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o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 – |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 – |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 – |
(Jurisdiction of incorporation or organization)
Makati Avenue
Makati City, Philippines
(Address of principal executive offices)
Ramon Cojuangco Bldg., Makati Avenue, Makati City, Philippines
(Name, telephone, e-mail and/or facsimile number and address of Company contact person)
Title of each class | Name of each exchange on which registered | |
Common Capital Stock, Par Value Five Philippine Pesos Per Share | New York Stock Exchange* | |
American Depositary Shares, evidenced by American Depositary Receipts, each representing one share of Common Capital Stock | New York Stock Exchange |
* | Registered on the New York Stock Exchange not for trading but only in connection with the registration of American Depositary Shares pursuant to the requirements of such stock exchange. |
As at December 31, 2008: | ||||
187,483,837 shares of Common Capital Stock, Par Value Five Philippine Pesos Per Share | ||||
441,480,512 shares of Serial Preferred Stock, Par Value Ten Philippine Pesos Per Share |
Yesþ Noo
Large Accelerated Filerþ | Accelerated Filero | Non-Accelerated Filero |
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CERTIFICATION | 151 | |||
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• | 3rd Brand means 3rd Brand Pte. Ltd., an 85%-owned subsidiary of Smart; |
• | ACeS Philippines means ACeS Philippines Cellular Satellite Corporation, our wholly-owned subsidiary; |
• | AIL means ACeS International Limited, a 36.99%-owned associate of ACeS Philippines; |
• | Airborne Access means Airborne Access Corporation, a 99.4%-owned subsidiary of Smart; |
• | BayanTrade means BayanTrade Dotcom, Inc., a 45.11%-owned associate of ePLDT; |
• | BCC means Bonifacio Communications Corporation, a 75%-owned subsidiary of PLDT; |
• | BSP means Bangko Sentral ng Pilipinas; |
• | ClarkTel means PLDT Clark Telecom, Inc., a wholly-owned subsidiary of PLDT; |
• | CURE means Connectivity Unlimited Resources Enterprises, a wholly-owned subsidiary of Smart; |
• | CyMed means CyMed, Inc., a wholly-owned subsidiary of SPi; |
• | DigiPar Thailand means Digital Paradise Thailand, an 87.5%-owned subsidiary of ePLDT; |
• | Digital Paradise means Digital Paradise, Inc., a 75%-owned subsidiary of ePLDT; |
• | DSL means digital subscriber line; |
• | ePLDT means ePLDT, Inc., a wholly-owned subsidiary of PLDT; |
• | ePLDT Ventus means the umbrella brand name for ePLDT’s customer interaction solutions, including Ventus, Vocativ and Parlance; |
• | First Pacific means First Pacific Company Limited; |
• | First Pacific Group means First Pacific and its Philippine and other affiliates; |
• | FHI means Francom Holdings, Inc.; |
• | FPHC means First Philippine Holdings Corporation; |
• | FPUC means First Philippine Utilities Corporation; |
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• | GAAP means generally accepted accounting principles; |
• | GSM means global system for mobile communications; |
• | I-Contacts means I-Contacts Corporation, a wholly-owned subsidiary of Smart; |
• | IFRS means International Financial Reporting Standards as issued by the International Accounting Standards Board; |
• | Infocom means Infocom Technologies, Inc., a 99.6%-owned subsidiary of ePLDT; |
• | IP means internet protocol; |
• | ISP means internet service providers; |
• | Level Up! means Level Up!, Inc., a 60%-owned subsidiary of ePLDT; |
• | Mabuhay Satellite means Mabuhay Satellite Corporation, a 67%-owned subsidiary of PLDT; |
• | Maratel means PLDT-Maratel, Inc., a 97.5%-owned subsidiary of PLDT; |
• | Meralco means Manila Electric Company; |
• | netGames means netGames, Inc., an 80%-owned subsidiary of ePLDT; |
• | NTC means the National Telecommunications Commission of the Philippines; |
• | NTT means Nippon Telegraph and Telephone Corporation; |
• | NTT Communications means NTT Communications Corporation, a wholly-owned subsidiary of NTT; |
• | NTT DoCoMo means NTT DoCoMo, Inc., a majority-owned and publicly traded subsidiary of NTT; |
• | NTTC-UK means NTT Communications Capital (UK) Ltd., a wholly-owned subsidiary of NTT Communications; |
• | PAPTELCO means Philippine Association of Private Telephone Companies, Inc.; |
• | Parlance means Parlance Systems, Inc., a wholly-owned subsidiary of ePLDT; |
• | PFRS means Philippine Financial Reporting Standards; |
• | Philcom means Philcom Corporation; |
• | PHC means PH Communications Holdings Corporation; |
• | Philippine SEC means the Philippine Securities and Exchange Commission; |
• | Piltel means Pilipino Telephone Corporation, a 92.5%-owned subsidiary of Smart; |
• | PLDT Beneficial Trust Fund means the beneficial trust fund created by PLDT to pay the benefits under the PLDT Employees’ Benefit Plan; |
• | PLDT Global means PLDT Global Corporation, a wholly-owned subsidiary of PLDT; |
• | PSE means the Philippine Stock Exchange; |
• | SBI means Smart Broadband, Inc., a wholly-owned subsidiary of Smart; |
• | SCH means SmartConnect Holdings Pte. Ltd., a wholly-owned subsidiary of Smart; |
• | SGP means SmartConnect Global Pte., Ltd., a wholly-owned subsidiary of Smart; |
• | SHI means SmartHub Incorporated, a wholly-owned subsidiary of Smart; |
• | SIM means subscriber identification module; |
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• | SMHC means Smart Money Holdings, Inc., a wholly-owned subsidiary of Smart; |
• | SMI means Smart Money, Inc., a wholly-owned subsidiary of SMHC; |
• | SMS means short messaging service; |
• | Smart means Smart Communications, Inc., a wholly-owned subsidiary of PLDT; |
• | SNMI means Smart-NTT Multimedia, Inc., a wholly-owned subsidiary of PLDT; |
• | SPi means SPi Technologies, Inc., a wholly-owned subsidiary of ePLDT; |
• | SPi Group means SPi and its subsidiaries; |
• | SubicTel means PLDT Subic Telecom, Inc., a wholly-owned subsidiary of PLDT; |
• | TSI means Telecommunications Solutions, Inc., a wholly-owned subsidiary of SMI; |
• | U.S. SEC means the U.S. Securities and Exchange Commission; |
• | VAS means value-added service; |
• | VAT means value-added tax; |
• | Ventus means ePLDT Ventus, Inc., a wholly-owned subsidiary of ePLDT; |
• | Vocativ means Vocativ Systems, Inc., a wholly-owned subsidiary of ePLDT; |
• | WAP means wireless application protocol; |
• | WCI means Wireless Card, Inc., a wholly-owned subsidiary of Smart; |
• | W-CDMA means wireless-code division multiple access; and |
• | Wolfpac means Wolfpac Mobile, Inc., a wholly-owned subsidiary of Smart. |
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2008(1) | 2008 | 2007 | 2006 | |||||||||||||
(in millions, except earnings per common share amounts, ratio of earnings | ||||||||||||||||
to fixed charges and dividends declared per common share amounts) | ||||||||||||||||
Statements of Operating Data: | ||||||||||||||||
Revenues | US$ | 3,061 | Php | 145,837 | Php | 138,704 | Php | 127,508 | ||||||||
Service revenues | 2,999 | 142,873 | 135,478 | 124,988 | ||||||||||||
Non-service revenues | 62 | 2,964 | 3,226 | 2,520 | ||||||||||||
Expenses | 1,800 | 85,786 | 83,587 | 82,003 | ||||||||||||
Net income(2) | 734 | 34,976 | 39,274 | 32,581 | ||||||||||||
Earnings per common share for the year attributable to equity holders of PLDT | ||||||||||||||||
Basic | 3.78 | 179.96 | 205.84 | 173.10 | ||||||||||||
Diluted | 3.78 | 179.95 | 204.88 | 173.01 | ||||||||||||
Balance Sheets Data: | ||||||||||||||||
Cash and cash equivalents | 707 | 33,684 | 17,447 | 16,870 | ||||||||||||
Total assets | 5,301 | 252,558 | 240,158 | 241,904 | ||||||||||||
Total long-term debt — net of current portion | 1,236 | 58,899 | 53,372 | 63,769 | ||||||||||||
Total debt(3) | 1,551 | 73,911 | 60,640 | 80,154 | ||||||||||||
Total liabilities(4) | 3,056 | 145,589 | 127,813 | 139,052 | ||||||||||||
Total equity(2) | 2,245 | 106,969 | 112,345 | 102,853 | ||||||||||||
Other Data: | ||||||||||||||||
Depreciation and amortization | 519 | 24,709 | 28,613 | 31,869 | ||||||||||||
Ratio of earnings to fixed charges(5) | 8.0 | x | 8.0 | x | 8.3 | x | 4.6 | x | ||||||||
Net cash provided by operating activities | 1,643 | 78,302 | 77,418 | 69,211 | ||||||||||||
Net cash used in investing activities | 357 | 17,014 | 31,319 | 35,790 | ||||||||||||
Net cash used in financing activities | 954 | 45,464 | 44,819 | 45,900 | ||||||||||||
Dividends declared to common shareholders | 771 | 36,758 | 28,299 | 14,459 | ||||||||||||
Dividends declared per common share | 4.07 | 194.00 | 150.00 | 78.00 |
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2005 | 2004 | |||||||
(in millions, except operating income per | ||||||||
share amounts, earnings per common | ||||||||
share amounts, ratio of earnings to | ||||||||
fixed charges and dividends declared | ||||||||
per common share amounts) | ||||||||
Statements of Operating Data: | ||||||||
Revenues | Php | 123,335 | Php | 121,173 | ||||
Service revenues | 120,348 | 114,904 | ||||||
Non-service revenues | 2,987 | 6,269 | ||||||
Expenses | 74,821 | 72,634 | ||||||
Operating income per share | ||||||||
Basic | 263.81 | 266.73 | ||||||
Diluted | 255.15 | 252.20 | ||||||
Net income | 40,603 | 28,101 | ||||||
Earnings per common share | ||||||||
Basic | 217.84 | 146.32 | ||||||
Diluted | 211.93 | 145.30 | ||||||
Balance Sheets Data: | ||||||||
Cash and cash equivalents | 30,059 | 27,321 | ||||||
Total assets | 269,709 | 279,041 | ||||||
Total long-term debt — net of current portion | 93,516 | 131,377 | ||||||
Total debt(3) | 112,313 | 159,455 | ||||||
Total liabilities(4) | 176,980 | 215,145 | ||||||
Total stockholders’ equity | 79,595 | 48,079 | ||||||
Other Data: | ||||||||
Depreciation and amortization | 27,855 | 20,098 | ||||||
Ratio of earnings to fixed charges(5) | 5.9 | x | 4.1 | x | ||||
Net cash provided by operating activities | 66,280 | 63,107 | ||||||
Net cash used in investing activities | 13,080 | 24,764 | ||||||
Net cash used in financing activities | 49,470 | 30,325 | ||||||
Dividends declared to common shareholders | 9,624 | — | ||||||
Dividends declared per common share | 56.00 | — |
(1) | We maintain our accounts in Philippine pesos. For convenience, the peso financial information as at and for the year ended December 31, 2008, has been translated into U.S. dollars at the exchange rate of Php47.647 to US$1.00, the rate quoted through the Philippine Dealing System as at December 31, 2008. This translation should not be construed as a representation that the Philippine peso amounts represent, or have been or could be converted into, U.S. dollars at that rate or any other rate. | |
(2) | Net income and total equity under IFRS includes share of minority interest in consolidated net income and net assets, respectively. | |
(3) | Total debt represents current portion of long-term debt, long-term debt — net of current portion and notes payable. | |
(4) | Total liabilities on a consolidated basis in 2008, 2007 and 2006 under IFRS represent the sum of current and noncurrent liabilities. Total liabilities on a consolidated basis in 2005 and 2004 under U.S. GAAP represent the difference between total assets and minority interest in consolidated subsidiaries, preferred stock subject to mandatory redemption and stockholders’ equity. | |
(5) | For purposes of this ratio, “Earnings” consist of: (a) pre-tax income from continuing operations before adjustment for minority interest in consolidated subsidiaries or income or loss from equity investees, (b) fixed charges, (c) amortization of capitalized interest, (d) distributed income of equity investees, and (e) share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges; less the sum of the following: (1) capitalized interest, (2) preference security dividend requirements of consolidated subsidiaries, and (3) the minority interest in pre-tax income of subsidiaries that have not incurred fixed charges | |
“Fixed charges” consist of interest expensed and capitalized interest, amortized premiums, discounts and capitalized expenses related to indebtedness, an estimate of interest within rental expense, and preference security dividend requirements of consolidated subsidiaries. |
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December 31, | ||||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Serial Preferred Stock | ||||||||
10% Cumulative Convertible Preferred Stock | ||||||||
A to HH | Php | 4,054.81 | Php | 4,056.50 | ||||
Convertible Preferred Stock Subject to Mandatory Redemption | ||||||||
Series V(1) | 0.01 | 0.31 | ||||||
Series VI(1) | 0.04 | 6.80 | ||||||
Cumulative Non-convertible Redeemable Preferred Stock | ||||||||
Series IV | 360.00 | 360.00 | ||||||
Php | 4,414.86 | Php | 4,423.61 | |||||
Common Stock | Php | 947.28 | Php | 943.70 | ||||
(1) | Preferred stock subject to mandatory redemption in 2008 (see Note 18 — Interest-bearing Financial Liabilities — Preferred Stock Subject to Mandatory Redemption to the accompanying audited consolidated financial statements in Item 18 for further discussion). |
Date | Amount | |||||||||||||
Earnings | Approved | Record | Payable | Per share | Total Declared | |||||||||
(in millions) | ||||||||||||||
2006 | August 8, 2006 | August 21, 2006 | September 21, 2006 | Php | 50 | Php | 9,379 | |||||||
2006 | March 6, 2007 | March 20, 2007 | April 20, 2007 | 50 | 9,429 | |||||||||
2006 | August 7, 2007 | August 24, 2007 | September 24, 2007 | 40 | 7,548 | |||||||||
140 | 26,356 | |||||||||||||
2007 | August 7, 2007 | August 24, 2007 | September 24, 2007 | 60 | 11,322 | |||||||||
2007 | March 4, 2008 | March 19, 2008 | April 21, 2008 | 68 | 12,853 | |||||||||
2007 | March 4, 2008 | March 19, 2008 | April 21, 2008 | 56 | 10,585 | |||||||||
184 | 34,760 | |||||||||||||
2008 | August 5, 2008 | August 22, 2008 | September 22, 2008 | 70 | 13,140 | |||||||||
2008 | March 3, 2009 | March 18, 2009 | April 21, 2009 | 70 | 13,124 | |||||||||
2008 | March 3, 2009 | March 18, 2009 | April 21, 2009 | 60 | 11,249 | |||||||||
Php | 200 | Php | 37,513 | |||||||||||
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In Philippine Peso | In U.S. Dollars | |||||||
2006 | 78.00 | 1.543 | ||||||
2007 | 150.00 | 3.264 | ||||||
2008 | 194.00 | 4.474 | ||||||
Regular Dividend — April 21, 2008 | 68.00 | 1.624 | ||||||
Regular Dividend — September 22, 2008 | 70.00 | 1.513 | ||||||
Special Dividend — April 21, 2008 | 56.00 | 1.337 | ||||||
2009 | 130.00 | 2.728 | ||||||
Regular Dividend — March 3, 2009 | 70.00 | 1.429 | ||||||
Special Dividend — March 3, 2009 | 60.00 | 1.226 |
Note: | Dividends on PLDT’s common stock were declared and paid in Philippine pesos. For the convenience of the reader, the peso dividends are translated into U.S. dollars based on the Philippine Dealing System Reference Rate on the respective dates of dividend payments. |
Year Ended December 31, | ||||||||||||||||
Period End | Average(1) | High(2) | Low(3) | |||||||||||||
2004 | Php | 56.341 | Php | 56.149 | Php | 55.142 | Php | 56.443 | ||||||||
2005 | 53.062 | 55.006 | 53.062 | 56.321 | ||||||||||||
2006 | 49.045 | 51.165 | 49.045 | 53.587 | ||||||||||||
2007 | 41.411 | 45.879 | 41.142 | 49.156 | ||||||||||||
2008 | 47.647 | 44.706 | 40.360 | 49.984 | ||||||||||||
2009 (through March 31, 2009) | 48.422 | 48.141 | 46.554 | 49.056 |
Source: | Philippine Dealing System Reference Rate | |
(1) | Calculated by using the average of the exchange rates on the last day of each month during the period. | |
(2) | Highest exchange rate for the period. | |
(3) | Lowest exchange rate for the period. |
Month | ||||||||||||||||
Period End | Average(1) | High(2) | Low(3) | |||||||||||||
2008 | ||||||||||||||||
September | Php | 47.264 | Php | 46.756 | 46.253 | 47.270 | ||||||||||
October | 48.902 | 48.100 | 46.980 | 49.378 | ||||||||||||
November | 48.799 | 49.181 | 48.078 | 49.984 | ||||||||||||
December | 47.647 | 48.026 | 46.708 | 49.471 | ||||||||||||
2009 | ||||||||||||||||
January | 47.340 | 47.192 | 46.554 | 47.591 | ||||||||||||
February | 48.662 | 47.651 | 46.993 | 48.662 | ||||||||||||
March (through March 31, 2009) | 48.422 | 48.447 | 48.024 | 49.056 |
Source: | Philippine Dealing System Reference Rate | |
(1) | Calculated by using the average of the exchange rates during the month. | |
(2) | Highest exchange rate for the month. | |
(3) | Lowest exchange rate for the month. |
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• | political and economic developments affecting the Philippines; | ||
• | global economic and financial trends; | ||
• | the volatility of regional currencies, particularly the Japanese yen; | ||
• | any interest rate increases by the Federal Reserve Bank of the United States; | ||
• | higher demand for U.S. dollars by both banks and domestic businesses to service their maturing U.S. dollar obligations; and | ||
• | foreign exchange traders including banks covering their short U.S. dollar positions. |
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• | increased competition from other domestic and international telecommunications providers; |
• | advances in technology; |
• | alternative providers offering internet telephony, also known as Voice over Internet Protocol, or VoIP, and broadband capacity; and |
• | unauthorized traffic termination and bypass routings by international simple resale operators. |
• | our ability to identify suitable opportunities for investment or acquisition; |
• | our ability to reach an acquisition or investment agreement on terms that are satisfactory to us or at all; |
• | the extent to which we are able to exercise control over the acquired company; |
• | the economic, business or other strategic objectives and goals of the acquired company compared to those of the PLDT Group; and |
• | our ability to successfully integrate the acquired company or business with our existing businesses. |
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• | physical damage; |
• | power loss; |
• | capacity limitation; |
• | cable theft; |
• | software defects; and |
• | breaches of security by computer viruses, break-ins or otherwise. |
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• | capital expenditures in excess of US$50 million; |
• | any investments, if the aggregate amount of all investments for the previous 12 months is greater than US$25 million in the case of all investments to any existing investees and US$100 million in the case of all investments to any new or existing investees, determined on a rolling monthly basis; |
• | any investments in a specific investee, if the cumulative value of all investments made by us in that investee is greater than US$10 million in the case of an existing investee and US$50 million in the case of a new investee; |
• | issuance of common stock or stock that is convertible into common stock; |
• | new business activities other than those we currently engage in; and |
• | merger or consolidation. |
• | elections of PLDT’s directors; and |
• | approval of major corporate actions, which require the vote of common stockholders. |
• | NTT DoCoMo is entitled to nominate one additional NTT DoCoMo nominee to the board of directors of each of PLDT and Smart; |
• | PLDT must consult NTT DoCoMo no later than 30 days prior to the first submission to the board of PLDT or certain of its committees of any proposal of investment in an entity that would primarily engage in a business that would be in direct competition or substantially the same business opportunities, customer base, products or services with business carried on by NTT DoCoMo, or which NTT DoCoMo has announced publicly an intention to carry on; |
• | PLDT must procure that Smart does not cease to carry on its business, dispose of all of its assets, issue common shares, merge or consolidate, or effect winding up or liquidation without PLDT first consulting with NTT DoCoMo no later than 30 days prior to the first submission to the board of PLDT or Smart, or certain of its committees; and |
• | PLDT must first consult with NTT DoCoMo no later than 30 days prior to the first submission to the board of PLDT or certain of its committees for the approval of any transfer by any member of the PLDT Group of Smart common capital stock to any person who is not a member of the PLDT Group. |
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• | to bill their subscribers for cellular calls on a six-second pulse basis instead of the current per minute basis; |
• | not to bill calls directed to recorded voice messages; and |
• | to extend the expiration date of prepaid cards from the current two months to two years. |
• | a review of market trends deemed to impinge on current and future state of competition in the sector; |
• | an exploration of major policies that may change the balance of market power, hence the nature and degree of competition; |
• | an assessment of the quality of current regulation, identifying major handicaps of the NTC; and |
• | a discussion of the urgent tasks for the NTC to effectively govern a dynamic and complex industry. |
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(a) | guidelines on the mandatory interconnection of backhaul networks to the cable landing station, which were issued and became effective on October 7, 2008; and |
(b) | guidelines on the interconnection of local exchange carriers, or LECs, in local calling areas that eliminate interconnection access charges between LECs within a local calling area, which were issued and became effective on May 30, 2008. |
• | shortages of equipment, materials and labor; |
• | work stoppages and labor disputes; |
• | interruptions resulting from inclement weather and other natural disasters; |
• | unforeseen engineering, environmental and geological problems; and |
• | unanticipated cost increases. |
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• | suspend temporarily or restrict sales of foreign exchange; |
• | require licensing of foreign exchange transactions; or |
• | require the delivery of foreign exchange to the BSP or its designee banks. |
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Percentage of Ownership | ||||||||||||
Name of Subsidiary | Place of Incorporation | Principal Activity | Direct | Indirect | ||||||||
Wireless | ||||||||||||
Smart | Philippines | Cellular mobile services | 100.0 | — | ||||||||
Smart Broadband, Inc. | Philippines | Internet broadband distribution | — | 100.0 | ||||||||
SmartConnect Holdings Pte. Ltd. | Singapore | Investment company | — | 100.0 | ||||||||
I-Contacts Corporation | Philippines | Customer interaction solutions | — | 100.0 | ||||||||
Wolfpac Mobile, Inc. | Philippines | Mobile applications development and services | — | 100.0 | ||||||||
SmartConnect Global Pte. Ltd. | Singapore | International trade of satellites and GSM enabled global telecommunications | — | 100.0 | ||||||||
Wireless Card, Inc. | Philippines | Promotion of the sale and/or patronage of debit and/or charge cards | — | 100.0 | ||||||||
Smarthub, Incorporated | Philippines | Development and sale of software, maintenance and support services | — | 100.0 | ||||||||
Smart Money Holdings Corporation | Cayman Islands | Investment Company | — | 100.0 | ||||||||
Smart Money, Inc. | Cayman Islands | Mobile commerce solutions marketing | — | 100.0 | ||||||||
Telecoms Solutions, Inc. | Mauritius | Mobile commerce platforms | — | 100.0 | ||||||||
Far East Capital Limited | Cayman Islands | Cost effective offshore financing and risk management activities for Smart | — | 100.0 | ||||||||
PH Communications Holdings Corporation | Philippines | Investment company | — | 100.0 | ||||||||
Francom Holdings, Inc. | Philippines | Investment company | — | 100.0 | ||||||||
Connectivity Unlimited Resource Enterprise | Philippines | Cellular mobile services | — | 100.0 | ||||||||
Airborne Access Corporation | Philippines | Wireless Internet services | — | 99.4 | ||||||||
Pilipino Telephone Corporation | Philippines | Cellular mobile services | — | 92.5 | ||||||||
3rd Brand Pte. Ltd. | Singapore | Solutions and systems integration services | — | 85.0 | ||||||||
Telesat, Inc. | Philippines | Satellite communications services | 100.0 | — | ||||||||
ACeS Philippines Cellular Satellite Corporation | Philippines | Satellite information and messaging services | 88.5 | 11.5 | ||||||||
Mabuhay Satellite Corporation | Philippines | Satellite communications services | 67.0 | — | ||||||||
Fixed Line | ||||||||||||
PLDT Clark Telecom, Inc. | Philippines | Telecommunications services | 100.0 | — | ||||||||
PLDT Subic Telecom, Inc. | Philippines | Telecommunications services | 100.0 | — | ||||||||
Philcom Corporation | Philippines | Telecommunications services | 100.0 | — | ||||||||
PLDT Global Corporation | British Virgin Islands | Telecommunications services | 100.0 | — | ||||||||
Smart-NTT Multimedia, Inc. | Philippines | Data and network services | 100.0 | — | ||||||||
PLDT-Maratel, Inc. | Philippines | Telecommunications services | 97.5 | — | ||||||||
Bonifacio Communications Corporation | Philippines | Telecommunications, infrastructure and related value-added services | 75.0 | — |
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Percentage of Ownership | ||||||||||||
Name of Subsidiary | Place of Incorporation | Principal Activity | Direct | Indirect | ||||||||
Information and Communications Technology, or ICT | ||||||||||||
ePLDT, Inc., or ePLDT | Philippines | Information and communications infrastructure for Internet-based services, e-commerce, customer interaction solutions and IT-related services | 100.0 | — | ||||||||
SPi Technologies, Inc. and Subsidiaries | Philippines | Knowledge processing solutions | — | 100.0 | ||||||||
ePLDT Ventus, Inc. | Philippines | Customer interaction solutions | — | 100.0 | ||||||||
Vocativ Systems, Inc. | Philippines | Customer interaction solutions | — | 100.0 | ||||||||
Parlance Systems, Inc. | Philippines | Customer interaction solutions | — | 100.0 | ||||||||
Infocom Technologies, Inc. | Philippines | Internet access services | — | 99.6 | ||||||||
Digital Paradise Thailand | Thailand | Internet access services | — | 87.5 | ||||||||
netGames, Inc. | Philippines | Publisher of online games | — | 80.0 | ||||||||
Digital Paradise, Inc. | Philippines | Internet access services | — | 75.0 | ||||||||
Level Up! (Philippines), Inc. | Philippines | Publisher of online games | — | 60.0 |
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• | Recognized Brands. PLDT and Smart are strong and widely recognized brand names in the Philippines. We have built the PLDT brand name for 80 years as the leading telecommunications provider in the Philippines. Smart is recognized in the Philippines as an innovative provider of high-quality cellular services. Piltel’sTalk ‘N Text brand, which is provided using Smart’s network, has also gained significant recognition as a value for money brand. |
• | Leading Market Shares. With approximately 37 million fixed line and cellular subscribers as at December 31, 2008, we have the leading market positions in both the fixed line and cellular markets in the Philippines. |
• | Diversified Revenue Sources. We derive our revenues from our three business segments, namely, wireless, fixed line and ICT businesses, with wireless contributing 61%, fixed line 32% and ICT 7% to our consolidated revenues in 2008. Revenue sources of our wireless business segment include cellular services, which include voice services and text message-related and VAS, and wireless broadband services. Our fixed line business derives service revenues from local exchange, international long distance, national long distance and data and other network services. In our ICT business, sources of revenue include knowledge processing solutions, customer interaction solutions and internet and online gaming, broadband and data center services. Fixed line revenues, which represented 32%, 33% and 36% of our consolidated revenues in 2008, 2007, and 2006, respectively, have been declining over the past years as a share of our consolidated revenues due to pressures on traditional fixed line voice revenues, resulting from decreases in our local exchange, international long distance and national long distance services, and reduced international interconnection rates. We will continue to identify and develop new revenue sources to further broaden our diversified revenue base for our wireless, fixed line and ICT businesses. |
• | Advanced Integrated Network. With one of the most advanced and extensive telecommunications networks in the Philippines, we are able to offer a wide array of communications services. We are enhancing the capabilities of our fixed line and wireless networks to allow us to better exploit this competitive strength and achieve higher levels of network efficiency in providing voice and data services. In addition, we continue our upgrade to NGN and our roll out of 3G and wireless broadband in order to increase broadband subscribers, and expand our data/broadband capabilities. |
• | Innovative Products and Services. We have successfully introduced a number of innovative and award-winning cellular products and services, includingSmart LoadandPasa Load. Smart Loadis an “over-the-air” electronic loading facility designed to make reloading of air time credits more convenient for, and accessible to consumers.Pasa Load(the term “pasa” means “transfer”), is a derivative service ofSmart Load that allows load transfers to otherSmart BuddyandTalk ‘N Textsubscribers. |
• | Strong Strategic Relationships. We have important strategic relationships with First Pacific, NTT DoCoMo and NTT Communications. The technological support, international experience and management expertise made available to us through these strategic relationships enhance our market leadership and ability to provide and cross-sell a more complete range of products and services. |
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• | Build on our leading positions in the fixed line and wireless businesses. We plan to build on our position as the leading provider of fixed line service in the Philippines by continuing to launch new products and services to increase subscriber value and utilization of our existing facilities and equipment at reduced cost. We plan to build on our position as the leading wireless service provider in the Philippines by continuing to introduce new products and services to increase our subscribers’ use of our network for both voice and data, as well as their reliance on our services. We are currently upgrading our fixed line facilities to NGN, and have rolled out a 3G network based on a W-CDMA technology as well as expanding our DSL and wireless broadband facilities. Our operating target is to continue growth in profitability by increasing our revenues while controlling our costs. |
• | Capitalize on our strength as an integrated provider of telecommunications services. We offer the broadest range of telecommunications services among all operators in the Philippines. We plan to capitalize on this position to maximize revenue opportunities by bundling and cross-selling our products and services, and by developing convergent products that feature the combined benefits of voice and data, fixed line, wireless and ICT services utilizing our network and business platforms. We are also lowering our costs by integrating the operations of our different businesses. |
• | Strengthen our leading position in the data and broadband market. Leveraging on the inherent strength of our fixed line and wireless businesses, we are committed to further develop our fastest growing business segment — broadband, data and other network services. Consistent with our strategy of introducing innovative products and services using advanced technology, we have launched various products and services that address different market needs. |
• | Maintain a strong financial position and improve shareholder returns.In recent years, we have significantly improved our financial position by utilizing our cash flows principally for debt reduction. Our debt decreased to US$1.6 billion as at December 31, 2008. As the cash flows generated by our businesses have increased and our leverage ratios have improved, we have been able to restore the payment of cash dividends to our common shareholders beginning 2005 and have increased our cash dividend payout ratio in 2006, 2007 and 2008. We expect that a greater proportion of our free cash flows in succeeding years will be utilized for the payment of cash dividends to common shareholders and investments in new growth areas while continuing to maintain a healthy balance sheet position. As part of our growth strategy, we made and may continue to make acquisitions and investments in companies or businesses. We will continue to consider value-accretive investments in related businesses such as those in the global outsourcing and off-shoring industry. |
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2008 | 2007 | 2006 | ||||||||||
Systemwide cellular subscriber base | 35,224,604 | 30,041,030 | 24,175,384 | |||||||||
Smart | 20,899,753 | 20,339,204 | 17,201,005 | |||||||||
Prepaid | 20,501,617 | 19,997,324 | 16,882,442 | |||||||||
Postpaid | 398,136 | 341,880 | 318,563 | |||||||||
Piltel(1) | 14,308,493 | 9,701,826 | 6,974,379 | |||||||||
CURE | 16,358 | — | — | |||||||||
Growth rate of cellular subscribers | 17 | % | 24 | % | 18 | % | ||||||
Smart | 3 | % | 18 | % | 12 | % | ||||||
Piltel(1) | 47 | % | 39 | % | 40 | % | ||||||
CURE | 100 | % | — | — | ||||||||
Cellular revenues (in millions) | Php | 87,518 | Php | 82,334 | Php | 75,617 | ||||||
Voice | 37,287 | 36,105 | 35,233 | |||||||||
Data | 47,792 | 44,092 | 38,672 | |||||||||
Others(1) | 2,439 | 2,137 | 1,712 | |||||||||
Percentage of cellular revenues to total wireless service revenues | 94 | % | 95 | % | 96 | % | ||||||
Percentage of cellular revenues to total service revenues | 57 | % | 57 | % | 56 | % |
(1) | Represents Talk ‘N Text, a prepaid service provided by Piltel using Smart’s network. Piltel’s revenue is net of service fees payable to Smart for using Smart’s network. Piltel does not offer postpaid service. |
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• | Smart Money,launched in conjunction with MasterCard, enables subscribers to pay for their purchases by transferring money from their bank accounts to their Smart Money cards, reload their prepaid cards electronically, as well as download specialized content such as ringtones, logos, caller ringback tunes and games; |
• | Mobile Banking, launched in collaboration with various banks, allows subscribers to execute banking transactions such as balance inquiries and transfers over their mobile telephones; and |
• | Smart Padala, one of the many innovative initiatives from ourSmart Moneyplatform, is the first cash remittance service through text and is faster and cheaper than traditional remittance arrangements. It was launched initially as an international remittance service for overseas Filipino workers but is now available for domestic remittances as well. |
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2008 | 2007 | 2006 | ||||||||||
Number of local exchange line subscribers | 1,782,356 | 1,724,702 | 1,776,647 | |||||||||
Number of fixed line employees | 7,813 | 8,080 | 8,711 | |||||||||
Number of local exchange line subscribers per employee | 228 | 213 | 204 | |||||||||
Total local exchange service revenues (in millions) | Php | 15,923 | Php | 16,205 | Php | 16,965 | ||||||
Local exchange service revenues as a percentage of total fixed line service revenues | 32 | % | 33 | % | 34 | % | ||||||
Local exchange service revenues as a percentage of total service revenues | 10 | % | 11 | % | 13 | % |
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2008 | 2007 | 2006 | ||||||||||
Total call volumes (million minutes) | 2,024 | 2,280 | 2,177 | |||||||||
Inbound call volumes (million minutes) | 1,786 | 2,007 | 1,984 | |||||||||
Outbound call volumes (million minutes) | 238 | 273 | 193 | |||||||||
Inbound-outbound call ratio | 7.5:1 | 7.4:1 | 10.3:1 | |||||||||
Total international long distance service revenues (in millions) | Php | 7,063 | Php | 8,674 | Php | 9,933 | ||||||
International long distance service revenues as a percentage of total fixed line service revenues | 14 | % | 18 | % | 20 | % | ||||||
International long distance service revenues as a percentage of total service revenues | 5 | % | 6 | % | 7 | % |
Net Settlement | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
United States | US$ | 46 | US$ | 55 | US$ | 54 | ||||||
Saudi Arabia | 30 | 28 | 27 | |||||||||
United Arab Emirates | 20 | 18 | 15 | |||||||||
Japan | 14 | 12 | 12 | |||||||||
Canada | 9 | 17 | 18 | |||||||||
Taiwan | 6 | 6 | 4 | |||||||||
Ireland | 6 | 5 | 2 | |||||||||
Italy | 5 | 10 | 11 | |||||||||
Singapore | 5 | 3 | 1 | |||||||||
Others | 33 | 42 | 41 | |||||||||
Total | US$ | 174 | US$ | 196 | US$ | 185 | ||||||
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2008 | 2007 | 2006 | ||||||||||
Total call volumes (million minutes) | 1,944 | 2,183 | 2,251 | |||||||||
Total national long distance service revenues (in millions) | Php | 6,207 | Php | 6,338 | Php | 6,921 | ||||||
National long distance service revenue as a percentage of total fixed line service revenues | 13 | % | 13 | % | 14 | % | ||||||
National long distance service revenue as a percentage of total service revenues | 4 | % | 4 | % | 5 | % |
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2008 | 2007 | 2006 | ||||||||||
Number ofDSLbroadband subscribers | 432,583 | 264,291 | 133,159 | |||||||||
Number ofPLDT Vibenarrowband subscribers | 101,411 | 230,995 | 297,250 | |||||||||
Total data and other network service revenues (in millions) | Php | 18,607 | Php | 15,921 | Php | 13,725 | ||||||
Data and other network service revenues as a percentage of total fixed line service revenues | 38 | % | 33 | % | 28 | % | ||||||
Data and other network service revenues as a percentage of total service revenues | 12 | % | 11 | % | 10 | % |
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Cable System | Countries Being Linked | |
G-P | Guam and the Philippines | |
Asia-Pacific Cable Network | Korea, Japan, Hong Kong, Taiwan, Australia, Philippines, Singapore, Malaysia, Indonesia and Thailand | |
Asia-Pacific Cable Network 2 | Philippines, Hong Kong, Japan, Korea, Malaysia, Singapore, China and Taiwan | |
Transpacific Cable No. 5 | Guam, Japan, Hawaii and the U.S. Mainland | |
SEA-ME-WE-3 | Japan, Korea, China, Taiwan, Hong Kong, Macau, Philippines, Vietnam, Brunei, Malaysia, Singapore, Indonesia, Australia, Thailand, Myanmar, Sri Lanka, India, Pakistan, United Arab Emirates, Oman, Djibouti, Saudi Arabia, Egypt, Cyprus, Turkey, Greece, Italy, Morocco, Portugal, France, UK, Belgium and Germany | |
Americas Cable 1 | U.S. Mainland, U.S. Virgin Islands, Brazil, Trinidad and Venezuela | |
China-U.S. Cable | Japan, China, Taiwan, Korea, Guam and U.S. Mainland | |
Columbus II Cable | U.S. Mainland, Italy, U.S. Virgin Islands, Mexico, Portugal and Spain | |
FLAG Cable | Japan, Korea, China, Hong Kong, Malaysia, Thailand, India, United Arab Emirates, Saudi Arabia, Egypt, Italy, Spain and UK | |
RJK Cable | Russia, Japan and Korea | |
Southern Cross Cable | U.S. Mainland, Hawaii, Fiji, Australia and New Zealand | |
TVH Cable | Thailand, Vietnam and Hong Kong | |
EAC Cable | Japan, Hong Kong, Korea, Taiwan, Singapore and the Philippines | |
PC-1, Japan-U.S. Cable and TGN | Japan and the U.S. |
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• | begin installation and rollout of its 3G network no later than 18 months from the date of the award; | ||
• | start commercial operations no later than 30 months from the date of the award; and | ||
• | cover at least 80% of provincial capitals and 80% of chartered cities within five years. |
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Carrier | Spectrum System | Frequency Assignment | Bandwidth | ||||
Smart | ETACS/GSM 900 | 897.5-905/942.5-950 MHz | 7.5 MHz | ||||
GSM 1800 | 1725-1730/1820-1825 MHz | 5.0 MHz | |||||
1730-1732.5/1825-1827.5 MHz | 2.5 MHz | ||||||
1735-1740/1830-1835 MHz | 5.0 MHz | ||||||
1745-1750/1840-1845 MHz | 5.0 MHz | ||||||
1780-1782.5/1875-1877.5 MHz | 2.5 MHz | ||||||
3G (W-CDMA) | 1920-1935/2110-2125 MHz | 15.0 MHz | |||||
