6-K 1 d6k.htm FORM 6-K

Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO

RULE 13a-16 OR 15d-16 UNDER THE SECURITIES

EXCHANGE ACT OF 1934

For the month of February 2005

KT Corporation

206 Jungja-dong

Bundang-gu, Sungnam

Kyunggi-do

463-711

Korea

(Address of principal executive offices)

(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    

February 4th, 2005

“The Value Networking Company”

(KSE : 30200 / NYSE : KTC)

4th Quarter 2004

Preliminary Earnings Commentary

Disclaimer

This material contains estimated information of unaudited non-consolidated preliminary financial and operating data of KT Corporation (“KT” or “the company”) as of December 31, 2003 and forward-looking statements with respect to the financial condition, results of operations and business of KT. Statements that are not historical facts, including statements about KT’s beliefs and expectations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other future results or performance expressed or implied by such forward-looking statements. Such forward-looking statements were based on current plan, estimates and perfections of KT and the political and economic environment in which KT will operate in the future and therefore you should not place undue reliance on them.

Therefore, KT does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the unaudited financial and operating data contained in this material and such information maybe materially different from the actual results or performance of KT. KT speaks only as of the date it is made, and KT undertakes no obligation to update publicly any of them in light of new information or future events.

The financial and operating data contained in this presentation have been rounded. Since affiliated companies have not finished accounting, estimated figures were used for the equity method gains/losses.

KT’s non-consolidated financial statements and report as of December 31, 2004 will be filed with the Korea Financial Supervisory Commission in March 31, 2005.

Final 3rd quarter 2004 figures are provided in the table below, compared with the third quarter preliminary earnings.

(KRW, billion)		3Q 2004 (Final)		3Q 2004 (Preliminary)		Change
Operating Revenues		2,922.5		2,922.5		0
Operating Expenses		2,411.9		2,411.9		0
Operating Income		510.6		510.6		0
EBITDA		1,093.2		1,093.2		0
Net Income		304.2		310.3		-6.1

If you have any questions in connection with the preliminary earnings, please contact Investor Relations Department of KT Corp.

Tel :		82-31-727-0931~4
Fax :		82-31-727-0949
E-mail:		takim@kt.co.kr

I. Financial Highlights

A. Summary of Income Statement

(KRW billion)

Classification		2004 4Q			2004 3Q			2004 4Q / 2004 3Q					2003 4Q			2004 4Q / 2003 4Q
								amount		%D						amount		%D
Revenue		2,871.2			2,922.5			-51.4		-1.8	%		2,862.8			8.3		0.3	%
Operating Expense		2,583.9			2,411.9			172.0		7.1	%		2,473.7			110.2		4.5	%
o Depreciation		628.6			582.6			46.0		7.9	%		691.1			-62.5		-9.0	%
o Labor		572.7			562.9			9.8		1.7	%		541.0			31.7		5.9	%
o Commissions		174.8			162.7			12.1		7.5	%		180.8			-6.0		-3.3	%
o Sales promotion		105.7			87.2			18.5		21.2	%		73.3			32.4		44.2	%
o Sales commission		68.2			70.8			-2.6		-3.7	%		31.4			36.8		117.1	%
o Provision for doubtful accounts		100.7			50.0			50.8		101.6	%		112.4			-11.7		-10.4	%
o Advertising		37.8			31.1			6.7		21.7	%		48.8			-11.0		-22.5	%
o Repairs and maintenance		102.8			124.1			-21.3		-17.1	%		139.8			-37.0		-26.4	%
o Cost of goods sold		77.5			79.0			-1.6		-2.0	%		50.1			27.4		54.6	%
o Cost of service provided		473.8			449.6			24.2		5.4	%		403.4			70.4		17.5	%
- Cost of service		125.9			145.1			-19.2		-13.2	%		127.0			-1.1		-0.9	%
- LM interconnection		241.3			193.5			47.8		24.7	%		185.7			55.6		29.9	%
- International settlement		50.4			52.4			-2.0		-3.9	%		42.3			8.1		19.1	%
- Cost of SI/NI service		56.2			58.6			-2.3		-4.0	%		48.4			7.8		16.2	%
o R&D		85.9			64.0			21.9		34.1	%		69.7			16.2		23.3	%
o Others		155.4			148.0			7.4		5.0	%		131.9			23.5		17.8	%
Operating Income		287.2			510.6			-223.3		-43.7	%		389.1			-101.9		-26.2	%
Operating Margin		10.0	%		17.5	%		-7.5% P					13.6	%		-3.6% P
EBITDA		915.9			1,093.2			-177.3		-16.2	%		1,080.2			-164.3		-15.2	%
EBITDA Margin		31.9	%		37.4	%		-5.5% P					37.7	%		-5.8% P
Non-operating Income		659.6			92.6			567.1		612.7	%		-15.0			674.6		N/A
o Gain on disposition of investments		7.8			2.7			5.1		191.6	%		0.6			7.2		1200.8	%
o Interest income		36.5			28.8			7.7		26.6	%		12.9			23.6		182.8	%
o FX transaction gain		7.7			1.2			6.5		554.5	%		4.2			3.5		82.9	%
o FX translation gain		513.8			8.6			505.2		5882.6	%		-56.5			570.3		N/A
o USO fund		62.3			14.5			47.8		329.4	%		-12.2			74.5		N/A
o Others		31.5			36.8			-5.3		-14.3	%		36.0			-4.5		-12.4	%
Non-operating Expense		389.8			223.7			166.1		74.3	%		297.7			92.1		30.9	%
o Interest expense		114.1			124.5			-10.4		-8.3	%		104.4			9.7		9.3	%
o FX transaction loss		16.2			2.4			13.8		582.6	%		2.7			13.5		499.7	%
o FX translation loss		54.3			0.8			53.5		6681.7	%		-3.0			57.3		N/A
o Loss on equity method		40.5			17.8			22.7		127.5	%		43.6			-3.1		-7.2	%
- KTF earning contribution		48.0			22.9			25.1		109.6	%		52.8			-4.8		-9.1	%
- Amortization expense on goodwill		-48.8			-89.9			41.1		N/A			-85.1			36.3		N/A
- Other subsidiaries		-37.7			-12.5			-25.2		N/A			3.8			-41.5		N/A
o Loss on disposition of fixed assets		26.2			20.6			5.6		27.4	%		28.1			-1.9		-6.6	%
o Others		138.5			57.6			80.9		140.3	%		121.9			16.6		13.6	%
Ordinary Income		557.1			379.5			177.6		46.8	%		76.4			480.7		629.0	%
Income Tax Expense		160.9			75.3			85.6		113.7	%		-5.2			166.1		N/A
Net Income		396.2			304.2			92.0		30.2	%		81.6			314.6		385.4	%
EPS (won)
EPS		1,880			1,443			437		30.3	%		382			1,498		392.1	%
Diluted EPS		1,733			1,231			502		40.8	%		348			1,385		398.0	%

