It is hard to miss how passionate we are about technology, design, the environment, and our neighbors. And now, that passion is delivering.

THE PERFECT HARMONY OF

Mobile Communications Company
It is hard to think of any consumer electronics field that changes more rapidly and dramatically than the mobile phone space. Models seem to come and go overnight, and only a precious few achieve icon status. At LG Electronics, stylish design and smart technology make our handsets really stand out. Not just in international design competitions, but where it really counts. Your palm.
We shipped a record 80.5 million mobile phones in 2007, a remarkable 27% improvement that boosted sales 20% to USD 11.2 billion. Operating profit margin also continued to improve, rising from 6.8% to 8.1% as our premium handsets won over consumers around the globe. During the year, we expanded our product localization strategy from North America, Europe, and Korea to include the CIS, India, and South and Central America. We also sharpened our cost-competitiveness by strengthening operations, increasing our number of global platforms, and streamlining our global supply chain. In 2008, we are aiming to grow sales volume, revenue, and operating profit by more than 20% as we target sales of 100 million units. MOBILE PHONES The 2006 global launch of the LG Chocolate phone the first handset in our Black Label series of premium design phones has been a tough act to follow, selling over 15 million units through the end of 2007. During the year, we launched the LG Shine phone, the second phone in our Black Label series, featuring a sleek full-metal body. We partnered with fashion icon Prada to launch the Prada Phone by LG, a sophisticated and elegant handset with the industrys first complete advanced touch interface. We also launched the LG Viewty, a featureoriented phone with a 5.0-megapixel camera and high-end multimedia capabilities. These advanced handsets are just the beginning of what we believe will be a long series of global best-sellers that will wow
consumers with stylish design and innovations in image capture, user interface, and Internet connectivity. In 2008, many of our new phones will feature touch technology to make their advanced features easier to use. These will include high-tech handsets with advanced camera and Internet features such as the LGKF510, LG-KF600, and LG-KF700. We will also launch the LG Secret, the third phone in our Black Label series. Designed around the concept of style that lasts, the LG Secret has a timeless and elegant design that is enhanced by stylish materials such as carbon fiber and tempered glass.
MOBILE TECHNOLOGIES We are extremely competitive in all current mobile communications technologies. As the market leader in CDMA and 3G phones, we continue to create handsets that will take full advantage of the increased capacity and bandwidth that technologies like HSUPA and 3G LTE will bring into the mainstream in the coming years. We are also adding value by supporting major mobile broadcast standards like DVB-H, MediaFLO, T-DMB, and S-DMB in select models across our product lineup.
1. LG-KF510 2. LG-KF700 3. LG Voyager (LG-VX10000) 4. LG Secret (LG-KF750) 5. LG Viewty (LG-KU990) 6. LG Vu (LG-CU920) 7. LG-KF600 8. LG-KM710 9. LG-KS20

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Digital Display Company
We see the big picture a little differently than others. Lots of companies can deliver a no-frills big screen LCD or plasma TV. But only a handful can deliver one that is a work of art. At LG Electronics, stylish design and smart technology make our flat-panel HDTVs really stand out. Not just in international design competitions, but where it really counts. Your living room.

Sales rose a healthy 11% to USD 13.6 billion as global demand for full HD 1080p flat-panel displays and widescreen monitors continued to grow across the board. While we recorded an operating loss for the year due to profitability issues with our plasma TV business, these losses progressively shrank each quarter, setting the stage for us to return to profitability in 2008 with a target operating profit of just over USD 80 million. Although we expect our LCD and plasma TV sales volumes to roughly double in the coming year as falling prices bring flat-panel TVs within reach of more consumers, we also expect fierce competition to limit sales growth to USD 14.1 billion, a modest 3.7% increase. LCD TVs We were the worlds No. 4 producer of LCD TVs in 2007 with 14% of the market. Our current lineup includes 19, 22, 26, 32, 37, 42, 47, and 52 inch screen sizes. In 2008, we aim to sell 14 million units and capture 14% of the global market. PLASMA TVs We were the worlds No. 2 producer of plasma TVs in 2007 with 30% of the market. Our current lineup includes 32, 42, 50, and 60 inch screen sizes. In July, we took a key step toward returning to profitability by increasing our 50-inch panel production capacity from 360,000 to 440,000 units a month. We aim to sell 4 million units and capture 30% of the global market in 2008. We believe that demand for 32-inch plasma TVs will be particularly strong due to growth in both primary TV purchases in emerging markets and secondary set purchases in developed ones. We expect this business to turn its first operating profit starting in the first quarter of 2008.
LCD MONITORS In 2007, we retained our No. 4 global market share, close on the heels of No. 3 HP. We are now either first or second in this market in 24 countries worldwide. During the year, we expanded the boundaries of technology and design by introducing new monitors with dynamic contrast ratios as high as 50,000:1, color gamuts of up to 115% of the NTSC spectrum, and stands with interactive LED lighting effects. According to industry statistics, widescreen LCDs rose from 9% of monitor sales in 2006 to over 35% in 2007, and are on track to pass 50% in 2008. We expect this trend to help double our sales as we work to capture a major portion of this profitable emerging segment. PROJECTORS Although we are a relative newcomer to this business, we are proud to be producing some of the most innovative designs in the industry. In 2007, we introduced the worlds first wall-mounted projector (AN110), an innovation that earned us a coveted IDEA Design Award. We also launched the worlds first ultra-mobile LED-based projector (HS101) to deliver 100 ANSI lumens, more than three-times the previous category leader. In 2008, we aim to nearly triple sales from 36,000 to 109,000 units as we continue to expand our business and consumer lineup with innovative models, including high-end home theater projectors with full HD resolution.

