LG 2002 Annual Report Download

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Annual Report 2002
Corporate Profile 01
Financial Highlights 02
2003 Organization & Management 04
A Message from CEO 06
Vision 10
Reorganization of LG Electronics 11
R&D...A Message from CTO 12
LGE Innovations 20
At a Glance 22
Digital Appliance Division 24
Digital Display & Media Division 28
Telecommunication Equipment & Handset Division 32
Management Issues 36
Management’s Discussion and Analysis 38
Financial Report 48
The forward-looking statements in this report involve significant risks and uncertainties and are subject to change based on
various factors. Factors that may be beyond LG Electronics’ control include interest rate volatility, foreign exchange
fluctuation, changes in consumer taste, technical advances, social changes in LG Electronics-based economics, competition
and a changing business environment.
LG전자 - 본문 2003.4 .22 7:14 AM 페이지1

Table of contents

  • Page 1
    Annual Report 2002 Corporate Profile 01 Financial Highlights 02 2003 Organization & Management 04 A Message from CEO 06 Vision 10 Reorganization of LG Electronics 11 R&D...A Message from CTO 12 LGE Innovations 20 At a Glance 22 Digital Appliance Division 24 Digital Display & Media Division 28 ...

  • Page 2
    ... Center Acquired shares in IFC First to be listed in stock market among the peers in Korea First to produce air conditioner in Korea First to establish an overseas branch office (New York) in Korea First to produce black and white TV in Korea 17 billion won Established production line in Germany...

  • Page 3
    ... I Annual Report 2002 I 02 03 The financial highlights and figures for 2002 reflect LG Electronics results from April 1, 2002 to December 31, 2002, post demerger, and the results of the entire fiscal year ended on December 31, 2002, assuming no demerger. The official first-term financial statements...

  • Page 4
    ... CEO, LGE Holding Company in China Head of Digital Appliance Division CTO Head of Telecommunication Equipment & Handset Division Head of Digital Display & Media Division Chief of LG Electronics Institute of Technology Chief of Korea Marketing Operation Chief Manufacturing Technology Officer Chief...

  • Page 5
    ... LG Elect ronics gives new impet us t o management t ransparency. Complet ely exempt ed from invest ment requirement s for relat ed companies, LG Electronics' management transparency now meets global standards. Over the longer term, this also will benefit efforts to maximize profitability. Building...

  • Page 6
    ...and to focus its resources on strategic businesses. LG Electronics aims to become a Global Top Player by 2005. Expanding market share through technology innovation and brand power Strategic Businesses Organic EL PDP Digital TV These remarkable operating results of the past year can be attributed...

  • Page 7
    ...attain global leadership as a highly reputable electronics, information and telecommunications enterprise through fast growth of its IMT-2000, PDP, OLED and other evolving core businesses. a world-class enterprise. The holding company will focus on managing investment assets while being responsible...

  • Page 8
    ... created a range of premium home appliances and new digital solutions, augmenting our technological capabilities. These next-generation products include a turbo-drum washing machine, DVD with multiple-write function, Home Theater, HD-grade VDR (video disc recorder) with embedded VSB tuner, a cutting...

  • Page 9
    ... Backbone Communications Core Businesses Digital A/V Home Appliance Optical Storage Profitable Businesses Monitor Analog A/V Recording Media Electron Tube For the GSM phone market, LGE launched a GPRS (general packet radio service) handset featuring multimedia messaging service that...

  • Page 10
    ...a multi-write DVD Drive, which can accommodate record and playback functions based on DVD Ram and DVD RW format, enabled the company to secure global leadership in DVD recording technology. products, such as an Internet-enabled refrigerator, Kimchi refrigerator, washing machine, microwave oven, air...

  • Page 11
    LG Electronics Inc. I Annual Report 2002 I 18 19 refrigerator and drum-type washing machine models. As a proactive initiative to expand our market shares in t he digit al A/V and opt ical st orage sect ors, maximum effort s w ill be exert ed for t he development of DVD recorders, whose demand is ...

  • Page 12
    ... capacity. IM T-2000 System LGE has built unr ivaled technological leader ship in the next-gener ation mobile sector thr ough the timely supply of W CDM A and IM T-2 0 0 0 ser vice equipment. Gas Oven Household Refrigerator LGE has alr eady attained the "Global Top" in the global white appliance...

  • Page 13
    LG Electronics Inc. I Annual Report 2002 I 22 23 Business Description LGE's product lines include state-of-the-art household and consumer appliances, such as refrigerators, washing machines, air conditioners, microwave ovens and vacuum cleaners. Of particular note, LGE's WHISEN digital room air ...

