<PAGE>
SECOND QUARTER REPORT
FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1998
[PEAK LOGO APPEARS HERE]
PEAK INTERNATIONAL LIMITED
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TO OUR STOCKHOLDERS:
For the second fiscal quarter of fiscal 1999, the Company reported that net
sales fell 15% to $15.3 million from $18.0 million reported for the
corresponding quarter in the previous year. Net income decreased to $3.2
million from $5.0 million reported for the second quarter of fiscal 1998. Fully
diluted earnings per share decreased to 0.23 from $0.37 reported for the
corresponding quarter a year ago.
For the six-month period ended September 30, 1998, net sales fell 9% to $31.1
million from $34.0 million reported for the corresponding period last year. Net
income decreased to $6.2 million from $9.1 million for the same six-month period
a year ago. Fully diluted earnings per share for the period fell to $0.46 from
$0.74 between these periods.
This quarter, as we saw last quarter, included a rather disappointing final
month where our expectations for strong month-end sales did not materialize.
Despite this month-end weakness, the Company did experience improved operating
efficiencies as a result of cost reduction programs. Management took a pay cut
that averaged between 10% and 25% of their salaries depending on position.
Manufacturing overhead was cut sequentially by approximately 10% and SG&A
expenses were cut by approximately 8%. As a result, net income as a percentage
of sales improved by 1.1% from 19.5% to 20.6%. Also included in this quarter's
expenses were one-time charges associated with a workforce reduction at our
small manufacturing facility in Malaysia.
The generally slow business climate presents Peak with the opportunity to
continue to strengthen our position in the market. Comparing the second quarter
of fiscal 1999 with the same quarter of the previous year, the Company has
expanded its customer base by 17%.
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The number of customers served per month is up from an average of 186 to 218
with only one customer exceeding 10% of sales in the second quarter of fiscal
1999. This customer's total sales are comprised of orders from nine separate
manufacturing locations throughout the world. Peak's ever-broadening customer
base translates into a much-improved position for the company as the industry
recovers.
With Peak's advantageous cost structure and our unique business strategy, we
believe the Company can weather severe storms and emerge from them with improved
prospects for the future.
/s/ Richard Brook
- -----------------------------
RICHARD BROOK
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
OCTOBER 28, 1998
RESULTS AT A GLANCE...
SECOND QUARTER ENDED SEPTEMBER 30,
1998 1997
- --------------------------------------------------------------------------
Net sales $15,305,000 $17,963,000
Net income 3,154,000 5,002,000
Per share Diluted $ 0.23 $ 0.37
SIX MONTHS ENDED SEPTEMBER 30,
1998 1997
- --------------------------------------------------------------------------
Net sales $31,074,000 $34,033,000
Net income 6,234,000 9,109,000
Per share Diluted $ 0.46 $ 0.74
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CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30
(Unaudited)
1998 1997
- ------------------------------------------------------------------------
(in thousands, except per share data)
Net Sales $ 15,305 $ 17,963
Cost of Goods Sold 9,328 9,689
-------- --------
Gross Profit 5,977 8,274
General & Administrative, and
Research & Development 1,707 1,627
Selling & Marketing 1,375 1,347
-------- --------
Operating Income 2,895 5,300
Other Income - net 352 19
Interest Income - net 218 127
-------- --------
Profit Before Tax 3,465 5,446
Taxation 311 444
-------- --------
NET INCOME $ 3,154 $ 5,002
======== ========
EARNINGS PER SHARE
- - Basic $ 0.23 $ 0.37
- - Diluted $ 0.23 $ 0.37
Weighted Avg #Shares-Diluted 13,509 13,639
Six Months Ended September 30
(Unaudited)
1998 1997
- ------------------------------------------------------------------------
(in thousands, except per share data)
Net Sales $ 31,074 $ 34,033
Cost of Goods Sold 18,774 18,976
-------- --------
Gross Profit 12,300 15,057
General & Administrative, and
Research & Development 3,462 2,811
Selling & Marketing 2,902 2,638
-------- --------
Operating Income 5,936 9,608
Other Income net 446 415
Interest Income net 467 (137)
-------- --------
Profit Before Tax 6,849 9,886
Taxation 615 777
-------- --------
NET INCOME $ 6,234 $ 9,109
======== ========
EARNINGS PER SHARE
- - Basic $ 0.46 $ 0.75
- - Diluted $ 0.46 $ 0.74
Weighted Avg #Shares-Diluted 13,596 12,239
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CONSOLIDATED BALANCE SHEETS
September 30, March 31, 1998
1998
(unaudited)
- --------------------------------------------------------------------------
(in thousands)
ASSETS
Current assets:
Cash & cash equivalents $ 14,157 $ 19,314
Accounts receivable-net 10,196 14,416
Inventory-net 28,865 27,941
Other current assets 1,901 1,521
-------- --------
Total Current Assets 55,119 63,192
-------- --------
Property, plant and
equipment-net 40,885 26,348
-------- --------
TOTALS $ 96,004 $ 89,540
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Bank borrowings 453 89
Accounts payable 6,062 7,251
Taxation 4,326 3,800
Total Current Liabilities 10,841 11,140
-------- --------
Deferred income taxes 831 818
-------- --------
Total Liabilities 11,672 11,958
-------- --------
Stockholders' Equity:
Share capital 135 135
Additional paid-in capital 34,620 34,034
Retained earnings 50,351 44,117
Cumulative translation
adjustment (774) (704)
Total stockholders' equity 84,332 77,582
-------- --------
TOTALS $ 96,004 $ 89,540
======== ========
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[PEAK LOGO APPEARS HERE]
Peak International Limited, 2111 Kramer Lane, Austin, TX 78758 (512) 339-4684