825-835/870-880 MHz | 10.0 MHz | ||||||
Piltel | AMPS/CDMA | 824-825/869-870 MHz | 1.0 MHz | ||||
845-846.5/890-891.5 MHz | 1.5 MHz | ||||||
SBI | Wireless broadband | 2400-2483.5 MHz * | 73 MHz | ||||
3400-3590 MHz * | 94 MHz | ||||||
5470-5850 MHz * | 123 MHz | ||||||
CURE | 3G | 1955-1965/2145-2155 MHz | 10.0 MHz |
* | SBI frequency assignments on these bands are non-contiguous and are on a per station and location basis. |
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(a) | guidelines on the mandatory interconnection of backhaul networks to the cable landing station, which were issued and became effective on October 7, 2008; and | ||
(b) | guidelines on the interconnection of local exchange carriers, or LECs, in local calling areas that eliminate interconnection access charges between LECs within a local calling area, which were issued and became effective on May 30, 2008. |
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• | 67% consisted of cable, wire and cellular facilities, including our domestic fiber optic network, subscriber cable facilities, inter-office trunking and toll cable facilities and cellular facilities; | ||
• | 16% consisted of central office equipment, including five international gateway facilities, six pure national toll exchanges and 15 combined local and toll exchanges, and our communications satellite; | ||
• | 11% consisted of land and improvements and buildings, which we acquired to house our telecommunications equipment, personnel, inventory and/or fleet; | ||
• | 5% consisted of information origination and termination equipment, including pay telephones and radio equipment installed for customers use, and cables and wires installed within customers’ premises; and | ||
• | 1% consisted of other work equipment. |
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• | Wireless— wireless telecommunications services provided by Smart, Piltel and CURE, our cellular service providers; SBI and Airborne Access, our wireless broadband providers; Wolfpac, our wireless content operator; Mabuhay Satellite and ACeS Philippines, our satellite operator; |
• | Fixed Line— fixed line telecommunications services primarily provided through PLDT. We also provide fixed line services through PLDT’s subsidiaries, namely, ClarkTel, Subictel, Maratel, Piltel (on June 4, 2008, PLDT acquired the fixed line assets of Piltel), PLDT Global, and BCC, all of which account for approximately 2% of our consolidated fixed line subscribers; and |
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• | Information and Communications Technology— information and communications infrastructure and services for internet applications, IP-based solutions and multimedia content delivery provided by ePLDT, Inc., or ePLDT; knowledge processing solutions provided by the SPi Group; customer interaction solutions provided under the umbrella brand nameePLDT Ventus, through Ventus, Parlance and Vocativ; internet access and online gaming services provided by Infocom, Digital Paradise, netGames and Level Up!; and e-commerce, and IT-related services provided by other investees of ePLDT, as discussed inNote 9 — Investments in Associates and Joint Venturesto the accompanying audited consolidated financial statements in Item 18. |
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Inter-segment | ||||||||||||||||||||
Wireless | Fixed Line | ICT | Transactions | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
For the year ended December 31, 2008 | ||||||||||||||||||||
Revenues | Php | 95,852 | Php | 49,686 | Php | 10,983 | Php | (10,684 | ) | Php | 145,837 | |||||||||
Expenses | 47,589 | 35,733 | 13,267 | (10,803 | ) | 85,786 | ||||||||||||||
Other expenses | 2,640 | 3,173 | 1 | 188 | 6,002 | |||||||||||||||
Income (loss) before income tax | 45,623 | 10,780 | (2,285 | ) | (69 | ) | 54,049 | |||||||||||||
Net income (loss) | 29,499 | 7,732 | (2,186 | ) | (69 | ) | 34,976 | |||||||||||||
Net income (loss) attributable to equity holders of PLDT | 28,628 | 7,727 | (1,969 | ) | (69 | ) | 34,317 | |||||||||||||
For the year ended December 31, 2007 | ||||||||||||||||||||
Revenues | 89,299 | 48,832 | 10,322 | (9,749 | ) | 138,704 | ||||||||||||||
Expenses | 44,530 | 37,891 | 11,005 | (9,839 | ) | 83,587 | ||||||||||||||
Other income (expenses) | 2,577 | (64 | ) | 472 | (21 | ) | 2,964 | |||||||||||||
Income (loss) before income tax | 47,346 | 10,877 | (211 | ) | 69 | 58,081 | ||||||||||||||
Net income (loss) | 31,780 | 7,519 | (94 | ) | 69 | 39,274 | ||||||||||||||
Net income (loss) attributable to equity holders of PLDT | 31,674 | 7,516 | 30 | 69 | 39,289 | |||||||||||||||
For the year ended December 31, 2006 | ||||||||||||||||||||
Revenues | 80,405 | 49,255 | 6,890 | (9,042 | ) | 127,508 | ||||||||||||||
Expenses | 42,821 | 41,149 | 7,175 | (9,142 | ) | 82,003 | ||||||||||||||
Other expenses | 1,113 | 5,979 | 64 | 100 | 7,256 | |||||||||||||||
Income (loss) before income tax | 36,471 | 2,127 | (349 | ) | — | 38,249 | ||||||||||||||
Net income (loss) | 30,127 | 2,766 | (312 | ) | — | 32,581 | ||||||||||||||
Net income (loss) attributable to equity holders of PLDT | 29,854 | 2,764 | (233 | ) | — | 32,385 |
Change | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless | Php | 95,852 | 66 | Php | 89,299 | 64 | Php | 6,553 | 7 | |||||||||||||||
Fixed line | 49,686 | 34 | 48,832 | 35 | 854 | 2 | ||||||||||||||||||
Information and communications technology | 10,983 | 7 | 10,322 | 8 | 661 | 6 | ||||||||||||||||||
Inter-segment transactions | (10,684 | ) | (7 | ) | (9,749 | ) | (7 | ) | (935 | ) | (10 | ) | ||||||||||||
Total | Php | 145,837 | 100 | Php | 138,704 | 100 | Php | 7,133 | 5 | |||||||||||||||
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Change | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless | Php | 47,589 | 55 | Php | 44,530 | 53 | Php | 3,059 | 7 | |||||||||||||||
Fixed line | 35,733 | 42 | 37,891 | 45 | (2,158 | ) | (6 | ) | ||||||||||||||||
Information and communications technology | 13,267 | 16 | 11,005 | 13 | 2,262 | 21 | ||||||||||||||||||
Inter-segment transactions | (10,803 | ) | (13 | ) | (9,839 | ) | (11 | ) | (964 | ) | (10 | ) | ||||||||||||
Total | Php | 85,786 | 100 | Php | 83,587 | 100 | Php | 2,199 | 3 | |||||||||||||||
Change | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless | Php | (2,640 | ) | 44 | Php | 2,577 | 87 | Php | (5,217 | ) | (202 | ) | ||||||||||||
Fixed line | (3,173 | ) | 53 | (64 | ) | (2 | ) | (3,109 | ) | (4,857 | ) | |||||||||||||
Information and communications technology | (1 | ) | — | 472 | 16 | (473 | ) | (100 | ) | |||||||||||||||
Inter-segment transactions | (188 | ) | 3 | (21 | ) | (1 | ) | (167 | ) | 795 | ||||||||||||||
Total | Php | (6,002 | ) | 100 | Php | 2,964 | 100 | Php | (8,966 | ) | (302 | ) | ||||||||||||
Change | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless | Php | 29,499 | 84 | Php | 31,780 | 81 | Php | (2,281 | ) | (7 | ) | |||||||||||||
Fixed line | 7,732 | 22 | 7,519 | 19 | 213 | 3 | ||||||||||||||||||
Information and communications technology | (2,186 | ) | (6 | ) | (94 | ) | — | (2,092 | ) | (2,226 | ) | |||||||||||||
Inter-segment transactions | (69 | ) | — | 69 | — | (138 | ) | (200 | ) | |||||||||||||||
Total | Php | 34,976 | 100 | Php | 39,274 | 100 | Php | (4,298 | ) | (11 | ) | |||||||||||||
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Increase (Decrease) | ||||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
Wireless Services: | ||||||||||||||||||||||||||
Service Revenues | ||||||||||||||||||||||||||
Cellular | Php | 87,518 | 92 | Php | 82,334 | 92 | Php | 5,184 | 6 | |||||||||||||||||
Wireless broadband, satellite and others | 6,075 | 6 | 4,165 | 5 | 1,910 | 46 | ||||||||||||||||||||
93,593 | 98 | 86,499 | 97 | 7,094 | 8 | |||||||||||||||||||||
Non-Service Revenues: | ||||||||||||||||||||||||||
Sale of cellular handsets and SIM-packs | 2,259 | 2 | 2,800 | 3 | (541 | ) | (19 | ) | ||||||||||||||||||
Total Wireless Revenues | Php | 95,852 | 100 | Php | 89,299 | 100 | Php | 6,553 | 7 | |||||||||||||||||
Increase | |||||||||||||||||||
2008 | 2007 | Amount | % | ||||||||||||||||
(in millions) | |||||||||||||||||||
Cellular service revenues | Php | 87,518 | Php | 82,334 | Php | 5,184 | 6 | ||||||||||||
By service type | 85,079 | 80,197 | 4,882 | 6 | |||||||||||||||
Prepaid | 78,743 | 74,284 | 4,459 | 6 | |||||||||||||||
Postpaid | 6,336 | 5,913 | 423 | 7 | |||||||||||||||
By component | 85,079 | 80,197 | 4,882 | 6 | |||||||||||||||
Voice | 37,287 | 36,105 | 1,182 | 3 | |||||||||||||||
Data | 47,792 | 44,092 | 3,700 | 8 | |||||||||||||||
Others(1) | 2,439 | 2,137 | 302 | 14 |
(1) | Refers to other non-subscriber-related revenues consisting primarily of inbound international roaming fees, revenues from Smart’s public calling offices and a small number of leased line contracts, revenues from Wolfpac and other Smart subsidiaries and revenue share in PLDT’s WeRoam and PLDT Landline Plus services. |
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Increase | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
Cellular subscriber base | 35,224,604 | 30,041,030 | 5,183,574 | 17 | ||||||||||||
Prepaid | 34,826,468 | 29,699,150 | 5,127,318 | 17 | ||||||||||||
Smart | 20,501,617 | 19,997,324 | 504,293 | 3 | ||||||||||||
Piltel | 14,308,493 | 9,701,826 | 4,606,667 | 47 | ||||||||||||
CURE (acquired on April 25, 2008) | 16,358 | — | 16,358 | 100 | ||||||||||||
Postpaid | 398,136 | 341,880 | 56,256 | 16 | ||||||||||||
Systemwide traffic volumes (in millions) | ||||||||||||||||
Calls (in minutes) | 6,708 | 6,355 | 353 | 6 | ||||||||||||
Domestic — outbound | 3,810 | 3,799 | 11 | — | ||||||||||||
International | 2,898 | 2,556 | 342 | 13 | ||||||||||||
Inbound | 2,677 | 2,355 | 322 | 14 | ||||||||||||
Outbound | 221 | 201 | 20 | 10 | ||||||||||||
SMS count | 249,691 | 227,028 | 22,663 | 10 | ||||||||||||
Text messages | 248,051 | 225,083 | 22,968 | 10 | ||||||||||||
Domestic | 247,751 | 224,818 | 22,933 | 10 | ||||||||||||
Bucket-Priced | 223,373 | 199,326 | 24,047 | 12 | ||||||||||||
Standard | 24,378 | 25,492 | (1,114 | ) | (4 | ) | ||||||||||
International | 300 | 265 | 35 | 13 | ||||||||||||
Value-Added Services | 1,614 | 1,903 | (289 | ) | (15 | ) | ||||||||||
Financial Services | 26 | 42 | (16 | ) | (38 | ) |
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Increase (Decrease) | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
(in millions) | ||||||||||||||||
Text messaging | ||||||||||||||||
Domestic | Php | 43,330 | Php | 39,430 | Php | 3,900 | 10 | |||||||||
Bucket-Priced | 27,245 | 20,141 | 7,104 | 35 | ||||||||||||
Standard | 16,085 | 19,289 | (3,204 | ) | (17 | ) | ||||||||||
International | 1,877 | 1,835 | 42 | 2 | ||||||||||||
45,207 | 41,265 | 3,942 | 10 | |||||||||||||
Value-added services | ||||||||||||||||
Standard(1) | 1,469 | 1,802 | (333 | ) | (18 | ) | ||||||||||
Rich Media(2) | 627 | 352 | 275 | 78 | ||||||||||||
Pasa Load | 444 | 594 | (150 | ) | (25 | ) | ||||||||||
2,540 | 2,748 | (208 | ) | (8 | ) | |||||||||||
Financial services | ||||||||||||||||
Smart Money | 41 | 75 | (34 | ) | (45 | ) | ||||||||||
Mobile Banking | 4 | 4 | — | — | ||||||||||||
45 | 79 | (34 | ) | (43 | ) | |||||||||||
Total | Php | 47,792 | Php | 44,092 | Php | 3,700 | 8 | |||||||||
(1) | Includes standard services such as info-on demand, ringtone and logo download, etc. | |
(2) | Includes Multimedia Messaging System, or MMS, internet browsing, General Packet Radio Service, or GPRS, etc. |
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Increase (Decrease) | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
Prepaid | 5,127,318 | 5,842,329 | (715,011 | ) | (12 | ) | ||||||||||
Smart | 504,293 | 3,114,882 | (2,610,589 | ) | (84 | ) | ||||||||||
Piltel | 4,606,667 | 2,727,447 | 1,879,220 | 69 | ||||||||||||
CURE | 16,358 | — | 16,358 | 100 | ||||||||||||
Postpaid | 56,256 | 23,317 | 32,939 | 141 | ||||||||||||
Total | 5,183,574 | 5,865,646 | (682,072 | ) | (12 | ) | ||||||||||
2008 | 2007 | |||||||||||||||||||||||||||||||
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | |||||||||||||||||||||||||
Prepaid | 1,533,812 | 1,660,040 | 917,528 | 1,015,938 | 1,301,154 | 1,615,246 | 1,148,283 | 1,777,646 | ||||||||||||||||||||||||
Smart | 282,044 | 130,697 | 111,487 | (3,577 | ) | 880,281 | 1,050,678 | 763,257 | 420,666 | |||||||||||||||||||||||
Piltel | 1,251,768 | 1,529,343 | 806,041 | 1,019,515 | 420,873 | 564,568 | 385,026 | 1,356,980 | ||||||||||||||||||||||||
Postpaid | 1,117 | 5,027 | 17,816 | 32,296 | 6,921 | 7,403 | 5,704 | 3,289 | ||||||||||||||||||||||||
Total | 1,534,929 | 1,665,067 | 935,344 | 1,048,234 | 1,308,075 | 1,622,649 | 1,153,987 | 1,780,935 | ||||||||||||||||||||||||
Gross(1) | Decrease | Net(2) | Decrease | |||||||||||||||||||||||||||||
2008 | 2007 | Amount | % | 2008 | 2007 | Amount | % | |||||||||||||||||||||||||
Prepaid | ||||||||||||||||||||||||||||||||
Smart | Php | 290 | Php | 312 | Php | (22 | ) | (7 | ) | Php | 230 | Php | 254 | Php | (24 | ) | (9 | ) | ||||||||||||||
Piltel | 194 | 221 | (27 | ) | (12 | ) | 158 | 184 | (26 | ) | (14 | ) | ||||||||||||||||||||
Prepaid — Blended(3) | 254 | 285 | (31 | ) | (11 | ) | 203 | 233 | (30 | ) | (13 | ) | ||||||||||||||||||||
Postpaid — Smart | 2,065 | 2,091 | (26 | ) | (1 | ) | 1,483 | 1,485 | (2 | ) | — | |||||||||||||||||||||
Prepaid and Postpaid Blended(4) | 274 | 307 | (33 | ) | (11 | ) | 217 | 248 | (31 | ) | (13 | ) |
(1) | Gross monthly ARPU is calculated by dividing gross cellular service revenues for the month, including (i) discounts, (ii) allocated content-provider costs; and (iii) interconnection income but excluding inbound roaming revenues, by the average number of subscribers in the month. | |
(2) | Net monthly ARPU is calculated by dividing gross cellular service revenues for the month, net of (i) discounts, (ii) allocated content-provider costs; and (iii) interconnection income net of interconnection expense, by the average number of subscribers in the month. | |
(3) | The average monthly ARPU of Smart and Piltel. | |
(4) | The average monthly ARPU of prepaid and postpaid subscribers of Smart and prepaid subscribers of Piltel. |
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Prepaid | Postpaid | |||||||||||||||||||||||
Smart | Piltel | Smart | ||||||||||||||||||||||
Gross(1) | Net(2) | Gross(1) | Net(2) | Gross(1) | Net(2) | |||||||||||||||||||
2008 | ||||||||||||||||||||||||
First Quarter | Php | 292 | Php | 230 | Php | 207 | Php | 163 | Php | 2,013 | Php | 1,472 | ||||||||||||
Second Quarter | 294 | 232 | 199 | 159 | 2,134 | 1,510 | ||||||||||||||||||
Third Quarter | 285 | 223 | 178 | 148 | 2,078 | 1,505 | ||||||||||||||||||
Fourth Quarter | 291 | 234 | 192 | 162 | 2,037 | 1,445 | ||||||||||||||||||
2007 | ||||||||||||||||||||||||
First Quarter | Php | 323 | Php | 267 | Php | 228 | Php | 187 | Php | 2,045 | Php | 1,483 | ||||||||||||
Second Quarter | 324 | 265 | 233 | 198 | 2,141 | 1,526 | ||||||||||||||||||
Third Quarter | 293 | 239 | 206 | 173 | 2,073 | 1,464 | ||||||||||||||||||
Fourth Quarter | 307 | 244 | 216 | 177 | 2,105 | 1,467 |
(1) | Gross quarterly ARPU is calculated by dividing gross cellular service revenues for the quarter, including (i) discounts, (ii) allocated content-provider costs; and (iii) interconnection income but excluding inbound roaming revenues for the quarter, by the average number of subscribers in the quarter. | |
(2) | Net quarterly ARPU is calculated by dividing gross cellular service revenues, net of (i) discounts,(ii) allocated content-provider costs; and (iii) interconnection income net of interconnection expense, by the average number of subscribers in the quarter. |
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Increase (Decrease) | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless Services: | ||||||||||||||||||||||||
Depreciation and amortization | Php | 11,975 | 25 | Php | 12,202 | 27 | Php | (227 | ) | (2 | ) | |||||||||||||
Rent | 9,267 | 20 | 8,751 | 20 | 516 | 6 | ||||||||||||||||||
Compensation and employee benefits(1) | 5,433 | 11 | 4,608 | 10 | 825 | 18 | ||||||||||||||||||
Cost of sales | 4,236 | 9 | 4,446 | 10 | (210 | ) | (5 | ) | ||||||||||||||||
Repairs and maintenance | 4,230 | 9 | 3,634 | 8 | 596 | 16 | ||||||||||||||||||
Selling and promotions | 3,781 | 8 | 3,803 | 9 | (22 | ) | (1 | ) | ||||||||||||||||
Professional and other contracted services | 2,529 | 5 | 2,369 | 5 | 160 | 7 | ||||||||||||||||||
Taxes and licenses | 1,872 | 4 | 1,348 | 3 | 524 | 39 | ||||||||||||||||||
Communication, training and travel | 1,091 | 2 | 1,083 | 3 | 8 | 1 | ||||||||||||||||||
Asset impairment | 1,006 | 2 | 563 | 1 | 443 | 79 | ||||||||||||||||||
Provisions | 897 | 2 | — | — | 897 | 100 | ||||||||||||||||||
Insurance and security services | 722 | 2 | 783 | 2 | (61 | ) | (8 | ) | ||||||||||||||||
Amortization of intangible assets | 133 | — | 158 | — | (25 | ) | (16 | ) | ||||||||||||||||
Other expenses | 417 | 1 | 782 | 2 | (365 | ) | (47 | ) | ||||||||||||||||
Total | Php | 47,589 | 100 | Php | 44,530 | 100 | Php | 3,059 | 7 | |||||||||||||||
(1) | Includes salaries and employee benefits, incentive plan, pension and manpower rightsizing program, or MRP, costs. |
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Change | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
(in millions) | ||||||||||||||||
Other Income (Expenses) | ||||||||||||||||
Interest income | Php | 1,197 | Php | 1,186 | Php | 11 | 1 | |||||||||
(Losses) gains on derivative transactions — net | (241 | ) | 278 | (519 | ) | (187 | ) | |||||||||
Foreign exchange (losses) gains — net | (1,771 | ) | 2,649 | (4,420 | ) | (167 | ) | |||||||||
Financing costs | (2,029 | ) | (2,299 | ) | 270 | 12 | ||||||||||
Others | 204 | 763 | (559 | ) | (73 | ) | ||||||||||
Total | Php | (2,640 | ) | Php | 2,577 | Php | (5,217 | ) | (202 | ) | ||||||
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Increase (Decrease) | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Fixed Line Services: | ||||||||||||||||||||||||
Service Revenues | ||||||||||||||||||||||||
Local exchange | Php | 15,923 | 32 | Php | 16,205 | 33 | Php | (282 | ) | (2 | ) | |||||||||||||
International long distance | 7,063 | 14 | 8,674 | 18 | (1,611 | ) | (19 | ) | ||||||||||||||||
National long distance | 6,207 | 13 | 6,338 | 13 | (131 | ) | (2 | ) | ||||||||||||||||
Data and other network | 18,607 | 37 | 15,921 | 32 | 2,686 | 17 | ||||||||||||||||||
Miscellaneous | 1,466 | 3 | 1,413 | 3 | 53 | 4 | ||||||||||||||||||
49,266 | 99 | 48,551 | 99 | 715 | 1 | |||||||||||||||||||
Non-Service Revenues: | ||||||||||||||||||||||||
Sale of computers | 420 | 1 | 281 | 1 | 139 | 49 | ||||||||||||||||||
Total Fixed Line Revenues | Php | 49,686 | 100 | Php | 48,832 | 100 | Php | 854 | 2 | |||||||||||||||
Increase (Decrease) | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
Total local exchange service revenues (in millions) | Php | 15,923 | Php | 16,205 | Php | (282 | ) | (2 | ) | |||||||
Number of fixed line subscribers | 1,782,356 | 1,724,702 | 57,654 | 3 | ||||||||||||
Postpaid | 1,533,687 | 1,479,647 | 54,040 | 4 | ||||||||||||
Prepaid | 248,669 | 245,055 | 3,614 | 1 | ||||||||||||
Number of fixed line employees | 7,813 | 8,080 | (267 | ) | (3 | ) | ||||||||||
Number of fixed line subscribers per employee | 228 | 213 | 15 | 7 |
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Decrease | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
Total international long distance service revenues (in millions) | Php | 7,063 | Php | 8,674 | Php | (1,611 | ) | (19 | ) | |||||||
Inbound | 5,667 | 7,127 | (1,460 | ) | (20 | ) | ||||||||||
Outbound | 1,396 | 1,547 | (151 | ) | (10 | ) | ||||||||||
International call volumes (in million minutes, except call ratio) | 2,024 | 2,280 | (256 | ) | (11 | ) | ||||||||||
Inbound | 1,786 | 2,007 | (221 | ) | (11 | ) | ||||||||||
Outbound | 238 | 273 | (35 | ) | (13 | ) | ||||||||||
Inbound-outbound call ratio | 7.5:1 | 7.4:1 | — | — |
Decrease | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
Total national long distance service revenues (in millions) | Php | 6,207 | Php | 6,338 | Php | (131 | ) | (2 | ) | |||||||
National long distance call volumes (in million minutes) | 1,944 | 2,183 | (239 | ) | (11 | ) |
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Increase (Decrease) | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
Data and other network service revenues (in millions) | Php | 18,607 | Php | 15,921 | Php | 2,686 | 17 | |||||||||
Number ofDSLbroadband subscribers | 432,583 | 264,291 | 168,292 | 64 | ||||||||||||
Number ofPLDT Vibenarrowband subscribers | 101,411 | 230,995 | (129,584 | ) | (56 | ) |
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Increase (Decrease) | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Fixed Line Services: | ||||||||||||||||||||||||
Depreciation and amortization | Php | 11,901 | 33 | Php | 15,477 | 41 | Php | (3,576 | ) | (23 | ) | |||||||||||||
Compensation and employee benefits(1) | 9,093 | 25 | 10,411 | 27 | (1,318 | ) | (13 | ) | ||||||||||||||||
Repairs and maintenance | 4,634 | 13 | 3,772 | 10 | 862 | 23 | ||||||||||||||||||
Rent | 2,492 | 7 | 1,799 | 5 | 693 | 39 | ||||||||||||||||||
Professional and other contracted services | 2,143 | 6 | 1,727 | 5 | 416 | 24 | ||||||||||||||||||
Selling and promotions | 1,715 | 5 | 1,552 | 4 | 163 | 11 | ||||||||||||||||||
Asset impairment | 888 | 3 | 43 | — | 845 | 1,965 | ||||||||||||||||||
Taxes and licenses | 769 | 2 | 877 | 2 | (108 | ) | (12 | ) | ||||||||||||||||
Communication, training and travel | 608 | 2 | 466 | 1 | 142 | 30 | ||||||||||||||||||
Insurance and security services | 487 | 1 | 439 | 1 | 48 | 11 | ||||||||||||||||||
Cost of sales | 356 | 1 | 300 | 1 | 56 | 19 | ||||||||||||||||||
Provisions | 1 | — | 666 | 2 | (665 | ) | (100 | ) | ||||||||||||||||
Other expenses | 646 | 2 | 362 | 1 | 284 | 78 | ||||||||||||||||||
Total | Php | 35,733 | 100 | Php | 37,891 | 100 | Php | (2,158 | ) | (6 | ) | |||||||||||||
(1) | Includes salaries and employee benefits, incentive plan, pension and MRP costs. |
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Change | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
(in millions) | ||||||||||||||||
Other Income (Expenses) | ||||||||||||||||
Gains (losses) on derivative transactions — net | Php | 3,444 | Php | (3,335 | ) | Php | 6,779 | 203 | ||||||||
Interest income | 448 | 296 | 152 | 51 | ||||||||||||
Financing costs | (3,903 | ) | (4,657 | ) | 754 | 16 | ||||||||||
Foreign exchange (losses) gains — net | (4,513 | ) | 5,479 | (9,992 | ) | (182 | ) | |||||||||
Others | 1,351 | 2,153 | (802 | ) | (37 | ) | ||||||||||
Php | (3,173 | ) | Php | (64 | ) | Php | 3,109 | 4,858 | ||||||||
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Increase | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Service Revenues: | ||||||||||||||||||||||||
Knowledge processing solutions | Php | 5,272 | 48 | Php | 5,261 | 51 | Php | 11 | — | |||||||||||||||
Customer interaction solutions | 3,402 | 31 | 3,262 | 32 | 140 | 4 | ||||||||||||||||||
Internet and online gaming | 976 | 9 | 937 | 9 | 39 | 4 | ||||||||||||||||||
Vitroä data center | 767 | 7 | 595 | 6 | 172 | 29 | ||||||||||||||||||
10,417 | 95 | 10,055 | 98 | 362 | 4 | |||||||||||||||||||
Non-Service Revenues: | ||||||||||||||||||||||||
Point-product-sales | 566 | 5 | 267 | 2 | 299 | 112 | ||||||||||||||||||
Total ICT Revenues | Php | 10,983 | 100 | Php | 10,322 | 100 | Php | 661 | 6 | |||||||||||||||
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Increase (Decrease) | ||||||||||||||||||||||||
2008 | % | 2007 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
ICT Services: | ||||||||||||||||||||||||
Compensation and employee benefits(1) | Php | 6,131 | 46 | Php | 5,455 | 50 | Php | 676 | 12 | |||||||||||||||
Asset impairment | 2,286 | 17 | 711 | 6 | 1,575 | 222 | ||||||||||||||||||
Depreciation and amortization | 833 | 6 | 934 | 8 | (101 | ) | (11 | ) | ||||||||||||||||
Professional and other contracted services | 747 | 6 | 1,129 | 10 | (382 | ) | (34 | ) | ||||||||||||||||
Rent | 665 | 5 | 620 | 6 | 45 | 7 | ||||||||||||||||||
Cost of sales | 660 | 5 | 381 | 3 | 279 | 73 | ||||||||||||||||||
Repairs and maintenance | 573 | 4 | 504 | 5 | 69 | 14 | ||||||||||||||||||
Communication, training and travel | 573 | 4 | 523 | 5 | 50 | 10 | ||||||||||||||||||
Amortization of intangible assets | 244 | 2 | 232 | 2 | 12 | 5 | ||||||||||||||||||
Selling and promotions | 203 | 2 | 194 | 2 | 9 | 5 | ||||||||||||||||||
Taxes and licenses | 98 | 1 | 94 | 1 | 4 | 4 | ||||||||||||||||||
Insurance and security services | 61 | — | 49 | — | 12 | 24 | ||||||||||||||||||
Other expenses | 193 | 2 | 179 | 2 | 14 | 8 | ||||||||||||||||||
Total | Php | 13,267 | 100 | Php | 11,005 | 100 | Php | 2,262 | 21 | |||||||||||||||
(1) | Includes salaries and employee benefits, incentive plan, pension and MRP costs. |
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Change | ||||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
(in millions) | ||||||||||||||||
Other Income (Expenses) | ||||||||||||||||
Foreign exchange gains (losses) — net | Php | 93 | Php | (138 | ) | Php | 231 | 167 | ||||||||
Interest income | 22 | 21 | 1 | 5 | ||||||||||||
(Loss) gains on derivative transactions — net | (59 | ) | 138 | (197 | ) | (143 | ) | |||||||||
Financing costs | (172 | ) | (132 | ) | (40 | ) | (30 | ) | ||||||||
Others | 115 | 583 | (468 | ) | (80 | ) | ||||||||||
Total | Php | (1 | ) | Php | 472 | Php | (473 | ) | (100 | ) | ||||||
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Change | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless | Php | 89,299 | 64 | Php | 80,405 | 63 | Php | 8,894 | 11 | |||||||||||||||
Fixed line | 48,832 | 35 | 49,255 | 39 | (423 | ) | (1 | ) | ||||||||||||||||
Information and communications technology | 10,322 | 8 | 6,890 | 5 | 3,432 | 50 | ||||||||||||||||||
Inter-segment transactions | (9,749 | ) | (7 | ) | (9,042 | ) | (7 | ) | (707 | ) | 8 | |||||||||||||
Total | Php | 138,704 | 100 | Php | 127,508 | 100 | Php | 11,196 | 9 | |||||||||||||||
Change | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless | Php | 44,530 | 53 | Php | 42,821 | 52 | Php | 1,709 | 4 | |||||||||||||||
Fixed line | 37,891 | 45 | 41,149 | 50 | (3,258 | ) | (8 | ) | ||||||||||||||||
Information and communications technology | 11,005 | 13 | 7,175 | 9 | 3,830 | 53 | ||||||||||||||||||
Inter-segment transactions | (9,839 | ) | (11 | ) | (9,142 | ) | (11 | ) | (697 | ) | (8 | ) | ||||||||||||
Total | Php | 83,587 | 100 | Php | 82,003 | 100 | Php | 1,584 | 2 | |||||||||||||||
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Change | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless | Php | 2,577 | 87 | Php | (1,113 | ) | 15 | Php | 3,690 | 332 | ||||||||||||||
Fixed line | (64 | ) | (2 | ) | (5,979 | ) | 82 | 5,915 | (99 | ) | ||||||||||||||
Information and communications technology | 472 | 16 | (64 | ) | 1 | 536 | 838 | |||||||||||||||||
Inter-segment transactions | (21 | ) | (1 | ) | (100 | ) | 2 | 79 | 79 | |||||||||||||||
Total | Php | 2,964 | 100 | Php | (7,256 | ) | 100 | Php | 10,220 | 141 | ||||||||||||||
Change | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless | Php | 31,780 | 81 | Php | 30,127 | 92 | Php | 1,653 | 5 | |||||||||||||||
Fixed line | 7,519 | 19 | 2,766 | 9 | 4,753 | 172 | ||||||||||||||||||
Information and communications technology | (94 | ) | — | (312 | ) | (1 | ) | 218 | (70 | ) | ||||||||||||||
Inter-segment transactions | 69 | — | — | — | 69 | 100 | ||||||||||||||||||
Total | Php | 39,274 | 100 | Php | 32,581 | 100 | Php | 6,693 | 21 | |||||||||||||||
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Increase | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless Services: | ||||||||||||||||||||||||
Service Revenues | ||||||||||||||||||||||||
Cellular | Php | 82,334 | 92 | Php | 75,617 | 94 | Php | 6,717 | 9 | |||||||||||||||
Wireless broadband, satellite and others | 4,165 | 5 | 2,778 | 3 | 1,387 | 50 | ||||||||||||||||||
86,499 | 97 | 78,395 | 97 | 8,104 | 10 | |||||||||||||||||||
Non-Service Revenues: | ||||||||||||||||||||||||
Sale of cellular handsets and SIM-packs | 2,800 | 3 | 2,010 | 3 | 790 | 39 | ||||||||||||||||||
Total Wireless Revenues | Php | 89,299 | 100 | Php | 80,405 | 100 | Php | 8,894 | 11 | |||||||||||||||
Increase | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
(in millions) | ||||||||||||||||
Cellular service revenues | Php | 82,334 | Php | 75,617 | Php | 6,717 | 9 | |||||||||
By service type | 80,197 | 73,905 | 6,292 | 9 | ||||||||||||
Prepaid | 74,284 | 68,846 | 5,438 | 8 | ||||||||||||
Postpaid | 5,913 | 5,059 | 854 | 17 | ||||||||||||
By component | 80,197 | 73,905 | 6,292 | 9 | ||||||||||||
Voice | 36,105 | 35,233 | 872 | 2 | ||||||||||||
Data | 44,092 | 38,672 | 5,420 | 14 | ||||||||||||
Others(1) | 2,137 | 1,712 | 425 | 25 |
(1) | Refers to other non-subscriber-related revenues consisting primarily of inbound international roaming fees, revenues from Smart’s public calling offices and a small number of leased line contracts, revenues from Wolfpac and other Smart subsidiaries and revenue share in PLDT’s WeRoam and PLDT Landline Plus services. |
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Increase | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
Cellular subscriber base | 30,041,030 | 24,175,384 | 5,865,646 | 24 | ||||||||||||
Prepaid | 29,699,150 | 23,856,821 | 5,842,329 | 24 | ||||||||||||
Smart | 19,997,324 | 16,882,442 | 3,114,882 | 18 | ||||||||||||
Piltel | 9,701,826 | 6,974,379 | 2,727,447 | 39 | ||||||||||||
Postpaid | 341,880 | 318,563 | 23,317 | 7 | ||||||||||||
Systemwide traffic volumes (in millions) | ||||||||||||||||
Calls (in minutes) | 6,355 | 5,667 | 688 | 12 | ||||||||||||
Domestic — outbound | 3,799 | 3,437 | 362 | 11 | ||||||||||||
International | 2,556 | 2,230 | 326 | 15 | ||||||||||||
Inbound | 2,355 | 2,065 | 290 | 14 | ||||||||||||
Outbound | 201 | 165 | 36 | 22 | ||||||||||||
SMS count | 227,028 | 238,362 | (11,334 | ) | (5 | ) | ||||||||||
Text messages | 225,083 | 235,957 | (10,874 | ) | (5 | ) | ||||||||||
Domestic | 224,818 | 235,734 | (10,916 | ) | (5 | ) | ||||||||||
Bucket-Priced | 199,326 | 203,669 | (4,343 | ) | (2 | ) | ||||||||||
Standard | 25,492 | 32,065 | (6,573 | ) | (20 | ) | ||||||||||
International | 265 | 223 | 42 | 19 | ||||||||||||
Value-Added Services | 1,903 | 2,370 | (467 | ) | (20 | ) | ||||||||||
Financial Services | 42 | 35 | 7 | 20 |
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Increase (Decrease) | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
(in millions) | ||||||||||||||||
Text messaging | ||||||||||||||||
Domestic | Php | 39,430 | Php | 32,763 | Php | 6,667 | 20 | |||||||||
Bucket-Priced | 20,141 | 11,054 | 9,087 | 82 | ||||||||||||
Standard | 19,289 | 21,709 | (2,420 | ) | (11 | ) | ||||||||||
International | 1,835 | 1,886 | (51 | ) | (3 | ) | ||||||||||
41,265 | 34,649 | 6,616 | 19 | |||||||||||||
Value-added services | ||||||||||||||||
Standard(1) | 1,802 | 2,809 | (1,007 | ) | (36 | ) | ||||||||||
Rich Media(2) | 352 | 287 | 65 | 23 | ||||||||||||
Pasa Load | 594 | 854 | (260 | ) | (30 | ) | ||||||||||
2,748 | 3,950 | (1,202 | ) | (30 | ) | |||||||||||
Financial services | ||||||||||||||||
Smart Money | 75 | 68 | 7 | 10 | ||||||||||||
Mobile Banking | 4 | 5 | (1 | ) | (20 | ) | ||||||||||
79 | 73 | 6 | 8 | |||||||||||||
Total | Php | 44,092 | Php | 38,672 | Php | 5,420 | 14 | |||||||||
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Increase (Decrease) | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
Prepaid | 5,842,329 | 3,728,278 | 2,114,051 | 57 | ||||||||||||
Smart | 3,114,882 | 1,738,324 | 1,376,558 | 79 | ||||||||||||
Piltel | 2,727,447 | 1,989,954 | 737,493 | 37 | ||||||||||||
Postpaid | 23,317 | 38,485 | (15,168 | ) | (39 | ) | ||||||||||
Total | 5,865,646 | 3,766,763 | 2,098,883 | 56 | ||||||||||||
2007 | 2006 | |||||||||||||||||||||||||||||||
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | |||||||||||||||||||||||||
Prepaid | 1,301,154 | 1,615,246 | 1,148,283 | 1,777,646 | 486,009 | 1,553,570 | 450,553 | 1,238,146 | ||||||||||||||||||||||||
Smart | 880,281 | 1,050,678 | 763,257 | 420,666 | 111,987 | 851,326 | 131,486 | 643,525 | ||||||||||||||||||||||||
Piltel | 420,873 | 564,568 | 385,026 | 1,356,980 | 374,022 | 702,244 | 319,067 | 594,621 | ||||||||||||||||||||||||
Postpaid | 6,921 | 7,403 | 5,704 | 3,289 | 5,001 | 11,955 | 13,722 | 7,807 | ||||||||||||||||||||||||
Total | 1,308,075 | 1,622,649 | 1,153,987 | 1,780,935 | 491,010 | 1,565,525 | 464,275 | 1,245,953 | ||||||||||||||||||||||||
Gross(1) | Increase (Decrease) | Net(2) | Increase (Decrease) | |||||||||||||||||||||||||||||
2007 | 2006 | Amount | % | 2007 | 2006 | Amount | % | |||||||||||||||||||||||||
Prepaid | ||||||||||||||||||||||||||||||||
Smart | Php | 312 | Php | 339 | Php | (27 | ) | (8 | ) | Php | 254 | Php | 289 | Php | (35 | ) | (12 | ) | ||||||||||||||
Piltel | 221 | 226 | (5 | ) | (2 | ) | 184 | 194 | (10 | ) | (5 | ) | ||||||||||||||||||||
Prepaid — Blended(3) | 285 | 308 | (23 | ) | (7 | ) | 233 | 263 | (30 | ) | (11 | ) | ||||||||||||||||||||
Postpaid — Smart | 2,091 | 1,904 | 187 | 10 | 1,485 | 1,407 | 78 | 6 | ||||||||||||||||||||||||
Prepaid and Postpaid Blended(4) | 307 | 330 | (23 | ) | (7 | ) | 248 | 278 | (30 | ) | (11 | ) |
(1) | Gross monthly ARPU is calculated by dividing gross cellular service revenues for the month, including (i) discounts, (ii) allocated content-provider costs; and (iii) interconnection income but excluding inbound roaming revenues, by the average number of subscribers in the month. | |
(2) | Net monthly ARPU is calculated by dividing gross cellular service revenues for the month, net of (i) discounts,(ii) allocated content-provider costs; and (iii) interconnection income net of interconnection expense, by the average number of subscribers in the month. | |
(3) | The average monthly ARPU of Smart and Piltel. | |
(4) | The average monthly ARPU of prepaid and postpaid subscribers of Smart and prepaid subscribers of Piltel. |
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Prepaid | Postpaid | |||||||||||||||||||||||
Smart | Piltel | Smart | ||||||||||||||||||||||
Gross(1) | Net(2) | Gross(1) | Net(2) | Gross(1) | Net(2) | |||||||||||||||||||
2007 | ||||||||||||||||||||||||
First Quarter | Php | 323 | Php | 267 | Php | 228 | Php | 187 | Php | 2,045 | Php | 1,483 | ||||||||||||
Second Quarter | 324 | 265 | 233 | 198 | 2,141 | 1,526 | ||||||||||||||||||
Third Quarter | 293 | 239 | 206 | 173 | 2,073 | 1,464 | ||||||||||||||||||
Fourth Quarter | 307 | 244 | 216 | 177 | 2,105 | 1,467 | ||||||||||||||||||
2006 | ||||||||||||||||||||||||
First Quarter | Php | 356 | Php | 294 | Php | 245 | Php | 207 | Php | 1,867 | Php | 1,386 | ||||||||||||
Second Quarter | 344 | 294 | 234 | 202 | 1,920 | 1,414 | ||||||||||||||||||
Third Quarter | 323 | 280 | 213 | 184 | 1,891 | 1,403 | ||||||||||||||||||
Fourth Quarter | 332 | 286 | 213 | 184 | 1,939 | 1,425 |
(1) | Gross quarterly ARPU is calculated by dividing gross cellular service revenues for the quarter, including (i) discounts, (ii) allocated content-provider costs; and (iii) interconnection income but excluding inbound roaming revenues, by the average number of subscribers in the quarter. | |
(2) | Net quarterly ARPU is calculated by dividing gross cellular service revenues for the quarter, net of (i) discounts, (ii) allocated content-provider costs; and (iii) interconnection income net of interconnection expense, by the average number of subscribers in the quarter. |
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Increase (Decrease) | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Wireless Services: | ||||||||||||||||||||||||
Depreciation and amortization | Php | 12,202 | 27 | Php | 10,752 | 25 | Php | 1,450 | 13 | |||||||||||||||
Rent | 8,751 | 20 | 7,887 | 19 | 864 | 11 | ||||||||||||||||||
Compensation and employee benefits(1) | 4,608 | 10 | 5,041 | 12 | (433 | ) | (9 | ) | ||||||||||||||||
Cost of sales | 4,446 | 10 | 4,888 | 11 | (442 | ) | (9 | ) | ||||||||||||||||
Selling and promotions | 3,803 | 9 | 3,012 | 7 | 791 | 26 | ||||||||||||||||||
Repairs and maintenance | 3,634 | 8 | 3,646 | 9 | (12 | ) | — | |||||||||||||||||
Professional and other contracted services | 2,369 | 5 | 1,779 | 4 | 590 | 33 | ||||||||||||||||||
Taxes and licenses | 1,348 | 3 | 1,018 | 2 | 330 | 32 | ||||||||||||||||||
Communication, training and travel | 1,083 | 3 | 891 | 2 | 192 | 22 | ||||||||||||||||||
Insurance and security services | 783 | 2 | 797 | 2 | (14 | ) | (2 | ) | ||||||||||||||||
Asset Impairment | 563 | 1 | 2,220 | 5 | (1,657 | ) | (75 | ) | ||||||||||||||||
Amortization of intangible assets | 158 | — | 312 | 1 | (154 | ) | (49 | ) | ||||||||||||||||
Other expenses | 782 | 2 | 578 | 1 | 204 | 35 | ||||||||||||||||||
Total | Php | 44,530 | 100 | Php | 42,821 | 100 | Php | 1,709 | 4 | |||||||||||||||
(1) | Includes salaries and employee benefits, incentive plan, pension and manpower rightsizing program, or MRP, costs. |
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Increase (Decrease) | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
(in millions) | ||||||||||||||||
Other Income (Expenses) | ||||||||||||||||
Foreign exchange gains (losses) — net | Php | 2,649 | Php | 1,722 | Php | 927 | 54 | |||||||||
Interest income | 1,186 | 1,197 | (11 | ) | (1 | ) | ||||||||||
Gains (losses) on derivative transactions — net | 278 | 39 | 239 | 613 | ||||||||||||
Financing costs | (2,299 | ) | (4,658 | ) | 2,359 | (51 | ) | |||||||||
Others | 763 | 587 | 176 | 30 | ||||||||||||
Total | Php | 2,577 | Php | (1,113 | ) | Php | 3,690 | 332 | ||||||||
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Increase (Decrease) | ||||||||||||||||||||||||
2007 | % | 2006(1) | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Fixed Line Services: | ||||||||||||||||||||||||
Service Revenues | ||||||||||||||||||||||||
Local exchange | Php | 16,205 | 33 | Php | 16,965 | 35 | Php | (760 | ) | (4 | ) | |||||||||||||
International long distance | 8,674 | 18 | 9,933 | 20 | (1,259 | ) | (13 | ) | ||||||||||||||||
National long distance | 6,338 | 13 | 6,921 | 14 | (583 | ) | (8 | ) | ||||||||||||||||
Data and other network | 15,921 | 33 | 13,725 | 28 | 2,196 | 16 | ||||||||||||||||||
Miscellaneous | 1,413 | 3 | 1,632 | 3 | (219 | ) | (13 | ) | ||||||||||||||||
48,551 | 100 | 49,176 | 100 | (625 | ) | (1 | ) | |||||||||||||||||
Non-Service Revenues: | ||||||||||||||||||||||||
Sale of computers, cellular handsets and SIM-packs | 281 | — | 79 | — | 202 | 256 | ||||||||||||||||||
Total Fixed Line Revenues | Php | 48,832 | 100 | Php | 49,255 | 100 | Php | (423 | ) | (1 | ) | |||||||||||||
Increase (Decrease) | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
Total local exchange service revenues (in millions) | Php | 16,205 | Php | 16,965 | Php | (760 | ) | (4 | ) | |||||||
Number of fixed line subscribers | 1,724,702 | 1,776,647 | (51,945 | ) | (3 | ) | ||||||||||
Postpaid | 1,479,647 | 1,450,331 | 29,316 | 2 | ||||||||||||
Prepaid | 245,055 | 326,316 | (81,261 | ) | (25 | ) | ||||||||||
Number of fixed line employees | 8,080 | 8,711 | (631 | ) | (7 | ) | ||||||||||
Number of fixed line subscribers per employee | 213 | 204 | 9 | 4 |
Increase (Decrease) | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
Total international long distance service revenues (in millions) | Php | 8,674 | Php | 9,933 | Php | (1,259 | ) | (13 | ) | |||||||
Inbound | 7,127 | 8,378 | (1,251 | ) | (15 | ) | ||||||||||
Outbound | 1,547 | 1,555 | (8 | ) | (1 | ) | ||||||||||
International call volumes (in million minutes, except call ratio) | 2,280 | 2,177 | 103 | 5 | ||||||||||||
Inbound | 2,007 | 1,984 | 23 | 1 | ||||||||||||
Outbound | 273 | 193 | 80 | 41 | ||||||||||||
Inbound-outbound call ratio | 7.4:1 | 10.3:1 | — | — |
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Decrease | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
Total national long distance service revenues (in millions) | Php | 6,338 | Php | 6,921 | Php | (583 | ) | (8 | ) | |||||||
National long distance call volumes (in million minutes) | 2,183 | 2,251 | (68 | ) | (3 | ) |
Increase (Decrease) | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
Data and other network service revenues (in millions) | Php | 15,921 | Php | 13,725 | Php | 2,196 | 16 | |||||||||
Number ofDSLbroadband subscribers | 264,291 | 133,159 | 131,132 | 98 | ||||||||||||
