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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, 2001
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.)
25th & 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
21, 2002: 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 $1.26 per share
for the registrant's common stock as reported by the American Stock Exchange as
of February 21, 2002, was approximately $9,769,410.
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.
3
PART I
ITEM 1 BUSINESS
General
- -------
The global airport 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. As stated in Raven Fox Report of the Duty-Free &
Travel-Retail 2001/2002, in 2000, global airport duty free sales increased by
1.3% reaching US$9 billion, accounting for 44.8% of the world's duty-free
market. Sales at European airports were down by 8.4% as the effects of intra-EU
abolition in July 1999 were felt. But offsetting these declines, duty-free sales
through airports in the Asia/Pacific region have continued to recover, rising
impressively by 18% in 2000. Asia/Pacific, including the Middle East, now
accounts for 31.3% of all airport duty-free sales, up from 26.8% in 1999;
Europe's share has slipped to 50% and the Americas' share has grown to 17.5%.
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 and Domestic 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). The AAT is anticipating
that the number of passengers will increase to 50 million by the year 2007.
King Power International Group Co., Ltd. (the "Company") is currently
the leading travel-retail operator in Thailand. The Company operates and manages
27 duty free and 21 tax free stores, via two concession agreements with the
Airports Authority of Thailand, throughout all of Thailand's major airports. At
the end of 2001, the Company has approximately 44,720 square feet of retail
space at the Bangkok and Provincial International and Domestic 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 operating license granted by the Airports Authority of
Thailand ("AAT") for shops of this specific nature.
4
At the end of 2001, the Tax Free Division operated 21 stores within
Thailand's major international and domestic airports, totaling 15,326 square
feet of retail space compared to 6,181 square feet in 1993 when it first began
operations. There are now 11 shops located in the various terminals that
comprise the Bangkok International Airport; of which 9 shops are located in the
airside departure terminals, whereas the landside shops are established in two
different locations in the departure hall. 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.
There are ten shops, selling indigenous general merchandise of
Thailand, together with local specialty goods, located in the domestic terminals
at the Bangkok, Chiang Mai and Phuket domestic and international airports.
The Company is an active participant in the promotional campaign known
as "Thailand Brand", including the Company's in-house brand, "VR", for the years
2000 to 2002. The four shops were opened in joint operations with AAT, the
Tourism Authority of Thailand ("TAT"), and the Department of Industrial
Promotion from the Ministry of Commerce and dedicated to the "Thailand Brand"
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.
From January 1, 2002, the Duty Free Division obtained additional 19,171 square
meters to operate duty free shops from the AAT for shops of this specific nature
until December, 2006 or until the new international airport is in operation.
At December 31, 2001, The Duty Free Division operates 27 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'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 to 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 Harrods of Knightsbridge,
U.K, into both Terminals of the Bangkok International Airport 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, 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 attract a greater number of tourists and travelers to Thailand
in the future, which should have a significant positive effect on the Company's
business, both as to sales 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 three bonded warehouses, located in Bangkok, Chiang
Mai, 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
5
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.
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 the ability 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 duty free shops
in Thailand. Furthermore, the Company receives significant sales support from
these vendors. This support includes 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 managers. The Company maintains the overall
control of 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 vendors, and (3) comply with Customs' record-keeping
requirements. Through the Company's automated system, appropriate product mixes
are maintained to maximize merchandise turnover. 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 2,897 employees. 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 9001 year 2000 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 less competitive environment for the Tax Free
Division and Duty Free Division. During 1997, the Company was successfully
granted an extension by the AAT of the Tax Free Division's license to operate
and sell gifts and general merchandise at the Bangkok International Airport, for
a further five year term extending from 1998 to 2003. Furthermore, starting from
January 1, 2002, the Company was granted additional retail space by the AAT of
the Duty Free Division's license to operate and sell gifts and general
merchandise at the Bangkok, Chiang Mai, Phuket, and Hatyai International
Airports, for a further five year term extending from 2002 to 2006 or until the
new international airport is in operation.
In Thailand, there are several barriers to entry 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.
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
6
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 has concentrated on improving the profitability of
the Tax Free Division during previous years, principally through reducing
concession fees and rent cost, selecting higher value merchandise, and lowering
operating costs. However, in the future, the strategy will emphasize increasing
the volume of sales via altering product mix that would suit each group of
travelers. 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 or until the new international airport is in operation. Furthermore,
effective from January 1, 2002, the Company has obtained additional space from
the AAT to operate the Duty Free business throughout international airports in
Thailand covering the period of 2002 until 2006 or until the new international
airport is in operation, in effect, position the Company to be a sizable
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 continuing 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 2002 and beyond. The main
components of this re-engineering target are:
(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 types of merchandise displayed at different
locations;
(5) developing premium brands in order to create brand awareness,
uniqueness of product availability, to upgrade quality and
design, and to improve packaging and marketing; and
(6) utilizing the Company's overall resources more efficiently
through the implementation of ISO 9001.
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 2002 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.
7
ITEM 2 PROPERTIES
The Company's principal office is located at the 25th, 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 36,902 square feet of
space and is leased from Bangkok Intercontinental Hotels Co., Ltd. under a lease
expiring in October, 2003, at an annual rental cost of $144,291 using an average
exchange rate of 44.3812 Thai Baht to 1 US Dollar for 2001.
At the end of 2001, the Company operates 48 retail stores with retail space
totaling 44,720 square feet, located in the international and domestic airports
of Thailand located in Bangkok, Chiang 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 2001 fiscal year, the Company paid a total of
$856,979 to the AAT under these lease agreements. The Company anticipates that
the total for the 2002 fiscal year under these lease agreements will be
approximately $1,184,112 using an exchange rate of 44.3812 Thai Baht to 1 US
Dollar as of December 31, 2001.
The Company leases six warehouses containing approximately 41,300 square feet
from the AAT. The three bonded warehouses located in Bangkok, Chiang Mai, and
Phuket containing approximately 33,200 square feet for the Duty Free Division
and three warehouses located in Bangkok, Chiang Mai, and Phuket containing
approximately 8,100 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 44.3812 Thai Baht to 1 US Dollar to translate
these expenses into US Dollars during 2001.
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
On November 1, 2001, the Company filed a preliminary proxy statement for
purposes of calling a meeting of shareholders to vote on a Plan of Merger which
would result in all of the outstanding shares of the Company being acquired by a
newly formed corporation to be owned by the shareholders presently comprising
the Company's management. Should the plan of merger be approved and the
transaction concluded, the Company would cease to exist. A final proxy statement
has not been filed and the shareholders' meeting has not been scheduled.
8
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 346 as of February 21, 2002. The Company believes that
approximately 372 stockholders currently own and hold the stock in street name.
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 2002 (Through February 22) $1.48 $1.26
Fourth Quarter of 2001 $1.50 $0.85
Third Quarter of 2001 $1.90 $1.26
Second Quarter of 2001 $2.15 $0.90
First Quarter of 2001 $1.34 $0.87
Fourth Quarter of 2000 $1.18 $0.68
Third Quarter of 2000 $1.75 $1.00
Second Quarter of 2000 $1.37 $1.06
First Quarter of 2000 $1.50 $1.06
Fourth Quarter of 1999 $1.56 $0.93
Third Quarter of 1999 $2.00 $1.06
Second Quarter of 1999 $2.18 $1.25
First Quarter of 1999 $2.88 $2.12
Fourth Quarter of 1998 $4.50 $1.75
Third Quarter of 1998 $4.50 $1.88
Second Quarter of 1998 $6.31 $3.43
First Quarter of 1998 $7.37 $1.50
Fourth Quarter of 1997 $13.12 $2.25
Third Quarter of 1997 (After July 29) $16.62 $13.12
The Company has not paid any cash dividends since the listing of its Common
Shares on the American Stock Exchange.
