LG 2004 Annual Report Download - page 58

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LG Electronics Inc.
Report of Independent Auditors
To the Board of Directors and Shareholders of LG Electronics Inc.
We have audited the accompanying non-consolidated balance sheets of LG Electronics Inc. (the "Company") as of
December 31, 2004 and 2003, and the related non-consolidated statements of income, appropriations of retained earnings, and cash
flows for the years then ended expressed in Korean won. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the
financial statements of certain subsidiaries, the investments in which are reflected in the accompanying non-consolidated financial
statements using the equity method of accounting. The investments in those subsidiaries represent 8.5% of the Company's total
assets as of December 31, 2004, and the equity in their net income represents 2.6% of the Company's income before income taxes for
the year then ended. These financial statements were audited by other auditors whose reports have been furnished us, and our
opinion, insofar as it relates to the amounts included for the subsidiaries, is based solely on the reports of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, the non-consolidated financial statements referred to
above present fairly, in all material respects, the financial position of LG Electronics Inc. as of December 31, 2004 and 2003, and the
results of its operations, the changes in its retained earnings and its cash flows for the years ended December 31, 2004 and 2003, in
conformity with accounting principles generally accepted in the Republic of Korea.
Without qualifying our opinion, we draw your attention to following matters.
As discussed in Note 25 to the accompanying non-consolidated financial statements, for the year ended December 31,
2004, the Company sells its products to, and purchases certain materials from, affiliated companies. During 2004, the Company's total
sales to and purchases from affiliated companies amounted to 16,795,160 million and 3,344,125 million, respectively, and related
receivables and payables amounted to 632,716 million and 566,379 million, respectively, as of December 31, 2004. During 2003, the
Company's total sales to and purchases from affiliated companies amounted to 12,590,720 million and 2,679,403 million,
respectively, and related receivables and payables amounted to 584,407 million and 319,545 million, respectively, as of December
31, 2003.
As discussed in Note 10 to the accompanying non-consolidated financial statements, upon a resolution of the Board of
Directors in July, 2004, the Company invested 289,125 million (equivalent to US$ 250 million) in LG Electronics Wales Ltd. ("LGEWA")
which, in turn, invested to its subsidiary, LG.Philips Displays Holding B.V. ("LPD") according to an agreement with the LPD's creditor
financial institutions. The other conditions in the said agreement included the deferment of loan repayment and the reduction in the
interest rate of the said loan.
Samil PricewaterhouseCoopers
Kukje Center Building
191 Hangangro 2 ga, Yongsanku
Seoul 140-702, KOREA
(Yongsan P.O. Box 266, 140-600)