Hyundai 2003 Annual Report Download - page 47

Hyundai Motor Company Annual Report 2003 _9291_Hyundai Motor Company Annual Report 2003
HYUNDAI MOTOR COMPANY AND SUBSIDIARIES HYUNDAI MOTOR COMPANY AND SUBSIDIARIES
(1) Treasury stock
For the stabilization of stock price, the Company has treasury stock consisting of 889,470 common shares and 3,138,600
preferred shares with a carrying value of 89,706 million (US$74,892 thousand) as of December 31, 2003 and 1,005,570
common shares and 3,167,300 preferred shares with a carrying value of 73,036 million (US$60,975 thousand) as of December
31, 2002, acquired directly or indirectly through the Treasury Stock Fund and Trust Cash Fund. In addition, the Company’s
ownership portion of subsidiaries’ treasury stock held by themselves, amounting to 3,485 million (US$2,910 thousand) and
13,478 million (US$11,252 thousand) as of December 31, 2003 and 2002, respectively, are included in the treasury stock.
(2) Discounts on stock issuance
Certain subsidiaries accounted for expense on issuance of new stock as discounts on stock issuance. The Company’s
ownership portion of these discounts amounting to 3,015 million (US$2,517 thousand) and 374 million (US$312 thousand)
is accounted for as a debit to capital adjustments as of December 31, 2003 and 2002, respectively.
(3) Stock option cost
The Company granted directors stock options at an exercise price of 26,800 (grant date: February 14, 2003, beginning date
for exercise: February 14, 2006, expiry date for exercise: February 13, 2011) and of 14,900 (grant date: March 10, 2000,
beginning date for exercise: March 10, 2003, expiry date for exercise: March 9, 2008). These stock options all require at least
two-year continued service starting from the grant date. If all of the stock options as of December 31, 2003 are exercised,
2,352,200 shares (1,492,000 shares and 860,200 shares for the options granted as of February 14, 2003 and March 10, 2000,
respectively) will be issued as new shares or using treasury stock or will be compensated by cash, according to the decision of
the Board of Directors. In 2003, 429,800 shares of stock options granted as of March 10, 2000 were exercised by directors.
The Company calculates the total compensation expense using an option-pricing model. In the model, the risk-free rate of
4.94% and 9.04%, an expected exercise period of 5.5 years and an expected variation rate of stock price of 63.29 percent and
71.1 percent are used for the options granted as of February 14, 2003 and March 10, 2000, respectively. Total compensation
expenses amounting to 17,088 million (US$14,266 thousand) and 11,832 million (US$9,878 thousand) for the options
granted as of February 14, 2003 and March 10, 2000, respectively, have been accounted for as a charge to current operations
and a credit to stock option cost in capital adjustments over the required period of service (two years) from the grant date
using the straight-line method.
(4) Cumulative translation adjustments
Cumulative translation debits of 32,503 million (US$27,136 thousand) and 70,923 million (US$59,211 thousand) as of
December 31, 2003 and 2002, respectively, which result from the translation of financial statements of overseas subsidiaries
and the two branches located in the United States, are included in capital adjustments on the basis set forth in Note 2.
(5) Gain (loss) on valuation of derivatives
The gain (loss) on valuation of the effective portion of derivative instruments for cash flow hedging purpose from forecasted
exports is included in capital adjustments on the basis set forth in Note 2. The Company recorded a loss of 83,863 million
(US$70,014 thousand) and a gain of 22,900 million (US$19,118 thousand) as of December 31, 2003 and 2002, respectively.
17. PLEDGED ASSETS, CHECKS AND NOTES
As of December 31, 2003, the following assets, checks and notes are pledged as collateral:
(1) The Company’s and its domestic subsidiaries’ property, plant and equipment are pledged as collateral for various loans to
a maximum of 3,265 billion ($2,726 million).
(2)The Company’s and its domestic subsidiaries’ cash and cash equivalents of 13,115 million ($10,949 thousand),financial
instruments of 196,346 million ($163,922 thousand), some investment securities including 4,183,466 shares for Kia,
4,400,000 shares for Eukor Car Carriers Inc. and others are pledged as collateral for various borrowings, debentures,
payables, lease agreements, guarantees of a customer financing system and others.
(3)Certain overseas subsidiaries’ receivables, inventories and other financial business assets are pledged as collateral for their
borrowings.
(4)132 blank checks, 246 blank promissory notes, 2 checks amounting to 6,624 million ($5,530 thousand) and
4 promissory notes amounting to 10,320 million ($8,616 thousand) are pledged as collateral to financial institutions and
others.