Edgar Filing: LG Display Co., Ltd.

Form 6-K

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 2015

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, 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 registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s 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 registrant’s 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, 2015 to September 30, 2015)

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. REFERENCES TO “Q1”, “Q2”, “Q3” and “Q4” OF A FISCAL YEAR ARE REFERENCES TO THE THREE-MONTH PERIODS ENDED MARCH 31, JUNE 30, SEPTEMBER 30 AND DECEMBER 31, RESPECTIVELY, OF SUCH FISCAL YEAR. REFERENCES TO “Q1~Q3” OF A FISCAL YEAR ARE REFERENCES TO THE NINE-MONTH PERIOD ENDED SEPTEMBER 30 OF SUCH FISCAL YEAR.

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. K-IFRS ALSO DIFFERS IN CERTAIN RESPECTS FROM THE INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES IN THIS DOCUMENT.

Contents


1.	Company		4
	A.	Name and contact information	4
	B.	Domestic credit rating	4
	C.	Capitalization	6
	D.	Voting rights	6
	E.	Dividends	7

2.	Business		7
	A.	Business overview	7
	B.	Industry	7
	C.	New businesses	9

3.	Major Products and Raw Materials		9
	A.	Major products	9
	B.	Average selling price trend of major products	10
	C.	Major raw materials	10

4.	Production and Equipment		10
	A.	Production capacity and output	10
	B.	Production performance and utilization ratio	11
	C.	Investment plan	11

5.	Sales		11
	A.	Sales performance	11
	B.	Sales route and sales method	11

6.	Market Risks and Risk Management		12
	A.	Market risks	12
	B.	Risk management	13



7.	Derivative Contracts		13
	A.	Currency risks	13
	B.	Interest rate risks	13

8.	Major Contracts		13

9.	Research & Development		14
	A.	Summary of R&D-related expenditures	14
	B.	R&D achievements	14

10.	Intellectual Property		19

11.	Environmental and Safety Matters		19

12.	Financial Information		21
	A.	Financial highlights (Based on consolidated K-IFRS)	21
	B.	Financial highlights (Based on separate K-IFRS)	21
	C.	Consolidated subsidiaries	22
	D.	Status of equity investment	22

13.	Audit Information		23
	A.	Audit service	23
	B.	Non-audit service	23

14.	Board of Directors		24
	A.	Members of the board of directors	24
	B.	Committees of the board of directors	24
	C.	Independence of directors	24

15.	Information Regarding Shares		25
	A.	Total number of shares	25
	B.	Shareholder list	25

16.	Directors and Employees		25
	A.	Directors	25
	B.	Employees	27

Attachment: 1. Financial Statements in accordance with K-IFRS

1.	Company

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 LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Republic of Korea, and our telephone number is +82-2-3777-1010. Our website address is http://www.lgdisplay.com.

Domestic credit rating

(1)

Corporate bonds


Subject instrument	Month of rating	Credit rating⁽¹⁾	Rating agency (Rating range)
Corporate bonds	February 2010	AA-	NICE Information Service Co., Ltd. (AAA ~ D)
	May 2010
	December 2010
	August 2011
	June 2012
	October 2012
	March 2013
	June 2013
	October 2013

	April 2014	AA
	September 2014
	April 2015

	February 2010	AA-	Korea Investors Service, Inc. (AAA ~ D)
	May 2010
	August 2010
	February 2011
	April 2011
	August 2011
	October 2011
	June 2012
	October 2012
	June 2013
	October 2013

	March 2014	AA
	April 2015	AA

	August 2010	AA-	Korea Ratings Corporation (AAA ~ D)
	December 2010
	February 2011
	April 2011
	July 2011
	October 2011
	June 2012
	March 2013
	June 2013

	March 2014	AA
	September 2014
	May 2015

Domestic corporate bond credit ratings are generally defined to indicate the following:


Subject instrument	Credit rating	Definition
Corporate bonds	AAA	Strongest capacity for timely repayment.
	AA+/AA/AA-	Very strong capacity for timely repayment. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category
	A+/A/A-	Strong capacity for timely repayment. This capacity may, nevertheless, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories.
	BBB+/BBB/BBB-	Capacity for timely repayment is adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity.
	BB+/BB/BB-	Capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time.
	B+/B/B-	Lack of adequate capacity for repayment and speculative characteristics. Interest payment in time of unfavorable economic conditions is uncertain.
	CCC	Lack of capacity for even current repayment and high risk of default.
	CC	Greater uncertainties than higher ratings.
	C	High credit risk and lack of capacity for timely repayment.
	D	Insolvency.

(2)

Commercial paper


Subject instrument	Month of rating	Credit rating⁽¹⁾	Rating agency (Rating range)
Commercial paper	October 2015	A1	Korea Investors Service, Inc. (A1 ~ D)
Commercial paper	October 2015	A1	NICE Information Service Co., Ltd. (A1 ~ D)

Domestic commercial paper credit ratings are generally defined to indicate the following:


Subject instrument	Credit rating	Definition
Commercial paper	A1	Timely repayment capability is at the highest level with extremely low investment risk and is stable such that it will not be influenced by any reasonably foreseeable changes in external factors.
	A2	Strong capacity for timely repayment with very low investment risk. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category.
	A3	Capacity for timely repayment is adequate with low investment risk. This capacity may, nevertheless, be somewhat influenced by sudden changes in external factors.
	B	Capacity for timely repayment is acknowledged, but there are some speculative characteristics.
	C	Capacity for timely repayment is questionable.
	D	Insolvency.

ø ‘+’ or ‘-’ modifier can be attached to ratings A2 through B to differentiate ratings within broader rating categories.

Capitalization

(1)

Change in capital stock (as of September 30, 2015)

There were no changes to our issued capital stock during the quarterly reporting period ended September 30, 2015.

(2)

Convertible bonds

Not applicable.

Voting rights (as of September 30, 2015)


		(Unit: share)
Description		Number of shares
A. Total number of shares issued: ⁽¹⁾	Common shares ⁽¹⁾		357,815,700
	Preferred shares		—

B. Shares without voting rights:	Common shares		—
	Preferred shares		—
C. Shares subject to restrictions on voting rights pursuant to our articles of incorporation:	Common shares		—
	Preferred shares		—
D. Shares subject to restrictions on voting rights pursuant to regulations:	Common shares		—
	Preferred shares		—
E. Shares with restored voting rights:	Common shares		—
	Preferred shares		—

Total number of issued shares with voting rights (=A – B – C – D + E):	Common shares		357,815,700
	Preferred shares		—

(1)	Authorized: 500,000,000 shares

Dividends

Dividends for the three most recent fiscal years


Description (unit)		2014			2013		2012
Par value (Won)			5,000			5,000		5,000
Profit for the year (million Won) ⁽¹⁾			904,268			426,118		233,204
Earnings per share (Won) ⁽²⁾			2,527			1,191		652

Total cash dividend amount for the period (million Won)			178,908			—		—

Total stock dividend amount for the period (million Won)			—			—		—

Cash dividend payout ratio (%)			19.78	%		—		—
Cash dividend yield (%) ⁽³⁾	Common shares		1.47	%		—		—
	Preferred shares		—			—		—
Stock dividend yield (%)	Common shares		—			—		—
	Preferred shares		—			—		—
Cash dividend per share (Won)	Common shares		500			—		—
	Preferred shares		—			—		—
Stock dividend per share (share)	Common shares		—			—		—
	Preferred shares		—			—		—

(1)	Based on profit for the year attributable to us as owners of the controlling company.

(2)	Earnings per share is based on par value of W5,000 per share and is calculated by dividing net income by weighted average number of common shares.

(3)

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 shares 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.

2.	Business

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 and OLED.

As of September 30, 2015, in Korea we operated TFT-LCD and OLED production facilities and a research center in Paju and TFT-LCD production facilities in Gumi. We have also established subsidiaries in the Americas, Europe and Asia.

As of September 30, 2015, our business consisted of the manufacture and sale of display and display related products utilizing TFT-LCD, OLED and other technologies under a single reporting business segment.

In order to achieve synergies and strengthen the competitiveness of our OLED business, we plan to acquire the OLED Light business of LG Chem in December 2015 for an estimated acquisition price of approximately W160 billion. Such transaction was approved at a meeting of our board of directors in October 2015, and the final agreement for such transaction was signed on November 10, 2015.

2015 Q1~Q3 consolidated operating results highlights


	(Unit: In billions of Won)
2015 Q1-Q3	Display business
Sales Revenue		20,888
Gross Profit		3,548
Operating Profit		1,565

Industry

(1)

Industry characteristics and growth potential

•

The entry barriers to manufacture display panels are relatively high due to the technology and capital intensive nature of the mass manufacturing process that is required to achieve economies of scale, among other factors.

•

While growth in the market for displays used in notebook computer, monitor and other traditional IT products has stagnated or declined, the market for small- and medium-sized displays (including those used in smartphones) in the rapidly evolving IT environment has shown steady growth. The display market for televisions has also shown steady growth mainly due to growing demand from developing countries as well as from consumers in general for larger sized display panels. As for displays used in industrial, automobile and other value added products, we expect to see growth in these markets.

(2)

Cyclicality

•

The display panel business is highly cyclical and sensitive to fluctuations in the general economy. The industry experiences periodic volatility caused by imbalances between supply and demand due to capacity expansion and changing production utilization rates within the industry.

•

Macroeconomic factors and other causes of business cycles can affect the rate of growth in demand for display panels. Accordingly, if supply exceeds demand, average selling prices of display panels may decrease. Conversely, if growth in demand outpaces growth in supply, average selling prices may increase.

(3)

Market conditions

•

Overall, while there have been some variations in rates of production capacity growth among individual display panel manufacturers, display panel manufacturers have generally slowed their respective rates of production capacity growth since 2011 due to a slowdown in growth of the display panel industry.

•

Most display panel manufacturers are located in Asia.

Korea: LG Display, Samsung Display, etc.

Taiwan: AU Optronics, Innolux, CPT, HannStar, etc.

Japan: Japan Display, Sharp, Panasonic LCD, etc.

China: BOE, CSOT, etc.

(4)

Market shares

•

Our worldwide market share of large-sized display panels (i.e., panels that are 9 inches or larger) based on revenue is as follows:


	2015 Q1~Q3			2014			2013
Panels for Televisions ⁽¹⁾		25.4	%		25.0	%		24.7	%
Panels for Monitors		38.7	%		32.7	%		34.0	%
Panels for Notebook Computers ⁽²⁾		26.7	%		27.5	%		32.3	%
Panels for Tablet Computers		23.4	%		27.0	%		32.0	%

Total		27.8	%		26.9	%		27.8	%

Source: Large-Area Display Market Tracker (formerly, DisplaySearch)

(1)	Includes panels for public displays.

(2)	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, timely investments, adaptable production capabilities, development of new and premium products through technological advances, competitive production costs, 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 buyer’s 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 various technologies and products, including display panels with IPS, Advanced In-cell Touch, OLED and other technologies. With respect to TFT-LCD panels, we are leading the market with our differentiated products with IPS technology, such as our slim and light ultra-high definition (“Ultra HD”) television panels and 21:9 screen aspect ratio ultra-wide IPS curved monitors, and have prepared our production facilities to produce products with Advanced In-cell Touch technology. With respect to OLED panels, following our supply of the world’s first 55-inch OLED 3D panels for televisions in January 2013, we have supplied Ultra HD OLED panels for televisions, flexible plastic OLED panels for smartphones, round OLED panels for wearable devices among others and have shown that we are technologically a step ahead of the competition.

•

Moreover, we entered into long-term sales contracts with major global firms to secure customers and expand partnerships for technology development.

New businesses

For our continued growth, we are actively exploring and preparing for new business opportunities that may arise in the changing market environment. As such, we are continually reviewing and looking at opportunities in the display and promising new industries.

3.	Major Products and Raw Materials

Major products

We manufacture TFT-LCD and OLED panels, of which a significant majority is exported overseas.

(Unit: In billions of Won, except percentages)

Business area

Sales type

Items (Market)

Usage

Major
trademark

Sales in 2015 Q1~Q3 (%)

Display

Product/ Service/ Other sales

Display panel (Overseas⁽¹⁾)

Panels for notebook computers, monitors, televisions, smartphones, tablets, etc.

LG Display

19,130 (91.6%)

Display panel (Korea ⁽¹⁾)

Panels for notebook computers, monitors, televisions, smartphones, tablets, etc.

LG Display

1,758 (8.4%)

Total

20,888 (100.0%)

•

Period: January 1, 2015 ~ September 30, 2015.

(1)	Based on ship-to-party.

Average selling price trend of major products

The average selling price of LCD panels per square meter of net display area shipped in the third quarter of 2015 remained relatively stable compared to the second quarter of 2015, while average selling prices of LCD panels exhibited varying trends according to demand by product category. There is no assurance that the average selling prices of LCD panels will not fluctuate in the future due to change in market conditions.

