1934 Act Registration No. 1-14418
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF AUGUST 2003
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SK TELECOM CO., LTD.
(Translation of registrant's name into English)
99, Seorin-dong
Jongro-gu
Seoul, Korea
(Address of principal executive offices)
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(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F [X] Form 40-F -
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes- No [X]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):82- .)
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This report on Form 6-K shall be deemed to be incorporated by reference in
the prospectuses included in Registration Statements on Form F-3 (File Nos.
333-91034 and 333-99073) filed with the Securities and Exchange Commission and
to be a part thereof from the date on which this report is filed, to the extent
not superceded by documents or reports subsequently filed or furnished.
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This report contains (i) the discussion and analysis of the
non-consolidated results of operations of SK Telecom Co., Ltd. and its unaudited
non-consolidated financial information as of and for the six months ended June
30, 2002 and 2003 prepared pursuant to Korean generally accepted accounting
principles, or Korean GAAP, (ii) information in respect of SK Telecom's consent
given to POSCO for the deposit of 1,696,428 common shares of SK Telecom owned by
Pohang Iron and Steel Co., Ltd. ("POSCO") with Citibank, N.A. for issuance of
American Depositary Shares and (iii) information regarding SK Telecom's stock
buyback program.
In this report on Form 6-K, unless the context indicates or otherwise
requires, references to "we", "us", "our" or the "Company" shall mean SK Telecom
Co., Ltd. and its consolidated subsidiaries, and references to "SK Telecom"
shall mean SK Telecom Co., Ltd., but shall not include its consolidated
subsidiaries. Unless otherwise indicated, references to our number of
subscribers shall include Shinsegi Telecomm, Inc.'s subscribers from April 1,
2000. All references to "Korea" contained in this report shall mean The Republic
of Korea and all references to the "Government" shall mean the government of The
Republic of Korea.
The financial information appearing in this report is stated in Korean Won.
All references to "KRW," "Won" or "W" in this report are to the currency of
Korea. Any discrepancies in any table between totals and the sums of the amounts
listed are due to rounding.
This report contains "forward-looking statements", as defined in Section
27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S.
Securities Exchange Act of 1934, as amended, that are based on our current
expectations, assumptions, estimates and projections about our company and our
industry. The forward-looking statements are subject to various risks and
uncertainties. Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "anticipate", "believe",
"estimate", "expect", "intend", "project", "should", and similar expressions.
Those statements include, among other things, the discussions of our business
outlook and expected performance as well as other statements that are not
historical facts. We caution you that reliance on any forward-looking statement
involves risks and uncertainties, and that although we believe that the
assumptions on which our forward-looking statements are based are reasonable,
any of those assumptions could prove to be inaccurate, and, as a result, the
forward-looking statements based on those assumptions could be incorrect. In
light of these and other uncertainties, you should not conclude that we will
necessarily achieve any plans and objectives or projected financial results
referred to in any of the forward-looking
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statements. We do not undertake to release the results of any revisions of these
forward-looking statements to reflect future events or circumstances.
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NON-CONSOLIDATED FINANCIAL INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE
30, 2002 AND 2003
We must file semi-annual reports with the Financial Supervisory Commission
of Korea and the Korea Stock Exchange. SK Telecom's unaudited, reviewed and
non-consolidated financial information as of and for the six months ended June
30, 2002 and 2003 shown below were prepared pursuant to generally accepted
accounting principles in Korea ("Korean GAAP"), which differs in certain
material respects from generally accepted accounting principles in the United
States.
The financial information below is non-consolidated and does not include
the results of operations of our subsidiaries except for certain subsidiaries
which are accounted for using the equity method of accounting of Korean GAAP.
Therefore, our income statement, including revenues and net income, as well as
our balance sheets, including total assets and total liabilities, if prepared on
a consolidated basis, may be significantly different from those in SK Telecom's
non-consolidated financial statements. See note 2(b) of our notes to
consolidated financial statements for a list of our subsidiaries that were
included in our consolidated financial statements in the last three years which
is available in SK Telecom's annual report for 2002 filed under Form 20-F, as
amended. Under Korean GAAP, for the years ended December 31, 2000, 2001 and
2002, SK Telecom's non-consolidated revenues accounted for 77.6%, 74.4% and
92.6%, respectively, of our consolidated revenues. We can give no assurance as
to what the actual ratios will be for 2003. In addition, SK Telecom's results of
operations for the first six months of 2003 may not be indicative of results of
operations for the full year 2003.
