<PAGE>
Exhibit 99.4
GSS ARRAY TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT MAY 24, 2000
"UNAUDITED"
--------------------------------------------------------------------------------
BAHT'000
ASSETS
CURRENT ASSETS
Cash in hand and at banks (Note 4) 74,106
Short-term investments (Note 6) 27,540
Trade accounts and notes receivable (Note 7) 819,619
Less Allowance for doubtful accounts (298,226)
----
----------
Net trade accounts and notes receivable 521,393
----------
Inventories 1,024,357
Other current assets
Other receivable 6,402
Receivable from Revenue Department 21,047
Deposit in an Escrow Trust account 19,582
Others 45,507
----------
Total Current Assets 1,739,934
----------
PROPERTY, PLANT AND EQUIPMENT (Note 8) 631,976
OTHER ASSETS
Property for disposal 308,655
Loan to director (Note 15.1) 24,302
Others 4,762
----------
TOTAL ASSETS 2,709,629
==========
See notes to the interim financial statements
1
<PAGE>
GSS ARRAY TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT MAY 24, 2000
"UNAUDITED"
--------------------------------------------------------------------------------
BAHT'000
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdrafts and loans from financial
institutions (Note 9) 744,794
Trade accounts and notes payable 868,396
Current portion of long-term liabilities
(Note 10) 41,130
Long-term liabilities converted to current
liabilities according to contracts (Note 10) 412,906
Other current liabilities
Accrued salary and bonus 45,570
Others 122,510
----------
Total Current Liabilities 2,235,306
----------
LONG-TERM LIABILITIES (Note 10) 123,390
----------
TOTAL LIABILITIES 2,358,696
----------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 11)
Authorized share capital
22,050,000 ordinary shares of
Baht 10.00 each 220,500
==========
Issued and paid-up share capital
21,124,400 ordinary shares of
Baht 10.00 each, fully paid 211,244
PREMIUM ON SHARE CAPITAL 968,732
RETAINED EARNINGS
Appropriated
Statutory reserve 21,000
Unappropriated (deficit) (923,309)
ACCUMULATED FOREIGN CURRENCY
TRANSLATION ADJUSTMENTS (Note 2.3) 73,266
----------
TOTAL SHAREHOLDERS' EQUITY 350,933
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,709,629
==========
See notes to the interim financial statements
2
<PAGE>
GSS ARRAY TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX- MONTH PERIOD ENDED MAY 24,
"UNAUDITED"
--------------------------------------------------------------------------------
BAHT'000
2000 1999
REVENUES
Sales 2,985,496 4,484,969
Other income
Rental income 17,355 8,172
Others 49,579 7,287
--------- ---------
Total Revenues 3,052,430 4,500,428
--------- ---------
EXPENSES
Cost of sales 2,716,826 4,331,236
Selling and administrative expenses 180,430 263,781
Financial advisory fee (Note 19) 9,651 -
Interest expenses 66,160 102,304
--------- ---------
Total Expenses 2,973,067 4,697,321
--------- ---------
INCOME (LOSS) BEFORE INCOME TAX 79,363 (196,893)
INCOME TAX 1,059 -
--------- ---------
NET INCOME (LOSS) 78,304 (196,893)
========= =========
BASIC EARNINGS (LOSS) PER SHARE (Note 13) BAHT 3.71 (9.34)
DILUTED EARNINGS PER SHARE (Note 13) BAHT 3.63 -
See notes to the interim financial statements
3
<PAGE>
GSS ARRAY TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX-MONTH PERIOD ENDED MAY 24,
"UNAUDITED"
----------------------------------------------------------------------------
BAHT'000
2000 1999
SHARE CAPITAL
Ordinary shares
Beginning balance 210,759 210,759
Additions 485 -
---------- ----------
Ending balance 211,244 210,759
---------- ----------
PREMIUMS ON SHARE CAPITAL
Premiums on ordinary shares
Beginning balance 967,277 967,277
Additions 1,455 -
---------- ----------
Ending balance 968,732 967,277
---------- ----------
RETAINED EARNINGS (DEFICIT)
Appropriated
Statutory reserve
Beginning balance 21,000 21,000
---------- ----------
Ending balance 21,000 21,000
---------- ----------
Unappropriated
Beginning balance (1,001,613) (684,026)
Additions (Deductions) 78,304 (196,893)
---------- ----------
Ending balance (923,309) (880,919)
---------- ----------
