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LPL » Topics » Selling, General and Administrative Expenses

This excerpt taken from the LPL 20-F filed Jun 23, 2009.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by 34.5% from (Won)595.8 billion in 2006 to (Won)801.4 billion in 2007. As a percentage of sales, our selling, general and administrative expenses generally remained the same and was 5.6% in each of 2006 and 2007. The increase in selling, general and administrative expenses in 2007 was attributable primarily to increases in:

 

  •  

salaries, bonuses and retirement payments, resulting from an increase in performance related compensation to executive officers and employees;

 

  •  

impairment cost of assets, primarily due to an impairment loss on tangible assets due to change in investment strategies relating to capital expenditures in new facilities;

 

  •  

warranty expenses, resulting from providing services and replacement parts for defective products sold to customers;

 

  •  

fee and commission expenses, primarily due to increases in legal fees related to our patent litigations; and

 

  •  

research and development expenses, resulting from an increase in research and development activities.

The following table shows selling, general and administrative expenses broken down by major components for each of the years in the two-year period ended December 31, 2007:

 

     Year Ended December 31,
     2006    2007
     (in billions of Won)

Salaries and bonus

    (Won) 67.8    (Won) 116.1

Retirement allowance

      5.6      8.5

Employee benefit

      9.8      13.0

Transportation

      188.8      194.1

Depreciation

      7.0      15.0

Insurance

      5.3      5.2

Travel

      9.3      10.0

Fee and commission

      71.8      95.7

Advertising

      24.1      30.4

Sales promotion

      11.3      17.5

Overseas market development

      5.3      6.3

Research and development

      81.2      102.8

Warranty

      46.0      77.9

Others

      62.5      108.9
             

Total

    (Won) 595.8    (Won) 801.4
             

 

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Table of Contents
This excerpt taken from the LPL 20-F filed Apr 16, 2008.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by 12.8% from (Won)528.1 billion in 2005 to (Won)595.8 billion in 2006. As a percentage of sales, our selling, general and administrative expenses increased from 5.2% in 2005 to 5.6% in 2006. The increase in selling, general and administrative expenses in 2006 was attributable primarily to increases in:

 

  •  

research and development expenses, consisting primarily of salaries paid to research and development personnel at our research and development center in Anyang, resulting from an increase in the number of research and development employees in Anyang;

 

56

  •  

warranty expenses, resulting from providing services and replacement parts for defective products sold to customers;

 

  •  

loss from disposal of accounts receivable to financial institutions;

 

  •  

fee and commission expenses, primarily due to increases in legal fees related to our patent litigations;

 

  •  

rent and lease expenses, primarily due to increases in expenses relating to office lease and office equipment lease; and

 

  •  

salaries, bonuses and retirement pay, resulting from an increase in the number of selling and administrative staff hired to meet the operating demands of P6 and P7.

The following table shows selling, general and administrative expenses broken down by major components for each of the years in the two-year period ended December 31, 2006:

 

     Year Ended
December 31,
     2005    2006
     (in billions of Won)

Salaries and bonus

    (Won) 61.6    (Won) 67.8

Retirement allowance

      4.6      5.6

Employee benefit

      11.0      9.8

Transportation

      187.6      188.8

Depreciation

      10.5      7.0

Insurance

      6.8      5.3

Travel

      8.8      9.3

Fee and commission

      64.6      71.8

Advertising

      21.9      24.1

Sales promotion

      14.7      11.3

Overseas market development

      8.8      5.3

Research and development

      55.4      81.2

Others

      71.8      108.5
             

Total

    (Won) 528.1    (Won) 595.8
             
This excerpt taken from the LPL 20-F filed Apr 11, 2007.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by 65.9% from (Won)318.4 billion in 2004 to (Won)528.1 billion in 2005. As a percentage of sales, our selling, general and administrative expenses increased from 3.8% in 2004 to 5.2% in 2005. The increase in selling, general and administrative expenses in 2005 was attributable primarily to increases in:

 

  •  

shipping and handling cost, which is based on unit weight, resulting from increased sales volume, especially of larger size panels, and, to a lesser extent, increases in shipping rates, fuel surcharges and sales to more geographically distant markets such as Europe;

