`
`
`
`
`
`
`
`
`
`INNOVATIVE DISPLAY TECHNOLOGIES LLC’s
`EXHIBIT 2003
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`LG DISPLAY CO., LTD.
`Petitioner
`
`v.
`
`INNOVATIVE DISPLAY TECHNOLOGIES LLC
`Patent Owner
`
`
`Case IPR2014-01092
`U.S. Patent No. 7,434,974
`
`
`
`
`
`
`
`

`

`
`
`
`
`
`LG Electronics
`Consolidated Financial Statements
`December 31, 2013 and 2012
`
`
`
`IDT00059
`
`

`

`LG Electronics
`Index
`December 31, 2013 and 2012
`
`
`
`Page(s)
`
`Report of Independent Auditors .........................................................................
`
`1 - 2
`
`Consolidated Financial Statements
`
`Consolidated Statements of Financial Position ......................................................
`
`3
`
`Consolidated Statements of Income ..........................................................................
`
`Consolidated Statements of Comprehensive Income ................................................
`
`Consolidated Statements of Changes in Equity .........................................................
`
`Consolidated Statements of Cash Flows ................................................................
`
`4
`
`5
`
`6
`
`7
`
`Notes to the Consolidated Financial Statements .................................................... 8 - 129
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`IDT00060
`
`

`

`
`
`
`
`Report of Independent Auditors
`
`
`
`To the Board of Directors and Shareholders of
`LG Electronics Inc.
`
`
`We have audited the accompanying consolidated statements of financial position of LG Electronics Inc.
`and its subsidiaries (collectively the “Group”) as of December 31, 2013, December 31, 2012 and
`January 1, 2012, and the related consolidated statements of income, comprehensive income, changes
`in equity and cash flows for the years ended December 31, 2013 and 2012, expressed in Korean won.
`These financial statements are the responsibility of the Group’s management. Our responsibility is to
`express an opinion on these financial statements based on our audits. We did not audit the financial
`statements of certain consolidated subsidiaries, whose financial statements represent 37% of the
`Group’s consolidated total assets as of December 31, 2013, December 31, 2012 and January 1, 2012,
`respectively, and 53% and 54% of the Group’s consolidated total sales for the years ended December
`31, 2013 and 2012, respectively. These statements were audited by other auditors whose reports have
`been furnished us and our opinion, insofar as it relates to the amounts included for those subsidiaries,
`is based solely on the reports of other auditors.
`
`We conducted our audits in accordance with auditing standards generally accepted in the Republic of
`Korea. Those standards require that we plan and perform the audits to obtain reasonable assurance
`about whether the financial statements are free of material misstatement. An audit includes examining,
`on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
`also includes assessing the accounting principles used and significant estimates made by
`management, as well as evaluating the overall financial statement presentation. We believe that our
`audits provide a reasonable basis for our opinion.
`
`In our opinion, based on our audits and the reports of the other auditors, the consolidated financial
`statements referred to above present fairly, in all material respects, the financial position of the Group
`as of December 31, 2013, December 31, 2012 and January 1, 2012, and their financial performance
`and cash flows for the years ended December 31, 2013 and 2012, in conformity with International
`Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”).
`
`Samil PricewaterhouseCoopers, 92 Hangang-daero, Yongsan-gu, Seoul 140-702, Korea, www.samil.com
`
`IDT00061
`
`

`

`Auditing standards and their application in practice vary among countries. The procedures and
`
`practices used in the Republic of Korea to audit such financial statements may differ from those
`
`generally accepted and applied in other countries. Accordingly. this report is for use by those who are
`informed about Korean auditing standards and their application in practice.
`
`Mam/‘32 fries Oder/tame (2705
`
`Seoul, Korea
`
`February 25, 2014
`
`
`
`
`the audit report date. Certain subsequent events or
`This report
`is effective as of February 25, 2014,
`circumstances. which may occur between the audit report date and the time of reading this report. could
`have a material
`impact on the accompanying consolidated financial statements and notes thereto.
`Accordingiy. 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.
`
`
`
`
`
`|DT00062
`
`IDT00062
`
`

