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Annual Report
22000033
LG Electronics Annual Report
22000033
LG Electronics Inc.
Digital
for Next Generation

Table of contents

  • Page 1
    L G E l e c t r o n i c s Annual Report 2 0 0 3 Annual Report 2 0 0 3 Digital for Next Generation LG Electronics Inc.

  • Page 2
    .... 3. 1995. 3. 7. 8. 10. Promotion of TL2005 Developed world's first IC set for DTV Developed next generation hand held PC Renamed the Company, 'LG Electronics' Acquired Zenith Established TFT-LCD factory Developed PDA Sales : £‹ 6,592 billion Capital : £‹ 535 billion Employees : 35,073 1996...

  • Page 3
    ... factory in Poland 11. Supplied telematics to GM 12. Became 1st in the global general vacuum cleaner market Sales : £‹ 20,177 billion Capital : £‹ 784 billion Employees : 27,683 2002. 4. 5. 5. 6. 6. Demerger(LGE & LGEI) First to commercialize home network system Released color mobile phone...

  • Page 4
    ...498 *The sales on raw materials(outsourcing related) and PC Buy & Sell in 2002 are excluded for like-for-like comparisons. Balance Sheet (Unit, Billion won) 2003 I. Current Assets Quick Assets Inventories II. Fixed Assets Investment Assets Tangible Assets Intangible Assets Total Assets I. Current...

  • Page 5
    ...Total Liabilities | Total Shareholders' Equity (Unit, Billion won) 7,773 7,128 3,505 3,005 2003 2002 2003 2002 R&D Investment | Capex (Unit, Billion won) 1,024 689 830 533 2003 2002 2003 2002 Debt-to-equity Ratio (Unit, %) 108.0 96.3 2003 2002 LG Electronics Inc._Annual Report...

  • Page 6
    ..., China), VKX(Hanoi, Vietnam), EMGS(Bucharest, Romania) As of December 31, 2003 CFO Digital Appliance Digital Display & Media Telecommunication Equipment & Handset Human Resources CTO | Electronics Engineering | Production Engineering China Holding Company Korea Marketing Customer Service 6

  • Page 7
    ... of Technology Head of Telecommunication Equipment&Handset Company Head of LGE China Holding Company Chief of Korea Marketing Operation Head of of North American Headquarters Chief of Human Resources Chief Financial Officer Head of Digital Appliance Company LG Electronics Inc._Annual Report 2003 7

  • Page 8
    ... LG Electronics is striving to become. Under this banner, we are determined to be one of the Global Top 3 electronics companies by the year 2010. To carry out our goals, LG Electronics will continue to develop our growth strategy, focusing mainly on expanding our presence worldwide. S. S. Kim | CEO...

  • Page 9
    ... back to the localization of the vacuum-tube radio in 1958. Today, LG Electronics is not only a global leader in home appliances but we are also at the forefront of such cutting-edge products as digital TVs, PDPs, and mobile handsets. LG Electronics may have started with simple technology, but we...

  • Page 10
    ... are many countries with high growth potential such as China, Vietnam, and India. Moreover, developed markets such as North America and Europe present challenges as we strive to increase our presence. LG Electronics has decided to concentrate on the global business in order to promote our future...

  • Page 11
    ..., LG Electronics created many internal Task Force Teams mandated to carry out Tear Down and Redesign (TDR) activities and further expand Six Sigma initiatives. COMPETITIVENESS OF VALUE CREATIVE MANAGEMENT & EMPLOYEE RELATIONS LG Electronics is a company with enormous energy. 45 years of history...

  • Page 12
    ... CTO Developing and maintaining Global No.1 products require not only continuous technological improvements but also a commitment toward new growth engines. Therefore, we plan to invest 75% of our total 2004 R&D budget to shore up our lead in our core businesses as well as secure vital technology in...

  • Page 13
    ... excellent results by developing premium appliances and new digital products such as our front loading washing machine, a multi-air conditioner for buildings, energy-saving linear-type refrigerators, wireless home theater system, and DVD multi-recorders. By focusing on and investing in prospective...

