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2011
SAMSUNG
ELECTRONICS
ANNUAL
REPORT

Table of contents

  • Page 1
    2011 SAMSUNG ELECTRONICS ANNUAL REPORT

  • Page 2
    ... for change's sake, CONTENTS our commitment is focused on smart and heartfelt innovation - the kind of transformational change 02 04 06 09 29 94 2011 Financial Summary Message from the CEO About the Board Business Overview Financial Statements Global Network that creates a better world. So we invite...

  • Page 3
    ... 10 trillion in cash after deducting outstanding loans. At the end of 2011, Samsung Electronics recorded a rise in share price of 11%, or KRW 1,058,000, compared to 2010, exceeding the market return. Shareholders were paid an interim dividend of KRW 500 per share and a year-end dividend of KRW 5,000...

  • Page 4
    ... expanding market share with differentiated premium product lines in our core areas, including mobile phones, TVs and memory chips. Led by growth in the AP and sensor segments, we also saw good performances in our emerging business lines, such as the System LSI Business. The stellar Samsung GALAXY...

  • Page 5
    ... (2010~Present) • President & CEO, Samsung Electronics (2010~2010) • President & Head, Digital Media & Communications Business, Samsung Electronics (2009~2009) • Head, Telecommunication Networks Business, Samsung Electronics Head, Mobile Communications Division Head, Corporate Design Center...

  • Page 6
    In 2011, Samsung Electronics achieved record-setting sales and generated earnings Business Overview Visual Display Business Digital Appliances Business Mobile Communications Business IT Solutions Business Telecommunication Systems Business Digital Imaging Business that sustained our global ...

  • Page 7
    ..., Samsung Electronics has earned the No. 1 global market share across all TV product lines every year since 2006, including flat-panel TVs, LCD TVs, smart TVs and 3D TVs. Last year we continued that blistering pace. In 2011, we achieved sales of 47.69 million TV units, a 5.7% increase over 2010...

  • Page 8
    ... efforts to guarantee product reliability. 13.49% a. Smart Wall-Mount Air Conditioner, AQV09KBBN The next-generation air conditioner can be remotely controlled by smartphone and offers slim design and a sophisticated air purifier and cooling system. b. Front Load Washing Machine, WF1124ZAC...

  • Page 9
    ..., Samsung is pursuing growth that balances the steadiness of advanced premium markets with the energy and potential of emerging markets. 21.2% 327.4 million units 19.9% 97.4 million units 2011 Global Mobile Phone Sales and Market Share Source: Strategy Analytics 2011 Global Smartphone Sales and...

  • Page 10
    ... 7 Chronos and the high-performance portable Slate PC, achieving sales increases of 28% compared to 2010. In 2012, we will launch Ultrabook and New Series 9 models as we move to dominate the premium slim and lightweight PC category. In the printer sector, we are concentrating on the consumer market...

  • Page 11
    ... market, Samsung Electronics has also solidified its position as the nextgeneration mobile network systems trailblazer. Through product development and market expansion, we are driving standardization of the two major 4G technologies, Long-Term Evolution (LTE) and Mobile WiMAX. In 2010, Samsung...

  • Page 12
    ... 12.8% 2010 Global Compact Camera Market Share Source: Samsung Electronics a. Smart Camera, DV300F Dual LCD and Wi-Fi-enabled, this smart camera offers versatile self-camera modes and shooting functions. b. Compact Camera, WB850F This premium compact camera can send photos or videos via email or...

  • Page 13
    ... nearly two decades, from 1993 to 2011, Samsung Electronics has held the No. 1 market share in the global memory business. We maintain our leadership by developing a range of cuttingedge products and green solutions that support speedier and ecofriendly applications and technologies. We play a major...

  • Page 14
    ... stay close to customers for system-on-chips, image sensors and display IC solutions in order to develop products that truly add value and innovation. For mobile APs (Application Processor), a fast growing system-onchip device, we launched the high-performance Exynos family, which features low-power...

  • Page 15
    ... has high-intensity, high-quality color consistency. a. b. a. Middle Power LED MP23L This LED features low power consumption, true color reproduction and excellent heat emission. b. L-tube _ 24W 2200lm A low-cost, easy maintenance solution for retail stores or parking lots, this highly efficient...

  • Page 16
    ... focus on software innovation and creative thinking. We are meeting that challenge by creating differentiated new value beyond our proprietary competitive areas. As always, Samsung Electronics will lead transformation in the industry. As ever, we will harness the winds of change to propel us forward...

  • Page 17
    29 Financial Statements Report of Independent Auditors Consolidated Financial Statements Consolidated Statements of Financial Position Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows...

  • Page 18
    ... the "Company"), which comprise the consolidated statements of financial position as of December 31, 2011 and December 31, 2010, the related consolidated statements of income, comprehensive income, changes in equity and cash flow for the years ended December 31, 2011 and 2010, and the related notes...

