Exhibit 7.1
Computation of Ratios of Earnings to Fixed Charges
Year Ended December 31, | |||||||||
Korean GAAP | 2003 | 2004 | 2005 | ||||||
(Millions of Won) | |||||||||
Earnings: | |||||||||
Net earnings | 821,734 | 1,282,216 | 1,051,942 | ||||||
Income tax | 523,631 | 577,889 | 420,788 | ||||||
Income from equity investees | (5,462 | ) | (11,310 | ) | (11,204 | ) | |||
Dividend from equity method affiliates | 554 | 333 | 2,247 | ||||||
Fixed charges | 720,744 | 708,364 | 639,073 | ||||||
Less interest capitalized (a) | — | — | — | ||||||
Minority interest in earnings of consolidated subsidiaries | 235,695 | 148,931 | 274,586 | ||||||
Total earnings | 2,296,896 | 2,706,423 | 2,377,432 | ||||||
Fixed charges: | |||||||||
Interest expense | 705,540 | 678,514 | 616,540 | ||||||
Capitalized interest (a) | — | — | — | ||||||
One-third of rent expenses on operating leases, deemed to be representative of interest expense | 15,204 | 29,850 | 22,533 | ||||||
Total fixed charges | 720,744 | 708,364 | 639,073 | ||||||
Radios of earnings to fixed charges | 3.19:1 | 3.82:1 | 3.72:1 |
U.S. GAAP | |||||||||
Earnings: | |||||||||
Net earnings | 395,443 | 1,404,616 | 1,148,534 | ||||||
Income tax | 217,568 | 386,934 | 356,109 | ||||||
Income from equity investees | (10,559 | ) | (36,136 | ) | (234,868 | ) | |||
Dividend from equity method affiliates | 958 | 45,153 | 51,549 | ||||||
Fixed charges | 443,078 | 467,365 | 417,658 | ||||||
Less interest capitalized | (21,469 | ) | (12,154 | ) | (7,339 | ) | |||
Minority interest in losses of consolidated subsidiaries | (22 | ) | (1,760 | ) | 6,787 | ||||
Total earnings | 1,024,997 | 2,254,018 | 1,738,430 | ||||||
Fixed charges: | |||||||||
Interest expense | 421,609 | 455,211 | 410,319 | ||||||
Capitalized interest | 21,469 | 12,154 | 7,339 | ||||||
One-third of rent expense on operating leases, deemed to be representative of interest expense | — | — | — | ||||||
Total fixed charges | 443,078 | 467,365 | 417,658 | ||||||
Radios of earnings to fixed charges | 2.31:1 | 4.82:1 | 4.16:1 |
(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. |