Items under Loss on Equity Method are expressed as positive for gains and negative for losses for convenience.

B. Summary of Balance Sheet

(KRW billion)

Classification		2004 4Q			2004 3Q			2004 4Q / 2004 3Q					2003 4Q			2004 4Q / 2003 4Q
								amount		%D						amount		%D
Total Assets		20,068.2			20,563.0			-494.8		-2.4	%		19,573.2			495.0		2.5	%
Current assets		5,295.7			5,171.4			124.2		2.4	%		3,360.5			1,935.2		57.6	%
o Quick assets		5,195.0			5,052.7			142.3		2.8	%		3,203.6			1,991.4		62.2	%
- Cash and cash equivalents		3,126.2			2,645.1			481.1		18.2	%		933.3			2,192.9		235.0	%
o Inventories		100.7			118.7			-18.0		-15.2	%		156.9			-56.2		-35.8	%
Non-current assets		14,772.6			15,391.6			-619.0		-4.0	%		16,212.7			-1,440.1		-8.9	%
o Investments		3,836.4			4,456.1			-619.7		-13.9	%		4,719.3			-882.9		-18.7	%
- KTF shares		2,428.1			2,435.2			-7.2		-0.3	%		2,643.6			-215.5		-8.2	%
- Deferred income tax assets		204.8			326.2			-121.3		-37.2	%		313.9			-109.1		-34.7	%
- Long-term loans		443.2			499.3			-56.1		-11.2	%		592.9			-149.7		-25.2	%
- Others		760.3			1,195.5			-435.2		-36.4	%		1,168.9			-408.6		-35.0	%
o Tangible assets		10,637.1			10,702.0			-65.0		-0.6	%		11,245.6			-608.5		-5.4	%
o Intangible assets		299.1			233.4			65.7		28.1	%		247.8			51.3		20.7	%
Total Liabilities		12,621.7			13,498.9			-877.2		-6.5	%		12,760.5			-138.8		-1.1	%
Current liabilities		6,098.2			4,784.9			1,313.4		27.4	%		3,491.9			2,606.3		74.6	%
o Interest-bearing debts		3,995.9			2,707.9			1,288.0		47.6	%		1,304.3			2,691.6		206.4	%
o Accounts payable		683.5			557.7			125.9		22.6	%		893.3			-209.8		-23.5	%
o Others		1,418.8			1,519.3			-100.5		-6.6	%		1,294.3			124.5		9.6	%
Long-term liabilities		6,523.5			8,714.0			-2,190.5		-25.1	%		9,268.6			-2,745.1		-29.6	%
o Interest-bearing debts		5,038.8			7,147.2			-2,108.4		-29.5	%		7,716.6			-2,677.8		-34.7	%
o Installation deposit		1,087.3			1,115.3			-28.0		-2.5	%		1,229.7			-142.4		-11.6	%
o Others		397.4			451.5			-54.1		-12.0	%		322.3			75.1		23.3	%
Total Stockholders’ Equity		7,446.5			7,064.1			382.4		5.4	%		6,812.7			633.8		9.3	%
Common stock		1,561.0			1,561.0			0.0		0.0	%		1,561.0			0.0		0.0	%
Capital surplus		1,440.3			1,440.3			0.0		0.0	%		1,440.3			0.0		0.0	%
Retained earnings		8,399.1			8,003.0			396.2		5.0	%		7,775.9			623.2		8.0	%
Capital adjustment		-3,953.9			-3,940.1			-13.8		N/A			-3,964.5			10.6		N/A
Total Interest-bearing Debt		9,034.7			9,855.2			-820.5		-8.3	%		9,020.9			13.8		0.2	%
Net Debt		5,908.5			7,210.0			-1,301.5		-18.1	%		8,087.6			-2,179.1		-26.9	%
Net Debt / Total Stockholders’ Equity		79.3	%		102.1	%		-22.7% p					118.7	%		-39.4% P

