1934 Act Registration No. 1-14418
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF AUGUST 2004
-------------------
SK TELECOM CO., LTD.
(Translation of registrant's name into English)
99, Seorin-dong
Jongro-gu
Seoul, Korea
(Address of principal executive offices)
-------------------
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F [x] Form 40-F -
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes - No [x]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):82- .)
================================================================================
RESULTS FOR THE QUARTER
ENDED JUNE 30, 2004
* THE INFORMATION CONTAINED HEREIN IS BASED ON KOREAN GAAP.
--------------------------------------------------------------------------------
SEOUL, KOREA, JULY 29, 2004 - SK TELECOM CO., LTD. (KSE: 017670, NYSE: SKM)
("SKT" OR "THE COMPANY"), THE LEADING WIRELESS TELECOMMUNICATIONS COMPANY IN
KOREA, TODAY ANNOUNCED THE RESULTS OF ITS OPERATIONS FOR THE QUARTER ENDED JUNE
30, 2004.
--------------------------------------------------------------------------------
This material contains forward-looking statements with respect to the financial
condition, results of operations and business of SKT and plans and objectives of
the management of SKT. Statements that are not historical facts, including
statements about SKT's beliefs and expectations, are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results or performance of SKT to be
materially different from any future results or performance expressed or implied
by such forward-looking statements. SKT does not make any representation or
warranty, expressed or implied, as to the accuracy or completeness of the
information contained in this management presentation, and nothing contained
herein is, or shall be relied upon as, a promise or representation, whether as
to the past or the future.
Such forward-looking statements were based on current plans, estimates and
projections of SKT and the political and economic environment in which SKT will
operate in the future, and therefore you should not place undue reliance on
them. Forward-looking statements speak only as of the date they are made, and
SKT undertakes no obligation to update publicly any of them in light of new
information or future events. Additional information concerning these and other
risk factors are contained in SKT's latest annual report on Form 20-F and in
SKT's other filings with the U.S. Securities and Exchange Commission.
--------------------------------------------------------------------------------
CONTENTS
--------------------------------------------------------------------------------
I. FINANCIAL HIGHLIGHTS .......................................... 1
II. FINANCIAL RESULTS ............................................. 2
1. INCOME STATEMENT
2. CAPITAL EXPENDITURE
3. BALANCE SHEET
III. OPERATING RESULT .............................................. 6
IV. APPENDIX (FINANCIAL STATEMENTS) ............................... 7
V. IR CONTACTS ................................................... 10
--------------------------------------------------------------------------------
I. FINANCIAL HIGHLIGHTS
o SUMMARY OF INCOME STATEMENT
-------------------------------------------------------------------------------------------------
(IN BILLIONS OF KRW) Q2.'04 Q2.'03 CHANGE Q2.'04 Q1.'04 CHANGE
-------------------------------------------------------------------------------------------------
OPERATING REVENUE 2,384 2,387 0% 2,384 2,401 -1%
-------------------------------------------------------------------------------------------------
OPERATING EXPENSES 1,921 1,570 22% 1,921 1,709 12%
-------------------------------------------------------------------------------------------------
OPERATING INCOME 463 817 -43% 463 691 -33%
-------------------------------------------------------------------------------------------------
Operating margin 19.4% 34.2% -14.8%p 19.4% 28.8% -9.4%p
-------------------------------------------------------------------------------------------------
OTHER INCOME 72 105 -31% 72 90 -20%
-------------------------------------------------------------------------------------------------
OTHER EXPENSES 124 143 -13% 124 111 12%
-------------------------------------------------------------------------------------------------
ORDINARY INCOME 411 779 -47% 411 670 -39%
-------------------------------------------------------------------------------------------------
NET INCOME 299 551 -46% 299 453 -34%
-------------------------------------------------------------------------------------------------
Net margin 12.5% 23.1% -10.5%p 12.5% 18.9% -6.3%p
-------------------------------------------------------------------------------------------------
EBITDA 1) 868 1,194 -27% 868 1,063 -18%
