SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2011
LG Display Co., Ltd.
(Translation of Registrants name into English)
65-228 Hangangno 3-ga, Yongsan-gu, Seoul 140-716, Republic of Korea
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrants home country), or under the rules of the home country exchange on which the registrants securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrants security holders, and if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
QUARTERLY REPORT
(From January 1, 2011 to September 30, 2011)
THIS IS A TRANSLATION OF THE QUARTERLY REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SUPERVISORY COMMISSION.
IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED AND CERTAIN NUMBERS WERE ROUNDED FOR THE CONVENIENCE OF READERS.
UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A CONSOLIDATED BASIS IN ACCORDANCE WITH KOREAN INTERNATIONAL FINANCIAL REPORTING STANDARDS, OR K-IFRS, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES IN THIS DOCUMENT.
1. | Company | 4 | ||||||
A. | Name and contact information | 4 | ||||||
B. | Domestic credit rating | 4 | ||||||
C. | Capitalization | 5 | ||||||
D. | Voting rights | 6 | ||||||
E. | Dividends | 6 | ||||||
2. | Business | 7 | ||||||
A. | Business overview | 7 | ||||||
B. | Industry | 8 | ||||||
C. | New businesses | 9 | ||||||
3. | Major Products and Raw Materials | 12 | ||||||
A. | Major products in 2011 (Q1~Q3) | 12 | ||||||
B. | Average selling price trend of major products | 12 | ||||||
C. | Major raw materials | 12 | ||||||
4. | Production and Equipment | 13 | ||||||
A. | Production capacity and output | 13 | ||||||
B. | Production performance and utilization ratio | 13 | ||||||
C. | Investment plan | 13 | ||||||
5. | Sales | 14 | ||||||
A. | Sales performance | 14 | ||||||
B. | Sales route and sales method | 14 | ||||||
6. | Market Risks and Risk Management | 15 | ||||||
A. | Market risks | 15 | ||||||
B. | Risk management | 15 | ||||||
7. | Derivative Contracts | 15 | ||||||
A. | Currency risks | 15 | ||||||
B. | Interest rate risks | 16 | ||||||
8. | Major Contracts | 16 | ||||||
9. | Research & Development | 17 | ||||||
A. | Summary of R&D expenses | 17 | ||||||
B. | R&D achievements | 17 |
2
10. | Intellectual Property | 28 | ||||||
11. | Environmental Matters | 28 | ||||||
12. | Financial Information | 30 | ||||||
A. | Financial highlights (Based on consolidated K-IFRS) | 30 | ||||||
B. | Financial highlights (Based on separate K-IFRS) | 31 | ||||||
C. | Consolidated subsidiaries | 32 | ||||||
D. | Status of equity investment | 33 | ||||||
13. | Audit Information | 33 | ||||||
A. | Audit service | 33 | ||||||
B. | Non-audit service | 34 | ||||||
14. | Board of Directors | 34 | ||||||
A. | Independence of directors | 34 | ||||||
B. | Members of the board of directors | 34 | ||||||
C. | Committees of the board of directors | 35 | ||||||
15. | Information Regarding Shares | 35 | ||||||
A. | Total number of shares | 35 | ||||||
B. | Shareholder list | 35 | ||||||
16. | Directors and Employees | 36 | ||||||
A. | Directors | 36 | ||||||
B. | Employees | 37 |
Attachment: 1. Financial Statements in accordance with K-IFRS
3
1. | Company |
A. | Name and contact information |
The name of our company is EL-GI DISPLAY CHUSIK HOESA, which shall be LG Display Co., Ltd. in English.
Our principal executive office is located at 65-228 Hangangno 3-ga, Yongsan-gu, Seoul 140-716, Republic of Korea, and our telephone number is +82-2-3777-1114. Our website address is http://www.lgdisplay.com.
B. | Domestic credit rating |
Subject |
Month of rating |
Credit rating |
Rating agency (Rating range) | |||
Commercial Paper | January 2006 | A1 | National Information & Credit Evaluation, Inc. (A1 ~ D) | |||
June 2006 | ||||||
December 2006 | ||||||
June 2007 | ||||||
December 2007 | ||||||
September 2008 | ||||||
December 2008 | ||||||
| ||||||
June 2006 | A1 | Korea Investors Service, Inc. (A1 ~ D) | ||||
January 2007 | ||||||
June 2007 | ||||||
December 2007 | ||||||
September 2008 | ||||||
| ||||||
Corporate Debenture | June 2006 | AA- | ||||
|
||||||
December 2006 | A+ | |||||
June 2007 | ||||||
September 2008 | ||||||
|
||||||
July 2009 | AA- | National Information & Credit Evaluation, Inc. | ||||
|
||||||
October 2009 | AA- | (AAA ~ D) | ||||
February 2010 | ||||||
May 2010 | ||||||
December 2010 | ||||||
July 2011 | ||||||
| ||||||
June 2006 | AA- | Korea Investors Service, Inc. | ||||
|
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January 2007 | A+ | (AAA ~ D) | ||||
June 2007 | ||||||
September 2008 | ||||||
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July 2009 | AA- | |||||
December 2009 | ||||||
February 2010 | ||||||
May 2010 | ||||||
August 2010 | ||||||
February 2011 | ||||||
April 2011 | ||||||
August 2011 | ||||||
October 2011 | ||||||
| ||||||
October 2009 | AA- | Korea Ratings, Inc. (AAA ~ D) | ||||
December 2009 | ||||||
August 2010 | ||||||
December 2010 | ||||||
February 2011 | ||||||
April 2011 | ||||||
July 2011 | ||||||
October 2011 |
4
C. | Capitalization |
(1) Change in capital stock (as of September 30, 2011)
(Unit: Won, Share) | ||||||||||
Date |
Description |
Change in number of common shares |
Face amount per share |
|||||||
July 23, 2004 |
Offering (1) | 33,600,000 | 5,000 | |||||||
September 8, 2004 |
Follow-on offering (2) | 1,715,700 | 5,000 | |||||||
July 27, 2005 |
Follow-on offering (3) | 32,500,000 | 5,000 |
(1) | ADSs offering: 24,960,000 shares (US$30 per share, US$15 per ADS) / Initial public offering in Korea: 8,640,000 shares (Won)34,500 per share) |
(2) | ADSs offering: 1,715,700 shares ((Won)34,500 per share) pursuant to the exercise of greenshoe option by the underwriters |
(3) | ADSs offering: 32,500,000 shares (US$42.64 per share, US$21.32 per ADS) |
5
(2) Convertible bonds (as of September 30, 2011)
(Unit: In millions of Won, Share) | ||||
Item |
Content | |||
Issue date | April 18, 2007 | |||
Maturity | April 18, 2012 | |||
Face amount (1) | (Won)513,480 | |||
Conversion shares | Registered common shares | |||
Conversion period | Convertible into shares of common stock during the period from April 19, 2008 to April 3, 2012 | |||
Conversion price (2) | (Won)47,892 per share | |||
Outstanding | Face amount |
(Won)61,618 | ||
Number of convertible shares (2) |
1,286,594 shares if all are converted | |||
Remarks | - Registered form - Listed on Singapore Exchange |
(1) | Face amount translated from US$550 million at the noon buying rate of the Federal Reserve Bank of New York in effect on April 10, 2007 (which was the date the convertible bond purchase agreement was entered into), which was (Won)933.6 = US$1.00. |
(2) | Conversion price was adjusted from (Won)49,070 to (Won)48,760 and the number of convertible shares was adjusted from 10,464,234 to 10,530,762 following the approval by the shareholders of a cash dividend of (Won)750 per share at the annual general meeting of shareholders on February 29, 2008. Conversion price was further adjusted from (Won)48,760 to (Won)48,251 and the number of shares issuable upon conversion was adjusted from 10,530,762 to 10,641,851 following the approval by the shareholders of a cash dividend of (Won)500 per share at the annual general meeting of shareholders on March 13, 2009. Conversion price was further adjusted from (Won)48,251 to (Won)48,075 and the number of shares issuable upon conversion was adjusted from 10,641,851 to 10,680,811 following the approval by the shareholders of a cash dividend of (Won)500 per share at the annual general meeting of shareholders on March 12, 2010. In April 2010, certain holders of our US$550 million convertible bonds due 2012 exercised their put option for an aggregate principal amount of US$484 million and were repaid at 109.75% of their principal amount. The remaining US$66 million matures in 2012 at 116.77% of their principal amount. Accordingly, the number of shares issuable upon conversion changed from 10,680,811 to 1,281,697. Conversion price was further adjusted from (Won)48,075 to (Won)47,892 and the number of shares issuable upon conversion was adjusted from 1,281,697 to 1,286,594 following the approval by the shareholders of a cash dividend of (Won)500 per share at the annual general meeting of shareholders on March 11, 2011. |
D. | Voting rights (as of September 30, 2011) |
(Unit: share) | ||||
Description |
Number of shares |
|||
1. Shares with voting rights [A-B] |
357,815,700 | |||
A. Total shares issued |
357,815,700 | |||
B. Shares without voting rights |
| |||
2. Shares with restricted voting rights |
| |||
|
|
|||
Total number of shares with voting rights [1-2] |
357,815,700 |
E. | Dividends |
At the annual general meeting of shareholders on March 11, 2011, our shareholders approved a cash dividend of (Won)500 per share of common stock and payment of the dividends was made in April 2011.
6
Dividends during the recent three fiscal years
Description (unit) |
2010 | 2009 | 2008 | |||||||||
Par value (Won) |
5,000 | 5,000 | 5,000 | |||||||||
Profit for the period / Net income (million Won) |
1,002,648 | (3) | 1,067,947 | (4) | 1,086,896 | (4) | ||||||
Earnings per share (Won) (1) |
2,802 | 2,985 | 3,038 | |||||||||
Total cash dividend amount (million Won) |
178,908 | 178,908 | 178,908 | |||||||||
Total stock dividend amount (million Won) |
| | | |||||||||
Cash dividend payout ratio (%) |
17.8 | 16.8 | 16.5 | |||||||||
Cash dividend yield (%) (2) |
1.3 | 1.3 | 2.2 | |||||||||
Stock dividend yield (%) |
| | | |||||||||
Cash dividend per share (Won) |
500 | 500 | 500 | |||||||||
Stock dividend per share (share) |
| | |
(1) | Earnings per share is based on par value of (Won)5,000 per share and is calculated by dividing net income by weighted average number of common stock. |
(2) | Cash dividend yield is the percentage that is derived by dividing cash dividend by the arithmetic average of the daily closing prices of our common stock during the one-week period ending two trading days prior to the closing of the register of shareholders for the purpose of determining the shareholders entitled to receive annual dividends. |
(3) | Profit for the period based on separate K-IFRS. |
(4) | Net income based on non-consolidated Korean GAAP. |
2. | Business |
A. | Business overview |
We were incorporated in February 1985 under the laws of the Republic of Korea. LG Electronics and LG Semicon transferred their respective LCD business to us in 1998, and since then, our business has been focused on the research, development, manufacture and sale of display panels, applying technologies such as TFT-LCD, LTPS-LCD and OLED.
As of September 30, 2011, we operated TFT-LCD and OLED production facilities in Paju and Gumi, Korea and a LCD research center in Paju, Korea. We have also established subsidiaries in the United States, Europe and Asia.
As of September 30, 2011, our business consisted of (i) the manufacture and sale of LCD panels, (ii) the manufacture and sale of OLED panels and (iii) the manufacture and sale of television sets and monitors that utilize our LCD panels. Because our OLED, television set and monitor businesses represent an extremely small portion of our assets and revenues, we have included them as part of our LCD reporting business segment.
