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SAMSUNG ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2001 and 2000

1. The Company:

The Controlling Company - Samsung Electronics Co., Ltd. ("SEC"), the controlling company, was incorporated under the laws of the Republic of Korea to manufacture and sell semiconductors, telecommunications, home appliances and digital media products. The shares of SEC have been listed on the Korea Stock Exchange since 1975. As of December 31, 2001, 152,530,007 shares of common stock and 23,893,427 shares of preferred stock have been issued. The preferred shares, which are non-cumulative and non-voting, were all issued on or before February 28, 1997 and are entitled to an additional cash dividend (1% of par value) over common stock. As of December 31, 2001, major shareholders of SEC’s stock, including preferred stock, and their respective shareholdings are as follows: Percentage Name of Shareholder Number of Shares of Ownership (%) Citibank N.A. 24,681,285 13.99 Samsung Life Insurance 10,624,693 6.02 Samsung Corporation 5,917,362 3.35 Lee, Kun-Hee and relatives 5,322,559 3.02 Jpmcb-Cap Re Em Gth Fd 2,728,142 1.55 National Pension Corporation 2,494,120 1.41 Korea Exchange Bank 1,947,824 1.10 The Government of Singapore 1,943,878 1.10 Putnam International Gro 1,897,359 1.08 Samsung Fire & Marine Insurance 1,856,370 1.05

Continued;

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued December 31, 2001 and 2000

1. The Consolidated Companies, Continued:

The Controlling Company, Continued- Under its Articles of Incorporation, SEC is authorized to issue 500,000,000 shares of capital stock (par value ₩5,000), of which 100,000,000 shares are cumulative, participating preferred stock, which are non-voting and entitled to a minimum cash dividend (9% of par value). In addition, SEC is authorized to issue to investors other than current shareholders convertible debentures and debentures with warrants of face values up to ₩4,000 billion and ₩2,000 billion, respectively (₩3,000 billion of such convertible debentures is for common stock and the remaining ₩1,000 billion is for preferred stock, and ₩1,500 billion of such debentures with warrants is for common stock and the remaining ₩500 billion is for preferred stock). SEC is also authorized, subject to board of directors approval, to issue common or preferred stock to investors other than current shareholders for issuance of depository receipts, general public subscription, urgent financing with financial institutions, and strategic alliance. SEC has a stock option plan under which options to purchase shares of common stock may be granted to key employees with the approval of shareholders. At March 16, 2000 and March 9, 2001, stock options were granted to 76 and 560 employees and directors, respectively (see Note 21). SEC issued 88,408 shares of common stock upon the conversion of foreign currency convertible bonds in the amount of US$7,000 thousand during the year ended December 31, 2001 (see Note 15). The cash proceeds in excess of par value of ₩5,349 million were credited to paid-in capital in excess of par value. As of December 31, 2001, ₩540,410 million (face value of US$469,780 thousand) of convertible bonds are outstanding (see Note 15). No debentures with warrants have been issued as of December 31, 2001.

Consolidated Subsidiaries - The consolidated financial statements include the accounts of SEC and its controlled subsidiaries (collectively referred to as "the Company"). Controlled subsidiaries include majority-owned entities and entities of which SEC owns more than 30 percent of the total outstanding voting stock and is the largest shareholder. Percentage of ownership is the sum of the percentage of direct and indirect ownership. The consolidated financial statements include the accounts of the financial services subsidiaries, Samsung Card and Samsung Capital, in accordance with, the consolidation accounting standards of the Republic of Korea.

Continued;

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Consolidated Subsidiaries, Continued -

The following table sets forth certain information with regard to consolidated subsidiaries as of December 31, 2001.

Area Subsidiaries Primary business

Capital (millions of won)

Percentage of ownership (%) Location

Korea Samsung Kwangju Electronics (SKEC) Home appliances manufacturing

￦ 378,847 94.25 Korea

Samsung Card Consumer financing 1,402,785 56.59 Korea Samsung Capital (SFC) Consumer financing 511,763 75.03 Korea STECO (STECO) Semiconductor

equipment manufacturing

38,531 51.00 Korea

Novita (NOVITA) Home appliances manufacturing

36,531 96.15 Korea

DNS Korea (DNS) Semiconductor equipment

manufacturing

30,358 62.37 Korea

Samsung Electronics Service (SSVC) Service center for electronic goods

51,072 83.33 Korea

Samsung Corning Micro Optics Manufacturing 45,145 50.00 Korea Living Plaza (formerly, Korea Electronics &

Information Distribution) Sales 52,732 96.77 Korea

Blueteck, ITL Manufacturing 48,794 90.00 Korea Tolos Logistics Distribution 8,025 95.41 Korea Towa Korea Manufacturing 13,666 50.63 Korea

America Samsung Electronics Canada (SECA) Distribution of electronic goods

38,628 100.00 Canada

Samsung Electronics America (SEA) Distribution of electronic goods

441,663 100.00 U.S.A.

Samsung Electronics Latino America Panama (ZONA LIBRE) (SELAPA)

Distribution of electronic goods

63,532 100.00 Panama

Samsung Electronics Mexico (SEM) Distribution of electronic goods

47,887 100.00 Mexico

Samsung Electronics Argentina (SEASA) A/V & home appliances sales

27,744 100.00 Argentina

Cagent Technologies (CET) Sale of software 22,183 92.58 U.S.A.

Samsung Receivables Corporation (SRC)

Financing

675,100

100.00

U.S.A.

Samsung Semiconductor, Inc.(SSI) Semiconductor sales 558,791 100.00 U.S.A. Samsung Information Systems America (SISA) Information system

R&D 17,320 100.00 U.S.A.

Samsung Telecommunication America (STA) Telephone Sales 102,500 100.00 U.S.A. Samsung International, Inc.(SII) A/V(CTV)

manufacturing 65,900 100.00 U.S.A.

Samsung Austin Semiconductor (SAS) Semiconductor manufacturing

100.00 U.S.A.

Samsung Mexicana (SAMEX) CTV&Monitor manufacturing

267,798 100.00 Mexico

Samsung Electronics Latino America Miami, Inc.(SELAMI)

Sale of electronic goods (6,531) 100.00 U.S.A.

Samsung Electronica Latino America Columbia (SELACOL)

Sale of electronic goods 7,073 100.00 Columbia

Samsung Electronica Da Amazonia Ltda.(SEDA)

A/V(CTV) manufacturing

40,605 100.00 Brazil

Continued;

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Europe Samsung Electronics Iberia, S.A. (SESA) VCR, TVCR manufacturing & sales

￦ 73,384 100.00 Spain

Samsung Electronics Svenska AB. (SESAB) Sale of electronic goods 15,816 100.00 Sweden

Samsung Electronics Hungarian RT (SEH)

CTV manufacturing 62,733 100.00 Hungary

Samsung Electronica Portuguesa (SEP)

Sale of electronic goods 13,612 100.00 Portugal

Samsung Electronics France (SEF) Sale of electronic goods 39,633 100.00 France Samsung Europe PLC. (SEPLC) Holding Company 200,378 100.00 U.K. Samsung Electronics (UK) (SEUK) Sale of electronic goods 180,932 100.00 U.K. Samsung Electronics Holding Gmbh

(SEHG) Holding company 55,008 100.00 Germany

Samsung Electronics Italia (SEI) Sale of electronic goods 48,316 100.00 Italy Samsung Electronics South Africa (PTY) (SSA) Sale of electronic goods 2,760 100.00 Republic of

South Africa

Samsung Electronics Benelux B. V. (SEBN)

Sale of electronic goods 41,379 100.00 Netherlands

Samsung Electronics Polska, SP.ZO.O (SEPOL)

Sale of electronic goods 19,630 100.00 Poland

Samsung Semiconductor Europe Limited (SSEL)

Semiconductor sales 35,730 100.00 U.K.

Samsung Electronics Manufacturing (UK) (SEMUK)

Electronic goods manufacturing

70,581 100.00 U.K.

Samsung Telecoms (UK) (STUK) Sale of electronic goods 8,742 100.00 U.K. Samsung Electronics Gmbh (SEG) Sale of electronic goods 69,937 100.00 Germany Samsung Semiconductor Europe

Gmbh (SSEG) Semiconductor sales 20,466 100.00 Germany

Samsung Electronics Overseas (SEO) Sales & marketing center

568 100.00 Netherlands

Asia Samsung Yokohama Research

Institute (SYRI) Research center 60,566 100.00 Japan

Samsung Electronics Australia (SEAU) Sale of electronic goods 34,548 100.00 Australia Samsung Telecommunications

Australia (STAU) Telecommunication

system manufacturing311 100.00 Australia

Pt.Samsung Electronics Indonesia (SEIN) A/V manufacturing 44,047 99.99 Indonesia Samsung Asia Pte (SAPL) Semiconductor & home 107,143 70.00 Singapore appliances sales Samsung Electronics Display (M)

SDN.BHD (SDMA) Monitor manufacturing 65,970 100.00 Malaysia

Samsung Electronics (M) SDN.BHD. (SEMA)

Home appliances manufacturing

33,496 100.00 Malaysia

Samsung Vina Electronics (SAVINA) Manufacturing 22,577 80.00 Vietnam Samsung Gulf Electronics FZE (SGE) Sale of electronic goods 16,834 100.00 The United

Arab Emirates

Samsung India Electronics Ltd. (SIEL) Manufacturing & sales 27,499 73.87 India Thai-Samsung Electronics (TSE)

CTV & washing

machine manufacturing57,203 91.83 Thailand

Samsung Electronics India Info. & Telecom. (SEIIT)

Sale of electronic goods 9,610 100.00 India

Samsung Electronics Philippines Corporation (SEPCO)

Sale of electronic goods 8,989 100.00 Philippines

Samsung Electronics Philippine Manufacturing Corp. (SEPHIL)

ODD Manufacturing 24,141 100.00 Philippines

Continued;

