CONSOLIDATED FINANCIAL STATEMENTS OF SAMSUNG ELECTRONICS CO., LTD.

AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

Page

Auditors Review Report................................................................................. Consolidated Financial Statements Consolidated Statements of Financial Position............................................................... Consolidated Statements of Income................................................................................ Consolidated Statements of Comprehensive Income .................................................... Consolidated Statements of Changes in Equity............................................................... Consolidated Statements of Cash Flows ......................................................................... Notes to the Consolidated Financial Statements ...........................................................

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Auditors Review Report

To the Board of Directors and Shareholders of Samsung Electronics Co., Ltd.

Reviewed Financial Statements We have reviewed the accompanying interim consolidated financial statements of Samsung Electronics Co., Ltd. and its subsidiaries (collectively referred to as the Company). These financial statements consist of consolidated statement of financial position of the Company as of March 31, 2011, and the related consolidated statements of income and comprehensive income, changes in equity and cash flows for the three-month then ended March 31, 2011 and 2010, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the International Financial Reporting Standards as adopted by the republic of Korea (K-IFRS) 1034, Interim Financial Reporting and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to issue a report on these consolidated financial statements based on our reviews. We conducted our reviews in accordance with the quarterly and semi-annual review standards established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of Korea and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our reviews, nothing has come to our attention that causes us to believe the accompanying interim consolidated financial statements do not present fairly, in all material respects, in accordance with the K-IFRS 1034, Interim Financial Reporting.

We have audited the statement of financial position of the Company as of December 31, 2010, and the related statements of income and comprehensive income, changes in equity, and cash flows for the year then ended, in accordance with auditing standards generally accepted in the Republic of Korea. We expressed an unqualified opinion on those financial statements in our audit report dated March 2, 2011. The statement of financial position as of December 31, 2010, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as of December 31, 2010.

Seoul, Korea May 20, 2011

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Korean Won, in thousands of U.S dollars (Note 2.1))

Notes
Assets Current Assets Cash and cash equivalents Short-term financial instruments Available-for-sale financial assets Trade and other receivables Advances Prepaid expenses Inventories Other current assets Total current assets Non-current assets Available-for-sale financial assets Associates and joint ventures Property, plant and equipment Intangible assets Deposits Long-term prepaid expenses Deferred income tax assets Other non-current assets Total assets

March 2011
KRW

December 2010
KRW

March 2011
USD

December 2010
USD

11,709,152 9,826,551 805,077 19,960,474 1,298,447 2,395,364 14,176,330 785,681 60,957,076

9,791,419 11,529,392 1,159,152 21,308,834 1,302,428 2,200,739 13,364,524 746,101 61,402,589

10,575,462 8,875,136 727,129 18,027,885 1,172,730 2,163,443 12,803,766 709,612 55,055,163

8,843,406 10,413,107 1,046,922 19,245,695 1,176,326 1,987,662 12,070,560 673,863 55,457,541

5 6 7 8

3,025,544 8,663,075 55,182,116 2,871,403 680,033 3,451,869 1,194,209 506,830 136,532,155

3,040,206 8,335,290 52,964,594 2,779,439 655,662 3,544,572 1,124,009 442,383 134,288,744

2,732,608 7,824,309 49,839,339 2,593,391 614,192 3,117,656 1,078,585 457,758 123,313,001

2,745,851 7,528,260 47,836,519 2,510,331 592,180 3,201,384 1,015,182 399,551 121,286,799

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Korean Won, in thousands of U.S dollars (Note 2.1))

Notes
Liabilities and Equity Current liabilities Trade and other payables Short-term borrowings Advance received Withholdings Accrued expenses Income tax payable Current portion of long-term borrowings and debentures Provisions Other current liabilities Total current liabilities Non-current liabilities Long-term trade and other payables Debentures Long-term borrowings Retirement benefit obligation Deferred income tax liabilities Provisions Other non-current liabilities Total liabilities

March 2011
KRW

December 2010
KRW

March 2011
USD

December 2010
USD

16,659,217 7,925,482 882,677 1,378,211 4,696,615 1,683,882 9, 10 11 531,138 3,973,190 306,168 38,036,580

16,049,800 8,429,721 883,585 1,052,555 7,102,427 2,051,452 1,123,934 2,917,919 333,328 39,944,721

15,046,258 7,158,130 797,215 1,244,771 4,241,885 1,520,847 479,713 3,588,503 276,526 34,353,848

14,495,845 7,613,549 798,036 950,646 6,414,764 1,852,829 1,015,114 2,635,404 301,054 36,077,241

10 9

11

972,398 584,991 2,506,179 694,802 1,737,112 346,325 155,014 45,033,401

1,072,661 587,338 634,381 597,829 1,652,667 295,356 154,700 44,939,653

878,250 528,352 2,263,529 627,531 1,568,923 312,794 140,004 40,673,231

968,805 530,471 572,960 539,947 1,492,654 266,759 139,722 40,588,559

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Korean Won, in thousands of U.S dollars (Note 2.1))

Notes
Equity attributable to owners of the parent Preferred stock Common stock Share premium Retained earnings Other component of equity Non-controlling interests Total equity Total liabilities and equity

March 2011
KRW

December 2010
KRW

March 2011
USD

December 2010
USD

13 13 14 15

119,467 778,047 4,403,893 86,972,979 (4,971,634) 4,196,002 91,498,754 136,532,155

119,467 778,047 4,403,893 85,014,550 (4,726,398) 3,759,532 89,349,091 134,288,744

107,900 702,716 3,977,505 78,552,185 (4,490,278) 3,789,742 82,639,770 123,313,001

107,900 702,716 3,977,505 76,783,372 (4,268,784) 3,395,531 80,698,240 121,286,799

The accompanying notes are an integral part of these consolidated financial statements.

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(In millions of Korean Won, in thousands of U.S dollars (Note 2.1))

For the three-months ended March 31, Notes 2011

KRW Revenue

2010
KRW

2011
USD

2010
USD

36,985,017

34,638,070

33,404,098

31,284,384

Cost of sales 26,054,443 Gross profit 10,930,574 Research and development Expenses Selling, general and administrative expenses Other operating income Other operating expenses Operating profit Share of profit or loss of associates and joint ventures Finance income Finance expense Profit before income tax Income tax expense Profit for the period Profit attributable to owners of the parent Profit attributable to non-controlling interest 19 19 20 2,344,075 17 18 18 5,791,054 309,755 156,664 2,948,536 375,608 1,391,185 1,327,570 3,387,759 603,021 2,784,738 11,629,461 2,052,865 5,541,301 589,013 218,696 4,405,612 461,694 1,452,027 1,346,430 4,972,903 979,133 3,993,770 9,872,267 2,117,120 5,230,359 279,764 141,496 2,663,056 339,241 1,256,489 1,199,033 3,059,753 544,636 2,515,117 10,503,487 1,854,105 5,004,788 531,984 197,521 3,979,057 416,992 1,311,441 1,216,067 4,491,423 884,333 3,607,090 23,008,609 23,531,831 20,780,897

2,714,645 70,093

4,016,443 (22,673)

2,451,811 63,306

3,627,568 (20,478)

Earnings per share for profit attributable to the owners of the parent (in Korean Won and US dollars): Basic Diluted

21 21

17,831 17,793

27,103 26,963

16.10 16.07

24.48 24.35

The accompanying notes are an integral part of these consolidated financial statements.

