LG 2001 Annual Report Download - page 75

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LG Electronics Inc. The
43
rd Annual Report
Notes to Financial Statements
for the years ended December 31, 2001 and 2000
Call option contract
Call option buyer : the Company
Call option seller: CSFB
Effective date : March 19, 2001
Termination date: September 17, 2004
Initial share price : 14,140.62
Call option contract amounts: 155,547 million (US$120 million)
Call option premium: 17.34% of call option contract amounts
Exercise of call options:
Call option buyer has the right to exercise the call options on the expiry date, which is the fifth
business day immediately preceding the termination date. On the termination date, the call
options exercised shall be cash settled and the call option seller shall pay an amount per the call
options exercised equal to: Max(final share price minus initial share price, 0), subject to a
maximum of 30.0% of initial share price.
Final share price :
equal to the arithmetic average of the seven interim share prices, calculated based on the closing
trade prices during the period from 36 months following the effective date through the expiry
date.
An unrealized gain on valuation of derivatives in the amount of 20,849 million in excess of the option
premium cost of 26,947 million was recognized for the year ended December 31, 2001.
(2) Contract with BOA
Treasury stock sales
Trade date: May 24, 2001
Number of shares: 9,149,920 shares of common stock
1,023,180 shares of preferred stock
Sales price: the closing trade price on the trade date per share (common stock : 18,200 per
share, preferred stock : 8,340 per share)
Price adjustment:
On September 7, 2001, sales price was adjusted to the weighted average trade price during the initial
valuation period determined based on BOA s executions. As a result, the Company incurred a loss on
transaction of derivatives amounting to 25,267 million.
Call option contract
Call option buyer : the Company