MBC 17A May2006

SEC Number 1674
File Number CM-030
MANILA BROADCASTING COMPANY

(Company's Full Name)
MBC BUILDING, STAR CITY, CCP COMPLEX

ROXAS BOULEVARD, PASAY CITY, METRO MANILA
(Company's Address)
832-6149; 8326150
(Telephone Number)
December 31
(Fiscal Year Ending)
FORM 17-A (ANNUAL REPORT)

(Form Type)
(Amendment Designation)
For the Year Ended December 31, 2005

(Period Ended Date)
April 25, 2006

(Date Prepared)
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, 2005

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; 8326150

Registrant’s telephone number, including area code
9. FJE Bldg., 105 Esteban St., Legaspi Village, Makati City, M.M.
Former name, former address, and former fiscal year, if changed since last report.
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

Title of Each Class Outstanding and Amount of Debt Outstanding
Common P1.00 par value 402,682,990 shares-Debt– P307,645,391
11. Are any or all of these securities listed on the Philippine Stock Exchange.
Yes x No.
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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 8,924,700 shares is P8,924,700.00 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
PART I - BUSINESS AND GENERAL INFORMATION
ITEM 1. Business
Business Development
For close to 60 years, the Manila Broadcasting Company (MBC) has been known
for radio stations, radio dramas, radio news, radio promos, radio ads and anything
and everything that is radio. A few years back, however, the new millennium
ushered in an un-chartered era for the media industry, and MBC has taken bold
moves to address the changing needs of the changing times.
Today, we have expanded our operations to embrace both broadcasting and event
organizing. Our current business model provides advertisers with a combination of
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benefits – the traditional appeal of our AM and FM networks plus the high-impact
exposure generated by special events.
In 2003, 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.
Since then, MBC has put together a string of events including a “Pamaskong Aliwan”
in time for Christmas 2003, Aliwan Fiesta in the summers of 2004 and 2005, and
concerts featuring international stars like Dionne Warwick, Stephen Bishop, Sergio
Mendez, and Toto.
In September 2004, MBC inked a co-production deal with the executive committee of
Metro Manila Film Festival Philippines (MMFFP) paving the way for MBC to act as
the official co-organizer of the 2004 and 2005 Metro Manila Film Festivals.
In 2005, MBC inked a deal to mount the local search for a representative to Global
Battle of the Bands (GBOB). GBOB is the first and only global band competition
open to both amateurs and professionals that gives the chance to represent the country
in the main gig in London and win US$100,000.00 as top prize.
Looking back and looking forward, none of these ventures would be a success without
the invaluable support of our partners, our advertisers. Much in the same way that our
business model is evolving, our time-tested relationships with advertisers are also
changing… becoming stronger and transcending the conventional boundaries of radio.
With these developments, MBC fortified its position of leadership in the local
broadcasting industry as its stations dominated all surveys conducted in 2004 and
2005 by the Radio Research Council (RRC). The series of independent studies
include Metro Manila, Laoag, Dagupan, Puerto Princesa, Bacolod, Iloilo, Davao,
Tuguegarao, Tacloban, Baguio, Iligan, and Zamboanga. Official tallies show MBC
stations leading in all these survey areas.
Official RRC commissioned and supervised study in Metro Manila conducted last
December 7-14, 2005 showed DZMB Love Radio as the over-all most-listened to
station in Metro Manila. Ironically, Love Radio’s strongest competitor is its sister
station, DWYS YES-FM, which occupies the no. 2 slot. On the other hand, DZRH
continues as one of the top ranking AM stations, a tough act to follow in the highly
competitive AM stations’ war.
In Laoag City, results show that DZJC AM Aksyon Radyo stood unbeatable by its
competitors with an audience share of 19.3%, while DZMT/DZRH (Manila) came in
at second with a 4.6% audience share. DWIL FM Love Radio on the other hand,
managed to take hold of the top spot with a staggering 29.1% audience share, leaving
far behind its next rival which only garnered 7.9%.
WHR Hot-FM in Dagupan, meanwhile, achieved a landslide victory as it garnered an

audience share of 40.3%, leaving far behind its competitor which only registered
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11.4%. Also topping the charts in Dagupan is DZRH AM (Manila) and DWCM AM
Aksyon Radyo, which emerged as top 1 and 2, respectively in the AM dial.
Also leading the pack is DYHP AM / DZRH AM in Puerto Princesa City, which
accumulated 8.2% in audience share, while DYEZ FM Love Radio also clinched the
no. 1 position with a winning score of 22.2%.
In Bacolod City, DYEZ finishes first in the AM band with a 9.3% rating, while
DYKS FM Love radio lands at the no. 2 rank with 10.3% in audience share.
In Iloilo City, DYMB FM Love Radio secures the top spot in the FM band with
16.8% audience share while DYOK AM Aksyon Radyo finishes first in the AM band
with 9.3% audience share.
Figures from Davao City survey showed DXBM FM Love radio as the over-all
number one (1) station, both in FM and AM band, with a run-away audience share of
12.7%.
DZRH, the flagship station of MBC broadcasting via satellite to 20 relay stations
strategically located all over the Philippine archipelago, topped the Tuguegarao
survey with an audience share of 12.9 percent from Saturday to Tuesday and 8.2
percent on Sunday.
Figures from Tacloban showed DYVL and DZRH posting a one-two finish among all
AM stations. DYVL is part of Aksyon Radyo, a network composed of MBC's
provincial AM stations.
DYVL clinched the number one spot with audience shares of 14.1 percent during
Thursdays to Saturdays and 8 percent on Sundays. DZRH was second with audience
shares of 3.9 percent during Thursdays to Saturdays.
On the FM band, DYTM Love Radio Tacloban raked in record-breaking ratings

registering audience shares of 49.8 percent during Thursdays to Saturdays and 76.1
percent on Sundays.
Aggregate figures of the Tacloban survey show that from Thursday to Sunday more
than seven out of every ten listeners are tuned-in to an MBC station. Combined
weekend and weekday audience shares for DYVL (12.7), DZRH (3.1), and DYTM
(55.6) add up to 71.4 percent.
Data from Baguio City showed that DWMB FM Love Radio is the number one FM
station in the area. Love Radio DWMB garnered an audience share of 14.8 percent
during Thursdays to Saturdays and 5.3 percent during Sundays. The DZRH relay
station in Baguio City led all competitors on the AM band logging an audience share
of 6.1 percent during Thursdays to Saturdays and 5.5 percent during Sundays.
In Iligan City, YES FM DXTL, which opened barely a year ago, bested all other
stations in the area. YES FM DXTL topped the survey by capturing an audience
share of 31.5 percent during Thursdays to Saturdays and 28.6 percent during Sundays.
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In Zamboanga, Hot FM DXHT emerged as the number one FM station with an
audience share of 19.2 percent. Hot FM is the provincial pop-format station of MBC
in the southern Philippines. It commands a solid following among the youth market.
The RRC is the official survey arm of KBP, Philippine Association of National
Advertisers (PANA), and Association of Accredited Advertising agencies (4A’s).
DZRH is MBC’s flagship station broadcasting via satellite to 20 relay stations
strategically located all over the Philippine archipelago, while Love Radio and YES
FM are two FM networks being operated by MBC. 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 provincial pop format station of MBC. It commands a solid following among the
youth market. Aksyon Radyo is MBC’s network composed of provincial AM
stations.
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.
MBC engages the services of various local and foreign suppliers in the maintenance
and upgrade of its existing stations and for its new stations. Among its suppliers are
Energy Onix Broadcast Equipment, Broadcast Electronics, Inc., Binariang Satellite of
Malaysia, Comstream Corporation, Power Construction, Guan Industrial Sales, etc.
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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 airtime for advertising. Of the radio advertising
budget of the advertisers, MBC accounts for at least 30% of the market.
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 as regards 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 has four programming formats, namely DZRH and Aksyon Radyo stations,
Love Radio, Yes-FM, and Hot-FM, which represent about 51%, 29%, 15% and 5% of the
total broadcasting fees in 2005. The company operates nationwide with one AM and two FM
stations in Metro Manila and 10 Aksyon Radyo, 22 Love Radio, 9 Yes-FM, 4 Hot-FM and
hundreds of Radyo Natin stations in the provinces.
Transactions with and/or dependence on related parties;
Please refer to note 10, page 19 of the 2005 audited financial statements.
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.
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.
Estimate of the amount spent for research and development activities (3 yrs.)
The Company is not engaged in research and development-intensive business.
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
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Resources, Department of Health, Air Transportation Office, and other
regulatory agencies, for the installation and operation of proposed broadcast
stations nationwide.
No. of Employees and CBA, if any
The company has 32 employees as of December 31, 2005 and anticipates no material
change within the ensuing twelve months. Twenty Eight (28) employees are under the
operations department of the company while the remaining four (4) are doing administrative
functions. The company has no Collective Bargaining Agreement (CBA) with its employees.
The company’s employees are not on strike, nor have been in the past three years, nor
threatening to go on strike. There are no material supplemental benefits or incentive
arrangements the company has or will have with its employees.
Other Matters
There were no known major risks involved in each of the businesses of the company. The
company has no subsidiaries.
ITEM 2. 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 facility 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 and Matina Hills, Davao City, 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 the carrying value
may not be recoverable. Please see note on impairment of assets on pages 15-16 of
the 2005 audited financial statements.
Legal Proceedings
Most of the legal proceedings involving MBC are its various applications pending
with the National Telecommunications Commission involving upgrade of transmitter power
and change of location. There were no applications of new stations for the year 2005.
It is also a defendant 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 company’s financial position.
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Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth quarter
of the calendar year covered by this report.
***************************************************
PART II - OPERATIONAL AND FINANCIAL INFORMATION
Market for Registrant’s 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 22 November 2004
at P1.20 per share involving 50,000 shares. Prior to this, the price per share for the last two
calendar years has remained at P1.00 per share equivalent to its par value.
There have been no known recent sales of unregistered securities of the company.
The Board of Directors declared cash dividends of P.0625 per share which was paid
starting September 15, 2005 to stockholders of record as of August 31, 2005. There are no
existing restrictions that limit the ability to declare cash dividends on the common stock.
The number of stockholders for the common shares as of 31 December 2005 is 623. The top
20 Stockholders as of 31 December 2005 are as follows:
Name No. of Shares

