-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FhBsdmnfK3ItgC0R9QUCtLuUn2c+5BriBs1ZirIBRxLD1oxzNp3kq1IuDG/L0s8n Rtqs54lYZJf7+o8H10AeBQ== 0001145549-03-001064.txt : 20030822 0001145549-03-001064.hdr.sgml : 20030822 20030821201744 ACCESSION NUMBER: 0001145549-03-001064 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030822 FILED AS OF DATE: 20030822 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SK TELECOM CO LTD CENTRAL INDEX KEY: 0001015650 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 999999999 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-04906 FILM NUMBER: 03861192 BUSINESS ADDRESS: STREET 1: 267 5-KA NAMDAEMUN-RO STREET 2: JUNG KU CITY: SEOUL KOREA STATE: M5 MAIL ADDRESS: STREET 1: 1R TEAM SK BLDG STREET 2: 99 SEORIM DONG CITY: SEOUL STATE: MO ZIP: 9999999999 FORMER COMPANY: FORMER CONFORMED NAME: KOREA MOBILE TELECOMMUNICATIONS CORP DATE OF NAME CHANGE: 19960530 6-K 1 u98652e6vk.txt FORM 6-K 1934 Act Registration No. 1-14418 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE MONTH OF AUGUST 2003 ------------------- SK TELECOM CO., LTD. (Translation of registrant's name into English) 99, Seorin-dong Jongro-gu Seoul, 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] (If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82- .) ================================================================================ This report contains (i) the press release dated July 31, 2003 of SK Telecom Co., Ltd. setting forth the non-consolidated results of operations of SK Telecom Co., Ltd. and its unaudited non-consolidated financial information as of and for its second quarter ended June 30, 2002 and 2003 prepared pursuant to and in accordance with Korean generally accepted accounting principles, or Korean GAAP, and (ii) the reconciliation of certain non-GAAP financial information to Korean GAAP pursuant to and in accordance with Regulation G. In this report on Form 6-K, unless the context indicates or otherwise requires, references to "we", "us", "our" or the "Company" shall mean SK Telecom Co., Ltd. and its consolidated subsidiaries, and references to "SK Telecom" shall mean SK Telecom Co., Ltd., but shall not include its consolidated subsidiaries. The financial information appearing in this report is stated in Korean Won. All references to "KRW," "Won" or "W" in this report are to the currency of Korea. Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding. This report contains "forward-looking statements", as defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, that are based on our current expectations, assumptions, estimates and projections about our company and our industry. The forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate", "believe", "estimate", "expect", "intend", "project", "should", and similar expressions. Those statements include, among other things, the discussions of our business outlook and expected performance as well as other statements that are not historical facts. We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could be incorrect. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances. 2 (i) PRESS RELEASE DATED JULY 31, 2003: JULY 31, 2003 2nd Quarter Earnings for the Period Ended June 30, 2003 THE INFORMATION CONTAINED HEREIN IS BASED ON KOREAN GAAP. IT IS UNAUDITED AND NON-CONSOLIDATED. (SK TELECOM LOGO) ================================================================================ SEOUL, KOREA, JULY 31, 2003 - SK TELECOM CO., LTD. (KSE: 17670, NYSE: SKM) ("SKT" OR "THE COMPANY"), THE LEADING WIRELESS TELECOMMUNICATIONS COMPANY IN KOREA, TODAY ANNOUNCED THE RESULTS OF ITS OPERATIONS FOR THE SECOND QUARTER ENDED JUNE 30, 2003. ================================================================================ This material contains forward-looking statements with respect to the financial condition, results of operations and business of SK Telecom and plans and objectives of the management of SK Telecom. Statements that are not historical facts, including statements about SK Telecom's beliefs and expectations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of SK Telecom to be materially different from any future results or performance expressed or implied by such forward-looking statements. SK Telecom does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this management presentation, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Such forward-looking statements were based on current plans, estimates and projections of SK Telecom and the political and economic environment in which SK Telecom will operate in the future, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and SK Telecom understates no obligation to update publicly any of them in light of new information or future events. Additional information concerning these and other risk factors are contained in SK Telecom's latest annual report on Form 20-F and in SK Telecom's other filings with The U.S. Securities and Exchange Commission (SEC). 