NOTE 5 - TRANSACTIONS WITH RELATED PARTIES Significant transactions arising in the course of ordinary business between the Company and related parties during 1998 and 1997 were as follows: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Transactions with subsidiary companies (Eliminated in consolidated financial statements) Sales of goods - - 10,544,524 29,919,129 Purchases of goods - - 2,151,863,806 2,660,345,521 Dividend income - - 60,703,597 236,696,803 Interest income - - 104,207,630 50,133,369 Other income - - - 27,594,148 Interest expense - - 585,824 1,927,572 Transactions with associated companies Dividend income 6,744,916 1,230,000 6,744,916 1,230,000 Interest income 11,901,362 868,579 11,901,362 868,579 Interest expense 1,016,031 355,143 1,016,031 355,143 Business transactions between the Company and related parties are conducted during the ordinary course of business; the price of goods sold is based upon normal profit margins over the cost of the related goods and services and interest rates are based on the Company's cost of borrowing and market rates. At December 31, 1998 and 1997 the outstanding balances with related parties were as follows: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Accounts receivable - related parties Subsidiary Companies Berli Jucker (Myanmar) Ltd. - - 5,193,941 8,552,710 Polipharm Co., Ltd. - - 1,723,755 1,955,360 Siam Snack Co., Ltd. - - - 40,307 Thai-Scandic steel Co, Ltd. - - 13,200 - Thai Glass Industries PCL - - 121,162,679 3,847,374 Cellox Paper Co., Ltd. - - 4,035,449 - Total - - 132,129,024 14,395,751 Accounts payable - related parties Subsidiary Companies Polipharm Co., Ltd. - - 219,001 712,817 Siam Snack Co., Ltd. - - 61,409,222 59,396,747 Rubia Industries Ltd. - - 92,940,626 46,082,867 Thai Glass Industries PCL - - - 199,356,115 Thai Flourspar & Minerals Co., Ltd. - - 2,644,657 2,590,217 Cellox Paper Co., Ltd. - - 38,818,184 107,002,097 Total - - 196,031,690 415,140,860 (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Lease receivable from a related party - current portion - - 36,000,000 36,000,000 - non-current portion - - 31,500,000 67,500,000 The lease receivable from a related party represents amounts outstanding under a five year finance lease for machinery and equipment entered into with Cellox Paper Co., Ltd. in November 1995. The lease carries interest at 12% per annum. (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Short-term loans and advances to related parties Subsidiary Companies Montana Co., Ltd. - - - 1,762,734 Polipharm Co., Ltd. - - 26,813,568 43,602,603 Siam Snack Co., Ltd. - - 36,597,933 34,355,418 Cosma Ltd. - - 405,625 259,681 Rubia Industries Ltd. - - 69,339,592 55,299,529 Ganong Ltd. - - 49 160 Thai Sancella Co., Ltd. - - 4,558,900 4,558,900 Marble & Stones Co., Ltd. - - - 318,390 Thai-Scandic Steel Co., Ltd. - - 203,984,023 190,616,206 Tropicwood Co., Ltd. (net of allowance for doubtful account Baht 9 million) - - 20,286,190 28,153,649 Thai Glass Industries PCL. - - 267,920,920 61,131,357 Thai Flourspar & Minerals Co., Ltd. - - - 315 Cellox Paper Co., Ltd. - - 660,188 - Agri-Systems (Thailand) Co., Ltd. - - 31,647,638 27,464,227 Thai Klinipro Co., Ltd. - - 393 20,164,383 Berli Prospack Co., Ltd. - - 37,130,521 30,592,821 Associated Companies BJT Water Co., Ltd. 3,914,398 3,838,695 3,914,398 3,838,695 Vina Glass Industries Limited - 223,755,297 - - Beston Food (Shanghai) Co., Ltd. 6,953,000 - 6,953,000 - Pacific Leisure (Thailand) Ltd. Group 127,619 469,472 127,619 469,472 Other Companies Pathum Thani Water Co., Ltd. 105,485,000 - 105,485,000 - Prospack Co., Ltd. Group 131,832 - - - Total 116,611,849 228,063,464 815,825,557 502,588,540 Short-term loans and advances from related parties Subsidiary Company Montana Co., Ltd. - - 4,792,965 - Associated Company Bell International Surveyors & Adjusters Ltd. - 8,640,664 - 8,640,664 Other Companies J.N.P.A. Co., Ltd. 17,241,100 - 17,241,100 - Reime Jarlso AS 2,920,000 3,893,461 - - Prospack Co., Ltd. Group 114,000 - - - Total 20,275,100 12,534,125 22,034,065 