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2007
SamSung
electronicS
annual
report

Table of contents

  • Page 1
    2007 SamSung electronicS annual report

  • Page 2
    ...sponsorship R&D product gallery design thinking smarter for you digital media telecommunication networks digital appliance semiconductor LCD 34 38 42 46 50 thinking more of you corporate citizenship co-prosperity green management financial statements investor information global network...

  • Page 3
    ...annual report. All risks in making an investment or business decision based on the information contained in the forward-looking statements shall be entirely assumed by you. All the financial data in this report comes from the consolidated financial statements. SamSung electronicS annual report 2007...

  • Page 4
    ... SUMMARY BY BUSINESS Net Sales and Operating Profit Net sales Operating profit (loss) [in trillions of KRW ] [in millions of KRW ] 26.5 20.8 17.7 Digital Media 1.06 0.2 2005 [in trillions of KRW ] 2005 2006 2007 Net sales Operating profit (loss) \ 17,656,558 247,700 \ 20,774...

  • Page 5
    ...at panel TV market and a steady increase in the sale of our core products, such as LCD monitors, digital audio-visual products, laser printers and notebook PCs. The strength of our market leadership position in TVs helped us to maintain the No. 1 market share position across all TV market segments...

  • Page 6
    MESSAGE FROM THE CEO By increasing management prowess and embracing innovation at every opportunity, Samsung Electronics will become one of the most profitable and most revered global companies.

  • Page 7
    ... recognized global companies in the world. Dear Customers, Business Partners and Shareholders: I am extremely pleased to take this opportunity to discuss our 2007 achievements, as well as our future goals and strategies. Samsung Electronics achieved its best ever business results in 2007, moving...

  • Page 8
    ...rst increase our market dominance in such key businesses as memory chips, LCDs, mobile phones, and ï¬,at panel TVs, building upon the unique design and operational efficiency of many leading-edge product lines. We also will set the parameters for a successful incubation of promising growth engines...

  • Page 9
    ... our new management structure by emphasizing transparency, compliance and greater sensitivity to customer needs, thereby fulfilling our social responsibilities as a company growing hand-in-hand with shareholders, customers and business partners. The ultimate goal of Samsung Electronics is to...

  • Page 10
    ... survey of "Best Global Brands," ranked 21st in the world in 2007, to consolidate our enhanced position worldwide. In addition, leading business journals such as Finance Asia and Asset have rated Samsung again among the very best in terms of investor relations and corporate governance. In 2008...

  • Page 11
    ... of Business Administration, Seoul National University [1988-Present] Chairman, Leadership Institute [2003-2004] Dean of College of Business Administration, Seoul National University [2003-2005] Chairman, Korean Human Resources Management Institute [2002-2003] SamSung electronicS annual report 2007...

  • Page 12
    ...Eastern countries Ranked No. 2 in 2006 for the number of U.S. patents registered Achieved No. 1 market share for the sale of mobile phones in France for the second year in a row Attained No. 1 worldwide market share position for LCD for the sixth year in a row Developed the first thermally-enhanced...

  • Page 13
    ... Selected the board of directors' committee for discussing candidate 4G technology Announced PVC-free LCD panel production Received Lowe's "Provider of the Year" award Introduced 10mm-thin, 40-inch super-slim LCD panel for TVs Developed the world's first 30nm-class 64Gb NAND Flash memory Launched...

  • Page 14
    ... struggle to maintain relevancy in today's market. To stay relevant in this ever-changing world, we must keep one step ahead of our customers. That's why we have dedicated ourselves to exceed the needs of our customers through the production and sale of world-class products and, most importantly, by...

  • Page 15
    ahead of you SamSung electronicS annual report 2007 13

  • Page 16
    ... in the U.S. Our market-driven strategies contributed to the development of popular products such as the digital TV, smart phone, music phone, video MP3 player, side-by-side refrigerator and drum washing machine. Supported by a sound business plan, our innovative products have invariably exceeded...

  • Page 17
    ... effect for what we're trying to get across. c Blu-ray Player (BD-P1500) Complement the high image quality of our LCD TV with the latest Blu-ray player. And, watch your favorite movies for the first time as a completely new, high definition experience. SamSung electronicS annual report 2007 15

  • Page 18
    ...the TOC monitor, Armani TV, J-Series refrigerator by Jasper Morrison, and a five-megapixel camera phone. Building on advanced technology with versatile features and stylish design, our innovative premium products will increase customer loyalty and pave the way to a greater leadership position in the...

