, 21, 24 and 26) (448,707) (287,142) (227,143) 15,975,657 16,619,752 14,759,690 INCOME BEFORE INCOME TAX 1,409,976 427,324 1,011,642 PROVISION FOR INCOME TAX (Note 22) 667,432 168,852 266,973 NET INCOME P=742,544 P=258,472 P=744,669

Attributable to: Equity holders of Parent Company (Note 27) P=740,552 P=251,731 P=734,250 Minority interest 1,992 6,741 10,419 P=742,544 P=258,472 P=744,669

BASIC/DILUTED EARNINGS PER SHARE (EPS) (Note 27) P=0.962 P=0.327 P=0.954

See accompanying Notes to Consolidated Financial Statements.

ABS-CBN BROADCASTING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Amounts in Thousands Except Per Share Amounts)

Attributed to Equity Holders of Parent Company Philippine Depository Receipts Cumulative Unappropriated Convertible to Capital Capital Paid Translation Retained Appropriated Common Stock in Excess of Adjustments Earnings Retained Shares Minority (Note 16) Par Value (CTA) (Note 26) (Notes 2 and 16) Earnings (Note 16) Total Interest Total Equity At December 31, 2005, as previously reported P=779,583 P=706,047 P=153,194 P=3,477,060 P=8,300,000 (P=200,000) P=13,215,884 P=61,015 P=13,276,899 Prior period adjustment (Note 2) – – – (52,518) – – (52,518) – (52,518) At December 31, 2005, as restated 779,583 706,047 153,194 3,424,542 8,300,000 (200,000) 13,163,366 61,015 13,224,381 Cash flow hedges – – (162,281) – – – (162,281) – (162,281) Translation adjustments during the year – – (138,913) – – – (138,913) – (138,913) Amortization of initial CTA – – (31,328) – – – (31,328) – (31,328) Unrealized fair value gain on available- for-sale investment (Note 11) – – 21,105 – – – 21,105 – 21,105 Total income and expense for the year recognized directly in equity – – (311,417) – – – (311,417) – (311,417) Net income for the year – – – 740,552 – – 740,552 1,992 742,544 Total income and expense for the year – – (311,417) 740,552 – – 429,135 1,992 431,127 Issuance of treasury shares (Note 16) – – – – – 22,379 22,379 – 22,379 At December 31, 2006 P=779,583 P=706,047 (P=158,223) P=4,165,094 P=8,300,000 (P=177,621) P=13,614,880 P=63,007 P=13,677,887

Attributed to Equity Holders of Parent Company Philippine Depository Receipts Cumulative Unappropriated Convertible to Capital Capital Paid Translation Retained Appropriated Common Stock in Excess of Adjustments Earnings Retained Shares Minority (Note 16) Par Value (CTA) (Note 26) (Notes 2 and 16) Earnings (Note 16) Total Interest Total Equity At December 31, 2004, as previously reported P=779,583 P=706,047 P=138,334 P=3,236,377 P=8,300,000 (P=200,000) P=12,960,341 P=42,248 P=13,002,589 Prior period adjustment (Note 2) – – – (16,505) – – (16,505) – (16,505) At December 31, 2004, as restated 779,583 706,047 138,334 3,219,872 8,300,000 (200,000) 12,943,836 42,248 12,986,084 Effect of adoption of PAS 39 (Note 2) – – 117,071 (47,061) – – 70,010 – 70,010 At January 1, 2005, as restated 779,583 706,047 255,405 3,172,811 8,300,000 (200,000) 13,013,846 42,248 13,056,094 Minority interest – – – – – – – 12,026 12,026 Cash flow hedges – – (52,603) – – – (52,603) – (52,603) Amortization of initial CTA – – (31,845) – – – (31,845) – (31,845) Translation adjustments during the year – – (17,763) – – – (17,763) – (17,763) Total income and expense for the year recognized directly in equity – – (102,211) – – – (102,211) 12,026 (90,185) Net income for the year – – – 251,731 – – 251,731 6,741 258,472 Total income and expense for the year – – (102,211) 251,731 – – 149,520 18,767 168,287 At December 31, 2005 P=779,583 P=706,047 P=153,194 P=3,424,542 P=8,300,000 (P=200,000) P=13,163,366 P=61,015 P=13,224,381

At December 31, 2003 P=779,583 P=706,047 P=130,251 P=2,984,556 P=8,300,000 (P=200,000) P=12,700,437 P=31,829 P=12,732,266 Translation adjustments during the year recognized directly to equity – – 8,083 – – – 8,083 – 8,083 Net income for the year – – – 734,250 – – 734,250 10,419 744,669 Total income and expense for the year – – 8,083 734,250 – – 742,333 10,419 752,752 Cash dividends P=0.64 per share in 2004 (Note 16) – – – (498,934) – – (498,934) – (498,934) At December 31, 2004 P=779,583 P=706,047 P=138,334 P=3,219,872 P=8,300,000 (P=200,000) P=12,943,836 P=42,248 P=12,986,084

See accompanying Notes to Consolidated Financial Statements.

ABS-CBN BROADCASTING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands)

Years Ended December 31 2005 2004 (As restated - (As restated - 2006 Note 2) Note 2) CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=1,409,976 P=427,324 P=1,011,642 Adjustments for: Depreciation (Note 9) 1,170,365 1,234,729 1,146,303 Amortization of: Program rights and other intangibles (Note 10) 1,094,167 957,212 936,177 Debt issue costs (Note 21) 83,860 87,046 107,880 Deferred charges (Notes 19 and 20) 26,683 348,063 92,509 Interest expense (Note 21) 631,816 683,465 802,850 Unrealized foreign exchange gain - net (199,659) (20,847) (940) Interest income (Note 21) (161,905) (297,435) (152,897) Mark-to-market loss (gain) - net (Note 21) 114,975 (34,435) – Provisions for: Doubtful accounts (Note 20) 94,060 159,520 164,045 Retirement expense (Note 23) 75,437 79,758 80,111 Other employee benefits 43,750 136,283 73,194 Decline in value of inventory 1,200 1,200 4,002 Decline in value of marketable securities – 4,625 918 Equity in net losses of associates 51,853 193,651 47,325 Curtailment gain (Note 23) – (158,418) – Gain on sale of property and equipment – (8,262) (292) Operating income before working capital changes 4,436,578 3,793,479 4,312,827 Decrease (increase) in: Trade and other receivables 284,508 (1,198,013) 398,360 Program rights and other intangible assets (591,196) (662,896) (467,561) Other current assets (471,591) (261,538) (88,824) Increase (decrease) in: Trade and other payables (202,298) 971,196 281,246 Obligations for program rights (400,220) (243,879) (167,238) Payment of accrued pension obligation (34,156) – 20,652 Cash generated from operations 3,021,625 2,398,349 4,289,462 Income tax paid (257,417) (422,116) (431,653) Net cash provided by operating activities 2,764,208 1,976,233 3,857,809 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (491,566) (639,040) (808,117) Increase (decrease) in: Other noncurrent assets (33,079) (328,528) (571,403) Long-term receivables from a related party – – (2,073,849) Interest received 46,483 36,129 41,528 Proceeds from sale of property and equipment 2,662 25,468 26,771 Net cash used in investing activities (475,500) (905,971) (3,385,070) CASH FLOWS FROM FINANCING ACTIVITIES Payments of: Long-term debt (1,798,223) (481,381) (5,583,565) Interest and other financial charges (598,900) (713,921) (815,695) Bank loans (355,398) (111,545) - Capital lease (114,597) (74,819) (59,832) Cash and scrip dividends – – (498,934) Proceeds from: Bank loans 473,979 – 246,366 Long-term debt – 745,749 5,975,277 Net cash used in financing activities (2,393,139) (635,917) (736,383) EFFECTS OF EXCHANGE RATE CHANGES AND TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS 14,533 25,828 (25,154) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (89,898) 460,173 (288,798) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,751,730 1,291,557 1,580,355 CASH AND CASH EQUIVALENTS AT END OF YEAR P=1,661,832 P=1,751,730 P=1,291,557

See accompanying Notes to Consolidated Financial Statements. ABS-CBN BROADCASTING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in Thousands Unless Otherwise Specified)

1. CORPORATE INFORMATION

ABS-CBN Broadcasting Corporation (“ABS-CBN” or “Parent Company”) is incorporated in the Philippines. The Parent Company’s core business is television and radio broadcasting. Its subsidiaries and associates are involved in the following related businesses: cable and direct-to-home (DTH) television distribution and telecommunication services overseas, movie production, audio recording and distribution, video/audio post production, and film distribution. Other activities of the subsidiaries include merchandising, internet and mobile services and publishing.

The Parent Company is 57% owned by Lopez, Inc. (Lopez), a Philippine entity (see Note 14). The registered office address of the Parent Company is Mother Ignacia Street corner Sgt. Esguerra Avenue, Quezon City.

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors (BOD) on March 28, 2007.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments and available-for-sale investments which are measured at fair value.

The consolidated financial statements are presented in Philippine Peso, which is the Company’s functional and presentation currency under Philippine Financial Reporting Standards (PFRS) and all values are rounded to the nearest thousand except when otherwise indicated.

Statement of Compliance The consolidated financial statements of ABS-CBN Broadcasting Corporation and all its subsidiaries (the Company) have been prepared in compliance with PFRS. PFRS include standards named PFRS and Philippine Accounting Standards (PAS), including Interpretations issued by the Financial Reporting Standards Council.

Changes in Accounting Policies The Company has adopted the following amendments to PFRS and Philippine Interpretation of International Financial Reporting Interpretations Committee (IFRIC) interpretations during the year. The accounting policies adopted are consistent with those of the previous financial year except the adoption of the amended standards and interpretation below.

§ Amendment to PAS 19, “Employee Benefits” § Amendment to PAS 21, “The Effects of Changes in Foreign Exchange Rates” § Amendments to PAS 39, “Financial Instruments: Recognition and Measurement” § Philippine Interpretation IFRIC 4, “Determining Whether an Arrangement Contains a Lease”

The principal effects of these changes, if any, are as follows:

§ Amendment to PAS 19, “Employee Benefits”

Amendment for Actuarial Gains and Losses, Group Plans and Disclosures — As of January 1, 2006, the Company adopted the amendment of PAS 19. As a result, additional disclosures on the financial statements are made to provide information about trends in the assets and liabilities in the defined benefit plans and the assumptions underlying the components of the defined benefit cost. The Company chose not to apply the new option offered to recognize actuarial gains and losses outside of the consolidated statement of income. The Company’s financial statement has been restated to adjust the employee benefits recognized and adjusted in 2005 in line with the adoption of PAS 19, “Employee Benefits”. A new interpretation has been issued related to the implementation of the Standard. The Company revisited its computation which resulted to P=16 million (net of tax amounting to P=8 million) adjustment to decrease the 2005 beginning retained earnings and increase “General and administrative expenses” account in 2005 by P=57 million, decrease the “Provision for income tax” account by P=20 million and increase the “Trade and other payables” account by P=81 million as of December 31, 2005.

§ Amendment to PAS 21, “The Effects of Changes in Foreign Exchange Rates”

Amendment for Net Investment in Foreign Operation — As of January 1, 2006, the Company adopted the amendment to PAS 21 which requires that all exchange differences arising from a monetary item that forms part of the Company’s net investment in a foreign operation are recognized in a separate component of equity in the consolidated financial statements regardless of the currency in which the monetary item is denominated. This change has no impact on the consolidated financial statements.

§ Amendments to PAS 39, “Financial Instruments: Recognition and Measurement”

Amendment for Financial Guarantee Contracts (issued August 2005) — This amended the scope of PAS 39 to require financial guarantee contracts that are not considered as insurance contracts to be recognized initially at fair value and to be remeasured at the higher of the amount determined in accordance with PAS 37, “Provisions, Contingent Liabilities and Contingent Assets” and the amount initially recognized less, when appropriate, cumulative amortization recognized in accordance with PAS 18, “Revenue”. This amendment did not have an effect on the consolidated financial statements.

Amendment for Cash Flow Hedge Accounting of Forecast Intra-Group Transactions (issued August 2005) — This amended PAS 39 to permit the foreign currency risk of a highly probable intra-group forecast transaction to qualify as the hedged item in a cash flow hedge, provided that the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and that the foreign currency risk will affect the consolidated statement of income. As the Company currently has no such transactions, the amendment did not have an effect on the consolidated financial statements.

Amendment for the Fair Value Option (issued June 2005) — This amended PAS 39 to restrict the use of the option to designate any financial asset or any financial liability to be measured at fair value through profit or loss. This amendment has no significant impact on the consolidated financial statements.

§ Philippine Interpretation IFRIC 4, “Determining Whether an Arrangement Contains a Lease”

This interpretation provides guidance in determining whether arrangements contain a lease to which lease accounting must be applied. The adoption of the interpretation has no significant impact on the consolidated financial statements.

The following Philippine Interpretations are effective for annual periods beginning on or after January 1, 2006 but are not relevant to the Company:

§ Philippine Interpretation IFRIC 5, “Rights to Interests Arising from Decommissioning Restoration and Environmental Rehabilitation of Funds”

§ Philippine Interpretation IFRIC 6, “Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment”

Standards and Interpretations Not Yet Effective The Company did not opt for the early adoption of the following PFRS and Philippine Interpretations that have been approved but are not yet effective:

§ PFRS 7, “Financial Instruments: Disclosures,” and the complementary amendment to PAS 1, “Presentation of Financial Statements: Capital Disclosures” (effective for annual periods beginning on or after January 1, 2007)

PFRS 7 introduces new disclosures to improve the information about the financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, as well as sensitivity analysis to market risk. It replaces PAS 30, “Disclosures in the Financial Statements of Banks and Similar Financial Institutions,” and the disclosure requirements in PAS 32, “Financial Instruments: Disclosure and Presentation.” It is applicable to all entities that report under PFRS. The Company is currently assessing the impact of PFRS 7 and the amendment to PAS 1 and expects that the main additional disclosures will be the sensitivity analysis to market risk and capital disclosures required by PFRS 7 and the amendment to PAS 1. The Company will apply PFRS 7 and amendment to PAS 1 in 2007.

§ PFRS 8, “Operating Segments” (effective for annual periods beginning on or after January 1, 2009)

This PFRS adopts a management approach to reporting segment information. The information reported would be that which management uses internally for evaluating the performance of operating segments and allocating resources to those segments. Such information may be different from that reported in the balance sheet and statement of income and companies will need to provide explanations and reconciliations of the differences. PFRS 8 will replace PAS 14, “Segment Reporting.” The Company is currently assessing the impact of this standard to its current manner of reporting segment information.

§ Philippine Interpretation IFRIC 7, “Applying the Restatement Approach under PAS 29, Financial Reporting in Hyperinflationary Economies” (effective for annual periods beginning on or after March 1, 2006)

This interpretation provides guidance on how to apply PAS 29 when an economy first becomes hyperinflationary, in particular the accounting for deferred income tax. The interpretation will have no impact on the consolidated financial statements.

§ Philippine Interpretation IFRIC 8, “Scope of PFRS 2” (effective for annual periods beginning on or after May 1, 2006)

This interpretation requires PFRS 2, “Group and Treasury Share Transactions,” to be applied to any arrangements where equity instruments are issued for consideration which appears to be less than fair value. The Company expects that the interpretation will have no material impact on the consolidated financial statements.

§ Philippine Interpretation IFRIC 9, “Reassessment of Embedded Derivatives” (effective for annual periods beginning on or after June 1, 2006)

This interpretation prohibits subsequent reassessment of embedded derivatives unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case, reassessment is required. An entity determines whether a modification to cash flows is significant by considering the extent to which the expected future cash flows associated with the embedded derivatives, the host contract or both have changed and whether the change is significant relative to previously expected cash flows on the contract. This interpretation will have no significant impact on the consolidated financial statements.

§ Philippine Interpretation IFRIC 10, “Interim Financial Reporting and Impairment” (effective for annual periods beginning on or after November 1, 2006)

This interpretation prohibits the reversal of impairment loss on goodwill and available-for-sale equity investments recognized in the interim financial reports even if impairment is no longer present at the annual balance sheet date. This interpretation will have no significant impact on the consolidated financial statements.

§ Philippine Interpretation IFRIC 11, PFRS 2, “Group and Treasury Share Transactions” (effective for annual periods beginning on or after March 1, 2007)

This interpretation requires arrangements whereby an employee is granted rights to an entity’s equity instruments to be accounted for as an equity-settled scheme by the entity even if (a) the entity chooses or is required to buy those equity instruments (e.g., treasury shares) from another party, or (b) the shareholder(s) of the entity provide the equity instruments needed. It also provides guidance on how subsidiaries, in their separate financial statements, account for such schemes when their employees receive rights to the equity instruments of the parent. Currently, the Company does not have any stock option plan and therefore, does not expect this interpretation to have significant impact on the consolidated financial statements. § Philippine Interpretation IFRIC 12, “Service Concession Arrangements” (effective for annual periods beginning on or after January 1, 2008)

This interpretation covers contractual arrangements arising from entities providing public services and is not relevant to the Company’s current operations.

Basis of Consolidation The consolidated financial statements comprise the financial statements of ABS-CBN Broadcasting Corporation and its subsidiaries as at December 31 each year (see Note 14). The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.

All intra-company balances, transactions, income and expenses and profits and losses resulting from intra-company transactions that are recognized in assets, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases.

Minority Interests Minority interests represent the portion of profit or loss and net assets not held by the Company and are presented separately in the statements of income and within the equity in the consolidated balance sheets separately from parent shareholders’ equity.

Foreign Currency Translation Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the consolidated statement of income with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognized in the statement of income. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with in equity. Nonmonetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The functional currencies of the foreign subsidiaries are as follows:

Subsidiary Functional Currency ABS-CBN International United States Dollar ABS-CBN Australia Pty. Ltd. (ABS-CBN Australia) Australian Dollar ABS-CBN Middle East FZ-LLC (ABS-CBN Middle East) United States Dollar ABS-CBN Europe Ltd. (ABS-CBN Europe) Great Britain Pound

As at the reporting date, the balance sheets of these subsidiaries are translated into the presentation currency of the Company (the Philippine Peso) at the rate of exchange ruling at the balance sheet date and, their statement of income are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognized in equity relating to that particular foreign operation is recognized in the consolidated statement of income.

Financial Instruments The Company made use of exemption provided by PFRS 1. As allowed by the Securities and Exchange Commission (SEC), the effect of adopting PAS 39 did not result in a restatement of prior period’s consolidated financial statements. The cumulative effect of adopting this standard was credited to the January 1, 2005 retained earnings. Adoption of this Standard has increased (decreased) the following accounts at January 1, 2005:

Increase Notes (Decrease) Other noncurrent assets a (P=255,261) Interest-bearing loans and borrowings - net of current portion a (249,949) Derivative assets b 125,575 CTA b 117,071 Trade and other receivables c (59,588) Obligations for program rights d (17,170) Deferred tax assets 14,545 Program rights and other intangibles b (22,838) Trade and other payables d (458) Retained earnings (47,061) a. Implementation of the effective interest method resulted to a decrease of P=5 million in January 1, 2005 retained earnings; unamortized debt issued costs were reclassified from other noncurrent assets and presented as deduction from long-term debt. b. The Company recognized the fair value of its derivatives (freestanding and embedded) as of January 1, 2005. The fair value of freestanding derivatives which qualified for hedge accounting under previous Generally Accepted Accounting Principles was reported in CTA. Embedded derivatives were bifurcated from program rights and license agreements. c. The Company tested its trade and other receivable for impairment on January 1, 2005 resulting to additional impairment losses. d. The Company discounted its long-term noninterest-bearing payables to comply with PAS 39’s requirement to record all financial instruments at fair value upon initial recognition. Subsequently, these were carried at amortized costs.

The policies on financial instruments effective January 1, 2005 follow:

Financial Assets and Financial Liabilities

Date of Recognition. Purchases or sale of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace are recognized on the settlement date. Derivatives are recognized on trade date basis (i.e. the date that the Company commits to purchase or sell the asset).

Initial Recognition of Financial Instruments. Financial assets and financial liabilities are recognized initially at fair value. Transaction costs are included in the initial measurement of all financial assets and liabilities, except for financial instruments which are measured at fair value through profit and loss.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument or a component that is a financial liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity net of any related income tax benefits. Financial instruments are offset when there is a legally enforceable right to offset and intention to settle either on a net basis or to realize the asset and settle the liability simultaneously.

Financial assets are further classified into the following categories: (a) financial asset at fair value through profit or loss; (b) loans and receivables; (c) held-to-maturity investments; and (d) available-for-sale financial assets. Financial liabilities, on the other hand, are classified into: (a) financial liabilities at fair value through profit or loss; and (b) other liabilities at amortized cost. The Company determines the classification at initial recognition and where allowed and appropriate, re- evaluates this designation at every reporting date. a. Financial Assets or Financial Liabilities at Fair Value through Profit or Loss

Financial assets and financial liabilities at fair value through profit or loss include financial assets and liabilities held for trading purposes, financial assets and financial liabilities designated upon initial recognition as at fair value through profit or loss, and derivative instruments. Financial assets and financial liabilities are classified as held for trading if they are acquired for the purpose of selling and repurchasing in the near term. Included in this classification are debt and equity securities which have been acquired principally for trading purposes.

Financial assets and financial liabilities may be designated at initial recognition as at fair value through profit or loss if the following criteria are met:

§ the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them on a different basis;

§ the assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy; or

§ the financial instrument contains an embedded derivative, unless the embedded derivative does not significantly modify the cash flows or it is clear, with little or no analysis, that it would not be separately recorded.

The Company’s derivative instruments (including embedded derivatives) that are not accounted for as accounting hedges are classified under this category. b. Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are not entered into with the intention of immediate or short-term resale, are not classified as financial assets at fair value through profit or loss, designated as available-for-sale financial assets or held-to-maturity investments.

After initial measurement, loans and receivables are subsequently measured at amortized cost using the effective interest method less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. The amortization is included in the interest income in the consolidated statement of income. The losses arising from impairment are recognized in provision for doubtful accounts in the consolidated statement of income.

This category includes the Company’s trade, intercompany and other receivables. c. Held-to-Maturity Investments

Quoted nonderivative financial assets with fixed or determinable payments and fixed maturities are classified as held- to-maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long-term investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at amortized cost. This cost is computed as the amount initially recognized minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initially recognized amount and the maturity amount. This calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortized cost, gains and losses are recognized in the consolidated statement of income when the investments are derecognized or impaired, as well as through the amortization process.

The Company has no held-to-maturity investments as of December 31, 2006 and 2005. d. Available-for-Sale Financial Assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three preceding categories. They are purchased and held indefinitely and may be sold in response to liquidity requirements or changes in market conditions. After initial recognition, available-for-sale financial assets are measured at fair value. The effective yield component of debt securities classified as available-for-sale financial assets, as well as the impact of restatement on foreign currency-denominated debt securities classified as available-for-sale, is reported in the consolidated statement of income. The unrealized gains and losses arising from the fair valuation of available-for-sale financial assets are excluded, net of applicable tax, from the consolidated statement of income and are reported as cumulative translation adjustments in the equity section of the consolidated balance sheet and in the consolidated statement of changes in equity.