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China Samsung Electronics Hong Kong (SEHK) Semiconductor sales ￦ 69,954 100.00 Hongkong

Samsung Electronics Taiwan (SET) Semiconductor sales 16,324 99.99 Taiwan Samsung Electronics Huizhou (SEHZ) A/V manufacturing 77,693 100.00 China Shandong-Samsung

Telecommunication (SST) Telecom System

(PABX) manufacturing38,665 69.00 China

Samsung Electronics Suzhou Semiconductor (SESS)

Semiconductor manufacturing

82,741 100.00 China

Souzhou Samsung Electronics (SSEC) Home appliances manufacturing

67,831 88.27 China

Samsung (China) Investment (SCIC) Holding company 39,067 100.00 China Tianjin Samsung Electronics (TSEC) VCR manufacturing 75,966 90.55 China Tianjin Samsung Electronics Display (TSED) Monitor manufacturing 21,146 80.17 China Tianjin Tongguang Samsung

Electronics (TTSEC) CTV manufacturing 1,459 96.03 China

Tianjin Samsung Telecom Technology (TSTC)

HHP manufacturing 11,237 70.95 China

Subsidiaries excluded in the consolidated financial statements as of December 31, 2001 are as follows:


Capital (millions of

won) Percentage of ownership (%) Location

Korea MPEON Internet service ￦ 4,730 50.19 Korea

America Samsung Video Glass America, Inc. Holding company 710 61.04 U.S.A. Kdns America Inc. Sale of electronic goods 566 100.00 U.S.A. NewCo3 - 31 91.82 U.S.A. Alpha Processor, Inc.(API) Sales of Alpha CPU - 86.55 U.S.A. Europe Closed Joint Stock Company

Samsung Electronics Russia Service 656 100.00 Russia

Samsung Electronics Moscow Service Center

Service 134 95.00 Russia

Samsung Russia Service Center

Service 810 100.00 Russia

Samsung Electronics Moscow Service 27 100.00 Russia Samsung-Crosna Joint Stock

Company Facsimile machine

manufacturing 280 67.00 Russia

S.G.M. Moscow, Russian, Federation Service 1,237 100.00 Russia China Beijing Samsung Telecommunication Technology

Research Research 4,058 100.00 China

Shanghai Samsung Kang Cheng Communications Equipment

Telecommunication manufacturing

2,957 51.00 China

International View Technology Service 662 99.90 Taiwan In accordance with consolidation accounting standards generally accepted in the Republic of Korea, financial statements of the above subsidiaries are excluded in the consolidated financial statements as their total assets as of the end of the prior fiscal year-end was less than 7 billion won or the entities were in the process of liquidation. Continued;

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Changes of Subsidiaries Consolidated - (a) Details of subsidiaries newly included in the consolidated financial statements for the year ended

December 31, 2001 are as follows:

Location Name of Subsidiaries Korea Towa Korea Tolos Logistics Philippines Samsung Electronics Philippine Manufacturing Corp.(SEPHIL) China Tianjin Samsung Telecom Technology (TSTC)

(b) Details of subsidiaries excluded in the consolidated statements for the year ended December 31, 2001

are as follows:

Area Name of subsidiaries Remark America ARI Service, Inc.(ARI) Liquidated AST MEX Liquidated Alpha Processor, Inc. (API) Liquidation in process Eastern Europe Usbekistan Samsung Electronics (USE) Liquidated

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2. Summary of Significant Accounting Policies:

The significant accounting policies followed by the Company in the preparation of its consolidated financial statements in accordance with the accounting principles generally accepted in the Republic of Korea are summarized below.

Basis of Consolidated Financial Statement Presentation - The Company maintains its official accounting records in Korean Won and prepares statutory consolidated financial statements in the Korean language in accordance with the laws and regulations of the Republic of Korea. Certain accounting principles applied by the Company that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting principles in other countries. Accordingly, these consolidated financial statements are intended for use by those who are informed about Korean accounting principles and practices. For the convenience of the reader, the accompanying consolidated financial statements have been condensed, restructured and translated into English (with certain expanded descriptions) from the Korean language financial statements. Some information attached to the Korean language financial statements, but not required for a fair presentation of the Company’s financial position, results of operations or cash flows, has been omitted in the consolidated financial statements. Use of Estimates - The preparation of consolidated financial statements requires management to make estimates and assumptions that affect amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates.

Continued;

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2. Summary of Significant Accounting Policies, Continued:

Principles of Consolidation - The accompanying consolidated financial statements include the accounts of SEC and its controlled subsidaries. All significant intercompany transactions and balances have been eliminated in consolidation. Controlled subsidiaries include majority-owned entities and entities in which SEC owns more than 30 percent of total outstanding voting stock and is the largest shareholder. The Company records differences between the investment account and corresponding capital account of subsidiaries as a goodwill or a negative goodwill, and such differences are amortized over five years using the straight-line method. However, differences which occur from additional investments acquired in consolidated subsidiaries are reported in a separate component of shareholders’ equity, and are not included in the determination of the results of operations. In accordance with accounting principles generally accepted in the Republic of Korea, minority interest in consolidated subsidiaries is presented as a component of shareholders’ equity in the consolidated balance sheet. Cash, Cash Equivalents and Short-term Financial Instruments - Cash and cash equivalents include cash on hand and in bank accounts, with original maturities of three months or less. Investments which are readily convertible into cash within four to twelve months of purchase are classified in the balance sheet as short-term financial instruments. The cost of these investments approximates fair value. Allowance for Doubtful Accounts - The Company provides an allowance for doubtful accounts and notes receivable based on the aggregate estimated collectibility of the receivables. However, Samsung Capital and Samsung Card provide the allowance for doubtful financing receivables in accordance with the Detailed Enforcement Rules for Supervision of Financial Companies Specializing in Loan Business and the accounting principles generally accepted in the Republic of Korea, based on the results of the credit risk, classification of loan balances outstanding.

Continued;

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Inventory Valuation - Inventories are stated at the lower of cost or net realized value. Cost is determined by the average cost method, except for materials in transit which are stated at actual cost as determined by the specific identification method. Property, Plant and Equipment, and Related Depreciation - Property, plant and equipment are stated at cost, except for certain assets subject to upward revaluation in accordance with the Asset Revaluation Law of Korea. The revaluation presents production facilities and other buildings at their depreciated replacement cost, and land at the prevailing market price, as of the effective date of revaluation. The revaluation increment, net of revaluation tax, is first applied to offset accumulated deficit and deferred foreign exchange losses, if any. The remainder may be credited to other capital surplus or transferred to common stock. A new basis for calculating depreciation is established for revalued assets (see Note 9). Depreciation is computed using the straight-line method, based on the estimated useful lives of the assets as described below:

Estimated Useful Lives- Years Buildings and auxiliary facilities 2-66 Machinery and equipment 2-15 Tools and fixtures 2-20 Structures and vehicles 2-50

The Company capitalizes interest expense incurred on borrowings used to finance the cost of constructing facilities and equipment (see Note 9). Maintenance and Repairs - Routine maintenance and repairs are charged to expense as incurred. Expenditures which enhance the value or extend the useful life of the related assets are capitalized.

Continued;

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Investments in Equity Securities - ㆍFair-value investments

Investments in marketable equity securities (other than equity-method investments) are stated at market value. Unrealized holding gains and losses are reported in a separate component of shareholders´ equity(capital adjustments) and are not included in the determination of the results of operations.

ㆍCost-method investments

Investments in non-marketable equity securities (other than equity-method investments) are stated at cost except for non-temporary declines in the Company’s share of the underlying book value of the investee. Such declines are recorded in current operations, and subsequent recoveries are also recorded in current operations up to the original acquisition cost of the investment.

ㆍEquity method investments

Investments in business entities in which the Company has the ability to exercise significant influence over the operating and financial policies are accounted for using the equity method of accounting. Under the equity method, the original investment is recorded at cost and adjusted by the Company's share of the net book value of the investee with a corresponding charge to current operations, a separate component of shareholders´ equity, or retained earnings, depending on the nature of the underlying change in the net book value. All significant unrealized profits resulting from intercompany transactions of inventories and property, plant and equipment have been eliminated. Differences between the investment account and corresponding capital account of the investee at the date of acquisition of the investment are recorded as part of investments and are amortized over five years using the straight-line method. Assets and liabilities of the Company´s foreign investees are translated at current exchange rates, while income and expense are translated at average rates for the period. Adjustments resulting from the translation process are reported in a separate component of shareholders´ equity, and are not included in the determination of the results of operations.

