THE 1ST QUARTER F/S

AUDITOR'S REPORT To the Shareholders of Singer Thailand Public Company Limited I have performed a review of the accompanying consolidated and company balance sheets as at 30 September 1998 and 1997 and the related consolidated and company statements of income, of changes in shareholders+ equity, of retained earnings and of cash flows for the three-month periods then ended of Singer Thailand Public Company Limited and its subsidiaries, and of Singer Thailand Public Company Limited in accordance with standards established by the Institute of Certified Accountants and Auditors of Thailand. A review of interim financial statements consists principally of obtaining an understanding of the system for the preparation of the financial statements, making an analytical review of pertinent financial data, and making inquiries of officials of the company who have responsibility for financial and accounting matters. This review is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objectives of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I express no opinion on the financial statement which I have reviewed. Based on my review as stated above, I am not ware of any material modification that should be made to the aforementioned interim consolidated and company financial statements for them to be in conformity with generally accepted accounting principles. I draw attention to note 1 to the interim consolidated and company financial statements. The company+s operations have been affected, and are expected to continue to be affected for the foreseeable future, by the current economic crisis. The ultimate outcome of this crisis cannot be determined at present. SUCHART LUENGSURASWAT Certified Public Accountant (Thailand) No. 2807 PRICEWATERHOUSECOOPERS AUDIT AND BUSINESS ADVISORY SERVICES LTD. Bangkok 30 October 1998 SINGER THAILAND PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT 30 SEPTEMBER 1998 AND 1997 (UNAUDITED) ASSETS Consolidated Company 1998 1997 1998 1997 Restated Notes Baht Baht Baht Baht CURRENT ASSETS Cash in hand, at banks and in transit 3 57,341,964 55,410,947 54,307,423 54,735,350 Short-term investments 5 230,000,000 1,000,000 230,000,000 - Trade and installment accounts receivable (net) 4 3,403,352,576 4,905,339,479 3,393,664,709 4,900,499,457 Inventories 989,149,198 1,679,351,454 936,364,484 1,623,261,073 Amounts due from and loans to subsidiaries 10(b) - - 108,853,594 72,601,270 Prepaid rent 18,000,000 20,000,000 18,000,000 20,000,000 Other current assets 57,541,295 73,045,857 50,214,641 64,210,547 TOTAL CURRENT ASSETS 4,755,385,033 6,734,147,737 4,791,404,851 6,735,307,697 RECEIVABLE FROM AND LOANS TO EMPLOYEES 4,951,560 6,662,948 3,936,383 5,745,333 LONG-TERM INVESTMENTS 6 1,939,914 1,970,000 131,538,766 156,891,119 PROPERTY, PLANT AND EQUIPMENT (net) 727,909,196 735,248,022 572,318,926 576,992,170 PREPAID RENT 78,719,729 89,472,969 78,719,729 89,472,969 TOTAL ASSETS 5,568,905,432 7,567,501,676 5,577,918,655 7,564,409,288 ............................................................................................................................. Director ............................................................................................................................. Director SINGER THAILAND PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT 30 SEPTEMBER 1998 AND 1997 (UNAUDITED) LIABILITIES AND SHAREHOLDERS+ EQUITY Consolidated Company 1998 1997 1998 1997 Restated Notes Baht Baht Baht Baht CURRENT LIABILITIES Bank overdrafts and short-term loans 521,810,838 1,674,068,342 513,384,568 1,659,524,079 Current portion of long-term loans 105,789,500 80,000,000 105,789,500 80,000,000 Accounts payable - other companies 230,128,592 447,353,077 218,125,133 431,811,950 - related companies 6,873,860 15,891,144 6,873,860 15,891,144 Amounts due to - subsidiaries - - 38,592,466 36,595,587 - related companies 9,882,823 86,071,732 9,501,023 85,531,273 Dividends payable 35,445,645 24,717,729 35,445,645 24,717,729 Accrued income tax 2,926,738 