  • Page 19
    ...T260) Our beautifully designed monitors provide you with the power and features to help drive your business well into the future. c BlackJack II (SGH-i617) Boost productivity whether you're in the office or on the road with the award-winning BlackJack II. SamSung electronicS annual report 2007 17

  • Page 20
    ... The dynamic growth in emerging markets, including China, is a major opportunity for Samsung Electronics. With aggressive marketing and locally customized products, including digital media, mobile phones and home appliances, we are providing a more comfortable and an enhanced lifestyle for customers...

  • Page 21
    .... c Drum Washing Machine (WF-448 & DV-448 VRT Steam: Stainless Platinum) Leading the newest trend in washing machines is our silent, but powerful, drum washing machine. From an attractive design to top-notch performance, this washing machine has it all. SamSung electronicS annual report 2007 19

  • Page 22
    thinking thinking

  • Page 23
    ... Tech 100. the world's number one Info-Tech Tech 100. the world's number one Info-Tech minds of customers worldwide, which will propel our company and our brand well into the future. company in its annualInfo Tech 100. company in its annualInfo Tech 100. SamSung electronicS annual report 2007 21

  • Page 24
    ... marketing and technology alliance with Time Warner Samsung Electronics partnered with Time Warner Cable, the second largest cable company in the U.S., to sell its TVs and set-top box products with opencable-application platforms, allowing more customers to use interactive broadcasting services...

  • Page 25
    ... tourists to recharge their digital devices, including mobile phones and notebook PCs, free of charge, where electrical receptacles are lacking. Actively promoting our on-site marketing initiatives, we maintain our brand leadership position by being the brand our customers think of first. S CU...

  • Page 26
    ...through a robust range of programs. We will continue to share the dynamic energy of sporting activities and the emotional experiences of cultural events with our customers, thereby enhancing global harmony and our customers' quality of life. exciting An Official Partner for the Olympic Games With...

  • Page 27
    ... ( WTF ), in addition to World Cup Short Track of the International Skating Union (ISU), and the Cycling Center of the Union Cycliste Internationale (UCI). Each year, we also serve as the Worldwide Sponsor of the World Cyber Games (WCG), the world's largest online gaming sport tournament, which was...

  • Page 28
    ...-class1Gb DDR2 memory; first 30nm-class 64Gb NAND Flash; the world's smallest and lightest allin-one color laser printer; a drum washing machine boasting the world's lowest noise and vibration levels; commercialization of the world's largest (14.3-inch) color e-paper, the world's largest LCD panel...

  • Page 29
    ... of digital devices. Samsung Electronics developed a 14.3-inch (A4-sized), color "electronic" paper (e-paper), delivering undistorted images even when the surface is bent. This ï¬,exible display does not require any electricity. 14.3-inch e-paper b c c SamSung electronicS annual report 2007 27

  • Page 30
    a b

  • Page 31
    ... technology to produce rich sound. It's also Bluetooth enabled. CDMA UbiCell™ The CMDA UbiCell is the world's first ultra-small CDMA base station. The device attaches to a mobile network connection and is designed to enhance coverage for the home. b c SamSung electronicS annual report 2007 29

  • Page 32
    ... touch screen. Plus, it is built with Samsung's award-winning Croix user interface, enabling greater convenience and ease of use. Ultra Edition 10.9, SGH-U600 The highly efficient Ultra Edition mobile phone has a 2.2-inch screen display and is a mere 10.9mm thick. Housed in a sleek, modern casing...

  • Page 33
    ... Awards from International Forum Design Hanover honored 26 Samsung products, including LCD TVs, mobile phones, note PCs, and laser printers. We also received 27 prizes at Japan's Good Design Awards, including the Gold Prize for our side-byside refrigerator. Samsung's Ultra Edition II mobile phone...

  • Page 34
    Satisfaction should not be a guarantee. It should be a given. thinking Like modern-day pioneers, Samsung Electronics has opened doors to new worlds through our innovative products and our dedication to customer satisfaction. In strengthening our R&D, fostering more strategic alliances, and ...

  • Page 35
    smarter for you SamSung electronicS annual report 2007 33

  • Page 36
    digital media

  • Page 37
    ... LCD TV and home theater system won three EISA Awards while eight products, including an MP3 player, received Innovation Awards at CES 2007. Last year, we were also honored with an iF Design Award for the quality of a wide range of our digital media products. SamSung electronicS annual report 2007...

  • Page 38
    ..., has already received an enthusiastic response from the marketplace. By strengthening our marketing activities, diversifying distribution channels and stepping up retail promotions, we are further elevating our global leadership. A True Leader in the World IT Industry Our LCD monitors have become...

