SEC Form 17-A: Annual Report - the solid group inc website

- 54 -
20. OPERATING EXPENSES BY NATURE
The details of operating expenses by nature are shown below.
Notes 2012 2011 2010
Net purchases of merchandise
inventories 18.1 P 2,925,915,239 P 2,700,622,823 P 1,582,453,911
Salaries and employee benefits 22.1 259,430,838 254,151,282 231,327,047
Outside services 194,934,604 149,697,511 97,545,658
Advertising and promotions 130,977,514 132,187,080 92,776,544
Subcontracting services 110,298,465 86,887,735 52,116,171
Materials, supplies and other
consumables 78,028,164 110,419,752 109,721,847
Rentals 26.3, 28.2 60,820,460 42,785,957 44,419,377
Service fee 59,347,325 - -
Utilities and communication 54,590,325 72,208,053 72,260,992
Taxes and licenses 52,113,634 46,839,422 55,402,878
Depreciation and amortization 12 46,467,220 78,173,250 75,588,976
Net provision (reversal) on
inventory obsolescence 18.1 ( 48,770,199) 27,304,279 ( 11,239,861 )
Cost of real estate sold 45,917,227 95,886,118 151,396,685
Transportation and travel 44,072,915 43,880,536 29,924,036
Provision for warranty 16 41,465,997 45,072,286 35,696,455
Repairs and maintenance 31,640,652 45,966,836 28,229,042
Transponder rental and leased line 7,070,544 44,719,890 48,257,021
Change in merchandise,
finished goods and
work-in-process inventories 168,559,419 ( 206,529,649) ( 338,484,611 )
Miscellaneous 103,021,196 50,319,996 68,205,328
P 4,365,901,539 P 3,820,593,157 P 2,425,597,496
In 2012, SBC entered into a sale agreement with a third party for the sale of SBC's assets used
in operations. In connection with such agreement, SBC shall also act as a collecting agent for
the existing subscribers and accordingly, remit to the third party all collection received.
Service fees incurred for the remittance of the collections to the third party amounting to
P59.3 million is presented as part of Cost of Services in the 2012 consolidated statement of
income (see Notes 18.2 and 27.3).
Items classified under the miscellaneous account primarily consist of advertising and
promotions, subcontracting services, taxes and licenses, cable services and insurance expenses
incurred by the Group.