3 CONTENTS I. FINANCIAL HIGHLIGHTS ................................................ 5 II. FINANCIAL RESULTS ................................................... 6 1. INCOME STATEMENT 2. CAPITAL EXPENDITURE 3. BALANCE SHEET III. OPERATING RESULT .................................................... 10 IV. APPENDIX (FINANCIAL STATEMENTS) ..................................... 11 V. IR CONTACTS ......................................................... 13
4 I. FINANCIAL HIGHLIGHTS o SUMMARY OF INCOME STATEMENT
- ------------------------------------------------------------------------ (KRW BN) Q2 03 Q1 03 CHANGE(%) Q2 02 CHANGE(%) - ------------------------------------------------------------------------ REVENUE 2,387 2,243 6% 2,113 13% - ------------------------------------------------------------------------ OPERATING EXPENSES 1,570 1,492 5% 1,407 12% - ------------------------------------------------------------------------ OPERATING INCOME 817 751 9% 705 16% - ------------------------------------------------------------------------ Operating Margin 34% 33% 33% - ------------------------------------------------------------------------ NON-OPERATING INCOME 102 49 108% 80 28% - ------------------------------------------------------------------------ NON-OPERATING EXPENSES 143 149 -4% 118 21% - ------------------------------------------------------------------------ ORDINARY INCOME 776 650 19% 667 16% - ------------------------------------------------------------------------ NET INCOME 548 449 22% 461 19% - ------------------------------------------------------------------------ Net Margin 23% 20% 22% - ------------------------------------------------------------------------ EBITDA 1) 1,194 1,094 9% 1,052 13% - ------------------------------------------------------------------------ EBITDA Margin 50% 49% 50% - ------------------------------------------------------------------------
1) EBITDA = Operating income + Depreciation + R&D related depreciation included in R&D expense o OTHER MAIN ITEMS
- ----------------------------------------------------------------------------- (KRW BN) Q2 03 Q1 03 CHANGE(%) Q2 02 CHANGE(%) - ----------------------------------------------------------------------------- WIRELESS INTERNET SALES 306 265 15% 160 91% - ----------------------------------------------------------------------------- % of Cellular Revenue 14% 13% 9% - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- MARKETING EXPENSES 391 357 10% 352 11% - ----------------------------------------------------------------------------- Marketing Commissions 300 264 14% 243 23% - ----------------------------------------------------------------------------- Advertising 91 93 -2% 108 -16% - ----------------------------------------------------------------------------- % of Revenue 16% 16% 17% - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- CAPITAL EXPENDITURE 330 174 90% 412 -20% - ----------------------------------------------------------------------------- % of Revenue 14% 8% 19% - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- INTEREST-BEARING DEBT 4,893 5,815 -16% 4,997 -2% - ----------------------------------------------------------------------------- Debt/Equity ratio (%) 89% 118% 86% - -----------------------------------------------------------------------------
5 II. FINANCIAL RESULTS 1. INCOME STATEMENT A. REVENUE
- ----------------------------------------------------------------------------- (KRW BN) Q2 03 Q1 03 CHANGE(%) Q2 02 CHANGE(%) - ----------------------------------------------------------------------------- SIGN-UP FEES 44 45 -3% 48 -9% - ----------------------------------------------------------------------------- MONTHLY FEES 722 718 1) 1% 698 4% - ----------------------------------------------------------------------------- VOICE REVENUE 1,054 955 1) 10% 939 12% - ----------------------------------------------------------------------------- CALL CHARGES 938 849 1) 10% 848 11% - ----------------------------------------------------------------------------- VAS AND OTHERS 115 105 10% 90 28% - ----------------------------------------------------------------------------- WIRELESS INTERNET SALES 306 265 15% 160 91% - ----------------------------------------------------------------------------- % of Cellular Revenue 14% 13% 9% - ----------------------------------------------------------------------------- TOTAL CELLULAR REVENUE 2,126 1,983 7% 1,845 15% - ----------------------------------------------------------------------------- INTERCONNECTION REVENUE 261 260 0% 268 -3% - ----------------------------------------------------------------------------- L-M 154 164 -6% 168 -8% - ----------------------------------------------------------------------------- M-M 107 96 11% 100 7% - ----------------------------------------------------------------------------- TOTAL REVENUE 2,387 2,243 6% 2,113 13% - -----------------------------------------------------------------------------
