PSE Circular for Brokers No. 2762-99

October 27, 1999 PSE CIRCULAR FOR BROKERS NO. 2762-99 October 26, 1999 PHILIPPINE STOCK EXCHANGE Philippine Stock Exchange Center Exchange Road, Ortigas Center Pasig City, Metro Manila Attention: Ms . Grace De Guia Listing and Disclosure Group Gentlemen: Enclosed please find a copy of our disclosure related to Nenacos ongoing CBA negotiation. We are making this disclosure in compliance with the Continuing Listing Requirements of the Philippine Stock Exchange. Very truly yours, NEGROS NAVIGATION CO., INC. By: (SGD.) ROBIN M. ARROWSMITH Corporate Information Officer DISCLOSURE MADE IN CONNECTION WITH THE ONGOING COLLECTIVE BARGAINING AGREEMENT NEGOTIATIONS BETWEEN NEGROS NAVIGATION CO. INC. AND THE ILOILO-NEGROS EMPLOYEES LABOR UNION The collective bargaining agreement ("CBA") entered into between Negros Navigation Co. Inc. ("Nenaco") and the Iloilo-Negros Employees Labor Union ("INELU") signed on 15th August 1997, covering the two-year period from 1st April 1997 to 31st March 1999, expired on 1st April 1999. Nenaco has been negotiating with the INELU but has failed to reach agreement on the terms of the new CBA that will take effect from 1st April 1999 for the three year period to 31st March 2002. On 8th October 1999, Nenaco and INELU filed a Notice of deadlocked negotiations with the Department of Labor & Employment National Conciliation and Mediation Board ("DOLE-NCMB"). A copy of the Notice is attached to this disclosure. Conciliation conferences presided over by a DOLE-NCMB conciliator were held on 19th and 20th October although no agreement has been reached. On 25th October 1999, INELU officially requested DOLE-NCMB for assistance in the conduct of strike balloting nationwide. Allowing for the thirty-day conciliation period and seven-day notice of strike mandated by law, a strike could legally be conducted on or after 15th November 1999. Given the ongoing conciliation process, Nenaco is confident that agreement will be reached with the INELU on the new CBA terms without strike action being taken. Profit & Loss Statement For the nine months ended 30th September 1999 (in thousand pesos) For the nine months ended notes 30 Sept 199 9 REVENUES Passage 872,023 Freight 489,572 Terminal & Other Revenue 41,190 TOTAL REVENUES 1,402,786 EXPENSES Fuel and lubricants 424,998 Other Vessel Operating Expenses 545,752 Total Vessel Operating Expenses 1 970,749 Terminal Operating Costs 2 330,743 Administrative Expenses 3 217,389 TOTAL EXPENSES 1,518,881 NET OPERATING LOSS (116,095) FINANCING CHARGES 295,554 NET LOSS BEFORE EQUITY IN NET EARNINGS OF AFFILIATES (411,649) Equity in net earnings of affiliates 8,902 NET LOSS BEFORE EXTRA-ORDINARY ITEMS (420,552) Extra-ordinary Loss (net of applicable tax) 55 044 NET LOSS BEFORE TAX (475,596) Deferred income tax benefit (131,728) NET LOSS (343,868) Negros Navigation Co., Inc. Notes to Profit and Loss Statement For the nine months ended 30 September 1999 (in thousand pesos) Note 1 Vessel Operating Expenses Fuel & lubricants 416,552 Drydocking 22,673 Repairs & maintenance 98,033 Salaries & wages 136,640 Water expenses 20,523 Charter Hire Expenses 8,445 Security Guards Services 1,371 Laundry and Janitorial Services 11,311 Depreciation 118,242 Insurance 46,228 Taxes, Licenses, Fees 28,363 Pilotage, stevedoring and port charges 51,275 Others 11,094 Total (Pesos thousand) 970,749 Note 2 Terminal Operating Expenses Fuel & lubricants 10,291 Equipment and container van repairs 36,664 Salaries & wages 41,464 Utility and Travel 6,219 Other cargo handling 23,506 Depreciation 113,205 Insurance 5,728 Taxes, Licenses, Fees 688 Rent, warehouse, container vans & others 73,594 Others 19,382 Total (Pesos thousand) 330,743 Note 3 Administrative Expenses Repairs & maintenance 4,815 Salaries & wages 94,047 Utility and Travel 25,034 Advertising & promotions 11,874 Security guard services 10,117 Janitorial services 2,585 Depreciation 20,318 Insurance 7,391 Taxes, Licenses, Fees 2,853 Rent expense - building & equipment 11,509 Professional & legal fees 9,726 Others 17,119 Total (Pesos thousand) 217,389 Negros Navigation Co., Inc. Balance sheet September 1999 (in thousand pesos) September 1999 Fixed assets Vessels, plant & equipment 3,825,492 Investment in associates 583,281 Other assets 55,980 4,464,753 Current assets Cash (116) Trade receivables 137,221 Deferred income tax 157,631 Spare parts inventory 283,170 Others 135,234 713,140 Current liabilities Short-term loans 85,247 Current portion of long-term loans 181,844 Accounts payable & other liabilities 556 645 823,736 Net current assets (110,596) Long-term liabilities Bank loans 944,848 Advances from MPC 1,911,410 Others 14,555 Minority interest 64 Net assets 1,483,280 Shareholder's funds Share capital 3,638,425 Retained losses (2,155,145) 1,483,280 NEGROS NAVIGATION CO., INC. Statement of Cash Flows For the nine months ended 30 September 1999 (in thousand pesos) For the nine months ended 30 Sept. 1999 CASH FLOWS USED IN OPERATING ACTIVITIES Net Loss (343,868) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation/Amortization 251,766 Net earnings of affiliates 8,902 Extraordinary loss 80,948 (2,253) Changes in working capital: (Increase) Decrease in: Trade and other receivables, deposits and prepayments 37,855 Inventories (15,850) Deferred income tax (166,921) Other assets (9,290) Increase ( Decrease ) in: Accounts payable and accruals (204,377) (358,583) Net cash used in operating activities (360,836) CASH FLOWS USED IN INVESTING ACTIVITIES Investment in affiliate (71,532) Acquisition of property and equipment (97,040) Net cash used in investing activities (168,572) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in notes payable (351,478) Decrease in long-term loans (935,180) Increase in advances from parent company 1,589,981 Insurance proceeds 165,000 Decrease in capital stock (10,878) Net cash provided by financing activities 457,445 NET DECREASE IN CASH AND CASH EQUIVALENTS (71,963) Cash, Beginning 71,847 Cash, End (116) Summary of Financial Support from MPC As of 20 October 1999