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KT CORP — Regulatory Filings 2004
Feb 10, 2004
30640_ffr_2004-02-10_d492c9dd-06ad-4a60-9cb0-37337d7a4ca9.zip
Regulatory Filings
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6-K 1 d6k.htm FORM 6-K Form 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 UNDER THE SECURITIES
EXCHANGE ACT OF 1934
For the month of January 2004
KT Corporation
206 Jungja-dong
Bundang-gu, Sungnam
Kyunggi-do
463-711
Korea
(Address of principal executive offices)
(indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
(Indicate by check mark whether the registrant by furnishing
the information contained in this form
is also thereby furnishing the information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes No X
4th Quarter 2003
Preliminary Earnings Commentary
2
Disclaimer
This material contains estimated information of unaudited non-consolidated preliminary financial and operating data of KT Corporation (KT or the company) as of December 31, 2003 and forward-looking statements with respect to the financial condition, results of operations and business of KT management. Statements that are not historical facts, including statements about KTs beliefs and expectations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other future results or performance expressed or implied by such forward-looking statements. Such forward-looking statements were based on current plan, estimates and perfections of KT and the political and economic environment in which KT will operate in the future and therefore you should not place undue reliance on them.
Therefore, KT does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the unaudited financial and operating data contained in this material, and such information maybe materially different from the actual results or performance of KT. KT speaks only as of the date it is made, and KT undertakes no obligation to update publicly any of them in light of new information or future events.
Please note that net revenue based financial figures of 2002, under the new net revenue recognition accounting rule, effective from January 1, 2003, are provided in this material for discussion and comparative purposes.
The financial and operating data contained in this presentation have been rounded. Since affiliated companies have not finished accounting, estimated figures were used for the equity method gains/losses. KTs non-consolidated financial statements and report as of December 31, 2003 will be filed with the Korea Financial Supervisory Commission on March 31, 2004.
Final 3rd quarter 2003 figures are provided in the table below, compared with the third quarter preliminary earnings.
| (KRW, billion) | 3Q 2003 (Final) | 3Q 2003 (Preliminary) | Change |
|---|---|---|---|
| Operating Revenues | 2,792.9 | 2,784.2 | 8.7 |
| Operating Expenses | 3274.8 | 3,279.4 | -4.6 |
| Operating Income (OP Margin) | -481.9 (-17.3%) | -495.2 (-17.8%) | 13.3 (0.5%p) |
| EBITDA (EBITDA Margin) | 157.4 (5.6%) | 144.1 (5.2%) | 13.3 (0.4%p) |
| Net Income | -496.5 | -499.5 | 3.0 |
If you have any questions in connection with the preliminary earnings, please contact the Investor Relations Department of KT Corp.
KT Corporation
Investor Relations
Tel: 82-31-727-0931~5 Fax: 82-31-727-0949
E-mail: [email protected]
3
I. Financial Highlights
A. Summary of Balance Sheet
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Assets | 19,575.6 | 21,761.1 | -2,185.5 | -10.0 % | 19,844.5 | -268.9 | -1.4 % |
| ¨ Current Assets | 3,323.5 | 4,072.4 | -748.9 | -18.4 % | 3,841.8 | -518.3 | -13.5 % |
| ¡ Quick Assets | 3,166.6 | 3,992.0 | -825.4 | -20.7 % | 3,770.0 | -603.4 | -16.0 % |
| - Cash & Cash Equivalents | 657.1 | 1,009.0 | -351.9 | -34.9 % | 954.5 | -297.4 | -31.2 % |
| - Accounts Receivable | 1,815.6 | 2,033.9 | -218.3 | -10.7 % | 1,840.3 | -24.7 | -1.3 % |
| - Others | 693.9 | 949.0 | -255.1 | -26.9 % | 975.2 | -281.3 | -28.8 % |
| ¡ Inventories | 156.9 | 80.4 | 76.5 | 95.1 % | 71.8 | 85.1 | 118.5 % |
| ¨ Fixed Assets | 16,252.1 | 17,688.7 | -1,436.6 | -8.1 % | 16,002.7 | 249.4 | 1.6 % |
| ¡ Invested Assets | 4,758.7 | 5,654.8 | -896.1 | -15.8 % | 4,632.5 | 126.2 | 2.7 % |
| - KTF Shares | 2,646.9 | 2,362.5 | 284.4 | 12.0 % | 2,580.5 | 66.4 | 2.6 % |
| - KTICOM Shares | 0.0 | 0.0 | 0.0 | | 0.0 | 0.0 | |
