LG 1999 Annual Report Download

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00 LGE Profile 01 Financial Highlights 02 Confidence 03 Business Domains 04 Letter to Our Shareholders 08 Business Overview
10 Digital Display Company 12 Digital Appliance Company 14 Digital Media Company 16 A Landscape by Digital LG 18 Digital LG Vision
19 Financial Statements 44 Global Network 46 Management 47 Board of Directors 48 Corporate Information 49 Corporate Chronology
annual report 1999

Table of contents

  • Page 1
    ...03 Business Dom ains 04 Let t er t o Our Shareholders 08 Business Overview 10 Digit al Display Com pany 12 Digit al Appliance Com pany 14 Digit al M edia Com pany 16 A Landscape by Digit al LG 18 Digit al LG Vision 19 Financial St at em ent s 44 Global Net w ork 46 M anagem ent 47 Board of Direct...

  • Page 2
    ... are TVs, plasma display panels (PDPs), monitors, and other display devices. W e are providing diverse home appliances such as air conditioners, refrigerators, and washing machines, many of them world hits. Our multimedia products such as optical storage devices, PCs, VCRs, and digital A/ V systems...

  • Page 3
    ...AL H I G H L I G H T S (Unit: billion KRW ) 1999 1998 1997 Sales...shareholders' equity 3,186 1,834 1,527 Total capital stock 632 632 525 Earnings per share (W on) 18,494 1,264 1,034 Sales per share (W on) 83,419 93,432 87,429 Cash flow per share (W on) 21,949 6,470 5,110 SALES...

  • Page 4
    ...financial health. Meanwhile we normalized the operation of our U.S. subsidiary Zenith, a costly acquisition, which enhanced our strength in the North American market. Development of Core Digital Technologies and Their Commercialization W e invested technological resources and capital in digital TVs...

  • Page 5
    ..., and Digital Media Companies are making their own way towards gaining a digital edge. LGE also operates CFO, HR, the Korea Sales Operation covering domestic marketing, and the LGE Holding Company for China. All these companies are supported by the LG Electronics Institute of Technology and the LG...

  • Page 6
    ... o t h e w o r l d t h a t 1 9 9 9 w a s t h e Ye a r o f D i g i t a l LG. O u r d i g i t a l o d y sse y w a s l a u n ch e d a n d u n d e r f u... e ch n o l o g i ca l a d v a n ce m e n t . O u r H D - 1 ch i p , 6 0 " P D P TV, 8 X CD - RW , 8 X D VD - RO M , 6 0 " w i d e LCD m o n i t o r , a...

  • Page 7
    Digit al LG aim s at m aking our cust om ers' lives m ore excit ing and affluent and at put t ing us on t he global forefront as a digit al leader t hrough proact ive digit al m a na gem ent . JOHN KOO | VICE CHAIRMAN & CEO 0 5

  • Page 8
    ... i n st a n ce , t h e LG Cu p so cce r g a m e s h a v e b e co m e i n t e r n a t i o n a l l y k n o w n . Th e " LG Sch o l a r sh i p Qui z" for o u t st a n d i n g h i g h sch o o l st u d e n t s w e b r o a d ca st i n Vi e t n a m , Th a i l a n d , Ka z a k st a n , a n d I n d o n e si...

  • Page 9
    ...sm anship in digit alwar e. W e declar ed t o t he wor ld t hat 1 9 9 9 was t he Year of Digit al LG . Our digit al odyssey was launched and ... e f f e ct s h a ve gr own gr ea t er year by year. We beli eve that t h e se two i ni t i a t i ves wi ll doubly a ssu r e our digit a l cr a f t sm a n ...

  • Page 10
    ... 8 X DVD-ROM drives, video phones, the drum-spinning Turbodrum Inverter Washing Machine, optical microwave ovens, and 19" color display tubes (CDTs). Our efficient marketing activities pushed our overseas revenues 24% higher. Fully-flat monitors, fully-flat TVs, LCD monitors, PCs, CD-ROM drives, and...

  • Page 11
    North America Latin America Asia, Oceania Tot al 1 0 5 ,4 6 1 M.E, Africa Europe, CIS Total 2,023 319 2,574 525 1,148 6,589 30.7% 4.8% 39.1% Tot al 8 ,2 6 4 8.0% 17.4% 100% • • Domestic_ Overseas_ 27,039 78,422 | | 25.6% 74.4% • • ' 9 9 OVERSEAS SALES ( U n i t : U S$ m i l l i o n )...

