Edgar Filing: LG Display Co., Ltd.

Form 6-K

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 March 2010

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

20 Yoido-dong, Youngdungpo-gu, Seoul 150-721, The Republic of 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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant 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

ANNUAL REPORT

(From January 1, 2009 to December 31, 2009)

THIS IS A TRANSLATION OF THE ANNUAL REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SUPERVISORY COMMISSION.

IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED FOR THE CONVENIENCE OF READERS.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A NON-CONSOLIDATED BASIS IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN KOREA, OR KOREAN GAAP, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES IN THIS DOCUMENT.

Contents


1.	Company		3
	A.	Name and Contact Information	3
	B.	Domestic Credit Rating	3
	C.	Capitalization	4
	D.	Voting Rights	5
	E.	Dividends	5

2.	Business		6
	A.	Business Overview	6
	B.	Industry	6
	C.	New Business	8

3.	Major Products and Raw Materials		10
	A.	Major products in 2009	10
	B.	Average selling price trend of major products	10
	C.	Major raw materials	11

4.	Production and Equipment		11
	A.	Production capacity and calculation	11
	B.	Production performance and utilization ratio	11
	C.	Investment plan	12

5.	Sales		12
	A.	Sales performance	12
	B.	Sales route and sales method	12

6.	Market Risks and Risk Management		13
	A.	Market Risks	13
	B.	Risk Management	14

7.	Derivative Contracts		14
	A.	Derivative Instruments	14
	B.	Hedge of fair value	14
	C.	Hedge of cash flows	15
	D.	Realized gains and losses	16

8.	Major Contracts		16

9.	Research & Development		17
	A.	Summary of R&D Expense	17
	B.	R&D Achievements	17

10.	Customer Service		26


11.	Intellectual property		26

12.	Environmental Matters		27

13.	Financial Information		28
	A.	Financial highlights (Based on Non-consolidated, Korean GAAP)	28
	B.	Financial highlights (Based on Consolidated, Korean GAAP)	29
	C.	Status of equity investment	30

14.	Audit Information		31
	A.	Audit Service	31
	B.	Non-audit Service	31

15.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
	A.	Risk relating to Forward-looking Statements	31
	B.	Financial Condition and Results of Operations	32

16.	Board of Directors		35
	A.	Independence of directors	35
	B.	Members of the board of directors	36
	C.	Committees of the board of directors	37

17.	Information Regarding Shares		37
	A.	Total number of shares	37
	B.	Shareholder list	37

18.	Directors and Employees		38
	A.	Directors	38
	B.	Employees	39

19.	Subsequent Event		39


Attachment:		1. Korean GAAP Non-consolidated Financial Statements
		2. Korean GAAP Consolidated Financial Statements

1. Company

A. Name and Contact Information

The name of our company is “EL-GI DISPLAY CHUSIK HOESA”, which shall be written in English as “LG Display Co., Ltd.”

Our principal executive offices are located at West Tower, LG Twin Towers, 20 Yoido-dong, Youngdungpo-gu, Seoul, Republic of Korea, 150-721, and our telephone number at that address is +82-2-3777-0978. Our website address is http://www.lgdisplay.com.

B. Domestic Credit Rating


Subject	Month of rating	Credit rating	Rating agency (Rating range)
Commercial Paper	January 2006	A1	National Information & Credit Evaluation, Inc. (A1 ~ D)
	June 2006	A1
	December 2006	A1
	June 2007	A1
	December 2007	A1
	September 2008	A1
	December 2008	A1

	June 2006	A1	Korea Investors Service, Inc. (A1 ~ D)
	January 2007	A1
	June 2007	A1
	December 2007	A1
	September 2008	A1
Corporate Debenture	June 2006	AA-	National Information & Credit Evaluation, Inc. (AAA ~ D)
	December 2006	A+
	June 2007	A+
	September 2008	A+
	July 2009	AA-
	October 2009	AA-

	June 2006	AA-	Korea Investors Service, Inc. (AAA ~ D)
	January 2007	A+
	June 2007	A+
	September 2008	A+
	July 2009	AA-
	December 2009	AA-

	October 2009	AA-	Korea Ratings, Inc. (AAA ~ D)
	December 2009	AA-	Korea Ratings, Inc. (AAA ~ D)

C. Capitalization

(1) Change in Capital Stock (as of December 31, 2009)


(Unit: Won, Share)

Date	Description	Change in number of common shares	Face amount per share
July 23, 2004	Offering*	33,600,000	5,000
September 8, 2004	Follow-on offering**	1,715,700	5,000
July 27, 2005	Follow-on offering***	32,500,000	5,000

ADSs offering: 24,960,000 shares (US$30 per share, US$15 per ADS)

Initial public offering in Korea: 8,640,000 shares ((Won)34,500 per share)

ADSs offering: 1,715,700 shares ((Won)34,500 per share) pursuant to the exercise of greenshoe option by the underwriters

***

ADSs offering: 32,500,000 shares (US$42.64 per share, US$21.32 per ADS)

(2) Convertible Bonds (as of March 12, 2010)


(Unit: US$, Share)

Item		Content
Issuing date		April 18, 2007

Maturity (Redemption date after put option exercise)		April 18, 2012 (April 18, 2010)

Face Amount		US$550,000,000

Offering method		Public offering

Conversion period		Convertible into shares of common stock during the period from April 19, 2008 to April 3, 2012

Conversion price		(Won)48,075 per share*

Conversion status	Number of shares already converted	None
	Number of convertible shares	10,680,811 shares if all are converted*

Remarks		- Registered form - Listed on Singapore Exchange

Conversion price was adjusted from (Won)49,070 to (Won)48,760 and the number of convertible shares was adjusted from 10,464,234 to 10,530,762 following the approval by the shareholders of a cash dividend of (Won)750 per share at the annual general meeting of shareholders on February 29, 2008. Conversion price was further adjusted from (Won)48,760 to (Won)48,251 and the number of shares issuable upon conversion was adjusted from 10,530,762 to 10,641,851 following the approval by the shareholders of a cash dividend of (Won)500 per share at the annual general meeting of shareholders on March 13, 2009. Conversion price was further adjusted from (Won)48,251 to (Won)48,075 and the number of shares issuable upon conversion was adjusted from 10,641,851 to 10,680,811 following the approval by the shareholders of a cash dividend of (Won)500 per share at the annual general meeting of shareholders on March 12, 2010.

D. Voting rights (as of December 31, 2009)


(Unit: share)

Description		Number of shares
1. Shares with voting rights [A-B]		357,815,700
A. Total shares issued		357,815,700
B. Shares without voting rights		—
2. Shares with restricted voting rights		—

Total number of shares with voting rights [1-2]		357,815,700

E. Dividends

At the annual general meeting of shareholders on March 12, 2010, our shareholders approved a cash dividend of (Won)500 per share of common stock.

Dividends during the recent three fiscal years


Description	2009	2008	2007
Par value (Won)	5,000	5,000	5,000
Net income (loss) (Million Won)	1,067,947	1,086,896	1,344,027
Earnings (Loss) per share (Won)	2,985	3,038	3,756
Total cash dividend amount (Million Won)	178,908	178,908	268,362
Total stock dividend amount (Million Won)	—	—	—
Cash dividend payout ratio (%)	16.8	16.5	20.0
Cash dividend yield (%)	1.3	2.2	1.6
Stock dividend yield (%)	—	—	—
Cash dividend per share (Won)	500	500	750
Stock dividend per share (Share)	—	—	—

Earnings per share is calculated based on par value of (Won)5,000 per share.

Earnings per share is calculated by dividing net income by weighted average number of common stock.

Cash dividend yield is the percentage that is derived by dividing cash dividend by the arithmetic average of the daily closing prices of our common stock during the one-week period ending two trading days prior to the closing of the register of shareholders for the purpose of determining the shareholders entitled to receive annual dividends.

2. Business

A. Business overview

We were incorporated in February 1985 under the laws of the Republic of Korea. LG Electronics and LG Semicon transferred their respective LCD business to us in 1998, and since then our business has been focused on the research, development, manufacture and sale of display panels applying technologies such as TFT-LCD, LTPS-LCD and OLED.

As of December 31, 2009, we operated fabrication facilities and module facilities in Paju and Gumi, Korea, an OLED facility in Gumi, Korea and a LCD research center in Paju, Korea. We have also established sales subsidiaries in the United States, Europe and Asia.

As of December 31, 2009, our business consisted of (i) the manufacture and sale of LCD panels, (ii) the manufacture and sale of OLED panels and (iii) the manufacture and sale of television sets that utilize our LCD panels. Because our OLED business represents only an extremely small part of our overall business, only our LCD business has been categorized as a reporting business segment. In addition, because our television sales business is operated by our affiliated company, we have not categorized our television sales business as a separate reporting business segment.

Financial highlights by business (based on non-consolidated, Korean GAAP)


(Unit: In billions of Won)

2009		LCD business
Sales Revenue		20,119
Gross Profit		1,821
Operating Profit		1,001

B. Industry

(1) Industry characteristics and growth potential

•

TFT-LCD technology is one of the widely used technologies in the manufacture of flat panel displays and the demand for flat panel displays is growing. The flat panel display industry is characterized by entry barriers due to rapidly evolving technology, capital-intensive characteristics, and the significant investments required to achieve economies of scale, among other factors. There is intense competition between the players within the industry and production capacity in the industry, including ours, is being continually increased.

•

The demand for LCD panels for notebook computers and desktop monitors has grown, to a degree, in tandem with the growth in the information technology industry. The demand for LCD panels for television sets has been growing as digital broadcasting is becoming more common and as LCD television has come to play an important role in the digital display market. In addition, markets for small- to medium-sized LCD panels, such as mobile phones, P-A/V, medical applications, automobile navigation systems and e-books, among others, have shown continued growth.

•

The average selling prices of LCD panels may continue to decline with time irrespective of general business cycles as a result of, among other factors, technology advancements and cost reductions.

(2) Cyclicality

•

The TFT-LCD business is highly cyclical. In spite of the increase in demand for products, this industry has experienced periodic volatility caused by imbalances between supply and demand due to capacity expansion within the industry.

•

Intense competition and expectations of demand growth may lead panel manufacturers to invest in manufacturing capacity on similar schedules, resulting in a surge in capacity when production is ramped up at new fabrication facilities.

•

During such surges in capacity growth, the average selling prices of display panels may decline. Conversely, demand surges and fluctuations in the supply chain may lead to price increases.

(3) Market Condition

•

The TFT-LCD industry is highly competitive due largely to additional capacity expansion driven by TFT-LCD panel makers.

•

Most TFT-LCD panel makers are located in Asia.

a. Korea: LG Display, Samsung Electronics (including a joint venture between Samsung Electronics and Sony Corporation), Hydis Technologies

b. Taiwan: AU Optronics, Chi Mei Optoelectronics, CPT, Hannstar etc.

c. Japan: Sharp, IPS-Alpha, etc.

d. China: SVA-NEC, BOE-OT, etc.

(4) Market shares

•

Our worldwide market share for large-sized TFT-LCD panels (10-inch or larger) based on revenue is as follows:


	2009		2008		2007
Panels for Notebook Computers	30.3	%**	29.6	%**	28.5	%
Panels for Monitors	23.9	%	17.7	%	15.6	%
Panels for Televisions	24.4	%	19.4	%	22.0	%
Total	25.2	%	20.6	%	20.4	%

Source: DisplaySearch February 2010

Includes panels for netbooks.

(5) Competitiveness

•

Our ability to compete successfully depends on factors both within and outside our control, including product pricing, our relationship with customers, successful and timely investment and product development, cost competitiveness, success in marketing to our end-brand customers, component and raw material supply costs, foreign exchange rates and general economic and industry conditions.

•

In order to compete effectively, it is critical to be cost competitive and maintain stable and long-term relationships with customers which will enable us to be profitable even in a buyer’s market.

•

A substantial portion of our sales is attributable to a limited number of end-brand customers and their designated system integrators. The loss of these end-brand customers, as a result of customers entering into strategic supplier arrangements with our competitors or otherwise, would result in reduced sales.

•

Developing new products and technologies that can be differentiated from those of our competitors is critical to the success of our business. It is important that we take active measures to protect our intellectual property internationally by obtaining patents and undertaking monitoring activities in our major markets. It is also necessary to recruit and retain experienced key managerial personnel and skilled line operators.

•

We reinforced our position as a leader in LCD technology by developing an ultra slim LCD module for 47-inch LCD televisions that is sturdy and provides high-quality images, a large three-dimensional multi-vision LCD panel which does not require special viewing glasses, one of the world’s most energy efficient LCD panels for 32-inch LCD televisions that uses less than 1 watt per inch, a 47-inch digital photo television which can utilize its standby power to display digital pictures and the world’s first Trumotion 480Hz LCD panel which refreshes 480 frames per second to substantially decrease afterimage and provide viewers with high-quality images that cause less eye fatigue.

•

Moreover, we formed strategic alliances or entered into long-term sales contracts with major global firms such as Dell, Hewlett Packard and Kodak of the United States and Japan’s Toshiba, among others, to secure customers and expand partnerships for technology development. In January 2009, we entered into a long term supply agreement with Apple Inc. to supply display panels to Apple Inc. for five years.

C. New business

•

In October 2007, we decided to invest in an 8th generation fabrication facility (P8) to expand our production capacity in line with the growing large-sized LCD television market. The construction of P8 has been completed and mass production at P8 commenced in March 2009. In July 2008, we decided to invest in a 6th generation fabrication facility (P6E) to expand our production capacity. The construction of P6E has been completed and mass production at P6E commenced in April 2009.

•

We also plan to strengthen our market position in future display technologies by accelerating the development of flexible display technologies and leading the LED backlight LCD market.

•

In order to facilitate a cooperative purchasing relationship with HannStar Display Corporation (HannStar), a company that manufactures TFT-LCD panels in Taiwan, in February 2008, we purchased 180 million shares of preferred stock of HannStar at a purchase price of NT$3,170,250,000. The preferred shares mature in three years and are convertible into shares of common stock of HannStar.

•

We are making an effort to increase our competitiveness by forming cooperative relationships with suppliers and purchasers of our products. As part of this effort, in June 2008, we purchased 2,037,204 shares of AVACO Co., Ltd., which produces sputters, a core equipment for LCD production, at a purchase price of (Won)6.2 billion and in May 2008, we purchased 1,008,875 shares of TLI Inc., which produces core LCD panel components such as timing controllers and driver integrated circuits, at a purchase price of (Won)14.1 billion. In July 2008, we purchased 6,850,000 shares of common stock of New Optics Ltd. at a purchase price of (Won)9.7 billion. In addition, in February 2009, we purchased 3,000,000 shares of common stock of ADP Engineering Co., Ltd. at a purchase price of (Won)6.3 billion. In May 2009, we purchased 6,800,000 shares of common stock of Wooree LED Co., Ltd. at a purchase price of (Won)11.9 billion. In November 2009, we purchased 34,125,061 shares of common stock of RPO Inc. at a purchase price of US$12.3 million. In November 2009, we purchased TWD212.5 million in convertible bonds from Everlight Electronics Co., Ltd. In addition, in December 2009, we purchased 420,000 global depositary receipts of Prime View International Co., Ltd. at a purchase price of US$9.9 million. By promoting strategic relationships with equipment and parts suppliers, which enables us to obtain a stable source of supply of equipment and parts at competitive prices, we have strengthened our competitive position in the LCD business.

•

In July 2008, we and Skyworth-RGB Electronics Co., Ltd. founded a research and development joint venture corporation with a registered capital of CNY 50 million in China.

