1934 Act Registration No. 1-14418
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 MAY 2003
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SK TELECOM CO., LTD.
(Translation of registrant's name into English)
99, Seorin-dong
Jongro-gu
Seoul, Korea
(Address of principal executive offices)
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(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- .)
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This report on Form 6-K shall be deemed to be incorporated by reference in
the prospectuses included in Registration Statements on Form F-3 (File Nos.
333-91034 and 333-99073) filed with the Securities and Exchange Commission and
to be a part thereof from the date on which this report is filed, to the extent
not superseded by documents or reports subsequently filed or furnished.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
In this report on Form 6-K, unless the context indicates or otherwise
requires, references to "we", "us", "our" or the "Company" shall mean SK Telecom
Co., Ltd. and its consolidated subsidiaries, and references to "SK Telecom"
shall mean SK Telecom Co., Ltd., but shall not include its consolidated
subsidiaries. Unless otherwise indicated, references to our number of
subscribers shall include Shinsegi Telecomm, Inc.'s subscribers from April 1,
2000. All references to "Korea" contained in this report shall mean The Republic
of Korea and all references to the "Government" shall mean the government of The
Republic of Korea.
The financial information appearing in this report and in our accompanying
consolidated financial statements is stated in Korean won. All references to
"Won" or "W" in this report are to the currency of Korea. Any discrepancies in
any table between totals and the sums of the amounts listed are due to rounding.
This report contains "forward-looking statements", as defined in Section
27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S.
Securities Exchange Act of 1934, as amended, that are based on our current
expectations, assumptions, estimates and projections about our company and our
industry. The forward-looking statements are subject to various risks and
uncertainties. Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "anticipate", "believe",
"estimate", "expect", "intend", "project", "should", and similar expressions.
Those statements include, among other things, the discussions of our liquidity
and capital resources. We caution you that reliance on any forward-looking
statement involves risks and uncertainties, and that although we believe that
the assumptions on which our forward-looking statements are based are
reasonable, any of those assumptions could prove to be inaccurate, and, as a
result, the forward-looking statements based on those assumptions could be
incorrect. In light of these and other uncertainties, you should not conclude
that we will necessarily achieve any plans and objectives or projected financial
results referred to in any of the forward-looking statements. We do not
undertake to release the results of any revisions of these forward-looking
statements to reflect future events or circumstances.
NON-CONSOLIDATED FINANCIAL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED
MARCH 31, 2002 AND 2003
We must file quarterly reports with the Financial Supervisory Commission of
Korea and the Korea Stock Exchange. The unaudited, reviewed and non-consolidated
financial information as of and for the three months ended March 31, 2002 and
2003 shown below were prepared pursuant to generally accepted accounting
principles in Korea ("Korean GAAP"), which differs in certain material respects
from generally accepted accounting principles in the United States.
The financial information below is non-consolidated and includes the
results of operations of our subsidiaries using the equity method of accounting.
Therefore, although net income in our consolidated financial statements may be
similar to that in our non-consolidated financial statements our operating
revenue, total assets and total liabilities, if prepared on a consolidated
basis, could be significantly different from those in our non-consolidated
financial statements. Under Korean GAAP, our non-consolidated revenues accounted
for between approximately 74.4% and 92.6% of our consolidated revenues for the
years ended December 31, 2000, 2001 and 2002. We can give no assurance as to
what the actual ratios will be for 2003.
Shinsegi was merged into SK Telecom on January 13, 2002. As a result, our
results of operations from that date include the results of operations of the
business that was previously operated by Shinsegi, as a subsidiary, and which
was accounted for using the equity method of accounting in our non-consolidated
financial information.
