AETS-CBN CORPORAT]ON ABS-CH\T 14 November 2013 SECURITIES AND EXCHANGE COMMISSION Attention: Justina F. Callangan Director, Corporate Governance and Finance Department SEC Building, EI)SA, Mandaluvong City PHILIPPINE STOCK EXCHANGE Attenuon: Janet A. Encarnacion Head, Disclosure I)epartment 3'u Floor Philippine Stock ExchangePlaza Ayala Triangle, Ayala Avenue Makau Cirv Subject: ABS-CBN Corpotation - SEC Form 17-Q 3Q13 Quarterly Report Gendemen/Ladres: Attached is ABS-CBN Corporation's SEC Form 17-Q for the 3'd Quarter of 2013. V"ry truly yours, EULOGIO MARTIN O. TVTESILUNGAN Compliance Officer for Corporate Governal]ce ABS-CBN BROADCAST CENTER, SGT. E.A. ESGUERRAAVENUE COR. MOTHER IGNACIA ST,, QUEZON CITY TEL. NOS.: (632)9244101 .415-2272 COVER SHEET 1 8 0 3 SEC Registration Number A B S - C B N C O R P O R A T I O N A N D S U B S I D I A R I E S (Company’s Full Name) A B S - C B N B R O A D C A S T C E N T E R S G T . E S G U E R R A A V E . C O R N E R M O . I G N A C I A S T . Q U E Z O N C I T Y (Business Address: No. Street City/Town/Province) Mr. Aldrin M. Cerrado 415-2272 (Contact Person) (Company Telephone Number) 1 2 3 1 1 7 - Q 0 4 2 3 Month Day (Form Type) Month Day (Fiscal Year) (Annual Meeting) (Secondary License Type, If Applicable) SEC Dept. Requiring this Doc. Amended Articles Number/Section Total Amount of Borrowings 5,756 P15.6 B $1.0 million Total No. of Stockholders Domestic Foreign To be accomplished by SEC Personnel concerned File Number LCU Document ID Cashier S T A M P S Remarks: Please use BLACK ink for scanning purposes. SECURITIES AND EXCHANGE COMMSSION SEC FORM 17-Q QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17 (2) (b) THEREUNDER 1 For the quarter ended SEPTEMBER 30,2013 2 SEC Identification No. 1803 3. BIR Tax Identification No. 000-406-761-000 4 Exact name of the registrant as specified in its charter ABS-CBN CORPORATION 5 Philippines 6. ________ (SEC use only) Province, Country or other jurisdiction of Industry Classification code: Incorporation or organization 7 ABS-CBN Broadcasting Center, Sgt. Esguerra Ave. cor Mo. Ignacia St., Diliman, Quezon City 1100 . Address of principal office and Postal code 8 (632) 415-22-72 Registrant’s telephone number, including area code 9 NOT APPLICABLE Former name, former address, and former fiscal year, if changed since last year 10 Securities registered pursuant to Sections in the Securities Regulation Code Title of Each Class Number of Shares of Stock Outstanding Common Stock, P1.00 par value Issued 837,421,502 shares Subscribed 34,702,140 shares Preferred Stock, P0.20 par value 1,000,000,000 shares 11 Are any or all of these securities listed on the Philippine Stock Exchange? Yes [x] Common Shares only No [ ] 12 Check whether the registrant: a) has filed all reports to be filed by Section 11 of the Revised Securities Act (RSA) and RSA Rule 11(a)-1 thereunder and Sections 26 and 141 of the Corporation Code of the Philippines during the preceding 12 months (or for such shorter period that the registrant was required to file such reports): Yes [x] No [ ] b) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] 2 TABLE OF CONTENTS PART I – FINANCIAL INFORMATION Item 1 Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 2 Financial Statements Consolidated Statements of Financial Position Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Financial Statements PART II - OTHER FINANCIAL INFORMATION Exhibit 1 Business Segment & Geographical Segment Results Exhibit 2 Aging of Accounts Receivables Exhibit 3 Roll-forward of PPE SIGNATURES 3 Part I FINANCIAL INFORMATION Item 1 MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 For the nine months ended September 30, 2013 (9M13), ABS-CBN Corporation (“ABS-CBN” or the “Company”) generated consolidated revenues of P25.227 billion from advertising and consumer sales, P3.436 billion or 16% higher than the same period last year. Advertising revenues increased by 20% to P14.773 billion, while consumer sales increased by 11% to P10.454 billion. Total costs and expenses amounted to P22.749 billion, or a 15% increase from the previous year. The company generated a net income of P1.891 billion in 9M13, up by 22% compared to P1.555 billion in the previous year. EBITDA reached P5.961 billion or a 16% increase year-on-year. The table below summarizes the key performance