  • Page 14
    ... of our technological prowess is the development of our digital Set-Top Boxes (STB) that support two-way Data service for Korea's satellite servicing company, Skylife. PDP With the successful ramp up of our second PDP line, we now have a yearly production capacity of 780,000 units. Yield improvement...

  • Page 15
    ...as a top global player in the world's digital AV market. Moreover, by internally-developing core parts such as Pick-up and AV loader for recording, we will continue to maintain our global position and cost leadership. As for HD STB, we have 70% market share of North America's major satellite company...

  • Page 16
    ... home theater products ¶U Variety of home theatre product line-up 2004 Plans ¶UFull Line-up of DVD Recorder and its related products ¶U Expand market share through various combination products Digital AV Optical Storage ¶U Developed world's top speed DVD/CD-RW Combo Drive ¶U Release of DVD...

  • Page 17
    ... optical storage businesses, areas in which we already have product global leadership. To extend our superiority in home appliances, we are developing next-generation core technology and components using new manufacturing methods to produce better compressors and motors, at the same time searching...

  • Page 18
    ...increasingly strict global environmental regulations, we have been mass producing refrigerators with eco-friendly natural refrigerants and linear compressors. Major home appliance makers in Japan, North America, and Europe have been developing linear technology as the next-generation core technology...

  • Page 19
    .../record CDs. These products have provided the foundation to rapidly dominate the DVD recording market. By launching products earlier than our competitors, LGE has been able to maintain its number 1 rank in global sales for six consecutive years since 1998. LG Electronics Inc._Annual Report 2003 19

  • Page 20
    ... machine. Our microwaves and vacuum cleaners are seizing a significant global market share with continuous differentiation adding high-end features. Major Products Side-by-side Refrigerator, Air Conditioner, Front loading Washing Machine, Microwave Oven, Vacuum Cleaner Operating Results Sales...

  • Page 21
    ... with the world's best technology and competitiveness. We also solidified our position as the top global leader in optical storage and digital products. Major Products PDP , DVD Player, TV & Monitor, Optical Storage, Home Theater Telecommunication Equipment & Handset This company, which focuses on...

  • Page 22
    ... we developed the "XD Engine" chip using our own proprietary algorithms to improve picture quality. Our global leading optical storage business produced the "Super Multi Drive", the world's first DVD writer to support DVD+RW,-RW as well as RAM-type. Nam Kyun Woo | Digital Display & Media Company 22

  • Page 23
    ... leadership with the release of our Super Multi Drive, the world's first multi-format DVD writer that not only supports DVD+RW, -RW but also RAM as well. In the future, we expect digital broadcasting to be a high growth market; as such, we developed an HD level set-top box and data communications...

  • Page 24
    ... Company our core technologies for this business. As for our PC business, we are planning to focus our energies on LG brand products. Finally, we will actively develop next generation PDA phones so that they may become another engine of future growth. Third, we will focus more efforts on increasing...

  • Page 25
    ... economy are risks - PDP : start of 3rd mass production line and planning of 4th line - Digital TV & LCD monitors : strengthening of brand in the North American market - Optical Storage : sales expansion of DVD writers and timely release of new products LG Electronics Inc._Annual Report 2003 25

  • Page 26
    ... Handset Company In 2003, we sold 27 million handsets for a total of 5.2 trillion won. This is more than a 47% increase over the previous year. As a result, we raised our global market share to 5.3% and we are now ranked in the Global Top 5. This has established a solid foundation for LG Electronics...

  • Page 27
    Telecommunication Equipment & Handset Company Rising Star in the Global Market Dear shareholder and customers, In the difficult international and domestic market environments of last year, LGE rose to the new challenges of the worldwide handset market and secured a position as one of the Top 5 ...

  • Page 28
    ... multi-level innovative activities. We will become an organization that achieves both growth and profit at the same time by redoubling each person's efforts and maximizing our company's capabilities. Thus, in 2004 we hope to confirm our status as a "Global Top Player" in the mobile handset market...

  • Page 29
    ... demand in North America and Western Europe and new demand from Asia and Eastern Europe expected - Increased demand for next-generation handsets such as color, multimedia and camera phones - 2004 target sales growth of 32%, representing 36 million handsets LG Electronics Inc._Annual Report 2003 29

  • Page 30
    Digital Appliance Company LG Electronics has strengthened its appliance market position. We maintained our No.1 market share in room air conditioners for the fourth consecutive year, and for microwave ovens, we sold 15 million units last year to maintain our global leadership for the second year in ...