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,
1996 1997 1998 1999 2000 2001
--------- --------- --------- --------- --------- ---------
Consolidated Statement of Income data :
Sales Revenue $ 41,869 $ 95,997 $ 91,125 $ 89,483 $ 108,914 $ 116,329
Gross Profit 7,383 23,154 27,051 23,859 34,214 36,347
Operating Expenses 6,273 14,621 31,931 20,753 23,357 28,794
--------- --------- --------- --------- --------- ---------
Operating Income ( Loss) 1,110 8,533 (4,880) 3,106 10,857 7,553
Other Income (Expenses), net 493 (1,846) 541 197 (952) 401
Income (loss) before minority interest
and income tax 1,603 6,687 (4,339) 3,303 9,905 7,954
Net Income (loss) $ 1,643 $ 7,935 $ (4,287) $ 2,413 $ 6,485 $ 4,548
========= ========= ========= ========= ========= =========
Net Income (loss) per share :
Basic $ 0.09 $ 0.40 $ (0.21) $ 0.12 $ 0.32 $ 0.22
Diluted $ -- $ -- $ -- $ -- $ -- $ --
Weighted Average Share Outstanding :
Basic 18,800 19,779 20,250 20,250 20,250 20,250
Diluted -- -- -- -- -- --
Consolidated Balance Sheet Data :
Working Capital $ (7,351) $ 17 $ 2,793 $ 2,899 $ 3,664 $ 5,054
Total Assets 23,742 35,078 48,076 42,213 47,691 59,517
Total Long - Term Debt 55 227 403 254 178 140
Stockholders' Equity 3,927 9,764 8,751 11,065 15,600 19,828
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.
Results of operations, comparing fiscal years ended December 31, 2001 and 2000
- ------------------------------------------------------------------------------
Sales revenue for the year ended December 31, 2001, was approximately
$116.3 million compared to approximately $108.9 million for 2000. This increase
is directly attributable to the continual growth in the number of tourists
entering Thailand and the Company's change in its product mix to target
precisely various groups of travelers. According to the statistical compilation
10
provided by the Bangkok International Airport (BIA), the number of passengers
traveling through its premises from January to December, 2001, has increased to
31.0 million passengers or 6.65% increase from the same period last year.
However, due to the adverse impact by the events of September 11, 2001, in
United States, numbers of travelers traveling through BIA has dropped
significantly during the month of September, 2001 but still with the increase of
1.88% from the same period last year.
The cost of merchandise sold for the years ended December 31, 2001 and
2000, was approximately $56.7 million and $53.2 million, respectively. The
principal factor causing this increase is directly related to the increase in
sales volume. The concession fees paid to the Airports Authority of Thailand
(AAT), comparing the year ended December 31, 2001, to the same period in 2000,
the ratio of concession fees paid to sales revenue increased from 19.75% in 2000
to 20.05% in 2001. This increase is due to the concession fee structure of KPT
being based on a fixed amount with an additional annual increment. The volume of
sales generated from KPT during the year 2001 has not kept up with such
increment, thus causing the increase in the ratio of the concession fees paid to
the AAT. Management anticipates that a further reduction in the ratio of these
fees may result from the increase in sales volume generated from the product mix
to target precisely various groups of travelers.
Selling and administrative expenses were approximately $28.8 million
for the year ended December 31, 2001, and approximately $23.4 million for the
same period in 2000. In terms of percentage of sales, 2001 expenses were
approximately 24.75% of sales and 2000 expenses were approximately 21.44% of
sales. This increase was associated with the research and development cost
incurred in developing new lines of merchandise, coupled with the continuing
sales promotional campaign, and was in line with Management's expectations.
Furthermore, the Company has expanded employees with 630 more personnel to
support the additional space the Company obtained from the AAT effective January
1, 2002, as mentioned above. The Management anticipates that the ratio will come
down favorably once the new space is fully operational.
Net income for the year ended December 31, 2001, was approximately $4.5
million, or $0.22 per share (basic), compared to the net income of approximately
$6.5 million, or $0.32 per share (basic), for the year ended December 31, 2000.
The ratio of inventory divided by sales revenue for the years ended
December 31, 2001 and 2000, was approximately 18.21% and 16.60%, respectively.
This increase resulted from the inventory expansion initiated to support the
additional space the Company had obtained from the AAT effective January 1,
2002, as mentioned above.
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 continued 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.
11
The ratio of inventory divided by sales revenue for the years 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.
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.
Liquidity and Capital Resources
- -------------------------------
For the years ended December 31, 2001 and 2000, the Company had working
capital of approximately $5.1 million and $3.7 million, respectively. The
improvement in this figure was due to the Company's ability to significantly
expand operations, thereby increasing current assets while controlling the
current liabilities to be proportionate to current assets in relation to the
prior year. The Company experienced a negative cash flow from operations of
approximately $1.9 million at December 31, 2001, compared to a positive cash
flow of $3.4 million during the same period of 2000. This decrease is mainly due
to the significant increase in inventories in preparation for the space
expansion and in loans to related companies and directors.
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.
12
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 unrealized gain on foreign exchange-net of $40,000 for the
year ended December 31, 2001, with the following showing the calculation
supporting the figure:
13
CHART A
The calculation of Unrealized gain on foreign exchange of US$ = 85,158 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 12/31/01
- ------------------------- ----------------------- ------------------------ ---------------------
Currency Amount Exchange Rate Total
12/31/01 Thai Baht
- ------------------------- ----------------------- ------------------------ ---------------------
Austria Shilling (7,282) 2.8644 (20,860)
Australian Dollar (77) 22.6594 (1,740)
Belgium Franc (549) 0.9775 (537)
Swiss Franc 81,052.25 26.5317 2,150,454
German Deutschmark 85,275.80 20.1192 1,715,681
Europe 235,562.81 39.3736 9,274,956
French Franc 79,336.66 6.0025 476,218
British Pound Sterling 16,855.41 64.5096 1,087,336
Hong Kong Dollar 5,827,055.90 5.7004 33,216,549
Italian Lire 45,953,303.00 0.0206 946,638
Netherlands Guilder 103,653.92 17.8604 1,851,301
Singapore Dollar 26,320.54 24.0449 632,875
US Dollar 2,314,813.39 44.3597 102,684,428
- ------------------------- ----------------------- ---------------------- -----------------------
Total 154,013,299
- ------------------------- ----------------------- ---------------------- -----------------------
BALANCE PER GENERAL LEDGER 151,090,580
-----------------------
Unrealized gain on accounts payable in foreign currency 12/31/01 (2,922,719)
-----------------------
Unrealized gain on accounts payable in foreign currency 01/01/01 4,206,282
-----------------------
Net unrealized gain on account payable in foreign currency 12/31/01 1,283,563
-----------------------
Loan from bank (Trust receipt) in foreign currency as of 12/31/01
- ------------------------- ----------------------- ---------------------- -----------------------
Currency Amount Exchange Rate Total
12/31/01 Thai Baht
- ------------------------- ----------------------- ---------------------- -----------------------
Swiss Franc 219,305.10 26.5317 5,818,537
Europe 120,179.12 39.3736 4,731,885
British Pound Sterling 15,081.40 64.5096 972,895
Hong Kong Dollar 1,277,545.30 5.7004 7,282,519
Singapore Dollar 25,815.76 24.0449 620,738
US Dollar 833,074.46 44.3597 36,954,933
- ------------------------- ----------------------- ---------------------- -----------------------
Total 56,381,507
- ------------------------- ----------------------- ---------------------- -----------------------
BALANCE PER GENERAL LEDGER 56,427,594
-----------------------
Unrealized gain on Trust Receipt in foreign currency 12/31/01 46,087
-----------------------
Unrealized gain on Trust Receipt in foreign currency 01/01/01 2,386,578
-----------------------
Net unrealized gain in Trust Receipt in foreign currency 12/31/01 2,432,665
-----------------------
14
Unrealized gain on Account receivable as of 12/31/01
- ------------------------- ----------------------- ---------------------- -------------------
Currency Amount Exchange Rate Total
12/31/01
- ------------------------- ----------------------- ---------------------- -------------------
Australian Dollar 5,707.80 22.2046 126,740
Swiss Franc 28,313.64 26.2718 743,850
Europe 4,516.39 38.8499 175,462
German Deutschmark 1,688.50 63.8793 107,860
Hong Kong Dollar 168,885.60 5.6550 955,048
Singapore Dollar 2,840.58 23.7660 67,509
US Dollar 206,971.32 44.1796 9,143,910
- ------------------------- ----------------------- ---------------------- -------------------