ACCUMULATED FOREIGN CURRENCY
TRANSLATION ADJUSTMENT
Beginning balance 85,664 117,662
Deductions (12,398) (7,658)
---------- ----------
Ending balance 73,266 110,004
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 350,933 428,121
========== ==========
See notes to the interim financial statements
4
<PAGE>
GSS ARRAY TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE SIX-MONTH PERIOD ENDED MAY 24,
"UNAUDITED"
--------------------------------------------------------------------------------
BAHT'000
2000 1999
UNAPPROPRIATED RETAINED EARNINGS (DEFICIT)
Beginning Balance as at November 25, (1,001,613) (684,026)
Net income (loss) 78,304 (196,893)
----------- ----------
TOTAL UNAPPROPRIATED RETAINED
EARNINGS (DEFICIT) (923,309) (880,919)
----------- ----------
APPROPRIATED RETAINED EARNINGS
Statutory reserve 21,000 21,000
----------- ----------
TOTAL APPROPRIATED RETAINED EARNINGS 21,000 21,000
----------- ----------
TOTAL RETAINED EARNINGS (DEFICIT) (902,309) (859,919)
=========== ==========
See notes to the interim financial statements
5
<PAGE>
GSS ARRAY TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED MAY 24,
"UNAUDITED"
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BAHT'000
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) 78,304 (196,893)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Allowance for doubtful accounts (recovered) (3,329) 15,171
Inventory reserve 51,293 32,380
Depreciation and amortization 82,708 114,603
Net unrealized loss on exchange 17,503 42,505
Loss on disposal of assets 17 68
---------- ----------
Income from operations before
changes in operating assets and liabilities 226,496 7,834
(Increase) Decrease in operating assets
Trade accounts and notes receivable 133,169 (180,135)
Inventories (109,635) 163,521
Other current assets 9,608 (10,205)
Other assets 21 (1,215)
Increase (Decrease) in operating liabilities
Trade accounts and notes payable (211,118) 287,710
Other current liabilities (71,336) 45,094
Other liabilities (2,946) -
---------- ----------
Net cash provided by (used in) operating activities (25,741) 312,604
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in deposit with maturity of more than 3 months (372) (4,555)
Purchase of property, plant and equipment (13,271) (39,588)
---------- ----------
Net cash provided by (used in) investing activities (13,643) (44,143)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in bank overdrafts and
loans from financial institutions (208,379) 1,503
Decrease in long-term loans (27,027) (139,210)
Increase in share capital 1,940 -
---------- ----------
Net cash provided by (used in) financing activities (233,466) (137,707)
---------- ----------
ACCUMULATED FOREIGN CURRENCY TRANSLATION ADJUSTMENT (12,398) (7,658)
---------- ----------
Net increase (decrease) in cash and cash equivalents (285,248) 123,096
Cash and cash equivalents at the beginning of period 359,354 101,965
---------- ----------
Cash and cash equivalents at the end of period 74,106 225,061
========== ==========
</TABLE>
See notes to the interim financial statements
6
<PAGE>
GSS ARRAY TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODS ENDED MAY 24, 2000 AND 1999
"Unaudited"
1. ASIA-PACIFIC ECONOMIC TURMOIL AND GOING CONCERN CONSIDERATION
Many Asia-Pacific countries, including Thailand, experienced severe economic
difficulties relating to currency devaluations, volatile stock markets, and
slowdown in growth. The operations of the Company have been affected to a
certain extent, and will continue to be affected for the foreseeable future,
by the financial and economic uncertainty in the Asia Pacific region.
As further described in Note 10, as at May 24, 2000, the Company has bank
loans of Baht 192 million which is past due. In addition the Company was
unable to comply with one of the financial covenant requirements related to
its loan agreement with the banks as a result of incurred deficit.
Management plans with respect to these matters are to continue negotiations
with banks for a restructuring of the debt and negotiate for the sale of the
Company.