Number ofPLDT Vibenarrowband subscribers | 230,995 | 297,250 | (66,255 | ) | (22 | ) |
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Increase (Decrease) | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Fixed Line Services: | ||||||||||||||||||||||||
Depreciation and amortization | Php | 15,477 | 41 | Php | 20,406 | 50 | Php | (4,929 | ) | (24 | ) | |||||||||||||
Compensation and employee benefits(1) | 10,411 | 27 | 10,298 | 25 | 113 | 1 | ||||||||||||||||||
Repairs and maintenance | 3,772 | 10 | 3,553 | 9 | 219 | 6 | ||||||||||||||||||
Rent | 1,799 | 5 | 1,579 | 4 | 220 | 14 | ||||||||||||||||||
Professional and other contracted services | 1,727 | 5 | 1,082 | 3 | 645 | 60 | ||||||||||||||||||
Selling and promotions | 1,552 | 4 | 1,733 | 4 | (181 | ) | (10 | ) | ||||||||||||||||
Taxes and licenses | 877 | 2 | 659 | 2 | 218 | 33 | ||||||||||||||||||
Provisions | 666 | 2 | 38 | — | 628 | 1,653 | ||||||||||||||||||
Communication, training and travel | 466 | 1 | 507 | 1 | (41 | ) | (8 | ) | ||||||||||||||||
Insurance and security services | 439 | 1 | 498 | 1 | (59 | ) | (12 | ) | ||||||||||||||||
Cost of sales | 300 | 1 | 162 | — | 138 | 85 | ||||||||||||||||||
Asset impairment | 43 | — | 54 | — | (11 | ) | (20 | ) | ||||||||||||||||
Other expenses | 362 | 1 | 580 | 1 | (218 | ) | (38 | ) | ||||||||||||||||
Total | Php | 37,891 | 100 | Php | 41,149 | 100 | Php | (3,258 | ) | (8 | ) | |||||||||||||
(1) | Includes salaries and employee benefits, incentive plan, pension and MRP costs. |
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Change | |||||||||||||||||||
2007 | 2006 | Amount | % | ||||||||||||||||
(in millions) | |||||||||||||||||||
Other Income (Expenses) | |||||||||||||||||||
Foreign exchange gains — net | Php | 5,479 | Php | 3,208 | Php | 2,271 | 71 | ||||||||||||
Interest income | 296 | 441 | (145 | ) | (33 | ) | |||||||||||||
(Losses) gains on derivative transactions — net | (3,335 | ) | (8,346 | ) | 5,011 | (60 | ) | ||||||||||||
Financing costs | (4,657 | ) | (6,173 | ) | 1,516 | (25 | ) | ||||||||||||
Others | 2,153 | 4,891 | (2,738 | ) | 56 | ||||||||||||||
Total | Php | (64 | ) | Php | (5,979 | ) | Php | 5,915 | 99 | ||||||||||
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Increase (Decrease) | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Service Revenues: | ||||||||||||||||||||||||
Knowledge processing solutions | Php | 5,261 | 51 | Php | 2,374 | 34 | Php | 2,887 | 122 | |||||||||||||||
Customer interaction solutions | 3,262 | 32 | 2,624 | 38 | 638 | 24 | ||||||||||||||||||
Internet and online gaming | 937 | 9 | 796 | 12 | 141 | 18 | ||||||||||||||||||
Vitroä data center | 595 | 6 | 543 | 8 | 52 | 10 | ||||||||||||||||||
10,055 | 98 | 6,337 | 92 | 3,718 | 59 | |||||||||||||||||||
Non-Service Revenues: | ||||||||||||||||||||||||
Point-product-sales | 267 | 2 | 553 | 8 | (286 | ) | (52 | ) | ||||||||||||||||
Total ICT Revenues | Php | 10,322 | 100 | Php | 6,890 | 100 | Php | 3,432 | 50 | |||||||||||||||
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Increase (Decrease) | ||||||||||||||||||||||||
2007 | % | 2006 | % | Amount | % | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
ICT Services: | ||||||||||||||||||||||||
Compensation and employee benefits(1) | Php | 5,455 | 50 | Php | 3,021 | 42 | Php | 2,434 | 81 | |||||||||||||||
Professional and other contracted services | 1,129 | 10 | 739 | 10 | 390 | 53 | ||||||||||||||||||
Depreciation and amortization | 934 | 8 | 711 | 10 | 223 | 31 | ||||||||||||||||||
Asset impairment | 711 | 6 | 492 | 7 | 219 | 45 | ||||||||||||||||||
Rent | 620 | 6 | 444 | 6 | 176 | 40 | ||||||||||||||||||
Communication, training and travel | 523 | 5 | 276 | 4 | 247 | 89 | ||||||||||||||||||
Repairs and maintenance | 504 | 5 | 368 | 5 | 136 | 37 | ||||||||||||||||||
Cost of sales | 381 | 3 | 575 | 8 | (194 | ) | (34 | ) | ||||||||||||||||
Amortization of intangible assets | 232 | 2 | 138 | 2 | 94 | 68 | ||||||||||||||||||
Selling and promotions | 194 | 2 | 194 | 3 | — | — | ||||||||||||||||||
Taxes and licenses | 94 | 1 | 70 | 1 | 24 | 34 | ||||||||||||||||||
Insurance and security services | 49 | — | 35 | — | 14 | 40 | ||||||||||||||||||
Other expenses | 179 | 2 | 112 | 2 | 67 | 60 | ||||||||||||||||||
Total | Php | 11,005 | 100 | Php | 7,175 | 100 | Php | 3,830 | 53 | |||||||||||||||
(1) | Includes salaries and employee benefits, incentive plan, pension and MRP costs. |
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Change | ||||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
(in millions) | ||||||||||||||||
Other Income (Expenses) | ||||||||||||||||
Gains on derivative transactions — net | Php | 138 | Php | 3 | Php | 135 | 4,500 | |||||||||
Interest income | 21 | 16 | 5 | 31 | ||||||||||||
Financing costs | (132 | ) | (23 | ) | (109 | ) | (474 | ) | ||||||||
Foreign exchange losses — net | (138 | ) | (109 | ) | (29 | ) | (27 | ) | ||||||||
Others | 583 | 49 | 534 | 1,090 | ||||||||||||
Total | Php | 472 | Php | (64 | ) | Php | 536 | 838 | ||||||||
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2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Cash Flows | ||||||||||||
Net cash provided by operating activities | Php | 78,302 | Php | 77,418 | Php | 69,211 | ||||||
Net cash used in investing activities | 17,014 | 31,319 | 35,790 | |||||||||
Capital expenditures | 25,203 | 24,824 | 20,674 | |||||||||
Net cash used in financing activities | 45,464 | 44,819 | 45,900 | |||||||||
Net increase (decrease) in cash and cash equivalents | 16,237 | 577 | (13,189 | ) |
2008 | 2007 | |||||||
(in millions) | ||||||||
Capitalization | ||||||||
Interest-bearing financial liabilities: | ||||||||
Long-term financial liabilities: | ||||||||
Long-term debt | Php | 58,899 | Php | 53,372 | ||||
Obligations under finance lease | 11 | 15 | ||||||
58,910 | 53,387 | |||||||
Current portion of interest-bearing financial liabilities: | ||||||||
Notes payable | 553 | 493 | ||||||
Long-term debt maturing within one year | 14,459 | 6,775 | ||||||
Obligations under finance lease maturing within one year | 59 | 481 | ||||||
Preferred stock subject to mandatory redemption | 9 | 1,015 | ||||||
15,080 | 8,764 | |||||||
Total interest-bearing financial liabilities | 73,990 | 62,151 | ||||||
Total equity | 106,969 | 112,345 | ||||||
Php | 180,959 | Php | 174,496 | |||||
Other Financial Data | ||||||||
Total assets | Php | 252,558 | Php | 240,158 | ||||
Property, plant and equipment — net | 160,326 | 159,414 | ||||||
Cash and cash equivalents | 33,684 | 17,447 | ||||||
Short-term investments | 6,670 | 13,415 |
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Rating Agency | Credit Rating | Outlook | ||||
Standard & Poor’s Ratings Services, or Standard & Poor’s | Foreign Currency Rating | BB+ | Stable | |||
Moody’s Investor Service, or Moody’s | Foreign Currency Senior Unsecured Debt Rating | Ba2 | Positive | |||
Local Currency Corporate Family Rating | Baa2 | Positive | ||||
Fitch Ratings, or Fitch | Long-term Foreign Currency Rating | BB+ | Stable | |||
Long-term Local Currency Rating | BB+ | Stable | ||||
Long-term Foreign Currency Issuer Default Rating, or IDR | BB+ | Stable | ||||
Long-term Local Currency Issuer Default Rating | BBB | Stable | ||||
National Long-term Rating | AAA(ph1) | Stable |
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Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 year | 1-3 years | 3-5 Years | 5 years | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||
Long-term debt(1): | 99,363 | 7,649 | 31,500 | 26,744 | 33,470 | |||||||||||||||
Principal | 77,934 | 7,077 | 19,916 | 21,978 | 28,963 | |||||||||||||||
Interest | 21,429 | 572 | 11,584 | 4,766 | 4,507 | |||||||||||||||
Lease obligations: | 7,235 | 2,727 | 1,608 | 1,265 | 1,635 | |||||||||||||||
Operating lease | 7,164 | 2,667 | 1,601 | 1,261 | 1,635 | |||||||||||||||
Finance lease | 71 | 60 | 7 | 4 | — | |||||||||||||||
Unconditional purchase obligations(2) | 762 | 24 | 167 | 286 | 285 | |||||||||||||||
Other obligations: | 51,367 | 33,714 | 11,630 | 1,816 | 4,207 | |||||||||||||||
Mandatory conversion and purchase of shares | 9 | 9 | — | — | — | |||||||||||||||
Derivative financial liabilities(3): | 6,207 | 108 | 2,003 | 1,768 | 2,328 | |||||||||||||||
Long-term currency swaps | 6,099 | — | 2,003 | 1,768 | 2,328 | |||||||||||||||
Forward foreign exchange contracts | 69 | 69 | — | — | — | |||||||||||||||
Long-term foreign currency options | 39 | 39 | — | — | — | |||||||||||||||
Various trade and other obligations: | 45,151 | 33,597 | 9,627 | 48 | 1,879 | |||||||||||||||
Suppliers and contractors | 22,781 | 14,131 | 8,650 | — | — | |||||||||||||||
Utilities and related expenses | 11,376 | 11,346 | 27 | 1 | 2 | |||||||||||||||
Employee benefits | 2,925 | 2,925 | — | — | — | |||||||||||||||
Customers’ deposits | 2,251 | — | 327 | 47 | 1,877 | |||||||||||||||
Carriers | 1,780 | 1,780 | — | — | — | |||||||||||||||
Dividends | 1,379 | 1,379 | — | — | — | |||||||||||||||
Others | 2,659 | 2,036 | 623 | — | — | |||||||||||||||
Total contractual obligations | 158,727 | 44,114 | 44,905 | 30,111 | 39,597 | |||||||||||||||
(1) | Before deducting unamortized debt discount and debt issuance costs. | |
(2) | Based on the Amended ATPA with AIL. | |
(3) | Gross liabilities before any offsetting application. |
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Name | Age | Period during which individual has served as such | ||||
Manuel V. Pangilinan | 62 | November 24, 1998 to present | ||||
Napoleon L. Nazareno | 59 | November 24, 1998 to present | ||||
Helen Y. Dee | 64 | June 18, 1986 to present | ||||
Ray C. Espinosa | 52 | November 24, 1998 to present | ||||
Tatsu Kono | 56 | March 28, 2006 to present | ||||
Rev. Fr. Bienvenido F. Nebres, S.J.* | 68 | November 24, 1998 to present | ||||
Takashi Ooi | 47 | November 6, 2007 to present | ||||
Donald G. Dee(1) | 62 | September 30, 2008 to present | ||||
Oscar S. Reyes* | 62 | April 5, 2005 to present | ||||
Albert F. del Rosario | 69 | November 24, 1998 to present | ||||
Pedro E. Roxas* | 52 | March 1, 2001 to present | ||||
Alfred V. Ty* | 41 | June 13, 2006 to present | ||||
Tony Tan Caktiong(2) | 56 | July 8, 2008 to present |
* | Independent Director | |
(1) | Elected on September 30, 2008 to replace Corazon de la Paz-Bernardo who resigned as a director effective on the same date. | |
(2) | Elected on July 8, 2008 to replace Ma. Lourdes C. Rausa-Chan who resigned as a director effective July 7, 2008. |
Period during which | ||||||||
Name | Age | Position(s) | individual has served as such | |||||
Manuel V. Pangilinan | 62 | Chairman of the Board | February 19, 2004 to present | |||||
Napoleon L. Nazareno | 59 | President and Chief Executive Officer President and Chief Executive Officer of Smart | February 19, 2004 to present January 2000 to present | |||||
Ernesto R. Alberto | 47 | Senior Vice President Corporate Business Head Customer Sales and Marketing Head | May 15, 2003 to present May 15, 2003 to January 31, 2008 February 1, 2008 to present | |||||
Rene G. Bañez | 53 | Senior Vice President Chief Governance Officer Administration and Materials Management Head | January 25, 2005 to present October 5, 2004 to March 3, 2008 January 1, 2008 to present | |||||
Anabelle L. Chua | 48 | Senior Vice President Corporate Finance and Treasury Head Treasurer Chief Financial Officer of Smart | February 26, 2002 to present March 1, 1998 to present February 1, 1999 to present December 1, 2005 to present | |||||
Jun R. Florencio | 53 | Senior Vice President Audit and Assurance Head Internal Audit and Fraud Risk Management Head | June 14, 2005 to present September 1, 2000 to February 15, 2006 February 16, 2006 to present | |||||
Menardo G. Jimenez, Jr. | 45 | Senior Vice President Corporate Communications and Public Affairs Head Retail Business Head Business Transformation Office Revenue Team | December 9, 2004 to present December 1, 2001 to June 15, 2004 June 16, 2004 to December 31, 2007 January 1, 2008 to present | |||||
George N. Lim | 56 | Senior Vice President Network Services Head Business Transformation Office Network Team | February 26, 1999 to present February 1, 2003 to December 31, 2007 January 1, 2008 to present | |||||
Alfredo S. Panlilio | 45 | Senior Vice President International and Carrier Business Head PLDT Global Corp. President | May 8, 2001 to present February 1, 2003 to June 15, 2004 June 16, 2004 to present |
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Period during which | ||||||||
Name | Age | Position(s) | individual has served as such | |||||
Claro Carmelo P. Ramirez | 48 | Senior Vice President Retail Business Head International and Carrier Business Head Consumer Affairs Head Office of the President and CEO | July 1, 1999 to present February 1, 2003 to June 15, 2004 June 16, 2004 to December 4, 2005 December 5, 2005 to December 31, 2007 January 1, 2008 to present | |||||
Ma. Lourdes C. Rausa-Chan | 55 | Corporate Secretary Senior Vice President Corporate Affairs and Legal Services Head Chief Governance Officer | November 24, 1998 to present January 5, 1999 to present March 4, 2008 to present | |||||
Victorico P. Vargas | 57 | Senior Vice President Human Resources Head International and Carrier Business Head Business Transformation Office Head | February 15, 2000 to present February 15, 2000 to present March 1, 2007 to December 31, 2007 January 1, 2008 to present | |||||
June Cheryl A. Cabal | 35 | First Vice President Financial Reporting and Planning Head Financial Reporting and Controllership Head | May 6, 2008 to present May 1, 2002 to November 15, 2006 November 15, 2006 to present | |||||
Christopher H. Young | 51 | Chief Financial Advisor | November 24, 1998 to present | |||||
Rolando G. Peña | 46 | Network Services Head of Smart Customer Service Assurance Head | September 1, 1994 to present January 1, 2008 to present |
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Name of Companies | ||||
Name of Director | Public | Private | ||
Helen Y. Dee | EEI Corporation | AY Holdings, Inc. | ||
Petro Energy Resources Corporation | Business Harmony Realty, Inc. | |||
Rizal Commercial Banking Corporation | Great Life Financial Assurance Corporation | |||
(Chairman) | ||||
Seafront Resources Corporation | Great Pacific Life Assurance Corp. | |||
Grepalife Asset Management Corp. (Chairman) | ||||
Grepalife Fixed Income Fund Corp. (Chairman) | ||||
Hi-Eisai Pharmaceuticals, Inc. (Chairman) | ||||
Honda Cars Philippines, Inc. | ||||
Isuzu Philippines, Inc. | ||||
La Funeraria Paz, Inc. | ||||
Landev Corp. (Chairman) | ||||
Malayan Insurance Company (Chairman) | ||||
Manila Memorial Park Cemetery, Inc. (Chairman) | ||||
Mapua Information Technology Center, Inc. (Chairman) | ||||
MICO Equities, Inc. | ||||
Pan Malayan Management and Investment Corporation | ||||
(Vice Chairman) | ||||
Pan Malayan Realty Corp. (Chairman) | ||||
RCBC Forex Brokers Corp. | ||||
RCBC Savings Bank (Chairman) | ||||
South Western Cement Corporation | ||||
Ray C. Espinosa | Lepanto Consolidated Mining Company | Digital Paradise, Inc. (Chairman) | ||
PhilWeb Corporation | ePDS, Inc. (Chairman) | |||
ePLDT Ventus, Inc. (Chairman) | ||||
Infocom Technologies, Inc. (Chairman) | ||||
Level Up! (Philippines), Inc. (Chairman) | ||||
netGames, Inc. (Chairman) | ||||
Parlance Systems, Inc. (Chairman) | ||||
SPi Technologies, Inc. (Chairman) | ||||
Vocativ Systems, Inc. (Chairman) |
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Name of Companies | ||||
Name of Director | Public | Private | ||
Albert F. del Rosario | First Philippine Infrastructure, Inc. | Asia Insurance Philippines Corporation (Vice Chairman) | ||
Metro Pacific Investments Corporation | Bancholders, Inc. | |||
Business World Publishing Corporation (Chairman) | ||||
Gotuaco del Rosario and Associates, Inc. (Chairman) | ||||
Infrontier (Philippines), Inc. | ||||
Landco Pacific Corporation | ||||
LMG Chemicals Corporation | ||||
Manila North Tollways Corporation | ||||
MediaQuest Holdings, Inc. | ||||
MediaScape, Inc. | ||||
Nation Broadcasting Corporation | ||||
Philippine Indocoil Corporation (Chairman) | ||||
Stratbase, Inc. (Chairman) | ||||
Oscar S. Reyes | Bank of the Philippine Islands | CEO’s Inc. | ||
Basic Energy Corporation | First Philippine Electric Company | |||
Manila Water Company, Inc. | In1 Archipelago Minerals, Inc. | |||
Pepsi Cola Products Philippines, Inc. | Link Edge, Inc. (Chairman) | |||
Mindoro Resources Ltd. | ||||
MRL Gold Phils. Inc. (Chairman) | ||||
Petrolift, Inc. | ||||
Sun Life of Canada Phils. Inc. | ||||
Sun Life Dollar Advantage & Dollar Abundance Funds, Inc. | ||||
Sun Life Financial, Inc. |
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2007 | 2008 | 2009 | ||||||||||
Actual | Estimate | |||||||||||
(In millions) | ||||||||||||
President and CEO(1)(4) and four most highly compensated key officers: | ||||||||||||
Salary(2) | Php | 36 | Php | 41 | Php | 49 | ||||||
Bonus(3) | 9 | 8 | 10 | |||||||||
Other compensation(4) | 252 | 46 | 48 | |||||||||
297 | 95 | 107 | ||||||||||
All other key officers, other officers and directors as a group (excluding the President and CEO and four most highly compensated key officers): | ||||||||||||
Salary(2) | 194 | 188 | 220 | |||||||||
Bonus(3) | 50 | 48 | 60 | |||||||||
Other compensation(4) | 1,063 | 266 | 223 | |||||||||
Php | 1,307 | Php | 502 | Php | 503 | |||||||
(1) | The President and CEO receives compensation from Smart. | |
(2) | Basic monthly salary. | |
(3) | Includes longevity pay, mid-year bonus, 13th month and Christmas bonus. | |
(4) | Includes variable pay, director’s fee and other payments. Variable pay is based on an annual incentive system that encourages and rewards the achievement of corporate objectives. It covers regular officers and executives of PLDT and is based on a percentage of their guaranteed annual cash compensation. Also includes LTIP payout in May 2007. |
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Shares of | Shares of | |||||||
Name of Owner | Common Stock(1) | Preferred Stock | ||||||
Manuel V. Pangilinan | 221,450 | 360 | ||||||
Napoleon L. Nazareno | 13,927 | (2) | 495 | |||||
Helen Y. Dee | 22,055 | (3) | 180 | |||||
Ray C. Espinosa | 16,243 | (2) | — | |||||
Takashi Ooi | 1 | — | ||||||
Tatsu Kono | 100 | — | ||||||
Rev. Fr. Bienvenido F. Nebres, S.J. | 2 | — | ||||||
Donald G. Dee | 10,931,131 | (4) | 640 | |||||
Oscar S. Reyes | 1 | 360 | ||||||
Albert F. del Rosario | 140,005 | (5) | 2,100 |
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Shares of | Shares of | |||||||
Name of Owner | Common Stock(1) | Preferred Stock | ||||||
Pedro E. Roxas | 1 | 540 | ||||||
Alfred V. Ty | 1 | — | ||||||
Tony Tan Caktiong | 1 | 50 | ||||||
Ma. Lourdes C. Rausa-Chan | 699 | (2) | 350 | |||||
Ernesto R. Alberto | 4,100 | — | ||||||
Rene G. Bañez | 1 | 540 | ||||||
Anabelle L. Chua | 13,878 | (2) | — | |||||
Jun R. Florencio | 15 | 530 | ||||||
Menardo G. Jimenez, Jr. | 22 | — | ||||||
George N. Lim | 5,356 | (2) | 360 | |||||
Alfredo S. Panlilio | 4,531 | — | ||||||
Claro Carmelo P. Ramirez | 11,500 | — | ||||||
Victorico P. Vargas | 2,878 | 180 | ||||||
June Cheryl A. Cabal | — | — | ||||||
Christopher H. Young | 51,813 | (2) | — | |||||
Rolando G. Peña | — | — |
(1) | As at December 31, 2008, under PLDT’s ESOP, all of the options to purchase shares of common stock of key officers and directors listed in the table above had been exercised. No options have been granted to non-executive directors. All outstanding options were exercisable at an exercise price of Php814 per share and had an expiration date of December 10, 2009. All outstanding options were fully vested as at December 10, 2004. | |
(2) | Includes PLDT common shares that have been lodged with the Philippine Central Depository, Inc. | |
(3) | Includes 21,957 PLDT common shares registered in the name of Hydee Management and Resources, Inc. As chairperson and president of Hydee Management & Resources, Inc., Ms. Dee may exercise voting rights in respect of and may be considered to have beneficial ownership of these shares. | |
(4) | Includes 5,024,788 PLDT common shares registered in the name of Social Security System and 5,906,342 PLDT common shares held of record by PCD Nominee Corporation. Mr. Dee, as Commissioner of the Social Security System, may exercise voting rights in respect of these shares and may be considered to have beneficial ownership of these shares. | |
(5) | Out of the 140,005 common shares, 15,000 common shares are under the name of Albert F. del Rosario and/or Margaret Gretchen del Rosario. |
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• | to review and evaluate the qualifications, performance and independence of the external auditors and the lead partner of the external auditors; | ||
• | to select and appoint the external auditors and to remove or replace the external auditors; | ||
• | to review and approve in consultation with the head of the internal audit organization and the chief financial advisor the fees charged by the external auditors for audit and non-audit services; | ||
• | to pre-approve all audit and non-audit services to be provided by and all fees to be paid to the external auditors; | ||
• | to ensure that the external auditors prepare and deliver annually the statement as to independence, to discuss with the external auditors any relationships or services disclosed in such statements that may impact the objectivity, independence or quality of services of said external auditors and to take appropriate action in response to such statement to satisfy itself of the external auditor’s independence; | ||
• | to ensure that the external auditors or the lead partner of the external auditors having the primary responsibility for the audit of PLDT’s accounts is rotated at least once every five years; | ||
• | to advise the external auditors that they are expected to provide the committee a timely analysis of significant/critical financial reporting issues and practices; | ||
• | to obtain assurance from the external auditors that the audit was conducted in a manner consistent with the requirement under applicable rules; and | ||
• | to resolve disagreements between management and the external auditors regarding financial reporting. |
1. | To develop and recommend to the board for approval and oversee the implementation of corporate governance principles and policies; | ||
2. | To review and evaluate the qualifications of the persons nominated for election as directors (including independent directors) or other positions requiring board appointment; |
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3. | To identify the qualified nominees and recommend that the board select and recommend such qualified nominees for election as directors/independent directors at the annual meeting of shareholders; and | ||
4. | To provide an assessment on our board’s effectiveness in the process of replacing or appointing new directors or members of the board committees. |
1. | To provide guidance to and assist our board of directors in developing a compensation philosophy or policy consistent with our culture, strategy and control environment; | ||
2. | To oversee the development and administration of our compensation programs; and | ||
3. | To review and approve corporate goals and objectives relevant to the compensation of our chief executive officer, evaluate the performance of our chief executive officer in light of those goals and objectives, and set the compensation level of our chief executive officer based on such evaluation. |
1. | To review and approve our technology strategy and roadmap, and to review and advise our board on major technology trends and strategies; | ||
2. | To evaluate and advise our board on actual and proposed technology investments and transactions; | ||
3. | To review and submit to the board recommendations regarding management’s formulation and execution and overall performance in achieving technology-related strategic goals and objectives; and | ||
4. | To recommend to the board approaches to acquiring and maintaining technology positions and maximizing our access to relevant technologies, and to ensure optimized contribution of technology to our business strategy and growth targets. |
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1. | Mr. Manuel V. Pangilinan, in his capacity as Chairman of the Board of Metro Pacific Corporation, a stockholder of Metro Tagaytay Land Company, Inc., or MTLCI, and four other individuals were respondents in I.S. 04-A-1057 for alleged violation of Article 315 (1)(b), or Estafa, of the Revised Penal Code filed by Mr. Vicente A. Tuason in behalf of Universal Leisure Club, Inc. (ULCI) and Mr. Jose L. Merin in behalf of Universal Rightfield Property Holdings, Inc. (URPHI). | ||
In the complaint-affidavit, Messrs. Tuason and Merin alleged that, in violation of the trust reposed by ULCI and certain contractual commitments and representations, MTLCI, with the participation and/or conformity of the respondents, misappropriated and converted Php139 million that ULCI entrusted for the purpose of incorporating Golf Land Co., Inc. (GLCI), a corporation to be wholly-owned by MTLCI and to which a property of MTLCI was to be transferred in exchange for shares in GLCI. The said shares were then supposed to be transferred to ULCI. | |||
Based on his counsel’s advice, Mr. Pangilinan cannot be held liable for violating Article 315 (1)(b) of the Revised Penal Code because no document or other evidence has been presented to prove that Mr. Pangilinan actually participated in the negotiation, preparation, approval, execution and/or implementation of the agreement/contract upon which the claims of the complainants are purportedly based, much less that Mr. Pangilinan, with abuse of trust and confidence, misappropriated any amounts paid by ULCI to MTLCI. | |||
On March 25, 2004, Mr. Pangilinan submitted his counter-affidavit in I.S. No. 04-A-1057, including therein counter-charges against Messrs. Tuason and Merin for Perjury and Unjust Vexation. These counter-charges were docketed as I.S. No. 04-C-5493-94. | |||
In a Joint Resolution dated June 7, 2004, the City Prosecution Office of Makati dismissed all charges in the Estafa case against Mr. Pangilinan as well as the counter-charges for Perjury and Unjust Vexation against Messrs. Tuason and Merin. | |||
On November 16, 2004, MTLCI, through Mr. Pangilinan and ULCI, through Messrs. Tuason and Merin, filed with the Philippine Department of Justice, or DOJ, their respective Petitions for Review assailing the Resolution of the City Prosecution Office of Makati. Thereafter, the complainants and respondents including Mr. Pangilinan filed, with the assistance of their respective counsels, a Joint Motion to Dismiss (with prejudice) the charges and counter-charges subject of the investigation before the DOJ. | |||
On March 20, 2006, Mr. Pangilinan, through counsel, filed a Manifestation and Motion reiterating the parties’ prayer in their Joint Motion to Dismiss that the cases be dismissed with prejudice. On March 6, 2008, the DOJ promulgated a Resolution dismissing the appeal by ULCI of the Resolution of the City Prosecution Office of Makati dismissing ULCI’s complaint for Estafa against Mr. Pangilinan, et al. The same Resolution of the City Prosecution Office of Makati dismissed Mr. Pangilinan’s counter-charges (perjury and unjust vexation) against Messrs. Tuason and Merin of ULCI. Mr. Pangilinan also appealed against the said Resolution of the City Prosecution Office of Makati before the DOJ. The DOJ has yet to rule on Mr. Pangilinan’s appeal which remains pending despite the parties’ Joint Motion to Dismiss. | |||
2. | Mr. Napoleon L. Nazareno, in his capacity as President and Chief Executive Officer of Smart, is a respondent in a complaint docketed as I.S. 07-3216-F filed with the Cebu City Prosecutor’s Office by Integrated Distribution Network, Inc., or IDNI, for alleged estafa and violation of R.A. 8484 or the “Access Devices Regulation Act of 1988”. IDNI alleged that Smart, through its directors and officers including Mr. Nazareno (respondent in this complaint), perpetrated fraud by blocking the SIMs of its sub-dealers. The dispute arose from contracts executed between Smart and IDNI on roving billboards. The parties entered into a settlement agreement allowing IDNI to purchase electronic load from Smart within a specific period and for a specified amount. It is Smart’s position that IDNI’s cause of action, if any, is purely civil in nature. | ||
The Cebu City Prosecutor’s Office issued a Resolution dated November 12, 2007, finding probable cause to indict respondents for estafa and violation of R.A. 8484 or the “Access Devices Regulation Act of 1988”. On January 10, 2008, Mr. Nazareno filed a Petition for Review before the DOJ seeking the reversal of the Resolution mentioned above. On May 13, 2008, the DOJ issued a Resolution granting the Petition for Review. In said Resolution, the DOJ directed the Prosecutor of Cebu City to cause the withdrawal of the complaint for estafa and violation of the Access Devices Regulation Act of 1988, if any has been filed in court, against Mr. Nazareno. |
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On July 15, 2008, the complainant filed a Motion for Reconsideration of the aforementioned DOJ Resolution and on October 3, 2008, Mr. Nazareno together with the other respondents filed their Opposition. The Motion for Reconsideration filed by the complainant is pending resolution by the DOJ. | |||
3. | Messrs. Napoleon L. Nazareno and Albert F. del Rosario and other directors and officers of the former PDCP Bank and some officers of the Bangko Sentral ng Pilipinas and Development Bank of the Philippines, are respondents in a complaint docketed as I.S. No. 2004-631 filed by Chung Hing Wong/Unisteel/Unisco Metals, Inc. with the DOJ, for alleged syndicated estafa, estafa through falsification of documents, other deceits, malversation and robbery. In the complaint-affidavit, the complainant alleged that the officers and directors of PDCP Bank deceived the complainant to secure a loan from PDCP Bank through misrepresentation and with the sinister purpose of taking over the complainant’s corporation. As stated in their respective counter-affidavits, the charges against the PDCP directors including Messrs. Nazareno and del Rosario are manifestly unmeritorious. These directors have not personally met the complainants, nor are they parties to the questioned transactions and, as such, could not have deceived the complainants in any manner. The complaint was referred to the Office of the Ombudsman, or OMB, by the DOJ on October 30, 2007 considering that some of the respondents are public officers and the offenses charged were committed in the performance of their official functions. | ||
Meanwhile, on July 23, 2008, Chung Hing Wong filed with the DOJ a Motion for Reconsideration of a Resolution of the DOJ dated September 7, 2007 dismissing his complaint. It appears that prior to forwarding the case records to the OMB, the DOJ had prepared a Resolution recommending the dismissal of the complaint but did not release the said Resolution to the parties because it wanted the OMB to conduct a review of the DOJ Resolution in view of the fact that some of the respondents in the case are public officers. | |||
In an Order dated July 30, 2008, the OMB confirmed that it was conducting a review of the said DOJ Resolution for the abovestated reason and that its authority relative to the case forwarded to it by the DOJ is limited to a review of the DOJ Resolution and not to conduct another preliminary investigation of the case. The review of the DOJ Resolution is still pending with the OMB. | |||
4. | Mr. Albert F. del Rosario and other former directors/officers, and Ms. Ma. Lourdes C. Rausa-Chan and other former corporate secretaries/assistant corporate secretaries of Steniel Cavite Packaging Corporation, Metro Paper and Packaging Products, Inc., AR Packaging Corporation and Starpack Philippines Corporation, are respondents in a case docketed as OMB C-C-04-0363-H (CPL No. C-04-1248), in the OMB. The complaint is for alleged: (a) violation of R.A. 3019 (otherwise known as the Anti-Graft and Corrupt Practices Act); (b) estafa thru falsification of public documents; (c) falsification of public documents under Article 171, in relation to Article 172, of the Revised Penal Code (RPC); (d) infidelity in the custody of public documents under Article 226 of the RPC; and (e) grave misconduct. It relates to various tax credit certificates (allegedly fraudulent, with spurious and fake supporting documents) issued to Victory Textile Mills, Inc. (allegedly, a non-existent corporation with fictitious incorporators and directors) and transferred to several companies including the aforesaid companies. The complaints against Mr. del Rosario and Ms. Rausa-Chan involve the first two offenses only and in their capacity as director and corporate secretary, respectively, of Metro Paper and Packaging Products, Inc. In the opinion of the legal counsel of Mr. del Rosario and Ms. Rausa-Chan, there are no legal and factual bases for their inclusion as respondents in this complaint. Mr. del Rosario and Ms. Rausa-Chan had no participation or involvement in the alleged anomalous acquisition and transfer of the subject tax credit certificates. The case is still pending with the OMB. |
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Name and Address | Name of Beneficial | Number of | ||||||||||||||||
Title | of Record Owner and | Place of | Owner and Relationship | Shares Held of | Percentage | |||||||||||||
of Class | Relationship With Issuer | Incorporation | with Record Owner | Record | of Class | |||||||||||||
Common | Metro Pacific Resources, Inc.(1) | Philippine | Same as Record Owner | 15,745,172 | (3) | 8.40 | ||||||||||||
c/o Corporate Secretary | Corporation | |||||||||||||||||
18th Floor, Liberty Center, | ||||||||||||||||||
104 H. V. dela Costa St. | ||||||||||||||||||
Salcedo Village, Makati City | ||||||||||||||||||
Common | Philippine Telecommunications | Philippine | Same as Record Owner | 26,034,263 | (3) | 13.89 | ||||||||||||
Investment Corporation(2) | Corporation | |||||||||||||||||
12th Floor Ramon Cojuangco Bldg. | ||||||||||||||||||
Makati Avenue, Makati City | ||||||||||||||||||
Common | NTT Communications Corporation(4) | Japanese | See Footnote (6) | 12,633,487 | 6.74 | |||||||||||||
1-1-6 Uchisaiwai-cho | Corporation | |||||||||||||||||
1-Chome, Chiyoda-ku | ||||||||||||||||||
Tokyo 100-8019, Japan | ||||||||||||||||||
Common | NTT DoCoMo, Inc.(5) | Japanese | See Footnote (6) | 18,234,821 | (6) | 9.73 | ||||||||||||
41st Floor, Sanno Park Tower | Corporation | |||||||||||||||||
2-11-1 Nagata-cho, Chiyoda-ku Tokyo 100-6150, Japan | ||||||||||||||||||
Common | Social Security System(7) | Philippine | Same as Record Owner | 5,024,788 | 2.68 | |||||||||||||
SSS Building | Corporation | |||||||||||||||||
East Avenue, Quezon City | ||||||||||||||||||
Common | PCD Nominee Corporation(8) | Philippine | See Footnote (8) | 61,542,659 | 32.83 | |||||||||||||
37/F Enterprise Building, Tower I | Corporation | |||||||||||||||||
Ayala Avenue cor. Paseo de Roxas | ||||||||||||||||||
Makati City | ||||||||||||||||||
Common | J. P. Morgan Asset Holdings | HongKong | See Footnote (9) | 43,097,297 | 22.99 | |||||||||||||
(HK) Limited(9) | Corporation | |||||||||||||||||
(various accounts) | ||||||||||||||||||
20/F Chater House | ||||||||||||||||||
8 Connaught Road | ||||||||||||||||||
Central, Hongkong | ||||||||||||||||||
Common | Capital Research Global Investors(10) | Delaware Corporation | See Footnote (10) | 15,098,070 | 8.05 |
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(1) | In addition to the 15,745,172 shares owned on record by Metro Pacific Resources, Inc., or MPRI, MPRI beneficially owned 650,000 shares held of record by PCD Nominee Corporation, or PCD, as of February 28, 2009. The total shareholdings of MPRI is 16,395,172 shares of PLDT common stock representing 8.74% of the outstanding common stock of PLDT as at February 28, 2009. Based on a resolution adopted by the Board of Directors of MPRI, Mr. Manuel V. Pangilinan has been appointed as proxy or duly authorized representative of MPRI to represent and vote the PLDT shares of common stock of MPRI at the Annual Meeting of stockholders of PLDT. | |
(2) | Pursuant to a resolution adopted by the Board of Directors of PTIC, the chairman of PTIC, Mr. Manuel V. Pangilinan, has the continuing authority to represent PTIC at any and all meetings of the stockholders of a corporation in which PTIC owns of record or beneficially any shares of stock or other voting security, and to sign and deliver, in favor of any person he may deem fit, a proxy or other power of attorney, with full power of delegation and substitution, authorizing his designated proxy or attorney-in-fact to vote any and all shares of stock and other voting securities owned of record or beneficially by PTIC at any and all meetings of the stockholders of the corporation issuing such shares of stock or voting securities. | |
(3) | First Pacific Group beneficially owned 26.37% of the outstanding common stock of PLDT as at February 28, 2009 by virtue of PLDT common shareholdings by intermediate holding companies, including PTIC and MPRI. | |
(4) | Based on publicly available information, NTT Communications is a wholly-owned subsidiary of NTT. Based on a certification signed by a duly authorized officer of NTT Communications, Mr. Jun Sawada is authorized to execute for and on behalf of NTT Communications, endorsements, transfers, and other matters relating to the shares of PLDT common stock held by NTT Communications. | |
(5) | The total shareholdings of NTT DoCoMo is 26,768,074 shares of PLDT common stock, of which 18,234,821 are owned on record by NTT DoCoMo, and 8,533,253 are shares of PLDT common stock underlying ADS representing 14.28% of the outstanding common stock of PLDT as at February 28, 2009. Based on publicly available information, NTT DoCoMo is a majority-owned and publicly traded subsidiary of NTT. Based on a certification signed by a duly authorized officer of NTT DoCoMo, Mr. Toshinari Kunieda or Mr. Matsuo Yamamoto, is authorized to execute for and on behalf of NTT DoCoMo, endorsements, transfers and other matters relating to the PLDT shares of common stock held by NTT DoCoMo. | |
(6) | NTT DoCoMo completed an acquisition of 12,633,486 shares of PLDT common stock from NTT Communications on March 14, 2006. From March 23, 2007 to February 11, 2008, NTT DoCoMo acquired through open market purchases a total of 14,134,588 additional shares of PLDT common stock. The total shareholdings of NTT DoCoMo is 26,768,074 shares of PLDT common stock (of which 18,234,821 are owned on record by NTT DoCoMo and 8,533,253 are shares of PLDT common stock underlying ADS) representing 14.28% of the outstanding common stock of PLDT as at February 28, 2009. | |
In publicly available reports filed by NTT Communications and NTT DoCoMo, it is stated that because of NTT’s ownership of all the outstanding capital stock of NTT Communications and a majority of the common stock of NTT DoCoMo, together with certain contractual arrangements including the Cooperation Agreement dated January 31, 2006, NTT, NTT Communications and NTT DoCoMo may be considered to constitute a “group” within the meaning of Section 13(d)(3) of the U.S Securities Exchange Act of 1934, as amended. Therefore, each of them may be deemed to have beneficial ownership of the 39,401,561 shares in aggregate held by NTT Communications and NTT DoCoMo, representing approximately 21% of the outstanding shares of common stock of PLDT as at February 28, 2009. | ||
(7) | In addition to the 5,024,788 shares owned on record by the SSS, SSS also beneficially owned 5,906,342 shares of PLDT common stock held of record by PCD as at February 28, 2009. The total beneficial shareholdings of SSS is 10,931,130 shares of PLDT common stock representing 5.83% of the outstanding common stock of PLDT as at February 28, 2009. Based on a resolution adopted by the Board of Directors of the SSS Mr. Donald G. Dee, as Commissioner of the SSS, has been authorized to represent and vote the shares of PLDT common stock of SSS in the annual meeting of stockholders of PLDT. | |