1) The revenue from "Free Tariff Scheme" was reflected in Monthly Fee in the previous quarter. Beginning 2nd quarter, this revenue will be reflected in Call Charge. As we have applied this change to the previous quarter retroactively, the figures for 1st quarter are different from the figures on 1st quarter earnings result material. 1) VOICE REVENUE - 10% increase QoQ due to the increase in subscribers for free tariff schemes and VAS NOTE) FREE TARIFF SCHEME - A tariff scheme which provide 8 to 11 hours of free service during weekend, holiday and late night when the call traffic is low at KRW 7,000 to 15,000 extra payment besides monthly fee. - Free Tariff Scheme
------------------------------------------- Q2 03 Q1 03 ------------------------------------------- REVENUE (KRW BN) 31.3 19.3 -------------------------------------------
2) WIRELESS INTERNET SALES - Due to the increase in Internet-enabled handsets and high-end handsets which generate higher wireless Internet ARPU (June, EV-DO, Color, 1X), wireless Internet sales increased 15% QoQ. Wireless Internet sales portion in total revenue excluding interconnection revenue steadily increased to 14% from 13% in the previous quarter. 3) INTERCONNECTION REVENUE - L-M: 6% QoQ decrease due to the KT's direct connection to HLR, which resulted in reduction in interconnection revenue. (KRW 41 / minute- > KRW 36 / minute). - M-M: 11% QoQ increase due to the increased MOU NOTE) KT'S DIRECT CONNECTION TO HLR(HOME LOCATION REGISTER) - In the past, when a land-line (KT) caller called mobile (SKT) receiver, KT had to transfer the call to SKT to locate the receiver, thereby KT had to use some section of SKT-owned land-line. However, since KT was allowed to connect to SKT's HLR directly beginning April, KT can now locate the receiver allowing it to use minimum amount of SKT line. Thus, the interconnection rate between SKT and KT has been adjusted. 6 B. OPERATING EXPENSES
- ------------------------------------------------------------------------------ (KRW BN) Q2 03 Q1 03 CHANGE(%) Q2 02 CHANGE(%) - ------------------------------------------------------------------------------ WAGE AND EMPLOYEE BENEFITS 69 124 -44% 67 3% - ------------------------------------------------------------------------------ COMMISSIONS 558 525 6% 453 23% - ------------------------------------------------------------------------------ MARKETING COMMISSIONS 300 264 14% 243 23% - ------------------------------------------------------------------------------ INITIAL COMMISSIONS 81 75 8% 55 48% - ------------------------------------------------------------------------------ MONTHLY COMMISSIONS 102 104 -2% 103 -1% - ------------------------------------------------------------------------------ RETENTION COMMISSIONS 117 85 38% 86 37% - ------------------------------------------------------------------------------ FEES 197 172 15% 174 13% - ------------------------------------------------------------------------------ OTHER COMMISSIONS 61 89 -32% 36 67% - ------------------------------------------------------------------------------ ADVERTISING 91 93 -2% 108 -16% - ------------------------------------------------------------------------------ DEPRECIATION 347 315 10% 326 6% - ------------------------------------------------------------------------------ NETWORK INTERCONNECTION 236 181 30% 194 21% - ------------------------------------------------------------------------------ M-M 136 121 13% 127 7% - ------------------------------------------------------------------------------ M-L 100 61 65% 68 48% - ------------------------------------------------------------------------------ LEASED LINE 76 73 5% 71 7% - ------------------------------------------------------------------------------ OTHER 1) 193 181 7% 187 3% - ------------------------------------------------------------------------------ TOTAL 1,570 1,492 5% 1,407 12% - ------------------------------------------------------------------------------