Elizalde Holdings Corporation 139,031,704 34.53%
Elizalde Land, Inc. 120,000,000 29.80%
Romulo, Mabanta, Buenaventura
Sayoc & delos Angeles - Trustee 69,910,993 17.36%
Cebu Broadcasting Company 50,000,000 12.42%
Sunshine Inns, Inc. 10,000,000 2.48%
Philippine Broadcasting Company 5,000,000 1.24%
Tangsengco, Uy & Co., Inc. 659,892 0.16%
Estate of Allen Cham 632,549 0.16%
Myron C. Papa, SA of Estate of Angela M. Butte 627,254 0.16%
Luiz M. Alberto &/or Manuel C. Alberto 553,368 0.14%
Pacifico De Ocampo 551,819 0.14%
Estate of Cristina Knecht 527,070 0.13%
Estate of Eduardo L. Montilla 490,361 0.12%
L.V.N. Pictures, Inc. 447,961 0.11%
A. &/or J.O. Del Rosario 363,592 0.09%
Ruperto S. Nicdao, Jr. 129,201 0.03%
Ernestina U. De Garcia 122,338 0.03%
Luis G. Ablaza 121,149 0.03%
Consuelo Fajardo 121,149 0.03%
Joaquina Tirona 114,719 0.03%
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Management’s Discussion and Analysis or Plan of Operation
(2005 VS. 2004)
RESULTS OF OPERATIONS
In spite of the difficult economic factors faced by the business sector in general, MBC
registered an increase in revenue of P27.3 Million or 4.25% from P642.1 Million in 2004 to
P669.4 Million in 2005. This can be attributed to the number 1 and number 2 rating of our
DZMB and YES-FM stations in Metro Manila and the sustained strong rating of DZRH and
provincial stations. The aggressive stance on advertising and promotion campaigns also
proved beneficial as it contributed greatly to the revenue stream of the company.
The cost and operating expenses amounted to P619.2 Million in 2005, up slightly by P22.5
Million or 3.8% from the P596.7 Million incurred the previous year. The 2005 expenses were
higher due mainly to the variable costs associated with the higher revenues generated during
the year such as agency commission and discount, entertainment, amusement and recreation
and personnel expenses. Interest expense decreased by P2.1 Million or 12.0% due to lower prevailing
interest rates and average loan balances in 2005. The increase in rental income of P1.9 Million
represents revenue derived from the investment properties acquired in 2005.
With the aforementioned increase in revenue, our company registered net income of P26.8 Million, an
increase of P7.7 Million or 40.3% over last year figure of P19.1Million.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION
Our company remains fundamentally strong. Total Assets increased by P8.2 Million or 1.0%
due mainly to the plough-back of cash inflows from operations to investment properties.
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 registrant’s trade payables have not been paid within the stated trade terms.
Causes for Material Change from Period to Period (5%)
1. Receivables decreased by P15.5 Million or 7.6% due mainly to accelerated collection

efforts made on station advances
2. Material and Supplies, net decreased by P2.1 Million or 17.2% mainly due to the
provisions made for obsolescence of certain slow moving items.
3. Prepaid expenses and other current assets decreased by P7.8 Million or 84.6% mainly
due to the extensive review made of the realizability of certain deposit items and
prepaid accounts.
4. Available-for-sale financial assets is a new account name used in lieu of Investment in
shares of stock to conform with Philippine Accounting Standards (PAS) #39, please
refer to page 3 of the 2005 audited notes to financial statements for related topics
regarding PAS #39.
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5. Due from affiliates decreased by P12.6 million or 8.4% mainly due to payments made
to Star Parks Corporation.
6. Property and equipment decreased by P46.6 million or 13.9% mainly due to the
depreciation charges during the year.
7. Investment Properties amounting to P121.5 Million represents acquisition of land and
construction of building intended for future use of the company. The said property is
currently being leased out on a year on year basis to generate revenue in order to
sustain its maintenance costs.
8. Deferred income tax assets increased by P3.2 Million or 14.5% mainly due to the
change in corporate income tax rates and the timing difference of certain non-
deductible expenses in the computation of current year’s actual tax payable.
9. Notes payable decreased by P22.0 million or 16.1% mainly due to improved cash
generated from operations.
10. Accounts payable & accrued expenses increased by P20.5 million or 16.8% mainly
due to increased purchases during the latter part of the year brought by the
construction of investment property mentioned above.
11. Talent Fees and Commissions Payable increased by P4.2 million or 43.4% as a
consequence of the increased revenues generated during the year.
12. Income Tax Payable increased by P4.0 million or 248.2% mainly due to higher net
income for the year.
13. Deferred income tax liability decreased by P1.2 Million or 6.2% due to the change in
corporate income tax rates.
Key Financial Indicators

2005 2004
1. Return on Sales (ROS)
Net Income 26,756,350 19,051,949
Divide by: Revenue 669,435,748 642,075,782
ROS 4.00% 2.97%
2. Earnings Per Share (EPS)

Net Income 26,756,350 19,051,949
Divide by: No.of Shares Outstanding 402,682,990 402,682,990
EPS 0.07 0.05
3. Current Ratio
Current Assets 364,404,491 432,632,524
Divide by: Current Liabilities 276,467,121 269,793,400
Current Ratio 1.318 1.604
4. Debt/Equity Ratio
Total Liabilities 307,645,391 302,319,320
Total Stockholders' Equity 523,081,281 520,224,933
Debt/Equity Ratio 0.588 0.581
5. Book Value Per Share

Book Value Per Share 1.299 1.292
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Discussion on Key Performance Indicators
1. There was an improvement in ROS. The increase in ROS ratio from 2.97% to 4.00%
is an indication of a favorable trend because the net income has not only increased
peso-wise, it has increased percentage-wise in relation to sales.
2. The EPS increased by P0.019 per share because of the increase in net income with the
total number of outstanding shares remaining constant.
3. Although current ratio in 2005 decreased compared to last year, it remains

fundamentally strong. The present current ratio of 1.318:1 indicates that all
immediate maturing obligations will be paid on time without difficulty.
4. The debt-equity ratio remained low at .588 : 1. The low debt-equity ratio is a
favorable indication because the company has more leverage for increasing its credit
lines.
5. The increase in book value per share from P1.292 to P1.299 means that the owner’s
equity of each stockholder has increased in value by P.007/share. The increase was
brought about by the increase in retained earnings, revaluation increment in land and
reserve for fluctuation in available-for-sale financial assets while maintaining the
number of outstanding shares.
PLAN OF OPERATION
Metro Manila truly belongs to MBC. MBC, the biggest radio network, has the figures to
show for. In the recent Radio Research Council (RRC) survey commissioned by the
Kapisanan ng mga Brodkaster ng Pilipinas (KBP) last December 7-14, 2005, MBC garnered a
hefty total of 47.8 percent, combining the ratings of its flagship stations, DZRH, Love Radio
and YES-FM. This outstanding performance thus makes MBC the most powerful radio
network with the biggest share of the ratings pie. One out of two radio listeners in Metro
Manila is sure to be tuning in to an MBC station, at any given time of the day at any given
week. This success can be attributed to continuous programming and marketing innovations
in the MBC headquarters.
This year, MBC will sustain or even capture a bigger share of the market by bringing in a host
of promising new event performances, thus boosting audience share and creating a pipeline of
revenue streams that will compliment its existing airtime revenues. MBC, always ready to
shake things up in every event it partakes in, takes part in regional events across the country.
MBC is set to stage its own concert featuring popular acts and local favorites in various
provincial festivals such as Araw ng Dabaw, Pistay Dayat, Kadayawan sa Davao, GenSan
Tuna Festival, Naga Penafrancia, Zamboanga Festival, Bacolod Masskara, Dagupan
Panganadew and Baguio Tossed Salad Festival.
The company has just concluded a Thank You Party in February 2006 at the Aliw Theater
featuring live performances from well-known artists plus a full slate of games and raffles.
Seasonal festivals and events mounted by MBC in cooperation with local government units
and sponsors bring radio entertainment and involvement to the next level. This goes a long
way in keeping listeners tuned-in. MBC is embarking on yet another innovative series as it
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takes the excitement to the waters with the staging of the 2nd Manila Bay Festival and the
Manila Bay Summer Festival last March 2006. From there, it is back on land as MBC is once
again gearing up for the fourth run of the Philippines’ grandest fiesta, The Aliwan Fiesta.
Now on its fourth year, Aliwan Fiesta brings together the best of the best Philippine festivals,
highlighted by spirited street dancing peculiar to the participating regions that display richness
of their respective culture and tradition. Thousands of the country’s cultural dance
performers, finest craftsmen, and amateur models will gather to compete in Dance Parade
Competition, Float Competition, and Reyna ng Aliwan beauty pageant.
With all of these lined-up, our most valued partners, listeners all over the country can look
forward to a sizzling summer full of excitement.
In December of this year, MBC, in coordination with MMDA, plans to host once again the Metro
Manila Film Festival, the biggest movie event in the country. We will handle certain aspects of the
festival activities like the Stars on Parade, Streetball/Volleyball with the Stars, Star Bazaar and Fans
Day, Rock with the Stars and Awards Night of the said Festival.
The initial planned Capex for the year 2006 is the improvement of existing regular stations
nationwide. The proposed budget for the said Capex is P75.0 Million, which will be funded
by cash flows from operations.
Other Disclosure Matters
• There are no seasonal aspects that had a material effect on the financial condition or
results of operations.
• There are no unusual items affecting assets, liabilities, equity, net income, or cash
flows.
• 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.
• 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.
• 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.
• There are no changes in contingent liabilities or contingent assets since the last annual
balance sheet date.
• There are no material contingencies and any events or transactions that are material to
an understanding of the current interim period.
• There are no known trends, demands, commitments, events or uncertainties that will
have a material impact on the company’s liquidity;
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• There are no known trends, events or uncertainties that have had or that are reasonably
expected to have a material impact on the net sales or revenues or income from
continuing operations;
• There are no significant elements of income or loss that did not arise from the
company’s continuing operations;
• 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.
• 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.
• There were no business or geographical segments for which information is not

reported to the board of directors and chief executive officer that were not reportable
segments.
• The pricing of inter-segment transfers was based on cost at the time of transaction.
• There were no changes in accounting policies adopted for segment reporting that have
a material effect on segment information.
• There were no changes in and disagreements with Accountants and financial

disclosure.
Management’s Discussion and Analysis or Plan of Operation
(2004 VS. 2003)
RESULTS OF OPERATION
As 2004 was no different than 2003 in terms of the prevailing economic factors that made
doing business more difficult, the company registered a slight decline in gross revenues of
3.8% from P667.2 Million in 2003 to P642.1 Million in 2004. The reasons for the decline in
gross revenues can be attributed to decline in industry advertising minutes and stiff
competition.
The cost and operating expenses amounted to P594.7 Million in 2004, down by P32.9 Million or 5.2%
from the P627.6 Million incurred the previous year. The 2003 expenses were higher due mainly to the
higher provision for doubtful accounts charged to operations during the year as a result of a thorough
review of trade receivables. Interest expense increased by P.8 Million or 4.8% due to higher
prevailing interest rates in 2004. Other income was higher by P6.6 Million in 2003 than in 2004 due
mainly to the reclassification of advances made by various clients for commercial airtime to “Other
Income” account during the year 2003.
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Despite the decrease in gross revenues, the company registered a slight increase in Net Income before
Tax of P.23 Million or .1% in 2004.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION
Our company remains fundamentally strong. Although Total Assets decreased by P34.5
Million or 4%, this was mainly due to the acceleration of payment of bank loans and trade
payables. Working Capital improved to 1.05:1 from 1.03:1 the previous year. This enabled the
company to meet its maturing obligations without difficulty. Total Debt to Equity ratio remained
constant at a .6:1, which is a favorable indication because suppliers and banks prefer a low debt to
equity ratio.
There were no major capital expenditures for the year. Operating income before working
capital changes was used primarily to pay bank loans and trade payables.
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 registrant’s trade payables have not been paid within the stated trade terms.
Causes for Material Change from Period to Period (5%)

