F/S

FINANCIAL STATEMENTS AND ACCOUNTANTS' REVIEW REPORT THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED THIRD QUARTER ENDED SEPTEMBER 30, 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 Industry Public Company Limited as at September 30, 1998 and 1997, and the related statements of income, changes in shareholders+ equity and retained earnings for the three-month and nine-month periods then ended and cash flows for the three-month and nine-month periods ended September 30, 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 nine-month period ended September 30 , 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, November 5, 1998 THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED BALANCE SHEETS (UNAUDITED) (Amounts in Thousand Baht) September 30 ASSETS 1998 1997 CURRENT ASSETS Cash in hand and at banks 72,041 6,183 Short-term investments Notes receivable - finance companies (Note 5) - 27,733 Deposits with financial institutions 72,285 6,000 Trade accounts and notes receivable (Notes 4 and 6) 98,427 84,480 Less Allowance for doubtful accounts (5,487) (2,368) Trade accounts and notes receivable - net 92,940 82,112 Inventories - net (Note 4 ) 75,663 91,853 Other current assets Refundable value added tax 16,910 7,136 Subsidy for export tax 3,487 4,807 Others 7,635 4,011 Total Current Assets 340,961 229,835 INVESTMENTS (Notes 4 and 7) 8,241 247 PROPERTY, PLANT AND EQUIPMENT - Net (Note 4) 129,332 143,226 OTHER ASSETS Advance payments for assets acquisition (Note 2) 20,500 - Deferred charges - net (Note 4) 1,500 4,438 Deposits 189 30 Total Assets 500,723 377,776 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED BALANCE SHEETS (UNAUDITED) (Amounts in Thousand Baht) September 30 LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997 CURRENT LIABILITIES Bank overdraft and loans from financial institutions 2,386 40,215 Trade accounts payable (Note 2) 74,622 75,648 Other current liabilities Accrued expenses (Note 2) 16,756 12,696 Accrued income tax 45,177 2,882 Others 6,461 4,052 Total Current Liabilities 145,402 135,493 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 7,655 6,024 Unappropriated 130,866 19,459 Total Shareholders' Equity 355,321 242,283 Total Liabilities and Shareholders' Equity 500,723 377,776 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Nine Months Ended (Amounts in Thousand Baht September 30 September 30 Except Earnings per Share) 1998 1997 1998 1997 REVENUES Sales (Note 4) 205,857 160,348 668,003 392,991 Other income Income from subsidy for export tax 417 583 5,251 3,070 Sales of scrap 4,317 3,755 12,384 8,647 Interest income 2,608 1,136 5,188 2,442 Others 379 41 1,694 939 Total Revenues 213,578 165,863 692,520 408,089 EXPENSES Cost of sales (Note 2) 126,299 109,211 426,553 302,669 Selling and administrative expenses (Note 2) 41,278 38,942 116,229 86,113 Interest expense 104 1,390 1,106 2,514 Total Expenses 167,681 149,543 543,888 391,296 Income before income tax 45,897 16,320 148,632 16,793 Income tax expenses 14,477 3,756 45,225 3,795 Net income 31,420 12,564 103,407 12,998 Earnings per share (Baht) (Note 4) 3.93 1.57 12.93 1.62 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) Three Months Ended Nine Months Ended (Amounts in Thousand Baht) September 30 September 30 1998 1997 1998 1997 Share capital Ordinary shares Beginning balance 80,000 80,000 80,000 80,000 Additions - - - - Ending balance 80,000 80,000 80,000 80,000 Paid-in capital Premium on share capital Beginning balance 136,800 136,800 136,800 136,800 Additions - - - - Ending balance 136,800 136,800 136,800 136,800 Retained earnings Appropriated Legal reserve Beginning balance 7,655 6,024 6,024 5,651 Additions - - 1,631 373 Ending balance 7,655 6,024 7,655 6,024 