1. Assets: KRW 20,068.2 billion, a decrease of 494.8 billion (2.4%) from the previous quarter

• Current assets increased due to increase in cash flow from operating activities and foreign currency holdings, which is for the redemption of USD denominated EB and BW maturing in January 2005.

• Non-current assets decreased due to reclassification of KTF CB as current assets (347.8 billion won) and loss from reduction in deferred income tax assets.

2. Liabilities: KRW 12,621.7 billion, a decrease of 877.2 billion (6.5%) from the previous quarter

• Current liabilities increased as current portion of long term debt rose mainly due to exercise of USD denominated EB put-option.

• Approximately KRW 500 billion of liabilities decreased due to appreciation of Korean Won against US dollar in 4Q.

II. Operating Results

A. Revenues

1. Overview

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Revenue		2,871.2		2,922.5		-51.4		-1.8	%		2,862.8		8.3		0.3	%
o Internet access		628.2		624.2		4.0		0.6	%		583.6		44.6		7.6	%
o Internet application		50.3		55.2		-4.9		-8.8	%		33.0		17.3		52.3	%
o Data		340.5		343.0		-2.5		-0.7	%		342.5		-2.0		-0.6	%
o Telephone		1,110.7		1,106.3		4.4		0.4	%		1,149.2		-38.5		-3.3	%
o LM		446.3		454.3		-8.0		-1.8	%		496.7		-50.4		-10.1	%
o Wireless		194.2		244.2		-50.0		-20.5	%		167.8		26.5		15.8	%
o Satellite		29.3		29.5		-0.3		-0.9	%		30.1		-0.8		-2.8	%
o Real estate		20.0		18.1		1.9		10.5	%		13.7		6.2		45.5	%
o Others		51.8		47.9		3.9		8.1	%		46.2		5.5		11.9	%

• In the fourth quarter of 2004, revenue increased compared to the corresponding period of 2003 due to growth in the number of broadband and PCS resale subscribers.

• Compared to the third quarter of 2004, total operating revenue decreased. Decrease in sales of PCS handsets and the lowering of land-to-mobile tariff, starting from September 1, were the main factors behind the revenue decline.

2. Internet Revenue

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Internet Access		628.2		624.2		4.0		0.6	%		583.6		44.6		7.6	%
o Broadband		558.0		545.4		12.6		2.3	%		517.5		40.5		7.8	%
- Megapass		529.4		524.5		4.9		0.9	%		502.2		27.2		5.4	%
- Nespot		28.6		20.9		7.7		36.8	%		15.3		13.3		86.9	%
o Kornet		69.3		77.6		-8.3		-10.7	%		64.4		4.9		7.6	%
o Others		0.9		1.1		-0.2		-21.9	%		1.7		-0.8		-49.1	%
Internet Application		50.3		55.2		-4.9		-8.8	%		33.0		17.3		52.3	%
o IDC		25.9		23.2		2.7		11.5	%		17.4		8.5		48.6	%
o Bizmeka		12.9		18.5		-5.6		-30.2	%		7.9		5.0		63.1	%
o Others		11.5		13.5		-2.0		-14.6	%		7.7		3.8		49.5	%
Broadband Subscriber No. (’000)		6,078		6,005		73		1.2	%		5,589		489		8.7	%
Nespot Subscriber No. (’000)		418		404		14		3.5	%		344		74		21.5	%

• Internet access revenue continued its increasing trend, topping 3Q 2004 and 4Q 2003 by 0.6% and 7.6%, respectively. This can be explained by an increase in the number of Megapass subscribers boosted by VDSL.