Continued;

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Investments in Debt Securities Investments in debt securities are stated at cost. The difference between acquisition cost and face value of held-to-maturity debt securities is amortized using the effective interest method. Discounts and Premiums on Debentures - The difference between the face amount and the proceeds upon issuance of debenture is treated as either discount or premium, which is amortized over the life of the debenture using the effective interest method. The discount or premium is reported in the balance sheet as a direct deduction from or addition to the face amount of the debenture. Amortization of discount or premium is treated as interest expense. Debt Issued with a Put - When debt is issued with a premium put allowing the holder to redeem the debt for cash at a certain multiple of the debt’s par value at dates prior to maturity, the debt is accreted on an interest method by charges to income so that the debt equals the put price at the date the put is exercisable. In the years prior to 1999, in accordance with the previous financial accounting standards, the Company recorded both a discount and a separate component of shareholders’ equity for the difference between the face amount and the present value of the put price upon issuance. The discount was amortized using the effective interest method as interest expense over the life of the debt. Stock and Debenture Issue Cost - Stock issue costs are charged directly to paid-in capital in excess of par value. Debenture issue costs are recorded as a reduction of proceeds from the issuance of debenture. Intangible Assets - Intangible assets are amortized on a straight-line basis over the estimated useful lives, as follows:

Estimated Useful Lives -Years Goodwill 5 - 15 Intellectual property rights 3 - 10 Software development cost 3 Other intangible assets 1 - 50

Continued;

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Accrued Severance Benefits - Employees and directors with more than one year of service are entitled to receive a lump-sum payment upon termination of their employment with SEC, its Korean subsidiaries and certain foreign subsidiaries, based on their length of service and rate of pay at the time of termination. Accrued severance benefits represent the amount which would be payable assuming all eligible employees terminated their employment as of the balance sheet date. A portion of the accrued severance benefits of domestic companies are funded through a group severance insurance plan with Samsung Life Insurance, and the amounts funded under this insurance plan are classified as a deduction to accrued severance benefits liability. Subsequent accruals are to be funded at the discretion of the companies. In accordance with the National Pension Act of the Republic of Korea, a certain portion of accrued severance benefits of domestic companies is deposited with the National Pension Fund and deducted from the accrued severance benefits liability. Foreign Currency Translation - Assets and liabilities denominated in currencies other than the functional currencies have been translated at the rate of exchange on the balance sheet date. Gains and losses resulting from the translation are reflected in income for the period. Foreign currency convertible debentures are translated at the exchange rate that will be used at the time of conversion as prescribed in the terms of such debentures. Translation of Foreign Operations - Accounts of foreign subsidiaries are maintained in the currencies of the countries in which they operate. In translating the foreign currency financial statements of these subsidiaries into Korean Won, income and expenses are translated at the average rate for the year and assets and liabilities are translated at the rate prevailing on the balance sheet date. Resulting translation gains or losses is recorded as a cumulative translation adjustment presented as part of shareholders’ equity.

Continued;

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Income Tax Expense - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. However, deferred taxes are not recognized for temporary differences related to unrealized holding gains and losses on fair-value investment in equity securities that are reported in a separate component of shareholders’ equity. Long-Term Receivables and Payables-

Long-term receivables and payables that have no stated interest rate or whose interest rate is different from the market rate are recorded at their present values. The difference between nominal value and present value of the long-term receivables and payables is amortized using the effective interest method with interest income or expenses adjusted accordingly. Earnings Per Share - Basic earnings per share are calculated by dividing net income available to common shareholders by the weighted average of common shares outstanding during the year. Diluted earnings per share are calculated by using the weighted average of common shares outstanding adjusted to include the potentially dilutive effect of convertible bonds. Product Warranties -

The Company accrues the estimated cost of warranty coverage at the time that sales are recorded. Derivative Instruments - The Company enters into forward foreign exchange contracts and interest rate swap agreements to offset certain balance sheet exposures from changes in foreign currency exchange rates or interest rates. Such exposures result from the portion of the Company´s operations, assets and liabilities that are denominated in currencies other than the functional currencies of the consolidated entities. These foreign exchange contract and swap transactions, are entered into to support product sales, purchases and financing transactions made in the normal course of business, and accordingly, are not intended to be speculative in nature.

Continued;

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Derivative Instruments, Continued - Forward foreign exchange contracts are utilized to manage the risk associated with currency fluctuations on certain foreign currency denominated debt positions. The Company’s forward foreign exchange contracts are for periods consistent with the terms of the underlying transactions. Unrealized gains and losses resulting from the impact of currency exchange rate movements on forward foreign exchange contracts designated to offset certain foreign currency denominated debt are recognized as non-operating income or expense in the period in which the exchange rates change and offset the foreign currency gains and losses on the underlying exposures being hedged. The Company enters into interest rate swap agreements to manage its exposure to interest rate movements by effectively converting a portion of its debt and certain financing arrangements from variable to fixed rates. Maturity dates of interest rate swap agreements generally match those of the underlying debt or financing arrangements. These agreements, which mature through September 2004, involve the exchange of variable rate payments for fixed rate payments without the exchange of the underlying principal amounts. The differential between variable and fixed rates to be paid or received is accrued as interest rates change in accordance with the agreements and recognized over the life of the agreements as an adjustment to interest expense. Unrealized gains and losses on such agreements are recorded as a separate component of shareholders’ equity, with the related amounts due to or from counterparties included in accrued liabilities or other current assets.

3. United States Dollar Amounts:

The Company operates primarily in Korean Won and its official accounting records are maintained in Korean Won. The U.S. Dollar amounts are provided herein as supplementary information solely for the convenience of the reader. Won amounts are expressed in U.S. Dollars at the rate of ￦1,326 to US$1, the rate in effect on December 31, 2001. This presentation is not in accordance with accounting principles generally accepted in either the Republic of Korea or the United States, and should not be construed as a representation that the Won amounts shown could be converted to, realized or settled in U.S. Dollars at this rate. The 2000 U.S. Dollar amounts, which were previously expressed at ￦1,259 to US$1, the rate prevailing on December 31, 2000, have been restated to reflect the exchange rate in effect on December 31, 2001.

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4. Cash and Cash Equivalents, and Short-Term Financial Instruments:

Cash and cash equivalents, and short-term financial instruments as of December 31, 2001 and 2000 consist of the following:

Annual Interest Millions Rates (%) 2001 2000

(1) Cash and cash equivalents

Cash on hand and in banks - ￦ 25,147 ￦ 197,158 Passbook accounts 1 182,954 231,162 Foreign currency deposits 0 - 8.2766 468,274 424,975 Money market deposit accounts 1 - 5.4 1,290,410 1,143,069

￦ 1,966,785 ￦ 1,996,364 =============== ============== (2) Short-term financial instruments

Installment and time deposits 3.9-9 ￦ 1,608,731 ￦ 1,044,701 Foreign currency deposits 0 - 8.2766 337,831 405,763 Other financial instruments 0 - 9 320,358 696,245 2,266,920 2,146,709 Less: Long-term portion (86,072) (235,227) ￦ 2,180,848 ￦ 1,911,482

=============== ==============

At December 31, 2001 and 2000, bank deposits of ￦257,005 million and ￦320,630 million, respectively, are subject to withdrawal restrictions in relation to short-term borrowings, long-term debt and government-sponsored R&D projects (see Notes 13 and 14).

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5. Marketable Securities:

Marketable securities as of December 31, 2001 and 2000 consist of the following: Annual Interest Millions Rates (%) 2001 2000 Beneficiary certificates - ￦ - ￦ 5,718 Government and public bonds 5.0 - 7.0 3,656 1,042 Marketable securities owned by foreign subsidiaries 45,159 22,374 ￦ 48,815 ￦ 29,134 ============== ==============

6. Accounts and Notes Receivable:

Accounts and notes, and their provision for doubtful accounts as of December 31, 2001 and 2000 are as follows:

Millions 2001 2000 Trade accounts and notes receivable ￦ 3,940,666 ￦ 3,911,505 Less: Provision for doubtful accounts (92,486) (98,492) ￦ 3,848,180 ￦ 3,813,013 =============== ============= Other accounts and notes receivable ￦ 806,410 ￦ 940,866 Less: Provision for doubtful accounts (12,334) (20,136) ￦ 794,076 ￦ 920,730 =============== ============= On an ongoing basis, the Company sells to various financial institutions certain accounts receivables primarily from product sales to foreign countries, primarily subject to limited recourse. Amounts excluded from the balance sheets under these arrangements were ￦3,283,203 million and ￦4,052,247 million at December 31, 2001 and 2000, respectively. Costs associated with the sale of receivables, primarily related to the discount and loss on sale, were ￦99,667 million and ￦140,291 million in 2001 and 2000, respectively, and are included in other non-operating expenses in the consolidated income statements.

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7. Inventories:

Inventories as of December 31, 2001 and 2000 consist of the following: Millions 2001 2000 Finished goods and merchandise ￦ 1,241,428 ￦ 1,640,791 Semi-finished goods and work in process 868,714 1,129,116 Raw materials and supplies 910,509 1,185,868 Materials in transit 590,081 769,101 ￦ 3,610,732 ￦ 4,724,876 =============== ============== Inventories are insured against fire and other casualty losses of up to ￦3,849,722 million at December 31, 2001. At December 31, 2001, ￦121,630 million of land and construction in progress held for resale are included in the finished goods and merchandise account. Related interest costs of ￦1,432 million and ￦10,048 million have been capitalized for the years ended December 31, 2001 and 2000, respectively. At December 31, 2001, certain portion of inventories is pledged as collateral for certain short-term borrowings (see Note 13).

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8. Financing Receivables:

Financing receivables of consumer financing subsidiaries, Samsung Card and Samsung Capital as of December 31, 2001 and 2000 are as follows:

Millions Classification 2001 2000

(1) Short-term financing receivables

Credit card assets ￦ 9,809,553 ￦ 8,673,153 Lease assets 101,290 65,535 Installment finance 941,540 945,729 General loans 2,742,724 1,573,340 Other 87,227 170,162

13,682,334 11,427,919 Allowance for bad debt (660,904) (273,336) 13,021,430 11,154,583

(2) Long-term financing receivables Credit card assets ￦ 689,464 ￦ 163,981 Lease assets 193,501 112,289 Installment finance 914,984 411,329 General loans 257,449 288,994 Other 13,900 15,868 2,069,298 992,461 Accumulated depreciation (19,189) (7,345) Discount on present value (537) (2,515) Allowance for bad debt (61,579) (11,399)

1,987,993 971,202 ￦ 15,009,423 ￦ 12,125,785

The consumer finance subsidiaries have agreements with various financial institutions to sell certain eligible financing receivables, subject to recourse. Payments are collected by the consumer finance subsidiaries from the sold accounts receivable and the collections are transferred to the buyers on predetermined dates. These transactions were accounted for as sales and as a result the related receivables in an aggregate amount of ￦5,303,615 million have been excluded from the accompanying consolidated balance sheets. In addition, the consumer finance subsidiaries have entered into agreements (“Receivables Sale Agreements”) with several financial institutions whereby it sells certain eligible financing receivables in accordance with the Act on Asset Backed Securitization of the Republic of Korea (the “ABS Act”). Pursuant to the Receivables Sale Agreements, the consumer finance subsidiaries formed Special Purpose Entities (“SPEs”), which were formed for the sole purpose of buying receivables generated by consumer finance subsidiaries. Under the Receivables Sale Agreements, consumer finance subsidiaries, irrevocably and with limited recourse, transfer certain eligible financing receivables to SPEs. These two-step transactions are accounted for as a sale of receivables and as a result the related receivables in an aggregate amount of ￦9,989,747 million have been excluded from the accompanying balance sheets.

