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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934 for the fiscal year ended December 31, 2000
OR
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 1-13205
KING POWER INTERNATIONAL GROUP CO., LTD.
(Exact name of registrant as specified in its charter)
NEVADA 75-2641513
------ ----------
(State of incorporation) (I.R.S. Employer Identification No.)
26th & 27th Floors, Siam Tower, 989 Rama I Road,
Patumwan, Bangkok 10330 Thailand
(Address of principal executive offices)
Registrant's telephone number, including area code: 011 (662) 658-0090
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, $.001 par value per share
Name of exchange on which registered: American Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
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 disclosure of delinquent filers pursuant to Item 405
of regulation 8-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
---
Number of shares of Common Stock of the registrant outstanding as of February
28, 2001: 20,250,000 shares.
The approximate aggregate market value of the voting stock held by
non-affiliates of the registrant based upon the closing price of $1.21 per share
for the registrant's common stock as reported by the American Stock Exchange as
of February 28, 2001, was approximately $9,031,581.
TABLE OF CONTENTS
Item Number Page
Part I
1. Business
2. Properties
3. Legal Proceedings
4. Submission of Matters to a Vote of Security Holders
Part II
5. Market for the Company's Common Stock and Related Stockholder
Matters
6. Selected Financial Data
7. Management's Discussion and Analysis of Financial Condition
And Results of Operations
7A. Quantitative and Qualitative Disclosures of Market Risk
8. Financial Statements
9. Changes In and Disagreements with Accountants on Accounting
And Financial Disclosure
Part III
10. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
11. Executive Compensation
12. Security Ownership of Certain Beneficial Owners and Management
13. Certain Relationships and Related Transactions
Part IV
14. Exhibits and Reports on Form 8-K
2
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This report contains certain forward-looking statements and information relating
to the Company that are based on the beliefs of the Company or its management as
well as assumptions made by and information currently available to the Company
or its management. When used in this document, the words "anticipate",
"believe", "estimate", "expect", and "intend" and similar expressions, as they
relate to the Company or its management, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company regarding future events and are subject to certain risks, uncertainties
and assumptions, including the risks and uncertainties noted. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those described herein
as anticipated, believed, estimated, expected or intended. In each instance,
forward-looking information should be considered in light of the accompanying
meaningful cautionary statements herein.
PART I
ITEM 1 BUSINESS
General
- -------
The global duty and tax free business is a multi-billion dollar
industry in which luxury and brand name merchandise such as perfumes and
cosmetics, liquor and tobacco and general merchandise products are sold to
travelers exempt from import duties and taxes, within certain allowances, at
their respective destinations. Since 1993, the revenues of the global duty free
business have grown at a compounded annual rate of 5.4% increasing from US$17
billion in 1993 to US$21 billion in 1997. However, the abolition of duty free
among European Union (EU) members during 1999 has stunted the growth of this
industry. In 1999, global duty free sales declined by 2.4% reaching US$20
billion with European duty free sales down by 8.6% or US$0.9 billion following
abolition on June 30th. The main positive trend for the market is that
Asia/Pacific sales have started to make a strong recovery from the economic
crisis that hit the region. Duty free sales in the region, including the Middle
East, rose by 15.2% last year to US$4.93 billion, accounting for 24.7% of total
global sales. According to the Duty Free & Travel-Retail Database & Directory,
it is estimated that by 2010, the region will account for US$14.5 billion worth
of duty free sales, or 36% of the global business. This is due to the
expectation of traffic volumes being predicted to rise rapidly in the next 10
years in Asia/Pacific.
The travel-retail industry, which is defined as all of the business
activities involved in the duty free and tax free businesses, including selling
merchandise at traveling ports (principally airports) and on airplanes, at
tourist centers, at resorts and in major cities, etc., began to develop in Asia
in 1964 when Japanese retailers began establishing duty free shops around the
region. As trade among the countries within the region increased, the Asian duty
free business began to grow. The Asian travel-retail industry was given
additional impetus when trade between Asian countries and the United States and
European countries began to grow further. This increase in trade resulted in an
increase in tourism by travelers from the United States and Europe.
Consequently, Thailand became the most popular travel destination among
Southeast Asia's countries, welcoming more than 36 million passengers traveling
through the International Airports in Thailand during 2000. During the 1990's,
the number of passengers has increased at a compounded average growth rate of 7%
from 19 million in 1990 to 36 million passengers in 2000, according to the
Airports Authority of Thailand (AAT). Furthermore, AAT is expecting to service
passengers up to 50 million in 2007.
3
King Power International Group Co., Ltd. (the "Company") is currently
the leading travel-retail operator in Thailand. The Company operates and manages
29 duty free and 25 tax free stores, via two concession agreements with the
Airports Authority of Thailand, throughout all of Thailand's major airports. At
the end of 2000, the Company has approximately 45,719 square feet of retail
space at the Bangkok and Provincial International Airports.
Background and Organization of the Company
- ------------------------------------------
The Company (formerly known as Immune America, Inc.) was incorporated
under the laws of the State of Nevada in 1985. Until June 12, 1997, this Company
was inactive and was regarded as a development stage company.
On June 12, 1997, the Company engaged in a reverse merger transaction
with the shareholders of J.M.T. Group Company Limited and J.M.T. Duty Free
Company Limited, whereby an aggregate 18,800,000 shares of restricted,
unregistered common stock was exchanged for 99.94% of the issued and outstanding
shares of J.M.T Group Company Limited and 94.95% of the issued and outstanding
shares of J.M.T. Duty Free Company Limited.
The reverse merger was treated as a re-capitalization of the Company.
Accordingly, the assets, liabilities and business operations of J.M.T. Group
Company Limited and J.M.T. Duty Free Company Limited were recognized at
historical cost. The consolidated historical financial statements of J.M.T.
Group Company Limited and J.M.T. Duty Free Company Limited became the historical
financial statements of the Company.
Concurrent with the reverse merger, the Company changed its corporate
name from Immune America, Inc. to King Power International Group Co., Ltd.
Subsequently, on September 9, 1997, J.M.T. Duty Free Company Limited changed its
corporate name to King Power Duty Free Company Limited and on October 10, 1997,
J.M.T. Group Company Limited changed its corporate name to King Power Tax Free
Company Limited.
The Company operates its current businesses through two divisions: the
Tax Free Division and the Duty Free Division .
Tax Free Division
- -----------------
King Power Tax Free Company Limited (the "Tax Free Division" or,
sometimes, "KPT") is a Thai corporation engaged in selling various souvenirs and
consumer products in the International and Domestic terminals of all the major
airports located in Thailand to international and local travelers. The Tax Free
Division holds the exclusive operating license granted by the Airports Authority
of Thailand ("AAT") for all shops of this specific nature.
At the end of 2000, the Tax Free Division operated 25 stores within
Thailand's major international and domestic airports, totaling more than 16,325
square feet of retail space compared to 6,181 square feet in 1993 when it first
began operation. There are now 15 shops located in the various terminals, which
comprise the Bangkok International Airport; 10 of these shops are located in the
airside departure terminals. The landside shops are established in five
different locations in the departure and arrival halls of both terminals. The
Tax Free Division sells domestically manufactured general merchandise including
Thai silk, pewter, Benjarong porcelain, Thai dolls, jewelry, watches, pens,
lighters, leather goods and confectionery, free of Thailand's value-added-tax.
4
There are ten shops, located in the domestic terminals at the Bangkok,
Chiang Mai and Phuket domestic and international airports, selling indigenous
general merchandise of Thailand, together with local specialty goods.
The Company is an active participant in the promotional campaign known
as "Amazing Thailand" for the years 1998 to 2000. The four new shops were opened
in joint operations with AAT, the Tourism Authority of Thailand ("TAT"), and the
Department of Industrial Promotion from the Ministry of Industry and dedicated
to the "Amazing Thailand" promotion.
Duty Free Division
- ------------------
King Power Duty Free Company Limited (the "Duty Free Division" or,
sometimes, "KPD") is a Thai corporation engaged in selling duty free merchandise
to the traveling public under the supervision of Thai customs in duty free shops
located in the international terminals of all of the major airports in Thailand.
The Duty Free Division holds a non-exclusive license to operate duty free shops
from the AAT for shops of this specific nature until December, 2006.
The Duty Free Division operates 29 duty free stores, with approximately
29,394 square feet of retail space, in Thailand's International Airports at
Bangkok, Chiang Mai and Phuket. The Duty Free Division accounts for 60% of the
total duty free retail space currently used in these airports. The Duty Free
Division's merchandise mix consists of top quality brand name liquor and tobacco
products, luxury goods such as watches, perfumes, cosmetics, fashion
accessories, gourmet food and chocolates. In Thailand all imported merchandise
is subject to import duties and governmental taxes. However, the Duty Free
Division's goods are sold exclusively for departing passengers and are free of
all import duties, excise taxes and the value-added-tax imposed by the Thai
government.
The Duty Free Division started its operation on January 1, 1997. During
1998, the Duty Free Division successfully introduced into both Terminals of the
Bangkok International Airport Harrods of Knightsbridge, U.K, as the first duty
free Harrods in Asia. Additionally, the Company has also introduced specialty
stores focusing on well known fashion designers, such as Ferragamo, Versace,
Cartier, Dunhill, Hermes, Burberry, Fendi, Bally, Lanvin, and Givenchy located
in the Terminal I of the Bangkok International Airport.
Both the Duty Free Division's and the Tax Free Division's sales and
their overall performance and results are subject to the influence of external
factors, some of which are beyond the Company's control. These include the
distribution of airlines at particular terminals, the routes that are serviced
by those airlines, loading levels of airline passengers, and economic and other
conditions affecting the airlines servicing Thailand in general. The Company
strategically manages those factors within its control in order to maximize its
performance and minimize the effect of those that it cannot control. The Company
believes that the devaluation of the Thai Baht, relative to the U.S. dollar,
will continue to encourage a greater number of tourists and travelers to come to
Thailand in the future, which should result in a significant positive effect on
the Company's business, both as to sales volumes and profits.
King Power International Group (Thailand) Co., Ltd.
- ---------------------------------------------------
King Power International Group (Thailand) Co., Ltd. was principally
formed to lease the Company's Head Office in the Siam Tower in Bangkok in 1997.
The rental expenses for this facility are allocated according to the actual
usage by each of the Company's subsidiaries. Management has decided to have the
subsidiaries lease their premises directly from the lessor effective as of
January, 1999, in order to prevent unnecessary repetitive payment of corporate
income taxes among the Company's subsidiaries.
Regulation
- ----------
The Duty Free operations are subject to the regulated supervision of
the Customs Department of Thailand ("Customs"). All imported merchandise is
received and stored in the Company's bonded warehouses in Thailand where it is
exempt from all import duties, excise taxes and value-added-taxes of Thailand.
Since the merchandise is sold without duties or taxes, it must remain within the
bonded warehouses until it is requested to transfer to the respective Duty Free
stores for sales.
The Company has a total of two bonded warehouses located in Bangkok and
Phuket serving all of the Duty Free Division's shops in Thailand. Transfer of
any bonded merchandise must be documented and approved by Customs before these
products are transferred for sale to the traveling public at the various retail
stores. Customs makes regular inspections of the inventory in the bonded
warehouses and shop premises. With this tightly regulated control from Customs,
customers are assured that all products sold by the Company are genuine and of
the highest quality.
5
Suppliers, Distribution and Inventory Control
- ---------------------------------------------
The Company purchases both local and imported merchandise from more
than 550 vendors worldwide. This supplier base gives the Company a choice to
selectively purchase the highest quality products and to negotiate with vendors
for the lowest cost, in order for the Company to supply its customers with the
best possible value for their money. Currently, the Company does not have any
long-term purchase commitments.
Through the Company's historically strong relationships with many of
its suppliers, the Company has secured exclusive agreements from numerous
suppliers to be the sole agent for the sale of their products in Thailand in the
duty free shops. Furthermore, the Company receives significant sales support
from these vendors. These supports include in-store displays, gift-with-purchase
items, sales incentives, advertisements, staff training, signage and sales
personnel.
Merchandise is generally shipped directly from vendors to the Company's
bonded warehouses for the Duty Free Division and delivered to the Company's
warehouses at the airport or downtown for the Tax Free Division. The Company's
inventories are strictly controlled to comply with Customs' regulations.
Detailed records documenting the receipt, the transfer and sale of all
merchandise are kept by the Company to certify the authenticity and excellence
of the products sold by the Company.
The Company uses an outside shipping contractor to provide the services
of customs clearing for the imported merchandise into Thailand and directly to
the Company's bonded warehouses.
In order to control inventory levels, the Company uses automated
replenishment systems. Transfers are made to stores in accordance with demands
identified by respective store's managers. The Company maintains the overall
control of enough stock displays in respective stores and repurchasing point of
inventory level in respective warehouses.
The Company's computerized inventory control system allows the Company
to: (1) identify the merchandise needs at each store, (2) promptly reorder
merchandise from the vendors, and (3) comply with the Customs' record-keeping
requirements. Through the Company's automated system, appropriate product mixes
are maintained to maximize merchandise turnovers. The Company has rarely
experienced problems with obsolescence because the turnover frequency for most
products is rapid and slow moving products are quickly identified.
Employees
- ---------
The Company's business as conducted in it shops is labor intensive. The
Company currently employs approximately 1,927 persons. Each member of the sales
staff is equipped with special selling skills geared to the Travel-Retail
business, that is, they are fluent in many languages and have extensive product
knowledge in order to handle sales discussions with foreign customers.
Management promotes job enhancement at every level of the staff to ensure
maximum job satisfaction in return for the highest productivity by each
employee. For example, the Company maintains a Training Center to encourage the
learning of managerial skills, languages, product knowledge, etc. and has
implemented the ISO 9002 standards of operation. Employee turnover continues to
be very low and Management foresees no problems in maintaining its capable staff
of employees as long as the Company sustains its market share and the growth of
its businesses.
Competition
- -----------
The Company foresees no competition for the Tax Free Division. During
1997, the Company was granted an extension by the AAT of the Tax Free Division's
license for the exclusive right to operate and sell gifts and general
merchandise at the Bangkok International Airport, for a further five year term
extending from 1998 to 2003.
As a result of the Company's strong relationship with the AAT over the
years and the major contributions which the Company has made to increase tourism
to Thailand, the Company was granted an extension of the Duty Free Division's
license until 2006. Furthermore, at the end of 2001, the duty free concession
granted to the Company's only competitor will expire and will not be renewed. As
of March 2001, the Company was granted the concession to take over the space
from this out-going competitor, resulting in a significant increase in the Duty
Free Division's existing space. At that time, the Company will become the
principle duty-free operator at Thailand's international airports.
In Thailand, there are several barriers for parties wishing to enter
into the airport duty free business. Any new entrant company must be owned by
Thais who have proven Asian regional duty free experience, particularly with
regard to serving international passengers and Thai Nationals. A new entrant
must reach a minimum turnover in duty free business and must possess bonded
warehouse facilities located in Thailand. It should already be carrying all
major international brands in its portfolio of merchandise.
