LGE 2010 4Q Separate

LG
Electronics
Inc. December 31, 2013 and 2012
LG Electronics Inc.
Index
December 31, 2013 and 2012
Page(s)
Report o Independent !"ditors ......................................................................... 1-
2
#eparate $inancial #tatements
Statements of Financial Position
........................................................................... 3
Income Statements ................................................................................................ 4
Statements of Comprehensive Income ..................................................................... 5
Statements of Changes in Shareholders !"it# ....................................................... $
Statements of Cash Flo%s ..................................................................................... &
'otes to the Separate Financial Statements
.........................................................( - &&
)eport on the )evie% of Internal *cco"nting Control S#stem ................................. &(
)eport on the +perations of the Internal *cco"nting Control S#stem ...................... &,
Report o Independent !"ditors
-o the .oard of /irectors and
Shareholders of 01 lectronics Inc.
2e have a"dited the accompan#ing separate statements of financial position of
01 lectronics Inc. 3the 4Compan#45 as of /ecem6er 317 2818 and 288,7 and
the related separate income statements7 statements of comprehensive income7
changes in shareholders e!"it# and cash flo%s for the #ears then ended7
e9pressed in :orean %on. -hese separate financial statements are the
responsi6ilit# of the Compan#;s management. +"r responsi6ilit# is to e9press an
opinion on these separate financial statements 6ased on o"r a"dits.
2e cond"cted o"r a"dits in conformit# %ith a"diting standards generall#
accepted in the )ep"6lic of :orea. -hose standards re!"ire that %e plan and
perform the a"dits to o6tain reasona6le ass"rance a6o"t %hether the financial
statements are free of material misstatement. *n a"dit incl"des e9amining7 on a
test 6asis7 evidence s"pporting the amo"nts and disclos"res in the financial
statements. *n a"dit also incl"des assessing the acco"nting principles "sed
and significant estimates made 6# management7 as %ell as eval"ating the
overall financial statement presentation. 2e 6elieve that o"r a"dits provide a
reasona6le 6asis for o"r opinion.
In o"r opinion7 6ased on o"r a"dits7 the separate financial statements referred to
a6ove present fairl#7 in all material respects7 the financial position of the Compan#
as of /ecem6er 317 2818 and 288,7 and the res"lts of its operations and cash
flo%s for the #ears ended 2818 and 288,7 in conformit# %ith International
Financial )eporting Standards as adopted 6# the )ep"6lic of :orea 3<:orean
IF)S=5.
LG Electronics Inc.
December 31, 2013 and 2012
(in millions of Korean won)
!ssets
%"rrent assets
Cash and cash
e!"ivalents
Financial
deposits
-rade receiva6les
0oans and other
receiva6les
+ther financial
assets
Inventories
+ther c"rrent assets
'on-c"rrent assets held for
sale
&on'
c"rrent
assets
Financial
deposits
0oans and other
receiva6les +ther
financial assets
Propert#7 plant
and e!"ipment
Intangi6le assets
/eferred income ta9 assets
Investments in
s"6sidiaries7 >ointl# controlled
entities and associates
Investment
propert# +ther
non-c"rrent
assets
(otal
assets
Liabiliti
es
%"rrent
liabilities
-rade
pa#a6les
.orro%in
gs +ther
pa#a6les
+t
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fin
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*cc"m"lated other
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+ther components of
e!"it#
(otal e*"it+
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&ote December
31, 2010
475741
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-he accompan#ing notes are an integral part of these separate
financial statements.
3
LG Electronics Inc.
#eparate Income
#tatements
.ears ended December 31, 2010 and 200,
.ear Ended December 31
(in millions of Korean won, except per share
amounts)
&ote
&et sales 24
%ost o sales 25
Gross proit
Selling and mar@eting e9penses
2572& *dministrative e9penses
2572& )esearch and development e9penses
2572& Service costs
2572& +ther operating income
2, +ther operating e9penses
25738
/perating income (expense)
Financial income
31 Financial e9penses
32
Proit (loss) beore income tax
Income ta9 e9pense 3income5 33
Proit (loss) or t0e +ear
Earnings (losses) per s0are d"ring t0e +ear (in
1on) 34
arnings 3losses5 per share profit
attri6"ta6le to the ordinar# e!"it#
holders of the compan#
arnings 3losses5 per share for profit attri6"ta6le
to
the preferred e!"it# holders of the compan#
2010
2,723(75
83
247(,37$
,&
473447(
8$
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1&
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&
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&,
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,
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$&
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&7115
&71$5
-he accompan#ing notes are an integral part of these separate financial
statements.
4
LG Electronics Inc.
#eparate #tatements o %ompre0ensi2e
Income .ears ended December 31, 2010 and
200,
.ear Ended December
31 (in millions of Korean won) &ote 2010 200,
Proit (loss) or t0e +ear
/t0er compre0ensi2e income
(expense)3
3$357(&
45
343722
(5
1714$7(84
57&1$
*vaila6le-for-sale financial assets &
*ct"arial loss on defined 6enefit lia6ilit#
1&
(otal compre0ensi2e income (expense) or t0e
+ear
3172,
35
3417,3
55
3$&,718
25
$7,82
3171($
5
171527528
statements.
5
LG Electronics Inc.
#eparate #tatements o %0anges in #0are0olders4 E*"it+
.ears ended December 31, 2010 and 200,
5alance at -an"ar+
1, 200,
%ompre0ensi2e
income
Profit for the #ear
*ct"arial loss on defined
6enefit lia6ilit# *vaila6le-for-
sale financial assets
/ividends
5alance at December 31,
200,
5alance at -an"ar+
1, 2010
%ompre0ensi2e
income
0oss for the #ear
*ct"arial loss on defined
6enefit lia6ilit# *vaila6le-for-
sale financial assets
/ividends
5alance at December 31,
2010
Paid'
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15
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statements.
$
LG Electronics Inc.
#eparate #tatements o %as0
$lo1s .ears ended
December 31, 2010 and 200,
.ear Ended December
31
&ote
%as0 lo1s rom operating acti2ities
Cash generated from operations 3$
Interest received
Interest paid
/ividends
received
Income ta9
paid
&et cas0 generated rom operating acti2ities
%as0 lo1s rom
in2esting acti2ities
/ecrease in financial
deposits /ecrease in
loans and other
receiva6les
Proceeds from disposal of other
financial assets Proceeds from
disposal of propert#7 plant and
e!"ipment Proceeds from
disposal of intangi6le assets
Proceeds from disposal of investments in
s"6sidiaries7 >ointl# controlled entities and
associates
/ecrease in other
assets Increase in
financial deposits
Increase in loans and other
receiva6les *c!"isition of
other financial assets
*c!"isition of propert#7
plant and e!"ipment
*c!"isition of intangi6le
assets
*c!"isition of investments in
s
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&et increase (decrease) in cas0 and cas0
e*"i2alents
Cash and cash e!"ivalents at the 6eginning of #ear 5
%as0 and cas0 e*"i2alents at t0e end o +ear 5
2010
34(,7
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$
-he accompan#ing notes are an integral part of these consolidated financial
statements.
&
LG Electronics Inc.
&otes to t0e #eparate $inancial #tatements
December 31, 2010 and 200,, and -an"ar+ 1, 200,
1. General Inormation
01 lectronics Inc. 3the <Compan#=5 %as sp"n-off from 01 lectronics
Investment 0td. on *pril 17 28827 to engage in the man"fact"re and sale of
electronic7 information and comm"nication prod"cts. -he Compan#s shares
are listed on the :orea 9change and some of its preferred shares7 in the
form of glo6al depositar# receipts 3</)s=57 are listed on the 0ondon Stoc@
9change as of the reporting date. -he Compan# is domiciled in :orea at
Aeo"ido-dong7 Ae"ngde"ngpo- g"7 Seo"l.
-he Compan# is engaged in the man"fact"re and sale of electronic prod"cts
incl"ding mo6ile phones7 -B7 air conditioners7 refrigerators7 %ashing
machines7 and personal comp"ters. *s of /ecem6er 317 28187 the
Compan# operates man"fact"ring facilities mainl# in P#eongtae@7
Chang%on7 Cheong>" and 1"mi in the )ep"6lic of :orea.
*s of /ecem6er 317 28187 01 Corp. and its related parties o%n 34.(C of the
Compan#s total shares7 e9cl"ding preferred shares7 %hile financial
instit"tions7 foreign investors and others o%n the rest.
2. #igniicant !cco"nting Policies
-he principal acco"nting policies applied in the preparation of these
separate financial statements are set o"t 6elo%. -hese policies have 6een
consistentl# applied to all the #ears presented7 "nless other%ise stated.
5asis o Preparation
-he financial statements are prepared in accordance %ith International
Financial )eporting Standards as adopted 6# the )ep"6lic of :orea
3<:orean IF)S=5. -hese are the standards7 s"6se!"ent amendments and
related interpretations iss"ed 6# the International *cco"nting Standards
.oard 34I*S.45 that have 6een adopted 6# the )ep"6lic of :orea.
-he non-consolidated financial statements of the Compan# %ere prepared in
accordance %ith acco"nting principles generall# accepted in the )ep"6lic of
:orea 3<:-1**P=5. -he Compan#s :orean IF)S transition date according to
:orean IF)S 11817 First-time Adoption of Korean IFRS, is Dan"ar# 17
288,7 and reconciliations and descriptions of the effect of the transition from
:-1**P to :orean IF)S on the Compan#s e!"it#7 its comprehensive
income and cash flo%s are provided in 'ote 42.
-he preparation of separate financial statements in accordance %ith :orean
IF)S re!"ires the "se of certain critical acco"nting estimates. It also re!"ires
management to e9ercise >"dgement in the process of appl#ing the
Compan#s acco"nting policies. -he areas involving a higher degree of
>"dgement or comple9it#7 or areas %here ass"mptions and estimates are
significant to the separate financial statements7 are disclosed in 'ote 3.
-he follo%ing ne% standards7 ne% interpretations and amendments to
standards and interpretations have 6een iss"ed and anno"nced 6"t are not
effective for the period 6eginning
(
LG Electronics Inc.
Dan"ar# 17 2818 and have not 6een earl# adopted?
:orean IF)S 211,? E9ting"ishing Financial 0ia6ilities %ith !"it# Instr"ments
:orean IF)S 1824 3amendment5? E)elated /isclos"res
:orean IF)S 1832 3amendment5? EFinancial Instr"ments-Presentation
:orean IF)S 1181 3amendment5? EFirst-time *doption of :orean IF)S
:orean IF)S 2114 3amendment5? :orean IF)S 181, F E-he 0imit on a
/efined .enefit *sset7 Ginim"m F"nding )e!"irements and -heir
Interaction
:orean IF)S ann"al improvements
In2estments in #"bsidiaries, -ointl+ %ontrolled Entities and !ssociates
-he attached statements are the separate financial statements s"6>ect to
:orean IF)S 182&7 Consolidated and Separate Financial Statements7 and
are those presented 6# a parent. -he investments in s"6sidiaries7 >ointl#
controlled entities or associates are recorded at ac!"isition cost on the 6asis
of the direct e!"it# interest. *s of the date of transition to :orean IF)S7 :-
1**P carr#ing amo"nt at the transition date is "sed as its deemed cost.
-he Compan# recognises a dividend from a s"6sidiar#7 >ointl# controlled
entit# or associate in profit or loss %hen its right to receive the dividend is
esta6lished.
#egment Reporting
+perating segments are esta6lished on the 6asis of 6"siness divisions %hose
internal reporting is provided to the chief operating decision-ma@er %ho is
the chief e9ec"tive officer. -he information of the operating segments is
disclosed in 'ote 4 to the consolidated financial statements7 s"6>ect to
:orean IF)S 118(7 peratin! Se!ments.
$oreign %"rrenc+ (ranslation
-he Compan#s f"nctional and presentation c"rrenc# is E:orean %on.
Foreign c"rrenc# transactions are translated into the f"nctional c"rrenc#
"sing the e9change rates prevailing at the dates of the transactions or
val"ation %here items are re-meas"red. Foreign e9change gains and losses
res"lting from the settlement of s"ch transactions and from the translation at
each reporting date e9change rates of monetar# assets and lia6ilities
denominated in foreign c"rrencies are recognised in the income statement7
e9cept !"alif#ing cash flo% hedges %hich are recogniHed in other
comprehensive income.
Foreign e9change gains and losses that relate to 6orro%ings and cash and
cash e!"ivalents are reported in Efinancial income and e9penses in the
separate income statement. *ll other foreign e9change gains and losses are
reported in Eother operating income and e9penses in the separate income
statement.
Changes in the fair val"e of monetar# sec"rities denominated in foreign c"rrenc#
classified as
,
LG Electronics Inc.
availa6le-for-sale are anal#sed 6et%een translation differences res"lting from
changes in the amortised cost of the sec"rit# and other changes in the
carr#ing amo"nt of the sec"rit#. -ranslation differences related to changes in
amortised cost are recognised in profit or loss7 and other changes in carr#ing
amo"nt are recognised in other comprehensive income.
-ranslation differences on non-monetar# financial assets and lia6ilities7 s"ch
as e!"ities held at fair val"e thro"gh profit or loss7 are recognised in the
separate income statement as part of the fair val"e gain or loss. -ranslation
differences on non-monetar# financial assets7 s"ch as e!"ities classified as
availa6le-for-sale7 are incl"ded in other comprehensive income.
%as0 and %as0 E*"i2alents
Cash and cash e!"ivalents incl"de cash on hand7 deposits held at call %ith
6an@s7 and other short-term highl# li!"id investments %ith original mat"rities of
less than three months.
$inancial Instr"ments
3a5 Classification
-he Compan# classifies its financial assets in the follo%ing categories?
financial assets and lia6ilities at fair val"e thro"gh profit or loss7 loans and
receiva6les7 held-to-mat"rit# investments7 availa6le-for-sale financial assets7
and other financial lia6ilities meas"red at amortised cost. -he classification
depends on the p"rpose for %hich the financial assets %ere ac!"ired and
the nat"re of the instr"ments. Ganagement determines the classification of
its financial assets at initial recognition.
i5 Financial assets and lia6ilities at fair val"e thro"gh profit or loss
Financial assets and lia6ilities at fair val"e thro"gh profit or loss are financial
instr"ments held for trading. Financial assets and lia6ilities are classified in
this categor# if ac!"ired or inc"rred principall# for the p"rpose of selling or
rep"rchasing it in the near term. /erivatives that are not s"6>ect to hedge
acco"nting and financial instr"ments having em6edded derivatives are also
incl"ded in this categor#. -he Compan#s financial assets and lia6ilities at
fair val"e thro"gh profit or loss comprise Eother financial assets and Eother
financial lia6ilities.
ii5 0oans and receiva6les
0oans and receiva6les are non-derivative financial assets %ith fi9ed or
determina6le pa#ments that are not !"oted in an active mar@et. -he# are
incl"ded in c"rrent assets7 e9cept for those %ith mat"rities greater than 12
months after the end of the reporting period. -hese are classified as non-
c"rrent assets. -he Compan#s loans and receiva6les comprise Ecash and
cash e!"ivalents7 Efinancial deposits7 Etrade receiva6les7 and Eloans and other
receiva6les.
18
LG Electronics Inc.
iii5 Ield-to-mat"rit# financial assets
Ield-to-mat"rit# financial assets are non-derivative financial assets %ith fi9ed
or determina6le pa#ments and fi9ed mat"rities that the Compan#s
management has the positive intention and a6ilit# to hold to mat"rit# and are
classified as Eother financial assets in the separate statements of financial
position. If the Compan# %ere to sell other than an insignificant amo"nt of
held-to-mat"rit# financial assets7 the %hole categor# %o"ld 6e tainted and
reclassified as availa6le-for-sale. Ield-to-mat"rit# financial assets are incl"ded
in non-c"rrent assets7 e9cept for those %ith mat"rities less than 12 months
after the end of the reporting period7 %hich are classified as c"rrent assets.
iv5 *vaila6le-for-sale financial assets
*vaila6le-for-sale financial assets are non-derivative financial assets that are
either designated in this categor# or not classified in an# of the other
categories. -he# are incl"ded in Eother financial assets as non-c"rrent
assets "nless their mat"rities are less than 12 months or management
intends to dispose of %ithin 12 months of the end of the reporting period.
v5 Financial lia6ilities meas"red at amortised cost
-he Compan# classifies non-derivative financial lia6ilities as financial
lia6ilities meas"red at amortised cost e9cept for financial lia6ilities at fair
val"e thro"gh profit or loss or financial lia6ilities that arise %hen a transfer of
a financial asset does not !"alif# for derecognition. In this case the transferred
asset contin"es to 6e recognised and a financial lia6ilit# is meas"red at the
consideration received. Financial lia6ilities meas"red at amortised cost are
incl"ded in non-c"rrent lia6ilities7 e9cept for mat"rities less than 12 months
after the end of the reporting period7 %hich are classified as c"rrent lia6ilities.
365 Reco!nition and "easurement
)eg"lar p"rchases and sales of financial assets are recognised on the trade
date. Investments are initiall# recognised at fair val"e pl"s transaction costs
for all financial assets not carried at fair val"e thro"gh profit or loss. Financial
assets carried at fair val"e thro"gh profit or loss are initiall# recognised at fair
val"e7 and transaction costs are e9pensed in the separate income
statement. Financial assets are derecognised %hen the rights to receive
cash flo%s from the investments have e9pired or have 6een transferred
and the Compan# has transferred s"6stantiall# all ris@s and re%ards of
o%nership. *vaila6le-for-sale financial assets and financial assets at fair val"e
thro"gh profit or loss are s"6se!"entl# carried at fair val"e. 0oans and
receiva6les are s"6se!"entl# carried at amortised cost "sing the effective
interest method.
1ains or losses arising from changes in the fair val"e of the financial assets
carried at fair val"e thro"gh profit or loss are presented in the separate
income statement %ithin Efinancial income and e9penses in the period in
%hich the# arise. -he Compan# recognises a dividend from financial assets
at fair val"e thro"gh profit or loss in the separate income statement %hen its
11
LG Electronics Inc.
right to receive the dividend is esta6lished.
2hen sec"rities classified as availa6le-for-sale are sold or impaired7 the
acc"m"lated fair val"e ad>"stments recognised in other comprehensive
income are reported in the separate income statement as Efinancial income
and e9penses.
Interest on availa6le-for-sale sec"rities calc"lated "sing the effective
interest method is recognised in the separate income statement as part
of Efinancial income. /ividends on availa6le-for-sale e!"it# instr"ments are
recognised in the separate income statement as part of Efinancial income
%hen the Compan#s right to receive the dividend is esta6lished.
3c5 ffsettin!
Financial assets and lia6ilities are offset and the net amo"nt reported in
the statement of financial position %hen there is a legall# enforcea6le right to
offset the recognised amo"nts and there is an intention to settle on a net
6asis7 or realise the asset and settle the lia6ilit# sim"ltaneo"sl#.
Impairment o $inancial !ssets
3a5 *ssets carried at amortised cost
-he Compan# assesses at the end of each reporting date %hether there is
o6>ective evidence that a financial asset or a gro"p of financial assets is
impaired. * financial asset or a gro"p of financial assets is impaired and
impairment losses are inc"rred onl# if there is o6>ective evidence of
impairment as a res"lt of one or more events that occ"rred after the
initial recognition of the asset 3a Eloss event5 and that loss event 3or events5
has an impact on the estimated f"t"re cash flo%s of the financial asset or a
gro"p of financial assets that can 6e relia6l# estimated.
-he criteria that the Compan# "ses to determine that there is o6>ective
evidence of an impairment loss incl"de?
Significant financial diffic"lt# of the iss"er or o6ligorJ
* 6reach of contract7 s"ch as a defa"lt or delin!"enc# in interest or
principal pa#mentsJ For economic or legal reasons relating to the
6orro%ers financial diffic"lt#7 granting to
the 6orro%er a concession that the lender %o"ld not other%ise considerJ
It 6ecomes pro6a6le that the 6orro%er %ill enter 6an@r"ptc# or
other financial reorganisationJ
-he disappearance of an active mar@et for that financial asset
6eca"se of financial diffic"ltiesJ or
+6serva6le data indicating that there is a meas"ra6le decrease in the
estimated f"t"re cash flo%s from a portfolio of financial assets since the
initial recognition of those assets7 altho"gh the decrease cannot #et 6e
identified %ith the individ"al financial assets in the portfolio7 incl"ding?
3i5 adverse changes in the pa#ment stat"s of 6orro%ers in the portfolioJ
12
LG Electronics Inc.
3ii5 national or local economic conditions that correlate %ith defa"lts on
the assets in the portfolio.
-he amo"nt of the loss is meas"red as the difference 6et%een the assets
carr#ing amo"nt and the present val"e of estimated f"t"re cash flo%s
3e9cl"ding f"t"re credit losses that have not 6een inc"rred5 disco"nted at the
financial assets original effective interest rate. -he assets carr#ing amo"nt
of the asset is red"ced and the amo"nt of the loss is recognised in the income
statement. *s a practical e9pedient7 the Compan# ma# meas"re impairment
on the 6asis of an instr"ments fair val"e "sing an o6serva6le mar@et price.
If7 in a s"6se!"ent period7 the amo"nt of the impairment loss decreases and
the decrease can 6e related o6>ectivel# to an event occ"rring after the
impairment %as recognised 3s"ch as an improvement in the de6tors credit
rating57 the reversal of the previo"sl# recognised impairment loss is recognised
in the income statement.
365 *ssets classified as availa6le-for-sale
-he Compan# assesses at the end of each reporting period %hether there
is an o6>ective evidence that a financial asset or a gro"p of financial assets is
impaired. For de6t sec"rities7 the Compan# "ses the criteria referred to 3a5
a6ove. In the case of e!"it# investments classified as availa6le-for-sale7 a
significant or prolonged decline in the fair val"e of the sec"rit# 6elo% its cost
is also evidence that the assets are impaired. If an# s"ch evidence e9ists for
availa6le-for-sale financial assets7 the c"m"lative loss F meas"red as the
difference 6et%een the ac!"isition cost and the c"rrent fair val"e7 less an#
impairment loss on that financial asset previo"sl# recognised in profit or loss
F is removed from e!"it# and recognised in the income statement. Impairment
losses recognised in the income statement on e!"it# instr"ments are not
reversed thro"gh the income statement. If7 in a s"6se!"ent period7 the fair
val"e of a de6t instr"ment classified as availa6le-for-sale increases and the
increase can 6e o6>ectivel# related to an event occ"rring after the impairment
loss %as recognised in profit or loss7 the impairment loss is reversed
thro"gh the income statement.
Deri2ati2e $inancial Instr"ments
/erivatives are initiall# recognised at fair val"e on the date a derivative
contract is entered into and are s"6se!"entl# re-meas"red at their fair val"e.
2hen hedge does not meet the criteria for hedge acco"nting7 changes in fair
val"e of those derivatives are recognised t#picall# in the separate income
statement %ithin Eother operating income and e9penses or Efinancial income
and e9penses according to the nat"re of transactions.
(rade Recei2ables
-rade receiva6les are amo"nts d"e from c"stomers for merchandise sold or
services performed in the ordinar# co"rse of 6"siness. If collection is
e9pected in one #ear or less7 the# are classified as c"rrent assets. If not7
the# are presented as non-c"rrent assets. -rade receiva6les are recognised
initiall# at fair val"e7 less provision for impairment.
13
LG Electronics Inc.
In2entories
Inventories are stated at the lo%er of cost and net realisa6le val"e. Cost is
determined "sing the %eighted-average method7 e9cept for inventories in-
transit %hich are determined "sing the specific identification method. -he
cost of finished goods and %or@ in progress comprises ra% materials7 direct
la6o"r7 other direct costs and related prod"ction overheads 36ased on normal
operating capacit#5. -he Compan# periodicall# revie%s a possi6ilit# of the
significant changes in net realiHa6le val"e of inventories from dis"se7 decrease
in mar@et val"e and o6solescence and recogniHes as ;*llo%ances for
Bal"ation of Inventories;. 'et realisa6le val"e is the estimated selling price in
the ordinar# co"rse of 6"siness7 less applica6le selling e9penses.
Propert+, Plant and E*"ipment
*ll propert#7 plant and e!"ipment are stated at historical cost less
depreciation. Iistorical cost incl"des e9pendit"res directl# attri6"ta6le to the
ac!"isition of the items.
S"6se!"ent costs are incl"ded in the assets carr#ing amo"nt or recognised
as a separate asset7 as appropriate7 onl# %hen it is pro6a6le that f"t"re
economic 6enefits associated %ith the item %ill flo% to the Compan# and the
cost of the item can 6e meas"red relia6l#. -he carr#ing amo"nt of the
replaced part is derecognised. *ll other repairs and maintenance are charged
to the separate income statement d"ring the financial period in %hich the# are
inc"rred.
0and is not depreciated. /epreciation on other assets is calc"lated "sing
the straight-line method to allocate the difference 6et%een their cost and
their resid"al val"es over their estimated "sef"l lives7 as follo%s?
."ildings
Str"ct"re
s
Gachiner
#
28 - 48
#ears 28 -
48 #ears
5 - 18 #ears
-ools
!"ipme
nt
+thers
1 - 5
#ears 5
#ears
5 #ears
-he assets resid"al val"es and "sef"l lives are revie%ed7 and ad>"sted if
appropriate7 at the end of each reporting period. *n assets carr#ing amo"nt
is %ritten do%n immediatel# to its recovera6le amo"nt if the assets carr#ing
amo"nt is greater than its estimated recovera6le amo"nt. 1ains and losses
on disposals are determined 6# comparing the proceeds %ith the carr#ing
amo"nt and are recognised %ithin Eother operating income and e9penses
in the separate income statement.
5orro1ing %osts
-he Compan# capitalises 6orro%ing costs directl# attri6"ta6le to the
ac!"isition or constr"ction of a !"alif#ing asset as part of the cost of that
asset d"ring an e9tended period in %hich it
14
LG Electronics Inc.
prepares an asset for its intended "se. -he Compan# recognises other
6orro%ing costs as an e9pense in the period in %hich it is inc"rred.
Go2ernment Grants
1rants from the government are recognised at their fair val"e %here there
is a reasona6le ass"rance that the grant %ill 6e received and the
Compan# %ill compl# %ith all attached conditions.
1overnment grants relating to costs are deferred and recognised in the
separate income statement to match them %ith the costs the# are intended to
compensate.
1overnment grants relating to propert#7 plant and e!"ipment are presented
as a ded"ction of related assets and are credited to depreciation over the
e9pected lives of the related assets.
Intangible !ssets
3a5 #oodwill
1ood%ill represents the e9cess of the aggregate of the consideration
transferred and the ac!"isition-date fair val"e of the Compan#s previo"sl#
held e!"it# interest in the ac!"iree over the net identifia6le assets at the date
of ac!"isition. 1ood%ill is tested ann"all# for impairment and carried at cost
less acc"m"lated impairment losses. Impairment losses on good%ill are not
reversed.
365 Industrial propert$ ri!hts
Ind"strial propert# rights are sho%n at historical cost. Ind"strial propert#
rights have a finite "sef"l life and are carried at cost less acc"m"lated
amortisation. *mortisation is calc"lated "sing the straight-line method to
allocate the cost of ind"strial propert# rights over their estimated "sef"l
lives of five to ten #ears.
3c5 %e&elopment costs
/evelopment costs %hich are individ"all# identifia6le and directl# related to a
ne% technolog# or to ne% prod"cts %hich carr# pro6a6le f"t"re 6enefits are
capitalised as intangi6le assets. *mortisation of development costs 6ased
on the straight-line method over their estimated "sef"l lives of one to five
#ears 6egins at the commencement of the commercial prod"ction of the
related prod"cts or "se of the related technolog#.
3d5 ther intan!i'le assets
