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- Sales in the third quarter of 2006 increased by 20% to KRW 2,773 billion (USD 2,931 million) from sales of KRW 2,315 billion (USD 2,446 million) in the second quarter of 2006 and increased 1% compared to KRW 2,741 billion (USD 2,897 million) in the third quarter of 2005. The sequential rise in sales was the result of increased seasonal demand across all segments and improving market conditions, especially in the monitor and notebook segments.
- Operating loss in the third quarter of 2006 was KRW 382 billion (USD 404 million) compared to an operating loss of KRW 372 billion (USD 393 million) in the second quarter of 2006, and an operating profit of KRW 240 billion (USD 254 million) in the third quarter of 2005.
- EBITDA in the third quarter of 2006 was KRW 295 billion (USD 312 million), an increase from KRW 243 billion (USD 257 million) in the second quarter of 2006 and a year-over-year decline of 57% from KRW 681 billion (USD 720 million) in the third quarter of 2005.
- Net income in the third quarter of 2006 was a loss of KRW 321 billion (USD 339 million) compared to a loss of KRW 322 billion (USD 340 million) in the second quarter of 2006 and a profit of KRW 227 billion (USD 240 million) in the third quarter of 2005.

“During the third quarter, our business did not perform at the level we expected, primarily due to higher than anticipated price declines mainly for LCD TVs. As such, the Company continues to take the necessary steps to correct the issues that have limited our progress in recent quarters. Our ability to effectively reduce costs and improve efficiencies will be crucial in restoring profitability as we prepare for what we believe will be a difficult first half of 2007. We have made some inroads in these areas, and will take more substantial steps going forward,” said Bon Joon Koo, CEO of LG.Philips LCD.

Mr. Koo continued, “As part of our ongoing efforts to restore value for our shareholders, we have initiated a number of actions to improve customer alignment and ensure that our operations support their future needs. Toshiba’s equity participation in our new Poland module plant and our focus on Gen 5.5 to accommodate increasing demand for large and wide format notebooks and high-end monitors, are two such examples.”

Third Quarter Financial Review

Revenue and Cost

Revenue in the three-month period ended September 30, 2006, increased by 1% to KRW 2,773 billion (USD 2,931 million) from KRW 2,741 billion (USD 2,897 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 third quarter of 2006, the same level as the second quarter.

Overall, the Company shipped a total of 2 million square meters of net display area in the third quarter of 2006, a 34% increase quarter-on-quarter, with an average selling price per square meter of USD 1,430. This represents a decrease in the average selling price per square meter of net display area of approximately 3% compared to the end of the second quarter of 2006 and an average decrease of 11% from the second quarter of 2006.

The total cost of goods sold increased 19% quarter-on-quarter to KRW 3,019 billion (USD 3,190 million), and increased 28% 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 1.5 million (USD 1,585) for the third quarter of 2006, down 11% from the second quarter of 2006.

“We saw good progress this quarter with a 12% decline in COGS per square meter in USD, although this was not enough to offset the LCD TV price decline. In addition, our decision last quarter to temporize production, along with an increase in shipments, led to a reduction in inventory turnover levels from four weeks at the end of the second quarter, to over two weeks at the end of the third quarter for large panels,” said Ron Wirahadiraksa, CFO of LG.Philips LCD.

“We are now at a crucial inflection point. Without additional measures relating to product mix, cost, and productivity, we will not be able to deliver value to our shareholders. In the coming months, LG.Philips LCD will take the required actions in these areas to better respond to a new reality on pricing, demand and competitive pressures. We are confident that we have at least taken the right first steps - maintaining healthier inventory levels, reducing costs at an expedited rate in Q3, and aligning ourselves in a more substantial way with our customers ？ and management remains committed to do what is necessary to generate acceptable returns.”

Liquidity

As of September 30, 2006, LG.Philips LCD had KRW 472 billion (USD 499 million) of cash and cash equivalents. Total debt was KRW 4,480 billion (USD 4,734 million), and the net-debt-to-equity ratio was 57% as of September 30, 2006, compared to 46% as of June 30, 2006.

Capital Spending

Capital expenditures in the third quarter of 2006 were KRW 908 billion (USD 960 million) compared to KRW 1,380 billion (USD 1,458 million) in the third quarter of 2005, and were mainly used for P7, P8 and our module plant in Nanjing, China.

Utilization and Capacity

Total input capacity on an area basis increased approximately 10% in the third quarter compared to the second quarter of 2006, mainly due to the further ramp up of P7, which has reached an average of 52,000 input sheets per month.

Outlook

The following expectations are based on current information as of October 10, 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.

“For the fourth quarter of 2006, we anticipate continued growth and an increase in area shipments by a mid-twenties percentage quarter-on-quarter,” commented Mr. Wirahadiraksa. “We expect our average selling price per square meter at the end of the fourth quarter of 2006 to decline by a low single digit percentage, largely due to the continued decline in TV prices. The average ASP per square meter is expected to be flat.”

“Our COGS reduction per square meter will be approximately a mid-single digit percentage in the fourth quarter. Our EBITDA margin for the fourth quarter of 2006 is expected to be a low-teens percentage as a result. We are working on plans to achieve a significantly higher cost down for 2007, in order to better prepare for the anticipated price declines.”

“Our CAPEX guidance for 2006 remains unchanged at KRW 3 trillion. In line with us continuing to take a more prudent approach to capital spending and in anticipation of a difficult first half in 2007, we expect our CAPEX for 2007 to be approximately KRW 1 trillion, substantially lower than that of 2006. This CAPEX will be used for the investment in Gen. 5.5, enhancement of production efficiencies and maintenance of our existing facilities.”



Earnings Conference and Conference Call

LG.Philips LCD will hold a Korean language earnings conference on October 10, 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 68570#.

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-