COVER SHEET

1 6 7 4 SEC Registration Number M A I L A B R O A D C A S T I G C O M P A Y

(Companys Full Name) M B C C C P P a s a B u i l d l t i e y n g x , , S R o t x a a r s C i t u y l , e v a r d ,

C o m p y C i

B o

(Business Address: No. Street City/Town/Province) Mr. Eduardo Cordova (Contact Person) 1 2 3 1 1 Yr 0 1 7 A Month Day (Annual Meeting) 832-6149 (Company Telephone Number)

Month Day (Calendar Year)

(Form Type)

ot Applicable (Secondary License Type, If Applicable) ot Applicable Dept. Requiring this Doc. Amended Articles Number/Section Total Amount of Borrowings Total No. of Stockholders To be accomplished by SEC Personnel concerned Domestic Foreign

File Number

LCU

Document ID

Cashier

STAMPS Remarks: Please use BLACK ink for scanning purposes.

SEC FORM 17-A 2010

SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE (SRC) AND SECTION 141 OF CORPORATION CODE OF THE PHILIPPINES

1. December 31, 2010 For the calendar year ended 2. 1674 SEC Registration Number 3. 000-479-027 BIR Tax Identification Number 4. Manila Broadcasting Company Exact name of registrant as specified in its charter 5. Metro Manila Province, Country or other jurisdiction of incorporation or organization 6. (SEC Use Only) Industry Classification Code:

7. MBC Bldg., Star City, CCP Complex, Roxas Boulevard, Pasay City, M.M. Address of principal office 8. Tel. No. (0632) 832-6149; 832-6150 Registrants telephone number, including area code 9. FJE Bldg., 105 Esteban St., Legaspi Village, Makati City, M.M. Former address 10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding 402,682,990 shares-Debt P277,790,552

Title of Each Class Common P1.00 par value

11. Are any or all of these securities listed on the Philippine Stock Exchange. SEC FORM 17-A 2010

Yes

No.

If yes, state the name of such stock exchange and the classes of securities listed therein: Philippine Stock Exchange Common Shares

12. Check whether the registrant: a) has filed all reports required to be filed by section 17 of the SRC and SRC Rule 17 there under, and Sections 26 and 141 of the Corporation Code of the Philippines during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); Yes X No.

b) has been subject to such filing requirements for the past 90 days. Yes No. X

13. State the aggregate market value of the voting stock held by non-affiliates of the registrant. The aggregate market value of the voting stock held by non-affiliates consisting of 8,005,489 shares is P8,005,489 based on the last known transaction price at the exchange of P1.00 per share. APPLICABLE ONLY TO REGISTRANTS INVOLVED IN INSOLVENCY/SUSPENSION OF PAYMENTS PROCEEDINGS DURING THE PRECEDING FIVE YEARS: 14. Check whether the registrant has filed all documents and reports required to be filed by Section 11 of the RSA subsequent to the distribution of securities under a plan confirmed by a court or the SEC. Yes No. NA X

SEC FORM 17-A 2010

TABLE OF CONTENTS PART I BUSINESS AND GENERAL INFORMATION A. Business B. Properties C. Legal Proceedings D. Submission of Matters to a Vote of Security Holders PART II - OPERATIONAL AND FINANCIAL INFORMATION E. Market for Registrants Common Equity and Related Stockholder Matters F. Managements Discussion and Analysis or Plan of Operation PART III - CONTROL AND COMPENSATION INFORMATION G. Directors and Executive Officers of the Registrant H. Executive Compensation I. Employment Contract with an Executive Officer J. Security Ownership of Certain Beneficial Owners and Management K. Security Ownership of Management as of December 31, 2009 L. Changes in Control M. Certain Relationships and Related Transactions PART IV CORPORATE GOVERNANCE PART V EXHIBITS AND SCHEDULES

SEC FORM 17-A 2010

PART I BUSINESS AND GENERAL INFORMATION (A) Business (1) Business Development Over the years, radio has stood its ground to prove that it is the most powerful medium of communication. Given the archipelagic nature of the Philippine islands, radio continues to be an indispensable medium for information, entertainment and advertising; why not when it has the affordability, portability and mobility which other media do not have. To begin with, almost all Philippine households own at least one radio set. Radios are easily transferred from one section of the house to another. It travels with its listeners be they in their private cars or in Jeepneys, Taxis and FX. A few years back, however, the new millennium ushered in an un-chartered era for the media industry, and Manila Broadcasting Company (MBC or the Company), has taken bold moves to address the changing needs of the changing times. Today, MBC has gone beyond its usual role as a medium and has become a message itself in terms of the following: (a) Events MBC has expanded its operations to embrace both broadcasting and organizing special events. Our current business model provides advertisers with a combination of benefits - the traditional appeal of our AM and FM networks plus the high-impact exposure generated by special events. Aliwan Fiesta One of the most successful events, Aliwan Fiesta has celebrated its 8th year anniversary last April 2010. It started in 2003 when MBC, in collaboration with Star City and Aliw Theater, ventured to bring together in Manila the award-winning performers and performances from the most popular festivals all over the Philippines. As daunting as this task may have seemed at first, Aliwan Fiesta turned out to be a sterling success, drawing tens of thousands to the streets, making it the Philippines' grandest fiesta. Paskong Pinoy Paskong Pinoy started in 2007 highlighted by Himig ng Pasko Childrens Choir competition and Ilaw ng Pasko, a parol making competition. The events instant success led to a bigger Paskong Pinoy in 2008 adding an open category to Himig ng Pasko for academic institutions, churches, special interest groups, as well as companies or agencies in the public and private sectors. In 2010, MBC has again expanded its scope by turning the event into a nationwide competition which was participated by the best choral conductors and arrangers in the country. This 2010, the Quezon City

SEC FORM 17-A 2010

Performing Arts and St. Luis University Glee Club bagged the award for Childrens Choir and Open Category, respectively. Sea Sports Festival MBC and the City of Manila, in cooperation with the Philippine Coast Guard, launched in 2005 of what was then called Bankathon Festival. Comprising a Motorized banca competition and Dragon boat race, now called the Sea Sports Festival converge at the Baywalk Roxas Boulevard every March. During these recent years, MBC has also gone into producing and sponsoring concerts featuring top local artists and even international stars. On special occasions, the Companys FM stations would mount movie premiers while giving away tickets to loyal listeners. The Company also has tie ups with movie and recording outfits for promo tours, live performances, and fans days in malls. This way, MBC can reach its customers in several ways; on air when our customers listen to radio stations, on the streets where there are streamers and posters of the events, and in the newspapers and TV, when media cover these events. (b) Branding For Love Radio, it is Kailangan Pa Bang Immemorize Yan?, for YES-FM, it is Automatic Yan!, for EasyRock (formerly DWRK), it is Less Talk and just the Right Rock and for DZRH, it is One Nation, One Station. Indeed, these taglines invoke a personality, a character that forms a personal and emotional bond with listeners, so much so that loyalty is formed and is very hard to break. (c) Creative Content A far cry from the traditional produced ads, there is much now such a thing as creative content. This is when advertising messages are now casually embedded in announcers and DJs adlibs and in soap opera scripts. This renders the message more credible, more fun to listen to, and in so many ways than one, more effective. (d) Promotions Radio promos may be as old as time but they are given new twists nowadays. Most are tailor-made according to the specifications and needs of a particular advertiser. These promos give advertisers both the traditional reach of AM and FM stations; and the high-impact exposure generated by special events and promotions. (e) Improved Research

SEC FORM 17-A 2010

Major agencies and advertisers now are provided with the latest and most reliable data to help them buy into radio. The Kapisanan ng mga Brodkasters ng Pilipinas (KBP), of which MBC is an active member, bridges the information gap between advertisers and radio with the Market Readers and AC Nielsen studies. With the Association of Accredited Advertising Agencies (4As) and Philippine Association of National Advertisers (PANA), KBP has also reactivated the Radio Research Council (RRC) as the official radio research arm. With this, the radio industry can now be measured with a single, uniform yardstick. (f) Globalization Through the internet radio streaming, Filipinos all over the world are now able to listen to MBCs radio stations real time, thus adding additional venue for products and services that need to reach Filipinos and their families worldwide. It is a case of a world that has gone smaller, and we have radio largely to thank for. Looking back and moving forward, none of these ventures would be a success without the invaluable support of our partners, our advertisers. Much in the same way that the Companys business model is evolving, time-tested relationships with advertisers are also changing growing stronger and transcending the conventional boundaries of radio. (g) Acquisition of Station DWRK (now EasyRock) Manila Broadcasting Company marked another milestone in the history of Philippine radio through its acquisition of DWRK in October 2008 under a Memorandum of Agreement with ACWS-United Broadcasting Network Inc. and Exodus Broadcasting Company. Currently the top-rating niche station in Metro Manila, DWRKs entry into the MBC family -- already the home of the two highest-rating stations on the FM band -- is viewed as an even bigger boost to the networks over-all audience share, with aggregate advertising revenues set to propel to even higher levels. Armed with the same business foresight that has seen it through seven decades as a media conglomerate to reckon with, MBC now sets out to carve its niche among youthful A-B listeners who favor light rock music. DWRK, now popularly known as Easy Rock, presents the cream of adult contemporary music from the 70s, 80s, 90s, 2000s and 2010s. (h) RHTV As part of MBCs integrated media approach, seeing how radio has gone multiplatform in efforts to respond to the Filipino diaspora phenomenon, and thereby expanding both listenership and viewership, the longest running AM radio station in the country is now on television.

SEC FORM 17-A 2010

DZRH, the flagship station of MBC and considered the standard-bearer of broadcasting excellence in the Philippines, started its 24-hour broadcast on October 1, 2008 over Dream (Channel 10) and Cable Link (Channel 9). Through the agreement signed with various members of the Federation of International Cable TV Associations of the Philippines operating throughout the country, RHTV is now accessible to a nationwide audience. (2) Business of Issuer MBC is engaged in the radio broadcasting business. Its banner station is DZRH, the only nationwide, via satellite, AM station in the country. Love Radio, YES FM and EasyRock are the three top-rated FM networks being operated by the Company. These stations utilize an adult contemporary music format, which combines new chart-topping hits with familiar songs that are acknowledged as timeless favorites in order to attract listeners from virtually every age group and economic background. On the other hand, Hot-FM is the Companys provincial pop format station. It commands a solid following among the youth market. Aksyon Radyo is
MBCs network composed of provincial AM stations. The company also operates Radyo Natin, the largest network of community radio stations in the country with over 100 small FM stations throughout the archipelago.

MBC engages the services of various local and foreign suppliers in the maintenance and upgrade of its existing stations and for its new stations. Its regular suppliers include Energy Onix Broadcast Equipment, Broadcast World Phils. System, Inc., Broadcast Electronics, Inc., Binariang Satellite of Malaysia, Shanghai Teng Da Broadcasting Equipment Co., Ltd., Array Solution, B & F Foto Electronics & Spin Electronics. MBC is the largest radio network in the country. Its principal competitors include Bombo Radyo, Radio Mindanao Network, GMA, NBC, the Vera Group, and ABS/CBN. MBC and its competitors are all engaged in the sale of radio airtime for advertising. MBC boasts of top-rated stations in almost all areas of the country because of its good program format, talented broadcasters and state-of-the-art equipment. MBC generates sales through advertising that accounts for more than 99% of the corporate revenue. It has a regular team of sales executives handling direct placements from advertisers and/or coordinates with advertising agencies with regard to their advertisement placements for their respective clients. In view of its leadership in size, MBC is capable of offering to clients an effective advertising package at a lower cost. Big networks such as MBC can be expected to bring in more advertising revenues, because it can market its stations more effectively. By packaging the stations, MBC can lump stations with low listenership level in some areas with stations of high listenership in other areas. The Company now has six programming formats, namely DZRH and Aksyon Radyo stations, Love Radio, Yes-FM, Easy Rock, Hot-FM and Radyo Natin, which represent about 35%, 37%, 10%, 7%,5% and 6% of the total broadcasting fees in 2010. The SEC FORM 17-A 2010

Company operates nationwide with one AM and three FM stations in Metro Manila and 10 Aksyon Radyo, 19 Love Radio, 5 Yes-FM, 4 Hot-FM, 9 Easy Rock and over a hundred Radyo Natin stations in the provinces.

(a) Transactions with and/or dependence on related parties Please refer to note 13 of the 2010 notes to audited financial statements. (b) Patents, trademarks, licenses, franchises, concessions, royalty MBC is a grantee of a congressional franchise to operate and own radio and TV stations in the country for a period of 25 years that was granted in 1994. For its operations, MBC is required to secure from the National Telecommunications Commission (NTC) appropriate permits and licenses for its stations and any frequency in the TV or radio spectrum. (c) Effect of existing or probable governmental regulations on the business There are no new or probable governmental regulations that might have a material adverse effect on the business. (d) Estimate of the amounts spent for research and development activities (3 yrs.) The Company is not engaged in research and development-intensive business. (e) Costs and effect of compliance with environmental laws Whenever required, the Company applies for and secures proper permits, clearances or exemptions from the Department of Environment and Natural Resources, Department of Health, Air Transportation Office, and other regulatory agencies, for the installation and operation of proposed broadcast stations nationwide. (f) Number of Employees and CBA, if any The company has 59 employees as of December 31, 2010 and anticipates no material change within the ensuing twelve months. Fifty six (56) employees are under the operations department of the Company while the remaining four (3) are doing administrative functions. The Company has no Collective Bargaining Agreement (CBA) with its employees. The Companys employees are not on strike, nor have been in the past three years, nor threatening to go on strike. MBC has or will have no material supplemental benefits or incentive arrangements for its employees. (g) Other Matters

SEC FORM 17-A 2010

There were no known major risks involved in each of the businesses of the Company.