The interim financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and liquidation of liabilities
in the ordinary course of business. They do not include any adjustments that
might result from the outcome of this uncertainty.
2. BASIS FOR PREPARATION OF THE INTERIM FINANCIAL STATEMENTS
2.1 The accompanying consolidated interim financial statements for the
quarters ended May 24, 2000 and 1999 are prepared by the management of
the Company and are unaudited. However, in the opinion of the Company,
all adjustments necessary for a fair presentation, have been reflected
therein.
The results of operations for the six-month period ended May 24, 2000
are not necessarily indicative of the operating results anticipated for
the full year.
The interim financial statements have been prepared in accordance with
the regulation of the Stock Exchange of Thailand dated November 22,
1999, regarding the basis, conditions and procedures for the preparation
and submission of financial statements and reports for the financial
position and results of operations of the listed companies (No.1) B.E.
2542, and in accordance with generally accepted accounting principles in
Thailand ("GAAP").
7
<PAGE>
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes,
has been omitted. In addition, the consolidated interim financial
statements should be read in conjunction with the financial statements
and notes thereto included in the audited financial statements for the
year ended November 24, 1999.
The Company maintains its accounting records in Thai Baht and prepares
its statutory financial statements in conformity with accounting
standards in Thailand. The accompanying financial statements are
prepared in accordance with accounting principles and practices
generally accepted in Thailand and are designed for those who have
reasonable knowledge thereof. Such principles may not conform with
generally accepted accounting principles in other countries.
2.2 The consolidated interim financial statements include the accounts of
GSS Array Technology Public Company Limited and its subsidiaries,
prepared after eliminating significant intercompany transactions and
balances.
2.3 Balance sheet and statement of income of foreign subsidiaries are
translated into Baht at the exchange rates announced by The Bank of
Thailand at the balance sheet date and the average exchange rates,
respectively. The translation differences have been shown as the
accumulated foreign currency translation adjustments in the
shareholders' equity.
3. SIGNIFICANT ACCOUNTING POLICIES
The Company uses the same accounting policies and methods of computation in
these interim financial statements as in the audited financial statements
for the year ended November 24, 1999. A number of new accounting standards
were issued and became effective from January 1, 2000.
8
<PAGE>
4. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
4.1 Cash and cash equivalents consist of the followings :
BAHT'000
May, 24
2000 1999
Cash in hand and at banks 74,106 225,061
Short-term investment 27,540 23,163
-------------- -------------
101,646 248,224
Less Deposits with maturity of
----
more than 3 months (27,540) (23,163)
-------------- -------------
74,106 225,061
============== =============
4.2 Cash paid for interest and income tax are as follows:
BAHT'000
May 24,
2000 1999
Interest 71,116 99,673
Income tax 1,812 504
5. RISK MANAGEMENT POLICIES FOR FOREIGN CURRENCY
The currency of the primary economic environment in which the Company
operates is U.S. dollars, and management believes that there is no need to
hedge currency risk against the dollars.
6. SHORT-TERM INVESTMENTS
As at May 24, 2000, fixed deposits at bank of Baht 26 million have been
pledged as security against bank overdrafts and loans from financial
institutions (see Note 9).
9
<PAGE>
7. TRADE ACCOUNTS AND NOTES RECEIVABLE
Trade accounts and notes receivable are classified by aging as follows:
BAHT'000
May 24, 2000
Not yet due (Credit term 30 days) 391,797
Overdue 1-3 months 114,143
Overdue 4-6 months 9,803
Overdue over 6 months 303,876
-------------
819,619
Less Allowance for doubtful account (298,226)
---- -------------
Net trade accounts and notes receivable 521,393
=============
8. PROPERTY, PLANT AND EQUIPMENT
The Company has mortgaged machinery and equipment of which book value
amounting to Baht 71 million as at May 24, 2000, with banks as security
against short-term and long-term loans (see Notes 9 and 10).
9. BANK OVERDRAFTS AND LOANS FROM FINANCIAL INSTITUTIONS
Bank overdrafts of the Company are secured by a pledge of its fixed
deposits (see Note 6) and carry interest at the minimum over draft rate.
