2002 Annual Report - Turkish Airlines

2002 • 43TURKISH AIRLINES INC.(ACCORDING TO COMMINIQUE SERIES XI OF THE CAPITAL MARKETS BOARD)TÜRK HAVA YOLLARI ANON‹M ORTAKLI⁄IINDEPENDENT AUDITORS’ REPORTJanuary 1, 2002 – December 31, 20021. We have audited the accompanying balance sheet of Türk Hava Yollar› Anonim Ortakl›¤› “the Company” as of December 31, 2002 and the relatedstatement of income for the year then ended. Our audit is performed in accordance with the generally accepted auditing principles, rules andstandards and therefore included such tests of the accounting records and such other auditing procedures, as we considered necessary in thecircumstances.2. In independent auditors’ report as of December 31, 2001, we stated that the Company, recognizes passenger and cargo income when ticket issold, however, cost of transportation is recognized when transportation is provided and the Company was continuing with a project to recognizepassenger income when transportation is provided (flight basis). However, flight basis revenue could not be accurately calculated because thisproject was not completed as of the date of our report, which was March 25, 2002. As it is explained in greater detail in note 11a, the Companyhas completed the necessary information technology infrastructure at the end of 2002 and started to recognize passenger and cargo fares asoperating revenue when the transportation is provided as in line with many of the airline companies throughout the and accrual basis of accountingprinciple of Generally Accepted Accounting Principles. Had the Company implemented this policy as of December 31, 2001, the net profit beforetax for the year ended December 31, 2002 would be approximately TL 39,972,081 Million higher.3. As explained in greater detail in note 11, the Company develops estimations using historical statistics and data to estimate unredeemed tickets.Total unredeemed tickets of TL 45,594,117 Million were recognized as operating revenue in 2002. As also explained in greater detail in note 33,the Company recorded income of TL 18,203,028 Million, due to the cancellation of A type handling license. However, no tax provision has beenprovided for these amounts because these items will be taxable in periods after December 31, 2002 in accordance with the Turkish Tax Legislation.4. Most of the income and expenses of the Company are composed of foreign currency transactions. As it is explained in greater detail in note 11, theticket fares in foreign currencies are recorded to sales income account according to the reporting periods of agencies and bureaus. Exchange ratedifferences related to receivables from ticket sales are recorded to sales account instead of exchange rate difference income account. Exchange ratedifferences related to the payments in foreign currencies for services and goods obtained from the third parties are recorded to the cost of sales andoperational expense accounts instead of exchange rate differences expense account. As of December 31, 2002 foreign exchange gain or lossincluded in Gross Sales is TL 32,975,292 Million, TL 50,233,712 Million to Cost of Sales, and TL 1,470,371 Million to Operational Expense related tothese operations.5. In our opinion, except for such adjustments as might arise from the matters discussed in second, third and fourth paragraphs, the financialstatements referred to above presents fairly the financial position of the Türk Hava Yollar› Anonim Ortakl›¤› as of December 31, 2002 and the resultsof its operations for the year then ended in conformity with generally accepted accounting principles as published by Turkish Capital Market Board,applied on a consistent basis.Istanbul, March 7, 2003DRT DENET‹M REV‹ZYON TASD‹KYEM‹NL‹ MAL‹ MÜfiAV‹RL‹K A.fi.Member Firm of DELOITTE TOUCHE TOHMATSUZeki KurtçuPartnerThe accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance withaccounting principles and practices generally accepted in countries and jurisdictions other than those in Turkey. The standards, procedures and practicesto audit the accompanying financial statements are those generally accepted and applied in Turkey.