•

In October 2008, we established a joint venture company with AmTRAN Technology Co., Ltd., a Taiwan corporation. The joint venture company will supply both parties with TFT-LCD modules and TFT-LCD televisions. Through the establishment of this joint venture, we are able to further expand our customer base by securing a long-term stable panel dealer. It also allows us to produce LCD modules and LCD television sets in a single factory, which enables us to provide our customers with products that are competitive both in terms of technology and price.

•

We are making an effort to strengthen our competitiveness in the solar cell business, which is emerging as a future growth engine. As part of this effort, in June 2009, we purchased 933,332 shares of common stock of Dynamic Solar Design Co., Ltd. at a purchase price of (Won)6.1 billion. Dynamic Solar Design Co., Ltd. produces equipment for the solar cell business.

•

As part of our strategy to expand our production capacity overseas, in November 2009, we signed an investment agreement and a joint venture agreement with the City of Guangzhou, China, to build an eighth-generation panel fabrication facility in China.

•

In December 2009, certain LG affiliates and we entered into a joint venture investment agreement and established a joint venture company, Global OLED Technology LLC, for purposes of managing the patent assets relating to OLED technology that we acquired from Eastman Kodak Company in December 2009. We invested (Won)72.3 billion in return for a 49% equity interest in the joint venture company.

•

In December 2009, we invested (Won)1.8 billion and acquired a 30.6% limited partnership interest in LB Gemini New Growth Fund No.16. Under the limited partnership agreement, we have agreed to invest a total amount of (Won)30 billion in the fund. By becoming a limited partner of this fund, our aim is to seek direct investment opportunities as well as to receive benefits from the indirect investment.

•

In July 2009, in order to expand our back-end module assembly capacity for liquid crystal display production, we entered into a stock purchase agreement with LG Electronics Inc. and LG Electronics (China) Co., Ltd. to purchase all of the shares of LG Electronics (Nanjing) Plasma Co., Ltd. at a purchase price of (Won)3.5 billion. Pursuant to the terms of such transaction, in December 2009, we acquired all of the equity interests of LG Electronics (Nanjing) Plasma Co., Ltd.

3. Major Products and Raw Materials

A. Major products in 2009

We manufacture TFT-LCD panels, of which a significant majority is exported overseas.


(Unit: In billions of Won)

Business area	Sales types	Items (Market)	Specific use	Major trademark	Sales (%)
TFT-LCD	Product/ Service/ Other Sales	TFT-LCD (Overseas)	Panels for Notebook Computer, Monitor, Television, etc	LG Display	19,172 (95.3%	)
TFT-LCD	Product/ Service/ Other Sales	TFT-LCD (Korea*)	Panels for Notebook Computer, Monitor, Television, etc	LG Display	947 (4.7%	)
Total					20,119 (100%	)

Including local export.

Period: January 1, 2009 ~ December 31, 2009.

B. Average selling price trend of major products

The average selling prices of LCD panels have decreased due to oversupply for LCD panels. The average selling prices of LCD panels are expected to continue to fluctuate due to imbalances in the supply and demand for LCD panels.


(Unit: US$ / m²)

Description	2009 Q4	2009 Q3	2009 Q2	2009 Q1
TFT-LCD panel	809	833	739	669

Semi-finished products in the cell process have been excluded.

Quarterly average selling price per square meter of net display area shipped

***

On a consolidated basis

C. Major raw materials

Prices of major raw materials depend on fluctuations in supply and demand in the market as well as on change in size and quantity of raw materials due to the increased production of large-sized panels.


(Unit: In billions of Won)

Business area	Purchase types	Items	Specific use	Purchase price	Ratio (%)		Suppliers
TFT-LCD	Raw Materials	Glass	LCD panel manufacturing	3,592	26.73	%	Samsung Corning Precision Glass Co., Ltd., Nippon Electric Glass Co., Ltd., etc.
		Backlight		3,681	27.39	%	Heesung Electronics Ltd., etc.
		Polarizer		1,836	13.67	%	LG Chem., etc.
		Others		4,328	32.21	%	-
Total				13,437	100	%	-

Period: January 1, 2009 ~ December 31, 2009

4. Production and Equipment

A. Production capacity and calculation

(1) Calculation method of production capacity

Year: Maximum monthly input capacity during the year x number of months (12 months).

(2) Production capacity


(Unit : 1,000 Glass sheets)

Business area	Items	Business place	2009	2008	2007
TFT-LCD	TFT-LCD	Gumi, Paju	15,003	12,492	11,544

B. Production performance and utilization ratio

(1) Production performance


(Unit: 1,000 Glass sheets)

Business area	Items	Business place	2009	2008	2007
TFT-LCD	TFT-LCD	Gumi, Paju	12,860	11,042	10,182

(2) Utilization Ratio


(Unit: Hours)

Business place (area)	Available working hours of 2009	Actual working hours of 2009	Average utilization ratio
Gumi (TFT-LCD)	8,760 (24 hours x 365 days)	8,707 (24 hours x 362.8 days)	99.4	%
Paju (TFT-LCD)	8,760 (24 hours x 365 days)	8,748 (24 hours x 364.5 days)	99.9	%

C. Investment plan

In connection with our strategy to expand our TFT-LCD production capacity, we estimate that we will incur capital expenditures of approximately (Won)4 trillion, on a consolidated basis, for the expansion of existing production lines and the construction of new facilities. Such amount is subject to change depending on business conditions and market environment.

5. Sales

A. Sales performance


(Unit: In billions of Won)

Business area	Sales types	Items (Market)		2009	2008	2007
TFT-LCD	Products, etc.	TFT-LCD	Overseas	19,172	14,801	13,137
			Korea*	947	1,064	1,026
			Total	20,119	15,865	14,163

Includes local export.

B. Sales route and sales method

(1) Sales organization

•

As of December 31, 2009, each of our IT Business Unit, Television Business Unit and Mobile/OLED Business Unit had individual sales and customer support functions.

•

Sales subsidiaries in the United States, Germany, Japan, Taiwan, Singapore and China (Shanghai and Shenzhen) perform sales activities and provide local technical support to customers.

(2) Sales route

One of the following:

•

LG Display HQ g Overseas subsidiaries (USA/Germany/Japan/Taiwan/Singapore/China (Shanghai and Shenzhen)), etc. g System integrators, Branded customers g End users

•

LG Display HQ g System integrators, Branded customers g End users

(3) Sales methods and sales terms

•

Direct sales and sales through overseas subsidiaries, etc. Sales terms are subject to change depending on the fluctuation in the supply and demand of LCD panels

(4) Sales strategy

•

To secure stable sales to major personal computer makers and the leading consumer electronics makers globally

•

To increase sales of premium notebook computer products, to strengthen sales of the larger size and high-end monitor segment and to lead the large and wide LCD television market including in the category of full-high definition 120Hz television monitors

•

To diversify our market in the mobile business segment, including products such as mobile phone, P-A/V, automobile navigation systems, e-book, aircraft instrumentation and medical diagnostic equipment, etc.

(5) Purchase Orders

•

Customers generally place purchase orders with us one month prior to delivery. Our customary practice for procuring orders from our customers and delivering our products to such customers is as follows:

•

Receive order from customer (overseas sales subsidiaries, etc.) g Headquarter is notified g Manufacture product g Ship product (overseas sales subsidiaries, etc.) g Sell product (overseas sales subsidiaries, etc.)

6. Market Risks and Risk Management

A. Market Risks

Our industry continues to experience steady declines in the average selling prices of display panels irrespective of cyclical fluctuations in the industry, and our margins would be adversely impacted if prices decrease faster than we are able to reduce our costs.

The TFT-LCD industry is highly competitive. We have experienced pressure on the prices and margins of our major products due largely to additional industry capacity from panel makers in Korea, Taiwan, China and Japan. Our main competitors in the industry include Samsung Electronics, Infovision, Hydis Technologies, AU Optronics, Chi Mei Optoelectronics, Chunghwa Picture Tubes, HannStar, Innolux, SVA-NEC, BOE-OT, Sharp, Hitachi, TMDisplay, Mitsubishi, Sony and IPS-Alpha.

Our ability to compete successfully depends on factors both within and outside our control, including product pricing, performance and reliability, successful and timely investment and product development, success or failure of our end-brand customers in marketing their brands and products, component and raw material supply costs, and general economic and industry conditions. We cannot provide assurance that we will be able to compete successfully with our competitors on these fronts and, as a result, we may be unable to sustain our current market position.

Our results of operations are subject to exchange rate fluctuations. To the extent that we incur costs in one currency and generate sales in a different currency, our profit margins may be affected by changes in the exchange rates between the two currencies. Our sales of display panels are denominated mainly in U.S. dollars, whereas our purchases of raw materials are denominated mainly in U.S. dollars and Japanese Yen. Our risk management policy regarding foreign currency risk is to minimize the impact of foreign currency fluctuations on our foreign currency denominated assets and liabilities.

B. Risk Management

The average selling prices of display panels have declined in general and could continue to decline with time irrespective of industry-wide cyclical fluctuations. Certain contributing factors for this decline will be beyond our ability to control and manage. However, in anticipation of such price decline we have continued to develop new technologies and have implemented various cost reduction measures. In addition, in order to manage our risk against foreign currency fluctuations, we have entered into cross-currency interest rate swap contracts and foreign currency forward contracts.

7. Derivative contracts

A. Derivative Instruments

Derivative instruments used by us for hedging purposes as of December 31, 2009 are as follows:


Hedging purpose		Derivative instrument
Hedge of fair value		Foreign currency forwards

Hedge of cash flows		Cross currency swap
		Interest rate swap

B. Hedge of fair value

We enter into foreign currency forward contracts to manage the exposure to changes in the value of foreign currency denominated accounts receivable and accounts payable in accordance with its foreign currency risk management policy. Hedge accounting is not applied to the abovementioned derivatives.

(1) Foreign currency forward contracts

Details of foreign currency forwards outstanding as of December 31, 2009 are as follows:


(In millions of Won and US$, except forward rate)

Bank	Maturity date	Selling		Buying		Forward rate
UBS and 8 others	January 22, 2010 ~ February 26, 2010	US$	175	(Won)	207,276	(Won)1,177.0:US$1 ~ (Won)1,200.5:US$1

(2) Unrealized gains and losses

Unrealized gains and losses related to the above derivatives as of December 31, 2009 are as follows:


(In millions of Won)

Type	Unrealized gains		Unrealized losses
Foreign Currency Forwards	(Won)	2,674	—

The unrealized gains and losses are charged to operations as gains and losses on foreign currency translation for the year ended December 31, 2009.

C. Hedge of cash flows

Details of our derivative instruments related to hedge of cash flows from changes in foreign currency exchange rates and interest rates related to floating rate debt as of December 31, 2009 are as follows:

(1) Cross Currency Swap

In 2009, we early settled our two floating to fixed cross currency swaps in the amount of US$100 million and US$50 million, respectively. As a result, as of December 31, 2009, we had no cross currency swaps outstanding. Net unrealized gains and losses, net of the related deferred tax effects, incurred prior to the early settlement of the cross currency swaps were recorded as accumulated other comprehensive income.

In relation to the above-mentioned cross currency swap, unrealized losses with present value of (Won)4,523 million recorded as accumulated other comprehensive income are expected to be charged to operations as losses within twelve months of December 31, 2009.

(2) Interest Rate Swap


(In millions of US$, except forward rate)

Bank	Maturity date	Contract amount		Contract rate

Standard Chartered First Bank Korea	May 24, 2010	US$	100	Receiving floating rate	6-month LIBOR
Standard Chartered First Bank Korea	May 24, 2010	US$	100	Paying fixed rate	5.644	%

Net unrealized gains and losses, net of the related deferred tax effects, were recorded as accumulated other comprehensive income.

In relation to the above-mentioned interest rate swap, unrealized losses with present value of (Won)3,047 million recorded as accumulated other comprehensive income are expected to be charged to operations as losses within twelve months of December 31, 2009.

(3) Unrealized gains and losses

Unrealized gains and losses, before tax, related to hedge of cash flows as of December 31, 2009 are as follows:


(In millions of Won)

Type	Unrealized gains	Unrealized losses	Cash flow hedge requirements
Cross currency swap	—	8,144	Fulfilled

Interest rate swap	—	3,047	Fulfilled

D. Realized gains and losses

Realized gains and losses related to derivative instruments for the year ended December 31, 2009 are as follows:


(In millions of Won)

Hedge purpose	Type	Transaction gains	Transaction losses
Cash flow hedge	Cross currency swap	55	13,645

Cash flow hedge	Interest Rate Swap	—	5,422

Cash flow hedge	Foreign currency forwards	—	2,534

Fair value hedge	Foreign currency forwards	52,350	52,991

8. Major contracts

•

January 2009: We entered into a long-term supply agreement with Apple Inc. to supply LCD panels to Apple Inc. for 5 years. In connection with the Agreement, we received long-term advances from Apple Inc. in the amount of US$500,000,000 in January 2009 which will be offset as the consideration for products supplied to Apple Inc.

9. Research & Development

A. Summary of R&D Expense


(Unit: In millions of Won)

Account		2009		2008		2007
Material Cost		400,467		302,445		246,577
Labor Cost		191,507		128,041		110,586
Depreciation Expense		89,459		21,679		22,516
Others		92,905		49,027		34,737
Total R&D Expense		774,338		501,192		414,416

Accounting Treatment	Selling & Administrative Expenses	168,081		148,037		106,082
Accounting Treatment	Manufacturing Cost	606,257		353,155		308,334
R&D Expense / Sales Ratio [Total R&D Expense÷Sales for the period×100]		3.8	%	3.2	%	2.9	%

B. R&D achievements

[Achievements in 2007]

1) Development of first Poland model

•

32-inch HD model

2) Development of socket type backlight model

•

42-inch FHD model

•

47-inch HD/FHD model

3) Development of new concept backlight model

•

Development of 32-inch HD model

•

42/47-inch model under development

4) Development of interlace image sticking free technology and model

•

Improvement of low picture quality caused by television interlace signals

5) Development of TFT-LCD with ODF (One Drop Filling) for mobile phone application

•

Our first ODF model for mobile phone application (1.52 inch)

6) Development of GIP (Gate in Panel) application model 15XGA

•

Removal of gate drive integrated circuits: 3ea g 0ea

•

Reduction in net material costs and shortening of assembly process

7) 24-inch TN (92%) monitor model development

•

The world’s first large-size panel TN application

•

Realization of 92% high color gamut on the world’s largest TN panel

8) 15.4-inch LED backlight applied model development

•

The world’s first 15.4-inch wide LED-applied display panel for notebook computers

•

The world’s largest LED-applied panel for notebook computers

9) Development of FHD 120Hz display panel

•

37- to 47-inch FHD model

10) Development of backlight localization model

•

32-inch HD model

11) Development of enhanced Dynamic Contrast Ratio technology

•

32-inch HD model

•

Enhanced from 5000:1 to 10000:1

12) Development of technology that improves panel transmittance

•

Expected to be applied to new models

13) Development of THM (through-hole mounting) technology and model

•

37- to 47-inch model

•

Providing more mounting options to users

14) Development of the world’s first DRD (Double Rate Driving) technology-applied model

•

Reduction in source drive integrated circuits: 6ea g 3ea

•

Reduction in net material costs and shortening of assembly process

15) COG (Chip On Panel) applied model development

•

Development of thin and light LCD panels made possible by flat type structure

16) 26-inch/30-inch IPS 102% monitor model development

•

Development of 26-inch/30-inch IPS model that can realize 102% wide color gamut

17) 2.4-inch narrow bezel for Mobile Display

•

The borders on the left and right sides of this 2.4-inch qVGA-resolution (240RGB×320) LCD panel measure just 1mm each. Most a-Si TFT LCD panels currently produced generally have borders measuring closer to 2mm

18) Development of 6-inch Electrophoretic Display Product (EDP) to be used in e-books. The first EPD product for LG Display

•

The first EDP to be developed and launched for e-books, the 6-inch SVGA-resolution (800RGBX600) EDP will be supplied to SONY

[Achievements in 2008]

19) 42FHD Ultra-Slim LCD television development

•

Development of ultra-slim (19.8mm in thickness) 42-inch television panel

20) 37FHD COF adoption LCD television development

•

Cost reduction with TCP g COF change: $2.4 (as of March 2008)

21) CCFL scanning backlight technology development

•

Achieve 6ms MPRT from 8ms

22) 24WUXGA monitor model development applying RGB LED backlight

•

High color gamut (NTSC > 105%), color depth (10 bit)

23) 13.3-inch notebook computer model development applying LED backlight

•

Thin & Light model development applying LED backlight and COG technology

(3.5mm in thickness, 275g in weight)

24) IPS GIP technology development

•

Developed LCD industry’s first WUXGA GIP technology in wide view mode area (IPS, VA)

•

Comparative advantage in cost & transmittance over VA

25) Notebook computer model development applying RGB LED backlight

•

High color gamut (100%) notebook computer model development applied RGB LED backlight

26) Free form LCD development (Elliptical, Circle)

•

Development of the world’s largest 6-inch elliptical and 1.4-inch circular-shaped LCD panels

•

Developing non-traditional shaped displays by applying (i) error-free, cutting-edge techniques to overcome technical limitations in making curved LCD panels, (ii) accumulated panel design knowledge and (iii) unique screen information processing algorithm

•

Potential applications of the elliptical-shaped LCD panels include digital photo frame, as well as instrument panels for automobiles and home electronics. The circular LCD panel is expected to make a huge impact in the design of small digital devices like mobile phones, watches and gaming devices.

