Document and Entity Information
Document and Entity Information | |
Dec. 31, 2009
| |
Entity Common Stock, Shares Outstanding | 357,815,700 |
Consolidated Balance Sheets
Consolidated Balance Sheets | |||
In Millions | Dec. 31, 2009
KRW (₩) KRW / shares | Dec. 31, 2009
USD ($) USD / shares | Dec. 31, 2008
KRW (₩) KRW / shares |
Current assets: | |||
Cash and cash equivalents | 817982 | $703 | 1352752 |
Short-term financial instruments | 2,500,000 | 2,148 | 2,055,000 |
Accounts receivable, net (note 4) | |||
Trade, net | 1,746,777 | 1,501 | 1,209,890 |
Due from related parties | 1,203,468 | 1,034 | 804,810 |
Others, net | 79,978 | 69 | 36,088 |
Prepaid expenses | 44,017 | 38 | 43,589 |
Prepaid value added tax | 95,892 | 82 | 176,379 |
Deferred income tax assets (note 15) | 211,761 | 182 | 85,753 |
Inventories (note 6) | 1,667,780 | 1,433 | 1,136,673 |
Investment securities (notes 5 and 20) | 74 | ||
Other current assets | 83,780 | 72 | 119,836 |
Total current assets | 8,451,435 | 7,263 | 7,020,844 |
Long-term prepaid expenses | 162,495 | 140 | 171,219 |
Property, plant and equipment, net (notes 9 and 25) | 9,666,540 | 8,307 | 9,296,364 |
Intangible assets, net (note 10) | 226,990 | 195 | 171,019 |
Deferred income tax assets (note 15) | 681,383 | 586 | 494,263 |
Investment securities (notes 5 and 20) | 126,681 | 109 | 126,455 |
Equity method investments (note 7) | 278,261 | 239 | 79,474 |
Other non-current assets | 125,826 | 108 | 152,435 |
Total assets | 19,719,611 | 16,946 | 17,512,073 |
Current liabilities: | |||
Short-term borrowings (notes 12 and 19) | 770,913 | 662 | 601,068 |
Current installments of long-term debt and debentures (notes 13 and 20) | 1,229,362 | 1,056 | 553,430 |
Trade accounts payable | |||
Trade | 1,206,031 | 1,036 | 633,405 |
Due to related parties | 825,391 | 709 | 354,606 |
Other accounts payable (note 25) | |||
Others | 997,764 | 857 | 1,166,104 |
Due to related parties | 598,850 | 515 | 877,602 |
Accrued expenses | 629,691 | 541 | 203,488 |
Income taxes payable (note 15) | 145,326 | 125 | 294,494 |
Other current liabilities (note 11) | 126,610 | 109 | 108,981 |
Total current liabilities | 6,529,938 | 5,612 | 4,793,178 |
Long-term debt, excluding current installments (notes 13, 19 and 20) | 2,078,102 | 1,786 | 2,959,779 |
Long-term other payables (notes 1 and 20) | 407,907 | 351 | 531,757 |
Long-term accrued expenses | 18,596 | 16 | 16,471 |
Long-term advance receipt (note 19) | 583,800 | 502 | |
Accrued severance benefits, net (note 14) | 58,976 | 51 | 70,232 |
Other non-current liabilities (note 11) | 88,355 | 76 | 89,856 |
Total liabilities | 9,765,674 | 8,392 | 8,461,273 |
Stockholders' equity (note 16) | |||
Common stock, (Won)5,000 par value. Authorized 500,000,000 shares; issued and outstanding 357,815,700 shares in 2008 and 2009 | 1,789,078 | 1,537 | 1,789,078 |
Capital surplus | 2,257,339 | 1,940 | 2,253,445 |
Accumulated other comprehensive income | 144,423 | 124 | 176,949 |
Retained earnings | 5,763,097 | 4,953 | 4,831,328 |
Total stockholders' equity | 9,953,937 | 8,554 | 9,050,800 |
Commitments and contingencies (note 19) | |||
Total liabilities and stockholders' equity | 19719611 | $16,946 | 17512073 |
1_Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical) | ||||
Dec. 31, 2009
KRW (₩) KRW / shares | Dec. 31, 2009
USD ($) USD / shares | Dec. 31, 2008
KRW (₩) KRW / shares | Dec. 31, 2008
USD ($) | |
Common stock, par value | 5000 | $0 | 5000 | |
Common stock, Authorized | 500,000,000 | 500,000,000 | ||
Common stock, issued | 357,815,700 | 357,815,700 | ||
Common stock, outstanding | 357,815,700 | 357,815,700 |
Consolidated Statements of Inco
Consolidated Statements of Income | ||||
In Millions, except Per Share data | 12 Months Ended
Dec. 31, 2009 KRW (₩) KRW / shares | 12 Months Ended
Dec. 31, 2009 USD ($) USD / shares | 12 Months Ended
Dec. 31, 2008 KRW (₩) KRW / shares | 12 Months Ended
Dec. 31, 2007 KRW (₩) KRW / shares |
Sales (note 22) | ||||
Related parties | 7589663 | $6,522 | 6401173 | 5475969 |
Others | 12,448,039 | 10,697 | 9,872,945 | 8,875,997 |
Sales Revenue, Net, Total | 20,037,702 | 17,220 | 16,274,118 | 14,351,966 |
Cost of sales | 17,824,767 | 15,318 | 13,609,094 | 12,072,257 |
Gross profit | 2,212,935 | 1,902 | 2,665,024 | 2,279,709 |
Selling, general and administrative expenses | 1,192,071 | 1,024 | 895,919 | 801,406 |
Antitrust (note 19) | 325,784 | 280 | 534,800 | |
Operating income | 695,080 | 597 | 1,234,305 | 1,478,303 |
Other income (expense) | ||||
Interest income | 129,332 | 111 | 212,651 | 58,348 |
Interest expense | (124,948) | (107) | (152,197) | (206,670) |
Foreign exchange gain (loss), net | 270,676 | 233 | (242,748) | 71,046 |
Rental income | 4,116 | 4 | 3,203 | 3,796 |
Legal settlement (note 19) | 146,606 | |||
Gain (loss) from redemption of debentures, net (note 13) | (173) | 0 | 1,140 | (17,632) |
Others, net | 41,010 | 35 | 17,058 | 19,472 |
Total other income (expense), net | 320,013 | 275 | (160,893) | 74,966 |
Earnings before income tax expense (benefit) | 1,015,093 | 872 | 1,073,412 | 1,553,269 |
Income tax expense (benefit) (note 15) | (95,584) | (82) | 168,011 | 208,890 |
Net income | 1,110,677 | 954 | 905,401 | 1,344,379 |
Less: Net income attributable to noncontrolling interest | 2 | |||
Net income attributable to LG Display Co., Ltd. | 1110677 | $954 | 905399 | 1344379 |
Earnings per share (note 18) | ||||
Basic | 31 | 26.7 | 25.3 | 37.6 |
Diluted | 30.7 | 26.4 | 25 | 37.1 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity and Comprehensive Income | |||||
In Millions | Common Stock
USD ($) | Capital Surplus
KRW (₩) | Retained Earnings
KRW (₩) | Accumulated Other Comprehensive Income
USD ($) | Total
KRW (₩) KRW / shares |
Beginning Balance at Dec. 31, 2006 | $1,789,078 | 2246947 | 2849912 | ($12,367) | 6873570 |
Stock compensation expense | 2,691 | 2,691 | |||
Comprehensive income: | |||||
Net income | 1,344,379 | 1,344,379 | |||
Cumulative translation adjustment, net of tax | 46,693 | 46,693 | |||
Net unrealized gain (loss) in cash flow hedge derivatives, net of tax | (18,640) | (18,640) | |||
Total comprehensive income | 1,372,432 | ||||
Ending Balance at Dec. 31, 2007 | 1,789,078 | 2,249,638 | 4,194,291 | 15,686 | 8,248,693 |
Stock compensation expense | 1,474 | 1,474 | |||
Payment of dividend | (268,362) | (268,362) | |||
Beneficial conversion feature related to US dollar-denominated convertible bonds | 2,333 | 2,333 | |||
Comprehensive income: | |||||
Net income | 905,399 | 905,399 | |||
Unrealized (losses) gains on investment securities, net of tax | 21,899 | 21,899 | |||
Cumulative translation adjustment, net of tax | 136,692 | 136,692 | |||
Net unrealized gain (loss) in cash flow hedge derivatives, net of tax | 2,672 | 2,672 | |||
Total comprehensive income | 1,066,662 | ||||
Ending Balance at Dec. 31, 2008 | 1,789,078 | 2,253,445 | 4,831,328 | 176,949 | 9,050,800 |
Payment of dividend | (178,908) | (178,908) | |||
Beneficial conversion feature related to US dollar-denominated convertible bonds | 3,894 | 3,894 | |||
Comprehensive income: | |||||
Net income | 1,110,677 | 1,110,677 | |||
Unrealized (losses) gains on investment securities, net of tax | (21) | (24,018) | |||
Cumulative translation adjustment, net of tax | (9) | (10,345) | |||
Net unrealized gain (loss) in cash flow hedge derivatives, net of tax | 2 | 1,837 | |||
