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Annual Report 2005
The Power to Surprise

Table of contents

  • Page 1
    Annual Report 2005 The Power to Surprise

  • Page 2
    ... years, KIA Motors has been on a quest to produce ever better vehicles, starting out humbly in domestic markets, and gradually gaining confidence globally. Over time we have expanded our domestic and overseas market share. Our brand image has been burnished as millions of satisfied customers equated...

  • Page 3
    ... Review 120 IR Information 122 Five-Years Summary 123 Brand Strategy 124 Management for Sustainable Growth 125 Board of Directors 126 Global Networks This annual report contains performance results, financial data as well as the business outlook and strategies of Kia Motors Corp. The statements...

  • Page 4
    In the last few years, Kia Motors has been changing...strengthening the power of our brands, the power of our technology, the power of our design and the power of our people. This change positions us to lead our markets in outstanding and sustainable ways. Indeed, it is giving us 2 KIA MOTORS

  • Page 5
    ...of Your Life The Picanto is not just a car; it's your fashion statement designed for safety and that special feel. And the 1,000cc engine will provide a freedom that's yours alone. It will be love at first sight, and the car will continue to grow on you the longer you drive it. 5 2005 Annual Report

  • Page 6
    ... by Passion The fun starts here That delightful little model that everyone loves is back. The moment you sit in the driver's seat you can feel the youthful passion from steering wheel design to pedals, switches and dashboard color and lighting. The allure and the excitement continue. 6 KIA MOTORS

  • Page 7
    Gentleness on the Road A reflection of your good taste You've worked hard. Let yourself know you appreciate it. The Lotze has all the features you'd expect in a stylish, sporty sedan with a refined ambiance. We've given Lotze a sleek new body design and more interior room so you and your passengers ...

  • Page 8
    ... world of the Opirus Any car fine enough to lead the times provides special satisfaction. The Opirus boasts the magnificent styling, cutting-edge technology and extravagant interior to be the trendsetter today. This is the ultimate sedan-the standard to which all other sedans aspire. 8 KIA MOTORS

  • Page 9
    ... for Challenge It's time for a new start with Sportage. You can meet the challenge of daily life. The Sportage with luxurious European styling is the compact SUV of choice. It rides as comfortably and quietly as a sedan and boasts the highest safety performance in its class. 9 2005 Annual Report

  • Page 10
    Let the Good Times Roll You ticked to a world of unexplored possibilities More than powerful, the Sorento is beautiful. Curtain-type airbags and upgraded features take safety and luxury to new heights for added value and greater satisfaction. 10 2005 KIA Annual MOTORS Report

  • Page 11
    ... all driving conditions, with the looks and power to lead in its class. The noble character of this minivan remains unchanged over time, and its quality is well documented: The Carnival is sold in over 70 countries, and it won top marks for customer satisfaction in the US. 11 2005 Annual Report

  • Page 12
    > > Chairman's Message Mong-Koo Chung Kia Motors Corporation Chairman & CEO 12 KIA MOTORS

  • Page 13
    Kia Motors has launched a brand management strategy that differentiates us from our peers. We have our sights set on establishing greater presence in global markets and are on the right t rack in doing so. Appraisals from t he independent media overseas and rating agencies keep getting better. Kia ...

  • Page 14
    ...ever. We w orked hard to gain acceptance in Western Europe, and the EU expansion in recent years has made t he region a hot ly cont est ed ground for global car companies. We chalked up the number 1 sales growth rate in this key region for the third year consecut ively. This furt her solidified our...

  • Page 15
    ...-), and JD Power selected our Sportage & Opirus models as the best vehicle types in the APEAL study. expectations of our shareholders. The past year was filled w ith challenging global export conditions, especially in central Asia, where higher oil prices became entrenched and the value of the USD...

  • Page 16
    ... reduce costs associated with logistics. And by providing employment to skilled employees abroad, the European plant will shift KIA Motors image from being " M ade in Korea" to a more global " Made in Europe" . I w ould like to urge all of our stockholders to follow the progress made as new lines...

  • Page 17
    ...2005 Sales revenue Cost of sales 2004 2003 15,999,356 13,732,641 15,257,742 12,421,361 12,839,881 10,084,078 Gross profit Selling and administrative...752,857 SUMMARIZED NON-CONSOLIDATED BALANCE SHEETS (Korean won in millions) 2005 Current assets Non-current assets 2,912,851 8,328,934 2004 ...

  • Page 18
    The Pow er to Grow > >

  • Page 19
    ...fact that KIA Motors is on the verge of becoming a more prominent global automobile maker can be seen in various parts of the world. The KIA brand has gained popularity in both the U.S. and Europe. We are making good headways into China. Having already surpassed the 5 million export mark, our sights...