FOR THE THREE MONTHS
ENDED MARCH 31,
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2002 2003
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(IN BILLIONS OF WON)
NON-CONSOLIDATED INCOME STATEMENT DATA
Operating Revenue............................................. W 1,932.2 W 2,242.7
Operating Expenses............................................ 1,269.2 1,491.8
Operating Income.............................................. 663.1 750.9
Other Income.................................................. 59.0 48.7
Other Expenses................................................ 85.6 149.5
Income Taxes.................................................. 192.9 201.9
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Net Income.................................................... W 443.6 W 448.7
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AS OF MARCH 31,
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2002 2003
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(IN BILLIONS OF WON)
NON-CONSOLIDATED BALANCE SHEET DATA
Total Current Assets.......................................... W 2,757.5 W 4,108.7
Total Non-Current Assets...................................... 8,648.5 8,995.6
Total Assets.................................................. 11,406.0 13,104.3
Total Current Liabilities..................................... 2,976.4 4,928.8
Total Long-Term Liabilities................................... 2,879.7 3,237.6
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Total Shareholders' Equity.................................... W 5,550.0 W 4,937.8
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Non-Consolidated Operating Revenue. SK Telecom's operating revenue
increased by 16.1% to Won 2,242.7 billion for the three months ended March 31,
2003 from Won 1,932.2 billion for the three months ended March 31, 2002,
principally reflecting an 18.7% increase in cellular revenue to Won 1,983.0
billion for the three months ended March 31, 2003 from Won 1,670.1 billion for
the three months ended March 31, 2002.
The increase in SK Telecom's cellular revenue was principally due to
increases in the number of SK Telecom's average wireless subscribers and
non-consolidated average monthly revenue per subscriber (excluding
interconnection revenue). The number of SK Telecom's subscribers increased to
approximately 17.6 million as of March 31, 2003 from approximately 16.0 million
as of March 31, 2002. Wireless Internet sales increased by 108.7% to Won 265
billion for the three months ended March 31, 2003 from Won 127.3 billion for the
three months ended March 31, 2002, representing 13.4% of SK Telecom's cellular
revenue, primarily due to the increased number of wireless Internet-enabled
handset holders. However, the increase in wireless Internet sales was partially
offset by a change in the accounting method related to wireless Internet sales.
SK Telecom now recognizes e-lottery sales net of sourcing cost of contents. Such
sales were previously recognized on a gross basis. Value-added service and
others sales increased by 69.8% to Won 105.2 billion for the three months ended
March 31, 2003 from Won 61.9 billion for the three months ended March 31, 2002.
SK Telecom's non-consolidated average monthly revenue per subscriber
(including interconnection revenue) increased by 3.2% to Won 42,895 for the
three months ended March 31, 2003 from Won 41,546 for the three months ended
March 31, 2002. The increase was principally due to increases in wireless
Internet average monthly revenue per subscriber and average monthly revenue per
subscriber from value-added service, despite a change in the accounting method
related to voice information services. SK Telecom now recognizes voice
information sales net of commissions to contents providers. Such sales were
previously recognized on a gross basis. However, the increase was partially
offset by the reduction in tariffs by 7.3% (based on the reduction in a standard
tariff plan) from January 2003.
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Interconnection revenue decreased slightly by 0.9% to Won 259.7 billion for
the three months ended March 31, 2003 from Won 262.1 billion for the three
months ended March 31, 2002. The decrease was the result of lower
interconnection rates in 2003.
Non-Consolidated Operating Income. SK Telecom's operating income increased
by 13.2% to Won 750.9 billion for the three months ended March 31, 2003 from Won
663.1 billion for the three months ended March 31, 2002. SK Telecom's operating
income did not increase commensurate with the increase in its operating revenue
as a result of an increase in its operating expenses for the first quarter of
2003. SK Telecom's operating expenses for the three months ended March 31, 2003
increased by 17.5% to Won 1,491.8 billion compared to Won 1,269.2 billion for
the three months ended March 31, 2002. The increase in SK Telecom's operating
expenses was primarily due to the increases in commissions, depreciation
expenses, interconnection expenses, labor costs, advertising expenses, leased
line expenses and miscellaneous operating expenses.
Commissions paid to SK Telecom's authorized dealers increased by 19.4% to
Won 525.1 billion for the three months ended March 31, 2003 compared to Won
439.7 billion for the three months ended March 31, 2002. The increase was
primarily due to the increase in average subscribers by 12.4% during the period
and as a result of our aggressive marketing activities to maintain our market
leadership in 2G & 2.5G service as well as 3G service going forward.
Depreciation and amortization expenses increased by 5.9% to Won 315.2
billion for the three months ended March 31, 2003 compared to Won 297.7 billion
for the three months ended March 31, 2002. The increase in depreciation expenses
was primarily due to the expansion of SK Telecom's CDMA 1xRTT network.
