Hyundai 2001 Annual Report Download

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ANNUAL REPORT 2001
PREPARE TO WANT ONE
HYUNDAI MOTOR COMPANY
"1974 FIFA TM
Hyundai Motor, 2002 FIFA World Cup Official Partner

Table of contents

  • Page 1
    A NNUAL R EPORT 2001 "1974 FIFA TM PREPARE TO WANT ONE H Y U N D A I M O T O R C O M P A N Y Hyundai Motor, 2002 FIFA World Cup Official Partner

  • Page 2
    ...O N T E N T S FINANCIAL HIGHLIGHTS HYUNDAI GETS HOT PRESIDENT'S MESSAGE HISTORICAL HIGHLIGHTS PROGRESSIVE MANAGEMENT RESEARCH & DEVELOPMENT ADVANCED PRODUCTION MARKETING, SALES & SERVICE 26 • NEW HORIZONS IN THE COMMUNITY 28 • WORLDWIDE ACTIVITIES 32 • LINE-UP 35 • FINANCIAL STATEMENTS

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  • Page 5
    FINANCIAL HIGHLIGHTS For the years ended December 31, 2001, 2000 and 1999 Korean Won in Billions 2001 Sales Net Income Total Assets , Shareholders Equity Earnings Per Share (", US$) Dividends Per Share (", US$) "22,505 1,165 19,633 9,098 5,164 750 2000 "18,231 668 17,968 7,623 3,140 600 1999 "14,...

  • Page 6
    ... development of the Korean auto industry, Hyundai has become a major force in the modernization of the Korean economy. Responsive management, visionary leadership and aggressive investment in the creation of advanced technology are some of the key elements which have helped build Hyundai into Korea...

  • Page 7
    Mong-Koo Chung Chairman & CEO

  • Page 8
    ... possible by the hard work and dedication of The Dec. 17, 2001 issue of Business Week, America's leading economic magazine, featured a cover story on Hyundai Motor. Profiling Chairman Chung Mong-Koo, it presents a positive report on the company's rapid growth in the U.S. market and Chairman Chung...

  • Page 9
    ...,700 won to 26,900 won. The aggregate value of listed stock including preferred issues doubled from 3 trillion won to 6.5 trillion won during the same period. In May 2001, Moody's and S&P raised their credit rating of Hyundai to Ba2 and BB, respectively. 6 2001 Annual Report Hyundai Motor Company

  • Page 10
    ... of our fuel cell technology. For the purposes of accelerating and better coordinating R&D programs, Hyundai opened engineering and design centers in the United States, Europe and Japan. As reflected in the success of Santa Fe which was developed by Hyundai Motor America, we recognize the increasing...

  • Page 11
    ...our pioneering role in the development of the Korean auto industry. Despite the passage of time, our corporate philosophy "Pursuing Happiness Through Cars" has remained unchanged. These words have guided us through more than three decades of continuous growth and made Hyundai one of the most admired...

  • Page 12
    ... 1992, the automotive world saw the new face of Hyundai with the unveiling of the HCD-I concept car, establishing a tradition of exciting concept cars that would include the HCD-II and HCD-III. The company recorded major progress in its development of electric 10 2001 Annual Report Hyundai Motor...

  • Page 13
    ... of Tuscani/Coupe which bowed in 2001 as did the HCD-6 Roadster unveiled at Chicago Motor Show. The long-awaited opening of the Hyundai-Kia California Design and Technical Center signaled a major new phase in the company's technological evolution. Hyundai Motor Company 2001 Annual Report 11

  • Page 14
    ... car Euro-I developed #Logistic Center in Belgium opens for business #Near-luxury Grandeur XG launched #Grand opening for Chennai Plant in India #Hyundai acquires Kia Motors 1974 #Pony, Korea's first independently designed and manufactured model unveiled at the 55th Turin Motor Show 1988 #Excel...

