Samsung Electronics Co., Ltd.

and its Subsidiaries

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1. General Information

1.1 Company Overview

Samsung Electronics Co., Ltd. (“SEC”) was incorporated under the laws of the Republic of Korea in 1969 and listed
its shares on the Korea Stock Exchange in 1975. SEC and its subsidiaries (collectively referred to as the “Company”)
operate four business divisions: Consumer Electronics (“CE”), Information technology & Mobile communications
(“IM”), Device Solutions (“DS”) and Harman. The CE division includes digital TVs, monitors, air conditioners and
refrigerators and the IM division includes mobile phones, communication systems, and computers. The DS division
includes products such as Memory, Foundry and System LSI in the semiconductor business (“Semiconductor”), and
LCD and OLED panels in the display business (“DP”). The Harman division includes connected car systems, audio
and visual products, enterprise automation solutions and connected services. The Company is domiciled in the
Republic of Korea and the address of its registered office is Suwon, the Republic of Korea.

These interim consolidated financial statements have been prepared in accordance with Korean International
Financial Reporting Standards (“Korean IFRS”) 1110, Consolidated Financial Statements. SEC, as the controlling
company, consolidates its 256 subsidiaries including Samsung Display and Samsung Electronics America. The
Company also applies the equity method of accounting for its 41 associates, including Samsung Electro-Mechanics.

1.2 Consolidated Subsidiaries

(A) The consolidated subsidiaries as at September 30, 2018 are as follows:

Percentage
of
Area Subsidiaries Industry ownership1
Samsung Display (SDC) Manufacture and sale of display panels 84.8
SU Materials Manufacture of display components 50.0
STECO Manufacture of semiconductor components 70.0
SEMES Manufacture of semiconductor/FPD 91.5
Samsung Electronics Service Repair services for electronic devices 99.3
Samsung Electronics Sales Sale of electronic devices 100.0
Samsung Electronics Logitech General logistics agency 100.0
Samsung Medison Manufacture and sale of medical equipment 68.5
Samsung Venture Capital Union #21 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #22 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #23 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #26 Technology business, Venture capital investments 99.0
Domestic Samsung Venture Capital Union #27 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #28 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #29 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #32 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #33 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #37 Technology business, Venture capital investments 99.0
Samsung Venture Capital Union #40 Technology business, Venture capital investments 99.0
Development and supply of semiconductor
Mirero System 99.9
process defect and quality control software
Growth type private equity trust specialized in
Investment on semiconductor industry 66.7
semiconductors
Harman International Korea Software development and supply, etc. 100.0
Red Bend Software Korea Software development and supply 100.0

1 Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

14
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Percentage of
ownership1
Area Subsidiaries Industry
Samsung Electronics America (SEA) Sale of electronic devices 100.0
NeuroLogica Medical equipment 100.0
Samsung Semiconductor (SSI) Sale of semiconductor/display panels 100.0
Samsung Electronics Canada (SECA) Sale of electronic devices 100.0
Samsung Research America (SRA) R&D 100.0
Samsung Mexicana (SAMEX) Manufacture of electronic devices 100.0
Samsung International (SII) Manufacture of TV/monitors 100.0
Samsung Austin Semiconductor (SAS) Manufacture of semiconductor 100.0
Samsung Electronics Mexico (SEM) Sale of electronic devices 99.9
SEMES America (SEMESA) Semiconductor equipment 100.0
Samsung Electronics Digital Appliance Mexico
Manufacture of electronic devices 100.0
(SEDAM)
Samsung Electronics Latinoamerica Miami
Sale of electronic devices 100.0
(SEMI)
Samsung Electronics Latinoamerica (SELA) Sale of electronic devices 100.0
Samsung Electronics Venezuela (SEVEN) Marketing and services 100.0
Samsung Electronica Colombia (SAMCOL) Sale of electronic devices 100.0
Samsung Electronics Panama (SEPA) Consulting 100.0
Samsung Electronica da Amazonia (SEDA) Manufacture and sale of electronic devices 100.0
Samsung Electronics Argentina (SEASA) Marketing and services 100.0
Samsung Electronics Chile (SECH) Sale of electronic devices 100.0
Samsung Electronics Peru (SEPR) Sale of electronic devices 100.0
RT SV CO-INVEST (RT-SV) Venture capital investments 99.9
Samsung HVAC Sale of heating and cooling products 100.0
SmartThings Sale of smart home electronics 100.0
America Prismview Manufacture and sale of LED displays 100.0
Beijing Integrated Circuit Industry
Venture capital investments 61.4
International Fund (Beijing Fund)
Manufacture and sale of server semiconductor
Stellus Technologies 100.0
storage system
Samsung Oak Holdings (SHI) Holding company 100.0
AdGear Technologies Digital advertising platforms 100.0
Joyent Cloud Services 100.0
Samsung Next Holding Company 100.0
Technology business, Venture capital
Samsung Next Fund 100.0
investments
Dacor Holdings Holding Company 100.0
Dacor Manufacture and sale of Home appliances 100.0
Dacor Canada Sale of Home appliances 100.0
[Link] Sale of Home appliances 100.0
Distinctive Appliances of California Sale of Home appliances 100.0
Viv Labs Research of AI technology 100.0
SigMast Communications RCS (Rich Communication Service) 100.0
Harman Becker Automotive Systems Manufacture and sale of audio products, R&D 100.0
Harman Connected Services Engineering Connected Service Provider 100.0
Harman Connected Services, Inc. Connected Service Provider 100.0
Harman Connected Services South America Connected Service Provider 100.0
Harman da Amazonia Industria Electronica e
Manufacture and sale of audio products 100.0
Participacoes
Harman de Mexico S. de R.L. de C.V. Manufacture of audio products 100.0
Harman do Brasil Industria Electronica e
Sale of audio products, R&D 100.0
Participacoes.
1 Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

15
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Percentage
of
Area Subsidiaries Industry ownership1
Harman Financial Group Management Company 100.0
Harman International Industries Canada Sale of audio products 100.0
Harman International Industries, Inc. Holding Company 100.0
Harman International Mexico S de RL de CV Sale of audio products 100.0
Harman Investment Group, LLC Financing Company 100.0
America Harman KG Holding, LLC Holding Company 100.0
Harman Professional Sale of audio products, R&D 100.0
Red Bend Software Software design 100.0
Samsung Electronics Home Appliances America
Manufacture of home appliances 100.0
(SEHA)
China Materialia Venture capital investments 99.0
Samsung Electronics (UK) (SEUK) Sale of electronic devices 100.0
Samsung Electronics Holding (SEHG) Holding Company 100.0
Samsung Semiconductor Europe GmbH (SSEG) Sale of semiconductor/display panels 100.0
Samsung Electronics GmbH (SEG) Sale of electronic devices 100.0
Samsung Electronics Iberia (SESA) Sale of electronic devices 100.0
Samsung Electronics France (SEF) Sale of electronic devices 100.0
Samsung Electronics Hungarian (SEH) Manufacture and sale of electronic devices 100.0
Samsung Electronics Czech and Slovak (SECZ) Sale of electronic devices 100.0
Samsung Electronics Italia (SEI) Sale of electronic devices 100.0
Samsung Electronics Europe Logistics (SELS) Logistics 100.0
Samsung Electronics Benelux (SEBN) Sale of electronic devices 100.0
Samsung Display Slovakia (SDSK) Toll processing of display panels 100.0
Samsung Electronics Romania (SEROM) Sale of electronic devices 100.0
Samsung Electronics Overseas (SEO) Sale of electronic devices 100.0
Samsung Electronics Polska (SEPOL) Sale of electronic devices 100.0
Samsung Electronics Portuguesa (SEP) Sale of electronic devices 100.0
Samsung Electronics Nordic (SENA) Sale of electronic devices 100.0
Samsung Semiconductor Europe (SSEL) Sale of semiconductor/display panels 100.0
Europe/CIS Samsung Electronics Austria (SEAG) Sale of electronic devices 100.0
Samsung Electronics Slovakia (SESK) Manufacture of TV/monitors 100.0
Samsung Electronics Europe Holding (SEEH) Holding Company 100.0
Samsung Electronics Poland Manufacturing
Manufacture of home appliances 100.0
(SEPM)
Samsung Electronics Greece (SEGR) Sale of electronic devices 100.0
Samsung Nanoradio Design Center (SNDC) R&D 100.0
Samsung Electronics Air Conditioner Europe B.V.
Sale of heating and cooling products 100.0
(SEACE)
Samsung Electronics Rus Company (SERC) Sale of electronic devices 100.0
Samsung Electronics Baltics (SEB) Sale of electronic devices 100.0
Samsung Electronics Ukraine Company (SEUC) Sale of electronic devices 100.0
Samsung R&D Institute Rus (SRR) R&D 100.0
Samsung Electronics Central Eurasia (SECE) Sale of electronic devices 100.0
Samsung Electronics Rus Kaluga (SERK) Manufacture of TV 100.0
Samsung Electronics (London) Limited (SEL) Holding Company 100.0
Samsung Denmark Research Center (SDRC) R&D 100.0
Samsung France Research Center (SFRC) R&D 100.0
Samsung Cambridge Solution Centre (SCSC) R&D 100.0

1 Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

16
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Percentage
of
Area Subsidiaries Industry ownership1
Samsung Electronics Switzerland GmbH (SESG) Sale of electronic devices 100.0
Samsung Electronics Caucasus (SECC) Marketing 100.0
Harman Connected Services OOO Connected Service Provider 100.0
Harman RUS CIS LLC Sale of audio products 100.0
AKG Acoustics Manufacture and sale of audio products 100.0
AMX UK Sale of audio products 100.0
Duran Audio B.V. Sale of audio products, R&D 100.0
Duran Audio Iberia Espana Sale of audio products 100.0
Endeleo Sale of audio products, R&D 100.0
Harman Automotive UK Manufacture of audio products 100.0
Harman Becker Automotive Systems (Germany) Manufacture and sale of audio products, R&D 100.0
Harman Becker Automotive Systems Italy Sale of audio products 100.0
Harman Becker Automotive Systems
Manufacture of audio products, R&D 100.0
Manufacturing Kft
Harman Belgium Sale of audio products 100.0
Harman Connected Services AB. Connected Service Provider 100.0
Harman Connected Services Finland OY Connected Service Provider 100.0
Harman Connected Services (Germany) Connected Service Provider 100.0
Harman Connected Services Connected Service Provider 100.0
Harman Connected Services Poland [Link] Connected Service Provider 100.0
Harman Connected Services UK Connected Service Provider 100.0
Harman Consumer Division Nordic ApS Sale of audio products 100.0
Harman Consumer Finland OY Sale of audio products 100.0
Harman Consumer Nederland B.V. Sale of audio products 100.0
Harman Deutschland Sale of audio products 100.0
Europe/CIS
Harman Finance International GP S.a.r.l Holding Company 100.0
Harman Finance International SCA Financing Company 100.0
Harman France SNC Sale of audio products 100.0
Harman Holding & Co. KG Management Company 100.0
Harman Hungary Financing Financing Company 100.0
Harman Inc. & Co. KG Holding Company 100.0
Harman International Estonia OU R&D 100.0
Harman International Industries (UK) Sale of audio products, etc. 100.0
Harman International Romania SRL R&D 100.0
Harman International s.r.o Manufacture of audio products 100.0
Harman International SNC Sale of audio products 100.0
Harman Management Holding Company 100.0
Harman Professional Kft Manufacture of audio products, R&D 100.0
Inspiration Matters Sale of audio products, R&D 100.0
Knight Image Sale of audio products, R&D 100.0
Martin Manufacturing (UK) Manufacture of audio products 100.0
Harman Professional Denmark ApS Sale of audio products, R&D 100.0
Harman Professional France SAS Sale of audio products 100.0
R&D International Manufacture of audio products 100.0
Red Bend Software (UK) Software design 100.0
Red Bend Software SAS Software design 100.0
Studer Professional Audio Sale of audio products, R&D 100.0
Innoetics E.P.E. Software development 100.0
ARCAM Holding Company 100.0
A&R Cambridge Sale of audio products 100.0
1 Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

17
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Percentage
of
Area Subsidiaries Industry ownership1
Samsung Electronics West Africa (SEWA) Marketing 100.0
Samsung Electronics East Africa (SEEA) Marketing 100.0
Samsung Gulf Electronics (SGE) Sale of electronic devices 100.0
Samsung Electronics Egypt (SEEG) Manufacture and sale of electronic devices 100.0
Samsung Electronics Israel (SEIL) Marketing 100.0
Samsung Electronics Tunisia (SETN) Marketing 100.0
Samsung Electronics Pakistan (SEPAK) Marketing 100.0
Samsung Electronics South Africa (SSA) Sale of electronic devices 100.0
Samsung Electronics Turkey (SETK) Sale of electronic devices 100.0
Samsung Semiconductor Israel R&D Center
R&D 100.0
(SIRC)
Middle East
Samsung Electronics Levant (SELV) Sale of electronic devices 100.0
and Africa
Samsung Electronics Maghreb Arab (SEMAG) Sale of electronic devices 100.0
Samsung Electronics South Africa Production
Manufacture of TV/monitors 100.0
(SSAP)
Broadsense Service 100.0
Global Symphony Technology Group Holding Company 100.0
Harman Connected Services Morocco Connected Service Provider 100.0
Harman Industries Holdings Mauritius Holding Company 100.0
iOnRoad R&D 100.0
iOnRoad Technologies R&D 100.0
Red Bend Manufacture of audio products 100.0
TowerSec (Israel) R&D 100.0