`

`LG Electronics
`Consolidated Statements of Financial Position
`December 31, 2013 and 2012, and January 1, 2012
`
`(in millions of Korean won)
`
`Note
`
`December 31, 2013 December 31, 2012
`
`January 1, 2012
`
`Assets
`
`Current assets
`Cash and cash equivalents
`Financial deposits
`Trade receivables
`Loans and other receivables
`Other financial assets
`Inventories
`Current income tax assets
`Other current assets
`Assets classified as held for sale
`
`Non-current assets
`Financial deposits
`Loans and other receivables
`Other financial assets
`Property, plant and equipment
`Intangible assets
`Deferred income tax assets
`Investments in associates and joint ventures
`Investment property
`Other non-current assets
`
`Total assets
`
`Liabilities
`
`Current liabilities
`Trade payables
`Borrowings
`Other payables
`Other financial liabilities
`Current income tax liabilities
`Provisions
`Other current liabilities
`Liabilities related to assets held for sale
`
`Non-current liabilities
`Borrowings
`Other payables
`Other financial liabilities
`Deferred income tax liabilities
`Net defined benefit liability
`Provisions
`Other non-current liabilities
`
`Total liabilities
`
`5,6,42
`5,6,42
`5,7
`5,7,42
`5,8,42
`9
`
`10
`11
`
`5,6,42
`5,7,42
`5,8,42
`12
`13
`18
`14
`15
`10
`
`5,42
`5,16,42
`5,17,42
`5,8,42
`
`20
`21
`11
`
`5,16,42
`5,17,42
`5,8,42
`18
`19
`20
`21
`
`Equity attributable to owners of the Parent Company
`Paid-in capital:
`Capital stock
`Share premium
`Retained earnings
`Accumulated other comprehensive loss
`Other components of equity
`
`22
`
`23
`24
`25
`
`Non-controlling interest
`
`Total equity
`
`Total liabilities and equity
`
`2,645,270
`
`
`67,896
`
`7,117,402
`
`596,505
`
`17,430
`
`4,838,830
`
`116,254
`
`925,471
`-
`
`
`16,325,058
`
`96,992
`
`
`601,978
`
`55,714
`
`10,341,993
`
`1,363,690
`
`1,619,551
`
`4,329,583
`
`4,923
`
`788,582
`
`19,203,006
`35,528,064
`
`5,691,114
`
`
`3,022,723
`
`2,829,686
`
`10,890
`
`74,131
`
`663,701
`
`2,721,759
`-
`
`
`15,014,004
`
`6,188,306
`
`
`27,670
`
`10,663
`
`7,651
`
`580,919
`
`998,795
`
`10,687
`
`7,824,691
`
`22,838,695
`
`904,169
`
`
`3,088,179
`
`8,885,523
`(907,440)
`(231,229)
`11,739,202
`
`
`950,167
`
`12,689,369
`
`35,528,064
`
`2,185,000
`
`
`54,000
`
`7,332,761
`
`498,615
`
`56,486
`
`5,074,500
`
`225,659
`
`864,477
`
`16,937
`
`16,308,435
`
`121,036
`
`
`603,233
`
`67,001
`
`9,889,204
`
`1,222,302
`
`1,511,462
`
`4,182,878
`
`10,261
`
`850,238
`
`18,457,615
`34,766,050
`
`5,626,571
`
`
`2,715,041
`
`2,704,522
`
`321
`
`114,728
`
`644,282
`
`2,707,033
`
`1,794
`
`14,514,292
`
`5,923,346
`
`
`29,169
`
`16,621
`
`10,568
`
`630,138
`
`932,871
`
`3,298
`
`7,546,011
`
`22,060,303
`
`904,169
`
`3,088,179
`
`
`8,723,950
`(675,098)
`(242,111)
`11,799,089
`
`
`906,658
`
`12,705,747
`
`34,766,050
`
`2,781,069
`180,000
`7,338,759
`529,510
`1,677
`5,321,845
`198,897
`920,882
`6,865
`17,279,504
`
`136,108
`629,703
`145,787
`9,593,424
`1,167,567
`1,444,208
`4,252,408
`10,909
`859,520
`18,239,634
`35,519,138
`
`5,750,549
`
`
`3,871,889
`
`2,322,897
`13,860
`
`
`85,651
`
`734,848
`
`2,676,039
`-
`
`
`15,455,733
`
`5,808,491
`
`20,892
`
`
`378
`
`15,237
`
`483,125
`
`575,632
`
`3,238
`
`6,906,993
`
`22,362,726
`
`904,169
`
`
`3,088,179
`
`8,792,879
`(327,469)
`(242,223)
`12,215,535
`
`940,877
`
`
`13,156,412
`
`35,519,138
`
`The accompanying notes are an integral part of these consolidated financial statements.
`
` 3
`
`IDT00063
`
`