The Company’s available-for-sale financial assets include investments in ordinary common shares and debt instruments.

Other Financial Liabilities at Amortized Cost This classification includes loans and borrowings which are initially recognized at fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method.

Gains or losses are recognized in income or loss when the liabilities are derecognized as well as through the amortization process.

Derivative Financial Instruments and Hedging The Company uses derivative financial instruments such as interest rate swaps and cross currency swaps to hedge its risks associated with interest rate and foreign currency fluctuations. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to the consolidated statement of income.

For the purpose of hedge accounting, hedges are classified as:

§ fair value hedges when hedging the exposure to changes in the fair value of a recognized asset or liability;

§ cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability or a forecast transaction; or

§ hedges of a net investment in a foreign operation.

A hedge of the foreign currency risk of a firm commitment is accounted for as a cash flow hedge.

At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Hedges which meet the strict criteria for hedge accounting are accounted for as follows:

Fair Value Hedges. Fair value hedges are hedges of the Company’s exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a particular risk and could affect profit or loss. For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged, the derivative is remeasured at fair value and gains and losses from both are taken to the consolidated statement of income.

The Company has no derivatives that are designated or accounted for fair value hedges as of December 31, 2006 and 2005. Cash Flow Hedges. Cash flow hedges are hedges of the exposures to variability in cash flows that are attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction and could affect the consolidated statement of income. Changes in the fair value of a hedging instrument that qualifies as a highly effective cash flow hedge are recognized directly in equity, while any hedge ineffectiveness is recognized immediately in the consolidated statement of income.

Amounts taken to equity are transferred to the consolidated statement of income when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognized or when a forecast sale or purchase occurs. Where the hedged item is the cost of a non-financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction is no longer expected to occur, amounts previously recognized in equity are transferred to the consolidated statement of income. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognized in equity remain in equity until the forecast transaction occurs. If the related transaction is not expected to occur, the amount is taken to the consolidated statement of income.

In October 2005, the Company designated its outstanding interest rates and cross currency swaps as cash flow hedges.

Hedges of a Net Investment. Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognized directly in equity while any gains or losses relating to the ineffective portion are recognized in the consolidated statement of income. On disposal of the foreign operation, the cumulative value of any such gains or losses recognized directly in equity is transferred to the consolidated statement of income.

The Company has no hedges of a net investment in 2006 and 2005.

Impairment of Financial Assets The Company assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.

Assets Carried at Amortized Cost. If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset shall be reduced either directly or through use of an allowance account. The amount of the loss shall be recognized in the consolidated statement of income.

The Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the consolidated statement of income, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.

Assets Carried at Cost. If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Available-for-Sale Financial Assets. If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortization) and its current fair value, less any impairment loss previously recognized in the consolidated statement of income, is transferred from equity to the consolidated statement of income. Reversals in respect of equity instruments classified as available-for-sale are not recognized in the consolidated statement of income. Reversals of impairment losses, if any, on debt instruments are reversed through the consolidated statement of income, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognized in the consolidated statements of income.

Derecognition of Financial Assets and Liabilities

Financial Assets. A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized where:

§ the rights to receive cash flows from the asset have expired;

§ the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or

§ the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Company’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

Financial Liability. A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statement of income.

Determination of Fair Value. The fair value of financial instruments traded in organized financial markets is determined by reference to quoted market bid prices that are active at the close of business at the balance sheet date. When current bid and asking prices are not available, the price of the most recent transaction is used since it provides evidence of current fair value as long as there has not been significant change in economic circumstances since the time of the transaction.

For all other financial instruments not listed in an active market, the fair value is determined using valuation techniques. Such techniques include using reference to similar instruments for which observable prices exist, discounted cash flows analyses, and other relevant valuation models.

Financial Instruments (Prior to 2005) The Company enters into long-term foreign currency swap agreements to manage its foreign currency exposures relating to certain long-term foreign currency-denominated loans. Translation gains or losses on foreign currency swaps entered into as hedges are computed by multiplying the swap notional amounts by the difference between the spot exchange rate prevailing on balance sheet date and the spot exchange rate on the contract inception date (or the last reporting date). The resulting translation gains or losses are offset against the translation losses or gains on the underlying foreign currency-denominated liabilities.

The Company also enters into interest rates swaps to manage its interest rate exposures on underlying floating-rate loans. Swap costs accruing on foreign currency swaps and interest rate swaps that are currently due to or from the swap counterparties are charged to current operations. Mark-to-market values of the foreign currency swaps are not included in the determination of net income but are disclosed in the relevant note to these consolidated financial statements. Cash and Cash Equivalents Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.

Inventories Inventories included under “Other current assets - net” account in the consolidated balance sheet are valued at the lower of cost or net realizable value. Cost is determined on the weighted average method. Net realizable value of inventories that are for sale is the selling price in the ordinary course of business, less the cost of marketing and distribution. Net realizable value of inventories not held for sale is the current replacement cost. Unrealizable inventories are written off.

Property and Equipment Property and equipment, except land, are carried at cost (including capitalized interest), excluding the costs of day-to-day servicing, less accumulated depreciation and amortization and accumulated impairment in value. Such cost includes the cost of replacing part of such property and equipment when that cost is incurred if the recognition criteria are met. Land is stated at cost less any impairment in value. Depreciation is computed on a straight line method over the property and equipment’s useful lives.

The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of income in the year the asset is derecognized.

The property and equipment’s residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial year-end.

Construction in progress represents equipment under installation and building under construction and is stated at cost which includes cost of construction and other direct costs. Construction in progress is not depreciated until such time that the relevant assets are completed and put into operational use.

The net present value of legal obligations associated with the retirement of an item of property and equipment that resulted from the acquisition, construction or development and the normal operations of property and equipment is recognized in the period in which it is incurred and a reasonable estimate of the obligation can be made.

Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the consolidated statement of income in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangibles are not amortized. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from finite to indefinite is made on a prospective basis. A summary of the policies applied to the Company’s acquired intangible assets is as follows:

Impairment Testing/ Current and Amortization Recoverable Noncurrent Intangible Asset Useful Lives Method Used Amount Testing Portion

Program rights Finite (license term or Amortized on the basis To the extent that a Based on the estimated economic life whichever of program usage except given future expected year of usage except CPI is shorter) for Creative Programs, benefit period is shorter which is based on Inc. (CPI) which is than the initial Company license term. amortized on a straight- estimates, the Company line method over the writes off the purchase lease term. price or the license fee sooner than anticipated.

Cable Channels - CPI Indefinite No amortization. Annually and more Not applicable. frequently when an indication of impairment exists.

Production and Finite- 25 years Amortized over the To the extent that a Not applicable. Distribution Business - period of 25 years. given future expected Middle East benefit period is shorter than the initial Company estimates, the Company writes off the cost sooner than anticipated.

Movie in-process Finite Individual-film-forecast To the extent that the fair Based on the estimated computation method. value of the film is less year of usage. than its unamortized film costs and writes off the amount by which the unamortized capitalized costs exceeds the film’s fair value.

Video rights and Record Finite (six months or Amortized on the basis To the extent that a Not applicable. master 10,000 copies sold of of number of copies sold. given future expected video discs and tapes, benefit period is shorter whichever comes first) than the initial Company estimates, the Company writes off the purchase price or the license fee sooner than anticipated.

Story, music and Finite (useful economic Amortized on the basis To the extent that a Based on the estimated publication rights benefit) of the useful economic given future expected year of usage. life. benefit period is shorter than the initial Company estimates, the Company writes off the cost sooner than anticipated

Investment in an Associate The Company’s investment in an associate is accounted for under the equity method of accounting. An associate is an entity in which the Company has significant influence and which is neither a subsidiary nor a joint venture.

Sky Vision Corporation (Sky Vision) was considered as an associate although the Company’s equity interest is only 10.2% (see Note 8), as the Company exercise significant influence over Sky Vision with the combination of the Company’s interest with that of Lopez (the ultimate parent company) and Benpres Holdings Corporation (a co-subsidiary) (collectively, the Lopez Group). The combined Lopez Group interest represents controlling interest in Sky Vision and results in Sky Vision being consolidated in Lopez, the ultimate parent. In addition, the Company has a significant long- term receivable from Sky Vision which is convertible into Sky Vision shares upon determination of the conversion price. Upon conversion, the Company will gain control over Sky Vision (see Note 8). Under the equity method, the investment in an associate is carried in the balance sheets at cost plus post-acquisition changes in the Company’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortized. After application of the equity method, the Company determines whether it is necessary to recognize any additional impairment loss with respect to the Company’s net investment in the associate. The consolidated statement of income reflects the share of the results of operations of the associate. Where there has been a change recognized directly in the equity of the associate, the Company recognizes its share of any changes and discloses this, when applicable, in the consolidated statement of changes in equity. The reporting dates of the associate and the Company are identical and the associates’ accounting policies conform to those used by the Company for like transactions and events in similar circumstances.

Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Company’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

Tax Credits Tax credits from government airtime sales availed under Presidential Decree No. 1362 are recognized in the books upon actual airing of government commercials and advertisements. This is included under “Other noncurrent assets - net” account in the consolidated balance sheet.

Deferred Charges Gain or loss on sale of decoders which has no stand alone value without the subscription revenues are aggregated and recognized ratably over the longer of subscription contract term or the estimated customer service life. These are presented as part of “Other noncurrent assets - net” account in the consolidated balance sheets. As explained in Note 24, the Parent Company and ABS-CBN International entered into an agreement with DirecTV, Inc. (DirecTV) whereby direct- to-home (DTH) subscribers of ABS-CBN International are expected to migrate to DirecTV in 2006. ABS-CBN International will continue to service its subscribers until February 28, 2006. Accordingly, the deferred charges related to the DTH subscribers of ABS-CBN International are written off as of December 31, 2005, since management is of the opinion that the corresponding future benefits from these assets, if any, are not material.

Impairment of Nonfinancial Assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash- generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses are recognized in the consolidated statement of income in those expense categories consistent with the function of the impaired asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement of income unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

Revenue Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of the revenue can be measured reliably.

Airtime revenue is recognized as income on the dates the advertisements are aired. The fair values of barter transactions are included in airtime revenue and the related accounts. These transactions represent advertising time exchanged for program materials, merchandise or service. Sale of services include: a. Subscription fees which are recognized as follows:

DTH Subscribers and Cable Operators. Subscription fees are recognized under the accrual basis in accordance with the terms of the agreements.

Share in Direct TV, Inc. (DirecTV) Subscription Revenue. Subscription revenue from subscribers of DirecTV who subscribe to the The Filipino Channel is recognized in accordance with the Deal Memorandum, as discussed in Note 24.

Subscription revenue from ABS-CBN Now. Subscription revenue from online streaming services of Filipino-oriented content and programming are received in advance (included under “Trade and other payables” account) and are deferred and recognized as revenue over the period during which the service is performed. b. Telecommunications revenue which is recognized when earned. These are stated net of the share of the other telecommunications carriers, if any, under existing correspondence and interconnection agreements. Interconnection fees and charges are based on agreed rates with the other telecommunications carriers.

Income from prepaid phone cards are realized based on actual usage hours or expiration of the unused value of the card, whichever comes earlier. Income from prepaid card sales for which the related services have not been rendered as of balance sheet date, is presented as “Other current liabilities” under “Trade and other payables” account in the consolidated balance sheets. c. Channel lease revenue which is recognized as income on a straight-line basis over the lease term. d. Income from film exhibition which is recognized, net of theater shares, on the dates the films are shown. e. Income from TV rights and cable rights are recognized on the dates the films are permitted to be publicly shown as stipulated in the agreement.

License fees earned from DirecTV is recognized upon migration of the DTH subscribers of ABS-CBN International to DirecTV. The additional license fees for each migrated subscriber that will remain for 14 consecutive months from the date of activation, will be recognized on the 14th month (see Note 24).

Sale of goods is recognized when delivery has taken place and transfer of risks and rewards has been completed. These are stated net of sales discounts, returns and allowances.

Income related to the sale and installation of decoders of ABS-CBN Australia (included under “Sale of goods” account in the consolidated statement of income) which has no stand alone value without the subscription revenues are aggregated and recognized ratably over the longer of subscription contract term or the estimated customer service life.

Short-messaging-system/text-based revenues, sale of news materials and Company-produced programs included under “Sale of services” account in the consolidated statement of income are recognized upon delivery.

Rental income is recognized as income on a straight-line basis over the lease term.

Interest income is recognized on a time proportion basis that reflects the effective yield on the asset.

Dividends are recognized when the shareholders’ right to receive payment is established.

Leases The determination whether an arrangement is, or contains a lease is based on the substance of the arrangement at the inception date of whether the fulfillment of the arrangement is dependent on the use of a specific asset or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: a. there is a change in contractual terms, other than a renewal or extension of the agreement; b. a renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term; c. there is a change in the determination of whether the fulfillment is dependent on a specified asset; or d. there is a substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios a, c or d and the date of renewal or extension period for scenario b.

For arrangements entered prior to January 1, 2005, the date of inception is deemed to be January 1, 2005 in accordance with the transitional requirements of Philippine Interpretation IFRIC 4.

Company as Lessee. Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against the consolidated statement of income.

Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term. Operating lease payments are recognized as an expense in the consolidated statement of income on a straight-line basis over the lease term.

Company as Lessor. Leases where the Company retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.

Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense.

Borrowing Costs Borrowing costs are generally expensed as incurred. Borrowing costs are capitalized if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalization of borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred and ceases when the assets are ready for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded. Borrowing costs include interest charges and other costs incurred in connection with the borrowing of funds.

Pension Costs The Company has a funded defined benefit pension plans except for ABS-CBN International which has a defined contribution pension plan. The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit method. Actuarial gains and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses for each individual plan at the end of the previous reporting year exceeded 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognized over the expected average remaining working lives of the employees participating in the plans.

The past service cost is recognized as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits are already vested immediately following the introduction of, or changes to, a pension plan, past service cost is recognized immediately. The defined benefit liability is the aggregate of the present value of the defined benefit obligation and actuarial gains and losses not recognized, reduced by past service cost not yet recognized and the fair value of plan assets out of which the obligations are to be settled directly. If such aggregate is negative, the asset is measured at the lower of such aggregate or the aggregate of cumulative unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.

Income Taxes

Current Tax. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the balance sheet date.

Deferred Tax. Deferred income tax is provided, using the balance sheet liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, including asset revaluations. Deferred income tax assets are recognized for all deductible temporary differences, carryforward benefits of unused tax credits from excess minimum corporate income tax (MCIT) and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carryforward benefits of unused tax credits and unused tax losses can be utilized. Deferred income tax, however, is not recognized when it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit.

Deferred income tax liabilities are not provided on non-taxable temporary differences associated with investments in domestic subsidiaries and associates. With respect to investments in other subsidiaries and associates, deferred income tax liabilities are recognized except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred tax assets are measured at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income tax relating to items recognized directly in equity is recognized in equity and not in the statement of income.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

EPS Basic EPS amounts are calculated by dividing the net income attributed to equity holders of the Parent Company for the period attributable to common shareholders by the weighted average number of common shares outstanding during the period. The Company has no dilutive potential common shares outstanding that would require disclosure of diluted earnings per share in the consolidated statement of income.

Contingencies Contingent liabilities are not recognized in the consolidated financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognized in the consolidated financial statements but disclosed when an inflow of economic benefits is probable.

Subsequent Events Post-year-end events that provide additional information about the Company’s financial position at the balance sheet date (adjusting events) are reflected in the consolidated financial statements. Post-year-end events that are not adjusting events are disclosed in the notes to the consolidated financial statements when material.

3. MANAGEMENT’S USE OF JUDGMENT AND ESTIMATES

The Company’s consolidated financial statements prepared under PFRS require management to make judgments and estimates that affect amounts reported in the consolidated financial statements and related notes. Future events may occur which will cause the judgments and assumptions used in arriving at the estimates to change. The effects of any change in judgments and estimates are reflected in the consolidated financial statements as they become reasonably determinable.

Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgments In the process of applying the Company’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognized in the consolidated financial statements.

Leases. The evaluation whether an arrangement contains a lease is based on its substance. An arrangement is, or contains a lease when the fulfillment of the arrangement depends on a specific asset or assets and the arrangement conveys the right to use the asset.

The Company has entered into operating lease arrangements as a lessor and as a lessee. The Company, as a lessee, has determined that the lessor retains substantial risks and rewards of ownership of these properties which are on operating lease agreements. As a lessor, the Company retains substantially all the risks and benefits of ownership of the assets.

The Company has also entered into finance lease agreements covering certain property and equipment. The Company has determined that it bears substantially all the risks and benefits incidental to ownership of said properties which are on finance lease agreements.

The carrying amount of property and equipment under finance lease amounted to P=175 million and P=177 million as of December 31, 2006 and 2005, respectively (see Note 9).

Determination of Functional Currency. Below are the functional currencies of the foreign subsidiaries based on the economic substance of the underlying circumstance relevant to the Company:

Subsidiary Functional Currency ABS-CBN International United States Dollar ABS-CBN Australia Australian Dollar ABS-CBN Middle East United States Dollar ABS-CBN Europe Great Britain Pound

The functional currency of the foreign subsidiaries is the currency of the primary economic environment in which it operates. It is the currency that mainly influences the revenue from and cost of rendering services.

Fair Value of Financial Instruments. PFRS requires that certain financial assets and liabilities (including derivative instruments) be carried at fair value, which requires the use of accounting estimates and judgment. While significant components of fair value measurement are determined using verifiable objective evidence (i.e. foreign exchange rates, interest rates, volatility rates), the timing and amount of changes in fair value would differ using a different valuation methodology. Any change in the fair values of financial assets and liabilities (including derivative instruments) directly affect the consolidated statement of income and equity.

The fair value of financial assets and liabilities are set out in Note 26.

Financial Assets not Quoted in an Active Market. The Company classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. Included in the evaluation on whether a financial asset is quoted in an active market is the determination on whether quoted prices are readily and regularly available, and whether those prices represent actual and regularly occurring market transactions on an arm’s length basis. Estimates The key assumptions concerning future and other key sources of estimation at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Allowance for Doubtful Accounts. The Company maintains an allowance for doubtful accounts at a level considered adequate to provide for potentially uncollectible receivables. The level of allowance is evaluated by management based on experience and other factors that may affect the recoverability of these assets. If there is an objective evidence that an impairment loss on trade and other receivables carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset shall be reduced either directly or through use of an allowance account. The allowance is established by charges to income in the form of provision for doubtful accounts. The amount and timing of recorded expenses for any period would therefore differ based on the judgments or estimates made. An increase in provision for doubtful accounts would increase the Company’s recorded expenses and decrease current assets.

Provision for doubtful accounts amounted to P=94 million in 2006, P=160 million in 2005 and P=164 million in 2004 (see Note 20). Trade and other receivables, net of allowance for doubtful accounts, amounted to P=4,383 million and P=4,652 million as of December 31, 2006 and 2005, respectively (see Note 6). Allowance for doubtful accounts as of December 31, 2006 and 2005 amounted to P=551 million and P=599 million, respectively (see Note 6).

Net Realizable Value of Inventories. Inventories are carried at net realizable value whenever net realizable value of inventories becomes lower than cost due to damage, physical deterioration, obsolescence, changes in price levels or other causes. The allowance account is reviewed on a regular basis to reflect the accurate valuation in the financial records. Inventory items identified to be obsolete and unusable are written off and charged as expense in the period such losses are identified.

Inventories at net realizable value, amounted to P=207 million and P=139 million as of December 31, 2006 and 2005, respectively (see Note 7).

Estimated Useful Lives. The useful life of each of the Company’s property and equipment and intangible assets with definite life is estimated based on the period over which the asset is expected to be available for use. Estimation for property and equipment is based on a collective assessment of industry practice, internal technical evaluation and experience with similar assets while for intangible assets with definite life, estimated life is based on the life of agreement covering such intangibles. The estimated useful life of each asset is reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear or other limits on the use of the asset. It is possible, however, that future results of operations could be materially affected by changes in the amounts and timing of recorded expenses brought about by changes in the factors mentioned above. A reduction in the estimated useful life of any property and equipment or intangible assets would increase the recorded expenses and decrease noncurrent assets.

The carrying values of property and equipment and intangible assets with definite life are as follows (see Notes 9 and 10):

2006 2005 Property and equipment - net P=9,724,640 P=10,287,599 Program rights 1,536,958 1,629,849 Production and distribution business - Middle East 124,684 141,759 Movie in-process 83,561 79,461 Story, music and publication rights 4,787 4,561 Video rights and record master 7,800 11,395

Impairment of Available-for-sale Equity Investments. The Company treats available-for-sale equity investments as impaired when there has been a significant or prolonged decline in the fair value below its cost or where there are objective evidence of impairment exists. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. The Company treats ‘significant’ generally as 20% or more of the original cost of investment, and ‘prolonged’ as greater than 6 months. In addition, the Company evaluates other factors, including normal volatility in share price for quoted equities and the future cash flows and discount factors for unquoted equities.

As of December 31, 2006 and 2005, available-for-sale investments are carried at P=68 million and P=47 million, respectively (see Note 11). Asset Retirement Obligation. Determining asset retirement obligation requires estimation of the costs of dismantling installations and restoring leased properties to their original condition. While it is believed that the assumptions used in the estimation of such costs are reasonable, significant changes in these assumptions may materially affect the recorded expense or obligation in future periods.

Asset retirement obligation amounted to P=17 million and P=2 million as of December 31, 2006 and 2005, respectively.

Recognition of Deferred Tax Assets. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. However, there is no assurance that sufficient taxable profit will be generated to allow all or part of the deferred tax assets to be utilized.

Unrecognized deferred tax assets as of December 31, 2006 and 2005 amounted to P=193 million and P=124 million, respectively. Net recognized deferred tax assets as of December 31, 2006 and 2005 amounted to P=302 million and P=322 million, respectively (see Note 22).

Present Value of Pension Obligation. The cost of defined benefit obligation is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assts, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to uncertainty.

The expected rate of return on plan assets was based on average historical premium on plan assets. The assumed discount rates were determined using the market yields on Philippine bonds with terms consistent with the expected employee benefit payout as of statements of income dates (see Note 23).

As of December 31, 2006 and 2005, the present value of the pension obligation of the Company amounted to P=845 million and P=344 million, respectively (see Note 23).

As of December 31, 2006 and 2005, unrecognized net actuarial gain (loss) amounted to (P=390 million) and P=34 million, respectively (see Note 23).

Impairment of Non-financial Assets. The Company assesses impairment on assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the group considers important which could trigger an impairment review include the following:

§ significant underperformance relative to expected historical or projected future operating results; § significant changes in the manner of use of the acquired assets or the strategy for overall business; and § significant negative industry or economic trends.