6
Economic Conditions and Exchange Rates
- --------------------------------------
The principal customers of the Company are the traveling public
utilizing the International and Domestic Airports at Bangkok, Chiang Mai, and
Phuket. The Company's businesses are closely tied to the economic conditions of
the countries from which the travelers come. The Company has strategically
confronted the current economic turmoil of the Asia Pacific region with decisive
actions to minimize the adverse effects on its operations.
In 1999, the Tax Free Division was able to maintain its operational
trends because most of its merchandise consists of products purchased in Thai
Baht. Additionally, the Tax Free Division has always been able to sell its
merchandise in U.S. dollars. Although Thai Baht was floated, there was a minimal
impact on this division's operations because there was very little difference in
the purchasing power of the customers.
The Duty Free Division imports all of its products from suppliers
across the world whereas the purchasing commitments are tied to either U.S.
dollars or currencies of the originating countries. The Company partially offset
the impact of the weak Thai Baht by adjusting, as often as daily, both the
Company's pricing policy and point of sale exchange rates reflecting the current
exchange rate of the Thai banks. By this policy, the Company is able to minimize
the realized and unrealized loss of exchange when purchasing activities are
denominated in foreign currencies.
BUSINESS STRATEGIES
- -------------------
The Company began operating its Tax Free Division in 1993 after
obtaining the five-year sole license to operate its business from the AAT. This
license was renewed in 1998, extending for a period of five additional years
(until 2003) the Division's license to operate in Thailand. In 1997, the Company
obtained its five-year duty free license. Since that time, the Duty Free
Division has become the principal contributor of profits to the Company's
operations. Even though merchandise sold by the Tax Free Division generally
carries a higher profit margin compared to the profit margin for merchandise
sold by the Duty Free Division, the value of each item (measured by its selling
price) is much less. Thus, the profitability of the Tax Free Division has been
generally lower. Management intends to concentrate on improving the
profitability of the Tax Free Division, which has taken effect during this year
and in the future, principally through reducing concession fees and rent cost,
selecting higher value merchandise, and lowering operating costs. For the Duty
Free Division, the Company will continue to increase sales volumes and maintain
higher margins. The Company has successfully extended the existing concession
that is scheduled to expire at the end of 2001 until 2006. Furthermore, the duty
free competitor that shared concession space with the Company in the past was
not able to secure an extension of its concession for the corresponding period;
and the Company was awarded this additional space. Effective January 1, 2002,
the Company will be the preeminent operator of general merchandise tax free and
duty free stores at Thailand's international airports.
Improving profitability for the Tax Free Division
- -------------------------------------------------
The Company has on-going negotiations with the AAT to lower the concession fees
charged by the AAT, to exchange spaces between the Tax Free and the Duty Free
Divisions, and to discontinue some of the shops to lessen losses which are
caused by increased concession fees. The Tax Free Division is in the process of
re-engineering its entire operation to be more compatible with new international
trends for this business. Starting in 2000, it has implemented some phases and
will progress further throughout 2001 and beyond. The main components of this
re-engineering target:
(1) expanding non-concession points of sales, i.e., through
e-commerce where the Company can act as an intermediary for
local products catering to international consumers;
(2) jointly promoting merchandise with several airlines through
its frequent flyer programs and credit-card firms;
(3) increased efficiency in selecting the merchandise to be sold
and emphasizing the potential for increased sales volumes and
the profitability of each item of merchandise selected;
(4) downsizing the amount and types of merchandise displayed from
the concept of "something for everyone" to becoming more
selective in the types of merchandise displayed at different
locations;
(5) developing premium brands in order to create brand awareness,
the uniqueness of product availability, to upgrade quality and
design, and to improve packaging and marketing; an
(6) utilizing the Company's overall resources more efficiently
through the implementation of ISO 9002.
7
Ensure adequate supplies and variety of products of the Duty Free Division
- --------------------------------------------------------------------------
Since the current trend for the Duty Free Division's products is
continued high demand driven by the increased number of Asian tourists who have
made plans or arrangements to visit Thailand in 2001 and beyond, as announced by
the Tourism Authorities of Thailand (TAT), this Division will focus on ensuring
adequate supplies of, and more variety in, the merchandise it offers for sale in
order to cater to these customers. Furthermore, this year the TAT puts greater
emphasis on international exhibitions and conventions travelers to be functioned
in Thailand due to higher spending per capita generated from these groups of
travelers, therefore, the Company will dedicate its resources to plan out
products campaign that would attract spending from these travelers. This
Division will also prepare itself for the expansion in 2002 when the Company
takes over new space replacing the out-going competitor.
ITEM 2 PROPERTIES
The Company's principal office is located at the 26th and 27th floors of the
Siam Tower, at 989 Rama I Road, Patumwan, Bangkok 10330 Thailand. The telephone
number is +662-658-0090. This office contains 29,367 square feet of space and is
leased from Bangkok Intercontinental Hotels Co., Ltd. under a lease expiring in
October, 2003, at an annual cost of $123,929 using an average exchange rate of
40.2391 Thai Baht to 1 US Dollar for 2000.
The Company operates 54 retail stores with retail space totaling 45,719 square
feet, located in the international and domestic airports of Thailand located in
Bangkok, Chaing Mai and Phuket. All of the stores are leased from the Airports
Authority of Thailand (the "AAT") under varying lease agreements involving the
Company's two subsidiaries, KPT and KPD, and require a monthly rental fee
(excluding duty charges and other expenses) for the space actually utilized.
During the 2000 fiscal year, the Company paid a total of $920,180 to the AAT
under these lease agreements. The Company anticipates that the total for the
2001 fiscal year under these lease agreements will be approximately $931,381,
using an exchange rate of 40.2391 Thai Baht to 1 US Dollar as of December 31,
2000.
The Company leases three warehouses located in Bangkok, Chaing Mai, and Phuket,
containing almost 30,000 square feet, from the AAT. The two bonded warehouses
contain approximately 25,000 square feet for the Duty Free Division and
approximately 4,100 square feet for the Tax Free Division. The Company believes
that its facilities are adequate for its current operations.
All payments with regards to these properties are made in Thai Baht. The Company
used an average exchange rate of 40.2391 Thai Baht to 1 US Dollar to translate
these expenses into US Dollars during 2000.
ITEM 3 LEGAL PROCEEDINGS
The Company is not currently a party to any material litigation, or any
litigation which if it were decided against the Company would likely have a
result which would be materially adverse to the Company, its current or future
financial condition, or the Company's present or anticipated methods of
operation.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5 MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock trades on the American Stock Exchange under the
ticker symbol "KPG". The approximate number of holders of record of shares of
common stock, excluding the number of beneficial owners whose securities are
held in street name, was 355 as of February 28, 2000. The Company believes that
approximately 900 stockholders currently own and hold the stock in street name.
8
The following table set out the high and low reported sales prices for the
common stock as reported by the American Stock Exchange since it was listed on
July 30, 1997:
High Low
First Quarter of 2001
(Through February 28, 2001) $1.45 $0.75
Fourth Quarter of 2000 $1.25 $0.62
Third Quarter of 2000 $1.75 $1.25
Second Quarter of 2000 $1.75 $1.00
First Quarter of 2000 $1.62 $1.00
Fourth Quarter of 1999 $1.81 $0.88
Third Quarter of 1999 $2.13 $1.00
Second Quarter of 1999 $2.50 $1.13
First Quarter of 1999 $2.88 $2.00
Fourth Quarter of 1998 $4.50 $1.75
Third Quarter of 1998 $4.50 $1.88
Second Quarter of 1998 $6.38 $3.50
First Quarter of 1998 $9.75 $1.19
Fourth Quarter of 1997 $13.38 $12.88
Third Quarter of 1997 $16.75 $12.88
The Company has never paid any cash dividends. Future earnings will be retained
for use in the Company's business, and the Company does not intend to pay any
cash dividends on its common stock for the foreseeable future.
9
ITEM 6 SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
The following data should be read in conjunction with "the Company,"
"Management's Discussion and analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and notes thereto and the
Unaudited Pro Forma Information and notes thereto included elsewhere in this
Prospectus.
Year Ended December 31,
1995 1996 1997 1998 1999 2000
--------- --------- --------- --------- --------- ---------
Consolidated Statement of Income data:
Sales Revenue ......................... $ 26,461 $ 41,869 $ 95,997 $ 91,125 $ 89,483 $ 108,914
Gross Profit .......................... 192 7,383 23,154 27,051 23,859 34,214
Operating Expenses .................... 3,179 6,273 14,621 31,931 20,753 23,357
--------- --------- --------- --------- --------- ---------
Operating Income ( loss) .............. (2,986) 1,110 8,533 (4,880) 3,106 10,857
Operating Income (expenses),net ....... 399 493 (1,846) 541 197 (952)
Income (loss) before minority interest
and income tax ..................... (2,587) 1,603 6,687 (4,339) 3,303 9,905
Net Income (loss) ..................... $ (2,586) $ 1,643 $ 7,935 $ (4,287) $ 2,413 $ 6,485
========= ========= ========= ========= ========= =========
Net Income (loss) per share :
Basic .............................. $ (0.14) $ 0.09 $ 0.40 $ (0.21) $ 0.12 $ 0.32
Diluted ............................ $ -- $ -- $ -- $ -- $ -- $ --
Weighted Average Share Outstanding :
Basic .............................. 18,800 18,800 19,779 20,250 20,250 20,250
Diluted ............................ -- -- -- -- -- --
Consolidated Balance Sheet Data :
Working Capital ..................... $ (6,109) $ (7,351) $ 17 $ 2,793 $ 6,225 $ 11,996
Total Assets ........................ 1,952 23,742 35,078 48,076 42,213 47,691
Total Long - Term Debt .............. -- 55 227 403 254 178
Stockholders' Equity ................ (5,258) 3,927 9,764 8,751 11,065 15,600
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Caution Regarding Forward-Looking Information
- ---------------------------------------------
This annual report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or its management as well as assumptions made by and information currently
available to the Company or its management. When used in this document, the
words "anticipate", "believe", "estimate", "expect", and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
10
Results of operations, comparing fiscal years ended December 31, 2000 and 1999
- ------------------------------------------------------------------------------
Sales revenue for the year ended December 31, 2000, was approximately
$108.9 million compared to approximately $89.5 million for 1999. This increase
is directly attributable to the continual growth in the number of tourists
entering into Thailand and the promotional sales discount to attract larger
customer base. Commencing in the last half of 1997, the Thai Government began
the "Amazing Thailand" marketing campaign to coincide with various events
occurring in Thailand or other countries closely located near Thailand. This
marketing campaign is international in scope and directly targeted to attract
additional new and repeat visitors to Thailand. The Company expects that this
promotional campaign will continue to directly impact the Company's operations
in a positive manner during and subsequent to this time period. In addition to
the "Amazing Thailand" campaign, during the first half of 2000, the Company
launched promotional sales discount in order to capture new and larger base
customer groups who are price sensitive. By implementing this strategy,
Management believes that the sales volume will continue to grow and positively
impact the Company's operating profit.
The cost of merchandise sold for the year ended December 31, 2000, and
1999, was approximately $53.2 million and $43.3 million, respectively. The
principal factor causing this increase is directly related to the increase in
sales volume. However, due to the lower concession fees paid to the Airports
Authority of Thailand (AAT), comparing the year ended December 31, 2000, to the
same period in 1999, the ratio of concession fees paid to sales revenue fell
from 24.97% in 1999 to 19.75% in 2000. This decrease is a result of successful
negotiations with the AAT to lower the fixed concession fees paid by KPT to be
more closely in line with the current sales of this subsidiary. Management
anticipates a further reduction in these fees may result from continued
negotiations with the AAT.
Selling and administrative expenses were approximately $23.4 million
for the year ended December 31, 2000, and approximately $21.8 million for the
same period in 1999. In terms of percentage of sales, 2000 expenses were
approximately 21.44% of sales and 1999 expenses were approximately 24.4% of
sales. This decrease is in-line with Management's expectation as the result of
increasing efficiency among business units.
Net income for the year ended December 31, 2000, was approximately $6.5
million, or $0.32 per share (basic), compared to the net income of approximately
$2.4 million, or $0.12 per share (basic), for the year ended December 31, 1999.
The ratio of inventory divided by sales revenue for the year ended
December 31, 2000 and 1999, was approximately 16.60% and 18.44%, respectively.
This decrease is the result of an unscheduled increase in number of tourists who
shop at the Company's stores causing faster turnover of merchandise.
Results of operations, comparing fiscal years ended December 31, 1999 and 1998
- ------------------------------------------------------------------------------
Sales revenue for the year ended December 31, 1999, was approximately
$89.5 million compared to approximately $91.1 million for 1998. This decrease
was a result of the travelers concern over Y2K problem causing a substantial
reduction in the number of passengers traveling through the airports.
Furthermore, commencing during the last half of 1997, the Thai Government began
the "Amazing Thailand" tourism marketing campaign for the period 1998 and 1999.
This campaign coincided with the devaluation of the Thai Baht that made Thailand
more attractive to numerous travelers, including, in particular,
budget-conscious tourists. This caused the Company to adjust its marketing and
operating strategies to cater to this new and larger base of customers. In order
to maintain the same level of sales volume as in prior years, the Company had to
sell more units of merchandise. The Company implemented efforts to optimize its
resources and obtain benefits from economies of scale in its operations in order
to improve its financial performance.
The cost of merchandise sold for the year ended December 31, 1999, and
1998, was approximately $43.3 million and $39.1 million, respectively. The
principal factor causing this increase was directly related to the campaign of
promotional sales discounts on products sold in both subsidiaries where more
units of merchandise were sold with less profit margin. However, due to the
lower concession fees paid to the Airports Authority of Thailand (AAT),
comparing the year ended December 31, 1999, to the same period in 1998, the
ratio of concession fees paid to sales revenue fell from 27.40% in 1998 to
24.97% in 1999. This decrease was a result of successful negotiations with the
AAT to lower the fixed concession fees paid by KPT to be more closely in line
with the current sales of this subsidiary. Management anticipates a further
reduction in these fees may result from continued negotiations with the AAT.
Selling and administrative expenses also reflected the temporary
merchandise adjustment and the implementation of promotional sales discount.
These expenses were approximately $21.8 million for the year ended December 31,
1999, and approximately $16.2 million for the same period in 1998. In terms of
percentage of sales, 1999 expenses were approximately 24.40% of sales and 1998
expenses were approximately 17.76% of sales. This increase was directly
attributable to the promotional costs supporting the on-going campaigns to
expand the customer base for both subsidiaries and the promotional sales
discount offered to increase sales volume.
11
Net income for the year ended December 31, 1999, was approximately $2.4
million, or $0.12 per share (basic), compared to the net loss of approximately
$4.3 million, or $0.21 per share (basic), for the year ended December 31, 1998.
The net loss shown in 1998 was caused by a one-time charge of approximately
$15.7 million, resulting from a provision for doubtful accounts for advances to
related companies and loans to directors. During 1999, the balance for these
accounts has been reduced due to successful collections from the total amount of
$27.7 million at December 31, 1998 to $19.6 million at December 31, 1999.
