Samsung El.gdr Regulatory News (SMSN)

10 Feb 2006 07:00

Samsung Electronics Co. Ld09 February 2006 Introduction on AGM - Date and Time: February 28, 2006 (09:00)- Place: Hoam Art Hall Summary of Agenda Agenda 1 Approval of Balance Sheet, Profit and Loss Statement and Statement ofAppropriation of Retained Earnings for the 37th Fiscal Year (January 1, 2005 - December 31, 2005) Agenda 2 Appointment of Directors - Agenda 2-1: Appointment of Independent Non-Executive Directors (five persons) -> Gwi- Ho Chung, Jae-Sung Hwang, Oh Soo Park, Chae-Woong Lee, and Dong-Min Yoon. - Agenda 2-2: Appointment of Executive Directors (four persons) -> Kun-hee Lee, Jong-yong Yun, Yoon-woo Lee, and Doh-seok Choi. - Agenda 2-3: Appointment of Members of Audit Committee (two persons) -> Jae-Sung Hwang and Chae-Woong Lee. Agenda 3 Approval of the Limit on the Renumeration for Directors Reference Documents for the 37th Ordinary General Shareholders' Meeting of Samsung Electronics Co., Ltd. AGENDA 1: APPROVAL OF BALANCE SHEET, PROFIT AND LOSS STATEMENT AND STATEMENT OF APPROPRIATION OF RETAINEDEARNINGS FOR THE 37TH FISCAL YEAR The balance sheet, the statement of income and the statement of appropriation of retained earnings for the 37thfiscal year are to be approved in accordance with Article 449 of the Commercial Code. Financial results for thefiscal year 2005 are as follows - sales: 57,458 billion won, operating profit: 8,060 billion won, andnet income: 7,640 billion won. Summary of financial statements is attached at the end of this document. Details of scheduled dividend declaration are as follows: year-end dividend per share is KRW 5,000 for commonshares, and KRW 5,050 for preferred shares. As a result, total dividends paid during year 2005 will be 834billion won (Dividend payout ratio: 11%). For your information, interim dividend was KRW 500 per share, bothfor preferred and common shares. As a part of our long-term commitment to enhance the value of our shareholders, we are returning a good portionof our earnings to our shareholders in forms of share buybacks and cash dividends. For cash dividends, ourpolicy is to gradually increase the dividend amount as a sudden fluctuation in dividend is considered extremelynegative from the investment community. In case we generate higher free cash flow, the management will utilizeshare buy-backs as means to return some of earnings to our shareholders. For example, in 2004, we had executedbigger share buy-backs (3.8 trillion KRW) than we'd originally planned, as we generated higher profits. (Return to Shareholders During the Past 5 Years) (Unit: Trillion Won, %) 2001 2002 2003 2004 2005Net income 2.9 7.1 6.0 10.8 7.6Dividends 0.3 0.9 0.9 1.6 0.8Amount of share buy-back - 1.5 2.0 3.8 2.1Total payout ratio 12% 34% 49% 50% 39% (Stock Price and EPS During the Past 5 Years) (Unit: Won) 2001 2002 2003 2004 2005Stock Price (Year-end) 279,000 314,000 451,000 450,500 659,000EPS 17,461 42,005 36,356 67,899 49,970 AGENDA 2: APPOINTMENT OF DIRECTORS The Company's Board of Directors is composed of thirteen directors, sixManagement Committee members and seven Independent Non-Executive Directors.Independent Non-Executive Directors constitute a majority of the Company's BoD. The Company's nominees for the upcoming election include nine directors whoseappointments expire in February 2006. Among those nominees, five are candidatesfor Independent Non-Executive Directors, and four for Executive Directors. Also,as current appointment of two members of Audit Committee expire in February2006, the two seats need to be filled at the AGM as well. AGENDA 2-1: APPOINTMENT OF INPENDENT NON-EXECUTIVE DIRECTORS Pursuant to Article 191-16 of the Securities and Exchange Law and Article 24 ofthe Articles of Incorporation of the Company, the independent directorrecommendation committee recommends the following candidates as Independent Non-Executive Directors: Gwi-ho Chung (1), Jae-sung Hwang(1), Oh-soo Park(2), Chae-Woong Lee(2), and Dong-Min