Latest News

▶ Sales in the second quarter of 2006 decreased by 6% to KRW 2,315 billion (USD 2,441 million) from sales of KRW 2,471 billion (USD 2,605 million) in the first quarter of 2006 and increased 0.3% compared to KRW 2,308 billion (USD 2,433 million) in the second quarter of 2005. The sequential decline in sales was the result of an industry-wide decline in average selling prices across the TV, monitor and notebook segments, as well as less than expected sales volume growth and overcapacity.
▶ Operating loss in the second quarter of 2006 was KRW 372 billion (USD 392 million) compared to an operating profit of KRW 52 billion (USD 55 million) in the first quarter of 2006, and an operating profit of KRW 29 billion (USD 31 million) in the second quarter of 2005.
▶ EBITDA in the second quarter of 2006 was KRW 243 billion (USD 256 million), a decrease from KRW 670 billion (USD 706 million) in the first quarter of 2006 and a year-over-year decline of 45% from KRW 442 billion (USD 466 million) in the second quarter of 2005.
▶ Net income in the second quarter of 2006 was a loss of KRW 322 billion (USD 339 million) compared to a profit of KRW 48 billion (USD 51 million) in the first quarter of 2006 and a profit of KRW 41 billion (USD 43 million) in the second quarter of 2005.

“The second quarter was a difficult quarter for the Company, as we were significantly impacted by much greater than expected industry-wide pricing weakness. As we look closely at our business and the long-term growth prospects for the TFT-LCD industry, we remain committed to building sustainable value for shareholders and customers by balancing long-term growth strategies with shorter-term actions designed to maximize operating profits,” said Bon Joon Koo, Vice Chairman and CEO of LG.Philips LCD.

Mr. Koo continued, “The decision to continue evaluating any further investment in a next generation and invest in a multi-purpose Gen 5.5 facility, which will be housed in our P8 facility, demonstrates our resolve to both adapt to changing market conditions and to make timely investments to meet our customers’ forthcoming needs, particularly in the expanding wide format notebook and high-end monitor segments.”


Second Quarter Financial Review

Revenue and Cost
Revenue in the three-month period ended June 30, 2006, increased by 0.3% to KRW 2,315 billion (USD 2,441 million) from KRW 2,308 billion (USD 2,433 million) in the corresponding period of 2005. TFT-LCD panels for TVs, desktop monitors, notebook computers and other applications accounted for 48%, 26%, 21% and 5%, respectively, on a revenue basis, in the second quarter of 2006, compared to 45%, 30%, 20% and 5%, respectively, in the first quarter of 2006.

Overall, the Company shipped a total of 1.5 million square meters of net display area in the second quarter of 2006, a 17% increase quarter-on-quarter, with an average selling price per square meter of USD 1,598. This represents a decrease in the average selling price per square meter of net display area of approximately 19% compared to the end of the first quarter of 2006 and an average decrease of 18% from the first quarter of 2006.

The total cost of goods sold increased 10% quarter-on-quarter to KRW 2,529 billion (USD 2,666 million), and increased 17% year-on-year, primarily as a result of increased shipments. The cost of goods sold per square meter of net display area shipped was KRW 1,703,000 (USD 1,795) for the second quarter of 2006, down 5% from the first quarter of 2006.

“We are disappointed with our financial performance in the second quarter of 2006. As a result, the Company is now taking initiatives to address the issues that are affecting our business. As we announced in June, we are addressing an increase in inventory levels during a period of overcapacity, primarily in the LCD TV segment, by temporizing production. We will continue to control inventory levels going forward,” said Ron Wirahadiraksa, President and CFO of LG.Philips LCD.”

Mr. Wirahadiraksa continued, “We believe that the temporization of production, along with other efforts, will enable us to maintain our competitiveness as a top-tier player in an industry that is starting to take a more rational approach to capacity and has undiminished long-term growth prospects. While some of the measures are immediate, we generally expect they will strengthen our shareholders’ long？term value and will enable us to leverage the industry’s strong growth opportunities as we closely examine all areas of our manufacturing, capital expenditures, customer relations and expense management. We are confident that LG.Philips LCD’s business results and prospects will improve over the course of 2006.”