31



9. Property, Plant and Equipment:

Property, plant and equipment as of December 31, 2001 and 2000 consist of the following: Millions 2001 2000 Buildings and auxiliary facilities ￦ 3,897,660 ￦ 3,176,076 Machinery and equipment 17,268,266 13,841,941 Tools and fixtures 2,012,813 1,649,407 Structures and other 311,683 293,108 23,490,422 18,960,532 Less: Accumulated depreciation (11,162,416) (7,876,148) 12,328,006 11,084,384 Land 2,085,200 2,012,156 Construction in progress 988,147 1,202,992 ￦ 15,401,353 ￦ 14,299,532 ============== ============= In accordance with the Asset Revaluation Law, on January 1, 1980, 1982, 1998 and April 1, 1999, SEC revalued a substantial portion of its property, plant, equipment and investments in equity securities by ￦3,051,612 million. The remaining revaluation increments of ￦1,212,641 million, net of revaluation tax, credits to deferred foreign currency translation losses and others, were credited to capital surplus, a component of shareholders’ equity. In addition, effective on October 1, 2000, Samsung Kwangju Electronics revalued a substantial portion of its property, plant and equipment by ￦63,326 million. The revaluation increment of ￦62,145 million, net of revaluation tax of ￦1,181 million, was credited to capital surplus. At December 31, 2001, certain portion of the Company’s property, plant and equipment, up to a maximum of ￦1,314,398 million, is pledged as collateral for various loans from financial institutions (see Notes 13 and 14). As of December 31, 2001, property, plant, equipment are insured against fire and other casualty losses, and business interruption losses of up to ￦32,800,638 million and ￦7,745,357 million, respectively. Financial institutions, including Korea Development Bank, are the beneficiaries for the insurance benefits of up to ￦808,289 million, held as collateral for borrowings. At December 31, 2001 and 2000, the value of land owned by SEC and its Korean subsidiaries based on the posted price issued by the Korean tax authority is ￦1,468,672 million and ￦1,378,358 million, respectively. Interest costs of ￦92,759 million and ￦83,984 million were capitalized for the years ended December 31, 2001 and 2000, respectively. At December 31, 2001 and 2000, Samsung Card, a SEC subsidiary, has recorded ￦96,267 million and ￦56,901 million of operating lease assets and prepaid finance lease assets, acquired through the lease finance business.

32



10. Investments:

Investments as of December 31, 2001 and 2000 consist of the following (in millions of Korean Won except percentage information):

2001 2000 Market value Percentage of Acquisition (Net book Recorded Recorded Ownership Cost value) Book value Book value

(1) Equity-method investments

Bokwang FUND V 83.33 ￦ 5,000 ￦ 14,174 ￦ 14,174 ￦ 6,329 Bokwang FUND X 81.82 9,000 8,987 8,987 9,000 SVIC FUND I 99.00 9,900 7,652 7,652 9,948 SVIC FUND II 99.00 29,700 32,009 32,009 30,893 SVIC FUND III 99.00 19,800 18,202 18,202 20,445 SVIC FUND IV 65.67 98,500 100,047 100,047 101,561 SVIC FUND V 99.00 29,700 28,146 28,146 29,741 Samsung Electro-Mechanics 22.93 359,237 405,816 420,332 426,505 Samsung Economic Research Institute 29.80 17,880 18,134 18,084 17,940 Samsung SDS 26.27 12,753 54,602 47,391 58,208 Samsung Corning 45.29 94,230 310,012 311,456 284,052 Samsung Thomson-CSF 50.00 135,000 112,222 18,054 3,065 Samsung Lions 27.50 274 - - - Towa Korea - - - - 8,524 MEMC Korea 20.00 17,200 34,838 34,800 43,551 Samsung Portugal Productos Electro-Mechanicos S.A. 24.15 2,124 - - 1,768 Samsung Devices (M) SDN BHD 25.00 21,849 89,570 72,136 53,985 Skyworld Corporation 25.00 2,028 1,905 2,170 2,409 Samsung Electro-Mechanics Thailand 25.00 4,101 20,870 16,368 11,196

Continued;

33



10. Investments, Continued: 2001 2000 Market value Percentage of Acquisition (Net book Recorded Recorded Ownership Cost value) Book value Book value

Syrian-Korean Telecommunication Equipment Manufacturing Establishment 49.00 2,061 6,043 6,043 4,261 Samsung Japan 49.00 47,767 76,876 55,234 95,713 Union Optical 20.00 17,389 430 3,599 - e-Samsung Greater China - - - - 3,537 e-Samsung USA Corporation 30.00 2,387 2,315 2,435 - Opentide Corporation 30.00 4,774 4,532 4,771 - e-Samsung Asia(Holdings) Pte, Ltd. 22.05 8,400 7,616 8,391 - Samsung SDI 19.83 423,722 586,925 603,182 472,415 Samsung Techwin 26.28 211,726 137,049 176,293 227,566 Seoul Commtech. 35.75 8,392 21,297 22,427 17,374 Samsung Networks 27.06 5,214 13,647 8,726 8,070 Samsung Corning Precision Glass 41.85 116,140 113,458 133,118 107,424 Samsung Everland 25.64 64,112 227,295 154,841 117,341 1,780,360 2,454,669 2,329,068 2,172,821

(2) Other investments Fair-value investments ￦1,130,443 ￦ 875,438 ￦ 875,438 ￦ 606,924 Cost-method investments 428,022 170,695 383,412 387,731 Securities market stabilization fund 13,096 13,979 13,979 8,744 ABS Subordinated Securities(*) 1,143,700 1,143,700 1,143,700 246,958 Class II Beneficiary Certificates(*) 915,318 915,318 915,318 - Other 12,646 12,965 12,646 2,976 3,643,225 3,132,095 3,344,493 1,253,333 Total Investments ￦5,423,585 ￦ 5,586,764 ￦5,673,561 ￦ 3,426,154 ========= ========= ========= ========= (*) In relation to the financing receivables sales agreements, the consumer finance subsidiaries purchased

these debt securities issued by the SPEs. Continued;

34



10. Investments, Continued:

The following table reconciles the difference between the acquisition cost and the book value recorded for the equity-method investments at December 31, 2001.

Millions Acquisition cost ￦ 1,780,360 Earnings from equity-method investments - prior years 162,791 Earnings from equity-method investments - current year 301,473 Capital surplus 98,192 Other capital adjustments 109,078 Dividends paid by investees (122,826) Book value ￦ 2,329,068 ================

At December 31, 2001, unrealized holding loss on fair-value investments was ￦255,005 million, which was recorded in a separate component of shareholders’ equity (other capital adjustments). For the year ended December 31, 2000, the Company recognized an extraordinary loss in the amount of ￦125,000 million on the write-off of the equity investments of the consumer finance subsidiaries in Samsung Commercial Vehicles.

11. Intangible Assets:

Intangible assets, net of accumulated amortization, as of December 31, 2001 and 2000 consist of the following: Millions 2001 2000 Goodwill ￦ 10,545 ￦ 9,088 Intellectual property rights 230,172 194,162 Software development cost 12,722 7,162 Other 38,363 42,941 ￦ 291,802 ￦ 253,353 ================ ==============

35



12. Long-Term Deposits and Other Assets:

Long-term deposits and other assets as of December 31, 2001 and 2000 consist of the following: Millions 2001 2000 Long-term deposits ￦ 624,274 ￦ 580,125 Long-term receivables 18,561 14,879 Long-term loans 245,894 113,209 Long-term prepaid expenses 370,179 459,760 Other 16,318 15,023 ￦ 1,275,226 ￦ 1,182,996 ================ ===============

13. Short-Term Borrowings:

Short-term borrowings at December 31, 2001 and 2000 consist of the following:

Annual Interest Rates (%) Millions 2001 2001 2000 Bank overdraft facilities 10.5 ￦ 6 ￦ 177,484 General term loans from commercial banks 5.6 - 10.3 1,079,900 1,088,900 Notes discounted 4.33 - 8.43 5,994,757 6,247,303 Usance financing LIBOR+0.6 - 1.8 1,509,217 1,827,492 (including D/A loan incurred from intercompany transaction) Short-term borrowings of foreign subsidiaries 2.47 – 17.00 682,095 835,174 ￦ 9,265,975 ￦ 10,176,353 ============== ==============

Certain bank deposits, inventories, and property, plant and equipment are pledged as collateral for the above borrowings (see Notes 4, 7 and 9). In addition, SEC guarantees repayment of substantially all short-term borrowings of overseas subsidiaries (see Note 17). In addition, for the years ended December 31, 2001 and 2000, the above short-term borrowings includes borrowings of the consumer finance subsidiaries in an aggregate amount of ￦6,927,663 million and ￦7,379,544 million, respectively.

36



14. Long-Term Debt:

Long-term debt as of December 31, 2001 and 2000 consists of the following: Millions Reference 2001 2000 Korean won loans (A) ￦ 345,346 ￦ 300,934 Foreign currency loans, in Korean Won equivalents (B) 621,540 1,471,361 Debentures (C) 9,852,739 6,166,941 10,819,625 7,939,236 Less: Current maturities (4,421,695) (5,380,024) ￦ 6,397,930 ￦ 2,559,212 =============== ==============

At December 31, 2001, certain bank deposits, and property, plant and equipment are pledged as collateral for the above long-term debt (see Notes 4 and 9). In addition, repayment of certain long-term debt is guaranteed by various Korean financial institutions and/or certain affiliated companies (see Note 17). Included in the long-term debt were borrowings of the consumer finance subsidiaries in an aggregate amount of ￦5,164,072 million and ￦1,861,322 million, as of December 31, 2001 and 2000, respectively.

