FINANCIAL STATEMENTS QUARTER3/2000

2000/680/4619 AUDITOR' S REVIEW REPORT To The Shareholders and Board of Directors of Thantawan Industry Public Company Limited I have reviewed the accompanying balance sheet of Thantawan Industry Public Company Limited at September 30, 2000, and the related statements of income, changes in shareholders' equity, retained earnings, and cash flows for the three-month and nine-month periods ended September 30, 2000 and 1999. These financial statements are the responsibility of the Company's management as to their correctness and completeness of the presentation. My responsibility is to issue a report on these financial statements based on my review. I conducted my review in accordance with generally accepted auditing standards applicable to review engagements. This Standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. I have not performed an audit and, accordingly, I do not express an audit opinion. Based on my review, nothing has come to my attention that causes me to believe that the accompanying financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. I have previously audited, in accordance with generally accepted auditing standards, the financial statements for the year ended December 31, 1999 of Thantawan Industry Public Company Limited; and in my report dated February 11, 2000, I expressed an unqualified opinion on those financial statements. The balance sheet as at December 31, 1999 presented herewith for comparative purposes only, was a part of the audited financial statements and I have already reported. I have not performed any audit procedure since that date. In the second quarter of 1999, the company had changed the method of valuation of investment in marketable equity/debt securities from the lower of aggregate cost or market to the fair value, in order to conform with the application of new accounting standard. (Mr. Pichai Dachanapirom) Certified Public Accountant Registration No. 2421 Dharmniti Auditing Company Limited Bangkok, Thailand November 2, 2000 "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED BALANCE SHEETS ASSETS In Thousand Baht As at September As at December 30, 2000 31, 1999 CURRENT ASSETS Cash in hand and at banks 45,533 114,338 Short-term investments Deposits with financial institutions (Note 12) 9,407 9,348 Trade accounts and notes receivable, net (Notes 1.3 and 3) 89,508 99,387 Inventories, net (Notes 1.4 and 4) 73,725 85,571 Other current assets Refundable value added tax 17,546 8,992 Tax card - 1,535 Subsidy for export tax 2,658 4,027 Others 9,016 1,691 Total current assets 247,393 324,889 LONG-TERM INVESTMENTS, Net (Notes 1.2 and 5 ) 150 150 PROPERTY, PLANT AND EQUIPMENT, Net (Notes 1.5, 6 and 12) 216,612 126,855 OTHER ASSETS Advance payments for assets acquisition (Notes 2 and 7) - 20,500 Deposit for machine acquisition (Note 8) 28,886 18,525 Deferred charges, net (Note 1.6) 2,632 4,124 Others 253 293 Total other assets 31,771 43,442 TOTAL ASSETS 495,926 495,336 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts (Notes 9 and 12) 1,267 2,204 Trade accounts payable - Related parties (Note 2) 501 537 - Others 82,289 93,104 Accrued expenses (Note 2) 20,762 24,497 Other current liabilities Accrued income tax 6,905 10,963 Others 2,501 4,318 Total current liabilities 114,225 135,623 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 11) 10,000 10,000 Unappropriated 154,901 132,913 Total shareholders' equity 381,701 359,713 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 495,926 495,336 Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated November 2, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE THREE - MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 In Thousand Baht For the three-month period For the nine-month period ended September 30, ended September 30, 2000 1999 2000 1999 REVENUES Sales 184,212 169,397 566,715 484,916 Other income Subsidy for export tax income 1,282 1,741 1,391 4,738 Sales of scrap 2,055 1,813 6,586 5,734 Interest income 392 969 1,368 4,266 Gain on exchange rate 2,437 6,317 5,326 6,854 Others 702 875 2,373 1,630 Total revenues 191,080 181,112 583,759 508,138 EXPENSES Cost of sales (Note 2 ) 134,494 124,861 419,196 348,116 Selling and administrative expenses (Note 2) 39,024 39,085 120,784 106,265 Interest expense - 237 140 306 Directors' remuneration - - - - Total expenses 173,518 164,183 540,120 454,687 INCOME BEFORE INCOME TAX 17,562 16,929 43,639 53,451 INCOME TAX (5,520) (5,329) (13,651) (15,856) NET INCOME 12,042 11,600 29,988 37,595 EARNINGS PER SHARE (Note 1.9) Net income (Baht) 1.51 1.45 3.75 4.70 Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated November 2, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE - MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 In Thousand Baht For the three-month period For the nine-month period ended September 30, ended September 30, 2000 1999 2000 1999 Ordinary share capital Beginning balance 80,000 80,000 80,000 80,000 Additions - - - - Ending balance 80,000 80,000 80,000 80,000 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 10,000 10,000 10,000 7,656 Additions - - - 2,344 Ending balance 10,000 10,000 10,000 10,000 Unappropriated Beginning balance 142,859 131,159 132,913 121,508 Additions - net income 12,042 11,600 29,988 37,595 Deduction - Legal reserve - - - (2,344) - Dividend - - (8,000) (14,000) Ending balance 154,901 142,759 154,901 142,759 Total Shareholders' Equity 381,701 369,559 381,701 369,559 Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated November 2, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS FOR THE THREE - MONTH AND NINE - MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 In Thousand Baht For the three-month period For the nine-month period ended September 30, ended September 30, 2000 1999 2000 1999 Unappropriated retained earnings Beginning balance 142,859 131,159 132,913 121,508 Less Appropriations of earnings for prior period Legal reserve - - - (2,344) Dividend - - (8,000) (14,000) Net income for the period 12,042 11,600 29,988 37,595 Total unappropriated retained 154,901 142,759 154,901 142,759 Appropriated retained earnings Legal reserve 10,000 10,000 10,000 10,000 Total Retained Earnings 164,901 152,759 164,901 152,759 Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated November 2, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH AND NINE -MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 In Thousand Baht For the three-month period For the nine-month period ended September 30, ended September 30, 2000 1999 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net income 12,042 11,600 29,988 37,595 Add (less) Adjustments to reconcile net income to net cash provided by operating activities Loss (gain) on disposal of equipment - 5 (131) 5 Allowance for doubtful accounts (reversal) (117) 235 (143) 235 Unrealized loss on exchange rate 185 (563) 185 (562) Allowance for devalue of inventories (reversal) - 2,931 - 1,628 Depreciation and amortization 4,897 4,850 14,238 14,620 Deferred charges written off 866 1,199 1,492 3,391 Net income from operations before changes of operating assets and liabilities 17,873 20,257 45,629 56,912 (Increase) decrease in operating assets Accounts receivable (2,812) (7,670) 11,635 2,503 Investment in trading securities - unit trust - 10,270 - - Inventories 12,106 7,101 11,846 (17,888) Other current assets (11,067) 7,760 (12,975) 7,919 Other assets 18 (930) 40 (3,244) Increase (decrease) in operating liabilities Trade accounts payable - Related companies (83) (24) (36) (223) - Others (21,182) (9,931) (12,613) 11,076 Accrued expenses 617 858 (3,735) (3,217) Income tax payable (1,219) 5,327 (4,057) (27,014) Other current liabilities (327) (1,536) (1,817) 731 Net cash provided by (used in) operating activities (6,076) 31,482 33,917 27,555 CASH FLOWS FROM INVESTING ACTIVITIES Increase in fixed deposit - 12 months - - - (153) Proceeds from disposal of equipment - 9 131 9 Advance payment for machine acquisition (15,172) (72) (10,361) (18,597) Purchases of property, plant and equipment (12,110) (5,505) (83,495) (16,290) Net cash used in investing activities (27,282) (5,568) (93,725) (35,031) CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in notes payable (45,000) - Dividend payment - - (8,000) (14,000) Net cash provided by (Used in) financing activities - (45,000) (8,000) (14,000) Net increase (decrease) in cash and cash equivalents (33,358) (19,086) (67,808) (21,476) Cash and cash equivalents at beginning of period 77,729 154,972 112,237 157,362 Cash at bank pledged as collateral at beginning of period (Note 12) 1,211 1,153 1,153 1,153 Cash at bank pledged as collateral at end of period (Note 12) (1,211) (1,153) (1,211) (1,153) Cash and cash equivalents at end of period 44,371 135,886 44,371 135,886 SUPPLEMENTARY INFORMATION 1) Cash and cash equivalents consist of Cash in hand and at banks 45,533 127,748 45,533 127,748 Add Deposits with financial institutions 1,316 11,256 1,316 11,256 Less Bank overdrafts (1,267) (1,965) (1,267) (1,965) Cash at banks pledged as collateral (1,211) (1,153) (1,211) (1,153) Cash and cash equivalents 44,371 135,886 44,371 135,886 2) Cash payment during the period Interest expense - 237 139 306 Income tax 6,735 - 17,698 42,833 3) In 1999, the Company had reclassified investment in negotiable certificate of deposit of Baht 8.09 million from long-term investment to be short - term investment since it will due within one year. Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated November 2, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED NOTES TO INTERIM FINANCIAL STATEMENTS SEPTEMBER 30, 2000 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 Since the second quarter of 1999, the Company's investment is stated as follows: - Short-term investment in equity/debt securities classified as trading securities is stated at the fair value. - Long-term investment in equity securities, non-marketable securities being held to be general investment is stated at cost. - Investment in long-term note receivable from finance company is stated at cost. - The cost of short-term and long-term investment which are sold during the period, are determined by weighted average. Before the second quarter of 1999, 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 shareholder's 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. 1.3 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 receivable. 1.4 Inventories Inventories are stated at the lower of average cost or net realizable value. 1.5 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 equipments. 1.6 Deferred charges Mould is amortized to expense over a period of 2 years. 1.7 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. 1.8 Cash and cash equivalents Cash and cash equivalents consist of cash on hand and at bank and short-term investment in promissory notes which are not due over 3 months deducted by bank overdrafts and cash at bank pledged as collateral. 1.9 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. 2. TRANSACTIONS WITH RELATED PARTIES The Company has transactions with related parties. The financial statements reflect the effect of these transactions on the basis determined by the companies concerned under their policy over sale/purchase of goods which are stated that they will be compared with market price or fair value. Significant transactions occurred between the company and related parties for the three - month and nine-month periods ended September 30, 2000 and 1999 as follows : In Thousand Baht For the three-month period For the nine-month period Ended September 30, ended September 30, 2000 1999 2000 1999 Purchase made by the company to related parties 1,529 1,334 4,536 5,646 Rental, land compensation fee and service expenses paid to related parties 73 829 2,323 2,615 Purchase of property, plant from related parties - - 85,000 - At September 30, 2000 and December 31, 1999 the outstanding balances with related parties are as follows : In Thousand Baht As at September As at December 30, 2000 31, 1999 Advance payments for assets acquisition paid to related party - Sunflower Enterprise Co.,Ltd. - 20,500 Accounts payable - related parties Flower International Company Limited 501 537 Accrued rental and service fee expenses Sunflower Enterprise Co.,Ltd. 3 4 Sun Tower Co.,Ltd. 12 7 3. TRADE ACCOUNTS AND NOTES RECEIVABLE Trade accounts and notes receivable consisted of : In Thousand Baht As at September As at December 30, 2000 31, 1999 Domestic accounts receivable 8,984 10,480 Foreign accounts receivable 79,637 88,669 Domestic post-dated cheques 855 576 Foreign post-dated cheques 2,764 2,373 92,240 102,098 (more)