TAIHAN - a highly competitive world-class enterprise Financial Highlights 3 Chairman's Statement 4 President’s Review 6 Introduction 8 Review of Operations 12 Financial Statements

"TAIHAN - a highly competitive world-class enterprise"

Profile

Taihan Electric Wire Co., Ltd. (TAIHAN) is becoming a global industry leader by implementingstrategic reforms and promoting corporate value. Backed up by high-quality products and superiorservice, TAIHAN earns favorable responses from customers around the world.

TAIHAN continues to develop innovative, high-value-added core products like the extra high-voltage cable and accessories, optical fibers, and stainless steel products.

TAIHAN pursues high investment returns for its shareholders, a rewarding life for its employees,and meaningful contributions to the betterment of society.

Financial Highlights 3

Chairman's Statement 4

President’s Review 6

Introduction 8

Review of Operations 12

Financial Statements 25

Corporate Information 42

Organization 42

History 43

Contents

Note : U.S. Dollar amounts have been translated, for convenience only, at the exchange rate of W1,200.4=US$1.

Millions of Korean Won Thousands of U.S Dollars

2002 2001 2000 2002

1,252,151 1,270,318 1,273,213 $ 1,043,111

88,251 70,379 35,410 73,518

63,269 50,531 26,180 52,707

1,412,342 1,372,633 1,262,104 1,176,559

603,412 580,577 517,871 502,676

Korean Won U.S Dollars

1,990 1,579 818 $ 1,658

SalesIncome before Income TaxesNet IncomeTotal AssetsStockholder's Equity

Earnings Per Share

Financial HighlightsFor the years ended December 31, 2002, 2001 and 2000

Exports Ratio (%)

Net Income (Billion Won)

Sales (Billion Won)

Sales by Business Segment(2002)

73%

25%

2%

ANNUAL REPORT - 4

TAIHAN's new vision is to grow into a world-class enterprise. In today's rapidly changing

management environment, TAIHAN is practicing ‘global management’ by making a conversion of

thinking so performance and creativity are rewarded.

"Let's repay the nation by fostering key industries!"

Sull Won-ryang / Chairman & CEO

Chairman’s Statement

5-ANNUAL REPORT

Since being founded under the slogan "Let's repay the nation by fostering key industries!", TAIHAN hascontinuously made technical reforms to ensure a rich history as an enterprise that represents one of Korea's keyindustries.

Considering humanity

Just as we cannot expect to achieve corporate success without technical reforms and R&D, TAIHAN's industry-wide reputation is the result of unparalleled efforts in these two mission-critical activities. These results havepropelled TAIHAN into a world-class enterprise with two core businesses, i.e. cables and other metallic products.

Boasting a recognized international competitive edge, TAIHAN has steadily enjoyed growth and diversificationcentered on the unrivaled extra high-voltage cables and optical communication business. This includes thestainless steel business, which contributes significantly to the development of other related industries in Korea andaround the world.

TAIHAN operates local subsidiaries in the U.S., Mongolia, and South Africa, the first such operation by domesticmanufacturers. This global effort ensures TAIHAN's international name recognition and demonstrates acompany-wide commitment to quality.

TAIHAN's new vision is to grow into a world-class enterprise. In today's rapidly changing managementenvironment, TAIHAN is practicing "global management" by making a conversion of thinking so performanceand creativity are rewarded.

Investment in management resources as a key business and maximization of corporate value by eliminatinginternal inefficiency are thrusting TAIHAN to the top of the industry.

TAIHAN is fulfilling this vision by creating a new corporate culture full of passion. We are strengthening ourbrand image to impress customers with our quality and service. All members of TAIHAN are committed toprotecting the environment and building a better tomorrow through wisdom and humanity.

Thank you.

Sull Won-ryangChairman & CEO

ANNUAL REPORT - 6

Kim Jung-hoon / CEO Lim Chong-wook / CEO

We will secure our core competitiveness through positive cost saving and the development of

high-added-value products. Additionally, we will establish a foundation for long-term growth

through continuous restructuring and a commitment to profit-oriented policies.

“New corporate culture full of passion!”

President Review

7-ANNUAL REPORT

Lim Chong-wook / CEOKim Jung-hoon / CEO

I am taking this opportunity to express my sincere gratitude to all of you for your support and encouragement.

We experienced difficult economic conditions at home and abroad last year. The U.S. economy, which we thought hadbottomed out after the 9.11 terrorist attacks, continued in the doldrums due to the Enron scandal, large business groups'accounting fraud and resultant insolvency. On the other hand, some domestic businesses failed to receive overseasorders because they lost price competitiveness due to rapid advances by developing countries such as China.

The domestic market also seemed brisk when the nation recovered its sovereign credit rating to pre IMF levels,successfully hosted the World Cup, and had a smooth transition of power in the presidential election. However,household debt emerged as a new risk factor, dampening private consumption and curtailing corporate investment.

Despite this adverse economic environment, TAIHAN achieved solid management results last year thanks to theefforts of all TAIHAN members.

In 2002, the electric wire division realized sales of 910.6 billion won, the stainless division 319.4 billion won, andother areas 22.2 billion won, for a total of 1.25 trillion won.

In the electric wire division, exports decreased by about 14% while domestic demand increased by 12%, resulting in a4.8% drop in sales compared with the previous year. However, the stainless division grew by 8% thanks to briskdemand in the early part of last year. TAIHAN realized a net profit of 63.3 billion won through profit-orientedmarketing strategy and continuous restructuring efforts.

The management environment this year also forecasts difficult navigation. The North Korean nuclear standoff and theMiddle East issue are increasing the uncertainties of the world economy. The nation's economy fears another possiblerecession due to unstable oil prices and the unclear financial market.

Therefore, this year will be an important period for our company to become a top international corporation. Given thatthe future belongs to those thinking about the future, a decline of competitiveness must be prevented by all means. Wewill secure our core competitiveness through positive cost saving and the development of high-added-value products.Additionally, we will establish a foundation for long-term growth through continuous restructuring and a commitmentto profit-oriented policies.

TAIHAN has the proven power and intelligence to overcome adversity and I am confident that our position in theworld marketplace will become stronger through dynamic leadership and a company-wide commitment to makepositive changes that will benefit the shareholders, the customers, and the employees of Taihan Electric Wire Co. Ltd.

Thank you.

ANNUAL REPORT - 8

Taihan Electric Wire Co., Ltd. (TAIHAN) is a cable and

cold rolled stainless steel sheet manufacturer with annual

average sales of approximately 1.3 trillion won. Despite

the ongoing economic stagnation at home and abroad,

TAIHAN is able to enjoy such performance owing to the

improved sales in the high value-added products including

the extra high-voltage cable and the favorable trends of the

cold rolled stainless steel sheet business.

Last year, the electric wire division realized sales of 910.6

billion won, the stainless division 319.4 billion won and

other areas 22.2 billion won, totaling to 1.25trillion won.

Sales of electric cable and communication cable recorded

828 billion won and 104.8 billion won respectively.

Electric cable showed steady growth every year; however,

sales of communication cable posted less than that of the

average year due to dull IT industry.

As for the stainless sector, TAIHAN produced 175,000

tons last year sharing 20% or more of domestic market.

Sales increased by 8% over that of the previous year.

The net profit for the year was 63.6 billion won, an

increase by 25.3% over that of the previous year. This

achievement is attributable to the improved performance

in the high value-added products including the extra high-

voltage cable and cold rolled stainless steel sheet and the

profit-centered marketing strategies.

LME price and exchange rate directly affect sales due to

the characteristics of cable. Because of the market

structure of TAIHAN where the percentage of export is

large, production quantity increases but the amount is

reduced.

Introduction

9-ANNUAL REPORT

ANNUAL REPORT - 10

Muju Resort, a year-round integrated resort, taken over

Last May, TAIHAN took over Muju Resort from Ssang

Bang Wool Development Co., Ltd. to expand business to

service leisure industry, laying a foundation for a new

take-off, while strengthening existing cable business.

TAIHAN took over this resort with an expectation that the

family-centered leisure population would rapidly increase

because a 5-day workweek system is widely spread and

the future leisure industry is anticipated to grow

continuously. TAIHAN invested a total of 147.3 billion

won consisting of 62.3 billion won of stock price and 85

billion won of convertible bonds (CB), becoming the

largest shareholder with 74.5% of the equity of Ssang

Bang Wool Development Co., Ltd.

