Annual R

eport 2000

Contents [3] Foreword [4] Financial H

ighlights [8] CEO

’s Message [12] 2000 H

ighlights [13] Business P

ortfolios

[16] Hom

e Netw

orks [22] Mobile N

etworks [28

] Office N

etworks [34] Core Com

ponents [40] Vision in A

ction

[44] Sports S

ponsorship [46] Comm

unity Service [47] Financial R

eport [88

] Board of D

irectors [90] Global N

etwork

a strategy for leadership in the digital convergence revolution

At th

e sta

rt of o

ur 3

0th

an

nive

rsary ye

ar in

No

vem

be

r 199

9, w

e d

ed

icate

d o

urse

lves to

be

ing

at th

e

fore

fron

t of th

e d

igita

l con

verg

en

ce re

volu

tion

. No

w in

ou

r 31st, w

e’re

wo

rkin

g h

ard

to tu

rn th

at a

mb

itiou

s

com

mitm

en

t into

rea

lity thro

ug

h a

n in

itiative

we

call o

ur

strate

gy.

Th

e “d

igita

l” pa

rt of th

is strate

gy fo

cuse

s on

en

ha

ncin

g th

e va

lue

cha

in b

y rea

lign

ing

ou

r op

era

tion

s

into

fou

r ma

jor b

usin

ess p

ortfo

lios—

ho

me

ne

two

rks, m

ob

ile n

etw

ork

s, office

ne

two

rks, a

nd

core

com

po

ne

nts. T

he

“E

” or “e

lectro

nic” p

art a

ims to

crea

te a

solid

sup

po

rt fram

ew

ork

for th

ese

po

rtfolio

s

by o

ptim

izing

the

sup

ply ch

ain

to m

ak

e o

ur o

pe

ratio

ns a

s efficie

nt a

nd

time

ly as p

ossib

le.

So

, wh

ere

do

we

exp

ect th

is strate

gy to

tak

e u

s? All th

e w

ay to

the

top

in th

e ve

ry, very n

ea

r futu

re.

An

d e

veryo

ne

’s invite

d to

join

us!

03

Th

e ye

ar 2

00

0 p

rese

nte

d S

am

sun

g E

lectro

nics w

ith a

ho

st of e

xtern

al

cha

llen

ge

s. Bu

t eve

n re

cord

-hig

h o

il price

s, plu

mm

etin

g m

em

ory p

rices,

an

d fa

lterin

g te

chn

olo

gy se

ctor sto

cks co

uld

n’t sto

p u

s from

on

ce a

ga

in

reco

rdin

g o

ur b

est fin

an

cial p

erfo

rma

nce

eve

r.

20

00

199

9

Ca

pita

l Ra

tio6

0.2

%5

4%

De

bt to

Eq

uity R

atio

66

.1%8

5.3

%

Re

turn

on

Eq

uity R

atio

41%

31%

Ne

t De

bt E

qu

ity Ra

tio9

%3

3%

EB

ITD

A M

arg

in3

2%

27

%

Ea

rnin

gs p

er S

ha

re3

5,0

06

19

,214

US

$2

8U

S$

15

in m

illion

s of w

on

in m

illion

s of U

.S. d

olla

rs

20

00

199

92

00

019

99

Sa

les

34

,28

3,7

52

26

,117,7

86

27

,23

0.9

20

,74

4.9

Op

era

ting

Pro

fit7

,43

5,15

44

,48

1,50

05

,90

5.6

3,5

59

.6

Ne

t Inco

me

6,0

14,5

30

3,17

0,4

03

4,7

77

.22

,518

.2

To

tal A

ssets

26

,89

5,0

46

24

,70

9,8

03

21,3

62

.219

,62

6.5

To

tal Lia

bilitie

s10

,70

2,19

911,3

78

,23

48

,50

0.6

9,0

37

.5

Sh

are

ho

lde

rs’ Eq

uity

88

1,67

58

75

,54

27

00

.36

95

.4

• T

he

fina

ncia

l resu

lts in th

e a

bo

ve ta

ble

s are

for S

am

sun

g E

lectro

nics o

nly a

nd

do

no

t refle

ct the

resu

lts of its su

bsid

iarie

s or a

ffiliate

s.

• U

S$

am

ou

nts a

re co

nve

rted

at a

rate

of U

S$

1= 1,2

59

wo

n.

05

Du

ring

the

yea

r, sale

s climb

ed

ove

r 31%

, gro

ss pro

fit jum

pe

d o

ver 4

5%

,

op

era

ting

pro

fit soa

red

to 6

6%

, an

d n

et in

com

e sk

yro

cke

ted

to 9

0%

.

Wh

ile th

ese

imp

ressive

figu

res cle

arly sh

ow

solid

quantitativeg

row

th,

the

y also

sho

w o

utsta

nd

ing

qualitativeg

row

th, p

rovid

ing

un

eq

uivo

cal

pro

of th

at o

ur o

ng

oin

g e

fforts to

de

liver g

rea

ter va

lue

to o

ur cu

stom

ers,

pa

rtne

rs, a

nd

sh

are

ho

lde

rs h

av

e g

ive

n u

s a

so

lid, e

fficie

nt, a

nd

pro

fitab

le fin

an

cial stru

cture

tha

t’s seco

nd

to n

on

e.

06

Sales

For th

e 7

th stra

igh

t yea

r, we

led

the

do

me

stic

ma

nu

factu

ring

secto

r with

sale

s of 3

4.3

trillion

wo

n,

a 3

1.3%

incre

ase

ove

r 199

9. A

pp

roxim

ate

ly 68

% o

f

the

tota

l ca

me

from

inte

rna

tion

al m

ark

ets

,

rep

res

en

ting

12

% o

f Ko

rea

’s to

tal y

ea

r 20

00

ex

po

rts. T

he

Se

mic

on

du

cto

r Bu

sin

es

s G

rou

p

acco

un

ted

for 3

8%

(13 trillio

n w

on

), follo

we

d b

y the

Dig

ital M

ed

ia S

ystem

Bu

sine

ss Gro

up

with

27

% (9

.3

trillion

wo

n), th

e In

form

atio

n &

Co

mm

un

icatio

ns

Bu

sine

ss Gro

up

with

22

% (7

.6 trillio

n w

on

), an

d th

e

Ho

me

Ap

plia

nc

es

Bu

sin

es

s G

rou

p w

ith 8

% (2

.7

trillion

wo

n).

Gross P

rofit O

ng

oin

g re

structu

ring

an

d m

an

ag

e-

me

nt in

no

va

tion

ac

tivitie

s w

ere

be

hin

d th

e

rem

ark

ab

le 4

5.3

% g

row

th in

gro

ss

pro

fit to 12

.3

trillion

wo

n. T

he

ye

ar a

lso sa

w th

e o

verw

he

lmin

g

bia

s tow

ard

sem

icon

du

ctors b

eg

in to

shift to

wa

rd a

mo

re b

ala

nce

d p

rofit stru

cture

.

Operating Profit

Th

e 2

00

0 o

pe

ratin

g p

rofit o

f 7.4

trillion

wo

n w

as th

e h

igh

est in

com

pa

ny h

istory a

nd

an

ou

tsta

nd

ing

66

% im

pro

ve

me

nt o

ve

r 19

99

,

tran

slatin

g in

to a

n o

vera

ll pro

fit ma

rgin

of 2

2%

. Th

e

Se

mico

nd

ucto

r Bu

sine

ss Gro

up

led

with

81.5

% o

f

this

tota

l (6.1 trillio

n w

on

), an

ou

tsta

nd

ing

pro

fit

ma

rgin

of 4

7%

, follo

we

d b

y th

e In

form

atio

n &

Co

mm

un

icatio

ns B

usin

ess G

rou

p w

ith 12

.2%

(90

8

07

billio

n w

on

), the

Dig

ital M

ed

ia S

ys

tem

Bu

sin

es

s

Gro

up

with

7.1%

(52

5 b

illion

wo

n), a

nd

the

Ho

me

Ap

plia

nce

s Bu

sine

ss Gro

up

with

2.5

% (18

7 b

illion

wo

n).

Net incom

eIn

20

00

, ne

t inco

me

sho

t up

90

% to

just o

ver 6

trillion

wo

n. T

his p

rod

uce

d a

n e

qu

ally

rem

ark

ab

le 8

2%

rise

in E

PS

from

19,2

14 w

on

to

35

,00

6 w

on

. Th

e fa

ct tha

t ne

t inco

me

rose

ne

arly

90

%—

ne

arly trip

le th

e 3

1% in

crea

se in

sale

s—is a

so

lid in

dica

tor th

at w

e’v

e s

ucce

ss

fully

ma

de

the

tran

sitio

n

to

a

pro

fit-driv

en

o

rga

niz

atio

na

l

structu

re.

Return on EquityTo

tal sh

are

ho

lde

rs’ eq

uity ro

se to

16.2

trillion

wo

n fro

m 13

.3 trillio

n w

on

in 19

99

, a

21.5

% ye

ar-o

n-ye

ar in

crea

se. T

his a

s we

ll as stro

ng

sale

s he

lpe

d R

OE

jum

p fro

m 3

1% y

ea

r-on

-ye

ar to

41%

, pu

tting

us in

the

sam

e le

ag

ue

as th

e w

orld

’s

top

corp

ora

tion

s.

Deb

t to Equity

For th

e s

eco

nd

stra

igh

t ye

ar, w

e

too

k a

dv

an

tag

e o

f stro

ng

ea

rnin

gs

to trim

ou

r

ove

rall d

eb

t. In 2

00

0, w

e p

aid

ba

ck 1.6

trillion

wo

n,

slash

ing

ou

r 5.7

trillion

wo

n d

eb

t bu

rde

n b

y 28

% to

4.1 trillio

n w

on

. Th

is in tu

rn im

pro

ved

ou

r de

bt to

eq

uity

ratio

from

85

% in

199

9 to

66

%, la

yin

g a

stron

g fo

un

da

tion

for co

ntin

ue

d p

rofita

bility.

08

“Sam

sung Electronics is dedicated to leading

the digital convergence revolution…”

Dear Custom

ers, Partners, and Shareholders,

09

I am pleased to report that 2000 w

as Samsung Electronics’ best

year ever. During the year, our sales grew

over 31.3% to 34.3

trillion won. Even m

ore remarkable w

as the 66% rise in operating

profit to 7.4 trillion won, producing an outstanding 22%

operating

margin. Taken alone, these figures are an im

pressive testimony to

the success of our ongoing customer-driven efforts to enhance the

value of the Samsung brand as w

ell as our aggressive marketing and

pricing policies in markets w

orldwide. Taken in the context that

they and similarly im

pressive figures in 1998 and 1999 were

recorded in an environment m

arked by unfavorable economic

conditions at home and unclear econom

ic prospects abroad, they

10

are also unmistakable proof that the restructuring initiatives of the

past three years have helped lay a solid foundation for profitability.

But our w

ork is far from over.

As I have stated m

any times, the com

ing decade will bring

more changes to the w

ay we live, w

ork, and play than the entire

past century. And Sam

sung intends to be the driving force behind

as many of these changes as possible. O

ur ambitious plans for the

next five years call for us to more than double salesto 80 trillion

won as w

e aim for an operating m

argin of 15% in 2005. W

e also

intend to triple our brand value from U

S$5 billion to US$15

billion. I would like to share w

ith you now the m

aster strategy that

will m

ake this all possible.

On our 30th anniversary in N

ovember 1999, w

e made public

our vision of leading the digital convergence revolution. On our

31st in 2000, we announced how

we intend to translate this vision

into reality. Recognizing the critical role that digital convergence

and networking technology w

ill play in our success in this endeavor,

we have highlighted them

in the name of our new

master plan—

Digital- e

Com

pany—a strategy that seeks to m

aximize both

customer and corporate value through a com

prehensive solution-

and process-centric approach to enhancing the value chain and

optimizing the supply chain.

Our value chain focus is now

putting in place an integrated,

solution-focused organizational framew

ork where each of our

divisions is assigned to one of four synergetic business portfolios:

home netw

orks, mobile netw

orks, office networks, and core com

ponents.T

his reorganization will create a fertile internal clim

ate for synergy

and greater value as our divisions cooperate, share, and together

create digital solutionsfar superior to anything they could achieve

on their own.

Similarly, our supply chain focus now

reflects the simple reality

that value innovation is not just about developing the most

innovative products. It is about finding ways to enhance value at

every stepof the supply chain process—

from the research lab to

the marketing departm

ent. By applying e-processes to stream

line,

accelerate, and create opportunities for synergy within the business

process itself, we w

ill reap the benefits across the entire organiza-

tion, ultimately creating greater value for all. A

nd that will help us

more effectively achieve our m

ission of bringing innovation and

digital technology to all our products in ways that w

ill make life

easier, richer, and more enjoyable for all generations and all

customers. W

e call it Samsung D

igitall. And everyone’s invited.

I would like to close w

ith a sincere thank you for your support

during the past year that helped make 2000 our best year ever. W

e

look forward to bringing you even better new

s in 2001.

11

Jong-Yong YYunV

ice C

ha

irma

n a

nd

CE

O

12

Septem

ber 15-30

Wh

ile o

ur la

test m

ob

ile

ph

on

es h

elp

ke

ep

the

Olym

pic G

am

es ru

nn

ing

smo

oth

ly, we

pla

y ho

st

to o

ver 1.1 m

illion

Syd

ne

y Olym

pic P

ark

visitors. O

ur O

lymp

ic

Re

nd

ezvo

us@

Sa

msu

ng

pa

vilion

pro

vide

s a

un

iqu

e sh

ow

case

for o

ur

late

st mo

bile

com

mu

ni-

catio

ns te

chn

olo

gy, a

con

ven

ien

t ga

the

ring

pla

ce fo

r ath

lete

s an

d

the

ir fam

ilies, a

nd

a fu

ll

da

ily pro

gra

m o

f cultu

ral

pe

rform

an

ces a

nd

en

ter-

tain

me

nt fo

r all.

Septem

ber 29

We

de

bu

t the

wo

rld’s

faste

st gra

ph

ics me

mo

ry

chip

. Fab

ricate

d w

ith

0.17

-micro

n te

chn

olo

gy,

the

128

Mb

do

ub

le-d

ata

-

rate

SD

RA

M ch

ip is

cap

ab

le o

f mo

ving

da

ta

at 5

00

Mb

ps, a

two

-an

d-

a-h

alf-fo

ld in

crea

se in

pe

rform

an

ce o

ver o

ur

pre

viou

s faste

st offe

r-

ing

. Th

e ch

ip w

ill pla

y a

ke

y role

in o

ur co

ntin

ue

d

do

min

an

ce in

the

gra

ph

-

ics me

mo

ry ma

rke

t, an

are

a w

he

re w

e cu

rren

tly

ho

ld a

40

%-p

lus m

ark

et

sha

re.

October 10

Ou

r tech

no

log

y spe

cifi-

catio

n fo

r dig

ital im

ag

e

com

pre

ssion

is acce

pte

d

into

the

pa

ten

t po

ol fo

r

MP

EG

-4, a

ne

xt-ge

ne

ra-

tion

com

pre

ssion

tech

-

no

log

y de

sign

ed

to

shrin

k m

ultim

ed

ia co

n-

ten

t do

wn

to co

mp

act,

hig

h-q

ua

lity da

ta

strea

ms th

at ca

n b

e

smo

oth

ly bro

ad

cast o

ver

the

Inte

rne

t or to

3G

mo

bile

ph

on

es.

Septem

ber 7

We

intro

du

ce th

e

wo

rld’s first cd

ma

20

00

mo

bile

ph

on

e. T

he

first

step

tow

ard

glo

ba

l 3G

mo

bile

com

mu

nica

tion

s,

the

SC

H-X

100

cellu

lar

an

d S

PH

-X10

00

PC

S

ph

on

es o

ffer fu

ll ba

ck-

wa

rd co

mp

atib

ility with

existin

g cd

ma

On

e n

et-

wo

rks, u

p to

10x h

igh

er

da

ta sp

ee

ds fo

r service

s

like

au

dio

- an

d vid

eo

-on

-

de

ma

nd

, an

d 3

0%

lon

ge

r talk

an

d 10

0%

lon

ge

r stan

db

y time

s.

We

also

de

mo

nstra

te a

com

ple

te cd

ma

20

00

system

du

ring

the

Syd

ne

y Olym

pic G

am

es.

Novem

ber 1

We

ma

rk o

ur 3

1st

an

nive

rsary b

y un

veilin

g

ou

r Dig

ital-E

Co

mp

an

y

strate

gy to

gu

ide

us a

s

we

wo

rk to

be

com

e th

e

lea

de

r of th

e d

igita

l con

-

verg

en

ce re

volu

tion

. Th

e

go

al o

f this stra

teg

y is to

bu

ild o

n th

e su

ccess o

f

ou

r reo

rga

niza

tion

effo

rts ove

r the

pa

st

thre

e ye

ars to

tak

e o

ur

org

an

izatio

n to

the

ne

xt

leve

l, focu

sing

on

valu

e

inn

ova

tion

in b

oth

the

valu

e a

nd

sup

ply ch

ain

s

to p

rop

el o

urse

lves to

the

top

of th

e in

du

stry in

20

05

.

2000H

igh

ligh

ts

January 4

We

de

velo

p th

e w

orld

’s

first 28

8M

b R

am

bu

sT

M

DR

AM

. De

sign

ed

with

0.17

-micro

n p

roce

ss

tech

no

log

y, this n

ew

RD

RA

M o

ffers th

e h

igh

-

est b

an

dw

idth

of a

ny

curre

nt m

em

ory te

chn

ol-

og

y. Up

to 16

of th

ese

28

8M

b ch

ips ca

n b

e

com

bin

ed

to cre

ate

me

mo

ry mo

du

les o

f up

to 5

76

MB

. RD

RA

M is

use

d p

rima

rily in h

igh

-

en

d P

en

tium

4-b

ase

d

wo

rksta

tion

s, PC

s, an

d

ga

me

con

sole

s.

May 1

We

join

AM

D, C

om

pa

q,

Ga

tew

ay, H

itach

i, HP

,

Infin

eo

n, N

EC

, Qu

an

tum

,

SC

I Syste

ms, S

ole

ctron

,

an

d W

este

rn D

igita

l to

form

eH

ITE

X, a

n in

de

-

pe

nd

en

t on

line

B2

B m

ar-

ke

tpla

ce fo

cuse

d o

n

crea

ting

a h

igh

-tech

sup

-

ply ch

ain

for th

e co

mp

ut-

ing

an

d e

lectro

nics

ind

ustrie

s. In D

ece

mb

er,

the

na

me

cha

ng

es to

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din

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ge

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tor w

ith

a tra

din

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lum

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US

$1 b

illion

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pro

du

ce o

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mil-

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FT-LC

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da

te.

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terin

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ld in

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ua

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acity fro

m 8

millio

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14-in

ch p

an

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qu

iva-

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ne

arly

15 m

illion

in 2

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no

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ce a

strate

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pa

rtne

rship

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soft to

crea

te

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rne

t-savvy 2

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ct

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uts

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mb

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H.M

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ina

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nt in

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rop

e. T

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rcelo

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ain

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ga

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H-6

00

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d S

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ph

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ua

ry. Wh

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com

ple

ted

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e

pla

nt w

ill ha

ve 11 p

ro-

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ction

line

s, em

plo

y

mo

re th

an

1,00

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cal

wo

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uce

som

e 7

.5 m

illion

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its

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0%

for sa

le

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pa

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The power to lead a revolution

It tak

es a

spe

cial co

mb

ina

tion

of ca

pa

bilitie

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sou

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lea

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critical m

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inte

nd

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r ind

ustry in

no

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n in

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me

ne

two

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ere

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vited

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more inside… «

Mobile N

Hom

e Netw

orks

Ou

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van

ced

dig

ital a

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chn

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igita

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vel o

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Yo

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nd

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voice

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Cs, P

DA

s, dig

ital ca

me

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sign

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you

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A digit allportfolio of solutions

Sa

msu

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w

drivin

g o

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igita

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rtfolio

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Office N

etworks

Netw

orks

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en

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wo

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A

rs run

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rob

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ly

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first to d

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sine

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mu

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s

tha

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ak

e a

ny o

ffice n

etw

ork

mo

re p

rod

uctive

an

d e

fficien

t.

We’re serving up the tastiest

digital dishes in the industry.

Hom

e Netw

orks

17

Wh

at’s o

n to

da

y’s me

nu

? Ho

w a

bo

ut 4

2 in

che

s of p

lasm

a

go

od

ne

ss de

livere

d to

you

r tab

le. B

ut it co

uld

just a

s ea

sily be

serve

d u

p o

n a

wa

ll. Or e

ven

the

ceilin

g. Y

ou

see

, this isn

’t just

you

r ord

ina

ry kin

d o

f me

al. It’s a

dig

ital sm

org

asb

ord

tha

t’s a

fea

st for th

e e

yes. B

on

ap

pé

tit!

SPK-4215 42-inch 16:9 Plasm

a TV

Th

ere

’s simp

ly no

oth

er w

ay to

ge

t a b

igg

er, fla

tter p

icture

ha

ng

ing

on

you

r wa

ll. Or a

nyw

he

re e

lse fo

r tha

t ma

tter.

Cool Multim

ediaO

ur to

p-o

f-the

-line

SR

-127

DT

L

refrig

era

tor k

ee

ps yo

ur fo

od

fresh

as it k

ee

ps yo

u in

tou

ch,

en

terta

ine

d, a

nd

org

an

ized

with

Inte

rne

t acce

ss, vide

o-

ph

on

e ca

pa

bility, T

V re

cep

tion

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recip

e file

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du

ler, a

nd

a

dig

ital p

ho

to a

lbu

m.

Video Convergence

Loo

kin

g to

rep

lace

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ag

ing

VC

R o

r set u

p a

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me

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ate

r?

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r ne

w S

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mb

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erful CookingW

ith 1,10

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we

r, 10 p

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er le

vels, a

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riab

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Ge

ntle

Co

ok

tech

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y, the

MW

85

93

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ring

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le n

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leve

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con

trol to

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kitch

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Internet Comm

unicatorA

s simp

le to

use

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tele

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ph

on

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con

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An

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tern

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tal m

ed

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terfa

ces.

18

“The fully automated hom

e has been a technophile’s dream since the

1960s. Today, Samsung’s m

aking it a digital reality with the w

orld’s first

home netw

ork solution to use Internet protocols to seamlessly link

virtually any electric-powered device im

aginable…. A

nd that’ll make hom

ean even sw

eeter place to be.”

—Jae-M

oon Jo, Senior Manager, D

igital Media R

&D

Center

19

In Ja

nu

ary 2

00

1, we

pu

blicly d

em

on

strate

d o

ur T

CP

/IP-

ba

sed

dig

ital h

om

e n

etw

ork

con

cep

t for th

e first tim

e a

t the

Co

nsu

me

r Ele

ctron

ics Sh

ow

in La

s Ve

ga

s, US

A. W

ith th

e

ne

two

rk in

frastru

cture

an

d p

roto

col sta

nd

ard

s no

w in

pla

ce, w

e’ll b

e a

ccele

ratin

g d

eve

lop

me

nt w

ork

on

ne

two

rk-

rea

dy e

lectro

nics a

nd

ap

plia

nce

s to fu

lly exp

loit o

ur

com

pe

titive a

dva

nta

ge

in th

e fie

ld. O

ur iZ

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eb

We

bp

ad

is

just a

taste

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e u

pco

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g B

lue

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tern

et

ap

plia

nce

s ou

r en

gin

ee

rs are

wo

rkin

g o

n th

at w

ill intro

du

ce

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Inte

rne

t to a

wh

ole

ne

w ca

teg

ory o

f con

sum

ers.

Ou

r lea

de

rship

in d

igita

l disp

lay te

chn

olo

gy w

ill

con

tinu

e to

pa

ve th

e w

ay fo

r big

ge

r, brig

hte

r, thin

ne

r, an

d

sha

rpe

r TV

s. Th

ese

inn

ova

tion

s in m

an

ufa

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g

tech

no

log

y as w

ell a

s dig

ital se

rvices w

ill en

ab

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bre

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r

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r No

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ith 8

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pin

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ajo

r

step

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e Surfer

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d.

The space-saving, pearl-white Tantus 32-inch H

DTV

will brighten any

room it’s in. A

nd with the w

orld’s shallowest 32-inch picture tube, it’ll

take up about 20% less space than a standard 32-inch and about the

same as a 20-inch. K

ey features include a built-in DTV

tuner, Dolby

Pro Logic surround sound, and a second-generation progressive-scan

circuit that delivers silky-smooth m

otion with dram

atically improved

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ing experience.

0%thinner...

We’re designing the haute couture

of the comm

unications world.

Mobile N

etworks

In th

e co

mp

etitive

wo

rld o

f mo

bile

ha

ute

cou

ture

, Sa

msu

ng

con

sisten

tly stea

ls

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sho

w w

ith w

orld

-first de

sign

s. Like

ph

on

es w

ith a

bu

ilt-in T

V, M

P3

pla

yer,

dig

ital ca

me

ra, o

r eve

n a

mo

bile

vide

oco

nfe

ren

cing

cen

ter. A

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t’s wh

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ma

ke

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m g

rea

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ell a

s gre

at co

mm

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icato

rs.

3G M

obile PhoneIt’s a

mu

ltime

dia

futu

re. A

nd

ou

r 3G

ph

on

es w

ill let yo

u se

e, h

ea

r, an

d in

tera

ct with

it wh

ere

ver yo

u g

o.

23

24

“In 1996, Samsung introduced cdm

aOne 2G

digital mobile com

muni-

cations to the world. In 2000, w

e made history again by delivering the

world’s first cdm

a2000 1x solution as we continued to pioneer the w

ay

to global 3G m

obile comm

unications. Our m

ission is simple—

we

intend to be the world’s w

ireless comm

unications solution leader.”

—K

i-Hw

a Choi, Senior Engineer, RF/ System

Laboratory Guinness Candidate

Ou

r first-ge

ne

ratio

n S

PH

-WP

10

wristw

atch

ph

on

e m

ad

e it in

to

the

20

01 G

uinness Book

. Ou

r

sma

ller a

nd

ligh

ter se

con

d-g

en

-

era

tion

SP

H-S

100

ma

y be

the

first mo

bile

you

we

ar.

MP3 W

ith Vision

Yo

ur m

usic is p

orta

ble

, wh

y no

t

you

r ph

oto

s? Ou

r YV

P-P

64

Ye

pp

Inte

rne

t au

dio

pla

yer is

the

wo

rld’s first to

let yo

u

sha

re d

igita

l ph

oto

s an

d te

xt

wh

en

you

’re o

n th

e g

o.

Sound SenseA

t 19.8

mm

thin

an

d 1.3

5 k

g

ligh

t, the

aw

ard

-win

nin

g

NV

50

00

/Se

ns 7

60

no

teb

oo

k

with

the

wo

rld’s first in

te-

gra

ted

-bu

t-ind

ep

en

de

nt M

P3

pla

yer is a

con

verg

en

ce p

rod

-

uct th

at tru

ly rock

s.

GSM

Turns 2.5G

SM

is also

be

gin

nin

g th

e tra

n-

sition

to 3

G. O

ur S

GH

-Q10

0 is

the

wo

rld’s fa

stest G

PR

S p

ho

ne

to d

elive

r en

ha

nce

d In

tern

et

an

d d

ata

service

s at 2

.5G

spe

ed

s of u

p to

115 k

bp

s.

25

In 2

00

1, we

’ll con

tinu

e w

ork

on

the

com

mu

nica

tion

s

tech

no

log

ies th

at’ll m

ak

e u

s a le

ad

er in

tom

orro

w’s g

lob

al

3G

mo

bile

mu

ltime

dia

ne

two

rks. W

e’ll la

un

ch o

ur first

CD

MA

an

d G

SM

ph

on

es b

uilt o

n th

e M

icroso

ft sma

rt

ph

on

e p

latfo

rm, g

iving

use

rs sea

mle

ss acce

ss to n

ext-

ge

ne

ratio

n w

irele

ss info

rma

tion

an

d e

nte

rtain

me

nt

service

s. We

’ll also

exp

an

d o

ur cd

ma

20

00

1x an

d G

PR

S

mo

bile

ph

on

e o

fferin

gs.

Du

ring

the

yea

r, we

exp

ect o

ur cd

ma

20

00

1x ne

two

rk

solu

tion

to b

e d

ep

loye

d n

atio

nw

ide

in K

ore

a. A

s pa

rt of

ou

r ma

rke

t dive

rsificatio

n e

fforts, w

e’ll a

lso co

ntin

ue

wo

rk

on

ne

two

rk so

lutio

ns fo

r W-C

DM

A, th

e 3

G m

igra

tion

cho

ice fo

r tod

ay’s G

SM

ne

two

rks.

Sa

msu

ng

no

teb

oo

k P

Cs w

ill con

tinu

e to

ge

t ligh

ter,

thin

ne

r, an

d fa

ster in

the

com

ing

yea

r. We

inte

nd

to

ma

inta

in o

ur co

mm

an

din

g 5

0%

ma

rke

t sha

re a

t ho

me

as

we

bu

ild o

n o

ur im

pre

ssive 10

0%

sale

s gro

wth

tha

t

pu

she

d o

verse

as re

ven

ue

s to U

S$

3.3

billio

n in

20

00

. Ou

r

Ye

pp

Inte

rne

t au

dio

pla

yer a

nd

Ne

xca d

igita

l cam

era

line

s

will a

lso co

ntin

ue

to g

ain

con

verg

en

ce fe

atu

res a

nd

con

ne

ctivity op

tion

s tha

t will e

mp

ow

er th

em

to b

eco

me

eve

n m

ore

active

pa

rticipa

nts in

tom

orro

w’s m

ob

ile

ne

two

rks.

26

No.

SCH-X120 cdm

a2000 Mobile Phone

As th

e m

ak

er o

f the

wo

rld's first

cdm

a2

00

0 1x m

ob

ile p

ho

ne

, we

con

tinu

e to

roll o

ut n

ew

up

scale

mo

de

ls like

the

SC

H-X

120

tha

t are

he

lpin

g b

ring

the

pro

mise

of tru

e

glo

ba

l 3G

com

mu

nica

tion

s on

e

step

close

r in style

.

27

Sam

sung continues to lead in CDM

A

mobile com

munications technology, an

area we helped pioneer w

ith the world’s

first comm

ercial service in 1996. We’ve

sold the world’s m

ost CDM

A-based

cellular and PCS phones for the past four

years running. And w

hat’s even more

gratifying is the fact that our SCH

-3500

was the best-selling phone in the U

.S. in

2000, capturing an amazing 28

% m

arket

share as it helped us surpass the 10-

million-unit sales m

ilestone in that

market in just three short years.

