SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON,
Washington, D.C., 20549

                               -------------------

                                    
FORM 20-F

[ ] 
 
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR (g) OF THE SECURITIES
    EXCHANGE ACT OF 1934
                                       OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

                   
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended DECEMBERDecember 31, 2003
                                       2007
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                        
 
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from                     to                     
Commission file number 1-14542
ASIA PACIFIC WIRE & CABLE
CORPORATION LIMITED
             (Exact
(Exact name of Registrant as specified in its charter)

                                     BERMUDA
                 (Jurisdiction
Bermuda
(Jurisdiction of incorporation or organization)

                             19 BENOI ROAD, LEVEL 3A
                          SIGMA CABLE HIGH TECH COMPLEX
                                SINGAPORE 629909
                    (Address
7/Fl. B, No. 132, Sec. 3
Min-Sheng East Road
Taipei, 105, Taiwan
Republic of China
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12 (b)12(b) of the Act.

Title for each class
Common Shares, par value $0.01 per share
Name of each exchange on which registered
COMMON SHARE, PAR VALUE $0.01 PER SHARE (THE "COMMON STOCK")                        NONE

None
Securities registered or to be registered pursuant to Section 12 (g)12(g) of the Act.
None
                         ------------------------------
                                (Title
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Common Stock
                         ------------------------------
                               (TitleShares
(Title of Classes)
Indicate the number of outstanding shares of each of the issuer'sissuer’s classes of capital or common stock as of the close of the period covered by the annual report.
13,830,769 shares of Common Stock

         Shares
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]    No [ ]

         
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes     No 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes     No 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
Indicate by check mark which financial statement item the registrant has elected to follow. Item 17   [ ]      Item 18   [X]





CONTENTS


OTHER CONVENTIONS.................................................................................................1

Item 1:
Identity of Directors;Directors, Senior Management and Advisers.................................................1

Advisers
2
Item 2:
Offer Statistics and Expected Timetable...............................................................1

Timetable
2
Item 3:
Key Information about Asia Pacific Wire & Cable.......................................................1
   Cable
2
3.1
Selected Consolidated Financial Data..................................................................1
   Data
2
3.2
Exchange Rates........................................................................................2
   Rates
3
3.3
Risk Factors..........................................................................................5
   Factors
5
3.4
Forward-looking Statements...........................................................................11

Statements
13
Item 4:
Information on the Company...........................................................................11
   Company
15
4.1
History and Development of the Company; Recent Developments..........................................11
   Developments
15
4.2
Business Overview....................................................................................14
   Overview
19
4.3
Organizational Structure.............................................................................28
   Structure
30
4.4
Property, Plant and Equipment........................................................................31

Equipment
32
Item 5:
Operating and Financial Review and Prospects.........................................................33
   Prospects
34
5.1
Disclosures of Critical Accounting Policies..........................................................33
   Policies
34
5.2
Summarized Income Statement..........................................................................36
   Statement
38
5.3
Operating Results....................................................................................38
   Results
39
5.4
Liquidity and Capital Resources......................................................................45
   Resources
45
5.5      Inflation............................................................................................48

Inflation
46
5.6
Off-Balance Sheet Arrangements
46
Item 6:
Directors, Senior Management and Employees...........................................................48
   Employees
46
6.1
Directors and Senior Management......................................................................48
   Management
46
6.2
Audit Committee......................................................................................49
   Committee
48
6.3
Remuneration Committee...............................................................................50
   Committee
48
6.4      Compensation.........................................................................................50
   
Compensation
48
6.5      Employees............................................................................................50

Employees
49
Item 7:
Major Shareholders and Related Party Transactions....................................................51
   Transactions
49
7.1
Major Shareholders...................................................................................51
   Shareholders
49
7.2
Related Party Transactions...........................................................................51

Transactions
50
Item 8:
Financial Information................................................................................52
   Information
51
8.1
Legal Proceedings....................................................................................52
   Proceedings
51
8.2
Dividend Policy......................................................................................54

Policy
51
Item 9:
The Offer and Listing................................................................................54
   Listing
52
9.1
Historical Trading Information.......................................................................54
   Information
52
9.2
Nature of the Trading Market.........................................................................56

                                       i
Market
53
Item 10:
Additional Information...............................................................................56
   Information
54
10.1
Memorandum of Association and Bye-laws...............................................................56
   Bye-laws
54
10.2
Material Contracts...................................................................................65
   Contracts
61
10.3
Environmental Matters................................................................................67
   Matters
62
10.4     Insurance............................................................................................67
   
Insurance
62
10.5
Credit Support.......................................................................................67
   Support
63
10.6     Taxation.............................................................................................68
   
Taxation
63
10.7
Documents on Display.................................................................................72

Display
69
Item 11:
Quantitative and Qualitative Disclosures About Market Risk...........................................72
   Risk
69
11.1
Foreign Currency Exposure............................................................................72
   Exposure
69
11.2
Interest Rate Risk...................................................................................73
   Risk
70
11.3
Risks Relating to Copper.............................................................................74

Copper
70
Item 12:
Description of Securities Other Than Equity Securities...............................................74

Securities
70
Item 13:
Defaults, Dividend Arrearages and Delinquencies......................................................74

Item 14:    Material ModificationsDelinquencies
71
i




Item 14:
Material Modifications to the Rights of Security Holders and Use of Proceeds
71
Item 15:
Controls and Procedures
71
Item 16A.
Audit Committee Financial Expert
73
Item 16B.
Code of Ethics
73
Item 16C.
Principal Accountant Fees and Services
74
Item 16D.
Exemptions from the Listing Standards for the Audit Committees
74
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
74
Item 17:
Financial Statements
75
Item 18:
Financial Statements
75
Item 19:
Exhibits
75
 
19.1
Index to Audited Financial Statements
75
 
19.2
Index to Exhibits
75
ii



FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this Annual Report on Form 20-F contain some forward-looking statements. Forward-looking statements give our current beliefs or expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘plan,’’ ‘‘believe’’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance.
Such statements are not promises or guarantees and are subject to a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include our ability to maintain and develop market share for our products, the introduction of competing products or technologies, our inability to successfully identify, consummate and integrate acquisitions, our potential exposure to liability claims, the uncertainty and volatility of the markets in which we operate, the availability and price for copper, our principal raw material, the fact that we have operations outside the United States that may be materially and adversely affected by acts of terrorism or major hostilities, fluctuations in currency, exchange and interest rates, oper ating results and other factors that are discussed in this report and in our other filings made with the Securities and Exchange Commission (the ‘‘SEC’’).
In particular, these statements include, among other things, statements relating to:
• 
the business strategy;
• 
our prospects for future revenues and profits in the markets in which we operate;
• 
the possibility that our Common Shares will again be listed on a national exchange;
• 
our dependence on a limited number of suppliers for our raw materials and our vulnerability to fluctuations in the Rightscost of Security Holdersour raw materials; and Use of Proceeds.........................74

Item 15:    Disclosure Controls and Procedures...................................................................74

Item 16:    Audit Matters........................................................................................75
   16.1     Audit Committee Financial Expert.....................................................................75
   16.2     Code of Ethics.......................................................................................75
   16.3     Principal Accountant Fees and Services...............................................................75

Item 17:    Financial Statements.................................................................................76

Item 18:    Financial Statements.................................................................................76

Item 19:    Exhibits.............................................................................................76
   19.1     Index to Asia Pacific Wire & Cable Corporation Limited Audited Financial Statements..................76
   19.2     Index to Exhibits....................................................................................76

SIGNATURE PAGE
CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT
ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AUDITED FINANCIAL
   STATEMENTS
EXHIBIT 4.4 - SETTLEMENT AGREEMENT [TRANSLATION]
EXHIBIT 10 - CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT
EXHIBIT 16.2 - CODE OF ETHICS FOR CEO AND SENIOR FINANCIAL OFFICERS


                                       ii
• 
our liquidity.
We undertake no obligation to update any forward-looking statements or other information contained in this Annual Report, whether as a result of new information, future events or otherwise except as required by law. You are advised, however, to consult any additional disclosures we make in our Form 6-K reports periodically filed with the SEC. Also note that we provide a cautionary discussion of risks and uncertainties under ‘‘Risk Factors’’ beginning on page 6 of this report. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could also adversely affect us. This discussion is permitted by the Private Securities Litigation Reform Act of 1995.
OTHER CONVENTIONS
Unless otherwise specified, all references in this Annual Report to "Thailand"‘‘Thailand’’ are to the Kingdom of Thailand, all references to "Singapore"‘‘Singapore’’ are to The Republic of Singapore, all references to "Taiwan"‘‘Taiwan’’ are to Taiwan, The Republic of China, all references to "China"‘‘China’’ and to the "PRC"‘‘PRC’’ are to The People'sPeople’s Republic of China, all references to "Australia"‘‘Australia’’ are to the Commonwealth of Australia and all references to the "US"‘‘U.S.’’ are to the United States of America.
Most measurements in this Annual Report are given according to the metric system. Standard abbreviations of metric units (e.g., "mm"‘‘mm’’ for millimeter) have been employed without definitions. All references in this Annual Report to "tons"‘‘tons’’ are to metric tons, which are equivalent in weight to 2,204.6 pounds.
With respect to measurements relating to the manufacture of wire and cable products, references to "pkm"‘‘pkm’’ are to kilometers of twisted pairs of copper wire.

PART


Part I

ITEM
Item 1:    IDENTITY OF DIRECTORS; SENIOR MANAGEMENT AND ADVISERS

         (NotIdentity of Directors, Senior Management and Advisers
(Not applicable)

ITEM
Item 2:    OFFER STATISTICS AND EXPECTED TIMETABLE

         (NotOffer Statistics and Expected Timetable
(Not applicable)

ITEM
Item 3:    KEY INFORMATION ABOUT ASIA PACIFIC WIREKey Information about Asia Pacific Wire & CABLECable
    3.1    SELECTED CONSOLIDATED FINANCIAL DATA

         Selected Consolidated Financial Data
The following selected consolidated financial data areis derived from the consolidated financial statements of Asia Pacific Wire & Cable Corporation Limited (the "Company"‘‘Company’’) for the years ended December 31, 1999, 2000, 2001, 20022003, 2004, 2005, 2006 and 20032007, prepared in accordance with U.S. GAAP.
The selected data set forth below should be read in conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements of the Company included in ‘‘Item 5: Operating and Financial Review and Prospects,
Prospects’’ and ‘‘Item 18: Financial Statements,Statements’’ and the notes thereto.

         (See chart on following page)


                                       1

 
For the Year Ended December 31,
 
2003
2004
2005
2006
2007
 
(in thousands, except per share amounts)
Income Statement Data:
 
 
 
 
 
Net sales
$
211,399
$
294,256
$
337,262
$
468,117
$
510,841
Cost of sales
(178,111
) 
(255,384
) 
(300,656
) 
(410,823
) 
(465,165
) 
Gross profit
33,288
38,872
36,606
57,294
45,676
Other operating income
1,336
—
—
—
—
Operating expenses
(20,479
) 
(28,867
) 
(26,553
) 
(27,612
) 
(29,451
) 
Impairment loss
—
(134
) 
(3,223
) 
(86
) 
(95
) 
Operating profit
14,145
9,871
6,830
29,596
16,130
Exchange gain/(loss)
4,161
233
(3,137
) 
5,464
864
Net interest income/(expense)
(1,122
) 
(2,025
) 
(2,747
) 
(5,181
) 
(6,063
) 
Share of net income/(loss) of equity investees
1,475
(4,224
) 
170
73
124
Gain on liquidation of subsidiary
—
—
—
1,801
—
Gain/(loss) on sale of investment
(885
) 
(1,161
) 
(259
) 
(729
) 
35
Others
(214
) 
925
829
1,536
2,070
Income/(loss) before income taxes and minority interests
17,560
3,619
1,686
32,560
13,160
Income taxes
(2,477
) 
(4,716
) 
(3,860
) 
(10,257
) 
(6,298
) 
Minority interests
(5,083
) 
(1,427
) 
(2,783
) 
(9,330
) 
(2,029
) 
Net income/(loss)
$
10,000
$
(2,524
) 
$
(4,957
) 
$
12,973
4,833
Earnings/(loss) per share(1)
$
0.72
$
(0.18
) 
$
(0.36
) 
$
0.94
$
0.35

                                                                   Year
(1)
The calculation of the earnings/(loss) per share is based on 13,830,769 Common Shares for the years ended December 31, ---------------------------------------------------------------------

                                                 1999           2000         2001          2002          2003, ---------------------------------------------------------------------
                                                           (in thousands, except per share amounts)

Income Statement Data:
     Net sales..........................      $143,144        $192,194     $197,311      $241,179      $211,399
     Cost of sales......................      (125,365)       (174,983)    (177,352)     (206,435)     (178,239)
                                             ---------------------------------------------------------------------
     Gross profit.......................        17,779          17,211       19,959        34,744        33,160
     Other operating income.............            --              --           --            --         1,336
     Operating expenses.................       (17,617)        (13,347)     (15,616)      (19,282)      (20,351)
     Goodwill written off...............        (2,142)             --         (506)           --            --
     Impairment loss....................            --          (1,404)          --        (1,559)           --
                                             ---------------------------------------------------------------------
     Operating profit/(loss)............        (1,980)          2,460        3,837        13,903        14,145
     Exchange gain/(loss)...............          (554)         (6,226)         (81)          (16)        4,161
     Net interest income/(expense)......        (2,306)         (3,686)      (3,173)       (1,499)       (1,122)
     Share of net income/(loss) of
       equity investees ................          (387)         (2,844)      (2,535)       (4,090)        1,475
     Gain on share issuance by
       subsidiaries2004, 2005, 2006 and affiliates......            --              --           --         1,011            --
     Gain/(loss) on sale of investment..            --           2,716          743          (557)         (885)
     Gain on disposal of property.......            --           6,634           --            --            --
     Others.............................           297           1,299        1,619         2,502          (214)
                                             ---------------------------------------------------------------------

     Income/(loss) before income taxes
       and minority interests...........        (4,930)            353          410        11,254        17,560
     Income taxes.......................        (1,163)         (7,584)       1,411        (4,683)       (2,477)
     Minority interests.................         1,268           3,791       (1,730)       (1,780)       (5,083)
                                             ---------------------------------------------------------------------
     Net income/(loss)..................     $  (4,825)        $(3,440)    $     91      $   4,791   $    10,000

                                             ---------------------------------------------------------------------
     Earnings/(loss) per share(1).......     $   (0.35)        $ (0.25)    $   0.01      $    0.35   $      0.72




                                                 1999           2000         2001          2002          2003
                                             ---------------------------------------------------------------------
Balance Sheet Data:
     Cash and cash equivalents..........        $21,206        $24,634       $14,241      $14,431       $25,032
     Working capital....................         36,999         30,988        36,900       46,446        71,141
     Total assets.......................        214,118        209,951       193,426      208,193       232,176
     Total debt.........................         53,541         84,475        54,559       49,681        33,780
     Total shareholders' equity.........         96,658         84,674        80,718       92,047       107,176
2007.



 
As of December 31,
 
2003
2004
2005
2006
2007
 
(in thousands)
Balance Sheet Data:
 
 
 
 
 
Cash and cash equivalents
$
25,032
$
24,419
$
20,748
$
24,664
$
29,127
Working capital
71,141
80,152
80,350
108,084
132,409
Total assets
232,176
270,433
262,938
364,565
396,116
Total debt
32,965
57,389
58,438
100,195
104,146
Total shareholders’ equity
107,176
107,146
97,622
118,765
136,783
3.2      EXCHANGE RATES

             Exchange Rates
Unless otherwise specified, references in this Annual Report to "$"‘‘$’’, "U.S. dollars"‘‘U.S. dollars’’ or "US$"‘‘US’’ are to United States dollars; all references to "Bt",
"Thai Baht"‘‘Bt,’’ ‘‘Thai Baht’’ or "Baht"‘‘Baht’’ are to Baht, the legal tender currency of Thailand; all references to "S$"‘‘S$’’ are to Singapore dollars, the legal tender currency of Singapore; all references to "A$"‘‘A$’’ are to Australian dollars, the legal tender currency - --------
(1)  The calculation of the earnings/(loss) per share is based on 13,830,769
     shares of Common Stock for the years ended December 31, 1999, 2000, 2001,
     2002 and 2003, which gives effect to the issuance of 3,097,436 common
     shares in connection with the acquisition of Crown Century Holdings Limited
     and its wholly owned subsidiary.

                                       2
of Australia; and all references to "Rmb"‘‘Rmb’’ are to Chinese Renminbi, Yuan, the legal tender currency of China.
Unless otherwise noted, translationfor the convenience of the reader, translations of amounts from Baht, Singapore dollars, Australian dollars and from Chinese Renminbi Yuan to U.S. dollars for
the convenience of the reader have been made at the respective noon buying rates in New York City for cable transfers in those currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon‘‘Noon Buying Rate"Rate’’) on December 31, 2003.2007. The respective Noon Buying Rates on December 31, 20032007 were US$1.00 = Bt 39.63;29.50; S$ 1.699;1.436; A$ 1.330;1.14; and Rmb 8.28.7.295. The respective Noon Buying Rates on June 23, 2004,20, 2008, the latest practicable date before publication of this annual report,Annual Report, were US$1.00 = Bt 41.03;33.30; S$ 1.72;1.365; A$ 1.431.048; and Rmb 8.28.6.880. No representation is made that the foreign currency amounts could have been or could be converted into U.S. dollars on these dates at these rates or at any other rates.
Thailand

         On July 2, 1997, the Bank of Thailand announced it had switched from
The Thai Baht is convertible into foreign currencies and is subject to a system which had pegged the Baht tomanaged float against a basket of foreign currencies, dominated by
the U.S. dollar (the compositionmost significant of which is not made public) to "a managed
float which would allow the Baht's value to be determined by market forces to
reflect economic fundamentals". This change in monetary policy allowed the Baht
to decline in value relative to the U.S. dollar.Dollar. The fall incomposition of the basket for determining the value of the Baht was exacerbated by subsequent financial crises in the region, particularly
in Indonesia and South Korea. The Baht stabilized in 1999, buoyed by return of
investors' confidence and some capital inflows. However, from mid-2000, the Thai
economy began to decelerate as a result of weak domestic demand, coupled with a
major fiscal expansion program espousedis not made public by the newly elected government, which
contributed to a weakeningBank of the Thai Baht. Since then, the Baht has remained
relatively stable. At the rate of US$1.00 = Bt 41.03 as of June 23, 2004, the
Baht has depreciated by approximately 40% since its flotation.Thailand. The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate.Rate of the Thai Baht. No representation is made that the Baht or USU.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Baht, as the case may be, at any particular rate or at all.

         (See chart on following page.)

                                       3

Year Ended December 31,
At Period End
Average(1)
High
Low
 
 
(Bt per $1.00)
2003
39.63
41.485
43.18
39.09
 
2004
38.80
40.263
41.70
38.80
 
2005
40.99
40.339
42.08
38.21
 
2006
36.10
37.680
40.76
35.19
 
2007
29.50
32.020
35.96
29.28
 

        YEAR ENDED DECEMBER 31,              AT PERIOD END          AVERAGE(1)            LOW               HIGH
- ----------------------------------------     --------------    ------------------    ---------------    -------------
                                                                  (BT PER $1.00)

1998...............................                36.500            40.764               56.100            35.780
1999...............................                37.450            37.048               38.650            36.180
2000 ..............................                43.478            40.000               44.380            36.970
2001 ..............................                44.240            44.517               45.820            42.300
2002..............................                 43.200            43.020                44.20             41.07
2003..............................                 39.630            41.564                43.18             39.09


(1) Average means the average of the Noon Buying Rates on the last day of each
month during a year.

(1)
Average means the average of the Noon Buying Rates on the last day of each month during a year.


The high and low exchange rates for the six months preceding the date of this reportAnnual Report were:

                 MONTH                           HIGH                 LOW
- ----------------------------------------     --------------    -----------------
             December 2003                       39.58               39.93
             January 2004                        38.89               39.54
             February 2004                       38.87               39.35
              March 2004                         39.28               39.62
              April 2004                         39.06               40.04
               May 2004                          39.93               40.93

- -----------

Month
High
Low
December 2007
30.62
29.50
January 2008
29.36
31.45
February 2008
32.08
29.53
March 2008
31.56
31.10
April 2008
31.74
31.38
May 2008
32.48
31.62
Sources:    Federal Reserve Bulletin, Board of Governors of the Federal Reserve System. Federal Reserve Statistical Release H.10(512), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.
Singapore
The Singapore dollar is convertible into foreign currencies and floats against a trade-weighted basket of foreign currencies, the composition of which is not made public by Singapore'sSingapore’s central bank, the Monetary Authority of Singapore, but of which the USU.S. dollar is a component. The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate of the Singapore dollar. No representation is made that the Singapore dollar or USU.S. dollar amounts referred to herein could have been or could be converted into USU.S. dollars or Singapore dollars, as the case may be, at any particular rate or at all.

         (See chart on following page.)

                                       4

Year Ended December 31,
At Period End
Average(1)
High
Low
 
 
(S$ per $1.00)
2003
1.699
1.743
1.784
1.699
 
2004
1.632
1.690
1.729
1.631
 
2005
1.663
1.665
1.706
1.618
 
2006
1.534
1.580
1.652
1.534
 
2007
1.436
1.501
1.543
1.436
 

        YEAR ENDED DECEMBER 31,              AT PERIOD END        AVERAGE(1)              LOW               HIGH
- ----------------------------------------     --------------    ------------------    ---------------    -------------
                                                                (S$ PER $1.00)

1998...............................              1.651              1.668                 1.796             1.581
1999...............................              1.732              1.699                 1.737             1.658
2000 ..............................              1.733              1.730                 1.760             1.654
2001 ..............................              1.847              1.797                 1.854             1.732
2002..............................               1.735              1.791                 1.852             1.731
2003..............................               1.699              1.741                 1.784             1.699


(1) Average means the average of the Noon Buying Rates on the last day of each
month during a year.

(1)
Average means the average of the Noon Buying Rates on the last day of each month during a year.
The high and low exchange rates for the six months preceding the date of this reportAnnual Report were:

                 MONTH                           HIGH                 LOW
- ----------------------------------------     --------------    -----------------
             December 2003                       1.699               1.724
             January 2004                        1.691               1.707
             February 2004                       1.671               1.703
              March 2004                         1.675               1.716
              April 2004                         1.668               1.705
               May 2004                          1.685               1.728

- -----------

Month
High
Low
December 2007
1.463
1.436
January 2008
1.438
1.417
February 2008
1.419
1.393
March 2008
1.391
1.378
April 2008
1.385
1.350
May 2008
1.379
1.358
Sources:    Federal Reserve Bulletin, Board of Governors of the Federal Reserve System. Federal Reserve Statistical Release H.10(512), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.
China
The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade. The following tables set forth, for the periods indicated, certain information concerning the


Noon Buying Rate of the Renminbi. No representation is made that the Renminbi or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Renmimbi, as the case may be, at any particular rate or at all.

Year Ended December 31,
At Period End
Average(1)
High
Low
 
 
(Rmb per $1.00)
2003
8.277
8.277
8.280
8.277
 
2004
8.277
8.277
8.277
8.276
 
2005
8.070
8.183
8.277
8.070
 
2006
7.804
7.958
8.070
7.804
 
2007
7.295
7.581
7.813
7.295
 
(1)
Average means the average of the Noon Buying Rates on the last day of each month during a year.
The high and low exchange rates for the six months preceding the date of this Annual Report were:

Month
High
Low
December 2007
7.412
7.295
January 2008
7.295
7.182
February 2008
7.197
7.110
March 2008
7.108
7.011
April 2008
7.019
6.984
May 2008
7.000
6.938
Sources:    Federal Reserve Bulletin, Board of Governors of the Federal Reserve System. Federal Reserve Statistical Release H.10(512), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.
    3.3    RISK FACTORS

              3.3.1  CONTROL BY PEWC; BANKRUPTCY OF PUSA; CONTRACTUAL
                     ARRANGEMENTS WITH PEWC

              Risk Factors
3.3.1 
Potential Illiquidity of Common Shares
Approximately 75.4% of our Common Shares are held as restricted securities, which are not publicly registered securities, and are, therefore, not freely tradable. In the recent past, the volume of trading in our Common Shares has not been substantial. The illiquidity of your ownership interest in the Company may negatively impact the value of your Common Shares.
3.3.2 
Control of the Company Rests with Majority Shareholder
As of December 31, 2003,the majority shareholder, Pacific Electric Wire and& Cable Co., Ltd
("PEWC"Ltd. (‘‘PEWC’’) indirectly held approximately 75.4%has sufficient votes to control the outcome of the outstandingany matters presented for a shareholder vote. PEWC may vote its shares of Common
Stock. Of these shares, Pacific USA Holdings Corp. ("PUSA"), a subsidiary of
PEWC, holds 53.0% of the outstanding shares of Common Stock. On December 2,
2002, PUSA filed a voluntary petition for bankruptcy protection under Chapter 11
of the United States Bankruptcy Code. The future ownership of these shares may
be affected by these bankruptcy proceedings and the resolution of certain
litigation involving an Amended and Restated Pledge Agreement dated as of
February 20, 2002 among Swiss Re Financial Products Corporation ("Swiss Re"),
PUSA, certain affiliates of PUSA and PEWC (the "Pledge Agreement") pursuant to
which these shares (the "Pledged Shares") were pledged to Swiss Re.

                                       5


              On October 16, 2003, Swiss Re entered into an agreement with Set
Top International, Inc. ("Set Top"), pursuant to which Swiss Re assigned its
rights under the Pledge Agreement to Set Top. On December 4, 2003,in the Company and PEWC commenced an action in the United States District Court for the
Southern Districtmanner that it sees fit. PEWC may also sell, convey or encumber all or a portion of New York contesting the validity of the transactions
underlying the assignment of the Pledge Agreement. However, Set Top proceeded to
exercise the rights it believed it acquired under the assignment of the Pledge
Agreement. On March 10, 2004, Set Top held a foreclosure sale and acquired for
itself a beneficialits ownership interest in the Pledged Shares.

              PursuantCompany without regard to a Settlementthe best interests of the other shareholders of the Company except to the extent it may be required to comply with the terms of the Shareholders’ Agreement entered into by anddated June 28, 2007 (the ‘‘Shareholders Agreement’’) among the Company, PEWC and Set Top asSOF Investments, L.P., a Delaware limited partnership which owns beneficially 20% of July 2, 2004 (the "Settlement Agreement"), PEWC
has agreedthe issued and outstanding Common Shares, and except that it may not engage in conduct oppressive to pay Set Top $25 million (the "Settlement Amount") for allminority interests under applicable law.
3.3.3 
Consolidation of Charoong Thai Group Accounts
As of Set
Top's interest inDecember 31, 2007, the Company's shares. Also pursuantCompany owned approximately 50.93% of the issued and outstanding shares of Charoong Thai Wire and Cable Public Company Limited (‘‘Charoong Thai’’). That percentage ownership constitutes a decrease from the Company’s initial ownership percentage


and is attributable to the Settlement
Agreement, Set Top has agreedexercise of warrants or conversion of convertible securities by third parties. The Company’s present intention is to withdraw as a creditor and party in interest to
the PUSA bankruptcy proceedings. If PEWC fails to pay the Settlement Amount by
August 30, 2004 (subject to extension), Set Top will become the controlling
shareholdermaintain majority ownership of the Company. Consequently, Set Top wouldvoting securities of Charoong Thai. However, there may be able to elect the
majority of the members of our Board of Directors and have the power to
determine the outcome of other actions requiring the approval of our
shareholders. Whilecircumstances under which the Company PEWC and Set Top have executedcannot maintain majority ownership of Charoong Thai. In the Settlement
Agreement, the actions calledevent Charoong Thai determined to make a further offering of voting securities, or securities convertible into or exchangeable for by that agreement have not yet been
implementedvoting securities, and the Company cannot provide assurances that eachwas not in a position to fund or finance its participation in the offering, the ownership interest of the parties
will takeCompany in Charoong Thai could fall below 50%. If the actions which that party has agreedCompany’s holding in Charoong Thai were to take underfall below 50%, the Settlement
Agreement. See Exhibit 4.4 "Settlement Agreement [Translation]". See also
Section 4.1.2 "Recent Developments" and Section 8.1 "Legal Proceedings".

              We engage in transactions in the ordinary course of business with
PEWC, including the purchase of certain raw materials and the distribution of
PEWC products in various countries in the Asia Pacific region. We and PEWC have
entered into a composite services agreement dated November 7, 1996, as amended
and supplemented (the "Composite Services Agreement"), which contains provisions
that define our relationship and the conduct of our respective businesses and
confers certain preferential benefits on us. This agreement is renewable at our
option and currently in force. However, we are unable to predict whether PEWC
would, at some future date, seek to limit the business it conducts with the
Company pursuant to the termsaccounts of the Composite Services Agreement.

              3.3.2  COMPETITION

              The wireCharoong Thai group, which includes all of the Company’s Thailand operations, will not be consolidated but instead will be equity accounted. In such an event, the Company’s accounts will show a fall in revenue and cable industry in the Asia Pacific region is highly
competitive. Our competitors includemost categories of assets and liabilities, wh ich events could have a large number of independent domestic and
foreign suppliers. Certain competitors in each of our markets have substantially
greater manufacturing, sales, research and financial resources than we do. We
and other wire and cable producers increasingly competematerial adverse effect on the basisvalue of product
quality and performance, reliability of supply, customer service and price. To
the extent that one or more of our competitors is more successful with respect
to the primary competitive factors, our business could be adversely affected.
See Section 4.2.6 "Competition" for additional information with reference to the
competitive environment we face in specific countries.

              3.3.3  RISKS RELATING TO COPPER

              your Common Shares.
3.3.4 
Risks Relating to Copper
Copper is the principal raw material we use, accounting for a majority of the cost of sales. We purchase copper at prices based on the average prevailing international spot market prices on the London Metal Exchange (the "LME"‘‘LME’’) for copper for the one month prior to purchase. The price of copper is influenced heavilyaffected by globalnumerous factors beyond our control, including international economic and political conditions, supply and demand, as well as

                                       6


speculative trading.inventory levels maintained by suppliers, actions of participants in the commodities markets and currency exchange rates. As with other costs of production, an increasechanges in the price of copper will increase ourmay affect the Company’s cost of sales. Whether this has a material impact on our operating margins and financial results depends primarily on ourthe Company’s ability to pass on these increased costsadjust charges to our customers.its customers, such that increases and decreases in the price of copper are fully reflected in those charges. The selling price of our productspro ducts is based in part on the cost of copper used to manufacture those products. In addition, in the ordinary course of business we maintain inventories of raw materials and finished products reasonably necessary for the conduct of our business. These inventories typically reflect the cost of copper prevailing in the market at the time of purchase. Most of our sales of manufactured products reflect copper prices prevailing at the time the products are ordered. A long-term decrease in the price of copper would require the Company to revalue its inventory at periodic intervals to the then net realizable value, which could be below cost. Copper prices have been subject to considerable volatility in
recent years and this volatility has had a significantit is not always possible to manage our copper purchases and inventory so as to neutralize the impact on our revenues
and profits.of copper price volatility. Accordingly, significant volatility in copper prices could have an adverse effect on our operations. No assurance can be given that such volatility will not continue to recur. (SeeSee Section 11.3 "Risks11.3: &lsqu o;‘Risks Relating to Copper"Copper’’ for additional information).

              3.3.4  EXPOSURE TO FOREIGN EXCHANGE RISKS

              Changesinformation.
3.3.5 
Risks Relating to China
We conduct substantial business operations in exchange rates influenceChina. Accordingly, our results of operations. Our
principal operations and prospects are located in Thailand and Singapore and a substantial
portion of our revenues are denominated in Baht or Singapore dollars. Nearly all
of the raw materials for these operations are imported and paid for in U.S.
dollars and a substantial portion of our future capital expenditures are
expectedlikely to be materially impacted by economic, legal and other developments in U.S. dollars. We require a significant amount of U.S. dollars
for our ongoing equipment upgrade and maintenance programs. Any devaluation of
the Baht or the Singapore dollar against the U.S. dollar would increase the
effective cost of foreign manufacturing equipment and the amount of foreign
currency denominated expenses and liabilities and would have an adverse impact
on our operations. Forward foreign exchange contracts are used on a selective
basis to hedge foreign exchange risk, but they do not provide any assurance that
we will not incur substantial losses in the event of a devaluation of the Baht
or Singapore dollar against the U.S. dollar.

              Although our reporting currency is U.S. dollars, the functional
currency of our Singapore operations, which accounted for 16.7% of Company sales
(including sales of Distributed Products) in 2003, is the Singapore dollar, and
the functional currency of our Thai operations, which accounted for 44.2% of our
sales in 2003, is the Baht. Accordingly, the functional currency accounts of
these operations are translated into U.S. dollars utilizing, for the year, the
balance sheet exchange rate for balance sheet accounts, and an average exchange
rate for the year for the income statement accounts. Such translation of the
functional currency accounts is recognized as a separate component of
shareholders' equity. Any devaluation of the Baht or Singapore dollar against
the U.S. dollar would adversely affect our financial performance measured in
U.S. dollars.

              3.3.5  RISKS RELATING TO THAILAND

              A substantial portion of our Thai operations, which accounted for
approximately 44.2% of our net sales in 2003, consists of the manufacture of
telecommunications and power cable and sales of those products for use in
large-scale telecommunications projects and various construction projects in
Thailand. As a result, our future performance will depend in part on the
political situation in Thailand and the general state of the Thai economy. China.
In July 1997, the

                                       7


floatation of the Thai Baht caused the currency to fall in value against the
U.S. Dollar and triggered declines in other regional currencies, such as the
Singapore Dollar and Australian Dollar. The Thai Baht generally appreciated
against the U.S. Dollar during the course of 1998 and largely stabilized in
1999. However, from mid-2000, the Thai economy began to decelerate as a result
of weak domestic demand, coupled with a major fiscal expansion program espoused
by the newly elected government, causing the Thai Baht to weaken further. Such
fluctuations in the value of the Thai Baht may negatively impact our
performance. The Baht has since stabilized at approximately Baht 39 to Baht 43
to US$ 1 in 2003.

              3.3.6  RISKS RELATING TO CHINA

              The economy of China differs from that of most free-market
economies in such respects as structure, government involvement, level of
development, growth rate, capital reinvestment, allocation of resources, rate of
inflation and balance of payments position. The economy of China has been a
planned economy subject to one-, five- and ten-year plans adopted by central PRC
government authorities and implemented, to a large extent, by provincial and
local authorities, which set out production and development targets for state
enterprises. Although the majority of productive assets in China are still owned
by the PRC government, more recentlyrecent years, the PRC government has implemented economic reform measures which emphasizeemphasizing decentralization, utilization of market forces andin the development of the economy and a high level of management autonomy. While such economic reform measures are generally viewed as a positive development for foreign businesses investing or establishing operations in China, the reforms are at an early stage and there is not sufficient administrative or judicial precedent to permit the Company to determine with any degree of certainty how the reforms will impact our business in China.
The Chinese legal system is a civil law system based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, the central government has promulgated laws and regulations dealing with economic matters such as foreign investment, projects such as Ningbo Pacific Cable
Co., Ltd. ("NPCDC").

              Until March 1998, when a government restructuring plancorporate organization and governance, commerce, taxation and trade. In particular, legislation over the past decades has significantly enhanced the protections afforded to abolish
fifteen ministries, including the PRC Ministryvarious forms of Postforeign investment in China. As foreign investment laws and Telecommunications
(the "MPT"), was approved by the National People's Congress, the MPT set
telecommunications policies at the national levelregulations in China are relatively new and supervisedbecause of the provincial postlimited volume of published decisions and telecommunications bureaustheir non-binding nature, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit the remedies available to us in each provincethe event of any claims or


disputes with third parties. In addition, any litigation in China which
are (and are expected to remain) semi-autonomousmay be protracted and responsible for developing
operating networks within each province. could result in substantial costs and diversion of resources and management attention.
The PRC government throughimposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade related transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange (‘‘SAFE’’) by complying with certain procedural requirements. However, approval from SAFE or its local branch is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. Shortages in the availability of foreign currency may restrict the abilit y of our subsidiaries in the PRC to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency-denominated obligations.
In addition, the PRC government has considerable control over the structure and overall development of the telecommunications industry in the PRC. Purchasers of our telecommunications cable in China are subject to extensive regulation by and under the supervision of the Ministry of Information and Industry (the "MII"‘‘MII’’) (which incorporates the MPT), remainswhich is the primary providertelecommunications industry regulator in China. The MII is responsible for formulating policies and regulations for the telecommunications industry, granting telecommunications licenses, allocating frequency spectrum and numbers, formulating interconnection and settlement arrangements between telecommunications operators, and enforcing industry regulations. Other PRC governmental authorities also regulate tariff policies, capital investment and foreign investment in the telecommunications industry. As a result of telecommunications service in Chinaits accession to the World Trade Organization (‘‘WTO’’) and along
with the provincial post and telecommunications bureaus, is onea doption of the few
consumersRegulations on the Administration of Foreign-Invested Telecommunications Enterprises in January 2002, which implement its commitments to the WTO, the Chinese government has agreed to gradually liberalize the various segments and regions of the telecommunications cable in China. Consequently,market to foreign telecommunications operators. Currently, however, the MII has only granted licenses to operate fixed-line telecommunications networks (which use our telecommunications cables) to certain domestic entities. As a result, the business of our companies in China may be more dependent on the political stability and
general economic condition of Chinathe country than if there were more consumers of telecommunications cable and if the government-related entities were not so closely involved in the telecommunications industry. In addition, the MII is
expected to set the price at which telecommunications cable may be sold. By
virtue of the adoption of the government restructuring plan, the former
ministries of the MPT will become the ministries of the MII, and all of the
regulatory functions of the MPT are to be transferredFuture changes to the MII.

              regulations and policies governing the telecommunications industry in China, including possible future industry restructurings, may have a material adverse effect on our business.
Political or social instability in China maycould also adversely affect our business operations or financial conditions. condition. In particular, adverse public health epidemics or pandemics in China could not only interfere with our ability to operate our PRC subsidiaries, but could also affect the country’s overall economic growth, which could in turn affect the sales of our products in China. In addition, as our corporate headquarters are now located in Taipei, any escalation in political tensions between the PRC and the government of Taiwan could impact adversely our ability to manage our Chinese operations efficiently or without third party interference.
The rapid growth of the PRC economy has historically resulted in high levels of inflation. If the government tries to control inflation, it may have an adverse effect on the business climate and growth of private enterprise in the PRC. An economic slowdown may increase our costs. If inflation is significant, our costs would likely increase, and there can be no assurance that we would be able to increase our prices to an extent that would offset the increase in our expenses.
We consume substantial amounts of electricity in our manufacturing processes at our production facilities in China. Certain parts of China have been subject to power shortages in recent years. We have experienced a number of power shortages at our production facilities in China to date. We are sometimes given advance notice of power shortages and in relation to this we currently have a backup power system at certain of our production facilities in China. However, there can be no assurance that in the future our backup power system will be completely effective in the event of a power shortage,


particularly if that power shortage is over a sustained period of time and/or we are not given advance notice thereof. Any power shortage, brownout or blackout for a significant period of time may disrupt our manufacturing, and as a result, may have an adverse impact on our business.
The insurance industry in China is still at an early stage of development. In particular, PRC insurance companies do not offer extensive business insurance products. As a result, we do not have any business liability or disruption insurance coverage for our operations in China. Any business disruption, litigation or natural disaster might result in our incurring substantial costs and the diversion of resources.
Certain of our PRC companies enjoy preferential tax treatments, in the form of reduced tax rates or tax holidays, provided by the PRC government or its local agencies or bureaus. On March 16, 2007, the National People’s Congress of the PRC, or NPC, passed the new PRC Enterprise Income Tax Law, or New EIT Law. Under the New EIT Law, effective January 1, 2008, China adopted a uniform tax rate of 25% for all enterprises (including foreign-invested enterprises) and revoked the then current tax exemption, reduction and preferential treatments applicable to foreign-invested enterprises. However, there is a transition period for enterprises, whether foreign-invested or domestic, that were receiving preferential tax treatments granted by relevant tax authorities at the time the New EIT Law became effective. Enterprises that are subject to an enterprise income tax, or EIT, rate lower than 25% may continue to enjoy the lower rate and gradually tr ansition to the new tax rate within five years after the effective date of the New EIT Law. Enterprises that are currently entitled to exemptions or reductions from the standard income tax rate for a fixed term may continue to enjoy such treatment until the fixed term expires. Preferential tax treatments will continue to be granted to industries and projects that are strongly supported and encouraged by the state, and enterprises otherwise classified as such ‘‘encouraged’’ high-tech enterprises will be entitled to a 15% EIT rate. On April 14, 2008, the Measures for the Recognition and Administration of New and High-tech Enterprises, or the Measures, were promulgated jointly by the Ministry of Science and Technology of the PRC, the Ministry of Finance of the PRC and the State Administration of Taxation of the PRC and became retroactively effective from January 1, 2008. Under the Measures, the term ‘‘high-tech enterprise’’ is defined as a resi dent enterprise that has been registered in the PRC (excluding Hong Kong, Macao or Taiwan) for more than one year, conducts business in the new and high-tech fields encouraged by government as listed in an appendix to the Measures, continuously undertakes research and development and technology conversion, and relies on self-owned intellectual property rights as the basis of its business operation. Such new and high-tech enterprises may apply for tax incentives.
The New EIT Law and any other changes to our effective tax rate could have a material and adverse effect on our business, financial condition and results of operations. We cannot assure you that we will continue to enjoy these preferential tax treatments in the future. The discontinuation or reduction of these preferential tax treatments or government financial incentives could materially and adversely affect our business, financial condition and results of operations.
3.3.6 
Disclosure Controls and Procedures and Internal Controls Over Financial Reporting Classified as Ineffective
In 2004 and continuing into 2005, the Company conducted an internal review regarding certain past and present financial and accounting practices with the assistance of an internationally-recognized forensic accounting firm. The internal review examined the adequacy of the Company’s disclosure controls and procedures. As of the end of 2006, management and the Company’s forensic accounting advisors identified the following material weaknesses:
• 
Lack of documented policies and procedures governing the Company’s accounting policies, internal control and code of conduct;
• 
Lack of an adequate internal audit function;
• 
Need for improvement in monthly financial statement close process for the Company and its subsidiaries to allow timely financial reporting;


• 
Need for greater U.S. GAAP and tax expertise to identify potential accounting and taxation issues that have a material impact on the Company; and
• 
Lack of credit control policies at certain subsidiaries.
The Company engaged a consultant to advise and assist on establishing an internal audit department and to assist in establishing and maintaining satisfactory disclosure controls and procedures. However, the Company has not completed this process and, as a result, under applicable regulatory guidance, the Company’s disclosure controls and procedures as of December 31, 2007 are required to be classified as ineffective. The Company is focused on improving its disclosure controls and procedures and is confident that these material weaknesses will no longer exist as of December 31, 2008 as long as the Company’s personnel properly implement and adhere to all remediation plans adopted by the Company.
In addition, the spreadCompany engaged a consultant to assist the Company’s management, including its Chief Executive Officer (‘‘CEO’’) and Interim Chief Financial Officer (‘‘CFO’’), in evaluating the Company’s internal controls over financial reporting as of Severe
Acute Respiratory Syndrome ("SARS"),December 31, 2007. As a pneumonia-like infection,result of that assessment, management, including our CEO and CFO, identified four material weaknesses and certain significant deficiencies in Chinathe Company’s internal controls over financial reporting as of that assessment date. As a result, under applicable regulatory guidance, the Company’s internal controls over financial reporting as of that assessment date are also required to be classified as ineffective. Those material weaknesses were reported by our CEO and CFO to the Company’s Board of Directors, its Audit Committee and its independent auditors, and those significant deficiencies were reported by our CEO and CFO to the Audit Committee and the independent auditors.
At a meeting held on June 13, 2008, the Company’s Board of Directors implemented certain remedial actions which the Company believes, once fully implemented, will address satisfactorily those material weaknesses identified by our CEO and CFO. However, the Company cannot provide any assurances that those actions will be sufficient or that other material weaknesses will not be identified upon further investigation, such that internal controls over financial reporting may negatively impactcontinue to be classified as ineffective, or, if rendered effective for a period of time, may not in the country's economic growth outlook.

                                       8


              3.3.7  Alternative Transmission Technologies

              Our fiber opticfuture cease to be effective.
The certifications provided as part of this Annual Report by our Chief Executive Officer and copper-based telecommunications business isby our Chief Financial Officer are subject to competition from other transmission technologies, principally
wireless-based technologies. Fiber optic cable is presently being usedand qualified by the disclosures and discussion in telecommunications trunksthis Annual Report on the lack of adequate disclosure controls and feeder cable businessesprocedures and minimallyon the lack of effectiveness, as of December 31, 2007, of the Company’s internal controls over financial reporting.
See Item 15: ‘‘Controls and Procedures’’ for a more detailed description of the aforementioned material weaknesses and significant deficiencies and the remedial measures to be taken in connection with those weaknesses.
3.3.7 
Potential Conflict of Certain Officers and Directors
The Company appointed two independent directors on September 28, 2007. Other than those two independent directors, all of the access cable businessmembers of the Board are also directors or officers or otherwise affiliated with PEWC, the majority shareholder. Certain of our officers are also affiliated with PEWC. In the Asia Pacific markets where we compete, wireless
telecommunications businesses have sometimes made substantial inroads in early
emerging markets where sufficient fundingeach case, they may not then be availablesubject to install
the infrastructure necessary for market-wide fixed line telecommunications.potential conflicts of interest. In addition, the ease of use of wireless telecommunications may make that medium an
attractive alternative in circumstances where access to fixed line
telecommunications is limited. While these technologies do not currently present
significant competition in the markets in which we conduct or plan to conduct
business, no assurance can be given that the future development and use of such
alternative technologies will not adversely affect our results of operations.

              3.3.8  POTENTIAL CONFLICT OF CERTAIN OFFICERS AND DIRECTORS

              Certaincertain of our officers and directors who are also officers andand/or directors of affiliates of PEWC and may be subject to various conflicts of interest in connection with, for example, pursuing corporate opportunities in which we and suchPEWC or one of its affiliates of PEWC have competing interests, and the performance by us and PEWC of our respective obligations under existing agreements, including the Composite Services Agreement and the Indemnification Agreement (discussed below in Section 10.2). In addition, some of these persons will devote time to the business and affairs of PEWC and its affiliates as is appropriateappropria te under the circumstances, which could reduce the amount of time available for overseeing or managing our business and affairs. Notwithstanding any such potential conflicts, however, such individuals, in their capacities as our directors and officers, are subject to fiduciary duties to our shareholders.
The Bermuda Companies Act 1981, as amended (the "Companies Act"‘‘Companies Act’’), subjects our officers and directors to certain fiduciary standards in the exercise of their fiduciary duties on our behalf. Under


the Companies Act, an officer of ours (which term includes our directors) is subject to a duty of care requiring him to act honestly, in good faith and in the best interests of the Company in the discharge of his duties and to, among other things, give notice to the Board at the first opportunity of any interest he has in any material contract or proposed material contract with us or any of our subsidiaries. The Companies Act also prohibits us, subject to certain exceptions, from making loans to any directors without first obtaining the consent of shareholders holding in the aggregate not less than nine-tenths of the total voting rights of all the shareholders having the right to vote at any shareholders meeting. As of May 31, 2004, we do not make any loans to our directors or executive officers in accordance with the provisions of The Sarbanes-Oxley Act of 2002.

              3.3.9  POTENTIAL ILLIQUIDITY OF COMMON SHARES

              Our common shares are quoted
3.3.8 
Obligations under Shareholders Agreement
On June 28, 2007, SOF Investments, L.P. (‘‘SOF’’), a Delaware limited partnership, acquired 2,766,154 Common Shares, representing 20% of the issued and outstanding Common Shares (the ‘‘SOF Shares’’), from Sino-JP Fund Ltd (‘‘Sino-JP’’). Following that sale, Sino-JP ceased to have any ownership interest in the Company and its three designees on the Over-the-Counter Bulletin
Board ("OTC BB"of Directors and the Company officers selected by it each resigned with immediate effect. On that same date, the Company entered into the Shareholders Agreement with PEWC and SOF, pursuant to which the Company granted to SOF certain rights and protections. Under the Shareholders Agreement, the Company has agreed to indemnify SOF and its partners and certain of its affiliates (the ‘‘SOF Indemnified Persons’’) operated, for any additional taxes, interest, penalties and other costs that might be imposed upon or incurred by the NASD, Inc. However, approximately 75.4% of our
common sharesSOF Indemnified Persons in the event that the Company is determined by the Internal Revenue Service (the ‘‘IRS’’) to be a ‘‘controlled foreign corporation’’ (a ‘‘CFC’’) or a ‘‘passive foreign investment company’’ (a ‘‘PFIC’’), as such terms are indirectly held by PEWCinterpreted and management and aredefined under IRS rules or regulations. The Company does not publicly
registered securities, and are, therefore, not freely tradable. Inbelieve that it is now or is likely to become a CFC or a PFIC; however, the recent
past, the volume of trading in our common shares has

                                       9


not been substantial. There can be noCompany cannot provide any assurances that it will not become a shareholder wishingCFC or a PFIC in the future.
In addition, the Company has granted certain registration rights to dispose of his or her shares will be able to immediately sell his or her
position, nor can there be any assurances asSOF with respect to the priceSOF Shares referred to in the Shareholders Agreement as (the ‘‘Registrable Securities’’) acquired by SOF from Sino-JP. In particular, the Company has agreed to use its reasonable best efforts to prepare and file, and cause to go effective, as soon as practicable, a shelf registration statement covering the resale of the Registrable Securities on a continuous basis. In addition, the Company has granted to SOF two demand registration rights for underwritten offerings and customary piggyback registration rights with regard to the Registrable Securities. Moreover, the Company has agreed that, not later than January 31, 2009, it shall have used its reasonable best efforts to cause the Common Shares to be listed on a national ‘‘Securities Market,’’ which could be
obtained inmeans any such sale.

              Prior to December 24, 2001,of the common shares were traded onNasdaq Stock Market, Inc. (Global Market or G lobal Select Market), the American Stock Exchange LLC or the New York Stock Exchange LLC. All of the costs and expenses of the Company in connection with the fulfillment of its obligations under the Shareholders Agreement are to be paid by the Company, other than underwriting fees, discounts and commissions attributable to the sale of Registrable Securities.
The Company has also granted to SOF preemptive rights in the event of any issuance of additional equity securities (or securities convertible into or exchangeable for equity securities) by the Company, such that SOF may subscribe for additional securities in order to maintain its then percentage ownership interest in the issued and outstanding equity securities of the Company.
If the Company fails to fulfill its obligations under the Shareholders Agreement, SOF may have a claim for damages against the Company or, if the Company fulfills its reasonable best efforts undertakings but fails to meet one or more of the stated goals, SOF may have a put right of its Common Shares to PEWC, either of which events may adversely impact the value of your Common Shares. See Section 4.1.2: ‘‘Recent Developments’’; see also the Shareholders Agreement for a complete statement of the obligations of the Company under that agreement.
3.3.9 
Risks Relating to the Settlement Agreement.
Following the acquisition by Sino-JP in 2004 of Common Shares of the Company, a number of disputes arose between PEWC and Sino-JP regarding the governance of the Company and other


matters. On June 28, 2007, the date of the purchase by SOF of the SOF Shares from Sino-JP and the date of the Shareholders Agreement among the Company, PEWC and SOF, the Company and Sino-JP also entered into a comprehensive settlement and release agreement (the "NYSE"‘‘Settlement Agreement’’), which dismissed and released all claims between the parties and which put an end to all related litigation. Separately, PEWC also entered into a settlement and release agreement that terminated all disputes and litigation between those parties. Upon the closing of the purchase agreement for the SOF Shares and the Settlement Agreement, all of the directors and officers of the Company designated by Sino-JP submitted their resignations and Sino-JP ceased to have any interest in the Company. As part of the Settlement Agreement, the Company agreed to indemnify all of those Sino-JP designated directors and officers (the ‘‘Sino-JP Indemnified Persons’’) for all acts or omiss ions taken in their capacity as a director or officer to the maximum extent permitted under the memorandum of association and the Bye-laws of the Company and the Bermuda Companies Act. The Company could incur significant costs in the event any claims are asserted or actions commenced against any of the Sino-JP Indemnified Persons for matters within the scope of the indemnification provisions of the Settlement Agreement. See Section 4.1.2: ‘‘Recent Developments.’’
3.3.10 
Exposure to Foreign Exchange Risks
Changes in exchange rates influence our results of operations. Our principal operations are located in Thailand, Singapore and China, and a substantial portion of our revenues is denominated in Baht, Singapore dollars or Renminbi. Nearly all of the raw materials for these operations are imported and paid for in U.S. dollars and a substantial portion of our future capital expenditures are expected to be in U.S. dollars. We require a significant amount of U.S. dollars for our ongoing equipment upgrade and maintenance programs. Any devaluation of the Baht, the Singapore dollar or Renminbi against the U.S. dollar would increase the effective cost of foreign manufacturing equipment and the amount of foreign currency denominated expenses and liabilities and would have an adverse impact on our operations. Forward foreign exchange contracts are used on a selective basis to hedge foreign exchange risk, but they do not provide any assurance that we will not incur substant ial losses in the event of a devaluation of the Baht, Singapore dollar or Renminbi against the U.S. dollar.
Although our reporting currency is U.S. dollars, the functional currency of our Singapore operations, which accounted for 9.4% of Company sales (including sales of Distributed Products) in 2007, is the Singapore dollar, the functional currency of our Thai operations, which accounted for 48.8% of our sales in 2007, is the Baht, and the functional currency of our Chinese operations, which accounted for 30.9% of our sales in 2007, is the Renminbi. Accordingly, the functional currency accounts of these operations are translated into U.S. dollars utilizing, for the year, the balance sheet exchange rate for balance sheet accounts, and an average exchange rate for the year for the income statement accounts. Such translation of the functional currency accounts is recognized as a separate component of shareholders’ equity. Any devaluation of the Baht, Singapore dollar or Renminbi against the U.S. dollar would adversely affect our financial performance measured in U .S. dollars.
Substantially all of the revenues of our operations in China are denominated in Renminbi. The value of the Renminbi against the U.S. dollar and other foreign currencies fluctuates and is subject to changes in Chinese and international political and economic conditions. From 1994 to July 20, 2005, the conversion of Renminbi into foreign currencies, including U.S. dollars, was based on rates set by the People’s Bank of China daily based on the previous business day’s inter-bank foreign exchange market rates and current exchange rates on the world financial markets. From 1994 to July 20, 2005, the official exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. On the same day, the value of the Renminbi appreciated by approximately 2% against the U.S. dollar. The PRC government has establishedsince made and in the future may make further adjustments to the exchange rate system. Fluctuations in exchange rates may adversely affect the value, translated or converted into U.S. dollars, of our net assets, earnings and any declared dividends payable by our operating subsidiaries and joint ventures in China. We cannot assure you


that any future movements in the exchange rate of the Renminbi against the U.S. dollar or other foreign currencies will not adversely affect our results of operations and financial condition.
For further information on our foreign exchange risks and certain continued
listing criteria for companies whose shares are tradedexchange rates, see Section 11.1: ‘‘Foreign Currency Exposure.’’
3.3.11 
Competition
The wire and cable industry in the Asia Pacific region is highly competitive. Our competitors include a large number of independent domestic and foreign suppliers. Certain competitors in each of our markets have substantially greater manufacturing, sales, research and financial resources than we do. We and other wire and cable producers increasingly compete on it. The criteria
impose certain minimum requirementsthe basis of product quality and performance, reliability of supply, customer service and price. To the extent that one or more of our competitors is more successful with respect to the per share priceprimary competitive factors, our business could be adversely affected. See Section 4.2.6: ‘‘Competition’’ for additional information regarding the competitive environment we face in specific countries.
3.3.12 
Composite Services Agreement with PEWC
We engage in transactions in the ordinary course of business with PEWC, including the purchase of certain raw materials and the aggregatedistribution of PEWC products in various countries in the Asia Pacific region. We and PEWC have entered into a composite services agreement dated November 7, 1996, as amended and supplemented (the ‘‘Composite Services Agreement’’), which contains provisions that define our relationship and the conduct of our respective businesses and confers certain preferential benefits on us. The Composite Services Agreement is renewable at our option and is currently in force. However, we are unable to predict whether PEWC would, at some future date, seek to limit the business it conducts with the Company pursuant to the terms of the Composite Services Agreement. See Section 10.2: ‘‘Material Contracts’’ for a summary of the terms of the Composite Services Agreement.
3.3.13 
Risks Relating to Thailand
A substantial portion of our Thai operations, which accounted for approximately 48.8% of our net sales in 2007, consists of the manufacture of telecommunications and power cable and sales of those products for use in large-scale telecommunications projects and various construction projects in Thailand. As a result, our future performance will depend in part on the political situation in Thailand and the general state of the Thai economy. In recent years the Thai economy has been highly cyclical and volatile, depending for economic growth in substantial part on a number of government initiatives for economic expansion. However, the Baht remains volatile and subject to significant fluctuations in relation to the U.S. dollar. Such fluctuations in the value of the publiclyBaht may negatively impact our performance. The Baht traded securitiesin the range of approximately Baht 29.28 to Baht 35.96 to US$1 in 2007.
3.3.14 
Alternative Transmission Technologies
Our fiber optic and copper-based telecommunications business is subject to competition from other transmission technologies, principally wireless-based technologies. Fiber optic cable is presently being used in telecommunications trunks and feeder cable businesses and minimally in the access cable business. In the Asia Pacific markets where we compete, wireless telecommunications businesses have sometimes made substantial inroads in early emerging markets where sufficient funding may not then be available to install the infrastructure necessary for market-wide fixed line telecommunications. In addition, the ease of use of wireless telecommunications may make that medium an issuer. In February
2001,attractive alternative in circumstances where access to fixed line telecommunications is limited. While these technologies do present significant competition in the NYSE notified usmarkets in which we conduct or plan to conduct business, the Company believes that we had not been in compliance with those NYSE
requirements, anddemand for its fixed wire products will remain strong. However, no assurance can be given that the NYSE would be authorized to suspend trading infuture development and use of such alternative technologies will not adversely affect our common shares and to commence delisting procedures subject to review and
approvalresults of our business plan. During the course of 2001, our business plan was
submitted, amended and finally provisionally agreed with the NYSE, subject to
the right of the staff to require continuous compliance within a designated time
frame, which the Company was not able to achieve, due to, among other factors,
delays in approvals by Thai regulatory authorities of the implementation of
certain Thai-based elements of the plan. On December 24, 2001, the staff of the
NYSE announced that it has determined that the trading of the common shares
should be suspended on December 28, 2001. The decision was reached in view of
the fact that the Company had fallen below the NYSE's continued listing
standards. The Company appealed the NYSE's decision, but its appeal was denied
by a Committee of the Board of Directors of the Exchange. The Company
subsequently re-established a public trading market for its common shares on the
OTC BB. It is traded under the symbol "AWRCF.OB".

              3.3.10 HOLDING COMPANY STRUCTURE, POTENTIAL RESTRICTIONS ON THE
                     PAYMENT OF DIVIDENDS

              operations.