Total comprehensive income | 1,078,151 | ||||
Ending Balance at Dec. 31, 2009 | $1,537 | 2257339 | 5763097 | $124 | 9953937 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows | ||||
In Millions | 12 Months Ended
Dec. 31, 2009 KRW (₩) KRW / shares | 12 Months Ended
Dec. 31, 2009 USD ($) USD / shares | 12 Months Ended
Dec. 31, 2008 KRW (₩) KRW / shares | 12 Months Ended
Dec. 31, 2007 KRW (₩) KRW / shares |
Cash flows from operating activities: | ||||
Net income | 1110677 | $954 | 905401 | 1344379 |
Adjustments for: | ||||
Depreciation | 2,783,732 | 2,392 | 2,493,512 | 2,780,812 |
Amortization of intangible assets | 43,121 | 37 | 13,184 | 15,824 |
Loss (gain) on disposal of property, plant and equipment, net | (232) | 0 | (311) | 2,656 |
Impairment losses on property, plant and equipment | 664 | 1 | 83 | 44,398 |
Loss (gain) from redemption of debentures, net | 173 | 0 | (1,140) | 17,632 |
Loss (gain) on foreign currency translation, net | (272,685) | (234) | 411,479 | 836 |
Amortization of debt issuance cost | 1,528 | 1 | 1,805 | 1,717 |
Provision for warranty reserve | 113,866 | 98 | 90,063 | 77,852 |
Provision for severance benefits | 79,525 | 68 | 68,992 | 62,828 |
Deferred income tax expense (benefit) | (284,223) | (244) | (157,626) | 122,361 |
Others, net | 283,559 | 244 | 12,878 | 101,669 |
Changes in operating assets and liabilities: | ||||
Decrease (increase) in accounts receivable | (911,820) | (784) | 177,936 | (1,446,420) |
Decrease (increase) in inventories | (531,108) | (456) | (312,749) | 227,666 |
Decrease in prepaid expenses | 29,382 | 25 | 26,870 | 18,405 |
Decrease (increase) in prepaid value added tax | 96,635 | 83 | (70,455) | (10,506) |
Decrease (increase) in other current assets | 8,981 | 8 | (18,668) | 10,139 |
Decrease (increase) in other non-current assets | 21,276 | 18 | (23,647) | (78,049) |
Increase in trade accounts payable | 1,021,807 | 878 | 83,729 | 36,778 |
Increase (decrease) in other accounts payable | 45,273 | 39 | 195,692 | (19,853) |
Increase in accrued expenses | 161,170 | 139 | 102,689 | 43,421 |
Increase (decrease) in other current liabilities | (247,810) | (213) | 62,120 | 42,607 |
Increase in long-term advances received | 695,500 | 598 | ||
Increase (decrease) in other non-current liabilities | (97,592) | (84) | 463,631 | (88,188) |
Net cash provided by operating activities | 4,151,399 | 3,568 | 4,525,468 | 3,308,964 |
Cash flows from investing activities: | ||||
Acquisition of short-term financial instruments | (4,000,000) | (3,437) | (3,320,000) | (785,000) |
Proceeds from disposal of short-term financial instruments | 3,555,000 | 3,055 | 2,050,000 | |
Acquisition of investment securities | (29,246) | (25) | (96,260) | (39) |
Acquisition of property, plant and equipment | ||||
From related parties | (1,021,011) | (877) | (1,238,009) | (408,244) |
From others | (2,757,647) | (2,370) | (1,510,568) | (1,169,075) |
Proceeds from disposal of property, plant and equipment | 7,850 | 7 | 2,975 | 5,547 |
Acquisition of intangible assets | (109,017) | (94) | (125,413) | (18,651) |
Acquisition of equity method investments | (186,477) | (160) | (46,755) | |
Others, net | (9,603) | (8) | (6,220) | (6,612) |
Net cash used in investing activities | (4,550,151) | (3,910) | (4,290,250) | (2,382,074) |
Cash flows from financing activities: | ||||
Proceeds from (repayment of) short-term borrowings, net | 151,180 | 130 | 596,407 | (245,335) |
Proceeds from issuance of long-term debts | 868,319 | 746 | 23,637 | 887,434 |
Repayment of long-term debt | (957,612) | (823) | (503,916) | (1,364,400) |
Proceeds from long-term other payables | 14,608 | 39,843 | ||
Payment of dividend | (178,908) | (154) | (268,362) | |
Distribution to noncontrolling interest holders | (88) | |||
Net cash used in financing activities | (117,021) | (101) | (137,714) | (682,458) |
Effect of exchange rate changes on cash and cash equivalents | (21,679) | (19) | 58,825 | (2,457) |
Net increase in cash and cash equivalents from change in consolidated subsidiaries | 2,682 | 2 | 86 | |
Net increase (decrease) in cash and cash equivalents | (534,770) | (460) | 156,329 | 242,061 |
Cash and cash equivalents, beginning of the year | 1,163 | 1,196,423 | 954,362 | |
Cash and cash equivalents, end of the year | 817982 | $703 | 1163 | 1196423 |
Organization and Nature of Busi
Organization and Nature of Business (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Organization and Nature of Business | 1. Organization and Nature of Business LG Display Co., Ltd. and its subsidiaries principal activities are the manufacture and supply of Thin Film Transistor Liquid Crystal Displays (TFT-LCD) to Original Equipment Manufacturers (OEMs) and multinational corporations. The accompanying consolidated financial statements include the accounts of LG Display Co., Ltd. (LGD or the Controlling Company) and its consolidated subsidiaries (hereinafter collectively referred to as the Company). LG Display Co., Ltd. was incorporated in 1985 in the Republic of Korea under the original name of LG Soft, Ltd. On February29, 2008, the Controlling Company changed its name from LG.Philips LCD Co., Ltd. to LG Display Co., Ltd. upon the approval of shareholders at the general shareholders meeting on the same date as a result of the decrease in Koninklijke Philips Electronics N.V. (Philips)s share interest in the Controlling Company and the possibility of its business expansion to Organic Light Emitting Diode (OLED) and Flexible Display products. On March16, 2009, Philips sold its remaining 13.20% share interest in the Controlling Company. Consequently, Philips no longer has an equity interest and therefore is no longer a principal owner of the Company. As of December31, 2009, the Controlling Companys shareholders are as follows: Number of Shares Percentageof Ownership (%) LG Electronics Inc. 135,625,000 37.90 Others 222,190,700 62.10 357,815,700 100.00 The Controlling Companys subsidiaries as of December31, 2009 are as follows: Subsidiaries Country of Incorporation PercentageofOwnership(%) 2007 2008 2009 LG Display America, Inc. US 100 100 100 LG Display Japan Co., Ltd. Japan 100 100 100 LG Display Germany GmbH Germany 100 100 100 LG Display Taiwan Co., Ltd. Taiwan 100 100 100 LG Display Nanjing Co., Ltd. China 100 100 100 LG Display Shanghai Co., Ltd. China 100 100 100 LG Display Poland Sp. zo.o. Poland 80 80 80 LG Display Guangzhou Co., Ltd. China 100 84 89 LG Display Shenzhen Co., Ltd. China 100 100 100 LG Display Singapore Pte. Ltd. Singapore 100 LG Electronics (Nanjing) Plasma Co., Ltd. China 100 LG Display Hong Kong Co., Ltd., a consolidated subsidiary in 2008, was liquidated in November 2009. LG Display Singapore Pte. Ltd. was incorporated in Singapore on January12, 2009, to sell TFT-LCD products. In July 2009, the Controlling Company entered into a stock purchase agreement with LG Electronics Inc. and LG Electronics (China) Co., Ltd. for the acquisition of the shares of LG Electronics (Nanjing) Plasma Co., Ltd. in order to expand cell back-end process to module production. In accordance with the agreement, the Controlling Company acquired all of the shares of LG Electronics (Nanjing) Plasma Co., Ltd. at (Won)3,503 million in December 2009. In December 2007, Toshiba Corporation (Toshiba) acquired a 20% interest in LG Display