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Management’s Discussion and Analysis of Financial Condition and Results of OperationsConsolidated Net Cash FlowsGlobe Group31-Dec 31-Dec YoY(Php Mn)change2012 2011(%)Net Cash from Operating Activities……………………………… 24,237 29,926 -19%Net Cash from Investing Activities………………………………. (24,633) (18,190) 35%Net Cash from Financing Activities……………………………… 2,198 (12,521) -118%Net cash flows provided by operating activities in 2012 stood at P24,237 million, down 19%year-on-year driven by the increase in advances to suppliers and contractors related to thevarious projects being undertaken.Meanwhile, net cash used in investing activities amounting to P24,633 million was up 35%driven largely by investments in property and equipment resulting from the networkmodernization projects and ongoing efforts to expand the coverage and capacities of theCompany’s broadband network and improve the quality of its mobile service. Consolidatedcapital expenditures in 2012 amounted to P26,810 million, up 54% from the 2011 level ofP17,417 million.Globe Group31-Dec 31-Dec YoY(Php Mn)2012 2011change(%)Capital Expenditures (Cash) ……………………………………….. 21,085 18,744 12%Increase (decrease) in Liabilities related to Acquisition of PPE… 5,725 (1,327) -531%Total Capital Expenditures 1 ……………………………………… 26,810 17,417 54%Total Capital Expenditures / Service Revenues 2 (%)…………… 32% 22%1Consolidated capital expenditures include property and equipment, intangibles and capitalized borrowing costs acquired as ofreport date regardless of whether payment has been made or not.22011 service revenues have been restated to reflect the change in the presentation of outbound revenues to be at gross ofinterconnect expenses (from net previously).For 2013, Globe has earmarked about US$550 – 650 Million in capital expenditures. Thisconsists of US$210 Million for transformation initiatives and about US$290 Million for businessas usual spend for provisions for fixed line data investments, international cable facilities, and ITinfrastructure. Other capital expenditures for 2013 also include carryover spend of aboutUS$100 Million from 2012.Consolidated net cash from financing activities generated an inflow of P2,198 million in 2012compared to the net cash outflow of P12,521 million in 2011. This was driven largely by thebond issuance and borrowings from banks to fund the Company’s network modernization and ITtransformation program as well as finance business-as-usual capital expenditure requirements.The 2012 inflow was partially offset by payments of cash dividends as well as short-term andlong-term loan repayments. Consolidated debt increased by 27% from P48,679 million in 2011to P61,779 million in 2012.Out of the total debt, 13% are denominated in US$. There were no outstanding currencyhedges on debt as of end-December 2012.___________________________________________________________________________________________________ 160