LG.Philips LCD Reports First Quarter 2005 Results

LG.Philips LCD Reports First Quarter 2005 Results

    Business Editors

    SEOUL, South Korea--(BUSINESS WIRE)--April 11, 2005--LG.Philips LCD (NYSE: LPL, KRX: 034220), one of the world's leading TFT-LCD manufacturers, today reported unaudited earnings results based on consolidated Korean GAAP for the three-month period ended March 31, 2005. Amounts in Korean Won are translated into US dollars at the noon buying rate in effect on March 31, 2005, which was KRW 1,015.4 per US dollar.

--	Sales in the first quarter of 2005 increased by 7% to KRW 2,064 billion (USD 2,033 million) from sales of KRW 1,933 billion (USD 1,904 million) in the fourth quarter of 2004. Sales decreased by 6% in the first quarter of 2005 from KRW 2,188 billion (USD 2,155 million) in the first quarter of 2004 due to decreases in panel prices. First quarter 2005 sales comparisons, from both a sequential and year-on-year perspective, were also impacted by the Korean Won appreciation against the US Dollar during this period.
--	Operating income in the first quarter of 2005 decreased to a loss of KRW 135 billion (USD 133 million) from a profit of KRW 2 billion (USD 2 million) in the fourth quarter of 2004 and from a profit of KRW 699 billion (USD 688 million) in the first quarter of 2004.
--	EBITDA in the first quarter of 2005 decreased by 35% to KRW 269 billion (USD 265 million) from EBITDA of KRW 412 billion (USD 406 million) in the fourth quarter of 2004. EBITDA decreased by 72% in the first quarter of 2005 from KRW 976 billion (USD 961 million) in the first quarter of 2004.
--	Net income in the first quarter of 2005 decreased to a loss of KRW 79 billion (USD 78 million) from a net profit of KRW 35 billion (USD 34 million) in the fourth quarter of 2004 and from a net profit of KRW 628 billion (USD 618 million) in the first quarter of 2004.

    "Despite challenging market conditions, we continue to execute and perform in line with our plans," said Bon Joon Koo, CEO of LG.Philips LCD. "As a result of our ongoing, strong ramp-up of our sixth generation factory, 'P6', we grew our total net display area shipped by 24 percent in the first quarter sequentially. Our seventh generation TFT-LCD facility, 'P7', construction remains on track for mass production to begin in the first half of 2006. We continue to believe in the growth opportunities for the TFT-LCD industry, as LCDs evolve as the flat-panel of choice for HDTV content."

    First Quarter Financial Review

    Revenue and Cost

    Revenues decreased by 6% to KRW 2,064 billion (USD 2,033 million) in the three-month period ended March 31, 2005, from KRW 2,188 billion (USD 2,155 million) in the corresponding period of 2004 due to decreases in panel prices and the strong appreciation of the Korean Won. The effect of the overall decrease in panel prices was partially offset by an increase in the volume of large and wide panels for notebook computers, desktop monitors and TVs. The increase in volume shipments was in response to the growing market needs for large and wide flat panels, especially for large size TV panels. TFT-LCD panels for desktop monitors, notebook computers, TVs and applications accounted for 56%, 18%, 22% and 4% respectively on a revenue basis in the first quarter of 2005, compared to 53%, 27%, 15% and 5% respectively on a revenue basis in the fourth quarter of 2004.
    Overall, LG.Philips LCD shipped a total of 958,000 square meters of net display area, a 24% sequential quarterly increase, with an average selling price per square meter of net display area of USD 2,085 in the first quarter of 2005. This represents a decline in the selling price per square meter of net display area of approximately 10% compared to the average of the fourth quarter of 2004, and a decline of 9% at the end of the first quarter as compared to the end of the fourth quarter of 2004.
    The cost of goods sold per square meter of net display area shipped was KRW 2,177 thousand (USD 2,144) for the first quarter of 2005, down 2.3% from the fourth quarter of 2004. Total cost of goods sold increased to KRW 2,102 billion (USD 2,070 million), or 48% year-on-year and 14% compared to the fourth quarter of 2004, as a result of increased volumes shipped as well as an increase in large and wide panels, especially in the TV segment.
    "While the first quarter was challenging due to the strengthening of the Korean Won and a difficult pricing environment, we did see some positive emerging trends," said Ron Wirahadiraksa, Chief Financial Officer of LG.Philips LCD. "During this quarter, the average LCD size increased with the adoption of large and wide LCD monitors and the growing popularity of LCD TVs. To meet the increase in demand, we continue to focus on effectively using our resources to serve our customers and improve operational efficiency."