Financial highlights by business (based on K-IFRS)
(Unit: In billions of Won) | ||
2011 (Q1~Q3) |
LCD business | |
Sales Revenue | 17,681 | |
Gross Profit | 864 | |
Operating Profit (Loss) | (780) |
7
B. | Industry |
(1) | Industry characteristics and growth potential |
| TFT-LCD technology is one of the widely used technologies in the manufacture of flat panel displays, and the demand for flat panel displays is growing. The flat panel display industry is characterized by entry barriers due to rapidly evolving technology, capital-intensive characteristics, and the significant investments required to achieve economies of scale, among other factors. There is intense competition among the players in the industry, and the industrys production capacity, including ours, is continually increasing. |
| The demand for LCD panels for notebook computers and desktop monitors has grown, to a degree, in tandem with the growth in the information technology industry. The demand for LCD panels for television sets has been growing as digital broadcasting is becoming more common and as LCD television has come to play an important role in the digital display market. In addition, markets for small- to medium-sized LCD panels, such as those used in mobile phones, P-A/V, medical applications, automobile navigation systems and e-books, among others, have shown continued growth. |
| The average selling prices of LCD panels may continue to decline with time irrespective of general business cycles as a result of, among other factors, technology advancements and cost reductions. |
(2) | Cyclicality |
| The TFT-LCD business is highly cyclical. In spite of the increased demand for products, this industry has experienced periodic volatility caused by imbalances between supply and demand due to capacity expansion within the industry. |
| Intense competition and expectations of demand growth may lead panel manufacturers to invest in manufacturing capacity on similar schedules, resulting in a surge in capacity when production is ramped up at new fabrication facilities. |
| During such surges in production capacity, the average selling prices of display panels may decline. Conversely, demand surges and inability of supply to meet such demand may lead to price increases. |
(3) | Market conditions |
| The TFT-LCD industry is highly competitive due largely to additional capacity expansion driven by TFT-LCD panel makers. |
| Most TFT-LCD panel makers are located in Asia. |
a. Korea: |
LG Display, Samsung Electronics (including a joint venture between Samsung Electronics and Sony Corporation), Samsung Mobile Display, Hydis Technologies | |
b. Taiwan: AU Optronics, Chi Mei Innolux, CPT, Hannstar, etc. | ||
c. Japan: Sharp, Panasonic LCD, etc. | ||
d. China: SVA-NEC, BOE-OT, etc. |
(4) | Market shares |
| Our worldwide market share for large-sized TFT-LCD panels based on revenue is as follows: |
2011 (Q1~Q3) (1) (4) | 2010 (2) (4) | 2009 (3) (5) | ||||||||||
Panels for Notebook Computers (6) |
35.9 | % | 33.2 | % | 30.3 | % | ||||||
Panels for Monitors |
27.4 | % | 26.5 | % | 23.9 | % | ||||||
Panels for Televisions |
26.1 | % | 23.4 | % | 24.4 | % | ||||||
Total |
26.7 | % | 25.4 | % | 25.2 | % |
8
(1) | Source: 2011 Q3 DisplaySearch Quarterly Large-Area TFT LCD Shipment Report (advanced version with LED backlight). |
(2) | Source: 2010 Q4 DisplaySearch Large-Area TFT LCD Shipment Report (advanced version with LED backlight). |
(3) | Source: 2009 Q4 DisplaySearch Large-Area TFT LCD Shipment Report. |
(4) | Based on TFT-LCD panels that are 9 inches or larger. |
(5) | Based on TFT-LCD panels that are 10 inches or larger. |
(6) | Includes panels for netbooks. |
(5) | Competitiveness |
| Our ability to compete successfully depends on factors both within and outside our control, including product pricing, our relationship with customers, successful and timely investment and product development, cost competitiveness, success in marketing to our end-brand customers, component and raw material supply costs, foreign exchange rates and general economic and industry conditions. |
| In order to compete effectively, it is critical to be cost competitive and maintain stable and long-term relationships with customers which will enable us to be profitable even in a buyers market. |
| A substantial portion of our sales is attributable to a limited number of end-brand customers and their designated system integrators. The loss of these end-brand customers, as a result of customers entering into strategic supplier arrangements with our competitors or otherwise, would result in reduced sales. |
| Developing new products and technologies that can be differentiated from those of our competitors is critical to the success of our business. It is important that we take active measures to protect our intellectual property internationally by obtaining patents and undertaking monitoring activities in our major markets. It is also necessary to recruit and retain experienced key managerial personnel and skilled line operators. |
| As a leading technology innovator in the display industry, we continue to focus on delivering differentiated value to our customers by developing new technologies and products, including in the categories of 3D, touch screens and next generation displays. With respect to 3D technology, we have commenced mass production of high definition 3D panels with reduced degrees of crosstalk, or the degree of 3D image overlapping, of less than 1% (which is less than what the human eye can perceive). We have also acquired the technical skills and have established a supply chain management system that enables us to provide one-stop solutions to our customers with respect to touch module products. In addition, we have shown that we are technologically a step ahead of the competition by developing products such as 10.1-inch flexible LCDs, 2.6 mm thin televisions (the thinnest in the world at the time) and 19-inch flexible e-papers. |
| Moreover, we entered into long-term sales contracts with major global firms, including those in the United States and Japan, to secure customers and expand partnerships for technology development. |
C. | New businesses |
| In order to meet the rapidly increasing market demand for large TFT-LCD panels, we decided in March 2010 to further expand P8 by investing in P83, which successfully commenced mass production in March 2011. In January 2011, we also decided to invest in a new eighth generation production facility, P98. |
| We also plan to strengthen our market position in future display technologies by strengthening our OLED business, accelerating the development of flexible display technologies and maintaining our leadership position in the LED backlight LCD market. |
9
| We are making an effort to increase our competitiveness, including in the LCD component parts market, by forming cooperative relationships with suppliers and purchasers of our products. As part of this effort, in March 2005, we established a joint venture company, Paju Electric Glass Co., Ltd., with Nippon Electric Glass Co., Ltd. We invested (Won)14.4 billion in return for a 40% interest in Paju Electric Glass Co., Ltd. In November 2010 and April 2011, we invested an additional (Won)14.8 billion and (Won)4.4 billion, respectively, in Paju Electric Glass Co., Ltd. but the additional investments did not change our percentage interest in Paju Electric Glass Co., Ltd. In July 2008, we purchased 6,850,000 shares of common stock of New Optics Ltd. at a purchase price of (Won)9.7 billion, and in February 2010, we purchased an additional 1,000,000 shares of common stock of New Optics at a purchase price of (Won)2.5 billion. In addition, in February 2009, we purchased 3,000,000 shares of common stock of LIG ADP Co., Ltd. (formerly ADP Engineering Co., Ltd.) at a purchase price of (Won)6.3 billion. In May 2009, we purchased 6,800,000 shares of common stock of Wooree LED Co., Ltd. at a purchase price of (Won)11.9 billion. In November 2009, we purchased TWD212.5 million in convertible bonds from Everlight Electronics Co., Ltd. In December 2009, we purchased 420,000 global depositary shares representing 420,000 shares of Prime View International Co., Ltds common stock at a purchase price of US$9.9 million. In January 2010, we purchased 10.8 million shares of Can Yang Investment Limited representing a 15% interest at a purchase price of US$10.8 million. In October 2010, we invested an additional US$4.5 million and acquired 4.8 million additional shares of Can Yang Investment Limited. |
| In October 2008, we established a joint venture company, Suzhou Raken Technology Ltd., with AmTRAN Technology Co., Ltd., a Taiwan corporation. We invested US$10.4 million in return for a 51% interest in Suzhou Raken Technology Ltd. Suzhou Raken Technology Ltd. will supply both parties with TFT-LCD modules and TFT-LCD televisions. Through the establishment of this joint venture, we are able to further expand our customer base by securing a stable long-term panel dealer. It also allows us to produce LCD modules and LCD television sets in a single factory, which enables us to provide our customers with products that are more competitive both in terms of technology and price. In 2009 and 2010, we invested an additional US$58.7 million and US$14.5 million, respectively, in Suzhou Raken Technology Ltd., but the additional investments did not change our percentage interest in Suzhou Raken Technology Ltd. |
| As part of our strategy to expand our production capacity overseas, we signed an investment agreement and a joint venture agreement in November 2009 with the City of Guangzhou, China, to build an eighth-generation panel fabrication facility in China. |
| In December 2009, certain LG affiliates and we entered into a joint venture investment agreement and established a joint venture company, Global OLED Technology LLC, for purposes of managing the patent assets relating to OLED technology that we acquired from Eastman Kodak Company in December 2009. As of December 31, 2009, we had invested (Won)72.3 billion in return for a 49% equity interest in the joint venture company. In June 2010, we sold (Won)19.0 billion worth of our equity interest in the joint venture company. After such sale, our equity interest was reduced to 32.73%. |
| In December 2009, we acquired a 30.6% limited partnership interest in LB Gemini New Growth Fund No. 16. Under the limited partnership agreement, we have agreed to invest a total amount of (Won)30 billion in the fund, and as of December 31, 2010, we had invested (Won)8.3 billion in the fund. By becoming a limited partner of this fund, our aim is to seek direct investment opportunities as well as to receive benefits from the investment. In February 2011, we received a distribution of (Won)1.4 billion from the fund, and in March and April 2011, we invested an additional (Won)1.9 billion and (Won)3.1 billion, respectively, in the fund. In June 2011, we received a further distribution of (Won)0.7 billion as return of principal and (Won)0.9 billion as dividends and we invested an additional (Won)1.2 billion in the fund. The additional investments did not change our investment commitment amount of (Won)30 billion or our limited partnership interest in the fund, which remained at 30.6%. |
10
| In order to establish a production base for LCD modules, LCD television sets and LCD monitors, we entered into a joint investment agreement with Top Victory Investment Ltd. in January 2010 and established L&T Display Technology (Xiamen) Ltd. and L&T Display Technology (Fujian) Ltd. in Xiamen and Fujian, China, respectively. We invested (i) (Won)7.1 billion and acquired a 51% equity interest in L&T Display Technology (Xiamen) Ltd. and (ii) (Won)10.1 billion and acquired a 51% equity interest in L&T Display Technology (Fujian) Ltd. |
| In May 2010, we completed the acquisition of the LCD module division of LG Innotek Co., Ltd. Through this acquisition, we expect to improve our module manufacturing process and simplify our supply chain which will increase our efficiency and competitiveness. |
| In August 2010, in order to strengthen our competitiveness in the LED backlight LCD market, we entered into a joint venture with Everlight Electronics Co., Ltd. and AmTRAN Technology Co., Ltd. and established Eralite Optoelectronics (Jiangsu) Co., Ltd., a company that specializes in LED packaging and manufacturing, in Suzhou, China. We invested US$4 million and acquired a 20% equity interest in Eralite Optoelectronics (Jiangsu) Co., Ltd. |
| In September 2010, in order to strengthen our OLED business, we acquired a 20% equity interest in YAS Co., Ltd., which develops and manufactures OLED deposition equipment components, at a purchase price of (Won)10 billion. |
| In November 2010, in order to strengthen our e-book business, we acquired a 100% equity interest in Image & Materials, Inc., a company that develops and manufactures e-book deposition equipment components, at a purchase price of (Won)35 billion. In each of June 2011 and September 2011, respectively, we invested an additional (Won)3.0 billion in Image & Materials, Inc. |
| In October 2010, in order to strengthen our competitiveness in the e-book market, we entered into a joint venture with Iriver Ltd. and established L&I Electronics Technology (Dongguan) Limited, a company that specializes in e-book manufacturing, in Dongguan, China. We invested US$2.6 million and acquired a 51% equity interest in L&I Electronics Technology (Dongguan) Limited. |
| In November 2010, in order to build Backlight-Module-System (BMS) lines that would help differentiate our technical skills from those of our competitors and increase our cost competitiveness, we entered into a joint venture with Compal Electronics, Inc., a Taiwanese company, and established LUCOM Display Technology (Kunshan) Ltd. in Kunshan, China. We invested US$2.3 million and acquired a 51% equity interest in LUCOM Display Technology (Kunshan) Ltd. In February and April 2011, we invested an additional US$ 3.1 million and US$2.3 million, respectively, in LUCOM Display Technology (Kunshan) Ltd., but the additional investments did not change our percentage interest in LUCOM Display Technology (Kunshan) Ltd. |
| In April 2011, in order to enhance the product quality and assist the local development of coaters, a component used in our TFT-LCD products, we invested (Won)20 billion and acquired a 16.6% interest in Narae Nanotech Corporation, a Korean equipment manufacturer. In June 2011, we invested an additional (Won)10.0 billion and acquired a further 7.7% interest in Narae Nanotech Corporation. As of September 30, 2011, we held a 23% equity interest in Narae Nanotech Corporation. |
11
3. | Major Products and Raw Materials |
A. | Major products in 2011 (Q1~Q3) |
We manufacture TFT-LCD panels, of which a significant majority is exported overseas.
(Unit: In billions of Won) | ||||||||||||
Business area |
Sales types |
Items (Market) |
Specific use |
Major |
Sales (%) | |||||||
TFT-LCD |
Product/ Service/ Other Sales | TFT-LCD (Overseas (1)) | Panels for Notebook Computer, Monitor, Television, etc | LG Display | 16,182 (91.5 | %) | ||||||
TFT-LCD (Korea (1)) |
Panels for Notebook Computer, Monitor, Television, etc |
LG Display | 1,499 (8.5 | %) | ||||||||
|
|
|||||||||||
Total |
17,681 (100 | %) | ||||||||||
|
|
- Period: January 1, 2011 ~ September 30, 2011.
(1) | Based on ship-to-party. |
B. | Average selling price trend of major products |
The average selling price of LCD panels per square meter of net display area in the third quarter of 2011 decreased by 5% from the second quarter of 2011. There is no assurance that the average selling prices of LCD panels will not fluctuate in the future due to imbalances in supply and demand.
(Unit: US$ / m2) | ||||||||||||||||
Description |
2011 Q3 | 2011 Q2 | 2011 Q1 | 2010 Q4 | ||||||||||||
TFT-LCD panel (1)(2) |
704 | 743 | 702 | 707 |
(1) | Quarterly average selling price per square meter of net display area shipped. |
(2) | Includes semi-finished products in the cell process. |
C. | Major raw materials |
Prices of major raw materials depend on fluctuations in supply and demand in the market as well as on change in size and quantity of raw materials due to the increased production of large-sized panels.
(Unit: In billions of Won) | ||||||||||||||||
Business area |
Purchase types |
Items |
Specific use |
Purchase price (1) |
Ratio (%) | Suppliers | ||||||||||
TFT-LCD |
Raw Materials | Glass | LCD panel manufacturing |
2,640 | 22.14 | % | Samsung Corning Precision Glass Co., Ltd., Nippon Electric Glass Co., Ltd., etc. | |||||||||
Backlight | 3,672 | 30.79 | % | Heesung Electronics Ltd., etc. | ||||||||||||
Polarizer | 1,817 | 15.23 | % | LG Chem, etc. | ||||||||||||
Others | 3,797 | 31.84 | % | - | ||||||||||||
|
|
|
|
| ||||||||||||
Total | 11,926 | 100 | % | - | ||||||||||||
|
|
|
|
|
- Period: January 1, 2011 ~ September 30, 2011.
(1) | Based on total cost for purchase of raw materials which includes manufacturing and development costs, etc. |
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A. | Production capacity and output |
(1) | Production capacity |
The table below sets forth the production capacity of our Gumi and Paju facilities in the periods indicated.
(Unit: 1,000 Glass sheets) | ||||||||||||
Business area |
Items |
Business place |
2011 (Q1~Q3) (1) | 2010 (2) | 2009 (2) | |||||||
TFT-LCD |
TFT-LCD | Gumi, Paju | 5,840 | 7,509 | 6,219 |
(1) | Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth generation glass sheets) during the period multiplied by the number of months in the period (i.e., 9 months). |
(2) | Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth generation glass sheets) during the year multiplied by the number of months in a year (i.e., 12 months). |
(2) | Production output |
The table below sets forth the production output of our Gumi and Paju facilities in the periods indicated.
(Unit: 1,000 Glass sheets) | ||||||||||||
Business area |
Items |
Business place |
2011 (Q1~Q3) | 2010 | 2009 | |||||||
TFT-LCD |
TFT-LCD | Gumi, Paju | 4,932 | 6,490 | 5,231 |
- Based on glass input substrate size for eighth generation glass sheets.