Loans from financial institutions of the Company are secured by the pledge
of its fixed deposits and the mortgage of land, buildings, machinery and
equipment having book value of Baht 71 million as at May 24, 2000 (see Note
8).
10.LONG-TERM LIABILITIES
<TABLE>
<CAPTION>
Long-term liabilities consist of the following:
Interest rate May 24,
2000
p.a. (%) Baht'000
<S> <C> <C>
Loan in Thai Baht repayable
monthly from 2000 to 2003 MLR 164,520
Loan in foreign currency repayable quarterly
from 1998 to 2000 LIBOR+3 412,906
-----------
577,426
Less Current portion (41,130)
---- -----------
536,296
Less Long-term liabilities converted to current liabilities
----
according to contracts (412,906)
-----------
123,390
===========
</TABLE>
10
<PAGE>
Loan of Baht 413 million as at May 24, 2000 denominated in foreign currency
of US$ 10.5 million.
These loans are secured by mortgage of land, buildings, machinery and
equipment having book value of Baht 71 million (see Note 8). The Company is
required to meet the restrictive financial covenant requirements related to
the foreign currency loan agreement.
Included in foreign currency loan repayable quarterly Baht 192 million (US$
4.9 million) was past due as at May 24, 2000. In addition, as at May 24,
2000, the Company's debt to equity ratio exceeded that contained in the
loan agreement. The lenders may enforce their rights under the loan
agreement to call the debt at any time. Accordingly, the Company presented
the long-term liabilities as current liabilities under the heading of
"long-term liabilities converted to current liabilities according to
contracts" in order to comply with generally accepted accounting
principles.
To date, no notice has been issued by the lenders to the Company.
11.SHARE CAPITAL
The increases in issued and paid-up capital are as follows:
Increase in
Date Issued and Premiums on Date of
paid-up capital share capital Registration
(Baht) (Baht) **
February 23, 1998 150,000 450,000 February 23, 1998
April 9, 1998 559,000 1,677,000 April 9, 1998
September 22, 1998 50,000 150,000 September 22, 1998
February 16, 2000 330,000 990,000 February 24, 2000
March 20, 2000 155,000 465,000 March 31,2000
The increases were due to the exercises of warrants (see Note 12).
** The Company registered the above increases in issued and paid-up capital
with the Department of Commercial Registration.
12.STOCK OPTION PLAN
The shareholders passed a resolution on November 21, 1996 to issue
1,050,000 ordinary share warrants to be allocated to certain directors and
employees of the Company. The issued warrants cannot be transferred to any
other persons and will not be listed in the Stock Exchange of Thailand. The
holders of warrants will have the right to buy ordinary share of the
Company according to the ratio and exercise price stated in the warrants.
These warrants shall become exercisable over the period of 5 years in
accordance with vested schedule as specified in the stock option agreement.
11
<PAGE>
The exercises of warrants are as follows:
Date of the exercise Number of warrants Exercise
Exercised price
(Unit) (Baht)
January 30, 1998 15,000 40.00
March 26, 1998 55,900 40.00
September 22, 1998 5,000 40.00
February 16, 2000 33,000 40.00
March 20, 2000 15,500 40.00
---------
124,400
=========
As at May 24, 2000, 85,100 warrants were cancelled and returned to the
company due to the resignation of the optionee.
840,500 warrants have been valid and have not been exercised according to
vested schedule as at May 24, 2000.
13.EARNINGS PER SHARE
Earnings per share is computed as follows:
<TABLE>
<CAPTION>
For the six-month period ended
May 24, 2000
Weighted Average
Income Number Earnings
of shares per share
(Baht:'000) (Share) (Baht)
<S> <C> <C> <C>
Net income 78,304
Basic earnings per share
Net income attributable to ordinary shareholders 78,304 21,099,417 3.71
The effect of the dilutive potential ordinary shares
Stock option to purchase ordinary shares - 480,861
Diluted earnings per share
Net income attributable to ordinary shareholders
on conversion of potential ordinary shares 78,304 21,537,293 3.63
</TABLE>
Average market prices of the Company's ordinary share for the six-month
period ended May 24, 2000 are stated at Baht 80.93 per share.
