alaska ar10 per page low
Post on 06-Apr-2018
226 Views
Preview:
TRANSCRIPT
-
8/2/2019 ALASKA AR10 Per Page Low
1/84
Th Hat fALASKA
2010 AnnuAL reporT
-
8/2/2019 ALASKA AR10 Per Page Low
2/84
Contents
1Financial Highlights /2Our Company /3Our Vision & Mission /4Our Business Portolio /8Chairmans Message / 10Presidents Message /14Childrens Hour / 16Alaska GK Village /18 Happyland /20 The Alaska Aces /22Values-Inspired Campaigns /24CFOs Report /
26Managements Discussion & Analysis o Operations /32Corporate Governance /36Board o Directors /40Management Committee /42AuditCommittee Report /
43Statement o Managements Responsibility or Financial Statements /
44Financial Statements/80Corporate and Shareholder Inormation
Corporate Social Responsibility is an intrinsic part o
Alaska Milk Corporations business operations. At the heart o our
advocacies and in line with our heritage o nutrition are programs
that put thrusts towards the areas o nutrition education
and physical development.
As a responsible corporate citizen, we strive to make a
diference in our country, especially in the community where
we operate. We engage and sustain partnerships with private
organizations, local government units and individuals
by providing unds and other means o viable support
to help uplit the lives o underprivileged Filipinos.
We also recognize our crucial role in promoting positive values
to address the moral challenges conronting modern society.
Going beyond creative relevance and executions,
our advertising campaigns are geared towards the development
o better societal values that support the ulillment o
better lives or our countrymen.
-
8/2/2019 ALASKA AR10 Per Page Low
3/84
Financial Highlights
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
6.00
6.50
7.00
7.50
8.00
8.50
9.00
9.50
10.00
10.50
11.00
11.50
12.00
12.50
13.00
13.50
14.00
In million Pesos except per share data and ratios 2010 2009 Change
For the YearNet Sales 12,163 10,580 15%
Income rom Operations 2,327 1,889 23%
EBITDA1 2,762 2,241 23%
Net Income 1,816 1,409 29%
At YearEndTotal Assets 9,140 7,271 26%
Stockholders Equity 6,046 4,677 29%
Financial RatiosOperating Margin 19.1% 17.9% +1.2% pts
Return on Sales 14.9% 13.3% +1.6% pts
Return on Equity 30.0% 30.1% -0.1% pt
Current Ratio 1.93 1.55 +0.38
Debt-to-Equity Ratio 0.51 0.55 -0.04
Per Common ShareEarnings per Share 2.06 1.59 +0.47
Cash Dividends 0.50 0.20 +0.30
1
Earnings Before Interest, Taxes, Depreciation and Amortization
Index based on December 29, 2009 PSEi of 3,053 and AMC closing price of P7.10 per share
2010 AMC Stoc Price Performance Relative to PSEi
PSEi
AMC
2010 Annual Report
-
8/2/2019 ALASKA AR10 Per Page Low
4/84
Our Company
-
8/2/2019 ALASKA AR10 Per Page Low
5/84
PRODUCT DEVELOPMENT
We will continue to build on the strengths andcompetitive attributes o the ALASKA brand
and develop its ull marketing potential. We
will develop new products and identiy market
opportunities, mindul o our task to be responsive
to the ever changing and growing needs o our
consumers.
CUSTOMER SERVICECustomer relationships are integral in building the
Alaska business. We aim to provide our partners in
trade the best and most eicient service, makinguse o leading edge technology to ensure timely
product availability and accessibility. We strive
to know and understand our customers ully to
bridge the gap between what they need and
what we can oer.
QUALITYUltimately, the consumer whom we serve and
their level o satisaction with our products
become our nal judge and jury. We are
committed to deliver high quality milk andother consumer ood products rom production
to consumption. We will respond to the call to
deliver higher quality nutrition to every Filipino
home.
To be a leading consumer oods company with a diversiied portolio o consumer ood
brands and products that are market leaders in their respective categories.
PEOPLE
We recognize that our people, the Alaska TeamMembers, are one o our most important assets
and we are committed to promote their saety and
welare. Their wealth o experience, ideas, dedication
and strong work ethic lay the oundation or the
Companys continued success. It is our goal as
much as it is theirs, to pursue and reach their ull
potentials through continuing education, training,
and skills-enhancement programs. We challenge
each individual by providing the opportunity to
contribute to the Companys endeavors.
PROFITABLE GROWTHGrowth that creates value or our shareholders
is paramount. We will deploy our resources on
investment opportunities that are within our core
competence and yield excellent returns relative to
its risks and which are consistent with our growth
objectives.
SOCIAL RESPONSIBILITYWe recognize our role in nation building by
promoting the protection o the environmentand taking part in various community-building
projects that help enhance and uplit the quality
o lie o the underprivileged and the marginalized
sectors o our society.
Our Mission
Our Vision
32010 Annual Report
-
8/2/2019 ALASKA AR10 Per Page Low
6/84
Honde SalPaborito ng Pamilya!
Our Business Portfolio
-
8/2/2019 ALASKA AR10 Per Page Low
7/84
52010 Annual Report
LIQUID CANNED MILkFor nearly orty years, the Alaska brand has always been associated with
quality and nutrition. The Companys rst generation o milk products are Alaska
Evaporated Filled Milk and Alaska Sweetened Condensed Filled Milk. Collectively
known as the Classic Line, product usage has since expanded rom a nutritional
beverage to a multi-purpose cooking ingredient. To address the needs o the
low-income earners or more aordable products, the Company also developed
a Value Line o evaporated and sweetened condensed creamers in the market.
Priced competitively and with the same Alaska Milk seal o quality, Alaska
Evaporada and Alaska Condensada are the perect enhancers or various ood
and beverage preparations. The Alaska brand is the undisputed market leader in
both the Evaporated and Condensed Milk Categories.
The Company has urther strengthened its core business by acquiring /
licensing the liquid canned milk business o global ood giant Socit Des Produits
Nestl S.A. In a deal signed on April 16, 2007, Alaska Milk Corporation bought
rom Nestle the Alpine, Liberty and Krem-Top brands, including all trademark
properties. Also included in the deal is a long-term licensing agreement or AMC
to manuacture and sell the Carnation and Milkmaid brands or liquid canned milk
products. Each o these brands has a strong market position, a loyal customer base
and a brand name associated with quality.
In line with the Companys thrust o providing aordable and quality products
to a greater number o consumers, an economy brand was made available in
the market. Launched in 2009, Cow Bell Condensada addresses the needs o a
growing price-conscious market, speciically the low-income earners.
Today, Alaska Milk Corporation has a dominant position in the liquid
canned milk category, accounting or nearly 80% o the market.
-
8/2/2019 ALASKA AR10 Per Page Low
8/84
Our Business Portfolio
6 The Heart o Alaska
POWDERED MILkThe Company has likewise built a solid position in the Powdered Milk
Category. With the heritage gained by the Alaska line o liquid canned milk
products, the Companys Alaska Powdered Milk Drink, the most nutritious
powdered milk, has emerged as the second leading brand in the market.
The successul Growth Gap Campaign was instrumental in sustaining
consumer awareness on the beneits o drinking milk, especially among
school-age children where weight and height gained during inancy
progressively lessen over the years until the child reaches puberty.
UHT READY-TO-DRINk MILkAlaska Milk Corporation also oers a line o Ready-to-Drink milk products
that come in both plain and favored milk. The Companys line o Ready-to-Drink
milk products use Ultra Heat Temperature (UHT) process combined with aseptic
packaging to ensure product quality, hygiene and longer shel lie.
Alaska Fresh Milk contains the essential vitamins and minerals or healthy
bones and teeth. It also contains energy-giving carbohydrates to suit the active
liestyle o every member o the amily. Alaska Slim Milk, a 98% at-ree resh cows
milk, suits the nutritional needs o the weight and health conscious milk drinkers.
Alaska Slim has all the calcium and minerals o regular milk, with less o the at.
To encourage milk consumption among children, a range o ready-to-drink
favored milk drinks under the brand names Alaska Choco! and Alaska SweetMilk! are likewise available in the market.
Alaska Yoghurt Drink is a ready-to-drink milk naturally ermented with
good bacteria which promotes proper digestion. It comes in our ruity favors:
Strawberry, Blueberry, Orange and Green Apple.
UHT READY-TO-USE PRODUCTAlaska Crema All-Purpose Cream is a result o the Companys eort to
broaden its product portolio in higher value-added segments. Launched in
2003, Alaska Crema enhances the taste o a variety o ood preparations,
bringing gourmet goodness at home.
NON-DAIRY COFFEE CREAMERThe latest addition to the Companys portolio o quality products is Alaska
Krem-Top Coee Creamer. A non-dairy coee creamer, Alaska Krem-Top enhances
coee experience with its rich favor and aroma. In a blind test, more coee
drinkers in Metro Manila like Alaska Krem-Top better than the leading coee
creamer brand.
-
8/2/2019 ALASKA AR10 Per Page Low
9/84
-
8/2/2019 ALASKA AR10 Per Page Low
10/84
8 The Heart o Alaska
Chairmans Message
The results or the year certainly relect our
strong commitment to deliver higher levels o
perormance and value to our customers, consumers
and shareholders.