The Company recognizes an impairment loss whenever the carrying amount of an asset exceeds it recoverable amount. The recoverable amount is computed using the value in use approach. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which the asset belongs.

Noncurrent assets that are subjected to impairment testing when impairment indicators are present and annually for those intangibles with indefinite useful lives are as follows:

2006 2005 Program rights P=854,112 P=914,831 Cable channels - CPI 459,968 459,968 Production and distribution business - Middle East 124,684 141,759 Long-term receivables from a related party 2,423,392 2,357,413 Property and equipment - net 9,724,640 10,287,599 Tax credits 1,741,030 1,767,484

No impairment loss for noncurrent assets was recognized in 2006 and 2005. Impairment of Goodwill. The Parent Company’s management conducts an annual review for any impairment in value of the goodwill. The impairment on the goodwill is determined by comparing: (a) the carrying value of goodwill; and (b) the present value of the annual projected cash flows for five years and the present value of the terminal value computed under the discounted cash flow method. Refer to Note 12 for the key assumptions used in the impairment test of goodwill.

The carrying amount of goodwill at December 31, 2006 and 2005 amounted to P=23 million included in “Other noncurrent assets - net” account under “Deferred charges and others” in the consolidated balance sheets (see Note 11).

No impairment loss was recognized in 2006 and 2005.

Contingencies. The Company is currently involved in various legal proceedings. The Company’s estimate of the probable costs for the resolution of these claims has been developed in consultation with outside counsel handling defense in these matters and is based upon an analysis of potential results. The Company currently does not believe these proceedings will have a material adverse effect on its consolidated financial position and results of operations. It is possible, however, that future results of operations could be materially affected by changes in the estimates or in the effectiveness of strategies relating to these proceedings (see Note 29).

4. SEGMENT INFORMATION

Segment information is prepared on the following bases:

Business Segments For management purposes, the Company is organized into three business activities - broadcasting, cable and satellite, and other businesses. This segmentation is the basis upon which the Company reports its primary segment information. The broadcasting segment is principally the television and radio broadcasting activities which generates revenue from sale of national and regional advertising time. Cable and satellite business primarily develops and produces programs for cable television, including delivery of television programming outside the Philippines through its DTH satellite service, cable television channels and blocked time on television stations. Other businesses include movie production, consumer products and services.

Geographical Segments Although the Company is organized into three business activities, they operate in three major geographical areas. In the Philippines, its home country, the Company is involved in broadcasting, cable operations and other businesses. In the United States and other locations (which includes Middle East, Europe and Australia), the Company operates its cable and satellite operations to bring television programming outside the Philippines.

Inter-segment Transactions Segment revenue, segment expenses and segment results include transfers among business segments and among geographical segments. Such transfers are accounted for at competitive market prices charged to unaffiliated customers for similar services. Those transfers are eliminated in consolidation. Business Segment Data The following tables present revenue and income information and certain asset and liability information regarding business segments for the years ended December 31, 2006, 2005 and 2004:

Broadcasting Cable and satellite Other Businesses Eliminations Consolidated 2005 2004 2005 2004 (As restated - (As restated - (As restated - (As restated - 2006 Note 2) Note 2) 2006 2005 2004 2006 2005 2004 2006 2005 2004 2006 Note 2) Note 2) Revenues External sales P=11,168,762 P=11,612,208 P=10,856,408 P=4,820,554 P=4,068,221 P=3,895,790 P=1,396,317 P=1,366,647 P=1,019,134 P=– P=– P=– P=17,385,633 P=17,047,076 P=15,771,332 Inter-segment sales 217,032 110,815 59,027 103,371 – 117,605 236,122 273,159 94,776 (556,525) (383,974) (271,408) – – – Total revenue P=11,385,794 P=11,723,023 P=10,915,435 P=4,923,925 P=4,068,221 P=4,013,395 P=1,632,439 P=1,639,806 P=1,113,910 (P=556,525) (P=383,974) (P=271,408) P=17,385,633 P=17,047,076 P=15,771,332

Results Segment result P=815,000 P=300,454 P=924,852 P=73,709 P=385,466 P=231,633 P=96,561 (P=538,785) P=89,459 P=676,212 P=903,586 P=346,060 P=1,661,482 P=1,050,721 P=1,592,004 Finance cost (1,353,368) (989,996) (911,843) (52,400) (11,122) (67) (177) (872) 1,180 42,562 – – (1,363,383) (1,001,990) (910,730) Finance revenue 533,578 294,799 138,222 5,159 32,545 8,226 4,605 4,955 6,449 – (36) – 543,342 332,263 152,897 Equity in net earnings (losses) of associates – – – (51,853) (194,166) (45,976) – 515 (1,349) – – – (51,853) (193,651) (47,325) Foreign exchange gain (loss) 119,151 (9,606) (2,347) 35,305 (29,905) – 17,225 (7,650) – – – – 171,681 (47,161) (2,347) Other income 671,971 469,311 498,525 345,231 746,489 17,231 53,746 23,056 46,801 (622,241) (951,714) (335,414) 448,707 287,142 227,143 Income tax (375,273) 8,517 (210,226) (216,795) 62,465 (41,891) (75,364) (239,834) (14,856) – – – (667,432) (168,852) (266,973) Net income (loss) P=411,059 P=73,479 P=437,183 P=138,356 P=991,772 P=169,156 P=96,596 (P=758,615) P=127,684 P=96,533 (P=48,164) P=10,646 P=742,544 P=258,472 P=744,669

Assets and Liabilities Segment assets P=18,543,208 P=20,694,815 P=20,027,343 P=4,417,299 P=1,642,458 P=3,695,695 P=4,631,595 P=3,976,767 P=1,124,338 (P=4,036,600) (P=1,856,854) (P=1,539,776) P=23,555,502 P=24,457,186 P=23,307,600 Investments in associates - at equity 3,580,822 2,487,992 2,606,705 – – – – – – (3,536,589) (2,443,759) (2,368,821) 44,233 44,233 237,884 Consolidated total assets P=22,124,030 P=23,182,807 P=22,634,048 P=4,417,299 P=1,642,458 P=3,695,695 P=4,631,595 P=3,976,767 P=1,124,338 (P=7,573,189) (P=4,300,613) (P=3,908,597) P=23,599,735 P=24,501,419 P=23,545,484

Segment liabilities P=4,176,947 P=4,000,924 P=2,885,411 P=1,623,141 P=2,402,669 P=1,842,427 P=3,908,614 P=814,048 P=845,996 (P=4,059,165) (P=1,893,961) (P=1,617,844) P=5,649,537 P=5,323,680 P=3,955,990

Other Segment Information Capital expenditures: Property and equipment P=442,914 P=651,185 P=752,196 P=119,913 P=223,346 P=147,517 P=47,241 P=14,718 P=13,587 P=– P=– P=– P=610,068 P=889,249 P=913,300 Intangible assets 646,632 636,090 578,789 124,171 67,076 141,164 214,129 196,756 77,238 – 28,826 (14,346) 984,932 928,748 782,845 Depreciation and amortization of program rights and other rights 1,705,721 1,761,354 1,762,888 252,750 201,534 176,649 99,217 99,159 98,229 – – (4,325) 2,057,688 2,062,047 2,033,441 Noncash expenses other than depreciation and amortization of program rights and other rights 196,649 572,025 335,239 90,125 465,378 205,042 11,540 11,517 22,304 – (292,391) – 298,314 756,529 562,585

Geographical Segment Data The following tables present revenue and expenditure and certain asset information regarding geographical segments for the years ended December 31, 2006, 2005 and 2004:

Philippines United States Others Eliminations Consolidated 2006 2005 2004 2006 2005 2004 2006 2005 2004 2006 2005 2004 2006 2005 2004 Revenue External sales P=13,084,107 P=13,202,093 P=12,654,058 P=3,437,104 P=2,919,411 P=2,779,571 P=864,422 P=925,572 P=337,703 P= – P=– P=– P=17,385,633 P=17,047,076 P=15,771,332 Inter-segment sales 556,525 383,974 271,408 – – – – – – (556,525) (383,974) (271,408) – – – Total revenue P=13,640,632 P=13,586,067 P=12,925,466 P=3,437,104 P=2,919,411 P=2,779,571 P=864,422 P=925,572 P=337,703 (P=556,525) (P=383,974) (P=271,408) P=17,385,633 P=17,047,076 P=15,771,332

Other Segment Information Segment assets P=28,153,007 P=25,769,513 P=22,000,305 P=2,659,344 P=1,863,083 P=1,911,374 P=360,573 P=1,169,437 P=3,541,769 (P=7,573,189) (P=4,300,614) (P=3,907,964) P=23,599,735 P=24,501,419 P=23,545,484 Capital expenditures: Property and equipment 560,225 707,714 806,731 29,728 170,079 65,065 20,115 11,456 41,504 – – – 610,068 889,249 913,300 Intangible assets 984,932 899,922 745,160 – – 6,039 – – 45,992 – 28,826 (14,346) 984,932 928,748 782,845

5. CASH AND CASH EQUIVALENTS

2006 2005 Cash on hand and in banks P=1,334,611 P=1,284,690 Short-term placements 327,221 467,040 P=1,661,832 P=1,751,730

Cash in banks earn interest at the respective bank deposit rates. Short-term placements are made for varying periods of up to three months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term placement rates.

6. TRADE AND OTHER RECEIVABLES

2006 2005 Trade receivables P=4,010,212 P=3,904,848 Due from related parties (see Note 14) 288,715 246,698 Advances to employees and talents 217,630 206,948 Advances to suppliers 121,214 97,002 Receivable from DirecTV (see Note 24) 97,963 439,499 Other receivables 197,965 356,312 4,933,699 5,251,307 Less allowance for doubtful accounts (see Note 3) 551,169 599,407 P=4,382,530 P=4,651,900

Trade receivables are noninterest-bearing and are generally on 60-90 days’ terms.

Receivable from DirecTV was subsequently collected in January 2007.

7. OTHER CURRENT ASSETS - NET

2006 2005 Prepaid taxes P=360,723 P=461,881 Inventories at net realizable value (see Note 3) 206,899 138,978 Preproduction expenses 281,497 103,070 Advance payment to a supplier 80,000 – Prepaid expenses and others 82,103 86,838 P=1,011,222 P=790,767

Inventories consist mainly of materials and supplies of the Parent Company and records and other consumer products held for sale by subsidiaries. The cost of inventories carried at net realizable value amounted to P=244 million and P=170 million in 2006 and 2005, respectively.

8. LONG-TERM RECEIVABLE FROM A RELATED PARTY

On June 30, 2004, Sky Vision and Central CATV, Inc. (“Central” or “Issuer”) issued a convertible note (note) to the Parent Company amounting to US$30 million equivalent to P=1,579 million and P=1,576 million as of December 31, 2006 and 2005, respectively. The Parent Company’s long-term receivable from Sky Vision, includes accrued interest receivable of P=459 million and P=344 million as of December 31, 2006 and 2005, respectively. The note is subject to interest of 13% compounded annually and matured on June 30, 2006. The principal and accrued interest as of maturity date shall be mandatorily converted, based on the prevailing U.S. Dollar to Philippine Peso exchange rate on Maturity Date, at a conversion price equivalent to a twenty percent (20%) discount of: (a) the market value of the Shares, in the event of a public offering of the Issuer before Maturity Date; (b) the valuation of the Shares by an independent third party appraiser that is a recognized banking firm, securities underwriter or one of the big three international accounting firms or their Philippine affiliate jointly appointed by the Lopez and Benpres Holdings Corporation (Benpres Group) and Philippine Long Distance Telephone Company and Mediaquest Holdings, Inc. (PLDT Group) pursuant to the Master Consolidation Agreement (MCA) (see Note 11) dated July 18, 2001 as amended or supplemented. As of December 31, 2006, the conversion price has not been determined. Based on the provisions of the convertible note, its conversion cannot be completed without the determination of the conversion price, which in turn depends on the valuation of Sky Vision or Central, by an independent third party. Consequently, ABS-CBN cannot convert the notes without such valuation. The conversion date was effectively extended since the conversion price was not fixed on June 30, 2006. The conversion date will effectively be the date when the conversion price will be set. ABS-CBN will gain control of Sky Vision upon their conversion of the convertible note. Consequently, the voting rights on the underlying shares are retained by the original shareholders and ABS-CBN has no right to exercise such voting rights.

The convertible note does not specifically state that interest shall accrue after June 30, 2006 in the event that the convertible note is not converted for any reason. Thus, no interest was charged after June 30, 2006.

Prior to the issuance of the convertible note, Sky Vision, Central and The Philippine Home Cable Holdings, Inc. (Home) had trade and advances payable to its shareholders in the Benpres Group and the PLDT Group, respectively. Upon receipt of the proceeds of the note, Sky Vision, Central and Home prioritized the servicing of its outstanding payables to third-party suppliers and creditors, as well as new payables due to CPI. As a result, these companies did not service payables to its existing shareholders outstanding as of June 30, 2004. Included in the amounts left unpaid were CPI's receivable from Central of around P=437 million. Subject to approval of its creditors, the Parent Company intends to include CPI's receivable in the above equity conversion in Sky Vision under the same terms of the note.

On January 11, 2007, the Parent Company signed a commitment letter with ABN Amro Bank N.V., BPI Capital Corporation and ING Bank N.V. (together, the Mandated Lead Arrangers) to arrange and underwrite on a firm commitment basis the refinancing/restructuring of the existing long-term loan. Consequently, the execution copies of the agreement amending the Senior Credit Agreement (SCA) facility was signed on March 27, 2007. It provides a carve out allowing P=437 million in receivables of CPI from Central to be converted into equity. This shall effectively supersede the consent requirement under the old facility.

As of December 31, 2006, equity in net losses amounting to P=52 million has been credited against the “Long-term receivable from a related party” account in the consolidated balance sheet.

9. PROPERTY AND EQUIPMENT

Television, Land and Radio, Movie Land Building and and Auxiliary Other Construction Improvements Improvements Equipment Equipment in Progress Total At January 1, 2006, net of accumulated depreciation P=297,944 P=8,114,474 P=1,055,532 P=700,871 P=118,778 P=10,287,599 Additions – 7,194 311,034 54,036 237,804 610,068 Disposals – – (218) (2,444) – (2,662) Reclassifications (61) 42,584 (5,455) 203,900 (240,968) – Depreciation charge for the year (see Notes 18, 19 and 20) (1,192) (473,481) (404,627) (291,065) – (1,170,365) At December 31, 2006, net of accumulated depreciation P=296,691 P=7,690,771 P=956,266 P=665,298 P=115,614 P=9,724,640

At January 1, 2006: Cost P=305,940 P=9,778,788 P=5,530,811 P=3,201,128 P=118,778 P=18,935,445 Accumulated depreciation (7,996) (1,664,314) (4,475,279) (2,500,257) – (8,647,846) Net carrying amount P=297,944 P=8,114,474 P=1,055,532 P=700,871 P=118,778 P=10,287,599

At December 31, 2006: Cost P=298,983 P=9,825,584 P=5,765,479 P=3,477,171 P=115,614 P=19,482,831 Accumulated depreciation (2,292) (2,134,813) (4,809,213) (2,811,873) – (9,758,191) Net carrying amount P=296,691 P=7,690,771 P=956,266 P=665,298 P=115,614 P=9,724,640

At January 1, 2005, net of accumulated depreciation P=291,008 P=8,356,900 P=1,219,179 P=692,455 P=90,743 P=10,650,285 Additions 3,835 157,908 149,192 243,040 335,274 889,249 Disposals – (3,083) (9,487) (4,636) – (17,206) Reclassifications 4,201 46,491 183,073 73,474 (307,239) – Depreciation charge for the year (see Notes 18, 19 and 20) (1,100) (443,742) (486,425) (303,462) – (1,234,729) At December 31, 2005, net of accumulated depreciation P=297,944 P=8,114,474 P=1,055,532 P=700,871 P=118,778 P=10,287,599

At January 1, 2005: Cost P=297,904 P=9,585,198 P=5,296,294 P=2,969,740 P=90,743 P=18,239,879 Accumulated depreciation – (1,234,616) (4,069,106) (2,285,872) – (7,589,594) Reclassifications (6,896) 6,318 (8,009) 8,587 – – Net carrying amount P=291,008 P=8,356,900 P=1,219,179 P=692,455 P=90,743 P=10,650,285 Television, Land and Radio, Movie Land Building and and Auxiliary Other Construction Improvements Improvements Equipment Equipment in Progress Total At December 31, 2005: Cost P=305,940 P=9,778,788 P=5,530,811 P=3,201,128 P=118,778 P=18,935,445 Accumulated depreciation (7,996) (1,664,314) (4,475,279) (2,500,257) – (8,647,846) Net carrying amount P=297,944 P=8,114,474 P=1,055,532 P=700,871 P=118,778 P=10,287,599

Property and equipment of the Parent Company with a carrying amount of P=8,746 million and P=9,461 million as of December 31, 2006 and 2005, respectively, was pledged as collateral to secure the Parent Company’s long-term debt (see Note 15).

Unamortized borrowing costs capitalized as part of property and equipment amounted to P=973 million and P=1,011 million as of December 31, 2006 and 2005, respectively. No borrowing cost was capitalized beginning 2002.

Property and equipment includes the following amounts where the Company is a lessee under a finance lease (see Note 24):

2006 2005 Cost - capitalized finance lease P=467,608 P=393,823 Accumulated depreciation (292,875) (216,327) Net book value P=174,733 P=177,496

The useful lives of the Company’s assets are estimated as follows:

Land improvements 10 years Building and improvements 15 to 40 years Television, radio, movie and auxiliary equipment 10 to 15 years Other equipment 3 to 10 years

The Company determined depreciation charges for each significant part of an item of property and equipment.

10. PROGRAM RIGHTS AND OTHER INTANGIBLE ASSETS

2006 Production Story, and Music and Video Rights Cable Distribution Program Publication Movie and Record Channels - Business - Rights Rights In-Process Master CPI Middle East Total Balance at beginning of year P=1,629,849 P=4,561 P=79,461 P=11,395 P=459,968 P=141,759 P=2,326,993 Additions 793,514 1,144 172,503 17,771 – – 984,932 Amortization and write-off during the year (see Notes 18, 19 and 20) (886,405) (918) (168,403) (21,366) – (17,075) (1,094,167) Balance at end of year 1,536,958 4,787 83,561 7,800 459,968 124,684 2,217,758 Less current portion 682,846 220 82,424 7,800 – – 773,290 Noncurrent portion P=854,112 P=4,567 P=1,137 P=– P=459,968 P=124,684 P=1,444,468

Costs and related accumulated amortization of other intangible assets is as follow:

2006 Production and Cable Distribution Channels - Business - CPI Middle East Total Cost P=574,960 P=212,358 P=787,318 Accumulated amortization (114,992) (87,676) (202,668) Net carrying amount P=459,968 P=124,682 P=584,650

2005 Story, Production and Music and Video Rights Cable Distribution Program Publication Movie and Record Channels - Business - Rights Rights In-Process Master CPI Middle East Total Balance at beginning of year P=1,629,447 P=3,840 P=79,607 P=25,011 P=459,968 P=157,584 P=2,355,457 Additions 821,992 6,449 84,554 15,753 – – 928,748 Amortization and write-off during the year (see Notes 18, 19 and 20) (821,590) (5,728) (84,700) (29,369) – (15,825) (957,212) Balance at end of year 1,629,849 4,561 79,461 11,395 459,968 141,759 2,326,993 Less current portion 715,018 1,260 79,461 11,395 – – 807,134 Noncurrent portion P=914,831 P=3,301 P=– P=– P=459,968 P=141,759 P=1,519,859

Costs and related accumulated amortization of other intangible assets is as follow:

2005 Production and Cable Distribution Channels - Business - CPI Middle East Total Cost P=574,960 P=212,358 P=787,318 Accumulated amortization (114,992) (70,599) (185,591) Net carrying amount P=459,968 P=141,759 P=601,727

The cable channels, namely, Lifestyle Channel, Cinema One and Myx Channel, were acquired by CPI from Sky Vision in 2001. Based on the Company’s analysis of all the relevant factors, there is no foreseeable limit to the period over which this business is expected to generate net cash inflows for the Company and therefore, assessed to have an indefinite life. As at December 31, 2006 and 2005, cable channels were tested for impairment (see Note 12).

Production and distribution business for the Middle East operations represents payments arising from the sponsorship agreement between Arab Digital Distribution (ADD) and ABS-CBN Middle East. This agreement grants the Company the right to operate in the Middle East with ADD as sponsor for a period of 25 years.

11. OTHER NONCURRENT ASSETS - NET

2006 2005 Tax credits with tax credit certificates (TCCs) P=1,741,030 P=1,767,484 Available-for-sale investments 68,426 47,321 Investments in associates 44,233 44,233 Deferred charges and others (see Note 12) 312,234 282,674 P=2,165,923 P=2,141,712

Tax Credits Tax credits represent claims on the government arising from airing of government commercials and advertisements. Pursuant to Presidential Decree No. 1362, these will be collected in the form of TCCs which the Parent Company can use in paying for import duties and taxes on its broadcasting equipment. The Parent Company expects to utilize these tax credits within the next 10 years.

Deferred Charges In view of the Deal Memorandum with DirecTV discussed in Note 24, the Company has written off the deferred charges amounting to P=348 million pertaining to the DTH subscribers as of December 31, 2005.

Available-for-sale Investments Available-for-sale investments are investments in ordinary shares and therefore have no fixed maturity date or coupon rate. Available-for-sale investments with a carrying value of P=15 million and P=14 million as of December 31, 2006 and 2005 respectively was pledged as part of the collateral to secure the Parent Company’s long-term debt (see Note 15).

As of December 31, 2006, unrealized fair value gains on available-for-sale investments amounting to P=21 million was directly charged to equity. Investments in Associates Investments in associates are as follows:

Place of Principal Ownership Interest Company Incorporation Activities 2006 2005 AMCARA Broadcasting Network, Inc. (Amcara) Philippines Services 49.0 49.0 Star Cinema Philippines Movie Production 45.0 45.0 Sky Vision Philippines Cable operation 10.2 10.2

2006 2005 Acquisition costs P=541,292 P=541,292 Accumulated equity in net losses: Balance at beginning of year (497,059) (303,408) Equity in net losses during the year – (193,651) Balance at end of year, as restated (497,059) (497,059) P=44,233 P=44,233

As of December 31, 2006 and 2005, the remaining carrying value of investments in associates pertains to Amcara. Investments in Star Cinema and Sky Vision have been reduced to zero due to accumulated equity in net losses.