1) For details, please refer to income statements in appendix 1) WAGE AND EMPLOYEE BENEFITS - It was temporarily high in the previous quarter due to the payment of incentive bonus. Therefore, this quarter's wages decreased 44% QoQ. 2) COMMISSIONS - MARKETING COMMISSIONS: 14% increase QoQ due to the increased handset change and some promotional events - FEES: 15% increase QoQ due to the payment of consulting fee for the formation of sub-committees within the Board and the establishment of corporate innovation strategy. 3) DEPRECIATION - 10% increase QoQ due to the increase in depreciating assets. 4) NETWORK INTERCONNECTION - M-M: 13% increase QoQ due to the increased MOU. - M-L: 65% increase QoQ due to the share of KT114 directory service expense (KRW 40.6 bn for the loss from 1998~2001) NOTE) SHARE OF KT 114 EXPENSE - The loss from the KT 114 occurred from 1998~2001 was all reflected in this quarter - The share of the KT 114 expense after the year 2002 will be negotiated. However, the amount after 2002 is expected to be less due to upward adjustment of information fee and cost reduction due to the spin-off of the 114 information service division. 7 C. NON-OPERATING ITEMS
- ----------------------------------------------------------------------------------------------- (KRW BN) Q2 03 Q1 03 CHANGE(%) Q2 02 CHANGE(%) - ----------------------------------------------------------------------------------------------- NON-OPERATING INCOME 102 49 108% 80 28% - ----------------------------------------------------------------------------------------------- INTEREST INCOME 20 12 70% 13 58% - ----------------------------------------------------------------------------------------------- INCOMING FEES 32 27 19% 26 27% - ----------------------------------------------------------------------------------------------- OTHER 1) 49 10 400% 41 22% - ----------------------------------------------------------------------------------------------- NON-OPERATING EXPENSES 143 149 -4% 118 21% - ----------------------------------------------------------------------------------------------- INTEREST EXPENSES 101 87 16% 81 25% - ----------------------------------------------------------------------------------------------- DONATIONS 21 20 2% 20 5% - ----------------------------------------------------------------------------------------------- LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT 1 2 -66% 1 -46% - ----------------------------------------------------------------------------------------------- LOSS ON EQUITY METHOD 5 11 -58% 0 - - ----------------------------------------------------------------------------------------------- OTHER 1) 16 29 -48% 17 -12% - -----------------------------------------------------------------------------------------------
1) For details, please refer to income statements in appendix. 1) INTEREST INCOME - 70% increase QoQ due to the increase in quarterly average balance of cash & cash equivalent. 2) OTHER NON-OPERATION INCOME - 400% increase QoQ due to the dividend income from KT shares which were held by the Company as of December 31, 2002 and the increase in foreign translation gain from the Won currency appreciation (1,252.9 won - > 1,193.1 won) 3) INTEREST EXPENSES - 16% increase QoQ due to the increase in quarterly average balance of interest-bearing debt. 2. CAPITAL EXPENDITURE
- --------------------------------------------------------------------------- (KRW BN) Q2 03 Q1 03 CHANGE(%) Q2 02 CHANGE(%) - --------------------------------------------------------------------------- NETWORK 245 87 181% 385 -36% - --------------------------------------------------------------------------- 95 A/B 19 8 144% 36 -47% - --------------------------------------------------------------------------- CDMA 2000 1X 145 65 122% 313 -54% - --------------------------------------------------------------------------- BACKBONE AND OTHER 81 14 473% 35 128% - --------------------------------------------------------------------------- NON-NETWORK 84 86 -2% 27 214% - --------------------------------------------------------------------------- WIRELESS INTERNET 32 41 -23% 16 94% - --------------------------------------------------------------------------- GENERAL SUPPORTING 40 37 8% 11 282% - --------------------------------------------------------------------------- OTHERS 12 8 56% - - - --------------------------------------------------------------------------- TOTAL CAPEX 330 174 90% 412 -20% - ---------------------------------------------------------------------------
8 3. BALANCE SHEET
