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 NOVEMBER 2002
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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not superseded by documents or reports subsequently filed or furnished.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 NINE MONTHS ENDED SEPTEMBER 30, 2002
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 NINE MONTHS ENDED
SEPTEMBER 30, 2001 AND 2002
We must file quarterly reports with the Financial Supervisory Commission of
Korea and the Korea Stock Exchange. The unaudited, non-reviewed and
non-consolidated financial information as of and for the nine months ended
September 30, 2001 and 2002 shown below were prepared pursuant to generally
accepted accounting principles in Korea ("Korean GAAP").
The financial information below is non-consolidated and includes the
results of operations of our subsidiaries using the equity method of accounting.
Therefore, 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, even though net income in our
consolidated financial statements may be similar to that in our non-consolidated
financial statements. Under Korean GAAP, our non-consolidated revenues accounted
for approximately 74% to 97% of our consolidated revenues in the last three
years. We can give no assurance as to what the actual ratios will be for 2002.
In addition, results of operations for the first nine months of 2002 may not be
indicative of results of operations for the full year 2002.
We merged Shinsegi into SK Telecom with effect from 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 and
accounted for using the equity method of accounting in our non-consolidated
financial information. Consequently, it may be difficult to compare our
non-consolidated financial information as of and for the nine months ended
September 30, 2001 to that as of and for the nine months ended September 30,
2002.
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
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2001 2002
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(IN BILLIONS OF WON)
NON-CONSOLIDATED INCOME STATEMENT DATA
Operating Revenue Won 4,517.1 Won 6,266.6
Operating Expenses 2,784.9 4,180.8
Operating Income 1,732.2 2,085.8
Other Income 68.8 204.6
Other Expenses 369.8 352.5
Income Taxes 508.3 592.2
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Net Income Won 923.0 Won 1,345.5
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AS OF SEPTEMBER 30,
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2001 2002
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(IN BILLIONS OF WON)
NON-CONSOLIDATED BALANCE SHEET DATA
Total Current Assets Won 1,988.9 Won 2,914.9
Total Non-Current Assets 7,970.9 10,472.0
Total Assets 9,959.9 13,386.8
Total Current Liabilities 2,153.9 3,673.3
Total Long-Term Liabilities 1,713.9 3,318.5
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Total Shareholders' Equity Won 6,092.1 Won 6,395.1
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Non-Consolidated Operating Revenue. SK Telecom's operating revenue
increased by 38.7% to Won 6,266.6 billion for the nine months ended September
30, 2002 from Won 4,517.1 billion for the nine months ended September 30, 2001,
principally reflecting a 51.0% increase in cellular revenue to Won 5,443.3
billion for the nine months ended September 30, 2002 from Won 3,604.7 billion
for the nine months ended September 30, 2001, which was partially offset by a
6.3% decrease in interconnection revenue.
The increase in SK Telecom's cellular revenue was principally due to an
increase in the number of SK Telecom's wireless subscribers, which more than
offset a decrease in the average monthly revenue per subscriber. The number of
SK Telecom's subscribers increased to approximately 11.2 million as of September
30, 2002 from approximately 17 million as of September 30, 2001, reflecting the
Shinsegi merger and increased marketing activity after June 30, 2001, when we
satisfied the FTC's condition to our acquisition of Shinsegi. Wireless Internet
sales increased by 182.4% to Won 483.3 billion for the nine months ended
September 30, 2002 from Won 171.2 billion for the nine months ended September
30, 2001, representing 8.9% of SK Telecom's cellular revenue, primarily due to
the increased number of wireless internet-enabled handset holders.
SK Telecom's non-consolidated average monthly revenue per subscriber
(including interconnection revenue) decreased by 5.5% to Won 43,058 for the nine
months ended September 30, 2002 from Won 45,573 for the nine months ended
September 30, 2001. The decrease was principally due to the reduction in tariffs
by 8.3% from January 2002, the decrease in interconnection rates and the
inclusion from January 13, 2002 of Shinsegi's subscribers, who produced lower
average monthly revenue. But the decrease was partially offset by increases in
wireless internet average monthly revenue per subscriber and average monthly
revenue per subscriber from value-added service.
On an aggregate basis, interconnection revenue decreased by 6.3% to Won
809.8 billion for the nine months ended September 30, 2002 from Won 864.3
billion for the nine months ended September 30, 2001. The decrease was the
result of lower interconnection rates in 2002.