  • Page 15
    ... at developing the next generation automotive technology #Hyundai-Kia California Design and Technical Center opened #US$105 million in CP issued for Hyundai Motor Finance Company. #Hyundai launches its first commercial vehicles in the U.S. market #In celebration of the 2002 World Cup, Hyundai rolls...

  • Page 16
    ...and rewarding environment so that they can achieve their personal career goals. At the same time, we are fulfilling our obligations to our shareholders by creating value and maximizing returns on their investment. And as a good corporate citizen, we take pride in our civic spirit by supporting local...

  • Page 17
    ...the best technology and the highest quality standards to create cars that make life easier and more convenient for people everywhere. Guided by our management concept that emphasizes win-win relationships with our shareholders, customers and partners, we have been strategically positioning ourselves...

  • Page 18
    .... By constantly looking for a fresh approach to how we conduct business, we are firmly on track to attain our goals of joining the ranks of the world's top five automakers and elevating Korea to membership in the club of economically advanced countries. Hyundai Motor Company 2001 Annual Report 17

  • Page 19
    ... end, we have been investing aggressively in research and development to the tune of 7.7 percent of sales in 2001 while forming strategic alliances with major technology companies. We remain focused on the task of shortening the development lead times for new products while improving quality and...

  • Page 20
    ...design and simulation tools which help us work with dramatically improved efficiency in our new car development projects. With 7.7 percent of our sales allocated to research and development, our investment promises to yield great rewards in the years ahead. Hyundai Motor Company 2001 Annual Report...

  • Page 21
    ...million sq.m. site making it the world's single largest auto plant. Its output spans everything from the Atos minicar to the Equus/Centennial luxury car. Ulsan is also the home of the Verna/Accent, Avante/Elantra, Tuscani/Coupe, Santa Fe, Trajet, Lavita/Matrix, Starex/H-1, Porter/H-100 and Terracan...

  • Page 22
    ... new models, Terracan and Tuscani/Coupe which have received critical acclaim in the international motoring press. The strategically important EF Sonata and Grandeur XG are of great commercial value to the company and excellent export figures for these two models confirm our predictions that Hyundai...

  • Page 23
    ... sponsor of the 2002 FIFA World Cup, Hyundai is uniquely wellpositioned to further elevate its standing as a global brand. We are planning a wide range of World Cup-related sports marketing initiatives in Korea and Japan the host countries as well 22 2001 Annual Report Hyundai Motor Company

  • Page 24
    ... the urgent need to improve our after-sales service operations so that they are second to none. Our new One-Stop service system unifies sales, repair and parts purchasing enabling us to respond to customer's requests with speed, courtesy and enthusiasm. Hyundai Motor Company 2001 Annual Report 23

  • Page 25
    ... by unveiling Terracan, Lavita/Matrix and Tuscani/Coupe, all of which have been highly acclaimed by the media and public in overseas markets. With the launch of our all-new World Car in 2002, we will add one more model to our line-up giving us a full product range that will ascertain our status as...

  • Page 26
    ...nature of the global automotive business, we at Hyundai will keep working diligently and will find innovative solutions to build brand equity, improve profitability and mount a credible challenge to become one of the world's top five automakers by 2010. Hyundai Motor Company 2001 Annual Report 25

  • Page 27
    ...are dreaming of a future career in the Korean auto industry. In addition, the company has sponsored a variety of cultural promotion events such as Kyongju EXPO, concerts by the Seoul Youth Symphony Orchestra, to name but a few. Currently, Hyundai Motor Chairman 26 2001 Annual Report Hyundai Motor...

  • Page 28
    ... of keen interest to Hyundai Motor. financial assistance towards retirement pension plans and covers medical bills. Such a carefully considered and well-designed employee welfare system has played a big part in maintaining a productive and mutually respectful labor-management relationship. Hyundai...