In 2

00

0, w

e le

d th

e g

lob

al C

DM

A p

ho

ne

ind

ustry fo

r a

fou

rth stra

igh

t yea

r as w

e sh

ipp

ed

a n

ew

line

up

of

con

verg

en

ce p

ho

ne

s with

MP

3 p

laye

r, TV

, dig

ital

cam

era

, an

d In

tern

et fu

nctio

na

lity. In a

first for a

ny

Ko

rea

n-m

ad

e p

rod

uct, w

e m

ad

e it in

to th

e 2

00

1

ed

ition

of th

e G

uinness Book of W

orld Recordsfo

r the

wo

rld’s sm

alle

st cell p

ho

ne

TV

(SC

H-M

22

0) a

nd

wristw

atch

ph

on

e (S

PH

-WP

10). W

e a

lso in

trod

uce

d

the

wo

rld’s first cd

ma

20

00

an

d fa

stest G

PR

S p

ho

ne

s,

he

rald

ing

the

arriva

l of 2

.5G

mo

bile

com

mu

nica

tion

s

service

s.

Du

ring

the

yea

r, we

tea

me

d u

p w

ith 3

Co

m to

de

velo

p th

e w

orld

’s first 3G

ne

two

rk so

lutio

n b

ase

d

on

cdm

a2

00

0 1x te

chn

olo

gy. B

ack

wa

rdly co

mp

atib

le

with

existin

g cd

ma

On

e n

etw

ork

s, the

ne

w syste

m

ma

de

the

wo

rld’s first cd

ma

20

00

1x test ca

ll in M

ay

an

d w

as d

ep

loye

d in

the

Se

ou

l me

trop

olita

n a

rea

with

com

me

rcial se

rvice sta

rting

Octo

be

r 1. Fea

ture

s of th

e

ne

w syste

m in

clud

e d

ou

ble

the

cha

nn

el ca

pa

city an

d

da

ta ra

tes o

f up

to 14

4 k

bp

s.

En

joyin

g 10

0%

gro

wth

in sa

les in

20

00

, we

con

tinu

ed

to m

ak

e p

orta

ble

com

pu

ting

eve

n m

ore

con

ven

ien

t with

the

lau

nch

of n

ew

hig

hly-ra

ted

line

of

Pe

ntiu

m III n

ote

bo

ok

s. We

also

con

tinu

ed

to e

xpa

nd

ou

r line

of d

igita

l cam

era

s, ad

din

g 1.3

- an

d 2

.1-

me

ga

pixe

l mo

de

ls with

3x o

ptica

l zoo

m a

nd

1.8-in

ch

colo

r LCD

scree

ns.

1in

CDM

A

CDM

A Goes 2.5G

Ou

r com

pre

he

nsive

cdm

a2

00

0 1x so

lutio

n

allo

ws e

xisting

cdm

aO

ne

cellu

lar a

nd

PC

S

op

era

tors to

sea

mle

ssly up

gra

de

the

ir

ne

two

rks w

itho

ut d

ow

ntim

e o

r ba

ckw

ard

-

com

pa

tibility issu

es.

Office N

etworks

We’re helping people get

the big picture of the future.

29

Th

ese

da

ys, you

alm

ost h

ave

to b

e a

futu

rist to k

ee

p u

p th

e b

rea

kn

eck

pa

ce o

f

tech

no

log

y. Sa

msu

ng

is wo

rkin

g to

sho

w e

veryo

ne

the

“big

pictu

re” o

f wh

ere

tech

no

log

y is he

ad

ed

, em

po

we

ring

pe

op

le to

exp

ress th

em

selve

s in n

ew

wa

ys on

scree

n, o

n p

ap

er, o

n o

ptica

l me

dia

, an

d o

n th

e In

tern

et. G

et th

e p

icture

?

SyncMaster 240T 24-inch TFT-LCD

Monitor

Ea

sily disp

layin

g tw

o A

4-size

pa

ge

s side

-by-sid

e w

ith ro

om

to sp

are

, this m

assive

flat-

pa

ne

l mo

nito

r will ch

an

ge

the

dyn

am

ics of d

esk

top

com

pu

ting

.

Enterprising Comm

unicationsT

od

ay’s b

usin

esse

s are

loo

kin

g fo

r a co

mp

reh

en

sive,

inte

gra

ted

com

mu

nica

tion

s

solu

tion

. An

d th

e In

foM

ob

ile

PB

X d

elive

rs it with

sea

mle

ss,

scala

ble

sup

po

rt for C

DM

A

wire

less, vo

ice-o

ver-IP

, da

ta,

an

d sta

nd

ard

ph

on

e n

etw

ork

s.

Digital Im

agemaker

Ou

r ne

w N

exca

SD

C-2

00

Z

ma

ke

s cap

turin

g th

ose

spe

cial

mo

me

nts e

asy w

ith 2

.11-

me

ga

pixe

l reso

lutio

n, five

inte

llige

nt e

xpo

sure

mo

de

s, a

6x zo

om

(3x o

ptica

l/2x d

igita

l),

an

d a

brig

ht 1.8

-inch

TFT

-LCD

disp

lay.

Page Burner

Prin

ting

at 3

5 p

pm

, the

ML-

35

50

A3

-ove

rsize b

usin

ess

lase

r pro

mise

s to o

utru

n th

e

com

pe

tition

in sp

ee

d, fe

atu

res,

an

d to

tal co

st of o

wn

ersh

ip.

All-In-Wonder

With

an

86

6-M

Hz P

en

tium

III,

30

GB

ha

rd d

rive, a

nd

the

wo

rld’s first 1,4

00

x 1,05

0-p

ixel

15-in

ch T

FT-LC

D d

ispla

y, the

aw

ard

-win

nin

g M

150

0 is th

e

ultim

ate

all-in

-on

e d

esk

top

com

pu

ter.

30

“The world is flat. A

t least the monitor w

orld of the future is. And Sam

sung

is a leader in bringing flat-screen CDT and flat-panel TFT-LCD

monitors to

the desktop. Our latest developm

ent is a 24-inch TFT-LCD m

onitor with a

record-setting WU

XGA

resolution of 1,920 x 1,200 pixels that’ll give

computer users plenty of room

to create their own flat digital w

orlds.”

—B

yung-Woo K

ang, Vice P

resident, Flat Panel D

isplay R&

D Team

31

In 2

00

1, we

’ll con

tinu

e to

cha

llen

ge

the

limits o

f disp

lay

tech

no

log

y as w

e d

elive

r the

clea

rest, sh

arp

est, m

ost

erg

on

om

ic visua

l acce

ss to o

ffice n

etw

ork

s with

the

mo

st-ad

van

ced

CD

T a

nd

TFT

-LCD

mo

nito

rs ava

ilab

le.

Th

ese

flag

ship

pro

du

cts will co

ntin

ue

to e

nh

an

ce th

e

Syn

cMa

ster b

ran

d im

ag

e a

s we

mo

un

t a m

ajo

r ma

rke

ting

pu

sh to

cap

ture

25

% o

f the

ma

rke

t ba

cke

d b

y a n

ew

fou

rth-g

en

era

tion

TFT

-LCD

ma

nu

factu

ring

line

tha

t’ll

bo

ost o

utp

ut to

3 m

illion

un

its an

nu

ally.

In th

e d

esk

top

PC

cate

go

ry, ou

r ma

rke

t lea

de

rship

in

virtua

lly eve

ry ma

jor co

mp

on

en

t are

a w

ill en

sure

we

ma

inta

in a

50

%-p

lus sh

are

of th

e K

ore

an

ma

rke

t in th

e

com

ing

yea

r. We

also

pla

n to

step

up

ma

rke

ting

of o

ur

Ma

gicS

tatio

n P

C b

ran

d in

inte

rna

tion

al m

ark

ets, fo

cusin

g

on

lea

din

g-e

dg

e p

rod

ucts lik

e th

e a

ll-in-o

ne

M15

00

with

a

hig

h-re

solu

tion

1,40

0 x 1,0

50

SX

GA

+ T

FT-LC

D d

ispla

y.

20

01 w

ill also

ma

rk o

ur fu

ll-scale

en

tran

ce in

to th

e

bu

sine

ss lase

r cate

go

ry with

the

mid

-yea

r de

bu

t of th

e

ML-3

55

0 3

5-p

pm

A3

-ove

rsize la

ser p

rinte

r. With

un

iqu

e

fea

ture

s like

stan

da

rd fu

ll-spe

ed

du

ple

x prin

ting

an

d th

e

low

est co

st-pe

r-pa

ge

in th

e cla

ss, this p

rinte

r en

gin

e w

ill

also

pa

ve th

e w

ay fo

r ou

r en

try into

the

hig

h-sp

ee

d

dig

ital co

pie

r field

be

fore

yea

r-en

d.

19%

In 2

00

0,w

e o

nce

ag

ain

do

min

ate

d th

e g

lob

al m

on

itor

ma

rke

t with

a 19

% sta

ke

. Ou

r gro

win

g S

yncM

aste

r

flat-scre

en

CD

T a

nd

flat-p

an

el T

FT-LC

D lin

eu

p w

on

a

rem

ark

ab

le to

tal o

f 20

0 to

p ra

ting

s in m

ag

azin

es

wo

rldw

ide

. Am

on

g th

e n

ew

arriva

ls du

ring

the

yea

r

we

re th

e 2

00

0 ID

EA

Silve

r Aw

ard

-win

nin

g 15

0M

P a

nd

170

MP

mu

ltime

dia

TFT

-LCD

s, a 2

2-in

ch fla

t-scree

n C

DT

mo

nito

r, the

wo

rld’s first 2

4-in

ch T

FT-LC

D, a

nd

ou

r

first LCD

pro

jecto

r with

a p

ow

erfu

l 2,4

00

-lux o

utp

ut.

Du

ring

the

yea

r, we

exte

nd

ed

ou

r lea

d in

the

Ko

rea

n d

esk

top

PC

cate

go

ry to 4

3.6

% o

f the

ma

rke

t.

Ou

r Ma

gicS

tatio

n d

esk

top

s con

tinu

ed

to k

ee

p p

ace

with

the

ind

ustry tre

nd

s with

1-GH

z PIII a

nd

P4

pro

cesso

rs, hig

h-te

ch stylin

g, a

nd

an

all-in

-on

e d

esig

n

with

the

ind

ustry’s h

igh

est-re

solu

tion

15-in

ch LC

D.

In 2

00

0, w

e e

xpa

nd

ed

ou

r lea

d in

the

com

pu

ter

stora

ge

ma

rke

t, cap

turin

g 2

5%

of th

e D

VD

-RO

M a

nd

30

% o

f the

com

bin

atio

n C

D-R

W/D

VD

-RO

M d

rive

cate

go

ries. O

ur S

pin

Po

int h

ard

drive

cap

acitie

s also

con

tinu

ed

the

ir rap

id g

row

th, d

ou

blin

g to

40

GB

.

Prin

ters a

nd

fax m

ach

ine

s are

an

incre

asin

gly

imp

orta

nt p

art o

f ou

r office

ne

two

rk stra

teg

y. Th

e ye

ar

saw

us la

un

ch th

e w

orld

’s first flatb

ed

mu

ltifun

ction

ink

-jet p

rinte

r with

a b

uilt-in

Sm

artM

ed

ia™

me

mo

ry

card

inte

rface

as w

ell a

s the

iF Pro

du

ct De

sign

Aw

ard

-

win

nin

g M

L-45

00

an

d M

L-46

00

lase

r prin

ters.

32

Multim

edia Goes Flat

Fea

turin

g a

TV

tun

er, p

icture

-in-p

icture

,

an

d in

pu

ts for a

ny a

na

log

vide

o so

urce

,

the

171M

P b

ring

s a sh

arp

, stylish 1,2

80

x

1,02

4-p

ixel m

ultim

ed

ia vie

win

g e

xpe

ri-

en

ce to

an

y de

skto

p.

Topping the sales lists in 29 nations, Sam

sung moni-

tors were hooked up to alm

ost one out of every five

computers sold w

orldwide in 2000. The international

media liked them

even more, aw

arding a total of 130

and 43 top ratings to our CDT and LCD

monitor fam

i-

lies during the year. And as the year cam

e to a close,

we m

arked yet another milestone as w

e shipped our

100 millionth m

onitor to date.

SyncMaster 740 D

FT 17-Inch Monitor

Sa

msu

ng

brin

gs D

yna

Flat fla

t-scree

n te

chn

olo

gy

to a

ne

w p

rice-p

oin

t in th

is stylish n

ew

pa

cka

ge

.

market share

33

Core Components

35

We’re turning m

anufacturers on to the essence of the digital age.

It do

esn

’t tak

e m

uch

con

tem

pla

tion

to re

alize

sem

icon

du

ctors a

re th

e life

-force

of th

e

ele

ctron

ics ind

ustry. S

am

sun

g d

erive

s gre

at in

ne

r stren

gth

from

ind

ustry le

ad

ersh

ip in

com

pu

ter m

em

ory a

nd

LCD

disp

lays a

s we

ll as a

rap

idly in

crea

sing

sha

re o

f the

system

-

on

-chip

an

d o

ptica

l stora

ge

de

vice m

ark

ets. A

nd

ele

ctron

ics ma

nu

factu

rers w

orld

wid

e

are

find

ing

tha

t fact ve

ry en

ligh

ten

ing

.

Alpha 21264a 833-M

Hz M

icroprocessorS

pe

ctacu

lar b

an

dw

idth

an

d a

cho

ice o

f eith

er U

nix o

r Linu

x op

era

ting

system

s are

just tw

o o

f

the

rea

son

s ou

r 64

-bit A

lph

a p

roce

ssors a

re fo

un

d in

som

e o

f tod

ay’s h

igh

est-p

erfo

rma

nce

Wafers G

row U

pO

ur n

ew

12-in

ch w

afe

r

fab

ricatio

n te

chn

olo

gy w

ill

allo

w u

s to p

rod

uce

ove

r twice

as m

an

y chip

s pe

r wa

fer a

s

tod

ay’s 8

-inch

line

s, givin

g u

s a

ma

jor co

mp

etitive

ad

van

tag

e

as th

e in

du

stry mo

ves to

hig

he

r-ma

rgin

25

6M

b a

nd

512

Mb

chip

s.

Cards With Sm

artsW

he

the

r it’s facilita

ting

e-

com

me

rce, b

uild

ing

custo

me

r

loya

lty, pa

ying

for a

ph

on

e ca

ll

or b

us fa

re, o

r simp

ly pro

vidin

g

ide

ntifica

tion

, ou

r full-ra

ng

e o

f

con

tact a

nd

con

tactle

ss sma

rt

card

s are

the

pe

rfect so

lutio

n.

Mobile H

igh-Definition

Th

e n

ext g

en

era

tion

of

cdm

a2

00

0 1x a

nd

GP

RS

mo

bile

ph

on

es a

re m

ak

ing

vide

o-o

n-

the

-go

a re

ality. O

ur n

ew

hig

h-

reso

lutio

n 7

20

x 24

0-p

ixel

po

ly-silicon

refle

ctive T

FT-LC

D

en

sure

s the

view

ing

exp

erie

nce

is as sh

arp

an

d

clea

r as p

ossib

le.

More M

emory To G

oLe

ap

ing

from

0.18

-micro

n to

0.15

-micro

n te

chn

olo

gy in

just

a six-m

on

th p

erio

d, w

e

bo

oste

d o

ur N

AN

D fla

sh m

em

-

ory ch

ip ca

pa

cities fro

m 2

56

Mb

to 5

12M

b w

ith th

e w

orld

’s

sma

llest d

ie size

to d

ate

. An

d

0.12

-micro

n is ju

st aro

un

d th

e

corn

er.

36

“The networked m

ultimedia future is going to require lots of m

emory. In

2000, we developed the w

orld’s first 0.10-micron process technology for

the next generation of 4Gb D

RA

M chips…

. This technology will soon be

dramatically increasing per-w

afer yields of our 128Mb and 256M

b chips

as we lead the industry in introducing higher-capacity, higher-m

argin512M

b and 1Gb chips.”

—Su-Jin A

hn, Senior Engineer, Technology Developm

ent Team

37

In 2

00

1, we

’ll con

tinu

e to

pu

sh o

ur fa

brica

tion

pro

cess

tech

no

log

y be

low

the

0.10

-micro

n le

vel a

nd

ad

d 12

-inch

fab

ricatio

n te

chn

olo

gy a

s we

aim

for sig

nifica

nt n

ew

eco

no

mie

s of sca

le. O

ur co

ntin

uo

us p

ursu

it of h

igh

er-

cap

acity, h

igh

er-m

arg

in m

em

ory p

rod

ucts w

ill ke

ep

us

com

forta

bly N

o. 1 in

this a

rea

. In p

articu

lar, a

strate

gic

allia

nce

with

Inte

l will p

rovid

e u

s with

the

fun

din

g fo

r

ne

cessa

ry testin

g a

nd

valid

atio

n e

qu

ipm

en

t tha

t will

he

lp u

s bo

ost o

utp

ut o

f third

-ge

ne

ratio

n 12

8M

b R

DR

AM

to 10

millio

n ch

ips m

on

thly in

ea

rly 20

01 a

nd

20

millio

n

in th

e se

con

d h

alf o

f the

yea

r, givin

g u

s a m

ark

et sh

are

of o

ver 5

0%

in th

is hig

h-p

erfo

rma

nce

me

mo

ry are

a.

Du

ring

the

yea

r, we

’ll con

tinu

e o

ur d

iversifica

tion

into

no

n-m

em

ory se

mico

nd

ucto

r field

s to re

du

ce o

ur

exp

osu

re to

vola

tile m

em

ory m

ark

ets. Fo

cusin

g o

n th

e

system

-on

-chip

, LCD

drive

r IC, a

nd

sma

rt card

field

s,

ou

r system

larg

e-sca

le in

teg

ratio

n b

usin

ess w

ill

con

cen

trate

on

solid

gro

wth

op

po

rtun

ities w

ith e

xisting

cash

-cow

as w

ell a

s ne

w h

igh

-ma

rgin

pro

du

cts.

Ha

nd

-in-h

an

d w

ith o

ng

oin

g w

ork

on

larg

er, h

igh

er-

reso

lutio

n T

FT-LC

Ds, w

e’ll a

lloca

te m

ore

reso

urce

s on

sma

ll an

d m

ed

ium

-size LC

D d

eve

lop

me

nt to

me

et

incre

asin

g d

em

an

d fo

r hig

he

r-qu

ality d

ispla

ys for P

DA

s,

mo

bile

ph

on

es, In

tern

et a

pp

lian

ces, a

nd

oth

er p

orta

ble

dig

ital d

evice

s.

0.13-mi

38

In 2

00

0, w

e m

ark

ed

ou

r 8th

con

secu

tive ye

ar a

t the

top

of th

e m

em

ory b

usin

ess, ca

ptu

ring

21%

of th

e

DR

AM

an

d th

e S

RA

M m

ark

ets. A

mo

ng

the

yea

r’s ke

y

de

velo

pm

en

ts we

re a

0.12

-micro

n 5

12M

b S

DR

/DD

R

DR

AM

, 128

MB

Sm

artM

ed

ia™

flash

me

mo

ry card

, 50

0-

Mb

ps 12

8M

DD

R S

DR

AM

, 0.17

-micro

n 2

88

Mb

RD

RA

M,

0.15

-micro

n 5

12M

b N

AN

D fla

sh m

em

ory, a

nd

0.10

-

micro

n p

roce

ss tech

no

log

y tha

t’ll pa

ve th

e w

ay fo

r

Mem

ory Breaks 1 G

Hz

Ou

r ne

w 0

.17-m

icron

tech

no

log

y

ha

s bo

oste

d th

e sp

ee

d o

f ou

r

third

-ge

ne

ratio

n R

DR

AM

me

mo

ry

chip

s by o

ver 3

0%

from

80

0 M

Hz

to 1,0

66

MH

z as w

ell a

s incre

ase

d

pe

r-wa

fer yie

lds b

y 25

%.

cronleader

When w

e unveiled the world’s first 1G

b DD

R D

RA

M

in mid-1999, it becam

e the first mem

ory chip to use

0.13-micron process technology, the first D

RA

M chip

to operate at 350 MH

z, and the smallest 1G

b chip

with a 30%

to 40% sm

aller die size. This ground-

breaking technology dramatically im

proved our

cost-competitiveness in 2000, m

ore than doubling

per-wafer yields of our 64M

b, 128M

b and 256Mb

chips as it removed the im

mediate need to invest in

expensive 12-inch wafer lines.

39

ne

xt-ge

ne

ratio

n 4

Gb

de

vices.

In n

on

-me

mo

ry field

s, we

focu

sed

on

ho

nin

g o

ur

com

pe

titive e

dg

e d

urin

g th

e ye

ar a

s we

de

velo

pe

d

Rig

ht W

are

, the

ind

ustry’s first C

AD

softw

are

de

sign

too

l for syste

m la

rge

-scale

inte

gra

tion

chip

s. In

ad

ditio

n to

he

lpin

g u

s red

uce

the

initia

l stag

e o

f chip

de

velo

pm

en

t time

by a

t lea

st 20

%, R

igh

t Wa

re w

ill

save

us a

pp

roxim

ate

ly US

$2

millio

n a

nn

ua

lly in

softw

are

licen

sing

fee

s.

Du

ring

the

yea

r, we

also

ma

inta

ine

d o

ur N

o. 1

ran

kin

g in

the

TFT

-LCD

ind

ustry fo

r a 3

rd stra

igh

t

yea

r with

a 2

0.1%

ma

rke

t sha

re, re

cord

ing

US

$3

billio

n in

sale

s as p

rod

uctio

n su

rpa

ssed

6.11 m

illion

pa

ne

ls. Ea

rly in th

e ye

ar, w

e re

intro

du

ced

ou

r TFT

-

LCD

pa

ne

l line

up

un

de

r the

Wise

Vie

w™

na

me

to

stren

gth

en

ou

r bra

nd

ing

as w

e ro

lled

ou

t a 2

-inch

the vision: leading the digital convergence revolution

the strategy:year zero

13

Samsung Electronics is an electronics industry leader w

ith 66,000em

ployees and operations in some 50 countries around the globe.

We’re currently the w

orld’s top-selling brand in six core productareas—

mem

ory chips, TFT-LC

Ds, com

puter monitors, m

icro-w

ave ovens, DV

D-R

OM

drives, and CD

MA

mobile phones—

and a top-ten player in numerous others.

Our Sem

iconductor Business G

roup maintained a com

m-

anding 20% m

arket share in the DR

AM

, SRA

M, and T

FT-LCD

markets in 2000 as w

e continued to diversify into non-mem

oryareas to reduce our exposure to m

emory m

arket volatility, focusingon high-grow

th, high-margin areas such as sm

all and medium

-sizeT

FT-LCD

s, smart cards, and system

-on-chip products.O

ur Information &

Com

munications B

usiness Group stayed

No. 1 in C

DM

A phone sales during the year as w

e introduced thew

orld’s first 2.5G G

PRS and cdm

a2000 1x mobile phones,

marking an

important first step in the m

igration to global 3Gm

obile service. We dem

onstrated a complete w

orking solution forcdm

a2000 1x at the Sydney Olym

pic Gam

es as well as supplying

all the wireless com

munications equipm

ent and technicalassistance to ensure the w

orld’s greatest sports festival went as

smoothly as possible. W

e also acquired TL 9000 certification—

thecom

munications indus- try’s equivalent of ISO

9001—for our

entire wired and w

ireless product lineup, including the world’s first

in the radio access network equipm

ent and phone software

categories.

41

Our D

igital Media System

and Hom

e Appliances B

usiness Groups

continued to move aw

ay from single-function, low

-margin com

modity

products to multifunction, high-m

argin convergence products like acom

bination DV

D player/V

HS recorder, an M

P3 player capable ofstoring and displaying digital photos, and the w

orld’s thinnest notebookPC

with an industry-first integrated-but-independent M

P3 player. We

also marked our 10th straight year at the top of the com

puter monitor

category with 19%

of the global market and our first in the m

icrowave

oven category, shipping over 7 million units to capture 25%

of the world

market.

The record-breaking financial perform

ance we achieved in 2000 w

asa culm

ination of several factors. Our ongoing restructuring efforts since

the 1997 Korean financial crisis and a select-and-focus strategy helped us

make a total com

mitm

ent to investing in growth businesses and exiting

marginal ones. O

perational innovations also played a key role as we suc-

cessfully reengineered and systemized business processes around custom

ersand m

arkets.D

uring the year, we achieved our global supply chain m

anagement

goal of order fulfillment w

ithin five days for all monitor, m

emory, and

TFT-LC

D m

odule products, a system w

e’re now in the process of expand-

ing to our audio/video, home appliance, m

obile phone, and printerproduct lines. In addition to com

pleting implem

entation of a global ER

Psystem

at 70 worksites for real-tim

e access to logistics and financial infor-m

ation throughout our global manufacturing and sales netw

orks , we also

carried out 720 Six Sigma projects and added 3,800 black belts to our

ranks as we significantly im

proved both product quality and customer

satisfaction on our way to a cost savings of 180 billion w

on.

42

Expanded investm

ent in R&

D in 2000 enhanced our ability to

proacti vely respond to changing markets and custom

er requirements. W

einvested 1.8 billion w

on or 5.3% of sales—

a 12.5% year-on-year increase

in mone- tary term

s—in developing tom

orrow’s digital netw

ork techno-logies at our nine-center global R

&D

network. O

ur staff of 13,000engineers w

as hard at work adding links to the value chain and acquiring

key Internet techno- logies as it created new convergence products and

enhanced our capability to leverage the latest developments in the rapidly

changing digital landscape. B

uilding on accomplishm

ents in recent years that have includedparticipation in the developm

ent of the 4.7 GB

DV

D specification and

the contribution of three MPE

G-2 technologies to the M

PEG

-LA patent

pool, we continued to steadily m

ove from standard-adopter to standard-

maker by contributing a technology specification for digital im

age comp-

ression to the MPE

G-4 patent pool in 2000 as w

e accelerated ourpioneering developm

ent work in the 3G

mobile com

munications and

double-data-rate DR

AM

fields. These efforts helped us w

in 1,442 US

patents during the year, making us the N

o. 4 innovator in the world’s

biggest technology market for a third consecutive year.

Individually and collectively, the achievements m

entioned above havehelped set the stage for the next phase of our corporate grow

th—value

innovation. We expect our D

igital -C

ompany strategy launched in late

2000 to have a profound impact on our bottom

line in 2001 as we focus

our considerable resources on creating tomorrow

’s digital technologies andsolutions as w

ell as building a cutting-edge global supply chain manage-

ment system

that’ll rapidly move us tow

ard our goal of leading the digitalconvergence revolution.

43

e

If you

wa

nt to

rea

ch co

nsu

me

rs wo

rldw

ide

, you

’ve g

ot to

spe

ak

the

ir lan

gu

ag

e. A

t Sa

msu

ng

, we

’ve sp

en

t the

pa

st

two

de

cad

es b

eco

min

g flu

en

t in th

e u

nive

rsal “la

ng

ua

ge

” of sp

orts, sp

on

sorin

g a

gro

win

g n

um

be

r of in

tern

atio

na

l

eve

nts in

clud

ing

the

pre

stigio

us S

am

sun

g N

atio

ns C

up

eq

ue

strian

tea

m ch

am

pio

nsh

ip se

ries, th

e A

sian

Ga

me

s,

Sa

msu

ng

Ru

nn

ing

Festiva

l 5 k

m fu

n ru

ns, a

nd

do

zen

s of p

rofe

ssion

al a

nd

am

ate

ur sp

orts te

am

s wo

rldw

ide

. Bu

t

ou

r big

ge

st an

d m

ost m

ea

nin

gfu

l invo

lvem

en

t with

spo

rts is ou

r succe

ssful re

latio

nsh

ip w

ith th

e O

lymp

ic Mo

ve-

me

nt a

s the

Wo

rldw

ide

Wire

less C

om

mu

nica

tion

s Eq

uip

me

nt P

artn

er o

f the

Olym

pic G

am

es.

An O

lympic Rendezvous w

ith Samsung

Sin

ce 19

97

, we

’ve h

elp

ed

ke

ep

the

Olym

pic G

am

es ru

nn

ing

smo

oth

ly with

state

-of-th

e-a

rt wire

less co

mm

un

i-

catio

ns te

chn

olo

gy. H

ow

eve

r, ou

r pre

sen

ce a

t the

20

00

Syd

ne

y Ga

me

s wa

s mu

ch m

ore

tha

n ju

st ab

ou

t mo

bile

ph

on

es a

nd

two

-wa

y rad

ios. O

ur O

lymp

ic Re

nd

ezvo

us@

Sa

msu

ng

pa

vilion

in O

lymp

ic Pa

rk d

rew

mo

re th

an

1.1

millio

n visito

rs, givin

g a

thle

tes a

pla

ce to

rela

x, spe

ctato

rs en

terta

inm

en

t from

aro

un

d th

e w

orld

, an

d e

veryo

ne

an

up

-close

loo

k a

t ho

w S

am

sun

g 3

G m

ob

ile co

mm

un

icatio

ns te

chn

olo

gy w

ill cha

ng

e th

eir fu

ture

. We

loo

k fo

rwa

rd to

brin

gin

g th

e w

orld

eve

n clo

ser to

ge

the

r at th

e u

pco

min

g 2

00

2 S

alt La

ke

Win

ter G

am

es a

nd

20

04

Ath

en

s Su

mm

er

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on

Ha

p

At S

am

sun

g, co

rpo

rate

citizen

ship

is a re

spo

nsib

ility we

tak

e ve

ry serio

usly. R

eco

gn

ized

by th

e W

ash

ing

ton

D.C

.-

ba

sed

Po

ints o

f Ligh

t Fou

nd

atio

n in

199

8 w

ith th

e p

restig

iou

s Aw

ard

for E

xcelle

nce

in C

orp

ora

te C

om

mu

nity S

ervice

,

we

con

tinu

e to

active

ly de

velo

p p

rog

ram

s an

d su

pp

ort th

e o

ver 10

,00

0 e

mp

loye

es w

ho

volu

nte

er th

eir tim

e to

he

lp

the

disa

ble

d a

nd

disa

dva

nta

ge

d, p

rote

ct the

en

viron

me

nt, a

nd

pro

mo

te co

mp

ute

r litera

cy to m

ak

e th

eir lo

cal

com

mu

nitie

s be

tter p

lace

s to live

. In 2

00

0, w

e re

ach

ed

ou

t to th

e w

orld

’s less fo

rtun

ate

child

ren

by co

ntrib

utin

g 6

00

millio

n w

on

to U

NE

SC

O th

at w

ill be

use

d to

fun

d e

du

catio

na

l pro

gra

ms fo

r ne

ed

y child

ren

in 15

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rldw

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.