-------------------------------------------------------------------------------------------------
EBITDA margin 36.4% 50.0% -13.6%p 36.4% 44.3% -7.9%p
-------------------------------------------------------------------------------------------------
1) EBITDA = Operating income + Depreciation (including R&D related
depreciation)
o OTHER MAIN ITEMS
-------------------------------------------------------------------------------------------------
(IN BILLIONS OF KRW) Q2.'04 Q2.'03 CHANGE Q2.'04 Q1.'04 CHANGE
-------------------------------------------------------------------------------------------------
WIRELESS INTERNET SALES 417 306 36% 417 392 7%
-------------------------------------------------------------------------------------------------
% of Cellular revenue 19.0% 14.4% 4.6%p 19.0% 18.1% 0.9%p
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
MARKETING EXPENSES 575 391 47% 575 478 20%
-------------------------------------------------------------------------------------------------
- Marketing commissions 488 300 63% 488 386 26%
-------------------------------------------------------------------------------------------------
- Advertising 87 91 -4% 87 92 -5%
-------------------------------------------------------------------------------------------------
% of Revenue 24.1% 16.4% 7.7%p 24.1% 19.9% 4.2%p
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURE 358 330 8% 358 106 237%
-------------------------------------------------------------------------------------------------
% of Revenue 15.0% 13.8% 15.0% 4.4% 10.6%p
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
INTEREST-BEARING DEBT 4,299 4,893 -12% 4,299 4,118 4%
-------------------------------------------------------------------------------------------------
Debt/Equity ratio 67.8% 88.7% -20.9%p 67.8% 68.2% -0.4%p
-------------------------------------------------------------------------------------------------
II. FINANCIAL RESULTS
1. INCOME STATEMENT
A. OPERATING REVENUE
-------------------------------------------------------------------------------------------------
(IN BILLIONS OF KRW) Q2.'04 Q2.'03 CHANGE Q2.'04 Q1.'04 CHANGE
-------------------------------------------------------------------------------------------------
SIGN-UP FEES 57 44 29% 57 53 7%
-------------------------------------------------------------------------------------------------
MONTHLY FEES 756 722 5% 756 755 0%
-------------------------------------------------------------------------------------------------
CALL CHARGES 875 938 -7% 875 877 0%
-------------------------------------------------------------------------------------------------
VAS & OTHERS 89 115 -23% 89 84 6%
-------------------------------------------------------------------------------------------------
WIRELESS INTERNET SALES 417 306 36% 417 392 7%
-------------------------------------------------------------------------------------------------
% of Cellular service 19.0% 14.4% 4.6%p 19.0% 18.1% 0.9%p
-------------------------------------------------------------------------------------------------
TOTAL CELLULAR SERVICE 2,194 2,126 3% 2,194 2,161 2%
-------------------------------------------------------------------------------------------------
INTERCONNECTION REVENUE 190 261 -27% 190 240 -21%
-------------------------------------------------------------------------------------------------
land to mobile 101 154 -34% 101 126 -20%
-------------------------------------------------------------------------------------------------
mobile to mobile 89 107 -17% 89 113 -21%
-------------------------------------------------------------------------------------------------
OPERATING REVENUE 2,384 2,387 0% 2,384 2,401 -1%
-------------------------------------------------------------------------------------------------
1) SIGN-UP FEES
In the second quarter of 2004, sign-up fees increased 29% compared to the
second quarter of 2003 (hereinafter referred to as "on a YoY basis") and 7%
compared to the first quarter of 2004 (hereinafter referred to as "on a QoQ
basis") due to an increase in the number of new subscribers.
2) MONTHLY FEES
The YoY and QoQ increases in monthly fees were due to an increase in the
number of total subscribers.
3) CALL CHARGES
The YoY decrease in the call charges was caused by contract-based discount
plans and a decrease in the minutes of usage ("MOU"). The QoQ decrease was
smaller despite the contract-based discount plans because of a higher MOU
on a QoQ basis.
4) VALUE ADDED SERVICES ("VAS") AND OTHERS
VAS and other sales have decreased on a YoY basis primarily due to caller
ID tariff cuts implemented in October 2003. The QoQ sales increased,
however, because of a higher demand for VAS such as "color rings" and
automatic roaming services.