    Liquidity

    As of March 31, 2005, LG.Philips LCD had KRW 1,350 billion (USD 1,330 million) of cash and cash equivalents. Total debt as of March 31, 2005, was KRW 3,030 billion (USD 2,984 million) with a net-debt-to-equity ratio of 30% compared to 23% at the end of the fourth quarter of 2004.
    During the first quarter of 2005, LG.Philips LCD issued KRW 400 billion of Korean Won-denominated fixed rate bonds. The capital raised is being used for capital expenditures.

    Capital Spending

    Capital expenditures, on a cash basis, in the first quarter of 2005 decreased to KRW 453 billion (USD 446 million) from KRW 473 billion (USD 466 million) in the fourth quarter of 2004, and from KRW 730 billion (USD 719 million) in the first quarter of 2004. Capital expenditures for the first quarter of 2005 were mainly used for investments in P7.

    Utilization and Capacity

    Total input capacity on an area basis increased approximately 13% in the first quarter of 2005 compared to the fourth quarter, due mainly to the ramp-up of P6. P6 averaged 55,000 input sheets per month for the first quarter of 2005.

    Industry Outlook

    The following expectations are based on current information as of April 11, 2005. The Company does not expect to update its expectations until next quarter's earnings release. However, the Company may update its full business outlook, or any portion thereof, at any time for any reason.
    "As we have previously stated, we expect the industry supply/demand balance will begin to stabilize and then show signs of strengthening later in the year, mainly due to the growing demand for LCD TVs," commented Mr. Wirahadiraksa.
    LG.Philips LCD expects to increase its output of net display area shipped at a double digit rate for the second quarter of 2005, compared to the first quarter of 2005, in order to meet the anticipated market growth and to satisfy customers' needs. At the same time, due to market pricing conditions, the Company expects its ASP per square meter to decline at a single digit rate at the end of the second quarter of 2005, compared to the end of the first quarter in 2005. In terms of the EBITDA margin, the Company anticipates mid to high teens for Q2 05.

    Earnings Conference and Conference Call

    LG.Philips LCD will hold a Korean language earnings conference on April 11, 2005 at 4:30 p.m. Korea Standard Time on the 21st floor of the Korea Exchange (KRX). An English language conference call will follow at 9:00 p.m. Korea Standard Time (8:00 a.m. EST and 1:00 p.m. GMT). The call-in number is 1566-2256 for callers in Korea and +82-2-6677-2256 for callers outside of Korea. The confirmation number is 3777. Corresponding slides will be available at the Investor Relations section of the LG.Philips LCD website. http://www.lgphilips-lcd.com

    Investors can listen to the conference call over the Internet at http://www.lgphilips-lcd.com. To listen to the live call, please go to the Investor Relations section of the website at least 15 minutes prior to the call to register and install any necessary audio software.
    For those who are unable to participate in the call, a replay will be available for 30 days after the call. The call-in number is 031-810-3100 for callers in Korea and +82-31-810-3100 for callers outside of Korea. The confirmation number for the replay is 22619#.

