Samsung 2003 Annual Report Download

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To come so far to achieve so much and yet
to have so much more within our grasp.

Table of contents

  • Page 1
    To come so far to achieve so much and yet to have so much more within our grasp.

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  • Page 3
    To humbly press on toward even greater goals to seize the opportunity to be the best.

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    To move the entire industry forward with us without complacency, with enterprising creative spirit. Samsung Electronics leads into the imminent future of ever greater, ubiquitous connection and consumer delight. Moving forward to be the best. >

  • Page 6
    ... business. Number one in Europe in sales of LCD TVs. Number one in the US in sales of projection TVs, even though Samsung Electronics premium products are 20% more expensive than those of competitors. Ranked first in JEDEC Award. 2nd The second largest maker of mobile handsets, in terms...

  • Page 7
    ...return on equity, total return and profit as compiled by Standard and Poor's. 4th Ranked fourth in Fortune's World's Most Admired Electronics Companies. 24% Average annual growth over last four years in sales of mobile handsets. 30% Fastest growing brand worldwide for two years in a row, Samsung...

  • Page 8
    8 FINANCIAL HIGHLIGHTS $ 36.4 billion SALES 2003 2002 2001 $ 26.9 billion $ 33.2 billion $ 6.0 billion OPERATING PROFIT 2003 2002 2001 $ 1.9 billion $ 6.2 billion Growing to be the best

  • Page 9
    9 $ 5.6 billion CAPEX 2003 2002 2001 $ 3.5 billion $ 3.5 billion $ 2.9 billion R&D EXPENSE 2003 2002 2001 $ 2.5 billion $ 2.0 billion -23.0% NET DEBT-TO-EQUITY RATIO 2002 -23.8% 2001 -0.6% Won/ US Dollar as of December 31, 2003: 1,197/1

  • Page 10
    ... of the world economy, 2003 brought remarkable results, both in tangible returns and in terms of elevating the brand. The fastest growing brand for two years in a row, Samsung Electronics stands for premium quality around the globe, from emerging markets in China, Hong Kong and India to the leading...

  • Page 11
    ... Korea." Euromoney ranked our corporate governance at number two in its listing of 500 emerging market companies. The British magazine Investor Relations noted our strong commitment to shareholder value and transparent financial management, and lauded Samsung Electronics for the "Best Communication...

  • Page 12
    ...threaten world security. Many countries and regions were plagued with political antagonism and a stagnant economy. Despite the unfavorable business environment, Samsung Electronics posted a second record-breaking year in a row in 2003. Exceptional financial results helped the stock price set record...

  • Page 13
    ...innovation and high ideals. Executing on our vision, Samsung Electronics has become one of the world's top companies, with an increasingly powerful brand. However, today's rapidly changing environment does not guarantee a future to world-class companies. In the business world of tomorrow, only world...

  • Page 14
    ... in how we think, act and work. With challenging goals and a pioneering spirit, our people are up to the task. At Samsung Electronics, we are not content with current achievements. To drive innovation, we continue to invest heavily in the future. With a net debt/ equity ratio of negative 23% at year...

  • Page 15
    ... a premier company in the world - the best of the best - as we help shape the future of how people work, play and live. strong growth continuously in the past five years. T his has given us the resources to invest for the future and to accelerate innovation in products, technology, marketing, cost...

  • Page 16
    ... and digital broadcasting. Now every appliance in the home - from the washing machine to the vacuum to the refrigerator - works better, cleaner and smarter. All thanks to futuristic digital technology, inspiring functionality and stylish design from an emerging world leader, Samsung Electronics.

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    RH2777AT Homepad Internet Refrigerator

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    Families find more quality time and comfort at home, through breakthrough products for the always-on, always-connected digital life.

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    M-35 Notebook PC

  • Page 21
    ... accelerate through advanced communications that remove geographic boundaries and that free individuals from personal limitations. Playing an increasing role in business transformation worldwide, Samsung Electronics provides the tools and technologies that help people work smarter, faster and...

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    Wherever you are, work can be as near or far as you want it. The paperless, wireless workplace is more and more a reality, freeing the creative spirit.