+ther intangi6le assets s"ch as soft%are %hich meet the definition of an
intangi6le asset are amortised "sing the straight-line method over their
estimated "sef"l lives of five #ears %hen the asset is availa6le for "se.
Gem6ership rights are regarded as intangi6le assets %ith indefinite "sef"l life
and not amortised 6eca"se there is no foreseea6le limit to the period over
%hich the
15
LG Electronics Inc.
asset is e9pected to generate net cash inflo%s for the entit#. *ll mem6ership
rights are tested ann"all# for impairment and stated at cost less acc"m"lated
impairment. Impairment losses are not reversed.
Researc0 and De2elopment %osts
Costs associated %ith research are recognised as an e9pense as inc"rred.
Costs that are identifia6le7 controlla6le and directl# attri6"ta6le to
development pro>ects are recognised as intangi6le assets %hen all the
follo%ing criteria are met?
It is technicall# feasi6le to complete the intangi6le asset so that it %ill
6e availa6le for "seJ
Ganagement intends to complete the intangi6le asset and "se or sell itJ
-here is the a6ilit# to "se or sell the intangi6le assetJ
It can 6e demonstrated ho% the intangi6le asset %ill generate pro6a6le
f"t"re economic 6enefitsJ
*de!"ate technical7 financial and other reso"rces to complete the
development and to "se or sell the intangi6le asset are availa6leJ and
-he e9pendit"re attri6"ta6le to the intangi6le asset d"ring its
development can 6e relia6l# meas"red.
+ther development e9pendit"res that do not meet these criteria are
recognised as an e9pense as inc"rred. /evelopment costs previo"sl#
recognised as an e9pense are not recognised as an asset in a s"6se!"ent
period. Capitalised development costs %hich are stated as intangi6le assets
are amortised "sing the straight-line method %hen the assets are availa6le for
"se and are tested for impairment.
In2estment Propert+
Investment propert# is held to earn rentals or for capital appreciation or
6oth. Investment propert# is meas"red initiall# at its cost incl"ding
transaction costs inc"rred in ac!"iring the asset. *fter recognition as an
asset7 investment propert# is carried at its cost less an# acc"m"lated
depreciation and an# acc"m"lated impairment losses.
S"6se!"ent costs are incl"ded in the assets carr#ing amo"nt or recognised
as a separate asset7 onl# %hen it is pro6a6le that f"t"re economic 6enefits
associated %ith the item %ill flo% to the Compan# and the cost of the item can
6e meas"red relia6l#. -he carr#ing amo"nt of the replaced part is
derecognised. *ll other repairs and maintenance are charged to the income
statement d"ring the financial period in %hich the# are inc"rred.
0and held for investment propert# is not depreciated. Investment propert#
e9cept for land is depreciated "sing the straight-line method over their
estimated "sef"l lives.
1$
LG Electronics Inc.
-he depreciation method7 the resid"al val"e and the "sef"l life of an asset are
revie%ed at least at each financial #ear end and7 if the management >"dges
that previo"s estimates sho"ld 6e ad>"sted7 the change is acco"nted for as a
change in an acco"nting estimate.
Impairment o &on'$inancial !ssets
1ood%ill and intangi6le assets that have an indefinite "sef"l life are not
s"6>ect to amortisation and are tested ann"all# for impairment. *t each
reporting date7 assets that are s"6>ect to amortisation are revie%ed for
impairment %henever events or changes in circ"mstances indicate that the
carr#ing amo"nt ma# not 6e recovera6le. *n impairment loss is recognised for
the amo"nt 6# %hich the assets carr#ing amo"nt e9ceeds its recovera6le
amo"nt. -he recovera6le amo"nt is the higher of an assets fair val"e less
costs to sell and val"e in "se. For the p"rposes of assessing impairment7
assets are gro"ped at the lo%est levels for %hich there are separatel#
identifia6le cash flo%s 3Ecash-generating "nits5. 'on-financial assets other
than good%ill or intangi6le assets %ith an indefinite "sef"l life that s"ffered
impairment are revie%ed for possi6le reversal of the impairment at the each
reporting date.
(rade Pa+ables
-rade pa#a6les are o6ligations to pa# for goods or services that have 6een
ac!"ired in the ordinar# co"rse of 6"siness from s"ppliers. -rade pa#a6les
are classified as c"rrent lia6ilities if pa#ment is d"e %ithin one #ear or less. If
not7 the# are presented as non-c"rrent lia6ilities. -rade pa#a6les are
recognised initiall# at fair val"e and s"6se!"entl# meas"red at amortised cost
"sing the effective interest method.
5orro1ings
.orro%ings are recognised initiall# at fair val"e7 net of transaction costs
inc"rred. .orro%ings are s"6se!"entl# carried at amortised costJ an#
difference 6et%een the proceeds 3net of transaction costs5 and the
redemption val"e is recognised in the income statement over the period of
the 6orro%ings "sing the effective interest method. -he Compan# classifies the
lia6ilit# as c"rrent as long as it does not have an "nconditional right to defer
its settlement for at least 12 months after the reporting date. -erms of a
lia6ilit# that co"ld7 at the option of the co"nterpart#7 res"lt in its
settlement 6# the iss"e of e!"it# instr"ments do not affect its
classification.
%"rrent and Deerred Income (ax
-he ta9 e9pense for the period comprises c"rrent and deferred ta9. -a9 is
recognised in the income statement7 e9cept to the e9tent that it relates
to items recognised in other comprehensive income or directl# in e!"it#.
In this case7 the ta9 is also recognised in other comprehensive income or
directl# in e!"it#7 respectivel#.
Ganagement periodicall# eval"ates positions ta@en in ta9 ret"rns %ith respect
to sit"ations in %hich applica6le ta9 reg"lation is s"6>ect to interpretation. It
esta6lishes provisions %here appropriate on the 6asis of amo"nts e9pected to
6e paid to the ta9 a"thorities.
1&
LG Electronics Inc.
/eferred income ta9 is recognised on temporar# differences arising 6et%een
the ta9 6ases of assets and lia6ilities and their carr#ing amo"nts in the
financial statements. It represents f"t"re ta9 conse!"ences that %ill arise
%hen recovering or settling the carr#ing amo"nt of its assets and lia6ilities.
Io%ever7 deferred income ta9 is not acco"nted for if it arises from initial
recognition of an asset or lia6ilit# in a transaction other than a 6"siness
com6ination that at the time of the transaction affects neither acco"nting nor
ta9a6le profit or loss. /eferred income ta9 is determined "sing ta9 rates 3and
la%s5 that have 6een enacted or s"6stantiall# enacted 6# the date of
statement of financial position and are e9pected to appl# %hen the related
deferred income ta9 asset is realised or the deferred income ta9 lia6ilit# is
settled.
/eferred income ta9 assets are recognised onl# to the e9tent that it is
pro6a6le that f"t"re ta9a6le profit %ill 6e availa6le against %hich the temporar#
differences can 6e "tilised.
/eferred income ta9 lia6ilities are provided on temporar# differences arising
on investments in s"6sidiaries7 >ointl# controlled entities and associates7 e9cept
%here the timing of the reversal of the temporar# difference is controlled 6#
the Compan# and it is pro6a6le that the temporar# difference %ill not reverse
in the foreseea6le f"t"re. /eferred income ta9 assets are recognised onl# to
the e9tent that it is pro6a6le that the temporar# difference %ill reverse in the
foreseea6le f"t"re and ta9a6le profit %ill 6e availa6le against %hich the
temporar# difference can 6e "tilised.
/eferred income ta9 assets and lia6ilities are offset %hen there is a legall#
enforcea6le right to offset c"rrent ta9 assets against c"rrent ta9 lia6ilities
and %hen the deferred income ta9es assets and lia6ilities relate to income
ta9es levied 6# the same ta9ation a"thorit# on either the ta9a6le entit#.
Pro2isions
Provisions are recognised %hen the Compan# has a present legal or
constr"ctive o6ligation as a res"lt of past events and an o"tflo% of reso"rces
re!"ired to settle the o6ligation is pro6a6le and can 6e relia6l# estimated.
Provisions are not recognised for f"t"re operating losses.
* %arrant# provision is accr"ed for the estimated costs of f"t"re %arrant#
claims 6ased on historical e9perience. Sales ret"rn provision is for the
estimated sales ret"rns 6ased on the historical e9perience. 2here the
Compan# is re!"ired to restore its leased assets to their original state at the
end of the lease-term7 the Compan# recognises the present val"e of the
estimated cost of restoration as a provision for restoration. 2hen there is a
pro6a6ilit# that an o"tflo% of economic 6enefits %ill occ"r from litigation or
disp"tes7 and %hose amo"nt is reasona6l# estima6le7 a corresponding
amo"nt of provision is recognised as a provision for litigation in the financial
statement.
Provisions are meas"red at the present val"e of the e9pendit"res e9pected
to 6e re!"ired to settle the o6ligation "sing a pre-ta9 rate that reflects c"rrent
mar@et assessments of the time val"e of mone# and the ris@s specific to the
o6ligation. -he increase in the provision d"e to passage of time is recognised
as an interest e9pense.
1(
LG Electronics Inc.
Emplo+ee 5eneits
3a5 %efined 'enefit lia'ilit$
-he Compan# operates vario"s pension schemes. -he schemes are generall#
f"nded thro"gh pa#ments to ins"rance companies or tr"stee-administered
f"nds7 determined 6# periodic act"arial calc"lations. -he Compan#
operates 6oth defined contri6"tion and defined 6enefit plans.
* defined contri6"tion plan is a pension plan "nder %hich the Compan# pa#s
fi9ed contri6"tions into a separate f"nd. -he Compan# has no legal or
constr"ctive o6ligations to pa# f"rther contri6"tions even if the f"nd does not
hold s"fficient assets to pa# all emplo#ees the 6enefits relating to emplo#ee
service in the c"rrent and prior periods. For the defined contri6"tion plan7 the
Compan# pa#s contri6"tions to p"6licl# or privatel# administered pension
ins"rance plans on a mandator#7 contract"al or vol"ntar# 6asis. -he
Compan# has no f"rther pa#ment o6ligations once the contri6"tions have
6een paid. -he contri6"tions are recognised as emplo#ee 6enefit e9pense
%hen the# are d"e. Prepaid contri6"tions are recognised as an asset to the
e9tent that a cash ref"nd or a red"ction in the f"t"re pa#ments is availa6le.
* defined 6enefit plan is a pension plan that is not a defined contri6"tion plan.
-#picall# defined 6enefit plans define an amo"nt of pension 6enefit that an
emplo#ee %ill receive on retirement7 "s"all# dependent on one or more
factors s"ch as age7 #ears of service and compensation. -he lia6ilit#
recognised in the separate statement of financial position in respect of the
defined 6enefit pension plan is the present val"e of the defined 6enefit lia6ilit#
at the reporting date less the fair val"e of plan assets. -he defined 6enefit
lia6ilit# is calc"lated ann"all# 6# independent act"aries "sing the pro>ected
"nit credit method. -he present val"e of the defined 6enefit lia6ilit# is
determined 6# disco"nting the estimated f"t"re cash o"tflo%s "sing interest
rates of high-!"alit# corporate 6onds that are denominated in the c"rrenc# in
%hich the 6enefits %ill 6e paid7 and that have terms to mat"rit# appro9imating
to the terms of the related pension lia6ilit#.
*ct"arial gains and losses arising from e9perience ad>"stments and
changes in act"arial ass"mptions are charged or credited to other
comprehensive income in the period in %hich the# arise.
365 Share-'ased pa$ments
-he Compan# operates cash-settled7 share-6ased compensation plans7
"nder %hich the Compan# receives services from emplo#ees as consideration
for the pa#ments of the difference 6et%een mar@et price of the stoc@ and
e9ercise price. -he fair val"e of the emplo#ee services received in e9change
for the grant of the options is recognised as an e9pense in the separate
income statement over the vesting period. -he total amo"nt to 6e e9pensed
is determined 6# reference to the fair val"e of the options granted
considering the impact of an# service and performance vesting conditions
and non-vesting condition. Kntil the lia6ilit# is settled7 the Compan# shall
remeas"re the fair val"e of the lia6ilit# at each reporting date and at the date
of settlement7 %ith an# changes in fair val"e recognised in profit or loss for the
period.
1,
LG Electronics Inc.
(c) ther lon!-term emplo$ee 'enefits
-he Compan# provides other long-term emplo#ee 6enefits to their emplo#ees.
-he entitlement to these 6enefits is "s"all# conditional on the emplo#ee
%or@ing more than ten #ears. -he e9pected costs of these 6enefits are
accr"ed over the period of emplo#ment "sing the same acco"nting
methodolog# as "sed for defined 6enefit pension plans. *ct"arial gains and
losses arising from e9perience ad>"stments and changes in act"arial
ass"mptions are recognised in the income statement as the# occ"r. -hese
6enefits are calc"lated ann"all# 6# independent act"aries.
(d) (ermination 'enefits
-ermination 6enefits are pa#a6le %hen emplo#ment is terminated 6# the
Compan# 6efore the normal retirement date7 or %henever an emplo#ee
accepts vol"ntar# retirement in e9change for these 6enefits. -he Compan#
recognises termination 6enefits %hen it is demonstra6l# committed to
either? terminating the emplo#ment of c"rrent emplo#ees according to a
detailed formal plan %itho"t possi6ilit# of %ithdra%alJ or providing termination
6enefits as a res"lt of an offer made to enco"rage vol"ntar# retirement.
#0are %apital
+rdinar# shares and preferred shares %itho"t mandator# dividends or the
o6ligation to 6e repaid are classified as e!"it#.
2here the Compan# p"rchases the Compan#s e!"it# share capital7 the
consideration paid7 incl"ding an# directl# attri6"ta6le incremental costs is
ded"cted from e!"it# attri6"ta6le to the Compan#s e!"it# holders "ntil the
shares are cancelled or reiss"ed. 2here s"ch shares are s"6se!"entl#
reiss"ed7 an# consideration received is incl"ded in e!"it# attri6"ta6le to
the Compan#s e!"it# holders.
Re2en"e Recognition
)even"e comprises the fair val"e of the consideration received or receiva6le
for the sales of goods and services in the ordinar# co"rse of the Compan#s
activities. )even"e is sho%n net of val"e-added ta97 ret"rns7 re6ates and
disco"nts.
-he Compan# recognises reven"e %hen the amo"nt of reven"e can 6e
relia6l# meas"red7 it is pro6a6le that f"t"re economic 6enefits %ill flo% to the
Compan# and %hen specific criteria have 6een met for each of the
Compan#s activities as descri6ed 6elo%. -he Compan# 6ases its estimates
on historical res"lts7 ta@ing into consideration the t#pe of c"stomer7 the
t#pe of transaction and the specifics of each arrangement.
3a5 Sales of !oods
-he Compan# man"fact"res and sells home electronics and their related core
parts and displa#7 m"ltimedia7 mo6ile comm"nication prod"cts. Sales of goods
are recognised %hen the Compan#
28
LG Electronics Inc.
has delivered prod"cts to the c"stomer. /eliver# does not occ"r "ntil the
prod"cts have 6een shipped to the specified location7 the ris@s of
o6solescence and loss have 6een transferred to the c"stomer7 and either the
c"stomer has accepted the prod"cts in accordance %ith the sales contract7 the
acceptance provisions have lapsed7 or the Compan# has o6>ective evidence
that all criteria for acceptance have 6een satisfied.
-he prod"cts are often sold %ith vol"me disco"nts and c"stomers have a
right to ret"rn fa"lt# prod"cts in the mar@et. *cc"m"lated e9perience is
"sed to estimate and provide for the disco"nts and ret"rns. -he vol"me
disco"nts are assessed 6ased on anticipated ann"al p"rchases. -he
Compan# recognises provisions for prod"ct %arranties and sales ret"rn 6ased
on reasona6le e9pectation reflecting %arrant# o6ligation and sales ret"rn
rates inc"rred 6# sales 3'ote 1(5.
365 Sales of ser&ices
2hen the o"tcome of a transaction involving the rendering of services can 6e
estimated relia6l#7 reven"e associated %ith s"ch transaction is recognised
6# reference to the stage of the transaction. 2hen the o"tcome of the
transaction involving the rendering of services cannot 6e estimated relia6l#7
reven"e shall 6e recognised onl# to the e9tent of the e9penses recognised
that are recovera6le.
3c5 Ro$alt$ income
)o#alt# income is recognised on an accr"al 6asis in accordance %ith the
s"6stance of the relevant agreements.
3d5 Interest income
Interest income is recognised "sing the effective interest method. 2hen
receiva6les are impaired7 the Compan# red"ces the carr#ing amo"nt to its
recovera6le amo"nt and contin"es "n%inding the disco"nt as interest
income. Interest income on impaired receiva6les is recognised "sing the
original effective interest rate.
3e5 %i&idend income
/ividend income is recognised %hen the right to receive pa#ment is esta6lished.
Leases
0eases in %hich a significant portion of the ris@s and re%ards of o%nership
are retained 6# the lessor are classified as operating leases. Pa#ments made
"nder operating leases are charged to the separate income statement on a
straight-line 6asis over the period of the lease.
0eases %hich the Compan# has s"6stantiall# all the ris@s and re%ards of
o%nership are classified as finance leases. Finance leases are capitalised at
the leases commencement at the lo%er of the fair val"e of the leased
propert# and the present val"e of the minim"m lease
21
LG Electronics Inc.
pa#ments.
Di2idend Distrib"tion
/ividend lia6ilit# is recognised in the financial statements %hen the dividends
are approved 6# the shareholders.
!ssets classiied as 6eld or #ale (Gro"p classiied as 0eld or sale)
and Discontin"ed /perations
*ssets 3or disposal gro"ps5 are classified as Eassets and lia6ilities classified as
held for sale 3or Egro"ps classified as held for sale5 %hen their carr#ing
amo"nt is to 6e recovered principall# thro"gh a sale transaction and a sale
is considered highl# pro6a6le. -he# are stated at the lo%er of carr#ing
amo"nt or fair val"e less costs to sell.
2hen a component of the Compan# representing a separate ma>or line
of 6"siness or geographical area of operation has 6een disposed of7 or is
s"6>ect to a sale plan involving loss of control of a s"6sidiar#7 the Compan#
discloses in the income statement the post-ta9 profit or loss of discontin"ed
operations and the post-ta9 gain or loss recognised on the meas"rement to fair
val"e less costs to sell or on the disposal of the assets or disposal gro"ps
constit"ting the discontin"ed operation. -he net cash flo%s attri6"ta6le to the
operating7 investing and financing activities of discontin"ed operations are
presented in the notes to the financial statements.
3. %ritical !cco"nting Estimates and !ss"mptions
-he Compan# ma@es estimates and ass"mptions concerning the f"t"re.
stimates and ass"mptions are contin"all# eval"ated and are 6ased on
historical e9perience and other factors7 incl"ding e9pectations of f"t"re
events that are 6elieved to 6e reasona6le "nder the circ"mstances. -he
res"lting acco"nting estimates %ill7 6# definition7 seldom e!"al the related
act"al res"lts. -he estimates and ass"mptions that have a significant
ris@ of ca"sing ad>"stments to the carr#ing amo"nts of assets and lia6ilities
after the end of the reporting period are addressed 6elo%.
Estimated Impairment o Good1ill
-he Compan# tests ann"all# %hether good%ill has s"ffered an# impairment in
accordance %ith the acco"nting polic# stated in 'ote 2. -he recovera6le
amo"nts of cash-generating "nits have 6een determined 6ased on val"e-in-
"se calc"lations. -hese calc"lations re!"ire the "se of estimates.
Income (axes
-he meas"rement of c"rrent and deferred ta9 reflects the ta9 conse!"ences
that %o"ld follo% from the manner in %hich the Compan# e9pects7 at the
reporting date7 to recover or settle the carr#ing amo"nt of its assets and
lia6ilities. Io%ever7 %here the final ta9 conse!"ences of
22
LG Electronics Inc.
these matters are different from the e9pected amo"nts that %ere
initiall# recorded7 s"ch differences %ill impact the c"rrent and deferred
income ta9 assets and lia6ilities in the period in %hich s"ch determination is
made.
$air 7al"e o $inancial Instr"ments
-he fair val"e of financial instr"ments that are not traded in an active
mar@et is determined 6# "sing val"ation techni!"es. -he Compan# "ses
its >"dgement to select a variet# of methods and ma@e ass"mptions that
are mainl# 6ased on mar@et conditions e9isting at each reporting date.
Pro2isions
-he Compan# recognises provisions for prod"ct %arranties and sales
ret"rns at the reporting date as descri6ed in 'ote 1(. -he amo"nts are
estimated 6ased on historical data.
Deined beneit liabilit+
-he present val"e of the defined 6enefit lia6ilit# depends on vario"s factors
that are determined on an act"arial 6asis "sing a n"m6er of ass"mptions.
-he ass"mptions "sed in determining the net cost 3income5 for pensions
incl"de the disco"nt rate. *n# changes in these ass"mptions %ill impact the
carr#ing amo"nt of defined 6enefit lia6ilit#. -he Compan# determines the
appropriate disco"nt rate at the end of each #ear. -his is the interest rate
that is "sed to determine the present val"e of estimated f"t"re cash
o"tflo%s e9pected to 6e re!"ired to settle the defined 6enefit lia6ilit#. In
determining the appropriate disco"nt rate7 the Compan# considers the
interest rates of high-!"alit# corporate 6onds that are denominated in the
c"rrenc# in %hich the 6enefits %ill 6e paid7 and that have terms to mat"rit#
appro9imating the terms of the related pension lia6ilit#. +ther @e#
ass"mptions for pension o6ligations are 6ased in part on c"rrent mar@et
conditions. *dditional information is disclosed in 'ote 1&.
8. $inancial Instr"ments b+ %ategor+
Categorisations of financial instr"ments as of /ecem6er 317 28187 are as follo%s?
!ssets at
air 2al"e (in
millions of
Korean won)
proit or loss
Loans and
recei2ables
!ssets
classiie
d as
a2ailable'or'
sale
6eld'to'mat"rit+
inancial assets (otal
Cash and cash
e!"ivalents
Financial deposits
-rade receiva6les
0oans and other
receiva6les +ther
financial assets
(otal
-
($(7(34 -
18(7(53 -
574(&75$5 -
$847,(4 -
-
-
&78&8723$
- -
- -
- -
- -
2(7,45
5(7138
2(7,45
5(7138
($(7(3
4
18(7(5
3
574(&75
$5
$847,(
4
(&78&5
&715&73
11
23
LG Electronics Inc.
(in millions of
Korean won) -rade
pa#a6les
.orro%ings
+ther pa#a6les
+ther financial
lia6ilities
(otal
Liabilities at
air 2al"e
t0ro"g0 t0e
proit and loss
-
-
-
4172
2$
4172
2$
Liabilities
carried at
amortised
cost
472(572
(8
47,,,7(
$4
1741578
81 -
187&887
145
(otal
472(572
(8
47,,,7(
$4
1741578
81
41722$
187&4173&1
Categorisations of financial instr"ments as of /ecem6er 317 288,7 are as follo%s?
!ssets at
air 2al"e
t0ro"g0
(in millions of Korean won) proit or
loss
Loans
and
recei2ab
les
!ssets
classiied as
a2ailable'or'
sale
6eld'to'mat"rit+
Cash and cash
e!"ivalents
Financial deposits
-rade receiva6les
0oans and other
receiva6les +ther
financial assets
(otal
-
&(,7,$$ -
24$7823 -
5715475(, -
$$87,15 -
-
-
$7(5174,3
- -
- -
- -
- -
2475&&
5(7138
2475&&
5(7138
&(,7,$
$
24$782
3
5715475
(,
$$87,1
5
(27&8&
$7,3472
88
(in
million
s of
Kor
ean
won)
-rade pa#a6les
.orro%ings
+ther pa#a6les
+ther financial
lia6ilities
(otal
Liabilities at
air 2al"e
t0ro"g0 t0e
proit and loss
-
-
-
11$7,
85
11$7,
85
Liabilities
carried at
amortised
cost
37(1,7,
&&
3745(71
($
1733872
1$ -
(7$8(73
&,
(otal
37(1,7,
&&
3745(71
($
1733872
1$
11$7,85
(7&2572(4
24
LG Electronics Inc.
Categorisations of financial instr"ments as of Dan"ar# 17 288,7 are as follo%s?
!ssets at
air 2al"e
t0ro"g0
(in millions of Korean won) proit or
loss
Loans
and
recei2ab
les
!ssets
classiied as
a2ailable'or'
sale
6eld'to'mat"rit+
Cash and cash
e!"ivalents
Financial deposits
-rade receiva6les
0oans and other
receiva6les +ther
financial assets
(otal
- 1715$7$45
-- &5783&
--
475&57483
-- $&27454 -
573&1 -
1278&,
573&1 $74&,753,
1278&,
-
1715$7$45 -
&5783& -
475&57483 -
$&27454 -
1&7458
-
$74,$7,(,
(in millions of
Korean won) -rade
pa#a6les
.orro%ings
+ther pa#a6les
+ther financial
lia6ilities
(otal
Liabilities at
air 2al"e
t0ro"g0 t0e
proit and loss
-
-
-
1(275
,(
1(275
,(
Liabilities
carried at
amortised
cost
2714,74
33
57&2(7&
41
172,(7(
55 -
,71&&78
2,
(otal
2714,74
33
57&2(7&
41
172,(7(
55
1(275,(
,735,7$2&
9. %as0 and %as0 E*"i2alents and $inancial Deposits
(in millions of
Korean won) Cash
o
n
h
a
nd
.an@
deposits
(otal
December
31, 2010
1
8
($(7(
24
($(7(
34
December
31, 200,
1
8
&(,7,
5$
&(,7,
$$
-an"ar+
1, 200,
1
8
1715$7$
35
1715$7$45
-he follo%ing amo"nts are restricted in connection %ith maintaining
chec@ing acco"nts7 vario"s short-term and long-term 6orro%ings7 and
national polic# pro>ects f"nded 6# the :orean government.
(in millions of Korean
won)
)estricted financial
deposits
December
31, 2010
237(
53
December
31, 200,
2378
23
-an"ar+
1, 200,
25783&
25
LG Electronics Inc.
:. (rade Recei2ables, and Loans and /t0er Recei2ables
-rade receiva6les7 and loans and other receiva6les7 net of allo%ance for
do"6tf"l acco"nts7 are as follo%s?
(in millions of
Korean won)
%"rrent
+rig
inal
am
o"n
t
December
31,
2010
0ess ?
allo%a
nce
for
do"6tf
"l
acco"n
ts
Carr
#ing
amo
"nt
+rig
inal
am
o"n
t
December
31,
200,
0ess ?
allo%a
nce
for
do"6tf
"l
acco"nt
s
Carr
#ing
amo
"nt
+rig
inal
am
o"n
t
-an"ar+
1, 200,
0ess ?
allo%anc
e for
do"6tf"l
acco"n
ts
Carr
#ing
amo
"nt
-rade
receiva6l
es
0oans
and
+ther
)eceiva
6les
&on'
%"rrent
0oans
and
+ther
)eceiva
6les
5758
17(8
3
2,5
74(
,
3$2
71(
4
3147
23(
5
3527
3&$
5
33
13
5
574(
&75$
5
243
711
3
3$1
7(&
1
571&
57&4
5
3&3
713
4
33,7
,3(
3217
15$
5
3527
883
5
31
54
5
5715
475(
,
321
713
1
33,
7&(
4
475,
27$$
1
43$
78&
(
2(&
7,2
3
31&7
25(
5
3517
532
5
31
55
475&
5748
3
3(47
54$
2(&7
,8(
-he details of loans and other receiva6les are as follo%s?
(in millions of
Korean won)
%"rrent
0oans
'on-trade
)eceiva6les
*c
cr"
ed
Inc
om
e
/e
pos
ts
#"
b'
(o
tal
&o
n
'
%
"
r
r
e
nt
0oans
/eposi
ts
#"b'(otal
(otal
December
31, 2010
1&711
5
1$,7,
22
557,4
5 131
24371
13
13872
(2
23175
(,
3$17(
&1
$847,
(4
December
31, 200,
1$755
2
28$75
,$
,&7(8
& 1&$
32171
31
1837$
&4
23$71
18
33,7&
(4
$$87,
15
-an"ar+
1, 200,
1273,
2
23&7,
48
13471
3& &&
3(475
4$
&57,
88
21278
8(
2(&7,
8(
$&27454
-he fair val"es of non-c"rrent loans and other receiva6les are as follo%s?
(in millions of
Korean won) 0oans
/eposits
(otal
December
31, 2010
11871
&&
22&71
51
33&73
2(
December
31, 200,
(&7(
($
2227$
5,
31875
45
-an"ar+
1, 200,
&873
5$
28(7,
$$
2&,7322
-he fair val"es of non-c"rrent loans and other receiva6les are 6ased on
cash flo%s disco"nted "sing a disco"nt rate of $.12C reflecting credit ris@s
3/ecem6er 317 288,? $.33C7 Dan"ar# 17 288,? &.(1C5. -he carr#ing
amo"nt of c"rrent receiva6les is a reasona6le appro9imation of fair val"e.
2$
LG Electronics Inc.
-he ageing anal#sis of these trade receiva6les7 and loans and other
receiva6les as of /ecem6er 317 28187 is as follo%s?
/2erd"e
(in millions of
Korean won) -rade
receiva6les
0oans and other
receiva6les C"rrent
'on-c"rrent
%"rren
t
5743872
4,
24(7$
41
34&7&
$5
;p to 3 8 to
: mont0s
mont0s
5475&&
272(4
3273&3
,78((
,7(,8
3755&
< to 12 /2er
mont0s
one +ear
4(
3,1
1713,
,&$
314
$5(
Dea"lt
ed
1472
54
372&
2
-
(otal
575817(
83
2,574
(,
3$271
(4
receiva6les as of /ecem6er 317 288,7 is as follo%s?
/2erd"e
(in millions of
Korean won) -rade
receiva6les
0oans and other
receiva6les C"rrent
'on-c"rrent
%"rren
t
578127&
82
3$875
21
2(,73
83
;p to 3 8 to
: mont0s
mont0s
14$71&4
1718(
37$&4
271(8
227415
47455
< to 12 /2er
mont0s
one +ear
1784,
431
27(&5
$,8
237&5( &
Dea"lt
ed
1472
(1
371,
4
-
(otal
571&57&
45
3&371
34
33,7,
3(
receiva6les as of Dan"ar# 17 288,7 is as follo%s?
/2erd"e
(in millions of
Korea
n
won) -rade
receiva6les
0oans and other
receiva6les
C"rren
t
'on-
c"rren
t
%"rren
t
4725475
,8
3547$
8(
2$17(
,4
;p to 3 8 to
: mont0s
mont0s
38$7183
127$2,
4,7,3(
1573(5
2872&2
371(3
< to 12 /2er
mont0s
one +ear
47$,$
238
,73,&
17544
2731$
25(
Dea"lt
ed
1474
13
5728
$
-
(otal
475,27$
$1
43$78
&(
2(&7,
23
+verd"e receiva6les are presented net of 6ad-de6t allo%ance %hich is
recognised 6ased on ageing anal#sis and historical e9perience.
/efa"lted receiva6les %hich are "ncertain to 6e collected d"e to reasons
incl"ding de6tors insolvenc# are classified into composition receiva6les and
other defa"lted receiva6les. In case of receiva6les from a de6tor "nder
co"rt receivership or composition7 its carr#ing amo"nt is meas"red at the
present val"e of estimated f"t"re cash flo%s 6ased on repa#ment
sched"le. *ll other defa"lted receiva6les are meas"red 6ased on the
class and amo"nt of provided collateral.
2&
LG Electronics Inc.
&otes to t0e #eparate $inancial #tatements December
31, 2010 and 200,, and -an"ar+ 1, 200,
-he movements in 6ad de6t allo%ance for the #ear ended /ecem6er 317 28187 are as
follo%s?
won) -rade
receiva6les
0oans and other
receiva6les C"rrent
'on-c"rrent
!t 1
-an"ar
+
21715
$
52788
3
15
4
!dditio
n

