HAAD THIP PUBLIC COMPANY LIMITED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND REPORT OF CERTIFIED PUBLIC ACCOUNTANT EXPRESSED IN Thai Baht REPORT OF CERTIFIED PUBLIC ACCOUNTANT Translation of a report originally issued in Thailand To The Shareholders of Haad Thip Public Company Limited I have audited the balance sheets of Haad Thip Public Company Limited as at December 31, 1998 and 1997, and the related statements of income, changes in shareholders'equity, retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Company's management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. - 2 - In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Haad Thip Public Company Limited as at December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. PRASIT MUSIKABHANTU C.P.A. (THAILAND) Registration No. 2675 Bangkok February 12, 1999 The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Thailand. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in Thailand. HAAD THIP PUBLIC COMPANY LIMITED BALANCE SHEETS DECEMBER 31, 1998 AND 1997 A S S E T S In Baht 1998 1997 CURRENT ASSETS Cash on hand and in banks 16,650,072 13,334,820 Accounts and notes receivable - trade (Note 2) 71,392,089 66,055,402 Less allowance for doubtful accounts ( 1,127,741) ( 1,127,741) Accounts and notes receivable - trade - net 70,264,348 64,927,661 Inventories - net (Note 3) 51,311,722 60,162,650 Other current assets Claim and other receivables - net 25,316,306 26,510,763 Prepaid expenses 6,479,763 6,274,078 Others 320,966 217,640 Total other current assets 32,117,035 33,002,481 Total Current Assets 170,343,177 171,427,612 ADVANCES AND LOANS TO DIRECTORS AND EMPLOYEES 1,770,822 1,861,413 INVESTMENT IN SHARES - Net (Note 4) 3,239,913 3,850,423 PROPERTY, PLANT AND EQUIPMENT - At Cost; net of accumulated depreciation (Note 5) 644,664,620 668,675,935 OTHER ASSETS - Net Promotion materials 25,503,341 23,509,997 Deferred charges and others 6,881,569 3,979,041 Total Other Assets 32,384,910 27,489,038 TOTAL ASSETS 852,403,442 873,304,421 See accompanying Notes to Financial Statements. (With Mr. Prasit Musikabhantu's report dated February 12, 1999) HAAD THIP PUBLIC COMPANY LIMITED BALANCE SHEETS DECEMBER 31, 1998 AND 1997 LIABILITIES AND SHAREHOLDERS' EQUITY In Baht 1998 1997 CURRENT LIABILITIES Bank overdraft and loans from financial institutions (Note 6) 60,456,953 87,264,283 Accounts payable - trade 112,133,313 122,475,970 Current portion of long-term loan (Note 7) 799,728 - Other current liabilities Accounts payable - others 14,110,817 11,947,453 Accrued bonus 14,274,646 15,349,002 Dividend payable - 16,601,500 Income tax payable 28,037,828 9,712,495 Others 15,059,570 13,451,830 Total other current liabilities 71,482,861 67,062,280 Total Current Liabilities 244,872,855 276,802,533 DEPOSITS RECEIVED FROM CUSTOMERS AND OTHERS 167,394,265 169,313,911 LONG-TERM LOAN - Net of Current Portion (Note 7) 7,197,609 7,997,337 Total Liabilities 419,464,729 454,113,781 SHAREHOLDERS' EQUITY Share capital Authorized - 25,000,000 shares; Baht 10 par value 250,000,000 250,000,000 Issued and fully paid up-16,601,500 shares 166,015,000 166,015,000 Premium on share capital 154,727,500 154,727,500 Retained earnings Appropriated Legal reserve (Note 8) 14,706,620 11,528,992 General reserve 16,000,000 13,000,000 Unappropriated 81,489,593 73,919,148 Total Shareholders' Equity 432,938,713 419,190,640 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 852,403,442 873,304,421 See accompanying Notes to Financial Statements. (With Mr. Prasit Musikabhantu's report dated February 12, 1999) HAAD THIP PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 In Baht 1998 1997 REVENUES Net sales 1,372,299,597 1,266,711,882 Other income Reversal of unclaimed customers' deposits 9,593,698 3,992,766 Others 7,033,590 8,585,159 Total other income 16,627,288 12,577,925 Total Revenues 1,388,926,885 1,279,289,807 COSTS AND EXPENSES Cost of sales 927,872,824 823,468,185 Selling and administrative expenses 360,356,564 353,407,450 Interest expense 8,883,438 16,826,173 Directors' remuneration 200,000 200,000 Total Costs and Expenses 1,297,312,826 1,193,901,808 INCOME BEFORE INCOME TAX 91,614,059 85,387,999 INCOME TAX ( 28,061,486) ( 26,557,217) NET INCOME 63,552,573 58,830,782 Earnings per Share 3.83 3.54 See accompanying Notes to Financial Statements. (With Mr. Prasit Musikabhantu's report dated February 12, 1999) HAAD THIP PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 In Baht 1998 1997 SHARE CAPITAL Common shares Balance, beginning of year 166,015,000 166,015,000 Increase during the year - - Balance, end of year 166,015,000 166,015,000 PREMIUM ON SHARE CAPITAL Balance, beginning of year 154,727,500 154,727,500 Increase during the year - - Balance, end of year 154,727,500 154,727,500 RETAINED EARNINGS Appropriated Legal reserve Balance, beginning of year 11,528,992 7,737,324 Increase during the year 3,177,628 3,791,668 Balance, end of year 14,706,620 11,528,992 General reserve Balance, beginning of year 13,000,000 13,000,000 Increase during the year 3,000,000 - Balance, end of year 16,000,000 13,000,000 Unappropriated Balance, beginning of year 73,919,148 52,083,034 Increase during the year 63,552,573 58,830,782 Decrease during the year ( 55,982,128) ( 36,994,668) Balance, end of year 81,489,593 73,919,148 TOTAL SHAREHOLDERS' EQUITY 432,938,713 419,190,640 See accompanying Notes to Financial Statements. (With Mr. Prasit Musikabhantu's report dated February 12, 1999) HAAD THIP PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 In Baht 1998 1997 UNAPPROPRIATED RETAINED EARNINGS: Beginning of year 73,919,148 52,083,034 Less appropriation of net income for previous year: (Note 8) Legal reserve - ( 849,668) General reserve ( 3,000,000) - Dividend ( 24,902,250) ( 16,601,500) Net income for the year 63,552,573 58,830,782 Appropriation for legal reserve during the year (Note 8) ( 3,177,628) ( 2,942,000) Interim dividend (Note 8) ( 24,902,250) ( 16,601,500) Total Unappropriated Retained Earnings 81,489,593 73,919,148 APPROPRIATED RETAINED EARNINGS: Legal reserve 14,706,620 11,528,992 General reserve 16,000,000 13,000,000 Total Appropriated Retained Earnings 30,706,620 24,528,992 TOTAL RETAINED EARNINGS 112,196,213 98,448,140 See accompanying Notes to Financial Statements. (With Mr. Prasit Musikabhantu's report dated February 12, 1999) HAAD THIP PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 In Baht 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income 63,552,573 58,830,782 Reconciliation of net income to net cash provided by (used in) operating activities: Bad debt expense and provision for doubtful accounts - 542,033 Increase (decrease) in provision for obsolete inventories 436,667 ( 101,375) Increase in provision for decline in value of investments 262,647 1,940 Depreciation and amortization 81,634,086 79,171,564 Loss on sales of investment in shares 347,863 - Gain on sales of fixed assets ( 643,624) ( 300,200) Promotion materials amortized and book value of containers written off 21,641,740 24,426,315 Reversal of unclaimed customers deposits ( 9,593,698) ( 3,992,766) Increase in accounts and notes receivable-trade ( 5,336,687) (10,747,551) Decrease (increase)in inventories 8,414,261 (10,189,220) Decrease (increase) in claim and other receivables 1,194,457 (13,755,253) Decrease (increase) in prepaid expenses ( 205,685) 3,563,576 Decrease (increase) in other current assets ( 103,326) 91,542 Increase in promotion materials ( 10,745,150) ( 9,223,800) Increase in deferred charges and others ( 4,117,669) ( 2,064,222) Increase (decrease) in accounts payable-trade ( 10,342,657) 31,862,788 Increase (decrease) in accounts payable-others 2,163,364 ( 1,580,160) Increase (decrease) in accrued bonus ( 1,074,356) 1,329,003 Increase in dividend payable - 16,601,500 Increase in income tax payable 18,325,333 9,712,495 Increase in other current liabilities 1,607,740 835,754 Increase in customers' deposits and others 7,674,052 13,654,604 Net Cash Provided by Operating Activities 165,091,9311 188,669,349 - 2 - In Baht 1998 1997 CASH FLOWS FROM INVESTING ACTIVITIES: Increase in property, plant and equipment ( 69,868,940) ( 75,469,340) Proceeds from sales of fixed assets 1,215,000 288,206 Net Cash Used in Investing Activities ( 68,653,940) ( 75,181,134) CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in advances and loans to directors and employees 90,591 306,118 Decrease in loans from banks ( 30,000,000) ( 54,000,000) Decrease in long - term loan - ( 10,752,663) Payment of dividends ( 66,406,000) ( 33,203,000) Net Cash Used in Financing Activities ( 96,315,409) ( 97,649,545) NET INCREASE IN CASH AND CASH EQUIVALENTS 122,582 15,838,670 Cash and Cash Equivalents, Beginning of Year 6,070,537 ( 9,768,133) CASH AND CASH EQUIVALENTS, END OF YEAR 6,193,119 6,070,537 ADDITIONAL INFORMATION FOR CASH FLOWS: 1.Cash and Cash Equivalents consisted of: Cash on hand and in banks 16,650,072 13,334,820 Bank overdraft ( 10,456,953) ( 7,264,283) Net 6,193,119 6,070,537 2.Cash Paid During the Year for: Interest expense 8,549,674 17,406,532 Income tax 9,736,153 16,844,722 See accompanying Notes to Financial Statements. (With Mr. Prasit Musikabhantu's report dated February 12, 1999) (More)