5) WIRELESS INTERNET SALES
The YoY and QoQ revenue growths from wireless Internet sales were driven by
higher wireless Internet usage primarily resulting from the continuous
introduction of high-end handsets and the introduction and development of a
variety of multimedia services. Consequently, the wireless Internet sales
accounted for 19% of the cellular service revenues in the second quarter.
6) INTERCONNECTION REVENUES
The new interconnection rates introduced by the Ministry of Information and
Communication were applied retroactively from the beginning of the second
quarter, resulting in the QoQ and YoY decreases in the interconnection
revenues.
* Applying the new interconnection rates retroactively from the beginning
of the first quarter would result in a decrease of KRW 26.4 billion in the
interconnection revenues for the first quarter. For details please refer to
Appendix C.
B. OPERATING EXPENSES
-------------------------------------------------------------------------------------------------
(IN BILLIONS OF KRW) Q2.'04 Q2.'03 CHANGE Q2.'04 Q1.'04 CHANGE
-------------------------------------------------------------------------------------------------
LABOR COSTS 96 69 40% 96 162 -41%
-------------------------------------------------------------------------------------------------
COMMISSIONS PAID 820 560 46% 820 652 26%
-------------------------------------------------------------------------------------------------
MARKETING COMMISSIONS 488 300 63% 488 386 26%
-------------------------------------------------------------------------------------------------
Initial commissions 145 72 102% 145 85 70%
-------------------------------------------------------------------------------------------------
Monthly commissions 107 102 5% 107 105 2%
-------------------------------------------------------------------------------------------------
Retention commissions 236 126 86% 236 195 21%
-------------------------------------------------------------------------------------------------
OTHER COMMISSIONS 332 260 28% 332 266 25%
-------------------------------------------------------------------------------------------------
ADVERTISING 87 91 -4% 87 92 -5%
-------------------------------------------------------------------------------------------------
DEPRECIATION 1) 405 377 8% 405 372 9%
-------------------------------------------------------------------------------------------------
NETWORK INTERCONNECTION 232 236 -2% 232 168 38%
-------------------------------------------------------------------------------------------------
mobile to mobile 175 136 29% 175 127 38%
-------------------------------------------------------------------------------------------------
mobile to land 57 100 -43% 57 40 40%
-------------------------------------------------------------------------------------------------
LEASED LINE 90 76 18% 90 82 10%
-------------------------------------------------------------------------------------------------
OTHERS 2) 191 160 19% 191 182 5%
-------------------------------------------------------------------------------------------------
OPERATING EXPENSES 1,921 1,570 22% 1,921 1,709 12%
-------------------------------------------------------------------------------------------------
1) Includes R&D expenses related depreciation.
2) For details, please refer to non-consolidated statements of income in
Appendix A.
1) LABOR COSTS
Labor costs have increased YoY due to the factors including an increase in
regular wages. Labor costs have decreased QoQ, however, because incentive
bonus payments were made in the first quarter.
2) COMMISSIONS PAID
-Marketing commissions
Because other mobile telecommunications service providers were given the
first opportunity to attract subscribers under the mobile number
portability ("MNP") regulations due to SKT's dominant market position, SKT
made a strategic decision to lock in its subscribers and maintain its
position as the market leader until the MNP policy became available to SKT
as well. Marketing commissions increased due to the diversification of
distribution channels, the enhancement of handset upgrades program and the
expansion of membership program.
-Other commissions
The costs paid to content providers increased due to the growth in the
information usage revenues related to wireless Internet services. SKT also
expanded its market research in the second quarter in order to prepare
itself for the MNP also becoming available to SKT, causing the related
costs to increase. The roaming fees increased as well.
3) DEPRECIATION
The YoY increase was due to the amortization of WCDMA frequency usage right
(KRW 23.9 billion/quarter) from December 2003. The QoQ increase resulted
from an increase in the depreciable assets.
4) NETWORK INTERCONNECTION EXPENSES
The mobile to mobile interconnection costs increased in the second quarter
due to the interconnection rates adjustment. The YoY mobile to land
interconnection costs decreased because we made a payment to Korea Telecom
of KRW 40.6 billion for its 114 directory information service in the second
quarter of 2003.
