Samsung 2006 Annual Report Download - page 113

Download and view the complete annual report

Please find page 113 of the 2006 Samsung annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

103
Reference January 1,
2006
Increase Decrease Others December
31, 2006
Warranty reserves (A) \579,362 \993,817 \862,783 \(6,599) \703,797
Royalty expenses (B) 844,538 397,689 267,347 358 975,238
Long-term incentives (C) 133,579 143,796 3,017 - 274,358
Point reserves (D) 107,984 121,629 104,743 - 124,870
(A) The Company accrues warranty reserves for estimated
costs of future service, repairs and recalls, based on historical
experience and terms of guarantees (1~4 years).
(B) The Company makes provisions for estimated royalty
expenses related to technical assistance agreements that have not
been settled. The timing of payment depends on the settlement of
agreement.
(C) The Company introduced long-term incentive plans for its
executives based on a three-year management performance
criteria and has made a provision for the estimated incentive cost
for the accrued period. The incentive is expected to be paid after
2007.
(D) Samsung Card Co., Ltd., a domestic subsidiary, accrues point
reserves based on estimated expenses of future service arising
within five years in order to reward loyal members and expand
customer base.
¹ Others includes amounts from changes in foreign currency exchange rates.
Note 18 : Liability Provisions
Changes in main liability provisions for the year ended December 31, 2006, are as follows:
Note 19 : Commitments and Contingencies
(A) As of December 31, 2006, the Company is contingently liable
for guarantees of indebtedness, principally for related parties,
approximating \7,623 million in loans and US$924.65 million on
drawn facilities which have a maximum limit of US$2,063 million.
As of December 31, 2006, the Company is contingently liable for
guarantees of indebtness for employees housing rental deposits
with a maximum limit of \206,171 million.
In addition, as of December 31, 2006, the Company’s overseas
subsidiaries enter into “Cash Pooling Arrangement” contracts
and “Banking Facility” agreements with overseas financial
institutions for funds employment and provide mutual guarantees
of indebtedness.
Area Participating
Subsidiaries
Financial
Institutions
Europe SEUK and 18 other
subsidiaries Citibank and another bank
Asia SAPL and 6 other
subsidiaries Bank of America
Asia SEMA and 2 other
subsidiaries Standard Chartered bank
(B) As of December 31, 2006, SEC and its domestic subsidiaries
are insured against future contract commitments of up to
\145,553 million. In addition, Samsung Card Co., Ltd. is insured
against future contract commitments relating American Express
from Woori Bank up to US$5 million.
(C) As of December 31, 2006, the Company has technical
assistance agreements with certain companies requiring payment
for use of the technology or from sales of products manufactured
using such technology.
(D) As of December 31, 2006, SEC and its Korean subsidiaries
have a bank overdraft facility agreement with various Korean
financial institutions with a combined maximum limit of \688,500
million.
(E) The Company leases certain property, plant and equipment
under various finance lease arrangements. Assets recorded
under capitalized lease agreements are included in property, plant
and equipment with a net book value of \24,029 million (2005:
\27,209 million). Depreciation expense for the finance lease
assets amounted to \1,442 million (2005: \1,917 million) for the
year ended December 31, 2006.
(In millions of Korean won)