Samsung 1999 Annual Report Download

Download and view the complete annual report

Please find the complete 1999 Samsung annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 83

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83

Table of contents

  • Page 1

  • Page 2
    CONTENTS >> INTRODUCTION [1] FINANCIAL HIGHLIGHTS [3] CEO'S GREETING [9] HOME MULTIMEDIA [14] PERSONAL MULTIMEDIA [17] MOBILE MULTIMEDIA [20] CORE COMPONENTS [23] PRODUCT OVERVIEW [28] SPORTS SPONSORSHIP [34] COMMUNITY SERVICE [36] FINANCIAL STATEMENTS [38]

  • Page 3
    10101001010101 001

  • Page 4
    ... in the new millennium with a new slogan. A slogan that contains the essence of our dedication to bringing innovation and digital technology to all our products in ways that make life easier, richer, and more enjoyable. And one that invites all generations and all customers to a digital world where...

  • Page 5
    Nineteen ninety-nine was a banner year for Samsung Electronics in every measure of 1 2 3 4 5 6 7 8 9 10 financial perfor11 12 mance. Sales were up 30%, gross profit 38%, and operating profit 45%, while net income skyrocketed 1,000% to 3,170 billion won, surpassing the previous 1995 high of 2,505 ...

  • Page 6
    VITAL STATISTICS Billions of Korean Won For the years ended December 31, 1999 and 1998 Millions of U.S. Dollars 99 98 99 98 Sales Gross Profit Operating Profit Net Income 26,118 8,457 4,482 3,170 20,084 6,108 3,100 313 22,803 7,383 3,913 2,768 16,640 5,061 2,568 260 EBITDA CAPEX (...

  • Page 7
    ...,900 12 60,700 / 87,000 1999 1 50,000 1998 10 82,000 / 96,400 2 250,000 300,000 Monthly highs are in orange, lows in green 78,600 / 92,000 3 SHARE 81,600 / 103,500 4 89,800 / 114,000 5 PRICE 78,900 / 98,500 6 TREND 81,300 / 133,500 7 127,500 / 204,000 8 173,000 / 233,000...

  • Page 8
    ...,000 which now account for 5,000 Billions of Korean Won Sales were exceptionally strong in 1999, rising over 30% to reach an all-time high of 26,118 billion won on the strength of recovering markets worldwide. At home, rebounding demand saw sales jump 36.2%, while sales growth abroad was almost...

  • Page 9
    ... profitability to trim overall debt by 44% to 5,745 billion won during 1999, we dramatically lowered our debt to equity ratio from 147% to 43%. In addition to benefiting from lower interest rates, we strategically moved to virtually eliminate short-term borrowings as well as retire over 54% of long...

  • Page 10
    ... Won Earnings before income taxes, depreciation, and amortization jumped a remarkable 102% in 1999 to 7,300 billion won, a new record. These strong earnings enabled us to resume the large capital expenditure investments necessary to expand our profit base in the years ahead, particularly in the...

  • Page 11
    TO OUR SHAREHOLDERS AND CUSTOMERS "Samsung Electronics is dedicated to leading the digital convergence revolution." > 10101001010101 009

  • Page 12
    .... 1999 HIGHLIGHTS We unveil two world-first mobile phones. One can be worn on the wrist like a watch; the other can browse the Internet and function like a PDA. Later in the year, we add two more that let users listen to MP3 files or watch TV. >> Over the past three decades, Samsung Electronics...

  • Page 13
    ... Olympic marketing programs in 40 countries as well as on-site programs. Sept 17 Our Kiheung semiconductor complex is listed as the "World's Safest Workplace" by the Guinness Book of World Records for logging over 211.6 million accident-free hours between November 1991 and August 1998. In 1999, we...

