PDF Far Eastern University

Aurelio Montinola III, 57, Filipino: Vice Chairman of the Board of Trustees, Far Eastern University, Inc.

January 21, 2003 to present)

Compensation of Trustees and Executive Officers

Nagal graduated from Far Eastern University with a Bachelor of Science degree in Commerce, majoring in Accounting.

10 - Summary Compensation Table

Canilao Chief Financial Officer

Maliwat

Independent Public Accountant

OTHER MATTERS

Minutes of Annual Meeting held on August 25, 2007
Academic Report of the President, 2007 – 2008 and Annual Report of the Chair, 2007 – 2008
Ratification and Confirmation of the following
Election of Trustees and Independent Trustees for the fiscal year 2008 – 2009
Appointment of Punongbayan and Araullo as External Auditor for the fiscal year 2008-2009;
Vote of Appreciation
Board of Trustees’ meeting held on April 15, 2008
Board of Trustees’ meeting held on June 17, 2008
Board of Trustees’ meeting held on August 19, 2008
Organizational Meeting of the Board of Trustees held on September 16, 2008

The Audit Committee's approval of the policies and procedures covering the examination of FEU's financial statements for the fiscal year ended March 31, 2009, including other services, is covered by the minutes of the Audit Committee meeting dated February 18, 2009. Actions and the Board of Administration in advancing the issues covered by the Annual Report.

13 - Executive Committee

Board of Trustees’ meeting held on December 16, 2008
Board of Trustees’ meeting held on March 17, 2009
Board of Trustees’ meeting held on March 17, 2009
Item 8: Voting Procedures

With respect to the election of nine (9) directors, each shareholder may vote such number of shares for as many as nine persons, he may elect to be elected from the list of nominees, or he may cumulate those shares and give one nominee as many votes as the number of his shares multiplied by nine is equal, or he may distribute them on the same principle among as many candidates as he thinks fit, provided that the total number of votes cast by him shall not exceed the number of shares held by him multiplied by nine. In the case of voting by ballot, each ballot shall be signed by the shareholder voting, or on his behalf by his proxy, if such proxy exists, and shall state the number of shares voted by him.

INFORMATION REQUIRED IN A PROXY FORM Items 1 and 2

KNOW ALL MEN BY THESE PRESENTS

Actions of the Board of Trustees in the furtherance of the matters covered by the Annual Report

In the event that this Proxy is returned without a choice having been made in any or all of the above items, the undersigned hereby authorizes the appointed proxy to vote in his or her behalf, at this

THIS PROXY IS BEING SOLICITED IN BEHALF OF FAR EASTERN UNIVERSITY, INC

Persons Making the Solicitation

THE FAR EASTERN UNIVERSITY, INCORPORATED

Interest of Certain Persons in Matters to be Acted Upon

MANAGEMENT REPORT

Brief Description of the General Nature and Scope of the Business of the Registrant and its Subsidiaries

Market Price and Dividends

Top 20 Stockholders as of June 30, 2009

Management Discussion and Analysis or Plan of Operation

Statement of Management’s Responsibility for Financial Statements 6. Compliance Report

Audited Financial Statements March 31, 2009, 2008 and 2007 with accompanying notes to Financial Statements

Consolidated Financial Statements March 31, 2009, 2008 and 2007 with accompanying notes to Financial Statements

17 - Grade School and High School

High and low sale prices for each quarter are as follows

April 01, 2009 – July 16, 2009

April 1, 2007 – March 31, 2008

Dividends

Number of Shareholders

Common Seyrel Investment and Realty Corporation

Management’s Discussion and Analysis or Plan of Operation

Financial Position

The constant and steady improvement in the company's financial condition, both in solvency and liquidity, is largely attributed to the company's net income each year over the past four years, net of cash dividends paid over the same period. Excess of net cash dividend income over cash net income paid dividends paid year (in million) (in million) % (in million.

Results of Operations

A Look of What Lies Ahead

Top Five (5) Key Performance Indicators

Test of Liquidity

Current ratio measures the number of times that the current liabilities could be paid with the available current assets (Adequate: at least 5:1)
Quick ratio measures the number of times that the current liabilities could be paid with the available quick assets (Adequate: at least 1:1)
Equity to asset ratio measures the amount of assets provided by the owner relative to the total assets of the company (Adequate: 50% or more)

Test of Profitability

Return on total assets measures how well management has used its assets under its control to generate income (Adequate: at least equal to the
Return on owner’s equity measures how much was earned on the owners’

Product Standard

Teaching performance in the University is constantly being monitored to maintain a satisfactory level of excellence
The Philippine Association of Colleges and Universities Commission on Accreditation (PACUCOA) has granted Certificates of Level III Re-
Performance of FEU graduates in their respective Board Exams is generally better than the national passing rate