1. Cash increased by P31.5 million or 121% mainly due to increased collection during
the year.
2. Material and Supplies increased by P.76 million or 6.5% mainly due to accelerated
purchases of certain items being used for the operations during the period specifically
spare parts of radio stations.
3. Due from affiliates increased by P12.8 million or 9.4% mainly due to increase in
advances to Star Parks Corporation.
4. Property and equipment decreased by P54.2 million or 16.7% mainly due to the
depreciation charges during the year.
5. Other non-current assets decreased by P2.4 million or 31.5% mainly due to the
reclassification of some rental deposits under noncurrent assets to Advances to Station
under the Receivables account.
6. Notes payable decreased by P8.6 million or 5.9% mainly due to excess cash from
operations.
7. Accounts payable & accrued expenses decreased by P43.7 million or 26.37% mainly
due to accelerated payment of trade suppliers.
8. Talent Fees and Commissions Payable decreased by P4.0 million or 28.93% mainly
due to accelerated payment of these accounts.
14
9. Income Tax Payable increased by P1.4 million or 576% mainly due to higher income
tax payable for the last quarter of 2004.
10. Retained Earnings increased by P20.4 million or 32.24% as a result of net income of
the company.
Key Performance Indicators

2004 2003
1. Return on Sales (ROS)
Net Income 20,435,340 20,559,821
Divide by: Sales 642,075,782 667,240,968
ROS 3.18% 3.08%
2. Earnings Per Share (EPS)

Net Income 20,435,340 20,559,821
EPS 0.051 0.051
3. Current Ratio
Current Assets 283,206,994 335,064,763
Divide by: Current Liabilities 269,793,400 324,717,883
Current Ratio 1.050 1.032
4. Debt/Equity Ratio
Dedt/Equity Ratio 0.548 0.615
5. Book Value Per Share

ROS 1.313 1.312
Discussion on Key Performance Indicators
1. There was an improvement in ROS. The increase in ROS ratio from 3.08% to 3.18%
is an indication of a favorable trend because although the net income has not increased
peso-wise, it has increased percentage-wise in relation to sales.
2. The EPS remained constant at .051:1 because the net income was almost the same as
last year and the total number of outstanding shares remained constant.
3. The current ratio remained almost constant when compared to last year. The present
current ratio of 1.05:1 indicates that all immediate maturing obligations will be paid
on time without difficulty.
4. The debt-equity ratio remained low at .548 : 1. The low debt-equity ratio is a
favorable indication because the company has more leverage for increasing its credit
lines.
5. The increase in book value per share from P1.312 to P1.313 means that the owner’s
equity of each stockholder has increased in value by P.001/share. The increase was
brought about by the increase in retained earnings while maintaining the number of
outstanding shares.
15
PLAN OF OPERATION
All the survey results are in and MBC has reason to celebrate. The year 2004 was a banner
year for all our networks. MBC stations emerged at the top of every survey conducted by the
Radio Research Council (RRC) last year. Our flagship AM station DZRH, along with Love
Radio and Yes-FM turned in brilliant ratings further bolstering MBC's position as the leading
radio network in the country.
This year, MBC will capture a bigger share of the market by bringing in a host of promising new
event performances, thus boosting our audience share and creating a pipeline of revenue streams that
will compliment the existing airtime revenues. Aside from the successful movie premier showing and
on-air and field promotions, we will be staging a series of concerts at the Aliw Theater featuring both
local and foreign artists.
The company has just concluded a Thank You Party on March 9, 2005 at the Aliw Theater
featuring a live performance from Area 1 plus a full slate of games and raffles. Seasonal
festivals and events mounted by MBC in cooperation with local government units and
sponsors bring radio entertainment and involvement to the next level. This goes a long way in
keeping listeners tuned-in. From the air, MBC is embarking on yet another innovative series
as it takes the excitement to the waters with the Manila Bay Festival and the Manila Bay
Summer Festival. From there, it's back on land as MBC is once again gearing up for the third
run of the Philippines’ grandest fiesta, The Aliwan Fiesta 2005.
With all of these lined-up, our most valued partners, listeners all over the country can look
forward to a sizzling summer full of excitement.
In December of this year, MBC, in coordination with MMDA, plans to host once again the Metro
Manila Film Festival, the biggest movie event in the country. We will handle certain aspects of the
festival activities like the Stars on Parade, Streetball/Volleyball with the Stars, Star Bazaar and Fans
Day, Rock with the Stars and Awards Night of the said Festival.
The planned Capex for the year 2005 is the increase in the number of small radio stations, and
improvement of existing regular stations nationwide and extension offices. The proposed
budget for the said Capex is P100 Million, which will be funded by cash flows from
operations and bank loans.
Other Disclosure Matters
• There are no unusual items affecting assets, liabilities, equity, net income, or cash
flows.
• 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.
• There are no dividends paid for common shares.
16
• 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.
• 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.
• There are no changes in contingent liabilities or contingent assets since the last annual
balance sheet date.
• There are no material contingencies and any events or transactions that are material to
an understanding of the current interim period.
• There are no known trends, demands, commitments, events or uncertainties that will
have a material impact on the company’s liquidity;
• There are no known trends, events or uncertainties that have had or that are reasonably
expected to have a material impact on the net sales or revenues or income from
continuing operations;
• There are no significant elements of income or loss that did not arise from the
company’s continuing operations;
• 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.
• 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.
• The company and three (3) affiliated broadcasting companies, namely, Cebu
Broadcasting Company (CBC), Philippine Broadcasting Company (PBC), and Pacific
Broadcasting Systems, Inc. (PBSI) entered into Marketing Agreements, whereby the
affiliated companies designated MBC as their sole marketing outfit for the sale,
promotion and marketing of the radio commercial airtime of all radio broadcast
stations of the said affiliated companies. Please refer to page 8, note 8 of the 2004
audited financial statements.
• There were no business or geographical segments for which information is not

reported to the board of directors and chief executive officer that were not reportable
segments.
• The pricing of inter-segment transfers was based on cost at the time of transaction.
17
• There were no changes in accounting policies adopted for segment reporting that have
a material effect on segment information.
• There were no changes in and disagreements with Accountants and financial

disclosure.
PART III - CONTROL AND COMPENSATION INFORMATION
Directors and Executive Officers of the Registrant
A. Executive Officers (All Filipino Citizens)
Name Position
Fred J. Elizalde - Chairman of the Board
Hadrian V. Arroyo - Vice Chairman
/Corporate Secretary
Ruperto S. Nicdao, Jr. - President
Julio P. Macuja II - EVP-Treasurer
Eduardo G. Cordova - SVP-CFO
Juan Manuel Elizalde - VP-Operations
Jose M. Taruc - VP-DZRH
Irving A. Lisondra - VP-Creative Services
Robert A. Pua - VP-Controller
Elpidio Macalma - AVP- DZRH
Ellen C. Fullido - AVP-HRD
Carlea C. Miranda - AVP-Treasury
Mario Valentino M. Victa - AVP
B. Directors (All Filipino Citizens)

Name Age Term
Fred J. Elizalde 65 1985 up to the present
Ruperto S. Nicdao, Jr. 50 1988 up to the present
Hadrian V. Arroyo 59 1988 up to the present
Eduardo G. Cordova 56 1988 up to the present
Julio P. Macuja II 42 1999 up to the present
Juan Manuel Elizalde 37 1999 up to present
Jose M. Taruc 58 2001 up to present
Gabriel L. Villareal* 51 2002 up to present
George T. Goduco* 41 2003 up to present
*Independent Directors
Business Experience for the last Five (5) years
18
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 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 President of Kapisanan ng mga Brodkasters sa Pilipinas (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 Master’s in Business
Administration from Asian Institute of Management and his AB-Honors (Major in Math),
Magna Cum Laude, from De La Salle College.
Hadrian V. Arroyo has been a Director of the and been with the company since 1967. He
was elected as Vice-Chairman of the company in 2004 and has been serving as Corporate
Secretary of the company since 2002. company since 1988. He was appointed as Vice-
Chairman of the company in 2004 and has been serving as Corporate Secretary of the
company since 2002. He is also the Chairman/President of our affiliate Cebu Broadcasting
Company since 1982. Currently, he is also the Vice-chairman of Star Parks Corporation,
operator of an amusement/theme park in Roxas Boulevard. A lawyer who graduated from the
Ateneo de Manila in 1972, he placed #14 in the 1972 bar exams.
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 Company. He is a member of the Philippine Institute of
Certified Public Accountants (PICPA). He is a Certified Public Accountant and obtained his
master’s degree in business administration, with honors, from University of St. La Salle and
his bachelor’s degree in business administration from University of the East. He is a member
of the Philippine Institute of Certified Public Accountants (PICPA).
Julio P. Macuja is currently the EVP/Treasurer and Director of the company when 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 our flagship
19
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.
Gabriel L. Villareal is an independent director. He is an accomplished lawyer and is the

Managing Partner of the Villareal Law Offices. He was the former President of Wack Wack
Golf and Country Club (1993-1996). He is currently a Director at Dutch Boy Philippines,
Inc. and Anchor Insurance Brokerage Corporation and a former Director of San Miguel
Corporation. He graduated from the University of the Philippines College of Law in 1979
Cum Laude. He garnered 9th place in the Bar Examination in 1979.
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
Family Relationships
Mr. Juan Manuel Elizalde, VP-Operation and Director, is the son of the
Chairman/Director, Fred J. Elizalde.
Involvement of Directors and Officers in Certain Legal Proceedings
None of the directors and officers was involved during 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.
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.
Executive Compensation
The aggregate compensation of the executives and directors of the issuer/Registrant is