The Philippine economy grew at its strongest
in 34 years at 7.3% in 2010 rom 1.1% in 2009, aided
by the recovery o exports and manuacturing,
accommodative monetary and iscal policies as wellas election spending. Sustained remittance infows,
combined by stable ood prices boosted consumer
spending which expanded by 5.3% rom 4.1% in 2009.
Investor sentiment likewise remained bullish, which
saw a 38% gain in the Philippine stock markets main
index. With the sharp rebound in the economy, the
Peso urther appreciated by 5.3%, to settle at P43.88 to
the U.S. dollar by year-end.
With the avorable economic environment, your
Company made signiicant progress, capitalizing
on market opportunities as we continue to position
our business or long-term growth. Our ocus onpromoting and growing our brands, building on our
capability and expanding market presence as well as
share o market enabled us to surpass our volume and
proit goals or the year.
Net income in 2010 reached P1.82 billion, 29%
higher than the previous years net income and the
highest in the history o the Company. This was
achieved as a result o robust sales volume growth
across our product portolio, complemented by a stable
cost environment and continuing ocus on improving
operating eiciencies.
As consumer spending remained buoyant, we were
relentless in pushing our products in the market through
strategic advertising and promotional campaigns that
capture the interest and diverse needs o consumers.
Collaborative eorts with our retail trade partners
ensured extensive exposure or our brands. Every
initiative undertaken has been guided by a conscious
eort to satisy our consumers to the extent that they
consistently choose our products over competition.
Our marketing and sales strategies were
complemented by continuing investments in
manuacturing capacity expansion and operating
eiciencies. While we have begun to realize initial beneits
rom these capital investments, more gains will materialize
in the coming years with the completion o these projects.
With a growing product portolio and brand strategies,
we are well positioned to respond to deliver higher salesvolumes amidst stronger consumer demand.
In 2010, we entered the non-dairy coee creamer
category with the launch o Alaska Krem-Top Coee
Creamer. Alaska Krem-Top is a signiicant step in our
continuing eort to expand our business portolio and
provide the Filipino consumers with aordable and
quality products. With a strong heritage in the milk
industry, we believe we are in a unique position to
capitalize on this opportunity which will support our
overall long-term growth objective.
Our strong inancial perormance and competitive
dividend yield continue to generate strong interest romthe investing public. From a share price o P7.10 at the start
o 2010, AMC share price gained 85% to close at P13.10 by
year-end, outperorming the local composite index which
increased by 38% during the comparable period.
Our accomplishments in 2010 have deinitely
established a higher perormance level moving orward.
In December 2010, the Board reviewed managements
strategic plan that ocuses on continuing high growth
and sustained proitability. Our priority in the immediate
term is to continue to extract growth rom our core milk
products and ast-track development o new products
and entry into new categories.
We entered 2011 amidst growing infationary
pressures, adding uncertainties to economic recovery
around the world. Soaring oil, ood and commodity
prices have been eeding infation, which puts pressure
on household budgets. Our assessment o the current
market conditions highlight the need to continuously
innovate in our marketing and selling eorts to
eectively communicate our value proposition to
This is my first report as Chairman of Alaska Milk Corporation after twelve years as ViceChairman and I write to you with mixed emotions. One borne out of humility, for the trust and
confidence the Board has bestowed on me and that of pride, for the great accomplishments we
have achieved for the year.
-
8/2/2019 ALASKA AR10 Per Page Low
11/84
92010 Annual Report
ANTONIO H. OZAETA
Chairman o the Board
Our accomplishments
in 2010 have definitely
established a higher
performance level moving
forward.
our consumers. This will be supported with trade and
distribution strategies to strengthen market coverage
and product availability. In these challenging times,
we will ensure that our company will live up to the
expectations o our consumers and we will ace these
challenges equally.
On behal o the Board, I wish to take this
opportunity to express our deepest gratitude and
appreciation to our ormer Chairman, the late WilredUytengsu, Sr., or his valuable contribution to the
growth o Alaska Milk. It was under his stewardship
and vision that we now have a strong and highly
committed organization, built under the solid
oundation o mutual respect and integrity. Thus, it is
an honor or me to build upon this legacy as I step into
a bigger role and responsibility o charting the next
course or Alaska Milk.
In closing, I would like to recognize the valuable
contribution o each and every Team Member in the
organization, or their dedication and commitment to
the objectives o the Company; to our business partners
and consumers, or their abiding trust and support; and
inally, to our shareholders, who continue to believe in the
inherent value o Alaska Milk Corporation.
-
8/2/2019 ALASKA AR10 Per Page Low
12/84
10 The Heart o Alaska
As the Philippine economy expanded to its strongest level in over three decades, I am pleased to reportthat your Company capped another year of solid financial results. Revenues for the year expanded
by 15% to P12.16 billion from P10.58 billion in 2009 as a result of sales volume gains in our core milk
products as well as incremental sales generated from new product launches. With the improvement
in the Companys cost structure, combined with a disciplined approach on spending, net income for the year surged
to a new record high of P1.82 billion, a 29% jump over the P1.41 billion net income earned in 2009.
Our achievements or the year can be credited to two
actors. First, the soundness o our business platorm which
consists o: harnessing the strengths and ull potential o
our brands, deepening our relationships with customers
and consumers and maintaining a strong balance sheet.
Second, is the dedication and expertise o our TeamMembers across the organization.
Dismissing conventional wisdom that a mature
market limits growth, we continued to create demand in
order to generate sales and expand our consumer base
through value-added marketing initiatives. We have
expanded our brand portolio and packaging options to
address the needs o an economically diverse market.
As a result, we maintained our dominance in the liquid
canned milk category, solidiied our position as the
second leading brand in the powdered milk market and
carved a bigger market share in the UHT ready-to-drink
and ready-to-use segments.Cognizant o our thrust to capitalize on the market
value o our acquisitions and develop new avenues o
growth in the uture, Alaska Krem-Top Coee Creamer was
ormally launched in July 2010. With a superior product
proile, we are conident that Alaska Krem-Top will achieve
a signiicant ollowing in the non-dairy coee creamer
market. As we build on our revenue base, we continue to
explore opportunities and rontiers within the dairy industry
which have strong growth potentials and where we can
become an important player. We are continuing to develop
new products as we work to leverage the equity our brands
have in the market and products that will meet and exceed
consumer expectations.
As reported last year, the devastation wrought by
Typhoon Ondoy impacted us signiicantly in the ourth
quarter o 2009, causing disruptions in our supply chain and
alling short o market requirements. Through extensive
rehabilitation eorts, your Company ully recovered rom
this unexpected calamity. With our ongoing expansion and
modernization programs, we stand ready with increased
President & CEOs Message
production capacity and the conidence that the current
strong demand is sustainable.
We recognize that our supply chain is a vital cog in our
aspiration to provide nutrition to every Filipino home. And
as such, we continue to hone our logistics and distribution
network in our resolve to bring our products to the smallestsari-sari stores and ultimately to the humblest homes.
Supply quality and stock availability programs were carried
out in earnest during the year. Technology enhancements,
through the interconnection o all provincial warehouses
under an integrated and seamless inventory management
system, have enabled us to distribute our products more
eiciently and cost-eectively than beore.
We have been resolute in growing our business by
sharpening our engagement with our consumers at the
point o purchase. To maximize trade coverage and spur
consumer trial and re-trial or our products, our sales eorts
concentrated on improving visibility and reach throughaggressive penetration drives.
Close collaboration with modern retailers enabled
us to capitalize on their store expansions. Specialized
in-store promotions and trade programs aorded us
the fexibility to bolster the presence o our products
in newly urbanized areas, capturing new consumers
almost immediately. For 2011, about 130 new stores
are expected to be opened by the Companys top retail
accounts, representing a real growth opportunity as we
bring our products closer to the consumers.
Our investments in brands and inrastructure would
be ineective without corresponding investments in
human capital. Along this line, we continue to develop
the capabilities and competencies o our Team Members
across the organization as well as those o our distributor-
partners. Through development programs that are
attuned to the ever-changing selling dynamics, we are
able to draw out the best in our people and make them
better understand and be more responsive to the growing
needs o a highly segmented market.
-
8/2/2019 ALASKA AR10 Per Page Low
13/84
12010 Annual Report
A welcome treat or the year was the victory o our
proessional basketball team, the Alaska Aces, in the 2010
Philippine Basketball Associations Fiesta Conerence. This
brings the total number o championship titles or the
team to 13 in 25 years, making the Alaska Aces the second
winningest team in terms o number o championship wins
in the history o the PBA.
This year, however, we are once again aced with strong
infationary pressures similar to those experienced in 2008,a concern that is shared by businesses and governments
around the world. With memories o the 2008 infation surge
still vivid, rising energy cost and soaring global ood prices
pose downside risks especially on consumer spending,
threatening economic recovery.
Prices o skimmed milk powder, a key ingredient in most
o our products, have risen sharply early on in 2011 driven
by global demand and poor weather conditions in Australia
and New Zealand, two o the worlds largest exporter o dairy
products. Furthermore, local costs o sugar and coconut oil have
likewise increased drastically, adding pressure to proit margins.