Total 11,320,379
- ------------------------- ----------------------- ---------------------- -------------------
BALANCE PER GENERAL LEDGER 11,239,037
-------------------
Unrealized loss from account receivable 12/31/01 81,342
-------------------
Unrealized loss from account receivable 01/01/01 (44,224)
-------------------
Net unrealized gain on account receivable 12/31/01 37,118
-------------------
Net unrealized gain on Trust Receipt in foreign currency 12/31/01 2,432,665
-------------------
Net unrealized loss on account payable in foreign currency 12/31/01 1,283,563
-------------------
Net unrealized loss on exchange rate as at 12/31/01 3,753,346
-------------------
Unrealized gain on advanced as at 12/31/01
- ------------------------- ----------------------- ---------------------- -------------------
Currency Amount Exchange Rate Total
BAHT 12/31/01
- ------------------------- ----------------------- ---------------------- -------------------
BAHT CURRENCY 49,147,701.90 44.227 1,111,260
- ------------------------- ----------------------- ---------------------- -------------------
BALANCE PER GENERAL LEDGER 1,111,847
-------------------
Net unrealized gain on advanced 12/31/01 587
-------------------
US$ = 85,158 (US$1 = 44.3812 Baht)
15
CHART B
The calculation of Unrealized loss on foreign exchange of US$ = 42,608 was
calculated on accumulated basis with quarterly adjustment on financial
receivable and cash on hand in foreign currency as shown below:
Cash on hand in foreign currency as of 12/31/01
- ------------------------- ----------------------- ---------------------- -----------------------
Currency Amount Exchange Rate Total
12/31/01
- ------------------------- ----------------------- ---------------------- -----------------------
Australian Dollar 17,863.34 22.2046 396,648
Canadian Dollar 1,060.00 27.5628 29,217
Swiss Franc 850.00 26.2718 22,331
China Renminbi Yuan 409,428.00 5.3258 2,180,532
German Deutschmark 5,065.00 19.8669 100,626
French Franc 3,150.00 5.9242 18,661
British Pound Sterling 136,750.65 63.87930 8,735,536
Hong Kong Dollar 544,230.10 5.6550 3,077,621
Japanese Yen 22,007,487.00 0.3349 7,370,968
Korean Won 5,548,000.00 0.0334 185,303
Netherlands Guilder 10.00 17.6262 176
Singapore Dollar 12,787.00 23.7660 303,896
Taiwanese Dollar 83,700.00 1.2585 105,336
US Dollar 344,872.81 44.1796 15,236,343
- ------------------------- ----------------------- ---------------------- -----------------------
Total 37,763,194
- ------------------------- ----------------------- ---------------------- -----------------------
BALANCE PER GENERAL LEDGER 36,088,381
-----------------------
Unrealized gain from cash on hand in foreign currency 12/31/01 1,674,813
-----------------------
Unrealized loss from cash on hand in foreign currency 01/01/01 (3,565,790)
-----------------------
Net unrealized gain from cash on hand in foreign currency 12/31/01 (1,890,977)
-----------------------
US$ = (42,608) (US$1 = 44.3812 Baht)
NET FOR UNREALIZED GAIN/LOSS EXCHANGE AS OF 12/31/01
Thai Baht US Dollar
---------- ----------
Net Unrealized exchange gain as of 12/31/01 3,753,346
Net Unrealized loss on exchange rate as at 12/31/01 (1,890,977)
----------
NET UNREALIZED EXCHANGE 1,862,369 41,963
----------
Net Unrealized exchange GAIN KPG (US) as of 12/31/01 587
----------
NET UNREALIZED EXCHANGE 42,550
==========
16
Monetary Assets and Liabilities Denominated in Thai Baht
As of December 31, 2001, 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 3,081,398
Trade Accounts Receivable 1,875,804
Refundable value-added-tax 626,537
Advance to Related Companies 11,288,237
Deferred income tax assets 3,541,113
Restricted deposit 11,650,467
Other current assets 1,058,741
Other non-current assets 200,353
TYPE OF MONETARY LIABILITY US DOLLARS
Bank overdraft & loan 20,287,863
Current portion of long-term debt 33,275
Accounts payable 7,410,689
Advance from directors -
Concession fees 2,737,366
Other current liabilities 3,294,854
Long-term loan - net 140,245
ITEM 7B Recently Issued Accounting Principles
New Accounting Standards Not Yet Adopted - NONE
ITEM 8 FINANCIAL STATEMENTS
Consolidated Financial Statements of the Company (Audited)
Report of Independent Auditors - Smith, Gray, Boyer & Daniell, PLLC (formerly
Smith, Jackson, Boyer & Daniell, PLLC) dated
March 26, 2002
Balance Sheets as of December 31, 2001 and 2000
Statements of Income for the Years ended December 31, 2001, 2000 and 1999
Statements of Cash Flows for the Years ended December 31, 2001, 2000 and 1999
Statements of Changes in Shareholders' Equity for the Years ended December 31,
2001, 2000 and 1999 Notes to Consolidated Financial Statements
17
REPORT OF INDEPENDENT AUDITORS
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, 2001 and 2000, and the related consolidated
statements of income, comprehensive income, cash flows and changes in
shareholders' equity for the years ended December 31, 2001, 2000, and 1999. 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, 2001 and 2000,
and the results of their consolidated operations, cash flows and changes in
shareholders' equity for the years ended December 31, 2001, 2000, and 1999, in
conformity with accounting principles generally accepted 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, presents fairly in all material respects the information set forth
therein.
/s/ SMITH, GRAY, BOYER & DANIELL, PLLC
--------------------------------------
SMITH, GRAY, BOYER & DANIELL, PLLC
March 26, 2002
Dallas, Texas
18
Audit Committee Report
The Audit Committee of the Board of Directors of King Power Group International
Co., Ltd. (the Committee) is composed of three directors and operates under a
written charter adopted by the Board of Directors. The members of the Committee
are Dharmnoon Prachuabmoh (Chair), Chulchit Bunyaketu, and Preeyaporn Thavornun.
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, 2001, filed with the Securities and Exchange Commission.
/s/ Dharmnoon Prachuabmoh /s/ Chulchit Bunyaketu
- ----------------------------- ----------------------
Dharmnoon Prachuabmoh (Chair) Chulchit Bunyaketu
/s/ Preeyaporn Thavornun
- ------------------------
Preeyaporn Thavornun
19
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND 2000
Note 2001 2000
----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,955,240 $ 2,633,890
Trade accounts receivable 676,073 280,785
Refundable value added tax 4 626,537 791,733
Trade accounts and management fee receivable from related
companies, net 1,455,691 845,589
Merchandise inventories, net 21,185,208 18,081,890
Restricted fixed deposits 3 11,650,467 7,747,981
Deferred income tax assets 10 3,541,113 3,618,933
Prepaid expenses 416,176 232,188
Other current assets 315,409 436,212
----------- -----------
Total current assets 43,821,914 34,669,201
Property, plant and equipment, net 5 3,719,476 4,179,495
Loans and accrued interest from related companies and directors, net 11,764,840 8,332,522
Investments and other assets 202,590 208,287
----------- -----------
TOTAL ASSETS $59,508,820 $47,389,505
=========== ===========
The accompanying notes are an integral part of these consolidated
financial statements
20
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
AS OF DECEMBER 31, 2001 AND 2000
Note 2001 2000
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and bank loans 6 21,562,684 $ 13,417,609
Current portion of long-term loan 8 33,275 31,355
Trade accounts payable 10,893,026 11,765,149
Advance from director 11 -- 446,186
Accrued concession fees 7/11 2,737,366 1,173,990
Accrued corporate income tax 1,391,145 2,359,840
Other current liabilities 2,151,468 1,811,825
------------ ------------
Total current liabilities 38,768,964 31,005,954
Long-term loan, net 8 140,245 178,094
------------ ------------
Total liabilities 38,909,209 31,184,048
------------ ------------
Minority interest 775,887 605,711
Shareholders' equity
Common stock, $0.001 par value, 9
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 earnings (deficit) 1,446,618 (3,018,454)
Legal reserve 82,233
------------
Translation adjustments (2,573,522) (2,250,195)
------------ ------------
Total shareholders' equity 19,823,224 15,599,746
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 59,508,820 $ 47,389,505
============ ============
The accompanying notes are an integral part of these consolidated
financial statements
21
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,
Note 2001 2000 1999
------------- ------------- -------------
Sales revenue $ 116,329,249 $ 108,914,156 $ 89,482,559
Cost of sales
Cost of merchandise sold 56,659,185 53,188,627 43,280,910
Concession fees 7 23,322,685 21,511,202 22,342,213
------------- ------------- -------------
Total cost of sales 79,981,870 74,699,829 65,623,123
------------- ------------- -------------
Gross profit 36,347,379 34,214,327 23,859,436
Operating expenses
Selling and administrative expenses 28,794,351 23,356,573 21,836,679
Provision for doubtful accounts -- -- (1,083,190)
------------- ------------- -------------
Total operating expenses 28,794,351 23,356,573 20,753,489
------------- ------------- -------------
Income from operations 7,553,028 10,857,754 3,105,947
Other income (expense)
Interest income 811,745 332,631 917,421
Interest expense (1,344,988) (1,074,709) (1,127,426)