3.3.15 
Holding Company Structure; Potential Restrictions on the Payment of Dividends
We have no direct business operations other than our ownership of the capital stock of our subsidiaries and joint venture holdings. While we have no present intention to pay dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends as well as toand meet our other obligations will depend upon the amount of distributions, if any, received from our operating subsidiaries and other holdings and investments. Our operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants contained in loan agreements, restrictions on the conversion of local currency earnings into U.S. dollars or other hard currency and other regulatory restrictions. For example, PRC legal restrictions permit payments of dividends by our business entities in the PRC only out of their retained earnings, if any, determined in accorda nce with relevant PRC accounting standards and regulations. Under PRC law, such entities are also required to set aside a portion of their net income each year to fund certain reserve funds. These reserves are not distributable as cash dividends. The foregoing restrictions may also affect our ability to fund operations of one subsidiary with dividends and other payments received from another subsidiary. 3.3.11 CORPORATE MATTERS; ORGANIZATIONAL DOCUMENTS

              See Section 3.3.3: ‘‘Consolidation of Charoong Thai Group Accounts.’’
3.3.16 
International Business Risks
We are subject to risks specific to our international business operations, including: the risk of supply disruption, production disruption or other disruption arising from the outbreak of highly infectious or communicable diseases such as Severe Acute Respiratory Syndrome; the risk of potential conflict and further instability in the relationship between Taiwan and the PRC; risks related to international political instability and to the recent global economic turbulence and adverse economic circumstances in Asia; unpredictable consequences on the economic conditions in the U.S. and the rest of the world arising from terrorist attacks, such as the attacks of September 11, 2001 in the U.S. and other military or security operations; unexpected changes in regulatory requirements or legal uncertainties regarding tax regimes; tariffs and other trade barriers, including current and future import and export restrictions; difficulties in staffing and manag ing international operations in countries such as Singapore, the PRC, Thailand and Taiwan; risks that changes in foreign currency exchange rates will make our products comparatively more expensive; limited ability to enforce agreements and other rights in foreign countries; changes in labor conditions; longer payment cycles and greater difficulty in collecting accounts receivable; burdens and costs of compliance with a variety of foreign laws; limitation on imports or exports and expropriation of private enterprises; and reversal of the current policies (including favorable tax and lending policies) encouraging foreign investment or foreign trade by our host countries. Although we have not experienced any serious harm in connection with our international operations, we cannot assure you that such problems will not arise in the future.
3.3.17 
Corporate Matters; Limited Recourse; Limited Enforceability
We are incorporated in and organized pursuant to the laws of Bermuda. In addition, certainmost of our directors and officers reside outside the United States and a substantial portion of our assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon such persons or to realize against them in courts of the United States upon judgments predicated upon civil liabilities under the United States federal securities laws. We have been advised by our legal counsel in Bermuda, Appleby, Spurling Hunter, that there is doubt as to the enforcement in Bermuda, in

                                       10
 original actions or in actions for enforcement of judgments of United States courts, of liabilities predicated upon U.S. federal securities laws, although Bermuda Courts will enforce foreign judgments for liquidated amounts in civil matters subject to certain conditions and exceptions.
    3.4    FORWARD-LOOKING STATEMENTS

         Forward-looking Statements
This annual report,Annual Report, including any documents incorporated by reference, contains statements that we believe constitute forward lookingforward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements appear throughout this annual reportAnnual Report and include


statements regarding the intent, belief or current expectations of the Company and its management, including with respect to trends affecting the Company'sCompany’s financial condition or results of operations and the Company'sCompany’s plans with respect to capital expenditures and investments. These forward lookingforward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those described in these forward lookingforward-looking statements as a result of various factors. See Section 3.3 "Risk Factors"3.3: ‘‘Risk Factors’’ for a further discussion of some of the factors that could cause such material differences.

ITEM


Item 4:    INFORMATION ON THE COMPANYInformation on the Company
    4.1    HISTORY AND DEVELOPMENT OF THE COMPANY; RECENT DEVELOPMENTS

              4.1.1  HISTORY AND DEVELOPMENT OF THE COMPANY

              History and Development of the Company; Recent Developments
4.1.1 
History and Development of the Company
The Company (Asia Pacific Wire & Cable Corporation Limited), formed on September 19, 1996, is a Bermuda corporationexempted limited liability company which, through its operating subsidiaries, is principally engaged in the manufacture and distribution of telecommunications (copper and fiber optic) and power cable and enameled wire products in the Asia Pacific region, primarily in Singapore, Thailand, Australia and China. The Company manufactures and distributes its own wire and cable products and also distributes copper rod and wire and cable products ("(‘‘Distributed Products"Products’’) manufactured by its principal shareholder, PEWC. FromPacific Electric Wire & Cable Company, a Taiwanese company (‘‘PEWC’’). Since 1997, the Company has also offered project engineering services in the supply, delivery and installation ("SDI"(‘‘SDI’’) of power cables. PEWC currently owns beneficially 55.4% of the issued and out standing Common Shares of the Company. Sino-JP Fund Co., Ltd. is a privately owned investment company, incorporated under the laws of the Cayman Islands. From September 10, 2004 until September 14, 2005, Sino-JP owned 10,074,102 Common Shares of the Company, representing 72.84% of the issued and outstanding Common Shares. From September 14, 2005 until June 28, 2007, Sino-JP owned 2,766,154 shares of the Company, representing 20% of the issued and outstanding Common Shares. On June 28, 2007, SOF Capital, L.P. acquired from Sino-JP the 20% of the issued and outstanding Common Shares previously held by Sino-JP. See Section 4.1.2: ‘‘Recent Developments’’ and Section 8.1: ‘‘Legal Proceedings.’’ The remaining 24.6% of the issued and outstanding Common Shares are publicly owned Taiwanese corporation whose shares are listedtraded on the Taiwan Securities
Exchange, currently owns approximately 75.4% ofOver-the-Counter Bulletin Board (the ‘‘OTC BB’’) in the Company's outstanding Common
Stock.

              United States under the trading symbol ‘‘AW RCF.’’
The Company is one of the five largest producers of telecommunications and low voltage power cable and enameled wire in Thailand and believes that it is the largest producer of low voltage power cable in Singapore. In 2003,2007, approximately 57.1%56.8% of the manufactured products sold by the Company were sold by its subsidiaries in Singapore and Thailand, with the remainder sold by its subsidiaries or joint ventures in China, Australia and Malaysia.
In Singapore, the Company also sells Distributed Products, which largely consist of copper rod and medium and high voltage power cable. SalesIn 2007, sales of Distributed Products accounted for 7.2%2.1% of the Company's revenues and 1.5% of
its operating profits in 2003.Company’s revenues. As the Company continues to focus its resources on manufacturing and distributing its own products, sales of Distributed Products are expected to decline over time as a percentage of the Company's

                                       11
Company’s business. The Company'sCompany’s SDI project engineering services accounted for 1.9%1.0% of the Company'sCompany’s revenue in 2003.

              2007.
The Company sells its cable products primarily to government agencies, telecommunications network operators and large construction companies and subcontractors bidding for government contracts. Telecommunications cable products manufactured by the Company are largely used as access lines to connect buildings and residences to feeder and trunk cables. Power cable manufactured by the Company is used primarily in power transmissions for public lighting, outdoor installations and in and to commercial and residential buildings. Enameled wire is sold primarily to private sector manufacturers of electric motors for use in various consumer appliances. The Company maintains local sales personnel in each country where it has manufacturing operations, and export sales are conducted through independent suppliers as well as the Company'sCompany’s own sales personnel. The Company principally competes on the basis of product quality and performance, reliability of supply, timely delivery, customer service and price.
4.1.2 
Recent Developments
Change of Control; Option Exercise by PEWC and Other Material Changes in Ownership of the Common Shares
From September 2004 until September 2005, Sino-JP Fund Co., Ltd., a Cayman Islands company (‘‘Sino-JP’’), held 10,074,102 shares, representing approximately 72.84% of the outstanding Common


Shares (the ‘‘Supramajority Shares’’). Sino-JP acquired its shares of the Company pursuant to an assignment from Asset Managers Co., Ltd., a Japanese company (‘‘AMC’’). The Company continuesSupramajority Shares were acquired by AMC pursuant to explore opportunities to establish
manufacturinga Share Purchase Agreement dated as of September 10, 2004 (the ‘‘2004 Share Purchase Agreement’’) by and distribution operations in the Asiabetween AMC and Pacific region,
principally in countries where demand exceeds local production capacityElectric Wire & Cable Co., Ltd. (‘‘PEWC’’) and where there are high import tariffs for finished products andcertain other substantial
barriers for market entry by foreign distributors.parties. The Company seeks to form
similar joint ventures in new markets with well-established local partners to
provide credibility in each market and access to sales opportunities on an
accelerated basis.

              The Company's business office is located at 19 Benoi Road, Level
3A, Sigma Cable High Tech Complex, Singapore 629909, telephone number (65)
6663-2132, and its registered office is located at Canon's Court, 22 Victoria
Street, Hamilton HM EX, Bermuda, telephone number (441) 295-2244.

              4.1.2  Recent Developments

              Bankruptcy of PUSA

              On December 2, 2002 (the "Filing Date"), our majority shareholder2004 Share Purchase Agreement and a subsidiary of PEWC, PUSA, filed a voluntary petition for bankruptcy
protection under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Northern District of Texas, Dallas Divisionrelated Option Agreement dated September 10, 2004 (the "Bankruptcy Court"‘‘2004 Option Agreement’’), along with its affiliates PUSA Investment Company, Montford
Limited, Top Target Limited, Berger Systems Limited, Elan Investments Limited,
Austway Services Limited, and Pacific Realty Group, Inc. (together with PUSA,
the "Debtors"). At that time, PUSA had pledged the Pledged Shares to Swiss Re
under the Pledge Agreement. We have been informed that an event of default
occurred under the Pledge Agreement that entitled Swiss Re to foreclose on the
Pledged Shares.

              On December 30, 2002, Swiss Re moved the Bankruptcy Court to lift
the automatic stay that were entered in effect on the Filing Date and which had
prohibited Swiss Re from foreclosing on the Pledged Shares. After negotiations
among the Debtors, PEWC and Swiss Re, the Debtors agreed to consent to a lifting
of the automatic stay if Swiss Re entered an agreement to refrain from
foreclosing on the Pledged Shares (the "Stay Agreement") on January 23, 2003.
Under the

                                       12


terms of the Stay Agreement, Swiss Re agreed it would not foreclose on the
Pledged Shares before May 23, 2003, provided that, among other things:

         (i) by April 8, 2003, the Debtors obtained court approval of a
disclosure statement detailing a plan of reorganization that would include
paying Swiss Re $50 million to satisfy its claim;

         (ii) by April 8, 2003, PEWC either placed cash in escrow or obtained a
letter of credit in the amount of $50 million to fund such a reorganization
plan, or presented a sale agreement to purchase Swiss Re's claim against the
Debtors for $50 million;

         (iii) by May 23, 2003, the Debtors have either obtained confirmation of
the plan of reorganization by the court or PEWC has purchased Swiss Re's claim;
and

         (iv) by June 6, 2003, Swiss Re has been paid $50 million in
satisfaction of its claim.

         If any of the conditions or deadlines stated in the Stay Agreement is
not met, then Swiss Re would be free to foreclose on the Pledged Shares. The
Stay Agreement was approved by an order of the Bankruptcy Court on February 28,
2003 (the "Stay Relief Order") and the automatic stay enjoining Swiss Re from
foreclosing on the Pledged Shares was lifted.

         On July 10, 2003, the Debtors filed an amended joint disclosure
statement, (the "Disclosure Statement")into in connection with a proposedsettlement of certain litigation commenced by PEWC against Set Top International Inc., a British Virgin Islands company (‘‘Set Top’’). In connection with that settlement, Set Top was paid $25,000,000 by AMC in exchange for the ownership interest in and all claims rela ting to the Supramajority Shares. Upon the consummation of the 2004 Share Purchase Agreement, PEWC, which formerly held 75.4% of the outstanding Common Shares, held indirectly approximately 2.56% of the outstanding Common Shares. Under the terms of the 2004 Option Agreement, PEWC was granted an option to reacquire 52.84% of the total issued and outstanding Common Shares (the ‘‘Repurchase Option’’). See Section 8.1: ‘‘Legal Proceedings.’’
In accordance with the provisions of the 2004 Share Purchase Agreement, Sino-JP had caused the Bye-laws of the Company to be amended joint planto establish a classified board of reorganizationdirectors, consisting of up to three (3) Class A Directors and up to seven (7) Class B Directors. Sino-JP and its affiliates were entitled to designate candidates for election as the Class A directors, who, under the Bankruptcy Code. A Second Amended Planterms of Reorganization was filedthe revised Bye-laws, had a veto power over all matters presented to the Board of Directors of the Company for a vote.
On September 14, 2005, PEWC exercised the Repurchase Option and reacquired 7,307,948 Common Shares (the ‘‘Repurchased Shares’’), representing 52.84% of the total issued and outstanding Common Shares, for a price of $2.581 per share, or a total purchase price of $18,861,813.78, plus certain guaranteed returns payable by PEWC to Sino-JP. As a result of the Debtors on February 26, 2004. The Bankruptcy
Court has not yet approvedreacquisition by PEWC of majority control, PEWC indirectly holds 7,664,615 Common Shares, representing 55.4% of the Disclosure Statement.

         On October 16, 2003, Swiss Re entered into an agreement with Set Top,
pursuant tototal issued and outstanding Common Shares and Sino-JP then held 2,766,154 Common Shares, representing 20% of the total issued and outstanding Common Shares (the ‘‘Sino-JP Shares’’).
Commencing in 2004, the banking group creditors of PEWC, consisting of a consortium of 32 banks (the ‘‘PEWC Banking Group’’), represented by Chiao Tung Bank, exercised control over any material expenditures by PEWC. Funding the exercise of the Repurchase Option required the approval of the PEWC Banking Group, which Swiss Re sold all of its rights, title and interest in
connection withimposed certain "Assigned Assets," including: (i) Swiss Re's claim in
the amount of $90.6 million dollars as filed in the Bankruptcy Proceeding and
(ii) the Pledged Shares. A month later, Set Top, as the new pledgee, announced
its intention to foreclose the Pledged Shares. PEWC and APWC commenced legal
proceedings in the federal courts to enjoin Set Top from selling the Pledged
Shares. See also Section 8.1 "Legal Proceedings".

         The Debtors and the Official Committee of Unsecured Creditors (the
"Committee") also moved in the Bankruptcy Court for an injunction to prevent Set
Top from foreclosingconditions on the Pledgedexercise of the Repurchase Option. Among the conditions, PEWC was required to enter into a letter of undertaking (the ‘‘PEWC Letter of Undertaking’’) which provided that (i) the funds made available would be used only to buy the Repurchased Shares, (the "Injunction Motion"). The
Injunction Motion was denied by(ii) as indirect majority shareholder, PEWC would cause the Bankruptcy Court on February 27, 2004 and
Set Top subsequently sold the Pledged SharesBoard of Directors of APWC to itself on March 10, 2004.

         On January 21, 2004, Set Top filedconsist of a motion requesting the Bankruptcy
Court to compel PUSA to complymajority of independent directors, with the Stay Relief Order by sending a
requisition notice to APWC demanding that APWC convene a special general
shareholders meeting for the purposes of considering the removal of certain
directors of APWC. Although Set Top did not haveBanking Group having the right to require PUSAconsent to callnominees for any independent directorships, (iii) PEWC would deposit the Repurchased Shares in a trust to secure the obligations of PEWC to the PEWC Banking Group and (iv) PEWC would make monthly installments through September 2006 in repayment of debt owed to the PEWC Banking Group.
In order to secure its obligations under the PEWC Letter of Undertaking, PEWC entered into a trust agreement dated September 12, 2005 (the ‘‘PEWC Trust Agreement’’) by and among PEWC, Moon View Ventures Limited BVI, a wholly-owned subsidiary of PEWC (‘‘Moon View’’), and Chiao Tung Bank Trust Department Trust Assets (‘‘CTB’’). Under the terms of the PEWC Trust Agreement, the Repurchased Shares were deposited with, and registered with the Company registrar in Bermuda in the name of, CTB. In addition to the Repurchased Shares, the trust assets included all dividend and voting rights; provided that PEWC was permitted to direct the voting of the Repurchased Shares unless and until there was a default under the PEWC Letter of Undertaking. In the event of a default by PEWC under the PEWC Letter of Undertaking, which included a default for three consecutive months under the agreements with the PEWC Banking Group, CTB was permitted to dispose of all of the Repurchased Shares and apply the proceeds to pay the PEWC Banking Group or CTB could exercise all voting rights associated with the Repurchased Shares.
In May 2006, the PEWC Banking Group determined that PEWC had fulfilled, or was in a position to fulfill, the requirements with respect to the PEWC Letter of Undertaking. Therefore, on


June 6, 2006, CTB, on behalf of the PEWC Banking Group, delivered a letter instructing the termination of the PEWC Trust Agreement and authorizing the registration of the Repurchased Shares on behalf of PEWC without any pledge or encumbrance in favor of the PEWC Banking Group.
PEWC has informed the Company that it is a party to a debt restructuring agreement with the PEWC Banking Group which provides PEWC with certain relief from the original loan terms and contains an agreement by the PEWC Banking Group to forbear on exercising certain remedies against collateral so long as PEWC adheres to the terms of the debt restructuring. PEWC has informed the Company that the debt restructuring agreement has been extended through 2009.
Subsequent to the 2004 Share Purchase Agreement, a number of disputes arose between Sino-JP and PEWC regarding the governance of the Company and other matters. Litigation was commenced in Bermuda, in which the Company was named a party, and in Hong Kong, in which the Company was not named a party. On June 28, 2007, the Company entered into a comprehensive settlement and release agreement with Sino-JP (the ‘‘Settlement Agreement’’), which dismissed and released all claims between the parties and which put an end to all related litigation. PEWC also entered into a settlement and release agreement with Sino-JP that terminated all disputes and litigation between those parties. On the same date, SOF Investments, L.P. (‘‘SOF’’), a Delaware limited partnership, acquired the Sino-JP Shares (the ‘‘SOF Acquisition’’) and entered into a shareholders meeting,agreement with the Debtors voluntarily agreedCompany and PEWC. Upon t he closing of that acquisition, Messrs. Eric Chi Chiu Yip, Wellen Sham and Ryoji Furukawa, who were all of the director-designees of Sino-JP, resigned from the Board, and all of the officers designated by Sino-JP submitted their resignations, and Sino-JP ceased to convene a
shareholders meetinghave any interest in the Company. On the same date, Messrs. Andy Cheng, Jack Sun and David Sun were re-appointed to the Board.
Following the closing of APWC. An agreed order was entered by the Bankruptcy
Court on March 25, 2004, pursuant to

                                       13


which PUSA sent a requisition letter to APWC formally requestingSOF Acquisition and the boardentering into of directors to convene a specialthe Settlement Agreement with Sino-JP, the Board called for an annual general meeting of the shareholders of APWC. The
meetingwhich was held on June 22, 2004.September 7, 2007 (the ‘‘2007 AGM’’). At the meeting, Tom C.Y. Tung was removed2007 AGM, the shareholders approved, among other things, the reappointment of Ernst & Young LLP to complete its audit of the consolidated financial statements of the Company for the year ended December 31, 2004 and the appointment of Moores Rowland International – Singapore (which now does business under the name Mazars Moores Rowland LLP) to act as the independent auditors of the Company for fiscal years 2005, 2006 and 2007.
At the 2007 AGM, shareholders of the Company voted to change from the boarda classified to an unclassified Board, composed of eight shareholder-elected directors and five newtwo casual vacancies to be filled after the meeting. As of the date of the filing of this Annual Report, the Board consists of ten members. The following eight members were elected by shareholders at the 2007 AGM: Michael Lee, Andy C.C. Cheng, David T. Sun, Jack T. Sun, Gai Poo Lee, Ching Rong Shue, Fang-Hsiung Cheng and Yuan Chun Tang.
Certain current Board members have relationships with PEWC. Directors Ching Rong Shue and Gai Poo Lee are Vice Presidents of PEWC, and Fang-Hsiung Cheng is an Assistant Vice President of PEWC. Director Yuan Chun Tang serves as Chairman of APWC, and he serves also as Chairman and a Director of PEWC.
At a Board meeting held on September 28, 2007, the Board appointed Mr. Samuel See as interim chief financial officer. In addition, the Board filled the two casual vacancies on the Board by appointing Mr. Anson Chan and Dr. Yichin Lee to be independent directors were elected.of the Company and to constitute the Audit Committee of the Board, with Mr. Anson Chan to serve as its chairman. In addition, the Board agreed to appoint Mr. Wei Gong as deputy chief operating officer, to be based in Bangkok at the offices of Charoong Thai. Mr. Gong works with the current chief operating officer of APWC, Mr. Carson Tien.
On November 9, 2007, the Company filed its annual report on Form 20-F for the fiscal year ended December 31, 2004 with the SEC, and on March 17, 2008, the Company filed its combined annual report for the fiscal years ended December 31, 2005 and December 31, 2006 with the SEC.


On April 9, 2008, trading in the Common Shares of the Company was restored to the over-the-counter bulletin board (www.otcbb.com) under the trading symbol ‘‘AWRCF.’’ The Company intends to apply for a listing on either the NASDAQ (Global Market) or the American Stock Exchange during the 2008 fiscal year.
At a board meeting held on June 13, 2008, the Board approved the formation of a compensation committee and appointed one independent director, Mr. Anson Chan, and three additional directors, Mr. Yuan Chun Tang (acting as Committee Chairman), Mr. David T. Sun, and Mr. Michael C. Lee to the Committee. See Section 6.1 "Directors6.3: ‘‘Compensation Committee.’’
Internal Review
In late 2004 and Senior Management".

         On May 19, 2004, Set Top filedcontinuing into 2005, the Board of Directors determined to undertake an amended motioninternal review regarding certain past financial and accounting practices. The Company retained an internationally-recognized forensic accounting firm as outside advisor to convertassist in the Debtors' bankruptcy casesconduct of the internal review.
The focus of the investigation included certain internal control weaknesses and other matters, including:
• 
Lack of documented policies and procedures governing the Company’s accounting policies, internal controls and code of conduct.
• 
Lack of an adequate internal audit function.
• 
Need for improvement in monthly financial statement close process for the Company and its subsidiaries to allow timely financial reporting.
• 
Need for greater U.S. GAAP and tax expertise to identify potential accounting and taxation issues that have a material impact on the Company.
• 
Lack of credit control policies at various subsidiaries.
• 
Certain unauthorized payments from the Company and certain of its subsidiaries to several of its former directors and officers.
As a result of the internal investigation, certain members of management at two of the Company’s subsidiaries in China, Ningbo Pacific Cable Company Limited (‘‘NPC’’) and Shandong Pacific Fiber Optics Cable Co., Ltd. (‘‘SPFO’’), were terminated. The Board determined that, in a number of instances, management at NPC and SPFO failed to Chapter 7 liquidations.exercise satisfactory supervision over financial and accounting practices, engaged in transactions without an adequate business purpose and did not exercise good business judgment. In 2006, the Board determined to cease operations at NPC due to the dim prospects in the near to medium term for reversal of losses and a turn to profitability.
Management and the Company’s forensic accounting advisors concluded that there were many instances of inadequate supervisory and internal controls at several of the significant operating subsidiaries and that there existed a widespread failure to establish and implement disclosure controls and procedures sufficient to ensure that material information relating to the Company is disclosed to senior management by others within the corporate group. Management concluded that the failure to have effective disclosure controls and procedures had a material adverse effect on the financial results of certain operating subsidiaries, particularly in the case of NPC located in China where the Company determined to cease operations in part due to the failures and misconduct of local management.
The Company is committed to improving the efficacy and reliability of its system of internal controls. We are developing new procedures to enhance internal controls over financial reporting, and we are establishing an internal audit department at the Company headquarters which would establish the rules for internal control procedures and would supervise operating and financial audits. Other measures taken include engaging external consultants to advise on risk control and internal audit functions and to assist in achieving compliance with applicable regulatory requirements, sending staff for training on U.S. GAAP accounting, employing more staff progressively to strengthen the accounting, finance and internal audit departments, implementing credit control policies at certain


subsidiaries, and commencing the process of documenting policies and procedures governing the Company’s accounting policies, internal control and code of conduct.
While the Company has undertaken the steps summarized above as part of its efforts to establish and maintain satisfactory disclosure controls and procedures, this process has not been completed. The Company cannot now offer any assurances to its shareholders that satisfactory disclosure controls and procedures will be successfully established and maintained.
In addition, the Company engaged a consultant to assist the Company’s management, including its Chief Executive Officer (‘‘CEO’’) and Interim Chief Financial Officer (‘‘CFO’’), in evaluating the Company’s internal controls over financial reporting as of December 31, 2007. As a result of that assessment, management, including our CEO and CFO, identified four material weaknesses and certain significant deficiencies in the Company’s internal controls over financial reporting as of that assessment date. As a result, under applicable regulatory guidance, the Company’s internal controls over financial reporting as of that assessment date are required to be classified as ineffective. Those weaknesses were reported by our CEO and CFO to the Company’s Board of Directors, its Audit Committee and its independent auditors. In addition, our CEO and CFO reported those significant deficienc ies to the Audit Committee and the independent auditors. At a hearingmeeting held on May
31, 2004,June 13, 2008, the Bankruptcy Court declined to convert the Debtors' bankruptcy
cases; however, the Bankruptcy Court maintained in effect a previously
established deadlineCompany’s Board of August 30, 2004 byDirectors implemented certain remedial actions which a plan of reorganization for
the Debtors must be confirmed.

         Pursuant to a Settlement Agreement entered into by and among the Company PEWCbelieves, once fully implemented, will address satisfactorily those material weaknesses identified by our CEO and Set TopCFO. However, the Company cannot provide any assurances that those actions will be sufficient or that other material weaknesses will not be identified upon further investigation, such that internal controls over financial reporting may continue to be classified as ineffective, or, if rendered effective for a period of time, may not in the future cease to be effective.
The certifications provided as part of this Annual Report by our Chief Executive Officer and by our Chief Financial Officer are subject to and qualified by the disclosures and discussion in this Annual Report on the lack of adequate disclosure controls and procedures and on the lack of effectiveness, as of July 2, 2004, Set Top has agreed to withdraw as
a creditor and party in interest to the bankruptcy proceedings. See Section 8.1
"Legal Proceedings".

         We are unable to predict the outcomeDecember 31, 2007, of the bankruptcy proceedings,
including whether a Plan would be confirmed by August 30, 2004. See Section 3.3
"Risk Factors - Control by PEWC; Bankruptcy of PUSA; Contractual Arrangements
with PEWC". See also Section 8.1 "Legal Proceedings" (for a discussion of the
status of litigation against Set Top).Company’s internal controls over financial reporting.
    4.2    BUSINESS OVERVIEW

         Business Overview
The Company'sCompany’s Thai operations are conducted through Charoong Thai Wire and Cable Public Company Limited ("(‘‘Charoong Thai"Thai’’), Siam Pacific Electric Wire & Cable Company Limited ("(‘‘Siam Pacific"Pacific’’) and Pacific-Thai Electric Wire & Cable Co. Ltd. ("(‘‘Pacific Thai"Thai’’).
Charoong Thai is a publicly-traded Thai corporation, the shares of which are listed on the Stock Exchange of Thailand.Thailand (‘‘SET’’). Immediately after the acquisition of Siam Pacific by Charoong Thai, the shareholders of Charoong Thai comprisedconsisted of the Company (68.42%), Ital-Thai (16.90%) and Bangkok Insurance (5.31%). The, with the rest of the shares are publicly tradedbeing publicly-traded on the SET. After the sale of some of its Charoong Thai shares on the open market, the Company held approximately 55.41%52.43% of the issued and outstanding shares of Charoong Thai as atof December 31, 2003.2005. As of December 31, 2007, the Company owned approximately 50.93% of the issued and outstanding shares of Charoong Thai, with the decrease in the Company’s percentage ownership being attributable to the exercise of warrants or conversion of convertible securities by third parties. The Company’s present intention is to maintain majority ownership of the v oting securities of Charoong Thai. Charoong Thai manufactures aluminum and copper electric wire, medium and high voltage power cable and telecommunications cable. It has subsidiaries and affiliates in the business of optic fiber cable manufacturing and the provision of telecommunication and network services.
Siam Pacific is a 100% owned by-owned subsidiary of Charoong Thai. Siam Pacific manufactures telecommunications cable, power cable and enameled wire for the domestic Thai market.
Pacific Thai is a 100%-owned subsidiary of Siam Pacific. Pacific Thai manufactures enameled wire for the export market.
The Company'sCompany’s Singapore operations are principally conducted through its 98.2%98.3%-owned subsidiary, Sigma Cable Company (Private) Limited ("(‘‘Sigma Cable"Cable’’). Sigma Cable manufactures low voltage power cable for sale and distribution in Singapore and countries in the Asia Pacific region.


Sigma Cable also distributes in Singapore copper rod and a wide range of wire and cable products produced by PEWC and provides SDI project engineering services.
The Company hasholds a 100% interest in Sigma-Epan International Pte. Ltd. ("Sigma-Epan"(‘‘Sigma-Epan’’), a group of companies with operations in Singapore and Malaysia. Sigma-Epan group has its headquarters in Singapore. Prior to ceasing manufacturing operations in May of 2007, Sigma-Epan manufacturesmanufactured specialty cables and assemblesassembled cable

                                       14
 harnesses for the electronics, computer, building automation, audio and communication industries. Sigma-Epan continues to trade specialty electronic and other types of cables.
The Company holds a 98.48%98.53% effective interest in Australia Pacific Electric Cables Pty Limited ("APEC"(‘‘APEC’’), a subsidiary of Sigma Cable, located near Brisbane, Australia. APEC is one of three major wire and cable manufacturers in Australia. The company produces low voltagea range of power cable forcables, which is supplemented by imports from overseas sister companies. APEC possesses a substantial marketing and distribution infrastructure with a network of sales offices and warehouses in the Australianmajor capital cities of Brisbane, Sydney, Melbourne and export markets.

         The Company'sPerth.
During fiscal year 2007, the Company’s China operations arewere conducted through sevensix business entities. The operating entities include NPCDC, a telecommunications cable
manufacturing joint venture located in Ningbo Yin County, Zhejiang Province in
eastern China. The Company owns a 94.31% interest in NPCDC. The other owner of
NPCDC is China Ningbo City Yin County Yinjiang Town Industrial Corporation
("CIC"). NPCDC manufactures a range of telecommunications cable and local area
network ("LAN") electronic cables for sale and distribution in the Chinese
domestic market.

         NPCDC's performance since 1997 has been below expectations due
primarily to difficulties faced in marketing its products and market penetration
in China. In view of the poor performance of NPCDC, the Company has decided that
it would be prudent to provide for a write-down of the carrying value of NPCDC
in the Company's financial statements. The Company's 1999 results therefore
included a write-off of unamortized goodwill of $2.1 million from the purchase
of NPCDC in 1998, and of $1.0 million on receivables and inventory of NPCDC.
Total net effect of these write-offs on the Company's results amounts to a loss
of $3.1 million in 1999. The Company's 2002 results further included a write off
of approximately $1.5 million in the carrying value of the telecommunication
cable machinery. Shanghai Yayang Electric Co., Ltd. ("(‘‘Shanghai Yayang"Yayang’’), formerly known as Shanghai Pacific Electric Co., Ltd., is a joint venture in Shanghai incorporated in June 1998 to manufacture enameled wire. The Company'sCompany’s effective holding in Shanghai Yayang is at 63.49% and54.41%. Shanghai Yayang is also partly held by Pacific Thai. Shanghai Yayang manufactures enameled wire with a diameter of between 0.05mm and 2.5mm.
Shangdong Pacific Fiber Optics Cable Co., Ltd. ("SPFO"(‘‘SPFO’’) is a joint venture company in Yanggu County, Shandong Province, China. SPFO was established to manufacture fiber optic cables for the China market. The Company owns a 51.0% interest in SPFO, with the remaining interest owned by the joint venture partner, Shandong Yanggu Cable Company ("(‘‘Shandong Yanggu"Yanggu’’), an established cable manufacturer in Shandong Province that produces a wide range of cable products and is considered one of the leading cable producers in China. The Company has
invested a total of $2.8 million in SPFO.

         
On June 30, 2001, the Company invested approximately $1.2 million for a 25.0% interest in an existing profitable company, Shandong Pacific Rubber Cable Company, Ltd. ("SRC"(‘‘SPRC’’), which manufactures rubber cable for the China market. The remaining 75% is owned by Shandong Yanggu. The investment was in the form of a contribution of machinery transfer and cash.
On August 18, 2001, a joint-venture agreement was signed with Shandong Yanggu to establish Shandong Huayu Pacific Fiber Optics Communication Co., Ltd. ("SHP"(‘‘SHP’’) for the


                                       15
 manufacture of optic fibers. The Company will invest $4.0 million for aowns 49% holding;of SHP with the remaining 51% was originally heldowned by Shandong Yanggu. In May 2002,
the shareholding by Shandong Yanggu was transferred to Hebei Huayu Co. Ltd. Production is tentatively scheduled(as the successor in interest to commence in 2004 or 2005 with initialShandong Yanggu). Due to the subsequent deterioration of the fiber optic market price, the plant has yet to be completed and a production of 900,000km of optic fibers annually.date for commencing operations has not been determined. The actual operation
commencement periodof operations, if it occurs at all, will depend on theour ongoing assessment of market conditions. The
company plansIn 2007, the Company took a $0.1 million impairment loss on the SHP investment to operate two optic fiber drawing towersreflect that assessment and four production
lines. Its products will be sold to Shandong Pacific Fiber Optic Cable Co., Ltd.
and other external buyers.

         all major equipment owned by SHP.
On March 22, 2002, the Company acquired two companies, namely, Crown Century Holdings Limited. ("CCH"Limited (‘‘CCH’’) and its wholly-owned subsidiary company, Pacific Electric Wire & Cable (Shenzhen) Co., Ltd. ("PEWS"(‘‘PEWS’’) from PEWC, the majority shareholder of the Company. The acquisition was in exchange for 3,097,436 new shares of the Company issued to PEWC. As a result of this new
issue, PEWC's holding in the Company increased from 68.3% to 75.4%. Since PEWC
was the majority shareholder of the Company and CCH prior to the transaction,
the acquisition is considered a combination of companies under common control
and has been accounted for at historical cost and given retroactive effect for
financial reporting purposes. PEWS manufactures enameled wire for electronic, video and audio products for the South China Marketmarket and for export. CCH is the trading arm of PEWS. The operations of PEWS and CCH have been profitable since 1999 and have contributed to the profits of the Company in 2003.

              4.2.1  PRODUCTS AND SERVICES

              2007.
Until 2006, the Company’s China operations included Ningbo Pacific Cable Co. Ltd. (‘‘NPC’’), a telecommunications cable manufacturing joint venture located in Ningbo Yin County, Zhejiang Province in eastern China, in which the Company owned a 94.31% interest. The other owner of NPC was China Ningbo City Yin County Yinjiang Town Industrial Corporation (‘‘CIC’’). NPC manufactured a range of telecommunications cable and local area network (‘‘LAN’’) electronic cables for sale and distribution in the Chinese domestic market and export market.


NPC’s performance since 1997 was below the Company’s expectations due primarily to difficulties faced in marketing its products and market penetration in China. In addition, the performance of certain managers at NPC, who were later terminated, did not comply with the Company’s standards for business practices. See Section 4.1.2: ‘‘Recent Developments, Internal Review.’’ The Company’s 2002 results included a write-off of approximately $1.5 million in the carrying value of the telecommunication cable machinery at NPC. In 2006, the Company determined to cease operations at NPC, as it concluded that the prospects for reversing the losses and achieving profitability were too remote. Thereafter, the Company liquidated its assets at the NPC facility.
4.2.1 
Products and Services
The Company manufactures and sells a wide variety of wire and cable products primarily in four general categories: telecommunications cable, power transmission cable, enameled wire and, until May 2007, electronic cables.cables, which the Company ceased to manufacture as of that date. The Company'sCompany’s telecommunications and power cables are used in a range of infrastructure projects and in commercial and residential developments. The Company'sCompany’s enameled wire is used in the manufacturing of components and sub-components of household appliances and small machinery. The electronic cables, which include cable harnesses, are used in the electronics, computer, building automation, audio and communication industries. In addition, the Company acts as the Singapore distributor of copper rod and wire and cable products manufactured by PEWC. In
1997, theThe Company also began offeringoffers SDI project engineering services of medium and high voltage cable for power transmission projects in Singapore.

              Sin gapore.
Telecommunications Cable
The Company produces a wide range of bundled telecommunications cable for telephone and data transmissions with different capacities and insulations designed for use in various internal and external environments principally as access cable to connect buildings and residents to trunk cables. Telecommunications cables produced by the Company include copper-based and fiber optic cables.
Copper-based cables contain twisted pairs of insulated copper wire, each pair color-coded and corresponding to one telecommunications line. The cables are produced with different insulators such as polyethylene ("PE"(‘‘PE’’), polyvinyl chloride ("PVC"(‘‘PVC’’) and foam skin, suitable for different installations and environmental conditions. The Company manufactures

                                       16
 telecommunications cable with capacities and sizes ranging from 25 to 3,000 pairs of 0.4 mm-diameter wire to 10 to 600 pairs of 0.9 mm-diameter wire.
Power Cable
The Company produces a range of armored and unarmored low-voltagelow voltage power transmission cable. Low-voltageLow voltage power cable, generally considered to be cable with a capacity of 1 to 3.3 kilovolts, is typically used to transmit electricity to and within commercial and residential buildings, as well as to outdoor installations such as street lights, traffic signals and other signs. Armored low-voltage power cable is usually used for public lighting and power transmission running to buildings and installed either above or below ground. Unarmored low-voltagelow voltage cable is mainly used as lighting and power supply cable inside and outside of buildings. The voltage capacity of the Company'sCompany’s power cables range from 300 volts to one kilovolt.
Unarmored cable is composed of one or more cores of copper wire, insulated by substances such as PVC. Armored cable is produced in the same range of configurations as unarmored cable, but with the addition of an outer layer of galvanized steel or iron wires to protect the cable from damage.
Enameled Wire
The Company also produces several varieties of enameled wire. Enameled wire is copper wire varnished, in an enameling process, by insulating materials. The enameling process makes the wire more resistant to oil, heat, friction and fusion, and therefore suitable for use in machinery and components and sub-components of manufactured goods. The Company manufactures enameled wire


in sizes that range from 0.030.02 mm to 3.004.00 mm in diameter, varnished by various types of petroleum insulation materials including polyvinal formal, polyurethanea wire and polyester, among others. Enameled wire products are used in the assembly of a wide range of electrical products, including oil-filled transformers, refrigerator motors, telephones, radios, televisions, fan motors, air conditioner compressors and other electric appliances.
Electronic Cables

              The
Until May 2007, the Company producesalso produced a wide range of electronic cables and related by-products, which includesbyproducts, including high specification telecommunication cables, data-communication cables, security cables, cable assemblies, fiber optic cables, local area network ("LAN"(‘‘LAN’’) patch-cords products and harness assembly. The products arewere used in the electronics, building automation, telecommunications and data-communications industries. The customers includeincluded government bodies, large construction companies, subcontractors bidding for government contracts and system integrators. These cables arewere produced by the Sigma-Epan group, which hasceased manufacturing operations in SingaporeMay 2007. Since Sigma-Epan ceased manufacturing operations, the Company no longer manufactures electronic cables but continues to trade specialty electronic and Malaysia.
In 2003, LAN cable production was introduced in NPCDC.

              other types of cables.
Sales of Distributed Products
The Company is also a distributor of copper rod and wire and cable products manufactured by PEWC. The leading PEWC products sold by the Company are medium and high voltage power cable (with capacities ranging from 3.3 kilovolts to 69 kilovolts) and copper 17
rod, with the vast majority of such sales made in Singapore. The PEWC products sold by the Company do not compete with the Company'sCompany’s manufactured products.
SDI Project Engineering Services
Based on trends of government and private sector expansion and upgrading of residential and commercial buildings and infrastructure projects in Singapore, the Company anticipates demand for medium and high voltage power and for value added services in the power supply industry. To take advantage of these opportunities, the Company has developed its SDI project engineering capability. The SDI project engineering operations supply, deliver and install primarily medium and high voltage cable to power transmission projects in Singapore. After entering into a contract to supply, deliver and install cable for a power transmission project, the Company delivers medium and high voltage cables and enters into subcontracting agreements with local companies to install the cable as required by the project.

              In 2003, Sigma Cable recorded revenue of $3.9 million under
project engineering turnkey contracts awarded by SP Powerassets, a
government-linked corporation that maintains and manages electrical transmission
and distribution networks in Singapore. The projects call for the supply and
installation of 66kV (kilo-volt) high-voltage power cables along various
distinct routes. The Company will continue to tender for future projects.

              4.2.2 MANUFACTURING

              
4.2.2 
Manufacturing
Copper rod is the base component for most of the Company'sCompany’s products. The manufacturing processes for these products require that the rod be "drawn"‘‘drawn’’ and insulated. In the "drawing"‘‘drawing’’ process, copper rod is drawn through a series of dies to reduce the copper to a specific diameter. For certain applications, the drawn copper conductor is then plated with tin. Copper used in cable is covered with various insulating materials that are applied in an extrusion process. The insulated wires are then combined, or "cabled"‘‘cabled’’ to produce the desired electrical properties and transmission capabilities. Then, depending upon the cable, some form of protective cover is placed over the cabled wires.
A summary of the manufacturing process used for the Company'sCompany’s primary wire and cable products is set forth below.
Telecommunications Cable
Production of telecommunications cable begins by drawing a copper rod until it has reached the desired diameter, after which the drawn wires are subjected to a process called "annealing"‘‘annealing’’ in which the wires are heated in order to make the wires softer and more pliable. Utilizing an extrusion process, which involves the feeding, melting and pumping of a compound through a die to shape it in


final form as it is applied to insulate the wire, the wires are then covered by a PE or PVC compound in one of ten standard colors. In order to reduce the cross-talk between pairs of communication wires, the insulated wires are then "twinned"‘‘twinned’’ or twisted so that two insulated single wires are combined to create a color-coded twisted pair. The twisted pairs of wire are then "cabled"‘‘cabled’’ or "stranded"‘‘stranded’’ into units of 25 twisted pairs for combination with other 25 pair units to form cable of various widths and capacities. The appropriate number of

                                       18
 units are cabled together after stranding to form a round cable core. Depending upon the planned environment, a petroleum jelly compound may then be added to fill the cable core to seal out moisture and water vapor. Aluminum or copper tape is used to "sheath"‘‘shield’’ the cable and, finally, the sheathedshielded cable core is covered by plastic outer coating.

              sheathing.
Power Cable
Unarmored cable.    Production of unarmored cable begins by drawing and annealing of copper rods. The drawn copper wires are then stranded or "bunched"‘‘bunched’’ into round or sector-shaped conductors in sizes ranging from 1.5 square millimeter to 1000 square millimeters. The copper conductors are then covered in an extrusion process with a plastic insulator such as a PVC, after which 2-5 conductors are twisted into a circular cable core in a cabling process and covered by a plastic outer cover.
Armored cable.    Armored cable is produced in the same manner as unarmored cable, except that armored cable requires the addition of a helical wrap of galvanized steel or iron wires prior to the application of a final plastic outer cover.
Enameled Wire
Production of enameled wire begins by drawing the copper rods until they have reached the desired diameter, after which the drawn wires are annealed. The annealed wires are then varnished by one or more types of petroleum-based insulation material. Up to seven14 coats of varnish are applied, depending upon the intended application of the enameled wire.

              4.2.3 RAW MATERIALS

              
4.2.3 
Raw Materials
Copper is the principal raw material used by the Company, accounting for approximately 50% to 60%70% of total cost of sales of products using copper as a conductor.conductor in 2007. The Company purchases copper at prices based on the average prevailing international spot market prices on The London Metal Exchange (the "LME"‘‘LME’’) for copper for the one month prior to purchase. The price of copper is influenced heavily by global supply and demand as well as speculative trading. As with other costs of production, an increasechanges in the price of copper will increasemay affect the Company'sCompany’s cost of sales. Whether this has a material impact on the Company'sCompany’s operating margins and financial results depends primarily on the Company'sCompany’s ability to pass on these increased costsadjust charges to its customers.customers, such that increases and decreases in the price of copper are fully reflected in those charges. Most sales of Company manufactured products reflect copper prices prevailing at the time the products are ordered. A long-term decrease in the price of copper would require the Company to revalue the value of its inventory at periodic intervals to the then net realizable value, which could be below cost.
The Company purchases copper in the form of rods and cathodes. Copper cathodes are thin sheets of copper purified from copper ore. Copper purchased by the Company in the form of cathodes must be sent to subcontractors to be melted and cast into the copper rods necessary for the manufacturing processes, for a processing fee equal to approximately 7.0%3.5% of the copper cathode purchase price. The Company presently relies on the services of Thai Metal Processing Co., Ltd. to process its copper cathodes into copper rods in Thailand, although the Company has a variety of processing companies from which to obtain these services. In the future, the Company may construct a plant to
process copper cathode into copper rods, which may reduce the Company's
dependence on subcontractors. Construction of such a facility could

                                       19
 also be an additional source of revenues and profit, to the extent that sales are made to unaffiliated parties. Copper rods are drawn into copper wire for the production of telecommunications cable, power cable and enameled wire.
The Company has historically purchased a substantial portion of its copper rods from PEWC. Under the Composite Services Agreement between the Company and PEWC, PEWC agreed to supply to the Company on a priority basis its copper rod requirements at prices at least as favorable


as prices charged to other purchasers in the same markets purchasing similar quantities. PEWC continues to be the principal supplier of copper rods to the Company'sCompany’s operations. Under the Company'sCompany’s copper rod supply arrangements, orders will be placed between eight to ten weeks before the desired delivery date, with prices "pegged"‘‘pegged’’ to the average spot price of copper on the LME for the one month prior to delivery plus a premium.
The Company purchases copper cathodes, which are subject to a 6.0%1.0% import tariff, for use at its Thailand operations in order to avoid the higher import tariff of 10.0%5.0% on copper rods. The Company obtains copper cathodes from three major suppliers which import cathodes into the Thai market. These suppliers are Mitsubishi Corporation, Mitsui & Co (Thailand) and Tomen
Enterprise (Bangkok) Ltd.Marubeni Corporation. The Company has regularly signed one yearone-year contracts with each of its copper cathode suppliers pursuant to which the Company agrees to purchase a set quantity of copper cathodes each month. Under the terms of such contracts, the price of copper cathodes is usually "pegged"‘‘pegged’’ to the average of the spot price of copper on the LME for the delivery month plus a premium. The Company believes its relationships with its three copper cathode suppliers will allow access to alternative supplies in the event one or more of such suppliers was unable or unwilling to renew a supply contract on terms satisfactory to the Company, although the Company does not anticipate any change in relations in the near term.
The Company attempts to maintain approximately a three to five week supply of copper rods and cathodes for its Thai operations and approximately a two to four week supply in Singapore. The Company has never experienced a material supply interruption or difficulty obtaining sufficient supply of copper rod or cathode.
Other raw materials used by the Company include aluminum used as a conductor in power cable and petroleum-based insulation materials such as PE, PVC and jelly compounds for insulating covers on cables and varnishes on enameled wire; aluminum foils for sheathing of communication cable; and galvanized steel wire for the production of armored wire. The Company has not had any difficulty in maintaining adequate supplies of these raw materials and expects to continue to be able to purchase such raw materials at prevailing market prices.

              The Company is
We consume substantial amounts of electricity in our manufacturing processes at our production facilities in China. Certain parts of China have been subject to power shortages in recent years. We have experienced a major usernumber of electric power shortages at our production facilities in China to date. We are sometimes given advance notice of power shortages and has not
experienced any problem in obtainingrelation to this we currently have a constant electricity supplybackup power system at certain of our production facilities in the past.
The Company does not maintain any in-house power generating capacity.

              China.
Other than import tariffs in Thailand, the Company does not face any restriction or control on the purchase or import of its raw materials. The Company may freely choose its suppliers and negotiate the price and quantity of material with its suppliers. The Company formulates consumption plans for raw materials regularly and continually monitors market conditions in respect of the supply, price and quality of raw materials.

                                       20


              4.2.4 QUALITY CONTROL

              
4.2.4 
Quality Control
The Company places a significant emphasis on product quality. The Company has implemented a range of quality control procedures with stringent quality standards under the supervision of a dedicated quality control staff. Quality control procedures are implemented from the raw material to the finished product stages at each of the Company'sCompany’s major production facilities. Raw materials are inspected to ensure they meet the necessary level of quality before production begins. During the manufacturing process, quality control procedures are performed at several stages of production. Upon completion, finished goods are brought to quality control centers set up in the factory for inspection and testing of different electrical and physical properties.
Depending on the requirements of its customers, the Company has the capability to manufacture its products to meet a variety of different quality and production standards. These include local standards and certifications, such as the Singapore Institute of Standards and Industrial Research Quality Mark and the Thailand Industrial Standard, as well as other standards including the National


Electrical Manufacturers Association Standard, the British Standard, the Japan Industrial Standard and Underwriters Laboratories Inc. Standard, as applicable.
All the major companies in the group have attained International Standards Organization ("ISO"(‘‘ISO’’) 9002 international standardscertification for quality management and assurance standards in the manufacture of electric wire and cable. In September 1994, Sigma Cable received an ISO 9002 certificate fromcable and have maintained that certification for at least the Singapore Institute of Standards and Industrial Research. Charoong Thai received
its ISO 9002 certification in September 1996. Siam Pacific and Pacific Thai, the
Company's two major subsidiaries in Thailand, both achieved ISO 9002
certification in May 1997.last ten years. The certifications mean that the companies have in place quality assurance systems and the capability to consistently manufacture products of quality.

              4.2.5 SALES AND MARKETING

              
4.2.5 
Sales and Marketing
The Company'sCompany’s telecommunications cable and power cable products are primarily sold in the domestic markets of the countries where they are manufactured, whereas most of the enameled wire manufactured by the Company is exported to take advantage of Pacific Thai'sThai’s tax status exempting it from paying import duties on raw materials used in the manufacture of export product. The following table sets forth the Company'sCompany’s sales revenues by geographic area for the periods indicated, together with their respective percentage share of total sales revenue for such periods:

 
Year ended December 31,
 
(dollar figures ($) are in thousands of US$)
 
2005
2006
2007
 
$
%
$
%
$
%
Manufactured Products:
 
 
 
 
 
 
Thailand
100,683
29.9
% 
142,500
30.4
% 
170,585
33.4
% 
Singapore
14,968
4.4
% 
29,440
6.3
% 
31,762
6.3
% 
Australia
34,831
10.3
% 
49,134
10.5
% 
55,789
10.9
% 
China
102,797
30.5
% 
148,502
31.7
% 
157,917
30.9
% 
Export
48,237
14.3
% 
69,704
14.9
% 
78,752
15.4
% 
Total
301,516
89.4
% 
439,280
93.8
% 
494,805
96.9
% 
Distributed Products(1)
20,055
5.9
% 
12,416
2.7
% 
10,783
2.1
% 
SDI Project Engineering(2)
15,691
4.7
% 
16,421
3.5
% 
5,253
1.0
% 
Total net sales
337,262
100.0
% 
468,117
100.0
% 
510,841
100.0
% 

                                                             Year ended December 31,
                             -----------------------------------------------------------------------------------------
                                      2001                        2002                             2003
                             -----------------------------------------------------------------------------------------
                                  $           %            $                %                $               %
                             -----------------------------------------------------------------------------------------

Manufactured Products:
Thailand                           47,225      23.9          79,246             32.8           62,984            29.7
Singapore                          15,804       8.0          16,637              6.9           12,514             5.9
Australia                          11,009       5.6          13,961              5.8           22,058            10.4
China                              46,838      23.7          46,095             19.1           60,606            28.7
Myanmar                               591       0.3               -                -                -               -
Export                             27,551      14.0          29,803             12.4           34,131            16.2
                             -----------------------------------------------------------------------------------------

                                       21

                             -----------------------------------------------------------------------------------------
Total                             149,018      75.5         185,742             77.0          192,293            90.9
(1)
Distributed Products(1)            33,325      16.9          24,303             10.1           15,187             7.2Products are largely sold in Singapore.
(2)
All SDI Project Engineering(2)         14,968       7.6          31,134             12.9            3,919             1.9
                             -----------------------------------------------------------------------------------------
Total net sales                   197,311     100.0         241,179            100.0          211,399           100.0
                             -----------------------------------------------------------------------------------------
Engineering is supplied in Singapore.


(1)  Distributed Products are largely sold in Singapore.
(2)  All SDI Project Engineering is supplied in Singapore.

              
Sales within Thailand and Singapore are made directly by the sales department of the Company'sCompany’s local subsidiaries in accordance with terms and pricing set by the local subsidiaries. The local subsidiaries are also responsible for sales planning, marketing strategy and customer liaison. The Company'sCompany’s sales staff is knowledgeable about the Company'sCompany’s products and frequently must render technical assistance, consulting services and repair and maintenance services to the Company'sCompany’s customers. In order to ensure quality service and maintain sensitivity to market conditions, the Company does not conduct sales through independent sales agents on a commission basis but uses its own sales employees located at the operating subsidiaries.
As copper constitutes the costliest component of the Company'sCompany’s wire and cable products, the price of the Company'sCompany’s products depends primarily upon the price of copper. In order to minimize the risk of copper price fluctuations, the Company attempts to determine the prices of its products based on the prevailing market price of copper. However, the Company may be affected, to a degree, in the short term by significant fluctuations in the price of copper.
Payment methods for the Company'sCompany’s products vary with markets and customers. The majority of sales by the Company of its manufactured products require payment within 90 days, but may vary depending on the customer and payment record. Sales pursuant to a successful project tender or sales to governmental or public utilities are conducted in accordance with the tender or other applicable


regulations. In connection with the distribution of medium and high voltage power cable manufactured by PEWC, the Company is required to pay PEWC 90% of the cost of the products either within 30 days of receipt of the product or, in the case of SDI products, upon installation, with the remaining 10% to be paid within one year. In connection with the purchase of copper rod, the Company is required to pay PEWC the cost of the copper rod within 30 days from obtaining the products from PEWC. For the export market, payment is usually made by prior delivery of an irrevocable letter of credit. Neither the Company nor its local subsidiaries offer financing for purchases of the Company'sCompany’s products. The Company sells its products in the local currency of the country of sale. Company employees engaged in sales and marketing are paid a salary and may also receive a bonus based on performance.
Products are marketed under the respective names of each company. For instance, products manufactured by Siam Pacific are marketed under the "Siam
Pacific"‘‘Siam Pacific’’ and "PTEWC"

                                       22
‘‘PTEWC’’ brands, both registered trademarks in Thailand; products manufactured by Sigma Cable are sold under the "Sigma Cable"‘‘Sigma Cable’’ brand.
Thailand
The Company produces and sells telecommunications cable, enameled wire and power cable in Thailand. Sales of telecommunications cables, the Company'sCompany’s leading product in Thailand, are conducted either by tender for participation in large scale telecommunications projects of the Telephone
Organization of Thailand ("TOT"TOT Corporation Ple. (‘‘TOT’’), or directly to subcontractors of TT&T and TelecomAsia,True Corporation Ple., the two private telephone line contractors which would be licensed by TOT with regard to particular projects. Power cable (and a limited quantity of telecommunications cable) is generally sold to construction firms or contractors for use in infrastructure, commercial and residential construction projects. The Company generally sells enameled wire directly to manufacturers of electric motors for use in various consumer appliances. Enameled wire purchasers tend to be smaller businesses than those that purchase telecommunications and power cable. A small quantity of power and telecommunications cable and enameled wire is sold to general electrical products supply companies which then resell to end users.
Singapore
The Company produces and sells low voltage power cable in Singapore. In addition, the Company sells copper rod and a wide range of wire and cable products produced by PEWC. Power cables manufactured by the Company and PEWC are primarily sold to SP Powerassets, a quasi-public entity responsible for power delivery in Singapore, and to a large number of private contractors and construction firms. The Company also offers project engineering services for the SDI of medium and high voltage power cable to power transmission projects in Singapore.
Sales of Company manufactured products in 20032007 accounted for 45.7%66.4% of the Company'sCompany’s net sales in Singapore; sales of Distributed Products in 2007 accounted for 43.2%22.6% with the remaining 11.1%11.0% comprised of SDI project engineering services. In 2003,2007, sales to SP Powerassets alone accounted for approximately 48.0%39.5% of the Company'sCompany’s total sales in Singapore and 8.0%3.7% of the Company'sCompany’s total aggregate sales. Additionally, sales of SDI project engineering services to SP Powerassets in 20032007 accounted for all96.4% of the Company'sCompany’s SDI sales. Approximately 70.1%35.5% of the sales to SP Powerassets in 20032007 were sales of Distributed Products, which sales have a low profit margin. Such sales are not made under a continuing contract, but pursuant to purchase orders placed from time to time with the Company by SP Powerassets. Although SP Powerassets is an important customer of the Company, neither the loss of Distributed Product sales to SP Powerassets, nor the losslos s of manufactured product sales to SP Powerassets, which the Company expects would be replaced by sales to other customers, would likely have a material adverse effect on the Company'sCompany’s results of operations. Although the Company does not believe that it could easily replace its SDI sales to SP Powerassets by sales to other customers, SDI sales presently accountaccounted for only 1.9%1.0% of the Company's sales.

                                       23
Company’s sales in 2007.
China
The Company produces and sells copper-based telecommunication cable, fiber optic cables and enameled wire in China. The Company'sCompany’s China operations are conducted through sevensix business entities.


Copper-based telecommunication cables and fiber optic cables are generally sold to statethe national, provincial or provincial telecommunication agencieslocal offices of the fixed-line and mobile telecommunications network operators or sub-contactors of such agencies. The Company generally sells enameled wire directly to manufacturers of electric motors for use in various consumer appliances.
Exports
The Company'sCompany’s main export markets are Hong Kong, Brunei, Myanmar,Vietnam, India, China, Malaysia and Indonesia. Export sales are conducted by local agents or distributors of the Company in accordance with terms and prices negotiated between the local agent and the Company at the time of sale. In Thailand, the Company'sCompany’s principal export is enameled wire. In Singapore, the Company'sCompany’s principal export is power cable. The Company does not actively pursue an export business in Singapore, but benefits from Singapore'sSingapore’s position as a trading center and makes export sales in response to buyer inquiries and solicitations. In Thailand, the Company has
concentrated on promoting export sales for its enameled wire products and
because of the decline in demand in the Thai market, the Company is seeking to
expand its exports from Thailand of other products. In 2003, totalTotal export sales accounted for 16.2%15.4% of net sales.

              4.2.6 COMPETITION

              sales in 2007.
4.2.6 
Competition
The wire and cable industry in the Asia Pacific region is highly competitive. The Company'sCompany’s competitors include a large number of independent domestic and foreign suppliers. Certain competitors in each of the Company'sCompany’s markets have substantially greater manufacturing, sales, research and financial resources than the Company. The Company and other wire and cable producers increasingly compete on the basis of product quality and performance, reliability of supply, customer service and price. To the extent that one or more of the Company'sCompany’s competitors is more successful with respect to the primary competitive factors, the Company'sCompany’s business could be adversely affected.
Thailand
The wire and cable industry in Thailand is highly competitive. In its various product lines, the Company competes with a total of approximately 30 local wire and cable manufacturers and, to a lesser extent, with foreign producers for sales in Thailand of telecommunications cable, power cable and enameled wire. Siam Pacific and Charoong Thai are two of the five largest wire and cable producers in Thailand and their principal competitors are the three other largest producers in Thailand. These five largest producers are the only producers of telecommunications cable approved by the Thai Industrial Standards Institute and, therefore, the only cable producers whose products may be used in government-commissioned projects. Stringent governmental approval processes, tariffs and other import restrictions have limited competition in the Thailand market from foreign wire and cable producers. The Company also experiences significant competition from a number of smaller producerspr oducers with regard to sales of enameled wire products.