  • Page 39
    ... experience. UMPC Q1 Ultra Premium Improving portability and screen resolution, the secondgeneration UMPC includes a touch screen, a QWERTY keyboard and an enhanced battery life of up to 4-1/2 hours- guaranteed to add more freedom to anyone's lifestyle. SamSung electronicS annual report 2007 37

  • Page 40
    telecommunication networks

  • Page 41
    ...in sales and units sold for 2007, holding a global market share of 14.3% to rank No. 2 in the world. Sales reached KRW23.76 trillion globally, with 160 million units sold-a 41.6% increase year-over-year. Our management efficiency strategy, initiated in early 2007 to focus on customer value and cost...

  • Page 42
    ... emerging markets, enabled Samsung Electronics to become world's second-largest mobile phone maker last year. Following this strategy, we introduced the Ultra Edition II to drive sales of mid-range products in emerging markets. Our Ultra Edition I model SGH-D900 and Ultra Edition II model SCH...

  • Page 43
    ... fine-tuned by converging core mobile technologies with our world-leading power efficiency and design capabilities. Our leadership in digital convergence will further bolster our mobile communication brand as the industry takes mobility to the next level. SamSung electronicS annual report 2007 41

  • Page 44
    digital appliance

  • Page 45
    ... products, including our side-by-side refrigerator, received the Red Dot Design Award in Germany. In Korea, we also placed first in the 2007 National Customer Satisfaction Index (NCSI) in the refrigerator, washing machine and air conditioner categories. SamSung electronicS annual report 2007 43

  • Page 46
    ... cumulative sales record with global sales of over six million units, and attained the No. 1 market share position in 34 countries. In North America, we showed a 68% sales increase over the previous year after the launch of our French door refrigerator with a built-in Twin Cooling Plus System, which...

  • Page 47
    ... of side-by-side refrigerators and drum washing machines in North America, as well as side-by-side refrigerators and air conditioners in Europe. In the fast-growing markets of China, India and the CIS, we will boost sales of our premium models where the market conditions of these regions warrant...

  • Page 48
    semiconductor

  • Page 49
    ... products with distinct market advantages. Our No. 2 ranking in the semiconductor industry remained solid with continued market dominance in most areas of the memory business, including strong sales in DRAM, SRAM, MCPs, ï¬,ash memory and fusion memory devices. SamSung electronicS annual report 2007...

  • Page 50
    .... Unwavering Memory Leadership In 2007, Samsung Electronics easily held on to its No. 1 position in the memory industry with 28% overall market share. Our product portfolio included the industry's most extensive mix of Flash and DRAM chips, designed to power the widest range of PC, server, graphics...

  • Page 51
    ... lines. Furthermore, in our System LSI Division, we will also add digital TV/mobile TV SoCs, SoCs for next-generation optical storage and memory storage controllers to our line-up of strategic product areas for future R&D focus and targeted market penetration. SamSung electronicS annual report 2007...

  • Page 52
    lcD

  • Page 53
    ... for TVs, desktop monitors and notebook PCs, achieving a global market share of 23.1%, in terms of sales. We have held the highest share of this product segment globally for six consecutive years, ensuring our continued leadership in the LCD industry. SamSung electronicS annual report 2007 51

  • Page 54
    ... price increases due to short product supply and continuing cost-reduction efforts, our outstanding performance should continue to lead the LCD industry. The Successful Commercialization of the 8th-Generation Production Line In August 2007, we began manufacturing LCD panels from the world's largest...

  • Page 55
    ... and black-and-white e-paper, plus several commercial sizes of AMOLEDs as we continue to accelerate the advancement of the display business. Expanding Production Capacity and Premium Product Lines In 2008, we expect increased demand for LCD modules in the production of large-format TVs and mobile...

  • Page 56
    ... citizen, we have dedicated ourselves to nurturing our local communities through corporate social responsibility and co-prosperity initiatives. Samsung has also remained steadfast when it comes to supporting education initiatives, helping of the disadvantaged and efforts to stop the "greening...

  • Page 57
    more of you SamSung electronicS annual report 2007 55

  • Page 58
    ... We share with all communities our hope for a brighter future, and try each day to make this world a better place to live in. hopeful From a Good Company to an Admirable One Samsung Electronics believes that it's our responsibility to realize sustainable growth while driving business performance...

  • Page 59
    ... for the blind. Our LCD Business provides magnifying glasses for low-income elderly people in farming communities and drives an eye disease prevention campaign. Sharing Love and Hope around the World Samsung Electronics' social contribution work extends beyond our country's borders. We contribute to...