• Internet application revenue showed improvement aided by higher demand for IDC (Internet Data Center) servers and increasing number of Bizmeka subscribers (2003. 4Q 32,543 ® 2004. 4Q 61,750), compared to the fourth quarter of 2003. Compared to the third quarter of 2004, “Marketplace,” one of the B2B services of Bizmeka, caused decrease in Internet application revenue due to decrease in transactions among companies as they reduced expenses at the end of the year, affected by general economic downturn.

3. Telephone Revenue

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Telephone Revenue		1,110.7		1,106.3		4.4		0.4	%		1,149.2		-38.5		-3.3	%
Subscriber Connection		394.1		339.8		54.4		16.0	%		351.3		42.8		12.2	%
o Subscription fee		17.0		17.4		-0.5		-2.6	%		26.9		-9.9		-36.9	%
o Basic monthly fee		282.4		284.3		-1.9		-0.7	%		285.8		-3.4		-1.2	%
o Installation		10.2		8.8		1.4		15.7	%		12.4		-2.2		-17.9	%
o Interconnection		84.5		29.2		55.3		189.2	%		26.2		58.4		222.8	%
o Others		0.0		0.0		0.0		N/A			0.0		0.0		N/A
Local		277.2		292.4		-15.2		-5.2	%		308.9		-31.7		-10.3	%
o Usage		205.3		207.2		-1.9		-0.9	%		234.3		-29.0		-12.4	%
o Interconnection		23.4		38.2		-14.8		-38.7	%		35.6		-12.2		-34.3	%
o Others		48.4		47.0		1.5		3.1	%		39.0		9.4		24.2	%
Domestic Long Distance		180.3		213.3		-33.0		-15.5	%		231.5		-51.1		-22.1	%
o Usage		196.5		197.2		-0.7		-0.4	%		219.4		-22.9		-10.5	%
o Interconnection		-16.5		15.8		-32.3		N/A			11.7		-28.2		-240.8	%
o Others		0.4		0.4		0.0		2.1	%		0.3		0.0		10.2	%
International Long Distance		58.5		60.5		-2.1		-3.4	%		64.8		-6.3		-9.7	%
International settlement		44.5		43.7		0.8		1.7	%		36.5		8.0		21.9	%
VoIP		4.1		4.7		-0.6		-12.3	%		2.6		1.5		56.7	%
VAS		83.5		84.5		-1.1		-1.3	%		89.5		-6.1		-6.8	%
Public telephone		11.1		13.1		-2.0		-15.3	%		14.7		-3.7		-25.0	%
114 Phone directory service		31.6		32.0		-0.4		-1.2	%		30.8		0.9		2.9	%
Others		25.8		22.2		3.7		16.5	%		18.6		7.2		38.9	%

• Revenue from telephone business was tending downwards due to drop in revenue from subscription fee as the number of subscribers fell, and overall decline in traffic volume. However, we note that the decreasing rate has substantially subsided.

• On the other hand, interconnection revenue increased due to the change in land-to-land, mobile-to-land interconnection rate in September 2004.

4. LM (Land to Mobile) Interconnection Revenue

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
	LM revenue				446.3					454.3				-8.0				-1.8	%		496.7		-50.4		-10.1	%
LM interconnection cost		241.3		193.5		47.8		24.7	%		185.7		55.6		29.9	%

• LM revenue fell. Main factors were the 2.2% tariff cut in effect as of September 1, 2004 coupled with the offering of 5 minute free call per month until November 2005.

• It takes about three months for operators to verify the actual volume of LM traffic. Thus, KT estimates LM interconnection cost reflecting historical traffic at the time of quarterly closing and makes appropriate adjustments in the following quarter. This contributes an increase in LM interconnection cost in 4Q compare to the previous quarter.

< Quarterly LM Interconnection Cost >

(KRW billion)

Classification		2004 1Q		2004 2Q		2004 3Q		2004 4Q
	LM Interconnection Cost				224.7				210.1		193.5		241.3

5. Data Revenue

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Data		340.5		343.0		-2.5		-0.7	%		342.5		-2.0		-0.6	%
o Leased Line		294.1		298.2		-4.1		-1.4	%		293.6		0.5		0.2	%
- Local		126.8		130.2		-3.5		-2.7	%		115.1		11.7		10.2	%
- Domestic long distance		85.5		89.7		-4.2		-4.6	%		102.0		-16.5		-16.2	%
- International long distance		4.6		4.4		0.3		5.8	%		5.3		-0.7		-13.3	%
- Broadcasting & others		77.2		73.9		3.3		4.4	%		71.2		6.0		8.4	%
o Other Data		46.4		44.8		1.6		3.6	%		48.9		-2.5		-5.1	%
- Packet date		4.4		4.7		-0.3		-5.9	%		7.3		-2.9		-39.9	%
- National network ATM		21.3		22.8		-1.4		-6.3	%		19.5		1.9		9.5	%
- Others		20.7		17.3		3.3		19.3	%		22.1		-1.4		-6.4	%

• Data revenue is getting stabilized due to higher demand for our local leased lines by mobile operators with increased usage of wireless date.

