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Annual Report 2005
Hyundai Sublime Drive

Table of contents

  • Page 1
    Annual Report 2005 Hyundai Sublime Drive

  • Page 2
    ... 05 History of Hyundai Motor Company 07 Financial Highlights 09 Letter from the Chairman 11 Letter from the Vice Chairman 17 Leadership Achievements 19 Management Achievements 21 Product Quality Achievements 25 Product Quality 31 Concept Cars 35 R&D Network 39 Global Management 44 Motor Shows...

  • Page 3
    Hyundai...A Sublime Drive Elevate your senses to a higher plane, to an enlightened place of mind, through the sublime driving experience of a Hyundai motor car. Produced through the innovation of our collective vision.

  • Page 4
    ... century successive Sonata models, the EF and XG, earned Hyundai the highest possible accolades from international automotive press sustaining exports beyond 2000. The acquisition of Kia/Asia Motors and Hyundai Precision Industries and Hyundai Motor Service mergers endowed Hyundai Motor Company to...

  • Page 5
    ... Sales Net Income Total Assets Shareholder's Equity Earnings Per Share (Korean won, US dollars) Dividends Per Share (Korean won, US dollars) 58,831 2,324 65,891 19,640 10,696 1,250 2004 £Ü 53,101 1,642 58,023 16,756 7,193 1,150 2003 £Ü 46,588 1,793 53,427 15,429 7,909 1,000 2005 $58,076 2,294...

  • Page 6
    ... excitement reached a fever pitch with the opening of our first U.S.A manufacturing plant in Montgomery, Alabama. Hyundai Motor Manufacturing Alabama (HMMA) represents not only a boldly symbolic moment in our history but the fortification of our existing market share and a solid platform from which...

  • Page 7
    ...and human resources and other related channels. On the heels of the 2004 Sonata's number one ranking in the U.S.A in J.D. Power and Associates New Automobile Initial Quality Study, Hyundai Motor Company garnered top marks with respect to the best improvement in product quality in the 2005 J.D. Power...

  • Page 8
    ... business policies, Hyundai Motor Company forecasts investment to total 3.436 trillion Korean won in 750,000 Through our ongoing development in global markets and our continued progress in the development of environmentally friendly automobiles and automobile technologies, a rise in the brand value...

  • Page 9
    Enlightening The enlightened mind makes shrewd decisions. Every moment in our creative process is calculated towards the beauty and refinement of the end product. Through clarity of vision and the harnessing of human and global energies our goal is achieved.

  • Page 10
    ... success in an article entitled "Hyundai Gets Hip: How South Korea' s Leading Automaker Is Taking the Global Auto Industry by Storm." Over four million American readers read the feature story on Hyundai Motor Company. That the U.S.A edition, which accounts for 80 percent of the magazine's total...

  • Page 11
    ...Hyundai Motor Company Annual Report 2005 >> Sublime Drive 19 Corporate Confidence 'AAA' Accelerating Absolute Assurance Since 2004 Hyundai Motor Company has been rated Baa3 by financial ratings agency Moody's Investors. This endorsement means Hyundai commercial paper is rated as investment quality...

  • Page 12
    ... by paying close attention to owner feedback and designing products with both short- and long-term quality in mind." Significantly, Hyundai's all-new compact SUV, the 2005 Tucson, scored impressively in its first year of production, winning praise from J.D. Power as the highest quality all-new model...

  • Page 13
    Genius in Motion Genius flows from the river of imagination. In stirring rapids works the invigorated mind. The rising tide of Hyundai has landed.

  • Page 14
    ... Stability Control (ESC) with Traction Control. The midsize Sonata is the best-selling sedan in the Hyundai product line and the first 2006 model rolled off the production line in March at Hyundai' s all-new manufacturing plant in Montgomery, Alabama. The all-new Sonata was designed specifically...

  • Page 15
    ... "Best Bet" title - Car Book 2005 Received Recommended Buy Rating - Consumer Reports Awards Achieved Highest Quality all-new model rating - Initial Quality Survey (IQS), J.D. Power & Associates Selected "Best Quality Small SUV" - 2005 Strategic Vision Quality Study Chosen in "The Best Value Car...

  • Page 16
    Product Quality Hyundai Motor Company Annual Report 2005 >> Sublime Drive 29 Elantra Recalling its predecessor's reputation for quality and reliability, the all new Elantra has stepped up performance, redesigned its lines with curvaceous, but elegant styling, added room to its cabin and enhanced ...

  • Page 17
    ... o rt ing dynamism of a coupe with the versatility of a traditional wagon. Created at the Hyundai Motor Europe Tec hnic al Center, in Rüsselsheim , Germany, the Genus was developed as a D-segment vehicle with broad appeal to m any target group s. Thus, w ith its multi-use concept, the Genus can be...

