FINANCIAL STATEMENTS THE 1ST QUARTER

99/411/4306 AUDITOR'S REPORT To The Shareholders and Board of Directors Thantawan Industry Public Company Limited I have made a review of the balance sheet of Thantawan Industry Public Company Limited as at March 31, 1999 and the related statements of income, changes in shareholders equity, retained earnings and cash flows for the three-month period then ended, in accordance with standards established by the lnstitute of Certified Accountants and Auditors of Thailand. A review of interim financial statements consists principally of obtaining an understanding of the system for the preparation of interim financial statements, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion. Based on my review, I am not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with generally accepted accounting principles. I draw attention to Notes to the interim financial statements as follows : (a) The Company had a portion of building and land improvement which are located on a related company's land without a lease agreement. The Company did not record this liability about rent for the said land. Consequent, in 1998 the related company charged the Company for rental fees of Baht 24.1 million for the preceding five years since 1994. The Company is in the process of negotiation with the related company in this moment. (see Notes 6 and 13), and (b) The Company had advance payments for land and building acquisition to related company (company is same as (a)). The Shareholders did not approve subsequently to purchase the said land and building. Therefore, the Company has notified for cancellation of to buy and to sell agreement and asked for refund the advance payments. At the present, the advance payment has not been refunded and the Company is in process of negotiation with the rerated company in this moment. (see note 7). The accompanying balance sheet as at December 31, 1998 of such company which is presented for comparative purposes, was audited by other auditors whose report dated February 19, 1999, expressed an unqualified opinion on the statements. They draw attention to the matters that I have mentioned in the fourth paragraph (a) and (b) and the operations of the Company since 1997 have been affected and may continue to be influenced for the foreseeable future by the adverse economic conditions in Thailand and the Asia Pacific Region in general. The ultimate effect that these uncertainties will have on the financial statements cannot presently be determined. The accompanying related statements of income, changes in shareholders' equity, retained earnings and cash flows for the three-month period ended March 31, 1998 of Thantawan Industry Public Company Limited which are presented for comparative purposes, were reviewed by other auditors, whose report dated May 8, 1998, stated that they were not aware of any material modifications that should be made to those interim financial statements for them to be in conformity with generally accepted accounting principles. (Mr. Pichai Dachanapirom) Certified Public Accountant Registration No. 2421 Dharmniti Auditing Company Limited Bangkok, Thailand May 4, 1999 "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED BALANCE SHEETS ASSETS In Thousand Baht As at March 31, 1999 As at December 31, 1998 CURRENT ASSETS Cash in hand and at banks 74,753 71,617 Short-term investments Deposits with financial institutions (Note 11) 66,100 87,437 Trade accounts and notes receivable-net (Notes 1.3 and 3) 79,480 79,676 Inventories-net (Notes 1.4 and 4) 65,204 53,716 Other current assets Refundable value added tax 22,480 12,732 Tax card 1,039 4,322 Subsidy for export tax 3,213 2,431 Others 1,774 1,462 Total current assets 314,043 313,393 INVESTMENTS-Net (Notes 1.2, 2, 5 and 11) 8,241 8,241 PROPERTY, PLANT AND EQUIPMENT-Net (Notes 1.5, 6 and 11) 127,063 126,140 OTHER ASSETS Advance payments for assets acquisition (Notes 2 and 7) 20,500 20,500 Deposit for machine acquisition (Note 8) 20,378 - Deferred charges-net (Note 1.6) 4,452 4,402 Deposits 284 189 Total other assets 45,614 25,091 TOTAL ASSETS 494,961 472,865 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdraft and loans from financial institutions (Note 11) 2,711 692 Trade accounts payable - Related parties (Note 2) 1,135 713 - Others 72,392 54,866 Accrued expenses (Note 2) 19,755 25,144 Other current liabilities Accrued income tax 36,242 42,832 Others 2,056 2,654 Total current liabilities 134,291 126,901 SHAREHOLDERS EQUITY Share capital Authorized share capital 10,000,000 shares Baht 10 par value 100,000 100,000 Issued and fully paid-up share capital 8,000,000 shares, Baht 10 par value 80,000 80,000 Paid-in capital Premium on share capital 136,800 136,800 Retained earnings Appropriated-legal reserve (Note 10) 7,656 7,656 Unappropriated 136,214 121,508 Total shareholders' equity 360,670 345,964 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 494,961 472,865 Notes to interim financial statements form an integral part of these statements. (See auditor's report dated May 4, 1999) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1999 AND 1998 In Thousand Baht 1999 1998 REVENUES Sales 156,958 220,843 Other income Subsidy for export tax income 2,054 3,026 Sales of scrap 2,314 3,726 Interest income 2,288 995 Others 1,950 533 Total revenues 165,564 229,123 EXPENSES Cost of sales (Note 2) 109,019 139,076 Selling and administrative expenses (Note 2) 34,940 44,147 Interest expense 5 611 