(Unit: US$ / m²)

Description

2015 Q3

2015 Q2

2015 Q1

2014 Q4

2014 Q3

Display panel⁽¹⁾⁽²⁾

622

620

652

773

658

(1)	Quarterly average selling price per square meter of net display area shipped.

(2)	Excludes semi-finished products in the cell process.

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, except percentages)
Business area	Purchase type	Items	Usage	Cost⁽¹⁾		Ratio (%)			Suppliers
Display	Raw materials	Glass	Display panel manufacturing		1,153		9.98	%	NEG, Asahi Glass, etc.
		Backlight			2,296		19.88	%	HeeSung Electronics, etc.
		Polarizer			1,800		15.58	%	LG Chem, etc.
		Others			6,304		54.57	%

Total					11,553		100.0	%

•

Period: January 1, 2015 ~ September 30, 2015.

(1)	Based on total cost for purchase of raw materials which includes manufacturing and development costs, etc.

4.	Production and Equipment

Production capacity and output

(1)

Production capacity

The table below sets forth the production capacity of our Gumi, Paju and Guangzhou facilities in the periods indicated.

(Unit: 1,000 glass sheets)

Business area

Items

Location of facilities

2015 Q1~Q3⁽¹⁾

2014⁽²⁾

2013⁽²⁾

Display

Display panel

Gumi, Paju, Guangzhou

7,284

9,573

8,562

(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, Paju and Guangzhou facilities in the periods indicated.

(Unit: 1,000 glass sheets)

Business area

Items

Location of facilities

2015 Q1~Q3

2014

2013

Display

Display panel

Gumi, Paju, Guangzhou

6,468

8,425

7,670

•

Based on glass input substrate size for eighth generation glass sheets.

Production performance and utilization ratio


	(Unit: Hours, except percentages)
Production facilities	Available working hours in 2015 Q1~Q3	Actual working hours in 2015 Q1~Q3	Average utilization ratio
Gumi	6,552 ⁽¹⁾ (273 days) ⁽²⁾	6,324⁽¹⁾ (263.5 days) ⁽²⁾		96.5	%
Paju	6,552⁽¹⁾ (273 days) ⁽²⁾	6,552⁽¹⁾ (273 days) ⁽²⁾		100.0	%
Guangzhou	6,552⁽¹⁾ (273 days) ⁽²⁾	6,552⁽¹⁾ (273 days) ⁽²⁾		100.0	%

(1)	Based on the assumption that all 24 hours in a day have been fully utilized.

(2)	Number of days is calculated by averaging the number of working days for each facility.

Investment plan

In 2014, our total capital expenditures on a cash out basis was W3 trillion. In 2015, we currently expect that our total capital expenditures on a cash out basis will be W3 trillion or less in anticipation of funding the production of future display products and leading the market for OLED panels, as well as investing in our production facilities to respond to increases in demand for large-sized panels. Such amount is subject to change depending on business conditions and market environment.

Sales

Sales performance


	(Unit: In billions of Won)
Business area	Sales types	Items (Market)		2015 Q1~Q3		2014		2013
Display	Products, etc.	Display panel	Overseas ⁽¹⁾		19,130		23,847		24,341
Display	Products, etc.	Display panel	Korea ⁽¹⁾		1,758		2,609		2,692

			Total		20,888		26,456		27,033

(1)	Based on ship-to-party.

Sales route and sales method

(1)

Sales organization

•

As of September 30, 2015, each of our television, IT/mobile and OLED businesses 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

Sales of our products take place through one of the following two routes:

•

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

•

As part of our sales strategy, we have secured stable sales to major personal computer manufacturers and leading consumer electronics manufacturers globally, led the television market with our OLED and other market leading television panels, increased the proportion of sales of our differentiated television panels, such as our Ultra HD and large television panels, in our product mix and strengthened sales of high-resolution, IPS, narrow bezel and other high-end display panels in the monitor, notebook computer and tablet markets.

•

In the smartphone, industrial products (including aviation and medical equipment) and automobile displays segment, we have continued to build a strong and diversified business portfolio by expanding our business with customers with a global reach on the strength of our differentiated products applying IPS, plastic OLED, high-resolution, Advanced In-cell Touch and other technologies.

(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

Market risks

The display industry continues to experience continued declines in the average selling prices of TFT-LCD and OLED 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 display 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 manufacturers in Korea, Taiwan, China and Japan coupled with changes in the production mix of such manufacturers. Our main competitors in the industry include Samsung Display, AU Optronics, Innolux, Sharp, BOE, CSOT, Japan Display, CPT, HannStar and Panasonic LCD.

Our ability to compete successfully depends on factors both within and outside our control, including product pricing, performance and reliability, timely investments, adaptable production capabilities, utilization of differentiated technologies in 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. Seeking to achieve stable management, we take every precaution in our foreign currency risk management to minimize the risk of foreign currency fluctuations on our foreign currency denominated assets and liabilities.

Risk management

As the average selling prices of TFT-LCD and OLED panels can continue to decline over time irrespective of industry-wide cyclical fluctuations, we may find it hard to manage risks associated with certain factors that are outside our control. However, we counteract such declines in average selling prices by increasing the proportion of high value added panels in our product mix while also implementing various cost reduction measures. In addition, in order to manage our risk against foreign currency fluctuations, we continually monitor our currency position and risk, and when needed, we may from time to time enter into cross-currency interest rate swap contracts and foreign currency forward contracts. As of September 30, 2015, we had not entered into any such contract for currency related derivative products.

7.	Derivative Contracts

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 Japanese Yen and the Chinese Yuan.

•

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 and the U.S. dollar.

•

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.

Interest rate risks

•

Our exposure to interest rate risks relates primarily to our floating rate long term loan obligations. We have established and are managing interest rate risk policies to minimize uncertainty and costs associated with interest rate fluctuations by monitoring cyclical interest rate fluctuations and enacting countermeasures.

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
Technology licensing agreement	Hewlett-Packard	January 2011 ~	Patent licensing of semi-conductor device technology

Technology licensing/supply agreement	HannStar Display Corporation	December 2013 ~	Patent cross-licensing of LCD technology
	AU Optronics Corporation	August 2011~	Patent cross-licensing of LCD technology
	Innolux Corporation	July 2012 ~	Patent cross-licensing of LCD technology, etc.

9.	Research & Development

Summary of R&D-related expenditures


	(Unit: In millions of Won, except percentages)
Items		2015 Q1~Q3			2014			2013
Material Cost			500,589			762,008			586,901
Labor Cost			391,729			542,857			500,705
Depreciation Expense			168,165			249,306			319,854
Others			128,560			233,422			267,320

Total R&D-Related Expenditures			1,189,043			1,787,593			1,674,780

Accounting Treatment⁽¹⁾	Selling & Administrative Expenses		909,035			1,164,294			1,095,727
	Manufacturing Cost		121,695			356,218			456,818
	Development Cost (Intangible Assets)		158,313			267,081			122,235
R&D-Related Expenditures / Revenue Ratio (Total R&D-Related Expenditures ÷ Revenue for the period × 100)			5.7	%		6.8	%		6.2	%

(1)	For accounting purposes, R&D-related expenditures are recognized in accordance with our financial statements.

R&D achievements

Achievements in 2013

(1)

Developed 19.5-inch desktop monitor product

•

Developed new display panel size for desktop monitor products

•

Increased yield of glass panel area per glass substrate by cutting glass substrates at 19.5 inches

(2)

Developed 11.6-inch Tab Book product applying GF2 touch technology

•

Applied GF2 direct bonding process

(3)

Developed 5.0-inch and 5.5-inch high resolution (over 400 PPI) smartphone products applying AH-IPS technology

•

Luminance increased by 10% compared to conventional panels (5.0-inch FHD panel has 403 PPI and 5.5-inch FHD panel has 440 PPI)

•

Developed new source D-IC to drive 4 lanes of MIPI with speeds of up to 1 Gbps per lane

(4)

Developed the world’s first 60-inch three-side borderless product

•

Made possible by removing the forward-facing case top, resulting in “zero” bezel on three sides with a borderless like bottom design

(5)

Developed the world’s first 47-inch and 55-inch FHD TV product with 2.3 mm narrow bezels

•

Achieved optimal slim design by minimizing bezel width to 2.3 mm

(6)

Developed 55-inch and 65-inch Ultra HD products with narrow bezels

•

Ultra HD (55-inch model has 80 PPI and 65-inch model has 68 PPI)

•

Achieved high transmittance panel by applying 1 Gate 1 Data structure

•

Achieved narrow bezels (55-inch model has 6.9 mm and 65-inch has 7.5 mm) by optimizing panel and mechanical design

(7)

Developed 42-inch, 47-inch and 55-inch FHD three-side borderless products with direct backlight units

•

Borderless design made possible by removing the forward-facing case top, resulting in “zero” bezel on three sides

(8)

Developed 5-inch HD smartphone product utilizing oxide cell technology

•

Reduced energy consumption and achieved narrower bezels by using indium gallium zinc oxide (IGZO) cell technology (energy consumption reduced by 26.7% and bezel size reduced by 23.0% compared to products utilizing conventional silicon (a-Si) cell technology)

(9)

Developed FHD a-Si AH-IPS technology for use in smartphone products (more than 400 PPI)

•

Improved structure and technology compared to conventional FHD panels (luminance increased by 30%, achieved 443 PPI in 5.0-inch FHD panel)

•

Developed new D-IC and IC bonding materials and processes

(10)

Developed new line of 19.5-inch HD+ monitor products with IPS technology

•

Developed new line of display panels for desktop monitor products

•

Increased yield of glass panel area per glass substrate by cutting glass substrates at 19.5 inches

(11)

Developed 19.5-inch HD+ ultra-light monitor product

•

The world’s lightest (at the time) 19.5-inch HD+ IPS monitor product with slim concept design

•

Reduced weight by 55% from 1520g to 830g and thickness from 7.6t to 5.4t compared to a conventional 19.5-inch HD+ IPS monitor product

(12)

Developed the world’s first borderless monitor product with 3.5 mm narrow bezel (23.8-inch FHD)

•

Developed 23.8-inch FHD Neo Blade1 monitor product with the world’s narrowest (at the time) bezel (3.5 mm)

(13)

Introduced 9.2-inch WXGA high resolution / high luminance automotive display product

•

The first automotive display product to apply EPI interface (800Mbps high speed transmission with Real 8it)

•

High luminance (800 nit) and high color gamut (70%)

•

Developed T-con with improved reliability and resolution

(14)

Developed 49-inch FHD four sided borderless like product

•

Achieved narrow borders by applying 4.9 mm GIP technology and developed a new PSJ mechanical structure

•

Developed new resin technology to apply to the bottom base decoration

(15)

Developed 55-inch FHD wide color gamut (“WCG”) LCM product

•

Achieved life like colors with WCG by combining panel and optical technologies

•

Developed differentiated case top set design

(16)

Developed our first 60-inch FHD product

•

Achieved narrow panel bezel size (7.8 mm)

•

New size in our product lineup

(17)

Developed the world’s first 23.8-inch Ultra HD monitor product

•

The world’s first Ultra HD AH-IPS monitor product (23.8-inch Ultra HD: 185 ppi)

•

Applied PAC panel technology and developed Ultra HD T-con/D-IC driver

•

Developed high luminance dual LED array structure

(18)

Expanded product lineup of 21:9 screen aspect ratio monitors

•

Expanded product lineup of 21:9 screen aspect ratio monitors to include 25-inch, 29-inch and 34-inch monitors

•

Borderless on three sides by removing case top

(19)

Developed the world’s first 13.3-inch FHD notebook model with 1.9 mm narrow bezel

•

Development slim notebook design by utilizing panel GLA structure and minimizing bezel size to 1.9 mm

•

Achieved slim (3.0 mm) and ultra-light (230 g) LCM by utilizing 0.25 mm glass PPP LGP technology

(20)

Developed our first quad HD (“QHD”) notebook model (13.3-inch, 222 ppi / 14.0-inch / 210 ppi)

•

Increased transmittance rate by utilizing 3^rd metal, coop CS, red eye 12 um technology and improving aperture ratio

•

Achieved slim (2.6 mm) and ultra-light (235 g) LCM by utilizing 0.3 mm glass PPP LGP technology

(21)

Introduced product applying PPP LGP to maximize light collimation

•

Developed PPP technology for light collimation (improved luminance by 44% compared to conventional panels) for a more energy efficient panel model

•

Used 2 sheet structure to reduce thickness

(22)

Developed 12.3-inch FHD full cluster automotive product

•

The world’s first full cluster product to apply IPS technology

•

Ultra-high luminance (800 nit) and high color gamut (85%). High color PR and developed RG LED for high light collimation

•

Applied the highest resolution (1920 x 720), at the time, for clusters

(23)

Developed 5.5-inch QHD LTPS smartphone panel applying AH-IPS technology with the worlds’ highest resolution, at the time, for smartphone panels (more than 500 ppi)

•

Designed and developed QHD, the world’s highest resolution, at the time, for smartphone panels (538 ppi)

•

The world’s first QHD module applying 1 chip D-IC driver

Achievements in 2014

(1)

Developed the world’s first green plus structure television panel products (42-inch, 49-inch and 55-inch Ultra HD)

•

Added white pixels to increase transmittance by 55% compared to conventional display panels

•

Developed energy conservation technology for Ultra HD products

(2)

Developed the world’s narrowest, at the time, bezel (BtB 3.5 mm) videowall product (55-inch FHD)

•

The world’s narrowest, at the time, bezel (BtB 3.5 mm) videowall product

•

Reduced panel PAD parts and minimized bezel size

(3)

Developed our first 79-inch Ultra HD product

•

New size in our product lineup

•

Achieved narrow bezel (On 9.9 mm) and slim depth (13.9 mm)

(4)

Developed the world’s first 4 sided borderless like product (49-inch, 55-inch and 60-inch FHD)

•

Removed front case top and narrowed gap between the panel and front deco cabinet (set side reduced from 2.0 mm to 0.5 mm)

(5)

Developed the world’s first a-Si AF-IPS 5Mask panel product for smartphones (5.0 WVGA)

•

Reduced production cost and simplified manufacturing process by reducing the number of mask steps from 6 to 5

•

Same level of performance as 6Mask panels

(6)

Developed the world’s first LTPS AH-IPS photo alignment and negative LC panel product for smartphones (5.0-inch FHD)

•

LTPS AH-IPS photo alignment and negative LC panel product for smartphones developed in March 2014

•

Improved luminance and contrast ratio through improvement in panel transmittance (450 nit to 515 nit; 1,000:1 to 1500:1).