Volunteers Make A

ll the Difference

Financial Report 2000

[48] Report of Independent A

ccountants

[49] Balance S

heets

[52] Statements of Incom

e

[53] Statements of A

ppropriations of Retained Earnings

[54] Statements of Cash Flow

s

[56] Notes to Financial Statem

ents

*T

he

fina

ncia

l resu

lts in th

e fo

llow

ing

rep

ort a

re fo

r Sa

msu

ng

Ele

ctron

ics on

ly

an

d d

o n

ot re

flect th

e re

sults o

f its sub

sidia

ries o

r affilia

tes.

As o

f De

cem

be

r 31, 2

00

0 a

nd

199

9

In Thousands of Korean W

onIn Thousands of U

.S. Dollars (N

ote 3)

20

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92

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SETS

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cash

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526,829,785$414,522

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ote

4)

1,409,879,711648,343,188

1,119,841514,967

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237,450,347534,822

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99

(No

te 6

)1,162,483,845

1,334,971,347923,339

1,060,343O

the

r acco

un

ts an

d n

ote

s rece

ivab

le,

less a

llow

an

ce fo

r do

ub

tful

acco

un

ts of

15,2

32

,211,0

00

in 2

00

0 a

nd

2

9,13

1,35

4,0

00

in 19

99

659,700,104690,544,173

523,987548,486

Inve

nto

ries (N

ote

7)

2,802,763,6252,261,379,652

2,226,1821,796,171

Accru

ed

inco

me

88,277,06021,614,484

70,11717,168

Ad

van

ce p

aym

en

ts, less a

llow

an

ce

for d

ou

btfu

l acco

un

ts of

14,3

46

,07

4,0

00

in 2

00

0 a

nd

74

5,0

90

,00

0 in

199

944,286,594

84,940,45735,176

67,467G

ua

ran

tee

de

po

sits160,287,992

171,716,625127,314

136,391O

the

r233,538,148

219,441,221185,494

174,299T

ota

l curre

nt a

ssets

7,756,441,2626,197,231,279

$6,160,794$4,922,345

Pro

pe

rty, pla

nt a

nd

eq

uip

me

nt,

inclu

din

g re

valu

ed

po

rtion

,

ne

t of a

ccum

ula

ted

de

pre

ciatio

n (N

ote

8)

12,324,428,6499,822,251,279

$9,789,062$7,801,629

Eq

uity in

vestm

en

ts (No

te 9

)5,409,741,103

6,050,044,4574,296,856

4,805,436

Lon

g-te

rm fin

an

cial in

strum

en

ts, rece

ivab

les

an

d o

the

r asse

ts (No

tes 4

, 6 a

nd

10)

1,226,228,9721,559,748,944

973,9711,238,879

De

ferre

d in

com

e ta

x asse

ts (No

te 19

)178,206,497

1,080,526,923141,546

858,242

To

tal a

ssets

26,895,046,48324,709,802,882

$21,362,229$19,626,531

Continued;

The accompanying notes are an integral part of these statem

ents.

Balance S

heets

49

As o

f De

cem

be

r 31, 2

00

0 a

nd

199

9

In Thousands of Korean W

onIn Thousands of U

.S. Dollars (N

ote 3)

20

00

199

92

00

019

99

LIABILITIES AN

D SH

AREH

OLD

ERS’ EQ

UITY

Cu

rren

t liab

ilities:

Tra

de

acco

un

ts an

d n

ote

s pa

yab

le1,492,046,020

1,405,008,718$1,185,104

$1,115,972O

the

r acco

un

ts an

d n

ote

s pa

yab

le1,697,547,216

1,613,961,6321,348,330

1,281,939S

ho

rt-term

bo

rrow

ing

s (No

te 11)

14,21749,511

1139

Cu

rren

t ma

turitie

s of lo

ng

-term

de

bt,

ne

t of d

iscou

nts a

nd

pre

miu

ms

on

de

be

ntu

res (N

ote

s 12 a

nd

13)

2,357,173,6861,396,329,672

1,872,2591,109,078

Accru

ed

exp

en

ses

1,162,008,323733,624,266

922,961582,704

Divid

en

ds p

aya

ble

(No

te 16

)422,741,482

342,729,389335,776

272,224In

com

e ta

xes p

aya

ble

(No

te 19

)896,957,557

606,942,742712,437

482,083O

the

r579,960,001

682,225,510460,651

541,880T

ota

l curre

nt lia

bilitie

s8,608,448,502

6,780,871,440$6,837,529

$5,385,919

Lon

g-te

rm d

eb

t, less cu

rren

t

ma

turitie

s (No

te 12

)493,102,602

2,933,429,090$391,662

$2,329,968

Fore

ign

curre

ncy n

ote

s an

d

bo

nd

s (No

te 13

)1,210,765,542

1,415,529,449961,688

1,124,328

Oth

er lo

ng

-term

liab

ilities

245,146,335160,902,912

194,715127,802

Accru

ed

seve

ran

ce b

en

efits,

ne

t of tra

nsfe

r to th

e

Na

tion

al P

en

sion

Fun

d o

f

27

,76

9,8

54

,00

0 in

20

00

an

d

35

,175

,07

1,00

0 in

199

9, a

nd

seve

ran

ce

insu

ran

ce fu

nd

de

po

sits of

190

,90

0,17

4,0

00

in 2

00

0 a

nd

15

3,13

3,7

24

,00

0

in 19

99

(No

te 2

)144,736,222

87,501,523114,961

69,500

To

tal lia

bilitie

s10,702,199,203

11,378,234,414$8,500,555

$9,037,517

Continued;

The accompanying notes are an integral part of these statem

ents.

Balance S

heets

50

As o

f De

cem

be

r 31, 2

00

0 a

nd

199

9

In Thousands of Korean W

onIn Thousands of U

.S. Dollars (N

ote 3)

20

00

199

92

00

019

99

LIABILITIES AN

D SH

AREH

OLD

ERS’ EQ

UITY

Co

mm

itme

nts a

nd

con

ting

en

cies (N

ote

14)

Sh

are

ho

lde

rs’ eq

uity:

Ca

pita

l stock

(No

te 1):

Co

mm

on

stock

762,207,995756,074,960

$605,407$600,536

Pre

ferre

d sto

ck119,467,135

119,467,13594,890

94,890

Pa

id-in

cap

ital in

exce

ss of

pa

r valu

e (N

ote

1)3,843,442,538

3,719,943,0123,052,774

2,954,682

Oth

er ca

pita

l surp

lus (N

ote

s 8 a

nd

13)

1,843,210,7521,834,985,265

1,464,0281,457,494

Re

tain

ed

ea

rnin

gs (N

ote

15):

Ap

pro

pria

ted

10,754,395,6885,241,659,358

8,542,0144,163,352

Un

ap

pro

pria

ted

31,40931,989

2525

Ca

pita

l ad

justm

en

ts:

Tre

asu

ry stock

(No

te 17

)(962,247,859)

(427,838,371)(764,295)

(339,824)C

on

side

ratio

n fo

r con

versio

n rig

hts (N

ote

13)

29,434,90985,476,294

23,38067,892

Ga

in (lo

ss) on

valu

atio

n o

f

inve

stme

nts (N

ote

9)

(287,568,317)2,005,562,370

(228,410)1,592,980

Loss o

n va

lua

tion

of d

eriva

tive

instru

me

nts (N

ote

14)

(3,272,484)(3,793,544)

(2,599)(3,013)

Sto

ck o

ptio

n co

mp

en

satio

n (N

ote

18)

93,745,514–

74,460–

To

tal sh

are

ho

lde

rs’ eq

uity

16,192,847,28013,331,568,468

$12,861,674$10,589,014

To

tal lia

bilitie

s an

d sh

are

ho

lde

rs’ eq

uity

26,895,046,48324,709,802,882

$21,362,229$19,626,531

The accompanying notes are an integral part of these statem

ents.

Balance S

heets

51

For th

e ye

ars e

nd

ed

De

cem

be

r 31, 2

00

0 a

nd

199

9

In Thousands of Korean W

onIn Thousands of U

.S. Dollars (N

ote 3)

20

00

199

92

00

019

99

Sa

les (N

ote

21):

Do

me

stic10,903,383,976

8,850,624,784$8,660,353

$7,029,885E

xpo

rt23,380,368,303

17,267,160,96718,570,586

13,714,980T

ota

l sale

s34,283,752,279

26,117,785,751$27,230,939

$20,744,865

Co

st of sa

les (N

ote

21)

21,993,377,77017,661,171,944

17,468,92614,027,936

Gro

ss pro

fit12,290,374,509

8,456,613,807$9,762,013

$6,716,929S

ellin

g, g

en

era

l an

d a

dm

inistra

tive e

xpe

nse

s4,855,219,849

3,975,113,6903,856,410

3,157,358O

pe

ratin

g p

rofit

7,435,154,6604,481,500,117

$5,905,603$3,559,571

No

n-o

pe

ratin

g in

com

e:

Inte

rest a

nd

divid

en

d in

com

e156,427,345

227,740,962$124,247

$180,890G

ain

on

fore

ign

curre

ncy tra

nsa

ction

s299,070,108

267,472,334237,546

212,448G

ain

on

fore

ign

curre

ncy tra

nsla

tion

(No

te 2

3)

34,121,680261,416,440

27,102207,638

Ga

in o

n va

lua

tion

of in

vestm

en

ts

usin

g th

e e

qu

ity me

tho

d871,326,886

298,242,218692,079

236,888O

the

r649,446,121

592,472,848515,843

470,591T

ota

l no

n-o

pe

ratin

g in

com

e2,010,392,140

1,647,344,802$1,596,817

$1,308,455

No

n-o

pe

ratin

g e

xpe

nse

s:

Inte

rest e

xpe

nse

343,367,140721,198,940

$272,730$572,835

Loss o

n fo

reig

n cu

rren

cy tran

sactio

ns

279,048,744280,490,610

221,643222,788

Loss o

n fo

reig

n cu

rren

cy tran

slatio

n (N

ote

23

)237,838,325

106,594,502188,911

84,666O

the

r638,478,440

726,334,345507,131

576,914T

ota

l no

n-o

pe

ratin

g e

xpe

nse

s1,498,732,649

1,834,618,397$1,190,415

$1,457,203

Ord

ina

ry pro

fit7,946,814,151

4,294,226,522$6,312,005

$3,410,823E

xtrao

rdin

ary in

com

e153,634,395

–122,029

–E

xtrao

rdin

ary lo

ss –

266,258,185–

211,484N

et in

com

e b

efo

re in

com

e ta

xes

8,100,448,5464,027,968,337

$6,434,034$3,199,339

Inco

me

tax e

xpe

nse

(No

te 19

)2,085,918,354

857,565,7631,656,806

681,148

Ne

t inco

me

6,014,530,1923,170,402,574

$4,777,228$2,518,191

Ea

rnin

gs p

er sh

are

(No

te 2

0)

35,00619,214

$28$15

(In K

ore

an

Wo

n a

nd

U.S

. Do

llars)

Dilu

ted

ea

rnin

gs p

er sh

are

(No

te 2

0)

34,39318,848

$27$14.9

(In K

ore

an

Wo

n a

nd

U.S

. Do

llars)

The accompanying notes are an integral part of these statem

ents.

Statem

ents of Income

52

For th

e ye

ars e

nd

ed

De

cem

be

r 31, 2

00

0 a

nd

199

9

Da

te o

f ap

pro

pria

tion

s: Ma

rch 9

, 20

01 a

nd

Ma

rch 16

, 20

00

In Thousands of Korean W

onIn Thousands of U

.S. Dollars (N

ote 3)

20

00

199

92

00

019

99

Re

tain

ed

ea

rnin

gs b

efo

re a

pp

rop

riatio

ns:

Un

ap

pro

pria

ted

reta

ine

d e

arn

ing

s carrie

d

ove

r from

prio

r yea

r31,989

32,306$25

$26C

um

ula

tive e

ffects o

f cha

ng

es

in a

ccou

ntin

g p

olicy (N

ote

2)

6,761,574(1,744,477,621)

5,371(1,385,606)

Ad

ditio

na

l accru

ed

seve

ran

ce b

en

efits

–(8,450,909)

–(6,712)

Inte

rim d

ivide

nd

s (No

te 16

, divid

en

d ra

te: 10

%)

(85,885,559)(84,663,871)

(68,217)(67,247)

Ne

t inco

me

6,014,530,1923,170,402,574

4,777,2282,518,191

To

tal re

tain

ed

ea

rnin

gs b

efo

re a

pp

rop

.5,935,438,196

1,332,842,479$4,714,407

$1,058,652

Tra

nsfe

rs from

volu

nta

ry rese

rves (N

ote

15):

Re

serve

for o

verse

as m

ark

et d

eve

lop

me

nt

37,990,68553,600,000

$30,175$42,573

Re

serve

for o

verse

as in

vestm

en

t loss

48,400,00070,199,899

38,44355,758

Re

serve

for te

chn

olo

gy d

eve

lop

me

nt

184,700,000274,700,000

146,704218,190

Re

serve

for e

xpo

rt loss

49,368,98568,000,000

39,21354,011

To

tal tra

nsfe

rs from

volu

nta

ry rese

rves

320,459,670466,499,899

$254,535$370,532

Ap

pro

pria

tion

s (No

te 15

):

Leg

al re

serve

53,000,000150,000,000

$42,097$119,142

Re

serve

for b

usin

ess ra

tion

aliza

tion

1,000,000,000700,000,000

794,281555,997

Re

serve

for te

chn

olo

gy d

eve

lop

me

nt

2,000,000,000606,581,000

1,588,562481,796

Ca

sh d

ivide

nd

s (No

te 16

)422,670,457

342,729,389335,719

272,224[C

om

mo

n sto

ck: 5

0%

in 2

00

0 a

nd

40

% in

199

9]

[Pre

ferre

d sto

ck: 5

1% in

20

00

an

d 4

1% in

199

9]

Re

serve

for lo

ss on

disp

osa

l of tre

asu

ry stock

200,000,000–

158,856–

Re

serve

for fa

cilities in

vestm

en

t2,580,196,000

–2,049,402

–T

ota

l ap

pro

pria

tion

s6,255,866,457

1,799,310,389$4,968,917

$1,429,159

Un

ap

pro

pria

ted

reta

ine

d e

arn

ing

s carrie

d o

ver

to su

bse

qu

en

t yea

r31,409

31,989$25

$25

The accompanying notes are an integral part of these statem

ents.

Statem

ents of Appropriations of R

etained Earnings

53

For th

e ye

ars e

nd

ed

De

cem

be

r 31, 2

00

0 a

nd

199

9

In Thousands of Korean W

onIn Thousands of U

.S. Dollars (N

ote 3)

20

00

199

92

00

019

99

Ca

sh flo

ws fro

m o

pe

ratin

g a

ctivities:

Ne

t inco

me

6,014,530,1923,170,402,574

$4,777,228$2,518,191

Item

s no

t invo

lving

cash

flow

s:

De

pre

ciatio

n a

nd

am

ortiza

tion

2,666,229,0962,739,262,420

$2,117,736$2,175,745

Pro

vision

for se

vera

nce

be

ne

fits160,523,572

119,847,588127,501

95,193Lo

ss on

disp

osa

l of p

rop

erty,

pla

nt a

nd

eq

uip

me

nt

23,325,28451,750,930

18,52741,105

Ga

in o

n d

ispo

sal o

f pro

pe

rty,

pla

nt a

nd

eq

uip

me

nt

(28,459,459)(23,523,016)

(22,605)(18,684)

Loss o

n d

ispo

sal o

f eq

uity in

vestm

en

ts36,411,398

32,702,75428,920

25,975G

ain

on

disp

osa

l of e

qu

ity inve

stme

nts

(1,016,307)(106,514,836)

(808)(84,603)

Loss o

n fo

reig

n cu

rren

cy tran

slatio

n237,838,325

106,358,633(692,079)

(236,888)G

ain

on

fore

ign

curre

ncy tra

nsla

tion

(27,643,050)(261,376,425)

188,91184,479

Ga

in o

n va

lua

tion

of in

vestm

en

ts

usin

g th

e e

qu

ity me

tho

d(871,326,886)

(298,242,218)(21,956)

(207,606)D

efe

rred

inco

me

taxe

s899,310,939

199,038,851714,306

158,092O

the

r283,050,658

526,336,066224,822

418,058T

ota

l item

s no

t invo

lving

cash

flow

s3,378,243,570

3,085,640,747$2,683,275

$2,450,866

Ch

an

ge

s in o

pe

ratin

g a

ssets a

nd

liab

ilities:

Tra

de

acco

un

ts an

d n

ote

s rece

ivab

le(697,751)

19,068,860$(554)

$15,146In

ven

torie

s(488,361,559)

(475,512,306)(387,896)

(377,690)A

ccrue

d in

com

e(65,522,394)

3,536,432(52,043)

2,809A

dva

nce

pa

yme

nts

(18,126,650)21,607,277

(14,398)17,162

Gu

ara

nte

e d

ep

osits

11,449,282(3,072,795)

9,094(2,441)

Tra

de

acco

un

ts an

d n

ote

s pa

yab

le68,396,233

308,456,59554,326

245,001A

ccrue

d e

xpe

nse

s409,340,228

84,558,898325,131

67,164In

com

e ta

xes p

aya

ble

290,014,815564,890,732

230,353448,682

Pa

yme

nt o

f seve

ran

ce b

en

efits

(68,872,692)(110,691,623)

(54,704)(87,920)

Oth

er

(74,574,885)408,846,750

(59,234)324,739

To

tal ch

an

ge

s in o

p. a

ssets a

nd

liab

ilities

63,044,627821,688,820

$50,075$652,652

Ne

t cash

pro

vide

d b

y op

era

ting

activitie

s9,455,818,389

7,077,732,141$7,510,578

$5,621,709

Continued;

The accompanying notes are an integral part of these statem

ents.

Statem

ents of Cash Flows

54

For th

e ye

ars e

nd

ed

De

cem

be

r 31, 2

00

0 a

nd

199

9

In Thousands of Korean W

onIn Thousands of U

.S. Dollars (N

ote 3)

20

00

199

92

00

019

99

Ca

sh flo

ws fro

m in

vestin

g a

ctivities:

Incre

ase

in sh

ort-te

rm fin

an

cial in

strum

en

ts(761,536,523)

–$(604,874)

$–D

ecre

ase

in sh

ort-te

rm fin

an

cial in

strum

en

ts–

362,368,502–

287,823P

roce

ed

s from

sale

of m

ark

eta

ble

secu

rities

1,708,799,613837,207,770

1,357,267664,978

Acq

uisitio

n o

f ma

rke

tab

le se

curitie

s(2,136,393,351)

(929,344,062)(1,696,897)

(738,160)In

crea

se in

oth

er a

ccou

nts a

nd

no

tes re

ceiva

ble

(5,495,533,634)(2,370,114,943)

(4,364,998)(1,882,538)

De

crea

se in

oth

er a

ccou

nts a

nd

no

tes re

ceiva

ble

5,522,883,4602,448,959,963

4,386,7231,945,163

Pro

cee

ds fro

m d

ispo

sal o

f pro

pe

rty,

pla

nt a

nd

eq

uip

me

nt

52,860,263399,277,815

209,649317,139

Acq

uisitio

n o

f pro

pe

rty, pla

nt a

nd

eq

uip

me

nt

(5,036,923,839)(3,401,866,665)

(4,281,161)(2,702,039)

Pro

cee

ds fro

m sa

le o

f eq

uity in

vestm

en

ts142,963,660

258,841,067113,553

205,593A

cqu

isition

of e

qu

ity inve

stme

nts

(954,452,666)(1,980,667,389)

(758,104)(1,573,207)

Incre

ase

in lo

ng

-term

fina

ncia

l instru

me

nts

an

d o

the

r asse

ts(275,443,541)

(609,048,949)(218,780)

(483,756)D

ecre

ase

in lo

ng

-term

fina

ncia

l instru

me

nts

an

d o

the

r asse

ts550,781,633

790,771,403437,475

628,095O

the

r(141,956,097)

3,902,01911

3,099N

et ca

sh u

sed

in in

vestin

g a

ctivities

(6,823,951,022)(4,189,713,464)

$(5,420,136)$(3,327,810)

Ca

sh flo

ws fro

m fin

an

cing

activitie

s:

Pro

cee

ds fro

m sh

ort-te

rm b

orro

win

gs

1,506,859214,979,206

$1,197$170,754

Re

pa

yme

nt o

f sho

rt-term

bo

rrow

ing

s(1,542,153)

(453,342,931)(1,225)

(360,082)In

crea

se in

oth

er a

ccou

nts a

nd

no

tes p

aya

ble

15,422,340,5099,603,870,409

12,249,6747,628,174

De

crea

se in

oth

er a

ccou

nts a

nd

no

tes p

aya

ble

(15,297,532,349)(9,046,194,581)

(12,150,542)(7,185,222)

Pro

cee

ds fro

m lo

ng

-term

de

bt

–722,407,330

–573,795

Re

pa

yme

nt o

f lon

g-te

rm d

eb

t(391,627,375)

(3,304,344,477)(311,062)

(2,624,579)P

roce

ed

s from

bo

nd

s–

478,410,000–

379,992R

ep

aym

en

t of cu

rren

t ma

turitie

s

of lo

ng

-term

de

bt

(1,398,995,814)(2,064,758,293)

(1,111,196)(1,639,999)

Issua

nce

of co

mm

on

stock

–1,567,684,230

–1,245,182

Pa

yme

nts o

f divid

en

ds

(428,543,923)(172,423,703)

(340,384)(136,953)

Pro

cee

ds fro

m a

cqu

isition

of tre

asu

ry stock

(534,409,488)–

(424,471)–

Oth

er

(8,009,728)(84,243,073)

(6,362)(66,913)

Ne

t cash

use

d in

fina

ncin

g a

ctivities

(2,636,813,462)(2,537,955,883)

$(2,094,371)$(2,015,851)

Ne

t cha

ng

e in

cash

an

d ca

sh e

qu

ivale

nts

(4,946,095)350,062,794

$(3,929)$278,048

Ca

sh a

nd

cash

eq

uiva

len

ts at b

eg

inn

ing

of ye

ar

526,829,785176,766,991

418,451140,403

Ca

sh a

nd

cash

eq

uiva

len

ts at e

nd

of ye

ar

521,883,690526,829,785

$414,522$418,451

The accompanying notes are an integral part of these statem

ents.

Statem

ents of Cash Flows

55

De

cem

be

r 31, 2

00

0 a

nd

199

9

1. The Company

Sa

ms

un

g E

lectro

nics

Co

., Ltd

. (the

“C

om

pa

ny

”) is

inco

rpo

rate

d

un

de

r the

law

s of th

e R

ep

ub

lic of K

ore

a to

ma

nu

factu

re a

nd

sell

ele

ctro

nic

go

od

s, c

om

mu

nic

atio

n fa

cilitie

s, s

em

ico

nd

uc

tors

,

tele

com

mu

nica

tion

pro

du

cts an

d o

the

r simila

r pro

du

cts.

Th

e C

om

pa

ny

’s s

toc

k is

pu

blic

ly tra

de

d a

nd

all is

su

ed

an

d

ou

tstan

din

g sh

are

s are

listed

on

the

Ko

rea

Sto

ck E

xcha

ng

e.

Un

de

r its Article

s of In

corp

ora

tion

, the

Co

mp

an

y is a

uth

orize

d to

issue

50

0,0

00

,00

0 sh

are

s of ca

pita

l stock

(pa

r va

lue

5

,00

0), o

f

wh

ich 10

0,0

00

,00

0 sh

are

s are

cum

ula

tive

, pa

rticipa

ting

pre

ferre

d

sto

ck

, wh

ich

are

no

n-v

otin

g a

nd

en

titled

to a

min

imu

m c

as

h

div

ide

nd

(9%

of p

ar v

alu

e). T

he

no

n-c

um

ula

tive

, no

n-v

otin

g

pre

ferre

d sto

ck issu

ed

on

or b

efo

re Fe

bru

ary 2

8, 19

97

is en

titled

to

an

ad

ditio

na

l cash

divid

en

d (1%

of p

ar va

lue

) ove

r com

mo

n sto

ck.

As o

f De

cem

be

r 31, 2

00

0, 15

2,4

41,5

99

sha

res o

f com

mo

n sto

ck a

nd

23

,89

3,4

27

sh

are

s o

f su

ch

pre

ferre

d s

toc

k w

ere

iss

ue

d a

nd

ou

tstan

din

g.

As o

f De

cem

be

r 31, 2

00

0, m

ajo

r sha

reh

old

ers o

f the

Co

mp

an

y’s

stock

, inclu

din

g p

refe

rred

stock

, an

d th

eir re

spe

ctive sh

are

ho

ldin

gs

are

as fo

llow

s:

In a

dd

ition

, the

Co

mp

an

y is

au

tho

rize

d to

iss

ue

co

nv

ertib

le

de

be

ntu

res w

ith fa

ce va

lue

s of u

p to

4

,00

0 b

illion

(3

,00

0 b

illion

for c

om

mo

n s

toc

k a

nd

1,0

00

billio

n fo

r pre

ferre

d s

toc

k) a

nd

de

be

ntu

res w

ith sto

ck p

urch

ase

op

tion

s with

face

valu

es o

f up

to

2,0

00

billio

n (

1,50

0 b

illion

for co

mm

on

stock

an

d

50

0 b

illion

for p

refe

rred

stock

). Th

e C

om

pa

ny is a

uth

orize

d to

issue

de

po

sitory

rec

eip

ts w

ith th

e a

pp

rov

al o

f the

Bo

ard

of D

irec

tors

. Als

o, th

e

Co

mp

an

y is au

tho

rized

to issu

e ca

pita

l stock

thro

ug

h th

e e

xercise

of sto

ck o

ptio

ns o

r ge

ne

ral p

ub

lic sub

scriptio

n a

nd

to d

om

estic a

nd

fore

ign

fina

nc

ial in

stitu

tion

s fo

r urg

en

t fun

d ra

isin

g o

r to c

o-

op

era

ting

com

pa

nie

s for te

chn

ical a

ssistan

ce w

ith th

e a

pp

rova

l of

the

Bo

ard

of D

irecto

rs.

Th

e C

om

pa

ny

ha

s a

sto

ck

op

tion

pla

n u

nd

er w

hic

h o

ptio

ns

to

pu

rch

as

e s

ha

res

of c

om

mo

n s

toc

k m

ay

be

gra

nte

d to

ke

y

em

plo

yee

s with

the

ap

pro

val o

f sha

reh

old

ers. O

n M

arch

16, 2

00

0,

sto

ck o

ptio

ns

we

re g

ran

ted

to 7

6 e

mp

loy

ee

s a

nd

dire

ctors

(se

e

No

te 18

).

Th

e C

om

pa

ny issu

ed

1,22

6,6

07

sha

res o

f com

mo

n sto

ck u

po

n th

e

con

versio

n o

f fore

ign

curre

ncy co

nve

rtible

bo

nd

s in th

e a

mo

un

t of

US

$14

6,9

30

,00

0 d

urin

g th

e y

ea

r en

de

d D

ece

mb

er 3

1, 20

00

(see

No

te 13

). Th

e ca

sh p

roce

ed

s in e

xcess o

f pa

r va

lue

of

123

,50

0

millio

n w

ere

cred

ited

to p

aid

-in ca

pita

l in e

xcess o

f pa

r valu

e.

As

of D

ec

em

be

r 31, 2

00

0,

54

6,4

27

,65

0,0

00

(fac

e v

alu

e o

f

US

$4

77

,08

0,0

00

) of co

nve

rtible

bo

nd

s are

ou

tstan

din

g (se

e N

ote

13). N

o d

eb

en

ture

s with

stock

pu

rcha

se o

ptio

ns h

ave

be

en

issue

d

as o

f De

cem

be

r 31, 2

00

0.

2. Sum

mary of S

ignificant Accounting P

olicies

Th

e sig

nifica

nt a

ccou

ntin

g p

olicie

s follo

we

d b

y the

Co

mp

an

y in th

e

pre

pa

ratio

n o

f its fin

an

cia

l sta

tem

en

ts in

ac

co

rda

nc

e w

ith th

e

Fin

an

cia

l Ac

co

un

ting

Sta

nd

ard

s o

f the

Re

pu

blic

of K

ore

a a

re

sum

ma

rized

be

low

.

Ba

sis of Fin

an

cial S

tate

me

nt P

rese

nta

tion

Th

e o

fficia

l ac

co

un

ting

rec

ord

s o

f the

Co

mp

an

y, o

n w

hic

h th

e

Ko

rea

n la

ng

ua

ge

fina

ncia

l state

me

nts a

re b

ase

d, a

re m

ain

tain

ed

in

Ko

rea

n W

on

in a

ccord

an

ce w

ith th

e la

ws a

nd

reg

ula

tion

s of th

e

Re

pu

blic o

f Ko

rea

.

Th

e a

ccom

pa

nyin

g fin

an

cial sta

tem

en

ts ha

ve b

ee

n e

xtracte

d fro

m

the

Co

mp

an

y’s

Ko

rea

n la

ng

ua

ge

fina

ncia

l sta

tem

en

ts th

at w

ere

pre

pa

red

usin

g a

ccou

ntin

g p

rincip

les, p

roce

du

res a

nd

rep

ortin

g

pra

ctic

es

ge

ne

rally

ac

ce

pte

d in

the

Re

pu

blic

of K

ore

a. T

he

se

stan

da

rds v

ary

from

Inte

rna

tion

al A

ccou

ntin

g S

tan

da

rds a

nd

the

ac

co

un

ting

prin

cip

les

ge

ne

rally

ac

ce

pte

d in

the

co

un

try o

f the

rea

de

r. Th

e fin

an

cial sta

tem

en

ts ha

ve b

ee

n tra

nsla

ted

from

Ko

rea

n

into

En

glish

, an

d h

ave

be

en

form

atte

d in

a m

an

ne

r diffe

ren

t from

the

pre

se

nta

tion

un

de

r Ko

rea

n fin

an

cia

l sta

tem

en

t pra

ctic

es

.

Ce

rtain

su

pp

lem

en

tary

info

rma

tion

inc

lud

ed

in th

e K

ore

an

lan

gu

ag

e sta

tuto

ry fina

ncia

l state

me

nts, b

ut n

ot re

qu

ired

for a

fair

pre

se

nta

tion

of th

e C

om

pa

ny

’s fin

an

cia

l po

sitio

n o

r res

ults

of

op

era

tion

s, is

no

t pre

se

nte

d in

the

ac

co

mp

an

yin

g fin

an

cia

l

state

me

nts. A

ccord

ing

ly, th

e a

ccom

pa

ny

ing

fina

ncia

l state

me

nts

are

no

t inte

nd

ed

to p

res

en

t the

fina

nc

ial p

os

ition

, res

ults

of

op

era

tion

s an

d ca

sh flo

ws in

acco

rda

nce

with

acco

un

ting

prin

ciple

s

an

d p

ractice

s g

en

era

lly a

ccep

ted

in co

un

tries

an

d ju

risd

iction

s

oth

er th

an

Ko

rea

.

56

Notes to Financial S

tatements

Sh

are

ho

lde

r

Citib

an

k N

.A.

