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SAMSUNG ELECTRONICS 2001 ANNUAL REPORT

Table of contents

  • Page 1
    SAMSUNG ELECTRONICS 2001 ANNUAL REPORT

  • Page 2
    ... [2] Financial Brief [4] Board Leadership [6] CEO Keynote [12] Convergence Showcase [18] Digital Innovation [20] Digital Media Network [26] Telecommunication Network [30] Digital Appliance Network [34] Device Solution Network [38] -Process Innovation [46] At Play [48] In Service [50] In Harmony...

  • Page 3
    ... company where continuous innovation in both products and processes empowers us to deliver superior value to both our customers and investors as we lead the digital convergence revolution. Jan 6 Home network, modular TV debut at CES 2001 Jan 9 Industry's first 512MB SO-DIMM ships Jan 10 SyncMaster...

  • Page 4
    ... business environment for multinationals in 2001. Samsung Electronics rose to meet this challenge with sales of 32.4 trillion won and net income of 2.9 trillion won for the year. While many of our global peers saw their stock prices fall sharply, ours rose 77% during the year, propelling our market...

  • Page 5
    PEOPLE SAMSUNG IS TECHNOLOGY CONTINUING TO LEAD & INNOVATE SOLUTIONS IDEAS pass 50 million Jan 29 SCH-3500 CDMA phone wins Consumer Reports top rating Jan 30 Industry's first viable argon-fluoride photoresist for 03

  • Page 6
    ......" At Samsung Electronics, we recognize it takes both world-class products and worldclass management to be a global leader. And as our four business networks continued to deliver innovative products for customers around the globe in 2001, our Board of Directors and management team were hard at...

  • Page 7
    ...in May, Investor Relations magazine honored us with its prestigious "Best IR by a Korean Company" award. The year also saw us continue to climb the ranks of the world's leading corporations in annual surveys by Fortune and Forbes. We were No. 7 on the Fortune Global 500 in electronics and electrical...

  • Page 8
    ... convergence is Jong-Yong Yun Vice Chairman and CEO In billions of won Sales W32,380.4 -5.6% 32.4% Operating Profit 67.4% W2,295.3 Sales Korea 06 Sales outside Korea What PC? 5-star rating Feb 20 Marketing deal puts 15- and 17-inch TFT-LCD monitors on Hong Kong buses Feb 21 Industry's first...

  • Page 9
    ... System and Home Appliances units as well as the large cushion that would prevent an operating loss for the Semiconductor unit. -69% Net Income W2,946.9 -51% Sales in Korea W9,438.4 by Unit >> DDR SDRAM ships Digital Media Network +0.9 07 Mar 2 1.3- and 1.4-GHz Pentium 4 PCs ship in Korea...

  • Page 10
    ... downturn. The year ended with a slight rebound in Q4 as operating profit skyrocketed 279% over Q3 and sales jumped 17% to nearly reach Q1 levels. The Digital Media, Home Appliances, Information & Communications, and Semiconductor units enjoyed quarter-on-quarter growth of 10.6%, 11%, 20.6%, and 25...

  • Page 11
    ... than just something we are doing. It is something we are becoming. +18.69% Digital Appliance Network W1,918.2 W3,107 +13.17% Businesses Sales Distribution by Unit Apr 4 Flip-chip BGA package debuts million DRAM chips ship in March Apr 3 Part of side-by-side fridge sales donated to UNICEF 09

  • Page 12
    ...-CDMA mobile phones, microwave ovens, DRAM, SRAM, TFT-LCD panels, computer monitors, and VCRs-these four strategic portfolios are a catalyst for convergence and collaboration both within and between our four business units as well as with strategic partners like Dell, AOL Time Warner, Sony, and...

  • Page 13
    ...conclusion: Samsung Electronics is converging on success. Jong-Yong Yun Vice Chairman and CEO Network 22.2% Digital Appliance Network 8% Sales W32,380.4 -5.6% Businesses 4.7% Operat 11 SVR-S1330 13.5-hr voice recorder ships Apr 17 SIR-K150 HDTV receiver ships Apr 19 Pentium III notebooks with...