(7)

Developed the world’s first 23.8-inch FHD ultra slim and light monitor product

•

Achieved ultra-light design (reduced LCM weight from 2,270g to 1,280g compared to conventional LCMs)

•

Achieved ultra slim design by using slim component parts (7.6t reduced to 5.5t)

(8)

Developed LTPS AH-IPS QHD smartphone product (5.5-inch QHD, 538 ppi, LG Electronics’ G3 model smartphone)

•

LTPS AH-IPS QHD smartphone product developed in April 2014

•

Width of panel bezel: 0.95 mm (L/R); luminance: 500 nit; G1F Touch Direct Bonded LCM

(9)

Developed our first curved Ultra HD product (65-inch and 55-inch Ultra HD)

•

The curved LCM retains the same panel transmissivity as a conventional flat LCM through application of BM-less COT structure with a double pigment lamination

•

Realized curved LCM technology by applying Frame (Horizontal / Vertical / Center) Structure and Curved C/T & Guide Panel Technologies

(10)

Developed the world’s first 6-inch plastic OLED product

•

Developed the world’s first curved display with a curvature radius (“R”) of 700

•

Precursor to the development of future bendable, foldable and rollable display products

(11)

Developed the world’s first 34-inch curved monitor product (3,800R)

•

Launched the world’s first blade type 21:9 screen aspect ratio 34-inch wide QHD 3,800R curved monitor product and created a new market and standard for curved monitor products

•

Achieved curvature of 3,800R by using annealing process and setting up assembly equipment utilizing 0.4t glass for curved panels and pol edge type curved backlight

(12)

Developed the world’s first AH-IPS FHD GIP/DRD product (15.6-inch notebook product)

•

The world’s first AH-IPS FHD (more than 142 ppi) GIP/DRD product developed in September 2014

•

Increased cost competitiveness by developing GIP/DRD technology

(13)

Developed the world’s first Advanced In-cell Touch LTPS smartphone product (4.5-inch HD product)

•

Completed development of an AH-IPS LTPS product applying LG Display’s own in-cell touch technology, which utilizes the AH-IPS Vcom electrodes in an all point sensing self-capacitive manner in July 2014 (450 nit luminance; L/R panel bezel of 1.00 mm; module thickness of 2.28 mm)

•

Simplified SCM and provided a cost competitive and differentiated valued product with touch functionality

(14)

Developed the world’s first Advanced In-cell Touch a-Si smartphone product (4.5-inch WVGA product)

•

Completed development of an AH-IPS a-Si product applying LG Display’s own in-cell touch technology, which utilizes the AH-IPS Vcom electrodes in an all point sensing self-capacitive manner in August 2014 (450 nit luminance; L/R panel bezel of 1.35 mm; module thickness of 2.6 mm)

•

Simplified SCM and provided a cost competitive and differentiated valued product with touch functionality

(15)

Developed the world’s first Ultra HD+ curved (6,000R) product (105-inch Ultra HD)

•

The world’s first large 105-inch 21:9 screen aspect ratio Ultra HD curved (6,000R) display product

(16)

Developed our first 98-inch Ultra HD product

•

Our new line of 98-inch Ultra HD products

•

Achieved ultra-high definition through utilizing the direct BLU local dimming and FCIC circuit compensation algorithm.

(17)

Developed four sided product with even bezels (5.9 mm) for commercial use (42-inch, 49-inch and 55-inch FHD product)

•

Developed our first 4 sided even bezel product (off bezel: 5.9 mm)

•

Reduced panel PAD and lower bezel thickness

•

Improved PAC transmittance and after image reliability

(18)

Developed our first 60-inch Ultra HD product

•

Our new line of 60-inch Ultra HD products

•

Achieved narrow panel bezel of 7.8 mm

(19)

Developed the world’s first circular plastic OLED product (1.3 F)

•

Developed the world’s first circular plastic OLED product in September 2014

•

Developed ultrathin display module of 559 um (without cover window)

•

Lowered power consumption by developing Power Save Mode algorithm

•

Display can be turned on without powering the P-IC

(20)

Developed the world’s first four sided borderless OLED television product (55-inch)

•

Product developed using the world’s first four sided borderless technology utilizing reverse tab bonding manufacturing process in September 2014

(21)

Developed the world’s first ultra-slim OLED television products (49-inch, 55-inch and 65-inch Ultra HD)

•

Achieved LCM thickness of 7.5 mm

•

Reduced thickness by combining exterior set with LCM parts (B/cover, M/cabinet)

(22)

Developed the world’s first 1:1 screen aspect ratio New Platform Monitor (26.5-inch; 1920 x 1920 resolution)

•

Creation of new market through the development of new 1:1 screen aspect ratio platform display

•

Development of high resolution display with four sided even bezels (on bezel: 8 mm)

(23)

Development of 14-inch FHD notebook product with three sided even bezels (3.9 mm)

•

World’s first notebook panel with three sided narrow bezels (top and side bezels: 3.9 mm)

•

Reduced GIP area by 50% compared to conventional GIP area

(24)

Development of 12.3-inch new display size UXGA tablet product

•

Developed new display panel size for tablet products: 12.3-inch UXGA (4:3 screen aspect ratio)

•

Increased yield of glass panel area per glass substrate by cutting glass substrates at 12.3 inches

Achievements in 2015

(1)

Developed the world’s narrowest, at the time, module bezel (0.7mm) LTPS smartphone display (5.3-inch FHD AIT)

•

Developed the world’s first FHD Advanced In-cell Touch display (LTPS 5.3-inch FHD) applying the “Neo Edge” module process (new manufacturing technology) in January 2015

•

Set-up glue & laser cutting process, 0.6mm panel bezel (L/R)

(2)

Developed the world’s first QHD Advanced In-cell Touch (AIT) LTPS smartphone display (5.5-inch QHD)

•

Developed LTPS 5.5-inch QHD display applying LG Display’s new capacitive type in-cell touch technology with “all points sensing” in March 2015; luminance: 500nit, contrast ratio: 1500:1(using photo alignment & negative LC), 0.95mm panel bezel (L/R)

•

Delivered differentiated value proposition based on touch performance, simplified SCM process and competitive cost innovation

(3)

Developed the world’s narrowest, at the time, bezel videowall product (49-inch FHD)

•

Developed the world’s narrowest bezel videowall product (bezel to bezel 3.5mm)

•

Optimized sizing of panel PAD and mechanical bezel

(4)

Developed our first 43-inch Ultra HD slim and light LED television

•

Achieved LCD module thickness of 8.4mm

•

Reduced thickness through publication of set LCM parts (back cover and middle cabinet)

(5)

Developed the world’s first Ultra HD OLED television (55-inch and 65-inch Ultra HD)

•

Developed the world’s first Ultra HD television product lineup

(6)

Developed the world’s first Ultra HD television product applying DRD technology (55-inch, 49-inch and 43-inch Ultra HD)

•

World’s first application of Ultra HD DRD technology based on an RGBW(M+) pixel structure

•

Utilized RGBW(M+) technology to optimize picture quality (high definition, high luminance, low energy consumption and High Dynamic Range (HDR))

(7)

Developed our first Ultra HD asymmetric RGBW(M+) structure product (15.6-inch)

•

Improved panel transmittance, lowered energy consumption and enhanced outdoor visibility compared to previous models

(8)

Developed the world’s first “second display” LTPS smartphone product (5.7-inch QHD+)

•

Delivered differentiated set design through the realization of a second display by applying a panel exterior manufacturing process

•

Developed panel and instrumental optics technology for the independent operation of main display and second display

•

Developed advanced power consumption technology for the realization of “Always On Display” functionality for the second display

10.

Intellectual Property

As of September 30, 2015, our cumulative patent portfolio (including patents that have already expired) included a total of 27,959 patents, consisting of 13,600 in Korea and 14,359 in other countries.

11.

Environmental and Safety Matters

We are subject to a variety of environmental laws and 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 relevant laws and regulations in each area of the environment, including with respect to the treatment of chemical by-products. 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.

In accordance with the Framework Act on Low Carbon, Green Growth, we implemented the greenhouse gas emission and energy consumption target system from 2012 to 2014. Starting from 2015, we plan on implementing the greenhouse gas trading system, under which we will be responsible to meet our emission targets based on the emission credits allocated to us by the Ministry of Environment of the Korean government. As a result, we may need to invest in additional equipment and there may be other costs associated with meeting reduction targets, which may have a negative effect on our profitability or production activities. As a designated company subject to greenhouse gas emission targets under the Framework Act on Low Carbon, Green Growth, if we fail to meet a reduction target and are unable to comply with the government’s subsequent enforcement notice relating to such failure, we may be subject to fines. Furthermore, as a designated company subject to the Act on Allocation and Trading of Greenhouse Gas Emissions, if do not have enough emission credits, we may be required to purchase additional credits or be subject to fines.

In connection with the greenhouse gas emission and energy reduction target system, we submitted a statement of our domestic emissions and energy usage for the 2013 to the Korean government (i.e., the Ministry of Environment and the Ministry of Trade, Industry & Energy) in March 2014 after it was certified by Lloyd’s Register Quality Assurance, a government-designated certification agency. The table below sets forth yearly levels of our greenhouse gases emissions and energy usage in the statement submitted to the Korean government:


(Unit: thousand tonnes of CO₂ equivalent; Tetra Joules)
Category	2014		2013		2012
Greenhouse gases		7,537		6,922		6,161
Energy		60,002		61,092		61,169

Operations at our manufacturing plants are subject to regulation and periodic scheduled and unscheduled on-site inspections by the 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 to manage our water and air pollution, toxic materials and waste. In December 2013, to ensure safe water quality and reduce costs, we entered into a contract with a specialist company to operate our waste water treatment facilities. In stages beginning in November 1997, we have obtained environmental management system ISO 14001 certifications for our domestic panel and module production facilities and our overseas module production plants in Nanjing, Yantai and Guangzhou, China, and with respect to our domestic panel and module production plants, we received ISO 50001 certification in December 2013 for our energy management system.

In addition, in August 2014, GP1, our newest eighth-generation panel fabrication facility located in Guangzhou, China, was the first electronics plant in China to receive the “Green Plant” designation under China’s Green China Policy, in addition to receiving ISO 14001, ISO 50001, OHSAS 18001, ISO 9001, PAS 2050 and ISO 14064-1 certifications. Furthermore, with respect to our production facilities in Gumi, we have been certified by the Ministry of Environment as a “Green Company” for P1 and our Gumi module production plant since 1997, P2 and P3 since 2006 and P4, P5 and P6 since 2008. Also, we received certification to self-inspect designated waste products with respect to our Paju plant by the Ministry of Environment in 2011, which was recertified in 2013. In addition, in recognition of our efforts to reduce greenhouse gas emissions, we were awarded a commendation from the Minster of Environment in the efforts against climate change category in the 2013 Green Management Awards, which was jointly hosted by the Ministry of Environment and the Ministry of Trade, Industry & Energy. In recognition of our efforts to improve recycling and reduce waste, we received a citation for being a leading recycling company by the Prime Minister of Korea.

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 2011/65/EU, and restricts the use of certain hazardous substances in the manufacture of electrical and electronic equipment.

In addition, as part of our commitment to use environment-friendly raw materials, we have implemented a green purchasing system that prevents the introduction of hazardous materials at the purchasing stage. The green purchasing system has been a key component in our efforts to comply with RoHS and other applicable environmental laws and regulation.

