LG 2003 Annual Report Download - page 93

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LG Electronics Inc._Annual Report 2003 93
Notes to Non-Consolidated Financial Statements
For the years ended December 31, 2003 and 2002
million.
As a result of the issuance of foreign currency convertible bonds on August 11, 2003, a premium for conversion
rights amounting to ￦15,833 million was recorded as a capital surplus representing the difference between the
issuance price of convertible bonds and the present value of bonds under identical conditions without conversion
rights.
20. Retained Earnings
Retained earnings as of December 31, 2003 and 2002 are as follows:
(in millions of Won)
2003 2002
Legal reserve ￦15,743 ￦-
Other reserves
Reserve for improvement of financial structure 27,771 -
Reserve for research and manpower development 76,590 -
104,361 -
Unappropriated retained earnings to be
carried forward to the subsequent period 645,993 277,716
￦766,097 ￦277,716
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 the 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 an appropriate resolution by the Company’s shareholders.
In accordance with the regulations regarding securities’ issuance and disclosure, 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 shareholders’ equity equals 30% of total assets. This reserve is not available for
the payment of 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.
Pursuant to the Special Tax Treatment Control Law, the Company is allowed to appropriate retained earnings as
a reserve for research and manpower development. This reserve is not available for the payment of dividends until
used for the specified purposes or reversed.