(B) Properties Broadcast operations in Manila are principally conducted in the CCP Complex located at Roxas Boulevard, Pasay City. This also houses the transmitter tower and other high-cost broadcast facilities and equipment of the Company. The various stations of MBC are located in the key cities/towns of the Philippines and are standing on leased sites. Except for the transmitter sites located in Malanday, Polo, Bulacan, Ortigas Center in Pasig City, Sto. Tomas, Laoag, Barangay Lahug, Cebu City, Matina Hills, Davao City, and Palo Leyte, the rest of the transmitter sites are also leased. The above properties are in good condition and have no mortgage or lien. The carrying values of property and equipment, investments and other assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Please see note 2 on the audited financial statements for the policy on impairment of non-financial assets. (C) Legal proceedings Most of the legal proceedings involving MBC are related to its various applications pending with NTC involving upgrade of transmitter power and change of location. It is also a defendant/respondent in various legal actions arising in the ordinary course of business. However, any ultimate liability, if any, resulting from these matters will not have a material effect on the Companys financial position and results of operations. (D) Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the calendar year covered by this report. PART II - OPERATIONAL AND FINANCIAL INFORMATION (E) Market for Registrants Common Equity and Related Stockholder Matters MBC shares are traded in the Philippine Stock Exchange. The shares are not actively traded in the market. The last known transaction of MBC shares was last 2008 at P1.00 per share involving 551,819 shares. There have been no known recent sales of unregistered securities of the Company. (1) Dividends

SEC FORM 17-A 2010

There are no existing restrictions that limit the ability to declare cash dividends on the common stock. The following are the dividend declarations for the last three years:

Amount in Pesos P0.0625 = 0.0625 0.0625

Cash Dividends (per share) Declaration Date Record Date Nov. 19, 2010 Nov. 19, 2009 Dec. 11, 2008 Dec. 9, 2010 Dec. 15, 2009 Jan. 7, 2009

Payment Date Dec. 23, 2010 Dec. 29, 2009 Jan. 31, 2009

(2) Top 20 Stockholders NO. OF SHARES 139,558,774 120,000,000 69,910,993 50,000,000 10,000,000 5,000,000 1,167,996 659,892 632,549 627,254 553,368 447,961 363,592 129,201 122,338 121,149 121,149 114,719 105,370 105,370

NAME OF STOCKHOLDER 1 Elizalde Holdings Corporation 2 Elizalde land, Inc. Romulo, Mabanta, Buenaventura, Sayoc & 3 Delos Angeles 4 Cebu Broadcasting Company 5 Sunshine Inns, Inc. 6 Philippine Broadcasting Company 7 PCD NOMINEE 8 Tansengco Uy & Co., Inc. 9 Estate Of Allen Cham 10 Myron C. Papa, SA of Estate of Angela Butte 11 Luis M. Alberto &/or Manuel C. Alberto 12 L.V.N. Pictures, Inc. 13 A. &/or J.O. Del Rosario 14 Ruperto S. Nicdao, Jr. 15 Ernestina U. De Garcia 16 Luis G. Ablaza 17 Consuelo Fajardo 18 Joaquina Tirona 19 Beatriz Hidalgo De Miranda 20 Agapito D. Balagtas (F) Managements Discussion and Analysis or Plan of Operation 2010 vs 2009 (1) Results Of Operations

%AGE 34.65% 29.79% 17.36% 12.41% 2.48% 1.24% 0.29% 0.16% 0.16% 0.16% 0.14% 0.11% 0.09% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03%

SEC FORM 17-A 2010

The Company posted revenue of P833.4 million, 25.95% higher than its revenue last year as a result of the strong ratings of both the AM and FM stations and also due to advertisement spending by political candidates in line with their election campaign. On the other hand, Cost and operating expenses increased only by 15.12% or P88.3 million as compared to last year. Interest expense decreased by P5.0 Million or 57.09%mainly due to payment of loan during the year. The rental income which slightly decreased by P0.2 million from P8.7 million in 2009 to P8.5 million in 2010 represents revenue derived from the investment properties being leased to employees and third parties. Interest income increased by P.9 million or 226.64% from P.4 million in 2009 to P1.3 million in 2010 mainly due to additional investment placement on money market during the year. As an overall result, the Company registered a net income of P117.5 million in 2010, an increase of P63.2 million or 116.27% from P54.3 million in 2009. (2) Financial Condition and Changes In Financial Condition MBC is not having or does not anticipate having, within the next 12 months, any cash flow or liquidity problems; neither is it in default or in breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments; nor a significant amount of the registrants trade payables have not been paid within the stated trade terms. (3) Causes for Material Changes from Period to Period (5%) (a) Cash and cash equivalents increased by P48.0 million or 95.77% from P50.1 = million in 2009 to P98.1 million in 2010 mainly due to improved cash flows from operating activities. (b) Due from affiliates represents interest-free advances to Elizalde Holdings Corporation, an affiliate under common control with the Company. There was a net increase on this account in the amount of P22.5 million. Please see note 13 of the 2010 audited financial statements. (c) Prepaid expenses and other current assets increased by P6.4 million or 1,238.2% mainly due to input tax on capital goods. (d) Property and Equipment at cost decreased by P22.4 million mainly due to depreciation while Property and Equipment at revalued amount remained constant. (e) Investment properties amounting to P81.3 Million as of December 31, 2010, represents the net balance on the acquisition of land and construction of building in 2005 intended for future use of the Company. The said property is currently being leased out on a yearly basis to generate revenue in order to sustain its maintenance costs. The decrease of P8.1 Million or 9.0% represents depreciation charges during the year. (f) Intangible assets arise from the Companys acquisition of DWRK which became effective on October 4, 2008. This is composed of frequency and intellectual property rights with net book values of P127.0 million and P1.5 million, SEC FORM 17-A 2010

(g) (h)

(i) (j) (k) (l)

respectively, as of December 31, 2010. Please see Note 10 of the 2010 audited financial statements. The decrease of P13.8 million or 10% represents amortization costs during the year. The Notes payable of P105 million was fully paid during the year. There was a net increase of P21.6 million or 11.9% in Accounts payable and accrued expenses mainly due to advance payments made by various advertisers for their 2011 advertisements. Dividend payable increased by P0.4 million or 26.3% mainly due to unclaimed dividends declared during the year. Talent fees and commissions payable increased by P11.7 million or 72.1% mainly due to increased placement ofclient-initiated promos during the year. Income tax payable increased by P10.8 million or 87.0% mainly due to higher income before income tax. Accrued retirement benefits decreased by P1.2 million or 10.3% mainly due to the additional cash contribution to the Retirement Fund during the year.

Key Financial Indicators 2010 1. Return on Sales (ROS) Net Income Divide by: Sales ROS 2009

117,528,855 54,343,557 833,380,988 661,673,035 14.10% 8.21%

2. Earnings Per Share (EPS) Net Income 117,528,855 54,343,557 Divide by: No. of Shares Outstanding 402,682,990 402,682,990 EPS 0.292 0.135 3. Current Ratio Current Assets Divide by: Current Liabilities Current Ratio 4. Debt-Equity Ratio Total Liabilities Total Stockholders Equity Debt-Equity Ratio 5. Book Value Per Share Total Stockholders Equity Divide by: No.of Shares Outstanding Book Value Per Share (4) Discussion on Key Performance Indicators

470,379,960 390,975,308 255,482,571 316,024,132 1.84 1.24

277,790,552 339,191,121 682,124,951 589,793,967 0.407 0.575

682,124,951 589,793,967 402,682,990 402,682,990 1.694 1.465

SEC FORM 17-A 2010

(a) ROS increased from 8.21% to 14.10%. This is an indication of a favorable trend because the net income has increased both peso and percentage-wise in relation to sales. (b) The EPS increased by P0.157 per share because of the increase in net income with the total number of outstanding shares remaining constant. (c) Current ratio increased from 1.24 to 1.84 mainly due to higher cash and cash equivalents which was augmented by the revenue during the year. (d) The debt-equity ratio was down 0.407: 1 from 0.575: 1 mainly due to the bank loans paid and higher net income during the year. (e) The book value per share increased from P1.465 to P1.694 mainly due to net income incurred during the year. (5) Plan Of Operation Responding to the challenge of staying on top, MBC has once again set a lineup of events that will surely provide maximum value for advertisers and the listening public. First is the Manila Bay Seasports Festival which was held last March 12-13 where an elite roster of participants was invited to join the event. Organized by Manila Broadcasting Company and the City of Pasay, in cooperation with the Philippine Coast Guard, this years seasports festival featured mixed team championships for the Dragon Boat Race, stock and formula races in the motorized banca competition. Converging along Roxas Boulevards Baywalk, water enthusiasts and hobbyists cheered on the participants in these popular spectator sports. - The most successful event of the company, the Aliwan Fiesta, scheduled on April 14-16, 2011 is set to unfold once again and bring the best, biggest, loudest and the most colorful fiestas from all over the Philippines to Manila. Now on its 9th year, the festival will again showcase the dance competition, where the contingents present fabulously choreographed routines in full costumed glory. The three other categories of the event were the Float completion, Reyna ng Aliwan and the Photo Competition. - On July 17, 2011, MBC will hold the first-ever Manila Bay Clean-Up Fun Run to put in focus a sustainable approach to cleaning and protecting marine and costal resources in the area. - MBC National Choral Competition which will take place in December 2011 also promises to bring highly acclaimed contestants not only from Metro Manila but all over the country Aside from these grand events, MBC will also produce and sponsor shows and events and mount movie premiers while giving away tickets to loyal listeners. There will also be a live telecast at Aliw Theater of the much awaited boxing fight between our very own Manny Pacquiao and Shane Mosley which will be held on May 7, 2011. The Company also plans to tie up with movie and recording outfits for promo tours, live performances, and fans days in malls. There are also several promos in the pipeline, like the yearly Bagong Taon Bagong Milyon and other client initiated promos that promise to be a big hit among radio listeners. -

SEC FORM 17-A 2010

The Company also plans to earmark P50.0 million capital expenditure for its various projects, namely; RHTV broadcast expansion over various cable and TV channels, upgrading of transmitters of Love Radio Manila and Yes-FM Manila stations, leasehold improvement at Head Office, audio and video streaming over the internet, improvement of existing stations equipment and facilities nationwide and upgrading of Radyo Natin stations to at least 500 watt-power. This will be funded by cash flows from operating activities. (6) Other Disclosure Matters (a) There are no seasonal aspects that had a material effect on the financial condition or results of operations. (b) There are no unusual items affecting assets, liabilities, equity, net income, or cash flows. (c) There are no changes in estimates of amounts reported in prior interim periods of the current financial year or in estimates of amounts reported in prior financial years. (d) There are no material events subsequent to the end of the accounting period that have not been reflected in the financial statements for the period. (e) There are no changes in the composition of the issuer during the accounting period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinuing operations. (f) There are no changes in contingent liabilities or contingent assets since the last annual balance sheet date. (g) There are no material contingencies and any events or transactions that are material to the understanding of the current interim period. (h) There are no known trends, demands, commitments, events or uncertainties that will have a material impact on the Companys liquidity. (i) There are no known trends, events or uncertainties that had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. (j) There are no significant elements of income or loss that did not arise from the companys continuing operations; (k) There are no seasonal aspects that had a material effect on the financial condition or results of operations. (l) There are no known events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation. (m) There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons created during the reporting period. (n) There are no businesses or geographical segments for which information is not reported to the Board of Directors (BOD) and chief executive officer. (o) The pricing of inter-segment transfers was based on cost at the time of transaction. (p) There were no changes in accounting policies adopted for segment reporting that have a material effect on segment information. SEC FORM 17-A 2010

(q) There were no changes in and disagreements with Accountants and financial disclosures. (7) Other Disclosure Requirements Per Annex 68.1 M Paragraph 7e of Rule 68.1 (a) Marketable Securities The aggregate cost or market value of short-term investments constitutes less than 10% of total assets as of December 31, 2010. (b) There were no amounts receivable of more than P100,000.00 or one percent of total assets from Directors, Officers, employees, Related Parties, and Principal Stockholders. (c) The available-for-sale financial assets of P26,099,910 in the related balance sheet does not exceed five percent of total assets and have no material changes in the information required to be filed from that last previously reported. (d) The due from affiliates of P41.3 million in the related balance sheet does not exceed five percent of total assets and have no material changes in the information required to be filed from that last previously reported. (e) Intangible Assets-Other Assets Please refer to note 10, pages 19-20 of the audited FS. (f) Long-term Debt No balances as of December 31, 2010. (g) Indebtedness to Related Parties No balances as of December 31, 2010. (h) Guarantees of Securities of Other Issuers Not applicable. (i) Capital Stock there were no significant changes since the date of the last balance sheet filed.

Title of Issue umber of Shares Authorized umber of Shares Issued and Outstanding umber of Shares Reserved for Options, Warrants, Conversion and Other Rights umber of Shares Held by Related Parties Directors, Officers and Employees Others 2009 vs 2008 (1) Results Of Operations SEC FORM 17-A 2010

Common Shares - 1,000,000,000 shares - 402,682,990 shares - IL - 394,469,767 shares - 219,844 shares - 7,993,195 shares

The Company posted revenue of P661.7 million, 22.7% higher than its revenue last year as a result of the strong ratings of both the AM and FM stations of the company. On the other hand, Cost and operating expenses increased only by 15.6% or P78.9 million as compared to last year. Interest expense increased by P1.7 Million or 23.2%, mainly due to higher average loan balance outstanding as of December 31, 2009. The rental income which slightly decreased by P0.3 million from P9.0 million in 2008 to P8.7 million in 2009 represents revenue derived from the investment properties being leased to employees and third parties. Interest income decreased by P1.3 million or 77.2% from P1.7 million in 2008 to P0.4 million in 2009, this is mainly due to termination of investment on money market placement during the year. As an overall result, the Company registered a net income of P54.3 million in 2009, an increase of P33.7 million or 163.9% from P20.6 million in 2008. (2) Financial Condition and Changes In Financial Condition MBC is not having or does not anticipate having, within the next 12 months, any cash flow or liquidity problems; neither is it in default or in breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments; nor a significant amount of the registrants trade payables have not been paid within the stated trade terms. (3) Causes for Material Changes from Period to Period (5%) (a) Cash and cash equivalents decreased by P17.4 million or 25.7% from P67.5 = million in 2008 to P50.1 million in 2009 mainly due to payment of notes payable and dividends. (b) Receivables increased by P82.7 million or 36.2% which is attributable to the increased revenue. (c) Due to and from affiliates represent interest-free advances to and from its affiliates. There was a net decrease on this account in the amount of P21.0 million. Please see note 13 of the 2009 audited financial statements. (d) Prepaid expenses and other current assets decreased by P0.8 million or 60.8% as a result of a rigorous drive on collecting certificates on creditable withholding tax. (e) Property and Equipment at cost decreased by P29.0 million mainly due to depreciation while Property and Equipment at revalued amount increased by P53.8 million or 78.7% as as a result of the increase in market value of land an outcome of the valuation conducted by an independent appraisal company as of Dec. 31, 2009. (f) Investment properties amounting to P89.4 Million as of December 31, 2009, represents the net balance on the acquisition of land and construction of building in 2005 intended for future use of the Company. The said property is currently being leased out on a yearly basis to generate revenue in order to sustain its maintenance costs. The decrease of P8.1 Million or 8.3% represents depreciation charges during the year. SEC FORM 17-A 2010