Yoon(2). * (1): Those who are re-nominated, (2): Those who are newly nominated The committee decided not to retain three of the incumbent Independent Non-Executive Directors (Franz-Hermann Hirlinger, Iwasaki, Sung-lark Rim) to ensureboard independency. For that purpose, the committee replaced those who haveserved on the board for a long time with new candidates, and also diversifiedthe director pool by recruiting directors with a variety of expertise. The threeIndependent Non-Executive Directors who are not be re-nominated served on theboard for three consecutive terms, a total of 8 to 9 years since they were firstelected for directorship The follwing section contains the names andbiographical information for each of the nominees for Independent Non-ExecutiveDirectors.The Board recommends a vote 'FOR' the election of each of the followingnominees. Date of Birth: August 4, 1939 Gwi-Ho Chung, has been Independent Non-Executive Director of Samsung Electronics sinceGwi-Ho Chung February 2003. He served as Judge of Seoul Civil District Court from 1966 - 1991. He then was Chief Judge of Seoul and Chuncheon District Court during 1991 - 1992. From 1993 to 1999, he(Re-nominated) served as Justice of Supreme Court. In November 1999, Mr. Chung joined CJ International Law Office as Senior Partner. Mr. Chung graduated from Seoul National University (major: Law) in 1963 and also holds Master and PhD. Degree in Law from the same University. Date of Birth: February 1, 1944 Jae-Sung Hwang has been Independent Non-Executive Director of Samsung Electronics sinceJae-Sung Hwang March 2000. He joined Ministry of Finance in 1966 and worked for the organization until 1986. He then worked for Korean National Tax Service during 1981 - 1998, and in year 2000,(Re-nominated) he became Non-Standing Judge of National Tax Tribunal. Mr. Hwang served as Consultant of Kim & Chang Law Firm since 1999 until present. Mr. Hwang graduated from Kunkook University (major: Business) in 1966 and also holds a Master's degree in Public Administration from Hanyang University. Date of Birth: December 24, 1952 Oh Soo Park is currently Dean of Business School at Seoul National University. He hasOh Soo Park been Professor of Organizational Behavior and Human Resource Management, College of Business Administration at Seoul National University since 1988 until present. He was(Newly-nominated) Visiting Professor at Stanford University Business School during 1995 - 1996 and has been Independent Director of Korean Air since 2003. Professor Park is a specialist in the field of Personnel Administration & Organization Behavior. He was President of Korean Academy of Management in 2002 - 2003 and President of Academy of Leadership during 2003 - 2004. Professor Park is also a Member of Korean Association of Business Administration and Korean Association of Personal Administration. Mr. Park graduated from Seoul National University (major: Business Administration) in 1975 and also holds MBA degree from the same University. He received PhD. degree in Business Administration from Penn State University (specialization: Personnel Management, Organizational Behavior) in 1986. Date of Birth: May 2, 1942 Chae-Woong Lee has been Professor of Sungkyunkwan University since 1982.Chae-Woong Lee He served as Vice President of Sungkyunkwan University during 1999 - 2001. Also, during the(Newly-nominated) same period, he also was Independent Director of Samsung Electro-Mechanics. Professor Lee was President of Korea Academy of International Economy during 1999 - 2000. He also served as Independent Director of Pusan Bank since 2004 and has been President of Korea Academy of Economy since February 2005. Professor. Lee graduated from Seoul National University (major: Economics) in 1966 and received PhD degree in economics from Southern Methodist University. Date of Birth: April 4, 1945 Dong-Min Yoon has been Attorney at Kim & Chang Law Firm since 1999. At Kim & Chang, he isDong-Min Yoon a specialist at IP