It is unlikely that this trend in commodity prices will reverse in
the short-term. While we recognize the realities o the marketplace,
we take these as a challenge or us to better ourselves. We intend
to retain our competitive vigor, determined to urther cementing
our position in the domestic milk market and delivering on our ull
potential as an organization. I am conident that the soundnesso our business model and strategies will give us stability through
diicult times and optimistic that this will make us stronger.
WILFRED STEVEN UYTENGSU, JR.
President & Chie Executive Oicer
We intend to retain
our competitive vigor,
determined to further
cementing our position
in the domestic
milk market.
-
8/2/2019 ALASKA AR10 Per Page Low
14/84
The Heart
-
8/2/2019 ALASKA AR10 Per Page Low
15/84
of ALASKA
-
8/2/2019 ALASKA AR10 Per Page Low
16/84
14 The Heart o Alaska
Childrens Hour began with a noble dream wrapped in a single package: to create a brighter
uture or Filipino children. It was in 1999 when Childrens Hour began as an end-o-the-millennium
campaign built on the promise that the one hours worth o annual earnings o each individual,
employee, corporation and organization would be able to start the change that we all dreamt o.
At present, Childrens Hour is now a ull orce non-proit organization that raises unds through the
power o one hour. These unds are then deployed to careully selected projects that help children
in the areas o education, nutrition, shelter, protection and total development in the orm o grants.
All children deserve to get an education, to live healthy and happy lives, and to look orward
to a brighter uture where they can ulill their potential. The truth is, everyone who has a job and
a regular income, no matter how small, can make a dierence in the lives o marginalized children,
explains Ms. Emily Abrera, Chairperson o Childrens Hour Philippines, Inc.
Emily AbreraChildrens Hour Director
The Alaska Milkcampaigns for Childrens
Hour are always creative
and unique.
To date, rom the contributions o
individuals, organizations and partnercorporations, Childrens Hour has unded 545
projects that beneitted over 600,000 children
all over the country.
Alaska Milk Corporation and Childrens
Hour have enjoyed a long collaboration,
spanning 10 years o shared goal o nurturing
the Filipino children. The Company was
one o the irst companies to join Childrens Hour in 1999 and has been recognized as one o the
organizations Top 20 contributors. Since Childrens Hours inception, oicers and employees o
Alaska Milk Corporation have raised a total o P2.2 million with an average employee participation
rate o 90%.
A staunch supporter o the Childrens Hour, AMC President and CEO Wilred Steven Uytengsu
went the extra mile by personally raising unds by competing in the 2009 Ironman World
Championships in Kona, Hawaii.
Ms. Abrera adds, Fred Uytengsu is one o our strongest champions. He himsel is tireless in
promoting our cause within the company, as well as raising extra unds via the Alaska Aces and
through his personal contacts. The Alaska Milk campaigns or Childrens Hour are always creative
and unique and unlike most o our donors, it is Alaska Milk who comes up with the ideas and
presents those to us.
To commemorate the 25th year o the Alaska Aces, Alaska Milk and Childrens Hour is launching
yet another co-branding project wherein or every 1 liter o Alaska Fresh and Alaska Slim sold, 25
centavos will go to the Childrens Hour.
Alaska Milk looks orward to a continuing partnership with Childrens Hour in making the world
a better place, one hour at a time.
Childrens Hour
-
8/2/2019 ALASKA AR10 Per Page Low
17/84
[ children lie at the heart of alaska ]
-
8/2/2019 ALASKA AR10 Per Page Low
18/84
6
[ home is where the heart is ]
-
8/2/2019 ALASKA AR10 Per Page Low
19/84
Alaska GK Village
12010 Annual Report
In 2005, Alaska Milk Corporation together with the municipality o San Pedro, Laguna and the
Gawad Kalinga Community Development Foundation laid the groundwork to build a community o
100 homes or the poorest o the poor.
Gawad Kalinga (GK), which means to give care in Filipino, is a community development model
and social movement ounded in the Philippines in 1995. Its mission is to transorm a nation by
creating peaceul and sel-reliant communities, anchored on the values o caring and generosity. It
seeks to restore the dignity o the poor. People struggling to survive one day at a time and living in
Alaska Milk believes that
providing decent homes
and livelihood programs
are just the beginning ofthe transformation of a
person, a family
and a community.
makeshit homes are given a chance to build
their own homes and re-build their lives. More
than providing a decent roo over their heads,
GK also aims to develop community leaders
and transorm residents to be productive
members o society, instilling in them the heartand capacity to help not only themselves but
others as well.
Guided by the belie that good community
relationships is key or the business, the housing
project is Alaska Milk s modest way o giving
back to the people o San Pedro who have contributed so much to the companys growth. San Pedro
is home to the companys manuacturing acilities or nearly 40 years.
Through the spirit o bayanihan (cooperation), the AMC-Gawad Kalinga Housing Project bore
witness to a deeper meaning o social awareness and volunteerism among Alaska Milk employees.
Under warm camaraderie, company employees, rom senior management to plant personnel,
worked together with the intended beneiciaries in constructing homes. More than providing
inancial assistance, the housing project is all about active involvement in building a shared
community, nourishing the homeless dream or a better lie.
Five years later, 30 additional or a total o 130 homes now stand in what used to be a barren
area. Wastelands have now been replaced by a multi-purpose hall, a day care center and a
basketball court. As importantly, AMC used their hopes or better lives by conducting training
and skills development programs that will help address the residents economic needs. Livelihood
training programs such as urniture making and making bags out o recycled packaging materials
have been started within the community, with recyclable materials being supplied by Alaska Milk.
Alaska Milk believes that providing decent homes and livelihood programs are just the
beginning o the transormation o a person, a amily and a community. Long ater the last brick has
been laid, Alaska Milk will continue to support its adopted community. Ater all, home is where the
heart is and where your heart is, there shall your riches be.
-
8/2/2019 ALASKA AR10 Per Page Low
20/84
18 The Heart o Alaska
Jim Libiran (Direk Jim), a ormer broadcast journalist, gained acclaim as an independent ilm maker
through his debut ilm Tribu in 2007. The ilm, which shows street lie and gangster culture in Tondo rom an
impoverished boys point o view, bagged Best Film, Best Actor and Best Sound Awards in the Philippines 2007
Cinemalaya Festival. The ilm was given the Pari de lAvenir Award by the Festival Paris Cinema in 2008.
Fast orward to 2010, Direk Jim returns once more to the streets o Tondo or his second movie
Happyland. I Tribu showed the dark and violent side o poverty in the Philippines, Happyland tells about
inding hope and redemption in the ace o desperate circumstances. It tells o a story o how ones
ambition survived in one o Manilas poorest and roughest slums. The movie, based on true events that
happened during the 1970s 80s, traces how an odd group o young misits ound inspiration in ootball.
These boys eventually ormed a ootball team that became legendary or playing bareoot (utkaleros)
because they could not aford to buy shoes. Direk Jim describes the ilm as a coming-o-age story about
poor young kids who learned to dream big and dared to ight or their simple goal.
Direk Jim saw the need to develop grassrootsootball in the country. From this dream, he envisioned,
what he calls a three-legged social project an NGO to
teach Futbol sa Kalye, a Tondo Futbol Team as proo o
success, and a ilm to inspire the young (Happyland).
The ilm is just part o a bigger dream.
But to turn the vision into reality, Direk Jim
needed support rom the private sector.
Thanks to what he considered divine intervention,
Direk Jim got introduced to Alaska Milk Corporations own sports development program the Alaska Football
Power Camp. Alaska Milk has always believed that structured recreations can serve as a powerul tool in building
a childs character and sel-conidence. The Company also saw the movie as a vehicle to promote its advocacy on
health and nutrition among the youth.
A tie-up was then orged between Direk Jim and Alaska Milk Corporation, with the latter providing
invaluable support to make the movie a reality. The best parts o the ilm are the ootball match scenes which
give insights on how the ultkaleros play the game. For his part, Direk Jim is thankul or the partnership with
Alaska Milk and its support to this creative endeavor.
Doing service to the community is good business and good business goes hand-in-hand with a healthy
nation. The movie is an ideal it to Alaska Milks CSR activities considering its products are milk-based and
children are its primary market, Direk Jim adds.
Following good reviews or the ilm, plans are underway to show Happyland in schools and poor
communities all over the country to help bring the message o hope and resilience amidst adversities. Direk Jim
hopes the ilm will inspire more youth to take up ootball and get them out rom a drug and crime-illed lie.
Alaska Milk Corporation is one in supporting Direk Jim and Happyland in its mission o promoting positive valuesamong the youth and inspiring them to reach their ull potential or a better Philippines.
These are challenging times or us as a nation, Direk Jim says. I we want to reach the peak o
progress and Filipino potential, we need to orge new relationships, new alliances, and develop new ways o
doing business and art.
Jim LibiranIndependent Film Director
Happyland is a coming-
of-age story about poor
young kids who learned
to dream big and dared to
fight for their simple goal
Happyland
-
8/2/2019 ALASKA AR10 Per Page Low
21/84
[ striking a goal in the hearts of youth ]
-
8/2/2019 ALASKA AR10 Per Page Low
22/84
6
[ heart of a champion ]
-
8/2/2019 ALASKA AR10 Per Page Low
23/84
-
8/2/2019 ALASKA AR10 Per Page Low
24/84
Values-Inspired Campaigns
22 The Heart o Alaska
Over the years, Alaska Milk Corporation has created communication campaigns that help build a
strong connection between its products and its consumers. With the timeless tagline: Sa sustansyat
lasa, wala pa ring tatalo sa Alaska (in nutrition and taste, nothing beats Alaska), Alaska Milk has since
been associated with providing quality milk products or good nutrition and health.
