Samsung 2006 Annual Report Download - page 73

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63
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.
The amounts expressed in U.S. dollars, provided solely for the
convenience of the reader, have been translated on the basis
set forth in Note 3 to the accompanying consolidated financial
statements.
Accounting principles and auditing standards and their application
in practice vary among countries. The accompanying consolidated
financial statements are not intended to present the financial
position, results of operations and cash flows in conformity with
accounting principles and practices generally accepted in countries
and jurisdictions other than the Republic of Korea. In addition, the
procedures and practices used in the Republic of Korea to audit
such financial statements may differ from those generally accepted
and applied in other countries. Accordingly, this report and the
accompanying consolidated financial statements are for use by
those who are informed about Korean accounting principles or
auditing standards and their application in practice.
Seoul, Korea
March 5, 2007
This report is effective as of March 5, 2007, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this
report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is
a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.
A member firm of
www.samil.com
Kukje Center Building 191 Hangangno 2-ga, Yongsan-gu
Seoul 140-702, KOREA (Yongsan P.O. Box 266, 140-600)