Condensed financial information of the associates follows:

2006 2005 Current assets P=1,197,691 P=2,038,169 Noncurrent assets 3,181,357 6,494,213 Current liabilities (7,850,401) (3,073,041) Noncurrent liabilities (316,626) (6,012,886) Net capital deficiency (P=3,787,979) (P=553,545)

Revenues P=2,221,032 P=3,051,591 Cost and expenses (2,341,186) (4,974,049) Net loss (P=120,154) (P=1,922,458)

On July 18, 2001, the Parent Company, along with the Benpres Group signed an MCA whereby they agreed with the PLDT Group to consolidate their respective ownership or otherwise their rights and interests in Sky Vision and Unilink Communications Corporation (Unilink) under a holding company to be established for that purpose. Beyond Cable Holdings, Inc. (Beyond) was incorporated on December 7, 2001 as the holding company. Sky Vision owns Central and Pilipino Cable Corporation (PCC), which in turn operate cable television systems in Metro Manila and key provincial areas under the tradenames “Sky Cable” and “Sun Cable”. Unilink owns Home, which operates cable television systems in Metro Manila and key provincial areas under the tradename “Home Cable”.

Pursuant to the MCA, the Benpres Group and the PLDT Groups shall, respectively, own 66.5% and 33.5% of Beyond upon the transfer of their respective ownership and rights and interests in Sky Vision and Unilink into Beyond. Although the original MCA envisioned the transfer to be completed within six months from signing date, or by January 18, 2002, the Benpres Group and PLDT Group agreed on January 16, 2002, to extend this closing date.

In view of the above, in a separate Memorandum of Agreement (Agreement) executed on April 8, 2004, the major stockholders of Home and Sky Vision have agreed to consolidate the ownership of their respective shares in Home and Sky Vision and to combine the operations, assets and liabilities of Home and the Central. To effect the consolidation, Home transferred its assets and liabilities to Central in exchange for a 33% ownership. The issuance of shares was approved by the SEC on August 30, 2004. It is a plan to transfer Sky Vision’s Minority Shareholders (Sky Vision Minority) to Central to put into effect in Central what was originally intended for Beyond. With this transfer and as stipulated in the MCA, the Sky Vision Minority shall hold 17.3% of Central while Sky Vision will hold 55% and Home holding the balance of 27.7%. Barring any unforeseen impediments, it is expected that the transfer of the Sky Vision Minority to Central will be completed in 2007.

In relation to the consolidation discussed above, a competitor broadcasting company filed a case before National Telecommunications Commission (NTC) asking for NTC to declare as null and void the consolidation of the cable operating companies. On November 16, 2004, the NTC denied the motion for cease and desist order filed by the competitor broadcasting company. On November 30, 2004, the competitor broadcasting company filed a motion for reconsideration which is still pending with the NTC. It is the opinion of Sky Vision’s legal counsels that the case filed by the competitor broadcasting company is without legal basis.

In November 2005, Sky Vision met with its creditors to request for an extension of the grace period on its long-term debt for another five (5) years, with principal amortization to start in 2011. The creditors have already formed a steering committee to address the request of Sky Vision.

In September 2006, Central paid a token payment amounting to P=5 million, upon which the principal payments due in September 2006, December 2006 and March 2007 were deferred to be paid on June 2007. A second token payment amounting to P=5 million should be paid upon finalization of the debt restructuring. As of March 28, 2007, negotiations are still ongoing.

12. IMPAIRMENT TESTING OF GOODWILL AND CABLE CHANNELS

Cable channels of CPI amounted to P=460 million as of December 31, 2006 and 2005 (see Note 10).

Goodwill in investment in a subsidiary included under “Other noncurrent assets - net” account in the consolidated balance sheets totaled P=23 million as of December 31, 2006 and 2005.

For the impairment test of goodwill and cable channels, the difference between the recoverable amount and the carrying amount of the cash-generating unit was compared. The recoverable amount of the cash-generating unit is its value-in- use. Value-in-use was determined using cash flow projections which were based on financial budgets approved by the subsidiaries’ senior management covering a five-year period. The discount rate applied to the cash flow projections as of December 31, 2006 and 2005 is 15.22% and 21.1%, respectively, while cash flows beyond the 5-year period are extrapolated using a 0% perpetual growth rate in 2006 (5% in 2005) that is based on projected long-term inflation rate and long-term real growth.

Key Assumptions Following are the key assumptions on which management has based its cash flow projections to undertake impairment testing of goodwill and cable channels:

Gross Revenues. On the average, gross revenues of the subsidiaries over the next five years were projected to grow in line with the economy or with nominal Gross Domestic Product (GDP). This assumes that the market share of the subsidiaries in their respective industries will be flat on the assumption that the industries also grow at par with the economy. Historically, advertising spending growth had a direct correlation with economic growth.

Operating Expenses. Cash expenses of the subsidiaries particularly employee costs and general and administrative expenses were projected to rise at an inflationary pace. On the other hand, production costs or cost of sales were forecasted to increase in line with revenue growth.

Gross Margins. Increased efficiencies over the next five years are expected to result to some improvements in gross margins.

Discount Rate. The discount rate or Weighted Average Cost of Capital (WACC) was based on the cost of equity of the Parent Company plus 2% for small size premium. The cost of equity was obtained from external data provider.

13. TRADE AND OTHER PAYABLES

2005 (As restated - 2006 see Note 2) Trade P=1,682,625 P=1,993,708 Accrued production cost and other expenses 934,429 762,826 Accrued salaries and other employee benefits 691,488 441,749 Accrued taxes 602,204 543,320 Due to related parties (see Note 14) 224,678 311,299 Deferred revenue 240,045 374,701 Accrued interest 15,656 22,346 Other current liabilities 162,790 79,034 P=4,553,915 P=4,528,983

14. RELATED PARTY DISCLOSURES

The consolidated financial statements include the financial statement of ABS-CBN Broadcasting Corporation and the subsidiaries listed in the following table:

Place of Ownership Interest Company Incorporation Principal Activities 2006 2005 ABS-CBN Australia Victoria, Australia Cable and satellite programming services 100.0(a) 100.0(a) ABS-CBN Center for Communication Arts, Inc. Philippines Educational/training 100.0(b) 100.0(b) ABS-CBN Europe United Kingdom Cable and satellite programming services 100.0(a) 100.0(a) ABS-CBN Film Productions, Inc. (ABS-CBN Films) Philippines Movie production 100.0 100.0 ABS-CBN Global Ltd. (ABS-CBN Global) (c) Cayman Islands Holding company 100.0 100.0 ABS-CBN Interactive, Inc. Philippines Services - interactive media 100.0 100.0 ABS-CBN International California, USA Cable and satellite programming services 98.0(a) 98.0(a) ABS-CBN Middle East * Dubai, UAE Cable and satellite programming services 100.0(a) 100.0(a) ABS-CBN Multimedia, Inc. Philippines Digital electronic content distribution 75.0(d) 75.0(d) ABS-CBN Integrated and Strategic Property Holdings, Inc. (e) Philippines Real estate 100.0 100.0 ABS-CBN Publishing, Inc. (f) Philippines Print publishing 100.0 100.0 Creative Programs, Inc. Philippines Content development and programming services 100.0 100.0 E-Money Plus, Inc. Philippines Services - money remittance 100.0(a) 100.0(a) Professional Services for Television & Radio, Inc. Philippines Services 100.0 100.0 Sarimanok News Network, Inc. (SNN) Philippines Content development and programming services 100.0 100.0 Sky Films, Inc. (Sky Films) Philippines Services - film distribution 100.0 100.0 Star Recording, Inc. Philippines Audio and video production and distribution 100.0 100.0 Studio 23, Inc. (Studio 23) Philippines Content development and programming services 100.0 100.0 TV Food Chefs, Inc. Philippines Services - restaurant and food 100.0 100.0 Roadrunner Network, Inc. (Roadrunner) Philippines Services - post production 98.9 98.9 Star Songs, Inc. Philippines Music Publishing 100.0 100.0

(a) indirectly-owned through ABS-CBN Global (b) non-stock ownership interest (c) with a branch in the Philippines (d) indirectly-owned through ABS-CBN Interactive, Inc. (e) not yet started commercial operations (f) owns 50% interest in Sky Guide, Inc. and 70% interest in Culinary Publications, Inc. * ABS-CBN Middle East owns ABS-CBN Middle East LLC

ABS-CBN Broadcasting Corporation is the ultimate Philippine parent entity and the ultimate parent company of the Company is Lopez, Inc. The following table provides the total amount of transactions, which have been entered into with related parties.

Significant transactions of the Company with its associates and related parties follow:

2006 2005 2004 Associates: Interest on noncurrent receivable from Sky Vision (see Note 21) P=115,424 P=261,161 P=112,841 License fees charged by CPI to Central(a), PCC and Home Cable 104,927 112,334 137,443 Blocktime fees paid by Studio 23 to Amcara(b) 57,078 60,816 68,000 Affiliates: Expenses paid by Parent Company and subsidiaries to Manila Electric Company (Meralco), Bayan Telecommunications Holding, Inc. (Bayantel) and other related parties (see Notes 18, 19 and 20) 413,036 432,346 364,527 Termination cost charges of Bayantel, a subsidiary of Lopez, to ABS-CBN Global (see Note 19) 236,244 286,549 232,140 Airtime revenue from Manila North Tollways Corp., Bayantel and Meralco, an associate of Lopez 50,718 61,273 30,162 Expenses and charges paid for by the Parent Company which are reimbursed by the concerned related parties (see Notes 18, 19 and 20) 36,862 34,788 46,449

The related receivables and payables from related parties are as follows:

2006 2005 Due from associates P=150,929 P=150,929 Due from affiliates 137,786 95,769 Total P=288,715 P=246,698

Due to associates P=32,938 P=40,715 Due to affiliates 191,740 270,584 Total P=224,678 P=311,299

Lopez, Inc. (Ultimate Parent) The Company has no transaction with Lopez, Inc. for the years 2006 and 2005. a. License Fees Charged by CPI to Central

CPI entered into a cable lease agreement (Agreement) with Central for the airing of the cable channels (see Note 10) to the franchise areas of Central and its cable affiliates. The initial Agreement with Central is for a period of five years effective January 1, 2001, renewable on a yearly basis upon mutual consent of both parties. Said Agreement was renewed for one year in 2006 and under negotiation for 2007. Under the terms of the Agreement, CPI receives license fees from Central and its cable affiliates computed based on agreed percentage of subscription revenues of Central and its cable affiliates. As the owner of the said cable channels, CPI develops and produces its own shows and acquires program rights from various foreign and local suppliers. b. Blocktime Fees Paid by Studio 23 to Amcara

Studio 23 owns the program rights being aired in UHF Channel 23 of Amcara. On July 1, 2000, it entered into a blocktime agreement with Amcara for its provincial operations.

Other transactions with associates include cash advances for working capital requirements.

Terms and Conditions of Transactions with Related Parties The sales to and purchases from related parties are made at normal market prices. Outstanding balances as of year-end are unsecured, interest-free and settlement occurs in cash, except for the noncurrent receivables from SkyVision discussed in Note 8. For the years ended December 31, 2006 and 2005, the Company has not made any provision for doubtful accounts relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

As discussed in Note 15, the Parent Company’s obligation under the SCA is jointly and severally guaranteed by its principal subsidiaries. Compensation of Key Management Personnel of the Company

2006 2005 2004 Compensation (see Note 16) P=413,692 P=358,321 P=281,553 Pension benefit 47,840 32,128 20,640 Vacation leaves and sick leaves 29,484 3,920 4,472 Termination benefits – 70,181 – Total compensation paid to key management personnel P=491,016 P=464,550 P=306,665

15. INTEREST-BEARING LOANS AND BORROWINGS

Effective Interest Rate Amount Maturity 2006 2005 2006 2005 Current: Bank loans 2007 10.28 11.17 P=473,979 P=355,398 Long-term debt under SCA 2007 12.26 13.01 1,554,855 1,322,500 Obligations under capital lease (see Note 24) 2007 108,305 88,246 P=2,137,139 P=1,766,144

Noncurrent: Long-term debt under SCA (net of transaction costs amounting to P=113,691 in 2006 and P=197,551 in 2005) 2008-2009 12.90 12.87 P=2,251,904 P=4,307,941 Obligations under capital lease (see Note 24) 2008-2011 185,047 201,699 P=2,436,951 P=4,509,640

Bank Loans This represents peso-denominated loans obtained from local banks which bear average annual interest rates of 10.28% in 2006 and 11.17% in 2005.

Term Loan under the SCA On June 18, 2004, the Parent Company entered into a SCA with several foreign and local banks (Original Lenders) for a US$120 million dual currency syndicated term loan facility for the purpose of refinancing existing indebtedness incurred for the construction of the Eugenio Lopez, Jr. Communications Center, additional investment in the cable TV business and funding capital expenditures and working capital requirements. The SCA is classified in three (3) groups namely: Tranche A, a floating rate facility (3.5% + LIBOR) amounting to US$62 million; Tranche B, a floating rate facility (3.5% + MART1 T- bill) amounting to P=2,688 million; and, Tranche C, a fixed rate facility (3.5% + FXTN) amounting to P=560 million. Both Tranche A and Tranche B have a term of five years with 17 quarterly unequal payments and Tranche C has a term of four years with four annual unequal installments. These have all been availed of in March 2005. The Parent Company’s obligation under the SCA is secured and covered by a Mortgage Trust Indenture (MTI) which consists of substantially all of the Parent Company’s real property and moveable assets used in connection with its business and insurance proceeds related thereto. Further, the Parent Company’s obligation under the SCA is jointly and severally guaranteed by its principal subsidiaries.

The SCA contains provision regarding the maintenance of certain financial ratios and limiting, among others, the incurrence of additional debt, the payment of dividends, making investments, the issuing or selling the Parent Company’s capital stock or some of its subsidiaries, the selling or exchange of assets, creation of liens and effecting mergers. As of December 31, 2006 and 2005, the Parent Company is in compliance with the provisions of the SCA.

As indicated in the SCA, all existing loans of the Parent Company outside the SCA were settled via proceeds of the term loan facility.

Details of the term loan under SCA using the effective interest rate method are as follows:

2006 2005 Long-term debt under SCA Current portion P=1,554,855 P=1,322,500 Noncurrent portion 2,251,904 4,307,941 P=3,806,759 P=5,630,441 Transaction costs related to the SCA amounting to P=324 million were deducted from the face amount of the loan to get its net carrying value. This will be amortized over the life of the loan using the effective interest rate method of amortizing transaction cost detailed as follows:

Tranche A (USD) Tranche B (PHP) Tranche C (PHP) 2004 $353 P=14,526 P=3,331 2005 835 34,809 7,477 2006 774 33,353 7,339 2007 597 26,778 5,373 2008 353 16,440 2,805 2009 72 3,479 630 $2,984 P=129,385 P=26,955

As of December 31, 2006 and 2005, P=210 million and P=126 million, respectively have been amortized and directly reported in the consolidated statements of income.

Repayments of the term loan based on the face value of the SCA are scheduled as follows:

2007 P=1,681,654 2008 1,809,978 2009 676,915 P=4,168,547

To manage its exposures to foreign currency exchange and interest rate risks relating to the facility drawdowns, the Parent Company entered into interest rate and cross currency swap contracts with counterparty banks (see Notes 25 and 26).

On January 11, 2007, the Parent Company signed a commitment letter with the Mandated Lead Arrangers to arrange and underwrite on a firm commitment basis the refinancing/restructuring of the existing long-term loan. Consequently, the execution copies of the agreement amending the SCA facility was signed on March 27, 2007. The major amendments to the existing agreement that were agreed upon with the Mandated Lead Arrangers are as follows: a. There will be an additional amount that will be available for drawdown amounting to US$4,784 million. Once effected, total outstanding loan will be around P=4,440 million, P=270 million more than the P=4,170 million that is currently outstanding; b. The Tranche B and C will have bullet repayment schemes maturing in March 2012 while maintaining the original structure of the Tranche A facility with a final due date of until June 2009. Interest payments will continue to be paid on a quarterly basis; c. The applicable margins added to the benchmark interest rates will be reduced from 3.50% to an average of about 2.20%; d. Except for the Quezon City Broadcast Complex and certain broadcast machinery and equipment contained therein, all other assets will be removed from the MTI and will no longer form part of the security package; e. Certain mandatory prepayment provisions will be removed; f. The Parent Company financial ratio requirement will be removed, while maintaining a financial ratio requirement on a consolidated basis but at more relaxed thresholds; g. The Company will be allowed to make interest bearing advances and guarantees to Sky Vision of up to P=400 million; h. The Company will be allowed to convert into equity outstanding advances amounting to US$30 million including interest and P=437 million, respectively made to Sky Vision by the Parent Company and CPI.

16. EQUITY

a. Capital Stock

Details of authorized and issued capital stock follow:

2006 2005 Number of Number of Shares Amount Shares Amount (In Thousands) (In Thousands)

Authorized - Common shares - P=1 par value 1,500,000,000 P=1,500,000 1,500,000,000 P=1,500,000

Issued - Common shares 779,583,312 P=779,583 779,583,312 P=779,583

b. Philippine Depository Receipts (PDRs) convertible to common shares

2006 2005 Number of Number of Shares Amount Shares Amount (In Thousands) (In Thousands)

Balance at beginning of year 10,000,000 P=200,000 10,000,000 P=200,000 Issuance during the year (1,118,929) (22,379) – – Balance at end of year 8,881,071 P=177,621 10,000,000 P=200,000

This account represents ABS-CBN PDRs held by the Parent Company which are convertible into 10 million ABS-CBN shares. These PDRs were listed in the Philippine Stock Exchange on October 7, 1999. Each PDR grants the holders, upon payment of the exercise price and subject to certain other conditions, the delivery of one ABS-CBN share or the sale of and delivery of the proceeds of such sale of one ABS-CBN share. The ABS-CBN shares are still subject to ownership restrictions on shares of corporations engaged in mass media and ABS-CBN may reject the transfer of shares to persons other than Philippine nationals. The PDRs may be exercised at any time from October 7, 1999 until the expiry date as defined in the terms of the offering. Any cash dividends or other cash distributions in respect of the underlying ABS-CBN shares shall be applied by ABS-CBN Holdings Corporation, issuer of PDRs, towards payment of operating expenses and any amounts remaining shall be distributed pro-rata among outstanding PDR holders.

In December 2006, the Parent Company issued P=22 million of these PDRs, which are convertible into 1,118,929 ABS-CBN shares, to some of its officers as payment for their bonuses.

c. Unappropriated retained earnings available for dividend distribution is adjusted to exclude the Parent Company’s accumulated equity in net losses of subsidiaries and associates amounting to P=1,562 million and P=1,666 million as of December 31, 2006 and 2005, respectively.

d. On June 3, 2004, the BOD approved the declaration of cash dividend of P=0.64 per share to all stockholders of record as of July 26, 2004 payable on August 10, 2004.

e. On March 28, 2007, the BOD approved the declaration of cash dividend of P=0.45 per share to all stockholders of record as of April 20, 2007 payable on May 15, 2007.

17. AGENCY COMMISSION, INCENTIVES AND CO-PRODUCERS’ SHARE

2006 2005 2004 Agency commission P=1,547,307 P=1,534,605 P=1,759,939 Incentives and co-producers’ share 910,517 550,142 436,723 P=2,457,824 P=2,084,747 P=2,196,662

Industry rules allow ABS-CBN to sell up to 18 minutes of commercial spots per hour of television programming. These spots are sold mainly through advertising agencies which act as the buying agents of advertisers, and to a lesser extent, directly to advertisers. Substantially, all gross airtime revenue, including airtime sold directly to advertisers, is subject to a standard 15% agency commission.

Incentives include early payment and early placement discount as well as commissions paid to the Company’s account executives and cable operators.

The Company has co-produced shows which are programs produced by ABS-CBN together with independent producers. Under this arrangement, ABS-CBN provides the technical facilities and airtime, and handles the marketing of the shows. The co-producer shoulders all other costs of production. The revenue earned on these shows is shared between ABS-CBN and the co-producer.

18. PRODUCTION COSTS

2006 2005 2004 Personnel expenses and talent fees (see Notes 10 and 23) P=2,412,150 P=2,513,203 P=2,524,568 Facilities related expenses (see Notes 10, 14 and 24) 833,439 840,284 716,189 Amortization of program rights and other rights (see Note 10) 735,424 711,354 766,407 Depreciation (see Note 9) 635,035 679,547 541,110 Other program expenses (see Notes 10 and 14) 1,098,470 946,396 919,874 P=5,714,518 P=5,690,784 P=5,468,148

Other program expenses consist of production expenses including, but not limited to, set requirements, prizes, transportation, advertising and other expenses related to the promotional activities of various projects during the year.

19. COST OF SALES AND SERVICES

2006 2005 2004 Termination costs (see Note 14) P=566,365 P=404,600 P=451,233 Facilities related expenses (see Notes 14 and 24) 423,554 535,809 478,384 Personnel expenses (see Note 23) 200,592 167,972 209,200 Amortization of program rights (see Note 10) 151,899 115,964 120,731 Inventory cost (see Note 10) 133,272 363,115 545,228 Depreciation (see Note 9) 47,266 47,894 39,614 Other expenses (see Note 14) 894,179 738,252 540,132 P=2,417,127 P=2,373,606 P=2,384,522

20. GENERAL AND ADMINISTRATIVE EXPENSES

2005 2004 (As restated - (As restated - 2006 see Note 2) see Note 2) Personnel expenses (see Note 23) P=2,078,012 P=2,505,486 P=1,704,469 Facilities related expenses (see Notes 14 and 24) 536,905 496,076 407,653 Advertising and promotions 519,539 503,475 95,448 Depreciation (see Note 9) 488,064 507,288 565,579 Contracted services 447,521 404,060 337,774 Taxes and licenses 151,185 151,407 168,959 Entertainment, amusement and recreation 138,948 118,634 128,428 Provision for doubtful accounts (see Note 3) 94,060 159,520 164,045 Amortization of deferred charges and other intangible assets (see Notes 10 and 11) 17,075 363,888 92,509 Other expenses (see Note 14) 663,373 637,384 465,132 P=5,134,682 P=5,847,218 P=4,129,996 21. OTHER INCOME AND EXPENSES

Other Income

2006 2005 2004 Rental income (see Notes 14 and 24) P=102,898 P=90,374 P=78,247 Royalty income 25,046 11,450 17,576 Others 320,763 185,318 131,320 P=448,707 P=287,142 P=227,143

Others mainly pertain to income from gate receipts, studio tours, management fees and other miscellaneous revenues.