(g) Intangible assets arse from the Companys acquisition of DWRK which became effective on October 4, 2008. This is composed of frequency and intellectual property rights with net book values of P138.8 million and P3.8 million, respectively, as of December 31, 2009. Please see Note 10 of the 2009 audited financial statements. (h) There was a net deferred tax liability mainly due to tax effect of the appraisal increase in land. Please see note 18 of 2009 audited financial statements for the components of deferred tax liability. (i) Other noncurrent assets decreased by P3.7 million or 17.2%, mainly due to the amortization of input tax attributable to purchase of DWRK. (j) Net payments of bank loans during the year 2009 amounted to P42.0 million. (k) Dividend payable decreased by P8.4 million or 85.8% mainly due to payments of dividends declared in previous years. (l) Talent fees and commissions payable increased by P6.9 million or 74.2% mainly due to more client-initiated promos. (m) Income tax payable increased by P10.4 million or 521.2% mainly due to higher net income from operations. (n) Accrued retirement benefits increased by P3.7 million or 44.8% mainly due to the increase in unfunded portion of retirement benefits cost. (o) Reserve for fluctuation in available-for-sale financial assets increased by P0.01 million due to fair value adjustment of Celebrity Sports Plaza Club Shares. Key Financial Indicators 2009 1. Return on Sales (ROS) Net Income Divide by: Sales ROS 2008

54,343,557 20,594,779 661,673,035 539,058,747 8.21% 3.82%

2. Earnings Per Share (EPS) Net Income 54,343,557 20,594,779 Divide by: No. of Shares Outstanding 402,682,990 402,682,990 EPS 0.135 0.051 3. Current Ratio Current Assets Divide by: Current Liabilities Current Ratio 4. Debt-Equity Ratio Total Liabilities Total Stockholders Equity Debt-Equity Ratio 5. Book Value Per Share Total Stockholders Equity Divide by: No.of Shares Outstanding Book Value Per Share SEC FORM 17-A 2010

390,975,308 347,892,214 316,024,132 359,018,743 1.24 0.969

339,191,121 367,188,634 589,793,967 522,945,598 0.575 0.702

589,793,967 522,945,598 402,682,990 402,682,990 1.465 1.299

(4) Discussion on Key Performance Indicators (a) ROS increased from 3.82% to 8.21%. This is an indication of a favorable trend because the net income has increased both peso and percentage-wise in relation to sales. (b) The EPS increased by P0.084 per share because of the increase in net income with the total number of outstanding shares remaining constant. (c) Current ratio increased from 0.969 to 1.24 mainly due to higher trade receivables which was augmented by the revenue during the year. (d) The debt-equity ratio was down 0.575: 1 from 0.702: 1 mainly due to the bank loans paid and higher net income during the year. (e) The book value per share increased from P1.299 to P1.465 mainly due to net income and revaluation increment on land. (5) Plan Of Operation MBC is firm on its drive to keep the lead in the radio broadcasting arena. With its plan of streaming on-line through the internet all of its radio stations nationwide, MBC will certainly increase its share of the market here and abroad. Once again, the Company has set a lineup of events that will undoubtedly excite the crowd - First was the Seasports festival where MBC, in collaboration with the City of Pasay and Philippine Coast Guard featured a two-day event on March 20 and 21, 2010 with stock and formula races comprising the motorized banca competitions. While the bangkeros from all over the country pit their skills in this show of seafaring brains and brawn, water enthusiasts and hobbyists cheered. - The most successful event of the company, the Aliwan Fiesta, scheduled on April 22-24, 2010 is set to unfold once again and bring the best, biggest, loudest and the most colorful fiestas from all over the Philippines to Manila. Now on its 8th year, the festival will showcase the dance competition, where the contingents present fabulously choreographed routines in full costumed glory. The two three other categories of the event were the Float completion, Reyna ng Aliwan and the Photo Competition. - As May 10, 2010 approaches, MBC-DZRH has launched a comprehensive coverage of the entire process. Desisyon 2010 will not only give listeners detailed backgrounders on the different candidates but will also keep the voters informed on the automation procedures that will be enforced for the very first time. - MBC National Choral Competition which will take place in December 2010 also promises to bring highly acclaimed contestants not only from Metro Manila but all over the country. There will also be a Parol Making competition which seeks to reinterpret the Christmas lantern tradition by merging recycling techniques and folk craft. SEC FORM 17-A 2010

Aside from these grand events, MBC will also produce and sponsor shows and events and mount movie premiers while giving away tickets to loyal listeners. A live telecast at Aliw Theater of the much awaited boxing fight between our very own Manny Pacquiao and Joshua Clottey was held last March 14, 2010. The Company also plans to tie up with movie and recording outfits for promo tours, live performances, and fans days in malls. There are also several promos in the pipeline, like the yearly Bagong Taon Bagon Milyon and other client initiated promos that promises to be a big hit among radio listeners. On the financial side, MBC plans to reduce the balance of notes payable by at least P25.0 million. The Company also plans to earmark P50.0 million capital expenditure for its various projects, namely; TeleRadyo broadcast over various cable and TV channels, audio and video streaming over the internet, improvement of existing stations equipment and facilities nationwide and upgrading of Radyo Natin stations to at least 500 watt-power. This will be funded by cash flows from operating activities. (6) Other Disclosure Matters (a) There are no seasonal aspects that had a material effect on the financial condition or results of operations. (b) There are no unusual items affecting assets, liabilities, equity, net income, or cash flows. (c) There are no changes in estimates of amounts reported in prior interim periods of the current financial year or in estimates of amounts reported in prior financial years. (d) There are no material events subsequent to the end of the accounting period that have not been reflected in the financial statements for the period. (e) There are no changes in the composition of the issuer during the accounting period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinuing operations. (f) There are no changes in contingent liabilities or contingent assets since the last annual balance sheet date. (g) There are no material contingencies and any events or transactions that are material to the understanding of the current interim period. (h) There are no known trends, demands, commitments, events or uncertainties that will have a material impact on the Companys liquidity. (i) There are no known trends, events or uncertainties that had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. (j) There are no significant elements of income or loss that did not arise from the companys continuing operations; (k) There are no seasonal aspects that had a material effect on the financial condition or results of operations.

SEC FORM 17-A 2010

(l) There are no known events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation. (m) There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons created during the reporting period. (n) There are no businesses or geographical segments for which information is not reported to the Board of Directors (BOD) and chief executive officer. (o) The pricing of inter-segment transfers was based on cost at the time of transaction. (p) There were no changes in accounting policies adopted for segment reporting that have a material effect on segment information. (q) There were no changes in and disagreements with Accountants and financial disclosures. 7. There are no supplementary schedules (paragraph 7 (e) of SRC Rule 68.1); (a) Marketable Securities No balances as of December 31, 2009. (b) There were no amounts receivable of more than P100,000.00 or one percent of total assets from Directors, Officers, employees, Related Parties, and Principal Stockholders. (c) The available-for-sale financial assets of P26,099,910 in the related balance sheet does not exceed five percent of total assets and have no material changes in the information required to be filed from that last previously reported. (d) The due from affiliates of P18,810,458 in the related balance sheet does not exceed five percent of total assets and have no material changes in the information required to be filed from that last previously reported. (e) Intangible Assets-Other Assets Please refer to note 10, pages 23-24 of the audited FS. (f) Long-term Debt No balances as of December 31, 2009. (g) Indebtedness to Related Parties No balances as of December 31, 2009. (h) Guarantees of Securities of Other Issuers Not applicable. (i) Capital Stock there were no significant changes since the date of the last balance sheet filed. Title of Issue umber of Shares Authorized umber of Shares Issued and Outstanding umber of Shares Reserved for Options, Warrants, Conversion and Other Rights SEC FORM 17-A 2010 Common Shares - 1,000,000,000 shares - 402,682,990 shares - IL

- 394,469,767 shares umber of Shares Held by Related Parties Directors, Officers and Employees - 219,844 shares Others - 7,993,195 shares PART III CONTROL AND COMPENSATION INFORMATION (G) Directors and Executive Officers of the Registrant (1) Executive Officers (All Filipino Citizens)

Name Fred J. Elizalde Ruperto S. Nicdao, Jr. Julio P. Macuja II Eduardo G. Cordova Juan Manuel Elizalde Jose M. Taruc Irving A. Lisondra Robert A. Pua Ellen C. Fullido Carlea C. Miranda Jonathan E. Decena Elpidio Macalma Wilfredo Espinosa Jose Maria T. Parocco Atty. Rodinil D. Bugay -

Position Chairman of the Board President EVP Treasurer SVP CFO VP Operations VP DZRH VP Creative Services VP Controller/Compliance Officer VP HRD VP Treasury VP Radyo Natin AVP DZRH AVP FM Network Programming AVP Sales Asst. Corporate Secretary

(1) Directors (All Filipino Citizens)

Name Fred J. Elizalde Ruperto S. Nicdao, Jr. Eduardo G. Cordova Julio Manuel P. Macuja Juan Manuel Elizalde Jose M. Taruc Santiago Z. Ureta* George T. Goduco* Age 70 55 61 47 42 63 76 45 Term 1985 up to the present 1988 up to the present 1988 up to the present 1999 up to the present 1999 up to present 2001 up to present 2006 up to present 2003 up to present

*Independent Directors (2) Business Experience for the last Five (5) years: Fred J. Elizalde has been serving as Director/Chairman of the Company since 1985. He is also currently serving as Chairman/President of Philippine International Corporation (Philcite), Star Parks Corporation (Star City), Elizalde Holdings Corporation and Northern Capiz Agro-Industrial Development Corporation (Norcaic). He has also served as past Chairman/President of Asean SEC FORM 17-A 2010

Section, Asean-U.S. Business Council, Philippine Chamber of Commerce & Industry, Confederation of Asian Chambers of Commerce & Industry, etc. In 2005, he was appointed as member of the Boracay Eminent Persons Group. He graduated Magna Cum Laude from Harvard University with a degree of Bachelor of Arts Major in Social Relations. Ruperto S. Nicdao, Jr. is the current President of the Company. He has been serving as Director of the Company since 1988. He is also serving as Director of Philippine International Corporation, Star Parks Corporation, Elizalde Holdings Corporation and Cultural Center of the Philippines. He is the Vice-Chairman of KBP and a member of the Financial Executives Institute of the Philippines, Philippine Chamber of Commerce and Industry and the Makati Business Club. He obtained his Masters in Business Administration from Asian Institute of Management and his AB-Honors (Major in Math), Magna Cum Laude, from De La Salle College. Eduardo G. Cordova has been a Director of the company since 1988 and is currently the SVP-CFO of the Company and Elizalde Holdings Corporation. He is also Chairman/President of our affiliate Philippine Broadcasting Corporation. He is a member of the Philippine Institute of Certified Public Accountants (PICPA). He is a Certified Public Accountant and obtained his Masters in Business Administration, with honors, from University of St. La Salle and his bachelors degree in business administration from University of the East. Julio Manuel P. Macuja is currently the EVP/Treasurer and has been a Director of the company since he joined in 1999. He was formerly connected with BPI Treasury Group and Director of Ateneo Center for Social Policy and Public Affairs. He holds a MA (Econ.) in Development Studies from the University of Manchester, U.K. Juan Manuel Elizalde is currently the VP-Operations and has been connected with the Company since 1994 in various capacities. He holds an AB Mass Communication degree from Menlo College, Menlo Park, California, U.S.A. Jose M. Taruc has been with the Company since 1986. He is a multi-awarded broadcast professional and is currently the Station Manager with rank of Vice President of the Companys flagship station DZRH-AM. He is an accounting graduate of Jose Rizal College and was involved with other broadcast networks as reporter prior to joining the Company. Santiago Z. Ureta is an independent director. He is a double degree holder of Bachelor of Science in Mechanical Engineering, Magna Cum Laude, 1955 and Bachelor of Science in Electrical Engineering, 1956, from National University. He is presently Consultant, CADP Consultancy Services, Inc., President, Philippine Association of Sugar Refiners, Inc., Treasurer, Philippine Sugar Research Institute and Trustee, Sugar Master Plan Foundation. He was formerly President, Central Azucarera de la Carlota (a listed company), President, Philippine Sugar Millers Association, Inc. 1993 1995, Chairman, Philippine Sugar Technologists SEC FORM 17-A 2010

Association, Inc., President, Philippine Sugar Technologists Association, Inc., National Vice President, Philippine Society of Mechanical Engineers, 1976 and President, Negros Occ. Chapter, Philippine Society of Mechanical Engineers, 1974. George T. Goduco is an independent director. At present, he is the President of Healthlab Inc., a full service diagnostics laboratory and medical examination facility. He was EVP/COO of Star Parks Corporation in 2000-2002. He also served as Vice-President and Treasurer of the FJE Group of Companies in 1997-2000 and its Director for Corporate Planning in 1995 1997. He also served as Account Officer in Solidbank and Boston Bank from 1988-1991. He holds an MBA from the University of Bridgeport, Connecticut and a Bachelor of Science in Economics from the University of the Philippines. (3) Family Relationships Mr. Juan Manuel Elizalde, VP-Operations and Director, is the son of the Chairman/Director, Fred J. Elizalde. (4) Involvement of Directors and Officers in Certain Legal Proceedings None of the directors and officers was involved in the past five (5) years in any bankruptcy proceeding. Neither have they been convicted by final judgment in any criminal proceeding, or been subject to any order, judgment or decree of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting their involvement in any type of business nor found in action by any court or administrative bodies to have violated any law. The Company has no pending material legal proceedings for and against it. (5) Significant Employee There is no person who is not an executive officer but who is expected by the Company to make a significant contribution to the business. (H) Executive Compensation The aggregate compensation of the executives and directors of the issuer/Registrant is P6,500,000 both in 2010 and 2009, P6,349,548 in 2008, P5,929,641 in 2007, and P5,929,641 in 2006. There were no additional amounts paid for committee participation or special assignments. The key management compensation is as follows:

SEC FORM 17-A 2010

Name Fred J. Elizalde Chairman/CEO

Year

Salary

Bonus

Others

2006 2007 2008 2009 2010

5,538,708 5,538,708 6,000,262 6,500,000 6,500,000

0.00 0.00 0.00

390,933 390,933 349,286

(I) Employment Contract with an Executive Officer There is no employment contract executed by the company and the above-named executive officers. Neither is there any other arrangement or compensatory plan made between the Company and the named executive officers. (J) Security Ownership of Certain Beneficial Owners and Management Owners of at least 5% of the Companys securities as of 31 December 2010 were as follows: and Citizenship Title of Class Name and Address Amount of of Record/Beneficial Nature Owner and Ownership (R or B) Relationship with Issuer Common Elizalde Holdings Corporation*, 2nd Floor, MBC Bldg., CCP Complex, Roxas Boulevard, Pasay City, M.M. (major stockholder) Elizalde Land Inc.*, 2nd Floor, MBC Bldg., CCP Complex, Roxas Boulevard, Pasay City, M.M. (major stockholder) Romulo Mabanta Buenaventura Sayoc & delos Angeles Law Offices*, 30th Floor, Citibank Tower, 8741 Paseo de Roxas, Makati City, M.M. (Trust Fund for the Elizalde 139,558,774 R/B Filipino Percent

34.65%

120,000,000 R/B

Filipino

29.80%

69,910,993.25 R

Filipino

17.36%

SEC FORM 17-A 2010

Children) Cebu Broadcasting Company*, 2nd Floor, MBC Bldg., CCP Complex, Roxas Boulevard, Pasay City, M.M. (Affiliate Broadcast Company)

50,000,000 R/B

Filipino

12.42%

*Elizalde Holdings Corporation is owned by various trust funds that have executed voting trusts in favor of the Chairman, Fred J. Elizalde. Elizalde Land, Inc. and Cebu Broadcasting Company are 100% owned subsidiaries of Elizalde Holdings Corporation. Mr. Eduardo G. Cordova and Atty. Hadrian V. Arroyo (deceased) are the persons designated to exercise voting power over the shares of ELI and CBC respectively in the registrant. *The Romulo Mabanta, et al. Trust Fund is represented by its designated representative in the person of Atty. Reynaldo G. Geronimo. (K) Security Ownership of Management as of December 31, 2010 Title of Class Common Directors Ruperto S. Nicdao, Jr. Eduardo G. Cordova Juan M. Elizalde Jose M. Taruc Fred J. Elizalde Julio Manuel P. Macuja Santiago Z. Ureta George T. Goduco Title of Class Common Officers Fred J. Elizalde, Chairman Amount/Nature of Ownership (R/B) 129,201 (R/B) 12,779 (R/B) 1,000 (R/B) 1,000 (R/B) 94 (R/B) 36 (R/B) 36 (R/B) 1,000 (R/B) Amount/Nature of Ownership (R/B) 94 (R/B) Percent 0.03% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Percent 0.00% Citizenship Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Citizenship Filipino

Ruperto S. SEC FORM 17-A 2010

129,201 (R/B)

0.03%

Filipino

Nicdao, Jr., President Julio P. Macuja II, EVP Eduardo G. Cordova, SVPCFO Juan M. Elizalde, VP-Operations Jose M. Taruc, VP-DZRH Irving A. Lisondra VP-Creative Services Robert A. Pua, VP-Controller 36 (R/B) 0.00% Filipino

12,779 (R/B)

0.00%

Filipino

1,000 (R/B)

0.00%

Filipino

1,000 (R/B)

0.00%

Filipino

1,000 (R/B)

0.00%

Filipino

12,293 (R/B)

0.00%

Filipino

Carlea Miranda, VP-Treasury Jonathan E. Decena AVP Radyo Natin Elpidio Macalma AVP-DZRH Ellen C. Fullido, VP-HRD Wilfredo Espinosa, AVP FM Network Programming Jose Maria T. Parocco, AVP Sales

1,000 (R/B) 1,000 (R/B)

0.00% 0.00%

Filipino Filipino

1,000 (R/B)

0.00%

Filipino

36 (R/B)

0.00%

Filipino

0 (R/B)

0.00%

Filipino

11,294 (R/B)

0.00%

Filipino

All Directors and Officers as a Group (L) Changes in Control

171,733

.04%

There are no arrangements that may result in a change in control of the Company. SEC FORM 17-A 2010

(M) Certain Relationships and Related Transactions Refer to note 13 of 2010 notes to audited financial statements. PART IV CORPORATE GOVERNANCE The Company, through its Compliance Officer, evaluates the level of compliance of the BOD and top-level management with the Manual of Corporate Governance semi-annually. As of December 31, 2010, the members of the Audit, Nominating and Compensation Committees have been appointed and will be recommended for re-appointment once the new board is constituted. There were no deviations from the Companys Manual of Corporate Governance noted during the year 2010. The Company continues to strive to integrate the mandate of good corporate governance in its daily life. PART V EXHIBITS AND SCHEDULES Exhibits and Reports on SEC Form 17-A (A) Exhibits 1. Statement of Management Responsibility for the Financial Statements. 2. The audited financial statements ending 31 December 2010 are hereto attached and incorporated by reference. 3. Independent Auditors Report on Supplementary Schedules and Supplementary Schedule of Retained Earnings Available for Dividend Declaration. 4. Voting Trust Agreement Please see attached letter dated May 18, 2004 that formed part of the amendment of SEC form 17-A filed with SEC on May 25, 2004. (B) Reports on SEC Form 17-Q & 17-C The last quarterly report for Form 17-Q was for the quarter ending September 30, 2009. The last SEC Form 17-C was dated February 24, 2011 regarding the demise of Atty. Hadrian V. Arroyo, Vice-Chairman and Corporate Secretary.

SEC FORM 17-A 2010

Manila Broadcasting Company

Financial Statements December 31, 2010 and 2009 and Years Ended December 31, 2010, 2009 and 2008 and Independent Auditors Report

SyCip Gorres Velayo & Co.

COVER SHEET

1 6 7 4
SEC Registration Number

M A N I L A

B R O A D C A S T I N G

C O M P A N Y

(Companys Full Name)

M B C C C P

B u i

l d i n g , e x ,

S t a r R o x a s

C i

t y e v a r d

C o m p l C i

B o u l

P a s a y

t y

(Business Address: No. Street City/Town/Province)

Mr. Eduardo Cordova

(Contact Person)

832-6149
(Company Telephone Number)

1 2
Month

3 1
Day

A A F S
(Form Type)

Month

Day

(Calendar Year)

(Annual Meeting)

Not Applicable
(Secondary License Type, If Applicable)

Dept. Requiring this Doc.

Amended Articles Number/Section Total Amount of Borrowings

619
Total No. of Stockholders To be accomplished by SEC Personnel concerned Domestic Foreign

File Number

LCU

Document ID

Cashier

STAMPS Remarks: Please use BLACK ink for scanning purposes.

*SGVMC311591

SyCip Gorres Velayo & Co. 6760 Ayala Avenue 1226 Makati City Philippines Phone: (632) 891 0307 Fax: (632) 819 0872 www.sgv.com.ph BOA/PRC Reg. No. 0001 SEC Accreditation No. 0012-FR-2

INDEPENDENT AUDITORS REPORT

The Stockholders and the Board of Directors Manila Broadcasting Company MBC Building, Star City CCP Complex, Roxas Boulevard Pasay City
Report on the Financial Statements

We have audited the accompanying financial statements of Manila Broadcasting Company, which comprise the statements of financial position as at December 31, 2010 and 2009, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31, 2010, and a summary of significant accounting policies and other explanatory information. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

*SGVMC311591
A member firm of Ernst & Young Global Limited

MANILA BROADCASTING COMPANY STATEMENTS OF FINANCIAL POSITION

December 31 2010 ASSETS Current Assets Cash and cash equivalents (Note 5) Receivables - net (Note 6) Due from affiliates (Note 13) Materials and supplies - net of allowance for inventory obsolescence of P1,387,209 in 2010 and =1,550,325 = P in 2009 Prepaid expenses and other current assets Total Current Assets Noncurrent Assets Available-for-sale financial assets (Note 7) Property and equipment - net (Note 8) At cost At revalued amount Investment properties - net (Note 9) Intangible assets - net (Note 10) Goodwill (Note 10) Other noncurrent assets Total Noncurrent Assets TOTAL ASSETS LIABILITIES AND EQUITY Current Liabilities Notes payable (Note 11) Accounts payable and accrued expenses (Notes 12, 13 and 18) Dividends payable Talent fees and commissions payable Income tax payable Total Current Liabilities Noncurrent Liabilities Accrued retirement benefits (Note 18) Deferred income tax liabilities - net (Note 19) Total Noncurrent Liabilities Total Liabilities Equity Capital stock (Note 14) Additional paid-in capital Revaluation increment on land (Note 8) Reserve for fluctuation in available-for-sale financial assets (Note 7) Retained earnings (Note 15) Treasury stock (at cost) - 120,787 shares Total Equity TOTAL LIABILITIES AND EQUITY 2009

P98,066,938 = 313,361,245 41,283,182

10,793,789 6,874,806 470,379,960 26,069,910 79,732,301 122,201,600 81,294,243 128,463,904 38,016,206 13,757,379 489,535,543

= P50,092,872 311,370,382 18,810,458

10,187,848 513,748 390,975,308 26,099,910 102,117,223 122,201,600 89,362,896 142,215,856 38,016,206 17,996,089 538,009,780 P928,985,088 =

P959,915,503 =

P =
202,638,303 1,766,303 27,950,862 23,127,103 255,482,571 10,609,959 11,698,022 22,307,981 277,790,552 402,803,777 79,354 81,154,854 40,000 198,167,753 (120,787) 682,124,951 P959,915,503 =

= P105,000,000 181,020,870 1,398,253 16,239,025 12,365,984 316,024,132 11,827,439 11,339,550 23,166,989 339,191,121 402,803,777 79,354 81,154,854 70,000 105,806,769 (120,787) 589,793,967 P928,985,088 =

See accompanying Notes to Financial Statements.

*SGVMC311591

MANILA BROADCASTING COMPANY STATEMENTS OF COMPREHENSIVE INCOME

2010 REVENUE (Note 13) COST AND OPERATING EXPENSES (Notes 9, 13 and 16) OTHER INCOME (LOSS) Rental income (Note 9) Interest expense (Note 11) Interest income Other income (loss) - net INCOME BEFORE INCOME TAX PROVISION FOR INCOME TAX (Note 19) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Net changes in fair value of available-for-sale financial assets (Note 7) Increase in revaluation increment due to appraisal, net of deferred income tax (Note 8) TOTAL OTHER COMPREHENSIVE INCOME (LOSS) TOTAL COMPREHENSIVE INCOME Weighted Average Number of Shares Outstanding Basic/Diluted Earnings Per Share
See accompanying Notes to Financial Statements.

Years Ended December 31 2009 2008 = P661,673,035 (583,779,649) 8,701,439 (8,802,931) 387,897 208,101 78,387,892 24,044,335 54,343,557 =539,058,747 P (504,847,154) 8,985,094 (7,144,896) 1,701,705 (376,363) 37,377,133 16,782,354 20,594,779

P833,380,988 = (672,060,628) 8,503,695 (3,777,035) 1,267,010 561,484 167,875,514 50,346,659 117,528,855

(30,000) (30,000) P117,498,855 = 402,682,990 P0.29 =

10,000 37,662,487 37,672,487 = P92,016,044 402,682,990 =0.13 P

10,000 10,000 =20,604,779 P 402,682,990 =0.05 P

*SGVMC311591

MANILA BROADCASTING COMPANY STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008

Capital Stock (Note 14) BALANCES AT DECEMBER 31, 2007 Total comprehensive income Cash dividends, P0.06 per share = BALANCES AT DECEMBER 31, 2008 Total comprehensive income Cash dividends, P0.06 per share = BALANCES AT DECEMBER 31, 2009 Total comprehensive income (loss) Cash dividends, P0.06 per share = BALANCES AT DECEMBER 31, 2010 See accompanying Notes to Financial Statements. P402,803,777 = 402,803,777 402,803,777 P402,803,777 =

Additional Paid-in Capital P79,354 = 79,354 79,354 P79,354 =

Revaluation Increment on Land (Note 8) P43,492,367 = 43,492,367 37,662,487 81,154,854 P81,154,854 =

Reserve for Fluctuation in Available-forsale Financial Assets (Note 7) P50,000 = 10,000 60,000 10,000 70,000 (30,000) P40,000 =

Retained Earnings (Note 15) P81,174,127 = 20,594,779 (25,138,019) 76,630,887 54,343,557 (25,167,675) 105,806,769 117,528,855 (25,167,871) P198,167,753 =

Treasury Stock (P120,787) = (120,787) (120,787) (P120,787) =

Total P527,478,838 = 20,604,779 (25,138,019) 522,945,598 92,016,044 (25,167,675) 589,793,967 117,498,855 (25,167,871) P682,124,951 =

*SGVMC310250*

MANILA BROADCASTING COMPANY STATEMENTS OF CASH FLOWS

2010 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation and amortization (Note 16) Interest expense (Note 11) Movement in accrued retirement benefits (Note 18) Interest income Operating income before working capital changes Decrease (increase) in: Receivables Due from affiliates Materials and supplies Prepaid expenses and other current assets Increase (decrease) in: Accounts payable and accrued expenses Talent fees and commissions payable Due to affiliates Net cash flows generated from operations Income taxes paid, including final and creditable withholding tax Interest received Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (Note 8) Decrease (increase) in other noncurrent assets Acquisition of a business (Note 10) Net cash flows from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Payments of notes payable Interest paid Dividends paid Proceeds from notes payable Net cash flows from (used in) financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 5)
See accompanying Notes to Financial Statements.

Years Ended December 31 2009 2008 = P78,387,892 53,134,425 8,802,931 3,657,548 (387,897) 143,594,899 (82,756,822) (7,102,967) 449,132 797,946 (9,741,000) 6,916,012 52,157,200 (14,984,139) 410,647 37,583,708 = P37,377,133 44,540,569 7,144,896 (1,652,790) (1,701,705) 85,708,103 12,449,083 17,580,494 666,441 (94,467) 16,669,711 2,365,564 (12,143,366) 123,201,563 (14,955,896) 1,778,713 110,024,380

P167,875,514 =
50,425,931 3,777,035 (1,217,480) (1,267,010) 219,593,990 (1,990,863) (22,472,724) (605,941) (6,361,058) 21,744,525 11,711,837 221,619,766 (39,227,067) 1,267,010 183,659,709 (6,220,404) 4,238,710 (1,981,694) (105,000,000) (3,904,127) (24,799,822) (133,703,949) 47,974,066 50,092,872

(2,310,298) (11,710,063) 3,735,153 (1,188,974) (176,512,000) 1,424,855 (189,411,037) (42,000,000) (8,930,023) (5,436,848) (56,366,871) (17,358,308) 67,451,180 P50,092,872 = (63,000,000) (7,055,858) (4,185,450) 140,000,000 65,758,692 (13,627,965) 81,079,145 P67,451,180 =

P98,066,938 =

*SGVMC310250*

MANILA BROADCASTING COMPANY NOTES TO FINANCIAL STATEMENTS

1. Corporate Information Manila Broadcasting Company (the Company) was incorporated in the Philippines on September 30, 1947. The Company is primarily engaged in the business of radio broadcasting. The registered office address of the Company is MBC Building, Star City, CCP Complex, Roxas Boulevard, Pasay City. The financial statements were authorized for issuance by the Board of Directors (BOD) on April 4, 2011.