  • Page 14
    ...-screen CRT monitors and TFT-LCD displays to major US retail chains Best Buy and CompUSA as part of contracts valued at US$150 million. Dec 31 We capture 40% of the worldwide market for CDMA mobile phones, marking our second straight year at the top of the industry. Our CDMA cellular phone sales...

  • Page 15
    ... two. In the new paradigm of the digital age, it can add up to much more. At Samsung, the digital convergence revolution is improving people's lives as it opens the door to a future full of unlimited possibilities in home multimedia, personal multimedia, and mobile multimedia. A future where...

  • Page 16
    ...to love. >> At Samsung, we're on the cutting edge of digital technology for the home. From interactive TVs for the living room, to Internet-enabled microwaves and refrigerators for the kitchen, to intelligent washing machines for the laundry room, we're creating home electronics and appliances that...

  • Page 17
    everyone's invited. Tantus is one digital show the whole family's going to love. 10101001010010 01 5

  • Page 18
    1. Jong-Hoon Shin, engineer SVM-M32 Motion Yepp MP3 player/recorder 2. Woo-Yong Kan, senior engineer FLCD and LCD projection TVs 1 2 1 60 10 0 1 0 0 1 0 1 0 0 1 0 1

  • Page 19
    Life is full of personal decisions. Whether it's a choice of music, color, or styling, what appeals to you might turn off another. And at Samsung, these differences are the challenge that sparks our creativity to create products that let you be "you." We take the future very personally. ...

  • Page 20
    ...personal multimedia half the size of a passport... You're tired of others "controlling transmission." You want to take control of your music. And Samsung Yepp MP3 Internet music players and recorders let you do just that-and a whole lot more. Photo Yepp lets you view digital stills. Motion Yepp adds...

  • Page 21
    everyone's invited. Yepp is your passport to musical freedom. 1010100101001001 9

  • Page 22
    >> Mobile phones aren't mobile multimedia just for talking anymore. 2 00 0 1 0 1 0 0 1 0 1 0 0 1 0 1

  • Page 23
    everyone's invited. Now you're visually connected to the future. 1010100101001002 1

  • Page 24
    ...family or partner can't make it. So you do the next best thing; take along your Samsung 3G phone. This handheld wonder does much more than let you talk. It's a mobile videoconferencing solution that lets you share the experience with those back home-all from the palm of your hand. >> At Samsung, we...

  • Page 25
    ... the philosophy that consistently keeps us six months to a year ahead of the competition in semiconductors as we build the future core components of tomorrow's digital products. We build the future for the future. 1 1. Dae-Won Ha, senior engineer 1Gb and 512Mb DRAM 2. Ja-Heon Gu, engineer Notebook...

  • Page 26
    >> Silica used to be something core components we played in at the beach. 2 40 0 1 0 1 0 0 1 0 1 0 0 1 0 1

  • Page 27
    ... as well as the No. 4 semiconductor maker. >> From SmartMediaTM flash memory cards, to 1GHz Alpha processors, to larger, higher-resolution WiseView TM TFT-LCD panels, to advanced chipsets for digital TV, broadband communications, and 3G handsets and equipment, we're making the core components that...

  • Page 28
    >> Whoever you are... SAMSUNG DIGITall Wherever you are... 2 60 0 1 0 1 0 0 1 0 1 0 0 1 0 1

  • Page 29
    Whatever you do... everyone's invited. 1010100101001002 7

  • Page 30
    ...During the year, we continued to hold the No. 2 position in the microwave oven category just behind Sharp with a 20% global market share. Our surround sound and inputs for a DVD player, PC, and digital set-top box. Appliances >> Digital technology is fast becoming an essential part of Samsung home...

  • Page 31
    ... ability to download cooking programs via the Internet in 2001. Targeting markets in Latin America and Southeast Asia, our 5 kg to 13 kg washing machines continued to win accolades and customers with their simple but versatile programmability, washing performance, and efficiency. Our vacuum cleaner...