(A) Local currency loans as of December 31, 2001 and 2000 consist of the following:


Korea Development Bank 6.55 - 10.59 ￦ 45,304 ￦ 87,544 Korea Technology Banking Corporation 6.5 6,449 12,222 Hanvit Bank 5 - 10 24,209 17,157 Kookmin Bank 3 - 12.45 9,651 18,823 Shinhan Bank 9.8 20,000 20,000 Kyobo Life Insurance Co., Ltd. - - 100,000 Korea Energy Management Corporation 4.5 - 6 28,125 33,156 CIT Financial Korea Ltd. 12.31 - 13.78 6,275 8,720 Korea Life Insurance 7.65 78,000 - Samsung Life Insurance 8 120,000 - Other 3-6.5 7,333 3,312 ￦ 345,346 ￦ 300,934 ============== ==============

Continued;

37



14. Long-Term Debt, Continued:

(B) Long-term debt denominated in foreign currencies as of December 31, 2001 and 2000 consist of the following:

Annual Interest Thousands Rates (%) 2001 2000 Citibank, N.A. LIBOR+0.6 $ 77,673 $ 129,516 Korea Development Bank LIBOR+0.4-1.5 157,488 544,558 Korea Exchange Bank LIBOR+0.375 21,000 37,799 Korea Development Leasing Corporation and others LIBOR+0.6-1.1 76,931 267,892 Other LIBOR+1-1.95 5,215 21,012 Long-term debt of foreign subsidiaries 1.4 - 1.65 130,426 217,925 U.S. Dollar equivalents $ 468,733 $ 1,218,702 ============== ============== Korean won equivalents (in millions) ￦ 621,540 ￦ 1,471,361 ============== ==============

38



14. Long-Term Debt, Continued:

(C) Debentures outstanding as of December 31, 2001 and 2000 consist of the following:


Guaranteed debentures - ￦ - ￦ 122,500 Non-guaranteed debentures 6.5 - 20.1 9,855,100 5,953,300 Private debentures 10.65 - 15.7 20,000 60,000 Non-guaranteed floating rate notes CD + 0.1 - 32,000 9,875,100 6,167,800 Less: Discounts (22,361) (859) ￦ 9,852,739 ￦ 6,166,941

============== ============== Maturities of long-term debt outstanding, excluding premiums and discounts on debentures, at December 31, 2001 are as follows:

Millions

Local Foreign Currency Currency Loans Loans Debentures Total 2002 ￦ 134,331 ￦ 426,763 ￦ 3,860,600 ￦ 4,421,694 2003 52,839 74,736 3,269,500 3,397,075 2004 8,538 22,270 2,527,000 2,557,808 2005 9,211 10,237 123,000 142,448 2006 127,545 24,490 95,000 247,035 Thereafter 12,882 63,044 - 75,926 ￦ 345,346 ￦ 621,540 ￦ 9,875,100 ￦ 10,841,986 ============= ============= ============== ===============

39



15. Foreign Currency Notes and Bonds:

Unsecured foreign currency notes and bonds as of December 31, 2001 and 2000 consist of the following: Millions Reference Due Date 2001 2000 SEC USD denominated straight bonds ( A ) November 1, 2002 ￦ 206,798 ￦ 196,444 JPY denominated straight bonds ( B ) April 23, 2003 149,290 162,915 DEM denominated straight bonds December 16, 2001 - 182,112 USD denominated straight bonds ( C ) October 1, 2027 132,610 125,970 USD denominated straight bonds ( D ) October 1, 2002 202,714 192,564 Convertible bonds December 31, 2006 - 6,018 Convertible bonds ( E ) December 31, 2007 62,000 62,000 Convertible bonds ( F ) February 1, 2004 117,300 117,300 Convertible bonds ( G ) July 30, 2002 120,470 120,470 Convertible bonds ( H ) January 31, 2003 240,640 240,640 Overseas subsidiaries USD denominated fixed rate notes ( I ) May 1, 2003 389,873 370,352 USD denominated straight bonds October 2, 2002 - 9,574 USD denominated fixed rate notes April 1, 2027 33,153 31,492 USD denominated fixed rate notes April 1, 2030 33,153 31,492 USD denominated fixed rate notes July 26, 2004 66,305 - 1,754,306 1,849,343 Less: Current maturities (529,983) (191,686) Less: Discounts (6,070) (6,379) Add: Long-term accrued interest 16,470 14,019 Less: Conversion rights (17,183) (21,195) ￦ 1,217,540 ￦ 1,644,102 ============= ============

Continued;

40



15. Foreign Currency Notes and Bonds, Continued:

(A) USD denominated straight bonds - On November 1, 1992, the Company issued straight bonds in the amount of US$200 million at 99.5% of face value for the expansion of its semiconductors manufacturing facilities. The bonds bear interest at 8.5% per annum and mature on November 1, 2002. The Company redeemed US$44,055 thousand of these bonds during 1998 and 1999.

(B) JPY denominated straight bonds -

On April 23, 1996, the Company issued straight bonds in the amount of ￥20,000 million at face value. The bonds bear interest at 3.3% per annum and mature on April 23, 2003. The Company redeemed ￥5,210 million of these bonds during 1998.

(C) USD denominated straight bonds -

On October 2, 1997, the Company issued straight bonds in the amount of US$100 million at 99.85% of face value. The bonds bear interest at 7.7% per annum and mature on October 1, 2027, with repayment to be made annually for 20 years after a 10-year grace period which began on the date of issuance.

(D) USD denominated straight bonds -

On October 2, 1997, the Company issued straight bonds in the amount of US$227 million at 93.11% of face value. The bonds bear interest at 7.45% per annum and mature on October 1, 2002. The Company redeemed US$74,135 thousand of these bonds during 1998 and 2000.

Continued;

41




( E ) Convertible bonds -

On June 26, 1997, the Company issued foreign currency convertible bonds in the amount of US$300 million for the expansion of its manufacturing facilities. The bonds are listed on the London Stock Exchange and will mature on December 31, 2007. A summary of the terms of these bonds is as follows:

∙ Interest: 0% ∙ Conversion period: On or after July 26, 1997 through December 15, 2007. ∙ Conversion Price: Subject to adjustment pursuant to antidilution provisions, ₩113,351 per share,

with a fixed exchange rate applicable to the conversion of ₩888.5 to US$1.00.

∙ Redemption/Premium Put: Redeemable at the option of the bondholders on June 26, 2002 at 131.1% of the principal amount, and at the option of the Company at any time on or after June 26, 1999 at a declining redemption price. However, no such redemption may be made prior to June 26, 2002 unless the closing price of the Company's common share has reached 135% of the conversion price for a stipulated period.

( F ) Convertible bonds-Intel -

On February 1, 1999, the Company issued foreign currency convertible bonds in the amount of US$100 million to Intel Corporation, which mature on February 1, 2004. A summary of the terms of the bonds is as follows: ㆍ Interest: 5% per annum payable annually in arrears on February 1. ㆍ Conversion period: On or after May 3, 2000 through January 21, 2004. ㆍ Conversion price: Subject to adjustment pursuant to auditilution provisions, ₩108,465 per share,

with a fixed exchange rate applicable to the conversion of ₩1,173 to US$1.00.

Continued;

42




(G) Convertible bonds-Apple -

On July 30, 1999, the Company issued foreign currency convertible bonds in the amount of US$100 million to Apple Computer Inc. Ltd., which mature on July 30, 2002. A summary of the terms of these bonds is as follows: ㆍ Interest: 2% per annum payable annually in arrears on December 31. ㆍ Conversion period: On or after July 30, 2000 through July 20, 2002. ㆍ Conversion price: Subject to adjustment pursuant to antidilution provisions, ₩219,050 per share,

with a fixed exchange rate applicable to the conversion of ₩1,204.7 to US$1.00.

(H) Convertible bonds-Dell - On October 15, 1999, the Company issued foreign currency convertible bonds in the amount of US$200 million to Dell Computer Corporation, which mature on January 31, 2003. A summary of the terms of these bonds is as follows: ㆍ Interest: 2% per annum payable annually in arrears on December 31. ㆍ Conversion period: On or after October 15, 2001 through January 16, 2003. ㆍ Conversion price: Subject to adjustment pursuant to antidilution provisions, ₩260,000 per share,

with a fixed exchange rate applicable to the conversion of ₩1,203.2 to US$1.00. (I) USD denominated fixed rate notes -

On May 1, 1998, SEA issued fixed rate notes in the amount of US$ 300 million at face value. The notes bear interest at 9.75% per annum and will mature on May 1, 2003. The notes are non-callable except in the event of the imposition of certain taxes in the U.S. or the Republic of Korea which would then grant the issuer the right to redeem the note at 100% of their principal amount plus accrued interest. The notes are guaranteed by SEC.

43



16. Accrued Severance Benefits:

Accrued severance benefits as of December 31, 2001 and 2000 consist of the following: Millions 2001 2000 Accrued severance benefits ￦ 547,051 ￦ 416,458 Less: Funded portion National Pension fund (26,130) (32,010) Severance insurance fund (302,106) (218,349) Unfunded portion ￦ 218,815 ￦ 166,099 ================ ==============

17. Commitments and Contingencies: ㆍAt December 31, 2001, guarantees of indebtedness between the Company and the equity-method

investees consist of the following (unit: million Won, thousand US$):

Guarantor Guarantee Amount SEC Samsung Techwin ￦ 1,231 ============== SEC SJC US$ 147,361 ============== Samsung Card Samsung Networks, etc. ￦ 21,562 ============== In addition, at December 31, 2001, the Company is contingently liable for guarantees of indebtedness, principally for other related parties, approximating ￦14,609 million and provided guarantees of contract fulfillment for Iljin Heavy Industries in the amount of ￦828 million.