Stock options to purchase 889,000 ordinary share at Baht 40.00 per share
were outstanding as of May 24, 1999 but were not included in the computation
of diluted EPS for the quarter then ended because the options' exercise
price was greater than the average market price of the ordinary shares.
12
<PAGE>
14.CONTINGENT LIABILITIES
The Company has contingent liabilities to bank for letters of guarantee as
at May 24, 2000 amounting to Baht 23.7 million.
15.TRANSACTIONS WITH RELATED PARTIES
15.1 Loans to Director
Baht'000
May 24,2000
Beginning Balance 23,985
Loss on exchange rate 317
Addition -
Repayment -
----------
Ending balance 24,302
==========
Loans to director carry no interest and are not secured. Such loans
will be due in full on December 31, 2000.
15.2 Directors' remuneration
No declaration for director's remuneration for the six-month period
ended May 24, 2000 and 1999.
15.3 Stock option plan
See Note 12.
16.FINANCIAL INFORMATION BY SEGMENT
The Company and its subsidiaries' operations involve a single industry
segment in electronic component assembly and carried on business in
Thailand and foreign geographic areas. Geographical segment information of
the Company and its subsidiaries as of and for the six-month period ended
May 24, 2000 and 1999 are as follows:
13
<PAGE>
For the six-month period ended
May 24, 2000
<TABLE>
<CAPTION>
Million of Baht
Domestic Foreign Total Elimination Grand total
<S> <C> <C> <C> <C> <C>
Net sales
- Outside customers 2,974 11 2,985 - 2,985
- Other segment 7 - 7 (7) -
---------- --------- --------- --------- ----------
2,981 11 2,992 (7) 2,985
---------- --------- --------- --------- ----------
Other income
- Outside customers 59 7 66 - 66
- Other segment - 105 105 (105) -
---------- --------- --------- --------- ----------
59 112 171 (105) 66
---------- --------- --------- --------- ----------
Operating income 335
Expense (190)
Interest expense (66)
--------
Income before income 79
Income tax (1)
--------
Net income 78
========
Property, plant and equipment 648 5 653 (21) 632
Others 3,044 92 3,136 (1,058) 2,078
---------- --------- --------- --------- --------
Total assets 3,692 97 3,789 (1,079) 2,710
========== ========= ========= ========= ========
</TABLE>
For the six-month period ended
May 24, 1999
<TABLE>
<CAPTION>
Million of Baht
Domestic Foreign Total Elimination Grand total
<S> <C> <C> <C> <C> <C>
Net sales
- Outside customers 3,499 986 4,485 - 4,485
- Other segment 50 - 50 (50) -
--------- --------- --------- --------- --------
3,549 986 4,535 (50) 4,485
--------- --------- --------- --------- --------
Other income
- Outside customers 13 - 13 - 13
- Other segment - 75 75 (73) 2
--------- --------- --------- --------- --------
13 75 88 (73) 15
--------- --------- --------- --------- --------
Operating income 236
Expense (331)
Interest expense (102)
--------
Net loss (197)
========
Property, plant and equipment 990 190 1,180 - 1,180
Others 3,123 1,134 4,257 (1,497) 2,760
--------- --------- --------- --------- --------
Total assets 4,113 1,324 5,437 (1,497) 3,940
========= ========= ========= ========= ========
</TABLE>
14
<PAGE>
17.DISCONTINUED OPERATIONS
In October and November 1999, the Company's wholly owned subsidiaries at San
Jose and Wales ceased their main activities. The income statements of those
subsidiaries relating to the discontinued operations are as follows:
For the six-month period ended May 24,
<TABLE>
<CAPTION>
Baht'000
Continuing Discontinued Total
operations operations
2000 1999 2000 1999 2000 1999
<S> <C> <C> <C> <C> <C> <C>
San Jose
Revenue - - 9,555 429,355 9,555 429,355
Expenses 27,153 27,153 9,819 562,486 36,972 589,639
------ ------ ----- ------- ------ -------
Net loss (27,153) (27,153) (264) (133,131) (27,417) (160,284)
====== ====== ===== ======= ====== =======
Wales
Revenue - - 352 4,604 352 4,604
Expenses - - 22 10,418 22 10,418
------ ------ ----- ------- ------ -------
Net income (loss) - - 330 (5,814) 330 (5,814)
====== ====== ===== ======= ====== =======
</TABLE>
18.SUBSEQUENT EVENT OCCURRING AFTER THE BALANCE SHEET DATE
18.1 On May 30, 2000, 15,000 warrants were exercised at the price stated
in the warrants of Baht 40.00 each. Paid-up capital increased by
Baht 150,000 and premium on share capital increased by Baht
450,000. The Company registered such increased issued and paid-up
capital with the Department of Commercial Registration on June 5,
2000.
