Samsung 2004 Annual Report Download

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> > > > > > > >
HOW
DOES
TOMORROW
FEEL?
> > > > > > > >
2004
SAMSUNG ELECTRONICS
ANNUAL REPORT

Table of contents

  • Page 1
    2004 SAMSUNG ELECTRONICS ANNUAL REPORT HOW DOES TOMORROW FEEL?

  • Page 2
    ... CONFIDENT MESSAGES FROM MANAGEMENT 21 GLOBAL LEADING THE WORLD 29 GROWING BRANDING & MARKETING 35 SHARED SERVICE & SUSTAINABILITY 41 INNOVATIVE BUSINESS REVIEW & PREVIEW 53 PROFITABLE FINANCIAL STATEMENTS 66 WELL-GOVERNED BOARD OF DIRECTORS 68 BLUE CHIP INVESTOR INFORMATION 69 NETWORKED AROUND THE...

  • Page 3
    01 >>>>>>> WHAT WILL TOMORROW BE LIKE? NOBODY KNOWS FOR SURE, BUT COME INSIDE, MAKE YOURSELF COMFORTABLE, AND SEE HOW OUR VISION OF IT FEELS ...>>>>>

  • Page 4
    >>>>>> WHERE'S THAT DESSERT RECIPE MY FRIEND WAS RAVING ABOUT? >>>>> >>>>>> WITH AN INTERNET REFRIGERATOR, IT'S ALWAYS RIGHT THERE. SAMSUNG GETS IT. >>>>>

  • Page 5
    03 SH2777AT HomePADâ„¢ Refrigerator The refrigerator has always been a convenient place to leave messages. Thanks to HomePADâ„¢-a wireless tablet computer-it's now a powerful messenger that literally puts the Internet at your fingertips. >>> SAMSUNG HOMEPADâ„¢ REFRIGERATORS. THE COOLEST INTERNET ...

  • Page 6
    ...THE ENJOYMENT IN HOME ENTERTAINMENT WITH HOME NETWORKING, IT'S ALWAYS RIGHT THERE. SAMSUNG GETS IT. >>>>> A "Best of Innovations Winner" at CES 2004, this 56-inch widescreen HDTV monitor elevates the style and sophistication of any living room. HT-DS1000 Home Theater System Designed to complement...

  • Page 7
    05 >>>>>>> SAMSUNG HOMEVITAâ„¢. THE DIGITAL LIFE HAS NEVER BEEN SO SWEET. >>>>>

  • Page 8
    a >> WHERE'S THE POWER OF THE DIGITAL REVOLUTION? >>> >>> WITH ADVANCED COMPONENTS, IT'S ALWAYS RIGHT THERE. SAMSUNG GETS IT. >>>>>> b

  • Page 9
    07 c >>>>> SAMSUNG DIGITAL DEVICES. THE STUFF TOMORROW'S MADE OF. >>>>> a 1Gb OneNANDâ„¢ The Fusion memory that covers both NOR and NAND Flash memory functions, OneNANDâ„¢ is the total solution for multimedia intensive 3G phones. d b VGA-Class Mobile LCD Driver IC Mobile phone screens are ...

  • Page 10
    >>>>> WITH A WIRELESS NOTEBOOK, IT'S ALWAYS RIGHT THERE. SAMSUNG GETS IT. >>>>>> >>> WHERE'S THAT REFERENCE THE PROFESSOR CITED IN CLASS? >>>>> Sens Q30 Notebook PC The digital life just got a lot more mobile. This ultra-portable 1.1kg wonder offers a stunning 12.1-inch widescreen display, speedy ...

  • Page 11
    09 >>>> SAMSUNG WIRELESS NOTEBOOKS. BECAUSE THE INTERNET IS EVEN MORE POWERFUL UNPLUGGED. >>>>>

  • Page 12
    ... 3G MOBILE PHONES, IT'S ALWAYS RIGHT THERE. SAMSUNG GETS IT. >>>>>> SGH-Z130 Mobile Phone This 1.3-megapixel 3G camera phone puts a whole new spin on life with a display that rotates to give a wider, more natural view of photos and information with the same aspect ratio as a computer or TV screen...

  • Page 13
    11 >>>>>>> SAMSUNG 3G MOBILE PHONES. BROADBAND WIRELESS SERVICES ANYWHERE. AND EVERYWHERE. >>>>>

  • Page 14
    ..., and functionality in increasingly smaller spaces. Home networking technology is enabling AV devices to talk to each other. And 3G mobile phones are doing much more than keeping people in touch. Digital technology is becoming ubiquitous, and with it, so is the Samsung brand. >>> It's all too easy...