As a responsible corporate citizen, we are committed to making a dierence to society at large.
Along this line, the Company believes that its brands can be used as a tool to uplit the lives o
Filipinos by championing social causes that promote changes in behavior and attitudes.
the Company believes that
its brands can be used as
a tool to uplift the lives of
Filipinos by championing
social causes that promote
changes in behavior
and attitudes.
In 2010, two award-giving bodies
recognized two o the Companys advertising
campaigns or marketing excellence.
The Ginang Alaska Integrated Marketing
Communication (IMC) Campaign won the
Silver Prize or Best Family-Oriented Brand
Campaign and the Bronze Prize or Best
Established Product Brand Campaign in the
2010 UA&P Tambuli Integrated Marketing
Communications Eectiveness Awards. The UA&P Tambuli Awards is the irst and only award in
the Philippines that recognizes both the business and societal values o marketing communication
campaigns. It complements existing industry awards based solely on either creative merit or human
values by recognizing integrated campaigns proven to deliver positive results or both the companies
shareholders and society at large.
The multi-media campaign o Liberty Condensada, entitled Lambing, on the other hand, won
the Silver Medal or Reverence or Family Unity and the Inviolability o Marriage Category in the 2010
Araw Value Awards. Liberty Condensadas Lambing is a concentrated area marketing campaign
implemented in Visayas and Mindanao which communicated the sharing o lies sweetest moments
among amily members. The Araw Value Awards is organized by the Advertising Foundation o the
Philippines, the social development institution o the advertising and marketing communications
industry. The awards recognize advertising and marketing communications that promote values or
national progress.
Moving orward, Alaska Milk Corporation pledges that its marketing campaigns will continue to
be relevant with the times, going beyond creative executions. As always, they will be driven by the
same purpose that has distinguished the Company one that is aligned with the aspirations and
development goals o our nation.
-
8/2/2019 ALASKA AR10 Per Page Low
25/84
[ the heart of our campaigns ]
-
8/2/2019 ALASKA AR10 Per Page Low
26/84
Chief Financial Officers Report
24 The Heart o Alaska
Alaska Milk Corporation delivered another year of solid performance, ending 2010 with a newrecord net income of P1.82 billion, a 29% improvement over the P1.41 billion net income
earned in 2009. Fueling the growth was the strong sales volume expansion across the
Companys portfolio of milk products alongside lower input costs as well as prudent spending.
Net sales or 2010 grew by 15% to P12.16 billion
rom P10.58 billion a year ago, underpinned by the
double-digit growth o the domestic milk market as
the Philippine economy sharply rebounded rom the
slowdown in 2009. In addition, sustained advertising
campaigns and demand-generating promotional
initiatives help pushed sales volumes higher year-
on-year, a signiicant achievement amidst aggressivecompetition and market challenges.
The year 2010 also saw a moderation in price
movements o production inputs. This was largely
achieved as a result o the Companys strategic buying
initiatives to secure orward supply contracts or key
commodities skimmed milk powder, sugar, coconut
oil and tinplates. With the avorable cost environment
coupled with the appreciation o the Philippine Peso
against the U.S. Dollar, cost o sales or the year grew at
a slower pace o 11% at P7.56 billion rom P6.82 billion
in 2009. As a result, gross proit jumped 22% to P4.60
billion or 37.8% o net sales rom P3.76 billion or 35.6%o net sales the prior year.
Operating expenses or the year increased
signiicantly, by 22% at P2.28 billion rom P1.87
billion in 2009. The increase can be attributed to
higher advertising and promotional spending to
boost consumer demand or Alaska Milk products. In
addition, higher distribution-related charges attendant
to increased sales volume pushed operating expenses
higher year-on-year. This put operating income or the
year at P2.33 billion or 19.1% o net sales, a 23% increase
rom the 2009 operating income o P1.89 billion or
17.8% o net sales.
As Alaska Milk carried on to improve its proitability,
we kept our commitment to reward our shareholders
and at the same time, ensure that signiicant capital is
set aside or reinvestment to support uture business
plans. For 2010, the Company declared a total P0.50
per share in regular and special cash dividends. This
translates to a 4.8% cash dividend yield based on
a weighted average share price o P10.43 and is
equivalent to a 31% payout o 2009 net income.
During the year, 7.3 million common AMC shares worth
P50.5 million were re-acquired under the Companys
share buy-back program, a testament to Managements
conidence in the underlying value o
the business. Market capitalization at year-end stood
at P11.5 billion, up 82% rom P6.3 billion in the sameperiod last year.
The Company continues to generate strong cash
fows rom its operations, which amounted to P1.75
billion in 2010. This pushed interest income or the
year higher at P48.75 million rom P24.65 million in
2009. Internally generated unds were used to und
the Companys capital expenditure requirements
which amounted to P347 million in 2010. Cash, cash
equivalents and short-term investments as o end-
December 2010 totaled P2.94 billion compared to
P1.90 billion in the same period last year. This puts
our Company in a solid position to pursue growthobjectives that will create value in the years to come.
Our balance sheet likewise remained sound. As
o December 31, 2010, total assets stood at P9.14
billion, posting a 26% increase rom the December
31, 2009 level o P7.27 billion bolstered by a higher
cash balance. Total inventories ended the year higher
at P2.12 billion rom P1.15 billion in the same period
last year on account o higher cost per unit o raw
materials combined with the purposive build-up
o skimmed milk powder position going into 2011.
Notwithstanding the 15% increase in net sales, total
trade receivables at year-end edged 3% lower at P825
million rom P849 million a year-ago on the back o
improvements in collection turnover.
Total liabilities stood at P3.09 billion, 19% higher
than the end-2009 liabilities o P2.59 billion attributed
to higher import bills and trade payables attendant
to increased commodity prices as well as higher
cash dividend payable due to a higher cash dividend
-
8/2/2019 ALASKA AR10 Per Page Low
27/84
22010 Annual Report
JOSELITO J. SARMIENTO, JR.
Senior Vice President & Chie Financial Oicer
declaration or 2010. The current ratio as o end-
December 2010 was 1.93:1.00, an improvement rom
the 1.55:1.00 current ratio or the same period last year.
Debt-to-equity ratio, on the other hand, improved to
0.51:1.00 rom 0.55:1.00 in 2009.
Indeed, our perormance or the year refects our
resolve as an organization to develop clear-cut strategies
and to execute them eectively, promoting healthy
growth while at the same time, ensuring inancial stability.
Despite the challenges acing global economies in 2011,
we remain committed towards a more solid inancial
position that will enable our Company to withstand even
the most trying business conditions.
We remain committedtowards a more solid
financial position that
will enable our Company
to withstand even the
most trying business
conditions.
-
8/2/2019 ALASKA AR10 Per Page Low
28/84
Managements Discussion &Analysis of Operations
26 The Heart o Alaska
Through programs designed to take ull advantage
o a growing economy, Alaska Milk Corporation achieved
record revenues and proits in 2010. From P10.58 billion a
year ago, net sales or 2010 grew 15% to P12.16 billion onaccount o higher sales volume. Sales volume growth was
broad-based, with all business segments registering healthy
growth rates alongside market share gains.
Collectively, sales volume o the Companys liquid
canned milk business evaporated milk and sweetened
condensed milk, posted strong double-digit growth
rates or the year as product availability became more
stable ollowing supply disruptions in the atermath o
the September 2009 fooding. Investments in capacity
expansion provided manuacturing headroom to meet
growing demand and seasonal surges.
Alaska Milk maintained its dominance o the liquidcanned milk market despite the continuing presence o
cheaper imported milk brands. In 2010, the Company
capitalized on the growing trend towards economy brands
with the nationwide distribution o Cow Bell Condensada,
winning new customers and to some extent, regaining the
interest o lapsed milk users.
Alaska Evaporada and Alaska Condensada continue
to be regarded as the most preerred milk creamer in
the market. Creative marketing initiatives stimulated
excitement in the industry especially during high-demand
seasons. Renewed emphasis was placed on developing
new markets to expand consumer base, especially among
grassroots businesses.
The Alaska Classic Line o liquid canned milk products
Alaska Evaporated Filled Milk and Alaska Sweetened
Condensed Milk, continued to enjoy strong patronage
among its core loyal patrons. Tactical promotions and
brand-building programs strengthened the products
position in the upscale market segment.
Carnation, Milkmaid, Liberty and Alpine, the Companys
licensed and acquired milk brands, likewise perormed
well on robust sales. Various consumer initiatives as well as
advertising campaigns that encourage everyday usage omilk through multiarious culinary applications contributed
to strong sales volume growth. Channel-speciic sales and
marketing programs strengthened the brands leadership
position in key regions o the Philippines.