18.2 On August 1, 2000, the Company has entered into the purchase and
sell agreement to sell certain parts of property at Rangsit plant
of book value Baht 53 million at the purchase price of Baht 37.5
million. The deposit of Baht 3.75 million was paid on the signing
date of the agreement and the remaining will be paid as follows:
1) Baht 17.95 million will be paid on the Registration of Transfer
of Titles and Ownership Date
2) Baht 10.80 million will be paid on a monthly basis at the rate
of Baht 300,000 per month within 36 months from the
Registration of Transfer of Titles and Ownership Date
3) The purchase price for the equipment of Baht 5 million will be
paid on the Registration of Transfer of Titles and Ownership
Date
The purchaser agrees to submit the Company on the Registration of
Transfer of Titles and Ownership Date a letter of guarantee issued
by bank approved by the Company in the total guarantee amount of
Baht 10.8 million to be a security for the monthly payment referred
to above.
15
<PAGE>
The Registration of Transfer of Titles and Ownership will not be
made without the release of mortgage of the property.
It is acknowledged and accepted by the purchaser that certain parts
of the property are currently subject to a tenancy agreement dated
June 2, 1999 entered into by and between the Company as the lessor
and Pronec (Thailand) Co., Ltd. as the lessee. The lessee shall
still have the right to continue hiring from the purchaser as
specified in such a tenancy agreement after the Registration of
Transfer of Titles and Ownership Date.
19. OTHER MATTER
On March 15, 2000, the Company has entered into a Pre-Tender Agreement with
ACT Manufacturing Inc. (ACT) which is currently listed on the NASDAQ stock
market in the USA, for ACT to tender for all outstanding shares and warrants
of the Company at Baht 163 per share.
In order for meeting the primary the Pre-Tender Agreement condition for ACT
to make an unconditional tender offer, the Company's shareholders then voted
in favor of the resolution on April 28, 2000 to de-list the Company's shares
from the Stock Exchange of Thailand (SET). The SET subsequently approved in
principle the de-listing by the letter dated May 15, 2000.
Upon the approval in principle by the SET to the de-listing, ACT will make
the tender offer to the Company's shareholders and submit the relevant
documents to the SEC. The tender period is 45 trading days, which will
result in a completion date around the beginning of August 2000. After the
completion date, the Company's shares will be de-listed from the SET.
In addition, the outstanding warrants issued to certain directors and
employees of the Company were issued subject to the terms and conditions
that they may not be transferred to any other persons unless the Allotment
Committee of the warrant deems otherwise. Due to the fact that ACT will have
to make a tender offer for all types of securities issued by the Company,
including the warrants, the Allotment Committee then passed a resolution
allowing such warrants to be transferable in case of the above mentioned
tender offered by ACT.
In this regard, the Company incurred expenses related to financial advisory
amounting to Baht 9.7 million.
16
<PAGE>
20. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY
THE COMPANY AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED
STATES
The Company's consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the Kingdom of
Thailand (Thai GAAP), which differs in certain respects from U.S. GAAP.
The differences are reflected in the approximations provided in Note 21 and
arise due to the items discussed in the following paragraphs:
Functional Currency
Under Thai GAAP, the functional currency is to be the Thai Baht. Under US
GAAP, FASB No. 52 requires that an entity's functional currency is to be the
currency of the primary economic environment in which that entity operates.
Company's management has determined that under US GAAP, the company's
functional currency should be the US dollar.