97,360,689 - 94,077,680 Accrued liabilities 321,091,694 384,475,463 316,371,285 379,066,372 Other current liabilities 7 44,905,904 55,824,835 44,233,367 55,566,165 TOTAL CURRENT LIABILITIES 1,278,855,594 2,865,763,011 1,288,316,847 2,862,781,979 UNSECURED DEBENTURES 500,000,000 500,000,000 500,000,000 500,000,000 LONG-TERM LOANS 1,491,524,200 1,499,885,000 1,491,524,200 1,499,885,000 EMPLOYEES SECURITY DEPOSITS 151,170,165 216,672,652 150,722,135 216,561,296 PROVIDENT FUNDS 195,681,919 189,251,549 195,681,919 189,251,549 TOTAL LIABILITIES 3,617,231,878 5,271,572,212 3,626,245,101 5,268,479,824 SINGER THAILAND PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT 30 SEPTEMBER 1998 AND 1997 (UNAUDITED) LIABILITIES AND SHAREHOLDERS+ EQUITY (CONT+D) Consolidated Company 1998 1997 1998 1997 Restated Notes Baht Baht Baht Baht SHAREHOLDERS+ EQUITY Share capital Registered, issued and fully paid-up 27,000,000 ordinary shares of Baht 10 each 270,000,000 270,000,000 270,000,000 270,000,000 Share premium 225,000,000 225,000,000 225,000,000 225,000,000 Surplus on revaluation of land 241,546,403 235,866,403 241,546,403 235,866,403 Retained earnings: Appropriated | Legal reserve 27,000,000 27,000,000 27,000,000 27,000,000 Unappropriated 1,188,127,151 1,538,063,061 1,188,127,151 1,538,063,061 TOTAL SHAREHOLDERS+ EQUITY 1,951,673,554 2,295,929,464 1,951,673,554 2,295,929,464 TOTAL LIABILITIES AND SHAREHOLDERS+ EQUITY 5,568,905,432 7,567,501,676 5,577,918,655 7,564,409,288 SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED 30 SEPTEMBER 1998 AND 1997 Consolidated Company 1998 1997 1998 1997 Restated Notes Baht Baht Baht Baht REVENUES Sales 651,991,267 1,229,277,718 642,617,169 1,223,508,610 Interest from installment sales 170,737,499 250,765,366 170,737,499 250,765,366 Gain on exchange rate 8,383,672 - 8,414,800 - Other income 8 57,097,888 742,047 56,696,193 409,136 TOTAL REVENUES 888,210,326 1,480,785,131 878,465,661 1,474,683,112 EXPENSES Cost of sales 444,056,900 794,766,329 437,604,420 790,819,080 Selling and administrative expenses 407,132,667 614,614,075 401,552,495 613,288,657 Director remuneration 100,000 100,000 100,000 100,000 Interest and other financial costs 90,202,180 112,745,056 85,803,627 110,042,056 TOTAL EXPENSES 941,491,747 1,522,225,460 925,060,542 1,514,249,793 INCOME (LOSS) FROM OPERATION BEFORE INCOME TAX (53,281,421) (41,440,329) (46,594,881) (39,566,681) Income tax 442,676 1,887,068 - - INCOME (LOSS) AFTER INCOME TAX (53,724,097) (43,327,397) (46,594,881) (39,566,681) Share of (loss) profit from subsidiaries - - (7,129,216) (8,459,446) INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (53,724,097) (43,327,397) (53,724,097) (48,026,127) Extraordinary item: Loss from the change in Exchange rate system 11 - (68,728,341) - (64,029,611) NET INCOME (LOSS) FOR THE PERIOD (53,724,097) (112,055,738) (53,724,097) (112,055,738) EARNINGS PER SHARE Income (loss) before extraordinary item (1.99) (1.60) (1.99) (1.78) Extraordinary item - (2.55) - (2.37) Net income (loss) for the period (1.99) (4.15) (1.99) (4.15) SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS+ EQUITY (UNAUDITED) FOR THE THREE MONTHS ENDED 30 SEPTEMBER 1998 AND 1997 Consolidated Company 1998 1997 1998 1997 Restated Notes Baht Baht Baht Baht Share capital | ordinary shares Beginning balance 270,000,000 270,000,000 270,000,000 270,000,000 Addition during the period - - - - Ending balance 270,000,000 270,000,000 270,000,000 270,000,000 Additional paid-in capital Share premium Beginning balance 225,000,000 225,000,000 225,000,000 225,000,000 Addition during the period - - - - Ending balance 225,000,000 225,000,000 225,000,000 225,000,000 Surplus on revaluation of land Beginning balance 235,866,403 235,866,403 235,866,403 235,866,403 Addition during the period 6,600,000 6,600,000 Deduction during the period (920,000) - (920,000) - Ending balance 241,546,403 235,866,403 241,546,403 235,866,403 Retained earnings Appropriated | legal reserve Beginning balance 27,000,000 27,000,000 27,000,000 27,000,000 