  • Page 31
    ... circumstances, the Digital Appliance Company will continue to foster strong growth with innovative activities. LGE plans to continuously lead the market by focusing on our premium products such as front loading washing machines, side-by-side refrigerators, and commercial air-conditioners. Moreover...

  • Page 32
    ...Growth drivers : front loader, linear-type refrigerator, bagless vacuum, commercial air conditioners) Sales growth will highly rely on success of overseas market expansion. - Domestic : Expect similar level of sales to that of 2003. - Export : Continuous growth with premium products in North America...

  • Page 33
    ... of 12kg (washer volume of 92 liters). Our front loader has a "Direct Drive Motor" to achieve the lowest noise level of 51 dB and uses smart drying technology that optimizes the drying process considering the size of the washing load and humidity. Roboking Korea's first robot vacuum cleaner is user...

  • Page 34
    ... domestic economy, 2003 was a difficult year for all firms including LG Electronics. However, we were able to more than compensate for the domestic decline by increasing our exports by 32%, recording 18% overall growth to break through 20 trillion in total sales for the first time ever. Young...

  • Page 35
    ...to robust Digital TV and PDP sales. In 2003, we increased our position among the major global handset makers, leaping up to number five in the world, up another notch from 2002. As for PDPs, we have set a solid foundation to lead this rapidly growing market as our timely facility investments have us...

  • Page 36
    ...which is comprised of such major products as air conditioners, refrigerators, washing machines, and vacuum cleaners, recorded 9% YoY sales growth to 5.65 trillion won. In 2003, our Appliance Company focused on increasing the portion of premium products and enhancing our brand power in order to build...

  • Page 37
    ... become so popular in Korea that it has become a brand name synonymous with all types of drum-type washing. Display & Media TVs, monitors, optical storage and PDP (plasma display panel) modules comprise the major products in our Display & Media Company. This company posted a sales growth of 10% YoY...

  • Page 38
    ... in optical storage profitability due to the rise of DVD-RW sales. Last year was a difficult year for our handset company profits as we had some delays in our new product lineup for the domestic market, which led to a loss of [ Quarterly Operating Profit ] market share. In the second quarter, our...

  • Page 39
    ... earlier, was the increase in recurring profit, and the second was our effective tax rate falling to 21% from 26% the year before. BALANCE SHEET Despite an increase in debt, our financial structure improved as the rise in shareholders' equity from strong earnings helped bring down our liabilities...

  • Page 40
    ... from CFO Financial Positioning 2003 Total Assets Current Assets Fixed Assets Investment Assets Tangible Assets Intangible Assets Total Liabilities Tangible Liabilities Intangible Liabilities Total Shareholder°Ø s Equity Paid-in Capital Capital Surplus Retained Earnings Capital Adjustment 11...

  • Page 41
    ... the high-end market in North America and Europe with premium products like our drum-type washing machine and side-by-side door refrigerator to maintain high levels of profitability. In Display & Media, we will strive to become the number one player in the PDP market as our 3rd PDP line will ramp up...

  • Page 42
    ...era of growth in China. While our competitors have been stepping up their activities recently, we believe our accumulated expertise over 10 years in the China market gives us a competitive edge and the foundation to achieve "GCGP" in our biggest neighbor. Jin Bang Son | LGE China Holding Company 42

  • Page 43
    ..., we will rapidly increase our local operational manpower and encourage local R&D researchers to develop product styles that appeal directly to the domestic market. Second, we will improve profitability and enhance our brand image by continuously promoting our advanced business structure. We aim to...

  • Page 44
    ...) strategy. In addition, we will create a corporate culture that encourages daily innovation so that all of our employees in China can achieve continuously higher set goals...to actualize the "Great Company, Great People" campaign in China. Thank you. Head of LGE China Holding Company, Jin Bang Son 44

  • Page 45
    ... development plan in December 2003, declaring "by the end of 2004, LGE will abolish the use of hazardous substances in all products." Such initiatives will help prepare LGE to compete as the international environmental regulations become increasingly stricter. LG Electronics Inc._Annual Report 2003...