1. LG50

2. LG60

3. LG40

4. PG60

5. PG30

6. LG70

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Digital Appliance Company
For a company in the white goods business, we have got quite a colorful lineup. Todays home appliances not only have to work well. They have to look good. At LG Electronics, stylish design and smart technology make our appliances really stand out. Not just in international design competitions, but where it really counts. Your home.
We put three years of flat growth soundly behind us in 2007 as sales climbed nearly 18% to USD 12.6 billion and operating profit rose 5.7% to USD 724 million. Key factors in this robust performance included growing revenues from premium products worldwide, new channel partners in the US, commercial air conditioners in Europe, and off-season air conditioner purchases in Korea. In 2008, we expect solid growth across Europe and emerging markets to largely offset a slowdown in the US. We believe our rapidly expanding commercial air conditioning business and a steady stream of new products will provide solid momentum for profitable growth as we target sales of USD 13.3 billion. AIR CONDITIONERS In 2007, our power-saving inverter technologies and health-conscious features helped us make an exceptionally strong showing in the Middle East, Africa, and Europe as we continued to lead the global market. We launched a new range of outdoor units including our Multi-V Water and Multi-V Plus 2 as we steadily expanded our V-Net lineup of remote control accessories to make our commercial systems the most flexible and scalable on the market. We also introduced Hybrid XEO, our first renewable energy heating and cooling system and the most efficient geothermal solution available to date, consuming approximately 30% less energy than conventional systems. REFRIGERATORS We continued to solidify our top-three position in the global refrigerator market in 2007. During the year, we introduced refinements such as hidden door hinges, in-door icemakers that free-up freezer space and provide convenient exterior access to water and ice, VitaLight LED technology to keep vegetables fresher, and an improved version of our Green Ion Door-Cooling system that eliminates mold, micro bacteria, and unpleasant odors as it maintains a constant temperature throughout the refrigerator compartment. We also continued to expand our Swarovski-crystal studded Art Home series in collaboration with renowned Korean artists.

WASHING MACHINES We led the US market for front-loading washers as we continued to expand the capacity and functionality of our frontloading washer and dryer lineup in 2007. We increased capacities to 15 kg and created a dryer control panel that can be rotated 180-degrees, enabling unit stacking without compromising operating convenience. COOKING APPLIANCES We continued to refine and expand our lightwave oven family in 2007 with the new SolarCube series. Our lightwave technology uses a halogen heater to cook food up to four times faster than conventional ovens while retaining all the flavor and nutrients. VACUUM CLEANERS We continued to refine our bagless vacuum technology to meet consumer expectations in 2007. We introduced a simplebut-effective dust compression technology that dramatically decreases emptying frequency and dust escape as well as handy new features like an extendable brush tool built into the grip handle and a new floor tool designed to conveniently handle both carpet and hard floors. BUILT-IN APPLIANCES Our full lineup of built-in ovens, hobs, hoods, refrigerators, and dishwashers is designed to seamlessly and elegantly integrate into any kitchen environment. Equipped with virtually all the latest features of our freestanding appliances and several unique ones of their own, our built-ins continue to grow in popularity across Europe. HOME NETWORKING Our HomNet smart home solutions continued to make inroads in the UAE and China in 2007. HomNet goes a step beyond standard home automation systems to offer advanced control over network-enabled LG home appliances and entertainment systems. It also has a community management component to provide integrated security, information, and communications services within residential complexes. We continue to make plans to bring HomNet solutions to consumers in the US, South Africa, and Europe in the near future.

5. Lightwave Oven

1. Steam Washing Machine 2. Washer and Drier 3. 3-Door Refrigerator 4. ARTCOOL Air Conditioner 6. Side by Side Refrigerator 7. Vacuum Cleaner with Dust Compression System 8. Steam Dishwasher

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Digital Media Company
It used to be that you had to go to a theater to really enjoy movies. Now you can grab some popcorn and a soda and head to the living room for a captivating sight and sound experience. At LG Electronics, stylish design and smart technology make entertainment really stand out. Not just in international design competitions, but where it really counts. Your imagination.
We generated sales of USD 5.8 billion in 2007, virtually identical to our 2006 results. Operating profit was down just over 3% to USD 929 million as we faced increasing product commoditization, falling prices, inaccurate market forecasting, and delays in getting products to market. Today, we continue to enhance profitability by expanding outsourcing, setting phase-out schedules for less profitable products, initiating planning for stylish new products, launching new HD products, and focusing on opportunities in the mobile Internet device, car infotainment, and security fields. HOME AUDIO We captured 13% of the global home-theater-in-a-box market in 2007, maintaining our No. 2 ranking while closing the gap with market leader Sony to a mere 2.2 percentage points. We also signed a consulting agreement with audio legend Mr. Mark Levinson to take our sound quality to the next level and introduced new models designed to perfectly complement our flat-panel TVs. HOME VIDEO We made significant inroads in the high-definition player category in 2007 as we grew our market share from zero to 4% following the January launch of the BH100 Super Blu, the worlds first dualformat HD disc player. The HD player market is forecast to double to USD 4 billion in 2008 as it stays on track to reach USD 13 billion by 2010. MOBILE ENTERTAINMENT DEVICES Our latest touch-screen MP3 playerthe FM37dazzled the judges at the 2007 iF, EISA, and Red Dot design awards with its stylish design and innovative graphical user interface. We aim to offer a touch-screen mobile TV to European football fans in time for the 2008 UEFA European Football Championship.

