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2013
SAMSUNG ELECTRONICS
ANNUAL REPORT

Table of contents

  • Page 1
    2013 SAMSUNG ELECTRONICS ANNUAL REPORT

  • Page 2
    2013 Financial Summary Samsung Electronics and Consolidated Subsidiaries 228,693 Income Statements Sales Operating Profit 2011 165,002 15,644 13,759 2012 201,104 29,049 23,845 2013 228,693 36,785 30,475 201,104 36,785 Net Income 29,049 165,002 15,644 Balance Sheets Assets Liabilities ...

  • Page 3
    ... IDEA International Design Excellence Awards in 2013 and 24 CES 2014 Innovations Awards. We were ranked No. 8 on Interbrand's Best 100 Global Brands 2013, with a brand value of USD 39.6 billion. Fortune listed Samsung Electronics 21st on its World's Most Admired Companies list. President & CEO Boo...

  • Page 4
    ... alongside communities by creating socially shared value. We are focusing on education, professional training and healthcare. Individual programs are informed by regional characteristics in order to respect and resolve local issues. We also support a range of green management and environmental...

  • Page 5
    ... Business (1998~2000) Sang-Hoon Lee President & CFO, Corporate Management Office (2012~Present) Head, Strategy Team 1, Samsung Corporate Strategy Office (2010~2012) Head, Corporate Management Support Team (2008~2010) Strategy & Planning Office (2006~2008) Kwang-Soo Song Independent Director (2013...

  • Page 6
    ...forward despite the global economic downturn. Once again, outstripping 2012, we recorded historic sales and profit. Our corporate value and worldwide reputation continue to increase significantly as we consolidate our global leadership in the electronics industry. At Samsung Electronics, our success...

  • Page 7
    ...first mover continued through 2013. Despite the depressed TV market, Samsung Electronics again earned No. 1 global market share of 26.8% across all at panel TV product lines, including LCD, LED and PDP TVs. That makes it eight years in a row. We maintained our dominant leadership in ultra large size...

  • Page 8
    ... natural air ow. Chef Collection Refrigerator Designed in collaboration with world-famous threestar Michelin chefs, this is the world's largest-capacity premium refrigerator that keeps foods at optimal freshness, while offering excellent convenience. 12 2013 SAMSUNG ELECTRONICS ANNUAL REPORT 13

  • Page 9
    ... Business Coreâ„¢ Printing Solution, which can be used without an independent printing server, and XOA Web, a Web-based open platform. In 2014, we will maintain our lead in the mobile printing market by introducing a new Samsung Cloud Printing service that supports easy document printing and sharing...

  • Page 10
    ... Consumer Electronics Health & Medical Equipment Business Expanding healthcare and medical services with advanced diagnostic equipment and convergence technology Samsung Electronics boasts the world's best cutting-edge technologies in a range of fields, including visual display, IT, semiconductor...

  • Page 11
    ... display offers several fitness apps, including a built-in heart rate sensor and workout management. In 2013, Samsung mobile devices were the most prized by consumers around the world. We achieved No. 1 ranking in sales revenue and market share in the mobile phone market, recording historic sales...

  • Page 12
    ... building on our advanced mobile network technology. Now we are expanding that business to corporations and public organizations. In 2014, we will continue to grow our global business as we launch new products and solutions. Samsung MBS (Multi-Standard Base Station) Developed to meet exible market...

  • Page 13
    ... top within two years of entering the global brand SSD market with the industry's first 3-bit MLC SSD, 840 EVO. In 2014, we plan to focus on development of 10nm-class DRAM technology and provide high-quality premium products and solutions that will lead the mobile and server markets. Looking ahead...

  • Page 14
    ... with optimized system semiconductor solutions With cutting-edge competitiveness in process technology and advanced development of next-generation products, Samsung Electronics has consistently expanded in the system LSI business. We are currently maintaining our lead in the global market with...

  • Page 15
    DS Device Solutions LED Business Making a brighter and greener world with leading-edge LED components that are eco-friendly and efficient Building on its leading semiconductor technology and manufacturing expertise, Samsung Electronics produces and supplies a wide range of energy-efficient LED ...