Continued;

44



17. Commitments and Contingencies, Continued:

At December 31, 2001, the Company has various technical assistance agreements with certain foreign companies. Total royalty expense incurred in relation to these agreements for the years ended December 31, 2001 and 2000 amounts to ￦800,975 million and ￦804,235 million, respectively. ㆍThe Company leases certain property and equipment under various capital lease arrangements that

expire over the next three years. Assets recorded under capitalized lease agreements included in the property, plant and equipment (total acquisition costs: ￦744,125 million). Depreciation expense for the capital lease assets was ￦27,180 million in 2001.

Future minimum lease payments under scheduled capital leases are as follows:

Millions 2002 ￦ 115,390 2003 11,175 2004 104 Total minimum payments 126,669 Amount representing interest (11,101) Obligations under capital leases ￦ 115,568 ==============

In addition, at December 31, 2001, the Company has various lease agreements that are recognized as operating leases. Related rental payments are charged to operations as incurred. Future rental expenses under these non-cancelable operating lease agreements amount to ￦661,234 million in 2001. Continued;

45




ㆍ Samsung Card carries on a lease finance business and lease receivables related to such business is

recorded as short-term and long-term financing receivables (see Note 8). Scheduled future lease incomes from these operating lease arrangements are as follows:

Millions

2002 ￦ 28,762 2003 20,974 2004 8,421 2005 1,982 Thereafter 550 ￦ 60,689 =================

ㆍ As of December 31, 2001, the Company has forty three forward exchange contracts with various foreign

and Korean financial institutions to hedge currency risk on foreign currency long-term debt. In addition, the Company has twelve interest rate SWAP contracts with various foreign and Korean financial institutions to hedge interest rate risk on floating-rate foreign currency long-term debt.

For the year ended December 31, 2001, the Company recognized gains of ￦6,850 million and losses of ￦1,371 million, charged to current operations, from the valuation of forward exchange contracts. In addition, from the valuation of interest rate SWAP contracts, the Company recognized deferred losses of ￦6,649 million, charged to capital adjustment, of which ￦5,133 million is expected to be realized by December 31, 2002.

Continued;

46




ㆍ In June 1999, Samsung Motors Inc. (“SMI”), an affiliate of the Company, filed a petition for court

receivership. In connection with this petition, the Company and certain other Samsung Group affiliates (“the Affiliates”) entered into an agreement with the institutional creditors (the “Creditors”) of SMI in September 1999. In accordance with this agreement, the Company, and the Affiliates agreed to sell 3,500,000 shares of Samsung Life Insurance Co., Ltd., transferred to the Creditors in connection with the petition for court receivership of SMI by December 31, 2000. In the event that the sales proceeds fall short of ￦2,450,000 million, the Company, and the Affiliates have agreed to compensate the Creditors for the shortfall by other means including participation in any equity offering or subordinated debentures issued by the Creditors. Any excess proceeds over ￦2,450,000 million is to be distributed to the Company, and the Affiliates. As of the date of this report, the shares in Samsung Life Insurance Co., Ltd. were not sold. The ultimate effect of these matters on the financial position of the Company as of the balance sheet date cannot presently be determined.

ㆍAt December 31, 2001, the Company is a party to various legal claims and proceedings including patent

infringements, breach of contracts and unpaid debts, all of which are pending as of December 31, 2001. The Company’s management believes that, although the outcome of these matters are uncertain, the resolution of these matters will not have a material adverse effect on the operations or financial position of the Company.

ㆍAs of December 31, 2001, SEA and four other overseas subsidiaries have agreements with financial

institutions to sell certain eligible trade accounts receivable under which, on an ongoing basis, a maximum of US$459 million can be sold. SEC and four domestic subsidiaries have entered into agreements to discount trade notes receivable with Korean banks up to ￦1,003,600 million and credit sales facility agreements with three banks, including Hanvit Bank, amounting up to ￦820,000 million. SEC and some of its subsidiaries have agreements with Hanvit Bank and other financial institutions, whereby certain trade creditors of the Company are paid through these financial institutions.

ㆍAs of December 31, 2001, 38 blank notes and 16 blank checks have been provided to financial

institutions as collateral for bank borrowings and for the fulfillment of certain contracts.

ㆍ Beginning in 1997, Korea and other countries in the Asia Pacific region experienced a severe contraction in substantially all aspects of their economies. This situation is commonly referred to as the 1997 Asian financial crisis. In response to this situation, the Korean government and the private sector began implementing structural reforms to historical business practices.

The Korean economy is currently experiencing difficulties, particularly in the areas of restructuring

private enterprises and reforming the banking industry. The Korean government continues to apply pressure to Korean companies to restructure into more efficient and profitable firms. The banking industry is currently undergoing consolidation and uncertainty exists with regard to the continued availability of financing. The Company may be either directly or indirectly affected by the situation described above.

47



18. Retained Earnings:

Retained earnings at December 31, 2001 and 2000 consist of the following:

Millions Reference 2001 2000 Appropriated: Legal reserve (A) ￦ 441,289 ￦ 440,789 Reserve for business rationalization (B) 3,512,101 2,512,101 Reserve for improvement of financial structure (C) 204,815 204,815 Reserve for overseas market development (D) 510,750 510,750 Reserve for overseas investment losses (D) 164,982 164,982 Reserve for research and human resource development (D) 5,436,459 3,838,398 Reserve for export losses (D) 167,749 167,749 Reserve for loss on disposal of treasury stock (D) 200,000 200,000 Reserve for capital expenditure (E) 2,714,811 2,714,811 13,352,956 10,754,395 Unappropriated: (11,028) (34,856) ￦ 13,341,928 ￦ 10,719,539 =============== =============

(A) The Korean Commercial Code requires the Company to appropriate as a legal reserve an amount

equal to a minimum of 10% of annual cash dividends declared, until the reserve equals 50% of capital stock. This reserve is not available for the payment of cash dividends but may be transferred to capital stock or used to reduce accumulated deficit, if any.

(B) Pursuant to the Tax Exemption and Reduction Control Law, the Company is required to appropriate

as a reserve for business rationalization, an amount equal to the exemption of income taxes resulting from investment tax credits and certain deductions from taxable income specified by such law. This reserve may be used for the reduction of accumulated deficit, if any, or transferred to capital stock.

(C) In accordance with the Regulation for Securities Issuance and Disclosure, the Company is required

to appropriate as a reserve for improvement of financial structure an amount equal to at least 50% of the net gain on disposal of property, plant and equipment and 10% of net earnings for each year until the shareholders’ equity equals 30% of total assets. This reserve is not available for payment of cash dividends, but may be transferred to capital stock or used to reduce accumulated deficit, if any.

Continued;

48



18 Retained Earnings, Continued:

(D) Pursuant to the Korean tax laws, the Company is allowed to claim a tax deduction in determining

taxable income for the amounts of retained earnings appropriated to reserves for overseas market development, overseas investment losses, research and human resource development, export losses and losses on disposal of treasury stock. These amounts are not available for dividends until used for the specified purposes or reversed.

(E) The reserve for capital expenditure represents amounts appropriated by the Company for capital

expenditures and may be used for any purpose through shareholders' resolution. 19. Treasury Stock:

As of December 31, 2001, the Company holds 6,449,625 shares of its own common stock and 1,269,693 shares of its own preferred stock. This treasury stock is recorded as a capital adjustment.

20. Other Capital Adjustments:

Other capital adjustments as of December 31, 2001 and 2000 consist of the following: Millions 2001 2000 Premium put ￦ 26,906 ￦ 29,435 Gains (losses) on valuation of investments (192,916) (454,075) Losses on valuation of derivative instruments (5,939) (3,272) Cumulative translation adjustment 342,603 126,219 Stock option compensation 336,301 93,746 Other (2,421) (106) ￦ 504,534 ￦ (208,053) =============== ===============

49



21. Stock Option Plan:

The Company has a stock option plan that provides for granting stock purchase options to employees or directors who have contributed or are expected to contribute to the management and technological innovation of the Company. The Company granted such options on March 16, 2000 and March 9, 2001, which can be exercised for the purchase of 1,455 thousand and 3,032 thousand common stocks, respectively, at an exercise price of ￦272,700 and ￦197,100 per share, respectively. The exercise price can be adjusted in the case of issuing new shares, stock dividends, stock splits, or stock merger. These options, with a service period of two years from the date of the grant, can be exercised after three and within ten years from the date of the grant. The Company recognized compensation cost using the fair value method by using expected stock price volatility of 69.48% and 74.46%, estimated risk-free interest rates of 9.08% and 6.04%, expected exercise terms of 4 years each and expected dividend yields of 0.39% and 0.89%, respectively. The compensation cost for stock options recognized was ￦242,555 million for the year ended December 31, 2001 and will be ￦213,481 million for the periods thereafter.

