NOTE 10 - OTHER ASSETS - OTHERS Others in other assets as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Deposits 9,997,861 10,071,201 5,107,363 5,098,163 Property foreclosed 41,014,762 49,231,483 - - Deferred charges - net 48,026,186 24,404,560 2,110,005 3,614,451 Others 10,860,894 284,984 - - Total 109,899,703 83,992,228 7,217,368 8,712,614 NOTE 11 - LONG-TERM LIABILITIES Long-term liabilities as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Baht loans from financial institutions 494,865,575 309,000,000 - - Foreign currency loans from financial institutions 2,212,084,708 3,891,859,778 1,940,768,965 3,243,395,207 Other loans 6,923,035 10,721,553 - - Total loans outstanding 2,713,873,318 4,211,581,331 1,940,768,965 3,243,395,207 (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Loan repayment within a period: Not exceeding one year 118,871,952 1,628,770,778 - 1,205,460,000 More than 1 year but not exceeding 2 years 112,100,771 168,389,106 - - More than 2 year but not exceeding 3 years 142,419,055 156,254,385 - - More than 3 year but not exceeding 4 years 2,082,222,965 115,231,855 1,940,768,965 - More than 4 year but not exceeding 5 years 117,009,000 2,132,935,207 - 2,037,935,207 More than five years 141,249,575 10,000,000 - - Total loans outstanding 2,713,873,318 4,211,581,331 1,940,768,965 3,243,395,207 Less : Amounts repayable within one year included in current liabilities (118,871,952)(1,628,770,778) - (1,205,460,000) Total long-term liabilities 2,595,001,366 2,582,810,553 1,940,768,965 2,037,935,207 The figures for foreign currency loans from financial institutions shown above disclose foreign currency borrowings at exchange rates prevailing on the balance sheet date or, where relevant, at exchange rates based on various foreign exchange contracts entered into to fix the exchange rate at which such foreign currency borrowings will be repaid in future. Loans are repayable in various annual installments at a weighted average rate of interest of 6.13% in 1998 (1997:6.57%) for foreign currency loans and at a weighted average rate of 10.47% in 1998 (1997:13.79%) for Baht loans. Hedging costs for US dollar denominated loans vary between 2.42% and 7.25% in 1998 (1997:2.42% and 7.25%). In December 1997 the Company crystallized a gain on its long term principal only swaps, amounting to Baht 1,428,946,000, of which Baht 973,516,000 was received in cash and Baht 455,430,000 relating to loans due in 2002 will be received in 2002. NOTE 12 - LONG-TERM LEASE DEFERRED INCOME The long-term lease deferred income outstanding as at December 31, 1998 and 1997 represents the unamortized balance of lease premiums received in advance in respect of which the underlying lease had 26 years and 27 years, respectively, to expiry. NOTE 13 - OTHER LIABILITIES -OTHERS Others in other liabilities as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Deposits 13,207,948 16,618,354 13,207,948 16,618,354 Provision for loss on suspension of business segment 200,000,000 - - - Financial transaction payable 37,865,496 - 37,865,496 - Excess of loss over book value of investments in subsidiary companies - 1,211,641 34,125,760 30,673,876 Others 413,950 - - Total 251,487,394 17,829,995 85,199,204 47,292,230 NOTE 14 - SHARE CAPITAL A special resolution was passed by the extraordinary general meeting of shareholders held on June 5, 1998 authorizing an increase in the authorized share capital of the Company by Baht 1,010,625,000 by issuing 101,062,500 new ordinary shares with a par value of Baht 10 each, thus increasing the authorized share capital from Baht 577,500,000 to Baht 1,588,125,000. The new ordinary shares were offered on a rights basis to all existing shareholders at a price per share of Baht 40 in the proportion of 7 new ordinary shares for every 4 existing shares held. On June 26, 1998, all rights had been fully subscribed and the Company received Baht 4,028.4 million in subscription monies (net of expenses). The Company registered the increase in share capital on July 7, 1998. NOTE 15 - DONATED SURPLUS The donated surplus of Baht 36,867,563 at December 31, 1998 and 1997 resulted from profits made by a director of the Company in 1994 on the sale of 397,104 rights issue shares not subscribed for by the shareholders and resold to the public on the Stock Exchange of Thailand. NOTE 16 - SHARE OF PROFITS LESS LOSSES OF SUBSIDIARY AND ASSOCIATED COMPANIES Share of profits less losses of subsidiary and associated companies included a provision in respect of the suspension of a subsidiary business segment in the amount of Baht 92.58 million in 1998. This has been classified as an extraordinary item in the consolidated accounts in conformity with the generally accepted accounting principles. NOTE 17 - OTHER FINANCING INCOME In the normal course of business the Company undertakes financial transactions to minimise the cost of its foreign exchange hedging activities. For the year ended December 31, 1998 these activities