The ratio of inventory divided by sales revenue for the year ended
December 31, 1999 and 1998, was approximately 18.44% and 16.36%, respectively.
This increase resulted from the trip cancellations by many travelers concerned
with potential Y2K problems which adversely affected the Company's inventory
turnover.
Results of operations, comparing fiscal years ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------
King Power Duty Free Co., Ltd. (KPD) began retail operations in 1997
and the revenue of this subsidiary was a direct result of the increase in the
number of tourists coming to Thailand as a result of the social and government
stability, the Thai Baht devaluation, and its fully functional retail stores. In
1998, additional growth was experienced in general merchandise sales at the King
Power Tax Free Co., Ltd. (KPT) stores in Thailand airports, principally due to
increased domestic tourism traffic.
Sales revenue for the year ended December 31, 1998, was approximately
$91.1 million, compared to approximately $96.0 million for 1997. This decrease
was directly attributable to the devaluation of the Baht that took place during
the last half of 1997. Overall sales revenue, measured in Thai Baht, increased
14.29% from Baht 3,252.7 million for the year ended December 31,1997, to Baht
3,717.5 million for the same period in 1998. However, the average exchange rate
of Baht 40.795 to 1 was used to convert the 1998 figure into US Dollars, while
the average exchange rate of Baht 33.883 to 1 was used for 1997. Also commencing
in the last half of 1997, the Thai Government began the "Amazing Thailand"
marketing campaign for the 1998-1999 time period to coincide with various events
occurring in Thailand or other countries located near Thailand. This marketing
campaign was international in scope and directly targeted to attract additional
new and repeat visitors to Thailand.
The cost of merchandise sold for the years ended December 31, 1998 and
1997, was approximately $39.1 million and $38.5 million, respectively. The
principal factor causing this slight increase was directly related to the change
in product mix during 1998 resulting from the decision to concentrate more on
products that have higher turnover and to sacrifice some profit margin in order
to increase sales volumes and decrease carrying costs. In addition, KPT's
concession agreement to maintain its locations within the Thai airports required
payments based upon a fixed amount. As a result, comparing the year ended
December 31, 1998, to the year ended December 31, 1997, the ratio of the
Company's concession fee to sales revenue dropped favorably from approximately
35.77% in 1997 to approximately 27.40% in 1998. Additionally, during the first
quarter of 1998, the Thai government permanently waived the Customs Fee
previously imposed at the rate of 15% of gross sales.
Selling and administrative expenses, excluding depreciation and others,
also reflected the expansion of KPD's business and the increased traffic at
KPT's stores. These expenses were approximately $16.2 million for the year ended
December 31, 1998 and approximately $14.6 million for the same period in 1997.
In terms of percentage of sales, 1998 expenses were approximately 17.76% of
sales and 1997 expenses were approximately 15.23% of sales.
For 1998 the Company provided an allowance for doubtful accounts in the
amount of approximately $15.7 million for advances to related companies and
directors. This allowance was necessary due to liquidity constraints of the
related parties, including businesses in Hong Kong which suffered unexpected and
severe losses as a result of the dramatic decrease in tourists visiting that
country.
The Company's profit, before this provision for doubtful accounts, for
the 1998 fiscal year was approximately $10.8 million, compared to a profit from
operations of approximately $8.5 million for the year ended December 31, 1997.
The net loss for the year ended December 31, 1998, (including this provision for
doubtful accounts) was approximately $4.3 million, or $0.21 per share (basic),
compared to net income of approximately $7.9 million, or $0.40 per share
(basic), for the year ended December 31, 1997. This decrease was caused by a
one-time charge of approximately $15.7 million, resulting from a provision for
doubtful accounts. As a result of a substantial increase in the total amount of
Advances to Related Companies and Loans to Directors which increased from $4.9
million at December 31,1997, to $23.1 million at December 31, 1998, and
liquidity constraints on those businesses, under generally accepted accounting
principles the Company was required to make this provision. Even though an
allowance was provided, Management aggressively pursued collection of these
accounts.
The ratio of inventory divided by revenue for the years ended December
31, 1998 and 1997, was approximately 16.36% and 13.69%, respectively. This
slight increase was a result of the commencement of operations by the Company's
new stores, including Harrods (Knightsbridge) and nine boutique shops.
12
Liquidity and Capital Resources
- -------------------------------
For the years ended December 31, 2000 and 1999, the Company had working
capital of approximately $12.0 million and $6.2 million, respectively. The
improvement in this figure is due to the Company's ability to significantly
expand operations, thereby increasing current assets while maintaining the
current liabilities at the same level similar to last year. The Company
experienced a positive cash flow from operations of approximately $3.4 million
at December 31, 2000, compared to a positive cash flow of $1.4 million during
the same period of 1999. This increase is mainly due to the significant increase
in net income while offsetting cash payment against accrued concession fee.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
On July 2, 1997, the Thai Government announced that the Thai Baht would
thereafter be converted to a "Managed Float" system for the relationship of the
Baht to other international currencies. This change had an immediate impact on
the Company's operations and the results of its operations.
The Company's subsidiaries conduct their business with selling and
purchase prices based on Thai Baht, US Dollars, and other currencies. Sales are
made both in Thai Baht and other currencies, but eventually will be converted
into Thai Baht. Accordingly, the Company bears foreign currency transaction
risks between the date of purchase of goods for resale and the ultimate payment
of the goods in the appropriate negotiated currency.
King Power Duty Free Company, Limited (KPD) incurred an economic and
financial loss as a result of the devaluation and subsequent float of the Thai
Baht on the settlement of accounts in currencies owed other than Thai Baht.
However, as the Thai Baht stabilized and KPD began to buy forward contracts in
order to prevent any exchange risk from its foreign currencies financial
obligations, the losses from this transaction have been significantly reduced.
King Power Tax Free Company, Limited (KPT) has been selling goods at
prices based upon the US Dollar since its inception. Further, KPT deals in
predominately Thailand produced goods whereby all purchases are settled in Thai
Baht. Therefore, the devaluation of the Thai Baht had minimal effect on the
settlement of open trade payables of KPT. Accordingly, the devaluation had an
opposite economic impact on the operations of KPT whereby the Thai Baht
devaluation increased the overall profitability of this subsidiary.
The overall effect of the Thai Baht devaluation was an increase in the
attractiveness of Thailand as a tourist destination. This increase in tourists
had a direct impact on increasing the Company's sales in the post-devaluation
time period.
The Company's financial statements and all accompanying discussions in
this document are presented in US Dollars.
In accordance with generally accepted accounting principles, the
Company has reported loss on foreign exchange-net of $0.42 million for the year
ended December 31, 2000, with the following showing the calculation supporting
the figure:
13
CHART A
The calculation of Unrealized gain on foreign exchange of US$ = 156,810 was
calculated on accumulated basis with quarterly adjustment on financial
obligations, receivable and cash on hand in foreign currency as shown below:
Account payable in foreign currency as of 31/12/00
- ---------------------- ------------------ -------------------- ----------------
Currency Amount Exchange Rate Total
31/12/00 Thai Baht
- ---------------------- ------------------ -------------------- ----------------
Belgium Franc 192,780.00 0.9886 190,582
Swiss Franc 13,281.00 26.3121 349,451
British Pound Sterling 7,441.10 64.2311 477,950
Hong Kong Dollar 11,649.60 5.5238 64,350
Italian Lire 24,384,000.00 0.0205 499,872
US Dollar 98,500.99 43.1934 4,254,593
- ---------------------- ------------------ -------------------- ----------------
Total 5,836,798
- ---------------------- ------------------ -------------------- ----------------
BALANCE PER GENERAL LEDGER 5,792,574
----------------
Unrealized gain from account receivable 31/12/00 44,224
----------------
Unrealized gain from account receivable 01/01/00 1,244,035
----------------
Net unrealized gain on account receivable 31/12/00 1,288,259
----------------
Unrealized gain on advance as at 31/12/00
- ---------------------- ------------------ -------------------- ----------------
Currency Amount Exchange Rate Total
Thai Baht 31/12/00 US$
- ---------------------- ------------------ -------------------- ----------------
BAHT CURRENCY 17,552,066.24 43.262 405,716
- ---------------------- ------------------ -------------------- ----------------
BALANCE PER GENERAL LEDGER 444,936
----------------
Net Unrealized gain on advanced 31/12/00 39,220
----------------
Unrealized gain on Cash on hand as of 31/12/00
- ---------------------- ------------------ -------------------- ----------------
Currency Amount Exchange Rate Total
31/12/00 Thai Baht
- ---------------------- ------------------ -------------------- ----------------
Australian Dollar 15,655.49 23.7697 372,126
Swiss Franc 110.00 26.3121 2,894
China Renminbi Yuan 212,783.00 4.9924 1,062,298
Canadian Dollar 130.00 28.6743 3,728
German Deutschmark 9,760.00 20.4235 199,333
French Franc 16,110.00 6.0876 98,071
British Pound Sterling 95,967.39 64.2311 6,164,091
Hong Kong Dollar 840,491.10 5.5238 4,642,705
Japanese Yen 15,971,150.00 0.374590 5,982,633
Korean Won 5,106,000.00 0.0344 175,646
Malaysian Ringgit 497.00 11.3133 5,623
Singapore Dollar 12,812.00 24.8320 318,148
Taiwanese Dollar 1,787,600.00 1.3020 2,327,455
Netherlands Guilder 25.00 18.1184 453
US Dollar 701,795.08 43.1934 30,312,916
- ---------------------- ------------------ -------------------- ----------------
Total 51,668,120
- ---------------------- ------------------ -------------------- ----------------
BALANCE PER GENERAL LEDGER 48,102,330
----------------
Unrealized gain on cash in hand in foreign currency 31/12/00 3,565,790
----------------
Unrealized gain on cash in hand in foreign currency 01/01/00 (122,343)
----------------
Net unrealized gain on cash in hand in foreign
currency 31/12/00 3,443,447
----------------
Net unrealized gain on account receivable foreign
currency 31/12/00 1,288,259
----------------
Net unrealized gain on exchange rate as at 31/12/00 4,731,706
----------------
US$ = 156,810 (US$1 = 40.2391 Baht)
14
CHART B
The calculation of Unrealized loss on foreign exchange of US$ = 363,439 was
calculated on accumulated basis with quarterly adjustment on financial
receivable and cash on hand in foreign currency as shown below:
Unrealized loss from Loan from Bank (Trust Receipt) as at 31/12/00
- ---------------------- ------------------ -------------------- ----------------
Currency Amount Exchange Rate Total
31/12/00 Thai Baht
- ---------------------- ------------------ -------------------- ----------------
Swiss Franc 266,670.03 26.6134 7,096,996
Europe 301,200.96 40.5262 12,206,530
French Franc 1,541,487.36 6.1791 9,525,005
British Pound Sterling 25,054.92 64.9569 1,627,490
Hong Kong Dollar 4,222,213.10 5.5834 23,574,305
Italian Lire 73,456,000.00 0.0210 1,542,576
Japanese Yen 1,223,000.00 0.3800 464,789
Netherlands Guilder 344,818.20 18.3856 6,339,689
Singapore Dollar 31,460.80 25.1899 792,494
US Dollar 1,939,740.53 43.4396 84,261,553
- ---------------------- ------------------ -------------------- ----------------
Total 147,431,427
- ---------------------- ------------------ -------------------- ----------------
BALANCE PER GENERAL LEDGER 145,044,849
----------------
Unrealized loss from Loan from Bank in foreign
currency 31/12/00 (2,386,578)
----------------
Unrealized loss from Loan from Bank in foreign
currency 01/01/00 (3,379,893)
----------------
Net unrealized loss from Loan from Bank in foreign
currency 31/12/00 (5,766,471)
----------------
Unrealized loss from Account Payable as at 31/12/00
- ---------------------- ------------------ -------------------- ----------------
Currency Amount Exchange Rate Total
31/12/00 Thai Baht
- ---------------------- ------------------ -------------------- ----------------
Australian Dollar 18,900.00 24.2478 458,283
Swiss Franc (5,632.00) 26.6134 (149,886)
German Deutschmark 303,688.92 20.7151 6,290,946
Europe 198,401.95 40.5262 8,040,477
French Franc 862,991.36 6.1791 5,332,510
Hong Kong Dollar 5,838,272.50 5.5834 32,597,411
Italian Lire 31,231,778.00 0.0210 655,867
Netherlands Guilder 648,084.40 18.3856 11,915,421
Singapore Dollar 63,767.08 25.1899 1,606,286
US Dollar 2,284,571.23 43.4396 99,240,860
- ---------------------- ------------------ -------------------- ----------------
Total 165,988,175
- ---------------------- ------------------ -------------------- ----------------
BALANCE PER GENERAL LEDGER 161,781,893
----------------
Unrealized loss from Account payable in foreign
currency 31/12/00 (4,206,282)
----------------
Unrealized loss from Account payable in foreign
currency 01/01/00 (4,651,712)
----------------
Net unrealized loss from account payable in foreign
currency 31/12/00 (8,857,994)
----------------
Net unrealized loss from Loan from bank (Trust
receipt) 31/12/00 (5,766,471)
----------------
Net unrealized exchange loss as of 31/12/00 (14,624,465)
----------------
US$ = (363,439) (US$1 = 40.2391 Baht)
15
NET FOR UNREALIZED GAIN/LOSS EXCHANGE AS OF 31/12/00
- ----------------------------------------------------
Thai Baht US Dollar
----------- -----------
Net Unrealized exchange loss as of 31/12/00 4,731,706
Net Unrealized loss on exchange rate as at 31/12/00 (14,624,465)
-----------
NET UNREALIZED EXCHANGE (9,892,760) (245,849)
-----------
Net Unrealized exchange GAIN KPG (US) as of 31/12/00 39,220
-----------
NET UNREALIZED EXCHANGE (206,629)
-----------
NET FOR REALIZED GAIN/LOSS EXCHANGE AS OF 31/12/00
Net realized loss on exchange rate of KPT as at 31/12/00 (17,671,776)
Net realized gain on exchange rate of KPD as at 31/12/00 9,064,543
-----------
NET REALIZED EXCHANGE (8,607,233) (213,902)
-----------
Net realized gain on exchange rate of KPG (US) as at 31/12/00 8
-----------
NET REALIZED EXCHANGE (213,894)
-----------
TOTAL NET REALIZED/UNREALIZED EXCHANGE RATE (420,523)
-----------
16
Monetary Assets and Liabilities Denominated in Thai Baht
As of December 31, 2000, the amount of monetary assets and liabilities
which are denominated in Thai Baht are as follows:
TYPE OF MONETARY ASSET US DOLLARS
Cash and equivalents 1,434,627
Trade Accounts Receivable 1,293,661
Refundable value-added-tax 791,733
Advance to Related Companies 7,735,450
Deferred income tax assets 3,618,933
Restricted deposit 7,747,981
Other current assets 1,149,198
Other non-current assets 196,091
TYPE OF MONETARY LIABILITY
Bank overdraft & loan 10,009,736
Current portion of long-term debt 31,355
Accounts payable 8,230,541
Advance from directors 446,186
Concession fees 1,173,990
Other current liabilities 4,096,632
Long-term loan - net 178,094
Recently Issued Accounting Principles
New Accounting Standards Not Yet Adopted - Accounting for Derivative Instruments
and Hedging Activities - Statement of Financial Accounting Standards No. 133 as
amended by Statements of Financial Accounting Standards Nos.137 and 138, is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000. This Statement requires that certain derivative instruments be recognized
in balance sheets at fair value and for changes in fair value to be recognized
in operations. Additional guidance is also provided to determine when hedge
accounting treatment is appropriate whereby hedging gains and losses are offset
by losses and gains related directly to the hedged item. The Company believes
that adoption will not have a significant impact on financial condition or
operating results.