    About LG.Philips LCD

    LG.Philips LCD (NYSE: LPL, KRX: 034220) is a leading manufacturer and supplier of thin film transistor liquid crystal display (TFT-LCD) panels. The Company manufactures TFT-LCD panels in a wide range of sizes and specifications primarily for use in notebook computers, desktop monitors and televisions. Headquartered in Seoul, South Korea, LG.Philips LCD currently operates six fabrication facilities in Korea and has over 14,000 employees in locations around the world.
    For more information about the Company, please visit http://www.lgphilips-lcd.com. LG.Philips LCD makes "Technology you can see!"

    Forward-Looking Statement Disclaimer

    This press release contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Additional information as to factors that may cause actual results to differ materially from our forward-looking statements can be found in our filings with the United States Securities and Exchange Commission.

Investor Relations Contacts: ---------------------------------------------------------------------- Jay Hong (Korea) Monica Huang (USA) ---------------------------------------------------------------------- LG.Philips LCD Sloane & Company ---------------------------------------------------------------------- Tel: +822-3777-1010 Tel: +1-212-446-1874 ---------------------------------------------------------------------- Email: jay.hong@lgphilips-lcd.com Email: Mhuang@sloanepr.com ---------------------------------------------------------------------- Media Contacts: ---------------------------------------------------------------------- Elliot Sloane (USA) Sue Kim (Korea) ---------------------------------------------------------------------- Sloane & Company Edelman ---------------------------------------------------------------------- Tel: +1-212-446-1860 Tel: + 822-2022-8239 ---------------------------------------------------------------------- Email: ESloane@sloanepr.com Email: Sue.kim@edelman.com ----------------------------------------------------------------------

LG.Philips LCD CONSOLIDATED STATEMENTS OF INCOME (In millions of KRW) (The financial statements are based on unaudited Korean GAAP)

In millions of KRW ----------------- ------------------ 2005 2004 ----------------- ------------------ 1Q 1Q ----------------- ------------------ REVENUE 2,064,046 100% 2,188,013 100% Cost of goods sold (2,102,015) -102% (1,418,002) -65%

----------------- ------------------

GROSS PROFIT (37,969) -2% 770,011 35%

Selling, general & administrative exp. (96,606) -5% (70,965) -3%

----------------- ------------------ . OPERATING INCOME (134,575) -7% 699,046 32%

Interest income 8,991 0% 3,936 0% Interest expense (20,872) -1% (17,513) -1% Foreign exchange gain (loss), net (9,530) 0% (11,348) -1% Others, net (1,364) 0% 5,123 0% ----------------- ------------------ Total other income (expense) (22,775) -1% (19,802) -1% ----------------- ------------------

INCOME BEFORE TAX (157,350) -8% 679,244 31%

Income tax expense 78,520 4% (51,320) -2%

----------------- ------------------ NET INCOME (LOSS) (78,830) -4% 627,924 29% ----------------- ------------------

- These financial statements are provided for informational purposes only

LG.Philips LCD CONSOLIDATED BALANCE SHEETS (In millions of KRW) (The financial statements are based on unaudited Korean GAAP)

In millions of KRW ---------------- ------------------ 2005 2004 ---------------- ------------------ 31-Mar 31-Dec ---------------- ------------------ ASSETS Current assets: Cash and cash equivalents 1,350,492 12% 1,361,239 13% Trade accounts and notes receivable 1,098,624 10% 890,507 9% Inventory 736,916 7% 805,288 8% Other receivables and assets 351,035 3% 334,444 3% Total current assets 3,537,067 32% 3,391,478 33% ---------------- ------------------

Investments and other non- current assets 307,354 3% 245,632 2% Property, plant and equipment, net 7,007,544 64% 6,528,182 63% Other Intangible assets, net 182,626 2% 192,010 2% ---------------- ------------------ Total assets 11,034,591 100% 10,357,302 100%

---------------- ------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt 550,652 5% 694,230 7% Trade accounts and notes payable 612,242 6% 581,581 6% Other payables and accrued liabilities 1,666,845 15% 1,292,453 12% ---------------- ------------------ Total current liabilities 2,829,739 26% 2,568,264 25% ---------------- ------------------

