Samsung 2000 Annual Report Download - page 68

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(F) Convertible bonds
On September 24, 1996, the Company issued foreign currency convertible bonds of US$150 million for the expansion of its manufacturing
facilities. The bonds are listed on the London Stock Exchange and will mature on December 31, 2006. A summary of the terms of these
bonds is as follows:
• Interest: 0.25% per annum payable annually in arrears on December 31.
• Conversion period: On or after November 24, 1996 through December 15, 2006.
• Conversion price: Subject to adjustment based on certain events, 65,499 per share, with a fixed exchange rate applicable to the
conversion of 827.3 to US$1.00.
• Redemption: Redeemable at the option of the bondholders on September 24, 2001 at 131.1% of the principal amount, and at the option of
the Company at any time on or after October 24, 1996 at a declining redemption price. However, no such redemption may be made prior to
September 24, 2001 unless the closing price of the Company’s common stock has reached 135% of the conversion price for a stipulated
period.
The Company recorded 51,969 million of consideration for conversion rights, the difference between the nominal value and the
discounted present value at a 5.796% 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 225 million was recognized as interest expense during 2000.
During 1997 and 1999, US$72,440,000 and US$54,620,000 worth of convertible bonds were converted into 823,352 and 689,856 shares of
common stock at the conversion price of 72,784 and 65,499 per share, respectively.
During 2000, US$15,640,000 of convertible bonds were converted into 197,540 shares of common stock at the conversion price of 65,499
per share. In relation to the conversion to common stock, the Company recorded 1,398 million as other capital surplus, the difference
between the conversion right price and the related consideration for conversion rights.
(G) 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 these
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 to 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 stock 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 the nominal value and the
discounted present value at a 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 2,236 million was recognized as interest expense during 2000.
During 1998 and 1999, US$500,000 and US$98,430,000 worth of convertible bonds were converted into common stock at the conversion
price of 123,635 and 113,351 per share, respectively.
During 2000, US$131,290,000 worth of convertible bonds were converted into 1,029,067 shares of common stock at the conversion price of
113,351 per share. In relation to the conversion to common stock, the Company recorded 9,647 million as other capital surplus, the
difference between the conversion right price and the related consideration for conversion rights.
(H) Convertible bonds
On February 1, 1999, the Company issued foreign currency convertible bonds of US$100 million to Intel Corporation which will mature on
February 1, 2004. A summary of the terms of these bonds is as follows:
• Interest: 5% per annum payable annually in arrears on February 1.
• Conversion period: On or after May 2, 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 to US$1.00.
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