-
55
5
15
,
Re2ers
al
3&785
(5
-
-
=rite'
o
318(
5
31(2
5
-
!t 31
/t0ers
December
24( 14723(
- 5273&$
- 313
-he movements in 6ad de6t allo%ance for the #ear ended /ecem6er 317 288,7 are as
follo%s?
!t 1
(in millions of Korean won) -an"ar+ !ddition Re2ersal =rite'o /t0ers
!t 31
Decemb
er
-rade receiva6les 1&725( 37,51
0oans and other receiva6les
C"rrent 517532 4&1
'on-c"rrent 15 13,
- 3&85 1& 21715$
- - - 527883
- - - 154
-he ma9im"m e9pos"re to credit ris@ at the reporting date is the carr#ing val"e
of each class of receiva6le mentioned a6ove.
-he 6ad de6t e9penses of trade receiva6les have 6een incl"ded in Eselling
and mar@eting e9penses in the income statement and the 6ad de6t e9penses
of other receiva6les have 6een incl"ded in Eother operating e9penses.
*mo"nts charged to the allo%ance acco"nt are generall# %ritten off7 %hen
there is no e9pectation of recovering additional cash.
<. /t0er $inancial !ssets and Liabilities
-he details of other financial assets and lia6ilities are as follo%s?
won) /t0er inancial
assets
/
e
r
i
v
a
t
i
v
es *vaila6le-
for-sale Ield-
to-mat"rit#
0ess? c"rrent
(otal
/t0er inancial
liabilities
/erivatives
0ess? c"rrent
(otal
December 31,
2010
-
2(7,4
5
5(713
8
-(&78&
5
41722
$
337,,(
5
3&722
(
December 31,
200,
-
2475&
&
5(713
8
-(27&8
&
11$7,8
5
3$17&2
25
5571(
3
-an"ar+ 1, 200,
573&1
1278&
, -
3573&1
5
1278&
,
1(275,
(
35371(
25
12,741$
2(
LG Electronics Inc.
31, 2010 and 200,, and -an"ar+ 1, 200,
/etails of derivatives and lia6ilities are as follo%s?
(in millions of
December 31, 2010 December 31, 200, -an"ar+ 1, 200,
Korean won) !ssets Liabilities !ssetsLiabilities
!ssets Liabilities %"rrent
C"rrenc#
For%ard
C"rrenc#
+ption
C"rrenc#
S%ap Interest
S%ap
#"b'total
&on'
c"rrent
C"rrenc#
For%ard
C"rrenc#
S%ap Interest
S%ap
#"b'total
(otal
- --
--
--
37,,( -
37,,(
- --
--
3&722( -
3&722(
-
41722$
- --
--
$17&22 - --
$17&22
- --
--
5571(3 -
5571(3
-
11$7,85
573&1 57583
- 27143
-
45753$ -
-
573&1
5371(2
- --
4,75(8 -
&,7(3$ -
12,741$
573&1
1(275,(
-he details of ma>or c"rrenc# for%ard contracts as of /ecem6er 317 28187 are as
follo%s?
%ontracted
amo"nts Interest paid Interest recei2ed Expiration
Interest rate s%ap KSL 588 5.$2C 3G 0i6or M $5 6p 2812-5-15
Interest rate s%ap
1,87888
5.$8C C/ 3G
2811-18-$
*ssets classified as availa6le-for-sale are as follo%s?
0isted
!"it# Sec"rities
Knlisted !"it#
Sec"rities /e6t
Sec"rities
(otal
December 31,
2010
13758
(
137$,
8
17&4&
2(7,4
5
December 31,
200,
13782
3
11755
4 -
2475&
&
-an"ar+ 1, 200,
$731&
57&$2
-
1278&,
-he amo"nts recognised as other comprehensive income is 172,3 million
3288,? $7,82 million5 and there are no amo"nts reclassified from e!"it# into
the income statement 3288,? 'il5. *lso7 impairment losses in the amo"nt of
375$$ million 3288,? 17&32 million5 %ere recognised.
-he "nlisted sec"rities mentioned a6ove are meas"red at cost as their fair
val"es cannot 6e meas"red relia6l#.
2,
LG Electronics Inc.
31, 2010 and 200,, and -an"ar+ 1, 200,
Ield-to-mat"rit# financial assets consists of ?
won) 1 to 5 #ear
(otal
December 31,
2010
5(713
8
5(713
8
December 31,
200,
5(7138
5(7138
-an"ar+ 1,
20
0,
-
-
-he amo"nt recognised as interest income in relation to held-to-mat"rit#
financial assets is 475$3 million 3288,? 5(4 million5. 'o impairment losses
%ere recogniHed in relation to held-to-mat"rit# financial assets.
>. In2entories
Inventories consist of?
won)
Gerchandise and
finished prod"cts
1
2or@-in-process
)a% materials and
s"pplies
1
+thers
(otal
December 31,
2010
4157&,
5
13172(
(
4487&2
,
&$7,(8
178$47&,
2
December 31,
200,
3447$1
5
&47&5,
2,,785
(
4(75(&
&$&781
,
-an"ar+ 1, 200,
3(&7,,5
(578$$
3447$&
3
(373(&
,817121
1
Inventories in-transit are incl"ded.
-he cost of inventories recognised as e9pense and incl"ded in ECost of Sales
amo"nted to 237$3$7288 million 3288,? 217,(,7283 million5 incl"ding E0osses
on Bal"ation of Inventories of 187135 million 3288,? 1871&5 million5. 'o
reversal of allo%ance for E0osses on Bal"ation of Inventories %as recognised
3288,? 'il5.
,. /t0er !ssets
won) %"rrent3
*dvances
Prepaid e9penses
Prepaid val"e added
ta9
#"b (otal
&on'%"rrent3
0ong-term prepaid
e9penses 0ong-term
advances
#"b (otal
(otal
December 31,
2010
18$78$
1
1&3748
4
$87,8,
34873&
4
448718
$
2,1713
1
&31723
&
178&17$1
1
December 31,
200,
11&752
1
2237(1
&
,47$51
4357,(
,
4(37$&
1
2&2714
5
&557(1
$
171,17(8
5
-an"ar+ 1, 200,
&,74&1
1&(754
,
$1755(
31,75&
(
212733
(
233725
$
44575,
4
&$571&2
38
LG Electronics Inc.
10. Propert+, Plant and E*"ipment
Carr#ing amo"nts of propert#7 plant and e!"ipment consist of?
(in millions of
Korean won)
!t December 31,
2010
Cost
*cc"m"lated
depreciation
*cc"m"lated
Impairment
&et boo?
amo"nts
!t December 31,
200,
Cost
*cc"m"lated
depreciation
*cc"m"lated
Impairment
&et boo?
amo"nts
!t -an"ar+ 1,
200,
Cost
*cc"m"lated
depreciation
*cc"m"lated
Impairment
&et boo?
amo"nts
Land
17&427
243
-
-
17&427
243
17&2$7
144
-
-
17&2$7
144
17$,(7
&1,
-
-
17$,(7
&1,
5"ildin
gs
2724&7
,(2
341873
$&5
3272
155
17(357
488
273427
&&(
33($7$
1$5
3478
$15
17,527
181
2782,7
&$(
333378
,(5
3478
$&5
17$,27
$83
#tr"ct"
res
1$172
33
3$37$
855
33,
35
,&72
35
1557&
23
3$173
(45
341
55
,37,
24
15473
3$
35571
545
3174
$55
,&7&
1&
@ac0iner
+ and
e*"ipmen
t
17(327
212
31741$7
4,55
32(71
8,5
3(&7$
8(
17((57
(1,
31744378
585
33&71
135
4857$
5$
2784&7
8$2
3174317
,$35
33(74
&(5
5&$7$
21
(ools
173&(7
4$5
3178(,7
3,,5
3$$
15
2((74
85
1725,7
2$$
31782378
,,5
353
&5
2357$
38
171&37
$&3
3,2271
385
3$,
85
2587(
53
/t0ers
5117,
42
33$171
(&5
3,
15
1587$
$4
53273
,8
348273
$,5
338
85
12,7&
21
5&,74
(3
342,73
855
33$
35
14,7(
15
%onstr"c
tion'in'
progress
15,7
(&5
-
-
15,7
(&5
1137
,$4
-
-
1137
,$4
2(&7
&,4
-
-
2(&7
&,4
(otal
(78337
,52
3373417
8535
33174
$,5
47$$17
438
(781$7
8(4
33731$7
51(5
34274
2$5
47$5&7
148
&7,&87
(35
3371&17
$585
34578
$35
47&547
122
Changes in propert#7 plant and e!"ipment are as follo%s?
(in millions of
Korean won)
!t
-an"
ar+ 1,
2010
*c!"i
sitions
-
r
ansf
er-
i
n