`

`LG Electronics
`Notes to the Consolidated Financial Statements
`December 31, 2013 and 2012
`
`
`
`
`
`
`
`
`
`
`
`
`Territory
`
` Location
`
`
`
`
`
`
`
`
`
`Subsidiaries
`
`
`
`2013
`
`
`
`2012
`
` Percentage of ownership
`Non-
`controlling
`interest
`
`Controlling
`interest
`
`
`
`
`
` Percentage of ownership
`Non-
`controlling
`interest
`
`Controlling
`interest
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Closing
`Month
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Major Business
`
` Basis of control
`
`
`
`
`
`
`
`
`
` USA
`
` Canada
`
` Mexico
`
` Mexico
`
` LG Electronics Alabama
`Inc.(LGEAI)
`
` LG Electronics Canada,
`Inc.(LGECI)
`
` LG Electronics Mexicalli,
`S.A. DE C.V.(LGEMX)
`
` LG Electronics Mexico S.A.
`DE C.V.(LGEMS)
`
`
`
`
`
`
`
`
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`
`
`
`
`
`
`
`
`-
`
`-
`
`-
`
`-
`
`
`
`
`
`
`
`
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`
`
`
`
`
`
`
`
`-
`
`-
`
`-
`
`-
`
` December
`
`Services
`
` December
`
` December
`
` December
`
`Sales of
`Electronic products
`
`Production of
`Electronic products
`
`Sales of
`Electronic products
`
`R&D
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` USA
`
` USA
`
` Mexico
`
` Mexico
`
` USA
`
` USA
`
` Mexico
`
`
`
`LG Electronics Mobile
`Research U.S.A.,
`L.L.C.(LGEMR)
` LG Electronics Mobilecomm
`U.S.A., Inc.(LGEMU)
`
`
`
`LG Electronics Monterrey
`Mexico S.A.de
`C.V.(LGEMM)
` LG Electronics Reynosa S.A.
`DE C.V.(LGERS)
`
` LG Electronics U.S.A.,
`Inc.(LGEUS)
`
`
`
`
`
`
`
`
`
`
`
` LG Receivable Funding LLC
`
` Servicios Integrales LG S.A
`DE C.V
`
`
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`100.0%
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
` December
`
` December
`
`Sales of
`Electronic products
`
` December
`
`Production of
`Electronic products
`
` December
`
` December
`
`Production of
`Electronic products
`
`Sales of
`Electronic products
`
` December
`
`Special Purpose
`Company
`
` December
`
`Services
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`
`
`16
`
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
` More than half of
`voting rights
`
`IDT00064
`
`

`

`LG Electronics
`Notes to the Consolidated Financial Statements
`December 31, 2013 and 2012
`
`
`The recoverable amount of CGUs has been determined based on value-in-use calculations.
`These calculations use pre-tax cash flow projections based on financial budgets approved by
`the management covering a four-year period. Cashflows beyond the four-year period are
`extrapolated using the estimated growth rate which does not exceed the long-term average
`growth rate for the electronic business in which the CGU operated.
`
`Management determined the estimated pre-tax cash flow based on past performance and its
`expectations of market development. Value-in-use is measured by applying the pre-tax
`discount rates reflecting specific risks relating to the relevant operating segments.
`
`Discount rates and nominal long-term growth rates used for calculating the value-in-use of
`major operating segments are as follows:
`
`(in millions of Korean won)
`Discount rates
`Nominal long-term growth rates
`
`
`
`
`
`
`
`AE
`
`
`13.7%
`2.1%
`
`MC
`
`
`13.8%
`4.6%
`
`Other
`13.4%
`2.9%
`
`14. Investments in associates and joint ventures
`
`(a) Associates and joint ventures
`
`Associates as of December 31, 2013, are as follows:
`
`
`
`
`
`
`
`
`
`
`
`
`
`Percentage of Ownership
`
`
`
`
`
`
`
`Nature of relationships
`
`(in millions of Korean won)
`
`LG Display Co., Ltd.
`
`
`
`Domicile
` Korea
`
`Fiscal year
`end
`
`
`
` December 31
`
`
`
`
`
`December 31,
`2013
`
`37.9%
`
`Ericsson-LG Co., Ltd
`
` Korea
`
` December 31
`
`25.0%
`
`with the Group
` Production and supply of
`display products
` Supply of communication
`devices and network
`solution products
` Production and supply of
`data storages
` OLED related patent
`licensing
`Certificate services
` R&D of fuel cell
` Communication services
` DVD related patent
`licensing
`1 Classified as an associate although the percentage of ownership is less than 20% because the Group
`can exercise its voting rights through the Board of Directors.
`
`Japan
`
` December 31
`
`USA
`
` December 31
`
` December 31
`
`Hitachi-LG Data Storage
`Inc.(HLDS)
`
`Global OLED Technology
`LLC.
`
`Korea Information
`Certificate Authority Inc.1 Korea
`USA
`LG Fuel Cell Systems Inc.
` December 31
`SKT Vietnam PTE., Ltd.
` Singapore December 31
` March 312
`
`USA
`
`
`One-Red, LLC
`
`49.0%
`
`32.7%
`
`9.3%
`
`30.0%
`
`25.4%
`
`25.0%
`
`December 31,
`2012
`
`37.9%
`
`25.0%
`
`49.0%
`
`32.7%
`
`9.3%
`
`25.5%
`
`25.4%
`
`-
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`2 The financial statements as of November 30, 2013, were used due to the difference in the fiscal year
`end.
`
` 75
`
`IDT00065
`
`