Poland Sp. zo.o. (LG Display Poland). In connection with the tra |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below. Principles of Consolidation The consolidated financial statements include the accounts of LG Display Co., Ltd. and its majority-owned subsidiaries. When the Company does not have a controlling financial interest in an entity, but has the ability to exercise significant influence over the entity, the affiliated entity is accounting for using the equity method. All significant intercompany transactions and balances with the consolidated subsidiaries have been eliminated upon consolidation. Noncontrolling Interest On January1, 2009, the Company adopted an amendment to ASC 810 (Statement of Financial Accounting Standards (SFAS) 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No.51), which requires certain retrospective changes to the presentation of the financial statements. This amendment requires noncontrolling interests (previously referred to as minority interest) to be classified in the consolidated statements of income as part of consolidated net earnings and to include the accumulated amount of noncontrolling interests in the consolidated balance sheets as part of total equity. As of December 31, 2008 and 2009, the Company did not have any noncontrolling interests. The adoption of the amendment to ASC 810 did not have a material impact on the Companys consolidated financial statements and accordingly, the Company did not retrospectively apply changes to the presentation of the comparative financial statements. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. The most significant estimates and assumptions relate to the allowance for uncollectible accounts receivable, warranty obligations, recoverability of long-lived assets, valuation of inventories and deferred tax assets, assessments of tax uncertainties, assessment of pending and threatened litigation and other contingent liabilities, and the determination of fair value of financial instruments. Although these estimates are based on managements best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions. Foreign Currency Transactions and Translation The functional currency of the Controlling Companys subsidiaries in Nanjing and Guangzhou, China is the Chinese Renminbi. The functional currency of the Controlling Companys subsidiary in Poland is Zloty and that of the remaining foreign subsidiaries is the US dollar. The functional currency of the Controlling Company is the Korean |
United States Dollar Convenienc
United States Dollar Convenience Translations (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
United States Dollar Convenience Translations | 3. United States Dollar Convenience Translations The Controlling Company operates primarily in Korea and its financial accounting records are maintained in Korean Won. The US dollar amounts are provided herein as supplemental information solely for the convenience of the reader. Korean Won amounts are expressed in US dollars at the rate of (Won)1,163.65 : US $1, the US Federal Reserve Bank of New York noon buying exchange rate in effect on December31, 2009. The US dollar amounts are unaudited and are not presented in accordance with generally accepted accounting principles in the United States of America. These translations should not be construed as a representation that the Korean Won amounts shown could be converted, realized or settled in US dollars at this or any other rate. |
Accounts Receivable
Accounts Receivable (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Accounts Receivable | 4. Accounts Receivable The following table presents accounts receivable at December31: (in millions of Korean Won) 2008 2009 Trade (Won) 1,210,924 1,747,142 Due from related parties 804,810 1,203,468 Others 36,364 80,088 2,052,098 3,030,698 Allowance for doubtful accounts (1,310 ) (475 ) (Won) 2,050,788 3,030,223 The activity in the allowance for doubtful accounts for the years ended December31, 2007, 2008 and 2009 is as follows: (in millions of Korean Won) 2007 2008 2009 Allowance for doubtful accounts at beginning of year (Won) 3,631 10,261 1,310 Additions/Deductions to bad debt expense 6,638 (8,951 ) (835 ) Write-offs charged against the allowance (8 ) Allowance for doubtful accounts at end of year (Won) 10,261 1,310 475 The Controlling Company entered into accounts receivable insurance programs with insurance companies to reduce collection risk of accounts receivable due from certain customers with relatively low credit ratings. As of December31, 2009, the insurance programs cover 95 percent of the insured customers accounts receivable balance. The Controlling Company has negotiated trade accounts receivable due from the subsidiaries through banks. The trade accounts receivable negotiated but have not matured, were recorded as short-term borrowings. Those amounted to (Won)601,068 million (US$478 million) as of December31, 2008, and (Won)229,787 million (US$187 million and JP950 million) as of December31, 2009, respectively. As of December31, 2009, the Company entered into accounts receivable selling programs with banks and accounts and notes receivable amounting to US$601 million were sold under these programs in 2009. For the year ended December31, 2009, the Company recognized (Won)4,307 million as loss on disposal of trade accounts and notes receivable. (note19(a)) |
Investment Securities
Investment Securities (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Investment Securities | 5. Investment Securities Investment securities as of December31, 2008 and 2009 are as follows: (in millions of Korean Won) 2008 2009 Carrying amount Acquisition cost Carrying amount Fair value Available for sale securities: Debt securities: HannStar Display Corporation(*) (Won) 126,455 96,249 91,394 91,394 Government bonds 74 83 83 83 Equity securities: Prime View International Co., Ltd. 11,522 12,912 12,912 Formosa Epitaxy Inc. 3,128 4,841 4,841 Others 109 108 108 Trading securities: Debt securities: (Fair value option elected) Everlight Electronics Co., Ltd. 14,404 17,343 17,343 (Won) 126,529 125,495 126,681 126,681 (*) During 2008, the Company purchased 180million shares of non-voting mandatorily redeemable convertible preferred stock. The preferred stock is convertible into common stock of HannStar Display Corporation at a ratio of 1:1 at the option of the Company from the issue date (February 28, 2008) to the maturity (February 28, 2011). The Company has a put option for total or partial cash redemption of convertible preferred stocks during the period between 18 months from issuance to 91 days prior to maturity and the issuer has a call option to repay, in cash, total preferred stocks during the period between 2 years from issuance to 90 days prior to maturity. The abovementioned convertible preferred stock have been issued pursuant to a private placement under Taiwanese laws, which restrict the sale of the preferred stock and the stock acquired through conversion are not to be traded in the Taiwanese stock exchange until the original maturity of the preferred stock. Investment securities are all classified as available-for-sale securities except investment in Everlight Electronics Co., Ltd., for which the fair value option has been elected. |
Inventories