Litigation. (Newly-nominated) Attorney Yoon served as Prosecutor of Seoul and Daegu District from 1975 - 1985. He was Head of 1st./2nd/4th Prosecutor Department of the Ministry of Justice from 1987 - 1989 and served as Head Prosecutor of 2nd /5th Criminal Department of Seoul District Prosecutor's Office during 1991 - 1992. Attorney Yoon was Branch Chief Prosecutor of Sung Nam Branch of Suwon District Prosecutors' Office during 1994 - 1995 and Assistant Prosecutor General of Daejeon High Prosecutor's Office during 1995 - 1997. He also served as Assistant Minister of Bureau of Planning and Management at Department of Justice during 1997 - 1998 and was Assistant Minister of Bureau of Protection and Probation at Department of Justice during 1998 - 1999. Mr. Yoon graduated from Seoul National University (major: Law) in 1967 and studied at University of Washington Law School in 1982. AGENDA 2-2: APPOINTMENT OF EXECUTIVE DIRECTORS Pursuant to Article 382 of the Commercial Code and Article 24 of the Articles ofIncorporation of the Company, the BOD recommends all of the following fourExecutive Directors to be retained: Kun- Hee Lee, Jong-Yong Yun, Yoon-Woo Lee,and Doh- Seok Choi. The BOD recommends that the four incumbent ExecutiveDirectors should be retained. They achieved outstanding business performance forthe past several years and also made great contributions to the companyperformance despite years-long global IT slump. Under their management, theCompany built up its financial structure to a level comparable to the globalblue chip companies (net debt to equity of -17% as of end of year 2005.) Thus,current management needs to be kept intact to ensure continuing success. The following section contains the names and biographical information for eachof the nominees for Executive Directors. The Board recommends a vote 'FOR' theelection of each of the following nominees. Date of Birth: January 9, 1942 Mr. Lee became Chairman of Samsung Group in 1987 and has been Representative Director ofKun-Hee Lee Samsung Electronics since 1998. He also served as Vice Chairman of the Federation of Korean Industries from February 1987 until present(Re-nominated) Mr. Lee has been Honorary President of International Olympic Committee since 1996, and he was Member of The Korean Organizing Committee for the 2002 FIFA World cup Korea/Japan. Mr. Lee graduated from Waseda University (major: Economics) in 1965 and also completed MBA courses at George Washington University (1966). He also holds Honorary Doctor of Economics from Seoul National University (2000) Date of Birth: January 21, 1944 Mr. Yun has been Vice Chairman & CEO of Samsung Electronics since 1999.Jong-Yong Yun He joined Samsung Group in 1966 and became President & CEO of Samsung Electro-Mechanics in(Re-nominated) December 1992. Mr. Yun served as President & CEO, Samsung Display Devices from November 1993 to November 1995 and in 1996, he became President & CEO of Samsung Electronics. Mr. Yun received The Best CEO Award by IIE and Gold Tower for Contribution to Industry given by the Korean Government in 1992. And in year 2000, he was named as 'The Top 25 Managers of the Year' by Business Week and 'Asia's Businessman of the Year' by Fortune. In 2003, Mr. Yun awarded Chang-Jo (Gold) Medal for Contribution to Science Technology given by the Korean Government, and in 2004, he was named as 'Asia's Most Powerful People in Business' by Fortune. Mr. Yun graduated from Seoul National University (major: Electrical Engineering) in 1966 and also completed the Sloan School Senior Executive Courses, Massachusetts Institute of Technology, in June 1988. Date of Birth: June 26, 1946Yoon-Woo Lee Mr. Lee has been Vice Chairman & CEO of Samsung Electronics since 2005.