6. Wireless Revenue

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
	Wireless Revenue				194.2					244.2				-50.0				-20.5	%		167.8		26.5		15.8	%
o PCS resale		191.0		239.6		-48.6		-20.3	%		166.9		24.1		14.5	%
- PCS service		187.0		183.7		3.3		1.8	%		122.5		64.6		52.7	%
- Handset sales		3.9		55.9		-51.9		-93.0	%		44.4		-40.5		-91.2	%
o Other wireless revenue		3.3		4.6		-1.4		-29.5	%		0.9		2.3		256.4	%
PCS Resale Expense		112.0		149.0		-37.0		-24.8	%		103.1		8.9		8.6	%
- Cost of handset		43.8		57.4		-13.7		-23.8	%		51.6		-7.8		-15.2	%
- KTF network usage cost		68.2		91.5		-23.3		-25.5	%		51.5		16.7		32.4	%
Resale Subscribers (’000)		2,230		2,234		-4.0		-0.2	%		1,555		675		43.4	%

• Wireless revenue was down from the previous quarter of 2004 as a result of lower handset sales. Compared to the fourth quarter of 2003, wireless revenue increased due to higher usage as the number of PCS resale subscribers increased.

• KTF network usage cost in 4Q decreased as a result of adoption of settlement for volume discount over 200 million minutes/month reduction (89.39 won/min ® 87.09 won/min) and retroactive adjustment made in 4Q.

7. Satellite and Other Revenues

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
	Satellite				29.3					29.5				-0.3				-0.9	%		30.1		-0.8		-2.8	%
Real estate		20.0		18.1		1.9		10.5	%		13.7		6.2		45.5	%
Others		51.8		47.9		3.9		8.1	%		46.2		5.5		11.9	%
o SI/NI		48.9		47.5		1.4		3.0	%		47.2		1.8		3.8	%

B. Operating Expenses

1. Overview

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Operating Expense		2,583.9		2,411.9		172.0		7.1	%		2,473.7		110.2		4.5	%
o Labor		572.7		562.9		9.8		1.7	%		541.0		31.7		5.9	%
o Depreciation		628.6		582.6		46.0		7.9	%		691.1		-62.5		-9.0	%
o Commissions		174.8		162.7		12.1		7.5	%		180.8		-6.0		-3.3	%
o Sales promotion		105.7		87.2		18.5		21.2	%		73.3		32.4		44.2	%
o Sales commission		68.2		70.8		-2.6		-3.7	%		31.4		36.8		117.1	%
o Provision for doubtful accounts		100.7		50.0		50.8		101.6	%		112.4		-11.7		-10.4	%
o Advertising		37.8		31.1		6.7		21.7	%		48.8		-11.0		-22.5	%
o Repairs and maintenance		102.8		124.1		-21.3		-17.1	%		139.8		-37.0		-26.4	%
o Cost of goods sold		77.5		79.0		-1.6		-2.0	%		50.1		27.4		54.6	%
o Cost of service provided		473.8		449.6		24.2		5.4	%		403.4		70.4		17.5	%
o Others		241.3		212.0		29.3		13.8	%		201.6		39.7		19.7	%

• Operating expense increased slightly, compared to the third quarter of 2004 and the fourth quarter of 2003. Main factors were increases in depreciation resulting from increased CAPEX, marketing expenses to promote handsets such as Ann, Nespot Swing, and Du:, and provision for doubtful accounts.

• “Ann” is a newly introduced handset which applied convenient features of mobile handset to cordless phone.

2. Labor Expense

(KRW billion)

		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
Classification						amount		D %					amount		D %
Total Labor Expense		572.7		562.9		9.8		1.7	%		541.0		31.7		5.9	%
o Salaries & Wages		411.8		406.8		5.0		1.2	%		401.9		9.9		2.5	%
- Salaries		252.7		249.5		3.2		1.3	%		236.9		15.8		6.7	%
- Wages		157.4		156.5		0.9		0.6	%		164.0		-6.6		-4.0	%
* Over-time payment		30.6		31.8		-1.3		-3.9	%		35.6		-5.0		-14.2	%
* Performance-based bonus		88.9		109.6		-20.7		-18.9	%		97.3		-8.4		-8.6	%
o Employee Benefits		116.1		107.3		8.9		8.3	%		113.8		2.3		2.1	%
- Bonus		34.0		31.1		2.9		9.4	%		34.5		-0.5		-1.4	%
o Provision for Retirement		44.7		48.8		-4.0		-8.3	%		25.3		19.4		76.8	%

• Labor expense increased as a result of increases in basic salary (2% over 2003) in accordance with collective bargaining agreement in the third quarter of 2004 and provision for retirement.

