LG 2001 Annual Report Download - page 76

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ยป76
LG Electronics Inc. The
43
rd Annual Report
Notes to Financial Statements
for the years ended December 31, 2001 and 2000
Call option seller: BOA
Effective date : September 7, 2001
Termination date: 3 years after effective date (September 7, 2004)
Initial share price : common stock 15,517, preferred stock 7,660
Call option contract amounts: common stock 141,979 million (US$110 million), preferred
stock 7,838 million (US$6 million)
Call option premium: 15% of call option contract amounts
Exercise of call options:
Call option buyer has the right to exercise the call options. 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 :
Determined as the average of twelve monthly closing prices for the twelve months up to and
including the termination date, where each monthly closing price is taken as the arithmetic
average of the official closing price of the five business day period ending in and including the
monthly anniversary date relative to the termination date of each month.
An unrealized gain on valuation of derivatives in the amount of 23,761 million in excess of the option
premium cost of 22,477 million was recognized for the year ended December 31, 2001.
As of December 31, 2001, the Company has entered into Dacom Corporation stock sales and
derivatives contracts for its share in Dacom Corporation with Credit Suisse First Boston International (CSFB).
The terms and conditions of the contracts are as follows :
Sales of Shares in Dacom Corporation
Trade date : September 21, 2001
Number of shares : 4,563,000 shares of common stock
Sales price : the closing trade price on the trade date per share ( 17,750 per share)
Price adjustment :
On November 5, 2001, sales price was adjusted to the weighted average trade price during the
initial valuation period determined based on CSFB s executions.
As a result, the Company incurred a gain on transaction of derivatives amounting to 212
million.
Call option contract
Call option buyer : the Company
Call option seller : CSFB
Effective date : November 5, 2001