Market Acceptability

There are no known trends, events or uncertainties which may have a material impact on liquidity
There are no known events that will trigger direct or contingent financial obligation that may be material to the company. There are also no known events that would result in
There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the company with
There are no sales of Unregistered or Exempt Securities including Recent Issuance of Securities Constituting an Exempt Transaction
There are no material commitments for capital expenditures
There are no known trends, events or uncertainties which may have a material impact on sales
There are significant elements of income or loss from continuing operations
Seasonal aspects that has material effect on financial statements
Solvency
Debt to Equity ratio = Total liabilities Total Stockholder's Equity
Equity to Asset ratio = Total Stockholder's Equity
Profitability
Return on Owner's Equity = Net Income

Due to the economic recession, it was estimated that first semester enrollment for SY 2009-2010 will be about 10% lower. Tuition increases, if any, usually take effect during the first semester of the current school year.

Gross Book Value

Accumulated

EQUIPMENTS

INVESTMENT PROPERTY

FAR EASTERN UNIVERSITY

SCHEDULE OF PROPERTY, PLANT & EQUIPMENT/INVESTMENT PROPERTY SCHOOL YEAR 2008 - 2009

Properties

PROPERTIES LEASED BY THE CORPORATION FROM FERN REALTY, INC

Corporate Governance

On January 23, 2009, our Governance Compliance Officer filed with the Securities and Exchange Commission his 2008 certification regarding the extent of the Company's compliance with its Handbook. All members of the board of directors and senior management officers completed and received the appropriate certificate for having attended a special seminar on corporate governance conducted by an entity accredited by the Securities and Exchange Commission.

INDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED MARCH 31, 2009, 2008 and

STATEMENTS OF CASH FLOWS FOR THE YEARS

SUPPLEMENTARY SCHEDULE

CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT AUDITORS TO ACCOMPANY SEC SCHEDULES FILED SEPARATELY FROM THE

FAR EASTERN UNIVERSITY, INC

BALANCE SHEET MARCH 31, 2009

2008 (As restated -

NON-CURRENT ASSETS

LIABILITIES AND EQUITY CURRENT LIABILITIES

NON-CURRENT LIABILITY

EQUITY

2008 2007 (As restated - (As restated -

EDUCATIONAL INCOME

INCOME STATEMENT

NOTES TO FINANCIAL STATEMENTS MARCH 31, 2009

CORPORATE INFORMATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation of Financial Statements
Impact of New Amendments and Interpretations to Existing Standards (a) Effective in fiscal year 2009 that are relevant to the University

PFRS 2 – Group and Treasury Share Transactions
Service Concession Agreements Philippine Interpretation
PAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding
Revised 2007) : Presentation of Financial Statements PAS 27 (Amendments) : Consolidated and Separate Financial
Revised) : Business Combinations

Separate Financial Statements and Investments in Subsidiaries and an Associate
Financial Assets
Property and Equipment
Investment Property
Financial Liabilities
Provisions
Revenue and Expense Recognition
Leases
Foreign Currency Transactions
Impairment of Non-financial Assets
Employee Benefits (a) Retirement Benefit Obligations
Trust Funds
Income Taxes
Related Parties
Equity
Earnings Per Share
SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
CASH AND CASH EQUIVALENTS
RECEIVABLES

The financial statements of the University have been prepared in accordance with Philippine Financial Reporting Standards (PFRS). Items included in the financial statements of the University are measured using its functional currency. Recognition and Measurements and PFRS 7, Financial Instruments: Disclosures (effective from 1 July 2008), are relevant to the University.

Below is a discussion of the possible impact of these accounting standards on the University's financial statements. The University's financial assets which are categorized as loans and receivables are presented as Cash and Cash Equivalents, Receivables and Due from a Related Party in the balance sheet. Any changes to the carrying amount of the investment are recognized in profit or loss.

Financial liabilities are recognized when the University becomes a party to the contractual agreements of the instrument. Leases that do not transfer substantially all the risks and rewards of ownership of the asset to the University are classified as operating leases.

AVAILABLE-FOR-SALE (AFS) INVESTMENTS This category of financial assets consists of the following
INVESTMENTS IN SUBSIDIARIES AND AN ASSOCIATE
INVESTMENT PROPERTY
PROPERTY AND EQUIPMENT
ACCOUNTS PAYABLE AND OTHER LIABILITIES This account consists of
TRUST FUNDS
TUITION FEES
OPERATING EXPENSES Operating expenses consists of
FINANCE INCOME This account consists of
EMPLOYEES’ HEALTH, WELFARE AND RETIREMENT FUND
INCOME TAXES

Below is an analysis of the movement in the book value of the university's investments with trustee banks. This account consists of the FEU East Asia Main Building and the improvements that are leased to EAEF. A reconciliation of the book values at the beginning and end of 2009 and 2008 of investment properties is shown below.

