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2012 SAMSUNG ELECTRONICS ANNUAL REPORT 2012 Financial Summary

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2012 SAMSUNG ELECTRONICS ANNUAL REPORT 2012 Financial Summary 2012 SAMSUNG ELECTRONICS ANNUAL REPORT 2012 Financial Summary Samsung Electronics and Consolidated Subsidiaries 37,973 201,104 23,827 22,918 165,002 154,630 29,049 2010 2011 2012 17,297 15,644 (21,113) (23,985) 2010 2011 2012 (31,322) Sales And Operating Profit (in billions of KRW) Cash Flows (in billions of KRW) Sales Cash Flows from Operating Activities Operating Profit Cash Flows from Investing Activities DISCOVERY Income Statements 2010 2011 2012 INNOVATION Sales 154,630 165,002 201,104 Operating Profit 17,297 15,644 29,049 Net Income 16,147 13,759 23,845 POSSIBILITY Balance Sheets Assets 134,289 155,800 181,072 Liabilities 44,940 54,487 59,591 Shareholders’ Equity 89,349 101,314 121,480 In a world of amazing imagination, Cash Flows our reality is filled with possibilities. Cash Flows from Operating Activities 23,827 22,918 37,973 Cash Flows from Investing Activities (23,985) (21,113) (31,322) On the path where no one ventures, Cash Flows from Financing Activities (152) 3,110 (1,865) Samsung Electronics is striding (in billions of KRW) toward new goals. Discover with This annual report includes forward-looking statements that relate to future events and can be generally us the happiness of new lives, identified by phrases containing words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar meaning. These forward-looking statements are not powered by creativity. Our constant guarantees of future performance and may involve known and unknown risks, uncertainties and other innovation and desire for positive factors that may affect our actual results, performance, achievements or financial position, making them materially different from the actual future results, performance, achievements or financial position change brings surprising possibilities expressed or implied by these forward-looking statements. Unless otherwise specified, all data presented in this report is from our consolidated financial statements. into everyday life. (※ K-IFRS standards have been applied to our data. As some business accounting standards have been revised in 2012, some statements for 2011, such as income statements, are retroactive and have been recalculated.) CONTENTS | 02 CEOs’ Message 04 About the Board 07 Business Overview 40 PlanetFirst 43 Financial Statements 112 Global Network Dear Samsung Electronics Stakeholder: at CES 2013, the world’s largest consumer electronics show. In 2012, the company achieved steady growth thanks to your We also advanced high profile and consistent global brand continued trust and dedication. Despite intensifying marketing by sponsoring a range of international sports competition, we recorded historic sales revenue and operating events, including the London 2012 Summer Olympics. As a profit that strengthened our leadership in the global electronics result of such efforts, we attained the No. 9 ranking on industry. Based on consolidated financial statements, we Interbrand’s Best 100 Global Brands 2012 list, with an realized sales revenue of KRW 201 trillion, operating profit of estimated brand value of USD 32.9 billion. KRW 29 trillion and net income of KRW 24 trillion, double the previous year. We also maintained a robust financial structure, Corporate citizenship that’s committed with a 49.1 percent liability ratio and 79.5 percent capital to social improvement adequacy ratio. Samsung Electronics is committed to transmitting its positive energy to society and to creating shared social value. We Vice Chairman & CEO Oh-Hyun Kwon Expanding the market leadership of core businesses comply with all laws and ethical standards that safeguard Last year, Samsung Electronics expanded its market leadership markets around the world, including those for fair in core businesses, including smartphones and TVs. We achieved competition, personal data protection and anti-corruption, remarkable results in our mobile business, ranking No. 1 in both even as these turn more rigorous. We are increasing our sales and market share in smartphones and all mobile phones. In social responsibility programs. In addition, we are boosting The trust and dedication the TV business, we again achieved No. 1 market share, for the support for our worldwide partner companies to promote seventh year in a row, also earning the highest profitability in the their global competitiveness as we expand the win-win of our customers, industry. We further strengthened the market power of our partnerships that sustain growth. Memory business, outpacing competitors with our unmatched The power to keep growing is directly fueled by the trust shareholders and technology, dominant cost savings and advanced process and dedication