Shinsegi was merged into SK Telecom on January 13, 2002. As a result, our
results of operations from that date include the results of operations of the
business that was previously operated by Shinsegi, as a subsidiary, and which
was accounted for using the equity method of accounting in our non-consolidated
financial information.
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FOR THE SIX MONTHS ENDED
JUNE 30,
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2002 2003
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(IN BILLIONS OF WON)
NON-CONSOLIDATED INCOME STATEMENT DATA
Operating Revenue............................................. W4,044.8 W4,629.6
Operating Expenses............................................ 2,676.3 3,061.8
Operating Income.............................................. 1,368.5 1,567.8
Other Income.................................................. 138.6 142.5
Other Expenses................................................ 203.8 280.8
Income Taxes.................................................. 398.7 430.3
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Net Income.................................................... W 904.6 W 999.2
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AS OF JUNE 30,
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2002 2003
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(IN BILLIONS OF WON)
NON-CONSOLIDATED BALANCE SHEET DATA
Total Current Assets.......................................... W 2,486.1 W 3,730.3
Total Non-Current Assets...................................... 10,498.1 9,262.4
Total Assets.................................................. 12,984.2 12,992.7
Total Current Liabilities..................................... 3,915.0 3,885.0
Total Long-Term Liabilities................................... 3,274.9 3,591.2
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Total Shareholders' Equity.................................... W 5,794.4 W 5,516.4
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Non-Consolidated Operating Income. SK Telecom's operating income increased
by 14.6% to Won 1,567.8 billion for the six months ended June 30, 2003 from Won
1,368.5 billion for the six months ended June 30, 2002, as a result of a greater
increase in operating revenue than the increase in operating expense, for the
six months ended June 30, 2003 as compared to the six months ended June 30,
2002.
Non-Consolidated Operating Revenue. SK Telecom's operating revenue
increased by 14.5% to Won 4,629.6 billion for the six months ended June 30, 2003
from Won 4,044.8 billion for the six months ended June 30, 2002, principally
reflecting a 16.9% increase in cellular revenue to Won 4,108.9 billion for the
six months ended June 30, 2003 from Won 3,514.6 billion for the six months ended
June 30, 2002, which was offset by a 1.8% decrease in interconnection revenue.
The increase in SK Telecom's cellular revenue was principally due to an
increase in the number of SK Telecom's average wireless subscribers and
non-consolidated average monthly revenue per subscriber (excluding
interconnection revenue). The number of
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SK Telecom's subscribers increased to approximately 17.9 million as of June 30,
2003 from approximately 16.5 million as of June 30, 2002. SK Telecom's
non-consolidated average monthly revenue per subscriber (excluding
interconnection revenue) increased by 5.6% to Won 38,942 for the six months
ended June 30, 2003 from Won 36,890 for the six months ended June 30, 2002. The
increase was principally due to increases in average monthly revenue from
wireless Internet sales and average monthly revenue from value-added services
and other sales. However, the increase in cellular revenue was partially offset
by a reduction in tariffs of 7.3% (based on the reduction in a standard tariff
plan) from January 2003.
Average monthly revenue from wireless Interest sales increased by 74.7% to
Won 5,408 for the six months ended June 30, 2003 from Won 3,096 for the six
months ended June 30, 2002. Wireless Internet sales increased by 98.8% to Won
570.7 billion for the six months ended June 30, 2003 from Won 287.1 billion for
the six months ended June 30, 2002, representing 12.3% of SK Telecom's cellular
revenue, primarily due to the increased number of wireless Internet-enabled
handset holders. However, the increase in wireless Internet sales was partially
offset by a change in the method SK Telecom uses to account for wireless
Internet sales. SK Telecom now recognizes e-lottery sales net of the sourcing
cost of content. Such sales were previously recognized on a gross basis.