B. | Production performance and utilization |
(Unit: Hours) | ||||||||||||
Business place (area) |
Available working hours of 2011 (Q1~Q3) |
Actual working hours of 2011 (Q1~Q3) |
Average utilization ratio |
|||||||||
Gumi |
6,552 | (1) | 6,470 | (1) | 98.7 | % | ||||||
(TFT-LCD) |
(273 days | ) (2) | (270 days | ) (2) | ||||||||
Paju |
6,198 | (1) | 5,634 | (1) | 90.9 | % | ||||||
(TFT-LCD) |
(258 days | ) (2) | (235 days | ) (2) |
(1) | Based on the assumption that all working hours in a day (i.e., 24 hours) have been fully utilized. |
(2) | No. of days are calculated by averaging the no. of working days for each facility. For Paju, includes facilities that commenced production in March 2011. |
C. | Investment plan |
In connection with our strategy to expand our TFT-LCD production capacity, we estimate that we will incur capital expenditures on a cash out basis slightly in excess of (Won)4.0 trillion in 2011. Such amount is subject to change depending on business conditions and market environment.
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A. | Sales performance |
(Unit: In billions of Won)
Business area |
Sales types |
Items (Market) |
2011 (Q1~Q3) |
2010 | 2009 | |||||||||||||
TFT-LCD |
Products, etc. | TFT-LCD | Overseas (1) | 16,182 | 23,806 | 18,833 | ||||||||||||
Korea (1) | 1,499 | 1,706 | 1,205 | |||||||||||||||
Total | 17,681 | 25,512 | 20,038 |
(1) | Based on ship-to-party. |
B. | Sales route and sales method |
(1) Sales organization
| As of September 30, 2011, each of our IT Business Unit, Television Business Unit and Mobile/OLED Business Unit had individual sales and customer support functions. |
| Sales subsidiaries in the United States, Germany, Japan, Taiwan, China and Singapore perform sales activities and provide local technical support to customers. |
(2) Sales route
One of the following:
| LG Display HQ and overseas manufacturing subsidiaries g Overseas sales subsidiaries (USA/Germany/Japan/Taiwan/China/Singapore), etc. g System integrators and end-brand customers g End users |
| LG Display HQ and overseas manufacturing subsidiaries g System integrators and end-brand customers g End users |
(3) Sales methods and sales terms
| Direct sales and sales through overseas subsidiaries, etc. Sales terms are subject to change depending on the fluctuation in the supply and demand of LCD panels. |
(4) Sales strategy
| To secure stable sales to major personal computer makers and leading consumer electronics makers globally. To increase sales of high-end notebook computer products (including smartbooks, IPS and slim and narrow bezel notebook computer products), to strengthen sales of the high-end monitor segment (such as LED, IPS, slim and narrow bezel and 3D monitors), to lead in the large and wide television market (including the LED television market) and to continually increase our market share in the 3D television market by utilizing film patterned retarder technology. |
| In the small- to medium-sized products segment, which is centered on high-end products applying IPS technology, to strengthen our business portfolio by developing a diverse range of products, such as mobile phone (including smartphone), smartbook, car navigation, e-book, industrial products (including aviation and medical equipment), etc. |
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(5) Purchase orders
| Customers generally place purchase orders with us one month prior to delivery. Our customary practice for procuring orders from our customers and delivering our products to such customers is as follows: |
| Receive order from customer (overseas sales subsidiaries, etc.) g Headquarter is notified g Manufacture product g Ship product (overseas sales subsidiaries, etc.) g Sell product (overseas sales subsidiaries, etc.) |
6. | Market Risks and Risk Management |
A. | Market risks |
Our industry continues to experience continued declines in the average selling prices of display panels irrespective of cyclical fluctuations in the industry, and our margins would be adversely impacted if prices decrease faster than we are able to reduce our costs.
The TFT-LCD industry is highly competitive. We have experienced pressure on the prices and margins of our major products due largely to additional industry capacity from panel makers in Korea, Taiwan, China and Japan. Our main competitors in the industry include Samsung Electronics (including its joint venture with Sony), Samsung Mobile Display, Infovision, Hydis Technologies, AU Optronics, Chi Mei Innolux, Chunghwa Picture Tubes, HannStar, SVA-NEC, BOE-OT, Sharp, Hitachi, TMDisplay, Mitsubishi and Panasonic LCD.
Our ability to compete successfully depends on factors both within and outside our control, including product pricing, performance and reliability, successful and timely investment and product development, success or failure of our end-brand customers in marketing their brands and products, component and raw material supply costs, and general economic and industry conditions. We cannot provide assurance that we will be able to compete successfully with our competitors on these fronts and, as a result, we may be unable to sustain our current market position.
Our results of operations are subject to exchange rate fluctuations. To the extent that we incur costs in one currency and generate sales in a different currency, our profit margins may be affected by changes in the exchange rates between the two currencies. Our sales of display panels are denominated mainly in U.S. dollars, whereas our purchases of raw materials are denominated mainly in U.S. dollars and Japanese Yen. Our risk management policy regarding foreign currency risk is to minimize the impact of foreign currency fluctuations on our foreign currency denominated assets and liabilities.
B. | Risk management |
The average selling prices of display panels have declined in general and could continue to decline with time irrespective of industry-wide cyclical fluctuations. Certain contributing factors for this decline will be beyond our ability to control and manage. However, in anticipation of such price decline we have continued to develop new technologies and have implemented various cost reduction measures. In addition, in order to manage our risk against foreign currency fluctuations, we have entered into cross-currency interest rate swap contracts and foreign currency forward contracts.
A. | Currency risks |
| We are exposed to currency risks on sales, purchases and borrowings that are denominated in currencies other than in Won, our functional currency. These currencies are primarily the U.S. dollar, the Euro, the Japanese Yen and the Chinese Renminbi. |
| We generally use forward exchange contracts with a maturity of less than one year to hedge against currency risks. |
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| Interest on borrowings is denominated in the currency of the borrowing. Generally, borrowings are denominated in currencies that match the cash flows generated by our underlying operations, primarily in Won, the U.S. dollar, the Japanese Yen and the Chinese Renminbi. |
| In respect of other monetary assets and liabilities denominated in foreign currencies, we ensure that our net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates, when necessary, to address short-term imbalances. In addition, we also adjust the factoring volumes of foreign currency denominated receivables and utilize usances as means of settling accounts payables relating to capital expenditures for our facilities, in response to currency fluctuations. |
B. | Interest rate risks |
Our exposure to interest rate risks relates primarily to our long term debt obligations. To the extent necessary, we hedge our interest rate risks by entering into interest swap contracts. As of September 30, 2011, we had no interest swap contracts outstanding.
8. | Major contracts |
Our material contracts, other than contracts entered into in the ordinary course of business, are set forth below.
Type of agreement |
Name of party |
Term |
Content | |||
Technology licensing agreement | Semiconductor Energy Laboratory
|
October 2005 ~ | Patent licensing of LCD and OLED related technology | |||
Fergason Patent Properties
|
October 2007 ~ | Patent licensing of LCD driving technology | ||||
Hewlett-Packard | January 2011 ~ | Patent licensing of semi-conductor device technology | ||||
Technology licensing/supply agreement | Chunghwa Picture Tubes
|
November 2007 ~ | Patent cross-licensing of LCD technology | |||
Hannstar Display Corporation
|
November 2009 ~ | Patent cross-licensing of LCD technology | ||||
AU Optronics Corporation | August 2011~ | Patent cross-licensing of LCD technology |
16
9. | Research & Development |
A. | Summary of R&D expenses |
(Unit: In millions of Won) | ||||||||||||||
Account |
2011 (Q1~Q3) |
2010 | 2009 | |||||||||||
Material Cost |
431,716 | 616,072 | 400,467 | |||||||||||
Labor Cost |
278,949 | 285,212 | 191,507 | |||||||||||
Depreciation Expense |
153,936 | 93,365 | 89,459 | |||||||||||
Others |
133,748 | 122,619 | 92,905 | |||||||||||
Total R&D Expense |
998,349 | 1,117,268 | 774,338 | |||||||||||
Accounting Treatment |
Selling & Administrative Expenses |
190,378 | 264,073 | 168,081 | ||||||||||
Manufacturing Cost |
712,116 | 717,848 | 505,585 | |||||||||||
Development Cost (Intangible Assets) |
95,855 | 135,347 | 100,672 | |||||||||||
R&D Expense / Sales Ratio [Total R&D Expense÷Sales for the period×100] |
5.8 | % | 4.4 | % | 3.8 | % |
B. | R&D achievements |
[Achievements in 2009]
1) | Developments of 15.6-inch, 18.5-inch HD monitors for emerging market |
| Achieving cost reduction by focusing on basic functions and by applying GIP and DRD |
2) | Development of 22-inch WSXGA+ monitor applying White LED backlight |
| Development of our first environmentally friendly slim model (14.5mm in thickness) |
| Reduces power consumption by 47% compared to conventional CCFL model by applying White LED backlight |
3) | Development of 24-inch WUXGA+ monitor applying GIP |
| Development of the worlds first monitor applying IPS GIP technology |
| Increased cost competitiveness by applying 960ch source driver integrated circuits chip, which reduces the number of integrated circuits: 8ea g 6ea |
4) | Development of 55/47/42-inch FHD LED models |
| Development of Direct thicker LED model MP |
| Realization of TM240Hz |
5) | 240Hz driving technology development |
| Development of the worlds first 1 Gate 1 Drain 240Hz driving technology |
6) | Development of low voltage liquid crystal development |
| Improving contrast ratio by 2.7% |
| Decreases voltage used in liquid crystals reducing circuit heat; decreases voltage by 6.9% |
7) | Development of Ez (Easy) Gamma technology |
| Minimize Gamma difference by using new measuring algorithm: 2.2±0.6 g 2.2±0.25 |
8) | Development of 22-inch White+ technology |
| Increases transmissivity by 66% by using White+ Quad type pixel structure |
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9) | Development of 55FHD direct slim LED model |
| Development of the worlds first direct-mounted 16.3mm depth slim LCM |
| Realization of 240 block local dimming and Trumotion 240Hz |
10) | Development of 42HD GIP +TRD technology |
| The worlds first application of the 42HD GIP + TRD structure |
| Removal of gate drive integrated circuits: 3ea g 0ea |
| Reduction in source drive integrated circuits: 6ea g 2ea |
11) | Development of TV3 CR5 Color PR |
| Realization of 100% BT709 reiteration rate by applying RGB Color Locus |
| Achieving a 5% increase in CR by decreasing size of Color PR pigment |
12) | Development of the worlds first slim 27W FHD TN monitors |
| Reduces thickness by applying edge-mounted backlight: 37.2t g 21.6t |
| Reduces power consumption by 60% compared to conventional models by applying 4Lamp |
| Realization of MPRT 8ms by applying BDI technology |
13) | Development of the worlds first 25W FHD TN new size monitors |
| Development of new aspect ratio model: 16:9 wide-format |
| Reduction in the number of driver integrated circuits by applying 960ch Source Driver: 8ea g 6ea |
| Removal of gate driver integrated circuits by applying GIP technology |
14) | Development of 16:9 wide-format power consumption saving monitors (200W HD+, 215W FHD, 230W FHD) |
| Reduces power consumption by 40% compared to conventional models by applying 2Lamp |
| Slim design which reduces thickness: 17.0t g 14.5t |
| To meet Energy Star 5.0 standards |
15) | Development of the worlds first 22-inch WSXGA+ DRD (Double Rate Driving) monitors |
| A 50% reduction in source driver integrated circuits by applying Double Rate Driving technology: 8ea g 4ea |
| Removal of gate driver integrated circuits by applying GIP technology |
| Application of optimum thin-film transistor structure for Double Rate Driving monitors |
16) | Development of the worlds first 23W e-IPS monitors |
| Slim design: Reduces thickness by applying edge-mounted backlight: 35.7t g 17t |
| Reduces power consumption by 50% compared to conventional model by applying 4Lamp |
| Realization of high aperture ratio by applying UH-IPS technology |
| Reduction in the number of integrated circuits by applying 960ch source driver: 8ea g 6ea |
| Removal of gate driver integrated circuits by applying GIP technology |
| To meet Energy Star 5.0 standards |
17) | Development of high efficiency backlight technology |
| Removal of DBDEF-D Sheet by increasing backlight luminance level by more than 30% g development of high efficiency lamp and improvement of optics sheet optical efficiency |
18
18) | Development of GIP and high aperture ratio technology for QHD IPS model |
| Stable GIP output in QHD IPS models |
| Maximizing transmissivity by applying UH-IPS technology and asymmetric pixel design |
19) | Development of three-dimensional display technology using the shutter glasses method. |
| Realization of stable rate of 172Hz |
| Realization of 4port low voltage differential signaling frequencies at a rate of 400MHz |
| Realization of ODC (Over Driver Circuit) tuning of GTG 3.5ms which is optimum for three-dimensional display |
20) | Development of 17.1-inch wide-format slim (flat type) panel applying COG (Chip On Panel) chip, our largest slim (flat type) panel |
| Development of our largest size slim (flat type) model (previously, our largest model was the 15.4-inch wide-format) |
| Reduction in thickness: 6.5mm g 4.3mm |
21) | Development of new high resolution 101W model (1024x600, 1366x768) |
| Achieving higher resolution: 1024x576 g 1024x600, 1366x768 |
22) | Development of worlds first 17.3-inch HD+ LED panel for notebook computers |
| New size and resolution for 16:9 wide-format |
| Existing model: 17.1-inch WXGA+ 1400x900 / New model: 17.3-inch HD+ 1600x900 |
23) | Development of 13.3-inch HD LED panel for notebook computers |