• The reason for lower provision for retirement in the fourth quarter of 2003 is that allowance for employee retirement benefits is temporarily decreased as a result of the employee downsizing implemented in September 2003.

3. Depreciation

(KRW billion)

		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
Classification						amount		D %					amount		D %
Depreciation		628.6		582.6		46.0		7.9	%		691.1		-62.5		-9.0	%

< CAPEX Spending >

(KRW billion)

Classification		2004 1Q		2004 2Q		2004 3Q		2004 4Q
CAPEX		192.6		520.6		561.4		543.9
Depreciation		557.4		510.5		582.6		628.6

4. Commissions

(KRW billion)

		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
Classification						amount		D %					amount		D %
Total Commissions		174.8		162.7		12.1		7.5	%		180.8		-6.0		-3.3	%
o Commissions to KT Linkus		28.4		27.6		0.7		2.7	%		32.3		-3.9		-12.2	%
o Commissions to 114 Phone Directory		33.5		31.0		2.5		8.0	%		33.0		0.5		1.4	%
o Commissions to Call Center		28.0		28.9		-0.9		-3.2	%		28.3		-0.3		-1.2	%
o Others		85.0		75.2		9.8		13.1	%		87.2		-2.2		-2.5	%

5. Sales Promotion, Sales Commission, Provision for Doubtful Accounts, Advertising

(KRW billion)

		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
Classification						amount		D %					amount		D %
Sales Promotion		105.7		87.2		18.5		21.2	%		73.3		32.4		44.2	%
Sales Commission		68.2		70.8		-2.6		-3.7	%		31.4		36.8		117.1	%
Provision for Doubtful Accounts		100.7		50.0		50.8		101.6	%		112.4		-11.7		-10.4	%
Advertising		37.8		31.1		6.7		21.7	%		48.8		-11.0		-22.5	%

• Sales promotion increased due to intensified sales activities to vitalize newly introduced handsets, such as Ann, Nespot Swing, Du: in the fourth quarter of 2004.

• Sales commission increased compared to the corresponding period of 2003 due to temporary rehiring of ex-employee as sales agent for 1 year.

• Provision for doubtful accounts increased due to write-off delinquent accounts of KRW 102.9 billion.

< Allowance and Provision for Doubtful Accounts >

(KRW billion)

Classification		2004 4Q			2004 3Q			2004 2Q			2004 1Q			2003 4Q			2003 3Q			2003 2Q
Account Receivable		2,178.9			2,529.9			2,508.9			2,444.0			2,329.8			2,310.4			2,398.0
Allowance for Doubtful Accounts		532.9			523.6			503.3			484.8			465.8			418.3			344.4
Allowance Rate		24.5	%		20.7	%		20.1	%		19.8	%		20.0	%		18.1	%		14.4	%
Provision for Doubtful Accounts		100.7			50.0			49.1			39.2			112.4			79.6			60.6
Write-off		102.9			29.5			30.6			20.2			64.9			5.7			20.1

6. Repairs and Maintenance

(KRW billion)

		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
Classification						amount		D %					amount		D %
Repairs & Maintenance		102.8		124.1		-21.3		-17.1	%		139.8		-37.0		-26.4	%

• Repairs and Maintenance cost for strengthen the competitiveness was intensified in the first half in response to FNP implementation began in Seoul and Busan in the second half of 2004; thus, it decreased in 4Q.

7. Cost of Goods Sold

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Cost of Goods Sold		77.5		79.0		-1.6		-2.0	%		50.1		27.4		54.6	%
o PCS Handset Cost		43.8		57.4		-13.7		-23.8	%		51.6		-7.8		-15.2	%
o Wireless LAN Card		1.7		1.6		0.1		3.8	%		-6.2		7.9		N/A
o PDA and Notebook		15.2		12.8		2.4		18.7	%		3.5		11.7		335.1	%
o Others		16.8		7.2		9.7		134.9	%		1.2		15.6		1300.5	%

• Cost of goods sold increased compared to fourth quarter of 2003. This was mainly due to a rise in handset cost driven by newly introduced handsets such as Ann, Nespot Swing, and Du: and server sales in conjunction with the enTUM service

