Samsung 2007 Annual Report Download - page 66

REPORT OF INDEPENDENT AUDITORS
TO THE BOARD OF DIRECTORS AND
SHAREHOLDERS OF SAMSUNG ELECTRONICS CO., LTD.
We have audited the accompanying consolidated balance
sheets of Samsung Electronics Co., Ltd. and its subsidiaries
(collectively referred to as the “Company”) as of December
31, 2007 and 2006, and the related consolidated statements
of income, changes in shareholders’ equity 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 did not
audit the financial statements of Samsung Card Co., Ltd. and
certain other subsidiaries, whose statements reflect total assets
representing 20% and 19% of the consolidated total assets as of
December 31, 2007 and 2006, respectively, and total revenues
representing 24% and 19% of the consolidated total revenues
for the years then ended, respectively. Those statements were
audited by other auditors whose reports thereon have been
furnished us, and our opinion expressed herein, insofar as it
relates to the amounts included for those companies, is based
solely on the reports of the other auditors.
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
management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the reports of the
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the
other auditors, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Samsung Electronics Co., Ltd. and its subsidiaries
as of December 31, 2007 and 2006, and the results of their
operations, the changes in their shareholders’ equity and
their 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 18 to the accompanying consolidated
financial statements, Samsung Electronics Co., Ltd. (“SEC”) and
30 other Samsung Group affiliates (the “Affiliates”) entered into
an agreement with the institutional creditors (the “Creditors”) of
Samsung Motors Inc. (“SMI”) in September 1999. In accordance
with this agreement, SEC and the Affiliates agreed to sell
3,500,000 shares of Samsung Life Insurance Co., Ltd. (the
“Shares”), which were previously transferred to the Creditors in
connection with the petition for court receivership of SMI. The
Shares were to be disposed of by December 31, 2000, and if the
sales proceeds fell short of ￦2,450 billion (the “Shortfall”), SEC
and the Affiliates agreed to compensate the Creditors for the
Shortfall by other means, including participating in any equity
offering or subordinated debentures issued by the Creditors.
Any excess proceeds over ￦2,450 billion were to be distributed
to SEC and the Affiliates. In the event of non-performance to this
agreement, default interest on the Shortfall was agreed to be
paid to the Creditors by SEC and the Affiliates.
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