Hyundai 2004 Annual Report Download - page 63

Hyundai Motor Company Annual Report 2004_124
HYUNDAI MOTOR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003
(6) Effective June 4, 2003, Hyundai Card Co., Ltd. merged First CRV, which had been the sole owner of Hyundai Card Co., Ltd., by
issuing new common stock for its shareholders. Applying the pooling of interest method, Hyundai Card Co., Ltd. recorded acquired
assets and liabilities on a basis of the carrying amount as of the merger date. Through this issuance of new common stock, the
treasury stock of 118,295 million (US$113,331 thousand) held by Hyundai Card Co., Ltd. was all retired in accordance with
approval at the shareholders’ meeting on September 3, 2003.
(7) Effective July 1, 2003, Autoever Systems Corp. entered into a sales contract of Used Cars Auction Business division with Glovis
Co., Ltd. under the decision of the board of directors on June 10, 2003. In accordance with the contract, Autoever Systems Corp.
transferred the assets and liabilities of 1,141 million (US$1,093 thousand) and 1,350 million (US$1,293 thousand),
respectively, and paid cash of 209 million (US$200 thousand) for the excess of transferred liabilities over transferred assets.
28. SALES AND ACQUISITION OF ASSETS:
(1) Effective March 5, 2004, WIA Corporation acquired plant equipments by the payment of 22,258 million (US$21,324 thousand)
from Kovico. Ltd. in accordance with the decision of the board of directors on February 28, 2004. The excess cost of the acquisition
over the fair value of the plant equipments, amounting to 5,151 million (US$4,935 thousand), is recorded as goodwill.
(2) Kia Motors Corporation entered into a trust contract for maintenance and disposal of receivables, long-term investment securities
and properties (book value of 154,892 million (US$148,392 thousand)) of the Company with Woori Bank (“trustee” hereinafter)
on December 27, 2004, and received Class A Certificate and Class B Certificate for the trust contract from the trustee on December
30, 2004. The Company disposed the Class A Certificate (face value of 158,000 million (US$151,370 thousand)) to Pilot Asset
Securitization Specialty Co. Also, the Company entered into a lease contract (lease period: 2 years and 6 months) on the trusted
property (land and buildings) with Woori Bank. Also, the Company did not recognize the value of the Class B Certificate from the
trust contract of property on the balance sheet due to the uncertainty of inflow of economic benefits in the future. As result of this
transaction, the Company recorded 6,308 million (US$6,043 thousand) of gain on disposal of investments and 3,482 million
(US$3,336 thousand) of loss on disposal of property, plant and equipment as other income and other expenses in 2004.
(3)Hyundai Hysco made a consortium with INI Steel and entered into a contract for acquisition of assets of Hanbo Iron & Steel Co.,
Ltd., effective July 31, 2004, to satisfy the increasing demand of steel plate (specially coated steel plate) used for vehicle
manufacture. On October 1, 2004, the consortium acquired the assets by the payment of remaining consideration on September
10, 2004.
29. THE STOCK RETIREMENT OF SUBSIDIARIES:
Kia Motors Corporation completed retirement of 12,500,000 shares and 10,000,000 shares of treasury stock, which were acquired
at 136,700 million (US$130,964 thousand) and 88,742 million (US$85,018 thousand), respectively, for the purpose of such
retirement based on the decision of the board of directors on March 19, 2004 and May 9, 2003, respectively.
HYUNDAI MOTOR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003
26. DISPOSAL OF RECEIVABLES IN FINANCIAL SUBSIDIARIES:
Hyundai Capital Service Inc., Hyundai Card Co., Ltd. and Hyundai Motor Finance Company dispose their finance receivable assets to
special purpose companies or financial intermediaries for the purpose of funding its operating capital. Hyundai Capital Service Inc.
disposed such assets of 4,366,544 million (US$4,183,315 thousand) and 6,154,972 million (US$5,896,697 thousand) in 2004
and 2003, respectively, with a resultant net gain of 24,180 million (US$23,165 thousand) and 25,216 million (US$24,158
thousand) in 2004 and 2003, respectively. Also, Hyundai Card Co., Ltd. disposed its finance receivable assets of 1,338,602 million
(US$1,282,432 thousand) and 549,555 million (US$526,495 thousand) in 2004 and 2003, respectively, on a basis of the carrying
amount. The gain on disposal of finance receivables assets were accounted for as operating income and included in sales in the
consolidated financial statements.
27.MERGER AND SALES OF BUSINESS DIVISION BETWEEN SUBSIDIARIES:
(1) Effective November 5, 2004, the Company merged with Hyundai Commercial Vehicle Engine Co., Ltd. (HCVE) with assets of
125,110 million (US$119,860 thousand) and liabilities of 127,418 million (US$122,071 thousand) without issuing new
common stock for its shareholders (the exchange rate for merger – the Company : HCVE = 1 : 0). Since HCVE was a subsidiary
of the Company and in accordance with the Accounting Standards for Business Combination in the Republic of Korea, the excess
amount of 32,915 million (US$31,534 thousand) of the investment securities in HCVE over the carrying amount of acquired net
assets of the HCVE is accounted for as deduction in capital surplus.
(2) Effective February 1, 2004, Autoever Systems Corp. acquired On-Line Education Business division with assets of 446,639
million (US$427,897 thousand) and the related personnel from e-HD.com by cash payment of 941,139 million (US$901,647
thousand). Since both Autoever Systems Corp. and e-HD.com were subsidiaries of the Company and in accordance with the
Accounting Standards for Business Combination in the Republic of Korea, the excess amount of 494,500 million (US$473,750
thousand) of the cash payments over the carrying amount of acquired assets of e-HD.com is accounted for as deduction in
retained earnings instead of capital surplus, which does not exist.
(3) Effective February 1, 2004, ROTEM acquired Aircraft Business division from Hyundai MOBIS with assets and liabilities of
15,399 million (US$14,753 thousand) and 504 million (US$483 thousand), respectively, by cash payment of 14,895
million (US$14,270 thousand).
(4) Effective March 31, 2003, WIA Corporation merged with e-HD.com by issuing new common stock for its shareholders (the
exchange rate for merger – WIA Corporation : e-HD.com = 1 : 0.0162). WIA Corporation recorded acquired assets and liabilities
of 40,507 million ($38,807 thousand) and 35,028 million (US$33,558 thousand), respectively, on a consolidated basis of the
carrying amount as of the merger date.
(5) To prohibit having competition with GE Capital Korea Ltd., the subsidiary of GE Holdings, which has the same business with Hyundai
Capital Service Inc. (HCSI), one of the Company’s domestic subsidiaries, after GE Holdings’ acquisition of HCSI’s shares, HCSI
entered into a business transfer contract with GE Capital Korea at the extraordinary shareholders’ meeting on October, 1, 2004,
wherein GE Capital Korea transferred the right of business of installment financing for new or used vehicles made by the Company
and Kia Motors Corporation, tangible assets related to such right of business (including lease contract of sales office and related
fixtures and equipments) and related employees. In accordance with such business transfer contract, HCSI paid 17,958 million
(US$17,204 thousand) for the considerations of the business transfer. According to the business transfer agreement, the
considerations of the business transfer on the personal credit loans are to be paid depending on the personal credit loan business
performance (net income that are computed by the agreed earn-out payment model) in three years from the business transfer date.