NANCIAL STATEMENTS QUARTER 2/2000

117,086,496 142,567,889 114,966,919 140,110,055 Restructured debt (Note 5) 50,468,913 53,388,913 50,468,913 53,388,913 167,555,409 195,956,802 165,435,832 193,498,968 Less: Allowance for doubtful accounts (145,930,000) (153,670,000) (144,000,000) (151,800,000) 21,625,409 42,286,802 21,435,832 41,698,968 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month period ended 30 June 2000 and 1999 4 Trade and Installment Accounts Receivable, net (Con't) Trade accounts receivable - other Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht Baht Baht Baht 3-6 months 18,428,392 12,579,036 18,428,392 12,579,036 6-12 months 31,710,028 38,315,855 31,710,028 38,315,855 Over 12 months 64,447,466 78,733,177 64,447,466 78,733,177 114,585,886 129,628,068 114,585,886 129,628,068 Less: Allowance for doubtful accounts (44,000,000) (58,900,000) (44,000,000) (58,900,000) 70,585,886 70,728,068 70,585,886 70,728,068 Employees receivable Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Employees receivable 309,139,849 303,169,122 309,139,849 303,169,122 Less: Allowance for doubtful accounts (247,500,000) (242,500,000) (247,500,000) (242,500,000) 61,639,849 60,669,122 61,639,849 60,669,122 Employees receivable are the amount of damage caused by employees' faulty in their responsibilities. The Company has 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 six-month period ended 30 June 2000 and 1999 5 Troubled Debt Restructurings (TDR) The Company has an outstanding receivable which has been restructured as follows: 30 June 2000 Consolidated Company Outstanding Outstanding balance balance Number of before TDR Number of before TDR loans Baht loans Baht Debt Restructurings 1 50,468,913 1 50,468,913 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 Details of customer are compared with the total customers, both in the consolidated and company financial statements, are as follows: 30 June 2000 Consolidated Company Outstanding Outstanding balance balance Number of before TDR Number of before TDR loans Baht loans Baht Restructured debt 1 50,468,913 1 50,468,913 Total customers 386,070 3,568,730,905 385,693 3,561,146,400 386,071 3,619,199,818 385,694 3,611,615,313 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month period ended 30 June 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: 30 June 2000 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 50,468,913 33,983,368 33,983,368 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 six-month period ended 30 June 2000, the Company decreased provision for losses on the TDR amounting to Baht 2.4 million in the consolidated and company financial statements 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 six-month period ended 30 June 2000 and 1999 6 Property, Plant and Equipment For the six-month period ended 30 June 2000 Consolidated Company Baht Baht Opening net book amount 708,972,667 556,945,389 Additions 13,187,415 13,152,215 Depreciation (22,125,521) (20,655,470) Closing net book amount 700,034,561 549,442,134 7 Long-Term Borrowings Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Current 210,606,060 313,017,020 210,606,060 313,017,020 Non-current 289,393,940 550,000,000 289,393,940 550,000,000 Total 500,000,000 863,017,020 500,000,000 863,017,020 The movements in the borrowings can be analysed as follows: For the six-month period ended 30 June 2000 Consolidated Company Baht Baht Opening amount 863,017,020 863,017,020 Long-term borrowings made 200,000,000 200,000,000 Repayment of long-term borrowings (563,017,020) (563,017,020) Closing amount 500,000,000 500,000,000 Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Loans denominated in Thai Baht 500,000,000 480,000,000 500,000,000 480,000,000 Loans denominated in foreign currency - 383,017,020 - 383,017,020 Total 500,000,000 863,017,020 500,000,000 863,017,020 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month period ended 30 June 2000 and 1999 7 Long-Term Borrowings (Con't) On 23 May 2000, syndicated loans from financial institutions in Thailand for which Thai Farmer Bank Public Company Limited acted as the lead manager and Bangkok Bank Public Company Limited acted as the facility agent for the Company amounts to Baht 200 million and bears interest at MLR per annum. The loan and interest will be due for redemption every month commencing September 2000 until May 2003. Loans denominated in Thai Baht as at 30 June 2000 are from financial institutions in Thailand amounting to Baht 500 million (31 December 1999: Baht 480 million). The loans bear interest at rates ranging from 8.25 % to 8.75 % per annum (31 December 1999: 8 % to 11 % per annum). The loans will be due within 1 to 3 years. Long-term loans denominated in foreign currency include the following: - As at 31 December 1999, syndicated loans from overseas financial institutions for which Schroder International Merchant Bankers Limited acted as the facility agent for the Company amounts to US$ 10 million or Baht 254 million. Loan interest is at LIBOR per annum. The Company repaid the loan in June 2000. - 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% per annum 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 six-month period ended 30 June 2000 and 1999 8 Unsecured Debentures Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Current 282,609,000 - 282,609,000 - Non-current 549,810,000 500,000,000 549,810,000 500,000,000 Total 832,419,000 500,000,000 832,419,000 500,000,000 The movements in the unsecured debentures can be analysed as follows: For the six-month period ended 30 June 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 (567,581,000) (567,581,000) Closing amount 832,419,000 832,419,000 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 were 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 six-month period ended 30 June 2000. Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month period ended 30 June 2000 and 1999 9 Cash Flows from Operating Activities Reconciliation of net profit to cash flows from operating activities: For the six-month period ended 30 June Consolidated Company 2000 1999 2000 1999 Baht Baht Baht Baht Profit from ordinary activities 72,383,062 44,605,826 72,383,062 44,605,826 Adjusted by: (Gain) on exchange rate (671,249) (9,710,273) (671,249) (9,710,273) Depreciation 22,125,521 22,724,397 20,655,470 21,252,796 Amortisation of prepaid rent 9,389,663 10,907,953 9,389,663 10,907,953 (Decrease) increase in allowance for doubtful accounts (17,640,000) 21,887,800 (17,700,000) 20,499,000 (Gain) on disposal of fixed assets (1,267,000) (377,833) (1,267,000) (377,833) Increase (decrease) in allowance for inventory obsolescence 6,096,768 (6,941,315) 4,850,000 (6,250,000) (Decrease) in dividends payable - (24,317,729) - (24,317,729) Share of loss from subsidiaries - - 3,741,258 7,230,697 Decrease in inventories 72,781,347 80,350,775 67,753,485 72,463,658 Decrease in debtors and other current assets 23,040,338 121,340,918 16,587,430 117,108,753 (Decrease) in creditors and other current liabilities (160,304,860) (16,519,847) (150,014,445) (10,753,619) (Decrease) increase in current tax liabilities (882,301) 516,921 - - Cash generated from operations 25,051,289 244,467,593 25,707,674 242,659,229 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month period ended 30 June 2000 and 1999 10 Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, at banks and loans to financial institutions for periods not exceeding three months as follows: Consolidated Company 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Baht Baht Baht Baht Cash on hand and at banks 53,184,330 185,261,281 52,093,083 183,042,048 Short-term investments 99,627 50,000,000 99,627 50,000,000 53,283,957 235,261,281 52,192,710 233,042,048 11 Related Party Transactions The following transactions were carried out with related parties: I) Sales of goods and other incomes For the six-month period ended 30 June Consolidated Company 2000 1999 2000 1999 Baht Baht Baht Baht Sales of goods Subsidiary - S.T.L. Electronics Limited - - 8,961,574 4,440,844 Other incomes Interest income: Subsidiaries - Singer Industries (Thailand) Limited - - 3,315,890 3,995,753 - S.T.L. Electronics Limited - - 1,536,137 1,968,644 Management fee income: Subsidiary - Singer (Broker) Limited - - 334,068 404,697 - - 5,186,095 6,369,094 Sales to subsidiaries are based on the transfer price which is determined at cost plus gross margin. Management fee income is calculated at 5.5 % of total brokerage income of Singer (Broker) Limited. Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month period ended 30 June 2000 and 1999 11 Related Party Transactions (Con't) II) Purchases of goods and other expenses For the six-month period ended 30 June Consolidated Company 2000 1999 2000 1999 Baht Baht Baht Baht Purchases of goods Subsidiary - Singer Industries (Thailand) Limited - - 92,591,490 80,593,640 Related parties - Singer Brazil Limited 3,061,150 2,039,330 3,061,150 2,039,330 - Singer Nikko Company Limited 5,917,505 8,671,222 1,576,332 718,990 - Singer (Shanghai) Sewing Machine Company Limited 8,768,833 8,157,036 530,005 225,665 - P.T. Singer Industries (Indonesia) Limited 10,437,091 3,767,292 - - - Singer Industries (Taiwan) Limited 2,147,088 2,166,663 2,147,088 1,133,516 - Singer Export Limited 752,095 4,546,496 752,095 1,478,261 - Singer India Limited 3,346,352 15,070 4,480 5,098 - Others 769,522 621,478 769,522 621,478 35,199,636 29,984,587 101,432,162 86,815,978 For the six-month period ended 30 June Consolidated Company 2000 1999 2000 1999 Baht Baht Baht Baht Other expenses Interest expense: Subsidiary - Singer (Broker) Limited - - 1,595,333 1,216,796 Trademark license fee: Related party - The Singer Company B.V. 2,003,982 2,043,083 2,003,982 2,043,083 Offshore service fee: Related party - The Singer Company B.V. 20,039,823 - 20,039,823 - Royalty fee: Related party - The Singer Company B.V. 1,801,980 1,444,290 - - 23,845,785 3,487,373 23,639,138 3,259,879 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month period ended 30 June 2000 and 1999 11 Related Party Transactions (Con't) II) Purchases of goods and other expenses (Con't) 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. Interest expense on outstanding balance each month due to Singer (Broker) Limited bear interest at the rate of 9.5 % per annum (1999 : 9.5 % per annum). 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. III) Outstanding balances arising from sales/purchases of goods and other incomes/expenses Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht Baht Baht Baht Amounts due from Subsidiaries - S.T.L. Electronics Limited - - - 1,067,978 - Sansui (Thailand) Limited - - 87,845 77,025 - Singer Trading (Thailand) Limited - - 12,850 11,000 Related parties 375,048 203,061 - - 375,048 203,061 100,695 1,156,003 Trade accounts payable Subsidiaries - Singer Industries (Thailand) Limited - - 6,995,280 2,365,540 - Singer (Broker) Limited - - 32,480,042 38,218,759 Related parties 6,423,309 4,335,509 5,246,619 3,922,455 6,423,309 4,335,509 44,721,941 44,506,754 Amounts due to Subsidiary - S.T.L. Electronics Limited - - 142,876 - Related party - The Singer Company B.V. 26,822,205 4,098,958 25,933,717 3,246,608 26,822,205 4,098,958 26,076,593 3,246,608 Singer Thailand Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month period ended 30 June 2000 and 1999 11 Related Party Transactions (Con't) Iv) Loans to subsidiaries Company For the six- month period For the year ended ended (more)