  • Page 16
    ... semiconductors to visual display, digital appliances to business, medical equipment and IT to mobile communications, we are providing happier todays and more creative tomorrows. Global Citizenship Samsung Electronics has long Sharing and Volunteering to Support Hope invested in global corporate...

  • Page 17
    ... vocational education. Programs vary with location. We train software engineers in advanced countries and offer computer science classes in developing countries. We nurture talent and create jobs by operating 23 institutes in Europe, Central and Latin America, Southeast Asia, the Middle East, Africa...

  • Page 18
    ...eq Greenhouse Gas Emissions Intensity Unit: Tons of CO eq/KRW 100 million, re ecting the Korean Price Index Korea Global *Emissions before 2011 are recalculated based on the restructuring of the LCD Business and the merger of Samsung LED with Samsung Electronics in 2012 Korea Global 7,486 8,018...

  • Page 19
    ..., business management and leadership development. We work with our suppliers to establish compliance management systems so they comply with international laws, labor regulations, human rights and health and safety standards. Looking ahead, we are expanding our support and shared growth benefits...

  • Page 20
    ... for that dream, Samsung Electronics is committed to corporate citizenship around the globe. We lend a hand to children who want to learn and to young adults who want to work, instilling them with optimistic energy. We also help neighborhoods and communities to embrace hope and health. At the same...

  • Page 21
    Financial Statements REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Shareholders of Samsung Electronics Co., Ltd. We have audited the accompanying consolidated financial statements of Samsung Electronics Co., Ltd. and its subsidiaries (collectively referred to as the "Company"), ...

  • Page 22
    ...-for-sale financial assets Trade and other receivables Advances Prepaid expenses Inventories Other current assets Assets held for sale Total current assets Non-current assets Available-for-sale financial assets Associates and joint ventures Property, plant and equipment Intangible assets Long-term...

  • Page 23
    ... its subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Samsung Electronics Co., Ltd. and its subsidiaries (In millions of Korean won, in thousands of US dollars (Note 2.28)) (In millions of Korean won) For the year ended December 31, Notes Revenue Cost of sales Gross profit Selling and...

  • Page 24
    ...,477 CONSOLIDATED STATEMENTS OF CASH FLOWS Samsung Electronics Co., Ltd. and its subsidiaries Noncontrolling interests Total Balance at January 1, 2013 Profit for the year Changes in value of available-for-sale financial assets, net of tax Share of other comprehensive income (loss) of associates...

  • Page 25
    ... with Korean International Financial Reporting Standards ("K-IFRS") 1110, Consolidated Financial Statements. SEC, as the controlling Company, consolidates its 153 subsidiaries including Samsung Display and Samsung Electronics America. The Company also applies the equity method of accounting to...

  • Page 26
    ... the Company's ownership of the voting rights in each entity. Middle East and Africa Samsung Electronics Tunisia (SETN) Samsung Electronics Pakistan (SEPAK) Samsung Electronics South Africa (SSA) Samsung Electronics Turkey (SETK) Samsung Semiconductor Israel R&D Center (SIRC) Samsung Electronics...

  • Page 27
    ... Medical Equipment (Shanghai) (MMS) Tianjin Samsung LED (TSLED) Tianjin Samsung Opto-Electronics (TSOE) Samsung R&D Institute China-Xian (SRC-Xian) SEMES (Xian) (*) Ownership represents the Company's ownership of the voting rights in each entity. 50 2013 SAMSUNG ELECTRONICS ANNUAL REPORT 51

  • Page 28
    ... financial data of major consolidated subsidiaries is as follows: (1) 2013 (In millions of Korean won) (2) 2012 (In millions of Korean won) 2013 Assets Samsung Display (SDC) Samsung Electronics America (SEA) Samsung (China) Investment (SCIC) Samsung Semiconductor (SSI) Samsung Austin Semiconductor...

  • Page 29
    ... of Significant Accounting Policies Description Acquisition of shares Incorporation Incorporation Incorporation Incorporation Incorporation Incorporation Incorporation The Company has prepared the consolidated financial statements in accordance with Korean International Financial Reporting Standards...

  • Page 30
    ... to the net assets relating to the joint venture and accounts for that investment using the equity method. 2.5 Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term highly liquid investments that are readily convertible...