Inventories (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Inventories | 6. Inventories Inventories comprise the following at December31: (in millions of Korean Won) 2008 2009 Finished goods (Won) 539,387 763,181 Merchandise 940 Work-in-process 358,091 544,070 Raw materials 168,188 228,631 Supplies 70,067 131,898 (Won) 1,136,673 1,667,780 |
Equity Method Investments
Equity Method Investments (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Equity Method Investments | 7. Equity Method Investments Investments in affiliated companies accounted for under the equity method consist of the following: (in millions of Korean Won) Percentageof Carrying value Affiliated Company Ownership(%) 2008 2009 Paju Electric Glass Co., Ltd. 40.00 (Won) 25,841 33,901 TLI Inc. (*1) 12.69 13,116 14,984 AVACO Co., Ltd. (*1) 19.90 5,831 5,374 New Optics Ltd. 36.68 11,789 11,736 Guangzhou New Vision Technology Research and Development Limited 50.00 4,569 3,996 Suzhou Raken Technology Ltd. (*2) 51.00 18,328 97,348 ADP Engineering Co., Ltd. (*1) 12.93 4,273 WooRee LED Co., Ltd. 29.57 12,097 Dynamic Solar Design Co., Ltd. 40.00 5,964 RPO, Inc. 25.96 14,538 Global OLED Technology LLC 49.00 72,250 LB Gemini New Growth Fund No.16 30.64 1,800 Total (Won) 79,474 278,261 (*1) Although the Companys share interests in these investees are below 20%, the Company is able to exercise significant influence through its right to assign a director on the board of directors of the investees and, accordingly, the investments in these investees have been accounted for using the equity method. Based on quoted market price at December31, 2009, the fair value of the investment in TLI Inc., AVACO Co., Ltd. and ADP Engineering Co., Ltd. was (Won)15,032 million, (Won)14,607 million and (Won)17,040 million, respectively. (*2) Despite its 51% equity interest, management concluded that the Company does not have control of Suzhou Raken Technology Ltd. because the minority shareholder has substantive participating rights. Accordingly, investment in Suzhou Raken Technology Ltd. was excluded from consolidation and was accounted for as equity method investment. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Derivative Instruments and Hedging Activities | 8. Derivative Instruments and Hedging Activities Derivatives for cash flow hedges During the years ended December31, 2007 and 2008, 279 and 185 foreign currency forward contracts were designated as cash flow hedges, respectively. As of October1, 2008, the Company discontinued the use of hedge accounting for derivatives related to arrangements entered into after that date, as management stopped designating those derivatives as a hedging instrument. During the year ended December31, 2008, derivative losses amounting to (Won)1,837 million were recognized in accumulated other comprehensive income, net of tax and since then, derivative losses amounting to (Won)1,517 were charged to statement of operations. The deferred loss of (Won)1,837 million was reclassified into earnings upon the completion of the related forecasted hedged transactions on January28, 2009. During the years ended December31, 2007 and 2008, these cash flow hedges were fully effective and changes in the fair value of the derivatives of (Won)(1,609) million and (Won)(2,534) million were recorded in other comprehensive income. Derivatives for trading For the years ended December31, 2007, 2008 and 2009, the Company recorded exchange gains of (Won)27,309 million, (Won)104,564 million and (Won)55,025 million and exchange losses of (Won)55,630 million, (Won)323,829 million and (Won)62,718 million, respectively, upon settlement on derivative contracts designated for trading. Fair value of derivative instruments held as of December31, 2008 and 2009 is as follows: (in millions of Korean Won) Asset derivatives 2008 2009 BalanceSheet Location FairValue BalanceSheet Location FairValue Derivatives for trading Interest rate swap (Won) Othercurrent assets Othercurrent assets 63 Cross currency swap Othernon-current assets 39,649 Foreign currency forward Other current assets 24,574 Other current assets 2,674 (Won) 64,223 2,737 Derivatives for trading Interest rate swap (Won) Othercurrent liabilities 5,421 Other current liabilities 3,761 Other non-current liabilities 2,596 Cross currency swap Other current liabilities 6,576 Foreign currency forward Other current liabilities 1,517 (Won) 16,110 3,761 The effect of derivative instruments on the statement of income for the year ended December31, 2009: (in millions of Korean Won) Amountofloss recognizedinOCI on derivative (effective portion) Locationofloss reclassifiedfrom AOCIintoincome (effective portion) Amountofloss reclassifiedfrom AOCIintoincome (effective portion) Derivatives in ASC Topic 815 cash flow hedging relationships Foreign currency forward (Won) Sales 1,837 (in millions of Korean Won) Location of gain (loss) recognized in income on derivatives Amountofgain(loss)recognized in income on derivatives Derivatives for |
Property, Plant and Equipment
Property, Plant and Equipment (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Property, Plant and Equipment | 9. Property, Plant and Equipment Property, plant and equipment comprise the following at December31: (in millions of Korean Won) 2008 2009 Land (Won) 414,609 425,169 Buildings 2,829,317 3,671,174 Machinery, equipment and vehicles 15,402,562 19,999,920 Tools, furniture and fixtures 730,304 773,142 Construction-in-progress 4,096,727 1,593,144 23,473,519 26,462,549 Accumulated depreciation (14,177,155 ) (16,796,009 ) (Won) 9,296,364 9,666,540 |
Intangible Assets
Intangible Assets (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Intangible Assets | 10. Intangible Assets Intangible assets comprised the following at December31: (in millions of Korean Won) 2008 Intellectual propertyrights Purchased software Privilegesfor industrialwater facilities Construction- in- progress (software) (*) Others Total Acquisition cost (Won) 83,621 32,704 12,472 107,920 602 237,319 Accumulated amortization (31,310 ) (27,353 ) (7,371 ) (266 ) (66,300 ) Intangible assets, net (Won) 52,311 5,351 5,101 107,920 336 171,019 Weighted average amortization periods 9.92 4.00 10.00 N/A 10.00 (in millions of Korean Won) 2009 Intellectual propertyrights Purchased software Privilegesfor industrialwater facilities Construction- in- progress (software) Others Total Acquisition cost (Won) 102,267 202,054 12,476 18,967 647 336,411 Accumulated amortization (39,669 ) (60,999 ) (8,384 ) (369 ) (109,421 ) Intangible assets, net (Won) 62,598 141,055 4,092 18,967 278 226,990 Weighted average amortization periods 9.95 4.00 10.00 N/A 10.00 (*) As of December31, 2008, construction-in-progress (software) consists of costs associated with the implementation of the Companys new Enterprise Resource Planning system. Amortization expense for the years ended December31, 2007, 2008 and 2009 amounted to (Won)15,824 million, (Won)13,184 million and (Won)43,124 million, respectively. The estimated aggregate amortization expense for intangible assets for the next five years is as follows: (in millions of Korean Won) For the years ended December 31, 2010 (Won) 62,304 2011 57,783 2012 53,897 2013 23,801 2014 7,967 |
Accrued Warranty Obligations