| - SKT Shares | 0.0 | 853.3 | -853.3 | -100.0 % | 0.0 | 0.0 | |
| - Deferred Assets | 313.8 | 376.3 | -62.5 | -16.6 % | 322.2 | -8.4 | -2.6 % |
| - Long-term Loans | 592.9 | 901.2 | -308.3 | -34.2 % | 621.4 | -28.5 | -4.6 % |
| - Others | 1,205.1 | 1,161.5 | 43.6 | 3.8 % | 1,108.4 | 96.7 | 8.7 % |
| ¡ Tangible Assets | 11,245.6 | 11,809.9 | -564.3 | -4.8 % | 11,166.6 | 79.0 | 0.7 % |
| ¡ Intangible Assets | 247.8 | 224.0 | 23.8 | 10.6 % | 203.6 | 44.2 | 21.7 % |
| Total Liabilities | 12,763.1 | 13,983.5 | -1,220.4 | -8.7 % | 12,892.3 | -129.2 | -1.0 % |
| ¡ Current Liabilities | 3,494.1 | 4,401.6 | -907.5 | -20.6 % | 3,780.9 | -286.8 | -7.6 % |
| - Interest-bearing Debts | 1,304.3 | 1,545.8 | -241.5 | -15.6 % | 871.3 | 433.0 | 49.7 % |
| - Accounts Payable | 893.3 | 940.1 | -46.8 | -5.0 % | 706.6 | 186.7 | 26.4 % |
| - Others | 1,296.5 | 1,915.7 | -619.2 | -32.3 % | 2,203.0 | -906.5 | -41.1 % |
| ¡ Long-term Liabilities | 9,269.0 | 9,581.9 | -312.9 | -3.3 % | 9,111.4 | 157.6 | 1.7 % |
| - Interest-bearing Debts | 7,716.6 | 7,562.5 | 154.1 | 2.0 % | 7,385.2 | 331.4 | 4.5 % |
| - Installation Deposit | 1,229.7 | 1,536.7 | -307.0 | -20.0 % | 1,287.6 | -57.9 | -4.5 % |
| - Others | 322.7 | 482.7 | -160.0 | -33.1 % | 438.6 | -115.9 | -26.4 % |
| Total Shareholders Equity | 6,812.5 | 7,777.7 | -965.2 | -12.4 % | 6,952.2 | -139.7 | -2.0 % |
| ¡ Capital Stock | 1,561.0 | 1,561.0 | 0.0 | 0.0 % | 1,561.0 | 0.0 | 0.0 % |
| ¡ Capital Surplus | 1,440.3 | 1,440.3 | 0.0 | 0.0 % | 1,440.3 | 0.0 | 0.0 % |
| ¡ Retained Earnings | 7,775.5 | 8,145.9 | -370.4 | -4.5 % | 7,968.1 | -192.6 | -2.4 % |
| ¡ Capital Adjustment | -3,964.3 | -3,369.4 | -594.9 | 17.7 % | -4,017.2 | 52.9 | -1.3 % |
| - Treasury Stock | -3,962.6 | -4,112.2 | 149.6 | -3.6 % | -3,962.6 | 0.0 | 0.0 % |
| - Unrealized Gain on Investment | -44.2 | 749.4 | -793.6 | -105.9 % | -85.0 | 40.8 | -48.0 % |
| - Others | 42.5 | -6.6 | 49.1 | -744.2 % | 30.4 | 12.1 | 39.6 % |
| Total Interest-bearing Debts | 9,020.9 | 9,108.3 | -87.4 | -1.0 % | 8,256.5 | 764.4 | 9.3 % |
| Net Debts | 8,363.8 | 8,099.3 | 264.5 | 3.3 % | 7,302.1 | 1,061.7 | 14.5 % |
| Net Debt/Equity Ratio | 122.8 % | 104.1 % | 18.6% p | 105.0 % | 17.7% P |
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B. Summary of Income Statement
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Operating Revenue | 2,862.8 | 2,830.4 | 32.4 | 1.1 % | 2,792.9 | 69.9 | 2.5 % |
| Operating Expense | 2,473.7 | 2,681.5 | -207.8 | -7.7 % | 3,274.8 | -801.1 | -24.5 % |
| ¡ Depreciation | 691.1 | 763.4 | -72.3 | -9.5 % | 639.3 | 51.8 | 8.1 % |
| ¡ Labor | 541.0 | 655.0 | -114.0 | -17.4 % | 1,509.2 | -968.2 | -64.2 % |
| ¡ Commission | 180.8 | 155.8 | 25.0 | 16.1 % | 150.7 | 30.1 | 19.9 % |
| ¡ Sales Promotion | 73.3 | 84.3 | -11.0 | -13.0 % | 77.3 | -4.0 | -5.2 % |
| ¡ Sales Commission | 31.4 | 36.2 | -4.8 | -13.4 % | 15.1 | 16.3 | 108.3 % |
| ¡ Provision for doubtful accounts | 112.4 | 96.0 | 16.4 | 17.0 % | 79.6 | 32.8 | 41.2 % |
| ¡ Advertising | 48.7 | 50.5 | -1.8 | -3.6 % | 36.6 | 12.1 | 33.0 % |
| ¡ Repairs & Maintenance | 139.8 | 95.1 | 44.7 | 47.0 % | 103.2 | 36.6 | 35.4 % |
| ¡ Cost of Goods Sold | 50.1 | 62.0 | -11.9 | -19.2 % | 25.3 | 24.8 | 98.0 % |
| ¡ Cost of Service Provided | 403.4 | 461.3 | -57.9 | -12.5 % | 445.0 | -41.5 | -9.3 % |
| - Cost of Service | 127.0 | 121.4 | 5.6 | 4.6 % | 90.6 | 36.4 | 40.2 % |
| - LM Interconnection | 185.7 | 291.5 | -105.8 | -36.3 % | 290.3 | -104.5 | -36.0 % |
| - Intnl Settlement | 42.3 | 42.5 | -0.2 | -0.4 % | 44.8 | -2.4 | -5.4 % |
| - Cost of SI/NI Services | 48.4 | 5.9 | 42.5 | 723.2 % | 19.4 | 29.0 | 150.0 % |
| ¡ R&D | 69.7 | 70.4 | -0.7 | -1.0 % | 53.0 | 16.7 | 31.5 % |
| ¡ Others | 132.0 | 151.5 | -19.5 | -12.9 % | 140.5 | -8.5 | -6.1 % |
| Operating Income | 389.1 | 148.9 | 240.2 | 161.3 % | -481.9 | 871.0 | -180.7 % |
| Operating Margin | 13.6 % | 5.3 % | 8.3%P | -17.3 % | 30.8%P | ||
| EBITDA | 1,080.2 | 912.3 | 167.9 | 18.4 % | 157.4 | 922.8 | 586.3 % |
| EBITDA Margin | 37.7 % | 32.2 % | 5.5%P | 5.6 % | 32.1%P | ||
| Non-operating Revenue | -11.9 | 996.1 | -1,008.0 | -101.2 % | 131.2 | -143.1 | -109.1 % |
| ¡ Gains on Disp. Of Inv. Assets | 0.6 | 907.6 | -907.0 | -99.9 % | 0.0 | 0.6 | |
| ¡ Interest Income | 16.0 | 13.0 | 3.0 | 23.1 % | 19.5 | -3.5 | -18.1 % |
| ¡ FX Transaction Gain | 4.2 | 9.2 | -5.0 | -54.3 % | 1.0 | 3.2 | 305.4 % |