(Re-nominated) He joined Samsung Display Devices Co., Ltd. in December 1968, and in November 1976, he became Chief of Semiconductor Department, Samsung Electronics. Mr. Lee became Executive Vice President of Memory Business in March 1992, and in January 1996, he became President & CEO of Device Solution Network. Mr. Lee became Vice Chairman, Samsung Advanced Institute of Technology in 2004 and Vice Chairman, Corporate CTO & Global Collaboration of Samsung Electronics in 2005. Mr. Lee served as Chairman of Korea Semiconductor Industry Association since 2000, and he has been Vice Chairman of Seoul Chamber Commerce & Industry and Vice Chairman of Korea Industrial Technology Association from 2003 to present. Mr. Lee received 'The Technology & Science Award' for the Invention of 256K DRAM in 1985 and 'The Best TPM CEO Award' at TPM World Conference in 1998. He was also named 'The 34th CEO of the Year Award' by the Korea Management Association in 2005. Mr. Lee graduated from Seoul National University (major: Electrical Engineering) in 1969. Date of Birth: May 3, 1949 Mr. Choi served as President and CFO of Samsung Electronics since March 2001.Doh-Seok Choi He joined Cheil Industries, a division of Samsung Group in 1975 and in 1981, he became Manager(Re-nominated) of Accounting Section, Samsung Electronics. Mr. Choi became Vice President & Corporate Controller of Samsung Electronics in 1997 and became Executive Vice President & CFO of the Company in 1999. He was awarded Pin Tower for Contribution to Industry by the Korean Government in 1997. Mr. Choi graduated from Yonsei University (major: Business Administration) in 1975 and received MBA degree from Hong-Ik University in 1996. AGENDA 2-3: APPOINTMENT OF MEMBERS OF AUDIT COMMITTEE The Company's Audit Committee is a committee under Board of Directors thatsupervises and supports the management so that it may enhance the company'svalue to the maximum through auditing. Currently, Audit Committee consists ofthree members, all of whom are Independent Non-Executive Directors Pursuant to Article 415-2 of the Commercial Code, Article 191-17 of theSecurities and Exchange Law and Article 28-4 of the Articles of Incorporation ofthe Company, the BOD recommends the following Independent Non-ExecutiveDirectors to the audit committee: Jae-Sung Hwang (1), and Chae-Woong Lee (2). * (1): re-nominated, (2): newly nominated The following section contains the names and biographical information for eachof the nominees for Members of Audit Committee. The Board recommends a vote 'FOR' the election of each of the following nominees. Date of Birth: February 1, 1944 Jae-Sung Hwang has been Independent Non-Executive Director of Samsung Electronics sinceJae-Sung Hwang March 2000. He joined Ministry of Finance in 1966 and worked for the organization until 1986. He then worked for Korean National Tax Service during 1981 - 1998, and in year 2000,(Re-nominated) he became Non-Standing Judge of National Tax Tribunal. Mr. Hwang served as Consultant of Kim & Chang Law Firm since 1999 until present. Mr. Hwang graduated from Kunkook University (major: Business) in 1966 and also holds a Master's degree in Public Administration from Hanyang University. Date of Birth: May 2, 1942 Chae-Woong Lee has been Professor of Sungkyunkwan University since 1982.Chae-Woong Lee He served as Vice President of Sungkyunkwan University during 1999 - 2001. Also, during the(Newly-nominated) same period, he also was Independent Director of Samsung Electro-Mechanics. Professor Lee was President of Korea Academy of International Economy during 1999 - 2000. He also served as Independent Director of Pusan Bank since 2004 and has been President of Korea Academy of Economy since February 2005. Professor. Lee graduated from Seoul National University (major: Economics) in 1966 and received PhD degree in economics from Southern Methodist University. AGENDA 3: APPROVAL OF THE LIMIT ON THE RENUMERATION FOR DIRECTORS The remuneration to be paid to directors during the 38th fiscal year is to beapproved in accordance with Article 388 of the Commercial Code and Article 34 ofthe Articles of Incorporation. The proposed limit on the remuneration for the38th fiscal year is 60 billion won, and that is the same amount as