Watermelon - includes recipe

Sunset, Spring-Summer, 1995 by Lauren Bonar Swezey

JAKARTA, Indonesia, May 15 /PRNewswire/ -- P.T. Tri Polyta Indonesia (Nasdaq-ADR: TPIFY) today announced first quarter 1995 net income, on a US GAAP basis, of Rp. 15.7 billion (US $7.1 million), an increase of 27 percent over the Rp. 12.4 billion (US$ 5.8 million) earned in the same period in 1994. Earnings per ADS were Rp. 611 (US$ 0.28) for the first quarter 1995, on a US GAAP basis, down from the Rp. 679 million (US$ 0.32) per ADS earned in the same period in 1994 prior to the issuance of new shares equal to 29.1% of the company's current shares outstanding during its IPO last July.

On an Indonesian GAAP basis, the company earned Rp. 13.4 billion (US$ 6.0 million) in first quarter 1995 versus Rp. 18.5 billion (US$ 8.7 million) in first quarter 1994, a decrease of 28%. The decrease in the company's reported earnings between the first quarters of 1994 and 1995 were the result of an acceleration into the first quarter 1995 of the amortization of pre-operating expenses under Indonesian GAAP to meet revised Indonesian financial reporting standards, which resulted in incremental amortization cost as compared with first quarter 1994 of Rp. 3.9 billion (US$ 1.7 million). In addition, under Indonesian GAAP, the company follows the taxes payable method of accounting, which, due to its tax loss carry forwards from prior years, resulted in the company not recording any tax expense in first quarter 1994. The company's tax expense under Indonesian GAAP in the first quarter 1995 totaled Rp. 4.0 billion (US$ 1.8 million). The accounting for both of these items did not impact reported results under US GAAP.

The company's results were impacted by mechanical problems with the vent recovery systems in its two existing production trains which resulted in abnormally high consumption of propylene in its polypropylene manufacturing process as well as a bearing failure in one of the plant's pellitizers. As a result of the vent recovery problem, increased propylene costs of Rp. 3.1 billion (US$ 1.4 million) were incurred during the quarter over the company's standard for the production of polypropylene. In addition, the company's two production trains were shut down for 10 days during March to complete temporary repairs of the vent recovery systems and the pellitizer, lowering production by approximately 6,000 MT during the quarter. Management used this downtime to complete the final utility and power connections for its third train, eliminating a future planned 3 day shutdown to accomplish this work.

The mechanical problems with the plant's vent recovery systems was the same as problems experienced at similar plants employing UNIPOL technology and stemmed from a design weakness of components manufactured from aluminum and prone to fatigue leading to internal cracking of key piping. Temporary repairs were carried out under the recommendations of the vendor, on a basis consistent with their experience with other similar plants of the UNIPOL technology. The company has ordered stainless steel vent recovery systems based on new UNIPOL basic design at a cost of US$400,000, which are less susceptible to fatigue and cracking and are expected to provide improved performance and life. The replacement units are scheduled to be installed September 1995 and their installation will require a plant shut down of 2 days. In the interim, plant management will continue to monitor the vent recovery systems and will make further repairs as and when required.

Mr. Henry Pribadi, president and chief executive officer noted: "The quarter saw strong demand for polypropylene despite the Islamic holidays which fell in the first quarter this year and during which Indonesian business activity traditionally is substantially curtailed. It is clear that without the mechanical problems we experienced in first quarter 1995, our results would have been significantly better."

The company's revenues increased in first quarter 1995 over fourth quarter 1994 to Rp. 152.9 billion (US $68.9 million) from sales of 54,261 metric tons of polypropylene, notwithstanding slower overall business activity in Indonesia during the Islamic holidays. This result is comparable to fourth quarter 1994 revenues of Rp. 150.2 billion (US$ 68.3 million) on sales of 54,725 MT. During first quarter 1995 inventories of finished polypropylene stocks were depleted to 1,668 MT of resins in lower demand categories, as a result of lower production due to mechanical problems experienced at the plant and stronger than forecast market demand.

International South East Asia prices for propylene continued to increase during first quarter 1995 and principally as a result of this, the company's average Delta P, or spread between the price of polypropylene and propylene, for first quarter 1995 decreased to Rp. 1,164 thousand (US $525) per metric ton, compared with a Delta P of Rp. 1,259 thousand (US $572) per MT in the fourth quarter of 1994. The lower Delta P in first quarter 1995 impacted the company's operating income by Rp. 4.9 billion (US$ 2.2 million) in comparison with the spread achieved in fourth quarter 1994.