ITEM 8 FINANCIAL STATEMENTS
Consolidated Financial Statements of the Company (Audited)
Independent Auditors Report - Smith, Gray, Boyer & Daniell, PLLC (formerly
Smith, Jackson, Boyer & Daniell, PLLC)
dated March 23, 2001
Independent Auditors Report - Deloitte Touche Tohmatsu Jaiyos, dated April 1,
1999
Balance Sheets as of December 31, 2000 and 1999
Statements of Income for the Years ended December 31, 2000, 1999 and 1998
Statements of Cash Flows for the Years ended December 31, 2000, 1999 and 1998
Statements of Changes in Shareholders' Equity for the Years ended December 31,
2000, 1999 and 1998 Notes to Financial Statements
17
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
KING POWER INTERNATIONAL GROUP CO., LTD.
We have audited the consolidated balance sheets of King Power International
Group Co., Ltd. as of December 31, 2000 and 1999, and the related consolidated
statements of income, comprehensive income, cash flows and changes in
shareholders' equity for the years then ended. Our audit also included the
financial statement schedule listed in the Index at Item 14. 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance as to whether the financial
statements are free of material misstatement. An audit also 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 audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of King Power
International Group Co., Ltd. and subsidiaries as of December 31, 2000 and 1999,
and the results of their operations, cash flows and changes in shareholders'
equity for the years then ended, in conformity with generally accepted
accounting principles in the United States of America. Also, in our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
SMITH, GRAY, BOYER & DANIELL, PLLC
March 23, 2001
Dallas, Texas
18
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
We have audited the accompanying consolidated statements of operations,
comprehensive income, changes in shareholder's equity and cash flows of King
Power International Group Co., Ltd. and subsidiaries (the "Corporation") for the
year ended December 31, 1998. Our audit also included the financial statement
schedule listed in the Index at Item 14. These financial statements and the
financial statements schedule are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
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. 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 audit provides a
reasonable basis for our opinion.
In our opinion, the aforementioned consolidated financial statements present
fairly, in all material respects, the results of operations and cash flows of
King Power International Group Co., Ltd. and subsidiaries for the year ended
December 31, 1998, in conformity with generally accepted accounting principles
in the United States of America. Also, in our opinion, such financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE TOUCHE TOHMATSU JAIYOS
April 1, 1999
BANGKOK, THAILAND
19
Audit Committee Report
The Audit Committee of the King Power Group International Co., Ltd. Board of
Directors (the Committee) is composed of three directors and operates under a
written charter adopted by the Board of Directors (Exhibit A). The members of
the Committee are Vichai Raksriaksorn (Chair), Suwan Panyapas, and Dharmnoon
Prachuabmoh. The Committee recommends to the Board of Directors, subject to
stockholder ratification, the selection of the Corporation's independent
accountants.
Management is responsible for the Corporation's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Corporation's consolidated financial
statements in accordance with generally accepted auditing standards in the
United States of America and to issue a report thereon. The Committee's
responsibility is to monitor and oversee these processes.
In this context, the Committee has met and held discussions with management and
the independent accountants. Management represented to the Committee that the
Corporation's consolidated financial statements were prepared in accordance with
generally accepted accounting principles in the United States of America, and
the Committee has reviewed and discussed the consolidated financial statements
with management and the independent accountants. The Committee discussed with
the independent accountants matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees).
The Corporation's independent accountants also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence. Based upon the
Committee's discussion with management and the independent accountants and the
Committee's review of the representation of management and the report of the
independent accountants to the Committee, the Committee recommended that the
Board of Directors include the audited consolidated financial statements in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000,
filed with the Securities and Exchange Commission.
/s/ Vichai Raksriaksorn /s/ Dharmnoon Prachuabmoh
- --------------------------- --------------------------
Vichai Raksriaksorn (Chair) Dharmnoon Prachuabmoh
/s/ Suwan Panyapas
- -------------------
Suwan Panyapas
20
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------
Note 2000 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,633,890 $ 2,192,510
Trade accounts and advances receivable, net of reserves of
$977,339 in 2000 and $280,198 in 1999 280,785 179,485
Refundable value added tax 4 791,733 1,180,436
Trade accounts and accrued interest receivable from and
advances to related companies and directors, net 11 9,480,316 5,214,335
Merchandise inventories - net 18,081,890 16,498,754
Restricted fixed deposits 3 7,747,981 3,845,629
Deferred income tax assets 10 3,618,933 4,354,132
Prepaid expenses 11 232,188 2,607,962
Other current assets 436,212 667,209
---------- ----------
Total current assets 43,303,928 36,740,452
Property, plant and equipment - net 5 4,179,495 5,257,949
Investment and other assets 208,287 214,180
---------- ----------
TOTAL ASSETS $ 47,691,710 $ 42,212,581
========== ==========
The accompanying notes are an integral part of the financial statements
21
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
AS AT DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------
Note 2000 1999
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and loans from banks 6 $ 13,417,609 $ 10,048,791
Current portion of long - term loan 8 31,355 28,089
Trade accounts payable 12,067,354 10,003,574
Advance from director 11 446,186 -
Accrued concession fees 7 1,173,990 8,467,028
Accrued corporate income tax 2,359,840 779,874
Other current liabilities 1,811,825 1,188,122
---------- ----------
Total current liabilities 31,308,159 30,515,478
Long - term loan - net 8 178,094 254,000
---------- ----------
Total liabilities 31,486,253 30,769,478
---------- ----------
Minority interest 605,711 378,457
Shareholders' equity 9
Common stock, $0.001 par value,
100,000,000 shares authorized,
20,250,000 shares issued and outstanding 20,250 20,250
Additional paid in capital 20,848,145 20,848,145
Retained (deficit) (3,018,454) (9,503,916)
Translation adjustments (2,250,195) (299,833)
---------- ----------
Total shareholders' equity 15,599,746 11,064,646
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 47,691,710 $ 42,212,581
========== ==========
The accompanying notes are an integral part of the financial statements
22
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------------------------
Note 2000 1999 1998
Sales revenue $ 108,914,156 $ 89,482,559 $ 91,125,385
Cost of sales:
Cost of merchandise sold 53,188,627 43,280,910 39,104,944
Concession fees 7 21,511,202 22,342,213 24,969,793
------------- ------------- -------------
Total cost of sales 74,699,829 65,623,123 64,074,737
------------- ------------- -------------
Gross profit 34,214,327 23,859,436 27,050,648
Operating expenses:
Selling and administrative expenses 23,356,573 21,836,679 16,184,976
Provision for doubtful account -- (1,083,190) 15,745,552
------------- ------------- -------------
Total operating expenses 23,356,573 20,753,489 31,930,528
------------- ------------- -------------
Income from operation 10,857,754 3,105,947 (4,879,880)
Other income (expenses)
Interest income 332,631 917,421 1,439,169
Interest expenses (1,074,709) (1,127,426) (1,364,628)
Gain (Loss) on foreign exchange - net (420,523) 227,904 25,909
Gain (Loss) on investment in other companies (4,123) (112,608) --
Management fee income -- -- 254,243
Other income 214,452 291,337 186,795
------------- ------------- -------------
Total other revenues (expenses) (952,272) 196,628 541,488
------------- ------------- -------------
Net income before income tax 9,905,482 3,302,575 (4,338,392)
Income tax benefit (expenses) 10 (3,121,690) (848,249) 113,955
------------- ------------- -------------
Net income before minority interest 6,783,792 2,454,326 (4,224,437)
Minority interest (298,330) (41,347) (62,697)
------------- ------------- -------------
Net income attributed to common shares $ 6,485,462 $ 2,412,979 $ (4,287,134)
============= ============= =============
Weighted average number of common shares
Outstanding 20,250,000 20,250,000 20,250,000
Basic earnings per share $ 0.32 $ 0.12 $ (0.21)
The accompanying notes are an integral part of the financial statements
23
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
Net income attribute to common shares $ 6,485,462 $ 2,412,979 $ (4,287,134)
Other comprehensive income, before tax:
Foreign currency translation adjustments (1,950,362) (99,652) 3,274,159
----------- ----------- -----------
Comprehensive income $ 4,535,100 $ 2,313,327 $ (1,012,975)
=========== =========== ===========
The accompanying notes are an integral part of the financial statements
24
KING POWER INTERNATIONAL GROUP CO., LTD AND SUB SIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,485,462 $ 2,412,979 $ (4,287,134)
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 1,466,472 1,452,924 953,908
Unrealized loss (gain) on foreign exchange 206,629 (184,303) (517,287)
Provision for damaged stock - - (617,652)
Deferred income tax assets 735,199 110,474 (3,338,336)
Provision for doubtful account - (1,083,190) 15,745,552
Decrease (increase) in operating assets:
Loan and receivables to related companies
and Directors (4,226,762) 7,782,118 (22,131,676)
Trade accounts receivable (69,285) 121,626 777,840
Refundable valued added tax 388,703 1,058,426 997,883
Inventories (1,583,136) (1,588,590) 2,631,652
Prepaid expense and other current assets 2,606,772 (2,389,570) 790,443
Other long term asset (3,427) 200,180 665,430
Increase (decrease) in operating liabilities:
Trade accounts payable 1,843,645 (1,271,552) (3,078,966)
Advance from director 446,186 - -
Accrued concession fees (7,293,038) (2,330,807) 2,791,828
Other current liabilities 2,203,671 (2,881,898) 3,628,816
Other liabilities 236,574 37,240 102,218
----------- ----------- -----------
Net cash provided (used) by
Operating activities $ 3,443,665 $ 1,446,057 $ (4,885,481)
The accompanying notes are an integral part of the financial statements
25
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEAR ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
CASH FLOWS FROM INVESTING ACTIVES:
Purchase of fixed assets $ (388,019) $ (537,263) $ (2,564,547)
(Increase) decrease in restricted fixed deposit (3,902,352) 1,408,856 3,073,008
----------- ----------- -----------
Net cash provided (used) by investing activities (4,290,371) 871,593 508,461
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayment) in bank overdrafts 841,319 (32,191) 2,176,618
Proceeds (repayment) from bank loans 2,384,194 (15,403) 1,578,472
Proceeds (repayment) from installment purchase (18,907) (30,647) -
Proceeds (repayment) from long-term loan (53,733) (1,322,221) -
----------- ----------- -----------
Net cash provided (used) by financing activities 3,152,873 (1,400,462) 3,755,090
Effect of exchange rate changes on cash and cash equivalents (1,864,787) (96,417) 676,789
----------- ----------- -----------
Net increase in cash and cash equivalents 441,380 820,771 54,859
Cash and cash equivalents - beginning of period 2,192,510 1,371,739 1,316,880
----------- ----------- -----------
Cash and cash equivalents - end of period $ 2,633,890 $ 2,192,510 $ 1,371,739
=========== =========== ===========
Supplement cash flow information Cash paid during the period:
Interest paid $ 1,057,338 $ 1,188,170 $ 1,469,280
Income taxes paid $ 1,142,649 $ 3,213,815 $ 5,466
The accompanying notes are an integral part of the financial statements
26
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Additional Other
Common Stock Paid in Comprehensive Retained Comprehensive
Shares Amount Capital Income Earnings Income
US$ US$ US$ US$ US$
----------- ----------- ----------- ----------- ----------- -----------
Balances, January 1, 1998 20,250,000 20,250 20,848,145 (7,629,761) (3,474,340)
Net Income (4,287,134) (4,287,134)
Other Comprehensive income, net of tax
Foreign currency translation adjustment 3,274,159 3,274,159
-----------
Comprehensive Income (1,012,975) -- --
----------- ----------- ----------- =========== ----------- -----------
Balances, December 31, 1998 20,250,000 20,250 20,848,145 (11,916,895) (200,181)
=========== =========== =========== =========== ===========
Balances, January 1, 1999 20,250,000 20,250 20,848,145 (11,916,895) (200,181)
Net Income 2,412,979 2,412,979
Other Comprehensive income, net of tax
Foreign currency translation adjustment (99,652) (99,652)
-----------
Comprehensive Income 2,313,327
----------- ----------- ----------- =========== ----------- -----------
Balances, December 31, 1999 20,250,000 20,250 20,848,145 (9,503,916) (299,833)
=========== =========== =========== =========== ===========
Balances, January 1, 2000 20,250,000 20,250 20,848,145 (9,503,916) (299,833)
Net Income 6,485,462 6,485,462
Other comprehensive income, net of tax
Foreign currency translation adjustment (1,950,362) (1,950,362)
----------- -----------
Comprehensive Income 4,353,100
----------- ----------- ----------- =========== ----------- -----------
Balances, December 31, 2000 20,250,000 20,250 20,848,145 (3,018,454) (2,550,195)
=========== =========== =========== =========== ===========
Total
US$
-----------
Balances, January 1, 1998 9,764,294
Net Income (4,287,134)
Other Comprehensive income, net of tax
Foreign currency translation adjustment 3,274,159
Comprehensive Income --
-----------
Balances, December 31, 1998 8,751,319
===========
Balances, January 1, 1999 8,751,319
Net Income 2,412,979
Other Comprehensive income, net of tax
Foreign currency translation adjustment (99,652)
Comprehensive Income
-----------
Balances, December 31, 1999 11,064,646
===========
Balances, January 1, 2000 11,064,646
Net Income 6,485,462
Other comprehensive income, net of tax
Foreign currency translation adjustment (1,950,362)
-----------
Comprehensive Income
-----------
Balances, December 31, 2000 15,599,746
===========
The accompanying notes are an integral part of the financial statement
27
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
1. BASIS OF PRESENTATION
King Power International Group Co., Ltd. (formerly Immune America,
Inc.) (herein the "Company") was incorporated under the laws of the State of
Nevada on July 30, 1985.
On June 12, 1997, the Company exchanged 18,800,000 shares of its common
stock for 99.94% of the issued and outstanding common shares of King Power Tax
Free Company Limited [(formerly J.M.T. Group Company Limited)-KPT thereafter]
and 94.95% of the issued and outstanding common shares of King Power Duty Free
Company Limited [(formerly J.M.T. Duty Free Company Limited)-KPD thereafter].
This exchange of the Company's common stock to the former KPT and KPD
shareholders resulted in those former shareholders obtaining a majority voting
interest in the Company. Generally accepted accounting principles require that
the company whose stockholders retain the majority interest in a combined
business be treated as the acquirer for accounting purposes. Consequently, this
transaction was accounted for as a "reverse acquisition" for financial reporting
purposes and KPT and KPD were deemed to have acquired 94% of equity interest in
the Company as of the date of acquisition. The relevant acquisition process
utilized the capital structure of Immune America, Inc., and the assets and
liabilities of KPT and KPD were recorded at historical cost.