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Non-Consolidated Operating Income. SK Telecom's operating income increased
by 20.4% to Won 2,085.8 billion for the nine months ended September 30, 2002
from Won 1,732.2 billion for the nine months ended September 30, 2001. SK
Telecom's operating income increased at a lower rate than operating revenue
because SK Telecom's operating expenses for the nine months ended September 30,
2002 increased by 50.1% to Won 4,180.8 billion compared to Won 2,784.9 billion
for the nine months ended September 30, 2001. The increase in SK Telecom's
operating expenses was primarily due to the Shinsegi merger and the increases in
commissions, depreciation expenses, interconnection expenses, advertising
expenses, labor costs, leased line expenses and miscellaneous operating
expenses.
Commissions paid to SK Telecom's authorized dealers increased by 114% to
Won 553.2 billion for the nine months ended September 30, 2002 compared to Won
258.5 billion for the nine months ended September 30, 2001. The increase was
primarily due to the increase in new subscribers by 175% and in average
subscribers by 48% during the period.
Depreciation & amortization expenses increased by 27.8% to Won 989.2
billion for the nine months ended September 30, 2002 compared to 774.2 billion
for the nine months ended September 30, 2001. The increase in depreciation
expenses was primarily due to the Shinsegi merger and the expansion of SK
Telecom's CDMA 1xRTT network.
Interconnection expenses increased by 23.5% to Won 543.6 billion for the
nine months ended September 30, 2002 compared to Won 440.0 billion for the nine
months ended September 30, 2001. The increase was primarily due to the higher
subscriber numbers (including as a result of the Shinsegi merger) and an
increase in the amount of mandated payment in Universal Service Obligation fund,
which were only partially offset by a decrease in the level of interconnection
fees that SK Telecom must pay to other operators for calls using their networks
Advertising expenses increased by 69.2% to Won 284.9 billion for the nine
months ended September 30, 2002 compared to Won 168.4 billion for the nine
months ended September 30, 2001, primarily due to the promotion of new services
and the marketing activities related to the World Cup events in Korea. In
addition, advertising expenses for the first half of 2001 were unusually low as
a result of our efforts to satisfy the FTC's condition to our acquisition of
Shinsegi that our wireless market share be less than 50.0% as of June 30, 2001.
Labor cost increased by 63.6% to Won 244.8 billion for the nine months
ended September 30, 2002 compared to Won 149.7 billion for the nine months ended
September 30, 2001. The increase was primarily due to the inclusion of
Shinsegi's labor expense from January 13, 2002 and higher wage levels.
Leased line expenses increased by 21.0% to Won 196.6 billion for the nine
months ended September 30, 2002 compared to Won 162.5 billion for the nine
months
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ended September 30, 2001, primarily due to the Shinsegi merger and an increase
in wireless traffic.
Miscellaneous operating expenses increased by 62.3% to Won 274.9 billion
for the nine months ended September 30, 2002 compared to Won 169.4 billion for
the nine months ended September 30, 2001, primarily due to the Shinsegi merger
and increases in research and development expenses and frequency usage fees.
Non-Consolidated Other Income. Other income, consisting primarily of
commission income, interest income, foreign exchange and translation gains and
miscellaneous income, increased by 197.3% to Won 204.6 billion for the nine
months ended September 30, 2002 compared to Won 68.8 billion for the nine months
ended September 30, 2001. Other income increased primarily due to significant
increases in commission income, foreign exchange translation gains, interest
income and miscellaneous other income, which were partially offset by a decrease
in foreign exchange gains.
Non-Consolidated Other Expenses. Other expenses, consisting primarily of
interest expense, donations, foreign exchange and translation losses and
miscellaneous expenses, decreased by 4.7% to Won 352.5 billion for the nine
months ended September 30, 2002 compared to Won 369.8 billion for the nine
months ended September 30, 2001. Other expenses decreased primarily as a result
of the absence of equity in losses of affiliates, lower levels of donations, a
decrease in foreign exchange translation losses and a decrease in miscellaneous
other expenses, which were partially offset by a significant increase in
interest expenses. As a percentage of operating revenue, other expenses
decreased to 5.6% for the nine months ended September 30, 2002 from 8.2% for the
nine months ended September 30, 2001.
Non-Consolidated Income Tax. Provision for income taxes increased by 16.5%
to Won 592.2 billion for the nine months ended September 30, 2002 from Won 508.3
billion for the nine months ended September 30, 2001.
Non-Consolidated Net Income. Principally as a result of the factors
discussed above, SK Telecom's net income increased by 45.8% to 1,345.5 billion
for the nine months ended September 30, 2002 from Won 923.0 billion for the nine
months ended September 30, 2001.