Gain (loss) on foreign exchange, net 159,134 (420,523) 227,904
Gain (loss) on investment in other companies 381 (4,123) (112,608)
Other income 774,365 214,452 291,337
------------- ------------- -------------
Total other income (expense) 400,637 (952,272) 196,628
------------- ------------- -------------
Net income before income tax 7,953,665 9,905,482 3,302,575
Income tax expense 10 (3,127,659) (3,121,690) (848,249)
------------- ------------- -------------
Net income before minority interest 4,826,006 6,783,792 2,454,326
Minority interest (278,701) (298,330) (41,347)
------------- ------------- -------------
Net income attributed to common shares $ 4,547,305 $ 6,485,462 $ 2,412,979
============= ============= =============
Weighted average number of common shares outstanding
20,250,000 20,250,000 20,250,000
Basic earnings per share $ 0.22 $ 0.32 $ 0.12
The accompanying notes are an integral part of these consolidated
financial statements
22
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31,
2001 2000 1999
----------- ----------- -----------
Net income attributed to common shares $ 4,547,305 $ 6,485,462 $ 2,412,979
Other comprehensive income, net of tax:
Foreign currency translation adjustment (323,327) (1,950,362) (99,652)
----------- ----------- -----------
Comprehensive income $ 4,223,978 $ 4,535,100 $ 2,313,327
=========== =========== ===========
The accompanying notes are an integral part of these consolidated
financial statements
23
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
2001 2000 1999
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,547,305 $ 6,485,462 $ 2,412,979
Adjustments to reconcile net income, to net cash provided by
(used in) operating activities:
Depreciation expense 1,425,992 1,466,472 1,452,924
Unrealized loss (gain) on foreign exchange (42,550) 206,629 (184,303)
Deferred income tax assets 77,820 735,199 110,474
Provision for doubtful accounts -- -- (1,083,190)
Decrease (increase) in operating assets:
Trade accounts receivable (394,452) (69,285) 121,626
Refundable valued added tax 165,196 388,703 1,058,426
Receivables and loans to related companies and
directors (4,042,419) (4,166,005) 8,023,566
Merchandise inventories (3,103,318) (1,583,136) (1,588,590)
Prepaid expenses and other current assets (63,186) 2,606,772 (2,389,570)
Other long-term assets 5,698 (3,427) 200,180
Increase (decrease) in operating liabilities:
Trade accounts payable (843,199) 1,782,888 (1,513,000)
Advances from director (446,186) 446,186 --
Accrued concession fees 1,563,376 (7,293,038) (2,330,807)
Other current liabilities (628,466) 2,212,991 (2,879,642)
Minority interest 170,176 227,254 34,984
Translation adjustments (323,327) (1,950,362) (99,652)
----------- ----------- -----------
Net cash provided by (used in) operating
activities $(1,931,540) $ 1,493,303 $ 1,346,405
The accompanying notes are an integral part of these consolidated
financial statements
24
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEARS ENDED DECEMBER 31,
2001 2000 1999
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVES:
Purchases of fixed assets $ (965,973) $ (388,019) $ (537,263)
(Increase) decrease in restricted fixed deposits (3,902,486) (3,902,352) 1,408,856
----------- ----------- -----------
Net cash provided by (used in) investing activities (4,868,459) (4,290,371) 871,593
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment of) bank overdrafts (727,856) 841,319 (32,191)
Proceeds from (repayment of) bank loans 8,927,743 2,384,194 (15,403)
Repayment of long-term loan (35,930) (72,640) (1,352,868)
----------- ----------- -----------
Net cash provided by (used in) financing activities 8,163,957 3,152,873 (1,400,462)
Effect of exchange rate changes on cash and cash equivalents
(42,608) 85,575 3,235
----------- ----------- -----------
Net increase in cash and cash equivalents 1,321,350 441,380 820,771
Cash and cash equivalents, beginning of period 2,633,890 2,192,510 1,371,739
----------- ----------- -----------
Cash and cash equivalents, end of period $ 3,955,240 $ 2,633,890 $ 2,192,510
=========== =========== ===========
Supplemental cash flow information Cash paid during the period:
Interest $ 1,300,636 $ 1,057,338 $ 1,188,170
Income taxes $ 3,949,025 $ 1,142,649 $ 3,213,815
The accompanying notes are an integral part of these consolidated
financial statements
25
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (in US$)
Additional
Common Stock Capital Comprehensive Retained
Shares Amount Paid in Income Earnings
----------- ----------- ----------- ----------- -----------
Balances at January 1, 1999 20,250,000 20,250 20,848,145 (11,916,895)
Net Income 2,412,979 2,412,979
Other comprehensive income, net of tax
Foreign currency translation adjustment (99,652)
-----------
Comprehensive Income 2,313,327
----------- ----------- ----------- =========== -----------
Balances at December 31, 1999 20,250,000 20,250 20,848,145 (9,503,916)
=========== =========== =========== ===========
Balances at January 1, 2000 20,250,000 20,250 20,848,145 (9,503,916)
Net Income 6,485,462 6,485,462
Other comprehensive income, net of tax
Foreign currency translation adjustment (1,950,362)
-----------
Comprehensive Income 4,535,100
----------- ----------- ----------- =========== -----------
Balances at December 31, 2000 20,250,000 20,250 20,848,145 (3,018,454)
=========== =========== =========== ===========
Balances at January 1, 2001 20,250,000 20,250 20,848,145 (3,018,454)
Net Income 4,547,305 4,547,305
Legal Reserve (82,233)
Other comprehensive income, net of tax
Foreign currency translation adj (323,327)
-----------
Comprehensive Income 4,223,978
----------- ----------- ----------- =========== -----------
Balances at December 31, 2001 20,250,000 20,250 20,848,145 1,446,618
=========== =========== =========== ===========
26
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (in US$)
Accumulated
Other
Legal Comprehensive
Reserve Income Total
----------- ----------- -----------
Balances at January 1, 1999 (200,181) 8,751,319
Net Income 2,412,979
Other comprehensive income, net of tax
Foreign currency translation adjustment (99,652) (99,652)
Comprehensive Income
----------- -----------
Balances at December 31, 1999 (299,833) 11,064,646
=========== ===========
Balances at January 1, 2000 (299,833) 11,064,646
Net Income 6,485,462
Other comprehensive income, net of tax
Foreign currency translation adjustment (1,950,362) (1,950,362)
----------- -----------
Comprehensive Income
----------- -----------
Balances at December 31, 2000 (2,250,195) 15,599,746
=========== ===========
Balances at January 1, 2001 (2,250,195) 15,599,746
Net Income 4,547,305
Legal Reserve 82,233 --
Other comprehensive income, net of tax
Foreign currency translation adj (323,327) (323,327)
Comprehensive Income
----------- ----------- -----------
Balances at December 31, 2001 82,233 (2,573,522) 19,823,724
=========== =========== ===========
The accompanying notes are an integral part of these consolidated
financial statements
27
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
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 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 to the general public in the international and
domestic terminals of the various airports located throughout Thailand. KPT
holds the 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 for shops within the departure halls.
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, 2001 and 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 a provision 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 YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
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
transactions 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, 2001 and 2000, were $1= Baht 44.227
and Baht 43.262, respectively. The average exchange rates during the years 2001,
2000 and 1999 were $1= Baht 44.3812, Baht 40.2391 and Baht 37.8226,
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 expense 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 the
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
defined in the concession agreement. According to the concession agreement with
the Airports Authority of Thailand, KPD is required to pay concession fees at a
fixed percentage of sales, greater than or equal to the fixed charges as defined
in the concession 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. In addition, 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 fluctuate 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 basis 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.
29
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
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.
Reclassification - Certain amounts in the 2000 financial statements and
related footnotes have been reclassified to conform with 2001 presentation.
3. RESTRICTED FIXED DEPOSITS
2001 2000
---------------- ----------------
Restricted fixed deposits $ 11,650,467 $ 7,747,981
Interest rates 1.00%-4.00% 1.00 % - 5.00%
As of December 31, 2001 and 2000, the restricted fixed deposits with
maturities from three to twelve months were pledged as 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 August 16, 1997. The Minister
of Finance, however, declared a new value added tax at the rate 7% commencing
April 1, 1999, in order to stimulate the domestic economy.