2. Summary of Significant Accounting and Financial Reporting Policies Basis of Preparation The financial statements of the Company have been prepared using the historical cost convention, except for available-for-sale (AFS) financial assets which have been measured at fair value, and land, which has been measured at appraised value. The financial statements are presented in Philippine peso, which is the Companys functional and presentation currency. Amounts are rounded to the nearest peso unless otherwise indicated. Statement of Compliance The financial statements have been prepared in compliance with Philippine Financial Reporting Standards (PFRS). Changes in Accounting Policies and Disclosures The accounting policies adopted are consistent with those of the previous financial year except for the following improvements to PFRSs 2009 which became effective on January 1, 2010. These amendments, however, did not have significant impact on the Companys financial statements. PFRS 8, Operating Segments Philippine Accounting Standards (PAS) 1, Presentation of Financial Statements PAS 7, Statement of Cash Flows PAS 17, Leases PAS 36, Impairment of Assets PAS 38, Intangible Assets PAS 39, Financial Instruments: Recognition and Measurement

New Accounting Standards, Interpretations, and Amendments to Existing Standards Effective Subsequent to December 31, 2010 The following standards, new Philippine Interpretations based on International Financial Reporting Interpretations Committee (IFRIC) interpretations and amendments to existing standards will become effective subsequent to December 31, 2010 and have not been early adopted by the Company. The listing below are of standards and interpretations issued which the Company reasonably expects to be applicable at a later date. The Company intends to adopt those standards when they become effective.

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Effective in 2011 PAS 24 (Amended), Related Party Disclosures, clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduces a partial exemption of disclosure requirements for government-related entities. Philippine Interpretation IFRIC 14 (Amendment), Prepayments of a Minimum Funding Requirement, provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset.

Improvements to PFRSs 2010 Improvements to PFRSs is an omnibus of amendments to PFRSs. The amendments have not been adopted as they become effective on January 1, 2011. The Company anticipates that the adoption of the applicable improvements to PFRS will have no effect on its financial statements. PFRS 3, Business Combinations PFRS 7, Financial Instruments: Disclosures PAS 1, Presentation of Financial Statements PAS 27, Consolidated and Separate Financial Statements

Effective in 2012 PFRS 7, (Amendment) Disclosures - Transfer of Financial Assets, will allow users of financial statements to improve their understanding of transfer transactions of financial assets, including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. PAS 12 (Amended), Income Taxes - Deferred Tax: Recovery of Underlying Assets, provides a practical solution to the problem of assessing whether recovery of an asset will be through use or sale. It introduces a presumption that recovery of the carrying amount of an asset will, normally, be through sale.

Effective in 2013 PFRS 9, Financial Instruments: Classification and Measurement, introduces new requirements on the classification and measurement of financial assets. It uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the many different rules in PAS 39. The approach in the new standard is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. It also requires a single impairment method to be used, replacing the many different impairment methods in PAS 39.

Cash and Cash Equivalents Cash includes cash on hand and cash in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of up to three months and that are subject to an insignificant risk of change in value.

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Financial Assets and Financial Liabilities Financial assets and financial liabilities are recognized initially at fair value. Directly attributable transaction costs, if any, are included in the initial measurement of financial assets and financial liabilities, except for any financial instrument measured at fair value through profit or loss (FVPL). The Company recognizes a financial asset or financial liability in the statement of financial position when it becomes a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument or a component that is a financial liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity, net of any related income tax benefits. Financial instruments are classified as either financial assets or financial liabilities at FVPL, loans and receivables, held-to-maturity (HTM) investments, AFS financial assets, or other financial liabilities, as appropriate. The Company determines the classification of its financial assets and financial liabilities at initial recognition and, where allowed and appropriate, reevaluates this designation at each financial year-end. As of December 31, 2010 and 2009, the Companys financial instruments include loans and receivables, AFS financial assets and other financial liabilities. Loans and receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortized cost in the statement of financial position. Amortization is determined using the effective interest rate method. Loans and receivables are classified as current assets if maturity is within twelve months from the statement of financial position date. Otherwise, these are classified as noncurrent assets. Included under this category are the Companys cash in banks, short-term investments, receivables and due from affiliates as of December 31, 2010 and 2009. AFS financial assets AFS financial assets are those nonderivative financial assets that are designated as such or are not classified in any of the three preceding categories. Financial assets may be designated at initial recognition as AFS if they are purchased and held indefinitely, and may be sold in response to liquidity requirements or changes in market conditions. After initial recognition, quoted AFS financial assets are measured at fair value with gains or losses being recognized as a separate component of equity and as other comprehensive income until the investment is derecognized or until the investment is determined to be impaired. Unquoted AFS financial assets, on the other hand, are carried at cost, net of any impairment, until the investment is derecognized. Included under this category are the Companys quoted and unquoted equity investments as of December 31, 2010 and 2009. Other financial liabilities This category pertains to financial liabilities that are neither held for trading nor designated as at FVPL upon the inception of the liability. These include liabilities arising from operations or borrowings.

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The financial liabilities are recognized initially at fair value and are subsequently carried at amortized cost, taking into account the impact of applying the effective interest rate method of amortization (or accretion) for any related premium, discount and any directly attributable transaction costs. Included under this category are the Companys notes payable, accounts payable and accrued expenses, dividends payable, talent fees and commissions payable as of December 31, 2010 and 2009. Determination of Fair Value of Financial Instruments The fair value of financial instruments traded in active markets at the end of reporting period is based on their quoted market price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. When current bid and asking prices are not available, the price of the most recent transaction provides evidence of the current fair value as long as there has not been a significant change in economic circumstances since the time of the transaction. For all other financial instruments not listed in an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include net present value techniques, comparison to similar instruments for which market observable prices exist, options pricing models, and other relevant valuation models. The Company determines and discloses the fair value of its financial instruments on the basis of the following hierarchy: Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities. Included in this level are the Companys AFS financial assets. Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. The Company has no financial instruments included under this level. Level 3: techniques which use inputs that are not based on observable market data which have a significant effect on the recorded fair value. The Company has no financial instruments included under this level. Day 1 Difference When the transaction price in a non-active market is different from the fair value of other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Company recognizes the difference between the transaction price and fair value (a Day 1 difference) in profit or loss unless it qualifies for recognition as some other type of asset. In cases where use is made of data which is not observable, the difference between the transaction price and model value is only recognized in profit or loss when the inputs become observable or when the instrument is derecognized. For each transaction, the Company determines the appropriate method of recognizing the Day 1 difference amount. Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

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This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position. Derecognition of Financial Assets and Financial Liabilities Financial assets A financial asset (or, where applicable a part of a financial asset or part of similar financial assets) is derecognized when: the right to receive cash flows from the asset has expired; the Company retains the right to receive cash flows from the financial asset, but has assumed an obligation to pay them in full without material delay to a third party under a pass-through arrangement; or the Company has transferred its right to receive cash from the financial asset and either (a) has transferred substantially all the risks and rewards of the financial asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the financial asset, but has transferred control of the financial asset. When the Company has transferred its right to receive cash from a financial asset and has neither transferred nor retained substantially all the risks and rewards of the financial asset nor transferred control of the financial asset, the financial asset is recognized to the extent of the Companys continuing involvement in the financial asset. Continuing involvement that takes the form of a guarantee over the transferred financial asset is measured at the lower of the original carrying amount of the financial asset and the maximum amount of consideration that the Company could be required to repay. Financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original financial liability and the recognition of a new financial liability, and the difference in the respective carrying amounts is recognized in profit or loss. Impairment of Financial Assets The Company assesses at each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. Financial assets carried at amortized cost If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assets original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset shall be reduced either directly or through use of an allowance account. The amount of the loss shall be recognized in profit or loss. The Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. Objective evidence of impairment, includes, but is not limited to, bankruptcy or insolvency on the part of the customer and adverse changes in economy. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar

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credit risk characteristics and that group of financial assets is collectively assessed for impairment. Financial assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in profit or loss. Interest income continues to be accrued on the reduced carrying amount based on the original effective interest rate of the asset. Loans, together with the associated allowance, are written off when there is no realistic prospect of future recovery and all collateral, if any, has been realized or has been transferred to the Company. If in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance for impairment losses account. If a future writeoff is later recovered, the recovery is recognized in profit or loss. Any subsequent reversal of an impairment loss is recognized in profit or loss to the extent that the carrying value of the asset does not exceed its amortized cost at reversal date. In relation to receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Company will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivables is reduced through the use of an allowance account. Receivables together with the related allowance are written off when there is no realistic prospect of future recovery. AFS financial assets For AFS financial assets, the Company assesses at each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity investments classified as AFS financial assets, this would include a significant or prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss - is removed from equity and recognized in profit or loss. Impairment losses on equity investments are not reversed through profit or loss. Increases in fair value after impairment are recognized as other comprehensive income. Materials and Supplies Materials and supplies are stated at the lower of cost (determined using the first-in, first-out method) and net realizable value. Cost includes the invoice price and related charges such as freight, insurance, and taxes, among others. Net realizable value is the current replacement cost. Property and Equipment Property and equipment, except for land, are stated at cost less accumulated depreciation and amortization and any impairment in value. The initial cost of property and equipment comprises its purchase price, including import duties, taxes, and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance costs, are normally charged to profit or loss in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as additional cost of property and equipment. When

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assets are sold or retired, their cost, accumulated depreciation and amortization and any impairment in value are eliminated from the accounts. Any gain or loss resulting from the disposal is included in profit or loss. Land is stated at revalued amount based on the fair market value of the property determined by an independent firm of appraisers as of December 31, 2009. The increase in the valuation of land, net of deferred income tax liability, is credited to Revaluation increment on land in the statement of financial position and other comprehensive income. Upon disposal, the relevant portion of the revaluation increment realized in respect of the previous valuation will be released from the revaluation increment directly to retained earnings in other comprehensive income. Decreases that offset previous increases in respect of the same property are charged against the revaluation increment. All other decreases are charged against current operations. Depreciation commences when an asset is in its location and condition and capable of being operated in the manner intended by management. It is computed using the straight-line method, based on the estimated useful lives of the assets as follows: Years 8-11 5 4

Broadcasting and transmission equipment Furniture and equipment Transportation equipment

Building and leasehold improvements are amortized over the term of the lease or life of the building and improvements ranging from seven to seventeen (17) years, whichever is shorter. Construction in progress represents properties under construction and is stated at cost, including cost of construction and other direct costs. Construction in progress is not depreciated until such time that the relevant assets are completed and ready for operational use. The estimated useful lives and depreciation and amortization method are reviewed periodically to ensure that these are consistent with the expected pattern of economic benefits from the items of property and equipment. Investment Properties Investment properties are measured at cost, including transaction costs, less accumulated depreciation and any impairment in value. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred, if the recognition criteria are met, and excludes the costs of day-to-day servicing of an investment property. Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in profit or loss in the year of retirement or disposal. Transfers are made to investment property when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale. Investment properties is composed of building and other property and is depreciated on a straightline basis over their estimated useful lives of ten (10) years and eight years, respectively.

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Intangible Assets The cost of intangible assets acquired in a business combination is the fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. The intangible assets are assessed as finite and are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization of intangible assets with finite lives is recognized in profit or loss. Amortization commences when the intangible asset is acquired and is capable of being owned and operated in the manner intended by management. It is computed using the straight-line method, based on the estimated useful lives of the assets as follows: Frequency Intellectual property rights Years 13 3

Goodwill is initially measured at cost being the excess of the cost of the business combination over the net fair value of the acquirees identifiable assets. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment of Nonfinancial Assets The carrying values of property and equipment and investment properties are reviewed for impairment when events or changes in circumstances indicate the carrying values may not be recoverable. If any such indication exists, or when annual impairment testing is required, and where the carrying values exceed the estimated recoverable amounts, the assets or the cash generating units are written down to their recoverable amounts. The recoverable amount of the assets is the greater of the fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Any impairment loss is recognized in profit or loss. Capital Stock Capital stock is the portion of the paid in capital representing the total par value of the shares issued. Retained Earnings Retained earnings represent the cumulative balance of net income or loss, net of any dividend declaration and other capital adjustments. Treasury Stock Treasury stocks are shares of the Company which are reacquired and are measured at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Companys own equity instrument.