3
o"t
5
/
i
sposals N
reclassificati
on to assets
held for sale
/epreciation
Impairment N
reversal
!t December
31, 2010
Land
17&2$7
144
1(7&
(,
3(7(
(&
34175
&&5
-
-
17&427
243
5"ildin
gs
17,527
181
1,78
,2
3472
42
311872
8,5
35,7(
1(5
3(
5
17(357
488
#tr"ct"
res
,37,
24
17,
$8
1271
$5
3371
,(5
3&7$
155
31
5
,&72
35
@ac0iner
+ and
e*"ipme
nt
4857$
5$
$574
,1
13578
32
31378
4(5
328574
,$5
32
&5
3(&7$
8(
(ools
2357
$38
1&&7
55$
$&7&
88
3&72
,(5
31(47(
5(5
332
55
2((7
485
/t0ers
12,7
&21
14&7
$1&
3(372
425
3371
,35
34872
8&5
33
25
1587
$$4
%onstr"c
tion'in'
progress
1137
,$4
2347
4$,
31((75
5(5
-
-
-
15,7
(&5
(otal
47$5&7
148
$$47,
&4
1$72
2$
31&(75
235
34,&7,
,45
33,
35
47$$17
438
31
LG Electronics Inc.
(in millions of
Korean won)
!t -an"ar+ 1,
200,
*c!"isitions
-ransfer-in
3o"t5
/isposals N
reclassificati
on to assets
held for sale
/epreciation
Impairment N
reversal
!t December
31, 200,
Land
17$,(7
&1,
387$
42
357(
31
33,78
4(5
-
-
17&2$7
144
5"ildin
gs
17$,27
$83
(27&
1$
2557
38&
3,78
(25
3$,74
435
-
17,527
181
#tr"ct"
res
,&7&
1&
173
3&
27,
$5
35(
(5
3&74
&&5
33
85
,37,
24
@ac0ine
r+ and
e*"ipmen
t
5&$7
$21
4&72
54
4174
1$
3387,
5$5
322(7$
4(5
33
15
4857
$5$
(ools
2587
(53
13$7
(,5
387,
,$
3,78
3&5
31&478
$,5
3(
5
2357
$38
/t0ers
14,7(
15
13874
13
3,$72
,,5
3278
1$5
35271
$,5
32
35
12,7&
21
%onstr"c
tion'in'
progress
2(&7&
,4
11&72
35
32&872
1$5
3287(
4,5
-
-
1137,
$4
(otal
47&547
122
54$74
,2
-
311175
&$5
35317(
8$5
3,
25
47$5&7
148
.orro%ing costs amo"nting to &&, million 3288,? $5( million5 are
capitalised as ac!"isition costs and a capitaliHation rate of 4.51 C is applied.
-here are no propert#7 plant and e!"ipment pledged as collateral for
vario"s 6orro%ings from 6an@s.
*t Dan"ar# 17 288,7 the transition date7 certain land amo"nting to
$137,(& million "nder :-1**P is reval"ed at its fair val"e and recorded
as its deemed cost "nder the e9emption r"le for first time adopters. Ience7
the carr#ing val"e of land increased 6# 178(47&32 million and the
ad>"stments after considering deferred ta9 effects %ere recognised in
retained earnings.
11. Intangible assets
Carr#ing amo"nts of intangi6le assets consist of?
(in millions of
Ko
an
w
!
D
ce
mbe
r
20
10
Co
st
*cc"m"lated
amortisation and
impairment
&et boo?
amo"nts
!t December 31,
200,
Cost
*cc"m"lated
amortisation and
impairment
&et boo?
amo"nts
!t -an"ar+ 1,
200,
Cost
*cc"m"lated
amortisation and
impairment
&et boo?
amo"nts
Good1
ill
3278
85
-
3278
85
2,7(
,4
-
2,7(
,4
337$
&,
-
337$
&,
Ind"st
rial
proper
t+
rig0ts
4837
84$
31&575
335
22&7
513
35$7
,&5
315373
(35
2837
5,2
3357
($4
313578
455
2887
(1,
De2elop
ment
costs
(417
,$1
35$373
(45
2&(7
5&&
5(17
31&
33,&73
415
1(37
,&$
5837
25&
33357,
&35
1$&7
2(4
/t0er
intangi
ble
assets
3427
85&
31,(78
135
1447
844
3227
5(3
31&578
3$5
14&7
54&
3147
3$4
315471
&&5
1$87
1(&
%onstr"c
tion'in'
progress
437$
&,
-
437$
&,
1287,
8(
-
1287,
8(
3&78
(4
-
3&78
(4
(otal
17$$27&4(
3,3$7,385
&257(1(
174117$&&
3&257&$85
$(57,1&
17224724(
3$2571,55
5,,7853
32
LG Electronics Inc.
&otes to t0e #eparate $inancial #tatements December 31, 2010
and 200,, and -an"ar+ 1, 200,
Changes in intangi6le assets are as follo%s?
won)
!t -an"ar+ 1, 2010
*c!"isitions
-ransfer-in 3o"t5
/isposals N
reclassification
to assets held for
sale
*mortisation
!t December 31,
2010
Good1il
l
2,7(,
4
27111
-
-
-
32788
5
Ind"stri
al
propert
+ rig0ts
28375,
2
-
&578,
&
3127$4
25
33(753
45
22&751
3
De2elopm
ent costs
1(37,&
$
5(7$1
(
24,785
4
31$784(
5
31,&782
35
2&(75&
&
/t0er
intangib
le
assets
14&754
&
2&714
&
$8
35$&
5
338714
35
144784
4
%onstr"cti
on'in'
progress
1287,8
(
1&8715
8
324&71$
45
32155
-
437$&
,
(otal
$(57,1&
25(782$
&&784&
32,74&25
32$57&885
&257(1(
won)
!t -an"ar+ 1, 200,
*c!"isitions
-ransfer-in 3o"t5
/isposals N
reclassification
to assets held for
sale
*mortisation
!t December 31,
200,
Good1il
l
337$&
,
-
-
337&(5
5
-
2,7(,
4
Ind"stri
al
propert
+
rig0ts
2887(1
,
-
$3742
5
3247,4
(5
3357&8
45
28375,
2
De2elopm
ent costs
1$&72(
4
11758
1
$(751
3
3(5
3$37314
5
1(37,&
$
/t0er
intangib
le
assets
1$871(
&
3,74&
8
32$7$$
85
32(5
325742
25
14&754
&
%onstr"cti
on'in'
progress
3&78(
4
152733
&
3$(7513
5
-
-
1287,8
(
(otal
5,,785
3
283738
(
3$7&$
5
32(7&$
,5
3124744
85
$(57,1
&
*mortisation of intangi6le assets %as presented as follo%s?
(in millions of Korean won) Cost of prod"cts
Selling and mar@eting
e9penses *dministrative
e9penses
)esearch and development
e9penses Service Costs
(otal
2010
5274&1
571(5
(2724(
1237,32
17($4
2$57&88
200,
2,785,
$72,5
5$74&4
387$35
17,&&
1247448
1ood%ill is allocated among the Compan#s cash-generating "nits 3C1Ks5 according to
operating segment. *n operating segment-level s"mmar# of good%ill allocation is presented
6elo%.
won)
Go6ile
Comm"nications
Iome *ppliance
(otal
December 31,
2010
2,7(,4
27111
327885
December 31,
200,
2,7(,4
-
2,7(,4
-an"ar+ 1, 200,
337$&,
-
337$&,
1
-he Compan# too@ over the mem6rane segment from 01 I*KSAS7 0-/. for %ater
treatment 6"siness and recognised the e9cess of the consideration transferred over the
net identifia6le assets ac!"ired
33
LG Electronics Inc.
and 200,, and -an"ar+ 1, 200,
amo"nting to 27111 million as a good%ill.
-he recovera6le amo"nt of C1Ks has 6een determined 6ased on val"e-in-"se calc"lations.
-hese calc"lations "se pre-ta9 cash flo% pro>ections 6ased on financial 6"dgets approved 6#
management covering a three-#ear period. Cash flo%s 6e#ond the three-#ear period are
e9trapolated "sing the estimated gro%th rate %hich does not e9ceed the long-term average
gro%th rate for the electronic 6"siness in %hich the C1K operated.
Ganagement determined 6"dgeted .I- margin 6ased on past performance and its
e9pectations of mar@et development. -he disco"nt rates "sed are pre-ta9 and reflect specific
ris@s relating to the relevant operating segments. 1ro%th rate and disco"nt rate "sed for val"e-
in-"se calc"lations of Go6ile Comm"nications %hich ma>orit# of good%ill 6elongs to are 1.5C
and 18.4$C7 respectivel#.
-he recovera6le amo"nts 6ased on val"e-in-"se calc"lations e9ceed carr#ing amo"nts and no
impairments are recognised.
34
LG Electronics Inc.
12. In2estments in s"bsidiaries, Aointl+ controlled entities and associates
Investments in s"6sidiaries7 >ointl# controlled entities and associates are as follo%s?
(in millions of
Korean won)
S"6sidiaries
Dointl# controlled entities and
associates
(otal
December
31, 2010
373&57$
($
474$,78
48
&7(447&
2$
December
31,
200,
37&$87,
54
4713$71
55
&7(,&71
8,
December
31,
200,
37$,87(
5,
478$,7$
2,
&7&$874((
-he stat"s and carr#ing amo"nts of investments in s"6sidiaries are as follo%s?
Percentage o
%o"ntries o o1ners0ip (B) at
December 31, December 31, December (in millions of Korean won) incorporation
December 31, 2010 2010 200, 31, 200,
01 lectronics K.S.*.7 Inc.
301KS5 01 Innote@ Co.7
0td.
1
01 lectronics India Pvt.
0td. 301I05 01 lectronics
de Sao Pa"lo 0tda.
301SP5
01 lectronics Gla%a
Sp. H o. o 301G*5
01 lectronics -ian>in
*ppliances Co.7 0td.
301-*5
01 lectronics "ropean
Ioldings ..B. 301I5
IiplaHa C+.7 0td
-aiHho" 01 lectronics
)efrigeration Co.7 0td.
301-)5
P- 01 lectronics
Indonesia
301I'5 01
lectronics
2rocla% Sp H o.o
3012)5
01 lectronics
Ge9ico S.*. /
C.B. 301GS5
01 lectronics
Panama7 S.*.
301PS5 01
lectronics -hailand
Co. 0td. 301-I5 01
lectronics *"stralia
Pt#7 0td.
3
0
1
*
P
5

+
t
h
e
r
s
(otal
*meri
ca
188.
88
:ore
a
-
India
188.
88
.raHi
l
188.
88
Polan
d
188.8
8
Chin
a
&8.8
8
'etherl
ands
188.88
:ore
a
188.
88
Chin
a
((.4
4
Indone
sia
188.88
Polan
d
188.88
Ge9ico ,,.,&
Panama 188.88
-hailand 188.88
*"stralia 188.88
,557542 -3117&4$
2&87$31
21478,1
1$17331
14(7552
184745,
,&7$8(
,47124
&87814
$(7&28
&,7222 5575&(
587$$4
$,37484
373&57$($
,5575
42
4117(
44
3117&
4$
2&87$
31
21478
,1
1$173
31
14(75
52
18474
5,
,&7$
8(
,471
24
&878
14
$(7&
28
&,72
22
5575
&(
587$
$4
$$$7(
2(
37&$87,
54
,5575
42
25871
,1
3117&
4$
2&87$
31
21478
,1
1$173
31
14(75
52
18474
5,
,&7$
8(
,471
24
&878
14
$(7&
28
&,72
22
5575
&(
587$
$4
&5(73
($
37$,87(
5,
35
LG Electronics Inc.
Investments in >ointl# controlled entities and associates are as follo%s?
Percentage o
%o"ntr+ o o1ners0ip (B) at December 31, December 31,
-an"ar+ 1,
won)
01 /ispla# Co.7
0td. 01 Innote@
Co.7 0td.
1
01-
ricsson Co.7
0td
2
01 Ioldings
3I:5 0td.
1lo6al +0/
-echnolog# 00C
3
Ian@"@ lectric 1lass
Co.7 0td.
4
+thers
(otal
incorporat
ion
:orea
:orea
:orea
Iong@o
ng
*merica
:orea
December 31,
2010
3&.,
8
4&.,
$
58.8
8
4,.8
8
32.&
3
-
2010
374(87$
23
541753
(
1$3758
3
12,73(
$
537454
-
18875
3$
474$,78
48
200,
374(87$
2
3

-
2$3758
3
12,73(
$
&274(3
(4788$
18$715
4
4713$71
55
200,
374(87$
2
3

-
2$3758
3
($7,48
-
(4788
$
15475
5&
478$,7$2
,
1
/"e to decrease in the o%nership interest7 the Compan# reclassified the
investee from a s"6sidiar# to an associate. -he Compan# contri6"ted
12,7$,4 million to 01 Innote@ Co.7 0td.s paid in capital increase.
2
-he Compan# received 1887888 million for shares cancelled thro"gh capital
red"ction.
3
-he Compan# sold its investment in associates amo"nting to 1,782, million.
4
-he Compan# sold its investment in associates amo"nting to (4788$ million.
Investments in listed s"6sidiaries7 >ointl# controlled entities and associates are as
follo%s?
December 31, 2010
(in millions of Kore
an won)
01 /ispla# Co.7 0td.
01 Innote@ Co.7
0td.
1
#0ares
1357$2578
88
,7$5371
(1
@ar?et price
per s0are (in
1on)
3,7(8
8
134788
8
@ar?et
2al"e
573,&7(
&5
172,375
2$
5oo?
amo"
nt
374(87$23
541753(
December 31, 200,
won)
01 /ispla# Co.7
0td. 01 Innote@
Co.7 0td.
1
Ian@"@ lectric
1lass Co.7
0td.
#0ares
1357$2578
88
(7$$17$
42
17$147$
&5
@ar?et price
per s0are (in
1on)
3,725
8
,,718
8
2&7&8
8
@ar?et
2al"e
5732372
(1
(5(73
$,
447&2
$
5oo?
amo"
nt
374(87$
23
4117(4
4
(4788$
3$
LG Electronics Inc.
31, 2010 and 200,, and -an"ar+ 1, 200,
-an"ar+ 1, 200,
won)
01 /ispla# Co.7
0td. 01 Innote@
Co.7 0td.
1
Ian@"@ lectric 1lass
Co.7
0td.
#0ares
1357$2578
88
$718&74
88
17$147$
&5
@ar?et price
per s0are (in
1on)
21788
8
3&758
8
227(8
8
@ar?et
2al"e
27(4(71
25
2257$5
3
3$7(1
5
5oo?
amo"n
t
374(87$
23
25871,
1
(4788$
13. In2estment Propert+
Changes in carr#ing amo"nts of investment propert# for the #ear ended
/ecem6er 317 28187 are as follo%s?
won) !t -an"ar+ 1
/isposals
/epreciation
1
!t December 31
Land
5723&
337(&8
5
-
173$&
5"ildings
47&(3
34&5
5
31$&
5
4714
1
(otal
18782
8
347345
5
31$&5
5758(
Changes in carr#ing amo"nts of investment propert# for the #ear ended
/ecem6er 317 288,7 are as follo%s?
won) !t -an"ar+ 1
/epreciation
1
!t December 31
Land 5"ildings (otal
5723& 47,32
1871$,
- 314,5 314,5
5723& 47&(3 187828
1
."ildings are depreciated over their "sef"l lives of 48 #ears.
Fair val"e of investment propert# estimated for information p"rpose is as follo%s?
won) 0and
."ildings
(otal
December
31,
2010
17412
472&&
57$(,
December
31,
200,
573(
1
47,1
5
1872,
$
-an"ar+ 1,
200,
5714
1
47(4
1
,7,(2
1
-he Compan# estimates the fair val"e of investment propert# 6ased on the e9pected
f"t"re cashflo%s.
3&
LG Electronics Inc.
)ental income amo"nting to 412 million 3288,? 144 million5 and
operating e9penses amo"nting to 1,5 million 3288,? 1,$ million5 are
recognised in the income statement relating to investment propert#.
18. 5orro1ings
-he carr#ing amo"nts of 6orro%ings are as follo%s?
(in millions of
Korean won)
%"rrent
Short-term 6orro%ings
C"rrent mat"rities of long-term
6orro%ings C"rrent mat"rities of
de6ent"res
#"b'total
&on'
c"rrent
0ong-term
6orro%ings
/e6ent"res
#"b'total
(otal
Decembe
r 31,
2010
173$&75
,2
1,8788
8
3&,7$,
$
17,3&72
((
1735&7&
(8
17&847&
,$
378$275
&$
47,,,7(
$4
Decembe
r 31,
200,
(8475
21
-&8878
52
1758475
&3
$1375
28
1734878
,3
17,537$
13
3745(71
($
-an"ar+ 1,
200,
3744374
2(
1257&5
8
14,7$2
(
37&1(7(
8$
44175
88
175$(74
35
2788,7,
35
57&2(7&41
Short-term 6orro%ings consist of?
Latest !nn"al interest
%arr+ing amo"nt
won)
Foreign c"rrenc# loans
:oo@min .an@ and
o
t
h
e
r
s
0
1
l
e
ct
ro
ni
cs
"
ro
pe
an
S
h
a
r
e
d
S
e
r
v
i
c
e Center ..B.
.orro%ings on
negotiated trade 6ills
2oori .an@ and
others
(otal
mat"ri
t+
date
-
2811.12
.2,
-
rate (B)
at
Dec 31,
2010
-
3G0 M
1.18
1.18O2.
12
Decemb
er 31,
2010
-
13,7&8
(
1722&7(
(4
173$&75
,2
Decemb
er 31,
200,
$87,
$4
12$72
(2
$1&72
&5
(8475
21
-an"ar+
1,
200,
1$27,
1$
13,73
(,
3714171
23
3744374
2(
3(
LG Electronics Inc.
0ong-term 6orro%ings as of /ecem6er 317 28187 consist of?
won)
0ocal c"rrenc# loans
-he :orea
/evelopment .an@
-he :orea
/evelopment .an@
-he :orea
/evelopment .an@
-he :orea
/evelopment .an@
:orea Finance
Corporation
:orea Finance
Corporation
:oo@min .an@
:oo@min .an@
Shinhan .an@
Foreign c"rrenc#
loans
-he :orea
/evelopment .an@
:oo@min .an@
#"b'total
Less3 c"rrent
(otal
Latest
mat"rit+
date
2811-18-
$ 2812-3-
38 2814-
11-24
2814-12-
24 2815-
,-14
2815-12-
24 2813-
5-14
2814-11-
12 281$-
18-1,
2812- $-
2$
288,-,-
11
!nn"al
interest
rate (B)
at
Dec 31,
2010
3G C/ M
8.(( 5.(1
4.55
4.&1
4.5&
4.$4
4.$&
4.$2
$GM1.2(
3G0 M
8.4
$G0 M
8.(
December
31,
2010
1,8788
8
1,8788
8
158788
8
148788
8
(87888
487888
1,8788
8
158788
8
1,8788
8
22&7&(
8
-
1754&7&
(8
31,8788
85
1735&7&
(8
Decembe
r 31,
200,
1,878
88
1,878
88
-
-
-
-
-
-
-
23375
2
8
-
$13752
8
-
$13752
8
-an"ar+ 1,
200,
1,8788
8
--
--
--
--
2517588
1257&58
5$&7258
31257&5
85
4417588
/e6ent"res as of /ecem6er 317 28187 consist of?
Fi9e
d
rate
notes
in
loc
al
c"
rrenc#
P"6lic7
non-g"aranteed 6onds
34,
th
5 P"6lic7 non-
g"aranteed 6onds 351
st
5
P"6lic7 non-g"aranteed
6onds 352
nd
5 P"6lic7
non-g"aranteed 6onds
353
rd
5 P"6lic7 non-
th
5
6onds 355
th
5 P"6lic7 non-
g"aranteed 6onds 35$
th
5
6onds 35&
th
5
Floating rate notes in
foreign c"rrenc# Citi6an@7
'.*
0ess? disco"nt on
de6ent"res
(otal
Latest
mat"ri
t+
date
2812-
4-11
2812-
2-1&
2811-
5-2(
2811-
(-$
2813-
4-22
2813-
$-1$
2815-
,-,
2815-
18-22
2812-
5-15
!nn"al
interest
rate (B)
at
Dec 31,
2010
5.2
&
5.,
,
4.3
8
4.&
8
4.2
8
4.$
8
4.$
3
4.3
8
3G0M8.$
5
(otal
1,878
88
1,878
88
1,878
88
1,878
88
1,878
88
1,878
88
1,878
88
1,878
88
5$,74
58
347,5
(5
278(474
,2
Less3
c"rren
t
-
-
1,8788
8
1,8788
8 -
-
-
-
-
338
45
3&,7$
,$
&on'
c"rrent
1,8788
8
1,8788
8 -
-
1,878
88
1,878
88
1,878
88
1,878
88
5$,74
58
347$5
45
17&847&,$
3,
LG Electronics Inc.
31, 2010 and 200,, and -an"ar+ 1, 200,
/e6ent"res as of /ecem6er 317 288,7 consist of?
Fi9ed rate notes in local
c"rrenc# P"6lic7 non-
g"aranteed 6onds 34,
th
5
6onds 351
st
5 P"6lic7 non-
nd
5
6onds 353
rd
5
Fi9ed rate notes in
foreign c"rrenc#
Citi6an@ 7 '.*.
Floating rate notes in
foreign c"rrenc# Citi6an@ 7
'.*.
0ess? disco"nt on
de6ent"res
(otal
Lates
t
mat"ri
t+
date
2812-
4-11
2812-
2-1&
2811-
5-2(
2811-
(-$
2818-
$-1&
2812-
5-15
!nn"al
interest
rate (B)
at
Dec 31,
200,
5.2&
5.,,
4.38
4.&8
5.88
3G0M8.$
5
(otal
1,878
88
1,878
88
1,878
88
1,878
88
&8875
$8
5(37(
88
34721
55
2784871
45
Less3
c"rren
t
-
-
-
-
&8875
$8
-
358(
5
&8878
52
&on'
c"rrent
1,8788
8
1,8788
8
1,8788
8
1,8788
8
-
5(37(8
8
337&8
&5
1734878,3
/e6ent"res as of Dan"ar# 17 288,7 consist of?
Fi9ed rate notes in local
c"rrenc# P"6lic7 non-
g"aranteed 6onds 34&
th
5
6onds 34,
th
5
Fi
9
e
d
ra
te
n
ot
es in
foreig
n
c"rren
c#
Citi6a
n@ 7
'.*.
Floati
ng
rate
note
s in
forei
gn
c"rr
enc
#
Citi
6an
@ 7
'.*
.
0ess?
disco"nt
on
de6ent"re
s
(otal
Latest
mat"rit+
date
288,-,-23
2812-4-11
2818-$-1&
2812-5-15
!nn"a
l
interes
t
rate
(B)
at
-an
1,
200,
4.8
8
5.2
&
5.8
8
3G0M8.$
5
(otal
15878
88
1,878
88
&5475
88
$2(7&
58
3571(
&5
17&1(78
$3
Less3
c"rren
t
15878
8
8