While our marketing objectives do not include winning
advertising awards but rather reinorcing the image o
our brands, which mostly strongly and closely represents
the values and aspirations o our consumers, two o our
brand campaigns were recognized or their marketing
excellence. The Ginang Alaska Integrated Marketing
Communication Campaign won the Silver Prize or Best
Family-Oriented Brand Campaign and Bronze Prize or BestEstablished Product Brand Campaign in the 2010 Tambuli
Integrated Marketing Communications Eectiveness
Awards. Organized by the University o Asia and the Paciic
(UA&P), the Tambuli Awards is the irst and only award
in the Philippines that recognizes both the business and
societal values o marketing communications campaigns.
The Liberty Condensada multi-media campaign entitled
Lambing, on the other hand, won the Silver Medal or
Reverence or Family Unity and the Inviolability o Marriage
Category in the 2010 Araw Values Award. The Araw Value
Awards, organized by the Advertising Foundation, is one o
the most prestigious creative competition in the Philippineadvertising industry.
Sales volume o the Companys powdered milk
business likewise expanded on the back o increased
consumption alongside brand-building activities. Amidst
ierce competition rom rival brands, Alaska Powdered
Milk Drink continued to strengthen its hold as the second
leading brand in the powdered milk market. Branding
Riding on the heels o a resurgent consumer market, domestic consumption o both liquid
canned milk and powdered milk products grew at double-digit rates compared to 2009 levels,
their astest in ive years. The milk markets expansion was likewise stimulated by continuing
eforts among key industry players to encourage demand through extensive advertising
campaigns and promotional activities.
-
8/2/2019 ALASKA AR10 Per Page Low
29/84
Gelli de BelenPopular Television Host and Celebrity
My ties with ALASKA is notjust business; it has evolved
into friendship and family.
I can honestly say that I never
experienced that in my 25 years
in the entertainment industry.
I grew up on ALASKA products
and I am very grateful for the
support the company hasgiven me. We share a long,
time-tested relationship
which I truly treasure.
Janice de BelenPopular Television Host and Celebrity
-
8/2/2019 ALASKA AR10 Per Page Low
30/84
Managements Discussion & Analysis of Operations
28 The Heart o Alaska
campaign to improve perception and consumer loyalty
was carried out alongside sponsorship o sales-generating
events that support the Alaska brands equity in health and
sports. In an eort to make the Alaska Powdered Milk Drink
aordable or almost every consumer, a new economical,
33g packaging ormat was launched in 2010.
The Companys UHT ready-to-drink and ready-to-use
business sustained its growth trajectory, with sales volume
posting high double-digit growth rates, signiicantly aster
than the markets expansion. Consumers appetite or the
Companys portolio o ready-to-drink milk products: Alaska
Choco, Alaska Sweet Milk, Alaska Fresh, Alaska Slim and
Alaska Yoghurt Drink, remained strong on improved brandand retail management. On-site consumer promotions
were executed to sustain demand and increase point-o-
sale purchases.
Signiicant gains were equally achieved or Alaska
Crema All-Purpose Cream. Alaska Crema continued its
strong showing with sales volume growth maintained at
robust levels on the back o the brands pricing advantage.
Relevant consumer marketing events as well as cross-
promotional initiatives and co-branding activities enhanced
the proile o Alaska Crema, making it the second leading
brand in the category.
During the year, Alaska Krem-Top Coee Creamerwas launched to capitalize on the opportunities in the
non-dairy coee creamer market. Alaska Krem-Top
Coee Creamer has gained overwhelming consumer
response, maniested by very positive consumer eedback
on the products superior taste and quality. Alaska Milk
also began a strong marketing campaign in line with its
strategic thrust to bring Alaska Krem-Top Coee Creamer
in the mainstream market alongside eorts to extend
distribution and reach or the product.
Complementing the success o AMC in dierentiating
its product oerings through communication campaigns
is the continuing improvements in its distribution system,which enabled the Company to capture untapped and
underserved retail outlets. Emphasis was placed on
developing institutional accounts and strengthening
customer relationships. Focused account management
and trade-channel executions, supplemented by trade
incentives and tactical distribution drives, urther enhanced
availability and visibility o Alaska Milk products in primary
outlets. Logistical operations was also enhanced to
improve product distribution, in the most eicient and
cost-eective manner.
Cost o sales or the year grew at a slower pace
o 11%, at P7.56 billion rom P6.82 billion a year ago,
stemming rom a stable cost environment combined
with improvements in operating eiciency. Successul
commodity hedging contracts made during the latter part
o 2009 and early 2010 preserved the lower cost o key raw
materials through most o the year, notwithstanding the
sharp increases in commodity prices during the second
hal o 2010. The general weakness o the US Dollar
against the Philippine Peso likewise mitigated the impacto rising cost o imported raw and packaging materials,
including skimmed milk powder and tinplates. In addition,
improved production and process capability on account
o investments made in new machineries and equipment
translated to higher eiciencies and better yields on
material usages. All told, gross proit or 2010 swelled by
22% to P4.60 billion rom P3.76 billion a year ago. Gross
proit margin or the year likewise improved to 37.8% rom
35.5% in 2009.
Operating expenses or the year rose 22% to P2.28
billion rom P1.87 billion in 2009 on the back o heightened
trade marketing support and brand advertising to sustainsales volume growth and drive consumer demand or
Alaska Milk products. In addition, higher distribution-
related charges attendant to increased sales volume
pushed operating expenses higher year-on-year. This
brought operating income or the year at P2.33 billion, 23%
higher than year-ago operating income o P1.89 billion.
Operating margin was likewise higher by 1.2 percentage
points at 19.1% compared to 17.9% in 2009.
Net interest earned income or the year amounted to
P48.7 million rom P22.2 million in 2009 as a result o higher
cash balance, despite lower interest yields. The Company
incurred oreign exchange losses o P40.32 million onaccount o the unexpected appreciation o the Philippine
Peso against the US Dollar. Ater considering corporate
income tax, net income or the year ended at a record-
high o P1.82 billion or 14.9% o net sales, 29% higher than
year-ago net income o P1.41 billion or 13.3% o net sales.
Earnings per share or 2010 was up 30% at P2.06 against the
2009 level o P1.59.
-
8/2/2019 ALASKA AR10 Per Page Low
31/84
2,762
2,241
789
1,199
633
1,816
1,409
291
667
402
464
514
12,163
10,580
9,968
9,082
5,921
Net Sales(In million pesos)
10
09
08
07
06
0 2000 4000 6000 8000 10000 12000 14000
Net Income(In million pesos)
0 200 400 600 800 1000 1200 1400 1600 1800 2000
10
09
08
07
06
Operating Income(In million pesos)
0 500 1000 1500 2000 2500
10
09
08
07
06
950
2,327
1,889
0 1000 2000 3000
10
09
08
07
06
EBITDA(In million pesos)
22010 Annual Report
Cesar Montano with Samantha and ChescaPopular TV Host, Actor and Director
As a father, I only want whats best for my children. Thats why I only
give them milk with the highest level of nutrients relevant to the
Growth Gap years Alaska Powdered Milk Drink
-
8/2/2019 ALASKA AR10 Per Page Low
32/84
Ryan AgoncilloPopular Television Host and Celebrity
I love how good the coffee
smells with Alaska Krem-Top.
And even if you look at the
consistency, you can tell its
creamier and finer.
-
8/2/2019 ALASKA AR10 Per Page Low
33/84
9,140
7,271
6,307
7,126
5,128
0.50
0.20
0.30
0.300.20
2.06
1.59
0.32
0.70
0.42
Managements Discussion & Analysis of Operations
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2
10
09
08
07
06
Earnings Per Share
6
Cash Dividend Per Share
0.0 0.2 0.4 0.
10
09
08
0706
Total Assets at Year-End(In million pesos)
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
10
09
08
07
06
000
32010 Annual Report
The Companys total assets amounted to P 9.14 billion
as o December 31, 2010, an increase o 26% rom P7.27
billion in 2009 mainly due to higher cash balance and
higher inventory.
Cash and short-term investments ended the year 55%
higher at P2.94 billion rom P1.90 billion largely attributable
to higher proitability. Owing to higher cost per unit o
primary raw materials and purposive build-up o skimmed
milk powder position going into 2011, inventories as o end
December 2010 amounted to P2.12 billion, 84% higher than
year-ago inventories o P1.15 billion.
Property, plant and equipment, net o depreciation
and retirement, amounted to P1.56 billion rom P1.52 billiondue to capital investments made during the year.
Total liabilities increased by 19% to P3.09 billion rom
P2.59 billion on account o higher import bills attendant to
higher cost o skimmed milk powder. Also contributing to
the increase in liabilities is the higher income tax payable on
higher taxable income and higher cash dividends payable
attributed to higher cash dividend declaration in 2010.
Total stockholders equity, on the other hand, increased
to P6.05 billion rom P4.68 billion in 2009 primarily due
to the higher net income realized in 2010, net o cash
dividends declared or the year o P434 million. During the
year, the Company re-acquired 7.3 million o its commonshares under its Share Buy-Back Program or a total value o
P50.5 million.
The Companys current ratio as o December 31,
2010 was 1.93:1.00, higher than year-ago current ratio o
1.55:1.00. The level o indebtedness, on the other hand,
improved with a debt-to-equity ratio o 0.51:1.00 compared
to 0.55:1.00 a year ago.