                                       24
Singapore
The Company principally competes with four other major wire and cable manufacturers in Singapore. Although the Company believes it is the largest manufacturer of 1owlow voltage power cable in Singapore, it experiences significant competition from other local producers.
There are no tariff or other barriers against foreign competition in the local Singapore market and potential competitors are free to enter the industry. However, because of high capital costs, the Company believes it is unlikely that there will be new domestic entrants to the wire and cable industry in Singapore in the near future.
Australia
Currently, besides APEC, there are two major wire and cable producers in Australia: Olex Cables (owned by Pacific Dunlop) and Pirelli Cables, which
acquired the construction cable and power cable business of Metal Manufacturers
Cables, formerly a major wire and cable producer in Australia, in 1999. APEC's
principal competitors are Olex Cables and Pirelli Cables. With the April 1998
closing of the Olex Cables plant in Queensland in order to concentrate
operationswith factories in the states of Victoria and New South Wales, and Victoriarespectively. Both are APEC’s principal competitors. In addition, General Cables is a major participant in Australia,the market. During fiscal year 2007, APEC becamewas the only power cable producer in Queensland and therefore expectssought to have a
pricingtake advantage overof other competitors importing into Queensland.


APEC has also opened sales offices with warehousing facilities in Sydney, Melbourne and Perth in order to attract and service the customers in those regions. Foreign competition barriers exist with import duties and the more stringent Australian cable specifications standards. Free Trade Agreements are in effect with Singapore and Thailand.
China
PEWS manufactures enameled wire in the Shenzhen provinceSpecial Economic Zone in Guangdong Province for electronic, video and audio products for the South China Marketmarket and for export. CCH is the trading arm of PEWS. PEWS is one of the largest enameled wire manufacturesmanufacturers amongst the six manufacturers in Shenzhen province.Shenzhen. It supplies mainly to transformer, motor and coil manufacturers in and around Shenzhen. It faces competition principally from overseas imports and local manufacturers.
Shanghai Yayang is the only major enameled wire producer in Shanghai and it supplies mainly to transformer, motor and coil manufacturers in Shanghai. It faces competition principally from overseas imports and manufacturers from other provinces.
SPFO is one of the largest manufacturers of fiber optic cables in Shadong provinceShandong Province and it supplies mainly to government controlled and state
telecommunication agencieslicensed telecommunications network operators such as China Netcom, China Telecom, China Mobile, China Railcom, China Unicom and China Powercom. It faces competition principally from approximately twentya number of the larger domestic fiber optic cable manufacturers in China.

              NPCDC anticipates significant competition in selling
telecommunications cable in eastern China. Several established producers of
telecommunications cable exist in Zhejiang province, including one of similar
size to NPCDC in Ningbo, the city the company plant is located. Due to keen
market competition in the regional China market, NPCDC is looking towards export
of its telecommunication cables to countries such as Singapore. NPCDC has

                                       25


recently also installed production machines for the manufacture LAN cables for
the local China market with the objective of diversifying its product range.

              
Other Markets

              In 2003, the
The Company exported approximately 31.2%16.0% of its manufactured products manufactured in Singapore and Thailand.2007. These products are principally sold through independent suppliers in competition with domestic and foreign manufacturers.

              4.2.7 REGIONAL CONSIDERATIONS

              Since
4.2.7 
Regional Considerations
The principal Asian markets in which we do business have shown exceptional overall economic growth in recent years compared to the United States and a number of other more developed markets, subject to occasional episodes of economic and currency exchange volatility attributable to various factors including the increased risks of emerging market investment, actual or potential political instability and pandemics such as the SARS health crisis several years ago. In some countries, the IMF exerts considerable influence over economic policy and provides support to stabilize the domestic economy. In general, the Asian currencymarkets in which we do business have been export-driven in recent years and financial crisis which began in
mid-1997, confidence has gradually returned to countrieshave in the Asia Pacific
region. The financialcase of China and currency markets have significantly stabilized with
financial and economic reforms instituted by the local governments with
assistance from the International Monetary Fund (IMF). By the end of 1998 and in
1999, regional currencies had significantly stabilized in value relativeSingapore, for example, accumulated considerable capital reserves, which contributes to a more stable business environment.
Thailand
According to the U.S. dollar. However, from mid-2000,World Bank, the projected economic growth rate for 2007 was 4.3% compared to 5.0% in 2006, which was attributable primarily to slow net export growth. The World Bank has projected Thai economy beganeconomic growth in 2008 to decelerate as a
result of weak domestic demand, coupled with a major fiscal expansion program
espousedbe approximately 4.6% followed by the newly elected government, causing the Thai Baht to weaken
further. In 2003, the Thai Baht strengthened from an exchange rate of Baht 43.17
to the U.S. Dollar at the beginning of 2003 to Baht 39.63 to the U.S. Dollar at
the end of 2003.

              Thailand

              5.2% in 2009.
A substantial portion of the Company'sCompany’s Thai operations, which accounted for approximately 44.2%48.8% of the Company'sCompany’s net sales in 2003,2007, consists of the manufacture of telecommunications and power cable and sales of those products for use in large-scale telecommunications projects and various construction projects in Thailand. The volume of sales of these products tends to correlate with the general level of economic activity in Thailand. As a result, the performance of the Company'sCompany’s Thai operations depends in part on the general state of the Thai economy. For severalInfrastructure development and related construction projects in Thailand depend significantly upon government sponsored initiatives. In recent years, until late 1996, the wire
and cable industry and the Company benefited from continuedlevel of government involvement in infrastructure development has tended to track increases or contractions in Thailand'sThailand’s gross domestic product ("GDP"(‘‘GDP’’) and the many infrastructure projects
implemented by the Thai government. Since the impact of the financial and
economic crisis in 1997,. Overall, the construction industry and infrastructure projectsprojec ts have slowed considerably, thereby affecting local sales, placing competitive pressure on prices and prompting the Company to rationalize Thai operations and actively seek overseas export markets.

              Economic growth in 2003 has increased to 6.7% from 5.2% growth
recorded in 2002 as a result of increased private investment, increased domestic
consumption and robust exports. Thailand's exports, a key driver of the economy,
rose 3.5% in 2003, compared to a 5.0% increase in 2002. The World Bank has
projected Thai economic growth in 2004 to be approximately 7.2% followed by 6.5%
in 2005.

              


Telecommunications
Sales of the Company'sCompany’s telecommunication products in Thailand have depended to a significant degree on the substantial investment in and development of the telecommunications sector by the Thai government. In particular, the Company'sCompany’s sales of manufactured products are affected by

                                       26
 the dollar value of contracts awarded by the government for telecommunications and other infrastructure projects.
Historically, control of the telecommunications sector in Thailand, including the right to grant concessions for the installation and operation of telecommunications services, has rested with state owned enterprises. There are currently three public agencies responsible for communications in Thailand: TOT, which controls domestic telephone service, the Communications Authority of Thailand ("CAT"CAT Telecom Plc. (‘‘CAT’’), which handles postal and international telephone service, and the Thailand Post and Telegraph Department,Co., Ltd. (a state enterprise), which controls and regulates the use of frequencies for radio communication stations and satellite communication networks. Telecommunications services in Thailand have traditionally been developed and expanded through grants by TOT and CAT of concessions to private operators to install and operate telecom projects on a build-transfer-operate basis, where the government enterprise involved would maintain control over the award of the concession and receiverecei ve a profit share from the operations of the project.
Power
In past years, untilThailand the economic and financial crisis in Asia
which began in 1997,prevailing historical trend has been that economic growth in Thailand stimulatedwould stimulate rapid growth in the demand for electric power, and annual rates of growth in electricity demand outpacedwould outpace annual economic growth rates. Despite the rapid growth in electricity demand, electricity consumption in Thailand remains low by international standards. The Electricity Generating Authority of Thailand has estimated that
aggregate country-wide consumption will increase from approximately 13,600 MW in
1996 to approximately 26,300 MW by 2006. The Company believes that, in the medium to longer term, there will be an increased demand for power supply which will lead to increased demand for the Company'sCompany’s power cable products from both developers of power production facilities and contractors installing power supply lines.
Singapore
The Singapore government reported that the economy grew by approximately 1.1%7.7% in 2003 compared
to a 2.3% increase in 2002.2007. The weak global electronic sector, weak US consumer
demand and the slow world economy in 2003 all contributedgrowth was partially attributable to the slowefforts of the Singapore government to attract and retain foreign investments as a priority matter. Much of the economy’s growth in Singapore's GDP.2007 came from increased exports of electronics, pharmaceuticals and chemicals. The World BankSingapore government has projected Singapore economiclower growth of 4.0% to 6.0% in 20042008 due to be approximately 5.6% followed by 4.5% in 2004.

              the expected U.S. economy slowdown.
The Singapore government has established targets to increase the population from the current 3.24.6 million in 2007 to approximately 46 million by the end of 2010.2020. This planned growth in population plus the decline in average household
size from 4.2 persons per household in 1990 to 3.4 persons in 2000, is expected to result in an increase in demand for residential property and construction.
China
The economy of China differs from that of most developed free-market economies in a number of respects, including structure, degree of government involvement, level of 27
development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. The economy of China is a planned
economy subject to one-, five- and ten-year plans adopted by central PRC
government authorities and implemented, to a large extent, by provincial and
local authorities under the supervision of the State Development Planning
Commission. These plans set out production and development targets for state
enterprises. Although the majority of productive assets in China are still owned
by the PRC government, more recentlyIn recent years, the PRC government has implemented economic reform measures which emphasize decentralization, utilization of market forces and the development of foreign investment projects, of which NPCDC, SPFO and Shanghai Yayang are examples.

              For information regarding a government restructuring plan to
abolish fifteen ministries, including the MPT, approved by the National People's
Congress, see Section 3.3.6 "Risks Relating to China."

              
The Chinese economy is estimatedreported to have expanded by 9.1%11.4% in 2003
(2002: 8.0%)2007, as a result of fiscal stimulus and robust external demand. Exports and imports continue to surge. Fixed-asset investment, a crucial component of China'sChina’s economic growth, rose during the period partly as a result of increased public expenditure on infrastructure projects and technology upgrades of state-owned entities. The World Bank has projected China economic growth in 20042008 to be approximately 7.7%9.7% followed by 7.2%9.6% in 2005.

         2009.


4.3 ORGANIZATIONAL STRUCTURE

         Organizational Structure
Thailand
The Company'sCompany’s Thai operations are conducted by Siam Pacific, which produces telecommunications cable, power cable and enameled wire for the domestic market, Pacific Thai, a specialized producer of enameled wire for the export market and Charoong Thai, which manufactures power telecommunications cables and, through its subsidiaries, provides telecommunication and network services. As atof December 31, 2003,2005, the Company owns effective 55.41%effectively owned 52.43% of the interests in Siam Pacific, Pacific Thai and Charoong Thai. By 2007, the Company’s effective ownership interest in those three entities had been reduced to 50.93%, with the decrease in the Company’s percentage ownership being attributable to the exercise of warrants or conversion of convertible securities by third parties. The Company’s present intention is to maintain majority ownership of the voting securities of Charoong Thai.
Siam Pacific was established in 19891988 as a joint venture between PEWC and Ital-Thai, which is the largest diversified construction company in Thailand and is principally engaged in the design, engineering, construction and project management of large-scale civil engineering and telecommunications projects in Thailand. Capitalizing on PEWC'sPEWC’s wire and cable manufacturing expertise and Ital-Thai'sItal-Thai’s significant presence in the local market, the companyCompany was able to establish its presence in this market and gain knowledge of business opportunities in Thailand.
Pacific Thai was established in 1989 and is a wholly ownedwholly-owned subsidiary of Siam Pacific. Pacific Thai produces enameled wire for export only and has a special tax status which exempts it from import duties on raw materials used in export manufacturing. This special tax status must be renewed each year.
Charoong Thai is a public company listed on the Stock Exchange of Thailand ("SET"(‘‘SET’’). It manufactures aluminum and copper electric wire, medium and high voltage power cable and

                                       28
 telecommunications cable. It has subsidiaries and affiliates in the businesses of optic fiber cable manufacturing and telecommunication and network services. Charoong Thai was established in Thailand in 1967 as a limited public company. The board of directors of Charoong Thai may authorize the issuance of additional shares of common stock of Charoong Thai. The Company has preemptive rights to purchase an amount of additional shares equal to its pro rata share of the additional authorized shares, less amounts reserved for directors, officers and employees. In the event the board of Charoong Thai decides to cause it to issue those additional shares, the Company may decide not to exercise this right, in which case the Company'sCompany’s interest may be diluted.
Siam Pacific and Charoong Thai are two of the five largest telecommunications and power cable and wire manufacturers in Thailand and are two of the five government-approved suppliers of telecommunications cable for major public telecommunications projects.
As part of its restructuring plan, the Company has merged its Thai operations, which has generated cost savings while improving overall efficiency. The Company believes the synergistic effect of merging these operations will continue to produce significantly reducedsignificant savings in overhead and will centralizecost as it facilitates the centralization of decision making and resource allocation for the Thai operations.
Singapore
The transaction was completed on July 2, 2002 when Charoong Thai issued
177,500,000 new shares at Baht 5 per share, representing 49.92% of its enlarged
base of 355,660,000 paid-up shares. The new shares were exchanged for Siam
Pacific's shares at a swap ratio of 1 Siam Pacific share for every 26.5 of
Charoong Thai's newly issued shares. Immediately after the completion of this
transaction, the shareholders of the new enlarged Charoong Thai company
comprised of the Company (68.42%), Ital-Thai (16.90%) and Bangkok Insurance
(5.31%). The rest of the shares are publicly traded on the SET.

         Singapore

         The Company'sCompany’s Singapore operations are conducted primarily through its 98.2%98.3%-owned subsidiary, Sigma Cable. The Company believes that Sigma Cable is the largest producer of low voltage power cable products in Singapore. Sigma Cable manufactures and sells a range of low voltage power cable products, used mainly in infrastructure projects and commercial and residential developments. Sigma Cable is also the exclusive distributor in Singapore of copper rod and medium and high voltage wire and cable manufactured by PEWC.
Sigma Cable also has project engineering operations in Singapore to supply, deliver and install ("SDI"(‘‘SDI’’) primarily medium and high voltage cable to power transmission projects. While the Company


currently obtains its supply of medium and high voltage power cable for its SDI operations from PEWC, other suppliers are also available if necessary. The Company anticipates that there will be increasing demand for medium and high voltage power cable and related turnkey installation projects in Singapore.

         In 1998
The Company owns Sigma-Epan, which ceased manufacturing operations in Singapore and Malaysia in May 2007 due primarily to decreasing sales revenues, taxes imposed by the Company acquired a 60.0% interest inMalaysian government, inadequate machinery, and high overhead costs. Sigma-Epan consisted of a primarily Singapore-based group of companies whichengaged in the manufacture of specialty cables and assembleassembled cable harnesses for the electronics, computer, building automation, audio and communication industries. The Company bought over the remaining 40%
interest in the Sigma-Epan in 2001. Sigma-Epan has

                                       29


manufacturing operations in Singapore and Malaysia. It achieved ISO 9002 certification for its quality management system in 1990. Its customers arewere largely multinational original equipment manufacturers and its export markets includeincluded Malaysia, the Philippines, Indonesia, Thailand, Australia, New Zealand, China and the USA.

         U.S. Since Sigma-Epan ceased operations, the Company no longer manufactures specialty electronic cables.
Australia
The Company has an effective 98.5%98.53% ownership interest in APEC, an Australian wire and cable distributor, which commenced operations at its power cable manufacturing facility in Queensland near Brisbane, Australia in 1997. The new facility produces low voltage power cable with a targeted production capacity of 2,000 tons per year.
APEC has historically sold its production output to Australian distributors and major wholesalers that have been primarily dependent upon imports from other countries. In 1998, it established a sales office with warehousing facilities in Sydney, New South Wales to attract and service customers in this region of Australia. In 2000, it established another sales office with warehousing facilities in Melbourne, Victoria. In 2002, a sales office in Perth was established. APEC bids for supply contracts in state and national power development projects in Australia.
China

         In October 1997, the Company exercised its option to purchase from a
subsidiary of Charoong Thai a 70.0% interest in NPCDC, for a consideration of
$5.5 million. NPCDC manufactures a range of telecommunications cable and LAN
electronic cables in Yinjiang Town, Zhejiang Province, China. NPCDC began
commercial production of high quality telecommunications cable in December 1996.
Total production capacity of the NPCDC operations is approximately 800,000 pkm
per year. NPCDC currently obtains all of its copper rod requirements from PEWC
through a licensed Chinese importer.

         NPCDC's primary customers are the government owned post and
telecommunication bureaus in eastern China and major subcontractors bidding for
government contracts. While NPCDC will enjoy normal management control over its
production process and output, the prices it will receive for its
telecommunications cable will be determined by the government.

         The term of the NPCDC joint venture is 50 years commencing from
December 31, 1993, the date the joint venture received its business license. The
joint venture may be terminated early with the consent of all the joint venture
partners or following a serious breach by one of the joint venture partners of
the terms of the joint venture contract. The joint venture partners will share
future profits in proportion to their equity interests in the joint venture.

         
The Company also has a 63.49%54.41% effective interest in Shanghai Yayang, a company in Shanghai, China. Shanghai Yayang is a joint venture company manufacturing enameled wire which was formed in 1998. The other party to the
joint venture1998, and is South-West Power Cable in Chengdu Province.a subsidiary of Pacific Thai. Shanghai Yayang manufactures enameled wire with a diameter of between 0.05mm and 2.5mm.
SPFO is a joint venture company in Yanggu County, Shandong Province, China. SPFO was established to manufacture fiber optic cables for the China market. The Company owns a 30
51% interest in SPFO with the remaining interest owned by the joint-venture partner, Shandong Yanggu Cable Company (‘‘Shandong Yanggu’’), an established manufacturer in Shandong Province that produces a wide range of cable products and is considered one of the leading cable producers in China. The Company has invested a total of $2.8 million in SPFO.

         On June 30, 2001, the
The Company invested approximately $1.2 million forowns a 25.0%25% interest in an existing profitable company Shandong Pacific Rubber Cable Company, Ltd. ("SRC"(‘‘SPRC’’), which manufactures rubber cable for the China market. The remaining 75% is owned by Shandong Yanggu. The investment was in the form of
machinery transfer and cash.

         
On August 18, 2001, a joint-venture agreement was signed with Shandong Yanggu to establish Shandong Huayu Pacific Fiber Optics Communication Co., Ltd. ("SHP"(‘‘SHP’’) for the manufacture of optic fibers. The Company will invest $3.0has invested in excess of $5.0 million for a 49% holding;interest in SHP, with the remaining 51% will beinterest in SHP being held by Shandong Yanggu. Production is tentatively scheduled to commence in 2004 or 2005 with initialThe projected production of 900,000kmrate was initially set at 900,000 km of optic fibers annually. TheDue to weak market outlook, the actual commencement of operations will dependhas been put on the assessment of market conditions. The company plans
to operate two optic fiber drawing towers and four production lines. Its
products will be sold to Shandong Pacific Fiber Optic Cable Co., Ltd. and other
external buyers. The Company believes that the market for optic fiber and fiber
optic cable remains promising in China in the long term.

         hold.
On March 22, 2002, the Company acquired two companies, namely, Crown Century Holdings Limited ("CCH"(‘‘CCH’’) and its wholly-owned subsidiary, Pacific Electric Wire & Cable (Shenzhen) Co., Ltd. ("PEWS"(‘‘PEWS’’) from PEWC, the then majority shareholder of the Company. The acquisition was in exchange for 3,097,436 new shares of the Company issued to PEWC. As a result of this new issue, PEWC's
holding in the Company increased from 68.3% to 75.4% in 2002. PEWS manufactures enameled


wire for electronic, video and audio products for the South China Marketmarket and for export. CCH is the trading arm of PEWS. The operations of PEWS and CCH have been profitable since 1999 and have contributed to the profits of the Company in 2003.

         4.4 PROPERTY, PLANT AND EQUIPMENT

         2007.
Until 2006, the Company owned a 94.31% interest in NPC. NPC manufactured a range of telecommunications cable and LAN electronic cables in Yinjiang Town, Zhejiang Province, China. NPC began commercial production of high quality telecommunications cable in December 1996. Total production capacity of the NPC operations was approximately 800,000 pkm per year.
NPC’s primary customers were the government controlled and regulated telecommunications networks operators, in particular their provincial and local offices in eastern China and major subcontractors bidding for government contracts.
The Company'sterm of the NPC joint venture was 50 years commencing from December 31, 1993, the date the joint venture received its business license. The joint venture agreement permitted early termination with the consent of all the joint venture partners or following a serious breach by one of the joint venture partners of the terms of the joint venture contract. The joint venture agreement provided that the partners share in the profits in proportion to their equity interests in the joint venture. In 2006, the Company terminated the NPC joint venture due to lack of profitability, unsatisfactory management practices, the lack of qualified executives to assume management responsibility following termination of the then senior managers, and the lack of promising prospects for the business in the short to medium term.
4.4Property, Plant and Equipment
The Company’s manufactured products are produced at facilities on premises owned or leased by Siam Pacific, Pacific Thai, Charoong Thai, Sigma Cable, Sigma-Epan (until May 2007), APEC, NPCDC,NPC (until 2006), Shanghai Yayang, SPFO and PEWS.
As of December 31, 2007, the summary status of the Company’s facilities and operations was as follows:
Siam Pacific owns a 5.27.45 acre production facility near Bangkok, Thailand, located on a 26.926.79 acre site that it also owns. The production facility is mortgaged to Bangkok Bank as security for a $9.0 million line of credit. Pacific Thai operates a separate 92,800 square meter production facility located at the same site which it leases from Siam Pacific.
Charoong Thai owns a 24.7 acre production facility in Chachoengsao province, near Bangkok, Thailand. The production facility is located on a 57.9 acre site which Charoong Thai also owns. Neither the production facility nor the land areis mortgaged.

                                       31
Sigma Cable operates at a new production facility on a 19,373 square meter site in Singapore leased from the Jurong Town Corporation ("JTC"(‘‘JTC’’) for 30 years from September 16, 2000 to September 16, 2030. JTC is a government-linked corporation and is Singapore'sSingapore’s largest industrial landlord.
Sigma-Epan leased an office space from Sigma Cable in Singapore and operated two factory units in Johore Bahru and Penang, both in Malaysia. Both manufacturing operations of Sigma-Epan were terminated as of 2007, but Sigma-Epan continues to employ eight individuals in its trading operations.
APEC owns a 6,735 square meter manufacturing facility on a 39,000 square meter land in Brisbane, Australia, which is mortgaged to Westpac Banking Corporation of Australia as security for a bank facility of approximately Australian $4$10 million.

         NPCDC operates
NPC operated on 10.9 acres of state-owned land in Ningbo, Yinjiang, Zhejian Province, China. TheChina, with a factory area isof 3.3 acres. A leasehold right of industrial land use for the land has beenwas granted for 50 years. Manufacturing operations at NPC were terminated in 2006. NPC continues to hold the leasehold right of the land and maintains ten employees.
Shanghai Yayang operates a factory, partially mortgaged to a finance company, located in an area of approximately 5,000 square meters of state-owned land in an industrial district in Fengxian, Shanghai.


SPFO operates in a purpose-built factory building on a leasehold state-owned land in Yanggu, Shandong Province, China.
PEWS operates on 36,000 square meters of state-owned land with a built-up area of 20,367 square meters in Long Gang, Shenzhen, Province, China. A leasehold right of industrial land use for the land has been granted for 50 years. The facility is mortgaged to Agricultural Bank of China as security for a Rmb 14 million bank facility granted in 2003.

                                       32
The Company'sCompany’s primary operating facilities as of December 31, 2007 are briefly described below:

Location
Company
Products
- --------                                 -------                      --------
Bangkok, Thailand
Siam Pacific
Telecommunications cable, power cable, enameled wire
Bangkok, Thailand
Pacific Thai
Enameled wire
Bangkok, Thailand
Charoong Thai
Telecommunications cable, power cable
Ningbo, China                            NPCDC                        Telecommunications cable, LAN cable
Shanghai, China
Shanghai Yayang
Enameled wire
Yanggu, China
SPFO
Fiber optic cable
Shenzhen, China
PEWS
Enameled wire
Singapore
Sigma Cable
Power cable, SDI project engineering, distributed products
Singapore and Malaysia
Sigma-Epan
Electronic cable (until May 2007)
Brisbane, Australia
APEC
Power cable
All of the Company'sCompany’s facilities in Bangkok, Singapore, Brisbane and China use production processes and equipment of international standard imported from Europe, the United States, Taiwan, and Japan.

ITEM


Item 5:    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

         Operating and Financial Review and Prospects
The following discussion should be read in conjunction with the annual consolidated financial statements, including the notes to those financial statements, which are included with this annual report.Annual Report. Because more than 90% of the Company’s revenues are derived from its manufactured products segment, the following discussion is not presented on a segment basis.
    5.1    DISCLOSURES OF CRITICAL ACCOUNTING POLICIES

         Management'sDisclosures of Critical Accounting Policies
Management’s discussion and analysis of financial condition and results of operations discusses the Company'sCompany’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-goingongoing basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that 33
are not readily apparent from otherothe r sources. Actual results may differ from these estimates under different assumptions or conditions.
Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
Inventories
Inventories are valued at the lower of cost or market value. Cost is determined using the first-in, first-out or weighted average method. In assessing the ultimate realization of inventories, we are required to make judgments as to future market requirements compared with current inventory levels. Revisions to our allowance for inventories may be required if actual market requirements differ from our estimates.
The management at the respective subsidiaries conducts a thorough review of the inventory in all of its product lines on a regular basis. The allowances for inventories are made to reduce excess inventories to their estimated net realizable values, as necessary. The subsidiaries will take into consideration their best estimates of product sales prices, copper prices and customer demand patterns. The estimates used by the Company to determine its allowance for inventory losses may be more or less than the actual amount or results. The subsidiaries will also evaluate inventory on a regular basis for obsolete or slow-moving items to ascertain if the recorded allowance is reasonable and adequate. Inventory is written down for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions.
Carrying values

         Values
Valuations are required under accounting principles generally accepted in the United States to determine the carrying value of various assets. Our most significant assets that require management to prepare or obtain valuations are goodwill and deferred income taxes. Management must identify whether events have occurred that may impact the carrying value of these assets and make assumptions regarding future events, such as profitability. Differences between the assumptions used to prepare these valuations and actual results could materially impact the carrying amount of these assets and net earnings.
Investments
A judgmental aspect of accounting for investments (including investments in equity investees) involves determining whether an other-than-temporary decline in value of the investment has been sustained. If it has been determined that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value, by a charge to earnings. Such evaluation is dependent on the specific facts and circumstances. Factors that are considered by the Company in


determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.
In 2007, the Company recorded an impairment charge of $0.1 million in Shandong Huayu Pacific Fiber Optics Communication Co., Ltd. (‘‘SHP’’) due to an oversupply of products in the market at Shandong and the suspension of construction of the SHP production line.
Revenue Recognition
Sales represent the invoiced value of goods sold, net of value added tax and returns, commission income earned on distribution activities, and service fee income on installation activities. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The specific recognition criteria summarized in the next succeeding paragraph must also be met before revenue is recognized.
The Company recognizes revenue from the sale of goods and distribution activities upon passage of title to the customer which coincides with their delivery and acceptance. This method of revenue recognition is in accordance with Staff Accounting Bulletin, SAB 104 — ‘‘Revenue Recognition in Financial Statements.’’
A portion of our revenue is generated from installation activities which isare recognized using the percentage-of-completion method. Recognized revenues and profit are subject to revisions as the activity progresses to completion.
We allocate revenue from installation and sale of cables contained in a single arrangement, or in related arrangements with the same customer, based on their relative fair values. The allocation of the fair value to the delivered elements is limited to the amount that is not contingent on future delivery of services or subject to customer-specific return or refund privileges. The amounts of revenue recognized is impacted by our judgments as to whether an arrangement includes multiple elements. Changes to the elements in an arrangement could affect the timing of the revenue recognition.
Deferred Income Taxes
The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for valuation allowance, in the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.
Bad Debt
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the 34


Company'sCompany’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
Impairment of Long-Lived Assets
We evaluate the carrying value of our long-lived assets, consisting primarily of property plant and equipment, whenever certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. In 2002,2007, the Company recorded impairment charges of $1.6 million
related to thedid not record any impairment of certain property, plant and equipment of Ningbo.

         These impairment charges were recorded to reduce the carrying value of
the identified assets to fair value. Fair values were derived using a variety of
methodologies, including cash flow analysis, estimates of sales proceeds and
independent appraisals. Where cash flow analyses were used to estimate fair
values, key assumptions employed included estimates of future growth, estimates
of gross margins and estimates of the impact of inflation. Changes in these
estimates could have a material adverse effect on the assessment of our
long-lived assets.
Recent Pronouncements
In January 2003,September 2006, FASB issued FASB InterpretationStatement No. 46, "Consolidation157 — ‘‘Fair Value Measurements’’ (‘‘SFAS 157’’), which defines fair value, establishes a framework for measuring fair value in generally


accepted accounting principles, and expands disclosures about fair value measurements. The provisions of Variable Interest Entities" ("FIN 46"). FIN 46 requires a beneficiarythis standard apply to consolidate a variable interest entity ("VIE") if it is the primary beneficiary
ofother accounting pronouncements that entity. The primary beneficiary is defined as having a variable interest
in a VIE that will absorb a majority of the entity's expected losses if they
occur, receives a majority of the entity's expected residual returns if they
occur,require or both. In December 2003, FASB completed deliberations of proposed
modifications to FIN 46 ("Revised Interpretations") resulting in multiplepermit fair value measurements. SFAS 157 became effective dates basedfor us on the nature as well as the creation date of the VIE.
VIEs created after January 31, 2003, but prior to January 1, 2004, may be
accounted for either based on2008. Upon adoption, the original interpretation or the Revised
Interpretations. However, the Revised Interpretations mustprovisions of SFAS 157 are to be applied prospectively with limited exceptions.
In September 2006, FASB Statement No. 158 — ‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an Amendment of FASB Statements No. 87, 88, 106, and 132(R)’’ (‘‘SFAS 158’’), was issued. This statement requires an employer that sponsors one or more defined benefit pension or other postretirement plans to recognize an asset or liability for the overfunded or underfunded status of its postretirement benefit plans in financial statementsits balance sheet for periods ending after March 15, 2004. VIEs created after
December 31, 2003 must be accounted for under the Revised Interpretations.
Special Purpose Entities ("SPEs") created prior to February 1, 2003, may be
accounted for under the original or revised interpretation's provisions no later
than the first periodyears ending after December 15, 2003. Non-SPEs created prior2006. The funded status is measured as the difference between the fair value of the plan’s assets and its benefit obligation. The statement also requires an employer to February 1, 2003, shouldmeasure plan assets and benefit obligations as of the date of the employer’s statement of financial position. SFAS 158 is effective for fiscal years ending after December 15, 2006, except for the requ irement to measure plan assets and benefit obligations as of the statement of financial position date, which is effective for fiscal years ending after December 15, 2008. Transition for the recognition provisions is entirely prospective. The effect of adopting SFAS 158 on the consolidated financial statements is presented in Note 18 to the Audited Financial Statements.
In September 2006, the FASB ratified EITF Issue No. 06-1 — ‘‘Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive Service from the Service Provider’’ (‘‘EITF 06-1’’). This guidance requires the application of EITF Issue No. 01-9 — ‘‘Accounting for Consideration Given by a Vendor to a Customer’’ (‘‘EITF 01-9’’), when consideration is given to a reseller or manufacturer for benefit to the service provider’s end-customer. EITF 01-9 requires the consideration given to be accountedrecorded as a liability at the time of the sale of the equipment and also provides guidance for under the revised interpretation's
provisions no later thanclassification of the expense. EITF 06-1 is effective for the first annual reporting period endingbeginning after MarchJune 15, 2004.2007. The Company has applieddoes not expect the provisionsadoption of FIN 46 on variable interest entities
created after January 31, 2003 and for SPEs. The adoption did notEITF 06-1 to have a material impact on its consolidated financial statements.
In February 2007, the Company'sFASB issued Statement No. 159 — ‘‘The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115’’ (‘‘SFAS 159’’). SFAS 159 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We do not believe the adoption of SFAS 159 will have significant impact on our consolidated financial statements.
In June 2007, the FASB ratified EITF Issue No. 07-3 — ‘‘Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities’’ (‘‘EITF 07-3’’). This issue provides that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. Such amounts should be recognized as an expense as the related goods are delivered or the related services are performed. EITF 07-3 is effective for fiscal years beginning after December 15, 2007. The Company does not expect the adoption of EIFT 07-3 to have a material impact on its consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations (‘‘SFAS No. 141(R)’’), which establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement in the financial statements of position, resultsthe identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. This statement also establishes disclosure requirements to enable financial statement users to evaluate the nature and financial effects of operations,the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or cash flows.

         after the beginning of the first annual reporting period beginning on or after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The impact of this standard is dependant upon the level of future acquisitions by the Company.


In May 2003,December 2007, the FASB issued FASB StatementSFAS No. 150, "Accounting For
Certain160 — ‘‘Non-controlling Interests in Consolidated Financial Instruments with CharacteristicsStatements, an Amendment of Both LiabilitiesARB No. 51’’ (‘‘SFAS 160’’). SFAS No. 160 establishes accounting and Equity" ("Statement 150"). This statement establishesreporting standards for howthe non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an issuer classifiesownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, SFAS No. 160 requires expanded disclosures in the consolidated financial statements. SFAS No. 160 is effective for fiscal years, and measures certaininterim periods within those fiscal years, beginning on or after December 15, 2008. The Company is currently assessing the potential impact of SFAS No. 160 on its financial instruments with
characteristics of both liabilities and equity. statements.
In November 2003,February 2008, the FASB issued FASB Staff Position (FSP) 150-3, "Effective Date, Disclosures,(‘‘FSP’’) FAS 157-1, ‘‘Application of FASB Statement No. 157 to FASB Statement No. 13 and TransitionOther Accounting Pronouncements That Address Fair Value Measurement for Mandatorily Redeemable Financial InstrumentsPurpose of Certain Nonpublic
Entities and Certain Mandatorily Redeemable Noncontrolling InterestsLease Classification of Measurement under Statement 150",13,’’ which deferredamends SFAS 157 to exclude accounting pronouncements that address fair value measurements for purpose of lease classification or measurement under SFAS No. 13, ‘‘Accounting for Leases.’’ In February 2008, the FASB also issued FSP FAS 157-2 — ‘‘Effective Date of FASB Statement No. 157,’’ which delays the effective date of Statement 150SFAS 157 until the first quarter of fiscal 2010 for certain
mandatorily redeemable non-controlling interests. The

                                       35


Company has adopted the provisions of Statement 150,all non-financial assets and non-financial liabilities, except for certain
mandatorily redeemable non-controlling interests,items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for financial instruments
entered into or modifiedstatements issued for fiscal years beginning after May 31, 2003,November 15, 2007, and otherwise was effective atinterim periods within those fiscal years. The Company is currently assessing the beginningimpact SFAS 157 will have on its results of operations and financial position.
In March 2008, the FASB issued SFAS No. 161 — ‘‘Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133’’ (‘‘SFAS 161’’) which requires additional disclosures about the objectives of the first interim periodderivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. SFAS 161 will be effective for the Company in fiscal year 2010. The Company is currently assessing the potential impact that adoption of SFAS 161 may have on its financial statements.
In May 2008, the FASB issued SFAS No. 162 — ‘‘The Hierarchy of Generally Accepted Accounting Principles’’ (‘‘SFAS 162’’). The Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). The current GAAP hierarchy, as set forth in the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards No. 69, ‘‘The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles,’’ has been criticized because (1) it is directed to the auditor rather than the entity, (2) it is complex, and (3) it ranks FASB Statements of Financial Accounting Concepts, which are subject to the same level o f due process as FASB Statements of Financial Accounting Standards, below industry practices that are widely recognized as generally accepted but that are not subject to due process. The Board believes that the GAAP hierarchy should be directed to entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. Accordingly, the Board concluded that the GAAP hierarchy should reside in the accounting literature established by the FASB and is issuing this Statement to achieve that result. This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, ‘‘The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.’’
In May 2008, the FASB issued SFAS No. 163, ‘‘Accounting for Financial Guarantee Insurance Contracts,’’ an interpretation of FASB Statement No. 60 (‘‘SFAS 163’’). Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. That diversity results in inconsistencies in


the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5, Accounting for Contingencies. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial s tatements issued for fiscal years beginning after JuneDecember 15, 2003.2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise’s risk-management activities. This Statement requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period (including interim periods) beginning after issuance of this Statement. Except for those disclosures, earlier application is not permitted. The Company does not expect the adoption of Statement 150 did notSFAS 163 to have a material impact on the Company'sits consolidated financial statements of position, results of operations, or cash flows.statements.
    5.2    SUMMARIZED INCOME STATEMENT

         Summarized Income Statement
This discussion should be read in conjunction with the information contained in the Consolidated Financial Statementsconsolidated financial statements and notes thereto (the "Financial Statements"‘‘Financial Statements’’) presented in Item 18 of this Annual Report.


The following table sets forth a summary statement of income for the periods indicated:

         (See chart on following page.indicated (dollar ($) 36

                                                                        Year ended December 31,
                                                                 (US$ in thousands, except percentages)

                                                           2001                   2002                  2003
                                                   -------------------------------------------------------------------

                                                        (Restated)
Net Sales:
Manufactured products:
Telecommunications wire and cable                           $36,606                $35,619                    $33,640
Power cable                                                  41,782                 58,710                     58,450
Enameled wire                                                65,240                 86,635                     95,541
Electronic cable                                              5,390                  4,778                      4,662
                                                   -------------------------------------------------------------------
Total manufactured products                                 149,018                185,742                    192,293
SDI project engineering                                      14,968                 31,134                      3,919
Distributed Products                                         33,325                 24,303                     15,187
                                                   -------------------------------------------------------------------
Total net sales                                             197,311                241,179                    211,399
                                                   ===================================================================

Gross profit:
Manufactured products:
Telecommunications wire and cable                             6,593                  9,588                      8,503
Power cable                                                   6,548                 13,466                     11,224
Enameled wire                                                 6,578                 11,887                     12,295
Electronic cable                                                635                    252                        555
                                                   -------------------------------------------------------------------
Total manufactured products                                  20,354                 35,193                     32,577
SDI project engineering                                      (1,119)                  (787)                        92
Distributed Products                                            724                    338                        491
                                                   -------------------------------------------------------------------
Total gross profit                                           19,959                 34,744                     33,160
                                                   ===================================================================


Gross profit margin:
Manufactured products
Telecommunications wire and cable                                18.0%                  26.9%                   25.3%
Power cable                                                      15.7%                  22.9%                   19.2%
Enameled wire                                                    10.1%                  13.7%                   12.9%
Electronic cable                                                 11.8%                   5.3%                   11.9%
                                                   -------------------------------------------------------------------
Total manufactured products                                      13.7%                  18.9%                   16.9%
SDI Project engineering                                          -7.5%                  -2.5%                    2.3%
Distributed  Products                                             2.2%                   1.4%                    3.2%
                                                   -------------------------------------------------------------------
Total gross margin                                               10.1%                  14.4%                   15.7%
                                                   ===================================================================


                                       37
amounts in thousands of US$):

 
2005
2006
2007
Net Sales:
 
 
 
Manufactured products:
 
 
 
Telecommunications wire and cable
$
32,171
$
49,069
$
46,444
Power cable
101,333
147,726
188,818
Enameled wire
162,483
237,097
258,470
Electronic cable
5,529
5,388
1,073
Total manufactured products
301,516
439,280
494,805
SDI project engineering
15,691
16,421
5,253
Distributed Products
20,055
12,416
10,783
Total net sales
337,262
468,117
510,841
Gross profit:
 
 
 
Manufactured products:
 
 
 
Telecommunications wire and cable
1,600
11,294
7,712
Power cable
18,465
24,890
33,916
Enameled wire
16,482
21,901
2,995
Electronic cable
146
403
48
Total manufactured products
36,693
58,488
44,671
SDI project engineering
(375
) 
(284
) 
(347
) 
Distributed Products
634
1,107
80
Recovery (allowance) for inventory reserve
(346
) 
(2,017
) 
1,272
Total gross profit
36,606
57,294
45,676
Gross profit margin:
 
 
 
Manufactured products:
 
 
 
Telecommunications wire and cable
5.0
% 
23.0
% 
16.6
% 
Power cable
18.2
% 
16.8
% 
18.0
% 
Enameled wire
10.1
% 
9.2
% 
1.2
% 
Electronic cable
2.6
% 
7.5
% 
4.5
% 
Total manufactured products
12.2
% 
13.3
% 
9.0
% 
SDI Project engineering
(2.4
)% 
(1.7
)% 
(6.6
)% 
Distributed Products
3.2
% 
8.9
% 
0.7
% 
Total gross margin
10.9
% 
12.2
% 
8.9
% 
Note that gross profit margin by products excludes recovery or allowance for inventory reserve. Further note that the allowance for inventory reserve in 2005 and 2006 has been reclassified as cost of sales to conform with the current year’s presentation as management believes that this presentation better reflects the nature of the charges. That reclassification is reflected in certain operating results, including gross profits and gross profit margins.
    5.3    OPERATING RESULTS

              Operating Results
5.3.1    YEAR ENDED DECEMBERYear Ended December 31, 2003 COMPARED WITH YEAR ENDED
                     DECEMBER2007 Compared with Year Ended December 31, 2002

              2006
General
Results of operations are determined primarily by market demand and government infrastructure projects, market selling prices of our products, our ability to manufacture high quality products efficiently in quantities sufficient to meet demand and to control production and operating costs. Our results are also influenced by a number of factors, including currency stability in the countries in which our operations are located, competition and the cost of raw materials, especially copper, which accounted for approximately 50%60% to 60%70% of the cost of sales.


In order to minimize the impact of copper price fluctuations, we attempt to "peg"‘‘peg’’ the prices of our products to the prevailing market price of copper and pass changes in the cost of copper through to customers as much as possible. In certain circumstances, however, we remain affected by fluctuations in the price of copper. For example, the price of telecommunications cable sold for use in public projects in Thailand is determined semi-annually and is based upon the average spot market price of copper on the LME during the six-month period commencing on January 1 and July 1 prior to the month of order. Thus, a recent rise or decline in copper prices may not be fully reflected under this pricing scheme for several months.

              The monthly average copper prices in 2003 moved within the band of
$1,586 to $2,200 per metric ton. 
Average copper prices per metric ton have increased by 14.0%6.0% from $1,560$6,645 in 20022006 to $1,779$7,041 in 2003. The higher cost of
copper resulted in lower gross profit margins for our products in 2003 than in
previous years.2007. Gross profit margins for manufactured products in 20032007 were on average at 16.9%9.0% compared to 18.9%13.3% in 2002.

              2006.
Copper prices indicated in this report are quoted from the London Metal Exchange (LME) index. The 2003, 20022007 and 20012006 copper prices are as follows:

                                                                      2003              2002               2001
                                                              --------------------------------------------------------

Average LME copper price ($/Ton)                 1Q                 $1,663             $1,557             $1,764
                                                 2Q                  1,640              1,611              1,652
                                                 3Q                  1,753              1,516              1,472
                                                 4Q                  2,059              1,554              1,426
                                                              --------------------------------------------------------
                                                 Year                1,779              1,560              1,578
                                                              ========================================================


              The

 
 
2007
2006
Average LME copper price ($/Ton)
1Q
6,452
5,103
 
2Q
7,476
7,198
 
3Q
7,649
7,602
 
4Q
6,588
6,675
 
Year
7,041
6,645
According to the World Bank, (i) the rates of year 20032007 GDP growth for Thailand, Singapore and China were 6.7%4.3%, 1.1%7.7% and 9.1% respectively. The 200211.4% respectively and (ii) the 2006 GDP growth rates for Thailand, Singapore and China were 5.2%5.0%, 2.3%7.9% and 8.0%10.7% respectively. Our performance is largely influenced by the level of growth in the telecommunication and power infrastructure, construction and electronic goods manufacturing sectors. We are beginning to see the return of growth in these industrial sectors following the recovery in the general economies of the respective countries and increases in governments' budget spendinggovernments’ expenditures on infrastructure.

                                       38


              The Company showed improved net income of $10.0 million in 2003,
more than double that of $4.8 million in 2002. 
Net Sales
Sales of manufactured product increased by 3.5%, although overall net sales fell due to decrease in revenue12.7% from SDI project engineering and Distributed Products. Overall gross profit
margins have increased from 14.4% in 2002 to 15.7% in 2003 due to product mix
and improved selling prices for electronic cable, SDI project engineering and
Distributed Products. Selling, general and administrative expenses have
increased due to expanded group operations in China and Australia.

              Our net results in 2003 were aided by positive contributions from
exchange gain, lower net interest expense and share of net gain of equity
investees. An exchange gain of $4.2 million was recorded in 2003 largely due to
the appreciation of the Thai Baht and the Australian dollar. Net interest
expenses have decreased by 25.2% due to decreased borrowings with payments from
cash provided by operating activities.

              Net Sales

              Sales of manufactured product increased by 3.5% from $186$439 million in 20022006 to $192$495 million in 2003, although2007, contributing to an overall net sales fell due to decrease
in revenue from SDI project engineering and Distributed Products.increase of 9.2%. Sales in enameled wirepower cable exhibited the strongest increase of 10.3%27.8% due to the strong demand from appliance manufacturersfor transmission of electricity to and within commercial and residential buildings, especially in China.Thailand. Sales of Distributed Products and revenue from SDI project engineering in Singapore decreased in 20032007 due to decreased demand and a decrease in offers of tenders from SP Powerassets.
The following table shows the percentage share in net sales of the respective operations with respect to our total sales in 2003.

                                    Manufactured        All products and
                                    products only           services
                                ------------------------------------------
           Thailand                          48.6%              44.2%
           Singapore                          8.4%              16.7%
           Australia                         11.5%              10.4%
           China                             31.5%              28.7%
                                ------------------------------------------
           Total                            100.0%             100.0%
                                ==========================================

              In 2003, Sigma Cable recorded revenue of $3.9 million under
project engineering turnkey contracts awarded by SP Powerassets. The projects
call for the supply and installation of 66kV (kilo-volt) high-voltage power
cables along various distinct routes. The Company will continue to tender for
future projects.

              2007.

 
Manufactured
products only
All products
and services
Thailand
50.5
% 
48.8
% 
Singapore
6.3
% 
9.4
% 
Australia
11.3
% 
10.9
% 
China
31.9
% 
30.9
% 
Total
100.0
% 
100.0
% 
Gross Profit
Gross profit for 20032007 was $33.1$45.7 million, representing a decrease of 4.6%20.2% compared to $34.7$57.3 million for 2002.2006. The decrease was primarily attributable to increases in the prices of raw materials in the global market while the sales price of finished products to certain customers remained fixed or could not be increased significantly due to competitive market prices in the industry. Gross


profit contributed by sales of manufactured products was $32.6$44.7 million in 20032007 compared to $35.2$58.5 million in 2002.

              2006, representing a decrease of 23.6%.
Overall gross profit margins have increaseddecreased from 14.4%12.2% in 20022006 to 15.7%8.9% in 2003 due to product mix and improved selling prices for electronic
cable, SDI project engineering and

                                       39


Distributed Products. However, gross2007. Gross profit margins for manufactured products decreased from 18.9%13.3% in 20022006 to 16.9%9.0% in 20032007. The decrease was primarily due to decreased margins in enameled wire products resulting from weaker market conditions and increased competition in both China and Thailand. To a lesser extent, the decrease was due to decreased margins in telecommunications cable in Thailand. Gross profit margins for power cables increased, particularly in Australia due to the strong Australian economy and the Company’s focus on products with higher cost of raw material
copper.

              gross margins.
Operating Profit
Selling, general and administrative expenses have increased due to
expanded group operations in China and Australia. In 2002, impairment loss on
NPC telecommunication machinery of $1.5 million was taken up in view of the weak
copper telecommunication cable industry in the China region and dim prospects of
future sales in this product. Despite the lower gross profit in 2003, income
from operations increased by 1.7% from $13.9$1.8 million or 6.7% in 2002 to $14.1 million in
2003 due to other operating income of $1.3 million arising from the disposal of
certain property, plant and equipment.

              Gain/Loss from Investees

              In 2002, investee loss was related to that of Loxley Pacific Co.,
Ltd. ("Lox Pac"), Thai Professional Telecom Network Co., Ltd. ("Thai
Professional"), Siam Pacific Holding Company Limited ("SPHC") and Newcall Group
Limited ("NGL"). The share of loss of equity investees in 2002 consists2007, primarily of the share of loss in NGL, Thai Professional and Lox Pac. The loss
was in part due to the impairment of investmenthigher provisions for doubtful accounts. Higher provisions for doubtful accounts largely arose from increased specific and general provisions in Lox Pac of $2.5 million. In
2003, the share of gain in equity investees wasCompany’s Thai subsidiaries. Increased specific provisions were largely relatedattributed to share of
operating profits of LoxPac anda debtor, a major telecommunication subcontractor company, that encountered delayed payments under its contract with the recovery of certain receivables from NGL.

              Gain on Share Issuance by Subsidiaries and Affiliates

              In 2002, the issuance of new shares by Charoong Thai Shanghai
Yayang and Lox Pac contributed to the $1.0 million net gain on share issuance by
subsidiaries and affiliates. No such gain was recorded in 2003.

              Loss on Sale of Investment

              The loss on sale of investment in 2002 and 2003 was largely due to
the disposal of our investment in Charoong Thai.

              government.
Exchange Gain/Loss
In July 1997, the floatationflotation of the Thai Baht caused the currency to fall in value against the U.S. Dollardollar and triggered declines in other regional currencies, such as the Singapore Dollardollar and Australian Dollar.dollar. The Thai Baht generally appreciated against the U.S. Dollardollar during the course of 1998 and largely stabilized in 1999. However, from mid-2000, the Thai economy began to decelerate as a result of weak domestic demand, coupled with a major fiscal expansion program espoused by the newly elected government, which contributed to a weakening of the Thai Baht. Since then,In the Thaipast several years, the global weakening of the U.S. dollar against many other currencies has resulted in a strengthening of the Baht has
remained relatively stable.against the U.S. dollar. The exchange differences in the income statements arose largely as a result of these movements in the Thai Baht exchange rate and, to a lesser extent, the movements in the other operating currencies.
The exchange rates as of December 31, 2003,2007 and December 31, 2006, based on the Noon Buying Rate, were as follows:

                                       40




           Foreign currency to US$1:              December 31,     December 31,
                                                      2003             2002
                                                --------------------------------
                 Thai Baht                           39.63            43.20
                 Singapore $                          1.70             1.74
                 Australian $                         1.33             1.78
                 Chinese Rmb                          8.28             8.28

              

 
December 31,
2007
December 31,
2006
Foreign currency to US$1:
 
 
Thai Baht
29.50
36.10
Singapore $
1.44
1.53
Australian $
1.14
1.27
Chinese Rmb
7.30
7.80
Based on the above rates, the revaluation of assets and liabilities denominated in U.S. Dollarsdollars or other foreign currencies in the companiesCompany resulted in $4.2$0.9 million exchange gain in 2003, largely2007. The exchange gain in 2007 is less than that of 2006 due to the appreciationfluctuations in exchange rates and higher realized exchange gains in our Thai operations in 2006 arising from the settlement of the Thai Bahtreceivables and the Australian Dollar.

              payables denominated in U.S. dollars or other foreign currencies during that period.
We use Thai Baht forward foreign exchange contracts to reduce our exposure to foreign currency risks for liabilities denominated in foreign currencies. A forward foreign exchange contract obligates us and our subsidiaries to exchange predetermined amounts of specified foreign exchange currencies at specified exchange rates or to make an equivalent U.S. Dollardollar payment equal to the value of such exchange. Realized and unrealized gains and losses on forward foreign exchange contracts are included in operations as foreign exchange gains or losses.
Gain/Loss from Investees
In 2007, gains from investees were largely related to Shandong Pacific Rubber Cable Co., Ltd (‘‘SPRC’’).


Impairment of Investments
In 2007, the Company recorded an impairment of $0.1 million in SHP due to an oversupply of products in the market at Shandong and the suspension of construction of the SHP production line.
Gain on Sale of Investment
The gain on sale of investment in 2007 was attributable to the sale of warrants held by a subsidiary in Singapore.
Other Income
Other income largely consists of gains on sales of raw materials and scraps, and gains on disposal of fixed assets. The increase in other income in 2007 is primarily due to gains on disposal of fixed assets of NPC, Charoong Thai, and PEWS.
Income Taxes
Our effective tax rate increased from 31.5% in 2006 to 47.9% in 2007, primarily due to origination and reversal of temporary differences in CTW and the effect of the adoption of ‘‘Interpretation No. 48, Accounting for Uncertainty in Income Taxes In 2003, our– An Interpretation of FASB Statement No. 109.’’
The Company files income taxes charge has decreased partlyin each jurisdiction where such a filing is required based on its revenues. The provision for income taxes differs based on the taxes incurred by the operating subsidiaries in their respective jurisdictions. Effective tax rates differ from the statutory rate due to, among other things, whether certain expenses are deductible or not deductible for tax purposes and changes in valuation allowances.
As of December 31, 2007, the Company’s operating subsidiaries in China had net operating loss carry forwards of approximately $6 million which expire on various dates between 2008 and 2011. Based on their history of losses, management believes it is likely that the net operating loss carry forwards will not be fully utilized by those subsidiaries before expiration. Accordingly, the Company has not recognized the $6 million as deferred tax assets.
A significant portion of the deferred tax assets recognized by the Company relates to net operating loss carry forwards of APEC and reserves not yet deductible for tax purposes. Because the Company operates in multiple jurisdictions, it considers the need for a valuation allowance on a country-by-country basis, taking into account the effect of local tax laws. Where a valuation allowance was not recorded, the Company believes that there was sufficient evidence to support its conclusion not to record it. Management believes, but cannot assure, that the Company will utilize the APEC loss carry forwards in the future due to APEC’s profitability and continued generation of taxable income.
Reserves not yet deductible for tax purposes affect temporary differences. Tax consequences of most events recognized in the financial statements for a year are included in determining income taxes currently payable. However, tax laws often differ from the recognition and measurement requirements of financial accounting standards. These differences are referred to as ‘‘temporary differences.’’ Temporary differences ordinarily become taxable or deductible when the related asset is recovered or the related liability is settled. The major temporary differences that gave rise to deferred tax assetassets and liabilities were allowance for inventories, allowance for doubtful accounts and the allowance for impairment in APEC asinvestments.
Additional details regarding tax laws and income taxes of the company has demonstrated
profitability.

              Company including deferred tax liabilities and assets in 2006 and 2007 are disclosed in Note 12 of Item 18: ‘‘Financial Statements.’’
5.3.2    YEAR ENDED DECEMBERYear Ended December 31, 2002 COMPARED WITH YEAR ENDED
                     DECEMBER2006 Compared with Year Ended December 31, 2001

              2005
General
Results of operations are determined primarily by market demand and government infrastructure projects, market selling prices of our products, our ability to manufacture high quality products


efficiently in quantities sufficient to meet demand and to control production and operating costs. Our results are also influenced by a number of factors, including currency stability in the countries in which our operations are located, competition and the cost of raw materials, especially copper, which accounted for approximately 50%60% to 60%70% of the cost of sales.
In order to minimize the impact of copper price fluctuations, we attempt to "peg"‘‘peg’’ the prices of our products to the prevailing market price of copper and pass changes in the cost of copper through to customers as much as possible. In certain circumstances, however, we remain affected by fluctuations in the price of copper. For example, the price of telecommunications cable sold for use in public projects in Thailand is determined semi-annually and is based upon the average spot market price of copper on the LME during the six-month period commencing on January 1 and July 1 prior to the month of order. Thus, a recent rise or decline in copper prices may not be fully reflected under this pricing scheme for several months.

              During 2002, the prices of copper had stabilized significantly
compared to the fluctuations seen in 2001. The monthly average copper prices in
2002 moved within the band of $1,470 to $1,650 per metric ton. 
Average copper prices per metric ton have decreasedincreased by marginally by 1.1%73.3% from $1,578$3,835 in 20012005 to $1,560$6,645 in 2002.2006. The lowerhigher cost of copper resulted in

                                       41
has contributed to a higher gross profit margins forselling price of our products in 2002 than2006 and has contributed to sales increase of $131 million in previous years.2006, representing an increase of 38.8% over sales in 2005. Gross profit margins for manufactured products in 20022006 were on average at 18.9%13.3% compared to 13.7%12.2% in 2001.

              2005.
Copper prices indicated in this report are quoted from the London Metal Exchange (LME) index. The 2002, 20012006, 2005 and 20002004 copper prices are as follows:

                                                     2002       2001      2000
                                                   --------   --------  --------
Average LME copper price ($/Ton)         1Q        $ 1,557    $ 1,764   $ 1,795
                                         2Q          1,611      1,652     1,739
                                         3Q          1,516      1,472     1,872
                                         4Q          1,554      1,426     1,848
                                                   --------   --------  --------
                                         Year        1,560      1,578     1,814
                                                   ========   ========  ========

              The

 
 
2006
2005
Average LME copper price ($/Ton)
1Q
$
5,103
$
3,380
 
2Q
7,198
3,524
 
3Q
7,602
3,858
 
4Q
6,675
4,577
 
Year
6,645
3,835
According to the World Bank, (i) the rates of year 20022006 GDP growth for Thailand, Singapore and China were 5.2%5.0%, 2.3%7.9% and 8.0% respectively. The 200110.7%, respectively and (ii) the 2005 GDP growth rates for Thailand, Singapore and China were 1.9%4.5%, -2.0%6.6% and 7.3%10.2%, respectively. Our performance is largely influenced by the level of growth in the telecommunication and power infrastructure, construction and electronic goods manufacturing sectors. We are beginningcontinue to see the return of growth in these industrial sectors following the recoverysustained growth in the general economies of the respective countries and strong governments’ expenditures on infrastructure.
The Company showed net profit of $13.0 million in 2006, compared to net losses of $5.0 million in 2005 due largely to increases in governments' budget spending on
infrastructure. Thesales, gross profit margins and exchange gains, and lower impairment of investments. Overall net sales increased by 38.8% due to a copper price increase and higher demand for our products due to sterling economic growth in the region. Revenue from manufactured products increased by 45.8% but was offset by a decrease in SDI project engineering and Distributed Products by 19.3% in 2006 compared to 2005. Overall gross profit margins increased from 10.9% in 2005 to 12.2% in 2006, mainly due to an increase in the profit margin in telecommunication wire and cable industry has improved in 2002 with higher
selling prices and sales margins.