Long-term debt 2,478,724 22% 1,984,432 19% Reserves for pension 42,353 0% 31,964 0% ---------------- ------------------ Total liabilities 5,350,816 48% 4,584,660 44% ---------------- ------------------

Common Stock & Capital surplus 2,638,850 24% 2,638,850 25% Accumulated result 3,012,823 27% 3,091,674 30% Capital adjustment 32,102 0% 42,118 0% ---------------- ------------------ Shareholders' equity 5,683,775 52% 5,772,642 56% ---------------- ------------------

Total liabilities and shareholders' equity 11,034,591 100% 10,357,302 100%

---------------- ------------------

- These financial statements are provided for informational purposes only

LG.Philips LCD CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions of KRW) (The financial statements are based on unaudited Korean GAAP)

In millions of KRW ------------------ ------------------ 2005 2004 ------------------ ------------------ 1Q 1Q ------------------ ----------------- Net Income (78,830) 627,925 Depreciation 402,651 271,773 Amortization 11,546 11,312 Others 17,494 5,421 ------------------ ----------------- Operating Cash Flows 352,861 916,431 Net Change in Working Capital (270,051) (172,862) Change in A/R (210,419) (123,847) Change in inventory 68,373 (41,490) Change in A/P 31,182 (5,784) Change in others (159,187) (1,741) ------------------ ----------------- Cash Flows from Operations 82,810 743,569 Capital Expenditures (452,673) (730,401) Equipment investment (449,822) (745,332) (Delivery) (909,889) (939,887) (Other account payables) 460,067 194,555 Intangible asset investments (2,161) 0 Others (690) 14,931 ------------------ ----------------- Cash Flows before Financing (369,863) 13,168 Cash Flows from Financing Activities 359,116 25,143 ------------------ ----------------- Net Cash Flows (10,747) 38,311 ------------------ -----------------

- These financial statements are provided for informational purposes only

LG.Philips LCD CONSOLIDATED STATEMENTS OF INCOME (In millions of KRW) (The financial statements are based on unaudited US GAAP)

In millions of KRW ------------------- ------------------ 2005 2004 ------------------- ------------------ 1Q 1Q ------------------- ------------------ REVENUE 2,064,046 100% 2,188,013 100% Cost of goods sold (2,090,143) -101% (1,411,656) -65%

------------------- ------------------

GROSS PROFIT (26,097) -1% 776,357 35%

Selling, general & administrative exp. (99,409) -5% (68,801) -3%

------------------- ------------------ . OPERATING INCOME (125,506) -6% 707,556 32%

Interest income 8,991 0% 3,936 0% Interest expense (22,820) -1% (17,332) -1% Foreign exchange gain (loss), net (8,652) 0% (3,731) 0% Others, net 180 0% 550 0% ------------------- ------------------ Total other income (expense) (22,301) -1% (16,577) -1% ------------------- ------------------

INCOME BEFORE TAX (147,807) -7% 690,979 32% ------------------- ------------------

Income tax expense 53,298 3% (51,312) -2%

------------------- ------------------ NET INCOME (LOSS) (94,509) -5% 639,667 29% ------------------- ------------------

- These financial statements are provided for informational purposes only

LG.Philips LCD CONSOLIDATED BALANCE SHEETS (In millions of KRW) (The financial statements are based on unaudited US GAAP)

In millions of KRW ------------------ ------------------ 2005 2004 ------------------ ------------------ 31-Mar 31-Dec ------------------ ------------------ ASSETS Current assets: Cash and cash equivalents 1,350,492 12% 1,361,239 13% Trade accounts and notes receivable 1,098,624 10% 889,909 9% Inventory 736,872 7% 804,117 8% Other receivables and assets 320,980 3% 343,663 3% Total current assets 3,506,968 32% 3,398,928 33% ------------------ ------------------