Accrued Warranty Obligations (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Accrued Warranty Obligations | 11. Accrued Warranty Obligations Changes in accrued warranty liability for the years ended December31, 2007, 2008 and 2009 are as follows: (in millions of Korean Won) 2007 2008 2009 Accrued warranty at beginning of year (Won) 31,261 49,295 58,105 Additions 77,852 90,063 113,866 Utilization (59,818 ) (81,253 ) (108,375 ) Accrued warranty at end of year (Won) 49,295 58,105 63,596 |
Short-Term Borrowings
Short-Term Borrowings (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Short-Term Borrowings | 12. Short-Term Borrowings Short-term borrowings comprise the following at December31: (in millions of Korean Won) 2008 2009 U.S. Dollar denominated debt: Loans from discounting of accounts receivable, principally from banks : with interest rates of LIBOR + 0.65 ~ 1.00% (Won) 601,068 217,784 Loans, principally from related party with interest rates of 1.15% 34,394 Loans, principally from banks with interest rates of 6ML + 1.18% 34,027 601,068 286,205 Japanese Yen denominated debt: Loans from discounting of accounts receivable, principally from banks : with interest rates of LIBOR + 1.00% (Won) 12,003 Loans, principally from banks with interest rates of 3M LIBOR + 2.8 ~ 5.5% 189,423 with interest rates of 6M LIBOR + 1.4% 63,141 with interest rates of 6M LIBOR + 0.9 ~ 2.0% 220,141 484,708 (Won) 601,068 770,913 (*) LIBOR represent London Inter-Bank Offered Rates. |
Long-Term Debt
Long-Term Debt (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Long-Term Debt | 13. Long-Term Debt Long-term debt comprises the following at December31: (in millions of Korean Won) 2008 2009 Won denominated debt : Unsecured loans, representing obligations principally to banks: Due 2009 with interest rate of 6.08%per annum (Won) 9,850 Due 2011 with interest rate of 5.43% 200,000 Due 2012 to 2014 with Industrial Finance Bonds interest rate + 3.29%per annum 120,000 Due 2010 with KDB(*) Reference interest rate + 0.77%per annum 37,500 7,500 Due 2009 to 2015 with interest rate of 3-year Korean Treasury Bond -1.25%per annum 18,982 18,380 Due 2012 to 2017 with interest rate of 3-year Korean Treasury Bond -1.25%per annum 3,914 Unsecured bonds with interest rates ranging from 3.50% to 5.89%: Due 2009 to 2014, net of unamortized discount 1,447,026 1,089,736 1,513,358 1,439,530 (*)KDB represents Korea Development Bank U.S. dollar denominated debt : Unsecured loans, representing obligations principally to banks: Due 2009 to 2010 with interest rate of 6M LIBOR+0.50% per annum (Won) 109,046 50,623 Unsecured loans, representing obligations principally to banks: Due 2010 to 2011 with interest rate of 6M LIBOR+0.68% per annum 31,461 48,707 Unsecured loans, representing obligations principally to banks: Due 2011 with interest rate of 3M LIBOR+0.47% per annum 251,500 233,520 Unsecured loans, representing obligations principally to banks: Due 2011 with interest rate of 6M LIBOR+0.41% per annum 251,500 233,520 Unsecured loans, representing obligations principally to banks: Due 2011 with interest rate of 3M LIBOR+0.35% per annum 125,750 116,760 Unsecured loans, representing obligations principally to banks: Due 2010 to 2013 with interest rate of 6M LIBOR+0.69% per annum 62,875 58,380 Unsecured loans, representing obligations principally to banks: Due 2012 with interest rate of 3M LIBOR+0.66% per annum 176,050 163,464 Unsecured loans, representing obligations principally to banks: Due 2012 with interest rate of 3M LIBOR+0.53% per annum 125,750 116,760 Zero Coupon Convertible Bond due 2012 (put year : 2010) 728,559 696,495 1,862,491 1,718,229 Euro denominated debt : Unsecured loans, representing obligations principally to banks: Due 2010 to 2013 with interest rate 3M EURIBOR+0.60% per annum 124,474 116,519 (*) EURIBOR represents Euro Interbank Offered Rate Chinese Renminbi denominated debt : Unsecured loans, representing obligations principally to banks: Due 2010 to 2011 with interest rate of 95% of the Basic Rate published by the Peoples Bank of China 12,886 33,186 Less : Current installments (553,430 ) (1,229,362 |
Accrued Severance Benefits
Accrued Severance Benefits (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Accrued Severance Benefits | 14. Accrued Severance Benefits Accrued severance benefits are as follows as of December31: (in millions of Korean Won) 2008 2009 Balance at beginning of year (Won) 153,535 202,013 Provisions for severance benefits 68,992 79,525 Transferred from affiliated companies 3,339 1,630 Actual severance payments (23,853 ) (47,921 ) Balance at end of year 202,013 235,247 Cumulative Deposits to National Pension Fund (479 ) (402 ) Balance of the severance insurance deposits (131,302 ) (175,869 ) Net balance (Won) 70,232 58,976 The severance benefits are funded approximately 65.0% and 74.8% as of December31, 2008 and 2009, respectively, through severance insurance deposits for the payment of severance benefits. The Company has no additional liability once the amount has been contributed, thus the Company deducts contributions made to National Pension Fund and the severance insurance deposits from accrued severance benefit liabilities. The beneficiaries of the severance insurance deposit are the Companys employees. Severance insurance deposits comprise cash deposits placed with Kyobo Life Insurance Co., Ltd., WooriAviva Life Insurance Co., Ltd., Korea Life Insurance Co., Ltd., Green Cross Life Insurance Co., Ltd and LIG Insurance Co., Ltd. and these deposits earn interests at average rates ranging from 4.9% to 5.2% for the year ended December31, 2008 and 4.1% to 7.0% for the year ended December31, 2009. The Company expects to pay the following future benefits to its employees upon their normal retirement age: (in millions of Korean Won) For the years ended December 31, 2010 (Won) 2,476 2011 4,547 2012 2,860 2013 3,411 2014 4,925 2015 5,880 2016 5,176 2017 6,523 2018 7,906 2019 9,164 The above amounts were determined based on the employees current salary rates and the number of service years that will be accumulated upon their retirement date. These amounts do not include amounts that might be paid to employees who will cease working with the Company before their normal retirement age. |
Income Taxes
Income Taxes (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Income Taxes | 15. Income Taxes Earnings (loss) before income taxes and income tax expense (benefit) are as follows: (in millions of Korean Won) 2007 2008 2009 Earnings (loss) before income taxes: Domestic (Won) 1,538,264 1,421,976 897,267 Foreign subsidiaries 15,005 (348,564 ) 117,826 (Won) 1,553,269 1,073,412 1,015,093 Current income tax expense: Domestic (Won) 80,318 287,748 157,207 Foreign subsidiaries 6,211 37,889 31,432 86,529 325,637 188,639 Deferred income tax expense (benefit): Domestic (Won) 131,175 (137,874 ) (263,234 ) Foreign subsidiaries (8,814 ) (19,752 ) (20,989 ) 122,361 (157,626 ) (284,223 ) Income tax expense (benefit) (Won) 208,890 168,011 (95,584 ) Income tax refunds receivable and income taxes payable at December31, 2008 and 2009 are as follows: (in millions of Korean Won) 2008 2009 Income tax refunds receivable: Domestic (Won) Foreign subsidiaries 1,988 7,397 (Won) 1,988 7,397 Income taxes payable: Domestic (Won) 265,550 120,206 Foreign subsidiaries 28,944 25,120 (Won) 294,494 145,326 