/S

NOTE 3 - BASIS FOR PREPARATION OF THE CASH FLOWS STATEMENTS Cash and Cash Equivalents Cash and cash equivalents shown in the cash flows statements as at December 31 consisted of the following: 1997 1996 Baht Baht Cash in hand and at banks 37,676,512.58 14,608,742.74 Add Notes receivable - financial institutions - 1,800,000.00 Fixed Deposit 8,151,178.42 1,000,000.00 Less Bank overdrafts (4,818,146.13) (923,551.92) Cash at bank pledged as collateral (1,000,000.00) (1,000,000.00) Cash and Cash Equivalents 40,009,544.87 15,485,190.82 NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Trade Accounts Receivable Trade accounts receivable are shown net of allowance for doubtful accounts which is an estimate of those amounts which may prove to be uncollectible based on historical collection experience and a review of the current status of existing receivables. Inventories Inventories are stated at the lower of cost or net realizable value determined on a average method. Investments Investments in listed securities are stated at the lower of aggregate cost or market. Allowance for reduction in market price due to temporary market fluctuations, if any, is treated as deduction from the shareholders equity. Investments in other securities and long-term note receivable-financial institution are stated at cost. Property, Plant and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation. Depreciation and amortization are computed by the straight-line method at the rates of 5% for buildings and 10-20% for equipment. Deferred Charges Deferred charges represent development expenditures for new products in the amount of Baht 2.42 million and are amortized over a period of 5 years from the date revenues from sales of those products are first earned. In addition, deferred charges include expenditures incurred in obtaining a Stock Exchange of Thailand listing in the amount of Baht 6.42 million which will be amortized over a period of 5 years from the listing date. Revenues Recognition Revenues from sales of goods are recognized at the date of delivery to customers. Accounts in foreign Currencies Accounts in foreign currencies occurred during the year are translated into Baht at the rates of exchange prevailing on the date of the transactions. Accounts in foreign currencies at the end of the year are translated into Baht at the rates of exchange prevailing at that date. Gain or loss on translation is included in the statement of income. Earnings Per Share Earnings per share is computed by dividing net income for the year by the number of shares outstanding at the end of the year. NOTE 5 - ACCOUNTS RECEIVABLE Accounts receivable at December 31 consisted of: 1997 1996 Baht Baht Domestic accounts receivable 4,353,368.16 3,305,461.34 Foreign accounts receivable 120,797,029.70 85,431,961.33 Post - dated cheques 143,043.29 201,490.59 125,293,441.15 88,938,913.26 Less Allowance for doubtful accounts (3,068,214.59) (5,724,400.70) Accounts Receivable - net 122,225,226.56 83,214,512.56 NOTE 6 - INVENTORIES Inventories at December 31 consisted of: 1997 1996 Baht Baht Finished goods 19,678,753.62 16,146,745.74 Work in process 21,195,769.67 24,275,684.45 Raw materials 29,117,432.41 26,296,009.26 Supplies 6,932,806.91 8,093,542.59 Goods in transit 7,515,709.23 112,332.00 84,440,471.84 74,924,314.04 Less Allowance for devalue of inventories (2,217,471.89) (1,686,767.30) Inventories - net 82,222,999.95 73,237,546.74 NOTE 7 - INVESTMENTS At December 31, 1997 investments in the amount of Baht 8,305,430.14 included investments in note receivable in the amount of Baht 8,090,592.64 issued by the financial institution which has closed its business as its rehabilitation plan was not approved by the Financial Sector Restructuring Authority on December 8, 1997. The Company is in the process to exchange the note according to the project in accepting exchange of notes managed by Krung Thai Bank Public Company Limited. NOTE 8 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at December 31 consisted of: 1997 1996 Baht Baht Land and improvements 16,177,999.50 16,177,999.50 Buildings and improvements 46,518,772.53 