  • Page 60
    .... Along with financial and manpower support, we are involved in promoting technology exchange among outstanding companies. Assistance is also extended for development projects related to government policy such as those linked to the Small and Medium Business Association (SMBA). In our strategic...

  • Page 61
    ...Case Studies of Partner Companies" event, attended by 196 partner companies and our employees. At the event, our partners presented a wide range of innovative ideas to sharpen our mutual leadership in technology while enhancing the cohesiveness of our partnerships. SamSung electronicS annual report...

  • Page 62
    ... of five major segments aimed at preserving the global environment: the Greening of Management is a commitment toward improving our ESH program through the public disclosure of corporate information; the Greening of Products is our assumption of responsibility for all processes related to our...

  • Page 63
    ... activities to stakeholders through our website's homepage. With environmental websites designed specifically for our semiconductors and mobile phones, we are able to provide further information on our product-related environmental policies .and programs. SamSung electronicS annual report 2007...

  • Page 64

  • Page 65
    ... SHEETS STATEMENTS OF INCOME STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY STATEMENTS OF CASH FLOWS CONSOLIDATED FIVE-YEAR FINANCIAL SUMMARY 66 68 69 73 75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 77 INVESTOR INFORMATION GLOBAL NETWORK 132 133 SamSung electronicS annual report 2007 63

  • Page 66
    ... December 31, 2007 and 2006, and the related consolidated statements of income, changes in shareholders' equity and cash flows for the years then ended, expressed in Korean won. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion...

  • Page 67
    ...and applied in other countries. Accordingly, this repor t and the accompanying consolidated financial statements are for use by those who are informed about Korean accounting principles or auditing standards and their application in practice. Seoul, Korea March 11, 2008 This report is effective as...

  • Page 68
    ... in thousands of U.S. dollars (Note 3)) 2007 ASSETS Current assets Cash and cash equivalents Short-term financial instruments (Note 4) Short-term available-for-sale securities (Note 5) Short-term held-to-maturity securities (Note 5) Trade accounts and notes receivable, net of allowance for doubtful...

  • Page 69
    ...,292 (8,017,082) 560,568 568,038 47,402,647 48,256,301 $ 86,744,356 The accompanying notes are an integral part of these consolidated financial statements. SamSung electronicS annual report 2007 67

  • Page 70
    CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2007 AND 2006 (In millions of Korean won and in thousands of U.S. dollars (Note 3)) 2007 SALES (Note 27) Cost of sales (Note 27) Gross profit Selling...exchange losses Loss on foreign currency translation (Note 29) Loss on valuation of equity...

  • Page 71
    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2007 AND 2006 (In millions of Korean won) Capital Stock Shareholders' equity, January 1, 2006 ... ￦ (6,994,210) ￦ ￦ 44,463,683 ￦ 2,675,456 ￦ 47,939,867 continued SamSung electronicS annual report 2007 69

  • Page 72
    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2007 AND 2006 (In millions of Korean won) Capital Stock Shareholders' equity, January 1, 2007 Cash dividends from prior year's net income Retained earnings after appropriations Cash dividends from current year's ...

  • Page 73
    ... 23,035 19,802 21,409 378,838 $ 956,838 $ 6,785,292 $ (7,456,514) $ 568,038 $ 47,402,647 $ 2,852,299 $ 51,108,600 continued SamSung electronicS annual report 2007 71

  • Page 74
    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2007 AND 2006 (In thousands of U.S. dollars (Note 3)) Capital Stock Shareholders' equity, January 1, 2007 Cash dividends from prior year's net income Retained earnings after appropriations Cash dividends from ...

  • Page 75
    ...2007 CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Provision for severance benefits Loss on transfer of trade accounts and notes receivable... SamSung electronicS annual report 2007 73

  • Page 76
    ...of treasury stock Others Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents from changes in consolidated subsidiaries Net increase in cash and cash equivalents CASH AND CASH EQUIVALENTS Beginning of year End of...

  • Page 77
    ... 0 8,125 10.1% 1,218 733 7,640 9.5% 2006 85,426 59,652 25,773 30.2% 16,766 9,008 10.5% 820 70 520 0 9,828 11.5% 1,634 (268) 7,926 9.3% 2007 98,508 70,881 27,627 28% 18,654 8,973 9.1% 660 171 378 0 9,633 9.8% 1,710 (502) 7,421 7.5% continued SamSung electronicS annual report 2007 75

  • Page 78
    ...,880 2007 14.3% 0.08 1.13 1.68 25.9% 4.8% 49,502 21.4% 0.09 0.97 2.39 77.8% 38.4% 36,376 The numbers are adjusted for the latest change in Korean GAAP and thus may be different from those in audited financial statements. Financial sectors are included in the consolidated base financial statements...