Below is a reconciliation of the book values of property, plant and equipment at the beginning and end of 2009 and 2008. Towards the end of the fiscal year, the University collected tuition from students for the summer course that begins after the balance sheet date. Contributions to this fund are subject to a defined contribution set by the Pension Commission, which is the sum of employee and university contributions.

The employees' contribution is 5% of the basic salary, and the university's contribution is 20% of the employees' basic salary. The components of the university's tax expenses presented in the profit and loss statements are as follows:

Deferred tax expense (income)

RELATED PARTY TRANSACTIONS

Interest-bearing Advances
Noninterest-bearing Advances
Lease of Campus Premises from FRC
Lease of Certain Floor to FRC
Key Management Personnel Compensation

EQUITY

Capital Stock
Retained Earnings

EARNINGS PER SHARE
COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments – University as Lessee

Affiliated customers of the University include its subsidiaries, key University management and others as described below. The University has outstanding FRC cash advances with an aggregate principal amount of P100.0 million as of March 31, 2009 and 2008. The University grants unsecured and non-interest-bearing advances to certain related parties for working capital purposes that are currently due and claimed.

The university leases certain buildings on the campus grounds from FRC for a period of 10 years from July 1, 2005 to June 30, 2015. The university leases the mezzanine floor of one of the university's buildings to FRC for a period of 10 years from September 1, 2007 to August 31, 2017, renewable by mutual agreement of both parties. Based on the rental contract, the university gives discounts on the monthly rent during the lean season of the school year.

In 2009, the university made a reversal of grants amounting to P172.1 million. regarding expansion of facilities, repairs and improvements. Diluted earnings per share was not determined, as the university has no dilutive shares in March and 2007.

Others
RISK MANAGEMENT OBJECTIVES AND POLICIES

Interest Rate Sensitivity
Credit Risk
Liquidity Risk
Other Price Risk Sensitivity

CATEGORIES AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

There are other contingencies that arise in the normal course of business that are not accounted for in the university's financial statements. The BOT is ultimately responsible for establishing and supervising the university's risk management framework. The university's interest rate risk arises from the following interest-bearing financial instruments to which variable interest rates apply.

The following table illustrates the sensitivity of income before tax for the years in relation to financial instruments of interest to the University. The University's exposure to price risk arises from its investments in equity and debt securities, which are classified as PVF investments on the balance sheet. In accordance with University policies, no specific hedging activities are undertaken in relation to these investments.

The investments are continuously monitored and the voting rights derived from these equity instruments are used for the benefit of the university. A description of the university's objectives and policies regarding risk management for financial instruments is given in note 21.

NON-CURRENT LIABILITIES

FAR EASTERN UNIVERSITY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET

MARCH 31, 2009

REVENUES Educational income

FAR EASTERN UNIVERSITY, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT

FAR EASTERN UNIVERSITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impact of New Amendments and Interpretations to Existing Standards (a) Effective in fiscal year 2009 that are relevant to the Group
Revised 2007) : Presentation of Financial Statements PAS 23 (Revised 2007) : Borrowing Costs
Amendments) : Consolidated and Separate Financial Statements
Agreements for the Construction of Real Estate
Distribution of Non-cash Assets to Owners

Consolidation and Investment in an Associate
Real Estate Held for Sale
Property and Equipment
Investment Property
Financial Liabilities
Provisions
Revenue and Expense Recognition
Leases
Foreign Currency Transactions
Impairment of Non-financial Assets
Employee Benefits (a) Retirement Benefit Obligations
Trust Funds
Borrowing Costs
Income Taxes
Related Parties
Equity
Earnings Per Share
Critical Judgments in Applying Accounting Policies

The consolidated financial statements of the Group have been prepared in accordance with Philippine Financial Reporting Standards (PFRS). Items included in the consolidated financial statements of the Group are measured using its functional currency. Below is a discussion of the possible impact of these accounting standards on the Group's financial statements.

All subsequent changes in the share in the associated company's equity are recognized in the accounting value of the group's investment. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net sale proceeds and the carrying amount of the item) is included in. Financial liabilities are recognized when the Group becomes a party to the instrument's contractual agreements.

