Securities And Exchange Commission Sec Form 11-C

February 9, 1998 PSE CIRCULAR FOR BROKERS NO. 095-98 SECURITIES AND EXCHANGE COMMISSION SEC Form 11-C CURRENT REPORT UNDER SECTION 11 OF THE REVISED SECURITIES ACT (RSA AND RSA RULE 11(a)-1(b)(3) THEREUNDER 1. Date of Report: 6 February 1998 2. SEC Identification No: ASO 94-008745 3. BIR Tax Identification No: 047-003-945-022V 4. Exact Name of Registrant: ALASKA MILK CORPORATION 5. Jurisdiction of Incorporation: Makati, Metro Manila 6. Address of Principal Office: 6/F Corinthian Plaza, 121 Paseo de Roxas, Makati 7. Telephone No: 819-5451 to 76 8. Number of Common Shares Outstanding: 956,444,878 Financial Condition and Result of Operation for the fourth quarter and year ending December 31, 1997 Revenues in the fourth quarter dropped 17% to P558MM from P671MM in the fourth quarter of 1996 as sales volumes softened in the period. The sluggish volume sales was predictably the effect of heavy trade loading in the third quarter attendant to selling price increases implemented in October. The lower revenues was also a result of a one-time charge in December of bad order allowance held in abeyance in previous years amounting to P20MM. Cost of sales and operating expenses dropped 13% to P521MM from P599MM. Operating income was 50% lower year-on-year at P36MM from P72MM in the same period last year. As a result, operating margins in 4Q97 fell to 6% from 11% in 4Q96. Earnings before tax reached P65MM, 25% lower than the P86MM achieved in 4Q96. Net income reached P50MM, a 13% drop from P58MM recorded in fourth quarter 1996. For the full year, revenues expanded 4% to P2.38B from P2.29B in 1996 with significant contribution from the UHT milk business as well as sales of Nabisco biscuits. Operating margins improved substantially to 14% from 7% in 1996 as cost of sales and operating expenses dropped to P2.04B from P2.12B. SMP cost averaged US$1,375/MT compared to US$2,200/MT in 1996. Operating income nearly doubled to P337MM in 1997 from P170MM in the previous year. Interest income of P69MM this year pushed earnings before taxes further to P432MM. Net earnings grew 156% to P303MM in 1997 from P118MM in 1996. AMC continues to be a net placer of funds with P583MM in cash and cash equivalents at the end of the year. The usual fourth quarter surge in volumes did not materialize as trade loading in the previous quarter more than sufficiently covered inventory requirements of the trade through year-end. This was reflected by a decline in liquid and powdered milk industry volumes, respectively in 4Q97 from the same period last year. For the full year, AMC's combined liquid and powdered milk volumes fell 1% lower than full year 1996 volumes. Significant market share gain was achieved in the condensed milk category with average market share in 1997 expanding to 44.6% from 42.3% in 1998. Market share in the evaporated milk category slightly higher at 37.3% from 36.8%. Sales of UHT milk products likewise increased substantially versus last year and similarly with Nabisco biscuits. Debt to equity ratio stands at 0.2X, unchanged from last year. Return on sales posted significant improvement to 14% from 7% and return on equity to 19% from 9%.