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December31, 2008 and 2009 are as follows: (in millions of Korean Won) 2008 2009 Current deferred tax assets (liabilities) Inventories (Won) 18,239 19,681 Accrued warranty obligation 12,444 15,449 Loss on foreign currency translation (*) 71,941 5,362 Other current assets (21,353 ) (11,511 ) Accrued expense 6,272 66,252 Investment tax credit carryforwards 109,740 Others (1,790 ) 6,788 Current deferred tax asset, net (Won) 85,753 211,761 Non-current deferred tax assets (liabilities) Property, plant and equipment (Won) 69,712 98,492 Long-term debt 40,808 42,393 Cumulative translation adjustment (47,607 ) (25,413 ) Investment tax credit carryforwards 421,758 554,432 Others 9,592 11,479 Non-current deferred tax asset, net (Won) 494,263 681,383 Net deferred tax asset (Won) 580,016 893,144 (*) Beginning in 2008, in accordance with the amended Korean Tax Law, unrealized gains and losses on foreign currency translation are not taxable or deductible for tax purposes until the related assets and liabilities are recovered/settled. As of December31, 2009 the Company has available unused investment tax credits of (Won)664,172 million, which will expire at various dates through 2014. T |
Stockholders' Equity
Stockholders' Equity (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Stockholders' Equity | 16. Stockholders Equity Retained Earnings Retained earnings consist of the following as of December31: (in millions of Korean Won) 2008 2009 Appropriated retained earnings: Legal reserve (Won) 86,922 104,813 Unappropriated retained earnings 4,744,406 5,658,284 (Won) 4,831,328 5,763,097 The Commercial Code of the Republic of Korea requires the Company to appropriate a portion of retained earnings as a legal reserve at an amount equal to a minimum of 10% of its cash dividends until such reserve equals 50% of its capital stock. The reserve is not available for dividends but may be transferred to capital stock through an appropriate resolution by the Companys board of directors or used to reduce accumulated deficit, if any, through an appropriate resolution by the Companys stockholders. |
Stock Appreciation Plan
Stock Appreciation Plan (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Stock Appreciation Plan | 17. Stock Appreciation Plan On April7, 2005, the Company granted 450,000 units of stock appreciations rights (SARs) to certain management employees. Under the terms of this plan, upon exercise the grantee will receive cash for each SAR exercised an amount that equals the excess of the market price of the Companys common stock over the strike price ((Won)44,050). The vesting period is two years starting from the grant date, and exercisable period is April8, 2008 through April7, 2012. In accordance with ASC Topic 718, share-based awards that require the Company to settle the award by cash or other assets rather than issuing equity instruments are classified as liabilities, which are initially measured at grant date fair value and remeasured at fair value at the end of each reporting period until the award is settled or expires. The changes in the fair value measurements are recognized as compensation expense during the requisite service period, based on the percentage of the requisite service that the employee has rendered as of the reporting date. The following table shows total share-based compensation expense included in the consolidated statement of operations: (in millions of Korean Won) 2007 2008 2009 Cost of sales (Won) 1,038 Selling, general and administrative expenses 4,670 (5,594 ) 201 There were no capitalized share-based compensation costs at December31, 2008 and 2009. The following tables summarize the activities under the SARs for the years ended December31, 2007, 2008 and 2009: (in Korean Won) Weighted-average exercise price NumberofSAR Weightedaverage remaining contractual life (in years) Balance at December31, 2006 (Won) 44,050 260,000 Granted Exercised Canceled (40,000 ) Balance at December31, 2007 (Won) 44,050 220,000 4.3 Granted Exercised Canceled (110,000 ) Balance at December31, 2008 (Won) 44,050 110,000 3.3 Granted Exercised Canceled Balance at December31, 2009 (Won) 44,050 110,000 2.3 Exercisable at December31, 2009 (Won) 44,050 110,000 If the increase rate of the Companys share price is equal or less than that of the Korea Composite Stock Price Index (KOSPI) over the three-year period following the grant date, only 50% of the initially granted SARs are exercisable. The actual increase rate of the Companys share price for the three-year period ended April7, 2008, was less than that of the KOSPI. As a result, in 2008, exercisable SARs decreased to 50% of the initially granted SARs and as of December31, 2008 and 2009, only 110,000 SARs are exercisable. In connection with the adoption of ASC Topic 718, the Company assessed its valuation technique and related assumptions.The Company estimates the fair value of SAR awards using the Black-Scholes option-pricing model as well as the likelihood of the occu |
Earnings Per Share
Earnings Per Share (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Earnings Per Share | 18. Earnings Per Share Earnings per share is computed by dividing net income attributable to the stockholders of LGD by the weighted-average number of common shares outstanding during the year. Diluted earnings per share is computed in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive common shares that were outstanding during the period. Earnings per share for the years ended December31, 2007, 2008 and 2009 are calculated as follows: (in millions except for per share data expressed in Korean Won) 2007 2008 2009 Basic earnings per share: Net income attributable to the stockholders of LGD (Won) 1,344,379 905,399 1,110,677 Weighted-average number of common shares outstanding 358 358 358 Basic earnings per share (Won) 3,755 2,529 3,102 (in millions, except for per share data expressed in Korean Won) 2007 2008 2009 Diluted earnings per share: Net income attributable to the stockholders of LGD (1) (Won) 1,353,369 921,434 1,132,987 Weighted-average number of common shares outstanding and common shares equivalent (2) 365 369 369 Diluted earnings per share (Won) 3,708 2,497 3,070 (1) Adjustments to net income attributable to the stockholders of LGD: (in millions of Korean Won) 2007 2008 2009 Net income attributable to the stockholders of LGD (Won) 1,344,379 905,399 1,110,677 Interest expense of convertible bonds, net of tax 8,990 16,035 22,310 Net income attributable to the stockholders of LGD used in the determination of diluted earnings per share (Won) 1,353,369 921,434 1,132,987 (2) Weighted-average number of common shares outstanding: (in million shares) 2007 2008 2009 Weighted-average number of common shares (Won) 358 358 358 Effect of conversion of convertible bonds 7 11 11 Weighted-average number of common shares and common shares equivalent (Won) 365 369 369 |
Commitments and Contingencies