Interconnection expenses increased by 21.5% to Won 181.1 billion for the
three months ended March 31, 2003 compared to Won 149.0 billion for the three
months ended March 31, 2002. The increase was primarily due to the higher
subscriber numbers and an increase of the mandated payment in Universal Service
Obligation fund for the first quarter of 2003 of Won 22.5 billion compared to
Won 7.2 billion in the first quarter of 2002, which were only partially offset
by a decrease in interconnection rates and a decrease in the level of
interconnection fees that SK Telecom must pay to other operators for calls using
their networks.
Labor cost increased by 27.9% to Won 123.9 billion for the three months
ended March 31, 2003 compared to Won 96.9 billion for the three months ended
March 31, 2002. The increase was primarily due to higher wage levels.
Advertising expenses increased by 32.8% to Won 92.7 billion for the three
months ended March 31, 2003 compared to Won 69.8 billion for the three months
ended March 31, 2002, primarily due to the promotion of new services such as
Cara, June and Moneta.
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Leased line expenses increased by 11.0% to Won 72.9 billion for the three
months ended March 31, 2003 compared to Won 65.7 billion for the three months
ended March 31, 2002, primarily due to an increase in wireless traffic.
Miscellaneous operating expenses increased by 20.3% to Won 180.9 billion
for the three months ended March 31, 2003 compared to Won 150.3 billion for the
three months ended March 31, 2002, primarily due to increases in research and
development expenses and frequency usage fees.
Non-Consolidated Other Income. Other income decreased by 17.5% to Won 48.7
billion for the three months ended March 31, 2003 compared to Won 59.0 billion
for the three months ended March 31, 2002. Other income consists primarily of
commission income, interest income, foreign exchange and translation gains, gain
on equity method, gain on disposal of property and equipment, reversal of
allowance for doubtful accounts and miscellaneous income. Other income decreased
primarily due to the absence of gain on equity method (compared to a gain of Won
21.7 billion in the first quarter of 2002), a decrease in gain on disposal of
property and equipment and the absence of reversal of allowance for doubtful
accounts (compared to a gain of Won 1.5 billion in the first quarter of 2002)
which were partially offset by increases in commission income, foreign exchange
translation gains, interest income and miscellaneous other income.
Non-Consolidated Other Expenses. Other expenses increased by 74.6% to Won
149.5 billion for the three months ended March 31, 2003 compared to Won 85.6
billion for the three months ended March 31, 2002. Other income consists
primarily of interest expense, donations, foreign exchange and translation
losses, loss on equity method and miscellaneous expenses. Other expenses
increased primarily as a result of increases in interest expenses, donations and
loss on equity method. As a percentage of operating revenue, other expenses
increased slightly to 6.7% for the three months ended March 31, 2003 from 4.4%
for the three months ended March 31, 2002.
Non-Consolidated Income Tax. Provision for income taxes increased by 4.7%
to Won 201.9 billion for the three months ended March 31, 2003 from Won 192.9
billion for the three months ended March 31, 2002.
Non-Consolidated Net Income. Principally as a result of the factors
discussed above, SK Telecom's net income increased slightly by 1.1% to 448.7
billion for the three months ended March 31, 2003 from Won 443.6 billion for the
three months ended March 31, 2002.
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INCOME STATEMENT
(KRW mn) 1Q 03 4Q 02 1Q 02(1)
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REVENUE 2,242,746 2,365,638 1,932,239
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OPERATING EXPENSES 1,491,808 1,772,653 1,269,150
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WAGE AND EMPLOYEE BENEFITS 123,926 59,844 96,891
COMMISSIONS PAID 525,085 603,457 439,690
ADVERTISING 92,696 155,115 69,793
DEPRECIATION 315,180 425,386 297,689
NETWORK INTERCONNECTION 181,112 196,759 149,010
LEASED LINE 72,894 70,193 65,730
R&D EXPENSES 47,784 58,538 33,212
FREQUENCY USAGE FEES 31,569 30,634 27,992
BAD DEBT 3,731 15,357 1,902
RENT 30,644 33,359 39,989
OTHERS 67,187 124,011 47,252
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OPERATING INCOME 750,938 592,985 663,089
