LG 2000 Annual Report Download - page 74

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Millions of won 2000 1999
Transfer to property, plant and equipment from construction in progress W 75,196 W 35,735
Transfer to machinery and equipment from machinery in transit 86,596 79,602
Additional provision of severance benefits –11,907
Reclassify current maturities of debenture 1,275,736 1,154,450
Reclassify current maturities of long-term debt 223,923 217,800
Retroactive adoption of the revised standards on prior year’s research cost –425,582
Retroactive adoption of the revised standards on deferred income tax –254,280
Retroactive adoption of the revised standards on sales of receivables –34,734
Changes in retained earnings and capital adjustments by
equity method of accounting on investments 304,103 251,797
Transfer to investments from receivables from Zenith –433,119
Increase in assets by merger of LGIC 3,060,233 –
Increase in liabilities by merger of LGIC 2,534,043 –
25. Merger :
Effective September 1, 2000, the Company merged LG Information & Communications, Ltd., (“LGIC”), an affiliate, in accordance
with a merger agreement with LGIC on June 8, 2000 and subsequent approval by shareholders on July 22, 2000.
LGIC was incorporated to manufacture and sell electronic switching systems, transmission equipment, network equipment, mobile
telecommunication systems, and mobile phones.
The Company owned 8,374,357 shares of LGIC (27.10%) at the time of merger but the Company cancelled those shares without
issuing common stock.
In connection with the merger, the Company issued 47,790,404 shares of common stock (W1,347,645 million) exchanging 2.1216
shares of its common stock for each share of LGIC. The Company acquired the assets and assumed the liabilities of LGIC at their
fair value as of September 1, 2000. As a result of the merger, the Company recognized goodwill of W393,820 million.
Changes in goodwill are as follows :
Millions of won
Goodwill at the merger W 393,820
Amortization (21,275)
Goodwill as of December 31, 2000 W 372,545
Condensed balance sheets of LGIC as of August 31, 2000 and December 31, 1999 and the related statements of income are as
follows (Millions of won) :
Condensed balance sheets
As of August As of December
31, 2000 31, 1999
Current assets W1,221,105 W 894,135
Investment 1,571,884 1,473,054
Property, plant and equipment 228,085 198,261
Intangible assets 36,176 30,508
Total assets W3,057,250 W2,595,958
Current liablities W1,910,295 W1,021,601
Non-current liabilities 623,748 403,647
Total liabilities 2,534,043 1,425,248
Shareholders’ equity 523,207 1,170,710
Total liabilities and shareholders’ equity W3,057,250 W2,595,958
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