  • Page 24
    ...the mobile handset will be the hub of all other devices, enabling people to access information and technology anywhere at any time through any device. Samsung Electronics is at the center of this revolution, helping to shape our shared future. We put the power and delight of converged communications...

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    DVD-L1200W Portable DVD Player

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  • Page 27
    Sharing thoughts, data, music and pictures anytime and anywhere, people are gaining the means to communicate freely - around the home, around the office and all around the world.

  • Page 28
    ... investments in the future. This keeps the Digital Media Business at the forefront of digital convergence. Receiving very positive market response, the Digital Media Business posted stable growth in 2003, focused on marketing core premium products such as digital TVs. Notably, Samsung Electronics...

  • Page 29
    ... DuoCamcorder, the Hyper Vision DVD and the world's thinnest and lightest two spindle notebook PC that is also the first to be installed with Centrino and a TV tuner. Samsung Electronics' home theater system and digital camcorder received awards for innovation at CES 2003. While we are proud of our...

  • Page 30
    30 In sales revenue of mobile phones, Samsung Electronics has risen to number two in the world. to build up market leadership and brand equity worldwide, while we continue to expand intelligently into emerging markets. As we shape our future, differentiation, innovation and a focus on premium ...

  • Page 31
    ... mobile product portfolio, and our strategic focus on the premium mobile consumer. Such growth enabled to Samsung Electronics' rise to third worldwide in terms of sales volume, with a 12 percent global market share. More remarkably, our sales revenues outperformed all expectations, taking the number...

  • Page 32
    ... American home appliances market. We exhibited over 80 innovative appliances including an extensive line of advanced built-in refrigerators and microwave ovens at the world's largest home appliance exhibition, the Kitchen & Bath Industry Show (KBIS) in Chicago. KBIS recognized the Homepad Internet...

  • Page 33
    ... Business In 2003, the memory semiconductor market grew by 20-percent over the previous year increased IT investments and strong demand for PCs, mobile phones and digital consumer electronics. Samsung Electronics overwhelmed its competitors in market share and profitability with its strategic focus...

  • Page 34
    ...TVs. The splendid performance is attributed to timely investments in process technologies, business structure enhancement and the resulting competitive edge. Always at the forefront of the industry, we have developed a 57-inch TFT-LCD panel for HDTV, the world's largest to date. To extend our market...

  • Page 35
    ... customer satisfaction. 57-inch TFT-LCD TV In another w orld 's first, Samsung Elec tronic s has d evelop ed a 5 7 - inc h high resolution, low energy c onsump tion, long life TFT- LC D TV that overc omes all exp ec ted size limitations. LC D Business Sales Strategy Group M arketer Seong-Jun Jang

  • Page 36
    ... DEVELOPMENT >> Fast forward into ubiquitous connection Mobile Pac with Brain Core The Mobile Pac takes "plug-and-play" to a whole new meaning. With this modularized computer and its multiple components, including a mobile projector, users can set up a custom work environment anytime and anywhere.

  • Page 37
    .... Samsung Electronics has applied for over a thousand patents. R&D is a continuous, dynamic process that spans the globe with operations in Korea, China, India, Russia, Israel, the UK and the USA. Smile-bot Smile-bot greets visitors with a handy touch screen and provides automated vacuum cleaning...

  • Page 38
    ... personal assistant weaves diverse devices into a seamless network, acting as a data fishing rod for seamless data ï¬,ow. It has several displays that serve multiple purposes. The UB Pad has a large display for main work and a medium size sub-display for extra work area or digital contact with...

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    ... future businesses by incorporating international mobile telecommunications standards into new technologies. Our innovations keep pushing forward the power and reach of wireless broadband. As it develops, handsets are evolving into multifunctional devices that deliver many services, including TV and...

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    ... Station Rather than commit office space to certain employees who are constantly on the move, businesses will be able to use Personal Work Station (PWS) to create a dynamic, fun and highly productive "nomad" office environment. The PWS recognizes the user by sensing his or her personal device and...

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    ... destination information mobile services and in-vehicle data and entertainment. We are moving into the digital home with VOD and HDTV. We are commercializing video services for cyber-education and remote medical care. And we are establishing high-speed portable Internet and 4G systems for future...