Addition during the period - - - - Ending balance 27,000,000 27,000,000 27,000,000 27,000,000 Unappropriated retained earnings Beginning balance 1,241,851,248 1,650,118,799 1,241,851,248 1,650,118,799 Less: Dividends - - - - Add: Net income (loss) for the period (53,724,097) (112,055,738) (53,724,097) (112,055,738) Ending balance 1,188,127,151 1,538,063,061 1,188,127,151 1,538,063,061 TOTAL SHAREHOLDERS+ EQUITY 1,951,673,554 2,295,929,464 1,951,673,554 2,295,929,464 SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) FOR THE THREE MONTHS ENDED 30 SEPTEMBER 1998 AND 1997 Consolidated Company 1998 1997 1998 1997 Restated Notes Baht Baht Baht Baht Unappropriated retained earnings Beginning balance 1,241,851,248 1,650,118,799 1,241,851,248 1,650,118,799 Net income (loss) for the period (53,724,097) (112,055,738) (53,724,097) (112,055,738) Unappropriated retained earnings 1,188,127,151 1,538,063,061 1,188,127,151 1,538,063,061 Appropriated retained earnings Legal reserve, beginning balance 27,000,000 27,000,000 27,000,000 27,000,000 Additional reserve for the period - - - - Appropriated retained earnings 27,000,000 27,000,000 27,000,000 27,000,000 Retained earnings 1,215,127,151 1,565,063,061 1,215,127,151 1,565,063,061 SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED 30 SEPTEMBER 1998 AND 1997 Consolidated Company 1998 1997 1998 1997 Restated Baht Baht Baht Baht CASH FLOWS FROM OPERATING ACTIVITIES: Income (loss) before extraordinary item (53,724,097) (43,327,397) (53,724,097) (48,026,127) Adjusted by: Unrealised (gain) loss on exchange rate (13,493,748) - (13,493,748) - Depreciation 10,824,308 11,329,802 10,092,788 10,597,462 Amortisation of prepaid rent 6,278,489 7,083,172 6,278,489 7,083,171 Allowance for doubtful accounts 53,937,524 7,500,000 53,937,524 7,500,000 (Decrease) in allowance for inventory obsolescence (5,718,077) (3,960,758) (5,000,000) - Provision for diminution in value of other investment 170,000 - 170,000 - Gain on disposal of fixed assets (128,705) (375,045) (128,705) (375,045) Share of loss from subsidiaries - - 7,129,216 8,459,446 Decrease in inventories 123,893,458 59,922,532 119,033,116 62,644,094 Decrease in debtors and other current assets 408,691,545 342,408,975 411,413,936 290,155,866 (Decrease) in creditors and other current liabilities (117,502,609) (233,011,829) (121,966,629) (217,642,208) (Decrease) increase in bank overdrafts and short-term loans (185,835,745) 82,962,809 (185,562,546) 106,585,979 Increase (decrease) in accrued income tax 321,019 822,027 - (185,752) Cash flows from operating activities before extraordinary item 227,713,362 231,354,288 228,179,344 226,796,886 Realised gain (loss) from the change in exchange rate system - (13,608,829) - (8,910,099) Net cash inflow from operating activities 227,713,362 217,745,459 228,179,344 217,886,787 SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS (UNAUDITED) (Cont+d) FOR THE THREE MONTHS ENDED 30 SEPTEMBER 1998 AND 1997 Consolidated Company 1998 1997 1998 1997 Restated Baht Baht Baht Baht CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of fixed assets 255,455 375,045 255,455 375,045 Purchases of fixed assets (4,259,630) (8,198,637) (4,161,820) (8,133,184) (Increase) in prepaid rent (2,327,000) (4,593,040) (2,327,000) (4,593,040) Decrease (increase) in receivable from and loans to employees 922,641 98,362 605,600 (106,783) Net cash (outflow) from investing activities (5,408,534) (12,318,270) (5,627,765) (12,457,962) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term loans (20,000,000) (260,000,000) (20,000,000) (260,000,000) Proceeds from long-term loans - 80,225,000 - 80,225,000 (Decrease) in employees security deposits and provident funds (29,777,354) (12,885,965) (30,117,328) (12,889,627) Net cash (outflow) from financing activities (49,777,354) (192,660,965) (50,117,328) (192,664,627) Increase in cash and cash equivalents 172,527,474 12,766,224 172,434,251 12,764,198 Cash and cash equivalents at beginning of the period 114,814,490 43,644,723 111,873,172 41,971,152 