-
-
-
33&2
5
14,7$
2(
&on'
c"rrent
-
1,8788
8
&547588
$2(7&5
8
347(1
55
175$(7435
48
LG Electronics Inc.
Carr#ing amo"nts and fair val"e of non-c"rrent 6orro%ings consist of?
December 31,
2010
(in millions of Korean %arr+ing
December 31,
200,
%arr+ing
-an"ar+ 1, 200,
%arr+ing
won)
0ong-term
6orro%ings
/e6ent"res
(otal
amo"nt
1735&7&
(8
17&847&
,$
378$275
&$
$air
2al"e
1
173(17$
(4
17&317$
,5
3711373
&,
amo"nt
$1375
28
1734878
,3
17,537$
13
$air
2al"e
1
$2875
,1
173$&74
$1
17,((78
52
amo"nt
44175
88
175$(74
35
2788,7,
35
$air
2al"e
1
4587,
34
17$3$71
($
278(&71
28
1
-he fair val"es are 6ased on the cash flo%s disco"nted "sing the
6orro%ing rate of 4.(1C 3/ecem6er 317 288,? 5.8&C7 Dan"ar# 17 288,?
4.84C5.
Pa#ment sched"le
1
of 6orro%ings as of /ecem6er 317 28187 is as follo%s?
(in millions of
Korean won) Short-
term 6orro%ings
C"rrent mat"rities of
long-term 6orro%ings
C"rrent mat"rities of
de6ent"res 0ong-term
6orro%ings /e6ent"res
(otal
(otal
173$&75
,2
1,878
88
3(878
88
1735&7&
(8
17&8,74
58
578847(
22
1 +ear
173$&75
,2
1,878
88
3(878
88 -
-
17,3&75
,2
Less
t0an 2
+ears
-
-
-
41&7&
(8
,4,74
58
173$&72
38
9 +ears
-
-
-
&5878
88
&$878
88
1751878
88
/2er
9
+ears
-
-
-
1,878
8
8

-
1,878
88
1
-he a6ove cash flo% is "ndisco"nted amo"nt.
19. /t0er Pa+ables
(in millions of
Korean won) 'on-
trade Pa#a6les
*ccr"ed 9penses
/eposits )eceived
(otal
Decembe
r 31,
2010
1748178
24
171(,7&
&(
137,&&
27$847&
&,
Decembe
r 31,
200,
1731378
1$
1728472
&8
1&7288
2753474
($
-an"ar+ 1,
200,
172($73
,(
171,27$
$&
12745&
274,17522
41
LG Electronics Inc.
1:. Deerred Income (ax
-he anal#sis of deferred ta9 assets and deferred ta9 lia6ilities is as follo%s?
(in millions of Korean won) December 31, 2010 December 31, 200,
-an"ar+ 1, 200, /eferred ta9 assets
/eferred ta9 asset to 6e
recovered %ithin 12
months
/eferred ta9 asset to 6e
recovered after more than 12
months
Deerred tax assets beore
osetting
/eferred ta9 lia6ilities?
/eferred ta9 lia6ilit# to 6e
recovered %ithin 12
months
/eferred ta9 lia6ilit# to 6e
recovered after more than
12 months
Deerred tax liabilities beore
osetting
Deerred tax assets
(liabilities) ,net
3457(
,2
,1(7,
$&
172$47(
5,
1,712
2
(8$7$
25
(257&
4&
43,71
12
3,274
(8
23475
,1
$2&78
&1
3371
13
$4271
&4
$&572
(&
34(721
$5
2,(7&1$
(472$$
3(27,(2
(73,3
3,,78$4
48&745&
32474&55
-he movement in deferred income ta9 assets and lia6ilities d"ring the #ears
ended /ecem6er 317 2818 and 288,7 %itho"t ta@ing into consideration
the offsetting of 6alances %ithin the same ta9 >"risdiction7 is as follo%s?
2010
won) Changes in
temporar# differences
Investments in
s"6sidiaries7 >ointl#
controlled entities and
associates
Propert#7 plant and
e!"ipme
nt
!t -an"ar+ 1
32$271445
31($7,555
%0argedC
(credited) to
t0e income
statement
5714(
$7252
%0argedC
(credited) to
ot0er
compre0ensi2e
income
-
-
!t
Decembe
r 31 325$7,,$5
31(87&835
-rade
receiva6les
*ccr"ed
e9penses
Provisions
1ain 3loss5 on foreign
c"rrenc# translation
1ain 3loss5 on
val"ation of
derivatives
)eserve for
research and
manpo%er
development
+thers
#"b
total
-a9 credits
carr#for%ards 0oss
carr#for%ards
Deerred tax assets
(liabilities)
3$73&
15
2&3785
$
4&73,$
&57853
2&71(&
-
315743
(5
34(721
$5
-
-
34(721
$5
4
2
33741
35
37342
357,8
85
34,741
,5
31(782
,5
314878(
55
5725
2
31,$7(5
25
3$$7&&
&
38&781
,
4&$7,4
4
-
3,7&(45 -
2&$73,( -
4174,$
- 257$34
- ,715(
-
314878(55 1873(4
1,( 1873(4
32347$(45 -
3$$7&&&
- 38&781,
1873(4 43,7112
LG Electronics Inc.
200,
won) Changes in
temporar# differences
Investments in
s"6sidiaries7 >ointl#
controlled entities and
associates
Propert#7 plant and
e!"ipment -rade
receiva6les
*ccr"ed e9penses
Provisions
1ain 3loss5 on foreign
c"rrenc# translation
1ain 3loss5 on
val"ation of
derivatives
+thers
#"b
total
-a9 credits carr#for%ards
Deerred tax assets
(liabilities)
!t
-an"ar+
1
32(47$
&45
321171(
$5
45,
2217(
(,
53745
4
($71(
1
4878
42
3784
,
3,87&(
$5
$$731
1
32474&
55
%0argedC
(credited) to
t0e income
statement
2275
38
2472
31
3$7(3
85
5171$
&
3$785
(5
311712
(5
3127(5
55
31(7$(
35
4273&
4
3$$731
15
3237,3
&5
%0argedC
(credited) to
ot0er
compre0ensi
2e income
-
-
-
-
-
-
-
1,
$
1,
$
-
1,
$
!t December 31
32$2714
45
31($7,5
55
3$73&15
2&378
5$
4&73
,$
&57853
2&71(
&
315743
(5
34(721
$
5
-
34(721$5
1
/eferred ta9 lia6ilities of 547,35 million 3288,? 5373,1 million5
%ere not recognised for the temporar# differences on the "nremitted
earnings of s"6sidiaries %hich are e9pected to 6e permanentl#
reinvested.
-a9 effects recognised in other comprehensive income directl# are as follo%s?
(in millions of
Korean won)
+ther
comprehensive
income
*vaila6le-for-
sale financial
assets
*ct"arial
gainNloss
-otal
.efor
e
-a9
127$2
1
35572(
35
3427$$
25
-a9
effec
ts
327&&
&5
1271$
2
,73(
5
*fte
r
-a9
,7(4
4
343712
15
33372&
&5
.efor
e
-a9
12713
$
3171(
$5
187,5
8
-a9
effec
ts
3,,
,
5
-
3,,
,5
*fter
.efore -a9
-a9
11713&
57438 3171($5
-
,7,51
57438
-a9
*fter effects
-a9
3171,55
47235 -
-
3171,55
47235
9pirations of "nrecognised ta9 loss and ta9 credit carr#-for%ards are as follo%s?
(in millions of
Korean won)
2ithin 1
#ear
2ithin 2
#ears
2ithin 3
#ears +ver
3 #ears
(otal
(ax loss
-
-
-
38&78
1,
38&78
1,
(ax credit
-
2(74
,3
327(
44
3857448
3$$7&&&
43
LG Electronics Inc.
1<. Deined 5eneit Liabilit+
-he amo"nts recognised in the statements of financial position are determined as
follo%s?
Present val"e of f"nded
o6ligations Fair val"e of
plan assets
Liabilities
December
31, 2010
(857$5
$
353$741
35
2$,724
3
December
31, 200,
$2&715
,
34237(&
,5
28372(
8
-an"ar+
1,
200,
$5&74$
&
34437&(85
2137$(&
-he amo"nts recognised in the income statements for the #ears ended
/ecem6er 317 2818 and 288,7 are as follo%s?
2010 200,
C"rrent service
cost Interest cost
9pected ret"rn on plan
assets Past service cost
C"rtailments
(otal expense
12$7&(
,
3$7,31
32&7,5
55 -
-
1357&$
5
11$7&3
5
3(7,(8
3157,2
$5
187$8(
$71&8
15$75$&
-he line items in %hich e9penses are incl"ded for the #ears ended
Cost of sales
e9penses *dministrative
e9penses
)esearch and development
e9penses
Service costs
2010 200,
$(7552
&(7(5,
28748(
237(3&
(72,3
117$3(
3$7314
3,7(5&
271,(
273&$
(otal expense
1357&$5 15$75$&
C"m"lative act"arial losses recognised in the statement of other
comprehensive income as of /ecem6er 317 28187 are 437121 million 3288,?
171($ million5.
44
LG Electronics Inc.
31, 2010 and 200,, and -an"ar+ 1, 200,
Changes in the defined 6enefit o6ligations for the #ears ended /ecem6er 317
2818 and 288,7 are as follo%s?
2010 200,
!t -an"ar+ 1
C"rrent service
cost -ransfer-
in3o"t5 Interest
e9pense .enefits
paid
Past service
cost
C"rtailments
Settlements
*ct"arial loss
!t December 31
$2&715,
12$7&(,
2725$
3$7,31
33,7(235
--
-
527344
(857$5$
$5&74$
&
11$7&3
5
327$($5
3(7,(8
3$$73(85
187$8(
$71&8
313,7555
5
57(28
$2&715,
Changes in the fair val"e of plan assets for the #ears ended /ecem6er 317
2818 and 288,7 are as follo%s?
2010 200,
!t -an"ar+ 1
9pected ret"rn on plan
assets mplo#er
contri6"tions .enefits
paid
Settlements
*ct"arial
gain3loss5
!t December 31
4237(&,
2&7,55
1887888
3137$$(5
-
317&535
53$7413
4437&(8
157,2$
(&7$,1
348733&
5
3(&7(15
5
47$34
4237(&,
-he act"al ret"rn on plan assets for the #ear ended /ecem6er 317 28187 is
2$7282 million 3288,? 2875$8 million5.
-he principal act"arial ass"mptions "sed are as follo%s?
3C5 /isco "nt rate
9pected rate of
ret"rn
F"t"re salar#
increase
December 31,
201
0
5.5
4.3
$.8
December 31,
200
,
$.2
$.2
$.8
-an"ar+ 1,
200
,
$.(
3.(
$.8
Plan assets consist of?
3C5
-ime deposits
Sec"rities com6ined
%ith derivatives
3g"aranteed5
(otal
December 31,
2010
1,47&8
&
3417&8
$
53$741
3
December 31,
200,
158714
2
2&37&3
&
4237(&
,
-an"ar+ 1,
200,
4437&(8
-
4437&(8
45
LG Electronics Inc.
-he amo"nts of e9perience ad>"stments arising on the plan lia6ilities and
the plan assets are as follo%s?
3C5
Present val"e of
o6ligation Fair val"e
of plan assets
Deicit in t0e plan
9perience ad>"stments
on plan lia6ilities
9perience ad>"stments
on plan assets
December 31,
2010
(857$
5$
353$741
35
2$,724
3
34741
15
317&5
35
December 31,
200,
$2&71
5,
34237(&
,5
28372(
8
257&$
8
47$3
4
-an"ar+ 1,
200,
$5&74
$&
34437&(
85
2137$(
&
-
-
1>. Pro2isions
Changes in provisions d"ring the #ear ended /ecem6er 317 28187 are as
follo%s?
(in millions of
Korean won)
!t -an"ar+ 1,
2010 *ddition
Ktilisation
!t December 31,
2010
%"rrent
&on'c"rrent
=arrant+
1,57(
53
3457&
5(
33&8714
15
1&174&
8
1&174
&8
-
#ales
ret"
rns
1783
&
$5
4
31783
&5
$5
4
$5
4
-
Restorat
ion
371(
(
1735
3
35&
85
37,&
1
-
37,&
1
Litigatio
n
32373
45
$781
5
312738
$5
31&78
54
-
31&78
54
(otal
52374
23
3537&
(8
33(4785
45
4,3714
,
1&271
24
32178
25
Changes in provisions d"ring the #ear ended /ecem6er 317 288,7 are as
follo%s?
(in millions of
Korean won)
!t -an"ar+ 1,
200, *ddition
Ktilisation
!t December 31,
200,
%"rrent
&on'c"rrent
=arrant+
2287(
(4
32174
41
334$74&
25
1,57(5
3
1,57(5
3
-
#ales
r
e
t
"
r
n
s

-
1783
&

-
1783
&
1783
&
-
Restorat
i
o
n

-
3758
(
332
85
371(
(
-
371(
(
Litigatio
n
271,
(
32174
4(
338
15
32373
4
5
-
32373
45
(otal
22378
(2
$4&74
34
334&78,
35
523742
3
1,$7(
,8
32$75
33
1,. /t0er Liabilities
+ther lia6ilities consist of?
(in millions of
Korean won)
*dvances from
c"stomers
Knearned income
2ithholding
(otal
December 31,
2010
23&73
,8
4571
2$
$37$
1,
34$71
35
December 31,
200,
31873&
2
537&
&5
12,75
4&
4,37$,
4
-an"ar+ 1,
200,
2$371
5,
$378
54
5&7,
45
3(4715(
4$
LG Electronics Inc.
20. Paid'in %apital
*s of /ecem6er 317 2818 and 288,7 and Dan"ar# 17 288,7 the n"m6er of
shares a"thorised is $88 million shares.
December 31, 2010 December 31, 200,
-an"ar+ 1, 200,
Common
stoc@
Preferred
stoc@
1
Par
2al"e
per
s0are
5788
8
5788
8
&"mber o
s0ares
iss"ed
1447$4&7
(14
1&71(57
,,2
1$17(337
(8$
!mo"n
t (in
millions)
&2372
3,
(57,
38
(8,71
$,
!mo"n
t (in
millions)
&2372
3,
(57,
38
(8,71
$,
!mo"n
t (in
millions)
&2372
3,
(57,
38
(8,71
$,
1
-he preferred shareholders have no voting rights and are entitled to
preferred dividends at a rate of one percentage point over that of common
stoc@. -his preferred dividend rate is not applica6le to stoc@ dividends. In
addition7 the preferred shareholders have same rights on the remaining
assets %ith ordinar# shareholders. )epa#ment and convert are not
applica6le to preferred shares.
/etails of share premi"m consist of?
(in millions of
Korean won)
Share premi"m
December 31,
2010
2728&7,
1,
December 31,
200,
2728&7,1
,
-an"ar+ 1, 200,
2728&7,1,
1
Share premi"m incl"des the amo"nt of 17(&$7153 million7 less
capital stoc@ amo"nting to &(37,$1 million and capital ad>"stment
amo"nting to 15575,3 million from net 6oo@ val"e of net assets
amo"nting to 27(157&8& million ta@en over d"e to the split-off on *pril 17
2882. In addition7 the amo"nt of 3317&$$ million paid in e9cess of par
val"e d"e to iss"ance of ne% shares 3merger %ith 01 I.GPC Co.7 0td5 and
the e9ercise of conversion right and %arrants in 2885 and 288$ are
incl"ded.
21. Retained Earnings
/etails of retained earnings consist of?
(in millions of
Korean won) 0egal
reserve
1
/iscretionar#
reserve
Knappropriated
retained
earnings
(otal
December 31,
2010
13(7(2
1
57$437$
,&
1714,74
,&
$7,3278
15
December 31,
200,
118754
,
37,4,734
3
37(327$5
&
&7(,2754
,
-an"ar+ 1,
200,
1847(
2$
372(872&$
3741,78$1
$7(8471$3
1
-he Commercial Code of the )ep"6lic of :orea re!"ires the Compan# to
appropriate7 as a legal reserve7 an amo"nt e!"al to a minim"m of 18C of
cash dividends paid "ntil s"ch reserve e!"als 58C of its iss"ed capital
stoc@. -he reserve is not availa6le for the pa#ment of cash dividends7 6"t
ma# 6e transferred to capital stoc@ thro"gh an appropriate resol"tion 6#
the Compan#s .oard of /irectors or "sed to red"ce acc"m"lated deficit7 if
an#7 %ith the ratification of the Compan#s ma>orit# shareholders.
2
*s of /ecem6er 317 28187 discretionar# reserve for research and manpo%er
development is s"6>ect
4&
LG Electronics Inc.
31, 2010 and 200,, and -an"ar+ 1, 200,
to dividend according to the special ta9 treatment control la%.
Changes in "nappropriated retained earnings are as follo%s?
won) !t -an"ar+ 1
Profit 3loss5 for the
#ear *ct"arial
3losses5Ngains
/ividend
!t December 31
2010
&7(,2754
,
3$357(&45
3417,355
32(27&255
$7,32781
5
200,
$7(8471$
3
1714$7(8
4 3171($5
35&72325
&7(,2754,
Separate statements of appropriation of retained earnings #ears ended /ecem6er
317 2818 and 288,7 are as follo%s?
#eparate #tatements o !ppropriation o Retained
Earnings .ears Ended December 31, 2010 and 200,
(Date o !ppropriation3 @arc0 1>, 2011 and @arc0 1,, 2010
or t0e +ears ended December 31, 2010 and 200,, respecti2el+)
Retained earnings beore
appropriation Knappropriated retained
earnings carried over
from prior #ear
ffect of the transition to :orean
IF)S *ct"arial loss
Profit 3loss5 for the #ear
(ranser rom discretionar+
reser2e )eserve for research
and manpo%er
development
)eserve for financial str"ct"re
improvement
(otal
!ppropriation o retained earnings
/iscreti
onar#
reserve
)
e
s
e
r
v
e

f
o
r

r
e
s
e
a
r
c
h
and
man
po%e
r
devel
opm
ent
/ividends
/ividends3
ratio5 per
share
Common
stoc@ ?
2010
17(2&738$ -
3417 ,355 3$357(&45
1714,74,&
5788$7,4& -
5788$7,4& $715$7444
3738&
$711,7,$$
3378&2
200,
,
,
27$
($7
,48
31
71($
5
1714
$7(8
4
37(3
27$5
&
37,2175&
1
2&7&&
2
37,4,734
3
&7&(2788
8
2(72&2
57$437$,&
2(27&25
288 3 4C5 in 28187
17&58 335C5 in 288,
4(
LG Electronics Inc.
Preferred stoc@ ?
258 3 5C5 in
28187 17(88
33$C5 in 288,
$715$7345 57,547$,4
;nappropriated retained earnings to be
carried or1ard to s"bse*"ent +ear ,, 17(2&738$
22. /t0er %omponents o E*"it+
/etails of other components of e!"it# consist of?
(in millions of
Korean won)
-reas"r# shares
1
Consideration for
conversion rights
1ain on disposal of
treas"r# shares
!t December 31
December
31, 2010
3447(,
35
,7(,1
271(3
3327(1
,5
December
31, 200,
3447(,
35
,7(,
1
271(
3
3327(1
,5
-an"ar+
1, 200,
3447(,
35
,7(,1
271(3
3327(1,5
1
-he Compan# has treas"r# shares consisting of &$371$1 shares 3288,?
&$3715& shares5 of ordinar# shares and 47$(& shares 3288,? 47$(4 shares5
of preferred shares at the reporting date. -he Compan# intends to either
grant these treas"r# shares to emplo#ees and directors as compensation7 or
to sell them in the f"t"re.
23. #0are'5ased Pa+ments
-he Compan# operates cash-settled7 share-6ased compensation plans
3stoc@ appreciation rights5 %hich %ere granted to its e9ec"tives and
emplo#ees on Garch 237 28857 and are e9ercisa6le 6et%een Garch 237
288( and Garch 227 2812. 9ercise price per share is determined to 6e
&171387 %hich is lo%er 6# 38C than %eighted average stoc@ price of
181751& at the reporting date.
Govements in the n"m6er of stoc@ appreciation rights o"tstanding and their
related %eighted average stoc@ prices are as follo%s?
=eig0ted a2erage
stoc? price (in 1on)
1
&"mber o options
("nitD s0ares)
.eginnin
g
9ercise
d 2
nding
2010
11575
14
11471
44
18175
8&
200,
&&731
1
12&7(
,&
11575
14
2010
38575
88
38788
8
2&575
88
200,
38&758
8
27888
3857588
4,
LG Electronics Inc.
1
-he %eighted average stoc@ price is determined 6# an average of three
share prices? average share price of last t%o months7 last one month and
last one %ee@ from each date of e9ercise.
2
-his line represents the %eighted average of the stoc@ prices determined
6# a6ove calc"lation at each of e9ercise dates for the #ear.
-he %eighted average fair val"e of options determined "sing the .lac@-
Scholes val"ation model %as (7,4$ million 3288,? 1$7(24 million5. -he
significant inp"ts into the model %ere the %eighted average share price of
181758& 3288,? 115751457 e9ercise price of &171387 volatilit# of 2$.15C
3288,? 45.$3C57 dividend #ield of 8.,5C 3288,? 8.(,C57 an e9pected option life
of 1.25 #ears 3288,? 2.25 #ears5 and an ann"al ris@-free interest rate of 3.84C
3288,? 4.3&C5.
28. &et #ales
/etails of net sales for the #ears ended /ecem6er 317 2818 and 288,7 are as
follo%s?
(in millions of
Korean won)
'et sales
Sales of
goods Sales
of services
)o#alt#
income
(otal
2010
2(75&272
4,
3537$
&3
31275
(1
2,723(75
83
200,
2,7,837&
15
2287(
&(
3((7(
43
387513743$
29. Expenses b+ &at"re
9penses that are recorded 6# nat"re as cost of sales7 general operating
e9penses and other operating e9penses in the income statements for the
#ears ended /ecem6er 317 2818 and 288,7 consist of?
Changes in inventories
P"
rc
hase of ra%
materials and
merchandise mplo#ee 6enefit
e9penses 3'ote 2$5 /epreciation7
amortisation
*dvertising e9penses
Sales promotional
e9penses
-ransportation
e9penses Commission
e9penses
+ther e9penses
(otal
1
2010
32,&7&&
35
227$4273
(&
271&374
(3
&$478(&
55&7318
38$7581
(2(7552
1743$7$
(&
372&178
,5
317$(273
2,
200,
1347182
287,4472
3,
271847&4
3
$5$733(
,137(3&
3$47518
$5$744,
1732173$
3
37$($745
&
387&(2783(
1
Selling and mar@eting e9penses7 administrative e9penses7 research
and development e9penses and service costs are incl"ded.
58
LG Electronics Inc.
2:. Emplo+ee 5eneit Expense
2010 200,
2ages and
salaries
2elfare
e9pense
Stoc@ options 3'ote 235
/efined contri6"tion
plans /efined 6enefit
plans 3'ote 1&5
+ther post-emplo#ment
6enefits -ermination
e9pense
(otal
17$&&71
5$
3417(22
3$75(15
17585
1357&$5
1,723,
475&&
271&374
(3
17$287(
2$
2(,7142
12741,
57(52
15$75$&
1&7,&$
17,$1
271847&43
2<. General /perating Expenses (#elling and mar?eting expenses,
!dministrati2e expenses, Researc0 and de2elopment expenses,
#er2ice costs)
/etails of general operating e9penses for the #ears ended /ecem6er 317 2818
and 288, are
as follo%s?
(in millions of
Korean won) 2ages
and salaries
Severance 6enefits
2elfare e9pense
Freight e9pense
)ental e9pense
2010
(237$4
8
&171&$
1$17(&
5
(21718
3
12872
,5
200,
(117$(
&
&&7&8(
13,751
8
$327($
1
1847&2&
Commission
e9pense
/
e
preci
ation
*mortiHation
-a9es and d"es
*dvertising e9pense
Promotional e9pense
)esearch and
development Service
e9penses
+ther
(otal
178$373
3$
112732,
2137238
14724(
55&7318
38$7581
425745,
45$7$(5
3217885
574$(71
,2
,&&7(5
2
11&7,&
5
,&748&
1(7441
,137(3
&
3$4751
8
3&17&4
8
4(,742
(
2,3722
,
574187,12
51
LG Electronics Inc.
2>. Researc0 and De2elopment Expendit"re
)esearch and development e9pendit"re recogniHed in the income statements
consist of?
Kncapitalised research and
development e9pendit"re
*mortised development costs
3'ote 115
(otal
2010
278&478
(3
1,&78
23
272&171
8$
200,
17&,378
,2
$3731
4
17(5$748$
2,. /t0er /perating Income
+ther operating income for the #ears ended /ecem6er 317 2818 and 288,7
consists of?
(in millions of
Korean won)
)ental income
2010 200,
3178&8 237,$5
Foreign e9change gain
1ain on settlement of
derivatives
1ain on disposal of
propert#7 plant and
e!"ipment
1ain on disposal of
intangi6le assets
)eversal of allo%ance for
do"6tf"l acco"nts
+thers
(otal
171&,73
&
&