CAR INFOTAINMENT We continued to expand our presence in the car audio aftermarket, capturing the No. 3 ranking in Latin America. We also successfully launched our portable navigation device lineup in North America as we continued to expand our OEM audio-video-navigation and telematics system sales to major global automakers. SECURITY SYSTEMS Surveillance equipment sales grew a solid 10% in 2007 as we continued to make inroads in international markets. We expect sales to accelerate in 2008 as we debut new surveillance cameras featuring our advanced XDI chipset with an industry-leading 570 TV lines of color resolution and a new family of IP cameras and network video recorders that will enable us to tap a market segment that is growing around 40% annually. OPTICAL STORAGE We marked our tenth year at the top of the industry by extending our market share from 31% to 35% and our leadership with 20x burning, 9.5 mm thick slot-loading, and slim external models. We continue to look beyond Blu-ray to the next generation of ultra-highdensity recording technologies. NOTEBOOK PCs We introduced a broad new lineup of models in 2007 designed to satisfy the full spectrum of users and price points. We continue to deliver trend-setting designs with the latest mobile platforms from Intel as well as next-generation wireless broadband technologies such as HDSPA and WiMAX.

1. T80

2. HT953TV

3. RH39 4. BE06

5. P300

6. LAC7800

7. LS903

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In recent years, LG Electronics has wowed the world with the industrys first 100-inch LCD and 102-inch Plasma TVs with built-in digital video recorder. Today, we continue to redefine the viewing experience in every dimension. We have adopted full HD resolution across our entire product lineup. We have doubled screen refresh rates for blurand flicker-free viewing. We have added sensors to continuously optimize picture quality for ambient light conditions. We have increased contrast up to 50,000:1 for truer colors and deeper blacks. We have added more digital inputs and full HD wireless streaming for easier connections to other devices. And we have worked with audio legend Mr. Mark Levinson to create superior sound without any visible speakers. Just imagine what we will think of next.

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LG Electronics believes that great products start with simple but novel ideas that solve real-world problems. We have created air conditioners that cool, heat, and showcase art. We have integrated manual icemaking into freezer doors to provide more convenient access and save energy. We have used steam cleaning technology in our washing machines to save water, energy, and clothing wear-and-tear. We have compressed dust in our bagless vacuums to reduce dustbin emptying and messiness. We have focused the power of light to prepare food four times faster than conventional ovens while preserving all the flavor and nutrients. And we have developed energy solutions that provide electricity, heating, and cooling using clean and renewable energy sources like geothermal energy. Just imagine what we will think of next.
Digital Appliance Innovations

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Digital Media Innovations
Digital technology is enabling us to deliver exciting, compelling entertainment experiences both at home and on the go. We have turned living rooms into theaters with premium high-definition disc players and stylish home theater audio systems. We have worked with audio legend Mr. Mark Levinson to deliver sound that impresses even hardcore audiophiles. We have created advanced digital signal processing chips that help security cameras deliver clearer, sharper, and brighter images. We have added mobile TV reception to our MP3 players and portable navigation devices for on-the-go entertainment. And we have offered next-generation wireless technologies like HSPDA in our notebooks for ubiquitous connectivity. Just imagine what we will think of next.

30 + 31

It has been 14 years since we made history by being Koreas first major consumer electronics company to make a public commitment to environmental sustainability in 1994. In the years that have passed, our commitment has grown and taken on new dimensions. We have continued to make our products more environmentally friendly by systematically and proactively eliminating the use of hazardous substances in manufacturing, boosting energy efficiency, and making them easier to recycle. Our products are now among the industrys greenest, and we continue to innovate with new materials, processes, and technologies that will help ensure a sustainable future for us, our industry, and the world.
Eliminating Hazardous Substances
As part of our environmental commitment, we are committed to meeting and exceeding the worlds toughest environmental standards. The EUs RoHS Directive has been our focus for the past few years. Known best for its banning of the use of lead, RoHS also restricts the use of three other heavy metalsmercury, cadmium, and hexavalent chromiumas well as polybrominated biphenyls and polybrominated diphenyl ether, both commonly used as flame retardants in plastics. Our progressive internal guidelines are significantly stricter than RoHS, and we continue to work closely with our suppliers to ensure that raw materials, packaging materials, batteries, and other sourced components meet our high standards. We are currently taking the next step toward environmental sustainability by phasing out our use of volatile organic compounds, PVC, brominated flame retardants, and other substances identified as hazardous by environmental NGOs.

Enhancing Efficiency

There is a hidden price to pay for all the modern conveniences we enjoy today. Everything that plugs into an electrical circuit consumes electricity, even when it is in standby mode or turned off. In August 2005, we launched an initiative to limit the standby consumption of our products to one watt or less. As of 2007, we have achieved this goal for the vast majority of our product lines as well as substantially exceeding it for certain categories such as washing machines (0.3 watts) and LCD TVs (0.5 watts). This is just a part of our ongoing efforts to reduce the power consumption of our products to save our consumers money and help conserve our energy resources.

34 + 35

Sports has often been called a universal language because of its ability to bring people together regardless of race, background, or social status. The ideals of teamwork, fair play, and excellence are things we all can appreciate, regardless of where we come from or which side we root for. We are proud to be associated with a large and growing number of teams and events in some of the worlds favorite leisure pastimes. And regardless of who takes home bragging honors at the end of the day, it is our hope that each spectator or viewer is left with the unmistakable impression that LG is an exciting, world-class brand that shares their passion for life.