  • Page 15
    13 WHAT MAKES TOMORROW CONFIDENT? >>>> AN ORGANIZATION THAT EXCELS AT TURNING CHALLENGES INTO OPPORTUNITIES. >>>>>

  • Page 16
    ...FROM THE BOARD Meeting tomorrow's challenges with a commitment to global excellence. In the business world, success is judged first and foremost by the size of the bottom line. Samsung Electronics certainly measured up to that standard well in 2004 with a net income of $10.3 billion on sales of $55...

  • Page 17
    .... In 2004, we paid out a record dividend of KRW 10,000 per share-nearly double the amount declared in recent years-as we continued to enhance shareholder value by buying back 7.1 million common shares and retiring just over 5.2 million, resulting in a total payout ratio of 50% for the year. In...

  • Page 18
    MESSAGE FROM THE CEO Profitably meeting the challenges of the digital convergence revolution once again.

  • Page 19
    ..., all figures in this section are translated into US dollars at the exchange rate of USD 1 = KRW 1,043. 2002 Dear Customers, Partners, and Shareholders, It was by all measures a very good year for Samsung Electronics. Sales were up 32% to $55.3 billion (57.6 trillion won). Operating income jumped...

  • Page 20
    ... supply outruns demand. Growth in the mobile phone business is also slowing as global markets mature. We will respond by making it our top priority to maintain and extend our leadership in these core businesses as we continue to improve the bottom lines of our home appliance and consumer electronics...

  • Page 21
    ... mobile phone, and LCD panel businesses even more competitive and profitable as we tap new growth opportunities in the flat-panel TV, high-definition optical media recorder, printer, and system LSI fields. Second, we will continue to strive for even greater efficiency across the entire supply chain...

  • Page 22
    ...in the United States and our DigitAll Hope program benefiting youth organizations across Southeast Asia. And we plan to do even more in 2005. In the space of just a few short years, we have gone from being a maker of commodity electronics to one of the world's hottest brands. We have established our...

  • Page 23
    21 WHAT MAKES TOMORROW GLOBAL? >>>> A PRODUCT LINEUP THAT'S TAKING FORM AND FUNCTION TO NEW HEIGHTS. >>>>>

  • Page 24
    ... OUT IS SOMETHING SAMSUNG HIGH-END PROJECTION TVS, CDMA PHONES, AND COMPUTER MONITORS DO EXTREMELY WELL IN THE CROWDED AND COMPETITIVE US MARKETPLACE. >>>>> 2Gb DDR2 SDRAM The world leader in DRAM since 1992, we continued to boost both capacity and performance in 2004 by developing the industry...

  • Page 25
    ... IN CHINA, ONE THAT SAMSUNG PROJECTION TVS, MONITORS, MULTIFUNCTION LASERS, AND SIDE-BY-SIDE REFRIGERATORS ARE RIGHT AT HOME WITH. >>>>> SV-DVR350 DVD-VCR Combo After years of leading the global VCR market, we're duplicating our success in the DVD-VCR combo recorder market, making it even easier...

  • Page 26
    ... FRENCH HAVE FALLEN HEAD-OVER-HEELS IN LOVE WITH SAMSUNG MOBILE PHONES, PROJECTION TVS, DVD-VCR COMBOS, MP3 PLAYERS, SIDE-BY-SIDE REFRIGERATORS, AND MICROWAVE OVENS. >>>>> SyncMaster 193P LCD Monitor This 2004 IDEA gold award winner highlights the convergence of styling and functionality that makes...

  • Page 27
    ...RE SEEING A LOT OF SAMSUNG BLUE AS THE "PEOPLE'S BRAND" CONTINUES TO LEAD IN MOBILE PHONES, MP3 PLAYERS, DVD-VCR COMBOS, DVD PLAYERS, HOME THEATERS-IN-A-BOX, SIDE-BY-SIDE REFRIGERATORS, MICROWAVE OVENS, AND MULTIFUNCTION LASER PRINTERS. >>>>> RS21K Refrigerator Deluxe finishes and advanced features...