5) LEASED LINES
Leased line expenses increased QoQ and YoY because additional lines were
leased to accommodate the subscriber growth and increased wireless Internet
traffic and to enhance the call quality.
C. NON-OPERATING ITEMS
-------------------------------------------------------------------------------------------------------
(IN BILLIONS OF KRW) Q2.'04 Q2.'03 CHANGE Q2.'04 Q1.'04 CHANGE
-------------------------------------------------------------------------------------------------------
OTHER INCOME 72 105 -31% 72 90 -20%
-------------------------------------------------------------------------------------------------------
Interest income 18 20 -8% 18 19 -4%
-------------------------------------------------------------------------------------------------------
Equity in earnings of affiliates 20 - N/A 20 24 -15%
-------------------------------------------------------------------------------------------------------
Others 1) 34 85 -60% 34 47 -28%
-------------------------------------------------------------------------------------------------------
OTHER EXPENSES 124 143 -13% 124 111 12%
-------------------------------------------------------------------------------------------------------
Interest 81 101 -20% 81 76 6%
-------------------------------------------------------------------------------------------------------
R&D contribution & donations 21 21 0% 21 19 8%
-------------------------------------------------------------------------------------------------------
Others 1) 23 21 9% 23 16 46%
-------------------------------------------------------------------------------------------------------
1) For details, please refer to non-consolidated statements of income in
Appendix A.
1) INTEREST INCOME
The YoY and QoQ decrease in the interest income was due to a decrease in
the average balance.
2) INTEREST EXPENSE
The interest expense decreased on a YoY basis due to lower costs of
borrowing and a decrease in the average balance of interest-bearing debt.
The interest expense increased on a QoQ basis, however, because of an
increase in the average balance of interest-bearing debt.
3) EQUITY METHOD PROFITS
The increase in the equity method profits was due to the profit improvement
in our subsidiaries such as SK Communications.
4) OTHERS
The decline in other non-operating income was primarily caused by the
dividend income from the second quarter of 2003 and the first quarter of
2004 (KRW 25.7 billion from Korea Telecom and KRW 17.4 billion from POSCO
respectively).
Other non-operating expenses have increased on a QoQ basis due to the
impairment loss in long-term investment securities (KRW 11.8 billion)
caused by Enterprise Networks' application for court receivership.
2. CAPITAL EXPENDITURE
-------------------------------------------------------------------------------------------------------
(IN BILLIONS OF KRW) Q2.'04 Q2.'03 Q2.'04 Q1.'04 CHANGE
-------------------------------------------------------------------------------------------------------
NETWORK 270 257 5% 270 63 332%
-------------------------------------------------------------------------------------------------------
95 A/B 35 19 79% 35 14 146%
-------------------------------------------------------------------------------------------------------
CDMA 2000 1X 204 145 40% 204 26 669%
-------------------------------------------------------------------------------------------------------
1X 173 138 25% 173 24 616%
-------------------------------------------------------------------------------------------------------
EV-DO 30 7 341% 30 2 1223%
-------------------------------------------------------------------------------------------------------
WCDMA 2 12 -82% 2 3 -14%
-------------------------------------------------------------------------------------------------------
Backbone & others 30 81 -63% 30 19 54%
-------------------------------------------------------------------------------------------------------
NON-NETWORK 87 85 3% 87 44 101%
-------------------------------------------------------------------------------------------------------
Wireless Internet & marketing 54 44 21% 54 24 123%
-------------------------------------------------------------------------------------------------------
General supporting 34 40 -17% 34 19 73%
-------------------------------------------------------------------------------------------------------
TOTAL CAPEX 358 342 5% 358 106 237%
-------------------------------------------------------------------------------------------------------
3. BALANCE SHEET
-------------------------------------------------------------------------------------------------------
(IN BILLIONS OF KRW) 04.6 03.6 CHANGE 04.6 04.3 CHANGE
-------------------------------------------------------------------------------------------------------