  • Page 32
    ... Featuring a built-in TV tuner, picture-in-picture, and inputs for a PC, DVD player, and VCR, our 15- and 17-inch SyncMaster 150MP/170MP TFT-LCD multimedia displays deliver a total multimedia experience wherever space is at a premium. Computing >> In 1999, Samsung SyncMaster monitors continued to...

  • Page 33
    ... single-lens pickup mechanism. Safari Shooter Getting close to the action is never a problem with our VP-D60 Mini DV camcorder's generous 22x optical zoom and incredible 440x digital zoom. Toll Free Web Our AnywebTM web phone leverages Internet standards to let you simultaneously surf or shop...

  • Page 34
    ...will help us meet world's first phones with a builtin MP3 player (SCH-M105/SGHM100); and the world's first phone with a built-in TV tuner (SCH-M220). As work on a US$210 million CDMA network for Hutchison Telecom Australia proceeded on schedule for a spring 2000 launch, we signed a one-year, US$500...

  • Page 35
    ... the CalmRISC 8-bit microcontroller, a singlechip digital TV tuner solution, several DVD player chipsets, and the CopperMagic UADSL modem TFT -LCD Panels >> Leading the industry for the second straight year, Samsung captured 18.8% of the global market in 1999. We rolled out new 15-, 17-, and 18inch...

  • Page 36
    Promoting 3 40 0 1 0 1 0 0 1 0 1 0 0 1 0 1

  • Page 37
    ... Sydney Summer Games as an Olympic Partner in both the wireless communications equipment and whitegoods categories, our sponsorship activities include multinational events such as the Samsung Nations Cup equestrian team championship series, Samsung Running Festival 5 km fun runs, and a large number...

  • Page 38
    ...Giving back to local communities is a responsibility Samsung takes very seriously. Our efforts to support employee volunteerism and develop and maintain volunteer programs to meet local needs were recognized with the prestigious Award for Excellence in Corporate Community Service from the Washington...

  • Page 39
    Report of Independent Accountants 40 Balance Sheet 41 Statements of Income 44 Statements of Appropriations of Retained Earnings 45 Statements of Cash Flows 46 Notes to Financial Statements 48 Five-year Financial Summary 78 Global Network 80 1010100101001003 9

  • Page 40
    ..., the financial position of the Company as of December 31, 1999, and the results of its operations, the changes in its retained earnings and its cash flows for the year then ended in accordance with financial accounting standards generally accepted in the Republic of Korea. The following matters do...

  • Page 41
    ...,429 Property, plant and equipment, including revalued portion, net of accumulated depreciation (Note 8) Equity investments in subsidiaries and affiliated companies (Note 9) Other investments (Note 9) Long-term financial instruments and other assets (Notes 4 and 6) Deferred income tax assets (Note...

  • Page 42
    ... 31, 1999 Thousands of Korean Won Thousands of U.S. Dollars (Note 3) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts and notes payable Other accounts and notes payable Short-term borrowings (Note 10) Current maturities of long-term debt, net of discounts and premiums...

  • Page 43
    BALANCE SHEET As of December 31, 1999 Thousands of Korean Won Thousands of U.S. Dollars (Note 3) LIABILITIES AND SHAREHOLDERS' EQUITY Commitments and contingencies (Note 13) Shareholders' equity: Capital stock (Note 1) Common stock Preferred stock Paid-in capital in excess of par value (Note ...

  • Page 44
    ... OF INCOME For the year ended December 31, 1999 Thousands of Korean Won Thousands of U.S. Dollars (Note 3) Sales (Note 19): Domestic Export 8,850,624,784 17,267,160,967 26,117,785,751 Cost of sales (Note 19) Gross profit Selling, general and administrative expenses Operating profit 17,661,171...

  • Page 45
    ...carried over from prior year Cumulative effects of changes in accounting policy (Note 2) Additional accrued severance benefits (Note 2) Interim dividends (Note 15) (Dividend rate: 10%) Net... Reserve for technology development Cash dividends (Note 15) (Common stock: 40%) (Preferred stock: 41%) $ 28...