  • Page 12
    ... Company conduct s R&D and manufact uring in digit al display product s and t heir core component s. It has 7,500 employees at it s four domest ic operat ions and 20 overseas subsidiaries. Besides it s Display Device Research Lab., it has ot her research cent ers and a market ing net work at home...

  • Page 13
    ... North America, Europe, and Australia. The Digital Display Company developed digital TVs for Korean audiences, wall-mounted PDPs which are the slimmest in the world, 22"-wide LCD monitors, and the 19" FLATRON CDT. Its 64" digital TVs were shipped to the United States for the first time. Com plet ly...

  • Page 14
    ...> The Digit al Appliance Company is in charge of developing and manufact uring feat ure-rich home appliances t o resonat e wit h t he diversified needs of cust omers. It has 5,500 employees in t hree manufact uring plant s in Korea, nine product ion subsidiaries and nine overseas sales depot s, and...

  • Page 15
    ... TurboDrum Inverter W ashing Machine developed and Kimchi refrigerator commercialized Optical microwave oven exported Good Design Award received from the Japan Industrial Design Promotion Organization 3-way discharge air conditioner developed, digital refrigerator DIOS commercialized The Australian...

  • Page 16
    ... The Digit al Media Company conduct s R&D and manufact uring in mult ifunct ional and mult imedia product s and t heir core component s. It s digit ech leadership and management skills enable diversified mult imedia solut ions wor ldwide. It has a t ot al of 5,300 employees in it s t hree domest ic...

  • Page 17
    ...CD-ROM drive commercialized Internet karaoke Sing-a-Song machine developed Videophone developed 8X CD-RW drive commercialized Exclusive stock-trading kiosk developed 8X DVD-ROM drive commercialized Dec. 1999 Feb. 2000 Mar. 2000 VI SI ON To be the digital multimedia leader of the world, the company...

  • Page 18
    ...is from PC, satellite, cable, or the Internet. It even has its own powerful search engine. M P 3 P LAYE R W ith no computer files, tape, or CD, MP3 portable digital player enables storing and replaying music. An LCD remote control for all functions, 32Mb memory, built-in multimedia memory card slot...

  • Page 19
    ... ET M I CROW AVE OVEN Fol l ow i n g t he LCD t ou ch scr een op er a t i n g instructions, you download information through the built-in Internet modem which automatically sets the cooking mode for perfect results. This Internet microwave oven also connects with your grocery shop when need to place...

  • Page 20
    ... - Providing maximum benefits to shareholders - Giving pride and satisfaction to employees Vi si o n - LG as a Digital Leader - Making people's lives more exciting and comfortable - Offering innovative digital products and the best services - Realizing leadership in digital-based businesses Co...

  • Page 21
    ... Auditors' Report 1999 financial statements 20 RE P O RT O F I N D E P E N D E N T ACCO U N TAN TS BALAN CE SH E E TS STATE M E N TS O F I N CO M E STATE M E N TS O F RE TAI N E D E ARN I N GS AP P RO P RI ATI O N S STATE M E N TS O F CASH FLO W S N O TE S TO FI N AN CI AL STATE M E N TS 21...

  • Page 22
    ...T ACCO U N TAN TS Samil Accounting Corporation Hanil Group Building 21st Flr. 191 Hangangro 2 ga, Yongsanku, Seoul 140-702, KOREA (C.P.O. Box 2170, 100-621) Telephone + 82-2-709-0800 | Facsimile + 82-2-792-7001 To the Board of Directors and Shareholders of LG Electronics Inc. W e have audited the...

  • Page 23
    ...Total current assets Property, plant and equipment, less accumulated depreciation (Note 8, 10 and 11) Long-term financial instruments (Note 3) Investments (Note 7) Refundable deposits (Note 5) Long-term trade accounts receivable (Note 4) Long-term other accounts receivable (Note 4) Long-term prepaid...

  • Page 24
    ... millions of Korean W on) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities : Short-term borrowings (Note 10) Current maturities of long-term debt (Note 10) Trade accounts and notes payable (Notes 5 and 22) Other accounts payable (Note 5) Income taxes payable (Note 19) Accrued expenses (Note...

  • Page 25
    ...,783 Non-operating expenses : Interest expense Foreign exchange losses Loss from transfer of trade accounts and notes receivable Loss from disposal of property, plant and equipment Loss from disposal of investments Loss from redemption of debentures Equity in loss of affiliates, net Donations Other...