  • Page 31
    ...-line method over their estimated useful lives. The Company's policy is that intangible assets should be amortized over the following estimated useful lives: Estimated useful lives Development costs Trademarks, licenses and other intangible assets 2 years 5-10 years 2.15 Trade Payables Trade...

  • Page 32
    ... The fair value of financial instruments that are not traded in an active market is determined by using a variety of methods and assumptions that are mainly based on market conditions existing at the end of each reporting period. 2.23 Share Capital 2.25 Government Grants Common shares and preferred...

  • Page 33
    ...,907 Total Assets Assets at fair value through profit or loss 47,227 47,227 Loans and receivables 18,791,460 17,397,937 23,861,235 5,685,042 65,735,674 Available-for-sale financial assets 1,258,874 5,229,175 6,488,049 Total Cash and cash equivalents Short-term financial instruments Short-term...

  • Page 34
    ... having experienced impairment of capital. As the trade payables are guaranteed by credit insurance or collateral, all default risk has been relieved (A) Accounts receivables Total (In millions of Korean won) 8. Transfer of Financial Assets Trade receivables of the Company have been discounted...

  • Page 35
    ... to credit risk of available-for-sale debt securities is the carrying value at the reporting date. (*) In October 2013, the Company sold part of its investment in Seagate Technology for USD 1,505 million. Acquisition cost includes impairment loss on available-for-sale financial assets recognized...

  • Page 36
    (2) Equity securities - Non-listed (excluding investments in associates and joint ventures) Details of non-listed equity securities as of December 31, 2013 and 2012, are as follows: (In millions of Korean won, number of shares and percentage) 10. Trade and Other Receivables (A) Trade and other ...

  • Page 37
    ...: (1) Investments in associates Samsung Techwin Others Total Percentage of Ownership (*)(%) 37.5 23.7 Principal Business Location Korea Korea (*) Company's portion of net asset value of associates based on the Company's ownership percentage. Investee Samsung Card Samsung Electro-Mechanics Nature...

  • Page 38
    ... in foreign exchange rates, etc. (*) Company's portion of net asset value of associates based on the Company's ownership percentage. (E) Summary of condensed financial information of major associates and joint ventures. (D) Details of valuation of investments in associates and joint ventures under...

  • Page 39
    ... value of investments in joint ventures, and dividends from joint ventures as of and for the years ended December 31, 2013 and 2012, are as follows: (In millions of Korean won) 2013 Others Samsung Corning Advanced Glass 1. Condensed financial information Current assets - Cash and cash equivalent...

  • Page 40
    ... in foreign currency exchange rates. (B) Details of depreciation of property, plant and equipment by line item for the years ended December 31, 2013 and 2012, are as follows: (In millions of Korean won) LCD business LED business Others Total 2013 Cost of sales Selling and administrative expenses...

  • Page 41
    ... assets by line item for the years ended December 31, 2013 and 2012, are as follows: (In millions of Korean won) (*1) Collateralized borrowings are secured by trade receivables (Note 8). (*2) Leased property, plant and equipment were pledged as collateral (Note 19). 2013 Cost of sales Selling...

  • Page 42
    ... Others For the Years Ending December 31 2014 2015 2016 2017 2018 and thereafter Total Debentures 505,277 5,277 205,277 1,060,577 52,763 1,829,171 (*) Plan assets are mostly invested in instruments which have a quoted price in active market. 80 2013 SAMSUNG ELECTRONICS ANNUAL REPORT 81

  • Page 43
    ... in foreign currency exchange rates. (A) The Company accrues warranty reserves for estimated costs of future service, repairs and recalls, based on historical experience and terms of warranty programs. (J) The actual returns on plan assets for the years ended December 31, 2013 and 2012, are as...

  • Page 44
    ... accounts receivable with BTMU and other financial institutions for up to US$1,169 million and other 3 subsidiaries including SSDG have a credit facility agreement with Bank of China and other financial institutions for up to CNY 3,400 million and EUR 30 million. 84 2013 SAMSUNG ELECTRONICS ANNUAL...