  • Page 46
    ...,321 Changes in operating assets and liabilities: Trade accounts and notes receivable Inventories Accrued income Advance payments Guaranteed deposits Trade accounts and notes payable Accrued expenses Income taxes payable Payment of severance benefits Other Net cash provided by operating activities...

  • Page 47
    ... bonds Repayment of current maturities of long-term debt Issuance of common stock Payments of dividends Other Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 214,979,206 (453,342...

  • Page 48
    ..., 1999, major shareholders of the Company's stock, including preferred stock, consist of the following: Name of Shareholder Citibank, N.A. Samsung Life Insurance Co., Ltd. Samsung Corporation Lee, Kun-Hee and relatives Seoul Bank 5,322,559 4,699,627 3.04 2.68 10,873,359 5,917,362 6.21 3.38 Number of...

  • Page 49
    ... in Financial Accounting Standards Effective January 1, 1999, the financial accounting policies of the Company have been significantly changed in accordance with the changes of accounting principles generally accepted in Korea. The cumulative effects on assets and liabilities arising in accordance...

  • Page 50
    ...using the equity method of accounting. Differences between the initial purchase price and the Company's initial proportionate ownership of the net book value of the invested company are amortized over 5 years using the straight-line method. Under the equity method, the Company records changes in its...

  • Page 51
    ... retirement grants of employees with Samsung Life Insurance Company, Ltd. The amounts funded under this insurance plan are classified as a deduction to accrued severance benefits liability. Subsequent accruals are to be funded at the discretion of the Company. In accordance with the National Pension...

  • Page 52
    ...change, shareholders' equity as of December 31, 1999 is approximately 1,080,527 million greater and net income for the year ended December 31, 1999 is approximately 199,039 million less than that which would have been reported under the previous accounting method. Valuation of Assets and Liabilities...

  • Page 53
    ..., Short-term Financial Instruments: Cash and cash equivalents and short-term financial instruments at December 31, 1999 consist of the following: Annual Interest Rates (%) Thousands of Korean Won Cash and cash equivalents Cash on hand and in banks Passbook accounts Foreign currency deposits 1 2,770...

  • Page 54
    ... present value under rescheduled payment and long-term installment transactions are as follows: Millions of Korean Won Accounts Face Value Discount Present Value Long-term installment transactions Long-term financial instruments and other assets Other long-term liabilities 4,151 205,363 742 46...

  • Page 55
    ... portions of the Company's property, plant and equipment, up to a maximum of million, is pledged as collateral for various loans from the Korea Development Bank and Hanvit Bank (see Note 11). 1,469,422 At December 31, 1999, depreciable assets are insured against fire and other casualty losses, and...

  • Page 56
    ... at December 31, 1999 consist of the following: Thousands of Korean Won Percentage of Ownership (1) Equity investments in subsidiaries and affiliated companies Subsidiaries: Samsung Electronics Canada, Inc. Samsung Electronics America, Inc. Samsung Electronics Latinoamerica Panama (Zone Libre...

  • Page 57
    ... Co., Ltd. Samsung Aerospace Industries Ltd. Seoul Commtech Co., Ltd. Samsung Economic Research Institute Samsung SDS Co., Ltd. Samsung Corning Co., Ltd. Samsung Lions Co., Ltd. Samsung Motors Inc. Towa Korea Co., Ltd. Posco Hüls Co., Ltd. Total equity investments in affiliated companies 49.00 49...

  • Page 58
    ... small scale of assets. At December 31, 1999, the financial condition of other investments, such as Array Micro Sys. Inc., Acc Microelectronics Co., Jazz Multimedia, Inc., Micro Unity Systems Engineering Inc. and the Institute for Social Development & Policy Research, have deteriorated significantly...