  • Page 14
    ...just that, creating innovative concepts and usage scenarios that illustrate where digital convergence is going. Here's a peek at what they've been working on... 12 Apr 19 YP-MF64 Yepp MP3 player with FM tuner ships Apr 20 iZZi Web wireless Webpad ships Apr 23 CTO named first chair of Recordable DVD

  • Page 15
    ... MY SOLE FAMILY DESIGNER: SUNG-JIN ANN, CREATING NEW BUSINESS GROUP, CORPORATE DESIGN CENTER KEY FEATURES: DIGITAL CAMCORDER WITH MOTORIZED TRIPOD AND FULL REMOTE CONTROL, CONTROLLER SUPPORTS VIDEO EDITING AND E-MAILING MOBILE PRINTER CONTROLLER DIGITAL TV Sergey Khruschev / Digital Video System...

  • Page 16
    ...Credu's mobile component has a digital camera that helps kids capture their world as well as a GPS transponder to help their parents track them down for dinner." 14 solution chosen for Integer Hong Kong Pavilion project Apr 30 2-inch LTPS mobile phone TFT-LCD panel ships May 2 15 new laser, inkjet...

  • Page 17
    ... control of digital home networks, including lighting, air-conditioning, and appliances. And with its GPS-powered family locator feature, Hommanager makes finding Credu-toting kids a breeze." multifunction printers debut May 4 Strategic digital TV chipset partnership with TeraLogic (U.S.) May 9 Eco...

  • Page 18
    ... READER, MODULAR DESIGN FOR EASY UPGRADES RECOGNITION: 2002 IDEA SILVER AWARD, IDSA AND BUSINESSWEEK FUNCTIONAL SKINS MOBILE PRINTER DIGITAL TV Katie McMahon / Mobile Communication Division "We're used to upgrading computer hardware and software. But just about every other electronic gadget we...

  • Page 19
    ... ANY NETWORK-SAVVY DEVICE, MODULAR DESIGN FOR EASY UPGRADES SET-TOP BOX WEBPAD DIGITAL TV REFRIGERATOR Mark Williams / Telecommunication Systems Division "Much more than just a home gateway that connects multiple PCs to the Internet, our Digital Home Hub concept provides each family member with...

  • Page 20
    CUSTOMER VALUE DIGITAL PRODUCTS & SOLUTIONS SAMSUNG IS CONVERGING ON SUCCESS OPTIMIZED -PROCESS INVESTOR VALUE 18 70-mm-tall DVD players with 128x search ship May 24 "Best IR from a Korean Company" award from Investor Relations magazine

  • Page 21
    ... Appliance Network, and Device Solution Network. The word network in each name underscores the synergistic collaboration and resource sharing that's now happening within each network, between networks, and with strategic partners like Dell, AOL Time Warner, Sony, and Microsoft. These dynamic, value...

  • Page 22
    digital media network "Together with Microsoft, we're going to turn average households into next-generation digital homes..." 20 accreditation May 31 SR-H750 Internet-enabled side-by-side refrigerator ships June 7 SPH-N2000 ships, the industry's first sub-centimeter

  • Page 23
    ... of PCs, digital devices, intelligent home appliances, and services that'll literally bring all the convenience and benefits of the digital convergence revolution home. CDMA phone June 8 Lufthansa buys NV5000 notebooks for cargo flight simulation June 13 63-inch plasma and 50-inch fLCD TVs debut...

  • Page 24
    ... 40-inch TFT-LCD TV models as we take aim at No. 1 in the market. 1. 63-inch plasma TV The world's largest plasma screen makes a big impression in any setting. 2. NEXiO S150 handheld PC The post-PC era arrives with style, power, and a built-in CDMA2000 1X phone 3. DVD-V2000 combo DVD/VCR The sequel...

  • Page 25
    ... VCR market in 2001, putting us in the No. 1 position for the first time since we entered the business in 1979. As illustrated by our strategic alliance with AOL Time Warner to develop Internet-capable cable TV set-top boxes with hard-drive recording capabilities, digital video recording technology...

  • Page 26
    ...world's most advanced post-PC device to date: 7. SpinPoint V40 series 80 GB hard drive Plenty of storage space for growing digital photo, video, and MP3 collections. 8. SW-224B 24x CD-RW drive Just three short minutes is all this speedster needs to burn a backup CD. 9. SN-308B combo CD-RW/DVD-ROM...