Concurrent with the reverse acquisition, the Company changed its
corporate name from Immune America, Inc. to King Power International Group Co.,
Ltd.
KPD is a Thailand-based corporation engaged in selling duty free
merchandise to the traveling public under the supervision of Thai customs in
stores located in the international terminals of the various airports located in
Thailand. KPD holds from the Airports Authority of Thailand a non-exclusive
license to operate duty free stores for all stores of this specific nature. For
the duty free store operation, KPD is exempt from input value added tax on
purchases of import merchandise and from output value added tax on sales of
merchandise.
KPT is a Thailand-based corporation engaged in selling various
souvenirs and consumer products in the international and domestic terminals of
the various airports located in Thailand to the general public. KPT holds the
exclusive operating license granted by the Airports Authority of Thailand for
all shops of this specific nature. For the tax free operation, KPT is subject to
input value added tax on purchases of merchandise and is exempt from output
value added tax on sales of merchandise.
On October 10, 1997, the Company acquired 4,900 shares of common stock
in King Power International Group (Thailand) Company Limited (KPG Thai),
equivalent to 49% of the registered capital. KPG Thai was established in
Thailand on September 11, 1997, and has registered capital totaling Baht 1
million divided into 10,000 shares of common stock with Baht 100 per share. On
the same date, KPT acquired 5,093 shares of common stock in KPG Thai, equivalent
to 50.93% of the registered capital. Ultimately, the Company owns 99.93% of
equity interest in KPG Thai.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements,
which include the accounts of the Company and its subsidiaries, are prepared in
accordance with accounting principles generally accepted in the United States of
America. All significant intercompany accounts and transactions have been
eliminated in consolidation. Investments in other companies under 20% of
interest are accounted for using the cost method. At December 31, 2000, these
investments have been written down due to an assumed permanent impairment of
their value. The consolidated financial statements are presented in U.S.
dollars.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.
Merchandise Inventories - Merchandise inventories are stated at the
lower of cost or market. Cost is determined on a weighted average basis.
Provision for Doubtful Accounts - Estimated collection losses of the
Company are provided for based on the Company's collection experience together
with a review of the financial position of each debtor. Where the Company
determines reserves are necessary, it will provide an allowance for the total
receivable and accrued interest outstanding.
Marketable Securities - Securities held for trading are marked to
market at year-end with the resulting gain or loss being included in current
income.
28
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
Foreign Currency Translation and Transactions - The financial position
and results of operations of the Company's foreign subsidiaries are determined
using the local currency as the functional currency. Assets and liabilities of
these subsidiaries are translated at the prevailing exchange rates in effect at
each period end. Contributed capital accounts are translated using the
historical rate of exchange when capital was injected. Income statement accounts
are translated at the average rate of exchange during the year. Translation
adjustments arising from the use of different exchange rates from period to
period are included in the cumulative translation adjustment account in
shareholders' equity. Gains and losses resulting from foreign currency
transactions are included in operations. Gains or losses on foreign exchange
transaction are recognized as incurred in the consolidated statements of income.
Differences between the forward rate and the spot rate in forward exchange
contracts are amortized as revenue and expense over the period of the contract.
The exchange rates at December 31, 2000 and 1999, are $1= Thai Baht
43.262 and Baht 37.520, respectively. The average exchange rates during the
years 2000, 1999 and 1998 are $1= Thai Baht 40.2391, Baht 37.8226 and Baht
40.795, respectively.
Property, Plant and Equipment - Property, plant and equipment are
stated at cost. Depreciation is computed by using the straight-line method over
the estimated useful lives of the assets as follows:
Buildings 20 Years
Leasehold improvements Term of lease
Selling office equipment and fixtures 5 Years
Vehicles 5 Years
Maintenance, repairs and minor renewals are charged directly to expenses as
incurred.
Store Pre-Opening Costs - Store pre - opening costs are expensed as
incurred.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
financial statements, and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from these estimates.
Revenue Recognition - The Company recognizes revenue from sales of
merchandise at the point of sale.
Concession Fees - According to the concession agreement with Airports
Authority of Thailand, KPT is required to pay concession fees, rental and
services fees, and other related expenses at the fixed charges per month as
defined in the agreement. According to the concession agreement with the
Airports Authority of Thailand, KPD is required to pay concession fees at the
fixed percentage of sales but at least equal to the fixed charges as defined in
the agreement, and pay rental and service fee and other related expenses.
Concentrations of Credit Risk - The Company's retail businesses are
cash flow businesses. Most sales take place with cash receipts or credit card
payments. The Company maintains its cash accounts with various financial
institutions. In Thailand, such accounts are insured for the full amount of
their value by the Thai government. U.S. bank deposits are within Federal
insurance limits. See Note 11 with respect to loans and advances to directors
and affiliated companies.
Fair Value of Financial Instruments - The carrying amount of cash,
trade accounts receivable, notes receivable, trade accounts payable and accrued
payables are reasonable estimates of their fair value because of the short
maturity of these items. The carrying amounts of the Company's credit facilities
approximate fair value because the interest rates on these instruments are
subject to change with market interest rates.
Income Taxes - The Company accounts for income taxes using the
liability method, which requires an entity to recognize the deferred tax
liabilities and assets. Deferred income taxes are recognized based on the
differences between the tax bases of assets and liabilities and their reported
amounts in the financial statements that will result in taxable or deductible
amounts in future years. Further, the effects of enacted tax laws or rate
changes are included as part of deferred tax expense or benefits in the period
that covers the enactment date. A valuation allowance is recognized if it is
more likely than not that some portion, or all of, a deferred tax asset will not
be realized.
The Company does not provide for United States income taxes on
unlimited earnings of its Thailand-based subsidiaries since the Company's
intention is to reinvest these earnings in their operations.
Earnings Per Share - Basic earnings per share has been computed based
on the average number of common shares outstanding for the period. There are no
potentially dilutive securities outstanding.
29
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
New Accounting Standards Not Yet Adopted-Accounting for Derivative
Instruments and Hedging Activities - Statement of Financial Accounting Standards
No. 133 as amended by Statement of Financial Accounting Standards Nos.137 and
138, is effective for all fiscal quarters of all fiscal years beginning after
June 15, 2000. This Statement requires that certain derivative instruments to be
recognized in balance sheets at fair value and for changes in fair value to be
recognized in operations. Additional guidance is also provided to determine when
hedge accounting treatment is appropriate whereby hedging gains and losses are
offset by losses and gains related directly to the hedged item. The Company
believes that adoption will not have a significant impact on financial condition
or operating results.
3. RESTRICTED FIXED DEPOSITS
2000 1999
---- ----
Restricted fixed deposits $ 7,747,981 $ 3,845,629
Interest rates 1.00 % - 5.00 % 3.00% - 5.50%
As of December 31, 2000 and 1999, the restricted fixed deposits with
maturities from three to twelve months are pledged as a collateral to a
commercial bank for bank credit facilities of subsidiaries. As these are current
obligations of the Company, the deposits are shown as current assets.
4. REFUNDABLE VALUE ADDED TAX
For Thailand-based subsidiaries, refundable value added tax (VAT)
represents, on a cumulative basis, the excess of input tax (charged by suppliers
on purchases of merchandise and services) over the output tax (charged to
customers on sales of merchandise and services). Value added tax is levied on
the value added at each stage of production and distribution, including
servicing, generally at the rate of 10% effective at August 16, 1997. The
Minister of Finance, however, declared a new value added tax at the rate 7%
commencing at April 1, 1999, in order to stimulate the domestic economy.
5. PROPERTY, PLANT AND EQUIPMENT - NET
2000 1999
---- ----
Land $ 607,461 $ 700,426
Building 119,450 137,730
Leasehold improvements 4,433,748 4,693,023
Sales office equipment and fixtures 2,287,457 2,317,640
Vehicles 801,891 720,864
Work in progress 101,970 -
----------- -----------
Total cost 8,351,977 8,569,683
Less Accumulated depreciation (4,172,482) (3,311,734)
---- ----------- -----------
Net book value $ 4,179,495 $ 5,257,949
=========== ===========
6. BANK OVERDRAFT AND LOANS FROM BANKS
2000 1999
Bank overdraft $ 1,325,717 $ 484,398
Trust receipts 10,704,994 9,564,393
Short Term loan 1,386,898 -
----------- -----------
$ 13,417,609 $ 10,048,791
=========== ===========
As of December 31, 2000 and 1999, the Company has an overdraft facility
with commercial banks in Thailand totaling Baht 65.74 million ($1,519,578) and
Baht 30.74 million ($819,296), respectively, bearing interest at MOR
30
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
(Minimum Overdraft Rate), plus 1.00% - 1.50% per annum. For the year ended
December 31, 2000, the average rate of MOR was 3.50% - 9.50% per annum and for
the year ended December 31,1999, the average rate of MOR was 6.50% - 12.75% per
annum. Available lines of credit for the bank overdrafts are guaranteed by
certain directors and collateralized by fixed deposits. (Note 3)
As of December 31, 2000 and 1999, trust receipts incurred by KPD and
KPT bear interest at the rates varying from 4.00% - 12.75% and 6.17% - 12.25%
per annum, respectively, and are collateralized by fixed deposits, KPD's land,
and guaranteed by two directors of KPD together with a related company.
As of December 31, 2000, the company has short-term loan with
Commercial Banks in Thailand bearing interest rate at 3.50% - 8.00% per annum.
Trust receipts at December 31, 2000, are:
Foreign currency borrowing by subsidiaries in Thailand Currencies Amount Interest rate (%)
-Under forward contract and T/R BAHT 315,688,033 $ 7,297,120 8.75-9.75
-Without forward contract USD 1,939,741 1,947,704 9.00-12.50
CHF 266.670 164,047 7.21-10.00
GBP 25,055 37,619 10.00
NLG 344,818 146,542 9.75
FRF 1,541,487 220,170 8.00-10.00
HKD 4,222,213 544,919 9.00-12.75
ITL 73,456,000 35,657 8.55-8.62
JPY 1,223,000 10,744 4.00-9.50
SGD 31,461 18,318 9.50
EUR 301,201 282,154 8.44-10.16
------------
$ 10,704,994
============
Trust receipts at December 31, 1999, are:
Foreign currency borrowing by subsidiaries in Thailand Currencies Amount Interest rate (%)
-Under forward contract and T/R BAHT 217,975,088 $ 5,809,571 6.17-12.25
-Without forward contract USD 2,892,560 2,907,192 7.50-11.50
CHF 290,055 183,289 6.17-7.50
DEM 12,542 6,512 7.46-7.56
AUD 29,266 19,280 10.50
FRF 727,837 112,731 7.50
HKD 2,135,117 276,894 10.25-12.25
ITL 367,483,750 192,949 7.50
GBP 4,903 7,997 9.75
EUR 47,260 47,978 7.50-7.56
-----------
$ 9,564,393
===========
As of December 31, 2000 and 1999, land and building are pledged as
collateral for credit line of trust receipt and long-term loan from a bank.
(Note 6 and Note 8)
7. CONCESSION FEES
Accrued concession fees as of December 31, 2000 and 1999, consist of
the following:
2000 1999
---- ----
- The Customs Department of Thailand $ - $ 533,049
- The Airports Authority Of Thailand 1,173,990 7,933,979
--------- ---------
1,173,990 8,467,028
========= =========
For the years ended December 31,
2000 1999 1998
---- ---- ----
Concession fees expense $ 21,511,202 $ 22,342,213 $ 24,969,793
31
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
In order to obtain the necessary rights to operate at the international and
domestic airports in Thailand, the Company has entered into various agreements
with the Airports Authority of Thailand and the Customs Department of Thailand,
which including the right to rent office space.
Both KPD and KPT are required to pay concession fees, rental and
service fees, property tax, and other expenses, and to pledge cash or obtain a
letter of bank guarantee of a local commercial bank as collateral under the
aforementioned agreements with the Airports Authority of Thailand and pay
concession fees under the aforementioned agreements with the Customs Department
of Thailand.
A summary of the concession and rental fees payable and value of collateral for
the remaining period of the agreement are as amended are as follows (see Notes
12 and 13):
KPT KPD
- -------------------------------------------------- ---------------------------------------------
Airport Rental, Service Collateral Airport Rental, Service Collateral
Concession fees & Other Customs & Other
Expenses Concession fees Expenses
- ---- --------------- ---------------- ---------- --------------- ---------------- ----------
(& in thousands) (& in thousands)
Year
- ----
2001 $ 8,947 $510 $ 4,758 $ 10,601 $ 915 $ 4,345
2002 9,404 490 4,716 20,688 1,141 11,356
2003 2,246 98 4,277 21,381 1,141 11,727
2004 - - - 22,190 1,141 12,159
2005 - - - 23,462 - 12,552
2006 - - - 24,502 - 13,109
For the years ended December 31, 2000,and 1999, both KPD and KPT were
charged penalty fees amounting to $ 496,531 and $ 1,292,170, respectively,
relating to late payment of concession fees to the Customs Department and the
Airports Authority of Thailand. Of these amounts, $ 0 and $ 175,464,
respectively, were unpaid at December 31,2000, and December 31, 1999, and are
included in other current liabilities in the accompanying balance sheets.
8. LONG-TERM LOAN - NET
Long-term liabilities as of December 31, 2000 and 1999, consist of the
following:
2000 1999
---- ----
Long-term loans $ 199,447 $ 253,180
Installment purchase payable 10,002 28,909
------- -------
209,449 282,089
Less Current portion of long-term debt (31,355) (28,089)
------- -------
Total $ 178,094 $ 254,000
======= =======
As of December 31, 2000,and 1999, long-term loans consist of loans from banks
carrying interest rates of 8.50% and 14.75%, per annum, respectively. The
long-term loans are secured by the Company's land and building and guaranteed by
a director of the Company. (See Note 5)
32
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
Loans are due as follows:
2000 1999
---- ----
Installment Purchase Obligation
2000 $ - $ 16,827
2001 5,715 6,590
2002 4,287 5,492
------- -------
Total $ 10,002 $ 28,909
======= =======
Long-term Loan Installment Payments
2000 $ - $ 11,262
2001 25,640 13,174
2002 27,906 15,254
2003 30,373 17,663
2004 33,054 20,443
Thereafter 82,474 175,384
------- -------
Total $ 199,447 $ 253,180
======= =======
8. SHAREHOLDERS'EQUITY
(a) Per the reverse acquisition agreement, the two Thailand-based companies
together received a total of 18,800,000 shares of common stock of Immune
America, Inc. which represented 94% of equity interest as of the date the
reverse acquisition agreement was effective. Therefore, the 18,800,000
shares were assumed to be issued and outstanding as of January 1, 1996, for
the purpose of presenting comparative financial statements.