  • Page 28
    ... ASIA AND OCEANIA, PEOPLE ARE JOINING THE SAMSUNG DIGITALL EXPERIENCE WITH OUR SOPHISTICATED MOBILE PHONES, TVS, MONITORS, DVD PLAYERS, MP3 PLAYERS, AND SIDE-BY-SIDE REFRIGERATORS. >>>>> HL-P5685W DLP TV Unique projection TV designs like this DLP beauty have made us the global No. 2 when it comes to...

  • Page 29
    ...'S A FRESH NEW VIBE IN THE AIR AS SAMSUNG MOBILE PHONES, DVD-VCR COMBOS, MICROWAVE OVENS, SIDE-BY-SIDE REFRIGERATORS, AND LASER PRINTERS BRING MORE SPICE TO LIFE ACROSS LATIN AMERICA. >>>>> CE1150 Microwave Oven No. 3 globally, we continue to innovate in the microwave market with products like this...

  • Page 30
    ...market share, we are today the world leader in color TVs, TFT-LCDs, memory chips, color monitors, and DVD-VCR combos. We are No. 2 in CRT and DLP rear-projection TVs, laser printers, and DVD players. We are No. 3 in mobile phones, LCD TVs, microwave ovens, and vacuum cleaners. We are No. 4 in plasma...

  • Page 31
    29 WHAT MAKES TOMORROW GROW? >>>> A KNACK FOR IMPACTING MARKETS IN CREATIVE NEW WAYS. >>>>>

  • Page 32
    >> > > Olympic Games >> > > > Samsung Running Festivals >> > > WE BELIEVE IN USING THE UNIVERSAL LANGUAGE OF SPORTS TO CONNECT WITH THE HOPES AND ASPIRATIONS OF A GLOBAL AUDIENCE.

  • Page 33
    ...Super League >> > > World Cyber Games >> > > Over the past decade, we have been executing a comprehensive global branding strategy that has evolved in recent years into a premium branding focus. And as we have been busy developing and delivering some of the coolest gadgets and devices on the planet...

  • Page 34
    > >>Samsung World Championship >>> > AMA Supercross >>>> > NASCAR China, and Iran as well as special festivals in Bulgaria, Brazil, Columbia, Argentina, Peru, Chile, and Panama to commemorate the international Olympic Torch Relay. We also continued our title sponsorship of the Samsung Dubai ...

  • Page 35
    33 Busch Series >> > > Samsung Cup Cricket >> > > Movie Co-Promotion >> > WE BELIEVE THAT THERE IS A NATURAL SYNERGY BETWEEN OUR BRAND AND THE ENTERTAINMENT AND FASHION INDUSTRIES.

  • Page 36
    ...edition SPH-A680 phone designed by Diane von Furstenberg.>>>>>Several major channel partners in the United States recognized our contribution to their bottom lines in 2004. In August, Best Buy, the nation's largest TV retailer, awarded us a coveted "Bravo Award" in the computer monitor merchandising...

  • Page 37
    35 WHAT MAKES TOMORROW SHARED? >>>> A COMMITMENT TO LOCAL COMMUNITIES THAT BENEFITS EVERYONE. >>>>>

  • Page 38
    >> > Charity & Volunteer Programs >> > > Samsung's Four Seasons of WE BELIEVE IN MAKING A DIFFERENCE IN LIFE BY CHALLENGING, MENTORING, AND SUPPORTING OUR LOCAL COMMUNITIES.

  • Page 39
    ...for service to local communities around the world.>>>>>Samsung's Four Seasons of Hope was established in May 2002 in the United States to raise national awareness and funds through a close partnership with professional athletes and celebrities, the print media, and channel partners Best Buy, Circuit...

  • Page 40
    ...Thailand, and Vietnam bridge the digital divide. In 2004, we pledged an additional $550,000 to fund 13 new programs, bringing the two-year total to $1.15 million. This program earned us an honorable mention in the Community Affairs category of the PR News 2003 Corporate Social Responsibility Awards...

  • Page 41
    39 Certifications >>> > > > > Recycling Initiatives >> > > > WE BELIEVE THAT WE HAVE AN IMMENSELY IMPORTANT ROLE TO PLAY IN ENSURING A BRIGHT, SUSTAINABLE FUTURE.

  • Page 42
    ... to procurement to ensure the materials and components we source measure up to high safety and recycling standards. Toward this end, we introduced our Eco-Partnership Certification program in 2004 to screen and monitor the production processes, facilities, and environmental management systems of...