27) 42HD power consumption saving technology development

•

Power consumption reduction using lamp mura coverage technology which reduces the number of lamps used for B/L from 18pcs(160W) to 9pcs(80W) in case of 42-inch HD LCD panels

28) New liquid crystal development

•

CR: Up 5% compared with the MP level

•

Material cost is similar to the MP material

29) New AG Polarizer development

•

New Polarizer which has a low CR drop ratio under bright room condition

•

CR drop ratio under 1,500lux compared with dark room condition : 82% g 67%

30) PSM (Potential Sharing Method) technology development

(Improves the Yogore mura characteristics by applying a different electric circuit driving method)

•

The time for Yogore mura occurrence delayed by more than 50%

: Black line 1level base, 552Hrs, 720Hrs g 1,392Hrs, 2,064Hrsh

31) LED backlight 47FHD television model in development

•

Development of next generation light source which enables realization of ultra slim LCD panels

32) 24WUXGA monitor model development applying RGB LED backlight

•

Our first green & slim monitor model development applying white LED backlight (thickness 18.3mm)

•

Our first display port interface type monitor

33) Line up of aspect ratio 16:9 wide models (185W, 23W, 27W)

•

16:9 models provide for better productivity and larger contents area than existing 16:10 models

•

Supports HD or FHD that are compatible with television applications

•

Development of our first 27W size model

34) Power consumption saving monitor model development

•

Reduces power consumption by 40% by decreasing the number of B/L lamps from 4pcs to 2pcs (17SXGA, 19SXGA, 185WXGA, 19WXGA+. 22WSXGA+)

35) Notebook model development applying VIC (Viewing Image Control) technology

•

Unlike existing models which use external polarizer attachments to adjust viewing angles, the VIC technology allows for the adjustment to be controlled by the LCD panel itself. (Wide viewing angle « Narrow viewing angle)

36) Notebook model development applying 0.3t glass

•

Thin & Light model development applying 0.3t glass

37) 8.9-inch small-sized notebook (netbook) model development

•

Development of minimum size notebook model for improved portability

38) New aspect ratio 16:9 notebook model development

•

Existing aspect ratios: 16:10, 4:3

•

New aspect ratio 16:9, 15.6-inch notebook model development

39) Development of highest resolution for mobile application that uses the a-Si method.

•

Development of the world’s first 3-inch WVGA LCD panels (300ppi)

40) 42FHD super narrow bezel LCD television development

•

Development of narrow bezel (10.0mm in metal bezel) 42-inch television panel

41) 47FHD slim depth & narrow bezel LCD television development

•

Development of slim (20.8mm in thickness) & narrow bezel (14.0mm in metal bezel) 47-inch television panel

42) Display port development

•

Securing the next generation Interface technology that will replace the current LVDS interface: Decreases the number of connector pins from 91pin (51+41) to 30pin and improves EMI characteristics

43) LCM rotation circuit development

•

Increases the design flexibility of television sets by using a 180° screen rotation function

44) Small- to medium-sized television model development

•

To meet increased demand for secondary television sets

•

19/22/26 inch model development

45) 55FHD television model development

•

Development of 55-inch (a new category) television panel applying scanning B/L technology

46) Development of television model applying GIP+TRD technology

•

Development of 32-inch and 26-inch HD television applying GIP+TRD technology

47) One PCB structure development

•

Achieving cost reduction by combining Source PCB with Control PCB: $1.94®$1.1

48) 42FHD Gate Single Bank technology development

•

Reduction in gate driver integrated circuits by applying 42FHD Gate Single Bank technology: 8ea ® 4ea

49) 22-inch WSXGA+ model development for Economy IPS Monitor

•

Development of the world’s first Economy IPS 22-inch WSXGA+ model

•

Achieving cost competitiveness by applying various cost reduction technologies, including DBEF-D sheet deletion

50) 21.5-inch TN FHD model development applying 960ch source driver integrated circuits chip

•

Development of LG Display’s first 21.5-inch wide-format TN FHD model

•

Increased cost competitiveness by applying 960ch source driver integrated circuits chip, which reduces the number of integrated circuits: 8ea ® 6ea

51) 27-inch TN FHD model development applying BDI (Black Data Insertion) technology

•

Development of LG Display’s first 27-inch wide-format TN FHD model that applies BDI technology, which removes motion picture afterimages

•

Applying CCA (Color Compensation Algorism) technology that enables the display of superior color tone

•

Achieving 16:9 spect ratio, more than 2.07 million pixel and FHD Resolution

52) a-Si TFT based 3-inch DOD AMOLED technology development

•

Development of the world’s first 3-inch AMOLED applying a-Si TFT and DOD Structure

•

Possible to use prior LCD infrastructure (a-SI TFT) to develop AMOLED

53) Development of AMOLED applying new crystallization (A-SPC) technology

•

Development of the world’s first AMOLED applying non-laser crystallization method (A-SPC)

•

Development of the world’s largest AMOLED television (15-inch HD)

[Achievements in 2009]

54) Developments of 15.6-inch, 18.5-inch HD monitors for emerging market

•

Achieving cost reduction by focusing on basic functions and by applying GIP and DRD

55) Development of 22-inch WSXGA+ monitor applying White LED backlight

•

Development of our first environmentally friendly slim model (14.5mm in thickness)

•

Reduces power consumption by 47% compared to conventional CCFL model by applying White LED backlight

56) Development of 24-inch WUXGA+ monitor applying GIP

•

Development of the world’s first monitor applying IPS GIP technology

•

Increased cost competitiveness by applying 960ch source driver integrated circuits chip, which reduces the number of integrated circuits: 8ea ® 6ea

57) Development of 55/47/42-inch FHD LED models

•

Development of “Direct thicker” LED model MP

•

Realization of TM240Hz

58) 240Hz driving technology development

•

Development of the world’s first 1 Gate 1 Drain 240Hz driving technology

59) Development of low voltage liquid crystal development

•

Improving contrast ratio by 2.7%

•

Decreases voltage used in liquid crystals reducing circuit heat; decreases voltage by 6.9%

60) Development of Ez (Easy) Gamma technology

•

Minimize Gamma difference by using new measuring algorithm: 2.2±0.6 ® 2.2±0.25

61) Development of 22-inch White+ technology

•

Increases transmissivity by 66% by using White+ Quad type pixel structure

62) Development of 55FHD direct slim LED model

•

Development of the world’s first direct-mounted 16.3mm depth slim LCM

•

Realization of 240 block local dimming and Trumotion 240Hz

63) Development of 42HD GIP +TRD technology

•

The world’s first application of the 42HD GIP + TRD structure

•

Removal of gate drive integrated circuits: 3ea ® 0ea

•

Reduction in source drive integrated circuits: 6ea ® 2ea

64) Development of TV3 CR5 Color PR

•

Realization of 100% BT709 reiteration rate by applying RGB Color Locus

•

Achieving a 5% increase in CR by decreasing size of Color PR pigment

65) Development of the world’s first slim 27W FHD TN monitors

•

Reduces thickness by applying edge-mounted backlight: 37.2t ® 21.6t

•

Reduces power consumption by 60% compared to conventional models by applying 4Lamp

•

Realization of MPRT 8ms by applying BDI technology

66) Development of the world’s first 25W FHD TN new size monitors

•

Development of new aspect ratio model: 16:9 wide-format

•

Reduction in the number of driver integrated circuits by applying 960ch Source Driver: 8ea ® 6ea

•

Removal of gate driver integrated circuits by applying GIP (Gate in Panel) technology

67) Development of 16:9 wide-format power consumption saving monitors (200W HD+, 215W FHD, 230W FHD)

•

Reduces power consumption by 40% compared to conventional models by applying 2Lamp

•

Slim design which reduces thickness: 17.0t ® 14.5t

•

To meet Energy Star 5.0 standards

68) Development of the world’s first 22-inch WSXGA+ DRD (Double Rate Driving) monitors

•

A 50% reduction in source driver integrated circuits by applying Double Rate Driving technology: 8ea ® 4ea

•

Removal of gate driver integrated circuits by applying GIP technology

•

Application of optimum thin-film transistor structure for Double Rate Driving monitors

69) Development of the world’s first 23W e-IPS monitors

•

Slim design: Reduces thickness by applying edge-mounted backlight: 35.7t ® 17t

•

Reduces power consumption by 50% compared to conventional model by applying 4Lamp

•

Realization of high aperature ratio by applying UH-IPS technology

•

Reduction in the number of integrated circuits by applying 960ch source driver: 8ea ® 6ea

•

Removal of gate driver integrated circuits by applying GIP technology

•

To meet Energy Star 5.0 standards

70) Development of high efficiency backlight technology

•

Removal of DBDEF-D Sheet by increasing backlight luminance level by more than 30% ® development of high efficiency lamp and improvement of optics sheet optical efficiency

71) Development of GIP and high aperature ratio technology for QHD IPS model

•

Stable GIP output in QHD IPS models

•

Maximizing transmissivity by applying UH-IPS technology and asymmetric pixel design

72) Development of three-dimensional display technology using the shutter glasses method.

•

Realization of stable rate of 172Hz

•

Realization of 4port low voltage differential signaling frequencies at a rate of 400MHz

•

Realization of ODC (Over Driver Circuit) tuning of GTG 3.5ms which is optimum for three-dimensional display

73) Development of 17.1-inch wide-format slim (flat type) panel applying COG (Chip On Panel) chip, our largest slim (flat type) panel

•

Development of our largest size slim (flat type) model (previously, our largest model was the 15.4-inch wide-format)

•

Reduction in thickness : 6.5mm ® 4.3mm

74) Development of new high resolution 101W model (1024x600, 1366x768)

•

Achieving higher resolution : 1024x576 ® 1024x600, 1366x768

75) Development of world’s first 17.3-inch HD+ LED panel for notebook computers

•

New size and resolution for 16:9 wide-format

•

Existing model: 17.1-inch WXGA+ 1400x900 / New model: 17.3-inch HD+ 1600x900

76) Development of 13.3-inch HD LED panel for notebook computers

•

New size and resolution for 16:9 wide-format

77) Development of world’s first 14.0-inch HD+ LED panel for notebook computers

•

New size and HD+ resolution (1600x900) for 16:9 wide-format

78) Development of world’s first 15.6-inch HD+ LED panel for notebook computers

•

First HD+ resolution (1600x900) for 16:9 wide-format

79) Development of world’s first 15.6-inch FHD LED panel for notebook computers

•

First FHD resolution (1920x1080) for 16:9 wide-format

80) Development of the first Green PC models (13.3-inch, 14.0-inch, 15.6-inch)

•

First models applying Green product concept (halogen free, low power consumption)

81) Development of DRD (Double Rate Driving) technology applying COG (Chip on Glass)

•

Development of the first COG that applies DRD technology (a 50% reduction in the number of COG drive integrated circuits)

82) Development of 10.1-inch SD (1024 x 600) model for netbooks

•

Improved resolution: 1024 x 576®1024 x 600

•

Reduction in cost by applying COG instead of COF

83) Development of 10.1-inch HD (1366 x 768) model for netbooks

•

Highest resolution among 10.1-inch models

•

Reduction in cost by applying GIP technology

84) Development of 17.1-inch WUXGA flat type model

•

Development of largest flat type model (previously, largest model was 15.4-inch)

•

The thinnest among 17.1-inch models

•

Reduction in thickness: 6.5t ® 4.3t

85) Developments of 11.6-inch HD monitor for netbooks

•

Development of largest/ highest resolution monitor for netbooks

•

Reduction in cost by applying GIP technology

86) Development of low-cost 26-inch and 32-inch HD model for televisions

•

World’s first monitor without a cover shield

•

Application of sheet type support side

•

Reduction in cost by applying low-cost single bottom covers for mold frames

87) Development of large-sized (42-inch/47-inch) edge type LED LCD model for televisions

•

Development of our first model for televisions applying edge type LED backlight (mass production commenced in September 2009)

•

Slim depth (11.9mm in thickness) & narrow bezel (18mm in thickness)

88) Development of world’s first S/D-IC + Tcon merging technology applicable to television monitors

•

Minimizing size of printed circuit board by applying 1380ch S/D-IC + ASIC technology and removing ASIC chip

•

A 49% cost reduction in manufacturing circuits

89) Achieving a full product line-up for netbook monitors

•

A full product line-up that covers the full spectrum of netbook monitor sizes from 8.9-inch to 11.6-inch models

90) Development of our first flat type monitor for netbooks

•

Development of 11.6-inch flat type HD monitor

91) Development of new LED-applied model utilizing vertical LED array technology

•

Development of 15.6-inch HD model applying vertical LED array technology (technology applied in existing models: horizontal LED array)

•

Reduction in power consumption and raw material costs

92) Development of world’s first 21.5W FHD IPS monitor applying white LED backlight technology

•

Application of environmentally friendly components including white LED backlight and halogen free parts

•

Achievement of high luminance (more than 330nit) by applying high efficiency white LED backlight

•

A 100% sRGB coverage

93) Development of world’s first 27W QHD IPS monitor applying white LED backlight technology

•

Application of environmentally friendly components including white LED backlight and halogen free parts

•

Achievement of high luminance (more than 380nit) by applying high efficiency white LED backlight

•

A 100% sRGB coverage

•

Realization of high resolution (2560x1440)

•

Removal of gate driver integrated circuits by applying GIP (Gate In Panel) technology

94) Development of world’s first 19-inch WXGA monitor applying DRD (Double Rate Driver)

•

A 50% reduction in the number of source driver integrated circuits by applying DRD (Double Rate Driving) technology

•

Removal of gate driver integrated circuits by applying GIP (Gate In Panel) technology

•

Optimization of TFT design structure for DRD (Double Rate Driver) technology

95) Development of world’s first 22W e-IPS monitor applying GIP (Gate In Panel) technology