- ---------------------------------------------------------------------------- (KRW BN) JUN 03 MAR 03 CHANGE(%) - ---------------------------------------------------------------------------- TOTAL ASSETS 12,993 13,104 -1% - ---------------------------------------------------------------------------- CURRENT ASSETS 3,730 4,109 -9% - ---------------------------------------------------------------------------- CASH AND MARKETABLE SECURITIES 1,186 1,621 -27% - ---------------------------------------------------------------------------- INVESTMENT ASSETS 1,397 2,352 -41% - ---------------------------------------------------------------------------- PROPERTY AND EQUIPMENT 4,273 4,279 0% - ---------------------------------------------------------------------------- INTANGIBLE ASSETS 3,592 2,364 52% - ---------------------------------------------------------------------------- LIABILITIES 7,475 8,166 -8% - ---------------------------------------------------------------------------- CURRENT LIABILITIES 3,884 4,929 -21% - ---------------------------------------------------------------------------- SHORT-TERM BORROWINGS 839 1,691 -50% - ---------------------------------------------------------------------------- CURRENT PORTION OF LONG-TERM DEBT 1,300 1,140 14% - ---------------------------------------------------------------------------- LONG-TERM LIABILITIES 3,591 3,238 11% - ---------------------------------------------------------------------------- LONG-TERM DEBT 2,754 2,984 -8% - ---------------------------------------------------------------------------- SHAREHOLDERS' EQUITY 5,517 4,938 12% - ---------------------------------------------------------------------------- DEBT/EQUITY RATIO (%) 1) 89% 118% - ----------------------------------------------------------------------------
1) Debt/Equity Ratio = Interest-bearing Debt / Shareholders' Equity 1) CASH AND MARKETABLE SECURITIES - As of June 30, 2003, Cash and Marketable Securities included the remaining trust fund balance (KRW 345 bn) and the fund for 3% stock buyback which are currently ongoing. 2) INVESTMENT ASSETS - 41% decrease due to the decrease in investment securities (KRW 1 tn) from the merger with SK IMT. 3) INTANGIBLE ASSETS - 52% increase due to the accrual of frequency usage right (KRW 1.3 tn) from the merger with SK IMT. 4) SHAREHOLDERS' EQUITY - 12% increase due to the net income increase in this quarter and the adjustment because of the merger with SK IMT. 5) DEBT/EQUITY RATIO - Improved from 118% to 89% due to the use of cash coming from the ABS issuance and the merger with SK IMT to repay the interest-bearing debt. 9 III. OPERATING RESULT
- ------------------------------------------------------------------------------------------------------ Q2 03 Q1 03 CHANGE(%) Q2 02 CHANGE(%) - ------------------------------------------------------------------------------------------------------ SUBSCRIBERS ('000) 17,857 17,628 1% 16,463 8% - ------------------------------------------------------------------------------------------------------ NET ADDS 229 408 -44% 462 -50% - ------------------------------------------------------------------------------------------------------ ACTIVATIONS 910 945 -4% 1,014 -10% - ------------------------------------------------------------------------------------------------------ DEACTIVATIONS 681 537 27% 552 23% - ------------------------------------------------------------------------------------------------------ Monthly Churn Rate(%) 1.3% 1.0% 1.1% - ------------------------------------------------------------------------------------------------------ AVERAGE SUBSCRIBERS ('000) 17,743 17,424 2% 16,194 10% - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ MONTHLY ARPU (KRW) 44,841 42,895 5% 43,484 3% - ------------------------------------------------------------------------------------------------------ SIGN-UP FEE 829 868 -5% 997 -17% - ------------------------------------------------------------------------------------------------------ MONTHLY FEE & CALL CHARGE 31,198 29,980 4% 31,827 -2% - ------------------------------------------------------------------------------------------------------ VAS & OTHER 2,169 2,011 8% 1,855 17% - ------------------------------------------------------------------------------------------------------ WIRELESS INTERNET 5,743 5,068 13% 3,290 75% - ------------------------------------------------------------------------------------------------------ INTERCONNECTION 4,902 4,968 -1% 5,516 -11% - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ MOU - ------------------------------------------------------------------------------------------------------ OUTGOING 201 1) 186 8% 194 4% - ------------------------------------------------------------------------------------------------------ INCOMING 119 1) 112 6% 115 4% - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ SUBSCRIBER BY HANDSET FEATURE ('000) - ------------------------------------------------------------------------------------------------------ 