Investments and other non- current assets 345,175 3% 262,160 3% Property, plant and equipment, net 7,043,223 64% 6,563,977 64% Other Intangible assets, net 37,711 0% 37,435 0% ------------------ ------------------ Total assets 10,933,077 100% 10,262,500 100%

------------------ ------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt 552,293 5% 696,212 7% Trade accounts and notes payable 612,255 6% 583,117 6% Other payables and accrued liabilities 1,670,054 15% 1,294,755 13% ------------------ ------------------ Total current liabilities 2,834,602 26% 2,574,084 25% ------------------ ------------------

Long-term debt 2,488,016 23% 1,993,150 19% Reserves for pension 42,318 0% 31,963 0% ------------------ ------------------ Total liabilities 5,364,936 49% 4,599,197 45% ------------------ ------------------

Common Stock & Capital surplus 2,629,477 24% 2,628,519 26% Accumulated result 2,906,511 27% 3,001,042 29% Capital adjustment 32,153 0% 33,742 0% ------------------ ------------------ Shareholders' equity 5,568,141 51% 5,663,303 55% ------------------ ------------------

Total liabilities and shareholders' equity 10,933,077 100% 10,262,500 100%

------------------ ------------------

- These financial statements are provided for informational purposes only

LG.Philips LCD CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions of KRW) (The financial statements are based on unaudited US GAAP)

In millions of KRW ------------------- ------------------ 2005 2004 ------------------- ------------------ 1Q 1Q ------------------- ------------------ Net Income (94,509) 639,667 Depreciation 403,022 269,754 Amortization 1,885 1,650 Others 14,572 1,644 ------------------- ------------------ Operating Cash Flows 324,970 912,715 Net Change in Working Capital (242,160) (154,064) Change in A/R (276,512) (112,165) Change in inventory 67,245 (41,498) Change in A/P 29,659 (6,037) Change in others (62,552) 5,636 ------------------- ------------------ Cash Flows from Operations 82,810 758,651 Capital Expenditures (452,673) (730,401) Equipment investment (448,159) (730,453) (Delivery) (908,226) (925,008) (Other account payables) 460,067 194,555 Intangible asset investments (2,161) 0 Others (2,353) 52 ------------------- ------------------ Cash Flows before Financing (369,863) 28,250 Cash Flows from Financing Activities 359,116 9,993 ------------------- ------------------ Net Cash Flows (10,747) 38,243 ------------------- ------------------

- These financial statements are provided for informational purposes only

LG.Philips LCD Net Income Reconciliation to US GAAP (In millions of KRW)

----------- 2005 ----------- Q1 ----------- Net Income under K GAAP (78,830) Total US GAAP Adjustments (15,679) Depreciation of property, plant and equipment (655) Amortization of Intellectual Property Rights 11,806 Adjustment of AR discount loss (558) Capitalization of financial interests 539 Inventory valuation effect of US GAAP Adjustments (1,016) Pension expense 974 Income tax effect of US GAAP Adjustments (25,811) Others (958) ----------- Net Income under US GAAP (94,509) -----------

- These financial statements are provided for informational purposes only

--30--CD/ny*

CONTACT: Investor Relations Contacts: LG.Philips LCD Jay Hong (Korea), +822-3777-1010 jay.hong@lgphilips-lcd.com or Sloane & Company Monica Huang (USA), +1-212-446-1874 Mhuang@sloanepr.com or Media Contacts: Sloane & Company Elliot Sloane (USA), +1-212-446-1860 ESloane@sloanepr.com or Edelman Sue Kim (Korea), + 822-2022-8239 Sue.kim@edelman.com

KEYWORD: SOUTH KOREA INTERNATIONAL ASIA PACIFIC INDUSTRY KEYWORD: HARDWARE COMPUTERS/ELECTRONICS EARNINGS CONFERENCE CALLS SOURCE: LG.Philips LCD

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