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    WORLDWIDE ACTIVITIES 28 2001 Annual Report Hyundai Motor Company

  • Page 30
    ... Izmit Country India Name of Company HMI Location Chennai Model Atos Prime Verna Verna Grace Grace Porter(1.5) Accent Accent Porter Atos Indonesia HIM Jakarta Atos Verna Trajet Malaysia ORIENTAL HYUNDAI Johor Avante EF Sonata Taiwan China CCM RCHT JAC Keelung Rongcheng HUBEI XG Galloper Starex SOP...

  • Page 31
    ... Korean auto industry, realizing our dream of happiness and a better life for all. Reflecting on our 30 year-plus corporate history and 2000's solid business performance, Hyundai Motor stands on a solid foundation and is well poised to realize our company's goal of ranking as one of the world's top...

  • Page 32
    FULL LINE-UP Equus (Centennial) New Grandeur XG (Hyundai XG) New EF Sonata (Sonata) Avante XD (Elantra) Tuscani(Coupe) Lavita(Matrix) Verna(Accent) Atoz (Atos) Terracan Santa Fe Trajet XG(Trajet) Galloper

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    Santamo Starex (H-1) Grace (H-100) Porter (H-100 Truck) Libero (H-1 Truck) Mighty II 5 Ton Cargo Tractor Dump Truck County Aero Town Aero Queen

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    F I N A N C I A L S TAT E M E N T S • Balance Sheets • Statements of Income • Statements of Appropriations of Retained Earnings • Cash Flow Statements • Notes to Financial Statements • Report of Independent Public Accountants

  • Page 36
    ...,148 182,165 11,083,528 $ 14,804,951 6,363,608 1,137,363 717,952 181,625 10,487,190 $ 13,549,230 (continued) 36 2001 Annual Report Hyundai Motor Company

  • Page 37
    ... severance benefits, net of National Pension payments for employees of "83,680 million in 2001 and "100,093 million in 2000 and individual severance insurance deposits of "654,600 million in 2001 and "346,894 million in 2000 (Note 2) Accrued loss on valuation of derivatives (Note 2) Accrued product...

  • Page 38
    ... income tax Income tax expense (Note 18) Net income Earnings per common share (Note 2) Earnings per common share - assuming dilution (Note 2) 1,666,018 500,619 " 1 ,165,399 " " 5,164 - The accompanying notes are an integral part of these statements. 38 2001 Annual Report Hyundai Motor Company

  • Page 39
    ...,837 Appropriations (Note 15): Legal reserve Reserve for business rationalization Reserve for technology development Cash dividends (Note 17) Unappropriated retained earnings, end of year... The accompanying notes are an integral part of these statements. Hyundai Motor Company 2001 Annual Report 39

  • Page 40
    ...investments, net Gain on valuation of investments accounted for using the equity method Amortization of discount on debentures Amortization of intangibles Amortization of development costs Provision for severance benefits Provision for warranties and product...2001 Annual Report Hyundai Motor Company

  • Page 41
    ... of property, plant and equipment Proceeds from the sale of Motor Parts Division 23,727 2,201,060 Cash outflows from investing activities: Purchase of short-term financial instruments Acquisition of marketable securities Additions to other current assets Acquisition of investments Additions to other...

  • Page 42
    ... Cash, end of year 1,125,409 258,654 " 1,384,063 2000 12 (3,327) (3,315) (89,026) 347,680 " 258,654 2001 848,660 195,049 $ 1,043,709 2000 9 (2,509) (2,500) (67,133) 262,182 $ 195,049 The accompanying notes are an integral part of these statements. 42 2001 Annual Report Hyundai Motor Company

  • Page 43
    ...formerly Hyundai Precision America Inc., wholly owned distributor of van trailers and equipment in the United States), Hyundai Machine Tool Europe GmbH (wholly owned distributor of equipment in Germany), Hyundai Motor India (wholly owned production plant in India), Hyundai Motor Japan R&D Center Inc...