| New size and resolution for 16:9 wide-format |
24) | Development of worlds first 14.0-inch HD+ LED panel for notebook computers |
| New size and HD+ resolution (1600x900) for 16:9 wide-format |
25) | Development of worlds first 15.6-inch HD+ LED panel for notebook computers |
| First HD+ resolution (1600x900) for 16:9 wide-format |
26) | Development of worlds first 15.6-inch FHD LED panel for notebook computers |
| First FHD resolution (1920x1080) for 16:9 wide-format |
27) | Development of the first Green PC models (13.3-inch, 14.0-inch, 15.6-inch) |
| First models applying Green product concept (halogen free, low power consumption) |
28) | Development of DRD (Double Rate Driving) technology applying COG (Chip on Glass) |
| Development of the first COG that applies DRD technology (a 50% reduction in the number of COG drive integrated circuits) |
29) | Development of 10.1-inch SD (1024 x 600) model for netbooks |
| Improved resolution: 1024 x 576g1024 x 600 |
| Reduction in cost by applying COG instead of COF |
30) | Development of 10.1-inch HD (1366 x 768) model for netbooks |
| Highest resolution among 10.1-inch models |
19
| Reduction in cost by applying GIP technology |
31) | Development of 17.1-inch WUXGA flat type model |
| Development of largest flat type model (previously, largest model was 15.4-inch) |
| The thinnest among 17.1-inch models |
| Reduction in thickness: 6.5t g 4.3t |
32) | Developments of 11.6-inch HD monitor for netbooks |
| Development of largest/ highest resolution monitor for netbooks |
| Reduction in cost by applying GIP technology |
33) | Development of low-cost 26-inch and 32-inch HD model for televisions |
| Worlds first monitor without a cover shield |
| Application of sheet type support side |
| Reduction in cost by applying low-cost single bottom covers for mold frames |
34) | Development of large-sized (42-inch/47-inch) edge type LED LCD model for televisions |
| Development of our first model for televisions applying edge type LED backlight (mass production commenced in September 2009) |
| Slim depth (11.9mm in thickness) & narrow bezel (18mm in thickness) |
35) | Development of worlds first S/D-IC + Tcon merging technology applicable to television monitors |
| Minimizing size of printed circuit board by applying 1380ch S/D-IC + ASIC technology and removing ASIC chip |
| A 49% cost reduction in manufacturing circuits |
36) | Achieving a full product line-up for netbook monitors |
| A full product line-up that covers the full spectrum of netbook monitor sizes from 8.9-inch to 11.6-inch models |
37) | Development of our first flat type monitor for netbooks |
| Development of 11.6-inch flat type HD monitor |
38) | Development of new LED-applied model utilizing vertical LED array technology |
| Development of 15.6-inch HD model applying vertical |
LED array technology (technology applied in existing models: horizontal LED array)
| Reduction in power consumption and raw material costs |
39) | Development of worlds first 21.5W FHD IPS monitor applying white LED backlight technology |
| Application of environmentally friendly components including white LED backlight and halogen free parts |
| Achievement of high luminance (more than 330nit) by applying high efficiency white LED backlight |
| A 100% sRGB coverage |
40) | Development of worlds first 27W QHD IPS monitor applying white LED backlight technology |
| Application of environmentally friendly components including white LED backlight and halogen free parts |
20
| Achievement of high luminance (more than 380nit) by applying high efficiency white LED backlight |
| A 100% sRGB coverage |
| Realization of high resolution (2560x1440) |
| Removal of gate driver integrated circuits by applying GIP technology |
41) | Development of worlds first 19-inch WXGA monitor applying DRD (Double Rate Driver) |
| A 50% reduction in the number of source driver integrated circuits by applying DRD (Double Rate Driving) technology |
| Removal of gate driver integrated circuits by applying GIP technology |
| Optimization of TFT design structure for DRD (Double Rate Driver) technology |
42) | Development of worlds first 22W e-IPS monitor applying GIP technology |
| Achievement of high aperture ratio by applying UH-IPS technology |
| Reduction in the number of source driver integrated circuits by applying 960 channel chip (8eag6ea) |
| Removal of gate driver integrated circuits by applying GIP technology |
43) | Development of worlds first QHD new high resolution monitor (27W QHD) |
| Achievement of high resolution (2560 x 1440) |
| Maximization of aperture ratio applying UH-IPS technology and elimination of gate driver integrated circuits by applying GIP technology |
| Achievement of high luminance and sRGB coverage of 100% applying high efficiency white LED |
44) | Development of worlds first monitor applying GIP, DRD (Double Rate Driver) and I-VCOM monitor (185W HD) |
| 50% reduction in the number of source driver integrated circuits by applying DRD (Double Rate Driving) technology |
| Elimination of gate driver integrated circuits by applying GIP technology |
| Elimination of DBEF Optical sheet by applying I-VCOM technology and optical efficiency improvement in backlight |
45) | Development of shutter glasses type three-dimensional monitor with full high definition |
| 172Hz operation frame rate |
| Highest data interface speed of over 400MHz in 4port LVDS interface and achievement of GTG 3.5ms by optimal tuning of ODC (Over Driving Circuit) |
46) | One layer vertical LED monitor development and reinforcement of monitor product line up (200W HD+, 215W FHD, 230W FHD) |
| Minimization of the number of LED PKG applying vertical array structure |
| Elimination of DBEF Sheet applying two-in-one LED PKG |
| Slim design: optimization of mechanical structure |
47) | Development of worlds first notebook monitor applying 2ea Sheet Backlight |
| Achieving cost competitiveness by switching from conventional 3~4ea sheet to 2ea complex sheet backlight (with the Diffuser Sheet eliminated) |
21
[Achievements in 2010]
48) | Development of 9.7-inch AH-IPS model for Apples i-Pad. |
| Development of the worlds first IPS Tablet |
| Achieving the following viewing angles by applying AH-IPS: top (80°) / bottom (80°) / left (80°) / right (80°) |
49) | Development of second Green PC products (13.3-inch, 14.0-inch and 15.6-inch in high-definition) |
| Thin and light; low electricity consumption thereby increasing battery life |
| Development of Company-led flat product market |
50) | Development of worlds first TruMotion 480Hz product (47-inch and 55-inch in full high-definition) |
| Worlds first application of 240hz driving technology and scanning technology to achieve TruMotion 480Hz. |
| 50% reduction in source driver integrated circuits (from 16ea to 8ea) by applying 1 gate 1 drain technology |
51) | Worlds first full high-definition 47-inch three-dimensional display panels using Glass Patterned Retarder (GPR) technology |
| Achieving full high-definition for three-dimensional display panels using GPR technology |
52) | Development of our first large-sized display panels viewable in three-dimension using shutter glasses (42-inch, 47-inch, 55-inch in full high-definition) |
| Achieving high aperture ratio by applying S-IPS V technology |
| Removal of gate driver integrated circuits by applying GIP technology |
| Reduction in the number of integrated circuits (from 8ea to 6ea) by applying 960Ch source driver integrated circuits |
53) | Worlds first LCD product which uses the LCD monitors bottom cover as the back cover of a television set (32-inch, 37-inch and 42-inch in full high-definition) |
| Removal of the television set back cover by replacing it with the LCD monitors bottom cover. Co-designed with a third party |
54) | Development of 42-inch and 47-inch full high-definition display panels for television to be sold in emerging markets |
| Focusing on basic functions and removing functions that are costly |
| Achieving cost reduction by applying GIP technology |
55) | Development of intra interface technology for large-sized, high resolution, high frequency display panels |
| Improved data transmission rate (from 660Mbps to 1.6Gbps) |
| Developing slim PCBs by decreasing the number of transmission lines |
56) | Development of our first 21.5-inch and 26-inch full high-definition Edge LED products |
| Application of 21.5-inch, 26-inch full high-definition TV LED BL and mid-sized full high-definition model Slim TCON (176Pin g 88Pin) |
22
57) | Development of our first 32 high-definition Edge LED product |
| Application of 32-inch high-definition TV Edge LED BL |
58) | Development of our first 37-inch full high-definition M240Hz product |
| Development of 37-inch full high-definition 240Hz panel. Development and mass production of MEMC 240Hz with TCON model. |
59) | Development of 240Hz panel for LG Electronics Borderless TV |
| Development of Narrow Bezel 240Hz panel (Bezel 14mm g 7mm) for LG Electronics Borderless TV |
60) | Development of the worlds first slim 23W full high-definition monitor in IPS mode |
| Slim design by applying slim-type LED backlight (thickness: 14.5t g 11.5t) |
| Cost saving by applying low voltage liquid crystal |
| Removal of gate driver integrated circuits by applying GIP technology |
61) | Development of the worlds first slim 185W high-definition monitor in TN mode |
| Slim design by applying slim-type LED backlight (thickness: 11.5t g 9.7t) |
| 50% reduction in source driver integrated circuits by applying DRD (Double Rate Driving) technology |
| Elimination of optical sheet by applying new TFT structure technology (I-VCOM) |
| Removal of gate driver integrated circuits by applying GIP technology |
62) | Development of 42-inch, 47-inch and 55-inch full high-definition monitors applying low cell gap (3.1 g 2.8um) technology |
| Enhanced 3D performance (3D CrossTalk 10.x% g 5.x%) |
| Worlds first application of this technology in 42-inch, 47 inch and 55-inch full high-definition products |
63) | Development of ultra slim 0.2t glass 12.1-inch notebook computer |
| Realization of ultra slim product by applying 0.2t glass and flat screen backlight structure |
64) | Development of worlds first ultra slim 19SX TN monitor |
| Slim design by applying slim type LED backlight (thickness: 15.5 g 9.9t) |
| 50% reduction (6ea to 3ea) in the number of source driver integrated circuits by applying DRD (Double Rate Driving) technology |
| Elimination of gate driver integrated circuits by applying GIP technology |
65) | Development of 215FHD e-IPS monitor products applying LED PKG |
| Reduction in the number of LED and LED array cost through optimization of LED PKGs beam and size |
| Realization of 2 sheet structure by adopting I-VCOM resulting in increased transmittance and backlight luminance |
| Elimination of gate driver integrated circuits by applying GIP technology |
| Minimization of LCM thickness by applying thin LED array structure (14.5t g 10.2t) |
23
66) | Development and application of LED PKG in 215FHD TN monitor products |
| Reduction in the number of LED and LED array cost through optimization of LED PKGs beam and size |
| Elimination of DBEF sheet by adopting I-VCOM resulting in increased transmittance and backlight luminance |
| Elimination of gate driver integrated circuits by applying GIP technology |
| Minimization of LCM thickness by applying thin LED array structure (14.5t g 10.2t) |
67) | Development of worlds first slim TN monitor (185W HD, 20W HD+, 215W/23W FHD) |
| Developing ultra slim monitor by cooperating with set makers in the design process (SET standard: over 20t g 12.9t) |
| Minimization of LCM thickness by applying thin LED array structure (11.5t g 8.2t) |
| Simplification of circuit by developing T-con + Scaler 1chip |
68) | Development of worlds first ultra slim 215W FHD TN monitor |
| Developing ultra slim monitor by cooperating with set makers in the design process (SET standard: 12.9t g 7.2t) |
| Minimization of LCM thickness by applying thin LED array structure (8.2t g 6t) |
104) Development of the worlds first 3D FPR type 42-inch, 47-inch and 55-inch full high definition panels
| Improved 3D performance (cross talk 1.0% i, 3D luminance 170 nit) |
69) | Development of our first 42-inch, 47-inch and 55-inch full high definition panels with built-in 3D formatters |
| Development of our first products with built-in MEMC and 3D formatters |
70) | Development of the worlds first real 240Hz applying GIP driving technology |
| First to develop real 240Hz applying GIP driving technology |
| Reduced the number of driver integrated circuits by applying 960ch Source Driver: 8ea g 6 ea |
71) | Development of panels for Macbook Air |
| Development and mass production of 116HD, 133 WXGA+ panels |
| Application of Z-inversion technology for low energy consumption |
72) | Introduction of the worlds first high definition shutter glasses type 3D notebook product (17.3 inch full high definition) |
| Development of 172Hz high recharging speed notebook LCD panel |
| Development of Timing Controller (TC) driving technology |
73) | The first all-in-one touch panel notebook from an LCD panel manufacturer (15.6 inch high definition add-on touch notebook) |
| The worlds first large size (15.6-inch) notebook panel to receive Win7 Touch certification (received on July 23, 2010) |
| The worlds first LCD and touch panel integrated add-on touch module developed by an LCD panel manufacturer |
74) | Introduction of the worlds first Micro Film 3D notebook (15.6-inch full high definition) |
| The worlds first 3D FPR type notebook (developed timely to win market share in the 3D market) |
24
75) | Development of the worlds first 240Hz 23W IPS monitor |
| The worlds first to realize 240Hz by application of 120Hz panel driving and scanning technologies |
| Achievement of Motion Picture Response Time (MPRT) of 8ms |
76) | Development of the worlds first add-on infrared camera type 215W IPS monitor |
| Realization of thin LCM (20.5t) by application of the worlds first add-on infrared camera |
| Improved touch capabilities (dead zone free and multi-touch) and the first in the world to receive Win 7 Logo certification |
| Touch location auto correction by applying auto calibration |
77) | Development of 20-inch high definition and 23-inch full high definition e-IPS monitor products applying widescreen LED PKG |
| Reduction in the number of LED and LED array cost through optimization of LED PKGs beam and size |
| Elimination of gate driver integrated circuits by applying GIP technology |
| Cost reduction and lower power consumption (20% reduction for driver integrated circuits) by using low voltage driver integrated circuits |
| Minimization of LCM thickness by applying thin LED array structure (for 20-inch high definition panels: 14.5t g 10.2t) |