Average monthly revenue from value-added services and other sales increased
by 24.4% to Won 2,091 for the six months ended June 30, 2003 from Won 1,681 for
the six months ended June 30, 2002. Value-added services and other sales
increased by 45.0% to Won 220.6 billion for the six months ended June 30, 2003
from Won 152.1 billion for the six months ended June 30, 2002, despite a change
in the accounting method related to voice information services. SK Telecom now
recognizes voice information sales net of commissions to contents providers.
Such sales were previously recognized on a gross basis.
Interconnection revenue decreased by 1.8% to Won 520.7 billion for the six
months ended June 30, 2003 from Won 530.1 billion for the six months ended June
30, 2002. The decrease was due to a reduction in land-to-mobile interconnection
rates beginning April of 2003 to account for a decrease in the use of land lines
owned by us by land-line callers calling a subscriber, partially offset by an
increase in mobile-to-mobile interconnection rates due to an increase in minutes
of use.
Non-Consolidated Operating Expense. SK Telecom's operating expenses for the
six months ended June 30, 2003 increased by 14.4% to Won 3,061.8 billion
compared to
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Won 2,676.3 billion for the six months ended June 30, 2002. The increase in SK
Telecom's operating expenses was primarily due to the increases in commissions,
interconnection, depreciation, labor, leased line and miscellaneous operating
expenses.
Commissions paid to SK Telecom's authorized dealers increased by 21.2% to
Won 1,082.7 billion for the six months ended June 30, 2003 compared to Won 893.1
billion for the six months ended June 30, 2002. The increase was primarily due
to the increase in average subscribers by 11% during the period and increase in
the number of handsets sold, and our aggressive marketing activities to maintain
our market leadership in 2G & 2.5G services as well as 3G services going
forward. SK Telecom also incurred an increase in consulting fees paid in
relation to the establishment of a corporate innovation strategy.
Interconnection expenses increased by 21.5% to Won 417.1 billion for the
six months ended June 30, 2003 compared to Won 343.4 billion for the six months
ended June 30, 2002. The increase was primarily due to the higher subscriber
numbers and an increase of the mandated payment in Universal Service Obligation
fund, which is a fund into which certain telecommunications service providers in
Korea contribute based upon such company's net annual income (which is
calculated pursuant to guidelines set forth by the Minister of Information
Communication which differ from SK Telecom's accounting practices) to fund the
provision of telecommunication services to the general public, for the first
quarter of 2003 of Won 22.5 billion compared to Won 7.2 billion in the first
quarter of 2002, which were only partially offset by a decrease in
interconnection rates and a decrease in the level of interconnection fees that
SK Telecom must pay to other operators for calls using their networks.
Additionally, SK Telecom reflected as an expense in the second quarter of 2003
all amounts due to be paid to KT Corp. for the years 1998, 1999, 2000 and 2001
pursuant to a cost sharing arrangement regarding the provision of directory
assistance services by KT Corp. to SK Telecom's subscribers. SK Telecom's share
of expenses for the provision of directory assistance service by KT Corp. SK
Telecom will discuss with KT Corp. the amounts to be paid by SK Telecom for
directory assistance services provided to its subscribers during 2002 and the
six months ended June 30, 2003.
Depreciation and amortization expenses increased by 6.1% to Won 661.9
billion for the six months ended June 30, 2003 compared to Won 623.9 billion for
the six months ended June 30, 2002. The increase in depreciation expenses was
primarily due to the expansion of SK Telecom's CDMA 1xRTT network.
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Labor cost increased by 17.8% to Won 192.9 billion for the six months ended
June 30, 2003 compared to Won 163.7 billion for the six months ended June 30,
2002. The increase was primarily due to payment of performance bonuses to its
employees in 2003 in respect of SK Telecom's performance in 2002.
Leased line expenses increased by 9.0% to Won 149.3 billion for the six
months ended June 30, 2003 compared to Won 136.9 billion for the six months
ended June 30, 2002, primarily due to an increase leased line expenses in
response to higher wireless traffic.