indicators for the period as discussed above. Variance 9M13 9M12 (Amounts in million Pesos) Amount % Consolidated Revenues 25,227 21,791 3,436 16 Advertising Revenues 14,773 12,331 2,442 20 Consumer Sales 10,454 9,460 994 11 Sale of Services 10,180 9,153 1,027 11 Sale of Goods 274 307 (33) (11 ) Costs and Expenses 22,749 19,751 2,981 15 Net Income 1,891 1,555 336 22 EBITDA 5,961 5,141 820 16 Consolidated Revenues Advertising Revenues Consolidated advertising revenues across all platforms and subsidiaries increased by 20% to P14.773 billion. The increase in advertising revenues is partly due to election-related advertisements. Without election-related advertising, recurring advertising revenues grew 13% fuelled by ABS-CBN’s ratings leadership and the overall increase in advertising spending of corporates. For 9M13, ABS-CBN’s Channel 2 led in national audience share and ratings. Channel 2’s total audience share was at 42% while the primetime audience share was at 47% based on Kantar National TV Ratings. 4 Moreover, for 9M13, the top 20 programs in the Philippines were from ABS-CBN: Rank Channel Program Ratings 1 ABS-CBN Juan dela Cruz 34.7 2 ABS-CBN Juan dela Cruz Ang Simula 33.5 3 ABS-CBN Ina Kapatid Anak 33.4 4 ABS-CBN MMK Ang Tahanan Mo 32.3 5 ABS-CBN Princess and I 31.0 6 ABS-CBN Wansapanataym 30.5 7 ABS-CBN Got to Believe 30.1 8 ABS-CBN World Junior Featherweight Champ 28.9 9 ABS-CBN TV Patrol Weekday 27.8 10 ABS-CBN Aryana 26.6 11 ABS-CBN Muling Buksan ang Puso 26.2 12 ABS-CBN Huwag Ka Lang Mawawala 25.9 13 ABS-CBN Pilipinas Got Talent Saturday 25.8 14 ABS-CBN The Voice of the Philippines Sunday 25.4 15-16 ABS-CBN The Voice of the Philippines Saturday 24.8 15-16 ABS-CBN Pilipinas Got Talent Sunday 24.8 17 ABS-CBN Be Careful with my Heart 24.5 18 ABS-CBN Rated K Handa na ba Kayo? 23.1 19 ABS-CBN 2013 NBA Finals (Live) 22.7 20 ABS-CBN Apoy Sa Dagat 22.1 Consumer Sales Consumer sales amounted to P10.454 billion, or an 11% increase year-on-year. The increase is largely attributable to Sky Cable’s 21% growth in revenues. Consumer Sales Variance 9M13 9M12 (Amounts in million Pesos) Amount % Sky Cable 4,980 4,127 853 21 ABS-CBN Global 3,668 3,561 107 3 Films and Music 924 798 126 16 Other subsidiaries 882 974 (92) (9) Consolidated Consumer Sales 10,454 9,460 994 11 Sky Cable’s revenues for 9M13 grew 21% year-on-year, driven by a 21% growth in post paid cable revenues and a 38% growth in broadband revenues. For 9M13, ABS-CBN Global’s revenues from consumer sales increased by 5% in US dollar terms , and 3% in peso terms. During this period, ABS-CBN Global’s overall viewer count increased by 19%. This increase was attributable to the significant growth of viewers in the Middle East and Canada. ABS-CBN Film Productions, Inc.’s (AFPI) released 13 films in 9M13. 5 Costs and Expenses Costs and expenses amounted to P22.749 billion, 15% higher than the same period last year. Costs and Expenses Variance 9M13 9M12 (Amounts in million Pesos) Amount % Production Costs 8,293 7,611 682 9 Cost of Sales and Services 6,601 6,301 300 5 General and Administrative Expenses 7,577 5,900 1,677 28 Other Expenses (Income) 278 (61) 339 --- TOTAL 22,749 19,751 2,998 15 Production Costs Production Costs Variance 9M13 9M12 (Amounts in million Pesos) Amount % Personnel Expenses and Talent Fees 4,592 3,912 680 17 Facilities-Related Expenses 1,335 1,592 (257) (16) Other Program Expenses 1,121 991 130 13 Cash Production Costs 7,048 6,495 616 9 Non-Cash Production Costs 1,245 1,116 129 12 TOTAL 8,293 7,611 682 9 Total production costs went up by P682 million or 9% to P8.293 billion. Cash production costs went up by P616 million or 9% year-on-year due to the increase in the number of shows produced and incremental election-related costs. Non-cash production costs increased by 12% to P1.245 billion, due to the higher amortization of program rights. Without the non-recurring election-related expenses, production costs increased by only 5%. Cost of Sales and Services Cost of Sales and Services Variance 9M13 9M12 (Amounts in million Pesos) Amount % Sky Cable 3,206 2,743 463 17 ABS-CBN Global 1,972 1,889 83 4 Films and Music 218 434 (216) (50) Other Subsidiaries 1,205 1,235 (30) (2) Consolidated Cost of Sales and Services 6,601 6,301 300 5 Cost of sales and services increased by 5% or P300 million to P6.601 billion.