5. PROPERTY, PLANT AND EQUIPMENT, NET
2001 2000
----------- -----------
Land $ 594,207 $ 607,461
Building 116,844 119,450
Leasehold improvements 4,627,983 4,433,748
Office equipment and fixtures 2,663,704 2,287,457
Vehicles 788,678 801,891
Work in progress 338,498 101,970
----------- -----------
Total cost 9,129,914 8,351,977
Less: accumulated depreciation (5,410,438) (4,172,482)
----------- -----------
Net book value $ 3,719,476 $ 4,179,495
=========== ===========
6. BANK OVERDRAFT AND LOANS FROM BANKS
2001 2000
----------- -----------
Bank overdraft $ 597,861 $ 1,325,717
Trust receipts 13,955,530 10,704,994
Short-term loan 7,009,293 1,386,898
----------- -----------
$21,562,684 $13,417,609
=========== ===========
30
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
As of December 31, 2001 and 2000, the Company has an overdraft facility
with commercial banks in Thailand totaling Baht 80.74 million ($ 1,825,582) and
Baht 65.74 million ($ 1,519,578), respectively, bearing interest at the Minimum
Overdraft Rate ("MOR") plus 1.00% - 1.50% per annum. For 2001 and 2000, the
average rate of MOR was 3.00% - 8.25% and 3.50% - 9.50% per annum, respectively.
Available lines of credit for the bank overdrafts are guaranteed by certain
directors and collateralized by fixed deposits. (Note 3)
As of December 31, 2001 and 2000, trust receipts incurred by KPD and
KPT bear interest at the rates varying from 4.56% - 9.00% and 4.00% - 12.75% 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, 2001 and 2000, the Company has a short-term loan
with various commercial banks in Thailand, bearing interest at rates of 2.875% -
8.75% and 3.50% - 8.00% per annum, respectively, and are collateralized by fixed
deposits and guaranteed by a director.
Trust receipts at December 31, 2001
Foreign currency borrowing by subsidiaries in Thailand Currencies Amount Interest rate (%)
-Under forward contract and T/R
BAHT 233,728,932 $ 5,284,757 4.56 - 9.00
USD 833,074 835,574 4.56 - 9.00
CHF 219,305 131,561 6.00 - 9.00
BAHT 327,100,775 7,395,952 5.50 - 9.00
GBP 15,081 21,998 7.25 - 9.00
HKD 1,277,545 164,662 5.625 - 9.00
SGD 25,816 14,035 5.67 - 9.00
EUR 120,179 106,991 6.50 - 9.00
-----------
$13,955,530
===========
-Without forward contract
Trust receipts at December 31, 2000
Foreign currency borrowing by subsidiaries in Thailand Currencies Amount Interest rate (%)
-Without forward contract BAHT 315,688,033 $ 7,297,120 8.75-9.75
-Under forward contract and T/R 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
===========
As of December 31, 2001 and 2000, land and building are pledged as
collateral for credit lines, trust receipts, and a long-term loan from a bank.
(Notes 6 and 8)
7. CONCESSION FEES
Accrued concession fees to the Airport Authority of Thailand were
$2,737,366 and $1,173,990 as of December 31, 2001 and 2000, respectively.
Concession fee expense for 2001, 2000 and 1999 was $23,322,685, $21,511,202, and
$22,342,213, respectively.
31
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
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 included 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
local commercial bank letter of guarantee, 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 the value of
collateral for the remaining period of the agreement (as amended) are as follows
(see Notes 11 and 12):
KPT (in 000's) KPD (in 000's)
- ---------------------------------------------------------- --------------------------------------------------
Airport Rental, Service & Airport Rental, Service &
Year Concession Fees Other Expenses Collateral Concession Fees Other Expenses Collateral
- ---------------------------------------------------------- --------------------------------------------------
2002 $ 9,263 $ 483 $ 4,637 $20,237 $ 1,116 $11,108
2003 2,270 103 4,191 20,914 1,116 11,471
2004 -- -- -- 21,706 1,116 11,894
2005 -- -- -- 22,950 -- 12,278
2006 -- -- -- 23,967 -- 12,822
For the years ended December 31, 2001,and 2000, both KPD and KPT were
charged penalty fees amounting to $ 0 and $ 496,531, respectively, relating to
late payment of concession fees to the Customs Department and the Airports
Authority of Thailand.
On March 20, 2001, the Airports Authority of Thailand awarded the
Company a contract, beginning January 1, 2002, to operate the duty free retail
space of other operator.
8. LONG-TERM LOANS, NET
Long-term liabilities as of December 31, 2001 and 2000 consist of the following:
2001 2000
--------- --------
Long-term loans $ 168,861 $ 199,447
Installment purchase payable 4,659 10,002
--------- ---------
173,520 209,449
Less: current portion of long-term debt (33,275)
(31,355)
--------- ---------
Total $ 140,245 $ 178,094
========= =========
As of December 31, 2001 and 2000, long-term loans consist of loans from banks
carrying interest rates of 7.75% and 8.50%, 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 YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Loans are due as follows:
2001 2000
-------- --------
Installment purchase obligation
2001 $ 4,659 $ 5,715
2002 -- 4,287
-------- --------
Total $ 4,659 $ 10,002
======== ========
Long-term loan installment payments
2001 $ -- $ 25,640
2002 28,616 27,906
2003 30,915 30,373
2004 33,395 33,054
Thereafter 75,935 82,474
-------- --------
Total $168,861 $199,447
======== ========
9. 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:
Additional
Common Stock 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) $ -- $ --
========== ========== ========== ========== ========== ==========
33
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(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.
(e) Dividend Declaration and Legal Reserve
At its ordinary shareholders' meeting held on August 1, 2001, KPD
passed a resolution to pay a dividend at the rate of Baht 40 per share
for a total of Baht 80,000,000 ($1.8 million), based on the results of
its operations for 1999. Further, in accordance with Thai law, a legal
reserve was created, equal to 5% of the total net profit for the year
that the dividend is based on. The 5% net profit reserve is required by
Thai law each time dividend is declared; until such reserve reaches 10%
of the Company's authorized share capital.
10. INCOME TAX
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 consists of the following:
2001 2000 1999
----------- ----------- -----------
Current income tax (payable)
United States $ (6,552) $ -- $ --
Foreign (2,871,446) (2,386,491) (737,775)
----------- ----------- -----------
(2,877,998) (2,386,491) (737,775)
Deferred income tax
United States (171,841) -- --
Foreign (77,820) (735,199) (110,474)
----------- ----------- -----------
(249,661) (735,199) (110,474)
----------- ----------- -----------
Net income tax expense $(3,127,659) $(3,121,690) $ (848,249)
=========== =========== ===========
Pre-tax income for foreign companies for the year ended December 31,
2001, was $ 8,613,440. Current taxes payable are included in current
liabilities.
The components of deferred income tax assets and liabilities were:
2001 2000 1999
----------- ----------- -----------
Provision for doubtful accounts and investment
obsolescence
$ 3,795,411 $ 3,873,561 $ 4,423,804
Net operating loss carried forward 21,081 274,659 369,019
----------- ----------- -----------
3,816,492 4,148,220 4,792,823
Less: valuation allowance (275,379) (529,287) (438,691)
----------- ----------- -----------
Deferred income tax assets $ 3,541,113 $ 3,618,933 $ 4,354,132
=========== =========== ===========
34
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
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.
2001 2000 1999
---------------------------------------
Standard income tax rate 35.00% 35.00% 35.00 %
Foreign tax rate difference (4.25%) (5.23%) (4.00%)
Less: valuation allowance -- 0.92% (11.00%)
Non deductible expenses (2.37%) 0.70% 6.00%
Prior year tax 4.53% -- --
---------------------------------------
Effective income tax rate 32.91% 31.39% 26.00%
=======================================
As of December 31, 2001 and 2000, the Company has deferred income tax
assets relating to net operating loss carry forwards for income tax purposes of
$21,082 and $274,659, 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 YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
11. RELATED PARTY AND DIRECTOR TRANSACTIONS
The Company and its subsidiaries have business transactions with and
have advanced funds to various entities affiliated by common ownership and
control and to its officers, directors and shareholders. Where management has
considered it necessary, reserves have been provided for losses on collection of
these balances. In certain instances, advances to affiliated companies have
been, in turn, advanced to other related parties, including directors and
shareholders of the company. Of the $12,105,524 shown in the following schedule
as receivable from King Power International Co., Ltd. (KPI), as of December 31,
2001, reserves have been provided for $1,293,470. Of the $3,455,458 shown on the
following schedule as receivable from King Power On Board Sales and Services
Co., Ltd. (KPO), reserves have been provided for $1,090,540. KPO's operating
license expires in April, 2002, and its application for renewal is pending. If
not renewed, its management intends to cease operations. The payment of the net,
unreserved receivables from KPI and KPO are personally guaranteed by two
officer/director/shareholders of the Company who have collateralized their
guarantee by the pledge of 9,373,000 shares of the Company's stock.
