F/S

FINANCIAL STATEMENTS AND ACCOUNTANTS REVIEW REPORT THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED FIRST QUARTER ENDED MARCH 31, 1998 AND 1997 Accountants Review Report To the Shareholders of Thantawan Industry Public Company Limited: We have made a review of the balance sheets of Thantawan Industries Public Company Limited as at March 31, 1998 and 1997, and the related statements of income, changes in shareholders equity and retained earnings for the three-month periods then ended and cash flows for the three-month period ended March 31, 1998, in accordance with standards established by The Institute of Certified Accountants and Auditors of Thailand. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, 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, we do not express such an opinion. We draw attention to Note 1 to the financial statements. The operations of the Company have been affected and will continue to be affected for the foreseeable future by the economic conditions in Thailand and the Asia Pacific Region in general. The ultimate effect that these uncertainties will have on the financial statements for the three-month period ended March 31, 1998 cannot presently be determined. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. Nirand Lilamethwat Certified Public Accountant Peat Marwick Suthee Limited Bangkok, May 8, 1998 THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED BALANCE SHEETS (UNAUDITED) (Amounts in Thousand Baht) March 31 ASSETS 1998 1997 CURRENT ASSETS Cash in hand and at banks 37,095 17,767 Short-term investments Deposits with financial institutions 11,808 1,000 Trade accounts and notes receivable (Note 4) 107,264 83,914 Less Allowance for doubtful accounts (3,214) (7,105) Trade accounts and notes receivable - net 104,050 76,809 Inventories - net ( Note 4) 103,078 92,046 Other current assets Refundable value added tax 11,678 7,484 Subsidy for export tax 5,975 3,723 Others 6,375 3,981 Total Current Assets 280,059 202,810 INVESTMENTS (Note 4) 8,260 247 PROPERTY, PLANT AND EQUIPMENT - Net (Note 4) 134,999 148,152 OTHER ASSETS Advance payments for assets acquisition (Note 2) 20,500 - Deferred charges - net (Note 4) 3,772 4,939 Deposits 189 30 Total Assets 447,779 356,178 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED BALANCE SHEETS (UNAUDITED) (Amounts in Thousand Baht) March 31 LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997 CURRENT LIABILITIES Bank overdraft and loans from financial institutions 16,841 21,858 Trade accounts payable (Note 2) 91,506 84,981 Other current liabilities Accrued expenses (Note 2) 13,639 9,385 Accrued income tax 26,811 782 Others 5,455 1,733 Total Liabilities 154,252 118,739 SHAREHOLDERS' EQUITY Share capital Authorized share capital 10,000,000 shares, Baht 10 par value 100,000 100,000 Issued and fully paid 8,000,000 shares 80,000 80,000 Paid-in capital Premium on share capital 136,800 136,800 Retained earnings Appropriated Legal reserve 6,024 5,651 Unappropriated 70,780 14,988 Unrealized loss on securities for investment (Note 4) (77) - Total Shareholders' Equity 293,527 237,439 Total Liabilities and Shareholders' Equity 447,779 356,178 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF INCOME (UNAUDITED) (Amounts in Thousand Baht Three Months Ended Except Earnings per Share) March 31 1998 1997 REVENUES Sales (Note 4) 220,843 118,223 Other income Income from subsidy for export tax 3,026 334 Sales of scrap 3,726 2,452 Others 1,528 679 Total Revenues 229,123 121,688 EXPENSES Cost of sales (Note 2) 139,076 96,626 Selling and administrative expenses (Note 2) 44,147 23,729 Interest expense 611 397 Total Expenses 183,834 120,752 Income before income tax 45,289 936 Income tax expenses 13,599 782 Net income 31,690 154 Earnings per share (Baht) (Note 4) 3.96 0.02 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Amounts in Thousand Baht) Three Months Ended March 31 Share capital 1998 1997 Ordinary shares Beginning balance 80,000 80,000 Additions - - Ending balance 80,000 80,000 Paid-in capital Permium on share capital Beginning balance 136,800 136,800 Additions - - Ending balance 136,800 136,800 Retained earnings Appropriated Legal reserve Beginning balance 6,024 5,651 Additions - - Ending balance 6,024 5,651 Unappropriated Beginning balance 39,090 14,834 Additions 31,690 154 Ending balance 70,780 14,988 Unrealized loss on securities for investment Beginning balance (32) - Additions (45) - Ending balance (77) - Total Shareholders' Equity 293,527 237,439 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) (Amounts in Thousand Baht) Three Months Ended March 31 1998 1997 Unappropriated retained earnings Beginning balance 39,090 14,834 Net income for the period 31,690 154 Total Unappropriated Retainned Earnings 70,780 14,988 Appropriated retained earnings Legal reserve 6,024 5,651 Total Retained Earnings 76,804 20,639 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENT OF CASH FLOWS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1998 (UNAUDITED) (Amounts in Thousand Baht) CASH FLOWS FROM OPERATING ACTIVITIES Net income 31,690 