EX-99.7 4 h04956exv99w7.htm EX-99.7 CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES Ex-99.7
EXHIBIT 7
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY
Calculation of Ratio of Earnings to Fixed Charges
For the years 2006 through 2010
                                                 
    2010(1)     2010     2009     2008     2007     2006  
   
    (in millions, except ratio of earnings to fixed charges)  
Earnings: Income before income tax
                                                
Pre-tax income from continuing operations before adjustment for non-controlling interest in consolidated subsidiaries or income or loss from equity investees subsidiaries
   US$ 1,225       Php53,685       Php54,839       Php54,049       Php58,081       Php38,249  
Add (Deduct):
                                                
Fixed Charges (see b below)
     194       8,514       8,273       7,831       8,051       10,874  
Amortization of capitalized interest
     36       1,594       1,544       1,543       1,559       1,490  
Capitalized interest
     (16 )     (710 )     (691 )     (778 )     (542 )     (549 )
 
Total Earnings(a)
   US$ 1,439       Php63,083       Php63,965       Php62,645       Php67,149       Php50,064  
 
Fixed Charges(b)
                                                
Interest on loans and related items
   US$ 125       Php5,471       Php5,317       Php5,083       Php5,714       Php7,359  
Capitalized interest
     16       710       691       778       542       549  
Amortization of debt issuance costs and debt discount
     23       1,010       913       751       874       2,214  
Estimated financing component of rent expense(3)
     30       1,323       1,352       1,219       921       752  
 
Total Fixed Charges
   US$ 194       Php8,514       Php8,273       Php7,831       Php8,051       Php10,874  
 
Ratio (a/b)(2)
     7.4       7.4       7.7       8.0       8.3       4.6  
 
 
(1)   We maintain our accounts in Philippine pesos, the functional and presentation currency under IFRS. For convenience, the Philippine peso financial information as at and for the year ended December 31, 2010 has been translated into U.S. dollars at the exchange rate of Php43.81 to US$1.00, the Philippine peso-dollar rate as quoted through the Philippine Dealing System as at December 31, 2010.
 
(2)   For purposes of this ratio, “Earnings” consist of: (a) pre-tax income from continuing operations before adjustment for non-controlling interest in consolidated subsidiaries or income or loss from equity investees, (b) fixed charges, (c) amortization of capitalized interest, (d) distributed income of equity investees, and (e) share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges; less the sum of the following: (1) capitalized interest, (2) preference security dividend requirements of consolidated subsidiaries, and (3) the non-controlling interests in pre-tax income of subsidiaries that have not incurred fixed charges.
 
    “Fixed charges” consist of interest expense and capitalized interest, amortized premiums, discounts and capitalized expenses related to indebtedness, an estimate of interest within rental expense, and preference security dividend requirements of consolidated subsidiaries.
 
(3)   Rent expense substantially represents payments for the satellite circuits leased by PLDT. Historically, PLDT has been using one-third of rent expense as a reasonable estimate of the financing component of rent expense, since it is impracticable to determine the actual financing component of rent expense.

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