Finance Revenue

2006 2005 2004 Mark-to-market gain (see Note 26) P=381,437 P=34,828 P=– Interest income 161,905 297,435 152,897 P=543,342 P=332,263 P=152,897

The following are the sources of the Company’s interest income:

2006 2005 2004 Long-term receivable from related parties (see Notes 8 and 14) P=115,424 P=261,161 P=112,841 Cash and cash equivalents (see Note 5) 46,481 36,274 40,056 P=161,905 P=297,435 P=152,897

Finance Costs

2006 2005 2004 Interest expense (see Note 26) P=631,816 P=683,465 P=802,850 Hedge cost (see Note 26) 137,689 218,845 – Amortization of debt issue costs (see Note 15) 83,860 87,046 107,880 Bank service charges (see Note 5) 13,606 12,241 – Mark-to-market loss (see Note 26) 496,412 393 – P=1,363,383 P=1,001,990 P=910,730

The following are the sources of the Company’s interest expense:

2006 2005 2004 Long-term debt under SCA (see Note 15) P=563,701 P=603,338 P=745,885 Obligation under capital lease (see Note 15) 34,442 62,294 23,006 Bank loans (see Note 15) 33,673 17,833 33,959 P=631,816 P=683,465 P=802,850

22. INCOME TAX

Consolidated deferred tax assets - net of the Company follow:

2005 (As restated - 2006 see Note 2) Deferred tax assets - net: Capitalized interest, duties and taxes (net of accumulated depreciation) (P=295,652) (P=326,515) Accrued retirement expense and other employee benefits 222,083 204,315 Allowance for doubtful accounts 122,928 158,542 Accrued expenses 112,103 – Cumulative translation adjustment of cash flow hedge 86,685 – Unrealized foreign exchange loss (69,881) (8,045) Mark-to-market loss (gain) 40,241 (11,330) Customer’s deposit 37,690 135,456 Net operating loss carryover (NOLCO ) 9,888 11,528 Allowance for inventory obsolescence 4,561 10,384 MCIT 986 5,185 Reimbursable expenses – 77,272 Others 30,147 65,634 P=301,779 P=322,426

The provision for income tax follows:

2005 2004 (As restated - (As restated - 2006 see Note 2) see Note 2) Current P=563,651 P=436,633 P=320,929 Deferred 103,781 (267,781) (53,956) P=667,432 P=168,852 P=266,973

The details of the unrecognized deductible temporary differences, NOLCO, and MCIT of the subsidiaries follow:

2006 2005 NOLCO P=296,124 P=201,652 Allowance for doubtful accounts 199,946 146,429 Unearned revenue 31,471 – MCIT 6,312 908 Accrued retirement expense and others 5,607 5,253 P=539,460 P=354,242

Management believes that it is not probable that taxable income will be available against which temporary differences, NOLCO and MCIT will be utilized.

MCIT of the subsidiaries amounting to P=7,298 million can be claimed as tax credit against future regular corporate income tax as follows:

Year Incurred Expiry Dates Amount 2004 December 31, 2007 P=3,161 2005 December 31, 2008 3,050 2006 December 31, 2009 1,087 P=7,298

NOLCO of the subsidiaries amounting to P=324,375 million can be claimed as deductions from regular corporate income tax as follows:

Year Incurred Expiry Dates Amount 2004 December 31, 2007 P=140,865 2005 December 31, 2008 97,968 2006 December 31, 2009 85,542 P=324,375

The reconciliation of statutory tax rates to effective tax rates applied to income before income tax is as follows:

2006 2005 2004 Statutory tax rate 35% 32% 32% Additions to (reduction in) income taxes resulting from the tax effects of: Equity in net losses of investees 1 14 1 Interest income subject to final tax (1) (3) (1) Unrecognized deferred tax assets 2 (8) (1) Nondeductible interest expense 4 1 – Others, mainly income subject to different tax rates and change in tax rate - net 6 3 (4) Effective tax rates 47% 39% 27%

23. PENSION PLAN

The Company’s pension plan is composed of funded (Parent Company) and unfunded (Subsidiaries), noncontributory and actuarially computed pension plan except for ABS-CBN International (unfunded and contributory) covering substantially all of its employees. The benefits are based on years of service and compensation during the last year of employment.

In 2005, the Company implemented an Early Retirement Program. The employees availed this program from July to December 2005. Total retrenchment cost amounted to P=576 million, net of recognized curtailment gain of P=158 million.

The following table summarizes the components of consolidated net benefit expense (income) recognized in the consolidated statement of income and accrued pension obligation recognized in the consolidated balance sheets.

Net Benefit Expense (Income)

2006 2005 2004 Current service cost P=53,038 P=41,474 P=46,105 Interest cost 36,480 51,482 46,664 Expected return on plan assets (14,031) (12,847) (12,658) Net actuarial gain recognized during the year (50) (351) – Curtailment gain – (158,418) – Net benefit expense/(income) P=75,437 (P=78,660) P=80,111

2006 2005 Actual return on Parent Company’s plan assets P=36,628 P=12,847

Benefit Liability

2006 2005 Present value of obligation P=853,765 P=343,887 Fair value of plan assets (175,580) (138,952) Unfunded obligation 678,185 204,935 Unrecognized net actuarial gain (loss) (398,369) 33,600 Benefit liability P=279,816 P=238,535 Consolidated changes in the present value of the defined benefit obligation are as follows:

2006 2005 Defined benefit obligation at beginning of year P=343,887 P=396,936 Actuarial loss on obligation 454,516 – Current service cost 53,038 41,474 Interest cost 36,480 51,482 Benefits paid (34,156) – Curtailment gain – (146,005) Defined benefit obligation at end of year P=853,765 P=343,887

Change in the fair value of plan assets of the Parent Company are as follows:

2006 2005 Fair value of plan assets at beginning of year P=138,952 P=126,105 Expected return on plan assets 14,031 12,847 Actuarial gains 22,597 – Fair value of plan assets at end of year P=175,580 P=138,952

The Company expects to contribute P=70 million to its defined benefit obligation in 2007.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

2006 2005 (Percentage) Investment in FXTN/FRTN 48.25 45.35 Investment in bonds 24.12 21.93 Short-term equity investment 19.58 17.53 Others 8.05 15.19 100.00 100.00

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The principal assumptions used as of January 1, 2006, 2005 and 2004 in determining pension benefit obligations for the Company’s plans are shown below:

2006 2005 2004 (Percentage) Discount rate 10.98 13.54 11.62 Expected rate of return on plan assets 10.00 10.00 10.00 Future salary rate increases 7.00 6.00 6.00

Discount rate prevailing as of December 31, 2006 is 7.16%.

Amounts for the current and previous two periods are as follows:

2006 2005 2004 Defined benefit obligation (P=853,765) (P=343,887) (P=396,936) Fair value of plan assets 175,580 138,952 126,105 Deficit (678,185) (204,935) (270,831) Experience adjustments on defined benefit obligation (119,602) – 48,088 Experience adjustments on plan assets 22,597 – (4,049)

24. COMMITMENTS

Deal Memorandum with DirecTV On June 1, 2005, the Parent Company and ABS-CBN International entered in to a 25-year Deal Memorandum (Memorandum) with DirecTV in which the Parent Company granted DirecTV the exclusive right via satellite, internet protocol technology and satellite master antenna television system or similar system, to display, exhibit, perform and distribute certain programs of the Parent Company that are listed in the Memorandum. ABS-CBN International may engage in any marketing plan mutually agreed by both parties and DirecTV may engage in ABS-CBN International. All costs under any mutually agreed marketing plans shall be shared equally between DirecTV and ABS-CBN International.

As provided in the Memorandum, all rights, title and interest in and to the content, discrete programs or channels not granted to DirecTV are expressly reserved by the Parent Company. All programming decisions with respect to the programs shall be in the Parent Company’s commercially reasonable discretion, including the substitution or withdrawal of any scheduled programs, provided that the Parent Company agrees that the programs will consist substantially the same content and genre provided for in the Memorandum.

The Memorandum also provides for the following license fees to be paid by DirecTV to the Parent Company:

a. A license fee for each existing DTH subscriber of ABS-CBN International or new subscribers who becomes an activated subscriber during the migration period (from June 2005 to February 2006); and

b. An additional license fee for each activated subscriber who becomes an activated subscriber during the migration period that remains a subscriber for 14 consecutive months.

The Memorandum also provides that subscription revenues, computed as the current and stand alone retail price per month for a subscription to the TFC channel multiplied by the average number of subscribers, shall be divided equally between DirecTV and ABS-CBN International.

Starting July 2005, existing DTH subscribers of ABS-CBN International have been migrating to DirecTV. License fee earned from DirecTV amounted to P=1,117 million in 2006 and P=1,619 million in 2005. ABS-CBN International’s share in the subscription revenues earned from subscribers that have migrated to DirecTV amounted to P=616 million in 2006 and P=93 million in 2005.

On January 17, 2006, the Parent Company and DirecTV agreed to amend the Memorandum entered in June 1, 2005 that includes among others the extension of the migration period from February 2006 to August 2006.

Operating Lease Commitments - Company as Lessee The Parent Company and subsidiaries lease office facilities, space and satellite equipment. Future minimum rentals payable under non-cancelable operating leases are as follows as of December 31:

2006 2005 Within one year P=306,035 P=291,921 After one year but not more than five years 932,241 1,184,726 After five years 455,545 626,252 P=1,693,821 P=2,102,899

Operating Lease Commitments - Company as Lessor The Parent Company has entered into commercial property leases on its building, consisting of the Parent Company’s surplus office buildings. These non-cancelable leases have remaining non-cancelable lease terms of between 3 to 5 years. All leases include a clause to enable upward revision of the rental charge on a predetermined rate.

Future minimum rentals receivable under non-cancelable operating leases are as follows as of December 31, 2006 and 2005:

2006 2005 Within one year P=149,769 P=117,854 After one year but not more than five years 186,845 171,297 After five years 366 11,257 P=336,980 P=300,408 Obligations Under Capital Lease The Company has finance leases over various items of equipment. Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net minimum lease payments are as follows:

2006 2005 Within one year P=136,775 P=118,984 After one year but not more than five years 206,872 233,287 Total minimum lease payments 343,647 352,271 Less amounts representing finance charges 50,295 62,326 Present value of minimum lease payments 293,352 289,945 Less current portion 108,305 88,246 P=185,047 P=201,699

25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial instruments, other than derivatives, comprise bank loans, finance leases and cash and short-term deposits. The main purpose of these financial instruments is to raise funds for the Company’s operations. The Company has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The Company also enters into derivative transactions, including principally interest rate swaps and cross currency swaps. The purpose is to manage the interest rate and currency risks arising from the Company’s operations and its sources of finance.

It is, and has been throughout the year under review, the Company’s policy that no trading in financial instruments shall be undertaken.

The main risks arising from the Company’s financial instruments are cash flow interest rate risk, liquidity risk, foreign currency risk and credit risk. The BOD reviews and agrees policies for managing each of these risks and they are summarized below. The Parent Company’s accounting policies in relation to derivatives are set out in Note 2.

Cash Flow Interest Rate Risk The Company’s exposure to the risk for changes in market interest rates relates primarily to the Company’s long-term debt obligations with a floating interest rate.

To manage this mix in a cost-efficient manner, the Company enters into interest rate swaps, in which the Company agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated to hedge underlying debt obligations. After taking into account the effect of interest rate swaps, approximately 52% in 2006 and 45% in 2005 of the Company’s borrowings are at a fixed rate of interest.

Interest Rate Risk The following table sets out the carrying amount, by maturity, of the Company’s consolidated financial instruments that are exposed to interest rate risk:

Within More than 1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years 5 Years Total 2006 Fixed Rate P=263,634 P=290,517 P=112,597 P=18,975 P=2,020 P=– P=687,743 Floating Rate 1,873,505 1,483,724 529,118 – – – 3,886,347

2005 Fixed Rate P=178,973 P=231,253 P=263,128 P=94,911 P=930 P=– P=769,195 Floating Rate 1,587,171 1,438,504 1,531,830 949,084 – – 5,506,589

Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument. The other financial instruments of the Company that are not included in the above tables are noninterest-bearing and are therefore not subject to interest rate risk. Foreign Currency Risk The Company’s primary exposure to the risk in changes in foreign currency relates to the Company’s long-term debt obligation. Approximately 50% of these obligations are denominated in currencies other than the functional currency of the operating unit.

The Company enters into cross currency swaps, to manage this risk and eliminate the variability of cash flows due to changes in the fair value of the foreign-currency-denominated debt maturing more than 1 year.

Other than the debt obligations, the Company has transactional currency exposures. Such exposure arises when the transaction is denominated in currencies other than the functional currency of the operating unit or the counterparty.

Credit Risk The Company trades only with recognized, creditworthy third parties. Customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Company, which comprise cash and cash equivalents, available-for-sale financial assets and certain derivative instruments, the Company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Since the Company trades only with recognized third parties, there is no requirement for collateral.

The Company does not have significant concentration of credit risk.

Liquidity Risk The Company seeks to manage its liquid funds through cash planning on a weekly basis. The Company uses historical figures and forecasts from its collection and disbursements. As part of its liquidity risk management, the Company regularly evaluates its projected and actual cash flows. It also continuously assesses conditions in the financial markets for opportunities to pursue fund raising activities. Also, the Company only places funds in the money market which exceeded the Company’s requirements. Placements are strictly made based on cash planning assumptions and covers only a short period of time.

26. FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The following table sets forth the carrying values and estimated fair values of consolidated financial assets and liabilities recognized as of December 31, 2006 and 2005. There are no material unrecognized financial assets and liabilities as of December 31, 2006 and 2005.

2006 2005 Carrying Carrying Amount Fair Value Amount Fair Value Financial Assets: Cash and cash equivalents P=1,661,832 P=1,661,832 P=1,751,730 P=1,751,730 Trade and other receivables - net 4,382,530 4,382,530 4,651,900 4,651,900 Derivative assets 12,438 12,438 193,305 193,305 Available-for-sale investments (included as part of “Other noncurrent assets”) 68,426 68,426 47,321 47,321 Long-term receivable from a related party 2,423,392 2,423,392 2,357,413 2,357,413 Total financial assets P=8,548,618 P=8,548,618 P=9,001,669 P=9,001,669

Financial Liabilities: Trade and other payables P=3,951,711 P=3,951,711 P=3,985,663 P=3,985,663 Interest-bearing loans and borrowings 4,574,090 4,630,763 6,275,784 6,582,905 Derivative liabilities 357,920 357,920 103,912 103,912 Obligations for program rights 411,944 414,994 422,402 424,010 Total financial liabilities P=9,295,665 P=9,355,388 P=10,787,761 P=11,096,490

Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate such value:

Cash and Cash Equivalents, Trade and Other Receivables and Trade and Other Payables. Due to the short-term nature of transactions, the fair values of these instruments approximate the carrying amount as of balance sheet date.

Available-for-sale Investments. The fair values of publicly-traded instruments were determined by reference to market bid quotes as of balance sheet date. Investments in unquoted equity securities for which no reliable basis for fair value measurement is available are carried at cost net of impairment.

Long-term Receivable from a Related Party. This is, in substance, equity instruments and, as such, are carried at cost.

Obligations for Program Rights. Estimated fair value is based on the discounted value of future cash flows using the applicable risk-free rates for similar types of loans adjusted for credit risk.

Interest-bearing Loans and Borrowings. Fair value was computed based on the following:

Fair Value Assumptions Term loan Estimated fair value is based on the discounted value of future cash flows using the applicable risk-free rates for similar types of loans adjusted for credit risk. The interest rates used to discount the future cash flows have ranged from 4.3% to 5.4% for those that are dollar-denominated and from 4.4% to 12.5% for those that are peso-denominated.

Other variable rate loans The face value approximates fair value because of recent and frequent repricing (i.e., 3 months) based on market conditions.

Principal-only Swaps and Interest Rate Swaps. The fair values were computed as the present value of estimated future cash flows.

Bifurcated Foreign Currency Forwards. The fair values of embedded foreign currency forwards were calculated by reference to forward exchange market rate at balance sheet date.

Derivative Instruments

Cross Currency Swaps. In 2004, the Parent Company entered into long-term cross currency swaps that hedge 100% of the Tranche A Principal against foreign exchange risk. The long-term principal-only currency swaps have an aggregate notional amount of US$42 million as of December 31, 2006 and 2005 and a weighted average swap rate of P=56.01 to US$1. Under these agreements, the Parent Company effectively swaps the principal amount of certain US dollar- denominated loans under the SCA into Philippine peso-denominated loans with payments up to June 2009.

The Company is also obligated to pay swap costs based on a fixed rate of 8.0% on a notional amount of P=353 million, 5.125% on a notional amount of P=55 million, 3-month PHIREF minus 2.9% on a notional amount of P=2 billion and 3-month PHIREF minus 3.1% on a notional amount of P=264 million.

Currently, the aggregate notional amount is 13% more than the underlying debt instrument. This is a result of a portion of the cross currency swap not being unwound when the company prepaid a portion of the loan in 2006. The excess is currently marked to market and directly reported to the profit and loss.

The execution copies of the agreement amending the SCA facility, will allow the reinstatement of the amount prepaid in 2006. While this will cure the current over-hedge position of the underlying instrument, the mark to market gain or loss that may be derived will continue to be immediately reported to the profit and loss until it matures in June 2009. Interest Rate Swaps. To manage the interest rate exposure from the floating rate loans, the Company also entered into USD interest rate swaps and PHP interest rate swaps which effectively swap certain floating rate loans into fixed-rate loans. These USD interest rate swaps and PHP interest rate swaps have an aggregate outstanding notional amount of US$32 million and P=394 million as of December 31, 2005, respectively, with payments up to September 2006 and March 2008.

As of December 31, 2006, the USD interest rate swaps have an aggregate outstanding notional amount of US$19.4 million, while the PHP interest rate swaps have matured in September 2006.

The terms of the USD and PHP interest rate swap agreements are as follows:

December 31, 2006

Outstanding Notional Amount Maturity Receive Pay US$19,377 2008 3-Month LIBOR + 3.5% 7.18%

December 31, 2005

Outstanding Notional Amount Maturity Receive Pay US$31,620 2008 3-Month LIBOR + 3.5% 7.18% PHP391,918 2006 PHIREF + 3.5% 14.40%

Hedge Accounting Implications of Swaps. The Parent Company’s principal-only currency swaps and USD interest rate swap are designated as cash flow hedges on October 1, 2005, to manage the Parent Company’s exposure to variability in cash flows attributable to foreign exchange and interest rate risks of the underlying debt obligations. Since the critical terms of the swaps and the outstanding debt obligations coincide, the hedges are expected to exactly offset changes in expected cash flows due to fluctuations in foreign exchange and the prime rate over the term of the debt obligations.

From October 1, 2005 up to December 31, 2005, the effective net mark-to-market losses that have been deferred in equity for these cash flow hedges amounted to P=53 million (P=34 million, net of tax). Prior to designation as cash flow hedges, the principal-only currency swaps accounted for mark-to-market losses in the consolidated statement of income of about P=32 million (net of P=316 million gain on the swap differentials), while the USD interest rate swap accounted for mark-to-market gains in the consolidated statement of income of P=48 million.

The effective net mark-to-market losses that have been deferred in equity for these cash flow hedges amounted to P=249 million (P=163 million, net of tax) in 2006.

As part of the transition adjustments as of January 1, 2005, the Company initially recognized an aggregate amount of P=117 million (P=76 million net of tax), representing the fair value for the principal-only currency swaps (net of the impact of the foreign exchange restatement) and the USD and PHP interest rate swaps. This amount is initially recorded as a credit adjustment in CTA (‘initial CTA’) and will be amortized using the effective interest method over the remaining term of the underlying related loans. For the year ended December 31, 2006 and 2005, the amortization of the initial CTA amounted to P=31 million and P=32 million, respectively and is recorded as a reduction in interest expense (see Note 21).

In 2006, the Company made a reassessment of its outstanding cross currency swap and interest rate swap. The valuation of each swap transaction was remeasured to confirm with the values derived by each of the counterparties to the hedges. This recalibration resulted in the increase of the derivative liability and decrease of the derivative asset by P=105 million and P=26 million, respectively in 2006. The aggregate total of P=132 million was then recorded in equity and will be transferred to the consolidated statement of income when the hedge transaction affects profit or loss.

Embedded Derivatives. As of December 31, 2006 and 2005, the Company has outstanding embedded foreign currency derivatives which were bifurcated from various non-financial contracts. The impact of these embedded derivatives is not significant.

As discussed in Note 8, the Parent Company has a receivables from Sky Vision that is convertible into the latter’s common share, which are not quoted in an active market. The conversion option embedded in the receivable is not separately accounted for as a financial asset at fair value through profit and loss. The entire receivable from Sky Vision is reported at cost subject to impairment. The table below summarizes the fair values of derivative instruments (both freestanding and embedded) as of December 31, 2006 and 2005:

2006 2005 Derivative Derivative Derivative Derivative Asset Liability Asset Liability Cross currency swaps P=– P=357,695 P=129,270 P=103,688 Interest rate swaps 11,340 – 62,774 – Embedded derivatives 1,098 225 1,261 224 Total P=12,438 P=357,920 P=193,305 P=103,912

27. EPS COMPUTATIONS

Basic EPS amounts are calculated by dividing the net income for the period attributable to common shareholders by the weighted average number of common shares outstanding during the period.

The following table presents information necessary to calculate EPS:

2005 2004 (As restated - (As restated - 2006 see Note 2) see Note 2) (a) Net income attributable to equity holders of parent P=740,552 P=251,731 P=734,250

(b) Weighted average shares outstanding At beginning of year 769,583,312 769,583,312 769,583,312 Issuances (see Note 16) 93,244 – – At end of year 769,676,556 769,583,312 769,583,312

Basic/Diluted EPS (a/b) P=0.962 P=0.327 P=0.954

The Company has no dilutive potential common shares outstanding, therefore basic EPS is the same as diluted EPS.

28. NOTE TO STATEMENTS OF CASH FLOW

2006 2005 2004 Noncash investing and financing activities: Acquisition of program rights on account P=393,736 P=265,852 P=315,284 Acquisition of property and equipment under capital lease 118,004 166,077 82,244 Payment of bonus through the issuance of PDRs 22,379 – – Acquisition of property and equipment on account – 81,466 21,100 Acquisition of property and equipment as settlement of trade receivables – 44,280 –

29. OTHER MATTERS

a. In 1972, the Parent Company discontinued its operations when the government took possession of its property and equipment. In the succeeding years, the property and equipment were used without compensation to the Parent Company by Radio Philippines Network, Inc. (RPN) from 1972 to 1979, and Maharlika Broadcasting System (MBS) from 1980 to 1986. A substantial portion of these property and equipment was also used from 1986 to 1992 without compensation to the Parent Company by People’s Television 4, another government entity. In 1986, the Parent Company resumed commercial operations and was granted temporary permits by the government to operate several television and radio stations. The Parent Company, together with Chronicle Broadcasting System, filed a civil case on January 14, 1988 against Ferdinand E. Marcos and his family, RPN, MBS, et. al, before the Sandiganbayan to press collection of the unpaid rentals for the use of its facilities from September 1972 to February 1986 totaling P=305,400 plus legal interest compounded quarterly and exemplary damages of P=100,000.

The BOD resolved on June 27, 1991 to declare as scrip dividends, in favor of all stockholders of record as of that date, whatever amount that may be recovered from the foregoing pending claims and the rentals subsequently settled in 1995. The scrip dividends were declared on March 29, 2000. In 2003, additional scrip dividends of P=13,290 were recognized for the said stockholders.