1 Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

18
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Percentage
of
Area Subsidiaries Industry ownership1
Samsung Japan (SJC) Sale of electronic devices 100.0
Samsung R&D Institute Japan (SRJ) R&D 100.0
Samsung Electronics Japan (SEJ) Sale of electronic devices 100.0
Samsung Electronics Display (M) (SDMA) Manufacture of electronic devices 100.0
Samsung Electronics (M) (SEMA) Manufacture of home appliances 100.0
Samsung Vina Electronics (SAVINA) Sale of electronic devices 100.0
Samsung Asia Private (SAPL) Sale of electronic devices 100.0
Samsung India Electronics (SIEL) Manufacture and sale of electronic devices 100.0
Samsung R&D Institute India-Bangalore (SRI-B) R&D 100.0
Samsung Nepal Services (SNSL) Service 100.0
Samsung Electronics Australia (SEAU) Sale of electronic devices 100.0
Samsung Electronics Indonesia (SEIN) Manufacture and sale of electronic devices 100.0
Samsung Telecommunications Indonesia (STIN) Sale and service of electronic devices 100.0
Thai Samsung Electronics (TSE) Manufacture and sale of electronic devices 91.8
Samsung Electronics Philippines (SEPCO) Sale of electronic devices 100.0
Samsung Malaysia Electronics (SME) Sale of electronic devices 100.0
Samsung R&D Institute Bangladesh (SRBD) R&D 100.0
Samsung Electronics Vietnam (SEV) Manufacture of electronic devices 100.0
Samsung Electronics Vietnam THAINGUYEN Manufacture and sale of communication
Asia 100.0
(Except China) (SEVT) equipment
Samsung Medison India (SMIN) Medical equipment 100.0
Samsung Electronics New Zealand (SENZ) Sale of electronic devices 100.0
Samsung Display Vietnam (SDV) Manufacture of display panels 100.0
Samsung Electronics HCMC CE Complex
Manufacture and sale of electronic devices 100.0
(SEHC)
Laos Samsung Electronics Sole(LSE) Marketing 100.0
AMX Products and Solutions Private Sale of audio products 100.0
Harman Connected Services India Connected Service Provider 100.0
Harman Connected Services Technologies Connected Service Provider 100.0
Harman International (India) Private Sale of audio products, R&D 100.0
Harman International Industries PTY Holding Company 100.0
Harman International Singapore Sale of audio products 100.0
Harman Professional Singapore Pte. Sale of audio products 100.0
INSP India Software Development Pvt. Software development and supply 100.0
Martin Professional Pte. Sale of audio products 100.0
Harman Connected Services Japan Connected Service Provider 100.0
Harman International Japan Sale of audio products, R&D 100.0
Red Bend Software Japan Software design 100.0
Studer Japan Holding Company 100.0

1 Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

19
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Percentage
of
Area Subsidiaries Industry ownership1
Samsung Display Dongguan (SDD) Manufacture of display panels 100.0
Samsung Display Tianjin (SDT) Manufacture of display panels 95.0
Samsung Electronics Hong Kong (SEHK) Sale of electronic devices 100.0
Suzhou Samsung Electronics (SSEC) Manufacture of home appliances 88.3
Samsung Suzhou Electronics Export
Manufacture of home appliances 100.0
(SSEC-E)
Samsung (China) Investment (SCIC) Sale of electronic devices 100.0
Samsung Mobile R&D Center China-Guangzhou
R&D 100.0
(SRC-Guangzhou)
Samsung Tianjin Mobile Development Center
R&D 100.0
(STMC)
Samsung R&D Institute China-Shenzhen (SRC-
R&D 100.0
Shenzhen)
Samsung Electronics Suzhou Semiconductor
Toll processing of semiconductor 100.0
(SESS)
Samsung Electronics Huizhou (SEHZ) Manufacture of electronic devices 99.9
Tianjin Samsung Electronics (TSEC) Manufacture of TV/monitors 91.2
Samsung Electronics Taiwan (SET) Sale of electronic devices 100.0
Beijing Samsung Telecom R&D Center (BST) R&D 100.0
Tianjin Samsung Telecom Technology (TSTC) Manufacture of communication equipment 90.0
Shanghai Samsung Semiconductor (SSS) Sale of semiconductor/display panels 100.0
Samsung Electronics Suzhou Computer (SESC) Manufacture of electronic devices 100.0
China
Samsung Suzhou Module (SSM) Toll processing of display panels 100.0
Samsung Suzhou LCD (SSL) Manufacture of display panels 60.0
Shenzhen Samsung Electronics
Manufacture of communication equipment 95.0
Telecommunication (SSET)
Samsung Semiconductor (China) R&D (SSCR) R&D 100.0
Samsung Electronics China R&D Center (SCRC) R&D 100.0
Samsung (China) Semiconductor (SCS) Manufacture of semiconductor 100.0
Samsung Electronics (Beijing) Service (SBSC) Services 100.0
Tianjin Samsung LED (TSLED) Manufacture of LED 100.0
SEMES (Xian) Semiconductor equipment 100.0
Samsung Semiconductor Xian (SSCX) Sale of semiconductor/display panels 100.0
Harman (China) Technologies Manufacture of audio products 100.0
Harman (Suzhou) Audio and Infotainment
Sale of audio products 100.0
Systems
Harman Automotive Electronic Systems (Suzhou) Manufacture of audio products, R&D 100.0
Harman Commercial (Shanghai) Sale of audio products 100.0
Harman Holding Sale of audio products 100.0
Harman International (China) Holdings Sale of audio products, R&D 100.0
Harman Technology (Shenzhen) Sale of audio products, R&D 100.0
Harman Connected Services Solutions (Beijing) Connected Service Provider 100.0
Harman Connected Services Solutions (Chengdu) Connected Service Provider 100.0

1 Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

20
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(B) A summary of financial data of major consolidated subsidiaries is as follows:

(1) 2018

For the three months ended For the nine months ended
As at September 30, 2018 September 30, 2018 September 30, 2018
Net Income Net Income
(In millions of Korean won) Assets Liabilities Sales (Loss) Sales (Loss)
Samsung Display (SDC) ￦49,836,709 ￦10,546,281 ￦9,098,839 ￦658,230 ￦20,327,834 ￦599,393
Samsung Electronics America
30,844,367 12,314,676 8,396,872 329,386 22,482,760 652,532
(SEA)
Samsung (China) Investment
17,281,633 15,269,489 659,265 12,355 2,670,800 (80,145)
(SCIC)
Harman and its subsidiaries1 15,132,670 5,714,624 2,200,810 23,858 6,270,564 (65,258)
Samsung Electronics Vietnam
11,917,013 2,716,749 7,368,469 473,234 21,189,837 1,915,919
THAINGUYEN(SEVT)
Samsung Electronics
11,877,993 1,958,686 5,536,378 416,665 17,068,217 1,857,700
Vietnam(SEV)
Samsung Semiconductor(SSI) 11,691,361 6,898,946 9,068,095 (185,412) 23,518,964 (141,523)
Samsung (China)
9,713,763 2,073,437 1,242,756 465,184 3,589,827 1,177,387
Semiconductor(SCS)
Samsung Display
9,664,507 7,795,068 6,493,238 440,095 13,554,784 853,309
Vietnam(SDV)
Samsung Electronics Europe
9,124,281 6,762,965 - 1,582 - 12,861
Holding(SEEH)
Shanghai Samsung
7,900,808 6,828,265 9,249,477 71,887 23,421,996 205,341
Semiconductor(SSS)
Samsung Asia Private(SAPL) 7,430,017 675,144 476,069 37,000 1,289,422 859,239
Samsung India
7,396,916 4,499,009 3,098,604 59,725 8,675,215 359,617
Electronics(SIEL)
Samsung Electronics
6,375,115 680,378 1,924,159 55,596 7,798,046 308,563
Huizhou(SEHZ)
Samsung Electronica da
5,809,797 1,532,307 1,620,386 292,199 5,236,863 620,118
Amazonia(SEDA)
Samsung Austin
5,515,500 588,602 968,094 90,888 2,763,353 253,598
Semiconductor(SAS)
Thai Samsung
2,434,704 418,879 839,828 (7,659) 3,039,146 121,483
Electronics(TSE)
Samsung Electronics
2,331,548 1,690,084 1,162,011 (8,650) 3,520,229 111,436
(UK)(SEUK)
Samsung Electronics Europe
2,316,718 1,864,056 2,803,147 14,643 9,554,260 341,289
Logistics(SELS)
Samsung Electronics
2,247,220 2,401,878 1,256,428 (176,407) 4,500,725 (214,988)
GmbH(SEG)
Samsung Electronics HCMC
2,101,218 1,151,022 1,350,121 186,857 3,317,338 421,991
CE Complex(SEHC)
Samsung Electronics
1,980,511 358,402 554,611 7,904 1,750,068 90,328
Hungarian(SEH)
Samsung Electronics
1,898,060 1,585,566 958,871 (3,872) 2,808,631 20,259
France(SEF)
Samsung Suzhou LCD(SSL) 1,819,413 653,915 423,540 18,789 1,215,251 12,107
Samsung Electronics
1,709,274 583,883 486,101 (10,566) 1,628,708 9,509
Benelux(SEBN)

1
Consolidated financial data of an intermediate company that includes Harman International Industries, Inc. and its subsidiaries.

21
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(2) 2017
For the three months ended For the nine months ended
As at December 31, 2017
September 30, 2017 September 30, 2017
Net Income Net Income
(In millions of Korean won) Assets Liabilities Sales (Loss) Sales (Loss)
Samsung Display (SDC) ￦50,723,199 ￦12,243,688 ￦7,261,121 ￦622,567 ￦20,173,103 ￦2,642,465
Samsung Electronics America
26,266,636 8,980,828 8,357,290 (5,218) 23,995,468 307,293
(SEA)
Harman and its subsidiaries1 14,676,715 5,391,669 2,086,611 (26,705) 4,778,802 (174)
Samsung (China)
13,409,281 11,297,307 1,522,101 142,112 4,203,425 195,899
Investment(SCIC)
Samsung Display
10,460,755 9,495,803 4,598,457 210,221 10,236,161 689,613
Vietnam(SDV)
Samsung Semiconductor(SSI) 10,125,193 5,376,696 8,316,809 19,349 20,521,935 56,290
Samsung Electronics Vietnam
10,044,337 2,325,221 7,316,692 791,186 21,824,215 2,713,677
THAINGUYEN(SEVT)
Samsung Electronics
9,592,074 1,875,105 5,427,215 768,347 14,594,861 1,790,742
Vietnam(SEV)
Samsung Electronics Europe
9,474,960 7,241,753 - 2,588 - 16,467
Holding(SEEH)
Samsung (China)
8,076,107 1,499,220 1,243,016 423,033 3,320,052 934,502
Semiconductor(SCS)
Samsung Electronics
6,440,564 980,064 3,946,570 182,654 10,427,697 459,891
Huizhou(SEHZ)
Samsung India
6,200,351 3,406,484 2,778,124 233,650 8,529,829 636,008
Electronics(SIEL)
Samsung Asia Private(SAPL) 6,138,652 481,546 499,369 20,541 1,436,450 520,938
Samsung Electronica da
5,838,533 1,514,891 1,819,544 411,072 5,236,894 990,575
Amazonia(SEDA)
Shanghai Samsung
5,169,438 4,182,832 5,675,015 55,166 17,590,283 162,922
Semiconductor(SSS)
Samsung Austin
4,943,576 448,772 912,648 35,607 2,590,710 89,810
Semiconductor(SAS)
Thai Samsung
2,191,519 371,379 1,201,853 68,720 3,524,268 100,761
Electronics(TSE)
Samsung Electronics
2,019,572 1,051,361 759,034 30,294 2,352,969 91,901
Slovakia(SESK)
Samsung Suzhou LCD(SSL) 2,019,262 852,618 452,401 19,963 1,333,251 92,601
Samsung Electronics Europe
1,927,321 1,810,014 3,786,317 23,091 10,210,444 214,972
Logistics(SELS)
Samsung Electronics
1,823,278 238,383 680,561 42,987 2,001,636 98,857
Hungarian(SEH)
Samsung Electronics HCMC
1,784,883 1,282,489 1,109,529 87,383 2,883,624 193,372
CE Complex(SEHC)
Samsung Electronics
1,743,138 1,685,252 1,561,719 (35,216) 4,726,018 (14,685)
GmbH(SEG)
Samsung Electronics
1,615,723 1,094,995 1,253,634 20,605 3,502,058 147,813
(UK)(SEUK)
Samsung Electronics
1,562,037 1,002,213 782,062 21,555 2,309,552 80,500
Indonesia(SEIN)

1
Consolidated financial data of an intermediate company that includes Harman International Industries, Inc. and its subsidiaries.

22
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(C) Changes in scope of consolidation

(1) Subsidiaries newly included in the consolidation for the nine months ended September 30, 2018.
Area Subsidiary Description
NexusDX (Nexus) Sale of Business
S1NN USA Merger1
Samsung Pay Merger2
Harman Connected Services Holding Merger3
America
AMX LLC Merger4
AMX Holding Corporation Merger5
Southern Vision Systems Merger6
Triple Play Integration Merger7
Joyent (UK) Liquidation
Aditi Technologies Europe Liquidation
Europe/CIS
AMX (Germany) Merger8
Harman Professional Germany GmbH Merger9
Asia Harman Malaysia Sdn. Bhd. Liquidation
Harman Connected Services Taiwan Liquidation
China
Harman Automotive InfoTech (Dalian) Liquidation
1
S1NN USA merged into Harman International Industries, Inc., a subsidiary of the Company, in April 2018.
2
Samsung Pay merged into Samsung Electronics America (SEA), a subsidiary of the Company, in June 2018.
3
Harman Connected Services Holding merged into Harman Connected Services, Inc., a subsidiary of the Company, in June 2018.
4
AMX LLC merged into Harman Professional., a subsidiary of the Company, in July 2018.
5
AMX Holding Corporation merged into Harman Professional., a subsidiary of the Company, in July 2018.
6
Southern Vision Systems merged into Harman Professional., a subsidiary of the Company, in July 2018.
7
Triple Play Integration merged into Harman Connected Services, Inc., a subsidiary of the Company, in July 2018.
8
AMX (Germany) merged into Harman Deutschland., a subsidiary of the Company, in September 2018
9
Harman Professional Germany GmbH merged into Harman Deutschland., a subsidiary of the Company, in September 2018

(2) Subsidiaries newly included in the consolidation for the nine months ended September 30, 2018.

Area Subsidiary Description

Domestic Samsung Venture Capital Union #40 Incorporation

23
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies

2.1 Basis of Presentation

The interim consolidated financial statements for the nine months ended September 30, 2018, have been prepared in
accordance with Korean IFRS 1034, Interim Financial Reporting. These interim consolidated financial statements
have been prepared in accordance with the K-IFRS standards and interpretations effective at the reporting date.

(A) New and amended standards adopted by the Company

The Company applied the following amended and enacted standards for the annual period beginning on January 1,
2018:

Enactment of Korean IFRS 1109, Financial Instruments

The Company has applied Korean IFRS 1109, Financial Instruments on January 1, 2018, the date of initial
application. In accordance with the transitional provisions in Korean IFRS 1109, comparative figures have not been
restated.

Enactment of Korean IFRS 1115, Revenue from Contracts with Customers

The Company has elected to apply Korean IFRS 1115, Revenue from Contracts with Customers on January 1, 2018,
the date of initial application. In accordance with the transitional provisions in Korean IFRS 1115, comparative
figures have not been restated.

Enactment of Korean IFRIC 2122, Foreign Currency Transaction and Advance Consideration

According to the enactment, the date of the transaction for the purpose of determining the exchange rate to use on
initial recognition of the related asset, liability, expense or income (or part of it) is the date on which an entity initially
recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance
consideration. The enactment does not have a significant impact on the consolidated financial statements.