  • Page 27
    ... a top-five player in the U.S. market by 2005. Storage In 2001, we were once again a leading player in optical storage, capturing the top spot in the combination CD-RW/DVD-ROM drive category as our SpinPoint hard drive capacities continued to double, reaching 80 GB. In 2002, speeds and capacities...

  • Page 28
    Telecommunication Network "Our CDMA technology is putting China in the fast lane on the wireless information highway..." 26 with AOL Time Warner July 23 First CompUSA store-in-store opens in Miami July 26 Industry's first 40-micron pitch LDI package debuts

  • Page 29
    ... to deliver the phones and equipment mobile operators in China and around the world need to put their subscribers in the fast lane on the wireless information highway. July 28 SN-308B notebook combo DVD/CD-RW drive debuts July~Aug CDMA2000 1X field trial in U.S. with Sprint PCS, Qualcomm, and 3Com...

  • Page 30
    ... LCD screen makes it easy to check incoming calls and messages. 4. SPH-I300 CDMA PDA phone Award-winning Palm-powered portable is a seamless convergence of PDA and phone. 2 3 4 28 Aug 2 Strategic Memory Stick alliance with Sony Aug 6 YP-30SB Fashion Yepp MP3 player ships Aug 7 Industry's first...

  • Page 31
    ... carriers the tools they need to make the transition to next-generation networks capable of handling multimedia and data as effectively and reliably as voice traffic. We also signed ADSL and cable modem deals with major carriers in Korea, Japan, Taiwan, and China as we moved into the No. 4 position...

  • Page 32
    Digital Appliance Network "We're cooking up a lot of good things for the homes of the future..." 30 256Mb DDR333 SDRAM ships Aug 21 Mobile phones make Orange Group's "Global Model" list Aug 22 Industry's first 40-inch TFT-LCD TV

  • Page 33
    ... for innovation, performance, and value in their individual industries, they're also coming together as one in our Home Vita home networking solutions to create living environments that will be all those things-and much more. panel debuts Aug 27 YVP-P300 Photo Yepp MP3 player, SV-DVD1E DVD/VCR...

  • Page 34
    ...integrated control over the entire home via a wireless Webpad, WAP-enabled mobile phone, or any PC with an Internet connection. Air Conditioners In 2001, we began a strategic shift in focus to commercial air conditioning systems, a market that's over 30-times more profitable than residential systems...

  • Page 35
    ... with our Home Vita networking solutions as we keep innovating to stay at the top of the industry. Washing Machines In 2001, our full-scale entry into the drum washer category helped boost overall sales by 15%. Our advance into the high-end CIS market with slim-profile models featuring designs...

  • Page 36
    Device Solution Network Industry leaders are finding a global competitive edge with our advanced memory and TFT-LCD panel technologies...34 CDMA system deal with Huchison Telecom Australia Sept 6 Rear-projection HDTV-ready widescreen TVs debut Sept 11 VM-A6XX series

  • Page 37
    ...and R&D resources that have enabled us to bring them to market first. In short, they're finding a global competitive edge that's helping them meet and exceed the expectations of their customers. Mini DV camcorders ship Sept 13 High-capacity 16-bit smart card ships Sept 14 Spain GSM phone plant wins...

  • Page 38
    ...-bit color are ideal for video-savvy mobile phones. 3. LCD driver IC chips The industry's first 40-micron-pitch chips handle more channels in less space. 4. Smart card IC chips Advanced 16-bit chips support major operating systems with ultrafast data encryption. 2 3 4 36 certification Sept 20...

  • Page 39
    ... losing money. Our system LSI business accounted for 23% of total unit sales, led by strong LCD driver IC and smart card chip sales as well as brisk orders for system-on-chip products with applications in network equipment, digital TV chipsets, and next-generation mobile phones and portable devices...

  • Page 40
    ... extensible platform for business process solutions spanning the entire supply chain, revolutionizing the way we relate to and work with partners, suppliers, and customers. The rewards will be better products and solutions in less time, win-win global sourcing relationships that help us sharpen cost...

  • Page 41
    ...to real-time information on production, sales, logistics, and inventory, enabling us to manage our resources on a truly worldwide basis, a capability that few other firms have. It is also a solid, extensible platform for essential add-on solutions addressing advanced planning and scheduling, partner...

  • Page 42
    ... as we cut overall lead time from manufacturing to sales. We started by upgrading our global ERP system with an APS solution to support a weekly planning cycle for demand forecasting, resource management, and production planning functions for our entire global network of 32 production facilities and...