•

Achievement of high aperture ratio by applying UH-IPS technology

•

Reduction in the number of source driver integrated circuits by applying 960 channel chip (8ea®6ea)

•

Removal of gate driver integrated circuits by applying GIP (Gate In Panel) technology

96) Development of world’s first QHD new high resolution monitor (27W QHD)

•

Achievement of high resolution (2560 x 1440)

•

Maximization of aperture ratio applying UH-IPS technology and elimination of gate driver integrated circuits by applying GIP (Gate In Panel) technology

•

Achievement of high luminance and sRGB coverage of 100% applying high efficiency white LED

97) Development of world’s first monitor applying GIP (Gate In Panel), DRD (Double Rate Driver) and I-VCOM monitor (185W HD)

•

50% reduction in the number of source driver integrated circuits by applying DRD (Double Rate Driving) technology

•

Elimination of gate driver integrated circuits by applying GIP (Gate In Panel) technology

•

Elimination of DBEF Optical sheet by applying I-VCOM technology and optical efficiency improvement in backlight

98) Development of shutter glass type three-dimensional monitor with full high definition

•

172Hz operation frame rate

•

Highest data interface speed of over 400MHz in 4port LVDS interface and achievement of GTG 3.5ms by optimal tuning of ODC (Over Driving Circuit)

99) One layer vertical LED monitor development and reinforcement of monitor product line up (200W HD+, 215W FHD, 230W FHD)

•

Minimization of the number of LED PKG applying vertical array structure

•

Elimination of DBEF Sheet applying two-in-one LED PKG

•

Slim design: optimization of mechanical structure

100) Development of world’s first notebook monitor applying 2ea Sheet Backlight

•

Achieving cost competitiveness by switching from conventional 3~4ea sheet to 2ea complex sheet backlight (with the Diffuser Sheet eliminated)

10. Customer Service

In order to highlight the importance of creating customer value, we have formulated a roadmap toward creating customer value and have shared this information with all of our employees. Through our “Voice of Customer” campaign, we have responded to customer feedback including complaints, suggestions, praises, enquiries and requests as soon as they were made and we have made efforts to change any negative feedback made by a customer into a positive feedback through such prompt response. In addition, in order to support our customers, we have established IPS camps and have cooperated with our customers to promote IPS technology. Furthermore, we have hosted “Why LGD” campaigns in order to provide superior products and services to our customers including in the areas of technology, quality, responsiveness, delivery and cost. We also monitor customer opinion through annual customer satisfaction surveys and customer interviews, and the results of such surveys and interviews are reflected in the performance evaluation of our executive officers.

11. Intellectual Property

As of December 31, 2009, we currently hold a total of 12,151 patents, including 5,630 in Korea, and 6,521 in other countries.

12. Environmental Matters

We are subject to strict environmental regulations and we may be subject to fines or restrictions that could cause our operations to be interrupted. Our manufacturing processes generate chemical waste, waste water and other industrial waste at various stages in the manufacturing process, and we are subject to a variety of laws and regulations relating to the use, storage, discharge and disposal of such chemical by-products and waste substances. We have installed various types of anti-pollution equipment, consistent with industry standards, for the treatment of chemical waste and equipment for the recycling of treated waste water at our various facilities. However, we cannot provide assurance that environmental claims will not be brought against us or that the local or national governments will not take steps toward adopting more stringent environmental standards. Any failure on our part to comply with any present or future environmental regulations could result in the assessment of damages or imposition of fines against us, suspension of production or a cessation of operations. In addition, environmental regulations could require us to acquire costly equipment or to incur other significant compliance expenses that may materially and negatively affect our financial condition and results of operations. We have also voluntarily agreed to reduce emission of greenhouse gases, such as per fluoro compounds, or PFCs, and sulfur hexafluoride, or SF6, gases, by installing PFC abatement systems to meet voluntary emissions targets for the TFT-LCD industry by 2010. We installed PFC abatement systems at all of our production lines when the production facilities were being constructed. We also installed a SF6 abatement system in P1 in April 2005 and we intend to install similar abatement systems in our other production facilities through implementation of Clean Development Mechanism, or CDM, projects. Our methodology for SF6 decomposition has been approved by the CDM Executive Board, an entity established by the parties to the United Nations Framework Convention on Climate Change, or UNFCCC, in February 2009, and we are currently conducting a feasibility study on the CDM project design document and working toward receiving the approval of the Korean government for such projects. In addition, as of December 31, 2009, we were party to voluntary agreements, which reflect a coordinated energy conservation initiative between government and industry, with respect to our operation of P1 through P8, the Gumi module production plant and the Paju module production plant. In accordance with such agreements, we have implemented a variety of energy-saving measures in those facilities, including installation of energy saving devices and consulting with energy conservation specialists. We also established an overall greenhouse gas emissions inventory system for our domestic sites, which was verified by Lloyd’s Register Quality Assurance, which is certified as the designated operational entity for CDM by the CDM Executive Board. Operations at our manufacturing plants are subject to regulation and periodic monitoring by the Korean Ministry of Environment and local environmental protection authorities. We believe that we have adopted adequate anti-pollution measures for the effective maintenance of environmental protection standards consistent with local industry practice, and that we are in compliance in all material respects with the applicable environmental laws and regulations in Korea. Expenditures related to such compliance may be substantial. Such expenditures are generally included in capital expenditures. As required by Korean law, we employ licensed environmental specialists for each environmental area, including air quality, water quality, toxic materials and radiation. We currently have ISO 14001 certifications with respect to the environmental record for P1 through P8, the Gumi module production plant and the Paju module production plant, as well as our module production plants in Nanjing and Guangzhou, China. We have been certified by the Korean Ministry of Environment as an “Environmentally Friendly Company”, with respect to our environmental record for P1 and our module production plant in Gumi since 1997, with respect to our operations at P2 and P3 since 2006, and with respect to our operations at P4, P5 and P6 since 2008.

We also have an internal monitoring system to control the use of hazardous substances in the manufacture of our products as we are committed to compliance with all applicable environmental laws and regulations, including European Union Restriction of Hazardous Substances (RoHS) Directive 2002/95/EC, which took effect on July 1, 2006 and restricts the use of certain hazardous substances in the manufacture of electrical and electronic equipment. In June 2006, we became the first TFT-LCD panel manufacturer to be recognized as an internationally accredited RoHS testing laboratory by the European Union’s German accreditation organization, EU TÜV SÜD. In October 2007, we became the first TFT-LCD company to be certified the International Electrotechnical Commission-Hazardous Substance Process Management (IECQ-HSPM) QC 080000, which is an international system requirements document intended to help organizations manage hazardous substances in their components and products through hazardous substance process management, and demonstrates the organization’s conformity with RoHS.

Furthermore, we are operating a “green purchasing system,” which excludes the hazardous materials at the purchasing stage. This system has enabled us to comply with various environmental legislations of hazardous substances, from European Union RoHS to China RoHS.

13. Financial Information

A. Financial highlights (Based on Non-consolidated, Korean GAAP)


(Unit: In millions of Won, except for per share data)

Description	2009		2008	2007	2006		2005
Current Assets	7,897,206		6,256,112	5,644,253	2,731,656		3,196,934
Quick Assets	6,610,901		5,374,609	4,963,657	1,996,280		2,725,169
Inventories	1,286,305		881,503	680,596	735,376		471,765
Non-current Assets	10,987,957		10,245,875	7,750,182	10,084,191		9,798,981
Investments	1,177,182		973,322	489,114	361,558		213,984
Tangible Assets	8,731,929		8,431,214	6,830,600	8,860,076		8,988,459
Intangible Assets	240,900		194,343	111,530	114,182		149,894
Other Non-current Asset	837,946		646,996	318,938	748,375		446,644
Total Assets	18,885,163		16,501,987	13,394,435	12,815,847		12,995,915
Current Liabilities	5,720,245		4,227,226	2,245,410	2,694,389		2,594,282
Non-current Liabilities	3,039,634		2,998,739	2,859,652	3,231,782		2,726,036
Total Liabilities	8,759,879		7,225,965	5,105,062	5,926,171		5,320,318
Capital Stock	1,789,079		1,789,079	1,789,079	1,789,079		1,789,079
Capital Surplus	2,311,071		2,311,071	2,311,071	2,275,172		2,279,250
Capital Adjustment	(713	)	—	—	—		—
Other Accumulated Comprehensive Income (Loss)	134,874		173,938	5,823	(13,948	)	(1,418	)
Retained Earnings	5,890,973		5,001,934	4,183,400	2,839,373		3,608,686
Total Shareholder’s Equity	10,125,284		9,276,022	8,289,373	6,889,676		7,675,597


Description	2009	2008	2007	2006		2005
Sales Revenues	20,119,342	15,865,240	14,163,131	10,200,660		8,890,155
Operating Income (Loss)	1,000,583	1,536,306	1,491,135	(945,208	)	447,637
Income (Loss) from continuing operation	1,067,947	1,086,896	1,344,027	(769,313	)	517,012
Net Income (Loss)	1,067,947	1,086,896	1,344,027	(769,313	)	517,012
Earnings (loss) per share – basic	2,985	3,038	3,756	(2,150	)	1,523
Earnings (loss) per share – diluted	2,954	3,003	3,716	(2,150	)	1,523

B. Financial highlights (Based on Consolidated, Korean GAAP)


(Unit: In millions of Won)

Description	2009		2008	2007	2006		2005
Current Assets	8,377,533		7,018,010	5,746,133	3,154,627		3,846,068
Quick Assets	6,672,171		5,881,337	4,922,209	2,101,922		3,155,283
Inventories	1,705,362		1,136,673	823,924	1,052,705		690,785
Non-current Assets	11,160,657		10,370,356	8,033,702	10,333,160		9,828,014
Investments	311,618		190,227	24,718	19,298		14,173
Tangible Assets	9,671,504		9,270,262	7,528,523	9,428,046		9,199,599
Intangible Assets	265,534		199,697	123,111	123,826		159,306
Other Non-current Asset	912,001		710,170	357,350	761,990		454,936
Total Assets	19,538,190		17,388,366	13,779,835	13,487,787		13,674,082
Current Liabilities	6,214,493		4,785,882	2,401,222	3,208,789		3,138,835
Non-current Liabilities	3,107,804		3,313,861	3,089,154	3,389,322		2,859,650
Total Liabilities	9,322,297		8,099,743	5,490,376	6,598,111		5,998,485
Capital Stock	1,789,079		1,789,079	1,789,079	1,789,079		1,789,079
Capital Surplus	2,311,071		2,311,071	2,311,071	2,275,172		2,279,250
Capital Adjustment	(713	)	—	—	—		—
Other Accumulated Comprehensive Income (Loss)	134,874		173,938	5,823	(13,948	)	(1,418	)
Retained Earnings	5,885,500		5,001,934	4,183,400	2,839,373		3,608,686
Minority Interest	96,082		12,601	86	—		—
Total Shareholder’s Equity	10,215,893		9,288,623	8,289,459	6,889,676		7,675,597


Description	2009	2008	2007	2006		2005
Sales Revenues	20,613,571	16,263,635	14,351,966	10,624,200		10,075,580
Operating Income (Loss)	1,067,241	1,735,441	1,504,007	(879,038	)	469,697
Net Income (Loss)	1,083,653	1,086,778	1,344,027	(769,313	)	517,012

C. Status of equity investment

•

Status of equity investment as of December 31, 2009:


Company	Paid-in Capital		Equity Investment Date	Ownership Ratio
LG Display America, Inc.	US$	5,000,000	September 24,1999	100	%
LG Display Germany GmbH	EUR	960,000	November 5, 1999	100	%
LG Display Japan Co., Ltd.	¥	95,000,000	October 12, 1999	100	%
LG Display Taiwan Co., Ltd.	NT$	115,500,000	May 19, 2000	100	%
LG Display Nanjing Co., Ltd.	CNY	1,807,914,180	July 15, 2002	100	%
LG Display Shanghai Co., Ltd.	CNY	4,138,650	January 16, 2003	100	%
LG Display Poland Sp. zo.o.	PLN	410,327,700	September 6, 2005	80	%
LG Display Guangzhou Co., Ltd.	CNY	855,487,730	August 7, 2006	89	%
LG Display Shenzhen Co., Ltd.	CNY	3,775,250	August 28,2007	100	%
Suzhou Raken Technology Co., Ltd.	CNY	472,319,351	October 7, 2008	51	%
LG Display Singapore Co., Ltd.	SGD	1,400,000	January 12, 2009	100	%
LG Electronics (Nanjing) Plasma Co., Ltd.	CNY	206,918,375	December 29, 2009	100	%
Paju Electric Glass Co., Ltd.	(Won)	14,400,000,000	March 25, 2005	40	%
TLI Co., Ltd.	(Won)	14,073,806,250	May 16, 2008	13	%
AVACO Co., Ltd.	(Won)	6,172,728,120	June 9, 2008	20	%
Guangzhou Vision Display Technology Research and Development Limited	CNY	25,000,000	July 11, 2008	50	%
NEW OPTICS., Ltd.	(Won)	9,699,600,000	July 30, 2008	37	%
ADP Engineering Co., Ltd.	(Won)	6,300,000,000	February 24, 2009	13	%
Wooree LED Co., Ltd.	(Won)	11,900,000,000	May 22, 2009	30	%
Dynamic Solar Design Co., Ltd.	(Won)	6,066,658,000	June 24, 2009	40	%
RPO, Inc.	US$	12,285,021.96	November 3, 2009	26	%
Global OLED Technology LLC	US$	61,250,000	December 23, 2009	49	%
LB Gemini New Growth Fund No.16	(Won)	1,800,000,000	December 7, 2009	31	%

14. Audit Information

A. Audit Service


	(Unit: In millions of Won)

Description	2009	2008	2007
Auditor	KPMG Samjong	KPMG Samjong	Samil PricewaterhouseCoopers
Activity	Audit by independent auditor	Audit by independent auditor	Audit by independent auditor
Compensation	700 (540)*	750 (750)**	650 (1,407)***
Time required	17,569	23,100	14,725

Compensation amount in ( ) is for US-GAAP audit, 20-F filing and SOX404 audit

Compensation amount in ( ) is for US-GAAP audit and review and SOX404 audit

***

Compensation amount in ( ) is for US-GAAP audit and review, 20-F filing, SOX404 audit and IFRS audit Note) Compensation is based on annual contracts.

B. Non-audit Service


(Unit: In millions of Won)

Fiscal Year	Independent Auditor	Contract Date	Detail	Compensation
2009	KPMG Samjong	September 8, 2009	Agreed procedure regarding Company A	30
2009	KPMG Samjong	December 18, 2009	Agreed procedure regarding Company B	140

15. Management’s Discussion and Analysis of Financial Condition and Results of Operations

A. Risk relating to Forward-looking Statements

The annual report contains forward-looking statements that are, by their nature, subject to significant risks and uncertainties. These forward-looking statements reflect our current views as of the date of this report with respect to future events and are not a guarantee of future performance or results. Actual results may differ materially from information contained in the forward-looking statements as a result of a number of factors beyond our control. We have no obligation to update or correct the forward-looking statements contained in these materials subsequent to the date hereof. All forward-looking statements attributable to us in this report are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

B. Financial Condition and Results of Operations

1. Results of Operations (Based on Non-consolidated, Korean GAAP)

In 2009, we successfully commenced production at our P8 and P6E fabrication facilities and, according to DisplaySearch, we also increased our worldwide market share based on revenue for LCD panels in notebook computers, desktop monitors and in particular for LCD panels in television. During the same period, we have also achieved substantial growth in the sale of our mobile products and we have further strengthened our infrastructure for the commercialization of OLED technology. Our sales increased by 27% from (Won)15,865 billion in 2008 to (Won)20,119 billion in 2009. Despite the oversupply of LCD panels in the global market during the first half of 2009, due in large part to our efforts to strengthen our relationships with customers, our operating income amounted to (Won)1,001 billion and our net income amounted to (Won)1,068 billion in 2009.