38,416,123.31 Machinery and equipment 171,028,461.28 146,755,695.32 Tools and equipment 14,655,827.76 12,921,125.78 Office furniture, fixtures and equipment 5,833,220.85 5,560,630.39 Vehicles 11,383,145.10 13,210,645.10 Construction in progress 3,291,344.36 25,077,435.61 268,888,771.38 258,119,655.01 Less Accumulated depreciation and amortization (131,753,183.67) (114,686,831.02) Property, plant and equipment-net 137,135,587.71 143,432,823.99 Depreciation and amortization in the amounts of Baht 25,672,237.50 in 1997 and Baht 23,060,751.57 in 1996 were included under cost of sales and selling and administrative expenses. NOTE 9 - ADVANCE PAYMENTS FOR ASSETS ACQUISITION At December 31, 1997 advance payments for assets acquisition represent advance payments according to the agreement to purchase land and building with a related company on December 29, 1997 at a price of Baht 41 million. The Company paid 50% of the price in the amount of Baht 20.5 million on date of signing of the agreement by issuing note receivable in the amount of Baht 20,232,717.81 issued by a financial institution which has closed its business as its rehabilitation plan was not approved by the Financial Sector Restructuring Authority on December 8, 1997. On January 22, 1998 the Extraordinary Meeting of Shareholders did not approve to purchase the said land and building. Therefore, the Company has notified for cancellation of the agreement and refund the advance payments of Baht 20.5 million as its letter dated February 12, 1998. NOTE 10 - APPROPRIATIONS OF EARNINGS On April 24, 1997 the Ordinary General Meeting of Shareholders approved the proposed dividend, payable from the net income of the year 1996 of Baht 1.00 per share on 8 million shares totaling Baht 8.0 million and the appropriation of 5% net income for the year 1996 to legal reserve in the amount of Baht 373,598.29. On April 24, 1996 the Ordinary General Meeting of shareholders approved the proposed dividend, payable from the net income of the year 1995 of Baht 1.70 per share on 8 million shares totaling Baht 13.6 million and the appropriation of 5% net income for the year 1995 to legal reserve in the amount of Baht 769,167.86 NOTE 11 - SEGMENT INFORMATION Thantawan Industry Public Company Limited manufactures plastic products which devided into three main products: straw products, HD.PE bag product and LD.PE bag product. Product purchased for sales are groups as others. The results of its operations for the years ended December 31, 1997 and 1996 are summarized as follows: Baht (Thousand) HD. PE bag LD. PE bag 1997 1996 Straw products products products Others Total Total Sales-export : 1997 109,234 191,799 256,319 10,494 567,846 : 1996 116,250 184,317 187,729 10,526 498,822 sales-local : 1997 17,469 2,562 2,611 121 22,763 : 1996 14,087 3,606 1,977 154 19,824 Total : 1997 126,703 194,361 258,930 10,615 590,609 : 1996 130,337 187,923 189,706 10,680 518,646 Operating profit (loss) : 1997 32,128 19,394 57,270 854 109,646 : 1996 25,434 13,304 24,496 (167) 63,067 Other income 4,953 4,073 General corporate (64,325) (51,641) Interest expense (3,506) (2,527) Income tax (14,138) (5,500) Net income 32,630 7,472 As at December 31, 1997 and 1996 property, plant, and equipment net of accumulated depreciation and amortization are summarized as follows: Baht (Thousand) 1997 1996 Straw products HD.PE LD Products Total Total Assets used by products : 1997 20,702 44,864 57,268 122,834 : 1996 24,504 39,869 60,172 124,545 General assets used 14,301 18,888 Total property, plant and equipment - net 137,135 143,433 NOTE 12 - ASSETS PLEDGED AS COLLATERAL Fixed deposit in the amount of Baht 1 million and part of land and constructions were pledged as collateral for liabilities and commitments with commercial banks. Post-dated cheque in the amount of Baht 7.5 million was pledged as collateral for loan with Export Import Bank of Thailand. NOTE 13 - RECLASSIFICATION OF ACCOUNTS Certain accounts in the financial statements for the year ended December 31, 1996 have been reclassified to conform with the presentation in the financial statements for the year ended December 31, 1997.