8. Cost of Services Provided

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Cost of Service Provided		473.8		449.6		24.2		5.4	%		403.4		70.4		17.5	%
o Cost of Service		125.9		145.1		-19.2		-13.2	%		127.0		-1.1		-0.9	%
- PCS resale network cost to KTF		68.2		91.5		-23.3		-25.5	%		51.5		16.7		32.4	%
- B&A service cost		15.7		16.3		-0.7		-4.3	%		25.6		-9.9		-38.9	%
- Others		42.0		37.3		4.8		12.8	%		49.9		-7.9		-15.7	%
o SI/NI Service Cost		56.2		58.6		-2.3		-4.0	%		48.4		7.8		16.2	%
o International Settlement Cost		50.4		52.4		-2.0		-3.9	%		42.3		8.1		19.1	%
o LM Interconnection Cost		241.3		193.5		47.8		24.7	%		185.7		55.6		29.9	%

• Cost of services provided increased due to an increase in land-to-mobile interconnection cost, compared to the third quarter of 2004 and the fourth quarter of 2003. It takes about three months for operators to verify the actual volume of LM traffic. Thus, KT estimates LM interconnection cost reflecting historical traffic at the time of quarterly closing and makes appropriate adjustments the following quarter. This contributes an increase in LM interconnection cost in 4Q compare to the previous quarter.

• PCS resale network cost to KTF in 4Q decreased as a result of adoption of settlement for volume discount over 200 million minutes/month reduction (89.39 won/min ® 87.09 won/min) and retroactive adjustment made in 4Q.

C. Non-Operating Revenues

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Non-Operating Revenue		659.6		92.6		567.1		612.7	%		-15.0		674.6		N/A
o Gains on disp. of investments		7.8		2.7		5.1		191.6	%		0.6		7.2		1200.8	%
o Interest income		36.5		28.8		7.7		26.6	%		12.9		23.6		182.8	%
o FX transaction gain		7.7		1.2		6.5		554.5	%		4.2		3.5		82.9	%
o FX translation gain		513.8		8.6		505.2		5882.6	%		-56.5		570.3		N/A
o USO Fund		62.3		14.5		47.8		329.4	%		-12.2		74.5		N/A
o Others		31.5		36.8		-5.3		-14.3	%		36.0		-4.5		-12.4	%

• Non-operating revenue increased, compared to the third quarter of 2004 and the fourth quarter of 2003, benefiting from increase in FX translation gain due to the appreciation of Korean Won against US dollar.

• USO compensations for both 2003 and 2004 have been finalized and they were more than KT has originally estimated. (KRW 82.6 billion in 2003 and KRW 81.3 billion in 2004) The differences were recognized in the fourth quarter of 2004; thus, USO fund increased compared to the third quarter of 2004 and the fourth quarter of 2003.

< USO Fund >

(KRW billion)

Classification		amount
Finalized compensation in 2003 (A)		82.6
Estimated compensation in 2003 (B)		58.3
Differences (C=A-B)		24.3
Estimated compensation in 2004 (D)		81.3
Compensation recognized until 3Q (E)		43.3
Differences (F=D-E)		38.0
Total compensation recognized in 4Q 2004 (G=C+F)		62.3

D. Non-Operating Expenses

(KRW billion)

Classification		2004 4Q		2004 3Q		2004 4Q / 2004 3Q					2003 4Q		2004 4Q / 2003 4Q
						amount		D %					amount		D %
Non-Operating Expenses		389.8		223.7		166.1		74.3	%		297.7		92.1		30.9	%
o Interest expense		114.1		124.5		-10.4		-8.3	%		104.4		9.7		9.3	%
o FX transaction loss		16.2		2.4		13.8		582.6	%		2.7		13.5		499.7	%
o FX translation loss		54.3		0.8		53.5		6681.7	%		-3.0		57.3		N/A
o Loss on equity method		40.5		17.8		22.7		127.5	%		43.6		-3.1		-7.2	%
o Loss on disp. of fixed assets		26.2		20.6		5.6		27.4	%		28.1		-1.9		-6.6	%
o Others		138.5		57.6		80.9		140.3	%		121.9		16.6		13.6	%

• FX translation loss increased due to foreign currency holdings of US$ 350 million, which is for the redemption of USD denominated EB and BW maturing in January 2005.

• Loss on equity method increased compared to the third quarter of 2004. Major factor was temporary amortization on goodwill of KRW 40.1 billion due to weak results of KDB.

< Schedule for Amortization on Goodwill >

(KRW billion)

Classification		2004		2005		2006		2007		2008		2009		2010
Total		326.0		181.7		181.9		154.5		141.1		141.1		76.0

• Others increased as a result of derivatives translation loss, which were carried out to hedge FX risks.