              The Company showed improved results in 2002 compared to 2001. Net
sales and gross profit have increased by 22.2% and 74.1%, respectively. Gross
profit margins have also increased from 10.1% in 2001 to 14.4% in 2002 due to
improved selling prices for telecommunication cable and power cable, and the
lower cost of copper.products. Selling, general and administrative expenses have increased by 4.0%, mainly due to expanded group operations and additionalincreases in the provision for doubtful accounts receivables. Despite recording impairment loss on NPCDC telecommunication cable
machinery of $1.5 million in 2002, income from operations has increased from
$3.8 million in 2001 to $13.9 million in 2002.

              and inventory, and professional fees.
Our net results in 2006 were affectedaided by net interest expenses, share of
loss of equity investees,positive contributions from the provisions for exchange gain and gain on saleliquidation of investment, and income taxes charges.
Net interest expenses have decreasedsubsidiary, with an offset by 52.8%a lower impairment of investment. An exchange gain of $5.5 million was recorded in 2006 largely due to decreased borrowings. The
share of loss of equity investees in 2002 consists primarilythe appreciation of the shareThai Baht.
Net Sales
Sales of loss in NGL and Lox Pac. Gain on share issuancemanufactured product increased by subsidiaries and affiliates
arose45.8% from the issuance of shares by Charoong Thai, Shanghai Yayang and Lox Pac.
Gain on sale of investment in 2001 arose from the sale of Charoong Thai
warrants; while the net gain on sale of investment in 2002 arose primarily from
the disposal of our investment in Charoong Thai. In 2001, $0.7 million of the
valuation allowance on the deferred tax asset of Charoong Thai was written back
as the company had demonstrated profitability in 2001. In 2002, our income tax
charge increased primarily due to increased profitability of our Thai
operations. Net income improved from $91,000 in 2001 to $4.8$301 million in 2002.

                                       42


              Net Sales

              Net2005 to $439 million in 2006, contributing to an overall sales for 2002 amounted to $241.2 million, representing an increase of $43.9 million, or 22.2%, against 2001 sales of $197.3 million. Sales
in telecommunications cable decreased marginally by 2.7% partly due to a fall in
copper prices. Sales in power cable increased by 40.5% reflecting increased
power cable infrastructure spending by the Thai government and improved prices
in Australia.38.8%. Sales in enameled wire increased by 32.8% reflectingexhibited the strongest increase of 46.0% due to the strong demand from the electrical product manufacturing sectorappliance manufacturers especially in China.China and higher selling prices reflecting the rise of copper prices as a percentage of overall sales. Sales of Distributed Products decreased 27.1% in 2002 compared to
2001 due to decreased demandand revenue from the Singapore government. Revenue from the SDI project engineering in Singapore increased by 108.0%decreased in 2006 due to Sigma Cable securing
larger tender projectsdecreased demand and a decrease in offers of tenders from Powergrid.

              SP Powerassets.


The following table shows the percentage share in net sales of the respective operations with respect to our total sales in 2002.

                                      Manufactured      All products and
                                      products only         services
                                     ----------------  -------------------
           Thailand                            48.6%            44.2%
           Singapore                            8.4%            16.7%
           Australia                           11.5%            10.4%
           China                               31.5%            28.7%
                                     ----------------  -------------------
           Total                              100.0%           100.0%
                                     ================  ===================

              In 2002, Sigma Cable recorded revenue of $31.1 million under
project engineering turnkey contracts awarded by Powergrid. The projects call
for the supply and installation of 66kV (kilo-volt) high-voltage power cables
along various distinct routes. The Company will continue to tender for future
projects.

              2006.

 
Manufactured
products only
All products
and services
Thailand
48.3
% 
45.3
% 
Singapore
6.7
% 
12.5
% 
Australia
11.2
% 
10.5
% 
China
33.8
% 
31.7
% 
Total
100.0
% 
100.0
% 
Gross Profit
Gross profit for 20022006 was $34.7$57.3 million, representing an increase of 73.5%56.5% compared to $20.0$36.6 million for 2001.2005 in line with increased sales and increased gross profit margins. Gross profit contributed by sales of manufactured products was $36.5$58.5 million in 20022006 compared to $21.6$36.7 million in 2001, representing an increase of 69.2%.2005.
Overall gross profit margins increased from 10.9% in 2005 to 12.2% in 2006 due to increased margin in telecommunication wire and cable products. Gross profit marginsmargin for manufactured products increased from 14.5%12.2% in 20012005 to 19.6%13.3% in 2002. Gross profit2006 due to higher contribution margins increased in all categories
of products except for electronic cable and Distributed Products. Gross profit
increased as a result of better selling prices forfrom telecommunication cable,
power cable and enameled wire and lower production costs due to weaker copper
prices and higher production volumes.

              cable.
Operating Profit
Selling, general and administrative expenses have increased by $1.1 million or 4.1% in 2006, due to expanded group operationshigher provisions for doubtful accounts and additional provisioninventory, and professional fees. Higher provisions for doubtful accounts receivables. In
2001, goodwill related to

                                       43


Sigma-Epan of $0.5 million was written off asand inventory were in line with the Company decided that it would
be prudent to provide for a write-down of its carrying value in view of its poor
performance. In 2002, impairment loss on NPC telecommunication machinery of $1.5
million was taken up in view of the weak copper telecommunication cable industry
in the China regionincreased accounts receivables and dim prospects of future sales in this product. With
higher gross profit in 2002, incomeinventory resulting from operations increased by 357.2% from
$3.8 million in 2001 to $13.7 million in 2002.

              Loss from Investees

              In 2001 and 2002, investee loss related to that of Lox Pac, Thai
Professional, SPHC and NGL. The share of loss of equity investees in 2001
consists primarily of the share of loss in NGL, which includes provision for
advances made to NGL. The share of loss of equity investees in 2002 consists
primarily of the share of loss in NGL, Thai Professional and Lox Pac. The loss
is in part due to the impairment of investment in Lox Pac of $2.5 million.

              Gain on Share Issuance by Subsidiaries and Affiliates

              In 2002, the issuance of new shares by Charoong Thai, Shanghai
Yayang and Lox Pac contributed to the $1.0 million net gain on share issuance by
subsidiaries and affiliates. No such gain was recorded in 2001.

              Gain on Sale of Investment

              In 2001, we disposed of certain Charoong Thai warrants and
achieved a gain on sale of investment of $0.7 million. In 2002, the deemed
disposal of our investment in Charoong Thai contributed to the $0.5 million gain
on sale of investment.

              sales.
Exchange Gain/Loss
In July 1997, the floatationflotation of the Thai Baht caused the currency to fall in value against the U.S. Dollardollar and triggered declines in other regional currencies, such as the Singapore Dollardollar and Australian Dollar.dollar. The Thai Baht generally appreciated against the U.S. Dollardollar during the course of 1998 and largely stabilized in 1999. However, from mid-2000, the Thai economy began to decelerate as a result of weak domestic demand, coupled with a major fiscal expansion program espoused by the newly elected government, which contributed to a weakening of the Thai Baht. Since then,In the Thaipast several years, the global weakening of the U.S. dollar against many other currencies has resulted in a strengthening of the Baht has
remained relatively stable.against the U.S. dollar. The exchange differences in the income statements arose largely as a result of these movements in the Thai Baht exchange rate and, to a lesser extent, the movements in the other operating currencies. The exchange rates as of December& nbsp;31, 2002,2006 and December 31, 2005, based on the Noon Buying Rate, were as follows:

                                       44



                                              December 31,        December 31,
            Foreign currency to US$1:            2002                2001
                                            ----------------    ----------------
            Thai Baht                            43.20               44.25
            Singapore $                           1.74                1.85
            Australian $                          1.78                1.95
            Chinese Rmb                           8.28                8.28

              

 
December 31,
2006
December 31,
2005
Foreign currency to US$1:
 
 
Thai Baht
36.10
40.99
Singapore $
1.53
1.66
Australian $
1.27
1.36
Chinese Rmb
7.80
8.07
Based on the above rates, the revaluation of assets and liabilities denominated in U.S. Dollarsdollars or other foreign currencies in the companiesCompany resulted in small$5.5 million exchange differencesgain in both 2001 and 2002.

              2006.
We use Thai Baht forward foreign exchange contracts to reduce our exposure to foreign currency risks for liabilities denominated in foreign currencies. A forward foreign exchange contract obligates us and our subsidiaries to exchange predetermined amounts of specified foreign exchange currencies at specified exchange rates or to make an equivalent U.S. Dollardollar payment equal to the value of such


exchange. Realized and unrealized gains and losses on forward foreign exchange contracts are included in operations as foreign exchange gains or losses.

              Income Taxes

              
Gain/Loss from Investees
In 2001, $0.72005, as in 2006, the share of gain in equity investees was largely related to a share of operating profits of Shandong Pacific Rubber Cable Co., Ltd (‘‘SPRC’’).
Impairment of Investment
In 2005, the impairment of investment consisted of an impairment of $3.0 million in Loxley Pacific Co., Ltd. (‘‘LoxPac’’) due to limited business prospects of its investments, and an impairment of $0.2 million in SHP due to oversupply of products in the market at Shandong and temporary suspension of construction of the valuation allowanceproduction line.
Loss on Sale of Investment
The loss on sale of investment in 2005 and 2006 was largely due to the disposal of a portion of our investment in Charoong Thai.
Gain on Liquidation of Subsidiary
In 2006, the gain on liquidation of subsidiary of $1.8 million resulted from the liquidation of CTW (Hong Kong) Limited.
Income Taxes
In 2006, our overall income tax charge has increased in line with the increased chargeable income with an overall tax rate on chargeable income at 31.5%.
Additional details regarding tax laws and income taxes of the Company including deferred tax assetliabilities and assets in 2005 and 2006 are disclosed in Note 12 of Charoong Thai was written back as the company had demonstrated
profitability in 2001. In 2002, our income taxes charge increased primarily due
to increased profitability of our Thai operations.Item 18: ‘‘Financial Statements.’’
    5.4    LIQUIDITY AND CAPITAL RESOURCES

         Liquidity and Capital Resources
Capital Expenditure and Capital Resources

         Net proceeds from the initial public offering of common shares on March
26, 1997 were $33.3 million. The proceeds have been used to finance a
significant portion of the cost of our development. 
The following are the major investmentinvestments and purchases made in 2001, 20022006 and 2003:

         On June 30, 2001, the Company invested approximately $1.2 million for a
25.0% interest in an existing profitable company Shandong Rubber Cable Company,
Ltd. ("SRC"), which manufactures rubber cable for the China market. The
remaining 75% is owned by Shandong Yanggu Cable Co., Ltd. ("Shandong Yanggu"),
an established cable manufacturer in Shandong Province manufacturing a wide
range of cable products and one of the top twelve cable producers in China. The
investment was in the form of machinery transfer and cash.

         On August 18, 2001, a joint-venture agreement was signed with Shandong
Yanggu to establish Shandong Huayu Pacific Fiber Optics Communication Co., Ltd.
("SHP") for the manufacture of optic fibers. The Company will invest $4.0
million for a 49% holding; the remaining 51% was originally held by Shandong
Yanggu. In May 2002, the shareholding by Shandong Yanggu was transferred to
Hebei Huayu Co. Ltd. Investment to date amounts to $2.3 million.

                                       45


Production is expected to commence in 2004 instead of 2002 originally with an
initial estimated production of 900,000km of optic fibers annually. The company
will operate with an optic fiber drawing tower and two production lines. Its
products will be sold to Shandong Pacific Fiber Optic Cable Co., Ltd. and other
external buyers.

         Other investments in 2001 include: the acquisition of an additional
20.8% interest in NPC for $0.7 million, thereby increasing the Company's
interests in NPC from 70.0% to 90.8%; the acquisition of an additional 40%
interest in Sigma-Epan for $0.4 million, thereby increasing the Company's
interests in Sigma-Epan from 60% to 100%; an investment in Shanghai Yayang by
the Company's 66.15% held subsidiary, Pacific Thai, for $1.0 million; and, the
acquisition of an additional 16.7% interest in Lox Pac for $1.1 million, thereby
increasing the Company's interest in Lox Pac from 13.9% to 30.6%.

         On March 22, 2002, the Company purchased 100% of PEWC's interest in CCH
and its wholly-owned subsidiary, PEWS, resulting in CCH and PEWS becoming
wholly-owned subsidiaries of the Company upon completion of the transaction. The
acquisition was funded by the issuance of 3,097,436 common shares. As a result
of this new issue, PEWC's holding in the Company increased from 68.3% to 75.4%.
PEWS manufactures enameled wire for electronic, video and audio products for the
South China Market and for export. The consolidated revenues of CCH and PEWS for
the year 2001 were $26.6 million with a profit of $1.4 million. For the year
2002, these companies contributed $35.0 million in sales and $4.8 million in net
profits to the Company's results.

         Other investments in 2002 include: the acquisition of an additional
3.51% interest in NPC for $5.8 million, thereby increasing the Company's
interest in Ningbo from 90.8% to 94.31%; the acquisition of additional new
shares in Shanghai Yayang for $0.3 million, thereby increasing the Company's
interest in Shanghai Yayang from 62.09% to 62.39%; the acquisition of an
additional 1.84% interest in Newcall Communications Singapore Pte Ltd ("NCS")
for $0.5 million, thereby increasing the Company's interest in NCS from 37.69%
to 39.53%; the acquisition of additional new shares in Lox Pac for $1.2 million,
however, the further issuance of new shares during the year by Lox Pac has
caused the Company's effective interest in Lox Pac to be diluted from 30.56% to
24.58%; and, the acquisition of the remaining 33.85% interest in Siam Pacific
for $11.6 million, in the form of Charoong Thai shares issued to the minority
shareholders. NCS was liquidated during 2002 and the increased investment was
written off.

         2007:
In 2003, the Company injected a further $1.7 million in Shanghai Yayang through its subsidiary, Pacific Thai, thereby increasing the Company'sCompany’s interest in Shanghai Yayang from 62.39% to 63.49%. In 2004 and 2006, the Company, through its subsidiary, Charoong Thai, made additional capital contributions of $0.5 million and $1 million, respectively, to Shanghai Yayang. The additional investment was in view of improved sales and operating performance and the need for capacity expansion as part of the company's operationCompany’s operational strategy. TheEach of the Company and its joint venture partner, Shandong Yanggu, have also injected $0.3 million each in SPFO.of capital into Shangdong Pacific Fiber Optics Cable Co., Ltd. (‘‘SPFO’’). To date, the Company has invested a total of $2.8 million withrepresenting a 51.0% interest in SPFO. The Company has also contributed $0.2 million capital injection into SHP.

         to Shandong Huayu Pacific Fiber Optics Communication Co., Ltd. (‘&ls quo;SHP’’).
Total purchases of property, plant and equipment totaled $11.1amounted to $5.2 million in 20022006 and $5.0$2.6 million in 2003. Purchases relate2007. Those purchases related mainly to the capacity expansion of certain subsidiaries in 46
Thailand and China, namely Shanghai Yayangparticularly Charoong Thai, and SPFO. The remaining purchases were forto the replacement of old equipment.
Liquidity
We met our working capital requirements from cash provided by operations and both short-term and long-term borrowings. Net cash generated from operating activities was $1.9 million in 2007 compared to $42.9 million of net cash used for 2003operating activities in 2006. Net cash used for investing activities in 2007 was $23.8$4.0 million compared to $19.3$3.3 million for
2002.generated in 2006. Net cash generated from investing activities in 2003 was $2.5 million,
compared to $14.6 million used in 2002, largely on account of lower capital
expenditure and proceeds from disposal of investment in 2003. Net cash used in
financing activities amounted to $16.5$4.0 million in 20032007 compared to $41.8 million in 2006, which was largely for the repayment
ofdue to an increase in bank loans.

         loans in 2006.
The Company maintains several working capital and overdraft credit facilities with various commercial bank groups and financial institutions. Under line of credit arrangements for short-term


debt with the Company'sCompany’s bankers, the Company may borrow up to approximately $78$252 million on such terms as the Company and the banks may mutually agree upon. These arrangements do not have termination dates but are reviewed annually for renewal. As of December 31, 2003,2007, the unused portion of the credit lines was approximately $42$134 million which included unused letters of credit amounting to $27$98 million. Letters of credit are issued byfor the account of the Company during the ordinary course of business throughby major financial institutions as required by certain vendor contracts. As of December 31, 2003,2007, the Company had open letters of credit totaling $18$81 million. Liabilities relating to the letters of credit are included in current liabilities.
Our main source of liquidity in the near future continues to be the net cash provided by our operating activities. We continue to have sufficient liquidity to meet our anticipated working capital, capital expenditures, general corporate requirements, and other short-term and long-term obligations as they come due. We may further enhance our liquidity in the future, as needs arise, by establishing additional lines of credit, with the support of PEWCone or more of our principal shareholders if necessary and available.
The following table setsets forth our obligations and commitments to make future payments under contracts and other commitments.

Contractual obligations                                                  Payments due by period
As of December 31, 2003
(In thousands of US$)                                      Total       2004   2005-2006   2007-2008    After 2008
- -----------------------------------------------------------------------------------------------------------------

Long term debt                                             1,654        -        1,654         -            -
Long term loan from PEWC                                   7,824        -          -         7,824          -
Capital lease obligations (principal amount only)            398        244        154         -            -
Operating leases                                           5,778        441        731         388        4,218
Purchase obligations                                         -          -          -           -            -
                                                         --------------------------------------------------------
Total contractual cash obligations                         15,654       685      2,539       8,212        4,218
                                                         ========================================================

 
Payments due by period
Contractual obligations as of December 31, 2007
(In thousands of US$)
Total
2008
2009-2010
2011-2012
After 2012
Long term debt
—
—
—
—
—
Long term loan from PEWC
240
240
—
—
—
Capital lease obligations (principal amount only)
326
146
180
—
—
Operating leases
3,441
425
293
272
2,451
Purchase obligations for copper cathodes
71,147
71,147
—
—
—
Total contractual cash obligations
75,154
71,958
473
272
2,451
For more details on financial commitments and contingencies, please refer to Exhibit 19.1 "Asia Pacific Wire & Cable Corporation Limited- Audited
Item 18.1: ‘‘Financial Statements",Statements,’’ beginning on page F-31.

                                       47
F-1.
    5.5    INFLATION

         Inflation
We do not consider inflation to have had a material impact on our results of operations during the periodsperiod covered.

ITEM
    5.6    Off-Balance Sheet Arrangements
We do not consider the Company to have any material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 6:    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEESDirectors, Senior Management and Employees
    6.1    DIRECTORS AND SENIOR MANAGEMENT

         Directors and Senior Management
At present, there is only one class of directorships and no one or more directors possesses any veto power over matters presented to the Board or any other special or enhanced voting rights. Until September 7, 2007, the Bye-laws provided for a classified board consisting of Class A Directors and Class B Directors, with the Board to have up to three Class A Directors and up to seven Class B Directors. Upon the sale by Sino-JP of its 20% interest in the Company to SOF on June 28, 2007, the three Class A Directors designated by Sino-JP resigned from the Board, and the remaining Board members filled those vacancies by appointing Messrs. Jack Sun, David Sun and Andy Cheng. At an annual meeting of shareholders (‘‘AGM’’) held on September 7, 2007, the shareholders passed a


resolution amending the Bye-laws to eliminate the classified board. In addition, the Bye-laws were amended to provide that a quorum consists of a majority of the directors then in office. As of December 31, 2007, there were a total of ten directors on the Board, including two independent directors, Anson Chan and Yichin Lee, appointed by the Board to fill casual vacancies. Each director is entitled to one vote, and approval of any matter requires a simple majority assuming a quorum is present.
The following table sets forth certain information concerning the directors and executivecertain other officers of the Company.Company as of December 31, 2007. All directors are subject to annual election atby the shareholders' meeting.

shareholders of the Company.

Name
Age
Position
- ----                                     ---          --------
Michael C. Lee
56
Director
Yuan Chun Tang
46
Director and Chairman of the Board
Ching Rong Shue
57
Director
Gai Poo Lee
50
Director
Fang Hsiung Cheng
64
Director
Andy C.C. Cheng                          45           Director.

Michael C. Lee                           52           Director.

49
Director
David T. Sun                             50           Director. Mr. Sun also serves as President of Charoong Thai.

Tony Chun-Tang Yuan                      53           Director.

54
Director
Jack T. Sun                              54           Director.

Charles Chung-Yuan Han                   65           
58
Director
Anson Chan
45
Director, member of the ExecutiveAudit Committee Chairman and Chief
                                                      Operating Officer of the Company since its formation. Mr. Han
                                                      has also served as the general manager of Sigma Cable since
                                                      1982.

Raymond Chin-Yung Kung                   57           
Yichin Lee
47
Director, and member of the Executive Committee of the Company
                                                      since its formation. Mr. Kung has been the president and
                                                      general manager of Siam Pacific since 1989.

Tim Wong                                 49           Director. Senior Finance Manager of Utahloy Education
                                                      Foundation. Member of the Audit Committee and Remuneration
                                                      Committee.

Charles Xue                              50           Director. Chief Executive Officer of United Medical. Member of
                                                      the Audit Committee and Remuneration Committee.

Aaron Chik                               53           Director. Chief Financial Officer and Company Secretary.

Jeffrey Too                              39           Chief Executive Officer.

James M. Keyes                           41           
42
Bermuda Resident Secretary.

Secretary
Appleby Corporate Services               Management (Bermuda) Ltd.
N/A
Resident Representative in Bermuda.
Bermuda


                                                         48
In addition, on June 28, 2007, Messrs. Wellen Sham, Ryoji Furukawa and Eric Chi Chiu Yip, each of whom was a director-designee of Sino-JP and its affiliate, AMC, resigned from the Board of Directors and from all executive positions with the Company.
Certain officers and directors of the Company are also officers and directors of PEWC and/or PEWC affiliates, as described below:

         below. A brief professional summary for each member of the Board of Directors as of December 31, 2007 is as follows:
Mr. Andy C.C. ChengMichael C. Lee is a member of the Company's Board of Directors, as
well as Executive Vice President and Director of PEWC. Mr. Cheng also serves as
Director and Chief Executive Officer of PUSA and as a board member of other PEWC
affiliates.

         Mr. Michael C. Lee is a member of the Company'sCompany’s Board of Directors, as well Chief Executive Officer of PEWC. Mr. Lee also serves as Chairman of PUSA.Pacific USA Holdings, Ltd. Mr. David T. Sun isLee became a member of the Board of Directorsdirector of the Company as well as President of PEWC and President of Charoong Thai.

         in 2004.
Mr. Tony Chun-Tang Yuan Chun Tang is a member of the Board of Directors of the Company. He also serves as Chairman of PEWC. Mr. Jack T. SunYuan became a director of the Company in 2004 and was appointed Chairman of the Company in 2005.
Mr. Ching Rong Shue is a member of the Company'sCompany’s Board of Directors, as
well as Executive Vice Chairman of Charoong Thai. Mr. SunDirectors. He also serves onas Vice President of PEWC. Mr. Shue became a numberdirector of other boards of PEWC affiliates.

         the Company in 2006.
Mr. Charles C.Y. HanGai Poo Lee is a member of the Company’s Board of DirectorsDirectors. He also serves as Vice President of PEWC. Mr. Lee became a director of the Company in 2006.
Mr. Fang Hsiung Cheng is a member of the Executive Committee, Chairman and Chief Operating
OfficerCompany’s Board of the Company. Mr. HanDirectors. He also serves as General ManagerAssistant Vice President of Sigma Cable,PEWC. Mr. Cheng became a director of the Company in 2006.
Mr. David Sun is a member of the Company’s Board of Directors. He also serves as President of PEWC and Managing Director of APECCharoong Thai Wire and ChairmanPublic Company Limited. Mr. Sun became a director of NPCDC.

         the Company in 2007.
Mr. Jack Sun is a member of the Company’s Board of Directors. Mr. Sun became a director of the Company in 2007.


Mr. Anson Chan is a member of the Company’s Board of Directors and serves on the Audit Committee as its Chairman. He is an independent director. He also is a Managing Director of the Bonds Group of Companies and a Senior Advisor to Elliott Associates. Mr. Chan became a director of the Company in 2007.
Dr. Yichin Lee is a member of the Company’s Board of Directors and serves on the Audit Committee. He is an independent director. He also is the Managing Director of Giant Management Consulting LLC. Dr. Lee became a director of the Company in 2007.
Notwithstanding the relationshipsany relationship with PEWC or affiliateswith any of PEWC,its affiliates, the above named individuals, in their capacities as directors and officers of the Company, are subject to fiduciary duties to the Company's shareholders.

         Company.
As of the date of the filing of this Annual Report, the Board consists of ten members. The following eight members were elected by shareholders at the 2007 AGM: Michael Lee, Andy C.C. Cheng, David T. Sun, Jack T. Sun, Gai Poo Lee, Ching Rong Shue, Fang-Hsiung Cheng and Yuan Chun Tang. Two independent directors, Anson Chan and Yichin Lee, were appointed to the casual vacancy positions by the Board on September 28, 2007.
Actions may be taken by a quorum of directors (which consists of at
least two directors)a majority of the directors then in office) present at a board meeting. The Bye-Laws of the Company provide that any one director may call a board meeting.
As the Company is not listed on any national exchanges, the Company is not required to have a Board of Directors that is composed of a majority of independent directors. In the event that the Company seeks to list its Common Shares on a national exchange, the Company may choose to rely upon the ‘‘controlled company exception’’ that is available to issuers on a number of national exchanges. In effect, the ‘‘controlled company exception’’ provides that an issuer listing on a national exchange that recognizes the exception is not required to have its Board of Directors consist of a majority of independent directors if a shareholder, or two or more shareholders who constitute a group, have beneficial ownership of more than 50% of the issued and outstanding voting securities of the issuer.
    6.2    AUDIT COMMITTEE

         Audit Committee
The Audit Committee is a committee of the boardBoard of directors comprised
of the two independent directors, Mr. Charles Xue and Mr. Tim Wong. Its primary
function isDirectors primarily functions to assist the board of directorsBoard in its oversight of: (i) the reliability and integrity of accounting policies and financial reporting and disclosure practices and (ii) the establishment and maintenance of processes to ensure that there is compliance with all applicable laws, regulations and company policy and an adequate system of internal control, management of business risks and safeguard of assets.

         This function
As the Common Shares are traded on the OTC BB, the Company is carried out by: (i) reviewingnot required to have an audit committee that meets the appropriatenessrequirements of Regulation 10A-3 of the accounting principles adoptedExchange Act. In the absence of an audit committee, the full Board of Directors may fulfill the functions of an audit committee pursuant to Section 3(a)(58) of the Exchange Act. Until the appointment of a new Audit Committee on September 28, 2007, the full Board of Directors fulfilled the functions of an audit committee.
On September 28, 2007, the Company filled two casual vacancies on the Board by management inappointing Mr. Anson Chan and Dr. Yichin Lee to be independent directors of the compositionCompany and presentationto constitute the Audit Committee of financial reports; (ii) overseeing the financial reports andBoard. As of the external auditdate of these reports; and (iii) overseeing the 49


establishment and managementfiling of risk limits and tolerances across our business
and within our subsidiaries.

         Thethis Annual Report, the Audit Committee is solelycomposed of Mr. Chan and directly responsible forDr. Lee, with Mr. Chan serving as the appointment,committee’s chairman.
    6.3    Compensation Committee
On June 13, 2008, the Board authorized the formation of a compensation and oversight ofcommittee to assist the work of our auditors. Our
auditors report directly toCompany in determining the Audit Committee. In addition, the Audit
Committee has authority to engage independent counsel and other advisers as it
determines is necessary to carry out its duties.

         6.3 REMUNERATION COMMITTEE

         The Board has established a Remuneration Committee comprised of the two
independent directors, Mr. Charles Xue and Mr. Tim Wong. This committee will
help determine the remunerationcompensation to be paid to the executive directors of the Company. The compensation committee is comprised of one independent director, Mr. Anson Chan, and three additional directors, Mr. Yuan Chun Tang (acting as committee chairman), Mr. David T. Sun, and


Mr. Michael C. Lee. The Board previously formed a compensation committee in 2003, the last member of which resigned on June 29, 2006. The Board never appointed new directors to such committee.
6.4    COMPENSATION

         Compensation
The aggregate amount of compensation paid by the Company to all of the Company'sCompany’s directors and executive officers, as a group, for services in all capacities during 20032007 was approximately $900,000.$1.4 million. As of April 8, 2004,December 31, 2007, our directors and executive officers beneficially owned 8,000 common shares10,000 Common Shares representing approximately 0.058%0.072% of the outstanding common shares.

         Common Shares.
The Company has authorized a stock option planfee for the independent directors is $20,000 per year and key
employeesthe fee payable to directors who are executive officers of the Company pursuant to which any awardis $10,000 per year, together with, in each case, reimbursement of stock options will be
made only with the approvalreasonable travel expenses for attendance of meetings of the Board of Directors. The Company has granted
options to purchase 97,500 shares at
Presently, there is no group policy on bonus or profit-sharing plan or stock options. However, the initial public offering price of $12.00
per share. These options vestCompany’s subsidiaries have their respective bonus or profit-sharing plans based on individual performance and subsidiaries’ profitability for the fiscal year, which are generally in equal amounts over three yearsaccordance with the industry practice and are
exercisable for a period of ten years. The Company has reserved 650,000 common
shares for issuance undermarket conditions in the plan.respective countries.
    6.5    EMPLOYEES

         AsEmployees
Certain relevant information regarding the Company’s employees as of December 31, 2003, the2007 is described in this Section 6.5. The Company employed a total of approximately 1,9801,816 employees in 2007, of which 300 areabout 18% were administrative and management personnel. InApproximately 58% of employees are in Thailand, the Company employs approximately 1,140 staff. In addition, the
Company has approximately 190 employees30% in China, 8% in Singapore 60 employeesand 4% in Australia,
520 employees in China and 70 employees in Malaysia.Australia. Production workers are usually organized into two 12-hour shifts or three 8-hour shifts to allow continuous factory operation.
The Company offers a range of employee benefits, which it believes are comparable to industry practice in its local markets. Such benefits include performance-based pay incentives, medical benefits, vacation, pension, housing for a small number of workers in Singapore and in Thailand, and a small housing supplement to other workers. The Company also provides training programs for its personnel designed to improve worker productivity and occupational safety.
Approximately 60% of the employees of Sigma Cable are members of the United Workers of Electronics & Electrical Industries, an employees'employees’ union in Singapore. Under the terms of a collective agreement, signed in June 2003, the Company is required to negotiate salary and wage increases yearly. All other worker benefits and employment terms are included in the 50
collective agreement. None of the employees of Siam Pacific, Pacific Thai, Charoong Thai or APEC are members of a union.
The Company has never experienced a strike or other disruption due to labor disputes. The Company considers its employee relations to be good and has not experienced difficulties attracting and retaining qualified employees. In Singapore, employee turnover is approximately 10%8% of total employees annually. In Thailand, employee turnover is approximately 3% of total employees annually.

ITEM
Item 7:    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONSMajor Shareholders and Related Party Transactions
    7.1    MAJOR SHAREHOLDERS

         Major Shareholders
As of April 8,December 31, 2004, approximately 75.4%Sino-JP Fund, a company incorporated under the laws of the commonCayman Islands, was the owner of 10,074,102 Common Shares, representing approximately 72.84% of the issued and outstanding Common Shares. Pacific Electric Wire & Cable Corporation was the owner, indirectly, of 356,757 Common Shares, representing approximately 2.56% of the issued and outstanding Common Shares. The remaining Common Shares were held by investors who purchased in the public market. See Section 4.1.2: ‘‘Recent Developments.’’
In July 2004, the Company and PEWC entered into a Settlement Agreement with Set Top International Inc. (‘‘Set Top’’), pursuant to which it was agreed that Set Top would be paid


$25,000,000 in exchange for the release of all claims of an ownership interest in 10,074,102 Common Shares and the dismissal by all parties of all claims in litigation proceedings against each other, which included actions in New York, Singapore and Bermuda (the ‘‘Set Top Settlement Agreement’’). In addition, Set Top agreed to withdraw all of its claims in the bankruptcy proceedings of Pacific USA Holdings Ltd. (‘‘PUSA’’), a Dallas based subsidiary of PEWC.
Under a Share Purchase Agreement dated September 10, 2004 by PEWC and Asset Managers Co., Ltd. (‘‘AMC’’), AMC agreed to purchase the 10,074,102 Common Shares from Set Top for purchase consideration of $25,000,000 (the ‘‘2004 Share Purchase Agreement’’). In addition, AMC entered into an Option Agreement dated September 10, 2004 (the ‘‘2004 Option Agreement’’) granting to PEWC an option (the ‘‘Repurchase Option’’) to purchase 7,307,948 Common Shares (the ‘‘Repurchased Shares’’), representing approximately 52.84% of the issued and outstanding Common Shares.
Until the implementation of the Set Top Settlement Agreement, PEWC owned indirectly 10,430,769 shares of the Company. Following the implementation of the Set Top Settlement Agreement and the closing of the 2004 Share Purchase Agreement, Sino-JP owned 10,074,102 Common Shares of the Company, representing approximately 72.84% of the issued and outstanding Common Shares, and PEWC owned indirectly 356,757 shares of the Company, are indirectly ownedrepresenting approximately 2.56% of the issued and outstanding Common Shares.
On September 14, 2005, PEWC exercised the Repurchase Option and reacquired the Repurchased Shares for an aggregate purchase price of $18,861,813.78, or $2.581 per share, plus a guaranteed return. Exercising the Repurchase Option required approval of the PEWC Banking Group, which imposed certain conditions on PEWC. One condition imposed by the PEWC Banking Group was that PEWC enter into a company incorporatedletter of undertaking (the ‘‘PEWC Letter of Undertaking’’) which provided that, among other conditions, PEWC enter into a trust agreement with the PEWC Banking Group (the ‘‘PEWC Trust Agreement’’), under which the Repurchased Shares were registered in TaiwanBermuda in the name of Chiao Tung Bank Trust Department Trust Assets (‘‘CTB’’), although PEWC retained beneficial ownership of the Repurchased Shares unless and listeduntil there occurred an event of default under the PEWC Trust Agreement. In May 2006 the PEWC Banking Group determined that PEWC had fulfilled or was in a position to fulfill the requirements with respect to the PEWC Trust Agreement. Therefore, on June 6, 2006, CTB, on behalf of the Taiwan Securities Exchange.PEWC Banking Group, delivered a letter instructing termination of the PEWC Trust Agreement and authorizing the registration of the Repurchased Shares on behalf of PEWC without any pledge or encumbrance of the PEWC Banking Group. See Section 4.1.2 "Recent
Developments". 4.1.2: ‘‘Recent Developments.’’
On June 2007, Sino-JP sold its 2,766,154 Common Shares, representing 20% of the issued and outstanding Common Shares of the Company, to SOF Investments, L.P., a Delaware limited partnership (‘‘SOF’’), all of the directors and officers of the Company designated by Sino-JP tendered their resignations and Sino-JP ceased to have any interest in the Company. In connection with that purchase, the Company, SOF and PEWC entered into a shareholders agreement dated June 28, 2007. See Section 7.2: ‘‘Related Party Transactions.’’
The following table sets forth certain information regarding beneficial ownership of the Company'sCompany’s capital stock as of April 8, 2004December 31, 2007 by (i) all persons who are known to the Company to own beneficially more than five percent of the capital stockCommon Shares of the Company and (ii) the officers and directors of the Company as a group. The voting rights attaching to the Common Shares below are the same as those attaching to all other Common Shares.

       Title of Class                  Identity of Person or Group              Number of         Percent of Class
                                                                                 Shares
- ------------------------------    ---------------------------------------    ----------------    -------------------

Common Stock                      Pacific Electric Wire & Cable Co.,             10,430,769                  75.4%
                                  Ltd.

Common Stock                      Heartland Advisors, Inc. (1)                    1,645,100                  11.9%
                                  William J. Nasgovitz (1)                        1,137,300                   8.2%
                                  President and Principal Shareholder
                                  Heartland Advisors, Inc.

Common Stock                      Directors and Officers of the Company               8,000                 0.058%


(1) Based on Schedule 13G filed February 12, 2004.

Identity of Person or Group
Number of
Shares
Percent of Class
Pacific Electric Wire & Cable Co., Ltd.
7,664,615
55.400
% 
SOF Investments, L.P.
2,766,154
20.000
% 
Directors and Officers of the Company
10,000
0.072
% 


    7.2    RELATED PARTY TRANSACTIONS

         Related Party Transactions
As atof December 2003,31, 2007, the Company'sCompany’s largest short-term loan ofwas $1.5 million wasborrowed from Moon View Venture Limited, a subsidiary of PEWC. The loan is unsecured. As atof December 2003,31, 2007, the only long-term loan of $7.8 million was from PEWC. ThePEWC, with $0.2 million outstanding. As of December 31, 2007, the loan iswas unsecured, and consists of $3.0 million being interest-free and
the remaining portion bears interest at LIBOR plus 1%. Interest has been paid
quarterly. The loan is repayable in 2008.
The Company is a party to a shareholders agreement dated June 28, 2007, together with PEWC and SOF (the ‘‘Shareholders Agreement’’), pursuant to which the Company granted to SOF certain rights and protections. Under the Shareholders Agreement, the Company has agreed to indemnify SOF, and its partners and certain of its affiliates (the ‘‘SOF Indemnified Persons’’), for any additional taxes, interest, penalties and other costs that might be imposed upon or incurred by the SOF Indemnified Persons in the event that the Company is determined by the Internal Revenue Service (the ‘‘IRS’’) to be a ‘‘controlled foreign corporation’’ (a ‘‘CFC’’) or a ‘‘passive foreign investment company’’ (a ‘‘PFIC’’) as such terms are interpreted and defined under IRS rules or regulations.
Additional details regarding related party balances as of December 31, 20032007 and related party transactions during the year 20032007 are disclosed in Note 1517 of Item 18: ‘‘Financial Statements.

                                       51


ITEM’’
Item 8:    FINANCIAL INFORMATIONFinancial Information
    8.1    LEGAL PROCEEDINGS

         All material litigation involvingLegal Proceedings
8.1.1 
Sino-JP/PEWC/APWC Litigation (Settled); See Section 4.1.2: ‘‘Recent Developments’’
Following the acquisition of Common Shares by Sino-JP, a number of disputes arose between Sino-JP and PEWC regarding the governance of the Company discussed below is
subject toand other matters. Litigation was commenced in Bermuda, in which the Company was named a Settlement Agreementparty, and in Hong Kong, in which the Company was not named a party. On June 28, 2007, the Company entered into asa comprehensive settlement and release agreement with Sino-JP (the ‘‘Settlement Agreement’’), which dismissed and released all claims between the parties and which put an end to all related litigation. PEWC also entered into a settlement and release agreement with Sino-JP that terminated all disputes and litigation between those parties. On the same date, SOF Investments, L.P. (‘‘SOF’’), a Delaware limited partnership, acquired all of July 2, 2004the Common Shares then held by Sino-JP (the ‘‘SOF Acquisition’’) and amongentered into a shareholders agreement with the Company PEWC and Set Top International Inc.,PEWC. Upon the material termsclosing of which
are summarized below. See also Exhibit 4.4 "Settlement Agreement [Translation]".

              Pacific Electric Wire & Cable Co., Ltd. & Asia Pacific Wire &
              Cable Corp., Ltd. v. Set Top International, Case No. 03 Civ. 9623
              (JFK) (AJP) (the "New York Action")

         On December 4, 2003, PEWC and the Company (collectively "Plaintiffs")
commenced an action in the United States District Court for the Southern
District of New York (the "Southern District") against the following parties:
Set Top, Kinbong Holdings Limited ("Kinbong"), Tom Ching-Yun Tung, Frank
Wei-Feng Lin, Tai-Sheng Lien, Fu-Chuan Tsai, Fu-Nu Tsai, Yuan-Chun Hsu, Jack
Takacs and Robert Everett Wolin (collectively "Defendants"). The Complaint
alleges 12 causes of action, including fraud and conspiracy to commit fraud;
violation of section 13(d)that acquisition, all of the Securities Exchange Act; RICO violations under
18 USC ss. 1962;directors and breach of fiduciary duty.

         The case involves an alleged fraud perpetuated over a period of yearsofficers designated by certain of the Defendants against Plaintiffs. PriorSino-JP submitted their resignations and Sino-JP ceased to the allegedly
fraudulent transactions, PEWC owned (indirectly), free and clear ofhave any
competing claims, a 75.42% interest in the Company. As a resultpart of the
transactions, PEWC's controlling interest in the Company was purportedly
transferred to Defendant Set Top.


                                       52


         The Southern District action did not progress to the discovery phase as
the parties sought to agree to the terms of a settlement agreement on several
occasions.

         On July 2, 2004, the Company, PEWC and Set Top entered into a
Settlement Agreement (the "Settlement Agreement") pursuant to which PEWC has
agreed to pay Set Top $25 million (the "Settlement Amount") by August 30, 2004
(subject to extension) to purchase all of Set Top's interest in the Company's
shares. In the event that PEWC fails to pay the Settlement Amount to Set Top by
August 30, 2004 (subject to extension), under the Settlement Agreement the
ownership of 10,074,102 shares of the Company will pass to Set Top.

         Pursuant to the Settlement Agreement, the Company PEWC and Set Top
have agreed to withdraw all claims in all litigation proceedings against each
other, including the actions in New York, Singapore and Bermuda, and Set Top has
agreed to withdrawindemnify all of its claimsthose Sino-JP designated directors and officers (the ‘‘Sino-JP Indemnified Persons’’) for all acts or omissions taken in their capacity as a director or officer to the PUSA bankruptcy proceedings. The
parties are presently negotiating onmaximum extent permitted under the termsmemorandum of association and the timing of the filing of
the stipulations of discontinuance and/or dismissal.

         Prior to payment to Set Top of the Settlement Amount, Set Top is
entitled under the terms of the Settlement Agreement to register in its name
50.44% of the total outstanding shares of the Company. Such sharesBye-laws of the Company along withand the approximately three million shares ofBermuda Companies Act (the ‘‘Companies Act’’). See Section 4.1.2: ‘‘Recent Developments.’’
8.1.2    Sigma Cable/Highness Electrical Litigation (Appealed)
The Company’s Singapore operations are principally conducted through its 98.3%-owned subsidiary, Sigma Cable Company (Private) Limited (‘‘Sigma Cable’’). Sigma Cable manufactures low voltage power cable for sale and distribution in Singapore and countries in the Company
currently held of record by Kinbong, will be held by an escrow agent pending
payment of the Settlement Amount.

              Set Top International, Inc. v. Asia Pacific Wire & Cable Corp.,
              Ltd. & Others, Case No. S231/2004/S

         On March 23, 2004, Set Topregion.
In June 2005, Highness Electrical Engineering Pte Ltd (‘‘Highness Electrical’’) commenced an action in the High Court of Singapore (the ‘‘High Court’’) against Sigma Cable claiming damages arising from an alleged breach of a contract. The parties entered into a contract on December 17, 2003 for the Company seeking damages and an injunction restrainingsupply by Sigma Cable to Highness Electrical of various types of electrical cables from December 2003 to December 31, 2005. By early February 2005, Sigma had not delivered goods that had been on order for several months. As a result, on February 3, 2005, Highness Electrical claimed Sigma Cable had repudiated the Company whether by itself, its related companies, its directors, officers,
employees or agents from disposing of or dealing with or diminishing in its name
or from causing or permitting any one to dispose of or deal with or diminish the
value of any of its assets. Pursuant to the terms of the Settlement Agreement,
the parties havecontract. On March 30, 2005, Sigma Cable agreed to dismiss all claimssupply electrical cables at the prices originally agreed to. However, in the Singapore action.


                                       53


              Set Top International, Inc. v. Asia Pacific Wire & Cable Corp.,
              Ltd., 2004 NO 192

         On June 11, 2004, Set Top commenced2005, Highness Electrical instituted an action into recover damages for the loss it claimed that it had suffered as a result of having to pay higher prices for the electrical cable. In June 2006, the High Court ruled that Sigma Cable had repudiated the contract and ordered that the assessment of damages be done by the Registrar.


Sigma Cable appealed the High Court’s verdict, but the determination that Sigma Cable was liable for damages has been upheld on appeal. In February 2008, the Supreme Court assessed damages of Bermuda to strike the nameapproximately $886,000. Sigma Cable is currently appealing this determination of PUSA from the share registerdamages. However, Sigma Cable has taken a write-down of the Company and
insert the name of Set Topits accounts receivable in its place. Pursuant to the terms of the Settlement
Agreement, the parties have agreed to dismiss all claims2005 in the Bermuda action.

              In re Venturelink Holdings, Inc., et al., Case No. 02-80906-11-SAF

         PUSA, the record owneramount of approximately 53% of the issued and
outstanding common shares of the Company, is a debtor$886,000 in Chapter 11 bankruptcy
proceedings in the United States Bankruptcy Courtorder to account for the Northern District of
Texas-Dallas Division (the "PUSA Bankruptcy"). Approximately 50.44% of the
common shares of the Company are subject to an alleged assignment of a pledge in
favor of Set Top, which has conducted a foreclosure proceeding on that pledge
and claims to have an ownership interest in those shares. In the New York Action
(see above), PEWC and the Company have challenged the validity of certain
actions taken by Set Top and other named defendants with respect to the shares
of the Company owned by PUSA.

         Pursuant to the Settlement Agreement, Set Top has agreed to dismiss its
claims and withdraw as a party in interest in the PUSA Bankruptcy. See Section
4.1.2 "Recent Developments".this adverse judgment.
    8.2    DIVIDEND POLICY

         Dividend Policy
To date, the Company, a Bermuda company formed in 1996, has not paid any dividends. While the Company has no present intention to pay dividends, should it decide in the future to do so, as a holding company the Company'sCompany’s ability to pay dividends, as well as to meet its other obligations, will depend upon the amount of distributions, if any, received from the Company'sCompany’s operating subsidiaries and other holdings and investments. The Company'sCompany’s operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to the Company, including as a result of restrictive covenants contained in loan agreements, restrictions on the conversion of local currency earnings into USU.S. dollars or other hard currency and other regulatory restrictions. The foregoing restrictions may also affect the Company'sCompany’s ability to fund operations of one subsidiary with dividends and other paymentspaymen ts received from another subsidiary.

ITEM
Item 9:    THE OFFER AND LISTINGThe Offer and Listing
    9.1    HISTORICAL TRADING INFORMATION

         Historical Trading Information
From March 26, 1997 through December 31, 2001, the Company's common
sharesCompany’s Common Shares were listed and traded on the New York Stock Exchange (the "NYSE"‘‘NYSE’’) under the symbol "AWC."‘‘AWC.’’ Prior to such listing, there was no public market for the Company'sCompany’s equity securities.
The NYSE has established certain continued listing criteria which
impose certain minimum requirements with respect to the per share price and the
aggregate value of the publicly traded securities of an issuer. In February
2001,Company’s Common Shares were subsequently delisted from the NYSE notified us that we had not been in compliance with those NYSE
requirements,the first quarter of 2002 and thatwere traded on the NYSE would be authorizedOver-the-Counter Bulletin Board (the ‘‘OTC BB’’), which is an electronic quotation service for trading of shares of OTC securities among market makers who are NASD members. As a foreign private issuer, the Company is required to suspend trading in our
common shares and to commence delisting procedures subject to review and
approval of our business plan. During the course of 2001, our business plan was
submitted, amended and finally provisionally agreedfile its annual report on Form 20-F with the NYSE, subject toSEC within six months following the rightclose of the staff to



                                       54


require continuous compliance within a designated time frame, which theits fiscal year. The Company was not ablein a position to achieve, due to, among other factors, delays in approvals by
Thai regulatory authoritiesmake the filing of its 2004 annual report on a timely basis. After the implementationexpiration of certain Thai-based elements
ofan automatic grace period, on August 29, 2005 the plan. On December 24, 2001, the staff of the NYSE announced that it has
determined that the trading of the common shares should be suspended prior to
December 31, 2001. The decision was reached in view of the fact thatOTC BB delisted the Company had fallen belowfor failure to remain current in the NYSE's continued listing standards.filing of its periodic reports. The Company appealed
the NYSE's decision, but its appeal was denied by a Committee of the Board of
Directors of the Exchange.

         Following the suspension of trading of the common shares on the NYSE,
the common shares have been quoted on the "pink sheets" market by Pink Sheets
LLC, a privately owned company that provides pricing and financial information
for over-the-counter securities, under the symbol "AWRCF.PK".

         Subsequent, to the quotation of the common shares on the "pink sheets"
market by Pink Sheets LLC, the Company established relationships with several
market markers and a public trading market for its common shares on the OTC BB.
It is tradedrelisted on the OTC BB in April 2008 under the symbol "AWRCF.OB".‘‘AWRCF.’’ Until that re-listing on the OTCBB, the Common Shares were traded on the Pink Sheets. See Section 3.3.1: ‘‘Potential Illiquidity of Common Shares’’ and Section 4.1.2: ‘‘Recent Developments.’’ The common sharesCommon Shares are not listed on any other exchanges or otherwise publicly traded within or outside the United States.


The high and low sales price for common shares on the NYSE (up until
December 2001) andCommon Shares on the OTC BB (from February 2002 when the Company
re-established a public trading market for its common sharesJanuary 2003 until August 2005) and on the OTC BB)Pink Sheets (from August 2005 until December 2007) for each quarterly period from the first quarter of 19982003 to the firstlast quarter of 2004, and the high and low prices for November 2003 through April 2004,2007 are as follows:

                                                       Price per Share ($)
                                               -------------------------------
                                                      High            Low

                1998
                  First Quarter                       8.75           7
                  Second Quarter                      8              5
                  Third Quarter                       6              1.875
                  Fourth Quarter                      4.25           1.875

                1999
                  First Quarter                       4.75           2.25
                  Second Quarter                      4.4375         2
                  Third Quarter                       4.625          3.75
                  Fourth Quarter                      4.125          3.3125

                2000
                  First Quarter                       4.625          3.625
                  Second Quarter                      4.25           2.375
                  Third Quarter                       3.375          2.50
                  Fourth Quarter                      2.75           1.1875


                                       55


                                                       Price per Share ($)
                                               -------------------------------
                                                      High            Low
                2001
                  First Quarter                       1.6875         0.67
                  Second Quarter                      0.85           0.65
                  Third Quarter                       0.90           0.74
                  Fourth Quarter                      0.86           0.40

                2002
                  First Quarter                       0.73           0.32
                  Second Quarter                      0.90           0.48
                  Third Quarter                       0.65           0.29
                  Fourth Quarter                      1.55           0.51

                2003
                  First Quarter                       1.06           0.83
                  Second Quarter                      1.60           0.75
                  Third Quarter                       2.74           1.40
                  Fourth Quarter                      3.60           2.15

                2004
                  First Quarter                       3.10           2.25

                PRIOR SIX MONTHS
                  December 2003                       3.50           2.30
                  January 2004                        3.10           2.30
                  February 2004                       2.84           2.35
                  March 2004                          2.90           2.25
                  April 2004                          2.85           2.50
                  May 2004                            2.40           1.90

 
Price per Share ($)
 
High
Low
2003
 
 
First Quarter
1.06
0.83
Second Quarter
1.60
0.75
Third Quarter
2.74
1.40
Fourth Quarter
3.60
2.15
2004
 
 
First Quarter
3.10
2.25
Second Quarter
2.90
1.90
Third Quarter
3.49
2.20
Fourth Quarter
4.75
2.90
2005
 
 
First Quarter
4.80
3.75
Second Quarter
4.00
2.20
Third Quarter
2.55
1.20
Fourth Quarter
2.23
1.40
2006
 
 
First Quarter
1.60
0.81
Second Quarter
1.60
0.83
Third Quarter
4.00
0.99
Fourth Quarter
2.95
2.15
2007
 
 
First Quarter
4.20
2.50
Second Quarter
5.00
3.03
Third Quarter
7.19
4.95
Fourth Quarter
5.95
4.50
    9.2    NATURE OF THE TRADING MARKET

         Our common sharesNature of the Trading Market
As of the date of the filing of this Annual Report, our Common Shares are quoted and traded on the OTC BB operated by the
NASD, Inc., under the symbol "AWRCF.OB".

ITEM‘‘AWRCF.’’


Item 10:    ADDITIONAL INFORMATIONAdditional Information
    10.1    MEMORANDUM OF ASSOCIATION AND BYE-LAWS

              10.1.1 GENERAL

              Memorandum of Association and Bye-laws
10.1.1 
General
For a detailed description of the Company'sCompany’s principal activities, see Section 4.1 4.1: ‘‘History and Development of the Company.’’ The Company'sCompany’s Bye-laws which have been incorporated by reference, are availablewere amended on December 16, 2004 to establish a classified Board of Directors consisting of up to three Class A Directors and up to seven Class B Directors. On September 7, 2007, the Company’s Bye-Laws were amended again to delete the provisions providing for inspection upon
prior written notice during customary business hours ata classified Board of Directors and to provide that the officesBoard shall consist of up to ten (10) directors of a single class, each with one vote on all matters put to the Board, and that a quorum shall consist of a majority of the Company.

                                       56


              10.1.2 DESCRIPTION OF SHAREHOLDER RIGHTS ATTACHING TO OUR COMMON
                     SHARES

              members of the Board of Directors then in office. The Company’s Bye-laws, as so amended, were filed with the annual report of the Company on Form 20-F for the fiscal year ended December 31, 2004.
10.1.2 
Description of Shareholder Rights Attaching to Our Common Shares
The Company was incorporated in Bermuda on September 19, 1996 under the Companies Act. The rights of our shareholders are governed by Bermuda law and our memorandum of association and Bye-laws.
The following discussion of our common shares,Common Shares and the laws governing the rights of our shareholders is based upon the advice of Appleby, Spurling Hunter, our Bermuda counsel.
Our authorized share capital of $200,000 consists of 20,000,000 common shares,Common Shares, par value $0.01 per share, of which, as of December 31, 2003,2007 and as of the date of the filing of this Annual Report, there were and are 13,830,769 common sharesCommon Shares issued and outstanding.

              o      Holders of the common shares have no preemptive,
                     redemption, conversion or sinking fund rights.

              o      Holders of the common shares are entitled to one vote per
                     share on all matters submitted to a poll vote of holders of
                     common shares and do not have any cumulative voting rights.

              o      In the event of our liquidation, dissolution or winding-up
                     and subject to any alternative resolution that may be
                     pursued by our shareholders, the holders of common shares
                     are entitled to share ratably in our assets, if any,
                     remaining after the payment of all our debts and
                     liabilities.

              o      Our outstanding common shares are fully paid and
                     nonassessable.

              o      Additional authorized but unissued common shares may be
                     issued by the board of directors without the approval of
                     the shareholders.

              
• 
Holders of the Common Shares have no preemptive, redemption, conversion or sinking fund rights.
• 
Holders of the Common Shares are entitled to one vote per share on all matters submitted to a poll vote of holders of Common Shares and do not have any cumulative voting rights.
• 
In the event of our liquidation, dissolution or winding-up and subject to any alternative resolution that may be pursued by our shareholders, the holders of Common Shares are entitled to share ratably in our assets, if any, remaining after the payment of all our debts and liabilities.
• 
Our outstanding Common Shares are fully paid and nonassessable.
• 
Additional authorized but unissued Common Shares may be issued by the Board without the approval of the shareholders.
The holders of common sharesCommon Shares will receive such dividends, if any, as may be declared by the boardBoard of directorsDirectors out of funds legally available for such purposes. We may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that:

              o      we are, or after the payment would be, unable to pay our
                     liabilities as they become due; or

              o      the realizable value of our assets after such payment or
                     distribution would be less than the aggregate amount of our
                     liabilities and our issued share capital and share premium
                     accounts.

              
• 
we are, or after the payment would be, unable to pay our liabilities as they become due; or
• 
the realizable value of our assets after such payment or distribution would be less than the aggregate amount of our liabilities and our issued share capital and share premium accounts.
The following is a summary of provisions of Bermuda law and our organizational documents, including the Bye-laws. We refer you to our memorandum of association and Bye-laws, copies of which have been filed with the SEC. You are urged to read these documents for a complete understanding of the terms of the memorandum of association and Bye-laws.



                                       57


              10.1.3 SHARE CAPITAL

              
10.1.3 
Share Capital
Our authorized capital consists of one class of common shares.Common Shares. Under our Bye-laws, our boardBoard of directorsDirectors has the power to issue any authorized and unissued shares on such terms and conditions


as it may determine. Any shares or class of shares may be issued with such preferred, deferred, qualified or other special rights or any restrictions with regard to such matters, whether in regard to dividend, voting, special rights, return of capital or otherwise, as we may from time to time by resolution of the shareholders prescribe, or in the absence of such shareholder direction, as the boardBoard of directorsDirectors may determine.

              10.1.4 VOTING RIGHTS

              
10.1.4 
Voting Rights
Generally, under Bermuda law and our Bye-laws, questions brought before a general meeting are decided by a simple majority vote of shareholders present or represented by proxy. Matters will be decided by way of votes cast by way of show of hands unless a poll is demanded.
If a poll is demanded, each shareholder who is entitled to vote and who is present in person or by proxy has one vote for each common shareCommon Share entitled to vote on such question. A poll may only be demanded under the Bye-laws by:

              o      the chairman of the meeting;

              o      at least three shareholders present in person or by proxy;

              o      any shareholder or shareholders present in person or by
                     proxy and holding between them not less than one-tenth of
                     the total voting rights of all shareholders having voting
                     rights;

              o      a shareholder or shareholders present in person or
                     represented by proxy holding common shares on which an
                     aggregate sum has been paid up equal to not less than
                     one-tenth of the total sum paid up on all common shares.

              
• 
the chairman of the meeting;
• 
at least three shareholders present in person or by proxy;
• 
any shareholder or shareholders present in person or by proxy and holding between them not less than one-tenth of the total voting rights of all shareholders having voting rights; or
• 
a shareholder or shareholders present in person or represented by proxy holding Common Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Common Shares.
Unless the boardBoard of directorsDirectors otherwise determines, no shareholder shall be entitled to vote at any general meeting unless all calls or other sums presently payable by that shareholder in respect of all shares held by such shareholder have been paid.

              10.1.5 DIVIDEND RIGHTS

              
10.1.5 
Dividend Rights
Under Bermuda law, a company may declare and pay dividends unless there are reasonable grounds for believing that the company is, or would, after the payment, be unable to pay its liabilities as they become due or that the realizable value of the company'scompany’s assets would thereby be less than the aggregate of its liabilities and issued share capital and share premium accounts.
Under our Bye-laws, each share is entitled to a dividend if, as and when dividends are declared by the boardBoard of directors. The boardDirectors. With the sanction of directorsa shareholders resolution, the Board of Directors may determine that any dividend


                                       58
 may be paid in cash or with the sanction of a shareholders resolution, by distribution of specific assets, including paid-up shares or debentures.debentures of any other company. The boardBoard of directorsDirectors may also pay any fixed cash dividend which is payable on any of our common sharesCommon Shares half-yearly or on other dates, whenever our position, in the opinion of the boardBoard of directors,Directors, justifies such payment.
Dividends, if any, on our common sharesCommon Shares will be at the discretion of our boardBoard of directors,Directors, and will depend on our future operations and earnings, capital requirements, surplus and general financial conditionscondition as our boardBoard of directorsDirectors may deem relevant.

