LG 1999 Annual Report Download - page 36

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Reconciliation of acquisition cost of investments in subsidiaries and affiliates accounted for using the equity method to their carrying value is as
follows :
Millions of Won
Capital adjustment Retained earnings Net income Total
Acqusition Cost
￦
3,914,151
Adjustment :
Capital surplus and capital adjustments
￦
224,623
￦
-
￦
- 224,623
Prior years’ net loss - (155,930) - (155,930)
Current year’s net income - - 153,316 153,316
Elimination of unrealized profit - (204,569) (280,892) (485,461)
Dividends income - (13,077) - (13,077)
Carrying Value
￦
3,637,622
At December 31, 1999, except for the Korea stock market stabilization fund, of which the differences between the market value and the
acquisition cost are charged to current operations, investments in marketable equity securities, of which the differences between the market value
and the acquisition cost are accounted for as capital adjustments, are as follows :
Millions of Won
Acquisition Cost Market Value Capital Adjustment
P.D.I
￦
336
￦
1,258
￦
922
Hyundai Electronics Industries Co., Ltd. 28,221 52,634 24,413
Hanaro Telecom Inc. 117,428 117,900 472
￦
145,985
￦
171,792
￦
25,807
Pursuant to a share transfer agreement dated May 20, 1999, the Company transferred 61,512,076 shares of LG Semicon Co., Ltd. to Hyundai
Electronics Industries Co., Ltd. in exchange for
￦
1,726,208 million (present value
￦
1,596,704 million) and recognized a gain on disposal of
investment of
￦
1,102,930 million. The price is subject to adjustment based on certain factors.
Pursuant to a joint venture agreement with Koninklijke Philips Electronics N.V. (“Philips”) dated July 24, 1999, the Company
transferred certain of the Company’s stock rights in LG. Philips LCD CO., Ltd. (formerly, LG LCD Co., Ltd.) to Philips. As a result, the Company
reduced its ownership of LG. Philips LCD Co., Ltd. to 50% and recognized a gain on disposal of investment of
￦
1,179,939 million.
In 1999, the Company transferred its own patents in relation to the Thin Film Transistor Liquid Crystal Display (“TFT-LCD”) to LG.
Philips LCD Co., Ltd. in exchange for
￦
288,000 million and recognized a gain on disposal of intangible assets amounting to
￦
281,391 million.
According to the equity method of accounting, unrealized profit of approximately
￦
253,252 million, net of realized profit, arising from the sales
of the patents by the Company to LG. Philips LCD Co., Ltd., an equity-method investee, is fully eliminated and charged to investment in LG.
Philips LCD Co., Ltd.
Senior secured note of
￦
142,674 million (US$ 125 million) issued by Zenith outstanding at December 31, 1999, was converted from
the Company’s receivables from Zenith according to the reorganization plan of Zenith approved by the court in the United States of America on
November 5, 1999 (see Note 14). The note’s terms and conditions are as follows :
Interest : LIBOR+ 6.5% on a quarterly basis
Maturity of principal : November 1, 2009
According to financial accounting standards generally accepted in Korea, the unrealized gain on valuation of investment in Dacom Corporation, an
equity-method investee, of approximately
￦
40,644 million previously accounted for as capital adjustment was credited to operations in 1999.
8. Property, Plant and Equipment :
Property, plant and equipment as of December 31, 1999 comprise the following :
Millions of Won
Buildings
￦
1,000,223
Structures 94,673
Machinery and equipment 985,193
Tools 697,789
Furniture and fixtures 405,810
Vehicles 24,777
3,208,465
Accumulated depreciation (1,270,871)
1,937,594
Land 702,810
Construction in progress 77,973
Machinery in transit 7,872
￦
2,726,249