LG 2000 Annual Report Download - page 37

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Earnings from LGE affiliates shifted from a negative gain of W146 billion in 1999 to a
positive gain of W287 billion in 2000.
Non-operating expenses were W1,234 billion in 2000, 6.5% lower than W1,320 billion in
1 9 9 9 .
The major reason for such improvement was the significant decrease in interest expenses,
equaling W437 billion in 2000. The decrease reflects a consistently falling interest rate as
well as LGE's effort to reduce interest expenses through diverse fund-raising channels.
Interest expenses as a percentage of sales decreased from 4.8% in 1999 to 2.9% in 2000
while interest expenses as a proportion of operating profit significantly improved from
74.5% to 47.4%.
Affected by the abrupt depreciation of Korean won, loss of foreign currency translation
rose from W17 billion in 1999 to W133 billion in 2000. The direct causes of this loss
were increased foreign currency debts resulting from Usance equivalent to US$91 million
and Y250 million, and foreign currency floating rate notes amounting to US$221 million.
Furthermore, LGE underwent the write-off of LGIC's bad assets equaling W54 billion and
the loss on cancellation of LGIC shares totaling W56 billion. Another factor for non-
operating expenses was the W196 billion loss from transfer of trade accounts and notes
receivable. Of this loss, the negotiation of foreign currency receivables resulted in a W180
billion loss, and the issuance of asset (receivables)-backed securities led to W10 billion
l o s s .
EBITDA & Profitability
With consistency and adherence to 1998 and 1999 accounting principle amendments,
EBITDA (earnings before interest expenses, taxes, depreciation and amortization)
increased in all of the last four years. In 2000, EBITDA amounted to W1,445 billion.
Following depreciation and amortization, EBIT (earnings before interest expenses and
taxes) were W921 billion, a significant rise from W684 billion of 1999.
1999
509
261
106
97
146
201
1,320
2000
437
275
196
109
-
217
1,234
Non-operating Expenses
Interest expenses
Foreign exchange losses
Loss from transfer of trade
accounts & notes receivable
Loss from disposal of noncurrent
assets
Equity in losses of affiliates
Other
1998
793
827
-
25
26
42
1,713
In billions of Korean won
427 419
706
R&D Expenditure
1998 1999 2000
In billions of Korean won
37