| ¡ FX Translation Gain | -56.5 | 12.5 | -69.0 | -552.0 % | 57.3 | -113.8 | -198.6 % |
| ¡ USO Fund | -12.2 | 5.4 | -17.6 | -325.9 % | 11.9 | -24.1 | -202.4 % |
| ¡ Others | 36.0 | 48.4 | -12.4 | -25.6 % | 41.4 | -5.4 | -13.1 % |
| Non-operating Expense | 297.4 | 277.8 | 19.6 | 7.1 % | 324.4 | -27.0 | -8.3 % |
| ¡ Interest Expense | 104.4 | 113.3 | -8.9 | -7.9 % | 106.5 | -2.1 | -2.0 % |
| ¡ FX Transaction Loss | 2.7 | 3.8 | -1.1 | -28.9 % | 2.1 | 0.6 | 31.0 % |
| ¡ FX Translation Loss | -3.0 | -0.4 | -2.6 | 650.0 % | 9.9 | -12.9 | -130.4 % |
| ¡ Loss on Equity Method | 43.3 | 49.9 | -6.6 | -13.2 % | 34.4 | 8.9 | 26.0 % |
| ¡ Loss on Disp. Of Fixed. Assets | 28.1 | 42.3 | -14.2 | -33.6 % | 15.7 | 12.4 | 79.1 % |
| ¡ Others | 121.9 | 68.9 | 53.0 | 76.9 % | 156.0 | -34.1 | -21.8 % |
| Ordinary Income | 79.8 | 867.2 | -787.4 | -90.8 % | -675.1 | 754.9 | -111.8 % |
| Income Tax | -1.3 | 198.9 | -200.2 | -100.7 % | -178.6 | 177.3 | -99.3 % |
| Net Income | 81.1 | 668.3 | -587.2 | -87.9 % | -496.5 | 577.6 | -116.3 % |
| EPS (KRW) | 380 | 2,703 | -2,323.0 | -85.9 % | -2,304 | 2,684.0 | -116.5 % |
| Fully Diluted EPS (KRW) | 388 | 2,284 | -1,896.0 | -83.0 % | -2,304 | 2,692.0 | -116.8 % |
5
II. Operating Results
A. Operating Revenue
1. Overview
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q /2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Operating Revenue | 2,862.8 | 2,830.4 | 32.4 | 1.1 % | 2,792.9 | 69.9 | 2.5 % |
| ¡ Internet | 628.5 | 544.5 | 84.0 | 15.4 % | 607.4 | 21.1 | 3.5 % |
| -Broadband | 517.3 | 429.5 | 87.8 | 20.4 % | 504.5 | 12.8 | 2.5 % |
| ¡ Telephone | 1,135.1 | 1,230.0 | -94.9 | -7.7 % | 1,152.3 | -17.2 | -1.5 % |
| ¡ Land-to-Mobile | 524.1 | 565.1 | -41.0 | -7.2 % | 514.0 | 10.2 | 2.0 % |
| ¡ Leased Line | 294.2 | 337.4 | -43.2 | -12.8 % | 309.2 | -15.0 | -4.9 % |
| ¡ Other Data | 46.6 | 55.9 | -9.3 | -16.6 % | 45.7 | 1.0 | 2.1 % |
| ¡ Wireless (PCS resale etc.) | 169.5 | 140.0 | 29.5 | 21.1 % | 134.7 | 34.8 | 25.8 % |
| ¡ Satellite | 30.1 | 23.9 | 6.2 | 26.2 % | 29.2 | 0.9 | 3.1 % |
| ¡ Others | 87.0 | 20.6 | 66.4 | 323.4 % | 53.5 | 33.5 | 62.5 % |
| ¡ Sales Discount | -52.3 | -87.0 | 34.7 | -39.9 % | -53.1 | 0.8 | -1.5 % |
· In the fourth quarter of 2003, total operating revenue increased by KRW 32.4 billion (1.1%) to KRW 2,862.8 billion, compared to the corresponding period of 2002. Despite revenue decreases from telephone, land-to-mobile, leased-line, and data services, there were offsetting increases in broadband, aided by continuous subscriber growth, and PCS resale.
· Compared to the third quarter of 2003, total operating revenue increased by KRW 69.9 billion (2.5%). This can be attributed to a slowdown in the telephone and leased line weakening trend, and increased revenues from land-to-mobile, broadband, PCS resale, and SI/NI services.
6
2. Internet Revenue
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Internet Revenue | 628.5 | 544.5 | 84.0 | 15.4 % | 607.4 | 21.1 | 3.5 % |
| ¡ Broadband | 517.3 | 429.5 | 87.8 | 20.4 % | 504.5 | 12.8 | 2.5 % |
| -Megapass | 501.8 | 414.8 | 87.0 | 21.0 % | 490.6 | 11.2 | 2.3 % |
| -Nespot | 15.6 | 14.7 | 0.8 | 5.6 % | 13.9 | 1.6 | 11.7 % |
| ¡ Kornet | 65.7 | 67.5 | -1.8 | -2.6 % | 64.9 | 0.7 | 1.1 % |
| ¡ Other Internet | 45.5 | 47.5 | -2.1 | -4.3 % | 37.9 | 7.6 | 20.0 % |
| -IDC | 32.9 | 31.4 | 1.5 | 4.9 % | 25.3 | 7.6 | 29.9 % |
| -Bizmeka | 8.4 | 5.6 | 2.8 | 50.9 % | 8.4 | 0.0 | 0.0 % |
| -Others | 4.2 | 10.6 | -6.4 | -60.6 % | 4.2 | 0.0 | 0.3 % |
| Megapass Subscriber No. (000) | 5,589 | 4,922 | 667 | 13.6 % | 5,524 | 65 | 1.2 % |
| Nespot Subscriber No. (000) | 358 | 112 | 246 | 219.6 % | 305 | 53 | 17.4 % |
· In the fourth quarter of 2003, internet revenue increased by KRW 84 billion (15.4%) to KRW 628.5 billion, compared to the same quarter of previous year. The number of Megapass subscribers stood at 5.589 million at the end of 2003, surpassing the year before figure of 4.922 million by 13.6%. Since its launch in May 2002, Nespot (wireless LAN) has steadily expanded its subscriber base, which reached 358,000 at the end of 2003, and contributed KRW 15.6 billion in revenue. In the Other Internet category, revenues from IDC (Internet Data Center) and Bizmeka, our IT outsourcing service for small and medium sized businesses, are steadily on the rise.