Football

It is natural that our biggest sports commitment is to football, the worlds most popular sport. We sponsored the Copa Amricathe worlds oldest international competitionin 2004 and 2007. We have hosted the annual LG Amsterdam TournamentEuropes famous pre-season warm-up competitionsince 2006. And we continue to sponsor or host numerous continental and regional competitions each year. In addition to our tournament sponsorships, we sponsor a number of major professional clubs including Sao Paulo FC of Brazil, Olympic Lyon of France, Fulham FC of Britain, and Morelia Monarcas Club of Mexico. We are also a proud supporter of the national teams of Germany, Greece, Hungary, and Iraq.
In 2006, we became the title sponsor of the LG Skins Game, an annual event that brings together four of the worlds top male golfers at the end of the PGA season to vie for USD 1 million in prize money. Stephen Ames topped the skins game for a second straight year in 2007 with USD 675,000 in winnings. www.lgskinsgame.com

Cricket

Over the years, we have been a major sponsor of the sport loved and played across the British Commonwealth, including the International Cricket Council (ICC) Cricket World Cups in 1999 and 2003. We also sponsored the respected ICC Player Rankings from 2002 to 2007. www.cricketratings.com

Snowboarding

We are the title sponsor for the 2008-2009 season of the FIS Snowboard World Cup. First held in 1994-1995, the series has evolved into one of the worlds biggest winter sports competitions, covering every aspect of this spectacular sport. The LG FIS World Cup will take place at 22 resorts in 16 countries between September 2008 and March 2009. www.fis-ski.com

Action Sports

We are the title sponsor of the LG Action Sports World Championships, the only major competition tour in action sports. This multi-city US tour pits the worlds top skateboarding, bicycle motocross, inline skating, and freestyle motocross pros against each other as they vie for the right to compete at the year-end World Championships. www.lgactionsports.com

Ice Hockey

We have been a partner of the Swedish national team and the title sponsor of the LG Hockey Games since 2006. Hosted by the Swedish Ice Hockey Association, the games have brought together the national teams of Sweden, Russia, Finland, and the Czech Republic every February since 1991 for a tournament that is considered the unofficial European championships. Sweden won the 2007 tournament, and Russia triumphed in 2008. www.lghockeygames.com
FULHAM FC SPONSOR UNITED KINGDOM
LG Skins Game Sponsor United States
Sponsoring the Pursuit of Excellence
LG Action Sports World Championships United States Sao Paulo FC Sponsor Brazil

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It is often said that success breeds success. We would like to add that it also breeds responsibility. Our success has enabled us to become actively involved in local communities through a diverse range of programs and initiatives that span all levels of our organization. We actively support those striving to achieve their dreams. We partner with consumers, local communities, and non-government organizations to meet local needs. We take a long-term view in our initiatives. We sponsor, support, and volunteer in programs that enhance social welfare, educational, and cultural opportunities. And we do all these things wherever we do business around the globe to help make the world a better place.

Supporting Education

Helping young people improve themselves is one of the most rewarding things in the world. One of our major educational initiatives is our support of primary schools in underdeveloped regions of Asia. We start with the basics, repairing or rebuilding facilities and furnishing classrooms. We also help bridge the digital divide by providing computers and Internet access. We are deeply honored that the schools we have helped in China have chosen to rename themselves LG Hope Schools. We also support Villa de Las Ninas run by the Sisters of Mary Catholic charity in Mexico, an institution that provides secondary and higher education classes as well as one-year vocational training programs to more than 4,000 underprivileged Mexican girls each year.

Lending a Helping Hand

We are involved in an incredibly diverse range of volunteer programs, contributing countless hours each year to worthy causes in our communities. We partner with Habitat for Humanity to build affordable homes. We operate community kitchen programs for the homeless and elderly. We provide computer training and other services to the handicapped. We hold blood drives to benefit the Korean Red Cross. We donate to and volunteer at Beautiful Store thrift shops. We help support parentless teens and single mothers. We partner with Koreas Make-A-Wish Foundation to make the dreams of kids with life-threatening illnesses come true. We provide emergency relief services when disaster strikes. We get college students involved in community service. We help introduce orphans and kids in rural communities to the wonders of science. We work with United Way International to make a difference in nine countries across Asia. We sponsor surgeries for kids with cleft lips and palates in the Middle East and Africa. These are just a few of the ways we are making a real difference in our local communities.

Contributing for Good

Every one of us is financially involved in helping our needy neighbors. Each month, we donate the small changethe amount less than KRW 1,000from our paychecks to the Usuri Fund, the primary funding source for our community outreach activities. Beyond this, our executives donate 1% of their monthly paychecks, and union members contribute the same percentage of their annual bonuses. In the spirit of partnership, the donations we make are automatically matched by the company, doubling their impact for good.

Food Donations Brazil

Cleft Lip & Palate Surgeries Morocco

LG Hope School China

Artificial Limb Donations Nigeria Eye Check-Up Clinics India
Giving Back to Our Communities
Volunteer Teaching Thailand
Greek Veteran Visit Sponsor Korea Coal Briquette Donations Korea

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It is hard to miss how passionate we are about technology, design, the environment, and our neighbors. And now, that passion is delivering.
Mobile Communications Company
It is hard to think of any consumer electronics field that changes more rapidly and dramatically than the mobile phone space. Models seem to come and go overnight, and only a precious few achieve icon status. At LG Electronics, stylish design and smart technology make our handsets really stand out. Not just in international design competitions, but where it really counts. Your palm.