-
,72&
3
1&
&785
(
11273
((
1733,71
(3
1755174
43
4783
2
&7&1
$
5738
8

-
((7$48
17$(178,$
30. /t0er /perating Expenses
2010 200,
Foreign e9change loss
0osses on disposal of
propert#7 plant and
e!"ipment
0osses on disposal of
intangi6le assets
0osses on settlement of
derivatives +thers
(otal
1721(74
8$
1(7$$
$
2(7,,
4
-
5473&
4
1732874
48
175$&74$8
2,75(,
257554
1(783
&
3237&
8(
17,$4734(
52
LG Electronics Inc.
31. $inancial Income
(in millions of
Korean won) Interest
income
/ividend income
2010
427&&
2
1217(
5&
200,
4&7&1,
1,,72($
1ain on foreign c"rrenc#
translation 1ain on
settlement of derivatives
1ain on disposal of
availa6le-for-sale
financial
assets +thers
(otal
44,73
$,
($723
$
$733
(
171$
&
&8&7&
3,
1782,74
41
$87&4
2
-
3788,
1734871,&
32. $inancial Expenses
won) Interest
e9pense
Contri6"tion
0oss on foreign c"rrenc#
translation 0oss on
settlement of derivatives
+thers
2010
1447,2
3
287853
4$$78(
2
4275(3
$745
8
200,
1(,7&3
,
147(2(
,287,$
,
&27&$5
135741,
(otal $(878,1 173337&28
33. Income (ax
/etails of income ta9 e9pense are as follo%s?
won) C"rrent income
t
a
9
e
s
C"rrent ta9 on profits for the
#ear *d>"stments in respect
of prior #ears
(otal c"rrent
tax /eferred
ta9
Changes in temporar# differences
/eferred income ta9 carried over
from prior #ear (otal deerred
income tax
Income tax expense (income)
2010
3&72(
3
3174$
85
357(2
3
34&$7,4
45
-
34&$7,4
45
3441712
15
200,
24(723
8
-
24(7238
4$74$&
322753
85
237,3&
2&271$&
53
LG Electronics Inc.
-he reconciliation 6et%een the ta9 charge calc"lated "sing %eighted average
ta9 rate and the effective ta9 rate are as follo%s?
2010
%0ange in tax
200,
%0ange in tax
Proit (loss) beore income tax
-a9 e9pense 6ased on stat"tor#
ta9 rate
1
-a9 ad>"stments?
Income not s"6>ect to ta9
9penses not ded"cti6le for ta9
p"rposes -a9 loss and credits
carr#-for%ards
*d>"stments in respect of prior
#ears
Changes in "nrecognised deferred
ta9 assets Change in ta9 rates
1
+thers
Income tax
expense
3178&$7,
,55
32$87$3
35
32(743,
5
117428
31,272&
35
3174$85
317(3(5
31755
5
54
&
3441712
15
(ax rate
24.2
C
2.$
C
3-51.1
C
1&.,
C
8.1
C
8.2
C
3-52.,
C
3-58.1
C
48.,
C
expense
1741(7,
&1
34373,
1
3(712
55
$7,82
31357$3
(5
322753
85
&(78
83
1272
(,
32712
55
2&271$
&
(ax rate
24.2
C
3-58.$
C
8.5
C
3-5,.$
C
3-51.$
C
5.5C
8.,C
3-58.1
C
1,.2
C
1
-he ta9 effect of c"m"lative temporar# differences %as calc"lated
6ased in f"t"re ta9 rates of the fiscal #ears %hen temporar# differences
are e9pected to reverse. -he 24.2C and 22C ta9 rates %ere "sed for
temporar# differences e9pected to reverse in #ear 2818 and 28117 and
thereafter7 respectivel#. *s a res"lt7 deferred ta9 assets %ere lo%er 6#
317555 million 3288,? 1272(, million5 as compared to the amo"nt
"sing the c"rrent ta9 rate of 24.2C.
38. Earnings per #0are
.asic earnings per share is calc"lated 6# dividing the profit
attri6"ta6le to ordinar# shareholders 6# the %eighted average n"m6er of
shares in iss"e e9cl"ding shares p"rchased 6# the Compan# and held as
treas"r# shares. Preferred shares have a right to participate in the profits of
the Compan#. -hese participation rights have 6een considered in presenting
the PS for ordinar# shares and Preferred shares.
*s of the reporting date7 the Compan# has no potential ordinar# shares.
Profit 3loss5 attri6"ta6le to ordinar# shares
1
2eighted average n"m6er of ordinar#
shares o"tstanding 3"nit? shares5
2
.asic earnings per ordinar# share 3in %on5
Profit 3loss5 attri6"ta6le to preferred shares
1
2eighted average n"m6er of preferred
shares o"tstanding 3"nit? shares5
2
.asic earnings per preferred share 3in %on5
2010
35$(7(1
15
1437((47$
55
337,53
5
2010
3$&78$
35
1&71(173
8$
337,8
35
200,
178237&84
1437((47$5&
&7115
200,
1237181
1&71(1738,
&71$5
54
LG Electronics Inc.
1
Profit attri6"ta6le to ordinar# and preferred shares are as follo%s?
Proit (loss) rom contin"ing operations
(!)
+rdinar# shares dividends 3.5
Preferred shares dividends 3C5
;ndistrib"ted earnings (DE!'5'%)
Kndistri6"ted earnings availa6le for
ordinar# shares 35
Kndistri6"ted earnings availa6le for
preferred shares 3F5
Proit (loss) attrib"table to ordinar+
s0ares (GE5FE)
Proit (loss) attrib"table to preerred
s0ares (6E%F$)
2010
3$357(&
45
2(7&&
&
472,
5
3$$(7,4
$5
35,&75(
(5
3&1735
(5
35$(7(1
15
3$&78$
35
200,
1714$7(84
2517&,(
387,2&
($478&,
&&17,8$
,271&4
178237&84
1237181
2
2eighted average n"m6ers of shares are calc"lated as follo%s?
2010 200,
+rdinar# shares o"tstanding
+rdinar# treas"r# shares
=eig0ted a2erage n"mber o ordinar+ s0ares
o"tstanding
Preferred shares o"tstanding
Preferred treas"r# shares
=eig0ted a2erage n"mber o preerred
s0ares o"tstanding
1447$4&7(
14
3&$371$
15
1437((47$
55
1&71(57,
,2
347$(
&5
1&71(173
8$
1447$4&7(14
3&$3715&5
1437((47$5&
1&71(57,,2
347$(45
1&71(1738,
39. Di2idends
-he n"m6ers of shares entitled to dividends are as follo%s?
(unit*
shares)
+rdinar#
shares
Preferred
shares
2010
1437((47$
53
1&71(173
85
200,
1437((47$5&
1&71(1738(
/etails of the Compan#s dividends declared as of /ecem6er 317 28187 are as
follo%s?
(in millions of
Korean won)
+rdinar# shares
Preferred shares
(otal
%alc"latio
n
1437((47$53 P 57888
P 4C Q
1&71(17385 P 57888 P
5C Q
!mo"nts
2(7&&&
472,5
3378&2
55
LG Electronics Inc.
/etails of the Compan#s dividends declared as of /ecem6er 317 288,7 are as
follo%s?
(in millions of
Korean won)
+rdinar# shares
Preferred shares
(otal
%alc"lation
1437((47$5& P 57888 P
35C Q
1&71(1738( P 57888 P
3$C Q
!mo"nts
2517&,(
387,2&
2(27&25
-he Compan#s dividend pa#o"t ratios for the #ears ended /ecem6er 317
2818 and 288,7 are comp"ted as follo%s?
won)
-otal dividends 3*5
Profit 3loss5 for the #ear
3.5
/ividend pa#o"t ratio
33*5N3.55
2010
3378&
2
3$357(&
45
-
1
200,
2(27&25
1714$7(84
25C
1
/ividend pa#o"t ratio is not calc"lated for the c"rrent #ear d"e to net loss of the
Compan#.
-he Compan#s dividend #ield ratios for the #ears ended /ecem6er 317
2818 and 288,7 are comp"ted as follo%s?
%ommo
n (in Korean won) s0ares
2010
Preerr
ed
s0ares
200,
%ommon
Preerred s0ares
s0ares
/ividend per share
3*5
Gar@et price at the
end of reporting
period 3.5
/ividend #ield ratio
33*5N3.55
28
8
11(78
88
8.1&
C
258 17&58 17(88
437(58 1217588 587888
8.5&C 1.44C 3.$8C
5$
LG Electronics Inc.
3:. %as0 Generated rom /perations
* reconciliation 6et%een operating profit and net cash inflo% 3o"tflo%5 from
operating activities
is as follo%s?
won) Profit 3loss5 for
the #ear
*d>"stments ?
Interest e9pense
Foreign e9change
loss 0oss on
derivatives
/epreciation
*mortisation
0oss on disposal of propert#7 plant and
e!"ipment 0oss on disposal of
intangi6le assets
Provisions for severance
6enefits Income ta9
e9pense 3income5
Provisions
+thers
Interest income
Foreign e9change
gain 1ain on
derivatives
1ain on disposal of propert#7 plant and
e!"ipment 1ain on disposal of
intangi6le assets
/ividend
income
+thers
Changes in operating assets and
l
i
a
6
i
l
i
t
i
e
s

I
n
c
r
e
a
s
e

i
n

t
r
a
d
e

r
e
c
e
i
v
a
6
l
e
s
/
e
c
r
e
a
s
e

i
n

l
o
a
n
s

a
n
d

o
ther receiva6les /ecrease
3Increase5 in inventories
/ecrease 3Increase5 in other
assets Increase in trade
pa#a6les
/ecrease 3Increase5 in other
pa#a6les /ecrease in
provisions
Pa#ment of defined 6enefit lia6ilit#
-ransfer in 3o"t5 of defined 6enefit
lia6ilit#7 net Pa#ment of plan assets7
net
%as0 Generated rom /perations
2010
3$357(&
45
1447,23
1837,(5
4275(3
4,&7,,4
2$57&88
1(7$$$
2(7,,4
1357&$5
3441712
15
3537&(8
247113
171&573
(2
427&&2
11$7,38
($723$
,72&3
1&
1217(5
&
1373,$
33,874(
15
332474,
15
&17,58
32,&7&&
45
2273,2
4$5711
,
3$&755$
5 33(478545
32$71555 2725$
318878885
34(,72($5
200, 1714$7(84
1(,7&3, 18574&( ,87(82 5317(8$
1247448 2,75(, 257554 15$75$&
2&271$& $4&7434 14,7&(2 27323735(
4&7&1, 2837,,3 $47&&4 &7&1$ 57388
1,,72($ 117&,$ 354875(45
3$2$73,(5 &47(1& 1347183 34,,7&2,5
1
7
$
$
,
7
4
(
,
1,17223
334&78,
35
3&&7&(35
327$($5
3(&7$,15
3735&7(38
5&
LG Electronics Inc.
Significant transactions not affecting cash flo%s for the #ears ended
)eclassification of constr"ction-in-
progress of propert#7 plant and e!"ipment
)eclassification of constr"ction-in-progress
of intangi6le assets
)eclassification to intangi6le assets
from long-term advances
)eclassification of c"rrent mat"rities of
6orro%ings
2010
1((75
5(
24&71
$4
&578,
&
5$,7$
,$
200,
2&8721$
$(7513
$37425
&887852
3<. %ontingencies
*s of /ecem6er 317 28187 the Compan# has overdraft facilit# agreements
%ith vario"s 6an@s incl"ding Shinhan .an@7 %ith a limit of 2587588 million
3288,? 2487588 million5.
*s of /ecem6er 317 28187 the Compan# has sales agreements for e9port
trade receiva6les %ith Shinhan .an@ and other 32 vario"s 6an@s
amo"nting to $73&2714$ million 3288,? &71147((5 million57 and for
domestic trade receiva6les %ith Iana .an@ and other t%o 6an@s amo"nting
to 3&57$(8 million. -he Compan# has corporate electronic settlement
services contracts for collection of trade receiva6les %ith t%o 6an@s of "p to
1387888 million 3288,? 1187888 million5.
*s of /ecem6er 317 28187 the Compan# has corporate electronic
settlement services contracts %ith vario"s 6an@s of "p to ,$57458
million 3288,? ,$57458 million5 %hich g"arantee the pa#ment of trade
acco"nts pa#a6le in case the s"ppliers sell their trade receiva6les.
*s of /ecem6er 317 28187 the s"6sidiaries have other trade financing
agreements and loan commitments in addition to the a6ove commitments.
*s of /ecem6er 317 28187 the Compan# is provided %ith a
performance g"arantee of (57$85 million 3288,? ,17,82 million5 from
Seo"l 1"arantee Ins"rance relating to the sales contracts.
5(
LG Electronics Inc.
-he Compan# is contingentl# lia6le for g"arantees appro9imating
2741273&& million 3/ecem6er 317 288,? 3785,7314 millionJ Dan"ar# 17
288,? 374(47&2( million5 on the inde6tedness of its s"6sidiaries7 as
follo%s?
01 lectronics "ropean Shared
Service Center ..B.301SC5
01 lectronics K.S.*.7 Inc.
301KS5 01 lectronics
-icaret *.S.301-:5
01 lectronics 2rocla% Sp H
o.o3012)5 01 lectronics
)KS7 00C 301)*5
01 lectronics -hailand Co.0td.
301-I5 01 lectronics Bietnam
Co.7 0td.301B'5 01 lectronics
-ian>in *ppliances Co.7 0td.
301-*5
01 lectronics *lgeria
S*)0301*S5 01 lectronics
S.*. 3Pt#5 0td. 301S*5 01-
Sha@er Co. 0td.301S)5
01 lectronics Gla%a Sp. H o.o
301G*5 01 lectronics
*rgentina S.*.301*)5 01
lectronics Inc7 Chile 0tda.
301C05 01 lectronics
Gonterre# Ge9ico S.*.de C.B.
301GG5
01 lectronics 3China5 Co. 0td.
301CI5 P- 01 lectronics
Indonesia 301I'5
01 lectronics Ge9ico S.*. /
C.B. 301GS5 +thers
(otal December
31, 2010
44173
3$
25$72
53
1,47,
5&
11&7(
18
18,74
85
1887&
(&
&,7&2
3
,274
1&
&475
81
$&7$
38
$$74
(5
$47$
31
$37(
14
$175
81
527
41
2
18(7
$,5
3,7(
$2
2473
$&
3,57
&,1
27412
73&&
December 31, 200,
523781$
2337528 1427832 1,373(8 (47233
21,7,&$ &57(,4 18&7&&1
-&873(( 3&7248 ,87843
3$78&, 3(7531
1$37$((
2127334 13472&4 12$7482
5&87513
3785,7314
-an"ar+
1, 200,
$$,74$2
2517588
1887$88
&27(25
21172$8
23$7($5
$873$8
2887$5$
-
&$7$($
1371(4
1,$781$
1(7($3
587388
1437,,8
1247$2,
2&,7$3&
5$78((
&217(8&
374(47&
2(
-he Compan# has contingent lia6ilities %ith respect to investigations and
litigations arising in the ordinar# co"rse of 6"siness. Ga>or investigations and
litigations are as follo%s?
*t the end of the reporting period7 the Compan# and certain foreign
s"6sidiaries are "nder investigation 6# the "ropean Commission %ith
respect to possi6le anti-competitive activities among C)- 3Cathode )a#
-"6e5 man"fact"rers. -he Compan# recogniHed a reasona6l# estimated
e9pected loss related to this investigation as a litigation provision. -he
"ltimate amo"nt of loss res"lting from the investigation ma# differ from the
estimated loss accr"ed 6# the Compan#. In addition7 the Compan# and
certain foreign s"6sidiaries are c"rrentl# "nder investigation %ith respect to
the same activities 6# the :orean Fair -rade Commission and other
competition a"thorities.
5,
LG Electronics Inc.
In addition7 the Compan# and certain foreign s"6sidiaries have 6een named
as defendants in a n"m6er of class actions 6ro"ght 6# p"rchasers of C)-
prod"cts in the Knited States and in Canada in connection %ith the alleged
anti-competitive activities among C)- man"fact"rers. -he o"tcome of the
cases and effect on financial statements co"ld not 6e ascertained as of the
report date.
In addition7 the Compan# and certain foreign s"6sidiaries have 6een named
as defendants in a n"m6er of class actions 6ro"ght 6# p"rchasers of +//
3+ptical /is@ /rive5 prod"cts in the Knited States and in Canada alleging
violation of antitr"st la%s in connection %ith the anti-competitive activities
among +// man"fact"rers. -he o"tcome of the cases and effect on
financial statements co"ld not 6e ascertained as of the reporting date.
-here are a n"m6er of other legal actions that remain pending at the end
of the reporting period. It is not anticipated that an# material lia6ilities %ill
arise from these contingent lia6ilities other than those provided for.
3>. %ommitments
3a5 Contractual commitments for the ac+uisition of assets
-he propert#7 plant and e!"ipment and intangi6le assets contracted for7 6"t
not #et ac!"ired at the end of the reporting period are as follo%s?
won) Propert#7 plant
and e!"ipment
Intangi6le assets
(otal
December 31,
2010
4(75&
(
1742
4
58788
2
December 31,
200,
1275(
$
32711
&
447&83
365 peratin! lease commitments , the compan$ as lessee
-he f"t"re aggregate minim"m lease pa#ments "nder non-cancella6le
operating leases as of /ecem6er 317 28187 are as follo%s?
(in millions of
Korean won)
."ildings and offices
Behicles
!"ipment
(otal
&o later
t0an 1
+ear
327$&
8
(7&1$
2&723
3
$(7$
1,
Later t0an 1
+ear and no
later t0an 9
+ears
$(738
2
578$$
4(7$2
4
1217,
,2
/2er (otal
lease 9 +ears
pa+ments
1&7534
11(758$ -
137&(2 -
&57(5&
1&7534 28(7145
$8
LG Electronics Inc.
3c5 (rademar- licenses commitments
*s of /ecem6er 317 28187 the Compan# has vario"s agreements as follo%s?
P"rpo
se Kse of
license
Provision of
license
Related
prod"cts
Go6ile
Iome
appliance
Pro2ided b+
RK*0C+GG
Incorporated and
others
01 lectronics Inc.
;sed
b+ 01
lectronics
Inc.
Panasonic
Corporation
and others
3,. Related Part+ (ransactions
S"6sidiaries as of /ecem6er 317 28187 are as follo%s?
(errito
r+ Domestic
s"bsidiaries
%0ina
!sia
&ame
IiplaHa C+.7 0td7 Ii ."siness 0ogistics7 Innovation
Investment F"nd7 Ii G Sol"te@ 3formerl# S#stem *ir-con
ngineering Incorporation57 :-. -echnolog# F"nd7 II
-eleservice C+.70-/. 01 *lliance F"nd
01 lectronics 3China5 Co. 0td.301CI5
-aiHho" 01 lectronics )efrigeration Co.7
0td.301-)5 01 lectronics I: 0td.
301I:5
01 lectonics 3IangHho"5 )ecording Gedia
Co.7 0td.301I'5 01 lectronics I"iHho" 0td.
301IS5
01 lectronics 3:"nshan5 Comp"ter Co.7
0td.301:S5 01 lectronics 'an>ing
/ispla# Co.7 0td.301'/5 'anDing 01-
Panda *ppliances Co.7 0td.301P'5
Ringdao 01 Insp"r /igital Comm"nication Co.7
0td.301R/5 01 lectronics Rinh"angdao Inc.
301RI5
01 lectronics 3China5 )esearch and /evelopment Centre
Co.7 0td.301)/5 Shanghai 01 lectronics Co.7 0td.
301SI5
01 lectronics Shen#ang Inc.301SA5
01 lectronics -ian>in *ppliances Co.7 0td.301-*5
Insp"r 01 /igital Go6ile Comm"nications Co.7
0td.301A-5 Ii 0ogistics 3China5 Co.7 0td.
01 lectronics 3Shanghai5 )esearch and /evelopment
Cent
er.
301
C)
5
-ian>
in
0i>ie
cartri
dge
heat
er
Co.7
0td.
0
1

lectronics Philippines Inc.
301PI5 01 lectronics India
Pvt. 0td.301I05 P- 01
lectronics Indonesia 301I'5
01 lectronics Gala#sia S/'. .I/
301G05 01 Soft India Private
0imited.301SI5
01 lectronics Singapore P-
0-/ 301S05 01 lectronics
Bietnam Co.7 0td.301B'5 01
lectronics -hailand Co.0td.
301-I5
01 lectronics -ai%an -aipei Co.7
0td.301--5 01 lectronics
*"stralia Pt#7 0td.301*P5
01 lectronics Dapan7 Inc.
301DP5 01 lectronics
Dapan70a6.301D05
$1
LG Electronics Inc.
E"rope
&ort0
!merica
#o"t0
!merica
01 lectronics *"stria 1m6I 301*15
01 lectronics .enel"9 Sales ..B.
301.'5 01 lectronics CS7 s.r.o.
301CS5
01 lectronics /e"tschland 1m6I
301/15 01 lectronics "ropean
Ioldings ..B.301I5 01 lectronics
spana S.*.301S5
01 lectronics France S.*.).0
301FS5 01 lectronics Iellas
S.*.).0 301IS5 01 lectronics
Italia S.p.* 301IS5
01 lectronics DI- "rope ..B.
301D5 01 lectronics 0atvia7
00C 3010B5
01 lectronics Gla%a Sp. H o.o 301G*5
01 lectronics Go6ilecomm France
301GF5 01 lectronics Gag#ar
:F- 301G:5
01 lectronics Pols@a Sp. H o.o
301P05 01 lectronics Port"gal
S.*.301P-5 01 lectronics
)omania S.).0.301)+5
01 lectronics "ropean Shared Service Center
..B.301SC5 01 lectronics "ropean 0ogistics
T Services ..B.3010S5 01 lectronics 'ordic
*. 301S25
01 lectronics Knited :ingdom 0td.
301K:5 01 lectronics 2rocla%
Sp H o.o 3012)5 II 0ogistics
"rope ..B.
01 lectronics 'or%a# *S.301'+5
01 lectronics *la6ama Inc.
301*I5 01 lectronics
Canada7 Inc.301CI5
01 lectronics Gonterre# Ge9ico S.*.de
C.B.301GG5 01 lectronics Go6ilecomm
K.S.*.7 Inc.301GK5
01 lectronics Go6ile )esearch K.S.*.7
0.0.C.301G)5 01 lectronics Ge9icalli7
S.*. / C.B.301GP5
01 lectronics Ge9ico S.*. / C.B.
301GS5 01 lectronics )e#nosa
S.*. / C.B.301)S5 01 lectronics
K.S.*.7 Inc.301KS5
Senith lectronics
Corporation -riveni
/igital Inc.
Senith lectronics Corporation of
P
e
n
n
s
#
l
v
a
n
i
a

