LG 2001 Annual Report Download - page 78

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ยป78
LG Electronics Inc. The
43
rd Annual Report
Notes to Financial Statements
for the years ended December 31, 2001 and 2000
In order to reduce the impact of changes in exchange rates, the Company enters into foreign currency
option contracts. An unrealized loss of 2,412 million was charged to operations for the year ended
December 31, 2001. A summary of the terms of outstanding currency option contracts at December 31,
2001 is as follows :
Option Type Amount (In millions) Exercising price Contract due date
Citibank Put US$ 9.0 1,280.0/US$ 2002.3.11
Call US$ 9.0 1,343.5/US$ 2002.3.11
Put US$ 5.0 1,285.0/US$ 2002.1.14
Call US$ 10.0 1,285.0/US$ 2002.1.14
Put US$ 5.0 1,295.0/US$ 2002.2.26
Call US$ 10.0 1,295.0/US$ 2002.2.26
Deutsche Bank Put US$ 10.0 1,280.0/US$ 2002.3.11
Call US$ 10.0 1,343.0/US$ 2002.3.11
Put US$ 10.0 1,290.0/US$ 2002.4.12
Call US$ 10.0 1,337.0/US$ 2002.4.12
Put US$ 2.0 121.1/US$ 2002.6. 4
Call US$ 2.0 124.5/US$ 2002.6. 4
UBS Warburg Put US$ 10.0 1,280.0/US$ 2002.6. 5
Call US$ 10.0 1,305.0/US$ 2002.6. 5
Credit Lyonnais Put US$ 10.0 1,300.0/US$ 2002.6.18
Call US$ 10.0 1,329.0/US$ 2002.6.18
Standard Chartered Bank Put US$ 2.0 117.0/US$ 2002.4.9
Call US$ 2.0 120.05/US$ 2002.4.9
Credit Lyonnais Put EURO 4.0 117.0/ 2002.3.14
Call EURO 4.0 120.05/ 2002.3.14
As a result of the above derivatives contracts, a gain of 2,167 million and a loss of 15,395 million
were recognized for the year ended December 31, 2001.
On December 14, 2000, the Company has entered into a leasehold deposits sales agreement with LG
Shinhan Securitization L.L.C. (SPC) to securitize the leasehold deposits owned by the Company. The
Company has sold leasehold deposits whose book value is 133,854 million to the SPC for 120,400
million, and in 2001 the Company repurchased a substantial portion of leasehold deposits for 119,898
million.
As of December 31, 2001, the Company has 13,700 million of subordinated bond issued by the SPC
and 3,300 million of long-term loan due from the SPC. The Company provides management services
related to the leasehold deposits owned by the SPC and receives a service fee from the SPC. The holders of
the bonds issued by the SPC based on the leasehold deposits have rights to request the Company to
purchase the bonds under certain adverse conditions within two years after the date upon which the bond
sales are completed.