TOTAL ASSETS 13,490 12,993 4% 13,490 13,415 1%
-------------------------------------------------------------------------------------------------------
Current assets 3,648 3,730 -2% 3,648 3,626 1%
-------------------------------------------------------------------------------------------------------
Cash & marketable securities 736 1,186 -38% 736 766 -4%
-------------------------------------------------------------------------------------------------------
Investment assets 1,997 1,397 43% 1,997 1,898 5%
-------------------------------------------------------------------------------------------------------
Property & equipment 4,351 4,273 2% 4,351 4,358 0%
-------------------------------------------------------------------------------------------------------
Intangible assets 3,493 3,592 -3% 3,493 3,533 -1%
-------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 7,147 7,476 -4% 7,147 7,379 -3%
-------------------------------------------------------------------------------------------------------
Current liabilities 3,384 3,885 -13% 3,384 3,969 -15%
-------------------------------------------------------------------------------------------------------
Short-term borrowings 180 839 -79% 180 576 -69%
-------------------------------------------------------------------------------------------------------
Current portion of long-term
debt 1,398 1,300 8% 1,398 1,134 23%
-------------------------------------------------------------------------------------------------------
Long-term liabilities 3,763 3,591 5% 3,763 3,409 10%
-------------------------------------------------------------------------------------------------------
Bond payable &
long-term borrowings 2,722 2,754 -1% 2,722 2,408 13%
-------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 6,343 5,516 15% 6,343 6,036 5%
-------------------------------------------------------------------------------------------------------
DEBT/EQUITY RATIO 1) 67.8% 88.7% -20.9%P 67.8% 68.2% -0.4%P
-------------------------------------------------------------------------------------------------------
1) Debt/Equity Ratio = Interest-bearing debt / Shareholders' equity
* Interest-bearing debt = Short-term borrowings + Current portion of
long-term debt + Long-term borrowings & corporate bonds
1) CURRENT ASSETS
The balance as of June 2004 is lower because the cash and marketable
securities for June 2003 included the fund for 3% buyback and cancellation
of shares (from June 30 to August 11, KRW 524.4 billion).
2) INVESTMENT ASSETS
A 43% increase in the investment assets on a YoY basis resulted from the
purchase of POSCO shares (KRW 332.5 billion) in July 2003.
3) TOTAL LIABILITIES
The amount of long-term debts has increased due to the issuance of bonds
such as exchangeable bonds based on treasury shares (KRW 385.9 billion) and
Global Bond (US $300 million), whereas the amount of short-term borrowings
has decreased due to the repayment of maturing debt.
4) TOTAL SHAREHOLDERS' EQUITY
An increase in the shareholder's equity was due to an increase in the net
income as of June 2004.
III. OPERATING RESULT
-------------------------------------------------------------------------------------------------------
Q2.'04 Q2.'03 CHANGE Q2.'04 Q1.'04 CHANGE
-------------------------------------------------------------------------------------------------------
Subscribers ('000) 18,595 17,857 4% 18,595 18,439 1%
Net adds 157 229 -32% 157 126 25%
Activations 1,277 910 40% 1,277 1,210 5%
Deactivations 1,120 681 65% 1,120 1,085 3%
Monthly churn rate 2.0% 1.3% 0.7%p 2.0% 2.0% 0.0%p
Average subscribers('000) 18,540 17,743 4% 18,540 18,343 1%
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
ARPU (KRW) 42,861 44,841 -4% 42,861 43,623 -2%
Sign-up fee 1,022 829 23% 1,022 968 6%
Monthly fee & call charge 29,316 31,199 -6% 29,316 29,655 -1%
VAS & others 1,601 2,169 -26% 1,601 1,529 5%
Wireless Internet 7,501 5,743 31% 7,501 7,116 5%
Interconnection 3,421 4,902 -30% 3,421 4,355 -21%
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
MOU
Outgoing 196 201 -2% 196 192 2%
Incoming 106 116 -8% 106 110 -4%
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Subscribers by handset feature
('000)
1X (Including EV-DO) 16,210 12,375 31% 16,210 15,452 5%
EV-DO (Including June) 5,398 1,433 277% 5,398 4,684 15%
June 2,777 829 235% 2,777 2,319 20%
Color 13,329 7,695 73% 13,329 12,098 10%
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Data ARPU by handset (KRW) 2)
2G 1,604 1,351 19% 1,604 1,461 10%
1X(Including EV-DO) 7,644 6,978 10% 7,644 7,710 -1%
Color 9,016 9,726 9,016 9,441 -5%
-------------------------------------------------------------------------------------------------------
1) MOU for May and June of 2004 is an estimate.