(B) New and amended standards not adopted by the Company

New standards, amendments and interpretations issued but not effective for the financial year beginning January 1,
2018, and not early adopted by the Company, are as follows:

Enactment of Korean IFRS 1116, Leases

Korean IFRS 1116 Leases issued on May 22, 2017 is effective for annual periods beginning on or after January 1,
2019, with early adoption permitted. This standard will replace Korean IFRS 1017 Leases, Interpretation 2104
Determining whether an Arrangement contains a Lease, Interpretation 2015 Operating Leases-Incentives, and
Interpretation 2027 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

At inception of a contract, and at the date of initial application, the Company shall assess whether the contract is, or
contains, a lease in accordance with the new standard. However, the Company may not need to reassess all contracts
at initial application because the Company can elect to apply the practical expedient to contracts entered into before
the date of initial application.

24
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For a contract that is, or contains, a lease, the Company shall account for each lease component within the contract
as a lease separately from non-lease components of the contract. A lessee is required to recognize a right-of-use asset
representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease
payments. The lessee may elect not to apply the requirements to short-term lease (a lease term of 12 months or less
at the commencement date) and low value assets (e.g. underlying assets below $ 5,000). In addition, as a practical
expedient, the lessee may elect, by class of underlying asset, not to separate non-lease components from lease
components, and instead account for each lease component and any associated non-lease components as a single
lease component.

The accounting standard as a lessor did not change significantly from Korean IFRS 1017 Leases.

(a) Lessee accounting

A lessee shall apply this standard to its leases either: a) retrospectively to each prior reporting period presented
applying Korean IFRS 1008 Accounting Policies, Changes in Accounting Estimates and Errors (Full retrospective
application) or b) retrospectively with the cumulative effect of initially applying the standard recognized at the date
of initial application. The Company has not yet elected an adoption method.

The Company is in the process of performing a preliminary assessment of potential financial impact of applying
Korean IFRS 1116 to the 2018 consolidated financial statements based on available information as at September 30,
2018. The Company plans to perform more detailed analyses on the financial effects based on additional information
in the future.

(b) Lessor accounting

The Company expects the effect on the consolidated financial statements from applying Korean IFRS 1116 will not
be significant as accounting for the Company, as a lessor, will not significantly change.

25
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

2.2 Accounting Policies

Significant accounting policies and estimates adopted in the preparation of the interim consolidated financial
statements are consistent with those adopted in the preparation of the annual financial statements for the year ended
December 31, 2017, except changes in accounting policies applied in the financial year beginning on January 1, 2018
(Note 2.1) and as described below.

(A) Income tax expense

Income tax expense for the interim period is recognized based on management’s best estimate of the weighted average
annual effective income tax rate expected for the full financial year. The estimated average annual tax rate is applied
to the pre-tax income.

(B) Financial assets

(1) Classification

From January 1, 2018, the Company classifies its financial assets in the following measurement categories:

- Those to be measured subsequently at fair value (either through other comprehensive income, or through profit
or loss)
- Those to be measured at amortized cost

The classification depends on the Company’s business model for managing the financial assets and the contractual
terms of the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business model in which the
investment is held. The Company reclassifies debt investments only when its business model for managing those
assets changes.

For investments in equity instruments that are not held for trading, classification will depend on whether the Company
has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value
through other comprehensive income. Changes in fair value of the investments in equity instruments that are not
accounted for as other comprehensive income are recognized in profit or loss.

(2) Measurement

At initial recognition, the Company measures a financial asset, in the case of a financial asset not at fair value through
profit or loss, at its fair value plus transaction costs that are directly attributable to the acquisition of the financial
asset or the issuance of the financial liabilities. Transaction costs of financial assets carried at fair value through profit
or loss are expensed in profit or loss.

Hybrid (combined) contracts with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payment of principal and interest.

a) Debt Instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and
the cash flow characteristics of the asset. The Company classifies its debt instruments into one of the following three
measurement categories:

26
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

① Financial assets measured at amortized cost.

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of
principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently
measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is
derecognized or impaired. Interest income from these financial assets is included in ‘Financial income’ using the
effective interest rate method.

② Financial assets measured at fair value through other comprehensive income

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash
flows represent solely payments of principal and interest, are measured at fair value through other comprehensive
income. Movements in the carrying amount are taken through other comprehensive income, except for the recognition
of impairment loss (reversal of impairment loss), interest income and foreign exchange gains and losses which are
recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously
recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income from these
financial assets is included in ‘Financial income’ using the effective interest rate method. Foreign exchange gains and
losses are presented in ‘Financial income and expenses’ and impairment losses are presented in ‘Other non-operating
expenses’.

③ Financial assets measured at fair value through profit or loss

Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income are measured
at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value
through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented in the
statement of profit or loss within ‘Other non-operating income and expenses’ in the year in which it arises.

b) Equity Instruments

The Company subsequently measures all equity investments at fair value. Where the Company’s management has
elected to present fair value gains and losses on equity investments in other comprehensive income, there is no
subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.
When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive
income is reclassified from equity to retained earnings. Dividend income from such investments continue to be
recognized in profit or loss as ‘Other non-operating income’ when the right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘Other non-operating
income and expenses’ in the statement of profit or loss as applicable.

(3) Impairment

The Company assesses on a forward looking basis the expected credit losses associated with its debt instruments
carried at amortized cost and fair value through other comprehensive income. The impairment methodology applied
depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies
the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the
receivables.

(C) Financial Liabilities

27
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(1) Classification and Measurement

The Company shall classify all financial liabilities as financial liabilities measured subsequently at amortized cost,
except for
- Financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities,
shall be subsequently measured at fair value.
- Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the
continuing involvement approach applies. Such financial liabilities are measured based on the methodology
described in Note 2.2 (B).
- Financial guarantee contracts. After initial recognition, an issuer of such a contract shall subsequently measure
it at the higher of:
(a) The amount of the loss allowance determined on lifetime expected credit losses.
(b) The amount initially recognized less, when appropriate, the cumulative amount of income recognized in
accordance with the principles of Korean IFRS 1115.
- Commitments to provide a loan at a below-market interest rate. An issuer of such a commitment shall
subsequently measure it at the higher of:
(a) The amount of the loss allowance determined on lifetime expected credit losses.
(b) The amount initially recognized less, when appropriate, the cumulative amount of income recognized in
accordance with the principles of Korean IFRS 1115.
- Contingent consideration recognized by an acquirer in a business combination to which Korean IFRS 1103
applies. Such contingent consideration shall subsequently be measured at fair value with changes recognized in
profit or loss.

(D) Revenue recognition

The Company applied Korean IFRS 1115 to the annual period beginning January 1, 2018. The Company shall
recognize revenue in accordance with Korean IFRS 1115 by applying the following 5 steps: ① Identify the contracts
with the customers, ② Identify the separate performance obligations, ③ Determine the transaction price of the
contract, ④ Allocate the transaction price to each of the separate performance obligations, and ⑤ Recognize the
revenue as each performance obligation is satisfied.

(1) Identification of performance obligations

The Company exports various products and merchandise in accordance with Incoterms Group C trading conditions
(Incoterms CIF, etc.). According to Korean IFRS 1115, since the seller provides the shipping service after control of
the product or merchandise has been transferred to the customer, the shipping service (including insurance) is
recognized as a separate performance obligation.

(2) A performance obligation is satisfied over time

The Company delivers products to customers and installs them in accordance with the system air conditioner contracts
awarded by the Public Procurement Service. According to Korean IFRS 1115, the Company can recognize revenue
over time if the Company creates or enhances an asset (for example, work in progress) that the customer controls as
the asset is created or enhanced. The Company recognizes the revenue from system air conditioner installation over
time as the customer controls the outcome of the service.

28
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(3) Variable consideration

The Company estimates an amount of variable consideration by using the expected value which the Company expects
to better predict the amount of consideration. The Company recognizes variable consideration only to the extent that
it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when
the refund period has lapsed. The refund liability is measured at the amount of consideration received for which the
Company does not expect to be entitled. The Company has a right to recover the product from the customer where
the customer exercises his right of return and recognizes an asset and a corresponding adjustment to cost of sales.
The asset is measured by reference to the former carrying amount of the product less the costs to recover the products.

(4) Allocation of the transaction price

The transaction price in an arrangement must be allocated to each separate performance obligation based on the
relative standalone selling prices of the goods or services being provided to a customer. The Company determines
the standalone selling price for each separate performance obligation by using methods such as the ‘adjusted market
assessment approach’.

2.3 Change of Accounting Policies

(A) Korean IFRS 1109, Financial Instruments

The Company has applied Korean IFRS 1109, Financial Instruments, for the first time for their annual reporting
period commencing January 1, 2018. In accordance with the transitional provisions in Korean IFRS 1109,
comparative figures have not been restated. The application of Korean IFRS 1109 has the following impacts on the
consolidated financial statements.

(1) Classification and measurement of financial instruments

a) On the date of initial application, January 1, 2018, the financial instruments of the Company subject to
reclassifications were as follows:

Category Carrying amount

(In millions of Korean Korean IFRS Korean IFRS Korean IFRS Korean IFRS
won) 1039 1109 1039 1109
Financial Assets
Cash and cash equivalents Loans and receivables Amortized cost ￦ 30,545,130 ￦ 30,545,130
Short-term financial
Loans and receivables Amortized cost 49,447,696 49,447,696
instruments
Short-term available-for- Available-for-sale financial
Amortized cost 3,191,375 3,191,375
sale financial assets assets
Trade receivable Loans and receivables Amortized cost 27,695,995 27,695,995
Fair value through other
7,151,434
Long-term available-for- Available-for-sale financial comprehensive income
7,752,180
sale financial assets assets Fair value through profit or
600,746
loss
Held-to-maturity financial Held-to-maturity financial
Amortized cost 106,751 106,751
assets assets
Assets at fair value through Fair value through profit or
67,702 67,702
profit or loss loss
Other
Loans and receivables Amortized cost 6,212,727 6,212,727
Other financial assets Other financial assets 45,396 45,396
Total ￦125,064,952 ￦125,064,952

29
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For financial liabilities, the Company has reclassified financial liabilities at fair value through profit or loss into fair
value through profit or loss, and financial liabilities at amortized cost into amortized cost.

b) The impact of the reclassification of financial instruments on the Company's equity as at January 1, 2018,
is as follows:

Other components of equity

Gains or losses on
Unrealized gains or financial assets at fair Share of other
losses on available- value through other comprehensive
Retained for-sale financial comprehensive income of associates
(In millions of Korean won) Earnings assets income and joint ventures
Balance as at January 1 –
￦ 215,811,200 ￦ 1,879,774 ￦ - ￦ 40,394
Korean IFRS 1039
Adjustments :
From available-for-sale
financial assets to financial
75,547 (75,547) - -
assets at fair value through
profit or loss
From available-for-sale
financial assets to financial
assets at fair value through 105,618 (1,804,227) 1,698,609 -
other comprehensive
income
Investments in associates
80,225 - - (80,569)
and joint ventures
Total ￦ 261,390 ￦ (1,879,774) ￦ 1,698,609 ￦ (80,569)
Balance as at January 1 –
Korean IFRS 1109 ￦ 216,072,590 ￦ - ￦ 1,698,609 ￦ (40,175)

(2) Impairments of Financial Assets

The Company has three types of financial assets subject to Korean IFRS 1109’s new expected credit loss model:

- Trade receivables arising from sales of inventories,

- Debt instruments measured at fair value through other comprehensive income, and
- Debt instruments measured at amortized cost.

Upon adoption of Korean IFRS 1109, accounting policies for recognition of impairment have changed. For trade
receivables, the Company applies the practical expedient to provide for expected credit losses prescribed by Korean
IFRS 1109, which requires the use of the lifetime expected loss provision for all trade receivables. The impact of
the change in impairment methodology on the Company’s consolidated financial statements is not material.

(3) Hedge Accounting

The Company held foreign currency forward contract hedges as of January 1, 2018, which qualified as cash flow
hedges under Korean IFRS 1109. The Company’s risk management strategies and hedge documentation are aligned
with the requirements of Korean IFRS 1109 and are thus treated as continuing hedges.

30
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(B) Korean IFRS 1115, Revenue from Contracts with Customers

The Company has applied Korean IFRS 1115, Revenue from Contracts with Customers, for the first time for their
annual reporting period commencing January 1, 2018. In accordance with the transitional provisions in Korean
IFRS 1115, comparative figures have not been restated. The application of Korean IFRS 1115 has the following
impact on the consolidated financial statements.

(1) The following adjustments were made to the amounts recognized in the statements of financial position at the
date of initial application (January 1, 2018):

Amount before application Amount after application

(In millions of Korean won) of Korean IFRS 1115 Adjustments of Korean IFRS 1115
Trade receivables ￦ 27,695,995 ￦ 6,983,845 ￦ 34,679,840
Prepaid expenses 3,835,219 188 3,835,407
Inventories 24,983,355 (139,546) 24,843,809
Other current assets 1,421,060 143,866 1,564,926
Investments in associates
6,802,351 (41,214) 6,761,137
and joint ventures
Total assets ￦ 301,752,090 ￦ 6,947,139 ￦ 308,699,229

Accrued expenses ￦ 13,996,273 ￦ 6,462,176 ￦ 20,458,449

Other current liabilities 403,139 526,177 929,316
Total liabilities ￦ 87,260,662 ￦ 6,988,353 ￦ 94,249,015

Retained earnings ￦ 215,811,200 ￦ (41,214) ￦ 215,769,986

Total equity ￦ 214,491,428 ￦ (41,214) ￦ 214,450,214

(2) Consolidated financial statement line items affected by the adoption of Korean IFRS 1115 in the current
period are as follows:

a) Consolidated statements of financial position

Amount before application Amount after application

(In millions of Korean won) of Korean IFRS 1115 Adjustments of Korean IFRS 1115
Trade receivables ￦ 34,559,390 ￦ 7,380,618 ￦ 41,940,008
Prepaid expenses 4,201,777 (296) 4,201,481
Inventories 28,529,308 (286,501) 28,242,807
Other current assets 1,765,393 287,599 2,052,992
Investments in associates and
joint ventures 7,044,012 (38,668) 7,005,344
Total assets ￦ 329,853,034 ￦ 7,342,752 ￦ 337,195,786

Accrued expenses ￦ 9,509,620 ￦ 6,821,572 ￦ 16,331,192

Other current liabilities 14,338,512 560,550 14,899,062
Total liabilities ￦ 87,710,504 ￦ 7,382,122 ￦ 95,092,626

Retained earnings ￦ 241,667,692 ￦ (39,370) ￦ 241,628,322

Total equity ￦ 242,142,530 ￦ (39,370) ￦ 242,103,160

31
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
b) Consolidated statements of comprehensive income

Amount before application Amount after application of

(In millions of Korean won) of Korean IFRS 1115 Adjustments Korean IFRS 1115
Revenue ￦ 184,505,563 ￦ 802 ￦ 184,506,365
Cost of sales 98,377,625 802 98,378,427
Gross profit 86,127,938 - 86,127,938
Operating profit 48,086,070 - 48,086,070
Gain on valuation of equity
method 286,580 2,546 289,126
Income tax expense 13,668,714 702 13,669,416
Profit for the period 35,880,828 1,843 35,882,671
Total comprehensive income
for the period 36,267,789 1,843 36,269,632

Applying Korean IFRS 1115, Revenue from Contracts with Customers, did not impact the cash flows from
operating activities, cash flows from investing activities, cash flows from financing activities, and total cash
flows for the nine months ended September 30, 2018.