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions of Korean Won, in thousands of U.S dollars (Note 2.1))

2011
KRW Profit for the period Available-for-sale financial assets, net of tax Share of other comprehensive income of associates and joint ventures, net of tax Foreign currency translation, net of tax Consolidated comprehensive income Consolidated comprehensive income attributable to : Owners of the parent Non-controlling interests 2,784,738 (36,537)

For the three-months ended March 31, 2010 2011

KRW 3,993,770 123,724 USD 2,515,117 (32,999)

2010
USD 3,607,090 111,745

(19,173) (187,651) 2,541,377

(98,557) (737,712) 3,281,225

(17,317) (169,482) 2,295,319

(89,015) (666,286) 2,963,534

2,497,936 43,441

3,326,556 (45,331)

2,256,083 39,236

3,004,476 (40,942)

The accompanying notes are an integral part of these consolidated financial statements.

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions of Korean Won)

2010 KRW
Balance at January 1, 2010 Profit for the period Available-for-sale financial assets, net of tax Share of other comprehensive income of associates and joint ventures, net of tax Foreign currency translation, net of tax Total comprehensive income Dividends Change in ownership interests, including new stock issues by consolidated subsidiaries Disposal of treasury stock Stock option activities Other Total transactions with owners Balance at March 31, 2010

Preferred stock
119,467 -

Common stock
778,047 -

Share premium
4,403,893 -

Retained earnings
71,065,247 4,016,443 -

Other component of equity

(6, 801,601) 123,109 (98,557)

Equity attributable to owners of the parent

69,565,053 4,016,443 123,109 (98,557) (714,439) 72,891,609 (1,111,931)

Noncontrolling interests
3,480,149 (22,673) 615 (23,273) 3,434,818 (14,623)

Total
73,045,202 3,993,770 123,724 (98,557) (737,712) 76,326,427 (1,126,554)

119,467 -

778,047 -

4,403,893 -

75,081,690 (1,111,931) (714,439) (7,491,488) -

119,467

778,047

4,403,893

(2,625) (1,114,556) 73,967,134

61,269 (20,769) 150 40,650 (7,450,838)

61,269 (20,769) (2,475) (1,073,906) 71,817,703

52 998 (13,573) 3,421,245

52 61,269 (20,769) (1,477) (1,087,479) 75,238,948

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands of U.S dollars (Note 2.25))

2010 USD
Balance at January 1, 2010 Profit for the period Available-for-sale financial assets, net of tax Share of other comprehensive income of associates and joint ventures, net of tax Foreign currency translation, net of tax Total comprehensive income Dividends Change in ownership interests, including new stock issues by consolidated subsidiaries Disposal of treasury stock Stock option activities Other Total transactions with owners Balance at March 31, 2010

Preferred stock
107,900 -

Common stock
702,716 -

Share premium
3,977,505 -

Retained earnings
64,184,652 3,627,568 -

Other component of equity

(6,143,064) 111,189

Equity attributable to owners of the parent

62,829,709 3,627,568 111,189

Noncontrolling interests
3,143,197 (20,478) 556

Total
65,972,906 3,607,090 111,745

107,900 107,900

702,716 702,716

3,977,505 3,977,505

67,812,220 (1,004,273) (2,371) (1,006,644) 66,805,576

(89,015) (645,266) (6,766,156) 55,337 (18,758) 135 36,714 (6,729,442)

(89,015) (645,266) 65,834,185 (1,004,273) 55,337 (18,758) (2,235) (969,929) 64,864,256

(21,020) 3,102,255 (13,207) 47 901 (12,259) 3,089,996

(89,015) (666,286) 68,936,440 (1,017,480) 47 55,337 (18,758) (1,334) (982,188) 67,954,252

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions of Korean Won)

2011 KRW
Balance at January 1, 2011 Profit for the period Available-for-sale financial assets, net of tax Share of other comprehensive income of associates and joint ventures, net of tax Foreign currency translation, net of tax Total comprehensive income Dividends Change in ownership interests, including new stock issues by consolidated subsidiaries Effect of business combinations Disposal of treasury stock Stock option activities Other Total transactions with owners Balance at March 31, 2011

Preferred stock
119,467 -

Common stock
778,047 -

Share premium
4,403,893 -

Retained earnings
85,014,550 2,714,645 -

Other component of equity

(4,726,398) (34,632)

Equity attributable to owners of the parent

85,589,559 2,714,645 (34,632)

Noncontrolling interests
3,759,532 70,093 (1,905)

Total
89,349,091 2,784,738 (36,537)

119,467 -

778,047 -

4,403,893 -

87,729,195 (749,476)

(19,173) (162,905) (4,943,108) -

(19,173) (162,905) 88,087,494 (749,476)

(24,746) 3,802,974 (582)

(19,173) (187,651) 91,890,468 (750,058)

(6,740) (756,216) 86,972,979

(63,791) 148,887 (29,737) (83,885) (28,526) (4,971,634)

(63,791) 148,887 (29,737) (90,625) (784,742) 87,302,752

392,874 52 684 393,028 4,196,002

329,083 52 148,887 (29,737) (89,941) (391,714) 91,498,754

119,467

778,047

4,403,893

10

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands of U.S dollars (Note 2.25))

2011 USD
Balance at January 1, 2011 Profit for the period Available-for-sale financial assets, net of tax Share of other comprehensive income of associates and joint ventures, net of tax Foreign currency translation, net of tax Total comprehensive income Dividends Change in ownership interests, including new stock issues by consolidated subsidiaries Effect of business combinations Disposal of treasury stock Stock option activities Other Total Transactions with owners Balance at March 31, 2011

Preferred stock
107,900 -

Common stock
702,716 -

Share premium
3,977,505 -

Retained earnings
76,783,372 2,451,811 -

Other component of equity

(4,268,784) (31,279)

Equity attributable to owners of the parent

77,302,709 2,451,811 (31,279)

Noncontrolling interests
3,395,531 63,306 (1,720)

Total
80,698,240 2,515,117 (32,999)

107,900 -

702,716 -

3,977,505 -

79,235,183 (676,911)

(17,317) (147,132) (4,464,512) -

(17,317) (147,132) 79,558,792 (676,911)

(22,350) 3,434,767 (526)

(17,317) (169,482) 82,993,559 (677,437)

107,900

702,716

3,977,505

(6,087) (682,998) 78,552,185

(57,615) 134,472 (26,858) (75,765) (25,766) (4,490,278)

(57,615) 134,472 (26,858) (81,852) (708,764) 78,850,028

354,836 47 618 354,975 3,789,742

297,221 47 134,472 (26,858) (81,234) (353,789) 82,639,770

The accompanying notes are an integral part of these consolidated financial statements.

11

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Korean Won, in thousands of U.S dollars (Note 2.1))

For the three-months ended March 31, Notes

Cash flows from operating activities Profit for the period Adjustments Changes in operating assets and liabilities Cash flows from operating activities Interest received Interest paid Dividend received Income tax paid Net cash generated from operating activities Cash flows from investing activities Net decrease (increase) in short-term financial instruments Net decrease in short-term available-for-sale securities Proceeds from disposal of long-term availablefor-sale securities Acquisition of long-term available-for-sale securities Proceeds from disposal of associates and joint ventures Acquisition of associates and joint ventures Purchases of property, plant and equipment Disposal of property, plant and equipment Purchases of intangible assets Disposal of intangible assets Payment for deposits Proceeds from deposits Others Net cash used in investing activities 22 22

2011
KRW 2,784,738 3,282,407 (1,102,903) 4,964,242 233,034 (100,405) 199,060 (952,220) 4,343,711

2010
KRW 3,993,770 3,448,608 (1,482,587) 5,959,791 103,210 (130,177) 171,020 (877,427) 5,226,417

2011
USD 2,515,118 2,964,602 (996,119) 4,483,601 210,471 (90,684) 179,786 (860,025) 3,923,149

2010
USD 3,607,090 3,114,711 (1,339,042) 5,382,759 93,217 (117,573) 154,462 (792,474) 4,720,391

1,697,149 360,416 424 (35,257) (286,384) (5,527,465) 139,939 (172,154) 126 (107,663) 75,545 (36,793) (3,892,117)