In October 2005, we became the first display panel company to receive accreditation as an International Accredited Testing Laboratory by the Korea Laboratory Accreditation Scheme, which is operated by the Korean Ministry of Trade, Industry & Energy. In September 2006, we received international accreditation from TUV SUD, EU’s German accreditation agency, as a RoHS testing laboratory. Our efforts to keep pace with the increasingly stringent accreditation standards and to receive and maintain such accreditations are part of our on-going efforts to systematically monitor environmentally controlled substances in our component parts inventory. Moreover, we participated in reforming IEC 62321, an international testing standard published by the International Electrotechnical Commission and used by RoHS, and the commission adopted our halogen-free combustion ion chromatography method in as IEC 62321-3-2, which was published in June 2013.

In February 2015, we were issued a corrective order and assessed a fine of W276 million, which we subsequently followed and paid, respectively, for violating the Occupational Health and Safety Act in connection with an accidental nitrogen gas exposure at one of our production facilities in Paju, Korea in January 2015. To prevent such accidents happening again in the future, we have strengthened our safety standards and management and employee education.

12.

Financial Information

Financial highlights (Based on consolidated K-IFRS)


(Unit: In millions of Won)
Description	As of September 30, 2015		As of December 31, 2014			As of December 31, 2013
Current assets		10,474,775		9,240,629			7,731,788
Quick assets		7,598,312		6,486,531			5,798,547
Inventories		2,876,463		2,754,098			1,933,241
Non-current assets		13,321,490		13,726,394			13,983,496
Investments in equity accounted investees		399,399		407,644			406,536
Property, plant and equipment, net		10,902,241		11,402,866			11,808,334
Intangible assets		695,912		576,670			468,185
Other non-current assets		1,323,938		1,339,214			1,300,441

Total assets		23,796,265		22,967,023			21,715,284

Current liabilities		7,304,533		7,549,556			6,788,919
Non-current liabilities		3,470,214		3,634,057			4,128,945

Total liabilities		10,774,747		11,183,613			10,917,864

Share capital		1,789,079		1,789,079			1,789,079
Share premium		2,251,113		2,251,113			2,251,113
Reserves		182,059		(63,843	)		(91,674	)
Retained earnings		8,255,646		7,455,063			6,662,655
Non-controlling interest		543,621		351,998			186,247

Total equity		13,021,518		11,783,410			10,797,420


	(Unit: In millions of Won, except for per share data and number of consolidated entities)
Description	For the nine months ended September 30, 2015		For the year ended December 31, 2014			For the year ended December 31, 2013
Revenue		20,888,135		26,455,529			27,033,035
Operating profit		1,564,946		1,357,255			1,163,314
Operating profit from continuing operations		1,036,959		917,404			418,973
Profit for the period		1,036,959		917,404			418,973
Profit (loss) attributable to:
Owners of the Company		982,388		904,268			426,118
Non-controlling interest		54,571		13,136			(7,145	)
Basic earnings per share		2,746		2,527			1,191
Diluted earnings per share		2,746		2,527			1,191
Number of consolidated entities		19		18			18

Financial highlights (Based on separate K-IFRS)


	(Unit: In millions of Won)
Description	As of September 30, 2015		As of December 31, 2014		As of December 31, 2013
Current assets		8,623,142		8,291,088		6,877,367
Quick assets		6,348,316		6,244,413		5,290,725
Inventories		2,274,826		2,046,675		1,586,642
Non-current assets		12,162,034		12,720,749		13,767,226
Investments		2,586,691		2,301,881		1,820,806
Property, plant and equipment, net		7,988,161		8,700,301		10,294,740
Intangible assets		455,797		548,078		461,620
Other non-current assets		1,131,385		1,170,489		1,190,060

Total assets		20,785,176		21,011,837		20,644,593

Current liabilities		7,201,949		7,550,330		6,754,175
Non-current liabilities		2,552,488		2,837,432		4,127,993

Total liabilities		9,754,437		10,387,762		10,882,168

Share capital		1,789,079		1,789,079		1,789,079
Share premium		2,251,113		2,251,113		2,251,113
Reserves		310		276		(305	)
Retained earnings		6,990,237		6,583,607		5,722,538

Total equity		11,030,739		10,624,075		9,762,425


	(Unit: In millions of Won, except for per share data)
Description	For the nine months ended September 30, 2015		For the year ended December 31, 2014		For the year ended December 31, 2013
Revenue		19,028,734		25,383,670		25,854,183
Operating profit		895,074		984,790		753,550
Operating profit from continuing operations		587,829		973,118		99,672
Profit for the period		587,829		973,118		99,672
Basic earnings per share		1,643		2,720		279
Diluted earnings per share		1,643		2,720		279

Consolidated subsidiaries (as of September 30, 2015)


Company Interest	Primary Business	Location	Equity
LG Display America, Inc.	Sales	U.S.A.		100	%
LG Display Japan Co., Ltd.	Sales	Japan		100	%
LG Display Germany GmbH	Sales	Germany		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		100	%
LG Display Guangzhou Co., Ltd.	Manufacturing and sales	China		100	%
LG Display Shenzhen Co., Ltd.	Sales	China		100	%
LG Display Singapore Pte. Ltd.	Sales	Singapore		100	%
L&T Display Technology (Fujian) Limited	Manufacturing	China		51	%
LG Display Yantai Co., Ltd.	Manufacturing and sales	China		100	%
LG Display (China) Co., Ltd.	Manufacturing and sales	China		70	%
LG Display U.S.A. Inc.	Manufacturing and sales	U.S.A.		100	%
Nanumnuri Co., Ltd.	Workplace services	Korea		100	%
Unified Innovative Technology, LLC	Managing intellectual property	U.S.A.		100	%
Global OLED Technology LLC	Managing intellectual property	U.S.A.		100	%
LG Display Guangzhou Trading Co., Ltd.	Sales	China		100	%
MMT (Money Market Trust)	Money market trust	Korea		100	%

Status of equity investments (as of September 30, 2015)


Company⁽¹⁾	Investment Amount		Initial Equity Investment Date		Equity Interest
LG Display America, Inc.	US$	411,000,000		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	2,936,759,345		July 15, 2002		100	%
LG Display Shanghai Co., Ltd.	CNY	4,138,650		January 16, 2003		100	%
LG Display Poland Sp. zo.o.	PLN	511,071,000		September 6, 2005		100	%
LG Display Guangzhou Co., Ltd.	CNY	1,654,693,079		August 7, 2006		100	%
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 (Fujian) Limited	CNY	59,197,026		January 5, 2010		51	%
LG Display Yantai Co., Ltd.	CNY	955,915,000		April 19, 2010		100	%
LG Display U.S.A. Inc.	US$	10,920,000		December 8, 2011		100	%
Nanumnuri Co., Ltd.	W	800,000,000		March 19, 2012		100	%
LG Display (China) Co., Ltd.⁽²⁾	CNY	5,703,466,124		December 27, 2012		70	%
Unified Innovative Technology, LLC	US$	9,000,000		March 21, 2014		100	%
Global OLED Technology LLC⁽³⁾	US$	152,767,000		May 7, 2015		100	%


Company⁽¹⁾	Investment Amount		Initial Equity Investment Date		Equity Interest
LG Display Guangzhou Trading Co., Ltd.⁽⁴⁾	CNY	1,223,960		May 27, 2015		100	%
MMT (Money Market Trust)	W	10,500,000,000		June 11, 2007		100	%
Suzhou Raken Technology Co., Ltd.	CNY	637,079,715		October 7, 2008		51	%
Paju Electric Glass Co., Ltd.	W	33,648,000,000		March 25, 2005		40	%
TLI Co., Ltd.	W	14,073,806,250		May 16, 2008		10	%
AVACO Co., Ltd.	W	6,172,728,120		June 9, 2008		16	%
New Optics Ltd.	W	12,199,600,000		July 30, 2008		46	%
LIG Invenia Co., Ltd. (formerly LIG ADP Co., Ltd.)	W	6,330,000,000		February 24, 2009		13	%
Wooree E&L Co., Ltd. (formerly Wooree LED Co., Ltd.)	W	11,900,000,000		May 22, 2009		21	%
LB Gemini New Growth Fund No. 16⁽⁵⁾	W	7,659,704,518		December 7, 2009		31	%
Can Yang Investment Ltd.	CNY	93,740,124		January 27, 2010		9	%
YAS Co., Ltd.	W	10,000,000,000		September 16, 2010		19	%
Narae Nanotech Corporation	W	30,000,000,000		April 22, 2011		23	%
Avatec Co., Ltd.	W	10,600,000,000		December 6, 2011		16	%
Glonix Co., Ltd.	W	2,000,000,000		April 10, 2012		20	%
Fuhu, Inc.⁽⁶⁾	US$	26,006,159		July 27, 2015		10	%

Changes since December 31, 2014:

(1)	In August 2015, we completed the dissolution of L&T Display Technology (Xiamen) Limited.

(2)	In January and August 2015, we invested CNY1,414 million and CNY35 million, respectively, in cash for the capital increase of LG Display (China) Co., Ltd. The investment did not affect our percentage interest.

(3)	In May 2015, we invested US$103 million to acquire an additional 67% interest in Global OLED Technology LLC in order to strengthen our intellectual property portfolio for our OLED business. Our shareholding in such company is 100%.

(4)	In April 2015, we founded LG Display Guangzhou Trading Co. Ltd. in Guangzhou, China for the purpose of sales of TFT-LCD products. Our shareholding in such company is 100%.

(5)	In March 2015, we invested W360 million in LB Gemini New Growth Fund No. 16, and in April, July and August 2015, we divested W2,490 million, W2,100 million and W2,175 million, respectively. The investment and divestment did not affect our percentage interest.

(6)	In July 2015, we invested US$26 million to acquire 500,000 common shares and 1,011,280 voting preferred shares of Fuhu, Inc., a producer of tablets and contents for children. Our shareholding in such company is 10% and we have the right to appoint one member of such company’s board of directors.

13.

Audit Information

Audit service

(Unit: In millions of Won, hours)

Description

2015 Q1~Q3

2014

2013

Auditor

KPMG Samjong

Activity

Audit by independent
auditor

Compensation⁽¹⁾

990 (400)

⁽²⁾

910 (326)

⁽²⁾

910 (325)

⁽²⁾

Time required

10,316

16,380

16,202

(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.

Non-audit service


(Unit: In millions of Won)
Fiscal year	Contract date	Service description	Service period	Compensation
2013	July 29, 2013	Advisory services in establishing a compliance system in connection with our disclosure obligations under the U.S. Securities and Exchange commission’s conflict mineral rule.	July 2013 to October 2013		126

14.

Board of Directors

Members of the board of directors

As of September 30, 2015 our board of directors consist of two non-outside directors, one non-standing director and three outside directors.


		(As of September 30, 2015)
Name	Position	Primary responsibility
Yu Sig Kang⁽¹⁾	Director (non-standing)	Chairman of the board of directors
Sang Beom Han⁽²⁾	Representative Director (non-outside), Chief Executive Officer and President	Overall head of management
Sangdon Kim	Director (non-outside), Chief Financial Officer and Senior Vice President	Overall head of finances
Jin Jang	Outside Director	Related to the overall management
Joon Park	Outside Director	Related to the overall management
Sung-Sik Hwang⁽³⁾	Outside Director	Related to the overall management

(1)	Yu Sig Kang is also a registered executive of LG Electronics.

(2)	Sang Beom Han was reappointed for another term as a non-outside director at the annual general meeting of shareholders held on March 13, 2015.

(3)	Sung-Sik Hwang was appointed as an outside director by the courts on January 22, 2015. Mr. Hwang was reappointed for a full term at the annual general meeting of shareholders held on March 13, 2015.

•

Tae Sik Ahn stepped down as an outside director on January 15, 2015 before the end of his term.

•

Dongil Kwon stepped down as an outside director on September 25, 2015 before the end of his term.

Committees of the board of directors

As of September 30, 2015, we have the following committees that serve under our board of directors: Audit Committee, Outside Director Nomination Committee and Management Committee.


		(As of September 30, 2015)
Committee	Composition	Member
Audit Committee	3 outside directors	Joon Park, Jin Jang, Sung-Sik Hwang⁽¹⁾
Outside Director Nomination Committee	1 non-standing director and 2 outside directors	Yu Sig Kang, Jin Jang⁽²⁾, Joon Park⁽²⁾
Management Committee	2 non-outside directors	Sang Beom Han, Sangdon Kim

(1)	Sung-Sik Hwang was appointed as member of the audit committee of the board of directors by the courts on January 22, 2015. Mr. Hwang was reappointed for a full term at the annual general meeting of shareholders held on March 13, 2015.

(2)	Jin Jang and Joon Park were appointed as members of the outside director nomination committee of the board of directors by the board of directors on January 27, 2015.

•

Tae Sik Ahn stepped down as a member of the audit committee and the outside director nomination committee of the board of directors on January 15, 2015 before the end of his term.

