PSE Circular for Brokers No. 1690-98

July 22, 1998 PSE CIRCULAR FOR BROKERS NO. 1690-98 PETRON CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND UNAPPROPRIATED RETAINED EARNINGS (Amounts in Millions of Pesos) 2nd Quarter 1998 1997 Revenues 30,890 29,362 Cost of sales 26,178 25,284 Gross profit 4,712 4,078 Operating expenses 1,557 1,307 Income from operations 3,155 2,771 Other income - net 284 410 Income before income tax 3,439 3,181 Provision for income tax 1,130 929 Net income before minority interest 2,309 2,252 Equity of minority interest 5 1 Net income after minority interest 2,304 2.251 Retained earnings at beginning of period 4,823 9,359 Appropriation for capital projects - (5,375) Unappropriated retained earnings at beginning of period 4,823 3,984 Cash dividend - (2,344) Stock dividend - (1,562) Unappropriated retained earnings at end of period 7,127 2,329 Certified by: (SGD.) MARIO S. LUCAS Manager Controllers Department PETRON CORPORATION & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in Millions of Pesos) 6/30/98 12/31/97 ASSETS Current Assets Cash and cash equivalents 10,791 18,474 Short-term investments 240 325 Receivables - net 7,718 7,644 Inventories - net 7,558 6,552 Other current assets 617 1,331 Total Current Assets 26,924 34,326 Property, Plant and Equipment 18,043 13,609 Investments and Advances 242 436 Other Assets 207 409 TOTAL ASSETS 45,416 48,780 ====== ====== LIABILITIES & STOCKHOLDERS EQUITY Current Liabilities Short-term loans 12,608 19,513 Liabilities for crude oil and petroleum product importation 3,244 3,094 Accounts payable and accrued expenses 5,202 4,668 Other current liabilities 2 7 Total Current Liabilities 21,056 27,282 Deferred Income Tax 474 331 Non-current Liabilities 615 514 Long-term Loans 6,726 6,418 Total Liabilities 28,871 34,545 Capital Stock Authorized-10,000,000,000 shares Par value-P1 per share Issued and outstanding 9,375 9,375 Retained Earnings Unappropriated 7,127 4,823 Accumulated Translation Adjustment 43 37 Total Stockholders' Equity 16,545 14,235 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 45,416 48,780 Certified by: (SGD.) MARIO S. LUCAS Manager Controllers Department PETRON CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Millions of Pesos) 2nd Quarter 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES Net income 2,304 2,251 Adjustments to reconcile net income to net cash provided by operating activities Provision for deferred income tax 1,029 - Net unrealized foreign exchange loss 499 Depreciation and amortization 665 417 Others 17 (129) Changes in assets and liabilities Decrease (increase) in: Receivables Trade 206 197 Inventories (1,006) 2,025 Other current asset (172) 20 Increase (decrease) in: Liabilities for crude oil and petroleum product importation 81 (509) Accounts payable and accrued expenses 546 (900) Other current liabilities (4) 226 Net cash provided by operating activities 4,165 3,598 CASH FLOWS FROM INVESTING ACTIVITIES Reductions from/(Additions to): Property and equipment (4,711) (2,278) Long-term investments 192 (252) Proceeds from sale of: Short-term investments 83 7,728 Long-term investments - 123 Decrease (increase) in: Receivables non-trade (292) 59 Other assets 194 3 Net cash used in investing activities (4,534) 5,383 CASH FLOWS FROM FINANCING ACTIVITIES Net repayment of short-term loans (7,991) (1,456) Increase in long-term loans 307 - Payment of cash dividends (2,309) Other No-current liabilities 98 105 Net cash provided by (used in) financing activities (7,586) (3,660) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 272 - NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (7,683) 5,321 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 18,474 5,733 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (Illegible portion in PSE1 file) Certified by: (SGD.) MARIO S. LUCAS Manager Controllers Department