  • Page 59
    ...Korea Development Bank Kookmin Bank Korea Technology Banking Corporation Samsung Card Co., Ltd. 5-6.5 8-9.65 6.5-12.45 6.5 6.5 1,624,515 224,109,000 28,975,527 18,041,302 83,000 272,833,344 (B) Long-term debt denominated in foreign currencies at December 31, 1999 consists of the following: Annual...

  • Page 60
    ...,000,000 2,216,550,000 Add: premiums Less: discounts 10,514 (45,972,542) 2,170,587,972 At December 31, 1999 certain property, plant and equipment are pledged as collateral for the above long-term debt (see Note 8). In addition, repayment of certain long-term debt is guaranteed by various Korean...

  • Page 61
    ... premiums Less: discounts Add: long-term accrued interest Less: conversion rights (299,056,662) 1,158,941 (6,556,876) 3,110,418 (68,652,265) 1,415,529,449 (A) ECU denominated floating rate notes On May 16, 1995, the Company issued ECU 80 million (US$106,880,000) of floating rate notes. These notes...

  • Page 62
    ...the terms of bonds is as follows: Interest: 0.25% per annum payable annually in arrears on December 31. Conversion period: On or after November 24, 1996 through December 15, 2006. Conversion price: Subject to adjustment based on certain events, 65,499 per share, with a fixed exchange rate applicable...

  • Page 63
    ... adjustment based on certain events, 108,465 per share, with a fixed exchange rate applicable to the conversion of 1,173: US$1.00. (K) Convertible bonds On July 30, 1999, the Company issued foreign currency convertible bonds of US$100 million to Apple Computer Inc. A summary of the terms of bonds is...

  • Page 64
    ...as follows: Millions of Korean Won Accounts Machinery and equipment Acquisition Cost 712,678 Depreciation Expense Charged to 1999 Operations 449,063 Scheduled future lease payments, net of interest, under these lease arrangements which are included in long-term debt (see Note 11), are as follows...

  • Page 65
    ... and Korean financial institutions to hedge interest rate risk on floating-rate foreign currency long-term debt. For the year ended December 31, 1999, the Company recognized gains of 9,407 million and losses of 1,954 million from the valuation of forward exchange contracts, and losses of 24,182...

  • Page 66
    ... least 50% of the net extraordinary gain on disposal of property, plant and equipment and 10% of net earnings for each year until the Company's net worth equals 30% of total assets. This reserve is not available for payment of cash dividends, but may be transferred to capital stock or used to reduce...

  • Page 67
    ...869,693 shares of non-voting preferred stock under the authorization of the Board of Directors. 17. Income Tax Expense: The statutory income tax rate applicable to the Company, including resident tax surcharges, is approximately 30.8%. Income tax expense for the year ended December 31, 1999 consist...

  • Page 68
    ... of December 31, 1999 are as follows: Thousands of Korean Won Beginning Balance Deferred tax assets: Loss (gain) on valuation of investments using the equity method Deferred foreign exchange losses Invested stock reduction losses Depreciation Other Tax credits Total deferred tax assets 759,579,159...

  • Page 69
    ... as follows: °§ Earnings per share Thousands of Korean Won Net income Adjustments: Dividends for preferred stock Undeclared participating preferred stock dividend Net income available for common stock Weighted average number of shares of common stock Earnings per share in Korean Won 3,170,402...

  • Page 70
    ... Ltd. Samsung Aerospace Industries Ltd. Cheil Communications, Inc. Seoul Commtech Co., Ltd. Samsung Heavy Industries Co., Ltd. Novita Co., Ltd. Samsung Everland Co., Ltd. Samsung Life Insurance Co., Ltd. Samsung Electronics Service Co., Ltd. Other local subsidiaries and affiliated companies Foreign...

  • Page 71
    21. Foreign Currency Translation: At December 31, 1999, assets and liabilities dominated in foreign currencies and foreign exchange gains (losses) are as follows: Thousands of Korean Won Account Foreign Currencies Korean Won (translated) Translation Loss Translation Gain Foreign currency ...