(1,655,820) 958,067 1,608 (217,166) 2,463 (4,141,530) 680,031 (601,597) 6,337 (183,096) 166,430 (182,140) (5,166,413)

1,532,830 325,520 383 (31,843) (258,656) (4,992,291) 126,390 (155,486) 114 (97,239) 68,231 (33,232) (3,515,279)

(1,495,502) 865,306 1,452 (196,140) 2,225 (3,740,544) 614,190 (543,350) 5,723 (165,368) 150,316 (164,505) (4,666,197)

12

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Korean Won, in thousands of U.S dollars (Note 2.1))

For the three-months ended March 31, Notes

Cash flows from financing activities Payment of dividends Disposal of treasury stock Net repayment from short-term borrowings Repayment of long-term borrowings Proceeds from long-term borrowings Others Net cash used in financing activities (2,256) 63,462 (293,491) (611,278) 1,946,519 331,866 1,434,822 (13,287) 42,451 (1,082,860) (379,260) 315,594 11,618 (1,105,744) (2,038) 57,318 (265,075) (552,094) 1,758,055 299,735 1,295,901 (12,001) 38,341 (978,017) (342,540) 285,038 10,494 (998,685)

2011
KRW

2010
KRW

2011
USD

2010
USD

Effect of exchange rate changes Net increase (decrease) in cash and cash equivalents Cash and cash equivalents Beginning of the year End of the period

31,317 1,917,733

121,053 (924,687)

28,286 1,732,057

109,333 (835,158)

9,791,419 11,709,152

10,149,930 9,225,243

8,843,405 10,575,462

9,167,206 8,332,048

The accompanying notes form an integral part of these consolidated financial statements

13

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. General Information Samsung Electronics Co., Ltd. ("SEC") was incorporated under the laws of the Republic of Korea to manufacture and sell semiconductors, LCDs, telecommunication products, and digital media products. As of March 31, 2011, SECs shares are listed on the Korea Stock Exchange, and its global depository receipts are listed on the London and Luxembourg Stock Exchange. SEC is domiciled in the Republic of Korea and the address of its registered office is Suwon, the Republic of Korea. Consolidated Subsidiaries The consolidated financial statements include the accounts of SEC and its controlled subsidiaries (collectively referred to as "the Company"). Controlled subsidiaries generally include those companies over which the Company exercises control. Control over an entity is presumed to exist when the Company owns, directly or indirectly through subsidiaries, over 50% of the voting rights of the entity, the Company has the power to govern the operating and financial policies of the entity through agreement or the Company has the power to appoint or remove the majority of the members of the board of the entity. Outlined below is a full list of SECs consolidated subsidiaries: Area Korea Subsidiaries STECO, SEMES, Samsung Electronics Service, Living Plaza, Samsung Electronics Logitech, SECRON, S-LCD, Samsung Electronics Hainan Fiberoptics Korea, Samsung Electronics Football Club, Samsung Mobile Display, World Cyber Games, Samsung Venture Capital Union #6, #7, #14 and #20, Ray, GES, Prosonic Americas Samsung Electronics Canada (SECA), Samsung Electronics America (SEA), Samsung Electronics Latinoamerica (SELA), Samsung Electronics Mexico (SEM), Samsung Electronics Argentina (SEASA), Samsung Receivables (SRC), Samsung Semiconductor (SSI), Samsung Information Systems America (SISA), Samsung Telecommunications America (STA), Samsung International (SII), Samsung Austin Semiconductor (SAS), Samsung Mexicana (SAMEX), Samsung Electronics Latinoamerica Miami (SEMI), Samsung Electronica Columbia (SAMCOL), Samsung Electronica da Amazonia (SEDA), SEMES America (SEMESA), Samsung Electronics Chile (SECH), Samsung Electronics Peru (SEPR), Samsung Electronics Venezuela (SEVEN)

14

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Area Europe and Africa Subsidiaries Samsung Electronics Iberia (SESA), Samsung Electronics Nordic (SENA), Samsung Electronics Hungarian (SEH), Samsung Electronics Portuguesa (SEP), Samsung Electronics France (SEF), Samsung Electronics (UK)(SEUK), Samsung Electronics Holding (SEHG), Samsung Electronics Italia (SEI), Samsung Electronics South Africa (SSA), Samsung Electronics Benelux (SEBN), Samsung Electronics LCD Slovakia (SELSK), Samsung Electronics Polska (SEPOL), Samsung Semiconductor Europe (SSEL), Samsung Electronics GmbH (SEG), Samsung Semiconductor Europe GmbH (SSEG), Samsung Electronics Austria (SEAG), Samsung Electronics Overseas (SEO), Samsung Electronics Europe Logistics (SELS), Samsung Electronics Rus (SER), Samsung Electronics Rus Company (SERC), Samsung Electronics Slovakia (SESK), Samsung Russia Service Center (SRSC), Samsung Electronics Rus Kaluga (SERK), Samsung Electronics Baltics (SEB), Samsung Electronics Ukraine Company (SEUC), Samsung Electronics KZ and Central Asia (SEKZ), Samsung Semiconductor Israel R&D Center(SIRC), Samsung Gulf Electronics (SGE), Samsung Electronics Ukraine (SEU), Samsung Electronics Limited (SEL), Samsung Telecoms (UK)(STUK), Samsung Electronics Kazakhstan (SEK), Samsung Electronics Turkey (SETK), Samsung Electronics Levant (SELV), Samsung Electronics Romania (SEROM), Samsung Electronics Czech and Slovak (SECZ), Samsung Electronics European Holding(SEEH), Samsung Electronics Morocco (SEMRC), Samsung Electronics Poland Manufacturing (SEPM), Samsung Electronics West Africa (SEWA), Samsung Electronics Greece (SEGR), Samsung LCD Netherlands R&D Center(SNRC), Samsung LCD Netherlands R&D Center UK(SNRC(UK)), Samsung Opto-Electronics GmbH (SOG) China Samsung Electronics Hong Kong (SEHK), Samsung Electronics Taiwan (SET), Samsung Electronics Huizhou (SEHZ), Samsung Electronics (Shandong) Digital Printing (SSDP), Samsung Electronics Suzhou Semiconductor (SESS), Suzhou Samsung Electronics (SSEC), Samsung Suzhou Electronics Export (SSEC-E), Samsung (China) Investment (SCIC), Tianjin Samsung Electronics (TSEC), Tianjin Samsung Telecom Technology (TSTC), Samsung Electronics Suzhou LCD (SESL), Samsung Electronics Suzhou Computer (SESC), Shanghai Samsung Semiconductor (SSS), Shenzhen Samsung Kejian Mobile Telecommunication Technology (SSKMT), Samsung Electronics Hainan Fiberoptics (SEHF), Samsung Electronics (Beijing) Service (SBSC), Samsung Semiconductor (China) R&D (SSCR), Beijing Samsung Telecom R&D Center (BST), Samsung Electronics Shanghai Telecommunication (SSTC), Samsung Electronics China R&D Center (SCRC), Dongguan Samsung Mobile Display (DSMD), Tianjin Samsung Mobile Display (TSMD), Samsung Guangzhou Mobile R&D Center (SGMC), Tianjin Samsung Opto-Electronics (TSOE), Samsung Tianjin Mobile R&D (STMC), Samsung LCD Netherlands R&D Center HK(SNRC(HK)),