Sa

msu

ng

Life In

sura

nce

Co

., Ltd.

Sa

msu

ng

Co

rpo

ratio

n

Lee

, Ku

n-H

ee

an

d re

lative

s

Se

ou

l Ba

nk

CM

B-E

uro

pa

c Gro

wth

Fun

d

Th

e G

ove

rnm

en

t of S

ing

ap

ore

CM

B-C

AP

RE

Em

erg

. Gro

wth

Fun

d

Ko

rea

Exch

an

ge

Ba

nk

CM

B-A

DIA

Nu

mb

er o

f

Sh

are

s

23,958,134

10,624,693

5,917,362

5,322,559

3,950,559

2,682,771

2,462,839

2,207,122

1,949,946

1,919,098

Pe

rcen

tag

e o

f

Ow

ne

rship

(%)

13.59

6.03

3.36

3.02

2.24

1.52

1.40

1.25

1.11

1.09

Th

e p

rep

ara

tion

of fin

an

cial sta

tem

en

ts req

uire

s ma

na

ge

me

nt to

ma

ke

es

tima

tes

an

d a

ss

um

ptio

ns

tha

t affe

ct am

ou

nts

rep

orte

d

the

rein

. Du

e to

the

inh

ere

nt u

nc

erta

inty

inv

olv

ed

in m

ak

ing

estim

ate

s, actu

al re

sults re

po

rted

in fu

ture

pe

riod

s ma

y diffe

r from

tho

se e

stima

tes.

Ca

sh, C

ash

Eq

uiva

len

ts an

d S

ho

rt-Te

rm Fin

an

cial In

strum

en

ts

Ca

sh

an

d c

as

h e

qu

iva

len

ts in

clu

de

ca

sh

on

ha

nd

an

d in

ba

nk

ac

co

un

ts w

ith o

rigin

al m

atu

rities

of th

ree

mo

nth

s o

r les

s.

Inve

stme

nts w

hich

are

rea

dily co

nve

rtible

into

cash

with

in fo

ur to

twe

lve m

on

ths o

f pu

rcha

se a

re cla

ssified

on

the

ba

lan

ce sh

ee

t as

sh

ort-te

rm fin

an

cial in

stru

me

nts

. Th

e co

st o

f the

se

inv

es

tme

nts

ap

pro

xima

tes fa

ir valu

e.

Ma

rke

tab

le S

ecu

rities

Ma

rke

tab

le se

curitie

s are

state

d a

t fair va

lue

.

Allo

wa

nce

for D

ou

btfu

l Acco

un

ts

Th

e C

om

pa

ny

pro

vid

es

an

allo

wa

nce

for d

ou

btfu

l acco

un

ts a

nd

no

tes re

ceiva

ble

ba

sed

on

the

ag

gre

ga

te e

stima

ted

colle

ctibility o

f

the

rece

ivab

les.

Inve

nto

ry Va

lua

tion

Inv

en

torie

s a

re s

tate

d a

t the

low

er o

f co

st o

r ma

rke

t. Co

st is

de

term

ine

d b

y th

e a

ve

rag

e co

st me

tho

d, e

xcep

t for m

ate

rials in

tran

sit wh

ich a

re sta

ted

at a

ctua

l cost a

s de

term

ine

d b

y the

spe

cific

ide

ntifica

tion

me

tho

d.

Pro

pe

rty, Pla

nt a

nd

Eq

uip

me

nt a

nd

Re

late

d D

ep

recia

tion

Pro

pe

rty, pla

nt a

nd

eq

uip

me

nt a

re sta

ted

at co

st, exce

pt fo

r certa

in

asse

ts sub

ject to

up

wa

rd re

valu

atio

n in

acco

rda

nce

with

the

Asse

t

Re

va

lua

tion

La

w o

f Ko

rea

. Th

e re

va

lua

tion

pre

se

nts

pro

du

ction

facilitie

s an

d o

the

r bu

ildin

gs a

t the

ir de

pre

ciate

d re

pla

cem

en

t cost,

an

d la

nd

at th

e p

reva

iling

ma

rke

t price

, as o

f the

effe

ctive d

ate

of

rev

alu

atio

n. T

he

rev

alu

atio

n in

crem

en

t, ne

t of re

va

lua

tion

tax, is

first a

pp

lied

to o

ffse

t accu

mu

late

d d

eficit a

nd

de

ferre

d fo

reig

n

exch

an

ge

losse

s, if an

y. T

he

rem

ain

de

r ma

y b

e cre

dite

d to

oth

er

cap

ital su

rplu

s or tra

nsfe

rred

to co

mm

on

stock

. A n

ew

ba

sis for

calcu

latin

g d

ep

recia

tion

is e

sta

blis

he

d fo

r rev

alu

ed

as

se

ts (s

ee

No

te 8

).

De

pre

ciatio

n is co

mp

ute

d u

sing

the

straig

ht-lin

e m

eth

od

, ba

sed

on

the

estim

ate

d u

sefu

l lives o

f the

asse

ts as d

escrib

ed

be

low

.

Th

e C

om

pa

ny ca

pita

lizes in

tere

st exp

en

se in

curre

d o

n b

orro

win

gs

use

d to

fina

nce

the

cost o

f con

structin

g fa

cilities a

nd

eq

uip

me

nt

(see

No

te 8

).

Ma

inte

na

nce

an

d R

ep

airs

Ro

utin

e m

ain

ten

an

ce

an

d re

pa

irs a

re c

ha

rge

d to

ex

pe

ns

e a

s

inc

urre

d. E

xp

en

ditu

res

wh

ich

en

ha

nc

e th

e v

alu

e o

r ex

ten

d th

e

use

ful life

of th

e re

late

d a

ssets a

re ca

pita

lized

.

Re

sea

rch a

nd

De

velo

pm

en

t Co

sts

Re

se

arc

h a

nd

de

ve

lop

me

nt c

os

ts a

re c

ha

rge

d to

ex

pe

ns

e a

s

incu

rred

.

Inta

ng

ible

Asse

ts

Inta

ng

ible

asse

ts are

state

at co

st, ne

t of d

ep

recia

tion

calcu

late

d

usin

g th

e stra

igh

t-line

me

tho

d b

ase

d o

n th

e e

stima

ted

use

ful live

s

as fo

llow

s:

Eq

uity In

vestm

en

ts in S

ub

sidia

ries a

nd

Affilia

ted

Co

mp

an

ies &

Oth

er In

vestm

en

ts

All in

vestm

en

ts in e

qu

ity an

d d

eb

t secu

rities a

re in

itially ca

rried

at

cost, in

clud

ing

incid

en

tal e

xpe

nse

s. Th

e su

bse

qu

en

t acco

un

ting

for

inve

stme

nts b

y the

type

of se

curity is a

s follo

ws.

Inv

es

tme

nts

in m

ark

eta

ble

eq

uity

se

cu

rities

of n

on

-co

ntro

lled

inve

stee

s, classifie

d a

s oth

er in

vestm

en

ts, are

carrie

d a

t fair va

lue

.

Te

mp

ora

ry ch

an

ge

s in fa

ir va

lue

are

acco

un

ted

for in

the

cap

ital

ad

justm

en

t acco

un

t, a co

mp

on

en

t of sh

are

ho

lde

rs’ eq

uity. D

eclin

es

in fa

ir valu

e w

hich

are

an

ticipa

ted

to b

e p

erm

an

en

t are

reco

rde

d in

curre

nt o

pe

ratio

ns a

fter e

limin

atin

g a

ny p

revio

usly re

cord

ed

cap

ital

ad

justm

en

t for te

mp

ora

ry cha

ng

es. S

ub

seq

ue

nt re

cove

ries o

r oth

er

futu

re ch

an

ge

s in fa

ir valu

e a

re re

cord

ed

in th

e ca

pita

l ad

justm

en

t

acco

un

t.

Inve

stme

nts in

no

n-m

ark

eta

ble

eq

uity se

curitie

s of n

on

-con

trolle

d

inv

es

tee

s, cla

ss

ified

as

oth

er in

ve

stm

en

ts, a

re ca

rried

at co

st,

exce

pt fo

r de

cline

s in th

e C

om

pa

ny

’s pro

po

rtion

ate

ow

ne

rship

of

the

un

de

rlyin

g b

oo

k v

alu

e o

f the

inv

es

ted

co

mp

an

y w

hic

h a

re

an

ticipa

ted

to b

e p

erm

an

en

t. Th

e d

eclin

es a

re re

cord

ed

in cu

rren

t

op

era

tion

s, an

d su

bse

qu

en

t reco

verie

s are

also

reco

rde

d in

curre

nt

op

era

tion

s up

to th

e o

rigin

al co

st of th

e in

vestm

en

t.

Inv

es

tme

nts

in e

qu

ity s

ec

uritie

s o

f co

mp

an

ies

ov

er w

hic

h th

e

Co

mp

an

y ha

s the

ab

ility to co

ntro

l or e

xercise

sign

ifican

t influ

en

ce

on

, classifie

d a

s eq

uity

inv

estm

en

ts in su

bsid

iarie

s an

d a

ffiliate

d

com

pa

nie

s, are

reco

rde

d u

sing

the

eq

uity

me

tho

d o

f acco

un

ting

.

Diffe

ren

ce

s b

etw

ee

n th

e p

urc

ha

se

pric

e a

nd

the

Co

mp

an

y’s

pro

po

rtion

ate

ow

ne

rsh

ip o

f the

ne

t bo

ok

va

lue

of th

e in

ve

ste

d

com

pa

ny a

re a

mo

rtized

ove

r 5 ye

ars u

sing

the

straig

ht-lin

e m

eth

od

.

Un

de

r the

eq

uity

me

tho

d, th

e C

om

pa

ny

reco

rds

cha

ng

es

in its

pro

po

rtion

ate

ow

ne

rsh

ip o

f the

bo

ok

va

lue

of th

e in

ve

ste

d

57

Asse

t

Go

od

will

Inte

llectu

al p

rop

rieta

ry righ

ts

Oth

er in

tan

gib

les

Estim

ate

d U

sefu

l

Life in

Ye

ars5

5 - 10

2 - 25

Asse

t

Bu

ildin

gs a

nd

au

xiliary fa

cilities

Ma

chin

ery a

nd

eq

uip

me

nt

To

ols a

nd

fixture

s

Stru

cture

s an

d o

the

rs

Estim

ate

d U

sefu

l

Life in

Ye

ars

7 - 60

2 - 10

2 - 10

2 - 40

com

pa

ny a

s curre

nt o

pe

ratio

ns, ca

pita

l ad

justm

en

ts or a

dju

stme

nts

to re

tain

ed

ea

rnin

gs, d

ep

en

din

g o

n th

e n

atu

re o

f the

un

de

rlyin

g

cha

ng

e in

bo

ok

valu

e o

f the

inve

sted

com

pa

ny.

In a

ccord

an

ce w

ith th

e re

vised

fina

ncia

l acco

un

ting

stan

da

rds fo

r

con

solid

atio

n g

en

era

lly acce

pte

d in

the

Re

pu

blic o

f Ko

rea

, effe

ctive

Ma

rch 2

3, 2

00

0, th

e C

om

pa

ny h

as ch

an

ge

d its a

ccou

ntin

g p

olicy fo

r

ad

ditio

na

l inv

es

tme

nts

ac

qu

ired

in c

on

so

lida

ted

su

bs

idia

ries

.

Pre

vio

us

ly, a

ll go

od

will a

nd

ne

ga

tive

go

od

will a

risin

g fro

m th

e

ad

ditio

na

l inv

es

tme

nt w

as

am

ortiz

ed

ov

er 5

ye

ars

us

ing

the

straig

ht-lin

e m

eth

od

. As o

f the

curre

nt ye

ar, su

ch d

iffere

nce

s tha

t

pre

vio

us

ly re

su

lted

in g

oo

dw

ill an

d n

eg

ativ

e g

oo

dw

ill are

reco

gn

ized

as g

ain

or lo

ss on

valu

atio

n o

f inve

stme

nt, a

com

po

ne

nt

of ca

pita

l ad

justm

en

ts.

As a

resu

lt of th

is cha

ng

e in

acco

un

ting

po

licy, be

gin

nin

g re

tain

ed

ea

rnin

gs a

nd

ne

t pro

fit for th

e ye

ar e

nd

ed

De

cem

be

r 31, 2

00

0 a

re

11,56

2 m

illion

an

d

5,3

32

millio

n g

rea

ter, re

spe

ctively, a

nd

the

cap

ital a

dju

stm

en

t (ga

in o

r los

s o

n v

alu

atio

n o

f inv

es

tme

nts

) is

ap

pro

xima

tely

3

3,3

56

millio

n le

ss tha

n w

ha

t wo

uld

ha

ve

be

en

rep

orte

d u

nd

er th

e p

rev

iou

s a

ccou

ntin

g m

eth

od

. If the

rev

ise

d

ac

co

un

ting

me

tho

d w

ere

ap

plie

d to

the

pre

vio

us

ye

ar e

nd

ed

De

ce

mb

er 3

1, 199

9, th

e d

isc

los

ed

am

ou

nts

for th

e fo

llow

ing

acco

un

ts wo

uld

ha

ve b

ee

n a

s follo

ws:

Inv

estm

en

ts in 6

com

pa

nie

s inclu

din

g S

am

sun

g E

lectro

nics In

dia

Info

rma

tion

& T

ele

com

mu

nica

tion

Ltd. w

hich

we

re n

ot va

lue

d u

sing

the

eq

uity m

eth

od

as o

f De

cem

be

r 31, 19

99

du

e to

the

sma

ll scale

of th

eir a

ss

ets

, we

re v

alu

ed

us

ing

the

eq

uity

me

tho

d a

s o

f

De

cem

be

r 31, 2

00

0. A

s a re

sult o

f the

se ch

an

ge

s, un

ap

pro

pria

ted

reta

ine

d

ea

rnin

gs

c

arrie

d

ov

er

from

th

e

prio

r y

ea

r a

re

ap

pro

xima

tely

, 4

,80

0 m

illion

les

s th

an

wh

at w

ou

ld h

av

e b

ee

n

rep

orte

d u

nd

er th

e p

revio

us a

ccou

ntin

g m

eth

od

.

Sto

ck a

nd

De

be

ntu

re Issu

an

ce C

osts

Sto

ck a

nd

de

be

ntu

re issu

an

ce co

sts are

cred

ited

to ca

pita

l surp

lus

an

d d

eb

en

ture

s.

Accru

ed

Se

vera

nce

Be

ne

fits

Em

plo

ye

es a

nd

dire

ctors w

ith m

ore

tha

n o

ne

ye

ar o

f serv

ice a

re

en

titled

to re

ceive

a lu

mp

-sum

pa

yme

nt u

po

n te

rmin

atio

n o

f the

ir

em

plo

ym

en

t with

the

Co

mp

an

y, b

ase

d o

n th

eir le

ng

th o

f serv

ice

an

d ra

te o

f pa

y a

t the

time

of te

rmin

atio

n. A

cc

rue

d s

ev

era

nc

e

be

ne

fits rep

rese

nt th

e a

mo

un

t wh

ich w

ou

ld b

e p

aya

ble

assu

min

g

all e

ligib

le e

mp

loye

es te

rmin

ate

d th

eir e

mp

loym

en

t at th

e b

ala

nce

she

et d

ate

.

As

of D

ec

em

be

r 31, 2

00

0, a

pp

rox

ima

tely

53

% o

f the

ac

cru

ed

se

ve

ran

ce b

en

efits

are

fun

de

d th

rou

gh

an

em

plo

ye

e s

ev

era

nce

ins

ura

nce

pla

n w

ith S

am

su

ng

Life

Ins

ura

nce

Co

mp

an

y, L

td. T

he

am

ou

nts

fun

de

d u

nd

er th

is in

su

ran

ce

pla

n a

re c

las

sifie

d a

s a

de

du

ctio

n to

ac

cru

ed

se

ve

ran

ce

be

ne

fits lia

bility

. Su

bs

eq

ue

nt

accru

als a

re to

be

fun

de

d a

t the

discre

tion

of th

e C

om

pa

ny.

In a

ccord

an

ce w

ith th

e N

atio

na

l Pe

nsio

n A

ct, a ce

rtain

po

rtion

of

the

ac

cru

ed

se

ve

ran

ce

be

ne

fits is

de

po

site

d w

ith th

e N

atio

na

l

Pe

nsio

n Fu

nd

an

d d

ed

ucte

d fro

m th

e a

ccrue

d se

ve

ran

ce b

en

efits

liab

ility. T

he

co

ntrib

ute

d a

mo

un

t sh

all b

e re

fun

de

d fro

m th

e

Na

tion

al P

en

sion

Fun

d to

em

plo

yee

s on

the

ir retire

me

nt.

Disco

un

ts an

d P

rem

ium

s on

De

be

ntu

res

Disco

un

ts an

d p

rem

ium

s on

de

be

ntu

res re

pre

sen

t the

diffe

ren

ce

be

twe

en

the

issue

price

an

d p

ar v

alu

e o

f de

be

ntu

res. D

iscou

nts

an

d p

rem

ium

s on

de

be

ntu

res a

re a

mo

rtized

ov

er th

e re

de

mp

tion

pe

riod

of th

e re

late

d d

eb

en

ture

s usin

g th

e e

ffectiv

e in

tere

st rate

me

tho

d. T

he

am

ortiza

tion

of d

iscou

nt o

n d

eb

en

ture

s is reco

rde

d a

s

inte

rest e

xpe

nse

an

d th

e a

mo

rtizatio

n o

f pre

miu

ms o

n d

eb

en

ture

s

is de

du

cted

from

inte

rest e

xpe

nse

.

Fore

ign

Cu

rren

cy Tra

nsla

tion

Mo

ne

tary a

ssets a

nd

liab

ilities d

en

om

ina

ted

in fo

reig

n cu

rren

cies

are

tran

sla

ted

into

Ko

rea

n W

on

at th

e ra

tes

pre

va

iling

at th

e

ba

lan

ce sh

ee

t da

te (in

the

case

of U

.S. D

olla

rs, US

$1 to

1,2

59

) an

d

resu

lting

tran

slatio

n lo

sses a

nd

ga

ins a

re re

cog

nize

d cu

rren

tly.

Fore

ign

curre

ncy

con

ve

rtible

de

be

ntu

res a

re tra

nsla

ted

at a

fixed

con

versio

n e

xcha

ng

e ra

te in

acco

rda

nce

with

acco

un

ting

pra

ctices

ge

ne

rally a

ccep

ted

in th

e R

ep

ub

lic of K

ore

a.

Inco

me

Ta

x Exp

en

se

Th

e C

om

pa

ny h

as a

do

pte

d th

e d

efe

rred

me

tho

d o

f acco

un

ting

for

inc

om

e ta

xe

s. U

nd

er th

is m

eth

od

, the

futu

re ta

x e

ffec

ts o

f

tem

po

rary

diffe

ren

ce

s b

etw

ee

n th

e fin

an

cia

l an

d ta

x b

as

es

of

asse

ts an

d lia

bilitie

s are

refle

cted

in th

e b

ala

nce

she

et.

Va

lua

tion

of A

ssets a

nd

Liab

ilities a

t Pre

sen

t Va

lue

As

se

ts a

cq

uire

d a

nd

liab

ilities

inc

urre

d th

rou

gh

lon

g-te

rm

insta

llme

nt tra

nsa

ction

s an

d a

ccou

nts a

nd

no

tes re

ceiva

ble

s un

de

r

resch

ed

ule

d d

eb

t pa

yme

nts a

pp

rove

d b

y the

Ko

rea

n ju

dicia

ry are

state

d a

t pre

sen

t valu

e.

Pro

du

ct Wa

rran

ties a

nd

Pe

rform

an

ce G

ua

ran

tee

s

In co

nfo

rmity w

ith a

ccou

ntin

g p

ractice

s pre

vailin

g in

the

Re

pu

blic o

f

Ko

rea

, costs re

late

d to

rep

airs, se

rvice a

nd

oth

er w

ork

req

uire

d in

acco

rda

nce

with

pro

du

ct wa

rran

ties a

nd

pe

rform

an

ce g

ua

ran

tee

s

are

cha

rge

d to

exp

en

se w

he

n in

curre

d.

De

rivative

Instru

me

nts

Th

e C

om

pa

ny u

tilizes d

eriva

tive in

strum

en

ts to re

du

ce its e

xpo

sure

to flu

ctua

tion

s in

inte

res

t an

d fo

reig

n cu

rren

cy e

xcha

ng

e ra

tes

.

Rig

hts

or o

blig

atio

ns

de

rive

d fro

m d

eriv

ativ

e in

stru

me

nts

are

reco

rde

d a

s asse

ts or lia

bilitie

s at fa

ir va

lue

on

an

accru

al b

asis.

Ga

ins

or lo

ss

es

on

va

lua

tion

of d

eriv

ativ

e in

stru

me

nts

are

reco

gn

ized

as a

com

po

ne

nt o

f curre

nt o

pe

ratio

ns, e

xcep

t for g

ain

s

or lo

sses o

n va

lua

tion

of d

eriva

tive in

strum

en

ts use

d to

he

dg

e ca

sh

flow

s, wh

ich a

re re

cord

ed

as a

cap

ital a

dju

stme

nt.

58

Acco

un

t

Ord

ina

ry inco

me

Ne

t inco

me

Ea

rnin

gs p

er sh

are

(in W

on

)

Dilu

ted

ea

rnin

gs p

er sh

are

(in W

on

)

Millio

ns o

f Wo

n

4,300,003

3,174,400

19,242

18,875

3. Am

ounts Stated in U

.S.D

ollars

Th

e C

om

pa

ny o

pe

rate

s prim

arily in

Ko

rea

n W

on

an

d its o

fficial a

ccou

ntin

g re

cord

s are

ma

inta

ine

d in

Ko

rea

n W

on

. Th

e U

.S. D

olla

r am

ou

nts

are

pro

vide

d h

ere

in a

s sup

ple

me

nta

ry info

rma

tion

sole

ly for th

e co

nve

nie

nce

of th

e re

ad

er. W

on

am

ou

nts a

re e

xpre

ssed

in U

.S. D

olla

rs at

the

rate

of

1,25

9 to

US

$1, th

e ra

te in

effe

ct on

De

cem

be

r 31, 2

00

0. T

his p

rese

nta

tion

is no

t in a

ccord

an

ce w

ith a

ccou

ntin

g p

rincip

les

ge

ne

rally a

ccep

ted

in e

ithe

r the

Re

pu

blic o

f Ko

rea

or th

e U

nite

d S

tate

s, an

d sh

ou

ld n

ot b

e co

nstru

ed

as a

rep

rese

nta

tion

tha

t the

Wo

n

am

ou

nts sh

ow

n co

uld

be

con

verte

d, re

alize

d o

r settle

d in

U.S

. Do

llars a

t this ra

te.

Th

e 19

99

U.S

. Do

llar a

mo

un

ts we

re p

revio

usly sta

ted

at th

e ra

te o

f 1,14

5 to

US

$1, w

hich

wa

s in e

ffect o

n D

ece

mb

er 3

1, 199

9.

4. Cash and Cash Equivalents, Short-Term

Financial Instruments

Ca

sh a

nd

cash

eq

uiva

len

ts an

d sh

ort-te

rm fin

an

cial in

strum

en

ts as o

f De

cem

be

r 31, 2

00

0 a

nd

199

9 co

nsist o

f the

follo

win

g:

At D

ece

mb

er 3

1, 20

00

, ba

nk

de

po

sits of

35

,96

8 m

illion

are

ple

dg

ed

as co

llate

ral fo

r certa

in sh

ort-te

rm b

orro

win

gs a

nd

are

sub

ject to

restrictio

n fro

m w

ithd

raw

al (se

e N

ote

11).

5. Marketable S

ecurities

Ma

rke

tab

le se

curitie

s as o

f De

cem

be

r 31, 2

00

0 a

nd

199

9 co

nsist o

f the

follo

win

g:

At D

ece

mb

er 3

1, 20

00

, ma

rke

tab

le se

curitie

s of

3,16

0 m

illion

are

restricte

d fro

m w

ithd

raw

al.

59

Asse

t

(1)C

ash

an

d ca

sh e

qu

ivale

nts

Ca

sh o

n h

an

d a

nd

in b

an

ks

Pa

ssbo

ok

acco

un

ts

Mo

ne

y ma

rke

t de

po

sit acco

un

ts

Fore

ign

curre

ncy d

ep

osits

To

tal ca

sh a

nd

cash

eq

uiva

len

ts

(2)

Sh

ort-te

rm fin

an

cial in

strum

en

ts

Insta

llme

nt a

nd

time

de

po

sits

Fore

ign

curre

ncy d

ep

osits

Tru

st de

po

sits

Oth

er fin

an

cial in

strum

en

ts

To

tal sh

ort-te

rm fin

an

cial in

strum

en

ts

Less: p

ortio

ns cla

ssified

as n

on

-curre

nt

To

tal

An

nu

al In

tere

st Ra

te (%

)

20

00–1

5.4 - 5.5–

5.9 - 13

0 - 7.3–

6.8

20

00

396,121

54,243,231

451,841,207

15,403,131

521,883,690

1,031,731,500

318,333,711–

60,072,500

1,410,137,711

(258,000)

1,409,879,711

199

9

2,770,492

43,081,819

480,095,523

881,951

526,829,785

438,401,514

145,441,850

15,896,324

50,071,000

649,810,688

(1,467,500)

648,343,188

Th

ou

san

ds o

f Wo

n

Asse

tA

nn

ua

l Inte

rest R

ate

(%)

Th

ou

san

ds o

f Wo

n

20

00

20

00

199

9

Be

ne

ficiary ce

rtificate

s5 - 6.8

672,708,231237,257,709

B0

nd

s5 - 6

632,262192,638

To

tal

673,340,493237,450,347

6. Trade Accounts and N

otes Receivable, and V

aluation at Present V

alue

Th

e o

utsta

nd

ing

ba

lan

ce o

f trad

e a

ccou

nts a

nd

no

tes re

ceiva

ble

sold

to fin

an

cial in

stitutio

ns a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

are

as

follo

ws (se

e N

ote

14):

Acco

un

ts wh

ich a

re va

lue

d a

t pre

sen

t valu

e u

nd

er re

sche

du

led

pa

yme

nt a

nd

lon

g-te

rm in

stallm

en

t tran

sactio

ns a

re a

s follo

ws:

7. Inventories

Inve

nto

ries a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sist of th

e fo

llow

ing

:

Inve

nto

ries a

re in

sure

d a

ga

inst fire

an

d o

the

r casu

alty lo

sses u

p to

2

,35

7,9

36

millio

n a

t De

cem

be

r 31, 2

00

0.

At D

ece

mb

er 3

1, 20

00

, 2

45

,58

3 m

illion

of la

nd

an

d co

nstru

ction

in p

rog

ress h

eld

for re

sale

are

inclu

de

d in

the

finish

ed

go

od

s an

d

me

rcha

nd

ise a

ccou

nt. R

ela

ted

inte

rest co

sts of

10,0

48

millio

n a

nd

2

9,8

85

millio

n h

ave

be

en

cap

italize

d fo

r the

yea

rs en

de

d D

ece

mb

er

31, 2

00

0 a

nd

199

9, re

spe

ctively.

60

Asse

tM

illion

s of W

on

20

00

199

9

Asse

t ba

cke

d se

curitie

s with

limite

d re

cou

rse–

1,953

Exp

ort a

ccou

nts a

nd

no

tes re

ceiva

ble

with

reco

urse

2,427,9931,523,803

Tra

de

no

tes re

ceiva

ble

with

reco

urse

243,981199,909

Tra

de

acco

un

ts rece

ivab

le w

itho

ut re

cou

rse128,895

113,626

Tra

de

acco

un

ts rece

ivab

le w

ith re

cou

rse71,015

–

Total2,871,884

1,839,291

Acco

un

tM

illion

s of W

on

Face

Va

lue

Disco

un

tP

rese

nt V

alu

e

Lon

g-te

rm in

stallm

en

t tran

sactio

ns

Lon

g-te

rm tra

de

rece

ivab

les

5,867375

5,492

Oth

er lo

ng

-term

rece

ivab

les

403,69458,034

345,660

Re

sche

du

led

Lon

g-te

rm tra

de

rece

ivab

les a

nd

oth

er a

ssets

5,6071,041

4,566

To

tal

415,16859,450

355,718

Inve

nto

ryM

illion

s of W

on

20

00

199

9

Finish

ed

go

od

s an

d m

erch

an

dise

737,544,326

572,945,964

Se

mifin

ishe

d g

oo

ds a

nd

wo

rk in

pro

cess

982,591,087666,500,256

Ra

w m

ate

rials a

nd

sup

plie

s952,276,658

909,922,532

Ma

teria

ls in tra

nsit

130,351,554112,010,900

Total2,802,763,625

2,261,379,652

8. P

roperty, Plant and Equipm

ent

Pro

pe

rty, pla

nt a

nd

eq

uip

me

nt a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sist of th

e fo

llow

ing

:

At D

ece

mb

er 3

1, 20

00

, certa

in p

ortio

ns o

f the

Co

mp

an

y’s p

rop

erty

, pla

nt a

nd

eq

uip

me

nt, u

p to

a m

axim

um

of

1,133

,413

millio

n, a

re

ple

dg

ed

as co

llate

ral fo

r vario

us lo

an

s from

Ko

rea

De

velo

pm

en

t Ba

nk

(see

No

te 12

).

As o

f De

cem

be

r 31, 2

00

0, p

rop

erty, p

lan

t an

d e

qu

ipm

en

t are

insu

red

ag

ain

st fire a

nd

oth

er ca

sua

lty losse

s an

d b

usin

ess in

terru

ptio

n lo

sses

up

to

26

,86

9,5

41 m

illion

an

d

6,3

36

,07

7 m

illion

, resp

ective

ly. Of th

e in

sure

d a

mo

un

t, Ko

rea

De

velo

pm

en

t Ba

nk

is the

be

ne

ficiary fo

r

78

9,6

21 m

illion

, he

ld a

s colla

tera

l for b

orro

win

gs.

At D

ece

mb

er 3

1, 20

00

an

d 19

99

, the

valu

e o

f lan

d b

ase

d o

n th

e p

oste

d p

rice issu

ed

by th

e K

ore

an

tax a

uth

ority is

1,27

7,3

25

millio

n a

nd

1,09

9,4

29

millio

n, re

spe

ctively.

Inte

rest co

sts of

82

,24

5 m

illion

an

d

45

,418

millio

n w

ere

cap

italize

d fo

r the

yea

r en

de

d D

ece

mb

er 3

1, 20

00

an

d 19

99

, resp

ective

ly.