1X(INCL. EV-DO) 12,375 11,173 11% 6,669 86% - ------------------------------------------------------------------------------------------------------ EV-DO(INCL. JUNE) 1,433 608 136% NA NA - ------------------------------------------------------------------------------------------------------ JUNE 829 393 111% NA NA - ------------------------------------------------------------------------------------------------------ COLOR 7,695 6,211 24% 2,062 273% - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ WIRELESS INTERNET ARPU BY HANDSET (KRW) 2) - ------------------------------------------------------------------------------------------------------ 2G 1,351 1,419 -5% 1,470 -8% - ------------------------------------------------------------------------------------------------------ 1X (EXCLUDING EV-DO) 5,462 5,655 -3% 5,473 0% - ------------------------------------------------------------------------------------------------------ COLOR 9,726 9,329 4% 9,135 6% - ------------------------------------------------------------------------------------------------------
1) May and June MOU are estimates. 2) Excludes others in wireless Internet sales such as financial enabler, PDA, VMT, Solution/Platform sales, etc. 10 IV. APPENDIX - INCOME STATEMENT
- ------------------------------------------------------------------------------------------------------------ (KRW MN) Q2 03 Q1 03 Q2 02 - ------------------------------------------------------------------------------------------------------------ REVENUE 2,386,829 2,242,746 2,112,530 - ------------------------------------------------------------------------------------------------------------ OPERATING EXPENSES 1,570,014 1,491,808 1,407,144 - ------------------------------------------------------------------------------------------------------------ WAGE AND EMPLOYEE BENEFITS 68,984 123,926 66,824 COMMISSIONS 557,577 525,085 453,409 ADVERTISING 91,280 92,696 108,102 DEPRECIATION 346,723 315,180 326,228 NETWORK INTERCONNECTION 235,946 181,112 194,386 LEASED LINE 76,383 72,894 71,195 R&D EXPENSES 47,050 47,784 33,329 RENT 34,227 30,644 30,338 FREQUENCY USAGE FEES 32,674 31,569 30,647 BAD DEBT 2,093 3,731 6,431 OTHERS 77,076 67,187 86,256 - ------------------------------------------------------------------------------------------------------------ OPERATING INCOME 816,815 750,938 705,386 - ------------------------------------------------------------------------------------------------------------ NON-OPERATING INCOME 101,655 48,691 79,543 - ------------------------------------------------------------------------------------------------------------ INTEREST INCOME 20,042 11,813 12,706 INCOMING FEES 32,404 27,082 25,566 GAIN ON DISPOSAL OF PROPERTY AND EQUIPMENT 440 276 292 GAIN ON EQUITY METHOD 0 0 4,065 FOREIGN EXCHANGE AND TRANSLATION GAINS 11,090 2,453 33,759 OTHER 37,678 7,067 3,155 - ------------------------------------------------------------------------------------------------------------ NON-OPERATING EXPENSES 142,516 149,479 118,195 - ------------------------------------------------------------------------------------------------------------ INTEREST EXPENSES 100,648 86,734 80,535 DONATIONS 20,562 20,102 19,540 LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT 739 2,194 1,374 LOSS ON EQUITY METHOD 4,777 11,405 - FOREIGN EXCHANGE AND TRANSLATION LOSS 224 11,796 3,189 LOSS ON IMPAIRMENT OF INVESTMENT SECURITIES 2,300 16,417 - LOSS ON DISPOSAL OF INVESTMENT ASSETS 102 77 1,743 OTHER 13,164 753 11,813 - ------------------------------------------------------------------------------------------------------------ ORDINARY INCOME 775,954 650,149 666,734 - ------------------------------------------------------------------------------------------------------------ INCOME BEFORE INCOME TAXES 775,954 650,154 666,734 - ------------------------------------------------------------------------------------------------------------ INCOME TAXES 227,783 201,480 205,754 - ------------------------------------------------------------------------------------------------------------ NET INCOME 548,171 448,674 460,979 - ------------------------------------------------------------------------------------------------------------
11 IV. APPENDIX - BALANCE SHEET