7
3. Telephone Revenue
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Telephone Revenue | 1,135.1 | 1,230.0 | -94.9 | -7.7 % | 1,152.3 | -17.2 | -1.5 % |
| Subscriber Connection | 351.5 | 369.3 | -17.8 | -4.8 % | 346.2 | 5.3 | 1.5 % |
| ¡ Subscription Fee | 26.2 | 32.4 | -6.2 | -19.2 % | 22.5 | 3.7 | 16.4 % |
| ¡ Basic Monthly Fee | 285.8 | 286.3 | -0.5 | -0.2 % | 287.5 | -1.7 | -0.6 % |
| ¡ Installation | 12.4 | 12.8 | -0.4 | -2.8 % | 11.0 | 1.4 | 13.1 % |
| ¡ Interconnection | 26.2 | 37.6 | -11.4 | -30.3 % | 25.0 | 1.2 | 4.8 % |
| ¡ Others | 1.0 | 0.3 | 0.6 | 193.6 % | 0.3 | 0.7 | 219.7 % |
| Local | 309.5 | 352.7 | -43.2 | -12.2 % | 317.4 | -7.9 | -2.5 % |
| ¡ Usage | 234.3 | 260.0 | -25.7 | -9.9 % | 233.5 | 0.8 | 0.3 % |
| ¡ Interconnection | 35.6 | 32.6 | 3.0 | 9.2 % | 36.3 | -0.8 | -2.1 % |
| ¡ Others | 39.7 | 60.2 | -20.5 | -34.0 % | 47.5 | -7.9 | -16.5 % |
| Domestic Long Distance | 231.5 | 279.5 | -48.1 | -17.2 % | 233.2 | -1.8 | -0.8 % |
| ¡ Usage | 219.4 | 254.4 | -35.0 | -13.8 % | 217.7 | 1.7 | 0.8 % |
| ¡ Interconnection | 11.7 | 24.9 | -13.2 | -52.9 % | 15.3 | -3.6 | -23.3 % |
| ¡ Others | 0.3 | 0.2 | 0.2 | 108.7 % | 0.3 | 0.1 | 19.6 % |
| International Long Distance | 64.5 | 89.6 | -25.0 | -27.9 % | 71.2 | -6.7 | -9.4 % |
| ¡ Usage | 62.5 | 88.7 | -26.2 | -29.5 % | 67.1 | -4.6 | -6.8 % |
| ¡ Others | 2.1 | 0.9 | 1.1 | 122.3 % | 4.2 | -2.1 | -50.5 % |
| International Settlement Revenue | 36.5 | 50.4 | -14.0 | -27.7 % | 35.5 | 1.0 | 2.8 % |
| VAS | 92.3 | 35.7 | 56.5 | 158.2 % | 99.1 | -6.8 | -6.9 % |
| 114 Phone Directory Service | 30.7 | 28.9 | 1.8 | 6.2 % | 28.1 | 2.6 | 9.4 % |
| Public Telephone | 19.1 | 23.4 | -4.3 | -18.3 % | 21.1 | -2.0 | -9.4 % |
| Miscellaneous | -0.5 | 0.4 | -0.9 | -224.6 % | 0.5 | -1.0 | -207.8 % |
· In the fourth quarter of 2003, we saw a drop of KRW 94.9 billion (7.7%) in telephone revenue over the fourth quarter of 2002. This is mainly due to i) a decrease in local interconnection revenue caused by reduction of
8
interconnection fee rate and decline in domestic long distance usage, ii) rate cut for international settlement, resulting in lower revenue, and iii) continued fall in local, domestic and international long distance usage.
· Compared to the previous quarter, telephone revenue was down by KRW 17.2 billion (1.5%), mostly because of weakened demand for toll free and international long distance services, both sensitive to the economic conditions.
9
· According to the newly adopted revenue re-categorization, some of the revenue from local, domestic and international long distance, and land-to-mobile was reallocated under VAS (Value Added Service). The following table shows VAS revenue details.
| 1Q 2003 | 2Q 2003 | 3Q 2003 | (KRW billion — 4Q 2003 | |
|---|---|---|---|---|
| Revenue before re-categorization | 38.7 | 31.1 | 38.1 | 37.1 |
| Local - > VAS | 27.7 | 19.6 | 19.4 | 19.5 |
| DLD - > VAS | 15.6 | 12.4 | 15.4 | 13.4 |
| ILD - > VAS | 11.1 | 9.3 | 11.8 | 10.1 |
| LM - > VAS | 11.3 | 11.4 | 14.4 | 12.2 |
| Revenue after re-categorization | 104.4 | 83.8 | 99.1 | 92.3 |
4. LM (Land to Mobile) Interconnection Revenue
| Sector | 2003 4Q | 2002 4Q | 2003 4Q/2002 4Q | 2003 3Q | (KRW billion) — 2003 4Q/2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| LM Revenue | 524.1 | 565.1 | -41.0 | -7.2 % | 514.0 | 10.1 | 2.0 % |
| LM Interconnection cost | 185.7 | 291.5 | -105.8 | -36.3 % | 290.3 | -104.6 | -36.0 % |
· Due to a 5.1% tariff cut and the 6 minute free call system (effective for 6 months) starting July, 2003, LM revenue for the fourth quarter was KRW 524.1 billion, a loss of KRW 41.0 billion (7.2%) over 4Q 2002. However, it was an improvement of 10.1 billion (2.0%) over 3Q 2003, made possible by increased call volume.
· Compared to the same period last year, LM interconnection cost decreased by KRW 105.8 billion (36.3%). This decrease is in excess of what can be explained by the 10.3% LM interconnection rate cut, effective from January 2003. It also showed a savings of KRW 104.6 billion (36.0%) over 3Q 2003, as a result of actual settlement adjustment of LM interconnection cost among operators.
- Journalization method of LM interconnection cost: It takes about 2 months for operators to verify the actual volume of LM traffic. Therefore, KT estimates LM interconnection cost reflecting historical traffic at the time of quarterly closing and makes appropriate adjustments the following quarter.
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5. Leased Line Revenue
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q /2002 4Q | 2003 3Q | 2003 4Q /2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Leased Line Revenue | 294.2 | 337.4 | -43.2 | -12.8 % | 309.2 | -15.0 | -4.9 % |
| ¡ Local | 163.0 | 180.4 | -17.4 | -9.6 % | 166.8 | -3.7 | -2.2 % |
| ¡ Domestic Long Distance | 113.6 | 133.6 | -20.0 | -14.9 % | 123.3 | -9.7 | -7.8 % |
| ¡ Intnl Long Distance | 10.7 | 14.3 | -3.6 | -25.4 % | 13.0 | -2.3 | -17.8 % |
| ¡ Broadcasting & Others | 6.8 | 9.1 | -2.3 | -25.1 % | 6.1 | 0.7 | 11.4 % |
· Leased line revenue totaled KRW 294.2 billion in the fourth quarter of 2003, a drop of KRW 43.2 billion (12.8%) over 4Q 2002 and KRW 15.0 billion (4.9%) over 3Q 2003. The main drivers were declining demands by SKT, now equipped with its own network, and the switch by the SK group and Dacom to SK Networks and Powercom, respectively. Shift in demand to other similar KT services such as Metro Ethernet and VPN has also played a role. Following is a detailed account of revenue increases under the similar services sector.