In a

ccord

an

ce w

ith th

e A

sset R

eva

lua

tion

Law

, on

Jan

ua

ry 1, 198

0, 19

82

, 199

8, a

nd

Ap

ril 1, 199

9, th

e C

om

pa

ny re

valu

ed

a su

bsta

ntia

l po

rtion

of its p

rop

erty

, pla

nt, e

qu

ipm

en

t an

d in

ve

stme

nts in

eq

uity

secu

rities b

y

3,0

54

,518

millio

n. T

he

rem

ain

ing

rev

alu

atio

n in

crem

en

ts of

1,216

,05

4 m

illion

, ne

t of re

valu

atio

n ta

x an

d cre

dits to

de

ferre

d fo

reig

n cu

rren

cy tran

slatio

n lo

sses, w

ere

cred

ited

to o

the

r cap

ital su

rplu

s,

a co

mp

on

en

t of sh

are

ho

lde

rs’ eq

uity.

Th

e C

om

pa

ny h

as a

lso re

verse

d th

e re

valu

atio

n o

f pro

pe

rty, pla

nt, e

qu

ipm

en

t an

d in

vestm

en

t pe

rform

ed

on

Ap

ril 1, 199

9 a

s allo

we

d fo

r in

the

Asse

t Re

valu

atio

n La

w fo

r asse

ts wh

ich a

re so

ld w

ithin

a ye

ar o

f the

reva

lua

tion

da

te. A

s a re

sult,

2,8

19 m

illion

wa

s de

du

cted

from

oth

er ca

pita

l surp

lus.

61

Pro

pe

rty, Pla

nt &

Eq

uip

me

nt

Millio

ns o

f Wo

n

20

00

199

9

Bu

ildin

gs a

nd

au

xiliary fa

cilities

2,420,800,4502,046,105,987

Ma

chin

ery a

nd

eq

uip

me

nt

12,498,044,6488,406,254,860

To

ols a

nd

fixture

s1,047,094,582

924,901,314

Stru

cture

s an

d o

the

r219,483,897

173,440,082

16,185,423,57711,550,702,243

Less: a

ccum

ula

ted

de

pre

ciatio

n(6,799,853,811)

(4,380,933,468)

9,385,569,7667,169,768,775

Lan

d1,778,542,402

1,708,831,071

Co

nstru

ction

in p

rog

ress

1,160,316,481943,651,433

To

tal

12,324,428,6499,822,251,279

9. Equity Investments

Eq

uity

inv

estm

en

ts in su

bsid

iarie

s an

d a

ffiliate

d co

mp

an

ies, a

nd

oth

er in

ve

stme

nts a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sist of th

e

follo

win

g:

62

(1) Eq

uity in

vestm

en

ts in su

bsid

iarie

s an

d a

ffiliate

d co

mp

an

ies

Su

bsid

iarie

s:

Sa

msu

ng

Ele

ctron

ics Ca

na

da

, Inc.

Sa

msu

ng

Ele

ctron

ics Am

erica

, Inc.

Sa

msu

ng

Ele

ctron

ics Latin

oa

me

rica

Pa

na

ma

(Zo

ne

Libre

) S.A

.

Sa

msu

ng

Ele

ctron

ics Me

xican

a S

.A. d

e C

.V.

Sa

msu

ng

Ele

ctron

ics Arg

en

tina

S.A

.

Ca

ge

nt T

ech

no

log

ies, In

c.

Alp

ha

Pro

cesso

r, Inc.

Sa

msu

ng

Ele

ctron

ics Ibe

ria, S

.A.

Sa

msu

ng

Ele

ctron

ics Sve

nsk

a A

B

Sa

msu

ng

Ele

ctron

ics Hu

ng

aria

n C

o., Ltd

.

Sa

msu

ng

Ele

ctron

ica P

ortu

gu

esa

S.A

.

Sa

msu

ng

Ele

ctron

ics Fran

ce S

.A.

Sa

msu

ng

Eu

rop

e P

LC

Sa

msu

ng

Ele

ctron

ics Ho

ldin

g G

mb

H

Sa

msu

ng

Ele

ctron

ics Italia

, S.p

.A.

Sa

msu

ng

Ele

ctron

ics Be

ne

lux B

.V.

Sa

msu

ng

Ele

ctron

ics Po

lska

, Sp

.Zo

.O

Sa

msu

ng

Ele

ctron

ics So

uth

Africa

(Pty) Ltd

.

Sa

msu

ng

Ele

ctron

ics Ove

rsea

s B.V

.

Uzb

ek

istan

Sa

msu

ng

Ele

ctron

ica C

o., Ltd

.

Sa

msu

ng

Ele

ctron

ics Ind

ia P

rivate

, Ltd.

Sa

msu

ng

Ele

ctron

ics Ho

ng

Ko

ng

Co

., Ltd.

Sa

msu

ng

Ele

ctron

ics Ta

iwa

n C

o., Ltd

.

Sa

msu

ng

Ele

ctron

ics Su

zho

u S

em

icon

du

ctor C

o., Ltd

.

Sa

msu

ng

(Ch

ina

) Inve

stme

nt C

o., Ltd

Tia

njin

Sa

msu

ng

Ele

ctron

ics Disp

lay C

o., Ltd

.

Su

zho

u S

am

sun

g E

lectro

nics C

o., Ltd

.

Tia

njin

Sa

msu

ng

Ele

ctron

ics Co

., Ltd.

Sh

an

do

ng

Sa

msu

ng

Te

leco

mm

un

icatio

ns C

o., Ltd

.

Sa

msu

ng

Yo

ko

ha

ma

Re

sea

rch In

stitute

Sa

msu

ng

Ele

ctron

ics Au

stralia

Pty. Ltd

.

Sa

msu

ng

Ele

ctron

ics Ma

laysia

Sd

n. B

hd

.

Sa

msu

ng

Gu

lf Ele

ctron

ics Co

., Ltd.

P.T

. Sa

msu

ng

Ele

ctron

ics Ind

on

esia

Sa

msu

ng

Ele

ctron

ics Disp

lay (M

) Sd

n. B

hd

.

Co

ntin

ue

d;

Re

cord

ed

Bo

ok

Va

lue

37,409,624

350,001,625

63,895,606

39,171,013

37,310,963

20,334,100

17,602,340

60,795,407

16,424,831

49,339,949

11,307,056

35,616,262

162,689,875

47,226,773

47,154,194

40,316,777

15,623,487

3,595,491

2,302,079

4,041,131

7,583,935

65,292,556

9,171,375

82,671,064

48,623,694

21,251,186

47,268,539

49,238,518

17,805,913

65,845,110

33,718,954

26,197,362

10,973,267

27,913,474

40,043,788

Re

cord

ed

Bo

ok

Va

lue

32,929,230

45,440,513

33,029,905

32,714,719

31,361,130

18,970,664

40,996,621

62,271,067

12,480,220

49,027,338

10,235,514

31,877,434

177,064,807

58,537,194

43,982,797

37,706,970

9,456,425

11,670,423

10,648,885

5,936,797–

62,634,166

721,209

39,577,031

12,324,814

10,108,585

39,545,497

39,667,002

18,779,418

32,656,218

31,156,982

30,264,479

9,682,868

22,601,517

29,620,515

Ma

rke

t Va

lue

(Ne

t Bo

ok

Va

lue

)

37,068,405

373,057,625

55,551,280

42,820,958

38,081,434

19,745,210

26,514,993

75,865,753

16,329,882

46,970,685

12,038,192

36,928,045

190,442,863

58,022,145

48,240,321

36,442,709

15,780,637

4,139,733

24,728,566

2,624,966

8,224,621

61,451,381

1,524,856

80,373,051

35,559,892

19,017,566

45,774,348

50,262,573

19,498,302

65,845,110

32,971,530

29,272,560

13,528,188

35,271,021

41,867,063

Acq

uisitio

n

Co

st

37,910,597

752,108,617

43,842,300

30,767,040

50,227,700

22,162,492

32,189,788

65,221,118

16,153,454

48,397,117

12,594,046

39,433,410

179,626,805

77,607,622

56,778,556

38,334,024

20,097,600

39,829,558

119,898

3,341,000

6,444,200

48,397,188

1,524,856

46,189,260

36,427,936

9,895,816

60,432,457

47,930,825

13,307,035

33,991,706

40,457,800

4,378,136

7,976,308

56,910,316

21,876,246

Pe

rcen

tag

e

of O

wn

ersh

ip

100.00

100.00

100.00

100.00

100.00

91.48

87.50

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

80.00

100.00

100.00

100.00

100.00

100.00

59.17

82.41

85.82

59.00

100.00

100.00

100.00

100.00

100.00

75.00

20

00

199

9

Th

ou

san

ds o

f Wo

n

9. Equity Investments, Continued

63

Sa

msu

ng

Ind

ia E

lectro

nics, Ltd

.

Sa

msu

ng

Asia

Priva

te, Ltd

.

Sa

msu

ng

Vin

a E

lectro

nics C

o., Ltd

.

Th

ai S

am

sun

g E

lectro

nics C

o., Ltd

.

No

vita C

o., Ltd

.

Sa

msu

ng

Kw

an

gju

Ele

ctron

ics Co

., Ltd.

Sa

msu

ng

Ca

pita

l Co

., Ltd.

Sa

msu

ng

Ca

rd C

o., Ltd

.

ST

EC

O, Ltd

.

DN

S K

ore

a C

o., Ltd

.

Sa

msu

ng

Ele

ctron

ics Se

rvice C

o., Ltd

.

Ko

rea

Ele

ctron

ics & In

form

atio

n D

istribu

tion

Co

., Ltd.

Blu

ete

ck IT

L

Bo

kw

an

g V

FUN

D

Bo

kw

an

g X

FUN

D

SV

IC

Fun

d

SV

IC

Fun

d

SV

IC

Fun

d

SV

IC

Fun

d

SV

IC

Fun

d

Sa

msu

ng

Co

rnin

g M

icro-O

ptics C

o., Ltd

.

Sa

msu

ng

Th

om

som

-CS

F Co

., Ltd.

Sa

msu

ng

Gla

ss Am

erica

, Inc.

Prim

eT

el, Ltd

.

Tia

njin

To

ng

gu

an

g S

am

sun

g E

lectro

nics C

o., Ltd

.

Affilia

ted

com

pa

nie

s:

Sa

msu

ng

Po

rtug

al P

rod

ucto

s Ele

ctro-M

ech

an

icos S

.A.

Sa

msu

ng

Ele

ctron

ics (UK

), Ltd.

Syria

n-K

ore

an

Te

leco

mm

un

icatio

n E

qu

ipm

en

t

Ma

nu

factu

ring

Esta

blish

me

nt C

o., Ltd

.

Sa

msu

ng

Ele

ctron

ics Hu

izho

u C

o., Ltd

.

Sa

msu

ng

Jap

an

Co

., Ltd.

Un

ion

Op

tical C

o., Ltd

.

Sa

msu

ng

SD

I Co

., Ltd.

Sa

msu

ng

Ele

ctro-M

ech

an

ics Co

., Ltd.

Sa

msu

ng

Te

chw

in C

o., Ltd

.

Se

ou

l Co

mm

tech

Co

., Ltd.

Sa

msu

ng

Eco

no

mic R

ese

arch

Institu

te

Sa

msu

ng

SD

S C

o., Ltd

.

Co

ntin

ue

d;

Re

cord

ed

Bo

ok

Va

lue

21,261,110

89,033,174

16,079,981

29,371,870

29,000,155

277,079,813

263,587,477

422,344,859

18,353,237

6,146,792

33,814,936

39,591,631

33,219,004

6,329,003

9,000,200

9,948,323

30,893,377

20,444,785

102,692,786

29,741,079

26,701,530––––

1,742,504

7,122,282

4,578,192

23,721,093

37,176,293

1,274,366

488,122,167

405,271,665

222,859,819

12,037,741

18,087,984

28,057,349

Re

cord

ed

Bo

ok

Va

lue

15,387,943

53,907,380

15,677,406

25,416,928

23,090,236

155,753,593

222,920,398

234,398,940

14,217,607

3,941,894

32,934,818–––––––––––

2,509,254

14,218,067

28,425,751

2,487,701

6,305,140

3,325,921

37,876,046

53,351,029

3,153,721–

266,167,164

211,725,943

5,174,213

9,027,093

26,324,854

Ma

rke

t Va

lue

(Ne

t Bo

ok

Va

lue

)

20,569,458

66,333,455

16,273,828

34,255,673

29,142,399

284,948,785

230,215,509

397,694,988

18,729,136

17,686,472

36,790,237

38,692,144

29,993,255

6,329,003

9,000,200

9,948,323

30,893,377

20,444,785

102,692,786

29,741,079

26,701,530

133,752,226–––

1,766,443

8,857,024

4,578,192

27,244,272

82,082,042

1,274,366

457,120,673

387,230,169

147,717,981

12,758,519

18,116,210

33,544,429

Acq

uisitio

n

Co

st

15,526,467

20,454,044

13,531,704

37,422,945

29,991,151

192,675,696

230,849,938

153,387,755

12,239,960

6,542,382

29,999,990

30,000,000

22,993,240

5,000,000

9,000,000

9,900,000

29,700,000

19,800,000

98,500,000

29,700,000

28,135,800

135,000,000–––

2,123,880

8,280,489

2,060,925

16,390,839

47,766,973

17,388,905

423,721,523

359,237,063

196,321,791

4,191,977

17,880,000

12,752,735

Pe

rcen

tag

e

of O

wn

ersh

ip

73.87

70.00

81.62

91.50

96.14

94.25

75.03

56.59

51.00

61.08

83.33

96.77

100.00

83.33

81.82

99.00

99.00

99.00

65.67

99.00

50.00

50.00–––

24.15

5.17

49.00

44.88

49.00

20.00

19.32

22.80

22.93

30.30

29.80

26.27

20

00

199

9

Th

ou

san

ds o

f Wo

n

9. Equity Investments, Continued

At D

ece

mb

er 3

1, 20

00

, inve

stme

nts in

11 affilia

ted

com

pa

nie

s, inclu

din

g S

am

sun

g G

lass A

me

rica In

c. we

re n

ot va

lue

d u

sing

the

eq

uity

me

tho

d d

ue

to th

e im

ma

teria

lity of th

eir a

ssets to

the

fina

ncia

l state

me

nts o

f the

Co

mp

an

y.

At D

ece

mb

er 3

1, 20

00

, the

fina

ncia

l con

ditio

ns o

f inv

este

d co

mp

an

ies, su

ch a

s Ko

rea

Ho

usin

g G

ua

ran

tee

Co

., Ltd

., Ne

w IC

O G

lob

al

Co

mm

un

icatio

ns, S

am

sun

g E

lectro

nics M

osco

w S

ervice

Ce

nte

r Ltd., T

RL M

icrow

ave

Te

ch, In

c. an

d S

am

sun

g C

rosa

na

Join

t Sto

ck C

om

pa

ny

ha

ve d

ete

riora

ted

sign

ifican

tly. Acco

rdin

gly, th

ese

inve

stme

nts h

ave

be

en

writte

n d

ow

n a

nd

cha

rge

d to

curre

nt o

pe

ratio

ns.

Th

e cu

mu

lative

ne

t ga

in o

n th

e va

lua

tion

of in

vestm

en

ts in liste

d co

mp

an

ies o

f 4

57

,99

7 m

illion

as o

f De

cem

be

r 31, 2

00

0 is re

cord

ed

in

the

cap

ital a

dju

stme

nt a

ccou

nt.

10. Long-Term Financial Instrum

ents, Receivables and O

ther Assets

Lon

g-te

rm fin

an

cial in

strum

en

ts an

d o

the

r asse

ts as o

f De

cem

be

r 31, 2

00

0 a

nd

199

9 co

nsist o

f the

follo

win

g:

64

Un

itel C

o., Ltd

.

Sa

msu

ng

Co

rnin

g C

o., Ltd

.

Sa

msu

ng

Lion

s Co

., Ltd.

To

wa

Ko

rea

Co

., Ltd.

PO

SC

O H

üls C

o., Ltd

.

Sa

msu

ng

Co

rnin

g P

recisio

n G

lass C

o., Ltd

.

Th

e Jo

on

g-A

ng

Da

ily Ne

ws C

alifo

rnia

, Inc.

To

tal in

vestm

en

t in su

bsid

iarie

s, affilia

tes

(2) O

the

r inve

stme

nts

Inve

stme

nt in

listed

com

pa

nie

s

Inve

stme

nt in

un

listed

com

pa

nie

s

Se

curitie

s ma

rke

t stab

ilizatio

n fu

nd

Oth

er

To

tal o

the

r inve

stme

nts

To

tal in

vestm

en

ts

Re

cord

ed

Bo

ok

Va

lue

8,097,545

266,813,817–

1,477,250

31,258,890

98,648,359–

4,779,785,567

440,442,604

180,337,602

8,743,987

431,343

629,955,536

5,409,741,103

Re

cord

ed

Bo

ok

Va

lue–

234,741,156–

937,991

13,693,448–

3,509,432

2,856,280,021

2,898,807,045

122,658,461

18,760,587

153,538,343

3,193,764,436

6,050,044,457

Ma

rke

t Va

lue

(Ne

t Bo

ok

Va

lue

)

14,092,076

269,615,291

46,816

4,150,664

34,820,290

75,434,805–

4,886,678,412

440,442,604

161,472,369

8,743,987

750,658

611,409,618

5,498,088,030

Acq

uisitio

n

Co

st

5,213,925

94,263,035

275,000

800,000

17,200,000

116,140,060–

4,505,243,019

898,439,398

197,315,163

16,601,222

431,343

1,112,787,126

5,618,030,145

Pe

rcen

tag

e

of O

wn

ersh

ip

29.07

45.29

27.50

40.00

20.00

41.85–––––

20

00

19

99

Th

ou

san

ds o

f Wo

n

Asse

t

Lon

g-te

rm fin

an

cial in

strum

en

ts

Lon

g-te

rm tra

de

rece

ivab

les

Lon

g-te

rm lo

an

s (A)

Lon

g-te

rm d

ep

osits

Lon

g-te

rm p

rep

aid

exp

en

ses

Inta

ng

ible

asse

ts (B)

To

tal

258,000

2,817,779

60,075,540

411,152,293

486,509,110

265,416,250

1,226,228,972

1,467,500

16,583,583

366,164,492

457,313,823

472,116,096

246,103,450

1,559,748,944

Millio

ns o

f Wo

n

20

00

199

9

(A) A

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

, lon

g-te

rm lo

an

s inclu

din

g e

mp

loy

ee

loa

ns to

tale

d

58

,09

4,7

77

,00

0 a

nd

3

65

,67

4,4

21,0

00

,

resp

ective

ly.

(B) A

s o

f De

ce

mb

er 3

1, 20

00

an

d 19

99

, inta

ng

ible

as

se

ts in

clu

din

g in

telle

ctu

al p

rop

erty

righ

ts to

tale

d

25

6,3

47

,26

1,00

0 a

nd

24

3,2

03

,92

4,0

00

, resp

ective

ly.

11. Short-Term

Borrow

ings

Sh

ort-te

rm b

orro

win

gs a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sist of th

e fo

llow

ing

:

As o

f De

cem

be

r 31, 2

00

0. th

e C

om

pa

ny’s u

nu

sed

ba

nk

ove

rdra

ft facility is

34

0,2

83

millio

n (se

e N

ote

4). In

ad

ditio

n, ce

rtain

ba

nk

de

po

sits

are

ple

dg

ed

as co

llate

ral fo

r the

ab

ove

bo

rrow

ing

s.

12. Long-Term D

ebt

Lon

g-te

rm d

eb

t as o

f De

cem

be

r 31, 2

00

an

d 19

99

con

sists of th

e fo

llow

ing

:

(A) Lo

cal cu

rren

cy loa

ns a

s of D

ece

mb

er 3

1,20

0 a

nd

199

9 co

nsist o

f the

follo

win

g:

65

Bo

rrow

ing

s

Ba

nk

ove

rdra

ft facilitie

s

Usa

nce

fina

nce

To

tal

An

nu

al In

tere

st Ra

te (%

)

20

00

11.5-

14,217-

14,217

5,046

44,465

49,511

Th

ou

san

ds o

f Wo

n

20

00

199

9

Lon

g-T

erm

De

bt

Loca

l curre

ncy lo

an

s

Fore

ign

curre

ncy lo

an

s, in W

on

eq

uiva

len

ts

De

be

ntu

res

Less: cu

rren

t ma

turitie

s

To

tal

Re

fere

nce

(A)

(B)

(C)

98,271,686

1,234,528,597

1,351,000,000

2,683,800,283

(2,190,697,681)

493,102,602

272,833,344

1,587,280,784

2,174,950,124

4,035,064,252

(1,101,635,162)

2,933,429,090

Th

ou

san

ds o

f Wo

n

20

00

199

9

Ha

nvit B

an

k

Ko

rea

De

velo

pm

en

t Ba

nk

Ko

ok

min

Ba

nk

Ko

rea

Te

chn

olo

gy B

an

kin

g C

orp

ora

tion

Sa

msu

ng

Ca

rd C

o., Ltd

.

An

nu

al In

tere

st Ra

te (%

)

20

00

5 - 6.5

9.35 - 9.65

11.5 - 12.45

6.5

6.5

1,114,195

66,053,000

18,823,440

12,198,051

83,000

98,271,686

1,624,515

224,109,000

28,975,527

18,041,302

83,000

272,833,344

Th

ou

san

ds o

f Wo

n

20

00

199

9

12. Long-Term D

ebt, Continued

(B) Lo

ng

-term

de

bt d

en

om

ina

ted

in fo

reig

n cu

rren

cies a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sist of th

e fo

llow

ing

:

(C) D

eb

en

ture

s ou

tstan

din

g a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sist of th

e fo

llow

ing

:

At D

ece

mb

er 3

1, 20

00

, certa

in p

rop

erty

, pla

nt a

nd

eq

uip

me

nt a

re p

led

ge

d a

s colla

tera

l for th

e a

bo

ve

lon

g-te

rm d

eb

ts (see

No

te 8

). In

ad

ditio

n, th

e re

pa

yme

nt o

f certa

in lo

ng

-term

de

bts is g

ua

ran

tee

d b

y vario

us K

ore

an

fina

ncia

l institu

tion

s.

Ma

turitie

s of lo

ng

-term

de

bts o

utsta

nd

ing

, exclu

din

g p

rem

ium

s an

d d

iscou

nts, a

t De

cem

be

r 31, 2

00

0 a

re a

s follo

ws:

66

Fore

ign

De

no

min

ate

d D

eb

t

ING

Citib

an

k, N

.A.

Ko

rea

De

velo

pm

en

t Ba

nk

Ko

rea

Exch

an

ge

Ba

nk

Ha

nvit B

an

k

Ba

nk

of S

eo

ul

Ko

rea

De

velo

pm

en

t Lea

sing

Co

rpo

ratio

n a

nd

oth

ers

U. S

. Do

llar e

qu

ivale

nt o

f fore

ign

curre

ncie

s

Wo

n e

qu

ivale

nts (in

tho

usa

nd

s)

An

nu

al In

tere

st Ra

te (%

)

LIBO

R + 0.45

LIBO

R + 0.6

LIBO

R + 0.4-0.6

LIBO

R + 0.375

LIBO

R + 0.45

LIBO

R + 1

LIBO

R + 0.65-1.1

$–

129,444

539,084

37,778

10,000–

263,712

$980,018

1,234,528,597

$8,533

181,222

618,371

56,667

20,000

8,606

492,388

$1,385,787

1,587,280,784

Th

ou

san

ds o

f U.S

. Do

llars

20

00

199

9

Ou

tstan

din

g D

eb

en

ture

s

Gu

ara

nte

ed

by b

an

ks, p

aya

ble

thro

ug

h 2

00

1

Floa

ting

rate

no

tes p

aya

ble

in 2

00

1

Oth

er, p

aya

ble

thro

ug

h 2

00

3

Ad

d: p

rem

ium

s

Less: d

iscou

nts

To

tal

An

nu

al In

tere

st Ra

te (%

)

20

00

11 - 22

CD

+ 0.1

8 - 15.70

122,500,000

32,000,000

1,196,500,000

1,351,000,000––

1,351,000,000

538,550,000

32,000,000

1,646,000,000

2,216,550,000–

(41,599,876)

2,174,950,124

Th

ou

san

ds o

f Wo

n

20

00

199

9

Lon

g-T

erm

De

bt M

atu

rities

20

01

20

02

20

03

20

04

Th

ere

afte

r

To

tal

De

be

ntu

res

1,331,000,000

20,000,000–––

1,351,000,000

Fore

ign

Cu

rren

cy

Loa

ns

805,829,177

394,020,369

34,679,051––

1,234,528,597

Loca

l Cu

rren

cy

Loa

ns

53,868,504

36,986,222

7,006,660

410,300–

98,271,686

To

tal

2,190,697,681

451,006,591

41,685,711

410,300–

2,683,800,283

Th

ou

san

ds o

f Wo

n

13. Foreign Currency Notes and B

onds

Un

secu

red

fore

ign

curre

ncy n

ote

s an

d b

on

ds a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sist of th

e fo

llow

ing

:

(A) U

SD

de

no

min

ate

d stra

igh

t bo

nd

s

On

No

vem

be

r 1, 199

2, th

e C

om

pa

ny issu

ed

straig

ht b

on

ds o

f US

$2

00

millio

n a

t 99

.5%

of fa

ce va

lue

for th

e e

xpa

nsio

n o

f its sem

icon

du

ctor

pro

du

ct ma

nu

factu

ring

facilitie

s. Th

e b

on

ds b

ea

r inte

rest a

t 8.5

% p

er a

nn

um

an

d m

atu

re o

n N

ove

mb

er 1, 2

00

2. T

he

Co

mp

an

y red

ee

me

d

US

$4

4,0

55

,00

0 o

f the

se b

on

ds d

urin

g 19

98

an

d 19

99

.

(B) JP

Y d

en

om

ina

ted

straig

ht b

on

ds

On

Ap

ril 23

, 199

6, th

e C

om

pa

ny issu

ed

straig

ht b

on

ds o

f 2

0,0

00

millio

n a

t face

valu

e. T

he

bo

nd

s be

ar in

tere

st at 3

.3%

pe

r an

nu

m a

nd

ma

ture

on

Ap

ril 23

, 20

03

. Th

e C

om

pa

ny re

de

em

ed

5

,210

millio

n o

f the

se b

on

ds d

urin

g 19

98

.

(C) D

EM

de

no

min

ate

d stra

igh

t bo

nd

s

On

De

cem

be

r 16, 19

96

, the

Co

mp

an

y issue

d stra

igh

t bo

nd

s of D

EM

30

0 m

illion

at fa

ce va

lue

. Th

e b

on

ds b

ea

r inte

rest a

t 5.3

75

% p

er a

nn

um

an

d m

atu

re o

n D

ece

mb

er 16

, 20

01.

(D) U

SD

de

no

min

ate

d stra

igh

t bo

nd

s

On

Octo

be

r 2, 19

97

, the

Co

mp

an

y issue

d stra

igh

t bo

nd

s of U

S$

100

millio

n a

t 99

.85

% o

f face

valu

e. T

he

bo

nd

s be

ar in

tere

st at 7

.7%

pe

r

an

nu

m a

nd

ma

ture

on

Octo

be

r 1, 20

27

.

(E) U

SD

de

no

min

ate

d stra

igh

t bo

nd

s

On

Octo

be

r 2, 19

97

, the

Co

mp

an

y issue

d stra

igh

t bo

nd

s of U

S$

22

7 m

illion

at 9

3.11%

of fa

ce va

lue

. Th

e b

on

ds b

ea

r inte

rest a

t 7.4

5%

pe

r

an

nu

m a

nd

ma

ture

on

Octo

be

r 1, 20

02

. Th

e C

om

pa

ny re

de

em

ed

US

$7

4,13

5,0

00

of th

ese

bo

nd

s du

ring

199

8 a

nd

199

9.

67

EU

R d

en

om

ina

ted

floa

ting

rate

no

tes

US

D d

en

om

ina

ted

straig

ht b

on

ds

DE

M d

en

om

ina

ted

straig

ht b

on

ds

JPY

de

no

min

ate

d stra

igh

t bo

nd

s

DE

M d

en

om

ina

ted

straig

ht b

on

ds

US

D d

en

om

ina

ted

straig

ht b

on

ds

US

D d

en

om

ina

ted

straig

ht b

on

ds

Co

nve

rtible

bo

nd

s

Co

nve

rtible

bo

nd

s

Co

nve

rtible

bo

nd

s

Co

nve

rtible

bo

nd

s

Co

nve

rtible

bo

nd

s

Less: cu

rren

t ma

turitie

s

Ad

d: p

rem

ium

s

Less: d

iscou

nts

Ad

d: lo

ng

-term

accru

ed

inte

rest

Less: co

nve

rsion

righ

ts

To

tal

Du

e D

ate

May 16, 2000

Novem

ber 1, 2002

March 24, 2000

April 23, 2003

Decem

ber 16, 2001

October 1, 2027

October 1, 2002

Decem

ber 31, 2006

Decem

ber 31, 2007

February 1, 2004

July 30, 2002

January 31, 2003

(A)

(B)

(C)

(D)

(E)

(F)

(G)

(H)

(I)

(J)

-

196,443,917–

162,914,808

182,112,000

125,970,000

192,564,040

6,018,120

61,999,530

117,300,000

120,470,000

240,640,000

1,406,432,415

(182,112,000)–

(6,378,785)

14,018,755

(21,194,843)

1,210,765,542

122,420,352

178,619,403

176,481,000

165,920,136

176,481,000

114,540,000

175,091,571

18,911,736

178,650,695

117,300,000

120,470,000

240,640,000

1,785,525,893

(298,901,352)

1,003,631

(6,556,876)

3,110,418

(68,652,265)

1,415,529,449

Th

ou

san

ds o

f Wo

n

20

00

199

9

(F) Co

nve

rtible

bo

nd

s

On

Se

pte

mb

er 2

4, 19

96

, the

Co

mp

an

y issue

d fo

reig

n cu

rren

cy con

vertib

le b

on

ds o

f US

$15

0 m

illion

for th

e e

xpa

nsio

n o

f its ma

nu

factu

ring

facilitie

s. Th

e b

on

ds a

re liste

d o

n th

e Lo

nd

on

Sto

ck E

xcha

ng

e a

nd

will m

atu

re o

n D

ece

mb

er 3

1, 20

06

. A su

mm

ary o

f the

term

s of th

ese

bo

nd

s is as fo

llow

s:

• In

tere

st: 0.2

5%

pe

r an

nu

m p

aya

ble

an

nu

ally in

arre

ars o

n D

ece

mb

er 3

1.

• C

on

versio

n p

erio

d: O

n o

r afte

r No

vem

be

r 24

, 199

6 th

rou

gh

De

cem

be

r 15, 2

00

6.

• C

on

ve

rsion

price

: Su

bje

ct to a

dju

stme

nt b

ase

d o

n ce

rtain

ev

en

ts, 6

5,4

99

pe

r sha

re, w

ith a

fixed

exch

an

ge

rate

ap

plica

ble

to th

e

con

versio

n o

f 8

27

.3 to

US

$1.0

0.