  • Page 79
    ...TO THE CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2007 AND 2006 1. THE COMPANY Samsung Electronics Co., Ltd. ("SEC") was incorporated under the laws of the Republic of Korea to manufacture and sell semiconductors, LCD, telecommunication products, digital appliances and digital media...

  • Page 80
    ...,104 1,956,231 444,626 1,096,135 1,196,354 24,373 137,710 35,473 209,333 44,141 16,498 1. As of June 27, 2007, Samsung Card Co., Ltd., one of SEC's domestic subsidiaries, has listed its issued and outstanding shares on the Korea Stock Exchange.

  • Page 81
    ... Semiconductor sales Holding company (financing) Semiconductor sales Sale of electronic goods Marketing Sale of electronic goods Logistics Distribution and sale of electronic goods LCD manufacturing Research center Marketing Sale of electronic goods and telephone Sale of electronic goods Monitor...

  • Page 82
    ... systems Monitor manufacturing CTV manufacturing and sale of electronic goods Research and development Mobile phone manufacturing and sales Sales Sale of electronic goods Holding company Manufacturing and sale of electronic goods CTV and washing machine manufacturing and sales ODD Manufacturing...

  • Page 83
    ... Monitor manufacturing Home appliances manufacturing A/V manufacturing Manufacturing and sales of facsimile, printer and telecommunication products Mobile phone manufacturing Computer manufacturing LCD manufacturing Mobile phone manufacturing Semiconductor sales Research center Optical cable...

  • Page 84
    ...financial information of subsidiaries as of and for the year ended December 31, 2007, included in the consolidated financial statements follows: (In millions of Korean won) Subsidiaries Samsung Gwangju Electronics Co., Ltd. Samsung Card Co., Ltd. S-LCD Corporation Samsung Electronics America, Inc...

  • Page 85
    ... Increase in assets Newly incorporated Newly acquired (b) The subsidiaries excluded from the consolidated financial statements for the year ended December 31, 2007, are as follows: Location Korea Name of Subsidiaries Bluetek Co., Ltd. Remark Liquidation completed SamSung electronicS annual report...

  • Page 86
    ... differences related to investments in subsidiaries and equity-method investees. The Company's consolidated financial statements for the year ended December 31, 2006, presented herein for comparative purposes, have not been restated as permitted under the Korea Accounting Institute Opinion 06-2. USE...

  • Page 87
    ... same fiscal year end. Differences in accounting policies between the Company and its consolidated subsidiaries are adjusted during consolidation. MARKETABLE SECURITIES Investments in equity securities or debt securities are classified into trading securities, available-for-sale securities and held...

  • Page 88
    ... expense over the term of the bonds using effective interest rate method. However, for convertible bonds issued before December 31, 2002, the previous standard is applied. ACCRUED SEVERANCE BENEFITS Employees and directors with at least one year of service are entitled to receive a lump-sum payment...

  • Page 89
    ... long-term receivables and payables are amortized using the effective interest rate method with interest income or expense adjusted accordingly. STOCK-BASED COMPENSATION The Company uses the fair-value method in determining compensation costs of stock options granted to its employees and directors...

  • Page 90
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued 3. UNITED STATES DOLLAR AMOUNTS The Company operates primarily in Korean won and its official accounting records are maintained in Korean won. The U.S. dollar amounts, provided herein, represent supplementary information solely for the ...

  • Page 91
    ...,683) ￦ (32,075) ￦ Deferred income tax ￦ (580) (580) 160 (420) Short-term held-to-maturity securities as of December 31, 2007 and 2006, consist of the following: (In millions of Korean won) 2007 Government and public bonds ￦ 2006 130 ￦ 248 SamSung electronicS annual report 2007 89

  • Page 92
    ... As a consolidation entry to account for the sale of subsidiaries' receivables, the Company has recognized borrowings of ￦4,384,783 million and ￦3,808,404 million as of December 31, 2007 and 2006, respectively. The outstanding balances of financing receivables sold to financial institutions as...

  • Page 93
    ...RECEIVABLES Financing receivables of the consumer financing subsidiary, Samsung Card Co., Ltd., as of December 31, 2007 and 2006, are as follows: (In millions of Korean won) Accounts Short-term financing receivables Credit card assets Lease assets...393,507 SamSung electronicS annual report 2007 91

  • Page 94
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued Collection schedule of installment finance and general loans as of December 31, 2007, follows: (In millions of Korean won) Year 2008 2009 2010 2011 2012 Thereafter ￦ Installment finance 358,870 222,723 150,112 23,129 10,170 485 765,489 ...