8,640,664 NOTE 6 - ACCOUNTS RECEIVABLE Accounts receivable as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Accounts receivable - trade 2,739,897,001 2,675,147,487 1,481,884,377 1,624,400,763 Installment receivables 346,935,550 375,385,557 346,935,550 375,385,557 Less : Unearned interest on installment contracts (56,780,932) (54,163,428) (56,780,932) (54,163,428) 3,030,051,619 2,996,369,616 1,772,038,995 1,945,622,892 Less : Allowance for doubtful accounts (172,632,506) (164,627,730) (141,623,324) (142,430,324) Total 2,857,419,113 2,831,741,886 1,630,415,671 1,803,192,568 Accounts receivable as at December 31, 1998, classified by age, can be summarized as follows: (Amounts in Baht) Consolidated Company 1998 1998 Less than 6 months 2,783,283,031 1,582,350,594 Over 6 months to 12 months 92,719,344 64,910,104 Over 12 months 154,049,244 124,778,297 Total 3,030,051,619 1,772,038,995 NOTE 7 - INVENTORIES Inventories as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Finished products 771,537,129 1,007,163,095 499,287,452 948,400,994 Work in process 51,619,807 90,047,058 - - Raw materials and packing materials 354,343,338 462,017,039 1,539,390 795,968 Assemblies and spare parts 144,865,243 126,211,027 2,106,663 3,209,728 Other materials 28,250,850 35,304,670 - - Merchandise in transit 52,971,562 112,935,059 19,409,907 62,064,375 Total 1,403,587,929 1,833,677,948 522,343,412 1,014,471,065 NOTE 8 - INVESTMETNS IN RELATED PARTIES AND OTHER COMPANEIS Investments in related parties and other companies as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company Cost method Equity method Type of Business Group Shareholding 1998 1997 1998 1997 1998 1997 Subsidiary Companies Berli Jucker (Myanmar) Ltd. Import & export 100.00% - - 2,075,748 2,075,748 -- - Montana Co., Ltd. Sales of cosmetics 100.00% - - 500,000 500,000 3,710,343 3,414,010 and machinery Polipharm Co., Ltd. Manufacture of 100.00% - - 12,950,000 12,950,000 70,543,989 67,697,507 pharmaceuticals - - Siam Snack Co., Ltd Manufacture of 100.00% - - 170,041,650 170,041,650 197,145,465 192,688,198 snack foods Rubia Investments Ltd. Investment vehicle 100.00% - - 380,000,000 - 369,743,748 - in 1998 Cosma Ltd. Dormant 100.00% - - 100,000 100,000 198,534 195,025 (A subsidiary - - holds 98.00%) Rubia Industries Ltd. Manufacture of 99.70% - - 19,255,700 19,255,700 257,247,623 151,981,958 soap, cosmetics & confectionery Tropicwood Co., Ltd. Dormant 98.30% - - 4,304,288 11,004,288 2,192,391 4,458,736 Thai Glass Industries PCL. Manufacture of 97.89% in 1998 - - 3,003,760,185 1,670,799,844 2,945,235,483 1,951,237,964 glass containers and 65.56% in 1997 Thai Flourspar & Minerals Co., Manufacture of 95.00% - - 1,900,000 1,900,000 19,916,168 21,158,727 Ltd. calcium carbonate Cellox Paper Co., Ltd. Manufacture of 75.48% in 1998 - - 506,098,430 482,599,715 659,073,634 576,738,478 paper products and 72.35% in 1997 Thai-Scandic Steel Co., Ltd. Manufacture of 100.00% of - - - 130,000,000 - 130,000,000 galvanized steel Preference shares structures in 1997 (A subsidiary holds 100% in 1998) Thai Klinipro Co., Ltd. Manufacture of 51.00% - - 51,000,000 20,400,000 79,735,529 37,065,337 surgical gowns Berli Prospack Co., Ltd. Manufacture of 50.00% - - 113,000,280 98,000,280 80,834,852 74,226,481 plastic containers (Amounts in Baht) Consolidated Company Cost method Equity method Type of Business Group Shareholding 1998 1997 1998 1997 1998 1997 Associated Companies BJC Marine Resources Dormant 50.00% 15,869,167 16,789,660 16,376,500 24,376,500 15,869,167 16,789,660 Development Co., Ltd. Thai-Swiss Metal Works Co., Ltd. Dormant 50.00% 300 300 300 300 300 300 ADAT Sales (Thailand) Ltd. Travel 48.32% 1,718,122 3,375,200 - - - - Thai-Pacific Foods Ltd. Dormant 47.33% - - - - - - Bell International Surveyors Surveying 41.00% in 1997 - 7,263,767 - 1,230,000 - 7,263,767 & Adjusters Ltd. BJT Water Co., Ltd. Consultancy and35.00% 13,409,988 14,385,186 7,000,000 3,500,000 13,409,988 14,385,186 management service for water and waste water systems Beston Food (Shanghai) Co., Ltd. Manufacture