- ----------------------------------------------------------------------------------------------------------- (KRW MN) JUN 03 MAR 03 - ----------------------------------------------------------------------------------------------------------- TOTAL ASSETS 12,992,667 13,104,257 - ----------------------------------------------------------------------------------------------------------- CURRENT ASSETS 3,730,287 4,108,732 - ----------------------------------------------------------------------------------------------------------- CASH AND MARKETABLE SECURITIES 1,186,456 1,620,876 ACCOUNTS RECEIVABLE - TRADE 1,351,740 1,253,421 SHORT-TERM LOANS 25,720 27,640 ACCOUNTS RECEIVABLE - OTHER 1,006,839 1,103,879 INVENTORIES 6,668 9,872 OTHER 152,864 93,045 - ----------------------------------------------------------------------------------------------------------- INVESTMENT ASSETS 1,396,980 2,352,419 - ----------------------------------------------------------------------------------------------------------- LONG-TERM INVESTMENT SECURITIES 1,053,172 2,010,099 LONG-TERM LOANS 51,381 54,215 GUARANTEE DEPOSITS 238,132 240,170 OTHER 54,295 47,935 - ----------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT 4,272,990 4,279,040 - ----------------------------------------------------------------------------------------------------------- LAND 440,187 439,270 BUILDING AND FIXTURE 797,014 775,553 EQUIPMENT 2,437,817 2,499,356 CONSTRUCTION IN PROGRESS 265,465 233,958 OTHER 332,507 330,904 - ----------------------------------------------------------------------------------------------------------- INTANGIBLE ASSETS 3,592,410 2,364,066 - ----------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------- LIABILITIES 7,475,245 8,166,462 - ----------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES 3,884,009 4,928,846 - ----------------------------------------------------------------------------------------------------------- ACCOUNTS PAYABLE 664,114 903,446 SHORT-TERM BORROWINGS 838,669 1,691,326 INCOME TAXES PAYABLE 404,100 411,083 ACCRUED EXPENSES 431,718 359,974 CURRENT PORTION OF LONG-TERM DEBT 1,299,690 1,139,794 OTHER 245,718 423,223 - ----------------------------------------------------------------------------------------------------------- LONG-TERM LIABILITIES 3,591,237 3,237,617 - ----------------------------------------------------------------------------------------------------------- LONG-TERM DEBT 2,754,360 2,984,162 FACILITY DEPOSITS 43,676 45,249 ACCRUED SEVERANCE INDEMNITIES 67,391 55,448 OTHER 725,809 152,758 - ----------------------------------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY 5,517,422 4,937,794 - ----------------------------------------------------------------------------------------------------------- CAPITAL STOCK 44,639 44,576 CAPITAL SURPLUS 2,916,150 2,884,355 RETAINED EARNINGS 4,735,173 4,184,402 CAPITAL ADJUSTMENTS -2,178,540 -2,175,539 TREASURY STOCK -2,067,784 -2,047,087 UNREALIZED LOSS ON VALUATION OF LONG-TERM INVESTMENT SECURITIES -113,916 -131,322 STOCK OPTIONS 3,160 2,870 - -----------------------------------------------------------------------------------------------------------
12 V. IR CONTACTS
- ----------------------------------------------------------------------------------------------------------- IR OFFICE - ----------------------------------------------------------------------------------------------------------- MR. TAE-JIN PARK HEAD OF IR TEAM + 82-2) 2121-4212 TJPARK@SKTELECOM.COM MR. UK JANG MANAGER + 82-2) 2121-4215 UJANG@SKTELECOM.COM MR. WOO-JIN CHOI ASSISTANT MANAGER + 82-2) 2121-4554 CH8031@SKTELECOM.COM MR. HANNAH KIM ASSISTANT MANAGER + 82-2) 2121-4542 HANNAH@SKTELECOM.COM - -----------------------------------------------------------------------------------------------------------
THANK YOU. 13 (II) RECONCILIATION PURSUANT TO AND IN ACCORDANCE WITH REGULATION G: 1. FREE CASH FLOW. Our free cash flow target for 2003 is estimated to be approximately KRW 1.6 trillion. Reconciliation of free cash flow to operating income under Korean GAAP: ---------------------------------------------------------------------------------------- Operating Income * (1-tax rate) KRW 3.0 tn * (1-29.7%) ---------------------------------------------------------------------------------------- Depreciation expense in cash flow statement KRW 1.55 tn ---------------------------------------------------------------------------------------- Capital Expenditure (KRW 1.95 tn) ---------------------------------------------------------------------------------------- Change in net working capital (KRW 0.1 tn) ---------------------------------------------------------------------------------------- FREE CASH FLOW KRW 1.6 TN ----------------------------------------------------------------------------------------