  • Page 95
    ... Shilla Hotels & Resorts Cheil Communications Inc. Samsung Fire & Marine Insurance Co., Ltd. Samsung Securities Co., Ltd. S1 Corporation Inc. Samsung Engineering Co., Ltd. Cheil Industries Inc. Other companies Korea Information Service Inc. Hanmi Capital Saehan Media SANYO Tomen Device Corp. Others...

  • Page 96
    ...TO THE CONSOLIDATED FINANCIAL STATEMENTS continued 2) NON-LISTED EQUITIES Non-listed equities as of December 31, 2007 and 2006, consist of the following: (In millions of Korean won, except for the number of shares and percentage) 2007 Number of Shares Owned Related parties Samsung Petrochemical Co...

  • Page 97
    ...TERM HELD-TO-MATURITY SECURITIES Long-term held-to-maturity securities as of December 31, 2007 and 2006, consist of the following: (In millions of Korean won) 2007 Face Value Government and public... to ￦20,700 million was charged to impairment loss. SamSung electronicS annual report 2007 95

  • Page 98
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued The maturities of long-term held-to-maturity securities as of December 31, 2007, consist of the following: (In millions of Korean won) Maturity From one year to five years Government and public bonds ￦ Recorded book value ABS ...

  • Page 99
    ... (Malaysia) Sdn. Bhd. Skyworld Corporation Siltronic Samsung Wafers Private Ltd. Samsung Electro-Mechanics Thailand Co., Ltd. Syrian-Korean Telecommunication Equipments Manufacturing Establishment Co., Ltd. Shanghai Bell Samsung Mobile Communications Co., Ltd. TSST Japan Co., Ltd. Number of Shares...

  • Page 100
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued Changes in goodwill (negative goodwill) for the years ended December 31, 2007 and 2006, are as follows: (In millions of Korean won) 2007 Investee Balance at Beginning of Year ￦ 2006 Balance at End of Year ￦ Increase (Decrease) - ...

  • Page 101
    ...changes in the book values of equity-method investments for the years ended December 31, 2007 and 2006, are as follows: (In millions of Korean won) 2007 Investee 2006 Earnings (Losses) from Equity Other -Method Increase... 519,661 ￦ (49,358) ￦ 3,393,617 SamSung electronicS annual report 2007 99

  • Page 102
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued Financial information of investees as of and for the years ended December 31, 2007 and 2006, follows: (In millions of Korean won) 2007 Investee Assets Liabilities Sales Net Income (Loss) Assets 2006 Liabilities Sales Net Income Samsung SDI...

  • Page 103
    ... equity method of accounting for following investees: (In millions of Korean won) Location Korea Subsidiaries Samsung Everland Inc. Allat ¹ International Cyber Marketing ² Content Management License Administrator LLC ² Samsung Electronic Ticaret A.S. ² Future Technology & Service Corporation...

  • Page 104
    ... 31, 2007 and 2006, Samsung Card Co., Ltd., an SEC subsidiary, recorded ￦626,731 million (2006: ￦505,319 million) of operating lease assets, cancellation lease assets and prepaid finance lease assets acquired through the lease financing business (Note 8). 12. INTANGIBLE ASSETS The changes in...

  • Page 105
    ... those of Samsung Card Co., Ltd., the consumer financing subsidiary, amounting to ￦2,127,160 million (2006: ￦1,557,976 million) and current maturities of long-term debts of ￦1,933,885 million (2006: ￦2,722,010 million) as of December 31, 2007. SamSung electronicS annual report 2007 103

  • Page 106
    ...TO THE CONSOLIDATED FINANCIAL STATEMENTS continued 14. LONG-TERM DEBTS Long-term debts as of December 31, 2007 and ...Annual Interest Rates (%) as of December 31, 2007 Korea Energy Management Corporation Samsung Shinhan 4th Special Purpose Company Shinhan Bank and others 4.5 5.8 ~ 6.1 ￦ ￦ 2007...

  • Page 107
    ... payable in case the bonds are not converted to equity before the due date. Maturities of long-term debts outstanding, excluding premiums and discounts on debentures, as of December 31, 2007, are as follows: (In millions of Korean won) For the Years Ending December 31 2009 2010 2011 2012 Thereafter...

  • Page 108
    ... payments over the terms of the bonds. SEC has provided guarantees over the overseas subsidiaries' bonds. Maturities of foreign currency notes and bonds, outstanding as of December 31, 2007, are as follows: (In millions of Korean won) For the Years Ending December 31 2009 2010 2011 2012 Thereafter...