15

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Area Rest of Asia

Subsidiaries Samsung Yokohama Research Institute (SYRI), Samsung Electronics Australia (SEAU), Samsung Electronics Indonesia (SEIN), Samsung Asia (SAPL), Samsung Electronics Asia Holding (SEAH), Samsung Electronics Display (M)(SDMA), Samsung Electronics (M)(SEMA), Samsung Vina Electronics (SAVINA), Samsung India Electronics (SIEL), Thai Samsung Electronics (TSE), Samsung Electronics Philippines (SEPCO), Batino Realty Corporation (BRC), Samsung Electronics Philippines Manufacturing (SEPHIL), Samsung Japan (SJC), Samsung Telecommunications Indonesia (STIN), Samsung Malaysia Electronics (SME), Samsung Electronics Vietnam (SEV), Samsung India Software Operations (SISO), Samsung Telecommunications Japan (STJ), Samsung Telecommunications Malaysia (STM) Samsung Bangladesh R&D (SBRC)

2. Basis of Presentation This condensed consolidated interim financial information for the three-month ended March 31, 2011 has been prepared in accordance with K-IFRS 1034. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended December 31, 2010, which have been prepared in accordance with K-IFRSs. The accounting policies adopted are consistent with those of the previous financial year, except as described below. Exceptional items are disclosed and described separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Company. They are material items of income or expense that have been shown separately due to the significance of their nature or amount. New standards, amendments and interpretations issued and effective for the financial year beginning January 1, 2011 (a) New and amended standards adopted by the Company The following new standards and amendments to standards are mandatory for the first time for the financial year beginning January 1, 2011

Revised K-IFRS 1024 (revised), Related party disclosures. It supersedes K-IFRS 1024, Related party
disclosures .

K-IFRS 1024 (revised) is mandatory for periods beginning on or after January 1, 2011. Earlier application, in whole or in part, is permitted. The Company has applied the revised standard from January 1, 2011. When the revised standard is applied, the Company and the parent will need to disclose any transactions between its subsidiaries and its associates. It is, therefore, not possible at this stage to disclose the impact, if any, of the revised standard on the related party disclosures.

16

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(b) New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January 2011 but not currently relevant to the Company.

Classification of rights issues (amendment to K-IFRS 1032).

The amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. Provided certain conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. Previously, these issues had to be accounted for as derivative liabilities. The amendment applies retrospectively in accordance with KIFRS 1008 Accounting policies, changes in accounting estimates and errors. The Company has applied the amended standard from January 1, 2011. It is not expected to have any impact on the Company or the parent entitys financial statements. K-IFRS 1103 (revised), Business combinations. The option to measure non-controlling interest either at fair value or at the non-controlling interests proportionate share of the acquirees identifiable net assets is amended to be available only in certain cases. Otherwise, non-controlling interest should be measured at fair value. In addition, the guidance applies to share-based payment transactions that are chosen not to be replaced as a consequence of the business combination and to share-based payment transactions that the acquirer chooses to exchange for share-based transactions of the acquiree. It is not expected to have any impact on the Company or the parent entitys financial statements.

Prepayments of a minimum funding requirement(amendments to K-IFRIC 2114).

The amendments correct an unintended consequence of K-IFRIC 2114, K-IFRS 1019 The limit on a defined benefit asset, minimum funding requirements and their interaction. Without the amendments, entities are not permitted to recognize as an asset on some voluntary prepayments for minimum funding contributions. This was not intended when K- IFRIC 2114 was issued, and the amendments corrected this. The amendments are effective for annual periods beginning January 1, 2011. The Company has applied these amendments for the financial reporting period commencing on January 1, 2011. It is not expected to have any impact on the Company or the parent entitys financial statements.

K-IFRIC 2119, Extinguishing financial liabilities with equity instruments.

The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability (debt for equity swap). It requires a gain or loss to be recognized in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. If the fair value of the equity instruments issued cannot be reliably measured, the equity instruments should be measured to reflect the fair value of the financial liability extinguished. The Company has applied the interpretation from January 1, 2011. It is not expected to have any impact on the Company or the parent entitys financial statements.

17

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.1 Convenience translation into United States Dollar Amounts The Company operates primarily in Korean Won and its official accounting records are maintained in Korean Won. The U.S. dollar amounts provided in the financial statements represent supplementary information solely for the convenience of the reader. All Won amounts are expressed in U.S. dollars at the rate of 1,107 to US $1, the exchange rate in effect on March 31, 2011. Such presentation is not in accordance with generally accepted accounting principles, and should not be construed as a representation that the Won amounts shown could be readily converted, realized or settled in U.S. dollars at this or at any other rate.

3.

Financial instruments by category Financial instruments by category as of March 31, 2011 consist of the following: Assets at fair value through Loans and receivables Availablefor-sale financial assets Held-tomaturity investments Total Fair value

(In millions of Korean Won) Assets Cash and cash equivalents Short -term financial instruments Available-for-sale financial assets Trade and other receivables Other financial assets (*) Total

the profit and loss

87,987

11,709,152 9,826,551 19,960,474 1,884,557 43,380,734

11,709,152 9,826,551 3,830,621 19,960,474 1,972,544 47,299,342

11,709,152 9,826,551 3,830,621 19,960,474 1,972,544 47,299,342

3,830,621 3,830,621

87,987

Liabilities at fair (In millions of Korean Won) Liabilities Trade and other payables Borrowings Debentures Other financial liabilities (**) Total 26,136 26,136 value through the profit and loss

Financial liabilities measured at amortized cost Total Fair value

17,631,615 10,857,487 690,303 5,131,661 34,311,066

17,631,615 10,857,487 690,303 5,157,797 34,337,202

17,631,615 10,857,487 690,303 5,157,797 34,337,202

18

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial instruments by category as of December 31, 2010, consist of the following: Assets at fair value through (In millions of Korean Won) Assets Cash and cash equivalents Short -term financial instruments Available-for-sale financial assets Trade and other receivables Other financial assets (*) Total 34,458 34,458 1,669,433 1,703,891 48,532,894 1,703,891 48,532,894 44,299,078 4,199,358 Liabilities at fair (In millions of Korean Won) Liabilities Trade and other payables Borrowings Debentures Other financial liabilities (**) 24,638 17,122,461 10,082,577 692,797 7,789,567 17,122,461 10,082,577 692,797 7,814,205 17,122,461 10,082,577 692,797 7,814,205 value through the profit and loss 21,308,834 21,308,834 21,308,834 4,199,358 4,199,358 4,199,358 11,529,392 11,529,392 11,529,392 9,791,419 9,791,419 9,791,419 the profit and loss Loans and receivables Availablefor-sale financial assets Held-tomaturity investments Total Fair value

Financial liabilities measured at amortized cost Total Fair value

Total 24,638 35,687,402 35,712,040 35,712,040 (*) Other financial assets consist of amounts included in other current assets, deposits, and other noncurrent assets in the statement of financial position, and do not include investments in joint-ventures and associated companies. (**) Other financial liabilities consist of amounts included in current and non-current accrued expenses, and other current and non-current liabilities, excluding items which are non-financial. The following table presents the assets and liabilities that are measured at fair value at March 31, 2010. (In millions of Korean Won) Short-term derivatives Available-for-sale financial assets Total assets Short-term derivatives Total liabilities Level 1 3,428,438 3,428,438 Level 2 87,987 68,985 156,972 26,136 26,136 Level 3 333,198 333,198 Total balance 87,987 3,830,621 3,918,608 26,136 26,136

19

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the assets and liabilities that are measured at fair value at 31 December 20010. (In millions of Korean Won) Short-term derivatives Available-for-sale financial assets Total assets Short-term derivatives Total liabilities Level 1 3,823,234 3,823,234 Level 2 34,458 49,765 84,223 24,638 24,638 Level 3 326,359 326,359 Total balance 34,458 4,199,358 4,233,816 24,638 24,638

The levels of the fair value hierarchy and its application to financial assets and liabilities are described below Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 : Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly Level 3 : Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arms length basis. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily listed equity investments classified as trading securities or available-for-sale. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Specific valuation techniques used to value financial instruments include: Quoted market prices or dealer quotes for similar instruments. The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments. As for trade and other receivables, the book value approximates a reasonable estimate of fair value.

