Kia 2004 Annual Report Download - page 82

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The maturities of long-term debt as of December 31, 2004 are as follows:
12. COMMITMENTS AND CONTINGENCIES:
(1) As of December 31, 2004, the outstanding balance of installment accounts receivable and notes receivable discounted with recourse amounts to ￦79,555
million (US$76,216 thousand) and the outstanding balance of accounts receivable from export sales discounted with recourse amounts to ￦2,336,666 million
(US$2,238,614 thousand).
(2) The Company uses a customer financing system related to a long-term installment sales system and has provided guarantees of ￦32,531 million (US$31,165
thousand) to the banks concerned as of December 31, 2004. These guarantees are all covered by insurance contracts, which regulate a customer and the Company
as a contractor and a beneficiary, respectively. In addition, the Company provides payment guarantee to Chohung Bank London Branch amounting to GBP
6,670,000 from July 1, 2004 through June 30, 2005 on behalf of Kia Motors (UK) Ltd., a related party.
(3) The Company is a defendant to seven lawsuits for com pensation of losses or damages amounting to ￦6,513 million (US$6,239 thousand) as of December 31,
2004. Although the outcome of these matters is not currently determinable, the managem ent believes that the resolution of these matters will not have a material
adverse effect on the operations or financial position of the Com pany.
(4) The Company is carrying certain lawsuits pertaining to the disputes with the Brazilian shareholders of Asia Motors Do Brasil S.A. (AMB) and AMB, which was
established as a joint venture by Asia Motors with a Brazilian investor, in local and Brazilian court. In 2002, the Company brought the case to the International Court
of Arbitration to settle the disputes pursuant to the terms of contract signed at the time of the inception of the joint venture, which stipulates that in case the
business has been adversely affected by a party s failure to comply with contract term s and other reasons, the matter should be taken before the International Court
of Arbitration for settlem ent and parties shall be held accountable according to the results. The case was decided in favour of the Com pany on July 22, 2004, and
this ruling by an internationally-recognized dispute-settling organization is believed to set a precedent for a favourable resolution of all the remaining lawsuits in
progress in Brazil. In addition, the Com pany, shareholder of AMB, has already written off this investment of ￦14,057 million (US$13,467 thousand). Although the
outcome of these matters is not currently determinable, the management believes that the resolution of these matters will not have a material adverse effect on
the operations or financial position of the Company.
(5) The Company made an agreem ent with its 9 European sales subsidiaries and agents for them to be responsible for projected costs for dismantling and recycling
vehicles sold in corresponding countries to com ply with European Parliament directive regarding End-of-Life vehicles (ELV).
13. DISPOSAL OF RECEIVABLES, LONG TERM INVESTMENT SECURITIES AND PROPERTIES
The Company 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 Com pany 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 Com pany 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.
Notes to Non-Consolidated
Financial Statements As of December 31, 2004 and 2003
82
KIA Motors_2004 Annual Report
198,322
208,760
–
–
407,082
￦
￦
85,053
83,484
79,911
15,811
264,259
￦
￦
16,997
342,570
16,997
17,006
393,570
￦
￦
300,372
634,814
96,908
32,817
1,064,911
￦
￦
287,768
608,176
92,841
31,440
1,020,225
＄
＄
Year Debentures Local currency
loans
Foreign currency
loans Total Total
2006
2007
2008
Thereafter
Korean won
(In millions) U.S. dollars (Note 2)
(In thousands)