2) Excludes others in Wireless Internet sales such as financial enabler,
IV. APPENDIX A (NON-CONSOLIDATED STATEMENTS OF INCOME)
--------------------------------------------------------------------------------------------------------------------
(IN MILLIONS OF KRW) Q2.'04 Q2.'03 CHANGE Q2.'04 Q1.'04 CHANGE
--------------------------------------------------------------------------------------------------------------------
Operating revenue 2,383,994 2,386,852 (2,858) 2,383,994 2,400,568 (16,574)
--------------------------------------------------------------------------------------------------------------------
Operating expenses 1,921,303 1,570,014 351,289 1,921,303 1,709,397 211,906
--------------------------------------------------------------------------------------------------------------------
Labor cost 1) 96,349 68,984 27,365 96,349 162,392 (66,042)
Commissions paid 819,720 560,116 259,604 819,720 651,940 167,780
Advertising 87,248 91,280 (4,032) 87,248 91,645 (4,397)
Depreciation 2) 405,262 376,831 28,431 405,262 371,791 33,471
Network interconnection 231,903 235,946 (4,043) 231,903 167,568 64,335
Leased line 90,190 76,383 13,806 90,190 82,001 8,188
Rent 41,136 34,227 6,909 41,136 39,132 2,004
Frequency usage fees 33,400 32,674 725 33,400 33,940 (541)
Bad debt - 2,093 (2,093) - - -
Others 116,095 91,480 24,616 116,095 108,988 7,107
--------------------------------------------------------------------------------------------------------------------
Operating income 462,691 816,838 (354,147) 462,691 691,171 (228,480)
--------------------------------------------------------------------------------------------------------------------
Other income 72,307 105,049 (32,742) 72,307 89,939 (17,632)
--------------------------------------------------------------------------------------------------------------------
Interest income 18,474 20,042 (1,569) 18,474 19,209 (736)
Equity in earnings of affiliates 20,089 - 20,089 20,089 23,765 (3,676)
Dividend income 1,263 25,721 (24,457) 1,263 17,529 (16,265)
Foreign exchange & translation gains 9,458 11,090 (1,633) 9,458 9,479 (21)
Others 23,023 48,195 (25,172) 23,023 19,957 3,066
--------------------------------------------------------------------------------------------------------------------
Other expenses 124,316 142,516 (18,200) 124,316 110,839 13,477
--------------------------------------------------------------------------------------------------------------------
Interest 80,691 100,648 (19,957) 80,691 76,044 4,647
R&D contribution & donations 20,505 20,562 (57) 20,505 18,954 1,551
Equity in losses of affiliates - 4,777 (4,777) - - -
Foreign exchange & translation losses 9,483 224 9,259 9,483 1,900 7,582
Loss on impairment of investment
securities 11,782 2,300 9,482 11,782 - 11,782
Loss on disposal of investment
assets, & property/equipment 1,400 841 559 1,400 7,477 (6,077)
Others 456 13,164 (12,708) 456 6,463 (6,007)
--------------------------------------------------------------------------------------------------------------------
Ordinary income 410,682 779,371 (368,689) 410,682 670,272 (259,590)
--------------------------------------------------------------------------------------------------------------------
Income before income taxes 410,682 779,371 10,682 670,272 (259,590)
--------------------------------------------------------------------------------------------------------------------
Income taxes 111,953 228,798 (116,845) 111,953 217,757 (105,804)
--------------------------------------------------------------------------------------------------------------------
Net income 298,729 550,573 (251,844) 298,729 452,515 (153,785)
--------------------------------------------------------------------------------------------------------------------
1) Includes salary, severance pay and other benefits
2) Includes R&D expenses related depreciation
IV. APPENDIX B (NON-CONSOLIDATED BALANCE SHEETS)
-------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS OF KRW) 04.6 03.6 CHANGE 04.6 04.3 CHANGE
-------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 13,489,680 12,992,667 497,013 13,489,680 13,414,555 75,125
-------------------------------------------------------------------------------------------------------------------------
Current assets 3,648,439 3,730,287 (81,849) 3,648,439 3,626,023 22,415