P5,191,195.13 (Estimate) in 2006, P5,191,195.13 in 2005, P3,424,303.53 in 2004,
P713,182.43 in 2003 and P6,385,513.64 in 2002.
There were no additional amounts paid for committee participation or special

assignments.
The compensation of each of the top executives is as follows:
20
Name Year Salary Bonus Others
Fred J. Elizalde
Chairman/CEO 2002 2,863,615.53 0.00 0.00
2003 713,182.43 0.00 0.00
2004 2,863,615.53 0.00 560,688.00
2005 4,800,262.13 0.00 390,933.00
2006 (Est.) 4,800,262.13 0.00 390,933.00
Elpidio Macalma
AVP-DZRH 2002 235,678.50 0.00 0.00
2003 0.00 0.00 0.00
2004 0.00 0.00 0.00
2005 0.00 0.00 0.00
2006 (Est.) 0.00 0.00 0.00
Ruperto S. Nicdao,Jr.
President 2002 874,497.48 0.00 0.00
2003 0.00 0.00 0.00
2004 0.00 0.00 0.00
2005 0.00 0.00 0.00
2006 (Est.) 0.00 0.00 0.00
Jose M. Taruc
VP-DZRH 2002 150,348.42 0.00 0.00
2003 0.00 0.00 0.00
2004 0.00 0.00 0.00
2005 0.00 0.00 0.00
2006 (Est.) 0.00 0.00 0.00
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.
Security Ownership of Certain Beneficial Owners and Management
Owners of at least 5% of the Company’s securities as of 31 December 2005, were as follows:
Title of Class Name and Address Amount and Citizenship Percent

of Record/Beneficial Nature of
Owner and Ownership (R or B)
Relationship with
Issuer
Common Elizalde Holdings
nd
Corporation*, 2 139,031,704
Floor, MBC Bldg., Filipino 34.53%
CCP Complex, R/B
Roxas Boulevard,
Pasay City, M.M.
(major
stockholder)
Elizalde Land Inc.*,
nd
2 Floor, MBC
Bldg., CCP 120,000,000 Filipino 29.80%
Complex, Roxas
21
Boulevard, Pasay R/B
City, M.M. (major
stockholder)
Romulo Mabanta
Buenaventura
Sayoc & delos
Angeles Law 69,910,993.25
th
Offices*, 30 Floor, Filipino 17.36%
Citibank Tower, R
8741 Paseo de
Roxas, Makati City,
M.M. (Trust Fund
for the Elizalde
Children)
Cebu Broadcasting
nd
Company*, 2
Floor, MBC Bldg.,
CCP Complex, 50,000,000 Filipino 12.42%
Roxas Boulevard,
Pasay City, M.M. R/B
(Affiliate
Broadcast
Company)
*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 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.
Security Ownership of Management as of December 31, 2005

Title of Class Directors Amount/Nature of Percent Citizenship
Ownership (R/B)
Common Ruperto S. 129,201 (R/B) 0.03% Filipino
Nicdao, Jr.
Hadrian V. 46,111 (R/B) 0.00% Filipino
Arroyo
Eduardo G. 11,779 (R/B) 0.00% Filipino
Cordova
Juan M. Elizalde 1,000 (R/B) 0.00% Filipino
Jose M. Taruc 1,000 (R/B) 0.00% Filipino
Fred J. Elizalde 94 (R/B) 0.00% Filipino
Julio P. Macuja, 36 (R/B) 0.00% Filipino

II
Gabriel L. 36 (R/B) 0.00% Filipino
Villareal
George T. 1,000 (R/B) 0.00% Filipino
Goduco
Title of Class Officers Amount/Nature of Percent Citizenship

Ownership (R/B)
Common Fred J. Elizalde, 94 (R/B) 0.00% Filipino
Chairman
22
Hadrian V. 46,111 (R/B) 0.00% Filipino
Arroyo, Vice
Chairman-Corp.
Secretary
Ruperto S. 129,201 (R/B) 0.03% Filipino
Nicdao, Jr.,
President
Julio P. Macuja 36 (R/B) 0.00% Filipino

II, EVP
Eduardo G. 11,779 (R/B) 0.00% Filipino

Cordova, SVP-
CFO
Juan M. Elizalde, 1,000 (R/B) 0.00% Filipino
VP-Operations
Jose M. Taruc, 1,000 (R/B) 0.00% Filipino

VP-DZRH
Irving A. Lisondra 1,000 (R/B) 0.00% Filipino

VP-Creative
Services
Robert A. Pua, 11,293 (R/B) 0.00% Filipino
VP-Controller
Carlea C. 1,000 (R/B) 0.00% Filipino

Miranda, AVP-
Treasury
Elpidio Macalma 1,000 (R/B) 0.00% Filipino
AVP-DZRH
Ellen A. Fullido, 36 (R/B) 0.00% Filipino

AVP-HRD
Mario Valentino 1,000 (R/B) 0.00% Filipino

M. Victa, AVP-
Drama
All Directors and Officers as a Group 205,586 .05%
Changes in Control
There are no arrangements that may result in a change in control of the company.
Certain Relationships and Related Transactions
Refer to note 10, page 19 of 2005 Audited Financial Statements.
PART IV – CORPORATE GOVERNANCE
The company, through its Compliance Officer, evaluates the level of compliance of the Board
of the Directors and top-level management with the Manual of Corporate Governance semi-
annually. As of December 31, 2005, the members of the Audit, Nominating and
23
Compensation Committees have been appointed and will be recommended for re-appointment
once the new Board is constituted. There were no deviations from the company’s Manual of
Corporate Governance noted during the year 2005. 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
The audited financial statements ending 31 December 2005 are hereto attached
and incorporated by reference.
(b) Reports on SEC Form 17-Q & 17-C

The last quarterly report for Form 17-Q was for the quarter ending September 30,
2005.
There was no Form 17-C submitted during the last 6 months.
(c) Part VI of “Annex C, as amended”

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.
24
25
26
27
28
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
(Company’s Full Name)
M B C B u i l d i n g , S t a r C i t y
C C P C o m p l e x , R o x a s B o u l e v a r d
P a s a y C i t y
(Business Address: No. Street City/Town/Province)
Mr. Eduardo Cordova 832-6149

(Contact Person) (Company Telephone Number)
1 2 3 1 A A F S
Month Day (Form Type) Month Day
(Calendar Year) (Annual Meeting)
Not Applicable
(Secondary License Type, If Applicable)
Not Applicable
Dept. Requiring this Doc. Amended Articles Number/Section
Total Amount of Borrowings
Total No. of Stockholders Domestic Foreign
To be accomplished by SEC Personnel concerned
File Number LCU
Document ID Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
999
29
Manila Broadcasting Company
Financial Statements
December 31, 2005 and 2004
and
Report of Independent Auditors
30
31
BALANCE SHEETS
December 31
2004
(As restated,
2005 Note 2)
ASSETS
Current Assets
Cash (Note 11) =
P27,249,435 P
=57,400,711
Receivables - net (Notes 5, 8 and 11) 188,639,328 204,185,011
Due from affiliates (Notes 10 and 11) 136,828,655 149,425,530
Materials and supplies - at net realizable value 10,269,747 12,410,774
Prepaid expenses and other current assets 1,417,326 9,210,498
Total Current Assets 364,404,491 432,632,524
Noncurrent Assets
Available-for-sale financial assets (Note 11) 26,099,910 –
Property and equipment - net (Note 6)
At cost 223,854,747 270,461,173
At revalued amount 65,762,180 65,762,180
Investment properties - net (Note 7) 121,479,024 –
Deferred income tax assets (Note 16) 25,308,432 22,106,346
Investment in shares of stock - at cost – 26,029,910
Other noncurrent assets 3,817,888 5,552,120
Total Noncurrent Assets 466,322,181 389,911,729
TOTAL ASSETS P
=830,726,672 =822,544,253
P
LIABILITIES AND EQUITY

Current Liabilities
Notes payable (Notes 8 and 11) P
=114,329,019 =136,329,019
P
Accounts payable and accrued expenses (Notes 9, 10 and 11) 142,567,668 122,092,527
Talent fees and commissions payable 14,026,819 9,779,862
Income tax payable 5,543,615 1,591,992
Total Current Liabilities 276,467,121 269,793,400
Noncurrent Liabilities
Accrued retirement benefits (Note 15) 12,538,684 12,643,695
Deferred income tax liability (Note 16) 18,639,586 19,882,225
Total Noncurrent Liabilities 31,178,270 32,525,920
Equity
Capital stock (Note 12) 402,803,777 402,803,777
Additional paid-in capital 79,354 79,354
Revaluation increment in land (Note 6) 43,492,367 42,249,728
Reserve for fluctuation in available-for-sale financial assets 70,000 –
Retained earnings (Notes 2 and 13) 76,756,570 75,212,861
Treasury stock - 120,787 shares (120,787) (120,787)
Total Equity 523,081,281 520,224,933
TOTAL LIABILITIES AND EQUITY P
=830,726,672 =822,544,253
P
See accompanying Notes to Financial Statements.
32
STATEMENTS OF INCOME
Years Ended December 31

2004
(As restated,
2005 Note 2)
REVENUE (Note 10) =669,435,748

P P
=642,075,782
Cost and operating expenses (Notes 10 and 14) (619,164,287) (596,736,725)

Interest expense (Notes 8 and 11) (15,232,851) (17,312,538)
Rental income (Note 7) 1,898,310 –
Interest income 226,609 100,444
Other income - net 902,562 726,955
INCOME BEFORE INCOME TAX 38,066,091 28,853,918
PROVISION FOR INCOME TAX (Note 16) 11,309,741 9,801,969
NET INCOME =26,756,350

P P
=19,051,949
Weighted Average Number of

Shares Outstanding 402,682,990 402,682,990
Earnings Per Share =0.07

P P
=0.05
33
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
Revaluation Reserve for

Capital Additional Increment Fluctuation in Retained
Stock Paid-in in Land Available-for-sale Earnings Treasury
(Note 12) Capital (Note 6) Financial Assets (Notes 2 and 13) Stock Total
BALANCES AT DECEMBER 31, 2003, AS PREVIOUSLY REPORTED =402,803,777

P =79,354
P =42,249,728
P P
=– P
=63,375,233 (P
=120,787) P
=508,387,305
Effect of change in accounting for employee benefits (Note 2) – – – – (7,214,321) – (7,214,321)
BALANCES AT DECEMBER 31, 2003, AS RESTATED 402,803,777 79,354 42,249,728 – 56,160,912 (120,787) 501,172,984
Net income for the year – – – – 19,051,949 – 19,051,949
BALANCES AT DECEMBER 31, 2004, AS RESTATED =402,803,777

P =79,354
P =42,249,728
P P
=– P
=75,212,861 (P
=120,787) P
=520,224,933
BALANCES AT DECEMBER 31, 2004, AS PREVIOUSLY REPORTED =402,803,777

P =79,354
P =42,249,728
P P
=– P
=83,810,573 (P
=120,787) P
=528,822,645
Effect of change in accounting for employee benefits (Note 2) – – – – (8,597,712) – (8,597,712)
BALANCES AT DECEMBER 31, 2004, AS RESTATED 402,803,777 79,354 42,249,728 – 75,212,861 (120,787) 520,224,933
Effect of change in accounting for financial instruments (Note 2) – – – – (44,968) – (44,968)
BALANCES AT JANUARY 1, 2005 402,803,777 79,354 42,249,728 – 75,167,893 (120,787) 520,179,965
Income (expense) recognized directly in equity

Effect of change in corporate income tax rate
on revaluation increment (Note 16) – – 1,242,639 – – – 1,242,639
Fair value adjustment on available-for-sale financial assets – – – 70,000 – – 70,000
Total income and expense for the year directly recognized in equity – – 1,242,639 70,000 – – 1,312,639
Net income for the year – – – – 26,756,350 – 26,756,350
Total income and expense for the year – – 1,242,639 70,000 26,756,350 – 28,068,989
Cash dividends, P
=0.06 per share – – – – (25,167,673) – (25,167,673)
BALANCES AT DECEMBER 31, 2005 =402,803,777