              10.1.6  PURCHASES BY A COMPANY OF ITS OWN COMMON SHARES

              We
10.1.6 
Purchases by a Company of its own Common Shares
Under Bermuda law, we may purchase our own common sharesCommon Shares out of the capital paid up on the common sharesCommon Shares in question or out of funds that would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of common sharesCommon Shares made for the purposes of the purchase. We may not purchase our shares if, as a result, our issued share capitalon the date on which the purchase is to be effected, there are reasonable grounds for believing that the Company is, or after the purchase would be, reduced below the
minimum capital specified in our memorandum of association.

              unable to pay its liabilities as they become due.
However, to the extent that any premium is payable on the purchase, the premium must be provided out of the funds of the companyCompany that would otherwise be available for dividend or


distribution or out of a company'sCompany’s share premium account. Any common sharesCommon Shares purchased by a companythe Company are treated as cancelled and the amount of the company'sCompany’s issued capital is diminished by the nominal value of the shares accordingly but shall not be taken as reducing the amount of the company'sCompany’s authorized share capital.

              10.1.7 PREEMPTIVE RIGHTS

              
10.1.7 
Preemptive Rights
Our Bye-laws generally do not provide the holders of our common sharesCommon Shares preemptive rights in relation to any issues of common sharesCommon Shares by us or any transfer of our shares.

              10.1.8 VARIATION OF RIGHTS

              
However, the Company has in the Shareholders Agreement granted to SOF preemptive rights in the event of any issuance of additional equity securities (or securities convertible into or exchangeable for equity securities) by the Company, such that SOF may subscribe for additional securities in order to maintain its then percentage ownership interest in the issued and outstanding equity securities of the Company. See Section 3.3.8: ‘‘Obligations under Shareholders Agreement.’’
10.1.8 
Variation of Rights
We may issue more than one class of shares and more than one series of shares in each class. If we have more than one class of shares, the rights attached to any class of shares may be altered or abrogated either:

              o      with the consent in writing of the holders of not less than
                     fifty percent of the issued common shares of that class; or

              o      pursuant to a resolution passed at a general meeting of the
                     holders of such common shares, voting in proxy or present,
                     at which a quorum is present.

              
• 
with the consent in writing of the holders of not less than fifty percent of the issued shares of that class; or
• 
pursuant to a resolution passed at a general meeting of the holders of such shares, voting in proxy or present, at which a quorum is present.
The Bye-laws provide that a quorum for such a meeting shall be two or more persons present in person or by proxy holding shares of the relevant class. The Bye-laws specify that the creation or issueissuance of shares ranking on paritypari passu with existing shares will not, subject to any statement to the contrary in the terms of issueissuance of thesethose shares or rights attached to those shares, vary the special rights attached to existing shares.


                                       59


              10.1.9 TRANSFER OF COMMON SHARES

              
10.1.9 
Transfer of Common Shares
Subject to the "Transfer Restrictions"‘‘Transfer Restrictions’’ section below, a shareholder may transfer title to all or any of his shares by completing an instrument of transfer in the usual common form or in such other form as the boardBoard of directorsDirectors may approve. The form of transfer is required to be signed by or on behalf of the transferor and also the transferee where any share is not fully paid. 10.1.10 TRANSFER RESTRICTIONS

              The boardtransferor shall be deemed to remain the holder of directorsthe shares until the name of the transferee is entered in the Register of Members.
10.1.10 
Transfer Restrictions
The Board of Directors may in its absolute discretion and without assigning any reason refuse to register the transfer of any share that is not fully paid.
The boardBoard of directorsDirectors may, in its absolute discretion and without assigning any reason therefor, decline to register any transfer of any share which is not a fully paid share. The Board of Directors may also refuse to register an instrument of transfer of a share unless it:

              o      is duly stamped, if required by law, and lodged with us;

              o      is accompanied by the relevant share certificate and such
                     other evidenceinstrument of the transferor's right to make the
                     transfer as the board of directors shall reasonably
                     require;

              o      has obtained, where applicable, permission of the Bermuda
                     Monetary Authority; and

              o      is in respect of one class of shares.

              transfer:
• 
is duly stamped, if required by law, and lodged with us;
• 
is accompanied by the relevant share certificate and such other evidence of the transferor’s right to make the transfer as the Board of Directors shall reasonably require;
• 
is in respect of one class of shares; and
• 
has obtained, where applicable, permission of the Bermuda Monetary Authority.


Our common sharesCommon Shares are no longer listed on an "appointed‘‘appointed stock exchange"exchange’’ and, therefore, do not qualify for a "blanket"‘‘blanket’’ authorization for free transferability from the Bermuda Monetary Authority for all transfers of our common sharesCommon Shares between persons who are not resident in Bermuda for exchange control purposes. The Bermuda Monetary Authority has informed us that it has no objection to the continued free transferability of our common sharesCommon Shares on the same basis as when the Company was listed on the NYSE, except that the Bermuda Monetary Authority has requested it be informed of any newshareholders holding five percent or more shareholders.

              10.1.11 TRANSMISSION OF SHARES

              of the Common Shares in issue or any proposals to transfer five percent or more of the issued and outstanding Common Shares.
The Company, together with PEWC and SOF Investments, L.P., has entered into a shareholders agreement dated as of June 28, 2007 (the ‘‘Shareholders Agreement’’) which provides, among other things, for certain transfer restrictions, notice requirements and tag-along rights in the event PEWC wishes to transfer any of its Common Shares in certain types of transactions. The Shareholders Agreement is binding only upon the three parties to that agreement. See Section 4.1.2: ‘‘Recent Developments.’’
10.1.11 
Transmission of Shares
In the event of the death of a shareholder, the survivor or survivors, where the deceased shareholder was a joint holder, orand the legal
personalestate representative, of such shareholder, including executors and
administrators,where he was sole holder, shall be the only persons recognized by us as having any title to the shares of the deceased. 10.1.12 DISCLOSURE OF INTERESTS

              ‘‘Estate representative’’ means the person to whom probate or letters of administration has or have been granted in Bermuda, or failing any such person, such other person as the Board of Directors may in its absolute discretion determine to be the person recognized by us for this purpose.
10.1.12 
Disclosure of Interests
Under the Companies Act, a director who has an interest in a material contract or assignment or a material proposed contract, or assignment, or a 10% or more interest (directly or indirectly) in an entity that is interested in a contract or proposed contract or arrangement with us, is obligated to declare the nature of such interest at the first opportunity at a meeting of the board


                                       60
Board of directors,Directors, or by writing to the boardBoard of directors.Directors. If the director has complied with the relevant sections of the Companies Act and the Bye-laws with respect to the disclosure of his interest, the director may vote at a meeting of the boardBoard of directorsDirectors or a committee thereof on a contract, transaction or arrangement in which that director is interested, in which case his vote shall be counted and he willshall be taken into account in ascertaining whether a quorum is present.

              10.1.13 RIGHTS IN LIQUIDATION

              
10.1.13 
Rights in Liquidation
Under Bermuda law, in the event of liquidation, dissolution or winding-up of a company, after satisfaction in full of all claims of creditors and subject to the preferential rights accorded to any series of preferred stock, the proceeds of such liquidation, dissolution or winding-up are distributed among the holders of shares in accordance with a company's Bye-laws.

              company’s bye-laws.
Under our Bye-laws, if we are wound up, the liquidator may, pursuant to a resolution of the shareholders and any approval required by the Companies Act, divide among the shareholders in cash or other assets the whole or part of our assets, whether they shall consist of property of the same kind or not and may for such purposes set such values as he deems fair upon any property to be divided and may determine how such division shall be carried out as between the shareholders.

              10.1.14 MEETINGS OF SHAREHOLDERS

              
10.1.14 
Meetings of Shareholders
Under Bermuda law, a company is required to convene at least one general meeting per calendar year. The directors of a company, notwithstanding anything in its Bye-laws,bye-laws, shall, on the requisition of the shareholders holding at the date of the deposit of the requisition not less than one-tenth of the paid-up capital of the company carrying the right of vote, duly convene a special general meeting.
The Bye-laws provide that the boardBoard of directorsDirectors may, whenever it thinks fit, convene a special general meeting whenever in their judgment such a meeting is appropriate
or necessary.meeting. Bermuda law requires that shareholders be given at least five days'days’ notice of a


meeting of the company.Company. Our Bye-laws extend this period to provide that not less than 20 days'days’ written notice of a general meeting must be given to those shareholders entitled to receive such notice. The accidental omission to give notice to or nonreceipt of a notice of a meeting by any person does not invalidate the proceedings of a meeting.
Our Bye-laws state that no business can be transacted at a general meeting unless a quorum of at least two shareholders representing a majority of the issued shares of the companyCompany are present in person or by proxy and entitled to vote.
Under our Bye-laws, notice to any shareholders may be delivered either personally or by sending it through the post, by airmail where applicable, in a pre-paid letter addressed to the shareholder at his address as appearing in the share register or by delivering it to, or leaving it at, such registered address. A notice of a general meeting is deemed to be duly given to the shareholder if it is sent to him by cable, telex or telecopier. 61


              10.1.15 ACCESS TO BOOKS AND RECORDS AND DISSEMINATION OF
                      INFORMATION

              Any such notice shall be deemed to have been served twenty-four (24) hours after its dispatch in the case of cable, telex or telecopier and seven (7) days after dispatch in the case of notice through the post.
10.1.15 
Access to Books and Records and Dissemination of Information
Under Bermuda law, members of the general public have the right to inspect the public documents of a company available at the office of the Bermuda Registrar of Companies. These documents include the memorandum of association and any amendment to the memorandum of association.

              Our shareholders have
Under Bermuda law, the additional right to inspect minutes of shareholder meetings will be open for inspection by any shareholder or director without charge for not less than two hours during business hours each day, subject to any reasonable restrictions that we may impose. The shareholders shall be entitled to receive a copy of every balance sheet and our audited financial statements, which must be
presented at an annualstatement of income and expenditure before a general meeting.

              Our Bye-laws provide thatmeeting as required under the Bye-laws.
The register of shareholders of a company is required to be open for inspection between 10:00 a.m. and 12:00 noon each working day without charge and to members of the general public on the payment of a fee. A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. We have established a branch register with our transfer agent, EquiServe Trust Company, N.A.

              Computershare Limited, which is based in Jersey City, New Jersey.
Under Bermuda law, a company is required to keep at its registered office a register of its directors and officers that is open for inspection for not less than two hours in each day by members of the public without charge. Under our Bye-laws, the register of directors and officers are available for inspection by the public between 10:00 a.m. and 12:00 noon every working day. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.

              10.1.16 ELECTION OR REMOVAL OF DIRECTORS

              
10.1.16 
Election or Removal of Directors
The Bye-laws provide that the number of directors will be such number not less than two, as our shareholders by resolution may from time to time determine. A director will serve until his successor is appointed or his prior removal in the manner provided by the Companies Act or the Bye-laws.
At an annual general meeting of shareholders held on December 16, 2004, the Company amended its Bye-laws to establish a classified board consisting of up to three Class A Directors and up to seven Class B Directors. Each Class A Director and each Class B Director had one vote on any resolution that came before the Board of Directors, and except as specified in the Bye-laws, a simple majority of votes cast by the combined Board of Directors (both Class A and Class B) was sufficient for the adoption of any resolution; provided, however, no resolution could be adopted without the approval of at least one of the Class A Directors.
At the annual general meeting held on September 7, 2007, the Company further amended its Bye-laws to delete the provisions establishing a classified board. Further, the shareholders of the


Company approved resolutions establishing the number of directorships at ten members. At that meeting, eight members of the Board of Directors were elected, with two seats then reserved as casual vacancies. See Section 4.1.2: ‘‘Recent Developments.’’
The boardshareholders may by resolution determine that one or more vacancies in the Board of Directors shall be deemed casual vacancies for the purposes of the Bye-laws. The Board, so long as a quorum of directors remains in office, shall have the power at any time and from time to time to appoint any individual to be a director so as to fill a casual vacancy. The shareholders may approve the appointment of alternate directors or may authorize the boardBoard to appoint them. Directors may also appoint and remove their own alternates.
We may, in a special general meeting called for this purpose, remove a director, provided notice of such meeting is served upon the director concerned not less than fourteen days before the meeting and he shall be entitled to be heard at that meeting.
The office of a director will be vacated in the event of any of the following:

              o      if he resigns his office by notice in writing to be
                     delivered to our registered office or tendered at a meeting
                     of the board of directors;

              o      if he becomes of unsound mind or a patient for any purpose
                     under any statute or applicable law relating to mental
                     health;


                                       62


              o      if he becomes bankrupt under the law of any country or
                     enters into a general settlement with his creditors;

              o      if he is prohibited by law from being a director; or

              o      if he ceases to be a director by virtue of the Companies
                     Act or is removed from office pursuant to the Bye-laws.

              10.1.17 AMENDMENT OF MEMORANDUM OF ASSOCIATION AND BYE-LAWS

              
• 
if he resigns his office by notice in writing to be delivered to our registered office or tendered at a meeting of the Board of Directors;
• 
if he becomes of unsound mind or a patient for any purpose under any statute or applicable law relating to mental health and the Board of Directors resolves that his office is vacated;
• 
if he becomes bankrupt or enters into a general settlement with his creditors;
• 
if he is prohibited by law from being a director; or
• 
if he ceases to be a director by virtue of the Companies Act or is removed from office pursuant to the Bye-laws.
10.1.17 
Amendment of Memorandum of Association and Bye-Laws
Bermuda law provides that the memorandum of association of a company may be amended by resolution passed at a general meeting of which due notice has been given. An amendment to a memorandum of association does not require the consent of the Minister of Finance save for specific circumstances, for example, the adopting of any authority to carry on restricted business activities.
Under Bermuda law, the holders of:

              o      an aggregate of not less than twenty percent in par value
                     of the Company's issued common shares; or

              o      not less in the aggregate than twenty percent of the
                     company's debentures

• 
an aggregate of not less than twenty percent in par value of the Company’s issued Common Shares; or
• 
not less in the aggregate than twenty percent of the company’s debentures
are entitled to object to amendments to its memorandum of association, and have the right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association. Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda Supreme Court. An application for an annulment of an amendment of the memorandum of association must be made within twenty-one days after the date on which the resolution amending the memorandum of association is passed and may be made on behalf of the persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose.
Our Bye-laws may be amended in the manner provided for in the Companies Act, which provides that the directors may amend the Bye-laws, provided that any such amendment shall be effective only to the extent approved by the shareholders.

              10.1.18 MERGER OR CONSOLIDATION (AMALGAMATION)

              
10.1.18 
Merger or Consolidation (Amalgamation)
The Companies Act provides that, subject to the terms of a company's Bye-laws,company’s bye-laws, the merger or consolidation of a Bermuda company with another company requires a merger or consolidation agreement which must be approved by the board of directors and at a meeting of the shareholders by seventy-five percent of the shareholders present and entitled to vote at such meeting in respect of which the quorum shall be two persons holding or representing by proxy at least one-third of the issued shares of the company.


Under Bermuda law, in the event of a merger or consolidation of a Bermuda company, a shareholder who did not vote in favor of the transaction and who is not satisfied that 63
fair value has been offered for the shares, may apply to a Bermuda court within one month of notice of the meeting of shareholders to appraise the fair value of those shares.

              10.1.19 CLASS ACTIONS AND DERIVATIVE ACTIONS

              
10.1.19 
Class Actions and Derivative Actions
Class actions and derivative actions are generally not available to shareholders under Bermuda law. A shareholder may commence an action in the name of a company to remedy a wrong done to the company where the act complained of is alleged to be beyond the corporate power of the company, or is illegal or would result in the violation of the company'scompany’s memorandum of association or Bye-laws.bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requiring the approval of a greater percentage of the company'scompany’s shareholders than those who actually approved it.
When one or more shareholders believes the affairs of a company are being conducted in a manner which is prejudicial to the interest of some of the shareholders, a Bermuda court, upon petition, may make such order as it sees fit, including an order regulating the conduct of the company'scompany’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.

              10.1.20 REGISTRAR OR TRANSFER AGENT

              
10.1.20 
Registrar or Transfer Agent
Our branch transfer agent and registrar is EquiServe Trust
Company, N.A.Computershare Limited, located at 525 Washington Boulevard, Jersey City, New Jersey 07310. In addition to a register held by our branch transfer agent, a register of holders of the shares is maintained by the principal registrar and transfer agent, Appleby Corporate ServicesManagement (Bermuda) Ltd. in Bermuda located at Canon's Court, 22 Victoria Street,Argyle House, 41A Cedar Avenue, Hamilton HM EX,12, Bermuda.

              10.1.21 PERSONAL LIABILITY OF DIRECTORS AND INDEMNITY

              
10.1.21 
Personal Liability of Directors and Indemnity
The Companies Act requires every officer, including directors, of a company in exercising powers and discharging duties, to act honestly in good faith with a view to the best interests of the company, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The Companies Act further provides that any provision, whether in the Bye-lawsbye-laws of a company or in any contract between the company and any officer or any person employed by the company as auditor, exempting such officer or person from liability, or indemnifying him against, any liability which by virtue of any rule of law would otherwise attach to him, in respect of any fraud or dishonesty of which he may be guilty in relation to the company, shall be void.
Every director, officer resident representative and committee member shall be indemnified out of our funds against all civil liabilities, loss, damage or expense including liabilities under contract, tort and statute or any applicable foreign law or regulation and all reasonable legal and other costs and expenses properly payable, incurred or suffered by him as director, officer resident representative or committee member; provided that the indemnity contained in the Bye-lawsbye-laws will not extend to any matter which would render it void under the Companies Act as discussed above.

                                       64


              10.1.22 EXCHANGE CONTROLS

              
10.1.22 
Exchange Controls
We have been designated by the Bermuda Monetary Authority as a nonresidentnon-resident under the Exchange Control Act of 1972 (the "Exchange Act"‘‘Exchange Control Act’’). This designation will allowallows us to engage in transactions in currencies other than the Bermuda dollar.
The transfer of common sharesCommon Shares between persons regarded as resident outside Bermuda for exchange control purposes and the issue of common sharesCommon Shares to such persons may be effected without specific consent under the Exchange Control Act and regulations thereunder.thereunder, provided that the Bermuda Monetary Authority is promptly notified of all instances in which the Company becomes


aware that a new shareholder has obtained five percent or more of the Company’s shares. Any issues of shares, and any transfers of common sharesCommon Shares to any person regarded as resident in Bermuda for exchange control purposes, require specific prior approval from the Bermuda Monetary Authority under the Exchange Control Act.

              Under Bermuda law, share certificates are only issued in the names
of corporations, partnerships or individuals. In the case of an applicant acting
in a special capacity, for example an executor or a trustee, certificates may,
at the request of the applicant, record the capacity in which the applicant is
acting.

              
Notwithstanding the recording of any special capacity, we are not bound to investigate or incur any responsibility in respect of the proper administration of any such estate or trust.
We will take no notice of any trust applicable to any of our common sharesCommon Shares whether or not we had notice of such trust.
As an "exempted company",‘‘exempted company,’’ we are exempt from Bermuda laws which restrict the percentage of share capital that may be held by non-Bermudians. However, as an exempted company we may not participate in certain designated business transactions, which we do not consider relevant to our present or planned business activities.
10.2    MATERIAL CONTRACTS

         Material Contracts
Composite Services Agreement
The Company engages in transactions in the ordinary course of business with PEWC, including the purchase of certain raw materials and the distribution of PEWC products in various countries in the Asia Pacific region. The Company and PEWC are parties to a composite services agreement dated November 7, 1996 (the "Composite‘‘Composite Services Agreement"Agreement’’), which originally expired on November 7,
1999 (butthe Company has been renewed yearlyannually, at the option of the Company), whichits option. The Composite Services Agreement contains provisions that define the relationship and the conduct of the respective businesses of the Company and PEWC and confers certain preferential benefits on the Company. Pursuant to the Composite Services Agreement:

         o    PEWC agrees to (a) sell copper rod to the Company, upon the
              Company's request, (i) at a price consisting of the spot price of
              copper on the LME plus an agreed upon premium and (ii) at prices
              and on terms at least as favorable as PEWC provides copper rod to
              other purchasers of similar amounts of copper rod in the

                                       65


              same markets, and (b) give priority in the supply of copper rod to
              the Company over other purchasers of copper rod from PEWC.

         o    The Company has the right to distribute any wire or cable product
              manufactured by PEWC in all markets in which the Company presently
              distributes or develops the capability to distribute in the future
              such products on such terms as have historically been in effect or
              on terms at least as favorable as PEWC grants to third parties
              that distribute such products in such markets. However, PEWC is
              not required to grant to the Company the right to distribute
              products manufactured by PEWC in the future in markets where the
              Company does not currently have the capability to distribute
              unless and until PEWC has no pre-existing contractual rights which
              would conflict with the grant of such right to the Company.

         o    Each of PEWC and the Company will notify the other party prior to
              entering into any negotiations with a third party concerning the
              establishment of any facility or similar venture to manufacture or
              distribute any wire or cable product outside of the markets where
              the Company currently manufactures or distributes, or intends to
              develop the capability to manufacture or distribute, any wire or
              cable product. Unless the Company and PEWC mutually agree
              otherwise, the Company has the right of first refusal to enter
              into any definitive agreement with such third party. If, however,
              such third party would not agree to the substitution of the
              Company for PEWC or such substitution would prevent the successful
              completion of the facility or venture, PEWC has agreed to arrange
              for the Company to participate to the extent possible.

         o    PEWC agrees to make available to the Company, upon the Company's
              request and on terms to be mutually agreed between PEWC and the
              Company from time to time, certain services with respect to the
              design and manufacture of wire and cable products,
              computerization, inventory control, purchasing, internal auditing,
              quality control, emergency back-up services, and recruitment and
              training of personnel; such services may include the training of
              the Company's employees and managers at PEWC facilities and the
              secondment of PEWC employees and managers to the Company.

         o    Without the consent of the Company, PEWC will not compete with
              respect to the manufacture or distribution of wire and cable
              products in any market in which the Company is manufacturing or
              has taken significant steps to commence manufacturing.

         o    For purposes of the Composite Services Agreement, each province in
              China is considered the equivalent of a country.

         
• 
PEWC agrees to (a) sell copper rod to the Company, upon the Company’s request, (i) at a price consisting of the spot price of copper on the LME plus an agreed upon premium and (ii) at prices and on terms at least as favorable as PEWC provides copper rod to other purchasers of similar amounts of copper rod in the same markets, and (b) give priority in the supply of copper rod to the Company over other purchasers of copper rod from PEWC.
• 
The Company has the right to distribute any wire or cable product manufactured by PEWC in all markets in which the Company presently distributes or develops the capability to distribute in the future such products on such terms as have historically been in effect or on terms at least as favorable as PEWC grants to third parties that distribute such products in such markets. However, PEWC is not required to grant to the Company the right to distribute products manufactured by PEWC in the future in markets where the Company does not currently have the capability to distribute unless and until PEWC has no pre-existing contractual rights which would conflict with the grant of such right to the Company.
• 
Each of PEWC and the Company will notify the other party prior to entering into any negotiations with a third party concerning the establishment of any facility or similar venture to manufacture or distribute any wire or cable product outside of the markets where the Company currently manufactures or distributes, or intends to develop the capability to manufacture or distribute, any wire or cable product. Unless the Company and PEWC mutually agree otherwise, the Company has the right of first refusal to enter into any definitive agreement with such third party. If, however, such third party would not agree to the substitution of the Company for PEWC or such substitution would prevent the successful completion of the facility or venture, PEWC has agreed t o arrange for the Company to participate to the extent possible.
• 
PEWC agrees to make available to the Company, upon the Company’s request and on terms to be mutually agreed between PEWC and the Company from time to time, certain services with respect to the design and manufacture of wire and cable products, computerization, inventory control, purchasing, internal auditing, quality control, emergency back-up services, and recruitment and training of personnel; such services may include the training of the Company’s employees and managers at PEWC facilities and the secondment of PEWC employees and managers to the Company.


• 
Without the consent of the Company, PEWC will not compete with respect to the manufacture or distribution of wire and cable products in any market in which the Company is manufacturing or has taken significant steps to commence manufacturing.
• 
For purposes of the Composite Services Agreement, each province in China is considered the equivalent of a country.
To the extent that transactions occur in the future between the Company and PEWC or affiliates of PEWC other than under the Composite Services Agreement, such transactions will be entered into on an arm'sarm’s length basis on terms no less favorable than those available from unaffiliated third parties.

                                       66
Indemnification Agreement
The Company and PEWC are parties to an indemnification agreement dated November 6, 1996 (the "Indemnification Agreement"‘‘Indemnification Agreement’’), pursuant to which PEWC agreed to indemnify the Company (including the Company'sCompany’s directors, officers, employees and agents) against any cost, expense, loss, liability or damage arising out of any claim asserted or threatened to be asserted by any third party as a result of certain actions taken or failed to be taken by PEWC or its subsidiaries (other than the Company) prior to March 1997 with respect to Sigma Cable, Sino-Sin Trading Co. Ltd., APEC, Siam Pacific, Siam Pacific Holding Company, Pacific Thai, Charoong Thai and NPCDC,NPC, following the exercise by the Company of its option to purchase, directly or indirectly, each of them (collectively, the "Transferred
Businesses"‘‘Transferred Businesses’’). PEWC has a duty to indemnify the Company if such cost, expense, loss, liability or damage arisesaris es out of claims resulting from the actions or inactions of PEWC or its subsidiaries, with respect to the Transferred Businesses, to the extent such action or failure to act was not in compliance with applicable laws and regulations or obligations to third parties and, with respect to Charoong Thai, is limited to situations of which PEWC had knowledge.
Shareholders Agreement
In connection with the acquisition by SOF of all of the Common Shares previously held by Sino-JP, the Company, PEWC and SOF entered into a shareholders agreement dated as of June 28, 2007 (the ‘‘Shareholders Agreement’’), pursuant to which the Company granted to SOF certain rights and protections. Under the Shareholders Agreement, the Company has agreed to indemnify SOF, and its partners and certain of its affiliates (the ‘‘SOF Indemnified Persons’’), for any additional taxes, interest, penalties and other costs that might be imposed upon or incurred by the SOF Indemnified Persons in the event that the Company is determined by the Internal Revenue Service (the ‘‘IRS’’) to be a ‘‘controlled foreign corporation’’ (a ‘‘CFC’’) or a ‘‘passive foreign investment company’’ (a ‘‘PFIC’’) as such terms are interpreted and defined under IRS rules or regulations.
    10.3    ENVIRONMENTAL MATTERS

         Environmental Matters
The Company believes that all of its operations are in compliance with, and in certain circumstances exceed, all applicable environmental laws and regulations in Thailand, Singapore, Australia and China. The Company has not been subject to any legal, regulatory or other action alleging violations or breaches of environmental standards. While the Company does not believe that the nature of its operations createcreates environmental hazards, no assurance can be given that new environmental laws or regulations in Thailand, Singapore, Australia, China or elsewhere, will not, in the future, require changes in the Company'sCompany’s production processes or otherwise adversely affect the Company'sCompany’s operations and financial condition.
    10.4    INSURANCE

         Insurance
The Company maintains insurance policies covering certain buildings, machinery and equipment against specified amounts of damage or loss caused by fire, flooding, other natural disasters and burglary and theft. The Company does not carry insurance for consequential loss arising from business interruptions or political disturbances and does not carry product liability insurance. The Company believes that it maintains insurance coverage commensurate with the nature of and risks associated with its business.


    10.5    CREDIT SUPPORT

         Credit Support
PEWC has provided credit support to the Company and its subsidiaries through the provision of direct loans, credit terms in inter-company trade balances between PEWC and the operating subsidiaries and corporate guarantees for trade and credit facilities from banks and financial institutions for the purposes of financing working capital, capital expenditures, acquisitions and expansion programs. There can be no assurance that PEWC would continue towill provide such support in the future if Swiss Re foreclosed on the Pledged Shares
or for some other reason.

                                       67
future.
    10.6    TAXATION

         Taxation
The following is a summary of certain tax consequences of the acquisition, ownership and disposition of common sharesCommon Shares based on the tax laws of the United States and Bermuda. Such summary is subject to changes in United States and Bermuda law, including changes that could have retroactive effect. The following summary does not take into account the individual circumstances of an investor, nor does it purport to be a complete technical analysis or examination of all potential tax effects relevant to a decision to purchase common shares.

              10.6.1 UNITED STATES TAXATION

              Common Shares, including without limitation, the tax laws of the various states within the United States.
10.6.1 
United States Taxation
The following is a summary of certain United States federal income tax consequences of the acquisition, ownership and disposition of common sharesCommon Shares by a U.S. Holder (as defined below) and a Non-U.S. Holder (as defined below). The summary does not purport to be a comprehensive description of all possible tax considerations that may be relevant to a decision to purchase common shares. Common Shares. This summary is based upon the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), regulations promulgated under the Code by the U.S. Treasury Department (the ‘‘Treasury’’) (including proposed and temporary regulations), rulings, current administrative interpretations and official pronouncements of the Internal Revenue Service (the ‘‘IRS’’), and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. Such change could materially and adversely affect the tax consequences described below. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. Further, this summary does not discuss any foreign, state or local tax consequences.
In particular, this summary deals only with common sharesCommon Shares held as capital assets and does not address the United States tax treatment of U.S. Holders and Non-U.S. Holders that are subject to special treatment under the United States Internal Revenue Code, of 1986, as amended (the
"Code"), such as dealers in stocks, securities, or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, financial institutions, life insurance companies, tax-exempt entities, real estate investment trusts, regulated investment companies, qualified retirement plans, individual retirement accounts, and other tax deferred accounts, expatriates of the United States, persons subject to the alternative minimum tax, persons holding shares as part of a hedging or conversion transaction or a straddle, or other integrated transaction, persons who acquired Common Shares pursuant to the exercise of any employee stock option or otherwise as compensation for services, or persons whose functional currencycurren cy is not the United States dollar or who own (directly, indirectly or by attribution) 10% or more of the stock of the Company. Consequently, prospective purchasers who are U.S. Holders or Non-U.S. Holders are advised to satisfy themselves as to the overall United States federal, state, local and localforeign tax consequences of their acquisition, of,
ownership and disposition of common sharesCommon Shares by consulting their own tax advisors.

              The statements of United States tax laws set forth below are based
on the laws in force as of the date of this Annual Report and may be subject to
changes in United States law occurring after such date.

              
As used herein, the term "U.S. Holder" shall mean‘‘U.S. Holder’’ means a beneficial owner of common sharesCommon Shares that is (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized in the United States or under the laws of the United States or any state (or the District of Columbia), (iii) an estate, the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more "United‘‘United States person"persons’’ (as defined in Section 7701(a)(30) of the Code) has the authority to control all substantial decisions of the trust.


The term ‘‘Non-U.S. Holder’’ means a beneficial owner of Common Shares that is not a U.S. Holder. As described in ‘‘Taxation of Non-U.S. Holders’’ below, the consequences to a Non-U.S. Holder may differ substantially from the tax consequences to a U.S. Holder.
If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of Common Shares, the U.S. federal income tax consequences to a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. A holder of Common Shares that is a partnership and the partners in such partnership should consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of Common Shares.
Taxation of U.S. Holders
The discussion in ‘‘Taxation of Dividends’’ and ‘‘Taxation of Capital Gains’’ below assumes that the Company will not be treated as a passive foreign investment company (‘‘PFIC’’) for U.S. federal income tax purposes. For a discussion of the rules that apply if the Company is treated as a PFIC, see the discussion in ‘‘Passive Foreign Investment Company’’ below.
Taxation of Dividends
A U.S. Holder receiving a distribution with respect to common
sharesCommon Shares generally will be required to include such distribution in gross income (as ordinary income subject to regular, and not reduced, tax rates) on the day received as foreign-source dividend income to the extent such distribution is paid from the Company'sCompany’s current or accumulated earnings and profits (as determined under United States federal income tax principles). Such dividends will not be eligible for the dividends received deduction (generally allowed to certain United States

                                       68
 corporations in respect of dividends received from United States corporations). U.S. Holders that are corporations and directly own 10% or more of the voting stock of the Company may be entitled to claim a foreign tax credit for United States federal income tax purposes in respect of foreign taxes paid by the Company and certain subsidiaries.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27, 117 Stat. 752) (the ‘‘2003 Act’’) was enacted on May 28, 2003. Subject to certain limitations, the 2003 Act generally provides that a dividend paid to an individual U.S. shareholder from either a domestic corporation or a ‘‘qualified foreign corporation’’ is subject to tax at the reduced rates applicable to certain capital gains (15%; 5% for taxpayers in the lower bracket; 0% for lower bracket taxpayers in 2008). A qualified foreign corporation includes certain foreign corporations that are eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary of the Treasury determines is satisfactory for purposes of this provision and which includes an exchange of information program. In addition, a foreign corporation not otherwise treated as a qualified foreign corporation is so treated with respect to any dividend it pays if the stock with respect to which it pays such dividend is readily tradable on an established securities market in the United States.
In the absence of a comprehensive income tax treaty between the United States and Bermuda, the Company will not be treated as a ‘‘qualified foreign corporation’’ under the treaty test. So long as the Company is not a PFIC (as discussed below), dividends paid by the Company to individual shareholders would qualify for these reduced rates if its stock was treated as readily tradable on an established securities market in the United States.
In Notice 2003-71, 2003-2 C.B. 922, the IRS determined that common or ordinary stock, or an American depositary receipt in respect of such stock, is considered readily tradable on an established securities market in the United States if it is listed on a national securities exchange that is registered under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) or on the Nasdaq Stock Market. As stated in the SEC’s Annual Report for 2002, registered national exchanges as of September 30, 2002 include the American Stock Exchange, the Boston Stock Exchange, the Cincinnati Stock Exchange, the Chicago Stock Exchange, the NYSE, the Philadelphia Stock Exchange, and the Pacific Exchange, Inc.
The notice further provided, however, that the Treasury and the IRS were continuing to consider, for subsequent years, the treatment of dividends with respect to stock listed only in a manner that did


not meet this definition, such as on the Over-the-Counter Bulletin Board (the ‘‘OTC BB’’) or on the electronic Pink Sheets. In particular, the notice indicated that the Treasury and the IRS were considering whether or to what extent treatment of stock that was listed only in such manner as ‘‘readily tradable on an established securities market in the United States’’ should be conditioned on the satisfaction of parameters regarding minimum trading volume, minimum number of market makers, maintenance and publication of historical trade or quotation data, issuer reporting requirements under SEC or exchange rules, or issuer disclosure or determinations regarding PFIC status. The IRS has not yet provided further guidance on whether or in what circumstances, a company like the Company, which is traded on the OTC BB, will be treated as a qualified foreign corporation. Should the Company be relisted on a registered national exchange, any dividends paid by the Company s hould qualify for the reduced rates referred to above.
To the extent any distribution exceeds the current and accumulated earnings and profits of the Company for a taxable year, the distribution will be treated as a non-taxable return of capital to the extent of the U.S. Holder'sHolder’s adjusted tax basis in the common sharesCommon Shares with respect to which the distribution is made, causing a reduction in the adjusted basis of the common sharesCommon Shares (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the U.S. Holder on a subsequent disposition of the common shares)Common Shares). To the extent such distribution exceeds the U.S. Holder'sHolder’s adjusted tax basis in the common shares,Common Shares, such excess will be treated as capital gain.
Taxation of Capital Gains

              For United States federal income tax purposes, a
A U.S. Holder will recognize taxable gain or loss on any sale, exchange or other disposition of Common Shares (including a liquidation, dissolution or as a result of a non-pro rata redemption of Common Shares that qualified for treatment as a sale or exchange of common sharesfor United States federal income tax purposes) in an amount equal to the difference between the amount realized for the common sharesCommon Shares and the U.S. Holder'sHolder’s adjusted tax basis in the common shares.Common Shares. Such gain or loss generally will be treated as capital gain or loss and will be long-term capital gain or loss if the common sharesCommon Shares have been held for more than one year on the date of the sale, exchange or exchangeother disposition thereof, and will be short-term capital gain or loss if the common sharesCommon Shares have been held for one year or less on the date of the sale or exchange thereof. Any gain recognized by a U.S. Holder generally will be treated as United States source income. In general, an individual's long-termindividual’s long - -term capital gains are subject to U.S. federal income tax at a marginal rate of 15%, or 5% in the case of individuals in the 10% or 15% income tax brackets. (If an individual is subject to the "alternative‘‘alternative minimum tax"tax’’, the maximum effective tax rate on long-term capital gains will be 26% to 28%).)

              
Long-term capital gains of corporations generally are subject to the U.S. federal income tax at a current maximum marginal rate of 35%. Short-term capital gain generally is taxable at ordinary income rates. Although capital gains of corporations currently are taxed at the same rates as ordinary income, the distinction between capital gain and ordinary income or loss is relevant for purposes of, among other things, limitations on the deductibility of capital losses. Corporations may deduct capital losses only to the extent of capital gains and generally may carry back capital losses to each of the preceding three years and carry forward capital losses to each of the succeeding five years. Individuals may deduct capital losses to the extent of capital gains plus up to $3,000 ($1,500 for married individuals filing separate returns) and may carry forward long-term capital losses indefinitely.
Backup Withholding
In general, information reporting requirements may be applicable to dividend payments (or other taxable distributions) made in respect of common
sharesCommon Shares to non-corporate U.S. Holders, and "backup withholding"‘‘backup withholding’’ at the rate of 28% will apply to such payments (i) if the holder or beneficial owner fails to provide a taxpayer identification number in the manner required by U.S. law and applicable regulations, (ii) if the Internal Revenue ServiceIRS notifies the

                                       69
 payor that the taxpayer identification number furnished by the holder or beneficial owner is incorrect, (iii) if there has been notification from the Internal Revenue ServiceIRS of a failure by the holder or beneficial owner to report all interest or dividends required to be shown on its United States federal income tax returns or (iv) in certain circumstances, if the holder or beneficial owner fails to comply with applicable certification requirements. In general, payment of the proceeds from a


sale of common sharesCommon Shares to or through a United States office of a broker is subject to both United States backup withholding and information reporting unless the holder or beneficial owner certifies as to its non-United States status or otherwise establishes an exemption. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. Amounts withheld under the backup withholding rules may be credited against a holder'sholder’s tax liability, and a holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the Internal Revenue Service ("IRS").IRS. Payment of the proceeds from the sale of common sharesCommon Shares effected outside the United States by a foreign office of certain United States connected brokers will not be subject to backup withholding tax but will be subject to information reporting requirements unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. Holder and has no actual knowledge to the contrary, or the beneficialben eficial owner otherwise establishes an exemption.
Passive Foreign Investment Company
In general, the Company will be treated as a passive foreign
investment company ("PFIC")PFIC for United States federal income tax purposes for any taxable year if either (i) at least 75% of the gross income of the Company is passive income or (ii) at least 50% of the value (determined on the basis of a quarterly average) of the Company'sCompany’s assets is attributable to assets that produce or are held for the production of passive income. The Company believes, based on its current operations and assets, that it is not a PFIC and does not expect to become a PFIC in the future. This conclusion is a factual determination based on, among other things, a valuation of the Company'sCompany’s assets, which will likely change from time to time.
If the Company were a PFIC for any taxable year during which a U.S. Holder held common shares,Common Shares, the U.S. Holder would be subject to special tax rules with respect to (i) any "excess distribution"‘‘excess distribution’’ by the Company to the U.S. Holder (generally any distribution received by the U.S. Holder in a taxable year that is greater than 125% of the average annual distribution received by the U.S. Holder in the three preceding taxable years, or the U.S. Holder'sHolder’s holding period for the common shares,Common Shares, if shorter) and (ii) any gain realized on the sale or other disposition (including a pledge) of common shares.

              Common Shares.
Under these special tax rules, (i) the excess distribution or gain would be allocated ratably over the U.S. Holder'sHolder’s holding period for the common
shares,Common Shares, (ii) the amount allocated to the U.S. Holder'sHolder’s current taxable year and to any period prior to the first taxable year in which the Company was a PFIC would be includible as ordinary income in the U.S. Holder'sHolder’s current taxable year and (iii) the amount allocated to a prior year during which the Company was a PFIC would be subject to tax at the highest tax rate in effect for that year, and an interest charge would also be imposed with respect to the resulting tax attributable to each such prior year. The interest charge is computed using the applicable rates imposed on underpayments of United States federal income tax for the relevant periods.

                                       70
The above rules will not apply if a ‘‘mark-to-market’’ election is available and a U.S. Holder validly makes such an election by filing a properly completed IRS Form 8621. If such election were made, a U.S. Holder generally would be required to take into account the difference, if any, between the fair market value and its adjusted tax basis in the Common Shares at the end of each taxable year as ordinary income or ordinary loss (to the extent of any net mark-to-market gains previously included in income). A U.S. Holder’s tax basis in the Common Shares would be adjusted to reflect any such income or loss amount. In addition, any gain from a sale, exchange or other disposition of the Common Shares would be treated as ordinary income, and any loss would be treated as ordinary loss (to the extent of any net mark-to-market gains previously included in income). A mark-to-market election is available to a U.S. Holder only if the Common Sh ares are considered ‘‘marketable stock’’ for these purposes. Generally, shares of a PFIC will be considered marketable stock if they are ‘‘regularly traded’’ on a ‘‘qualified exchange’’ within the meaning of applicable U.S. Treasury regulations. A class of shares is regularly traded during any calendar year during which such class of shares is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. A ‘‘qualified exchange’’ is defined to include a national securities exchange registered with the SEC or certain foreign exchanges. The Common Shares are not currently traded on a national securities exchange or a qualifying foreign exchange. Accordingly, the mark-to-market election under these rules will not currently be available.


The special tax rules described above will also not apply to a U.S. Holder if the U.S. Holder elects to have the Company treated as a "qualified‘‘qualified electing fund"fund’’ (a "QEF election"‘‘QEF election’’) and the Company provides certain information to U.S. Holders. If the Company is treated as a PFIC, it will notify the U.S. Holders and provide such holders with the information necessary to make an effective QEF election, including information as to the procedures for making such an election. The QEF election is made on a shareholder-by-shareholder basis and can ordinarily be revoked only with the consent of the IRS.
A U.S. Holder that makes a valid QEF election will be currently taxable on its pro rata share of the Company'sCompany’s ordinary earnings and net capital gain (at ordinary income and capital gains rates, respectively) for each taxable year that the Company is classified as a PFIC, regardless of whether distributions are received. Thus, the U.S. Holder may recognize taxable income without receiving any cash to pay its tax liability with respect to such income. The U.S. Holder'sHolder’s basis in the common sharesCommon Shares will be increased to reflect taxed but undistributed income. Distributions of income that have been previously taxed will result in a corresponding reduction of basis in the common sharesCommon Shares and will not be taxed again as a distribution to the U.S. Holder.
A U.S. Holder owning common sharesCommon Shares during any year that the Company is a PFIC must file IRS Form 8621. U.S. Holders should consult their tax advisors concerning the United States federal income tax consequences of holding common sharesCommon Shares and of making a mark-to-market or QEF election if the Company is treated as a PFIC in the future.
Controlled Foreign Corporation

              More
A non-U.S. corporation generally will be a controlled foreign corporation (a ‘‘CFC’’) for U.S. tax purposes if United States shareholders collectively own more than 50 percent of the Company'stotal combined voting power or total value of the corporation’s stock is owned by a
singleon any day during any taxable year. For this purpose, United States shareholder. Consequently, the Company is a "controlled
foreign corporation" for United States federal income tax purposes. United
Statesshareholders are limited to those U.S. persons owning (directly,who own, directly, indirectly or by attribution)constructively, 10 percent or more of the Company'stotal combined voting power of all classes of stock of the non-U.S. corporation. In general, if a corporation is a CFC, then, for each tax year, its United States shareholders will be required to recognize on a current basis their respective shares of the CFC’s ‘‘subpart F income’’ and income from investments in certain types of U.S. property (limited, however, to their respective shares of the CFC’s earnings and profits, as computed for U.S. tax purposes, for su ch tax year) even if the income has not been distributed to the shareholders in the form of dividends or otherwise. Subpart F income consists of certain specified categories of income including, among others, dividends, interest, rents, royalties, net gains from the sale of property giving rise to such income and income from certain types of transactions involving ‘‘related persons’’ as defined for U.S. federal income tax purposes. Income from investments in certain types of U.S. property to be included by United States shareholders on a current basis includes, among others, income from tangible property physically located in the U.S., income from stock of U.S. domestic corporations, and income from any right to sue a patent or copyright in the U.S. The Company should not currently qualify as a CFC.
Taxation of Non-U.S. Holders
Taxation of Dividends
Subject to the discussion in ‘‘Backup Withholding’’ below, Non-U.S. Holders generally will not be subject to U.S. federal income tax, including withholding tax, on distributions received on Common Shares, unless the distributions are effectively connected with a trade or business conducted in the United States (and, if an applicable income tax treaty so requires, attributable to a permanent establishment maintained in the United States).
If distributions are effectively connected with a U.S. trade or business (and, if applicable, attributable to a U.S. permanent establishment), Non-U.S. Holders generally will be subject to tax on such distributions in the same manner as U.S. Holders, as described in ‘‘Taxation of U.S. Holders — Taxation of Dividends’’ above. In addition, any such distributions received by a specialcorporate Non-U.S.


Holder may also, under certain circumstances, be subject to an additional ‘‘branch profits tax’’ at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.
Taxation of Capital Gains
Subject to the discussion in ‘‘Backup Withholding’’ below, Non-U.S. Holders generally will not be subject to U.S. federal income tax, including withholding tax, on any gain recognized on a sale or other taxable disposition of Common Shares, unless (i) the gain is effectively connected with a trade or business conducted in the United States (and, if an applicable income tax regime with respecttreaty so requires, attributable to their stocka permanent establishment maintained in the United States), or (ii) a Non-U.S. Holder is an individual and their shares of certain types of
incomeis present in the United States for at least 183 days in the taxable year of the Company. Anydisposition, and certain other conditions are present.
If a Non-U.S. Holder meets the test in clause (i) above, such 10 percent shareholdersNon-U.S. Holder generally will be subject to tax on any gain that is effectively connected with his conduct of a trade or business in the United States in the same manner as a U.S. Holder, as described in ‘‘Taxation of U.S. Holders — Taxation of Capital Gains’’ above. Effectively connected gain realized by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional ‘‘branch profits tax’’ at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.
If a Non-U.S. Holder meets the test in clause (ii) above, such Non-U.S. Holder generally will be subject to tax at a 30% rate on the amount by which his U.S. source capital gain exceeds his U.S. source capital loss.
Backup Withholding
Payments to Non-U.S. Holders of distributions on, or proceeds from the disposition of, Common Shares are advisedgenerally exempt from information reporting and backup withholding. However, a Non-U.S. Holder may be required to consultestablish that exemption by providing certification of non-U.S. status on an appropriate IRS Form W-8.
Backup withholding is not an additional tax. Amounts withheld as backup withholding from a payment to a Non-U.S. Holder may be credited against his U.S. federal income tax liability and a Non-U.S. Holder may obtain a refund of any excess amounts withheld by filing the appropriate claim for refund with their own tax advisors.

              10.6.2 BERMUDA TAXATION

              the IRS and furnishing any required information in a timely manner.
10.6.2 
Bermuda Taxation
In the opinion of Appleby, Spurling Hunter, the following discussion correctly describes certain tax consequences of the ownership of common sharesCommon Shares under Bermuda law.
Under current Bermuda law, there are no taxes on profits, income or dividends nor is there any capital gains tax. Furthermore, the Company has received from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966, as amended, an undertaking that, in the event that Bermuda enacts any legislation imposing tax computed on profits or income,
including any dividend or capital gains withholding tax, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax shall not be applicable to the Company or to any of its operations, or the shares, debentures or other obligations of the Company, until March 28, 2016. This undertaking does not, however, prevent the imposition of any such tax or duty on such persons as are ordinarily resident in Bermuda and holding such shares, debentures or obligations of the 71
Company or of property taxes on Company-owned real property or leasehold interests in Bermuda.

              Be rmuda.
As an exempted company, the Company must pay to the Bermuda government an annual registration fee calculated on a sliding-scale basis by reference to its assessable capital, that is, its authorized share capital plus any share premium.
There is no stamp duty or other transfer tax payable upon the transfer of shares in the Company by shareholders.
The United States does not have a comprehensive income tax treaty with Bermuda.


    10.7    DOCUMENTS ON DISPLAY

         Documents on Display
We are required to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"‘‘Exchange Act’’), applicable to a foreign private issuer. We willare required to file annually a Form 20-F no later than six months after the close of our fiscal year, which is December 31st. Any time the Company is delinquent in filing timely any periodic reports, including an Annual Report on Form 20-F, with the SEC, that delinquency may adversely affect the Company’s status on any exchange or quotation service on which its shares are listed or quoted and the Company may not be entitled to use certain abbreviated registration statements with the SEC in connection with the registration of any of its securities. We have previously been delinquent in filing our annual reports. As a result, the Company was delisted from the OTC BB and traded on the Pink Sheets. On April 9, 2008, trading in the Common Shares of the Company was restored to the OTC BB under the trading symbol ‘‘AWRCF.’’
As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
Our reports and other information, when so filed, may be inspected and copied (at prescribed rates) at the public reference facilities maintained by the Securities and Exchange Commission (the "SEC"‘‘SEC’’) at Judiciary Plaza, 450 Fifth100 F Street, N.W.N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information. In addition, the SEC maintains a web site that contains information filed electronically with the SEC, which can be accessed over the Internet at http://www.sec.gov.
We have filed all our reports electronically since November 4, 2002. Such reports can be accessed over the Internet at http://www.sec.gov.

ITEM
In addition, we post certain information regarding the Company and its operations on our website located at: www.apwcc.com. Summary information regarding the Company posted on our website should not be considered to be a substitute for, or a restatement of, the more complete information regarding the Company, its results of operations and financial condition set forth in this Annual Report or other documents or information which we may file with the SEC.
Item 11:    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Quantitative and Qualitative Disclosures About Market Risk
Our exposure to financial market risks derives primarily from the changes in interest rates, foreign exchange rates, interest rate, and the commodity price of our primary raw material, copper.
    11.1    FOREIGN CURRENCY EXPOSURE

         Foreign Currency Exposure
Changes in currency exchange rates influence the Company'sCompany’s results of operations. The Company'sCompany’s principal operations and sales are located in Thailand, Singapore and SingaporeChina and a substantial portion of its revenues are denominated in Baht, Singapore dollars or Singapore dollars.Chinese Renminbi. Nearly all of the raw materials for these operations are imported and paid for in USU.S. dollars and a substantial portion of the Company'sCompany’s future capital expenditures are expected to be in USU.S. dollars. The Company requires a significant amount of USU.S. dollars for its ongoing equipment upgrade and maintenance programs. Although the Company'sCompany’s reporting currency is USU.S. dollars, the functional currency of its Singapore operations, which accounted for approximately 16.7%9.4% of Company sales (including

                                       72
 sales of Distributed Products) in 2003,2007, is the Singapore dollar, and the functional currency of its Thai operations, which accounted for approximately 44.2%48.8% of Company sales in 2003,20 07, is the Baht.Baht, and the functional currency of its Chinese operations, which accounted for approximately 30.9% of Company sales in 2007, is the Renminbi. Accordingly, any devaluation of the Baht, or the Singapore dollar or the Chinese Renminbi against the USU.S. dollar increases the effective cost of foreign manufacturing equipment and the amount of foreign currency denominated expenses and liabilities and has an adverse impact on the operations of the Company.
We have entered into derivative financial instruments on a selective basis throughout the year to mitigate foreign currency fluctuation risks arising from operating activities. The application of these


instruments is primarily for currency hedging purposes and not for trading purposes. The Company uses Thai Baht forward foreign exchange contracts to reduce its exposure to foreign currency risk for liabilities denominated in foreign currency. A forward foreign exchange contract obligates the Company to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent USU.S. dollar payment equal to the value of such exchange. Realized and unrealized gains and losses on foreign exchange contracts are included in income as foreign exchange gains or losses.

         As of December 31, 2003, we do not have any significant
The Company entered into forward exchange contracts outstanding.with a notional value of approximately $1.8 million that matured in March and April 2007 and $12 million that matured in January, February, March, May and June 2008.
    11.2    INTEREST RATE RISK

         Interest Rate Risk
The Company'sCompany’s exposure to market rate risk for changes in interest rates relates primarily to the Company'sCompany’s bank loans and overdrafts, long-term debt and interest-bearing long-term loans from PEWC. The Company maintains a mixture of both fixed and floating debt instruments. During 2003 interestInterest paid totaled $1.6 million.

         $7.2 million in 2007.
The following table provides information about the Company'sCompany’s debt instruments as of December 31, 2007 that are sensitive to changes in interest rates.



         Principal Amount (In thousands of US$)
         -----------------

         Bank loans and overdrafts                             22,339

         Long-term debt                                         1,654

         Interest-bearing long-term loan from PEWC              4,818
                                                              -------

         Total                                                 28,811
                                                              -------



         

Principal Amount (In thousands of US$)
2007
Bank loans and overdrafts
102,174
Long-term debt
—
Interest-bearing long-term loan from PEWC
—
Total
102,174
We have cash flow and earnings exposure due to market interest rate changes for our floating debt obligations. We manage the exposure to financial market risk by performing ongoing evaluations of our debt portfolios and restructuring our financial instruments 73
accordingly to provide the optimum interest structure. AAt our current level of indebtedness, a half percentage point change in interest rates would affect our interest payments by approximately 13%$0.5 million annually.
    11.3    RISKS RELATING TO COPPER

         Risks Relating to Copper
Copper is the principal raw material we use, accounting for approximately 50% to 60%70% of the cost of sales in 2003.2007. We purchase copper at prices based on the average prevailing international spot market prices on the London Metal Exchange (the "LME"‘‘LME’’) for copper for the one month prior to purchase. The price of copper is influenced heavily by global supply and demand as well as speculative trading. As with other costs of production, an increasechanges in the price of copper will increasemay affect our cost of sales. Whether this has a material impact on our operating margins and financial results depends primarily on our ability to pass on these increased costsadjust charges to our customers.customers, such that increases and decreases in the price of copper are fully reflected in those charges. The purchase price of our products is based in part on the cost of copper used to manufacture those products. In addition, in the ordinary course of business we maintain inventories of raw materials and finished productspro ducts reasonably necessary for the conduct of our business. These inventories typically reflect the cost of copper prevailing in the market at the time we purchase. Most of our sales of manufactured products reflect copper prices prevailing at the time the products are ordered. A long-term decrease in the price of copper would require the Company to revalue the value of its inventory at periodic intervals to the then net realizable value, which could be below cost. Copper prices have been subject to considerable volatility in
recent years and this volatility has had a significantit is not always possible to manage our copper purchases and inventory so as to neutralize the impact on our revenues
and profits.of copper price volatility. Accordingly, significant volatility in copper prices could have an adverse effect on our operations. No assurance can be given that such volatility will not continuerecur.
Item 12:    Description of Securities Other Than Equity Securities
(Not applicable)


Part II
Item 13:    Defaults, Dividend Arrearages and Delinquencies
(Not applicable)
Item 14:    Material Modifications to recur.

ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         (Not Applicable)

PART II

ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

         (Not Applicable)

ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
         PROCEEDS

         (Not Applicable)

ITEMthe Rights of Security Holders and Use of Proceeds
(Not applicable)
Item 15:    DISCLOSURE CONTROLS AND PROCEDURES

         Our chief executive officerControls and our chief financial officer, after
evaluatingProcedures
Disclosure Controls and Procedures
In 2004, we retained an internationally recognized consulting firm to act as forensic accounting advisers, to review and evaluate the effectiveness of our disclosure controls and procedures within 90
days ofand to assist the date of this annual report, haveCompany in establishing satisfactory disclosure controls and procedures. The consulting firm concluded that as of that date, our disclosure controls and procedures were effectivenot satisfactory in a number of respects to ensure that material information relating to us was made known to them or to senior management by others within our Company. In particular, as of the end of 2006, the following material weaknesses were identified:
• 
Lack of satisfactory policies and procedures governing the Company’s and its subsidiaries’ accounting policies, internal control and code of conduct;
• 
Lack of an adequate internal audit function;
• 
Need for improvement in monthly financial statement close process for the Company and its subsidiaries to allow timely financial reporting;
• 
Need for greater U.S. GAAP and tax expertise to identify potential accounting and taxation issues that have a material impact on the Company; and
• 
Lack of credit control policies at various subsidiaries.
The Company particularly duringengaged a consultant to advise and assist on establishing an internal audit department and to assist in establishing and maintaining satisfactory disclosure controls and procedures. The Company has not completed this process. As of the end of the period in whichcovered by this annual report was being prepared.
ThereAnnual Report, the Company’s management, with the participation of its Chief Executive Officer (the ‘‘CEO’’) and its interim Chief Financial Officer (the ‘‘CFO’’), conducted an evaluation pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Due to the continued existence of certain material weaknesses identified above, under applicable regulatory guidance, management concluded that the Company’s disclosure controls and procedures as of D ecember 31, 2007 were required to be classified as ineffective. The Company is focused on improving its disclosure controls and procedures and is confident that these material weaknesses will no longer exist as of December 31, 2008 as long as the Company’s personnel properly implement and adhere to all remediation plans adopted by the Company.
We note that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

                                       74


         There were
Internal Controls over Financial Reporting
The Company is committed to improving the efficacy and reliability of its system of internal controls. We are developing new procedures to enhance internal controls over financial reporting, and we are establishing an internal audit department at the Company headquarters which would establish


the rules for internal control procedures and would supervise operating and financial audits. Other measures taken include engaging external consultants to advise on risk control and internal audit functions and to assist in achieving compliance with applicable regulatory requirements, sending staff for training on U.S. GAAP accounting, employing more staff progressively to strengthen the accounting, finance and internal audit departments, implementing credit control policies at certain subsidiaries, and commencing the process of documenting policies and procedures governing the Company’s accounting policies, internal control and code of conduct.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management, including our CEO and CFO, does not expect that our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or proced ures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
The Company’s management, including its CEO and CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, 2007 (the ‘‘Assessment Date’’). In making its assessment, management used the criteria set forth by the Committee of Sponsoring Organizations (‘‘COSO’’) of the Treadway Commission in Internal Control – Integrated Framework. These criteria include the control environment, risk assessment, control activities, information and communication and monitoring of each of the above criteria.
The Company’s management has identified four material weaknesses in the Company’s internal control over financial reporting as of the assessment date. As a result, the Company’s management, including its CEO and CFO, has concluded that, as of the Assessment Date, in accordance with the provisions of applicable regulatory guidance, the Company’s internal control over financial reporting must be classified as ineffective.
Management has identified, and the CEO and CFO have reported to the Board of Directors, the Audit Committee and the Company’s independent auditors, the following material weaknesses as of the Assessment Date, in accordance with the provisions of applicable regulatory guidance, with respect to the Company’s internal control over financial reporting:
• 
The Company lacks a written policy addressing the review and identification, and does not conduct regular review, of slow-moving and/or obsolete inventory and the making of a corresponding provision on a timely basis at certain subsidiaries.
• 
The Company lacks a written policy addressing the review and identification, and does not conduct regular review, of aged receivables and/or doubtful debts and the making of a corresponding provision on a timely basis at a significant subsidiary.
• 
The Company has insufficient data integrity, access control and segregation of duties controls among personnel with regard to spreadsheets that host financial data at both the corporate and subsidiary levels.
• 
The Company has insufficient access control and segregation of duties controls among personnel with regard to application systems that host financial data at both the corporate and subsidiary levels.
Management also identified, and the CEO and the CFO have reported to the Audit Committee on May 29, 2008 and the independent auditors, certain significant changesdeficiencies in our internal controls orover financial reporting as of the Assessment Date.