  • Page 46
    ... Provide product Information - Various company advertisement - Communication - Evaluation on investment - Reconsider company image - Introduce management strategy - Report compliance status - Reflects regulations - Communication - Trust on environmental safety - Maintain closeness - Communication...

  • Page 47
    ... products through new technology by enhancing our circuit designs and developing substitute materials. In 2003, we have already released products without lead soldering such as LCD TVs, monitors, washing machines, and air conditioners, and we plan to apply lead-free soldering to all LG products...

  • Page 48
    2003 Financial Report Report of Independent Auditors Non-Consolidated Financial Statements Balance Sheets Statements of Income Statements of Appropriations of Retained Earnings Statements of Cash Flows Notes to Non-Consolidated Financial Statements Other Information 51 53 55 56 58 106 49

  • Page 49
    ... Box 266, 140-600) Report of Independent Auditors To the Board of Directors and Shareholders of LG Electronics Inc. We have audited the accompanying non-consolidated balance sheets of LG Electronics Inc. (the "Company") as of December 31, 2003 and 2002, and the related non-consolidated statements...

  • Page 50
    ... of Independent Accountants For the years ended December 31, 2003 and 2002 As discussed in Note 9 to the accompanying non-consolidated financial statements, the Company invested its 27,841 shares (40.8%) of LG.Philips Displays Holding B.V. into LG Electronics Wales Ltd., a subsidiary located in the...

  • Page 51
    ...net (Note 5) Total current assets Property, plant and equipment, net (Notes 10, 12, 13 and 26) Long-term financial instruments (Note 4) Long-term investment securities (Note 8) Equity method investment securities (Note 9) Refundable deposits (Note 6) Long-term trade accounts receivable (Note 5) Long...

  • Page 52
    ... millions of Won) 2003 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings (Note 14) Current maturities of long-term debt (Note 14) Trade accounts and notes payable (Notes 6 and 25) Other accounts payable (Note 6) Income taxes payable (Note 22) Dividends payable (Note 24...

  • Page 53
    ... Dividend income Rent income Foreign exchange gains Gain on disposal of property, plant and equipment Gain on disposal of intangible assets Gain on disposal of investment securities (Note 9) Gain on valuation of securities using the equity method (Note 9) Refund of income taxes Gain on business...

  • Page 54
    ...(Note 23) Diluted ordinary income per share (in Won) (Note 23 836,800 836,800 173,976 662,824 4,229 4,229 4,187 4,187 2002 534 146,484 736,270 399,113 399,113 121,397 277,716 1,768 1,768 1,768 1,768 *The accompanying notes are an integral part of these non-consolidated financial statements. 54

  • Page 55
    ...stock Cash dividends (Note 24) 19,660 506,200 62 196,600 722,522 Unappropriated retained earnings to be carried forward to the subsequent year £‹ 60 £Ü £‹ 15 (3,271) £‹ 2002 - 277,716 277,716 277,716 15,743 76,590 27,771 166 157,431 277,701 15 LG Electronics Inc._Annual Report 2003...

  • Page 56
    ... tax assets Increase (decrease) in trade accounts and notes payable Increase in other accounts payable Increase (decrease) in accrued expenses Increase (decrease) in withholdings Increase (decrease) in advances from customers Increase (decrease) in income taxes payable Payment of severance benefits...

  • Page 57
    ...of short-term trading securities Decrease in short-term and long-term loans, net Disposal (acquisition) of long-term financial instruments Proceeds from disposal of investment securities Acquisition of investment securities Payment of refundable deposits Proceeds from disposal of property, plant and...

  • Page 58
    ... Exchange in September 2002. As of December 31, 2003, affiliated companies comprised of the LG Group, including LG Corp., and key management personnel, including the family members of such individuals, own a total of 32.1% of the Company's common stock, and financial institutions, foreign investors...