At the time of takeover, Muju Resort had 81.8 billion won

of paid-in capital, 774.3 billion won of total assets, and

501.1 billion won of total liabilities. However, after

TAIHAN took over, financial structure has been improved

significantly heralding the remarkably improved

management environment.

Muju Resort, a corporation with its accounts closed in

June, had suffered a loss of 16 billion won prior to

TAIHAN's takeover. This year, this loss is expected to be

reduced by half with operating profits anticipated within 2

or 3 years. Even borrowing-free management seems

possible.

The sole year-round resort located in the central south

area, Muju Resort developed in grand nature to the north

side of the Mt. Dukyoo boasts large sized leisure, sports

and entertainment facilities, international conference

rooms and performance stages.

Muju Resort also features large comfortable hotels,

international level skiing ground, sightseeing gondola

climbing to the Seolcheon peak of the Mt. Dukyoo

through the cloud, Muju Country Club located on a clean

high land, MTB, rafting and other nature-friendly

recreation facilities, and leisure and sports facilities. Muju

Resort induces numerous domestic and overseas events,

one of them being the 1997 Winter Universiade

successfully hosted by Muju Resort.

National income has increased recently to the level prior to

IMF crisis. The ski and golf population grow continuously

and it became easy for visitors to access it following the

opening of Daejin Express Highway.

Under such environment, TAIHAN plans to improve

management, modify or repair certain part of facilities and

invest more money to turn Muju Resort into a top-class,

integrated resort.

Accordingly, TAIHAN in last November changed the

company name from Ssang Bang Wool Development to

Muju Resort and poured more money in facilities which

had been suspended for a while. While strengthening the

ski, golf, hotel and other existing business, TAIHAN

intends to add new business including the Water Park,

Theme Park and chain resort, with an ultimate aim to

create a year-round integrated resort complex from the

previous ski-centered winter business.

Up to now, TAIHAN sought stable growth. If TAIHAN

improves management and continues new investment

based on the management know-how accumulated over

the past years in the cable and materials industry, Muju

Resort will, within a few years, be an integrated 4-season

resort boasting of the highest-level facilities and services.

11-ANNUAL REPORT

In May last year, OPTOMAGIC Co., Ltd., a subsidiary of

TAIHAN, invested 80 billion won and completed an

optical fiber plant, taking the first step towards a new

venture.

Constructed on a site of 33,000 square meters in Ansan

industrial complex, this plant has an annual production

capacity of 2,000,000 fkm. With existing Anyang plant's

production capacity of 1,000,000 fkm, OPTOMAGIC

now has a total production capacity of 3,000,000 fkm.

OPTOMAGIC is expected to maintain a production

capacity of 5,000,000 fkm per year, starting in the latter

half of 2003 through the upgrading of the equipment

capacity.

The optical fiber production facility most recently installed

by OPTOMAGIC is an ultra-modern facility using the

VAD (Vapor Axial Deposition) method which boasts

highest quality as well as productivity, and is applied only

by OPTOMAGIC in the nation.

Unlike the MCVD method used by other rival companies

that import quartz tube and produce optical fiber, the VAD

method demonstrates a manufacturing capability that is

more than 3 times per unit hour by self-producing preform

and fiber.

The length of the optical fiber that can be drawn per

preform rod is 1,000 km or more, indicating an extremely

low unit production cost. In addition, the optical fiber

features superior tensile strength and optical transmission

characteristics to produce the fiber suitable for 10Gbps or

higher-level high-speed broadband communication.

Since the core and cladding can be manufactured together

based on the All Synthetic Method, it is unnecessary to

import the quartz tubes used for cladding, saving foreign

currency.

OPTOMAGIC concentrated on developing the overseas

market in 2002 amidst the stagnant world economy and

dull IT industry. As a result, it had the largest export share

to China last year, among domestic optical product

makers, receiving orders for more than the half of the total

optical fiber exports. In March last year, OPTOMAGIC

opened a joint marketing office with TAIHAN in

Shanghai, China as part of a global marketing system,

carrying out aggressive marketing activities in Taiwan and

Hong Kong.

OPTOMAGIC also concluded a contract with Malesela

TAIHAN Electric Cable (Pty) Ltd. (M-TEC), a local

corporation in South Africa, to supply 1,500,000 fkm over

a period of 3 years, indicating that OPTOMAGIC is

getting good results from overseas markets.

Supported by the highest quality and the stable production

facilities, featuring cost competitiveness, Optomatic plans

to make active inroads into the domestic and overseas

markets, including China where backbone network

construction work is now in progress and Southeast Asia,

growing into a world's top-class optical fiber maker.

The inauguration of OPTOMAGIC, a KOSDAQ

registered company, carries a significant meaning in the

sense that OPTOMAGIC has externally promoted its

corporate image by advancing to the optical fiber business

and established corporate objectives and directions by

converting business to that of the high-added-value.

Inauguration of OPTOMAGIC, an optical fiber maker

Review of Operations

Taihan Electric Wire Co., Ltd. is a one-stop solution for the supply of

cables, wires, and stainless steel products. With its highly efficient

production capacity, TAIHAN supplies high-quality products that meet

customers' requirements and specifications on time, every time.

Cables and Wires 14

Stainless Steel 18

Overseas Activities 20

ANNUAL REPORT - 14

Cables and Wires

15- ANNUAL REPORT

Despite the difficult domestic and overseas economic

situation, the cable division in 2002 recorded sales of

910.6 billion won, a year-on-year decrease of 4.8%,

consisting of 386.4 billion won for domestic market and

524.2 billion won for export.

As for the electric power division, sales increased covering

most products. Domestic market increased by 12%, while

export decreased by 7%, with overall sales increased by

8% over those of the previous year. Sales in the future are

expected to increase because sales of the higher value-

added products such as the extra high-voltage cable

witness steady growth. On the other hand, domestic and

overseas price competition is being intensified in the case

of the medium-low-voltage cable sector. Demand of the

Korea Electric Power Corporation (KEPCO) for the high-

voltage cable is on a trend of rise.

The communication sector is now experiencing a dull

economic situation. Sales in the optical communication

sector are slow due to the IT industry slump during the

past several years. However, the demand for optical cable

is forecast to be increased on a gradual basis when the

world economy and the IT industry are recovered because

TAIHAN has highest-quality facilities, technical power

and highly capable human resources. As for copper

communication section, sales of the data cable are good.

Demand for materials (copper rod) has increased due to

increased domestic demand and the increased export by

the domestic cable exporters. Domestic market and export

increased by 13% and 8% respectively, making overall

sales to be higher than those of the previous year by 9%.

In the case of magnet wire, domestic demand and export

have slightly declined because of slow domestic economy,

with overall sales decreased by 9% compared with the

previous year.

Sales (Billion Won) Exports Ratio (2002)

Domestic 42%Export

58%

Sales Portfolio (2002)

ANNUAL REPORT - 16

Commercialization of 345kVXLPE extra high-voltage cable andaccessories

TAIHAN's proprietary 345kV XLPEcable and its accessories acquiredtype test certification from KoreaElectrotechnology Research Institute(KERI) and passed pre-qualificationtest based on IEC and KEPCOstandards, succeeding in commer-cialization.

The 345kV XLPE cable that haspassed pre-qualification test, togetherwith the 345kV O.F cable currentlyused for 345kV undergroundtransmission line, will be supplied forthe long-distance 345kV under-ground transmission line project athome and abroad.

In addition, as the demand forprefabricated type accessoriesincreases, TAIHAN has developedoutdoor termination (EB-A) and GIStermination (EB-G) using the 345 kVPNJ (Prefabricated Normal Joint) and

PIJ (Prefabricated Insulated Joint).The prefabricated type accessoriesboast superior electric performanceand reliability, contributing to reducethe construction period for domesticand overseas projects. The accessories passed the pre-qualification test that lasted 1 year,and have been used for the KEPCOPyeongtaek thermoelectric powerplant and Yeongseo-Yeongdeungpoprojects for the first time in thenation.

Through such successful commer-cialization, reliability of the 345kVXLPE cable and its accessories hasbeen recognized internally andexternally, enabling TAIHAN tomore actively meet rapidly increasingoverseas demand for extra high-voltage of 300kV class or higher.This also has provided an opportunityfor TAIHAN to accumulate technicalfoundation for the 400kV class and500kV class extra high-voltage cableand the prefabricated type accessoriescurrently being developed to expandthe domestic and overseas markets.

