Samsung 2005 Annual Report Download - page 117

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monthly basis from January 1, 2001. In addition, the Creditors
claimed further damages for delays (calculated at 19% per
annum on \2,450 billion) from December 1, 2005 until settle-
ment.
As of the balance sheet date, the outcome of this litigation is
uncertain and accordingly, the ultimate effect of this matter
on the financial position of the Company cannot presently be
determined.
(L) As of December 31, 2005, SEC has been named as the
defendant in nine foreign legal actions filed by Matsushita
Electric Industrial Co., Ltd., International Rectifier Corporation,
Commissariat A L’Energie Atomique, ITT Manufacturing
Inc., 02 Micro International Limited, St.Clair Intellectual
Property Consultants, Inc., Tadahiro Ohmi, Lavaflow, LLP.,
and Rambus Inc. for alleged patent infringements, and as a
plaintiff in four foreign legal actions against Quanta Computer,
Compal Electronics Inc., Matsushita Electric Industrial Co.,
Ltd, and Rambus Inc. for alleged patent infringements.
In addition, the Company is involved in two legal actions as
the defendant against the creditors of SONICblue Inc. and
Getronics Wang Co., LLC. for collection of certain debts.
Domestic legal actions involving SEC include 4 cases as
the plaintiff with total claims amounting to approximately
\6,504 million and 26 cases as the defendant, excluding
the Samsung Motors Inc. case, mentioned above in (K),
with a total claims amounting to approximately \96,007
million. In addition, its subsidiaries have been sued relating to
alleged patent infringements and collection of certain debts in
domestic and foreign countries with total claims amounting to
approximately \237,751 million as plaintiff and total claims
amounting to approximately \81,700 million as defendant.
Considering the legal cases mentioned above and various
other claims and proceedings pending as of December 31,
2005, the Company’s management believes that, although
the outcome of these matters is uncertain, the conclusion of
these matters will not have a material adverse effect on the
operations or financial position of the Company.
(M) As of December 31, 2005, SEA and five other overseas
subsidiaries have agreements with financial institutions to sell
certain eligible trade accounts receivable under which, on an
ongoing basis, a maximum of US$1,595 million can be sold.
The Company has trade notes receivable discounting facilities
with various Korean banks, including Korea First Bank with
a combined limit of up to \200,000 million; a credit sales
facility agreement with five Korean banks, including Woori
Bank; and an accounts receivable factoring agreement with
Korea Exchange Bank for up to \150,000 million. In relation
to the credit sales facility agreement with Woori Bank (up to
\70,000 million) and Kookmin Bank (up to \200,000 million),
the Company has recourse obligations on the receivables
where the due date extension have been granted. In addition,
the Company also has collateral loan facilities on accounts
receivables with four banks, including Woori Bank for up to
\1,311,000 million.
(N) As of December 31, 2005, Samsung Card Co., Ltd. has
credit loan facilities up to \3,000 billion and collateral loan
facilities up to \2,000 billion with Samsung Life Insurance
Co., Ltd. In addition, S-LCD and two other domestic
subsidiaries have general term loan facilities up to \480
billion with Korean banks, including Woori Bank.
(O) As of December 31, 2005, SEC and its domestic
subsidiaries have provided six blank notes and two notes
amounting to \30,000 million, to financial institutions as
collaterals for bank borrowings and for the fulfillment of certain
contracts, which would not have a direct adverse effect on
the operations or financial position of the Company.
(P) In 2002, the United States Department of Justice Antitrust
Division (the Justice Department) initiated an investigation
into alleged anti-trust violations by the sellers of Dynamic
Random Access Memory (“DRAM”) in the United States,
including Samsung Semiconductor Inc. (SSI), a US subsidiary
of the Company. The Company and SSI entered into a plea
agreement with the US Department of Justice on November
30, 2005 and agreed to pay US$300 million in five equal
installments over the next five years. As of the balance sheet
date, SSI has established a provision amounting to US$300
million in relation to the agreement.
Following the announcement of the Justice Department
investigation, several civil class action suits were filed against
the Company and SSI. Accordingly, SSI has established a
further provision amounting to US$67 million for any potential
losses. The Company’s management believes that, although
the outcome of these matters is uncertain and could differ
from the current estimation, the conclusion of the matters
will not have a material adverse effect on the operations or
financial position of the Company.