On April 28, 1995, the Parent Company and the government entered into a compromise settlement of rental claims from 1986 to 1992. The compromise agreement includes payment to the Parent Company of P=29,914 (net of the government’s counterclaim against the Parent Company of P=67,586) by way of tax credits or other forms of noncash settlement as full and final settlement of the rentals from 1986 to 1992. The TCCs were issued in 1998. b. The Company has contingent liabilities with respect to claims and lawsuits filed by third parties. The events that transpired last February 4, 2006, which resulted in the death of 71 people and injury to about 200 others led the Company to shoulder the burial expenses of the dead and medical expenses of the injured, which did not result in any direct or contingent financial obligation that is material to the Company. The Company has settled all of the funeral and medical expenses of the victims of the tragedy. Given the income flows and net asset base of the Company, said expenses do not constitute a material financial obligation of the Company, as the Company remains in sound financial position to meet its obligations.

As of March 28, 2007, the claims in connection with the events of February 4, 2006 are still pending and remain contingent liabilities. While the funeral and medical expenses have all been shouldered by the Company, there still exist claims for compensation for the deaths and injuries upon evaluation of these claims, the amount of which have not been declared and cannot be determined with certainty at this time. 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. c. Accrued pension obligation in the 2005 consolidated financial statements was reclassified from “Trade and other payables” account to noncurrent liabilities to conform to the 2006 presentation.

AR 2006.indd 68-69 4/24/07 8:12:33 AM MANAGEMENT COMMITTEE First Row (Standing L to R): Raffy Lopez, Gabby Lopez, Charo Santos-Concio, March Ventosa, Menchi Orlina, Mariole Alberto

Second Row (Seated L to R): Cory Vidanes, Fred Bernardo, Leng Raymundo, Philbert Berba, Monchet Olives, Cedie Vargas, Bonbon Jimenez, Mark Nepomuceno Johnny Sy, Robert Labayen, Mike Navarrete, Thelma San Juan, Ernie Lopez, Chinky de Jesus, Chit Guerrero, Paolo Pineda

First Row (Standing L to R): Raffy Jison, Vivian Tin, Gina Lopez, Bong Osorio, Jeff Remigio Ron Valdueza, Deo Endrinal, Billy Ick, Egay Garcia, Rick Hawthorne, Joanna Santos

Second Row (Seated L to R): Luchi Cruz-Valdez, Charie Villa, Maria Ressa, Raul Bulaong, Enrico Santos, Leo Katigbak, Maxim Uy, Buda Nubla, Olive Lamasan, Peter Musñgi, Malou Santos, Myrna Segismundo, Lauren Dyogi, Alden Castaneda, Annabelle Regalado, August Benitez, Johnny Manahan

AR 2006.indd 70-71 4/24/07 8:12:45 AM as of January 31, 2007 15th ANNUAL KBP GOLDEN DOVE AWARDS Breakfast Head, TV Production Business Unit – Special Projects CARMENCITA A. GUERRERO “Ka Doroy” Broadcaster of the Year Award Angelo Castro Gameplan EXECUTIVE OFFICE Best Television Station Channel 2 - Manila Chairman & Chief Executive Officer EUGENIO L. LOPEZ III Head, TV Production Business Unit MARILOU A. ALMADEN Math Tinik Head, TV Production Business Unit LUIS L. ANDRADA Best AM Radio Station DYAB-am Cebu Postman Pat Vice Chairman AUGUSTO ALMEDA-LOPEZ Best TV Newscast News Central - Studio 23 (Amcara Bctg. Network) Head, Security CIPRIANO M. LUSPO Head, TV Production Business Unit CATHERINE PATRICE O. PEREZ Sineskwela Executive Producer ALBERT B. ALMADEN Best TV Public Affairs Program Probe Sports TV BUSINESS DEVELOPMENT Executive Producer PHOEBE LUZ D. ANIEVAS Best TV Variety Program Little Big Star The Key of David Executive Producer NINI PATRICIA C. AQUINO Best TV Comedy Program Goin’ Bulilit Business Development & Special Projects Officer JOSE RAMON D. OLIVES Y Speak Assistant Vice President, International Program Development CARLOS P. AGUSTIN Executive Producer MARIA CHRISTINA P. BALUYUT Best TV Drama Program Maalaala Mo Kaya “Regalo” Executive Producer NOEMI M. BON Best TV Children’s Program Okiddo - DXAS TV4 Davao (ABS-CBN) Most Well-Liked Television Personalities Aga Muhlach CORPORATE COMMUNICATIONS DIVISION Executive Producer GRACE ANN B. CASIMSIMAN Best TV Culture and Arts Program Paano Kita Mapasasalamatan Gary Valenciano Chief Corporate Communications Officer RAMON R. OSORIO1 Executive Producer RODORA FELISA C. DE LA CERNA (A Tribute to George Canseco) Jericho Rosales Executive Producer JOAN D. DEL ROSARIO Best TV Public Service Announcement Flicker PROPERTY MANAGEMENT GROUP Executive Producer JESSICA A. FABELICO Julius Babao Executive Producer ESTERBELLE F. FRANCISCO Best Station Promotional Materials on TV Everest “Kaya ng Pinoy” Piolo Pascual Vice President for Property Management MARISSA L. NUBLA General Manager, Studio Tours & Shop LAURO L. PANGANIBAN Executive Producer MARVI M. GELITO Best TV Newscaster Mari Kaimo - News Central - Studio 23 Sam Milby Best TV Field Reporter Kharen Serra - DXAS TV4 Davao Executive Producer MARK ANTHONY D. GILE Bea Alonzo Media Asset Management Executive Producer MERCEDITA T. GONZALES Best Radio Newscast Radyo Patrol Balita Alas Siyete - DZMM-am 630 kHz Bernadette Sembrano Executive Producer NARCISO Y. GULMATICO, JR. Best Radio Comedy Program Rated R - DYAB-am 1512 kHz. Cebu Director, Central Library & Archives ADORACION G. CAMACHO Christine Bersola-Babao Manager, Film Archives MA. LUISA C. DEL PILAR Executive Producer DESIREY F. JUAN Best Radio Science & Technology Program Bago ‘Yan Ah! - DZMM-am 630 kHz. Judy Ann Santos Manager, Central Library & Archives KATHERINE JENNIFER P. SOLIS Executive Producer JEANNE KARLA R. MANALO Best Station Promotional Materials on Radio MOR Wrong-Correct Plugs DYOO-fm 101.5 Bacolod City Korina Sanchez Manager, Central Library & Archives JAYSON S. LABUDAHON Executive Producer MORLY STEWART A. NUEVA Best Radio Newscaster Ted Failon - DZMM-am 630 kHz Kristine Hermosa Executive Producer SHIELA MARIE A. OCAMPO Best Public Affairs Program Host Korina Sanchez - DZMM-am 630 kHz Sarah Geronimo Administration & Services Executive Producer MARIA VICTORIA H. ODUCAYEN Executive Producer MARLITO S. REJANO Best Radio Public Service Program Host Joey Lina - DZMM-am 630 kHz Sharon Cuneta Director, Administration & Services ADELINE SUSAN C. CARAG Best Radio Variety Program Host Winnie Cordero - DZMM-am 630 kHz Executive Producer LEON A. ROLDAN III Executive Producer EMILIO PAUL E. SIOJO Most Well-Liked Programs Bituing Walang Ningning 28th CATHOLIC MASS MEDIA AWARDS CHANNEL 2 MEGA MANILA DIVISION Executive Producer EMERALD C. SUAREZ Game K N B? Managing Director MA. ROSARIO N. SANTOS-CONCIO Executive Producer LOURDES D. TANWANGCO Television Gulong ng Palad Executive Producer RACQUEL B. UBANA Best News Magazine Rated K! Handa na ba kayo? Rated K Executive Producer DARNEL JOY R. VILLAFLOR Best Drama Series/Program Maging Aking Muli – DYAC TV3 Cebu Programming & On-Air, Licensing, Synergy, Content Monitoring and Development Sa Piling Mo Head, Programming & On-Air Operations, Licensing, Synergy, FLORIDA C. TAN Executive Producer NANCY B. YABUT Best Comedy Program Quizon Avenue TV Patrol Content Monitoring & Development Group Manager, Operations MYLENE ANTONETTE Q. MALLARI Best Talk Show Y Speak Head, Programming & On-Air Operations MARIA CRISTINA R. AMARILLE Manager, Production JULIE ANNE R. BENITEZ Best Sports Show Sports Unlimited UP COMMUNITY BROADCASTERS’ SOCIETY Head, Licensing KAREN EVE C. COLOMA Manager, Production MA. ROWENA R. BENITEZ Manager, Production RAYMUND G. DIZON Best Adult Educational/Cultural Program Kunin Mo O Diyos “Gandingan 2007: UPLB Isko’t Iska’s Broadcast Choice Awards” Best Special Event Coverage EDSA 1986: Mga Tinig ng Himagsikan Acquisitions Manager, Production RIZALINA G. EBRIEGA Best TV Station ABS-CBN Channel 2 Manager, Production ETHEL M. ESPIRITU Special Citation Best Development-Oriented TV Station ABS-CBN Channel 2 Head, Program Acquisitions EVELYN D. RAYMUNDO Best Public Service Program Nagmamahal, Kapamilya Manager, Program Acquisitions MA. LOURDES D. BAUTISTA Manager, Production ANNALIZA A. GOMA Best AM Radio Station DZMM-am Radyo Patrol 630 Executive Producer, Program Acquisitions NARISSA A. CALINAWAN Manager, Production CYNTHIA D. JORDAN Radio Best FM Radio Station DWRR-fm 101.9 Manager, Production JOYCE A. LIQUICIA Best News Program Radyo Patrol Balita - DYAB Cebu Best Radio Jock Martin D (DWRR 101.9) Manager, Production BENITA S. MATILAC Best Business News or Feature Radyo Negosyo Sales Most Development-Oriented TV Program Y Speak (Studio 23) Head, Channel 2 Sales JOSE AGUSTIN C. BENITEZ, JR. Manager, Production GINNY M. OCAMPO Best Sports Program Sports Talk Most Development-Oriented Radio Station DZMM-am Radyo Patrol 630 Head, Strategic Sales Planning Unit ALDEN ALFONSO M. CASTAÑEDA Manager, Production GIA NINA G. SUYAO Best Educational Program Bago Yan Ah! Most Development-Oriented Radio Program Tambalang Failon at Sanchez Head, Channel 2 Sales - Group 1 RONALDO M. MERINO Manager, Production EMMA V. VILBAR Music Best News Program TV Patrol World Head, Channel 2 Sales - Group 2 ELVIRA VICTORIA M. ECHAUZ-ANGARA Best Album - Secular Pure Hearts by Gary V. - Star Records Best Magazine Program Rated K Head, Channel 2 Sales - Group 3 RUBY ANGELA P. APELO Head, Channel 2 Sales - Group 4 ANNE MARIE S. LIM NEWS & CURRENT AFFAIRS DIVISION Best Talk Show Homeboy Managing Director MARIA A. RESSA PMPC STAR AWARDS 2007 Best Newscaster Korina Sanchez Head, Channel 2 Sales - Group 5 JENNY VERONICA M. SERRANO Best Musical Variety Show ASAP ‘06 Head, Channel 2 Sales - Group 6 MABELLE FLOR R. DEL MUNDO Best Magazine Program Host Korina Sanchez Current Affairs Best Male TV Host Luis Manzano Head, Channel 2 News & Current Affairs Sales/ YVETTE JEANNE W. NOVENARIO Best Public Affairs Program Host Karen Davila ABS-CBN News Channel Head, Current Affairs LUISITA C. VALDES Best Female TV Host Toni Gonzaga Best Public Service Program Host Bernadette Sembrano Head, Production Unit (Current Affairs) MARIQUIT A. GONZALEZ Best New Male Personality Sam Milby Manager, Strategic Sales Planning MARIS AGATHA M. AGUINALDO Best Talk Show Host Boy Abunda Manager, Strategic Sales Planning MICHELLE L. GATLABAYAN Head, Production Unit (Current Affairs) CLEON LESTER G. CHAVEZ Best Drama Anthology Maalaala Mo Kaya Best Panel Discussion Program Y Speak (Studio 23) Manager, Strategic Sales Planning MAXIMILIAN N. HONG Head, Production Unit (Current Affairs) ANNA LIZZA R. RODRIGUEZ Best Single Performance by an Actor Carlo Aquino Best Music Program Myx (Studio 23) Manager, Customer Development Group - Admin BERNADETTE M. BLANCO Executive Producer CHERYL C. FAVILA Best Single Performance by an Actress Vilma Santos Best Video Jock Iya Villania (Myx) Executive Producer JONAS H. LIWAG Best Drama Series Sa Piling Mo Creative Communication Management Best Drama Actor Diether Ocampo Head, Creative Communication Management ROBERTO G. LABAYEN Newscast 2006 LA SALLIAN SCHOLARUM AWARDS Supervising Producer LILIBETH SOCORRO F. DELA CRUZ Best Drama Actress Maricel Soriano Best Televised Feature Story on Youth and Education Tugdaan (Adrian Ayalin, The Correspondents) Head, Creative Account - Entertainment PATRICK ARIEL L. DE LEON Best Educational Program Kumikitang Kabuhayan Head, Creative Production Group JOHNNY S. DE LOS SANTOS Executive Producer JOSE A. CABURNIDA Finalists Kayod Eskwela (Gigi Grande, The Correspondents) Head, Creative Account - News & Current Affairs, ANC & Radio IRA VINCENT G. ZABAT Executive Producer FERNANDO M. GARCIA Best Horror/Fantasy Program Komiks Text on Air (Gigi Grande, The Correspondents) Executive Producer ENGELBERT C. APOSTOL Best News Program TV Patrol World Head, Creative Account - RNG MA. CHRISTINA M. BARBIN Best Male Newscaster Julius Babao Head, Creative Account - Entertainment RODA F. BALDONADO 2006 PRSP ANVIL AWARDS Head, Creative Account - Entertainment EDSEL P. MISENAS Newsgathering Best Magazine Show Rated K Award of Merit Sikapinoy – DZMM-AM 630 kHz Head, Creative Account - Entertainment FELIX NATHANIEL C. NAFARRETE Head, Newsgathering ROSARIO SOFIA S. VILLA Best Magazine Show Host Korina Sanchez Head, Creative Account - Entertainment KATHRINA V. SANCHEZ Head, Desk - Futures DAVID JUDE L. STA. ANA Best Morning Show Magandang Umaga Pilipinas 2006 DOST MEDIA AWARDS Head, Creative Account - Manila Radio & NCAG FAITH J. ZAMBRANO Chief Correspondent, Philippine & Global Operations KORINA B. SANCHEZ Chief, European News Bureau DANIEL K. BUENAFE Best Morning Show Hosts Julius Babao, Christine Bersola-Babao Institutional Awardee for Radio DZMM-AM 630 kHz Head, Creative Account - Entertainment, Sports and News JORDAN H. CONSTANTINO and Bernadette Sembrano Head, Editing & Post-Production JONATHAN M. CAPILO Chief, Middle East News Bureau FERNANDO A. SANGA Editor-in-Chief, Business News CARMINA R. ROMERO Best Documentary Program The Correspondents 48th NEW YORK FESTIVAL Head, Creative Account - Corporate Image & Special Events DANIE ROSE SEDILLA-CRUZ Best Documentary Program Hosts Karen Davila and Abner Mercado Head, Creative Account - ANC RONALDO G. CRUZ Head, Regional News Bureau PHILIP STANLEY A. PALISADA Silver - Best News Magazine Program The Correspondents: “Rugby”’ Head, Print Graphics and Design CARMELO B. SALIENDRA Head, Day of Coverage Morning FERNANDO A. ABOGA JR Best Celebrity Talk Show Homeboy Silver - Best Newscast The First Philippine Mount Everest Expedition Head, Day of Coverage Evening CLAUDE NORMAN M. VITUG Best Celebrity Talk Show Host Boy Abunda Finalist - Best News Promotion (Special Series) First Philippine Mt. Everest Expedition Head, Entertainment News MARIO V. DUMAUAL Best Showbiz-Oriented Talk Show The Buzz Talent Development & Management Center Senior Vice President, Talent Development & Mgmt. Center JUAN L. MANAHAN Head, News Features MARCELO L. PONTI, JR. Best Male Showbiz-Oriented Talk Show Host Boy Abunda 2006 PROMAX WORLD GOLD AWARDS Vice President, Talent Center MA. YOLANDA R. ALBERTO Head, Studio 23 News VICENTE O. RODRIGUEZ Best Female Showbiz-Oriented Talk Show Host Kris Aquino Finalist Lipad Ng Pangarap Director, Talent Center Operations LOURDES M. ROMERO Desk Editor DANILO P. LUCAS Best Game Show Pilipinas, Game K N B? Director, Talent Center MA. RAMONA INES R. NOVALES Desk Editor JOCELYN T. GRUTA Desk Editor ANNA LIZA L. EUGENIO ARAW VALUES AWARDS 2006 Senior Manager, Talent Center CRISELDA T. NAVARRO SOUTHEAST ASIAN FOUNDATION FOR CHILDREN’S TELEVISION - ANAK TV SEALS Manager, Public Relations & Publicity VERONICA I. DYLIM Desk Editor MONICA E. LACHICA Platinum, Advocacy - Multimedia “Flag Campaign” Desk Editor, Business MA. CONCEPCION I. DUMO ABS-CBN Art Jam Silver, Advocacy – Single Medium “Flicker” Manager, Talent MELINDA LOVE A. CAPULONG Barney and Friends Manager, Talent ALAN M. REAL Executive Producer GIDGET CECILLE V. ALIKPALA Silver, Branded - Multimedia “Everest: Kaya ng Pinoy” Senior Correspondent HENRY C. OMAGA John en Shirley Manager, Finance EDILBERTO TITO C. CAPULONG II Bronze, Advocacy – Single Medium “Bra” Senior Correspondent CECILIA O. DRILON Kabuhayang Swak na Swak Senior Correspondent AUGUSTO G. ABELGAS Pilipinas Game K N B? TV PRODUCTION DIVISION ASIAN TV AWARDS 2006 Managing Director MA. SOCORRO V. VIDANES Senior Correspondent - Sports DIANE C. GARCIA Rated K Best Current Affairs Programme, The Correspondents - “Juvenile Injustice” Head, TV Production Business Unit LAURENTI M. DYOGI Correspondent JULIUS CAESAR C. BABAO Salamat Dok Runner-Up Head, TV Production Business Unit ROLDEO THEODORE T. ENDRINAL Correspondent ALADIN M. BACOLODAN Sanrio World of Animation Best Current Affairs Programme, XXX Head, TV Production Business Unit JOAQUIN ENRICO C. SANTOS Correspondent ANTONIO VICTOR T. VELASQUEZ The New Adventures of Madeline Highly Commended Head, TV Production Operations JOANNA G. SANTOS Correspondent LYNDA J. ABALOS Wansapanataym Correspondent NADIA MARIE T. BANAGUDOS Best Entertainment Presenter, Sharon Cuneta for Sharon Correspondent KAREN D. STA. ANA Highly Commended Correspondent ABNER P. MERCADO Studio 23 6th National Quiz Bee Best News Programme, Finalist TV Patrol World 700 Club Asia 7th Heaven