  • Page 59
    ..., bank deposits and highly liquid marketable securities with original maturities of three months or less to be cash and cash equivalents. Securities The Company accounts for equity and debt securities under the provisions of Statement of Korean Financial LG Electronics Inc._Annual Report 2003 59

  • Page 60
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 Accounting Standards ("SKFAS") No. 8, Securities. This statement requires investments in equity and debt securities to be classified into three categories: trading, available-for-sale and held-to-maturity....

  • Page 61
    ... intangible assets. Amortization of development costs is computed using the straight-line method over five years from the commencement of the commercial production of the related products. Such costs are subject to continual analysis of recoverability. In the LG Electronics Inc._Annual Report 2003...

  • Page 62
    ...of time after the sale. Estimated costs of product warranties are charged to current operations at the time of sale and are included in the accompanying non-consolidated balance sheets as a product warranty reserve. Accrued Severance Benefits Employees and directors with at least one year of service...

  • Page 63
    ...-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 employees and directors were to terminate their employment as of the balance sheet date. Contributions made under the National Pension Plan and severance insurance deposits are deducted from accrued severance benefits...

  • Page 64
    ...8,729 9,495 As of December 31, 2003 and 2002, long-term financial instruments amounting to £‹ 9,623 million and £‹ 8,300 million, respectively, are deposited in connection with maintaining checking accounts or research and development projects funded by the government. The withdrawal of these...

  • Page 65
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 5. Receivables Receivables, including trade accounts and notes receivable, as of December 31, 2003 and 2002 comprise the following: (in millions of Won) 2003 Original amount Trade accounts £‹ 1,090,232...

  • Page 66
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 6. Assets and Liabilities Denominated in Foreign Currencies As of December 31, 2003 and 2002, monetary assets and liabilities denominated in foreign currencies, other than those disclosed in Notes 14 and ...

  • Page 67
    ...Term Investment Securities Long-term investment securities as of December 31, 2003 and 2002 are as follows: (in millions of Won) 2003 Available-for-sale securities Held-to-maturity securities £‹ 246,668 44 246,712 £Ü £‹ 2002 99,740 97,861 297,601 LG Electronics Inc._Annual Report 2003 67

  • Page 68
    ...-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 Available-for-sale securities as of December 31, 2003 and 2002 are as follows: (in millions of Won) Percentage of ownership (%) at December 31, 2003 MARKETABLE EQUITY SECURITIES Hynix Semiconductor Inc. KT Corp. LG...

  • Page 69
    ... Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 Percentage of ownership (%) at December 31, 2003 E2OPEN.COM COMMIT Incorporated Cenix Inc. Monet Mobile Networks SUNPOWER.INC Others 6.87 13.47 1.90 10.35 - 2003 Net asset Acquisition value Carrying cost /Market...

  • Page 70
    ...to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 The annual maturities of debt securities classified as available-for-sale securities and held-to-maturity securities as of December 31, 2003 are as follows: (in millions of Won) Due in Less than five years and...

  • Page 71
    ...-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 9. Equity-Method Investment Securities Equity-method investment securities as of December 31, 2003 and 2002 are as follows: (in millions of Won) Percentage of ownership (%) at December 31, 2003 DOMESTIC COMPANIES LG...

  • Page 72
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 (in millions of Won) Percentage of ownership (%) at December 31, 2003 LG Electronics Deutschland GmbH (LGEDG) PT LG Electronics Display Devices Indonesia (LGEDI) LG Electronics Design Tech, Ltd. (LGEDT) ...

  • Page 73
    ...LG Electronics United Kingdom Ltd. (LGEUK) (*1, *8) LG Electronics Ukraine Co., Ltd. (LGEUR) (*2) LG Electronics U.S.A., Inc.(LGEUS) LG Electronics Wales Ltd. (LGEWA) (*1, *8) Langchao LG (Yantai) Digital Mobile Technology Research & Development Co.,Ltd. (*2) Langchao LG Digital Mobile Communication...

  • Page 74
    ...Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 (in millions of Won) Percentage of ownership (%) at December 31, 2003 LG Infocomm Thailand, Inc. (LGICTH) Vietnam Korea Exchange, Ltd. (V.K.X.) LG TOPS LG Electronics System India, Ltd. (LGSYS) (*1, *4) LGE (China...