TAIHAN has successfully suppliedits proprietary 66kV, 132kV, 161kV,230kV, and 275kV extra high-voltagecables and accessories for the turn-key projects in Singapore, Malaysia,Brunei, Taiwan, Iraq, Saudi Arabia,UAE and Northern Ireland, earningworld recognition for the high-qualityand superiority of products.

17-ANNUAL REPORT

Commercialization of polymerinsulators

The polymer insulators developed byTAIHAN acquired certification

from the Korea ElectrotechnologyResearch Institute (KERI), a

government authorized certifi-cate authority, and passed

final performance test con-ducted prior to delivery,

succeeding in commer-cialization.

The successfully poly-mer insulators are

divided into twotypes: the suspen-sion insulators used

by KEPCO and the longrodinsulators used by the KoreanNational Railroad. The suspensioninsulators are used for extra high-voltage overhead distri-butionsystem, while the long-rod insulators,for the cantilever of the 25kVcatenary.

This product that has passed thedevelopment test conducted by theKorea Electrotechnology ResearchInstitute (KERI) has been developedto replace the existing ceramicinsulators. The product is lighter thanthe ceramic insulators and made ofsilicon, carrying self-cleaning function.

In addition, the crimping for the high-strength FRP rod and inlet/outletenables the product to maintain hightensile strength, and boast superiorelectric performance because theleakage distance is long. Especially,the product maintains excellentmechanical and electric characteris-tics even in salty areas or highlycontaminated areas, guaran-teeinglong life span.

Stainless Steel

ANNUAL REPORT - 18

19- ANNUAL REPORT

Wide width and narrow widthproduction lines installed for thefirst time in the nation

Backed up by the experience ofproducing 0.04mm ultra thinthickness products, TAIHANprovides highest quality products thatsatisfy the diversified demand ofcustomers.

TAIHAN operates a sole plant in thenation that can produce both widewidth and narrow width products.Furthermore, the plant operates theultra thin thickness product rollingmill, KT-MILL, the only one in thecountry to produce thin sheet andeffectively satisfy new demand.

TAIHAN has supplied 0.06mm ultrathin thickness products used forelectronic parts.

The stainless steel division in 2002 recorded sales of 319.4

billion won, a year-on-year increase of 8%, consisting of

200.7 billion won for domestic market and 118.7 billion

won for export.

Such favorable performance in the stainless steel division

was possible due to the brisk market situation during the

first half of the year, and because the price hike of the hot

coil, the raw material, was connected to the sales price.

The quantity supplied was similar to that of the previous

year.

Sales of the wide width and narrow width products

increased by 9% and 16% respectively. Sales at the

domestic market increased by17% compared with the

previous year, or by 8% in terms of the quality supplied.

Exports on the other hand decreased by 5% compared

with the previous year due to the brisk domestic stainless

steel market and the conversion of export quantity to the

domestic market. Exports decreased by 9% in terms of

quantity.

Cold rolled stainless steel sheet was used for tableware/

hollowware and for the construction materials in most

cases. Recently, however, applications have been

expanded to higher value-added products such as the sash

and reflectors used on LCD following the development of

the ultra thin thickness products, significantly contributing

to the company profits.

Sales (Billion Won) Exports Ratio (2002)

Wide Width

91%

Narrow Width

9%

Sales Portfolio (2002)

Export 37% Domestic

63%

ANNUAL REPORT - 20

Overseas Activities

21- ANNUAL REPORT

Exports during 2002 posted 642.9 billion won, a year-on-

year decrease of 18%, consisting of 524.2 billion won for

the cable division, and 118.7 billion won for the stainless

steel division.

Using the extra high-voltage cable as the key project of the

cable division, TAIHAN concentrates on the highly

profitable extra high-voltage turnkey projects. The extra

high-voltage cable division completed 161kV O.F., in

Taiwan and 275kV XLPE in Northern Ireland, in addition

to the successful implementation of the large turn-key

projects in Singapore, Malaysia, Brunei, Saudi Arabia and

UAE, earning recognition in TAIHAN's working

capability.

The communication division expands its export targets to

the North America, Central South America, China, and

Africa to create new demand and to diversify markets.

Since TAIHAN made an inaugural advance in 1999 to the

mobile communication market of Mongolia jointly with

SK Telecom, it has successfully completed the backbone

network project pursued by the Mongolia Post and

Telecom Administration (MPTA) and held an opening

ceremony in December last year. TAIHAN has also

participated in the CAN project, the communication

network project of Ghana in the West Africa as part of

strategies to strengthen overseas marketing power in the

communication market.

TAIHAN carries out marketing activities for copper

communication sector focusing on the Middle East and

the Southeast Asian areas. As for the optical

communication division, Malesela TAIHAN Electric

Cable (Pty) Ltd. (M-TEC), a local cable-manufacturing

corporation in South Africa, succeeded in the international

optical cable bidding which handles approximately 60%

of the total quantity required by South Africa.

Because the stainless cold rolled sheet division converted

to export quantity to the domestic market due to brisk

domestic market situation during the first half, and due to

the Safe Guard taken by China, a major market for

TAIHAN, sales were reduced by 5% compared with those

of the previous year.

Exports Ratio (2002)

Domestic 49%

Export 51%

Sales Portfolio (2002)Sales (Billion Won)

Stainless Steel18%

Cable & Wire

82%

ANNUAL REPORT - 22

Mongolia's backbone networkopening

The Mongolia's backbone communi-cation network designed andconstructed by TAIHAN's techno-logies and cable was opened inDecember 2002. Since a communi-cation network agreement was signedwith the Mongolia Post and TelecomAdministration (MPTA) in October

2001, the communication networkwas successfully completed at theend of last year. The project wascompleted approximately 1 year afterthe construction agreement wassigned. TAIHAN plans to provide fullpost-management service until theend of this year to ensure thecommunication network operatessatisfactorily after opening.

The communication network projectcompleted by TAIHAN this time is aproject of building a digital opticaltransmission network covering adistance of 800km from Ulaanbaatar,the capital city of Mongolia, toBaganuur, Sukhbaatar, Dornot andChoibalsanin the Eastern area. Withthe opening of the backbone network,high-speed internet, video conferenc-ing and mobile communication weremade possible not only in cities butalso in the outskirts.

Following the successful completionof this project, TAIHAN's techno-logies and construction capabilitywere recognized by the Mongolian

government. In recognition ofmeritorious service contributing tothe development of Mongolianinformation and communication, theMongolian government delivered aplaque of appreciation to TAIHAN.

In addition, since TAIHAN madeinaugural inroads into the Mongolianmobile communication market in1999 jointly with SK Telecom,TAIHAN built SkyTel, a local mobileservice provider.

Installing 2nd optical cableproduction facilities for the localcorporation in South Africa

Malesela Taihan Electric Cable (Pty)Ltd. (M-TEC), TAIHAN's localcorporation in South Africa, installed2nd optical cable production facilitiesfollowing 2001 and started full-scaleproduction.

With the additional installation of theoptical cable production facilities, M-

TEC, as South Africa's largest andfully equipped general cablemanufacturer, has secured a

bridgehead of the optical cablemarket aiming at South Africa andthe African Continent.

CAN project in Ghana

TAIHANis in the process of buildingcommunication network in Ghana ofWestern Africa since the first half oflast year. TAIHAN won this project

from Ghana Telecom. TAIHAN willconstruct primary communicationnetwork this year, and will continuemarketing activities to win nextproject step by step.The communication network will beconstructed in the Metropolitan areasincluding Accra, capital city of

Ghana, Madina, Obojo and Legon.This CAN project will not only bringprogress to the Ghana communi-cation market, but will also make theprospect of TAIHAN's marketingactivities aimed at African areas andmarket advance bright.

23- ANNUAL REPORT

ANNUAL REPORT - 24

Malesela TAIHAN wins largeoptical cable project in South Africa

Malesela TAIHAN to supply a totalof 1,500,000fkm for 3 years(500,000fkm each year). Contract may be extended by 2more years.

Malesela TAIHAN Electric Cable, ajoint-venture company of TAIHANwill supply large amount of opticalcable to Telkom of South Africa.

Recently, M-TEC participated in theinternational bidding for optical cableput out by Telkom, the first operatorof South Africa, and competed withworld-class cable makers and SouthAfrican makers. At this bidding, M-TEC made a great success, winningapproxi-mately 60% of the totalquantity.