78) | Development of 20-inch high definition and 23-inch full high definition TN monitor products applying widescreen LED PKG |
| Reduction in the number of LED and LED array cost through optimization of LED PKGs beam and size |
| Elimination of DBEF sheet by adopting I-VCOM resulting in increased transmittance and backlight luminance (for 20-inch high definition monitors) |
| 50% reduction in the number of source driver integrated circuits by applying DRD technology (for 23-inch full high definition panels) |
| Elimination of gate driver integrated circuits by applying GIP technology |
| Minimization of LCM thickness by applying thin LED array structure (11.5t g 10.2t) |
[Achievements in 2011]
79) | Introduction of glass-free mobile 3D product (4.3-inch WVGA) |
| Development and preparation for mass production of our first glass-free 3D product (utilizing barrier cell) |
80) | Introduction of the worlds first 12.5-inch AH-IPS notebook product |
| Development of the worlds first 12.5-inch notebook utilizing AH-IPS technology |
| Achievement of a maximum circuit logic power of 1.0W |
| Development of a slim and light AH-IPS model (development of a model that utilizes IPS and flat PCB) |
81) | Introduction of an integrated 14.0-inch touch panel notebook product |
| Development of a 14.0-inch touch panel notebook product as part of our plan to develop and expand our integrated touch panel products portfolio |
25
82) | Introduction of our 15.6-inch dream color IPS notebook product |
| Development of a notebook utilizing H-IPS technology |
| Realization of a 100% color reproduction rate by applying RGB LED technology |
| Realization of 1.073G color by applying 10-bit color depth technology |
83) | Development and mass production of 9.7-inch LCD panels for i-Pad 2 |
| Application of AH-IPS and slim LCD technology |
| Decreased thickness by 20% and weight by 7% compared to LCD panel for i-Pad 1 |
84) | Development of the worlds first 3D FPR 23-inch FHD TN monitor product |
| Minimization of flicker / crosstalk by applying FPR technology |
| Minimization of cost increase by applying one layer 3D film |
| Realization of high luminance 3D images (two times the luminance compared to images from monitors utilizing shutter glass technology) |
85) | Introduction of our first 50-inch Cinema TV product |
| Application of 21:9 screen display ratio (2560 x 1080 resolution) |
| Application of 960ch + EPI source driver integrated circuits for optimal high-resolution |
| Application of scanning technology under the Horizontal 2Edge structure |
86) | Development of the worlds first 3D FPR 23-inch IPS FHD monitor product |
| Minimization of flicker / crosstalk by applying FPR technology |
| Minimization of cost increase by applying one layer 3D film |
| Realization of high luminance 3D images (two times the luminance compared to images from monitors utilizing shutter glass technology) |
87) | Development and introduction of the worlds first 15.6-inch HD FPR 3D notebook product |
| Realization of the worlds first 15.6-inch HD FPR 3D product |
| Realization of high luminance 3D images (two times the luminance compared to images from notebooks utilizing shutter glass technology) |
| Minimization of cost increase by applying one layer 3D film |
88) | Development and introduction of the worlds first 17.3-inch Dream Color AH-IPS notebook product |
| Development of the worlds first 17.3-inch notebook computer applying AH-IPS |
| Realization of Dream Color (100% color reproduction rate) by applying RGB LED |
| Realization of 1.073G color by applying Color Depth 10-bit technology |
| Realization of 89 degrees viewing angle (up/down/left/right) by applying IPS technology |
89) | Development and introduction of a 15.6-inch HD product with the worlds lowest (at the time) power consumption from logic circuit (0.5W). |
| Application of DRD Z-inversion, HVDD and low voltage process |
| Application of high intensity LED (2.3cd) and Vcut light guide plate |
| Increase in battery life due to logic circuit power consumption reduction |
26
90) | Development of the worlds smallest (at the time) Narrow Bezel Notebook Model |
| The first in the world to apply 4.5 mm narrow bezel |
| Formation of camera hole by B/M mask patterning |
91) | Development of a new 10.1-inch WX smartbook LCD |
| Development of the our first 10.1-inch WXGA LCD following in the footsteps of our 9.7-inch XGA model |
| Realization of reduced power consumption, high permeability and increased viewing angle by application of IPS technology. |
92) | Development of a 42-inch full high-definition product applying COT technology |
| Simplifying panel production process by applying COT (Color Filter on TFT) technology |
| Luminance increased by 10% |
93) | Development of 42-inch, 47-inch and 55-inch direct slim LCD TV |
| Development of the worlds first direct-mounted 11.0mm depth ultra-slim LCM model |
| Application of 96 block local dimming and M240Hz technology |
94) | Development of a 47-inch super narrow public display panel |
| Development of our first super narrow bezel (seam 6.9mm) product for application in public display panels |
95) | Introduction of the worlds first 15.6-inch full high-definition AH-IPS notebook product |
| Development of the worlds first 15.6-inch full high-definition model applying AH-IPS technology |
| Development of slim & light AH-IPS model (thickness: 3.4mm; weight: 330g) |
| Achieving the following viewing angles by applying IPS technology; 178° from top to bottom; 178° from left to right |
96) | Development of a 15.6-inch full high-definition notebook applying a new backlight arrangement |
| Optimization of light placement by application of New Concept LED Backlight |
| Reduction in the number of LED integrated circuits (78ea g 10ea) by application of mid-power LED |
| Reduced energy consumption pursuant to a reduction in the number of LED integrated circuits (7.4W g 5.9W) |
97) | Development of the worlds first 215/25/27 full high-definition TN and 215 full high-definition IPS 3D monitor |
| Minimization of flicker/crosstalk by application of FPR technology |
| Minimization of cost increase by applying one-layered 3D film |
| Realization of high luminance 3D images (two times the luminance compared to images from monitors utilizing shutter glass technology) |
98) | Development of a 4.5-inch real HD AH-IPS display smartphone product |
| For 4G LTE smartphones (introduced by LG Electronics in September 2011) |
| Application of real HD720 resolution and AH-IPS technology |
27
As of September 30, 2011, we held a total of 16,237 patents, including 7,169 in Korea and 9,068 in other countries.
We are subject to a variety of environmental regulations and we may be subject to fines or restrictions that could cause our operations to be interrupted. Our manufacturing processes generate worksite waste, including water and air pollutants, at various stages in the manufacturing process, and we are subject to a variety of laws and regulations relating to the use, storage, discharge and disposal of such chemical by-products and waste substances. We have installed various types of anti-pollution equipment, consistent with environmental standards, for the treatment of chemical waste and equipment for the recycling of treated waste water at our various facilities. However, we cannot provide assurance that environmental claims will not be brought against us or that the local or national governments will not take steps toward adopting more stringent environmental standards. Any failure on our part to comply with any present or future environmental regulations could result in the assessment of damages or imposition of fines against us, suspension of production or a cessation of operations. In addition, environmental regulations could require us to acquire costly equipment or to incur other significant compliance expenses that may materially and negatively affect our financial condition and results of operations.
We have also voluntarily agreed to reduce emission of greenhouse gases, such as triflouride oxide and perfluoro compounds, or PFCs, including sulfur hexafluoride, or SF6, gases, by installing abatement systems to meet voluntary emissions targets for the TFT-LCD industry for 2010. As part of our voluntary activities to reduce emission of greenhouse gases, we installed triflouride oxide abatement systems at all of our production lines. We also installed an SF6 abatement system in P1 in April 2005, and we, along with LG International Corp., have taken steps to install additional SF6 abatement systems through the use of Clean Development Mechanism, or CDM, projects. On July 10, 2010, after becoming the first TFT-LCD company to receive the UNFCCC CDM Executive Boards approval of our CDM project, we installed an SF6 abatement system in P6. In June 2011, we received 144,222 tons of certified emission reduction credits from the UN for the reduction of greenhouse gas emissions during the period from August 1, 2010 to September 30, 2010 and an additional 214,847 tons of certified emission reduction credits from the UN for the reduction of greenhouse gas emissions during the period from October 1, 2010 to December 31, 2010. We were the first LCD company to receive such certified emission reduction credits pursuant to an SF6 decomposition CDM project. Currently, a third party accreditation agency is also examining the reduction of our greenhouse gas emissions during the period from January 1, 2011 to April 30, 2011 as part of our application for receiving certified emission reduction credits from the UN. In August 2011, we commenced the installation of an SF6 abatement system in P7 through the implementation of CDM projects which is expected to become operational in 2012 and further reduce our greenhouse gas emissions.
Currently, the Korean government is implementing the greenhouse gas emission reduction target system under the Framework Act on Low Carbon, Green Growth and is expected to assign greenhouse gas emission reduction targets to individual companies in 2011. Once such greenhouse gas emission reduction targets have been assigned, certain companies may need to invest in additional equipment and there may be other costs associated with meeting the reduction target, which may have a negative effect on such companies profitability or production activities. In addition, if a company fails to meet its reduction target and does not comply with the governments subsequent enforcement notice relating thereto, it may be subject to fines.
In connection with the greenhouse gas emission reduction target system, we have prepared a statement of our domestic emissions and energy usage and have submitted it to the government-designated accreditation agency. In addition, in order to improve the efficiency and reliability of measuring our greenhouse gas emission reduction activities, we plan to make improvements in our electronic greenhouse gas inventory system.
In addition, as of September 30, 2011, we were party to voluntary agreements, which reflect a coordinated energy conservation initiative between government and industry, with respect to our operation of P1 through P8, the Gumi module production plant and the Paju module production plant. In accordance with such agreements, we have implemented a variety of energy-saving measures in those facilities, including installation of energy saving devices and consulting with energy conservation specialists.
28
Operations at our manufacturing plants are subject to regulation and periodic monitoring by the Korean Ministry of Environment and local environmental protection authorities. We believe that we have adopted adequate anti-pollution measures and have minimized our impact on the environment by improving existing and developing new technologies for the effective maintenance of environmental protection standards consistent with local industry practice. In addition, we have continually monitored, and we believe that we are in compliance in all material respects with, the applicable environmental laws and regulations in Korea. Expenditures related to such compliance may be substantial. Such expenditures are generally included in capital expenditures. As required by Korean law, we employ licensed environmental specialists for each environmental area, including air quality, water quality, toxic materials and radiation. We currently have ISO 14001 certifications with respect to the environmental record for P1 through P8, our OLED production facility in Gumi, Korea, our Gumi module production plant and our Paju module production plant, as well as our module production plants in Nanjing and Guangzhou, China. In addition, with respect to P1 through P8 and our module production plants in Gumi and Paju, we have participated in, and have received certification for, a pilot environment management system called the green management certification system. We have been certified by the Korean Ministry of Environment as a Green Company, with respect to our environmental record for P1 and our module production plant in Gumi since 1997, with respect to our operations at P2 and P3 since 2006, and with respect to our operations at P4, P5 and P6 since 2008.
We also have an internal monitoring system to control the use of hazardous substances in the manufacture of our products as we are committed to compliance with all applicable environmental laws and regulations, including European Union Restriction of Hazardous Substances (RoHS) Directive 2002/95/EC, which took effect in July 2006, and restricts the use of certain hazardous substances in the manufacture of electrical and electronic equipment.
In October 2005, we became the first TFT-LCD company to receive accreditation as an International Accredited Testing Laboratory by the Korea Laboratory Accreditation Scheme, which is operated by the Korean Ministry of Knowledge Economy. In September 2006, we received international accreditation from TUV SUD, EUs German accreditation agency, as a RoHS testing laboratory. Moreover, we participated in reforming IEC 62321 by 2012, a RoHS international testing standard, by including a halogen-free combustion ion chromatography method in our committee draft that we submitted in June 2010.
In addition, we have implemented a green purchasing system that prevents the use of hazardous materials from the purchasing stage. As a result of the green purchasing system, we are in compliance with RoHS and other applicable environmental laws and regulation, and we became the first TFT-LCD company to receive the Hazardous Substance Process Management QC080000 certification, or HSPM, from the International Electrotechnical Commission. HSPM is used to help companies manage their hazardous materials and be in compliance with RoHS.