  • Page 26
    ...year ended December 31, 1999 ( LGE I n c. O n l...benefits (Note 13) Cumulative effect of retroactive adoption of the revised accounting standards (Note 17) Net income for the year (727,055) 2,005,021 1,266,092 Reversal of other reserve Reserve for technological...technological development Cash dividends...

  • Page 27
    ... in trade accounts and notes payable Increase in other accounts payable Increase in accrued expenses Increase in advances from customers Severance benefits transferred from affiliates Increase in income taxes payable Decrease in withholdings Payment of severance benefits Decrease in national pension...

  • Page 28
    ... Increase in refundable deposits Increase in long-term financial instruments Increase in severance insurance deposits Acquisition of marketable securities Acquisition of investments Acquisition of property, plant and equipment Acquisition of intangible assets Decrease in long-term loans Others Net...

  • Page 29
    .... Subsequent recoveries or other future changes in fair value are recorded in the capital adjustment account. Investments in non-marketable equity securities of non-controlled investees are carried at cost, except for declines in the Company' s proportionate ownership of the underlying book value of...

  • Page 30
    ... using the specific identification method. Propert y, Plant and Equipment Property, plant and equipment are recorded at cost except for upward revaluation in accordance with the Korean Asset Revaluation Law. Such revaluation presents land at the prevailing market price and buildings and other...

  • Page 31
    ...1999. The contributions to national pension fund made under the National Pension Plan and the severance insurance deposit are deducted from accrued severance benefits. Contributed amounts are refunded from the National Pension Plan and the insurance companies to employees on their retirement. 11,907...

  • Page 32
    ... financial instruments of 16,882 million as of December 31, 1999 represent deposits made under group severance insurance plans. The withdrawal of such deposits is restricted to the actual payment of severance benefits (see Note 13). 4 . Re ce i v a b l e s : Receivables, including trade accounts...

  • Page 33
    ... 246,842 HKD Others 40 Accrued income US$ Others 29 33,017 47 33,064 Other accounts receivable US$ ITL FFR Others 3 436 7 2,893 259 1,261 48 4,461 Refundable deposits USD 26 2 294 1,799 2,093 Trade accounts payable US$ 342 8,975 391,569 100,682 1,183 639 14 494,087 DEM ITL Others...

  • Page 34
    ... Ltd. - LG-Caltex Oil Corp. - LG-EDS Systems Inc. (* 3) - LG. Philips LCD Co., Ltd. - LG IBM PC Co., Ltd. (* 3) - Kukdong City Gas Inc. (* 3) - Dacom Corporation Overseas Companies - Goldstar Electronics Tailand Co., Ltd. (G.S.T.) (* 2) - LG Electronics Alabama, Inc. (LGEAI) - LG Electronics Almaty...

  • Page 35
    ... ment s Millions of W on Percentage of Ownership (% ) as of December 31, 1999 Marketable equity securities Hyundai Electronics Industries Co., Ltd. P.D.I. Korea stock market stabilization fund Hanaro Telecom Inc. 0.44 0.39 2.36 2.50 Acquisition Cost Market Value Carrying Value 28,221 336 23,235...

  • Page 36
    ... for the Korea stock market stabilization fund, of which the differences between the market value and the acquisition cost are charged to current operations, investments in marketable equity securities, of which the differences between the market value and the acquisition cost are accounted for as...

  • Page 37
    ..., are insured against fire and other casualty losses up to approximately N O TE S TO FI N AN CI AL STATE M E N TS December 31, 1999 A substantial portion of property, plant and equipment as of December 31, 1999 is pledged as collateral for various loans from banks, including Korea Development Bank...

  • Page 38
    ...Less : treasury debentures current maturities discount on debentures premium on debentures (117,171) (1,154,450) (38,170) 7,589 1,399,007 W on currency loans Korea Development Bank Kookmin Bank Korea Technology Banking Corporation Housing and Commercial Bank Hana Bank Hanvit Bank 5.5 - 10.1 5.0 - 11...

  • Page 39
    ... to change as a 888.30. result of any adjustment to the exchange price or an offer made for the common shares. On July 1996, relating to construction of Bundang research center, the Company entered into a land purchase agreement with Korea Land Corporation under which the Company has acquired...

  • Page 40
    ... deposits Contribution to National Pension Fund (265,835) (40,277) 128,730 The severance benefits are funded approximately 65% at December 31, 1999 through group severance insurance plans and employees severance insurance plans with Kyobo Life Insurance Co, Ltd. and other life insurance companies...

