ADDITIONAL INFORMATION FOR CASH FLOWS: 1.Cash and Cash Equivalents consisted of: Cash on hand and in banks 23,792 18,434 23,792 18,434 Bank overdrafts ( 539) ( 24,625) ( 539) ( 24,625) Net 23,253 ( 6,191) 23,253 ( 6,191) 2.Cash Paid During the Period for: Interest expense 1,640 2,791 4,324 6,176 Income tax 1,181 9,721 28,041 9,721 See accompanying Notes to Interim Financial Statements. HAAD THIP PUBLIC COMPANY LIMITED NOTES TO INTERIM FINANCIAL STATEMENTS JUNE 30, 1999 AND 1998 "UNAUDITED","REVIEWED" 1. SIGNIFICANT ACCOUNTING POLICIES Allowance for Doubtful Accounts The Company provides allowance for doubtful accounts equal to the estimated losses that may be incurred in the collection of receivables. The estimated losses are based on a review of the current status of the existing receivables. Inventories Inventories are valued at the lower of cost (first-in, first-out method) or net realizable value. Investments Investments in listed securities in 1998 are valued at the lower of aggregate cost or market. Investments in other securities are valued at cost, net of allowance for decline in value of investments. Depreciation and Amortization The Company depreciates its property, plant and equipment acquired prior to 1990 and containers by the declining balance method over the periods of five (5) to twenty (20) years and depreciates assets acquired since 1990 by the straight- line method over the estimated useful lives of the assets ranging from five (5) to twenty (20) years. The difference of depreciation between the straight-line method and declining balance method is not material. Promotion materials and deferred charges are amortized by the straight-line method over periods ranging from three (3) to five (5) years. - 2 - Earnings per Share Earnings per share is determined by dividing the net income by the weighted average number of shares outstanding during the periods. 2. ACCOUNTS AND NOTES RECEIVABLE - Trade Long - outstanding balances of the accounts and notes receivable as at June 30, 1999 were as follows: Amount (In Million Baht) Over 3 months to 6 months 5.6 Over 6 months to 12 months 1.2 Over 12 months 2.9 Total 9.7 As at June 30, 1999, the Company provided allowance for doubtful accounts equal to the estimated losses that may be incurred in the collection of receivables (which are based on a review of the current status of the existing receivables) amounting to approximately Baht 1.1 million. 3. INVENTORIES In Thousand Baht 1999 1998 Finished goods 28,580 66,673 Less allowance for obsolescence ( 256) - Finished goods - net 28,324 66,673 Work in process 106 - Raw materials and packing materials 6,255 9,714 Spare parts and factory supplies 7,788 11,027 Promotion supplies 5,793 6,175 Net 48,266 93,589 - 3 - 4. INVESTMENT IN SHARES In Thousand Baht 1999 1998 Listed securities - 40 Less allowance for decline in value - ( 37) Net - 3 Other securities 4,680 4,640 Less allowance for decline in value ( 1,440) ( 1,141) Net 3,240 3,499 Investment - Net 3,240 3,502 5. PROPERTY, PLANT AND EQUIPMENT - At Cost In Thousand Baht 1999 1998 Land 207,892 204,028 Land improvements 2,093 2,046 Buildings 173,676 173,986 Leasehold improvements 503 503 Machinery and equipment 202,459 200,889 Furniture and office equipment 126,496 116,763 Vehicles 249,111 230,846 Containers - net 77,504 101,555 Construction in progress 24,625 17,931 Total 1,064,359 1,048,547 Less accumulated depreciation ( 445,666) ( 391,161) Property, Plant and Equipment - Net 618,693 657,386 Depreciation charges included in costs and expenses for the three-month and six-month periods amounted to approximately Baht 18.8 million and Baht 37.4 million in 1999 and Baht 20.5 million and Baht 40.2 million in 1998, respectively. A portion of the Company's land, buildings, machinery and equipment were mortgaged/pledged as collateral for overdraft line, letters of guarantee and long- term loan as discussed in Notes 6, 7 and 10. - 4 - 6. BANK OVERDRAFT AND LOANS FROM FINANCIAL INSTITUTIONS In Thousand Baht 1999 1998 Bank overdraft 539 24,625 Short-term loans from banks 75,000 40,000 Total 75,539 64,625 As at June 30,1999 and 1998, the Company had an overdraft line with a local bank amounted to Baht 30 million which bears interest at rates ranging from 10.75% to 11.25% per annum in 1999 and from 16.25% to 18.25% per annum in 1998. This is collateralized by the mortgage/pledge of a portion of the Company's land,buildings, machinery and equipment as discussed in Note 5. The Company had short - term loans from a local bank and a local branch of foreign bank totalling Baht 75 million in 1999 and from two local branches of foreign banks totalling Baht 40 million in 1998, which bear interest at rates ranging from 5.375% to 5.625% per annum in 1999 and from 18.25% to 20.25% per annum in 1998. 