2. EBITDA MARGIN TARGET. Our EBITDA margin target for 2003 is estimated to be approximately 48%. A. Reconciliation of EBITDA to operating income under Korean GAAP: ---------------------------------------------------------------------------------------- Operating Income KRW 3.0 tn ---------------------------------------------------------------------------------------- Depreciation expense in cash flow statement KRW 1.55 tn ---------------------------------------------------------------------------------------- EBITDA KRW 4.55 tn ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- REVENUE KRW 9.5 tn ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- EBITDA MARGIN 48% ----------------------------------------------------------------------------------------
B. Reconciliation of FY 2003 EBITDA to operating income under Korean GAAP
FY 2003 FIRST QUARTER EBITDA ---------------------------------------------------------------------------------------- Operating Income KRW 751 BN ---------------------------------------------------------------------------------------- Depreciation expense in cash flow statement KRW 343 BN ---------------------------------------------------------------------------------------- EBITDA KRW 1,094 BN ----------------------------------------------------------------------------------------
FY 2003 SECOND QUARTER EBITDA ---------------------------------------------------------------------------------------- Operating Income KRW 817 BN ---------------------------------------------------------------------------------------- Depreciation expense in cash flow statement KRW 377 BN ---------------------------------------------------------------------------------------- EBITDA KRW 1,194 BN ----------------------------------------------------------------------------------------
14 3. ASSUMPTIONS. With respect to our (i) estimate of free cash flow target for 2003 of approximately KRW 1.6 trillion and (ii) estimate of EBITDA margin target for 2003 of approximately 48%, we have made the following principal assumptions, among others: - We achieve our number of wireless subscribers target for 2003 of approximately 18.7 million. - The average revenues per user (excluding interconnection fees) for 2003 increases slightly. - We are not adversely affected by changes in the Ministry of Information and Communication's interconnection policies during 2003. - The number of 2.5G handset holders increases by approximately 50% during 2003. - The number of EV-DO subscribers increases to approximately 3.7 million by the end of 2003. - The number of color handset holders increases to approximately 10 million by the end of 2003. - The wireless market penetration rate in Korea is in the range of 72% to 73% by the end of 2003. - Our market share of the Korean wireless market increases to approximately 53% by the end of 2003. - Our capital expenditures for 2003 is approximately KRW 1.95 trillion. - Our depreciation cost for 2003 increases at a rate of approximately 15%. - Our marketing expenses for 2003 increases at a rate of approximately 5%. - Our accounts receivable for 2003 increases at a rate of approximately 10%. 4. ADDITIONAL FACTORS. In addition to the foregoing assumptions, important factors that could cause our actual results to differ materially from estimates or projections contained in the forward-looking statements of this report include: - the effects of competition in the Korean wireless market, including the possible introduction of new competitive services or technologies by our competitors; - the costs and business risks associated with providing new services and entering new markets necessary to provide wireless services; - any adverse change in the ratings afforded our debt securities by ratings agencies; - our ability to continue to attract and retain wireless subscribers; - our ability to improve our profitability and reduce our cash requirements; - uncertainties related to our strategic investments; 15 - the impact of any unusual items resulting from ongoing evaluations of our business strategies; - the possible impact of changes in political, economic or other factors such as monetary policy, legal and regulatory changes, or other external factors over which we have no control; and - other risks disclosed from time to time in our filings with the Securities and Exchange Commission ("SEC"). You should not place undue reliance on these forward-looking statements, which are based on current expectations and speak only as of the date of this report. We are not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring or existing after the date of this report. We provide a detailed discussion of risk factors in periodic SEC filings, including Form 20-F, and you are encouraged to review these filings. 16 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. SK TELECOM CO., LTD. BY: /S/ SUNG HAE CHO Name: Sung Hae Cho Title: Vice President IR Office Date: August 22, 2003 17 -----END PRIVACY-ENHANCED MESSAGE-----