  • Page 41
    ...: N O TE S TO FI N AN CI AL STATE M E N TS December 31, 1999 Amount (In millions) Citi Bank Deutsche Bank CSFB US$ 40.0 US$ 40.0 US$ 45.5 Exchange rate HK$ 7.765 : US$ 1 HK$ 7.765 : US$ 1 HK$ 7.765 : US$ 1 Buying rate 5.35% 5.35% 5.35% Selling rate 7% 7% 7% Contract due date 2001.8.30 2001.8.30...

  • Page 42
    ...Millions of W on Equity method of accounting Amortization of deferred research cost Loss on valuation of Korea stock market stabilization fund Discounted present value of receivables Deferred tax assets Loss on valuation of marketable securities Loss from sale of trade accounts and notes receivable...

  • Page 43
    ...taxes N O TE S TO FI N AN CI AL STATE M E N TS December 31, 1999 566,892 15,992 582,884 Deferred income taxes The statutory income tax rate applicable to the Company, including resident tax...asset s Deferred foreign exchange loss, net Losses from sales of receivables The equity method of accounting...

  • Page 44
    ...10,500 41,193 6,153 970,297 1,049,335 Receivables 13,993 6,491 1,131 16,259 143,490 191,127 372,491 Payables 12,754 8,794 10,239 286 6,153 237,303 275,529 4 2 LG Electronics Alabama, Inc. LG Goldstar France S.A.R.L. PT LG Electronics Display Devices Indonesia Zenith Electronics Corporation Other

  • Page 45
    ... : Display division : TV, CPT/ CDT, Monitor, DY, FBT, Electron gun, Magnetron and PDP Home Appliances division : Refrigerator, W ashing machine, Air conditioner, Microwave oven and Vacuum cleaner Multimedia divisionaVCR, PC, Computer, CD-ROM and Audio For the year ended Financial Dat a by Business...

  • Page 46
    ... North of England Ltd. (MW O) LG Electronics U.K. Ltd. LG Electronics France S.A.R.L LG Electronics Deutchland GmbH. LG Electronics Italia S.P.A. LG Electronics Magyar Kft. LG Electronics Polska Sp Z.O.O. LG Electronics Espana S.A. LG Electronics Antwerp Logistics N.V. LG Electronics Services Europe...

  • Page 47
    ...C.V. LATIN AMERICA LGESP LGEAZ LGEPS LG Electronics de Sao Paulo Ltd. (Monitor) LG Electronics da Amazonia Ltda. (TV, VCR, MW O) LG Electronics Panama S.A. LG Electronics Peru S.A. LG Electronics Colombia Ltda. LG Electronics Argentina Bs. As. 4 5 INDIA LGEHL LGEIL LGSI LG Electronics Hotline CPT...

  • Page 48
    ...LGE Holding Company for China Ssang Su Kim Head of Digital Appliance Company Chang Soo Kim LG Electronics Institute of Technology Hee Gook Lee Corporate R & D Kun Hi Yu LG Production Engineering Research Center Nam Kyun W oo Head of Digital Media Company Byung Chul Jung Chief Financial Officer...

  • Page 49
    ... a n d i n g Sok Eun Kim - Tae Hong Pyeong Chang Soo Huh Young Ha Kim Ki Rak Sohn Sung Goo Gang Yu Sig Kang Hong Jin Park Bok Yong Park Ja Yong Koo O u t si d e D i r e ct o r s Shin Ik Kang - Kew Chul Chee Yong Chin Kim O Sik Kong Byung Nak Song Young Soo Koo Jae Hyung Lee Hyo Sang Bang...

  • Page 50
    ...employees of Zenith excluded) Shareholders' Meeting: The annual shareholders' meeting is held within 3 months following the end of the fiscal year at the company' s corporate office located at 20, Yoido-dong, Youngdungpo-gu, Seoul, Korea Listing: The company' s stock is listed on the Korea Stock...

  • Page 51
    ... s first washing machine, air conditioner, and elevator › Established South Korea ' s first private R&D facility (GoldStar Central Research Laboratory) › Established first overseas sales subsidiary in the USA (GoldStar Electronics International) › Became South Korea ' s first electronics maker...

  • Page 52
    http://w w w.lge.com 20 Yoido-dong Youngdungpo-gu, Seoul, Korea