  • Page 19
    ...KRW December 2011 USD December 2010 USD Assets Current Assets Cash and cash equivalents Short-term financial instruments Available-for-sale financial assets Trade and other receivables Advances Prepaid expenses Inventories Other current assets Total current assets Non-current assets Available-for...

  • Page 20
    ... 11,472,988 2010 USD 14,000,282 808,449 335,955 (154,649) 14,990,037 Revenue Cost of sales Gross profit Research and development expenses Selling, general and administrative expenses Other operating income Other operating expenses Operating profit Share of profit or loss of associates and joint...

  • Page 21
    ... Dividends Paid-in-capital increase Effect of business combination Disposal of treasury stock Stock option activities Others Total transactions with owners Balance at December 31, 2010 73,045,202 16,146,525 932,384 Balance at January 1, 2011 Profit for the year Available-for-sale financial assets...

  • Page 22
    ... paid Dividend received Income tax paid Net cash generated from Operating activities Cash ï¬,ows from investing activities Net decrease (increase) in short-term financial instruments Net decrease in short-term available-for-sale financial assets Proceeds from disposal of long-term available-for-sale...

  • Page 23
    ... digital TVs, air conditioning systems, refrigerators, home electronics, mobile phones, telecommunication systems, computers and printers. Device solutions include memory semiconductors, system LSI, display panels for LCD screens and TVs. SEC is domiciled in the Republic of Korea and the address of...

  • Page 24
    ... Corporation (BRC)² Samsung Malaysia Electronics (SME) Samsung Electronics Asia Holding (SEAH) Samsung Bangladesh R&D (SBRC) Samsung Electronics Vietnam (SEV) Samsung Telecommunications Malaysia (STM) Samsung Medison India (SMIN) Medison Medical Systems (India) (MI) China Samsung Tianjin Mobile...

  • Page 25
    ... won) 2011 Assets Samsung Mobile Display Samsung Electronics America (SEA) Samsung Austin Semiconductor (SAS) Samsung Semiconductor (SSI) S-LCD Samsung Electronics European Holding (SEEH) Samsung (China) Investment (SCIC) Samsung Electronics Huizhou (SEHZ) Samsung Japan (SJC) Samsung Electronica da...

  • Page 26
    ...in consolidation for the year ended December 31, 2011 are as follows : Location Name of Subsidiaries Prosonic Samsung Venture Capital Union #20 Samsung Medison Medison Healthcare Domestic CSL Medison Xray SU Materials High Pioneer Private Investment Trust #1 Samsung Venture Capital Union #21 Samsung...

  • Page 27
    ... net investment hedges. 2.5 Cash and Cash Equivalents The Company considers all highly liquid investments with less than three months maturity from the date of acquisition to be cash equivalents. Bank overdrafts are considered as short-term borrowings in the statement of financial position and...

  • Page 28
    ... into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not...

  • Page 29
    ... long-term payables. The interest element of the finance cost is charged to the statement of income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases...

  • Page 30
    ... proportion of the total services to be performed. Revenues and earnings are subject to significant change, effected by early steps in a long-term projects, change in scope of a project, cost, period, and plans of the customers. Cash on hand B) Provision for warranty The Company recognizes provision...

  • Page 31
    ... Income and loss of financial instruments by category for the years ended December 31, 2011 and 2010, are as follows : (In millions of Korean won) Level 1 Short-term derivatives Long and short-term Available-for-sale financial assets Total assets Short-term derivatives Total liabilities ￦3,182...

  • Page 32
    ...858 ￦ 1,159,144 ¹ KT Skylife was listed at the Korea Exchange stock market of republic of Korea during the current year. For the years ended December 31, 2011 and 2010, changes in valuation gain (loss) on short-term available-for-sale financial assets are as follows : (In millions of Korean Won...

  • Page 33
    ...) for the year ended December 31, 2011. As of December 31, 2011, the Company's investments in Pusan Newport are pledged as collateral against the investee's debt. For the years ended December 31, 2011 and 2010, changes in valuation gain (loss) on long-term available-for-sale financial assets are as...

  • Page 34
    ...,151,971 million) in which inventory valuation loss of ￦ 575,332 million (2010 : ￦ 527,123 million) is included. Investee Samsung Card Samsung Electro-Mechanics Acquisition cost ￦ 1,538,540 359,237 423,722 17,967 174,531 180,916 269,787 ￦2,964,700 2011 Net asset value ￦ 2,167,986 883,680...

  • Page 35
    ...,678 269,360 306,005 2,599,010 192,500 231,521 ￦8,335,290 Current Assets Non-Current Assets Total Assets E) Financial information of associates and joint ventures as of and for the year ended December 31, 2011 and 2010, are as follows : (1) Associates (In millions of Korean Won) (In millions of...

