LG 2001 Annual Report Download - page 19

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Risk Management
Despite signs of economic recovery, we will operate under the conservative
assumption that this year will present similar business challenges to 2001. Under such
notions, we are developing three possible scenarios: best, base and worst. In the worst-
case scenario we would see the Won appreciate to W1200/$ and continuing sluggishness
in the IT industry. In such a case, we would reduce IT related investments by a further 20%
while employing harder methods of restructuring. We would also adopt a keener hedging
policy, enabling us to react more flexibly to exchange rate risks.
Going Forward
LG Electronics will continue a “cash-oriented” management system in which
investments are kept within the range of our cash-generating capability. Subsequent to the
demerger, our debt ratio will increase to a level over 120%. By 2005, we would like to
bring this down to 50%. If we successfully bring our resources together I’m sure this target
will be within our reach.
I consider the year 2002 as an exciting new starting point for LG Electronics. We will
do our utmost to provide value for investors and we look forward to your continuing
support.
CFO Byung Chul Jung
LG Electronics Inc. The
43
rd Business Reprot
Message from CFO
*
Long-term liabilities include long-term
borrowings matured within one year.
**
Bonds are based on par value
Unit : Billion KRW, Million USD
Type Balance 1Q 2Q 3Q 4Q Total Total
Short-term loan Won currency 44.7 44.7 44.7 0
Foreign currency 7.2 3.6 1.9 1.7 7.2 0
(U$5) (U$3) (U$1) (U$1) (U$5) 0
Sub-total 51.9 48.3 1.9 1.7 0 51.9 0
Long-term loan Won loans 28.5 0.1 0.5 0.1 0.4 1.1 27.4
Won bonds 3,135.0 15.0 295.0 515.0 100.0 925.0 2,210.0
Sub-total 3,163.5 15.1 295.5 515.1 100.4 926.1 2,237.4
Foreign currency 260.4 132.6 14.1 2.8 13.1 162.6 97.8
loans (U$196) (U$100) (U$11) (U$2) (U$10) (U$123) (U$73)
Foreign currency 632.1 293.1 73.8 366.9 265.2
bonds (U$477) (U$221) (U$56) (U$277) (U$200)
Sub-total 892.5 132.6 307.2 76.6 13.1 529.5 363.0
(U$673) (U$100) (U$232) (U$58) (U$10) (U$400) (U$273)
Sub-total 4,056.0 147.7 602.7 591.7 113.5 1,455.6 2,600.4
Total 4,107.9 196.0 604.6 593.4 113.5 1,507.5 2,600.4
(U$678) (U$103) (U$233) (U$59) (U$10) (U$405) (U$273)
2001 Due in 2002 After 2003
Debt Maturity
LG Electronics will continue
“cash-oriented”
management system in
which investments are kept
within the range of our cash-
generating capability.