PSE Circular for Brokers No. 2459-98

October 28, 1998 PSE CIRCULAR FOR BROKERS NO. 2459-98 PETRON CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND UNAPPROPRIATED RETAINED EARNINGS For the nine-month period ending September 30, 1998 and 1997 (Amounts in Millions of Pesos) 9/30/98 9/30/97 Revenues 45,075 44,381 Cost of sales 39,015 39,669 Gross profit 6,060 4,712 Operating expenses 2,465 2,290 Income from operations 3,595 2,422 Other income/(charges)-net 550 (593) Income before income tax 4,145 1,829 Provision for income tax 1,314 378 Net income before minority interest 2,831 1,451 Equity of minority interest 7 2 Net income after minority interest 2.824 1.449 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 7,647 1,527 Certified by: (SGD.) MARIO S. LUCAS Manager Controllers Department PETRON CORPORATION CONSOLIDATED BALANCE SHEETS (Amounts in Millions of Pesos) As of 9/30/98 12/31/97 ASSETS Current Assets Cash and cash equivalents 8,414 18,474 Short-term investments 244 325 Receivables - net 6,068 7,644 Inventories - net 8,786 6,552 Deferred income tax 232 1,187 Other current assets 208 144 Total Current Assets 23,952 34,326 Property, Plant and Equipment 21,039 13,609 Investments 186 436 Other Assets 111 409 TOTAL ASSETS 45,288 48,780 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities Short-term loans 13,440 19,513 Liabilities for crude oil and petroleum product importation 2,933 3,094 Accounts payable and accrued expenses 5,396 4,668 Other current liabilities 7 7 Total Current Liabilities 21,776 27,282 Deferred Income Tax 504 331 Non-current Liabilities 654 514 Long-term Loans 5,283 6,418 Total Liabilities 28,217 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 7,646 4,823 Accumulated Translation Adjustment 50 37 Total Stockholders' Equity 17,071 14,235 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 45,288 48,780 Certified by: (SGD.) MARIO S. LUCAS Manager Controllers Department PETRON CORPORATION CONSOLIDATED BALANCE SHEETS (Amounts in Millions of Pesos) 9/30/98 9/30/97 CASH FLOWS FROM OPERATING ACTIVITIES Net income 2,824 1,449 Adjustments to reconcile net income to net cash provided by operating activities Provision for deferred income tax 1,127 (1,145) Net unrealized foreign exchange loss 675 3,304 Depreciation and amortization 825 641 Others 29 (336) Changes in assets and liabilities Decrease (increase) in: Receivables - Trade 1,466 409 Inventories (2,234) 72 Other current assets (63) 149 Increase (decrease) in: Liabilities for crude oil and petroleum product importation (166) 1,135 Accounts payable and accrued expenses 677 361 Other current liabilities 1 (572) Net cash provided by operating activities 5,161 5,467 CASH FLOWS FROM INVESTING ACTIVITIES Additions to: Property and equipment (7,639) (3,563) Proceeds from sale of: Short-term investments 74 1,235 Long-term investments 248 677 Decrease (increase) in: Receivables - non-trade 147 100 Others assets 287 (17) Net cash used in investing activities (6,883) (1,568) CASH FLOWS FROM FINANCING ACTIVITIES Net (repayment)/availment of short-term loans (6,889) 5,036 Payment of long-term loan (1.605) Payment of cash dividends (2,341) Other non-current liabilities 152 137 Net cash provided by (used in) financing activities (8,352) 2,832 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 14 335 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (10,060) 7,066 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 18,474 5,733 CASH AND CASH EQUIVALENTS AT THE END OF PERIOD 8,414 12,799 Certified by: (SGD.) MARIO S. LUCAS Manager Controllers Department