15 May 2000

NSOLIDATED FINANCIAL STATEMENTS 1/2000

31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Employees receivable 303,744,839 303,169,122 303,744,839 303,169,122 Less: Allowance for doubtful accounts (243,000,000) (242,500,000) (243,000,000) (242,500,000) 60,744,839 60,669,122 60,744,839 60,669,122 Employees receivable are the amount of damage caused by employees' faulty in their responsibilities. The Company have already made provision up to 80% of them. However the Company's management believes that the Company can collect the other by 20% from them. Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 5 Troubled Debt Restructurings (TDR) The Company has an outstanding receivable which has been restructured as follows: 31 March 2000 Consolidated Company Outstanding Outstanding balance balance Number of before TDR Number of before TDR loans Baht loans Baht Debt Restructurings 1 51,548,913 1 51,548,913 31 December 1999 Consolidated Company Outstanding Outstanding balance balance Number of before TDR Number of before TDR loans Baht loans Baht Debt Restructurings 1 53,388,913 1 53,388,913 Detail of customer is compared with the total customers, both in the consolidated and company financial statements, are as follows: 31 March 2000 Consolidated Company Outstanding Outstanding balance balance Number of before TDR Number of before TDR loans Baht loans Baht Restructured debt 1 51,548,913 1 51,548,913 Total customers 391,729 3,576,000,727 391,248 3,563,128,607 391,730 3,627,549,640 391,249 3,614,677,520 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 5. Troubled Debt Restructuring ( TDR ) ( Con't ) 31 December 1999 Consolidated Company Outstanding Outstanding balance balance Number of before TDR Number of before TDR loans Baht loans Baht Restructured debt 1 53,388,913 1 53,388,913 Total customers 391,252 3,602,144,507 390,752 3,587,853,958 391,253 3,655,533,420 390,753 3,641,242,871 Details of the restructured debt are classified into the restructuring method is as follows: 31 March 1999 and Company Consolidated Outstanding balance Fair value Book value Number before TDR of assets after TDR of loans Baht Baht Baht Restructuring method Modification of term of receivable 1 51,548,913 34,589,869 34,589,869 31 December 1999 Consolidated and Company Outstanding balance Fair value Book value Number before TDR of assets after TDR of loans Baht Baht Baht Restructuring method Modification of term of receivable 1 53,388,913 37,330,608 37,330,608 For the three-month period ended 31 March 2000, the Company decreased provision for loss on the TDR amounting to Baht 2.7 million due to the Company collected some portion of the debt. For the year ended 31 December 1999, the Company recognised losses from the TDR amounting to Baht 19 million in the consolidated and company financial statements. Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 6 Property, Plant and Equipment For the three-month period ended 31 March 2000 Consolidated Company Baht Baht Opening net book amount 708,972,667 556,945,389 Additions 4,112,199 4,077,000 Depreciation (12,166,468) (11,424,612) Closing net book amount 700,918,398 549,597,777 7 Long-Term Borrowings Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Current 150,000,000 313,017,020 150,000,000 313,017,020 Non-current 404,200,000 550,000,000 404,200,000 550,000,000 Total 554,200,000 863,017,020 554,200,000 863,017,020 The movements in the borrowings can be analysed as follows: For the three-month period ended 31 March 2000 Consolidated Company Baht Baht Opening amount 863,017,020 863,017,020 Repayment of long-term borrowings (308,817,020) (308,817,020) Closing amount 554,200,000 554,200,000 Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Loans denominated in Thai Baht 300,000,000 480,000,000 300,000,000 480,000,000 Loans denominated in foreign currency 254,200,000 383,017,020 254,200,000 383,017,020 Total 554,200,000 863,017,020 554,200,000 863,017,020 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 7 Long-Term Borrowings (Con't) Loans denominated in Thai Baht as at 31 March 2000 are from financial institutions in Thailand amounting to Baht 300 million (31 December 1999: Baht 480 million). The loans bear interest at the rates ranging from 8.25 % to 10.25 % per annum (31 December 1999: 8 % to 11 % per annum). The loans will be due within 1 to 2 years. Long-term loans denominated in foreign currency include the followings: - Syndicated loan from overseas financial institutions for which Schroder International Merchant Bankers Limited acted as the facility agent for the Company amounts to US$ 10 million (31 