Directors'remuneration - - Total expenses 143,964 183,834 INCOME BEFORE INCOME TAX 21,600 45,289 INCOME TAX (6,894) (13,599) NET INCOME 14,706 31,690 EARNINGS PER SHARE (Note 1.9) Net income (Baht) 1.84 3.96 Notes to interim financial statements form an integral part of these statements. (See auditor's report dated May 4, 1999) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1999 AND 1998 In Thousand Baht 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net income 14,706 31,690 Add (less) Adjustments to reconcile net income to net cash provided by operating activities Allowance for doubtful accounts 685 146 Unrealized loss on exchange rate 129 - Allowance for devalue of inventories (reversal) - (469) Depreciation and amortization 4,870 5,489 Deferred charges written off 1,071 435 Net income from operations before changes of operating assets and liabilities 21,461 37,291 (Increase) decrease in operating assets Accounts receivable (109) 18,029 Inventories (11,489) (20,386) Other current assets (7,559) (4,577) Other assets (1,218) (194) Increase (decrease) in operating liabilities Trade accounts payable - Related companies 422 103 - Others 17,019 (14,262) Accrued expenses (5,389) (2,328) Income tax payable (6,590) 13,595 Other current liabilities (598) 1,748 Net cash provided by operating activities 5,950 29,019 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of equipment - 8 Advance payment for machine acquisition (20,378) - Purchases of property plant and equipment (5,793) (3,171) Net cash used in investing activities (26,171) (3,163) , In Thousand Baht, , 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net income 14,706 31,690 Add (less) Adjustments to reconcile net income to net cash provided by operating activities Allowance for doubtful accounts 685 146 Unrealized loss on exchange rate 129 - Allowance for devalue of inventories (reversal) - (469) Depreciation and amortization 4,870 5,489 Deferred charges written off 1,071 435 Net income from operations before changes of operating assets and liabilities 21,461 37,291 (Increase) decrease in operating assets Accounts receivable (109) 18,029 Inventories (11,489) (20,386) Other current assets (7,559) (4,577) Other assets (1,218) (194) Increase (decrease) in operating liabilities Trade accounts payable - Related companies 422 103 - Others 17,019 (14,262) Accrued expenses (5,389) (2,328) Income tax payable (6,590) 13,595 Other current liabilities (598) 1,748 Net cash provided by operating activities 5,950 29,019 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of equipment - 8 Advance payment for machine acquisition (20,378) - Purchases of property plant and equipment (5,793) (3,171) Net cash used in investing activities (26,171) (3,163) CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in loans from financial institutions - (17,963) Net cash Used in financing activities - (17,963) Net increase (decrease) in cash and cash equivalents (20,221) 7,893 Cash and cash equivalents at beginning of period 157,362 40,010 Cash at bank pledged as collateral at beginning of period (Note 11) 1,000 1,000 Cash at bank pledged as collateral at end of period (Note 11) (1,000) (1,000) Cash and cash equivalents at end of period 137,141 47,903 SUPPLEMENTAY INFORMATION 1) Cash and cash equivalents consist of Cash in hand and at banks 74,753 37,095 Add Deposits with financial institutions 66,100 11,808 Less Bank overdrafts (2,711) - Cash at banks pledged as collateral (1,000) (1,000) Cash and cash equivalents 137,142 47,903 2) Cash payment during the period Interest expense 5 930 Income tax 13,467 4 Notes to interim financial statements form an integral part of these statements. (See auditor's report dated May 4, 1999) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1999 AND 1998 In Thousand Baht 1999 1998 Ordinary share capital Beginning balance 80,000 80,000 Additions - - Ending balance 80,000 80,000 Premium on share capital Beginning balance 136,800 136,800 Additions - - Ending balance 136,800 136,800 Retained earnings Appropriated Legal reserve Beginning balance 7,656 6,024 Additions - - Ending balance 7,656 6,024 Unappropriated Beginning balance 121,508 39,090 Additions - net income 14,706 31,690 Ending balance 136,214 70,780 Unrealized loss on securities for investment Beginning balance - (32) Additions (deduction) - (45) Ending balande - (77) Total Shareholders' Equity 360,670 293,527 Notes to interim financial statements form an integral part of these statements. (See auditor's report dated May 4, 1999) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1999 AND 1998 In Thousand Baht 1999 1998 Unappropriated retained earnings Beginning balance 121,508 39,090 Net income for the period 14,706 31,690 Total unappropriated retained earnings 136,214 70,780 Appropriated retained earnings Legal reserve 7,656 6,024 Total Retained Earnings 143,870 76,804 Notes to interim financial statements form an integral part of these statements. (See auditor's report dated May 4, 1999) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED NOTES TO INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 Revenues recognition Revenues from sales of goods are recognized at the date of delivery to customers. 1.2 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. Losses from permanent decline in value of investment are reflected in the statement of income. Investments in other securities and long- term note receivable-financial institution are stated at cost. (More)