Exhibit 7.1
Computation of Ratios of Earnings to Fixed Charges
Year Ended December 31, | ||||||||||||
Korean GAAP | 2002 | 2003 | 2004 | |||||||||
(Millions of Won) | ||||||||||||
Earnings: | ||||||||||||
Net earnings | 1,946,934 | 821,734 | 1,282,216 | |||||||||
Income tax | 741,354 | 523,631 | 577,889 | |||||||||
Income from equity investees | (8,524 | ) | (5,462 | ) | (11,310 | ) | ||||||
Dividend from equity method affiliates | 469 | 554 | 333 | |||||||||
Fixed charges | 828,079 | 720,744 | 708,364 | |||||||||
Less interest capitalized (a) | (158,482 | ) | — | — | ||||||||
Minority interest in earnings of consolidated subsidiaries | 316,918 | 235,695 | 148,931 | |||||||||
Total earnings | 3,666,748 | 2,296,896 | 2,706,423 | |||||||||
Fixed charges: | ||||||||||||
Interest expense | 650,460 | 705,540 | 678,514 | |||||||||
Capitalized interest (a) | 158,482 | — | — | |||||||||
One-third of rent expenses on operating leases, deemed to be representative of interest expense | 19,137 | 15,204 | 29,850 | |||||||||
Total fixed charges | 828,079 | 720,744 | 708,364 | |||||||||
Radios of earnings to fixed charges | 4.43:1 | 3.19:1 | 3.82:1 |
U.S. GAAP | ||||||||||||
Earnings: | ||||||||||||
Net earnings | 1,556,262 | 395,443 | 1,404,616 | |||||||||
Income tax | 519,642 | 217,568 | 386,934 | |||||||||
Income from equity investees | (10,713 | ) | (10,559 | ) | (36,136 | ) | ||||||
Dividend from equity method affiliates | 1,278 | 958 | 45,153 | |||||||||
Fixed charges | 488,970 | 443,078 | 467,365 | |||||||||
Less interest capitalized | (27,853 | ) | (21,469 | ) | (12,154 | ) | ||||||
Minority interest in losses of consolidated subsidiaries | (3,222 | ) | (22 | ) | (1,760 | ) | ||||||
Total earnings | 2,524,364 | 1,024,997 | 2,254,018 | |||||||||
Fixed charges: | ||||||||||||
Interest expense | 461,117 | 421,609 | 455,211 | |||||||||
Capitalized interest | 27,853 | 21,469 | 12,154 | |||||||||
One-third of rent expense on operating leases, deemed to be representative of interest expense | — | — | — | |||||||||
Total fixed charges | 488,970 | 443,078 | 467,365 | |||||||||
Radios of earnings to fixed charges | 5.16:1 | 2.31:1 | 4.82:1 |
(a) | Effective on January 1, 2003, in accordance with Korean GAAP, the Company elected to no longer capitalize interest costs on all borrowings incurred related to qualifying assets. |