Add (less) Adjustments to reconcile net income to net cash Provided by operating activities Allowance for doubtful accounts 146 Allowance for devalue of inventories (469) Depreciation and amortization 5,489 Deferred charges written off 435 Net income from operations before changes of operating assets and liabilities 37,291 (INCREASE) DECREASE IN OPERATING ASSETS Accounts receivable 18,029 Inventories (20,386) Other current assets (4,577) Other assets (5) INCREASE (DECREASE) IN OPERATING LIABILITIES Accounts payable (14,159) Accrued expenses (2,328) Accrued company income tax 13,595 Other current liabilities 1,748 Net Cash Provided by Operating Activities 29,208 CASH FLOWS FROM INVESTING ACTIVITIES Carrying value of tools and equipment disposed 8 Purchases of property, plant and equipment (3,360) Net Cash Used in Investing Activities (3,352) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in loans from financial institutions (17,963) Net Cash Used in Financing Activities (17,963) NET INCREASE IN CASH AND CASH EQUIVALENTS 7,893 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 40,010 CASH AT BANK PLEDGED AS COLLATERAL AT BEGINNING OF PERIOD 1,000 CASH AT BANK PLEDGED AS COLLATERAL AT END OF PERIOD (Note 3) (1,000) CASH AND CASH EQUIVALENTS AT END OR PERIOD (Note 3) 47,903 SUPPLEMENTARY INFORMATION Cash payment during the period Interest expense 930 Income tax 4 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED NOTES TO FINANCIAL STATEMENTS MARCH 31, 1998 AND 1997 (UNAUDITED) NOTE 1 - ECONOMIC ENVIRONMENT AND BASIS OF PRESENTATION As from the second half of 1997 up to present, certain Asia Pacific countries, including Thailand, are experiencing economic difficulties relating to currency devaluation and slowdown in growth. Accordingly, the Thai government sought assistance from the International Monetary Fund to alleviate the economic crisis and improve the economy over time. The financial statements for the period ended March 31, 1998 reflect the assessment of the possible impact of this economic situation on the financial position of the Company. In addition, the ultimate effect on the entitys financial position of these uncertainties cannot presently be determined. The financial statements are prepared in compliance with Commerce Ministerial Regulation No. 7 (B.E. 2539) dated October 25, 1996. NOTE 2 - TRANSACTIONS WITH RELATED PARTIES The Company has significant transactions with related parties. The financial statements reflect the effect of these transactions on the basis determined by the companies concerned. Significant transactions occurred between the Company and related parties during 1998 and 1997 as follows: (Amounts in Thousand Baht) 1998 1997 Advance payments for assets acquisition paid to related party 20,500 - Purchase made by the Company to related party 1,528 865 Rental and service expenses paid to related parties 893 862 At March 31, 1998 the outstanding balances with related parties are as follows: (Amounts in Thousand Baht) 1998 1997 Account payable - related party 534 461 Accrued rental expenses - related parties 829 275 NOTE 3 - BASIS FOR PREPARATION OF THE CASH FLOWS STATEMENT Cash and Cash Equivalents Cash and cash equivalents shown in the cash flows statement as at March 31, 1998 consisted of the following: (Amounts in Thousand Baht) Cash in hand and at banks 37,095 Add Deposits with financial institutions 11,808 Less Cash at bank pledged as collateral (1,000) Cash and Cash Equivalents 47,903 NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Trade Accounts and Notes Receivable Trade accounts and notes 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 the 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 period are translated into Baht at the rates of exchange prevailing on the date of the transactions. Assets and liabilities in foreign currencies at the end of the period 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 period by the number of shares outstanding at the end of the period. NOTE 5 - 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 three-month period ended March 31, 1998 are summarized as follows: (Amounts in Thousand Baht) HD.PE bag LD.PE bag Straw Products Products Products Others Total Sales - export 45,977 65,544 99,462 2,542 213,525 Sales - local 4,503 2,222 453 140 7,318 Total 50,480 67,766 99,915 2,682 220,843 Operating profit 18,424 14,050 34,540 817 67,831 Other income 1,433 General corporate expense (23,364) Interest expense (611) Income tax (13,599) Net income 31,690 As at March 31, 1998 property, plant, and equipment net of accumulated depreciation and amortization are summarized as follows: (Amounts in Thousand Baht) HD.PE bag LD.PE bag Straw Products Products Products Total Assets used by products 19,845 43,733 57,717 121,295 General assets used 13,704 Total property, pla-nt and equipment - net 134,999 NOTE 6 - RECLASSIFICATION OF ACCOUNTS Certain accounts in the financial statements for the period ended March 31, 1997 are reclassified to comply with presentation of the accounts in the financial statements for the period ended March 31, 1998.