Samsung 1999 Annual Report Download - page 63

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( I ) Convertible bonds -
On June 26, 1997, the Company issued foreign currency convertible bonds of US$300 million for the expansion of its
manufacturing facilities. The bonds are listed on the London Stock Exchange and will mature on December 31, 2007. A summary
of the terms of bonds is as follows:
Interest: 0%
Conversion period: On or after July 26, 1997 through December 15, 2007.
Conversion price: Subject to adjustment based on certain events, 113,351 per share, with a fixed exchange rate applicable
to the conversion of 888.5: US$1.00.
Redemption: Redeemable at the option of the bondholders on June 26, 2002 at 131.1% of the principal amount, and at the
option of the Company at any time on or after June 26, 1999 at a declining redemption price. However, no such redemption
may be made prior to June 26, 2002 unless the closing price of the Company’s common share has reached 135% of the
conversion price for a stipulated period.
The Company recorded 115,678 million of consideration for conversion rights, the difference between nominal value and the
discounted present value at 5.558% guaranteed return rate, as an adjustment to debentures and shareholders’ equity related to
the issuance of foreign currency convertible bonds. The conversion rights account is amortized using the effective interest
method, and amortization of 6,102 million was recognized as interest expense during 1999.
During 1998, US$500,000 of convertible bonds were converted into common stock at the conversion price of 123,635 per
share.
During 1999, US$98,430,000 of convertible bonds were converted into 771,503 shares of common stock at the conversion price
of 113,351 per share. In relation to the conversion to common stock, the Company recorded 4,245 million as other capital
surplus, the difference between conversion right and related consideration for conversion right (see Note 1).
( J ) Convertible bonds -
On February 1, 1999, the Company issued foreign currency convertible bonds of US$100 million to Intel Corporation.
A summary of the terms of bonds is as follows:
Interest: 5% per annum payable annually in arrears on February 1.
Conversion period: On or after May 3, 1999 through January 21, 2004.
Conversion price: Subject to adjustment based on certain events, 108,465 per share, with a fixed exchange rate applicable
to the conversion of 1,173: US$1.00.
(K) Convertible bonds -
On July 30, 1999, the Company issued foreign currency convertible bonds of US$100 million to Apple Computer Inc.
A summary of the terms of bonds is as follows:
Interest: 2% per annum payable annually in arrears on December 31.
Conversion period: On or after July 30, 2000 through July 20, 2002.
Conversion price: Subject to adjustment based on certain events, 219,050 per share, with a fixed exchange rate applicable
to the conversion of 1,204.7: US$1.00.
The Company recognized interest expense using a 5% effective interest rate. The difference between the effective and nominal
interest rate was credited to long-term accrued interest. The additional interest expense of 1,515 million was recognized as
long-term accrued interest during 1999.
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