Leases in which almost all the risks and rewards of ownership of the asset are not transferred to the Group are classified as operating leases. Analyzes of the book values of investment properties and tangible fixed assets are presented in

AVAILABLE-FOR-SALE INVESTMENTS
REAL ESTATE HELD FOR SALE
INVESTMENT IN AN ASSOCIATE
INVESTMENT PROPERTY
PROPERTY AND EQUIPMENT
ACCOUNTS PAYABLE AND OTHER LIABILITIES This account consists of
TRUST FUNDS
TUITION FEES
OPERATING EXPENSES Operating expenses consists of
FINANCE INCOME This account consists of
EMPLOYEES’ HEALTH, WELFARE AND RETIREMENT FUND
INCOME TAXES
RELATED PARTY TRANSACTIONS
EQUITY

Capital Stock
Retained Earnings

EARNINGS PER SHARE
COMMITMENTS AND CONTINGENCIES 1 Purchase of Condominium Unit

Interest income recognized in 2007 is presented as part of financial income in the consolidated income statements (see note 15). Analyzes of the movement in the book values of the Group's investments held by trusted banks are presented below. As of March 31, 2009 and 2008, the net book value of the property presented as Construction in progress under Property and Equipment amounts to P23.9 million and P9.1 million, respectively.

Towards the end of the financial year, the University collected tuition fees from students for the summer classes starting after the balance sheet date. Contributions to this fund are in accordance with the defined contribution set by the Retirement Board, which is the sum of the employees' and the Group's. Employees' contribution is 5% of basic salary while the Group's contribution is equivalent to 20% of the employees' basic salary.

Unpaid dividends per 31 March 2009 and 2008 are presented as payable dividends under Payables and other liabilities in the consolidated balance sheet (see note 11). This adjustment was made in connection with the FRC's use of the Tax Amnesty Program under R.A.

RISK MANAGEMENT OBJECTIVES AND POLICIES

Interest Rate Sensitivity
Credit Risk
Liquidity Risk
Other Price Risk Sensitivity

The group's exposure to interest rate risk arises from the following interest-bearing financial instruments, which are subject to variable interest rates. The following table shows the sensitivity of profit before tax for the years in relation to the Group's interest-bearing financial instruments. The Group's exposure to the credit risk of other receivables from debtors and related parties is controlled by careful monitoring and setting limits.

In relation to the credit risk arising from cash and cash equivalents, receivables, PVT investments and HTM investments, the Group's exposure to credit risk arises from the non-payment of the other party, with a maximum exposure equal to the book value of these instruments . The following table shows the credit quality of the Group's receivables, which are the only financial assets at 31 March 2009 and 2008 (presented in '000) that have overdue but not impaired components. The Group's exposure to price risk arises from its investments in equity and debt securities, which are classified as PVT investments in the consolidated balance sheets.

In accordance with Group policy, no specific hedging activities are undertaken in relation to these investments. The investments are continuously monitored and the voting rights arising from these equity instruments are used for the benefit of the Group.

CATEGORIES AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Group monitors capital based on the debt-to-equity ratio, which is calculated as total debt divided by total equity. Statement of Management's Responsibility for the Consolidated Financial Statements Report of the Independent Auditors on the supplementary schedules of the SEC.

Statement of Management’s Responsibility for the Consolidated Financial Statements Independent Auditors’ Report on the SEC Supplementary Schedules

Filed Separately from the Basic Financial Statements Supplementary Schedules to Consolidated Financial Statements

Form 17-A, Item 7)

Marketable Securities - (Current Marketable Equity Securities and Other

Amounts Receivable from Directors, Officers, Employees, Related Parties

Noncurrent Marketable Equity Securities, Other Long-term Investments in

Indebtedness to Unconsolidated Subsidiaries and Related Parties NA

Indebtedness to Related Parties (Long-term Loans

Guarantees of Securities of Other Issuers

Supplementary Schedule to Parent Financial Statements (SEC Circular No. 11)

FAR EASTERN UNIVERSITY, INC. AND SUBSIDIARIES INDEX TO SUPPLEMENTARY SCHEDULES

OTHER LONG-TERM INVESTMENTS IN STOCKS AND OTHER INVESTMENTS FOR THE YEAR ENDED MARCH 31, 2009

ADDITIONS (DEDUCTIONS) Name of Issuing Entity and

BEGINNING BALANCE

SCHEDULE E - NON-CURRENT ASSETS FOR THE YEAR ENDED MARCH 31, 2009

FAR EASTERN UNIVERSITY SCHEDULE I - CAPITAL STOCK

UNAPPROPRIATED RETAINED EARNINGS FOR DIVIDEND DECLARATION

Net Income Realized for the Year

Add (Less) Changes in Retained Earnings for the Year

Reconciliation of Retained Earnings for Dividend Declaration

UNAPPROPRIATED RETAINED EARNINGS

TO OUR STOCKHOLDERS

Undertaking

Any written request for a copy of SEC Form 17-A shall be addressed to the following

Far Eastern University Nicanor Reyes Street