Benguet Announces Third Quarter 1999 Results

December 6, 1999 PSE CIRCULAR FOR BROKERS NO. 3091-99 BENGUET ANNOUNCES THIRD QUARTER 1999 RESULTS Manila, Philippines, December 2, 1999 Benguet Corporation (NYSE: BE) today announced its consolidated third quarter results for the nine months ended September 30, 1999. Consolidated Results Consolidated net loss for the third quarter of 1999, mainly caretakership costs of suspended operations and accrued interest expense, amounted to P124,500,000 (US$3,028,000) or P1.09 (US$0.027) per share, higher than the loss of P109,700,000 (US$2,504,000) or P0.96 (US$0.022) per share in the same quarter of 1998. Higher loss for the quarter was mainly on account of higher foreign exchange loss of P70,500,000 this quarter compared with P46,300,000 a year ago as a result of the decline in the peso to dollar foreign exchange rate. For the nine months period, consolidated net loss amounted to P281,000,000 (US$6,835,000) or P2.46 (US$0.060) per share, significantly lower compared with the loss of P454,700,000 (US$10,379,000) or P3.98 (US$0.091) per share in the same period last year. Operating revenues increased to P97,500,000 (US$2,372,000) this quarter from P73,500,000 (US$1,676,000) for the same period in 1998. For the first nine months, operating revenues declined to P220,200,000 (US$5,356,000) from P331,800,000 (US$7,573,000) for the same period in 1998. Exploration Projects Benguet's exploration team has substantially covered the target area in Kingking (Pantukan, Compostela Valley), and will also cover areas controlled by Pantukan Mineral Corporation with whom Benguet Pantukan Gold Corporation (BPGC), a 100% owned subsidiary of the Company, has an operating agreement for 5,485.74 hectares. BPGC is still awaiting approval of a government permit to explore this particular claim. cdll Talks continue for the Acupan bulk gold project and the adjoining Ampucao copper-gold project, while the nickel property in Sta. Cruz, Zambales is still under due diligence study by a foreign company. The limestone properties in Alaminos, Pangasinan and in Sta. Cruz, Zambales have been the subject of both local and foreign inquiries, particularly as possible sources of cement plant feed. A modest supply contract for limestone with a foreign-run power plant is under negotiation. Mining Operations Benguet Antamok Gold Operation continues to be in suspension. The Masinloc Chromite Operation (MCO) mining and milling activities also remains suspended as the Company continues to market its chrome ore inventory. MCO generated net earning of P4,100,000 (US$98,900) this quarter, higher than earnings of P2,600,000 (US$60,000) for the same quarter in 1998. For the nine-month period, losses amounted to P600,000 (US$15,800), compared with the earnings of P13,300,000 in 1998. Shipment volume for the quarter and for the nine-month period aggregated 13,403 tonnes and 23,206 tonnes this year, higher than the 7,476 tonnes and 22,145 tonnes shipped for the same corresponding periods in 1998. Other Projects BC Property Management, Inc. continues to consolidate the Company's mineral and non-mineral properties in the Baguio District in preparation for future development or joint venture. Benguet Parkland Development Corporation has completed the construction of additional amenities at the Villaluna Resort. Agua de Oro Ventures, Inc. through its brand name Danum , continues to increase its share in the Baguio City 5-gallon bottled water market. BenguetCorp has written a formal Letter of Interest to the Baguio Water District to supply the city's short-and long-term bulk water requirements from the Company's permitted sources. The Engineering and Technical Services groups are currently engaged in several drilling and electrical/mechanical job contracts with outside parties. Benguet is seeking pre-qualification in preparation for bidding for various Local Water Utilities Administration and Department of the Interior and Local Government water projects. llcd Subsidiaries and Affiliate Companies Benguet Management Corporation (BMC), a 100% owned subsidiary, and its subsidiaries reported a consolidated net loss of P14,100,000 (US$342,000) this quarter and P43,200,000 (US$1,051,000) for the nine months period of 1999. BMC Foundry remains in a modified caretaker mode due to severe market slump and tight financial condition. On June 21, 1999, BMC and its creditor-banks agreed on a moratorium arrangement for the repayment of BMC's outstanding loans and unpaid letters of credit. At this time, a draft of the Memorandum of Agreement containing the term sheet of the moratorium has been prepared and is being reviewed by all parties concerned. BMC Forestry Corporation (BFC)'s Woodsdale Subdivision Project at Itogon, Benguet is scheduled to be completed within the next six months. BFC is currently considering several options for its next property development. Arrow Freight Corporation (AFC) is considering two strategic moves that will enhance growth and improve profitability in the long run. It is set to re-position itself as a logistics company from a purely trucking and warehouse management organization as well as to outsource its truck fleet repair with the aims of further lowering overhead costs and improving equipment availability. Benguetrade Inc. (BTI) recognizes the bright prospects of the water supply industry in the country. It has ongoing talks with a well-known U.S. manufacturing firm for the exclusive distribution of the latter's water treatment and distribution product lines. LexLib BenguetCorp International Limited (BIL), the Company's HongKong based and 100% owned subsidiary for international operations, broke even this quarter and for the first half of 1999. BenguetCorp U.S.A. a 100% owned subsidiary of BIL, currently has mineral properties in Royston Hills, Nevada for sale. cdll Debt Repayment Plan On June 11, 1999, the Company reached an agreement with its creditor-banks on the repayment of its outstanding loans. The Company signed a Term Sheet in the form of a letter of agreement prepared by the Agent Bank of the consortium of creditor-banks. To date, the Term Sheet has been formally approved by creditor-banks representing a substantial majority of the outstanding loan. Value-Added Tax Claims The Bureau of Internal Revenue and Department of Finance have favorably granted the Company tax credit certificates of P67.7 million from January to September 1999, bringing to P334.8 million the aggregate amount of tax credits so far granted to the Company for direct export shipments and gold sold to the Bangko Sentral ng Pilipinas (BSP). As of September 30, 1999, the balance of the Company's claim awaiting administrative and judicial review for direct exports and gold sold to the BSP amount to P316.7 and P203.1 million, respectively. prcd Private Placement The Tripartite Agreement among the Company, Palm Avenue Realty and Development Corporation, Palm Avenue Holding Company Inc. (Palm Avenue companies) and the Presidential Commission on Good Government for the private placement of a major block of the Company's shares is still pending for an approval by the Sandiganbayan. In March 1999, the Palm Avenue companies wrote the Company indicating their commitment to infuse more capital into the Company over P275 million, which is already subject to the approval of the appropriate government agencies and judicial bodies. llcd Business Outlook Benguet's Chairman, President and CEO, BP. G. Romualdez said, "Benguet is reviewing its mineral properties and mining organization in order to formulate a more cost effective maintenance program that will enable it to react immediately to positive changes in the Philippine mining environment. Benguet also continues to firm up its business strategies to ensure future revenue-earning projects in land and water resource development and engineering and technical services. Benguet is also intensifying its efforts to dispose of several identified non-performing assets in order to generate funds primarily for operations and debt servicing. With the strengthening of the Philippine and Asian economies, the markets for the Company's goods and services as well as non-performing assets are expected to improve further. In addition, the Company's bid to supply bulk water to the BLIST (Baguio-La Trinidad-Itogon-Sablan-Tuba) area has elicited favorable response. When this project pushes through, it will greatly enhance Benguet's profitability into the next millennium." cdlex BENGUET CORPORATION and Subsidiaries Consolidated Results of Operations In Thousands (Except Per Share Data) (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 PHILIPPINE PESOS 1999 1998 1999 1998 Operating Revenue P97,500 P73,500 P220,200 P331,800 Operating Profit (Loss) (12,800) (50,100) (71.900) (104.500) Other Income (Expenses) - Net (111,700) (59,600) (209,100) (240,000) Net Income (Loss) Before Other Items (124,500) (109,700) (281,000) (344,500) Other Items (a) - - - (110,200) Net Income (Loss) (b) (P124,500) (P109,700) (P231,000) (P454,700) Earnings (Loss) Per Share (c) (P1.09) (P0.96) (P2.46) (P3.98) US DOLLARS (d) Operating Revenue $2,372 $1,675 $5,356 $7,573 Operating Profit (Loss) (311) (1,143) (1,749) (2,385) Other Income (Expenses) - Net (2,717) (1,361) (5,086) (5,479) Net Income (Loss) Before Other Items (3,028) (2,504) (6,835) (7,864) Other Items (a) - - - (2,515) Net Income (Loss) (b) ($3,028) ($2,504) ($6,835) ($10,379) Earnings (Loss) Per Share (c) ($0.027) ($0.022) ($0.060) ($0.091) (a) Consist of nonrecurring loss from the sale of shareholdings in Petrofields Corporation. (b) Under Philippine generally accepted accounting principles, unrealized foreign exchange losses are deferred and amortized to coincide with the actual repayment of outstanding foreign currency obligations, while pension costs are actuarially computed and are funded as accrued. The effect of these methods is nil for the third quarter but to increase net loss by P2,100,000 (US$50,800) for the first nine months in 1999; and to increase net loss by P6,600,000 (US$151,000) for the third quarter and by P39,500,000 (US$901,000) for the first nine months in 1998. (c) Earnings per share are based on the weighted average number of common shares outstanding of 114,111,255 in 1999 and 114,110,662 in 1998. (d) Benguet is a Philippine corporation and its books of accounts are kept in Philippine pesos. U.S. dollar figures are shown purely for convenience and were computed based on the interbank guiding rate at September 30 of P41,112 to US$1.00 in 1999 (P43,809 to US$1.00 in 1998).