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    ... refrigerators, printers, mobile phones, notebook PCs, TFT-LCD monitors, PDP TVs, camcorders, DVD players and vacuum cleaners. A total of 36 Samsung recognition as the world's best is widespread. In Norway, the leading daily newspaper called Samsung Electronics "the Mercedes Benz of mobile phones...

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    For the greater good

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    44 SOCIAL CONTRIBUTION

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    ... thousands complete the course each year. In concert with UNESCO's international education fund we support children's educational programs around the world. In 2003, this involved over twenty countries, including North Korea and Vietnam. While for many the internet is an indispensable part of daily...

  • Page 46
    ... to Indonesia to Iran to Hungary and the Czech Republic. Samsung Electronics sponsors the World Cyber Games (WCG), the world's largest and most renowned contest bringing together e-athletes from 60 countries together for online multiplayer games. In just four years, WCG has grown to become the best...

  • Page 47
    ...reduce our energy and water consumption, CO 2 emissions and the levels of toxic chemicals we produce. In 2003, Samsung Electronics' commitment to the environment was recognized by several awards, including the 2003 Korea Green Management Grand Prize given by the Korea Management Association. Our SV...

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    48

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    FINANCIAL OVERVIEW 2003 50 Independent Auditor's Report 52 Non-consolidated Balance Sheets 55 Non-consolidated Income Statements 57 Non-consolidated Statements of Appropriations Retained Earnings 62 Non-consolidated Five-Year Financial Summary 58 Non-consolidated Statements of Cash Flows 64 ...

  • Page 50
    50 Independent Auditor's Report To the Board of Directors and Shareholders of Samsung Electronics Co., Ltd. We have audited the accompanying non-consolidated balance sheets of Samsung Electronics Co., Ltd. (the "Company") as of December 31, 2003 and 2002, and the related non-consolidated ...

  • Page 51
    ... and affiliated companies within the Samsung Group amounting to ￦1,423,958 million and US$24,533,201 thousand, and ￦ 8,373,540 million and US$7,328,688 thousand, respectively, during the year ended December 31, 2003, and the related accounts receivable and accounts payable as of December...

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    52 Non-Consolidated Balance Sheets 2003 ASSETS Current assets: Cash and cash equivalents Short-term financial instruments Short-term available-for-sale securities Trade accounts and notes receivable, net of allowance for doubtful accounts Other accounts and notes receivable, net of allowance for ...

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    ...Non-Consolidated Balance Sheets 2003 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts and notes payable Current portion of long-term debt Other accounts and notes payable Accrued expenses Income taxes payable Other current liabilities Total current liabilities Long-term debt...

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    54 Non-Consolidated Balance Sheets 2003 LIABILITIES AND SHAREHOLDERS' EQUITY Commitments and contingencies Shareholder's equity: Capital stock: Common stock Preferred stock Capital surplus: Paid-in capital in excess of par value Other capital surplus Retained earnings: (Net income of ￦5,958,998 ...

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    ... translation Gain on valuation of investments using the equity method of accounting Others Total non-operating income 250,205 295,269 13,415 556,266 ￦ 1,115,155 248,581 292,696 56,957 1,067,772 457,950 ￦ 2,123,956 For the years ended December 31, 2003 and 2002 2002 2003 2002 In millions of...

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    56 Non-Consolidated Income Statements 2003 Non-operating expenses: Interest expense Foreign exchange losses Loss on foreign currency translation Loss on valuation of investments using the equity method of accounting Loss on impairment of availablefor-sale securities Others Total non-operating ...

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    ... retained earnings before appropriations Appropriations: Legal reserve Reserve for business rationalization Reserve for research and human resource development Cash dividends (Common stock : 100% in 2003 and 100% in 2002) (Preferred stock : 101% in 2003 and 101% in 2002) Reserve for loss on disposal...

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    ...investments using the equity method of accounting Loss on valuation on investments using the equity method of accounting Loss on impairment of available-for-sale securities Deferred income taxes Others Total items not involving operating cash... 2003 and 2002 2002 In millions of Korean won 2003 2002...

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    59 Non-Consolidated Statements of Cash Flows 2003 Changes in operating assets and liabilities: Trade accounts and notes receivable Inventories Trade accounts and notes payable Accrued expenses Income taxes payable Payment of severance benefits Others Net cash provided by operating activities ￦ (...