Independence of directors

Directors are appointed in accordance with the procedures of the Commercial Act and other relevant laws and regulations. Following Dongil Kwon’s stepping down from his role as an outside director on September 25, 2015, three out of the six directors that comprise the board are outside directors. In order to comply with outside director requirements and in accordance with the Commercial Act, we plan to form, at our next general meeting of shareholders, a board of directors comprised of seven directors of whom the majority (four) will be outside directors. Outside directors candidates are nominated for appointment at a shareholders’ meeting after undergoing rigorous review by the Outside Director Nomination Committee.

All of our current outside directors were nominated by the Outside Director Nomination Committee, and all of our current non-outside directors were nominated by the board of directors.

15.

Information Regarding Shares

Total number of shares

(1)

Total number of shares authorized to be issued (as of September 30, 2015): 500,000,000 shares.

(2)

Total shares issued and outstanding (as of September 30, 2015): 357,815,700 shares.

Shareholder list

(1)

Largest shareholder and related parties as of September 30, 2015:


Name	Relationship	Number of shares of common stock		Equity interest
LG Electronics	Largest Shareholder		135,625,000		37.9	%
Sang Beom Han	Related Party		13,014		0.0	%
Sangdon Kim	Related Party		1,500		0.0	%

(2)

Shareholders who are known to us to own 5% or more of our shares as of September 30, 2015:


Beneficial owner	Number of shares of common stock		Equity interest
LG Electronics		135,625,000		37.9	%
National Pension Service		29,071,950		8.12	%

16.

Directors and Employees

Directors

(1)

Remuneration for directors in 2015 Q1~Q3


(Unit: person, in millions of Won)
Classification	No. of directors⁽¹⁾		Amount paid⁽²⁾			Per capita average remuneration paid⁽⁴⁾
Non-outside directors		3		2,207	⁽³⁾		736
Outside directors who are not audit committee members		0		57			57
Outside directors who are audit committee members		3		175			58

Total		6		2,439			—

(1)	Number of directors as at September 30, 2015. Dongil Kwon stepped down as an outside director on September 25, 2015 before the end of his term.

(2)	Amount paid is calculated on the basis of amount of cash actually paid.

(3)	Among the non-outside directors, Yu Sig Kang does not receive any remuneration.

(4)	Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the nine months ended September 30, 2015.

(2)

Remuneration for individual directors and audit committee members

•

Individual amount of remuneration paid in 2015 Q1~Q3

(Unit: in millions of Won)

Name

Position

Total remuneration

Payment not included in
total remuneration

Sang Beom Han

President

1,710

—

•

Method of calculation


Name	Method of calculation
Sang Beom Han	Total remuneration

		•	W1,710 million (consisting of W870 million in salary and W840 million in bonus).

	Salary

		•	Annual salary is set in accordance with the executive compensation regulations established by the board of directors.

		•	Annual salary is equally divided and paid on a monthly basis.

	Bonus

		•	Bonus is awarded by the board of directors based on performance and evaluation standards derived from the special bonus provisions of the executive compensation regulations.

		•	Bonus in the range of 0 to 150% of annual salary may be awarded by evaluating the previous year’s performance through certain financial indicators, such as revenue and operating profit, and non-financial indicators, such as meeting our medium- to long-term expectations, leadership and other contributions.

				•	Financial indicators: For the year ended December 31, 2014, revenue was W26,456 billion and operating profit was W1,357 billion, which was a 17% improvement compared to the previous year’s operating profit.

				•	Non-financial indictors: We maintained industry-leading technology through the continual release of differentiated technologies and products while improving profit margins and market position and Mr. Han showed leadership in leading us.

(3)

Stock options

Not applicable.

Employees

As of September 30, 2015, we had 32,693 employees (excluding our executive officers). On average, our male employees have served 7.7 years and our female employees have served 5.8 years. The total amount of salary paid to our employees for the nine months ended September 30, 2015 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act was W1,335,404 million for our male employees and W353,915 million for our female employees. The following table provides details of our employees as of September 30, 2015:


(Unit: person, in millions of Won, year)
	Number of employees⁽¹⁾		Total salary in 2015 Q1~Q3^(2)(3)(4)		Total salary per capita⁽⁵⁾		Average years of service
Male		23,763		1,355,404		57		7.7
Female		8,930		353,915		40		5.8

Total		32,693		1,709,320		53		7.2

(1)	Includes part-time employees.

(2)	Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees for the nine months ended September 30, 2015 was W266,116 million and the per capita welfare benefit provided was W8.2 million.

(3)	Based on income tax statements, which are submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act.

(4)	Includes incentive payments to employees who have transferred from our affiliated companies.

(5)	Calculated using the average number of employees (male: 23,592, female: 8,910) for the nine months ended September 30, 2015.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

September 30, 2015 and 2014

(With Independent Auditors’ Review Report Thereon)

Table of Contents


	Page

Independent Auditors’ Review Report		30

Condensed Consolidated Interim Statements of Financial Position		32

Condensed Consolidated Interim Statements of Comprehensive Income		33

Condensed Consolidated Interim Statements of Changes in Equity		34

Condensed Consolidated Interim Statements of Cash Flows		35

Notes to the Condensed Consolidated Interim Financial Statements		37

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying condensed consolidated interim financial statements of LG Display Co., Ltd. and subsidiaries (the “Group”) which comprise the condensed consolidated interim statement of financial position as of September 30, 2015, the condensed consolidated interim statements of comprehensive income for each of the three-month and nine-month periods ended September 30, 2015 and 2014, and statements of changes in equity and cash flows for the nine-month periods ended September 30, 2015 and 2014, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s 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 issue a report on these condensed consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Security and Futures Commission of the Republic of Korea. A review of interim financial statements 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 Korean Standards on Auditing 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

Without qualifying our opinion, we draw attention to the following:

As discussed in note 17 to the consolidated financial statements, the Group has been or is named as defendants in a number of individual lawsuits and class actions in the United States and Canada, respectively, in connection with alleged antitrust violations concerning the sale of LCD panels. The Group estimated and recognized losses related to these alleged violations. 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.

Other Matters

The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries. Accordingly this report is for use by those knowledgeable about Korean review standards and their application in practice.

We audited the consolidated statement of financial position as of December 31, 2014 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing and our report thereon, dated February 17, 2015, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2014, presented for comparative purposes, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

October 30, 2015

This report is effective as of October 30, 2015 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 the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

As of September 30, 2015 and December 31, 2014


(In millions of won)	Note	September 30, 2015		December 31, 2014

Assets
Cash and cash equivalents	9	W	556,821		889,839
Deposits in banks	9		2,037,652		1,526,482
Trade accounts and notes receivable, net	9,16,19		4,347,770		3,444,477
Other accounts receivable, net	9		101,250		119,478
Other current financial assets	9		4,633		3,250
Inventories	5		2,876,463		2,754,098
Prepaid income taxes			5,257		6,340
Other current assets			544,929		496,665

Total current assets			10,474,775		9,240,629

Deposits in banks	9		13		8,427
Investments in equity accounted investees	6		399,399		407,644
Other non-current financial assets	9		46,981		33,611
Property, plant and equipment, net	7,20		10,902,241		11,402,866
Intangible assets, net	8,20		695,912		576,670
Deferred tax assets	21		984,277		1,036,507
Other non-current assets			292,667		260,669

Total non-current assets			13,321,490		13,726,394

Total assets		W	23,796,265		22,967,023


Liabilities
Trade accounts and notes payable	9,19	W	3,392,978		3,391,635
Current financial liabilities	9,10		1,300,195		967,909
Other accounts payable	9,19		1,447,520		1,508,158
Accrued expenses			795,232		740,492
Income tax payable			150,015		227,714
Provisions	17		110,940		193,884
Advances received	16		51,632		488,379
Other current liabilities			56,021		31,385

Total current liabilities			7,304,533		7,549,556

Non-current financial liabilities	9,10		3,080,564		3,279,477
Non-current provisions			12,502		8,014
Defined benefit liabilities, net	14		330,317		324,180
Deferred tax liabilities	21		36,309		245
Other non-current liabilities			10,522		22,141

Total non-current liabilities			3,470,214		3,634,057

Total liabilities			10,774,747		11,183,613


Equity
Share capital	18		1,789,079		1,789,079
Share premium			2,251,113		2,251,113
Reserves	18		182,059		(63,843	)
Retained earnings			8,255,646		7,455,063


Total equity attributable to owners of the Controlling Company			12,477,897		11,431,412


Non-controlling interests			543,621		351,998

Total equity			13,021,518		11,783,410


Total liabilities and equity		W	23,796,265		22,967,023

See accompanying notes to the condensed consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Comprehensive Income

(Unaudited)

For the three-month and nine-month periods ended September 30, 2015 and 2014


(In millions of won, except earnings per share)	Note	For the three-month period ended September 30						For the nine-month period ended September 30
		2015			2014			2015			2014

Revenue	19, 20	W	7,158,201			6,546,853		W	20,888,135			18,113,591
Cost of sales	5,11,19		(6,111,527	)		(5,463,180	)		(17,340,386	)		(15,657,517	)

Gross profit			1,046,674			1,083,673			3,547,749			2,456,074

Selling expenses	12		(249,726	)		(167,857	)		(631,552	)		(486,293	)
Administrative expenses	12		(153,284	)		(133,216	)		(442,216	)		(377,877	)
Research and development expenses			(310,726	)		(308,483	)		(909,035	)		(860,424	)

Operating profit			332,938			474,117			1,564,946			731,480


Finance income	15		40,877			22,569			109,384			71,663
Finance costs	15		(126,889	)		(65,959	)		(237,092	)		(134,555	)
Other non-operating income	13		430,917			196,594			937,529			701,132
Other non-operating expenses	13		(412,435	)		(198,013	)		(978,364	)		(629,407	)
Equity in income of equity accounted investees, net			7,142			2,710			6,847			13,209


Profit before income tax			272,550			432,018			1,403,250			753,522
Income tax expense	21		(73,918	)		(77,889	)		(366,291	)		(225,324	)


Profit for the period			198,632			354,129			1,036,959			528,198


Other comprehensive income (loss)
Items that will never be reclassified to profit or loss
Remeasurements of net defined benefit liabilities	14		(692	)		(355	)		(3,629	)		(3,730	)
Related income tax			166			86			732			951

			(526	)		(269	)		(2,897	)		(2,779	)
Items that are or may be reclassified to profit or loss
Net change in fair value of available-for-sale financial assets	15		1,166			23			2,060			1,749
Foreign currency translation differences for foreign operations			185,302			111,505			278,206			(74,929	)
Share of loss from sale of treasury stocks by associates			(9	)		194			(353	)		(431	)
Related income tax			170			169			133			(198	)

			186,629			111,891			280,046			(73,809	)

Other comprehensive income (loss) for the period, net of income tax			186,103			111,622			277,149			(76,588	)

Total comprehensive income for the period		W	384,735			465,751		W	1,314,108			451,610


Profit attributable to:
Owners of the Controlling Company			189,168			349,804			982,388			528,180
Non-controlling interests			9,464			4,325			54,571			18

Profit for the period		W	198,632			354,129		W	1,036,959			528,198


Total comprehensive income attributable to:
Owners of the Controlling Company			354,882			449,204			1,225,393			455,010
Non-controlling interests			29,853			16,547			88,715			(3,400	)

Total comprehensive income for the period		W	384,735			465,751		W	1,314,108			451,610


Earnings per share (In Won)
Basic earnings per share	22	W	529			978			2,746			1,476

Diluted earnings per share	22	W	529			978			2,746			1,476

See accompanying notes to the condensed consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited)

For the nine-month periods ended September 30, 2015 and 2014


	Attributable to owners of the Controlling Company
(In millions of won)	Share capital		Share premium		Share of loss from sale of treasury stocks by associates			Fair value reserve		Translation reserve			Retained earnings			Non-controlling interests			Total equity

Balances at January 1, 2014	W	1,789,079		2,251,113		(254	)		572		(91,992	)		6,662,655			186,247			10,797,420

Total comprehensive income (loss) for the period
Profit for the period		—		—		—			—		—			528,180			18			528,198

Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax		—		—		—			1,652		—			—			—			1,652
Remeasurements of the net defined benefit liabilities, net of tax		—		—		—			—		—			(2,779	)		—			(2,779	)
Foreign currency translation differences for foreign operations, net of tax		—		—		—			—		(71,612	)		—			(3,418	)		(75,030	)
Share of loss from sale of treasury stocks by associates, net of tax		—		—		(431	)		—		—			—			—			(431	)

Total other comprehensive income (loss)		—		—		(431	)		1,652		(71,612	)		(2,779	)		(3,418	)		(76,588	)

Total comprehensive income (loss) for the period	W	—		—		(431	)		1,652		(71,612	)		525,401			(3,400	)		451,610