  • Page 18
    Concept cars Hyundai Motor Company Annual Report 2005 >> Sublime Drive 33 Driving the Future At Hyundai Motor Company our commitment to future planning and development is best seen in our concept vehicles. The main aim of our design and development teams in Korea, Japan, Germany and California is...

  • Page 19
    ... technologies related to recycling, exhaust emission reduction, fuel efficiency improvement, and environmentfriendly next-generation vehicles. Hyundai & Kia Corporate R&D Division California Design & Technical Center Europe Technical Center America Technical Center Inc. Japan R&D Center Hyundai...

  • Page 20
    Collective Consciousness As a global company we draw from a global talent pool. We utilize the best minds from the four corners of the earth. Vehicles created by all people and for all people.

  • Page 21
    ... Motor Manufacturing Alabama (HMMA) The grand opening of the HMMA plant in May 2005 was possibly the most significant moment in the history of Hyundai Motor Company. Employing more than 2,000 skilled workers and utilizing 75 suppliers, the plant has begun its roll out of the all-new 2006 Sonata...

  • Page 22
    ... the opening of the giant manufacturing plant in Tamil Nadu. India is a central part of the BRIC's (Brazil, Russia, India and China) developing countries that will play a major global role as key economic centers of the future. HMI has been targeted as one of the key bases for Hyundai Motor Company...

  • Page 23
    ... of our participation in the North European automotive market. Also, our event starring Goleo, the official mascot of the 2006 FIFA World Cup Germanyâ„¢, and World Cup Zone were rapturously received at the 2005 Frank furt M o t o r Sho w . We also introduced the new Getz and Accent SR d esig ned...

  • Page 24
    ... EURO 2004â„¢ Hyundai FIFA Partnership On March 1st 2005, Hyundai Motor Company signed with FIFA to become one of six elite official FIFA partners from 2007 to 2014, sharing the values commitment and vision for promoting and developing the game on a global basis. This uplifted FIFA partnership will...

  • Page 25
    Peace of Mind Through using energy we must also create it. In creating products for life we must cherish life. Hyundai has always resolved to nurture land and people from across the globe for the benefit of current and future generations.

  • Page 26
    ... Project, Hyundai Motor Company completed the construction of its first hyd ro g en fueling st at io n lo c at ed at t he Hyundai & Kia America Technical Center in Chino, California. A state of the art facility, the fueling station produces 15kg of natural gas per day. Daily fueling capacity is...

  • Page 27
    ... Boxing Day Tsunami. We were actively involved in support services by providing donations and relief goods totaling US$1.5million. More importantly, we sent a team of 5,000 voluntary relief workers, comprising employees and dealers, to the affected areas. Hyundai Motor Company has a contingency plan...

  • Page 28
    ... R&D Center) 2. Hyundai - Kia America Technical Center Inc. (HATCI) 3. Hyundai - Kia California Design & Technical Center (HKMDTC) 4. Hyundai Motor Europe Technical Center GmbH (HME R&D) 5. Hyundai Motor Japan R&D Center (HMJ R&D) 6. Hyundai Motor Manufacturing Alabama (HMMA) 7. Hyundai Motor India...

  • Page 29
    Financial Statements: 57 58 61 63 Independent Auditors' Report Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Shareholders' Equity 65 Consolidated Statements of Cash Flows 68 Notes to Consolidated Financial Statements

  • Page 30
    ...,466 million in 2005 and £Ü 98,855 million in 2004 Total current assets Non-current assets: Long-term financial instruments (Note 17) Long-term investment securities (Notes 5 and 17) Investment securities accounted for using the equity method (Notes 6 and 17) Property, plant and equipment, net of...

  • Page 31
    ... discount of £Ü 2,009 million in 2005 and £Ü 3,002 million in 2004 (Note 14) Trade notes and accounts payable Accrued warranties and product liabilities Accounts payable-other Accrued expenses Income tax payable Other current liabilities Total current liabilities Long-term liabilities: Long-term...

  • Page 32
    ... of investments accounted for using the equity method, net Gain on valuation of investment securities Gain (loss) on disposal of investments and other assets, net Loss on disposal of trade receivables Loss on disposal of property, plant and equipment, net Royalty income Reversal of loss (Loss) on...

  • Page 33
    ... Loss on valuation of investment equity securities Stock options Cumulative translation debits Loss on transaction of derivatives Minority interests Others December 31, 2005 £Ü 4,717,986 £Ü 19,640,409 $19,388,360 See accompanying notes to consolidated financial statements. £Ü 4,000...

  • Page 34
    ... outflows from investing activities: Purchase of short-term financial instruments Acquisition of short-term investment securities Additions to other current assets Acquisition of long-term investment securities Additions to other assets Acquisition of property, plant and equipment Expenditures for...