(8) | Registered owner of shares held by participants in the Philippine Depository and Trust Co., or PDTC, a private company organized to implement an automated book entry system of handling securities transactions in the Philippines. Under the PDTC procedures, when an issuer of a PDTC-eligible issue will hold a stockholders’ meeting, the PDTC will execute a pro-forma proxy in favor of its participants for the total number of shares in their respective principal securities account as well as for the total number of shares in their client securities account. For the shares held in the principal securities account, the participant concerned is appointed as proxy with full voting rights and powers as registered owner of such shares. For the shares held in the client securities account, the participant concerned is appointed as proxy, with the obligation to constitute a sub-proxy in favor of its clients with full voting and other rights for the number of shares beneficially owned by such clients. Based on available information, none of the owners of the PLDT common shares registered under the name of PCD owned more than 5% of PLDT’s outstanding common stock as at February 28, 2009, except The Hongkong and Shanghai Banking Corp. Ltd.–Clients, which owned approximately 17.32% of PLDT’s outstanding common stock as at February 28, 2009. PLDT has no knowledge if any beneficial owner of the shares under The Hongkong and Shanghai Banking Corp. Ltd.–Clients owned more than 5% of PLDT’s outstanding common stock as at February 28, 2009. | |
The PCD account also includes 650,000 shares beneficially owned by the MPRI, 5,906,342 shares beneficially owned by the SSS and 12,461,130 shares beneficially owned by Capital Research Global Investors or CRGI. |
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(9) | Holds shares as nominee of JPMorgan Chase Bank, successor depositary under the Common Stock Deposit Agreement, dated October 14, 1994, as amended on February 10, 2003, between JPMorgan Chase Bank and the holders of ADRs, evidencing ADSs, representing shares of common stock of PLDT (the “Deposit Agreement”). Under the Deposit Agreement, if the depositary does not receive voting instructions from a holder of ADRs, such holder will be deemed to have instructed the depositary to provide a discretionary proxy to a person designated by PLDT for the purpose of exercising the voting rights pertaining to the shares of common stock represented by such holder of ADRs, except that no discretionary proxy will be given with respect to any matter as to which substantial opposition exists or which materially and adversely affects the rights of the holders of such ADRs. | |
This account also includes 2,636,940 shares of PLDT common stock underlying ADSs beneficially owned by CRGI and 8,533,253 shares of PLDT common stock underlying ADS beneficially owned by NTT DoCoMo. | ||
(10) | According to the Schedule 13G of CRGI filed with the U.S. SEC on February 17, 2009, CRGI, as an investment adviser, beneficially owned 15,098,070 shares of PLDT common stock. In a letter to PLDT dated March 13, 2009, CRGI confirmed that they still hold 15,098,070 shares of PLDT common stock, which includes 2,636,940 shares of PLDT common stock underlying ADSs and 12,461,130 shares of PLDT common stock held of record by PCD. |
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• | erroneously paid value-added taxes, compensating taxes, advance sales taxes and other internal revenue taxes on PLDT’s importation of various equipment, machinery, and spare parts; and | ||
• | erroneously paid withholding tax on separation pay of employees who availed themselves of the benefits under the Manpower Reduction Program. |
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Philippine Stock | New York Stock | |||||||||||||||
Exchange | Exchange | |||||||||||||||
High | Low | High | Low | |||||||||||||
2009 | ||||||||||||||||
First Quarter | ||||||||||||||||
January | Php | 2,240.00 | Php | 2,010.00 | US$ | 48.29 | US$ | 42.18 | ||||||||
February | 2,305.00 | 2,080.00 | 49.80 | 43.56 | ||||||||||||
2008 | 3,175.00 | 1,810.00 | 76.72 | 36.05 | ||||||||||||
First Quarter | 3,175.00 | 2,520.00 | 76.72 | 61.49 | ||||||||||||
Second Quarter | 2,820.00 | 2,285.00 | 68.96 | 50.95 | ||||||||||||
Third Quarter | 2,795.00 | 2,240.00 | 62.97 | 51.10 | ||||||||||||
September | 2,795.00 | 2,445.00 | 59.98 | 51.10 | ||||||||||||
Fourth Quarter | 2,725.00 | 1,810.00 | 57.38 | 36.05 | ||||||||||||
October | 2,725.00 | 1,810.00 | 57.38 | 36.05 | ||||||||||||
November | 2,400.00 | 1,895.00 | 49.00 | 38.25 | ||||||||||||
December | 2,395.00 | 2,000.00 | 50.86 | 43.71 | ||||||||||||
2007 | 3,285.00 | 2,250.00 | 76.30 | 45.25 | ||||||||||||
First Quarter | 2,820.00 | 2,250.00 | 56.62 | 45.25 | ||||||||||||
Second Quarter | 2,730.00 | 2,390.00 | 58.88 | 50.05 | ||||||||||||
Third Quarter | 2,950.00 | 2,270.00 | 65.16 | 48.00 | ||||||||||||
Fourth Quarter | 3,285.00 | 2,900.00 | 76.30 | 64.90 | ||||||||||||
2006 | 2,610.00 | 1,675.00 | 51.90 | 32.15 | ||||||||||||
2005 | 1,860.00 | 1,310.00 | 34.35 | 23.50 | ||||||||||||
2004 | 1,505.00 | 810.00 | 27.03 | 14.38 |
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(a) | After the requirements with respect to preferential dividends on the serial Preferred Stock shall have been met and after PLDT shall have complied with all the requirements, if any, with respect to the setting aside of sums as purchase, retirement or sinking funds, the holders of the Common Stock shall be entitled to receive such dividends as may be declared from time to time by the board of directors out of funds legally available therefor. | ||
(b) | After distribution in full of the preferential amounts to be distributed to the holders of serial Preferred Stock in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of PLDT, the holders of Common Stock shall be entitled to receive all the remaining assets of PLDT of whatever kind available for distribution to stockholders ratably in proportion to the number of Common Stock held by them, respectively. | ||
(c) | Except as may be otherwise required by law, or by the Articles of Incorporation of PLDT, each holder of Common Stock shall have one vote in respect of each share of such stock held by him on all matters to be voted upon by the stockholders, and the holders of Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. At every election of directors, a holder of Common Stock is entitled to vote such shares of Common Stock held by him for as many persons as there are directors to be elected, or to cumulate said shares and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or to distribute such votes on the same principle among as many candidates as he shall think fit. |
(a) | Appraisal right or the right of a dissenting stockholder to demand payment of the fair value of his shares of stock in the following instances: (i) in case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence; (ii) in case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets of the corporation; (iii) in case of merger or consolidation; and (iv) in case of investment of funds of the corporation in any other corporation or business or for any purpose other than the primary purpose for which it was organized, except where the investment by the corporation is reasonably necessary to accomplish its primary purpose as stated in its articles of incorporation. | ||
(b) | The right to approve certain corporate acts, such as (i) election of directors; (ii) removal of directors; (iii) extension or shortening of the corporate term; (iv) increase or decrease of capital stock, and incurring, creating or increasing bonded indebtedness; (v) sale or other disposition of all or substantially all of the corporate assets; (vi) investment of corporate funds in any other corporation or business or for any purpose other than the primary purpose for which it was organized except where the investment is reasonably necessary to accomplish its primary purpose as stated in the corporation’s articles of incorporation; (vii) declaration of stock dividend; (viii) entering into a management contract with another corporation; (ix) plan of merger or consolidation; and (x) voluntary dissolution of the corporation by shortening the corporate term. |
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(c) | The right to inspect at reasonable hours on business days the records of all business transactions of the corporation and the minutes of any meeting; however, the stockholders’ right to inspect corporate records and books is not an absolute right so that the corporation may deny said right on the basis of impropriety of the purpose or motive of the stockholder. | ||
(d) | The right to be furnished the most recent financial statements of the corporation, within ten (10) days from receipt by the corporation of a written request from a stockholder. The same right exists at the annual meeting of stockholders at which the board of directors must present to the stockholders a financial report of the operations of the corporation for the preceding year which shall include financial statements duly signed and certified by an independent certified public accountant. |
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Series | No. of Shares | |||
Series A to HH 10% Cumulative Convertible | 405,480,512 | |||
Series IV Cumulative Non-Convertible Redeemable | 36,000,000 | * | ||
Series V Cumulative Convertible Redeemable | 1,355 | |||
Series VI Cumulative Convertible Redeemable | 3,891 |
* | Total subscribe shares is 300 million with a total subscription price of Php3 billion, out of which amount Php360 million has been paid. |
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• | if the deceased at the time of death, or the donor at the time of donation, was a citizen and resident of a foreign country which at the time of his death or donation did not impose a transfer tax of any character in respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or | ||
• | if the laws of the foreign country of which the deceased or the donor was a citizen and resident at the time of his death or donation allow a similar exemption from transfer or death taxes of every character or description in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country. |
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2008 | 2007 | |||||||||||||||
U.S. Dollar | Php(1) | U.S. Dollar | Php(2) | |||||||||||||
(in millions) | ||||||||||||||||
Noncurrent Financial Asset | ||||||||||||||||
Derivative financial assets | — | — | 1 | 59 | ||||||||||||
Current Financial Assets | ||||||||||||||||
Cash and cash equivalents | 101 | 4,794 | 93 | 3,853 | ||||||||||||
Short-term investments | 21 | 986 | 56 | 2,324 | ||||||||||||
Trade and other receivables | 207 | 9,880 | 227 | 9,400 | ||||||||||||
Derivative financial assets | 1 | 56 | 22 | 897 | ||||||||||||
Total current financial assets | 330 | 15,716 | 398 | 16,474 | ||||||||||||
Total Financial Assets | 330 | 15,716 | 399 | 16,533 | ||||||||||||
Noncurrent Financial Liabilities | ||||||||||||||||
Interest-bearing financial liabilities — net of current portion | 925 | 44,064 | 1,126 | 46,612 | ||||||||||||
Derivative financial liabilities | 37 | 1,761 | 187 | 7,741 | ||||||||||||
Total noncurrent financial liabilities | 962 | 45,825 | 1,313 | 54,353 | ||||||||||||
Current Financial Liabilities | ||||||||||||||||
Accounts payable | 143 | 6,820 | 160 | 6,614 | ||||||||||||
Accrued expenses and other current liabilities | 93 | 4,447 | 95 | 3,958 | ||||||||||||
Derivative financial liabilities | 2 | 87 | 6 | 242 | ||||||||||||
Current portion of interest-bearing financial liabilities | 301 | 14,331 | 187 | 7,748 | ||||||||||||
Total current financial liabilities | 539 | 25,685 | 448 | 18,562 | ||||||||||||
Total Financial Liabilities | 1,501 | 71,510 | 1,761 | 72,915 | ||||||||||||
(1) | The exchange rate used to translate the U.S. dollar amounts into Philippine peso was Php47.647 to US$1.00, the peso-dollar rate as quoted through the Philippine Dealing System as at December 31, 2008. | |
(2) | The exchange rate used to translate the U.S. dollar amounts into Philippine peso was Php41.411 to US$1.00, the peso-dollar rate as quoted through the Philippine Dealing System as at December 31, 2007. |
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Discount/ | ||||||||||||||||||||||||||||||||||||||||||||
Debt | ||||||||||||||||||||||||||||||||||||||||||||
In U.S. Dollars | Issuance | Carrying | Fair Value | |||||||||||||||||||||||||||||||||||||||||
Over 5 | Cost | Value | In U.S. | |||||||||||||||||||||||||||||||||||||||||
Below 1 year | 1 – 2 years | 2 – 3 years | 3 – 5 years | years | Total | In Php | In Php | In Php | Dollar | In Php | ||||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||
Cash in Bank | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 26 | — | — | — | — | 26 | 1,258 | — | 1,258 | 26 | 1,258 | |||||||||||||||||||||||||||||||||
Interest rate | 0.10% to 4.50% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 56 | — | — | — | — | 56 | 2,682 | — | 2,682 | 56 | 2,682 | |||||||||||||||||||||||||||||||||
Interest rate | 0.25% to 3.50% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Temporary Cash Investments | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 330 | — | — | — | — | 330 | 15,714 | — | 15,714 | 330 | 15,714 | |||||||||||||||||||||||||||||||||
Interest rate | 0.30% to 7.50% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 290 | — | — | — | — | 290 | 13,806 | — | 13,806 | 290 | 13,806 | |||||||||||||||||||||||||||||||||
Interest rate | 2% to 7.50% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Short-term Investments | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 21 | — | — | — | — | 21 | 985 | — | 985 | 21 | 985 | |||||||||||||||||||||||||||||||||
Interest rate | 3.29 | % | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Philippine Peso | 119 | — | — | — | — | 119 | 5,685 | — | 5,685 | 119 | 5,685 | |||||||||||||||||||||||||||||||||
Interest rate | 6.69 | % | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Investment in Debt Securities | ||||||||||||||||||||||||||||||||||||||||||||
Philippine Peso | 35 | — | 4 | 9 | — | 48 | 2,291 | — | 2,291 | 48 | 2,285 | |||||||||||||||||||||||||||||||||
Interest Rate | 6.3194 | % | — | 6.125 | % | 6.875% to 7% | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
877 | — | 4 | 9 | — | 890 | 42,421 | — | 42,421 | 890 | 42,415 | ||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | ||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate | ||||||||||||||||||||||||||||||||||||||||||||
US$ Notes | 114 | — | — | 159 | 295 | 568 | 27,061 | 368 | 26,693 | 559 | 26,607 | |||||||||||||||||||||||||||||||||
Interest rate | 10.50 | % | — | — | 11.375 | % | 8.35 | % | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
US$ Fixed Loans | 22 | 50 | 11 | 3 | 280 | 366 | 17,444 | 4,046 | 13,398 | 252 | 12,030 | |||||||||||||||||||||||||||||||||
Interest rate | 4.49% to 6% | 3.79% to 4.70% | 3.79% to 4.70% | 3.79 | % | 2.25 | % | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Philippine Peso | — | 3 | 1 | 182 | 33 | 219 | 10,420 | 79 | 10,341 | 209 | 9,955 | |||||||||||||||||||||||||||||||||
Interest rate | — | 6.50% to 8.4346% | 6.50% to 8.4346% | 5.625% to 8.4346% | 6.125% to 6.50% | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Variable Rate | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 13 | 215 | 59 | 77 | — | 364 | 17,339 | 67 | 17,272 | 363 | 17,272 | |||||||||||||||||||||||||||||||||
Interest rate | US$LIBOR + 1.75% to 2.75% | US$LIBOR + 0.42% to 2.50% | US$LIBOR + 0.42% to 0.815% | US$LIBOR + 0.42% to 0.75% | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | — | 47 | 32 | 40 | — | 119 | 5,670 | 16 | 5,654 | 119 | 5,653 | |||||||||||||||||||||||||||||||||
Interest rate | — | MART1 + 0.75% to 5.70%; PDST - F 1.0% - 1.50% | MART1 + 0.75%; PDST - F 1.0% - 1.50% | PDST - F 1.0% - 1.50% | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
149 | 315 | 103 | 461 | 608 | 1,636 | 77,934 | 4,576 | 73,358 | 1,502 | 71,517 | ||||||||||||||||||||||||||||||||||
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Discount/ | ||||||||||||||||||||||||||||||||||||||||||||
Debt | ||||||||||||||||||||||||||||||||||||||||||||
In U.S. Dollars | Issuance | Carrying | Fair Value | |||||||||||||||||||||||||||||||||||||||||
Over 5 | In U.S. | Cost | Value | In U.S. | ||||||||||||||||||||||||||||||||||||||||
Below 1 year | 1 – 2 years | 2 – 3 years | 3 – 5 years | years | Dollar | In Php | In Php | In Php | Dollar | In Php | ||||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||
Cash in Bank | ||||||||||||||||||||||||||||||||||||||||||||
U.S. dollar | 30 | — | — | — | — | 30 | 1,249 | — | 1,249 | 30 | 1,249 | |||||||||||||||||||||||||||||||||
Interest rate | 0.22% to 4.40% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 58 | — | — | — | — | 58 | 2,409 | — | 2,409 | 58 | 2,409 | |||||||||||||||||||||||||||||||||
Interest rate | 0.25% to 4.25% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Temporary Cash Investments | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 255 | — | — | — | — | 255 | 10,572 | — | 10,572 | 255 | 10,572 | |||||||||||||||||||||||||||||||||
Interest rate | 2% to 5.25% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 71 | — | — | — | — | 71 | 2,931 | — | 2,931 | 71 | 2,931 | |||||||||||||||||||||||||||||||||
Interest rate | 1.75% to 6.05% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Short-term Investments | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 56 | — | — | — | — | 56 | 2,312 | — | 2,312 | 56 | 2,312 | |||||||||||||||||||||||||||||||||
Interest rate | 7.65 | % | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Philippine Peso | 268 | — | — | — | — | 268 | 11,103 | — | 11,103 | 268 | 11,103 | |||||||||||||||||||||||||||||||||
Interest rate | 6.06 | % | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Investment in Debt Securities | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | — | — | — | 7 | — | 7 | 273 | — | 273 | 7 | 283 | |||||||||||||||||||||||||||||||||
Interest rate | — | — | — | 6.875 | % | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Philippine Peso | 27 | — | — | — | — | 27 | 1,115 | — | 1,115 | 27 | 1,115 | |||||||||||||||||||||||||||||||||
Interest rate | 11.29 | % | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
765 | — | — | 7 | — | 772 | 31,964 | — | 31,964 | 772 | 31,974 | ||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | ||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate | ||||||||||||||||||||||||||||||||||||||||||||
US$ Notes | — | 136 | — | 250 | 300 | 686 | 28,403 | 387 | 28,016 | 770 | 31,901 | |||||||||||||||||||||||||||||||||
Interest rate | — | 10.500 | % | — | 11.375 | % | 8.350 | % | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
US$ Fixed Loans | 55 | 46 | 23 | 9 | 280 | 413 | 17,123 | 4,016 | 13,107 | 342 | 14,078 | |||||||||||||||||||||||||||||||||
Interest rate | 4.49% to 8.9% | 4.49% to 6.0% | 4.515% to 4.7% | 4.700 | % | 2.250 | % | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Philippine Peso | — | — | — | 93 | 38 | 131 | 5,420 | 33 | 5,387 | 125 | 5,168 | |||||||||||||||||||||||||||||||||
Interest rate | 7.090 | % | 6.500 | % | 6.500 | % | 5.625% to 6.50% | 6.125% to 6.50% | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Variable Rate | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 98 | 92 | 58 | 28 | — | 276 | 11,445 | 28 | 11,417 | 276 | 11,445 | |||||||||||||||||||||||||||||||||
Interest rate | 0.05% to 2.75% over US$LIBOR | 0.05% to 2.75% over US$LIBOR | 0.05% to 2.5% over US$LIBOR | 0.75% to 0.815% over US$LIBOR | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 14 | 14 | 13 | 13 | — | 54 | 2,228 | 8 | 2,220 | 54 | 2,227 | |||||||||||||||||||||||||||||||||
Interest rate | MART1 + 0.75% to 5.70% | MART1 + 0.75% to 5.70% | MART1 + 0.75% to 5.70% | MART1 + 0.75% | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
167 | 288 | 94 | 393 | 618 | 1,560 | 64,619 | 4,472 | 60,147 | 1,567 | 64,819 | ||||||||||||||||||||||||||||||||||
Interest rate swap (fixed to floating) | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar (US$31 million) | — | — | — | — | — | 3.5 | 144 | — | 144 | 3.5 | 144 | |||||||||||||||||||||||||||||||||
Japanese Yen (JP¥3,759 million) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Fixed Rate on US$ notional | 11.375 | % | 11.375 | % | 11.375 | % | 11.375 | % | 11.375 | % | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Variable Rate on JP¥ notional | 8.11% over LIBOR | 8.11% over LIBOR | 8.11% over LIBOR | 8.11% over LIBOR | 8.11% over LIBOR | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | — | — | — | 3.5 | 144 | — | 144 | 3.5 | 144 | ||||||||||||||||||||||||||||||||||
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Gross Maximum Exposure(1) | Net Maximum Exposure(2) | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in million pesos) | ||||||||||||||||
Loans and receivables: | ||||||||||||||||
Advances and refundable deposits | 840 | 734 | 840 | 734 | ||||||||||||
Cash and cash equivalents | 33,684 | 17,447 | 33,621 | 17,406 | ||||||||||||
Short-term investments | 5,964 | 11,366 | 5,963 | 11,366 | ||||||||||||
Investment in debt securities | — | 1,115 | — | 1,115 | ||||||||||||
Foreign administrations | 5,477 | 4,324 | 5,477 | 4,324 | ||||||||||||
Retail subscribers | 3,904 | 3,861 | 3,877 | 3,861 | ||||||||||||
Dealers, agents and others | 2,960 | 917 | 2,958 | 917 | ||||||||||||
Corporate subscribers | 2,865 | 2,040 | 2,709 | 2,040 | ||||||||||||
Domestic carriers | 703 | 1,503 | 703 | 1,503 | ||||||||||||
Held-to-maturity investments: | ||||||||||||||||
Investment in debt securities | 2,098 | 273 | 2,098 | 273 | ||||||||||||
Designated at fair value through profit or loss: | ||||||||||||||||
Investment in debt securities | 193 | — | 193 | — | ||||||||||||
Available-for-sale financial assets | 131 | 143 | 131 | 143 | ||||||||||||
Held-for-trading: | ||||||||||||||||
Short-term investments | 706 | 2,049 | 706 | 2,049 | ||||||||||||
Foreign currency options | 38 | 59 | 38 | 59 | ||||||||||||
Forward foreign exchange contracts | 16 | 193 | 16 | 193 | ||||||||||||
Bifurcated embedded derivatives | 2 | 34 | 2 | 34 | ||||||||||||
Derivatives used for hedging: | ||||||||||||||||
Forward foreign exchange contracts | — | 670 | — | 670 | ||||||||||||
Total | 59,581 | 46,728 | 59,332 | 46,687 | ||||||||||||
(1) | Gross financial assets before taking into account any collateral held or other credit enhancements or offsetting arrangements. | |
(2) | Gross financial assets after taking into account any collateral held or other credit enhancements or offsetting arrangements or deposit insurance. |
Neither past due | ||||||||||||||||||||
nor impaired | Past due but | |||||||||||||||||||
Total | Class A(1) | Class B(2) | not impaired | Impaired | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||
Loans and receivables: | ||||||||||||||||||||
Advances and refundable deposits | 840 | 703 | 137 | — | — | |||||||||||||||
Cash and cash equivalents | 33,684 | 32,979 | 705 | — | — | |||||||||||||||
Short-term investments | 5,964 | 5,680 | 284 | — | — | |||||||||||||||
Corporate subscribers | 9,188 | 858 | 272 | 1,663 | 6,395 |
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Neither past due | ||||||||||||||||||||
nor impaired | Past due but | |||||||||||||||||||
Total | Class A(1) | Class B(2) | not impaired | Impaired | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
Retail subscribers | 8,993 | 1,457 | 550 | 1,897 | 5,089 | |||||||||||||||
Foreign administrations | 5,916 | 2,602 | 956 | 1,919 | 439 | |||||||||||||||
Dealers, agents and others | 3,271 | 2,114 | 444 | 402 | 311 | |||||||||||||||
Domestic carriers | 877 | 84 | 3 | 616 | 174 | |||||||||||||||
Held-to-maturity investments: | ||||||||||||||||||||
Investment in debt securities | 2,098 | 2,098 | — | — | — | |||||||||||||||
Designated at fair value through profit or loss: | ||||||||||||||||||||
Investment in debt securities | 193 | 193 | — | — | — | |||||||||||||||
Available-for-sale financial assets | 131 | 103 | 28 | — | — | |||||||||||||||
Held-for-trading(3): | ||||||||||||||||||||
Short-term investments | 706 | 706 | — | — | — | |||||||||||||||
Foreign currency options | 38 | 38 | — | — | — | |||||||||||||||
Forward foreign currency options | 16 | 16 | — | — | — | |||||||||||||||
Bifurcated embedded derivatives | 2 | 2 | — | — | — | |||||||||||||||
Total | 71,917 | 49,633 | 3,379 | 6,497 | 12,408 | |||||||||||||||
December 31, 2007 | ||||||||||||||||||||
Loans and receivables: | ||||||||||||||||||||
Advances and refundable deposits | 734 | 734 | — | — | — | |||||||||||||||
Cash and cash equivalents | 17,447 | 15,150 | 2,297 | — | — | |||||||||||||||
Short-term investments | 11,366 | 10,637 | 729 | — | — | |||||||||||||||
Investment in debt securities | 1,115 | 1,115 | — | — | — | |||||||||||||||
Retail subscribers | 8,179 | 1,389 | 637 | 1,823 | 4,330 | |||||||||||||||
Corporate subscribers | 7,915 | 641 | 187 | 1,166 | 5,921 | |||||||||||||||
Foreign administrations | 5,371 | 1,828 | 861 | 1,635 | 1,047 | |||||||||||||||
Dealers, agents and others | 2,151 | 983 | 315 | 196 | 657 | |||||||||||||||
Domestic carriers | 1,884 | 119 | 11 | 1,373 | 381 | |||||||||||||||
Held-to-maturity investments: | ||||||||||||||||||||
Investment in debt securities | 273 | 273 | — | — | — | |||||||||||||||
Available-for-sale financial assets | 143 | 113 | 30 | — | — | |||||||||||||||
Held-for-trading(3): | ||||||||||||||||||||
Short-term investments | 2,049 | 2,049 | — | — | — | |||||||||||||||
Forward foreign exchange contracts | 193 | 190 | 3 | — | — | |||||||||||||||
Foreign currency options | 59 | 59 | — | — | — | |||||||||||||||
Bifurcated embedded derivatives | 34 | 34 | — | — | — | |||||||||||||||
Derivatives used-for-hedging(3): | ||||||||||||||||||||
Forward foreign exchange contracts | 670 | 670 | — | — | — | |||||||||||||||
Total | 59,583 | 35,984 | 5,070 | 6,193 | 12,336 | |||||||||||||||
(1) | This includes low risk and good paying customer accounts with no history of account treatment for a defined period and no overdue accounts as at report date; and deposits or placements to counterparties with good credit rating or bank standing financial review; | |
(2) | This includes medium risk and average paying customer accounts with no overdue accounts as at report date, and new customer accounts for which sufficient credit history has not been established; and deposits or placements to counterparties not classified as Class A; and | |
(3) | Gross receivables from counterparties, before any offsetting arrangements. |
Neither past due | Past due but not impaired | |||||||||||||||||||||||
Total | nor impaired | 1-60 days | 61-90 days | Over 91 days | Impaired | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Loans and receivables: | ||||||||||||||||||||||||
Advances and refundable deposits | 840 | 840 | — | — | — | — | ||||||||||||||||||
Cash and cash equivalents | 33,684 | 33,684 | — | — | — | — | ||||||||||||||||||
Short-term investments | 5,964 | 5,964 | — | — | — | — | ||||||||||||||||||
Corporate subscribers | 9,188 | 1,130 | 1,024 | 313 | 326 | 6,395 | ||||||||||||||||||
Retail subscribers | 8,993 | 2,007 | 1,338 | 266 | 293 | 5,089 | ||||||||||||||||||
Foreign administrations | 5,916 | 3,558 | 1,043 | 550 | 326 | 439 | ||||||||||||||||||
Dealers, agents and others | 3,271 | 2,558 | 48 | 9 | 345 | 311 | ||||||||||||||||||
Domestic carriers | 877 | 87 | 80 | 87 | 449 | 174 | ||||||||||||||||||
Held-to-maturity investments: | ||||||||||||||||||||||||
Investment in debt securities | 2,098 | 2,098 | — | — | — | — | ||||||||||||||||||
Designated at fair value through profit or loss: | ||||||||||||||||||||||||
Investment in debt securities | 193 | 193 | — | — | — | — | ||||||||||||||||||
Available-for-sale financial assets | 131 | 131 | — | — | — | — | ||||||||||||||||||
Held-for-trading: | ||||||||||||||||||||||||
Short-term investments | 706 | 706 | — | — | — | — | ||||||||||||||||||
Forward foreign currency options | 38 | 38 | — | — | — | — | ||||||||||||||||||
Forward foreign exchange contracts | 16 | 16 | — | — | — | — | ||||||||||||||||||
Bifurcated embedded derivatives | 2 | 2 | — | — | — | — | ||||||||||||||||||
71,917 | 53,012 | 3,533 | 1,225 | 1,739 | 12,408 | |||||||||||||||||||
December 31, 2007 | ||||||||||||||||||||||||
Loans and receivables: | ||||||||||||||||||||||||
Advances and refundable deposits | 734 | 734 | — | — | — | — | ||||||||||||||||||
Cash and cash equivalents | 17,447 | 17,447 | — | — | — | — |
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Neither past due | Past due but not impaired | |||||||||||||||||||||||
Total | nor impaired | 1-60 days | 61-90 days | Over 91 days | Impaired | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
Short-term investments | 11,366 | 11,366 | — | — | — | — | ||||||||||||||||||
Investment in debt securities | 1,115 | 1,115 | — | — | — | — | ||||||||||||||||||
Retail subscribers | 8,179 | 2,026 | 1,513 | 231 | 79 | 4,330 | ||||||||||||||||||
Corporate subscribers | 7,915 | 828 | 715 | 133 | 318 | 5,921 | ||||||||||||||||||
Foreign administrations | 5,371 | 2,689 | 902 | 316 | 417 | 1,047 | ||||||||||||||||||
Dealers, agents and others | 2,151 | 1,298 | 30 | 4 | 162 | 657 | ||||||||||||||||||
Domestic carriers | 1,884 | 130 | 88 | 103 | 1,182 | 381 | ||||||||||||||||||
Held-to-maturity investments: | ||||||||||||||||||||||||
Investment in debt securities | 273 | 273 | — | — | — | — | ||||||||||||||||||
Available-for-sale financial assets | 143 | 143 | — | — | — | — | ||||||||||||||||||
Held-for-trading: | ||||||||||||||||||||||||
Short-term investments | 2,049 | 2,049 | — | — | — | — | ||||||||||||||||||
Forward foreign exchange contracts | 193 | 193 | — | — | — | — | ||||||||||||||||||
Foreign currency options | 59 | 59 | — | — | — | — | ||||||||||||||||||
Bifurcated embedded derivatives | 34 | 34 | — | — | — | — | ||||||||||||||||||
Derivatives used for hedging: | ||||||||||||||||||||||||
Forward foreign exchange contracts | 670 | 670 | — | — | — | — | ||||||||||||||||||
59,583 | 41,054 | 3,248 | 787 | 2,158 | 12,336 | |||||||||||||||||||
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2008 | 2007 | |||||||
(in millions) | ||||||||
Long-term debt, including current portion | Php | 73,358 | Php | 60,147 | ||||
Notes payable | 553 | 493 | ||||||
Total debt | 73,911 | 60,640 | ||||||
Cash and cash equivalents | (33,684 | ) | (17,447 | ) | ||||
Short-term investments | (6,670 | ) | (13,415 | ) | ||||
Net debt | 33,557 | 29,778 | ||||||
Equity attributable to equity holders of PLDT under PFRS | 105,531 | 111,113 | ||||||
Net debt to equity ratio | 32 | % | 27 | % | ||||
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1. | Compliance with applicable laws, rules and regulations; | ||
2. | Ethical handling of conflicts of interest, corporate opportunities and confidential information; | ||
3. | Protection and proper use of our assets; | ||
4. | Fair dealing with our employees, customers, service providers, suppliers and competitors; | ||
5. | Compliance with our reporting and disclosure obligations to the relevant regulators and the investors; | ||
6. | Compliance with our disclosure and financial reporting controls and procedures; |
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7. | Assessment and management of risks involved in our business endeavours; and | ||
8. | Adoption of international best practices of good corporate governance in the conduct of our business. |
1. | The qualifications and grounds for disqualification for directorship; | ||
2. | The requirement that at least two or 20% of the members of our board of directors, whichever is lesser, must be independent directors and the standards/criteria for the determination of independent directors; | ||
3. | The duties and responsibilities of our board of directors and the individual directors; | ||
4. | Our board committees, specifically, the governance and nomination committee, audit committee and executive compensation committee, the composition and the principal duties and responsibilities of such committees; | ||
5. | The role of our chairman in ensuring compliance with the corporate governance principles; | ||
6. | The role of our president/chief executive officer in ensuring that our organizational and procedural controls are adequate and effective to ensure reliability and integrity of financial and operational information, effectiveness and efficiency of operations, safeguarding of assets and compliance with laws, rules, regulations and contracts; | ||
7. | The duties and responsibilities of our corporate secretary/assistant corporate secretary in terms of the support services that they need to provide our board in upholding sound corporate governance; | ||
8. | The duties and responsibilities of the head of our internal audit organization that would provide our board of directors, management and shareholders with reasonable assurance that our key organizational and procedural controls are appropriate, adequate, effective and reasonably complied with; | ||
9. | The functions of our independent auditors that would reasonably ensure an environment of sound corporate governance as reflected in our financial records and reports; the requirement that non-audit work of the independent auditors should not conflict with their function as independent auditors; the requirement to rotate, at least once every five years, the independent auditors or the lead partner assigned to handle the independent audit of our financial statements; | ||
10. | Our commitment to respect and promote shareholders’ rights such as voting right, pre-emptive right, inspection right, dividend right, appraisal right, and right to receive information about the background, business experience, compensation and shareholdings of our directors and officers and their transactions with us; | ||
11. | The requirement to appoint a compliance officer and the duties and responsibilities of such compliance officer including the establishment of an evaluation system to determine and measure compliance with the provisions of our Governance Manual; and | ||
12. | The penalties for violations of our Governance Manual. |
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• | training sessions and workshops based on concepts and modules developed by the CGO and facilitated by various professionals, both local and international, known in the field of corporate governance and ethics, namely: (1) Board Corporate Governance session on Current Governance Environment in the United States and Ethics and Tone at the Top, conducted on December 12, 2008. Facilitating the session was Ms. Suzanne Hopgood of the National Association of Corporate Directors (NACD) of Washington DC, USA; and (2) PLDT Group Officers’ Corporate Governance Enhancement Session on the CG dimensions of the current global financial crisis, handled by Dr. Jesus P. Estanislao, Chairman of the Institute of Corporate Directors (ICD) and the Stages of Corporate Moral Development, facilitated by Dr. Antonette Palma-Angeles, Director of the JB Fernandez Center for Ethics of the Ateneo de Manila University; | ||
• | re-development and implementation of an e-Learning Session on Conflict of Interest, which involved the translation of the initial e-Learning module into Filipino, using simple terms and providing examples. Roll out for all supervisors and rank-and-file employees in other departments continued in 2008; | ||
• | translation of the PLDT CG Primer from English to Filipino for better appreciation and observance of CG policies by all of our employees. The Primer has been uploaded into the PLDT website for easy access by employees; | ||
• | development and launch of the PLDT music video entitledHuwag Kang Pasaway. A joint project with the Human Resource Group, the video seeks to discourage violations of and promote voluntary compliance with CG policies. It was launched in June 27, 2008 and has been cascaded to all employees through their respective division heads; | ||
• | continuing issuance of periodic CG communication materials such as posters, Ripples monthly e-newsletter and weekly CG news summaries e-mail. |
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a. | PLDT’s Governance Manual, as adopted on September 24, 2002 and amended on January 30, 2007, conforms with the provisions of the Manual on Corporate Governance (Model Corporation), as prescribed by the Philippine SEC, Memorandum Circular No. 2, Series of 2002, as well as adopted the leading practices and principles on good corporate governance; | ||
b. | PLDT has not deviated from the provisions of the Governance Manual and has complied therewith and with certain other corporate governance standards set out in the Sarbanes Oxley Act of 2002, Section 303A of the NYSE Listing Standards and implementing rules issued by the U.S. SEC and NYSE. |
1. | Risks are appropriately identified and managed; | ||
2. | Significant financial, managerial, and operating information are accurate, reliable and timely; | ||
3. | Employees’ actions are in compliance with policies, standards, procedures, and applicable laws and regulations; | ||
4. | Resources are acquired economically, used efficiently and adequately protected; | ||
5. | Programs, plans and objectives are achieved; |
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6. | Quality and continuous improvement are fostered in our control process; | ||
7. | Significant legislative or regulatory issues impacting us are recognized and addressed appropriately; and | ||
8. | Interaction with various governance groups occurs as needed. |
1. | Provide annually an assessment on the adequacy and effectiveness of our processes for controlling our activities and managing our risks; | ||
2. | Report significant issues related to the processes of controlling our activities, including potential improvements to those processes, and provide information concerning such issues; | ||
3. | Periodically provide information on the status and results of the annual audit plan and the sufficiency of our internal audit organization’s resources; and | ||
4. | Coordinate with and provide oversight of other control and monitoring functions (risk management, compliance, security, legal, ethics, environmental, external audit). |
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2008 | 2007 | |||||||
(in millions) | ||||||||
Audit Fees | Php | 45 | Php | 41 | ||||
All Other Fees | 19 | 25 | ||||||
Total | Php | 64 | Php | 66 | ||||
Total Number of Shares | ||||||||||||||||
Total Number of | Purchased as Part of | Maximum Number of Shares | ||||||||||||||
Shares | Average Price | Publicly Announced | that May Yet Be Purchased | |||||||||||||
Period | Purchased(1) | Paid per Share | Plans or Programs | Under the Programs | ||||||||||||
March 17 - 19, 2008 | 60,000 | 2,635 | 60,000 | 1,940,000 | (2) | |||||||||||
March 24 - 27, 2008 | 92,440 | 2,708 | 152,440 | 1,847,560 | ||||||||||||
April 4, 2008 | 30,000 | 2,782 | 182,440 | 1,817,560 | ||||||||||||
April 8 - 11, 2008 | 62,000 | 2,777 | 244,440 | 1,755,560 | ||||||||||||
April 14 - 18, 2008 | 101,820 | 2,727 | 346,260 | 1,653,740 | ||||||||||||
May 9, 2008 | 25,000 | 2,588 | 371,260 | 1,628,740 | ||||||||||||
May 12 - 16, 2008 | 144,810 | 2,658 | 516,070 | 1,483,930 | ||||||||||||
May 19 - 23, 2008 | 115,920 | 2,660 | 631,990 | 1,368,010 | ||||||||||||
May 26 - 30, 2008 | 83,050 | 2,618 | 715,040 | 1,284,960 | ||||||||||||
June 2 - 6, 2008 | 137,710 | 2,556 | 852,750 | 1,147,250 | ||||||||||||
June 10 - 13, 2008 | 138,280 | 2,361 | 991,030 | 1,008,970 | ||||||||||||
June 16 - 20, 2008 | 168,030 | 2,449 | 1,159,060 | 840,940 | ||||||||||||
June 23 - 27, 2008 | 182,630 | 2,416 | 1,341,690 | 658,310 | ||||||||||||
June 30, 2008 | 41,720 | 2,394 | 1,383,410 | 616,590 | ||||||||||||
July 1 - 4, 2008 | 150,440 | 2,344 | 1,533,850 | 466,150 | ||||||||||||
July 7 - 10, 2008 | 121,890 | 2,430 | 1,655,740 | 344,260 | ||||||||||||
July 14 - 16, 2008 | 83,890 | 2,413 | 1,739,630 | 260,370 | ||||||||||||
September 15 - 16, 2008 | 16,410 | 2,571 | 1,756,040 | 2,243,960 | (2) | |||||||||||
September 18, 2008 | 4,000 | 2,465 | 1,760,040 | 2,239,960 | ||||||||||||
September 23, 2008 | 3,100 | 2,595 | 1,763,140 | 2,236,860 | ||||||||||||
September 30, 2008 | 10,440 | 2,646 | 1,773,580 | 2,226,420 | ||||||||||||