  • Page 109
    ...Co., Ltd. In addition, Samsung Card Co., Ltd., one of SEC's domestic subsidiaries, implemented a defined benefit pension plan with Samsung Life Insurance Co., Ltd. in accordance with Employee Retirement Benefit Security Act. Retirement pension operating assets as of December 31, 2007, consist of the...

  • Page 110
    ... up to a limit of ￦250,132 million for employees' housing rental deposits. As of December 31, 2007, SEC is contingently liable for guarantees amounting to $21.6 million undertaken by Citi Bank relating to the guarantees for Samsung Electronics Latinoamerica (Zona Libre), S.A., one of SEC's foreign...

  • Page 111
    ... customers on behalf of its affiliates and subsidiaries with Korea Export Insurance Corporation. ( G) As of December 31, 2007, the Company has forward exchange contracts to manage the exposure to changes in currency exchanges rates in accordance with its foreign currency risk management policy...

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    ... on the operations or financial position of the Company. ( I ) The United States Department of Justice Antitrust Division had investigated the alleged anti-trust violations by the sellers of Dynamic Random Access Memory ("DRAM") in the United States, which include Samsung Semiconductor Inc. (SSI...

  • Page 113
    ... related to Samsung Life shares that have already been disposed of by the Creditors, plus interest at a rate of 6% per annum. As of the balance sheet date, the financial impact of this case is uncertain and accordingly, the ultimate effect of this matter on the financial position of the Company...

  • Page 114
    ... Samsung Card is obliged to redeem the issued securities. The transfer of the financial assets has been recognized as a sale and accordingly, have been derecognized from the financial statements. Total financial assets transferred amounted to ￦852,750 million for the year ended December 31, 2007...

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    ..., an amount equal to a minimum of 10% of annual cash dividends declared, until the reserve equals 50% of its issued capital stock. The reserve is not available for the payment of cash dividends, but may be transferred to capital stock through a resolution of the Board of Directors or used to reduce...

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    ...: 2007 Preferred Stock ￦ Common Stock Dividend per share Market price 1 Dividend yield ratio ￦ 2006 Common Stock Preferred Stock ￦ 8,000 566,600 1.41% 8,050 426,700 1.89% 5,500 611,400 0.90% ￦ 5,550 486,000 1.14% 1. The average closing price for the prior week from two trading days...

  • Page 117
    ... by Samsung Card Co., Ltd. was ￦2,237 million for the year ended December 31, 2006. The stock options of ￦1,231 million according to SEC's ownership ratio are included in a separate component of shareholders' equity as other capital adjustments. SamSung electronicS annual report 2007 115

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    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued 24. INCOME TAX The statutory income tax rate applicable to the Company, including resident surtax, is 27.5%. Income tax expense for the years ended December 31, 2007 and 2006, consists of the following: (In millions of Korean won) Current ...

  • Page 119
    ... 20,090 787,929 286,233 3,290 ￦ 988,122 ￦ (196,903) Deferred tax relating to items charged to equity ￦ (1,283,947) ￦ (2,278,554) ￦ (3,562,501) ￦ (355,117) ￦ (399,886) (755,003) (1,456) (753,547) ￦ 334,032 ￦ 1,533,307 ￦ (1,199,275) SamSung electronicS annual report 2007 117

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    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued Deferred income tax assets and liabilities from tax effect of ...Asset (Liabilities) Increase (Decrease) Ending Balance Current NonCurrent Deferred tax arising from temporary differences Special reserves appropriated for tax purposes Equity...

  • Page 121
    ... and equity-method investees. The Company's consolidated financial statements for the year ended December 31, 2006, presented herein for comparative purposes, have not been restated as permitted under the Korea Accounting Institute Opinion 06-2. SamSung electronicS annual report 2007 119

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    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued 25. EARNINGS PER SHARE Earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the year. Basic earnings per share for the years ended December 31, 2007 and 2006, are calculated ...

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    ... Stock options Stock options April 17, 2006 ~ April 16, 2014 December 21, 2007~ December 20, 2015 Quantity 548,549 shares 10,000 shares Exercise Price (Per share) ￦ ￦ 580,300 606,700 26. CONSOLIDATED COMPREHENSIVE INCOME Consolidated comprehensive income for the years ended December 31, 2007...

  • Page 124
    ... TO THE CONSOLIDATED FINANCIAL STATEMENTS continued 27. RELATED PARTY TRANSACTIONS (A) Significant transactions between SEC and its consolidated subsidiaries, which have been eliminated during consolidation, for the years ended December 31, 2007 and 2006, and the related receivables and payables...