of our customers, shareholders and society. technology development. In our developing businesses, OLED Looking ahead in 2013, Samsung Electronics will continue to greatly improved its profitability, led by differentiated work toward the change and innovation that inspires the society drives change competitiveness. The System LSI business also showed world and shapes new futures. outstanding growth in the mobile device market, led by the AP and innovation at and CIS sensor segments. Thank you. In 2013, we will sharpen our market leadership across core Samsung Electronics President & CEO Boo-Keun Yoon areas and accelerate developing businesses to maintain our strong performance. With our newly reorganized structure of three divisions, we will aggressively respond to rapidly changing business environments as we steer new technology initiatives, Vice Chairman & CEO pioneer new markets and identify business opportunities. Oh-Hyun Kwon Securing our core competitiveness and brand momentum To reinforce competitiveness, Samsung Electronics is focusing on attracting outstanding talent. We are consistently recruiting experts in software and R&D, and nurturing our patent capabilities President & CEO by collaborating with outside research institutes and partners. Boo-Keun Yoon That strategy has paid off. In 2012, we registered 5,081 patents in the U.S. Our differentiated capabilities and technology earned worldwide recognition, including four awards from the European Imaging and Sound Association 2012 (EISA), the most prestigious President & CEO President & CEO Jong-Kyun Shin in the region’s video and audio industry, and 27 innovation awards Jong-Kyun Shin 02 03 Our board of directors Oh-Hyun Kwon Sang-Hoon Lee Kwang-Soo Song • Vice Chairman & CEO, Samsung Electronics • President & CFO, Corporate Management • Independent Director (2013~Present) conducts transparent (2012~Present) Office (2012~Present) • Advisor, Kim & Chang Law Office • Vice Chairman & Head, Device Solutions, • Head, Strategy Team 1, Samsung Corporate (2007~Present) Samsung Electronics (2011~Present) Strategy Office (2010~2012) • Prosecutor General, Supreme Prosecutors’ • President & Head, Device Solutions, Samsung • Head, Corporate Management Support Team Office (2003~2005) and responsible Electronics (2011~2011) (2008~2010) • Chief Prosecutor, Daegu High Prosecutors’ • President & Head, Semiconductor Business, • Strategy & Planning Office (2006~2008) Office (2002~2003) Samsung Electronics (2008~2011) • Senior Prosecutor, Director of Prosecution management based • President & Head, System LSI Division, Samsung Bureau, Ministry of Justice (2001~2002) Electronics (2004~2008) • Head, LSI Technology, Samsung Electronics (2000~2004) on advanced, board- • Head, ASIC Business, Samsung Electronics (1998~2000) centered corporate governance Boo-Keun Yoon In-Ho Lee Byeong-Gi Lee At Samsung Electronics, our board consists of nine • President & CEO, Samsung Electronics • Independent Director (2010~Present) • Independent Director (2012~Present) (2013~Present) • Corporate Advisor, Shinhan Bank (2009~2011) • Professor of Electrical Engineering, Seoul members, including five outside directors. In 2012, • President & Head, Consumer Electronics • Chief Executive Officer, Shinhan Financial National University (1986~Present) we convened 11 board meetings and proposed and (2012~Present) Group (2005~2009) • President, IEEE Communications Society • Head, Consumer Electronics Division • President & Chief Executive Officer, Shinhan (2010~2011) addressed 47 motions. Our Management Committee, (2011~2012) Bank (1999~2003) • Commissioner, Korea Communications • Head, Visual Display Business (2007 2011) • Director & Deputy President (Executive Vice Commission (2008 2010) established to ensure professionalism and efficiency in ~ ~ • Head, R&D Team, Visual Display Business President), Shinhan Bank (1991~1999) • President, Korea Information and management performance, hosted 21 meetings that (2003~2007) Communication Society (KICS) (2007~2007) • President, Korea Society of Engineering deliberated and resolved the delegated issues. Education (KSEE) (2003~2004) Comprised of three outside directors appointed to • Vice Chancellor for Research Affairs, Seoul National University (2000~2002) monitor and support the company's operations through • Member of Technical Staff, AT&T Bell Laboratories (1984 1986) checks and balances, the Audit Committee had five ~ meetings in 2012. The Internal Transaction Committee, established to enhance transparency in management, has three outside directors and had nine meetings in 2012. Ensuring fairness and independence, two of the Jong-Kyun Shin Han-Joong Kim Eun-Mee Kim three members of the Outside Director Candidate Recommendation Committee are outside directors. • Independent Director (2012 Present) • President & CEO,
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