A total of 1,500,000fkm will besupplied during a period of 3 years(500,000fkm each year). Since thisperiod may be extended by 2 yearaccording to contract, M-TECbelieves that the actual period of

supply may be extended to 5 years.

In addition, M-TEC plans to supply100,000 fkm to the 2nd operatorexpected to be selected soon and150,000 fkm to private companiesand neighboring African countries.This will make the total quantity to besupplied this year to beapproximately 800,000fkm.

M-TEC is an overseas subsidiary ofTAIHAN established as a baseoperating in African area to winorders for optical fiber. At the time ofestablishment, M-TEC was rated asthe 4th largest cable maker in SouthAfrica, but now, 2 years afteroperation, it has emerged as the 2nd

largest maker due to brisk business

of optical cable.

The total quantity of the optical fiber,the base materials for the opticalcable won by M-TEC this time, willbe supplied by optical fiber makerOptomagic, TAIHAN's subsidiaryestablished in July 2000. This isconsidered a more valuable resultsbecause the world IT business, aswell as domestic IT business, doesnot show any signs of recovery.

With the winning of this order,TAIHAN and Optomagic haveacquired a stable optical fiber marketfor a several years to come,promoting continued growth in the

Financial Statements

Balance Sheets / 26

Income Statements / 29

Statements of Appropriations of Retained Earnings / 30

Statements of Cash Flows / 31

Notes to Financial Statements / 33

Report of Independent Accountants / 41

The accompanying notes are an integral part of these financial statements.

< December 31, 2002, 2001 and 2000 >

Balance Sheets

Millions of Korean Won Thousands ofU.S. Dollars

ANNUAL REPORT - 26

2002 2001 2000 2002

ASSETS

Current assets :

Cash and cash equivalents 2,506 1,237 8,237 $ 2,088

Short-term financial instruments 34,412 244,097 113,040 28,667

Marketable securities (Note 4) 27,714 62,348 133,650 23,087

Trade accounts and notes

receivable, net (Notes 2, 10) 189,497 187,956 215,093 157,862

Other accounts receivable,

net (Notes 2, 10) 10,262 3,336 5,650 8,549

Short-term loans, net (Notes 2, 3, 10) 136,138 2,133 2,164 113,411

Inventories (Note 5) 127,146 101,973 102,643 105,920

Accrued income, net (Note 2) 19,895 9,557 8,023 16,574

Advance payments 2,170 1,803 1,807 1,808

Prepaid expenses 3,063 5,424 4,523 2,552

Other current assets 2,869 7,232 2,400 2,390

Total current assets 555,672 627,096 597,230 462,906

Property, plant and equipment,

net (Notes 6, 9, 10) 505,410 523,309 518,779 421,035

Investment securities (Notes 7, 10) 312,424 182,582 139,913 260,267

Long-term financial instruments 7,125 3,402 480 5,936

Long-term loans (Notes 10) 4,630 30,138 1,110 3,857

Intangible assets (Notes 2) 1,375 1,907 194 1,145

Long-term receivables, net 11,348 - - 9,454

Severance insurance deposits (Notes 2) 12,426 - - 10,352

Other assets 1,932 4,199 4,398 1,609

TOTAL ASSETS 1,412,342 1,372,633 1,262,104 $ 1,176,559


< December 31, 2002, 2001 and 2000 >

2002 2001 2000 2002

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities :

Short-term borrowings (Note 8) 357,853 379,828 356,597 $ 298,111

Current maturities of long-term

debt, net (Note 9) 34,133 122,592 53,766 28,435

Trade accounts and notes payable (Notes 10) 78,643 62,716 97,741 65,514

Other accounts payable 33,823 29,703 9,774 28,176

Accrued expenses 7,616 8,619 14,021 6,345

Income taxes payable 16,166 14,406 6,746 13,467

Other current liabilities 10,677 13,340 13,817 8,895

Total current liabilities 538,911 631,204 552,462 448,943

Debentures, net (Note 9) 157,414 89,196 153,104 131,135

Loans (Note 9) 102,448 53,123 4,057 85,345

Obligations under capital

leases (Note 9) 30 2,959 9,237 25

Accrued severance benefits,

net (Note 2) 9,805 14,127 23,808 8,168

Deferred income tax liabilities 322 1,447 1,560 268

Other long-term accounts payable - - 5 -

Total liabilities 808,930 792,056 744,233 $ 673,884


27-ANNUAL REPORT


< December 31, 2002, 2001 and 2000 >

Balance Sheets

2002 2001 2000 2002

Shareholders' equity :

Capital stock, 2,500 par value;

authorized 120,000,000 shares

Common stock, issued and outstanding,

32,000,000 shares (Note1) 80,000 80,000 80,000 $ 66,644

Capital surplus :

Paid-in capital in excess of par value 61,874 61,874 61,874 51,544

Asset revaluation surplus 353,418 353,418 353,418 294,417

Other capital surplus 4,512 4,512 4,512 3,759

419,804 419,804 419,804 349,720

Retained earnings (Note 11):

Legal reserve 3,999 2,400 1,200 3,331

Other reserves 55,258 23,503 10,705 46,033

Unappropriated retained earnings

(Net income : 63,269 million,

50,531million and 26,180 million

in 2002, 2001 and 2000, respectively) 62,628 49,588 26,348 52,173

121,885 75,491 38,253 101,537

Capital adjustment :

Treasury stock (Note 12) (10,789) (61) (61) (8,988)

Gain(Loss) on valuation of investment

securities (Note 7) (6,464) 5,654 (20,125) (5,385)

Losses on valuation for

financial derivatives (1,024) (311) - (853)

(18,277) 5,282 (20,186) (15,226)

Total shareholders' equity 603,412 580,577 517,871 502,676

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,412,342 1,372,633 1,262,104 $ 1,176,559


ANNUAL REPORT - 28


< For the years ended December 31, 2002, 2001 and 2000 >Income Statements

2002 2001 2000 2002

Sales (Notes 10) 1,252,151 1,270,318 1,273,213 $ 1,043,111

Cost of sales (Notes 10) 1,117,750 1,111,737 1,136,950 931,148

Gross profit 134,401 158,581 136,263 111,964

Selling and administrative expenses 41,038 55,997 57,430 34,187

Operating income 93,363 102,584 78,833 77,777

Non-operating income (expenses) :

Interest expense, net (6,043) (25,836) (28,737) (5,034)

Foreign exchange gain, net 488 794 1,130 407

Gain on disposal of marketable

securities, net 1,897 2,766 (298) 1,580

Gain(loss) on disposal of investment, net 871 (2,439) (17,705) 726

Dividend income 861 196 44 717

Gain(loss) on futures transactions, net 3,614 (4,656) 1,030 3,011

Loss on valuation of investment

under the equity method of

accounting, net (Note 7) (3,296) (10,562) 331 (2,746)

Others, net (3,504) 7,532 782 (2,919)

(5,112) (32,205) (43,423) (4,259)

Ordinary income 88,251 70,379 35,410 73,518

Extraordinary gain (loss) - - - -

Income before income taxes 88,251 70,379 35,410 73,518

Income tax expense 24,982 19,848 9,230 20,811

Net income 63,269 50,531 26,180 $ 52,707

Basic and diluted ordinary income

and earnings per share (In Korean

Won and U .S. Dollars) (Note 13) 1,990 1,579 818 $ 1,658


29-ANNUAL REPORT


Statements of Appropriations of Retained Earnings< For the years ended December 31, 2002, 2001 and 2000 >

2002 2001 2000 2002


at the end of the year :


carried-forward from prior year 237 352 167 $ 197

Change of retained earnings of the investees

using the equity method accounting (Note 7) (878) (1,295) - (731)

Net income 63,269 50,531 26,180 52,707

62,628 49,588 26,347 52,173

Transfer from other reserves : 1,833 2,345 3,912 1,527

64,461 51,933 30,259 53,700

Appropriations :

Transfer to legal reserve (Note 11) 1,520 1,599 1,200 1,266

Transfer to other reserves (Note 11) 47,718 34,100 16,709 39,752

Cash dividends (Note 14) 15,197 15,997 11,998 12,660

(dividend ratio 20% in 2002, 2001

and 15% in 2000, respectively)

64,435 51,696 29,907 53,678


carried-forward to the subsequent year 26 237 352 $ 22


ANNUAL REPORT - 30


Statements of Cash Flows< For the years ended December 31, 2002, 2001 and 2000 >

2002 2001 2000 2002

Cash flows from operating activities :

