Samsung 2006 Annual Report Download - page 115

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to approximately \131,034 million. In addition, its subsidiaries
have been sued for alleged patent infringements and collection of
certain debts in domestic and foreign countries with total claims
amounting to approximately \152,383 million as the plaintiff and
total claims amounting to approximately \127,496 million as
the defendant.
Considering the legal cases mentioned above and various other
claims and proceedings pending as of December 31, 2006,
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.
(J) 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, which include
Samsung Semiconductor Inc. (SSI), a US subsidiary of
the Company. SEC and SSI entered into a plea agreement with
the Justice Department on November 30, 2005 and agreed to pay
US$300 million over five years. As of December 31, 2005, SSI
had accrued US$300 million in provisions in its balance sheet
relative to the agreement.
Following the announcement of the Justice Department’s
investigation, several civil class actions were filed against SEC
and SSI. As a result, SSI recognized expenses amounting to
US$ 67 million for the year ended December 31, 2005. SSI has
recognized additional expenses amounting to US$ 93.5 million as
further potential losses for the year ended December 31, 2006.
The Company’s management believes that although the outcome
of these cases are uncertain and the results could differ from
the current estimates, the difference from the actual resolution will
not have a material adverse effect on the operations or financial
position of the Company.
(K) The United States Department of Justice Antitrust Division
(the Justice Department) and other nations’ anti-trust authorities
initiated an investigation into alleged anti-trust violations by
the sellers of TFT-LCD and SRAM, which include SEC and some
of its foreign subsidiaries.
Following the investigation of the Justice Department, several
civil actions were filed against SEC and some of its foreign
subsidiaries.
As of balance sheet date, the outcome of this civil action is
uncertain and accordingly, the ultimate effect of this matter on
the financial position of Company cannot be determined.
(L) SEC and 30 other Samsung Group affiliates (the “Affiliates”)
entered into an agreement with the institutional creditors
(the “Creditors”) of Samsung Motors Inc. (“SMI”) in September
1999. In accordance with this agreement, SEC and the Affiliates
agreed to sell 3,500,000 shares of Samsung Life Insurance Co.,
Ltd. (the “Shares”), which were previously transferred to the
Creditors in connection with the petition for court receivership
of SMI. The Shares were to be disposed of by December 31,
2000 and if the sales proceeds fell short of \2,450 billion (the
“Shortfall”), SEC and the Affiliates agreed to compensate the
Creditors for the Shortfall by other means, including participating
in any equity offering or subordinated debentures issued by
the Creditors. Any excess proceeds over \2,450 billion were
to be distributed to SEC and the Affiliates. In the event of non-
performance to this agreement, default interest on the Shortfall
was agreed to be paid to the Creditors by SEC and the Affiliates.
As of the balance sheet date, the sale of the Shares has not been
completed and on December 9, 2005, the Creditors filed a civil
action against Mr. Kun-Hee Lee, the chairman of SEC, SEC and
27 of the remaining Affiliates, in connection with this agreement.
The Creditors are claiming from Mr. Kun-Hee Lee, SEC and 27 of
the Affiliates the agreed sales proceeds amount of \2,450 billion
together with interest of 6% per annum from January 1, 2001, until
the date SEC was served with court process and 20% per annum
thereafter until settlement.
In addition, the Creditors are claiming from SEC and 27 of the
Affiliates damages resulting from delays amounting to \2,287.9
billion (the “Damages”), the aggregate amount of monthly default
interest calculated from January 1, 2001, at 19% per annum on
\2,450 billion, with interest. Interest on the Damages has been
calculated by applying 6% per annum on the monthly calculated
Damages amount from the following month until the date SEC was
served with court process and 20% per annum thereafter until
settlement. Additional damage for delays, calculated at 19% per
annum on \2,450 billion, is also being claimed by the Creditors
from December 1, 2005, until settlement.
As of the balance sheet date, the outcome of this civil action is
uncertain and accordingly, the ultimate effect of this matter on
the financial position of the Company cannot presently be
determined.
(M) As of December 31, 2006, 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$1,349 million can be sold.
The Company has trade notes receivable discounting facilities
with various Korean banks, including Standard Charted First Bank
Korea with a combined limit of up to \150,000 million; a trade