October 3, 2008 | 20,000 | 2,695 | 1,793,580 | 2,206,420 | ||||||||||||
October 6 - 10, 2008 | 76,150 | 2,502 | 1,869,730 | 2,130,270 | ||||||||||||
October 13 - 17, 2008 | 90,160 | 2,328 | 1,959,890 | 2,040,110 | ||||||||||||
November 7, 2008 | 12,400 | 1,983 | 1,972,290 | 3,027,710 | (2) | |||||||||||
Total | 1,972,290 | |||||||||||||||
(1) | Outside the share buyback program, we did not repurchase any of our shares in the year ended December 31, 2008. | |
(2) | The Board of Directors approved the initial share buyback program of up to two million shares of PLDT’s common stock on January 29, 2008, authorized the repurchase of up to another two million shares on August 5, 2008, and approved the repurchase of an additional one million shares on December 9, 2008. |
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• | Number of Independent Directors.The NYSE listing standards require a majority of the board of directors to be independent. We have four independent directors out of 13 directors, which exceeds the requirements under the Philippine SEC Governance Code that at least two members or 20% of the board of directors must be independent. |
• | Director Independence Tests.There are differences between the director independence tests applied in PLDT’s corporate governance practice and those under the NYSE listing standards. In some cases, the independence tests set forth in the NYSE listing standards are more stringent than those under PLDT’s corporate governance practice andvice versa. |
• | Examples where the NYSE listing standards impose more stringent standards than PLDT’s corporate governance practices include the “auditor affiliation” test. In contrast to the NYSE listing standards, under PLDT’s By-Laws and Board Committee charters, present or previous affiliation or employment of a director’s immediate family member with the external auditors, or a director’s past or present affiliation with a firm that is PLDT’s internal auditor do not preclude a determination that such director is independent. |
• | Examples where PLDT’s corporate governance practices impose more stringent standards than NYSE listing standards include the look back periods for the independence tests and the “material relationship with the listed company” test. The look back period for each of the “past employment” and the “auditor affiliation” tests under PLDT’s corporate governance practices is five years compared to three years under the NYSE listing standards. Furthermore, in respect of material relationships that preclude an independence finding, PLDT’s Corporate Governance Manual provides that a director who is, or whose relative is, a substantial shareholder of PLDT, any of its related companies or any of its substantial shareholders cannot be considered as independent. |
• | Meetings of non-management directors.PLDT does not currently have regularly scheduled sessions of the non-management directors. However, as discussed and agreed by the Governance and Nomination Committee in its various meetings, non-management and/or independent directors are encouraged to request the Chairman to hold such meetings of non-management directors when there are important matters for discussion requiring such meetings. |
• | Nominating/Corporate Governance Committee and Compensation Committee.The NYSE listing standards require a listed company to maintain a nominating/corporate governance committee and a compensation committee, both composed entirely of independent directors. Our governance and nomination committee and our executive compensation committee is each composed of five voting members, a majority of whom are independent directors, which exceeds the requirements under the Philippine SEC Governance Code that one of the at least three voting members of the nominating/corporate governance committee and one of the at least three members of the compensation committee must be independent. |
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• | Audit Committee.As required by NYSE listing standards, PLDT maintains an audit committee in full compliance with Rule 10A-3 promulgated under the U.S. Securities Exchange Act of 1934, as amended, and Section 303A.06 of the NYSE Listed Company Manual. All of the members of PLDT’s audit committee are independent directors meeting the independence requirements of Rule 10A-3 as well as those under Section 303A.07 of the NYSE Listed Company Manual, except in those areas where our independence tests under the Philippine SEC Governance Code differ from those under the NYSE listing standards, as discussed above. |
Page | ||
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AUDITED ANNUAL FINANCIAL STATEMENTS | ||
155 | ||
F-1 | ||
F-2 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-8 |
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1 | (a). | Articles of Incorporation (incorporated by reference to PLDT’s Form 20-F as filed with the Securities and Exchange Commission in May 2001) | |
1 | (b). | By-Laws (as amended on June 28, 2005) (incorporated by reference to PLDT’s Form 20-F as filed with the Securities and Exchange Commission in June 2006) | |
2. | We have not included as exhibits certain instruments with respect to our long-term debt, the amount of debt authorized under each of which does not exceed 10% of our total assets, and we agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. | ||
4. | Material Contracts | ||
6. | Computation of Earnings Per Share | ||
7. | Calculation of Ratio of Earnings to Fixed Charges | ||
8. | Subsidiaries | ||
12.1 | Certification of Chief Executive Officer required by Rule 13a-14(a) of the Exchange Act | ||
12.2 | Certification of the Principal Financial Officer required by Rule 13a-14(a) of the Exchange Act | ||
13.1 | Certification of Chief Executive Officer required by Rule 13a-14(b) of the Exchange Act | ||
13.2 | Certification of the Principal Financial Officer required by Rule 13a-14(b) of the Exchange Act |
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PHILIPPINE LONG DISTANCE TELEPHONE COMPANY | ||||||
April 2, 2009 | ||||||
By: | /s/ Ma. Lourdes C. Rausa-Chan | |||||
Senior Vice President, Corporate Affairs and | ||||||
Legal Services Head and Corporate Secretary |
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Exhibit | |||
Number | Description of Exhibit | ||
1 | (a) | Articles of Incorporation (incorporated by reference to PLDT’s Form 20-F as filed with the Securities and Exchange Commission in May 2001) | |
1 | (b) | By-Laws (as amended on June 28, 2005) (incorporated by reference to PLDT’s Form 20-F as filed with the Securities and Exchange Commission in June 2006) | |
2 | We have not included as exhibits certain instruments with respect to our long-term debt, the amount of debt authorized under each of which does not exceed 10% of our total assets, and we agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. | ||
4 | (a) | Stock Purchase and Strategic Investment Agreement, dated September 28, 1999, by and among PLDT, First Pacific Limited, Metro Pacific Corporation, Metro Pacific Asia Link Holdings, Inc., Metro Pacific Resources, Inc. and NTT Communications Corporation (incorporated by reference to PLDT’s Form 6-K for the month of September 1999) | |
4 | (b) | Executive Stock Option Plan (incorporated by reference to PLDT’s Form 20-F as filed with the Securities and Exchange Commission in May 2001) | |
4 | (c) | Master Restructuring Agreement, dated June 21, 2000, as amended on December 12, 2000 and December 19, 2000, between Piltel, Piltel (Cayman) Limited, PLDT, The Chase Manhattan Bank, as escrow agent, Metropolitan Bank and Trust Company, as administrative agent and the creditors named therein (incorporated by reference to PLDT’s Form 20-F as filed with the Securities and Exchange Commission in May 2001) | |
4 | (d) | The Cooperation Agreement, dated January 31, 2006, entered into by and among PLDT, First Pacific, Metro Pacific Corporation, Metro Asia Link Holdings, Inc., Metro Pacific Resources, Inc., Larouge B.V., Metro Pacific Assets Holdings, Inc., NTT Communications and NTT DoCoMo (incorporated by reference to Schedule 13D/A (Amendment No.2) as filed with the United States Securities and Exchange Commission by Nippon Telegraph and Telephone Corporation and NTT Communications Corporation on January 31, 2006) | |
6 | Computation of Earnings Per Share | ||
7 | Calculation of Ratio of Earnings to Fixed Charges | ||
8 | Subsidiaries | ||
12.1 | Certification of Chief Executive Officer required by Rule 13a-14(a) of the Exchange Act | ||
12.2 | Certification of the Principal Financial Officer required by Rule 13a-14(a) of the Exchange Act | ||
13.1 | Certification of Chief Executive Officer required by Rule 13a-14(b) of the Exchange Act | ||
13.2 | Certification of the Principal Financial Officer required by Rule 13a-14(b) of the Exchange Act |
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Computation of Earnings Per Share
For the years 2008, 2007 and 2006
Amounts in conformity with IFRS
2008(1) | 2008 | 2007 | 2006 | |||||||||||||
(in millions, except earnings per common share) | ||||||||||||||||
Earnings per share for the year attributable to common equity holders of PLDT | ||||||||||||||||
Basic | ||||||||||||||||
Net income attributable to equity holders of PLDT | US$ | 720 | Php | 34,317 | Php | 39,289 | Php | 32,385 | ||||||||
Deduct: Dividends on preferred share | (9 | ) | (455 | ) | (457 | ) | (455 | ) | ||||||||
Net income attributable to common shareholders | US$ | 711 | Php | 33,862 | Php | 38,832 | Php | 31,930 | ||||||||
Diluted | ||||||||||||||||
Net income attributable to equity holders of PLDT | US$ | 720 | Php | 34,317 | Php | 39,289 | Php | 32,385 | ||||||||
Deduct: Dividends on preferred share | (9 | ) | (455 | ) | (457 | ) | (455 | ) | ||||||||
Dividends on dilutive preferred stock subject to mandatory redemption charged to interest expense for the year | — | — | 17 | — | ||||||||||||
Accretion to redemption value of preferred stock subject to mandatory conversion | — | — | 131 | — | ||||||||||||
Foreign exchange gains on preferred stock subject to mandatory conversion | — | — | (182 | ) | — | |||||||||||
Net income applicable to common shareholders | US$ | 711 | Php | 33,862 | Php | 38,798 | Php | 31,930 | ||||||||
Basic | ||||||||||||||||
Weighted average number of common shares (in thousands) | ||||||||||||||||
Outstanding common shares, beginning | 188,741 | 188,435 | 180,789 | |||||||||||||
Effect of issuance of common shares during the year | 542 | 221 | 3,667 | |||||||||||||
Effect of purchase of treasury stock during the year | (1,120 | ) | — | — | ||||||||||||
188,163 | 188,656 | 184,456 | ||||||||||||||
Diluted | ||||||||||||||||
Weighted average number of common shares (in thousands) | ||||||||||||||||
Outstanding common shares, beginning | 188,741 | 188,435 | 180,789 | |||||||||||||
Effect of issuance of common shares during the year | 542 | 221 | 3,667 | |||||||||||||
Average incremental number of shares under ESOP(2) | 13 | 38 | 98 | |||||||||||||
Effect of purchase of treasury stock during the year | (1,120 | ) | — | — | ||||||||||||
Common shares equivalent of preferred shares deemed dilutive | — | 680 | — | |||||||||||||
188,176 | 189,374 | 184,554 | ||||||||||||||
Earnings per share | ||||||||||||||||
Basic | 3.78 | 179.96 | 205.84 | 173.10 | ||||||||||||
Diluted | 3.78 | 179.95 | 204.88 | 173.01 | ||||||||||||
(3) | We maintain our accounts in Philippine pesos, the functional and presentation currency under IFRS and U.S. GAAP. For convenience, the peso financial information as at and for the year ended December 31, 2008 has been translated into U.S. dollars at the exchange rate of Php47.647 to US$1.00, the peso-dollar rate as quoted through the Philippine Dealing System as at December 31, 2008. | |
(2) | The dilutive effect of the outstanding options is reflected as additional share dilution in the computation of earnings per common share, see Note 7 — Earnings per Common Share to the accompanying audited consolidated financial statements in Item 18 for further discussion. |
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Computation of Operating Income and Earnings Per Share
For the years 2005 and 2004
Amounts in conformity with U.S. GAAP
2005 | 2004 | |||||||
(in millions, except net operating income per | ||||||||
common share) | ||||||||
1. Operating income per share | ||||||||
Basic | ||||||||
Operating income | Php | 48,514 | Php | 48,539 | ||||
Deduct: Dividends on convertible preferred shares | 1,677 | 1,764 | ||||||
Accretion of redemption value of preferred stock subject to mandatory conversion | 1,443 | 1,503 | ||||||
Operating income applicable to common shareholders | Php | 45,394 | Php | 45,272 | ||||
Diluted | ||||||||
Operating income | Php | 48,514 | Php | 48,539 | ||||
Deduct: Dividends on convertible preferred shares | 70 | 49 | ||||||
Accretion of redemption value of preferred stock subject to mandatory conversion | 1,746 | — | ||||||
Operating income applicable to common shareholders | Php | 46,698 | Php | 48,490 | ||||
Basic | ||||||||
Weighted average number of common shares (in thousands) | ||||||||
Outstanding common shares, beginning | 170,214 | 169,476 | ||||||
Effect of issuance of common shares during the year | 1,855 | 252 | ||||||
172,069 | 169,728 | |||||||
Diluted | ||||||||
Weighted average number of common shares (in thousands) | ||||||||
Outstanding common shares, beginning | 170,214 | 169,476 | ||||||
Effect of issuance of common shares during the year | 1,855 | 252 | ||||||
Weighted average number of shares under ESOP during the year(1) | 94 | 155 | ||||||
Common shares equivalent of preferred shares deemed dilutive | 10,858 | 22,381 | ||||||
183,021 | 192,264 | |||||||
Operating income per share | ||||||||
Basic | Php | 263.81 | Php | 266.73 | ||||
Diluted | 255.15 | 252.20 | ||||||
2. Earnings per share | ||||||||
Basic | ||||||||
Net income after cumulative effect of change in accounting policy | Php | 40,603 | Php | 28,101 | ||||
Deduct: Dividends on convertible preferred shares | 1,677 | 1,764 | ||||||
Accretion to redemption value of preferred stock subject to mandatory conversion | 1,443 | 1,503 | ||||||
Net income attributable to common shareholders | Php | 37,483 | Php | 24,834 | ||||
Diluted | ||||||||
Net income (loss) after cumulative effect of change in accounting policy | Php | 40,603 | Php | 28,101 | ||||
Deduct: Dividends on convertible preferred shares | 70 | 285 | ||||||
Accretion to redemption value of preferred stock subject to mandatory conversion | 1,746 | 1,503 | ||||||
Net income applicable to common shareholders | Php | 38,787 | Php | 26,313 | ||||
Basic | ||||||||
Weighted average number of common shares (in thousands) | ||||||||
Outstanding common shares, beginning | 170,214 | 169,476 | ||||||
Effect of issuance of common shares during the year | 1,855 | 252 | ||||||
172,069 | 169,728 | |||||||
Diluted | ||||||||
Weighted average number of common shares (in thousands) | ||||||||
Outstanding common shares, beginning | 170,214 | 169,476 | ||||||
Effect of issuance of common shares during the year | 1,855 | 252 | ||||||
Average incremental number of shares under ESOP(1) | 94 | 155 | ||||||
Common shares equivalent of preferred shares deemed dilutive | 10,858 | 11,213 | ||||||
183,021 | 181,096 | |||||||
Earnings per share(1) | ||||||||
Basic | Php | 217.84 | Php | 146.32 | ||||
Diluted | 211.93 | 145.30 | ||||||
(1) | The dilutive effect of the outstanding options is reflected as additional share dilution in the computation of earnings per common share. |
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Calculation of Ratio of Earnings to Fixed Charges
For the years 2008, 2007 and 2006
Amounts in conformity with IFRS
2008(1) | 2008 | 2007 | 2006 | |||||||||||||
(in millions, except ratio of earnings to fixed charges) | ||||||||||||||||
Earnings: Income before income tax | ||||||||||||||||
Pre-tax income from continuing operations before adjustment for minority interest in consolidated subsidiaries or income or loss from equity investees subsidiaries | US$ | 1,134 | Php | 54,049 | Php | 58,081 | Php | 38,249 | ||||||||
Add (Deduct): | ||||||||||||||||
Fixed Charges(see b below) | 164 | 7,831 | 8,051 | 10,874 | ||||||||||||
Amortization of capitalized interest | 33 | 1,543 | 1,559 | 1,490 | ||||||||||||
Capitalized interest | (16 | ) | (778 | ) | (542 | ) | (549 | ) | ||||||||
Total Earnings(a) | US$ | 1,315 | Php | 62,645 | Php | 67,149 | Php | 50,064 | ||||||||
Fixed Charges(b) | ||||||||||||||||
Interest on loans and related items | US$ | 107 | Php | 5,083 | Php | 5,714 | Php | 7,359 | ||||||||
Capitalized interest | 16 | 778 | 542 | 549 | ||||||||||||
Amortization of debt issuance costs | 16 | 751 | 874 | 2,214 | ||||||||||||
Estimated financing component of rent expense(3) | 25 | 1,219 | 921 | 752 | ||||||||||||
Total Fixed Charges | US$ | 164 | Php | 7,831 | Php | 8,051 | Php | 10,874 | ||||||||
Ratio (a/b)(2) | 8.0 | 8.0 | 8.3 | 4.6 | ||||||||||||
Amounts in conformity with U.S. GAAP
2005 | 2004 | |||||||
(in millions, except ratio of earnings to fixed charges) | ||||||||
Earnings: | ||||||||
Pre-tax income from continuing operations before adjustment for minority interest in consolidated subsidiaries or income or loss from equity investees subsidiaries | Php | 45,770 | Php | 34,840 | ||||
Add (Deduct): | ||||||||
Fixed Charges (see b below) | 11,273 | 13,479 | ||||||
Amortization of capitalized interest | 1,443 | 1,510 | ||||||
Capitalized interest | (504 | ) | (595 | ) | ||||
Total Earnings(a) | Php | 57,982 | Php | 49,234 | ||||
Fixed Charges(b) | ||||||||
Interest on loans and related items | Php | 9,615 | Php | 11,115 | ||||
Capitalized interest | 504 | 595 | ||||||
Amortization of debt issuance costs | 459 | 1,049 | ||||||
Estimated financing component of rent expense(3) | 695 | 720 | ||||||
Total Fixed Charges | Php | 11,273 | Php | 13,479 | ||||
Ratio (a/b)(2) | 5.1 | 3.7 | ||||||
(1) | We maintain our accounts in Philippine pesos, the functional and presentation currency under IFRS and U.S. GAAP. For convenience, the peso financial information as at and for the year ended December 31, 2008 has been translated into U.S. dollars at the exchange rate of Php47.647 to US$1.00, the peso-dollar rate as quoted through the Philippine Dealing System as at December 31, 2008. | |
(2) | For purposes of this ratio, “Earnings” consist of: (a) pre-tax income from continuing operations before adjustment for minority interest in consolidated subsidiaries or income or loss from equity investees, (b) fixed charges, (c) amortization of capitalized interest, (d) distributed income of equity investees, and (e) share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges; less the sum of the following: (1) capitalized interest, (2) preference security dividend requirements of consolidated subsidiaries, and (3) the minority interest in pre-tax income of subsidiaries that have not incurred fixed charges. | |
“Fixed charges” consist of interest expensed and capitalized interest, amortized premiums, discounts and capitalized expenses related to indebtedness, an estimate of interest within rental expense, and preference security dividend requirements of consolidated subsidiaries. | ||
(3) | Rent expense substantially represents payments for the satellite circuits leased by PLDT. Historically, PLDT has been using one-third of rent expense as a reasonable estimate of the financing component of rent expense, since it is impracticable to determine the actual financing component of rent expense. |
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Subsidiaries as at December 31, 2008
Percentage of Ownership | ||||||||||||
Name of Subsidiary | Place of Incorporation | Principal Activity | Direct | Indirect | ||||||||
Wireless | ||||||||||||
Smart | Philippines | Cellular mobile services | 100.0 | — | ||||||||
Smart Broadband, Inc. | Philippines | Internet broadband distribution | — | 100.0 | ||||||||
SmartConnect Holdings Pte. Ltd. | Singapore | Investment company | — | 100.0 | ||||||||
I-Contacts Corporation | Philippines | Customer interaction solutions | — | 100.0 | ||||||||
Wolfpac Mobile, Inc. | Philippines | Mobile applications development and services | — | 100.0 | ||||||||
SmartConnect Global Pte. Ltd. | Singapore | International trade of satellites and GSM enabled global telecommunications | — | 100.0 | ||||||||
Wireless Card, Inc. | Philippines | Promotion of the sale and/or patronage of debit and/or charge cards | — | 100.0 | ||||||||
Smart Money Holdings Corporation | Cayman Islands | Investment Company | — | 100.0 | ||||||||
Smart Money, Inc. | Cayman Islands | Mobile commerce solutions marketing | — | 100.0 | ||||||||
Telecoms Solutions, Inc. | Mauritius | Mobile commerce platforms | — | 100.0 | ||||||||
Far East Capital Limited | Cayman Islands | Cost effective offshore financing and risk management activities for Smart | — | 100.0 | ||||||||
Smarthub, Incorporated | Philippines | Development and sale of software, maintenance and support services | — | 100.0 | ||||||||
PH Communications Holdings Corporation | Philippines | Investment company | — | 100.0 | ||||||||
Francom Holdings, Inc. | Philippines | Investment company | — | 100.0 | ||||||||
Connectivity Unlimited Resource Enterprise | Philippines | Cellular mobile services | — | 100.0 | ||||||||
Airborne Access Corporation | Philippines | Wireless Internet services | — | 99.4 | ||||||||
Pilipino Telephone Corporation | Philippines | Cellular mobile services | — | 92.5 | ||||||||
3rd Brand Pte. Ltd. | Singapore | Solutions and systems integration services | — | 85.0 | ||||||||
Telesat, Inc. | Philippines | Satellite communications services | 100.0 | — | ||||||||
ACeS Philippines Cellular Satellite Corporation | Philippines | Satellite information and messaging services | 88.5 | 11.5 | ||||||||
Mabuhay Satellite Corporation | Philippines | Satellite communications services | 67.0 | — | ||||||||
Fixed Line | ||||||||||||
PLDT Clark Telecom, Inc. | Philippines | Telecommunications services | 100.0 | — | ||||||||
PLDT Subic Telecom, Inc. | Philippines | Telecommunications services | 100.0 | — | ||||||||
PLDT Global Corporation | British Virgin Islands | Telecommunications services | 100.0 | — | ||||||||
Smart-NTT Multimedia, Inc. | Philippines | Data and network services | 100.0 | — | ||||||||
PLDT-Maratel, Inc. | Philippines | Telecommunications services | 97.5 | — | ||||||||
Bonifacio Communications Corporation | Philippines | Telecommunications, infrastructure and related value-added services | 75.0 | — | ||||||||
Information and Communications Technology, or ICT | ||||||||||||
ePLDT, Inc. | Philippines | Information and communications infrastructure for Internet-based services, e-commerce, customer interaction solutions and IT-related services | 100.0 | — | ||||||||
SPi Technologies, Inc. and Subsidiaries | Philippines | Knowledge processing solutions | — | 100.0 | ||||||||
ePLDT Ventus, Inc. | Philippines | Customer interaction solutions | — | 100.0 | ||||||||
Vocativ Systems, Inc. | Philippines | Customer interaction solutions | — | 100.0 | ||||||||
Parlance Systems, Inc. | Philippines | Customer interaction solutions | — | 100.0 | ||||||||
Infocom Technologies, Inc. | Philippines | Internet access services | — | 99.6 | ||||||||
Digital Paradise Thailand | Thailand | Internet access services | — | 87.5 | ||||||||
netGames, Inc. | Philippines | Publisher of online games | — | 80.0 | ||||||||
Digital Paradise, Inc. | Philippines | Internet access services | — | 75.0 | ||||||||
Level Up! (Philippines), Inc. | Philippines | Publisher of online games | — | 60.0 |
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1. | I have reviewed this annual report on Form 20-F of Philippine Long Distance Telephone Company (the “Company”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
5. | The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
/s/ Napoleon L. Nazareno | ||||
Napoleon L. Nazareno | ||||
President and Chief Executive Officer (Principal Executive Officer) |
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1. | I have reviewed this annual report on Form 20-F of Philippine Long Distance Telephone Company (the “Company”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
5. | The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
/s/ Anabelle L. Chua | ||||
Anabelle L. Chua | ||||
Senior Vice President and Treasurer (Principal Financial Officer) |
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/s/ Napoleon L. Nazareno | ||||
Napoleon L. Nazareno | ||||
President and Chief Executive Officer (Principal Executive Officer) |
153
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/s/ Anabelle L. Chua | ||||
Anabelle L. Chua | ||||
Senior Vice President and Treasurer (Principal Financial Officer) |
154
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Philippine Long Distance Telephone Company
Makati City, Philippines
March 31, 2009
155
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Philippine Long Distance Telephone Company
December 31, 2008 and 2007, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the PLDT Group’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
Makati City, Philippines
March 31, 2009
F-1
Table of Contents
(in million pesos, except par value, per share amounts and number of shares)
2008 | 2007 | |||||||
ASSETS | ||||||||
Noncurrent Assets | ||||||||
Property, plant and equipment — net (Notes 3, 5, 8, 18 and 26) | 160,326 | 159,414 | ||||||
Investments in associates and joint ventures (Notes 9, 18 and 26) | 1,174 | 1,351 | ||||||
Available-for-sale financial assets (Note 26) | 131 | 143 | ||||||
Investment in debt securities (Notes 13 and 26) | 635 | 273 | ||||||
Investment properties (Notes 3, 10 and 26) | 617 | 577 | ||||||
Goodwill and intangible assets — net (Notes 3, 5, 11 and 26) | 10,450 | 11,721 | ||||||
Deferred income tax assets — net (Notes 3, 4, 6 and 26) | 9,605 | 13,757 | ||||||
Derivative financial assets (Note 26) | — | 59 | ||||||
Prepayments — net of current portion (Notes 16, 22 and 26) | 2,501 | 2,281 | ||||||
Advances and refundable deposits — net of current portion (Note 26) | 1,086 | 1,030 | ||||||
Total Noncurrent Assets | 186,525 | 190,606 | ||||||
Current Assets | ||||||||
Cash and cash equivalents (Notes 12 and 26) | 33,684 | 17,447 | ||||||
Short-term investments (Note 26) | 6,670 | 13,415 | ||||||
Investment in debt securities (Notes 13 and 26) | 1,656 | 1,115 | ||||||
Trade and other receivables — net (Notes 3, 14, 22 and 26) | 15,909 | 12,645 | ||||||
Inventories and supplies (Notes 3, 15 and 26) | 2,069 | 1,167 | ||||||
Derivative financial assets (Note 26) | 56 | 897 | ||||||
Current portion of prepayments (Notes 16, 22 and 26) | 4,164 | 2,368 | ||||||
Current portion of advances and refundable deposits (Notes 13 and 26) | 1,825 | 498 | ||||||
Total Current Assets | 66,033 | 49,552 | ||||||
TOTAL ASSETS | 252,558 | 240,158 | ||||||
EQUITY AND LIABILITIES | ||||||||
Equity | ||||||||
Preferred stock, Php10 par value, authorized — 822,500,000 shares; issued and outstanding — 441,480,512 shares as at December 31, 2008 and 441,650,297 shares as at December 31, 2007 (Notes 7 and 17) | 4,415 | 4,417 | ||||||
Common stock, Php5 par value, authorized — 234,000,000 shares; issued — 189,456,127 shares and outstanding — 187,483,837 shares as at December 31, 2008 and issued and outstanding — 188,740,519 shares as at December 31, 2007 (Notes 7 and 17) | 947 | 943 | ||||||
Treasury stock — 1,972,290 shares as at December 31, 2008 (Notes 7, 17 and 26) | (4,973 | ) | — | |||||
Stock options issued (Note 23) | 6 | 9 | ||||||
Equity portion of convertible preferred stock (Note 18) | — | 6 | ||||||
Capital in excess of par value | 68,337 | 67,057 | ||||||
Retained earnings (Note 7) | 37,177 | 39,894 | ||||||
Cumulative translation adjustments | (378 | ) | (1,383 | ) | ||||
Total Equity Attributable to Equity Holders of PLDT | 105,531 | 110,943 | ||||||
Minority interests | 1,438 | 1,402 | ||||||
TOTAL EQUITY | 106,969 | 112,345 |
F-2
Table of Contents
December 31, 2008 and 2007
(in million pesos, except par value, per share amounts and number of shares)
2008 | 2007 | |||||||
Noncurrent Liabilities | ||||||||
Interest-bearing financial liabilities — net of current portion (Notes 8, 18, 24 and 26) | 58,910 | 53,387 | ||||||
Deferred income tax liabilities (Notes 3, 4, 6 and 26) | 1,288 | 2,066 | ||||||
Derivative financial liabilities (Notes 24 and 26) | 1,761 | 7,741 | ||||||
Pension and other employee benefits (Notes 3, 23 and 26) | 5,467 | 4,540 | ||||||
Customers’ deposits (Notes 24 and 26) | 2,251 | 2,201 | ||||||
Deferred credits and other noncurrent liabilities (Notes 3, 8, 11, 14, 19, 21 and 26) | 10,582 | 9,632 | ||||||
Total Noncurrent Liabilities | 80,259 | 79,567 | ||||||
Current Liabilities | ||||||||
Accounts payable (Notes 20, 22, 25 and 26) | 18,268 | 12,253 | ||||||
Accrued expenses and other current liabilities (Notes 3, 11, 18, 19, 21, 22, 23, 24, 25 and 26) | 24,381 | 21,929 | ||||||
Derivative financial liabilities (Notes 24 and 26) | 87 | 242 | ||||||
Provisions for assessments (Notes 22, 24, 25 and 26) | 1,555 | 1,112 | ||||||
Current portion of interest-bearing financial liabilities (Notes 8, 18, 24 and 26) | 15,080 | 8,764 | ||||||
Dividends payable (Notes 7, 18, 24 and 26) | 1,379 | 1,071 | ||||||
Income tax payable (Notes 6 and 26) | 4,580 | 2,875 | ||||||
Total Current Liabilities | 65,330 | 48,246 | ||||||
TOTAL LIABILITIES | 145,589 | 127,813 | ||||||
TOTAL EQUITY AND LIABILITIES | 252,558 | 240,158 | ||||||
F-3
Table of Contents
(in million pesos, except earnings per common share amounts)
2008 | 2007 | 2006 | ||||||||||
REVENUES | ||||||||||||
Service revenues (Notes 3 and 4) | 142,873 | 135,478 | 124,988 | |||||||||
Non-service revenues (Notes 3, 4 and 5) | 2,964 | 3,226 | 2,520 | |||||||||
145,837 | 138,704 | 127,508 | ||||||||||
EXPENSES | ||||||||||||
Depreciation and amortization (Notes 3, 4 and 8) | 24,709 | 28,613 | 31,869 | |||||||||
Compensation and employee benefits (Notes 3, 5 and 23) | 20,709 | 20,470 | 18,359 | |||||||||
Repairs and maintenance (Note 22) | 8,569 | 7,310 | 6,886 | |||||||||
Selling and promotions | 5,695 | 5,541 | 4,907 | |||||||||
Cost of sales (Notes 5, 22 and 24) | 5,252 | 5,127 | 5,625 | |||||||||
Professional and other contracted services (Note 22) | 4,591 | 4,719 | 3,097 | |||||||||
Asset impairment (Notes 3, 5, 8, 9, 11, 13, 14 and 15) | 4,180 | 1,317 | 2,766 | |||||||||
Rent (Notes 3 and 24) | 3,656 | 2,762 | 2,257 | |||||||||
Taxes and licenses (Note 25) | 2,736 | 2,319 | 1,747 | |||||||||
Communication, training and travel | 1,993 | 1,850 | 1,481 | |||||||||
Insurance and security services (Note 22) | 1,196 | 1,197 | 1,255 | |||||||||
Provisions (Notes 3, 4, 14, 15, 22, 24 and 25) | 898 | 666 | 38 | |||||||||
Amortization of intangible assets (Notes 3 and 11) | 377 | 390 | 450 | |||||||||
Other expenses (Note 22) | 1,225 | 1,306 | 1,266 | |||||||||
85,786 | 83,587 | 82,003 | ||||||||||
60,051 | 55,117 | 45,505 | ||||||||||
OTHER INCOME (EXPENSES) | ||||||||||||
Gains (losses) on derivative financial instruments — net (Note 26) | 3,115 | (2,849 | ) | (8,304 | ) | |||||||
Interest income (Note 5) | 1,668 | 1,503 | 1,654 | |||||||||
Equity share in net losses of associates and joint ventures (Note 9 | ) | (176) | (11 | ) | (52 | ) | ||||||
Financing costs — net (Notes 5, 7, 8, 18 and 26) | (6,104 | ) | (7,088 | ) | (10,854 | ) | ||||||
Foreign exchange (losses) gains — net (Notes 8, 18 and 26) | (6,170 | ) | 7,990 | 4,821 | ||||||||
Others (Notes 5, 8, 22 and 24) | 1,665 | 3,419 | 5,479 | |||||||||
(6,002 | ) | 2,964 | (7,256 | ) | ||||||||
INCOME BEFORE INCOME TAX | 54,049 | 58,081 | 38,249 | |||||||||
PROVISION FOR INCOME TAX(Notes 3, 4 and 6) | 19,073 | 18,807 | 5,668 | |||||||||
NET INCOME FOR THE YEAR | 34,976 | 39,274 | 32,581 | |||||||||
ATTRIBUTABLE TO: | ||||||||||||
Equity holders of PLDT (Note 7) | 34,317 | 39,289 | 32,385 | |||||||||
Minority interests | 659 | (15 | ) | 196 | ||||||||
34,976 | 39,274 | 32,581 | ||||||||||
Earnings Per Share For The Year Attributable to Common Equity Holders of PLDT(Note 7) | ||||||||||||
Basic | 179.96 | 205.84 | 173.10 | |||||||||
Diluted | 179.95 | 204.88 | 173.01 | |||||||||
F-4
Table of Contents
(in million pesos)
Total | ||||||||||||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||||||||||
Stock | Equity Portion | Capital in | Cumulative | Attributable to | ||||||||||||||||||||||||||||||||||||||||
Preferred | Common | Treasury | Options | of Convertible | Excess of | Retained | Translation | Equity Holders of | Minority | Total | ||||||||||||||||||||||||||||||||||
Stock | Stock | Stock | Issued | Preferred Stock | Par Value | Earnings | Adjustments | PLDT | Interests | Equity | ||||||||||||||||||||||||||||||||||
Balances at January 1, 2006 | 4,433 | 904 | — | 67 | 49 | 53,918 | 11,891 | 504 | 71,766 | 1,162 | 72,928 | |||||||||||||||||||||||||||||||||
Changes in equity: | ||||||||||||||||||||||||||||||||||||||||||||
Net income for the year | — | — | — | — | — | — | 32,385 | — | 32,385 | 196 | 32,581 | |||||||||||||||||||||||||||||||||
Foreign currency translation differences | — | — | — | — | — | — | — | (546 | ) | (546 | ) | (45 | ) | (591 | ) | |||||||||||||||||||||||||||||
Net gains on available-for-sale financial assets | — | — | — | — | — | — | — | 5 | 5 | — | 5 | |||||||||||||||||||||||||||||||||
Total expense for the year recognized directly in equity | — | — | — | — | — | — | — | (541 | ) | (541 | ) | (45 | ) | (586 | ) | |||||||||||||||||||||||||||||
Total income and expense for the year | — | — | — | — | — | — | 32,385 | (541 | ) | 31,844 | 151 | 31,995 | ||||||||||||||||||||||||||||||||
Cash dividends (Note 7) | — | — | — | — | — | — | (14,915 | ) | — | (14,915 | ) | — | (14,915 | ) | ||||||||||||||||||||||||||||||
Issuance of capital stock — net of conversion (Note 17) | (9 | ) | 38 | — | — | (40 | ) | 12,567 | — | — | 12,556 | — | 12,556 | |||||||||||||||||||||||||||||||
Exercised option shares (Note 23) | — | — | — | (27 | ) | — | 89 | — | — | 62 | — | 62 | ||||||||||||||||||||||||||||||||
Minority interests | — | — | — | — | — | — | — | — | — | 227 | 227 | |||||||||||||||||||||||||||||||||
Balances at December 31, 2006 | 4,424 | 942 | — | 40 | 9 | 66,574 | 29,361 | (37 | ) | 101,313 | 1,540 | 102,853 | ||||||||||||||||||||||||||||||||
Balances at January 1, 2007 | 4,424 | 942 | — | 40 | 9 | 66,574 | 29,361 | (37 | ) | 101,313 | 1,540 | 102,853 | ||||||||||||||||||||||||||||||||
Changes in equity: | ||||||||||||||||||||||||||||||||||||||||||||
Net income for the year | — | — | — | — | — | — | 39,289 | — | 39,289 | (15 | ) | 39,274 | ||||||||||||||||||||||||||||||||
Deferred income tax effects on cash flow hedges | — | — | — | — | — | — | — | (256 | ) | (256 | ) | — | (256 | ) | ||||||||||||||||||||||||||||||
Foreign currency translation differences | — | — | — | — | — | — | — | (1,782 | ) | (1,782 | ) | (67 | ) | (1,849 | ) | |||||||||||||||||||||||||||||
Net gains on available-for-sale financial assets | — | — | — | — | — | — | — | 30 | 30 | — | 30 | |||||||||||||||||||||||||||||||||
Net gains on cash flow hedges | — | — | — | — | — | — | — | 662 | 662 | — | 662 | |||||||||||||||||||||||||||||||||
Total expense for the year recognized directly in equity | — | — | — | — | — | — | — | (1,346 | ) | (1,346 | ) | (67 | ) | (1,413 | ) | |||||||||||||||||||||||||||||
Total income and expense for the year | — | — | — | — | — | — | 39,289 | (1,346 | ) | 37,943 | (82 | ) | 37,861 | |||||||||||||||||||||||||||||||
Cash dividends (Note 7) | — | — | — | — | — | — | (28,756 | ) | — | (28,756 | ) | (12 | ) | (28,768 | ) | |||||||||||||||||||||||||||||
Issuance of capital stock — net of conversion (Note 17) | (7 | ) | 1 | — | — | (3 | ) | 379 | — | — | 370 | — | 370 | |||||||||||||||||||||||||||||||
Exercised option shares (Note 23) | — | — | — | (31 | ) | — | 104 | — | — | 73 | — | 73 | ||||||||||||||||||||||||||||||||
Minority interests | — | — | — | — | — | — | — | — | — | (44 | ) | (44 | ) | |||||||||||||||||||||||||||||||
Balances at December 31, 2007 | 4,417 | 943 | — | 9 | 6 | 67,057 | 39,894 | (1,383 | ) | 110,943 | 1,402 | 112,345 | ||||||||||||||||||||||||||||||||
Balances at January 1, 2008 | 4,417 | 943 | — | 9 | 6 | 67,057 | 39,894 | (1,383 | ) | 110,943 | 1,402 | 112,345 | ||||||||||||||||||||||||||||||||
Changes in equity: | ||||||||||||||||||||||||||||||||||||||||||||
Net income for the year | — | — | — | — | — | — | 34,317 | — | 34,317 | 659 | 34,976 | |||||||||||||||||||||||||||||||||
Deferred income tax effects on cash flow hedges | — | — | — | — | — | — | — | 251 | 251 | — | 251 | |||||||||||||||||||||||||||||||||
Foreign currency translation differences | — | — | — | — | — | — | — | 1,425 | 1,425 | 65 | 1,490 | |||||||||||||||||||||||||||||||||
Net losses on available-for-sale financial assets | — | — | — | — | — | — | — | (9 | ) | (9 | ) | — | (9 | ) | ||||||||||||||||||||||||||||||
Net losses on cash flow hedges | — | — | — | — | — | — | — | (662 | ) | (662 | ) | — | (662 | ) | ||||||||||||||||||||||||||||||
Total income for the year recognized directly in equity | — | — | — | — | — | — | — | 1,005 | 1,005 | 65 | 1,070 | |||||||||||||||||||||||||||||||||
Total income for the year | — | — | — | — | — | — | 34,317 | 1,005 | 35,322 | 724 | 36,046 | |||||||||||||||||||||||||||||||||
Cash dividends (Note 7) | — | — | — | — | — | — | (37,034 | ) | — | (37,034 | ) | (398 | ) | (37,432 | ) | |||||||||||||||||||||||||||||
Issuance of capital stock — net of conversion (Note 17) | (2 | ) | 4 | — | — | (6 | ) | 1,270 | — | — | 1,266 | — | 1,266 | |||||||||||||||||||||||||||||||
Exercised option shares (Note 23) | — | — | — | (3 | ) | — | 10 | — | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||
Treasury stock (Notes 7, 17 and 26) | — | — | (4,973 | ) | — | — | — | — | — | (4,973 | ) | (308 | ) | (5,281 | ) | |||||||||||||||||||||||||||||
Minority interests | — | — | — | — | — | — | — | — | — | 18 | 18 | |||||||||||||||||||||||||||||||||
Balances at December 31, 2008 | 4,415 | 947 | (4,973 | ) | 6 | — | 68,337 | 37,177 | (378 | ) | 105,531 | 1,438 | 106,969 | |||||||||||||||||||||||||||||||
F-5
Table of Contents
(in million pesos)
2008 | 2007 | 2006 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Income before income tax | 54,049 | 58,081 | 38,249 | |||||||||
Adjustments for: | ||||||||||||
Depreciation and amortization (Notes 3, 4 and 8) | 24,709 | 28,613 | 31,869 | |||||||||
Foreign exchange losses (gains) — net (Notes 18 and 26) | 6,170 | (7,990 | ) | (4,821 | ) | |||||||
Interest on loans and other related items — net (Note 5) | 5,083 | 5,714 | 7,359 | |||||||||
Asset impairment (Notes 3, 5, 14, 15 and 26) | 4,180 | 1,317 | 2,766 | |||||||||
Incentive plans (Notes 3, 5 and 23) | 1,281 | 1,448 | 3,150 | |||||||||
Accretion on financial liabilities — net (Notes 5 and 26) | 956 | 1,161 | 3,314 | |||||||||
Pension benefit costs (Notes 3, 5 and 23) | 725 | 1,773 | 1,003 | |||||||||
Amortization of intangible assets (Note 11) | 377 | 390 | 450 | |||||||||
Equity share in net losses of associates and joint ventures | 176 | 11 | 52 | |||||||||
Dividends on preferred stock subject to mandatory redemption (Note 5) | 4 | 17 | 130 | |||||||||
Gain on disposal of property, plant and equipment (Note 8) | (534 | ) | (527 | ) | (158 | ) | ||||||
Interest income (Note 5) | (1,668 | ) | (1,503 | ) | (1,654 | ) | ||||||
(Gains) losses on derivative financial instruments — net (Note 26) | (3,115 | ) | 2,849 | 8,304 | ||||||||
Gain on reversal of provision for onerous contracts (Note 25) | — | — | (3,529 | ) | ||||||||
Others | 830 | (1,242 | ) | (897 | ) | |||||||
Operating income before changes in assets and liabilities | 93,223 | 90,112 | 85,587 | |||||||||
Decrease (increase) in: | ||||||||||||
Trade and other receivables | (3,003 | ) | (3,266 | ) | (1,187 | ) | ||||||
Inventories and supplies | (913 | ) | (76 | ) | 343 | |||||||
Prepayments | (877 | ) | 1,862 | (1,513 | ) | |||||||
Advances and refundable deposits | (1,338 | ) | (307 | ) | 1,329 | |||||||
Increase (decrease) in: | ||||||||||||
Accounts payable | 5,244 | 4,763 | (9,254 | ) | ||||||||
Accrued expenses and other current liabilities | 2,084 | 3,558 | 2,559 | |||||||||
Pension and other employee benefits | (1,125 | ) | (6,649 | ) | (435 | ) | ||||||