`

`LG Electronics
`Notes to the Consolidated Financial Statements
`December 31, 2013 and 2012
`
`
`41. Related Party Transactions
`
`(a) The related parties of the Group are as follows:
`
`
`
`Name
`
`December 31, 2013
`
`
`
`December 31, 2012
`
`
`
`
`
`
`
`
`Classification
`Significantly influencing
`the Group
`Associates
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` LG Corp.
` LG Display Co., Ltd., and subs
` LG Display Co., Ltd.
` LG Display Germany GmbH
` LG Display Shanghai Co.,Ltd.
` LG Display Yantai Co.,Ltd.
` LG. Display America,Inc.
` LG Display Japan Co., Ltd.
` LG Display Taiwan Co., Ltd.
` LG Display Nanjing Co., Ltd.
` LG Display Poland Sp. zo.o.
` LG Display Guang Zhou Co., Ltd
` LG Display Shenzhen Co., Ltd.
` LG Display Singapore Pte. Ltd.
` LG Display U.S.A Inc
`L&T Display Technology
`(Xiamen) Limited
`L&T Display Technology (Fujian)
`Limited
`LUCOM Display Technology
`(Kunshan) Limited
`
` LG Display Reynosa S.A. de C.V.
` Nanumnuri Co., Ltd.
` LG Display (China) Co., Ltd.
`L&I Electronic Technology
`(Dongguan) Limited
`
`Image&Materials,Inc.
`
` Ericsson-LG Co., Ltd., and subs
` Ericsson-LG Co., Ltd.
` LN Srithai Com Co., Ltd.
` Nexer Inc.
` Ericsson-LG Europe B.V.
` Ericsson-LG Canada Inc.
` Novera Optics Inc.
`
`-
`Hitachi LG Data Storage
`Inc.(HLDS), and subs
`
`
`
`Note
`-
`-
`-
`-
`-
`-
`-
`-
`-
`-
`-
`-
`-
`-
`-
`
`-
`
`-
`
`-
`
`-
`-
`-
`
`-
`
`-
`-
`-
`-
`-
`-
`-
`-
`-
`
`-
`
`LG Corp.
` LG Display Co., Ltd., and subs
` LG Display Co., Ltd.
` LG Display Germany GmbH
` LG Display Shanghai Co.,Ltd.
` LG Display Yantai Co.,Ltd.
` LG. Display America,Inc.
` LG Display Japan Co., Ltd.
` LG Display Taiwan Co., Ltd.
` LG Display Nanjing Co., Ltd.
` LG Display Poland Sp. zo.o.
` LG Display Guang Zhou Co., Ltd
` LG Display Shenzhen Co., Ltd.
` LG Display Singapore Pte. Ltd.
` LG Display U.S.A Inc
`
`L&T Display Technology
`(Xiamen) Limited
`L&T Display Technology (Fujian)
`Limited
`LUCOM Display Technology
`(Kunshan) Limited
` LG Display Reynosa S.A. de C.V.
` Nanumnuri Co., Ltd.
` LG Display (China) Co., Ltd.
`
`
`-
`
`
`-
` Ericsson-LG Co., Ltd., and subs
` Ericsson-LG Co., Ltd.
` LN Srithai Com Co., Ltd.
` Nexer Inc.
` Ericsson-LG Europe B.V.
` Ericsson-LG Canada Inc.
` Novera Optics Inc.
` Ericsson-LG Enterprise Co., Ltd.
` Hitachi LG Data Storage
`Inc.(HLDS), and subs
`
` 109
`
`IDT00066
`
`