AMWAY ASIA PACIFIC REPORTS SECOND QUARTER AND FIRST HALF 1998 SALES AND EARNINGS HONG KONG, April 7 /PRNewswire/AsiaNet/-- Amway Asia Pacific Ltd. (NYSE: AAP; ASX: AMW) reported net sales for the second quarter ended February 28, 1998 were $160.7 million, a decrease of 21.7 percent from $205.2 million in the second quarter of last year. For the six months ended February 28, 1998, net sales were $329.8 million, a decrease of 23.4 percent from $430.4 million last year. Without the effect of foreign exchange, sales for the second quarter increased 3.2 percent and declined 5.0 percent for the first half. Net income for the second quarter was $5.5 million, a decrease of 77.6 percent from $24.7 million in the comparable period last year. Earnings per share were $.10 for the second quarter compared to $.41 last year. Net income for the six months was $14.1 million, a decrease of 74.2 percent from $54.6 million in the comparable period last year. Earnings per share were $0.25 compared to $0.91 for last year. Over 50 percent of the decline in net income for the second quarter and 45 percent of the decline for the six months, in relation to the comparable periods last year, was due to foreign currency issues: higher costs of U.S. dollar purchases, lower translated sales and operating results and realized exchange losses. Steve Van Andel, Chairman of Amway Asia Pacific, stated, "The adverse currency environment in Asia deepened in the second quarter of this year and had a significant impact on our sales and operations in Taiwan and the Malaysia-Thailand region. Thailand in particular was affected by the higher cost of U.S. dollar product purchases which contributed to the lower gross margin for the second quarter. The negative regulatory environment in China has worsened, hindering the level of distributor confidence and thus sales and sponsoring. We are firmly committed to China and the establishment of long- term business operations in that country and are hopeful that our time-proven system of product distribution will keep the support of relevant government authorities. Excluding China however, we are pleased that in each of our other markets local currency sales increased during the second quarter of fiscal 1998. Pre-price increase buying in Malaysia, Thailand and Taiwan was a factor in the local currency sales momentum." President Dick DeVos added, "In an effort to assist Malaysia and Thailand during their current economic difficulties, the Company is pleased to announce that Amway Corporation has agreed to reimburse these countries for specific, sales growth targeted marketing programs over the next two fiscal years. This negotiated assistance, developed in conjunction with the growth plans in all of our markets, reinforces our commitment to our distributors. Management will also continue to explore local sourcing opportunities in both the Malaysia-Thailand and Australia-New Zealand regions and monitor the overall economic situations in all our markets to determine if further actions are warranted." Operating and net income for both the second quarter and first half of the fiscal year decreased at a higher rate than sales due to several factors. The depreciation of currencies relative to the U.S. dollar in Thailand, Malaysia and Taiwan increased the cost of sales for U.S. dollar based product purchases and decreased the translated operating and net income contribution for these three markets. Net income was also negatively impacted due to the recognition of foreign currency exchange transaction losses in Thailand and the parent in the second quarter, and additionally in Taiwan for the six months. Higher distribution and selling and administrative expenses in China resulting from the fiscal 1997 fourth quarter geographic expansion also contributed to the declines in operating and net income. These expenses were offset somewhat in the second quarter by the recovery, in China, of certain taxes resulting from negotiations with the government and adjustment of prior year expenses. The inability to take advantage of the tax holiday in China also had a negative impact on net income. Sales Greater China Region In the Greater China region, net sales were $74.8 million for the second quarter, a decrease of 24.4 percent from the comparable period last year. For the six month period, sales were $144.6 million, a decrease of 25.5 percent from the same period last year. The stringent regulatory environment in China continued to negatively impact sales and sponsoring for both the second quarter and six months. Sales in China for the second quarter were $30.9 million, a 41.6 percent decline from the comparable period last year. For the six months, sales in China were $65.2 million, a 37.0 percent decline from the comparable period last year. Sales in Taiwan for the second quarter were $43.9 million, a decrease of 4.5 percent compared to the same period last year. In local currency, sales grew 14.4 percent in relation to the comparable period last year, primarily as a result of distributors' aggressive purchasing prior to the March 1st price increase in Taiwan. Since the opening of China three years ago, this was the first time Taiwan reported a quarterly year-on-year increase in local currency sales. For the six months, sales in Taiwan were $79.4 million, a decrease of 12.5 percent compared to the same period last year. In local currency, sales were level with the prior year. ....ENDS PART ONE... MORE