29
A. | Financial highlights (Based on consolidated K-IFRS) |
(Unit: In millions of Won) | ||||||||||||
Description |
As of September
30, 2011 |
As of December 31, 2010 |
As of December 31, 2009 |
|||||||||
Current assets |
7,412,425 | 8,840,433 | 8,226,142 | |||||||||
Quick assets |
5,043,621 | 6,625,216 | 6,558,362 | |||||||||
Inventories |
2,368,804 | 2,215,217 | 1,667,780 | |||||||||
Non-current assets |
17,361,685 | 15,017,225 | 11,477,335 | |||||||||
Investments in equity accounted investees |
363,684 | 325,532 | 282,450 | |||||||||
Property, plant and equipment, net |
14,939,543 | 12,815,401 | 9,596,497 | |||||||||
Intangible assets |
530,397 | 539,901 | 352,393 | |||||||||
Other non-current assets |
1,528,061 | 1,336,391 | 1,245,995 | |||||||||
|
|
|
|
|
|
|||||||
Total assets |
24,774,110 | 23,857,658 | 19,703,477 | |||||||||
|
|
|
|
|
|
|||||||
Current liabilities |
9,658,670 | 8,881,829 | 6,495,071 | |||||||||
Non-current liabilities |
4,932,628 | 3,914,862 | 3,168,657 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities |
14,591,298 | 12,796,691 | 9,663,728 | |||||||||
|
|
|
|
|
|
|||||||
Share capital |
1,789,079 | 1,789,079 | 1,789,079 | |||||||||
Share premium |
2,251,113 | 2,251,113 | 2,251,113 | |||||||||
Reserves |
38,502 | (35,298 | ) | (51,005 | ) | |||||||
Retained earnings |
6,077,086 | 7,031,163 | 6,050,562 | |||||||||
Non-controlling interest |
27,032 | 24,910 | 0 | |||||||||
|
|
|
|
|
|
|||||||
Total equity |
10,182,812 | 11,060,967 | 10,039,749 | |||||||||
|
|
|
|
|
|
(Unit : In millions of Won, except for per share data) | ||||||||||||
Description |
For the nine months ended September 30, 2011 |
For the nine months ended September 30, 2010 |
For the nine months ended September 30, 2009 (1) |
|||||||||
Revenue |
17,681,311 | 19,028,172 | 14,132,558 | |||||||||
Results from operating activities |
(779,601 | ) | 1,697,470 | 696,985 | ||||||||
Income (Loss) from continuing operation |
(781,641 | ) | 1,427,606 | 615,654 | ||||||||
Profit (Loss) for the period |
(781,641 | ) | 1,427,606 | 615,654 | ||||||||
Basic earnings (losses) per share |
(2,170 | ) | 3,987 | 1,721 | ||||||||
Diluted earnings (losses) per share |
(2,170 | ) | 3,892 | 1,721 |
(1) | Although our financial statements for the year ended December 31, 2009 have been audited by our independent auditors in accordance with K-IFRS, our financial statements for the nine months ended September 30, 2009 have not been reviewed by our independent auditors. |
30
B. | Financial highlights (Based on separate K-IFRS) |
(Unit: In millions of Won) | ||||||||||||
Description |
As of September
30, 2011 |
As of December 31, 2010 |
As of December 31, 2009 |
|||||||||
Current assets |
7,039,583 | 8,499,873 | 7,973,355 | |||||||||
Quick assets |
5,074,135 | 6,739,908 | 6,687,050 | |||||||||
Inventories |
1,965,448 | 1,759,965 | 1,286,305 | |||||||||
Non-current assets |
16,973,183 | 14,658,125 | 11,283,512 | |||||||||
Investments |
1,361,287 | 1,279,831 | 1,075,229 | |||||||||
Property, plant and equipment, net |
13,724,860 | 11,688,061 | 8,730,263 | |||||||||
Intangible assets |
473,613 | 483,260 | 340,885 | |||||||||
Other non-current assets |
1,413,423 | 1,206,973 | 1,137,135 | |||||||||
|
|
|
|
|
|
|||||||
Total assets |
24,012,766 | 23,157,998 | 19,256,867 | |||||||||
|
|
|
|
|
|
|||||||
Current liabilities |
9,257,526 | 8,453,869 | 6,120,663 | |||||||||
Non-current liabilities |
4,891,688 | 3,833,454 | 3,102,006 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities |
14,149,214 | 12,287,323 | 9,222,669 | |||||||||
|
|
|
|
|
|
|||||||
Share capital |
1,789,079 | 1,789,079 | 1,789,079 | |||||||||
Share premium |
2,251,113 | 2,251,113 | 2,251,113 | |||||||||
Reserves |
(2,854 | ) | (7,795 | ) | (17,366 | ) | ||||||
Retained earnings |
5,826,214 | 6,838,278 | 6,011,372 | |||||||||
Non-controlling interest |
0 | 0 | 0 | |||||||||
|
|
|
|
|
|
|||||||
Total equity |
9,863,552 | 10,870,675 | 10,034,198 | |||||||||
|
|
|
|
|
|
(Unit: In millions of Won, except for per share data) | ||||||||||||
Description |
For the nine months ended September 30, 2011 |
For the nine months ended September 30, 2010 |
For the nine months ended September 30, 2009 (1) |
|||||||||
Revenue |
17,022,421 | 18,793,301 | 14,194,396 | |||||||||
Results from operating activities |
(926,805 | ) | 1,453,412 | 728,392 | ||||||||
Income (Loss) from continuing operation |
(834,324 | ) | 1,305,635 | 662,199 | ||||||||
Profit (Loss) for the period |
(834,324 | ) | 1,305,635 | 662,199 | ||||||||
Basic earnings (losses) per share |
(2,332 | ) | 3,649 | 1,851 | ||||||||
Diluted earnings (losses) per share |
(2,332 | ) | 3,558 | 1,851 |
(1) | Although our financial statements for the year ended December 31, 2009 have been audited by our independent auditors in accordance with K-IFRS, our financial statements for the nine months ended September 30, 2009 have not been reviewed by our independent auditors. |
31
C. | Consolidated subsidiaries (as of September 30, 2011) |
Company |
Primary Business | Location | Ownership Ratio |
|||||||||
LG Display America, Inc. |
Sales | U.S.A | 100 | % | ||||||||
LG Display Germany GmbH |
Sales | Germany | 100 | % | ||||||||
LG Display Japan Co., Ltd. |
Sales | Japan | 100 | % | ||||||||
LG Display Taiwan Co., Ltd. |
Sales | Taiwan | 100 | % | ||||||||
LG Display Nanjing Co., Ltd. |
Manufacturing and sales | China | 100 | % | ||||||||
LG Display Shanghai Co., Ltd. |
Sales | China | 100 | % | ||||||||
LG Display Poland Sp. zo.o. |
Manufacturing and sales | Poland | 80 | % | ||||||||
LG Display Guangzhou Co., Ltd. |
Manufacturing and sales | China | 90 | % | ||||||||
LG Display Shenzhen Co., Ltd. |
Sales | China | 100 | % | ||||||||
LG Display Singapore Pte. Ltd. |
Sales | Singapore | 100 | % | ||||||||
L&T Display Technology (Xiamen) Co., Ltd. |
Manufacturing and sales | China | 51 | % | ||||||||
L&T Display Technology (Fujian) Co., Ltd. |
Manufacturing and sales | China | 51 | % | ||||||||
LG Display Yantai Co., Ltd. |
Manufacturing and sales | China | 100 | % | ||||||||
L&I Electronic Technology (Dongguan) Limited |
Manufacturing and sales | China | 51 | % | ||||||||
Image & Materials, Inc. |
Manufacturing and sales | Korea | 100 | % | ||||||||
LUCOM Display Technology (Kunshan) Limited |
Manufacturing and sales | China | 51 | % |
32
D. | Status of equity investment |
| Status of equity investment as of September 30, 2011: |
Company |
Paid-in Capital | Initial Equity Investment Date |
Ownership Ratio |
|||||||||
LG Display America, Inc. |
US$ | 185,000,000 | September 24, 1999 | 100 | % | |||||||
LG Display Germany GmbH |
EUR | 960,000 | November 5, 1999 | 100 | % | |||||||
LG Display Japan Co., Ltd. |
¥ | 95,000,000 | October 12, 1999 | 100 | % | |||||||
LG Display Taiwan Co., Ltd. |
NT$ | 115,500,000 | May 19, 2000 | 100 | % | |||||||
LG Display Nanjing Co., Ltd. |
CNY | 2,552,191,315 | July 15, 2002 | 100 | % | |||||||
LG Display Shanghai Co., Ltd. |
CNY | 4,138,650 | January 16, 2003 | 100 | % | |||||||
LG Display Poland Sp. zo.o. |
PLN | 410,327,700 | September 6, 2005 | 80 | % | |||||||
LG Display Guangzhou Co., Ltd. |
CNY | 895,904,754 | August 7, 2006 | 90 | % | |||||||
LG Display Shenzhen Co., Ltd. |
CNY | 3,775,250 | August 28, 2007 | 100 | % | |||||||
LG Display Singapore Pte. Ltd. |
SGD | 1,400,000 | January 12, 2009 | 100 | % | |||||||
L&T Display Technology (Xiamen) Co., Ltd. |
CNY | 41,785,824 | January 5, 2010 | 51 | % | |||||||
L&T Display Technology (Fujian) Co., Ltd. |
CNY | 59,197,026 | January 5, 2010 | 51 | % | |||||||
LG Display Yantai Co., Ltd. |
CNY | 273,048,000 | April 19, 2010 | 100 | % | |||||||
L&I Electronic Technology (Dongguan) Limited |
CNY | 17,062,560 | October 25, 2010 | 51 | % | |||||||
Image & Materials, Inc. |
(Won) | 40,999,919,576 | November 29, 2010 | 100 | % | |||||||
LUCOM Display Technology (Kunshan) Limited |
CNY | 50,353,677 | December 27, 2010 | 51 | % | |||||||
Suzhou Raken Technology Co., Ltd. |
CNY | 569,455,395 | October 7, 2008 | 51 | % | |||||||
Paju Electric Glass Co., Ltd. |
(Won) | 33,648,000,000 | March 25, 2005 | 40 | % | |||||||
TLI Co., Ltd. |
(Won) | 14,073,806,250 | May 16, 2008 | 12 | % | |||||||
AVACO Co., Ltd. |
(Won) | 6,172,728,120 | June 9, 2008 | 20 | % | |||||||
Guangzhou Vision Display Technology Research and Development Limited |
CNY | 25,000,000 | July 11, 2008 | 50 | % | |||||||
NEW OPTICS, Ltd. |
(Won) | 12,199,600,000 | July 30, 2008 | 42 | % | |||||||
LIG ADP Co., Ltd. |
(Won) | 6,330,000,000 | February 24, 2009 | 13 | % | |||||||
Wooree LED Co., Ltd. |
(Won) | 11,900,000,000 | May 22, 2009 | 30 | % | |||||||
Dynamic Solar Design Co., Ltd. |
(Won) | 6,066,658,000 | June 24, 2009 | 40 | % | |||||||
RPO, Inc. |
US$ | 12,285,022 | November 3, 2009 | 26 | % | |||||||
Global OLED Technology LLC |
US$ | 45,170,000 | December 23, 2009 | 33 | % | |||||||
LB Gemini New Growth Fund No. 16 |
(Won) | 12,444,647,109 | December 7, 2009 | 31 | % | |||||||
Can Yang Investment Ltd. |
US$ | 15,300,000 | January 27, 2010 | 12 | % | |||||||
YAS Co., Ltd. |
(Won) | 10,000,000,000 | September 16, 2010 | 19 | % | |||||||
Eralite Optoelectronics (Jiangsu) Co., Ltd. |
US$ | 4,000,000 | September 28, 2010 | 20 | % | |||||||
Narae Nanotech Corporation |
(Won) | 30,000,000,000 | April 22, 2011 | 23 | % |
A. | Audit service |
(Unit: In millions of Won, hours)
Description |
2011 (Q1~Q3) |
2010 |
2009 | |||
Auditor |
KPMG Samjong | KPMG Samjong | KPMG Samjong | |||
Activity |
Audit by independent auditor | Audit by independent auditor | Audit by independent auditor | |||
Compensation (1) |
850 (285) (2) | 850 (585) (3) | 700 (540) (4) | |||
Time required |
8,934 | 16,646 | 17,569 |
33
(1) | Compensation amount is the contracted amount for the full fiscal year. |
(2) | Compensation amount in ( ) is for Form 20-F filing and SOX 404 audit. |
(3) | Compensation amount in ( ) is for K-IFRS audit, Form 20-F filing and SOX 404 audit. |
(4) | Compensation amount in ( ) is for US-GAAP audit, Form 20-F filing and SOX 404 audit. |
B. | Non-audit service |
Not applicable.
A. | Independence of directors |
| Outside director: Independent |
| Non-outside director: Not independent |
| Each of our outside directors meets the applicable independence standards set forth under the applicable laws and regulations. Each of our outside directors was nominated by the Outside Director Nomination and Corporate Governance Committee, was approved by the board of directors and was appointed at the general meeting of shareholders. None of our outside directors has or had any business transaction or any related party transactions with us. Our outside directors are comprised of three persons, all of whom are also members of our audit committee. As of September 30, 2011, our non-outside directors were comprised of the chief executive officer, the chief financial officer and a non-standing director. |
B. | Members of the board of directors (as of September 30, 2011) |
Name |
Date of birth |
Position |
Business experience |
First Elected | ||||
Young Soo Kwon |
February 6, 1957 | Representative Director, President and Chief Executive Officer |
President and Chief Financial Officer of LG Electronics | January 1, 2007 | ||||
James (Hoyoung) Jeong |
November 2, 1961 | Director and Chief Financial Officer |
Executive Vice President and Chief Financial Officer of LG Electronics | January 1, 2008 | ||||
Yu Sig Kang |
November 3, 1948 | Director | Vice Chairman, Representative Director, LG Corp. | March 11, 2011 | ||||
Tae Sik Ahn |
March 21, 1956 | Outside Director | Dean, College of Business Administration and Graduate School of Business, Seoul National University | March 12, 2010 | ||||
William Y. Kim |
June 6, 1956 | Outside Director | Partner at Ropes & Gray LLP | February 29, 2008 | ||||
Jin Jang |
November 28, 1954 | Outside Director | Chair Professor, Department of Information Display, Kyung Hee University | March 11, 2011 |
34
C. | Committees of the board of directors (as of September 30, 2011) |
Committee |
Composition |
Member | ||
Audit Committee | 3 outside directors | Tae Sik Ahn, Jin Jang, William Y. Kim | ||
Outside Director Nomination and Corporate Governance Committee | 1 non-outside director and 2 outside directors |
James (Hoyoung) Jeong, Jin Jang, William Y. Kim | ||
Remuneration Committee | 1 non-outside director and 2 outside directors |
James (Hoyoung) Jeong, William Y. Kim, Tae Sik Ahn |
15. Information Regarding Shares
A. | Total number of shares |
(1) Total number of shares authorized to be issued (as of September 30, 2011): 500,000,000 shares.
(2) Total shares issued and outstanding (as of September 30, 2011): 357,815,700 shares.
B. | Shareholder list |
(1) Largest shareholder and related parties:
(Unit: share)
Name |
Relationship | As of September 30, 2011 | ||||
LG Electronics |
Largest
Shareholder |
|
135,625,000
(37.9 |
%) | ||
Young Soo Kwon |
Related
Party |
|
23,000
(0.0 |
%) |
(2) Shareholders who are known to us to own 5% or more of our shares as of September 30, 2011:
Beneficial Owner |
Number of Shares of Common Stock | Percentage | ||||||
LG Electronics |
135,625,000 | 37.9 | % | |||||
National Pension Service |
21,645,586 | 6.1 | % |
35
A. | Directors |
(1) Remuneration for directors in 2011 (H1)
(Unit: In millions of Won)
Classification |
No. of directors (1) |
Amount paid (2) |
Per capita average remuneration paid (6) |
Remarks | ||||||||||||
Non-outside directors |
3 | 1,246 | (3) | 415 | | |||||||||||
Outside directors who are not audit committee members |
1 | 39 | (4) | 33 | | |||||||||||
Outside directors who are audit committee members |
3 | 90 | (5) | 28 | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
7 | 1,374 | | | ||||||||||||
|
|
|
|
|
|
|
|
- Period: January 1, 2011 ~ June 30, 2011
(1) | No. of directors as at June 30, 2011. |
(2) | Amount paid is calculated on the basis of actually paid amount except accrued salary and severance benefits. |
(3) | Among the non-outside directors, Yu Sig Kang does not receive any remuneration. |
(4) | Includes remuneration for Dongwoo Chun whose term expired on March 11, 2011. |
(5) | Includes remuneration for Yoshihide Nakamura whose term expired on March 11, 2011. |
(6) | Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the six months ended June 30, 2011. |
(2) Remuneration for directors in 2011 (Q3)
(Unit: In millions of Won)
Classification |
No. of directors (1) |
Amount paid (2) |
Per capita average remuneration paid (5) |
Remarks | ||||||||||||
Non-outside directors |
3 | 324 | (3) | 108 | | |||||||||||
Outside directors who are not audit committee members |
0 | 0 | | | ||||||||||||
Outside directors who are audit committee members |
3 | 42 | (4) | 14 | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
366 | | | |||||||||||||
|
|
|
|
|
|
|
|
36
- Period: June 30, 2011 ~ September 30, 2011
(1) | No. of directors as at September 30, 2011. |
(2) | Amount paid is calculated on the basis of actually paid amount except accrued salary and severance benefits. |
(3) | Among the non-outside directors, Yu Sig Kang does not receive any remuneration. |
(4) | Includes remuneration for Jang Jin, who replaced Sunny Yi, as an outside director who is an audit committee member. |
(5) | Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the three months ended September 30, 2011. |
(2) Stock option
The following table sets forth certain information regarding our stock options as of September 30, 2011.
