LG 2002 Annual Report Download - page 7

LG Electronics has been reorganized into a holding company structure in which business operation and
equity investments are separated in order to enhance shareholder value. Following approval by its board
of directors, LGE was formally split into a holding company and an operating company as of April 1,
2002. The holding company was named LGEI (LG Electronics Investment, Ltd.), while the business
operating company will continue to be known as LG Electronics, Inc.
Of note, by reinvesting internally generated cash flow into expansion of its core businesses based on a
“ selection and focus” strategy, LGE will establish an advanced corporate governance structure befitting
a world-class enterprise. The holding company will focus on managing investment assets while being
responsible for evaluation and compensation of the operating company’s management.
LGE will also take steps to maximize synergy benefits through vertical integration of its affiliates
including LG.Philips LCD, LG.Philips Displays, and LG Innotek. With the home appliance segment serving
as a stable profit base, LGE will commit available resources to the development of its digital business
activities (display and IT related products) so as to emerge as a pre-eminent global leader in the digital
information and telecommunication sector.
Meanwhile, the stock split ratio was one share of LGEI to nine shares of LGE. This means that an
investment with 10 shares of LGE stock was issued one share of LGEI and nine shares of the new LGE,
which will boost shareholder value when the share price of the new operating company (LG Electronics)
trends upward.
After the demerger, LGEI initially maintained assets of 2,972 billion won, debt of 887 billion won, and
capital of 2,085 billion won. As for LGE, it started with 9,443 billion won of total assets, 6,628 billion
won of total debts and 2,816 billion won in capital. The demerger will completely free LGE from the
investment burden of its affiliates such that it can now devote itself wholly to business operations.
LG Electronics Inc. IAnnual Report 2002 I10 11
LGE (Operating Company)
LGEI (Holding Company)
Business Divisions
Joint Ventures
Overseas & Domestic Subsidiaries
Affiliated Companies in telecom
service area
Other Related Companies
“Challenge Toward No. 1 LG”
LGE will aggressively seek to attain
global leadership as a highly reputable
electronics, information and
telecommunications enterprise through fast
growth of its IMT-2000, PDP, OLED and
other evolving core businesses.
To proactively respond to the network
business environment that is expected
to flourish in the coming years, LGE will
dramatically step up its relevant
technology development and
investment activities.
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Home Appliance
LGE will relentlessly expand its
facility and technological
investment in its core businesses,
which are the primary sources of
revenue-generation, and other
business opportunities with higher-
growth potential.
Achieving our vision r equires a relentless focus on the networ k business
envir onment so that futur e growth engines can be identified and developed
in a timely manner. W e are wholly committed to the goal of becoming the
“No. 1” in our str ategic and core businesses, including infor mation &
telecommunications, display and home appliances.
LGE
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