Balances at December 31, 2001 and 2000, with related companies and
directors are as follows (in $000s)
---------------------------------------------------------------------------------
Loans to and receivables from
related Companies and Directors
As of December 31, 2001 Interest Management
Accounts & other Fee Accounts
Receivable Loans receivables Receivables Total Payable
---------------------------------------------------------------------------------
King Power International Co., Ltd. 1,196 10,233 599 75 12,103 --
Forty Seven Co., Ltd. -- 2,356 553 -- 2,909 --
Downtown D.F.S. (Thailand) Co., Ltd. 382 2,171 278 2,086 4,917 --
Top China Group Co., Ltd. -- 226 9 -- 235 --
Lengle (Thailand) Co., Ltd. -- 814 74 -- 888 --
Lengle TAT Phnom Penh Duty Free Co., Ltd. 50 -- -- -- 50 --
King Power On Board Sales and Services Co., Ltd. 136 3,147 168 -- 3,451 --
Thai Nishigawa International Co., Ltd. -- -- -- -- -- 43
Niji (Thailand) Co., Ltd. -- -- -- -- -- 94
---------------------------------------------------------------------------------
1,764 18,947 1,681 2,161 24,553 137
Less: provision for doubtful accounts:
Related companies (382) (7,659) (1,205) (2,086) (11,332) --
---------------------------------------------------------------------------------
Total 1,382 11,288 476 75 13,221 137
================================================================================
Director - to/(from) -- -- -- -- -- --
================================================================================
36
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------
Loans to and receivables from
related Companies and Directors
As of December 31, 2000 Interest Management
Accounts & other Fee Accounts
Receivable Loans receivables Receivables Total Payable
--------------------------------------------------------------------------------
King Power International Co., Ltd. 1,432 6,553 240 -- 8,225 --
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
--------------------------------------------------------------------------------
1,921 15,618 1,088 2,133 20,760 160
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 846 7,735 597 -- 9,178 160
================================================================================
Director - to/(from) -- (446) -- -- (446) --
================================================================================
Additionally, the Airports Authority of Thailand owns 5% of KPD common
shares. As of December 31, 2001 and 2000, KPD has accrued concession fees
amounting to $2,737,366 and $1,173,990, respectively.
37
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Effective July 1, 2001, KPD and KPT increased the interest rate charged
for new loans to related companies from a range of 2%-2.50% to 5.94%-8.65%,
reflecting the increase in borrowing costs to KPD and KPT. The new rates apply
to total loans outstanding of each related company that borrowed additional
funds from KPD or KPT during 2001. For related companies that did not require
additional loans from KPD and KPT, the interest rate charged to them did not
change.
During 2001, 2000 and 1999, the Company had operating transactions with
related parties and directors as follows (in $000s):
2001 2000 1999
---------------------------
Related Companies
Sales $ 926 $ 1,342 $ 3,219
Interest income 610 212 602
Management fee income 500 -- --
Purchases 2,067 1,590 2,658
Concession fees 14,624 12,629 22,414
Directors
Interest income $ -- $ -- $ 16
On June 29, 1999, KPT and KPD entered into an agreement to engage
Downtown 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 were 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, 2001, KPD and KPT had leasing commitments for office
space under non-cancelable operating lease agreements in excess of one year. The
obligations of the subsidiary companies under these lease agreements are set
forth as follows:
KPT KPD
---------- ----------
2002 $ 48,839 $ 393,747
2003 48,839 341,041
2004 12,210 --
Thereafter $ -- $ --
Letters of guarantee
As of December 31, 2001 and 2000, KPT and KPD were contingently liable
for bank guarantees totaling $16.95 million and $10.13 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, 2001 and 2000, KPD and KPT have unused letters of
credit totaling $7.99 million and $8.17 million, respectively.
38
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
13. SUBSEQUENT EVENT
On October 24, 2001, the Company announced its intent to file a proxy
statement for the purpose of obtaining shareholders approval of an offer to
acquire all of the outstanding minority interest shares and merge the Company
into a newly formed Nevada corporation to be owned by the Majority shareholders.
A preliminary proxy statement was filed on November 1, 2001. The date of the
shareholders' meeting has not been set, nor has the final proxy statement been
filed.
14. SEGMENT FINANCIAL INFORMATION
The following segment information of the Company for 2001, 2000 and
1999 are disclosed in accordance with Statement of Financial Accounting Standard
No.131 ("SFAS 131"). Each legal entity is classified as a reportable segment
under SFAS 131 because each entity is reported separately by management (in
$000s).
Year Ended December 31, 2001 Duty Free Tax Free
Retail Retail All Others Consolidated
------------ ------------ ------------ ------------
Segment Information
Revenue from external customers 90,094 26,235 -- 116,329
Cost of merchandise sold 45,833 10,826 -- 56,659
Concession fees 14,625 8,698 -- 23,323
Gross profit 29,617 6,730 -- 36,347
Interest Income 626 153 33 812
Interest expense 1,250 69 26 1,345
Segment net income (loss) 4,802 838 (814) 4,826
Segment total assets 49,069 10,187 253 59,509
Expenditures for segment assets 871 95 -- 966
Depreciation expense 1,127 299 -- 1,426
Unrealized gain (loss) on exchange 51 (9) -- 42
Provision for doubtful accounts -- -- -- --
Deferred income tax assets 2,365 1,155 21 3,541
Long-lived
Revenue Assets
------------ ------------
Geographic Information
Bangkok 111,767 3,760
Northern Thailand region 525 127
Southern Thailand region 4,037 67
------------ ------------
Total 116,329 3,954
============ ============
39
KING POWER INTERNATIONAL GROUP CO., LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Year Ended December 31, 2000 Duty Free Tax Free
Retail Retail All Others Consolidated
------------ ------------ ------------ ------------
Segment Information
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 expense 1,106 360 -- 1,466
Unrealized gain (loss) on exchange (272) 26 39 (207)
Provision for doubtful accounts -- -- -- --
Deferred income tax assets 2,418 1,180 21 3,619
Long-lived
Revenue Assets
------------ ------------
Geographic Information
Bangkok 104,951 4,253
Northern Thailand region 531 44
Southern Thailand region 3,432 91
------------ ------------
Total 108,914 4,388
============ ============
Year Ended December 31, 1999 Duty Free Tax Free
Retail Retail All Others Consolidated
------------ ------------ ------------ ------------
Segment Information
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 expense 1,067 340 46 1,453
Unrealized gain (loss) on exchange 201 (18) 2 185
Provision for doubtful accounts 985 (561) (1,507) (1,083)
Deferred income tax assets 2,788 1,542 24 4,354
Long-lived
Revenue Assets
------------ ------------
Geographic Information
Bangkok 86,304 5,344
Northern Thailand region 493 58
Southern Thailand region 2,685 70
------------ ------------
Total 89,482 5,472
============ ============
40
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON CCOUNTING 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 43 Group Chairman, Chief Executive
Officer and Director
Viratana Suntaranond 60 Group Chief Financial Officer,
Secretary, Treasurer and Director
Aimon Raksriaksorn 44 Group Deputy Managing Director
and Director
Suwan Panyapas 57 Director
Dharmnoon Prachuabmoh 67 Director
Chulchit Bunyaketu 58 Director
Preeyaporn Thavornun 49 Director
Sombat Dechapanichkul 39 Group Assistant Managing Director
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.
Co-Managing Director of King Power Duty Free Co., Ltd.
Chairman of King Power On Board Sales & Services Co., Ltd.
1994-Present Chairman of King Power International Co., Ltd.
1993-Present Chairman of King Power Tax Free Co., Ltd.
1991-Present Chairman of Lengle TAT Phnom Penh Duty Free Co., Ltd.