(Unit: In millions of Won)

Description	2009		2008	Changes
Sales Revenue	20,119,342		15,865,240	4,254,102
Cost of Sales	18,298,074		13,626,602	4,671,472
Gross Profit	1,821,268		2,238,638	(417,370	)
Selling and administrative expenses	820,685		702,332	118,353
Operating Income	1,000,583		1,536,306	(535,723	)
Non-operating Income	1,582,656		3,127,987	(1,545,331	)
Non-operating Expense	1,644,534		3,370,813	(1,726,279	)
Income before income taxes	938,705		1,293,480	(354,775	)
Income tax expenses (benefits)	(129,242	)	206,584	(335,826	)
Net income (loss)	1,067,947		1,086,896	(18,949	)

1) Sales and Cost of Sales

Our cost of sales as a percentage of sales revenue increased by 5% from 85.9% in 2008 to 90.9% in 2009. Such increase was primarily attributable to changes in currency exchange rates and a decrease in the average selling prices of LCD panels and not to an increase in the cost of sales per panel. Although we have successfully decreased our cost of sales per panel in 2009 by promoting “Max Capa / Min Loss” and other activities to increase production capacity and production volume and reduce cost, our cost of sales as a percentage of sales revenue increased in 2009 compared to 2008 because the decrease in the average selling prices of LCD panels from 2008 to 2009 outpaced the decrease in our cost of sales per panel from 2008 to 2009. Consequently, despite an increase in our sales revenue in 2009 compared to 2008, our gross profit decreased in 2009 compared to 2008.


(Unit: In millions of Won, except percentages)

Description	2009			2008			Changes
Sales Revenue	(Won)	20,119,342		(Won)	15,865,240		(Won)	4,254,102		26.8	%
Cost of Sales	(Won)	18,298,074		(Won)	13,626,602		(Won)	4,671,472		34.3	%
Gross Profit	(Won)	1,821,268		(Won)	2,238,638		(Won)	(417,370	)	(18.6	)%
Cost of Sales as a percentage of Sales		90.9	%		85.9	%

2) Sales by Product Category

Due to the strong growth of the LCD television market, sales of our LCD panels for televisions accounted for over 50% of our sales revenue in 2009. We intend to further increase our market share for LCD panels in televisions by increasing our product competitiveness, including in 240Hz products, and by strengthening our sales promotion activities. The following table shows the sales generated by each of our product categories as a percentage of our sales revenue.


	2009		2008		2007
Panels for Televisions	55	%	48	%	47	%
Panels for Desktop Monitors	23	%	24	%	26	%
Panels for Notebook Computers	17	%	23	%	22	%
Panels for Application	5	%	5	%	5	%

3) Production Capacity

Our annual production capacity increased by 39% in 2009 compared to 2008, in large part due to the successful ramp-up of our P8 and P6E fabrication facilities and our “Max Capa / Min Loss” activities.

2. Financial Condition (Based on Non-consolidated, Korean GAAP)

Our current assets increased by (Won)1,641 billion from (Won)6,256 billion as of December 31, 2008 to (Won)7,897 billion as of December 31, 2009, and our non-current assets increased by (Won)742 billion from (Won)10,246 billion as of December 31, 2008 to (Won)10,988 billion as of December 31, 2009. Our current liabilities increased by (Won)1,493 billion from (Won)4,227 billion as of December 31, 2008 to (Won)5,720 billion as of December 31, 2009, and our non-current liabilities increased by (Won)41 billion from (Won)2,999 billion as of December 31, 2008 to (Won)3,040 billion as of December 31, 2009. Our shareholders’ equity increased by (Won)849 billion from (Won)9,276 billion as of December 31, 2008 to (Won)10,125 billion as of December 31, 2009.


(Unit: In millions of Won)

Description	2009		2008	Changes
Current Assets	7,897,206		6,256,112	1,641,094
Non-current Assets	10,987,957		10,245,875	742,082
Total Assets	18,885,163		16,501,987	2,383,176
Current Liabilities	5,720,245		4,227,226	1,493,019
Non-current Liabilities	3,039,634		2,998,739	40,895
Total Liabilities	8,759,879		7,225,965	1,533,914
Capital Stock	1,789,079		1,789,079	—
Capital Surplus	2,311,071		2,311,071	—
Capital Adjustments	(713	)	—	(713	)
Accumulated other Comprehensive Income and Expense	134,874		173,938	(39,064	)
Retained Earnings	5,890,973		5,001,934	889,039
Shareholders’ Equity	10,125,284		9,276,022	849,262
Total liabilities and shareholders’ equity	18,885,163		16,501,987	2,383,176

In 2009, due in large part to our continuous “Max Capa” activities, we were able to increase the production capacities of our existing production facilities. In addition, we also commenced production at our P8 and P6E fabrication facilities, which further enabled us to increase our production capacity. Due to such increase, our inventory increased by (Won)356 billion from December 31, 2008 to December 31, 2009. This increase, combined with a reversal of write-down in inventory of (Won)48 billion from December 31, 2008 to December 31, 2009, resulted in the book value of our inventory increasing by (Won)404 billion from (Won)882 billion as of December 31, 2008 to (Won)1,286 billion as of December 31, 2009.

Our accounts receivable balance increased by (Won)1,327 billion from (Won)1,696 billion as of December 31, 2008 to (Won)3,023 billion as of December 31, 2009, primarily due to an increase in our fourth quarter sales in 2009 compared to our fourth quarter sales in 2008. Our fourth quarter sales increased by (Won)2,202 billion from (Won)3,723 billion in 2008 to (Won)5,925 billion in 2009. Meanwhile, the accounts receivables we sold to financial institutions as part of our accounts receivable factoring arrangements decreased by (Won)371 billion from (Won)601 billion in 2008 to (Won)230 billion (US$187 million / Yen 950 million) in 2009.

3. Liquidity and Capital Resources

Due to a general decrease in interest rates in 2009 compared to 2008, we reduced our cash and cash equivalents and increased our short-term financial instruments in 2009. Our cash and cash equivalents decreased by (Won)503 billion from (Won)1,208 billion as of December 31, 2008 to (Won)704 billion as of December 31, 2009 and our short-term financial instruments increased by (Won)445 billion from (Won)2,055 billion as of December 31, 2008 to (Won)2,500 billion as of December 31, 2009. This resulted in a decrease in cash and short-term financial instruments of (Won)59 billion from (Won)3,263 billion as of December 31, 2008 to (Won)3,204 billion as of December 31, 2009.

In 2009, our net cash provided by operating activities amounted to (Won)3.5 trillion, our net cash provided by our financing activities, including the incurrence of short- and long-term borrowings as well as the issuance of corporate bonds, amounted to (Won)267 billion and our net cash used in our investing activities, including the acquisition of tangible assets and investments in equity method investees, amounted to (Won)4.3 trillion.

We currently expect that our total capital expenditures on a cash-out basis to be approximately (Won)4 trillion. However, our overall expenditure levels and our allocation among projects are subject to many uncertainties, including whether to (i) expand our 8^th generation fabrication facility to meet customer demand, (ii) invest in new business ventures or (iii) make additional investments in China, among others. We review the amount of our capital expenditures and may make adjustments from time to time based on cash flow from operations, the progress of our expansion plans and market conditions.


(Unit: In millions of Won)

Description	2009		2008		Changes
Operating Income	1,000,583		1,536,306		(535,723	)
Net cash provided by operating activities	3,492,808		4,955,484		(1,462,676	)
Net cash provided by (used in) financing activities	267,222		(697,841	)	965,063
Net cash used in investing activities	(4,263,492	)	(4,159,606	)	(103,886	)
Cash and Cash Equivalents (as of Dec. 31)	704,324		1,207,786		(503,462	)

16. Board of Directors

A. Independence of Directors

•

Outside director: Independent

•

Non-outside director: Not independent

•

Each of our outside directors meets the applicable independence standards set forth under the applicable laws and regulations. Each of our outside directors was nominated by the Outside Director Nomination and Corporate Governance Committee, was approved by the board of directors and was appointed at the general meeting of shareholders. None of our directors has or had any business transaction or any related party transactions with us. Our outside directors are comprised of four persons including three who are members of our audit committee. Of the remaining outside directors, Dongwoo Chun is currently serving as Chairman of the Outside Director Nomination and Corporate Governance Committee. As of December 31, 2009, our non-outside directors were comprised of the chief executive officer, the chief financial officer and a member who was nominated by LG Electronics. On April 30, 2009, Paul Verhagen, who was nominated by Philips Electronics, resigned from his position as our board member, and on November 25, 2009, Bruce I. Berkoff resigned from his position as our board member.

B. Members of the Board of Directors

Members of the Board of Directors (as of December 31, 2009)


Name	Date of birth	Position	Business experience	First elected
Young Soo Kwon	February 6, 1957	Representative Director, President and Chief Executive Officer	President and Chief Financial Officer of LG Electronics	January 1, 2007

James (Hoyoung) Jeong	November 2, 1961	Director and Chief Financial Officer	Executive Vice President and Chief Financial Officer of LG Electronics	January 1, 2008

Simon (Shin Ik) Kang	May 10, 1954	Director	Head of Home Entertainment Division of LG Electronics	March 1, 2008

Ingoo Han	October 15, 1956	Outside Director	Dean, Graduate School of Management, Korea Advanced Institute of Science and Technology	July 19, 2004

Dongwoo Chun	January 15, 1945	Outside Director	Outside Director, Pixelplus	March 23, 2005

Yoshihide Nakamura	October 22, 1942	Outside Director	President of ULDAGE, Inc.	February 29, 2008

William Y. Kim	June 6, 1956	Outside Director	Partner of Ropes & Gray LLP	February 29, 2008

*	Paul Verhagen resigned on April 30, 2009.

*	Bruce I. Berkoff resigned on November 25, 2009.

*	Simon (Shin Ik) Kang resigned on March 12, 2010.

*	Ingoo Han resigned on March 12, 2010.

On March 12, 2010, Do Hyun Jung was elected as our non-outside director and Tae Sik Ahn was elected as our outside director by our shareholders at the annual general meeting of shareholders.

C. Committees of the Board of Directors

Committees of the Board of Directors (as of December 31, 2009)


Committee	Composition	Member

Audit Committee	3 outside directors	Ingoo Han, Yoshihide Nakamura, William Y. Kim

Outside Director Nomination and Corporate Governance Committee	1 non-outside director and 2 outside directors	Simon (Shin Ik) Kang, Dongwoo Chun, William Y. Kim

Remuneration Committee	1 non-outside director and 1 outside director	Simon (Shin Ik) Kang, Dongwoo Chun

Simon (Shin Ik) Kang resigned on March 12, 2010.

Ingoo Han resigned on March 12, 2010.

On March 12, 2010, Tae Sik Ahn was elected as the chairman of our Audit Committee.

17. Information Regarding Shares

A. Total Number of Shares

(1) Total number of shares authorized to be issued (as of December 31, 2009): 500,000,000 shares.

(2) Total shares issued and outstanding (as of December 31, 2009): 357,815,700 shares.

B. Shareholder list

(1) Largest shareholder and related parties.


(Unit: share)

Name	Relationship	As of September 30, 2009
LG Electronics	Largest Shareholder	135,625,000 (37.9%)

Young Soo Kwon	Related Party	23,000 (0.0%)

(2) Shareholders who owned 5% or more of our shares as of December 31, 2009


Beneficial Owner	Number of Shares of Common Stock	Percentage
LG Electronics	135,625,000	37.9	%
Citibank	18,513,073	5.2	%

18. Directors and Employees

A. Directors

(1) Remuneration for directors in 2009


(Unit: In millions of Won)

Classification	Amount paid	Approved payment amount at shareholders meeting	Per capita average remuneration paid	Remarks
Non-outside Directors (3 persons) **	1,689	8,500	563
Outside Directors (5 persons)	285	8,500	57	• Three of our outside directors are members of the audit committee.

Period: January 1, 2009 ~ December 31, 2009

Amount paid is calculated on the basis of actually paid amount except accrued salary and severance benefits

Amount paid to non-outside directors includes (i) remuneration for Paul Verhagen, who resigned on April 30, 2009 and (ii) remuneration for Bruce. I. Berkoff, who resigned on November 25, 2009.

Per capita average remuneration paid is calculated by dividing total amount paid by the average number of non-outside/outside directors for the year ended December 31, 2009.

(2) Stock option

The following table sets forth certain information regarding our stock options as of December 31, 2009.

(Unit: Won, Stock)

Executive Officers (including
Former Officers)

Grant Date

Exercise Period

Exercise
Price

Number of
Granted
Options

Number of
Exercised
Options

Number of
Cancelled
Options*

Number of
Exercisable
Options*

From

Ron H.Wirahadiraksa

April 7, 2005

April 8, 2008

April 7, 2012

(Won)

44,050

100,000

50,000

Duke M. Koo

April 7, 2005

April 8, 2008

April 7, 2012

(Won)

44,050

40,000

20,000

Sang Deog Yeo

April 7, 2005

April 8, 2008

April 7, 2012

(Won)

44,050

40,000

20,000

Jae Geol Ju

April 7, 2005

April 8, 2008

April 7, 2012

(Won)

44,050

40,000

20,000

Total

220,000

110,000

When the increase rate of our share price is the same or less than the increase rate of the Korea Composite Stock Price Index (“KOSPI”) over the three-year period following the grant date, only 50% of the initially granted shares are exercisable. Since the increase rate of our share price was lower than the increase rate of KOSPI during the period from April 7, 2005 to April 7, 2008, only 50% of the 220,000 initially granted shares are exercisable.

B. Employees

As of December 31, 2009, we had 23,854 employees (excluding our executive officers). The total amount of salary paid to our employees for the year ended December 31, 2009 based on cash payment was (Won)1,002,188 million. The following table provides details of our employees as of December 31, 2009:

(Unit: person, in millions of Won)

Details of Employees*

Total Salary in
2009**

Per Capita
Salary***

Average
Service Year

Office
Worker

Production
Worker

Others

Total

7,664

16,190

—

23,854

1,002,188

46.85

4.3

*	Directors and executive officers have been excluded.

**	Welfare benefit and retirement expense have been excluded. Total welfare benefit provided to our employees for the year ended December 31, 2009 was (Won)176,020 million and the per capita welfare benefit provided was (Won)8.2 million.

**	Based on cash payment.

**	Includes incentive payments to employees who have transferred from our affiliated companies.

***	Per Capita Salary is calculated using the average number of average employees (21,390) for the year ended December 31, 2009.

19. Subsequent Event

LG DISPLAY CO., LTD.

Non-Consolidated Financial Statements

December 31, 2009 and 2008

(With Independent Auditors’ Report Thereon)

Table of Contents


		Page

Independent Auditors’ Audit Report		1

Non-Consolidated Statements of Financial Position		3

Non-Consolidated Statements of Income		5

Non-Consolidated Statements of Appropriations of Retained Earnings		6

Non-Consolidated Statements of Changes in Stockholders’ Equity		7

Non-Consolidated Statements of Cash Flows		8

Notes to Non-Consolidated Financial Statements		9-75

Report on the Review of Internal Accounting Control System		76

Report on the Operations of the Internal Accounting Control System		77

Independent Auditors’ Report

Based on a report originally issued in Korean

To the Shareholders and Board of Directors

LG Display Co., Ltd.:

We have audited the accompanying non-consolidated statements of financial position of LG Display Co., Ltd. (the “Company”) as of December 31, 2009 and 2008, and the related non-consolidated statements of income, appropriations of retained earnings, changes in stockholders’ equity and cash flows for the years then ended. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company, as of December 31, 2009 and 2008 and the results of its operations, the appropriation of its retained earnings, the changes in its equity and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the Republic of Korea.