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q /2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | % | |||||
| Similar Services | 52.5 | 35.3 | 17.2 | 48.7 % | 47.3 | 5.2 | 11.0 % |
| ¡ Metro Ethernet | 23.0 | 15.2 | 7.8 | 51.3 % | 20.2 | 2.8 | 13.9 % |
| ¡ ATM | 19.4 | 13.2 | 6.2 | 47.0 % | 17.6 | 1.8 | 10.2 % |
| ¡ Satellite Leased line | 2.5 | 1.3 | 1.2 | 92.3 % | 2.3 | 0.2 | 8.7 % |
| ¡ VPN | 7.6 | 5.6 | 2.0 | 35.7 % | 7.2 | 0.4 | 5.6 % |
6. Other Data Revenue
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q /2002 4Q | 2003 3Q | 2003 4Q /2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Other Data Revenue | 46.6 | 55.9 | -9.3 | -16.6 % | 45.7 | 0.9 | 2.0 % |
| ¡ Dial-up | 1.4 | 4.1 | -2.7 | -65.8 % | 1.8 | -0.4 | -23.9 % |
| ¡ Packet Data | 7.3 | 11.6 | -4.3 | -36.7 % | 8.4 | -1.1 | -13.1 % |
| ¡ EDI | 5.5 | 12.3 | -6.8 | -55.5 % | 5.6 | -0.1 | -1.9 % |
| ¡ Others (ATM etc.) | 32.4 | 28.0 | 4.5 | 16.0 % | 29.9 | 2.6 | 8.6 % |
11
· Data revenue for 4Q 2003 totaled KRW 46.6 billion, a decrease of KRW 9.3 billion (16.6%) over 4Q 2002. ATM revenue increase was offset by the move from dial-up and packet data to broadband.
7. Wireless Revenue
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Wireless Revenue | 169.5 | 140.0 | 29.5 | 21.1% | 134.7 | 34.8 | 25.8% |
| ¨ PCS Resale | 168.6 | 139.3 | 29.3 | 21.0% | 133.5 | 35.0 | 26.2% |
| ¡ PCS Service | 124.2 | 114.0 | 10.2 | 8.9% | 122.6 | 1.6 | 1.3% |
| ¡ Handset Sales | 44.4 | 25.3 | 19.1 | 75.4% | 10.9 | 33.5 | 306.1% |
| ¨ Other Wireless | |||||||
| Revenue | 0.9 | 0.7 | 0.2 | 36.2% | 1.1 | -0.2 | -19.4% |
| PCS Resale Expense | 103.1 | 95.1 | 8.0 | 8.5% | 85.9 | 17.2 | 20.0% |
| ¡ Cost of Handset | 51.6 | 47.5 | 4.2 | 8.8% | 23.5 | 28.1 | 119.8% |
| ¡ Interconnection Fee to KTF | 51.5 | 47.6 | 3.9 | 8.2% | 62.4 | -11.0 | -17.6% |
| Resale subscribers (000) | 1,555 | 1,422 | 133 | 9.4% | 1,573 | -18.0 | -1.1% |
· Wireless revenue increased by KRW 29.5 billion (21.1%) compared to 4Q 2002. This can be explained by an increase in handset sales to 110,000 new subscribers accompanied by overall increase in the number of subscribers and usage.
· Compared to the previous quarter, revenue rose by KRW 34.8 billion (25.8%). Increased handset sales to 110,000 new subscribers and the seasonal trend of higher usage in the fourth quarter would account for this.
8. Satellite Revenue
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Satellite Revenue | 30.1 | 23.9 | 6.2 | 26.2% | 29.2 | 0.9 | 3.1% |
· In the fourth quarter of 2003, satellite revenue improved by 6.2 billion (26.2%) over 4Q 2002 and KRW 0.9 billion (3.1%) over 3Q 2003, primarily due to an increase in demand of satellite transmission service.
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9. Other Revenue
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q/ 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Other Revenue | 87.0 | 20.6 | 66.4 | 322.3 % | 53.6 | 33.4 | 62.3 % |
| ¡ SI/NI | 47.1 | 8.5 | 38.6 | 454.1 % | 19.2 | 27.9 | 145.4 % |
| ¡ Real Estate | 13.7 | 0.0 | 13.7 | | 11.8 | 2.0 | 16.7 % |
| ¡ Others | 26.2 | 0.0 | 14.1 | | 22.7 | 3.5 | 15.5 % |
· Other Revenue rose by KRW 66.4 billion (322.3%) and KRW 33.4 billion (62.3%) from 4Q 2002 and 3Q 2003, respectively; a direct benefit of increased revenues from SI/NI (System Integration and Network Integration) and leasing of real estate.
13
B. Operating Expenses
1. Overview
· The number of employees was reduced by 5,497 (12.6%) in September 2003 through our early retirement plan (ERP), and stood at 37,987 at end of 2003. A one-time ERP payment of KRW 831.5 billion was journalized in the third quarter, and thus resulted in an operating loss of KRW 481.9 billion in 3Q 2003. However, returning to normality, we recorded a positive operating income of KRW 389.1 billion in the fourth quarter, a substantial increase of KRW 240.2 billion (161.3%) over 4Q 2002.
2. Labor Expense
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | (KRW billion) — 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Labor Expense | 541.0 | 655.0 | -114.0 | -17.4 % | 1,509.2 | -968.2 | -64.2 % |
| ¡ Salaries & Wages | 401.9 | 461.7 | -59.8 | -12.9 % | 452.9 | -51.0 | -11.3 % |
| - Salaries | 236.9 | 271.6 | -34.7 | -12.8 % | 282.6 | -45.7 | -16.2 % |
| - Wages | 164.0 | 189.1 | -25.2 | -13.3 % | 169.2 | -5.2 | -3.1 % |
| * Performance-based Bonus | 97.3 | 146.8 | -49.5 | -33.7 % | 109.5 | -12.2 | -11.1 % |
| * Monthly & Annual Leave Compensation | 15.7 | -7.0 | 22.8 | -323.7 % | 15.5 | 0.3 | 1.7 % |
| - Miscellaneous | 1.0 | 0.9 | 0.1 | 11.3 % | 1.1 | -0.1 | -6.6 % |
| ¡ Employee Benefits | 113.8 | 132.4 | -18.6 | -14.1 % | 171.0 | -57.2 | -33.4 % |
| - Bonus | 34.5 | 0.0 | 34.5 | | 39.1 | -4.6 | -11.9 % |
| ¡ Retirement Allowance | 25.3 | 60.9 | -35.6 | -58.4 % | 885.3 | -860.0 | -97.1 % |
· Total labor expense recorded a decrease of KRW 114.0 billion from 4Q 2002. This can be attributed to a reduction of KRW 59.8 billion (12.9%) for salaries & wages, KRW 18.6 billion (14.1%) for employee benefits, and KRW 35.6 billion (58.4%) for retirement allowance. Increase of KRW 34.5 billion for bonus, despite the total labor expense savings, stems from uniform distribution recognition of the bonus expense.