  • Page 43
    41 WHAT MAKES TOMORROW INNOVATIVE? >>>> A PASSION FOR LEADING THE DIGITAL CONVERGENCE REVOLUTION. >>>>> For comparison purposes, all figures in this section are translated into US dollars at the exchange rate of USD 1 = KRW 1,043.

  • Page 44
    >>> TVs >> Home AV >>> Portable AV >> Cameras & Camcorders >> PCs BUSINESS HIGHLIGHTS MARCH Won iF Design Awards for five products, including the SPD-50P4H plasma TV, LT17N2/LT22N2 LCD TVs, DVD-HD931 DVD player, and SyncMaster 173P LCD monitor. APRIL Program search and encryption technologies are ...

  • Page 45
    43 JULY eXpandable Home Theater (XHTâ„¢) networking via IEEE 1394 is adopted as a standard by the Consumer Electronics Association. & Monitors >> Printers & Multifunction Devices >> Optical & Hard Drives >>> OCTOBER Entered the Coral Consortium for digital rights management, joining HP, InterTrust ...

  • Page 46
    >>>Mobile Phones >>> Network Systems >>>> Core Systems >>>> Wireless MARCH Introduced the SCH-A790, the world's first CDMA/GSM "world phone" at CeBIT 2004. Won iF Design Awards for SPH-i500 and SCH-X800/SPH-X9100 phones. MAY Demonstrated the SCH-B100 satellite DMB phone. Named top US phone brand ...

  • Page 47
    45 Systems >>>>>> Broadband Equipment >>>>> Home & Office Products >>>>>> AUGUST Hosted the second annual Samsung 4G Forum to discuss migration paths to 4G mobile networks. SEPTEMBER Demonstrated the SPH-V5400, the world's first hard drive-equipped phone with 1.5-gigabytes of storage for music, ...

  • Page 48
    ... Philips to launch the Universal Home API initiative for TVs, set-top boxes, and other home electronics. FEBRUARY Entered a strategic five-year alliance with home appliance powerhouse Maytag to bring high-end drum washing machines to the US market. APRIL Won best new product award for the RH2777AT...

  • Page 49
    ... as a global top-tier player later in the decade. While we intend to improve on our top-three global market share in the microwave oven and vacuum cleaner sectors, our focus will be on three major product categories-system air conditioners, side-by-side refrigerators, and drum washing machines-as we...

  • Page 50
    ... center in Hangzhou, China. MARCH Introduced an advanced lineup of device solutions for the mobile market at the 1st annual Samsung Mobile Solution Forum in Taipei, Taiwan. JULY Broke ground for the second phase of a US$500 million nanotech expansion project in Austin, Texas. Developed a system...

  • Page 51
    ... new research lab in China and developing innovative new display driver ICs, CMOS image sensors, and mobile processors. In the storage field, we continued to develop key components for the optical and magnetic storage devices that will store and retrieve digital content for tomorrow's high-tech home...

  • Page 52
    >>>>>>>> Mobile Panels Notebook Panels APRIL Launched S-LCD venture with Sony to produce LCD for TVs. The venture began operating Line 7-1, the world's first seventhgeneration fab, in April 2005. AUGUST Developed the world's first 2.6-inch amorphous silicon LCD panel capable of delivering full ...

  • Page 53
    ... in our development of a massive 82-inch HDTV module in early 2005, by far the world's largest to date.>>>>>In 2005, we intend to expand our industry leadership to the mobile device and TV panel segments. As S-LCD ramps up production on Line 7-1 beginning in April, we project our market share in the...

  • Page 54
    ... impressive list of global awards and world firsts like a 102-inch plasma TV, a mobile phone that takes 7-megapixel photos, and memory chips fabricated with sub-90-nanometer process technology.>>>>> In 2005, we will be initiating a broad range of strategic initiatives designed to drive future growth...

  • Page 55
    ... Five-Year Financial Summary 64 Consolidated Five-Year Financial Summary For the convenience of the reader, all 2003 and 2004 figures in the financial statements have been converted to US dollars at an exchange rate of USD 1 = KRW 1,043, the rate in effect as of the 2004 balance sheet date...

  • Page 56
    ...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, 2004 and 2003, and the related non-consolidated statements...500,000 shares of Samsung Life Insurance...

  • Page 57
    ...had sales to, and purchases from, subsidiaries and affiliated companies within the Samsung Group amounting to 2,379,191 million and US$37,983,923 thousand, and 11,052,972 million and US$9,135,020 thousand, respectively, during the year ended December 31, 2004, and the related accounts receivable and...

