Kia 2001 Annual Report Download - page 19
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Please find page 19 of the 2001 Kia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.To the Shareholders and Board of Directors of
Kia Motors Corporation:
We have audited the accompanying non-consolidated balance sheets of Kia Motors Corporation as of
December 31, 2001 and 2000, and the related non-consolidated statements of income, dispositions of
accumulated deficit and cash flows for the years then ended, all expressed in Korean won. These non-
consolidated financial statements are the responsibility of the Company's management. Our responsibili-
ty is to express an opinion on these non-consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of
Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by manage-
ment, as well as evaluating the overall financial statements presentation. We believe that our audits pro-
vide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Kia Motors Corporation as of December 31, 2001 and 2000, and the
results of its operations, changes in its accumulated deficit and its cash flows for the years then ended in
conformity with financial accounting standards in the Republic of Korea (see Note 2).
The translated amounts in the accompanying non-consolidated financial statements have been translat-
ed into U.S. dollars, solely for the convenience of the reader, on the basis set forth in Note 2 to the finan-
cial statements.
Without qualifying our opinion, we draw attention to Note 1 of the non-consolidated financial statements
which states that the operations of the Company have been affected, and may continue to be affected
for the foreseeable future, by the general unstable economic conditions in the Republic of Korea and in
the Asia Pacific region. The ultimate effect of these uncertainties on the financial position of the Company
as of the balance sheet dates cannot presently be determined.
As explained in Note 12 to the non-consolidated financial statements, on November 4, 2000, the share-
holders of the Company approved the retirement by December 31, 2001 of 80 million shares, or 17.8
percent of total common stock issued at the date of shareholders' meeting. In accordance with the con-
sensus reached during the shareholders' meeting and the provisions of the Korean Commercial Code, in
2001, the Company concluded the stock retirement covering 80 million treasury shares, which had been
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS reacquired for retirement purposes since the date of the shareholders' meeting. As a result of the stock
retirement, the number of the Company's total common shares issued has been reduced to 369,597,455
shares as of December 31, 2001.
As discussed in Note 16 to the non-consolidated financial statements, on January 31, 2001, the National
Tax Tribunal accepted the Company's assertion and issued its decision on the reassessment of the
Company's prior years' taxable income. Pursuant to the decision of the National Tax Tribunal, the tax
authorities reassessed the Company's tax loss carryforward and determined the deductible amount for
tax loss carryforward as 640,589 million ($483,062 million) as of January 1, 2001. In prior years, the
future tax benefits from the tax loss carryforward were not recorded by the Company as deferred income
tax assets pending the outcome of the tax litigation. Accordingly, in 2001, the Company recognized the
tax benefits from the reassessed tax loss carryforward as an extraordinary gain in the amount of
197,301 million ($148,783 million).
As discussed in Note 2 to the non-consolidated financial statements, through December 31, 2000, the
accounting for certain investments accounted for using the equity method was based on the financial
statements of investees as of a date earlier than the Company's balance sheet date since the investees
had not yet prepared financial statements as of that date. In 2001, the Company used financial state-
ments of investees, which are the same as the Company's balance sheet date in applying the equity
method. As a result of this change, in 2001, the Company's beginning accumulated deficit increased by
39,555 million ($29,828 thousand), net income increased by 59,026 million ($44,511 thousand), and
earning per share increased by 152 ($0.11), in comparison with previous accounting method.
As discussed in Note 18 to the non-consolidated financial statements, effective December 1, 2000, the
Company sold its Parts Sales Division, the main function of which had been the selling and distribution of
motor parts for after-sales services, to Hyundai MOBIS. The book value of the disposed Division's net
assets was 264,805 million ($199,687 thousand) as of December 1, 2000. The total consideration for
the sale of the Division consists of a fixed amount of 310,105 million ($233,847 thousand) as compen-
sation for the Division's net assets and goodwill of 45,300 million ($34,160 thousand), plus 10 percent
of ordinary income from the Division's operations which will be received every year for a ten-year period
starting in 2001.
Accounting principles and auditing standards and their application in practice vary among countries.
The accompanying non-consolidated financial statements are not intended to present the financial posi-
tion, results of operations and cash flows in accordance with accounting principles and practices gener-
ally accepted in countries and jurisdictions other than the Republic of Korea. In addition, the procedures
and practices utilized in the Republic of Korea to audit such financial statements may differ from those
generally accepted and applied in other countries. Accordingly, this report and the accompanying non-
consolidated financial statements are intended for use by those knowledgeable about Korean account-
ing procedures and auditing standards and their application in practice.
Seoul, Korea,
February 14, 2002
English Translation of a Report Originally Issued in Korean
34 35
Report of Independent Public Accountants