S
e
n
i
t
h

I
P

0
0
C
Servicios Integrales 01 S.* / C.B
Servicios 01 Gonterre# Ge9ico
S.*. de C.B. 01 )eceiva6le
F"nding 00C
01 lectonics Giami Inc.301GI5
01 lectronics *rgentina S.*.301*)5
01 lectronics da *maHonia 0tda.
301*S5 01 lectronics Colom6ia
0tda.301C.5 01 lectronics Inc7
Chile 0tda.301C05
01 lectronics Per" S.*.301P)5
01 lectronics Panama7 S.*.301PS5
01 lectronics de Sao Pa"lo 0tda.
301SP5 01 lectronics
BeneH"ela S.*.301BS5
C T S *merica Sol"tion
Inc. 01 lectronics
1"atemala S.*. S+CI+
BIP 0tda
01 *rmagem 1eral
0tda. 01 Cons"lting
corp.
01 lectronics Iond"ras
S.de ).0. 1oldstar Panama
S.*.
$2
LG Electronics Inc.
@iddle'east
!sia and !rica
/t0ers
01 lectronics g#pt S.*. 30115
01 lectronics Gorocco S.*.).0
301GC5 01 lectronics S.*.
3Pt#5 0td.301S*5
01 lectronics *frica 0ogistic
FS 301*F5 01 lectronics
/"6ai FS 301/F5
01 lectronics 1"lf FS 3011F5
01 lectronics 30evant5 Dordan 3010F5
01 lectronics Giddle ast Co.7
0td.301G5 01-Sha@er Co. 0td.
301S)5
01 lectronics -icaret *.S.301-:5
01 lectronics +verseas -rading
FS 301+-5 01 lectronics
*lgeria S*)0 301*S5
01 lectronics 'igeria
0imited.301'I5 01
lectronics 'orth *frica
*SA-C 10+.*0 S)BICS I''+B*-I+' 0IGI-/
01 lectronics *lmat#
:aHa@hstan 301*:5 01
lectronics K@raine Inc.301K)5
01 lectronics )KS7 00C
301)*5 01 *lina
lectronics 301)I5
01 lectronics )KS-Gar@eting7 00C 301)G5
Significant transactions for the #ears ended /ecem6er 317 2818 and 288,7 are as
follo%s?
2010
(in millions of Korean won) #ales
P"rc0ases
200,
#ales P"rc0ases
01 Corp.
S"6sidiaries
Dointl# controlled
entities and
associates
+ther related
parties
(otal
,,
8
217,,57
88$
&,272
8&
,17&
1(
227(&,7
,21
13871
,1
17(527$
3&
2734278
,$
1714475
,8
574$,75
14
&1
4
2375317
(5,
4&(73
51
3(7(
(3
24784,7
(8&
1237&
31
27(3578
$,
,(474&4
178&&7$,3
578287,$&
-he 6alances of significant transactions are as follo%s?
(in millions of
Korean won) 01
Corp.
S"6sidiaries
Dointl# controlled
entities and
associates
+ther related
parties
(otal
Recei2ab
les 47245
475&272&8
1((7(
$$
,875
&(
47(557,
5,
Pa+abl
es
$,
2
17$,173
,1
25,71
42
1(874
11
271317$
3$
Recei2ab
les
1$78&4
37(&875((
13275
&&
&&75
5$
478,$7&
,5
Pa+abl
es
,72&
5
2782375
2(
1$&71
3,
15478
3&
273537,
&,
Recei2abl
es
147$
2,
3738,74
$,
1(&7(
(3
&&73
45
375(,73
2$
Pa+abl
es
137,
18
(1$7,
33
,87&
&8
14473
,5
178$$78
8(
$3
LG Electronics Inc.
and 200,, and -an"ar+ 1, 200,
:e# management compensation costs of the Compan# for the #ears ended /ecem6er
317 2818 and 288,7 consist of?
2ages and salaries
Pension costs
+ther post-emplo#ment
6enefits Share-6ased
compensation
(otal
2010 200,
(7$$( &758&
37842 2734&
27483 274&8
3174225 57$4&
127$,1 1&7,&1
:e# management refers to the directors %ho have significant control and
responsi6ilities on the Compan#s 6"siness plans7 operations and controls.
-he Compan# recognised dividend income amo"nting to 4,7(,3 million 3288,?
4871&( million5 from s"6sidiaries and &17$51 million 3288,? 15(7(11 million5
from associates incl"ding 01 /ispla# Co.7 0td for the #ear ended /ecem6er 317 2818.
*t the end of the reporting period7 no allo%ance for do"6tf"l receiva6les for related
parties is recognised.
80. &on'c"rrent !ssets 6eld or #ale
*s of /ecem6er 317 28187 the Compan# determined to sell some of its land and
6"ildings. -he# are stated at the lo%er of carr#ing amo"nt or fair val"e less costs to sell
amo"nting to 47&81 million.
81. Ris? @anagement
$inancial Ris? @anagement
-he Compan#s financial ris@ management 3<F)G=5 polic# s"pports each 6"siness
division to achieve e9cellent performance solidl# and contin"o"sl# against mar@et ris@7
credit ris@ and li!"idit# ris@. In addition7 F)G helps the Compan# to enhance cost
competitiveness thro"gh cost-efficient financing cost 6# improving financial str"ct"re and
effective cash management.
2hile cooperating %ith other divisions7 the finance team in the Compan# mainl#
implements F)G. -his involves setting-"p ris@ management policies and recogniHing7
eval"ating and hedging ris@s from a glo6al point of vie%.
In addition7 the Compan# operates five overseas regional treas"r# centers 3<)-C=5
located in 'e% Derse# in KS*7 *msterdam in the 'etherlands7 .ei>ing in China7
Singapore7 and San Pa"lo in .raHil to mitigate financial ris@s in a glo6al 6"siness
environment preemptivel# and s#stematicall#. )-C contri6"tes 6# improving o"r
overseas s"6sidiaries 6"siness competitiveness 6# operating integrated financial
f"nctions.
$4
LG Electronics Inc.
and 200,, and -an"ar+ 1, 200,
-he Compan# mitigates the adverse effects from financial ris@ 6# monitoring the
ris@ periodicall# and "pdating F)G polic# each #ear.
3a5 "ar-et ris-
i5 Foreign e9change ris@
/"e to its m"ltinational 6"siness operations7 the Compan# is mainl# e9posed to
foreign e9change ris@ on KS /ollar and "ro. -he Dapanese Aen7 *"stralian /ollar7
.ritish Po"nd and Canadian /ollar also need to 6e considered for foreign e9change ris@.
-he p"rpose of foreign e9change ris@ management is to ma9imise the Compan#s
val"e 6# minimising the "ncertaint# and volatilit# of foreign e9change gains and losses
from foreign e9change rate fl"ct"ations.
-he Compan#s foreign e9change ris@ management polic# is implemented "nder its
glo6al hedge polic#. -he polic# contains its overall foreign e9change ris@ management
philosoph# %hich incl"des? strateg#7 e9pos"re definition7 hedge mat"rit#7 and hedge ratio.
-he Compan# manages foreign e9change ris@ 6# matching inflo% and o"tflo% of
each c"rrenc# performing 0eading T 0agging. -he Compan# hedges its remaining
e9pos"re %ith derivative financial instr"ments s"ch as for%ard e9change contracts
"nder its glo6al hedge polic#. Spec"lative foreign e9change trading is strictl# prohi6ited.
-he Compan# determines a hedge ratio for overseas s"6sidiaries %hile considering
factors highl# related to foreign e9change rate fl"ct"ation s"ch as ris@ inde97 implied
volatilit#7 and mar@et vie%. -he finance team in the Compan# and the )-C scr"tiniHe
changes in foreign e9change e9pos"re and the res"lts of hedging activities on a monthl#
6asis.
*s of /ecem6er 317 2818 and 288,7 if the foreign e9change rate of the :orean %on
fl"ct"ated 6# 18C %hile other varia6les %ere fi9ed7 the effects on profit 3loss5 6efore
income ta9 %o"ld 6e as follo%s?
won)
KS/N:)2
K)N:)
2
10B
increase
328$715(5
4178(1 10B decrease
28$715(
34178(15
10B increase 32857$$15
2(7$1$
10B
decrease
2857$$1
32(7$1$5
-he a6ove sensitivit# anal#sis is done %ith foreign c"rrenc# denominated assets and
lia6ilities %hich are not in the Compan#s f"nctional c"rrenc#.
$5
LG Electronics Inc.
and 200,, and -an"ar+ 1, 200,
ii5 Interest rate ris@
-he Compan# is e9posed to interest rate ris@ thro"gh changes in interest 6earing
lia6ilities or assets. -he ris@ mainl# arises from 6orro%ings and financial deposits %ith
varia6le interest rates lin@ed to mar@et interest rate changes in the f"t"re. -he
o6>ective of interest rate ris@ management lies in ma9imising corporate val"e 6#
minimising "ncertaint# ca"sed 6# fl"ct"ations in interest rates and minimising net
interest e9pense.
-o mitigate interest rate ris@7 the Compan# manages interest rate ris@ proactivel#
6#? minimising e9ternal 6orro%ings 6# ma9imising internal cash sharing7 red"cing
6orro%ings %ith high interest rates7 maintaining an ade!"ate mi9 6et%een short-term
and long-term lia6ilities and 6et%een fi9ed and varia6le interest rates and monitoring
%ee@l# and monthl# interest rate trends in domestic and international mar@ets.
*s of /ecem6er 317 28187 the Compan# is in a net 6orro%ing sit"ation and is
partiall# e9posed to a ris@ of increase in interest rates. Io%ever7 the Compan#
minimises ris@s from changes in interest rate fl"ct"ations 6# matching varia6le
interest 6earing short-term 6orro%ings %ith varia6le interest 6earing financial deposits
ade!"atel#.
*s of /ecem6er 317 28187 if interest rates fl"ct"ate 6# 1886p %itho"t other varia6les
changing7 the effects on income and e9penses related to 6orro%ings and financial
deposits %ith varia6le interest rates are as follo%s?
(in millions of Korean won) 100bp increase 100bp decrease 100bp increase 100bp
decrease
Interest e9pense
Interest income
1ain 3loss5 on val"ation
of
derivatives 3I)S
1
5
157,84 3157,845
,71(( 3,71((5
&7114 3&71145
18733( 318733(5
187138 31871385
&7((5 3&7((55
1
Interest rate s%aps mainl# creates fair mar@et val"e ris@ from changes in interest rates.
365 Credit ris-
-he Compan# operates a consistent 1lo6al Credit N -) 3trade receiva6les5 polic# to
manage credit ris@ e9pos"re.
-he p"rpose of the 1lo6al Credit N -) polic# is to s"pport timel# decision-ma@ing
and minimise loss 6# sec"ring pa#ment of -). -he polic# is composed of five
categories? Credit Ganagement7 -) Ganagement7 Internal Credit 0imit
Ganagement7 Credit N -) )is@ Gonitoring and Co"ntr# )is@ Ganagement.
$$
LG Electronics Inc.
and 200,, and -an"ar+ 1, 200,
*ss"med -) ris@ is especiall# mitigated %ith credit ins"rance7 g"arantees N collateral7
and internal credit limits. In order to manage the ris@7 1lo6al Credit Ins"rance
Program is str"ct"red %ith glo6al top three credit ins"rance companies 3"ler Iermes7
*tradi"s7 Coface5 and :orea -rade Ins"rance Corporation 3:-S"re5.
*de!"ate internal credit limit is assessed 6# the eval"ation standards of 1lo6al Credit N
-) Polic# and applied strictl# %ith a"thoriHation matri9 and proced"res.
*s of /ecem6er 317 28187 trade receiva6le 6alance of the Compan# is ,&,73$&
million 3/ecem6er 317 288,? 173&17$25 millionJ Dan"ar# 17 288,? 171$(721, million5
and its ris@ is managed appropriatel# %ith ins"rers credit limit of 2784&7,$( million
3/ecem6er 317 288,? 17&8(7$33 millionJ Dan"ar# 17 288,? 173$47,18 million5.
3c5 .i+uidit$ ris-
0i!"idit# ris@ is defined as the ris@ that the Compan# is "na6le to meet its short-term
pa#ment o6ligations on time d"e to deterioration of its 6"siness performance or
ina6ilit# to access financing.
-he Compan# forecasts its cash flo% and li!"idit# stat"s and sets action plans on a
reg"lar 6ase to manage li!"idit# ris@ proactivel#. -he Compan# assigns e9perts in
five )-Cs to manage li!"idit# ris@ in overseas s"6sidiaries efficientl#.
In addition7 the Compan# copes %ith potential financial distress 6# maintaining
ade!"ate amo"nt of cash and committed credit facilities. -he 6alance of cash and cash
e!"ivalents7 and c"rrent-financial deposits at /ecem6er 317 28187 is ,537(34 million
3/ecem6er 317 288,? 178127,$$ millionJ Dan"ar# 17 288,? 1728$7$45 million5. -he
Compan# maintains total committed credit lines of $887888 million 3/ecem6er 317
288,? $887888 millionJ Dan"ar# 17 288,? $887888 million5 in 2oori .an@7 :oo@min
.an@7 and Shinhan .an@ in :orea at /ecem6er 317 2818.
*s of /ecem6er 317 28187 the cash and cash e!"ivalents 6alance of the Compan# is
a6o"t 4,C 3/ecem6er 317 288,? $&C7 Dan"ar# 17 288,? 32C5 of c"rrent 6orro%ings %ith
d"e date in 12 months. If committed credit lines are incl"ded7 the 6alance covers a6o"t
(8C 3/ecem6er 317 288,? 18&C7 Dan"ar# 17 288,? 4,C5 of short-term 6orro%ings.
In addition7 the Compan# is a6le to so"rce f"nds an# time in domestic and
international financial mar@ets 6eca"se it has good investment credit grades from
Standard T Poors and Good#s of ... 'egative and .aa2 Sta6le 3/ecem6er 317
288,? ... Sta6le and .aa3 Sta6leJ Dan"ar# 17 288,? ... Sta6le and .aa3 Positive57
respectivel#.
Cash flo% information on mat"rit# of 6orro%ings is presented in 'ote 14.
$&
LG Electronics Inc.
and 200,, and -an"ar+ 1, 200,
%apital Ris? @anagement
-he Compan#s capital ris@ management p"rpose is to ma9imise shareholders val"e
thro"gh maintaining a so"nd capital str"ct"re. -he Compan# monitors financial ratios7 s"ch
as lia6ilit# to e!"it# ratio and net 6orro%ing ratio each month and implements re!"ired
action plan to improve the capital str"ct"re.
/e6tNe!"it# ratio and net 6orro%ing ratio are as follo%s?
won, except for ratios)
0ia6ilit# 3*5
!"it# 3.5
Cash and cash e!"ivalents
and c"rrent financial
deposits 3C5
.orro%ings 3/5
0ia6ilit#-to-e!"it# ratio 3*N.5
'et .orro%ings ratio 3/-C5N.
December 31,
2010
13784(7((1
,7,2$712(
,537(34
47,,,7($4
131C
41C
December 31,
200,
1172557255
187((&7,55
178127,$$
3745(71($
183C
22C
-an"ar+ 1, 200,
1174,4744&
,7&,27$$&
1728$7$45
57&2(7&41
11&C
4$C
@et0ods and !ss"mptions in Determining $air 7al"e
-he Compan# classifies fair val"e meas"rements "sing a fair val"e hierarch# that reflects
the significance of the inp"ts "sed in meas"rements.
0evel 1? !"oted prices 3"nad>"sted5 in active mar@ets for identical assets or lia6ilities.
0evel 2? inp"ts other than !"oted prices that are o6serva6le for the asset or lia6ilit#7
either directl# or indirectl#.
0evel 3? inp"ts for the asset or lia6ilit# that are not 6ased on o6serva6le mar@et data
3that is7 "no6serva6le inp"ts5.
December 31, 2010
(In millions of Korean won)
*vaila6le-for-sale financial
assets -otal
Financial lia6ilities at fair val"e thro"gh profit or
loss - /erivatives for trading
Share-6ased pa#ments
-otal
0evel 1 0evel 2 0evel 3 -otal 13758(
- - 13758( 13758(
- - 13758(
- 41722$ - 41722$ -
(7,4$- (7,4$
- 5871&2 - 5871&2
$(
LG Electronics Inc.
and 200,, and -an"ar+ 1, 200,
December 31, 200,
*vaila6le-for-sale financial assets
-otal
Financial lia6ilities at fair val"e thro"gh profit
or loss - /erivatives for trading
-otal
0evel 1 0evel 2 0evel 3
137823 - -
137823 - -
- 11$7,85 --
1$7(24 -
- 1337&2, -
-otal
137823
137823
11$7,85
1$7(24
1337&2,
-an"ar+ 1, 200,
Financial assets at fair val"e thro"gh profit or
loss - /erivatives for trading
*vaila6le-for-sale financial
assets -otal
Financial lia6ilities at fair val"e thro"gh profit
or loss - /erivatives for trading
-otal
0evel 1 0evel 2 0evel 3
- 573&1 -
$73&1 - -
$73&1 573&1 -
- 1(275,( --
1872,, -
- 1,27(,& -
-otal
573&1
$73&1
117$((
1(275,(
1872,,
1,27(,&
-he fair val"e of financial instr"ments traded in active mar@ets is 6ased on !"oted
mar@et prices at the reporting date. * mar@et is regarded as active if !"oted prices are
readil# and reg"larl# availa6le from an e9change7 dealer7 6ro@er7 ind"str# gro"p7
pricing service7 or reg"lator# agenc#7 and those prices represent act"al and
reg"larl# occ"rring mar@et transactions on an arms length 6asis. -he !"oted mar@et
price "sed for financial assets held 6# the Compan# is the c"rrent 6id price. -hese
instr"ments are incl"ded in level 1. Instr"ments incl"ded in level 1 comprise primaril#
e!"it# investments classified as availa6le for sale.
-he fair val"e of financial instr"ments that are not traded in an active mar@et is
determined 6# "sing val"ation techni!"es. -he Compan# "ses vario"s val"ation
techni!"es and ma@es >"dgments 6ased on c"rrent mar@et conditions. -hese val"ation
techni!"es ma9imise the "se of o6serva6le mar@et data %here it is availa6le and rel# as
little as possi6le on entit# specific estimates. If all significant inp"ts re!"ired to
meas"re the fair val"e an instr"ment are o6serva6le7 the instr"ment is incl"ded in
level 2.
If one or more of the significant inp"ts is not 6ased on o6serva6le mar@et data7 the
instr"ment is incl"ded in level 3.
$,
LG Electronics Inc.
31, 2010 and 200,, and -an"ar+ 1, 200,
82. (ransition to Gorean I$R#
5asis o (ransition to Gorean I$R#
3a5 (he first adoption of Korean IFRS
-he Compan#s transition date to :orean IF)S is Dan"ar# 17 288,7 and
adoption date is Dan"ar# 17 2818.
In preparing these separate financial statements in accordance %ith :orean
IF)S 11817 the Compan# has applied the mandator# e9ceptions and certain
optional e9emptions allo%ed 6# :orean IF)S.
365 /xemptions elected '$ the #roup
-he Compan# has elected to appl# the follo%ing optional e9emptions from f"ll
retrospective application.
i5 ."siness com6ination
-he Compan# has not retrospectivel# applied :orean IF)S 1183 to the
6"siness com6inations that too@ place prior to the transition date of Dan"ar# 17
288,.
ii5 /eemed cost
-he Compan# has elected to meas"re certain land at fair val"e as of Dan"ar#
17 288,7 the date of transition to :orean IF)S and "se that fair val"e as its
deemed cost at that date.
iii5 C"m"lative translation differences
-he Compan# has elected to set the acc"m"lated c"m"lative translation at
Dan"ar# 17 288,7 to Hero in accordance %ith :orean IF)S 1181.
&8
LG Electronics Inc.
31, 2010 and 200,, and -an"ar+ 1, 200,
iv5 /ecommissioning lia6ilities incl"ded in the cost of propert#7 plant and e!"ipment
S"6>ect to :orean IF)S Interpretations 21817 EChanges in 9isting
/ecommissioning7 )estoration and Similar 0ia6ilities7 regarding changes in a
decommissioning7 restoration or similar lia6ilit# to 6e added to or ded"cted from
the cost of the asset to %hich it relates7 the Compan# does not compl# %ith
these re!"irements for changes in s"ch lia6ilities that occ"rred 6efore the
date of transition to :orean IF)S. -he amo"nts to 6e incl"ded as costs of
decommissioning assets are meas"red 6# disco"nting the lia6ilit# over the
intervening period and the acc"m"lated depreciation on that amo"nt is
calc"lated at the date of transition to :orean IF)S.
v5 .orro%ing costs
In respect of capitalising 6orro%ing costs inc"rred in the constr"ction of a
!"alif#ing asset7 the Compan# capitalises interest on all !"alif#ing assets for
%hich the commencement date for capitalisation is after the transition date.
3c5 Reconciliations 'etween Korean IFRS and K-#AA0
-he follo%ing reconciliations provide a !"antification of the effect of the
transition to :orean IF)S.
&1
LG Electronics Inc.
i5 ffects on -otal *ssets7 0ia6ilities and !"it#
ffects on the total assets7 lia6ilities and e!"it# as of Dan"ar# 17 288,7 the date of :orean IF)S transition7 are as follo%s?
(in millions of
Korean won)
!ssets
Cash and cash
e!"ivalents
Financial
deposits
-rade
receiva6les
0oans and other
receiva6les
+ther financial
assets
Inventories
/eferred income
ta9 assets
+ther c"rrent
assets
%"rrent assets
Financial
deposit
s
0oans
and
other
receiva
6les
+ther
financi
al
assets
Propert
#7 plant
and
e!"ipm
ent
Intangi
6le
assets
Invest
ments
in
s"6sid
iaries7
>ointl#
control
led
entities
and
associ
ates
Investm
ent
propert
#
+ther
non-
c"rrent
assets
&on'
c"rrent
assets
(otal
assets
:-
1**P
1715$7
$45
5878
88
174347
2(8
3(47
54$
573
&1
,817
121
2,87
323
2,57
352
4751&7
$3(
25
78
3&
48
171
81
12
78
&,
37$
&37
$1,
58
&7$
,5
&7&
$87
4((
-
44
872
24
127(28
7243
1&733&
7((1
Sold
trade
receiv
a6les
1
-
-
3714
1712
3
-
-
-
-
13
7&
81
3715
47(2
4
-
-
-
-
-
-
-
-
-
371
547
(24
/efine
d
6enefit
lia6ilit#
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Provision
s
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)eval
"ation
of
land
4
-
-
-
-
-
-
-
-
-
-
-
-
178
(47
&32
-
-
-
-
178(47&32
178(47&32
Share-
6ased
pa#me
nts
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
!"it#
Sec"riti
es
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
/eferre
d ta9
&
-
-
-
-
-
-
32,873
235
-
32,873
235
-
-
-
-
-
-
-
-
-
32,
873
235
)eclass
ification
to
investm
ent
propert
#
-
-
-
-
-
-
-
-
-
-
-
-
347
22
,5
-
-
18
71
$,
357
,4
85
-
-
)ecla
ssifica
tion of
mem6
ership
rights
to
intang
i6le
asset
s
-
-
-
-
-
-
-
-
-
-
3,
17
3
5
(5
-
-
,
17
3
5
(
-
-
-
-
-
Present
val"e of
financial
assets
-
-
-
-
-
-
-
1875
25
1875
25
-
3217(
355
-
-
-
-
-
1173
18
318752
55
-
:-
IF)S
1715$7
$45
5878
88
475&57
483
3(475
4$
573&
1
,8171
21
-
31,75
&(
&73,27
$$4
2578
3&
2(&7,
8(
1278
&,
47&547
122
5,,7
853
&7&$8
74((
187
1$,
4457
5,4
137(,
47458
2172(
&7114
&2
LG Electronics Inc.
(in millions of
Korean won)
Liabilities
-rade pa#a6les
.orro%ings
+ther pa#a6les
+ther financial
lia6ilities
C"rrent income
ta9 lia6ilities
Provisions
+ther c"rrent
lia6ilities
%"rrent
liabilities
.orro%ings
+ther financial
lia6ilities
/eferred
income ta9
lia6ilities
/efined 6enefit
lia6ilit#
Provisi
ons
&on'
c"rre
nt
liabilit
ies
(otal
liabilit
ies
E*"it+
Paid-
in
capital
)etain
ed
earnin
gs
*cc
"m
"lat
ed
oth
er
co
mp
reh
en
sive
inco
me
+ther
compo
nents
of
e!"it#
(otal
E*"it+
(otal
liabiliti
es and
e*"it+
:-
1**P
2714,7
433
5&&7$
(3
2745,7
4,&
5371
(2
,$7&
51
2287(
(4
3(471
5(
57,417
5((
2788,7
,35
12,74
1$
$2171
53
22(
7,(
4
-
27,(
,74(
(
(7,3
178&
$
3781
&78(
(
4711
&722
3
(&3
73,
5
3,,
78,
,
(748
$7(8
5
1&733
&7((1
Sold
trade
receiv
a6les
1
-
3714
1712
3
-
-
-
-
-
3714
1712
3
-
-
-
-
-
-
3714
1712
3
-
13
7&
81
-
-
13
7&
81
3715
47(2
4
/efine
d
6enefit
lia6ilit#
2
-
-
31
7&
1,
-
-
-
-
31
7&
1,
-
-
-
315
72,
&5
-
315
72,&
5
1$7
422
-
31$7
4225
-
-
31$7
4225
-
Provision
s
-
-
3271,(
5
-
-
-
-
3271,(
5
-
-
-
-
271,(
271,(
-
-
-
-
-
-
-
)eval
"ation
of
land
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
178
(47
&32
-
-
178(47&32
178(47&32
Share-
6ased
pa#me
nts
5
-
-
27
58
4
-
-
-
-
27
58
4
-
-
-
-
-
-
27
58
4
-
327
584
5
-
-
3275
845
-
!"it#
Sec"riti
es
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
173817
8&(
3($,71
$85
34317,
1(5
-
-
/eferre
d ta9
&
-
-
-
-
-
-
-
-
-
-
35,$7
$&(5
-
-
35,$7
$&(5
35,$7
$&(5
-
38$7
355
-
-
38$7
355
32,87
3235
)ecla
ssifica
tion to
invest
ment
proper
t#
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)eclassi
fication
of
mem6er
ship
rights to
intangi6l
e assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Present
val"e
of
financia
l assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
:-IF)S
2714,7433
37&1(
7(8$
274,1
7522
5371
(2
,$7&
51
2287(
(4
3(47
15(
,7114
7&3$
2788,7
,35
12,74
1$
2474
&5
2137
$(&
271
,(
273&,7
&11
1174,4
744&
3781&78
((
$7(8471
$3
47235
3327(
1,5
,7&,27
$$&
2172(
&7114
&3
LG Electronics Inc.
ffects on the total assets7 lia6ilities and e!"it# as of /ecem6er 317 288,7 are as follo%s?
(in millions of
Korean won)
!ssets
Sold
trade :-
1**P
receiva6les
2
/efi
ned
6en
efit
lia6i
lit#
3
)eval
"ation 1ood%ill
3
Provisions of
land
4
Share-
6ased
pa#me
nts
5
!"it
#
Sec"r
ities
$
/evelo
pment
costs
.orro
%ing
costs
/efe
rred
ta9
&
)eclassification of
)eclassification
mem6ership rights Present
val"e
to investment to intangi6le
of financial
propert# assets assets :-
IF)S
Cash and cash
e!"ivalents
Financial
deposits
-rade
receiva6les
0oans and
other
receiva6les
Inventories
/eferred
income ta9
assets
+ther c"rrent
assets
%"rrent
assets
Fin
anc
ial
dep
osit
s
0oa
ns
and
oth
er
rec
eiv
a6l
es
+th
er
fina
nci
al
a
s
s
et
s
P
r
o
p
e
r
t
#
7