20

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. Inventories Inventories, net of valuation losses, as of March 31, 2011 and December 31, 2010, consist of the following: (In millions of Korean Won) Finished goods Work in Process Raw materials and supplies Materials-in-transit Total 2011 4,604,250 2,721,113 4,532,301 2,318,666 14,176,330 2010 4,511,391 2,619,713 4,159,842 2,073,578 13,364,524

As of March 31, 2011, losses from valuation of inventories of 404,502 million (December 31, 2010: 524,850 million) were deducted to inventories.

5. Long-Term Available-for-sale financial assets Long-term available-for-sale financial assets as of March 31, 2011 and December 31, 2010, consist of the following: December 31, March 31, 2011 Acquisition (In millions of Korean Won) Listed equities 1 Non-listed equities others
1, 2

2010 Recorded Book Value 2,664,082 326,359 49,765 3,040,206

Recorded Book Value 2,623,361 333,198 68,985 3,025,544

Detail 1) 2)

Cost 703,138 241,724 68,985 1,013,847

Government and public bonds and

Excludes associates and joint ventures The company measures available-for-sale financial assets, at their fair values. For an investment in equity instruments that do not have a quoted market price in an active market and its fair value cannot be measured reliably, it is measured at cost.

1) Listed equities Listed equities March 31, 2011 and December 31, 2010, consist of the following: (In millions of Korean Won, except for the number of shares and percentage)

21

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December March 31, 2011 Number of Shares Owned Samsung Life Insurance Samsung Heavy Industries Samsung Fine Chemicals Hotel Shilla Cheil Worldwide iMarket Korea A-Tech Solution SFA SNU Pricision Rambus Others 2,164,970 2,004,717 2,998,725 3,800,000 1,592,000 1,822,000 1,075,446 9,576,250 8.4 5.0 2.6 10.6 15.9 10.0 5.3 8.3 45,678 13,957 2,920 1,900 26,348 38,262 14,204 185,363 24,095 703,138 172,981 51,221 43,482 101,460 28,099 124,625 20,649 209,406 112,944 2,623,361 179,476 55,631 41,532 103,360 33,432 89,278 18,874 223,363 108,422 2,664,082 40,675,641 17.6 258,299 1,622,958 1,675,836 1,315,880 0.7 92,112 135,536 134,878 Percentage of Ownership (%) Acquisition Cost Recorded Book Value Recorded Book Value 31, 2010

The differences between the acquisition cost and the fair value of the investment is recorded under other reserves, a separate component of equity.

6. Associates and Joint Ventures Changes in associates and joint ventures for the three-month ended March 31, 2011 and 2010, consist of the following: (In millions of Korean Won) At January 1 Acquisition of Associates and Joint Ventures Disposal of Associates and Joint Ventures Share of profit1 Others At March 31
1

2011 8,335,290 286,384 375,608 (334,207) 8,663,075

2010 7,334,705 (2,463) 461,694 (250,853) 7,543,083

Share of profit/(loss) is after-tax and minority interest in associates.

Others consist of dividends and effect of change in foreign exchange rates.

22

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. Property, Plant and Equipment Changes in property, plant and equipment for the three-month ended March 31, 2011 and 2010, consist of the following: (In millions of Korean won) 2011 Net book value at January 1 Acquisition Disposal / Impairment Depreciation Others Net book value at March 31 52,964,594 5,527,465 (91,940) (2,978,642) (239,361) 55,182,116 2010 43,560,295 4,141,530 (568,313) (2,753,117) (351,372) 44,029,023

8. Intangible Assets Changes in intangible assets for the three-month ended March 31, 2011 and 2010, consist of the following: (In millions of Korean won) 2011 Net book value at January 1 Internal generation Acquisition Disposal / Impairment Amortization Others Net book value at March 31 2,779,439 104,089 68,065 (4,303) (145,106) 69,219 2,871,403 2010 1,256,008 63,088 590,381 (6,733) (119,009) (8,731) 1,775,004

9. Borrowings Borrowings as of March 31, 2011 and December 31, 2010, consist of the following: Annual Interest Financial (In millions of Korean Won) Short-term Borrowings Collateralized borrowings Bank borrowings Total Woori Bank etc Woori Bank etc 1.1 ~ 5.0 0.2 ~ 16.5 5,321,016 2,604,466 7,925,482 5,090,433 3,339,288 8,429,721 Institutions Rates (%) as of March 31, 2011 2011 2010

23

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Current Portion of longterm Borrowings Bank borrowings Financial lease liabilities Total Long-term Borrowings Bank borrowings Financial lease liabilities Total buildings (Note 7). (*2) The Company leases certain property, plant and equipment under various finance lease arrangements. Woori Bank etc APCI etc 1.0 ~ 4.6 2.3 ~ 15.3 2,413,429 92,750 2,506,179 536,871 97,510 634,381 Woori Bank etc APCI etc 2.8 ~ 9.6 4.2 ~ 15.3 416,314 9,512 425,826 1,008,884 9,591 1,018,475

(*1) Collateralized borrowings are secured by trade receivables. Bank borrowings are secured by lands and

10. Debentures Debentures as of March 31, 2011 and December 31, 2010, consist of the following: (In millions of Korean Won) Korea Won denominated debenture(A) Foreign currency denominated debenture(B) Total Current portion of debentures Non-current portion of debentures 2011 600,000 90,303 690,303 105,312 584,991 2010 600,000 92,797 692,797 105,459 587,338

24

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(A) Korean Won denominated debentures as of March 31, 2011 and December 31, 2010, consist of the following: Annual Interest Rates (%) (In millions of Korean Won) Samsung Mobile Display Samsung Mobile Display Total Current portion 2010.6.17 2013.6.17 4.7 500,000 600,000 100,000 500,000 600,000 100,000 2006.12.01 2011.12.01 5.1 100,000 100,000 Issue Date Due Date as of March 31, 2011 2011 2010

Korean Won denominated debentures were issued by Samsung Mobile Display, one of SECs domestic subsidiaries and included in consolidation scope since 2009. The debenture issued in 2006 will mature on December 1, 2011 with repayment to be made annually for two years after a three-year grace period, while the one issued in 2010 is due for repayment at maturity. (B) Debentures denominated in foreign currencies as of March 31, 2011 and December 31, 2010, consist of the following: Annual Interest Rates (%) (In millions of Korean Won) US dollar denominated straight bonds Less: Discounts Total Current portion 1997.10.2 2027.10.1 7.7 94,112 (USD 85M) (3,809) 90,303 5,312 96,807 (USD 85M) (4,010) 92,797 5,459 Issue Date Due Date as of March 31, 2011 2011 2010

US dollar straight bonds will be repaid annually for twenty years after a ten-year grace period from the date of issuance. Interests will be paid semi-annually.

25

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Provisions The changes in the main liability provisions during the three-month period ended March 31, 2011, are as follows: (In millions of Korean Won) Balance at Ref. January 1, 2011 Warranty Royalty expenses Long-term incentives
1

Balance at Increase 352,052 583,241 50,969 Decrease (346,658) (232,134) -, Other

1

March 31, 2011 1,570,985 1,343,663 641,681

(A) (B)

1,633,506 989,057 590,712

(67,915) 3,499 -

(C)

Others include amounts from changes in foreign currency exchange rates.

(A) The Company accrues warranty reserves for estimated costs of future service, repairs and recalls, based on historical experience and terms of warranty programs (which have terms ranging from one to four years). (B) The Company makes provisions for estimated royalty expenses related to technical assistance agreements that have not been settled. The timing of payment depends on the settlement of agreement. (C) The Company has a long-term incentive plans for its executives based on a three-year management performance criteria and has made a provision for the estimated incentive cost for the accrued period.