· Compared to the previous quarter when an additional KRW 831.5 billion ERP cost was incurred, total labor expense was brought down by KRW 968.2 billion. As a result of the downsizing, we experienced a reduction in retirement allowance of KRW 860.0 billion (97.1%), salaries & wages of KRW 51.0 billion (11.3%), and employ benefits of KRW 57.2 billion (33.4%). In the case of employ benefits, we note the one-time cost of
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KRW 40.8 billion in the previous quarter for the sale of treasury stock under ESOP (Employee Stock Ownership Program).
3. Depreciation Cost
· Depreciation cost for the fourth quarter 2003 was KRW 691.1 billion, a decrease of KRW 72.3 billion (9.5%) from 4Q 2002, but a rise of KRW 51.8 billion (8.1%) from the previous quarter. It has been our trend to concentrate CAPEX spending, a cause for depreciation, toward the end of year.
(KRW billion)
| 1Q | 2Q | 3Q | 4Q | total | |
|---|---|---|---|---|---|
| year 2002 | 189.1 | 523.4 | 510.6 | 922.0 | 2,145.1 |
| year 2003 | 168.0 | 392.0 | 620.0 | 902.6 | 2,082.6 |
4. Commissions
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Commission | 180.8 | 155.8 | 25.0 | 16.0 % | 150.7 | 30.1 | 19.9 % |
| ¡ Commissions to KT Linkus | 32.3 | 25.5 | 6.8 | 26.8 % | 30.2 | 2.1 | 6.9 % |
| ¡ Commissions to 114 Phone Directory | 33.0 | 31.6 | 1.4 | 4.4 % | 31.0 | 1.9 | 6.2 % |
| ¡ Commissions to Call Center | 28.3 | 24.5 | 3.8 | 15.7 % | 27.0 | 1.3 | 4.9 % |
| ¡ Others | 87.2 | 74.3 | 12.9 | 17.4 % | 62.6 | 24.6 | 39.4 % |
· Total commission expense was up by KRW 25.0 billion (16.0%) and KRW 30.1 billion from 4Q 2002 and 3Q 2003, respectively. More outsourcing of call centers to improve customer satisfaction, increases in the Linkus (public phone) outsourcing fee and others all contributed. Main factors for the increase in others are outsourcing to our subsidiaries and strengthened collection efforts.
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5. Sales Related Expenses
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q /2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| ¡ Sales Promotion | 73.3 | 84.3 | -11.0 | -13.0 % | 77.3 | -4.0 | -5.2 % |
| ¡ Sales Commission | 31.4 | 36.2 | -4.8 | -13.4 % | 15.1 | 16.3 | 108.3 % |
| ¡ Provision for doubtful accounts | 112.4 | 96.0 | 16.4 | 17.0 % | 79.6 | 32.8 | 41.2 % |
| ¡ Advertising | 48.7 | 50.5 | -1.8 | -3.6 % | 36.6 | 12.1 | 33.0 % |
· Provision for doubtful accounts resulted in KRW 112.4 billion, an upsurge of KRW 16.4 billion (17.0%) and KRW 32.8 billion (41.2%) compared to 4Q 2002 and 3Q 2003, respectively. This occurred in the process of rising delinquent accounts due to worsening economic conditions, our raising of the allowance rate to reflect that, and termination of seriously overdue accounts as part of our effort to pursue a clean asset.
· Facts about provision for doubtful accounts:
(KRW billion)
| Dec 2001 | Dec 2002 | Dec 2003 | |
|---|---|---|---|
| accounts receivable | 1,837.6 | 2,349.4 | 2,342.1 |
| allowance for doubtful accounts | 149.8 | 256.5 | 465.8 |
| provision for doubtful accounts | 80.7 | 156.5 | 301.1 |
| allowance/receivable | 8.2 % | 10.9 % | 19.9 % |
| type of account receivable | method | rate | |
|---|---|---|---|
| 3Q | 4Q | ||
| overdue (terminated) | collection failure rate | 74.3 % | 76.4 % |
| overdue (large amount) | termination rate after suspension × collection failure rate | 20.1 % | 20.6 % |
| overdue (small amount) | 50% of rate for large amount | 10.0 % | 10.3 % |
| previous month | past termination rate | 0.5 % | 0.6 % |
| interconnection | past termination rate | 0.5 % | 0.6 % |
| PCS resale | past termination rate | 0.5 % | 0.6 % |
| international call settlement | past termination rate | 0.5 % | 0.6 % |
| others | average of above | 18.1 % | 19.6 % |
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(KRW 100 million)
| type | -6 months | 6 months- 1 year | 1 year- 3 years | 3 years- | total | |
|---|---|---|---|---|---|---|
| Dec 2003 | amount proportion | 17,501 74.72 % | 2,347 10.02 % | 3,488 14.89 % | 85 0.36 % | 23,421 100.00 % |
| Sep 2003 | amount proportion | 15,532 67.10 % | 2,785 12.00 % | 4,502 19.40 % | 327 1.40 % | 23,146 100.00 % |
| June 2003 | amount proportion | 17,776 74.10 % | 2,859 11.90 % | 3,206 13.40 % | 139 0.60 % | 23,980 100.00 % |
| March 2003 | amount proportion | 18,643 77.46 % | 2,343 9.74 % | 2,875 11.95 % | 206 0.86 % | 24,067 100.00 % |
| Dec 2002 | amount proportion | 18,756 79.80 % | 2,027 8.60 % | 3,617 11.10 % | 93 .40 % | 23,493 100.00 % |
6. Repairs & Maintenance
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| ¡ Repairs and Maintenance | 139.8 | 95.1 | 44.7 | 47.0 % | 103.2 | 36.6 | 35.4 % |
· Repairs & maintenance, necessary along with CAPEX for the improvement of service quality, incurred a cost of KRW 139.8 billion. This is an increase of KRW 44.7 billion (47.0%) over 4Q 2002 and KRW 36.6 billion (35.4%) over 3Q 2003. We point out the rise in installation outsourcing necessitated by the recent downsizing.