Net income 63,269 50,531 26,180 $ 52,707

Adjustments to reconcile net income to

net cash provided by operating activities :

Depreciation and amortization 21,691 24,146 21,411 18,070

Amortization of discounts on debentures 1,710 4,293 4,488 1,425

Gain on disposal of marketable securities, net (1,897) (2,766) 298 (1,580)

Loss (gain) on disposal of investments, net (871) 2,439 17,705 (726)

Loss on valuation of investments

under the equity method of accounting 3,296 10,562 (331) 2,746

Provision for severance benefits 12,892 10,547 9,151 10,740

Provision for doubtful accounts 6,677 8,624 4,083 5,562

Loss on forign currency translation, net 5,467 1,923 935 4,554

Others, net 695 (5,388) 1,953 579

49,660 54,380 59,693 41,370

Changes in operating assets and liabilities :

Trade accounts and notes receivable (4,475) 22,030 1,217 (3,728)

Other accounts receivable (6,772) (668) 712 (5,641)

Accrued income (10,667) (1,535) 1,297 (8,886)

Inventories (26,511) 670 (30,018) (22,085)

Advance payments (367) 4 (20) (306)

Prepaid expenses 2,361 (901) 1,084 1,967

Other current assets, net 1,590 (4,054) 6,903 1,325

Trade accounts and notes payable 17,130 (35,025) (930) 14,270

Other accounts payable 4,137 19,929 2,536 3,446

Accrued expense (1,003) (5,402) (3,464) (836)

Income taxes payable 1,759 7,660 6,746 1,465

Payment of severance benefits (36,097) (22,643) (8,944) (30,071)

National pension fund 1,054 681 492 878

Deferred income tax liabilities (1,125) 463 (2,502) (937)

Other current liabilities, net (3,526) (576) (4,333) (2,937)

(62,512) (19,367) (29,224) (52,076)

Net cash provided by operating activities 50,417 85,544 56,649 $ 42,000


31-ANNUAL REPORT

Statements of Cash Flows< For the years ended December 31, 2002, 2001 and 2000 >

2002 2001 2000 2002

Cash flows from investing activities :Decrease (increase) in short-term financial instruments, net 208,305 (130,723) 130,260 $ 173,530 Decrease in long-term financial instruments 3,377 - 4,503 2,813 Decrease in long-term loans 25,261 461 242 21,044 Disposal of marketable securities 95,422 120,437 74,577 79,492 Disposal of investment securities 21,826 5,366 26,314 18,182 Decrease (increase) in short-term loans, net (139,794) 438 11,200 (116,456)Decrease in long-term guarantee deposits 12 33 95 10 Disposal of property, plant and equipment 15,867 2,548 6,912 13,218 Decrease in deposits for severance benefits 5,386 1,735 1,492 4,487 Increase in long-term financial instruments (7,100) (2,922) - (5,915) Acquisition of marketable securities (61,229) (40,494) (38,875) (51,007)Increase in deposits for severance benefits - - (4,693) - Acquisition of investment securities (166,961) (36,268) (44,902) (139,088)Increase in long-term loans (205) (29,537) - (171)Increase in long-term guarantee deposits (6) (5) (2) (5)Increase in long-term receivables (11,509) - - (9,588)Acquisition of property, plant and equipment (16,126) (30,680) (34,371) (13,434)Increase in intangible assets - (2,294) (100) - Others, net 2,258 205 (3,095) 1,881Net cash used in investing activities (25,216) (141,700) 129,557 $ (21,006)

Cash flows from financing activities :Increase (decrease) in short-term borrowings (21,895) 18,537 (39,825) $ (18,240)Issuance of debentures 127,584 87,722 - 106,285 Increase in long-term debt 130,000 50,000 1,000 108,297 Payment of current maturitiesof long-term debt (122,896) (74,698) (132,626) (102,379)Payment of long-term debt (80,000) (470) (4,673) (66,644)Payment of debentures (30,000) (19,931) - (24,992)Payment of dividend payable (15,997) (11,998) (11,997) (13,326)Decrease in long term accounts payable - (6) (59) - Acquistion of treasury stock (10,728) - - (8,937)Net cash provided by (used in) financing activities (23,932) 49,156 (188,180) (19,937)Net Increase (decrease) in cash and cash equivalents 1,269 (7,000) (1,974) 1,057 Cash and cash equivalents at the beginning of the year(Note 15) 1,237 8,237 10,211 1,030 Cash and cash equivalents at the end of the year(Note 15) 2,506 1,237 8,237 $ 2,088


ANNUAL REPORT - 32

Notes to Financial Statements< December 31, 2002, 2001 and 2000 >

Note 1. The Company

Taihan Electric Wire Co., Ltd. (the "Company") was incorporated in 1955 under the laws of the Republic of Koreato engage in manufacturing, processing and selling electric wires, cables, rolled stainless steel and related products.

In December 1968, the Company offered its shares for public ownership and all shares are listed on the Korea StockExchange.

Upon a resolution of the board of directors on February 26, 2002 and an approval of shareholders at theshareholders' meeting on March 15, 2002, the Company effected a two-for-one stock split, thereby decreasing thepar value per share from 5,000 to 2,500 on April 19, 2002. As a result, the outstanding number of shares ofthe Company increased from 16 million to 32 million.

There have been several increases in the Company's capital stock since incorporation bringing total contributedcapital to 80,000 millions as of December 31, 2002, 2001 and 2000.

Note 2. Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation of its non-consolidated financialstatements in accordance with Financial Accounting Standards of the Republic of Korea are summarized below:

a. Basis of Financial Statement Presentation

The Company maintains its official accounting records in Korean Won and prepares statutory financial statementsin the Korean language in conformity with financial accounting standards generally accepted in the Republic ofKorea. The accompanying financial statements have been condensed, restructured and translated into English fromthe Korean language financial statements. Certain accounting principles applied by the Company that conformwith financial accounting standards and accounting principles in the Republic of Korea may not conform withgenerally accepted accounting principles in other countries. Accordingly, these financial statements are intendedfor use by those who are informed about Korean accounting principles and practices. Certain information attachedto the Korean language financial statements, but not required for a fair presentation of the Company's financialposition and results of operations, is not presented in the accompanying financial statements.

b. Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that effectamounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported infuture periods may differ from those estimates.

c. Revenue Recognition

Sales are recognized when products or merchandise are delivered to customers and revenues from constructioncontracts are recognized using the percentage-of-completion method of which the progress toward completion ismeasured by comparing costs incurred to date with the most recent estimate of the total costs to complete thecontracts.

d. Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts based on the aggregate estimated net realizable valueof the receivables.

e. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and cash in bank accounts, with original maturities of threemonths or less.

33-ANNUAL REPORT


f. Marketable Securities and Investment securities

Marketable securities and all investments in equity and debt securities are initially carried at cost, including incidentalexpenses. In the case of debt securities, cost includes the premium paid or discount received at the time ofpurchase. The following paragraphs describe the subsequent accounting for securities by type of security.

Marketable securities held for short-term cash management purposes are carried at market value at the balancesheet date. The unrealized gains and losses on such securities are charged to current operations.

Investments in marketable equity securities of non-controlled investees are carried at fair value. Temporary changesin fair value are accounted for in the capital adjustment account, a component of stockholders' equity. Declines infair value which are anticipated to be permanent are recorded in current operations after eliminating any previouslyrecorded capital adjustment for temporary changes. Subsequent recoveries or other future changes in fair value arerecorded in the capital adjustment account.

Investments in non-marketable equity securities of non-controlled investees are carried at cost, except for declines inthe Company's proportionate ownership of the underlying book value of the investee which are anticipated to bepermanent, which are recorded in current operations. Subsequent recoveries are also recorded in currentoperations up to the original cost of the investment.

Investments in equity securities of companies over which the Company exerts significant control or influence on theinvestees' decision making by holding over 20% of total outstanding common shares of investees directly orindirectly (controlled investees) are recorded using the equity method of accounting. Differences between the initialpurchase price and the Company's initial proportionate ownership of the net book value of the investee areamortized or reversed within 20 years using the straight-line method. Under the equity method, the Companyrecords changes in its proportionate ownership of the book value of the investee as current operations, capitaladjustments or adjustments to retained earnings, depending on the nature of the underlying change in the bookvalue of the investee.

In the cases where the investee company applies accounting methods different from the Company for similartransactions or accounting events, the equity method is applied based on financial statements prepared using thesame accounting methods as those of the Company. However, the difference resulting from different accountingmethods is not reconciled when the difference amount is immaterial.