Miscellaneous operating expenses increased by 10.9% to Won 374.0 billion
for the six months ended June 30, 2003 compared to Won 337.3 billion for the six
months ended June 30, 2002, primarily due to increases in research and
development expenses and maintenance expenses.
Non-Consolidated Other Income. Other income increased by 2.8% to Won 142.5
billion for the six months ended June 30, 2003 compared to Won 138.6 billion for
the six months ended June 30, 2002. Other income consists primarily of incoming
fees, interest income, foreign exchange and translation gains, gain on equity
method, gain on disposal of property and equipment, reversal of allowance for
doubtful accounts and miscellaneous income. Other income increased primarily due
to an increase in incoming fees (6.6% increase to Won 50.3 billion for the six
months ended June 30, 2003 compared to Won 47.2 billion for the six months ended
June 30, 2002) which was principally due to an increase in rental income from
rentals of mobile phones and an increase in service income from the provision of
services relating to testing of 3G related technology for SK IMT Co., Ltd. and
miscellaneous income (665.3% increase to Won 57.4 billion for the six months
ended June 30, 2003 compared to Won 7.5 billion for the six months ended June
30, 2002), which partially due to an increase in income from sale of tangible
and intangible property, which were partially offset by the absence of gain on
equity method (compared to Won 25.7 billion for the six months ended June 30,
2002) which was partially due to losses at SK Communications Co., Ltd. and a
decrease in foreign exchange translation gains (93.2% decrease to Won 2.3
billion for the six months ended June 30, 2003 compared to Won 33.9 billion for
the six months ended June 30, 2002).
Non-Consolidated Other Expenses. Other expenses increased by 37.8% to Won
280.8 billion for the six months ended June 30, 2003 compared to Won 203.8
billion for the six months ended June 30, 2002. Other expenses consists
primarily of interest expense, donations, foreign exchange and translation
losses, loss on equity method and
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miscellaneous expenses. Other expenses increased primarily as a result of
increases in interest expenses, loss on equity method and miscellaneous
expenses. As a percentage of operating revenue, other expenses increased
slightly to 6.1% for the six months ended June 30, 2003 from 5.0% for the six
months ended June 30, 2002.
Non-Consolidated Income Tax. Provision for income taxes increased by 7.9%
to Won 430.3 billion for the six months ended June 30, 2003 from Won 398.7
billion for the six months ended June 30, 2002.
Non-Consolidated Net Income. Principally as a result of the factors
discussed above, SK Telecom's net income increased by 10.5% to 999.2 billion for
the six months ended June 30, 2003 from Won 904.6 billion for the six months
ended June 30, 2002.
CONSENT GRANTED TO POHANG IRON AND STEEL CO., LTD.
On August 5, 2003, pursuant to a request from POSCO, SK Telecom consented
to the deposit by POSCO of 1,696,428 common shares of SK Telecom for issuance of
American Depositary Shares, provided that such deposit occur before November 5,
2003.
SK TELECOM STOCK BUYBACK PROGRAM
On August 11, 2003 SK Telecom concluded the stock buyback program it had
commenced on June 30, 2003. SK Telecom acquired a total of 2,544,600 shares of
its outstanding common stock, all of which were cancelled on August 20, 2003.
The total purchase price for the stock buyback was KRW 524,387,490,000 or an
average of KRW 206,078.55 per share, with the price per share ranging from KRW
192,000 (on July 24, 2003) to KRW 216,000 (on July 15-16, 2003). As a result of
the stock buyback and subsequent cancellation of shares, the total number of SK
Telecom's outstanding common stock declined from 84,821,311 to 82,276,711.