7. LONG-TERM LOAN In Thousand Baht 1999 1998 Long-term loan 7,997 7,997 Less portion due within one year 1,599 - Long-term loan-Net 6,398 7,997 In 1997, the Company entered into a long - term loan agreement with a local bank amounting to Baht 7,997,337 which bears interest at rates ranging from 4% to 6% per annum. This loan shall be repayable monthly commencing from July 1999, and is collateralized by a portion of the Company's land as discussed in Note 5. 8. APPROPRIATION OF RETAINED EARNINGS At the Board of Directors meeting held on March 26, 1998, the Board of Directors approved to pay dividends out of earnings during July 1,1997 to December 31, 1997 totalling approximately Baht 24.9 million (Baht 1.50 per share for 16,601,500 shares) and approved the appropriation of general reserve amounting to Baht 3,000,000. Payment of dividends (including the interim dividends at Baht 1 per share for 16,601,500 shares approved by the Board of Directors during 1997) and the appropriation of general reserve were approved by the shareholders at the ordinary meeting held on April 30, 1998. - 5 - At the Board of Directors meeting held on September 2, 1998, the Board of Directors approved to pay interim dividends out of earnings during January 1, 1998 to June 30, 1998 totalling approximately Baht 24.9 million. As at December 31, 1998, the management proposed the appropriation of legal reserve at 5% of 1998 net income amounting to Baht 3,177,628. At the Board of Directors meeting held on March 25, 1999, the Board of Directors approved to pay dividends out of earnings during July 1,1998 to December 31,1998 totalling approximately Baht 16.6 million (Baht 1 per share for 16,601,500 shares) and approved the appropriation of general reserve amounting to Baht 3,000,000. The payment of dividends, the appropriation of general reserve and the appropriation of legal reserve referred to above were approved by the shareholders at the ordinary meeting held on April 30, 1999. Under the provisions of the Limited Public Company Act B.E.2535,the Company is required to appropriate at least 5% of its annual net income after deduction of the deficit brought forward (if any) as reserve fund until the reserve reaches 10% of authorized share capital. The reserve fund is not available for dividend distributions. 9. AGREEMENTS As at June 30, 1999, the Company had: a. Long-term land lease agreement for a period of 30 years which can be extended for another period of 30 years. The Company is committed to pay the rental at Baht 60,000 per annum. b. Long-term lease agreements with a lessor covering vehicles and a long - term lease agreement with another lessor covering computers for a period of 36 months ending on various dates up to August 2001. The Company has to pay the rental totalling approximately Baht 2.1 million per annum. c. Lease agreements covering areas for posting advertising billboards, for which the Company is committed to pay the rental of approximately Baht 1 million per annum. - 6 - 10. CONTINGENT LIABILITIES As at June 30, 1999, the Company : a. Was contingently liable for letters of guarantee issued by a local bank in favour of certain Government agencies and state enterprises totalling approximately Baht 35.7 million.These letters of guarantee are collateralized by the mortgage/pledge of a portion of the Company's land,buildings,machinery and equipment as discussed in Note 5. b. Was being audited by the Revenue Department for 1996 books of accounts since the Company asked for a refund of the corporate income tax of such year. The ultimate outcome of the audit can not presently be determined. However, the management believes that the effects are not material to the Company. Accordingly, no provision for possible liability has been set up in the accounts. 11. EFFECTS OF ECONOMIC CRISIS The operations of the Company have been affected, and may continue to be affected for the foreseeable future,by the adverse economic conditions in Thailand and Asia Pacific, including the volatile foreign exchange rates, restriction of credit, high interest rates, slowdown in economic growth and the general deterioration of the economies of countries in the Asia Pacific region.Furthermore, it is not possible to determine the future effect a continuation of the economic crisis may have on the Company's earnings, including the effect on transactions with the Company's customers and suppliers. 12. SEGMENT FINANCIAL INFORMATION The Company does not present the segment financial information in the interim financial statements since the Company engages in only the manufacturing of soft drink. 13. COMPUTER REMEDY PLAN FOR YEAR 2000 COMPLIANCE (UNAUDITED / UNREVIEWED) As at June 30, 1999, the Company has completed the Year 2000 remediation. But the Company still faces risks that other companies with whom the Company does business may be unsuccessful in their computer remedy projects within the time limit. However, the Company expects that the impact,if any,will not be significant to the Company's operations in the future.