Commitments and Contingencies (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Commitments and Contingencies | 19. Commitments and Contingencies (a) Commitments Overdraft agreements and credit facility agreement As of December31, 2009, the Controlling Company has bank overdraft agreements with Woori Bank and other various banks amounting to (Won)49,000 million in aggregate and maintains a line of credit amounting to (Won)200,000 million with Hana Bank. There is no overdrawn balance. Factoring and securitization of accounts receivable The Controlling Company has agreements with Korea Exchange Bank and several other banks for accounts receivable negotiating facilities of up to an aggregate of US$1,830 million in connection with its export sales transactions. As of December31, 2009, accounts and notes receivable amounting to US$187 million and JPY950 million were transferred, are outstanding, and were recorded as short-term borrowings. The Controlling Company has a credit facility agreement with Shinhan Bank pursuant to which the Controlling Company could negotiate its accounts receivable with Shinhan Bank up to an aggregate of (Won)50,000 million in connection with its domestic sales transactions. As of December31, 2009, no accounts and notes receivable were outstanding among the accounts and notes receivable sold during 2009. In October 2006, LG Display America, Inc., LG Display Germany GmbH, LG Display Shanghai Co., Ltd. and others entered into a five-year accounts receivable selling program with Standard Chartered Bank, on a revolving basis, of up to US$600 million. The Controlling Company joined this program in April 2007. As of December31, 2009, there was no outstanding balance of securitized accounts receivable held by third party conduits. Loss recognized on the sale of accounts receivable was (Won)6,053 million in the year ended December31, 2007 and nil in the years ended December31, 2008 and 2009. In June 2009, LG Display Singapore Pte. Ltd. (LGDSG), a subsidiary of the Controlling Company, entered into an accounts receivable selling program of up to US$250 million with Standard Chartered Bank. In July 2009, LG Display Taiwan Co., Ltd. (LGDTW), a subsidiary of the Controlling Company, entered into an accounts receivable selling program of up to US$400 million with Taishin International Bank. In July 2009, LG Display Shenzhen Co., Ltd. (LGDSZ) and LG Display Shanghai Co., Ltd. (LGDSH), subsidiaries of the Controlling Company, entered into accounts receivable selling programs with Bank of China Limited. These programs with Bank of China Limited do not have specified limits since the programs are only subject to accounts receivable for opened letters of credit. Under the accounts receivable selling programs, the accounts receivable of LGDs subsidiaries are sold without recourse with no continuing involvements. Letters of credit As of December31, 2009, the Controlling Company has agreements with Korea Exchange Bank in relation to the opening of letters of credit up to (Won)20,000 million and US$188.5 million, US$20 million with China Construction Bank, US$100 million with Shinhan Bank, respectively, and JPY11,000 million with Woori Bank. Payment guarantees The Controlling Company receives payment g |
Fair Value Measurements and the
Fair Value Measurements and the Fair Value Option (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Fair Value Measurements and the Fair Value Option | 20. Fair Value Measurements and the Fair Value Option The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Investments in debt and equity securities that are classified as available-for-sale, derivative financial instruments and investments elected to be recorded at fair value (Fair value option) are measured at fair value on a recurring basis. Fair Value Option ASC Subtopic 825-10 (SFAS 159) provides entities with an option to measure many financial instruments and certain other items at fair value. Under ASC Subtopic 825-10 (SFAS 159), unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each reporting period. The Company elected to record its investment in convertible bonds of Everlight Electronics Co., Ltd. (Everlight) at fair value because the management believes that fair value presentation on the face of the balance sheets provides better information rather than separating embedded derivatives from the host instrument. Other similar eligible instruments were not elected since they are not subject to separating embedded derivatives. For the investment in Everlight, the Company recorded a gain from change in fair value, included in Other income (expense) amounting to (Won)2,906 million for the year ended December31, 2009. Fair Value Hierarchy ASC Topic 820 (SFAS 157) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Determination of Fair Value The Company bases its fair value on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is the Companys policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. Fair value measurements for assets and liabilities where there exists limited or no observable market data and, therefore, are based primarily upon managements own estimates, are often calculated based on current pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other such factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there may |
Related Party Transactions
Related Party Transactions (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Related Party Transactions | 21. Related Party Transactions In the normal course of business, the Company purchases raw materials from, and sells its products to, stockholder companies and other companies within LG Group. LG Corp., the major stockholder of LG Electronics, is the holding company of LG Group. Other related parties of the Company within LG Group include LG International Corp., LG Chem, Ltd., and LG CNS Co., Ltd. Sales to LG Electronics The Company sells TFT-LCD panels, primarily large-size panels for televisions, notebook computers and desktop monitors and other applications, to LG Electronics (including its overseas subsidiaries) and certain of its affiliates on a regular basis. Sales to LG Electronics including its subsidiaries on an invoiced basis amounted to (Won)2,516,874 million, (Won)3,448,166 million and (Won)4,652,913 million in 2007, 2008 and 2009, respectively. The balance of receivables from LG Electronics and its subsidiaries amounted to (Won)442,943 million and (Won)719,798 million as of December31, 2008 and 2009, respectively. Sales to LG International The Company sells its products to certain subsidiaries of LG International, the Controlling Companys affiliated trading company, in regions where the Company does not have a sales subsidiary, or where doing so is consistent with local market practices. These subsidiaries of LG International process orders from and distribute products to customers located in their region. Sales to LG International and its subsidiaries on an aggregate basis amounted to (Won)1,189,842 million, (Won)1,009,615 million and (Won)1,467,655 million in 2007, 2008 and 2009, respectively. The balance of receivables from LG International and its subsidiaries amounted to (Won)147,467 million and (Won) 272,756million as of December31, 2008 and 2009, respectively. Sales to Other Related Parties The Companys total sales to its related parties excluding LG Electronics, LG International and their subsidiaries amounted to (Won)1,769,253 million, (Won)1,943,392 million and (Won)1,469,095 million for the years ended 2007, 2008 and 2009. These amounts include sales to Philips Electronics and its affiliates on an invoiced basis which amounted to (Won)1,704,297 million and (Won)1,636,796 for the years ended December31, 2007, 2008 and sales to Philips Electronics in 2009 for the period prior to its disposition of equity interest in the Company in March 2009 which amounted to (Won)149,641 million. The balance of receivables from related parties excluding LG Electronics, LG International and their subsidiaries amounted to (Won)214,400 million and (Won)210,914 million as of December31, 2008 and 2009, respectively. These amounts include receivables from Philips Electronics and its affiliates which amounted to (Won)139,268 million as of December31, 2008. Purchases from LG International The Company procures a portion of its production materials, supplies and services, from LG International and its subsidiaries in Japan, Europe and the United States. The Company uses these subsidiaries in order to take advantage of their relationships with vendors, experience in negotiations and logistics as well as the |