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INCOME STATEMENT
(KRW MN)
JAN-SEP 02 JAN-SEP 01
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CELLULAR REVENUE 5,443,325 3,604,689
INTERCONNECTION REVENUE 809,822 864,250
OTHERS 13,458 48,194
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TOTAL REVENUE 6,266,605 4,517,133
WAGE & EMPLOYEE BENEFITS 244,801 149,672
MARKETING EXPENSES 1,099,738 583,643
Cellular Initial Commission 247,147 46,103
Cellular Monthly Commission 306,087 210,037
Advertisement 284,909 168,390
Retention Commission 261,594 156,749
Others 2,365
REPAIR EXPENSES 60,669 25,188
RENT 103,782 89,407
FEES 466,954 286,929
DEPRECIATION (INCL. AMORTIZATION) 989,241 774,187
LEASED-LINE EXPENSES 196,611 162,460
R&D 111,998 62,998
FREQUENCY USAGE FEES 88,583 41,080
BAD DEBT
INTERCONNECTION EXPENSES 543,559 440,001
OTHERS 274,904 169,357
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OPERATING EXPENSES 4,180,841 2,784,923
OPERATING INCOME 2,085,765 1,732,209
OTHER INCOME 204,554 68,808
OTHER EXPENSES 352,488 369,811
ORDINARY INCOME 1,937,831 1,431,206
INCOME BEFORE TAXES 1,937,831 1,431,228
INCOME TAXES 592,186 508,271
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NET INCOME 1,345,546 922,958
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BALANCE SHEET
(KRW MN)
SEP-02 SEP-01
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CASH & MARKETABLE SECURITIES 445,661 426,681
TRADE RECEIVABLES 1,178,793 860,745
SHORT-TERM LOAN 32,960 12,077
ACCOUNTS RECEIVABLE 1,189,388 599,328
ACCRUED INCOME RECEIVABLES 9,827 3,770
INVENTORIES 4,910 5,372
PREPAID EXPENSES AND OTHERS 53,323 81,080
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TOTAL CURRENT ASSETS 2,914,863 1,988,931
INVESTMENT 1) 3,491,331 4,287,202
LONG-TERM DEPOSITS 2) 12,830 12,774
LEASEHOLD GUARANTEE DEPOSITS 237,697 197,677
OTHERS 96,565 115,419
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TOTAL INVESTMENT ASSETS 3,838,424 4,613,072
LAND 442,346 406,088
BUILDING & FIXTURE 760,527 709,967
MACHINERY AND EQUIPMENT 2,233,838 1,784,892
CONSTRUCTION IN PROGRESS 276,593 221,090
OTHERS 519,877 131,423
NET PP&E 4,233,181 3,253,461
INTANGIBLE & DEFERRED ASSETS 2,400,366 104,392
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TOTAL FIXED ASSETS 6,633,546 3,357,853
TOTAL ASSETS 13,386,833 9,959,856
LIABILITIES & SHAREHOLDERS' EQUITY
ACCOUNTS PAYABLE 1,052,960 660,175
ACCRUED EXPENSES 476,440 286,848
SHORT-TERM BORROWING 1,065,000 400,000
INCOME TAX PAYABLE 337,330 245,372
CURRENT PORTION OF LONG-TERM DEBT 541,139 427,637
OTHERS 200,374 133,872
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TOTAL CURRENT LIABILITIES 3,673,253 2,153,904
DEPOSIT FOR FACILITIES 52,954 50,380
LONG-TERM DEBT 3,056,702 1,533,041
ACCRUED SEVERANCE INDEMNITIES 94,730 30,454
OTHERS 39,995 29,378
DEFERRED INCOME TAX CREDITS 74,101 70,603
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TOTAL LONG-TERM LIABILITIES 3,318,482 1,713,856
TOTAL LIABILITIES 6,991,735 3,867,760
CAPITAL STOCK 44,576 44,576
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(KRW MN)
SEP-02 SEP-01
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CAPITAL SURPLUS 2,884,430 3,748,546
RETAINED EARNINGS 4,731,367 3,221,795
CAPITAL ADJUSTMENTS (1,265,275) (922,822)
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TOTAL SHAREHOLDERS' EQUITY 6,395,098 6,092,096
TOTAL LIAB. & S/E 13,386,833 9,959,856
1) INVESTMENT IN AFFILIATES + INVESTMENT SECURITIES
2) LONG-TERM DEPOSITS + LONG-TERM FINANCIAL INSTRUMENTS + INVESTMENT IN FUNDS
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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/ Tae-Jin Park
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Name: Tae-Jin Park
Title: Senior Manager
Investor Relations Office
Date: November 8, 2002
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