  • Page 75
    ...., Ltd. LG Investment & Securities Co., Ltd. LG.Philips LCD Co., Ltd. Hi Plaza Inc. £‹ (3) 112 25,571 1,572 (2,963) 24,289 OVERSEAS COMPANIES LG Electronics Mlawa SP. Zo. O. (LGEMA) LG Electronics Service Europe Netherlands B.V. (LGESE) LG Electronics Shenyang Inc.(LGESY) Taizhou LG-Chunlan Home...

  • Page 76
    ...LG Sports Ltd. LG Innotek Co., Ltd. LG Investment & Securities Co., Ltd. LG.Philips LCD Co., Ltd. Hi Plaza Inc. £‹ (4) (995) 36,707 2,495 (2,591) 35,612 OVERSEAS COMPANIES LG Electronics India Pvt. Ltd. (LGEIL) Nanjing LG-Tontru Color Display System Co., Ltd. (LGENT) LG Electronics Service Europe...

  • Page 77
    ... LG Electronics U.S.A., Inc. (LGEUS) LG.Philips Displays Holding B.V. LG Electronics Wales Ltd. (LGEWA) Others 2,707 346 (1,223) 1,348 965 (10,489) (124) (3,183) 68 (279) (5,746) (44,325) (59,935) (64,243) Property, plant and equipment Intangible assets Investment securities Total £‹ (3,788...

  • Page 78
    ... accounting are as follows: (in millions of Won) Inventories DOMESTIC COMPANIES LG Micron Ltd. LG Innotek Co., Ltd. LG.Philips LCD Co., Ltd. LG IBM PC Co., Ltd. Hi Plaza Inc. £‹ (212) 4,925 (140) 1,293 (1,959) 3,907 OVERSEAS COMPANIES LG Electronics Alabama, Inc. (LGEAI) LG Electronics Huizhou...

  • Page 79
    ... and affiliates accounted for using the equity method for the year ended December 31, 2003 are as follows: (in millions of Won) January 1, 2003 DOMESTIC COMPANIES LG Micron Ltd. LG Sports Ltd. LG Innotek Co., Ltd. LG Investment & Securities Co., Ltd. LG.Philips LCD Co., Ltd. LG IBM PC Co., Ltd...

  • Page 80
    ...DOMESTIC COMPANIES LG Micron Ltd. LG Sports Ltd. LG Innotek Co., Ltd. LG Investment & Securities Co., Ltd. LG.Philips LCD Co., Ltd. LG IBM PC Co., Ltd. Hi Plaza Inc. LG Card Co., Ltd. £‹ 31,870 4,118 78,482 151,959 572,202 11,120 53,508 7,183 910,442 OVERSEAS COMPANIES LG Electronics Alabama, Inc...

  • Page 81
    ...shareholders' equity. Upon a resolution of the Board of Directors on December 23, 2003, the Company purchased 1,614,675 shares (20%) of the common stock of Hankook Electric Glass Co., Ltd. from LG Corp., at the price of £‹ 119,163 million in January, 2004. LG Electronics Inc._Annual Report 2003...

  • Page 82
    ... Board of Directors on December 23, 2003, the Company entrusted its disposal and voting rights for the 10,180,531 shares of the common stock of LG Investment & Securities Co., Ltd. to Woori Bank, the representative of the creditor banks, as a part of the business normalization procedures of LG Card...

  • Page 83
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 11. Intangible Assets Changes in intangible assets for the year ended December 31, 2003 are as follows: (in millions of Won) Goodwill Balance as of January 1, 2003 Additions Disposals Amortization Other ...

  • Page 84
    ...) 2003 Goodwill Industrial property rights £‹ 254,399 311,531 £‹ 2002 293,781 387,890 Remaining years for amortization 7 years 2~7 years As a result of LG Electronics Investment Ltd. (formerly LG Electronics Inc., now merged into LG Corp.)'s merger with LG Information & Communications, Ltd...

  • Page 85
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 13. Insured Assets As of December 31, 2003, property, plant and equipment, other than land and certain construction in-progress, and inventories are insured against fire and other casualty losses up to ...