When applying the equity method, the Company eliminates the unrealized gain or loss included in the inventory,investments, property, plant & equipment and intangible assets acquired from transactions with the investeecompany. However, this unrealized gain or loss is not eliminated when the amount is immaterial.

Premiums and discounts on debt securities are amortized over the life of the debt using the effective interestmethod. Investments in debt securities which the Company has the intent and ability to hold to maturity aregenerally carried at cost, adjusted for the amortization of discounts or premiums (amortized cost). Declines in thefair value of debt securities which are anticipated to be permanent are recorded in current operations. Subsequentrecoveries are also recorded in current operations up to the amortized cost of the investment.

Investments in the stock market stabilization fund are carried at fair value, which is the proportionate ownershipamount of the Company. Resulting gains and losses are recorded in current operations.

g. Inventories

Inventory quantities are accounted for using a perpetual inventory method and adjusted by physical counts at theend of each period.

Inventories are stated at the lower of cost or market value, with cost being determined by the weighted averagemethod except for materials in-transit for which cost is determined by the specific identification method.

ANNUAL REPORT - 34


h. Property, Plant and Equipment and Related Depreciation

Property, plant and equipment are recorded at cost, except for upward revaluations in accordance with the KoreanAsset Revaluation Law. Such revaluations present production facilities and other buildings at their depreciatedreplacement cost and land at the prevailing market price as of the effective date of revaluation. The revaluationincrement, net of a 3% tax, is first applied to offset accumulated deficit, if any, and the remainder is credited tocapital surplus or transferred to common stock by issuing additional shares. For revalued assets, previously recordedaccumulated depreciation is eliminated and a new basis for depreciation is established.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets as describedbelow.

Estimated Useful LivesBuildings and structures 20 - 40 yearsMachinery and equipment 8 “Vehicles 5 “Tools and furniture 5 “

Effective January 1, 2002, the Company elected to change its method of depreciation for newly purchasedproperty, plant and equipment from the half-year convention to a method which uses a monthly calculation fordepreciation expense. As a result of the change in depreciation method, depreciation expense decreased by 440million for the year ended December 31, 2002.

i. Maintenance and Repairs

Routine maintenance and repairs are charged to expense as incurred. Expenditures which enhance the value orextend the useful lives of the related assets are capitalized.

j. Leases

The Company accounts for and classifies its lease transaction as capital leases or operating leases in accordance withaccounting guidelines for leases.

The assets and liabilities of capital leases are recognized at the present value of the minimum lease payments overthe lease term. The annual interest expense, applying the effective interest method, is a function of the outstandingobligation.

Rental expenses of operating leases are recorded as they become due.

k. Discounts on Debentures

Discounts on debentures are amortized using the effective interest rate method over the term of the debenturesand the resulting amortization is recorded as interest expense.

l. Current value measurement of assets and liabilities

The Company uses current value measurement when the difference between the nominal value and current valueof assets and liabilities resulting from sales transactions with long-term deferred payment conditions. The differenceamount is recorded as present value discount and subtracted from the assets and liabilities, amortized (reversed)using the effective interest method and recorded as interest income (expense).

35-ANNUAL REPORT

Notes to Financial Statements

< December 31, 2002, 2001 and 2000 >

m. Accrued Severance Benefits

Employees and directors with one year or more of employment with the Company are entitled to receive a lump-sum payment upon termination of their service with the Company, based on their length of employment and rateof pay at the time of termination. Accrued severance benefits represent the amount of severance benefits payableassuming all eligible employees and directors were to terminate their employment with the Company as of thebalance sheet date. Actual payment of severance benefits amounted to 36,097 million, 22,643 million

for the years ended December 31, 2002, 2001 and 2000, respectively.

Accrued severance benefits are funded approximately 61.2%, 67.8% and 58.1% as of December 31, 2002, 2001and 2000, respectively, through a severance insurance plan. The Company accounts for the amounts of 19,072million, 36,902 million and funded under the plan as a deduction item to accrued severancebenefits at December 31, 2002, 2001 respectively. In addition, the Company has recorded 12,426million of employee retirement insurance deposits as investments, which is to be paid to retired employees as ofDecember 31, 2002.

In accordance with the National Pension Act, accrued severance benefits of approximately 2,311 million, 3,365 million and million as of December 31, 2002, 2001 and 2000, respectively, were deposited in theNational Pension Fund and deducted from accrued severance benefits. The contributed amount shall be refundedfrom the National Pension Fund to employees and directors on their retirement.

Note. 3. Short-term Loans

The Company has entered into a specified money trust agreement with KORAM bank for short-term investmentamounting to 130,000 million in 2002. The details of trust agreement are as follows :

Agreement date : June 29, 2002Maturity date : June 29, 2003Principal Amount : 130,000 millionInvestment(*) : Loan to G.Forum AMC Co., Ltd. (loan date : July 16, 2002)

(*) The trusted fund has been used for loan to G.Forum AMC Co., Ltd., which engages in real estate rental business,at fixed annual interest rate of 25%.

The loan has been secured by a real estate collateral up to 169,000 million and real estate beneficiary certificateup to 180,000 million. In accordancewith the agreement of real estate beneficiary certificate, after eight monthsfrom the date of loan, the pledgee has a right to dispose the real estate collateral and collect principal and accruedinterestof the loan with proceeds from disposal.

Note. 4. Marketable Securities

Marketable securities at December 31, 2002, 2001 and 2000 comprise the following :

At December 31, 2001 and 2000 overseas debt securities of W3,382 million and 3.212 million are pledged ascollateral for guarantee of overseas construction from financial institutions.

Overseas debt

securities, etc

Millions of Korean Won Thousands of U.S. Dollars

2002 2001 2000 2002 2001 2000 2002 2002

28,098 60,025 132,970 27,714 62,348 133,650 $ 23,407 $ 23,087

Before ValuationMarket Value(Book Value)

Market Value(Book Value)

BeforeValuation

ANNUAL REPORT - 36


< December 31, 2002, 2001 and 2000 >

Note. 5. Inventories

Inventories at December 31, 2002, 2001 and 2000 comprise the following :

At December 31, 2002, 2001 and 2000, inventories are insured against fire and other casualty losses up to 62,000 million, 50,900 million and 43,000 million, respectively.

Note. 6. Property, Plant and Equipment

Property, plant and equipment at December 31, 2002, 2001 and 2000 comprise the following :

Note. 7. Investment Securities

Investment securities at December 31, 2002, 2001 and 2000 comprise the following :

Millions of Korean Won Thousands of U.S. Dollars2002 2001 2000 200245,022 61,028 30,081 $ 37,5068,998 6,357 5,859 7,496

163,683 104,190 97,052 136,35793,399 8,888 5,449 77,8071,322 2,119 1,472 1,101

312,424 182,582 139,913 $ 260,267

Listed equity securitiesUnlisted equity securitiesInvestments using the equity methodsInvestments in bondsOther equity investments

Millions of Korean Won Thousands of U.S. Dollars2002 2001 2000 2002

25,795 17,418 18,791 $ 21,489 54,707 39,088 34,937 45,574 27,400 31,333 42,748 22,826 9,594 3,883 1,915 7,992 9,650 10,251 4,252 8,039

127,146 101,973 102,643 $ 105,920

Finished products Work-in-processRaw materials and suppliesMerchandiseMaterials in-transit

Millions of Korean Won Thousands of U.S. Dollars2002 2001 2000 2002

93,708 93,438 92,920 $ 78,06410,431 10,431 10,364 8,690

207,297 227,676 189,229 172,6902,356 2,564 2,638 1,963

32,936 32,954 30,483 27,438346,728 367,063 325,634 288,844

(200,799) (204,784) (182,120) (167,277)145,929 162,279 143,514 121,567

357,807 357,831 357,269 298,0731,113 1,693 17,996 927

561 1,506 - 467505,410 523,309 518,779 $ 421,035

BuildingsStructuresMachinery and equipmentVehicles Tools and furniture

Accumulated depreciation

LandConstruction in-progress Machinery in transit

37-ANNUAL REPORT


Note. 8. Short-term Borrowings

Short-term borrowings at December 31, 2002, 2001 and 2000 comprise the following :

Note. 9. Long-term Debt

Long-term debt at December 31, 2002, 2001 and 2000 comprises the following :

Note. 10. Related Party Transactions

Significant transactions which occurred in the ordinary course of business with related companies for the years endedDecember 31, 2002, 2001 and 2000 and related account balances as of those dates are summarized as follows :

(*1) Include disposal of property, plant and equipment.(*2) Include the convertible bonds of 84,968 million (See Note 7) and lease receivables of 8,478 million to Muju Resort Inc..

