Samsung 2000 Annual Report Download - page 69

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(I) Convertible bonds
On July 30, 1999, the Company issued foreign currency convertible bonds of US$100 million to Apple Computer, Inc. which will mature on
July 30, 2002. A summary of the terms of these 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 to US$1.00.
The Company recognized interest expense using a 5% effective interest rate. The difference between the effective and guaranteed return
rate was credited to long-term accrued interest expense. The additional interest expense of 3,690 million was credited to long-term
accrued interest expense during 2000.
(J) Convertible bonds
On October 15, 1999, the company issued foreign currency convertible bonds of US$200 million to Dell Computer Corporation which will
mature on January 31, 2003. A summary of the terms of these bonds is as follows:
• Interest: 2% per annum payable annually in arrears on December 31.
• Conversion period: On or after October 15, 2000 through January 16, 2003.
• Conversion price: Subject to adjustment based on certain events, 260,000 per share, with a fixed exchange rate applicable to the
conversion of 1,203.2 to US$1.00.
The Company recognized interest expense using a 5% effective interest rate. The difference between the effective and guaranteed rate was
credited to long-term accrued interest expense. The additional interest expense of 7,218 million was credited to long-term accrued
interest expense during 2000.
14. Commitments and Contingencies
• At December 31, 2000, the Company is contingently liable for guarantees of indebtedness, principally for related parties, approximating
54,183 million and US$1,565,857,000. In addition, at December 31, 2000, the Company provided guarantees of contract fulfillment for
Iljin Heavy Industries Co., Ltd. in the amount of 1,678 million.
• At December 31, 2000, the Company has a total 142 of technical assistance agreements with certain foreign companies. Total royalty
expense incurred in relation to these agreements for the year ended December 31, 2000 and 1999 amounts to approximately 774, 118
million and 743,418 million, respectively.
• The Company provided product warranties for certain goods sold and is insured for the fulfillment of such warranties.
• At December 31, 2000, the Company has entered into lease agreements with several leasing companies that are recognized as direct
financing leases. These lease agreements are summarized as follows:
•Scheduled future lease payments, net of interest, which are also included in long-term debt (see Note 12), are as follows:
69
Account
Machinery and equipment
Acquisition Cost
712,678
Depreciation Expense Charged to
2000 Operations
137,187
Millions of Won
Lease Payment Schedule
2001
2002
2003
Total
Thousands of Won
238,001,939
92,129,257
2,066,818
332,198,014