• R

ed

em

ptio

n: R

ed

ee

ma

ble

at th

e o

ptio

n o

f the

bo

nd

ho

lde

rs on

Se

pte

mb

er 2

4, 2

00

1 at 13

1.1% o

f the

prin

cipa

l am

ou

nt, a

nd

at th

e o

ptio

n o

f

the

Co

mp

an

y at a

ny tim

e o

n o

r afte

r Octo

be

r 24

, 199

6 a

t a d

eclin

ing

red

em

ptio

n p

rice. H

ow

eve

r, no

such

red

em

ptio

n m

ay b

e m

ad

e p

rior to

Se

pte

mb

er 2

4, 2

00

1 un

less th

e clo

sing

price

of th

e C

om

pa

ny’s co

mm

on

stock

ha

s rea

che

d 13

5%

of th

e co

nve

rsion

price

for a

stipu

late

d

pe

riod

.

Th

e C

om

pa

ny

reco

rde

d

51,9

69

millio

n o

f con

sid

era

tion

for co

nv

ers

ion

righ

ts, th

e d

iffere

nce

be

twe

en

the

no

min

al v

alu

e a

nd

the

disco

un

ted

pre

sen

t valu

e a

t a 5

.79

6%

gu

ara

nte

ed

retu

rn ra

te, a

s an

ad

justm

en

t to d

eb

en

ture

s an

d sh

are

ho

lde

rs’ eq

uity re

late

d to

the

issua

nce

of fo

reig

n cu

rren

cy co

nv

ertib

le b

on

ds. T

he

con

ve

rsion

righ

ts acco

un

t is am

ortize

d u

sing

the

effe

ctive

inte

rest m

eth

od

, an

d

am

ortiza

tion

of

22

5 m

illion

wa

s reco

gn

ized

as in

tere

st exp

en

se d

urin

g 2

00

0.

Du

ring

199

7 a

nd

199

9, U

S$

72

,44

0,0

00

an

d U

S$

54

,62

0,0

00

wo

rth o

f con

vertib

le b

on

ds w

ere

con

verte

d in

to 8

23

,35

2 a

nd

68

9,8

56

sha

res o

f

com

mo

n sto

ck a

t the

con

versio

n p

rice o

f 7

2,7

84

an

d

65

,49

9 p

er sh

are

, resp

ective

ly.

Du

ring

20

00

, US

$15

,64

0,0

00

of co

nve

rtible

bo

nd

s we

re co

nve

rted

into

197

,54

0 sh

are

s of co

mm

on

stock

at th

e co

nve

rsion

price

of

65

,49

9

pe

r sha

re. In

rela

tion

to th

e co

nve

rsion

to co

mm

on

stock

, the

Co

mp

an

y reco

rde

d

1,39

8 m

illion

as o

the

r cap

ital su

rplu

s, the

diffe

ren

ce

be

twe

en

the

con

versio

n rig

ht p

rice a

nd

the

rela

ted

con

side

ratio

n fo

r con

versio

n rig

hts.

(G) C

on

vertib

le b

on

ds

On

Jun

e 2

6, 19

97

, the

Co

mp

an

y issu

ed

fore

ign

curre

ncy

con

ve

rtible

bo

nd

s of U

S$

30

0 m

illion

for th

e e

xpa

nsio

n o

f its ma

nu

factu

ring

facilitie

s. Th

e b

on

ds a

re liste

d o

n th

e Lo

nd

on

Sto

ck E

xcha

ng

e a

nd

will m

atu

re o

n D

ece

mb

er 3

1, 20

07

. A su

mm

ary o

f the

term

s of th

ese

bo

nd

s is as fo

llow

s:

• In

tere

st: 0%

• C

on

versio

n p

erio

d: O

n o

r afte

r July 2

6, 19

97

thro

ug

h D

ece

mb

er 15

, 20

07

.

• C

on

ve

rsion

price

: Su

bje

ct to a

dju

stme

nt b

ase

d o

n ce

rtain

ev

en

ts, 113

,35

1 pe

r sha

re, w

ith a

fixed

exch

an

ge

rate

ap

plica

ble

to th

e

con

versio

n o

f 8

88

.5 to

US

$1.0

0.

• R

ed

em

ptio

n: R

ed

ee

ma

ble

at th

e o

ptio

n o

f the

bo

nd

ho

lde

rs on

Jun

e 2

6, 2

00

2 a

t 131.1%

of th

e p

rincip

al a

mo

un

t, an

d a

t the

op

tion

of th

e

Co

mp

an

y at a

ny tim

e o

n o

r afte

r Jun

e 2

6, 19

99

at a

de

clinin

g re

de

mp

tion

price

. Ho

we

ver, n

o su

ch re

de

mp

tion

ma

y be

ma

de

prio

r to Ju

ne

26

, 20

02

un

less th

e clo

sing

price

of th

e C

om

pa

ny’s co

mm

on

stock

ha

s rea

che

d 13

5%

of th

e co

nve

rsion

price

for a

stipu

late

d p

erio

d.

Th

e C

om

pa

ny

reco

rde

d

115,6

78

millio

n o

f con

sid

era

tion

for co

nv

ers

ion

righ

ts, th

e d

iffere

nce

be

twe

en

the

no

min

al v

alu

e a

nd

the

disco

un

ted

pre

sen

t valu

e a

t a 5

.55

8%

gu

ara

nte

ed

retu

rn ra

te, a

s an

ad

justm

en

t to d

eb

en

ture

s an

d sh

are

ho

lde

rs’ eq

uity re

late

d to

the

issua

nce

of fo

reig

n cu

rren

cy co

nv

ertib

le b

on

ds. T

he

con

ve

rsion

righ

ts acco

un

t is am

ortize

d u

sing

the

effe

ctive

inte

rest m

eth

od

, an

d

am

ortiza

tion

of

2,2

36

millio

n w

as re

cog

nize

d a

s inte

rest e

xpe

nse

du

ring

20

00

.

Du

ring

199

8 a

nd

199

9, U

S$

50

0,0

00

an

d U

S$

98

,43

0,0

00

wo

rth o

f con

vertib

le b

on

ds w

ere

con

verte

d in

to co

mm

on

stock

at th

e co

nve

rsion

price

of

123

,63

5 a

nd

113

,35

1 pe

r sha

re, re

spe

ctively.

Du

ring

20

00

, US

$13

1,29

0,0

00

wo

rth o

f con

vertib

le b

on

ds w

ere

con

verte

d in

to 1,0

29

,06

7 sh

are

s of co

mm

on

stock

at th

e co

nve

rsion

price

of

113,3

51 p

er sh

are

. In re

latio

n to

the

con

versio

n to

com

mo

n sto

ck, th

e C

om

pa

ny re

cord

ed

9

,64

7 m

illion

as o

the

r cap

ital su

rplu

s, the

diffe

ren

ce b

etw

ee

n th

e co

nve

rsion

righ

t price

an

d th

e re

late

d co

nsid

era

tion

for co

nve

rsion

righ

ts.

(H) C

on

vertib

le b

on

ds

On

Feb

rua

ry 1, 199

9, th

e C

om

pa

ny issu

ed

fore

ign

curre

ncy co

nve

rtible

bo

nd

s of U

S$

100

millio

n to

Inte

l Co

rpo

ratio

n w

hich

will m

atu

re o

n

Feb

rua

ry 1, 20

04

. A su

mm

ary o

f the

term

s of th

ese

bo

nd

s is as fo

llow

s:

• In

tere

st: 5%

pe

r an

nu

m p

aya

ble

an

nu

ally in

arre

ars o

n Fe

bru

ary 1.

• C

on

versio

n p

erio

d: O

n o

r afte

r Ma

y 2, 19

99

thro

ug

h Ja

nu

ary 2

1, 20

04

.

• C

on

ve

rsion

price

: Su

bje

ct to a

dju

stme

nt b

ase

d o

n ce

rtain

ev

en

ts, 10

8,4

65

pe

r sha

re, w

ith a

fixed

exch

an

ge

rate

ap

plica

ble

to th

e

con

versio

n o

f 1,17

3 to

US

$1.0

0.

68

(I) Co

nve

rtible

bo

nd

s

On

July 3

0, 19

99

, the

Co

mp

an

y issue

d fo

reig

n cu

rren

cy con

vertib

le b

on

ds o

f US

$10

0 m

illion

to A

pp

le C

om

pu

ter, In

c. wh

ich w

ill ma

ture

on

July 3

0, 2

00

2. A

sum

ma

ry of th

e te

rms o

f the

se b

on

ds is a

s follo

ws:

• In

tere

st: 2%

pe

r an

nu

m p

aya

ble

an

nu

ally in

arre

ars o

n D

ece

mb

er 3

1.

• C

on

versio

n p

erio

d: O

n o

r afte

r July 3

0, 2

00

0 th

rou

gh

July 2

0, 2

00

2.

• C

on

ve

rsion

price

: Su

bje

ct to a

dju

stme

nt b

ase

d o

n ce

rtain

ev

en

ts, 2

19,0

50

pe

r sha

re, w

ith a

fixed

exch

an

ge

rate

ap

plica

ble

to th

e

con

versio

n o

f 1,2

04

.7 to

US

$1.0

0.

Th

e C

om

pa

ny re

cog

nize

d in

tere

st exp

en

se u

sing

a 5

% e

ffective

inte

rest ra

te. T

he

diffe

ren

ce b

etw

ee

n th

e e

ffective

an

d g

ua

ran

tee

d re

turn

rate

wa

s cred

ited

to lo

ng

-term

accru

ed

inte

rest e

xpe

nse

. Th

e a

dd

ition

al in

tere

st exp

en

se o

f 3

,69

0 m

illion

wa

s cred

ited

to lo

ng

-term

accru

ed

inte

rest e

xpe

nse

du

ring

20

00

.

(J) Co

nve

rtible

bo

nd

s

On

Octo

be

r 15, 19

99

, the

com

pa

ny issu

ed

fore

ign

curre

ncy co

nve

rtible

bo

nd

s of U

S$

20

0 m

illion

to D

ell C

om

pu

ter C

orp

ora

tion

wh

ich w

ill

ma

ture

on

Jan

ua

ry 31, 2

00

3. A

sum

ma

ry of th

e te

rms o

f the

se b

on

ds is a

s follo

ws:

• In

tere

st: 2%

pe

r an

nu

m p

aya

ble

an

nu

ally in

arre

ars o

n D

ece

mb

er 3

1.

• C

on

versio

n p

erio

d: O

n o

r afte

r Octo

be

r 15, 2

00

0 th

rou

gh

Jan

ua

ry 16, 2

00

3.

• C

on

ve

rsion

price

: Su

bje

ct to a

dju

stme

nt b

ase

d o

n ce

rtain

ev

en

ts, 2

60

,00

0 p

er sh

are

, with

a fixe

d e

xcha

ng

e ra

te a

pp

licab

le to

the

con

versio

n o

f 1,2

03

.2 to

US

$1.0

0.

Th

e C

om

pa

ny re

cog

nize

d in

tere

st exp

en

se u

sing

a 5

% e

ffective

inte

rest ra

te. T

he

diffe

ren

ce b

etw

ee

n th

e e

ffective

an

d g

ua

ran

tee

d ra

te w

as

cred

ited

to lo

ng

-term

accru

ed

inte

rest e

xpe

nse

. Th

e a

dd

ition

al in

tere

st exp

en

se o

f 7

,218

millio

n w

as cre

dite

d to

lon

g-te

rm a

ccrue

d

inte

rest e

xpe

nse

du

ring

20

00

.

14. Comm

itments and Contingencies

• A

t De

cem

be

r 31, 2

00

0, th

e C

om

pa

ny is co

ntin

ge

ntly lia

ble

for g

ua

ran

tee

s of in

de

bte

dn

ess, p

rincip

ally fo

r rela

ted

pa

rties, a

pp

roxim

atin

g

54

,183

millio

n a

nd

US

$1,5

65

,85

7,0

00

. In a

dd

ition

, at D

ece

mb

er 3

1, 20

00

, the

Co

mp

an

y pro

vide

d g

ua

ran

tee

s of co

ntra

ct fulfillm

en

t for

Iljin H

ea

vy Ind

ustrie

s Co

., Ltd. in

the

am

ou

nt o

f 1,6

78

millio

n.

• A

t De

cem

be

r 31, 2

00

0, th

e C

om

pa

ny h

as a

tota

l 142

of te

chn

ical a

ssistan

ce a

gre

em

en

ts with

certa

in fo

reig

n co

mp

an

ies. T

ota

l roya

lty

exp

en

se in

curre

d in

rela

tion

to th

ese

ag

ree

me

nts fo

r the

yea

r en

de

d D

ece

mb

er 3

1, 20

00

an

d 19

99

am

ou

nts to

ap

pro

xima

tely

77

4, 118

millio

n a

nd

7

43

,418

millio

n, re

spe

ctively.

• T

he

Co

mp

an

y pro

vide

d p

rod

uct w

arra

ntie

s for ce

rtain

go

od

s sold

an

d is in

sure

d fo

r the

fulfillm

en

t of su

ch w

arra

ntie

s.

• A

t De

cem

be

r 31, 2

00

0, th

e C

om

pa

ny h

as e

nte

red

into

lea

se a

gre

em

en

ts with

seve

ral le

asin

g co

mp

an

ies th

at a

re re

cog

nize

d a

s dire

ct

fina

ncin

g le

ase

s. Th

ese

lea

se a

gre

em

en

ts are

sum

ma

rized

as fo

llow

s:

•S

che

du

led

futu

re le

ase

pa

yme

nts, n

et o

f inte

rest, w

hich

are

also

inclu

de

d in

lon

g-te

rm d

eb

t (see

No

te 12

), are

as fo

llow

s:

69

Acco

un

t

Ma

chin

ery a

nd

eq

uip

me

nt

Acq

uisitio

n C

ost

712,678

De

pre

ciatio

n E

xpe

nse

Ch

arg

ed

to

20

00

Op

era

tion

s

137,187

Millio

ns o

f Wo

n

Lea

se P

aym

en

t Sch

ed

ule

20

01

20

02

20

03

To

tal

Th

ou

san

ds o

f Wo

n

238,001,939

92,129,257

2,066,818

332,198,014

•In

ad

ditio

n, a

t De

cem

be

r 31, 2

00

0, th

e C

om

pa

ny h

as e

nte

red

into

lea

se a

gre

em

en

ts tha

t we

re re

cog

nize

d a

s op

era

ting

lea

ses. R

ela

ted

ren

tal p

aym

en

ts we

re ch

arg

ed

to o

pe

ratio

ns a

s incu

rred

. Re

nta

l exp

en

se in

curre

d u

nd

er th

ese

op

era

ting

lea

se a

gre

em

en

ts am

ou

nts to

40

7 m

illion

for th

e ye

ar e

nd

ed

De

cem

be

r 31, 2

00

0, a

nd

futu

re re

nta

l pa

yme

nts o

f US

$10

8,0

00

are

du

e w

ithin

a ye

ar.

• A

s of D

ece

mb

er 3

1, 20

00

, the

Co

mp

an

y ha

s en

tere

d in

to se

ven

forw

ard

exch

an

ge

con

tracts w

ith va

riou

s fore

ign

an

d K

ore

an

fina

ncia

l

institu

tion

s to h

ed

ge

curre

ncy risk

on

fore

ign

curre

ncy lo

ng

-term

de

bts. In

ad

ditio

n, th

e C

om

pa

ny h

as e

nte

red

into

thre

e in

tere

st rate

swa

p

con

tracts w

ith va

riou

s fore

ign

an

d K

ore

an

fina

ncia

l institu

tion

s to h

ed

ge

inte

rest ra

te risk

on

floa

ting

-rate

fore

ign

curre

ncy lo

ng

-term

de

bts.

•Fo

r the

yea

r en

de

d D

ece

mb

er 3

1, 20

00

, the

Co

mp

an

y reco

gn

ized

ga

ins o

f 9

,06

9 m

illion

an

d lo

sses o

f 8

,97

1 millio

n, ch

arg

ed

to cu

rren

t

op

era

tion

s, from

the

valu

atio

n o

f forw

ard

exch

an

ge

con

tracts. In

ad

ditio

n, fro

m th

e va

lua

tion

of in

tere

st rate

swa

p co

ntra

cts, the

Co

mp

an

y

reco

gn

ized

losse

s of

83

millio

n, ch

arg

ed

to cu

rren

t op

era

tion

s, an

d d

efe

rred

3

,27

2 m

illion

, cha

rge

d to

cap

ital a

dju

stme

nt, o

f wh

ich

127

millio

n is e

xpe

cted

to b

e re

alize

d b

y De

cem

be

r 31, 2

00

1.

• A

s of D

ece

mb

er 3

1, 20

00

, the

Co

mp

an

y ha

s en

tere

d in

to a

n a

gre

em

en

t to issu

e a

sset b

ack

ed

secu

rities b

ase

d o

n e

xpo

rt acco

un

ts an

d

no

tes re

ceiva

ble

with

Atla

ntic A

sset S

ecu

ritizatio

n C

orp

ora

tion

for u

p to

US

$10

0 m

illion

, an

ag

ree

me

nt to

disco

un

t trad

e n

ote

s rece

ivab

le

with

thre

e K

ore

an

ba

nk

s for u

p to

3

00

,00

0 m

illion

an

d a

cred

it sale

s facility a

gre

em

en

t with

Ha

nvit B

an

k fo

r up

to

20

0,0

00

millio

n (se

e

No

te 6

).

• A

t De

cem

be

r 31, 2

00

0 th

e C

om

pa

ny h

as b

ee

n n

am

ed

as a

de

fen

da

nt in

thre

e le

ga

l actio

ns fo

r alle

ge

d p

ate

nt in

fring

em

en

ts an

d o

ne

leg

al

actio

n fo

r bre

ach

of co

ntra

ct, an

d a

s the

pla

intiff fo

r two

leg

al a

ction

s for p

ate

nt in

fring

em

en

ts an

d tw

o fo

r un

pa

id d

eb

ts in a

fore

ign

cou

ntry

. In a

dd

ition

, the

Co

mp

an

y is a

pa

rty to

va

riou

s oth

er le

ga

l claim

s an

d p

roce

ed

ing

s in K

ore

a, a

ll of w

hich

are

pe

nd

ing

as o

f

De

cem

be

r 31, 2

00

0. T

he

Co

mp

an

y’s ma

na

ge

me

nt b

elie

ves th

at, a

ltho

ug

h th

e o

utco

me

of th

ese

ma

tters is u

nce

rtain

, the

reso

lutio

n o

f

the

se m

atte

rs will n

ot h

ave

a m

ate

rial a

dve

rse e

ffect o

n th

e o

pe

ratio

ns o

r fina

ncia

l po

sition

of th

e C

om

pa

ny.

• A

t De

cem

be

r 31, 2

00

0, s

ix p

rom

iss

ory

no

tes

tota

ling

14

,175

millio

n, a

nd

15 b

lan

k n

ote

s a

nd

che

cks

we

re p

rov

ide

d to

fina

ncia

l

institu

tion

s as co

llate

ral fo

r ba

nk

bo

rrow

ing

s an

d fo

r the

fulfillm

en

t of ce

rtain

con

tracts.

• In

Jun

e 19

99

, Sa

msu

ng

Mo

tors In

c. (“SM

I”), an

affilia

te o

f the

Co

mp

an

y, filed

a p

etitio

n fo

r cou

rt rece

iversh

ip. In

con

ne

ction

with

this

pe

tition

, the

Co

mp

an

y an

d 3

0 S

am

sun

g G

rou

p a

ffiliate

s (the

“Affilia

tes”) e

nte

red

into

an

ag

ree

me

nt w

ith th

e in

stitutio

na

l cred

itors (“th

e

Cre

dito

rs”) of S

MI in

Au

gu

st, 199

9. In

acco

rda

nce

with

this a

gre

em

en

t, the

Co

mp

an

y an

d th

e A

ffiliate

s ag

ree

d to

sell 3

,50

0,0

00

sha

res o

f

Sa

msu

ng

Life In

sura

nce

Co

., Ltd. sto

ck a

nd

tran

sfer th

e p

roce

ed

s to th

e C

red

itors in

con

ne

ction

with

the

pe

tition

for co

urt re

ceive

rship

of

SM

I by D

ece

mb

er 3

1, 20

00

. In th

e e

ven

t tha

t the

sale

pro

cee

ds fa

ll sho

rt of

2,4

50

,00

0 m

illion

, the

Co

mp

an

y an

d th

e A

ffiliate

s ha

ve

ag

ree

d to

com

pe

nsa

te th

e C

red

itors fo

r the

sho

rtfall b

y o

the

r me

an

s, inclu

din

g p

articip

atio

n in

an

y e

qu

ity o

fferin

g o

r sub

ord

ina

ted

de

be

ntu

res issu

ed

by th

e C

red

itors. A

ny p

roce

ed

s in e

xcess o

f 2

,45

0,0

00

millio

n a

re to

be

distrib

ute

d to

the

Co

mp

an

y an

d th

e A

ffiliate

s.

•A

s of D

ece

mb

er 3

1, 20

00

, the

sha

res in

Sa

msu

ng

Life In

sura

nce

Co

., Ltd. w

ere

no

t sold

an

d ce

rtain

sha

reh

old

ers o

f the

Co

mp

an

y ha

ve

filed

an

inju

nctio

n a

ga

inst th

e d

irecto

rs of th

e C

om

pa

ny, a

lleg

ing

tha

t the

dire

ctors w

ere

actin

g in

con

trave

ntio

n to

the

law

wh

en

en

terin

g

into

this a

gre

em

en

t an

d a

ccord

ing

ly, tha

t this a

gre

em

en

t is void

. Th

e u

ltima

te e

ffect o

f the

se m

atte

rs on

the

fina

ncia

l po

sition

of th

e

Co

mp

an

y a

s of th

e b

ala

nce

she

et d

ate

can

no

t rea

son

ab

ly b

e d

ete

rmin

ed

, an

d a

ccord

ing

ly, n

o a

dju

stme

nts h

av

e b

ee

n m

ad

e in

the

acco

mp

an

ying

fina

ncia

l state

me

nts in

rela

tion

to th

ese

ma

tters.

• B

eg

inn

ing

in 19

97

, Ko

rea

an

d o

the

r cou

ntrie

s in th

e A

sia P

acific re

gio

n e

xpe

rien

ced

a se

vere

con

tractio

n in

sub

stan

tially a

ll asp

ects o

f

the

ir eco

no

mie

s. Th

is situa

tion

is com

mo

nly

refe

rred

to a

s the

199

7 A

sian

fina

ncia

l crisis. In re

spo

nse

to th

is situa

tion

, the

Ko

rea

n

go

vern

me

nt a

nd

the

priva

te se

ctor b

eg

an

imp

lem

en

ting

structu

ral re

form

s to h

istorica

l bu

sine

ss pra

ctices.

•T

he

Ko

rea

n e

con

om

y is curre

ntly e

xpe

rien

cing

ad

ditio

na

l difficu

lties, p

articu

larly in

the

are

as o

f restru

cturin

g p

rivate

en

terp

rises a

nd

refo

rmin

g th

e b

an

kin

g in

du

stry. T

he

Ko

rea

n g

ov

ern

me

nt co

ntin

ue

s to a

pp

ly p

ressu

re to

Ko

rea

n co

mp

an

ies to

restru

cture

into

mo

re

efficie

nt a

nd

pro

fitab

le firm

s. Th

e b

an

kin

g in

du

stry is curre

ntly u

nd

erg

oin

g co

nso

lida

tion

s an

d sig

nifica

nt u

nce

rtain

ty exists w

ith re

ga

rd to

the

ava

ilab

ility of sh

ort-te

rm fin

an

cing

du

ring

the

com

ing

yea

r. Th

e C

om

pa

ny m

ay b

e e

ithe

r dire

ctly or in

dire

ctly affe

cted

by th

e situ

atio

n

de

scribe

d a

bo

ve.

•T

he

acco

mp

an

ying

fina

ncia

l state

me

nts re

flect m

an

ag

em

en

t’s curre

nt a

ssessm

en

t of th

e im

pa

ct to d

ate

of th

e e

con

om

ic situa

tion

on

the

fina

ncia

l po

sition

of th

e C

om

pa

ny. A

ctua

l resu

lts ma

y diffe

r ma

teria

lly from

ma

na

ge

me

nt’s cu

rren

t asse

ssme

nt.

70

15. Retained Earnings

Re

tain

ed

ea

rnin

gs a

s of D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sist of th

e fo

llow

ing

:

(A) T

he

Ko

rea

n C

om

me

rcial C

od

e re

qu

ires th

e C

om

pa

ny to

ap

pro

pria

te a

s a le

ga

l rese

rve a

n a

mo

un

t eq

ua

l to a

min

imu

m o

f 10%

of a

nn

ua

l

cash

divid

en

ds d

ecla

red

un

til the

rese

rve e

qu

als 5

0%

of ca

pita

l stock

. Th

is rese

rve is n

ot a

vaila

ble

for th

e p

aym

en

t of ca

sh d

ivide

nd

s,

bu

t ma

y be

tran

sferre

d to

cap

ital sto

ck o

r use

d to

red

uce

the

accu

mu

late

d d

eficit, if a

ny.

(B) P

urs

ua

nt to

the

Ta

x E

xe

mp

tion

an

d R

ed

uctio

n C

on

trol L

aw

, the

Co

mp

an

y is

req

uire

d to

ap

pro

pria

te a

s a

res

erv

e fo

r bu

sin

es

s

ratio

na

lizatio

n a

n a

mo

un

t eq

ua

l to th

e e

xem

ptio

n o

f inco

me

taxe

s resu

lting

from

inve

stme

nt ta

x cred

its an

d ce

rtain

de

du

ction

s from

taxa

ble

inco

me

spe

cified

by su

ch la

w. T

his re

serve

ma

y be

use

d fo

r the

red

uctio

n o

f the

accu

mu

late

d d

eficit, if a

ny, o

r tran

sferre

d to

cap

ital sto

ck.

(C) In

acco

rda

nce

with

the

Re

gu

latio

n fo

r Se

curitie

s Issua

nce

an

d D

isclosu

re, th

e C

om

pa

ny

is req

uire

d to

ap

pro

pria

te a

s a re

serv

e fo

r

imp

rove

me

nt o

f fina

ncia

l structu

re a

n a

mo

un

t eq

ua

l to a

t lea

st 50

% o

f the

ne

t extra

ord

ina

ry ga

in o

n d

ispo

sal o

f pro

pe

rty, pla

nt a

nd

eq

uip

me

nt a

nd

10%

of n

et e

arn

ing

s for e

ach

yea

r un

til sha

reh

old

ers’ e

qu

ity eq

ua

ls 30

% o

f tota

l asse

ts. Th

is rese

rve is n

ot a

vaila

ble

for

pa

yme

nt o

f cash

divid

en

ds, b

ut m

ay b

e tra

nsfe

rred

to ca

pita

l stock

or u

sed

to re

du

ce th

e a

ccum

ula

ted

de

ficit, if an

y.

(D) P

ursu

an

t to K

ore

an

tax la

w, th

e C

om

pa

ny is a

llow

ed

to cla

im a

tax d

ed

uctio

n in

de

term

inin

g ta

xab

le in

com

e fo

r the

am

ou

nts o

f reta

ine

d

ea

rnin

gs a

pp

rop

riate

d to

rese

rve

s for o

ve

rsea

s ma

rke

t de

ve

lop

me

nt, o

ve

rsea

s inv

estm

en

t losse

s, tech

no

log

y d

ev

elo

pm

en

t, exp

ort

losse

s an

d lo

sses o

n d

ispo

sal o

f trea

sury sto

ck. T

he

se a

mo

un

ts are

no

t ava

ilab

le fo

r divid

en

ds u

ntil u

sed

for th

e sp

ecifie

d p

urp

ose

s or

reve

rsed

.

(E) T

he

rese

rve fo

r facilitie

s rep

rese

nts a

mo

un

ts ap

pro

pria

ted

by th

e C

om

pa

ny fo

r cap

ital e

xpe

nd

iture

s an

d m

ay b

e u

sed

for a

ny p

urp

ose

thro

ug

h a

sha

reh

old

ers’ re

solu

tion

.

16. Dividends

On

Jun

e 3

0, 2

00

0 a

nd

199

9, th

e C

om

pa

ny d

ecla

red

a 10

% ca

sh d

ivide

nd

to sh

are

ho

lde

rs of co

mm

on

stock

an

d p

refe

rred

stock

as a

n in

terim

divid

en

d fo

r the

six-mo

nth

pe

riod

en

de

d Ju

ne

30

, 20

00

an

d 19

99

. A ca

sh d

ivide

nd

of

85

,88

6 m

illion

an

d

84

,66

4 m

illion

wa

s pa

id o

n Ju

ne

30

, 20

00

an

d 19

99

resp

ective

ly.

71

Re

tain

ed

Ea

rnin

gs

Ap

pro

pria

ted

:

Leg

al re

serve

Re

serve

for b

usin

ess ra

tion

aliza

tion

Re

serve

for im

pro

vem

en

t of fin

an

cial stru

cture

Re

serve

for o

verse

as m

ark

et d

eve

lop

me

nt

Re

serve

for o

verse

as in

vestm

en

t losse

s

Re

serve

for te

chn

olo

gy d

eve

lop

me

nt

Re

serve

for e

xpo

rt losse

s

Re

serve

for lo

ss on

disp

osa

l of tre

asu

ry stock

Re

serve

for fa

cilities in

vestm

en

t

Un

ap

pro

pria

ted

:

To

tal

Re

fere

nce

(A)

(B)

(C)

(D)

(D)

(D)

(D)

(D)

(E)

440,789,000

2,512,100,829

204,815,000

510,750,423

164,982,454

3,838,397,908

167,749,074

200,000,000

2,714,811,000

10,754,395,688

31,409

10,754,427,097

387,789,000

1,512,100,829

204,815,000

548,741,108

213,382,454

2,023,097,908

217,118,059–

134,615,000

5,241,659,358

31,989

5,241,691,347

Th

ou

san

ds o

f Wo

n

20

00

199

9

Th

e y

ea

r-en

d ca

sh d

ivid

en

d fo

r the

prio

r fiscal y

ea

r wa

s 3

42

,72

9 m

illion

. For th

e y

ea

r en

de

d D

ece

mb

er 3

1, 20

00

, a ca

sh d

ivid

en

d o

f

42

2,6

70

millio

n (co

mm

on

stock

: 50

%, p

refe

rred

stock

: 51%

) exclu

din

g th

e in

terim

divid

en

d is p

rop

ose

d fo

r the

ge

ne

ral sh

are

ho

lde

rs’

me

etin

g to

be

he

ld o

n M

arch

16, 2

00

1. Inclu

din

g th

is pro

po

sed

fina

l divid

en

d, th

e d

ivide

nd

pa

you

t ratio

is ap

pro

xima

tely 8

.46

% a

nd

13.4

8%

at D

ece

mb

er 3

1, 20

00

an

d 19

99

, resp

ective

ly.