26

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. Commitments and Contingencies (A) Guarantees Balance at (In millions of Korean Won) Guarantees of debt for housing rental March 31, 2011 171,674 Balance at December 31, 2011 171,674

The guarantees of debt for housing rental relate to guarantees provided by the Company to the landlords for housing for expatriate employees. (B) Litigation A. Civil class actions with respect to fixed pricing on the sales of TFT-LCD were filed against the Company and its subsidiaries in the United States. As of balance sheet date, the outcome of the investigation and civil actions cannot be reasonably determined, and therefore, the Company has not recorded any liability for these matters in the consolidated financial statements. B. Based on the agreement entered into on August 24, 1999 with respect to Samsung Motor Inc.s (SMI) bankruptcy proceedings, Samsung Motor Inc.s creditors (the Creditors) filed a civil action lawsuit against Mr. Kun Hee Lee, chairman of the Company, and 28 Samsung Group affiliates including the Company under joint and several liability for failing to comply with such agreement. Under the suit, the Creditors have sought 2,450,000 million (approximately $1.95 billion) for loss of principal on loans extended to SMI, a separate amount for breach of the agreement, and an amount for default interest. SLI completed its Initial Public Offering (IPO) on May 7, 2010. After disposing of 2,277,787 of the shares donated by Mr. Lee and payment of the principal balance owed to the Creditors, 878,000 million (approximately $ 0.80 billion) was deposited into an escrow account. That remaining balance was to be used to pay the Creditors interest due to the delay in the SLI IPO. On January 11, 2011, the Seoul High Court ordered Samsung Group affiliates to pay 600,000 million (approximately $ 0.53 billion) to the Creditors and pay 5% annual interest for the period between May 8, 2010 and January 11, 2011, and pay 20% annual interest for the period after January 11, 2011 until the amounts owed to the Creditors are paid. In accordance with the Seoul High Court order, 620,400 million (which includes penalties and interest owed) was paid to the Creditors from the funds held in escrow during January 2011. Samsung Group affiliates and the Creditors all have appealed to the Korean Supreme Court. The Company has concluded that no provision for loss related to this matter should be reflected in the Companys consolidated financial statements at March 31, 2011. C. As of March 31, 2011, the Company was named as a defendant in legal actions filed by 23 overseas companies including Philips, and as the plaintiff in legal actions against four overseas companies including Spansion Inc. for alleged patent infringements. In addition to the cases mentioned above, the Companys domestic and foreign subsidiaries have been involved in various

27

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
claims and proceedings during the normal course of business. As the outcome of these matters cannot be reasonably determined, the Company has not recorded any liability for these matters in the consolidated financial.

13. Share capital and premium Under its Articles of Incorporation, SEC is authorized to issue 500 million shares of capital stock with a par value of 5,000 per share, of which 100 million shares are cumulative, participating preferred stock that are non-voting and entitled to a minimum cash dividend at 9% of par value. As of March 31, 2011, exclusive of retired stocks, 147,299,337shares of common stock and 22,833,427 shares of preferred stock have been issued. The preferred shares which are non-cumulative and nonvoting, were all issued on or before February 28, 1997, and are entitled to an additional cash dividend of 1% of par value over common stock. SEC has issued global depositary receipts (GDR) to overseas capital markets. The number of outstanding GDR as of March 31, 2011 and December 31, 2010, are as follows: 2011 Non-voting Preferred Stock Outstanding GDR - Share of Stock - Share of GDR 3,263,356 6,526,712 8,111,683 16,223,366 3,253,577 6,507,154 9,243,488 18,486,976 Common Stock Non-voting Preferred Stock 2010 Common Stock

14. Retained earnings Retained earnings as of March 31, 2011 and December 31, 2010, consist of the following: (In millions of Korean won) Legal reserve Discretionary reserve: Unappropriated 2011 450,789 78,262,530 8,259,660 86,972,979 2010 450,789 62,693,841 21,869,920 85,014,550

28

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. Other components of equity Other components of equity as of March 31, 2011 and December 31, 2010, consist of the following: (In millions of Korean Won) Treasury stock(*) Stock option Unrealized holding gains on available-for-sale financial assets Share of associates and joint ventures accumulated other comprehensive gains Foreign-currency translation differences Others 1,166,160 (1,120,484) 953,028 1,185,333 (957,579) 1,071,420 1,573,403 1,608,035 2011 (7,642,325) 98,584 2010 (7,761,927) 128,320

(4,971,634) (4,726,398) (*) As of March 31, 2011, the Company holds 17,163,853 common shares and 2,979,693 preferred shares as treasury stocks.

16. Expenses by Nature Expenses by nature for the three-month ended March 31, 2011 and 2010, consists of the following: (In millions of Korean Won) Wages and salaries Severance and retirement benefits Welfare expenses Depreciation expenses Amortization expenses 2011 2,989,103 152,926 444,126 2,978,642 145,106 2010 2,489,306 128,259 377,303 2,753,117 119,009

29

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17. Selling, general and administrative expenses Selling, general and administrative expenses for March 31, 2011 and 2010, consist of the following: (In millions of Korean Won) Wages and salaries Severance and retirement benefits Commission and service charges Depreciation expenses Amortization expenses Advertising expenses Sales promotion expenses Transportation expenses Warranty expenses Public relation expenses Others 18. Other operating income and expense Other operating income and expenses for March 31, 2011 and 2010, consist of the following: 1) Other operating income (In millions of Korean Won) Dividend income Commission income Rental income Gain on disposal of investments Gain on disposal of property, plant and equipment Gain on transfer of business Other March 2011 855,090 37,305 1,512,645 89,693 62,993 394,573 806,592 878,126 581,002 81,547 491,488 5,791,054 March 2010 747,456 30,812 1,521,891 87,498 44,406 500,203 660,187 890,862 518,129 96,656 443,201 5,541,301

March 2011 26,680 5,134 23,436 15,544 60,490 178,471 309,755

March 2010 28,593 1,818 18,401 133,430 152,005 179,418 75,348 589,013

2) Other operating expense (In millions of Korean Won) Other bad debts expense Loss from disposal of property, plant and equipment Donations Other 19. Finance income and expenses

March 2011 2,809 13,599 31,896 108,360 156,664

March 2010 4,136 40,287 44,243 130,030 218,696

30

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Finance income and expenses for the three-month ended March 31, 2011 and 2010, consist of the following: (In millions of Korean Won) Interest income Interest income from loans and receivables Interest income from available-for-sale financial assets Realized foreign exchange gains Unrealized foreign exchange gains Other finance income Finance income Interest expense: Interest expense from financial liabilities measured at amortized cost Realized foreign exchange losses Unrealized foreign exchange losses Other finance expenses Finance expenses 2011.1Q 2010.1Q

149,856 148,760 1,096 557,627 590,479 93,223 1,391,185 138,257 138,257 644,056 433,996 111,261 1,327,570

139,844 139,843 1 723,498 527,036 61,649

1,452,027 129,546 129,546 768,247 376,239 72,398

1,346,430

The company recognizes the profits and losses regarding translation differences as financial income and expenses

20. Income Tax Income tax expense is recognized based on managements best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year ended December 31, 2011 is 17.8% (the estimated tax rate for the period ended March 31, 2010: 19.7%). The primary reason for the decrease in estimated average annual tax rate for FY 2011 is the proportionate increase in tax credits relative to taxable income compared to FY 2010.