Pete Jacobs2010 Cobra Energy Drink Ironman 70.3 Philippines
Professional Mens Champion
To strengthen my body, I rely on the
calcium and energy that milk
builds into my bones.
-
8/2/2019 ALASKA AR10 Per Page Low
34/84
Corporate Governance
32 The Heart o Alaska
Alaska Milk Corporation acknowledges the importance o good governance in carrying out its
corporate mission o creating long-term value to its shareholders.
The Company espouses the highest level o integrity, transparency and accountability across all
levels o the organization in the conduct o its business. The Companys policies and guidelines on
governance are principally contained in its Manual on Corporate Governance.
Through the Manual, Alaska Milk Corporation has likewise adopted the Securities and Exchange
Commissions (SEC) Corporate Governance Sel Rating Form in evaluating the level o compliance o
the Company, its directors, oicers and employees.
On January 28, 2011, the Company submitted its Compliance Report on Corporate Governance
or the Year 2010 to the Philippine Stock Exchange, Inc. (PSE), refecting the Companys level o
adoption o the PSE recommended corporate guidelines or publicly-listed companies under PSE
Memorandum No. 2010-0574 dated 26 November 2010.
In addition, on February 21, 2011, Alaska Milk Corporation submitted to the SEC and PSE itsrevised Manual on Corporate Governance to adopt all the mandatory provisions o the Revised
Code o Corporate Governance in compliance with SEC Memorandum Circular No. 6, Series o 2009.
The Company constantly keeps its corporate governance provisions under review to conorm,
where applicable, with best practices and principles.
THE BOARD OF DIRECTORS
The Board o Directors plays an integral role in overseeing the strategic direction o the
Company, monitoring operational and inancial perormances as well as protecting the interests o
all stakeholders.
The Companys Board members have successul careers in business, academe and public
service. With their wealth o experience, they add signiicant perspective and direction into how
management shapes and executes business strategies. The proiles o each director are ound inthe Board o Directors section o this Annual Report.
The Board is currently composed o nine (9) directors, six (6) o whom are independent
directors. The Company deines an independent director as independent o management and ree
rom any business or other relationship with the Company which could interere with the exercise
o independent judgment in carrying out the responsibilities o a director.
In compliance with SEC Memorandum No. 16 Series o 2002 and with the Companys Manual
on Corporate Governance, the Nomination Committee reviews the qualiications o all directors
nominated or election. In addition, all nominees or independent directors possess all the
qualiications and none o the disqualiications prescribed under the Securities Regulation Code
Rule 38.
The directors are elected at each Annual Stockholders Meeting by stockholders entitled to vote
in accordance with the Companys By-Laws. Each director holds oice until the next annual election
and until his predecessor is duly elected; unless he resigns rom oice, is incapacitated and is unable to
carry out his duties as director, or is removed prior to such election.
The Board members are given a per diem o P5,000 per board or committee meeting. In
addition, the Board members are entitled to a share in the Companys operating income based
on their attendance. The remuneration is intended to provide a reasonable compensation to the
directors in recognition o their responsibilities and the potential liability they assume as a result o
the high standard o best practices required o the Board as a body, and o the directors individually,
-
8/2/2019 ALASKA AR10 Per Page Low
35/84
32010 Annual Report
under the Securities and Exchange Commission promulgated Code o Corporate Governance.
Aside rom the aorementioned, there are no other arrangements under which any director o the
Company is compensated, whether directly or indirectly.
The total compensation paid to non-executive directors or 2010 and 2009 amounted to
P8.5 million and P1.9 million, respectively. None o the directors, in their personal capacity, has been
contracted and compensated by the Company or services other than those provided as a director.
In 2010, the Board held our (4) board meetings, one (1) special meeting and one (1)
organizational meeting. All directors have individually complied with the Securities and Exchange
Commissions (SEC) minimum attendance requirement o 50%.
Annual Stockholders
Meeting, OrganizationalMeeting & Special Meeting
Legend: P Present A Absent
Feb 9 Aug 10 Dec 1 May 4
Antonio H. Ozaeta P P P P 100%
Juan B. Santos P A P P 75%
W. Steven Uytengsu, Jr. P P P P 100%
Roberto F. de Ocampo P A P P 75%
Jose R. Facundo P P P P 100%
Grahame S. Tonkin P P P P 100%
Michael R.B. Uytengsu P P P P 100%
Atty. Ramon S. Esguerra P P P P 100%
Bernardo M. Villegas P P P P 100%
Regular MeetingDirector Percentage
None o the members o the Companys directors and senior management own 1.0% or more
o the Companys outstanding capital stock.
To assist the Board in its unction and to secure the Companys sustained competitiveness in a
manner consistent with its iduciary responsibility, the Board has established our (4) committees with
oversight responsibilities. The committees are the Audit and Risk Committee, Nomination Committee,
Compensation and Remuneration Committee and Governance Committee.
AUDIT AND RISk COMMITTEE
The Audit and Risk Committee is composed o three (3) members o the Board, all o whom
are independent directors. The Audit and Risk Committee has oversight responsibility on inancial
management unctions, especially in the areas o inancial reporting process and internal controls. It has
the duty to ensure transparency and integrity in the Companys inancial management system.
Through the Committee, the Board is responsible or overseeing the implementation o
adequate internal control procedures as well as the scope o audit engagement o the Companys
external auditor Sycip Gorres Velayo and Co.
-
8/2/2019 ALASKA AR10 Per Page Low
36/84
Corporate Governance
34 The Heart o Alaska
The Committee is likewise tasked to (a) oversee the ormulation o an enterprise-wide risk
management system; (b) review, analyze and recommend the policy, ramework, strategy and
method to be used by the Company to manage risks or threats; (c) review with management the
corporate perormance in the areas o legal risks and crisis management; and (d) identiy, review
and assess the likelihood and magnitude o the impact o material events on the Company and to
recommend measures to avoid or mitigate risks.
NOMINATION COMMITTEE
The Nomination Committee is comprised o three (3) members o the Board, two (2) o whom
are independent directors. The Nomination Committee is mandated by the Board to review the
qualiications o all members o the Board. All candidates nominated to the Board are pre-screened
to ensure that they have all the necessary qualiications and none o the disqualiications as set
orth in the Companys Manual on Corporate Governance.
COMPENSATION AND REMUNERATION COMMITTEE
The Compensation and Remuneration Committee is composed o three (3) members o
the Board, two (2) o whom are independent directors. An independent director chairs the
Compensation Committee. The Compensation Committee is tasked to review the Companys
remuneration structure as well as the reasonableness o its incentive plans and compliance with all
statutory requirements.
GOVERNANCE COMMITTEE
The Governance Committee is composed o three (3) members o the Board, two (2) o whom
are independent directors. An independent director chairs the Governance Committee. The
Governance Committee is mandated to develop, maintain and review the Companys corporategovernance policies and procedures.
Antonio H. Ozaeta (Chairman)* Member Chairman
Juan B. Santos (Vice Chairman)* Member Chairman
Wilred Steven Uytengsu, Jr. Chairman Member
Dr. Roberto F. de Ocampo* Chairman
Jose R. Facundo* Member
Grahame S. Tonkin* Member
Michael R.B. Uytengsu
Atty. Ramon S. Esguerra Member
Dr. Bernardo M. Villegas* Member Member
Board CommitteesAs o December 31, 2010)
Directors
*Independent Director
AuditCommittee
NominationCommittee
CompensationCommittee
GovernanceCommittee
-
8/2/2019 ALASKA AR10 Per Page Low
37/84
32010 Annual Report
MANAGEMENT COMMITTEE
The Companys President and CEO is assisted by his senior management team, collectively
known as the Management Committee, in the day-to-day operations o the business as well as
in the development and execution o business strategies. The Management Committee meets
regularly to discuss operating perormances, market and industry developments and plans oactions in the attainment o corporate goals and objectives. In addition, management provides
the Board with inormation on the results o operations o the Company on a quarterly basis.
Management is also required to prepare the inancial statements or each preceding calendar year
in accordance with generally accepted accounting standards in conormity with Philippine Financial
Reporting Standards. Managements statement o responsibility or the Companys inancial
statements is included in this annual report.
DISCLOSURE AND TRANSPARENCY
Alaska Milk Corporation is committed to the highest standards o disclosure and transparency
to apprise the investing public on the Companys perormance. The Company regularly updates the
investing public with operating and inancial inormation through adequate and timely disclosures
iled with the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange
(PSE). In addition, any material, market-sensitive inormation as well as mandatory reportorial
requirements are likewise disclosed to the SEC and PSE. In addition, Quarterly Updates are provided
to und managers and investors, analysts, media and those who speciically requested or copies.
All corporate disclosures, including the Quarterly Updates, are made available on the Companys
website (www.alaskamilk.com.ph). This ensures that all stakeholders have equal opportunity and
access to corporate inormation. The Companys Investor Relations oice is also available to address
investor queries and requirements.