AR 2006.indd 72-73 4/24/07 8:12:46 AM INFORMATION TECHNOLOGY DIVISION ABS-CBN INTERNATIONAL, N.A. News Engineering TECHNICAL PRODUCTION OPERATIONS DIVISION (TPO) Chief Information Officer JOHNNY C. SY Managing Director RAFAEL L. LOPEZ Head, Camera Operations CONRADO M. PALILEO Managing Director RAUL PEDRO G. BULAONG AVP, Solutions Delivery EVELYN L. JAVIER Head, Telecom Consumer Services JOHN KERWIN G. DU Head, Editing Operations ARMAND DEREK N. SOL Manager, Technical System SANTOS C. BAUTISTA Director, Enterprise Systems FELIX C. NARITO, JR. Regional Finance Officer ZOILO M. DELA CRUZ Head, Engineering Van & On-Air Operations CARLOS S. TOLENTINO Manager, Technical Director & Video Operations NEMESIO V. ROQUE Senior Manager, Data Center/Operations ALBERTO J. DULATAS Head, Customer Service & Fulfillment Operations EMMA C. ANDAYA Head, Media Management FRANCISCO L. ALEJANDRO Manager, Camera & Lighting Operation BENJAMIN P. YSIP Senior Manager, Process & Quality Management CECILE MARIE L. ESCAÑO Head, Public Relations/Community Relations MILAGROS G. SANTISTEBAN Head, On-Air Operations K P. VILLAROYA Head, TPO Account Management EDWIN S. MENDOZA Senior Manager, Sales & Revenue Management JOSE ALVIN P. SALAMATIN Head, Broadcast Services DAVID P. HANCOCK Head, Digital Newsgathering Group MELISSA A. DELA MERCED Head, Visual Effects LEONARDO M. BARBIN Manager, Corporate Services Group 1 CECILIA M. ALOC Head, Technical & Post Production Services JONAS T. DE LEON Head, Technical Producer MELANIE E. FERNANDEZ Manager, Finance Applications ARLAN B. ALFONSO Head, Program Development & Acquisition JOHN D. LAZATIN Business Development Group Head, Animation MARIA GUIA JULIA U. JOSE Manager, Subsidiaries & Affiliates Solutions Group 1 MARVIN A. SANCHEZ Head, On-Air Promotions CARLOS V. MUÑOZ Head, Business Strategy & Programming MARY JEANE M. LARANAS Manager, Subsidiaries & Affiliates Solutions Group 2 MA. CYNTHIA ELENA I. MENDOZA News Bureau Chief MA. REGINA E. REYES Head, Business Development MARIA VICTORIA CILETTE L. CO MARKETING Manager, Business Intelligence EDWIN G. NILOOBAN Head, Systems, Budget & Logistics MARIJANE S. KOA Head, Business News & Interstitials KAREN GAYLE M. PUNO Chief Marketing Officer ANTONIO S. VENTOSA Manager, Web & Workgroup Applications MA. VICTORIA I. JARA Head, Network Services KEVIN K. HO Head, Special Projects MARY ANN R. PURIFICACION Head, Program Marketing Channel 2 MA. ZITA T. ARAGON Manager, Systems & Database Administration BESSIE G. FONTE Head, Los Angeles Operations PABLITO R. DUASO Head, Customer Marketing Channel 2 TERESITA L. VILLAREAL Manager, Network & Infrastructure Software Management JESSIE DEO L. YAMZON Head, Broadcast Systems Engineering EDMUND S. JOHNSON ABS-CBN News Channel Head, Production Services JONATHAN MARTIN A. MONTELIBANO Head, Studio Engineering ATANACIO V. PASCUAL Managing Director (Concurrent) MARIA A. RESSA Head, Media Planning FERDINAND B. MARCOS INTERNAL AUDIT Head, Business Development – Programming & JEFF S. NASALGA Chief Operations Officer JUDITH A. TORRES Head, Creative Services JENNIFER ANNE T. DE LOS SANTOS Chief Internal Audit Officer ALFREDO P. BERNARDO Music Label Manager, Operations PAULINE MARIE G. HALILI Head, Marketing - Studio 23 RALPH MARVIN M. MENORCA Head, Financial/Operations Audit JOSE VICTOR B. LEACHON Head, Business Development – MYX Channel Operations AUDIE T. VERGARA Head, Channel Operations ARLYN D. ARINES Manager, Customer Marketing - CH2 MARJORIE ANN L. SO Senior Manager, Information Technology Audit MA. LUISA S. ALCANESES Head, Business Development – Animation RAMON L. LOPEZ Executive Producer MARIA ELENA MANOLITA G. CATBAGAN Manager, Customer Marketing - CH2 ALVARO DAN S. MORGA Senior Manager, Information Technology Audit MARIA CECILIA J. PABICO Head, Starry Starry Store ANDREA W. VERGEL DE DIOS Manager, Customer Marketing - CH2 CHARI ANN M. SONGSONG Manager, Information Technology Audit SANDRA G. DE LEON Head, Starkargo ENRICO R. GATCHALIAN MANILA RADIO DIVISION Manager, Customer Marketing - CH2 JUN I. MARTINEZ Manager, Information Technology Audit MARIA CRISTINA C. CRUZ Head, Cable ROLANDO S. DEL ROSARIO Managing Director PETER A. MUSÑGI Manager, Customer Marketing - CH2 CHARINA O. CLEMENTE Manager, Financial/Operations Audit CARMELA GRACE C. DEL MUNDO Station Manager, DZMM ANGELO B. PALMONES Manager, Customer Marketing - CH2 MARCELO M. MIRANDA ABS-CBN GLOBAL, AUSTRALIA Manager, DZMM - Programming & Production Services MA. MARAH F. CAPUYAN Manager, Events ERLPE JUNN G. ORENZA LEGAL SERVICES Managing Director WILHELM O. ICK Manager, DZMM Radyo Patrol ANGELO V. ALMONTE Manager, Trade Promo MARION F. MARTINEZ Head, Legal Services MAXIMILIAN JOSEPH T. UY Director, Sales & Marketing EDGARDO P. ROXAS Station Manager, DWRR ELI BRUCE A. CAPUYAN Head, Contracts & Corporate Services MARIFEL G. CRUZ News Bureau Chief GERALDINE MARIE R. GRANDE Manager, Research & Monitoring Group GINA C. ABELLERA RESEARCH & BUSINESS ANALYSIS DIVISION Head, Regulatory Matter & Entertainment Law MONA LISA A. MANALO Product Manager, Asia Pacific ROSELLER JUAN MIGUEL L. CONSTANTINO Manager, News & Information Center ALONA M. LINDSTROM Chief Research & Business Analysis Officer VIVIAN Y. TIN Senior Manager, Legal Counsel MARJORIE G. SAGMIT Manager, Special Projects MAY CATHERINE V. CENIZA Head, Corporate Planning PAMELA ANN P. DA SILVA Manager, Legal Counsel JUDITH M. ZAMORA ABS-CBN GLOBAL, EUROPE Head, Manila Radio Sales EMMANUEL D. TADEO Head, Subsidiaries & Business Research RUTHIE A. FLORESTA Manager, Legal Counsel ROY JOHN C. BASA, JR. Managing Director RAFAEL A. JISON Head, NCA & Radio Research OLIVA M. CARANDANG Head, Operations & Concurrent CFO STEPHEN B. MACION Sports Division Head, Ratings, Entertainment & Regional Research LIZA A. ALETA LOGISTICS DIVISION Regional Head, Sales & Marketing, Europe LUIS C. BARIUAN Managing Director (Concurrent) PETER A. MUSÑGI Head, Subsidiaries Research SORAYA VIRGINIA V. PARLADE Chief Logistics Officer MERCEDES L. VARGAS Head, Marketing NOEMI A. ARGUILLO Production Manager JENNIFER F. JIMENEZ Head, Data Systems EVANGELINE P. BAYLON AVP, Procurement Group LEONORA V. BUENAVENTURA Head, Sales - Milan & other EU Countries EXPEDITO A. DELA CRUZ Head, Sports Sales GEOFFREY D. GARCIA Head, Regional & TV Entertainment Research MARIA DIVINIA J. BERNARDO AVP, Asset Management, Warehouse & Distribution RAUL Z. ECHIVARRE Chief Accountant & Logistics Officer ANGELITA A. LARA Head, Fundamentals & TV Entertainment Research MELINDA M. MARCELO Director, Asset Management, Warehouse & Distribution CYNTHIA R. VILLANUEVA Manager, IT & Operations GABRIEL T. DADIVAS REGIONAL NETWORK GROUP Director, Capital Projects & Technical Requirements JONATHAN B. BUKUHAN Managing Director ROLANDO P. VALDUEZA FINANCE DIVISION Manager, Importation, Procurement Group ALEJANDRO T. CORDOVA JR. ABS-CBN GLOBAL, MIDDLE EAST Head, Mindanao Cluster LOUIS BENEDICT O. BENNETT Chief Finance Officer MIGUEL JOSE T. NAVARRETE Manager, Non-Technical & Support Services, Procurement Group DIVINA T. CORDOVA Managing Director EDGARDO B. GARCIA Head, Visayas Cluster & Overall Radio ATTY. ABIGAIL E. QUERUBIN AVP, Comptrollership ESPERANZA P. ARMONIA Regional Finance Officer OLIVER C. CALMA Head, Luzon Cluster IRENE C. COPIOZO Director, Systems, Methods & Operations Management MARIA PAZ JIMENEZ-BALAYAN Regional Marketing Officer JOSEPH RODRIGO O. DIAZ II Director, Channel Development - RNG EMILY B. BARCELON Director, Financial Accounting Services ANA LIZA A. ESPIRITU ABS-CBN SUBSIDIARIES News Bureau Chief FERNANDO A. SANGA Senior Finance Officer, Regional Network Group MICAELA D. LABAGUIS Director, Budget, Business Analysis & Investor Relations LYRA GAY C. FAJARIT Senior Manager, Sales & Marketing ARTHUR LAWRENCE A. LOS BANOS Manager, TV Production CHRISTIE N. GARCIA Director, Finance - Entertainment MA. ENNA L. SANTOS ABS-CBN CENTER FOR COMMUNICATIONS ARTS, INC. Senior Manager, Operations JESUS ANTONIO G. GONZALEZ III Manager, Festival Events Group MICHELLE ANN S. KU Director, Finance - Entertainment MADONA ANGELYN S. GARRIDO Director, Workshops@ABS-CBN BEVERLY A. VERGEL Manager, Business Development & Procurement ANDREW S. JAMIAS Manager, RNG News STANLEY PALISADA Director, Finance - News & Current Affairs/ANC JAY FRANCIS Q. SANTOS Manager, Workshops@ABS-CBN J VINCENT L. DUQUE Manager, IT & Subscriptions FERDINAND C. ROMAN Manager, Luzon Promo - News & Entertainment WOODROW A. FRANCIA Senior Manager, Treasury & Collection PAUL MICHAEL V. VILLANUEVA, JR. Principal, Distance Learning Center MA. CRISTINA M. GONZALES Head, Ad Sales MARIO M. MARASIGAN Head, RNG Sales AMALIA ENCARNACION H. BAUTISTA Senior Manager, Systems, Methods & Operations Management JACQUELINE SANTOS-PEREZ Senior Finance Officer, Regional Network Group MICAELA D. LABAGUIS ABS-CBN FILM PRODUCTIONS, INC. (STAR CINEMA) ABS-CBN GLOBAL, JAPAN RNG – Luzon Cluster Senior Finance Officer, Broadcast Engineering, ELSIE SHAFER-CAPIZ Managing Director MA. LOURDES N. SANTOS Managing Director JEFFREY H. REMIGIO Area Manager, North Central Luzon GEMMA Q. CACAS Technical Production Operations & Logistics Senior Vice President, Creative & TV Drama OLIVIA M. LAMASAN Product Manager LYRA MARIE R. CEDENO Area Manager, South Luzon (Naga & Legaspi) AMALIA G. VILLAFUERTE Senior Finance Officer, Support Group 2 Financial Operations ROLANDO G. CRUZ Chief Finance Officer BEVERLY S. FERNANDEZ Finance Officer MONINA TERESA S. FERRER Station Manager, Laoag REMEDIOS I. ROCA Senior Finance Officer, Manila Radio & Sports Division ARLENE GONZALES-NEGRO AVP, Booking & Distribution MARY ANGELINE Y. PINEDA Station Manager, Baguio, Isabela & Tuguegarao BERNARDO D. ALDANA Senior Finance Officer, Sales & Marketing MARY GRACE S. SAROL Director, Creative ANNA LIZA MARIA B. DINOPOL E-MONEYPLUS INC. Head, Lucena Sales Center LODICIA R. JALAGO Manager, Financial Reporting LEONILA H. CRUZ Director, Advertising & Promotions DENNIS MARCO A. LIQUIGAN Treasurer & Head Of Operations ALFRED G. CRISTOBAL JR. Head, Cabanatuan Sales Center GIL DONATO V. VIOLAGO Manager, Accounts Payable, Asset & Insurance Accounting MONINA TERESA S. FERRER Head, Production Group MA. TERESITA V. FUENTES Head, Information Technology ALEJANDRO F. SANTOS OIC – Batangas Sales Center & Olongapo Sales Center JOSE C. DE CASTRO Manager, Revenue Accounting MELANIE E. PEDRON Manager, Booking ADORA L. JACILA Head, Remittance Inquiry GINA D. INDIANA OIC – Tarlac & Pampanga Sales Center DOLORES T. LINGWA Manager, Subsidiary Accounting MARILOU P. ORDONEZ Manager, Video Production MARIZEL S. MARTINEZ Manager, Systems, Methods & Operations Management WILHELM DAVID-REMOTIGUE Manager, Post Production & Technical Services and Research ELMA S. MEDUA ABS-CBN INTERACTIVE, INC. RNG – Visayas Cluster Head, Broadcast Traffic Operations MA. CATHLEYA D. BALUGA Managing Director LUIS PAOLO M. PINEDA Area Head, Central Visayas (Cebu & Dumaguete) VENERANDA C. SY ABS-CBN GLOBAL LIMITED Head, New Media DENNY C. MUNOZ Manager, Roxas & Kalibo Sales Center JOANNE BEATRIZ R. DADIVAS HUMAN RESOURCES DIVISION Managing Director RAFAEL L. LOPEZ Head, Mobile Philippines CLAUDIA G. SUAREZ Station Manager, Bacolod LEILANI S. ALBA Chief Human Resources Officer PHILIP LAMBERTO L. BERBA Chief Marketing Officer CARMENCITA T. ORLINA Head, Mobile Marketing RAFAEL L. SAN AGUSTIN, JR. Station Manager, Iloilo CHARIE MAY LYN G. ILON Head, Account Management LOURDES C. ABRILLO Chief Financial & Corporate Planning Officer ANNA KARINA V. RODRIGUEZ Head, Customer Relations Management MA. CORAZON I. DE GUZMAN Manager, Marketing MA. DESIREE D. BRETANA Head, Account Management LUZVIMINDA A. MORALES Chief Information Officer MA. GENEMAR D. SIMPAO Head, Acquisition DOMILEO G. ESPEJO Manager, Cebu Radio - News LEO A. LASTIMOSA Head, Systems - OMP Group ERNILDA L. BAYANI Head, Operations SHERRY ANN C. SUPELANA Head, Service Management SHERILLYN E. ELEDA Manager, Cebu TV - News RODA N. UY Head, Account Management ELEANOR HENEDINE S. LAURENA Head, Business Development ENRIQUE V. OLIVES Head, International Business Development RAFAEL L. CAMUS Head, HR Special Projects MA. VICTORIA L. NUGUID Head, Human Resources & Organization Development SIXTO S. GADDI Head, Business Development B2B JOSE MARIE ANGEL Y.TANJUATCO RNG – Mindanao Cluster Head, Account Management MA. ASUNCION A. PALMERO Head, Global Content ALLAN M. CORONEL Head, International Telco Relations OLIVIA S. MORENO Area Manager, General Santos, Cotabato, Koronadal ANNIE S. GACAYAN Head, Account Management LIBERTAD G. PASCUAL Head, MMOG MICHAEL CHARLES F. PADUA Area Manager, Northern Mindanao ALEXANDER T. MARTINEZ Head, Recruitment & IJM Systems JOVELYN C. SY ABS-CBN GLOBAL, MANILA Head, Sales & Distribution ROMEO S. CANON, JR. (Cagayan De Oro, Iligan & Butuan) Head, HR Operations RAUL D. VELASCO Head, Advertising Sales ELAINE M. PEREDO Head, Content Management JASMINE S. CASAS Station Manager, Davao TRISHA E. CORPUS Head, Account Management LORELEI A. BADAR Head, Customer Relationship Management JEANETTE Q. BELTRAN Head, Human Resources LORELEI A. BADAR Manager, Davao TV - News ARTURO C. BONJOC JR. Head, Account Management MARICEL C. BENITEZ Category Head, The Filipino Channel (TFC) PAMELA B. CASTILLO Head, Applications Development-Mobile CARL ADRIAN G.MENDOZA Station Manager, Zamboanga SORAIDA EDRIS Head, Account Management DANILO E. DE GUZMAN Head, Advertising Communications Group ELIZABETH B. SIOJO Head, Technical R&D JOSE O. DADO OIC – Dipolog Sales Center KIRSTEEN MILES B. RUT Head, Account Management MARIPOSA I. DE GUZMAN Head, Media Production & Events Group MICHAEL FRANCIS M. MUNOZ Head, Network Administration ARIEL O. DECENA Head, Account Management MARY ANN M. MUNOZ Head, Channel Management Development Group EDGAR N. LEGASPI Head, Online News JOEL B. SARACHO BROADCAST ENGINEERING DIVISION (BED) Head, Account Management CONCEPCION ISABEL G. TORIO Group Controller & Regional Finance Officer JENNIFER M. CABANIA Product Manager AGNES L. TAPIA Managing Director RUBEN R. JIMENEZ Head, Design, HR Systems - Compensation & Benefits CATHERINE D. MARCELO Senior Manager, In-Country Marketing CECILE ANGELA A. ILAGAN Head, ABS-CBN NOW! CONSUELO N. LOPEZ Head, Broadcast Digital Operations DEOGRACIAS S. JORDAN Head, Compensation System Global GENEVIE O. MENDOZA Head, Manila Productions GERALDINE G. BISQUERA Head, TOC & Transmitter Operations JOSE RIZALDE M. UMIPIG Head, Compensation Systems, Subsidiaries & Programs MA. ROSARIO LILIA D. SEMANA Channel Manager CHARLES AARON U. BAUTISTA ABS-CBN PUBLISHING, INC. Head, Broadcast Engineering Support Services BERNARDO M. ACOSTA Head, Employee & Labor Relations MARIA LUZ B. YAN Channel Manager ANN FRANCIS MARIBEL R. HERNAEZ Managing Director ERNESTO L. LOPEZ Head, Technical Operations Center ERWIN RAYMUND C. MALIMBAN Manager, Payroll & Compensation - Regular GILDA MOIRA F. MATIENZO Manager, Technical Services CORNELIO P. DELA FUENTE General Manager & Editorial Director THELMA S. SAN JUAN Senior Manager, Regional Engineering MELVIN C. ACOSTA Manager, Payroll & Compensation - Talent MANUEL A. PANGILINAN JR Manager, Human Resources LEANDRO C. CRUZ Brand Manager - Starstudio Philippine Edition, MA. LOURDES ROSARIO S. GONZALES Senior Manager, Network Special Action Team FRANKLIN V. MIRA Manager, Business Research & Analysis GLADIOLA V. ROSALES Starstudio International Edition, Kris Magazine Manager, Network Special Action Team ARMANDO G. ARMADA ORGANIZATION DEVELOPMENT & LEARNING Head, International Sales & Distribution MARIA REENA G. GARINGAN Senior Brand Manager - Metro Group MARITESS F. DE OCAMPO Manager, Mindanao Cluster, Regional Engineering ALVIN A. DE ASIS Chief Organization Development & Learning Officer MARIO CARLO P. NEPOMUCENO Manager, International Sales & Distribution MICHAEL ALLEN A. TOLENTINO Brand Manager - Pink, Chalk, K Magazine CATHERINE H. BAUTISTA Manager, Manila Transmitter Operations RODOLFO M. HERRERA JR. Head, Learning Technologies ARLENE D. TICZON Manager, Distribution REBECCA A. CATALLA Assistant Brand Manager - Metro Group CATHERINE C. BUSTOS Head, Broadcast Quality Management ALEXANDER I. CACHOLA Manager, Distribution LAARNI J. YU Brand Manager - Food & Working Mom MA. LOURDES S. MIJARES Head, Engineering Research & Development MAPAGTAPAT A. ONGCHANGCO III Assistant Operations Manager JOSEPH M. UY Business Development Officer FELIPE FERDINAND T. CRUZ III Manager, IT FRANCIS ALLAN M. BARANGAN