Without qualifying our opinion, we draw attention to the following:

As discussed in note 2(b) to the non-consolidated financial statements, accounting principles and auditing standards and their application in practice vary among countries. The accompanying non-consolidated financial statements are not intended to present the financial position, results of operations, changes in shareholders’ equity and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such non-consolidated financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying non-consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and auditing standards and their application in practice.

As discussed in note 18(b) to the non-consolidated financial statements, the Company is under investigations by Korea Fair Trade Commission in Korea, European Commission and antitrust authorities in other countries with respect to possible anti-competitive activities in the LCD industry. In addition, the Company has been named as defendants in a number of federal class actions in the United States and Canada and related individual lawsuits based on alleged antitrust violations concerning the sale of LCD panels, and the Company and certain of its officers and directors have been named as defendants in a federal class action in the United States by shareholders of the Company alleging violations of the U.S. Securities Exchange Act of 1934. The Company estimated and recognized losses related to these legal proceedings. However, actual losses are subject to change in the future based on new developments in each matter, or changes in circumstances, which could be materially different from those estimated and recognized by the Company.

/s/ KPMG Samjong Accounting Corp.

Seoul, Korea

February 16, 2010

This report is effective as of February 16, 2010, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying non-consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

LG DISPLAY CO., LTD.

Non-Consolidated Statements of Financial Position

As at December 31, 2009 and 2008


*(In millions of Won)*	Note	2009		2008

Assets
Cash and cash equivalents	3,16	(Won)	704,324	1,207,786
Short-term financial instruments	3		2,500,000	2,055,000
Available-for-sale securities	6		—	74
Trade accounts and notes receivable, net	4,8,16,18		3,023,158	1,695,578
Other accounts receivable, net	4,16		81,413	41,570
Accrued income, net	4		41,241	88,175
Advance payments, net	4		11,187	250
Prepaid expenses			38,208	34,156
Value added tax receivable	16		45,451	145,862
Deferred income tax assets, net	24		163,182	80,994
Other current assets			2,737	25,164
Inventories, net	5,11		1,286,305	881,503

Total current assets			7,897,206	6,256,112
Long-term financial instruments			13	13
Available-for-sale securities	6		119,944	129,497
Equity method investments	7		1,057,225	831,237
Long-term loans	16		—	12,575
Property, plant and equipment, net	8,9,10,11		8,731,929	8,431,214
Intangible assets, net	10,12		240,900	194,343
Non-current guarantee deposits	16		59,796	46,972
Long-term other receivables, net	4		—	182
Long-term prepaid expenses			139,884	150,665
Deferred income tax assets, net	24		638,266	409,528
Other non-current assets			—	39,649

Total non-current assets			10,987,957	10,245,875

Total assets		(Won)	18,885,163	16,501,987

See accompanying notes to non-consolidated financial statements.

LG DISPLAY CO., LTD.

Non-Consolidated Statements of Financial Position, Continued

As at December 31, 2009 and 2008


*(In millions of Won)*	Note	2009			2008

Liabilities
Trade accounts and notes payable	8,16	(Won)	2,014,909		951,975
Other accounts payable	8,16		1,392,811		2,205,092
Short-term borrowings	14		506,731		—
Advances received			27,830		10,669
Withholdings			16,820		15,486
Accrued expenses	18		638,419		212,330
Income tax payable	24		120,206		265,550
Warranty reserve, current	17		57,985		48,008
Current portion of long-term debt and debentures, net of discounts	13,14		934,921		498,652
Other current liabilities			9,613		19,464

Total current liabilities			5,720,245		4,227,226

Debentures, net of current portion and discounts on debentures	13		698,059		1,490,445
Long-term debt, net of current portion	14		1,256,488		1,019,306
Long-term accrued expenses	29		7,615		—
Long-term other accounts payable	7		429,222		406,156
Long-term advances received	16		583,800		—
Accrued severance benefits, net	15		58,839		70,139
Warranty reserve, non-current	17		5,611		10,097
Other non-current liabilities			—		2,596

Total non-current liabilities			3,039,634		2,998,739

Total liabilities			8,759,879		7,225,965


Shareholders’ equity
Common stock, (Won)5,000 par value. Authorized 500,000,000 shares; issued and outstanding 357,815,700 shares in 2009 and 2008	1,20		1,789,079		1,789,079
Capital surplus	21		2,311,071		2,311,071
Capital adjustment	7		(713	)	—
Accumulated other comprehensive income	22		134,874		173,938
Retained earnings	23		5,890,973		5,001,934

Total shareholders’ equity			10,125,284		9,276,022


Commitments and contingencies

Total liabilities and shareholders’ equity		(Won)	18,885,163		16,501,987

See accompanying notes to non-consolidated financial statements.

LG DISPLAY CO., LTD.

Non-Consolidated Statements of Income

For the years ended December 31, 2009 and 2008


*(In millions of Won, except earnings per share)*	Note	2009			2008

Sales	8,33	(Won)	20,119,342		15,865,240
Cost of sales	8,25		18,298,074		13,626,602

Gross profit			1,821,268		2,238,638

Selling and administrative expenses			820,685		702,332

Operating income	26		1,000,583		1,536,306


Interest income			125,313		205,988
Rental income			4,116		3,203
Foreign exchange gains			1,077,831		2,492,293
Gain on foreign currency translation	19		236,268		211,068
Equity income on investments	7		129,348		164,142
Gain on disposal of property, plant and equipment			2,497		3,299
Gain on disposal of intangible assets			9		1,633
Commission earned			7,007		30,207
Reversal of allowance for doubtful accounts			260		5,961
Gain on redemption of debentures	13		—		1,152
Other income			7		9,041

Non-operating income			1,582,656		3,127,987


Interest expense	10		122,602		115,702
Foreign exchange losses			1,078,556		2,324,969
Loss on foreign currency translation			21,384		437,392
Donations			6,929		7,829
Loss on disposal of trade accounts and notes receivable	4		10,571		23,019
Other bad debt expenses			32		—
Loss on disposal of available-for-sale securities			5		—
Equity loss on investments	7		108,135		454,672
Loss on disposal of property, plant and equipment			133		536
Impairment loss on property, plant and equipment	9		—		83
Loss on redemption of debentures	13		173		13
Loss on disposal of equity method investments	7		165		100
Other expenses	18		295,849		6,498

Non-operating expenses			1,644,534		3,370,813


Income before income taxes			938,705		1,293,480
Income tax expense (benefit)	24		(129,242	)	206,584

Net income		(Won)	1,067,947		1,086,896


Earnings per share	27
Basic earnings per share		(Won)	2,985		3,038

Diluted earnings per share		(Won)	2,954		3,003

See accompanying notes to non-consolidated financial statements.

LG DISPLAY CO., LTD.

Non-Consolidated Statements of Appropriations of Retained Earnings

For the years ended December 31, 2009 and 2008

(Date of appropriations : March 12, 2010 and March 13, 2009 for the years ended December 31, 2009 and 2008, respectively)


*(In millions of Won)*	Note	2009		2008

Retained earnings before appropriations
Unappropriated retained earnings carried over from prior year		(Won)	4,649,962	3,759,865
Net income			1,067,947	1,086,896

			5,717,909	4,846,761

Appropriation of retained earnings
Legal reserve			17,891	17,891
Cash dividend (Dividend per share (dividends as a percentage of par value) : (Won)500(10%) in 2009 and 2008	28		178,908	178,908

			196,799	196,799

Unappropriated retained earnings carried forward to the following year		(Won)	5,521,110	4,649,962

See accompanying notes to non-consolidated financial statements.

LG DISPLAY CO., LTD.

Non-Consolidated Statements of Changes in Stockholders’ Equity

For the years ended December 31, 2009 and 2008


*(In millions of Won)*	Capital stock		Capital surplus	Accumulated other Capital Adjustment		comprehensive income (loss)		Retained earnings		Total

Balances at January 1, 2008	(Won)	1,789,079	2,311,071	—		5,823		4,183,400		8,289,373
Net income		—	—	—		—		1,086,896		1,086,896
Cash dividend		—	—	—		—		(268,362	)	(268,362	)
Change in fair value of available-for-sale securities		—	—	—		25,934		—		25,934
Change in capital adjustment arising from equity method investments		—	—	—		144,688		—		144,688
Gain on valuation of cash flow hedges		—	—	—		(1,498	)	—		(1,498	)
Loss on valuation of cash flow hedges		—	—	—		(1,009	)	—		(1,009	)

Balances at December 31, 2008	(Won)	1,789,079	2,311,071	—		173,938		5,001,934		9,276,022


Balances at January 1, 2009	(Won)	1,789,079	2,311,071	—		173,938		5,001,934		9,276,022
Net income		—	—	—		—		1,067,947		1,067,947
Cash dividend		—	—	—		—		(178,908	)	(178,908	)
Change in fair value of available-for-sale securities		—	—	—		(22,453	)	—		(22,453	)
Change in capital adjustment arising from equity method investments		—	—	—		(25,034	)	—		(25,034	)
Loss on valuation of cash flow hedges		—	—	—		8,423		—		8,423
Acquisition of invested in affiliates		—	—	(713	)	—		—		(713	)

Balances at December 31, 2009	(Won)	1,789,079	2,311,071	(713	)	134,874		5,890,973		10,125,284

See accompanying notes to non-consolidated financial statements.

LG DISPLAY CO., LTD.

Non-Consolidated Statements of Cash Flows

For the years ended December 31, 2009 and 2008


*(In millions of Won)*	Note	2009			2008

Cash flows from operating activities:
Net income		(Won)	1,067,947		1,086,896
Adjustments for:
Depreciation	9		2,569,202		2,280,579
Amortization of intangible assets	12		42,606		50,310
Provision for severance benefits	15		79,321		68,956
Provision for warranty reserve	17		113,866		90,063
Loss (gain) on foreign currency translation, net			(214,884	)	226,347
Equity loss (income) on investments, net			(21,213	)	290,530
Other bad debt expenses			32		—
Loss on disposal of available-for-sale securities			5		—
Loss on disposal of equity method investments			165		100
Gain on disposal of property, plant and equipment, net			(2,364	)	(2,763	)
Gain on disposal of intangible assets, net			(9	)	(1,633	)
Impairment loss on property, plant and equipment			—		83
Amortization of discount on debentures, net			30,429		30,838
Loss (gain) on redemption of debentures, net			173		(1,139	)
Reversal of allowance for doubtful accounts			(260	)	—
Reversal of stock compensation cost	29		—		(560	)
Other income (expenses), net			263,520		—

			2,860,589		3,031,711
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts receivable and notes receivable			(1,328,237	)	619,830
Decrease (increase) in other accounts receivable			(38,120	)	81,060
Decrease (increase) in accrued income			46,876		(74,131	)
Decrease (increase) in advance payments			(11,183	)	2,493
Decrease (increase) in prepaid expenses			25,757		28,721
Decrease (increase) in value added tax receivable			102,997		(66,833	)
Decrease (increase) in current deferred income tax assets			(83,852	)	—
Decrease (increase) in other current assets			24,948		1,853
Decrease (increase) in inventories			(404,802	)	(200,907	)
Decrease (increase) in long-term other receivables			—		182
Decrease (increase) in long-term prepaid expenses			(19,029	)	(24,482	)
Decrease (increase) in non-current deferred income tax assets			(216,129	)	(81,165	)
Decrease (increase) in other non-current assets			41,735		2,539
Increase (decrease) in trade accounts and notes payable			1,064,542		59,217
Increase (decrease) in other accounts payable			(175,010	)	403,602
Increase (decrease) in advances received			17,161		(1,691	)
Increase (decrease) in withholdings			1,334		8,759
Increase (decrease) in accrued expenses			159,059		38,663
Increase (decrease) in income tax payable			(144,232	)	193,208
Increase (decrease) in other current liabilities			(3,662	)	(20,536	)
Increase (decrease) in warranty reserve	17		(108,375	)	(81,253	)
Accrued severance benefits transferred from affiliated company, net			1,630		3,339
Increase (decrease) in long-term accrued expenses			7,615		—
Increase (decrease) in long-term advances received			695,500		—
Payment of severance benefits			(47,761	)	(23,850	)
Decrease (increase) in severance insurance deposits			(44,567	)	(31,792	)
Decrease (increase) in contribution to the National Pension Fund			77		51

			(435,728	)	836,877


Net cash provided by operating activities		(Won)	3,492,808		4,955,484

See accompanying notes to non-consolidated financial statements.

LG DISPLAY CO., LTD.

Non-Consolidated Statements of Cash Flows, Continued

For the years ended December 31, 2009 and 2008


*(In millions of Won)*	Note	2009			2008

Cash flows from investing activities:
Acquisition of short-term financial instruments		(Won)	(4,000,000	)	(1,270,000	)
Proceeds from short-term financial instruments			3,555,000		—
Proceeds from available-for-sale securities			69		—
Decrease in short-term loans			12,575		—
Acquisition of available-for-sale securities			(19,233	)	(96,260	)
Cash dividends received	7		28,561		12,187
Acquisition of equity method securities			(242,490	)	(46,755	)
Proceeds from disposal of property, plant and equipment			7,602		10,343
Proceeds from disposal of intangible assets			11		3,196
Government subsidies received			2,550		—
Acquisition of property, plant and equipment			(3,496,658	)	(2,623,303	)
Acquisition of intangible assets			(98,780	)	(125,103	)
Refund of non-current guarantee deposits			553		32
Payment of non-current guarantee deposits			(13,252	)	(13,469	)
Long-term loans granted			—		(10,474	)


Net cash used in investing activities			(4,263,492	)	(4,159,606	)


Cash flows from financing activities:
Proceeds from short-term borrowings			651,518		—
Proceeds from long-term debt			323,914		—
Proceeds from issuance of debentures			498,020		—
Redemption of debentures			(400,000	)	(78,308	)
Repayment of current portion of long-term debts			(500,451	)	(351,171	)
Repayment of short-term borrowings			(126,871	)	—
Payment of cash dividends			(178,908	)	(268,362	)


Net cash used in financing activities			267,222		(697,841	)


Net increase (decrease) in cash and cash equivalents			(503,462	)	98,037
Cash and cash equivalents, beginning of the year			1,207,786		1,109,749

Cash and cash equivalents, end of the year		(Won)	704,324		1,207,786

See accompanying notes to non-consolidated financial statements.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

1 Organization and Description of Business

LG Display Co., Ltd. (the “Company”) was incorporated in 1985 under its original name of LG Soft, Ltd. as a wholly owned subsidiary of LG Electronics Inc. In 1998, LG Electronics Inc. and LG Semicon Co., Ltd. transferred their respective Thin Film Transistor Liquid Crystal Display (“TFT-LCD”) related business to the Company. The main business of the Company is to manufacture and sell TFT-LCD panels. In July 1999, LG Electronics Inc. and Koninklijke Philips Electronics N.V. (“Philips”) entered into a joint venture agreement. Pursuant to the agreement, the Company changed its name to LG.Philips LCD Co., Ltd. However, on February 29, 2008, the Company changed its name to LG Display Co., Ltd. based upon the approval of shareholders at the general shareholders’ meeting on the same date as a result of the decrease in Philips’s share interest in the Company and the possibility of its business expansion to Organic Light Emitting Diode (“OLED”) and Flexible Display products. In March 2009, Philips, which used to be one of the major shareholders of the Company, sold all of its share holdings, 47,225 thousand shares, of the Company. As of December 31, 2009, LG Electronics Inc. owns 37.9% (135,625 thousand shares) of the Company’s common shares.