-
8/2/2019 ALASKA AR10 Per Page Low
38/84
Standing from left to right:
WILFRED STEVEN UYTENGSU, JR. Director); DR. ROBERTO F. DE OCAMPO (Independent Director)
Seated from left to right:
ANTONIO H. OZAETA Chairman, Independent Director); JUAN B. SANTOS Vice Chairman, Independent Director)
Board of Directors
36 The Heart o Alaska
-
8/2/2019 ALASKA AR10 Per Page Low
39/84
Standing from left to right:
GRAHAME S. TONkIN (Independent Director); JOSE R. FACUNDO (Independent Director); MICHAEL R.B. UYTENGSU (Director)
Seated from left to right:
DR. BERNARDO M. VILLEGAS (Independent Director); ATTY. RAMON S. ESGUERRA Director)
32010 Annual Report
-
8/2/2019 ALASKA AR10 Per Page Low
40/84
Board of Directors Profile
38 The Heart o Alaska
ANTONIO H. OZAETAIndependent Director, Chairman of the Board since 2010,Vice Chairman of the Board from 1998 to 2010
President,PhilippineTrustCompany(PHILTRUSTBank)
ChairmanoftheBoardofDirectorsofPhilippine
Commercial Capital, Inc., Ancel Holdings Corporation
and Magellan Capital Holdings Corporation
BoardMemberofPHILTRUSTBank,InsularHealthCare,Inc.
and Home Credit Mutual Building and Loan Association
FormerPresidentandChiefExecutiveOfficerofPhilippine
Commercial International Bank (PCIBank) and ormer
Chairman o the Board o Manila Electric Company
(Meralco) EducatedattheAteneodeManilaUniversity(B.S.
Economics), De La Salle University (B.S. Business
Administration) and Harvard University (Masters in
Business Administration)
JUAN B. SANTOSIndependent Director, Vice Chairman of the Board since 2010,
Director since 2007
FormerSecretaryofTradeandIndustryoftheRepublic
o the Philippines
BoardMemberofGrepalifeFinancials,Inc.,First
Philippine Holdings Corporation, Philex MiningCorporation, Philippine Long Distance Telephone
Company (PLDT), Pilipino Telephone Corporation and
Zuelling Group, Inc.
Consultant,MarsmanDrysdaleGroupofCompanies
Member,BoardofAdvisorsofCocaColaBottlers
Philippines, Inc. and East-West Seeds Co., Inc.
Member,BoardofTrusteesofSt.LukesMedicalCenter
FormerChairmanandPresidentofNestlePhilippines,Inc.
FormerChiefExecutiveOfficerofNestleGroupof
Companies in Thailand and o Nestle Singapore Pte Ltd.
EducatedattheAteneodeManilaUniversity(B.S.
Business Administration) and took his postgraduatedegree at the Thunderbird Graduate School o
Management in Arizona, USA
WILFRED STEVEN UYTENGSU, JR.Director since 1994 PresidentandChiefExecutiveOfficerofAlaskaMilk
Corporation
PresidentofGenOSI,Inc.andJadestoneInvestmentsLLC
BoardMemberoftheMakatiBusinessCluband
Childrens Hour Philippines, Inc.
PastChairman,YoungPresidentsOrganization
AwardedPhilippinesEntrepreneuroftheYearand
Master Entrepreneur or 2007 by Ernst & Young
FormerExecutiveVicePresidentandChiefFinancial
Oicer o General Milling Corporation
EducatedattheUniversityofSouthernCalifornia(B.S.Business Administration)
DR. ROBERTO F. DE OCAMPOIndependent Director since 1999
FormerSecretaryofFinanceoftheRepublicofthe
Philippines
ChairmanoftheBoardofAdvisorsoftheRFOCenterfor
Public Finance and Regional Economic Corporation
BoardMemberofEEICorporation,GlobeTelecom,
Robinsons Land Corporation, Rizal Commercial
Banking Corporation, House o Investments, PHINMA
Corporation, DFNN Inc., Philippine Phosphate FertilizerCorporation, AB Capital & Investment Corporation,
Paciic Gaming Investments Pte. Ltd., Bankard, Inc.,
Beneicial Lie Insurance Co., Inc. and Salcon Power
Corporation
Member/AdvisoryBoardMember;TheConference
Board, the Trilateral Commission, the BOAO Forum or
Asia and the Emerging Markets Forum
MemberoftheBoardofTrusteesofAsianInstituteof
Management
FormerPresidentoftheAsianInstituteofManagement
FormerChairmanandChiefExecutiveOfficerof
Development Bank o the Philippines EducatedattheAteneodeManilaUniversity(A.B.
Economics), University o Michigan (Masters in Business
Adminisration) and London School o Economics (DDA
Fellow in Developmental Administration)
-
8/2/2019 ALASKA AR10 Per Page Low
41/84
32010 Annual Report
JOSE R. FACUNDOIndependent Director since 1994 BoardMemberofSecurityBankCorporation,
Aboitiz Power Corporation and Siemens Philippines, Inc.
FormerPresidentandChiefExecutiveOfficerof
CityTrust, ormer President o BPI Capital Corporation
and ormer Senior Managing Director o Ayala
Corporation
FormerChairmanofthePhilippineClearingHouse
EducatedattheAteneodeManilaUniversity(Bachelor
o Arts degree in Engineering) and took post graduate
studies in Statistics at the University o the Philippines,
and in Engineering at the Technical University o Munich
GRAHAME S. TONkINIndependent Director since 1998
Director,FoodandBeverageAustraliaLtd.andSmythe
Road Vintners Pty. Ltd.
ChiefExecutiveOfficeroftheAboriginalFoundationof
South Australia, Inc.
FormerExecutiveDirectorofFoodSouthAustraliaand
ormer Managing Director o Tarac Australia Pty. Ltd.
FormerChiefExecutiveOfficerofAustralianDairy
Corporation and o Inchape, Asia Paciic (Wines and Spirits)
QualifiedAccountant,FellowCPA,FellowCharteredSecretary and Fellow o the Australian Institute o
Company Directors
MICHAEL R.B. UYTENGSUDirector since 1998
President,BrookstoneHoldings,Inc.(USA)
FormerinvestmentbankeratSalomonBrothers
(New York and Hong Kong)
ObtainedhisBachelorsDegreeinBusinessfromthe
University o Southern Caliornia
ATTY. RAMON S. ESGUERRADirector since 2003 ManagingPartner,Esguerra&BlancoLawOffices
PresidentoftheIntellectualPropertyAssociationof
the Philippines, Inc.; Director o the Integrated Bar o he
Philippines Cavite Chapter
ProfessionalLecturer,GraduateSchoolofLawofthe
Pamantasan ng Lungsod ng Maynila
FormerUndersecretary,DepartmentofJustice
FormerPartneratCastilloLamanTanPantaleon&
San Jose Law Oices
FormerPresidentoftheLicensingExecutivesSocietyof
the Philippines EducatedattheUniversityofSantoTomas(A.B.Economics)
and University o the Philippines (Bachelor o Laws)
DR. BERNARDO M. VILLEGASIndependent Director from 1999 to 2006, Re-elected in 2008
UniversityProfessorattheUniversityoftheAsiaandthe
Paciic and a Visiting Proessor at the IESE Business
School in Barcelona, Spain
Member,BoardofTrusteesofInsularLifeandPhinma
Properties
FormerSeniorVicePresidentoftheUniversityofAsia
and the Paciic FormerChairmanoftheCenterforResearchand
Communication
EducatedatDeLaSalleUniversity(Bachelorsdegrees
in Commerce and the Humanities) and Harvard
University (M.A. in Economics and Ph.D. in Economics)
-
8/2/2019 ALASKA AR10 Per Page Low
42/84
10
Management Committee
Standing from left to right:
ALFREDO B. JAVIER AVP, Internal Audit); REYCELLE M. RODRIGUEZ Director, Materials Management);
ARNOLD L. ABAD VP, Accounting and Controller)
Seated from left to right:MA. BELEN M. FERNANDO VP, Marketing); WILFRED STEVEN UYTENGSU, JR. President and Chie Executive Oicer)
40 The Heart o Alaska
-
8/2/2019 ALASKA AR10 Per Page Low
43/84
11
Standing from left to right:
SANTIAGO A. POLIDO VP, Corporate Afairs and Corporate Secretary); ANSELMA G. CABANTAN AVP, Inormation Systems);
RENE D. FERNANDEZ Director, Engineering Services); THOMAS NILSSON Director, UHT Operations)
Seated from left to right:JOSELITO J. SARMIENTO, JR. SVP and Chie Financial Oicer); FRANCISCO T. IDIAN VP, Sales);
AARON D. FULTON Director, Plant Operations)
42010 Annual Report
-
8/2/2019 ALASKA AR10 Per Page Low
44/84
The Audit Committees roles and responsibilities are dened in the Audit Committee Charter approved by the Board o Directors. It assists the
Board o Directors in ullling its oversight responsibility to the shareholders relating to the (i) integrity o the Companys nancial statements
and its nancial reporting process; (ii) system o internal controls; (iii) risk management; (iv) perormance o internal and external auditors; and
(v) compliance with legal and regulatory matters and other reporting standards.