50



22. Income Taxes:

The Company is subject to a number of income taxes based upon earnings which result in a normal tax rate of approximately 30.8% for the years ended December 31, 2001 and 2000. Income tax expense for the years ended December 31, 2001 and 2000 consists of the following:

Millions 2001 2000 Current income taxes ￦ 799,233 ￦ 1,478,576 Deferred income taxes (335,716) 931,067 ￦ 463,517 ￦ 2,409,643 =============== ===============

The following table reconciles the expected amount of income tax expense based on Korean normal income tax rates to the actual amount of taxes recorded by the Company:

Millions 2001 2000 Income before taxes ￦ 3,834,429 ￦ 8,601,733 Korean normal income tax rate 30.8% 30.8% Expected taxes at Korean normal income tax rate 1,181,004 2,649,334 Tax credit (849,794) (516,496) Others, net 132,307 276,805 Actual taxes ￦ 463,517 ￦ 2,409,643 =============== =============== Effective tax rate 12.1% 28.0% =============== ===============

Continued;

51



22. Income Taxes, Continued:

Components of deferred taxes as of December 31, 2001 and 2000 are as follows: Millions Beginning Increase Ending balance (decrease) balance Undistributed earnings from subsidiaries and equity-method investees ￦ (7,318) ￦ (60,653) ￦ (67,971) Deferred foreign exchange losses 133,845 (78,924) 54,921 Invested stock reduction losses 5,305 574 5,879 Depreciation 120,500 (85,479) 35,021 Allowance for doubtful accounts 55,256 34,046 89,302 Accrued severance benefits 566 313 879 Undisposed deficit carried over to subsequent year 4,483 (3,295) 1,188 Tax credits 23 405,347 405,370 Special reserves appropriated for tax purpose (143,597) 595 (143,002) Capitalized interest expense (55,062) (12,753) (67,815) Other 53,182 138,669 191,851 Net deferred tax assets ￦ 167,183 ￦ 338,440 ￦ 505,623 ============== ============== ============ The Company periodically assesses its ability to recover deferred tax assets. In the event of significant uncertainty regarding the Company’s ultimate ability to recover such assets, a valuation allowance is recorded to reduce the asset to its estimated net realizable value. The Company did not recognize the income tax effect of the temporary difference resulting from undistributed earnings from certain subsidiaries and equity-method investees, as the Company does not expect cash inflows such as proceeds from disposal of or receipts of dividends from the investments within 5 years.

52



23. Earnings Per Share:

Earnings per share are calculated as follows (in millions won except for per share amounts): ㆍBasic earnings per share 2001 2000 Net income ￦ 3,055,066 ￦ 6,002,882 Adjustments: Dividends for preferred stock (46,379) (69,203) Undeclared participating preferred stock dividend (364,299) (737,192) Net income available for common stock 2,644,388 5,196,487 Weighted average number of shares of common stock 146,080,382 148,735,383 Basic earnings per share ￦ 18,102 ￦ 34,938 =============== ============== ㆍDiluted earnings per share

Net income available for common stock ￦ 2,644,388 ￦ 5,196,487 Adjustment: Interest expense on convertible bonds 19,710 18,856 Net income available for common stock & common equivalent shares 2,664,098 5,215,343 Weighted average number of common stock & common equivalent shares 149,184,308 151,931,513

Diluted earnings per share ￦ 17,858 ￦ 34,327 =============== ==============

53



24. Related Party Transactions:

Significant transactions between SEC and consolidated subsidiaries, which have been eliminated in consolidation, for the years ended December 31, 2001 and 2000, and the related amounts receivable and payable at December 31, 2001 and 2000 are as follows:

Millions Sales Purchases Receivables Payables

Company 2001 2000 2001 2000 2001 2000 2001 2000SESA ￦370,815 ￦ 207,160 ￦ 19,156 ￦ 4,042 ￦ 28,700 ￦ 5,291 ￦ 1,783 ￦ 1,832 SEI 294,496 215,233 5 8,759 2,551 10,368 7,415 4,736 SEF 313,352 237,287 60 8,068 3,798 8,996 4,563 - SEUK 457,798 290,215 208 5,869 13,822 8,274 5,638 541 SEO 479,072 318,062 21,335 - 74,096 24,291 8,045 3,193 SISA 458,841 424,500 50,236 74,660 82,546 80,197 332 71,015 SEHK 594,587 566,396 394,979 389,709 32,562 30,816 17,658 12,542 SEA 512,127 719,160 954,711 842,461 40,487 49,966 46,911 40,185 SAPL 771,301 777,579 489,171 484,729 52,596 72,614 13,408 20,865 SEBN 1,046,824 899,371 6,231 - 196,698 362,556 14,815 517 SET 781,618 924,219 464,419 422,781 119,305 57,623 17,744 19,471 SSEG 751,521 1,088,756 31 - 44,395 75,504 - - SSEL 669,724 1,177,135 17 - 50,387 103,952 - - STA 1,440,314 1,350,010 82 69,459 246,394 320,308 23,547 36,835 SSI 2,598,738 4,984,621 689 409 145,502 289,262 1 - Other 4,933,904 3,078,499 1,760,920 1,849,323 663,429 492,897 1,549,371 119,046

￦16,475,032 =========

￦17,258,203 =========

￦4,162,250 =========

￦4,160,269 =========

￦1,797,268 =========

￦1,992,915 =========

￦1,711,231 =========

￦330,778 ========

(*) The balance of Payables ￦1,232,016 to Samsung Card as of December 31, 2001 resulting from the credit purchase facility agreement is included in the above amount.

In addition, significant transactions among subsidiaries for the years ended December 31, 2001 and 2000 and the related amounts receivable at December 31, 2001 and 2000 are as follows:

Millions Sales Receivables

Sales company Purchase company 2001 2000 2001 2000SEBN SESA ￦ 162,645 ￦ 119,362 ￦ 6,262 ￦ 13,584 SEBN SEG 312,062 280,105 7,747 11,202 SAMEXCON SEA 529,934 493,338 6,839 10,899 SAPL SEIN 95,129 102,542 27,848 33,280 SAS SSI 110,331 356,141 4,791 36,619 SDMA SAMEXCON 185,889 97,508 30,893 80,196 SDMA SEBN 194,026 140,552 48,562 38,456 SEIN SEBN 122,454 83,250 44,556 32,138 SEMUK SEBN 464,892 333,545 39,228 45,950 TSED SEBN 137,471 103,113 13,703 47,162 Other Other 4,044,302 3,126,004 515,912 518,870

￦ 6,359,135==========

￦ 5,235,460==========

￦ 746,341 ==========

￦ 868,356 ==========

Continued;

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24. Related Party Transactions, Continued;

The loan amounts resulting from significant transactions among subsidiaries for the years ended December 31, 2001 and 2000 are ￦926,552 million and ￦770,996 million, respectively.

In addition, significant transactions related to fixed assets between SEC and consolidated subsidiaries for the years ended December 31, 2001 and 2000 are as follows: Millions

Sales company Purchase company 2001 2000 SEA SEC ￦ 12,276 ￦ 19,788 SEPLC SEC 24,366 14,731 DNS Korea SEC 55,488 55,339 Towa Korea SEC 18,947 11,889 SEC SHE and other 58,903 36,961Other 5,631 6,785 ￦ 175,611

============ ￦ 145,493============

In addition, significant transactions between SEC and equity-method investees for the years ended December 31, 2001 and 2000 are as follows:

Millions of Won, Thousands of US Dollar Sales Purchases

Equity-method investees 2001 2000 2001 2000 Samsung SDI ￦ 205,183 ￦ 130,501 ￦ 1,182,676 ￦ 1,550,460 Samsung Electro-Mechanics 35,887 56,334 762,586 814,222 Samsung SDS 38,061 91,541 289,573 298,140 Seoul Commtech. 13,513 12,978 128,995 121,464 Samsung Techwin Industry 1,086 3,609 158,514 187,042 Samsung Everland 4,195 1,212 121,441 111,146 Samsung Thales 7,571 196,412 489 2,532 Other domestic equity-method investees 29,449 14,679 263,549 138,338 Other foreign equity-method investees $ 1,349,792.00 $ 1,926,484.00 $ 1,545,789.00 $2,454,110.00 ￦ 334,945 ￦ 507,266 ￦ 2,907,823 ￦ 3,223,344 $ 1,349,792.00

===========$ 1,926,484.00 ===========

$ 1,545,789.00 ===========

$2,454,110.00 ==========

Continued;

55



24. Related Party Transactions, Continued;

Significant transactions with related parties which are not subsidiaries or equity-method investees for the year ended December 31, 2001 and the related receivables and payables at December 31, 2001 are as follows:

Millions Company Sales Purchases Receivables Payables

Samsung Corporation ￦ 63,378 ￦ 1,026,507 ￦ 14,806 ￦ 53,683 Cheil Communications 750 155,590 33 91,066 Samsung Heavy Industries 5,137 81,821 8,134 10,277 Samsung Life Insurance 4,670 3,805 53,599 5,912 Other local companies 41,350 200,416 17,478 16,207

￦ 115,285 ===========

￦ 1,468,139 ===========

￦ 94,050 ===========

￦ 177,145 ===========

In addition, for the year ended December 31, 2001, Samsung Corporation executed exportation of ￦17,996,360 million and importation of ￦1,323,396 million of goods on behalf of the Company.