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Revenue Revenue is recognized when the significant risks and rewards of ownership have been transferred or the services have been rendered to the customer, the amount of revenue can be measured reliably and it is probable that the economic benefits will flow to the Company. The following specific criteria must also be met before revenue is recognized: Broadcasting fees Broadcasting fees are recognized as income when the program is broadcasted or the advertisement is aired. Rental income Rental income is recognized on a straight-line basis over the lease term. Interest Interest is recognized as the interest accrues. Cost and Operating Expenses Cost and operating expenses are recognized when incurred. Retirement Benefits Retirement benefits cost is actuarially determined using the projected unit credit method. This method reflects services rendered by employees up to the date of valuation and incorporates assumptions concerning employees projected salaries. Actuarial valuation is conducted with sufficient regularity, with option to accelerate when significant changes to underlying assumptions occur. Retirement benefits cost includes current service cost, interest cost, expected return on plan assets, amortization of actuarial gains and losses, past service cost and effect of any curtailment or settlement. The net retirement benefits liability recognized by the Company is the aggregate of the present value of the defined benefit obligation and actuarial gains and losses not recognized reduced by past service cost not yet recognized and the fair value of plan assets out of which the obligation is to be settled directly. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using risk-free interest rates that have terms of maturity approximating the terms of the related accrued retirement benefits. Actuarial gains and losses is recognized as income or expense if the cumulative unrecognized actuarial gains and losses at the end of the previous reporting period exceeded 10% of the greater of the present value of defined benefit obligation or the fair value of the plan assets. These gains and losses are recognized over the expected average remaining working life of the employees participating in the plan. Borrowing Costs Borrowing costs are capitalized if they are directly attributable to the acquisition or construction of a qualifying asset. All other borrowing costs are expensed as incurred. Capitalization of borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred. Borrowing costs are capitalized until the assets are substantially ready for their intended use. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

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Income Taxes Current income tax Current income tax assets and current income tax liabilities for the current and prior periods are measured at the amount expected to be recovered or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that have been enacted or substantively enacted at the end of reporting period. Deferred income tax Deferred income tax is provided, using the balance sheet liability method, on all temporary differences at the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income tax assets are recognized for all deductible temporary differences, to the extent that it is probable that sufficient future taxable profits will be available against which the deductible temporary differences can be utilized. The carrying amount of deferred income tax assets is reviewed at each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred income tax assets to be utilized. Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority. Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: a. there is a change in contractual terms, other than a renewal or extension of the arrangement; b. a renewal option is exercised or extension granted, unless that term of the renewal or extension was initially included in the lease term; c. there is a change in the determination of whether fulfillment is dependent on a specified asset; or, d. there is a substantial change to the asset. When a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios a, c or d above, and at the date of renewal or extension period for scenario b. Company as lessor Leases where the Company retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same

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basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned. Company as lessee Leases where the lessor retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Operating lease expense is recognized in profit or loss on a straightline basis over the lease term. Earnings Per Share Basic earnings per share is computed by dividing the net income by the weighted average number of shares outstanding during the year. Diluted earnings per share is calculated by dividing the net income by the weighted average number of shares outstanding during the year and adjusted for the effects of all dilutive potential common shares, if any. In determining both the basic and the diluted earnings per share, the effect of stock dividends, if any, is accounted for retroactively. Foreign Currency-denominated Transactions Transactions in foreign currencies (i.e., currencies other than the Philippine peso) are initially recorded using the functional currency exchange rate at the date of the transaction. Outstanding monetary assets and liabilities denominated in foreign currencies are restated using the functional currency closing exchange rate at the end of reporting period. All differences are taken to profit or loss. Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Contingencies Contingent liabilities are not recognized in the financial statements. They are disclosed in the notes to financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed in the notes to financial statements when an inflow of economic benefits is probable. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the financial statements. Events After the End of the Reporting Period Post year-end events that provide additional information about the Companys position at the end of reporting period (adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes to financial statements when material. 3. Significant Accounting Judgments and Estimates The preparation of the financial statements in compliance with PFRS requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and notes. The judgments, estimates and assumptions used in the financial statements

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and notes are based upon managements evaluation of relevant facts and circumstances that are believed to be reasonable as of the date of the financial statements. Actual results could differ from such estimates. The judgments, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgment In the process of applying the Companys accounting policies, management has made the following judgment, apart from those involving estimations, which have the most significant effect on the amounts recognized in the financial statements: Determination of the Companys functional currency Based on the economic substance of the underlying circumstances relevant to the Company, the functional currency has been determined to be the Philippine peso. It is the currency that mainly influences the sale of service and the costs of providing the service. Assessment of impairment of nonfinancial assets The Company assesses the impairment of assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Company considers important which could trigger an impairment review include the following: a. significant adverse changes in the technological, market, or economic environment in which the Company operates; b. significant decrease in the market value of an asset; c. significant increase in the discount rate used for the value-in-use calculations; d. evidence of obsolescence and physical damage; e. significant changes in the manner in which an asset is used or expected to be used; f. plans to restructure or discontinue an operation; and g. evidence is available from internal reporting that the economic performance of an asset is, or will be, worse than expected. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized. The recoverable amount is the higher of an assets net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arms length transaction while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which the asset belongs. Recoverable amount represents the value in use, determined as the present value of estimated future cash flows expected to be generated from the continued use of the assets. The estimated cash flows are projected using growth rates based on historical experience and business plans and are discounted using pretax discount rates that reflect the current assessment of the time value of money and the risks specific to the asset. For goodwill, the Company determines whether it is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating unit to which the goodwill is allocated. Estimating a value in use amount requires management to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

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Based on managements evaluation, no impairment loss needs to be recognized in 2010, 2009 and 2008. Operating lease commitments - Company as lessee The Company has a lease agreement with a third party covering its satellite communications services. The Company has determined that the risks and rewards of ownership of the underlying property is retained by the lessor since the lease does not transfer ownership of the assets to the Company, the lease term is not for the major part of the economic life of the assets and the Company has no option to purchase the assets at the end of the lease agreements. Accordingly, the lease was accounted for as an operating lease and was determined that this lease shall be recognized on a straight-line basis over the lease term. Operating lease commitments - Company as lessor The Company has arrangements with various lessees covering the building units it offers for lease, the ownership over which was determined to have been retained by the Company. Accordingly, these leases were accounted for as operating leases. Classification of financial instruments The Company classifies a financial instrument, or its component parts, on initial recognition, as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial asset, a financial liability or an equity instrument. The substance of a financial instrument, rather than its legal form, governs its classification in the statement of financial position. As of December 31, 2010 and 2009, the Companys total financial assets amounted to =478.8 million and =406.4 million, respectively, P P while its total financial liabilities amounted to =189.4 million and =267.7 million, respectively P P (see Note 22). Estimations The key assumptions concerning the future and other key sources of estimation at the end of reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Estimation of allowance for doubtful accounts The Company maintains allowance for doubtful accounts at a level considered adequate to provide for potential uncollectible receivables. The level of this allowance is evaluated by management on the basis of factors that affect the collectibility of accounts. These factors include, but are not limited to, the length of the Companys relationship with the client, the clients payment behavior and known market factors. In addition to specific allowance against individually significant receivables, the Company also makes a collective impairment testing which takes into consideration the customers ability to pay, age of receivables, past collection experiences and other factors that may affect collectibility. As of December 31, 2010 and 2009, allowance for doubtful accounts amounted to =55.4 million P and P56.1 million, respectively. = Receivables, net of related allowance, amounted to = P313.4 million and P311.4 million as of December 31, 2010 and 2009, respectively (see Note 6). = Estimation of allowance for inventory obsolescence Provisions are made for items of inventory which are specifically identified to be obsolete. The amount of estimate is based on a number of factors which include, among others, the age and status of inventories and the Companys experience.

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Allowance for inventory obsolescence amounted to P1.4 million and P1.6 million as of = = December 31, 2010 and 2009, respectively. Materials and supplies, net of related provision for inventory obsolescence, amounted to =10.8 million and =10.2 million as of December 31, 2010 P P and 2009, respectively. Estimation of useful lives of property and equipment, investment properties and intangible assets The Company estimated the useful lives of its property and equipment, investment properties, and intangible assets based on the period over which the assets are expected to be available for use. The Company annually reviews the estimated useful lives of property and equipment, investment properties, and intangible assets based on factors that include asset utilization, internal technical evaluation, technological changes, environmental changes and anticipated use of the assets. It is possible that future results of operations could be materially be affected by changes in these estimates brought about by changes in the factors mentioned. As of December 31, 2010 and 2009, carrying value of depreciable property and equipment amounted to =79.7 million and =102.1 million, respectively. The net carrying value of investment P P properties amounted to =81.3 million and =89.4 million as of December 31, 2010 and 2009, P P respectively. Net intangible assets amounted to P128.5 million and P142.2 million as of = = December 31, 2010 and 2009, respectively. Total depreciation and amortization relating to property, equipment and investment properties, and intangible assets charged to operations amounted to =50.4 million, =53.1 million and =44.5 million in 2010, 2009 and 2008, respectively P P P (see Notes 8, 9, 10 and 16). Recognition of deferred income tax assets The Company reviews the carrying amounts of deferred income tax assets at each reporting period and reduces deferred income tax assets to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred income tax assets to be utilized. Based on managements evaluation, there will be sufficient future taxable profits against which the deferred income tax assets can be applied. As of December 31, 2010 and 2009, recognized deferred income tax assets amounted to P23.1 million and P23.4 million, respectively = = (see Note 19). Valuation of financial assets and financial liabilities The Company carries certain financial assets and financial liabilities at fair value, which requires extensive use of accounting estimates and judgment. The significant components of fair value measurement were determined using verifiable objective evidence (i.e., foreign exchange rates, interest rates). Any changes in fair value of these financial assets and financial liabilities would affect profit or loss and equity. Fair values of financial assets and financial liabilities as of December 31, 2010 and 2009 are disclosed in Note 22. Assessment of impairment of AFS financial assets The Company performs its impairment analysis of AFS financial assets with no quoted bid prices by considering changes in the issuers industry and sector performance, legal and regulatory framework, changes in technology, and other factors that affect the recoverability of the Companys investments. The Company performs its impairment analysis of AFS financial assets with quoted market prices by considering whether the investment incurs significant or prolonged decline in fair value. The determination of what is significant or prolonged requires

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judgment. Based on managements assessment, no impairment loss on AFS financial assets needs to be recognized in 2010, 2009 and 2008. The carrying value of AFS financial assets amounted to =26.1 million as of December 31, 2010 P and 2009 (see Note 7). Estimation of retirement benefits cost and liability The determination of the obligation and retirement benefits cost is dependent on assumptions used by actuaries in calculating such amounts. Those assumptions are described in Note 18 and include among others, discount rates which are determined by using risk-free interest rate of government bonds consistent with the estimated term of the obligation, expected returns on plan assets, and salary increase rates. In accordance with PFRS, actual results that differ from the Companys assumptions are accumulated and amortized over future periods and therefore, generally affect the recognized expense and recorded obligation in such future periods. While the Company believes that the assumptions are reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially affect the retirement benefits obligation. The Company has unrecognized actuarial gain amounting to P8.6 million and P6.5 million = = as of December 31, 2010 and 2009, respectively. Accrued retirement benefits amounted to =10.6 million and =11.8 million as of December 31, 2010 and 2009, respectively (see Note 18). P P Provisions The Company provides for present obligations (legal or constructive) where it is probable that there will be an outflow of resources embodying economic benefits that will be required to settle said obligations. An estimate of the provision is based on known information at the end of the reporting period, net of any estimated amount that may be reimbursed to the Company. If the effect of the time value of money is material, provisions are discounted using a pretax rate that reflects the risks specific to the liability. The amount of provision is being reassessed at least on an annual basis to consider new relevant information. There were no provisions recognized as of December 31, 2010 and 2009.

4. Segment Information The Company is organized into only one operating division, radio broadcasting, which is its primary activity. The Company has six programming formats, namely DZRH and Aksyon Radyo stations, Love Radio, Yes-FM, Hot-FM, Radyo Natin, and Easyrock. For management purposes, the Company considers the entire business as one segment. Management monitors the operating results of the business for the purpose of making decisions about resource allocation and performance assessment. Broadcasting fee, net income, total assets and total liabilities for the years ended December 31, 2010, 2009 and 2008 are the same as reported elsewhere in the accompanying financial statements. 2010 P833,380,988 = 117,528,855 959,915,503 277,790,552 2009 = P661,673,035 54,343,557 928,985,088 339,191,121 2008 = P539,058,747 20,594,779 890,134,232 367,188,634

Broadcasting fee Net income Total assets Total liabilities

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The Company has no revenue from transactions with a single external customer accounting for more than 10% or more of the broadcasting fee. All noncurrent assets of the Company are located in the Philippines.

5. Cash and Cash Equivalents 2010 P54,795,199 = 43,271,739 P98,066,938 = 2009 = P50,092,872 = P50,092,872

Cash on hand and in banks Short-term investments

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

6. Receivables Trade Advances to stations Others Less allowance for doubtful accounts 2010 P350,056,492 = 8,503,358 10,243,881 368,803,731 55,442,486 P313,361,245 = 2009 = P321,251,286 35,255,130 10,923,536 367,429,952 56,059,570 = P311,370,382

Trade receivables and advances to stations are noninterest-bearing and have credit terms of approximately 90 days. A reconciliation of the allowance for doubtful accounts by class is as follows:
Trade = P45,754,565 16,545,135 (13,740,015) 48,559,685 9,485,104 (6,907,422) = P51,137,367 Advances to stations = P6,345,922 (2,768,996) 3,576,926 251,121 (3,576,926) = P251,121 Others P3,547,579 = 375,380 3,922,959 131,039 P4,053,998 = 2010 Trade = P 51,137,367 P =51,137,367 Advances to stations = P101,514 149,607 = P251,121 Others = P1,325,257 2,728,741 = P4,053,998 Total = P1,426,771 54,015,715 = P55,442,486 Total = P55,648,066 16,920,515 (2,768,996) (13,740,015) 56,059,570 9,867,264 (3,576,926) (6,907,422) = P55,442,486

December 31, 2008 Provision (Note 16) Reversal (Note 16) Write off December 31, 2009 Provision (Note 16) Reversal (Note 16) Write off December 31, 2010

Individual impairment Collective impairment

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2009 Trade = P6,100,736 42,458,949 = P48,559,685 Advances to stations = P1,488,187 2,088,739 = P3,576,926 Others = P1,325,257 2,597,702 = P3,922,959 Total = P8,914,180 47,145,390 = P56,059,570

Individual impairment Collective impairment

7. Available-for-sale Financial Assets 2010 P70,000 = 25,999,910 P26,069,910 = 2009 = P100,000 25,999,910 = P26,099,910

Quoted Unquoted

The fair value of the quoted shares of stock is determined based on quoted market price. As of December 31, 2010, the Company has no intention to dispose the unquoted shares of stock primarily composed of investment in Star Parks Corporation, a related party. These unquoted shares of stock are carried and presented at cost less impairment losses, if any. Rollforward analysis of AFS financial assets follows: 2010 P26,099,910 = (30,000) P26,069,910 = 2009 = P26,089,910 10,000 = P26,099,910

Balance at beginning of year Gain (loss) recognized in other comprehensive income Balance at end of year

The movement of reserve for fluctuation in AFS financial assets follows: 2010 P70,000 = (30,000) P40,000 = 2009 = P60,000 10,000 = P70,000

Beginning balance Valuation gain (loss) taken to other comprehensive income Ending balance

8. Property and Equipment a. Property and equipment carried at cost consist of:
2010 Broadcasting and Building and Transmission Leasehold Equipment (Note 10) Improvements Cost Beginning balances Additions Reclassification and other adjustments Ending balances

Furniture and Transportation Equipment Equipment P30,894,874 = 4,037,958 34,932,832

Construction In Progress P589,849 = (589,849)

Total P608,672,397 = 6,810,253 (589,849) 614,892,801

P131,040,536 P352,150,332 P93,996,806 = = = 2,162,045 610,250 131,040,536 354,312,377 94,607,056

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(Forward) 2010 Broadcasting and Building and Transmission Furniture Leasehold Equipment and Transportation Improvements (Note 10) Equipment Equipment Accumulated Depreciation and Amortization Beginning balances P89,924,346 P295,308,987 P90,676,298 = = = P30,645,543 = Depreciation and amortization (Note 16) 728,642 9,568,476 17,336,849 971,359 Ending balances 99,492,822 312,645,836 91,647,657 31,374,185 Net Book Values P31,547,714 P41,666,541 P2,959,399 = = = P3,558,647 = 2009 Broadcasting and Transmission Equipment (Note 10)

Construction In Progress

Total

P =

P506,555,174 = 28,605,326 535,160,500 P79,732,301 =

P =

Building and Leasehold Improvements

Furniture and Equipment P93,222,766 = 774,040 93,996,806

Transportation Equipment P30,894,874 = 30,894,874

Construction In Progress P152,487 = 437,362 589,849

Total P606,362,099 = 2,310,298 608,672,397

Cost Beginning balances P129,941,640 P352,150,332 = = Additions 1,098,896 Ending balances 131,040,536 352,150,332 Accumulated Depreciation and Amortization Beginning balances 80,093,948 275,528,827 Depreciation and 9,830,398 19,780,160 amortization (Note 16) Ending balances 89,924,346 295,308,987 Net Book Values P41,116,190 P56,841,345 = =

89,779,150 897,148 90,676,298 P3,320,508 =

29,839,426 806,117 30,645,543 P249,331 =

P589,849 =

475,241,351 31,313,823 506,555,174 P102,117,223 =

b. Land at revalued amount as of December 31, 2010 and 2009 consists of: Cost Appraisal Increase = P6,266,094 115,935,506 = P122,201,600

The revalued amount of =122.2 million in 2010 and 2009 is based on the valuation conducted by P an independent appraisal company as of December 31, 2009. The valuation was made on the basis of the fair market value determined by referring to the extent, character and utility of the properties and sales and holding prices of similar land. The revaluation increment is included in the equity section of the statements of financial position, net of deferred income tax liability of = P34.8 million as of December 31, 2010 and 2009 (see Note 19).