We shipped a record 80.5 million mobile phones in 2007, a remarkable 27% improvement that boosted sales 20% to USD 11.2 billion. Operating profit margin also continued to improve, rising from 6.8% to 8.1% as our premium handsets won over consumers around the globe. During the year, we expanded our product localization strategy from North America, Europe, and Korea to include the CIS, India, and South and Central America. We also sharpened our cost-competitiveness by strengthening operations, increasing our number of global platforms, and streamlining our global supply chain. In 2008, we are aiming to grow sales volume, revenue, and operating profit by more than 20% as we target sales of 100 million units. MOBILE PHONES The 2006 global launch of the LG Chocolate phone the first handset in our Black Label series of premium design phones has been a tough act to follow, selling over 15 million units through the end of 2007. During the year, we launched the LG Shine phone, the second phone in our Black Label series, featuring a sleek full-metal body. We partnered with fashion icon Prada to launch the Prada Phone by LG, a sophisticated and elegant handset with the industrys first complete advanced touch interface. We also launched the LG Viewty, a featureoriented phone with a 5.0-megapixel camera and high-end multimedia capabilities. These advanced handsets are just the beginning of what we believe will be a long series of global best-sellers that will wow
consumers with stylish design and innovations in image capture, user interface, and Internet connectivity. In 2008, many of our new phones will feature touch technology to make their advanced features easier to use. These will include high-tech handsets with advanced camera and Internet features such as the LGKF510, LG-KF600, and LG-KF700. We will also launch the LG Secret, the third phone in our Black Label series. Designed around the concept of style that lasts, the LG Secret has a timeless and elegant design that is enhanced by stylish materials such as carbon fiber and tempered glass.
MOBILE TECHNOLOGIES We are extremely competitive in all current mobile communications technologies. As the market leader in CDMA and 3G phones, we continue to create handsets that will take full advantage of the increased capacity and bandwidth that technologies like HSUPA and 3G LTE will bring into the mainstream in the coming years. We are also adding value by supporting major mobile broadcast standards like DVB-H, MediaFLO, T-DMB, and S-DMB in select models across our product lineup.

WASHING MACHINES We led the US market for front-loading washers as we continued to expand the capacity and functionality of our frontloading washer and dryer lineup in 2007. We increased capacities to 15 kg and created a dryer control panel that can be rotated 180-degrees, enabling unit stacking without compromising operating convenience. COOKING APPLIANCES We continued to refine and expand our lightwave oven family in 2007 with the new SolarCube series. Our lightwave technology uses a halogen heater to cook food up to four times faster than conventional ovens while retaining all the flavor and nutrients. VACUUM CLEANERS We continued to refine our bagless vacuum technology to meet consumer expectations in 2007. We introduced a simplebut-effective dust compression technology that dramatically decreases emptying frequency and dust escape as well as handy new features like an extendable brush tool built into the grip handle and a new floor tool designed to conveniently handle both carpet and hard floors. BUILT-IN APPLIANCES Our full lineup of built-in ovens, hobs, hoods, refrigerators, and dishwashers is designed to seamlessly and elegantly integrate into any kitchen environment. Equipped with virtually all the latest features of our freestanding appliances and several unique ones of their own, our built-ins continue to grow in popularity across Europe. HOME NETWORKING Our HomNet smart home solutions continued to make inroads in the UAE and China in 2007. HomNet goes a step beyond standard home automation systems to offer advanced control over network-enabled LG home appliances and entertainment systems. It also has a community management component to provide integrated security, information, and communications services within residential complexes. We continue to make plans to bring HomNet solutions to consumers in the US, South Africa, and Europe in the near future.

5. Lightwave Oven

1. Steam Washing Machine 2. Washer and Drier 3. 3-Door Refrigerator 4. ARTCOOL Air Conditioner 6. Side by Side Refrigerator 7. Vacuum Cleaner with Dust Compression System 8. Steam Dishwasher

46 + 47

Digital Media Company
It used to be that you had to go to a theater to really enjoy movies. Now you can grab some popcorn and a soda and head to the living room for a captivating sight and sound experience. At LG Electronics, stylish design and smart technology make entertainment really stand out. Not just in international design competitions, but where it really counts. Your imagination.

1. T80

2. HT953TV

3. RH39 4. BE06

5. P300

6. LAC7800

7. LS903

48 + 49

AND SO, We have COME TO THE MOMENT OF TRUTH. WE HOPE THAT IT IS A GROWING APPRECIATION OF OUR COMMITMENT TO CREATING SOMETHING VERY SPECIAL FOR YOU.
Lifes good at LG. Everything you want and need is here.
Stylish design and smart technology are giving birth TO
LG Champaign Home Theater System (HT762TZ) Red Dot Design Award 2008
LCD TV (LG60) CES Innovations 2008 Award
refreshingly new products that bring a relaxed
sophistication to life. And it gets better every day.
LG Touch Screen Phone Vu (LG-CU920) CES Innovations 2008 Award
LG TROMM SteamDryer (DLG8388/DLG7188) CES Innovations 2008 Award

FACTS & FIGURES

ORGANIZATION
North America Headquarters Europe Headquarters China Headquarters Asia Headquarters South & Central America Headquarters Middle East & Africa Headquarters CIS Headquarters Korea Headquarters CTO CSO CMO CFO CHO CPO CSCO
DA 29% DD 31% CIS 5% SOUTH & CENTRAL AMERICA 10% KOREA 15%

36,730

40,848
IN BILLIONS OF KOREAN WON Global revenue, referring to the total revenue of the global subsidiaries account excluding internal transactions

SALES BY COMPANY

DM 13% MC 27%
CHINA & ASIA PACIFIC 17%

SALES BY REGION

NORTH AMERICA 27%

MID-TERM STRATEGIES

2008 BUSINESS GOAL DA
Global Number 1 player in the digital appliance industry.
MIDDLE EAST & AFRICA 7% EUROPE 19%
AS OF 2007 Global revenue, referring to the total revenue of the global subsidiaries account excluding internal transactions

2008 STRATEGY

Market-driving value creation.
Excelling to becoming the worlds top display brand by 2010.
Building its global leadership in the flat panel display industry by providing consumers with differentiated entertainment experiences with consumer-focused features. Grow new business by taking advantage of opportunities in digital convergence.