Transaction with owners, recognized directly in equity
Decrease of share interest in non-controlling interests		—		—		—			—		—			—			(2,955	)		(2,955	)
Capital contribution from non-controlling interests		—		—		—			—		—			—			146,159			146,159

Balances at September 30, 2014	W	1,789,079		2,251,113		(685	)		2,224		(163,604	)		7,188,056			326,051			11,392,234


Balances at January 1, 2015	W	1,789,079		2,251,113		(1,614	)		1,368		(63,597	)		7,455,063			351,998			11,783,410

Total comprehensive income (loss) for the period
Profit for the period		—		—		—			—		—			982,388			54,571			1,036,959

Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets, net of tax		—		—		—			2,049		—			—			—			2,049
Remeasurements of the net defined benefit liabilities, net of tax		—		—		—			—		—			(2,897	)		—			(2,897	)
Foreign currency translation differences for foreign operations, net of tax		—		—		—			—		244,206			—			34,144			278,350
Share of loss from sale of treasury stocks by associates, net of tax		—		—		(353	)		—		—			—			—			(353	)

Total other comprehensive income (loss)		—		—		(353	)		2,049		244,206			(2,897	)		34,144			277,149

Total comprehensive income (loss) for the period	W	—		—		(353	)		2,049		244,206			979,491			88,715			1,314,108

Transaction with owners, recognized directly in equity
Dividends to equity holders		—		—		—			—		—			(178,908	)		—			(178,908	)
Capital contribution from non-controlling interests		—		—		—			—		—			—			102,908			102,908

Balances at September 30, 2015	W	1,789,079		2,251,113		(1,967	)		3,417		180,609			8,255,646			543,621			13,021,518

See accompanying notes to the condensed consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the nine-month periods ended September 30, 2015 and 2014


(In millions of won)	Note	2015			2014

Cash flows from operating activities:
Profit for the period		W	1,036,959			528,198
Adjustments for:
Income tax expense	21		366,291			225,324
Depreciation	11		2,251,289			2,400,836
Amortization of intangible assets	11		303,270			185,346
Gain on foreign currency translation			(84,168	)		(98,211	)
Loss on foreign currency translation			85,054			105,331
Expenses related to defined benefit plans	14		149,275			152,738
Impairment loss on intangible assets			239			662
Reversal of impairment loss on intangible assets			(80	)		—
Gain on disposal of property, plant and equipment			(10,242	)		(7,629	)
Loss on disposal of property, plant and equipment			146			359
Loss on disposal of intangible assets			26			—
Finance income			(66,540	)		(40,129	)
Finance costs			180,806			90,240
Equity in income of equity method accounted investees, net			(6,847	)		(13,209	)
Other income			(12,510	)		(7,281	)
Other expenses			220,458			98,368

			3,376,467			3,092,745

Change in trade accounts and notes receivable			(1,287,375	)		(442,389	)
Change in other accounts receivable			43,028			5,830
Change in other current assets			(23,216	)		(228,535	)
Change in inventories			(122,364	)		(694,244	)
Change in other non-current assets			(68,610	)		(76,130	)
Change in trade accounts and notes payable			(55,190	)		129,955
Change in other accounts payable			(463,436	)		(301,543	)
Change in accrued expenses			95,254			89,477
Change in other current liabilities			30,335			(9,033	)
Change in other non-current liabilities			435			18,390
Change in provisions			(92,976	)		(76,926	)
Change in defined benefit liabilities, net			(146,161	)		(105,294	)

			(2,090,276	)		(1,690,442	)

Cash generated from operating activities			2,323,150			1,930,501
Income taxes paid			(392,017	)		(73,895	)
Interests received			44,932			27,677
Interests paid			(102,608	)		(129,915	)


Net cash provided by operating activities		W	1,873,457			1,754,368

See accompanying notes to the condensed consolidated interim financial statements.

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows, Continued

(Unaudited)

For the nine-month periods ended September 30, 2015 and 2014


(In millions of won)	Note	2015			2014

Cash flows from investing activities:
Dividends received		W	25,577			727
Proceeds from withdrawal of deposits in banks			1,725,172			1,299,676
Increase in deposits in banks			(2,227,928	)		(1,546,642	)
Acquisition of investments in equity accounted investees			(30,647	)		(324	)
Proceeds from disposal of investments in equity accounted investees			6,765			5,185
Acquisition of property, plant and equipment			(1,653,728	)		(2,352,432	)
Proceeds from disposal of property, plant and equipment			214,966			21,658
Acquisition of intangible assets			(207,383	)		(258,979	)
Government grants received			3,200			47,791
Proceeds from collection of short-term loans			—			6
Net cash inflow from disposal of a subsidiary			—			2,409
Net cash outflow from acquisition of a subsidiary			(110,093	)		—
Increase in long-term loans			(16,516	)		—
Proceeds from disposal of other financial assets			92			28
Acquisition of other non-current financial assets			(2,101	)		(5,052	)
Proceeds from disposal of other non-current financial assets			—			15,445


Net cash used in investing activities			(2,272,624	)		(2,770,504	)


Cash flows from financing activities:
Proceeds from short-term borrowings			—			419,941
Repayments of short-term borrowings			(223,626	)		(18,533	)
Proceeds from issuance of debentures			298,778			298,783
Proceeds from long-term debt			253,869			841,253
Repayments of long-term debt			—			(503,618	)
Repayments of current portion of long-term debt and debentures			(334,360	)		(387,993	)
Capital contribution from non-controlling interest			102,908			146,159
Dividends paid			(178,908	)		—


Net cash provided by (used in) financing activities			(81,339	)		795,992


Net decrease in cash and cash equivalents			(480,506	)		(220,144	)
Cash and cash equivalents at January 1			889,839			1,021,870
Effect of exchange rate fluctuations on cash held			147,488			21,738

Cash and cash equivalents at September 30		W	556,821			823,464

See accompanying notes to the condensed consolidated interim financial statements.

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 (the “Group”) 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 128 Yeouidae-ro, Yeongdeungpo-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, in February 2008, the Controlling Company changed its name to LG Display Co., Ltd. considering the decrease of Philips’s share interest in the Controlling Company and the possibility of its business expansion to other display products including Organic Light Emitting Diode (“OLED”) and Flexible Display products. As of September 30, 2015, LG Electronics Inc. owns 37.9% (135,625,000 shares) of the Controlling Company’s common stock.

As of September 30, 2015, the Controlling Company has TFT-LCD manufacturing plants, an OLED manufacturing plant and a Research & Development Center in Paju and TFT-LCD manufacturing plants in Gumi. The Controlling Company has overseas subsidiaries located in North America, Europe and Asia.

The Controlling Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of September 30, 2015, there are 357,815,700 shares of common stock outstanding. The Controlling Company’s 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, 2015, there are 31,303,446 ADSs outstanding.

1.	Reporting Entity, Continued

(b)

Consolidated Subsidiaries as of September 30, 2015

(In millions)

Subsidiaries

Location

Percentage of
ownership

Fiscal year

end

Date of
incorporation

Business

Capital stocks

LG Display America, Inc.

San Jose, U.S.A.

100%

December 31

September 24, 1999

Sell TFT-LCD products

USD

411

LG Display Japan Co., Ltd.

Tokyo, Japan

100%

December 31

October 12, 1999

Sell TFT-LCD products

JPY

LG Display Germany GmbH

Ratingen, Germany

100%

December 31

November 5, 1999

Sell TFT-LCD products

EUR

LG Display Taiwan Co., Ltd.

Taipei, Taiwan

100%

December 31

April 12, 1999

Sell TFT-LCD products

NTD

116

LG Display Nanjing Co., Ltd.

Nanjing, China

100%

December 31

July 15, 2002

Manufacture and sell TFT-LCD products

CNY

2,937

LG Display Shanghai Co., Ltd.

Shanghai, China

100%

December 31

January 16, 2003

Sell TFT-LCD products

CNY

LG Display Poland Sp. z o.o.

Wroclaw, Poland

100%

December 31

September 6, 2005

Manufacture and sell TFT-LCD products

PLN

511

LG Display Guangzhou Co., Ltd.

Guangzhou, China

100%

December 31

June 30, 2006

Manufacture and sell TFT-LCD products

CNY

1,655

LG Display Shenzhen Co., Ltd.

Shenzhen, China

100%

December 31

August 28, 2007

Sell TFT-LCD products

CNY

LG Display Singapore Pte. Ltd.

Singapore

100%

December 31

January 12, 2009

Sell TFT-LCD products

SGD

1.4

L&T Display Technology (Fujian) Limited

Fujian, China

51%

December 31

January 5, 2010

Manufacture LCD module and monitor sets

CNY

116

LG Display Yantai Co., Ltd.

Yantai, China

100%

December 31

April 19, 2010

Manufacture and sell TFT-LCD products

CNY

956

LG Display U.S.A. Inc.

McAllen, U.S.A.

100%

December 31

October 26, 2011

Manufacture TFT-LCD products

USD

Nanumnuri Co., Ltd.

Gumi, South Korea

100%

December 31

March 21, 2012

Janitorial services

KRW

800

LG Display (China) Co., Ltd. (*1)

Guangzhou, China

70%

December 31

December 10, 2012

Manufacture and sell TFT-LCD products

CNY

8,147

Unified Innovative Technology, LLC

Wilmington, U.S.A.

100%

December 31

March 12, 2014

Manage intellectual property

USD

LG Display Guangzhou Trading Co., Ltd. (*2)

Guangzhou, China

100%

December 31

April 28, 2015

Sell TFT-LCD products

CNY

1.2

Global OLED Technology, LLC (*3)

Herndon, U.S.A.

100%

December 31

December 18, 2009

Manage intellectual property

USD

138

Money Market
Trust(*4)

Seoul, South Korea

100%

December 31

—

Money market trust

KRW

10,500

(*1)

In January 2015, the Controlling Company invested W134,619 million in cash for the capital increase of LG Display (China) Co., Ltd. (“LGDCA”). In addition, LG Display Guangzhou Co., Ltd. (“LGDGZ”), a subsidiary of the Controlling Company, invested W118,936 million in cash for the capital increase of LGDCA in January and August 2015. The Controlling Company’s ownership percentage in LGDCA decreased from 56% to 52% and LGDGZ’s ownership percentage in LGDCA increased from 14% to 18%, respectively, as of December 31, 2014 to September 30, 2015.

1.	Reporting Entity, Continued

(*2)	In April 2015, the Controlling Company established LG Display Guangzhou Trading Co., Ltd. to sell TFT-LCD products. As of September 30, 2015, the Controlling Company has a 100% equity interest of this subsidiary and its capital stock amounts to W218 million as of September 30, 2015.

(*3)

In May 2015, the Controlling Company acquired 67% ownership in Gloabl OLED Technology LLC from LG Electronics Inc., LG Chem Ltd. and Idemitsu Kosan Co., Ltd. and paid W54,025 million, W2,990 million and W54,025million, respectively, in cash. As a result, the Controlling Company’s ownership percentage in Global OLED Technology increased from 33% to 100% as of December 31, 2014 to September 30, 2015.

(*4)

In January 2015, the Controlling Company disposed W18,100 million in MMT. As of September 30, 2015, the MMT balance as a result of its acquisition and disposal during the nine-month period ended September 30, 2015 is W10,500 million. There was no change in the Controlling Company’s ownership percentage in MMT as a result of its disposal and acquisition.

In August 2015, L&T Display Technology (Xiamen) Limited, a subsidiary of the Controlling Company, completed liquidation.

2.	Basis of Presenting Financial Statements

(a)

Statement of Compliance

The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRSs”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual consolidated 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, 2014.

(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 statements of financial position:

•

available-for-sale financial assets measured at fair value, and

•

net defined benefit liabilities are recognized as the present value of defined benefit obligations 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 Company’s functional currency.

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.

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied in its consolidated financial statements as of and for the year ended December 31, 2014.

3.	Summary of Significant Accounting Policies

The significant accounting policies followed by the Group in the preparation of its condensed 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, 2014.

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, 2014.

5.	Inventories

Inventories as of September 30, 2015 and December 31, 2014 are as follows:


(In millions of won)	September 30, 2015		December 31, 2014
Finished goods	W	1,151,849		1,200,592
Work-in-process		804,751		745,614
Raw materials		576,626		426,380
Supplies		343,237		381,512

	W	2,876,463		2,754,098

For the nine-month periods ended September 30, 2015 and 2014, the amount of inventories recognized as cost of sales, inventory write-downs and reversal and usage of inventory write-downs included in cost of sales is as follows;


(In millions of won)	2015			2014
Inventories recognized as cost of sales	W	17,340,386			15,657,517
Including: inventory write-downs		369,174			255,009
Including: reversal and usage of inventory write-downs		(332,699	)		(211,363	)

6.	Investments in Equity Accounted Investees

Associates and Joint Ventures (Equity Method Investees) as of September 30, 2015 are as follows:

(In millions of won)

Associates and joint ventures

Location

Percentage
of ownership

Fiscal
year end

Date of
incorporation

Business

Carrying
amount

Suzhou Raken Technology Co., Ltd.(*1)

Suzhou, China

December 31

October 2008

Manufacture and sell

LCD modules and

LCD TV set

146,612

Paju Electric Glass Co., Ltd.