7. Cost of Goods Sold
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Cost of Goods Sold | 50.1 | 62.0 | -11.9 | -19.2 % | 25.3 | 24.8 | 98.0 % |
| ¡ PCS Handset Cost | 51.6 | 47.5 | 4.2 | 8.8 % | 23.5 | 28.1 | 119.8 % |
| ¡ Notebook | 0.1 | 3.4 | -3.2 | -96.7 % | 0.2 | -0.1 | -35.9 % |
| ¡ PDA | 3.4 | 6.6 | -3.2 | -48.1 % | -5.0 | 8.4 | -168.2 % |
| ¡ Wireless LAN Card | -6.2 | 2.1 | -8.3 | -397.7 % | 4.0 | -10.2 | -253.9 % |
| ¡ Others | 1.2 | 2.5 | -1.3 | -53.2 % | 2.6 | -1.4 | -54.7 % |
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· Cost of goods sold for this quarter amounted to KRW 50.1 billion, a decrease of KRW 11.9 billion (19.2%) over 4Q 2002, due to a decline in costs of sales for PDA, notebook, and wireless LAN card.
· Compared to the previous quarter, it was an increase of KRW 24.8 billion (98.0%), mainly due to a rise of KRW 28.1 billion (119.7%) in handset cost driven by increased sales to new and handset-changing subscribers.
8. Cost of Service Provided
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Cost of Service Provided | 403.4 | 461.3 | -57.9 | -12.5 % | 445.0 | -41.6 | -9.3 % |
| ¡ Cost of Service | 127.0 | 121.4 | 5.6 | 4.6 % | 90.6 | 36.4 | 40.2 % |
| - PCS Resale Network Cost to KTF | 51.5 | 47.6 | 3.9 | 8.2 % | 62.4 | -10.9 | -17.5 % |
| - B&A Service Cost | 25.6 | 16.0 | 9.6 | 59.6 % | 0.5 | 25.1 | 5020.0 % |
| - Others | 49.9 | 57.8 | -7.9 | -13.6 % | 27.7 | 22.3 | 80.5 % |
| ¡ SI/NI Service Cost | 48.4 | 5.9 | 42.5 | 723.2 % | 19.4 | 29.0 | 149.3 % |
| ¡ International Settlement Cost | 42.3 | 42.5 | -0.2 | -0.4 % | 44.8 | -2.5 | -5.5 % |
| ¡ LM Interconnection Cost | 185.7 | 291.5 | -105.8 | -36.3 % | 290.3 | -104.5 | -36.0 % |
· Cost of service provided recorded a decrease of KRW 57.9 billion (12.5%) over 4Q 2002 and KRW 41.6 billion (9.3%) over 3Q 2003. Decline in land-to-mobile interconnection cost as a result of interconnection rate cut greatly contributed.
C. Non-Operating Revenue
(KRW billion)
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Non-operating Revenue | -11.9 | 996.1 | -1,008.0 | -101.2 % | 131.2 | -143.1 | -109.1 % |
| ¡ Gains on Disp. Of Inv. Assets | 0.6 | 907.6 | -907.0 | -99.9 % | 0.0 | 0.6 | |
| ¡ Interest Income | 16.0 | 13.0 | 3.0 | 23.1 % | 19.5 | -3.5 | -18.1 % |
| ¡ FX Transaction Gain | 4.2 | 9.2 | -5.0 | -54.3 % | 1.0 | 3.2 | 305.4 % |
| ¡ FX Translation Gain | -56.5 | 12.5 | -69.0 | -552.0 % | 57.3 | -113.8 | -198.6 % |
| ¡ USO Fund | -12.2 | 5.4 | -17.6 | -325.9 % | 11.9 | -24.1 | -202.4 % |
| ¡ Others | 36.0 | 48.4 | -12.4 | -25.6 % | 41.4 | -5.4 | -13.1 % |
· Non-operating revenue showed a decrease of KRW 1,008 billion (101.2%) from 4Q 2002, when selling of SKT shares contributed KRW 907.6 billion to gains on disposal of invested assets. In addition, we had a fall in FX translation gain of KRW 69.0 billion (552.0%) due to depreciation of the Korean won (1,150.2 won per dollar on Sep 30 versus 1,197.8 won per dollar on Dec 31; net debt exposure of US $1,173.6 million on Dec
18
31), and reduction in USO (Universal Service Obligation) fund of KRW 17.6 billion (325.9%) caused by change of rules.
· Compared to the previous quarter, there was a decrease of KRW 143.1 billion (109.1%). Main factors are declines in FX translation gain of KRW 113.8 billion (198.6%) and USO fund of KRW 24.1 billion (202.4%).
D. Non-Operating Expenses
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | (KRW billion) — 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Non-operating Expense | 297.4 | 277.8 | 19.6 | 7.1 % | 324.4 | -27.0 | -8.3 % |
| ¡ Interest Expense | 104.4 | 113.3 | -8.9 | -7.9 % | 106.5 | -2.1 | -2.0 % |
| ¡ FX Transaction Loss | 2.7 | 3.8 | -1.1 | -28.9 % | 2.1 | 0.6 | 31.0 % |
| ¡ FX Translation Loss | -3.0 | -0.4 | -2.6 | 650.0 % | 9.9 | -12.9 | -130.4 % |
| ¡ Loss on Equity Method | 43.3 | 49.9 | -6.6 | -13.2 % | 34.4 | 8.9 | 26.0 % |
| ¡ Loss on Disp. Of Fixed. Assets | 28.1 | 42.3 | -14.2 | -33.6 % | 15.7 | 12.4 | 79.1 % |
| ¡ Others | 121.9 | 68.9 | 53.0 | 76.9 % | 156.0 | -34.1 | -21.8 % |
· Non-operating expense was KRW 297.4 billion, an increase of KRW 19.6 billion (7.1%) over 4Q 2002. Despite a reduction in the interest expense of KRW 8.9 billion (7.9%) due to lowered interest rates, our SKT equity-linked securities suffered a KRW 35.2 billion loss.
· It was a decrease of KRW 27.0 billion (8.3%) from the previous quarter, when a regular tax audit, conducted by the National Tax Service usually every 5 years, resulted in additional tax of KRW 67.7 billion, which was journalized then.