  • Page 43
    ... total cost management and value engineering in product development and materials cost management in production to keep our competitive edge as sharp as possible. Oct 31 Annual TFT-LCD monitor sales pass 2 million units Nov 6 Integer Hong Kong Pavilion featuring Home Vita network solution opens 41

  • Page 44
    ... of product quality and customer satisfaction. During our second year, we added 680 new black belts-... adding some 750 black belts-approximately onethird at the executive level-as we more than double ...system order from China Unicom Nov 8 Giheung plant wins Korea's first TL 9000 certification Nov 13

  • Page 45
    ... up the essence of our products and brand in three words: "wow" for innovative and fun, "simple" for ease of use, and "inclusive" for value and affordability. Digital Showcase opens in Hong Kong Nov 15 Manhattan CompUSA store-in-store opens Nov 21 Mobile phone business ranked No. 4 in Q3 (Dataquest...

  • Page 46
    ... S150 wireless handheld PC. They thought service convergence with CDMA2000 1X and WCDMA 3G network equipment and system development. They thought creatively with modular TV, compact mobile phone, and digital camera concepts that won bronze at the Industrial Design Excellence Awards in the U.S. They...

  • Page 47
    VOLUNTEERISM SAMSUNG IS SPORTS CONTRIBUTING TO A BETTER WORLD CITIZENSHIP ENVIRONMENT 256Mb NAND flash memory ships Nov 24 SW-224 24x10x40 CD-RW drive ships Nov 27 CDMA joint venture with Shanghai Bell 45

  • Page 48
    ... video products, home appliances, and telecommunications equipment for the 14th Asiad slated for September 2002 in Busan, Korea. " Sharing the thrill of victory and the agony of defeat brings everyone closer At Samsung Electronics, our love for sports has brought us a global audience. From elite...

  • Page 49
    ...finalists converged on Seoul in early December to compete for US$300,000 in prize money at the first Grand Final where Korea, China, and Germany topped the medal standings. Oracle for vertical business solutions based on the NEXiO S150 wireless handheld PC Nov 30 Low-cost digital TV chip debuts 47

  • Page 50
    ...inspires the greatest reward of all: smiles At Samsung Electronics, corporate citizenship is not an afterthought. It is an integral part of our culture that involves tasks as diverse as teaching word processing, supporting computer training and scholarships for the disabled, and developing programs...

  • Page 51
    ... disabled and disadvantaged in their local communities. All in all, more than 15,000 members of our global family are involved in making a difference in their part of the world. SRAM debuts Dec 6 Shanghai Samsung Semiconductor founded Dec 12 Pentium 4 PCs with built-in audio systems ship in Korea...

  • Page 52
    ... safety management system over the years that measures up to ISO 14001 and OHSAS 18001 standards. The effectiveness of this systematic, top-down approach has been further enhanced by high disclosure standards, earning us the trust of local communities around the world. Greening of Products Eco...

  • Page 53
    ... awareness programs at schools, or providing technical assistance to suppliers, we take a proactive role in making local communities cleaner and greener places to live. BusinessWeek Dec 17 1.8-inch mobile phone TFT-LCD panel ships Dec 18 JEDEC Technical Recognition Award for role in standardizing...

  • Page 54
    The increasingly seamless integration of devices and networks that digital convergence is driving presents the consumer electronics industry with a mind-boggling array of new challenges and opportunities. At Samsung, our vision of leading the digital convergence revolution is now coming clearly into...

  • Page 55
    54 Report of Independent Accountants 55 Balance Sheets 58 Income Statements Financial Report 2001 The financial results in the following report are for Samsung Electronics only and do not reflect the results of its subsidiaries or affiliates. 59 Statements of Appropriations of Retained Earnings ...

  • Page 56
    ... had sales of 1,402,703 million and US$12,910,292,000 to subsidiaries and affiliated companies within the Samsung Group during the year ended December 31, 2001. Related accounts receivable as of December 31, 2001 amounted to 370,680 million and US$65,050,000. The amounts expressed in U.S. dollars...

  • Page 57
    ...31, 2001 and 2000 In millions of Korean won In thousands of U.S. dollars ASSETS Current assets: Cash and cash equivalents Short-term financial instruments Trade accounts and notes receivable, net of provisions for doubtful accounts Other accounts and notes receivable, net of provisions for doubtful...