of 34.00% 30,896,164 37,336,004 37,336,004 37,336,004 30,896,164 37,336,004 snack foods O-I Pacific (Machinery and Sale of machinery 29.37% in 1998 2,850,817 - - - - - Distribution) Ltd. for glass container and 19.67% in1997 factories Siemens Limited Electrical 25.50% in 1997 - 26,966,391 - 80,000,000 - 26,966,391 engineering, telecommunications and mass transportation Pacific Leisure (Thailand) Ltd. Travel 23.67% 2,276,003 2,605,152 Total Investments in Related Parties 67,020,561 108,721,660 4,325,699,085 2,766,070,029 4,745,753,378 3,313,603,729 (Amounts in Baht) Consolidated Company Cost method Equity method Type of Business Group Shareholding 1998 1997 1998 1997 1998 1997 Other Companies Siam Industrial Products Ltd. Import 20.00% 50,000 50,000 - - - - (25.00% paid up) J.N.P.A. Co., Ltd. Property holding 17.24% 53,778,970 53,778,970 53,778,970 53,778,970 53,778,9753,778,970 Pathum Thani Operations Co., Ltd. Rendering services for 17.00% in 1998 850,000 - 850,000 - 850,000 - water treatment Pathum Thani Water Co., Ltd. Clean water supply 15.00% 145,500,000 123,000,000 145,500,000 123,000,000 145,500,000 123,000,000 Siam Cement Myanmar Trading Ltd Cement distributor 15.00% 836,609 836,609 836,609 836,609 836,609 836,609 Ethoxylates Manufacturing Pte. Ltd. Manufacture of 5.00% in 1997 - 1,896,187 - 1,896,187 - 1,896,187 chemical products Thaiviet Invexim Co., Ltd. Import & export 1.00% 100,000 100,000 100,000 100,000 100,000 100,000 Total Investments in Other Companies 201,115,579 179,661,766 201,065,579 179,611,766 201,065,579 179,611,766 At December 31, 1998 and 1997 the Company had an excess loss over book value of investments in Agri- Systems (Thailand) Co., Ltd. and Berli Jucker (Myanmar) Ltd. totalling Baht 34.13 million and Baht 30.67 million respectively, which is shown as other liabilities in the Company's financial statements. The recording of investments in subsidiary and associated companies by using the equity basis in the financial statements for the years ended December 31, 1998 and 1997 is based on financial information obtained from audited financial statements and from management, which has not been audited or reviewed by the auditors in accordance with standards established by The Institute of Certified Accountants and Auditors of Thailand. NOTE 9 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment-net as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Land and improvements 332,890,029 349,102,980 66,958,915 66,894,155 Excess of acquisition costs attributable to land value 1,637,923,127 1,645,851,611 - - Buildings and construction 2,286,328,746 2,248,929,565 721,358,799 730,071,561 Leaseholdings - 1,152,444 - 1,152,444 Machinery, equipment and tools 5,671,524,684 5,528,944,949 18,168,786 31,042,514 Office furniture, fixtures and equipment 634,202,524 679,852,849 512,318,037 560,800,250 Vehicles 193,003,336 193,701,457 118,265,174 120,784,411 Construction and installation in progress 1,489,858,345 679,890,089 18,416,033 298,500 12,245,730,791 11,327,425,944 1,455,485,744 1,511,043,835 Less: Accumulated depreciation (4,971,456,060) (4,646,606,938) (622,968,961) (634,378,334) Property, Plant and Equipment - net 7,274,274,731 6,680,819,006 832,516,783 876,665,501 Depreciation and amortization are included under cost of goods manufactured, cost of sales and selling and administrative expenses in the amounts of Baht 717,077,780 in 1998 and Baht 740,997,720 in 1997, in the consolidated financial statements, and in the amounts of Baht 116,272,085 in 1998 and Baht 123,204,933 in 1997 in the Company's financial statements. The excess of acquisition costs attributable to land value represents the difference between the fair value of land at the date of acquisition of subsidaries and the original cost of this land to the subsidiaries concerned. The taxation that might become payable were the revaluation surpluses so arising realized through sale of these assets is included under deferred income tax - non-current in the consolidated financial statements. (More)