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Introduction

2012 Mary Ann P. Gayanilo For Professor E. Aurellado, CPA, MBA, PhD [ABS-CBN FINANCIAL STATEMENT ANALYSIS] In completion of final paper requirement for Managerial Accounting. ABS-CBN Corporation ABS-CBN Corporation is a Filipino media conglomerate and the country's largest and foremost media and entertainment company, The corporation was formed by the merger of Alto Broadcasting System (ABS) owned by James Lindenberg and Antonio Quirino (the brother of then-Philippine president Elpidio Quirino) and the Chronicle Broadcasting Network (CBN) owned by Don Eugenio Lopez, Sr. and the then-Philippine vice president Fernando Lopez. Founded on 13 June 1946 by James Lindenberg as Bolinao Electronics Corporation (BEC), it was incorporated as the ABS-CBN Broadcasting Corporation on 1 February 1967, shorted to simply ABS-CBN Corporation in 2010. The common shares of ABS were first offered in July 1992 while the PDR (Philippine Depository Receipt) of ABSP were offered in October 1999. Its assets include the broadcast television network ABS-CBN which is among the first commercial television networks in Asia, a youth-oriented broadcast television network Studio 23 as well as the radio networks DZMM Radyo Patrol 630 and Tambayan 101.9 along with subsidiaries dealing in print publication (ABS-CBN Publishing, Inc.), cable television (Creative Programs, Inc.), communications (Sky Cable Corporation) film production (Star Cinema), visual effects (Roadrunner Network, Inc.), music production (Star Recording, Inc.), new media (ABS-CBN Interactive) and other assets. ABS-CBN Corporation Type Public Traded as PSE: ABS and ABSP Industry Mass media Predecessor(s) Bolinao Electronics Corporation (1946-1952) Founded 14 June 1946 Founder(s) James Lindenberg Headquarters ABS-CBN Broadcast Center, Sgt. Esguerra Ave. corner Mother Ignacia St., Barangay South Triangle, Diliman, Quezon City, Philippines Area served Worldwide Key people Eugenio Lopez III, (Chairman and CEO) Augusto Almeda Lopez, (Vice chairman) Charo Santos-Concio, (President and COO) Rolando Valdueza, (CFO) Products Broadcast radio and television, cable television films, publication music records and publication sports, telecommunications television programming television, broadcast, music and brand license merchandise, pay per view, websites Parent Lopez, Inc. ...read more.

Middle

(2,135,938) Other current assets (544,453) 223,732 Increase (decrease) in: Trade and other payables 512,946 2,259,496 Obligations for program rights 18,290 (229,330) Pension benefits paid (117,639) Contribution to pension plan (527,621) Cash generated from operations 1,895,647 6,271,135 Income tax paid (197,100) (1,048,972) Net cash provided by operating activities 1,698,547 5,222,163 CASH FLOWS FROM INVESTING ACTIVITIES Additions to: Property and equipment (1,774,699) (1,782,293) Program rights (756,119) (384,555) Available-for-sale investments (15,000) Decrease (increase) in: Long-term receivables 120,468 Investments in subsidiaries and associates (672,159) (232,221) Other noncurrent assets 104,159 23,137 Due to a related party (92,400) Available-for-sale investments 25,000 Interest received 115,859 156,502 Proceeds from sale of: Investments in subsidiaries and associates 1,816,030 Property and equipment 20,586 58,932 Net cash used in investing activities (1,228,743) (2,040,030) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from: Long-term debt 3,094,000 6,811,989 Issuance of Philippine Depository Receipts (PDRs) 395,900 Payments of: Dividends (1,541,807) (828,166) Interest (486,977) (811,143) Long-term debt (100,000) (6,611,372) Obligations under finance lease (75,121) (71,780) Acquisitions of PDRs (10,082) (996,240) Net cash provided by (used in) financing activities) 880,013 (2,110,812) EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 3,130 (5,814) NET INCREASE IN CASH AND CASH EQUIVALENTS 1,352,947 1,065,507 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,527,750 1,462,243 CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) 3,880,697 2,527,750 ABS-CBN CORPORATION PARENT COMPANY STATEMENTS OF CASH FLOWS (Amounts in Thousands) Horizontal Analysis Increase (Decrease) Amount Percent CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax (2,656,714) -80% Adjustments for: Depreciation and amortization (Note 8) 129,567 9% Amortization and write-off of program rights (Note 9) 101,074 17% Interest expense (Note 20) (319,431) -37% Gain on sale of investments (Note 7) (489,769) #DIV/0! Provision for pension expense (Note 22) 147,080 64% Gain on settlement of a liability (Note 7) (143,616) #DIV/0! Interest income (Note 20) 36,785 -24% Unrealized foreign exchange loss (gain) - net 84,639 -175% Amortization of debt issue costs (Note 20) ...read more.

Conclusion

Variable Production Costs 7,622,289 6,040,983 Personnel expenses 2,143,137 3,009,038 Contracted services 522,913 520,372 Facilities related expenses 275,079 306,877 Catering and food expenses 23,146 31,850 Supplies expense 10,678 53,426 Total Variable General and Administrative Expenses 2,974,953 3,921,563 Gain on sale of investments (489,769) 0 Gain on settlement of a liability (143,616) 0 Interest income (118,064) (154,849) Foreign exchange loss (gain) loss - net 29,075 (58,821) Other income - net (874,455) (874,134) Total Variable Other Expenses (1,596,829) (1,087,804) TOTAL VARIABLE EXPENSES 9,000,413 8,874,742 CONTRIBUTION MARGIN 4,909,084 7,766,842 Other program expenses 449,493 483,629 Depreciation and amortization 1,098,885 916,568 Amortization and write-off of program rights 694,549 593,475 Total Fixed Production Costs 2,242,927 1,993,672 Research and survey 209,046 245,223 Depreciation and amortization 425,080 477,830 Taxes and licenses 284,581 221,847 Donations and contributions 153,501 156,441 Advertising and promotions 102,973 103,368 Provision for doubtful accounts 24,785 36,550 Due and subscriptions 14,110 16,250 Other expenses 230,905 227,316 Total Fixed General and Administrative Expenses 1,444,981 1,484,825 Finance costs 557,462 967,917 Total Fixed Other Expenses 557,462 967,917 TOTAL FIXED EXPENSES 4,245,370 4,446,414 INCOME BEFORE INCOME TAX 663,714 3,320,428 PROVISION FOR (BENEFIT FROM) INCOME TAX (9,441) 910,100 NET INCOME 673,155 2,410,328 OTHER COMPREHENSIVE INCOME Unrealized fair vale gain on available for sale investments 9,818 11,762 TOTAL COMPREHENSIVE INCOME 682,973 2,422,090 BREAKEVEN SALES Formula 2011 2010 Including the one-time expenses CM Ratio Contribution Margin 4,909,084 35% 7,766,842 47% Sales 13,909,497 16,641,584 Breakeven Point in Sales Total Fixed Expenses 4,245,370 12,028,916 4,446,414 9,527,086 CM Ratio 35% 47% Excluding the one-time expenses CM Ratio Contribution Margin 4,275,699 31% 7,766,842 47% Sales 13,909,497 16,641,584 Breakeven Point in Sales Total Fixed Expenses 4,245,370 13,810,832 4,446,414 9,527,086 CM Ratio 31% 47% The company should have sales of P13.8 billion in 2012 should it wished to maintain its contribution margin ratio to cover both the variable and fixed expenses. Once the company has reached this sale, it is safe to assume that sales above the breakeven sales will contribute to the profitability of the company. ?? ?? ?? ?? Page | 0 ...read more.

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