Customers’ deposits | 27 | 12 | 6 | |||||||||
Other noncurrent liabilities | 1 | (1,167 | ) | 43 | ||||||||
Net cash generated from operations | 93,323 | 88,842 | 77,478 | |||||||||
Income taxes paid | (15,021 | ) | (11,424 | ) | (8,267 | ) | ||||||
Net cash provided by operating activities | 78,302 | 77,418 | 69,211 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Proceeds from: | ||||||||||||
Maturity of short-term investments | 28,476 | 15,935 | 658 | |||||||||
Redemption of investment in debt securities | 2,676 | — | — | |||||||||
Disposal of property, plant and equipment (Note 8) | 1,015 | 953 | 694 | |||||||||
Disposal of investment in associates | 187 | — | — | |||||||||
Disposal of investment properties | 9 | 10 | 72 | |||||||||
Disposal of available-for-sale financial assets | — | 7 | — | |||||||||
Collection of notes receivable | — | — | 89 | |||||||||
Payments for: | ||||||||||||
Acquisition of intangibles (Note 11) | (69 | ) | (213 | ) | — | |||||||
Available-for-sale financial assets | (206 | ) | — | — | ||||||||
Purchase of subsidiaries — net of cash acquired (Note 11) | (375 | ) | (1,687 | ) | (10,254 | ) | ||||||
Purchase of investments in associates | (379 | ) | (601 | ) | (636 | ) | ||||||
Purchase of investment in debt securities | (3,457 | ) | (264 | ) | — | |||||||
Interest received | 1,461 | 1,218 | 1,481 | |||||||||
Increase in advances and refundable deposits | (77 | ) | (424 | ) | (1,054 | ) | ||||||
Interest paid — capitalized to property, plant and equipment (Notes 5 and 8) | (778 | ) | (542 | ) | (549 | ) | ||||||
Additions to short-term investments | (21,072 | ) | (21,429 | ) | (6,166 | ) | ||||||
Additions to property, plant and equipment (Notes 5 and 8) | (24,425 | ) | (24,282 | ) | (20,125 | ) | ||||||
Net cash used in investing activities | (17,014 | ) | (31,319 | ) | (35,790 | ) | ||||||
F-6
Table of Contents
For the Years Ended December 31, 2008, 2007 and 2006
(in million pesos)
2008 | 2007 | 2006 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from availment of long-term debt (Note 18) | 17,912 | 7,647 | 9,724 | |||||||||
Additional capital expenditures under long-term financing | 6,614 | 8,746 | 9,159 | |||||||||
Proceeds from notes payable | 660 | 502 | 211 | |||||||||
Proceeds from issuance of capital stock | 8 | 76 | 66 | |||||||||
Payments of debt issuance costs | (149 | ) | (54 | ) | (34 | ) | ||||||
Payments of obligations under finance lease | (474 | ) | (199 | ) | (210 | ) | ||||||
Payments of notes payable | (678 | ) | (193 | ) | (128 | ) | ||||||
Settlements of derivative financial instruments | (2,891 | ) | (2,066 | ) | (3,727 | ) | ||||||
Interest paid — net of capitalized portion | (5,167 | ) | (5,891 | ) | (7,528 | ) | ||||||
Payments for redemption of shares (Notes 7, 17 and 26) | (5,281 | ) | (15 | ) | — | |||||||
Reduction in capital expenditures under long-term financing | (5,519 | ) | (6,837 | ) | (9,282 | ) | ||||||
Payments of long-term debt (Note 18) | (13,375 | ) | (18,065 | ) | (29,238 | ) | ||||||
Cash dividends paid | (37,124 | ) | (28,470 | ) | (14,913 | ) | ||||||
Net cash used in financing activities | (45,464 | ) | (44,819 | ) | (45,900 | ) | ||||||
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 413 | (703 | ) | (710 | ) | |||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 16,237 | 577 | (13,189 | ) | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 17,447 | 16,870 | 30,059 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | 33,684 | 17,447 | 16,870 | |||||||||
F-7
Table of Contents
1. | Corporate Information |
F-8
Table of Contents
2. | Summary of Significant Accounting Policies and Practices |
2008 | 2007 | |||||||||||||||||||
Place of | Percentage of Ownership | |||||||||||||||||||
Name of Subsidiary | Incorporation | Principal Activity | Direct | Indirect | Direct | Indirect | ||||||||||||||
Wireless | ||||||||||||||||||||
Smart | Philippines | Cellular mobile services | 100.0 | — | 100.0 | — | ||||||||||||||
Smart Broadband, Inc., or SBI | Philippines | Internet broadband distribution | — | 100.0 | — | 100.0 | ||||||||||||||
SmartConnect Holdings Pte. Ltd., or SCH | Singapore | Investment company | — | 100.0 | — | 100.0 | ||||||||||||||
I—Contacts Corporation, or I—Contacts | Philippines | Customer interaction solutions | — | 100.0 | — | 100.0 | ||||||||||||||
Wolfpac Mobile, Inc., or Wolfpac | Philippines | Mobile applications development and services | — | 100.0 | — | 100.0 | ||||||||||||||
SmartConnect Global Pte. Ltd., or SGP | Singapore | International trade of satellites and Global System for Mobile Communication, or GSM, enabled global telecommunications | — | 100.0 | — | 100.0 | ||||||||||||||
Wireless Card, Inc., or WCI | Philippines | Promotion of the sale and/or patronage of debit and/or charge cards | — | 100.0 | — | 100.0 | ||||||||||||||
Smarthub, Incorporated, or SHI | Philippines | Development and sale of software, maintenance and support services | — | 100.0 | — | 100.0 | ||||||||||||||
Smart Money Holdings Corporation | Cayman Islands | Investment company | — | 100.00 | — | 100.00 | ||||||||||||||
Smart Money, Inc. | Cayman Islands | Mobile commerce solutions marketing | — | 100.00 | — | 100.00 | ||||||||||||||
Telecoms Solutions, Inc. | Mauritius | Mobile commerce platforms | — | 100.00 | — | 100.00 | ||||||||||||||
Far East Capital Limited | Cayman Islands | Cost effective offshore financing and risk management activities for Smart | — | 100.00 | — | 100.00 | ||||||||||||||
PH Communications Holdings Corporation, or PHC | Philippines | Investment company | — | 100.0 | — | — | ||||||||||||||
Francom Holdings, Inc., or FHI | Philippines | Investment company | — | 100.0 | — | — | ||||||||||||||
Connectivity Unlimited Resource Enterprise, or CURE | Philippines | Cellular mobile services | — | 100.0 | — | — | ||||||||||||||
Airborne Access Corporation, or Airborne Access | Philippines | Wireless Internet services | — | 99.4 | — | — | ||||||||||||||
Pilipino Telephone Corporation, or Piltel | Philippines | Cellular mobile services | — | 92.5 | — | 92.1 | ||||||||||||||
3rd Brand Pte. Ltd., or 3rd Brand | Singapore | Solutions and systems integration services | — | 85.0 | — | 85.0 | ||||||||||||||
Telesat, Inc., or Telesat | Philippines | Satellite communications services | 100.0 | — | 100.0 | — | ||||||||||||||
ACeS Philippines Cellular Satellite Corporation, or ACeS Philippines | Philippines | Satellite information and messaging services | 88.5 | 11.5 | 88.5 | 11.5 | ||||||||||||||
Mabuhay Satellite Corporation, or Mabuhay Satellite | Philippines | Satellite communications services | 67.0 | — | 67.0 | — | ||||||||||||||
Fixed Line | ||||||||||||||||||||
PLDT Clark Telecom, Inc., or ClarkTel | Philippines | Telecommunications services | 100.0 | — | 100.0 | — | ||||||||||||||
PLDT Subic Telecom, Inc., or SubicTel | Philippines | Telecommunications services | 100.0 | — | 100.0 | — | ||||||||||||||
PLDT Global Corporation, or PLDT Global | British Virgin Islands | Telecommunications services | 100.0 | — | 100.0 | — | ||||||||||||||
Smart—NTT Multimedia, Inc., or SNMI | Philippines | Data and network services | 100.0 | — | 100.0 | — | ||||||||||||||
PLDT—Maratel, Inc., or Maratel | Philippines | Telecommunications services | 97.5 | — | 97.5 | — | ||||||||||||||
Bonifacio Communications Corporation, or BCC | Philippines | Telecommunications, infrastructure and related value—added services | 75.0 | — | 75.0 | — | ||||||||||||||
Information and Communications Technology, or ICT | ||||||||||||||||||||
ePLDT, Inc., or ePLDT | Philippines | Information and communications infrastructure for Internet—based services, e—commerce, customer interaction solutions and IT—related services | 100.0 | — | 100.0 | — | ||||||||||||||
SPi Technologies, Inc., or SPi, and Subsidiaries, or SPi Group | Philippines | Knowledge processing solutions | — | 100.0 | — | 100.0 | ||||||||||||||
ePLDT Ventus, Inc., or Ventus | Philippines | Customer interaction solutions | — | 100.0 | — | 100.0 | ||||||||||||||
Vocativ Systems, Inc., or Vocativ | Philippines | Customer interaction solutions | — | 100.0 | — | 100.0 | ||||||||||||||
Parlance Systems, Inc., or Parlance | Philippines | Customer interaction solutions | — | 100.0 | — | 100.0 | ||||||||||||||
Infocom Technologies, Inc., or Infocom | Philippines | Internet access services | — | 99.6 | — | 99.6 | ||||||||||||||
Digital Paradise Thailand, or DigiPar Thailand | Thailand | Internet access services | — | 87.5 | — | 87.5 | ||||||||||||||
netGames, Inc., or netGames | Philippines | Publisher of online games | — | 80.0 | — | 80.0 | ||||||||||||||
Digital Paradise, Inc., or Digital Paradise | Philippines | Internet access services | — | 75.0 | — | 75.0 | ||||||||||||||
Level Up! (Philippines), Inc., or Level Up! | Philippines | Publisher of online games | — | 60.0 | — | 60.0 | ||||||||||||||
Airborne Access Corporation, or Airborne Access | Philippines | Wireless Internet services | — | — | — | 51.0 |
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F-10
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F-11
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• | IFRIC 11, IFRS 2, Group and Treasury Share Transactions.This standard has become effective for annual periods beginning on or after March 1, 2007. This interpretation addresses issues relating to whether transactions should be accounted for as equity-settled or as cash-settled underIFRS 2and issues concerning share-based payment arrangement involving entities within the same group. |
• | IFRIC 12, Service Concession Arrangements.This interpretation has become effective for financial years beginning on or after January 1, 2008. This interpretation applies to contractual arrangements whereby a private sector party participates in the development, financing, operation and maintenance of infrastructure for public sector services. |
• | IFRIC 14, IAS 19 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.This interpretation has become effective for financial years beginning on or after January 1, 2008.IFRIC 14addresses how to assess the limit underIAS 19, Employee Benefits, on the amount of the pension scheme surplus that can be recognized as an asset in our consolidated balance sheet, in particular, when a minimum funding requirement exists. The specific issues addressed by the interpretation are: |
• | Amendments to IAS 39, Financial Instruments: Recognition and Measurement,andIFRS 7, Financial Instruments: Disclosures: Reclassification of Financial Assets.The amendments toIAS 39are effective from July 1, 2008. Entities are not permitted to reclassify financial assets in accordance with the amendments before July 1, 2008. Any reclassification of a financial asset made in periods beginning on or after November 15, 2008 will take effect only from the date the reclassification is made. The amendments toIAS 39permit an entity to: (1) reclassify non-derivative financial assets (other than those designated at fair value through profit or loss by the entity upon initial recognition) out of the fair value through profit or loss category if the financial asset is no longer held for the purpose of selling or repurchasing it in the near term in particular circumstances; and (2) transfer from the available-for-sale category to the loans and receivables category a financial asset that would have met the definition of loans and receivables (if the financial asset had not been designated as available-for-sale), if the entity has the intention and ability to hold that financial asset for the foreseeable future. |
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• | Wireless — wireless telecommunications services provided through our cellular service providers namely, Smart, Piltel, and CURE, SBI and Airborne Access, our wireless broadband providers, Wolfpac, our wireless content operator, and Mabuhay Satellite and ACeS Philippines, our wireless broadband satellite and other service operators; | ||
• | Fixed Line — fixed line telecommunications services primarily provided through PLDT. We also provide fixed line services through PLDT’s subsidiaries ClarkTel, SubicTel, Maratel, Piltel (on June 4, 2008, PLDT acquired the fixed line assets of Piltel), BCC and PLDT Global, all of which account for approximately 2% of our consolidated fixed line subscribers; and |
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• | ICT — information and communications infrastructure and services for internet applications, internet protocol-based solutions and multimedia content delivery provided by ePLDT; customer interaction solutions (formerly referred to as call center business) provided under the umbrella brand nameePLDT Ventus, including Ventus, Parlance and Vocativ; knowledge processing solutions services (formerly referred to as business process outsourcing) provided by the SPi Group; and internet access and online gaming services provided by ePLDT’s subsidiaries Infocom, Digital Paradise, netGames and Level Up!. |
Inter-segment | ||||||||||||||||||||
Wireless | Fixed Line | ICT | Transactions | Total | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
As at and for the year ended December 31, 2008 | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Service revenues | 93,593 | 49,266 | 10,417 | (10,403 | ) | 142,873 | ||||||||||||||
External party | 93,106 | 40,316 | 9,451 | — | 142,873 | |||||||||||||||
Inter-segment transactions | 487 | 8,950 | 966 | (10,403 | ) | — | ||||||||||||||
Non-service revenues (Note 5) | 2,259 | 420 | 566 | (281 | ) | 2,964 | ||||||||||||||
External party | 2,259 | 420 | 285 | — | 2,964 | |||||||||||||||
Inter-segment transactions | — | — | 281 | (281 | ) | — | ||||||||||||||
Segment income | 95,852 | 49,686 | 10,983 | (10,684 | ) | 145,837 | ||||||||||||||
Result | ||||||||||||||||||||
Income (loss) before income tax | 45,623 | 10,780 | (2,285 | ) | (69 | ) | 54,049 | |||||||||||||
Provision for (benefit from) income tax (Note 6) | 16,124 | 3,048 | (99 | ) | — | 19,073 | ||||||||||||||
Net income for the year | 29,499 | 7,732 | (2,186 | ) | (69 | ) | 34,976 | |||||||||||||
Assets and liabilities | ||||||||||||||||||||
Segment assets | 112,162 | 189,377 | 15,963 | (75,723 | ) | 241,779 | ||||||||||||||
Investments in associates and joint ventures (Note 9) | 531 | — | 643 | — | 1,174 | |||||||||||||||
Deferred income tax assets (Note 6) | 251 | 9,131 | 223 | — | 9,605 | |||||||||||||||
Total assets | 112,944 | 198,508 | 16,829 | (75,723 | ) | 252,558 | ||||||||||||||
Segment liabilities | 67,656 | 89,636 | 4,222 | (17,213 | ) | 144,301 | ||||||||||||||
Deferred income tax liabilities (Note 6) | 911 | — | 377 | — | 1,288 | |||||||||||||||
Total liabilities | 68,567 | 89,636 | 4,599 | (17,213 | ) | 145,589 | ||||||||||||||
Cash flows | ||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||
Operating activities | 42,780 | 33,794 | 1,752 | (24 | ) | 78,302 | ||||||||||||||
Investing activities | (10,381 | ) | 18,882 | (1,290 | ) | (24,225 | ) | (17,014 | ) | |||||||||||
Financing activities | (21,688 | ) | (47,937 | ) | (88 | ) | 24,249 | (45,464 | ) | |||||||||||
Other segment information | ||||||||||||||||||||
Capital expenditures | 16,728 | 7,651 | 824 | — | 25,203 | |||||||||||||||
Depreciation and amortization (Note 8) | 11,975 | 11,901 | 833 | — | 24,709 | |||||||||||||||
Interest on loans and other related items — net (Note 5) | 1,248 | 3,802 | 33 | — | 5,083 | |||||||||||||||
Provisions | 897 | 1 | — | — | 898 | |||||||||||||||
Asset impairment (Notes 5, 8, 9, 11, 13, 14 and 15) | 1,006 | 888 | 2,286 | — | 4,180 | |||||||||||||||
Equity share in net losses (gains) of associates and joint ventures (Note 9) | 119 | 74 | (17 | ) | — | 176 | ||||||||||||||
As at and for the year ended December 31, 2007 | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Service revenues | 86,499 | 48,551 | 10,055 | (9,627 | ) | 135,478 | ||||||||||||||
External party | 86,067 | 39,836 | 9,575 | — | 135,478 | |||||||||||||||
Inter-segment transactions | 432 | 8,715 | 480 | (9,627 | ) | — |
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Inter-segment | ||||||||||||||||||||
Wireless | Fixed Line | ICT | Transactions | Total | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
Non-service revenues (Note 5) | 2,800 | 281 | 267 | (122 | ) | 3,226 | ||||||||||||||
External party | 2,800 | 281 | 145 | — | 3,226 | |||||||||||||||
Inter-segment transactions | — | — | 122 | (122 | ) | — | ||||||||||||||
Segment income | 89,299 | 48,832 | 10,322 | (9,749 | ) | 138,704 | ||||||||||||||
Result | ||||||||||||||||||||
Income (loss) before income tax | 47,346 | 10,877 | (211 | ) | 69 | 58,081 | ||||||||||||||
Provision for (benefit from) income tax (Note 6) | 15,566 | 3,358 | (117 | ) | — | 18,807 | ||||||||||||||
Net income for the year | 31,780 | 7,519 | (94 | ) | 69 | 39,274 | ||||||||||||||
Assets and liabilities | ||||||||||||||||||||
Segment assets | 89,984 | 180,529 | 17,663 | (63,126 | ) | 225,050 | ||||||||||||||
Investments in associates and joint ventures (Note 9) | 724 | — | 627 | — | 1,351 | |||||||||||||||
Deferred income tax assets (Note 6) | 1,640 | 12,040 | 77 | — | 13,757 | |||||||||||||||
Total assets | 92,348 | 192,569 | 18,367 | (63,126 | ) | 240,158 | ||||||||||||||
Segment liabilities | 50,828 | 78,323 | 5,697 | (9,101 | ) | 125,747 | ||||||||||||||
Deferred income tax liabilities (Note 6) | 1,571 | — | 495 | — | 2,066 | |||||||||||||||
Total liabilities | 52,399 | 78,323 | 6,192 | (9,101 | ) | 127,813 | ||||||||||||||
Cash flows | ||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||
Operating activities | 49,616 | 25,274 | 2,529 | (1 | ) | 77,418 | ||||||||||||||
Investing activities | (19,915 | ) | 26,092 | (2,687 | ) | (34,809 | ) | (31,319 | ) | |||||||||||
Financing activities | (34,635 | ) | (45,385 | ) | 391 | 34,810 | (44,819 | ) | ||||||||||||
Other segment information | ||||||||||||||||||||
Capital expenditures | 14,259 | 9,886 | 679 | — | 24,824 | |||||||||||||||
Depreciation and amortization (Note 8) | 12,202 | 15,477 | 934 | — | 28,613 | |||||||||||||||
Interest on loans and other related items — net (Note 5) | 1,393 | 4,288 | 33 | — | 5,714 | |||||||||||||||
Provisions | — | 666 | — | — | 666 | |||||||||||||||
Asset impairment (Notes 5, 8, 9, 11, 13, 14 and 15) | 563 | 43 | 711 | — | 1,317 | |||||||||||||||
Equity share in net losses of associates and joint ventures (Note 9) | — | — | 11 | — | 11 | |||||||||||||||
As at and for the year ended December 31, 2006 | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Service revenues | 78,395 | 49,176 | 6,337 | (8,920 | ) | 124,988 | ||||||||||||||
External party | 77,832 | 41,300 | 5,856 | — | 124,988 | |||||||||||||||
Inter-segment transactions | 563 | 7,876 | 481 | (8,920 | ) | — | ||||||||||||||
Non-service revenues (Note 5) | 2,010 | 79 | 553 | (122 | ) | 2,520 | ||||||||||||||
External party | 2,010 | 79 | 431 | — | 2,520 | |||||||||||||||
Inter-segment transactions | — | — | 122 | (122 | ) | — | ||||||||||||||
Segment income | 80,405 | 49,255 | 6,890 | (9,042 | ) | 127,508 | ||||||||||||||
Result | ||||||||||||||||||||
Income (loss) before income tax | 36,471 | 2,127 | (349 | ) | — | 38,249 | ||||||||||||||
Provision for (benefit from) income tax (Note 6) | 6,344 | (639 | ) | (37 | ) | — | 5,668 | |||||||||||||
Net income for the year | 30,127 | 2,766 | (312 | ) | — | 32,581 | ||||||||||||||
Assets and liabilities | ||||||||||||||||||||
Segment assets | 86,037 | 182,887 | 16,795 | (64,989 | ) | 220,730 | ||||||||||||||
Investments in associates and joint ventures (Note 9) | — | — | 636 | — | 636 | |||||||||||||||
Deferred income tax assets (Note 6) | 5,645 | 14,834 | 59 | — | 20,538 | |||||||||||||||
Total assets | 91,682 | 197,721 | 17,490 | (64,989 | ) | 241,904 | ||||||||||||||
Segment liabilities | 49,751 | 91,874 | 3,396 | (6,372 | ) | 138,649 | ||||||||||||||
Deferred income tax liabilities (Note 6) | 6 | — | 396 | — | 402 | |||||||||||||||
Total liabilities | 49,757 | 91,874 | 3,792 | (6,372 | ) | 139,051 | ||||||||||||||
Cash flows | ||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||
Operating activities | 37,285 | 30,425 | 1,501 | — | 69,211 | |||||||||||||||
Investing activities | (15,855 | ) | 7,051 | (11,708 | ) | (15,278 | ) | (35,790 | ) | |||||||||||
Financing activities | (30,438 | ) | (41,264 | ) | 10,524 | 15,278 | (45,900 | ) |
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Inter-segment | ||||||||||||||||||||
Wireless | Fixed Line | ICT | Transactions | Total | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
Other segment information | ||||||||||||||||||||
Capital expenditures | 10,490 | 9,052 | 1,132 | — | 20,674 | |||||||||||||||
Depreciation and amortization (Note 8) | 10,752 | 20,406 | 711 | — | 31,869 | |||||||||||||||
Interest on loans and other related items — net (Note 5) | 1,386 | 5,953 | 20 | — | 7,359 | |||||||||||||||
Provisions | — | 38 | — | — | 38 | |||||||||||||||
Asset impairment (Notes 5, 8, 9, 11, 13, 14 and 15) | 2,220 | 54 | 492 | — | 2,766 | |||||||||||||||
Equity share in net losses of associates and joint ventures (Note 9) | — | — | 52 | — | 52 | |||||||||||||||
5. | Income and Expenses |
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Sale of computers, cellular handsets and cellular SIM-packs | 2,679 | 3,081 | 2,089 | |||||||||
Point-product-sales | 285 | 145 | 431 | |||||||||
2,964 | 3,226 | 2,520 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Salaries and other employee benefits | 18,286 | 16,645 | 13,761 | |||||||||
Incentive plans (Notes 3 and 23) | 1,281 | 1,448 | 3,150 | |||||||||
Pension benefit costs (Notes 3 and 23) | 725 | 1,773 | 1,003 | |||||||||
Manpower rightsizing program, or MRP | 417 | 604 | 445 | |||||||||
20,709 | 20,470 | 18,359 | ||||||||||
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2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Cost of computers, cellular handsets and cellular SIM-packs sold | 4,573 | 4,713 | 4,851 | |||||||||
Cost of point-product-sales | 511 | 254 | 575 | |||||||||
Cost of satellite air time and terminal units (Notes 22 and 24) | 168 | 160 | 199 | |||||||||
5,252 | 5,127 | 5,625 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Goodwill and intangible assets (Note 11) | 2,450 | 1,244 | 50 | |||||||||
Trade and other receivables (Notes 3 and 14) | 1,079 | 417 | 736 | |||||||||
Investments in associates and joint ventures (Note 9) | 282 | — | — | |||||||||
Inventories and supplies (Notes 3 and 15) | 242 | 243 | 211 | |||||||||
Property, plant and equipment (Note 8) | 104 | — | 1,402 | |||||||||
Reversal of impairment in investment in debt securities (Notes 9 and 13) | — | (616 | ) | — | ||||||||
Notes receivable | — | — | 346 | |||||||||
Other assets | 23 | 29 | 21 | |||||||||
4,180 | 1,317 | 2,766 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Interest income on other loans and receivables | 1,545 | 1,270 | 1,404 | |||||||||
Interest income on assets held-to-maturity (Note 13) | 65 | 9 | — | |||||||||
Interest income on fair value through profit or loss (Note 13) | 58 | 224 | 250 | |||||||||
1,668 | 1,503 | 1,654 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Interest on loans and other related items (Notes 18 and 26) | 5,861 | 6,256 | 7,908 | |||||||||
Accretion on financial liabilities — net (Notes 18 and 26) | 956 | 1,161 | 3,314 | |||||||||
Financing charges (Note 26) | 61 | 196 | 51 | |||||||||
Dividends on preferred stock subject to mandatory redemption (Notes 7 and 18) | 4 | 17 | 130 | |||||||||
Capitalized interest (Note 8) | (778 | ) | (542 | ) | (549 | ) | ||||||
6,104 | 7,088 | 10,854 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Gain on disposal of property, plant and equipment (Note 8) | 534 | 527 | 158 | |||||||||
Gain on reversal of provision for onerous contracts (Notes 22 and 24) | — | — | 3,529 | |||||||||
Miscellaneous income | 1,131 | 2,892 | 1,792 | |||||||||
1,665 | 3,419 | 5,479 | ||||||||||
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6. | Income Tax |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Net assets | 9,605 | 13,757 | ||||||
Net liabilities | (1,288 | ) | (2,066 | ) |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Net assets: | ||||||||
Unearned revenues | 4,389 | 1,789 | ||||||
Accumulated provision for doubtful accounts | 3,005 | 3,428 | ||||||
Unrealized foreign exchange losses | 2,088 | 544 | ||||||
Pension and other employee benefits | 1,147 | 1,096 | ||||||
Unamortized past service pension costs | 959 | 985 | ||||||
MCIT | 770 | 645 | ||||||
Derivative financial instruments | 540 | 2,308 | ||||||
Provisions for impaired assets | 533 | 494 | ||||||
Accumulated write-down of inventories to net realizable values | 270 | 224 | ||||||
Net operating loss carryover, or NOLCO | 22 | 6,055 | ||||||
Capitalized taxes and duties — net of amortization | (306 | ) | (376 | ) | ||||
Capitalized foreign exchange differential | (627 | ) | (783 | ) | ||||
Undepreciated capitalized interest charges | (3,230 | ) | (3,572 | ) | ||||
Fixed asset impairment | — | 824 | ||||||
Others | 45 | 96 | ||||||
9,605 | 13,757 | |||||||
Net liabilities: | ||||||||
Unearned revenues | 898 | 914 | ||||||
Pension and other employee benefits | 384 | 217 | ||||||
Asset retirement obligation — net of undepreciated capitalized asset | 329 | 332 | ||||||
Accumulated provision for doubtful accounts | 223 | 304 | ||||||
Provisions for impaired assets | 210 | 348 | ||||||
Intangible assets and fair value adjustments on assets acquired | (616 | ) | (736 | ) | ||||
Undepreciated capitalized interest charges | (679 | ) | (718 | ) | ||||
Unrealized foreign exchange gains | (782 | ) | (1,613 | ) | ||||
Gain on debt exchange and debt restructuring transactions | (1,197 | ) | (1,228 | ) | ||||
Others | (58 | ) | 114 | |||||
(1,288 | ) | (2,066 | ) | |||||
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Current | 16,358 | 10,776 | 10,035 | |||||||||
Deferred | 2,715 | 8,031 | (4,367 | ) | ||||||||
19,073 | 18,807 | 5,668 | ||||||||||
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2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Provision for income tax at the applicable statutory tax rates | 18,917 | 20,328 | 13,387 | |||||||||
Tax effects of: | ||||||||||||
Loss (income) subject to lower tax rate | 1,408 | (1,752 | ) | 326 | ||||||||
Non-deductible expenses | 724 | 333 | 751 | |||||||||
Equity share in net losses of associates and joint ventures | 62 | 4 | 18 | |||||||||
Net movement in unrecognized deferred income tax assets | (576 | ) | 823 | (5,889 | ) | |||||||
Income subject to final tax | (616 | ) | (509 | ) | (550 | ) | ||||||
Income not subject to tax | (846 | ) | (420 | ) | (2,375 | ) | ||||||
Actual provision for corporate income tax (Note 4) | 19,073 | 18,807 | 5,668 | |||||||||
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2008 | 2007 | |||||||
(in million pesos) | ||||||||
NOLCO | 275 | 5 | ||||||
Accumulated provision for doubtful accounts | 126 | 76 | ||||||
Fixed asset impairment | 72 | 10 | ||||||
Accumulated write-down of inventories to net realizable values | 34 | 33 | ||||||
Unearned revenues | 18 | — | ||||||
Unrealized foreign exchange losses | 17 | 12 | ||||||
Provisions for other assets | 2 | 3 | ||||||
MCIT | 1 | 983 | ||||||
545 | 1,122 | |||||||
Year Incurred | Year Expiring | (in million pesos) | ||||||
2008 | 2011 | 4 | ||||||
2007 | 2010 | 641 | ||||||
2006 | 2009 | 126 | ||||||
771 | ||||||||
Consolidated unrecognized deferred income tax assets from MCIT as at December 31, 2008 | (1 | ) | ||||||
Consolidated recognized deferred income tax asset | 770 | |||||||
Year Incurred | Year Expiring | (in million pesos) | ||||||
2008 | 2011 | 54 | ||||||
2007 | 2010 | 931 | ||||||
985 | ||||||||
Consolidated tax benefit from NOLCO | 297 | |||||||
Consolidated unrecognized deferred income tax assets from NOLCO as at December 31, 2008 | (275 | ) | ||||||
Consolidated recognized deferred income tax asset | 22 | |||||||
7. | Earnings Per Common Share |
2008 | 2007 | 2006 | ||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
Consolidated net income attributable to equity holders of PLDT for the year | 34,317 | 34,317 | 39,289 | 39,289 | 32,385 | 32,385 | ||||||||||||||||||
Dividends on convertible preferred shares | (455 | ) | (455 | ) | (457 | ) | (457 | ) | (455 | ) | (455 | ) | ||||||||||||
Dividends on dilutive preferred stock subject to mandatory redemption charged to interest expense for the year | — | — | — | 17 | — | — | ||||||||||||||||||
Accretion of preferred stock subject to mandatory redemption | — | — | — | 131 | — | — | ||||||||||||||||||
Foreign exchange gains on preferred stock subject to mandatory redemption (Notes 18 and 24) | — | — | — | (182 | ) | — | — | |||||||||||||||||
Consolidated net income attributable to common equity holders of PLDT | 33,862 | 33,862 | 38,832 | 38,798 | 31,930 | 31,930 | ||||||||||||||||||
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(in thousands, except per share amounts) | ||||||||||||||||||||||||
2008 | 2007 | 2006 | ||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
Outstanding common shares at beginning of year | 188,741 | 188,741 | 188,435 | 188,435 | 180,789 | 180,789 | ||||||||||||||||||
Effect of issuance of common shares during the year | 542 | 542 | 221 | 221 | 3,667 | 3,667 | ||||||||||||||||||
Average incremental number of shares under ESOP during the year | — | 13 | — | 38 | — | 98 | ||||||||||||||||||
Effect of purchase of treasury stock during the year | (1,120 | ) | (1,120 | ) | — | — | — | — | ||||||||||||||||
Common shares equivalent of convertible preferred shares deemed dilutive: | ||||||||||||||||||||||||
Preferred Stock Series VI (Notes 18 and 24) | — | — | — | 680 | — | — | ||||||||||||||||||
Weighted average number of common shares for the year | 188,163 | 188,176 | 188,656 | 189,374 | 184,456 | 184,554 | ||||||||||||||||||
Earnings per share for the year attributable to common equity holders of PLDT | Php | 179.96 | Php | 179.95 | Php | 205.84 | Php | 204.88 | Php | 173.10 | Php | 173.01 | ||||||||||||
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Date | Amount | |||||||||||||||||||
Class | Approved | Record | Payable | Per Share | Total | |||||||||||||||
(in million pesos) | ||||||||||||||||||||
Preferred Stock Subject to Mandatory Redemption | ||||||||||||||||||||
Series V | March 4, 2008 | March 20, 2008 | April 15, 2008 | Php | 4.675 | — | ||||||||||||||
**May 6, 2008 | June 4, 2008 | June 23, 2008 | 0.051944 per day | — | ||||||||||||||||
June 10, 2008 | June 26, 2008 | July 15, 2008 | 4.675 | — | ||||||||||||||||
August 26, 2008 | September 25, 2008 | October 15, 2008 | 4.675 | — | ||||||||||||||||
December 9, 2008 | December 24, 2008 | January 15, 2009 | 4.675 | — | ||||||||||||||||
Series VI | March 4, 2008 | March 20, 2008 | April 15, 2008 | US$ | 0.09925 | 2 | ||||||||||||||
**May 6, 2008 | June 4, 2008 | June 23, 2008 | 0.001103 per day | 1 | ||||||||||||||||
June 10, 2008 | June 26, 2008 | July 15, 2008 | 0.09925 | — | ||||||||||||||||
August 26, 2008 | September 25, 2008 | October 15, 2008 | 0.09925 | — | ||||||||||||||||
December 9, 2008 | December 24, 2008 | January 15, 2009 | 0.09925 | — | ||||||||||||||||
Charged to income | 3 | |||||||||||||||||||
10% Cumulative Convertible Preferred Stock | ||||||||||||||||||||
Series CC | January 29, 2008 | February 28, 2008 | March 31, 2008 | Php | 1.00 | �� | 17 | |||||||||||||
Series DD | January 29, 2008 | February 15, 2008 | February 29, 2008 | 1.00 | 3 | |||||||||||||||
Series EE | March 25, 2008 | April 24, 2008 | May 30, 2008 | 1.00 | — | |||||||||||||||
Series A, I, R, W, AA and BB | July 8, 2008 | August 1, 2008 | August 29, 2008 | 1.00 | 128 | |||||||||||||||
Series B, F, Q, V and Z | August 5, 2008 | September 3, 2008 | September 30, 2008 | 1.00 | 90 | |||||||||||||||
Series E, K, O and U | August 26, 2008 | September 25, 2008 | October 31, 2008 | 1.00 | 44 | |||||||||||||||
Series C, D, J, T and X | September 30, 2008 | October 30, 2008 | November 28, 2008 | 1.00 | 57 | |||||||||||||||
Series G, N, P and S | November 4, 2008 | December 4, 2008 | December 29, 2008 | 1.00 | 26 | |||||||||||||||
Series H, L, M and Y | December 9, 2008 | January 2, 2009 | January 30, 2009 | 1.00 | 41 | |||||||||||||||
406 | ||||||||||||||||||||
Cumulative Non-Convertible Redeemable Preferred Stock | ||||||||||||||||||||
Series IV* | January 29, 2008 | February 22, 2008 | March 15, 2008 | Php | — | 12 | ||||||||||||||
May 6, 2008 | May 23, 2008 | June 15, 2008 | — | 12 | ||||||||||||||||
July 8, 2008 | August 7, 2008 | September 15, 2008 | — | 13 | ||||||||||||||||
November 4, 2008 | November 21, 2008 | December 15, 2008 | — | 13 | ||||||||||||||||
50 | ||||||||||||||||||||
Common Stock | ||||||||||||||||||||
Regular Dividend | March 4, 2008 | March 19, 2008 | April 21, 2008 | Php | 68.00 | 12,853 | ||||||||||||||
August 5, 2008 | August 22, 2008 | September 22, 2008 | 70.00 | 13,140 | ||||||||||||||||
Special Dividend | March 4, 2008 | March 19, 2008 | April 21, 2008 | 56.00 | 10,585 | |||||||||||||||
36,578 | ||||||||||||||||||||
Charged to retained earnings | 37,034 | |||||||||||||||||||
* | Dividends are declared based on total amount paid up. | |
** | Only the holders of Series V and VI Convertible Preferred Stock whose shares were originally issued on June 4, 2001 and mandatorily converted on June 5, 2008 shall be entitled to this final dividend. |
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Date | Amount | |||||||||||||||||||
Class | Approved | Record | Payable | Per Share | Total | |||||||||||||||
(in million pesos) | ||||||||||||||||||||
Cumulative Non-Convertible Redeemable Preferred Stock | ||||||||||||||||||||
Series IV* | January 27, 2009 | February 20, 2009 | March 15, 2009 | Php | — | 12 | ||||||||||||||
10% Cumulative Convertible Preferred Stock | ||||||||||||||||||||
Series CC | January 27, 2009 | February 26, 2009 | March 31, 2009 | Php | 1.00 | 17 | ||||||||||||||
Series DD | January 27, 2009 | February 13, 2009 | February 27, 2009 | 1.00 | 2 | |||||||||||||||
Series EE | March 31, 2009 | April 30, 2009 | May 29, 2009 | 1.00 | — | |||||||||||||||
19 | ||||||||||||||||||||
Common Stock | ||||||||||||||||||||
Regular Dividend | March 3, 2009 | March 18, 2009 | April 21, 2009 | Php | 70.00 | 13,124 | ||||||||||||||
Special Dividend | March 3, 2009 | March 18, 2009 | April 21, 2009 | 60.00 | 11,249 | |||||||||||||||
24,373 | ||||||||||||||||||||
24,404 | ||||||||||||||||||||
* | Dividends are declared based on total amount paid up. |
8. | Property, Plant and Equipment |
Information | ||||||||||||||||||||||||||||||||||||||||
Vehicles, | origination | |||||||||||||||||||||||||||||||||||||||
Cable and | furniture and | and | Land and | |||||||||||||||||||||||||||||||||||||
wire | Central office | Cellular | other network | Communications | termination | land | Property under | |||||||||||||||||||||||||||||||||
facilities | equipment | facilities | Buildings | equipment | satellite | equipment | improvements | construction | Total | |||||||||||||||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||||||||||||||||||
At December 31, 2006 | ||||||||||||||||||||||||||||||||||||||||
Cost | 112,621 | 84,604 | 64,423 | 20,376 | 31,039 | 9,834 | 9,140 | 2,684 | 12,686 | 347,407 | ||||||||||||||||||||||||||||||
Accumulated depreciation and amortization | (46,594 | ) | (58,292 | ) | (32,889 | ) | (6,235 | ) | (25,461 | ) | (7,678 | ) | (5,800 | ) | (268 | ) | — | (183,217 | ) | |||||||||||||||||||||
Net book value | 66,027 | 26,312 | 31,534 | 14,141 | 5,578 | 2,156 | 3,340 | 2,416 | 12,686 | 164,190 | ||||||||||||||||||||||||||||||
Year Ended December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||
Net book value at beginning of year | 66,027 | 26,312 | 31,534 | 14,141 | 5,578 | 2,156 | 3,340 | 2,416 | 12,686 | 164,190 | ||||||||||||||||||||||||||||||
Additions/Transfers — net | 4,769 | 2,254 | 3,018 | 408 | 1,811 | — | 1,633 | 1 | 10,914 | 24,808 | ||||||||||||||||||||||||||||||
Disposals/Retirements | (183 | ) | (55 | ) | (75 | ) | (11 | ) | (45 | ) | — | — | (41 | ) | (31 | ) | (441 | ) | ||||||||||||||||||||||
Translation differences charged directly to cumulative translation adjustments | — | 5 | — | (77 | ) | (103 | ) | (495 | ) | — | (84 | ) | — | (754 | ) | |||||||||||||||||||||||||
Acquisition through business combination | — | 99 | — | 18 | 146 | — | (32 | ) | — | (7 | ) | 224 | ||||||||||||||||||||||||||||
Reclassifications | 894 | 3 | 4,923 | 31 | 888 | — | (1,709 | ) | — | (5,030 | ) | — | ||||||||||||||||||||||||||||
Depreciation and amortization (Note 4) | (8,449 | ) | (6,063 | ) | (7,530 | ) | (1,138 | ) | (3,426 | ) | (556 | ) | (1,448 | ) | (3 | ) | — | (28,613 | ) | |||||||||||||||||||||
Net book value at end of year | 63,058 | 22,555 | 31,870 | 13,372 | 4,849 | 1,105 | 1,784 | 2,289 | 18,532 | 159,414 | ||||||||||||||||||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||
Net book value at beginning of year | 63,058 | 22,555 | 31,870 | 13,372 | 4,849 | 1,105 | 1,784 | 2,289 | 18,532 | 159,414 | ||||||||||||||||||||||||||||||
Additions/Transfers — net | 3,521 | 2,304 | 8,542 | 874 | 3,343 | — | 302 | 25 | 6,747 | 25,658 | ||||||||||||||||||||||||||||||
Disposals/Retirements | (52 | ) | (58 | ) | (108 | ) | (104 | ) | (77 | ) | — | — | (59 | ) | (32 | ) | (490 | ) | ||||||||||||||||||||||
Translation differences charged directly to cumulative translation adjustments | — | 280 | — | (274 | ) | 118 | 338 | — | — | — | 462 | |||||||||||||||||||||||||||||
Acquisition through business combination | 22 | — | 50 | 14 | 29 | — | — | — | — | 115 | ||||||||||||||||||||||||||||||
Impairment losses recognized during the year (Note 5) | — | (19 | ) | — | — | (85 | ) | — | — | — | — | (104 | ) | |||||||||||||||||||||||||||
Reclassifications | 99 | (273 | ) | — | 69 | 98 | — | — | — | (13 | ) | (20 | ) | |||||||||||||||||||||||||||
Depreciation and amortization (Note 4) | (9,048 | ) | (3,871 | ) | (7,544 | ) | (1,084 | ) | (2,201 | ) | (537 | ) | (423 | ) | (1 | ) | — | (24,709 | ) | |||||||||||||||||||||
Net book value at end of year | 57,600 | 20,918 | 32,810 | 12,867 | 6,074 | 906 | 1,663 | 2,254 | 25,234 | 160,326 | ||||||||||||||||||||||||||||||
At December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||
Cost | 115,980 | 83,562 | 76,229 | 21,040 | 34,816 | 9,581 | 8,251 | 2,527 | 25,234 | 377,220 | ||||||||||||||||||||||||||||||
Accumulated depreciation and amortization | (58,380 | ) | (62,644 | ) | (43,419 | ) | (8,173 | ) | (28,742 | ) | (8,675 | ) | (6,588 | ) | (273 | ) | — | (216,894 | ) | |||||||||||||||||||||
Net book value | 57,600 | 20,918 | 32,810 | 12,867 | 6,074 | 906 | 1,663 | 2,254 | 25,234 | 160,326 | ||||||||||||||||||||||||||||||
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2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Interest (Note 5) | 778 | 542 | 549 | |||||||||
Foreign exchange losses — net | 385 | 63 | 521 |
Buildings | 25 years | |||
Central office equipment | 10 – 20 years | |||
Cable and wire facilities | 10 – 15 years | |||
Communications satellite | 15 years | |||
Information origination and termination equipment | 3 – 15 years | |||
Cellular facilities | 3 – 10 years | |||
Land improvements | 10 years | |||
Vehicles, furniture and other network equipment | 3 - 5 years |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Asset retirement obligations at beginning of year | 952 | 831 | ||||||
Accretion expenses | 85 | 81 | ||||||
Additional liability recognized during the year (Note 27) | 70 | 48 | ||||||
Settlement of obligations | (7 | ) | (8 | ) | ||||
Asset retirement obligations at end of year (Notes 3 and 19) | 1,100 | 952 | ||||||
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Agila 2 satellite nearing its end-of-life and other events affecting its business, the transponders on the Agila 2 satellite were considered impaired. This impairment review was based on the net present value of future cash flows from the continued use of this asset group using the discount factor of 10% as applied on cash flow projections from 2008 until 2010. An impairment loss of Php1,391 million was charged to the carrying value of the satellite as at December 31, 2006 and included in the “Accumulated depreciation and amortization” account in the consolidated balance sheet as at December 31, 2006. In 2008 and 2007, we performed an impairment review on Mabuhay Satellite’s Agila 2 transponders and no additional impairment was recognized.
