LG 2001 Annual Report Download - page 81

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LG Electronics Inc. The
43
rd Annual Report
Notes to Financial Statements
for the years ended December 31, 2001 and 2000
17. Retained Earnings
Retained earnings as of December 31, 2001 and 2000 are as follows:
Millions of Won
2001 2000
Legal reserve (*1)
69,888 55,999
Other reserves
Reserve for business rationalization (*2) 431,065 281,065
Reserve for improvement o financial structure (*3) 84,458 84,458
Reserve for technological development (*4) 866,561 708,680
Reserve for redemption of redeemable preferred stock - 544,000
1,382,084 1,618,203
Unappropriated retained earnings carried forward to subsequent year 19 24
1,451,991 1,674,226
(*1) The Commercial Code of the Republic of Korea requires the Company to appropriate, as a legal reserve, an amount equal to a
minimum of 10% of cash dividends paid until such reserve equals 50% of its issued capital stock. The reserve is not available for payment
of cash dividends, but may be transferred to capital stock through an appropriate resolution by the Company s board of directors or used
to reduce accumulated deficit, if any, through appropriate resolution by the Company s shareholders.
(*2) Pursuant to the Tax Exemption and Reduction Control Law, the Company is required to appropriate, as a reserve for business
rationalization, a portion of retained earnings equal to tax reductions arising from investment and other tax credits. This reserve is not
available for dividends but may be transferred to capital stock through an appropriate resolution by the Company s board of directors or
used to reduce accumulated deficit, if any, through appropriate resolution by the Company s shareholders.
(*3) In accordance with the regulations regarding securities issuance and disclosure (formerly, the provisions of the Financial Control
Regulation for publicly listed companies), the Company is required to appropriate, as a reserve for improvement of financial structure, a
portion of retained earnings equal to a minimum of 10% of its annual income plus at least 50% of the net gain from the disposal of
property, plant and equipment after deducting related taxes, until equity equals 30% of total assets. This reserve is not available for
dividends, but may be transferred to capital stock through an appropriate resolution by the Company s board of directors or used to reduce
accumulated deficit, if any, through an appropriate resolution by the Company s shareholders.
(*4) Pursuant to the Tax Exemption and Reduction Control Law, the Company is allowed to appropriate retained earnings as a reserve
for technological development. This reserve is not available for dividends until used for the specified purposes or reversed.