Liquidity

As of June 30, 2006, LG.Philips LCD had KRW 779 billion (USD 821 million) of cash and cash equivalents. Total debt was KRW 4,202 billion (USD 4,430 million), and the net-debt-to-equity ratio was 46% as of June 30, 2006, compared to 33% as of March 31, 2006.

Capital Spending

Capital expenditures in the second quarter of 2006 was KRW 990 billion (USD 1,044 million) from KRW 969 billion (USD 1,022 million) in the second quarter of 2005, and were mainly used for the P7 facility.

Utilization and Capacity

Total input capacity on an area basis increased approximately 9% in the second quarter compared to the first quarter of 2006, mainly due to the ramp up of P7, which has reached an average of 34,000 input sheets per month.

Outlook

The following expectations are based on current information as of July 11, 2006. The Company does not expect to update its expectations until next quarter’s earnings announcement. However, the Company may update its full business outlook, or any portion thereof, at any time for any reason.

“Looking ahead, we expect to see prices begin to stabilize, and anticipate sustained growth in consumer demand for LCD TVs, in the second half of 2006, particularly in the fourth quarter. For the third quarter of 2006, we expect our area shipments to increase quarter-on-quarter by a mid-to-high twenties percentage, driven by continued growth in the expanding LCD TV segment, continued ramp up at our P7 facility, and the stabilization of pricing,” said Mr. Wirahadiraksa. “We expect our average selling price per square meter of net display area shipped at the end of the third quarter of 2006 to be relatively flat, as compared to the end of the second quarter of 2006, largely due to increased seasonal demand leading into the holiday season. We expect the average ASP per square meter in the third quarter to decrease by a mid-single digit percentage. Our EBITDA margin for the third quarter is anticipated to be in the low teens range.”

Mr. Wirahadiraksa continued, “We have made a decision to postpone investment in existing fabs and, as a result, have revised our capital expenditure guidance downward from KRW 4.2 trillion to KRW 3.0 trillion for 2006.”

Earnings Conference and Conference Call

LG.Philips LCD will hold a Korean language earnings conference on July 11, 2006 at
4:30 p.m. Korea Standard Time on the 21st floor, in the International Conference Room of the Korea Exchange Building (KRX). An English language conference call will follow at 9:00 p.m. Korea Standard Time, 8:00 a.m. EDT and 1:00 p.m. GMT. The call-in number is +82 (0)31-810-3001 for both callers in Korea and callers outside of Korea. The confirmation number is 3777. Corresponding slides will be available at the Investor Relations section of the LG.Philips LCD web site: http://www.lgphilips-lcd.com

Investors can listen to the conference call via the Internet at http://www.lgphilips-lcd.com.
To listen to the live call, please go to the Investor Relations section of the web site at least 15 minutes prior to the call to register and install any necessary audio software.

For those who are unable to participate in the call, a replay will be available for 30 days after the call. The call-in number is 031-810-3100 for callers in Korea and +82-31-810-3100 for callers outside of Korea. The confirmation number for the replay is 57025#.





About LG.Philips LCD

LG.Philips LCD [NYSE: LPL, KRX: 034220] is a leading manufacturer and supplier of thin film transistor liquid crystal display (TFT-LCD) panels. The Company manufactures TFT-LCD panels in a wide range of sizes and specifications primarily for use in notebook computers, desktop monitors and televisions. Headquartered in Seoul, South Korea, LG.Philips LCD currently operates seven fabrication facilities in Korea and has approximately 21,000 employees in locations around the world.

For more information about the Company, please visit http://www.lgphilips-lcd.com.
LG.Philips LCD makes "Technology you can see!"

Forward-Looking Statement Disclaimer

This press release contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Additional information as to factors that may cause actual results to differ materially from our forward-looking statements can be found in our filings with the United States Securities and Exchange Commission.

Investor Relations Contacts:
Jay Hong [Korea]
LG.Philips LCD
Tel: +822-3777-1010
Email: jay.hong@lgphilips-lcd.com

Joshua Hochberg [USA]
Sloane & Company
Tel: +1-212-446-1892
Email: jhochberg@sloanepr.com


Media Contacts:
Elliot Sloane [USA]
Sloane & Company
Tel: +1-212-446-1860
Email: ESloane@sloanepr.com

Sue Kim [Korea]
LG.Philips LCD
Tel: +822-3777-0970
Email: sue.kim@lgphilips-lcd.com