Contract liabilities as at September 30, 2018 amount to ￦7,628,905 million (as at January 1, 2018: ￦7,140,266
million), which are included in advances received, accrued expenses, other current liabilities and others.

2.4 Convenience Translation into United States Dollar Amounts

The Company operates primarily in Korean won and its official accounting records are maintained in Korean won.
The US dollar amounts provided in the consolidated financial statements represent supplementary information solely
for the convenience of the reader. All Korean won amounts are expressed in US dollars at the rate of ￦1090.96 to
US $1, the average exchange rate for the nine month period ended in September 30, 2018. Such presentation is not
in accordance with generally accepted accounting principles, and should not be construed as a representation that the
Korean won amounts shown could be readily converted, realized or settled in U.S. dollars at this or at any other rate.

2.5 Critical Accounting Estimates and Assumptions

In preparing the interim consolidated financial statements, the management of the Company makes estimates and
assumptions on matters which affect the application of policies and reported amounts of assets, liabilities, income
and expenses. Estimates and assumptions are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances. The
resulting accounting estimates, by definition, seldom equal the related actual results.

Critical accounting estimates and assumptions made in the preparation of the interim consolidated financial
statements are consistent with those made in the preparation of the annual consolidated financial statements for the
year ended December 31, 2017, except for the estimation methodologies applied in deriving corporate income tax
and accounting estimates and assumptions for implementation of Korean IFRS 1109 and Korean IFRS 1115.

(A) Impairment of financial assets

The provision for impairment of financial assets under Korean IFRS 1109, Financial Instruments, are based on
assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions
and selecting the inputs to the impairment calculation based on the Company’s past history, existing market
conditions as well as forward looking estimates at the end of each reporting period.

32
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
3. Financial Instruments by Category

Categorizations of financial assets and liabilities as at September 30, 2018 and December 31, 2017, are as follows:

(A) As at September 30, 2018

Financial assets
measured at fair
value through Financial assets
Financial assets other measured at fair Other
measured at comprehensive value through financial
(In millions of Korean won) amortized cost income profit or loss assets1 Total

Assets
Cash and cash equivalents ￦ 33,088,093 ￦ - ￦ - ￦ - ￦ 33,088,093
Short-term financial
58,681,418 - - - 58,681,418
instruments
Trade receivables 41,940,008 - - - 41,940,008
Financial assets at
3,688,537 - - - 3,688,537
amortized cost
Financial assets at fair value - 7,921,160 - - 7,921,160
through other
comprehensive income
Financial assets at fair value - - 700,224 - 700,224
through profit or loss
Other 8,227,112 - 44,523 21,205 8,292,840
Total ￦ 145,625,168 ￦ 7,921,160 ￦ 744,747 ￦ 21,205 ￦ 154,312,280

1 Other financial assets include derivatives designated as hedging instruments, which are not subject to categorizations.

Financial
Liabilities measured at liabilities
fair value measured at amortized Other
(In millions of Korean won) through profit or loss cost financial liabilities1 Total

Liabilities
Trade payables ￦ - ￦ 10,209,231 ￦ - ￦ 10,209,231
Short-term borrowings - 1,997,371 16,829,153 18,826,524
Other payables - 8,152,127 - 8,152,127
Current portion of long-term
- 1,799,346 - 1,799,346
liabilities
Debentures - 972,435 - 972,435
Long-term borrowings - 87,101 - 87,101
Long-term other payables 29,375 1,348,538 - 1,377,913
Other 137,836 8,795,044 27,131 8,960,011
Total ￦ 167,211 ￦ 33,361,193 ￦ 16,856,284 ￦ 50,384,688

1Other financial liabilities include collateralized borrowings and derivatives designated as hedging instruments, which are not
subject to categorizations.

33
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(B) As at December 31, 2017

Assets at fair Available-for- Held-to- Other

value through Loans and sale financial maturity financial
(In millions of Korean won) profit or loss receivables assets financial assets assets1 Total

Financial Assets
Cash and cash equivalents ￦ - ￦ 30,545,130 ￦ - ￦ - ￦ - ￦ 30,545,130
Short-term financial
- 49,447,696 - - - 49,447,696
instruments
Short-term available-for-sale
- - 3,191,375 - - 3,191,375
financial assets
Trade receivables - 27,695,995 - - - 27,695,995
Long-term available-for-sale
- - 7,752,180 - - 7,752,180
financial assets
Held-to-maturity financial
- - - 106,751 - 106,751
assets
Other 67,702 6,212,727 - - 45,396 6,325,825
Total ￦ 67,702 ￦113,901,548 ￦ 10,943,555 ￦ 106,751 ￦ 45,396 ￦125,064,952

1 Other financial assets include derivatives designated as hedging instruments, which are not subject to categorizations.

Financial liabilities
Liabilities at fair value measured at amortized Other financial
(In millions of Korean won) through profit or loss cost liabilities1 Total

Financial Liabilities
Trade payables ￦ - ￦ 9,083,907 ￦ - ￦ 9,083,907
Short-term borrowings - 1,497,417 14,270,202 15,767,619
Other payables 316,928 11,789,681 - 12,106,609
Current portion of long-term
- 278,619 - 278,619
liabilities
Debentures - 953,361 - 953,361
Long-term borrowings - 1,814,446 - 1,814,446
Long-term other payables 28,285 1,717,899 - 1,746,184
Other 180,366 10,732,501 41,646 10,954,513
Total ￦ 525,579 ￦ 37,867,831 ￦ 14,311,848 ￦ 52,705,258

1Other financial liabilities include collateralized borrowings and derivatives designated as hedging instruments, which are not
subject to categorizations.

34
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
4. Financial Assets at Fair Value

(A) Details of financial assets at fair value as at September 30, 2018 and December 31, 2017, are as follows:

(1) Financial assets at fair value through other comprehensive income

(In millions of Korean won) September 30, 2018 December 31, 2017
Equity instruments ￦ 7,900,418 ￦ -
Debt instruments 20,742 -
Total ￦ 7,921,160 ￦ -

(2) Financial assets at fair value through profit or loss

(In millions of Korean won) September 30, 2018 December 31, 2017
Equity instruments ￦ 389,356 ￦ -
Debt instruments 310,868 -
Total ￦ 700,224 ￦ -

Financial Assets above were previously classified as available-for-sale financial assets.

(B) Details of listed equity securities of financial assets at fair value as at September 30, 2018 and December 31,
2017, are as follows:

September 30, 2018

(In millions of Korean won, Number of Shares Percentage of Carrying Amount
number of shares and percentage) Owned Ownership1 (%) Acquisition Cost (Market Value)
Samsung Heavy Industries 100,693,398 16.0 ￦ 735,488 ￦ 813,603
Hotel Shilla 2,004,717 5.1 13,957 217,512
iMarket Korea 647,320 1.8 324 4,259
SFA 3,644,000 10.2 38,262 133,370
Wonik Holdings 3,518,342 4.6 30,821 17,486
Wonik IPS 3,701,872 9.0 32,428 82,922
ASML 6,297,787 1.4 363,012 1,311,806
Wacom 8,398,400 5.0 62,013 39,892
BYD 52,264,808 1.9 528,665 415,160
Other 223,013 197,657
Total ￦ 2,027,983 ￦ 3,233,667

1
Ownership represents the Company’s ownership of ordinary shares issued in each entity

35
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
5. Available-for-Sale Financial Assets

(A) Details of short-term available-for-sale financial assets as at September 30, 2018 and December 31, 2017, are
as follows:

(In millions of Korean won) September 30, 2018 December 31, 2017

Beneficiary certificates1 ￦ - ￦ 3,191,375

1 Beneficiary certificates are comprised of time deposits and others.

(B) Details of long-term available-for-sale financial assets as at September 30, 2018 and December 31, 2017, are
as follows:

(In millions of Korean won) September 30, 2018 December 31, 2017
Equity securities - Listed ￦ - ￦ 2,908,581
Equity securities - Non-listed - 4,729,124
Debt securities1 - 114,475
Total ￦ - ￦ 7,752,180

1The maximum exposure to credit risk of available-for-sale debt securities is the carrying amount at the end of the reporting
date.

(C) Details of listed equity securities as at December 31, 2017, are as follows:

December 31, 2017

(In millions of Korean won, Number of Shares Percentage of Carrying Amount
number of shares and percentage) Owned Ownership1 (%) Acquisition Cost (Market Value)
Samsung Heavy Industries 65,930,982 16.9 ￦ 473,727 ￦ 483,274
Hotel Shilla 2,004,717 5.1 13,957 170,200
iMarket Korea 647,320 1.8 324 5,832
SFA2 3,644,000 10.2 38,262 141,205
Wonik Holdings 3,518,342 4.6 30,821 27,760
Wonik IPS 3,701,872 9.0 32,428 123,643
ASML 6,297,787 1.4 363,012 1,169,393
Wacom 8,398,400 5.0 62,013 48,631
BYD 52,264,808 1.9 528,665 556,381
Other 158,688 182,262
Total ￦ 1,701,897 ￦ 2,908,581

1
Ownership represents the Company’s ownership of ordinary shares issued in each entity.
2
As SFA executed a capital increase without consideration, the Company’s number of SFA shares owned increased.

Acquisition cost includes impairment loss on available-for-sale financial assets recognized due to the decline in
realizable value below acquisition cost. The difference between the acquisition cost, net of impairment loss and the
current fair value is recorded within other components of equity, net of tax effects (unrealized gains or losses on
available-for-sale financial assets).

36
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
6. Inventories

Inventories as at September 30, 2018 and December 31, 2017, are as follows:

September 30, 2018 December 31, 2017

(In millions of Gross Valuation Carrying Gross Valuation Carrying
Korean won) Amount Allowance1 Amount Amount Allowance1 Amount
Finished goods ￦ 8,588,792 ￦ (474,078) ￦ 8,114,714 ￦ 8,201,526 ￦ (897,089) ￦ 7,304,437
Work in process 10,351,993 (415,928) 9,936,065 7,331,394 (217,493) 7,113,901
Raw materials and 9,730,099 (769,260) 8,960,839 10,196,123 (782,906) 9,413,217
supplies
Materials in transit 1,231,189 - 1,231,189 1,151,800 - 1,151,800
Total ￦ 29,902,073 ￦ (1,659,266) ￦ 28,242,807 ￦ 26,880,843 ￦ (1,897,488) ￦ 24,983,355

1 Inventories for which the Company has suspended sales or production, are evaluated based on net realizable value. Valuation
allowance is recorded if the net realizable value is less than the carrying amount.

7. Investments in Associates and Joint Ventures

(A) Changes in investments in associates and joint ventures for the nine months ended September 30, 2018 and
2017, are as follows:

(In millions of Korean won) 2018 2017

Balance as at January 1 ￦ 6,802,351 ￦ 5,837,884
Acquisition 17,564 19,510
Disposal (148) (52,834)
Share of profit 289,126 122,114
Other1 (103,549) (12,416)
Balance as at September 30 ￦ 7,005,344 ￦ 5,914,258

1 Other consist of dividends, impairment, reclassification and the cumulative effect of changes in accounting principles.

(B) Major investments in associates and joint ventures as at September 30, 2018, are as follows:

(1) Investments in associates

Principal The End of
Percentage of Business Reporting
Investee Nature of Relationship with Associate Ownership1 (%) Location Period
Manufacture and supply electronic
Samsung Electro-
components including passive components, 23.7 Korea December
Mechanics
circuit boards, and modules
Provide IT services including computer
Samsung SDS programming, system integration and 22.6 Korea December
management and logistical services
Samsung Biologics New business investment 31.5 Korea December
Manufacture and supply electronics including
Samsung SDI2 19.6 Korea December
secondary cell batteries
Cheil Worldwide Advertising agency 25.2 Korea December

1 Ownership represents the Company’s ownership of ordinary shares issued in each entity.
2 The Company’s ownership of ordinary shares outstanding is 20.6%.

37
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(2) Investments in joint ventures
Principal The End of
Nature of Relationship with Joint Percentage of Business Reporting
Investee Venture Ownership1 (%) Location Period
Samsung Corning Manufacture and supply industrial glass
50.0 Korea December
Advanced Glass devices

1 Ownership represents the Company’s ownership of ordinary shares issued in each entity.

(C) Details of investments in associates and joint ventures as at September 30, 2018 and December 31, 2017, are
as follows:

(1) Investments in associates

(In millions of Korean won) September 30, 2018

Investee Acquisition cost Net asset value of equity shares1 Carrying amount

Samsung Electro-Mechanics ￦ 359,237 ￦ 1,090,834 ￦ 1,095,156

Samsung SDS 147,963 1,323,430 1,348,877
Samsung Biologics 443,193 1,178,245 1,181,922
Samsung SDI 1,242,605 2,366,766 2,178,297
Cheil Worldwide 506,162 246,902 547,549
Other 601,976 247,740 419,834
Total ￦ 3,301,136 ￦ 6,453,917 ￦ 6,771,635

1 The Company’s portion of net asset value of associates is based on the Company’s ownership percentage.

(In millions of Korean won) December 31, 2017

Investee Acquisition cost Net asset value of equity shares 1 Carrying amount

Samsung Electro-Mechanics ￦ 359,237 ￦ 989,924 ￦ 991,579

Samsung SDS 147,963 1,256,881 1,282,205
Samsung Biologics 443,193 1,251,292 1,254,937
Samsung SDI 1,242,605 2,266,451 2,126,244
Cheil Worldwide 506,162 241,335 540,114
Other 593,080 215,025 376,349
Total ￦ 3,292,240 ￦ 6,220,908 ￦ 6,571,428

1 The Company’s portion of net asset value of associates is based on the Company’s ownership percentage.

(2) Investments in joint ventures

(In millions of Korean won) September 30, 2018

Net asset value of equity
Investee Acquisition cost shares 1 Carrying amount

Samsung Corning Advanced Glass ￦ 215,000 ￦ 171,718 ￦ 171,715

Other 259,994 65,857 61,994
Total ￦ 474,994 ￦ 237,575 ￦ 233,709

1 The Company’s portion of net asset value of joint ventures is based on the Company’s ownership percentage.

38
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In millions of Korean won) December 31, 2017
Net asset value of equity
Investee Acquisition cost shares 1 Carrying amount

Samsung Corning Advanced Glass ￦ 215,000 ￦ 170,440 ￦ 170,425

Other 259,994 65,106 60,498
Total ￦ 474,994 ￦ 235,546 ￦ 230,923

1 The Company’s portion of net asset value of joint ventures is based on the Company’s ownership percentage.

(D) Details of the valuation of investments in associates and joint ventures under the equity method, are as
follows:

(1) For the nine months ended September 30, 2018

Other
Balance as at Gain/loss on comprehensive Balance as at
(In millions of Korean won) January 1 valuation income/loss Other1 September 30

Samsung Electro-Mechanics ￦ 991,579 ￦ 112,816 ￦ 4,749 ￦ (13,988) ￦ 1,095,156

Samsung SDS 1,282,205 103,254 (1,637) (34,945) 1,348,877
Samsung Biologics 1,254,937 (29,566) 390 (43,839) 1,181,922
Samsung SDI 2,126,244 48,443 17,073 (13,463) 2,178,297
Cheil Worldwide 540,114 27,657 1,846 (22,068) 547,549
Samsung Corning Advanced
170,425 1,290 - - 171,715
Glass
Other 436,847 25,232 9,363 10,386 481,828
Total ￦ 6,802,351 ￦ 289,126 ￦ 31,784 ￦ (117,917) ￦ 7,005,344

1 Other consists of acquisitions, disposals, dividends, impairment, reclassification and the cumulative effect of changes in
accounting principle.