In compliance with the Audit Committee Charter, we conrm that:
An independent director chairs the Audit Committee;
We had ve (5) meetings during the year, which included executive sessions with the internal and / or independent auditors;
We have reviewed and discussed the quarterly unaudited nancial statements and the 2010 audited annual nancial statements
o Alaska Milk Corporation (the Company), including Managements Discussion and Analysis o Financial Condition and Results o
Operations, with the Companys management and SyCip Gorres Velayo & Co. (SGV & Co.), the Companys external auditor. Theseactivities were perormed in the ollowing context:
Management is responsible or the preparation and air presentation o the Companys nancial statements in accordance with
Philippine Financial Reporting Standards; and
SGV & Co.s responsibility is to express an opinion on the Companys nancial statements based on their audit conducted in
accordance with Philippine Standards on Auditing.
We have discussed and approved the overall scope and the respective audit plans o the internal auditors and SGV & Co. We have also
discussed the results o their audits, the internal auditors assessment o the Companys internal controls and the overall quality o the
nancial reporting process;
We have reviewed and approved all audit-related services provided by SGV & Co. to the Company;
We have reviewed the reports o the internal auditors, where applicable, ensuring that Management is taking appropriate corrective
actions in a timely manner, including addressing internal control and compliance issues; and
We have reviewed and discussed the adequacy o the Companys enterprise-wide risk management process, including the nature
o signicant risk exposures and the related risk mitigation eorts and initiatives. This activity was reviewed in the context that
management is primarily responsible or the risk management process.
Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities reerred to above, the Audit
Committee recommends to the Board o Directors that the audited nancial statements be included in the Annual Report or the year ended
December 31, 2010 or ling with the Securities and Exchange Commission. We are also recommending to the Board o Directors the re-
appointment o SGV & Co. as Alaska Milk Corporations external auditor or 2011 based on the review o their perormance and qualications.
March 11, 2011
Dr. Roberto F. de Ocampo
Chairman Audit Committee
Jose R. Facundo Dr. Bernardo M. Villegas
Member Member
42 The Heart of Alaska
Report o the Audit Committee
-
8/2/2019 ALASKA AR10 Per Page Low
45/84
The management o Alaska Milk Corporation is responsible or all inormation and representations contained in the balance sheets as at December
31, 2010 and 2009 and the related statements o comprehensive income, changes in stockholders equity and cash ows or each o the three
years in the period ended December 31, 2010. The nancial statements have been prepared in accordance with Philippine Financial Reporting
Standards and reect amounts that are based on the best estimates and inormed judgment o management with an appropriate consideration
to materiality.
In this regard, management maintains a system o accounting and reporting which provides or the necessary internal controls to ensure that
transactions are properly authorized and recorded, assets are saeguarded against unauthorized use or disposition and liabilities are recognized.
The management likewise discloses to the Companys Audit Committee and to its external auditor: (i) all signicant deciencies in the design
or operation o internal controls that could adversely aect its ability to record, process, and report nancial data; (ii) material weaknesses in the
internal controls; and (iii) any raud that involves management or other employees who exercise signicant roles in internal controls.
The Board o Directors reviews the nancial statements beore such statements are approved and submitted to the stockholders o the
Company.
SyCip Gorres Velayo & Co., the independent auditors appointed by the Board o Directors and stockholders, have audited the nancial statements
o the Company in accordance with Philippine Standards on Auditing and have expressed their opinion on the airness o presentation upon
completion o such audit, in their report to the Board o Directors and stockholders.
Antonio H. Ozaeta Wilfred Steven Uytengsu, Jr.Chairman President & Chie Executive Ofcer
Joselito J. Sarmiento, Jr. Arnold L. AbadSr. Vice President & Chie Financial Ofcer Vice President Accounting & Controller
42010 Annual Report
Statement o ManagementsResponsibility or Financial Statements
-
8/2/2019 ALASKA AR10 Per Page Low
46/84
The Stockholders and the Board o Directors
Alaska Milk Corporation
Report on the Financial Statements
We have audited the accompanying nancial statements o Alaska Milk Corporation, which comprise the balance sheets as at December 31, 2010 and 2009, and the
statements o comprehensive income, statements o changes in stockholders equity and statements o cash ows or each o the three years in the period ended
December 31, 2010, and a summary o signicant accounting policies and other explanatory inormation.
Managements Responsibility or the Financial Statements
Management is responsible or the preparation and air presentation o these nancial statements in accordance with Philippine Financial Reporting Standards,
and or such internal control as management determines is necessary to enable the preparation o nancial statements that are ree rom material misstatement,
whether due to raud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these nancial statements based on our audits. We conducted our audits in accordance with Philippine Standards on
Auditing. Those standards require that we comply with ethical requirements and plan and perorm the audit to obtain reasonable assurance about whether the
nancial statements are ree rom material misstatement.
An audit involves perorming procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend
on the auditors judgment, including the assessment o the risks o material misstatement o the nancial statements, whether due to raud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity s preparation and air presentation o the nancial statements in order to design
audit procedures that are appropriate in the circumstances, but not or the purpose o expressing an opinion on the eectiveness o the entitys internal control.
An audit also includes evaluating the appropriateness o accounting policies used and the reasonableness o accounting estimates made by management, as well
as evaluating the overall presentation o the nancial statements.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis or our audit opinion.
Opinion
In our opinion, the nancial statements present airly, in all material respects,the nancial position o Alaska Milk Corporation as at December 31, 2010 and 2009,
and its nancial perormance and its cash ows or each o the three years in the period ended December 31, 2010 in accordance with Philippine Financial
Reporting Standards.
Report on the Supplementary Information Required Under Revenue Regulations 15-2010
Our audits were conducted or the purpose o orming an opinion on the basic nancial statements taken as a whole. The supplementary inormation on taxes,
duties and license ees in Note 31 to the nancial statements is presented or purposes o ling with the Bureau o Internal Revenue and is not a required part o the
basic nancial statements. The inormation is also not required by Securities Regulation Code Rule 68. Such inormation is the responsibility o the management
o Alaska Milk Corporation. The inormation has been subjected to the auditing procedures applied in our audit o the basic nancial statements. In our opinion,
the inormation is airly stated in all material respects in relation to the basic nancial statements taken as a whole.
SYCIP GORRES VELAYO & CO.
Ramon D. Dizon
Partner
CPA Certicate No. 46047
SEC Accreditation No. 0077-AR-2
Tax Identication No. 102-085-577
BIR Accreditation No. 08-001998-17-2009,
June 1, 2009, Valid until May 31, 2012
PTR No. 2641521, January 3, 2011, Makati City
March 17, 2011
44 The Heart of Alaska
Independent Auditors Report
-
8/2/2019 ALASKA AR10 Per Page Low
47/84
December 31
2010 2009
ASSETS
Current Assets
Cash and cash equivalents (Notes 5, 26 and 27) P1,110,623,996 P857,054,066
Short-term investments (Notes 6, 24, 26 and 27) 1,833,983,891 1,044,563,465
Trade and other receivables - net (Notes 7, 26, 27 and 30) 827,839,418 893,566,768
Inventories (Note 8) 2,117,670,472 1,153,181,393
Prepaid expenses and other current assets (Notes 26 and 27) 38,970,814 33,263,909
Total Current Assets 5,929,088,591 3,981,629,601
Noncurrent Assets
Available-or-sale investments (Notes 9, 26 and 27) 2,556,403 2,556,403
Property, plant and equipment - net (Note 10) 1,562,810,605 1,515,257,935
Intangible assets - net (Notes 11 and 25) 1,310,444,899 1,481,438,498
Deerred tax assets - net (Note 21) 260,587,503 197,984,388
Net pension assets (Note 20) 44,836,138 49,260,438
Other noncurrent assets (Notes 26 and 27) 29,460,456 42,786,207
Total Noncurrent Assets 3,210,696,004 3,289,283,869
P9,139,784,595 P7,270,913,470
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Trade and other payables (Notes 12, 25, 26 and 27) P2,096,022,469 P1,839,819,125
Acceptances payable (Notes 26 and 27) 704,782,480 560,124,762
Income tax payable 131,913,063 109,980,839
Dividends payable (Notes 14, 26 and 27) 125,099,266 52,097,499
Current portion o obligation under nance leases (Notes 25, 26 and 27) 7,227,315 4,019,227
Total Current Liabilities 3,065,044,593 2,566,041,452
Noncurrent Liability
Obligation under nance leases - net o current portion (Notes 25, 26 and 27) 28,638,522 27,465,248
Stockholders Equity (Note 26)
Capital stock (Notes 13 and 22) 971,432,578 968,074,878
Additional paid-in capital (Note 22) 152,393,329 118,361,998
Retained earnings (Note 14):
Appropriated or various capital investment projects
and share buy-back program 2,075,000,000 1,625,000,000
Unappropriated 3,249,867,801 2,318,019,622Treasury stock (Notes 13 and 14) (402,592,228 ) (352,049,728 )
Total Stockholders Equity 6,046,101,480 4,677,406,770
P9,139,784,595 P7,270,913,470
See accompanying Notes to Financial Statements.
42010 Annual Report
Balance Sheets
-
8/2/2019 ALASKA AR10 Per Page Low
48/84
Years Ended December 31
2010 2009 2008
NET SALES P12,162,709,978 P10,580,440,474 P9,967,757,268
COST OF SALES (Notes 15 and 30) 7,558,650,096 6,821,522,353 7,903,815,821
GROSS PROFIT 4,604,059,88
top related