P =79,354
P =43,492,367
P P
=70,000 P
=76,756,570 (P
=120,787) P
=523,081,281

STATEMENTS OF CASH FLOWS
Years Ended December 31

2004
(As restated,
2005 Note 2)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax =38,066,091
P P
=28,853,918
Adjustments for:
Depreciation and amortization (Notes 6 and 7) 51,747,363 56,476,288
Interest expense 15,232,851 17,312,538
Provisions (reversal of allowance) for:
Doubtful accounts (Note 14) 1,841,932 4,633,773
Materials and supplies obsolescence 1,049,089 (1,829,969)
Property and equipment written-off 361,598 –
Interest income (226,609) (100,444)
Dividend income (750) –
Operating income before working capital changes 108,071,565 105,346,104
Decrease (increase) in:
Receivables 13,703,751 18,172,313
Due from affiliates 12,596,875 (12,842,866)
Materials and supplies 1,091,938 1,071,777
Prepaid expenses and other current assets 7,793,172 408,864
Increase (decrease) in:
Accounts payable and accrued expenses 20,884,819 (44,480,557)
Talent fees and commissions payable 4,246,957 (3,981,494)
Accrued retirement benefits (105,011) 2,034,399
Net cash generated from operations 168,284,066 65,728,540
Income taxes paid (10,560,204) (9,342,577)
Interest received 166,337 100,444
Net cash from operating activities 157,890,199 56,486,407
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (Note 6) (3,593,488) (2,256,985)
Additions to investment property (Note 7) (123,388,071) –
Decrease (increase) in other noncurrent assets 1,749,536 2,361,312
Dividends received 750 –
Net cash from (used in) investing activities (125,231,273) 104,327
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments of notes payable (22,000,000) (8,570,981)
Dividends paid (25,167,673) –
Interest paid (15,642,529) (16,560,435)
Cash used in financing activities (62,810,202) (25,131,416)
NET INCREASE (DECREASE) IN CASH (30,151,276) 31,459,318
CASH AT BEGINNING OF YEAR 57,400,711 25,941,393
CASH AT END OF YEAR =27,249,435
P P
=57,400,711

NOTES TO FINANCIAL STATEMENTS
1. Corporate Information
Manila Broadcasting Company (the Company) was incorporated in the Philippines. 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.
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. The affiliated service companies are
responsible for the day-to-day operations of their respective units including expenses related to their
respective operations. As consideration for the services rendered by the affiliated service companies
under the System, the Company pays service fees based on a certain percentage of collection (see
Note 10). As approved by the Board of Directors (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.
The accompanying financial statements were authorized for issue by the BOD on April 11, 2006.
2. Summary of Significant Accounting and Financial Reporting Policies
The principal accounting and financial reporting policies adopted in preparing the financial
statements of the Company are as follows:
Basis of Preparation
The accompanying financial statements of the Company are prepared in compliance with accounting
principles generally accepted (GAAP) in the Philippines as set forth in Philippine Financial
Reporting Standards (PFRS) using the historical cost convention, except for land and available-for-
sale financial assets which have been measured at fair value. These are the Company’s first
financial statements prepared in compliance with PFRS.
The Company prepared its financial statements until December 31, 2004 in accordance with
Statements of Financial Accounting Standards and Statement of Financial Accounting
Standards/International Accounting Standards. The Company applied PFRS 1, First-time Adoption
of Philippine Financial Reporting Standards, in preparing the financial statements, with January 1,
2004 as the date of transition. The transition to PFRS resulted in certain changes to the Company’s
previous accounting and financial reporting policies. The comparative figures for the 2004 financial
statements were restated to reflect the adjustments resulting from the adoption of new and revised
accounting standards except Philippine Accounting Standards (PAS) 32, Financial Instruments:
Disclosure and Presentation and PAS 39, Financial Instruments:
-2-
Recognition and Measurement. Based on the exemption available under PFRS 1 and as allowed by
Philippine Securities and Exchange Commission (SEC), the Company applied PAS 32 and 39 from
January 1, 2005. An explanation of how the transition to PFRS has affected the reported financial
position and financial performance of the Company is disclosed separately.
Adoption of New and Revised Accounting Standards

The Company adopted the following new and revised accounting standards which became effective
for periods beginning January 1, 2005:
New Accounting Standards
• PAS 19, Employee Benefits, prescribes the accounting and disclosures by employers for employee
benefits (including short-term employee benefits, post-employment benefits, other long-term employee
benefits and termination benefits). For post-employment benefits classified as defined benefit plans, the
standard requires (a) the use of the projected unit credit method to measure a company’s obligations and
costs; (b) a company to determine the present value of defined benefit obligations and fair value of any
plan assets with sufficient regularity; and, (c) the recognition of a specific portion of net cumulative
actuarial gains and losses when the net cumulative amount exceeds 10% of the greater of the present
value of the defined benefit obligation or 10% of the fair value of the plan assets, but also permits the
immediate recognition of these actuarial gains and losses.
The change in accounting policy was accounted for retroactively and the comparative financial
statements for 2004 were restated. Retained earnings as of December 31 and January 1, 2004 decreased
by P=8.6 million and P =7.2 million, respectively, representing the increase in the retirement benefit
obligation, net of deferred income tax effect of P =4.0 million and P =3.4 million, respectively. The
restatement increased liabilities as of December 31, 2004 by P=12.6 million. The decrease in net income
in 2004 of P
=1.4 million represents the increase in retirement benefit expense, net of the related deferred
income tax effect of P
=0.7 million.
• PAS 21, The Effects of Changes in Foreign Exchange Rates, prohibits the capitalization of
foreign exchange losses and also requires a company to determine its functional currency and
measure its results and financial position in that currency. Translation procedures are specified
when the presentation currency used for reporting differs from the company’s functional
currency. Adoption of PAS 21 did not have any impact on the financial statements. The
Company has determined its functional currency as Philippine peso.
• PAS 32, Financial Instruments: Disclosure and Presentation, covers the disclosure and
presentation of all financial instruments. The standard requires more comprehensive disclosures
about the company’s financial instruments in the financial statements. New disclosure
requirements include terms and conditions of financial instruments used by the company, types
of risks associated with financial instruments (market risk, price risk, credit risk, liquidity risk,
and cash flow risk), fair value information of financial assets and financial liabilities, and the
company’s financial risk management policies and objectives. The standard also requires
financial instruments to be classified as liabilities or equity in accordance with their substance
and not their legal form.
-3-
• PAS 39, Financial Instruments: Recognition and Measurement, establishes the accounting and
reporting standards for recognizing and measuring a company’s financial assets and financial
liabilities. The standard requires a financial asset or financial liability to be recognized initially at
fair value. Subsequent to initial recognition, the company should continue to measure financial
assets at their fair values, except for loans and receivables and held-to-maturity investments, which
are to be measured at cost or amortized cost using the effective interest rate method. Financial
liabilities are subsequently measured at cost or amortized cost, except for liabilities classified as “at
fair value through profit or loss” and derivatives, which are subsequently to be measured at fair
value.
PAS 39 also covers the accounting for derivative instruments. This standard has expanded the
definition of a derivative instrument to include derivatives (and derivative-like provisions)
embedded in non-derivative contracts. Under the standard, every derivative instrument is
recorded in the balance sheets as either an asset or liability measured at its fair value.
Derivatives that do not qualify as hedges are adjusted to fair value through income. If a
derivative is designated and qualifies as a hedge, depending on the nature of the hedging
relationship, changes in the fair value of the derivative are either offset against the changes in
fair value of the hedged assets, liabilities, and firm commitments through earnings, or recognized
in equity until the hedged item is recognized in earnings. A company must formally document,
designate and assess the hedge effectiveness of derivative transactions that receive hedge
accounting treatment. Derivatives that are not designated and do not qualify as hedges are
adjusted to fair value through income.
As allowed by the Philippine SEC, the adoption of PAS 39 did not result in the restatement of
prior year’s financial statements. The cumulative effect of adopting the accounting standard was
charged against the January 1, 2005 retained earnings.
The adoption of PAS 39 increased net income for the year ended December 31, 2005 by
=0.06 million and increased equity by P
P =0.03 million as of January 1, 2005, representing the
designation of investment of shares of stock as available-for-sale financial assets and fair value
adjustment amounting to P =0.07 million, and the effect of the recognition of refundable deposits
at fair value on inception date and the subsequent accretion amounting to P=0.04 million.
• PAS 40, Investment Property, prescribes the accounting treatment for investment
property which is defined as land and/or building held to generate income or for capital
appreciation or both. An investment property is initially recognized at cost. Subsequent
to initial recognition, an investment property is either carried at (i) cost less accumulated
depreciation and any impairment in value, or (ii) fair value, wherein fair value
movements are recognized as income or expense. Transfers to or from investment
property classification are made only when there is evidence of a change in use. Adoption
of this standard resulted in the recognition of land and building acquired in 2005 as
“Investment properties” in the 2005 balance sheet. The Company adopted the cost
method in accounting for its investment properties.
-4-
• PFRS 2, Share-based Payments, sets out the measurement principles and accounting requirements for
share-based payment transactions with employees or other parties to be settled in cash, other assets, or
equity instruments of the entity. The adoption of this standard has no material impact on the Company’s
financial statements.
• PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations, specifies the accounting for
assets held for sale and the presentation and disclosure requirements for discontinued operations. Under
this standard, qualifying noncurrent assets or disposal groups held for sale shall be carried at fair value
less cost to sell if this amount is lower than its carrying amount less accumulated impairment losses. The
Company shall not depreciate (or amortize) noncurrent assets (or disposal groups) while classified as held
for sale. Any gain or loss on the remeasurement of a noncurrent asset (disposal group) classified as held
for sale shall be included in the profit or loss from continuing operations. As of December 31, 2005 and
2004, the Company has no qualifying noncurrent assets held for sale.
Revised Accounting Standards
The adoption of the following revised accounting standards does not have a material effect on the
Company’s financial statements. Additional disclosures required by the revised accounting standards
were included in the Company’s financial statements.
• PAS 1, Presentation of Financial Statements, provides a framework within which an entity assesses how
to present fairly the effects of transactions and other events; provides the base criteria for classifying
liabilities as current or noncurrent; prohibits the presentation of income from operating activities and
extraordinary items as separate line items in the statements of income; and specifies the disclosures about
key sources of estimation, uncertainty and judgments that management has made in the process of
applying the entity’s accounting policies.
• PAS 2, Inventories, reduces the alternatives for measurement of inventories. It does not permit the use of
the last in, first out formula to measure the cost of inventories. Moreover, the revised accounting
standards does not permit foreign exchange differences arising directly on the recent acquisitions of
inventories invoiced in a foreign currency to be included in the cost of purchase of inventories.
• PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, removes the concept of
fundamental error and the allowed alternative to retrospective application of voluntary changes in
accounting policies and retrospective restatement to correct prior period errors; updates the previous
hierarchy of guidance to which management refers and whose applicability it considers when selecting
accounting in the absence of standards and interpretations that specifically apply; it defines material
omission or misstatements; and describes how to apply the concept of materiality when applying
accounting policies and correcting errors.
• PAS 10, Events After the Balance Sheet Date, provides a limited clarification of the accounting for
dividends declared after the balance sheet date.
-5-
• PAS 16, Property, Plant and Equipment, (a) provides additional guidance and clarification on recognition
and measurement of items of property, plant and equipment; (b) requires the capitalization of the costs of
asset dismantling, removal or restoration as a result of either acquiring or having used the asset for
purposes other than to produce inventories during the
period; and (c) requires measurement of an item of property, plant and equipment acquired in exchange
for a non-monetary asset or a combination of monetary and non-monetary assets at fair value, unless the
exchange transaction lacks commercial substance. Under the previous version of the standard, an entity
measured such an acquired asset at fair value unless the exchanged assets were similar.
• PAS 17, Leases, provides a limited revision to clarify the classification of a lease of land and buildings
and prohibits expensing of initial direct costs in the financial statements of the lessors.
• PAS 24, Related Party Disclosures, provides additional guidance and clarity in the scope of the standard,
the definitions and disclosures for related parties. It also requires disclosure of the compensation of key
management personnel in total by benefit type.
• PAS 36, Impairment of Assets, establishes frequency of impairment testing for certain intangibles and
provides additional guidance on the measurement of an asset’s value in use.
Reconciliation of the Effect of Adopting PAS 19