  • Page 36
    ... the business combination with Samsung Digital Imaging. B) Details of property, plant and equipment's depreciations by line item as of December 31, 2011 and 2010, are as follows : (In millions of Korean Won) 2011 Cost of sales Selling, general and administrative expenses Research and development...

  • Page 37
    .../ losses- net in the consolidated income statements. C) Details of amortization of intangible assets as of December 31, 2011 and 2010, consist of the following : (In millions of Korean Won) Total Account Production costs Selling general and administrative expenses Research and development expenses...

  • Page 38
    ... : Current portion Discounts Total (5,536) (3,683) ￦83,045 C) The pension expenses related to defined-benefit plans recognized in the statement of income for the years ended December 31, 2011 and 2010, are allocated to the following accounts : US dollar straight bonds will be repaid annually...

  • Page 39
    ... timing of payment depends on the settlement of agreement. C) The Company has a long-term incentive plans for its executives based on a three-year management performance criteria and has made a 2011 Domestic Discount rate Expected return on plan assets Future salary increases (including inflation...

  • Page 40
    ... financing with financial institutions, and strategic alliance. SEC has issued global depositary receipts ("GDR") to overseas capital markets. The number of outstanding GDR as of December 31, 2011 and 2010, are as follows : Redemption of shares SEC is authorized, subject to the Board of Directors...

  • Page 41
    ... terms and the number of outstanding stock options as of December 31, 2011 is as follows : 2011 Number of shares eligible for dividends Dividend rate Dividend amount Number of shares eligible for dividends Total C) Dividend Payout Ratio 2011 Dividend payout ratio D) Dividend Yield Ratio 2011 Common...

  • Page 42
    ..., plant and equipment Loss from disposal of investments Other ￦14,402 109,338 272,275 186,759 97,517 5,937 940,864 ￦ 1,627,092 2011 Wages and salaries Pension expenses Commission and service charges Depreciation expenses Amortization expenses Advertising expenses Sales promotion expenses...

  • Page 43
    ...fits of the consolidated entities as follows : (In millions of Korean Won) 2011 Finance income Interest income Interest income from loans and receivables Interest income from available-for-sale financial assets Realized foreign exchange gains Unrealized foreign exchange gains Gains on valuation of...

  • Page 44
    ... income is as follows : (In millions of Korean Won) Diluted earnings per preferred share (in Korean won) 2011 Gain and loss on valuation of available-for-sale financial assets Foreign currency translation adjustment Total ￦ (340,760) 22,708 ￦ (318,052) 2010 ￦ (449,408) 25,287 ￦ (424,121)

  • Page 45
    ... of inventories Gain on disposal of investments Gain on transfer of business Impairment losses on intangible assets Other income / expense Adjustments, total 2010 battery business and the HDD business. 30. Financial Risk Management Financial risk factors The Company is exposed to credit risk...

  • Page 46
    ... capital on the basis of the debt to equity ratio. This ratio is calculated as total liabilities divided by equity based on the consolidated financial statements. During 2011, the Company's strategy was to maintain a reliable credit rating. The Company has maintained an A credit rating for long term...

  • Page 47
    ...segment Revenue Revenue from external customers Depreciation Amortization Operating profit (loss) TeleCommunication 113,263,888 (57,729,846) Total¹ Device Semi conductor 71,305,465 (34,315,914) LCD Total¹ Elimination Consolidated ¹ The total of non-current assets other than financial instruments...

  • Page 48
    ...-year period would show revenue of ￦57,023 million and loss Name of the acquired company Headquarters location Representative director Classification of the acquired company Former relationship with the Company (2) Terms of the business combination The shareholders of Samsung Gwangju Electronics...

  • Page 49
    ... Period B) Acquisition of Grandis Samsung Information Systems America acquired Grandis with a closing date of July 22, 2011. (1) Overview of the acquired company Name of the acquired company Headquarters location Representative director Classification of the acquired company (2) Purchase price...

  • Page 50
    ... States Samsung Austin Semiconductor, LLC (SAS), Austin, Tx Tel : 1-512-672-1000 SALES NETWORK ASIA PACIFIC Australia Samsung Electronics Australia Pty. Ltd. (SEAU), Sydney Tel : 61-2-9763-9700 China Samsung China Investment Corp (SCIC), Beijing Tel : 86-10-6566-8100 Hong Kong Samsung Electronics...

  • Page 51
    ...-3535 Mexico Samsung Electronics Mexico Sales (SEM-S), Mexico City Tel : 52-55-5747-5100 United States Samsung Electronics America, Inc. (SEA), Ridgefield Park, N.J. Tel : 1-201-229-4000 Samsung Electronics Co., Ltd. (Miami Branch), Miami, Fl. Tel :1-305-594-1090 Samsung Telecommunications America...

  • Page 52