(2) For the nine months ended September 30, 2017

Other
Balance as at Gain/loss on comprehensive Balance as at
(In millions of Korean won) January 1 valuation income/loss Other1 September 30

Samsung Electro-Mechanics ￦ 997,022 ￦ 20,114 ￦ 11,678 ￦ (8,846) ￦ 1,019,968

Samsung SDS 1,185,703 85,087 (4,987) (13,103) 1,252,700
Samsung Biologics 1,289,351 (27,287) (1,345) (1) 1,260,718
Samsung SDI 1,232,986 (10,559) 3,619 (13,463) 1,212,583
Cheil Worldwide 517,885 26,586 8,412 (8,711) 544,172
Samsung Corning Advanced
169,485 1,826 - (1) 171,310
Glass
Other 445,452 26,347 5,600 (24,592) 452,807
Total ￦ 5,837,884 ￦ 122,114 ￦ 22,977 ￦ (68,717) ￦ 5,914,258

1 Other consists of acquisitions, disposals, dividends, impairment and reclassification.

39
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(E) Summary of the condensed financial information of major associates and joint ventures

(1) A summary of condensed financial information of major associates and dividends received from associates
as at September 30, 2018 and December 31, 2017, and for the nine months ended September 30, 2018 and
2017, is as follows:

2018
Samsung
Electro- Samsung Samsung Samsung Cheil
(In millions of Korean won) Mechanics SDS Biologics SDI Worldwide

1. Condensed financial information

Condensed statements of financial position :
Current assets ￦3,670,576 ￦5,756,683 ￦3,061,812 ￦5,362,621 ￦ 1,746,320
Non-current assets 4,942,674 2,110,622 4,243,711 13,063,354 359,858
Current liabilities 2,762,754 1,525,315 2,354,861 3,461,645 1,115,980
Non-current liabilities 1,069,364 316,439 1,209,277 2,928,929 119,538
Non-controlling interests 118,127 164,481 - 279,844 9,519
Condensed statements of comprehensive
income:
Revenue ￦6,194,843 ￦7,252,142 ￦ 357,532 ￦6,679,626 ￦ 2,591,403
Profit or loss from continuing operations1 470,854 456,676 (96,945) 446,864 96,072
Other comprehensive income (loss)1 930 1,331 1,082 121,490 (5,463)
Total comprehensive income (loss)1 471,784 458,007 (95,863) 568,354 90,609

2. Dividends from associates

Dividends ￦ 13,270 ￦ 34,944 ￦ - ￦ 13,463 ￦ 22,069

1 Income (loss) attributable to owners of the parent.

2017
Samsung
Electro- Samsung Samsung Samsung Cheil
(In millions of Korean won) Mechanics SDS Biologics SDI Worldwide

1. Condensed financial information

Condensed statements of financial position:
Current assets ￦ 2,478,798 ￦ 5,117,499 ￦ 620,995 ￦ 3,605,076 ￦ 1,889,096
Non-current assets 5,288,605 2,160,262 6,562,096 12,146,401 349,197
Current liabilities 2,454,110 1,324,862 2,287,442 2,670,360 1,281,293
Non-current liabilities 981,802 233,469 919,198 1,629,117 101,012
Non-controlling interests 99,848 161,151 - 194,698 9,927
Condensed statements of comprehensive
income:
Revenue ￦ 5,121,485 ￦ 6,832,584 ￦ 298,318 ￦ 4,467,095 ￦ 2,376,059
Profit or loss from continuing operations1 107,397 375,363 (86,871) 419,668 95,969
Other comprehensive income (loss)1 49,921 (22,085) (4,346) 63,709 28,133
Total comprehensive income (loss)1 157,318 353,278 (91,217) 483,377 124,102

2. Dividends from associates

Dividends ￦ 8,847 ￦ 13,104 ￦ - ￦ 13,463 ￦ 8,711

1 Income (loss) attributable to owners of the parent

40
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(2) A summary of condensed financial information of major joint ventures and dividends received from joint
ventures as at September 30, 2018 and December 31, 2017, and for the nine months ended September 30,
2018 and 2017, is as follows:

Samsung Corning Advanced Glass

(In millions of Korean won) 2018 2017

1. Condensed financial information

Condensed statements of financial position:
Current assets ￦ 147,340 ￦ 128,499
- Cash and cash equivalent 10,997 11,035
Non-current assets 240,331 253,840
Current liabilities 42,592 41,325
- Current financial liabilities1 17,865 18,900
Non-current liabilities 1,643 134
Condensed statements of comprehensive income2:
Revenue 177,017 184,735
Depreciation and amortization 981 1,032
Interest income 311 597
Income tax expense or income 135 218
Net loss from continuing operations3 2,558 3,619
Other comprehensive income (loss)3 - -
Total comprehensive income (loss)3 2,558 3,619

2. Dividends from joint ventures

Dividends ￦ - ￦ -

1 Trade payables, other payables, and provisions are excluded.

2 Amounts relate to the nine months ended September 30, 2018 and 2017.
3 Income (loss) attributable to owners of the parent.

(3) Income (loss) amounts attributable to owners of the parent from associates and joint ventures which are not
individually material for the nine months ended September 30, 2018 and 2017, are as follows:

2018 2017
(In millions of Korean won) Associates Joint ventures Associates Joint ventures

Profit or loss from continuing operations ￦ 24,197 ￦ 1,035 ￦ 20,479 ￦ 5,868

Other comprehensive income (loss) 6,668 2,695 701 4,899
Total comprehensive income (loss) ￦ 30,865 ￦ 3,730 ￦ 21,180 ￦ 10,767

(F) Details of marketable investments in associates as at September 30, 2018 and December 31, 2017, are as
follows:

(In millions of Korean won and September 30, 2018 December 31, 2017
number of shares) Number of shares held Market value Market value

Samsung Electro-Mechanics 17,693,084 ￦ 2,459,339 ￦ 1,769,308

Samsung SDS 17,472,110 4,036,057 3,494,422
Samsung Biologics 20,836,832 11,126,868 7,730,465
Samsung SDI 13,462,673 3,480,101 2,753,117
Cheil Worldwide 29,038,075 628,674 615,607

41
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
8. Property, Plant and Equipment

(A) Changes in property, plant and equipment for the nine months ended September 30, 2018 and 2017, are as
follows:

(In millions of Korean won) 2018 2017

Balance as at January 1 ￦ 111,665,648 ￦ 91,473,041

Acquisition and capital expenditures 22,294,169 32,874,746
Acquisitions through business combinations1 - 858,798
Depreciation (18,569,050) (14,886,343)
Disposals/scrap/impairment/reversal (364,172) (153,969)
Other2 (23,447) (1,160,182)
Balance as at September 30 ￦ 115,003,148 ￦ 109,006,091
1
During the nine months ended September 30, 2017, Samsung Electronics America, the Company's subsidiary, acquired
100% of the equity shares of Harman International Industries and its subsidiaries (Refer to Note 28).
2
Other includes effects of changes in foreign currency exchange rates and effects of the offset related to government
assistance.

(B) Details of depreciation of property, plant and equipment for the nine months ended September 30, 2018 and
2017, are as follows:

(In millions of Korean won) 2018 2017

Cost of sales ￦ 16,910,212 ￦ 13,292,501
Selling and administrative expenses and other 1,658,838 1,593,842
Total ￦ 18,569,050 ￦ 14,886,343

9. Intangible Assets

(A) Changes in intangible assets for the nine months ended September 30, 2018 and 2017, are as follows:

(In millions of Korean won) 2018 2017

Balance as at January 1 ￦ 14,760,483 ￦ 5,344,020

Internally generated (development costs) 229,153 307,775
External acquisitions 447,459 288,070
Acquisitions through business combinations1 - 10,017,528
Amortization (1,020,676) (1,155,447)
Disposals/scrap/impairment/reversal (29,131) (8,547)
Other2 412,808 582,770
Balance as at September 30 ￦ 14,800,096 ￦ 15,376,169
1 During the nine months ended September 30, 2017, Samsung Electronics America, the Company's subsidiary, acquired 100%
of the equity shares of Harman International Industries and its subsidiaries (Refer to Note 28).
2 Other includes effects of changes in foreign currency exchange rates.

(B) Details of amortization of intangible assets for the nine months ended September 30, 2018 and 2017, are as
follows:

(In millions of Korean won) 2018 2017

Cost of sales ￦ 519,921 ￦ 698,209
Selling and administrative expenses and other 500,755 457,238
Total ￦ 1,020,676 ￦ 1,155,447

42
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
10. Borrowings

Details of the carrying amounts of borrowings as at September 30, 2018 and December 31, 2017 are as follows:

Annual Interest
Rates (%)
Financial as at September 30, September 30, December 31,
(In millions of Korean won) Institutions 2018 2018 2017

Short-term borrowings
Collateralized borrowings1 Woori Bank and others 0.1 ~ 10.9 ￦ 16,829,153 ￦ 14,270,202
Non-collateralized borrowings Citibank and others 0.1 ~ 34.5 1,997,371 1,497,417
Total ￦ 18,826,524 ￦ 15,767,619

Current portion of
long-term borrowings
Bank borrowings Mizuho and others LIBOR+0.4 ~ 3.3 ￦ 1,782,986 ￦ 262,493
Financial lease liabilities2 CSSD and others 1.1 ~ 15.7 10,938 10,925
Total ￦ 1,793,924 ￦ 273,418

Long-term borrowings
Bank borrowings Shinhan Bank and others 3.2 ~ 3.5 ￦ 34,800 ￦ 1,756,908
Financial lease liabilities2 CSSD and others 1.1 ~ 15.7 52,301 57,538
Total ￦ 87,101 ￦ 1,814,446

1 Collateralized borrowings are secured by trade receivables.

2 Leased property, plant and equipment were pledged as collateral.

11. Debentures

Details of the carrying amounts of debentures as at September 30, 2018 and December 31, 2017 are as follows:

Annual Interest
Rates (%)
(In millions of Korean as at September September 30, December 31,
won) Issue Date Due Date 30, 2018 2018 2017

US dollar denominated 1997.10.2 2027.10.1 7.7 ￦ 55,635 ￦ 53,570

straight bonds1 (US$50 million) (US$50 million)
US dollar denominated 445,080 428,560
2015.5.6 2025.5.15 4.2
debenture bonds2 (US$400 million) (US$400 million)
EURO denominated 453,101 447,739
2015.5.20 2022.5.27 2.0
debenture bonds3 (EUR€350 million) (EUR€350 million)
Less: Current Portion (5,563) (5,357)
Less: Discounts (1,274) (1,405)
More: Premium 25,456 30,254
Total ￦ 972,435 ￦ 953,361

1 US dollar denominated straight bonds are repaid annually for twenty years after a ten-year grace period from the date of
issuance. Interest is paid semi-annually.
2 Harman International Industries issued dollar denominated debenture bonds. Repayment of these debentures is due on the date

of maturity and interest is paid semi-annually.

3 Harman Finance International SCA issued euro denominated debenture bonds. Repayment of these debentures is due on the

date of maturity and interest is paid annually.

43
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
12. Net Defined Benefit Liabilities (Assets)

(A) Details of net defined benefit liabilities (assets) recognized on the statements of financial position as at
September 30, 2018 and December 31, 2017 are as follows:

(In millions of Korean won) September 30, 2018 December 31, 2017

Present value of funded defined benefit

￦ 7,916,057 ￦ 7,302,621
obligations
Present value of unfunded defined benefit
244,795 234,315
obligations
Subtotal 8,160,852 7,536,936
Fair value of plan assets (7,926,726) (7,972,906)
Total ￦ 234,126 ￦ (435,970)

(B) The amounts recognized in the statements of profit or loss for the nine months ended September 30, 2018 and
2017 relating to defined benefit plans are as follows:

(In millions of Korean won) 2018 2017

Current service cost ￦ 613,729 ￦ 663,880

Net interest cost (income) (16,385) (9,277)
Other 8,914 2,621
Total ￦ 606,258 ￦ 657,224

(C) The expenses related to defined benefit plans recognized on the statements of profit or loss for the nine months
ended September 30, 2018 and 2017 are as follows:

(In millions of Korean won) 2018 2017

Cost of sales ￦ 250,413 ￦ 265,815

Selling and administrative expenses and other 355,845 391,409
Total ￦ 606,258 ￦ 657,224

13. Provisions

Changes in the provisions for the nine months ended September 30, 2018 are as follows:
(In millions of Korean Warranty Royalty Long-term Bonus Other
won) (A) expenses (B) incentives (C) (D) (E, F) Total

Balance as at January 1 ￦ 2,011,578 ￦ 1,759,068 ￦ 672,653 ￦ - ￦ 315,845 ￦ 4,759,144

Charged (credited) to
the statement of profit 1,303,063 (261,543) 224,540 3,202,900 224,438 4,693,398
or loss
Payment (1,321,024) (437,891) (247,781) (393,096) (131,800) (2,531,592)
Other1 (18,276) 98,141 14,486 81,266 426,626 602,243
Balance as at September
￦ 1,975,341 ￦ 1,157,775 ￦ 663,898 ￦ 2,891,070 ￦ 835,109 ￦ 7,523,193
30
1 Other includes effects of changes in foreign currency exchange rates.

44
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(A) The Company accrues warranty reserves for estimated costs of future service, repairs and recalls, based on
historical experience and terms of warranty programs.

(B) The Company recognizes provisions for the estimated royalty expenses that are under negotiation with
counterparties. The timing and amount of payment depends on the settlement of the negotiation.

(C) The Company has a long-term incentive plan for its executives based on a three-year management performance
criteria and recognizes a provision for the estimated incentive cost for the accrued period.