21. Earnings Per Share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the company and held as treasury shares.

31

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Basic earnings per share for the years ended March 31, 2011 and 2010, are calculated as follows: (In millions of Korean Won) Net income as reported on the statements of income Adjustments: Dividends for preferred stock1 Undeclared participating preferred stock dividend1 Net income available for common stock Weighted-average number of common shares Outstanding (in thousands) Basic earnings per share (in Korean Won)
1

2011 2,714,645 (74,700) (321,341) 2,318,604 130,032 17,831

2010 4,016,443 (30,029) (508,181) 3,478,233 128,336 27,103

Basic earnings per preferred share (in Korean Won)

(In millions of Korean Won) Net income available for preferred stock Weighted-average number of preferred shares Outstanding (in thousands) Basic earnings per preferred share (in Korean Won)

2011 396,041 19,854 19,948

2010 538,210 19,854 27,108

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company has one category of dilutive potential ordinary shares: stock options. A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the companys shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. Diluted earnings per share for the years ended December 31, 2011 and 2010, is calculated as follows: (In millions, except for share amounts) Net income available for common stock Net income available for common stock and common equivalent shares Weighted-average number of shares of common stock and common shares equivalent Diluted earnings per share (in Korean Won) 2011 2,318,604 2,318,604 130,313 17,793 2010 3,478,233 3,478,233 129,000 26,963

Diluted earnings per preferred share is equal to basic earnings per preferred share because stock options are not applicable to preferred shares.

32

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. Cash generated from operations a. Cash flows from operating activities as of March 31, 2011 and 2010, consist of the following: (In millions of Korean Won) Adjustments for: Tax expense Finance income Finance costs Severance and retirement benefits Depreciation expenses Amortization expenses Bad debt expenses Share of profit or loss of associates and joint ventures Gain on disposal of property, plant and equipment Loss on disposal of property, plant and equipment Obsolescence and scrappage of inventories Other income/expense Adjustments, total Changes in assets and liabilities: Decrease/(increase) in trade receivables Decrease/(increase) in other receivables Decrease in advances Increase in prepaid expenses Increase in inventories Increase in trade payables (Decrease)/increase in other payables Decrease in advance received (Decrease)/increase in withholdings Decrease in accrued expenses Increase in provisions Payment of severance benefits Other Changes in net working capital, total 2011 2010

603,021 (833,558) 683,514 152,926 2,978,642 145,106 13,891 (375,608) (60,490) 13,599 81,470 (120,106) 3,282,407

979,133 (580,466) 438,058 128,259 2,753,117 119,009 54,923 (461,694) (152,005) 40,287 194,543 (64,556) 3,448,608

1,210,588 100,923 14,174 (117,509) (932,759) 574,601 (799,296) (17,219) 333,727 (2,426,959) 1,170,658 (56,972) (156,860) (1,102,903)

(177,046) (85,129) 144,513 (780,355) (2,376,479) 3,184,350 742,444 (636,175) (161,801) (668,908) 501,688 (199,734) (969,955) (1,482,587)

33

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. Segment Information The chief operating decision maker has been identified as the Management Committee. The Management Committee is responsible for making strategic decisions based on review of the Companys internal reporting. The Management Committee has determined the operating segments based on these reports. The Management Committee reviews operating profit of each operating segment in order to assess performance and make decisions on resources to be allocated to the segment. The operating segments are product based and include Digital media, Telecommunication, Semiconductor, LCD and others. The segment information provided to the Management Committee for the reportable segments for the three-month ended March 31, 2011 and 2010, consist of the following: 1) Three-month ended March 31, 2011

SET

2011 Summary of Business by Segment Device Total Semiconductor LCD Total 82,401,474 45,416,457 36,985,017 2,948,536 194,811,737 Elimination (45,416,457) (45,416,457) (58,279,582 ) Consolidated 36,985,017 36,985,017 2,948,536 136,532,155

(In millions of Korean Won)

Total segment Revenue Inter-segment Revenue Revenue from external customers Operating profit1 Total assets
1

Total

TeleDigital Media Communication 20,722,301 (10,085,845) 10,636,456 1,433,440 34,301,536

51,645,114 30,730,542 (27,388,256) (17,205,613) 24,256,858 1,542,563 13,524,929 103,501

30,424,588 17,514,447 13,053,656 (14,924,333) (8,338,673) (6,540,373) 15,500,255 1,415,489 9,175,774 1,644,667 6,513,283 (229,254)

90,983,896 42,942,247

93,530,270 58,679,827 31,257,763

Operating profit for each segment is inclusive of all consolidation eliminations.

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Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2)

Three-month ended March 31, 2010

SET (In millions of Korean Won) Total segment Revenue Inter-segment Revenue Revenue from external customers Operating profit1 Total assets
1

2010 Summary of Business by Segment Device Total 30,224,773 (15,310,134) 14,914,639 2,443,170 77,319,400 Semiconductor 15,847,841 (7,642,913) 8,204,928 1,955,218 47,136,100 LCD 14,498,836 (7,648,495) 6,850,341 491,096 26,496,900

Total

Elimination

Consolidated

Total 47,037,621 (25,101,190) 21,936,431 1,606,671

TeleDigital Media Communication 28,742,679 (15,910,529) 12,832,150 527,109 18,063,937 (9,104,479) 8,959,458 1,096,063 33,017,800

83,146,729 (48,508,659) 34,638,070 4,405,612 167,252,100

(48,508,659) 48,508,659 (52,156,305)

34,638,070 34,638,070 4,405,612 115,095,795

87,434,900 41,915,000

Operating profit for each segment is inclusive of all consolidation eliminations.

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Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The regional segment information provided to the Management Committee for the reportable segments for the three-month ended March 31, 2011 and 2010, consist of the following: 1) Three-month ended March 31, 2011
Korea America Europe Asia China Eliminations Consolidated

(In millions of Korean Won)

Total segment Revenue Inter-segment Revenue Revenue from external customers Non-current assets
1 1

31,963,946 (25,171,382) 6,792,564 48,156,216

14,500,236 (4,227,139) 10,273,097 6,529,417

14,313,387 (5,908,099) 8,405,288 1,075,649

8,640,768 (2,391,567) 6,249,201 1,083,193

12,983,137 (7,718,270) 5,264,867 1,684,900

(45,416,457) 45,416,457 (475,856)

36,985,017 36,985,017 58,053,519

The total of non-current assets other than financial instruments, and deferred tax assets

2)

Three-month ended March 31, 2010

Korea America Europe Asia China Eliminations Consolidated

(In millions of Korean Won)

Total segment Revenue Inter-segment Revenue Revenue from external customers Non-current assets1
1

30,230,696 (24,196,529) 6,034,167

12,736,939 (4,291,664) 8,445,275 3,174,312

14,947,784 (6,905,648) 8,042,136 11,238

7,774,996 (2,241,747) 5,533,249 785,050

17,456,314 (10,873,071) 6,583,243 1,530,406

(48,508,659) 48,508,659 (681,038)

34,638,070 34,638,070 45,804,027

40,284,059

The total of non-current assets other than financial instruments, and deferred tax assets

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Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Related-party transactions 1) Associates The principal associate companies are Samsung SDI Co., Ltd., Samsung Electro-mechanics, Samsung SDS, Samsung Techwin Co., Ltd., and Samsung Card Co., Ltd. Transactions with associates for the years ended March 31, 2011 and 2010, and the related receivables and payables as of March 31, 2011 and December 31, 2010, are as follows: (In millions of Korean Won) Inter-company transactions Sales Purchases Receivables and Payables Receivables Payables 2) Joint ventures The principal joint venture companies are Samsung Corning Precision Glass, and Siltronic Samsung Wafer. Transactions with joint venture partners for the years ended March 31, 2011 and 2010, and the related receivables and payables as of March 31, 2011 and December 31, 2010, are as follows: (In millions of Korean Won) Inter-company transactions Sales Purchases Receivables and Payables Receivables Payables 2,371 141,774 131 126,906 1,660 729,417 24,341 601,914 2011 2010 106,264 671,003 183,812 816,473 94,449 1,091,129 324,708 1,143,414 2011 2010