Geographic and Other Informatio
Geographic and Other Information (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Geographic and Other Information | 22. Geographic and Other Information The Companys Chief Operating Decision Maker (CODM) is the Board of Directors, which comprises key personnel in top management (including Chief Executive Officer and Chief Financial Officer). The Board of Directors reviews consolidated results of revenue by product when making decisions about allocating resources and assessing performance of the Company. The CODM does not receive and therefore does not review discrete financial information for any component of the Group. Consequently, no operating segment information is included in these consolidated financial statements. The following is a summary of operations by region based on the location of the customer, where the Companys products are shipped to, for the years ended December31, 2007, 2008 and 2009. By Geography (in millions of Korean Won) 2007 2008 2009 Revenue from external customers: Republic of Korea (Won) 985,287 1,065,794 1,204,549 China 7,612,580 8,618,184 11,030,075 Poland 1,157,341 1,571,221 2,380,613 Asia (excluding China) 1,357,528 1,536,143 1,560,444 Americas 1,489,685 2,087,789 2,491,448 Europe (excluding Poland) 1,446,915 1,084,108 1,021,554 Others 302,630 310,879 349,019 Total (Won) 14,351,966 16,274,118 20,037,702 Property, plant and equipment: Republic of Korea (Won) 6,871,847 8,460,732 8,770,377 Asia 397,704 531,291 643,086 Europe 318,952 301,392 251,648 Others 3,151 2,949 1,429 Total (Won) 7,591,654 9,296,364 9,666,540 During the years ended December31, 2007, 2008 and 2009, the Companys revenue on an end-brand customer basis, from its three largest customers, LG Electronics, Philips Electronics and Dell in 2007, LG Electronics, Philips Electronics and Hewlett-Packard in 2008 and 2009, accounted for 41.8%, 43.2% and 41.5% of total revenue, respectively. Sales to LG Electronics constituted 19.2%, 21.4% and 25.9% of total revenue, for the years ended December31, 2007, 2008 and 2009, respectively. Sales to Philips Electronics constituted 13.3%, 12.0% and 8.1% of total revenue, for the years ended December31, 2007, 2008 and 2009, respectively. The following is a summary of revenue by product for the years ended December31, 2007, 2008 and 2009. By Product (in millions of Korean Won) 2007 2008 2009 Panels for: Notebook computers (Won) 3,084,705 3,700,753 3,567,535 Desktop monitors 3,708,891 3,934,583 4,639,523 TFT-LCD televisions 6,841,453 8,019,901 10,965,358 Others 716,917 618,881 865,286 Total (Won) 14,351,966 16,274,118 20,037,702 |
Significant Concentrations and
Significant Concentrations and Risks (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Significant Concentrations and Risks | 23. Significant Concentrations and Risks The Company purchases a number of components from various sources. In some cases, alternative sources of supply are not available. In other cases, the Company may establish a working relationship with a single source, even when multiple suppliers are available, if the Company believes it is advantageous to do so due to performance, quality, support, delivery, capacity or price considerations. If the supply of a critical material or component were delayed or curtailed, the Companys ability to ship the related product in desired quantities and in a timely manner could be adversely affected. Even where alternative sources of supply are available, qualification of the alternative suppliers and establishment of reliable supplies could result in delays and a possible loss of sales, which could adversely affect operating results. As of December31, 2009, approximately 65% of the Companys total employees, including those of the subsidiaries, were union members, and production employees accounted for substantially all of these members. The Company has a collective bargaining arrangement with its labor union, which is negotiated once a year. If the Companys relationship with its employees deteriorates and there is labor unrest resulting in a work stoppage or strike, the Companys production facilities will not be able to continue operations and this will have a material adverse effect on the Companys financial condition and results of operations. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Accumulated Other Comprehensive Income | 24. Accumulated Other Comprehensive Income Accumulated balances for each classification of other comprehensive income as of December31, 2008 and 2009 are as follows: (in millions of Korean Won) Cumulative translation adjustment Unrealized gains(losses)on investment securities Unrealized gains(losses)on cash flow hedge derivatives Total Balance at January1, 2008 (Won) 20,195 (4,509 ) 15,686 Foreign currency translation adjustment 136,692 136,692 Unrealized holding gains during period 21,899 21,899 Unrealized losses during period (1,837 ) (1,837 ) Reclassification adjustments for losses included in net income 4,509 4,509 Balance at December31, 2008 156,887 21,899 (1,837 ) 176,949 Foreign currency translation adjustment (10,345 ) (10,345 ) Unrealized holding losses during period (24,018 ) (24,018 ) Reclassification adjustments for losses included in net income 1,837 1,837 Balance at December31, 2009 (Won) 146,542 (2,119 ) 144,423 |
Supplemental Cash Flows Informa
Supplemental Cash Flows Information (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Supplemental Cash Flows Information | 25. Supplemental Cash Flows Information Supplemental cash flows information for the years ended December31, 2007, 2008 and 2009 is as follows: (in millions of Korean Won) 2007 2008 2009 Cash paid during the year for: Interest (Won) 231,017 163,700 98,429 Income taxes 20,915 49,738 357,666 Non-cash investing and financing activities: Changes in other accounts payable arising from the purchase of property, plant and equipment (616,371 ) 1,251,752 (604,186 ) |
Subsequent Events
Subsequent Events (Accumulated Other Comprehensive Income) | |
12 Months Ended
Dec. 31, 2009 KRW (₩) | |
Subsequent Events | 26. Subsequent Events In January 2010, the Company established two joint venture companies, LT Display Technology (Xiamen) Limited. and LT Display Technology (Fujian) Limited, with Top Victory Investments Limited., a wholly-owned subsidiary of TPV Technology Ltd. to manufacture and sell TFT-LCD modules, televisions and monitors. |