The Company has formed a project team, led by the Internal Audit Manager, to implement remediation plans for the aforementioned material weaknesses, commencing in other
factorsthe first half of 2008. Remediation plans adopted by the Company to address the aforementioned material weaknesses were as follows:
• 
Establish formal written policies and procedures for stock provision in order to identify slow-moving or obsolete inventory on a regular basis. The policies and procedures have been approved by management and communicated to all relevant personnel. Any stock provision must be reviewed and properly authorized and recorded on a timely basis.
• 
Establish formal written policies and procedures for receivables provision in order to identify aged receivables or doubtful debts on a regular basis, and to provide a consistent approach to determining when the posting of a reserve or a write-down is necessary or appropriate. The policies and procedures have been approved by management and communicated to all relevant personnel. Any receivables provision must be reviewed and properly authorized and recorded on a timely basis.
• 
Implement passwords and define who should have access rights to update the financial spreadsheets.
• 
Remove unnecessary access from the application systems in order to match the access rights as defined by business processes owners.
The aforementioned remediation plans and results to date were presented to the Audit Committee and Board of Directors on June 13, 2008. Management, including the CEO and CFO, believe the remedial course of action can address satisfactorily the material weaknesses and are confident that could significantly affect these material weaknesses will no longer exist as of December 31, 2008 as long as the Company’s personnel properly implement and adhere to the remediation plans adopted by the Company.
The certifications provided as part of this Annual Report by our CEO and CFO are subject to and qualified by the disclosures and discussion in this Annual Report on the current ineffectiveness of disclosure controls and procedures subsequentand internal controls over financial reporting. See Section 3.3.6: ‘‘Disclosure Controls and Procedures and Internal Controls Over Financial Reporting Classified as Ineffective.’’
This Annual Report does not contain an audit or attestation report of the Company’s registered public accounting firm regarding our internal control over financial reporting due to the date our chief executive officer and our chief financial officer
completed their evaluation, nor were there any significant deficiencies or
material weaknesses in ourapplication of a transition period during which the SEC permits us to provide only management’s report on internal controls requiring corrective actions.

ITEM 16:  AUDIT MATTERS

16.1     AUDIT COMMITTEE FINANCIAL EXPERT

         Thein this Annual Report.
Item 16A.    Audit Committee Financial Expert
For certain times prior to January 1, 2007 and until September 28, 2007, the Company has identified adid not have an audit committee. As the Common Shares are traded on the OTC BB, the Company is not required to have an audit committee that meets the requirements of, nor is it required to have an audit committee financial expert as contemplated by, Regulation 10A-3 under the Exchange Act. During those periods of time when the Company did not have any independent directors, our full Board of Directors fulfilled the functions of an audit committee pursuant to serveSection 3(a)(58) of the Exchange Act. On September 28, 2007, our Board appointed Mr. Anson Chan and Dr. Yichin Lee as independent directors to fill the Chairtwo casual vacancies on the Board, and to constitute the members of the Audit Committee.Committee, with Mr. Tim Wong isChan serving as the Audit Committee’s chairman. The Audit Committee was responsible for coordinating the preparation of this Annual Report.
On April 26, 2005, the Company adopted an independent directorAudit Committee Charter, which sets forth the powers and responsibilities of the Audit Committee of the Company. His
relevant experience includes, butA copy of the Charter is not limited to,on file with the following:

         1. Over 9 years experience as an external and internal auditor.

         2. Over 7 years experience as Financial Controller in several
            companies.

16.2     CODE OF ETHICS

         TheSEC.


Item 16B.    Code of Ethics
On April 26, 2005, the Company has adopted a code of ethics applicable to its Chief Executive Officer and senior financial officers. A copy of the Company'sCompany’s code of ethics for senior executives is attached as Exhibit 16.2.

16.3     PRINCIPAL ACCOUNTANT FEES AND SERVICES

         on file with the SEC.
Item 16C.    Principal Accountant Fees and Services
Audit Fees
The aggregate fees billed for the fiscal years 20022007 and 20032006 for professional services rendered by the principal accountant for the audit of the Company'sCompany’s annual financial statements total $0.3totaled $0.6 million per year.

         and $0.6 million, respectively.
Audit-Related Fees
There were no other fees for the fiscal years 2002 and 2003year 2007 or 2006 for assurance and audit-related services by the principal accountant.

         accountant that are not included in the figure provided in the preceding paragraph.
Tax Fees
The aggregate fees billed for the fiscal years 2002year 2007 and 20032006 for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning total approximately $20,000$8,000 and $37,000$6,000, respectively. These fees were for services including tax planning, compliance and general advice.
All Other Fees
There were no other fees for the fiscal years 2002 and 2003year 2007 or 2006 for services, other than those services described in the preceding paragraphs of this Item 16.3,16C, rendered by the principal accountant.
Audit Committee Approval
The engagement of the accountant to render audit or non-audit services is entered into pursuant to pre-approval policies and procedures established byin the audit committeeCharter of the Company and allAudit Committee of the Company. All services described in this Item 16.316C were approved by the audit committee.

                                       75


PARTAudit Committee holding office at the time of the engagement, which was the full Board of Directors. The services described in this Item 16C were approved also by the current Audit Committee after its appointment by the Board on September 28, 2007.
Item 16D.    Exemptions from the Listing Standards for the Audit Committees
The Company is not a listed issuer.
Item 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During 2007, there were no purchases by the issuer or any ‘‘affiliated purchaser’’ for the purposes of this Item.


Part III

ITEM
Item 17:    FINANCIAL STATEMENTS

         Financial Statements
The Company has elected to provide the financial statements and related information specified in Item 18 in lieu of Item 17.

ITEM
Item 18:    FINANCIAL STATEMENTS

         Financial Statements
See pages F-1 to F-43.

ITEMpage F-1.
Item 19:    EXHIBITS

Exhibits

19.1  INDEX TO ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AUDITED
              FINANCIAL STATEMENTS

              
Index to Audited Financial Statements
Report of independent auditors                                      F-2

              
Consolidated balance sheets as of December 31, F-3
              20022006 and 2003

              2007
Consolidated statements of operationsincome for the years ended December 31, 2001, 20022005, 2006 and 2003                        F-5

              2007
Consolidated statements of shareholders'shareholders’ equity for the years ended December 31, 2001, 20022005, 2006 and 2003                        F-6

              2007
Consolidated statements of cash flows for the years ended December 31, 2001, 20022005, 2006 and 2003                        F-7

              2007
Notes to consolidated financial statements                          F-8
19.2
Index to Exhibits


        19.2  INDEX TO EXHIBITS

1.1           Memorandum of Association of Asia Pacific Wire & Cable Corporation
              Limited (incorporated by reference to Exhibit 1.1 of the Company's
              Form 20-F filed with the Securities and Exchange Commission on
              June 21, 2001)

1.2           Bye-Laws of Asia Pacific Wire & Cable Corporation Limited
              (incorporated by reference to Exhibit 2.1 of the Company's Form
              20-F filed with the Securities and Exchange Commission on June 21,
              2001)

4.1           Composite Services Agreement (incorporated by reference to Exhibit
              3.1 of the Company's Form 20-F filed with the Securities and
              Exchange Commission on June 21, 2001)

4.2           Indemnification Agreement dated November 6, 1996 (incorporated by
              reference to Exhibit 10.2 of the Company's Form F-1 filed with the
              Securities and Exchange Commission on November 13, 1996)

                                       76


4.3           Agreement for the Sale and Purchase of (i) Shares in Crown Century
              Holdings Limited and (ii) Shareholder's Loan (incorporated by
              reference to Exhibit 5.1 of the Company's Form 20-F filed with the
              Securities and Exchange Commission on July 1, 2002)

4.4           Settlement Agreement between Set Top International Inc. (Party A)
              and Pacific Electric Wire and Cable Co., Ltd. and Asia Pacific
              Wire and Cable Corporation Ltd. (Party B) [Translation]

8             List of significant subsidiaries (see Note 1 to the consolidated
              financial statements)

10            Certification under Section 906 of the Sarbanes-Oxley Act.

16.2          Code of Ethics.








                                       77
1.1 
Memorandum of Association of Asia Pacific Wire & Cable Corporation Limited (incorporated by reference to Exhibit 1.1 of the Company’s Form 20-F filed with the Securities and Exchange Commission on June 21, 2001).
1.2 
Amended and Restated Bye-Laws of Asia Pacific Wire & Cable Corporation Limited (incorporated by reference to Exhibit 1.2 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
3.1 
Shareholders’ Agreement dated June 28, 2007 (incorporated by reference to Exhibit 3.1 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
4.1 
Composite Services Agreement (incorporated by reference to Exhibit 3.1 of the Company’s Form 20-F filed with the Securities and Exchange Commission on June 21, 2001).
4.2 
Indemnification Agreement dated November 6, 1996 (incorporated by reference to Exhibit 10.2 of the Company’s Form F-1 filed with the Securities and Exchange Commission on November 13, 1996).
4.3 
Agreement for the Sale and Purchase of (i) Shares in Crown Century Holdings Limited and (ii) Shareholder’s Loan (incorporated by reference to Exhibit 5.1 of the Company’s Form 20-F filed with the Securities and Exchange Commission on July 1, 2002).
4.4 
Settlement Agreement between Set Top International Inc. (Party A) and Pacific Electric Wire and Cable Co., Ltd. and Asia Pacific Wire and Cable Corporation Ltd. (Party B) (Translation) (incorporated by reference to Exhibit 4.4 of the Company’s Form 20-F filed with the Securities and Exchange Commission on July 7, 2004).
4.5 
Settlement Agreement between Asia Pacific Wire & Cable Corporation, Ltd. and Sino-JP Fund Co., Ltd. (incorporated by reference to Exhibit 4.5 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
4.6 
Termination Agreement between Pacific Electric Wire & Cable Co., Ltd. and Chiao Tung Bank (incorporated by reference to Exhibit 4.6 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).


8 
List of significant subsidiaries (see Note 1 to the consolidated financial statements).
11 
Code of Ethics (incorporated by reference to Exhibit 11 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
12.1 
Certification of Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act.
12.2 
Certification of Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act.
13.1 
Certification by Chief Executive Officer of periodic financial report pursuant to 18 U.S.C. Section 1350, as mandated by Section 906 of the Sarbanes-Oxley Act.
13.2 
Certification by Chief Financial Officer of periodic financial report pursuant to 18 U.S.C. Section 1350, as mandated by Section 906 of the Sarbanes-Oxley Act.
15(a) 
Audit Committee Charter (incorporated by reference to Exhibit 15(a) of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).


SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this annual reportAnnual Report to be signed on its behalf by the undersigned, thereunto duly authorized.


                                    ASIA PACIFIC WIRE & CABLE
                                    CORPORATION LIMITED



                                    /s/ Jeffrey Too
                                    -------------------------------
Date:  July 7, 2004                 Jeffrey Too
                                    Chief Executive Officer






            CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

                                  CERTIFICATION

         I, Jeffrey Too, Chief Executive Officer of 

ASIA PACIFIC WIRE & CABLE
CORPORATION LIMITED
Date: June 26, 2008
/s/ Yuan Chun Tang
Yuan Chun Tang
Chief Executive Officer


Audited Financial Statements
Asia Pacific Wire & Cable Corporation Limited certify that:

         1.   I have reviewed this annual report on Form 20-F
As of Asia Pacific
              Wire & Cable Corporation Limited;

         2.   Based on my knowledge, this annual report does not contain any
              untrue statement of a material fact or omit to state a material
              fact necessary to make the statements made, in light of the
              circumstances under which such statements were made, not
              misleading with respect to the period covered by this annual
              report;

         3.   Based on my knowledge, the financial statementsDecember 31, 2006 and other
              financial information included in this annual report, fairly
              present in all material respects the financial condition, results
              of operations2007
Years ended December 31, 2005, 2006 and cash flows of the registrant as of, and for, the
              periods presented in this annual report;

         4.   The registrant's other certifying officers and I are responsible
              for establishing and maintaining disclosure controls and
              procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
              for the registrant and have:

              a)   designed such disclosure controls and procedures to ensure
                   that material information relating to the registrant,
                   including its consolidated subsidiaries, is made known to us
                   by others within those entities, particularly during the
                   period in which this annual report is being prepared;

              b)   evaluated the effectiveness of the registrant's disclosure
                   controls and procedures as of a date within 90 days before
                   the filing date of this annual report (the "Evaluation
                   Date"); and

              c)   presented in this annual report our conclusions about the
                   effectiveness of the disclosure controls and procedures based
                   on our evaluation as of the Evaluation Date;

         5.   The registrant's other certifying officers and I have disclosed,
              based on our most recent evaluation, to the registrant's auditors
              and the audit committee of the registrant's board of directors (or
              persons performing the equivalent functions):

              a)   all significant deficiencies in the design or operation of
                   internal controls which could adversely affect the
                   registrant's ability to record, process, summarize and report
                   financial data and have identified for the registrant's
                   auditors any material weaknesses in internal controls; and


              b)   any fraud, whether or not material, that involves management
                   or other employees who have a significant role in the
                   registrant's internal controls;

         6.   The registrant's other certifying officers and I have indicated in
              this annual report whether there were significant changes in
              internal controls or in other factors that could significantly
              affect internal controls subsequent to the date of our most recent
              evaluation, including any corrective actions with regard to
              significant deficiencies and material weaknesses.



Date:    July 7, 2004                        /s/ Jeffrey Too
                                             ----------------------------
                                             Jeffrey Too
                                             Chief Executive Officer







            CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

                                  CERTIFICATION

         I, Aaron Chik, Chief Financial Officer of Asia Pacific Wire & Cable
Corporation Limited, certify that:

         1.   I have reviewed this annual report on Form 20-F of Asia Pacific
              Wire & Cable Corporation Limited;

         2.   Based on my knowledge, this annual report does not contain any
              untrue statement of a material fact or omit to state a material
              fact necessary to make the statements made, in light of the
              circumstances under which such statements were made, not
              misleading with respect to the period covered by this annual
              report;

         3.   Based on my knowledge, the financial statements and other
              financial information included in this annual report, fairly
              present in all material respects the financial condition, results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this annual report;

         4.   The registrant's other certifying officers and I are responsible
              for establishing and maintaining disclosure controls and
              procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
              for the registrant and have:

              d)   designed such disclosure controls and procedures to ensure
                   that material information relating to the registrant,
                   including its consolidated subsidiaries, is made known to us
                   by others within those entities, particularly during the
                   period in which this annual report is being prepared;

              e)   evaluated the effectiveness of the registrant's disclosure
                   controls and procedures as of a date within 90 days before
                   the filing date of this annual report (the "Evaluation
                   Date"); and

              f)   presented in this annual report our conclusions about the
                   effectiveness of the disclosure controls and procedures based
                   on our evaluation as of the Evaluation Date;

         5.   The registrant's other certifying officers and I have disclosed,
              based on our most recent evaluation, to the registrant's auditors
              and the audit committee of the registrant's board of directors (or
              persons performing the equivalent functions):

              a)   all significant deficiencies in the design or operation of
                   internal controls which could adversely affect the
                   registrant's ability to record, process, summarize and report
                   financial data and have identified for the registrant's
                   auditors any material weaknesses in internal controls; and


              b)   any fraud, whether or not material, that involves management
                   or other employees who have a significant role in the
                   registrant's internal controls;

         6.   The registrant's other certifying officers and I have indicated in
              this annual report whether there were significant changes in
              internal controls or in other factors that could significantly
              affect internal controls subsequent to the date of our most recent
              evaluation, including any corrective actions with regard to
              significant deficiencies and material weaknesses.



Date:     July 7, 2004                          /s/ Aaron Chik
                                                -----------------------
                                                Aaron Chik
                                                Chief Financial Officer




















Audited Financial Statements
ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED


31 December 2003

























2007



INDEX TO FINANCIAL STATEMENTS
CONTENTS


                                                                            Page


Report of independent auditors                                               F-2


Consolidated balance sheets as of December 31, 2002 and 2003                 F-3


Consolidated statements of operations for the years ended
    December 31, 2001, 2002 and 2003                                         F-5


Consolidated statements of shareholders' equity for the years ended
    December 31, 2001, 2002 and 2003                                         F-6


Consolidated statements of cash flows for the years ended
    December 31, 2001, 2002 and 2003                                         F-7


Notes to consolidated financial statements                                   F-8




                                      F-1

Page
Report of independent registered public accounting firm
F-2
Consolidated balance sheets as of December 31, 2006 and 2007
F-3
Consolidated statements of operations for the years ended December 31, 2005, 2006 and 2007
F-5
Consolidated statements of shareholders’ equity for the years ended December 31, 2005, 2006 and 2007
F-6
Consolidated statements of cash flows for the years ended December 31, 2005, 2006 and 2007
F-7
Notes to consolidated financial statements
F-8


REPORT OF INDEPENDENT AUDITORS




To the Shareholders of
Asia Pacific Wire & Cable Corporation Limited




         REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheets of Asia Pacific Wire & Cable Corporation Limited and subsidiaries (the ‘‘Company’’) as of December 31, 20022006 and 2003,2007, and the related consolidated statements of operations, shareholders'shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2003.2007. These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) auditing standards generally
accepted in the United States of America.. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesstatements, assessing the accounting principles used and significant estimates made by management,m anagement, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Asia Pacific Wire & Cable Corporation Limited and subsidiaries atas of December 31, 20022006 and 2003,2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2003,2007, in conformity with accounting principles generally accepted in the United States of America.












                                               Ernst & Young
                                               Certified Public Accountants

Mazars Moores Rowland LLP
Certified Public Accountants
Singapore
June 9, 2004


                                      F-2
12, 2008


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In
(In thousands of US Dollars, except share data)
                                                             DECEMBER 31,
                                                        2002             2003
ASSETS

Current assets:
   Cash and cash equivalents                         $  14,431        $  25,032
   Short-term bank deposits                              3,892            3,567
   Accounts receivable (note 9)                         53,740           58,867
   Amounts due from related parties (note 15)            4,675            3,108
   Inventories (note 9)
     Distributed products                                2,750            5,819
     Finished products                                  15,188           18,172
     Products in process                                 7,634            9,703
     Raw materials and supplies                         13,948           12,002
                                                     ---------        ---------
                                                        39,520           45,696

   Investments (note 5)                                    541            1,041
   Deferred tax assets (note 10)                           657              774
   Other current assets                                  3,332            2,785
                                                     ---------        ---------

Total current assets                                   120,788          140,870
                                                     ---------        ---------

Property, plant and equipment:
   Land                                                  4,017            4,300
   Land use rights                                       2,153            2,147
   Buildings                                            33,191           37,282
   Machinery and equipment                              76,652           84,867
   Motor vehicles                                        2,544            2,899
   Office equipment                                      6,004            6,581
                                                     ---------        ---------
                                                       124,561          138,076

   Accumulated depreciation and amortization           (56,311)         (70,115)
                                                     ---------        ---------

                                                        68,250           67,961
                                                     ---------        ---------

Other assets:
   Long term investments (note 5)                        2,412            2,441
   Investment in equity investees (note 19)              8,735           10,249
   Goodwill (note 4)                                     7,607            8,324
   Other assets                                            168              218
   Deferred tax assets (note 10)                           233            2,113
                                                     ---------        ---------

                                                        19,155           23,345
                                                     ---------        ---------

Total assets                                         $ 208,193        $ 232,176
                                                     =========        =========



 
December 31,
 
2006
2007
ASSETS
 
 
Current assets:
 
 
Cash and cash equivalents
$
24,664
$
29,127
Unrestricted short-term bank deposits (note 5)
2,003
1,861
Restricted short-term bank deposits (note 5)
13,587
18,714
Accounts receivable, net of allowance for doubtful accounts of $9,290 and $11,485 at December 31, 2006 and 2007, respectively (note 11)
120,422
145,902
Amounts due from related parties (note 17)
8,534
8,638
Inventories, net of allowance for inventories of $3,806 and $2,836 at December 31, 2006 and 2007, respectively (note 11)
 
 
Distributed products
3,390
3,897
Finished products
45,624
47,350
Products in process
22,576
26,702
Raw materials and supplies
37,423
27,482
 
109,013
105,431
Investments (note 7)
232
2,555
Deferred tax assets (note 12)
490
2,481
Prepaid expenses
10,612
5,601
Other current assets
1,995
2,262
Total current assets
291,552
322,572
Property, plant and equipment:
 
 
Land
4,514
6,230
Land use rights
1,710
1,827
Buildings
40,332
45,374
Machinery and equipment
98,325
116,278
Motor vehicles
3,150
3,657
Office equipment
8,953
10,537
Assets held for development
7,109
6,824
 
164,093
190,727
Accumulated depreciation and amortization
(106,749
) 
(133,209
) 
 
57,344
57,518
Other assets:
 
 
Long term investments (note 7)
533
650
Investment in equity investees (note 21)
4,238
4,246
Goodwill (note 6)
8,801
8,801
Other assets
58
297
Deferred tax assets (note 12)
2,039
2,032
 
15,669
16,026
Total assets
$
364,565
$
396,116
The accompanying notes are an integral part of these consolidated financial statements.

                                      F-3



ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In
(In thousands of US Dollars, except share data)

                                                                             DECEMBER 31,
                                                                        2002             2003

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Bank loans and overdrafts (note 6)                                $  36,808         $  22,339
   Accounts payable                                                     12,767            16,508
   Accrued expenses                                                      2,408             2,562
   Amounts due to related parties (note 15)                             16,052            22,515
   Short-term loans from a related party (note 15)                       2,251             1,963
   Income taxes                                                          1,450             1,699
   Current portion of long-term debt (note 7)                            1,125               -
   Deferred income taxes (note 10)                                         -                 449
   Other current liabilities                                             1,481             1,694
                                                                     ---------         ---------

Total current liabilities                                               74,342            69,729

Long-term debt, less current portion (note 7)                              675             1,654

Long-term debt from related parties, less
   current portion (note 15)                                             8,822             7,824

Other liabilities                                                          232               197

Deferred income taxes (note 10)                                          2,336             1,774
                                                                     ---------         ---------

Total liabilities                                                       86,407            81,178
                                                                     ---------         ---------

Minority interests                                                      29,739            43,822

Commitments and contingencies (notes 6 and 12)

Shareholders' equity (note 8):
   Common stock, $0.01 par value:
     Authorized shares - 20,000,000 shares
     Issued and outstanding shares - 13,830,769
       in 2001 and 2002                                                    138               138
     Additional paid-in capital                                        111,541           111,541
   Retained earnings                                                    11,032            21,032
   Accumulated other comprehensive income (loss)                       (30,664)          (25,535)
                                                                     ---------         ---------

Total shareholders' equity                                              92,047           107,176
                                                                     ---------         ---------

Total liabilities and shareholders' equity                           $ 208,193         $ 232,176
                                                                     =========         =========


 
December 31,
 
2006
2007
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
Current liabilities:
 
 
Bank loans and overdrafts (note 8)
$
95,986
$
102,174
Accounts payable
31,114
32,325
Accrued expenses
7,522
7,896
Amounts due to related parties (note 17)
33,306
31,801
Short-term loans from related parties (note 17)
2,632
1,972
Income tax liabilities (note 12)
8,308
8,782
Current portion of long-term debt (note 9)
1,577
—
Deferred tax liabilities (note 12) 
516
561
Other current liabilities
2,507
4,652
Total current liabilities
183,468
190,163
Other liabilities
387
578
Deferred tax liabilities (note 12) 
728
698
Total liabilities
184,583
191,439
Minority interest
61,217
67,894
Commitments and contingencies (notes 14 and 16)
 
 
Shareholders’ equity (note 10):
 
 
Common stock, $0.01 par value:
 
 
Authorized shares – 20,000,000 shares Issued and outstanding shares – 13,830,769 in 2006 and 2007
138
138
Additional paid-in capital
111,541
111,541
Retained earnings
26,524
29,468
Accumulated other comprehensive loss (note 13)
(19,438
) 
(4,364
) 
Total shareholders’ equity
118,765
136,783
Total liabilities and shareholders’ equity
$
364,565
$
396,116
The accompanying notes are an integral part of these consolidated financial statements.

                                      F-4


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In
(In thousands of US Dollars, except share data)

                                                                                 Year ended December 31,
                                                                     2001                2002                 2003

Net sales
   Manufactured products                                       $    149,018         $    185,742         $    192,293
   Distributed products                                              33,325               24,303               15,187
   Sales, delivery and installation of wires and cables              14,968               31,134                3,919
                                                               ------------         ------------         ------------
                                                                    197,311              241,179              211,399

Costs of sales (purchases from related parties
  amounted to $51,469 in 2001,  $81,910 in 2002
  and $53,141 in 2003)                                             (177,352)            (206,435)            (178,239)
                                                               ------------         ------------         ------------

Gross profit                                                         19,959               34,744               33,160

Other operating income                                                  -                    -                  1,336
Selling, general and administrative expenses                        (15,616)             (19,282)             (20,351)
Goodwill written off                                                   (506)                 -                    -
Impairment loss                                                         -                 (1,559)                 -
                                                               ------------         ------------         ------------
Income from operations                                                3,837               13,903               14,145

Exchange (loss) gain                                                    (81)                 (16)               4,161
Interest income                                                         901                  715                  285
Interest expense                                                     (4,074)              (2,214)              (1,407)
Share of net (loss) gain of equity investees                         (2,535)              (4,090)               1,475
Gain on share issuance by subsidiaries and affiliates                   -                  1,011                  -
Gain (loss) on sale of investment                                       743                 (557)                (885)
Others                                                                1,619                2,502                 (214)
                                                               ------------         ------------         ------------
Income before income taxes and
  minority interests                                                    410               11,254               17,560

Income taxes (note 10)                                                1,411               (4,683)              (2,477)
Minority interests                                                   (1,730)              (1,780)              (5,083)
                                                               ------------         ------------         ------------
Net income                                                               91                4,791               10,000
                                                               ============         ============         ============

Basic and diluted income per share                                     0.01                 0.35                 0.72
                                                               ============         ============         ============

Basic and diluted weighted average
    common shares outstanding                                    13,830,769           13,830,769           13,830,769
                                                               ============         ============         ============


 
Year ended December 31,
 
2005
2006
2007
Net sales
 
 
 
Manufactured products
$
301,516
$
439,280
$
494,805
Distributed products
20,055
12,416
10,783
Sales, delivery and installation of wires and cables
15,691
16,421
5,253
 
337,262
468,117
510,841
Costs of sales (purchases from related parties amounted to $55,619 in 2005, $75,338 in 2006 and $69,240 in 2007)
 
 
 
Manufactured products
(264,823
) 
(380,792
) 
(450,134
) 
Distributed products
(19,421
) 
(11,309
) 
(10,703
) 
Sales, delivery and installation of wires and cables
(16,066
) 
(16,705
) 
(5,600
) 
(Allowance) recovery for inventory reserve
(346
) 
(2,017
) 
1,272
 
(300,656
) 
(410,823
) 
(465,165
) 
Gross profit
36,606
57,294
45,676
Selling, general and administrative expenses
(25,536
) 
(26,195
) 
(26,156
) 
Allowance for doubtful accounts
(1,017
) 
(1,221
) 
(3,295
) 
Impairment of long-lived assets
—
(196
) 
—
Income from operations
10,053
29,682
16,225
Exchange (loss) gain
(3,137
) 
5,464
864
Interest income
680
705
1,517
Interest expense
(3,427
) 
(5,886
) 
(7,580
) 
Share of net gain of equity investees
170
73
124
Impairment of investments
(3,223
) 
(86
) 
(95
) 
(Loss) gain on sale of investments
(259
) 
(729
) 
35
Gain on liquidation of subsidiary
—
1,801
—
Other income
829
1,536
2,070
Income before income taxes and minority interests
1,686
32,560
13,160
Income taxes (note 12)
(3,860
) 
(10,257
) 
(6,298
) 
Minority interests
(2,783
) 
(9,330
) 
(2,029
) 
Net (loss) income
$
(4,957
) 
$
12,973
$
4,833
Basic and diluted (loss) income per share
$
(0.36
) 
$
0.94
$
0.35
Basic and diluted weighted average common shares outstanding
13,830,769
13,830,769
13,830,769
The accompanying notes are an integral part of these consolidated financial statements.


                                      F-5


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS'SHAREHOLDERS’ EQUITY

(In
(In thousands of US Dollars, except share data)

                                                                                                   Accumulated
                                                                Additional                               other
                                                  Common           paid-in         Retained      comprehensive
                                                   stock           capital         earnings      income (loss)          Total

Balance at December 31, 2000                   $     138         $ 111,541        $   6,150        $ (33,155)        $  84,674

Net income for 2001                                  -                 -                 91              -                  91

Currency translation adjustment                      -                 -                -             (4,024)           (4,024)

Unrealized losses on available-for-sale
  securities - net of income tax of $9               -                 -                -                (23)              (23)
                                                                                                                     ---------
Comprehensive loss                                                                                                      (3,956)
                                               ---------         ---------        ---------        ---------         ---------
Balance at December 31, 2001                   $     138         $ 111,541        $   6,241        $ (37,202)        $  80,718

Net income for 2002                                  -                 -              4,791              -               4,791

Currency translation adjustment                      -                 -                -              6,919             6,919

Unrealized losses on available-for-sale
  securities - net of income tax of $10              -                 -                -               (381)             (381)
                                                                                                                     ---------
Comprehensive income                                                                                                    11,329
                                               ---------         ---------        ---------        ---------         ---------
Balance at December 31, 2002                   $     138         $ 111,541        $  11,032        $ (30,664)        $  92,047

Net income for 2003                                  -                 -             10,000              -              10,000

Currency translation adjustment                      -                 -                -              4,754             4,754

Losses realized on disposal of
  available-for-sale securities                      -                 -                -                (89)              (89)

Unrealized gains on available-for-sale
  securities - net of income tax of $15              -                 -                -                464               464
                                                                                                                     ---------
Comprehensive income                                 -                 -                                                15,129
                                               ---------         ---------        ---------        ---------         ---------
Balance at December 31, 2003                   $     138         $ 111,541        $  21,032        $ (25,535)        $ 107,176
                                               =========         =========        =========        =========         =========

 
Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Total
Balance at January 1, 2005
$
138
$
111,541
$
18,508
$
(23,041
) 
$
107,146
Net loss for 2005
—
—
(4,957
) 
—
(4,957
) 
Currency translation adjustment
—
—
—
(4,062
) 
(4,062
) 
Unrealized loss on available-for-sale securities – net of income tax of $286
—
—
—
(505
) 
(505
) 
Comprehensive loss
 
 
 
 
(9,524
) 
Balance at December 31, 2005
138
111,541
13,551
(27,608
) 
97,622
Net income for 2006
—
—
12,973
—
12,973
Currency translation adjustment
—
—
—
9,822
9,822
Less: reclassification adjustment for realized translation gain for liquidation of subsidiary included in net income, net of income tax of $556
—
—
—
(1,245
) 
(1,245
) 
Gain realized on sale of available-for-sale securities – net of income tax of $258
—
—
—
(343
) 
(343
) 
Unrealized loss on available-for-sales securities – net of income tax of $92
—
—
—
(64
) 
(64
) 
Comprehensive income
 
 
 
 
21,143
Balance at December 31, 2006
138
111,541
26,524
(19,438
) 
118,765
Net income for 2007
—
—
4,833
—
4,833
Currency translation adjustment
—
—
—
15,179
15,179
Pension benefits recognized under SFAS 158 (note 18)
—
—
—
(71
) 
(71
) 
Adoption of FIN 48 effective January 1, 2007 (note 12)
—
—
(1,889
) 
—
(1,889
) 
Gain realized on sale of available-for-sale securities – net of income tax of $6
—
—
—
(28
) 
(28
) 
Unrealized loss on available-for-sale securities – net of income tax of $6
—
—
—
(6
) 
(6
) 
Comprehensive income
 
 
 
 
18,018
Balance at December 31, 2007
$
138
$
111,541
$
29,468
$
(4,364
) 
$
136,783
The accompanying notes are an integral part of these consolidated financial statements.



                                       F-6


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In
(In thousands of US Dollars, except share data)

                                                                                     Year ended December 31,
                                                                             2001             2002             2003

Operating activities:
   Net income                                                              $     91         $  4,791         $ 10,000
   Adjustments to reconcile net income to net
      cash provided by operating activities:
     Gain on disposal of property, plant and equipment                          -                 (7)          (1,336)
     Depreciation                                                            11,210            9,805            9,217
     Goodwill written off                                                       506              -                -
     Deferred income taxes                                                   (2,247)           1,867           (2,110)
     Provision for doubtful accounts                                           (255)             968              902
     Provision for slow-moving inventories                                    1,205              847               77
     Undistributed loss of equity investees                                   2,535            4,090           (1,475)
     Impairment loss                                                            -              1,559              -
     Gain on share issuance by subsidiaries and affiliates                      -             (1,011)             -
     (Gain) loss on sale of investment                                         (743)             557              885
     Minority interests                                                       1,730            1,780            5,083
     Foreign currency translation adjustment                                    447            5,192           (1,405)
     Changes in operating assets and liabilities
         net of acquisitions of businesses:
           Accounts receivable                                               (4,075)          (8,836)          (2,637)
           Inventories                                                        4,542           (7,746)          (6,253)
           Other current assets                                              (1,662)           3,024              547
           Amounts due to related parties                                       715            1,404            8,030
           Accounts payable, accrued expenses and other liabilities          (2,958)           1,065            4,321
                                                                           --------         --------         --------
Net cash provided by operating activities                                    11,041           19,349           23,846

Investing activities:
   Decrease in short-term bank deposits                                       4,274            3,221              603
   Investment in equity investees                                            (2,857)          (4,018)            (183)
   Advance to equity investees                                               (1,380)            (353)             -
   Purchases of property, plant and equipment                                (9,116)         (11,135)          (4,877)
   Proceeds from disposal of property, plant and equipment                    4,047              266            2,147
   Acquisition of additional investment in subsidiary                        (1,341)          (1,998)          (1,091)
   Proceeds from disposal of investment                                         743              -              6,013
   Disposal of other assets                                                      44              -                 81
   Purchases of other assets                                                    -               (364)            (218)
   Investment in long-term investments                                          (97)            (197)             -
                                                                           --------         --------         --------
Net cash (used in) provided by investing activities                          (5,683)         (14,578)           2,475

Financing activities:
   Additions of loans from related parties                                      -                459              -
   Repayments of loans from related parties                                  (4,276)             -               (288)
   Additions of long-term debt                                                8,223              -                -
   Repayments of long-term debt                                              (7,598)          (6,619)          (1,750)
   Repayments of bank loans                                                 (20,956)          (5,719)         (65,884)
   Increase in bank loans                                                    10,144            7,051           51,472
   Net decrease in overdrafts                                                  (917)             (50)             (57)
                                                                           --------         --------         --------
Net cash used in financing activities                                       (15,380)          (4,878)         (16,507)

Effect of exchange rate changes on cash and cash equivalents                   (371)             297              787
                                                                           --------         --------         --------
Net (decrease) increase in cash and cash equivalents                        (10,393)             190           10,601
Cash and cash equivalents at beginning of year                               24,634           14,241           14,431
                                                                           --------         --------         --------
Cash and cash equivalents at end of year                                   $ 14,241         $ 14,431         $ 25,032
                                                                           ========         ========         ========

 
Year ended December 31,
 
2005
2006
2007
Operating activities:
 
 
 
Net (loss) income
$
(4,957
) 
$
12,973
$
4,833
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
 
 
 
Loss (gain) on disposal of property, plant and equipment
386
(136
) 
(802
) 
Depreciation
9,429
8,989
9,079
Deferred income taxes
(324
) 
(423
) 
(1,969
) 
Allowance for doubtful accounts
1,017
1,221
3,295
Allowance (recovery) for inventory reserve
346
2,017
(1,272
) 
Share of net gain of equity investees
(170
) 
(73
) 
(124
) 
Impairment of long lived assets
—
196
—
Impairment of investments
3,223
86
95
Loss (gain) on sale of investments
259
729
(35
) 
Gain on liquidation of subsidiary
—
(1,801
) 
—
Pension benefits recognized under SFAS 158
—
—
(71
) 
Adoption of FIN 48 as of January 1, 2007
—
—
(1,889
) 
Minority interests
2,783
9,330
2,029
Foreign currency translation adjustment
5,211
(1,192
) 
(7,662
) 
Changes in operating assets and liabilities net of acquisitions of business:
 
 
 
Accounts receivable
(3,357
) 
(35,809
) 
(13,613
) 
Inventories
3,037
(52,017
) 
4,854
Other current assets
(66
) 
(6,739
) 
2,372
Amounts due to related parties
3,405
3,827
(1,609
) 
Accounts payable, accrued expenses and other liabilities
6
15,892
4,395
Net cash provided by (used in) operating activities
20,228
(42,930
) 
1,906
Investing activities:
 
 
 
Decrease in restricted short-term bank deposits
(10,925
) 
(1,056
) 
(3,156
) 
(Decrease) increase in unrestricted short-term bank deposits
(3,867
) 
8,619
518
Purchases of property, plant and equipment
(4,478
) 
(5,202
) 
(2,650
) 
Proceeds from disposal of property, plant and equipment
743
574
1,414
Acquisition of additional investment in subsidiary
—
(477
) 
—
Proceeds from disposal of investments
—
626
65
Disposal of other assets
—
190
—
Purchases of other assets
(140
) 
—
(239
) 
Net cash (used in) provided by investing activities
(18,667
) 
3,274
(4,048
) 
Financing activities:
 
 
 
Repayments of long-term debt
(19
) 
(5,026
) 
(2,237
) 
Repayments of bank loans
(10,806
) 
(19,048
) 
(21,671
) 
Increase in bank loans
12,506
65,516
28,275
Net (decrease) increase in overdrafts
(537
) 
354
(416
) 
Net cash provided by financing activities
1,144
41,796
3,951
Effect of exchange rate changes on cash and cash equivalents
(461
) 
1,776
2,654
Net increase in cash and cash equivalents
2,244
3,916
4,463
Cash and cash equivalents at beginning of year
18,504
20,748
24,664
Cash and cash equivalents at end of year
$
20,748
$
24,664
$
29,127
The accompanying notes are an integral part of these consolidated financial statements.

                                      F-7


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES

         The Company,
1. 
ORGANIZATION AND PRINCIPAL ACTIVITIES
Asia Pacific Wire & Cable Corporation Limited (‘‘APWC’’ or the ‘‘Company’’), which is a subsidiary of Pacific Electric Wire & Cable Co., Ltd. ("PEWC"(‘‘PEWC’’), a Taiwanese company, was incorporated as an exempted company in Bermuda on September 19, 1996 under the Companies Act 1981 of Bermuda (as amended) for the purpose of acting as a holding company. PEWC is a
         company listed on the Taiwan Securities Exchange andThe Company is principally engaged in owning operating companies engaged in the power cable, telecommunication cable, enameled wire and electronic cable industry.
The Company’s operating subsidiaries (the ‘‘Operating Subsidiaries’’) are engaged in the manufacturing and distribution of telecommunications, power cable and enameled wire products in Singapore, Thailand, Australia, the People’s Republic of China (‘‘PRC’’) and other markets in the Asia Pacific region. Major customers of the Operating Subsidiaries include government organizations, electric contracting firms, electrical dealers, and wire and cable industry.

         factories.
Background on the Pledge Agreement to Swiss Re
As previously disclosed in 2002,the Company’s 2006 Financial Statements, PEWC and Swiss Re entered into an Amended and Restated Letter of Credit and Reimbursement Agreement (the "LC Agreement"‘‘LC Agreement’’), pursuant to which Swiss Re issued a letter of credit to satisfy certain credit and loan obligations of PEWC'sPEWC’s subsidiary, Pacific USA Holdings Corp. ("PUSA"(‘‘PUSA’’), to PUSA'sPUSA’s lenders. Under the LC Agreement, Swiss Re issued a Standby Letter of Credit in favor of Standard Chartered Bank, Hong Kong Branch ("Standard"(‘‘Standard’’), in the total amount of $124,000$124 million (the "Letter‘‘Letter of Credit"Credit’’), conditioned upon the closing of a $120,000$120 million transaction between PUSA and Standard. As a condition to obtaining the letter of credit, in February 2002, PUSA, PEWC and Swiss Re finalized a Pledge Agreement ("(‘‘Pledge Agreement"Agreement’’), pursuant to which PUSAP USA pledged to Swiss Re shares representing approximately 50.4%53% of the equity of the Company (the "Pledged
         Shares"‘‘Pledged Shares’’), together with certain shares of other related entities. At that time PEWC iswas the ultimate beneficial owner of approximately 75.4% of the equity interest in the Company through its subsidiaries, Kinbong Holdings Limited ("Kinbong"(‘‘Kinbong’’) and PUSA.
PUSA Bankruptcy
As also previously disclosed in the 20022006 financial statements, in December 2002, PUSA filed a voluntary petition for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Because of the bankruptcy filing, in December 2002, Swiss Re paid to Standard $90,600$90.6 million under the terms of the Letter of Credit as a result of which Swiss Re became entitled, under the terms of the Pledge Agreement, to foreclose on the Pledged Shares of the Company.

         Pending Litigations

         
Litigation
Following an internal investigation, it was discovered by the Boards of both PEWC and the Company that an ex-director of PEWC (‘‘ex-director’’), without the authorization of either Board, had separately negotiated a transaction whereby the Pledged Shares of the Company held by PUSA and the shares of the Company held by Kinbong would be transferred to Set Top International Inc. ("(‘‘Set Top"Top’’), a British Virgins Islands company. The terms of the transaction were initially withheld from and, subsequently, misrepresented to the Boards of PEWC and the Company by the ex-director, together with certain of his associates.
The Boards of both PEWC and the Company concluded that the ex-director hashad an undisclosed interest in, or control position over, Set Top, and that the terms he agreed to with Set Top arewere significantly less favorable to the companies than those that would have been available in a bona fide transaction with an unaffiliated party.


                                      F-8



ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)

1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         The Boards of both PEWC and the Company commissioned a Special
         Committee which investigated the activities of the ex-director and
         certain of his associates in connection with the Set Top transaction.
         Based upon the conclusion of the Special Committee, the Boards of both
         PEWC and the Company have proceeded to take the necessary actions to
         remove the ex-director from his managerial positions in both companies.

         
1. 
ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)
On December 4, 2003, PEWC and the Company filedcommenced an action in U.S.the United States District Court for the Southern District of New York alleging among
         other things that(the ‘‘Southern District’’) against the transaction withfollowing parties: Set Top, was invalidKinbong, Tom Ching-Yun Tung, Frank Wei-Feng Lin, Tai-Sheng Lien, Fu-Chuan Tsai, Fu-Nu Tsai, Yuan-Chun Hsu, Jack Takacs and seekingRobert Everett Wolin (collectively ‘‘Defendants’’). The Complaint alleged various causes of action, including fraud and conspiracy to commit fraud; violation of section 13(d) of the Securities Exchange Act; RICO violations under 18 USC § 1962; and breach of fiduciary duty.
The Southern District action did not progress to the discovery phase as the parties sought to agree to the terms of a temporary restraining order ("TRO"settlement agreement.    On July 2, 2004, the Company, PEWC and Set Top entered into a Settlement Agreement (the ‘‘Settlement Agreement’’) onpursuant to which PEWC agreed to pay Set Top's announcementTop $25 million (the ‘‘Settlement Amount’’).
Pursuant to the Settlement Agreement, the Company, PEWC and Set Top agreed to withdraw all claims in all litigation proceedings against each other, including the actions in New York, Singapore and Bermuda, and Set Top agreed to withdraw all of its intentionclaims in the PUSA bankruptcy proceedings. The parties have filed stipulations of discontinuance and/or dismissal for each of those actions.
In order to sell 50.4%implement the terms of the Company's shares in a public foreclosure
         sale on December 9, 2003. At a hearing on December 8, 2003, the
         District Court granted the request for a TRO, and prohibited the
         planned sale bySettlement Agreement, PEWC, Set Top from proceeding pendingand Asset Managers Co., Ltd. (‘‘AMC’’) entered into a hearing onShare Purchase Agreement and a motion
         for a preliminary injunction set for Decemberrelated Option Agreement dated September 15, 2003. At the hearing,2004, pursuant to which AMC agreed to pay to Set Top also sought injunctive relief against$25 million in exchange for all right, title and interest of Set Top in 10,074,102 shares of APWC. Following the closing of the 2004 Share Purchase Agreement, AMC designated Sino-JP Fund Co., Ltd. (‘‘Sino-JP’’) as an assignee of the Subject Shares and Sino-JP was registered as the record owner of the Subject Shares with the Company’s register.
As of December 31, 2004, Sino-JP held 10,074,102 shares, representing approximately 72.84% of the outstanding shares of Common Stock of the Company.
On September 14, 2005, PEWC exercised the repurchase option under the Option Agreement and reacquired 7,307,948 shares of the Common Stock, representing 52.84% of the total issued and outstanding Common Stock. As a result of the reacquisition by PEWC of majority control, PEWC indirectly held as of that date 7,664,615 shares of Common Stock, representing 55.4% of the total issued and outstanding shares of Common Stock and Sino-JP now held 2,766,154 shares of the Common Stock, representing 20% of the total issued and outstanding shares of Common Stock (the ‘‘Sino-JP Shares’’).
Subsequent to the 2004 Share Purchase Agreement, a number of disputes arose between Sino-JP and PEWC regarding the governance of the Company and Asia Pacific Wire & Cable General Holdings Ltd., a subsidiary ofother matters. Litigation was commenced in Bermuda, in which the Company to prevent an alleged looting ofwas also a party, and in Hong Kong, in which the Company throughwas not a party.
On June 28, 2007, the pledge of stock of four ofCompany entered into a comprehensive settlement and release agreement with Sino-JP, which dismissed and released all claims between the Company's subsidiaries in other loan
         transactions. On December 29, 2003, the District Court dissolved the
         TRO of December 8, 2003parties and denied Set Top's motion.

         Thereafter, Set Top re-noticed the foreclosure sale. PEWC and APWC
         again applied for a TROwhich put an end to prevent the sale.all related litigation. The renewed application
         was denied by both the District Court and the U.S. Court of Appeals for
         the Second Circuit. On March 10, 2004, Set Top held a foreclosure sale
         at the Dallas office of Baker & McKenzie and acquired for itself a
         purported beneficial interest of approximately 50.4% of the Company's
         shares for only $13,000. However, Set Top is not registered in Bermuda
         as a55% majority shareholder of the Company, PEWC, also entered into a settlement and accordingly does not have any right
         to act onrelease agreement with Sino-JP that terminated all disputes and litigation between those parties.
On June 28, 2007, SOF Investments, L.P. (‘‘SOF’’), a Delaware limited partnership controlled by MSD Capital, L.P. acquired the behalf of the Company.

         On March 19, 2004, Set Top filed an action in the District Court to
         restrain PEWC,Sino-JP Shares and entered into a shareholders’ agreement with the Company and allPEWC. The shares acquired constituted 20% of the Company's subsidiaries from
         impairing the valueissued and outstanding shares of the Company, by, among other things, disposing
         of shares or assets of the Company and seeking a TRO. That same day,
         the District Court denied Set Top's requested for a TRO and set a
         preliminary injunction hearing for March 30, 2004. Thereafter, Set Top
         requested an extension of time with respect to the hearing. The
         District Court postponed the preliminary injunction hearing without
         date.

         On April 6, 2004, Set Top filed its counterclaims. In its
         counterclaims, Set Top seeks, among other things, a deficiency judgment
         in the amount of $39,544, specific performance and/or damages for
         breach of contract against PEWC, and specific performance against the
         Company to compel registration of the Company's shares.

         On March 23, 2004, Set Top commenced an action in the High Court of
         Singapore against the Company seeking damages and an injunction
         restraining the Company from disposing of, diminishing in its name,
         dealing with, causing or permitting other parties in similar causes,
         the assets of the Company. The prohibition includes the Company's
         assets in particular the shares in and the assets of Charoong Thai Wire
         and Cable Public Company Limited and Asia Pacific Wire & Cable General
         Holdings Ltd.

         On March 24, 2004, the High Court of Singapore granted the request for
         injunctive relief until after the trial of the action or until further
         notice and ordered the Company to file an affidavit confirming all its
         assets, giving the value, location and details of all such assets.

         The grounds of Set Top's application for injunctive relief against the
         Company were premised on Set Top's purported ownership of a controlling
         interest in the Company and the alleged looting of the Company through
         the pledge of the stock of four of the Company's subsidiaries in loan
         transactions, substantially the same allegations and issues between the
         Company and Set Top in the proceedings in the U.S. District Court for
         the Southern District of New York.


                                      F-9



ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         On April 1, 2004, the Company filed an application to set aside the
         order of the High Court of Singapore of March 24, 2004 and that the
         Company be relieved from complying with the part of the order that
         requires the filing of an affidavit disclosing the Company's assets,
         pending the final disposal of the application.

         On April 2, 2004, pursuant to the Company's application, the High Court
         of Singapore suspended the order of March 24, 2004 with immediate
         effect and adjourned the hearing of the application to a later date to
         be fixed.

         On May 18, 2004, Set Top applied to the High Court of Singapore to join
         nine additional parties (collectively referred to as the "Singapore
         defendants"), including PEWC Singapore Co (Pte) Ltd, certain directors
         and senior management
1. 
ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)
The subsidiaries of the Company as defendants to the action and
         claimed the following relief:

         (a)  An injunction restraining the Singapore defendants from disposing
              of, diminishing in their names, dealing with, causing or
              permitting other parties in similar causes, the assets of the
              Company, in pursuance of an alleged conspiracy by the Singapore
              defendants to injure Set Top by unlawful means.

         (b)  Alternatively, an injunction restraining the Singapore defendants
              from disposing of, diminishing in their names, dealing with,
              causing or permitting other parties in similar causes, the assets
              of the Company, in pursuance of an alleged conspiracy by the
              Singapore defendants with the sole or predominant purpose of
              injuring Set Top.

         (c)  Further or alternatively, an injunction restraining the Company,
              PEWC Singapore Co (Pte) Ltd, and certain Singapore defendants from
              procuring or inducing the breach of the amended and restated
              letter of credit and reimbursement agreement dated September 21,
              2001 between Set Top and PEWC by the disposal of, the diminution
              in its name, the dealing with, causing or permitting other parties
              in similar causes, the assets of the Company.

         (d)  Further or alternatively, an injunction restraining PEWC Singapore
              Co (Pte) Ltd, from dishonestly assisting the breach of fiduciary
              duty owed by certain Singapore defendants by disposing of,
              diminishing in its name, dealing with, causing or permitting other
              parties in similar causes, the assets of the Company.

         (e)  Damages, payable by the Company to Set Top in respect of its
              infringement of Set Top's right to be registered as a holder of
              72.84% of the shares of the Company, payable by the Singapore
              defendants to Set Top for the loss and damage suffered by Set Top
              as a result of their conspiracy to injure Set Top by unlawful
              means and with the sole or predominant purpose of injuring Set
              Top, payable by the Company, PEWC Singapore Co (Pte) Ltd and
              certain Singapore defendants to Set Top for the loss and damage
              suffered by Set Top as a result of their inducement or procurement
              of the breach of the amended and restated letter of credit and
              reimbursement agreement dated September 21, 2001 by PEWC.

         (f)  A declaration that PEWC Singapore Co (Pte) Ltd holds the pledged
              share of Asia Pacific Wire & Cable General Holdings Ltd. for the
              Company as its constructive trustee.

         (g)  Interest on any damages awarded to Set Top at such rate and for
              such period as the High Court of Singapore may award.

         On May 24, 2004, Set Top filed and served its statement of claim with
         the High Court of Singapore.


                                      F-10

are set out below:

Place of incorporation and operations
Percentage of
Equity interest
 
2006
2007
The British Virgin Islands
 
 
Asia Pacific Wire & Cable General Holdings Ltd
100%
100%
PRC (APWC) Holding Ltd.
100%
100%
Samray Inc.
100%
100%
Siam (APWC) Holdings Ltd.
100%
100%
Moon View Ltd.
100%
100%
Trigent Investment Holdings Limited
100%
100%
Crown Century Holdings Ltd.
100%
100%
Singapore
 
 
Sigma Cable Company (Private) Limited (‘‘Sigma Cable’’)
98.3%
98.3%
Sino-Sin Trading Pte. Ltd. (‘‘Sino-Sin’’)
100%
100%
Sigma-Epan International Pte Ltd. (‘‘Sigma-Epan’’)
100%
100%
Singvale Pte Ltd (‘‘Singvale’’)
100%
100%
The People’s Republic of China
 
 
Ningbo Pacific Cable Co., Ltd. (‘‘Ningbo Pacific’’)
94.31%
94.31%
Shanghai Yayang Electric Co., Ltd. (‘‘Shanghai Yayang’’)
53.9%
54.41%
Shandong Pacific Fiber Optics Co.Ltd (‘‘SPFO’’)
51%
51%
Pacific Electric Wire & Cable (Shenzhen) Co., Ltd (‘‘PEWS’’)
100%
100%
Hong Kong
 
 
Crown Century Holdings Limited (‘‘CCH’’)
100%
100%
Australia
 
 
Australia Pacific Electric Cable Pty Limited (‘‘APEC’’)
98.53%
98.53%
Thailand
 
 
Charoong Thai Wire and Cable Public Company Limited
(‘‘Charoong Thai’’)
50.39%
50.93%
Siam Pacific Electric Wire & Cable Company Limited
(‘‘Siam-Pacific’’)
50.39%
50.93%
Pacific-Thai Electric Wire & Cable Company Limited    
(‘‘Pacific-Thai’’)
50.39%
50.93%
Hard Lek Limited (‘‘Hard Lek’’)
73.98%
73.98%
APWC (Thailand) Co., Ltd
95.66%
99.48%
PEWC (Thailand) Co., Ltd
95.66%
99.48%
Myanmar
 
 
Myanmar Sigma Cable Co., Ltd. (Not active)
78.59%
78.59%


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         On June 9, 2004, the Company filed an application to stay the Singapore
         proceedings on grounds of duplicity with the proceedings in the U.S.
         District Court for the Southern District of New York and for an order
         that Set Top provide security for the Company's costs of defending the
         Singapore proceedings up to the stage of the hearing of the Company's
         application to stay the Singapore proceedings. The Company's
         application for the provision of security for costs is scheduled for
         hearing on June 21, 2004. The Company's application for the stay of the
         Singapore proceeding is scheduled for hearing on July 12, 2004.

         Both PEWC and APWC intend to prosecute vigorously these actions, and
         PEWC will continue to seek to the regain clean title to the shares of
         APWC owned by it. However, there can be no assurance that the Company
         will prevail in these actions. Management is unable to make a
         meaningful estimate of the amount or range of loss that could result
         from an unfavorable outcome of the pending litigations.

         While these matters are being resolved, PEWC is able to elect the
         majority of the members of the Company's Board of Directors and has the
         power to determine the outcome of other actions requiring the approval
         of the shareholders.

         The Company engages in transactions in the ordinary course of business
         with PEWC. Both the Company and PEWC have entered into a composite
         services agreement dated November 7, 1996 (the "Composite Services
         Agreement") as described in Note 15. However, the Company is unable to
         predict whether PEWC would, at some future date, seek to limit the
         business it conducts with the Company pursuant to the terms of the
         Composite Services Agreement either because PEWC's controlling interest
         in the Company had been effectively transferred to Set Top or for some
         other reason.

         The Company's operating subsidiaries (the "Operating Subsidiaries") are
         engaged in the manufacturing and distribution of telecommunications and
         power cable and enameled wire products in Singapore, Thailand,
         Australia, the People's Republic of China ("PRC") and other markets in
         the Asia Pacific region. Major customers of the Operating Subsidiaries
         include government organizations, electric contracting firms,
         electrical dealers, and wire and cable factories. 
1. 
ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)
ii) 
The equity investees of the Company are set out below:

Place of incorporation and operations
Percentage of
Equity interest
 
2006
2007
The People’s Republic of China
 
 
Shandong Huayu Pacific Fibre Optics Communications Co., Ltd. (‘‘Shandong Huayu’’)
48.73%
48.73%
Shandong Pacific Rubber Cable Co., Ltd. (‘‘SPRC’’)
25.00%
25.00%
Thailand
 
 
Siam Pacific Holding Company Limited (‘‘SPHC’’)
49.00%
49.00%
Loxley Pacific Co., Ltd. (‘‘Lox Pac’’)
21.26%
21.39%
Thai Professional Telecom Network Co., Ltd
(‘‘Thai Professional’’)*
15.84%
15.84%
*
Accounted for as an equity investee despite the Company holding less than 20% equity interest because the Company has the ability to exercise significant influence over the operating and financial policies of Thai Professional.
Charoong Thai Wire
         and Cable Public Company Limited ("Charoong Thai") is listed on the Stock Exchange of Thailand and is engaged in the manufacturing of wire and cable products for the power and telecommunications industries in Thailand.
Acquisitions accounted for as purchases and disposals undertaken by the Company during the years ended December 31, 2001, 20022005, 2006 and 20032007 include the following:

         (a) purchase in 2001 of an additional 20.8% interest in Ningbo Pacific
Cable Co., Ltd. ("Ningbo") (formerly known as Ningbo Pacific CDC Cable Co.,
Ltd.) for $725, thereby increasing the Company's interests in Ningbo from 70% to
90.8% in 2001. The increase in the Company's interests in Ningbo has been
accounted for as a purchase. Accordingly, the excess of fair value of assets
acquired over the amount paid for the incremental ownership of 20.8% resulted in
a goodwill of $582.


                                      F-11




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         (b) purchase in 2001 of an additional 40% interest in Sigma-Epan
International Pte Ltd. ("Sigma-Epan") for $425, thereby increasing the Company's
interests in Sigma-Epan from 60% to 100% in 2001. The increase in the Company's
interests in Sigma-Epan has been accounted for as a purchase. Accordingly, the
excess of fair value of assets acquired over the amount paid for the incremental
ownership of 40% resulted in a goodwill of $246.

         (c)  purchase in 2001 of additional new shares in Shanghai Yayang
              Electric Co., Ltd. ("Shanghai Yayang") by the Company's 66.15%
              held subsidiary for $950, which resulted in a goodwill of $513.
              However, the issuance of new shares during the year by Shanghai
              Yayang has caused the Company's effective interest in Shanghai
              Yayang to be diluted from 62.88% to 62.09%.

         (d)  purchase in 2001 of an additional 16.66% interest in Loxley
              Pacific Co., Ltd ("Lox Pac") for $1,054, thereby increasing the
              Company's interest in Lox Pac from 13.9% to 30.56%.

         (e)  purchase on March 22, 2002 of 100% of PEWC's interest in Crown
              Century Holdings Limited ("CCH") and its wholly-owned subsidiary,
              Pacific Electric Wire & Cable (Shenzhen) Co., Ltd ("PEWS")
              (collectively referred to as "CCH"), resulting in CCH becoming a
              wholly-owned subsidiary of the Company upon completion of the
              transaction. The acquisition was funded by the issuance of
              3,097,436 shares of the Company's common stock. Since the entities
              were under common control, the merger has been accounted for at
              historical cost in a manner similar to pooling-of-interests and
              accordingly, the consolidated financial statements for periods
              prior to the combination have been restated to include the
              accounts and results of both entities.

         (f) purchase in 2002 of an additional 3.51% interest in Ningbo for
$5,830, thereby increasing the Company's interest in Ningbo from 90.8% to 94.31%
in 2002. The increase in the Company's interest in Ningbo has been accounted for
as a purchase. Accordingly, the excess of fair value of the assets acquired over
the amount paid for the incremental ownership of 3.51% resulted in goodwill of
$327.