(b) Per the reverse acquisition agreement, 752,000 shares out of the total
18,800,000 shares were put in escrow subject to certain requirements
including that the Company shall have financial statements prepared in
accordance with U.S. GAAP and shall have reached certain criteria of
financial performance as of December 31, 1997. If, as of December 31, 1997,
the Company failed to satisfy any of these conditions, the 752,000 shares
were to be released to a financial consultant who was also a party to the
reverse requisition agreement. During the first quarter of 1998, these
shares were released from escrow and issued to the financial consultant.
(c) Per the reverse acquisition agreement, 1,200,000 shares of common stock as
of June 12, 1997, when the reverse acquisition was effective, represented
the other 4% of equity interests. These 1,200,000 shares of common stock
were represented by the following components.
Common Stock Additional
------------ paid-in Retained Treasury
Shares Amount capital earnings stock Total
--------- ------- --------- ---------- --------- --------
Beginning Balance at
12/31/96 275,316 $ 275 $ 151,186 $(143,833) $ (6,000) $ 1,628
Form S-8 issuance at
5/8/97 924,684 925 69,717 -- -- 70,642
Reissuing of treasury stock -- -- -- -- 6,000 6,000
Net loss at 6/12/97 -- -- -- (78,270) -- (78,270)
--------- ------- --------- --------- --------- --------
Total shareholders' equity
At June 12, 1997 1,200,000 $ 1,200 $ 220,903 $(222,103) $ -- $ --
========= ======= ========= ========= ========= ========
(d) On August 18,1997, the Company issued 250,000 shares of its common stock to
two foreign entities, 125,000 shares each, at a price of $8.00 per shares
with net of proceeds of $1,887,000. Both entities are located in Taipei,
Taiwan, Republic of China. One half of these shares (125,000) were placed
in escrow until May 1, 1998, subject to an additional payment by the
purchaser of $4.00 per share on all 250,000 shares issued or ($1,000,000)
in the event that the earnings per share for the Company for the calendar
year ended December 31, 1997, exceeded a certain amount per share. If the
earnings per share for fiscal year 1997 were below the specified goal, then
the shares under escrow were to be released to the purchasers without
further consideration. These shares have been released from escrow without
further consideration. No underwriter or placement agent was used. The
issuance was conducted pursuant to Regulation S promulgated under the
United State Securities Act of 1933, as amended.
33
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
10. INCOME TAX
Income Taxes - The Company accounts for income taxes using the liability
method, which requires an entity to recognize the deferred tax liabilities and
assets. Deferred income taxes are recognized based on the differences between
the tax bases of assets and liabilities and their reported amounts in the
financial statements that will result in taxable or deductible amounts in future
years. Further, the effects of enacted tax laws or rate changes are included as
part of deferred tax expense or benefits in the period that covers the enactment
date. A valuation allowance is recognized if it is more likely than not that
some portion, or all of, a deferred tax asset will not be realized.
The provision for income taxes consist of the following:
2000 1999 1998
---- ---- ----
Current income tax (Payable) $ $ $
United States -- -- --
Foreign (2,386,491) (737,775) (3,476,186)
---------- ---------- ----------
(2,386,491) (737,775) (3,476,186)
---------- ---------- ----------
Deferred income tax
United States -- -- --
Foreign (735,199) (110,474) 3,590,141
---------- ---------- ----------
(735,199) (110,474) 3,590,141
---------- ---------- ----------
Net income tax expense $ (3,121,690) $ (848,249) $ 113,955
========== ========== ==========
Pre-tax income for foreign companies for the year ended December 31, 2000,
was $ 10,165,058. Current taxes payable are included in current liabilities.
The components of deferred income tax assets and liabilities were:
2000 1999 1998
---- ---- ----
Reserves for bad debts and investment obsolescence $ 3,873,561 $ 4,423,804 $ 4,945,942
Net operating loss carried forward 274,659 369,019 333,572
---------- ---------- ----------
4,148,220 4,792,823 5,279,514
Less Valuation allowance (529,287) (438,691) (814,908)
----- ---------- ---------- ----------
Deferred income tax assets $ 3,618,933 $ 4,354,132 $ 4,464,606
========== ========== ==========
As a result, the effective income tax rate for the subsidiaries is
different from the standard income tax rate. The following reconciliation shows
the differences between the effective and standard rates.
For year ended December 31,
2000 1999 1998
------ ------ ------
Standard income tax rate 35.00% 35.00% (35.00%)
Foreign tax rate difference (5.23%) (4.00%) 2.00%
Use of net operating loss carry - forward - - (1.00%)
Valuation allowance recorded - - 19.00%
Less Valuation allowance 0.92% (11.00%) -
----
Non deductible expenses 0.70% 6.00% 3.00%
Other miscellaneous (including translation) - - 9.00%
------ ------ ------
Effective income tax rate 31.39% 26.00% (3.00%)
====== ====== =======
As of December 31, 2000,and 1999, the Company has deferred income tax
assets relating to net operating loss carry forwards for income tax purpose of $
274,659 and $ 369,019, respectively, that expire in years 2001 through 2004. (A
valuation allowance on the United States loss carry forward has been provided,
as the Company has determined that it is more likely than not that this deferred
income tax asset will not be realized.)
35
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
11. RELATED PARTIES AND DIRECTORS TRANSACTIONS
The Company has business transactions with and has advanced funds to related
companies and directors. These transactions are with companies that have joint
directors and/or shareholders with the Company. Balances at December 31, 2000
and 1999, with related companies and directors are as follows ($ in thousands)
As at December 31, 2000
Loans to and
Accounts receivables from related Management Accounts
Receivable Companies and Directors Fee Receivables Payable
---------- ------------------------ --------------- ---------- --------
Loans Interest and Total
other
receivables
2000
King Power International Co., Ltd. 1,734 6,553 240 -- 8,527 302
Forty Seven Co., Ltd. -- 2,408 517 -- 2,925 --
Downtown D.F.S. (Thailand) Co., Ltd. 391 2,220 240 2,133 4,984 --
Top China Group Co., Ltd. -- 231 5 -- 236 --
Lengle (Thailand) Co., Ltd. -- 833 59 -- 892 --
Lengle TAT Phnom Penh Duty Free 81 -- -- -- 81 --
King Power On Board Sales and Services Co., Ltd. 17 3,373 27 -- 3,417 --
Thai Nishigawa International Co., Ltd. -- -- -- -- -- 56
Niji (Thailand) Co., Ltd. -- -- -- -- -- 104
---------- --------- ---------- ---------- ---------- --------
2,223 15,618 1,088 2,133 21,062 462
Less Allowance for doubtful accounts:
Related companies (1,075) (7,883) (491) (2,133) (11,582) --
Directors -- -- -- -- -- --
---------- --------- ---------- ---------- ---------- --------
(1,075) (7,883) (491) (2,133) (11,582) --
---------- --------- ---------- ---------- ---------- --------
Total 1,148 7,735 597 -- 9,480 462
========== ========= ========== ========== ========== ========
Director - to/(from) -- (446) -- -- (446) --
========== ========= ========== ========== ========== ========
36
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
As at December 31, 1999
Loans to and
Accounts receivables from related Management Accounts
Receivable Companies and Directors Fee Receivables Payable
---------- ------------------------ --------------- ---------- --------
Loans Interest and Total
other
receivables
1999
King Power International Co., Ltd. 2,613 3,340 207 - 6,160 222
Forty Seven Co., Ltd. - 2,777 541 - 3,318 -
Downtown D.F.S. (Thailand) Co., Ltd. 451 2,596 226 2,459 5,732 1
King Power Duty Free (CBO) Ltd. - 1,079 36 - 1,115 -
Top China Group Co., Ltd. - 267 - - 267 -
Lengle (Thailand) Co., Ltd. - 960 49 - 1,009 -
Lengle TAT Phnom Penh Duty Free 44 - - - 44 -
King Power On Board Sales and Services Co., Ltd. 11 1,628 1 - 1,640 11
Thai Nishigawa International Co., Ltd. - - - - - 45
Niji (Thailand) Co., Ltd. 9 - - - 9 27
---------- --------- ---------- ---------- ---------- --------
3,128 12,647 1,060 2,459 19,294 306
Directors - to/(from) - - - - - -
---------- --------- ---------- ---------- ---------- --------
3,128 12,647 1,060 2,459 19,294 306
Less Allowance for doubtful accounts:
Related companies (1,240) (9,796) (585) (2,459) (14,080) -
Directors - - - - - -
---------- --------- ---------- ---------- ---------- --------
(1,240) (9,796) (585) (2,459) (14,080) -
---------- --------- ---------- ---------- ---------- --------
Total 1,888 2,851 475 - 5,214 306
========== ========= ========== ========== ========== ========
Additionally, the Airports Authority of Thailand owns 5% of KPD common
shares. At December 31, 2000 and 1999, there are accrued concession fees
amounting to $ 1,173,990 and $ 7,933,979, respectively.
37
POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
On March 8, 2000, due to the dramatic decline of market interest rates
in Thailand and in order to maintain liquidity within the group of companies,
the board of directors of the company passed a resolution reducing the interest
on loans to/from related companies and directors to be 2.00% and 1.00% per
annum, respectively. Effective January 1, 2000, promissory notes with maturities
of less than 6 months bear no interest. Such loans have no collateral and are
due on demand.
The Company had operating transactions with related parties and
directors as follows ($ in thousands):
Related Companies
For the years ended December 30,
2000 1999 1998
---- ---- ----
Sales $ 1,342 $ 3,219 $ 805
Interest income 212 602 843
Management fee income - - 254
Purchase 1,590 2,658 945
Commission - - 369
Concession fees 12,629 22,414 11,092
Directors
For the years ended December 30,
2000 1999 1998
---- ---- ----
Interest income $ - $ 16 $ 198
On June 29, 1999, KPT and KPD entered into an agreement to engage Down
Town D.F.S. (Thailand) Co., Ltd., a related company, to provide statistical
analysis and marketing procedures over a period of 18 months, commencing July 1,
1999. In accordance with the agreement, KPT and KPD agreed to pay in advance for
these services, in the amount of $ 1,799,041 (excluding VAT). Accordingly, the
advance payments are treated as prepaid expenses in the accompanying financial
statements and amortized on a monthly basis over the term of the agreement.
12. COMMITMENTS AND CONTINGENT LIABILITIES (see Note 7)
Lease commitments
As of December 31, 1998, KPG Thai had a leasing commitment for office
space under a non-cancelable operating lease agreement in excess of one year. As
of January 1, 1999, KPG Thai transferred the rights of the following lease
agreements to KPT and KPD. The obligations of the various consolidated companies
under these lease agreements are set forth as follows:
-KPT has made lease agreement with SIAM TOWER to lease 26th floor
starting from November 1, 2000, to October 31, 2003.
-KPD has made lease agreement with SIAM TOWER to lease 27th floor
starting from November 1,2000, to October 31, 2003.
KPT and KPD have made lease agreement with the third party starting
from April 1, 1998, to December 31, 2001.
Lease and service charge commitment are due as follows:
KPT KPD
--- ---
2001 $ 159,534 $ 247,037
2002 160,166 160,166
2003 $ 138,727 $ 138,727
38
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
Letter of guarantees
As of December 31, 2000 and 1999, KPT and KPD were contingently liable
for bank guarantees totaling $10.13 million and $12.68 million, respectively,
issued in favor of the Excise Department and the Airports Authority of Thailand
as a performance bond.
Unused letters of credit
As of December 31, 2000, and 1999, KPD and KPT have the unused letters
of credit amounting to $8.17 million and $3.19 million, respectively.
13. SUBSEQUENT EVENT
On March 20, 2001, the Airports Authority of Thailand awarded the
Company a concession beginning January 1, 2002, to operate the duty free retail
space of its only competitor in Thailand's international airports. Coupled with
the extension of its already existing concession, the Company will be positioned
as the principle operator of tax free and duty free stores in Thailand after
2001.
14. SEGMENT FINANCIAL INFORMATION
The following segment information of the Company for December 31, 2000, 1999 AND
1998, are disclosed in accordance with Statement of Financial Accounting
Standard No.131 ("SFAS 131"). Information by legal entities is the reportable
segment under SFAS 131 because each entity is reported separately for management
($ in thousands).