p
l
a
n
t

a
n
d

e
!
"
i
p
m
e
n
t
Intan
gi6le
asse
ts
Investm
ents in
s"6sidia
ries7
>ointl#
controlle
d
entities
and
associat
es
Investm
ent
propert#
+ther
non-
c"rrent
assets
&on'c"rrent
assets
(otal assets
&(,7,$$
2237888
4753&731
4
3287118
&$&781,
3(8751(
42&7(88
&74457&2
&
237823
4287(&2
&(73$&
375&57(3
8
5
1
$7
&
$
3
(7&
$47
14
&
-
&
5
27
4
4
&
1471
3174
4,
2175
&&71
&$
-
-
$1&7
2&5
-
-
-
174
5,
$1(7
&34
-
-
-
-
-
-
-
-
-
$1(7&
34
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- 1&7484
- -
- -
- -
- 1&7484
- 1&7484
-
-
-
-
-
-
17821
-
-
-
-
-
-
-
17821
-
-
-
-
-
-
-
-
178
(47
&3
2
-
-
-
-
-
-
-
-
-
17
8
(
47
&
3
2
1782
1
178(
47&3
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- -
- 47348
-
- -
-
- -
($7$(2
-
3($&783(5
-
- -
-
- -
-
-
3($27$,(5
($7$(2
-
3($27$,(5
($7$(2
- -
- -
- -
- -
- -
- 33(8751(5
-
- 33(8751(5
- -
- -
- -
$5( -
1, -
- -
- -
- -
$&& -
$&& 33(8751(5
-
-
-
-
-
-
-
-
-
-
-
3478(85
3
-
187828
357,435
-
-
-
-
-
-
-
-
-
-
-
3$57
84$
5
-
-
$57
84
$
-
-
-
-
-
-
-
-
-
-
-
$7&
38
$7&
38
-
31$7
8425
-
-
-
-
-
,73
12
3$7&
385
-
&(
,7
,$
$
22
37
88
8
571
547
5(,
32
17
13
1
&$
&7
81
,
-
43
57
,(
,
&7$
,17
$,4
2
37
823
33,7
&(4
(27
&8&
47$5&
7148
$(57
,1&
&7(,&
718,
187
828
&557
(1$
14745
1751$
22714
37218
&4
LG Electronics Inc.
(in millions of
Korean won)
Liabilities
Sold
trade :-
1**P
receiva6les
2
/efi
ned
6en
efit
lia6i
lit#
3
)eval
"ation 1ood%ill
3
Provisions of
land
4
Share-
6ased
pa#me
nts
5
!"it
#
Sec"r
ities
$
/evelo
pment
costs
.orro
%ing
costs
/efe
rred
ta9
&
)eclassification of
)eclassification
mem6ership rights Present
val"e
to investment to intangi6le
of financial
propert# assets assets :-
IF)S
-rade pa#a6les
.orro%ings
+ther pa#a6les
+ther financial
lia6ilities
C"rrent income
ta9 lia6ilities
Provisions
+ther c"rrent
lia6ilities
%"rrent
liabilities
.orro%ings
+ther financial
lia6ilities
/eferred
income ta9
lia6
iliti
es
/ef
ine
d
6en
efit
lia6
ilit#
Pro
visi
ons
&o
n'
c"r
ren
t
lia
bili
tie
s
(
o
ta
l
li
a
bi
lit
ie
s
E
*
"i
t+
P
ai
d-
in
c
a
pital
)etained
earnings
+ther
compreh
ensive
income
+ther
compone
nts of
e!"it#
(otal
E*"it+
(otal
liabilitie
s and
e*"it+
37(1,7,&&
((&72,(
274,$7552
$17&22
5&78((
1,$7(,8
4,37$,4
(78137221
17,537$13
5571(3
((&7133
1(27&21
3257512
3748471$2
11741&73(3
378
1&7
8(
(
$78
$57
34
2
$
$
17
5
3
1
4
1
57
(
3
2
18715,7&,3
2175&&71&$
-
$1&72&5
-
-
-
-
-
$1&72&5
-
-
-
-
-
-
$1&72&5
-
1745,
-
-
1745,
$1(7&34
- -
- -
347$$, -
- -
- -
- -
- -
347$$, -
- -
- -
- -
28755, -
- -
28755, -
55722( -
- -
355722(5
1&7484
- -
- -
355722(5
1&7484
- 1&7484
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17821
-
17821
-
17821
-
-
-
-
17
8
(
47
&
3
2
-
-
-
-
-
17
8
(
47
&
3
2
1782
1
178(
47&3
2
-
-
372$5
-
-
-
-
372$5
-
-
-
-
-
-
372$5
-
3372$55
-
-
3372$55
-
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
-
-
1,$7
&&4
($7$
(2
3$1&7
(3(5
-
34417
$345
-
3($27
$,(5
($7$(
2
3($27
$,(5
($7$(
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- -
-
- -
-
- -
-
-
3(3(7,1&5
-
- -
-
- -
-
-
3(3(7,1&5
-
-
3(3(7,1&5
-
- -
-
$&&
4,&7,&2
-
-
332755$5
-
-
3&781&5
-
$&&
45(
73,
,
-
$&&
33(
875
1(5
-
- -
37(1,7,&&
- -
1758475&3
- -
2753474($
- -
$17&22
- -
5&78((
- -
1,$7(,8
- -
4,37$,4
- -
(7$$(7438
- -
17,537$13
- -
5571(3
- -
4(721$
- -
28372(8
- -
32$7533
- -
275($7(25
- -
1172557255
- -
3781&78((
- -
&7(,2754,
- -
11713&
- -
3327(1,5
- -
187((&7,55
- -
2271437218
&5
LG Electronics Inc.
ii5 ffects on Separate Profit and Comprehensive Income
ffects on the separate profit and comprehensive income for the #ear ended /ecem6er 317 288,7 are as follo%s?
won)
&et sales
%ost o sales
Gross proit
e9penses
*dministrative
e9penses
)esearch and
development
e9penses
Service costs
+ther operating
income
+ther operating
e9penses
/perating income
Financial income
Financial e9penses
I
n
c
o
m
e
fr
o
m

s
"
6
s
i
d
i
a
ri
e
s
7
>
o
int
l#
co
nt
rol
le
d
en
titi
es
an
d
as
so
ci
at
es
Profit
3loss5
6efor
e
incom
e ta9
Incom
e ta9
e9pen
se
3inco
me5
Profit
3loss5
for
the
#ear
+ther
compr
ehens
ive
incom
e
3e9pe
nse5
(
o
t
a
l
c
o
m
p
r
e
0
e
n
s
i
2
e

i
n
c
o
m
e

(
e
x
p
e
n
s
e
)

o
r

t
0
e

+
e
a
r
:-
1**P
38751
3743$
23741
(72(&
&78,
5714
,
3785
$73,
4
5387
$15
172,
37&&
4
5,,7
545
173$
(74$
8
17$&27
3$3
173187
,1(
&4$7
$(,
&((7
$&5
1724&7
$(&
2751$7
$1,
4$37
&(4
278527
(35
32117
($45
17(487
,&1
Sold
trade
receiva
6les
1
-
-
-
-
-
-
-
3127
$3$
2((7
281
2474
35
4117
2,2
44&7
,$,
-
3127
2425
-
3127
2425
-
3127
2425
/efined
6enefit
lia6ilit#
2
-
1871$
&
31871$
&5
173$
4
$31
4744
1
455
-
-
31&785
(5
32875$
25
-
-
33&
7$2
85
-
33&
7$2
85
317
1(
$5
33(
7(8
$5
1ood%ill
3
-
-
-
-
328744,5
3&3,5
-
-
37&(4
1&7484
-
-
-
1&7484
-
1&7484
-
1&7484
Share
-
6ased
pa#m
ents
5
-
1
$
5
31
$
55
-
5
,
$
-
-
-
-
3&
$
15
-
-
-
3&
$
15
-
3&$
15
-
3&$
15
!"it#
Sec"rit
ies
$
-
-
-
-
-
-
-
-
-
-
1,37$
52
,&7&
53
31724&7
$(&5
3171517
&((5
-
3171517
&((5
25173
22
3,8874
$$5 /evelo
pment
costs
-
3227
8815
227
881
3
,
1
-
3$57
8&25
-
-
-
($7
$(2
-
-
-
($7
$(2
-
($7
$(2
-
($7
$(
2
.orro%i
ng
costs
-
-
-
-
-
-
-
-
-
-
-
3
$
&
&
5
-
$
&
&
-
$
&
&
-
$
&
&
/eferre
d ta9
&
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,17
$1&5
1,17
$1&
3327
55$5
15,7
8$1
Present
val"e of
financial
assets
-
1
$
8
31
$8
5
$74
43
(
4
2
1
5
5
175
2$
-
-
3,71
2$5
,71
2$
-
-
-
-
-
-
-
:-IF)S
387513743$
23748$7&&(
&718$
7$5(
378$4
75,2
51272
35
172327
55,
$8175
2$
17$(17
8,$
17,$47
34(
174127
4,4
17348
71,&
173337
&28
-
1741(7,
&1
2&271$
&
1714$7
(84
57&1$
17152752
8
&$
LG Electronics Inc.
&otes to t0e #eparate $inancial #tatements December 31, 2010 and 200,, and -an"ar+ 1, 200,
1
-he trade receiva6les %hich are transferred and sold7 6"t cannot 6e derecognised "nder :orean IF)S are treated as 6orro%ings %ith
collateral.
2
/efined 6enefit lia6ilit# and other long-term emplo#ee 6enefit o6ligations are calc"lated 6# "sing an act"arial method. *ct"arial loss on
defined 6enefit lia6ilit# is recognised in other comprehensive income and act"arial loss on other long-term emplo#ee 6enefit o6ligations is
recognised in the income statement.
3
1ood%ill amortisation is reversed.
4
Certain land is reval"ed at its fair val"e and recorded as its deemed cost "nder the e9emption r"le for first time adopters.
5
Changed val"ation method for stoc@ options.
$
Cost method is applied for investments in s"6sidiaries7 >oint vent"res and associates7 and the carr#ing val"e as of the transition date is
considered as the deemed costs.
&
/eferred ta9 effects from the a6ove ad>"stments and deferred ta9 differences.
*ccording to :orean IF)S7 cash flo%s of the related income 3e9penses5 and assets 3lia6ilities5 are ad>"sted to separatel# disclose the
cash flo%s from interest received7 interest paid and cash pa#ments of income ta9es that %ere not presented separatel# "nder :-1**P.
*lso the effects of the change in e9change rate on cash and cash e!"ivalents held or d"e in a foreign c"rrenc# are presented separatel#
from cash flo%s from operating7 investing and financing activities.
Cash flo%s from operating and financing activities are ad>"sted respectivel# 6eca"se some transactions are treated as 6orro%ings
%ith collateralised trade receiva6les7 %hich %ere treated as a sale "nder :-1**P. *lso7 other :orean IF)S transition effects are reflected
on cash flo%s if the# have an# effect on cash flo%s.
83. !ppro2al o $inancial #tatements
-he separate financial statements for the #ear ended /ecem6er 317 28187 %ere approved 6# the .oard of /irectors on Dan"ar# 257
2811.
&&
Report o Independent !cco"ntants4 Re2ie1 o Internal !cco"nting %ontrol #+stem
-o the President of 01 lectronics Inc.
2e have revie%ed the accompan#ing managements report on the operations of the Internal *cco"nting Control S#stem 3<I*CS=5 of
01 lectronics Inc. 3the <Compan#=5 as of /ecem6er 317 2818. -he Compan#s management is responsi6le for designing and operating
I*CS and for its assessment of the effectiveness of I*CS. +"r responsi6ilit# is to revie% the managements report on the operations of
the I*CS and iss"e a report 6ased on o"r revie%. -he managements report on the operations of the I*CS of the Compan# states that
<6ased on its assessment of the operations of the I*CS as of /ecem6er 317 28187 the Compan#s I*CS has 6een designed and is
operating effectivel# as of /ecem6er 317 28187 in all material respects7 in accordance %ith the I*CS standards esta6lished 6# the
Internal *cco"nting Control S#stem +perations Committee 3I*CS+C5 of the :orea 0isted Companies *ssociation.=
+"r revie% %as cond"cted in accordance %ith the I*CS revie% standards esta6lished 6# the :orean Instit"te of Certified P"6lic
*cco"ntants. -hose standards re!"ire that %e plan and perform7 in all material respects7 the revie% of managements report on the
operations of the I*CS to o6tain a lo%er level of ass"rance than an a"dit. * revie% is to o6tain an "nderstanding of a compan#s I*CS
and consists principall# of in!"iries of management and7 %hen deemed necessar#7 a limited inspection of "nderl#ing doc"ments7 %hich is
s"6stantiall# less in scope than an a"dit.
* compan#s I*CS is a s#stem to monitor and operate those policies and proced"res designed to provide reasona6le ass"rance regarding
the relia6ilit# of financial reporting and the preparation of financial statements for e9ternal p"rposes in accordance %ith acco"nting
principles generall# accepted in the )ep"6lic of :orea. .eca"se of its inherent limitations7 I*CS ma# not prevent or detect a material
misstatement of the financial statements. *lso7 pro>ections of an# eval"ation of effectiveness to f"t"re periods are s"6>ect to the ris@
that controls ma# 6ecome inade!"ate 6eca"se of changes in conditions7 or that the degree of compliance %ith the policies or proced"res
ma# deteriorate.
.ased on o"r revie%7 nothing has come to o"r attention that ca"ses "s to 6elieve that managements report on the operations of
the I*CS7 referred to a6ove7 is not presented fairl#7 in all material respects7 in accordance %ith the I*CS standards esta6lished 6# I*CS+C.
+"r revie% is 6ased on the Compan#s I*CS as of /ecem6er 317 28187 and %e did not revie% managements assessment of its I*CS
s"6se!"ent to /ecem6er 317 2818. -his report has 6een prepared p"rs"ant to the *cts on 9ternal *"dit for Stoc@ Companies in :orea
and ma# not 6e appropriate for other p"rposes or for other "sers.
Samil Price%aterho"seCoopers Garch 47 2811
&(
Report on t0e /perations o t0e Internal !cco"nting %ontrol #+stem
-o the .oard of /irectors and *"dit Committee of 01 lectronics Inc.
I7 as the Internal *cco"nting Control +fficer 3<I*C+=5 of 01 lectronics Inc. 3<the Compan#=57 assessed the stat"s of the design and
operations of the Compan#s internal acco"nting control s#stem 3<I*CS=5 for the #ear ended /ecem6er 317 2818.
-he Compan#s management incl"ding I*C+ is responsi6le for designing and operating I*CS. I7 as the I*C+7 assessed %hether the
I*CS has 6een effectivel# designed and is operating to prevent and detect an# error or fra"d %hich ma# ca"se an# misstatement
of the financial statements7 for the p"rpose of esta6lishing the relia6ilit# of financial reporting and the preparation of financial statements
for e9ternal p"rposes. I7 as the I*C+7 applied the I*CS standard for the assessment of design and operations of the I*CS.
.ased on the assessment on the operations of the I*CS7 the Compan#s I*CS has 6een effectivel# designed and is operating as
of /ecem6er 317 28187 in all material respects7 in accordance %ith the I*CS standards.
Dan"ar# 257 2811
/o-h#"n D"ng
Internal *cco"nting Control +fficer
Aong 'am
Chief 9ec"tive +fficer and President
&,

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