The reconciliation of the effect of adopting PAS 19 as it applies on assets, liabilities, equity and retained
earnings as of December 31 and January 1, 2004 and on net income for the year ended December 31, 2004 is
presented below:
Assets, liabilities and equity

December 31, 2004 January 1, 2004
Assets Liabilities Equity Assets Liabilities Equity
As previously reported
under previous GAAP =818,498,270 P
P =289,675,625 P
=528,822,645 P
=852,987,413 P
=344,600,108 =
P508,387,305
Effect of transition to
PFRS - PAS 19 4,045,983 12,643,695 (8,597,712) 3,394,975 10,609,296 (7,214,321)
As restated P
=822,544,253 P
=302,319,320 P
=520,224,933 P
=856,382,388 P
=355,209,404 P
=501,172,984
Retained earnings
December 31, January 1,

2004 2004
As previously reported under previous GAAP P
=83,810,573 P
=63,375,233
Effect of transition to PFRS - PAS 19 (8,597,712) (7,214,321)
As restated =75,212,861
P =56,160,912
P
-6-
Net income and earnings per share for the year ended December 31, 2004
Earnings Per
Net Income Share
As previously reported under previous GAAP =20,435,340
P =0.0507
P
Effect of transition to PFRS - PAS 19 (1,383,391) (0.0034)
As restated =19,051,949
P =0.0473
P
Note to the reconciliation

Under PFRS, retirement benefits are determined using the projected unit credit method. Actuarial
gains and losses that exceed a 10% “corridor” are amortized over the expected average remaining
working lives of participating employees and vested past service cost, recognized immediately. The
change in accounting policy reduced retained earnings as of January 1, 2004 by P =7.2 million,
representing the increase in the accrued retirement benefits as of January 1, 2004 of
=10.6 million, net of the corresponding deferred income tax of P
P =3.4 million. Retirement benefits
expense for the year ended December 31, 2004 increased by P =2.0 million resulting in a decrease in
the previously reported net income by P
=1.4 million, net of deferred income tax. As of December 31,
2004, retained earnings decreased by P=8.6 million; accrued retirement benefits increased by P =12.6
million and deferred income tax assets increased by P
=4.0 million.
Effect on 2004 Statement of Cash Flows

There are no material differences between the statement of cash flows prepared under PFRS and the
statement of cash flows presented under previous GAAP except for the adoption of PAS 19 as
discussed above.
Standards not yet Effective
The following accounting standards and/or amendments to existing standards are effective on the
following dates and have not been early adopted. Management does not believe that the applications
of these standards and/or amendments to existing standards will have a significant impact on the
financial statements. The required additional disclosures will be included in the financial statements
when the standards and/or amendments are adopted on their effectivity dates.
• Amendments to PAS 19, Employee Benefits - Actuarial Gains and Losses, Group Plans and
Disclosures - effective January 1, 2006
• Amendments to PAS 39, Financial Instruments: Recognition and Measurement - effective
January 1, 2006
• PFRS 7, Financial Instruments: Disclosures - effective January 1, 2007
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 amount of cash with original maturities of three
months or less and that are subject to an insignificant risk of changes in value.
Receivables
Receivables are stated at face value less allowance for doubtful accounts.
-7-
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. Net realizable value is the current replacement cost.
Financial Assets and Liabilities

Effective January 1, 2005, financial assets within the scope of PAS 39 are classified as either
financial assets at fair value through profit or loss, loans and receivable, held-to-maturity
investments, and available-for-sale financial assets, as appropriate. Financial liabilities, on the other
hand, are classified as either financial liabilities at fair value through profit or loss or other liabilities,
as appropriate. The Company determines the classification of its financial assets and liabilities at
initial recognition and, where allowed and appropriate, reevaluates this designation at each financial
yearend.
Financial assets and liabilities are recognized initially at fair value. Directly attributable transaction
costs, if any, are included in the initial measurement of financial assets and liabilities, except for any
financial instruments measured at fair value through profit or loss. The Company recognizes a
financial asset or liability in the balance sheets when it becomes a party to the contractual provisions
of the instrument.
Financial Assets at Fair Value through Profit or Loss

Financial assets classified as held for trading are included in the category “financial assets at fair
value through profit or loss”. Financial assets are classified as held for trading if they are acquired
for the purpose of selling in the near term. Derivatives are also classified as held for trading unless
they are designated and are effective hedging instruments. Gains or losses on investments held for
trading are recognized in the statements of income.
The Company has no derivative instruments.
Held-to-maturity Investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified
as held-to-maturity when the Company has the positive intention and ability to hold to maturity.
Investments intended to be held for an undefined period are not included in the classification. For
investments carried at amortized cost, gains and losses are recognized in income when the
investments are derecognized or impaired, as well as through the amortization process.
The Company has no held-to-maturity investments.
Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are carried at amortized cost using the effective
interest method. Gains and losses are recognized in income when the loans and receivables are
derecognized or impaired, as well as through the amortization process.
Included in this category are the Company’s trade and other receivables.
-8-
Available-for-sale Financial Assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as
available-for-sale or are not classified in any of the three preceding categories. After initial
recognition, available-for-sale financial assets are measured at fair value with gains or losses being
recognized as a separate component of equity until the investment is derecognized or until the
investment is determined to be impaired at which time the cumulative gain or loss previously
reported in equity is included in the statements of income.
Included in this category are the Company’s listed and unlisted equity investments.
The fair value of investments that are actively traded in organized financial markets is determined by
reference to quoted market bid prices at the close of business on the balance sheet date. For
investments where there is no active market, fair value is determined using generally accepted
valuation techniques.
Prior to January 1, 2005, loans and receivables are carried at cost while unlisted available-for-sale
financial assets are carried at cost less allowance for any substantial decline in value of investment,
and listed available-for-sale financial assets are carried at lower of cost or market.
Derecognition of financial assets and liabilities
Financial Assets
A financial asset (or, where applicable a part of a financial asset or part of similar financial assets) is
derecognized where:
• the rights to receive cash flows from the asset have expired;
• the Company retains the right to receive cash flows from the asset, but has assumed an obligation
to pay them in full without material delay to a third party under a “pass-through” arrangement; or
• the Company has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
Where the Company has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the asset is recognized to the extent of the Company’s continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration that
the Company could be required to repay.
Where continuing involvement takes the form of a written and/or purchased option (including a
cash-settled option or similar provision) on the transferred asset, the extent of the Company’s
continuing involvement is the amount of the transferred asset that the Company may repurchase,
except that in the case of a written put option (including a cash-settled option or similar provision)
on an asset measured at fair value, the extent of the Company’s continuing involvement is limited to
the lower of the fair value of the transferred asset and the option exercise price.
-9-
Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or expired.
Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognized in the statements of
income.
Impairment of Financial Assets

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

If there is objective evidence that an impairment loss on loans and receivables carried at amortized
cost has been incurred, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses
that have not been incurred) discounted at the financial 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 the statements of income.
The Company first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial assets
that are not individually significant. If it is determined that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not, the asset
is included in a group of financial assets with similar credit risk characteristics and that group of
financial assets is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognized are not included in a
collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is
recognized in the statements of income, to the extent that the carrying value of the asset does not
exceed its amortized cost at the reversal date.
Assets Carried at Cost

If there is objective evidence that an impairment loss on an unquoted equity instrument that is not
carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is
linked to and must be settled by delivery of such an unquoted equity instrument has been incurred,
the amount of the loss is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows discounted at the current market rate of return for a
similar financial asset.
- 10 -
Available-for-sale Financial Assets

If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net
of any principal payment and amortization) and its current fair value, less any impairment loss
previously recognized in profit or loss, is transferred from equity to the statements of income.
Reversals in respect of equity instruments classified as available-for-sale are not recognized in profit.
Reversals of impairment loses on debt instruments are reversed through profit or loss, if the increase
in fair value of the instrument can be objectively related to an event occurring after the impairment
loss was recognized in profit or loss.
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
operations, such as repairs and maintenance, are normally charged to income 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 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 the
statements of income.
The 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, 2005. The increase in the valuation of land,
net of deferred income tax liability, is credited to “Revaluation increment in land”. 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. 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:
Building and leasehold improvements 7 - 17 years or term of lease,

whichever is shorter
Broadcasting and transmission equipment 8 - 11 years
Furniture and equipment 5 years
Transportation equipment 4 years
The residual values, estimated useful lives and depreciation and amortization method are reviewed
periodically to ensure that the residual values, periods and method of depreciation and amortization are
consistent with the expected pattern of economic benefits from items of property and equipment.
- 11 -
Construction in progress, included in property and equipment, is stated at cost. This includes cost of
construction, property and equipment, and other direct costs. Construction in progress is not
depreciated until such time as the relevant assets are completed and put into operational use.
Investment Properties
Investment properties are measured at cost, including transaction costs. 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 the statements
of income 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.
Depreciation on building and generator set is calculated on a straight-line basis over their estimated
useful lives of 10 years and eight years, respectively.
Impairment of Nonfinancial Assets

The carrying values of property and equipment and other nonfinancial assets 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 net selling price 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. Impairment losses, if any, are recognized in the statements of income.
Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured.
Broadcasting fees are recognized as income on the date the program is broadcasted or the
advertisement is aired.
- 12 -
Retirement Benefits Cost

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 are 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 of government bonds that have terms to
maturity approximating to the terms of the related retirement benefits liability.
On the initial adoption of PAS 19, the effect of change in accounting policy includes all actuarial
gains and losses that arose in earlier periods that fall within the 10% corridor. In subsequent periods,
portion of 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 the
greater of the 10% of the present value of defined benefit obligation or 10% of 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 recognized as expense in the period in which they are incurred.
Income Taxes
Current Income Tax
Current income tax assets and 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 are enacted or substantively enacted at the balance sheet date.
Deferred Income Tax