December 1999: US$ 10 million) or Baht 254 million (31 December 1999 : Baht 254 million) of which is due for repayment in June 2002. Loan interest is at LIBOR per annum. - As at 31 December 1999 loan from a branch of a foreign financial institution amounted to US$ 3.3 million. Loan interest is at SIBOR per annum. The loan will be repaid in US$ by three consecutive semi-annual equal installments within one year. The repayments will be due within 2000. Hedging In order to manage the risks arising from fluctuations in currency exchange rates and interest rates, the Company makes use of the following derivative financial instruments: Interest rate and currency swap In December 1996, the Company has entered into interest rate and currency swap contracts to swap both interest rate and principal of a three-year offshore loan totalling US$ 40 million, bearing interest rate at LIBOR, in exchange with the principal of Baht 1,016 million, bearing interest rate at 10.35% for the principal amount of Baht 254 million and 10.57% per annum for the principal amount of Baht 762 million. Forward foreign exchange contracts As at 31 December 1999 the Company has forward contracts to hedge long-term loans of US$ 3.33 million at an average forward rate of US$ 1 per Baht 38.65 . Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 8 Unsecured Debentures Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Current 720,048,000 - 720,048,000 - Non-current 622,818,000 500,000,000 622,818,000 500,000,000 Total 1,342,866,000 500,000,000 1,342,866,000 500,000,000 The movements in the borrowings can be analysed as follows: For the three-month period ended 31 March 2000 Consolidated Company Baht Baht Opening amount 500,000,000 500,000,000 Unsecured debentures issued 900,000,000 900,000,000 Repayment of unsecured debentures (57,134,000) (57,134,000) Closing amount 1,342,866,000 1,342,866,000 On 8 May 1998, the Company issued three-year unsecured debentures totalling Baht 500,000,000 comprising 500,000 shares of Baht 1,000 each bearing interest rate of 12.35% per annum. The debentures were approved by the Securities and Exchange Commission in May 1998 and are due for redemption on 8 May 2000. The unsecured debentures are not classified to current liabilities in the consolidated and company balance sheets as at 31 December 1999 because the debentures will be refinanced by the new unsecured debentures. On 10 February 2000, the Company issued the three-year unsecured debentures totalling Baht 900,000,000 comprising 900,000 shares of Baht 1,000 each bearing interest rate of 7.75% per annum. The debentures will be due for redemption every three-month period until the last redemption on 10 February 2003. Proceeds from the issue of these debentures will be refinanced to a part of current portions of the long-term borrowings and debentures which will be due in 2000. Underwriting fee of Baht 10.35 million is charged to the statements of income for the three-month period ended 31 March 2000 . Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 9 Cash Flows from Operating Activities Reconciliation of net profit to cash flows from operating activities: For the three-month period ended 31 March Consolidated Company 2000 1999 2000 1999 Baht Baht Baht Baht Profit from ordinary activities 37,160,230 22,111,202 37,160,230 22,111,202 Adjusted by: (Gain) on exchange rate (1,012,459) (1,107,633) (1,012,459) (1,107,633) Depreciation 12,166,468 11,598,767 11,424,612 10,863,296 Amortisation of prepaid rent 4,646,968 5,584,500 4,646,968 5,584,500 (Decrease) increase in allowance for doubtful accounts (14,062,000) 12,320,800 (14,200,000) 11,499,000 Increase (decrease) in allowance for inventory obsolescence 5,896,649 (5,534,975) 4,700,000 (5,600,000) (Decrease) in dividends payable - (16,883,166) - (16,883,166) Share of loss from subsidiaries - - 1,909,594 3,672,225 (Increase) in inventories (22,896,292) (61,647,972) (29,565,983) (64,668,095) Decrease in debtors and other current assets 23,117,780 149,883,988 18,718,541 144,596,797 (Decrease) increase in creditors and other current liabilities (130,837,641) 66,835,766 (124,441,753) 69,604,337 (Decrease) increase in current tax liabilities (403,635) 493,475 - - Cash generated from operations (86,223,932) 183,654,752 (90,660,250) 179,672,463 10 Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, at banks and in transit and loans to financial institutions for periods not exceeding three months as follows: Consolidated Company 31 March 31 March 31 March 31 March 2000 1999 2000 1999 Baht Baht Baht Baht Cash on hand, at banks and in transit 103,096,086 145,751,039 99,887,701 144,121,597 Short-term investments 440,042,971 - 440,042,971 - 543,139,057 145,751,039 539,930,672 144,121,597 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 11 Related Party Transactions The following transactions were carried out with related parties: i)Sales of goods and other incomes For the three-month period ended 31 March Consolidated Company 2000 1999 2000 1999 Baht Baht Baht Baht Sales of goods Subsidiary - S.T.L. Electronics Limited - - 4,963,199 1,229,626 Other incomes Interest income: Subsidiaries - Singer Industries (Thailand) Limited - - 1,657,945 2,103,836 - S.T.L. Electronics Limited - - 754,404 1,073,151 - - 2,412,349 3,176,987 Sales to subsidiaries are based on the transfer price which is determined at cost plus gross margin. ii) Purchases of goods and other expenses For the three-month period ended Consolidated Company 2000 1999 2000 1999 Baht Baht Baht Baht Purchases of goods Subsidiary - Singer Industries (Thailand) Limited - - 57,717,339 38,655,000 Related parties - Singer Brazil Limited 1,478,823 1,048,745 1,478,823 1,048,745 - Singer Nikko Company Limited 6,081,886 3,025,142 1,576,333 591,195 - Singer (Shanghai) Sewing Machine Company Limited 10,574,043 3,475,669 - 56,864 - P.T. Singer Industries Indonesia Limited 5,046,682 1,643,040 - - - Singer Industries (Taiwan) Ltd. 1,123,195 1,266,215 1,123,195 514,862 - Singer Export Limited - 1,973,059 - - - Singer India Limited 2,723,416 9,972 - - - Others 175,959 344,554 175,959 344,554 27,204,004 12,786,396 62,071,649 41,211,220 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 11 Related Party Transactions (Con't) ii) Purchases of goods and other expenses (Con't) For the three-month period ended Consolidated Company 2000 1999 2000 1999 Baht Baht Baht Baht Other expenses Trademark license fee: Related party - The Singer Company B.V. 1,001,433 938,361 1,001,433 938,361 Offshore service fee: Related party - The Singer Company B.V. 10,014,333 - 10,014,333 - Royalty fee Related party - The Singer Company B.V. 913,492 657,630 - - 11,929,258 1,595,991 11,015,766 938,361 Purchase from subsidiaries is based on the transfer price which is determined at cost plus gross margin. Purchase from related companies is based on the fair price which would be charged to an independent third party. Trademark license fee is payable to the Singer Company B.V. abroad, which is calculated at 0.1% of total net sales in accordance with signed agreement. Offshore service fee is payable to the Singer Company B.V. abroad, which is calculated at 1% of total net sales in accordance with signed agreement. Royalty fee is payable to the Singer Company B.V. abroad, which is calculated at 5% of total net sales of sewing machines in accordance with signed agreement. Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 11 Related Party Transactions (Con't) iii) Outstanding balances arising from sales/purchases of goods and other incomes/expenses Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Amounts due from Subsidiaries - S.T.L. Electronics Limited - - 1,056,667 1,067,978 - Others - - 77,025 88,025 Related parties - The Singer Company B.V. - - - - - Others 219,775 203,061 - - 219,775 203,061 1,133,692 1,156,003 Trade accounts payable Subsidiaries - Singer Industries (Thailand) Limited - - 13,329,591 2,365,540 - Singer (Broker) Limited - - 36,627,167 38,218,759 Related parties 7,796,799 4,335,509 4,594,494 3,922,455 7,796,799 4,335,509 54,551,252 44,506,754 Amounts due to Related party - The Singer Company B.V. 16,873,900 4,098,958 15,960,408 3,246,608 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 11 Related Party Transactions (Con't) iv) Loans to subsidiaries Company For the three month period For the year ended ended 31 March 31 December 2000 1999 Baht Baht Singer Industries (Thailand) Limited Beginning balance 71,500,000 70,000,000 Loans made during the period/year - 1,500,000 Loans repaid during the period/year (1,500,000) - Ending balance 70,000,000 71,500,000 S.T.L. Electronics Limited Beginning balance 32,000,000 36,000,000 Loans made during the period/year 1,500,000 4,000,000 Loans repaid during the period/year (1,000,000) (8,000,000) Ending balance 32,500,000 32,000,000 As at 31 March 2000, the loans to subsidiaries bear interest rate at the rate of 9.5% per annum (31 December 1999: 9.5% per annum). Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month period ended 31 March 2000 and 1999 11 Related Party Transactions (Con't) v) Investments in Subsidiaries Investments in subsidiaries in the company financial statements comprise the following companies: Company 31 March 2000 (more)