  • Page 58
    ...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 doubtful accounts Inventories, net to valuation losses Prepaid expenses and...

  • Page 59
    ... NON-CONSOLIDATED BALANCE SHEETS December 31, 2004 and 2003 2004 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...

  • Page 60
    ... 2003 2004 Sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest and dividend income Foreign exchange gains Gain on foreign currency translation Gain on valuation of investments using the equity method of accounting Others Total...

  • Page 61
    ...equity-method investees Interim dividends (Dividend rate: 100% in 2004 and 10% in 2003) Retirement of treasury stock Net income Total retained earnings before appropriations Appropriations Legal reserve Reserve for business rationalization Reserve for research and human resource development...2,500,000...

  • Page 62
    ... STATEMENTS OF...equity method of accounting Loss on impairment of available-for-sale securities Deferred income taxes Others Total items not involving cash flows Changes in operating assets and liabilities: Increase in trade accounts and notes receivable Increase in other accounts and notes receivable...

  • Page 63
    ...-term available-for-sale securities Acquisition of equity-method investments Others Net cash used in investing activities Cash flows from financing activities Repayment of current portion of long-term debt Payment of dividends Acquisition of treasury stock Exercise of stock options Others Net cash...

  • Page 64
    ...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 Gain on valuation of investments using the equity method of accounting Others Total...

  • Page 65
    ...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 Gain on valuation of investments using the equity method of accounting Others Total...

  • Page 66
    ...-YEAR FINANCIAL SUMMARY For the years ended December 31 2004 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 Total non-operating...

  • Page 67
    ...-YEAR FINANCIAL SUMMARY For the years ended December 31 2004 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 Total non-operating...

  • Page 68
    ...directors-took up a total of 44 agenda items at 10 meetings over the course of the year, including an LCD TV panel manufacturing venture and patent cross-licensing agreements with Sony Corporation and the company's largest dividend declarations to date totaling KRW 10,000 per common share. The board...

  • Page 69
    ... Group [2001-present] • CEO & President, Korea Exchange Bank [1999-2000] • Managing director, Korea Exchange Bank [1997-1999] SUNG-LARK RIM • Outside director, Samsung Electronics [2000-present] • Executive director, Financial Planning Standards Board of Korea [2000-present] • President...

  • Page 70
    ... a par value of KRW 5,000. Samsung global depository receipts are traded on the London Stock Exchange under the "SMSN LI" ticker symbol for common shares and "SMSD" symbol for preferred shares. Preferred GDRs are also traded on the Luxemburg Stock Exchange under the symbol "SAMDR". A total of 30,307...

  • Page 71
    ...? >>>> A LOCAL PRODUCTION AND SALES NETWORK THAT SPANS THE GLOBE. >>>>> GLOBAL HEADQUARTERS Samsung Electronics Co., Ltd. Samsung Main Building 250, Taepyeongno 2-ga, Jung-gu Seoul 100-742 Korea Tel: 82-2-751-7114 Fax: 82-2-727-7892 www.samsung.com PRODUCTION NETWORK [KOREA] Suwon Complex 416...

  • Page 72
    ...-6000 [United States] Samsung Austin Semiconductor (SAS) Austin, Texas, U.S.A. Tel: 1-512-672-1000 [Malaysia] www.samsung.com/my Samsung Malaysia Electronics Sdn. Bhd. (SME) Tel: 60-3-263-2967~8 [The Philippines] www.samsung.com/ph Samsung Electronics Philippines Corp. (SEPCO), Manila Tel: 63-2-526...

  • Page 73
    ... Mexico City Tel: 52-55-5686-0800 [United States] www.samsungusa.com Samsung Electronics America, Inc. (SEA), Ridgefield Park, New Jersey Tel: 1-201-229-4000 Samsung Electronics Latinoamerica Miami, Inc. (SELMI), Miami, Florida Tel: 1-305-594-1090 Samsung Information Systems America, Inc. (SISA) San...

  • Page 74
    ... TO YOU? If you like the way our vision of the future feels, we invite you join us by becoming a Samsung customer, investor, or partner. And don't forget to visit us often on the Internet for the latest and greatest news on the digital convergence revolution that's changing the future for us all.

  • Page 75
    Produced by Cheil Communications I Written by Kevin Newhart I Photographed by Jean Charles, Dong-Yul Kim, Gyu-Hyun Lee I Created by InterGram WWW.SAMSUNG.COM

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