< Derivatives Translation Loss >

(KRW billion)

Classification		2004		2004 4Q
FX translation gain		589.1		513.8
FX translation loss		66.0		54.3
Derivatives translation loss		144.1		108.1
Net FX translation gain		379.0		351.4

E. Net Income

(KRW billion)

Classification		2004 4Q			2004 3Q			2004 4Q / 2004 3Q					2003 4Q			2004 4Q / 2003 4Q
								amount		D %						amount		D %
Income before Tax		557.1			379.5			177.6		46.8	%		76.4			480.7		629.0	%
o Income tax		160.9			75.3			85.6		-25.4	%		-5.2			166.1		N/A
o Effective tax rate		28.9	%		19.8	%		9.0% P					-6.8	%		35.7% P
Net Income		396.2			304.2			92.0		30.2	%		81.6			314.6		385.4	%
EPS (won)
EPS		1,880			1,443			437		30.3	%		382			1,498		392.1	%
Diluted EPS		1,733			1,231			502		40.8	%		348			1,385		398.0	%

• Higher CAPEX lead to a temporary tax credit for investment of 81.5 billion won in the fourth quarter of 2004. However, effective tax rate stood at 28.9%. A factor for the tax increase is the deduction of the total balance of 120.8 billion won in deferred income tax assets as related to loss on equity method on KTF.

• Net income increased, benefiting from increase in FX translation gain due to the appreciation of Korean Won against US dollar in the fourth quarter of 2004.

• Normalized net income for the year of 2004 is approximately 1.1 trillion won considering non-recurring gains and losses as below.

< Net Income for FY 2004>

(KRW billion)

Classification		Amount
Net Income (A)		1255.5
(Non-recurring gains and losses)
- FX translation gain		589.1
- FX translation loss		-66.0
- Derivatives translation loss		-144.1
- Impairment losses on deferred income tax assets		-120.8
- Impairment losses on goodwill of KDB		-40.1
Total		218.1
Effective tax rate		30.2	%
Total amount after tax (B)		152.2
Normalized Net Income (A-B)		1103.3

F. APPENDIX: Summary of Annual Income Statement

(KRW billion)

Classification		2004			2003			2004 / 2003
								amount		D %
Operating Revenue		11,850.8			11,574.5			276.3		2.4	%
Operating Expense		9,723.7			10,331.4			-607.7		-5.9	%
o Depreciation		2,279.1			2,446.8			-167.7		-6.9	%
o Labor		2,284.4			3,337.2			-1,052.8		-31.5	%
o Commissions		658.5			612.9			45.6		7.4	%
o Sales promotion		372.4			235.5			136.9		58.1	%
o Sales commission		235.1			108.8			126.3		116.1	%
o Provision for doubtful accounts		239.0			301.1			-62.1		-20.6	%
o Advertising		142.9			152.8			-9.9		-6.5	%
o Repairs and maintenance		418.5			371.6			46.9		12.6	%
o Cost of goods sold		554.8			275.9			278.9		101.1	%
o Cost of service provided		1,746.0			1,761.9			-15.9		-0.9	%
- Cost of service		493.8			437.7			56.1		12.8	%
- LM interconnection		869.6			1,025.2			-155.6		-15.2	%
- International settlement		189.9			185.4			4.5		2.4	%
- Cost of SI/NI service		192.7			113.6			79.1		69.6	%
o Research and development		254.4			232.1			22.3		9.6	%
o Others		538.6			494.8			43.8		8.8	%
Operating Income		2,127.1			1,243.1			884.0		71.1	%
Operating Margin		17.9	%		10.7	%		7.2% P
EBITDA		4,406.2			3,689.9			716.3		19.4	%
EBITDA Margin		37.2	%		31.9	%		5.3% P
Non-operating Income		988.3			1,132.8			-144.5		-12.8	%
o Gain on disposition of investments		40.8			775.9			-735.1		—
o Interest income		102.4			78.6			23.8		30.3	%
o FX transaction gain		12.2			13.0			-0.8		-5.9	%
o FX translation gain		589.1			7.3			581.8		7969.4	%
o USO fund		105.9			66.1			39.8		60.2	%
o Others		138.0			191.9			-53.9		-28.1	%
Non-operating Expense		1,315.9			1,086.3			229.6		21.1	%
o Interest expense		450.7			432.2			18.5		4.3	%
o FX transaction loss		25.3			12.6			12.7		100.5	%
o FX translation loss		66.0			7.7			58.3		756.6	%
o Loss on equity method		235.5			155.3			80.2		51.7	%
o Loss on disposition of fixed assets		95.5			86.8			8.7		10.1	%
o Others		442.9			391.7			51.2		13.1	%
Ordinary Income		1,799.5			1,289.6			509.9		39.5	%
Income Tax Expense		544.0			459.5			84.5		18.4	%
Net Income		1,255.5			830.1			425.4		51.2	%
EPS(won)		5,957			3,841			2,116.0		55.1	%
Diluted EPS(won)		5,145			3,344			1,801.0		53.9	%

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.

Dated: February 4, 2005

KT Corporation
By:		/s/ Wha - Joon Cho
Name:		Wha - Joon Cho
Title:		Managing Director