25. Research and Development Cost:

Research and development cost incurred and expensed for the years ended December 31, 2001 and 2000 comprise the following:

Millions 2001 2000 Research expenses ₩ 1,024,191 ₩ 950,996 Ordinary development expenses 1,453,814 1,000,377 ₩ 2,478,005 ₩ 1,951,373 ================ ===============

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26. Supplementary Information For Computation of Value Added:

The accounts and amounts, included in cost of sales and selling, general and administrative expenses, needed for computation of value added for the years ended December 31, 2001 and 2000 are as follows:

Millions 2001 2000 Wages and salaries ￦ 2,265,382 ￦ 1,815,816 Provision for severance benefits 195,456 130,032 Employee benefits 359,580 286,610 Rent 401,051 213,571 Depreciation and amortization 3,266,024 2,767,901 Taxes and dues 179,503 140,430 ￦ 6,666,996 ￦ 5,354,360 ============== =============

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27. Segment Information:

The summary of consolidated financial information by industry is as follows: ㆍConsolidated balance sheets by industry

Continued;

Millions Non-financial business Financial business 2001 2000 2001 2000 ASSETS Ⅰ. Current assets ￦ 12,416,579 ￦ 13,396,185 ￦ 15,946,692 ￦ 12,400,425 Ⅱ. Fixed assets 21,241,196 19,214,706 5,323,182 2,120,116 (1) Investments 5,754,295 4,814,392 5,116,777 1,967,544 (2) Tangible assets 15,202,374 14,156,479 199,132 143,053 (3) Intangible assets 284,527 243,835 7,273 9,519 Total Assets ￦ 33,657,775 ￦ 32,610,891 ￦ 21,269,874 ￦ 14,520,541 =========== =========== =========== =========== LIABILITIES Ⅰ. Current liabilities ￦ 11,034,110 ￦ 13,333,701 ￦ 14,023,713 ￦ 11,534,942 Ⅱ. Long-term liabilities 2,962,794 2,870,762 5,191,947 1,903,032 Total Liabilities 13,996,904 16,204,463 19,215,660 13,437,974 SHAREHOLDERS’ EQUITY Ⅰ. Capital stock ￦ 882,117 ￦ 881,675 ￦ 437,001 ￦ 437,001 Ⅱ. Capital surplus 5,723,591 5,819,652 113,301 113,301 Ⅲ. Retained earnings 13,341,928 10,719,539 1,292,520 522,240 Ⅳ. Capital adjustment (-)457,714 (-)1,170,301 211,392 10,025 Ⅴ. Minority interest 170,949 155,863 - - Total shareholders’ equity 19,660,871 16,406,428 2,054,214 1,082,567 Total liabilities and Shareholders’ equity ￦ 33,657,775 ￦ 32,610,891 ￦ 21,269,874 ￦ 14,520,541 =========== =========== =========== ===========

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27. Segment Information, Continued;

ㆍConsolidated income statements by industry, Continued:

In the above consolidated financial statements of non-financial business, financial service subsidiaries have been accounted for using the equity method.

Continued;

Millions Non-financial business Financial business 2001 2000 2001 2000 Ⅰ. Sales ￦ 42,057,392 ￦ 41,030,619 ￦ 4,392,883 ￦ 2,497,188 Ⅱ. Cost of sales 31,554,222 26,076,410 1,102,916 862,824 Ⅲ. Selling, general and administrative expenses 7,647,582 6,602,012 2,193,654 929,650 Ⅳ. Operating profit 2,855,588 8,352,197 1,096,313 704,714 Ⅴ. Non-operating income 2,150,532 1,874,407 42,892 34,741 Ⅵ. Non-operating expenses 1,809,527 2,129,028 27,518 10,589 Ⅶ. Ordinary income 3,196,593 8,097,576 1,111,687 728,866 Ⅷ. Extraordinary gain - 153,634 - - Ⅸ. Extraordinary loss - - - 125,000 Ⅹ. Income before income taxes 3,196,593 8,251,210 1,111,687 603,866 ⅩⅠ. Income tax 123,553 2,229,765 339,964 179,878 ⅩⅡ. Net income before minority interest in net income 3,073,040 6,021,445 771,723 423,988 ⅩⅢ. Minority interest in net income 17,974 18,563 - - ⅩⅣ. Consolidated net income ￦ 3,055,066 ￦ 6,002,882 ￦ 771,723 ￦ 423,988 ========== ========== ========== ==========

59

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27. Segment Information, Continued; ㆍ Operating data by business segment as of December 31, 2001 (in millions of Korean Won):

Digital Device Digital Media Appliances Telecommunications Solution Finance Other Elimination Consolidated Gross sales ￦ 24,531,125 ￦ 5,915,836 ￦ 13,277,367 ￦ 15,826,219 ￦ 4,392,883 ￦ 9,025,363 ￦ (26,525,025) ￦ 46,443,768 Intersegment sales (9,081,490) (2,091,394) (3,763,860) (6,439,343) (6,515) (5,142,423) 26,525,025 - Net sales ￦ 15,449,635 ￦ 3,824,442 ￦ 9,513,507 ￦ 9,386,876 ￦ 4,386,368 ￦ 3,882,940 ￦ - ￦ 46,443,768 =========== ========== =========== =========== ========== ========== =========== ==========

Operating profit (loss) ￦ 473,663 ￦ 318,557 ￦ 1,327,760 ￦ 367,856 ￦ 1,088,498 ￦ (250,842) ￦ 625,936 ￦ 3,951,428 =========== ========== =========== =========== ========== ========== =========== ==========

Total assets ￦ 7,276,467 ￦ 2,785,998 ￦ 5,391,625 ￦ 17,873,441 ￦ 21,130,208 ￦ 7,307,567 ￦ (9,650,428) ￦ 52,114,878 =========== ========== =========== =========== ========== ========== =========== ==========

ㆍ Operating data by business segments as of December 31, 2000 (in millions of Korean Won):

Digital Device Digital Media Appliances Telecommunications Solution Finance Other Elimination Consolidated Gross sales ￦ 20,137,887 ￦ 4,998,846 ￦ 10,734,435 ￦ 24,334,162 ￦ 2,497,188 ￦ 7,138,338 ￦ (26,313,050) ￦ 43,527,806 Intersegment sales (7,324,547) (804,579) (2,738,191) (10,482,004) - (4,963,729) 26,313,050 - Net sales ￦ 12,813,340 ￦ 4,194,267 ￦ 7,996,244 ￦ 13,852,158 ￦ 2,497,188 ￦ 2,174,609 ￦ - ￦ 43,527,806 =========== ========== =========== =========== ========== ========== =========== ==========

Operating profit (loss) ￦ 670,187 ￦ 274,744 ￦ 920,975 ￦ 6,435,196 ￦ 704,714 ￦ (188,992) ￦ 243,516 ￦ 9,060,340 =========== ========== =========== =========== ========== ========== =========== ==========

Total assets ￦ 7,624,247 ￦ 2,884,600 ￦ 6,126,700 ￦ 18,835,798 ￦ 14,438,603 ￦ 4,033,107 ￦ (7,521,552) ￦ 46,421,503 =========== ========== =========== =========== ========== ========== =========== ==========

60

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27. Segment Information, Continued;

ㆍ Operating data by geographic area as of December 31, 2001 (in millions of Korean Won): Korea Consumption Export Asia America Europe Africa Elimination Consolidated Gross sales ￦ 17,403,199 ￦ 22,267,459 ￦ 9,738,976 ￦ 12,367,542 ￦ 11,082,675 ￦ 108,942 ￦ (26,525,025) ￦ 46,443,768 Intersegment sales (2,539,289) (14,862,113) (3,847,843) (2,689,119) (2,585,344) (1,317) 26,525,025 - Net sales ￦ 14,863,910 ￦ 7,405,346 ￦ 5,891,133 ￦ 9,678,423 ￦ 8,497,331 ￦ 107,625 ￦ - ￦ 46,443,768 =========== ========== =========== =========== ========== ========== =========== ========== Operating profit (loss) ￦ 3,559,168 ￦ 166,413 ￦ (457,726) ￦ 61,026 ￦ (3,389) ￦ 625,936 ￦ 3,951,428 =========== =========== =========== ========== ========== =========== ========== Total assets ￦ 50,404,373 ￦ 2,745,093 ￦ 5,697,668 ￦ 2,882,871 ￦ 35,301 ￦ (9,650,428) ￦ 52,114,878 =========== =========== =========== ========== ========== =========== ==========

ㆍ Operating data by geographic area as of December 31, 2000 (in millions of Korean Won):

Korea Consumption Export Asia America Europe Africa Elimination Consolidated Gross sales ￦ 14,502,868 ￦ 23,843,623 ￦ 8,554,297 ￦ 13,847,930 ￦ 9,022,637 ￦ 69,501 ￦ (26,313,050) ￦ 43,527,806 Intersegment sales (947,188) (17,563,895) (3,135,221) (2,651,298) (2,015,373) (75) 26,313,050 - Net sales ￦ 13,555,680 ￦ 6,279,728 ￦ 5,419,076 ￦ 11,196,632 ￦ 7,007,264 ￦ 69,426 ￦ - ￦ 43,527,806 =========== ========== =========== =========== ========== ========== =========== ========== Operating profit (loss) ￦ 8,237,595 ￦ 141,017 ￦ 384,257 ￦ 57,089 ￦ (3,134) ￦ 243,516 ￦ 9,060,340 =========== =========== =========== ========== ========== =========== ========== Total assets ￦ 42,478,169 ￦ 2,562,812 ￦ 5,773,722 ￦ 3,083,119 ￦ 45,233 ￦ (7,521,552) ￦ 46,421,503 =========== =========== =========== ========== ========== =========== ==========

61

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28. Discontinued Operations:

(1) Defense Electronics Division

On January 11, 2000, SEC established Samsung Thomson-CSF (capital stock: ￦270,000 million), a 50:50 joint venture with Thomson-CSF International. Pursuant to the joint venture agreement, SEC sold its defense electronics division to the joint venture for ￦211,758 million on February 28, 2000. The Company recognized gain on disposal of discountinued operation amounting to ￦153,279 million.

(2) Business transfer of subsidiaries Pursuant to the business transfer agreement, effective February 26, 2000, Novita, a domestic

subsidiary, transferred the remote controller and airconditioner business to SJ Remotech and the dashboard business to Samji Electronics for ￦9,810 million and ￦3,089 million, respectively. The Company recognized in 2000 gain on such business transfers amounting to ￦1,679 million and ￦275 million, respectively.

29. Subsequent Events:

In accordance with the resolution reached at the shareholders’ meeting on February 28, 2002, the Company issued stock purchase options to 174 of its directors and officers which give them the right to purchase 988,000 shares of its newly issued common stock or treasury stock.

30. Reclassification of 2000 Amounts: Certain balance sheet accounts in the 2000 consolidated financial statements related to financial service subsidiaries have been reclassified into short-term and long-term financing receivables based upon the annual collection schedules. In addition, general and administrative expenses of the financial service subsidiaries have been reclassified into selling, general and administrative expenses from the previous income statement classification, cost of sales. In addition, certain amounts in the 2000 consolidated financial statements have been reclassified to conform to the 2001 presentation. These reclassifications had no effect on previously reported net income or shareholders’ equity.

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