The Company has guaranteed the repayment of various obligations of subsidiaries and affiliated companies. The outstandingbalance of such guarantees at December 31, 2002 approximated 107 million and US$ 12,045 thousand.

Annual Millions of Korean Won Interest Rate (%) (Thousands of U.S.Dollars)

2002. 12. 31 2002 2001 2000 2002

5.7-5.8 23,900 44,500 33,900 $ 19,9105.6-5.7 50,000 50,000 99,100 41,6535.6-5.7 119,864 109,994 104,942 99,853

193,764 204,494 237,942 161,416

0.4-2.4 139,181 107,622 115,796 115,9462.9 24,008 66,305 - 20,0002.9 900 1,407 2,859 750

164,089 175,334 118,655 136,695(US$ 136,695) (US$ 132,217) (US$ 89,477) (US$ 136,695)

357,853 379,828 356,597 $ 298,111

Won currency borrowings :General term loansCommercial papers discountedOthers

Foreign currency borrowings : UsanceGeneral term loansOthers

Millions of Korean Won Thousands of U.S.Dollars2002 2001 2000 2002 157,414 89,196 153,104 $ 131,135102,448 53,123 4,057 85,345

30 2,959 9,237 25259,892 145,278 166,398 $ 216,504

Millions of Korean Won Thousands of U.S.Dollars2002 2001 2000 2002

62,380 16,382 13,303 $ 51,96668,506 20,813 22,953 57,069

125,255 13,881 6,516 104,344918 659 1,948 765

DebenturesLoansObligations under capital leases

Description

Sales(*1)PurchasesReceivables(*2)Payables

ANNUAL REPORT - 38


Note. 11. Legal Reserve

The Korean Commercial Code requires the Company to appropriate an amount equal to a minimum of 10% of itscash dividends as a legal reserve until such reserve equals 50% of its paid-in capital. This reserve is not available forthe payment of cash dividends. Subject to the approval of the board of directors, it may be transferred to commonstock or may be used to dispose of accumulated deficit, if any.

Note. 12. Treasury stock

Upon a resolution of the board of directors on October 14, 2002, the Company purchased 1,600,000 shares of itscommon stock for 10,728 million for the purpose of stabilization of stock price. As of December 31, 2002 andDecember 31, 2001, the Company retained of 1,606,524 shares and 6,524 shares, respectively.

Note. 13. Earnings Per Share

Basic ordinary income per share and earnings per share for the years ended December 31, 2002, 2001 and 2000 areas follows :

Note. 14. Dividends

Details of dividends for the years ended December 31, 2002, 2001 and 2000 are as follows :

a. Dividend

b. Dividend payout ratio

c. Dividend yield ratio

Korean Won U.S. Dollars2002 2001 2000 2002

63,268,964,897 50,530,882,385 26,180,132,665 $ 52,706,569

31,798,216 shares 31,993,476 shares 31,993,476 shares 31,798,216 shares

1,990 1,579 818 $ 1.66


30,393,476shares 31,993,476shares 31,993,476shares 30,393,476shares500 (20%) 500 (20%) 375 (15%) $ 0.417 (20%)

15,197 million 15,997 million 11,998 million $ 12,660 Thousand

Common shares issued(par value 2,500 won)

Cash dividend per share(ratio)

Dividend amount

Ordinary income and net income of common stock

Weighted average number of Outstanding common stock

Basic ordinary income and earnings per share


15,197 million 15,997 million 11,998 million $ 12,660 Thousand 63,269 million 50,531 million 26,180 million 52,707 Thousand

24.0% 31.7% 45.8% 24.0%

Total dividends (A)Net income (B)Dividend payout ratio(A/B)


500 500 375 $ 0.42

5,990 6,000 3,475 5.08.3% 8.3% 10.8% 8.3%

Dividend per share (A)Market value at the end ofthe year (B)

Dividend yield ratio(A/B)

39-ANNUAL REPORT


< December 31, 2002, 2001 and 2000 >

Note. 15. Supplementary Cash Flow Information

Major transactions not involving an inflow or outflow of cash and cash equivalents are as follows :

<Remarks> United States Dollars Amounts

The Company operates primarily in Korean Won and its official accounting records are maintained in Korean Won. TheU.S. Dollar amounts are provided herein as supplementary information solely for the convenience of the reader. Wonamounts are expressed in U.S. Dollars at the rate of 1,200.4 : US$1, the rate in effect on December 31, 2002. Thispresentation is not in accordance with accounting principles generally accepted in either the Republic of Korea or theUnited States, and should not be construed as a representation that the Won amounts shown could be converted,realized or settled in U.S Dollars at this rate.

The 2001 and 2000 U.S. Dollar amounts, which were previously expressed at 1,326.1 : US$1 and 1,259.7 : US$1the rate prevailing on December 31, 2001 and 2000, respectively, have been restated to reflect the exchange rate ineffect on December 31, 2002.

Millions of Korean Won Thousands of U.S. Dollars

2002 2001 2000 2002

3,362 7,165 9,014 $ 2,801

13,635 24,633 329 11,359

30,780 135,427 45,684 25,641

- 25,779 - -

12,118 - 247,831 10,095

1,318 4,785 3,324 1,098

714 311 - 595

Transfer of long-term debts to current maturities

Transfer of construction-in-progress to property,

plant and equipment

Transfer of debentures to current maturities

Gain on valuation of investment securities

Loss on valuation of investment securities

Write-off of accounts receivable

Losses on valuation for financial derivatives

ANNUAL REPORT - 40

Independent Auditor’s Report

We have audited the accompanying balance sheets of Taihan Electric Wire Co., Ltd. (the "Company") as of December 31, 2002 and 2001,and the related statements of income, appropriations of retained earnings and cash flows for the years then ended, expressed in KoreanWon. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion onthese financial statements based on our audits.

We conducted our audits in conformity with auditing standards generally accepted in the Republic of Korea. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2002 and 2001, and the results of its operations, the changes in its retained earnings and its cash flows for the years thenended, in conformity with financial accounting standards generally accepted in the Republic of Korea.

Without qualifying our opinion, we draw your attention to the following matters.

As discussed in Note 7 to the financial statements, the Company became a majority shareholder of Muju Resort Inc. (formerly,Ssangbangwool Development Co., Ltd.) by acquiring 12,200,537 shares representing 74.5% of total common stock for 65,509 millionin 2002. In addition, the Company purchased convertible bonds issued by Muju Resort Inc. at par value for 84,968 million.

As discussed in Note 3 to the financial statements, the Company has entered into a specified money trust agreement with KORAM bankfor short-term investment amounting to 130,000 million in 2002. According to this agreement, the trustee has lent the trust fund toG.Forum AMC Co., Ltd. with real estate beneficiary certificate as collateral up to 180,000 million.

As discussed in Note 1 to the financial statements, upon a resolution of the board of directors on February 26, 2002 and an approval ofshareholders at the shareholders' meeting on March 15, 2002, the Company effected a two-for-one stock split, thereby decreasing thepar value per share from 5,000 to 2,500 on April 19, 2002. As a result, the outstanding number of shares of the Companyincreased from 16 million to 32 million.

As discussed in Note 10 to the financial statements, the Company sells its products to and purchases certain materials from relatedcompanies, including Optomagic Co., Ltd. During the years ended December 31, 2002 and 2001, total sales to related companiesamounted to 62,380 million and 16,382 million, respectively, and total purchases from related companies amounted to 68,506million and 20,813 million, respectively. As of December 31, 2002 and 2001, related receivables amounted to 125,255 million and

13,381 million, respectively, and related payables amounted to 918 million and 659 million, respectively.

As discussed in Note 2 to the financial statements, the Company early adopted the Statements of Korean Financial Accounting Standards("SKFAS") No. 5 "Subsequent Events" for the year ended December 31, 2002. In addition, the financial statements for the year endedDecember 31, 2001 have been restated to conform to the 2002 presentation. As a result, the balance sheets as of December 31, 2002and 2001 present the financial position before the appropriations of retained earnings such as the dividend declared at the shareholders'meeting amounting to 15,197 million and 15,997 million, respectively.