(D) The Company provides bonuses for its executives and employees, which are determined based on current-
period performance. The estimated bonus cost for the accrued period has been recognized as a provision.

(E) The Company records provisions for the estimated expenses occurring from discontinuing production, sale of
products and other activities.

(F) The Company makes provisions for the carrying amounts of emission rights held by the Company and the
emission in excess of the emission rights for the applicable years. Details of emission rights and liabilities as
at September 30, 2018 are as follows:

(1) Allocated amount of emission permits and estimated amount of emission as at September 30, 2018 are as
follows:

(In ten thousand metric tons) September 30, 2018

Allocated emission permits 1,272
Estimated volume of emission 1,647

(2) Changes in the emission permits rights for the nine months ended September 30, 2018 are as follows:

(In millions of Korean won) 2018

Balance as at January 1 ￦ 25,059
Acquisition 2,236
Disposal -
Balance as at September 30 ￦ 27,295

(3) Changes in the provisions for emissions liabilities for the nine months ended September 30, 2018 are as
follows:

(In millions of Korean won) 2018

Balance as at January 1 ￦ 13,116
Charged to the statement of profit or loss 68,547
Submission (13,217)
Balance as at September 30 ￦ 68,446

45
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
14. Commitments and Contingencies

(A) Guarantees

Details of guarantees of debt provided by the Company as at September 30, 2018 and December 31, 2017 are as
follows:

(In millions of Korean won) September 30, 2018 December 31, 2017

Guarantees of debt for housing rental1 ￦ 32,550 ￦ 49,937

1 The maximum amount of debt guarantee provided by the Company for employees seeking a first home mortgage from
financial institutions is ￦106,044 million.

(B) Litigation

(1) The Company and Apple have agreed to settle Apple’s design and utility patent litigation in the United States
as at the reporting date.

(2) The Company is involved in claims, disputes, and investigations conducted by regulatory bodies at the
reporting date, including civil claims from some overseas buyers for price-fixing related to the sale of TFT-
LCD. Although the outflow of resources and timing of these matters are uncertain, the Company believes
the outcome will not have a material impact on the financial condition of the Company.

(3) In addition during the normal course of business with numerous companies, the Company has been involved
in various claims, disputes, and investigations conducted by regulatory bodies. Although the outflow of
resources and timing of these matters are uncertain, as at the reporting date, the Company believes the
outcome will not have a material impact on the financial condition of the Company.

(C) Other commitments

Samsung Display entered into a collaboration agreement with Corning Incorporated on October 23, 2013 that includes
a condition relating to mutual loss preservation which can cause inflows or outflows of future economic benefits and
the Company has recorded an estimated liability as a result of this commitment as at September 30, 2018.

46
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

15. Share Capital

As at September 30, the Company’s total number of authorized shares has been changed from 500,000,000 shares
(￦5,000 per share) to 25,000,000,000 shares (￦100 per share). The Company has issued 6,419,324,700 shares of
ordinary shares and 903,629,000 shares of preference shares as at September 30, 2018, excluding retired shares. Due
to the retirement of shares, the total par value of the shares issued is ￦732,295 million (ordinary shares ￦641,932
million and preference shares ￦90,363 million), which does not agree with paid-in capital of ￦897,514 million.

16. Retained Earnings

(A) Retained earnings as at September 30, 2018 and December 31, 2017 consist of the following:

(In millions of Korean won) September 30, 2018 December 31, 2017

Appropriated ￦ 150,878,900 ￦ 139,629,195

Unappropriated 90,749,422 76,182,005
Total ￦ 241,628,322 ￦ 215,811,200

(B) On April 26, 2018, July 31, 2018, October 31, 2018 the Company declared cash dividends to shareholders of
ordinary shares and preference shares as interim dividends for the three months ended March 31, 2018, June
30, 2018, and September 30, 2018, respectively.

Details of interim dividends for the nine months ended September 30, 2018 and 2017 are as follows:

(In millions of Korean won) 2018 2017

Ordinary shares 119,395,651 121,840,851
Number of shares eligible for dividends
Preference share 16,457,734 17,069,534
1st Dividend rate (based on par value) 354% 140%
quarter Ordinary shares ￦ 2,113,303 ￦ 852,886
Dividend amount Preference share 291,302 119,487
Total ￦ 2,404,605 ￦ 972,373
Ordinary shares 5,969,782,550 121,038,051
Number of shares eligible for dividends1
Preference share 822,886,700 16,868,834
2nd Dividend rate (based on par value) 354% 140%
quarter Ordinary shares ￦ 2,113,303 ￦ 847,266
Dividend amount Preference share 291,302 118,082
Total ￦ 2,404,605 ￦ 965,348
Ordinary shares 5,969,782,550 120,316,189
Number of shares eligible for dividends1
Preference share 822,886,700 16,691,095
3rd Dividend rate (based on par value) 354% 140%
quarter Ordinary shares ￦ 2,113,303 ￦ 842,213
Dividend amount Preference share 291,302 116,838
Total ￦ 2,404,605 ￦ 959,051

1 For the nine months ended September 31, 2018, the Company’s number of shares has been changed by the stock split (Refer
to Note 15).

47
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

17. Other Components of Equity

(A) Other components of equity as at September 30, 2018 and December 31, 2017 are as follows:

(In millions of Korean won) September 30, 2018 December 31, 2017
Treasury stock ￦ (4,875,163) ￦ (6,228,187)
Unrealized gains on available-for-sale financial assets - 1,879,774
Changes in value of financial assets at fair value through other
1,894,779 -
comprehensive income
Share of other comprehensive income of associates and joint ventures (8,519) 40,394
Foreign currency translation (9,028,355) (9,192,002)
Remeasurement of net defined benefit liabilities (assets) (477,591) (405,206)
Other 41,500 6,036
Total ￦ (12,453,349) ￦ (13,899,191)

(B) The Company repurchases registered ordinary shares and non-voting preference shares for the purpose of
stock price stability and increase in shareholder value. The Company recognizes the repurchase amount in
other components of equity. Treasury stock as at September 30, 2018 and December 31, 2017 consists of as
follows:

September 30, 2018 December 31, 2017

(In millions of Korean won and Ordinary Preference Ordinary Preference
number of shares) Shares Shares Shares Shares

Number of shares1 449,542,150 80,742,300 9,410,125 1,720,171

Acquisition cost ￦ 4,435,755 ￦ 439,408 ￦ 5,560,506 ￦ 667,681

1 For the nine months ended September 30, 2018, the Company’s number of shares has been changed by the stock split (Refer
to Note 15).

48
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
18. Expenses by Nature

Expenses by nature for the three and nine months ended September 30, 2018 and 2017 consist of the following:

September 30, 2018 September 30, 2017

(In millions of Korean won) 3 Months 9 Months 3 Months 9 Months
Changes in finished goods and work
￦ (739,625) ￦ (3,632,439) ￦ (2,418,855) ￦ (4,186,999)
in process
Raw materials used and merchandise
20,440,504 58,245,296 21,509,283 58,907,132
purchased
Wages and salaries 5,500,229 16,459,120 5,648,974 16,427,353
Pension 237,477 705,644 244,320 721,416
Depreciation 6,481,244 18,569,050 5,270,583 14,886,343
Amortization 342,615 1,020,676 383,537 1,155,447
Welfare 988,504 3,098,028 922,622 2,871,547
Commission and service charges 1,501,583 4,150,720 1,944,076 5,703,997
Advertising 880,905 2,816,358 1,360,249 3,722,742
Sales promotion expenses 1,806,935 5,265,512 2,036,701 5,227,382
Other 10,444,757 29,722,330 10,614,252 29,662,537
Total1 ￦ 47,885,128 ￦ 136,420,295 ￦ 47,515,742 ￦ 135,098,897

1 Equal to the sum of cost of sales and selling and administrative expenses on the interim consolidated statements of profit or loss.

19. Selling and Administrative Expenses

Selling and administrative expenses for the three and nine months ended September 30, 2018 and 2017 are as
follows:

September 30, 2018 September 30, 2017

(In millions of Korean won) 3 Months 9 Months 3 Months 9 Months

1) Selling and administrative

expenses
Wages and salaries ￦ 1,503,110 ￦ 4,590,355 ￦ 1,656,927 ￦ 5,044,684
Pension 68,139 196,520 64,963 191,063
Commission and service charges 1,501,583 4,150,720 1,944,076 5,703,997
Depreciation 256,003 754,808 241,305 691,613
Amortization 112,888 327,550 107,488 282,772
Advertising 880,905 2,816,358 1,360,249 3,722,742
Sales promotion expenses 1,806,935 5,265,512 2,036,701 5,227,382
Transportation 618,347 1,800,729 961,194 2,691,067
Warranty 522,088 2,000,507 701,240 2,268,165
Other 900,773 3,025,200 1,255,649 3,793,679

2) Research and development

expenses
Total expenses 4,559,674 13,342,762 4,293,695 12,229,963
Capitalized expenses (39,675) (229,153) (111,864) (307,775)

Total ￦ 12,690,770 ￦ 38,041,868 ￦ 14,511,623 ￦ 41,539,352

49
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

20. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three and nine months ended September 30, 2018 and
2017 are as follows:

September 30, 2018 September 30, 2017

(In millions of Korean won) 3 Months 9 Months 3 Months 9 Months

Non-operating income
Dividend income ￦ 27,655 ￦ 102,619 ￦ 27,524 ￦ 100,924
Rental income 34,468 106,358 36,722 104,800
Gain on disposal of investments 5,886 16,623 17,376 131,873
Gain on disposal of property, plant and equipment 25,312 272,452 27,249 64,607
Other 83,291 417,124 266,903 634,208
Total ￦ 176,612 ￦ 915,176 ￦ 375,774 ￦ 1,036,412

September 30, 2018 September 30, 2017

(In millions of Korean won) 3 Months 9 Months 3 Months 9 Months

Non-operating expenses
Loss on disposal of property, plant and equipment ￦ 11,409 ￦ 59,334 ￦ 25,444 ￦ 90,504
Donations 81,428 219,626 68,491 208,205
Other 59,517 341,066 184,187 480,052
Total ￦ 152,354 ￦ 620,026 ￦ 278,122 ￦ 778,761

50
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

21. Financial Income and Expenses

(A) Details of financial income and expenses for the three and nine months ended September 30, 2018 and 2017
are as follows:

September 30, 2018 September 30, 2017

(In millions of Korean won) 3 Months 9 Months 3 Months 9 Months
Financial income
Interest income: ￦ 616,374 ￦ 1,627,133 ￦ 420,785 ￦ 1,182,516
Interest income from loans and receivables - - 420,439 1,181,532
Interest income from available-for-sale
- - 346 984
financial assets
Interest income from financial assets at
616,294 1,626,915 - -
amortized cost
Interest income from financial assets at fair
80 218 - -
value through profit or loss
Foreign exchange differences 1,748,308 5,475,023 1,975,746 4,690,871
Gains from derivatives 136,471 801,257 214,318 561,788
Total ￦ 2,501,153 ￦ 7,903,413 ￦ 2,610,849 ￦ 6,435,175

September 30, 2018 September 30, 2017

(In millions of Korean won) 3 Months 9 Months 3 Months 9 Months
Financial expenses
Interest expense: ￦ 189,639 ￦ 482,245 ￦ 161,386 ￦ 470,592
Interest expense from financial
69,850 207,214 77,015 252,720
liabilities at amortized cost
Other financial liabilities 119,789 275,031 84,371 217,872
Foreign exchange differences 1,866,097 5,930,362 1,993,815 4,672,032
Losses from derivatives 193,651 609,065 252,142 678,802
Total ￦ 2,249,387 ￦ 7,021,672 ￦ 2,407,343 ￦ 5,821,426

(B) The Company recognizes foreign exchange gains and losses arising from foreign currency transactions and
translation as financial income and expenses.

22. Income Tax Expense

Income tax expense is recognized based on management’s best estimate of the weighted average annual effective
income tax rate expected for the full financial year. The average annual tax rate expected as at September 30, 2018
to be effective for the year ended December 31, 2018 is 27.6%.

51
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
23. Earnings per Share

(A) Basic earnings per share

Basic earnings per share for the three and nine months ended September 30, 2018 and 2017 are calculated as
follows:

(1) Ordinary Shares

September 30, 2018 September 30, 2017

(In millions of Korean won and thousands of
number of shares) 3 Months 9 Months 3 Months 9 Months

Profit attributable to owners of the Parent

￦ 12,967,428 ￦ 35,560,808 ￦ 11,039,771 ￦ 29,328,245
company
Profit available for ordinary shares 11,396,510 31,252,853 9,694,653 25,753,240
Weighted-average number of ordinary shares
5,969,783 5,970,672 6,032,831 6,075,720
outstanding
Basic earnings per ordinary share (in
￦ 1,909 ￦ 5,234 ￦ 1,607 ￦ 4,239
Korean won)

(2) Preference Shares

September 30, 2018 September 30, 2017

(In millions of Korean won and thousands of
number of shares) 3 Months 9 Months 3 Months 9 Months

Profit attributable to owners of the Parent

￦ 12,967,428 ￦ 35,560,808 ￦ 11,039,771 ￦ 29,328,245
company
Profit available for preference shares 1,570,918 4,307,955 1,345,118 3,575,005
Weighted-average number of preference shares
822,887 823,094 838,802 849,439
outstanding
Basic earnings per preference share (in
￦ 1,909 ￦ 5,234 ￦ 1,604 ￦ 4,209
Korean won)

(B) Diluted earnings per share

The Company does not have dilutive potential ordinary shares and as a result, basic earnings per share and diluted
earnings per share are the same for the three and nine months ended September 30, 2018 and 2017.

52
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

24. Cash Flows

Adjustments and changes in assets and liabilities arising from operating activities for the nine months ended
September 30, 2018 and 2017 are as follows:

- Adjustments

(In millions of Korean won) 2018 2017

Adjustments for:
Income tax expense ￦ 13,669,416 ￦ 9,559,965
Financial income (2,922,912) (2,509,171)
Financial expenses 1,995,250 1,883,994
Post-employment benefits 705,644 721,416
Depreciation 18,569,050 14,886,343
Amortization 1,020,676 1,155,447
Bad debt expenses (Reversal) 46,742 202,076
Dividend income (102,619) (100,924)
Gain on valuation of equity method (289,126) (122,114)
Gain on disposal of property, plant and equipment (272,452) (64,607)
Loss on disposal of property, plant and equipment 59,334 90,504
Obsolescence and scrapping of inventories 1,569,403 1,145,018
Gain on disposal of investments (16,623) (131,873)
Other income/expenses 105,531 39,412
Total ￦ 34,137,314 ￦ 26,755,486

- Changes in assets and liabilities arising from operating activities

(In millions of Korean won) 2018 2017

Changes in assets and liabilities :

Increase in trade receivables ￦ (5,409,393) ￦ (4,469,738)
Decrease(Increase) in other receivables 858,372 (224,170)
Decrease(Increase) in advance payments 47,854 (409,827)
(Increase)decrease in prepaid expenses (221,570) 361,933
Increase in inventories (4,960,503) (8,940,606)
Increase in trade payables 1,189,019 3,517,958
(Decrease)Increase in other payables (3,350,738) 262,412
(Decrease)Increase in advances received (126,106) 6,315
Increase in withholdings 33,325 527,843
Decrease in accrued expenses (3,989,982) (3,052,284)
Increase in provisions 2,161,806 2,722,467
Payment of post-employment benefits (271,804) (353,566)
Other (2,231,773) (1,686,277)
Total ￦ (16,271,493) ￦ (11,737,540)

53
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
25. Financial Risk Management

The Company’s financial risk management focuses on minimizing market risk, credit risk, and liquidity risk arising
from operating activities. To mitigate these risks, the Company implements and operates a financial risk policy and
program that closely monitors and manages such risks. In addition, the Company uses derivatives to hedge certain
risk exposure.

