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TOTHEBOARD OF DIRECTORS AND SHAREHOLDERS OF SAMSUNG ELECTRONICS CO., LTD.
We have audited the accompanying non-consolidated balance sheets of Samsung
Electronics Co., Ltd. (the “Company”) as of December 31, 2004 and 2003, and the related
non-consolidated statements of income, appropriations of retained earnings and cash
flows for the years then ended, expressed in Korean won. These financial statements are
the responsibility of the Company’s management. Our responsibility is to express an opinion
on these 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 mis-
statement. 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 management, 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 non-consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Samsung Electronics Co., Ltd. as of
December 31, 2004 and 2003, and the results of its operations, the changes in its
retained earnings and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the Republic of Korea.
Without qualifying our opinion, we draw your attention to the following matters.
As discussed in Note 17 to the accompanying non-consolidated financial statements, the
Company and 30 other Samsung Group affiliates (the “Affiliates”) entered into an agree-
ment with the institutional creditors (the “Creditors”) of Samsung Motors Inc. (“SMI”) in
September 1999. In accordance with this agreement, the Company and the Affiliates
agreed to sell 3,500,000 shares of Samsung Life Insurance Co., Ltd., which were previously
transferred to the Creditors in connection with the petition for court receivership of SMI
by December 31, 2000. In the event that the sales proceeds fall short of ￦2,450,000 million,
the Company and the Affiliates have agreed to compensate the Creditors for the shortfall
by other means, including the participation in any equity offering or subordinated deben-
tures issued by the Creditors. The amount of overdue interest due to the default of the
agreement is to be reimbursed by the Company and the Affiliates. Any excess proceeds
over ￦2,450,000 million are to be distributed to the Company and the Affiliates. As of
the date of this report, the shares of Samsung Life Insurance Co., Ltd. have not yet been
sold. As of the balance sheet date, the ultimate effect of these matters on the financial
position of the Company cannot presently be determined.
REPORT OF INDEPENDENT AUDITORS