  • Page 14
    ..., recording a healthy 12.9% gain thanks to the timely release of state-of-the-art products, such as DIOS refrigerators equipped with cutting-edge linear compressor, super-size washing machine TROMM, commercial A/C Ssang-Soo Kim Head of Digital Appliance systems and a new-concept Light Oven...

  • Page 15
    ...4.4 3Q. 1.4 02 (April-December) Exports Domestic Sales 4Q. Contribution to Sales (% ) Contribution to Operating Income Product Composition (% ) 10 (% ) 32 13 53 4 34 14 25 Total Sales Digital Appliance Air Conditioner Washing Machine Vacuum Cleaner Refrigerator Cooking Appliance Others

  • Page 16
    ... as high-speed CD-RW and Combo Drive, while enhancing the competitive advantages of other products. The Digital TV business recorded equally impressive sale results with Xcanvas; the Audio-Visual business with DVD COMBI; and the Home Theater business with DVD Receiver. Overall, new digital products...

  • Page 17
    LG Electronics Inc. I Annual Report 2002 I 30 Unr ivaled 3 G Technology Second, continuous efforts to consolidate our " market leadership." To this end, the Division will step up it s brand-enhancement act ivit ies in major market s, such as China, Europe and Nort h America. Furthermore, LGE will ...

  • Page 18
    ... timely release of cutting-edge mobile phones and the strengthening of our customer base in Europe. Of significant note, we acquired a CDMA brand license for the LG brand in China. The company now has in place a full-line operating system in China in terms of R&D, production, marketing, and service...

  • Page 19
    LG Electronics Inc. I Annual Report 2002 I 34 35 ensure continued robust growth of its GSM sales worldwide. Furthermore, we will move proactively to expand it s market share in t he 3G service for CDM A / WCDM A mobile net w orks ahead of t he competition. To this end, we will strive to acquire ...

  • Page 20
    ... This center is capable of processing some 250,000 units of home appliances a year. And to promote more proactive environmentally friendly business operation, the company has adopted its EESH (Energy, Environment Safety & Health) system for its business locations throughout Korea. Back in 1994, LGE...

  • Page 21
    ...) and LG Electronics Investment, Ltd. (LGEI). The new LG Electronics holds the core business-related subsidiaries and runs underlying operations, including home appliances, handsets and telecommunication equipment among others. LGEI, as a pure holding company, is responsible for the control of...

  • Page 22
    ... (vacuum cleaner), while exports increased 12.9% to 3.11 trillion won, on the strength of improving product quality and high brand recognition. Side-by-side door refrigerators, drum-type washing machines, commercial air-conditioners and light ovens were the main drivers of overseas sales. In terms...

  • Page 23
    LG Electronics Inc. I Annual Report 2002 I 42 43 the Company climbed four places to rank 6th in the global mobile handset market in 2002. Of total shipments, CDMA handsets accounted for 83.5% with approximately 13.3 million units while GSM handsets represented the remaining 16.5% . In the domestic ...

  • Page 24
    ... due to the split of assets arising from the demerger, as investment assets which were not related to the Company's operation, such as LG Telecom, Dacom and LG Industrial Systems, were transferred to LGEI. After the demerger, assets increased by Operating Profit (margin) Digital Display & M edia...

  • Page 25
    ... maintaining high growth in mobile handset sales, high-end home and consumer electronic goods such as 2001 2002 1Q 42.4 Due in 2003 2Q 3Q 4Q Sub Total 42.4 - After 2003 Total - digital TVs, PDPs and home theater systems in 2003. Furthermore, the Company will maintain a cash-oriented strategy. So...

  • Page 26
    LG Electronics Inc. I Annual Report 2002 I 48 49 F i n a n c i a l Re p o r t Samil Accounting Corporation Kukje Center Building 21st Flr. 191 Hangangro 2ga, Yongsanku, Seoul 140-702, KOREA (Yongsan P.O Box 266, 140-600) To the Board of Directors and Shareholders of LG Electronics Inc. We have ...

  • Page 27
    ...Total current assets Property, plant and equipment, net of accumulated depreciation (Notes 8 and 23) Long-term financial instruments (Note 3) Investment securities (Note 7) Refundable deposits (Note 5) Long-term trade accounts receivable (Note 4) Long-term prepaid expenses Deferred income tax assets...

  • Page 28
    ... of investments Gain on disposal of property, plant and equipment Gain on disposal of intangible assets Equity in earnings of affiliates, net (Note 7) Gain on business transfer Gain on derivatives transactions (Note 14) Gain on valuation of derivatives (Note 14) Refund of income taxes Reversal...