1989-1998 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 Co-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.
41
Aimon Raksriaksorn
1997-Present Group Deputy Managing Director and Director of King Power
International Group Co., Ltd.
Executive Director of King Power On Board Sales & services Co.,
Ltd.
1996-Present Executive Director of King Power Duty Free Co., Ltd.
1994-Present Executive Director of King Power International Co., Ltd.
1993-Present Executive Director of King Power Tax Free Co., Ltd.
Executive Director of Lengle TAT Phnom Penh Duty Free Co., Ltd.
1989-Present Managing Director of Thai Nishikawa International Co., Ltd.
Suwan Panyapas
2001-Present Director of Infotel Communication (Thailand) Co., Ltd.
1999-Present Director of V.R.J. International Co., Ltd.
Director of C.A.S. Intertrade Co., Ltd.
1997-Present Director and Group Senior Advisor of King Power International
Group Co., Ltd.
1996-2000 Senator of Thai National Assembly
1991-Present Advisor to TAT Duty Free Co., Ltd.
1989-Present Advisor to Downtown D.F.S. (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 of Pacific Asia Travel Association (PATA)
1995-1996 Member of the Thai Parliament, House of Representatives
Advisor to Deputy Minister of Ministry of Communications and
Transport
Vice Chairman of 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
2001-Present Director of King Power International Group Co., Ltd.
2000 Director of Total Access Communication Co., Ltd.
1999 Director of Universal Utilities Co., Ltd
1998-Present Managing Director of Thai Oil Company Limited
1998 Managing Director, Thaioil Power Company Limited
Director of the Petroleum Authority of Thailand
Director of Thai Lube Blending Co., Ltd.
1997 Advisor to Board Director of Broadcasting Director Board, Royal
Thai Army Radio & Television
1996 Director of the Population & Community Development Association
Director of Thai Army Television Channel 5 & 7
Director of Thai Paraxylene Company Limited
Director of Thaioil Power Company Limited
Director of Independent Power (Thailand) Company Limited
1994 Deputy Managing Director of Thai Oil Company Limited
1993 Director of Thai Lube Base Public Company Limited
1992 Director of Eastern Water Resources Development and Management
Co., Ltd., Provincial Water Works Authority
Director of Bangkok Mass Transit System Corp. Ltd.
42
Preeyaporn Thavornun
2001-Present Director of King Power International Group Co., Ltd.
1997-Present Direct Distributor of Amway (Thailand) Co., Ltd.
1985-1997 Vice President of Provident Fund Management Department at Asia
Credit Ltd.
1975-1985 Accounting Manager at Cathay Trust Finance and Securities Co.,
Ltd.
Sombat Dechapanichkul
2000-Present Group Assistant Managing Director of King Power International
Group Co., Ltd.
1996 General Manager of King Power Duty Free Co., Ltd.
1995 General Manager of King Power Tax Free Co., Ltd.
1994-1995 Marketing Director of Downtown D.F.S. (Thailand) Co., Ltd.
1991-1994 Shop Operation, Sales and Promotions and Planning Manager of TAT
Duty Free Co., Ltd.
1990 Assistant Market Manager of Siam Steel Service Center Co., Ltd.
(Thailand)
1989 Total Control Manager of Aoyama Thai Co., Ltd.
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.
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
$4,700 - $9,300 per annum to attend meetings of the Board of Directors, Board of
Executive Officers, and Audit committee meeting held in 2001.
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 Dharmnoon Prachuabmoh, Chulchit
Bunyaketu, and Preeyaporn Thavornun with Mr. Prachuabmoh 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.
On September 11, 2001, the Board of Directors appointed a Special Committee
consisting of directors Dharmnoon Prachuabmoh, Chulchit Bunyaketu and Preeyaporn
Thavornun, who are not, nor were they previously officers or employees of the
Company or any of its affiliates and are not associates or affiliates of the
Majority Shareholders. The Board authorized and empowered the Special Committee,
acting in the interest of minority interest shareholders, to review the terms of
the proposed merger of the Company and make a recommendation to the full Board
of Directors and the Company's shareholders. The Special Committee was also
authorized to consider whether it might be necessary to negotiate the terms of
the Merger with the Majority Shareholders, and, if it considered negotiations to
be necessary, to engage in such negotiations.
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 2001 fiscal year.
43
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, 1997, 1998, 1999, 2000, and
2001.
Summary Compensation Table
- ------------------ -------------------------------------------- ------------------------------- -------------
(a) Annual Compensation Long Term Compensation
Name and Awards
Principal Payouts (i)
Position Payouts
- ------------------ -------------------------------------------- ------------------------------- -------------
(b) (c) (d) (e) (f) (g) (h)
- ------------------ ------- ---------- -------- ---------------- ------------- ------- --------- -------------
Year Salary Bonus Other Annual Restricted Option/ LTIP All Other
Compensation Stock Awards SARs(#) Payouts Compensation
- ------------------ ------- ---------- -------- ---------------- ------------- ------- --------- -------------
Vichai 2001 304,724 -- *9,328 -- -- -- --
Raksriaksorn 2000 74,554 -- 7,256 -- -- -- --
Group Chairman & 1999 79,317 -- 5,000 -- -- -- --
CEO 1998 -- -- 5,000 -- -- -- --
1997 -- -- 6,800 -- -- -- --
- ------------------ ------- ---------- -------- ---------------- ------------- ------- --------- -------------
Viratana 2001 283,228 -- **8,923 -- -- -- --
Suntaranond 2000 59,643 -- 6,262 -- -- -- --
Group Executive 1999 63,454 -- 5,000 -- -- -- --
Director & CFO 1998 - -- 5,000 -- -- -- --
1997 - -- 6,800 -- -- -- --
- ------------------ ------- ---------- -------- ---------------- ------------- ------- --------- -------------
Aimon 2001 111,588 -- **8,743 -- -- -- --
Raksriaksorn 2000 59,643 -- 5,517 -- -- -- --
Group Deputy 1999 63,454 -- 2,000 -- -- -- --
Managing 1998 53,000 -- 2,000 -- -- -- --
Director 1997 -- -- 6,800 -- -- -- --
- ------------------ ------- ---------- -------- ---------------- ------------- ------- --------- -------------
Suwan Panyapas 2001 54,077 -- *9,374 -- -- -- --
Group Senior
Advisor
- ------------------ ------- ---------- -------- ---------------- ------------- ------- --------- -------------
* Vichai Raksriaksorn and Suwan Panyapas received meeting compensation
for 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.
44
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 21, 2002, 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. Unless
otherwise indicated, the address of the persons listed below are in care of King
Power International Group Co., Ltd.
Name Number of Shares Beneficially Owned Percent
- ---- ------------------------------------ -------
Vichai Raksriaksorn (1) 6,386,500 (1) 31.54%
Viratana Suntaranond (2) 3,013,500 (2) 14.88%
Aimon Raksriaksorn (3) 3,625,000 (3) 17.90%
Suwan Panyapas -0- -0-
Dharmnoon Prachuabmoh -0- -0-
Chulchit Bunkaketu (4) 100,000 (4) 0.49%
Preeyaporn Thavornun -0- -0-
Niphon Raksriaksorn (5) 1,037,883 (5) 5.12%
Sombat Dechapanichkul 10,000 0.05%
All current directors and executive
Officers as a group (eight persons) 12,496,500 (6) 61.71%
(1) This excludes 3,000,000 shares owned by his wife, Aimon Raksriaksorn, as
well as 1,037,883 shares owned by his nephew, Niphon Raksriaksorn, as their
separate properties. Mr. Raksriaksorn disclaims all beneficial interest in those
shares, as well as any right to vote or control the disposition of those shares.
However, this includes (a) 13,500 shares held by Capitalux Co., Ltd., with
respect to which Mr. Raksriaksorn and Viratana Suntaranond have voting and
investment power over by virtue of their shareholding and directorship in such
company; and (b) 625,000 shares held by V&A Holding Co., Ltd., with respect to
which Mr. Raksriaksorn and his wife have voting and investment power over by
virtue of their shareholding and directorship in such company.