Long-lived Assets to be disposed of
While not addressed under Thai GAAP, the Company depreciated long-lived
assets to be disposed of.
Under U.S. GAAP, long-lived assets to be disposed of are reported at the
lower of carrying amount or fair value less cost to sell. Depreciation on
such assets is not recognized.
Reporting Comprehensive Income
Under U.S. GAAP, SFAS No. 130, Reporting Comprehensive Income, requires an
enterprise to display an amount representing total comprehensive income for
each period of operations presented in the financial statements.
Comprehensive income comprises net income and other comprehensive income
such as unrealized gains and losses on securities, foreign currency
translation adjustment and minimum pension liability adjustments. In
addition, an enterprise is required to classify items of other comprehensive
income by their nature in a financial statement and display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement of financial
position. Reclassification of financial statements for earlier periods
provided for comparative purposes is also required.
Thai GAAP does not address the reporting or disclosure of comprehensive
income.
17
<PAGE>
21. RECONCILIATION BETWEEN NET INCOME AND SHAREHOLDERS' EQUITY UNDER THAI GAAP
AND U.S. GAAP
<TABLE>
<CAPTION>
For the six-
month period
ended
May 24, 2000
<S> <C>
In Thousands of Thai Baht
Except Per Share Data
Net income (loss) according to the financial statements
prepared under Thai GAAP Bht 78,304
U.S. GAAP adjustments
Increase (decrease) due to :
Depreciation on assets to be disposed of Bht 7,498
Functional Currency Change Bht (10,882)
-------------
Approximate net income (loss) in accordance with U.S. GAAP Bht 74,920
=============
Basic Earnings Per Share Bht 3.55
Diluted Earnings Per Share Bht 3.48
Weighted average number of shares (Thousands)
Basic Share 21,099
Diluted Share 21,537
At May 24,
2000
In Thousands of Thai Baht
Stockholders' equity according to the financial statements
prepared under Thai GAAP Bht 350,933
U.S. GAAP adjustments
Increase (decrease) due to :
Depreciation on assets to be disposed of Bht 47,896
Functional currency change Bht 483,240
Approximate stockholders' equity _____________
in accordance with U.S. GAAP Bht 882,069
=============
With regard to the balance sheets and statements of income, the following
other significant captions determined under U.S. GAAP would have been:
In Thousands of Thai Baht At May 24,
2000
Balance sheet
Property, plant and equipment Bht 924,649
Total other assets Bht 576,184
Total assets Bht 3,240,767
Other current liabilities Bht 2,235,307
Total liabilities Bht 2,358,697
</TABLE>
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<PAGE>
The following table presents comprehensive income for the six-month period ended
May 24, 2000 and 1999.
For the six-
month period
ended
May 24, 2000
In Thousands of Thai Baht
Net income (loss) under US GAAP Bht 78,304
Foreign currency translation adjustments Bht 6,105
-----------
Comprehensive income Bht 84,409
===========
22. ADDITIONAL FINANCIAL STATEMENT DISCLOSURES REQUIRED UNDER U.S. GAAP
Income Taxes
Substantially all of the Company's income is earned in Thailand.
Accordingly, the Company is not subject to income tax in other countries to
any significant extent.
In providing for applicable deferred income taxes under U.S. GAAP, the tax
effect of significant temporary differences has been plus by the tax effect
of available tax loss carry forwards, as follows:
In Thousands of Thai Baht At May 24,
2000
Deferred income tax assets resulting principally from:
Inventory reserve 105,790
Bad debts reserve 82,869
Loss on impairment of investments in subsidiaries 322,119
Add : Tax effect of available tax loss carryforwards 34,450
Less : Valuation allowance (545,228)
-------
Net deferred income tax assets -
=======
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Statements of cash flows
The statements of cash flows in accordance with U.S. GAAP is as follows:
For the six-
months period
ended
May 24, 2000
In Thousands of Thai Baht
Cash flows from:
Operating activities Bht (37,672)
Investing activities Bht (14,034)
Financing activities Bht (240,158)
Effect of exchange rate changes on cash Bht 6,616
------------
Net decrease in cash and cash equivalents Bht (285,248)
============
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