SEC Form 20-IS - 7-Eleven

Cash flows generated from our retailing operations and franchising activities
Borrowings under our revolving credit facility
We believe that operating activities and available working capital sources will provide sufficient liquidity in 2008 to fund our operating
costs, capital expenditures and debt service. The following are the discussion of the sources and uses of cash for the year 2007.
Cash Flows from Operating Activities
Net cash generated by operating activities in 2007 reached P266 million, lower compared to the P358 million generated in 2006.
Although pre-tax income in 2007 is higher compared to a year ago, the decline in net cash from operating activities was due to the
increase in receivables and the payment of accounts payable, accrued expenses and current portion of long term debt.
Cash Flows from Investing Activities
Net cash used in investing activities reached P243 million in 2006 compared to net cash out flow of P218 million in 2007. Major cash
outlay went to the procurement of store equipment, new store constructions and store renovations. Total acquisitions of property and
equipment dropped this year by P23.7 million against 2006. Significant investment in 2006 went to the procurement of POS Machines
and the roll-out of batches of store renovations.
Majority of the company’s commitments for capital expenditures for the year are for new store constructions and renovations. Funds for
these expenditures are expected to come from the anticipated increase in cash flows from retail operations and from additional
borrowings if the need for such may arise.
Cash Flows from Financing Activities
Net cash outflow from financing activities during the year was P68.4 million. The year ended with outstanding bank loans of P375
million, an improvement from P411.2 million at the beginning of the year. The Company was able to pre-pay some of its loan as a
result of improved profitability in 2007.
DISCUSSION OF THE COMPANY’S KEY PERFORMANCE INDICATORS
System Wide Sales
System-wide sales represents the overall retail sales to customers of corporate and franchise-operated stores.
Sales per Store Day
Average daily sales of mature and new stores computed periodically and determine growth of all stores.
Gross Margin
This is the ratio of sales, less cost of sales but before considering selling and general expense, other income and income deduction
over sales and expressed in terms of percentage.
Return on Sales (ROS)
Measures the level of recurring income generated by continuing operations relative to revenues and is calculated by dividing net
income over sales.
Return on Equity (ROE)
The ratio of the net income over stockholders’ equity and indicates the level of efficiency with which a company utilizes owners’ capital.
PLANS FOR THE NEXT 12 MONTHS
In the year ahead, we intend to take strides to facilitate our expansion in new and traditional markets to expedite growth.
We believe that the Company’s strong performance reflects the soundness of our business model and overall strategies. Looking
ahead into 2009, we intend to retain our competitiveness in the C-store industry. We remain determined to follow the strategic plan we
have set to remain resilient in these turbulent times.
We will go on to build on the success of our franchising initiatives by strengthening our franchise selection process and implementing
our market development plan. This will be complemented by our HQ-level plans and programs aimed at supporting corporate and
franchise stores.