-------------------------------------------------------------------------------------------------------------------------
Cash and marketable securities 1) 736,004 1,186,456 (450,452) 736,004 765,743 (29,740)
Accounts receivable - trade 1,392,475 1,351,740 40,735 1,392,475 1,422,464 (29,989)
Accounts receivable - other 1,306,186 1,006,839 299,347 1,306,186 1,212,653 93,533
Short-term loans 57,896 25,720 32,176 57,896 60,271 (2,375)
Inventories 9,444 6,668 2,776 9,444 8,308 1,136
Other 146,434 152,865 (6,431) 146,434 156,583 (10,149)
-------------------------------------------------------------------------------------------------------------------------
Investment assets 1,997,190 1,396,980 600,209 1,997,190 1,897,839 99,351
-------------------------------------------------------------------------------------------------------------------------
Investment securities 2) 1,573,213 1,053,172 520,041 1,573,213 1,552,525 20,688
Long-term loans 33,099 51,381 (18,282) 33,099 39,081 (5,982)
Guarantee deposits 249,131 238,132 11,000 249,131 248,558 574
Other 141,746 54,295 87,450 141,746 57,674 84,071
-------------------------------------------------------------------------------------------------------------------------
Property & equipment 4,351,219 4,272,990 78,229 4,351,219 4,358,192 (6,973)
-------------------------------------------------------------------------------------------------------------------------
Land 446,147 440,187 5,960 446,147 444,791 1,356
Building & fixture 815,295 797,014 18,280 815,295 824,225 (8,931)
Machinery 2,390,498 2,437,817 (47,319) 2,390,498 2,411,195 (20,697)
Vehicles & others 263,392 332,507 (69,115) 263,392 253,354 10,038
Construction in progress 435,888 265,465 170,422 435,888 424,626 11,261
-------------------------------------------------------------------------------------------------------------------------
Intangible assets 3,492,833 3,592,410 (99,577) 3,492,833 3,532,501 (39,668)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 7,147,101 7,476,260 (329,159) 7,147,101 7,378,512 (231,410)
-------------------------------------------------------------------------------------------------------------------------
Current liabilities 3,384,399 3,885,024 (500,625) 3,384,399 3,969,179 (584,780)
-------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 180,000 838,669 (658,669) 180,000 575,676 (395,676)
Accounts payable 823,824 664,114 159,710 823,824 773,744 50,079
Income taxes payable 293,608 405,115 (111,507) 293,608 405,869 (112,261)
Accrued expenses 424,927 431,718 (6,791) 424,927 366,703 58,224
Current portion of long-term debt 1,397,807 1,299,690 98,117 1,397,807 1,134,013 263,795
Other 264,233 245,718 264,233 713,174 (448,942)
-------------------------------------------------------------------------------------------------------------------------
Long-term liabilities 3,762,703 3,591,237 171,466 3,762,703 3,409,332 353,370
-------------------------------------------------------------------------------------------------------------------------
Bond payable & long-term borrowings 2,721,504 2,754,360 (32,857) 2,721,504 2,407,921 313,583
Facility deposits 37,391 43,676 (6,285) 37,391 41,238 (3,847)
Accrued severance indemnities 122,787 67,391 55,396 122,787 78,798 43,989
Others 881,020 725,809 155,211 881,020 881,375 (355)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 6,342,579 5,516,407 826,172 6,342,579 6,036,044 306,535
-------------------------------------------------------------------------------------------------------------------------
Capital stock 44,639 44,639 - 44,639 44,639 -
Capital surplus 2,983,166 2,916,150 67,016 2,983,166 2,915,964 67,203
Retained earnings 5,486,714 4,734,158 752,557 5,486,714 5,187,985 298,729
Capital adjustments (2,171,941) (2,178,540) 6,599 (2,171,941) (2,112,544) (59,397)
Treasury stock (2,047,105) (2,067,784) 20,679 (2,047,105) (2,047,105) -
Unrealized gain(loss) on valuation of
investment securities (129,131) (113,916) (15,215) (129,131) (69,464) (59,667)
Stock options 4,295 3,160 1,135 4,295 4,024 271
-------------------------------------------------------------------------------------------------------------------------
1) Cash & marketable securities : Cash & cash equivalent, marketable
securities & short-term financial instruments are included
2) Investment securities : Long-term investment securities and investment
securities that have applied the equity method.