AR 2006.indd 74-75 4/24/07 8:12:47 AM Chief Finance Officer MARIA CORAZON B. ESQUELA ABS-CBN FOUNDATION, INC. ABS-CBN COTABATO TV 5 • DXPS 95.1 Manager, General Accounting RAYMUND C. BERJA ABS-CBN BROADCASTING CORPORATION #6 Don E. Sero Street, Rosary Heights Village, Cotabato City Manager, Payroll MA. AGNES CECILIA D. FETALVERO Office of the Managing Director ABS-CBN Broadcast Center Direct: (064) 421-1933 • (064) 421-8418 Manager, Sales Accounting and C&C ELEXIS C. AVESTRO Managing Director REGINA PAZ L. LOPEZ Sgt. Esguerra Avenue corner Mother Ignacia Street, Manager, Credit and Collection ROWENA D. DOTE Chief of Staff ANGELIE M. AGBULOS Diliman, Quezon City 1103 Philippines ABS-CBN DAVAO TV 4 • DXRR 101.1 • DXAB 1296 Director, Marketing PHILLIP T. CU-UNJIENG Project Manager, Sagip Kapamilya Relief Services Component JOCELYN L. SAW Trunk: (632) 415-2272 • (632) 924-4101 ABS-CBN Broadcast Complex Ad Sales Director - Entertainment & Niche Titles CATHERINE SARAH D. DA ROZA Project Director, Sagip Kapamilya Rehab & Dev’t. Mgmt. Services EDUARDO A. MORATO, JR. Fax: (632) 431-9368 Shrine Hills, Matina, Davao City Ad Sales Manager - Entertainment & Niche Titles CONRADO Q. PINLAC, JR. Component URL: www.abs-cbn.com Trunk: (082) 296-1917 • (082) 296-1911 to 13 Ad Sales Director - Metro Group MONICA O. HERRERA Chief Finance Officer/Financial Services Group Head CARMELITA U. DE GUZMAN 2 Fax: (082) 299-1477 Ad Sales Manager - Metro Group MA. TERESA F. GARCIA Manager, Asset Management VENCHITO C. AGAM REGIONAL STATIONS Director, Creative Services HERNAN C. VILLAVECER Manager, Human Resources VERONICA L.TOLENTINO ABS-CBN GENERAL SANTOS TV 3 • DXBC 92.7 Editor-in-Chief, Metro Him and Home BONIFACIO CARLO M. TADIAR Manager, IT JEROME S. GOTANGCO LUZON Bougainvilla Street, Villegas Subdivision Editor-in-Chief, Metro MELANIE ELAINE J. CUEVAS Purok Malakas, General Santos City Editor-in-Chief, Workingmom MA. MERCEDES R. PANABI ABS-CBN BAGUIO TV 3 • DZRR 103.1 Direct: (083) 301-0039 • (083) 301-7950 • (083) 553-3998 Editor-in-Chief, Food NORMA O. CHIKIAMCO Production Services Group Lower Basement, CAP Building, Fax: (083) 301-0038 Editor-in-Chief, Starstudio CHERRY S. PINEDA Creative Director CESAR C. CELESTINO Post Office Loop, Baguio City Editor-in-Chief, Chalk MA. VICTORIA F. MONTENEGRO Head, Production Services Group MA. ANGELES H. GONZALES Trunk: (074) 300-6091 local 6521 [Baguio Ofc] ABS-CBN ILIGAN TV 4 Editor-in-Chief, Pink JANE C. KINGSU Manager, Technical Services CHRISTOPHER P. SIOCO Trunk: (074) 300-6091 local 6522 [Sto. Tomas] 6/F Elena Tower Inn Manager, Distribution Dealership LAMBERTO M. ACUÑA Manager, CCM MA. CIELO S. REYES Fax: (074) 443-6091 Tibanga Highway, Iligan City Head, Circulation & Logistics RINA A. LAREZA Executive Producer CONSUELO T. FABREGAS Direct: (063) 492-0216 Manager, Pre-Press Sales TERESITA D. BAYANI Executive Producer LEAH S. BAUTISTA ABS-CBN DAGUPAN TV 3 • DWEC 94.3 Fax: (063) 223-9730 Manager, Pre-Press Production ANDRES S. LIZARDO A.B. Fernandez East, Dagupan City Bantay Bata Direct: (075) 523-4787 • (075) 523-6828 ABS-CBN ZAMBOANGA TV3 • DXFH 98.7 CREATIVE PROGRAMS, INC. Program Director TINA M. PALMA (075) 515-4458 • (075) 522-7056 San Jose Road, Zamboanga City Managing Director OLIVIA FININA G. DE JESUS Deputy Director CARMINIA M. ARAGON Fax: (075) 523-4787 Direct: (062) 993-1801 to 03 • (062) 992-2595 Channel Head, Cinema One & Strategic Programming RONALD M. ARGUELLES Manager, Direct Child Services Department MARIE CHARMINIA C. IRANTA Channel Head, MYX ANDRE ALLAN B. ALVAREZ Manager, Children’s Village PRISCILLA G. FERNANDO ABS-CBN ISABELA TV 2 PROVINCIAL SALES CENTERS Channel Head, Hero TV & Concurrent Head of Distribution JOCELYN D. GO OIC, Community & Family Services Department ROSA LEE V. RAMEL 3/F JECO Building, Channel Manager, Lifestyle Network STEPHANIE P. BENEDITO Manager, Child Helpline National Department MA. SHEILA N. ESTABILLO Maharlika Hi-way, Santiago City BATANGAS SALES CENTER TV 10 Channel Manager, Cinema One JINGKY M. SORIANO Program Manager, Bantay Bata-Davao ELLA M. ABAD-TAN Direct: (078) 682-3640 • (078) 682-3544 • (078) 682-5923 Unit 14-E, 2/F Caedo Commercial Center Head, Broadcast Operation BONBY P. MANALO Fax: (078) 682-3640 Calicanto, Batangas City Chief Finance Officer EDGARDO A. MASANGKAY E-Media Direct: (043) 300-2800 Head, Human Resources MA. ASUNCION A. PALMERO Program Director ZENAIDA S. DIMALANTA ABS-CBN LAOAG TV 7 • DWEL 95.5 Fax: (043) 722-1898 Head, Power Bundle Distribution GERTRUDES A. PICCIO Manager, Program Development GERRY D. DE ASIS G/F Insular Life Building Head, Graphics & Design RHONEIL ANTHONY R. RAMIREZ Manager, Events & Community Services JENNIFER D. CATIIS-CHAN Balintawak Street, Laoag City CABANATUAN SALES CENTER Head, Sales JULIE ANDREA A. SANTIAGO Manager, Research & Teacher’s Training Department DARLENE DOLLY A. CRUZ Direct: (077) 773-1722 • (077) 771-5234 Room 2, 2nd Floor, Santarina Building, Executive Producer MARCELA CLAUDETTE V. SEVILLA Direct: (077) 773-1713 [Transmitter] Maharlika Highway, Bernardo District ROADRUNNER NETWORK, INC. Head, Educational Radio ANGELO M. PALMONES Fax: (077) 773-1722 Cabanatuan City Chief Operating Officer (Concurrent) RUBEN R. JIMENEZ Direct: (044) 463-4160 Managing Director MA. MARTA INES A. DAYRIT Bantay Kalikasan ABS-CBN LEGASPI TV 4 • DWRD 93.9 Managing Director, Industry Relations ERIC J. HAWTHORNE Officer In Charge JOHN PAUL D. BALAYON ABS-CBN Compound DAET SALES CENTER TV 23 Manager, Audio & Music Operations ALBERT MICHAEL M. IDIOMA Manager, Resource Mobilization MA. ROWENA R. DIMANLIG Vel-Amor Subdivision, Legaspi City Rooftop, TJ Building, Vinzons Avenue, Manager, Marketing CARMINA V. MARCELO Administrator, Ecopark EDUARDO DAVID C. PARDO Direct: (052) 480-1730 • (052) 480-1001 Daet, Camarines Norte (052) 480-1128 • (052) 480-0939 Direct: (054) 440-1123 Manager, Finance ELY MIKE D. PINGOL Fax: (052) 480-1730 Manager, Human Resources & Admin. Services JONATHAN LOUIS C. HERBOLARIO ABS-CBN BAYAN FOUNDATION President EDUARDO A. MORATO JR. LUCENA SALES CENTER TV 36 ABS-CBN NAGA TV 11 • DWAC 93.5 Maharlika Hi-Way, SKY FILMS, INC. Executive Director RAUL ISAGANI E. MANIKAN ABS-CBN Broadcast Complex Managing Director (Concurrent) LEONARDO P. KATIGBAK Executive Director RENO R. RAYEL3 Brgy. Kanlurang Mayo, Lucena City Panganiban Avenue, Naga City Direct: (043) 373-7632 Director, Marketing & Acquisitions MA. CECILIA F. IMPERIAL Director, Enabling Network For The Upliftment of Filipino Families IRMA L. COSICO Direct: (054) 472-4675 • (054) 473-9733 • (054) 473-6989 Head, Physical Assets and Administrative Services OSCAR O. ESGUERRA Fax: (054) 473-2805 OLONGAPO SALES CENTER TV 12 STAR RECORDING, INC. Head, Finance ESTELITA C. CATACUTAN El Elyon Arcade & Café Managing Director MA. LOURDES N. SANTOS Manager-People Management Team (Recruitment and Routing) DIANA JEAN A. JIMENEZ VISAYAS 2443 Rizal Avenue, Olongapo City Vice President & Managing Director ANNABELLE M. REGALADO Manager-People Management Team (Reviewing and Rewarding) ROMEO E. MIRANDA Direct: (047) 224-4449 Director, International Sales & Video Content ESTRELLITA CASTRO-PALANISAMY Manager-People Management Team (Retaining and Resonating) MARCEL R. RIÑON ABS-CBN BACOLOD TV 4 • DYOO 101.5 Director, Local Sales REGIE G. SANDEL Manager-People Management Team (Retooling and Recycling) NOEL G. CAMACHO 26th Lacson Street, Barangay 1, PAMPANGA SALES CENTER TV 46 Director, Warehouse & Logistics NORMAN ALBERT V. SANTIAGO Assistant Manager, Property Management RAUL PERFECTO C. PUNZAL Mandalagan, Bacolod City Back of NVP Bldg. Manager, Video Content LEO C. SANTOS Manager, Workers Assistance Program REGIN D. PEÑAFLOR Direct: (034) 709-9401 to 04 • (034) 434-2357 to 58 MacArthur Hi-Way, Barangay Saguin, Chief Finance Officer BEVERLY S. FERNANDEZ Manager, Research PHILIP S. FELIPE (034) 434-2789 • (034) 434-6147 • (034) 434-0911 San Fernando City, Pampanga Head, Account Management - Star Records/Star Songs ISABEL GONZALEZ-TORIO Manager, Internal Audit MICHAEL D. MARQUEZ Fax: (034) 434-2357 to 58 Direct: (048) 861-4407 Manager, National Sales MA. CRISTINA R. BEROIN Section Head, Accounting and Information CHARMAINE U. DELOS REYES Manager, Audio Content PERCIVAL R. FONTANILLA Assistant Manager, Livelihood & Entrepreneurship Development BENJAMIN CHRISTIAN Q. ARCEBAL III ABS-CBN CEBU TV 3 • DYLS 97.1 • DYAB 1512 SAN PABLO SALES CENTER Regional Manager, NCR – South RODERICK R. RAMOS ABS-CBN Broadcast Complex 3/F PROSM Building, Brgy. Bagong Bayan, STAR SONGS, INC. Regional Manager, NCR – North THOR VICTOR D. KORIONOFF North Road, Jagobiao, Mandaue City Maharlika Hi-Way, San Pablo City Managing Director ANNABELLE M. REGALADO Regional Manager, South Luzon Region LUALHATI V. LEOSALA Direct: (032) 422-1950 • (032) 422-1952 to 54 Direct: (049) 561-3711 Publishing Head CEASAR M. APOSTOL Regional Manager, North Luzon Region WILFREDO M. ROMANTICO Direct: (032) 416-4500 [Pardo Transmitter] Chief Finance Officer BEVERLY S. FERNANDEZ Regional Manager, Central Luzon Region DENNIS P. DIARES Direct: (032) 419-3330 [Busay Transmitter] TARLAC SALES CENTER Regional Manager, Western Visayas Region GUADALUPE L. PAR Fax: (032) 422-1952 Room 304, 3/F Que Kian Juat Building STUDIO 23, INC. Corporate Secretary/Legal Counsel ATTY. GERMAN VOLTAIRE F. Tañedo Street, San Nicolas, Tarlac City Managing Director LEONARDO P. KATIGBAK DANTE M. CASTILLEJOS, JR. ABS-CBN DUMAGUETE TV 12 Direct: (045) 982-1770 Head, Creative On-Air NELSON EDISON M. AGUIFLOR Hibbard Avenue, Dumaguete City Head, On-Air Operations & Sports MARJORIE N. ESTACIO ______Direct: (035) 225-8167 • (035) 422-1169 TUGUEGARAO SALES CENTER TV 3 OIC, Head of Sales NICOLETTE MACHUCA-MORO 1 Effective March 1, 2007 4/F Rios Building, Chief Finance Officer EDGARDO A. MASANGKAY 2 Resigned as of January 31, 2007 ABS-CBN ILOILO TV 10 • DYMC 91.1 Corner Taft St, Colleges Avenue, Tuguegarao City Head, Human Resources MA. ASUNCION A. PALMERO 3 Resigned as of December 31, 2006 Luna Street, Lapaz, Iloilo City Direct: (078) 846-3316 • (078) 844-0995 • (078) 846-2480 Head, Local Production MARIA RAMONA EULALIA V. LAZARO Direct: (033) 320-7423 • (033) 508-6046 Head, News Central VICENTE O. RODRIGUEZ (033) 320-9451 to 52 ROXAS SALES CENTER TV 21 Manager, On-Air Promotions DENNIS NOEL A. BALANGUE Fax: (033) 320-7423 2706 Dayao Street, Roxas City Manager, On-Air Promotions ELIROSE M. BORJA Direct: (036) 621-2551 Manager, On-Air Graphics & Design FROILAN E. JONGCO, JR. ABS-CBN TACLOBAN TV 2 • DYTC 94.3 5/F Uytingco Building DIPOLOG SALES CENTER AMCARA Avenida Veteranos, Tacloban City, Leyte 6500 Suite 2-A, Hotel Camila, Building 11 Head, Amcara Engineering Operations DEOGRACIAS S. JORDAN Direct: (053) 321-3941 • (053) 321-9541 General Luna Street, Dipolog City Manager, Amcara Operations HERNANDO C. MANOGUID Direct: (065) 212-9241 Head, Human Resources MA. ASUNCION A. PALMERO MINDANAO Chief Finance Officer EDGARDO A. MASANGKAY KORONADAL SALES CENTER TV 24 ABS-CBN BUTUAN TV 11 2/F Green Valley Building TV FOOD CHEFS, INC. 3/F Bayantel Building, General Santos Drive, Korondal City Managing Director MYRNA D. SEGISMUNDO M. Calo St.. Butuan City Direct: (083) 228-9767 Director, Operations RAUL H. RAMOS Direct: (085) 341-4444 • (085) 342-8000 Manager, Operations RUTH J. PADILLA Manager, Executive Chef MIGUEL N. YADAO ABS-CBN CAGAYAN DE ORO TV 2 • DXEC 91.9 ABS-CBN Broadcasting Corp. Greenhills Road, Bulua, Cagayan de Oro City 9000 Direct: (08822) 737-777 • (08822) 735-759 Fax: (08822) 737-910

AR 2006.indd 76-77 4/24/07 8:12:48 AM STAR RECORDING, INC. & STAR SONGS, INC. ABS-CBN SUBSIDIARIES & AFFILIATES 2/F & 3/F Main Building, ABS-CBN Broadcast Center Sgt. Esguerra Avenue corner Mother Ignacia Street ABS-CBN CENTER FOR COMMUNICATION ARTS, INC. Diliman, Quezon City 1103 WORKSHOPS@ABS-CBN Trunk: (632) 415-2272 local 3423 ABS-CBN Broadcast Center Fax:(632) 413-9164 BANKS & OTHER FINANCIAL INSTITUTIONS RIZAL COMMERCIAL BANKING CORP. 6/F Design & Talent Center Building URL: www.abs-cbn.com/entertainment/starrecords 11/F, Yuchengco Tower, RCBC Plaza, ABS-CBN Broadcasting Complex ABN AMRO BANK, INC. 6819 Ayala Ave. cor. Gil Puyat Ave. Eugenio Lopez Jr. Drive, Quezon City 1103 STUDIO 23, INC. Makati City Direct: (632) 416-9366 3/F Main Building, ABS-CBN Broadcast Center 19/F LKG Tower Telefax: (632) 415-3828 Sgt. Esguerra Avenue corner Mother Ignacia Street 6801 Ayala Avenue 1226 Makati City SECURITY BANK E-mail: [email protected] Diliman, Quezon City 1103 Security Bank Center URL: www.abs-cbn.com/ccai Trunk:(632) 415-2272 or (632) 924-4101 ABN AMRO BANK, N.V. -MANILA OFFSHORE BANKING UNIT 6776 Ayala Avenue Fax: (632) 412-1259 Makati City DISTANCE LEARNING CENTER E-mail: [email protected] 19/F LKG Tower ABS-CBN Broadcast Center URL: www.studio23.tv 6801 Ayala Avenue 1226 Makati City SOCIETE GENERALE ASIA LIMITED 5/F Design & Talent Center Building 42/F Edinburgh Tower ABS-CBN Broadcasting Complex TV FOOD CHEFS, INC. ABN-AMRO BANK N.V. -SINGAPORE 15 Queen’s Road Central Eugenio Lopez Jr. Drive, Quezon City 1103 14/F ELJ Communications Center Hong Kong Direct: (632) 414-7193 Eugenio Lopez Jr. Drive corner Mother Ignacia Street 63 Chulia Street, Level 13 Singapore E-mail: [email protected] South Triangle, Diliman, Quezon City 1103 UNITED COCONUT PLANTERS BANK Trunk: (632) 415-2272 local 2331 or 2334 ALLIED BANKING CORPORATION 14/F UCPB Building ABS-CBN FOUNDATION, INC. Direct: (632) 411-1434 • (632) 411-1467 • (632) 411-1564 Makati City Mother Ignacia Street corner Eugenio Lopez Jr. Drive, Fax: (632) 411-1564 Mezzanine Floor, Allied Bank Center 6764 Ayala Avenue South Triangle, Diliman, Quezon City 1103 LEGAL COUNSEL Direct: (632) 411-0849 ABS-CBN GLOBAL LIMITED Makati City Fax: (632) 412-1382 9/F ELJ Communications Center BANCO DE ORO UNIVERSAL BANK QUIASON, MAKALINTAL, BAROT, TORRES & IBARRA Email: [email protected] Eugenio Lopez Jr. Drive corner Mother Ignacia Street 21/F, Robinsons- Equitable Tower URL: www.abs-cbnfoundation.com South Triangle, Diliman, Quezon City 1103, Philippines 12 ADB Avenue, Ortigas Center Mandaluyong City 4 ADB Avenue cor. Poveda St. , Trunk: (632) 415-2272 Ortigas Center 1605 Pasig City ABS-CBN BAYAN FOUNDATION, INC. Direct: (632) 411-1166 BANCO DE ORO UNIVERSAL BANK-TRUST 2/F Calderon Building, 827 EDSA Fax:(632) 924-2732 TRANSFER AGENT South Triangle, Diliman, Quezon City 1103 URL:www.abs-cbnglobal.com 12 ADB Avenue, Ortigas Center Mandaluyong City Direct: (632) 413-0349 SECURITIES TRANSFER SERVICES, INC. Email: [email protected] ABS-CBN GLOBAL’S INTERNATIONAL OFFICES BANK OF THE PHILIPPINE ISLANDS 4/F Benpres Building, BPI Building, Ayala Avenue Exchange Road corner Meralco Avenue, ABS-CBN FILM PRODUCTIONS, INC. (STAR CINEMA) ABS-CBN INTERNATIONAL N.A. Ortigas Center, 1600 Pasig City 3/F Main Building, ABS-CBN Broadcast Center 150 Shoreline Drive Cor. Paseo De Roxas Makati City Sgt. Esguerra Avenue corner Mother Ignacia Street Redwood City, CA 94065 EXTERNAL AUDITOR Diliman, Quezon City 1103 Trunk:(650) 508-6000 BPI CAPITAL CORPORATION Trunk:(632) 415-2272 local 3999/3902 Direct: (650) 508-6015 SYCIP, GORRES, VELAYO & CO. Fax:(632) 413-8704 Fax: (650) 551-1061 8/F, BPI Building. Ayala Avenue Cor. Paseo De Roxas 6750 Ayala Avenue E-mail: [email protected] URL: www.abs-cbni.com 1226 Makati City, Philippines URL: www.starcinema.com.ph Makati City ABS-CBN MIDDLE EAST ABS-CBN INTERACTIVE, INC. BPI LEASING CORPORATION 9/F ELJ Communications Center ABS-CBN Middle East LLC 8/F, BPI Head Office Eugenio Lopez Jr. Drive corner Mother Ignacia Street Unit 116 Belshalat Bldg. Ayala Ave. cor. Paseo de Roxas, South Triangle, Diliman, Quezon City 1103 Karama P.O. Box 502087 Makati City Trunk:(632) 415-2272 Dubai, United Arab Emirates URL: www.abs-cbn.com Direct: (9714) 397 9075 BUMIPUTRA-COMMERCE BANK BERHARD - HONG KONG BRANCH Fax: (9714) 397 9073 Suite 3607-08, Two Exchange Square ABS-CBN NEWS CHANNEL 8 Connaught Place, Central G/F Main Building, ABS-CBN Broadcast Center ABS-CBN Middle East FZ LLC Hong Kong Sgt. Esguerra Avenue corner Mother Ignacia Street Building 6, Office G08/G12 Diliman, Quezon City 1103 Dubai Media City, P.O. Box 502087 CITIBANK N. A. Trunk:(632) 415-2272 Dubai, United Arab Emirates 9/F, Citibank Tower Fax: (632) 413-5381 Direct: (9714) 390 2180 8741 Paseo De Roxas Fax: (9714) 390 8021 Makati City ABS-CBN PUBLISHING, INC. E-mail: [email protected] 4/F & 9/F ELJ Communications Center EQUITABLE - PCIBANK Eugenio Lopez Jr. Drive corner Mother Ignacia Street JEDDAH ABS-CBN Middle East Equitable PCI Bank Tower l South Triangle, Diliman, Quezon City 1103 SDD Compound Dallah Street Makati Ave., Cor H.V. Dela Costa St. Trunk: (632) 415-2272 P.O. Box 430, Jeddah 21411 Makati City Fax: (632) 415-1215 Direct: (9662) 619-4703 • (9662) 619-4723 • (9662) 619-4725 • (9662) 619-4727 (9662) 619-4729 • (9662) 619-4739 Ext.101-109 EQUITABLE – PCIBANK - TRUST BANKING CREATIVE PROGRAMS, INC. Fax: (9662) 670-5764 • (9662) 670-5819 Equitable PCI Bank Tower l 10/F ELJ Communications Center Makati Ave., Cor H.V. Dela Costa St. Eugenio Lopez Jr. Drive corner Mother Ignacia Street RIYADH ABS-CBN Middle East Makati City South Triangle, Diliman, Quezon City 1103 3/F Dallah Albarakah Building Trunk: (632) 415-2272 King Fahad Road ING BANK N.V. - SINGAPORE BRANCH Fax: (632) 415-2272 local 3167 P.O. Box 1438, Riyadh 11431 9th Raffles Place Trunk: (9661) 464-0084 • (9661) 464-5821 • (9661) 464-1726 • (9661) 464-8325 #19-02 Republic Plaza E-MONEYPLUS, INC. Ext. 1307; 1309; 1310 Singapore G/F ELJ Communications Center Fax: (9661) 201-1786 Ext 1308 Eugenio Lopez Jr. Drive corner Mother Ignacia Street ING BANK N.V. - MANILA BRANCH South Triangle, Diliman, Quezon City 1103 DAMMAM ABS-CBN Middle East 21/F Tower One, Ayala Triangle Trunk: (632) 415-2272 local 2373 to 74; local 2366 Dallah Compound, Dammam-Al Khobar Highway Ayala Avenue, Makati City Direct:(632) 411-9116 P.O. Box 6404, Dammam 31442 Fax: (632) 410-4807 Direct: (9663) 858-7447 • (9663) 857-4326 • (9663) 857-7562 • (9663) 858-1358 METROPOLITAN BANK AND TRUST COMPANY Extension Offices: Fax: (9663) 858-7227 2/F, Metrobank Plaza Direct: (632) 920-5135 • (632) 412-5003 • (632) 412-0047 Sen. Gil Puyat Avenue Fax (632) 412-5004 • (632) 928-2935 ABS-CBN EUROPE LTD. Makati City

ROADRUNNER NETWORK, INC. ABS-CBN Europe Limited – Head Office MIZUHO CORPORATE BANK, LTD. - MANILA BRANCH 282 Tomas Morato Avenue 1/F Intelco House, 2 Progress Business Center 26/F, Citibank Tower Diliman, Quezon City Whittle Parkway Slough SL1 6DQ Valero St. corner Villar St. Direct:(632) 414-3456 [Film Division] Direct: (44) 0 1628 606860 Salcedo Village, Makati City (632) 812-5851 • (632) 812-7866 [RTV Division] Fax: (44) 0 1628 606879 (632) 894-1324 to 25 [Film Lab] PCI LEASING AND FINANCE INC. Fax:(632) 414-6838 • (632) 414-6841 [Film Division] ABS-CBN Europe Limited-Filiale Italy PCI Leasing Center (632) 819-7379 • (632) 894-5633 • (632) 818-4511 [RTV Division] Via Piccinni, 3 Corinthian Gardens, Ortigas Avenue, (632) 893-4786 [Film Lab] 20131 Milan, Italy Quezon City URL: www.roadrunner.com.ph Direct: (39) 02 20480801• (39) 02 2951 8706 Fax: (39) 02 2046 626 PHILIPPINE COMMERCIAL CAPITAL INC. SKY FILMS, INC. PCCI Bldg., 118 Alfaro Street 41 Sct. Borromeo St. (Jusmag Compound) ABS-CBN AUSTRALIA PTY LTD. Salcedo Village South Triangle, Diliman, Quezon City 1103 B6 12-14 Solent Circuit Makati City Trunk: (632) 415-2272 local 3155 to 3159 Baulkham Hills NSW 2153, Australia Fax: (632) 929-8368 Direct: (612) 8884 6100 Fax: (612) 8884 6188 E-mail: [email protected]

AR 2006.indd 78-79 4/24/07 8:12:50 AM For further information about our company, please contact the following:

INVESTOR RELATIONS

Mr MIGUEL JOSE T. NAVARRETE Ph (632) 415-2272 ext. 4312 Fax (632) 431-9368 Email: [email protected]

Ms LYRA C. FAJARIT Ph (632) 415-2272 ext. 4609 Fax (632) 431-9368 Email: [email protected]

CORPORATE AFFAIRS AND PUBLIC RELATIONS

Mr RAMON R. OSORIO Ph (632) 415-2272 ext. 4377 Email: [email protected]

THE 2006 ANNUAL REPORT

STEERING COMMITTEE Miguel Jose T. Navarrete • Robert G. Labayen ● Lyra C. Fajarit • Danie Sedilla-Cruz ● Christine Daria-Estabillo • Carmelo B. Saliendra ● Michael Andre G. Ocampo • Alicia Yael B. Honasan John David D. Sison

OVERALL COORDINATION Lyra C. Fajarit

LAY-OUT & PRE-PRESS PRODUCTION ABS-CBN Creative Communications Management

PRODUCER Danie Sedilla-Cruz

CREATIVE DIRECTORS Robert G. Labayen • Carmelo B. Saliendra

CONTRIBUTING WRITER Alicia Yael B. Honasan

GRAPHIC DESIGNERS Carmelo B. Saliendra • Michael Andre G. Ocampo

ASSOCIATE PRODUCERS Lyra C. Fajarit • Christine Daria-Estabillo ● John David D. Sison • Jaime V. Porca

PHOTOGRAPHERS Mandy Navasero • Carmelo B. Saliendra

PRINT PRODUCTION Carmelo B. Saliendra

COLOR SEPARATION & PRINTER ABS-CBN Publishing

All information in this Annual Report are correct to the best of our knowledge, but do not constitute an assumption of liability or a guarantee of particular characteristics.

This publication may not be reprinted in its entirety or in part without the company’s permission.

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