1999 First Quarter Performance

May 13, 1999 PSE CIRCULAR FOR BROKERS NO. 1066-99 May 12, 1999 Securities & Exchange Commission Director Linda A. Daoang Money Market Department S.E.C. Building, EDSA Mandaluyong City Philippine Stock Exchange Disclosure Department Listing and Disclosure Group 4/F PSE Center, Exchange Road Ortigas Center, Pasig City SUBJECT : 1999 First Quarter Performance Gentlemen : We are pleased to inform you of the unaudited results of the consolidated financial performance of Ayala Corporation for the first quarter of 1999, as follows: Ayala Corporation generated a consolidated net income of P1.88 billion for the first quarter of 1999. This is minimally higher than the P1.86 billion first quarter performance last year excluding the net effect of the extraordinary gains booked in the first quarter of 1998. The Company's operating performance for the first quarter of 1999 was underpinned by the stronger performance of its food and telecommunications businesses. The strategic initiatives undertaken to enhance their competitiveness have started to generate positive results that augur well for Ayala's momentum of growth. Globe Telecom, Inc. posted a net income of P221 million. Globe's subscriber base to date has exceeded 500,000 and this growth was achieved while maintaining a strong hold on the high-end market. The Company continues to dominate the digital mobile service market and is expected to end the year with more than 700 cell sites. Globelines, the brand name of the Company's fixed line business continues to maximize the potential of its service areas which are concentrated on high growth centers and business areas. Its international business continues to grow with call volumes increasing with the launching of new products and intensified activities to strengthen and expand bilateral agreements. Ayala's food subsidiary, Pure Foods Corporation, posted a consolidated net income of P385 million as a result of stronger revenues from increasing sales volume in meats, flour and poultry products. Lower financial charges contributed to the rise in net income but the strength of the Company's regular operations enabled the Company to preserve its leading position in the food business. LibLex In the real estate sector, Ayala Land, Inc. posted a consolidated net income of P650 million for the period, 19% lower compared to the previous year's level. Land sales and rental income from commercial centers and office leasing operations contributed significantly to Ayala Land's consolidated operating revenues which amounted to P2.191 billion. In banking, Bank of the Philippine islands registered a net income of P1.03 billion. The Bank continued to successfully balance its operating performance with the need to preserve superior credit standards. Consistent with its policy on loan loss reserves, the Bank booked P171 million, further improving reserve cover on non-performing loans to 76%. The Bank's non-performing loans remained in check at 6.2% as of the end of the first quarter, still the lowest in the industry. Ayala Corporation continues to capitalize on its strong financial position to pursue opportunities in the market. Recently, the Company announced two major initiatives, namely the acquisition through its 100% subsidiary Filnet Holdings, Inc. of a 75% stake in Visay-Tech, Inc. and the creation of new Common X shares which was recently approved during its stockholders' meeting in April 1999. The former provides the vehicle for a potential merger between Globe Telecom and Islacom while the latter provides flexibility for the Company to raise additional equity capital for strategic opportunities. The foregoing is submitted in compliance with the rules of the SEC and the PSE. Very truly yours, RUFINO LUIS T. MANOTOK Managing Director & Head, Strategic Planning Group AYALA CORPORATION UNAUDITED CONSOLIDATED BALANCE SHEETS (In Thousand Pesos) March 1999 March 1998 ASSETS Current Assets : Cash and cash equivalents 14,170,786 21,883,560 Accounts and notes receivable net 8,606,242 6,491,121 Inventories 2,048,858 2,142,006 Subdivision land for sale 3,558,622 4,860,651 Condominium and residential units for sale 5,309,121 3,897,681 Deferred income tax and other current assets 3,320,397 2,206,547 Total Current Assets 37,014,026 41,481,566 Noncurrent Accounts and Notes Receivable 3,725,917 3,610,330 Land and Improvements 16,278,867 12,403,582 Investments 35,211,645 33,130,586 Property, Plant and Equipment net 6,331,654 5,924,517 Total Insurance Assets 14,184,683 12,200,773 Other Assets 8,487,023 7,325,597 121,233,815 116,076,951 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities : Accounts payable and accrued expenses 10,522,293 10,126,861 Income tax payable 409,439 301,042 Loans payable 2,013,616 3,256,443 Current portion of: Long Term Debt 2,312,709 1,392,307 Estimated Liability for land and property development 804,385 1,192,840 Other Current Liabilities 217,478 109,709 Total Current Liabilities 16,279,920 16,379,202 Long-Term Debt 30,865,911 31,707,307 Total Insurance Liabilities 8,755,003 6,745,674 Other Noncurrent Liabilities 6,092,179 8,002,135 Estimated Liability for Land and Property Development 520,217 1,181,390 Minority Interest 14,112,364 11,862,643 Stockholders' Equity 44,608,221 40,198,600 121,233,815 116,076,951 ========= ========= AYALA CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF INCOME For the Quarters Ended March 31, 1999 and 1998 (In Thousand Pesos) 1999 1998 REVENUES Sales and Services 5,170,293 4,987,257 Interest, rental and investment income 2,368,031 3,702,666 Insurance premiums and commission income 660,887 578,297 Equity in net earnings of affiliates 235,607 382,637 Others 88,614 113,829 8,523,432 9,764,686 COSTS AND EXPENSES Cost of sales and expenses 3,406,494 3,320,238 General and administrative 1,008,391 1,265,893 Insurance underwriting deductions 612,777 544,755 Provision for income tax 448,678 397,475 Interest and other financing charges 784,515 978,971 6,260,855 6,507,332 INCOME BEFORE NET EARNINGS APPLICABLE TO MINORITY INTEREST 2,262,577 3,257,354 NET EARNINGS APPLICABLE TO MINORITY INTEREST 378,556 233,006 NET INCOME 1,884,021 3,024,348 UNAPPROPRIATED RETAINED EARNINGS AT BEGINNING OF PERIOD 31,600,685 26,056,217 Stock Dividends Cash Dividends 41,873 47,274 UNAPPROPRIATED RETAINED EARNINGS AT END OF PERIOD 33,442,833 29,033,291 ======== ========