 

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Table of Contents
  •  

research and development expenses, consisting primarily of salaries paid to research and development personnel at our research and development center in Anyang, resulting from an increase in the number of research and development employees in Anyang and an increase in wage rates;

 

  •  

salaries, bonuses and retirement pay, resulting from an increase in the number of selling and administrative staff hired to meet the operating demands of P6 and an increase in wage rates;

 

  •  

advertising expenses, which include fees paid to LG Corp. and Philips Electronics for the use of the “LG” and “Philips” brand logos, which we began paying in 2005; and

 

  •  

fee and commission expenses, primarily consisting of legal fees related to our patent litigation and arising in connection with the establishment of our Polish subsidiary.

The following table shows selling, general and administrative expenses broken down by major components for each of the years in the two-year period ended December 31, 2005:

 

     Year Ended
December 31,
     2004    2005
     (in billions of Won)

Salaries and bonus

    (Won) 53.7    (Won) 61.6

Retirement allowance

      3.5      4.6

Employee benefit

      16.9      11.0

Transportation

      94.6      187.6

Depreciation

      6.9      10.5

Insurance

      3.6      6.8

Travel

      7.6      8.8

Fee and commission

      36.7      64.6

Advertising

      5.5      21.9

Sales promotion

      5.0      14.7

Overseas market development

      7.4      8.8

Research and development

      42.3      55.4

Others

      34.7      71.8
             

Total

    (Won) 318.4    (Won) 528.1
             

As a percentage of our total selling, general and administrative expenses, salaries, bonuses and retirement pay, as well as research and development expenses decreased from 2004 to 2005, while shipping and handling cost increased from 2004 to 2005.

This excerpt taken from the LPL 20-F filed Jun 21, 2006.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by 35.8% from (Won)234.5 billion in 2003 to (Won)318.4 billion in 2004. As a percentage of sales, however, our selling, general and administrative expenses remained the same at 3.8% in both 2003 and 2004. The increase in selling, general and administrative expenses in 2004 was attributable primarily to increases in:

 

  •   salaries, bonuses and retirement pay, resulting from an increase in the number of selling and administrative staff hired to meet the operating demands of P6 and P7, an increase in wage rates and higher special performance bonuses;

 

  •   research and development expenses, consisting primarily of salaries paid to research and development personnel at our research and development center in Anyang, resulting from an increase in the number of research and development employees in Anyang and an increase in wage rates; and

 

  •   shipping and handling cost, which is based on unit weight, resulting from increased sales volume, especially of larger size panels, and, to a lesser extent, increases in shipping rates, fuel surcharges and sales to more geographically distant markets such as Europe.

As a percentage of our total selling, general and administrative expenses, salaries, bonuses and retirement pay decreased from 2003 to 2004 while research and development expenses remained constant and shipping and handling cost increased from 2003 to 2004.

 

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Table of Contents
This excerpt taken from the LPL 20-F filed Apr 11, 2005.

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses increased by 81.7% from (Won)129.0 billion in 2002 to (Won)234.5 billion in 2003. As a percentage of sales, our selling, general and administrative expenses increased from 3.6% in 2002 to 3.8% in 2003. The increase in selling, general and administrative expenses in 2003 was attributable primarily to increases in:

 

  •   salaries, bonuses and retirement pay, resulting from an increase in the number of selling and administrative staff hired to meet the operating demands of P5, an increase in wage rates and a special performance bonus;

 

  •   research and development expenses, consisting primarily of salaries paid to research and development personnel at our research and development center in Anyang, resulting from an increase in the number of research and development employees in Anyang and an increase in wage rates; and

 

  •   shipping and handling cost, which is based on unit weight, resulting from increased sales volume and, to a lesser extent, increases in shipping rates and sales to more geographically distant markets such as Europe.

 

As a percentage of our total selling, general and administrative expenses, salaries, bonuses and retirement pay and shipping and handling cost increased from 2002 to 2003 while research and development expenses decreased over the same period.

 

EXCERPTS ON THIS PAGE:

20-F
Jun 23, 2009
20-F
Apr 16, 2008
20-F
Apr 11, 2007
20-F
Jun 21, 2006
20-F
Apr 11, 2005

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