As of December 31, 2009, the Company has LCD Research & Development Center and TFT-LCD manufacturing plants in Paju and TFT-LCD manufacturing plants and OLED manufacturing plant in Gumi. The Company has overseas subsidiaries located in the United States of America, Europe and Asia.

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements

(a) Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation of its non-consolidated financial statements are the same as those followed by the Company in its preparation of annual non-consolidated financial statements for the year ended December 31, 2008.

(b) Basis of Presenting Financial Statements

The Company maintains its accounting records in Korean Won and prepares statutory financial statements in the Korean language in conformity with the accounting principles generally accepted in the Republic of Korea. Certain accounting principles applied by the Company that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting principles(“GAAP”) in other countries. Accordingly, these non-consolidated financial statements are intended for use only by those who are informed about Korean accounting principles and practices. The accompanying non-consolidated financial statements have been translated into English from the Korean language non-consolidated financial statements.

(c) Revenue Recognition

Revenue is recognized when the significant risks and rewards of ownership have been transferred to the Company’s customers, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, volume rebates and other cash incentives paid to customers.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

(d) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and in banks, and financial instruments with maturity of three months or less at the time of purchase. These financial instruments are readily convertible into cash without significant transaction costs and bear low risks from changes in value due to interest rate fluctuations.

(e) Allowance for Doubtful Accounts

Allowance for doubtful accounts is estimated based on an analysis of individual accounts and past experience of collection and presented as a deduction from trade receivables.

(f) Inventories

Inventories are stated at the lower of cost or market value, with cost being determined by a weighted-average method, except for the materials in transit, which is determined by a specific identification method. Valuation loss, which is comprised of the amount of any write-down of inventories to market value and the amount of loss from the difference between the quantity of inventories recorded in the financial statements and the actual quantity incurred in the ordinary course of business, is added to the cost of goods sold. Valuation loss for the holding inventories is presented as a reduction of the inventories. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed and reduces cost of sales to the extent that revised book value does not exceed the book value that would have been recorded without the impairment.

Variable production overheads are allocated based on the actual level of production and fixed production overheads are allocated based on the actual capacity of production facilities. However, the normal capacity may be used for allocation of fixed production overheads if the actual level of production is lower than the normal capacity. The difference between actual fixed production overheads and allocated amount based on the normal level of production is recognized as capacity variances in non-operating expenses.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

(g) Investments in Securities

Upon acquisition, the Company classifies debt and equity securities, excluding investments in subsidiaries, associates and joint ventures, into the following categories: held-to-maturity, trading securities or available-for-sale securities. This classification is reassessed at each balance sheet date.

Investments in debt securities where the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity. Securities that are acquired principally for the purpose of selling in the short-term are classified as trading securities. Investments not classified as either held-to-maturity or trading securities are classified as available-for-sale securities.

Investments in securities are initially recognized at the fair value of considerations provided by the Company for the acquisition of securities and related transaction costs.

Held-to-maturity investments are carried at amortized cost. Trading and available-for-sale securities are subsequently carried at fair value. Investments in available-for-sale equity securities that do not have readily determinable fair values are recognized at cost less impairment, if any.

Gains and losses arising from changes in the fair value of trading securities are included in the income statement in the period in which they arise. Unrealized gains and losses arising from changes in the fair value of available-for-sale securities are recognized as accumulated other comprehensive income or loss, net of tax, directly in equity. Gains and losses of available-for-sale securities are recognized in the income statement when the securities are disposed or an impairment loss is recognized. Held-to-maturity investments are carried at amortized cost with interest income and expense recognized in the income statement using the effective interest method.

The Company assesses at the end of each reporting period whether there is any objective evidence that investments in securities are impaired. Impairment losses are recognized when the reasonably estimated recoverable amounts are less than the carrying amount and it is not obviously evidenced that impairment is unnecessary.

Trading securities are presented as current assets. Available-for-sale securities, which mature within one year from the balance sheet date or where the likelihood of disposal within one year from the balance sheet date is probable, are presented as current assets. Held-to-maturity securities, which mature within one year from the balance sheet date, are presented as current assets. All other available-for-sale securities and held-to-maturity securities are presented as long-term investments.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

(h) Equity Method Investments

Investments in associates and subsidiaries of which the Company has the ability to significantly influence are accounted for using the equity method of accounting. The Company records changes in its proportionate ownership in the net assets of the associates and subsidiaries in current operations or as adjustments to other comprehensive income (loss) or retained earnings, depending on the nature of the underlying change in the net assets of the associates and subsidiaries. If the carrying amount of an investment in an associate or subsidiary falls below zero as a result of reflecting the investee’s losses when the equity method is applied, the Company discontinues recognizing further changes in its share of equity interest in the associate or subsidiary and the related investment is accounted for at nil value. However, if the Company holds interest in the associate or subsidiary, including preferred stocks, long-term loans and receivables issued by the associate or subsidiary, the Company continues to account for the losses of the associate or subsidiary until the carrying amount of the interest is reduced to zero.

Unrealized gains on transactions between the Company and its associates or subsidiaries are eliminated to the extent of the Company’s interest in each associate or subsidiary. Unrealized gains are accounted for as a reduction of the carrying amount of the investment in the associate, while unrealized losses are added to the carrying amount of the investment in the associate. However, in the case of unrealized gains or losses arising from sales by the Company to the subsidiaries, they are fully eliminated.

At the date of acquisition of an investment in an associate or subsidiary, the Company’s share of the difference between the fair value and book value of the identifiable assets and liabilities of an associate or subsidiary is amortized or reinstated in accordance with the associate or subsidiary’s methods of accounting for assets and liabilities. The amount of goodwill or negative goodwill is calculated as the difference between the acquisition cost of an investment in an associate or subsidiary and the Company’s share of the fair value of the identifiable net assets of the associate or subsidiary. Goodwill is amortized using the straight-line method over five years. The amount of negative goodwill up to the fair value of depreciable non-monetary assets is recognized using the straight-line method as a gain over the weighted average useful lives and the remainder of negative goodwill up to the fair value of non-depreciable assets is recognized as a gain in the period of disposal of the assets. Any excess of negative goodwill over the fair value of identifiable non-monetary assets is recognized as a gain at the date of acquisition.

Assets and liabilities of a foreign company subject to the equity method of accounting for investments are translated into Korean Won at the rates of exchange prevailing at the end of the reporting period, while its equity is translated at the exchange rate at the time of transactions, and income statement accounts at the average rate over the year. Resulting translation gains and losses are recorded as accumulated other comprehensive income and loss.

(i) Interest in Joint Ventures

Joint ventures are those entities two or more venturers are bound by a contractual arrangement and the contractual arrangement establishes a joint control. The Company accounts for its interest in a jointly controlled entity using the equity method of accounting.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

(j) Property, Plant and Equipment

Upon acquisition, property, plant and equipment are stated at cost, which includes acquisition cost or production cost and other costs required to prepare the asset for its intended use as well as capitalized financial expense. Assets acquired through investment in kind or donations are recorded at their fair value upon acquisition. For assets acquired in exchange for a similar asset, the carrying amount of the asset given up is used to measure the cost of the asset received, and for assets acquired in exchange for a dissimilar asset, the fair value of the asset given up is used to measure the cost of the asset received unless the fair value of the asset received is more clearly evident.

Depreciation is computed by using the straight-line method over the estimated useful lives for the assets with the depreciable amount is determined after deducting its residual value from the cost. Assets are stated at cost less accumulated amortization and accumulated impairment loss, if any.

Estimated useful lives of the assets are as follows:


		Estimated useful lives (years)
Buildings		20, 40
Structures		20, 40
Machinery and equipment		4
Vehicles		4,12
Tools, furniture and fixtures		4

Significant additions or improvement extending the useful lives or increasing the value of the assets are capitalized. Normal maintenance and repairs are charged to expenses as incurred.

(k) Intangible Assets

Intangible assets are stated at cost, which includes acquisition or production cost and other costs required to prepare the asset for its intended use, less accumulated amortization and accumulated impairment loss, if any. Amortization commences when the asset is available for use, and the residual value of an intangible asset is assumed to be zero.

Costs incurred during the development phase are recognized as assets only if the criteria for capitalization as an intangible asset are met, otherwise costs are recognized as a development cost in cost of sales or selling, general and administrative expenses. Any expenditure incurred in the research phase is recognized as research expense in selling, general and administrative expenses.

Intangible assets are amortized using the straight-line method over the following estimated useful lives:


		Estimated useful lives (years)
Intellectual property rights		5, 10
Rights to use electricity and gas supply facilities		10
Rights to use industrial water facilities		10
Software		4

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

(l) Grants Received

Grants received from government and other third parties, which are to be repaid, are recorded as a liability. While non-refundable grants received are presented as a reduction of the acquisition cost of the acquired assets, grants received for a specific purpose, not related to the acquisition of assets, are offset against the related expense, and other grants received are recorded as other income.

(m) Impairment of Assets

When the book value of an asset is significantly greater than its recoverable value due to obsolescence, physical damage or an abrupt decline in the market value of the asset, the decline in value is deducted from the book value to agree with the recoverable amount and is recognized as an asset impairment loss for the period. When the recoverable value subsequently exceeds the book value, the reversal of impairment amount is recognized as a gain for the period to the extent that the revised book value does not exceed the book value that would have been recorded without the impairment.

(n) Convertible Bonds

When accounting for a convertible bond, the liability component and the equity component of a bond are separated. At the date of issue, the liability component of the bond is calculated at the fair value of a similar debt security without conversion rights, which is the present value of future cash flows from an ordinary bond until maturity and the equity component is calculated as the difference between the gross proceeds of the bond received at the date of issue and the amount of liability component. The equity component of the convertible bond is presented as a part of capital surplus within equity. Subsequent to initial recognition, the liability component is measured at amortized cost using the effective interest rate method; however, the equity component is not remeasured subsequent to initial recognition.

(o) Stock and Bond Issue Costs

Stock issue cost is deducted from the gross proceeds from issuance of those stocks and bond issue cost is adjusted to issuance price of debentures and, in turn, discount or premium on debentures.

(p) Discount (Premium) on Debentures

Discount (premium) on debentures, which represents the difference between the face value and issuance price of debentures, is amortized (accreted) using the effective interest method over the life of the debentures. The amount amortized (accreted) is included in interest expense.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

(q) Retirement and Severance Benefits

Employees and directors with at least one year of service are entitled to receive a lump-sum payment upon termination of their employment with the Company. Accrued severance benefits represent the amount which would be payable assuming all eligible employees and directors were to terminate their employment as of the end of the reporting period.

The Company has partially funded the accrued severance benefits through severance insurance deposits with insurance companies. Deposits made by the Company are recorded as a deduction from accrued severance benefits. In the case that the deposits are greater than the balance of accrued severance benefits, the excess portion of deposits over accrued severance benefits is recorded as other investments. The Company deposited a certain portion of severance benefits to the National Pension Service according to the prior National Pension Law. The deposit amount is recorded as a deduction from accrued severance benefits.

(r) Valuation of Receivables and Payables at Present Value

Receivables and payables arising from long-term cash loans or borrowings and other similar transactions are discounted using appropriate discount rates and stated at present value. The difference between the nominal value and present value of these receivables or payables is amortized using the effective interest rate method. The amount amortized is included in interest expense or interest income.

(s) Foreign Currency Translation

Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated into Korean Won at the foreign exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Korean Won using the foreign exchange rates prevailing at the end of the reporting period, with the resulting gains or losses recognized in the statement of income.

(t) Derivatives

The Company enters into foreign currency forward contracts to manage the foreign currency risk exposures to the changes in fair value of foreign currency denominated accounts receivable and accounts payable. In addition, the Company entered into cross currency swap and interest rate swap contracts to manage the interest rate and foreign currency risk exposures to the variability of future cash flows of floating rate notes.

Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value at each end of the reporting period. Attributable transaction costs are recognized in profit or loss when incurred.

Where a derivative, which meets certain criteria, is used for hedging the exposure to changes in the fair value of a recognized asset or liability, it is designated as a fair value hedge. Where a derivative, which meets certain criteria, is used for hedging the exposure to the variability of the future cash flows of a forecasted transaction, it is designated as a cash flow hedge.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

(t) Derivatives, Continued

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The effective portion of the changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in equity, other comprehensive income or loss. Amounts accumulated in equity are recycled to the income statement in the periods in which the hedged item will affect profit or loss or adjusted to the carrying value of an asset or liability of the related to the hedged transaction. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at the time remains in equity and is recognized in income when the forecast transaction is ultimately recognized in the statement of income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of income.

The Company documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis at each end of the reporting period, of whether the derivatives that are used in hedging transactions are highly effective in offsetting the changes in fair values or cash flows of hedged items and recognizes the gain or loss related to any ineffective portion immediately in the statement of income.

(u) Provisions and Contingent Liabilities

When it is probable that an outflow of economic benefits will occur due to a present obligation resulting from a past event, and whose amount is reasonably estimable, a corresponding amount of provision is recognized in the financial statements. However, when such outflow is dependent upon a future event, is not probable to occur, or cannot be reliably estimated, a disclosure regarding the contingent liability is made in the notes to the financial statements.

(v) Income Taxes

Income tax expense includes the current income tax under the relevant income tax laws and the changes in deferred tax assets or liabilities. Deferred tax assets and liabilities represent the amount of future income tax payables to be decreased or increased, respectively, by temporary differences, which is the difference between the carrying amounts of assets and liabilities for financial reporting purpose and the tax bases of assets and liabilities, and unused loss carryforwards and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the temporary differences, unused losses, and unused tax credits can be utilized. Deferred tax assets and liabilities are computed on temporary differences by applying enacted statutory tax rates applicable to the years when such differences are expected to reverse. Changes in the carrying amount of deferred tax assets or liabilities result from a change in tax rates or tax laws are recognized in the income statement except to the extent that the changes relate to items previously reflected directly in the shareholders’ equity.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

2 Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

(w) Sale or Discount of Accounts Receivable

The Company sells or discounts certain accounts or notes receivable to financial institutions, and accounts for the transactions as sale of the receivables if the control over the receivables is substantially transferred to the buyers. The losses from the sale of the receivables are charged to current operations as incurred.

(x) Earnings Per Share

Earnings per share are calculated by dividing net income attributable to stockholders of the Company by the weighted-average number of shares outstanding during the period. Diluted earnings per share are determined by adjusting net income attributable to stockholders and the weighted-average number of shares outstanding for the effects of all dilutive potential shares.