17. Treasury Stock

Du

ring

the

yea

r en

de

d D

ece

mb

er 3

1, 20

00

, the

Co

mp

an

y ha

s acq

uire

d 3

,00

0,0

00

sha

res o

f its ow

n co

mm

on

stock

an

d 4

00

,00

0 sh

are

s of its

ow

n n

on

-votin

g p

refe

rred

stock

. As o

f De

cem

be

r 31, 2

00

0, th

e C

om

pa

ny h

old

s 6,4

49

,62

5 sh

are

s of its o

wn

com

mo

n sto

ck a

nd

1,26

9,6

93

sha

res o

f its ow

n p

refe

rred

stock

. Th

is trea

sury sto

ck is re

cord

ed

as a

cap

ital a

dju

stme

nt .

18. S

tock Option P

lan

Th

e C

om

pa

ny h

as a

stock

op

tion

pla

n th

at p

rovid

es fo

r gra

ntin

g sto

ck p

urch

ase

op

tion

s to e

mp

loye

es o

r dire

ctors w

ho

ha

ve co

ntrib

ute

d o

r

are

exp

ecte

d to

con

tribu

te to

the

ma

na

ge

me

nt a

nd

tech

no

log

y inn

ova

tion

of th

e C

om

pa

ny.

Th

e C

om

pa

ny g

ran

ted

such

op

tion

s on

Ma

rch 16

, 20

00

, wh

ich ca

n b

e e

xercise

d fo

r up

to 1,5

00

,00

0 co

mm

on

sha

res (se

e N

ote

1) at a

n

exe

rcise p

rice o

f 2

72

,70

0 p

er sh

are

. Th

is price

will b

e a

dju

sted

in th

e e

ven

t of a

ne

w sh

are

offe

ring

, stock

divid

en

d, sto

ck sp

lit or sto

ck

me

rge

r. Th

ese

op

tion

s, with

a se

rvice p

erio

d o

f two

yea

rs from

the

da

te o

f the

gra

nt, ca

n b

e e

xercise

d a

fter th

ree

an

d w

ithin

seve

n ye

ars

from

the

da

te o

f the

gra

nt.

Th

e C

om

pa

ny re

cog

nize

d th

e co

mp

en

satio

n co

st for th

ese

op

tion

s usin

g th

e fa

ir valu

e m

eth

od

ba

sed

on

an

exp

ecte

d sto

ck p

rice vo

latility o

f

69

.48

%, e

stima

ted

risk-fre

e in

tere

st rate

s of 9

.08

%, e

xpe

cted

exe

rcise te

rm o

f fou

r yea

rs an

d e

xpe

cted

divid

en

d yie

ld o

f 0.3

9%

. Th

e co

st of

the

stock

op

tion

pla

n w

as

93

,74

6 m

illion

for th

e ye

ar e

nd

ed

De

cem

be

r 31, 2

00

0, a

nd

will b

e

141,4

24

millio

n fro

m th

e fo

llow

ing

yea

r.

19. Income Tax Expense

Th

e sta

tuto

ry inco

me

tax ra

te a

pp

licab

le to

the

Co

mp

an

y, inclu

din

g re

side

nt su

rtax, is a

pp

roxim

ate

ly 30

.8%

. Inco

me

tax e

xpe

nse

for th

e

yea

r en

de

d D

ece

mb

er 3

1, 20

00

an

d 19

99

con

sists of th

e fo

llow

ing

:

Th

e fo

llow

ing

tab

le re

con

ciles th

e e

xpe

cted

am

ou

nt o

f inco

me

tax e

xpe

nse

ba

sed

on

statu

tory ra

tes to

the

actu

al a

mo

un

t of ta

xes re

cord

ed

by th

e C

om

pa

ny:

72

Inco

me

Ta

xes

Cu

rren

t inco

me

taxe

s

De

ferre

d in

com

e ta

xes

To

tal

1,186,607,415

899,310,939

2,085,918,354

658,526,912

199,038,851

857,565,763

Th

ou

san

ds o

f Wo

n

20

00

199

9

Ta

x Ra

te C

alcu

latio

n

Inco

me

be

fore

taxe

s

Sta

tuto

ry tax ra

te

Exp

ecte

d ta

xes a

t statu

tory ra

te

Ta

x cred

it

Oth

ers, n

et

Actu

al ta

xes

Effe

ctive ta

x rate

8,100,448,546

30.8%

2,494,938,152

(455,027,917)

46,008,119

2,085,918,354

25.8%

4,027,968,337

30.8%

1,240,614,248

(403,263,139)

20,214,654

857,565,763

21.3%

Th

ou

san

ds o

f Wo

n

20

00

199

9

Co

mp

on

en

ts of d

efe

rred

taxe

s as o

f De

cem

be

r 31, 2

00

0 a

re a

s follo

ws:

Th

e C

om

pa

ny p

erio

dica

lly asse

sses its a

bility to

reco

ver d

efe

rred

tax a

ssets. In

the

eve

nt o

f sign

ifican

t un

certa

inty re

ga

rdin

g th

e C

om

pa

ny’s

ultim

ate

ab

ility to re

cove

r such

asse

ts, a va

lua

tion

allo

wa

nce

is reco

rde

d to

red

uce

the

asse

t to its e

stima

ted

ne

t rea

lizab

le va

lue

.

Th

e C

om

pa

ny h

as n

ot re

cog

nize

d th

e in

com

e ta

x effe

ct of a

tem

po

rary d

iffere

nce

of

415

,09

0 m

illion

resu

lting

from

the

reva

lua

tion

of la

nd

it ha

s no

imm

ed

iate

pla

ns to

disp

ose

of. In

ad

ditio

n, a

cha

ng

e in

acco

un

ting

po

licy in th

e cu

rren

t yea

r (see

No

te 2

) resu

lted

in a

cum

ula

tive

incre

ase

in d

efe

rred

inco

me

tax o

f 3

,00

9 m

illion

tha

t wa

s ad

juste

d to

op

en

ing

reta

ine

d e

arn

ing

s.

20. Earnings Per S

hare

Ea

rnin

gs p

er sh

are

an

d d

ilute

d e

arn

ing

s pe

r sha

re a

re ca

lcula

ted

as fo

llow

s:

73

De

ferre

d T

ax A

sset C

alcu

latio

n

De

ferre

d ta

x asse

ts:

Loss o

n va

lua

tion

of in

vestm

en

ts usin

g th

e e

qu

ity me

tho

d

De

ferre

d fo

reig

n e

xcha

ng

e lo

sses

Inve

stme

nt sto

ck re

du

ction

losse

s

De

pre

ciatio

n

Oth

er

Ta

x cred

its

To

tal d

efe

rred

tax a

ssets

De

ferre

d ta

x liab

ilities:

Sp

ecia

l rese

rves a

pp

rop

riate

d fo

r tax p

urp

ose

s

Ca

pita

lized

inte

rest e

xpe

nse

Accru

ed

inco

me

Ga

in o

n va

lua

tion

of in

vestm

en

ts usin

g th

e e

qu

ity me

tho

d

Oth

er

To

tal d

efe

rred

tax lia

bilitie

s

Ne

t de

ferre

d ta

x asse

ts

Be

gin

nin

g

Ba

lan

ce

320,422,447

236,486,776

85,782,593

311,472,320

89,287,880

240,187,881

1,283,639,897

160,301,578

34,669,575

4,031,119–

4,110,702

203,112,974

1,080,526,923

Incre

ase

(De

crea

se)

(320,422,447)

(104,366,080)

(80,546,470)

(165,310,076)

17,817,975

(240,187,881)

(893,014,979)

(49,322,141)

20,141,152

4,948,678

35,918,457

(2,380,699)

9,305,447

(902,320,426)

En

din

g

Ba

lan

ce–

132,120,696

5,236,123

146,162,244

107,105,855–

390,624,918

110,979,437

54,810,727

8,979,797

35,918,457

1,730,003

212,418,421

178,206,497

EP

S C

alcu

latio

n

Ne

t inco

me

Ad

justm

en

ts:

Divid

en

ds fo

r pre

ferre

d sto

ck

Un

de

clare

d p

articip

atin

g p

refe

rred

stock

divid

en

d

Ne

t inco

me

ava

ilab

le fo

r com

mo

n sto

ck

We

igh

ted

ave

rag

e n

um

be

r of sh

are

s of co

mm

on

stock

Ea

rnin

gs p

er sh

are

in K

ore

an

Wo

n

6,014,530,192

(69,202,389)

(738,754,987)

5,206,572,816

148,735,383

35,006

Th

ou

san

ds o

f Wo

n

Th

ou

san

ds o

f Wo

n

21. Related P

arty Transactions

Sig

nifica

nt tra

nsa

ction

s with

rela

ted

pa

rties fo

r the

yea

rs en

de

d D

ece

mb

er 3

1, 20

00

an

d th

e 19

99

an

d th

e re

late

d re

ceiva

ble

s an

d p

aya

ble

s

at D

ece

mb

er 3

1, 20

00

an

d 19

99

are

as fo

llow

s:

Du

ring

20

00

an

d 19

99

Sa

ms

un

g C

orp

ora

tion

exp

orte

d

21,5

59

,95

1 millio

n a

nd

15

,78

2,2

47

millio

n w

orth

of g

oo

ds

an

d im

po

rted

3,7

27

,413

millio

n a

nd

4

,516

,84

9 m

illion

wo

rth o

f go

od

s on

be

ha

lf of th

e C

om

pa

ny.

74

28,793,503

130,501,116

56,334,467

91,541,195

37,108,881

3,609,217

2,542,910

12,978,039

961,821

8,526,218

1,212,420

16,818,904

122,275,922

196,412,048

544,364,061

73,615,997

$13,533,592

1,327,596,719

$13,533,592

40,403,924

77,470,578

91,092,651

89,062,680

113,570,242

15,357,953

930,863

19,843,835

1,393,555

4,326,609

863,025

25,682,263

105,369,817- -

46,303,308

$10,678,976

631,671,303

$10,678,976

1,157,468,843

1,550,459,715

814,221,910

298,140,093

782,325,532

187,041,979

124,882,862

121,463,67430

30,108,821

151,182,121

111,146,302

3,157,127

172,262,778

2,531,563

1,905,131

577,595,366

$6,119,476

6,085,893,817

$6,119,476

625,112,597

987,862,496

724,502,937

272,211,537

667,459,514

162,368,633

94,919,970

95,803,645

44,292,171

119,891,015

101,364,743

2,695,194

124,600,307- -

318,196,254

$4,141,759

4,341,281,013

$4,141,759

72,366,272

13,165,784

6,747,530

3,716,739

12,665,328

994,946

5,500

620,024

5,267,064

88,034

115,380,900

52,651,475

41,288,409

1,337,916

39,633,044

583,236,542

$162,185

949,165,507

$162,185

72,017,084

10,238,439

8,910,815

29,833,411

21,741,911

1,468,672

37,927

6,208,306

5,337,569

97,653

112,901,005

158,751,364

31,008,173--

86,429,814

$156,532

544,982,143

$156,532

419,022,525

119,351,143

78,607,286

46,475,852

171,160,367

35,672,995

102,867,427

25,480,211

9,049,606

45,899,927

13,422,658

5,210,222

40,862,672

711,234

37,084,362

119,485,693

$182,903

1,270,364,180

$182,903

198,836,293

176,395,225

130,437,215

28,926,439

170,879,386

10,543,300

93,004,770

21,518,655

14,903,224

43,546,741

20,037,500

7,086,126

31,673,599--

55,263,314

$582,616

1,003,051,787

$582,616

Co

mp

an

y

Sa

msu

ng

Co

rpo

ratio

n

Sa

msu

ng

SD

I

Sa

msu

ng

Ele

ctro-M

ech

an

ics

Sa

msu

ng

SD

S

Sa

msu

ng

Kw

an

gju

Ele

ctron

ics

Sa

msu

ng

Te

chw

in

Ch

eil C

om

mu

nica

tion

s

Se

ou

l Co

mm

tech

Sa

msu

ng

He

avy In

du

stries

No

vita

Sa

msu

ng

Eve

rlan

d

Sa

msu

ng

Life In

sura

nce

Sa

msu

ng

Ele

ctron

ics Se

rvice

Sa

msu

ng

Th

ale

s

Ko

rea

Ele

ctron

ics &

Info

rma

tion

Distrib

utio

n

Oth

er lo

cal su

bsid

iarie

s

an

d a

ffiliate

d co

mp

an

ies

Fore

ign

sub

sidia

ries a

nd

affilia

ted

com

pa

nie

s

To

tal W

on

curre

ncy

To

tal fo

reig

n cu

rren

cy

Sa

les

20

00

199

9

Pu

rcha

ses

20

00

199

9

Re

ceiva

ble

s

20

00

199

9

Pa

yab

les

20

00

199

9

Th

ou

san

ds o

f Wo

n, T

ho

usa

nd

s of U

.S. D

olla

rs

Dilu

ted

EP

S C

alcu

latio

n

Ne

t inco

me

ava

ilab

le fo

r com

mo

n sto

ck

Ad

justm

en

t:

Inte

rest e

xpe

nse

on

con

vertib

le b

on

ds

Ne

t inco

me

ava

ilab

le fo

r com

mo

n sto

ck &

com

mo

n e

qu

ivale

nt sh

are

We

igh

ted

ave

rag

e n

um

be

r of co

mm

on

stock

& co

mm

on

eq

uiva

len

t sha

res

Dilu

ted

ea

rnin

gs p

er sh

are

in K

ore

an

Wo

n

5,206,572,816

18,855,974

5,225,428,790

151,931,513

34,393

Th

ou

san

ds o

f Wo

n

22. Research and D

evelopment Costs

Re

sea

rch a

nd

de

velo

pm

en

t costs in

curre

d fo

r the

yea

r en

de

d D

ece

mb

er 3

1, 20

00

an

d 19

99

com

prise

the

follo

win

g:

23. Foreign Currency Translation

At D

ece

mb

er 3

1, 20

00

an

d 19

99

, asse

ts an

d lia

bilitie

s de

no

min

ate

d in

fore

ign

curre

ncie

s an

d fo

reig

n e

xcha

ng

e g

ain

s (losse

s) are

as fo

llow

s:7

5

R&

D C

osts

Re

sea

rch e

xpe

nse

s

Ord

ina

ry de

velo

pm

en

t exp

en

ses

To

tal

946,629,028

1,072,726,375

2,019,355,403

806,465,213

785,874,334

1,592,339,547

Th

ou

san

ds o

f Wo

n

20

00

199

9

Acco

un

t

Fore

ign

curre

ncy d

ep

osits

Tra

de

acco

un

ts an

d

no

tes re

ceiva

ble

Oth

er a

ccou

nts a

nd

no

tes re

ceiva

ble

Gu

ara

nte

e d

ep

osits

Co

ntin

ue

d;

Tra

nsla

tion

Ga

in

6,478,630–––

6,478,630

29,636–

17,384

805

1,979

67,982

4,488,983

1,780

4,608,549–

151,392

145,790

6,371,655

13,829

6,682,666

118,798

41,961

3,138

163,897

Ko

rea

n W

on

(tran

slate

d)

145,812,900

144,717

318,723

47,461

146,323,801

1,461,811

41,982

2,441,005

4,580,424

26,928

1,767,271

279,857,711

5,662,639

295,839,771

10,910,778

1,318,342–

47,220,183

277,211

59,726,514–

185,235

82,299

267,534

Tra

nsla

tion

Loss–––––

4,587–

26,022––

107

15,116,562

845

15,148,123––

79,331

240,082–

319,413––

281

281

Ko

rea

n W

on

(tran

slate

d)

328,769,533

4,574,615

392,6886

333,736,842

2,478,096

651,208

4,861,825

2,539,155

838,233

7,410,415

259,015,161

880,654

278,674,747

3,670,447

2,082,855

4,283,766

142,051,380

1,063,091

153,151,539

145,051

178,407

30,040

353,498

Fore

ign

Cu

rren

cies

USD

260,990,341.23

JPY

415,300,244.00

MYR

1,184,580.36

Other

DEM

4,082,260.80

ESP91,261,878.00

EUR

4,094,961.90

GB

P1,349,996.80

ITL1,366,980,767.00

JPY

672,744,496.00

USD

205,616,544.68

Other

EUR

3,091,501.51

ITL3,396,697,478.00

JPY

388,895,890.00

USD

112,766,039.62

Other

IRR

190,856,450.00

USD

141,626.72

Other

Th

ou

san

ds o

f Wo

n

20

00

199

9

23. Foreign Currency Translation, Continued

76

Acco

un

t

Oth

er a

ssets

Tra

de

acco

un

ts an

d

no

tes p

aya

ble

Sh

ort-te

rm b

orro

win

gs

Oth

er a

ccou

nts p

aya

ble

Accru

ed

exp

en

ses

Co

ntin

ue

d;

Tra

nsla

tion

Ga

in

13,652

18,925–

205,722

19,300

8,770–

6,620

1,648,062

60,746

1,981,797–––

6,614

10,497–

216,751–

233,862–

210

43,525––

117–––––

43,852––––

Ko

rea

n W

on

(tran

slate

d)

48,726

538,095

36,413–

3,954––

62,066

5,068,007

492,447

6,249,708–

5,368,382–

691,898

138,965,381

255,006

280,536,231

140,616

425,957,514

44,465

3,998,912

461,168,949

115,520

233,160,149

24,359,216

1,663,782

24,292,366

721,230

625,164

4,642,158

754,747,446

2,965,923

3,127,050

856,646

3,834,139

Tra

nsla

tion

Loss––

6,000–

1,663–

4,393––

27,753

39,809

11,784

68,208

266,779

49,658

4,596,760

98,332

16,546,478

5,176

21,643,175–

23,969

3,209,743

115,586

1,326,815

1,073,515

10,029

13,230

2,403

27,493

1,082

5,803,865

83,568

113,898

25,033

53,743

Ko

rea

n W

on

(tran

slate

d)

59,014

201,178

50,454

8,684,500

595,447

74,662

51,192

78,045

55,317,612

1,237,686

66,349,790

214,074

1,046,315

3,199,168

697,653

156,212,281

1,400,776

397,663,284

203,959

560,637,510–

1,185,315

99,548,610

2,857,628

92,152,161

12,376,188

368,234

324,762

162,728

639,820

455,226

210,070,672

5,248,275

6,941,893

1,819,178

3,044,465

Fore

ign

Cu

rren

cies

ATS

683,987.39

CN

Y1,321,890.96

CO

P98,929,825.82

EUR

7,314,679.65

INR

22,029,097.30

MYR

225,224.48

SAR

152,425.00

TWD

2,048,975.00

USD

43,913,322.10

Other

BEF

7,274,000.00

DEM

1,723,633.82

EUR

2,694,557.92

FRF

3,854,435.40

JPY

14,181,520,180.00

NLG

2,600,000.00

USD

315,680,942.70

Other

USD

GB

P630,198.46

USD

79,025,648.57

EUR

2,406,890.17

JPY

8,365,909,054.00

AU

D17,591,306.82

DEM

606,606.45

NLG

602,795.44

FRF

899,050.00

ITL1,043,411,328.00

Other

AU

D7,459,809.88

DEM

11,435,644.18

ESP254,943,961.00

FRF

16,820,246.50

Th

ou

san

ds o

f Wo

n

20

00

199

9

23. Foreign Currency Translation, Continued

24. Accounts R

elating to Gross A

dded Value

Th

e a

ccou

nts re

qu

ired

for th

e ca

lcula

tion

of g

ross a

dd

ed

valu

e fo

r the

yea

r en

de

d D

ece

mb

er 3

1, 20

00

an

d 19

99

are

as fo

llow

s:

77

Acco

un

t

Wa

ge

s an

d sa

larie

s

Pro

vision

for se

vera

nce

be

ne

fits

We

lfare

exp

en

ses

Re

nta

l exp

en

ses

De

pre

ciatio

n e

xpe

nse

s

Ta

xes a

nd

du

es

To

tal

834,611,555

77,271,611

139,507,030

98,510,754

2,229,728,643

39,423,541

3,419,053,134

Th

ou

san

ds o

f Wo

n

To

tals

20

00

199

9

600,713,891

53,661,311

107,439,899

70,316,803

2,272,587,224

29,944,096

3,134,663,224

369,566,573

35,441,860

54,162,467

14,666,185

112,347,734

56,790,194

642,975,013

248,352,155

36,742,659

35,691,475

11,503,433

119,256,530

65,584,747

517,130,999

1,204,178,128

112,713,471

193,669,497

113,176,939

2,342,076,377

96,213,735

4,062,028,147

849,066,046

90,403,970

143,131,374

81,820,236

2,391,843,754

95,528,843

3,651,794,223

Se

lling

, Ge

ne

ral a

nd

Ad

min

istrative

Exp

en

ses

20

00

199

9

Ma

nu

factu

ring

Co

st

20

00

199

9

Acco

un

t

Accru

ed

exp

en

ses

Ad

van

ces fro

m cu

stom

ers

Lon

g-te

rm o

the

r acco

un

ts pa

yab

le,

inclu

din

g cu

rren

t ma

turitie

s

Fore

ign

curre

ncy n

ote

s

an

d b

on

ds, in

clud

ing

curre

nt m

atu

rities

Lon

g-te

rm d

eb

t, inclu

din

g

curre

nt m

atu

rities

Tra

nsla

tion

Ga

in–––––

20,929–

20,929––

7,326,412

101,038

7,427,450–

3,005,328–

3,005,328

3,474,720–

3,474,720

34,121,680

Ko

rea

n W

on

(tran

slate

d)

7,973,785

574,917

4,762,907

3,133,840

772,647

2,291,291

257,403,820

1,548,181

289,245,146–

157,771,148–

157,771,148

352,962,000

165,920,136

1,266,643,757

1,785,525,893

191,834,640

1,395,446,144

1,587,280,784

Tra

nsla

tion

Loss

54,908

21,495

33,897

735,444

92,814

8,713

16,461,750

21,743

17,707,006

422,404

27,374,670

2,096,550

29,471,220

5,631,000–

46,726,983

52,357,983–

94,925,046

94,925,046

237,838,325

Ko

rea

n W

on

(tran

slate

d)

8,410,791

2,604,824

4,327,893

18,243,103

2,213,500

3,184,221

332,646,460

1,707,739

390,392,342

4,948,179

335,488,920

10,170,465

345,659,385

182,112,000

162,914,808

1,061,405,607

1,406,432,415

188,359,920

1,046,168,677

1,234,528,597

Fore

ign

Cu

rren

cies

GB

P4,471,779.31

HK

D16,127,945.39

ITL7,057,881,785.00

JPY

1,656,175,340.00

NLG

4,108,509.05

SGD

4,381,875.66

USD

264,068,000.03

Other

USD

3,928,061.09

USD

266,324,459.00

EUR

8,566,261.00

DEM

300,000,000.00

JPY

14,790,000,000.00

USD

885,890,000.00

JPY

17,100,000,000.00

USD

830,490,336.87

Th

ou

san

ds o

f Wo

n

20

00

199

9

25. Environmental S

tandards and Policies

Bu

ildin

g o

n its p

hilo

sop

hy o

f “Gre

en

Ma

na

ge

me

nt,” th

e C

om

pa

ny co

ntin

ue

s to p

rom

ote

an

ab

un

da

nt life

as w

ell a

s the

pro

tectio

n o

f the

glo

ba

l en

viron

me

nt th

rou

gh

corp

ora

te a

ctivities th

at b

en

efit b

oth

pe

op

le a

nd

na

ture

. Th

e C

om

pa

ny is co

mm

itted

to e

nviro

nm

en

t pro

tectio

n

an

d p

rese

rvatio

n in

all a

spe

cts of its co

rpo

rate

activitie

s, inclu

din

g p

rod

uct d

eve

lop

me

nt, p

rod

uctio

n, m

ark

etin

g a

nd

disp

osa

l.

Th

e C

om

pa

ny h

as b

ee

n re

cog

nize

d a

s on

e o

f the

mo

st en

viron

me

nt-frie

nd

ly com

pa

nie

s an

d h

as a

cqu

ired

ISO

140

01 ce

rtificatio

n fo

r its

en

viron

me

nta

l ma

na

ge

me

nt syste

m. In

ad

ditio

n to

en

ga

gin

g in

de

velo

pm

en

t an

d re

sea

rch a

ctivities fo

r en

viron

me

nt-frie

nd

ly pro

du

cts, the

Co

mp

an

y o

pe

rate

s wa

ste tre

atm

en

t facilitie

s for its o

wn

use

an

d a

recy

cling

cen

ter to

colle

ct an

d re

cycle

wa

ste e

lectro

nic g

oo

ds. T

he

Co

mp

an

y active

ly pa

rticipa

tes in

com

mu

nity e

nviro

nm

en

tal p

rote

ction

pro

gra

ms. In

ad

ditio

n, th

e C

om

pa

ny su

pp

orts co

mm

un

ity pro

gra

ms

to cle

an

, pro

tect a

nd

pre

serve

the

na

tura

l en

viron

me

nt, in

clud

ing

mo

un

tain

s, strea

ms a

nd

pa

rks.

26. Employee B

enefits and Public D

onations

A) D

eta

ils of th

e C

om

pa

ny’s e

mp

loye

e b

en

efits a

re liste

d b

elo

w.

B) D

eta

ils of p

ub

lic do

na

tion

s ma

de

by th

e C

om

pa

ny d

urin

g th

e ye

ars e

nd

ed

De

cem

be

r 31, 2

00

0 a

nd

199

9 a

re a

s follo

ws:

27. Cultivation of Professional H

uman R

esources and Professional Training

Th

e C

om

pa

ny o

pe

rate

s a le

ad

ersh

ip d

eve

lop

me

nt ce

nte

r, a h

igh

tech

no

log

y institu

te a

nd

a g

lob

al m

ark

etin

g in

stitute

. Th

e C

om

pa

ny h

as

cultiva

ted

do

me

stic an

d o

verse

as e

xpe

rts in e

ach

are

a o

f bu

sine

ss thro

ug

h th

e o

pe

ratio

n o

f the

se p

rofe

ssion

al in

stitute

s an

d o

ve

rsea

s

assig

nm

en

ts. Th

e C

om

pa

ny a

lso p

rovid

es e

mp

loye

es w

ith a

ccess to

hig

he

r ed

uca

tion

pro

gra

ms a

t do

me

stic an

d o

verse

as u

nive

rsities,

aca

de

mic re

sea

rch p

rog

ram

s, the

in-h

ou

se C

olle

ge

of T

ech

no

log

y an

d th

e 2

1st Ce

ntu

ry Aca

de

my p

rog

ram

.

78

Su

pp

ort o

f em

plo

yee

we

alth

accu

mu

latio

n

Living

sup

po

rt

Su

pp

ort fo

r com

mu

ting

, me

als, e

tc.

Me

dica

l sup

po

rt

Su

pp

ort fo

r leisu

re a

ctivities

• A

llots a

po

rtion

of n

ew

ly issue

d sh

are

s to th

e e

mp

loye

e sto

ck o

wn

ersh

ip a

ssocia

tion

.

• O

pe

rate

s a m

utu

al sa

ving

s sche

me

to a

ssist em

plo

yee

s in u

rge

nt n

ee

d o

f fun

ds.

• In

divid

ua

l pe

nsio

n p

lan

s to su

pp

ort a

com

forta

ble

retire

me

nt.

• P

rovid

es h

ou

sing

for e

mp

loye

es a

ssign

ed

to fa

ctorie

s or p

rovin

cial o

ffice jo

bs.

• P

rovid

es a

cad

em

ic tuitio

n su

pp

ort.

• P

rovid

es co

mm

ute

r bu

ses fo

r em

plo

yee

s.

• O

pe

rate

s in-h

ou

se re

stau

ran

ts an

d p

rovid

es w

ork

cloth

ing

.

• S

up

po

rt for co

ng

ratu

latio

ns a

nd

con

do

len

ces.

• Fin

an

ces a

nn

ua

l me

dica

l che

ck-u

ps fo

r em

plo

yee

s.

• P

rovid

es a

ssistan

ce fo

r em

plo

yee

me

dica

l exp

en

ses.

• O

pe

rate

s con

do

min

ium

an

d re

sort fa

cilities fo

r em

plo

yee

s.

• P

rovid

es p

aid

sum

me

r or w

inte

r vaca

tion

s an

d h

alf-d

ay h

olid

ays.

Be

ne

fitsA

rea

Do

na

tion

s of la

nd

for lo

cal ro

ad

s

Co

ntrib

utio

ns to

the

em

plo

yee

we

lfare

fun

d

Do

na

tion

s to su

pp

ort u

nive

rsities a

nd

he

lp th

e le

ss fortu

na

te

–

80,000

90,533

170,533

54,182

54,000

30,874

139,056

Millio

ns o

f Wo

n

20

00

199

9

Do

na

tion

s

28. S

egment Inform

ation

A su

mm

ary o

f the

Co

mp

an

y’s op

era

tion

s by b

usin

ess se

gm

en

t an

d g

eo

gra

ph

ic are

a a

s of D

ece

mb

er 3

1, 20

00

an

d fo

r the

yea

r the

n e

nd

ed

is

as fo

llow

s (in m

illion

s of W

on

):

29. Discontinued O

perations

On

Jan

ua

ry 11, 20

00

, the

Co

mp

an

y esta

blish

ed

Sa

msu

ng

Th

ale

s Co

., Ltd. (fo

rme

rly Sa

msu

ng

Th

om

son

-CS

F Co

., Ltd.), a

50

:50

join

t ven

ture

with

Th

om

son

-CS

F Inte

rna

tion

al w

ith ca

pita

l stock

of

27

0 b

illion

. Pu

rsua

nt to

the

join

t ven

ture

ag

ree

me

nt, th

e C

om

pa

ny so

ld its d

efe

nse

ele

ctron

ics divisio

n to

the

join

t ven

ture

on

Feb

rua

ry 28

, 20

00

. Co

mp

on

en

ts of a

mo

un

ts refle

cted

in th

e in

com

e sta

tem

en

t an

d b

ala

nce

she

et

are

as fo

llow

s:

Disco

ntin

ue

d o

pe

ratio

n in

form

atio

n fo

r the

yea

r en

de

d D

ece

mb

er 3

1, 20

00

an

d 19

99

is as fo

llow

s:

30. Reclassification of 1999 A

mounts

Ce

rtain

am

ou

nts in

the

199

9 fin

an

cial sta

tem

en

ts ha

ve b

ee

n re

classifie

d to

con

form

to th

e 2

00

0 p

rese

nta

tion

. Th

ese

recla

ssificatio

ns h

ad

no

effe

ct on

pre

viou

sly rep

orte

d n

et in

com

e o

r sha

reh

old

ers’ e

qu

ity.