  • Page 44
    ...other rate of exchange. The significant accounting policies followed by the Company in the preparation of its non-consolidated financial statements are summarized below. Revenue Recognition Revenue, including long-term installment sales, is recognized at the time of shipping motor vehicles and parts...

  • Page 45
    ..., plant and equipment. The Company capitalizes interest as part of the cost of constructing major facilities and equipment. Interest expense capitalized in 2001 and 2000 was "74,353 million ($56,069 thousand) and "101,011 million ($76,171 thousand), respectively. Hyundai Motor Company 2001 Annual...

  • Page 46
    ... National Pension Law, the Company and the employees each pay 4.5 percent of monthly pay. Accrued Warranties and Product Liabilities The Company generally provides a warranty to the ultimate consumer with each product and accrues warranty expense at the time of sale based upon actual claims history...

  • Page 47
    ... Republic of Korea are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rates of exchange prevailing in 2001 and 2000, which was "1,293.20 and "1,130.60 to US$1.00, respectively,. Hyundai Motor Company 2001 Annual Report 49

  • Page 48
    ... 31, 2000. (2) Investment securities as of December 31, 2001 and 2000 consist of the following: Korean won (in millions) U.S. dollars (Note 2) (in thousands) 2001 Equity securities accounted for using the equity method Marketable equity securities Unlisted equity securities Debt securities 3,613...

  • Page 49
    ... Truck Co., Ltd. Hyundai Powertech KEFICO Cheju Dynasty Co., Ltd Korea Drive Train System e-HD.com WIA Kia Motor Corporation Korea Space & Aircraft Co., Ltd. Korea Economy Daily Hyundai HYSCO (formerly Hyundai Pipe Co., Ltd.) Wuhan Grand Motor Co., Ltd. First CRV Hyundai-Kia-Yueda Motor Company...

  • Page 50
    ... those in Kia Motor Corporation, Hyundai HYSCO (formerly Hyundai Pipe Co., Ltd.), Hyundai Capital Service Inc. and KEFICO, are valued based on the latest financial statements since investees did not prepare financial statements as of December 31, 2000. 52 2001 Annual Report Hyundai Motor Company

  • Page 51
    ... Savings & Finance Co., Ltd. Korea Industrial Development Co., Ltd. Hyundai Heavy Industries Co., Ltd. Hyundai Corporation Hyundai Information Technology Co., Ltd. LG Telecom Hyundai Merchant Marine Co., Ltd. Cho Hung Bank DongYang Investment Bank Treasury Stock Funds Stock Market Stabilization Fund...

  • Page 52
    ... Ltd. Industry Otomotif Komersial Hyundai Technology Investment Co., Ltd. Hyundai Unicorns Co., Ltd. Hyundai Research Institute Kihyup Finance Hyundai Motor Deutschland GmbH Yonhap Capital Co., Ltd. KOENTECH(been called as Ulsan Environmental Development) Internet Hankyoreh Inc. Hyundai Oil refinery...

  • Page 53
    ... Fire & Marine Insurance Co. In addition, the Company carries products and completed operations liability insurance with a maximum coverage of $70,000 thousand, general insurance for vehicles and workers' compensation and casualty insurance for employees. Hyundai Motor Company 2001 Annual Report...

  • Page 54
    ... in excess of fair value of net identifiable assets acquired Development costs Other " 537,533 1,028,322 30,578 " 1,596,433 56 2000 " 568,104 910,566 29,587 " 1,508,257 $ 2001 405,349 775,448 23,059 $ 1,203,856 2000 $ 428,402 686,650 22,311 $ 1,137,363 2001 Annual Report Hyundai Motor Company

  • Page 55
    ...consist primarily of bank loans and export financing loans with annual interest rates ranging from 4.56 percent to 10.5 percent. These borrowings are secured by certain bank deposits, investment securities and property, plant and equipment (See Note 6). Hyundai Motor Company 2001 Annual Report 57

  • Page 56
    ... maturity of long-term debt outstanding as of December 31, 2001 is as follows: Korean won (in millions) U.S. dollars (Note 2) (in thousands) Debentures 2002 2003 2004 2005 Thereafter Less: Discount on debentures (86,084) " 3,905,254 58 2001 Annual Report Hyundai Motor Company Local Currency Loans...