(Unit: Won, Stock)
Executive Officers (including Former Officers) |
Grant Date |
Exercise Period |
Exercise Price |
Number of Granted Options |
Number of Exercised Options |
Number of Cancelled Options (1) |
Number of Exercisable Options (1) |
|||||||||||||||||||||||||
From | To | |||||||||||||||||||||||||||||||
Ron H.Wirahadiraksa |
April 7, 2005 | April 8, 2008 | April 7, 2012 | (Won) | 44,050 | 100,000 | 0 | 50,000 | 50,000 | |||||||||||||||||||||||
Duke M. Koo |
April 7, 2005 | April 8, 2008 | April 7, 2012 | (Won) | 44,050 | 40,000 | 0 | 20,000 | 20,000 | |||||||||||||||||||||||
Sang Deog Yeo |
April 7, 2005 | April 8, 2008 | April 7, 2012 | (Won) | 44,050 | 40,000 | 0 | 20,000 | 20,000 | |||||||||||||||||||||||
Jae Geol Ju |
April 7, 2005 | April 8, 2008 | April 7, 2012 | (Won) | 44,050 | 40,000 | 0 | 20,000 | 20,000 | |||||||||||||||||||||||
Total |
220,000 | 110,000 | 110,000 |
(1) | When the increase rate of our share price is the same or less than the increase rate of the Korea Composite Stock Price Index (KOSPI) over the three-year period following the grant date, only 50% of the initially granted shares are exercisable. Since the increase rate of our share price was lower than the increase rate of KOSPI during the period from April 7, 2005 to April 7, 2008, only 50% of the 220,000 initially granted shares are exercisable. |
B. | Employees |
As of September 30, 2011, we had 34,642 employees (excluding our executive officers). The total amount of salary paid to our employees for the nine months ended September 30, 2011 based on cash payment (excluding welfare benefits and retirement expenses) was (Won)1,214,680 million. The following table provides details of our employees as of September 30, 2011:
(Unit: person, in millions of Won, year)
Number of Employees |
Total Salary in 2011 (Q1~Q3) (1) (2) (3) | Per Capita Salary (4) |
Average Service Year |
|||||||||||||
Male |
24,130 | 923,845 | 40 | 4.8 | ||||||||||||
Female |
10,512 | 290,835 | 29 | 3.2 | ||||||||||||
Total |
34,642 | 1,214,680 | 37 | 4.3 |
(1) | Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees for the nine months ended September 30, 2011 was (Won)230,841 million and the per capita welfare benefit provided was (Won)7.0 million. |
37
(2) | Based on cash payment made in Korea. |
(3) | Includes incentive payments to employees who have transferred from our affiliated companies. |
(4) | Per Capita Salary is calculated using the average number of employees (total: 33,043, male: 23,075, female: 9,968) for the nine months ended September 30, 2011. |
38
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Financial Statements
(Unaudited)
September 30, 2011 and 2010
(With Independent Auditors Review Report Thereon)
Table of Contents
Page | ||||
1 | ||||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
Notes to the Condensed Consolidated interim Financial Statements |
8 |
Independent Auditors Review Report
Based on a report originally issued in Korean
To the Board of Directors and Shareholders
LG Display Co., Ltd.:
Introduction
We have reviewed the accompanying condensed consolidated statement of financial position of LG Display Co., Ltd. and subsidiaries (the Group) as of September 30, 2011, and the related condensed consolidated statements of comprehensive income for each of the three-month and nine-month periods ended September 30, 2011 and 2010, changes in equity and cash flows for the nine-month periods ended September 30, 2011 and 2010, and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility for the Condensed Consolidated Interim Financial Statements
Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our reviews.
We conducted our reviews in accordance with the Review Standards for Quarterly/Semiannual Financial Statements of the Republic of Korea. A review consists principally of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of Korea and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our reviews, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements referred to above are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting.
Emphasis of Matter
As discussed in note 17 to the consolidated financial statements, on October 28, 2011, the Korea Fair Trade Commission indicated it would impose a fine on LG Display Co., Ltd. and other TFT-LCD manufacturers. In addition, LG Display Co., Ltd., along with its subsidiaries, is under investigations by antitrust authorities in other countries with respect to possible anti-competitive activities in the LCD industry and has been named as defendants in a number of federal class actions in the United States and Canada and related individual lawsuits in connection with the alleged antitrust violations concerning the sale of LCD panels. The Group estimated and recognized losses related to these legal proceedings. However, actual losses are subject to change in the future based on new developments in each matter, or changes in circumstances, which could be materially different from those estimated and recognized by the Group.
1
Other Considerations
We audited the consolidated statement of financial position as of December 31, 2010 and the consolidated statements of comprehensive income, changes in equity and cash flows for the year ended December 31, 2010, not accompanying this review report, in accordance with auditing standards generally accepted in the Republic of Korea, and our report thereon, dated February 24, 2011, expressed an unqualified opinion. The accompanying consolidated statement of financial position of the Group as of December 31, 2010, presented for comparative purposes, is not different from that audited by us in all material respects.
/s/ KPMG Samjong Accounting Corp.
Seoul, Korea
November 7, 2011
This report is effective as of November 7, 2011, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.
2
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Position
(Unaudited)
As of September 30, 2011 and December 31, 2010
(In millions of won) | Note |
2011 | 2010 | |||||||
Assets |
||||||||||
Cash and cash equivalents |
9 | (Won) | 1,715,617 | 1,631,009 | ||||||
Deposits in banks |
9 | 316,000 | 1,503,000 | |||||||
Trade accounts and notes receivable, net |
9, 16, 19 | 2,431,893 | 3,000,661 | |||||||
Other accounts receivable, net |
9 | 223,970 | 244,662 | |||||||
Other current financial assets |
9 | 20,275 | 35,370 | |||||||
Inventories |
5 | 2,368,804 | 2,215,217 | |||||||
Other current assets |
335,866 | 210,514 | ||||||||
|
|
|
|
|||||||
Total current assets |
7,412,425 | 8,840,433 | ||||||||
Investments in equity accounted investees |
6 | 363,684 | 325,532 | |||||||
Other non-current financial assets |
9 | 105,854 | 83,246 | |||||||
Deferred tax assets |
22 | 1,263,698 | 1,074,853 | |||||||
Property, plant and equipment, net |
7, 20 | 14,939,543 | 12,815,401 | |||||||
Intangible assets, net |
8, 20 | 530,397 | 539,901 | |||||||
Other non-current assets |
158,509 | 178,292 | ||||||||
|
|
|
|
|||||||
Total non-current assets |
17,361,685 | 15,017,225 | ||||||||
|
|
|
|
|||||||
Total assets |
(Won) | 24,774,110 | 23,857,658 | |||||||
|
|
|
|
|||||||
Liabilities |
||||||||||
Trade accounts and notes payable |
9, 19 | (Won) | 2,887,659 | 2,961,995 | ||||||
Current financial liabilities |
9, 10 | 1,152,019 | 2,100,979 | |||||||
Other accounts payable |
9 | 4,352,122 | 2,592,527 | |||||||
Accrued expenses |
273,242 | 373,717 | ||||||||
Income taxes payable |
37,650 | 153,890 | ||||||||
Provisions |
293,453 | 634,815 | ||||||||
Advances received |
635,022 | 44,880 | ||||||||
Other current liabilities |
27,503 | 19,026 | ||||||||
|
|
|
|
|||||||
Total current liabilities |
9,658,670 | 8,881,829 | ||||||||
Non-current financial liabilities |
9, 10 | 3,482,286 | 2,542,900 | |||||||
Non-current provisions |
6,849 | 8,773 | ||||||||
Deferred tax liabilities |
22 | | 6,640 | |||||||
Employee benefits |
14 | 154,546 | 78,715 | |||||||
Long-term advances received |
16 | 684,110 | 945,287 | |||||||
Other non-current liabilities |
604,837 | 332,547 | ||||||||
|
|
|
|
|||||||
Total non-current liabilities |
4,932,628 | 3,914,862 | ||||||||
|
|
|
|
|||||||
Total liabilities |
14,591,298 | 12,796,691 | ||||||||
|
|
|
|
|||||||
Equity |
||||||||||
Share capital |
18 | 1,789,079 | 1,789,079 | |||||||
Share premium |
2,251,113 | 2,251,113 | ||||||||
Reserves |
18 | 38,502 | (35,298 | ) | ||||||
Retained earnings |
6,077,086 | 7,031,163 | ||||||||
|
|
|
|
|||||||
Total equity attributable to equity holders of the Company |
10,155,780 | 11,036,057 | ||||||||
|
|
|
|
|||||||
Non-controlling interest |
27,032 | 24,910 | ||||||||
|
|
|
|
|||||||
Total equity |
10,182,812 | 11,060,967 | ||||||||
|
|
|
|
|||||||
Total liabilities and equity |
(Won) | 24,774,110 | 23,857,658 | |||||||
|
|
|
|
See accompanying notes to the condensed consolidated interim financial statements.
3
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(Unaudited)
For the three-month and nine-month periods ended September 30, 2011 and 2010
(In millions of Won, except earnings per share) | Note |
For the three-month periods ended September 30 |
For the nine-month periods ended September 30 |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||
Revenue |
19, 20 | (Won) | 6,268,733 | 6,697,629 | (Won) | 17,681,311 | 19,028,172 | |||||||||||
Cost of sales |
5, 11, 19 | (6,088,298 | ) | (5,926,362 | ) | (16,816,817 | ) | (15,691,287 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Gross profit |
180,435 | 771,267 | 864,494 | 3,336,885 | ||||||||||||||
Other income |
13 | 420,315 | 368,381 | 1,000,197 | 1,066,837 | |||||||||||||
Selling expenses |
11, 12 | (156,728 | ) | (245,151 | ) | (531,207 | ) | (650,953 | ) | |||||||||
Administrative expenses |
11, 12 | (129,626 | ) | (135,523 | ) | (415,607 | ) | (383,002 | ) | |||||||||
Research and development expenses |
11 | (170,541 | ) | (166,790 | ) | (527,260 | ) | (471,176 | ) | |||||||||
Other expenses |
11, 13 | (635,908 | ) | (410,124 | ) | (1,170,218 | ) | (1,201,121 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Results from operating activities |
(492,053 | ) | 182,060 | (779,601 | ) | 1,697,470 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Finance income |
15 | 57,788 | 150,160 | 167,509 | 206,254 | |||||||||||||
Finance costs |
15 | (263,973 | ) | (94,925 | ) | (330,896 | ) | (219,101 | ) | |||||||||
Other non-operating loss, net |
(1,956 | ) | (2,057 | ) | (8,187 | ) | (5,356 | ) | ||||||||||
Equity income(loss) on investments, net |
5,143 | 8,544 | 3,414 | 10,506 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) before income tax |
(695,051 | ) | 243,782 | (947,761 | ) | 1,689,773 | ||||||||||||
Income tax expense (benefit) |
22 | (7,533 | ) | 19,589 | (166,120 | ) | 262,167 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) for the period |
(687,518 | ) | 224,193 | (781,641 | ) | 1,427,606 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income |
||||||||||||||||||
Net change in fair value of available-for-sale financial assets |
3,365 | 4,849 | 5,056 | 11,495 | ||||||||||||||
Defined benefit plan actuarial gain or loss |
14 | 425 | (26,456 | ) | 1,497 | (26,450 | ) | |||||||||||
Cumulative translation differences |
91,991 | (1,584 | ) | 72,257 | (3,409 | ) | ||||||||||||
Gain (loss) on sales of own shares of associate accounted for using the equity method |
(118 | ) | (116 | ) | (346 | ) | 923 | |||||||||||
Income tax on other comprehensive income (loss) |
(929 | ) | 4,522 | (1,779 | ) | 1,724 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income (loss) for the period, net of income tax |
94,734 | (18,785 | ) | 76,685 | (15,717 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) for the period |
(Won) | (592,784 | ) | 205,408 | (Won) | (704,956 | ) | 1,411,889 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) attributable to: |
||||||||||||||||||
Owners of the Company |
(686,079 | ) | 221,879 | (776,337 | ) | 1,426,462 | ||||||||||||
Non-controlling interest |
(1,439 | ) | 2,314 | (5,304 | ) | 1,144 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Profit (loss) for the period |
(Won) | (687,518 | ) | 224,193 | (Won) | (781,641 | ) | 1,427,606 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) attributable to: |
||||||||||||||||||
Owners of the Company |
(593,954 | ) | 203,790 | (701,369 | ) | 1,410,830 | ||||||||||||
Non-controlling interest |
1,170 | 1,618 | (3,587 | ) | 1,059 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive income (loss) for the period |
(Won) | (592,784 | ) | 205,408 | (Won) | (704,956 | ) | 1,411,889 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Earning (loss) per share |
||||||||||||||||||
Basic earnings (loss) per share |
23 | (Won) | (1,917 | ) | 620 | (Won) | (2,170 | ) | 3,987 | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Diluted earnings (loss) per share |
23 | (Won) | (1,917 | ) | 608 | (Won) | (2,170 | ) | 3,892 | |||||||||
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated interim financial statements.