  • Page 125
    ...ended December 31, 2007 and 2006, and the related receivables and payables as of December 31, 2007 and 2006, are as follows: Sales Equity-method Investees Samsung SDI Co., Ltd. Samsung SDS Co., Ltd. Samsung ElectroMechanics Co., Ltd. Samsung... ￦ 473,930 SamSung electronicS annual report 2007 123

  • Page 126
    ... or equity-method investees, for the years ended December 31, 2007 and 2006, and the related receivables and payables as of December 31, 2007 and 2006, are as follows: (In millions of Korean won) Others Samsung Corporation iMarketKorea Inc. Samsung Life Insurance Co., Ltd. Cheil Communications Inc...

  • Page 127
    ...24,910 million and severance benefits of ￦7,514 million as key management compensation. Key management consists of registered executive officers who have the authority and responsibility in the planning, directing and controlling of Company operations. SamSung electronicS annual report 2007 125

  • Page 128
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued 28. RESEARCH AND DEVELOPMENT COSTS Research and development costs incurred and expensed for the years ended December 31, 2007 and 2006, consist of the following: (In millions of Korean won) 2007 Research expenses Ordinary development ...

  • Page 129
    ... ransactions are translated at the foreign exchange rate in effect as of the balance sheet date. Foreign currency translation gains and losses for the year ended December 31, 2007, amounted to ￦128,577 million and ￦122,597 million, respectively. SamSung electronicS annual report 2007 127

  • Page 130
    ...Consolidated Balance Sheets by Industry Non-financial Business Financial Business 2007 2006 2007 2006 Sales Cost of sales Selling... ￦ The above consolidated financial statements of the non-financial business include the financial service subsidiary which is accounted for using the equity method.

  • Page 131
    ... of and for the year ended December 31, 2006: (In millions of Korean won) 2006 Summary of Business by Segment Digital Media Gross sales Intersegment sales Net sales 1 Telecommunications SemiConductor LCD Device Appliances Others ￦ 17,177,358 Elimination Consolidated ￦ 44,766,941 ￦ 36...

  • Page 132
    ... CONSOLIDATED FINANCIAL STATEMENTS continued Operating data of entities classified according to geographic area as of and for the year ended December 31, 2007: (In millions of Korean won) 2007 Summary of Business by Geographic Area Korea Domestic Gross sales Intersegment sales Net sales Operating...

  • Page 133
    ... issued unguaranteed bonds amounting to ￦455,000 million. 33. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements as of and for the year ended December 31, 2007, were approved by SEC's Board of Directors on March 4, 2008. SamSung electronicS annual report 2007 131

  • Page 134
    ..., special, or similar damages. ADDITIONAL INFORMATION The 2007 Samsung Electronics Annual Report and the latest investor information are available online at www.samsung.com/ir. You may also contact us at [email protected]. For information, please visit www.samsung.com. LONDON STOCK EXCHANGE GDR...

  • Page 135
    ...Paulo - SP, Brasil Europe Samsung Electronics Europe Headquarters Samsung House, 1000 Hillswood Drive, Chertsey, Surrey, KT16 0PS Southeast Asia Samsung Electronics Southeast Asia Headquarters 3 Church Street #26-02 Samsung Hub, Singapore 049483, Singapore PRODUCTION NETWORK KOREA Suwon Complex 416...

  • Page 136
    ...-22-2396-1234 Tianjin Samsung Telecom Communication (TSTC), Tianjin Tel: 86-22-8396-9600 Tianjin Tongguang Samsung Electronics Company (TTSEC), Tianjin Tel: 86-22-2396-1234 China Printed Board Assembly (TSED), Zhongshan Tel: 86-760-830-4848(219) Samsung Electronics Shandong Digital Printing Co., Ltd...

  • Page 137
    ...: 62-21-8983-7114 Japan Samsung Japan Corporation (SJC), Tokyo Tel: 81-3-6234-2111 Malaysia Samsung Malaysia Electronics (SME) SDN. BHD., Kuala Lumpur Tel: 60-3-2263-6600 Philippines Samsung Electronics Philippines Corp. (SEPCO), Manila Tel: 63-2-722-7777 Singapore Samsung Asia Pte. Ltd. (SAPL) Tel...

  • Page 138
    ... Co., Ltd. Karachi Office Tel: 92-21-779-0281~3 Nigeria Samsung Electronics Co., Ltd. Lagos Office Tel: 234-1-461-7611 United States Samsung Electronics America, Inc. (SEA), Ridgefield Park Tel: 1-201-229-4000 Samsung Electronics Latino America Miami Inc. (SELA-Miami), Miami Tel: 1-305-594-1090...

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