LG 2000 Annual Report Download - page 43

43
To the Board of Directors and Shareholders of
LG Electronics Inc.
We have audited the accompanying non-consolidated balance
sheets of LG Electronics Inc. (the “Company”) as of December
31, 2000 and 1999, and the related non-consolidated
statements of income, appropriations of retained earnings and
cash flows for the years then ended, expressed in Korean Won.
These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the Republic of Korea. Those standards
require that we 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 also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
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
LG Electronics Inc. as of December 31, 2000 and 1999, and
the results of its operations, the changes in its retained earnings
and its cash flows for the years then ended, in conformity with
financial accounting standards generally accepted in the
Republic of Korea.
As discussed in Note 22 to the accompanying financial
statements, for the years ended December 31, 2000 and 1999,
the Company entered into various transactions with affiliated
companies such as LG Electronics U.S.A. Inc., including sales
of W7,028,871 million and W4,725,470 million, respectively,
and purchases of W1,504,114 million and W1,049,335 million,
respectively. As of December 31, 2000 and 1999, related
accounts receivable approximate W806,155 million and
W372,491 million, respectively, and related accounts payable
approximate W425,381 million and W275,529 million,
respectively.
As discussed in Note 25 to the accompanying financial
statements, LG Information & Communications, Ltd.
(“LGIC”), an affiliate, was merged into the Company effective
September 1, 2000. In connection with the merger, the
Company issued 47,790,404 shares of common stock (issue
value : W1,347,645 million) to the shareholders of LGIC.
As discussed in Note 15 to the accompanying financial
statements, pursuant to the resolution by the board of directors
on December 12, 2000, the Company issued W542,952 million
(32,000,000 shares) of redeemable preferred stock on
December 23, 2000.
As discussed in Note 1 to the accompanying financial
statements, pursuant to the resolution by the board of directors
on November 27, 2000, the Company entered into a LOI (letter
of intent) regarding a joint venture of Cathode Ray Tubes
(“CRT”) business with Koninklijke Philips Electronics N.V.
Currently, detailed matters to establish the joint venture are
being negotiated.
Without qualifying our opinion, we draw attention to Note 14
of the accompanying financial statements. The operations of
the Company have been significantly affected, and may
continue to be affected for the foreseeable future, by the
general adverse economic conditions in the Republic of Korea
and in the Asia Pacific region. The ultimate effect of these
significant uncertainties on the financial position of the
Company as of the balance sheet date cannot presently be
determined and accordingly, no adjustments have been made
in the accompanying financial statements related to such
uncertainties.
The accompanying financial statements are not intended to
present the financial position, results of operations and cash
flows in accordance with accounting principles and practices
generally accepted in countries and jurisdictions other than the
Republic of Korea. The procedures and practices utilized to
audit such financial statements may differ from those generally
accepted and applied in other countries and jurisdictions.
Accordingly, this report and the accompanying financial
statements are not intended for use by those who are not
informed about Korean accounting principles or auditing
standards and their application in practice.
Seoul, Korea
February 3, 2001
Report of Independent Accountants