INVESTMENT

EQUIPMENT INVESTMENT
Seize the Global Top 3 by 2010 through advanced infotainment solutions.
Advance into the Global Top 3 by 2010 through profitable growth.
Reinforce design leadership and enhanced focus on high-end feature phones with mobile touch technology.
AS OF 2007 / IN BILLIONS OF KOREAN WON
1,115 R&D INVESTMENT 1,678

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LEADING GLOBAL PRODUCTS

MARKET SHARE

GLOBAL PRODUCTION NETWORK

region

Europe

Country

Poland Poland
Mlawa Wroclaw Almaty Moscow Istanbul Ismailia Riyadh Hangzhou Huizhou Kunshan Nanjing Nanjing Nanjing Qingdao Qinhuangdao Shanghai Shenyang Tianjin Taizhou Yantai New Delhi/Pune Jakarta Bangkok Hanoi Monterrey Mexicali Reynosa Manaus Taubate

company

LGEMA LGEWR LGEAK LGERA LGEAT LGEEG LGESR LGEHN LGEHZ LGEKS LGENP LGEND LGEPN LGEQD LGEQH LGESH LGESY LGETA LGETR LGEYT LGEIL LGEIN LGETH LGEVN LGEMM LGEMX LGERS LGEAZ LGESP

Products

TV, LCD MNT, PDP MODULE LCD TV, REF TV, W/M, AUDIO REF, W/M, PDP TV, LCD TV, FLAT TV, HOME THEATER A/C TV, LCD A/C V/C, DVD-R, USB, PRISM SHEET DS, AUDIO NOTEBOOK PC, PDA, CAR TELEMATICS PDP TV, PDP MODULE MNT, LCD TV, PDP TV W/M GSM CAST DAV TV MWO, RAC, RO COMP, VC, MOTOR, MGT REF, REF-COMP CDMA, GSM TV, REF, W/M, A/C, MWO, MNT, GSM, ODD, DVD AUDIO, VIDEO, DVD, MNT, TV, LCD TV, PDP TV, REF W/M, A/C, A/C-COMP, TV FLAT TV, LCD TV, PDP TV, LCD MNT, CRT MNT, A/C, W/M, REF, MWO, V/C REF LCD TV, LCD MNT, GSM, CDMA PDP TV, FLAT TV, PDP MODULE TV, AUDIO, DVD, A/C CELLULAR, MNT, NOTEBOOK PC

Kazakstan Russia

Optical Storage

CDMA Handsets

Middle East & Africa
Turkey Egypt Saudi Arabia
China China China China China
Residential Air Conditioners

Plasma Panels

China China China China China China China China
India Indonesia Thailand Vietnam

DVD Players

LCD & Plasma TVs North America

Mexico Mexico Mexico

Brazil South & Central America Brazil

EMPLOYEES

29,496

OVERSEAS

STRATEGIC PARTNERS

50,787

PRADA 3M NORTEL MICROSOFT TOSHIBA DUPONT MATSUSHITA RENESAS QUALCOMM GE INTEL HITACHI HP TOYOTA YAHOO GOOGLE SUN YouTube

80,283

LGEAP LGEIL LGEIN LGEJP LGEML LGEPH LGESL LGETH LGEVN LGSI LG Electronics Australia Pty, Ltd. LG Electronics India Pvt. Ltd. P.T. LG Electronics Indonesia LG Electronics Japan, Inc. LG Electronics Malaysia SDN. BHD LG Electronics Philippines Inc. LG Electronics Singapore Pte, Ltd. LG Electronics (Thailand) Co., Ltd. LG Electronics Vietnam Co., Ltd. LG Soft India Private Ltd.

EUROPE

LGEAG LGEBN LGECZ LGEDG LGEEH LGEES LGEFS LGEHS LGEIS LGEJE LGELS LGEMA LGEMF LGEMK LGEPL LGEPT
LGEAK LGELV LGERA LGERI LGERM LGERU LGEUA LGEUR

NORTH AMERICA

LGEAI LGECI LGEMR LGEMS LGEMU LGEUS LGEMM LGEMX LG Electronics Alabama, Inc. LG Electronics Canada, Inc. LG Electronics Mobile Research. U.S.A., LLC LG Electronics Mexico S.A. de C.V. LG Electronics Mobilecomm U.S.A., Inc. LG Electronics U.S.A., Inc. LG Electronics Monterrey Mexico S.A. de C.V. LG Electronics Mexicali S.A. de C.V.

MIDDLE EAST & AFRICA

LGEAF LGEAT LGEEC LGEEG LGEGF LGEMC LGEME LGESA LGESR LG Electronics Africa Logistic FZE Arcelik-LG Klima Sanayi ve Ticaret A.S. LG Electronics Egypt Cairo S.A.E. LG Electronics Egypt S.A.E. LG Electronics Gulf FZE LG Electronics Morocco S.A.R.L. LG Electronics Middle East Co., Ltd. LG Electronics S.A. (Pty) Ltd. LG-Shaker Company Ltd.
SOUTH & CENTRAL AMERICA
LGEAR LGEAZ LGECB LGECL LGEPR LGEPS LGERS LGESP LG Electronics Argentina S.A. LG Electronics da Amazonia Ltda. LG Electronics Colombia Ltda. LG Electronics Inc. Chile Ltda. LG Electronics Peru S.A. LG Electronics Panama S.A. LG Electronics Reynosa, Inc. LG Electronics de Sao Paulo Ltda.