  • Page 35
    ...: Kia Motors Corporation (KIA) Hyundai HYSCO Hyundai Capital Service Inc. (HCS) Hyundai Card Co., Ltd. KEFICO Corporation Hyundai Powertech WIA Corporation (WIA) Dymos Inc. (DYMOS) Automobile Industrial Ace Corporation ROTEM Haevichi Resort Manufacturing ˝ Financing service ˝ Manufacturing...

  • Page 36
    ... Co. Inc Sales Bejing Hyundai Hysco Steel Process Co., Ltd. Manufacturing Hyundai-Kia Machine America Corp. (HKMA, formerly Kia Heavy Industries U.S.A., Corp.) ˝ Hyundai-Kia Machine Europe GmbH (HKME, formerly Hyundai Machine Tools Europe GmbH) ˝ Wia Automotive Parts (WAP) ˝ 100,636 205,780...

  • Page 37
    ...Europe Technical Center GmbH (HMETC), Hyundai Assan Otomotive Sannayi Ve Ticaret A.S.(HAOSVT), Hyundai Motor Group (China) Ltd., Hyundai Jingxian Motor Safeguard Service Co. Ltd. and Wia Automotive Parts (WAP), to its consolidated subsidiaries due to the acquisition of ownership enabling the Company...

  • Page 38
    ... risks and rewards of ownership of the goods have been transferred to the customer, and neither continuing managerial involvement nor effective control over the goods sold is retained. Revenue arising from rendering of services is generally recognized by the percentageof-completion method at the...

  • Page 39
    ... DECEMBER 31, 2005 AND 2004 HYUNDAI MOTOR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 75 Investment Securities Accounted for Using the Equity Method The Company assesses any possible recognition of impairment loss when there...

  • Page 40
    ... The Company and its subsidiaries compute total compensation expense to stock options, which are granted to employees and directors, by the fair value method using the option-pricing model. The compensation expense has been accounted for as a charge to current operations and a credit to capital...

  • Page 41
    .... 4. SHORT-TERM INVESTMENT SECURITIES: Short-term investment securities as of December 31, 2005 consist of the following: Deferred tax assets and liabilities are classified as current or non-current based on the classification of the related assets or liabilities for financial reporting and...

  • Page 42
    ... Korea Information Service, Inc. Jin Heung Mutual Savings Bank Daewoo Engineering & Construction Co., Ltd. Hyundai Heavy Industries Co., Ltd. Daewoo International Corporation Hyundai Information Technology Co., Ltd. LG Telecom, Ltd. Hyundai Development Company Hyundai Corporation Doosan Industrial...

  • Page 43
    ... the acquisition cost and the book value stated at fair value in short-term investment securities and long-term investment securities are recorded in capital adjustments (See Note 16). Specialty Co., Ltd. Yonhap Capital Co., Ltd. Wisco Co., Ltd. Hyundai Finance Corporation Daejoo Heavy Industry Co...

  • Page 44
    ... Service Co., Ltd. (*1) NGVTEK.com (*1) Hyundai-Motor Group China Ltd. (*1) Seoul Metro 9th line (*2) Michigan Global Culture Investment (*1) Amco Corp. Heesung PM Tech Corporation Dongyong Industries Co., Ltd. Hyundai RB Co., Ltd. Jinil MVC Co., Ltd. Mobil.Com Co., Ltd. Clean Air Technology...

  • Page 45
    ... into U.S. Dollars (Note 2) (In thousands) Companies Acquisition cost 168 2,213 10,786 10,501 13,905 4,890 5,530 251,013 Book value Book value Ownership percentage (*2) 0.22 0.02 Government bonds Corporate bonds Description Acquisition cost £Ü 12,545 49,200 61,745 The Korea Economy Daily Co...

  • Page 46
    ...Yan Ji Kia Motors A/S Hysco Slovakia S.R.O Hyundai Information System North America Beijing-Hyundai Motor Company HAOSVT (Turkey) Donghui Auto Co., Ltd. Korea Space & Aircraft Co., Ltd. Global Engine Alliance, LLC Global Engine Manufacturing, LLC PT. Kia Timor Motors Korea Economy Daily TRW Steering...

  • Page 47
    ... DECEMBER 31, 2005 AND 2004 HYUNDAI MOTOR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 91 The changes in investment securities accounted for using the equity method in 2004 are as follows: 7. LEASED ASSETS: The Company and its...

  • Page 48
    ... and Machine Tool Division of Hyundai MOBIS (Formerly Hyundai Precision and Industry Co., Ltd.), the carrying amount of cost in excess of fair value of net identifiable assets acquired, amounting to £‹ 461,107 million (US$455,190 thousand), is accounted for as impairment loss and charged to...