Paju,

South Korea

December 31

January 2005

Manufacture electric

glass for FPDs

59,110

TLI Inc.(*2)

Seongnam,

South Korea

December 31

October 1998

Manufacture and sell

semiconductor parts for
FPDs

5,138

AVACO Co., Ltd.(*2)

Daegu,

South Korea

December 31

January 2001

Manufacture and sell

equipment for FPDs

11,955

New Optics Ltd.

Yangju,

South Korea

December 31

August 2005

Manufacture back light

parts for TFT-LCDs

45,415

LIG INVENIA Co., Ltd. (LIG ADP Co., Ltd.)(*2)

Seongnam,

South Korea

December 31

January 2001

Develop and manufacture
equipment for FPDs

2,019

WooRee E&L Co., Ltd.

Ansan,

South Korea

December 31

June 2008

Manufacture LED back

light unit packages

24,104

LB Gemini New Growth Fund No. 16 (*3)

Seoul,

South Korea

December 31

December 2009

Invest in small and

middle sized

companies and

benefit from M&A
opportunities

13,203

Can Yang Investments Limited(*2)

Hong Kong

December 31

January 2010

Develop, manufacture
and sell LED parts

8,012

YAS Co., Ltd.(*2)(*4)

Paju,

South Korea

December 31

April 2002

Develop and

manufacture deposition

equipment for OLEDs

10,794

Narenanotech Corporation

Yongin,

South Korea

December 31

December 1995

Manufacture and sell

FPD manufacturing

equipment

24,896

AVATEC Co., Ltd.(*2)

Daegu,

South Korea

December 31

August 2000

Process and sell

glass for FPDs

19,060

Glonix Co., Ltd.(*5)

Gimhae,

South Korea

December 31

October 2006

Manufacture and sell

LCD

—

Fuhu, Inc.(*2)(*6)

Los Angeles,
U.S.A.

March 31

June 2008

Develop and manufacture

tablet for kids and

Contents service

29,081

399,399

(*1)

Despite its 51% ownership, management concluded that the Controlling Company does not have control of Suzhou Raken Technology Co., Ltd. because the Controlling Company and AmTRAN Technology Co., Ltd., which has a 49% equity interest of the investee, jointly control the board of directors of the investee through equal voting powers. Accordingly, investment in Suzhou Raken Technology Co., Ltd. was accounted for as an equity method investment.

6.	Investments in Equity Accounted Investees, Continued

(*2)

Although the Controlling Company’s share interests in TLI Inc., AVACO Co., Ltd., LIG INVENIA Co., Ltd., Can Yang Investments Limited, YAS Co., Ltd., AVATEC Co., Ltd., and Fuhu, Inc. are below 20%, the Controlling Company is able to exercise significant influence through its right to appoint a director to the board of directors of each investee and the transactions between the Controlling Company and the investees are significant. Accordingly, the investments in these investees have been accounted for using the equity method.

(*3)

The Controlling Company is a member of a limited partnership in the LB Gemini New Growth Fund No.16 (“the Fund”). In March 2015, the Controlling Company made an additional cash investment of W360 million in the Fund and received W2,490 million, W2,100 million and W2,175 million from the Fund as capital distribution in April, July and August 2015, respectively. There were no changes in the Controlling Company’s ownership percentage in the Fund and the Controlling Company is committed to making future investments of up to an aggregate of W30,000 million.

(*4)	In 2015, YAS Co., Ltd. exercised its stock option and the Controlling Company’s ownership percentage in YAS Co., Ltd. decreased from 19.2% to 18.5% as of December 31, 2014 to September 30, 2015.

(*5)

The Controlling Company’s share of net assets of Glonix Co., Ltd. (“Glonix”) was reduced below zero and, accordingly, the Controlling Company discontinued the recognition of its share of losses of the Glonix. The Controlling Company’s unrecognized share of losses of the Glonix amounts to W210 million.

(*6)

In July 2015, the Controlling Company invested W30,287 million and acquired 500,000 shares of common stock and 1,011,280 shares of preferred stock with voting rights in Fuhu, Inc.. As of September 30, 2015, the Controlling Company’s ownership percentage in Fuhu, Inc. is 10% and the Controlling Company has the right to appoint a director to the board of directors of the investee.

7.	Property, Plant and Equipment

For the nine-month periods ended September 30, 2015 and 2014, the Group purchased property, plant and equipment of W1,824,781 million and W2,503,119 million, respectively. The capitalized borrowing costs and the annualized capitalization rate were W10,277 million and 3.80%, and W26,560 million and 3.75% for the nine-month periods ended September 30, 2015 and 2014, respectively. Also, for the nine-month periods ended September 30, 2015 and 2014, the Group disposed of property, plant and equipment with carrying amounts of W228,139 million and W25,456 million, respectively, and recognized W10,242 million and W146 million as gain and loss, respectively, on disposal of property, plant and equipment for the nine-month period ended September 30, 2015 (gain and loss for the nine-month period ended September 30, 2014: W7,629 million and W359 million, respectively).

8.	Intangible Assets

The Group capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products that are ultimately selected for production. The carrying amounts of capitalized development costs as of September 30, 2015 and December 31, 2014 are W189,344 million and W253,624 million, respectively.

9.	Financial Instruments

(a)

Credit risk

(i)

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as of September 30, 2015 and December 31, 2014 is as follows:


(In millions of won)
	September 30, 2015		December 31, 2014

Cash and cash equivalents	W	556,821		889,839
Deposits in banks(*)		2,037,665		1,534,909
Trade accounts and notes receivable, net		4,347,770		3,444,477
Other accounts receivable, net		101,250		119,478
Available-for-sale financial assets		3,207		3,237
Deposits		22,023		19,602
Other non-current financial assets		19,522		7,859

	W	7,088,258		6,019,401

(*)	As of September 30, 2015, the amount of deposits in banks restricted in use is W82,115 million (as of December 31, 2014: W81,232 million).

The maximum exposure to credit risk for trade accounts and notes receivable as of September 30, 2015 and December 31, 2014 by geographic region was as follows:


(In millions of won)
	September 30, 2015		December 31, 2014

Domestic	W	483,007		406,163
Euro-zone countries		396,946		309,296
Japan		176,372		135,972
United States		1,403,850		1,300,700
China		961,464		746,111
Taiwan		552,427		378,272
Others		373,704		167,963

	W	4,347,770		3,444,477

9.	Financial Instruments, Continued

(ii)

Impairment loss

The aging of trade accounts and notes receivable as of September 30, 2015 and December 31, 2014 was as follows:


(In millions of won)
	September 30, 2015					December 31, 2014
	Book value		Impairment loss			Book value		Impairment loss
Not past due	W	4,309,748		(1,335	)		3,412,933		(762	)
Past due 1-15 days		16,830		(5	)		26,220		(30	)
Past due 16-30 days		285		—			4,130		(13	)
Past due 31-60 days		11,629		(116	)		1,830		(18	)
Past due more than 60 days		10,836		(102	)		189		(2	)

	W	4,349,328		(1,558	)		3,445,302		(825	)

The movement in the allowance for impairment in respect of receivables during the nine-month period ended September 30, 2015 and the year ended December 31, 2014 are as follows:


(In millions of won)
	2015		2014

Balance at the beginning of the period	W	825		330
Bad debt expense		733		495

Balance at the reporting date	W	1,558		825

9.	Financial Instruments, Continued

(b)

Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of September 30, 2015.


(In millions of won)			Contractual cash flows
	Carrying amount		Total		6 months or less		6-12 months		1-2 years		2-5 years		More than 5 years
Non-derivative financial liabilities :
Secured bank loans	W	718,432		781,041		11,070		11,070		111,770		647,131		—
Unsecured bank loans		966,843		988,282		186,863		5,772		528,045		267,481		121
Unsecured bond issues		2,695,484		2,859,162		863,808		330,712		513,681		1,067,128		83,833
Trade accounts and notes payables		3,392,978		3,392,978		3,392,978		—		—		—		—
Other accounts payable		1,457,278		1,458,531		1,445,099		2,660		5,452		5,320		—

	W	9,231,015		9,479,994		5,899,818		350,214		1,158,948		1,987,060		83,954

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

9.	Financial Instruments, Continued

(c)

Currency risk

(i)

Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts as of September 30, 2015 and December 31, 2014 is as follows:


(In millions)	September 30, 2015
	USD			JPY			CNY			TWD			EUR			PLN
Cash and cash equivalents		292			966			874			30			1			57
Deposits in banks		—			—			2,717			—			—			—
Trade accounts and notes receivable		3,073			—			1,381			—			—			—
Other accounts receivable		12			2			38			13			—			—
Long-term other accounts receivable		4			—			—			—			—			—
Other assets denominated in foreign currencies		1			254			28			6			—			—
Trade accounts and notes payable		(1,422	)		(17,626	)		(1,446	)		—			—			—
Other accounts payable		(209	)		(2,996	)		(1,512	)		(5	)		(3	)		(5	)
Long-term other accounts payable		—			—			(1	)		—			—			—
Debt		(1,405	)		—			—			—			—			—

Net exposure		346			(19,400	)		2,079			44			(2	)		52


(In millions)	December 31, 2014
	USD			JPY			CNY			TWD			EUR			PLN			BRL
Cash and cash equivalents		507			1,221			1,565			146			1			79			—
Trade accounts and notes receivable		2,737			682			962			—			—			—			—
Other accounts receivable		13			—			205			1			21			—			—
Long-term other accounts receivable		6			—			—			—			—			—			—
Other assets denominated in foreign currencies		1			255			18			7			—			—			—
Trade accounts and notes payable		(1,750	)		(21,468	)		(1,233	)		—			—			—			—
Other accounts payable		(268	)		(6,056	)		(1,522	)		(128	)		(20	)		(11	)		(34	)
Long-term other accounts payable		—			—			(1	)		—			—			—			—
Debt		(1,508	)		—			—			—			—			—			—

Net exposure		(262	)		(25,366	)		(6	)		26			2			68			(34	)

9.	Financial Instruments, Continued

Average exchange rates applied for the nine-month periods ended September 30, 2015 and 2014 and the exchange rates at September 30, 2015 and December 31, 2014 are as follows:


(In won)	Average rate				Reporting date spot rate
	2015		2014		September 30, 2015		December 31, 2014
USD	W	1,122.29		1,041.36		1,194.50		1,099.20
JPY		9.28		10.11		9.97		9.20
CNY		179.20		168.93		188.23		176.81
TWD		35.69		34.56		36.12		34.69
EUR		1,251.92		1,412.26		1,343.93		1,336.52
PLN		301.16		338.29		317.29		312.49
BRL		359.37		455.31		294.29		413.62

(ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Group’s assets or liabilities denominated in foreign currency as of September 30, 2015 and December 31, 2014, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considers to be reasonably possible as of the end of reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:


(In millions of won)	September 30, 2015						December 31, 2014
	Equity			Profit or loss			Equity			Profit or loss
USD (5 percent weakening)	W	14,161			20,097			(15,674	)		3,829
JPY (5 percent weakening)		(7,783	)		(5,908	)		(9,701	)		(6,169	)
CNY (5 percent weakening)		20,306			(2,304	)		197			(757	)
TWD (5 percent weakening)		82			—			46			—
EUR (5 percent weakening)		(264	)		386			(360	)		1,511
PLN (5 percent weakening)		913			(238	)		981			242
BRL (5 percent weakening)		—			—			(533	)		(533	)

A stronger won against the above currencies as of September 30, 2015 and December 31, 2014 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

9.	Financial Instruments, Continued

(d)

Interest rate risk

(i)

Profile

The interest rate profile of the Group’s interest-bearing financial instruments as of September 30, 2015 and December 31, 2014 is as follows:


(In millions of won)
	September 30, 2015			December 31, 2014
Fixed rate instruments
Financial assets	W	2,597,680			2,427,972
Financial liabilities		(2,698,857	)		(2,822,170	)

	W	(101,177	)		(394,198	)

Variable rate instruments
Financial liabilities	W	(1,681,902	)		(1,425,216	)

(ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

As of September 30, 2015 and December 31, 2014, a change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below for each 12-month period following the reporting dates. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.