9. Investment Properties 2010 Building and Other Property P80,381,524 = 34,181,128 8,068,653 42,249,781

Cost Accumulated Depreciation Beginning balances Depreciation (Note 16) Ending balances

Land P43,162,500 =

Total P123,544,024 = 34,181,128 8,068,653 42,249,781

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Net Book Values

P43,162,500 =

Cost Accumulated Depreciation Beginning balances Depreciation (Note 16) Ending balances Net Book Values

Land = P43,162,500 = P43,162,500

P38,131,743 = 2009 Building and Other Property = P80,381,524 26,112,476 8,068,652 34,181,128 = P46,200,396

P81,294,243 =

Total = P123,544,024 26,112,476 8,068,652 34,181,128 = P89,362,896

Investment properties are leased to employees and third parties. Total fair value of investment properties amounted to =168.6 million in 2010 and 2009, as determined by an independent P appraiser. The valuation was made on the basis of the market value determined by referring to the extent, character and utility of the properties and sales and holding prices of similar property. Rental income generated from these investment properties amounted to =8.5 million in 2010, P P8.7 million in 2009 and =9.0 million in 2008. Related direct operating expenses amounted to = P P12.8 million, P13.3 million and P13.0 million, in 2010, 2009 and 2008, respectively. = = =

10. Intangible Assets On September 30, 2008, the Company acquired a radio station from a private company (the Acquiree). The total cost of acquisition amounted to =229.6 million, inclusive of value-added tax P and net of withholding tax. Outstanding liability to the Acquiree arising from this transaction amounting to P45.5 million was fully paid in 2009. = In 2009, the Company obtained valuation services from an independent appraisal company to determine the fair values of the identifiable assets and the value of goodwill as of the acquisition date. Accordingly, the amounts provisionally determined were adjusted retrospectively. The excess of acquisition cost over the adjusted fair values of the identifiable assets was recognized as goodwill. The net book values of the intangible assets as of December 31 are as follows:
2010 Intellectual Property Rights = P5,810,867 2,421,195 1,936,956 4,358,151 P =1,452,716

Cost Accumulated Amortization Beginning balances Amortization (Note 16) Ending balances Net Book Values

Frequency = P153,594,927 14,768,743 11,814,996 26,583,739 = P127,011,188

Total = P159,405,794 17,189,938 13,751,952 30,941,890 = P128,463,904

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Cost Accumulated Amortization Beginning balances Amortization (Note 16) Ending balances Net Book Values

Frequency = P153,594,927 2,953,749 11,814,994 14,768,743 = P138,826,184

2009 Intellectual Property Rights = P5,810,867 484,239 1,936,956 2,421,195 = P3,389,672

Total = P159,405,794 3,437,988 13,751,950 17,189,938 = P142,215,856

11. Notes Payable Notes payable consist of non-complex, straight-forward loans payable to local banks at prevailing market rates. Loans amounting to P105.0 million as of December 31, 2009, are unsecured. = Average interest rates range from 7.00% to 7.25% in 2009 and 2010. The loans have varying maturities up to January 2011 but were fully paid in August 2010. Accrued interest, included under Accounts payable and accrued expenses account, amounted to =0.1 million as of P December 31, 2009.

12. Accounts Payable and Accrued Expenses 2010 P30,881,314 = 95,557,732 76,199,257 P202,638,303 = 2009 = P28,693,770 94,623,689 57,703,411 = P181,020,870

Trade Accrued expenses (Notes 11, 13 and 18) Output tax and others

Trade payables and accrued expenses consist of amounts due to suppliers and service providers and are usually payable within 30 days.

13. Related Party Transactions The Companys significant related party transactions are as follows: a. The Company and several affiliated broadcasting companies, which are owned and managed by certain stockholders and/or members of the BOD of the Company, entered into marketing agreements, whereby the affiliated broadcasting companies designated the Company as their sole marketing outfit for the sales, promotion, and marketing of the radio commercial airtime of all radio broadcast stations of these affiliated broadcasting companies. Under the marketing agreements, the Company shall remit to the affiliated broadcasting companies a certain fixed amount per year and/or a certain percentage of the annual net income from the sale of the commercial time of the radio broadcast stations after agency commission. The original marketing agreement, which was effective for a period of five years from January 1, 1998, has been renewed annually, thereafter. Total fees included under Program costs presented as part of Costs and operating expenses in the statements of comprehensive income amounted to =204.1 million in 2010, =111.7 million in 2009 and =120.6 million in 2008. The Company P P P also bills the affiliated broadcasting companies for their share in the expenses for operating the radio broadcast stations (see Note 16).

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b. In 2002, the Hating Kapatid system (the System) was devised to change the way the Company was handling the operations of the radio stations as well as its marketing, engineering, administrative, and financial functions (support functions). Under the System, the operations of each radio station and support services functions were outsourced to service companies managed and operated by former station managers and officers of the Company (affiliated service companies). As such, substantially all employees of the Company were separated. As approved by the BOD, the Company shall provide financial support to certain radio stations through advances as well as payment of certain operating expenses of the said radio stations until these radio stations can financially sustain their operations. As a result of the System, the Company entered into service agreements with affiliated service companies, which are owned and managed by certain stockholders and/or members of the BOD of the Company. These affiliated service companies provide production and creative services, promotions, accounting, personnel, collection, procurement, engineering, and other related services. The Company pays a certain percentage of collection as service fee. Total service fees amounted to P214.3 million in 2010, P135.5 million in 2009 and P127.3 million = = = in 2008 which is shown as part of Cost and operating expenses in the statements of comprehensive income. The outstanding payables related to these transactions amounted to = P23.6 million and =24.3 million as of December 31, 2010 and 2009, respectively, and are P shown as part of the Accounts payable and accrued expenses account in the statements of financial position. c. The Company grants and obtains short-term interest-free advances to and from its affiliates, which are owned and managed by certain stockholders and/or members of the BOD of the Company. The outstanding amount due from affiliates as of December 31, 2010 pertains to receivable from Elizalde Holding Company, an affiliate under common control with the Company. d. The short-term employee benefits and retirement benefits cost of key management personnel amounted to =6.5 million in 2010 and 2009, and P5.5 million in 2008. P =

14. Capital Stock Capital stock consists of 1,000,000,000 authorized common shares with par value of =1.00 per P share, of which 402,803,777 shares have been issued. Total number of equity shareholders as of December 31, 2010 and 2009 is 619 and 622, respectively.

15. Retained Earnings The Companys retained earnings are not available for declaration as dividends to the extent of the cost of treasury stock and subject to the provisions of the Securities and Exchange Commission Memorandum Circular No. 11, Series of 2008. On November 19, 2010, the BOD declared cash dividends amounting to =25.2 million or =0.06 P P per share to stockholders on record as of December 9, 2010 payable on December 23, 2010. On November 19, 2009, the BOD declared cash dividends amounting to =25.2 million or =0.06 P P per share to stockholders on record as of December 15, 2009 payable on December 29, 2009.

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On December 11, 2008, the BOD declared cash dividends amounting to =25.1 million or =0.06 P P per share to stockholders on record as of January 7, 2009 payable on January 31, 2009.

16. Cost and Operating Expenses 2009 2008 2010 Program costs (Notes 13 and 20) = = P273,926,827 P243,821,736 P217,809,501 = Service fees (Note 13) 214,305,150 135,467,587 127,281,364 Depreciation and amortization (Notes 8, 9 and 10) 53,134,425 44,540,569 50,425,931 Personnel expenses (Notes 13 and 17) 39,482,414 33,421,571 37,948,312 Communication, light and water 30,546,068 31,826,590 22,874,310 Agency commission and discounts 14,931,987 8,888,608 19,261,756 Advertising and promotions 12,464,397 11,639,038 8,372,563 Travel and transportation 11,243,092 6,719,177 6,606,257 Provision for doubtful accounts (Note 6) 14,151,519 5,566,601 6,290,338 Replacement parts 5,881,472 2,763,995 4,921,623 Entertainment, amusement and recreation 1,525,329 539,206 1,929,020 Others 21,129,623 13,850,934 25,198,541 = = P672,060,628 P583,779,649 P504,847,154 = Others includes, among others, repairs, rent, taxes and licenses and miscellaneous expenses.

17. Personnel Expenses 2010 P28,096,734 = 2,530,097 7,321,481 P37,948,312 = 2009 = P25,985,956 6,869,757 6,626,701 = P39,482,414 2008 = P19,915,592 1,827,103 11,678,876 = P33,421,571

Salaries, wages and bonuses Retirement benefits cost (Note 18) Other short-term employee benefits

18. Retirement Benefits and Separation Costs Substantially all employees of the Company were separated in 2002 upon implementation of the System. However, most of the said personnel were employed by the affiliated service companies. The separated employees expressly agreed in writing to receive their separation pay from the Company only after their final/actual separation/resignation from the affiliated service companies. Separation costs of =37.1 million have been recognized in 2002 in addition to the amount P previously accrued. The remaining unpaid balance of the separation cost of =42.2 million and P = P42.4 million as of December 31, 2010 and 2009, respectively, are included in the Accounts payable and accrued expenses account in the statements of financial position. The Company has a funded, noncontributory defined benefit retirement plan covering all of its remaining employees. The latest actuarial valuation report is as of December 31, 2010.

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The components of retirement benefits cost charged to profit and loss are as follows: 2010 P961,786 = 2,735,822 (993,273) (174,238) P2,530,097 = 2009 = P961,786 6,656,021 (643,398) (104,652) = P6,869,757 2008 = P1,093,352 1,843,344 (1,200,864) 91,271 = P1,827,103

Current service cost Interest cost Expected return on plan assets Net actuarial losses (gains) Total retirement benefits cost

The funded status and amounts recognized in the statements of financial position for the retirement plan as of December 31, 2010 and 2009 are as follows: 2009 2010 Present value of benefit obligation = P25,168,553 P28,094,233 = Fair value of plan assets 19,865,454 26,066,501 5,303,099 2,027,732 Unrecognized actuarial gains 6,524,340 8,582,227 Accrued retirement benefits = P11,827,439 P10,609,959 = Movements in the accrued retirement benefits follow: Balances, January 1 Retirement benefits cost Contributions Balances, December 31 2010 P11,827,439 = 2,530,097 (3,747,577) P10,609,959 = 2009 = P8,169,891 6,869,757 (3,212,209) = P11,827,439

The changes in present value of the retirement obligation are as follows: Present value of obligation at beginning of year Interest cost Current service cost Actuarial gain on obligation Present value of obligation at end of year The changes in fair value of plan assets are as follows: 2010 P19,865,454 = 993,273 3,747,577 1,460,197 P26,066,501 = 2009 =15,138,770 P 643,398 3,212,209 871,077 = P19,865,454 2010 P25,168,553 = 2,735,822 961,786 (771,928) P28,094,233 = 2009 = P23,224,078 6,656,021 961,786 (5,673,332) = P25,168,553

Fair value of plan assets at beginning of year Expected return on plan assets Contributions Actuarial gain on plan assets Fair value of plan assets at end of year

Actual return on plan assets amounted to P2.5 million in 2010 and =1.5 million in 2009. The = P expected rates of return on plan assets were based on a reputable fund trustees indicative yield rate for a risk portfolio similar to that of the fund with consideration to the funds past performance.

