LPL

LG Display Co., Ltd. Form 6-K Summary

Business Context and Reporting Period

This Form 6-K, filed on February 20, 2009, reports on the activities of LG Display Co., Ltd. (LGD) for the month of February 2009. The filing primarily details the attendance and voting records of outside directors, accumulated transaction amounts with major shareholders, and provides a comprehensive overview of the company's 2008 financial performance and business strategy. The document also outlines the agenda for the Annual General Meeting (AGM) scheduled for March 13, 2009.

Key Financial Metrics (Fiscal Year 2008)

Despite a difficult global economic environment and LCD oversupply, LGD reported growth in sales and profitability for 2008 based on Korean GAAP.

Dividend Proposal: A cash dividend of KRW 500 per share is proposed for approval at the AGM, representing a payout ratio of 16.5% of 2008 net income.

Material Changes and Operational Highlights

• Revenue Growth: Non-consolidated sales increased by 12% year-over-year to KRW 15.865 trillion, driven by sales expansion efforts despite market headwinds.
• Profitability Pressure: While operating income grew slightly, net income declined by approximately 19% compared to 2007, attributed to the global economic meltdown and industry-wide oversupply.
• Capacity Expansion: The company expanded its 7th generation fab (P7) capacity to over 150,000 sheets per month and commenced construction of the 8th generation fab (P8) and expansion of the 6th generation fab (P6).
• Strategic Investments: LGD acquired preferred stock in HannStar Display Corporation, shares in AVACO Co., Ltd. (sputter equipment), TLI Inc. (LCD components), and New Optics. Additionally, a joint venture with AmTRAN Technology Co., Ltd. was established in China.
• Legal Matters: The Board approved entering into a Plea Agreement with the U.S. Department of Justice (DOJ) in November 2008.

Outlook, Risks, and Management Commentary

Management Commentary: Management emphasized that despite the "difficult business environment," the company maintained profitability through cost innovation, purchasing cost reductions, and equipment effectiveness maximization ("Max Capa & Min Loss"). The company aims to reinforce its leadership in LCD technology and expand into solar energy and OLED markets.

Industry Risks:

• Cyclicality: The TFT-LCD industry is highly cyclical and capital-intensive, prone to volatility from supply-demand imbalances.
• Pricing Pressure: Average selling prices may decline due to technology advances and cost reductions, leading to fluctuations in gross margins.
• Customer Concentration: A substantial portion of sales is attributable to a limited number of end-brand customers; loss of these customers would significantly impact revenue.
• Raw Materials: Shortages of key materials or equipment lead times may arise due to industry-wide capacity expansion.

Corporate Governance Changes: The AGM agenda includes amending the Articles of Incorporation to broaden business objectives to include solar energy, updating references to the new Korean Capital Market Act, and increasing the maximum number of directors from 9 to 11.

Key Facts for Investor Verification

• DOJ Plea Agreement: Verify the specific terms and financial penalties associated with the Plea Agreement with the U.S. DOJ approved in November 2008.
• Dividend Payout: Confirm the final approval of the KRW 500 per share dividend and the record date for the March 2009 AGM.
• Related Party Transactions: Review the significant transaction volumes with subsidiaries (e.g., LG Display Taiwan, Germany) and affiliates (LG Electronics, LG Chem), which collectively represent a large portion of total sales and purchases.
• Capital Expenditure: Assess the financial impact of the ongoing construction of the P8 fab and the expansion of P6 and P7 facilities on future cash flows and debt levels.
• Market Share Trends: Note the decline in TV panel market share from 22.0% in 2007 to 18.1% in Q1-Q3 2008, while notebook and monitor shares increased.