E. Net Income
| Sector | 2003 4Q | 2002 4Q | 2003 4Q / 2002 4Q | 2003 3Q | (KRW billion) — 2003 4Q / 2003 3Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Income Before Tax | 79.8 | 867.1 | -787.3 | -90.8 % | -675.1 | 754.9 | 946.0 % |
| ¡ Income Tax | -1.3 | 198.9 | -200.2 | -100.7 % | -178.6 | 177.3 | -13637.3 % |
| ¡ Effective Tax Rate | -1.6 % | 22.9 % | -24.6% P | 26.5 % | -28.1% P | ||
| Net Income | 81.1 | 668.2 | -587.1 | -87.9 % | -496.5 | 577.6 | -116.3 % |
| Income from disposal of SKT shares | 0.0 | 699.5 | -699.5 | -100.0 % | 0.0 | 0.0 | |
| Normalized Net Income | 81.1 | -31.3 | 112.4 | -359.1 % | -496.5 | 577.6 | -116.3 % |
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· Income before tax amounted to KRW 79.8 billion. Applying the predicted effective annual tax rate of 35.8%, which translates to KRW -1.3 billion in tax (at the rate of -1.6%) for the fourth quarter, we obtained a quarterly net income of KRW 81.1 billion.
F. Balance Sheet Discussion
1. Asset: KRW 19,575.6 billion, a decrease of KRW 268.9 billion (1.4%) from the previous quarter
· Current assets stood at KRW 3,323.5 billion, a decrease of KRW 518.3 billion (13.5%). Major factors were payment of the special retirement allowance of KRW 831.5 billion during the fourth quarter and reduction in accounts receivable due to increased allowance allocation caused by a provision for doubtful accounts amount of KRW 112.4 billion.
· Other fixed assets recorded an increase of KRW 249.4 billion, aided by acquisition of shares in KDB (Korea Digital Broadcasting) amounting to KRW 82.4, increase in lease deposits of KRW 29.1 billion, and etc.
2. Liabilities: KRW 12,763.1 billion, a decrease of KRW 129.2 billion (1.0%) from the previous quarter
· Current liabilities stood at KRW 3,494.1 billion, a decrease of KRW 286.8 billion (7.6%). An increase in short term and current portion of long term debt of KRW 433.0 billion was far offset by the reduction in others, brought about by payment of retirement allowance on October 15.
· Long term liabilities rose by around KRW 157.6 billion due to our issuing of 10 year bonds (at the rate of 5.4%) worth KRW 300.0 billion in order to of improve our debt structure.
3. Shareholders Equity: KRW 6,812.5 billion, a decrease of KRW 139.7 billion (2.0%) from the previous quarter
· While we achieved a quarterly net income of KRW 81.1 billion, retirement of treasury stock worth KRW 273.5 billion (2% of total outstanding shares) resulted in reduced shareholders equity.
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G. Appendix: Summary of Annual Income Statement
(KRW billion)
| Sector | 2003 | 2002 | 2003 / 2002 | |
|---|---|---|---|---|
| Amount | D % | |||
| Operating Revenue | 11,574.5 | 11,377.6 | 196.9 | 1.7 % |
| Operating Expense | 10,331.4 | 9,583.6 | 747.8 | 7.8 % |
| ¡ Depreciation | 2,446.8 | 2,637.0 | -190.2 | -7.2 % |
| ¡ Labor | 3,337.2 | 2,697.7 | 639.5 | 23.7 % |
| ¡ Commission | 612.9 | 571.6 | 41.3 | 7.2 % |
| ¡ Sales Promotion | 235.5 | 197.7 | 37.8 | 19.1 % |
| ¡ Sales Commission | 108.8 | 71.8 | 37.0 | 51.5 % |
| ¡ Provision for doubtful accounts | 301.1 | 156.5 | 144.6 | 92.4 % |
| ¡ Advertising | 152.8 | 157.1 | -4.3 | -2.7 % |
| ¡ Repairs & Maintenance | 371.6 | 325.8 | 45.8 | 14.1 % |
| ¡ Cost of Goods Sold | 275.9 | 278.7 | -2.8 | -1.0 % |
| ¡ Cost of Service Provided | 1,761.9 | 1,745.6 | 16.3 | 0.9 % |
| - Cost of Service | 437.7 | 373.0 | 64.7 | 17.3 % |
| - LM Interconnection | 1,025.2 | 1,186.0 | -160.8 | -13.6 % |
| - Intnl Settlement | 185.4 | 177.9 | 7.5 | 4.2 % |
| - Cost of SI/NI Services | 113.6 | 8.7 | 104.9 | 1205.7 % |
| ¡ R&D | 232.1 | 233.0 | -0.9 | -0.4 % |
| ¡ Others | 494.8 | 511.1 | -16.3 | -3.2 % |
| Operating Income | 1,243.1 | 1,794.0 | -550.9 | -30.7 % |
| Operating Margin | 10.7 % | 15.8 % | -5.0% P | |
| EBITDA | 3,689.9 | 4,431.0 | -741.1 | -16.7 % |
| EBITDA Margin | 31.9 % | 38.9 % | -7.1% P | |
| Non-operating Revenue | 1,135.9 | 1,743.6 | -607.7 | -34.9 % |
| ¡ Gains on Disp. Of Inv. Assets | 775.9 | 1,185.6 | -409.7 | |
| ¡ Interest Income | 81.7 | 53.9 | 27.8 | 51.6 % |
| ¡ FX Transaction Gain | 12.9 | 24.6 | -11.7 | -47.6 % |
| ¡ FX Translation Gain | 7.3 | 111.5 | -104.2 | -93.5 % |
| ¡ USO Fund | 66.1 | 143.2 | -77.1 | -53.8 % |
| ¡ Others | 192.0 | 224.8 | -32.8 | -14.6 % |
| Non-operating Expense | 1,085.9 | 922.0 | 163.9 | 17.8 % |
| ¡ Interest Expense | 432.2 | 425.5 | 6.7 | 1.6 % |
| ¡ FX Transaction Loss | 12.6 | 24.8 | -12.2 | -49.2 % |
| ¡ FX Translation Loss | 7.7 | 14.8 | -7.1 | -48.0 % |
| ¡ Loss on Equity Method | 155.0 | 107.2 | 47.8 | 44.6 % |
| ¡ Loss on Disp. Of Fixed. Assets | 86.8 | 85.8 | 1.0 | 1.2 % |
| ¡ Others | 391.6 | 263.9 | 127.7 | 48.4 % |
| Ordinary Income | 1,293.1 | 2,615.6 | -1,322.5 | -50.6 % |
| Income Tax | 463.4 | 651.8 | -188.4 | -28.9 % |
| Net Income | 829.7 | 1,963.8 | -1,134.1 | -57.8 % |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: January 20, 2004
| KT C ORPORATION | |
|---|---|
| By: | /s/ W HA J OON C HO |
| Name: Wha Joon Cho |
Title: Managing Director
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