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    ... of Cash Flows 2003 Cash ï¬,ows from investing activities: Disposal(acquisition) of short-term financial instruments Proceeds from disposal of short-term available-for-sale securities Acquisition of short-term available-for-sale securities Payment for other accounts and notes receivable Proceeds...

  • Page 61
    ...Non-Consolidated Statements of Cash Flows 2003 Cash ï¬,ows from financing activities: Proceeds from other accounts and notes payable Repayment of current portion of long-term debt Proceeds from other long term liabilities Payment of dividends Acquisition of treasury stock Proceeds from the exercise...

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    ... exchange loss Loss on foreign currency translation Loss on valuation of investments using the equity method of accounting Loss on valuation of inventories Loss on impairment of available-for-sale securities Others Total non-operating expenses Ordinary profit Extraordinary income Extraordinary...

  • Page 63
    ... investments using the equity method of accounting Loss on valuation of inventories Loss on impairment of available-for-sale ...589 18,487,732 5,931,857 4,200,836 1,731,021 For the years ended December 31, 1999-2003 2002 2001 2000 1999 In thousands of U.S. dollars $ 8,660,353 18,570,586 $ 27,230,...

  • Page 64
    64 Consolidated Five-Year Financial Summary 2003 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 foreign currency translation Others ...

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    65 Consolidated Five-Year Financial Summary 2003 Sales: Domestic Export Total sales Cost of sales Gross profit Selling, general and ...,043 10,310,423 7,417,157 $ 2,893,266 For the years ended December 31, 1999-2003 2002 2001 2000 1999 In thousands of U.S. dollars $ 10,767,021 23,806,296 $ 34...

  • Page 66
    66 BOARD OF DIRECTORS Samsung Electronics works to enhance its business by encouraging a progressive and entrepreneurial environment based on the highest standards of governance, transparency, and accountability. Under such policy, the BOD administers the performance of management, sets corporate ...

  • Page 67
    ... director, Samsung Electronics [2000-present] • Executive Director, Korea Financial Planner Association [2000-present] • President & CEO, Kookmin Investment Trust Management [1998-2000] • Managing director, Korea Long Term Credit Bank [1998] Management Committee • Jong-Yong Yun [chair...

  • Page 68
    ...Buksu-ri, Baebang-myon Asan-gun, Chungcheongnam-do Korea Tel: 82-41-540-7114 Fax: 82-41-540-7049 Cheonan Plant OVERSEAS NETWORK CHINA Production Bases Tianjin Samsung Electronics Co., Ltd. (TSEC) Tianjin, China Tel: 86-22-2532-3715 Huizhou Samsung Electronics Co., Ltd. (SEHZ) Huizhou, China Tel: 86...

  • Page 69
    ...Sdn. Bhd. (SDMA) Seremban Malaysia Tel: 60-6-678-7914 Samsung India Electronics Ltd. (SIEL) New Delhi, India Tel: 91-1191-568251 Samsung Electronics Philippine Manufacturing Corporation (SEPHIL) Calamba, Philippines Tel: 63-49-545-9153 Shanghai Samsung Mobile Communications Co.,Ltd. (SSM) Shanghai...

  • Page 70
    ...-380-7200 Sales Bases Samsung Electronics Samsung Electronics U.K. Ltd. (SEUK) Chertsey, U.K. Tel: 44-1932-455000 Samsung Electronics Samsung Electronics GMBH (SEG) Schwalbach/TS., Germany Tel: 49-6196-661000 Samsung Telecoms Samsung Electronica Portuguesa S.A. (SEP) Linda-a-Pastora, Portugal Tel...

  • Page 71
    ...) Bryanston, South Africa Tel: 27-11-549-1510 AMERICA Production Bases Sales Bases Samsung Electronics Samsung Electronics Latinoamerica (Zona Libre), S.A. (SELAPA) Panama, Panama Tel: 50-7-210-1122 Samsung Electronics Samsung Mexicana S.A. DE C.V. (SAMEX) Tijuana, CA, Mexico Tel: 1-619-671-6000...

  • Page 72
    Coming together