The finance team mainly carries out the Company’s financial risk management. With the cooperation of the
Company’s divisions, domestic and foreign subsidiaries, the finance team periodically measures, evaluates and
hedges financial risk and also establishes and implements the global financial risk management policy.

The Company also operates local finance centers in accordance with global financial risk management across major
regions including the United States, United Kingdom, Singapore, China, Brazil and Russia.

The Company’s financial assets that are under financial risk management are comprised of cash and cash equivalents,
short-term financial instruments, financial assets at amortized cost, financial assets at fair value through other
comprehensive income, financial assets at fair value through profit or loss, trade receivables and other financial assets.
The Company’s financial liabilities under financial risk management are comprised of trade payables, borrowings,
debentures, and other financial liabilities.

(A) Market risk

(1) Foreign exchange risk

Revenues and expenses arise from foreign currency transactions and exchange positions, and the most widely used
currencies are the US Dollar, EU’s Euro, Japanese Yen and Indian Rupee.

To minimize foreign exchange risk arising from operating activities, the Company’s foreign exchange management
policy requires normal business transactions to be in local currency or for the cash-in currency to be matched up
with the cash-out currency. In addition, the Company makes use of derivatives to minimize uncertainty of cash
flows and fluctuation of profit or loss occurring from foreign exchange risk. The Company’s foreign exchange risk
management policy also defines foreign exchange risk, measuring period, controlling responsibilities, management
procedures, hedging period and hedge ratio.

The Company limits all speculative foreign exchange transactions and operates a system to manage receivables
and payables denominated in foreign currency. It evaluates, manages and reports foreign currency exposures to
receivables and payables.

(2) Price risk

The Company’s investment portfolio consists of direct and indirect investments in equity instruments classified as
financial assets at fair value through other comprehensive income, which is in line with the Company’s strategy.

As at September 30, 2018 and December 31, 2017, a price fluctuation in relation to marketable equity securities
by 1% would result in changes in other comprehensive income (before income tax) of ￦32,337 million and
￦29,086 million, respectively.

54
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(3) Interest rate risk

Risk of changes in interest rates for floating interest rate financial instruments is defined as the risk that the fair
value of components of the statement of financial position, and future cash flows of interest income (expenses) of
a financial instrument, will fluctuate because of changes in market interest rates. The Company’s position with
regard to interest rate risk exposure is mainly driven by its floating interest rate debt obligations and interest-
bearing deposits. The Company implemented policies and operates to minimize uncertainty arising from changes
in interest rates and financial expenses.

In order to avoid interest rate risk, the Company maintains minimum external borrowings by facilitating cash
pooling systems on a regional and global basis. The Company manages exposed interest rate risk via periodic
monitoring and handling risk factors on a timely basis.

(B) Credit risk

Credit risk arises during the normal course of transactions and investing activities where clients or other parties fail
to discharge an obligation. The Company monitors and sets the client’s and counterparty’s credit limit on a periodic
basis based on the client’s and counterparty’s financial conditions, default history and other important factors.
Adequate insurance coverage is maintained for accounts receivables related to trading partners situated in higher risk
countries.

Credit risk can arise from transactions with financial institutions which include financial instrument transactions such
as cash and cash equivalents, savings, and derivative instruments. To minimize such risk, the Company transacts only
with banks which have strong international credit rating (S&P A and above), and all new transactions with financial
institutions with no prior transaction history are approved, managed and monitored by the Company’s finance team
and the local finance center. The Company requires separate approval for contracts with restrictions.

As at September 30, 2018 and December 31, 2017, the Company estimates that its maximum exposure to credit risk
is the carrying amount of its financial assets, net of impairment losses.

(C) Liquidity risk

Due to large investments made by the Company, maintaining adequate levels of liquidity risk is critical. The
Company strives to achieve this goal by periodically forecasting its capital balance, estimating required cash levels,
and managing income and expenses.

The Company manages its liquidity risk by periodically forecasting projected cash flows. If abnormal signs are
identified, the Company works with the local finance center and provides liquidity support by utilizing a globally
integrated finance structure, such as Cash Pooling. In addition, the Company maintains a liquidity management
process which provides additional financial support by the local finance center and the Company. The Cash Pooling
program allows sharing of surplus funds among entities and contributes to minimizing liquidity risk and strengthening
the Company’s competitive position by reducing capital operation expenses and financial expenses.

In addition, the Company mitigates liquidity risk by contracting with financial institutions with respect to bank
overdrafts and foreign trade finance, and by providing payment guarantees to subsidiaries. For large scale facility
investments, liquidity risk is minimized by utilizing internal reserves and long term borrowings according to the
capital injection schedule.

55
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(D) Capital risk management

The purpose of capital management is to maintain a sound capital structure. The Company monitors capital on the
basis of the ratio of total liabilities to total equity. This ratio is calculated by dividing total liabilities by total equity
in the financial statements.

The Company’s capital risk management policy has not changed since the previous financial year. The Company has
maintained an AA- and Aa3 credit rating from S&P and Moody’s, respectively.

The total liabilities to equity ratios as at September 30, 2018 and December 31, 2017 are as follows:

(In millions of Korean won) September 30, 2018 December 31, 2017

Total liabilities ￦ 95,092,626 ￦ 87,260,662

Total equity 242,103,160 214,491,428
Total liabilities to equity ratio 39.3% 40.7%

56
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(E) Fair value estimation

(1) Carrying amounts and fair values of financial instruments by category as at September 30, 2018 and
December 31, 2017 are as follows:

September 30, 2018 December 31, 2017

Carrying Carrying
(In millions of Korean won) amount Fair value amount Fair value
Financial assets
Cash and cash equivalents ￦ 33,088,093 ￦ 1 ￦ 30,545,130 ￦ 1

Short-term financial instruments 58,681,418 1 49,447,696 1

Short-term available-for-sale financial assets - - 3,191,375 3,191,375

Short-term financial assets at amortized cost 3,446,114 1 - -
Trade receivables 41,940,008 1 27,695,995 1

Long-term available-for-sale financial assets2 - - 7,752,180 6,561,155

Held-to-maturity financial assets - - 106,751 1

Financial assets at amortized cost 242,423 1 - -

Financial assets at fair value through other
7,921,160 7,921,160 - -
comprehensive income
Financial assets at fair value through profit or loss 700,224 700,224 - -
Other3 8,292,840 65,728 6,325,825 113,098
Total financial assets ￦ 154,312,280 ￦ 125,064,952
Financial liabilities
Trade payables ￦ 10,209,231 ￦ 1 ￦ 9,083,907 ￦ 1

Short-term borrowings 18,826,524 1 15,767,619 1

Other payables3 8,152,127 1 12,106,609 316,928

Current portion of long-term liabilities 1,799,346 1 278,619 1

Debentures 972,435 979,443 953,361 978,643

Long-term borrowings 87,101 1 1,814,446 1

Long-term other payables3 1,377,913 29,375 1,746,184 28,285

Other3 8,960,011 164,967 10,954,513 222,012
Total financial liabilities ￦ 50,384,688 ￦ 52,705,258

1 Assets and liabilities whose carrying amount is a reasonable approximation of fair value are excluded from the fair value
disclosures.
2 Amounts measured at cost of 1,191,025 million as at December 31, 2017 are excluded as the range of reasonable fair value

estimates is significant and the discount rates and the probabilities of the various estimates cannot be reasonably assessed.
3 Assets measured at cost of ￦8,227,112 million (December 31, 2017: ￦6,212,727 million) and liabilities measured at cost of

￦10,143,582 million (December 31, 2017: ￦24,240,081) are excluded as the carrying amount is a reasonable approximation of
fair value.

57
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(2) Fair value hierarchy classifications of the financial instruments that are measured at fair value or its fair
value is disclosed as at September 30, 2018 and December 31, 2017 are as follows:

September 30, 2018

(In millions of Korean won) Level 1 Level 2 Level 3 Total balance
1) Assets
Financial assets at fair value through ￦ 3,223,961 ￦ 20,742 ￦ 4,676,457 ￦ 7,921,160
other comprehensive income
Financial assets at fair value through 9,706 - 690,518 700,224
profit or loss
Other - 65,728 - 65,728
2) Liabilities
Debentures ￦ - ￦ 979,443 ￦ - ￦ 979,443
Long-term other payables - - 29,375 29,375
Other - 158,490 6,477 164,967

December 31, 2017

(In millions of Korean won) Level 1 Level 2 Level 3 Total balance
1) Assets
Short-term available-for-sale
￦ - ￦ 3,191,375 ￦ - ￦ 3,191,375
financial assets
Long-term available-for-sale
2,908,581 - 3,652,574 6,561,155
financial assets
Other - 113,098 - 113,098
2) Liabilities
Other payables ￦ - ￦ - ￦ 316,928 ￦ 316,928
Debentures - 978,643 - 978,643
Long-term other payables - - 28,285 28,285
Other - 215,307 6,705 222,012

The levels of the fair value hierarchy and its application to financial assets and liabilities are described below.

ㆍ Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
ㆍ Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
ㆍ Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs)

The fair value of financial instruments traded in active markets is based on quoted market prices at the statement
of financial position date. A market is regarded as active if quoted prices are readily and regularly available from
an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual
and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial
assets held by the Company is the current bid price. These instruments are included in Level 1. The instruments
included in Level 1 are listed equity investments most of which are classified as financial assets at fair value
through other comprehensive income.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of
observable market data where it is available and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

58
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

If one or more of the significant inputs are not based on observable market data, the instrument is included in Level
3.

The Company performs the fair value measurements required for financial reporting purposes, including Level 3
fair values and discusses valuation processes and results at least once every quarter in line with the Company’s
quarterly reporting dates. The Company’s policy is to recognize transfers between levels at the end of the reporting
period, if corresponding events or changes in circumstances have occurred.

Specific valuation techniques used to value financial instruments include:

ㆍ Quoted market prices or dealer quotes for similar instruments

ㆍ The fair value of forward foreign exchange contracts is determined using forward exchange rates at the
statement of financial position date, with the resulting value discounted back to present value

Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial
instruments. For trade and other receivables, the book amount approximates a reasonable estimate of fair value.

(3) Valuation technique and the inputs

The Company utilizes a present value technique to discount future cash flows using a proper interest rate for
corporate bonds, government and public bonds, and bank debentures that are classified as Level 2 in the fair value
hierarchy.

The following table presents the valuation technique and the inputs used for major financial instruments classified
as Level 3.

(In millions of
Korean won)
Valuation Input Range
Classification Fair Value Technique Level 3 Inputs (Weighted Average)
Financial assets at fair value through other comprehensive income
Discounted Permanent growth rate -1.00% ~ 1.00% (0%)
Maltani \ 13,379
cash flow Weighted average cost of capital 6.95%-8.95%(7.95%)
Samsung Venture Discounted Permanent growth rate -1.00% ~ 1.00% (0%)
7,660
Investment cash flow Weighted average cost of capital 20.43%~22.43%(21.43%)
Corning Incorporated
Trinomial Risk adjusted discount rate 5.93% ~ 7.93% (6.93%)
convertible 3,955,709
model Price volatility 25.40% ~ 31.40%(28.40%)
preference shares
Long-term other payables
Discount rate 10.50%
Contingent financial Monte Carlo Risk free rate 0.97%
29,375
liability simulation Asset volatility 34.54%
Credit spread 2.12%
Other
Discount rate 17.57%
Contingent financial Monte Carlo Risk free rate 0.86%
5,174
liability simulation Operational leverage ratio 60.00%
Gross margin discount rate 6.68%
Probability-
Weighted average cost of capital 8.60%
Contingent financial weighted
1,303
liability discounted
Credit risk 2.12%
cash flow

59
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(4) Changes in Level 3 instruments:

(In millions of Korean won) 2018 2017

Financial Assets
Balance as at January 1 \ 3,652,574 \ 3,464,272
Acquisitions 247,848 -
Disposals (59,039) -
Amount recognized in profit or loss 14,064 -
Amount recognized in other comprehensive income 335,396 305,730
Other 1,176,132 -
Balance as at September 30 \ 5,366,975 \ 3,770,002

(In millions of Korean won) 2018 2017

Financial Liabilities
Balance as at January 1 \ 351,918 \ 342,702
Settlement (322,920) (2,669)
Amount recognized in profit or loss 5,992 (7,062)
Acquisition in the business combination - 39,083
Other 862 (355)
Balance as at September 30 \ 35,852 \ 371,699

(5) Sensitivity analysis for recurring fair value measurements categorized within Level 3

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair
value of financial instruments which are affected by the unobservable parameters, using a statistical technique.
When the fair value is affected by more than two input parameters, the amounts represent the most favorable or
most unfavorable.

The results of the sensitivity analysis for the effect on profit or loss (before tax amount for other comprehensive
income or loss) from changes in inputs for significant financial instruments categorized within Level 3 and subject
to sensitivity analysis, are as follows:

(In millions of Korean won) Favorable Changes Unfavorable Changes

Classification Profit or Loss Equity Profit or Loss Equity
Financial assets at fair value through
\ - \ 124,398 \ - \ (117,984)
other comprehensive income1
Total \ - \ 124,398 \ - \ (117,984)

1For equity instruments, changes in fair value are calculated with the correlation among growth rate (-1%~1%), volatility
(25.40%~31.40%) and discount rate, which are significant unobservable inputs.

60
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
26. Segment Information

(A) Operating segment information

The chief operating decision maker has been identified as the Management Committee. The Company determines
operating segments based on the units reported to the Management Committee. The Management Committee reviews
operating profits of each operating segment in order to assess performance and to make strategic decisions regarding
allocation of resources to the segment.

The operating segments are product-based and are identified based on the internal organization and revenue streams.
As at the reporting date, the operating segments are comprised of CE, IM, Semiconductor, DP, Harman and others.