79

Fina

ncia

l Da

ta b

y Bu

sine

ss Se

gm

en

t

1.S

ale

s

Sa

les to

un

affilia

ted

custo

me

rs

Inte

rseg

me

nt sa

les

2. O

pe

ratin

g p

rofit (lo

ss)

3. T

an

gib

le a

nd

inta

ng

ible

asse

ts

4. D

ep

recia

tion

Se

mico

nd

ucto

rs

12,953,399

1,081,049

14,034,448

6,057,705

10,016,939

2,308,874

Oth

er A

rea

s

1,625,331

217,619

1,842,950

(242,854)

128,100

64,450

Info

rma

tion

&

Co

mm

un

icatio

ns

7,610,397

22,160

7,632,557

908,401

1,598,400

188,767

Ho

me

Ap

plia

nce

s

2,745,049

18,202

2,763,251

187,309

412,787

36,786

Dig

ital M

ed

ia

9,349,576

50,154

9,399,730

524,594

453,619

67,352

Fina

ncia

l Da

ta b

y Ge

og

rap

hic A

rea

1. Sa

les

2. T

an

gib

le a

nd

inta

ng

ible

asse

ts

3. D

ep

recia

tion

Am

erica

9,916,847

4,820,126

1,078,890

Africa

88,827

10,492

891

Eu

rop

e

5,834,774

2,311,339

501,984

Asia

7,539,921

3,580,267

787,489

Do

me

stic

10,903,384

1,867,621

296,975

Ga

in o

n D

ispo

sal o

f Disco

ntin

ue

d O

pe

ratio

n

Asse

ts

Liab

ilities

Ne

t asse

ts of d

iscon

tinu

ed

op

era

tion

s

Pro

cee

ds fro

m d

ispo

sal

Ga

in o

n d

ispo

sal

Millio

ns o

f Wo

n

122,991

64,512

58,479

211,758

153,279

Disco

ntin

ue

d O

pe

ratio

n In

form

atio

n

Sa

les

Op

era

ting

loss

Ta

ng

ible

asse

ts

2,645

(698)

13,412

166,731

(4,852)

13,580

Millio

ns o

f Wo

n

20

00

199

9

Five-Year Financial Sum

mary

As o

f De

cem

be

r 31, 19

96

~2

00

0

Sa

les

Do

me

stic

Exp

ort

Co

st of sa

les

Gro

ss pro

fit

Se

lling

, ge

ne

ral a

nd

ad

min

istrative

exp

en

ses

Op

era

ting

pro

fit

No

n-o

pe

ratin

g in

com

e

Inte

rest a

nd

divid

en

d in

com

e

Ga

in o

n fo

reig

n cu

rren

cy tran

sactio

ns

Ga

in o

n fo

reig

n cu

rren

cy tran

slatio

n

Ga

in o

n va

lua

tion

of in

vestm

en

ts

usin

g th

e e

qu

ity me

tho

d

Oth

er

No

n-o

pe

ratin

g e

xpe

nse

s

Inte

rest e

xpe

nse

s

Am

ortiza

tion

of d

efe

rred

cha

rge

s

Loss o

n fo

reig

n cu

rren

cy tran

sactio

ns

Loss o

n fo

reig

n cu

rren

cy tran

slatio

n

Oth

er

Ord

ina

ry pro

fit

Extra

ord

ina

ry inco

me

Extra

ord

ina

ry loss

Ne

t inco

me

be

fore

inco

me

taxe

s

Inco

me

tax e

xpe

nse

Ne

t inco

me

Ea

rnin

gs p

er sh

are

(in K

ore

an

Wo

n a

nd

U.S

. Do

llars)

Th

ou

san

ds o

f U.S

.D

olla

rs

$8,660,353

$7,029,885$5,380,693

$5,663,406$7,206,351

18,570,58613,714,980

11,259,0567,386,318

11,602,350

$27,230,939$20,744,865

$16,639,749$13,049,724

$18,808,701

17,468,92614,027,936

11,578,9148,976,018

14,126,196

$9,762,013$6,716,929

$5,060,835$4,073,706

$4,682,505

3,856,4103,157,358

2,492,5182,055,176

2,968,229

$5,905,603$3,559,571

$2,568,317$2,018,530

$1,714,276

$124,247$180,890

$279,383$120,977

$244,520

237,546212,448

863,2311,321,352

–

27,102207,638

––

–

692,079236,888

515,843470,591

371,563290,965

333,951

$1,596,817$1,308,455

$1,514,177$1,733,294

$578,471

$272,730$572,835

$924,894$536,428

$480,852

--

1,559,2671,117,517

912,283

221,643222,788

857,7321,478,708

–

188,91184,666

––

–

507,131576,914

375,354508,878

634,647

$1,190,415$1,457,203

$3,727,247$3,641,531

$2,027,782

$6,312,005$3,410,823

$365,247$110,293

$264,965

122,029–

235,06846

12,647

–211,484

259,920 1,773

30,546

$6,434,034$3,199,339

$340,395$108,566

$247,066

1,656,806681,148

80,89521,283

52,569

$4,777,228$2,518,191

$259,500$87,283

$194,497

$28$15

$2$1

$2

80

20

00

199

919

98

199

719

96

81

Th

ou

san

ds o

f Ko

rea

n W

on

10,903,383,9768,850,624,784

6,494,496,6058,013,718,934

6,082,160,483

23,380,368,30317,267,160,967

13,589,679,92210,451,640,507

9,792,383,336

34,283,752,27926,117,785,751

20,084,176,52718,465,359,441

15,874,543,819

21,993,377,77017,661,171,944

13,975,748,86812,701,065,224

11,922,509,430

12,290,374,5098,456,613,807

6,108,427,6595,764,294,217

3,952,034,389

4,855,219,8493,975,113,690

3,008,468,8682,908,073,790

2,505,185,220

7,435,154,6604,481,500,117

3,099,958,7912,856,220,427

1,446,849,169

156,427,345227,740,962

337,215,452171,182,036

206,374,901

299,070,108267,472,334

1,041,919,1771,869,713,309

–

34,121,680261,416,440

––

–

871,326,886298,242,218

––

–

649,446,121592,472,848

448,477,112411,715,036

281,854,160

2,010,392,1401,647,344,802

1,827,611,7412,452,610,381

488,229,061

343,367,140721,198,940

1,116,346,994759,045,307

405,838,831

––

1,882,034,8791,581,287,365

769,966,975

279,048,744280,490,610

1,035,283,2302,092,372,147

–

237,838,325106,594,502

––

–

638,478,440726,334,345

453,052,701720,061,983

535,642,340

1,498,732,6491,834,618,397

4,486,717,8045,152,766,802

1,711,488,146

7,946,814,1514,294,226,522

440,852,728156,064,006

223,630,084

153,634,395–

283,726,60365,610

10,674,208

–266,258,185

313,723,0102,508,902

25,780,500

8,100,448,5464,027,968,337

410,856,321153,620,714

208,523,792

2,085,918,354857,565,763

97,640,28330,115,805

44,368,311

6,014,530,1923,170,402,574

313,216,038123,504,909

164,155,481

35,00619,214

2,8321,232

1,784

20

00

199

919

98

199

719

96

11

Yoon-Woo Lee

• P

resid

en

t, Se

mico

nd

ucto

r Bu

sine

ss Gro

up

,

Sa

msu

ng

Ele

ctron

ics [199

5-p

rese

nt]

• E

xecu

tive V

P, S

em

icon

du

ctor B

usin

ess G

rou

p,

Sa

msu

ng

Ele

ctron

ics [199

3-19

95

]

• E

xecu

tive V

P, S

em

icon

du

ctor B

usin

ess G

rou

p,

Sa

msu

ng

Ele

ctron

ics [199

2-19

93

]

• M

an

ag

ing

dire

ctor, K

ihe

un

g P

lan

t, Sa

msu

ng

Se

mico

nd

ucto

r & T

ele

com

mu

nica

tion

[198

7-19

92

]

Ove

r the

yea

rs, Sa

msu

ng

Ele

ctron

ics’ Bo

ard

of D

irecto

rs ha

s pla

yed

a cru

cial le

ad

ersh

ip ro

le in

ma

ximizin

g co

rpo

rate

valu

e. Fo

un

de

d o

n th

e

valu

es o

f tran

spa

ren

cy an

d re

spo

nsib

ility, the

de

cision

-ma

kin

g a

nd

corp

ora

te g

ove

rna

nce

fram

ew

ork

pro

vide

d b

y the

Bo

ard

con

tinu

es to

pro

vide

a fe

rtile e

nviro

nm

en

t for th

e cre

ative

, pro

gre

ssive e

ntre

pre

ne

uria

l spirit th

at h

as h

elp

ed

the

com

pa

ny e

me

rge

as a

n in

tern

atio

na

l

ele

ctron

ics lea

de

r.

Th

e B

oa

rd is cu

rren

tly com

po

sed

of th

ree

stan

din

g co

mm

ittee

s: the

Ma

na

ge

me

nt C

om

mitte

e, th

e A

ud

it Co

mm

ittee

, an

d th

e O

utsid

e

Dire

ctor R

eco

mm

en

da

tion

Co

mm

ittee

. Th

e M

an

ag

em

en

t Co

mm

ittee

is in ch

arg

e o

f eva

lua

ting

an

d m

ak

ing

reco

mm

en

da

tion

s on

issue

s

rela

ted

to im

pro

ving

the

pro

fessio

na

lism a

nd

efficie

ncy o

f ad

min

istrative

pro

cesse

s. Th

e A

ud

it Co

mm

ittee

rep

lace

s the

form

er o

utsid

e

au

dito

r’s po

sition

in 2

00

0 a

nd

use

s a sy

stem

of ch

eck

s an

d b

ala

nce

s to su

pe

rvise

an

d su

pp

ort th

e m

an

ag

em

en

t tea

m in

its qu

est to

ma

ximize

corp

ora

te v

alu

e. T

he

Ou

tside

Dire

ctor R

eco

mm

en

da

tion

Co

mm

ittee

is in ch

arg

e o

f imp

artia

lly a

nd

ind

ep

en

de

ntly

sele

cting

ou

tside

dire

ctorsh

ip ca

nd

ida

tes fo

r the

Bo

ard

.

Sa

msu

ng

Ele

ctron

ics’ 20

-me

mb

er B

oa

rd o

f Dire

ctors to

ok

up

a to

tal o

f 34

ag

en

da

item

s ove

r the

cou

rse o

f 12 m

ee

ting

s in 2

00

0,

inclu

din

g th

e a

pp

rova

l of th

e ye

ar 2

00

0 b

usin

ess a

nd

ma

na

ge

me

nt p

lan

, the

de

clara

tion

of a

10%

inte

rim ca

sh d

ivide

nd

of 5

00

wo

n p

er

sha

re in

July, a

nd

the

rep

urch

ase

of 2

% o

f the

tota

l ou

tstan

din

g sto

ck—

3 m

illion

com

mo

n sh

are

s an

d 4

00

,00

0 p

refe

rred

sha

res—

valu

ed

at

53

4.4

billio

n w

on

in O

ctob

er. In

ad

ditio

n to

the

12 g

en

era

l me

etin

gs, th

e M

an

ag

em

en

t Co

mm

ittee

me

t 31 tim

es a

nd

the

Au

dit C

om

mitte

e

nin

e tim

es d

urin

g th

e ye

ar.

Th

e B

oa

rd w

ill un

de

rgo

a fu

nd

am

en

tal ch

an

ge

in fisca

l 20

01 w

ith a

red

uctio

n in

me

mb

ersh

ip fro

m 2

0 d

irecto

rs—in

clud

ing

six ou

tside

dire

ctors—

to 14

, ha

lf of w

hich

will b

e o

utsid

e d

irecto

rs. Th

is cha

ng

e is in

ten

de

d to

acce

lera

te d

ecisio

n-m

ak

ing

as w

ell a

s resp

on

d to

sha

reh

old

er co

nce

rns th

at a

larg

e b

oa

rd is in

efficie

nt in

ma

na

gin

g th

e co

mp

an

y.

Kun-H

ee Lee•

Ch

airm

an

, Sa

msu

ng

Ele

ctron

ics [199

7-p

rese

nt]

• M

em

be

r, Inte

rna

tion

al O

lymp

ic Co

mm

ittee

[199

6-p

rese

nt]

• V

ice ch

airm

an

, Fed

era

tion

of K

ore

an

Ind

ustrie

s

[198

7-p

rese

nt]

• V

ice ch

airm

an

, Ko

rea

-Jap

an

Eco

no

mic C

om

mitte

e

[198

1-pre

sen

t]

• C

ha

irma

n, S

am

sun

g G

rou

p [19

87

-199

8]

Jong-Yong Yun •

Vice

cha

irma

n &

CE

O, S

am

sun

g E

lectro

nics

[199

9-p

rese

nt]

• P

resid

en

t & C

EO

, Sa

msu

ng

Ele

ctron

ics [199

6-19

99

]

• P

resid

en

t & C

EO

, Sa

msu

ng

Jap

an

He

ad

qu

arte

rs

[199

5-19

96

]

• P

resid

en

t & C

EO

, Sa

msu

ng

Disp

lay D

evice

s [199

3-19

95

]

• P

resid

en

t & C

EO

, Sa

msu

ng

Ele

ctro-M

ech

an

ics

[199

2-19

93

]

Board of D

irectors

Managem

ent Comm

ittee

Jon

g-Y

on

g Y

un

[cha

ir]

Yo

on

-Wo

o Le

e

Da

e-Je

Ch

in

Do

h-S

eo

k C

ho

i

Outside D

irector Recom

mendation Com

mittee

Fran

z-He

rma

nn

Hirlin

ge

r [cha

ir]

Su

ng

-Lark

Rim

Jon

g-Y

on

g Y

un

Do

h-S

eo

k C

ho

i

Audit Com

mittee

Su

ng

-Lark

Rim

[cha

ir]

Jae

-Su

ng

Hw

an

g

Ka

p-H

yun

Lee

2001 Board M

embers

Comm

ittees

Hak-S

oo Lee•

Pre

side

nt, C

hie

f of sta

ff Sa

msu

ng

Ele

ctron

ics

[199

8-p

rese

nt]

• P

resid

en

t & C

EO

, Sa

msu

ng

Fire &

Ma

rine

Insu

ran

ce [19

95

-199

8]

• V

ice p

resid

en

t, Sa

msu

ng

Fire &

Ma

rine

Insu

ran

ce [19

93

-199

5]

• E

xecu

tive d

irecto

r, Ch

eil Fo

od

s & C

he

mica

ls

[198

4-19

93

]

22

Franz-Herm

ann Hirlinger

• O

utsid

e d

irecto

r, Sa

msu

ng

Ele

ctron

ics [199

8-p

rese

nt]

• C

hie

f rep

rese

nta

tive a

nd

first vice p

resid

en

t, Ba

yerisch

e

Lan

de

sba

nk

, Se

ou

l & T

ok

yo o

ffices [19

95

-pre

sen

t]

• S

en

ior in

vestm

en

t ma

na

ge

r an

d h

ea

d o

f inte

rna

tion

al

ma

rke

ting

, Cre

dit S

uisse

[199

1-199

5]

• S

en

ior p

ortfo

lio m

an

ag

er, H

ilti AG

, Liech

ten

stein

[199

0-19

91]

Sung-Lark R

im•

Ou

tside

dire

ctor, S

am

sun

g E

lectro

nics [2

00

0-p

rese

nt]

• C

hie

f con

sulta

nt, K

ore

a Fin

an

cial P

lan

ne

r Asso

ciatio

n

[20

00

-pre

sen

t]

• O

utsid

e a

ud

itor, S

am

sun

g E

lectro

nics [19

98

-20

00

]

• P

resid

en

t & C

EO

, Ko

ok

min

Inve

stme

nt T

rust

Ma

na

ge

me

nt [19

98

-20

00

]

• M

an

ag

ing

dire

ctor, K

ore

a Lo

ng

Te

rm C

red

it Ba

nk

[199

8]

• G

en

era

l ma

na

ge

r/dire

ctor, K

ore

a Lo

ng

Te

rm C

red

it

Ba

nk

[198

8-19

98

]

Kap-H

yun Lee•

Ou

tside

dire

ctor, S

am

sun

g E

lectro

nics [2

00

1]

• P

resid

en

t, Ko

rea

Exch

an

ge

Ba

nk

[199

8-2

00

0]

• E

xecu

tive d

irecto

r, Ko

rea

Exch

an

ge

Ba

nk

[199

7-19

99

]

• M

an

ag

ing

dire

ctor, K

ore

a E

xcha

ng

e B

an

k

[199

6-19

97

]

• S

en

ior m

an

ag

er, K

ore

a E

xcha

ng

e B

an

k [19

91-19

96

]

Jae-Sung H

wang

• O

utsid

e d

irecto

r, Sa

msu

ng

Ele

ctron

ics

[20

00

-pre

sen

t]

• E

xam

ine

r, Na

tion

al T

ax T

ribu

na

l [20

00

-pre

sen

t]

• A

dviso

r, Kim

& C

ha

ng

Law

Firm [19

99

-pre

sen

t]

• P

resid

en

t, Kyu

ng

-In/S

eo

ul R

eg

ion

al T

ax O

ffices

[199

6-19

99

]

• H

ea

d o

f Inve

stiga

tion

Bu

rea

u, N

atio

na

l Ta

x Se

rvice

[199

5-19

98

]

Suk-S

oo Kim

• O

utsid

e d

irecto

r, Sa

msu

ng

Ele

ctron

ics

[199

9-p

rese

nt]

• P

resid

en

t, Law

Office

of S

uk

-So

o K

im [19

97

-pre

sen

t]

• C

ha

irma

n, S

up

rem

e C

ou

rt Eth

ics Co

mm

ittee

[199

7-p

rese

nt]

• C

ha

irma

n, C

en

tral E

lectio

n M

an

ag

em

en

t

Co

mm

ission

[199

3-19

97

]

• Ju

stice, S

up

rem

e C

ou

rt [199

1-199

7]

Goran S

. Malm

• O

utsid

e d

irecto

r, Sa

msu

ng

Ele

ctron

ics [20

01]

• P

resid

en

t & C

EO

, Icon

Me

dia

lab

Asia

[20

00

-pre

sen

t]

• P

resid

en

t/Se

nio

r vice p

resid

en

t, De

ll Co

mp

ute

r

Asia

Pa

cific/De

ll Co

mp

ute

r [199

9-2

00

0]

• P

resid

en

t/Se

nio

r vice p

resid

en

t, GE

Asia

-Pa

cific/GE

[199

7-19

99

]

• P

resid

en

t & C

EO

, GE

Me

dica

l Syste

ms A

sia

[199

2-19

97

]

Tetsuo Iwasaki

• O

utsid

e d

irecto

r, Sa

msu

ng

Ele

ctron

ics

[20

00

-pre

sen

t]

• C

o-fo

un

de

r/Ch

airm

an

, Ap

plie

d M

ate

rials Ja

pa

n

[197

9-p

rese

nt]

• P

resid

en

t & C

EO

, Ap

plie

d K

om

atsu

Te

chn

olo

gy

[199

4-p

rese

nt]

• M

em

be

r, OC

EO

Co

mm

ittee

[199

4-p

rese

nt]

In-Joo Kim

• E

xecu

tive V

P, Fin

an

cial M

an

ag

em

en

t Divisio

n,

Sa

msu

ng

Ele

ctron

ics [199

9-p

rese

nt]

• M

an

ag

ing

dire

ctor, Fin

an

cial C

on

trol T

ask

Force

,

Sa

msu

ng

Ele

ctron

ics [199

8-19

99

]

• M

an

ag

ing

dire

ctor, Fin

an

cial M

an

ag

em

en

t De

pt.,

Sa

msu

ng

Gro

up

Re

structu

ring

He

ad

qu

arte

rs [199

8]

• G

en

era

l ma

na

ge

r, Fina

ncia

l Ma

na

ge

me

nt D

ep

t.,

Sa

msu

ng

Gro

up

[199

1-199

9]

Dae-Je Chin

• P

resid

en

t, Dig

ital M

ed

ia S

ystem

Bu

sine

ss Gro

up

,

Sa

msu

ng

Ele

ctron

ics [20

00

-pre

sen

t]

• E

xecu

tive V

P &

CT

O, S

am

sun

g E

lectro

nics

[199

8-2

00

0]

• E

xecu

tive V

P, S

ystem

LSI D

ivision

,

Sa

msu

ng

Ele

ctron

ics [199

7-19

98

]

• G

en

era

l ma

na

ge

r, Me

mo

ry Divisio

n,

Sa

msu

ng

Ele

ctron

ics [198

7-19

97

]

Doh-S

eok Choi•

Pre

side

nt &

CFO

, Sa

msu

ng

Ele

ctron

ics

[199

9-p

rese

nt]

• V

ice p

resid

en

t & co

rpo

rate

con

trolle

r,

Sa

msu

ng

Ele

ctron

ics [199

7-19

99

]

• M

an

ag

ing

dire

ctor &

corp

ora

te co

ntro

ller,

Sa

msu

ng

Ele

ctron

ics [199

4-19

97

]

• E

xecu

tive d

irecto

r & co

rpo

rate

con

trolle

r,

Sa

msu

ng

Ele

ctron

ics [199

1-199

4]

1

Head O

ffice

Sam

sung Main B

uilding2

50

-2 g

a, T

ae

pyo

ng

-ro, C

hu

ng

-gu

Se

ou

l, Ko

rea

Te

l: 82

-2-7

27

-7114

Fax: 8

2-2

-72

7-7

98

5

ww

w.sa

msu

ng

ele

ctron

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OV

ERS

EAS

NETW

OR

K

CHIN

AProduction B

asesTianjin Tongguang S

amsung Electronics

Co., Ltd. (TTSEC)

Tia

njin

, Ch

ina

Te

l: 86

-22

-22

96

-24

00

Tianjin Sam

sung Electronics Co., Ltd. (TSEC)

Tia

njin

, Ch

ina

Te

l: 86

-22

-25

32

-123

4

Huizhou S

amsung Electronics Co., Ltd. (S

EHZ)

Gu

an

gd

on

g, C

hin

a

Te

l: 86

-75

2-3

32

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1

Shandong S

amsung Telecom

munications

Co., Ltd. (SS

T)S

ha

nd

on

g, C

hin

a

Te

l: 86

-63

1-56

2-6

86

8

Suzhou S

amsung Electronics Co., Ltd. (S

SEC)

Jian

gsu

, Ch

ina

Te

l: 86

-512

-53

2-12

34

Tianjin Sam

sung Electronics Display

Co., Ltd. (TSED

)T

ian

jin, C

hin

a

Te

l: 86

-22

-24

55

-62

42

Sam

sung Electronics Suzhou S

emiconductor

Co., Ltd. (SES

S)

Jian

gsu

, Ch

ina

Te

l: 86

-512

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1-22

97

China Customer S

atisfaction (CCS)

Te

l: 86

10-6

49

7-3

36

6

AS

IAProduction B

asesS

amsung Electronics Indonesia (S

EIN)

We

st Jaw

a, In

do

ne

sia

Te

l: 62

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93

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05

Sam

sung Electronics Display (M

) S

dn. Bhd. (S

DM

A)

Se

rem

ba

n N

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em

bila

n

Da

rul K

hu

sus, M

ala

ysia

Te

l: 60

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70

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Sam

sung Electronics (M) S

dn. Bhd. (S

EMA

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ort K

lan

g, S

ela

ng

or, M

ala

ysia

Te

l: 60

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176

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50

Sam

sung India Electronics (SIEL)

No

ida

, Ind

ia

Te

l: 91-11-8

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6-8

25

1

Sam

sung Vina Electronics Co., Ltd. (S

AV

INA

)H

o C

hi M

in C

ity, Vie

tna

m

Te

l: 84

-8-8

96

-55

00

Thai Sam

sung Electronics Co., Ltd. (TSE)

Srira

cha

Ch

olb

uri, T

ha

ilan

d

Te

l: 66

-2-6

81-0

50

1

Sales B

asesS

amsung A

sia Private Ltd. (S

emiconductor D

ivision), (SA

PL)U

E S

qu

are

, Sin

ga

po

re

Te

l: 65

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3-3

20

0

Sam

sung Electronics Australia Pty. Ltd. (S

EAU

)N

SW

, Au

stralia

Te

l: 61-2

-96

38

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00

Sam

sung Electronics India Information &

Telecom

munication Ltd. (S

EIIT)La

jpa

t Na

ga

r-III Ne

w D

elh

i

Te

l: 91-11-6

93

25

17

Sam

sung Electronics Philippines Co. (SEPCO

)M

an

ila, P

hilip

pin

es

Te

l: 63

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26

-37

96

Sam

sung Electronics H.K

. Co., Ltd. (SEH

K)

Ho

ng

Ko

ng

Te

l: 85

2-2

86

2-6

90

0

Sam

sung Japan Corporation (SJC)

To

kyo

, Jap

an

Te

l: 81-3

-56

41-9

80

0

Sam

sung Electronics Taiwan Co., Ltd. (S

ET)T

aip

ei, T

aiw

an

Te

l: 88

6-2

-27

58

-95

88

Asia Custom

er Satisfaction (A

CS)

Te

l: 65

-56

8-7

50

0

GLO

BA

L NETW

OR

K

2

CISProduction B

aseU

zbekistan Sam

sung Electronica Co., Ltd. (US

E)T

ash

ke

nt, U

zbe

kista

n

Te

l: 7-3

71-18

0-0

90

9

Sales B

asesS

amsung Electronics M

oscow Co., Ltd. (S

EMCO

)M

osco

w, R

ussia

Te

l: 7-0

95

-79

7-2

38

5

Sam

sung Russia S

ervice Center (SR

SC)

Te

l: 75

02

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4-8

210

EUR

OP

EProduction B

asesS

amsung W

ynyard Park (SEM

UK

)C

leve

lan

d, U

.K.

Te

l: 44

-174

0-6

60

00

0

Sam

sung Electronica Espanola, S.A

. (SES

A)

Ba

rcelo

na

, Sp

ain

Te

l: 34

-93

-86

2-9

60

0

Sam

sung Electronics Hungarian Co., Ltd. (S

EH)

Bu

da

pe

st, Hu

ng

ary

Te

l: 36

-1-25

0-2

311

Sales B

asesS

amsung Electronics G

mbH

(SEG

) S

chw

alb

ach

/TS

., Ge

rma

ny

Te

l: 49

-619

6-6

6-10

00

Sam

sung Sem

iconductor Europe Gm

bH (S

SEG

)S

chw

alb

ach

/TS

., Ge

rma

ny

Te

l: 49

-619

6-6

6-3

30

0

Sam

sung Sem

iconductor Europe Limited (S

SEL)

Mid

dle

sex, U

.K.

Te

l: 44

-181-3

80

-72

00

Sam

sung Electronics U.K

. Ltd. (SEU

K)

Su

rbito

n S

urre

y, U.K

.

Te

l: 44

-181-3

91-0

168

Samsung Electronics France S.A. (SEF)

Ce

de

x, Fran

ce

Te

l: 33

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38

-65

25

Sam

sung Electronics Italia S.p.A

. (SEI)

Ce

rnu

sco su

l Na

viglio

, Italy

Te

l: 39

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218

91

Sam

sung Electronics Svenska A

B (S

ESA

B)

Va

sby, S

we

de

n

Te

l: 46

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6-0

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Sam

sung Electronics Polska Sp.Zo.O

(SEPO

L) W

arsa

w, P

ola

nd

Te

l: 48

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8-4

40

0

Sam

sung Electronica Portuguesa S.A

. (SEP)

Lind

a-a

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lha

, Po

rtug

al

Te

l: 35

1-1-414

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0

Sam

sung Electronics Benelux B

.V. (S

EN)

Rijsw

ijk, T

he

Ne

the

rlan

ds

Te

l: 31-7

0-3

07

-29

10

Sam

sung Electronics Overseas B

.V. (S

EO)

Am

sterd

am

, Th

e N

eth

erla

nd

s

Te

l: 31-2

0-5

75

-30

12

Europe Customer Satisfaction (ECS)

Te

l: 44

1-95

-22

0-7

126

MID

DLE EA

ST &

AFR

ICAS

ales Bases

Sam

sung Electronics South A

frica Ltd. (SS

A)

Joh

an

ne

sbu

rg, S

ou

th A

frica

Te

l: 27

-11-25

4-3

66

8

Sam

sung Gulf Electronics FZE (S

GE)

Du

ba

i, U.A

.E.

Te

l: 97

14-8

81-3

33

5

Gulf Custom

er Satisfaction (G

CS)

Te

l: 97

14-8

83

-84

16

AM

ERICA

Production Bases

Sam

sung Mexicana S

.A. de. C.V

. (SA

MEX)

Tiju

an

a, M

exico

Te

l:1-619

-67

1-60

00

Samsung Electronica da Am

azonia, Ltda. (SEDA)

Sa

o P

au

lo, B

razil

Te

l: 55

-11-56

44

-64

00

Samsung Austin Sem

iconductor (SAS)T

exa

s, U.S

.A.

Te

l: 1-512

-67

2-10

00

Sales B

asesS

amsung Electronics A

merica, Inc. (S

EA)

Ne

w Je

rsey, U

.S.A

.

Te

l: 1-20

1-22

9-4

00

0

Sam

sung Telecomm

unications A

merica, Inc. (S

TA)

Te

xas, U

.S.A

.

Te

l: 1-97

2-7

61-7

00

0

Sam

sung Sem

iconductor Inc. (SS

I)C

alifo

rnia

, U.S

.A.

Te

l: 1-40

8-5

44

-40

00

Alpha Processor, Inc. (A

PI)M

assa

chu

setts, U

.S.A

.

Te

l: 1-97

8-3

18-110

0

Sam

sung Electronics Canada Inc. (SECA

)O

nta

rio, C

an

ad

a

Te

l: 90

5-8

19-5

05

6

Sam

sung Electronics Mexicana S

.A. (S

EM)

Me

xico D

.F., Me

xico

Te

l: 52

5-7

47

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0

Sam

sung Information S

ystems

Am

erica, Inc. (SIS

A)

Ca

liforn

ia, U

.S.A

.

Te

l: 1-40

8-5

44

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35

Sam

sung Electronics Latinoamerica

(Zona Libre), S.A

. (SELA

-Panama)

Pa

na

ma

City, P

an

am

a

Te

l: 50

7-2

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2

Sam

sung Electronics Latinoamerica

Miam

i Inc. (SELA

-Miam

i)M

iam

i, U.S

.A.

Te

l: 1-30

5-5

94

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0

Sam

sung Electronics Latinoamerica

Colombia S

.A. (S

ELA-Colom

bia)S

an

tafe

de

Bo

go

ta, C

olo

mb

ia

Te

l: 57

1-63

3-4

47

0

Sam

sung Electronics Argentina S

.A. (S

EAS

A)

Bu

en

os A

ires, A

rge

ntin

a

Te

l: 54

-11-43

08

-46

68

Global S

ervice Netw

ork

3

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sung Electronics!

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