For the year ended December 31, 2000
Duty Free Tax Free All Other Consolidated
Retail Retail
--------- -------- --------- ------------
Segment Information US $ US $ US $ US $
- -------------------
- - Revenue from external customers 81,058 27,856 - 108,914
- - Cost of merchandise sold 41,501 11,688 - 53,189
- - Concession fees 12,629 8,882 - 21,511
- - Gross profit 26,908 7,306 - 34,214
- - Interest Income 262 38 33 333
- - Interest expense 1,039 36 - 1,075
- - Segment net income (loss) 6,809 236 (261) 6,784
- - Segment total assets 37,146 10,320 226 47,692
- - Expenditures for segment assets 374 14 - 388
- - Depreciation 1,106 360 - 1,466
- - Unrealized gain (loss) on exchange (272) 26 39 (207)
- - Deferred income tax assets 2,418 1,180 21 3,619
Long-lived
Revenue Assets
--------- ------------
Geographical Information US $ US $
------------------------
Bangkok 104,951 4,253
Northern Thailand region 531 44
Southern Thailand region 3,432 91
--------- ------------
Total 108,914 4,388
========= ============
39
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
For the year ended December 31, 1999
Duty Free Tax Free All Other Consolidated
Retail Retail
--------- -------- --------- ------------
Segment Information US $ US $ US $ US $
- -------------------
- - Revenue from external customers 63,283 26,199 - 89,482
- - Cost of merchandise sold 31,870 11,411 - 43,281
- - Concession fees 10,979 11,363 - 22,342
- - Gross profit 20,434 3,426 - 23,860
- - Interest Income 725 110 82 917
- - Interest expense 1,111 16 1 1,128
- - Segment net income (loss) 842 388 1,224 2,454
- - Segment total assets 30,007 11,975 231 42,213
- - Expenditures for segment assets 361 313 5 679
- - Depreciation 1,067 340 46 1,453
- - Unrealized gain (loss) on exchange 201 (18) 2 185
- - Allowance for doubtful account 985 (561) (1,507) (1,083)
- - Deferred tax 2,788 1,542 24 4,354
Long-lived
Revenue Assets
--------- ------------
Geographical Information US $ US $
- ------------------------
Bangkok 86,304 5,344
Northern Thailand region 493 58
Southern Thailand region 2,685 70
--------- ------------
Total 89,482 5,472
========= ============
40
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2000, 1999 AND 1998
For the year ended December 31, 1998
Duty Free Tax Free All Other Consolidated
Retail Retail
--------- -------- --------- ------------
Segment Information US $ US $ US $ US $
- -------------------
- - Revenue from external customers 57,461 33,664 - 91,125
- - Cost of merchandise sold 25,537 13,568 - 39,105
- - Concession fees 11,198 13,771 - 24,969
- - Gross profit 20,726 6,325 - 27,051
- - Interest Income 1,049 264 126 1,439
- - Interest expense 1,048 313 4 1,365
- - Segment net income (loss) 2,251 (2,781) (3,757) (4,287)
- - Segment total assets 35,164 11,678 1,234 48,076
- - Expenditures for segment assets 2,532 580 710 3,822
- - Depreciation 539 311 104 954
- - Unrealized gain (loss) on exchange (491) 539 (74) (26)
- - Provision for damage stock (reversal) (618) - - (618)
- - Allowance for doubtful accounts 8,468 4,977 2,301 15,746
- - Deferred tax 1,865 2,540 60 4,465
Long-lived
Revenue Assets
--------- ------------
Geographical Information US$ US$
- ------------------------
Bangkok 88,040 6,608
Northern Thailand region 619 62
Southern Thailand region 2,466 35
--------- ------------
Total 91,125 6,705
========= ============
41
- -----------------------------------------------------------------------------------------------------------------------------------
SCHDULE 2 - ALLOWANCES
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at Additions Additions Deductions Balance at
---------------------------------------------------------------
beginning charged to charged end of year
---------------------------------------------------------------
of year costs and to other
---------------------------------------------------------------
expenses accounts
---------------------------------------------------------------
For the Year Ended December 31, 2000
- -----------------------------------------------------------------------------------------------------------------------------------
Allowances Deducted from Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Trade accounts receivable 280,198 697,141 977,339
- -----------------------------------------------------------------------------------------------------------------------------------
Accounts receivable - related companies 1,239,811 -- -- (164,555) 1,075,256
- -----------------------------------------------------------------------------------------------------------------------------------
Loans to and receivable from related company and directors 10,660,996 -- (697,141) (1,310,428) 8,373,229
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred tax 438,691 -- 90,696 -- 529,387
- -----------------------------------------------------------------------------------------------------------------------------------
Management fees (other current assets) 2,459,328 -- -- (326,417) 2,132,911
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in other companies 201,205 -- -- (22,871) 178,334
- -----------------------------------------------------------------------------------------------------------------------------------
Total allowances Deducted from Assets 15,000,031 0 90,696 (1,824,271) 13,266,456
- --------------------------------------------------------------------===============================================================
- -----------------------------------------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Allowances Deducted from Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Trade accounts receivable -- 280,198 280,198
- -----------------------------------------------------------------------------------------------------------------------------------
Accounts receivable - related companies 1,874,290 -- 223,466 (857,945) 1,239,811
- -----------------------------------------------------------------------------------------------------------------------------------
Loans to and receivable from related company and directors 11,157,025 -- (280,198) (496,029) 10,380,798
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred tax 814,908 -- 83,671 (459,888) 438,691
- -----------------------------------------------------------------------------------------------------------------------------------
Management fees (other current assets) 2,714,184 -- -- (254,856) 2,459,328
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in other companies 89,688 112,608 -- (1,091) 201,205
- -----------------------------------------------------------------------------------------------------------------------------------
Total allowances Deducted from Assets 16,650,095 112,608 307,137 (2,069,809) 15,000,031
- --------------------------------------------------------------------===============================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Allowances Deducted from Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Accounts receivable - related companies -- 1,874,290 -- -- 1,874,290
- -----------------------------------------------------------------------------------------------------------------------------------
Loans to and receivable from related company and directors -- 11,157,025 -- -- 11,157,025
- -----------------------------------------------------------------------------------------------------------------------------------
Merchandise inventories 533,367 -- -- (533,367) 0
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred tax -- -- 814,908 -- 814,908
- -----------------------------------------------------------------------------------------------------------------------------------
Management fees (other current assets) -- 2,714,184 -- -- 2,714,184
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in other companies 55,666 16,177 17,845 -- 89,688
- -----------------------------------------------------------------------------------------------------------------------------------
Total allowances Deducted from Assets 589,033 15,761,676 832,753 (533,367) 16,650,095
- --------------------------------------------------------------------===============================================================
42
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None
PART III
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Name Age Position
- ---- --- --------
Vichai Raksriaksorn 42 Group Chairman, Chief Executive
Officer and Director
Viratana Suntaranond 59 Group Chief Financial Officer,
Secretary, Treasurer and Director
Aimon Raksriaksorn 43 Group Deputy Managing Director
and Director
Suwan Panyapas 56 Director
Dharmnoon Prachuabmoh 66 Director
*Pong Chewananth 53 Director
* Resigned effective November 12th, 2000 due to his political candidate as a
Member of the Parliament of the Thai government, which position require the
candidates to be free from all employment of both the public and private
sectors.
Set forth below is a description of the backgrounds of the executive officers
and directors of the Company and a listing of their principal occupations for
the past five years.
Vichai Raksriaksorn
1999-Present Acting Group Managing Director of King Power International
Group Co., Ltd.
1997-Present Group Chairman, Chief Executive Officer and Director of King
Power International Group Co., Ltd. Managing Director of King
Power Duty Free Co., Ltd.
Chairman of King Power On Board Sale & Services Co., Ltd.
1994-Present Chairman of King Power International Co., Ltd.
Chairman of V&A Holdings Co., Ltd.
1993-Present Chairman of King Power Tax Free Co., Ltd.
Chairman of Capitalux Co., Ltd.
1991-Present Chairman of TAT (Phnom Penh) Duty Free Co., Ltd.
1989-1999 Managing Director of Downtown D.F.S. (Thailand) Co., Ltd.
Viratana Suntaranond
1997-Present Group Chief Financial Officer, Secretary and Director of King
Power International Group Co., Ltd.
Executive Director and Managing Director of King Power Duty
Free Co., Ltd.
1994-1997 Director of Big Hand Co., Ltd.
1993-Present Managing Director of King Power Tax Free Co., Ltd.
1992-Present President of U.M.P. Commercial Co., Ltd.
1985-Present President of Niji (Thailand) Co., Ltd.
1984-Present Managing Director of Thai-Tai International Trading Co., Ltd.
43
Aimon Raksriaksorn
1997-Present Group Deputy Managing Director and Director of King Power
International Group Co., Ltd.
Executive Director of King Power On Board Sale & services Co.,
Ltd.
1996-Present Executive Director of King Power Duty Free Co., Ltd.
1994-Present Executive Director of King Power International Co., Ltd.
Executive Director of TOP Tourist Service Co., Ltd.
1993-Present Executive Director of King Power Tax Free Co., Ltd.
Executive Director of TAT Phnom Penh Co., Ltd.
1989-Present Managing Director of Thai Nishikawa International Co., Ltd.
Suwan Panyapas
1999-Present Board of Director of V.R.J. International Co., Ltd.
Board of Director of C.A.S. Intertrade Co., Ltd.
1997-Present Director and Group Senior Advisor of King Power International
Group Co., Ltd.
1996-1999 Senator of Thai National Assembly
1992-2000 Board of Director of Infotel Communication Co., Ltd.
1991-Present Advisor to TAT Duty Free Co., Ltd.
1989-Present Advisor & Shareholder of Downtown DFS (Thailand) Co., Ltd.
1989-1991 Managing Director of TAT Duty Free Co., Ltd.
Some Special Positions Held:
o Member of Committee Training Successful Candidates appointed to
Juvenile Court.
o Member of Sub-Committee on the Development of Judicial and Ministerial
System.
o Member of Committee/Secretary on Selection Test for Judicial Officer
o Senior Judge of Thonburi Court
o Chief Judge of Udon Thanee District Court
o Chief Judge attached to the Ministry of Justice
Dharmnoon Prachuabmoh
1997-Present Director of King Power International Group Co., Ltd.
Life Member, Pacific Asia Travel Association (PATA)
1995-1996 Member of the Thai Parliament, House of Representatives
Advisor to Deputy Minister, Ministry of Communications and
Transport
Vice Chairman, Tourism Committee (House of Representatives)
1988-1995 President of Thailand Incentive and Convention Association
(TICA)
1988-1989 President of Pacific Asia Travel Association
1986-1994 Governor of Tourism Authority of Thailand (TAT)
Chulchit Bunyaketu (age: 58)
2000 Board Director of Total Access Communication Co., Ltd.
1999 Board Director of Universal Utilities Co., Ltd
1998-Present Managing Director, Thai Oil Company Limited
1998 Managing Director, Thaioil Power Company Limited
Board Director of the Petroleum Authority of Thailand
Board Director of Thai Lube Blending Co., Ltd.
1997 Advisor to Board Director of Broadcasting Director Board,
Royal Thai Army Radio & Television
1996 Board Director of the Population & Community Development
Association
Board Director of Thai Army Television Channel 5 & 7
Board Director of Thai Paraxylene Company Limited
Board Director of Thaioil Power Company Limited
Board Director of Independent Power (Thailand) Company Limited
1994 Deputy Managing Director, Thai Oil Company Limited
1995 Board Director of Thai Lube Base Public Company Limited
1996 Board Director of Eastern Water Resources Development and
Management Co., Ltd.,
Provincial Water Works Authority
Board Director of Bangkok Mass Transit System Corp. Ltd.
Mrs. Preeyaporn Thavornun (age: 49)
1997-Present Direct Distributor of Amway (ruby)
1985-1997 Vice President of Provident Fund Management Department Asia
Credit Ltd.
1975-1985 Manager of Accounting of Cathay Trust Finance and Securities
Co., Ltd.
1974-1975 Accounting Staff of Thai Military Bank, Samutprakarn Branch
Pong Chewananth
1998-2000* President, Infotel Communications (Thailand) Co., Ltd.
1997-1998 Advisor to the Minister of Industry
1997 Deputy Secretary-General to the Prime Minister for Political
Affairs
1996-1997 Board of Agriculture and Co-operative Policy and Planning
Committee;
Board of Director, Transport Co., Ltd., Ministry of Transport
and Communications
1995-1997 Director, Marketing Organization for farmer, Ministry of
Agriculture and Co-operative
1994-1995 Advisor to the Ministry of Public Health
1994 Advisor to the Deputy Prime Minister
* Resigned effective December 12th, 2000 due to his political candidate as a
Member of the Parliament of the Thai government, which position require the
candidates to be free from all employment of both the public and private
sectors.
Directors of the Company hold office until the next annual meeting of
stockholders or until their successors have been elected and qualified. Vichai
Raksriaksorn and Aimon Raksriaksorn are husband and wife. None of the other
directors or executive officers are related. Executive officers are elected by
the Company's Board of Directors to hold office until their respective
successors are elected and qualified.
The Company's bylaws provide that directors may be paid their expenses, if any.
Directors were not paid an annual retainer but they were each paid approximately
$2,500 - $7,200 per annum to attend meetings of the Board of Directors, Board of
Executive Officers, or of its committee meeting held in 2000.
44
Committees of the Board of Directors
The Board of Directors has two committees: the Audit Committee and Compensation
Committee. The Audit Committee is composed of Vichai Raksriaksorn, Suwan
Panyapas, and Dharmnoon Prachuabmoh with Mr. Raksriaksorn being the Chairman.
The Audit Committee is responsible for recommending the annual appointment of
the Company's auditors, with whom the Audit Committee will review the scope of
audit and non-audit assignments and related fees, accounting principles used by
the Company in financial reporting, internal auditing procedures and the
adequacy of the Company's internal control procedures. The Compensation
Committee is composed of Vichai Raksriaksorn, Suwan Panyapas, and Dharmnoon
Prachuabmoh with Mr. Raksriaksorn being the Chairman. The Compensation Committee
is responsible for reviewing and making recommendations to the Board of
Directors concerning all forms of compensation paid to the Company's executive
officers.
Compliance with Section 16(a) of the securities Exchange Act of 1934
Based solely on the review of Forms 3,4 and 5 and amendments thereto provided to
the Company pursuant to Rule 16a-3(e), no individuals have failed to file on a
timely basis the reports required to be filed under that rule or as required by
Section 16(a) of the 1934 Act during the 2000 fiscal year.
ITEM 11 EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
about the cash and non-cash compensation paid by the Company to its Executive
Officers for the fiscal year ended December 31, 1996, 1997, 1998, 1999, and
2000. None of the Company's executive officers or directors received cash and/or
non-cash compensation in excess of $100,000 for any of those fiscal years.
Summary Compensation Table
- --------------------------------------------------------------------------------------------------
(a) Annual Compensation Long Term Compensation
Name and Awards Payouts
Principal (i)
Position
- --------------------------------------------------------------------------------------------------
(b) (c) (d) (e) (f) (g) (h)
- ----------------- ---- ------ ----- ------------ ------------ ------- --------- ------------
Year Salary Bonus Other Annual Restricted Option/ LTIP All Other
Compensation Stock Awards SARs(#) Payouts Compensation
- ----------------- ---- ------ ----- ------------ ------------ ------- --------- ------------
Vichai 2000 74,554 - 7,256* - - - -
Raksriaksorn 1999 79,317 - 5,000 - - - -
Group Chairman & 1998 - - 5,000 - - - -
CEO 1997 - - 6,800 - - - -
1996 - - - - - - -
- ----------------- ---- ------ ----- ------------ ------------ ------- --------- ------------
Viratana 2000 59,643 - 6,262** - - - -
Suntaranond 1999 63,454 - 5,000 - - - -
Group Executive 1998 - - 5,000 - - - -
Director & CFO 1997 - - 6,800 - - - -
1996 - - - - - - -
- ----------------- ---- ------ ----- ------------ ------------ ------- --------- ------------
Aimon 2000 59,643 - 5,517** - - - -
Raksriaksorn 1999 63,454 - 2,000 - - - -
Group Deputy 1998 53,000 - 2,000 - - - -
Managing Director 1997 - - 6,800 - - - -
1996 - - - - - - -
- ----------------- ---- ------ ----- ------------ ------------ ------- --------- ------------
* Vichai Raksriaksorn received meeting compensation fo r the Board of
Directors' Meeting, the Board of Executive Officers' Meeting, and Audit
Committee Meeting.
** Viratana Suntaranond and Aimon Raksriaksorn received meeting
compensation for the Board of Directors' Meeting and the Board of
Executive Officers' Meeting.
The Company has no employment agreements with any of its executive officers or
directors.
45
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 28, 2000, with
regard to the beneficial ownership of the Common Stock: (i) by each person known
to the Company to a be beneficial owner of 5% or more of its outstanding Common
Stock; (ii) by the officers, directors and key employees of the Company
individually; and (iii) by the officers and directors as a group.
(1) (2) (3)
Name and Address Number of Shares Beneficially Owned Percent
- ---------------- ----------------------------------- -------
Vichai Raksriaksorn (1) 5,748,000 (1) 28.38%
Viratana Suntaranond (2) 3,000,000 (2) 14.81%
Aimon Boonkhundha (3) 3,000,000 (3) 14.81%
Suwan Panyapas -0- *
Dharmnoon Prachuabmoh -0- *
Pong Chewananth -0- *
Niphon Raksriaksorn (4) 1,037,883 (4) 5.12%
TOTAL 7 persons 12,785,883 (1)(2)(3)(4) 63.14%
* less than 1 %
(1) This excludes 3,000,000 shares owned by his wife, Aimon Raksriaksorn, as her
separate property, as well as 446,000 shares owned by his daughter, Voramas
Raksriaksorn. Mr. Raksriaksorn disclaims all beneficial interest in those
shares, as well as any right to vote or control the disposition of those shares.