  • Page 45
    ... ratio 7.2% 2012 5.2% (D) Dividend yield ratio 2013 Common Stock Dividend yield ratio (*) 1.0% Preferred Stock 1.4% 2012 Common Stock 0.5% Preferred Stock 1.0% (*) The average closing price for a week before 2 trading days prior to dividend date. 86 2013 SAMSUNG ELECTRONICS ANNUAL REPORT...

  • Page 46
    ...2-10 years Commission and service charges Other expenses Total (*) (*) Expenses above equal to the sum of cost of sales, and selling and administrative expenses on the statements of income. Note 1: The number of shares and exercise prices are subject to adjustments resulting from capital increase...

  • Page 47
    ... and 2012, are as follows: (In millions of Korean won) 2013 Loss on disposal of property, plant and equipment Donations Impairment losses on intangible assets Others 187,863 495,301 108,420 822,464 1,614,048 2012 324,993 235,349 216,790 798,893 1,576,025 90 2013 SAMSUNG ELECTRONICS ANNUAL REPORT...

  • Page 48
    ... unused tax credits for which no deferred tax asset is recognized in the balance sheet are as follows: (In millions of Korean won) 2014 Undisposed accumulated deficit Tax credit carryforwards 4,170 2015 3,437 2016 18,525 2017 and after 12,196 3,966 92 2013 SAMSUNG ELECTRONICS ANNUAL REPORT 93

  • Page 49
    ...preferred share (in Korean won) 3,927,064 2012 3,053,970 Changes in assets and liabilities: Increase in trade receivables Decrease/(increase) in other receivables 2013 2012 2013 Net income as reported on the statements of income Net income available for preferred stock Weighted-average number of...

  • Page 50
    ... of America, England, Singapore, China, Japan, Brazil and Russia to operate the local finance center for global financial risk management. The Company's financial assets that are under financial risk management are composed of cash and cash equivalents, short-term financial instruments, availablefor...

  • Page 51
    ... the consolidated financial statements. The Company's capital risk management policy has not changed since the fiscal year ended December 31, 2012. The Company has maintained an A+ and A1 credit ratings from S&P and Moody's, respectively, on its long term debt. The total liabilities to equity ratios...

  • Page 52
    ... Level 3. Specific valuation techniques used to value financial instruments include: · Quoted market prices or dealer quotes for similar instruments. · The fair value of forward foreign exchange contracts is determined using forward exchange rates at the statement of financial position date, with...

  • Page 53
    ... information provided to the Management Committee for the reportable segments for the years ended 31 December 2013 and 2012, is as follows: (In millions of Korean won) Samsung Everland Other related parties Others Total (other related parties) 2013 Korea America Europe Asia and Africa China...

  • Page 54
    ...for employee services for the years ended December 31, 2013 and 2012, consists of: (In millions of Korean won) 2013 Salaries and other short-term employee benefits Termination benefits Other long-term benefits 23,906 763 7,402 2012 10,062 530 5,865 104 2013 SAMSUNG ELECTRONICS ANNUAL REPORT 105

  • Page 55
    ... (3) Summarized consolidated statements of cash ows (In millions of Korean won) Current relationship with the Company Subsidiary Samsung Display and its subsidiaries 2013 Cash ows from operating activities Cash ows from investing activities Cash ows from financing activities Exchange rate effect...

  • Page 56
    ...Asia Samsung Electronics Southwest Asia Headquarters 2nd, 3rd & 4th Floor, Tower - C, Vipul Tech Square, Sector - 43, Golf Course Road, Gurgaon - 122002, India Middle East Samsung Electronics Middle East 43rd Floor, Business Central Tower A, Sheikh Zayed Road, Dubai Media City, P.O.Box 500047, Dubai...

  • Page 57
    ... Baltics (SEB), Riga Tel: 371-6750-8500 MIDDLE EAST & AFRICA Egypt Samsung Electronics Egypt(Sales) (SEEG-S), Cairo Tel: 20-2-2614-9200 United Arab Emirates Samsung Gulf Electronics Co., Ltd (SGE), Dubai Tel: 971-4-440-6000 Turkey Samsung Electronics Turkey Ltd. (SETK), Istanbul Tel: 90-212...

  • Page 58