produced a net receipt which, under generally accepted accounting standards, has been accounted for as" other financing income". The receipts were, in substance, a reduction in the cost of hedging US dollar denominated indebtedness. NOTE 18 - INCOME TAX Income tax consisted of the following: (Amounts in Baht) Consolidated Company 1998 1997 1998 1997 Accrued income tax 144,270,818 66,478,855 19,878,846 3,327,995 Income tax prepayment - half year 12,773,791 121,337,340 3,075,096 8,580,087 Income tax withheld 29,575,971 44,801,699 24,061,990 26,656,237 Adjustments to prior year- income tax provisions 106,380 252,513 - - Income tax payable 186,726,960 232,870,407 47,015,932 38,564,319 Deferred income tax (68,271,958) (12,048,391) (15,158,807) (43,745,612) Income tax shown in the statements Of income 118,455,002 220,822,016 31,857,125 (5,181,293) NOTE 19 - EXTRAORDINARY ITEMS Thai Glass Industries Public Company Limited has suspended its Vietnam Glass Project as demand for new glass bottles in Vietnam is substantially below original projections due to a combination of lower than forecast beverage consumption and a higher than anticipated re-usage rate of second hand bottles. The company decided to make a provision amounting to Baht 200 million, in connection with the project, as approved by the Board of Directors Meeting held on August 13, 1998. NOTE 20 - ADJUSTMENTS TO OPENING BALANCE OF RETAINED EARNINGS The adjustments represent retirement benefits payable to employees for periods prior to 1997, which had been underrecorded in the amounts of Baht 147,627,962 before tax and Baht 114,628,106 net of income tax. NOTE 21 - CONTINGENCIES The Company was contingently liable as guarantor of credit facilities for related parties at December 31, 1998 to the extent of Baht 474.62 million. NOTE 22 - COMMITMENTS At December 31, 1998 subsidiary companies had commitments for capital expenditures in the approximate amount of Baht 87.4 million. NOTE 23 - SEGMENT INFORMATION For financial accounting purposes the Group divides its core business into two areas: Packaging & Consumer products and Technical products & Engineering. Noncore operations are grouped as Others. The results of operations for the years ended December 31, 1998 and 1997 are summarized below: Baht (Million) Packaging Technical & Consumer products 1998 1997 products & Engineering Others Total Total Sales 1998 6,673.9 3,733.2 39.7 10,446.8 1997 6,736.3 3,834.5 44.2 10,615.0 Operating profit before interest excluding proportion attributable to minority interests 1998 779.7 173.1 (18.2) 934.6 1997 824.9 284.9 (47.9) 1,061.9 Minority interests proportion in operating profit before tax 150.8 295.5 Operating profit before interest 1,085.4 1,357.4 General corporate expenses (192.4) (29.4) Gain on disposal of investment 59.3 - Other financing income 142.2 - Net interest expense (210.2) (292.1) Loss on foreign exchange (148.3) (260.9) Loss on diminution in value of assets (17.0) - Net income before tax 719.0 775.0 Income tax (118.4) (220.8) Net income before minority interests and extraordinary items 600.6 554.2 Minority interests (93.2) (169.7) Net income after minority interests 507.4 384.5 Extraordinary items (92.6) - Net income 414.8 384.5 As at December 31, 1998 and 1997 property, plant and equipment, net of accumulated depreciation and amortization, were allocated as follows: Baht (Million) Packaging Technical & Consumer products 1998 1997 products & Engineering Others Total Total Property plant and equipment: 1998 5,889.9 528.5 52.3 6,470.7 1997 5,240.8 534.4 72.1 5,847.3 General assets used 803.6 833.5 Total Property Plant and Equipment - Net 7,274.3 6,680.8 NOTE 24 - YEAR 2000 PROBLEM AND COMPUTER REMEDY PLAN (UNAUDITED BY AUDITORS) The Year 2000 problem arises because many computerized systems use two digits rather than four to identify the year. Date-sensitive systems may recognize the year 2000 as some other dates, resulting in errors when information using year 2000 dates is processed. Entities may experience the effects of the Year 2000 problem before, on, or after January 1, 2000, and the effects on operations and financial reporting, if not addressed and repaired properly and timely, may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. In addition, it is not possible to be certain that all aspects of the Year 2000 problem affecting the entity, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. The Company has commenced its plan to address the Year 2000 compliance problem. The plan is expected to be completed by June 1999. The expected costs of remedying the problem are approximately Baht 13.5 million and these costs will be recognized in the period in which they occur. Although the Company expected to have addressed the Year 2000 issue before the year 2000 occurs, the operations of the Company would still remain at risk from other entities with which the Company undertakes business if they are unable to remedy their own problems in time.