  • Page 58
    ...2001 and 2000 In millions of Korean won In thousands of U.S. dollars LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts and notes payable Current maturities of long-term debt Other accounts and notes payable Accrued expenses Dividends payable Income taxes payable Other current...

  • Page 59
    ... 2001 and 2000 In millions of Korean won In thousands of U.S. dollars LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equity: Capital stock: Common stock Preferred stock Capital surplus: Paid-in capital in excess of par value Other capital surplus Retained earnings: (Net income 2,946,935 million...

  • Page 60
    ..., 2001 and 2000 In millions of Korean won In thousands of U.S. dollars 2001 2000 2001 2000 Sales: Domestic Export Total sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income: Interest and dividend income Foreign exchange gain Gain on...

  • Page 61
    ... of equity-method investees Interim dividends: (Dividend rate: 10% of par value) Net income Total retained earnings before approp. Transfers from voluntary reserves: Reserve for overseas market development Reserve for overseas investment loss Reserve for research and human resource development...

  • Page 62
    ...from equity-method investments Loss on valuation on inventories Deferred income taxes Other Total items not involving cash flows Changes in operating assets and liabilities: Trade accounts and notes receivable Inventories Trade accounts and notes payable Accrued expenses Income taxes payable Payment...

  • Page 63
    ... of long-term debt Repayment of foreign currency notes and bonds Proceeds from long-term debt Repayment of current maturities of long-term debt Increase in other long-term liabilities Decrease in other long-term liabilities Payment of dividends Acquisition of treasury stock Other Net cash used in...

  • Page 64
    ... Export Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income: Interest and dividend income Gain on foreign currency transactions Gain on foreign currency translation Gain on valuation of investments using the equity method Other 591,848...

  • Page 65
    In millions of Korean won 2001 2000 1999 1998 1997 10,509,895 21,870,480 32,380,375 24,514,733 7,865,642 5,570,308 2,295,334 10,903,384 23,380,368 34,283,752 21,993,377 12,290,375 4,855,220 7,435,155 8,850,625 17,267,161 26,117,786 17,661,172 8,456,614 3,975,114 4,481,501 6,494,497 13,589,...

  • Page 66
    ... Insurance [1993-1995] Yoon-Woo Lee • President & CEO, Device Solution Network Samsung Electronics [1995-present] • Executive VP & CEO, Semiconductor business Samsung Electronics [1993-1995] • Executive VP, Semiconductor business Samsung Electronics [1992-1993] • Managing director, Giheung...

  • Page 67
    ... System LSI business Samsung Electronics [1997-1998] • General manager, Memory business Samsung Electronics [1987-1997] Doh-Seok Choi • President & CFO, Samsung Electronics [1999-present] • Vice president & corporate controller Samsung Electronics [1997-1999] • Managing director & corporate...

  • Page 68
    ... Tel: 1-512-672-1000 American Distribution Center (ADC) San Diego, California, U.S.A. Tel: 1-858-642-5199 Samsung Information Systems America, Inc. (SISA) San Jose, California, U.S.A. Tel: 1-408-544-5400 EUROPE Sales Subsidiaries Samsung Electronics U.K. Ltd. (SEUK) Surbiton, Surrey, U.K. Tel: 44...

  • Page 69
    ...-4-225747 Gulf Customer Satisfaction (GCS) Tel: 9714-883-8416 ASIA Sales Subsidiaries Samsung Asia Pte. Ltd. (SAPL) UE Square, Singapore Tel: 65-8333-200 Samsung Electronics Australia Pty. Ltd. (SEAU) New South Wales, Australia Tel: 61-2-9638-5200 Samsung Electronics Philippines Co. (SEPCO) Manila...

  • Page 70
    Stay tuned ...For the latest news and information, visit us online at: www.samsungelectronics.com Have questions or comments? E-mail us at: [email protected] IR Team 24th Floor, Samsung Main Building, 250, Taepyeongno 2-ga, Jung-gu, Seoul 100-742, Korea 68

  • Page 71
    SAMSUNG ELECTRONICS CO., LTD. Samsung Main Bldg., 250, Taepyeongno 2-ga, Jung-gu, Seoul 100-742, Korea Tel: 82-2-727-7114 Fax: 82-2-727-7985