PSE Circular for Brokers No. 076-98

February 6, 1998 PSE CIRCULAR FOR BROKERS NO. 076-98 Press Release Reference : Rene B . Bermio 734-95-78 Lower Income for LTDI La Tondea Distillers, Inc. reported a recurring net income of P241 million for 1997, 67% lower than the year-ago level. The company's hard liquor volumes declined in the face of an industry that was contracted by successive price increases. Higher debt levelsbrought about by increased capital expenditures, selling and distribution costs, and brand building activitiesstrained the company's bottomline. This was further aggravated by extremely high interest rates imposed during the second semester. In terms of consolidated net sales, the company posted an 11% gain, with P8.8 billion compared to P7.9 billion in 1996. Sales volumes of liquor declined by 7%, as the entire industry reacted to successive price increases with the doubling of specific taxes. The rollback in beer prices further eroded the pricing advantage of hard liquor. As the sharp drop in currency dramatically weakened purchasing power, consumers opted for more essential products. With higher prices compensating for lower volumes, revenues for hard liquor continued to grow at a modest 8%. Overall, LTDI continued to lead the hard liquor market. In contrast to the slowdown in liquor, the company's sales volumes in both its juice and bottled water businesses surged. The company's juice business, led by its ready-to-drink variants, outperformed the industry with an increase of over 60%. The shift from subcontracting to in-house production resulted in significantly improved margins. Despite the presence of numerous water filling stations and the entry of several key players, LTDI's bottled water business posted another banner year. Aggregate sales of VIVA! and FIRST Mineral Water grew close to 60%. The company expects further growth in this particular sector, with the launching of Aquapeak, its entrant into the distilled water segment. With the economic problems expected to persist in the months ahead, LTDI is making the necessary adjustments not only to cope but to emerge stronger and even more competitive. In response to the challenges ahead, the company will continue to focus on its core businesses of liquor, water and juices. It has also put in place major initiatives to reduce debt levels and strengthen its overall balance sheet by improving working capital, adopting more prudent funds management and tighter financial controls. With these measures, the company remains optimistic in its business prospects, projecting exciting growth for its bottled and juices while expecting modest growth for liquor.