Accounting principles and auditing standards and their application in practice vary among countries. The accompanying financialstatements are not intended to present the financial position, results of operations and cash flows in conformity with accounting principlesand practices generally accepted in countries and jurisdictions other than the Republic of Korea. In addition, the procedures and practicesused in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries.Accordingly, this report and the accompanying financial statements are for use by those who are knowledgeable about Korean accountingprinciples or auditing standards and their application in practice.

Seoul, Korea

January 30, 2003

Board of directors and Shareholders of

Taihan Electric Wire Co., Ltd.

41-ANNUAL REPORT

Directors

Board of Directors

Administration Division

Sales & Business Division

EHV Const. & Eng. Business Division

E.H.V. Power Cable Factory

Power Cable Factory

Communication Cable Factory

Copper Rod Business Division

E.H.V. Power Cable Accessory Factory

Magnet Wire Factory

Stainless Steel Business Division

President & CEO Head Office

Anyang Plant

Siheung Plant

Ansan Plant

Instrument Factory

Auditors

Senior Vice President Auditor

Kim Seoung-koo Bae Jang-kwonChairman & CEO

Sull Won-ryangCEO CEO

Kim Jung-hoon Lim Chong-wook

Organization

Corporate Information

ANNUAL REPORT - 42

43-ANNUAL REPORT

Head OfficeInsong Bldg. 194-15, 1-ga, Hoehyeon-dong,Jung-gu, Seoul, KoreaTel. 82-2-316-9114 Fax. 82-2-754-5240R&D Center 996, Siheung-dong, Geumcheon-gu, Seoul,KoreaTel. 82-2-890-9504Fax. 82-2-806-0186Anyang Plant785, Gwanyang-dong, Dongan-gu, Anyang,Gyeonggi-do, KoreaTel. 82-31-420-9114 Fax.82-31-423-2685Shihung Plant 113-119, Siheung-dong, Geumchon-gu, Seoul,KoreaTel. 82-2-890-9114 Fax. 82-2-808-6320Ansan Plant 603, Seonggok-dong, Danwon-gu, Ansan,Gyeonggi-do, KoreaTel. 82-31-490-5114 Fax.82-31-491-3721

1955 Foundation of Taihan Electric Wire Co., Ltd.1957 Completed Construction of Consolidated Cable Plant.1959 Installed Copper Smelting and Rolling Machines.

1960 Started Production of Lead Sheathed Communication Cables.1964 Our Cables and Wires were Enlisted in KS for the first time in Korea.1965 Started Production of 1.2/ 4.4mm Small Diameter Coaxial Cables.1968 Company Stocks Opened to the Public.1969 Started Production of 33kV XLPE Insulated Cables.

1970 Started Production of 345kV A.C.S.R.1974 Our Cables and Wires were Enlisted in UL and CSA.1975 Completed Construction of Anyang Cable Plant.1976 Started Production of 154kV O.F Cable.1977 Developed Optical Fiber Cables.

1980 Started Production of SCR Wire Rod.1981 Started Production of Flame Retardant Plastic Cable for Nuclear Power Plant.1982 Supplied 154kV P.O.F Cables to KEPCO and Completed 154kV P.O.F Line

Exchange Works along the Line between Hyunjeo and Sungdong for the first time in the World.

1983 Completed Construction of VCV Extra High Voltage Power Cable Plant.1984 Started Production of Long Wavelength Single and Multi Mode Opical Fiber Cables.

Started Production of 154kV XLPE Insulated Cable.1985 Developed 345kV O.F Cable.

Supplied 2,800 Fiber km of Optical Fiber Cables for Seoul Olympic Communication Network.

1986 Developed 90Mb/s Optical Transmission System.1987 Developed OPGW.1988 Supplied Submarine Optical Fiber Cable to KT.1989 Developed ISDN Terminal Equipment & 565Mb/s Optical Transmission Equipment

an Cable TV System.Developed Polyprophylene Laminated Paper Insulated 345kV O.F Cable.

1990 Developed Class 1E Power and Control Instrumentation Cables for Nuclear Power Plant.Developed MX13 Digita1 Multiplex Equipment.

1991 Started Supplying 565Mb/s Optical Transmission System to KT.1992 Established Joint Ventures in China.

Developed ‘370kV’ ‘1POLE’ GIS SPACER.1993 Established a Joint Venture in India.

Developed Electronic W.H.M.Acquired the International Standards Certificate ISO 9001 from the SGSYARSLEY(U.K.).

1994 Developed 345kV OPGW.Developed SMOT-1, SMOT-4 Synchronous Transport Module Optical Transmission Equipment.

1995 Developed 345kV, 765kV AWS for Overhead Ground Wire, Developed STACIR.Acquired the International Standards Certificate ISO 9002 for Stainless Steel Sheet & Strip from the KMA- QA.Started Aluminum Business.

1996 Completed Construction of New VCV Tower & Extra High Voltage Power Cable Plant.Developed Fiber Distribution Frame, Fiber Distribution Panel, Mechanical Splicer for Optical Fiber and Optical Fiber Closure.Developed 2.5Gb/s Synchronous Optical Transmission Equipment.Developed 765kV OPGW.Developed the Super Thinnest Guage in the field of Stainless Steel for the first time in Korea.

1997 Presidential Prize Awarded for Achieving the Export Record Exceeding US $ 500 million on the 34th Annual Trade Day.Completed Construction of Copper Rod Plant in India.Developed Ribbon Type Optical Fiber Cable.

1998 Developed W-CDMA WLL(Wireless Local Loop) System and Qualified as a System Supplier to Hanaro Telecom, Inc.Copper Rod Production exceeds 2 Million tons for the first time in Korea.

1999 Obtaining KT Mark for Anywave Single Mode Optical Fiber.Development of Epoxy Bushing for Terminals to Test Extra High Voltage Cable and Joints.Established a Joint Venture in Mongolia.Established Alcan Taihan Aluminum Limited, a Joint Venture with Alcan Aluminium Limited, Canada.

2000 Acquired the JIS standard for Stainless Steel Sheet and Strip.Established a Joint Venture in South Africa.Acquired UL certification for Category 6 UTP Cable for LAN.

2001 Acquired ISO 14001 Environmental Management System Certificate.Developed 345kV XLPE Insulated Cable.Developed Polymer Insulators.Developed OIP Condenser Bushing for Extra High Voltage Transformer for the first time in Korea.

2002 Malesela-Taihan Secures Large Optical Cable Order in South Africa.A Dedication Ceremony Held for OPTOMAGIC Optical Fiber Plant.Taken over Muju Resort

Kuala Lumpur Office15th Floor, Kenanga International, JL. SultanIsmail, 50250, Kuala Lumpur, MalaysiaTel. 60-3-2161-8017 Fax. 60-3-2161-3628Singapore Office629 Aljunied Road #05-19, Cititech IndustrialBuilding, Singapore 389838, SingaporeTel. 65-6842-5069 Fax. 65-6842-5076Riyadh OfficeAl Akariyah Shopping Center 2, Room No.726, Olaya Road, P.O.Box 201, Riyadh,Saudi ArabiaTel. 966-1-419-0227 Fax. 966-1-419-0262

Skytel Co., Ltd.Skytel Plaza Building, Chinggiskhan Ave-9,Ulaanbaatar, 210613, Mongolia.Tel. 976-1-318488 Fax.976-1-318487Malesela Taihan Electric Cable (Pty) Ltd.Vereeniging 1930, Steel Road, PeacehavenVereeniging 1939,Gauteng, South AfricaTel. 27-16-450-8333 Fax.27-16-450-8266www.m-tec.co.zaTelecom & Energy Cables Corp.85 Denton Avenue, New Hyde Park, NY11040, U.S.ATel. 1-718-347-6030 Fax.1-718-347-6045www.tecables.com

PRINCIPAL OFFICES & PLANTS OVERSEAS BRANCHES JOINT VENTURE COMPANIES

History

ANNUAL REPORT - 44

Head OfficeInsong Bldg. 194-15, 1-ga, Hoehyeon-dong,Jung-gu, Seoul, KoreaOverseas Sales TeamTel. 82-2-316-9410~8 Fax. 82-2-757-2942www.taihan.com

TAE-0101-0307

Documents

TAIHAN - a highly competitive world-class enterprise Financial Highlights 3 Chairman's Statement 4 President’s Review 6 Introduction 8 Review of Operations 12 Financial Statements