9. | Investments in Associates and Joint Ventures |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
ACeS International Limited | 1,896 | 1,896 | ||||||
Mabuhay Space Holdings Limited | 910 | 791 | ||||||
Blue Ocean Wireless | 724 | 724 | ||||||
Philweb Corporation | 712 | 712 | ||||||
BayanTrade Dotcom, Inc. | 97 | 97 | ||||||
ePDS, Inc. | 6 | 6 | ||||||
PLDT Italy S.r.l. | 1 | — | ||||||
4,346 | 4,226 | |||||||
Less accumulated impairment losses and equity share in net losses of associates and joint ventures | 3,172 | 2,875 | ||||||
1,174 | 1,351 | |||||||
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2008 | 2007 | |||||||
(in million pesos) | ||||||||
Balance at beginning of year | 93 | 82 | ||||||
Equity share in net losses of associates and joint ventures for the year | 176 | 11 | ||||||
Balance at end of year | 269 | 93 | ||||||
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Balance at beginning of year | 2,782 | 2,930 | ||||||
Impairment for the year (Note 5) | 282 | — | ||||||
Translation adjustments | (161 | ) | (148 | ) | ||||
Balance at end of year | 2,903 | 2,782 | ||||||
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2008 | 2007 | |||||||
(in million pesos) | ||||||||
Consolidated Balance Sheets: | ||||||||
Noncurrent assets | 1,097 | 948 | ||||||
Current assets | 1,117 | 1,084 | ||||||
Capital deficiency | (9,048 | ) | (8,340 | ) | ||||
Noncurrent liabilities | 10,482 | 9,728 | ||||||
Current liabilities | 780 | 645 |
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Consolidated Statements of Income: | ||||||||||||
Revenues | 708 | 863 | 1,185 | |||||||||
Expenses | 378 | 292 | 405 | |||||||||
Net income (loss) | 314 | 260 | (308 | ) |
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2008 | 2007 | |||||||
(in million pesos) | ||||||||
Consolidated Balance Sheets: | ||||||||
Noncurrent assets | 532 | 434 | ||||||
Current assets | 161 | — | ||||||
Capital deficiency | (142 | ) | — | |||||
Noncurrent liabilities | 685 | 434 | ||||||
Current liabilities | 150 | — |
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Consolidated Statements of Income: | ||||||||||||
Revenues | 39 | — | — | |||||||||
Expenses | 287 | 101 | 113 | |||||||||
Net loss | 247 | 101 | 113 |
10. | Investment Properties |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Balance at beginning of year | 577 | 587 | ||||||
Net gain from fair value adjustments | 59 | 3 | ||||||
Disposals | (19 | ) | (13 | ) | ||||
Balance at end of year (Notes 3 and 26) | 617 | 577 | ||||||
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11. | Goodwill and Intangible Assets |
2008 | 2007 | |||||||||||||||||||||||
Intangible | Intangible | |||||||||||||||||||||||
Goodwill | assets | Total | Goodwill | assets | Total | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
Cost: | ||||||||||||||||||||||||
Balance at beginning of year | 10,879 | 3,821 | 14,700 | 10,137 | 3,456 | 13,593 | ||||||||||||||||||
Translation adjustments | 1,312 | 209 | 1,521 | (1,489 | ) | (242 | ) | (1,731 | ) | |||||||||||||||
Additions during the year | 261 | 83 | 344 | 2,231 | 607 | 2,838 | ||||||||||||||||||
Reclassifications | — | 52 | 52 | — | — | — | ||||||||||||||||||
Adjustments during the year | (163 | ) | — | (163 | ) | — | — | — | ||||||||||||||||
Balance at end of year | 12,289 | 4,165 | 16,454 | 10,879 | 3,821 | 14,700 | ||||||||||||||||||
Accumulated amortization and impairment: | ||||||||||||||||||||||||
Balance at beginning of year | 1,629 | 1,350 | 2,979 | 438 | 941 | 1,379 | ||||||||||||||||||
Impairment during the year (Note 5) | 2,026 | 424 | 2,450 | 1,191 | 53 | 1,244 | ||||||||||||||||||
Amortization during the year | — | 377 | 377 | — | 390 | 390 | ||||||||||||||||||
Translation adjustments | 144 | 51 | 195 | — | (34 | ) | (34 | ) | ||||||||||||||||
Reclassifications | — | 3 | 3 | — | — | — | ||||||||||||||||||
Balance at end of year | 3,799 | 2,205 | 6,004 | 1,629 | 1,350 | 2,979 | ||||||||||||||||||
Net balance at end of year (Notes 3 and 26) | 8,490 | 1,960 | 10,450 | 9,250 | 2,471 | 11,721 | ||||||||||||||||||
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Provisional | ||||||||
Previous | Value | |||||||
Carrying | Recognized on | |||||||
Value | Acquisition | |||||||
(in million pesos) | ||||||||
Assets: | ||||||||
Property, plant and equipment — net | 115 | 115 | ||||||
Investments in associates and joint ventures | 6 | 6 | ||||||
Provisional goodwill | — | 248 | ||||||
Other noncurrent assets | 4 | 4 | ||||||
Cash and cash equivalents | 52 | 52 | ||||||
Other current assets | 78 | 78 | ||||||
255 | 503 | |||||||
Liabilities: | ||||||||
Accounts payable | 82 | 82 | ||||||
Accrued expenses and other current liabilities | 1 | 1 | ||||||
83 | 83 | |||||||
Net assets acquired | 172 | 420 | ||||||
Fair Value Recognized on | ||||||||||||||||
Previous Carrying Value | Acquisition | |||||||||||||||
In U.S. Dollar | Php(1) | In U.S. Dollar | Php(1) | |||||||||||||
(in millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Property, plant and equipment — net | 3 | 143 | 3 | 143 | ||||||||||||
Goodwill | — | — | 45 | 2,139 | ||||||||||||
Intangible assets | 7 | 333 | 8 | 380 | ||||||||||||
Cash and cash equivalents | 1 | 48 | 1 | 48 | ||||||||||||
Trade and other receivables — net | 3 | 143 | 3 | 143 | ||||||||||||
14 | 667 | 60 | 2,853 | |||||||||||||
Liabilities: | ||||||||||||||||
Deferred income tax liabilities | 1 | 48 | 4 | 190 | ||||||||||||
Noncurrent liabilities | — | — | 1 | 48 | ||||||||||||
Accounts payable and other current liabilities | 10 | 475 | 2 | 95 | ||||||||||||
11 | 523 | 7 | 333 | |||||||||||||
Net assets acquired | 3 | 144 | 53 | 2,520 | ||||||||||||
(1) | Converted to Philippine Peso using the exchange rate at the time of purchase of Php47.536 to US$1.00. |
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Provisional | ||||||||
Previous | Value | |||||||
Carrying | Recognized on | |||||||
Value | Acquisition | |||||||
(in million pesos) | ||||||||
Assets: | ||||||||
Property, plant and equipment — net | 636 | 1,543 | ||||||
Other noncurrent assets | 12 | 12 | ||||||
Cash and cash equivalents | 46 | 46 | ||||||
Trade and other receivables — net | 137 | 137 | ||||||
Other current assets | 25 | 25 | ||||||
856 | 1,763 | |||||||
Liabilities: | ||||||||
Long-term debt | 340 | 340 | ||||||
Deferred income tax liabilities | 17 | — | ||||||
Other noncurrent liabilities | 11 | 11 | ||||||
Accounts payable | 1,118 | 1,118 | ||||||
Accrued expenses and other current liabilities | 176 | 176 | ||||||
1,662 | 1,645 | |||||||
(806 | ) | 118 | ||||||
Minority interests | 43 | 43 | ||||||
Net assets acquired | (849 | ) | 75 | |||||
2008 | 2007 | |||||||||||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||||
Amortization | Amortization | |||||||||||||||||||||||||||||||
Estimated | Remaining | Carrying | and | Carrying | and | |||||||||||||||||||||||||||
Useful Lives | Useful Lives | Amount | Impairment | Net | Amount | Impairment | Net | |||||||||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||||||||||
Customer list | 3 – 7 years | 3 – 4 years | 1,696 | 794 | 902 | 1,486 | 384 | 1,102 | ||||||||||||||||||||||||
Spectrum | 15 years | 11 – 15 years | 1,205 | 348 | 857 | 1,205 | 268 | 937 | ||||||||||||||||||||||||
Licenses | 6 – 18 years | 3 – 14 years | 370 | 203 | 167 | 318 | 182 | 136 | ||||||||||||||||||||||||
Technology application | 4 – 5 years | 1 – 2 years | 894 | 860 | 34 | 812 | 516 | 296 | ||||||||||||||||||||||||
4,165 | 2,205 | 1,960 | 3,821 | 1,350 | 2,471 | |||||||||||||||||||||||||||
(in million pesos) | ||||
2009 | 373 | |||
2010 | 342 | |||
2011 | 331 | |||
2012 | 866 | |||
2013 and onwards | 48 | |||
Balance at end of year | 1,960 |
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12. | Cash and Cash Equivalents |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Cash on hand and in banks (Note 26) | 4,164 | 3,944 | ||||||
Temporary cash investments (Note 26) | 29,520 | 13,503 | ||||||
33,684 | 17,447 | |||||||
13. | Investment in Debt Securities |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Government Securities | 1,656 | — | ||||||
National Power Corporation, or NAPOCOR, Zero Coupon Bonds | 292 | 273 | ||||||
Republic of the Philippines Credit Linked Notes | 193 | — | ||||||
Rizal Commercial Banking Corporation, or RCBC, Note | 150 | — | ||||||
Convertible Securities | — | 1,115 | ||||||
2,291 | 1,388 | |||||||
Less current portion of investment in debt securities | 1,656 | 1,115 | ||||||
Net of noncurrent portion of investment in debt securities | 635 | 273 | ||||||
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2007 | ||||
(in million pesos) | ||||
Balance at beginning of year | 616 | |||
Reversal of impairment provision for the year | (616 | ) | ||
Balance at end of year | — | |||
14. | Trade and Other Receivables |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Retail subscribers (Note 26) | 8,993 | 8,179 | ||||||
Corporate subscribers (Notes 22 and 26) | 9,188 | 7,915 | ||||||
Foreign administrations (Note 26) | 5,916 | 5,371 | ||||||
Domestic carriers (Note 26) | 877 | 1,884 | ||||||
Dealers, agents and others (Notes 13, 22 and 26) | 3,271 | 2,151 | ||||||
28,245 | 25,500 | |||||||
Less allowance for doubtful accounts | 12,336 | 12,855 | ||||||
15,909 | 12,645 | |||||||
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Dealers, | ||||||||||||||||||||||||
Retail | Corporate | Foreign | Domestic | Agents and | ||||||||||||||||||||
Total | Subscribers | Subscribers | Administrations | Carriers | Others | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Balance at beginning of year | 12,855 | 4,318 | 5,875 | 1,047 | 381 | 1,234 | ||||||||||||||||||
Provisions for the year (Notes 3 and 5) | 1,079 | 850 | 98 | 85 | 26 | 20 | ||||||||||||||||||
Translation adjustments | 111 | 44 | 43 | — | — | 24 | ||||||||||||||||||
Reversals | (16 | ) | — | — | (2 | ) | (13 | ) | (1 | ) | ||||||||||||||
Write-offs | (1,693 | ) | (189 | ) | (314 | ) | (645 | ) | (142 | ) | (403 | ) | ||||||||||||
Reclassifications | — | 66 | 621 | (46 | ) | (78 | ) | (563 | ) | |||||||||||||||
Balance at end of year | 12,336 | 5,089 | 6,323 | 439 | 174 | 311 | ||||||||||||||||||
Individual impairment | 11,636 | 4,656 | 6,056 | 439 | 174 | 311 | ||||||||||||||||||
Collective impairment | 700 | 433 | 267 | — | — | — | ||||||||||||||||||
12,336 | 5,089 | 6,323 | 439 | 174 | 311 | |||||||||||||||||||
Gross amount of receivables, individually impaired, before deducting any individually assessed impairment allowance | 11,708 | 4,656 | 6,128 | 439 | 174 | 311 | ||||||||||||||||||
December 31, 2007 | ||||||||||||||||||||||||
Balance at beginning of year | 16,770 | 5,847 | 6,418 | 2,506 | 504 | 1,495 | ||||||||||||||||||
Provisions for the year (Notes 3 and 5) | 417 | 226 | 151 | — | — | 40 | ||||||||||||||||||
Translation adjustments | (91 | ) | — | (91 | ) | — | — | — | ||||||||||||||||
Reversals | (889 | ) | (867 | ) | (11 | ) | — | — | (11 | ) | ||||||||||||||
Write-offs | (3,352 | ) | (1,968 | ) | — | (1,284 | ) | — | (100 | ) | ||||||||||||||
Reclassifications | — | 1,080 | (592 | ) | (175 | ) | (123 | ) | (190 | ) | ||||||||||||||
Balance at end of year | 12,855 | 4,318 | 5,875 | 1,047 | 381 | 1,234 | ||||||||||||||||||
Individual impairment | 12,115 | 3,944 | 5,509 | 1,047 | 381 | 1,234 | ||||||||||||||||||
Collective impairment | 740 | 374 | 366 | — | — | — | ||||||||||||||||||
12,855 | 4,318 | 5,875 | 1,047 | 381 | 1,234 | |||||||||||||||||||
Gross amount of receivables, individually impaired, before deducting any individually assessed impairment allowance | 12,168 | 3,951 | 5,555 | 1,047 | 381 | 1,234 | ||||||||||||||||||
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15. | Inventories and Supplies |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Spare parts and supplies: | ||||||||
At net realizable value | 966 | 502 | ||||||
At cost | 1,933 | 1,385 | ||||||
Terminal and cellular phone units: | ||||||||
At net realizable value | 936 | 554 | ||||||
At cost | 1,098 | 808 | ||||||
Others: | ||||||||
At net realizable value | 167 | 111 | ||||||
At cost | 167 | 112 | ||||||
Total inventories at the lower of cost or net realizable value (Note 26) | 2,069 | 1,167 | ||||||
16. | Prepayments |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Prepaid taxes (Note 6) | 6,178 | 3,995 | ||||||
Prepaid insurance (Note 22) | 161 | 184 | ||||||
Prepaid fees and licenses | 100 | 236 | ||||||
Prepaid rent | 31 | 61 | ||||||
Other prepayments | 195 | 173 | ||||||
6,665 | 4,649 | |||||||
Less current portion of prepayments | 4,164 | 2,368 | ||||||
Net of noncurrent portion of prepayments | 2,501 | 2,281 | ||||||
17. | Equity |
Preferred Stock— | ||||||||||||||||||||||||
Php10 par value per share | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
Series | Preferred | Common Stock— | ||||||||||||||||||||||
A to HH | IV | Stock | Php5 par value per share | |||||||||||||||||||||
No. of Shares | Amount | No. of Shares | Amount | |||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Authorized | 823 | Php | 8,230 | 234 | Php | 1,170 | ||||||||||||||||||
Issued | ||||||||||||||||||||||||
Balance at January 1, 2006 | 407 | 36 | 443 | Php | 4,433 | 181 | Php | 904 | ||||||||||||||||
Conversion | (1 | ) | — | (1 | ) | (11 | ) | 7 | 38 | |||||||||||||||
Issuance | — | — | — | 2 | — | — | ||||||||||||||||||
Balance at December 31, 2006 | 406 | 36 | 442 | Php | 4,424 | 188 | Php | 942 | ||||||||||||||||
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Preferred Stock— | ||||||||||||||||||||||||
Php10 par value per share | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
Series | Preferred | Common Stock— | ||||||||||||||||||||||
A to HH | IV | Stock | Php5 par value per share | |||||||||||||||||||||
No. of Shares | Amount | No. of Shares | Amount | |||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Balance at January 1, 2007 | 406 | 36 | 442 | Php | 4,424 | 188 | Php | 942 | ||||||||||||||||
Conversion | (1 | ) | — | (1 | ) | (8 | ) | — | 1 | |||||||||||||||
Issuance | — | — | — | 1 | — | — | ||||||||||||||||||
Balance at December 31, 2007 | 405 | 36 | 441 | Php | 4,417 | 188 | Php | 943 | ||||||||||||||||
Balance at January 1, 2008 | 405 | 36 | 441 | Php | 4,417 | 188 | Php | 943 | ||||||||||||||||
Conversion | — | — | — | (3 | ) | 1 | 3 | |||||||||||||||||
Issuance | — | — | — | 1 | — | 1 | ||||||||||||||||||
Balance at December 31, 2008 | 405 | 36 | 441 | Php | 4,415 | 189 | Php | 947 | ||||||||||||||||
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18. | Interest-bearing Financial Liabilities |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Long-term portion of interest-bearing financial liabilities — net of current portion: | ||||||||
Long-term debt (Notes 8, 21, 24 and 26) | 58,899 | 53,372 | ||||||
Obligations under finance lease (Notes 8, 21, 24 and 26) | 11 | 15 | ||||||
58,910 | 53,387 | |||||||
Current portion of interest-bearing financial liabilities: | ||||||||
Notes payable (Notes 21, 24 and 26) | 553 | 493 | ||||||
Long-term debt maturing within one year (Notes 8, 21, 24 and 26) | 14,459 | 6,775 | ||||||
Obligations under finance lease maturing within one year (Notes 8, 24 and 26) | 59 | 481 | ||||||
Preferred stock subject to mandatory redemption (Notes 24 and 26) | 9 | 1,015 | ||||||
15,080 | 8,764 | |||||||
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Long-term debt (Note 26) | 4,576 | 4,472 | ||||||
Obligations under finance lease (Note 8) | 1 | 10 | ||||||
Preferred stock subject to mandatory redemption | — | 56 | ||||||
Total unamortized debt discount at end of year | 4,577 | 4,538 | ||||||
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2008 | 2007 | |||||||
(in million pesos) | ||||||||
Unamortized debt discount at beginning of year | 4,538 | 6,319 | ||||||
Revaluations during the year | 706 | (678 | ) | |||||
Additions during the year | 154 | 59 | ||||||
Settlements and conversions during the year | (15 | ) | (96 | ) | ||||
Accretion during the year charged to interest expense (Note 5) | (806 | ) | (1,066 | ) | ||||
Total unamortized debt discount at end of year | 4,577 | 4,538 | ||||||
Description | Interest Rates | 2008 | 2007 | |||||||||||||||
(in millions) | ||||||||||||||||||
U.S. Dollar Debt: | ||||||||||||||||||
Export Credit Agencies-Supported Loans: | ||||||||||||||||||
Kreditanstalt für Wiederaufbau, or KfW | 5.65% - 7.58% and US$ LIBOR | |||||||||||||||||
+ 0.55% - 2.5% in 2008 and 2007 | US$ | 74 | Php | 3,540 | US$ | 130 | Php | 5,365 | ||||||||||
Finnvera, Plc, or Finnvera | 0.05% + US$ LIBOR in 2008 | |||||||||||||||||
and 2007 | 30 | 1,420 | 49 | 2,048 | ||||||||||||||
Others | 3.79% - 6.6% and US$ LIBOR + | |||||||||||||||||
0.15% - 0.65% in 2008 and 6.6% | ||||||||||||||||||
and US$ LIBOR + 0.15% - 0.65% | ||||||||||||||||||
and GOVCO's cost + 0.20% in | ||||||||||||||||||
2007 | 7 | 351 | 1 | 47 | ||||||||||||||
111 | 5,311 | 180 | 7,460 | |||||||||||||||
Fixed Rate Notes | 8.35% - 11.375% in 2008 and | |||||||||||||||||
7.85% - 11.375% in 2007 | 560 | 26,693 | 676 | 28,016 | ||||||||||||||
Term Loans: | ||||||||||||||||||
Debt Exchange Facility | 2.25% and US$ LIBOR + 1% | |||||||||||||||||
in 2008 and 2007 | 196 | 9,357 | 187 | 7,742 | ||||||||||||||
GSM Network Expansion Facilities | 4.49% - 4.70% and US$ LIBOR | |||||||||||||||||
+ 0.42% - 0.815% in 2008 and | ||||||||||||||||||
4.49% - 4.70% and US$ LIBOR | ||||||||||||||||||
+ 0.75% - 0.815% in 2007 | 183 | 8,698 | 194 | 8,024 | ||||||||||||||
Others | 6% - 8.9% and US$ LIBOR + | |||||||||||||||||
0.40% - 0.50% in 2008 and 6% - | ||||||||||||||||||
10% and US$ LIBOR + 0.40% in | ||||||||||||||||||
2007 | 141 | 6,694 | 4 | 153 | ||||||||||||||
Satellite Acquisition Loans | US$ LIBOR + 1.75% - 2.75% in | |||||||||||||||||
2008 and 5.66% and US$ LIBOR | ||||||||||||||||||
+ 1.75% - 2.75% in 2007 | 13 | 610 | 28 | 1,145 | ||||||||||||||
US$ | 1,204 | 57,363 | US$ | 1,269 | 52,540 | |||||||||||||
Philippine Peso Debt: | ||||||||||||||||||
Fixed Rate Corporate Notes | 5.625% - 8.4346% in 2008 and | |||||||||||||||||
5.625% - 15% in 2007 | 9,921 | 4,967 | ||||||||||||||||
Term Loans: | ||||||||||||||||||
Unsecured Term Loans | 6.125%, MART1 + 0.75% and | |||||||||||||||||
PDST-F + 1% - 1.50% in 2008 | ||||||||||||||||||
and 6.125% and MART1 + 0.75% | ||||||||||||||||||
in 2007 | 6,070 | 2,634 | ||||||||||||||||
Secured Term Loans | 7.09% and MART1 + 5.70% in | |||||||||||||||||
2008 and 7.09%, MART1 + 5.70% | ||||||||||||||||||
and 90-day PHILBOR + 3% in | ||||||||||||||||||
2007 | 4 | 6 | ||||||||||||||||
15,995 | 7,607 | |||||||||||||||||
Total long-term debt | 73,358 | 60,147 | ||||||||||||||||
Less portion maturing within one year (Note 26) | 14,459 | 6,775 | ||||||||||||||||
Noncurrent portion of long-term debt (Note 26) | Php | 58,899 | Php | 53,372 | ||||||||||||||
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U.S. Dollar Debt | Php Debt | Total | ||||||||||||||
Year | In U.S. Dollar | In Php | In Php | In Php | ||||||||||||
(in millions) | ||||||||||||||||
2009 | 289 | 13,768 | 805 | 14,573 | ||||||||||||
2010 | 125 | 5,971 | 1,572 | 7,543 | ||||||||||||
2011 | 69 | 3,305 | 1,571 | 4,876 | ||||||||||||
2012 | 214 | 10,183 | 4,816 | 14,999 | ||||||||||||
2013 and onwards | 601 | 28,617 | 7,326 | 35,943 | ||||||||||||
1,298 | 61,844 | 16,090 | 77,934 | |||||||||||||
• | US$53 million provided under various export credit agency-backed facilities, of which US$0.6 million was in connection with our expansion and service improvement programs, and US$52.4 million in connection with the US$149 million refinancing facility discussed below; and |
• | US$21 million provided for the 15% downpayment portion and credit facilities without guarantee/insurance cover from the export credit agencies, of which US$13 million was in connection with the US$149 million refinancing facility discussed in the following paragraphs. |
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Principal Amount | Interest Rate | Maturity Date | 2008 | 2007 | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
US$294,984,000 | 8.350 | % | March 6, 2017 | US$ | 291 | Php13,896 | US$ | 296 | Php12,273 | |||||||||||||||||
US$159,180,000 | 11.375 | % | May 15, 2012 | 155 | 7,380 | 245 | 10,136 | |||||||||||||||||||
US$113,786,000 | 10.500 | % | April 15, 2009 | 114 | 5,417 | 135 | 5,607 | |||||||||||||||||||
US$ | 560 | Php26,693 | US$ | 676 | Php28,016 | |||||||||||||||||||||
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• | 2007 Facility in the amount of US$0.2 million which was paid in full in December 2007; | ||
• | 2008 Facility in the amount of US$2.9 million which was paid in full in December 2008; and | ||
• | 2014 Facility in the amount of US$280.1 million will be payable in full in June 2014. |
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Year | (in million pesos) | |||
2009 | 60 | |||
2010 | 5 | |||
2011 | 3 | |||
2012 and onwards | 3 | |||
Total minimum finance lease payments (Note 24) | 71 | |||
Less amount representing interest | 1 | |||
Present value of net minimum finance lease payments (Notes 3 and 26) | 70 | |||
Less obligations under finance lease maturing within one year (Notes 8 and 26) | 59 | |||
Long-term portion of obligations under finance lease (Notes 8 and 26) | 11 | |||
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2008 | 2007 | |||||||||||||||||||||||
Series V | Series VI | Total | Series V | Series VI | Total | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
Balance at beginning of year | 49 | 966 | 1,015 | 61 | 1,308 | 1,369 | ||||||||||||||||||
Accretion | 3 | 36 | 39 | 10 | 131 | 141 | ||||||||||||||||||
Revaluation | — | 32 | 32 | — | (182 | ) | (182 | ) | ||||||||||||||||
Conversion (Note 27) | (50 | ) | (1,027 | ) | (1,077 | ) | (22 | ) | (291 | ) | (313 | ) | ||||||||||||
Balance at end of year (Notes 24 and 26) | 2 | 7 | 9 | 49 | 966 | 1,015 | ||||||||||||||||||
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19. | Deferred Credits and Other Noncurrent Liabilities |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Accrual of capital expenditures under long-term financing | 8,650 | 7,554 | ||||||
Liabilities on asset retirement obligations (Notes 3 and 8) | 1,100 | 952 | ||||||
Future earn-out payments — net (Note 11) | 593 | 782 | ||||||
Unearned revenues (Note 21) | 190 | 290 | ||||||
Others | 49 | 54 | ||||||
10,582 | 9,632 | |||||||
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20. | Accounts Payable |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Suppliers and contractors (Notes 24 and 26) | 14,131 | 8,672 | ||||||
Taxes (Notes 25 and 26) | 1,970 | 1,648 | ||||||
Carriers (Note 26) | 1,780 | 1,843 | ||||||
Related parties (Note 22) | 120 | 29 | ||||||
Others | 267 | 61 | ||||||
18,268 | 12,253 | |||||||
21. | Accrued Expenses and Other Current Liabilities |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Accrued utilities and related expenses (Note 22) | 13,504 | 10,823 | ||||||
Unearned revenues (Note 19) | 4,249 | 4,024 | ||||||
Accrued employee benefits (Note 23) | 2,928 | 2,837 | ||||||
Accrued taxes and related expenses (Notes 24 and 25) | 1,398 | 977 | ||||||
Accrued interests and other related costs (Notes 18, 22 and 26) | 1,212 | 1,234 | ||||||
Current portion of future earn-out payments (Note 11) | 127 | 266 | ||||||
Payable in installment purchase of equity investment (Note 11) | — | 123 | ||||||
Others | 963 | 1,645 | ||||||
24,381 | 21,929 | |||||||
22. | Related Party Transactions |
a. | Air Time Purchase Agreement between PLDT and AIL and Related Agreements |
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b. | Transactions with Major Stockholders, Directors and Officers |
1. | Cooperation Agreement with First Pacific and certain affiliates, or the FP Parties, NTT Communications and NTT DoCoMo |
• | certain contractual veto rights over a number of major decisions or transactions; and |
• | rights relating to the representation on the Board of Directors of PLDT and Smart, respectively, and any committees thereof. |
• | Restriction on Ownership of Shares of PLDT by NTT Communications and NTT DoCoMo. Each of NTT Communications and NTT DoCoMo has agreed not to beneficially own, directly or indirectly, in the aggregate with their respective subsidiaries and affiliates, more than 21% of the issued and outstanding shares of PLDT’s common stock. If such event does occur, the FP Parties, as long as they own in the aggregate not less than 21% of the issued and outstanding shares of PLDT’s common stock, have the right to terminate their respective rights and obligations under the Cooperation Agreement, the Shareholders Agreement and the Stock Purchase and Strategic Investment Agreement. |
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• | Limitation on Competition.NTT Communications, NTT DoCoMo and their respective subsidiaries are prohibited from investing in excess of certain thresholds in businesses competing with PLDT in respect of customers principally located in the Philippines and from using their assets in the Philippines in such businesses. Moreover, if PLDT, Smart or any of Smart’s subsidiaries intends to enter into any contractual arrangement relating to certain competing businesses, PLDT is required to provide, or to use reasonable efforts to procure that Smart or any of Smart’s subsidiaries provide, NTT Communications and NTT DoCoMo with the same opportunity to enter into such agreement with PLDT or Smart or Smart’s subsidiaries, as the case may be. |
• | Business Cooperation.PLDT and NTT DoCoMo agreed in principle to collaborate with each other on the business development, roll-out and use of a W-CDMA mobile communication network. In addition, PLDT agreed, to the extent of the power conferred by its direct or indirect shareholding in Smart, to procure that Smart will (i) become a member of a strategic alliance group for international roaming and corporate sales and services and (ii) enter into a business relationship concerning preferred roaming and inter-operator tariff discounts with NTT DoCoMo. |
• | Additional Rights of NTT DoCoMo.Pursuant to amendments effected by the Cooperation Agreement to the Stock Purchase and Strategic Investment Agreement and the Shareholders Agreement, upon NTT Communications and NTT DoCoMo and their respective subsidiaries owning in the aggregate 20% or more of PLDT’s shares of common stock and for as long as they continue to own in the aggregate at least 17.5% of PLDT’s shares of common stock then outstanding, NTT DoCoMo has additional rights under the Stock Purchase and Strategic Investment Agreement and Shareholders Agreement, including that: |
1. | NTT DoCoMo is entitled to nominate one additional NTT DoCoMo nominee to the Board of Directors of each PLDT and Smart; |
2. | PLDT must consult NTT DoCoMo no later than 30 days prior to the first submission to the board of PLDT or certain of its committees of any proposal of investment in an entity that would primarily engage in a business that would be in direct competition or substantially the same business opportunities, customer base, products or services with business carried on by NTT DoCoMo, or which NTT DoCoMo has announced publicly an intention to carry on; |
3. | PLDT must procure that Smart does not cease to carry on its business, dispose of all of its assets, issue common shares, merge or consolidate, or effect winding up or liquidation without PLDT first consulting with NTT DoCoMo no later than 30 days prior to the first submission to the board of PLDT or Smart, or certain of its committees; and |
4. | PLDT must first consult with NTT DoCoMo no later than 30 days prior to the first submission to the board of PLDT or certain of its committees for the approval of any transfer by any member of the PLDT Group of Smart common capital stock to any person who is not a member of the PLDT Group. |
• | Change in Control.Each of NTT Communications, NTT DoCoMo and the FP Parties agreed that to the extent permissible under applicable laws and regulations of the Philippines and other jurisdictions, subject to certain conditions, to cast its vote as a shareholder in support of any resolution proposed by the Board of Directors of PLDT for the purpose of safeguarding PLDT from any Hostile Transferee. A“Hostile Transferee” is defined under the Cooperation Agreement to mean any person (other than NTT Communications, NTT DoCoMo, First Pacific or any of their respective affiliates) determined to be so by the PLDT Board of Directors and includes, without limitation, a person who announces an intention to acquire, seeking to acquire or acquires 30% or more of PLDT common shares then issued and outstanding from time-to-time or having (by itself or together with itself) acquired 30% or more of the PLDT common shares announces an intention to acquire, seeking to acquire or acquires a further 2% of such PLDT common shares: (a) at a price per share which is less than the fair market |
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• | Termination.If NTT Communications, NTT DoCoMo or their respective subsidiaries cease to own, in the aggregate, full legal and beneficial title to at least 10% of the shares of PLDT’s common stock then issued and outstanding, their respective rights and obligations under the Cooperation Agreement and the Shareholders Agreement will terminate and the Strategic Arrangements (as defined in the Stock Purchase and Strategic Investment Agreement) will terminate. If the FP Parties and their respective subsidiaries cease to have, directly or indirectly, effective voting power in respect of shares of PLDT’s common stock representing at least 18.5% of the shares of PLDT’s common stock then issued and outstanding, their respective rights and obligations under the Cooperation Agreement, the Stock Purchase and Strategic Investment Agreement, and the Shareholders Agreement will terminate. |
2. | Integrated i-mode Services Package Agreement between NTT DoCoMo and Smart |
3. | Advisory Services Agreement between NTT DoCoMo and PLDT |
4. | Other Agreements with NTT Communications and/or its Affiliates |
• | Advisory Services Agreement. On March 24, 2000, PLDT entered into an agreement with NTT Communications, as amended on March 31, 2003, March 31, 2005 and June 16, 2006, under which NTT Communications provides PLDT with technical, marketing and other consulting services for various business areas of PLDT starting April 1, 2000; |
• | Arcstar Licensing Agreement and Arcstar Service Provider Agreement.On March 24, 2000, PLDT entered into an agreement with NTT Worldwide Telecommunications Corporation under which PLDT markets manages data and other services under NTT Communications’ “Arcstar” brand to its corporate customers in the Philippines. PLDT also entered into a Trade Name and Trademark Agreement with NTT Communications under which PLDT has been given the right to use the trade name “Arcstar” and its related trademark, logo and symbols, solely for the purpose of PLDT’s marketing, promotional and sales activities for the Arcstar services within the Philippines; and |
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• | Conventional International Telecommunications Services Agreement. On March 24, 2000, PLDT entered into an agreement with NTT Communications under which PLDT and NTT Communications agreed to cooperative arrangements for conventional international telecommunications services to enhance their respective international businesses. |
5. | Agreements between Smart and Asia Link B.V., or ALBV |
6. | Agreements Relating to Insurance Companies. |
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Short-term employee benefits | 538 | 549 | 541 | |||||||||
Share-based payments (Note 23) | 233 | 299 | 978 | |||||||||
Post-employment benefits (Note 23) | 24 | 58 | 30 | |||||||||
Total compensation paid to key officers of the PLDT Group | 795 | 906 | 1,549 | |||||||||
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23. | Share-based Payments and Employee Benefits |
2008 | 2007 | |||||||
Balance at beginning of year | 26,758 | 119,034 | ||||||
Exercised shares* | (8,417 | ) | (92,276 | ) | ||||
Balance at end of year | 18,341 | 26,758 | ||||||
* | Based on the date of payment of exercised shares. |
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2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Change in benefit obligation: | ||||||||||||
Defined benefit obligation at beginning of year | 10,160 | 13,314 | 7,652 | |||||||||
Interest cost | 834 | 996 | 895 | |||||||||
Current service cost | 600 | 777 | 479 | |||||||||
Actuarial (gain) loss on obligation | (101 | ) | (4,788 | ) | 4,826 | |||||||
Actual benefits paid | (576 | ) | (566 | ) | (594 | ) | ||||||
Curtailment | — | 427 | — | |||||||||
Liabilities of newly acquired subsidiaries | — | — | 56 | |||||||||
Defined benefit obligation at end of year | 10,917 | 10,160 | 13,314 | |||||||||
Change in plan assets: | ||||||||||||
Fair value of plan assets at beginning of year | 8,519 | 5,768 | 5,154 | |||||||||
Actual contributions | 914 | 1,515 | 320 | |||||||||
Expected return on plan assets | 865 | 644 | 541 | |||||||||
Actual benefits paid | (575 | ) | (565 | ) | (590 | ) | ||||||
Actuarial (loss) gain on plan assets | (2,555 | ) | 1,157 | 343 | ||||||||
Fair value of plan assets at end of year | 7,168 | 8,519 | 5,768 | |||||||||
Unfunded status | 3,749 | 1,641 | 7,546 | |||||||||
Unrecognized net actuarial (loss) gain (Note 3) | (1,126 | ) | 1,344 | (4,657 | ) | |||||||
Unrealized net transition obligation | — | — | (1 | ) | ||||||||
Accrued benefit cost at end of year (Note 3) | 2,623 | 2,985 | 2,888 | |||||||||
Components of net periodic benefit cost: | ||||||||||||
Interest cost | 834 | 996 | 895 | |||||||||
Current service cost | 600 | 777 | 479 | |||||||||
Net actuarial (gain) loss recognized for the year | (11 | ) | 89 | — | ||||||||
Expected return on plan assets | (865 | ) | (644 | ) | (541 | ) | ||||||
Curtailment loss | — | 416 | — | |||||||||
Amortizations of unrecognized net transition obligation | — | 1 | 58 | |||||||||
Net periodic benefit cost for the year | 558 | 1,635 | 891 | |||||||||
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2008 | 2007 | 2006 | ||||||||||
Average remaining working years of covered employee | 20 | 21 | 22 | |||||||||
Expected rate of return on plan assets | 9 | % | 10 | % | 10 | % | ||||||
Discount rate | 11 | % | 8 | % | 8 | % | ||||||
Rate of increase in compensation | 10 | % | 7 | % | 9 | % |
2008 | 2007 | 2006 | ||||||||||
Investments in equity securities | 51 | % | 60 | % | 52 | % | ||||||
Investments in debt and fixed income securities | 27 | % | 21 | % | 23 | % | ||||||
Investments in real estate | 9 | % | 8 | % | 10 | % | ||||||
Investments in temporary placements | 8 | % | 5 | % | 7 | % | ||||||
Investments in mutual funds | 5 | % | 6 | % | 8 | % | ||||||
100 | % | 100 | % | 100 | % | |||||||
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2008 | 2007 | 2006 | ||||||||||
Investments in debt and fixed income securities | 68 | % | 57 | % | 68 | % | ||||||
Investments in equity securities | 23 | % | 35 | % | 29 | % | ||||||
Others | 9 | % | 8 | % | 3 | % | ||||||
100 | % | 100 | % | 100 | % | |||||||
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Expense recognized for defined benefit plans | 558 | 1,635 | 891 | |||||||||
Expense recognized for defined contribution plans | 167 | 138 | 112 | |||||||||
Total expense recognized for pension benefit costs (Notes 3 and 5) | 725 | 1,773 | 1,003 | |||||||||
24. | Contractual Obligations and Commercial Commitments |
Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 year | 1-3 years | 3-5 Years | 5 years | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||
Long-term debt(1): | 99,363 | 7,649 | 31,500 | 26,744 | 33,470 | |||||||||||||||
Principal | 77,934 | 7,077 | 19,916 | 21,978 | 28,963 | |||||||||||||||
Interest | 21,429 | 572 | 11,584 | 4,766 | 4,507 | |||||||||||||||
Lease obligations: | 7,235 | 2,727 | 1,608 | 1,265 | 1,635 | |||||||||||||||
Operating lease | 7,164 | 2,667 | 1,601 | 1,261 | 1,635 | |||||||||||||||
Finance lease | 71 | 60 | 7 | 4 | — | |||||||||||||||
Unconditional purchase obligations(2) | 762 | 24 | 167 | 286 | 285 | |||||||||||||||
Other obligations: | 51,367 | 33,714 | 11,630 | 1,816 | 4,207 | |||||||||||||||
Mandatory conversion and purchase of shares | 9 | 9 | — | — | — | |||||||||||||||
Derivative financial liabilities(3): | 6,207 | 108 | 2,003 | 1,768 | 2,328 | |||||||||||||||
Long-term currency swaps | 6,099 | — | 2,003 | 1,768 | 2,328 | |||||||||||||||
Forward foreign exchange contracts | 69 | 69 | — | — | — | |||||||||||||||
Long-term foreign currency options | 39 | 39 | — | — | — | |||||||||||||||
Various trade and other obligations: | 45,151 | 33,597 | 9,627 | 48 | 1,879 | |||||||||||||||
Suppliers and contractors | 22,781 | 14,131 | 8,650 | — | — | |||||||||||||||
Utilities and related expenses | 11,376 | 11,346 | 27 | 1 | 2 | |||||||||||||||
Employee benefits | 2,925 | 2,925 | — | — | — | |||||||||||||||
Customers’ deposits | 2,251 | — | 327 | 47 | 1,877 | |||||||||||||||
Carriers | 1,780 | 1,780 | — | — | — | |||||||||||||||
Dividends | 1,379 | 1,379 | — | — | — | |||||||||||||||
Others | 2,659 | 2,036 | 623 | — | — | |||||||||||||||
Total contractual obligations | 158,727 | 44,114 | 44,905 | 30,111 | 39,597 | |||||||||||||||
December 31, 2007 | ||||||||||||||||||||
Long-term debt(1): | 86,334 | 11,441 | 22,662 | 21,218 | 31,013 | |||||||||||||||
Principal | 64,619 | 6,872 | 15,883 | 16,267 | 25,597 | |||||||||||||||
Interest | 21,715 | 4,569 | 6,779 | 4,951 | 5,416 | |||||||||||||||
Lease obligations: | 6,120 | 2,558 | 1,515 | 1,040 | 1,007 | |||||||||||||||
Operating lease | 5,614 | 2,067 | 1,500 | 1,040 | 1,007 | |||||||||||||||
Finance lease | 506 | 491 | 15 | — | — | |||||||||||||||
Unconditional purchase obligations(2) | 776 | 113 | 41 | 249 | 373 |
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Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 year | 1-3 years | 3-5 Years | 5 years | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
Other obligations: | 49,488 | 28,023 | 10,835 | 4,294 | 6,336 | |||||||||||||||
Mandatory conversion and purchase of shares | 1,070 | 1,070 | — | — | — | |||||||||||||||
Derivative financial liabilities(3): | 11,638 | 8 | 2,938 | 4,240 | 4,452 | |||||||||||||||
Long-term currency swaps | 11,170 | — | 2,527 | 4,191 | 4,452 | |||||||||||||||
Long-term foreign currency options | 318 | — | 318 | — | — | |||||||||||||||
Interest rate swap | 142 | — | 93 | 49 | — | |||||||||||||||
Forward foreign exchange contracts | 8 | 8 | — | — | — | |||||||||||||||
Various trade and other obligations: | 36,780 | 26,945 | 7,897 | 54 | 1,884 | |||||||||||||||
Suppliers and contractors | 16,371 | 8,816 | 7,555 | — | — | |||||||||||||||
Utilities and related expenses | 10,532 | 10,453 | 75 | 4 | — | |||||||||||||||
Employee benefits | 2,778 | 2,778 | — | — | — | |||||||||||||||
Customers’ deposit | 2,201 | — | 267 | 50 | 1,884 | |||||||||||||||
Carriers | 2,187 | 2,187 | — | — | — | |||||||||||||||
Dividends | 1,071 | 1,071 | — | — | — | |||||||||||||||
Others | 1,640 | 1,640 | — | — | — | |||||||||||||||
Total contractual obligations | 142,718 | 42,135 | 35,053 | 26,801 | 38,729 | |||||||||||||||
(1) | Before deducting unamortized debt discount and debt issuance costs. | |
(2) | Based on the Amended ATPA with AIL. | |
(3) | Gross liabilities before any offsetting application. |
F-87
Table of Contents
F-88
Table of Contents
25. | Provisions and Contingencies |
F-89
Table of Contents
F-90
Table of Contents
26. | Financial Assets and Liabilities |
Designated | ||||||||||||||||||||||||||||||||||||||||
at fair | ||||||||||||||||||||||||||||||||||||||||
value | Derivatives | Available- | Liabilities | Total | Non- | |||||||||||||||||||||||||||||||||||
Loans | Held-to- | through | Held- | used | for-sale | carried at | financial | financial | ||||||||||||||||||||||||||||||||
and | maturity | profit or | for- | for | financial | amortized | assets and | assets and | ||||||||||||||||||||||||||||||||
receivables | investments | loss | trading | hedging | assets | cost | liabilities | liabilities | Total | |||||||||||||||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||||||||||||||||||
Assets as at December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||
Noncurrent: | ||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment — net | — | — | — | — | — | — | — | — | 160,326 | 160,326 | ||||||||||||||||||||||||||||||
Investments in associates and joint ventures | — | — | — | — | — | — | — | — | 1,174 | 1,174 | ||||||||||||||||||||||||||||||