IV. APPENDIX C
The following charts show the impact of the new interconnection rates under two
different assumptions:
when all the adjustment is made in the second quarter vs. when the adjustment is
made from the first quarter.
-----------------------------------------------------------------------------------------------------------------
IF ALL THE ADJUSTMENT IS MADE IN 2Q
(AS IS REPORTED) IF THE ADJUSTMENT IS MADE FROM 1Q
----------------------------------- ---------------------------------
(IN MILLIONS OF KRW) Q2.'04 Q1.'04 CHANGE Q2.'04 Q1.'04 CHANGE
-----------------------------------------------------------------------------------------------------------------
INTERCONNECTION REVENUE 190,282 239,638 -21% 216,667 213,253 2%
-----------------------------------------------------------------------------------------------------------------
land to mobile 101,248 126,384 -20% 115,444 112,189 3%
-----------------------------------------------------------------------------------------------------------------
mobile to mobile 89,034 113,254 -21% 101,224 101,064 0%
-----------------------------------------------------------------------------------------------------------------
NETWORK INTERCONNECTION EXPENSES 231,903 167,568 38% 206,481 192,990 7%
-----------------------------------------------------------------------------------------------------------------
mobile to mobile 175,269 127,214 38% 158,653 143,829 10%
-----------------------------------------------------------------------------------------------------------------
mobile to land 56,634 40,355 40% 47,829 49,161 -3%
-----------------------------------------------------------------------------------------------------------------
o SUMMARY OF INCOME STATEMENT
-----------------------------------------------------------------------------------------------------------------
IF ALL THE ADJUSTMENT IS MADE IN 2Q
(AS IS REPORTED) IF THE ADJUSTMENT IS MADE FROM 1Q
----------------------------------- ---------------------------------
(IN BILLIONS OF KRW) Q2.'04 Q1.'04 CHANGE Q2.'04 Q1.'04 CHANGE
-----------------------------------------------------------------------------------------------------------------
OPERATING REVENUE 2,384 2,401 -1% 2,410 2,374 2%
-----------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES 1,921 1,709 2% 1,896 1,735 9%
-----------------------------------------------------------------------------------------------------------------
OPERATING INCOME 463 691 -33% 514 639 -20%
-----------------------------------------------------------------------------------------------------------------
Operating margin 19.4% 28.8% -9.4%p 21.3% 26.9% -5.6%p
-----------------------------------------------------------------------------------------------------------------
OTHER INCOME 72 90 -20% 72 90 -20%
-----------------------------------------------------------------------------------------------------------------
OTHER EXPENSES 124 111 12% 124 111 12%
-----------------------------------------------------------------------------------------------------------------
ORDINARY INCOME 411 670 -39% 462 618 -25%
-----------------------------------------------------------------------------------------------------------------
NET INCOME 299 453 34% 335 417 -20%
-----------------------------------------------------------------------------------------------------------------
Net margin 12.5% 18.9% -6.3%p 13.9% 17.5% -3.7%p
-----------------------------------------------------------------------------------------------------------------
EBITDA 1) 868 1,063 -18% 920 1,011 -9%
-----------------------------------------------------------------------------------------------------------------
EBITDA margin 36.4% 44.3% -7.9%p 38.2% 42.6% -4.4%p
-----------------------------------------------------------------------------------------------------------------
1) EBITDA = Operating income + Depreciation (including R&D related
depreciation)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SK TELECOM CO., LTD.
By: /s/ Sung Hae Cho
-----------------------------
Name: Sung Hae Cho
Title: Vice President
Date: August 4, 2004