         (g) purchase in 2002 of additional new shares in Shanghai Yayang for
$250, thereby increasing the Company's interest in Shanghai Yayang from 62.09%
to 63.81%. The increase in the Company's interest in Shanghai Yayang has been
accounted for as a purchase. Accordingly, the excess of fair value of the assets
acquired over the amount paid for the incremental ownership of 1.72% resulted in
goodwill of $85. The Company further purchased additional new shares in Shanghai
Yayang for $50. However, further issuance of new shares during the year by
Shanghai Yayang has caused the Company's effective interest in Shanghai Yayang
to be diluted from 63.81% to 62.39%. The Company recognized a loss of $79 on the
issuance of new shares by Shanghai Yayang.

         (h)  purchase in 2002 of a 48.72% equity interest in Shandong Huayu
              Pacific Fibre Optics Communications Co., Ltd ("Shandong Huayu")
              for a consideration of $2,330.

         (i)  purchase in 2002 of an additional 1.84% interest in Newcall
              Communications Singapore Pte Ltd ("NCS"), thereby increasing the
              Company's interest in NCS from 37.69% to 39.53% in 2002. The
              purchase consideration of $535 was fully written off in 2002 as
              NCS was liquidated during that year.

                                      F-12





ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         (j)  purchase in 2002 of additional new shares in Lox Pac for $1,153.
              However, further issuance of new shares during the year by Lox Pac
              has caused the Company's effective interest in Lox Pac to be
              diluted from 30.56% to 24.58%. The Company recognized a loss of
              $77 on the issuance of new shares by Lox Pac.

         (k)  purchase in 2002 of the remaining 33.85% interest in Siam Pacific
              Electric Wire & Cable Company Limited ("Siam Pacific") for
              $11,563, in the form of Charoong Thai shares issued to the
              minority shareholders. The excess of fair value of the assets
              acquired over consideration paid resulted in goodwill of $1,586.
              However, the further issuance of new Charoong Thai shares and the
              disposal of Charoong Thai shares have caused the Company's
              effective interest in Siam Pacific to be diluted from 66.15% to
              63.87%. The Company recognized a gain of $1,167 and a loss of $557
              on the issuance of new shares by Charoong Thai and the disposal of
              Charoong Thai shares, respectively.

         (l)  purchase in 2003 of additional new shares in Shanghai Yayang for
              $1,670, thereby increasing the Company's interest in Shanghai
              Yayang from 62.39% to 63.49%. The increase in the Company's
              interest in Shanghai Yayang has been accounted for as a purchase.
              Accordingly, the excess of fair value of the assets acquired over
              the amount paid for the incremental ownership of 1.1% resulted in
              goodwill of $717.

         (m)  disposal in 2003 of 8.46% interest in Charoong Thai for $6,013;
              thereby decreasing the Company's interest in Charoong Thai from
              63.87% to 55.41%. The Company recognised a loss of $885 on the
              disposal of Charoong Thai shares.

         (n)  convert in 2003 of $1,445 due from Newcall Group Limited ("NGL")
              to equity in NGL, thereby increasing the Company's interest in NGL
              from 20.81% to 27.45%.

         (o)  purchase in 2003 of additional new shares in Shandong Pacific
              Fiber Optics Co., Ltd. ("Shandong Pacific") for $308. The
              Company's equity in Shandong Pacific remained at 51%.

         (p)  purchase in 2003 of additional new shares in Shandong Huayu of
              $183, thereby increasing the Company's interest in Shandong Huayu
              by 1.19% to 49.91%.



                                      F-13




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         
(a) 
Disposal in 2005 of 0.4% interest in Charoong Thai, thereby decreasing the Company’s interest in Charoong Thai from 52.83% to 52.43% due to the exercise of warrants. The Company recognized a loss of US$357 on the disposal of these Charoong Thai shares.
(b) 
Disposal in 2006 of 2.04% interest in Charoong Thai, thereby decreasing the Company’s interest in Charoong Thai from 52.43% to 50.39% due to the exercise of warrants. The Company recognized a loss of $1,955 on the disposal of these Charoong Thai shares.
(c) 
During 2006, Charoong Thai’s subsidiary, Pacific-Thai contributed additional capital in Shanghai Yayang in the form of a cash injection of $1,000, the excess of its consideration paid over the fair value of the assets acquired resulted in goodwill of $477. The Company’s interest in Charoong Thai decreased from 52.83% to 52.43% and from 52.43% to 50.39% due to the exercise of warrants in 2005 and 2006, respectively, which also resulted in the Company’s interest in Shanghai Yayang decrease by 0.37% to 56.36% and by 2.46% to 53.90% in 2005 and 2006, respectively.
(d) 
In August 2000, the Board of Directors of Charoong Thai resolved to dissolve CTW (Hong Kong) Limited which was an overseas subsidiary company as CTW (Hong Kong) Limited was inactive. The dissolution was completed on August 16, 2006, and a gain of $1,801 was recognized in the consolidated statement of operations in 2006.
The Company was formed to take up PEWC's wire and cable business in
         Singapore, Thailand, Australia and the People's Republic of China and
         was successfully listed on the New York Stock Exchange in March 1997. The percentage of holdingOn December 24, 2001, the staff of the subsidiaries and equity investeesNew York Stock Exchange (‘‘NYSE’’) announced that it had determined that the trading of the common stock of APWC should be suspended prior to December 31, 2001. The decision was reached in view of the fact that the Company are set out below.

                                                                                                      Place of
                                                                           Percentage of         incorporation
         Company                                                         equity interest        and operations
         -------                                                      ------------------        --------------
                                                                        2002      2003


         Asia Pacific Wire & Cable General Holdings Ltd.                 100%       100%           The British
                                                                                                Virgin Islands

         Sigma Cable Company (Private) Limited                         98.24%     98.24%             Singapore

         Sino-Sin Trading Pte Ltd.                                       100%       100%             Singapore

         Siam Pacific Electric Wire & Cable Company                    63.87%     55.41%              Thailand
             Limited **

         Pacific-Thai Electric Wire & Cable Company                    63.87%     55.41%              Thailand
             Limited ("Pacific Thai") **

         Australia Pacific Electric Cable Pty Limited ("APEC")          98.48%    98.48%             Australia

         Ningbo Pacific Cable Co., Ltd.                                94.31%     94.31%          The People's
                                                                                             Republic of China

         Crown Century Holdings Limited                                  100%       100%             Hong Kong

         Pacific Electric Wire & Cable (Shenzhen) Co., Ltd               100%       100%          The People's
                                                                                             Republic of China

         Hard Lek Limited                                              73.98%     73.98%              Thailand

         PRC (APWC) Holding Ltd.                                         100%       100%           The British
                                                                                                Virgin Islands

         Samray Inc.                                                     100%       100%           The British
                                                                                                Virgin Islands

         Siam (APWC) Holdings Ltd.                                       100%       100%           The British
                                                                                                Virgin Islands



                                      F-14

had fallen below NYSE’s continued listing standards regarding: average global market capitalization over a consecutive 30 trading-day period of not less than $15; and average closing price of a security of not less than $0.001 over a consecutive 30 trading-day period. Following the delisting of the Company’s


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)

1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)



                                                                                                      Place of
                                                                           Percentage of         incorporation
         Company                                                         equity interest        and operations
         -------                                                      ------------------        --------------
                                                                        2002       2003


         Moon View Ltd.                                                  100%       100%           The British
                                                                                                Virgin Islands

         Trigent Investment Holdings Limited                             100%       100%           The British
                                                                                                Virgin Islands

         Siam Pacific Holding Company Limited ("SPHC")                    49%        49%              Thailand

         Charoong Thai Wire and Cable Public                           63.87%     55.41%              Thailand
             Company Limited

         Sigma-Epan International Pte Ltd.                               100%       100%             Singapore

         Crown Century Holdings Ltd.                                     100%       100%           The British
                                                                                                Virgin Islands

         APWC (Thailand) Co., Ltd.                                     95.59%     95.59%              Thailand

         PEWC (Thailand) Co., Ltd.                                     95.59%     95.59%              Thailand

         Shanghai Yayang Electric Co., Ltd.                            62.39%     63.49%          The People's
                                                                                             Republic of China

         Myanmar Sigma Cable Co., Ltd.                                    80%        80%               Myanmar

         Singvale Pte Ltd                                                100%       100%             Singapore

         Shandong Pacific Fiber Optics                                    51%        51%          The People's
             Co., Ltd.^                                                                      Republic of China

         Shandong Huayu Pacific Fibre Optics                           48.72%     49.91%          The People's
            Communications Co., Ltd                                                          Republic of China
            ("Shandong Huayu")

         Loxley Pacific Co., Ltd.                                      31.24%     29.16%              Thailand

         Thai Professional Telecom Network                             19.16%     16.61%              Thailand
             Co., Ltd. ("Thai Professional")

         Newcall Group Limited                                         20.81%     27.45%           New Zealand

1. 
ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)



                                      F-15




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         ^    Shandong Pacific
common stock on the NYSE, the Company’s common stock was incorporatedtraded under the lawsticker AWRCF, on the Over-the-Counter Bulletin Board (‘‘OTC BB’’), operated by NASD, Inc. After the Company failed to timely file its annual report on Form 20-F for the 2004 fiscal year, the Company was delisted from the OTC BB in August 2005 and since that time its shares of common stock have been quoted on the People's
              Republic of China‘‘pink sheets’’ market by Pink Sheets LLC, a privately owned company that provides pricing and financial information for over-the-counter securities. On April 9, 2008, the Company has listed and begun trading its common shares on Joint Ventures using Chinesethe OTC BB after completing all reporting requirements and Foreign
              Investment.filing all outstanding financial reports with the SEC. The tenure for this joint ventureCompany is 50 years and the
              Company's interest in accordancesubject to the joint venture agreement is
              51%. Due toreporting requirements under the timing difference in theSecurities Exchange Act of outstanding capital by
              the joint venture parties during 2001, the Company's effective
              interest has been diluted from 74.62% to 51%.

         **   On February 21, 2002, SPHC disposed of its shareholdings in Siam
              Pacific to its shareholders in proportion relative to their
              respective shareholdings in SPHC at a consideration of $3.87 per
              share. This transaction did not result in a change in the
              Company's effective interest in Siam Pacific. On July 2, 2002,
              Charoong Thai acquired 100% of the outstanding shares in Siam
              Pacific from the shareholders of SPHC by issuing 177,550,000 new
              shares at 5 Baht each in exchange for Siam Pacific shares at a
              swap ratio of 26.5 new Charoong Thai shares for every 1 Siam
              Pacific share. This transaction together with disposal of Charoong
              Thai shares has caused the Company's effective interest in
              Charoong Thai to be diluted from 69.18% to 63.87% in 2002.


2.       BASIS OF PRESENTATION

         1934.
2. 
BASIS OF PRESENTATION
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("(‘‘US GAAP"GAAP’’). The basis of accounting differs from that used in the statutory financial statements of the Company'sCompany’s subsidiaries and equity investee companies, which are prepared in accordance with the accounting principles generally accepted in their respective countries of incorporation. In the opinion of management, the consolidated financial statements have reflected all costs incurred by the Company and its subsidiaries in operating the business.


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         
All dollar amounts in the financial statements and in the notes herein are U.S. dollars (‘‘US$’’) unless otherwise designated.
3. 
CHANGES IN PRESENTATION OF COMPARATIVE FINANCIAL STATEMENTS
Certain comparative amounts in prior financial statements have been reclassified to conform with the current year’s presentation. Such reclassification had no effect on net (loss) income.
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated on consolidation. The Company'sCompany’s investments for which its ownership exceeds 20%, but which are not majority-owned or controlled, are accounted for using the equity method if the Company has the ability to exercise significant influence over the companies'companies’ operating and financial policies. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventories
Inventories are valued at the lower of cost or market value. Cost is determined using the first-in, first-out or weighted average method.


                                      F-16




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands
If the expected sales price less completion costs and costs to execute sales (net realizable value) is lower than the carrying amount, a write-down is charged to expenses in cost of US Dollars, except share data)

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         sales for the amount by which the carrying amount exceeds its net realizable value. When the finished goods that were previously written down to net realizable value are subsequently sold at above net realizable value, a recovery is credited to cost of sales. See note 11.
Income Taxes
In 2007, the Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), ‘‘Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109.’’ FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, ‘‘Accounting for Income Taxes’’ (SFAS 109). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense.
Current income tax expense is the amount of income taxes expected to be payable for the current year. A deferred income tax asset or liability is established for the expected future tax consequences resulting from differences in the financial reporting and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax credit and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred income tax expense (benefit) is the net change during the year in the deferred income tax asset or liability.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Assetscost less depreciation and any impairment losses. Asset leases qualifying as capital leases are also included in property, plant and equipment. Major renewals and improvements are capitalized and minor replacements, maintenance, and repairs are charged to current operations as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.assets or the respective lease term, whichever is shorter. No depreciation is charged for construction in progress and machinery and equipment under installation. Depreciation is provided as follows:

         Land                           Nil
         Land use rights                49 - 50 years
         Buildings                      5 - 30 years
         

Land
Nil
Land use rights
15 – 50 years
Buildings
5 – 30 years
Machinery and equipment
5 – 10 years
Motor vehicles
3 – 10 years
Office equipment
3 – 10 years
Depreciation for 2005, 2006 and 2007 amounted to $9,429, $8,989 and $9,079, respectively.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
When property and equipment 5 - 10 years
         Motor vehicles                 3 - 8 years
         Office equipment               3 - 10 years

         Depreciation for 2001, 2002 and 2003 amounted to $11,074, $9,805 and
         $9,217, respectively.

         Capitalized interest on construction in progress is added to the costare retired, sold or otherwise disposed of, the underlying assetasset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is amortized overincluded in operations. The useful lives and residual values if not insignificant are reassessed annually.
In 2006, the estimated useful lifeCompany terminated the NPC joint venture due to lack of profitability, unsatisfactory management practices, and the lack of qualified executives to assume management responsibility following termination of the assetthen senior managers, and the lack of promising prospects for the business in the same mannershort to medium term. The Company liquidated its major equipment at the NPC facility. The remaining property and equipment have been temporarily classified as the underlying asset. In 2002,‘‘Assets held for development’’ in its Balance Sheet before the Company capitalized interest of $207 ondetermines its construction of a factory
         building in Singapore.

         further plan.
Goodwill
Goodwill Goodwill arose fromrepresents the excess of the cost of purchased businessesbusiness over the fair value of the underlying net assets.

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
         FASB Statement No. 141, "Business Combinations" ("Statement 141") and
         FASB Statement No. 142, "Goodwill and Other Intangible Assets"
         ("Statement 142"). The Company adopted Statement 141 and Statement 142
         on January 1, 2002.

         
Goodwill, including goodwill associated with equity method investments, areis not amortized, but tested for impairment at least annually or more frequently if circumstances indicate that impairment may exist. Statement 142 provides forThe Company identifies potential goodwill impairment by comparing the fair value of a six month period fromreporting unit with its carrying amount, including goodwill. The Company determines fair value using a discounted cash flow approach. If the datefair value of implementation to recorda reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its fair value, the amount of goodwill impairment under the new method. The
         impairment charge,loss, if any, wouldmust be recorded as a cumulative effectmeasured. The Company measures the amount of a change in accounting principle. Thegoodwill impairment loss by comparing the implied fair value exceededof goodwill with the bookcarrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of eachgoodwill, an impairment loss is recognized as an ope rating expense.
FASB Statement No. 142, ‘‘Goodwill and Other Intangible Assets’’, defines a reporting unit as an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. Upon adoption of Statement 142 on January 1, 2002, and, accordingly,
         there was no impairment charge as a result of the implementation of the
         new standard. The impact on net income and earnings per share for the
         twelve months ended December 31, 2001 as if Statement 142 had been
         implemented as of the beginning of fiscal 2001 is disclosed in Note 4.

         Under Statement 142, the Company is requiredallocated the whole amount of goodwill to assess whether goodwill
         is impaired at least annually using a two-step process. Thisthe manufactured products segment.
The impairment assessment was made as of December 31, 20022005, 2006 and 2003,2007, and no impairment was indicated. In 2001, in view of the poor sales and operating performance of a
         subsidiary, the Company evaluated the goodwill attributable to that
         subsidiary and concluded that theTotal goodwill was impaired. The carrying
         amount$8,801 and $8,801 as of goodwill of $500 was expensed during 2001.

         In 2001, goodwill was amortized using the straight-line method over the
         lesser of its expected useful life or 40 years.


                                      F-17




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         CashDecember 31, 2006 and Cash Equivalents

         The Company considers all highly liquid investments with a maturity of
         three months or less when purchased to be cash equivalents.

         Income Taxes

         Income taxes have been provided using the liability method in
         accordance with FASB Statement No. 109, "Accounting for Income Taxes."

         2007, respectively.
Investments
Management determines the appropriate classification of debt securitiesits investment at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt
Equity securities are classified as held-to-maturity
         whenavailable-for-sale, as the Company hasdoes not trade in these securities, but rather are held as longer term investments due to business relationships with the positive intent and ability to hold the
         securities to maturity. Held-to-maturity securities are stated at
         amortized cost, adjusted for amortization of premiums and accretion of
         discounts to maturity. Such amortization is included in investment
         income. Interest on securities classified as held-to-maturity is
         included in investment income.

         Marketable equity securities and debt securities not classified as
         held-to-maturity are classified as available-for-sale.entities. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in a separate component of shareholders'shareholders’ equity. The amortized cost of held-to-maturity debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in investment income. Realized gains and losses and declines in values judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Investments in which the Company does not have a controlling interest or an ownership and voting interest so large as to exert significant influence, and which are not publicly traded are accounted for at cost.
A judgmental aspect of accounting for investments (including investments in equity investees) involves determining whether an other-than-temporary decline in value of the investment has been sustained. If it has been determined that an investment has sustained an other-than-temporaryother-than- temporary decline in its value, the investment is written down to its fair value, by a charge to earnings. Such evaluation is dependent on the specific facts and circumstances. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.
In 2005, 2006 and 2007, the Company recorded an impairment charge of $3,223, $nil and $117, respectively, related to investment in certain equity investees.
Impairment of Long-Lived Assets

         In August 2001,
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Recoverability of an asset is measured by comparison of the FASB issued FASB Statement No. 144, "Accounting forcarrying amount of the Impairment or Disposal of Long-Lived Assets," ("Statement 144").
         Statement 144 addresses significant issues relatingasset to the implementation of FASB Statement No. 121, "Accounting for the
         Impairment of Long-Lived Assets and for Long-Lived Assetsnet undiscounted future cash flow expected to be Disposed Of," ("Statement 121") and develops a single accounting model,generated from the assets. If the future undiscounted cash flows are not sufficient to recover the carrying value of the asset, the asset’s carrying value is adjusted to fair value. The Company estimates fair value based on discounted future cash flow.
In 2006, the framework establishedCompany recorded an impairment charge of $196 related to the impairment of certain property, plant and equipment of Ningbo Pacific, a subsidiary (note 1) included in Statement 121 for long-livedthe manufactured products segment.
These impairment charges were recorded to reduce the carrying value of the identified assets to be disposedfair values. Fair values were derived using a variety of by sale, whether such assetsmethodologies, including cash flow analysis, estimates of sales proceeds and independent appraisals. Where cash flow analyses were used to estimate fair values, key assumptions employed, included estimates of future growth, estimates of gross margins and estimates of the impact of inflation. The charges were primarily the result of management’s revised outlook due to the prolonged unfavourable market conditions.
Allowance for Doubtful Accounts
Trade accounts receivable are or are not
         deemedstated at the amount the Company expects to be a business. Statement 144 also modifies the accounting and
         disclosure rules for discontinued operations.collect. The Company adoptedmaintains allowances for doubtful accounts for estimated losses resulting from the standard effective January 1, 2002.


                                      F-18




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousandsinability of US Dollars, except share data)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         its customers to make required payments. Management considers the following factors when determining the collectibility of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.
Revenue Recognition
Sales represents the invoiced value of goods sold, net of value added tax and returns, commission income earned on distribution activities, and service fee income on installation activities. Revenue


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized.
Salesof goods and distribution activities
The Company recognizes revenue from the sale of goods and distribution activities upon passage of title to the customer which coincides with their delivery and acceptance. This method of revenue recognition is in accordance with Staff Accounting Bulletin, SAB 101 - "Revenue104 — ‘‘Revenue Recognition in Financial Statements."

         ’’
Installation activities
The Company recognizes revenue from installation activities using the percentage-of-completion method, based on the customer certification of the distance of cable laid with respect to the estimated total contract revenue, and in accordance with Statement of Position (SOP) 81-1, "Accounting‘‘Accounting for the Performance of Construction-Type and Certain Production-Type Contracts"Contracts’’ issued by the American Institute of Certified Public Accountants.
When elements such as installation and sale of cables are contained in a single arrangement, or in related arrangements with the same customer, the Company allocates revenue to each element based on its relative fair value. The allocation of the fair value to the delivered elements is limited to the amount that is not contingent on future delivery of services or subject to customer-specified return or refund privileges.
The Company adopted EITF No. 00-21, "Accounting‘‘Accounting for Revenue Arrangements with Multiple Deliverables" ("Deliverables’’ (‘‘EITF 00-21"00-21’’) in 2003. The impact of adopting EITF 00-21 was not material to the financial statements.

         statements in 2005, 2006 and 2007.
Shipping and Handling Costs
The Company classifies such costs as cost of sales.
Product Warranties
The Company provides for the estimated cost of product warranties based on the warranty policy and historical experience, and accrues for specific items at the time their existence is known and the amounts are determinable. F-19





ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Historical warranty liability and related costs have not been significant to the Company’s operations.
Foreign Currency Translation
The Company’s functional currency is generally the United States dollar and the consolidated financial statements have been presented in United States dollars.
The financial statements of the Company’s subsidiaries where the local currency is the functional currency have been translated into United States dollars in accordance with FASB Statement No. 52, ‘‘Foreign Currency Translation.’’ All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet dates. Statement of operations amounts have been translated using the exchange rates in effect during the year. The gains and losses resulting from the changes in exchange rates from year to year have been reported separately as a component of shareholders’ equity.
Foreign currency transactions are recorded at the applicable rates of exchange in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. Exchange differences are dealt with in the consolidated statements of operations.

         The financial statements


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of the Company's subsidiaries where the local
         currency is the functional currency have been translated into United
         States dollars in accordance with FASB Statement No. 52, "Foreign
         Currency Translation." All balance sheet accounts have been translated
         using the exchange rates in effect at the balance sheet date. Statement
         of operations amounts have been translated using the exchange rate in
         effect during the year. The gains and losses resulting from the changes
         in exchange rates from year to year have been reported separately as a
         component of shareholders' equity.

         US Dollars, except share data)
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Currency Forward Contracts
The Company uses Thai BahtCompany’s subsidiaries use forward foreign exchange contracts to reduce itstheir exposure to foreign currency risk for liabilities denominated in foreign currency. A forward foreign exchange contract obligates the Company to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent US dollar payment equal to the value of such exchange. Realized and unrealized gains and losses on foreign exchange contracts are included in income as foreign exchange gains or losses.
The Company recognizes all derivative financial instruments such as
         interest swap contracts and foreign exchange contracts, in the consolidated financial statements at fair value regardless of the purposes or intent for holding the instrument. Changes in the fair value of derivative financial instruments are either recognized periodically in income or in shareholders'shareholders’ equity as a component of comprehensive income depending on whether the derivative financial instruments qualify for hedge accounting, and if so, whether they qualify as a fair value or cash flow hedge.
Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income along with the portions of the changes in the fair value of the hedged items that relate to the hedged risks. Changes in fair value of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in other comprehensive income net of deferred taxes. Changes in fair value of derivatives used as hedges of the net investment in foreign operations are reported in other comprehensive income as part of the cumulative translation adjustment. Changes in fair values of derivatives not qualifying as hedges are reported in income.
As atof December 31, 20022005, 2006 and 2003,2007, the Company has entered into forward exchange contracts with notional valuevalues of $1,009$nil, $1,842 and $100,$12,674, respectively. The forward exchange contracts matured in March, April 2007 and January, February, March, May, June 2008. The fair valuevalues of the forward exchange contracts as at December 31, 20022005, 2006, and 20032007 were $1$nil, $81 and $1, respectively.$nil, respectively, which is included in other assets. These forward exchange contracts do not qualifyare qualified for hedge accounting in accordance with FASB Statement No. 133 "Accounting‘‘Accounting for Certain Derivative Instruments and Certain Hedging Activities"Activities’’.

                                      F-20






ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Allowance for Doubtful Accounts

         The Company maintains allowances for doubtful accounts for estimated
         losses resulting from the inability of its customers to make required
         payments based on the analysis of accounts receivable, historical bad
         debts, customer credit-worthiness and current economic trends.

         
Gain on Issuance of Shares by Subsidiaries
At the time a subsidiary sells its stock to unrelated parties at a price in excess of its book value, the Company'sCompany’s net investment in that subsidiary increases. If at that time, the subsidiary is not a newly-formed, non-operating entity, nor a research and development, start-up or development stage company, nor is there question as to the subsidiary'ssubsidiary’s ability to continue in existence, the Company records the increase as a non-operating gain in the Consolidated Statements of Operations. Otherwise, the increase is reflected in "effect‘‘effect of subsidiaries'subsidiaries’ equity transactions"transactions’’ in the Company'sCompany’s Consolidated Statements of Shareholders'Shareholders’ Equity.
(Loss) Earnings (Loss) Per Share
Basic and diluted (loss) earnings (loss) per share is calculated in accordance with FASB Statement No. 128, "Earnings‘‘Earnings Per Share."

         Asset Impairment Loss

         ’’ There are no potentially dilutive equity instrument.
Recent Pronouncements
In 2002,September 2006, FASB issued Statement No. 157 — ‘‘Fair Value Measurements’’ Statement No. 157 (‘‘SFAS 157’’) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements. SFAS 157 becomes effective for the Company recorded impairment chargeson January 1, 2008. Upon adoption, the provisions of $1,559 relatedSFAS 157 are to the impairment of certain property, plant and equipment of Ningbo,
         included in the manufactured products segment.

         These impairment charges were recorded to reduce the carrying value of
         the identified assets to fair value. Fair values were derived using a
         variety of methodologies, including cash flow analysis, estimates of
         sales proceeds and independent appraisals. Where cash flow analyses
         were used to estimate fair values, key assumptions employed, included
         estimates of future growth, estimates of gross margins and estimates of
         the impact of inflation. The charges were primarily the result of
         management's revised outlook due to the prolonged unfavourable market
         conditions. The remaining carrying value of these impaired long-lived
         assets, immediately after recording the impairment charge, was
         approximately $173.

         During 2001, the Company disposed of the factory building and machinery
         equipment to the Myanmar Economic Corporation for $3,500 and the
         Myanmar operations ceased. For the year ended December 31, 2001, the
         Myanmar operations, included in the manufactured product segment,
         resulted in a gain of $52.


                                      F-21
be applied prospectively with limited exceptions.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Recent Pronouncements

         
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In January 2003,September 2006, FASB issuedStatement No. 158, ‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB InterpretationStatements No. 46, "Consolidation87, 88, 106, and 132(R)’’ (‘‘SFAS 158’’), was issued. This statement requires an employer that sponsors one or more defined benefit pension or other postretirement plans to recognize an asset or liability for the overfunded or underfunded status of Variable Interest Entities" ("FIN 46"). FIN 46 requires a
         beneficiary to consolidate a variable interest entity ("VIE") if it is
         the primary beneficiary of that entity. The primary beneficiary is
         defined as having a variable interestits postretirement benefit plans in a VIE that will absorb a
         majority of the entity's expected losses if they occur, receives a
         majority of the entity's expected residual returns if they occur, or
         both. In December 2003, FASB completed deliberations of proposed
         modifications to FIN 46 ("Revised Interpretations") resulting in
         multiple effective dates based on the nature as well as the creation
         date of the VIE. VIEs created after January 31, 2003, but prior to
         January 1, 2004, may be accountedits balance sheets for either based on the original
         interpretation or the Revised Interpretations. However, the Revised
         Interpretations must be applied in financial statements for periods
         ending after March 15, 2004. VIEs created after December 31, 2003 must
         be accounted for under the Revised Interpretations. Special Purpose
         Entities ("SPEs") created prior to February 1, 2003, may be accounted
         for under the original or revised interpretation's provisions no later
         than the first periodyears ending after December 15, 2003. Non-SPEs created
         prior2006. The funded status is measured as the difference between the fair value of the plan’s assets and its benefit obligation. The statement also requires an employer to February 1, 2003, shouldmeasure plan assets and benefit obligations as of the date of the employer ’s statement of financial position. SFAS 158 is effective for fiscal years ending after December 15, 2006, except for the requirement to measure plan assets and benefit obligations as of the statement of financial position date, which is effective for fiscal years ending after December 15, 2008. Transition for the recognition provisions is entirely prospective. The effects on the consolidated financial statements upon adopting SFAS 158 is presented in note 18.
In September 2006, the FASB ratified EITF Issue No. 06-1 — ‘‘Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive Service from the Service Provider’’ (‘‘EITF 06-1’’). This guidance requires the application of EITF Issue No. 01-9 — ‘‘Accounting for Consideration Given by a Vendor to a Customer’’ (‘‘EITF 01-9’’), when consideration is given to a reseller or manufacturer for benefit to the service provider’s end-customer. EITF 01-9 requires the consideration given to be accountedrecorded as a liability at the time of the sale of the equipment and also provides guidance for under the revised
         interpretation's provisions no later thanclassification of the expense. EITF 06-1 is effective for the first annual reporting period endingbeginning after MarchJune 15, 2004.2007. The Company has applieddoes not expect the provisionsadoption of FIN 46 on
         variable interest entities created after January 31, 2003 and for SPEs.
         The adoption did notEITF 06-1 to have a material impact on its consolidated financial statements.
In February 2007, the Company'sFASB issued Statement No. 159 —The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Statement No. 159 is effective for fiscal years beginning after November 15, 2007. The Company does not believe the adoption of SFAS 159 will have significant impact on its consolidated financial statements.
In June 2007, the FASB ratified EITF Issue No. 07-3 (‘‘EITF 07-3’’), ‘‘Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities.’’ This issue provides that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. Such amounts should be recognized as an expense as the related goods are delivered or the related services are performed. EITF 07-3 is effective for fiscal years beginning after December 15, 2007. The Company does not expect the adoption of EIFT 07-3 to have a material impact on its consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations (‘‘SFAS No. 141(R)’’), which establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement in the financial statements of position, results of operations, or cash flows.

         In May 2003, FASB issued FASB Statement No. 150, "Accounting For
         Certain Financial Instruments with Characteristics of Both Liabilitiesthe identifiable assets acquired, the liabilities assumed, and Equity" ("Statement 150").any non-controlling interest in the acquiree. This statement also establishes standardsdisclosure requirements to enable financial statement users to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies prospectively to business combinations for how an issuer classifies and measures certain financial instruments
         with characteristics of both liabilities and equity. In November 2003,which the FASB issued FASB Staff Position (FSP) 150-3, "Effective Date,
         Disclosures, and Transition for Mandatorily Redeemable Financial
         Instruments of Certain Nonpublic Entities and Certain Mandatorily
         Redeemable Noncontrolling Interests under Statement 150", which
         deferred the effectiveacquisition date of Statement 150 for certain mandatorily
         redeemable non-controlling interests. The Company has adopted the
         provisions of Statement 150, except for certain mandatorily redeemable
         non-controlling interests, for financial instruments entered intois on or modified after May 31, 2003, and otherwise was effective at the beginning of the first interimannual reporting period beginning on or after JuneDecember 15, 2003.
         The adoption of Statement 150 did not have a material impact on the
         Company's financial statements of position, results of operations, or
         cash flows.

         Reclassification

         Certain prior-year amounts have been reclassified to conform to the
         current-year presentation.





                                      F-22
2008, and


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)

4.       GOODWILL

         
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
interim periods within those fiscal years. Early adoption is prohibited. The impact of this standard is dependant upon the level of future acquisitions.
In December 2007, the FASB issued SFAS No. 160, ‘‘Non-controlling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.’’ SFAS No. 160 establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, SFAS No. 160 requires expanded disclosures in the consolidated financial statements. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company is currently assessing the potential impact of SFAS No. 160 on its financial statements.
In February 2008, the FASB issued FASB Staff Position (‘‘FSP’’) FAS 157-1, ‘‘Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurement for Purpose of Lease Classification of Measurement under Statement 13,’’ which amends SFAS 157 to exclude accounting pronouncements that address fair value measurements for purpose of lease classification or measurement under SFAS No. 13, ‘‘Accounting for Leases.’’ In February 2008, the FASB also issued FSP FAS 157-2, ‘‘Effective Date of FASB Statement No. 157’’, which delays the effective date of SFAS 157 until the first quarter of fiscal 2010 for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS 157 d oe not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently assessing the impact SFAS 157 will have on its results of operations and financial position.
In March 2008, the FASB issued SFAS No. 161 (‘‘SFAS 161’’), ‘‘Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133,’’ which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. SFAS 161 will be effective for the Company in fiscal year 2010. The Company is currently assessing the potential impact that adoption of SFAS 161 may have on its financial statements.
In May 2008, the FASB issued SFAS No. 162 (‘‘SFAS 162’’), ‘‘The Hierarchy of Generally Accepted Accounting Principles’’, the Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). The current GAAP hierarchy, as set forth in the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, has been criticized because (1) it is directed to the auditor rather than the entity, (2) it is complex, and (3) it ranks FASB Statements of Financial Accounting Concepts, which are subject to the same level of due process as FASB Statements of Financial Accounting Standards, below industry practices that are widely recognized as generally accepted but that are not subject to due process. The Board believes that the GAAP hierarchy should be directed to entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
4. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
GAAP. Accordingly, the Board concluded that the GAAP hierarchy should reside in the accounting literature established by the FASB and is issuing this Statement to achieve that result. This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.
In May 2008, the FASB issued SFAS No. 163 (‘‘SFAS 163’’), ‘‘Accounting for Financial Guarantee Insurance Contracts’’, a interpretation of FASB Statement No. 60. Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5, Accounting for Contingencies. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition an d measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise’s risk-management activities. This Statement requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period (including interim periods) beginning after issuance of this Statement. Except for those disclosures, earlier application is not permitted. The Company does not expect the adoption of SFAS 163 to have a material impact on its consolidated financial statements.
5. 
SHORT-TERM BANK DEPOSITS

 
December 31,
 
2006
2007
Unrestricted short-term bank deposits
$
2,003
$
1,861
Restricted short-term bank deposits
13,587
18,714
 
$
15,590
$
20,575
Restricted short-term bank deposits represent the amounts of cash pledged by two subsidiaries to secure credit facilities granted by financial institutions. Unrestricted short-term bank deposits represents bank deposits which do not qualify as cash equivalents.
The bank deposits bear interest ranging from 1% to 5.1% per annum.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
6. 
GOODWILL
Goodwill of $8,801 (2006: $8,801; 2005: $8,324) relates to the manufactured products segment and the changes in the carrying value of goodwill for the yearyears ended December 31, 20032005, 2006 and 2007 are as follows :-


:

Balance, December 31, 2005
$
8,324
Goodwill acquired
477
Balance, December 31, 2006
8,801
Goodwill acquired
—
Balance, December 31, 2007
$
8,801

         Balance, December 31, 2001                                                            $ 5,609
         Goodwill acquired                                                                       1,998
                                                                                               -------

         Balance, December 31, 2002                                                            $ 7,607
         Goodwill acquired                                                                         717
                                                                                               -------
         Balance, December 31, 2003                                                            $ 8,324
                                                                                               =======
7. 
INVESTMENTS


         The following tables adjust net income (loss) and earnings (loss) per
         share to adjusted amounts that reflect the elimination of goodwill
         amortization for the comparable year ended
On December 31, 2001 prior to
         adoption2006 and 2007, the Company held available-for-sale securities issued by a minority shareholder of Statement 142: -


                                                                              December 31,
                                                                   2001            2002          2003


         NET INCOME
           Reported net income                                   $    91          $4,791       $10,000
           Goodwill amortization                                     136            -              -
           Equity method goodwill amortization                       210            -              -
                                                                 -------          ------       -------
           Adjusted net income                                       437           4,791        10,000
                                                                 =======          ======       =======


         BASIS AND DILUTED EARNINGS PER SHARE
           Reported net income                                     $0.01           $0.35         $0.72
           Goodwill amortization                                    0.01            -             -
           Equity method goodwill amortization                      0.01            -             -
                                                                 -------          ------       -------
           Adjusted net income                                   $  0.03          $ 0.35       $  0.72
                                                                 =======          ======       =======



5.       INVESTMENTS

         two of the Operating Subsidiaries.
The following is a summary of these available-for-sale securities and
held-to-maturity securities:

                                                                Available-for-sale Securities
                                                 -----------------------------------------------------
                                                                   Gross           Gross     Estimated
                                                              Unrealized      Unrealized          Fair
                                                     Cost          Gains          Losses         Value
                                                 -----------------------------------------------------

         December 31, 2002
         Quoted equity securities                $   790          $   53          $ (302)      $   541
                                                 =======          ======          ======       =======

         December 31, 2003
         Quoted equity securities                $   915          $  141          $  (15)      $ 1,041
                                                 =======          ======          ======       =======




                                      F-23




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


5.       INVESTMENTS (continued)


                                                             Held-to-maturity Securities
                                     ------------------------------------------------------------------------
                                                              Gross                Gross            Estimated
                                     Amortized           Unrealized           Unrealized                 Fair
                                          Cost                Gains               Losses                Value
                                     ------------------------------------------------------------------------

         December 31, 2002
         Corporate debts               $  120              $   -                 $  -                $    120
                                       ======              =======               ======              ========

         December 31, 2003
         Corporate debts               $   50              $   -                 $  -                $     50
                                       ======              =======               ======              ========

 
Available-for-sale Securities
 
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
December 31, 2006 Quoted equity securities
$
432
$
14
$
(214
) 
$
232
December 31, 2007 Quoted equity securities
$
473
$
—
$
(272
) 
$
201
A summary of the carrying values and balance sheet classification of all investments in debt, and equity securities including
         held-to-maturity and available-for-sale securities disclosed above was as follows:

                                                                                            December 31,
                                                                                       2002             2003


         Available-for-sale equity securities                                        $   541          $  1,041
                                                                                     -------          --------

                Short-term investments                                                   541             1,041
                                                                                     -------          --------

         Held-to-maturity debt securities                                            $   120          $     50
         Equity securities in privately-held companies and other investments           2,292             2,391
                                                                                     -------          --------

                Long-term investments                                                  2,412             2,441
                                                                                     -------          --------
         Total investments                                                           $ 2,953          $  3,482
                                                                                     =======          ========

 
December 31,
 
2006
2007
Available-for-sale equity securities
$
232
$
201
Held-to-maturity debt securities
—
2,354
Short-term investments
232
2,555
Equity securities in privately-held companies and other investments
533
650
Long-term investments
533
650
Total investments
$
765
$
3,205
There were realized gains of $nil, $nil$343 and $89$28 on disposal of available-for-sale securities in 2001, 20022005, 2006 and 2003,2007, respectively. The disposal of available-for-sale securities was for a consideration of $4, $nil, $626 and $175$65 in 2001, 20022005, 2006 and 2003,2007, respectively. The net adjustment to unrealized holding gains (losses) gains on available-for-sale securities included as a separate component of shareholders'shareholders’ equity, net at income taxes, totaled, $(23)$(505), $(381)$(64) and $464$(6) in 2001, 20022005, 2006 and 2003,2007, respectively.

         On
The held-to-maturity investment as of December 31, 20022007 bears interest at 3.0% per annum and 2003, the Company held available-for-sale and
         held-to-maturity securities issued by a minority shareholder of two of
         the Operating Subsidiaries with costs of $538 and $938, respectively.
         The estimated fair values of such available-for-sale and
         held-to-maturity securities were $394 and $120 and at December 31, 2002
         and $1,027 and $50 at December 31, 2003, respectively.

         The contractual maturity dates of the debt securities held-to-maturity
         at December 31, 2003 have contractual maturity dateswill mature in 2005.



                                      F-24
June 2008.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


6.       CREDIT ARRANGEMENTS

         
8. 
BANK LOANS
Under line of credit arrangements for short-term debt with the Company'sCompany’s bankers, the Company may borrow up to approximately $78,000$252,099 (2006: $110,994) on such terms as the Company and the banks may mutually agree upon. These arrangements do not have termination dates but are reviewed annually for renewal. As of December 31, 2003,2007, the unused portion of the credit lines was approximately $42,000,$134,811 (2006: $59,915), which included unused letters of credit amounting to $26,725.$98,089 (2006: $24,077). Letters of credit are issued by the Company during the ordinary course of business through major financial institutions as required by certain vendor contracts. As of December 31, 2003,2007, the Company had open letters of credit totaling $18,212.$80,693 (2006: $18,730). Liabilities relating to the letters of credit are included in current liabilities.
The credit lines of the Company were securedcollateralized by:
(i) 
Mortgage of the Company’s land, buildings, machinery and equipment with a total carrying amount of $37,541 at December 31, 2007 (2006: $26,607);
(ii) 
Mortgage of the assets with total carrying amount of $nil at December 31, 2007 of a subsidiary of the Company (2006: $1,414);
The subsidiary has ceased its business operation in May 2007 and all the bank facilities were cancelled as of the Company's land, buildings, machinery and
                  equipment with a total carrying amount of $4,892 at December
                  31, 2003;

         (ii)     Mortgage of the assets of a subsidiary of the Company;

         (iii)    Pledge of short-term deposits of $3,567 at December 31, 2003;

         (iv)     Joint and several personal guarantees from certain directors
                  of a subsidiary of the Company; and

         (v)      Corporate guarantees issued by the Company, a subsidiary of
                  the Company and the holding company.


         November 30, 2007.
(iii) 
Pledge of short-term deposits of $18,714 at December 31, 2007 (2006: $13,587);
(iv) 
Joint and several personal guarantees from certain directors of a subsidiary of the Company; and
(v) 
Corporate guarantees issued by the Company, a subsidiary of the Company and the holding company.
The weighted average interest rates on bank loans and overdrafts as of December 31, 20022006 and 20032007 were 5.6%5.9% and 4.0%,6.1% per annum, respectively.


7.       LONG TERM DEBT
                                                          December 31,
                                                     2002              2003


         Bank loan                                $ 1,800            $ 1,654
         Less: Current portion                     (1,125)               -
                                                  -------            -------
                                                  $   675            $ 1,654
                                                  =======            =======


         
9. 
LONG-TERM DEBT

 
December 31,
 
2006
2007
Bank loan
$
1,577
$
—
Less: Current portion
(1,577
) 
—
Long-term debt
$
—
$
—
During 2001, 20022005, 2006 and 20032007, interest paid totaled $1,093, $477$237, $339 and $155,$23, respectively. The bank loan on December 31, 20032006 is secured by land and buildings of a subsidiary (the "Subsidiary") of the Company with a net book value of $2,848 on$2,655 as of December 31, 20032006; a mortgage debenture over all of the subsidiary’s assets and uncalled capital and requires the requirementCompany to maintain a certain minimum percentageof 85% holding in this subsidiary.
The loan as of the Subsidiary.

         The above loan bearsDecember 31, 2006 bore interest at the bank'scommercial bill rate plus 1%, and the weighted average interest ratesrate on December 31, 2002 and 2003 were approximately 8.8%
         and 5.83%, respectively.

         commercial bills during 2006 was 8.4%.
The above loan amount as at December 31, 2003 matures within the next 1
         year. The Company renewed the bank loan upon its maturitymatured and was repaid in March
         2004.

         The current portion of bank loans in 2002 were partially repaid and
         partially rolled-over during 2003.



                                      F-25
February 2007.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


8.       DISTRIBUTION OF EARNINGS

         
10. 
DISTRIBUTION OF EARNINGS
The Company'sCompany’s ability to pay dividends is primarily dependent on the Company receiving distributions from the Operating Subsidiaries and the investee companies.
As described in Note 2, the earnings reflected in the financial statements prepared in accordance with US GAAP differ from those reflected in the statutory financial statements of the Company'sCompany’s subsidiaries and investee companies. In accordance with the relevant laws and regulations applicable to the Company'sCompany’s subsidiaries and investee companies, the earnings available for distribution are based on their respective statutory financial statements. At December 31, 2003,2006, the amount of the Company'sCompany’s retained earnings available for distribution was approximately $18,398$22,124 and the consolidated retained earnings included $3,223, $1,003, $676, $414$(3,084), $(1,003), $(723), $442 and $nil$(22) of the accumulated (losses) profits of Lox Pac, Thai Professional, SPHC, NGLSPRC and Shandong Huayu, respectively. 9.       VALUATION AND QUALIFYING ACCOUNTS

At December 31, 2007, the amount of the Company’s retained earnings available for distribution was approximately $27,126 and the consolidated retained earnin gs included $(3,084), $(1,003), $(729), $695 and $(145) of the accumulated (losses) profits of Lox Pac, Thai Professional, SPHC, SPRC and Shandong Huayu, respectively.

                                               Balance at      Net charged                     Currency         Balance
                                                beginning     to costs and                  translation          at end
         Description                              of year       expenses       Deduction    adjustments         of year
         -----------                           ----------      ---------       ---------    -----------       ---------

         Year ended December 31, 2001:
           Deducted from asset accounts
             Allowance for doubtful accounts    $  3,615         $   (255)     $  (272)       $   (59)         $  3,029
             Allowance for inventories             1,337            1,205         -               (24)            2,518
                                                --------         --------      -------        -------          --------
                                                $  4,952         $    950      $  (272)       $   (83)         $  5,547
                                                ========         ========      =======        =======          ========

         Year ended December 31, 2002:
           Deducted from asset accounts
             Allowance for doubtful accounts    $  3,029         $    968      $  (123)       $    84          $  3,958
             Allowance for inventories             2,518              847       (1,012)            52             2,405
                                                --------         --------      -------        -------          --------
                                                $  5,547         $  1,815      $(1,135)       $   136          $  6,363
                                                ========         ========      =======        =======          ========
         Year ended December 31, 2003:
           Deducted from asset accounts
             Allowance for doubtful accounts    $  3,958         $    902      $  (279)       $   271          $  4,852
             Allowance for inventories             2,405               77         (370)            95             2,207
                                                --------         --------      -------        -------          --------
                                                $  6,363         $    979      $  (649)       $   366          $  7,059
                                                ========         ========      =======        =======          ========
11. 
VALUATION AND QUALIFYING ACCOUNTS





                                      F-26

Description
Balance at
beginning
of year
Net
charged
(credited) to
costs and
expenses
Deduction
Currency
translation
adjustment
Balance at
end of year
Year ended December 31, 2005:
 
 
 
 
 
Deducted from asset accounts
 
 
 
 
 
Allowance for doubtful accounts
$
8,516
$
1,017
$
(986
) 
$
(164
) 
$
8,383
Allowance for inventories
 
 
 
 
 
– Net realizable value
—
201
—
—
201
– Obsolescence
3,450
145
(1,579
) 
(75
) 
1,941
Allowance for deferred tax assets
5,145
2,397
—
(1,515
) 
6,027
 
$
17,111
$
3,760
$
(2,565
) 
$
(1,754
) 
$
16,552
Year ended December 31, 2006:
 
 
 
 
 
Deducted from asset accounts
 
 
 
 
 
Allowance for doubtful accounts
$
8,383
$
1,221
$
(946
) 
$
632
$
9,290
Allowance for inventories
 
 
 
 
 
– Net realizable value
201
1,121
—
—
1,322
– Obsolescence
1,941
896
(509
) 
156
2,484
Allowance for deferred tax assets
6,027
(2,088
) 
—
402
4,341
 
$
16,552
$
1,150
$
(1,455
) 
$
1,190
$
17,437
Year ended December 31, 2007:
 
 
 
 
 
Deducted from asset accounts
 
 
 
 
 
Allowance for doubtful accounts
$
9,290
$
3,295
$
(2,172
) 
$
1,072
$
11,485
Allowance for inventories
 
 
 
 
 
– Net realizable value
1,322
(363
) 
—
102
1,061
– Obsolescence
2,484
(909
) 
—
200
1,775
Allowance for deferred tax assets
4,341
(3,158
) 
—
302
1,485
 
$
17,437
$
(1,135
) 
$
(2,172
) 
$
1,676
$
15,806


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)

10.      INCOME TAXES

         
11. 
VALUATION AND QUALIFYING ACCOUNTS (continued)
Due to changing market conditions in the wire & cable industry, the Company evaluates the inventory in all of its product lines on a periodic basis. As a result, a recovery for inventory obsolescence of $909 was recognized, as a credit to cost of sales, for the year ended December 31, 2007 and a reserve for obsolescence of $145 and $896 were recognized for the years ended December 31, 2005 and 2006, respectively. In addition, inventory write-down to net realizable value of $201 and $1,121 were charged to cost of sales in 2005 and 2006, respectively. During 2007, a decrease of $363 in the net realizable value allowance was also recognized, as a credit to cost of sales, for finished goods written down to net realizable value in previous years, which were sold at above net realizable value in 2007. The allowance for inventory losses is based on the Company’s best estimates of product sales prices and customer demand patterns, and its plans to tr ansition its products. The estimate used by the Company to determine its allowance for inventory losses may be more or less than the actual amount or results.
12. 
INCOME TAXES
Under current Bermuda law, the Company is not subject to tax on income or capital gains, and no Bermuda withholding tax is imposed upon payments of dividends by the Company to its shareholders.
The Company'sCompany’s investments in the Operating Subsidiaries are held through subsidiaries incorporated in the British Virgin Islands ("BVI"(‘‘BVI’’). Under current BVI law, dividends from the BVI subsidiaries'subsidiaries’ investments are not subject to income taxes and no withholding tax is imposed on payments of dividends by the BVI subsidiaries to the Company.
The Operating Subsidiaries and Equity Investeesequity investees are governed by the income tax laws of Singapore, Thailand, Australia, New Zealand, the People'sPeople’s Republic of China and Myanmar. The corporate income tax rate in Singapore was 24.5%20%, 22%20% and 22%18% for 2001, 20022005, 2006 and 2003,2007, respectively, and there is no withholding tax on dividends applicable to the Company. For Thailand, the corporate income tax rate was 30% for each of the three years ended December 31, 20032007 and a withholding tax of 3%10% is levied on dividends received by the Company. In Australia, the corporate income tax rate was 30% for 2001/2002, 2002/20032005/2006, 2006/2007 and 2003/20042007/2008 tax years. The corporate income tax rate for New Zealand was
         33% for 2001/2002, 2002/2003 and 2003/2004 tax years and a withholding
         tax of 30% is levied on dividends received by the Company. The applicable corporate income tax rate for the subsidiaries in the People'sPeople’s Republic of China was 33% for each of the three years ended December 31, 2003.2007. The corporate income tax rate for Myanmar was 30% for 2000/2001, 2001/20022005/2006, 2006/2007 and 2002/20032007/2008 tax years.
Pursuant to the Income Tax Lawincome tax law of the PRC concerning foreign investment enterprises and various local income tax laws (the Income Tax Law), the enterprises generally are subject to income tax at an effective rate of 33% (30% Statestate income taxes plus 3% local income taxes) on income as reported in their statutory accounts unless the enterprise is located in specially-designated regions or cities for which more favorable effective rates apply.
PEWS is located in Shenzhen, which is a region where preferential tax rates apply and currently qualifies for a reduced rate of taxation of 15% (50% of the full rate of 30% State income taxes and no local income taxes). PEWS qualifies for a further reduced rate of 10% if export revenues exceed 70% of its total revenues. PEWS is exempt from income tax for the two years starting from its first profitable year of operations (2001). PEWS is entitled to a 50% tax exemption from the State income taxes for a further three-year period (2003 to 2005) under the Income Tax Law. With the preferential tax rate, current income tax liabilities of PEWS were reduced by approximately $317 for the year ended December 31, 2007. The preferential tax rate also increased the net income per share by $0.02 for the year ended December 31, 2007.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
12. 
INCOME TAXES (continued)
Pre-tax income (loss) from continuing operations was taxed in the following jurisdictions:

                                                            Year ended December 31,
                                                     2001              2002           2003

         Thailand                                $  7,264          $ 17,131       $ 14,381
         Singapore                                 (3,450)           (3,572)        (4,194)
         Australia                                 (1,361)            1,257          3,924
         The People's Republic of China             1,516             1,117          4,598
         Myanmar                                       52               (24)          -
         Others                                    (1,076)             (561)        (1,269)
                                                 --------          --------       --------
                                                    2,945            15,348         17,440

         Equity investees
             Thailand                                (316)           (3,357)           120
             New Zealand                           (1,319)             (221)          -
             Singapore                               (901)             (475)          -
             Others                                     1               (41)          -
                                                 --------          --------       --------
                                                 $    410          $ 11,254       $ 17,560
                                                 ========          ========       ========




                                      F-27




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands of US Dollars, except
share data)


10.      INCOME TAXES (continued)

         

 
Year ended December 31,
 
2005
2006
2007
Thailand
$
10,122
$
25,524
$
9,116
Singapore
(6,633
) 
(2,652
) 
3,169
Australia
1,111
2,811
6,255
The People’s Republic of China
1,177
10,323
1,318
British Virgin Islands
(218
) 
(1,290
) 
(3,143
) 
Bermuda
(4,043
) 
(2,229
) 
(3,679
) 
 
1,516
32,487
13,036
Equity investees
 
 
 
Thailand
1
—
—
The People’s Republic of China
169
—
(123
) 
British Virgin Islands
—
73
247
 
170
73
124
 
$
1,686
$
32,560
$
13,160
Significant components of the provision (benefit) for income taxes are as follows:

                                                                        Year ended December 31,
                                                                    2001           2002         2003

         Allocated to net income
         Current:
           Thailand                                             $    555       $  2,787      $ 3,747
           Singapore                                                 281            (30)         150
           Myanmar                                                  -                12           12
           The People's Republic of China                           -              -             252
           Australia                                                -              -             286
                                                                --------       --------      -------
         Total current                                               836          2,769        4,447
                                                                --------       --------      -------
         Deferred:
           Thailand                                               (2,074)         2,022         (466)
           Singapore                                                (173)          (108)        (258)
           Australia                                                -              -          (1,246)
                                                                --------       --------      -------
         Total deferred                                           (2,247)         1,914       (1,970)
                                                                --------       --------      -------
                                                                $ (1,411)      $  4,683      $ 2,477
                                                                ========       ========      =======
         Allocated to comprehensive income (loss)               $     (9)      $    (10)     $    15
                                                                ========       ========      =======


         On

 
Year ended December 31,
 
2005
2006
2007
Allocated to net income
 
 
 
Current:
 
 
 
Thailand
$
3,387
$
7,578
$
5,701
Singapore
(282
) 
(168
) 
194
The People’s Republic of China
427
1,888
662
Australia
652
1,382
1,710
Total current
4,184
10,680
8,267
Deferred:
 
 
 
Thailand
(400
) 
(71
) 
(2,128
) 
Singapore
413
334
(3
) 
The People’s Republic of China
—
(110
) 
(56
) 
Australia
(337
) 
(576
) 
218
Total deferred
(324
) 
(423
) 
(1,969
) 
 
$
3,860
$
10,257
$
6,298
Allocated to comprehensive loss
$
(286
) 
$
(92
) 
$
(6
) 
At December 31, 2003,2005, 2006 and 2007, the Operating Subsidiaries had net operating loss carry forwards of approximately $16,538, for income tax purposes, of
         which $3,196$19,375, $19,460 and $841 will expire in 2006 and 2007$5,970, respectively. The remaining net operating losslosses can be carried forward indefinitely.indefinitely, subject to any condition to be met under the relevant tax laws of the respective jurisdictions. The utilization of these net operating loss carry forwards is subject to agreement by the income tax authorities in the respective jurisdictions.
The parent company’s tax is filed in Bermuda, which does not have a statutory tax rate. Therefore the provision for income taxes differs frombased on the amount computedtaxes incurred by
         applying the respective statutory rates to income before income taxes
         of the Company and the Operating Subsidiaries. The principal reasons
         for the difference are listed in the following table:


                                                                         Year ended December 31,
                                                                    2001         2002           2003

         Tax at statutory rate in Bermuda                        $  -          $  -           $  -
         Higher statutory rate in Thailand                         2,401        3,540          3,278
         Higher statutory rate in Singapore                         (720)        (891)          (923)
         Higher statutory rate in Australia                         (407)         377          1,177
         Higher statutory rate in New Zealand                       (733)         (66)          -
         Higher statutory rate in the People's
           Republic of China                                         500          369          1,114
         Higher statutory rate in Myanmar                           (365)          (7)          -
                                                                 -------       ------         ------
                                                                     676        3,322          4,646
         Expenses not deductible for tax purposes                    515        1,023            121
         Changes in valuation allowance                           (1,959)         740         (1,950)
         Withholding tax on net income retained                       56         -              -
         Others                                                     (699)        (402)          (340)
                                                                 -------       ------         ------
         Total (benefit) charge for the year                      (1,411)       4,683          2,477
                                                                 =======       ======         ======




                                      F-28
Subsidiaries,


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


10.      INCOME TAXES (continued)

         
12. 
INCOME TAXES (continued)
in their respective jurisdiction. The principal reasons for the differences are listed in the following table:

 
Year ended December 31,
 
2005
2006
2007
Higher statutory tax rate in:
 
Thailand
$
3,037
$
5,869
$
1,966
Singapore
(1,327
) 
(530
) 
634
Australia
333
843
1,899
People’s Republic of China
(421
) 
1,411
305
 
1,622
7,593
4,804
Expenses not deductible for tax purposes
1,517
4,541
4,163
Changes in valuation allowance
882
(1,686
) 
(2,856
) 
Others
(161
) 
(191
) 
187
Total charge for the year
$
3,860
$
10,257
$
6,298
Deferred tax liabilities and assets are comprised of the following:

 
2006
2007
Deferred tax liabilities:
 
 
Tax over book depreciation
$
(275
) 
$
(275
) 
Book over tax basis in subsidiaries
(1,459
) 
(1,511
) 
Translation adjustments
(565
) 
—
Total deferred tax liabilities
(2,299
) 
(1,786
) 
Deferred tax assets:
 
 
Unused tax losses and unused tax credits
4,747
1,687
Allowance for doubtful accounts
1,959
3,374
Allowance for inventories
554
772
Allowance for impairment in investment
601
610
Others
64
82
Total deferred tax assets
7,925
6,525
Valuation allowance for deferred tax assets
(4,341
) 
(1,485
) 
Total deferred tax assets
3,584
5,040
Net deferred tax assets
$
1,285
$
3,254


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

                                                                        December 31,
                                                                      2002         2003

         Deferred tax liabilities:
           Tax over book depreciation                               $  (791)     $  (322)
           Book over tax basis in subsidiaries                         (950)      (1,398)
           Translation adjustments                                     (584)        (503)
           Others                                                       (11)        --
                                                                    -------      -------
           Total deferred tax liabilities                            (2,336)      (2,223)
                                                                    -------      -------


         Deferred tax assets:
           Unused tax losses and unused tax credits                 $ 4,509      $ 4,322
           Provision for doubtful accounts                              172          847
           Provision for inventories                                    528          377
           Provision for impairment in investment                       952          595
           Others                                                        58          125
                                                                    -------      -------
           Total deferred tax assets                                  6,219        6,266
           Valuation allowance for deferred tax assets               (5,329)      (3,379)
                                                                    -------      -------
           Total deferred tax assets                                    890        2,887
                                                                    -------      -------
         Net deferred tax (liabilities) assets                      $(1,446)     $   664
                                                                    =======      =======
12. 
INCOME TAXES (continued)
The amount of deferred tax liabilities and assets at December 31, 2006 and 2007 were as follows:

 
December 31,
 
2006
2007
Gross current deferred tax liabilities
$
(1,074
) 
$
(561
) 
Gross current deferred tax assets
2,680
4,312
Valuation allowance for deferred tax assets
(1,632
) 
(1,254
) 
 
1,048
3,058
Net current deferred tax (liabilities) assets
(26
) 
2,497
Gross long-term deferred tax liabilities
(1,225
) 
(1,225
) 
Gross long-term deferred tax assets
5,245
2,213
Valuation allowance for deferred tax assets
(2,709
) 
(231
) 
 
2,536
1,982
Net long-term deferred tax assets
1,311
757
Net deferred tax assets
$
1,285
$
3,254
The deferred tax liabilities and assets are presented in the accompanying consolidated balance sheets as follows:

 
December 31,
 
2006
2007
Current
 
 
Deferred tax assets
$
490
$
2,481
Deferred tax liabilities
(516
) 
(561
) 
Total current
(26
) 
1,920
Long-term
 
 
Deferred tax assets
2,039
2,032
Deferred tax liabilities
(728
) 
(698
) 
Total long-term
1,311
1,334
Net deferred tax assets
$
1,285
$
3,254
Undistributed earnings of the Company'sCompany’s foreign subsidiaries included in the Company'sCompany’s retained earnings amounted to approximately $15,948$17,101, $30,000 and $24,202 on$32,697 as of December 31, 20022005, 2006 and 2003,2007, respectively. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to withholding taxes payable to the respective foreign countries. TheExcept for earnings relating to a subsidiary in Thailand, the Company has no intention of distributing the earnings that are subject to withholding taxes. Withholding taxes of approximately $237$1,327 would be payable upon remittance of all previously unremitted earnings onof that subsidiary, to the extent allowed by the subsidiary’s articles of association, as of December 31, 2003.