4
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited)
For the nine-month periods ended September 30, 2011 and 2010
(In millions of won) | Share capital |
Share premium |
Gain on sale of own shares of associates |
Fair value reserve |
Translation reserve |
Retained earnings |
Minority interest |
Total equity |
||||||||||||||||||||||||
Balances at January 1, 2010 |
(Won) | 1,789,079 | 2,251,113 | | (14,636 | ) | (36,369 | ) | 6,050,562 | | 10,039,749 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total comprehensive income (loss) for the period |
||||||||||||||||||||||||||||||||
Profit for the period |
| | | | | 1,426,462 | 1,144 | 1,427,606 | ||||||||||||||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||||||||||
Net change in fair value of available-for-sale financial assets |
| | | 8,535 | | | | 8,535 | ||||||||||||||||||||||||
Defined benefit plan actuarial gain |
| | | | | (20,960 | ) | | (20,960 | ) | ||||||||||||||||||||||
Cumulative translation differences |
| | | | (4,130 | ) | | (85 | ) | (4,215 | ) | |||||||||||||||||||||
Gain on sales of own shares of associates accounted for using the equity method |
| | 923 | | | | | 923 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total other comprehensive income (loss) |
| | 923 | 8,535 | (4,130 | ) | (20,960 | ) | (85 | ) | (15,717 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total comprehensive income (loss) for the period |
(Won) | | | 923 | 8,535 | (4,130 | ) | 1,405,502 | 1,059 | 1,411,889 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Transaction with owners, recorded directly in equity |
||||||||||||||||||||||||||||||||
Dividends to equity holders |
| | | | | (178,908 | ) | | (178,908 | ) | ||||||||||||||||||||||
Changes in ownership interests in subsidiaries |
| | | | | | 16,592 | 16,592 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balances at September 30, 2010 |
(Won) | 1,789,079 | 2,251,113 | 923 | (6,101 | ) | (40,499 | ) | 7,277,156 | 17,651 | 11,289,322 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balances at January 1, 2011 |
(Won) | 1,789,079 | 2,251,113 | 810 | (5,560 | ) | (30,548 | ) | 7,031,163 | 24,910 | 11,060,967 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total comprehensive income (loss) for the period |
||||||||||||||||||||||||||||||||
Loss for the period |
| | | | | (776,337 | ) | (5,304 | ) | (781,641 | ) | |||||||||||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||||||||||
Net change in fair value of available-for-sale financial assets |
| | | 3,606 | | | | 3,606 | ||||||||||||||||||||||||
Defined benefit plan actuarial gain |
| | | | | 1,168 | | 1,168 | ||||||||||||||||||||||||
Cumulative translation differences |
| | | | 70,540 | | 1,717 | 72,257 | ||||||||||||||||||||||||
Loss on sales of own shares of associates accounted for using the equity method |
| | (346 | ) | | | | | (346 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total other comprehensive income (loss) |
| | (346 | ) | 3,606 | 70,540 | 1,168 | 1,717 | 76,685 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total comprehensive income (loss) for the period |
(Won) | | | (346 | ) | 3,606 | 70,540 | (775,169 | ) | (3,587 | ) | (704,956 | ) | |||||||||||||||||||
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Transaction with owners, recorded directly in equity |
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Dividends to equity holders |
| | | | | (178,908 | ) | | (178,908 | ) | ||||||||||||||||||||||
Changes in ownership interests in subsidiaries |
| | | | | | 5,709 | 5,709 | ||||||||||||||||||||||||
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Balances at September 30, 2011 |
(Won) | 1,789,079 | 2,251,113 | 464 | (1,954 | ) | 39,992 | 6,077,086 | 27,032 | 10,182,812 | ||||||||||||||||||||||
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See accompanying notes to the condensed consolidated interim financial statements.
5
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
For the nine-month periods ended September 30, 2011 and 2010
(In millions of won) | 2011 | 2010 | ||||||
Cash flows from operating activities: |
||||||||
Profit (loss) for the period |
(Won) | (781,641 | ) | 1,427,606 | ||||
Adjustments for: |
||||||||
Income tax expense (benefit) |
(166,120 | ) | 262,167 | |||||
Depreciation |
2,484,028 | 2,023,120 | ||||||
Amortization of intangible assets |
173,271 | 119,737 | ||||||
Gain on foreign currency translation |
(166,063 | ) | (136,802 | ) | ||||
Loss on foreign currency translation |
289,381 | 204,450 | ||||||
Gain on disposal of property, plant and equipment |
(597 | ) | (1,382 | ) | ||||
Loss on disposal of property, plant and equipment |
472 | 316 | ||||||
Finance income |
(49,176 | ) | (152,862 | ) | ||||
Finance costs |
245,481 | 123,419 | ||||||
Equity in loss (gain) of equity method accounted investees, net |
(3,414 | ) | (10,506 | ) | ||||
Other income |
(18,962 | ) | (30,065 | ) | ||||
Other expenses |
236,405 | 345,355 | ||||||
Other non-operating loss |
7 | | ||||||
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|
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2,243,072 | 4,174,553 | |||||||
Change in trade accounts and notes receivable |
730,753 | (644,113 | ) | |||||
Change in other accounts receivable |
(104,751 | ) | (29,612 | ) | ||||
Change in other current assets |
(51,917 | ) | (98,228 | ) | ||||
Change in inventories |
(153,587 | ) | (786,723 | ) | ||||
Change in other non-current accounts receivable |
| 52 | ||||||
Change in other non-current assets |
(30,317 | ) | (49,477 | ) | ||||
Change in trade accounts and notes payable |
(223,293 | ) | 873,216 | |||||
Change in other accounts payable |
(20,400 | ) | (128,921 | ) | ||||
Change in accrued expenses |
(119,446 | ) | 173,401 | |||||
Change in other current liabilities |
9,330 | (9,138 | ) | |||||
Change in long-term advances received |
281,975 | 90,480 | ||||||
Change in other non-current liabilities |
15,070 | 8,483 | ||||||
Change in provisions |
(171,306 | ) | (133,695 | ) | ||||
Change in defined benefit obligation |
(8,093 | ) | (72,139 | ) | ||||
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Cash generated from operating activities |
2,397,090 | 3,368,139 | ||||||
Income taxes paid |
(157,588 | ) | (227,133 | ) | ||||
Interest received |
54,220 | 85,902 | ||||||
Interest paid |
(109,996 | ) | (79,695 | ) | ||||
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Net cash from operating activities |
(Won) | 2,183,726 | 3,147,213 | |||||
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See accompanying notes to the condensed consolidated interim financial statements.
6
LG DISPLAY CO., LTD. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Cash Flows, Continued
(Unaudited)
For the nine-month periods ended September 30, 2011 and 2010
(In millions of won) | 2011 | 2010 | ||||||
Cash flows from investing activities: |
||||||||
Dividends received |
(Won) | 6,130 | 18,962 | |||||
Proceeds from withdrawal of deposits in banks |
2,401,500 | 3,600,000 | ||||||
Increase in deposits in banks |
(1,214,500 | ) | (3,001,500 | ) | ||||
Acquisition of investments in equity accounted investees |
(40,610 | ) | (36,039 | ) | ||||
Proceed from disposal of investments in equity accounted investees |
2,045 | 20,530 | ||||||
Acquisition of property, plant and equipment |
(2,877,626 | ) | (2,955,433 | ) | ||||
Proceeds from disposal of property, plant and equipment |
800 | 1,860 | ||||||
Acquisition of intangible assets |
(154,636 | ) | (134,553 | ) | ||||
Grant received |
1,560 | 41 | ||||||
Payment for settlement of derivatives |
| (5,358 | ) | |||||
Proceeds from settlement of derivatives |
26,797 | | ||||||
Proceeds from collection of short-term loans |
45 | 41 | ||||||
Acquisition of other non-current financial assets |
(45,671 | ) | (34,321 | ) | ||||
Proceed from disposal of other non-current financial assets |
121,651 | 2,627 | ||||||
Acquisition of LCD module business |
| (238,482 | ) | |||||
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Net cash used in investing activities |
(1,772,515 | ) | (2,761,625 | ) | ||||
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Cash flows from financing activities: |
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Proceeds from short-term borrowings |
1,271,577 | 889,917 | ||||||
Repayment of short-term borrowings |
(2,084,505 | ) | (695,419 | ) | ||||
Issuance of debentures |
896,209 | 918,302 | ||||||
Proceeds from long-term borrowings |
591,921 | 454,679 | ||||||
Repayment of long-term borrowings |
| (120,000 | ) | |||||
Repayment of current portion of long-term debts |
(838,800 | ) | (1,278,219 | ) | ||||
Increase in non-controlling interest |
5,709 | 16,592 | ||||||
Payment of cash dividend |
(178,908 | ) | (178,908 | ) | ||||
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Net cash from (used in) financing activities |
(336,797 | ) | 6,944 | |||||
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Net Increase in cash and cash equivalents |
74,414 | 392,532 | ||||||
Cash and cash equivalents at January 1 |
1,631,009 | 817,982 | ||||||
Effect of exchange rate fluctuations on cash held |
10,194 | 34,177 | ||||||
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Cash and cash equivalents at September 30 |
(Won) | 1,715,617 | 1,244,691 | |||||
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See accompanying notes to the condensed consolidated interim financial statements.
7
1. | Reporting Entity |
(a) | Description of the Controlling Company |
LG Display Co., Ltd. (the Controlling Company) was incorporated in February 1985 under its original name of LG Soft, Ltd. as a wholly owned subsidiary of LG Electronics Inc. In 1998, LG Electronics Inc. and LG Semicon Co., Ltd. transferred their respective Thin Film Transistor Liquid Crystal Display (TFT-LCD) related business to the Controlling Company. The main business of the Controlling Company and its subsidiaries is to manufacture and sell TFT-LCD panels. The Controlling Company is a stock company (Jusikhoesa) domiciled in the Republic of Korea with its address at 65-228 Hangang-ro 3-ga, Yongsan-gu, Seoul, the Republic of Korea. In July 1999, LG Electronics Inc. and Koninklijke Philips Electronics N.V. (Philips) entered into a joint venture agreement. Pursuant to the agreement, the Controlling Company changed its name to LG.Philips LCD Co., Ltd. However, on February 29, 2008, the Controlling Company changed its name to LG Display Co., Ltd. based upon the approval of shareholders at the general shareholders meeting on the same date as a result of the decrease in Philipss share interest in the Controlling Company and the possibility of its business expansion to Organic Light Emitting Diode (OLED) and Flexible Display products. As of September 30, 2011, LG Electronics Inc. owns 37.9% (135,625,000 shares) of the Controlling Companys common shares.
As of September 30, 2011, the Controlling Company has its TFT-LCD manufacturing plants, OLED manufacturing plant and LCD Research & Development Center in Paju and TFT-LCD manufacturing plants and OLED manufacturing plant in Gumi. The Controlling Company has overseas subsidiaries located in the United States of America, Europe and Asia.
The Controlling Companys common stock is listed on the Korea Exchange under the identifying code 034220. As of September 30, 2011, there are 357,815,700 shares of common stock outstanding. The Controlling Companys common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (ADSs) under the symbol LPL. One ADS represents one-half of one share of common stock. As of September 30, 2011, there are 24,143,192 ADSs outstanding.
(b) | Changes in Investments of Consolidated Subsidiaries |
In January and June 2011, the Controlling Company invested (Won)14,363 million and (Won)35,618 million, respectively, in cash for the capital increase of LG Display Nanjing Co., Ltd. (LGDNJ). There were no changes in the Controlling Companys ownership percentage in LGDNJ as a result of these additional investments.
In February and April 2011, the Controlling Company invested (Won)3,417 million and (Won)2,525 million, respectively, in cash for the capital increase of LUCOM Display Technology (Kunshan) Limited(LUCOM). There were no changes in the Controlling Companys ownership percentage in LUCOM as a result of these additional investments.
In June 2011, the Controlling Company invested (Won)86,520 million in cash for the capital increase of LG Display America, Inc. (LGDUS). There were no changes in the Controlling Companys ownership percentage in LGDUS as a result of this additional investment.
8
1. | Reporting Entity, Continued |
(b) | Changes in Investments of Consolidated Subsidiaries, Continued |
In June and September 2011, the Controlling Company invested (Won)3,000 million each, (Won)6,000 million in total, in cash for the capital increase of Image & Materials, Inc. (I&M). There were no changes in the Controlling Companys ownership percentage in I&M as a result of these additional investments.
2. | Basis of Presenting Financial Statements |
(a) | Statement of Compliance |
The condensed interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (K-IFRSs) 1034 Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as of and for the year ended December 31, 2010.
The condensed consolidated interim financial statements were authorized for issue by the Board of Directors on October 19, 2011.
(b) | Basis of Measurement |
The condensed consolidated interim financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:
| derivative financial instruments measured at fair value; |
| financial instruments at fair value through profit or loss measured at fair value; |
| available-for-sale financial assets measured at fair value; |
| liabilities for cash-settled share-based payment arrangements measured at fair value; and |
| liabilities for defined benefit plans recognized at the net total of present value of defined benefit obligation less the fair value of plan assets |
(c) | Functional and Presentation Currency |
The condensed consolidated interim financial statements are presented in Korean won, which is the Controlling Companys functional currency. All amounts in Korean won are in millions unless otherwise stated.
9
2. | Basis of Presenting Financial Statements, Continued |
(d) | Use of Estimates and Judgments |
The preparation of the condensed consolidated interim financial statements in conformity with K-IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Groups accounting policies and the key sources of estimation uncertainty were the same as those applied in its financial statements as of and for the year ended December 31, 2010.
3. | Summary of Significant Accounting Policies |
The significant accounting policies followed by the Group in the preparation of its consolidated interim financial statements are the same as those followed by the Group in its preparation of the consolidated financial statements as of and for the year ended December 31, 2010, except for the application of the Statements of K-IFRS 1034 Interim Financial Reporting.
4. | Financial Risk Management |
The objectives and policies on financial risk management followed by the Group are consistent with those disclosed in the consolidated financial statements as of and for the year ended December 31, 2010.
5. | Inventories |
Inventories as of September 30, 2011 and December 31, 2010 are as follows:
(In millions of won) | ||||||||
2011 | 2010 | |||||||
Finished goods |
(Won) | 944,615 | 978,386 | |||||
Work-in-process |
712,142 |