the one forthe 37th fiscal year. The actual amount paid during the 37th fiscal year is 49.4billion won. (Attachment 1: Summary of Financial Statements) 37th fiscal year (January 1, 2005 - December 31, 2005)36th fiscal year (January 1, 2004 - December 31, 2004) Summary of Balance Sheet (Unit: Trillion Won, %)Account Title 37th Period 36th Period Change Assets 50.54 43.82 15% I. Current assets 14.22 13.96 2%- Quick assets 11.31 10.80 5%- Inventories 2.91 3.15 -8% II. Non-current assets 36.05 29.55 22%- Investments 10.93 9.42 16%- Tangible assets 24.65 19.73 25%- Intangible assets 0.47 0.40 17%Liabilities and Shareholders' Equity 50.54 43.82 15%Liabilities 10.88 9.38 16% I. Current liabilities 8.35 8.72 -4.3%II. Fixed liabilities 2.54 0.66 287% Total Shareholders' Equity 39.66 34.44 15% I. Capital stock 0.90 0. 90 -II. Capital surplus 6.37 6.33 1%III. Retained earnings 37.37 30.58 22%IV. Capital adjustments -4.97 -3.36 -48% Summary of Income Statement 37th fiscal year (January 1, 2005 - December 31, 2005)36th fiscal year (January 1, 2004 - December 31, 2004) (Unit: Trillion Won, %)Account Title 37th Period 36th Period ChangeSales 57.46 57.63 -0.3%Domestic 10.29 10.04 3%Export 47.16 47.60 -1%(in Billion USD) (46.31) (41.65) (11%)Cost of goods sold 40.16 37.28 8% Gross profit 17.30 20.35 -15%SG&A 9.24 8.34 11% Operating profits 8.06 12.02 -33%Non-operating income 2.67 2.14 25%Non-operating expense 1.86 1.03 81% Ordinary income 8.87 13.12 -32%Extraordinary gains - - -Extraordinary losses - - - Income before taxes 8.87 13.12 -32%Income taxes 1.23 2.34 -47% Net income 7.64 10.79 -30% Statement of Appropriations of Retained Earnings 37th fiscal year (January 1, 2005 - December 31, 2005); Scheduled date ofdisposal: February 27, 2006 36th fiscal year (January 1, 2004 - December 31, 2002); Actual date of disposal:February 28, 2005 (Unit: Trillion Won)Account Title Current Period (37th) Previous Period (36th) I. Retained earnings before appropriation - 7.56 - 6.971. Unappropriated retained earnings carried over - - from prior years2. Changes of surplus for companies subject to - - the equity method3. Interim dividend -0.08 -0.794. Retirement of treasury stock - -3.035. Net income for the year 7.64 10.79 II. Transfer from voluntary reserves - - - -1. Reserve for overseas market development - - - -2. Reserve for overseas investment losses - - - -3. Reserve for technology development - - - -4. Reserve for export losses - - - - III. Appropriation of retained earnings - 7.56 - 6.971. Legal reserve - -2. Reserve for business rationalization 1.00 1.003. Cash dividend 0.76 0.77 (Common shares:100 %; Preferred shares:101%)4. Reserve for research and personnel development 4.00 4.005. Reserve for losses from the disposal of treasury 0.65 0.55 shares6. Reserve for facilities 1.16 0.64 IV. Un-appropriated retained earnings to be carried - - - - forward to subsequent year Cash Flow Statement 37th fiscal year (January 1, 2005 - December 31, 2005)36th fiscal year (January 1, 2004 - December 31, 2004) (Unit: Trillion Won)Account Title Current Period (37th) Previous Period (36th) Cash flow from Operating Activities- Net Income 7.64 10.79- Depreciation & amortization 5.06 4.53- Gain on Foreign currency translation -0.06 -0.10- Gain on valuation on investments using the equity method -0.16 -0.58 Net Cash Provided by Operating Activities 12.79 14.80Cash flow from Investing Activities - -- Acquisition of property, plant & equipment -9.91 -7.35 - Net Cash Used in Investing Activities -9.95 -8.79 Cash flow from Financing Activities- Repayment of current portion of long-term debt - -1.00- Payment of dividends -0.85 -1.60- Acquisition of treasury stock -2.15 -3.84- Exercise of stock options 0.25 0.12 Net Cash Used in Financing Activities -2.75 -6.32 Net Increase/Decrease in Cash & Cash Equivalents 0.10 -0.31Cash at Beginning of the Year 0.96 1.27Cash at End of the Year 1.06 0.96 This information is provided by RNS The company news service from the London Stock Exchange