Steniel Announces Results for the Year 1999

March 2, 2000 PSE CIRCULAR FOR BROKERS NO. 538-00 STENIEL ANNOUNCES RESULTS FOR THE YEAR 1999 Steniel Manufacturing Corporation ("Steniel"), Metro Pacific Corporation's holding company for its packaging business, announced today a consolidated profit before non-recurring items for the year ended 31 December 1999 of Pesos 11 million, a complete turnaround compared to last year's loss of Pesos 142 million. Financial Review Consolidated sales decreased by 47 per cent to Pesos 1,530 million for 1999 from Pesos 2,914 million in 1998 due mainly to the divestment of Starpack Philippines Corporation ("Starpack"), Steniel's former flexible packaging company, to VAW Europack GmbH in December 1998. In addition, a relatively weak sales performance in Luzon as a result of prevailing over capacity in the region negated the improvements in revenues in Mindanao. Despite the decrease in consolidated revenues, however, a significant improvement in gross profit rate was realized. The consolidated gross profit rate increased to 22 per cent in 1999 as compared to 17 per cent in 1998 due primarily to the various cost reduction initiatives implemented throughout the Group. The gross profit in absolute terms, however, decreased to Pesos 340 million in 1999 from Pesos 489 million in 1998 as a result of a lower revenue base following the disposal of Starpack. Operating expenses, in absolute terms, decreased by 41 per cent from Pesos 340 million in 1998 to Pesos 202 million in 1999. As a percentage of sales, however, operating expenses increased marginally from 12 percent in 1998 to 13 percent this year mainly because the. reduction in fixed overhead expenses were offset by decreased revenues. The Group's financing charges also decreased by 56 per cent, from Pesos 291 million in 1998 to Pesos 128 million in 1999. This was due principally to the substantial reduction in interest bearing debts as a result of the disposal of Starpack, in addition to a lower average cost of borrowing. Overall, Steniel reported net income of Pesos 18 million for the year ended 31 December 1999 as compared to Pesos 73 million for the year ended 31 December 1998. Steniel acquired in August 1999 the 40 per cent minority interest in Treasure Packaging Corporation, the Group's Cebu operations. As a result of this recent investment. Steniel now owns 100 per cent all its operating subsidiaries. further enhancing the Group's dominance nationwide. Financial Condition Total consolidated assets slightly decreased from Pesos 2,663 million as of 31 December 1998 to Pesos 2,509 million as of 31 December 1999. Total consolidated equity, however, improved from Pesos 1,318 million as of 31 December 1998 to Pesos 1.336 million at the current year end. Summary and Outlook Delfin P. Paycana, Steniel's President and Chief Executive Officer, commented: "After three years of operating losses. I am very pleased that the Steniel Group has turned the corner and finally returned to profitability in 1999. We are now beginning to realize the fruits of the various initiatives instituted in the recent past as evidenced by our current year end's operating results. With four plants nationwide, we are confident that Steniel is now in a better position to achieve and sustain long-term viability." STENIEL MANUFACTURING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME/(LOSS) AND DEFICITS FOR THE YEARS ENDED 31 DECEMBER UNAUDITED (In thousands) 1999 1998 1997 REVENUES P1,530,029 P2,913,693 P2,534,655 COST OF SALES 1,190,324 2,424,471 2.199,857 GROSS PROFIT 339,705 489,222 334,798 OPERATING EXPENSES 201,637 340,211 298,520 INCOME FROM OPERATIONS 138,068 149,011 36,278 FINANCING CHARGES, net 127,567 291,221 192,619 PROFIT/(LOSS) BEFORE OTHER INCOME 10,501 (142,210) (156,341) OTHER INCOME/(CHARGES) 15,664 258,137 (297,053) INCOME/(LOSS) BEFORE TAXATION 26,165 115,927 (453,394) PROVISION FOR INCOME TAX 8,623 24,452 (37,557) INCOME/(LOSS) BEFORE MINORITY INTEREST 17,542 91,475 (415,837) MINORITY INTERESTS - (18,330) 19,485 NET INCOME/(LOSS) FOR THE PERIOD 17,542 73,145 (396,352) DEFICIT Beginning of the year As previously reported (183,336) (337,445) 58,907 Adjustment (73,222) - - As restated (256,558) (337,445) 58,907 Transfer from revaluation reserve of property, plant and equipment 7,742 7,742 - End of year P(231,274) P(256,558) P(337,445) ========= ========== ========= EARNINGS/(LOSS) PER COMMON SHARE, in centavos 2.00 8.35 (45.24) ========= ========== ========= STENIEL MANUFACTURING-CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 31 DECEMBER UNAUDITED (In thousands) 1999 1998 ASSETS CURRENT ASSETS Cash and cash equivalents P 92,231 P 160,217 Receivables, net 428,060 452,045 Inventories 331,282 341,293 Prepayments and other current assets 52,659 113,960 Deferred income tax 5,288 7,768 Net assets held for sale 196,417 196,417 Total current assets 1,105,937 1,271,700 PROPERTY, PLANT AND EQUIPMENT 1,360,194 1,369,413 OTHER ASSETS 43,333 22,157 P2,509,464 P2,663,270 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Loans and trust receipts payable P637,201 P514,554 Current portion of long-term debts 262,881 289,130 Accounts payable and accruals 164,058 307,208 Due to affiliated companies 38,411 100,769 Total current liabilities 1,102,551 1,211,661 LONG-TERM DEBTS 71,111 107,666 MINORITY INTERESTS - 25,682 STOCKHOLDERS' EQUITY 1,335,802 1,318,261 P2,509,464 P2,663,270 ========== ========== STENIEL MANUFACTURING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER UNAUDITED (In thousands) 1999 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) for the period P17,542 P73,145 P(396,352) Adjustments to reconcile net income/(loss) to net cash (used)/provided by operating activities: Depreciation and amortization 80,922 174,484 175,053 Gain on disposal of property, plant & equipment (908) (2,734) (24,345) Unrealized foreign exchange loss - 15,861 236,277 Gain on sale of investment. - (265,810) Changes in current assets and liabilities, net of disposal of a subsidiary: (Increase)/decrease in Receivables 23,984 (87,355) (134,321) Inventories 10,011 (39,939) 106,744 Prepayments and other current assets 56,272 (42,754) 23,084 Deferred income tax 2,480 22;427 (31,808) Net assets held for sale - - 53,637 Increase/(decrease) in: Accounts payable and accruals (143,151) 224,978 53,742 Due to affiliated companies (62,357) 69,057 (1,107) Net cash provided by operating activities (15,205) 141,360 60,604 CASHFLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (100,105) (111,930) (70,196) Proceeds from sale of property, plant and equipment 29,308 17,870 32,839 Decrease in other assets (16,145) 66,984 (50,323) (Decrease)/increase in minority interest (25,682) 18,310 (19,485) Proceeds from sale of a subsidiary - 700,000 - Cash held by a subsidiary on disposal - (58,791) - Net cash provided by investing activities (112,624) 632,443 (107,165) CASH FLOWS FROM FINANCING ACTIVITIES Increase/(decrease) in loans & trust receipts payable 96,398 (585,546) 239,875 Decrease in long-term debts (36,555) (110,304) (131,568) Net cash used in by financing activities 59,843 (695,850) 108,307 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (67,986) 77,953 61,746 CASH AND CASH EQUIVALENTS Beginning of period 160,217 82,264 20,518 End of period P92,231 P160,217 P82,264 ========= ======== ========