  • Page 49
    ... and rental deposits Long-term deposits Deferred gain on valuation of derivatives Long-term loans, net of allowance for doubtful accounts of £Ü 5 million in 2005 and nil in 2004 Other 2005 2004 2005 2004 Description Debentures Won currency loans: Capital lease Reorganization claims General...

  • Page 50
    ...TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 97 The maturity of long-term debt as of December 31, 2005 is as follows: Translation into U.S. Dollars (Note 2) (In thousands) The Company completed stock retirement of 1,320,000 common shares of treasury stock on...

  • Page 51
    ... 2005 AND 2004 HYUNDAI MOTOR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 99 (1) Treasury stock For the stabilization of stock price, the Company has treasury stock consisting of 11,416,470 common shares and 2,950,960 preferred...

  • Page 52
    ... HYUNDAI MOTOR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 101 19. INCOME TAX EXPENSE AND DEFERRED INCOME TAX ASSETS (LIABILITIES): Income tax expense in 2005 and 2004 consists of the following: Translation into U.S. Dollars...

  • Page 53
    ... Corp. Aju Metal Co., Ltd. ROTEM Mseat Co., Ltd. Hyundai Motor America Hyundai America Technical Center Inc. Hyundai Motor India Hyundai Motor Japan Co. Hyundai Motor Manufacturing Alabama, LLC Hyundai Motor Poland Sp. Zo. O Hyundai Motor Company Australia Hyundai-Kia Machine Europe Gmbh Hyundai...

  • Page 54
    ...Kia Motors Corporation Dymos Inc. Hyundai America Technica Center Inc. Hyundai Capital Service Inc. Autoever Systems Corp. Kia Motors Corporation Hyundai Card Kia Motors Corporation Hyundai Capital Service Inc. Hyundai Card Hyundai HYSCO Dymos Inc. Korea Rolling Stock Corp WIA Corporation Hyundai...

  • Page 55
    ... Hyundai Capital Service Inc. ROTEM Hyundai Card KEFICO Corporation Dymos Inc. Hyundai Powertech WIA Corporation Kia Motors Corporation Mseat Co., Ltd. Autoever Systems Corp. Hyundai HYSCO Aju Metal Co., Ltd. Hyundai Autonet Co., Ltd HMCA HME Hyundai Motor America Hyundai Motor Manufacturing Alabama...

  • Page 56
    ... Corporation Hyundai Card Hyundai Motor Manufacturing Alabama, LLC AIA Corporation Aju Metal Co., Ltd. M.Seat Co., Ltd. Hyundai America Technical Center Inc. World Marketing Group LLC Hyundai-Kia Machine America Corp Kia Motors America Inc. Hyundai Motor Europe GmbH Hyundai Motor Finance Company...

  • Page 57
    ...,196 Dymos Inc. Kia Motors Corporation Hyundai Motor Company Beijing Hines Millennium Real Estate Development Equus Cayman Finance Ltd. Hyundai Card Co., Ltd Other domestic companies Kia Motors Slovakia Kia Motors(UK) Ltd Kia Motors Europe Gmbh Kia Motors Australia. Pty Ltd WIA Corporation Beijing...

  • Page 58
    ...100 thousand). 25. SEGMENT INFORMATION: (1) Consolidated financial statements by industry 114 (3) The Company and its subsidiaries have used a customer financing system related to a long-term installment sales system and have provided guarantees to related banks amounting to £‹ 136,527 million...

  • Page 59
    ... industry Current assets: Non-current assets: Investments, net of unamortized present value discount Property, plant and equipment, net of accumulated depreciation Intangibles, net of amortization Other financial business assets Total non-current assets Total assets LIABILITIES AND SHAREHOLDERS...

  • Page 60
    ... the recognizable fair value was recorded as goodwill. (2) Effective January 1, 2005, WIA Corporation acquired both Machine Tool Engineering department of HMC with assets and Domestic North America Asia Europe Consolidation adjustments Consolidated amounts Total sales Inter-company sales Net...

  • Page 61
    ...financial statements. 29. CHANGES OF SUBSIDIARY NAME: Effective January 1, 2006, Aju Metal Co., Ltd. changed its firm name to Metia Corporation. Also, in 2005, Kia Heavy Industries U.S.A. Corp and Hyundai Machine Tools Europe GmbH also changed their company names to Hyundai-Kia Machine America Corp...

  • Page 62
    Full Line-up Centennial (Equus) Azera (Grandeur) Sonata Elantra (Avante) Terracan H-1 (Starex) H-100 Truck (Porter) H-1 Truck (Libero) Hyundai Coupe (Tuscani) Matrix (Lavita) Accent (Verna) Getz (Click) Mighty-II 5 Ton Cargo Tractor Dump Truck Santa Fe Tucson Trajet (Trajet XG) ...

  • Page 63