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NON-OPERATING INCOME 48,691 68,421 59,008
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INTEREST INCOME 11,813 13,687 9,282
INCOMING FEES 27,168 24,618 21,746
FOREIGN EXCHANGE AND TRANSLATION GAINS 2,453 6,217 160
REVERSAL OF ALLOWANCE FOR DOUBTFUL ACCOUNTS 0 -5,826 1,527
GAIN ON DISPOSAL OF PROPERTY AND EQUIPMENT 276 596 1,862
GAIN ON EQUITY METHOD 0 23,478 21,679
OTHER 6,981 5,652 2,751
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NON-OPERATING EXPENSES 149,479 423,643 85,555
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INTEREST EXPENSES 86,734 77,175 68,745
DONATIONS 20,102 72,621 11,427
LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT 2,194 177,830 3,338
LOSS ON EQUITY METHOD 11,405 - -
FOREIGN EXCHANGE AND TRANSLATION LOSS
11,796 1,798 1,274
LOSS ON IMPAIRMENT OF INVESTMENT SECURITIES 16,417 44,496 -
LOSS ON DISPOSAL OF INVESTMENT ASSETS 77 49,281 354
OTHER 753 441 417
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ORDINARY INCOME 650,149 237,764 636,543
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INCOME BEFORE INCOME TAXES 650,154 238,268 636,543
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INCOME TAXES 201,480 75,628 192,902
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NET INCOME 448,674 162,640 443,641
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1) Excludes the 12 days of Shinsegi Telecomm's performance before the official
merger on January 13, 2002
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BALANCE SHEET
(KRW mn) Mar 03 Dec 02 Mar 02
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TOTAL ASSETS 13,104,257 12,721,218 13,104,257
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CURRENT ASSETS 2,757,529
4,108,732 2,746,991
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CASH AND MARKETABLE SECURITIES 1,620,876 546,382 430,291
ACCOUNTS RECEIVABLE - TRADE 1,253,421 1,290,475 1,046,660
SHORT-TERM LOANS 27,640 29,623 22,790
ACCOUNTS RECEIVABLE - OTHER 1,103,879 809,616 1,204,752
ACCRUED INCOME RECEIVABLES 8,877 4,805 5,447
INVENTORIES 9,872 10,718 2,823
OTHER 84.168 55,372 44,766
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INVESTMENT ASSETS 2,352,419 3,132,330 2,190,441
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LONG-TERM INVESTMENT SECURITIES 2,010,099 2,806,963 1,834,059
LONG-TERM LOANS 54,215 57,984 73,726
GUARANTEE DEPOSITS 240,170 221,815 252,910
OTHER 47,935 45,568 29,745
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PROPERTY AND EQUIPMENT 4,279,040 4,451,548 4,011,519
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LAND 439,270 439,915 440,302
BUILDING AND FIXTURE 775,553 778,833 777,246
EQUIPMENT 2,499,356 2,432,552 2,289,971
CONSTRUCTION IN PROGRESS 233,958 345,063 194,907
OTHER 330,904 455,186 309,094
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INTANGIBLE ASSETS 2,364,066 2,390,350 2,446,556
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LIABILITIES 8,166,462 7,184,271 5,856,095
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CURRENT LIABILITIES 4,928,846 4,015,859 2,976,394
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ACCOUNTS PAYABLE 903,446 1,587,532 789,377
SHORT-TERM BORROWINGS 1,691,326 620,000 390,552
INCOME TAXES PAYABLE 411,083 362,365 715,000
ACCRUED EXPENSES 359,974 354,716 382,330
CURRENT PORTION OF LONG-TERM DEBT 1,139,794 920,745 489,325
OTHER 423,223 170,502 209,809
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LONG-TERM LIABILITIES 3,237,617 3,168,412 2,879,701
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LONG-TERM DEBT 2,984,162 2,913,922 2,691,594
FACILITY DEPOSITS 45,249 46,850 48,127
ACCRUED SEVERANCE INDEMNITIES 55,448 45,861 4,088
OTHER 152,758 161,778 135,892
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SHAREHOLDERS' EQUITY 4,937,794 5,536,948 4,937,794
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CAPITAL STOCK 44,576 44,576 44,576
CAPITAL SURPLUS 2,884,355 2,884,385 2,895,246
RETAINED EARNINGS 4,184,402 4,897,099 3,829,462
CAPITAL ADJUSTMENTS (2,175,539) (2,289,112) (1,219,335)
TREASURY STOCK (2,047,087) (2,192,449) (1,192,940)
UNREALIZED LOSS ON VALUATION OF (131,322) (99,115) (27,592)
LONG-TERM INVESTMENT SECURITIES
STOCK OPTIONS 2,870 2,452 1,198
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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
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Name: Sung Hae Cho
Title: Vice President
IR Office
Date: May 16, 2003
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