  • Page 57
    ... discounted overseas accounts receivable translated using the foreign exchange rate as of December 31, 2001.. (5) In connection with the merger of Automotive and Machine Tools Divisions of Hyundai MOBIS as at July 31, 1999, under the Korean Commercial Code, the Company became liable for the payment...

  • Page 58
    ... dividends rate of 1 percent to the rate of common stock on March 5, 2001, using retained earnings. In September 2000, the Company issued 20,618,000 common shares with a total proceeds of "430,916 million (US$324,950 thousand) (at a per share price of "20,900), which included paid-in capital...

  • Page 59
    ... deficit. The reserves for overseas market development and technological development are voluntary reserves, which are available for the payment of dividends. 16. Capital Adjustments Capital adjustments as of December 31, 2001 and 2000 consist of the following: Korean won (in millions) U.S. dollars...

  • Page 60
    ...) Number of Shares Dividend rate Common shares, net of treasury shares Preferred shares, net of treasury shares: Old New 218,187,967 15% " 163,641 $ 123,400 24,492,541 37,541,005 16% 17% 19,594 31,910 " 215,145 14,776 24,063 $ 162,239 62 2001 Annual Report Hyundai Motor Company

  • Page 61
    ... FINANCIAL STATEMENTS December 31, 2001 and 2000 The computation of the proposed dividends for 2000 is as follows: Number of Shares Dividend rate Korean won (in millions) U.S. dollars (Note 2) (in thousands) Common shares, net of treasury shares Preferred shares, net of treasury shares: Old...

  • Page 62
    ...,048) 461,275 (243,697) (229,737) (*) Sales in 2000 include the disposal value of the Motor Parts Division for after-sales service of "446,422 million, which consists of the lump-sum royalty and the book value of the disposed net assets (see Note 25). 64 2001 Annual Report Hyundai Motor Company

  • Page 63
    ... FINANCIAL STATEMENTS December 31, 2001 and 2000 Receivables (Payables) Korean won (in millions) U.S. dollars (Note 2) (in thousands) Affiliated Company Hyundai Motor America Hyundai Motor India Kia Motor Corporation KEFICO Hyundai MOBIS(*) Korea Drive Train System Hyundai HYSCO (formerly Hyundai...

  • Page 64
    ... Selling and administrative expenses in 2001 and 2000 are as follows: Korean won (in millions) U.S. dollars (Note 2) (in thousands) 2001 Salaries Export costs Sales promotion Sales commissions Sales warranties Taxes and dues Communications Utilities Freight and warehousing Rent Travel Service...

  • Page 65
    ... a five year period beginning in 2002, however, the entire amount was received in 2001. The Company also receives as annual royalty for ten percent of ordinary income of the Sales Division for motor parts for after-sales service for a ten year period starting in 2000. Interest on the principal of...

  • Page 66
    .... Accordingly, this report and the accompanying non-consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and auditing standards and their application in practice. Seoul, Korea, February 15, 2002 Hyundai Motor Company 2001 Annual Report 69

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  • Page 68
    ... E Headquarters Office : Hyundai Motor Company 231, Yangjae-dong, Seocho-Gu, Seoul, 137-938, Korea Tel. 82-2-3464-2545 Fax. 82-2-3463-3484 Namyang R& D Center, Design Center 772-1 Jangduk-Dong, Hwasung-Si Kyunggi-Do, Korea. Tel. 82-39-369-5114 Fax. 82-39-369-5116 Chunjoo Plant 800 Yongam-Ri Bondong...

  • Page 69
    www.hyundai-motor.com 2002 / 05 / IR / KJ