  • Page 29
    ... of Korean Won) Non-operating expenses: Interest expense Foreign exchange losses Loss from transfer of trade accounts and notes receivable Loss from disposal of investments Loss from disposal of property, plant and equipment Loss from disposal of intangible assets Loss from redemption of debentures...

  • Page 30
    ... securities Decrease in short-term and long-term loans, net Disposal of long-term financial instruments Disposal of refundable deposits Proceeds from disposal of investments Acquisition of investments Proceeds from disposal of property, plant and equipment Proceeds from disposal of intangible assets...

  • Page 31
    ... carried at cost, except for declines in the Company's proportionate ownership of the As of December 31, 2002, affiliated companies comprised of the LG Group including LG Electronics Investment Ltd. own a total of 36.1% of the Company's common stock, and financial institutions, foreign investors and...

  • Page 32
    ... costs of product warranties are charged to current operations at the time of sale and are included in the accompanying balance sheet as a product warranty provision. > Accrued Severance Benefits Employees and directors with more than one year of service in the Company and LG Electronics Investment...

  • Page 33
    ... Won) Acquisition cost Net asset value Carrying value < Equity method of accounting> Domestic Companies LG Micron Ltd. LG Sports Ltd. LG Innotek Co., Ltd. LG Investments Security Inc. (* 3) LG.Philips LCD Co., Ltd. LG IBM PC Co., Ltd. Hi Plaza Inc. Continued; Refundable deposits JPY US$ Others...

  • Page 34
    ...(* 3) LG TOPS (* 3) LG Electronics System India, Ltd. (LGSYS) (* 1) Electromagnetica Goldstar S.R.L. (* 2) SLD Telecom Pte. Ltd. (* 3) LG.Philips Displays Holding B.V. LG (Yantai) Information & Communication Technology Co., Ltd. (* 2) COMMIT Incorporated (* 2) LG Holdings (HK) Ltd. (* 3) Investments...

  • Page 35
    ...) Nanjing LG-Tontru Color Display System Co., Ltd. (LGENT) LG Electronics Service Europe Netherlands B.V. (LGESE) LG Electronics Shenyang Inc. (LGESY) TaiZhou LG-ChunLan Home Appliances Co., Ltd. (LGECT) LG.Philips Displays Holding B.V. Others Overseas Companies Gemfire Corp. Erlang Technology Inc...

  • Page 36
    ... are as follows: (Millions of Won) Digital Display & Media division: Digital Appliance division: Mobile Handset division: VCR, PC, computer, CD-ROM and audio, TV, monitor and PDP Refrigerator, washing machine, air conditioner, microwave oven and vacuum cleaner CDMA handset, GSM handset, wireless...

  • Page 37
    ... Code of the Republic of Korea. In accordance with the provisions in the Commercial Code Article No. 530-2, LG Electronics Investment Ltd. established the Company to engage in the electronics and information and communications businesses. The Company issued shares within the amount of net assets...

  • Page 38
    ... Refrigerator Washing machine Air conditioner Monitor Switching system LGENE LGESP LGEMM Production/ Sales Production/ Sales Production Monitor Cellular Microwave oven Refregerator MXN R$ 139,977 73,014 500 9,000 51,900 LGE LGE 100% 100% 00.04 96.04 Pyeongtaek, Gyeonggi-do VCR PC CD-ROM/DVD...

  • Page 39
    ... Production Sales TV Refrigerator Re compressor Audio CD-Rom Monitor Washing machine Foundry VCR DVD TV Microwave oven Air conditioner Motor Vacuum cleaner RO compressor PESO US$ US$ US$ US$ US$ US$ US$ US$ 739,000 45,000 16,000 11,920 15,700 5,000 7,800 21,300 89,860 LGE Collins LGE LGE TCL LGE...

  • Page 40
    LG Electronics Inc. I Annual Report 2002 I 86 87 Overseas Sales and Other Functions (Unit : Billion KRW, %) Location Greece Athens Austria Vienna S. Africa Johanesburg Moroco Casablanca M. Asia U.A.E. Dubai U.A.E. Dubai Egypt Cairo India Bangalow Singapore Kepel Singapore Names LGEHS LGEAG LGESA...

  • Page 41
    LG Electronics Inc. I Annual Report 2002 I 88 Listing Korea Stock Exchange (stocks) London Stock Exchange (CBs) Capital Stock 2001 Number of issuance(Shares) Common stock Preferred stock Redeemable preferred stock 155,118,070 19,095,547 - 2002 M illions of Won 775,590 95,478 - Par value 5,000 5,...

  • Page 42
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