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INCOME STATEMENT
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(KRW MN) 2002 IH 2003 IH
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REVENUE 4,044,769 4,629,598
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OPERATING EXPENSES 2,676,294 3,061,821
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WAGE AND EMPLOYEE BENEFITS 163,715 192,910
COMMISSIONS 893,099 1,082,661
ADVERTISING 177,895 183,976
DEPRECIATION 623,917 661,903
NETWORK INTERCONNECTION 343,395 417,058
LEASED LINE 136,925 149,278
R&D EXPENSES 66,541 94,835
RENT 70,327 64,871
FREQUENCY USAGE FEES 58,640 64,243
BAD DEBT 8,333 5,824
OTHERS 133,507 144,262
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OPERATING INCOME 1,368,476 1,567,753
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OTHER INCOME 138,551 142,500
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INTEREST INCOME 21,988 31,855
INCOMING FEES 47,209 50,269
GAIN ON DISPOSAL OF PROPERTY AND EQUIPMENT 2,154 720
GAIN ON EQUITY METHOD 25,744 -
FOREIGN EXCHANGE AND TRANSLATION GAINS 33,919 2,299
OTHERS 7,537 57,357
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OTHER EXPENSES 203,750 280,751
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INTEREST EXPENSES 149,280 187,382
DONATIONS 2,668 8,455
LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT 4,712 2,933
LOSS ON EQUITY METHOD - 16,183
FOREIGN EXCHANGE AND TRANSLATION LOSS 4,464 775
LOSS ON IMPAIRMENT OF INVESTMENT SECURITIES - 18,717
LOSS ON DISPOSAL OF INVESTMENT ASSETS 2,096 179
OTHERS 40,530 46,127
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ORDINARY INCOME 1,303,277 1,429,526
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INCOME BEFORE INCOME TAXES 1,303,277 1,429,526
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INCOME TAXES 398,656 430,278
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NET INCOME 904,621 999,247
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BALANCE SHEET
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(KRW MN) JUN 02 JUN 03
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TOTAL ASSETS 12,984,207 12,992,667
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CURRENT ASSETS 2,486,072 3,730,287
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CASH AND MARKETABLE SECURITIES 511,207 1,186,456
ACCOUNTS RECEIVABLE - TRADE 1,120,436 1,351,740
SHORT-TERM LOANS 29,883 25,720
ACCOUNTS RECEIVABLE - OTHER 760,029 1,006,839
INVENTORIES 3,649 6,668
OTHERS 60,868 152,864
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INVESTMENT ASSETS 3,954,265 1,396,980
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LONG-TERM INVESTMENT SECURITIES 3,612,068 1,053,172
LONG-TERM LOANS 66,988 51,381
GUARANTEE DEPOSITS 243,660 238,132
OTHERS 31,549 54,295
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PROPERTY AND EQUIPMENT 4,105,068 4,272,990
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LAND 440,751 440,187
BUILDING AND FIXTURE 769,585 797,014
EQUIPMENT 2,239,683 2,437,817
CONSTRUCTION IN PROGRESS 224,265 265,465
OTHERS 430,784 332,507
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INTANGIBLE ASSETS 2,438,802 3,592,410
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LIABILITIES 7,189,844 7,476,260
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CURRENT LIABILITIES 3,914,957 3,885,024
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ACCOUNTS PAYABLE 972,150 664,114
SHORT-TERM BORROWINGS 423,598 838,669
INCOME TAXES PAYABLE 1,515,000 405,115
ACCRUED EXPENSES 396,375 431,718
CURRENT PORTION OF LONG-TERM DEBT 411,417 1,299,690
OTHERS 196,417 245,718
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LONG-TERM LIABILITIES 3,274,887 3,591,237
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LONG-TERM DEBT 3,070,892 2,751,108
FACILITY DEPOSITS 47,278 43,676
ACCRUED SEVERANCE INDEMNITIES 88,708 67,391
OTHERS 68,009 729,062
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SHAREHOLDERS' EQUITY 5,794,363 5,516,407
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CAPITAL STOCK 44,576 44,639
CAPITAL SURPLUS 2,884,430 2,916,150
RETAINED EARNINGS 4,290,442 4,734,158
CAPITAL ADJUSTMENTS (1,425,085) (2,178,540)
TREASURY STOCK (1,192,940) (2,067,784)
UNREALIZED LOSS ON VALUATION OF
LONG-TERM INVESTMENT SECURITIES (233,760) (113,916)
STOCK OPTIONS 1,616 3,160
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SK TELECOM CO., LTD.
By: /s/ Sung Hae Cho
--------------------------------
Name: Sung Hae Cho
Title: Vice President
IR Office
Date: August 22, 2003
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