Deferred income tax is provided, using the balance sheet liability method, on all temporary differences at the
balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences, including asset
revaluations. Deferred income tax assets are recognized for all deductible temporary differences and
carryforward benefits of unused tax credits from excess minimum corporate income tax (MCIT) over regular
corporate income tax and net operating loss carryover (NOLCO), to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences and carryforward benefits of
unused MCIT and NOLCO can be utilized. Deferred income tax, however, is not recognized when it arises
from the initial recognition of an asset or liability in a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
- 13 -
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Leases
Operating lease expense is recognized in the statements of income on a straight-line basis over the
lease term.
Operating lease income is recognized over the term of the lease as provided in the lease contract.
Earnings Per Share

Earnings per share is computed by dividing the net income by the weighted average number of
shares outstanding during the year after giving retroactive effect to any stock dividends.
Foreign Currency Transactions

Transactions in foreign currencies are recorded using the exchange rate at the date of the transaction.
Outstanding monetary assets and liabilities denominated in foreign currencies are restated using the
rate of exchange at the balance sheet date. Exchange gains or losses arising from foreign currency-
denominated transactions and translations are credited to or charged against operations.
Subsequent Events
Post-year-end events that provide additional information about the Company’s position at the
balance sheet date (adjusting events) are reflected in the financial statements. Post-year-end events
that are not adjusting events are disclosed in the notes when material.
3. Significant Accounting Judgments and Estimates
The preparation of the accompanying financial statements in compliance with Philippine GAAP
requires management to make judgments, estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. The judgments, estimates and
assumptions used in the accompanying financial statements and accompanying notes are based upon
management’s 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.
- 14 -
Estimated 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 Company’s relationship with the client, the client’s payment behavior and
known market factors. The Company reviews the age and status of receivables, and identifies
accounts that are to be provided with allowances on a continuous basis.
As of December 31, 2005 and 2004, allowance for doubtful accounts amounted to P
=54.0 million and
P52.7 million, respectively.
= Receivables, net of related allowance, amounted to
=188.6 million as of December 31, 2005 and P
P =204.2 million as of December 31, 2004 (see
Note 5).
Estimated allowance for inventory obsolescence

Adequate provision is made by management. The amount of estimate is based on a number of
factors which include, among others, age and status of inventories and the Company’s experience.
Allowance for inventory obsolescence amounted to P =1.5 million and P =0.5 million for the years
ended December 31, 2005 and 2004, respectively. Inventories, net of related provision for inventory
obsolescence, amounted to P
=10.3 million and P=12.4 million as of December 31, 2005 and 2004,
respectively.
Estimated useful lives of property and equipment and investment properties

The Company estimated the useful lives of its property and equipment and investment properties
based on the period over which the assets are expected to be available for use. The Company
reviews annually the estimated useful lives of property and equipment and investment properties
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 affected by changes in these estimates brought about by changes in
factors mentioned. As of December 31, 2005 and 2004, property and equipment, net of accumulated
depreciation, amounted to P =289.6 million and P =336.2 million, respectively. Total depreciation and
amortization expense charged to operations amounted to P =51.7 million and
=56.5 million in 2005 and 2004, respectively. The carrying value of investment properties amounted
P
to P
=121.5 million as of December 31, 2005 (see Notes 6 and 7).
Asset Impairment
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
considered important which could trigger an impairment review include the following:
• significant adverse changes in the technological, market, or economic environment in which the
Company operates
• significant decrease in the market value of an asset
• significant increase in the discount rate used for the value in use calculations
• evidence of obsolescence and physical damage
• significant changes in the manner in which an asset is used or expected to be used
- 15 -
• plans to restructure or discontinue an operation

• evidence is available from internal reporting that the economic performance of an asset is, or
will be, worse than expected
There were no assets identified for impairment in 2005 and 2004.
Deferred income tax assets

The Company reviews the carrying amounts of deferred income taxes at each balance sheet date and
reduces deferred income tax assets to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred income tax assets to be utilized. Based on
management forecast, there will be future taxable income on which the deductible temporary
differences can be applied.
As of December 31, 2005 and 2004, deferred income tax assets amounted to P
=25.3 million and
=22.1 million, respectively.
P
Financial assets and liabilities

The Company carries certain financial assets and 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 liabilities would affect profit or loss and
equity.
Pension and other retirement benefits

The determination of the obligation and cost of pension and other retirement benefits is dependent
on assumptions used by actuaries in calculating such amounts. Those assumptions are described in
Note 15 and include among others, discount rates which are determined by reference to market
yields at the balance sheet date of high-quality corporate bonds for government bonds consistent
with the estimated term of the obligation, expected returns on plan assets, and salary increase rates.
In accordance with Philippine GAAP, actual results that differ from the Company’s 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’s unrecognized net actuarial losses amounted to P =3.0 million as December 31, 2005
while unrecognized net actuarial gains amounted to P
=1.5 million as of December 31, 2004 (see Note
15). Accrued retirement benefits amounted to P=12.5 million and P=12.6 million as of December 31,
2005 and 2004, respectively.
- 16 -
4. Segment Information
For management purposes, the Company is organized as one operating division - radio broadcasting
- which is its primary activity. The Company has the following four programming formats together
with their respective percentage contribution to the total broadcasting fees:
2005 2004
DZRH and “Aksyon Radyo” Stations 51% 53%
Love Radio 29% 27%
Yes-FM 15% 15%
Hot-FM 5% 5%
5. Receivables
2005 2004
Trade (Note 8) P
=192,387,028 =179,337,198
P
Advances to stations (Note 17 ) 38,972,628 65,428,439
Others 11,315,709 12,162,741
242,675,365 256,928,378
Less allowance for doubtful accounts 54,036,037 52,743,367
P
=188,639,328 =204,185,011
P
6. Property and Equipment
a. Property and equipment carried at cost consist of:

2005
Building and Broadcasting Furniture

Leasehold and Transmission and Transportation Construction
Improvements Equipment Equipment Equipment in Progress Total
Cost
Beginning balances P
= 129,370,484 = 341,355,861
P P
= 89,561,808 P
= 26,847,507 P
=361,598 P= 587,497,258
Additions 212,761 − 443,427 2,937,300 − 3,593,488
Write-off − − − − (361,598) (361,598)
Ending balances 129,583,245 341,355,861 90,005,235 29,784,807 − 590,729,148
Accumulated Depreciation
and Amortization
Beginning balances 41,167,795 181,961,499 72,203,707 21,703,084 – 317,036,085
Depreciation (Note 14) 9,479,782 27,764,579 10,885,806 1,708,149 − 49,838,316
Ending balances 50,647,577 209,726,078 83,089,513 23,411,233 − 366,874,401
Net Book Values P
= 78,935,668 = 131,629,783
P P
= 6,915,722 P
= 6,373,574 P
=− P
= 223,854,747
- 17 -
2004
Building and Broadcasting Furniture
Leasehold and Transmission And Transportation Construction
Improvements Equipment Equipment Equipment in Progress Total
Cost
Beginning balances =127,443,976
P =341,355,861
P P
=89,532,717 P
=26,847,507 P
=60,212 P
=585,240,273
Additions 1,926,508 − 29,091 − 301,386 2,256,985
Ending balances 129,370,484 341,355,861 89,561,808 26,847,507 361,598 587,497,258
and Amortization
Beginning balances 32,927,974 153,001,228 55,121,889 19,508,706 – 260,559,797
Depreciation (Note 14) 8,239,821 28,960,271 17,081,818 2,194,378 − 56,476,288
Ending balances 41,167,795 181,961,499 72,203,707 21,703,084 − 317,036,085
Net Book Values =88,202,689
P =159,394,362
P P
=17,358,101 P
=5,144,423 P
=361,598 P
=270,461,173
Under the terms of agreements covering liabilities under trust receipts amounting to
P2.3 million as of December 31, 2004, certain property and equipment were released to the
=
Company in trust for the banks. The Company is accountable to the banks for the trusteed
property and equipment.
b. Land is stated at revalued amount as follows:

Cost P3,630,227
=
Appraisal increase 62,131,953
=65,762,180
P
The appraisal increase, net of deferred income tax liability, is presented as “Revaluation
increment in land” in the balance sheets.
As mentioned in Note 2, the Company’s land is stated at revalued amount as of December 31,
2005 based on the valuation conducted by an independent appraisal company. 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 appraisal increase is
included in the equity section of the balance sheets as “Revaluation increment
in land,” net of deferred income tax liability of P
=18.6 million and P
=19.9 million as of December
31, 2005 and 2004, respectively (see Note 16).
7. Investment Properties
2005
Land Building Total
Cost
Beginning balances =–
P =–
P P
=–
Additions 43,062,500 80,325,571 123,388,071
Ending balances 43,062,500 80,325,571 123,388,071
Beginning balances – – –
Depreciation (Note 14) – 1,909,047 1,909,047
Ending balances – 1,909,047 1,909,047
Net Book Values =43,062,500
P =78,416,524
P P
=121,479,024
- 18 -
Under the terms of agreements covering liabilities under trust receipts amounting to
=1.2 million as of December 31, 2005, the generator set, significant component of building, was
P
released to the Company in trust for the banks. The Company is accountable to the banks for the
trusteed generator set.
The fair values of investment properties approximate their carrying values as of December 31,
2005. Rental income generated from these investment properties amounted to P =1.9 million in
2005. Related direct operating expenses incurred amounted to P
=2.2 million.
8. Notes Payable
Notes payable consist of loans payable to local banks with interest at prevailing market rates. Loans
amounting to P =76.3 million in 2005 and P =66.3 in 2004 are unsecured. Loans amounting to
=23.0 million in 2005 and P
P =40.0 million in 2004 are collateralized by a corporate surety agreement among
certain affiliates, while loans amounting to P
=15.0 million in 2005 and
=30.0 million 2004 are collateralized by an assignment with recourse of various trade receivables to the
P
creditor bank. Average interest rates ranges from 9.00% to 11.88% in 2005 and 9.67% to 12.09% in 2004.
9. Accounts Payable and Accrued Expenses
2005 2004
Trade P
=22,389,769 =9,188,790
P
Trust receipts (Notes 6 and 7) 1,220,000 2,333,940
Accrued expenses (Notes 10 and 15) 77,101,294 71,108,887
Output tax and others 41,856,605 39,460,910
P
=142,567,668 =122,092,527
P
10. Related Party Transactions
The Company’s significant related party transactions are as follows:
a. The Company and several affiliated broadcasting companies 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 amounted to P =153.5 million in 2005
and P=167.0 million in 2004. The Company also bills the affiliated broadcasting companies
for their share in the expenses for operating the radio broadcast stations.
- 19 -
b. As a result of the System (see Note 1), in May 2002, 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 P =76.5 million in 2005 and P =137.6 million in 2004. The outstanding
payables related to these transactions amounted to P =14.0 million and
=5.0 million as of December 31, 2005 and 2004, respectively, and are shown as part of the
P
“Accounts payable and accrued expenses” account in the balance sheets.
c. In the normal course of business, the Company grants and obtains both interest-bearing and
interest-free advances to and from its affiliates. These advances have no definite call dates.
d. The outstanding amounts due from affiliates are as follows:
2005 2004
Star Parks Corporation P
=80,657,633 =115,141,355
P
Elizalde Holding Company 56,171,022 33,019,242
Pacific Broadcasting Systems, Inc. – 1,264,933
P
=136,828,655 =149,425,530
P
e. The compensation of key management personnel are as follows:

2004
(As restated,
2005 Note 2)
Short-term employee benefits P
=4,800,262 =2,863,616
P
Retirement benefits 390,933 560,688
P
=5,191,195 =3,424,304
P
11. Financial Assets and Liabilities

The following table sets forth the carrying values and estimated fair values of the financial assets and
liabilities recognized as of December 31, 2005:
Carrying Value Fair Value
Financial Assets
Cash P
=27,249,435 P
=27,249,435
Receivables 188,639,328 188,639,328
Due from affiliates 136,828,655 136,828,655
Available-for-sale financial assets 26,099,910 26,099,910
Financial Liabilities
Notes payable 114,329,019 114,329,019
Accounts payable and accrued expenses 142,567,668 142,567,668
- 20 -
Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of
financial instrument for which it is practicable to estimate such value:
Available-for-sale financial assets

Available for sale financial assets consists of investment in listed and unlisted shares of stock. The
fair value of the listed shares of stock is based on quoted market price.
Other financial assets and liabilities

Due to the short-term nature of the transactions, the fair value of cash, receivables, due from
affiliates, accounts payable and accrued expenses and notes payable approximate the amount of
consideration at the time of initial recognition.
Financial Risk Management Objectives and Policies

The Company’s principal financial instruments comprise of cash and amounts due from affiliates.
The other financial assets and liabilities arising directly from its operations are accounts receivable
and accounts payable and accrued expenses and notes payable.
The main risks arising from the Company’s financial instruments are credit risk, liquidity risk and
interest rate risk. The board reviews and agrees policies for managing each of these risks and they
are summarized below:
Credit risk
It is the Company’s policy that all clients who wish to trade on credit terms are subject to credit
verification procedures. In addition, receivable balances are monitored on an ongoing basis to
ensure that the Company’s exposure to bad debts is not significant.
Liquidity risk
The Company’s objective is to be able to finance capital expenditures and service maturing
obligations. To cover the Company’s financing requirements, 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.
Interest rate risk

The Company’s exposure to the risk of changes in market interest rate relates primarily to the
Company’s short-term obligations.
12. Capital Stock
The capital stock consists of 1,000,000,000 authorized shares with par value of P
=1.00 a share, of
which 402,803,777 shares have been issued.
- 21 -
13. Retained Earnings

The Company’s retained earnings are not available for declaration as dividends to the extent of the
cost of treasury stock.
14. Cost and Operating Expenses

2004
(As restated,
2005 Note 2)
Program costs (Note 10) =315,151,658
P P
=260,751,276
Agency commission and discounts 99,108,520 93,446,800
Service fees (Note 10) 76,537,328 137,563,382
Depreciation and amortization (Notes 6 and 7) 51,747,363 56,476,288
Communication, light and water 23,880,871 4,252,328
Personnel expenses (Note 15) 22,300,990 17,647,370
Entertainment, amusement and recreation 4,061,487 839,662
Advertising and promotions 3,708,752 4,878,606
Provision for doubtful accounts 1,841,932 4,633,773
Replacement parts 1,743,144 2,610,839
Others 19,082,242 13,636,401
P
=619,164,287 =596,736,725
P
15. Retirement Benefits and Separation Costs

As stated in Note 1, 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 P =37.1 million have been recognized in 2002 in addition to the
amount previously accrued. The remaining unpaid balance of the separation cost of P=46.4 million as
of December 31, 2005 and P =47.1 million as of December 31, 2004 are included in the “Accounts
payable and accrued expenses” account in the balance sheets.
The components of retirement expense in the statements of income are as follows:
2004
(As restated,
2005 Note 2)
Current service cost P
=742,975 P
=709,560
Interest cost 1,639,858 1,324,839
Expected return on plan assets (62,939) –
Net actuarial gains (15,748) –
Total retirement expense P
=2,304,146 =2,034,399
P
Actual return on plan assets P
=161,400 P
=1,709
- 22 -
The funded status and amounts recognized in the balance sheets for the retirement plan as of
December 31, 2005 and 2004 are as follows:
2004
(As restated,
2005 Note 2)
Present value of benefit obligation P
=18,874,581 P
=11,823,059
Fair value of plan assets (3,199,944) (629,387)
15,674,637 11,193,672
Unrecognized net actuarial (losses) gains (3,135,953) 1,450,023
Liability recognized in the balance sheets P
=12,538,684 P
=12,643,695
The changes in present value of the retirement obligation are as follows:

2004
(As restated,
2005 Note 2)
Present value of obligation at beginning of year P
=11,823,059 P
=11,236,974
Interest cost 1,639,858 1,324,839
Current service cost 742,975 709,560
Actuarial losses (gains) on obligation 4,668,689 (1,448,314)
Present value of obligation at end of year P
=18,874,581 =11,823,059
P
The changes in the fair value of plan assets are as follows:

2004
(As restated,
2005 Note 2)
Fair value of plan assets at beginning of year P
=629,387 =–
P
Expected return on plan assets 62,939 –
Contributions 2,409,157 627,678
Actuarial gain on plan assets 98,461 1,709
Fair value of plan assets at end of year P
=3,199,944 =629,387
P
The assumptions used to determine pension benefits of the Company for the period ended December
31, 2005 and 2004 are as follows:
2004
(As restated,
2005 Note 2)
Discount rate 10.19% 13.87%
Salary increase rate 10% 10%
Expected rate of return on plan assets 10% 10%
- 23 -
16. Income Taxes
a. The provision for income tax consists of:
2004
(As restated,
2005 Note 2)
Current P
=14,511,827 =10,699,023
P
Deferred (3,202,086) (897,054)
P
=11,309,741 =9,801,969
P
b. The deferred income tax assets consist of the tax effects of the following:
2004
(As restated,
2005 Note 2)
Allowance for:
Doubtful accounts P
=18,912,613 =16,877,877
P
Inventory obsolescence 532,600 151,240
Accrued retirement benefits and unamortized
contribution to past service cost 4,913,387 4,045,983
Unamortized pre-operating expenses 949,832 1,031,246
P
=25,308,432 =22,106,346
P
The deferred income tax liability pertains to the revaluation increment in land.
c. The reconciliation of income tax computed at the statutory tax rate to provision for income tax as
shown in the statements of income follows:
2004
(As restated,
2005 Note 2)
Statutory income tax P
=12,371,480 =9,233,254
P
Additions to (reductions in) income tax
resulting from:
Nondeductible expenses 913,521 585,591
Interest income subjected to final tax
at a lower rate (21,320) (32,142)
Nondeductible portion of interest expense 20,903 15,266
Dividend income (244) –
Change in tax rates (1,974,599) –
Provision for income tax P
=11,309,741 =9,801,969
P
- 24 -
d. In 2005, Republic Act (RA) No. 9337 was enacted into law amending various provisions in the
existing National Internal Revenue Code. Among the changes provided for in RA
No. 9337, which became effective on November 1, 2005 are as follows:
i. Increase in the corporate income tax rate from 32% to 35% until January 1, 2009 when it
will be reduced to 30%
ii. Grant of authority to the President of the Philippines to increase the value-added tax (VAT)
rate from 10% to 12%, subject to compliance with certain economic conditions
iii. Expanded scope of transactions subject to VAT
iv. Setting of limitations on the amounts of VAT credits that can be claimed
Effective February 1, 2006, the VAT rate was increased to 12%.
The deferred income tax assets and liabilities have been adjusted to reflect the change in the
corporate income tax rates.
17. Lease Commitments
The Company leases the premises occupied by some of its stations. The lease contracts, which are
subject to future increases, are for periods ranging from one to 10 years from the date of the
contracts and are renewable upon mutual agreement between the Company and its lessors. Starting
2002, the Company charged the rentals to the stations.
The minimum annual rentals, which will be charged to the stations, for the 10-year lease follows:
Year Ending December 31 Amount

2006 =1,100,619
P
2007 1,210,153
2008 1,331,169
2009 1,464,285
Rental contracts on investment properties are renewable for a period of one year.
18. 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.

MBC 17A May2006

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MBC 17A May2006

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SEC Number 1674

File Number CM-030

MANILA BROADCASTING COMPANY

MBC BUILDING, STAR CITY, CCP COMPLEX

FORM 17-A (ANNUAL REPORT)

For the Year Ended December 31, 2005

April 25, 2006

SEC FORM 17-A

ANNUAL REPORT PURSUANT TO SECTION 17

1. December 31, 2005

4. Manila Broadcasting Company

6. (SEC Use Only)

8. Tel. No. (0632) 832-6149; 8326150

Number of Shares of Common Stock

Common P1.00 par value 402,682,990 shares-Debt– P307,645,391

Philippine Stock Exchange - Common Shares

12. Check whether the registrant:

APPLICABLE ONLY TO REGISTRANTS INVOLVED

PART I - BUSINESS AND GENERAL INFORMATION

WHR Hot-FM in Dagupan, meanwhile, achieved a landslide victory as it garnered an

On the FM band, DYTM Love Radio Tacloban raked in record-breaking ratings

Transactions with and/or dependence on related parties;

Patents, trademarks, licenses, franchises, concessions, royalty

MBC is a grantee of a congressional franchise to operate and own radio and TV

Effect of existing or probable governmental regulations on the business

There are no new or probable governmental regulations that might have a

The Company is not engaged in research and development-intensive business.

Costs and effect of compliance with environmental laws

No. of Employees and CBA, if any

Broadcast operations in Manila are principally conducted in the CCP Complex

PART II - OPERATIONAL AND FINANCIAL INFORMATION

Market for Registrant’s Common Equity and Related Stockholder Matters

Name No. of Shares

(2005 VS. 2004)

FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION

Causes for Material Change from Period to Period (5%)

1. Receivables decreased by P15.5 Million or 7.6% due mainly to accelerated collection

Key Financial Indicators

2. Earnings Per Share (EPS)

5. Book Value Per Share

3. Although current ratio in 2005 decreased compared to last year, it remains

Other Disclosure Matters

• There are no material off-balance sheet transactions, arrangements, obligations

• There were no business or geographical segments for which information is not

• There were no changes in and disagreements with Accountants and financial

Management’s Discussion and Analysis or Plan of Operation

(2004 VS. 2003)

FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION

Causes for Material Change from Period to Period (5%)

Key Performance Indicators

2. Earnings Per Share (EPS)

5. Book Value Per Share

Discussion on Key Performance Indicators

Other Disclosure Matters

• There are no dividends paid for common shares.

• There are no material off-balance sheet transactions, arrangements, obligations

• There were no business or geographical segments for which information is not

• There were no changes in and disagreements with Accountants and financial

PART III - CONTROL AND COMPENSATION INFORMATION

Directors and Executive Officers of the Registrant

A. Executive Officers (All Filipino Citizens)

B. Directors (All Filipino Citizens)