  • Page 86
    ...Financial Statements For the years ended December 31, 2003 and 2002 15. Long-Term Debt Long-term debt as of December 31, 2003 and 2002 comprise the following: (in millions) Annual interest rate (%) at December 31, 2003 DEBENTURES Private, non-guaranteed payable through 2006 Public, non-guaranteed...

  • Page 87
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 -Number of shares convertible: 4,887,500 shares -Conversion price: £‹ 68,900 per share -Conversion period: September 12, 2003 through July 28, 2006 (in millions) Annual interest rate (%) at December ...

  • Page 88
    ... million of accrued severance benefits for all employees of the Company was transferred from LG Electronics Investment Ltd. As of December 31, 2003 and 2002, the severance benefits are funded at approximately 61.8 % and 63.1 %, respectively, through employee severance insurance plans with Kyobo Life...

  • Page 89
    ... 31, 2003, the Company has outstanding forward contracts with UFJ Bank and others for selling Euro and buying US Dollars amounting to 25 million (contract exchange rates: 0.7968: US$1 ~ 0.8733: US$1, contract due dates: January through March 2004). LG Electronics Inc._Annual Report 2003 89

  • Page 90
    ...Consolidated Financial Statements For the years ended December 31, 2003 and 2002 As of December 31, 2003, the Company has outstanding forward contracts with UFJ Bank and others for selling US Dollars and buying Japanese Yen amounting to US$25 million (contract exchange...00 Exercise price £‹ 1,150...

  • Page 91
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 Option type Call Put Call Put Call Put Call Korea Development Bank Put Call Credit Agricole Indosuez Put Call Bank One Put Call Put Call ABN-AMRO Bank Put Call Put Call Korea Exchange Bank Put Call Put ...

  • Page 92
    ... environment on the financial position and results of operations of the Company. Actual results may differ materially from management's current assessment. 18. Capital Stock Capital stock as of December 31, 2003 is as follows: Number of shares issued Common stock Preferred stock (*) 139,606,263...

  • Page 93
    ...disposal of property, plant and equipment after deducting related taxes, until shareholders' equity equals 30% of total assets. This reserve is not available for the payment of dividends, but may be transferred to capital stock through an appropriate resolution by the Company's Board of Directors or...

  • Page 94
    ... to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 21. Capital Adjustments Capital adjustments as of December 31, 2003 and 2002 comprise the following: (in millions of Won) 2003 Treasury stock Gain on valuation of equity method investment securities Loss on...

  • Page 95
    ... comprising the deferred income tax assets as of December 31, 2003 and 2002 are as follows: (in millions of Won) 2003 Depreciation Allowance for doubtful accounts Reserve for research and manpower development Deferred income tax for investment securities Product warranty Amortization of intangible...

  • Page 96
    ..., which is net income allocated to common stock as adjusted by extraordinary gains or losses, net of related income taxes, by the weighted-average number of common shares outstanding during the period. Basic earnings per share for the year ended December 31, 2003 and the nine-month period from April...

  • Page 97
    ... Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 the weighted-average number of common shares and diluted securities outstanding during the period. Diluted ordinary income per share is computed by dividing diluted ordinary income allocated to common stock, which...

  • Page 98
    ...,716,219,383 56.69% The Company's dividend yield ratio for the year ended December 31, 2003 and for the nine-month period from April 1, 2002 (spin-off date) to December 31, 2002 is computed as follows: (in Korean Won) 2003 Common stock Dividend per share (A) Market price as of balance sheet date...

  • Page 99
    ...) LG Electronics Huizhou Inc. (LGEHZ) LG Electronics Italy S.P.A. (LGEIS) LG Electronics Service Europe Netherlands B.V. (LGESE) LG Electronics U.S.A. Inc. (LGEUS) Zenith Electronics Corporation (Zenith) LG Infocomm U.S.A. Inc. (LGICUS) LG International Corp. LG.Philips LCD Co., Ltd. Others 2003...

  • Page 100
    ... audio, TV and PDP Refrigerator, washing machine, air conditioner, microwave oven and vacuum cleaner Telecommunication Equipment & Handset division: CDMA handset, GSM handset, wireless telephone, WLL handset, mobile telecommunication, transmitter, switchboard, keyphone system and PC Financial data...