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The assumptions used to determine pension benefits of the Company as of January 1 are as follows: Discount rate Salary increase rate Expected rate of return on plan assets 2010 10.87% 10.00% 5.00% 2009 28.66% 10.00% 10.00%

As of December 31, 2010, the discount rate, salary increase rate and expected rate of return on plan assets are 7.37%, 10.00% and 4.21%, respectively. The Company expects to contribute P3.7 million in 2011. = The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: Investments in government securities Receivables Cash and cash equivalents 2010 90.88% 2.00% 7.12% 100.00% 2009 97.44% 2.39% 0.17% 100.00%

Amounts for the current and previous four annual periods are as follows:
2009 2008 2007 2006 2010 = = = = = P28,094,233 P25,168,553 P23,224,078 P26,183,862 P23,566,288 (26,066,501) (19,865,454) (15,138,770) (12,008,645) (7,107,293) 8,085,308 14,175,217 16,458,995 5,303,099 2,027,732 (2,612,571) 1,460,197 871,077 (1,550,632) 710,729 1,041,965 642,830

Benefit obligation Plan assets Deficit Experience adjustments on plan liabilities Experience adjustments on plan assets

19. Income Taxes a. The provision for income tax consists of: 2010 P49,749,512 = 238,675 358,472 P50,346,659 = 2009 = P25,281,770 77,570 (1,315,005) = P24,044,335 2008 = P12,558,697 339,967 3,883,690 = P16,782,354

Regular corporate income tax Final tax Deferred

b. The components of the Companys net deferred income tax consist of the tax effects of the following: 2010 Deferred income tax assets on: Allowance for: Doubtful accounts Inventory loss 2009

P16,632,746 = 416,163

= P16,817,871 465,097

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(Forward) 2010 Deferred income tax assets on: Accrued retirement benefits and unamortized contribution to past service cost Unamortized pre-operating expenses Accrued rent expense Deferred income tax liability on: Revaluation increment on land Unrealized foreign exchange gain Deferred income tax liabilities - net 2009

P5,968,641 = 50,882 26,670 23,095,102 34,780,652 12,472 34,793,124 (P11,698,022) =

=5,914,141 P 203,535 40,458 23,441,102 34,780,652 34,780,652 (P11,339,550) =

c. The reconciliation of income tax computed at the statutory tax rate to provision for income tax as shown in profit or loss follows: 2010 P50,362,654 = 2009 = P23,516,368 2008 = P13,081,996

Statutory income tax Additions to (reductions in) income tax resulting from: Interest income subjected to final tax at a lower rate Nondeductible portion of interest expense Nondeductible taxes and licenses Effect of change in tax rates Provision for income tax

(141,428) 125,433 P50,346,659 =

(38,799) 38,402 528,364 = P24,044,335

(255,630) 250,151 3,705,837 = P16,782,354

20. Lease Commitments The Company leases satellite communications services for the performance of its broadcasting services called the Transponder Lease, which considers certain space segment capacity and transponder power. The new lease agreement is for a period of five years commencing on November 1, 2007. Rent expense on this lease agreement amounted to =4.8 million, P = P4.9 million and =5.9 million in 2010, 2009 and 2008, respectively, included under Program P costs presented as part of Costs and operating expenses in the statements of comprehensive income. Future minimum lease payments are as follows: 2010 P4,708,416 = 3,923,680 P8,632,096 = 2009 = P4,961,880 9,096,780 = P14,058,660

Within one year After one year but not more than five years

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21. Financial Risk Management Objectives and Policies The Companys principal financial instruments consist of cash and cash equivalents and notes payable. The main purpose of these financial instruments is to fund the Companys operations. The other financial assets and financial liabilities arising directly from its operations are receivables, due from affiliates, AFS financial assets, accounts payable and accrued expenses, talent fees and commissions payable, and dividends payable. The main risks arising from the Companys financial instruments are credit risk, liquidity risk, and interest rate risk. The BOD reviews and approves policies for managing each of these risks. Credit Risk Credit risk, or the risk of counterparties defaulting, is controlled by the application of control and monitoring procedures. It is the Companys policy that all clients who wish to trade on credit terms are subjected to credit verification procedures. Receivables and due from affiliates balances are monitored on an ongoing basis to ensure that the Companys exposure to bad debts is not significant. With respect to credit risk arising from the Companys other financial assets consisting of cash and cash equivalents, the Companys exposure arises from the default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The Company deals only with financial institutions duly evaluated and approved by the BOD. The Company avoids concentrations of credit risk on its liquid assets as these are spread over several financial institutions. Gross maximum exposure to credit risk The maximum exposure to credit risk as of December 31, 2010 and 2009 without taking into account any collateral held or other credit enhancements is as follows: 2010 Loans and receivables Cash in banks and cash equivalents: Cash in banks Short-term investments Receivables: Trade Advances to stations Others Due from affiliates Unquoted AFS financial assets P54,279,157 = 43,271,739 97,550,896 298,919,125 8,252,237 6,189,883 313,361,245 41,283,182 354,644,427 25,999,910 P478,195,233 = 2009 = P49,605,284 49,605,284 272,691,601 31,678,204 7,000,577 311,370,382 18,810,458 330,180,840 25,999,910 = P405,786,034

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Credit quality of financial assets The tables below summarize the credit quality of the Companys financial assets as of December 31.
2010 Neither past due nor impaired Standard Past due but High grade grade not impaired Loans and receivables: Cash in banks Short-term investments Receivables: Trade Advances to stations Others Due from affiliates Unquoted AFS financial assets P54,279,157 = 43,271,739 15,702,249 6,165,985 477,531 41,283,182 P161,179,843 = P = 172,832,420 767,540 25,999,910 P199,599,870 = P = 110,384,456 1,318,712 5,712,352 P117,415,520 = 2009 Neither past due nor impaired Standard High grade grade Loans and receivables: Cash in banks Receivables: Trade Advances to stations Others Due from affiliates Unquoted AFS financial assets P49,605,284 = 52,494,811 16,894,381 996,343 18,810,458 P138,801,277 = P = 122,955,581 5,480,475 3,476,053 25,999,910 P157,912,019 = Past due but not impaired P = 97,241,209 9,303,348 2,528,181 P109,072,738 = Past due and impaired = P 48,559,685 3,576,926 3,922,959 =56,059,570 P

Past due and impaired P = 51,137,367 251,121 4,053,998 P55,442,486 =

Total P54,279,157 = 43,271,739 350,056,492 8,503,358 10,243,881 41,283,182 25,999,910 P533,637,719 =

Total =49,605,284 P 321,251,286 35,255,130 10,923,536 18,810,458 25,999,910 =461,845,604 P

Financial assets classified as high grade are those cash in banks and short-term investments transacted with reputable local banks and receivables and due from affiliates with no history of default on the agreed contract terms. Financial instruments classified as standard grade are those financial assets with little history of default on the agreed terms of the contract. A financial asset is considered past due when a counterparty has failed to make a payment when contractually due. Past due but not impaired financial assets are items with history of frequent default. Nevertheless, the amounts due are still collectible. Lastly, Past due and impaired items are those that are long outstanding and have been specifically identified and collectively provided with allowance for probable losses. Financial assets that are past due but not impaired The tables below summarize the aging analysis of past due but not impaired per class of the Companys financial assets as of December 31, 2010 and 2009.
31-60 Days 61-90 Days 2010 91-120 Days Over 120 Days

<30 Days Loans and receivables: Receivables Trade Advances to stations Others

Total

P25,858,926 = 169,686

P11,505,426 = 230,035

P10,007,940 = 388,481

P22,381,720 = 470,858

P26,028,612 =

P11,735,461 =

P10,396,421 =

P22,852,578 =

P40,630,444 = 59,652 5,712,352 P46,402,448 =

P110,384,456 = 1,318,712 5,712,352 P117,415,520 =

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<30 Days Loans and receivables: Receivables Trade Advances to stations Others

31-60 Days

61-90 Days

2009 91-120 Days

Over 120 Days

Total

= P21,818,531 2,088,167 = P23,906,698

= P17,954,480 56,334 = P18,010,814

= P5,245,751 115,000 = P5,360,751

= P29,184,558 3,379,007 = P32,563,565

= P23,037,889 3,664,840 2,528,181 = P29,230,910

= P97,241,209 9,303,348 2,528,181 = P109,072,738

Liquidity Risk Liquidity risk arises when obligations are not met when they fall due. It is the Companys objective to finance capital expenditures, services, and maturing obligations as scheduled. To cover the Companys financing requirements and at the same time, manage its liquidity risk, the Company uses internally generated funds and proceeds from debt. Projected and actual cash flow information are regularly evaluated and funding sources are continuously assessed. The tables below summarize the maturity profile of the Companys financial liabilities as of December 31, 2010 and 2009 based on contractual undiscounted payments, including interest due:
2010 Less than 3 months 3 to 12 months

On demand Other financial liabilities Accounts payable and accrued expenses* Dividends payable Talent fees and commissions payable

Total

P62,583,487 = 1,766,303

P54,251,709 =

P42,830,297 =

P159,665,493 = 1,766,303

19,565,604 8,385,258 27,950,862 P64,349,790 = P73,817,313 = P51,215,555 = P189,382,658 = *Amounts are exclusive of nonfinancial liabilities amounting to =42,972,810 as of December 31, 2010. P 2009 Less than 3 months = P16,815,449 61,893,716 3 to 12 months = P92,135,000 40,302,283

On demand Other financial liabilities Notes payable Accounts payable and accrued expenses* Dividends payable Talent fees and commissions payable = P 42,881,555 1,398,253

Total = P108,950,449 145,077,554 1,398,253

11,529,708 4,709,317 16,239,025 = P44,279,808 = P90,238,873 = P137,146,600 = P271,665,281 *Amounts are exclusive of nonfinancial liabilities amounting to =35,943,316 as of December 31, 2009. P

The following tables show the profile of financial assets used by the Company to manage its liquidity risk:
2010 On Demand P54,279,157 = 108,638,674 2,307,506 2,667,849 113,614,029 Less than 3 Months P = 43,271,739 190,280,451 5,944,731 3,522,035 199,747,217 3 to 12 Months P = 41,283,182 Total P54,279,157 = 43,271,739 298,919,125 8,252,237 6,189,884 313,361,246 41,283,182

Cash in banks Short-term investments Receivables Trade Advances to stations Others Due from affiliates

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P167,893,186 =

P243,018,956 =

P41,283,182 = 2009

P452,195,234 =

Cash in banks Receivables Trade Advances to stations Others Due from affiliates

On Demand = P49,605,284 97,241,209 9,303,348 2,528,181 109,072,738 = P158,678,022

Less than 3 Months = P 175,450,392 22,374,856 4,472,396 202,297,644 = P202,297,644

3 to 12 Months = P 18,810,458 = P18,810,458

Total = P49,605,284 272,691,601 31,678,204 7,000,577 311,370,382 18,810,458 = P379,786,124

Interest Rate Risk The Companys exposure to the risk of changes in market interest rate pertains primarily to interest-bearing notes payable amounting to P105.0 million as of December 31, 2009. = The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Companys income before tax in 2009. There is no other impact on the Companys equity other than those already affecting profit and loss. Increase/decrease in rates +1% -1% Effect on income before tax (P105,000) = 105,000

Equity Price Risk The Companys exposure to the risk of changes in equity price relates primarily to its quoted AFS financial asset. Management believes that the Companys exposure to equity price risk is minimal since the balance of quoted AFS financial asset is not material. Capital Management The primary objective of the Companys capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended December 31, 2010 and 2009. The Company monitors its use of capital using debt to equity ratio (total liabilities/total equity) which is 46.23% and 66.69% as of December 31, 2010 and 2009, respectively. The following table summarizes the Companys capital structure as of December 31, 2010 and 2009: 2010 P402,803,777 = 79,354 198,167,753 (120,787) P600,930,097 = 2009 = P402,803,777 79,354 105,806,769 (120,787) = P508,569,113

Capital stock Additional paid-in capital Retained earnings Treasury stock

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22. Financial Assets and Financial Liabilities The table below summarizes the carrying value and estimated fair value of all the financial instruments per category as of December 31, 2010 and 2009.
2010 Carrying Value Financial assets Cash on hand Loans and receivables: Cash in banks Short-term investments Receivables Trade Advances to stations Others Due from affiliates AFS financial assets: Quoted Unquoted Financial liabilities Other financial liabilities: Notes payable Accounts payable and accrued expenses Dividends payable Talent fees and commissions payable = P516,042 54,279,157 43,271,739 298,919,125 8,252,237 6,189,883 41,283,182 70,000 25,999,910 = P478,781,275 Fair Value = P516,042 54,279,157 43,271,739 298,919,125 8,252,237 6,189,883 41,283,182 70,000 25,999,910 = P478,781,275 2009 Carrying Value = P487,588 49,605,284 272,691,601 31,678,204 7,000,577 18,810,458 100,000 25,999,910 = P406,373,622 Fair value = P487,588 49,605,284 272,691,601 31,678,204 7,000,577 18,810,458 100,000 25,999,910 = P406,373,622

= P 159,665,493 1,766,303 27,950,862 = P189,382,658

= P 159,665,493 1,766,303 27,950,862 = P189,382,658

= P105,000,000 145,077,554 1,398,253 16,239,025 = P267,714,832

= P105,000,000 145,077,554 1,398,253 16,239,025 = P267,714,832

*Amounts are exclusive of nonfinancial liabilities amounting toP42,972,810 = and =35,943,316 as of December 31, 2010 and 2009, respectively. P

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate such value: AFS financial assets The fair value of the quoted shares of stock as of December 31, 2010 and 2009 is based on quoted market price (Level 1). Unquoted shares of stock amounting to =26.0 as of December 31, 2010 P and 2009 are carried and presented at cost since the fair values of such investments cannot be reliably determined. There were no transfers between the different hierarchy levels in 2010. Other financial assets and financial liabilities Due to the short-term nature of other financial assets and financial liabilities, the fair value of cash in banks, short-term investments, receivables, due from affiliates, notes payable, accounts payable and accrued expenses, dividends payable, and talent fees and commissions payable approximate the carrying amount as of the end of the reporting period. The interest rate of notes payable approximates the interest rates for comparable instruments in the market and is subject to monthly repricing.

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23. Other Matters The Company is and may become a defendant/respondent in various cases and assessments which are pending in the courts or under protest. Management and its legal counsels believe that the liability, if any, that may result from the outcome of these cases and investigation will not materially affect its financial position and results of operations.

24. Supplementary Information Required Under Revenue Regulations 15-2010 In compliance with Bureau of Internal Revenue Revenue Regulations 15-2010 issued on November 25, 2010, mandating all taxpayers to disclose information on taxes and license fees paid and accrued during the taxable year, summarized below are the taxes paid and accrued by the Company in 2010. a. Output VAT declared by the Company amounted to P98,826,912 based on receipts of = = P823,567,637 in 2010. Outstanding output tax payable amounted to =45,268,062 as of P December 31, 2010. The Companys revenue on which output VAT is declared, is based on collections, hence, may not be the same as the amounts accrued in the statement of comprehensive income. b. Movements in input VAT are as follows: Balance, January 1 Current year payments for: Services lodged under cost of services Services lodged under other accounts Capital goods subject to amortization Capital good not subject to amortization Claims for tax credit and other adjustments Balance, December 31 c. Taxes and licenses paid by the Company are as follows: Business permits Documentary stamp taxes Real property taxes Others = P1,398,071 271,234 561,965 1,391,050 = P3,622,320 = P5,266,089 56,458,746

4,920,000

(62,098,401) = P 4,546,434

d. Withholding taxes paid and accrued by the Company are as follows: Paid Withholding tax on compensation and benefits Expanded withholding taxes = P2,247,281 12,859,758 Accrued = P490,782 999,995 Total =2,738,063 P 13,859,753

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