LGECH LGEHK LGEHN

ZENITHZenith Electronics Corporation

60 + 61

MANAGEMENT / BOARD

MANAGEMENT

YONG NAM Vice Chairman & CEO

CORPORATE MILESTONES

1958 Established as GoldStar 1959 Produced Koreas first radio 1962 Exported Koreas first radios to the US and Hong Kong 1965 Produced Koreas first refrigerator 1966 Produced Koreas first black and white TV 1968 Produced Koreas first air conditioner 1969 Produced Koreas first washing machine 1974 Listed on the Korea Stock Exchange 1977 Produced Koreas first color TV 1993 Established a production and sales subsidiary in Huizhou, China (LGEHZ), beginning a full-scale advance into the Chinese market 1995 Renamed as LG Electronics Acquired US-based Zenith Electronics 1997 Developed 40-inch Plasma TV and worlds first DTV IC chipset Established India production subsidiary (LGEIL) 1998 Developed worlds first 60-inch Plasma TV 1999 Co-established LG.Philips LCD 2000 Acquired operations of LG Information & Communications Launched worlds first Internet-enabled refrigerator 2001 Commercialized asynchronous IMT-2000 communications equipment Launched worlds first Internet-enabled washing machine, air conditioner, and microwave oven Co-established LG.Philips Displays 2002 Demerged into two companies to unlock shareholder value: holding company LG Electronics Investment (LGEI) and operating company LG Electronics (LGE) Commercialized worlds first home network system 2003 Developed worlds first synchronousasynchronous IMT-2000 mobile phone Developed worlds first 76-inch Plasma TV Launched worlds first DVD rewriter compatible with all CD and DVD standards Led US CDMA mobile phone market for the first time 2004 Received approval for E-VSB as the nextgeneration ATSC DTV transmission standard Launched worlds first 55-inch LCD TV Commercialized worlds first 71-inch Plasma TV Developed worlds first mobile phone with T-DMB mobile TV reception Developed home cinema system with wireless speakers Led global CDMA mobile phone market for the first time 2005 Launched worlds first notebook with T-DMB reception Launched LG Chocolate, the first phone in the Black Label series Developed worlds first 102-inch Plasma TV Co-established LG-Nortel, a telecommunications network equipment venture with Nortel Networks Launched mobile phone with S-DMB reception and recording 2006 Launched LG Shine, the second handset in the Black Label series Launched steam washing machine and interactive TV refrigerator Developed worlds first 100-inch LCD TV Launched worlds first full HD (1080p) 102-inch Plasma TV Developed worlds first dual-format high-definition disc player and drive 2007 Launched BH100 Super Blu, the worlds first dual-format HD disc player Launched Prada Phone by LG with advanced touch interface Won record number of international design awards, including 21 iF and 29 Red Dot Design Award Launched 120 Hz full HD LCD TV line Shipped 15 millionth LG Chocolate Phone Led US drum washing machine market for the first time

65 Report of Independent Auditors 66 Non-Consolidated Balance Sheets 68 Non-Consolidated Statements of Income 69 Non-Consolidated Statements of Appropriations of Retained Earnings 70 Non-Consolidated Statement of Changes in Shareholders' Equity 71 Non-Consolidated Statements of Cash Flows
Seoul, Korea February 26, 2008
This report is effective as of February 26, 2008, 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.
Samil PricewaterhouseCoopers is the Korean member firm of PricewaterhouseCoopers. PricewaterhouseCoopers refers to the network of member firms of Pricewaterhouse Coopers International Limited, each of which is a separate and independent legal entity.

64 + 65

Non-Consolidated Balance Sheets
December 31, 2007 and 2006
(in millions of Korean won)

Assets

Current assets Cash and cash equivalents Short-term financial instruments Trade accounts and notes receivable, net Inventories, net Other accounts receivable, net Prepaid expenses Accrued income, net Advances, net Derivative transaction debit Deferred income tax assets Other current assets, net Total current assets Property, plant and equipment, net Long-term financial instruments Long-term investment securities Equity method investments Refundable deposits Long-term advance payments Long-term prepaid expenses Long-term loans receivable, net Intangible assets, net Derivative transaction debit Other investment assets 532,371 - 548,503 945,570 226,086 111,101 67,283 73,238,991 82,970 2,827,427 4,037,055 14,854 16,199 6,308,815 329,626 193,540 112,189 90,302 398,481 5,641 3,676 490,315 20,000 899,904 1,103,654 232,430 75,679 53,174 55,180 6,646 161,898 61,497 3,160,377 4,256,321 28,040 37,078 4,583,577 319,241 149,505 125,531 103,748 462,217 4,507 -
Liabilities and shareholders' equity
Current liabilities Short-term borrowings Current maturities of long-term debts and debentures, net Trade accounts and notes payable Other accounts payable Income taxes payable Accrued expenses Withholdings Unearned income Advances from customers Derivative transaction credit Total current liabilities Debentures and convertible bonds, net of current maturities and discounts on debentures Long-term debts, net of current maturities Accrued severance benefits, net Product warranty reserve Deferred income tax liabilities Derivative transaction credit Other long-term liabilities 29,265 370,867 1,838,402 1,051,298 42,196 835,332 46,033 40,132 149,424 19,682 4,422,631 1,366,043 281,460 245,005 165,031 570,213 76,720 - 37,674 792,569 1,764,116 1,083,209 42,813 805,438 53,705 35,928 284,595 1,281 4,901,328 792,197 849,944 228,635 241,956 257,396 23,832 38

