<PAGE>
SECOND QUARTER REPORT
FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1997
[PEAK LOGO APPEARS HERE]
PEAK INTERNATIONAL LIMITED
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TO OUR STOCKHOLDERS:
For the second quarter of fiscal 1998, the Company reported that net income
increased 95% to $5,002,000 from $2,559,000 for the second quarter of fiscal
1997. Earnings per share increased 54% to $0.37 from $0.24 reported for the
corresponding quarter in the previous fiscal year. The weighted average number
of shares outstanding increased 30% as a result of the Company's successful
initial public offering in June 1997. Net sales for the second fiscal quarter
of 1998 grew 46% to $17,963,000 from $12,308,000 a year ago.
For the six-month period ended September 30, 1997, net income increased 65% to
$9,109,000 from $5,527,000 reported for the corresponding period last year.
Earnings per share for the period grew 40% to $0.74 from $0.53 reported for the
corresponding period last year. The weighted average number of shares
outstanding increased 17% between these periods. Net sales for the six-month
period grew 33% to $34,033,000 from $25,614,000 reported for the period last
year.
We were quite gratified to see that the summer quarter remained stronger than
forecasted. This strength was spread fairly evenly throughout all of our
global markets and primarily was responsible for Peak's outstanding performance.
The telecommunications and consumer electronics segments remained strong while
the computer industry provided the most significant portion of Peak's growth
during the quarter. It appears that PC unit volume growth will show continued
strength in the coming quarters. Since we benefit from the semiconductor unit
volumes shipped, for the Company this will likely translate into naturally
strong growth for our mainstay products apart from growth in new product sales
and any increases in our market share.
"Quick delivery" remains a core focus of our comprehensive business strategy,
as there is an increasing trend among computer manufacturers to adopt a "build-
to-order" manufacturing model. This operating model allows the computer
manufacturers to run with near-zero inventory levels while placing the inventory
burden on upstream suppliers. As a result, Peak's customers, the semiconductor
and electronics suppliers, place an even greater value on vendors who can
respond with immediate delivery to their up-side demands. Peak is uniquely
positioned to capitalize on these dynamic market opportunities with our growing
global distribution network and expanding manufacturing capacity.
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In light of the stronger than expected demand for our products, we are
accelerating the design and construction of our additional manufacturing
facilities located in the PRC. Peak is vigilant in ensuring that sufficient
manufacturing capacity is maintained to support continued strong demand. During
this quarter, we announced the completion of an additional 30,000 square foot
expansion of our primary production facility, bringing total production space to
305,000 square feet. We also completed expansion of our precision tooling shop
by 30%, bringing its total size to 80,000 square feet.
A key to Peak's ability to deliver quickly has been our investment in vertical
integration. From our global design team standing by to assist customers with
new product designs, to our integrated tooling shop which gives us the shortest
new product lead-times, to our leading manufacturing capacity, we are focused on
getting to market first. This strategy continues to win us new customers and
draws our existing customers ever closer.
As a result of what we see in the market place and Peak's unique position, we
remain very upbeat about the coming quarters and the prospects for our continued
growth.
/s/ Richard Brook
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RICHARD BROOK
PRESIDENT AND
CHIEF OPERATING OFFICER
OCTOBER 29, 1997
RESULTS AT A GLANCE...
SECOND QUARTER ENDED SEPTEMBER 30,
1997 1996
- -------------------------------------------------- ------------
Net sales $17,963,000 $12,308,000
Net income 5,002,000 2,559,000
Per share $ 0.37 $ 0.24
SIX MONTHS ENDED SEPTEMBER 30,
1997 1996
- -------------------------------------------------- ------------
Net sales $34,033,000 $25,614,000
Net income 9,109,000 5,527,000
Per share $ 0.74 $ 0.53
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CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30
(Unaudited)
1997 1996
- ---------------------------------------------------------------
(in thousands, except per share data)
Net Sales $17,963 $12,308
Cost of Goods Sold 9,689 6,772
------- -------
Gross Profit 8,274 5,536
General & Administrative, and Research
& Development 1,627 1,412
Selling & Marketing 1,347 1,075
------- -------
Operating Income 5,300 3,049
Other Income - net 19 -
Interest Income - net 127 (277)
------- -------
Profit Before Tax 5,446 2,772
Taxation 444 213
------- -------
NET INCOME $ 5,002 $ 2,559
EARNINGS PER SHARE $ 0.37 $ 0.24
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Weighted Average Number of Shares 13,639 10,462
Six Months Ended September 30
(Unaudited)
1997 1996
- ---------------------------------------------------------------
(in thousands, except per share data)
Net Sales $34,033 $25,614
Cost of Goods Sold 18,976 14,715
------- -------
Gross Profit 15,057 10,899
General & Administrative, and Research
& Development 2,811 2,502
Selling & Marketing 2,638 1,832
------- -------
Operating Income 9,608 6,565
Other Income - net 415 -
Interest Income - net (137) (464)
------- -------
Profit Before Tax 9,886 6,101
Taxation 777 574
------- -------
NET INCOME $ 9,109 $ 5,527
======= =======
EARNINGS PER SHARE $ 0.74 $ 0.53
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Weighted Average Number of Shares 12,239 10,462
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CONSOLIDATED BALANCE SHEET
September March 31,
30, 1997 1997
(unaudited)
- -------------------------------------------------------------------------
(in thousands)
ASSETS
Current assets:
Cash & cash equivalents $ 17,484 $ 1,814
Marketable securities - 1,129
Accounts receivable-net 9,571 10,251
Inventory-net 24,635 22,053
Other current assets 3,437 2,804
-------- --------
Total Current Assets 55,127 38,051
-------- --------
Property, plant and equipment-net 19,840 15,744
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TOTALS $ 74,967 $ 53,795
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank borrowings 355 21,170
Accounts payable 4,685 3,502
Taxation 3,229 2,477
Total Current Liabilities 8,269 27,149
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Deferred income taxes 374 374
-------- --------
Total Liabilities 8,643 27,523
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Stockholders' Equity:
Share capital 135 105
Additional paid-in capital 34,034 2,564
Retained earnings 32,632 23,523
Cumulative translation adjustment (477) 21
Unrealized loss on marketable
securities - 59
-------- --------
Total stockholders' equity 66,324 26,272
-------- --------
TOTALS $ 74,967 $ 53,795
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[PEAK LOGO APPEARS HERE]
Peak International Limited, 2111 Kramer Lane, Austin, TX 78758 (512) 339-4684