  • Page 72
    ... Foreign Currency Translation, continued: Thousands of Korean Won Account Guaranteed deposits INR MAD CNY JPY PHP RUR TWD USD Others ...7,304 679 229,598 1,037 139 21,258 814 1,418,270 2,203 295 1,692,186 Other assets AED ATS VCLP CNY COP DEM EGP HKD INR IRR JOD JPY KZT MAD MYR NLG PEN PLN SAR...

  • Page 73
    ... Korean Won Account Trade accounts and notes ...660 379 47,473,153 6,494 1,581 6,745,980 6,754,055 Short-term borrowings Others accounts and notes payable USD 38,820.18 AUD 32,655,730.80 BEF 4,...SEK SGD USD 391,509.46 3,976,087.54 1,316,850.95 79,500.00 5,315,672.00 123,882,338.00 58,857.60 21,859,...

  • Page 74
    ... Added Value: The accounts required for the calculation of gross added value for the year ended December 31, 1999 are as follows: Thousands of Korean Won Manufacturing Costs Wage and salaries Provision for severance benefits Welfare expenses Rental expenses Depreciation expense Taxes and dues 600...

  • Page 75
    ... for its environmental management system. In addition to engaging in development and research activities for environment-friendly products, the Company operates waste treatment facilities for its own use and a recycling center to collect and recycle waste electronic goods. The Company actively...

  • Page 76
    ..., 1999 and for the year then ended, is as follows: Financial data by business segment: Millions of Korean Won Radio, Television & Communication Equipment and Semiconductors 1. Sales Sales to unaffiliated customers Intersegment sales 19,287,611 563,982 19,851,593 2. Operating profit 3. Tangible and...

  • Page 77
    ...Assets Liabilities Net assets of discontinued operations Disposal amount Gain on disposal 69,406 69,406 82,165 12,759 Information of discontinued operation for 1998: Millions of Korean Won 1. Sales 2. Operating profit 3. Tangible and intangible assets 541,867 8,800 111,578 28. Subsequent Events...

  • Page 78
    FIVE-YEAR FINANCIAL SUMMARY As of December 31, 1995~1999 99 98 97 Thousands of U.S. Dollars 96 95 Sales (Note 19): Domestic Export Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest and dividend income Gain on foreign currency ...

  • Page 79
    ...267,160,967 26,117,785,751 17,661,171,944 8,456,613,807 3,975,113,690 4,481,500,117 6,494,496,605 13,589,679,922 20,084,176,527 13,975,748,868 6,108,427... 769,966,975 535,642,340 1,711,488,146 223,630,084 10,674,208 25,780,500 208,523,792 44,368,311 164,155,481 1,784 374,802,357 683,958,106 675,748...

  • Page 80
    ...Ltd. (SESS) Jiangsu, China Tel: 86-512-761-2297 * China Customer Satisfaction (CCS) Tel: 8610-6497-3366 ASIA Production Bases P.T. Samsung Metrodata Electronics (SME)(SEIN) East Java, Indonesia Tel: 62-21-893-4005 Samsung Electronics Display (M) Sdn. Bhd. (SDMA) Seremban Negeri Sembilan Darul Khusus...

  • Page 81
    ...S.A. de. C.V. (SAMEX) Tijuana, Mexico Tel: 1-619-671-6000 Samsung Electronica da Amazonia, Ltda. (SEDA) Sao Paulo, Brazil Tel: 55-11-5644-8500 Samsung Austin Semiconductor (SAS) Texas, U.S.A. Tel: 1-512-672-1000 Sales Bases * Samsung Electronics America, Inc. (SEA) New Jersey, U.S.A. Tel: 1-201-229...

  • Page 82
    You're invited to visit us at www. samsungelectronics. com

  • Page 83