Unappropriated Beginning balance 99,446 6,895 39,090 14,834 Additions 31,420 12,564 103,407 12,998 Deductions - - (11,631) (8,373) Ending balance 130,866 19,459 130,866 19,459 Total Shareholders' Equity 355,321 242,283 355,321 242,283 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) Three Months Ended Nine Months Ended (Amounts in Thousand Baht) September 30 September 30 1998 1997 1998 1997 Unappropriated retained earnings Beginning balance 99,446 6,895 39,090 14,834 Less Appropriations of earnings for prior period Legal reserve - - (1,631) (373) Dividend - - (10,000) (8,000) Net income for the period 31,420 12,564 103,407 12,998 Total Unappropriated Retained Earnings 130,866 19,459 130,866 19,459 Appropriated retained earnings Legal reserve 7,655 6,024 7,655 6,024 Total Retained Earnings 138,521 25,483 138,521 25,483 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1998 (UNAUDITED) (Amounts in Thousand Baht) For the Period Three Months Nine Months CASH FLOWS FROM OPERATING ACTIVITIES Net income 31,420 103,407 Add (Less) Adjustments to reconcile net income to net cash provided by operating activities Allowance for doubtful accounts 1,166 2,418 Allowance for devalue of inventories 827 (1,390) Depreciation and amortization 5,537 16,548 Deferred charges written off 1,833 2,707 Net income from operations before changes of operating assets and liabilities 40,783 123,690 (INCREASE) DECREASE IN OPERATING ASSETS Accounts receivable 43,592 26,867 Inventories 1,768 7,950 Other current assets (4,025) (8,580) Other assets - (5) INCREASE (DECREASE) IN OPERATING LIABILITIES Accounts payable (21,726) (31,043) Accrued expenses (209) 789 Accrued company income tax 14,449 31,961 Other current liabilities (364) 2,754 Net Cash Provided by Operating Activities 74,268 154,383 CASH FLOWS FROM INVESTING ACTIVITIES Decrease in investment - 96 Carrying value of tools and equipment disposed - 4 Purchase of property, plant and equipment (2,536) (8,748) Net Cash Used in Investing Activities (2,536) (8,648) See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1998 (UNAUDITED) (Amounts in Thousand Baht) For the Period Three Months Nine Months CASH FLOWS FROM FINANCING ACTIVITIES Decrease in loans from financial institutions (10,322) (34,805) Dividend payment - (10,000) Net Cash Used in Financing Activities (10,322) (44,805) NET INCREASE IN CASH AND CASH EQUIVALENTS 61,410 100,930 CASH AND CASH EQUIVALENT AT BEGINNING OF PERIOD 79,530 40,010 CASH AT BANK PLEDGED AS COLLATERAL AT BEGINNING OF PERIOD 1,000 1,000 CASH AT BANK PLEDGED AS COLLATERAL AT END OF PERIOD (Note 3) (1,000) (1,000) CASH AND CASH EQUIVALENT AT END OF PERIOD (Note 3) 140,940 140,940 SUPPLEMENTARY INFORMATION Cash payment during the period Interest expense 186 1,568 Income tax 28 13,264 See notes to financial statements THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) NOTE 1 - ECONOMIC ENVIRONMENT AND BASIS OF PRESENTATION As from the second half of 1997, 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 September 30, 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 entity+s 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 4,221 3,322 Rental and service expenses paid to related parties 2,608 2,599 At September 30, 1998 the outstanding balances with related parties are as follows: (Amounts in Thousand Baht) 1998 1997 Account payable - related party 617 466 Accrued rental expenses - related parties 2,460 273 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 September 30, 1998 consisted of the following: (Amounts in Thousand Baht) Cash in hand and at banks 72,041 Add Deposits with financial institutions 72,285 Less Bank overdraft (2,386) Cash at bank pledged as collateral (1,000) Cash and Cash Equivalents 140,940 (More)