(2) This excludes 1,000,000 shares owned by his wife, Umaratana Suntaranond, as
her separate property, as well as 150,000 shares in the aggregate owned by his
three children. Mr. Suntaranond disclaims all beneficial interest in those
shares, as well as any right to vote or control the disposition of those shares.
(3) This excludes 5,748,000 shares owned by her husband, Vichai Raksriaksorn, as
his separate property, as well as 5,000 shares owned by her mother, Auemporn
Boonkhant. Ms. Raksriaksorn disclaims all beneficial interest in those shares,
as well as any right to vote or control the disposition of those shares.
(4) This excludes 5,748,000 shares owned by his uncle, Vichai Raksriaksorn, as
his separate property. Mr. Niphon Raksriaksorn disclaims all beneficial interest
in those shares, as well as any right to vote or control the disposition of
those shares.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following companies, which are owned or controlled by one or more
of the directors of the Company, had transactions with the Company during the
2000 fiscal year and are likely to have similar transactions with the Company in
the future. The related amounts are disclosed in Note 11 "Related Parties
Transactions" in Notes To Consolidated Financial Statements. All transactions
were on terms and conditions and at prices substantially similar to those that
these companies would have negotiated with unrelated third parties for the same
goods and services.
Thai Nishikawa International Co., Ltd.
Ms. Aimon Raksriaksorn is a Director and Managing Director of this company,
whose main business is a manufacturer of costume jewelry for exporting.
Lengle (Thailand) Co., Ltd.
Mr. Vichai Raksriaksorn is the Managing Director and Mr. Suwan Panyapas is a
stockholder of this company. Along with Mr. Viratana Suntaranond, and Ms. Aimon
Raksriaksorn, they are also stockholders of this company, whose main business
was the Central Buying Office for local merchandise sold to KPT. Other than the
existing loan outstanding owed to KPG's subsidiary, the Company currently has no
business activities.
Thai Sky Travel & Intertrade Co., Ltd.
Mr. Viratana Suntaranond is the Managing Director, director and owners of this
company, whose main business is a travel agency providing traveling arrangement
for clients. There have been and continue to be minimum business activities with
this company but principally the Company and its subsidiaries benefit from the
lower prices offered by this company for its services.
46
Niji (Thailand) Co., Ltd.
Mr. Viratana Suntaranond is the President and owner of this company, whose main
business is the manufacture of ballpoint and plastic-tip pens under the brand
name "Niji". Since 1998, when other suppliers raised the cost of shopping bags
to an unacceptable level, KPG's subsidiaries purchased shopping bags from Niji
at a much lower price than offered generally in the market.
Forty Seven Co., Ltd.
Messrs. Viratana Suntaranond, Dharmnoon Prachuabmoh, and Mr. Vichai Raksriaksorn
are shareholders of this company, whose main business is to act as the holding
company for a duty free operation in Hong Kong. This company's operations are
currently being liquidated and it is in the process of recovering the owners'
investment in this business.
Top China Group Co., Ltd.
Messrs. Viratana Suntaranond, Dharmnoon Prachuabmoh, and Vichai Raksriaksorn are
shareholders of this company, whose main business is acting as the holding
company for a duty free operation in Mainland China at the Great Wall. This
company operates, as a joint venture with the Forestry Ministry of the Republic
of China, a duty free business at the Great Wall area under the 50-year license.
King Power International Co., Ltd.
Mr. Vichai Raksriaksorn, Mr. Viratana Suntaranond, and Ms. Aimon Raksriaksorn
are Directors of this Company, with Mr. Raksriaksorn being its Chairman. They
are all are shareholders of this Company, whose main business is the operation
of a duty free store in downtown Bangkok where merchandise is sold to
international travelers.
Downtown D.F.S. (Thailand) Co., Ltd.
Mr. Vichai Raksriaksorn, Mr. Suwan Panyapas, and Ms. Aimon Raksriaksorn, and are
shareholders of this company. The main business of this company is the operation
of a duty free store in downtown Bangkok. During the year 2000, this company has
transferred its operation to King Power International Co., Ltd. (KPI) and is in
the process of settling proceeds from sales of this business with KPI.
Airports Authority of Thailand (AAT)
AAT is a governmental agency and it owns five percent of the stock of King Power
Duty Free Co., Ltd.
King Power on Board Sale and Service Co., Ltd.
Mr. Vichai Raksriaksorn and Ms. Aimon Raksriaksorn are the Directors and,
together with Mr. Viratana Suntaranond, are the shareholders of this company.
The main business of this company is the operation of duty free sales on board
the airplanes owned and operated by Thai Airways International Public Co., Ltd.
Infotel Communication (Thailand) Co., Ltd.
Mr. Suwan Panyapas is the Managing Director and the shareholders of this
company. The main business of this company, which holds the appropriate license
from the Telecommunications Authorities in Thailand, is to operate an
information providing service to the public.
TAT (Phnom Penh) Duty Free Co., Ltd.
Mr. Vichai Raksriaksorn and Mr. Suwan Panyapas are the Directors and, together
with Mr. Vichai Raksriaksorn and Ms. Aimon Raksriaksorn, are the shareholders of
this company. The main business is operating the duty free retail in Phnom Penh,
Cambodia.
47
PART IV
ITEM 14 EXHIBITS AND REPORTS ON FORM 8-K
There follows a list of all exhibits filed with this Form 10-K (1998), including
those incorporated by reference. .
- ------- ----------------------------------------------------------------------
Exhibit
No. Name or Description
- ------- ----------------------------------------------------------------------
3.1* Articles of Incorporation of King Power International Group Co., Ltd.
3.2* By-Laws of King Power International Group Co., Ltd.
3.3* Certification Document of King Power Duty Free Co., Ltd.
3.4* Certification Document of King Power Tax Free Co., Ltd.
3.5* Memorandum of Association of King Power International Group Co., Ltd.
10.1* Letter of Guarantee dated 01/24/97 (was 10.12)
10.2* Letter of Guarantee dated 06/13/97 (was 10.14)
10.3* Letter of Guarantee dated 06/13/97 (was 10.15)
10.4** Contract- Permission to Sell- Bangkok Airport with AAT dated 10/02/97
(was 10.21)
10.5** Maintenance & Repairs Agreement with Logic Company Limited, dated
09/01/98 for King Power Tax Free Co., Ltd. (was 10.29)
10.6** Maintenance & Repairs Agreement with Logic Company Limited, dated
09/01/98 for King Power Duty Free (was 10.31)
10.7** Memorandum with Thai Military Bank dated 08/21/98 (was 10.33)
10.8** Guarantee for Thai Military Bank dated 08/21/98 (was 10.34)
10.9** Guarantee for Thai Military Bank dated 08/21/98 (was 10.35)
10.10** Guarantee for Thai Military Bank dated 08/21/98 (was 10.36)
10.11** Memorandum with Thai Military Bank dated 11/19/98 (was 10.37)
10.12** Memorandum with Thai Military Bank dated 11/19/98 (was 10.38)
10.13** Guarantee for Thai Military Bank dated 11/19//98 (was 10.39)
10.14** Guarantee for Thai Military Bank dated 11/19//98 (was 10.40)
10.15** Guarantee for Thai Military Bank dated 11/19//98 (was 10.41)
10.16** Guarantee for Thai Military Bank dated 11/19//98 (was 10.42)
10.17** Notice for Deduction with Thai Military Bank dated 11/25/98 (was
10.43)
10.18** Pledge for Thai Military Bank dated 12/03/98 (was 10.44)
10.19** Letter of Consent with Thai Military Bank dated 12/03/98 (was 10.45)
10.20** Letter of Consent with Thai Military Bank dated 12/03/98 (was 10.46)
10.21** Loan Agreement with Siam City Bank dated 06/23/98 (was 10.47)
10.22** First Amendment to Loan Agreement with Siam City Bank dated 06/23/98
(was 10.48)
10.23** Guarantee for Siam City Bank dated 06/23/98 (was 10.49)
10.24** Guarantee for Siam City Bank dated 11/12/98 (was 10.50)
10.25** Letter of Consent with Siam City Bank dated 11/27/98 (was 10.51)
10.26** Pledge for Siam City Bank dated 11/27/98 (was 10.52)
10.27** Letter of Consent with Siam City Bank dated 12/30/98 (was 10.53)
10.28** Pledge for Siam City Bank dated 12/30/98 (was 10.54)
10.29** Contract of Permission for Operating Business Selling Photo
Developing-Duplicating-Enlarging Services at Bangkok International
Airport KPT#1 Contract No. 6-22/2542 (was 10.56)
10.30** Contract of Permission for Operating Business Selling Medicines,
Medical Supplies and Health Products at Bangkok International Airport
KPT#3 Contract No. 6-24/2542 (was 10.57)
10.31** Contract of Permission for Operating Business Selling Souvenirs and
Miscellaneous Items at Domestic Passengers Terminal Bangkok
International Airport KPT#5 Contract No. 6-06/2542 (was 10.58)
48
10.32** Lease Agreement Domestic Passengers Terminal Bangkok International
Airport KPT#6 Agreement No. 1-06/2542 (was 10.59)
10.33** Lease Agreement Bangkok International Airport KPT#7 Agreement No.
1-104/2542 (was 10.60)
10.34** Memorandum Attached to Contract of Permission for Operating Business
of Selling Merchandize and Souvenirs at Bangkok International Airport
No. 6-01/2541 dated 2 October 1997 Amendment 1 KPT#10 (was 10.63)
10.35 Memorandum Attached to Lease Agreement at Bangkok International
Airport No. 1-01/2541 dated 2 October 1997 Amendment 1 KPT#11 (was
10.64)
10.36 Siam Tower Lease KPT dated 11/23/97 KPT#13 (was 10.67)
10.37** Siam Tower Lease KPD dated 11/23/97 KPD#8 (was 10.75)
10.38** Pledge Agreement of Debenture dated 6/17/99 FN#2 SCC (Siam City Bank)
(was 10.77)
10.39** Letter of Consent for Bank Deposits Deduction dated 6/17/99 FN#3 SCC
(was 10.78)
10.40 Contract of Permission for Operating Business Selling Merchandise And
Souvenirs in Transit Lounge International Passenger Terminal Bangkok
International Airport dated 6-16-00
10.41 Lease Agreement for Space in Building Bangkok International Airport
dated 1-16
10.42 Contract of Permission for Operating Business Selling Sports Clothes
and Equipment, Toys, Games, and Souvenirs for Children, Bangkok
International Airport dated 6-02-00
10.43 Lease Agreement for Space in Building Bangkok International Airport
1-02-00
10.44 Contract of Permission for Operating Business Selling Souvenirs and
Miscellaneous Items in Domestic Passenger Terminal Bangkok
International Airport dated 6-10-00
10.45 Lease Agreement for Space in Building of Bangkok International Airport
dated 1-10-00
10.46 Contract of Permission for Operating Business Selling Books,
Magazines, Printed Materials, Cards, Stationery; Selling and Renting
Tapes, VDO, CD; Providing Services for printing Name Cards, Making
Rubber Stamps, Graphic, Advertising Stickers & Photo Copies at Bangkok
International Airport dated 6-03-00
10.47 Lease Agreement for Space in Building Bangkok International Airport
dated 1-03-00
10.48 Lease Agreement for Space in Building Bangkok International Airport
1-08-00
10.49 Contract of Permission for Operating Business Selling Bottled Liquor,
Cigarettes, Tobacco, Cigar and related Devices Bangkok International
Airport dated 6-04-00
10.50 Lease Agreement for Space in Building Bangkok dated 1-04-00
10.51 Lease Agreement (Siam Tower, 26th Floor) dated 7-25-00
10.52 Memorandum of Amendment Contract of Permission for Operating Business
Selling Duty Free Merchandise and Leasing Spaces for Operation Bangkok
International Airport, and Reginal Airports Contract No. 6-04/2539
dated 6 March 1996 (Amendment 1) dated 7-11-00
10.53 Memorandum of Amendment Contract of Permission for Operating Business
Selling Duty Free Merchandise and Leasing Spaces for Operation Bangkok
International Airport, and Reginal Airports Contract No. 6-04/2539
dated 6 March 1996 (Amendment 2) dated 11-10-00
10.54 Lease Agreement for Space in Building 305 Bangkok International
Airport dated 2-02-00
10.55 Lease Agreement (Siam Tower, 27th Floor) dated 7-25-00
10.56 Results of Consideration on Extension of the Contract for Merchandise
and Souvenirs Business Operation dated 7-14-00
10.57 Merchandise and Souvenir Business Operation at the Chiang Mai Airport
dated 5-18-00
10.58 Agreement for Pledge of Instrument Issued to person by Name dated
12-28-00
10.59 Guarantee Contract: Siam Commercial Bank (Baht 125 million) dated
7-20-00
10.60 Guarantee Contract: Siam Commercial Bank (Baht 385 million) dated
7-20-00
10.61 Guarantee Contract: Siam Commercial Bank (Baht 125 million) dated
7-20-00
10.62 Guarantee Contract: SICCO
10.63 Guarantee Contract: Siam City Bank dated 8-23-00
10.64 Letter of Consent: Siam City Bank dated 8-23-00
10.65 Letter of Consent for Deduction of Bank Deposit dated 12-28-00
10.66 Agreement for Pledge of Bank Deposit dated 11-10-00
10.67 Overdraft Agreement dated 6-20-00
10.68 Guarantee Contract dated 6-20-00
10.69 Agreement for pledge of Rights under Deposit dated 6-20-00
10.70 Loan Facility Agreement dated 11-15-00
10.71 Letter of Consent & Overdraft Facility Agreement dated 11-15-00
10.72 Form A : Agreement for Pledge of Rights under Deposit Instrument dated
11-27-00
10.73 Continuing Commercial Credit Agreement dated 11-15-00
10.74 Guarantee to Citibank, N.A./Citicorp Leasing (Thailand) Ltd.
21.1** List of Subsidiaries
27.1** Financial Data Schedule
* As filed with the Company's Form 10-KSB/A on May 7, 1998.
** As filed herewith.
49
Reports on Form 8-K
The Company filed the following reports with the SEC on FORM 8-K
(A) August 22,2000 - The Company issued a press release announcing the extension
of its concession contract.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, this 23th day of March,
2001.
KING POWER INTERNATIONAL GROUP CO., LTD.
By: /s/ Vichai Raksriaksorn
------------------------
Vichai Raksriaksorn
Group Chairman, Chief Executive Officer and Director
By: /s/ Viratana Suntaranond
-------------------------
Viratana Suntaranond
Group Chief Financial Officer, Secretary, and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Vichai Raksriaksorn Group Chairman, Chief Executive March 23, 2001
------------------- Officer and Director
Vichai Raksriaksorn
/s/ Viratana Suntaranond Group Executive Director, Chief March 23, 2001
-------------------- Financial Officer, Secretary and
Viratana Suntaranond Director
/s/ Aimon Raksriaksorn Group Deputy Managing Director March 23, 2001
------------------ and Director
Aimon Raksriaksorn
/s/ Dharmnoon Prachuabmoh Director March 23, 2001
---------------------
Dharmnoon Prachuabmoh
/s/ Suwan Panyapas Director March 23, 2001
--------------
Suwan Panyapas
50