The segment information for each reporting period such as depreciation, amortization of intangible assets, and
operating profit is prepared after the allocation of internal transaction adjustments. Total assets and liabilities of each
operating segment are excluded from the disclosure as these have not been provided regularly to the Management
Committee.

(1) For the nine months ended September 30, 2018

DS
Intercompany
elimination
(In millions of Semi- within the
Korean won) CE IM Total1 conductor DP Harman Total1 Company Consolidated

Total segment 69,020,638 165,178,323 183,721,916 130,205,866 49,961,288 7,912,289 427,436,384 (242,930,019) 184,506,365
revenue

Intercompany (38,699,109) (87,820,191) (92,916,865) (62,662,375) (26,670,515) (1,620,241) (242,930,019) 242,930,019 -

revenue
Net revenue2 30,321,529 77,358,132 90,805,051 67,543,491 23,290,773 6,292,048 184,506,365 - 184,506,365
Depreciation 407,032 871,145 16,846,472 11,926,478 4,831,653 171,811 18,569,050 - 18,569,050
Amortization 28,716 97,003 574,783 477,175 87,269 166,860 1,020,676 - 1,020,676
Operating profit 1,347,200 8,660,035 38,018,029 36,806,613 1,644,879 89,203 48,086,070 - 48,086,070

1 Includes other amounts not included in specific operating segments.

2 Segment net revenue includes intersegment revenues.

(2) For the three months ended September 30, 2018

DS
Intercompany
elimination
(In millions of Semi- within the
Korean won) CE IM Total1 conductor DP Harman Total1 Company Consolidated

Total segment 24,653,460 54,437,539 70,658,901 47,900,414 21,769,702 2,686,602 153,076,001 (87,616,008) 65,459,993
revenue
Intercompany (14,474,699) (29,524,922) (35,897,414) (23,132,303) (11,681,500) (469,892) (87,616,008) 87,616,008 -
revenue
Net revenue2 10,178,761 24,912,617 34,761,487 24,768,111 10,088,202 2,216,710 65,459,993 - 65,459,993
Depreciation 134,773 295,022 5,903,203 4,294,502 1,584,411 57,107 6,481,244 - 6,481,244
Amortization 9,213 30,713 192,551 161,671 27,431 58,184 342,615 - 342,615
Operating profit 558,986 2,221,241 14,564,055 13,650,341 1,101,089 80,978 17,574,865 - 17,574,865

1 Includes other amounts not included in specific operating segments.

2 Segment net revenue includes intersegment revenues.

61
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(3) For the nine months ended September 30, 2017

DS
Intercompan
y elimination
(In millions of Semi- within the
Korean won) CE3 IM Total1 conductor DP Harman Total1 Company Consolidated

Total segment 74,065,059 172,584,132 153,567,934 101,116,514 48,818,569 6,247,783 411,378,137 (237,781,173) 173,596,964
revenue
Intercompany (42,036,577) (91,383,243) (77,451,858) (47,974,854) (25,536,589) (1,468,988) (237,781,173) 237,781,173 -
revenue
Net revenue2 32,028,482 81,200,889 76,116,076 53,141,660 23,281,980 4,778,795 173,596,964 - 173,596,964
Depreciation 438,524 960,529 13,070,012 9,382,684 3,550,219 127,169 14,886,343 - 14,886,343
Amortization 28,942 115,940 720,124 617,148 91,493 119,444 1,155,447 - 1,155,447
Operating profit 1,253,221 9,412,022 28,127,074 24,307,704 3,985,508 (4,180) 38,498,067 - 38,498,067

1 Includes other amounts not included in specific operating segments.

2 Segment net revenue includes intersegment revenues.
3 CE is restated in correspondence to the reclassification of the Medical Instrument business segment, in which the composition

of reportable segment has been changed from CE to others.

(4) For the three months ended September 30, 2017

DS

Intercompan
y elimination
(In millions of Semi- within the
Korean won) CE3 IM Total1 conductor DP Harman Total1 Company Consolidated

Total segment 26,277,763 59,832,241 56,921,998 38,112,202 17,525,341 2,709,036 147,464,827 (85,415,926) 62,048,901
revenue
Intercompany (15,267,544) (32,140,825) (28,904,345) (18,206,292) (9,244,698) (622,432) (85,415,926) 85,415,926 -
revenue
Net revenue2 11,010,219 27,691,416 28,017,653 19,905,910 8,280,643 2,086,604 62,048,901 - 62,048,901
Depreciation 147,876 313,527 4,654,785 3,207,135 1,408,860 56,935 5,270,583 - 5,270,583
Amortization 9,746 37,796 226,989 193,280 30,696 53,657 383,537 - 383,537
Operating profit 485,071 3,289,905 10,846,687 9,962,704 968,588 (32,565) 14,533,159 - 14,533,159

1 Includes other amounts not included in specific operating segments.

2 Segment net revenue includes intersegment revenues.
3 CE is restated in correspondence to the reclassification of the Medical Instrument business segment , in which the composition

of reportable segment has been changed from CE to others.

62
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(B) Regional information

The regional segment information provided to the Management Committee for the reportable segments as at and for
the three and nine months ended September 30, 2018 and 2017, is as follows:

(1) For the nine months ended September 30, 2018

Intercompany
elimination
(In millions of Asia and within the
Korean won) Korea America Europe Africa China Company Consolidated

Net segment revenue 24,737,974 61,234,078 31,721,437 32,836,589 33,976,287 - 184,506,365

1
Non-current assets 93,699,847 10,055,368 6,070,517 11,846,848 8,784,903 (654,239) 129,803,244

1 Total of non-current assets other than financial instruments, deferred tax assets, and investments in associates and joint ventures.

(2) For the three months ended September 30, 2018

Intercompany
elimination
(In millions of Asia and within the
Korean won) Korea America Europe Africa China Company Consolidated

Net segment revenue 9,950,388 22,471,989 10,188,062 10,438,224 12,411,330 - 65,459,993

Non-current assets1 93,699,847 10,055,368 6,070,517 11,846,848 8,784,903 (654,239) 129,803,244

1 Total of non-current assets other than financial instruments, deferred tax assets, and investments in associates and joint ventures.

(3) For the nine months ended September 30, 2017

Intercompany
elimination
(In millions of Asia and within the
Korean won) Korea America Europe Africa China Company Consolidated

Net segment revenue 20,003,910 58,189,893 31,970,019 34,298,140 29,135,002 - 173,596,964

Non-current assets1 84,293,206 11,462,791 6,458,846 12,799,148 10,198,654 (622,272) 124,590,373

1 Total of non-current assets other than financial instruments, deferred tax assets, and investments in associates and joint ventures.

(4) For the three months ended September 30, 2017

Intercompany
elimination
(In millions of Asia and within the
Korean won) Korea America Europe Africa China Company Consolidated

Net segment revenue 7,690,359 21,550,326 11,206,535 11,732,865 9,868,816 - 62,048,901

Non-current assets1 84,293,206 11,462,791 6,458,846 12,799,148 10,198,654 (622,272) 124,590,373

1 Total of non-current assets other than financial instruments, deferred tax assets, and investments in associates and joint ventures.

63
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
27. Related Party Transactions

(A) Sale and purchase transactions

Sale and purchase transactions with related parties for the nine months ended September 30, 2018 and 2017, are as
follows:

2018
Disposal of Purchase of
(In millions of Korean won) Name of Company1 Sales fixed assets Purchases fixed assets
Samsung SDS \ 59,533 \ - \ 1,562,247 \ 272,066
Samsung Electro-Mechanics 47,651 - 1,631,481 -
Associates and Samsung SDI 51,195 - 610,839 77,358
Joint ventures Cheil Worldwide 24,768 - 649,160 3,258
Other 734,731 - 7,180,346 146,075
Total (Associates and Joint ventures) \ 917,878 \ - \11,634,073 \ 498,757
ventures
Samsung )C&T \ 82,924 \ 183 \ 240,816 \ 2,670,286
Other related parties Other 123,339 - 759,604 629,321
Total (Other related parties) \ 206,263 \ 183 \ 1,000,420 \ 3,299,607
Samsung Engineering \ 2,753 \ - \ 17,180 \ 981,671
S-1 27,761 258 294,703 25,651
Other2
Other 119,609 - 288,532 190,119
Total (Other) \ 150,123 \ 258 \ 600,415 \ 1,197,441
1 Transactions with separate entities that are related parties of the Company.
2 Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to same large
enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

2017
Disposal of Purchase of
(In millions of Korean won) Name of Company1 Sales fixed assets Purchases fixed assets
Samsung SDS \ 42,780 \ - \1,418,329 \ 215,689
Samsung Electro-Mechanics 36,097 - 1,627,909 302
Associates and Samsung SDI 49,204 - 749,487 38,605
Joint ventures Cheil Worldwide 11,563 - 531,035 667
Other 362,439 - 6,458,820 114,773
Total (Associates and Joint ventures) \ 502,083 \ - \10,785,580 \ 370,036
Samsung C&T \ 135,430 \ 68 \ 288,664 \2,786,369
Other related parties Other 124,278 35 689,190 196,646
Total (Other related parties) \ 259,708 \ 103 \ 977,854 \2,983,015
Samsung Engineering \ 7,336 \ - \ 31,886 \1,188,742
S-1 35,258 - 267,145 59,373
Other2
Other 51,198 3 171,477 365
Total (Other) \ 93,792 \ 3 \ 470,508 \1,248,480
1 Transactions with separate entities that are related parties of the Company.
2 Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same
large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

64
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(B) Balances of receivables and payables

Balances of receivables and payables arising from sales and purchases of goods and services as at September 30,
2018 and December 31, 2017, are as follows:

September 30, 2018

(In millions of Korean won) Name of Company1 Receivables Payables
Samsung SDS \ 9,339 \ 382,836
Samsung Electro-Mechanics 2,271 220,007
Associates and Joint Samsung SDI 89,857 110,184
ventures Cheil Worldwide 259 359,391
Other 259,769 975,255
Total (Associates and Joint ventures) \ 361,495 \ 2,047,673
Samsung C&T \ 237,723 \ 259,032
Other related parties Other2 29,562 1,343,794
Total (Other related parties) \ 267,285 \ 1,602,826
Samsung Engineering \ 2,069 \ 70,758
S-1 3,133 38,996
Other3
Other 5,772 86,658
Total (Other) \ 10,974 \ 196,412
1 Balances due from and to separate entities that are related parties of the Company.
2 Payables include the unsettled amount from purchasing cards with Samsung Card of \1,166,917 million. The Company has a
purchasing card agreement with a limit of \2,543,000 million as at September 30, 2018. For the nine months ended September
30, 2018, the amounts used and reimbursed are \3,724,851 million and \3,679,265 million, respectively.
3Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same
large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

December 31, 2017

(In millions of Korean won) Name of Company1 Receivables Payables
Samsung SDS \ 14,182 \ 406,760
Samsung Electro-Mechanics 7,052 197,364
Associates and Joint Samsung SDI 90,370 97,193
ventures Cheil Worldwide 369 500,706
Other 250,059 954,537
Total (Associates and Joint ventures) \ 362,032 \ 2,156,560
Samsung C&T \ 242,506 \ 731,995
Other related parties Other2 29,457 1,313,314
Total (Other related parties) \ 271,963 \ 2,045,309
Samsung Engineering 2,518 \ 652,519
S-1 2,589 58,309
Other3
Other 3,369 35,774
Total (Other) \ 8,476 \ 746,602

1 Balances due from and to separate entities that are related parties of the Company.
2 Payables include the unsettled amount from purchasing cards with Samsung Card of \1,121,331 million. The Company has a
purchasing card agreement with a limit of \2,343,000 million as at December 31, 2017. For the year ended December 31, 2017,
the amounts used and reimbursed are \5,091,576 million and \5,279,430 million, respectively.
3 Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same

large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

65
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(C) For the nine months ended September 30, 2018, the Company invested \17,564 million (for the nine months
ended September 30, 2017, \19,510 million) in associates and joint ventures. And for the nine months ended
September 30, 2018, the Company recovered \148 million (for the nine months ended September 30, 2017,
\52,732 million) from associates and joint ventures. In addition, for nine months ended September 30, 2018,
the Company invested \204,055 million to Samsung Heavy Industries, one of the entities that are not related
parties of the Company in accordance with Korean IFRS 1024, but belong to the same conglomerate according
to the Monopoly Regulation and Fair Trade Act.

(D) For the nine months ended September 30, 2018, the Company declared \ 1,357,898 million of dividends (for
the nine months ended September 30, 2017: \997,625 million) to related parties. As at September 30, 2018
and 2017, there are no unpaid dividends to related parties. Also, for the nine months ended September 30, 2018,
the Company declared \104,206 million of dividends (for the nine months ended September 30, 2017:
\77,039 million) to the entities that are not related parties of the Company in accordance with Korean IFRS
1024, but belong to the same conglomerate according to the Monopoly Regulation and Fair Trade Act. As at
September 30, 2018 and 2017, there are no unpaid dividends to these entities.

(E) Key management compensation

Key management includes directors (executive and non-executive) and members of the Executive Committee. The
compensation paid or payable for employee services for the nine months ended September 30, 2018 and 2017 consists
of:

(In millions of Korean won) 2018 2017

Short-term employee benefits \ 7,100 \ 14,376

Post-employment benefits 1,083 594
Other long-term employee benefits 6,142 6,462

66
 Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
28. Business Combination

Significant business combination for the nine months ended September 30, 2017 are as follows:

To strengthen the Company’s position in automotive electronics and the audio business, Samsung Electronics
America, the Company’s subsidiary, acquired 100% of the equity shares of Harman and its subsidiaries on March 10,
2017.

(A) Overview of the acquired company

Name of the acquired company Harman International Industries, Inc. and 109 subsidiaries
Headquarters location Stamford, CT, USA
Representative director Dinesh Paliwal
Industry Design, development, manufacture and sale of audio and video system components

(B) Purchase price allocation

(In millions of Korean Won) Amount

I. Consideration transferred ￦ 9,272,702
II. Identifiable assets and liabilities
Cash and cash equivalents 647,729
Trade and other receivables 1,533,437
Inventory 1,068,865
Property, plant and equipment 858,790
Intangible assets 5,564,309
Other assets 902,824
Trade and other payables 3,436,020
Deferred tax liabilities 1,442,527
Other liabilities 873,637
Total net identifiable assets 4,823,770
III. Goodwill (I – II) ￦ 4,448,932

Had Harman and it’s subsidiaries been consolidated from January 1, 2017, ￦6,256,826 million of revenues and
￦4,098 million of net income would be included on the interim consolidated statement of income for the nine months
ended September 30, 2017. The revenue and net loss contributed by Harman and it’s subsidiaries since acquisition
amount to ￦4,778,802 million and ￦174 million, respectively for the nine months ended September 30, 2017.

67