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Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3) Other related parties Samsung Everland and Samsung Petrochemical, etc. are defined as related parties for the company. Transactions with other related parties for the periods ended March 31, 2011 and 2010, and the related receivables and payables as of March 31, 2011 and December 31, 2010, are as follows: (In millions of Korean Won) Inter-company transactions Sales Purchases Receivables and Payables Receivables Payables 4) Key management compensation Key management includes directors (executive and non-executive), members of the Executive Committee. The compensation paid or payable to key management for employee services for the periods ended March 31, 2011 and 2010 is shown below: (In millions of Korean Won) Salaries and other short-term benefits Termination benefits Other long-term benefits 2011 1,653 174 1,497 2010 1,973 658 1,358 231,546 129,709 233,649 109,875 16,921 121,130 1,175 75,213 2011 2010

25. Financial risk management Financial risk factors The Company is exposed to credit risk, liquidity risk and market risk. Market risk arises from currency risk, interest rate risk and fair value risk associated with investments. The Company has a risk management program in place to monitor and actively manage such risks. Also, financial risk management officers are dispatched to the regional headquarters of each area including United States of America, England, Singapore, China, Japan, and Brazil to run and operate a local financial center for global financial risk management. The Companys financial assets that are under financial risk management are composed of cash and cash equivalents, short-term financial instruments, available-for-sale financial assets, trade and other receivables and other financial assets. The Companys financial liabilities under financial risk management are composed of trade and other payables, borrowings and debentures and other financial liabilities.

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Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) Market risk (a) Foreign exchange risk The Company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the United States of America, European Union, Japan, other Asian countries and South America. Revenues and expenses arise from foreign currency transactions and exchange positions, and the most widely used currencies are the US Dollar, EUs Euro, Japanese Yen and Chinese Yuan. Foreign exchange risk management of the Company is carried out by both SEC and its subsidiaries. To minimize foreign exchange risk arising from operating activities, the Companys foreign exchange management policy requires all normal business transactions to be in local currency, or cash-in currency be matched up with cash-out currency. The Companys foreign risk management policy also defines foreign exchange risk, measuring period, controlling responsibilities, management procedures, hedging period and hedge ratio very specifically. The Company limits all speculative foreign exchange transactions and operates a system to manage receivables and payables denominated in foreign currency. It evaluates, manages and reports foreign currency exposures to receivables and payables. (b) Price risk The Companys investment portfolio consists of direct and indirect investments in listed and non-listed securities. The market values for the Companys equity investments for the three-month ended March 31, 2011 and for the year-ended December 31, 2010 are W 2,956,559million and W 2,990,441million respectively. (Note 5) If there is change in price of equity investment by 1%, the amount of other comprehensive income changes for the three-month ended March 31, 2011 and for the year ended December 31, 2010 are W 26,234 million and W 26,641 million, respectively. (c) Interest rate risk Interest rate risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk mainly arising through interest bearing liabilities and assets. The Companys position with regard to interest rate risk exposure is mainly driven by its debt obligations such as bonds, interest-bearing deposits and issuance of receivables. In order to avoid interest rate risk, the Company maintains minimum external borrowing by facilitating cash pooling systems on a regional and global basis. The Company manages exposed interest rate risk via periodic monitoring and handles risk factors on a timely basis. (2) Credit risk Credit risk arises during the normal course of transactions and investing activities, where clients or other party fails to discharge an obligation. The Company monitors and sets the counterpartys credit limit on a periodic basis based on the counterpartys financial conditions, default history and other important factors.

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Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
There were no significant loans or other receivables which are overdue or subject to impairment, included in accounts receivables or other financial instruments. The Company has evaluated there is no indication of default by any of its counterparties. Credit risk arises from cash and cash equivalents, savings and derivative instruments transactions with financial institutions. To minimize such risk, the Company transacts only with banks which have strong international credit rating (S&P A above), and all new transactions with financial institutions with no prior transaction history are approved, managed and monitored by the Companys finance team and the local financial center. The Company requires separate approval procedure for contracts with restrictions. The top five customers account for approximately occupies 15.7% and 14.3% and 2,785,123 million and 2,734,014 million for the three-month ended March 31, 2011 and for the year-ended December 31, 2010, respectively, while the top three credit exposures by country amounted to 18.0%, 17.4% and 12.2% (December 31, 2010: 15.6%, 12.0% and 11.0%), respectively. (3) Liquidity risk The Company manages its liquidity risk to maintain adequate net working capital by constantly managing projected cash flows. Beyond effective working capital and cash management, the Company mitigates liquidity risk by contracting with financial institutions with respect to bank overdrafts, Cash Pooling or Banking Facility agreement for efficient management of funds. Cash Pooling program allows sharing of funds among subsidiaries to minimize liquidity risk and reduce financial expense. (4) Capital structure management The object of capital management is to maintain sound capital structure. Consistent with others in the industry, the Company monitors capital on the basis of the debt to equity ratio. This ratio is calculated as total liabilities divided by equity based on the consolidated financial statements. In 2011, the Companys strategy was to maintain a reliable credit rating. The Company has maintained an A credit rating for long term debt from S&P and A1 from Moodys, respectively throughout the period. The gearing ratios at March 31, 2011 and December 31, 2010 were as follows: (In millions of Korean Won) Total liabilities Total equity Gearing ratio 2011 45,033,401 91,498,754 49.2% 2010 44,939,653 89,349,091 50.3%

40

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. Business Combination 1) Merger of Samsung Gwangju Electronics The Company acquired Samsung Gwangju Electronics with a closing date of January 1, 2011. The approval of the Board of Directors of the Company replaces shareholders meeting approval of the acquisition, as the acquisition of Samsung Gwangju Electronics is a small and simple merger as defined in the commercial law. (1) Overview of the acquired company Name of the acquired company Headquarters location Representative director Classification of the acquired company Former relationship with the Company (2) Terms of the business combination The shareholders of Samsung Gwangju Electronics received 0.0252536 shares of the Companys common stock for each share of Samsung Gwangju Electronics common stock owned on the closing date. The Company transferred its treasury stocks to the shareholders of Samsung Gwangju Electronics, instead of issuing new stocks. 2) Acquisition of Prosonic The Company acquired 100% shares of Prosonic Co.,Ltd. with a closing date of February 16, 2011. (1) Overview of the acquired company Name of the acquired company Headquarters location Representative director Classification of the acquired company After acquision relationship with the Company Samsung Gwangju Electronics Gyeongsangbukdo, Gyeongju-si Sang-won Bang Unlisted company Subsidiary Samsung Gwangju Electronics Gwangju, Gwangsan-gu Chang-wan Hong Unlisted company Subsidiary

41

Samsung Electronics Co., Ltd. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(2) Purchase price allocation Classification Amount (in millions of KRW) 43,438 4,197 2,345 2,036 9,183 26,664 1,977 (1,713) (919) (2,793) 40,977 2,461

I. Considerations transferred II. Identifiable assets and liabilities Cash and cash equivalents Trade and other receivables Inventories Property, plant, and equipment Intangible assets Other assets Trade and other payables Short-term borrowings Retirement benefit obligation Other liabilities Total III. Goodwill

27. Events after the Reporting Period 1) Strategic Alignment with Seagate for HDD business The Company has announced the signing of a definitive agreement that it's selling its hard disk drivemanufacturing arm to Seagate Technology on April 19, 2011. The combined value of these transactions and agreements is a approximately $1.375 billion, which will be paid by Seagate to the Company in the form of 50% cash and 50% stock(9.6% ownership of Seagate). The agreement is subject to customary closing conditions, including review by U.S and international regulators. The transactions are expected to close by the end of year 2011. 2) Additional acquisition of Samsung Medison Co., Ltd. On February 16, 2011, the Company acquired 43.5% of Medisons shares and on April 29, 2011, additional shares in Medison 22.3%, of 157,077 from Korea Credit Guarantee Fund. As a consequence, Medison transferred from an associate to a subsidiary of Samsung Electronics and changed its name as Samsung Medison Co., Ltd.

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