Cash and cash equivalents at end of the period (Note 9) 287,341,964 56,410,947 284,307,423 54,735,350 ADDITIONAL CASH FLOWS INFORMATION Interest paid during the period 93,961,239 98,184,276 89,567,487 95,272,166 Income tax paid during the period 111,099 186,239 110,679 185,752 SINGER THAILAND PUBLIC COMPANY LIMITED NOTES TO INTERIM CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (UNAUDITED) 30 SEPTEMBER 1998 AND 1997 1 Economic crisis and effects on company+s operations The company operates in Thailand, which, together with a number of other countries in the Asia Pacific Region is currently experiencing an economic crisis. The crisis in Thailand has involved a slowdown in economic growth, a shortage of liquidity within the country and volatility in both the securities market and the value of the Thai Baht. The company+s operations have been affected by the economic crisis in the current period and are expected to continue to be effected for the foreseeable future. The ultimate outcome of the economic crisis cannot be determined at present. 2 Summary of significant accounting policies 2.1 Basis for preparation of financial statements The consolidated and company financial statements have been prepared in conformity with generally accepted accounting principles in Thailand and regulations of the Stock Exchange of Thailand. 2.2 Principles of consolidation The consolidated financial statements incorporate the financial statements of Singer Thailand Public Company Limited and its subsidiaries. Intercompany transactions are eliminated in the consolidation. Subsidiaries are those companies in which the company holds, directly or indirectly, more than 50% of the voting shares and dominant influence is exercised in the their management. Subsidiaries included in the consolidated financial statements are as follows:- 1998 1997 % of shareholding % of shareholding Singer Industries (Thailand) Limited 99.88 99.88 Singer (Broker) Limited 99.70 99.70 Singer Trading (Thailand) Limited 99.86 99.86 Sansui (Thailand) Limited 50.86 50.86 S. T. L. Electronics Company Limited 99.84 - 2.3 Revenue recognition Sales comprise cash sales, credit sales and installment sales. Cash sales and credit sales are recognised when products are delivered. Installment sales represent sales under hire-purchase contracts whereby the related debts are effectively secured by the products sold. Revenue from installment sales comprises sales of product and interest. The interest on installment sales are calculated on customary financing terms. Sales of product and gross profit are recognised when contracts are signed and first payments are received. Interest is recorded in unearned carrying charges and recognised as earned by using the sum- of-the-months+ digits method. Collection commissions are accrued upon collection. 2.4 Installment accounts receivable In accordance with trade practice, installment accounts receivable are classified as current asset regardless of when payments are due. This receivable is effectively secured by the products sold. The company makes an allowance for doubtful accounts to cover the estimated losses that may be incurred in the collection of the debts, and makes a provision for losses and expenses relating to future estimated sale cancellation and discounts . 2.5 Inventory Inventory is presented on the balance sheet at the lower of cost and net realisable value (NRV), cost being determined on the first-in first-out basis. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charge, less all attributable discounts, allowances or rebates. The company estimates net realisable value from the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale. 2.6 Investments Investment in an enterprise where the company holds more than 50 percent of its share capital or has control over its operations is considered an investment in a subsidiary company and is recorded using the equity method of accounting. Other investments are stated at cost less provision for permanent diminution in value. (More)