         A subsidiary2007.
The management estimated and accrued a tax provision in the amount of $158, $887 and $156 during 2005, 2006 and 2007 as the Company has been granteddetermined that it is more-likely-than-not that income derived from certain promotional
         privileges by the Board of Investment of Thailand foractivities may be subject to taxes in offshore locations that have a project
         investment of manufacturing enameled copper wire for export purposes.
         Such privileges include exemption from import duty andhigher tax on raw and
         essential materials used for export manufacturing up to January 2002.
         However, since the subsidiary has net operating loss carry forwards, no
         tax benefits have been obtained from the above privileges.

         PEWS is located in Shenzhen, which is a region where preferential tax
         rates apply and currently qualifies for a reduced rate of taxation of
         15%. PEWS is exempt from income tax for the two years starting from its
         first profitable year of operations (2001). PEWS is entitled to a 50%
         tax exemption from the local income tax for a further three-year period
         (2003 to 2005) under the local income tax law. With the tax holiday
         exemption, current income tax liabilities of PEWS were reduced by
         approximately $252 for the year ended December 31, 2003. The tax
         holiday exemption also increased the net income per share by $0.02 for
         the year ended December 31, 2003.


                                      F-29




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


10.      INCOME TAXES (continued)

         rate.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
12. 
INCOME TAXES (continued)
tax purposes. The Company had net deferred tax assets totaling approximately $6,219$7,925 and $6,266$6,525 at December 31, 20022006 and 2003,2007, respectively. However, realization of all of these deferred assets is not reasonably assured; therefore, they were reserved by a valuation allowance of $5,329$4,341 and $3,379$1,485 at December 31, 20022006 and 2003,2007, respectively.
The net change in valuation allowance for the years ended December 31, 2001, 20022005, 2006 and 20032007 was an increase (decrease) of approximately of
         $1,959, $740$882, $(1,686) and $(1,950)$(2,856), respectively, resulting primarily from net operating (gains) losses (gains) generated during the respective years.


11.      ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

         
On July 13, 2006, the FASB issued Interpretation No. 48, ‘‘Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109’’ (‘‘FIN 48’’). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement No. 109, ‘‘Accounting for Income Taxes’’ and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, FIN 48 provides guidanc e on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006.
The Company adopted the provisions of FIN 48 on January 1, 2007. The total amount of unrecognized tax benefits as of the date of adoption was $220. The Company’s practice is to recognize interest and/or penalties related to income tax matters as a component of income tax expenses. Upon adoption of FIN 48 on January 1, 2007, the Company recognized $1,774 of interest and penalties. As a result of the implementation of FIN 48 on January 1, 2007, the Company recognized a reduction to retained earnings of $1,889. As a result of the implementation of FIN 48, the Company recognized a $105 decrease in deferred tax assets and a corresponding decrease in the valuation allowance. As of January 1, 2007, the amount of unrecognized tax benefits included in the balance sheet that would, if recognized, affect the effective tax rate is $115.
As of December 31, 2007, the Company is subject to taxation in The People’s Republic of China, Hong Kong, Australia, Thailand, and Singapore. The Company’s tax years for 1998 and forward are subject to examination by the tax authorities in the jurisdictions where the Company is subject to taxation.
As of December 31, 2007, the amount of unrecognized tax benefits included in the balance sheet that would, if recognized, affect the effective tax rate is $130. The Company recognized $440 in interest and penalties during 2007. As of December 31, 2007, the Company recognized $2,214 of interest and penalties.

 
December 31,
Change in Uncertain Tax Positions
2006
2007
Balance at January 1
$
—
$
—
Adoption of FIN 48 effective January 1, 2007
—
220
Additions based on tax positions related to the current year
—
213
Additions for tax positions of prior years
—
42
Balance at December 31
$
—
$
475


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
13. 
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss) are as follows:

                                                                                    UNREALIZED
                                                                                       GAINS
                                                                                    (LOSSES) ON
                                                                    CURRENCY        AVAILABLE-
                                                                  TRANSLATION        FOR- SALE
                                                                  ADJUSTMENTS       SECURITIES           TOTAL

       Balance at December 31, 2000                                    (33,310)            155         (33,155)
       Currency translation adjustment                                  (4,024)              -          (4,024)
       Unrealized losses on available-for-sale
         securities                                                          -             (32)            (32)
       Deferred taxes relating to unrealized
         losses on available-for-sale securities                             -               9               9
                                                                       -------         -------         -------
       Balance at December 31, 2001                                    (37,334)            132         (37,202)

       Currency translation adjustment                                   6,919               -           6,919
       Unrealized losses on available-for-sale
         securities                                                          -            (391)           (391)
       Deferred taxes relating to unrealized
         losses on available-for-sale securities                             -              10              10
                                                                       -------         -------         -------
       Balance at December 31, 2002                                    (30,415)           (249)        (30,664)

       Currency translation adjustment                                   4,754               -           4,754
       Losses realized on disposal of available-for-sale
         securities                                                          -             (89)            (89)
       Unrealized gains on available-for-sale
           securities                                                        -             479             479
       Deferred taxes relating to unrealized gains
         on available-for-sale securities                                    -             (15)            (15)
                                                                       -------         -------         -------
       Balance at December 31, 2003                                    (25,661)            126         (25,535)
                                                                       =======         =======         =======






                                      F-30

 
Currency
translation
adjustments
Unrealized
gains (losses)
on available-
for-sale
securities
Others
Total
Balance at January 1, 2005
$
(24,078
) 
$
1,037
$
—
$
(23,041
) 
Currency translation adjustment
(4,062
) 
—
—
(4,062
) 
Unrealized losses on available-for-sale securities
—
(791
) 
—
(791
) 
Deferred taxes relating to unrealized losses on available-for-sale securities
—
286
—
286
Balance at December 31, 2005
(28,140
) 
532
—
(27,608
) 
Currency translation adjustment
9,822
—
—
9,822
Realized gain on liquidation of subsidiary
(1,801
) 
—
—
(1,801
) 
Deferred taxes relating to realized gain on
liquidation of subsidiary
556
—
—
556
Gain realized on sale of available-for-sale securities
—
(601
) 
—
(601
) 
Deferred taxes relating to realized gain on sales of available-for-sale securities
—
258
—
258
Unrealized losses on available-for-sale securities
—
(156
) 
—
(156
) 
Deferred taxes relating to unrealized losses on available-for-sale securities
—
92
—
92
Balance at December 31, 2006
(19,563
) 
125
—
(19,438
) 
Currency translation adjustment
15,179
—
—
15,179
Gain realized on sale of available-for-sale securities
—
(34
) 
—
(34
) 
Deferred taxes relating to realized gain on sales of available-for-sale securities
—
6
—
6
Unrealized losses on available-for-sale securities
—
(12
) 
—
(12
) 
Deferred taxes relating to unrealized losses
 
 
 
 
on available-for-sale securities
—
6
—
6
Pension benefits recognized under SFAS 158
—
—
(71
) 
(71
) 
Balance at December 31, 2007
$
(4,384
) 
$
91
$
(71
) 
$
(4,364
) 


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


12.      COMMITMENTS AND CONTINGENCIES

         (a)      Leases

                  
14. 
COMMITMENTS AND CONTINGENCIES
(a) 
Leases
The Company leases certain machinery and equipment under capital leases.

                  leases for 2006 and 2007.
The Company leases a piece of land in Singapore and certain buildings under non-cancelablenon-cancellable operating lease arrangements.

                  arrangements for terms from 5 to 30 years.
Future minimum payments under capital leases and non-cancelablenon-cancellable operating leases with initial terms of one year or more consisted of the following as of December 31, 2003:


                                                                             Capital      Operating
                                                                              Leases         Leases
                                                                             -------      ---------

                  2004                                                            244         441
                  2005                                                            154         429
                  2006                                                           -            302
                  2007                                                           -            194
                  2008                                                           -            194
                  Thereafter                                                     -          4,218
                                                                               ------     -------
                  Total minimum lease payments                                 $  398      $5,778
                                                                                           ======
                  Amounts representing interest                                   (35)
                                                                               ------

                  Present value of net minimum lease payments                  $  363
                                                                               ======

                  Rental expense consisted of the following:

                                                                       Year ended December 31,
                                                                    2001       2002         2003


                  Rentals under operating lease                     $  84      $  117      $  425
                                                                    =====      ======      ======
2007:

 
Capital
Leases
Operating
Leases
2008
$
161
$
425
2009
194
157
2010
—
136
2011
—
136
2012
—
136
Thereafter
—
2,451
Total minimum lease payments
$
355
$
3,441
Amounts representing interest
(29
) 
 
Present value of net minimum lease payments
$
326
 
Rental expense consisted of the following:

 
2005
2006
2007
Rentals under operating lease
$
671
$
738
$
766
The current and non-current portion of the capital lease liabilities of $222$142 and $141$184 as of December 31, 20032007 are included in accounts payable and accrued expensesother current liabilities and other liabilities, respectively. The capital lease liabilities are secured by a charge over the leased machinery and equipment at cost of $575$539 and $811$537 as of December 31, 20022006 and 2003,2007, respectively. The accumulated depreciation of these leased assets for the years endedas of December 31, 20022006 and 20032007 amounted to $206$158 and $365,$214, respectively.




                                      F-31
The average discount interest rate implicit in the lease is 7.8% and 7.8% for 2006 and 2007, respectively.
(b) 
As of December 31, 2007, there were outstanding bank guarantees of $50,221 (2006: $43,956; 2005: $14,845) issued by the banks on behalf of Charoong Thai and its subsidiaries in respect of certain performance bonds as required in the normal course of business of the companies. These guarantees generally expire within 1 year.
(c) 
As of December 31, 2007, Charoong Thai and its subsidiaries had given continuing corporate guarantee of $79,743 (2006: $58,653; 2005: $50,302) in respect of banking facilities extended to two Operating Subsidiaries.
(d) 
As of December 31, 2007, Charoong Thai has contract commitments to purchase totaling $47,431 to $71,147 (2006: $85,403; 2005: $45,657), of raw materials from third parties at the prices stipulated in the contracts.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


12.      COMMITMENTS AND CONTINGENCIES (continued)

         (b)      
14. 
COMMITMENTS AND CONTINGENCIES (continued)
(e) 
As of December 31, 2007, Sigma Cable has committed to sell/deliver copper cables at a predetermined price totaling $9.3 million (SGD 13.5 million) throughout 2008. As of December 31, 2007 the estimated fair value gain not recognized in the financial statements relating to this commitment is approximately $701.
(f) 
Sigma Cable has agreed to provide continuing financial support to APEC to enable APEC to meet its liabilities as and when they fall due. The letter of awareness from Sigma Cable with an ownership covenant requires Sigma Cable to maintain a minimum of 85% of interest in APEC.
(g) 
Approximately $2,159 of property, plant and equipment of a subsidiary in the People’s Republic of China is located on a piece of leasehold land held by an equity investee. The equity investee is in the process of obtaining the land use right certificate in respect of the said land.
(h) 
The Company provided a corporate guarantee not exceeding the sum of $3,503 (AUD 4 million) to a third party for the procurement of copper by a subsidiary company. The guarantee period is for one year. The latest renewal was made on January 16, 2008 and the guarantee will expire on February 28, 2009.
(i) 
In February 2008, Supreme Court in Singapore rendered a decision against Sigma Cable in which Sigma Cable is found liable to one of its customers for damage approximately in an amount of $886. Sigma Cable appealed the decision. However, the management believes that it is more likely than not that the Company’s appeal will not be successful. Therefore, this amount has been accrued as of December 31, 2005.
(j) 
A customer of Sigma Cable has claimed for damages relating to the termination of Sigma Cable’s purchase agreement with the customer. As at the date of this report, neither of the parties has started legal action, hence, the outcome of any potential litigation is still uncertain and the amount of damages is yet to be assessed. The management of Sigma Cable is going to have some discussion with this customer in near future.
(k) 
As disclosed in Note 1, on June 28, 2007, SOF acquired the Sino-JP shares pursuant to a share purchase agreement (the ‘‘Purchase Agreement’’), and entered into a shareholders’ agreement with the Company and PEWC (the ‘‘Shareholders’ Agreement’’). Among other things, the Shareholders’ Agreement provides for the following:
Indemnification
The Company must certify to SOF whether or not it is considered a Controlled Foreign Corporation or a Passive Foreign Investment Company as of December 31, 2003, there were outstanding bank
                  guarantees of $107, issuedeach fiscal year end. Should this certification be challenged by the banks on behalf of Charoong
                  Thaitaxing authorities and found to be incorrect, the Company must indemnify SOF and its subsidiariesshareholders against interest and penalties that may be imposed and reasonable attorney’s fees incurred.
It is management’s opinion that this indemnification will not result in respectany adverse material financial consequence to the Company.
Registration Rights
The Shareholders’ Agreement provides SOF with the certain registration rights. The Company must use its reasonable best efforts to prepare and file with the SEC a registration statement or statements covering, among such other securities as may be offered from time to time by the Company, the resale of certain performance
                  bondsthe ‘‘Registrable Securities’’ for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act of 1933. ‘‘Registrable Securities’’ includes the shares beneficially owned by SOF.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
14. 
COMMITMENTS AND CONTINGENCIES (continued)
The Company must use its reasonable best efforts to cause any such registration statement required by the Shareholders’ Agreement to be declared effective as promptly as possible after being filed, and keep such registration statement effective until (i) all Registrable Securities either have been sold or may be sold without volume restrictions pursuant to Rule 144(k) of the Securities Act of 1933 and (ii) SOF receives freely transferable shares from the Issuer’s transfer agent.
If (i) any such registration statement is not declared effective by November 30, 2008, or (ii) any such registration statement ceases to remain continuously effective for any reason after the effectiveness date and during any time when the registration statement is required to be effective, or SOF is otherwise not permitted to utilize the prospectus therein to resell such Registrable Securities, in either case, for more than fifteen (15) consecutive trading days or more than an aggregate of forty-five (45) trading days during any twelve month period (an ‘‘ Event ‘‘), then the ‘‘Put Right’’ (defined below) will become immediately exercisable and will continue until such event has been cured.
Put Right and Option
Under the terms of the Shareholders’ Agreement, SOF has the right and option (but not the obligation) to sell to PEWC upon the occurrence of a Put Event (defined below), and PEWC agreed to purchase from SOF upon the occurrence of a Put Event, all Registrable Securities then owned by SOF (the ‘‘Put Shares ‘‘), for an amount equal to the Put Price (defined below) together with interest (calculated on the basis of a 360 day year) on the Put Price, computed from the date of the Shareholders’ Agreement until the closing related to the applicable put right at a rate per annum that is equal to the Libor Rate plus fifty (50) basis points (compounded annually) (the ‘‘Put Right’’). If the Put Event terminates prior to the closing of such Put Right, the exercise of the Put Right is deemed rescinded and the transaction relating to the Put Right is deemed cancelled, but this will not terminate the existence of a fut ure Put Right upon the triggering of a future Put Event.
A ‘‘Put Event’’ means any date (i) after November 30, 2008 whereby (A) an Event has occurred and continues to occur or (B) the shares are not quoted on the Nasdaq Stock Market, Inc., or (ii) after January 31, 2009 whereby the shares are not listed on a US Securities Market, which means any of the Nasdaq Stock Market, Inc. (Global Market or Global Select Market), the American Stock Exchange LLC or the New York Stock Exchange LLC. The ‘‘Put Price’’ means for (i) shares purchased pursuant to the Purchase Agreement, an aggregate amount equal to the product of (a) the number of shares being sold and (b) US$4.35 and (ii) shares purchased under the preemptive right provisions of the Shareholders’ Agreement, an aggregate amount equal to the purchase price thereof.
The Shareholders’ Agreement does not contain any provisions that impose any purchase, reimbursement or financing obligations on the Company in the normal courseevent that SOF exercises the Put Right. The Put Right is an obligation solely of businessPEWC and not of the companies. These guarantees generally expire within 1 year.

         (c)Company. However, for the avoidance of doubt and as a re-affirmation that the financial and other obligation to SOF in the event of an exercise of the Put Right rest exclusively with PEWC, the Company has, on March 27, 2008, entered into a Non-Recourse Confirmation Agreement with PEWC whereby PEWC (i) covenants that it has no put right against the Company relating to the Put Shares and that PEWC’s obligations to SOF are without recourse to the Company, (ii) waives any such right should it arise in the future, and (iii) agrees that it shall not cause the Company, directly or indirectly, to incur any costs associated with the exercise of the Put Right.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
14. 
COMMITMENTS AND CONTINGENCIES (continued)
The Shareholders’ Agreement provides, and the Non-recourse Confirmation Agreement confirms, that the Put Rights is solely the obligation of PEWC. The Company has no purchase, reimbursement or financing obligations in the event that SOF exercises the Put Right. As of December 31, 2003, Charoong Thai and its subsidiaries
                  had given continuing corporate guarantee of $4,649such, the Company has classified the Put Shares as equity in respect
                  of banking facilities extended to two Operating Subsidiaries
                  of which $823 has been utilized.

         (d)      Sigma Cable has agreed to provide continuingthe accompanying financial support
                  to APEC to enable APEC to meet its liabilities as and when
                  they fall due.


13.      FINANCIAL INSTRUMENTS

         (a)      Concentrations of credit risk

                  statements.
15. 
FINANCIAL INSTRUMENTS
(a) 
Concentrations of credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, bank deposits, investments, investment securities and trade accounts receivable.
The Company maintains cash and cash equivalents and
                  short-term and long-term investments with various financial institutions. These financial institutions are located in Singapore, Thailand, Australia, Hong Kong and the People'sPeople’s Republic of China. The CompanyCompany’s policy is designed to limit its exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company'sCompany’s investment strategy.
Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities comprising the Company'sCompany’s customer base. The Company carefully assesses the financial strength of its customers and generally does not require any collateral. At December 31, 2003,2007, there was no trade receivable which exceeded 10% of the Company'sCompany’s account receivable amounts.
The Company is exposed to credit loss in the event of non-performance by counter parties on foreign exchange contracts, but the Company does not anticipate non-performance by any counter parties.




                                      F-32




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


13.      FINANCIAL INSTRUMENTS (continued)

         (b)      Fair value

                  
(b) 
Fair value
The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:
Cash and cash equivalents:equivalents:    The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value because of the short-term maturity of these instruments.
Accounts receivable and accounts payable:payable:    The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate their fair values because of the short-term maturity of these instruments.
Investment securities:securities:    The fair values forof marketable equity securities are based on quoted market prices, details of which are set out in Note 5.7. The fair values for debt securities are based on discounted cash flow analysis using current interest rates for instruments with similar maturities. It is not practicable to estimate the fair values of the equity investments that do not have a quoted market price, without incurring excessive costs.
Long-term and short-term debt:debt:    The carrying amounts of the Company'sCompany’s borrowings under its short-term revolving credit arrangements approximate their fair values. The fair values of the Company'sCompany’s long-term debt are estimated using discounted cash flow analyses, based on the Company'sCompany’s current incremental borrowing rates for similar types of borrowing arrangements. As of December 31, 2007, the Company had non-interest bearing long-term debt outstanding with a related party of $240. The fair value of this debt was $226 as of December 31, 2007. The fair value of the long-termnon-interest bearing short-term debt from a related partyparties is not determinable because of the related party nature of the loan.

                  The carrying amountsdebt and fair values of the Company's
                  financial instruments as of December 31, 2002 and 2003 were as
                  follows:


                                                                       2002                          2003
                                                           --------------------------    --------------------------
                                                              Carrying           Fair       Carrying            Fair
                                                                Amount          Value         Amount           Value
                                                              --------          -----       --------           -----


                  Cash and cash equivalents                   $ 14,431       $ 14,431       $ 25,032        $ 25,032
                  Short-term bank deposits                       3,892          3,892          3,567           3,567
                  Equity securities available-for-sale             541            541          1,041           1,041
                  Debt securities held-to-maturity                 120            120             50              50
                  Bank loans and overdrafts                     36,808         36,808         22,339          22,339

                  Long-term debt                                 1,800          1,800          1,654           1,654

                  Forward exchange contracts                         1              1              1               1






                                      F-33
fact that they have no stated due dates.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


14.      CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

         
15. 
FINANCIAL INSTRUMENTS (continued)
Forward exchange contracts:    The fair values of forward exchange contracts are estimated by reference to market quotations for forward contracts with similar terms, adjusted where necessary for maturity differences.
There are no significant differences between the carrying amounts and fair values of the Company’s financial instruments as of December 31, 2006 and 2007.
16. 
CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
Copper is the principal raw material used by the Company. The Company purchases copper at prices closely related to the prevailing international spot market prices on the London Metal Exchange for copper. The price of copper is influenced heavily by global supply and demand as well as speculative trading. Consequently, an increasea change in the price of copper will have a direct effect on the Company'sCompany’s cost of sales.
Changes in exchange rates influence the Company'sCompany’s results of operations. The Company'sCompany’s principal operations are located in Thailand, the People'sPeople’s Republic of China ("PRC"(‘‘PRC’’) and Singapore and a substantial portion of its revenues are denominated in Thai Baht, PRC Renminbi ("RMB"(‘‘RMB’’) or Singapore dollars, whereas a substantial portion of the Company'sCompany’s cost of sales are denominated in US dollars. In 1997, the
         devaluation of the Thai Baht against the US dollar adversely affected
         the operations of the Company in Thailand. Any devaluation of the Thai Baht, RMB or Singapore dollar against the US dollar would have an adverse impact on the operations of the Company.
The Company has investments in subsidiariesconducts substantial business operations in the PRC. The distributionsresults of earnings outsideoperations and prospects are likely to be materially impacted by economic, legal and other developments in the PRC.
The PRC are subject to control
         becausegovernment imposes controls on the RMB is not freely convertibleconvertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade related transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange (‘‘SAFE’’) by complying with certain procedural requirements. However, approval from SAFE or its local branch is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. On January 1, 1994, theThe PRC government introduced a single rate of
         exchange as quoted daily bymay also at its discretion restrict access in the People's Bank of China (the "Unified
         Exchange Rate"). The quotation of the exchange rates does not imply
         free convertibility of RMB into other foreign currencies. All foreign
         exchange transactions continuefuture to take place either through the Bank of
         China or other banks authorized to buy and sell foreign currencies atfor current account transactions. Shortages in the exchange rates quoted by the People's Bank of China. Approvalavailability of foreign currency payments bymay restrict the Bankabilit y of Chinathe Company’s subsidiaries in the PRC to remit sufficient foreign currency to pay dividends or other institutions
         requires submitting a payment application form together with suppliers'
         invoices, shipping documents and signed contracts.




                                      F-34
payments to the Company, or otherwise satisfy their foreign currency-denominated obligations.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


15.      RELATED PARTY BALANCES AND TRANSACTIONS



                                                                                   December 31,
                                                                              2002             2003


         Due from:
         Pardee Assets Co. Ltd                                              $     2          $     2
         Shandong Yanggu Wire & Cable Corp Ltd ("Shandong Yanggu")               58
         PEWC                                                                   603             --
         Italian-Thai Development Public Company Limited
           ("Ital-Thai") and its
17. 
RELATED PARTY BALANCES AND TRANSACTIONS
The related parties are defined as affiliates                                   3,056              887
         SPHC                                                                   731            1,624
         A director of Siam Pacific                                              21               21
         PEWS                                                                  --                277
         Others                                                                 262              239
                                                                            -------          -------
                                                                            $ 4,675          $ 3,108
                                                                            =======          =======

         Due to:
         PEWC                                                               $12,297          $18,339
         Fujikura Limited                                                       266               16
         Thai Metal Processing Company Limited                                   83              111
         Shangdong Yanggu                                                        92             --
         SPHC                                                                 2,630            2,600
         Pacific Overseas Investment Management Ltd                             221             --
         PEWS                                                                  --              1,000
         Others                                                                 463              449
                                                                            -------          -------
                                                                            $16,052          $22,515
                                                                            =======          =======
         Short-term loans from:
         Moon View Venture Limited ("Moon View")                            $ 1,537          $ 1,537
         PEWC                                                                   231              231
         Fujikura Limited                                                        69             --
         Pacific Overseas Investment Management Ltd                             195              195
         Ital-Thai                                                              219             --
                                                                            -------          -------
                                                                            $ 2,251          $ 1,963
                                                                            =======          =======



                                      F-35




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)

15.      RELATED PARTY BALANCES AND TRANSACTIONS (continued)


                                                                                  December 31,
                                                                              2002             2003


         Long term loans from PEWC                                          $ 8,822          $ 7,824
                                                                            =======          =======
the Company; entities for which investments are accounted for by the equity method by the Company; the principal owners of the Company; its management; members of the immediate families of the principal owners of the Company and its management.

 
December 31,
 
2006
2007
Due from:
 
 
PEWC
$
739
$
2,076
PEWC, Singapore Branch
—
955
PEWC Singapore Co. (Pte) Ltd.
885
—
Italian-Thai Development Public Company Limited (‘‘Ital-Thai’’) and its affiliates
4,639
3,566
SPHC
1,351
1,544
A director of Siam Pacific
10
13
Shandong Yanggu Wire & Cable Corp Ltd (‘‘Shandong Yanggu’’)
809
431
Others
101
53
 
$
8,534
$
8,638
Due to:
 
 
PEWC
$
26,898
$
24,577
PEWC, Singapore Branch
—
892
PEWC Singapore Co. (Pte) Ltd.
3,571
1,183
Shandong Yanggu
69
719
Fujikura Limited
76
220
Thai Metal Processing Co., Ltd.
50
147
SPHC
2,619
2,855
Shandong Huayu
—
1,208
Others
23
—
 
$
33,306
$
31,801
Short-term loans from:
 
 
Moon View Venture Limited (‘‘Moon View’’)
$
1,537
$
1,537
Pacific Overseas Investment Management Ltd
195
195
 
$
1,732
$
1,732
The above balances with related parties are interest-free and are repayable upon demand. All balances with related parties are unsecured.
Moon View, PEWC, Singapore Branch and PEWSPEWC Singapore Co. (Pte) Ltd are controlled by PEWC. Ital-Thai is the minority shareholder of one of the Company'sCompany’s Operating Subsidiaries.

         All balances with related parties are unsecured.

         Subsidiaries in Thailand. Shandong Yanggu is the shareholder of one of the Company’s Operating Subsidiaries in China. SPHC is one of the Company’s equity investees.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
17. 
RELATED PARTY BALANCES AND TRANSACTIONS (continued)

 
December 31,
 
2006
2007
Long term loans from PEWC Singapore Co. (Pte) Ltd
$
900
$
240
Less: short term portion
(900
) 
(240
) 
Long term portion
$
—
$
—
The long term loans from PEWC included amounts of $5,818 and $4,818 as
         of December 31, 2002 and 2003, respectively, which bear interest at
         LIBOR plus 1% per annum. The long-term loansSingapore Co. (Pte) Ltd have no fixeda term of repaymentthree years and were due in March 2007 and are uncollateralized. Partial repayment was made in 2007 and the remaining balance of $240 is expected to be repaid in 2008. Except forAs the above
         loans, allbalance was not paid in full in March 2007, the other balances with related parties are interest-freedebt is in default and are repayable on demand.

         therefore, is accruing interest at the default interest rate of 7.5% per annum. Through June 12, 2008, the debt has not been called by PEWC Singapore Co. (Pte) Ltd.
The transactions undertaken with related parties can be summarized as follows:

                                                                                   Year ended December 31,
                                                                             2001             2002              2003


         Purchases of copper from PEWC                                   $ 31,493         $ 42,959          $ 30,708
         Purchases of power cable from PEWC                                18,058           34,271            20,130
         Subcontracting services provided by PEWC                            -                 804               100
         Commission income from PEWC                                          293              348              -
         Sales to Ital-Thai and its affiliates                              1,378            1,014               520
         Sales to PEWC                                                          8               12               941
         Sales to PEWC Singapore                                             -                -                  146
         Sales to Lox Pac                                                     689             -                   19
         Sales to Shandong Yanggu                                            -                -                  131
         Sales to NCS                                                         215             -                 -
         Purchases of machinery from PEWC                                     776             -                 -
         Purchase of raw materials from Thai Metal
            Processing Company Limited                                        876            1,157               995
         Purchase of goods from Fujikura Limited                            1,042            3,523             1,161
         Interest expense paid to PEWC                                        392              111               129
         Management fee paid to PEWC                                          328              141               292
         Management fee received from  PEWC                                  -                  11                12
         Management fee received from PEWC Singapore                         -                -                   24
         Rental income received from Thai Professional
           Telecom Network Company Limited                                      3             -                 -
         Rental income received from NCS                                       16             -                 -
         Interest income from NCS and affiliates                              316              209              -
         Royalty fee paid to Fujikura Limited                                  69               69                14
         Purchase of goods from Shandong Yanggu                              -                -                  147
         Dividend income from Thai Metal Processing Co. Ltd.                 -                -                  152
                                                                           ======           ======            ======





                                      F-36




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of US Dollars, except share data)


15.      RELATED PARTY BALANCES AND TRANSACTIONS (continued)

         

 
Year ended December 31,
 
2005
2006
2007
Purchases of copper from PEWC
$
30,267
$
54,403
$
55,360
Purchases of power cables from PEWC
17,483
18,587
11,442
Purchases of power cables from PEWC, Singapore Branch
6,375
—
—
Sales to Ital-Thai and its affiliates
3,583
11,615
8,538
Sales to PEWC
6
—
—
Sales to PEWC, Singapore Branch
3,147
—
—
Sales to Shandong Yanggu
2,829
141
572
Purchases of raw materials from Thai Metal Processing Co. Ltd
1,466
1,196
1,222
Purchases of goods from Fujikura Limited
—
1,109
766
Interest expense paid to PEWC
337
491
472
Interest expense paid to PEWC Singapore Co. (Pte) Ltd.
—
52
64
Management fee paid to PEWC
117
152
98
Management fee paid to Ital-Thai
—
32
—
Management fee received from PEWC, Singapore Branch
—
12
12
Purchases of goods from Shandong Yanggu
28
43
450
Dividend income from Thai Metal Processing Co. Ltd.
140
117
104
Copper is the major raw material of the Company'sCompany’s wire and cable products. The Company purchases copper in the form of copper rods and copper cathode. Copper cathode is purchased by Siam Pacific to avoid the high import tariff levied on copper rods. Copper cathode needs to be processed into copper rods prior to the manufacturing of wire and cable products.
Substantially all of the Company'sCompany’s copper rods are supplied by PEWC while copper cathodes are supplied by unrelated third parties. The price of copper rods purchased from PEWC is determined by reference to the quoted copper prices on the London Metal Exchange (the "LME"‘‘LME’’) plus a certain premium.

         In addition to copper rods, the Company purchases high voltage power
         cable from PEWC for distribution purposes. The purchase price of power
         cable from PEWC is determined by reference to the quoted copper prices
         on the LME. Prior to 2003, a sales commission at an average rate of 1%
         to 3% was received from PEWC in addition to sales proceeds received
         from customers.

         Pursuant to the Composite Services Agreement,

         (a)      PEWC will sell copper rod to the Company, upon the Company's
                  request, (i) at a price consisting of the average spot price
                  of copper on the LME for the one month prior to purchase plus
                  an agreed upon premium, (ii) at prices and on terms at least
                  as favorable as it provides copper rod to other purchasers of
                  similar amounts of copper rod in the same markets from PEWC
                  and (iii) will give priority in the supply of copper rod to
                  the Company over other purchasers of copper rod from PEWC.

         (b)      PEWC will grant the Company the right to distribute any wire
                  or cable product manufactured by PEWC in all markets in which
                  the Company presently distributes or develops the capability
                  to distribute in the future, such products on such terms as
                  have historically been in effect or on terms at least as
                  favorable as PEWC grants to third parties that distribute such
                  products in such markets. However, PEWC shall not be required
                  to grant to the Company the right to distribute products
                  manufactured by PEWC in the future in markets where the
                  Company does not currently have the capability to distribute
                  unless and until PEWC has no pre-existing contractual rights
                  which would conflict with the grant of a right to the Company.

         (c)      PEWC will make available to the Company, upon the Company's
                  request and on terms to be mutually agreed between PEWC and
                  the Company from time and time, access to certain of PEWC's
                  technology (and PEWC personnel necessary to use such
                  technology) with respect to the design and manufacture of wire
                  and cable products, including, without limitation, certain
                  fiber optic technology.





                                      F-37
In addition to copper rods, the Company purchases high voltage power cable from PEWC for distribution purposes. The purchase price of power cable from PEWC is determined by reference to the quoted copper prices on the LME. Prior to 2003, a sales commission at an average rate of 1% to 3% was received from PEWC in addition to sales proceeds received from customers. No sales commission was received from PEWC during the years 2005, 2006 and 2007.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


15.      RELATED PARTY BALANCES AND TRANSACTIONS (continued)

         (d)      PEWC will make available
17. 
RELATED PARTY BALANCES AND TRANSACTIONS (continued)
Pursuant to the Company, upon the Company's
                  request and on terms to be mutually agreed between PEWC and
                  the Company from time to time, certaincomposite services agreement,
(a) 
PEWC will sell copper rod to the Company, upon the Company’s request, (i) at a price consisting of the average spot price of copper on the LME for the one month prior to purchase plus an agreed upon premium, (ii) at prices and on terms at least as favorable as it provides copper rod to other purchasers of similar amounts of copper rod in the same markets as PEWC and (iii) will give priority in the supply of copper rod to the Company over other purchasers of copper rod from PEWC.
(b) 
PEWC grants to the Company the right to distribute any wire or cable product manufactured by PEWC in all markets in which the Company presently distributes or develops the capability to distribute in the future, such products on such terms as have historically been in effect or on terms at least as favorable as PEWC grants to third parties that distribute such products in such markets. However, PEWC shall not be required to grant to the Company the right to distribute products manufactured by PEWC in the future in markets where the Company does not currently have the capability to distribute unless and until PEWC has no pre-existing contractual rights which would conflict with the grant of such right to the Company.
(c) 
PEWC will make available to the Company, upon the Company’s request and on terms to be mutually agreed between PEWC and the Company from time to time, access to certain of PEWC’s technology (and PEWC personnel necessary to use such technology) with respect to the design and manufacture of wire and cable products, including, without limitation, certain fiber optic technology.
(d) 
PEWC will make available to the Company, upon the Company’s request and on terms to be mutually agreed between PEWC and the Company from time to time, certain services with respect to the design and manufacture of wire and cable products, computerization, inventory control, purchasing, internal auditing, quality control, emergency back-up services, and recruitment and training of personnel; such services may include the training of the Company’s employees and managers at PEWC facilities and the secondment of PEWC employees and managers to the Company.
(e) 
Each of PEWC and the Company will offer the other party the right to participate in any negotiations with a third party concerning the establishment of any facility or similar venture to manufacture or distribute any wire or cable product outside of the markets where the Company currently manufactures or distributes, or intends to develop the capability to manufacture or distribute, any wire or cable product. Unless the Company and PEWC mutually agree otherwise, the Company shall have the right of first refusal to enter into any definitive agreement with such third party. If, however, such third party would not agree to the substitution of the Company for PEWC or such substitution would prevent the successful completion of the facility or venture, PEWC w ill arrange for the Company to participate to the extent possible.
(f) 
Without the consent of the Company, PEWC will not compete with respect to the manufacture of wire and cable products in any market in which the Company is manufacturing or has taken significant steps to commence manufacturing.
(g) 
For purposes of the composite services agreement, each province in China is considered the equivalent of a market.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of wire and cable products,
                  computerization, inventory control, purchasing, internal
                  auditing, quality control, emergency back-up services, and
                  recruitment and training of personnel; such services may
                  include the training of the Company's employees and managers
                  at PEWC facilities and the secondment of PEWC employees and
                  managers to the Company.

         (e)      Each of PEWC and the Company will notify the other party prior
                  to entering into any negotiations with a third party
                  concerning the establishment of any facility or similar
                  venture to manufacture or distribute any wire or cable product
                  outside of the markets where the Company currently
                  manufactures or distributes, or intends to develop the
                  capability to manufacture or distribute, any wire or cable
                  product. Unless the Company and PEWC mutually agree otherwise,
                  the Company shall have the right of first refusal to enter
                  into any definitive agreement with such third party. If,
                  however, such third party would not agree to the substitution
                  of the Company for PEWC or such substitution would prevent the
                  successful completion of the facility or venture, PEWC will
                  arrange for the Company to participate to the extent possible.

         (f)      Without the consent of the Company, PEWC will not compete with
                  respect to the manufacture of wire and cable products in any
                  market in which the Company is manufacturing or has taken
                  significant steps to commence manufacturing.

         (g)      For purposes of the Composite Services Agreement, each
                  province in China is considered the equivalent of a market.

         (h)      The Composite Services Agreement dated November 7, 1996 has a
                  three-year term. The Agreement originally expired on November
                  7, 1999 but has been renewed annually at the option of the
                  Company.

         US Dollars, except share data)
17. 
RELATED PARTY BALANCES AND TRANSACTIONS (continued)
(h) 
The composite services agreement dated November 7, 1996 has a three-year term. The Agreement originally expired on November 7, 1999. The Company gave a notice to extend the Agreement by successive one-year periods commencing on April 20, 2001. The notice is treated as a standing notice for successive one-year period renewals until further written notice from the Company.
To the extent that transactions occur in the future between the Company and PEWC or affiliates of PEWC other than under the Composite Service Agreement, such transactions will be entered into on an arm'sarm’s length basis on terms no less favorable than those available from unaffiliated third parties.


16.      SUPPLEMENTAL CASH FLOW INFORMATION


                                                               Year ended December 31,
                                                            2001        2002         2003


         Interest paid, including amounts capitalized      $3,890      $1,446      $1,630
                                                           ======      ======      ======

         Income taxes paid                                 $1,559      $1,139      $3,461
                                                           ======      ======      ======
18. 
DEFINED CONTRIBUTION AND BENEFIT PLANS




                                      F-38
As discussed in Note 4, the Company adopted the recognition and disclosure provisions of SFAS 158, effective December 31, 2006, which changed the manner in which the funded status of the Company’s defined benefit plans is reported in the consolidated balance sheet. Under SFAS 158, actuarial gains and losses and prior service costs continue to be deferred and recognized in expense ratably over appropriate future periods, but the overfunded or underfunded status of the defined benefit plans is now measured as the difference between the fair value of plan assets and the projected benefit obligation (‘‘PBO’’). This difference is recorded as an asset (if overfunded) or a liability (if underfunded), with a corresponding adjustment to accumulated other comprehensive loss, net of tax. To reflect the funded status of its plans in the consolidated balance sheet upon adopting SFAS 158, the Company recorded an adjustment to increase its liability for pension and other postretirement benefits by $71. Following adoption, as the net unrecognized actuarial loss and unrecognized prior service costs are recognized in net periodic benefit cost in the consolidated statements of income, those amounts are reclassified from accumulated other comprehensive loss.
SFAS 158 will also require companies to measure the funded status of their defined benefit plans as of the balance sheet date, beginning in fiscal years ending after December 15, 2008. The Company currently measures the funded status of its plan as of the balance sheet date.
The Company has several defined contribution plans covering its employees in Australia, the People’s Republic of China (‘‘PRC’’) and Singapore. Contributions to the plan are made annually. Total charges for the years ended December 31, 2005, 2006 and 2007 were $363, $815 and $785, respectively.
In accordance with the Thailand labor law, Charoong Thai is obliged to make payment to retiring employees, at rates of 1 to 10 times of their final month’s salary rate, depending on the length of service. During the financial year 2007, the Company’s total expense included $193 (2006: $140; 2005: $146). The plan is not funded and the amount is recognized in Other Current Liabilities in the balance sheet. The Company pays to settle the obligations as and when employees retire.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


17.      SEGMENT
18. 
DEFINED CONTRIBUTION AND BENEFIT PLANS (continued)
In conformity with SFAS 132, ‘‘Employers’ Disclosures about Pensions and Other Postretirement Benefits,’’ and SFAS 158, ‘‘Employers’ Accounting for Defined Benefits Pension and Other Postretirement Plans’’, the following table sets forth the Plan’s funded status and pension amounts recognized as at December 31, 2006 and 2007 based on the latest actuarial valuation:

 
2006
2007
Change in benefit obligation:
 
 
Benefit obligation at beginning of year
$
1,128
$
1,265
Foreign currency translation adjustments
—
424
Service cost
78
102
Interest cost
62
91
Benefits paid
(3
) 
(85
) 
Actuarial loss (gain)
—
193
Plan amendments
—
(122
) 
Curtailment
—
—
Settlement
—
—
Benefit obligation at end of year
$
1,265
$
1,868
Change in plan assets:
 
 
Fair value of plan assets at beginning of year
$
—
$
—
Employer’s contribution
 
 
Actual return on plan assets
—
—
Settlement
—
—
Benefits paid
—
—
Fair value of plan assets at end of year
—
—
Funded status
$
(1,265
) 
$
(1,868
) 
Unrealized net transition obligation
—
—
Unrecognized net actuarial loss (gain)
—
—
Accrued benefit cost
$
(1,265
) 
$
(1,868
) 
Components of net periodic benefit cost:
 
 
Service cost
$
78
$
102
Interest cost
62
91
Expected return on plan assets
—
—
Amortizations of:
—
—
Unrecognized net transition obligation
—
—
Unrecognized actuarial loss
—
—
Net periodic benefit cost
$
140
$
193
Amounts recognized in accumulated other comprehensive income
consist of the following: (recognized under SAFS 158)
 
 
Actuarial loss
$
—
$
193
Prior service cost (credit)
—
(122
) 
Total recognized in other comprehensive income
$
—
$
71
The accumulated benefit obligations amounted to $1,265 and $1,868 as at December 31, 2006 and 2007, respectively.


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION

         STATEMENTS
(In thousands of US Dollars, except share data)
18. 
DEFINED CONTRIBUTION AND BENEFIT PLANS (continued)
The estimated net loss and prior service cost (credit) for the defined benefit plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $2 and $(6), respectively.
The significant assumptions used in determining the actuarial present value of the projected benefit obligations as at December 31, 2007, 2006 and 2005 are as follows:

2005, 2006
and 2007
Discount Rate
6.0%
Rate of Increase in Compensation Levels
5.0% – 6.0%
Employee turnover rates:-
Prior to age 35
2.0% – 10.0%
Age 35 to 50
2.0% – 5.0%
Age 51 to 60
—
The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Year ended December 31
 
2008
$
209
2009
77
2010
89
2011
110
2012
45
2013-2017
1,028
 
$
1,558
19. 
SUPPLEMENTAL CASH FLOW INFORMATION

 
Year ended December 31,
 
2005
2006
2007
Interest paid
$
3,742
$
5,551
$
7,187
Income taxes paid
$
4,490
$
5,625
$
10,772


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)
20. 
SEGMENT FINANCIAL INFORMATION
Description of Products by Segment
The Company has three reportable segments -– manufacturing of wire and cable products ("(‘‘Manufactured products"products’’), distribution of copper and cable products manufactured by PEWC ("(‘‘Distributed products"products’’) and sales, delivery and installation of wires and cables.
Measurement of Segment Profit or Loss and Segment Assets
The Company evaluates performance and allocates resources based on profit or loss from operations before interest, gains and losses on the Company'sCompany’s investment portfolio, and income taxes. The accounting policies of the reportable segments, including transactions entered between reportable segments, are the same as those described in the summary of significant accounting polices.


                                                         Year ended December 31,
                                                     2001         2002         2003

         Revenues

         Revenues from external customers:
             Manufactured products                $ 149,018    $ 185,742    $ 192,293
             Distributed products                    33,325       24,303       15,187
             Sales, delivery and installation
               of wires and cables                   14,968       31,134        3,919
                                                  ---------    ---------    ---------

         Total revenues from external customers   $ 197,311    $ 241,179    $ 211,399
                                                  =========    =========    =========

         Intersegment revenues:
             Manufactured products                $   6,544    $   1,206    $   4,134
                                                  ---------    ---------    ---------

         Total intersegment revenues              $   6,544    $   1,206    $   4,134
                                                  ---------    ---------    ---------

         Total revenue                            $ 203,855    $ 242,385    $ 215,533

         Reconciling items
             Intersegment revenues                   (6,544)      (1,206)      (4,134)
                                                  ---------    ---------    ---------


         Total consolidated revenues              $ 197,311    $ 241,179    $ 211,399
                                                  =========    =========    =========



                                      F-39
policies.

 
Year ended December 31,
 
2005
2006
2007
Revenues
 
 
 
Revenues from external customers:
 
 
 
Manufactured products
$
301,516
$
439,280
$
494,805
Distributed products
20,055
12,416
10,783
Sales, delivery and installation of wires and cables
15,691
16,421
5,253
Total revenues from external customers
$
337,262
$
468,117
$
510,841
Intersegment revenues:
 
 
 
Manufactured products
$
4,581
$
934
$
2,648
Total intersegment revenues
$
4,581
$
934
$
2,648
Total revenue
$
341,843
$
469,051
$
513,489
Reconciling items
 
 
 
Intersegment revenues
(4,581
) 
(934
) 
(2,648
) 
Total consolidated revenues
$
337,262
$
468,117
$
510,841


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


17.      SEGMENT FINANCIAL INFORMATION (continued)



                                                                   Year ended December 31,
                                                               2001         2002         2003


         Segment profit
             Manufactured products                          $  20,354    $  35,193    $  32,577
             Distributed products                                 724          338          491
             Sales, delivery and installation
                 of wires and cables                           (1,119)        (787)          92
                                                            ---------    ---------    ---------
           Total segment profit                             $  19,959    $  34,744    $  33,160

         Reconciling items
             Corporate and other expenses                     (15,379)     (20,387)     (19,900)
             Exchange (loss) gain                                 (81)         (16)       4,161
             Interest income                                      901          715          285
             Interest expense                                  (4,074)      (2,214)      (1,407)
             Share of net (loss) gain of equity investees      (2,535)      (4,090)       1,475
             Others                                             1,619        2,502         (214)
                                                            ---------    ---------    ---------
         Total consolidated income before
             income taxes                                   $     410    $  11,254    $  17,560
                                                            =========    =========    =========

         Segment assets
             Manufactured products                          $ 171,025    $ 189,187    $ 209,721
             Distributed products                               2,639        2,016        6,348
             Sales, delivery and installation
               of wires and cables                              5,071          927          460
                                                            ---------    ---------    ---------
         Total segment assets                               $ 178,735    $ 192,130    $ 216,529

         Reconciling items
             Corporate assets                                   6,334        7,512        5,398
             Investment in equity investees                     8,359        8,735       10,249
             Intersegment accounts receivable                      (2)        (184)          --
                                                            ---------    ---------    ---------

         Total consolidated assets                          $ 193,426    $ 208,193    $ 232,176
                                                            =========    =========    =========

         Expenditures for additions to
           long-lived assets
             Manufactured products                          $   9,116    $  11,135    $   4,877
                                                            ---------    ---------    ---------
         Total expenditure for additions
           to long-lived assets                             $   9,116    $  11,135    $   4,877
                                                            =========    =========    =========
20. 
SEGMENT FINANCIAL INFORMATION (continued)




                                      F-40

 
Year ended December 31,
 
2005
2006
2007
Segment profit (loss)
 
 
 
Manufactured products
$
36,693
$
58,488
$
44,671
Distributed products
634
1,107
80
Sales, delivery and installation of wires and cables
(375
) 
(284
) 
(347
) 
(Allowance) recovery for inventory reserve
(346
) 
(2,017
) 
1,272
Total segment profit
$
36,606
$
57,294
$
45,676
Reconciling items
 
 
 
Corporate and other expenses
(30,035
) 
(28,427
) 
(29,511
) 
Exchange (loss) gain
(3,137
) 
5,464
864
Interest income
680
705
1,517
Interest expense
(3,427
) 
(5,886
) 
(7,580
) 
Share of net gain of equity investees
170
73
124
Gain on liquidation of subsidiary
—
1,801
—
Other income
829
1,536
2,070
Total consolidated income before income taxes
$
1,686
$
32,560
$
13,160
Segment assets
 
 
 
Manufactured products
$
247,160
$
349,082
$
373,057
Distributed products
1,011
293
5,117
Sales, delivery and installation of wires and cables
543
187
1,649
Total segment assets
$
248,714
$
349,562
$
379,823
Reconciling items
 
 
 
Corporate and other assets
10,059
10,765
12,047
Investment in equity investees
4,165
4,238
4,246
Total consolidated assets
$
262,938
$
364,565
$
396,116
Expenditures for additions to long-lived assets
 
 
 
Manufactured products
$
4,387
$
5,202
$
2,650
Corporate
91
—
—
Total expenditure for additions to long-lived assets
$
4,478
$
5,202
$
2,650


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


17.      SEGMENT FINANCIAL INFORMATION (continued)



                                                             Year ended December 31,
                                                          2001        2002        2003

         Depreciation expenses
             Manufactured products                      $ 11,210    $  9,805    $  9,217
                                                        --------    --------    --------
         Total consolidated depreciation expenses       $ 11,210    $  9,805    $  9,217
                                                        ========    ========    ========

         Impairment loss
             Manufactured products                      $    -      $  1,559    $    -
                                                        --------    --------    --------
         Total consolidated impairment expense          $    -      $  1,559    $    -
                                                        ========    ========    ========

         Interest income
             Manufactured products                      $    572    $    208    $     67
             Distributed products                            141         219          40
             Sales, delivery and installation
               of wires and cables                            94         280         153
             Corporate                                        94           8          25
                                                        --------    --------    --------
         Total consolidated interest income             $    901    $    715    $    285
                                                        ========    ========    ========

         Interest expense
             Manufactured products                      $  2,723    $  2,033    $    988
             Distributed products                            234         160          34
             Sales, delivery and installation
               of wires and cables                           156         205         132
             Corporate                                       961        (184)        253
                                                        --------    --------    --------
         Total consolidated interest expense            $  4,074    $  2,214    $  1,407
                                                        ========    ========    ========

         Share of net (loss) gain of equity investees
             Corporate                                  $ (2,535)   $ (4,090)   $  1,475
                                                        --------    --------    --------
         Total consolidated share of net (loss) gain
           of equity investees                          $ (2,535)   $ (4,090)   $  1,475
                                                        ========    ========    ========
20. 
SEGMENT FINANCIAL INFORMATION (continued)



                                      F-41




ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands
 
Year ended December 31,
 
2005
2006
2007
Depreciation expenses
 
 
 
Manufactured products
$
(9,422
) 
$
(8,964
) 
$
(9,050
) 
Corporate
(7
) 
(25
) 
(29
) 
Total consolidated depreciation expenses
$
(9,429
) 
$
(8,989
) 
$
(9,079
) 
Impairment loss
 
 
 
Corporate
$
(3,223
) 
$
(86
) 
$
(95
) 
Total consolidated impairment
expense
$
(3,223
) 
$
(86
) 
$
(95
) 
Interest income
 
 
 
Manufactured products
$
434
$
536
$
1,406
Distributed products
98
69
66
Sales, delivery and installation of wires and cables
77
93
45
Corporate
71
7
—
Total consolidated interest income
$
680
$
705
$
1,517
Interest expense
 
 
 
Manufactured products
$
(2,999
) 
$
(5,476
) 
$
(7,184
) 
Distributed products
(153
) 
(129
) 
(250
) 
Sales, delivery and installation of wires and cables
(120
) 
(173
) 
(62
) 
Corporate
(155
) 
(108
) 
(84
) 
Total consolidated interest expense
$
(3,427
) 
$
(5,886
) 
$
(7,580
) 
Share of net gain of equity investees
 
 
 
Corporate
$
170
$
73
$
124
Total consolidated share of net
gain of equity investees
$
170
$
73
$
124
Significant sales of US Dollars, except share data)


17.      SEGMENT FINANCIAL INFORMATION (continued)

         The salesapproximately 10% of the total revenue for any of the financial year are to a major customer, SP Powerassets, which include sales of manufactured products, distributed products, and sales, delivery and installation of wires and cables, which can be summarized as follows:

 
Year ended December 31,
 
2005
2006
2007
Manufactured products
$
1,477
$
3,217
$
7,114
Distributed products
14,521
11,668
6,710
Sales, delivery and installation of wires and cables
15,316
16,679
5,064
 
$
31,314
$
31,564
$
18,888


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

                                                              Year ended December 31,
                                                             2001       2002       2003

         Manufactured products                             $    882   $    663   $  1,127
         Distributed products                                 9,381      9,175     11,840
         Sales, delivery and installation of
           wires and cables                                  14,968     31,134      3,919
                                                           --------   --------   --------
                                                           $ 25,231   $ 40,972   $ 16,886
                                                           ========   ========   ========
20. 
SEGMENT FINANCIAL INFORMATION (continued)
Geographic Area Data
Revenue from external customers is attributed to individual countries based on the customer'scustomer’s country of domicile and is summarized as follows:

 
Year ended December 31,
 
2005
2006
2007
Revenues from external customers
 
 
 
Thailand
$
148,920
$
212,204
$
249,337
Singapore
50,714
49,134
47,798
Australia
34,831
58,277
55,789
The People’s Republic of China
102,797
148,502
157,917
Total revenues from external customers
$
337,262
$
468,117
$
510,841
Long-lived assets by area:
 
 
 
Thailand
$
34,535
$
36,221
$
37,037
Singapore
8,905
8,733
8,485
Australia
4,359
4,033
3,965
The People’s Republic of China
17,340
17,148
16,800
Other
36
10
32
Total long-lived assets
$
65,175
$
66,145
$
66,319

                                                              Year ended December 31,
                                                             2001       2002       2003

         Revenues from external customers
             Thailand                                      $ 80,852   $107,264   $ 93,543
             Singapore                                       58,021     73,859     35,193
             Australia                                       11,009     13,961     22,058
             The People's Republic of China                  46,838     46,095     60,605
             Others                                             591        -          -
                                                           --------   --------   --------
         Total revenues from external customers            $197,311   $241,179   $211,399
                                                           ========   ========   ========

         Long-lived assets by area:
             Thailand                                      $ 44,600   $ 43,238   $ 42,856
             Singapore                                        3,460     10,013      9,720
             Australia                                        4,765      4,731      5,312
             The People's Republic of China                  19,703     17,875     18,397
             Others                                               7        -          -
                                                           --------   --------   --------
         Total long-lived assets                           $ 72,535   $ 75,857   $ 76,285
                                                           ========   ========   ========
21. 
SUMMARIZED FINANCIAL INFORMATION OF EQUITY INVESTEES



18.      MATURITY FOR LONG-TERM DEBTS

         
The aggregate maturitiesfollowing tables present summarized financial information of the Company’s principal equity investees, Lox Pac, Thai Professional, SPHC, Shandong Huayu and SPRC for long-term debts for the five years after2005, 2006 and 2007.

 
December 31,
 
2006
2007
 
Unaudited
Unaudited
Current assets
$
20,426
$
26,338
Non-current assets
24,642
25,261
Current liabilities
(17,804
) 
(18,847
) 
Non-current liabilities
(1,679
) 
(2,006
) 
Total shareholders’ equity
$
25,585
$
30,746

 
Year ended December 31,
 
2005
2006
2007
 
Unaudited
Unaudited
Unaudited
Net sales
$
17,207
$
19,016
$
24,332
Sales less cost of sales
12,571
5,279
6,469
Net income/(loss)
659
(516
) 
127
At December 31, 2003 are $nil, $1,654, $nil, $nil and $7,824,
         respectively.



                                      F-42
2007 the Company’s share of the underlying net assets of certain equity investees was lower than its value of the investment in these equity investees. Accordingly, the Company recorded an impairment charge in value of its investment in these equity investees amounting to $117 (2006: $nil).


ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In
(In thousands of US Dollars, except share data)


19.      SUMMARIZED FINANCIAL INFORMATION OF EQUITY INVESTEES

         The following table presents summarized financial information of the
         Company's principal
21. 
SUMMARIZED FINANCIAL INFORMATION OF EQUITY INVESTEES (continued)
Certain equity investees Lox Pac, Thai Professional, SPHCdid not use PCAOB-registered accountants in the preparation of their financial statements, and NGL for 2001, 2002 and 2003, and Shandong Huayu for 2002 and 2003.
         NGL is listed on the New Zealand Stock Exchange. The aggregate market
         value of the Company's investment in NGL amounted to approximately $586
         and $1,278 as of December 31, 2002 and 2003, respectively.


                                                                December 31,
                                                             2002        2003

         Current assets                                    $  9,896   $  9,322
         Non-current assets                                  21,671     22,230
         Current liabilities                                  7,135      4,371
         Non-current liabilities                                -          -
         Minority interests                                     356          4
         Total shareholders' equity                          24,076     27,177


                                                    Year ended December 31,
                                                  2001       2002        2003

         Net sales                             $ 13,996    $ 11,105   $  4,753
         Sales less cost of sales                (3,567)      2,135      1,062
         Net (loss) income                       (5,487)        624        821

         On December 31, 2002 and December 31, 2003, the unamortized difference
         between the amount at which the investment in Lox Pac and Thai
         Professional was carried and the amount of the Company's underlying
         equity in its net assets amounted to $2,081 and $2,081, respectively.

         In conjunction with the adoption of Statement 142,a minority shareholder, the Company discontinued the amortizationcannot compel these equity investees to re-audit their financial records. The Company is thus unable to include audited financial statements of goodwill associated withthese equity method
         investments effective January 1, 2002. Amortization expense for the
         year ended December 31, 2001 of $210, is includedinvestees in the Company's
         share of net loss in equity investees.







                                      F-43