Available-for-sale financial assets | — | — | — | — | — | 131 | — | 131 | — | 131 | ||||||||||||||||||||||||||||||
Investment in debt securities | — | 442 | 193 | — | — | — | — | 635 | — | 635 | ||||||||||||||||||||||||||||||
Investment properties | — | — | — | — | — | — | — | — | 617 | 617 | ||||||||||||||||||||||||||||||
Goodwill and intangible assets | — | — | — | — | — | — | — | — | 10,450 | 10,450 | ||||||||||||||||||||||||||||||
Deferred income tax assets | — | — | — | — | — | — | — | — | 9,605 | 9,605 | ||||||||||||||||||||||||||||||
Prepayments — net of current portion | — | — | — | — | — | — | — | — | 2,501 | 2,501 | ||||||||||||||||||||||||||||||
Advances and refundable deposits — net of current portion | 840 | — | — | — | — | — | — | 840 | 246 | 1,086 | ||||||||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 33,684 | — | — | — | — | — | — | 33,684 | — | 33,684 | ||||||||||||||||||||||||||||||
Short-term investments | 5,964 | — | — | 706 | — | — | — | 6,670 | — | 6,670 | ||||||||||||||||||||||||||||||
Investment in debt securities | — | 1,656 | — | — | — | — | — | 1,656 | — | 1,656 | ||||||||||||||||||||||||||||||
Trade and other receivables | 15,909 | — | — | — | — | — | — | 15,909 | — | 15,909 | ||||||||||||||||||||||||||||||
Inventories and supplies | — | — | — | — | — | — | — | — | 2,069 | 2,069 | ||||||||||||||||||||||||||||||
Derivative financial assets | — | — | — | 56 | — | — | — | 56 | — | 56 | ||||||||||||||||||||||||||||||
Current portion of prepayments | — | — | — | — | — | — | — | — | 4,164 | 4,164 | ||||||||||||||||||||||||||||||
Current portion of advances and refundable deposits | — | — | — | — | — | — | — | — | 1,825 | 1,825 | ||||||||||||||||||||||||||||||
Total assets | 56,397 | 2,098 | 193 | 762 | — | 131 | — | 59,581 | 192,977 | 252,558 | ||||||||||||||||||||||||||||||
F-91
Table of Contents
Designated | ||||||||||||||||||||||||||||||||||||||||
at fair | ||||||||||||||||||||||||||||||||||||||||
value | Derivatives | Available- | Liabilities | Total | Non- | |||||||||||||||||||||||||||||||||||
Loans | Held-to- | through | Held- | used | for-sale | carried at | financial | financial | ||||||||||||||||||||||||||||||||
and | maturity | profit or | for- | for | financial | amortized | assets and | assets and | ||||||||||||||||||||||||||||||||
receivables | investments | loss | trading | hedging | assets | cost | liabilities | liabilities | Total | |||||||||||||||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||||||||||||||||||
Liabilities as at December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||
Noncurrent: | ||||||||||||||||||||||||||||||||||||||||
Interest bearing financial liabilities — net of current portion | — | — | — | — | — | — | 58,910 | 58,910 | — | 58,910 | ||||||||||||||||||||||||||||||
Deferred income tax liabilities | — | — | — | — | — | — | — | — | 1,288 | 1,288 | ||||||||||||||||||||||||||||||
Derivative financial liabilities | — | — | — | 1,761 | — | — | — | 1,761 | — | 1,761 | ||||||||||||||||||||||||||||||
Pension and other employee benefits | — | — | — | — | — | — | — | — | 5,467 | 5,467 | ||||||||||||||||||||||||||||||
Customers’ deposits | — | — | — | — | — | — | 2,251 | 2,251 | — | 2,251 | ||||||||||||||||||||||||||||||
Deferred credits and other noncurrent liabilities | — | — | — | — | — | — | 9,273 | 9,273 | 1,309 | 10,582 | ||||||||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||||||||||||||||||
Accounts payable | — | — | — | — | — | — | 16,294 | 16,294 | 1,974 | 18,268 | ||||||||||||||||||||||||||||||
Accrued expenses and other current liabilities | — | — | — | — | — | — | 18,612 | 18,612 | 5,769 | 24,381 | ||||||||||||||||||||||||||||||
Derivative financial liabilities | — | — | — | 87 | — | — | — | 87 | — | 87 | ||||||||||||||||||||||||||||||
Provisions for assessments | — | — | — | — | — | — | — | — | 1,555 | 1,555 | ||||||||||||||||||||||||||||||
Current portion of interest-bearing financial liabilities | — | — | — | — | — | — | 15,080 | 15,080 | — | 15,080 | ||||||||||||||||||||||||||||||
Dividends payable | — | — | — | — | — | — | 1,379 | 1,379 | — | 1,379 | ||||||||||||||||||||||||||||||
Income tax payable | — | — | — | — | — | — | — | — | 4,580 | 4,580 | ||||||||||||||||||||||||||||||
Total liabilities | — | — | — | 1,848 | — | — | 121,799 | 123,647 | 21,942 | 145,589 | ||||||||||||||||||||||||||||||
Net assets and liabilities | 56,397 | 2,098 | 193 | (1,086 | ) | — | 131 | (121,799 | ) | (64,066 | ) | 171,035 | 106,969 | |||||||||||||||||||||||||||
Assets as at December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||
Noncurrent: | ||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment — net | — | — | — | — | — | — | — | 159,414 | 159,414 | |||||||||||||||||||||||||||||||
Investments in associates and joint ventures | — | — | — | — | — | — | — | 1,351 | 1,351 | |||||||||||||||||||||||||||||||
Available-for-sale financial assets | — | — | — | — | — | 143 | — | 143 | — | 143 | ||||||||||||||||||||||||||||||
Investment in debt securities | — | 273 | — | — | — | — | — | 273 | — | 273 | ||||||||||||||||||||||||||||||
Investment properties | — | — | — | — | — | — | — | — | 577 | 577 | ||||||||||||||||||||||||||||||
Goodwill and intangible assets | — | — | — | — | — | — | — | — | 11,721 | 11,721 | ||||||||||||||||||||||||||||||
Deferred income tax assets | — | — | — | — | — | — | — | — | 13,757 | 13,757 | ||||||||||||||||||||||||||||||
Derivative financial assets | — | — | — | 59 | — | — | — | 59 | — | 59 | ||||||||||||||||||||||||||||||
Prepayments — net of current portion | — | — | — | — | — | — | — | — | 2,281 | 2,281 | ||||||||||||||||||||||||||||||
Advances and refundable deposits — net of current portion | 734 | — | — | — | — | — | — | 734 | 296 | 1,030 | ||||||||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 17,447 | — | — | — | — | — | — | 17,447 | — | 17,447 | ||||||||||||||||||||||||||||||
Short-term investments | 11,366 | — | — | 2,049 | — | — | — | 13,415 | — | 13,415 | ||||||||||||||||||||||||||||||
Investment in debt securities | 1,115 | — | — | — | — | — | — | 1,115 | — | 1,115 | ||||||||||||||||||||||||||||||
Trade and other receivables | 12,645 | — | — | — | — | — | — | 12,645 | — | 12,645 | ||||||||||||||||||||||||||||||
Inventories and supplies | — | — | — | — | — | — | — | — | 1,167 | 1,167 | ||||||||||||||||||||||||||||||
Derivative financial assets | — | — | — | 227 | 670 | — | — | 897 | — | 897 | ||||||||||||||||||||||||||||||
Current portion of prepayments | — | — | — | — | — | — | — | — | 2,368 | 2,368 | ||||||||||||||||||||||||||||||
Current portion of advances and refundable deposits | — | — | — | — | — | — | — | — | 498 | 498 | ||||||||||||||||||||||||||||||
Total assets | 43,307 | 273 | — | 2,335 | 670 | 143 | — | 46,728 | 193,430 | 240,158 | ||||||||||||||||||||||||||||||
Liabilities as at December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||
Noncurrent: | ||||||||||||||||||||||||||||||||||||||||
Interest bearing financial liabilities — net of current portion | — | — | — | — | — | — | 53,387 | 53,387 | — | 53,387 | ||||||||||||||||||||||||||||||
Deferred income tax liabilities | — | — | — | — | — | — | — | — | 2,066 | 2,066 | ||||||||||||||||||||||||||||||
Derivative financial liabilities | — | — | — | 530 | 7,211 | — | — | 7,741 | — | 7,741 | ||||||||||||||||||||||||||||||
Pension and other employee benefits | — | — | — | — | — | — | — | — | 4,540 | 4,540 | ||||||||||||||||||||||||||||||
Customers’ deposits | — | — | — | — | — | — | 2,201 | 2,201 | — | 2,201 | ||||||||||||||||||||||||||||||
Deferred credits and other noncurrent liabilities | — | — | — | — | — | — | 7,608 | 7,608 | 2,024 | 9,632 | ||||||||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||||||||||||||||||
Accounts payable | — | — | — | — | — | — | 10,605 | 10,605 | 1,648 | 12,253 | ||||||||||||||||||||||||||||||
Accrued expenses and other current liabilities | — | — | — | — | — | — | 16,570 | 16,570 | 5,359 | 21,929 | ||||||||||||||||||||||||||||||
Derivative financial liabilities | — | — | — | 237 | 5 | — | — | 242 | — | 242 | ||||||||||||||||||||||||||||||
Provisions for assessments | — | — | — | — | — | — | — | — | 1,112 | 1,112 | ||||||||||||||||||||||||||||||
Current portion of interest-bearing financial liabilities | — | — | — | — | — | — | 8,764 | 8,764 | — | 8,764 | ||||||||||||||||||||||||||||||
Dividends payable | — | — | — | — | — | — | 1,071 | 1,071 | — | 1,071 | ||||||||||||||||||||||||||||||
Income tax payable | — | — | — | — | — | — | — | — | 2,875 | 2,875 | ||||||||||||||||||||||||||||||
Total liabilities | — | — | — | 767 | 7,216 | — | 100,206 | 108,189 | 19,624 | 127,813 | ||||||||||||||||||||||||||||||
Net assets and liabilities | 43,307 | 273 | — | 1,568 | (6,546 | ) | 143 | (100,206 | ) | (61,461 | ) | 173,806 | 112,345 | |||||||||||||||||||||||||||
F-92
Table of Contents
Carrying Value | Fair Value | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in million pesos) | ||||||||||||||||
Noncurrent Financial Assets | ||||||||||||||||
Available-for-sale financial assets | 131 | 143 | 131 | 143 | ||||||||||||
Investment in debt securities | 635 | 273 | 629 | 283 | ||||||||||||
Derivative financial assets: | ||||||||||||||||
Long-term foreign currency options | — | 59 | — | 59 | ||||||||||||
Advances and refundable deposits — net of current portion | 840 | 734 | 728 | 657 | ||||||||||||
Total noncurrent financial assets | 1,606 | 1,209 | 1,488 | 1,142 | ||||||||||||
Current Financial Assets | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash on hand and in banks | 4,164 | 3,944 | 4,164 | 3,944 | ||||||||||||
Temporary cash investments | 29,520 | 13,503 | 29,520 | 13,503 | ||||||||||||
Short-term investments | 6,670 | 13,415 | 6,670 | 13,415 | ||||||||||||
Investment in debt securities | 1,656 | 1,115 | 1,656 | 1,115 | ||||||||||||
Trade and other receivables: | ||||||||||||||||
Foreign administrations | 5,477 | 4,324 | 5,477 | 4,324 | ||||||||||||
Retail subscribers | 3,904 | 3,861 | 3,904 | 3,861 | ||||||||||||
Dealers, agents and others | 2,960 | 917 | 2,960 | 917 | ||||||||||||
Corporate subscribers | 2,865 | 2,040 | 2,865 | 2,040 | ||||||||||||
Domestic carriers | 703 | 1,503 | 703 | 1,503 | ||||||||||||
Derivative financial assets: | ||||||||||||||||
Foreign currency options | 38 | — | 38 | — | ||||||||||||
Forward foreign exchange contracts | 16 | 863 | 16 | 863 | ||||||||||||
Bifurcated embedded derivatives | 2 | 34 | 2 | 34 | ||||||||||||
Total current financial assets | 57,975 | 45,519 | 57,975 | 45,519 | ||||||||||||
Total Financial Assets | 59,581 | 46,728 | 59,463 | 46,661 | ||||||||||||
Noncurrent Financial Liabilities | ||||||||||||||||
Interest-bearing financial liabilities: | ||||||||||||||||
Long-term debt — net of current portion | 58,899 | 53,372 | 57,058 | 58,044 | ||||||||||||
Obligations under finance lease | 11 | 15 | 11 | 15 | ||||||||||||
Derivative financial liabilities: | ||||||||||||||||
Long-term currency swap | 1,761 | 7,211 | 1,761 | 7,211 | ||||||||||||
Long-term foreign currency options | — | 390 | — | 390 | ||||||||||||
Interest rate swap | — | 140 | — | 140 | ||||||||||||
Customers’ deposits | 2,251 | 2,201 | 1,476 | 1,481 | ||||||||||||
Deferred credits and other noncurrent liabilities | 9,273 | 7,608 | 7,959 | 6,553 | ||||||||||||
Total noncurrent financial liabilities | 72,195 | 70,937 | 68,265 | 73,834 | ||||||||||||
Current Financial Liabilities | ||||||||||||||||
Accounts payable: | ||||||||||||||||
Suppliers and contractors | 14,131 | 8,493 | 14,131 | 8,493 | ||||||||||||
Carriers | 1,780 | 1,843 | 1,780 | 1,843 | ||||||||||||
Others | 383 | 269 | 383 | 269 | ||||||||||||
Accrued expenses and other current liabilities: | ||||||||||||||||
Utilities and related expenses | 13,385 | 10,780 | 13,385 | 10,780 | ||||||||||||
Employee benefits | 2,925 | 2,795 | 2,925 | 2,795 | ||||||||||||
Interests and other related costs | 1,212 | 1,234 | 1,212 | 1,234 | ||||||||||||
Others | 1,090 | 1,761 | 1,090 | 1,761 | ||||||||||||
Derivative financial liabilities: | ||||||||||||||||
Foreign currency options | 44 | — | 44 | — | ||||||||||||
Forward foreign exchange contracts | 31 | 7 | 31 | 7 | ||||||||||||
Bifurcated embedded derivatives | 11 | — | 11 | — | ||||||||||||
Bifurcated equity call options | 1 | 231 | 1 | 231 | ||||||||||||
Interest rate swap | — | 4 | — | 4 | ||||||||||||
Interest-bearing financial liabilities: | ||||||||||||||||
Notes payable | 553 | 493 | 553 | 493 | ||||||||||||
Current portion of long-term debt | 14,459 | 6,775 | 14,459 | 6,775 | ||||||||||||
Obligations under finance lease | 59 | 481 | 59 | 481 | ||||||||||||
Preferred stock subject to mandatory redemption | 9 | 1,015 | 9 | 1,015 | ||||||||||||
Dividends payable | 1,379 | 1,071 | 1,379 | 1,071 | ||||||||||||
Total current financial liabilities | 51,452 | 37,252 | 51,452 | 37,252 | ||||||||||||
Total Financial Liabilities | 123,647 | 108,189 | 119,717 | 111,086 | ||||||||||||
F-93
Table of Contents
Type | Fair Value Assumptions | |
Noncurrent portion of advances and refundable deposits | Estimated fair value is based on the discounted values of future cash flows using the applicable zero coupon rates plus credit spread. | |
Fixed rate loans: | ||
U.S. dollar notes/convertible debt | Quoted market price. | |
Other loans in all other currencies | Estimated fair value is based on the discounted value of future cash flows using the applicable Commercial Interest Reference Rate and Philippine Dealing System Treasury Fixing rates for similar types of loans. | |
Variable rate loans | The carrying value approximates fair value because of recent and regular repricing based on market conditions. | |
Customers’ deposits and deferred credits and other noncurrent liabilities | Estimated fair value is based on the discounted values of future cash flows using the applicable zero coupon rates plus credit spread. |
F-94
Table of Contents
2008 | 2007 | |||||||||||||||||||
Mark-to- | ||||||||||||||||||||
market Gains | Mark-to-market | |||||||||||||||||||
Maturity | Notional | (Losses) | Notional | Gains (Losses) | ||||||||||||||||
(in millions) | ||||||||||||||||||||
PLDT | ||||||||||||||||||||
Transactions not designated as hedges: | ||||||||||||||||||||
Currency swaps | 2017 | US$ | 295 | Php | (1,197 | ) | US$ | 300 | Php | (3,714 | ) | |||||||||
2012 | 159 | (564 | ) | 250 | (3,496 | ) | ||||||||||||||
Foreign currency bought call options | 2009 | 57 | (16 | ) | 136 | (390 | ) | |||||||||||||
Foreign currency sold call options | 2009 | 57 | (1) | 10 | 136 | (1) | 58 | |||||||||||||
Forward foreign exchange contracts | 2009 | 57 | (31 | ) | — | — | ||||||||||||||
2008 | — | — | 16 | 21 | ||||||||||||||||
Interest rate swap(2) | 2012 | — | — | 31 | (144 | ) | ||||||||||||||
Bifurcated equity call options | 2009 | — | (1 | ) | — | (2 | ) | |||||||||||||
2008 | — | — | 1 | share | (229 | ) | ||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Forward foreign exchange contracts | 2008 | — | — | 134 | 296 | |||||||||||||||
(1,799 | ) | (7,600 | ) | |||||||||||||||||
SMART | ||||||||||||||||||||
Transactions not designated as hedges: | ||||||||||||||||||||
Bifurcated embedded derivatives | 2009 | 3 | (10 | ) | 5 | 34 | ||||||||||||||
Forward foreign exchange contracts: | ||||||||||||||||||||
On loan proceeds | 2008 | — | — | 50 | 100 | |||||||||||||||
On gross U.S. dollar revenues | 2008 | — | — | 55 | 70 | |||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Forward foreign exchange contracts | 2008 | — | — | 171 | 265 | |||||||||||||||
Php | (10 | ) | Php | 469 | ||||||||||||||||
ePLDT | ||||||||||||||||||||
Transactions not designated as hedges: | ||||||||||||||||||||
Forward foreign exchange contracts | 2009 | US$ | 5 | Php | 16 | US$ | — | Php | — | |||||||||||
Bifurcated embedded derivatives | 2012 | 2 | 1 | — | — | |||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Forward foreign exchange contracts | 2008 | — | — | 36 | 104 | |||||||||||||||
17 | 104 | |||||||||||||||||||
Net liabilities | Php | (1,792 | ) | Php | (7,027 | ) | ||||||||||||||
(1) | Foreign currency sold call options based on the same notional amount as the foreign currency bought call options. |
(2) | The original term of the interest rate swap agreement is until 2012 but it was fully terminated in March 2008. |
2008 | 2007 | |||||||
(in million pesos) | ||||||||
Presented as: | ||||||||
Noncurrent assets | — | 59 | ||||||
Current assets | 56 | 897 | ||||||
Noncurrent liabilities | (1,761 | ) | (7,741 | ) | ||||
Current liabilities | (87 | ) | (242 | ) | ||||
Net liabilities | (1,792 | ) | (7,027 | ) | ||||
F-95
Table of Contents
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Net mark-to-market losses at end of year | (1,792 | ) | (7,027 | ) | (6,499 | ) | ||||||
Net mark-to-market losses at beginning of year | (7,027 | ) | (6,499 | ) | (3,284 | ) | ||||||
Net change | 5,235 | (528 | ) | (3,215 | ) | |||||||
Net losses on cash flow hedges charged to cumulative translation adjustments | 662 | (570 | ) | — | ||||||||
Effective portion recognized in the profit or loss for the cash flow hedge | 286 | — | — | |||||||||
Ineffective portion recognized in the profit or loss for the cash flow hedge | 118 | (4 | ) | — | ||||||||
Hedge cost | (819 | ) | (1,125 | ) | (1,446 | ) | ||||||
Settlements, accretion and conversion | (2,367 | ) | (622 | ) | (3,643 | ) | ||||||
Net gains (losses) on derivative financial instruments | 3,115 | (2,849 | ) | (8,304 | ) | |||||||
F-96
Table of Contents
F-97
Table of Contents
Note 18 — Interest-bearing Financial Liabilities. Each share of Series VI Convertible Preferred Stock is convertible at any time at the option of the holder into one share of PLDT’s common stock. On the date immediately following the seventh anniversary of the issue date of the Series VI Convertible Preferred Stock, the remaining outstanding shares under these series will be mandatorily converted into shares of PLDT’s common stock. For 30 days thereafter, the holders of these mandatorily converted shares of PLDT’s common stock have the option to sell such shares of PLDT’s common stock back to PLDT for US$36.132. On June 4, 2008, 336,779 shares of the Series VI Convertible Preferred Stock were converted to PLDT common stock. As at December 31, 2008 and 2007, the negative fair market value of these embedded call options amounted to Php1 million and Php231 million, respectively.
F-98
Table of Contents
December 31, 2007, outstanding forward foreign exchange sale contracts amounted to US$171 million with an average exchange rate of Php43.293. The ineffective portion of the loss in the fair value of these instruments recognized in the consolidated statement of income for the year ended December 31, 2008 amounted to Php117 million. The ineffective portion of the fair value of these instruments recognized in the consolidated statement of income for the year ended December 31, 2007 was not significant.
F-99
Table of Contents
F-100
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2008 | 2007 | |||||||||||||||
U.S. Dollar | Php(1) | U.S. Dollar | Php(2) | |||||||||||||
(in millions) | ||||||||||||||||
Noncurrent Financial Asset | ||||||||||||||||
Derivative financial assets | — | — | 1 | 59 | ||||||||||||
Current Financial Assets | ||||||||||||||||
Cash and cash equivalents | 101 | 4,794 | 93 | 3,853 | ||||||||||||
Short-term investments | 21 | 986 | 56 | 2,324 | ||||||||||||
Trade and other receivables | 207 | 9,880 | 227 | 9,400 | ||||||||||||
Derivative financial assets | 1 | 56 | 22 | 897 | ||||||||||||
Total current financial assets | 330 | 15,716 | 398 | 16,474 | ||||||||||||
Total Financial Assets | 330 | 15,716 | 399 | 16,533 | ||||||||||||
Noncurrent Financial Liabilities | ||||||||||||||||
Interest-bearing financial liabilities — net of current portion | 925 | 44,064 | 1,126 | 46,612 | ||||||||||||
Derivative financial liabilities | 37 | 1,761 | 187 | 7,741 | ||||||||||||
Total noncurrent financial liabilities | 962 | 45,825 | 1,313 | 54,353 | ||||||||||||
Current Financial Liabilities | ||||||||||||||||
Accounts payable | 143 | 6,820 | 160 | 6,614 | ||||||||||||
Accrued expenses and other current liabilities | 93 | 4,447 | 95 | 3,958 | ||||||||||||
Derivative financial liabilities | 2 | 87 | 6 | 242 | ||||||||||||
Current portion of interest-bearing financial liabilities | 301 | 14,331 | 187 | 7,748 | ||||||||||||
Total current financial liabilities | 539 | 25,685 | 448 | 18,562 | ||||||||||||
Total Financial Liabilities | 1,501 | 71,510 | 1,761 | 72,915 | ||||||||||||
(1) | The exchange rate used to translate the U.S. dollar amounts into Philippine peso was Php47.647 to US$1.00, the peso-dollar rate as quoted through the Philippine Dealing System as at December 31, 2008. | |
(2) | The exchange rate used to translate the U.S. dollar amounts into Philippine peso was Php41.411 to US$1.00, the peso-dollar rate as quoted through the Philippine Dealing System as at December 31, 2007. |
F-101
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Discount/ | ||||||||||||||||||||||||||||||||||||||||||||
In U.S. Dollars | Debt | |||||||||||||||||||||||||||||||||||||||||||
Issuance | Carrying | Fair Value | ||||||||||||||||||||||||||||||||||||||||||
Over 5 | Cost | Value | In U.S. | |||||||||||||||||||||||||||||||||||||||||
Below 1 year | 1-2 years | 2-3 years | 3-5 years | years | Total | In Php | In Php | In Php | Dollar | In Php | ||||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||
Cash in Bank | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 26 | — | — | — | — | 26 | 1,258 | — | 1,258 | 26 | 1,258 | |||||||||||||||||||||||||||||||||
Interest rate | 0.10% to 4.50% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 56 | — | — | — | — | 56 | 2,682 | — | 2,682 | 56 | 2,682 | |||||||||||||||||||||||||||||||||
Interest rate | 0.25% to 3.50% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Temporary Cash Investments | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 330 | — | — | — | — | 330 | 15,714 | — | 15,714 | 330 | 15,714 | |||||||||||||||||||||||||||||||||
Interest rate | 0.30% to 7.50% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 290 | — | — | — | — | 290 | 13,806 | — | 13,806 | 290 | 13,806 | |||||||||||||||||||||||||||||||||
Interest rate | 2% to 7.50% | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Short-term Investments | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 21 | — | — | — | — | 21 | 985 | — | 985 | 21 | 985 | |||||||||||||||||||||||||||||||||
Interest rate | 3.29 | % | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Philippine Peso | 119 | — | — | — | — | 119 | 5,685 | — | 5,685 | 119 | 5,685 | |||||||||||||||||||||||||||||||||
Interest rate | 6.69 | % | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Investment in Debt Securities | ||||||||||||||||||||||||||||||||||||||||||||
Philippine Peso | 35 | — | 4 | 9 | — | 48 | 2,291 | — | 2,291 | 48 | 2,285 | |||||||||||||||||||||||||||||||||
Interest Rate | 6.3194 | % | — | 6.125 | % | 6.875% to 7% | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
877 | — | 4 | 9 | — | 890 | 42,421 | — | 42,421 | 890 | 42,415 | ||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | ||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate | ||||||||||||||||||||||||||||||||||||||||||||
US$ Notes | 114 | — | — | 159 | 295 | 568 | 27,061 | 368 | 26,693 | 559 | 26,607 | |||||||||||||||||||||||||||||||||
Interest rate | 10.50 | % | — | — | 11.375 | % | 8.35 | % | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
US$ Fixed Loans | 22 | 50 | 11 | 3 | 280 | 366 | 17,444 | 4,046 | 13,398 | 252 | 12,030 | |||||||||||||||||||||||||||||||||
Interest rate | 4.49% to 6% | 3.79% to 4.70% | 3.79% to 4.70% | 3.79 | % | 2.25 | % | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Philippine Peso | — | 3 | 1 | 182 | 33 | 219 | 10,420 | 79 | 10,341 | 209 | 9,955 | |||||||||||||||||||||||||||||||||
Interest rate | — | 6.50% to 8.4346% | 6.50% to 8.4346% | 5.625% to 8.4346% | 6.125% to 6.50% | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Variable Rate | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 13 | 215 | 59 | 77 | — | 364 | 17,339 | 67 | 17,272 | 363 | 17,272 | |||||||||||||||||||||||||||||||||
Interest rate | US$LIBOR + 1.75% | US$LIBOR + 0.42% | US$LIBOR + 0.42% | US$LIBOR + 0.42% | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
to 2.75% | to 2.50% | to 0.815% | to 0.75% | |||||||||||||||||||||||||||||||||||||||||
Philippine Peso | — | 47 | 32 | 40 | — | 119 | 5,670 | 16 | 5,654 | 119 | 5,653 | |||||||||||||||||||||||||||||||||
Interest rate | — | MART1 + 0.75% to | MART1 + 0.75%; PDST | PDST – F 1.0% - | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
5.70%; | – F 1.0% - 1.50 | % | 1.50 | % | ||||||||||||||||||||||||||||||||||||||||
PDST – F 1.0% - | ||||||||||||||||||||||||||||||||||||||||||||
1.50 | % | |||||||||||||||||||||||||||||||||||||||||||
149 | 315 | 103 | 461 | 608 | 1,636 | 77,934 | 4,576 | 73,358 | 1,502 | 71,517 | ||||||||||||||||||||||||||||||||||
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Discount/ | |||||||||||||||||||||||||||||||||||||||||||||
In U.S. Dollars | Debt | ||||||||||||||||||||||||||||||||||||||||||||
Issuance | Carrying | Fair Value | |||||||||||||||||||||||||||||||||||||||||||
Over 5 | In U.S. | Cost | Value | In U.S. | |||||||||||||||||||||||||||||||||||||||||
Below 1 year | 1-2 years | 2-3 years | 3-5 years | years | Dollar | In Php | In Php | In Php | Dollar | In Php | |||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||||||
Cash in Bank | |||||||||||||||||||||||||||||||||||||||||||||
U.S. dollar | 30 | — | — | — | — | 30 | 1,249 | — | 1,249 | 30 | 1,249 | ||||||||||||||||||||||||||||||||||
Interest rate | 0.22% to 4.40% | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Philippine Peso | 58 | — | — | — | — | 58 | 2,409 | — | 2,409 | 58 | 2,409 | ||||||||||||||||||||||||||||||||||
Interest rate | 0.25% to 4.25% | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Temporary Cash Investments | |||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 255 | — | — | — | — | 255 | 10,572 | — | 10,572 | 255 | 10,572 | ||||||||||||||||||||||||||||||||||
Interest rate | 2% to 5.25% | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Philippine Peso | 71 | — | — | — | — | 71 | 2,931 | — | 2,931 | 71 | 2,931 | ||||||||||||||||||||||||||||||||||
Interest rate | 1.75% to 6.05% | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Short-term Investments | |||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 56 | — | — | — | — | 56 | 2,312 | — | 2,312 | 56 | 2,312 | ||||||||||||||||||||||||||||||||||
Interest rate | 7.65 | % | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 268 | — | — | — | — | 268 | 11,103 | — | 11,103 | 268 | 11,103 | ||||||||||||||||||||||||||||||||||
Interest rate | 6.06 | % | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Investment in Debt Securities | |||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | — | — | — | 7 | — | 7 | 273 | — | 273 | 7 | 283 | ||||||||||||||||||||||||||||||||||
Interest rate | — | — | — | 6.875 | % | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Philippine Peso | 27 | — | — | — | — | 27 | 1,115 | — | 1,115 | 27 | 1,115 | ||||||||||||||||||||||||||||||||||
Interest rate | 11.29 | % | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
765 | — | — | 7 | — | 772 | 31,964 | — | 31,964 | 772 | 31,974 | |||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | |||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate | |||||||||||||||||||||||||||||||||||||||||||||
US$ Notes | — | 136 | — | 250 | 300 | 686 | 28,403 | 387 | 28,016 | 770 | 31,901 | ||||||||||||||||||||||||||||||||||
Interest rate | — | 10.500 | % | — | 11.375 | % | 8.350 | % | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
US$ Fixed Loans | 55 | 46 | 23 | 9 | 280 | 413 | 17,123 | 4,016 | 13,107 | 342 | 14,078 | ||||||||||||||||||||||||||||||||||
4.49% to | |||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 8.9 | % | 4.49% to 6.0% | 4.515% to 4.7% | 4.700 | % | 2.250 | % | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Philippine Peso | — | — | — | 93 | 38 | 131 | 5,420 | 33 | 5,387 | 125 | 5,168 | ||||||||||||||||||||||||||||||||||
Interest rate | 7.090 | % | 6.500 | % | 6.500 | % | 5.625% to 6.50% | 6.125% to 6.50% | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Variable Rate | |||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar | 98 | 92 | 58 | 28 | — | 276 | 11,445 | 28 | 11,417 | 276 | 11,445 | ||||||||||||||||||||||||||||||||||
Interest rate | 0.05% to 2.75% over US$LIBOR | 0.05% to 2.75% over | 0.05% to 2.5% over | 0.75% to 0.815% | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
US$LIBOR | US$LIBOR | over US$LIBOR | |||||||||||||||||||||||||||||||||||||||||||
Philippine Peso | 14 | 14 | 13 | 13 | — | 54 | 2,228 | 8 | 2,220 | 54 | 2,227 | ||||||||||||||||||||||||||||||||||
Interest rate | MART1 + 0.75% to 5.70% | MART1 + 0.75% to | MART1 + 0.75% to | MART1 + 0.75% | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
5.70 | % | 5.70 | % | ||||||||||||||||||||||||||||||||||||||||||
167 | 288 | 94 | 393 | 618 | 1,560 | 64,619 | 4,472 | 60,147 | 1,567 | 64,819 | |||||||||||||||||||||||||||||||||||
Interest Rate Swap (fixed to floating) | |||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollar (US$31 million) | — | — | — | — | — | 3.5 | 144 | — | 144 | 3.5 | 144 | ||||||||||||||||||||||||||||||||||
Japanese Yen (JP¥3,759 million) | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Fixed Rate on US$ notional | 11.375 | % | 11.375 | % | 11.375 | % | 11.375 | % | 11.375 | % | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Variable Rate on JP¥ notional | 8.11% over LIBOR | 8.11% over LIBOR | 8.11% over LIBOR | 8.11% over LIBOR | 8.11% over LIBOR | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
— | — | — | — | — | 3.5 | 144 | — | 144 | 3.5 | 144 | |||||||||||||||||||||||||||||||||||
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F-104
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Gross Maximum Exposure(1) | Net Maximum Exposure(2) | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in million pesos) | ||||||||||||||||
Loans and receivables: | ||||||||||||||||
Advances and refundable deposits | 840 | 734 | 840 | 734 | ||||||||||||
Cash and cash equivalents | 33,684 | 17,447 | 33,621 | 17,406 | ||||||||||||
Short-term investments | 5,964 | 11,366 | 5,963 | 11,366 | ||||||||||||
Investment in debt securities | — | 1,115 | — | 1,115 | ||||||||||||
Foreign administrations | 5,477 | 4,324 | 5,477 | 4,324 | ||||||||||||
Retail subscribers | 3,904 | 3,861 | 3,877 | 3,861 | ||||||||||||
Dealers, agents and others | 2,960 | 917 | 2,958 | 917 | ||||||||||||
Corporate subscribers | 2,865 | 2,040 | 2,709 | 2,040 | ||||||||||||
Domestic carriers | 703 | 1,503 | 703 | 1,503 | ||||||||||||
Held-to-maturity investments: | ||||||||||||||||
Investment in debt securities | 2,098 | 273 | 2,098 | 273 | ||||||||||||
Designated at fair value through profit or loss: | ||||||||||||||||
Investment in debt securities | 193 | — | 193 | — | ||||||||||||
Available-for-sale financial assets | 131 | 143 | 131 | 143 | ||||||||||||
Held-for-trading: | ||||||||||||||||
Short-term investments | 706 | 2,049 | 706 | 2,049 | ||||||||||||
Foreign currency options | 38 | 59 | 38 | 59 | ||||||||||||
Forward foreign exchange contracts | 16 | 193 | 16 | 193 | ||||||||||||
Bifurcated embedded derivatives | 2 | 34 | 2 | 34 | ||||||||||||
Derivatives used for hedging: | ||||||||||||||||
Forward foreign exchange contracts | — | 670 | — | 670 | ||||||||||||
Total | 59,581 | 46,728 | 59,332 | 46,687 | ||||||||||||
(1) | Gross financial assets before taking into account any collateral held or other credit enhancements or offsetting arrangements. | |
(2) | Gross financial assets after taking into account any collateral held or other credit enhancements or offsetting arrangements or deposit insurance. |
Neither past due | ||||||||||||||||||||
nor impaired | Past due but | |||||||||||||||||||
Total | Class A(1) | Class B(2) | not impaired | Impaired | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||
Loans and receivables: | ||||||||||||||||||||
Advances and refundable deposits | 840 | 703 | 137 | — | — | |||||||||||||||
Cash and cash equivalents | 33,684 | 32,979 | 705 | — | — | |||||||||||||||
Short-term investments | 5,964 | 5,680 | 284 | — | — | |||||||||||||||
Corporate subscribers | 9,188 | 858 | 272 | 1,663 | 6,395 | |||||||||||||||
Retail subscribers | 8,993 | 1,457 | 550 | 1,897 | 5,089 | |||||||||||||||
Foreign administrations | 5,916 | 2,602 | 956 | 1,919 | 439 | |||||||||||||||
Dealers, agents and others | 3,271 | 2,114 | 444 | 402 | 311 | |||||||||||||||
Domestic carriers | 877 | 84 | 3 | 616 | 174 | |||||||||||||||
Held-to-maturity investments: | ||||||||||||||||||||
Investment in debt securities | 2,098 | 2,098 | — | — | — | |||||||||||||||
Designated at fair value through profit or loss: | ||||||||||||||||||||
Investment in debt securities | 193 | 193 | — | — | — | |||||||||||||||
Available-for-sale financial assets | 131 | 103 | 28 | — | — | |||||||||||||||
Held-for-trading(3): | ||||||||||||||||||||
Short-term investments | 706 | 706 | — | — | — | |||||||||||||||
Foreign currency options | 38 | 38 | — | — | — | |||||||||||||||
Forward foreign currency options | 16 | 16 | — | — | — | |||||||||||||||
Bifurcated embedded derivatives | 2 | 2 | — | — | — | |||||||||||||||
Total | 71,917 | 49,633 | 3,379 | 6,497 | 12,408 | |||||||||||||||
December 31, 2007 | ||||||||||||||||||||
Loans and receivables: | ||||||||||||||||||||
Advances and refundable deposits | 734 | 734 | — | — | — | |||||||||||||||
Cash and cash equivalents | 17,447 | 15,150 | 2,297 | — | — | |||||||||||||||
Short-term investments | 11,366 | 10,637 | 729 | — | — | |||||||||||||||
Investment in debt securities | 1,115 | 1,115 | — | — | — | |||||||||||||||
Retail subscribers | 8,179 | 1,389 | 637 | 1,823 | 4,330 | |||||||||||||||
Corporate subscribers | 7,915 | 641 | 187 | 1,166 | 5,921 | |||||||||||||||
Foreign administrations | 5,371 | 1,828 | 861 | 1,635 | 1,047 | |||||||||||||||
Dealers, agents and others | 2,151 | 983 | 315 | 196 | 657 | |||||||||||||||
Domestic carriers | 1,884 | 119 | 11 | 1,373 | 381 | |||||||||||||||
Held-to-maturity investments: | ||||||||||||||||||||
Investment in debt securities | 273 | 273 | — | — | — | |||||||||||||||
Available-for-sale financial assets | 143 | 113 | 30 | — | — |
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Neither past due | ||||||||||||||||||||
nor impaired | Past due but | |||||||||||||||||||
Total | Class A(1) | Class B(2) | not impaired | Impaired | ||||||||||||||||
(in million pesos) | ||||||||||||||||||||
Held-for-trading(3): | ||||||||||||||||||||
Short-term investments | 2,049 | 2,049 | — | — | — | |||||||||||||||
Forward foreign exchange contracts | 193 | 190 | 3 | — | — | |||||||||||||||
Foreign currency options | 59 | 59 | — | — | — | |||||||||||||||
Bifurcated embedded derivatives | 34 | 34 | — | — | — | |||||||||||||||
Derivatives used-for-hedging(3): | ||||||||||||||||||||
Forward foreign exchange contracts | 670 | 670 | — | — | — | |||||||||||||||
Total | 59,583 | 35,984 | 5,070 | 6,193 | 12,336 | |||||||||||||||
(1) | This includes low risk and good paying customer accounts with no history of account treatment for a defined period and no overdue accounts as at report date; and deposits or placements to counterparties with good credit rating or bank standing financial review; | |
(2) | This includes medium risk and average paying customer accounts with no overdue accounts as at report date, and new customer accounts for which sufficient credit history has not been established; and deposits or placements to counterparties not classified as Class A; and | |
(3) | Gross receivables from counterparties, before any offsetting arrangements. |
Neither past due | Past due but not impaired | |||||||||||||||||||||||
Total | nor impaired | 1-60 days | 61-90 days | Over 91 days | Impaired | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
DECEMBER 31, 2008 | ||||||||||||||||||||||||
Loans and receivables: | ||||||||||||||||||||||||
Advances and refundable deposits | 840 | 840 | — | — | — | — | ||||||||||||||||||
Cash and cash equivalents | 33,684 | 33,684 | — | — | — | — | ||||||||||||||||||
Short-term investments | 5,964 | 5,964 | — | — | — | — | ||||||||||||||||||
Corporate subscribers | 9,188 | 1,130 | 1,024 | 313 | 326 | 6,395 | ||||||||||||||||||
Retail subscribers | 8,993 | 2,007 | 1,338 | 266 | 293 | 5,089 | ||||||||||||||||||
Foreign administrations | 5,916 | 3,558 | 1,043 | 550 | 326 | 439 | ||||||||||||||||||
Dealers, agents and others | 3,271 | 2,558 | 48 | 9 | 345 | 311 | ||||||||||||||||||
Domestic carriers | 877 | 87 | 80 | 87 | 449 | 174 | ||||||||||||||||||
Held-to-maturity investments: | ||||||||||||||||||||||||
Investment in debt securities | 2,098 | 2,098 | — | — | — | — | ||||||||||||||||||
Designated at fair value through profit or loss: | ||||||||||||||||||||||||
Investment in debt securities | 193 | 193 | — | — | — | — | ||||||||||||||||||
Available-for-sale financial assets | 131 | 131 | — | — | — | — | ||||||||||||||||||
Held-for-trading: | ||||||||||||||||||||||||
Short-term investments | 706 | 706 | — | — | — | — | ||||||||||||||||||
Forward foreign currency options | 38 | 38 | — | — | — | — | ||||||||||||||||||
Forward foreign exchange contracts | 16 | 16 | — | — | — | — | ||||||||||||||||||
Bifurcated embedded derivatives | 2 | 2 | — | — | — | — | ||||||||||||||||||
71,917 | 53,012 | 3,533 | 1,225 | 1,739 | 12,408 | |||||||||||||||||||
DECEMBER 31, 2007 | ||||||||||||||||||||||||
Loans and receivables: | ||||||||||||||||||||||||
Advances and refundable deposits | 734 | 734 | — | — | — | — | ||||||||||||||||||
Cash and cash equivalents | 17,447 | 17,447 | — | — | — | — | ||||||||||||||||||
Short-term investments | 11,366 | 11,366 | — | — | — | — | ||||||||||||||||||
Investment in debt securities | 1,115 | 1,115 | — | — | — | — | ||||||||||||||||||
Retail subscribers | 8,179 | 2,026 | 1,513 | 231 | 79 | 4,330 | ||||||||||||||||||
Corporate subscribers | 7,915 | 828 | 715 | 133 | 318 | 5,921 | ||||||||||||||||||
Foreign administrations | 5,371 | 2,689 | 902 | 316 | 417 | 1,047 | ||||||||||||||||||
Dealers, agents and others | 2,151 | 1,298 | 30 | 4 | 162 | 657 | ||||||||||||||||||
Domestic carriers | 1,884 | 130 | 88 | 103 | 1,182 | 381 | ||||||||||||||||||
Held-to-maturity investments: | ||||||||||||||||||||||||
Investment in debt securities | 273 | 273 | — | — | — | — | ||||||||||||||||||
Available-for-sale financial assets | 143 | 143 | — | — | — | — | ||||||||||||||||||
Held-for-trading: | ||||||||||||||||||||||||
Short-term investments | 2,049 | 2,049 | — | — | — | — | ||||||||||||||||||
Forward foreign exchange contracts | 193 | 193 | — | — | — | — | ||||||||||||||||||
Foreign currency options | 59 | 59 | — | — | — | — | ||||||||||||||||||
Bifurcated embedded derivatives | 34 | 34 | — | — | — | — | ||||||||||||||||||
Derivatives used for hedging: | ||||||||||||||||||||||||
Forward foreign exchange contracts | 670 | 670 | — | — | — | — | ||||||||||||||||||
59,583 | 41,054 | 3,248 | 787 | 2,158 | 12,336 | |||||||||||||||||||
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2008 | 2007 | |||||||
(in million pesos) | ||||||||
Long-term debt, including current portion (Note 18) | 73,358 | 60,147 | ||||||
Notes payable (Note 18) | 553 | 493 | ||||||
Total debt | 73,911 | 60,640 | ||||||
Cash and cash equivalents (Note 12) | (33,684 | ) | (17,447 | ) | ||||
Short-term investments | (6,670 | ) | (13,415 | ) | ||||
Net debt | 33,557 | 29,778 | ||||||
Equity attributable to equity holders of PLDT under PFRS | 105,531 | 111,113 | ||||||
Net debt to equity ratio | 32 | % | 27 | % | ||||
27. | Cash Flow Information |
2008 | 2007 | 2006 | ||||||||||
(in million pesos) | ||||||||||||
Non-cash investing activity: | ||||||||||||
Fair value of future earn-out payments | 137 | 1,048 | — | |||||||||
Non-cash financing activities: | ||||||||||||
Conversion of preferred stock subject to mandatory redemption (Note 18) | 1,077 | 313 | 11,020 | |||||||||
Recognition of asset retirement obligations (Note 8) | 70 | 48 | 45 |
28. | Reclassification of Accounts |
2007 | 2006 | |||||||||||||||||||||||
As Released | Reclass | As Adjusted | As Released | Reclass | As Adjusted | |||||||||||||||||||
(in million pesos) | ||||||||||||||||||||||||
Revenues | 151,862 | (13,158 | ) | 138,704 | 139,724 | (12,216 | ) | 127,508 | ||||||||||||||||
Expenses | 93,781 | (10,194 | ) | 83,587 | 101,475 | (19,472 | ) | 82,003 | ||||||||||||||||
Other income – net | — | 2,964 | 2,964 | — | (7,256 | ) | (7,256 | ) |
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