564,584

534,914
Transfer from voluntary reserve
56,009 27,758 225,526 - 30,307 41,905 8,240 1,413,598 35,851 1,799 22,172 1,863,165 119,073 198,919 15,288 34,176 101,762 202,594 119,653 40,280 72,571 23,869 12,651 940,836 45,743 28,495 326,121 7,473 24,792 4,225,018 45,936 11,154 34,641 754,381 150,019 172,300 15,713 15,204,546 399,644 27,101 29,499 11,970 1,027,492 Reserve for research and manpower development 2,226,347 3,404,145 2,204,668 2,315,574
Appropriations of retained earnings
Legal reserve Reserve for research and manpower development Cash dividends Dividends (ratio) per share Common stock: \ 850 (17%) in 2007 \ 750 (15%) in 2006 Preferred stock: \ 900 (18%) in 2007 \ 800 (16%) in 2006 Unappropriated retained earnings to be carried forward to subsequent year 3,404,046 2,360,171 13,777 3,252,504 137,765 12,165 2,226,347 121,659

(44,597)

Income before income taxes

Income tax expense

1,486,913

264,518

261,803

22,600

Net income
Basic earnings per share (in won) Diluted earnings per share (in won)

1,222,395

7,584 7,584

239,203

1,480 1,480

68 + 69

Non-Consolidated Statement of Changes in Shareholders' Equity
Year Ended December 31, 2007
Non-Consolidated Statements of Cash Flows
Capital (in millions of Korean won) stock Balance at January 1, 2007 Cumulative effect of changes in accounting principles Restated balance Cash dividends Appropriation of retained earnings Net income Change in equity from equity method Change in equity from negative equity method Gain on valuation of available for sale securities 809,169 - 809,169 - - - - - -
Capital surplus 2,219,993 - 2,219,993 - - - - - - 2,219,993
Capital adjustments (44,893) - (44,893) - - - - - - (44,893)
Accumulated other Retained comprehensive earnings income 687,981 (159,664) 528,317 - - - 23,152 151,703,467 2,466,926 (44,696) 2,422,230 (121,659) 2,300,571 1,222,395 - - - 3,522,966

6,139,176 (204,360) 5,934,816 (121,659) 5,813,157 1,222,395 23,152 151,7,210,702
Cash flows from operating activities
Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation Amortization Amortization of discounts on debentures Provision for severance benefits Loss from transfer of trade accounts and notes receivable Bad debt expense Gain on foreign currency translation, net Gain from disposal of investment securities, net Loss on impairment of assets, net Loss from disposal of property, plant and equipment, net Equity in losses (gains) of equity-method investees, net Loss (gain) on valuation of derivatives, net Gain on settlement of derivatives, net Provision for product warranties, net Stock compensation costs Reversal of compensation costs Loss on redemption of debentures Reversal of accounts receivables Others Net adjustments 595,605 116,777 2,294 218,572 202,594 3,643 36,426 (28,656) 101,195 (7,730) (1,293,945) 70,772 4,429 401,423 11,256 - (8,240) - 3,178 429,593 591,211 115,763 23,674 186,811 204,546 (76,640) (23,474) 837 10,875 174,626 18,345 (18,835) 738,543 (5,799) (7,473) 21,136 1,954,146 1,222,395 239,203
Balance at December, 2007 809,169

70 + 71

Changes in operating assets and liabilities
Decrease in trade accounts and notes receivable (Increase) decrease in other accounts receivable Increase in accrued income Increase in advances Increase in other current assets Decrease in inventories Increase in prepaid expenses Increase in long-term advance payments Decrease (increase) in long-term prepaid expenses (Increase) decrease in deferred income tax assets Increase (decrease) trade accounts and notes payable Decrease in other accounts payable Increase (decrease) in accrued expenses (Decrease) increase in withholdings (Decrease) increase in advances from customers (Decrease) increase in income taxes payable Payment of severance benefits (Increase) decrease in severance insurance deposits Decrease in contribution to the National Pension Fund Increase (decrease) in deferred income tax liabilities Decrease in product warranty reserve Dividends received Others Net changes Net cash provided by operating activities 149,240 (43,268) (31,274) (18,569) (17,196) 152,067 (35,422) (44,035) 13,342 (77,093) 55,920 (33,267) 13,848 (7,709) (84,672) (41,681) (139,880) (43,402) 1,828 293,986 (478,348) 22,(392,302) 1,259,686 296,236 24,252 (2,131) (8,889) (20,485) 316,254 (6,038) (11,782) (30,461) 200 (24,361) (18,268) (77,616) 13,084 70,758 20,842 (210,763) 9,033 4,076 (73,232) (609,086) 16,673 (56,664) (378,368) 1,814,981
Cash flows from investing activities
Disposal of short-term and long term loans Increase in short-term and long term loans Decrease in short-term financial instruments Increase in short-term financial instruments Disposal of long-term financial instruments Acquisition of long-term financial instruments Proceeds from disposal of investment securities Acquisition of investment securities Return of refundable deposits Payment of refundable deposits Proceeds from disposal of property, plant and equipment Proceeds from disposal of intangible assets Proceeds from disposal of derivatives Acquisition of property, plant and equipment Acquisition of intangible assets Acquisition of derivatives Net cash used in investing activities 20,818 (12,462) 20,000 - 37,936 (24,750) 35,998 (222,705) 57,866 (67,347) 143,41,556 (577,766) (77,451) (40,620) (665,254) Proceeds from short-term borrowings Repayment of short-term borrowings Repayment of current maturities of long-term debt Proceeds from issuance of debentures Proceeds from long-term debt Repayment of long-term debt Payment of dividends Net cash used in financing activities Net increase (decrease) in cash and cash equivalents 174,679 (175,382) (786,248) 649,018 185,320 (478,104) (121,659) (552,376) 42,056 Beginning of the year End of the year 490,315 532,371 581,264 490,315 40,000 (44,992) (1,011,516) 381,550 (43,559) (199,956) (878,473) (90,949) 15,553 (24,493) (20,000) 25,198 (34,293) 23,912 (237,320) 118,886 (47,675) 28,823 23,910 50,685 (766,181) (153,360) (31,102) (1,027,457)