(In millions of won)	Equity					Profit or loss
	1%p increase			1%p decrease		1%p increase			1%p decrease
September 30, 2015
Variable rate instruments	W	(12,749	)		12,749		(12,749	)		12,749

December 31, 2014
Variable rate instruments	W	(10,803	)		10,803		(10,803	)		10,803

9.	Financial Instruments, Continued

(e)

Fair values

(i)

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the condensed consolidated interim statements of financial position, are as follows:


(In millions of won)
	September 30, 2015					December 31, 2014
	Carrying amounts		Fair values			Carrying amounts		Fair values
Assets carried at fair value
Available-for-sale financial assets	W	3,207		3,207			3,237		3,237

Assets carried at amortized cost
Cash and cash equivalents	W	556,821			(*)		889,839			(*)
Deposits in banks		2,037,665			(*)		1,534,909			(*)
Trade accounts and notes receivable		4,347,770			(*)		3,444,477			(*)
Other accounts receivable		101,250			(*)		119,478			(*)
Deposits		22,023			(*)		19,602			(*)
Other non-current financial assets		19,522			(*)		7,859			(*)
Liabilities carried at amortized cost
Secured bank loans	W	718,432		718,432			649,140		649,140
Unsecured bank loans		966,843		966,913			1,003,563		1,003,590
Unsecured bond issues		2,695,484		2,764,344			2,594,683		2,667,092
Trade accounts and notes payable		3,392,978			(*)		3,391,635			(*)
Other accounts payable		1,447,520		1,447,718			1,494,095		1,493,869
Other non-current liabilities		9,758		10,404			12,924		13,376

(*)	Excluded from disclosures as the carrying amount approximates fair value.

The basis for determining fair values above by the Group are consistent with those disclosed in the financial statements as of and for the year ended December 31, 2014

(ii)

Financial Instruments measured at cost

Available-for-sale financial assets measured at cost as of September 30, 2015 and December 31, 2014 are as follows:


(In millions of won)
	September 30, 2015		December 31, 2014
Intellectual Discovery Co., Ltd.	W	2,673		2,673
ARCH Venture Fund VIII, L.P		817		118
Henghao Technology Co., Ltd.		3,372		3,372

	W	6,862		6,163

9.	Financial Instruments, Continued

(e)

Fair Values, Continued

(iii)

Fair values of financial assets and liabilities

Fair value hierarchy

The table below analyzes financial instruments carried at fair value based on the input variables used in the valuation method to measure fair value of assets and liabilities. The different levels have been defined as follows:

•

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

•

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

•

Level 3: inputs for the asset or liability that are not based on observable market data

ii)

Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of September 30, 2015 and December 31, 2014 are as follows:

(In millions of won)

Level 1

Level 2

Level 3

Total

September 30, 2015

Assets

Available-for-sale financial assets

3,207

—

3,207

(In millions of won)

Level 1

Level 2

Level 3

Total

December 31, 2014

Assets

Available-for-sale financial assets

3,237

—

3,237

9.	Financial Instruments, Continued

(e)

Fair Values, Continued

iii)

Financial instruments not measured at fair value but for which the fair value is disclosed

Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the financial instruments not measured at fair value but for which the fair value is disclosed as of September 30, 2015 and December 31, 2014 are as follows:

(In millions of won)

September 30, 2015

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank loans

—

718,432

Discounted
cash flow

Discount rate

Unsecured bank loans

—

966,913

Discounted
cash flow

Discount rate

Unsecured bond issues

—

2,764,344

Discounted
cash flow

Discount rate

Other accounts payable

—

1,447,718

Discounted
cash flow

Discount rate

Other non-current liabilities

—

10,404

Discounted
cash flow

Discount rate

(In millions of won)

December 31, 2014

Valuation
technique

Input

Classification

Level 1

Level 2

Level 3

Liabilities

Secured bank loans

—

649,140

Discounted
cash flow

Discount rate

Unsecured bank loans

—

1,003,590

Discounted
cash flow

Discount rate

Unsecured bond issues

—

2,667,092

Discounted
cash flow

Discount rate

Other accounts payable

—

1,493,869

Discounted
cash flow

Discount rate

Other non-current liabilities

—

13,376

Discounted
cash flow

Discount rate

The significant interest rates applied for determination of the above fair value at the reporting date are as follows:


	September 30, 2015	December 31, 2014

Debentures, loans and others	1.65~2.42%	2.23%~2.60%

9.	Financial Instruments, Continued

(f)

Capital management

Management’s policy is to maintain a capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Liabilities to equity ratio, net borrowings to equity ratio and other financial ratios are used by management to achieve an optimal capital structure. Management also monitors the return on capital as well as the level of dividends to ordinary shareholders.


(In millions of won)
	September 30, 2015			December 31, 2014
Total liabilities	W	10,774,747			11,183,613
Total equity		13,021,518			11,783,410
Cash and deposits in banks (*1)		2,594,473			2,416,321
Borrowings (including bonds)		4,380,759			4,247,386
Total liabilities to equity ratio		83	%		95	%
Net borrowings to equity ratio (*2)		14	%		16	%

(*1)	Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks.

(*2)	Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds) less cash and current deposits in banks by total equity.

10.	Financial Liabilities

(a)

Financial liabilities as of September 30, 2015 and December 31, 2014 are as follows:


(In millions of won)
	September 30, 2015		December 31, 2014
Current
Short-term borrowings	W	—		223,626
Current portion of long-term debt		1,300,195		744,283

	W	1,300,195		967,909

Non-current
Won denominated borrowings	W	3,357		4,452
Foreign currency denominated borrowings		1,501,219		1,289,837
Bonds		1,575,988		1,985,188

	W	3,080,564		3,279,477

(b)

Short-term borrowings as of September 30, 2015 and December 31, 2014 are as follows:


(In millions of won and USD)
Lender	Annual interest rate as of September 30, 2015 (%)	September 30, 2015		December 31, 2014
Korea Development Bank and others	—	W	—		219,839
Industrial and Commercial Bank of China and others	—		—		3,787

Foreign currency equivalent			—	USD	203

		W	—		223,626

(c)

Won denominated long-term debt as of September 30, 2015 and December 31, 2014 is as follows:


(In millions of won)
Lender	Annual interest rate as of September 30, 2015 (%)	September 30, 2015			December 31, 2014
Woori Bank and others	3-year Korean Treasury Bond rate less 1.25, 2.75	W	4,881			7,336

Less current portion of long-term debt			(1,524	)		(2,884	)

		W	3,357			4,452

10.	Financial Liabilities, Continued

(d)

Long-term debt denominated in currencies other than won as of September 30, 2015 and December 31, 2014 is as follows:


(In millions of won and USD)
Lender	Annual interest rate as of *September 30, 2015 (%)()**	September 30, 2015			December 31, 2014
China Construction Bank and others	3ML+0.90~2.80	W	1,680,394			1,421,741

Foreign currency equivalent		USD	1,405		USD	1,305

Less current portion of long-term debt			(179,175	)		(131,904	)

		W	1,501,219			1,289,837

(*)	ML represents Month LIBOR (London Inter-Bank Offered Rates).

(e)

Details of bonds issued and outstanding as of September 30, 2015 and December 31, 2014 are as follows:


(In millions of won)
	Maturity	Annual interest rate as of September 30, 2015 (%)	September 30, 2015			December 31, 2014

*Won denominated bonds ()**
Publicly issued bonds	October 2015~ May 2022	2.12~4.95	W	2,700,000			2,600,000
Less discount on bonds				(4,516	)		(5,317	)
Less current portion				(1,119,496	)		(609,495	)

			W	1,575,988			1,985,188

(*)	Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly in arrears.

11.	The Nature of Expenses and Others

The classification of expenses by nature for the three-month and nine-month periods ended September 30, 2015 and 2014 are as follows:


(In millions of won)	For the three-month periods ended September 30,						For the nine-month periods ended September 30,
	2015			2014			2015			2014
Changes in inventories	W	(297,695	)		(640,800	)		(122,365	)		(691,605	)
Purchases of raw materials, merchandise and others		4,077,443			3,835,334			10,680,494			9,676,753
Depreciation and amortization		845,028			820,776			2,554,559			2,586,182
Outsourcing fees		303,434			303,085			820,867			777,966
Labor costs		781,331			731,794			2,279,630			2,176,100
Supplies and others		279,562			249,665			782,738			710,562
Utility		220,062			211,369			627,375			576,663
Fees and commissions		151,982			129,824			426,125			351,591
Shipping costs		61,260			63,835			171,185			174,022
Advertising		93,893			25,364			191,280			83,169
Warranty expenses		36,465			28,890			96,740			72,666
Taxes and dues		18,391			18,632			60,986			52,583
Travel		19,034			19,573			52,213			51,308
Others		238,940			282,354			836,592			832,357

	W	6,829,130			6,079,695			19,458,419			17,430,317

(*)	Total expenses consist of cost of sales, selling, administrative, research and development expenses and other non-operating expenses, excluding foreign exchange differences.

12.	Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month and nine-month periods ended September 30, 2015 and 2014 are as follows:


(In millions of won)	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
	2015		2014		2015		2014
Salaries	W	68,259		64,016		200,235		192,350
Expenses related to defined benefit plans		6,715		6,210		20,364		21,623
Other employee benefits		26,829		17,854		63,252		49,131
Shipping costs		53,452		51,643		148,149		140,894
Fees and commissions		46,249		47,242		144,346		130,681
Depreciation		30,793		22,148		85,976		66,284
Taxes and dues		7,268		6,971		26,057		18,484
Advertising		93,893		25,364		191,280		83,169
Warranty expenses		36,465		28,890		96,740		72,666
Rent		6,326		5,578		17,848		16,342
Insurance		3,029		2,166		7,960		8,929
Travel		6,232		5,703		17,799		17,058
Training		4,083		3,939		11,469		9,343
Others		13,417		13,349		42,293		37,216

	W	403,010		301,073		1,073,768		864,170

13.	Other Non-operating Income and Other Non-operating Expenses

(a)

Details of other non-operating income for the three-month and nine-month periods ended September 30, 2015 and 2014 are as follows:


(In millions of won)	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
	2015		2014		2015		2014
Rental income	W	1,099		1,189		3,336		5,589
Foreign currency gain		412,216		188,366		900,471		636,465
Reversal of impairment loss on intangible assets		105		—		80		—
Gain on disposal of property, plant and equipment		1,445		2,628		10,242		7,629
Reversal of allowance for doubtful accounts for other receivables		532		—		308		—
Commission earned		—		733		18		1,645
Others		15,520		3,678		23,074		49,804

	W	430,917		196,594		937,529		701,132

(b)

Details of other non-operating expenses for the three-month and nine-month periods ended September 30, 2015 and 2014 are as follows:


(In millions of won)	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
	2015		2014		2015		2014
Other bad debt expense	W	—		104		—		403
Foreign currency loss		408,568		191,054		843,134		581,201
Loss on disposal of property, plant and equipment		9		—		146		359
Loss on disposal of intangible assets		15		—		26		—
Impairment loss on intangible assets		—		44		239		662
Donations		1,371		1,536		8,162		8,750
Expenses related to legal proceedings or claims and others		2,472		5,275		126,657		38,032

	W	412,435		198,013		978,364		629,407

14.	Employee Benefits

The Controlling Company and certain subsidiaries’ defined benefit plans provide a lump-sum payment to an employee based on final salary rates and length of service at the time the employee leaves the Controlling Company.

(a)

Recognized liabilities for defined benefit plans as of September 30, 2015 and December 31, 2014 are as follows:


(In millions of won)
	September 30, 2015			December 31, 2014
Present value of partially funded defined benefit obligations	W	1,229,540			1,114,689
Fair value of plan assets		(899,223	)		(790,509	)

	W	330,317			324,180

(b)

Expenses recognized in profit or loss for the three-month and nine-month periods ended September 30, 2015 and 2014 are as follows:


(In millions of won)	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
	2015		2014		2015		2014
Current service cost	W	46,941		40,032		140,826		119,202
Past service cost		—		—		—		21,990
Net interest cost		2,816		3,754		8,449		11,546

	W	49,757		43,786		149,275		152,738

(c)

Plan assets as September 30, 2015 and December 31, 2014 are as follows:


(In millions of won)
	September 30, 2015		December 31, 2014
Guaranteed deposits in banks	W	899,223		790,509

As of September 30, 2015, the Group maintains the plan assets primarily with Mirae Asset Securities Co., Ltd. and Shinhan Bank.

(d)

Remeasurements of net defined benefit liabilities included in other comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2015 and 2014 are as follows:


(In millions of won)	For the three-month periods ended September 30,						For the nine-month periods ended September 30,
	2015			2014			2015			2014
Remeasurements of net defined benefit liabilities	W	(692	)		(355	)		(3,629	)		(3,730	)
Income tax		166			86			732			951

Remeasurements of net defined benefit liabilities, net of income tax	W	(526	)		(269	)		(2,897	)		(2,779	)

15.	Finance Income and Finance Costs

(a)

Finance income and costs recognized in profit and loss for the three-month and nine-month periods ended September 30, 2015 and 2014 are as follows:


(In millions of won)	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
	2015		2014		2015		2014
Finance income
Interest income	W	15,304		11,494		43,759		35,135
Dividend income		—		—		—		282
Foreign currency gain		25,128		11,075		42,844		35,190
Gain on disposal of available-for-sale financial assets		—		—		—		780
Gain on disposal of investments in subsidiaries		—		—		—		276
Gain on disposal of investments in equity accounted investees		445		—		22,781		—

	W	40,877		22,569		109,384		71,663