  • Page 101
    ... to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 Financial data by business division as of and for the nine-month period ended December 31, 2002 are as follows: (in millions of Won) Business Division Total SALES External sales Inter-division sales £‹ 13...

  • Page 102
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 27. Value Added Information Details of accounts included in the computation of value added for the year ended December 31, 2003 and the nine-month period from April 1, 2002 (spin-off date) to December 31, ...

  • Page 103
    Notes to Non-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 30. Spin-Off Upon a resolution of the Board of Directors on November 15, 2001 and a resolution of the shareholders on December 28, 2001, the Company was spun off from LG Electronics Investment Ltd. on ...

  • Page 104
    ...-Consolidated Financial Statements For the years ended December 31, 2003 and 2002 31. Operating Results for the Final Interim Period Significant operating results for the three-month periods ended December 31, 2003 and 2002 are as follows: (in millions of Won, except per share amounts) 2003 Sales...

  • Page 105
    ... purposes, have been reclassified to conform to the non-consolidated financial statements presentation as of and for the year ended December 31, 2003. These reclassifications had no effect on previously reported net income or shareholders' equity. LG Electronics Inc._Annual Report 2003 105

  • Page 106
    ...Location Major Products Microwave oven RE compressor Air conditioner Laundry washer Vacuum cleaner RO compressor Gimhae Gumi Digital Display & Media Pyeongtaek Pyeongtaek, Gyeonggi-do Gumi Gimhae, Gyeongsangnam-do Gumi, Gyeongsangbuk-do Gumi, Gyeongsangbuk-do Household motor MGT Monito TV PDP VCR PC...

  • Page 107
    ... Paulo Europe U.K New Castle U.K Wales Romania Bucharest Poland Mlawa M. Asia Egypt Ismalia LGEEG Production DY FBT Tuner TV Turkey Istanbul Asia India New Delhi Noida LGEIL LGEAT Production /Sales Production /Sales TV Air conditioner Refrigerator Washing machine Microwave oven Monitor Re-compressor...

  • Page 108
    ... /Sales Switch board CDMA System Monitor TV Refrigerator Air conditioner Refrigerator Re-compressor Audio Optical Storage Monitor LCD TV Washing machine Foundry /Sales VCR DVD TV Microwave oven Air conditioner Motor MGT Vacuum cleaner Ro-compressor VND 44,048,000 USD 41,240 IDR 80,109,000 LGE 40...

  • Page 109
    ... LGE 100% 96.07 Zenith R & D/Sales USD 0.02 LGE 100% 18.10 Triveni R&D USD 2,500 LGE 100% 96.10 LGEUS Sales USD 22,016 LGE 100% 78.08 LGECI Sales CAD 18,600 LGE 100% 86.10 Name LGEAI Type Service Capital(1000) USD 27 Investment Type LGE 100% Established 81.04 LG Electronics Inc._Annual Report 2003...

  • Page 110
    ... 9% LG International 53% LGE 100% LGE 100% LGE 49% Hitachi 51% LGE 100% LGE 100% LGE 99.99% Others 0.01% LGE 100% LGE 100% LGE 95% ALINA 5% LGE 100% Established 97.05 99.10 02.10 02.07 03.09 03.04 96.10 00.07 96.10 91.04 01.02 98.03 01.01 00.12 M. Asia Asia EIC Property Building management SGD...

  • Page 111
    ...,000 US$ 200,000 2,000 US$ 100,000 US$ 100,000 10 30 10 10 US$ 287,500 US$ 39,000 US$ 31,000 11 9 2.6 Total Foreign currency Won currency US$ 857,500 24,260 US$ 857,500 23,960 LG Electronics Inc._Annual Report 2003 111

  • Page 112
    ...Shareholder's list closing date Announcing newspapers Share types Agency Location LG Electronics Investors Relations December 31st Within 3 days of the end of business year From January 1st to January 31st Donga Ilbo, Chosun Ilbo 1, 5, 10, 50, 100, 500, 1,000, 10,000 shares (8 types) Korea Security...

  • Page 113
    LG Electronics Inc. http://www.lge.com

  • Page 114
    LG Electronics Inc. http://www.lge.com