(2) This excludes 1,000,000 shares owned by his wife, Umaratana Suntaranond, as
her separate property, as well as 200,000 shares in the aggregate owned by his
four children, as their separate properties. Mr. Suntaranond disclaims all
beneficial interest in those shares, as well as any right to vote or control the
disposition of those shares. However, this includes (a) 13,500 shares held by
Capitalux Co., Ltd., with respect to which Mr. Raksriaksorn and Viratana
Suntaranond have voting and investment power over by virtue of their
shareholding and directorship in such company
(3) This excludes 5,748,000 shares owned by her husband, Vichai Raksriaksorn,
1,037,883 shares owned by her nephew, Niphon Raksriaksorn, as well as 5,000
shares owned by her mother, Auemporn Boonkhundha, as their separate properties.
Ms. Raksriaksorn disclaims all beneficial interest in those shares, as well as
any right to vote or control the disposition of those shares. However, this
includes 625,000 shares held by V&A Holding Co., Ltd., with respect to which Ms.
Raksriaksorn and her husband have voting and investment power over by virtue of
their shareholding and directorship in such company.
(4) Mr. Bunyaketu's business address at Thai Oil Company Limited is 123 Sun
Tower Building B, 12th Floor, Vipavadee Rangsit Road, Ladyao, Jatujuk, Bangkok
10900, Thailand.
(5) 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.
Mr. Niphon Raksriaksorn has been employed at King Power since 1996, when he
joined as a Project Coordinator. He was promoted to Executive Secretary,
Management's Office, in 1997, and to Manager , CEO's Office, in 1999, a position
he currently holds.
(6) This includes the 13,500 shares held by Capitalux Co., Ltd. and 625,000
shares held by V&A Holding Co., Ltd., but excludes such number of shares from
the shareholdings of Vichai Raksriaksorn, Viratana Suntaranond, and Aimon
45
Raksriaksorn to avoid counting such numbers of shares more than once. This does
not include the 1,037,883 shares held by Niphon Raksriaksorn, as Mr.
Raksriaksorn is not a director or executive officer of the Company.
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
2001 fiscal year and are likely to have similar transactions with the Company in
the future. The related amounts are disclosed in Note 11 "Related Party and
Director Transactions" in Notes To Consolidated Financial Statements. As
discussed in Note 11, certain advances to affiliates have been advanced by those
entities to individuals who are officers, directors and shareholders of the
Company. Subsequent to December 31, 2001, Vichai Raksriaksorn and Viratana
Suntaranond personally guaranteed all amounts receivable by the Company. 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 Executive Officer of this company,
whose main business is a manufacturer of costume jewelry for exporting.
Lengle (Thailand) Co., Ltd.
Mr. Suwan Panyapas is the Director, Executive Officer, and Stockholder of this
company. Along with Mr. Vichai Raksiaksorn, 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. The Company has been dormant since the end
of 1997.
Niji (Thailand) Co., Ltd.
Mr. Viratana Suntaranond is the Director and Shareholder 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.
Mr. Vichai Raksriaksorn and Mr. Viratana Suntaranond are the shareholders of
this company, whose main business is to act as the holding company for an
Airport 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.
Mr. Vichai Raksriaksorn and Mr. Viratana Suntaranond are the shareholders of
this company, whose main business is acting as the holding company for a
souvenir shop operation in Mainland China. This company was transferred to the
Forest Ministry of the People's Republic of China in 1998
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 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.
46
Downtown D.F.S. (Thailand) Co., Ltd.
Mr. Vichai Raksriaksorn is the shareholder of this company. The main business of
this company is the operation of a duty free store in downtown Bangkok. During
the year 1998, 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 Services Co., Ltd.
Mr. Vichai Raksriaksorn and Ms. Aimon Raksriaksorn are the Directors and
shareholders of this company. The main business of this company is the operation
of duty free sales on board the airplanes under contract with Thai Airways
International Public Co., Ltd.
Lengle TAT (Phnom Penh) Duty Free Co., Ltd.
Mr. Suwan Panyapas is the Director and Executive Officer of this company,
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.
Infotel Communication (Thailand) Co., Ltd.
Mr. Suwan Panyapas is the executive officer and the shareholder 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.
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.
10.4** 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 Co., Ltd. (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)
47
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)
10.24** 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)
10.34** 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)
10.38** 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 9 June 2000 Contract no. 6-16/2543
10.41 Lease Agreement for Space in Building Bangkok International Airport
dated 1-16/2543
10.44 Contract of Permission for Operating Business Selling Souvenirs and
Miscellaneous Items in Domestic Passenger Terminal Bangkok
International Airport dated 9 November 2000 Contract no. 6-10/2543
10.45 Lease Agreement for Space in Building of Bangkok Domestic Airport
Contract no.1-10/2543
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 21 January 2000 Contract no. 6-03/2543
10.47 Lease Agreement for Space in Building Bangkok International Airport
dated 21 January 2000 Contract no. 1-03/2543
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 Regional 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 2-02-99
10.57 Merchandise and Souvenir Business Operation at the Chiang Mai Airport
Contract no. Chor.Mor.1-27/2543
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.
48
10.75 Siam Tower Lease Agreement dated 4-30-01
10.76 Lease Agreement for Space in Bangkok International Airport, Agreement
No. 7-21/2544
10.77 Lease Agreement for Rooms in Bangkok International Airport, Agreement
No. 1-79/2544
10.78 Lease Agreement for Space in Bangkok International Airport, Agreement
No. 7-40/2544
10.79 Lease Agreement for Space in Bangkok International Airport, Agreement
No. 7-32/2544
10.80 Contract of Permission for Operating Business of Selling Thailand's
Brand Merchandise and Souvenirs at Bangkok International Airport,
Contract No. 6-34/2544
10.81 Contract of Permission for Operating Business of Selling Thailand's
Brand Merchandise and Souvenirs at Bangkok International Airport,
Contract No. 6-53/2544
10.82 Contract of Permission of Operating Business of Selling Medicines,
Medical Supplies and Equipment at Bangkok International Airport,
Contract No. 6-61/2544
10.83 Lease Agreement for Space in Chiang Mai Airport, Agreement No.
Chor.Mor.1-28/2543
10.84 Contract of permission for Operating Business of Selling Merchandise
and Souvenirs at Chiang Mai Airport, Contract No. Chor.Mor.1-27/2543
10.85 Memorandum of Amendment Contract of Permission for Operating Business
of Selling Merchandise and Souvenirs at Chiang Mai Airport (No.
Chor.Mor.1-27/2543 dated 19 March 2001) Amendment 1 dated 6-05-01
10.86 Memorandum of Amendment Lease Agreement for Space in Chiang Mai
Airport (No. Chor.Mor.1-28/2543 dated 19 March 2001) Amendment 1 dated
6-05-01
10.87 Krung Thai Bank / Application for Credit Facilities: Letter of Credit
and trust Receipt dated 9-13-01
10.88 Krung Thai Bank / Application for credit Facilities: Forward Contract
dated 9-13-01
10.89 Siam City Bank / Pledge Agreement of Financial Instrument dated
10-18-01
10.90 Export-Import Bank of Thailand / Guarantee Contract dated 11-01-01
10.91 Bangkok First Investment & Trust / Application for Credit Facilities
dated 11-20-01
10.92 Thai Military Bank / Bank Deposit Pledge Agreement dated 12-11-01
10.93 UOB Radanasin Bank / Guarantee Contract dated 3-27-01
10.94 Siam City Bank / Guarantee Contract dated 5-21-01
10.95 SICCO / Guarantee Contract dated 12-24-01
10.96 Siam Commercial Bank / Loan Agreement
10.97 UOB Radanasin Bank / Guarantee Contract dated 3-27-01
10.98 Siam Commercial Bank / Application for Credit Facilities dated
10-16-01
10.99 Siam Commercial bank / Guarantee Contract dated 10-16-01
21.1** List of Subsidiaries
* As filed with the Company's Form 10-KSB/A on May 7, 1998
** As filed herewith.
Reports on Form 8-K
The Company filed the following reports with the SEC on FORM 8-K
October 24, 2001 - The Company issued a press release announcing a
going-private transaction.
49
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 26th day of March,
2002.
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 26, 2002
- -------------------------- Officer and Director
Vichai Raksriaksorn
/s/ Viratana Suntaranond Group Chief Financial Officer, March 26, 2002
- -------------------------- Secretary and Director
Viratana Suntaranond
/s/ Aimon Raksriaksorn Group Deputy Managing Director March 26, 2002
- -------------------------- and Director
Aimon Raksriaksorn
/s/ Dharmnoon Prachuabmoh Director March 26, 2002
- --------------------------
Dharmnoon Prachuabmoh
/s/ Suwan Panyapas Director March 26, 2002
- --------------------------
Suwan Panyapas