(y) Use of Estimates

The preparation of non-consolidated financial statements in accordance with accounting principles generally accepted in the Republic of Korea requires management to make estimates and assumptions that affect the amounts reported in the non-consolidated financial statements and related notes to non-consolidated financial statements. Items requiring management’s estimates and assumptions include, but not limited to, the valuation of property, plant and equipment, accounts receivable, inventories, deferred income tax and derivative contracts. Actual results may differ from those estimates.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

3 Cash and Cash Equivalents and Short-term Financial Instruments

Cash and cash equivalents and short-term financial instruments as of December 31, 2009 and 2008 are as follows:


*(In millions of Won)*	Annual
	interest rate(%) at December 31, 2009	2009		2008
Cash and cash equivalents
Checking accounts	—	(Won)	98	141
Time deposits	3.57~3.65		374,737	601,692
Passbook accounts in foreign currencies	0.07~1.96		329,489	605,953

			704,324	1,207,786

Short-term financial instruments
Time deposits and others	3.30~4.44		2,500,000	2,055,000

		(Won)	3,204,324	3,262,786

4 Receivables

The Company’s allowance for doubtful accounts on receivables, including trade accounts and notes receivable, as of December 31, 2009 and 2008 is as follows:


*(In millions of Won)*	2009
	Gross amount		Allowance for doubtful accounts	Carrying value

Trade accounts and notes receivable	(Won)	3,023,191	33	3,023,158
Other accounts receivable		81,502	89	81,413
Accrued income		41,360	119	41,241
Advance payments		11,300	113	11,187


*(In millions of Won)*	2008
	Gross amount		Allowance for doubtful accounts	Carrying value

Trade accounts and notes receivable	(Won)	1,695,871	293	1,695,578
Other accounts receivable		41,792	222	41,570
Accrued income		88,237	62	88,175
Advance payments		253	3	250
Long-term other receivables		184	2	182

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

4 Receivables, Continued

During 2009 certain trade accounts and notes receivable arising sales have been sold to financial institutions, of which trade accounts and notes receivable from the Company’s subsidiaries amounting to USD 187 million ((Won)217,784 million) and JPY 950 million ((Won)12,003 million) are current and outstanding as of December 31, 2009. For the year ended December 31, 2009, the Company recognized (Won)10,571 million as loss on disposal of trade accounts and notes receivable.

5 Inventories

Inventories as of December 31, 2009 and 2008 are as follows:


*(In millions of Won)*	2009
	Gross amount		Valuation loss	Book value

Finished goods	(Won)	397,330	11,812	385,518
Work-in-process		571,612	27,541	544,071
Raw materials		237,478	8,848	228,630
Supplies		165,003	36,917	128,086

	(Won)	1,371,423	85,118	1,286,305


*(In millions of Won)*	2008
	Gross amount		Valuation loss	Book value

Finished goods	(Won)	330,361	44,154	286,207
Work-in-process		415,264	57,173	358,091
Raw materials		173,708	5,520	168,188
Supplies		95,685	26,668	69,017

	(Won)	1,015,018	133,515	881,503

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

6 Available-for-Sale Securities

Available-for-sale securities as of December 31, 2009 and 2008 are as follows:


*(In millions of Won)*	2009
			Unrealized gains (losses)
	Acquisition cost		Beginning balance	Changes in unrealized gains and losses, net		Realized gains on disposition	Net balance at end of year	Carrying value (fair value)
Non-current asset
Debt securities
Government bonds		83	—	—		—	—	83
Everlight Electronics Co., Ltd.(*2)		7,628	—	1,599		—	1,599	9,227

	(Won)	7,711	—	1,599		—	1,599	9,310


Equity securities
HannStar Display Corporation(*1)		96,249	33,248	(31,775	)	—	1,473	97,722
Prime View International Co., Ltd. (*3)		11,522	—	1,390		—	1,390	12,912

	(Won)	107,771	33,248	(30,385	)	—	2,863	110,634

Total	(Won)	115,482	33,248	(28,786	)	—	4,462	119,944

(*1)

In February 2008, the Company purchased 180 million shares of non-voting mandatorily redeemable convertible preferred stock of HannStar Display Corporation (“Hannstar”) located in Taiwan. The preferred stocks are convertible into common stocks of HannStar at a ratio of 1:1 at the option of the Company from the issue date, February 28, 2008, to the maturity, February 28, 2011. In 2009, there is no preferred stock converted into common stock.

The Company has a put option for total or partial cash redemption of convertible preferred stocks during the period from 18 months after issuance of the convertible preferred stocks to 91 days prior to maturity of them and the issuer has a call option to repay, in cash, total preferred stocks during the period from 2 years after issuance to 90 days prior to maturity.

The abovementioned convertible preferred stocks have been privately placed under the Taiwanese Law, which restricts the sale of the preferred stocks (up to 3 years), and the stocks acquired through conversion are not to be traded in the Taiwanese Stock Exchange until the original maturity of the preferred stocks.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

6 Available-for-Sale Securities, Continued

(*2)

In November 2009, the Company acquired convertible bonds of Everlight Electronics Co., Ltd. (“Everlight”), a Taiwanese company which has LED packaging technologies, for strategic alliance purposes.

(*3)

In December 2009, the Company purchased 420,000 GDRs (Global Depositary Receipt) of Prime View International Co., Ltd. (“PVI”) for strategic alliance purposes.

The fair values of the preferred stock of HannStar and the convertible bonds of Everlight have been computed by discounting estimated cash flows from the stock using yield rate that reflects HannStar’s and Everlight’s credit risks. The fair value of PVI’s GDRs is listed price in Luxembourg Stock Exchange.


*(In millions of Won)*	2008
			Unrealized gains (losses)
	Acquisition cost		Beginning balance	Changes in unrealized gains and losses, net	Realized gains on disposition	Net balance at end of year	Carrying value (fair value)
Current asset
Debt securities
Government bonds	(Won)	74	—	—	—	—	74

Non-current asset
Equity securities

HannStar Display Corporation	(Won)	96,249	—	33,248	—	33,248	129,497

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

7 Equity Method Investments

(a) 2009

(i) Investments in companies accounted for using the equity method as of December 31, 2009 are as follows:


*(In millions of Won)*

Company	Percentage of Ownership (%)	Acquisition cost		Net asset value		Carrying value
LG Display America, Inc.	100.00		6,082	(404,476	)	—
LG Display Germany GmbH	100.00		1,252	14,688		113
LG Display Japan Co., Ltd.	100.00		1,088	15,533		9,500
LG Display Taiwan Co., Ltd.	100.00		6,076	29,704		21,784
LG Display Nanjing Co., Ltd.	100.00		197,132	408,200		408,331
LG Display Shanghai Co., Ltd.	100.00		596	11,026		1,094
LG Display Poland Sp. zo.o.	80.29		131,761	174,906		174,906
LG Display Guangzhou Co., Ltd.	89.12		120,809	172,269		164,952
LG Display Shenzhen Co., Ltd.	100.00		469	5,080		362
Suzhou Raken Technology Ltd.	51.00		86,745	100,003		94,797
LG Display Singapore Pte. Ltd. (*1)	100.00		1,250	4,173		—
LG Electronics (Nanjing) Plasma Co., Ltd. (*5)	100.00		3,503	2,790		2,790
Paju Electric Glass Co., Ltd.	40.00		14,400	36,256		33,901
TLI Inc. (*4)	12.69		14,074	9,914		13,345
AVACO Co., Ltd. (*4)	19.90		6,173	9,889		5,975
New Optics Ltd.	36.68		9,700	10,659		11,503
Guangzhou New Vision Technology Research and Development Limited	50.00		3,655	3,996		3,996
ADP Engineering Co., Ltd. (*2)	12.93		6,330	4,328		4,124
WooRee LED Co., Ltd. (*3)	29.57		11,900	6,502		11,537
Dynamic Solar Design Co., Ltd. (*3)	40.00		6,067	2,587		5,627
RPO, Inc. (*3)	25.96		14,538	4,858		14,538
Global OLED Technology LLC (*6)	49.00		72,250	72,250		72,250
LB Gemini New Growth Fund No. 16 (*7)	30.64		1,800	1,800		1,800

		(Won)	717,650	696,935		1,057,225

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

7 Equity Method Investments, Continued

(*1)

LG Display Singapore Pte. Ltd. (“LGDSG”) was established in Singapore in January 2009, by incorporating the Singapore branch of the Company, to sell TFT-LCD products. It is wholly owned by the Company as of December 31, 2009.

(*2)

In February 2009, the Company acquired 3,000,000 common shares of ADP Engineering Co., Ltd. (“ADP Engineering”) (12.9%) at (Won)6,330 million. Although the Company’s share interests in ADP Engineering is below 20%, the Company is able to exercise significant influence through its right to assign a director in the board of directors of ADP Engineering and, accordingly, the investment in ADP Engineering has been accounted for using the equity method.

(*3)

In May and June 2009, the Company acquired 6,800,000 and 933,332 common shares (29.6% and 40.0%) of WooRee LED Co., Ltd. and Dynamic Solar Design Co., Ltd. at (Won)11,900 million and (Won)6,067 million, respectively. Also, In November 2009, the Company acquired 34,125,061 common shares (26.0%) of RPO, Inc. at (Won)14,538 million.

(*4)

Although the Company’s share interests in these investees are below 20%, the Company is able to exercise significant influence through its right to assign a director in the board of directors of each investee and, accordingly, the investment in these investees have been accounted for using the equity method. As of December 31, 2009, the fair values of TLI Inc. and AVACO Co., Ltd., listed in KOSDAQ, are (Won)14,900 and (Won)7,170 per share, respectively.

(*5)

In July 2009, the Company entered into a stock purchase agreement with LG Electronics Inc. and LG Electronics (China) Co., Ltd. for the acquisition of the shares of LG Electronics (Nanjing) Plasma Co., Ltd. in order to expand cell back-end process to module production. In accordance with the agreement, the Company acquired whole shares of LG Electronics (Nanjing) Plasma Co., Ltd. at (Won)3,503 million in December 2009.

(*6)

The Company entered into a joint venture agreement with other LG affiliates, accordingly, Global OLED Technology LLC was set up with the purpose of managing and utilizing OLED patents purchased from Eastman Kodak Company. The Company acquired 49% equity interest in the joint venture and the Company’s investment in this equity investee is (Won)72,250 million.

(*7)

In December 2009, the Company joined the LB Gemini New Growth Fund No.16 as a member in a limited partnership with a view to searching for direct investment targets and gaining benefit from indirect investment. The Company invested (Won)1,800 million as a part of the agreed total investment amount up to (Won)30,000 million and acquired 30.6% equity interest in the fund.

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

7 Equity Method Investments, Continued

(ii) Changes in goodwill and negative goodwill for equity method investments for the year ended December 31, 2009 are as follows:


*(In millions of Won)*

Company	Balance at January 1, 2009			Increase (Decrease)		Amortized (Reversal) amount		Balance at December 31, 2009
TLI Inc.	(Won)	4,964		(71	)	(1,250	)	3,643
AVACO Co., Ltd.		(661	)	—		455		(206	)
New Optics Ltd.		1,498		—		(165	)	1,333
ADP Engineering Co., Ltd.		—		(272	)	26		(246	)
WooRee LED Co., Ltd.		—		5,594		(559	)	5,035
Dynamic Solar Design Co., Ltd.		—		3,378		(338	)	3,040
RPO, Inc.		—		9,680		—		9,680

	(Won)	5,801		18,309		(1,831	)	22,279

(iii) Details of eliminated unrealized gains and losses from transactions between the Company and equity investees as of December 31, 2009 are as follows:


*(In millions of Won)*

Company	Inventories			Property, plant and equipment		Accounts receivable	Total
LG Display America, Inc.	(Won)	(24,746	)	—		—	(24,746	)
LG Display Germany GmbH		(14,589	)	—		14	(14,575	)
LG Display Japan Co., Ltd.		(6,039	)	—		6	(6,033	)
LG Display Taiwan Co., Ltd.		(7,941	)	—		21	(7,920	)
LG Display Nanjing Co., Ltd.		—		131		—	131
LG Display Shanghai Co., Ltd.		(9,980	)	—		48	(9,932	)
LG Display Guangzhou Co., Ltd.		—		(7,317	)	—	(7,317	)
LG Display Shenzhen Co., Ltd.		(4,739	)	—		21	(4,718	)
Suzhou Raken Technology Ltd.		(5,178	)	(28	)	—	(5,206	)
LG Display Singapore Pte. Ltd.		(4,173	)	—		—	(4,173	)
Paju Electric Glass Co., Ltd.		(2,355	)	—		—	(2,355	)
TLI Inc.		(212	)	—		—	(212	)
AVACO Co., Ltd.		—		(3,708	)	—	(3,708	)
New Optics Ltd.		(489	)	—		—	(489	)
ADP Engineering Co., Ltd.		—		42		—	42

	(Won)	(80,441	)	(10,880	)	110	(91,211	)

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

7 Equity Method Investments, Continued

(iv) Changes in the balances of investments in the companies accounted for using the equity method for the year ended December 31, 2009 are as follows:


*(In millions of Won)*

Company	Balance at January 1, 2009		Acquisitions during the year	Dividend received		Equity income (loss)		Accumulated other comprehensive income		Other		Balance at December 31, 2009
LG Display America, Inc. (*1)	(Won)	—	—	—		(54,485	)	31,419		23,066		—
LG Display Germany GmbH		19,373	—	—		(18,071	)	(1,189	)	—		113
LG Display Japan Co., Ltd.		15,686	—	—		(5,088	)	(1,098	)	—		9,500
LG Display Taiwan Co., Ltd.		35,230	—	—		(14,405	)	959		—		21,784
LG Display Nanjing Co., Ltd.		409,200	4,428	(28,004	)	56,439		(32,620	)	(1,112	)	408,331
LG Display Hong Kong Co., Ltd. (*2)		2,000	—	—		(202	)	(159	)	(1,639	)	—
LG Display Shanghai Co., Ltd.		9,093	—	—		(8,117	)	118		—		1,094
LG Display Poland Sp. zo.o.		157,864	—	—		24,359		(7,317	)	—		174,906
LG Display Guangzhou Co., Ltd.		100,279	50,335	—		27,599		(13,261	)	—		164,952
LG Display Shenzhen Co., Ltd.		3,467	—	—		(2,597	)	(508	)	—		362
Suzhou Raken Technology Ltd.		18,328	73,592	—		11,302		(8,425	)	—		94,797
LG Display Singapore Pte. Ltd.		—	1,250	—		(1,680	)	430		—		—
LG Electronics (Nanjing) Plasma Co., Ltd.		—	3,503	—		—		—		(713	)	2,790
Paju Electric Glass Co., Ltd. (*3)		25,841	—	—		8,060		—		—		33,901
TLI Inc. (*3)		12,565	—	(353	)	1,316		(18	)	(165	)	13,345
AVACO Co., Ltd. (*3)		6,021	—	(204	)	(63	)	221		—		5,975
New Optics Ltd. (*3)		11,721	—	—		(418	)	200		—		11,503
Guangzhou New Vision Technology Research and Development Limited (*3)		4,569	—	—		273		(846	)	—		3,996
ADP Engineering Co., Ltd. (*3)		—	6,330	—		(2,206	)	—		—		4,124
WooRee LED Co., Ltd. (*3)		—	11,900	—		(363	)	—		—		11,537
Dynamic Solar Design Co., Ltd. (*3)		—	6,067	—		(440	)	—		—		5,627
RPO, Inc. (*3)		—	14,538	—		—		—		—		14,538
Global OLED Technology LLC (*3)		—	72,250	—		—		—		—		72,250
LB Gemini New Growth Fund No. 16 (*3)		—	1,800	—		—		—		—		1,800

	(Won)	831,237	245,993	(28,561	)	21,213		(32,094	)	19,437		1,057,225

LG DISPLAY CO., LTD.

Notes to Non-Consolidated Financial Statements—(Continued)

December 31, 2009 and 2008

7 Equity Method Investments, Continued

(*1)

LG Display America, Inc. (“LGDUS”) was sentenced to pay the fine of USD400 million by the U.S. Government. The Company recognized all losses related to LGDUS’s fine payable and recorded the cumulative loss in excess of the Company’s investment in LGDUS as long-term other accounts payable.

(*2)

LG Display Hong Kong Co., Ltd. was liquidated in November 2009.

(*3)

The Company accounted for its investments in these companies by using equity method of accounting based on the unaudited financial statements of the investees as it was unable to obtain the audited financial statements. The Company performed certain procedures to gain reasonableness of the unaudited financial statements.

(v) Accumulated amounts of the investor’s share of losses in associates that were not recognized as the Company ceased to apply the equity method to the balance of its investment in the associate are as follows: