PHILIPPINE POSTAL CORPORATION

CENTRAL OFFICE
BALANCE SHEET
As of December 31, 1998
(With Comparative Figures for 1997)
ASSETS 1998 1997
CURRENT ASSETS
Cash & Cash Equivalents (Note 2) P 1,030,119,910.00 P 603,480,698.00 P
Accounts Receivable (Note 3) 1,945,541,000.00 2,060,737,149.00
Due from Regional Offices - (1,069,521,495.08)
Inventories (Note 4) 837,831,704.00 799,842,352.16
Total Current Assets 3,813,492,614.00 2,394,538,704.08
MISC. ASSETS & DEFERRED CHARGES (Note 5) 16,056,954.00 21,877,320.00
INVESTMENTS (Notes 1 & 6) 585,855,600.00 585,855,600.00
CONTINGENT ASSETS (Note 7) 58,088,824.00 58,088,824.00
PROPERTY, PLANT & EQUIPMENT, Net (Note 8) 2,119,229,646.00 1,991,529,939.00
TOTAL ASSETS 6,592,723,638 5,051,890,387
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable (Note 9) 1,832,311,615.00 1,911,991,175.00
Due to RO's - DMOF 1,639,054,196.00 560,791,615.00
Due to PPC Subsidiaries 501,856.00 501,856.00
Trust Liabilities (Note 10) -336951905 -606914791
Depository Liabilities 2,253,674.00 2,568,674.00
Miscellaneous Liabilities 1,135,665.00 552,041.00
Total Current Liabilities 3,138,305,101.00 1,869,490,570.00

CONTINGENT LIABILITIES 100,190.00 100,190.00
NOTES & ACCEPTANCES (Note 12) 644,807,147.00 647,152,947.00
3,783,212,438.00 2,516,743,707.00
STOCKHOLDERS' EQUITY
Authorized Capital Stock P10 B (Note 13)
Government P4.5B
Private 5.5B
Paid-in Capital 2,136,351,774.10 2,136,351,774.10
Donated Capital 283,519,294.00 283,519,294.00
Contingent Capital 58,088,824.00 58,088,824.00
Retained Earnings 331,551,308.00 57,186,788.00
2,809,511,200.10 2,535,146,680.10 P
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY P 6,592,723,638 P 5,051,890,387 P

See accompanying Notes to Financial Statements.
PHILIPPINE POSTAL CORPORATION
CENTRAL OFFICE
BALANCE SHEET
As of December 31, 1998
(With Comparative Figures for 1997)
INCREASE/
(DECREASE)
426,639,212.00
(115,196,149.00)
1,069,521,495.08
37989351.84
1,418,953,909.92

(5,820,366)
-
-
127,699,707

1,540,833,251


(79,679,560)
1,078,262,581
-
269,962,886
(315,000)
583624

1,268,814,531.00

-
(2,345,800)

1,266,468,731.00


-
-
-
274364520

274,364,520.00

1,540,833,251.00

See accompanying Notes to Financial Statements.
PHILIPPINE POSTAL CORPORATION
CENTRAL OFFICE
STATEMENT OF INCOME AND RETAINED EARNINGS
For the year ended December 31, 1998
(With Comparative Figures for 1997)
Increase/
1998 1997 (Decrease)
GROSS SALES
Stamp/Philatelic sales P 26,826,497 P 22,990,591 P 3,835,906
Telemoney order fees 2,213,465 1,663,770 549,695
Foreign postal administration 848,377,066 756,788,559 91,588,507

877,417,028 781,442,920 95,974,108

OPERATING EXPENSES
Personal services (Schedule 1) 416,638,677 555,041,900 (138,403,223)
Maintenance and other
operating expenses (Schedule 2) 666,160,225 690,809,276 (24,649,051)

1,082,798,902 1,245,851,176 (163,052,274)

LOSS FROM OPERATION (205,381,874) (464,408,256) 259,026,382

OTHER INCOME (CHARGES)
Other income (Schedule 3) 20,554,798 32,979,298 (12,424,500)
Income from regional offices 176,849,437 177,374,100 (524,663)
Interest received 22,549,668 11,710,798 10,838,870
Interest expense (3,977,809) (81,318,582) 77,340,773
Dividend on Stocks 10,478 95,962 (85,484)
215,986,572 140,841,576 75,144,996
NET INCOME (LOSS) BEFORE SUBSIDY/GRANTS 10,604,698 (323,566,680) 334,171,378

SUBSIDY/GRANTS 41,800,000 441,860 41,358,140
NET INCOME (LOSS) AFTER SUBSIDY/GRANTS 52,404,698 (323,124,820) 375,529,518
RETAINED EARNINGS AT BEGINNING OF YEAR

As previously stated 57,186,788 342,368,665 (285,181,877)
Prior period adjustments (Note 15) 221,959,822 37,942,943 184,016,879
As adjusted 279,146,610 380,311,608 (101,164,998)

RETAINED EARNINGS AT THE END OF YEAR P 331,551,308 P 57,186,788 P 274,364,520

See accompanying Notes to Financial Statements.
PHILIPPINE POSTAL CORPORATION
CENTRAL OFFICE
STATEMENT OF CASH FLOWS
For the year ended December 31, 1998
(With Comparative Figures for 1997)
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers P 992,613,177 P 195,387,348
Cash paid to suppliers and employees (960,251,548) (578,598,380)
Interest received 22,549,668 11,710,798
Interest expense (3,977,809) (81,318,582)
Other income received 20,565,276 33,075,260
Income from regional offices 176,849,437 177,374,100
(Increase)/Decrease in miscellaneous assets and deferred charges 5,820,366 (16,820,413)
Decrease in due from regional offices (1,069,521,495) 399,851,137
Increase/(Decrease) in trust liabilities 269,962,886 1,359,526,850
Increase in due to RO's - DMOF 1,078,262,581 560,791,615
Increase in contingent asset/capital - (26,082,595)
Subsidy from national government 41,800,000 441,860
Net cash provided from operating activities 574,672,539 2,035,338,998
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase/Decrease in investment from subsidiaries - (1,500,000)
Equipment donated by DOTC - 282,943,459
Acquisition, major repair and adjustments of fixed assets (145,687,527) (508,855,251)
Net cash used in investing activities (145,687,527) (227,411,792)
CASH FLOWS FROM FINANCING ACTIVITIES :
Increase in long-term liabilities (2,345,800) 274,975,818

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 426,639,212 2,082,903,024
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 603,480,698 (1,479,422,326)
CASH AND CASH EQUIVALENTS, END OF YEAR P 1,030,119,910 P 603,480,698
Reconciliation of Net Loss to Net Cash Provided by Operating Activities :
1998 1997
Net income (loss) P 52,404,698 P (323,124,820)
Adjustments to reconcile net income
to net cash provided by operating activities :
Depreciation 17,987,820 17,987,820
Prior period adjustment 221,959,822 37,942,943
Increase (Decrease) in accounts receivable 115,196,149 (586,055,572)
Increase (Decrease) in due from regional offices (1,069,521,495) 399,851,137
Increase (Decrease) in inventories (37,989,352) 20,101,655
Increase in miscellaneous and deferred charges 5,820,366 (16,820,413)
Decrease in accounts payable (79,679,560) 596,085,877
Increase in due to RO's - DMOF 1,078,262,581 560,791,615
Decrease in trust liabilities 269,962,886 1,359,526,850
Decrease in depository liabilities (315,000) 266,641
Increase (Decrease) in miscellaneous activities 583,624 (5,132,140)
Decrease (Increase) in contingent capital - (26,082,595)
Net cash provided by operating activities P 574,672,539 P 2,035,338,998



See accompanying Notes to Financial Statements.
Schedule 1
PHILIPPINE POSTAL CORPORATION
CENTRAL OFFICE
PERSONAL SERVICES
For the year ended December 31, 1998
(With Comparative Figures for 1997)

1998 1997
Salaries P 142,814,590.00 P 175,426,615.67
Amelioration 86,555,375 -
Uniform allowance 31,732,500 6,728,102
Wages 25,946,924 30,522,641
PERA/ACA 24,436,581 29,496,642
Bonuses/cash gift 21,740,118 32,631,393
Terminal leave 20,272,375 6,116,986
GSIS corporate share 17,726,569 31,933,668
Salary adjustment 12,195,258 36,081,512
Overtime Pay 11,461,296 23,829,191
Centennial Bonus 6,557,250 -
Productivity incentive bonus 4,586,000 3,841,000
Representation and transportation 3,917,577 4,426,080
PAG-IBIG 1,795,076 1,896,890
Per diem 1,765,328 2,872,550
Medicare 958,662 1,023,834
Honoraria 797,165 570,399
Employees compensation 692,458 539,160
Salary increment 566,638 7,373,556
Loyalty cash award 91,475 114,000
Hazard pay 29,462 2,823,353
Provident fund 81,884,058
Grocery allowance 54,885,763
Hospitalization 12,168,506
Laundry allowance 7,856,000
P 416,638,677.00 P 555,041,899.67
Schedule 2
PHILIPPINE POSTAL CORPORATION
CENTRAL OFFICE
MAINTENANCE AND OTHER OPERATING EXPENSES
For the year ended December 31, 1998
(With Comparative Figures for 1997)
1998 1997
Transportation expenses P 179,499,911.49 P 214,439,881.00
Leasing costs 131,225,328.26 170,919,293.00
Interest expenses 123,438,462.21
Transportation expenses - FPA 61,669,777.00 150,000,000.00
Retirement gratuity 29,896,585.16 5,187,862.00
Auditing services 20,069,132.00 8,058,579.00
Depreciation/amortization 17,987,820.00 17,987,820.00
Light and water 17,483,835.48 13,858,504.00
Fidelity bond and insurance premium 13,856,528.98 10,853,985.00
Extraordinary/representation expenses 9,478,815.00 5,054,052.00
Communication expenses 5,317,730.08 2,658,917.00
Supplies and materials - gasoline 4,523,412.44 4,936,365.00
Training and seminar expenses 4,046,292.41 7,733,975.00
Supplies and materials - printed forms 3,321,621.67 8,041,011.00
Supplies and materials - others 2,945,298.39 29,565,234.00
Amortization - organization costs 2,346,518.20
Travelling expenses 2,070,427.92 10,287,141.00
Supplies and materials - spare parts 2,039,711.42 2,087,703.00
Advertising and publication expenses 2,023,889.22 2,970,759.00
Repairs and maintenance - gov't facilities 1,525,496.16 953,280.00
Rents 1,456,515.99 5,603,521.00
Supplies and materials - PS 1,000,365.73 1,135,630.00
Repairs and maintenance - gov't vehicles 432,593.00 291,032.00
Loss on foreign exchange 405,184.56
Commitment and other charges 172,075.02 199,345.00
Grants, subsidies and contributions 95,670.42 408,260.00
Taxes, duties and fees 40,013.33 57,796.00
Supplies and materials - MO blank forms 14,377.73 16,868.00
Other services 27,776,836.86 17,502,462.00
P 666,160,226.13 P 690,809,275.00
Schedule 3
PHILIPPINE POSTAL CORPORATION
CENTRAL OFFICE
OTHER INCOME
For the year ended December 31, 1998
(With Comparative Figures for 1997)

1998 1997

Gain on foreign exchange P 11,144,541.94 P 15,814,496.00
Rent Income 6,003,700.00 5,502,051.00
Commission on international money order 2,033,219.59 1,914,746.00
Outgoing IMO fees 901,349.00
Sale of waste materials 170,663.68 716,411.00
Fines and penalties 135,082.00 27,774.00
Presentation to customs 94,129.48
Other miscellaneous income 72,112.33 207,212.00
Telemoney 15,158.00
Surety fee income 8,781,450.00
P 20,554,798.02 P 32,979,298.00