  • Page 20
    ... economies of the markets we operate, and to bring about positive effects. We are redoubling our resolve to press towards the 10 million vehicle milestone. This goal can only be achieved through developing the w orld's highest standards in terms of product quality and services. 20 KIA MOTORS

  • Page 21
    The Power to Satisfy The Power to Excite e f f o r t s t o u p g r a d e t h e q u a l i t y o f o u r v e h i cl e s a n d d i st r i b u t i o n n e t w o r k s. 21 2005 Annual Report

  • Page 22
    The Pow er to Grow The Power to Realize The Zilina plant w ill operat e co m p r e h e n si v e m a n u f a ct u r i n g a ct i v i t i e s, 22 KIA MOTORS

  • Page 23
    ...the global management of KIA M otors -- it w ill take us to the next level of competitiveness. By producing an exclusively European model, researched & developed locally in Europe, and selling over 300,000 vehicles locally per year, w e w ill strengthen our presence in the market. The Slovakia plant...

  • Page 24
    ...in March 2006. The West Point site seemed an ideal location given that the Hyundai Motors plant is located a short distance away, about 134km north east of M ontgomery (Alabama). Both Hyundai and KIA w ill be able to leverage our presence to push down parts supply costs. We plan to invest a total of...

  • Page 25
    ... h e w o r l d , t h r o u g h a l l K i a ' s sp e ci a l l i n e u p . Hyundai-Kia M ot ors America Technical Cent er Hyundai-Kia M ot ors Design & Technical Cent er Hyundai-Kia M ot ors Calif ornia Proving Ground KIA M ot ors America KIA M ot ors M anuf act uring Georgia 25 2005 Annual Report

  • Page 26
    The Pow er to Grow The Power to Realize W e a ch i e v e d t h e h i g h e st g r o w t h r a t e s i n Eu r o p e a n d o u r co m p a ct d e si g n s, 26 KIA MOTORS

  • Page 27
    ... of the Slovakia plant later in the year, bode well for us as we seek to gain further trust and acceptance within European market. Our 'Exciting & Enabling' sports marketing campaign targeting soccer and tennis events also helped us tap into dynamic new customer segments. 27 2005 Annual Report

  • Page 28
    The Pow er to Realize > >

  • Page 29
    KIA Motors now projects an exciting and enabling brand image throughout the entire world. Our future-orientated brand image portrays sleek creative designs that offer the latest automobile technology. The release of technologically superior new models has helped us forge our brand image domestically...

  • Page 30
    The Power to Grow The Pow er to Realize We have initiated a mid to longterm brand strategy that focuses us on becoming entrenched as a top global brand. 30 KIA MOTORS

  • Page 31
    ... including product development, design, marketing and after sales service. in unique mix of exclusive benefits for our customers; these will encompass overall g In 2005 we announced a global management blueprint that included specific brand strategies such as brand direction, brand slogan...

  • Page 32
    The Power to Grow The Pow er to Realize S t r at eg ic Co m e De t in si p Ra n k gn g App wi roac h d th t he Wo e rl To p d C las s 10 Auto makers Tr en dy De sigKIA MOTORS n 32

  • Page 33
    ... sister company Hyundai Motor, marks a significant change in strategy, as its other existing design centers located throughout the world are jointly operated. Through a separate facility, Kia Motors will be able to further strengthen its goal of designing high quality vehicles with European-oriented...

  • Page 34
    ... M ichigan, the Hyundai-Kia America Technical Center was completed in October 2005. The tech center is supporting the development of cutting edge Hyundai and Kia products for the U.S. market. The center is devoted to activities such as research and analysis, design, emissions, durability testing...

  • Page 35
    The Power to Satisfy The Power to Excite n for the top passio r u O global resources aging and r e cap Lev ab il it ie s nds, powering te e r t g chn n i olo d gy Lea an d lo ok in g a ad he 35 2005 Annual Report

  • Page 36
    ..., and more interior space than the larger Honda Civic or Toyota Corolla. KIA Motors launched the new Carnival (Sedona) in July 2005. Already a popular choice for buyers looking for value, quality and safety, the com plet ely redesigned m inivan of f ers m ore horsepow er t han it s predecessor...

  • Page 37
    The Power to Satisfy The Power to Excite With the release of strategic new models, we are aiming for new hearts domestically and overseas. 37 2005 Annual Report

  • Page 38
    The Pow er to Satisfy > >

  • Page 39
    ... its maximum speed. KIA vehicles are about meeting the lifestyles of a dynamic range of drivers. Innovation is the driving force behind each of our models, as the people of KIA bring their passions alive through better technology reflected in our integrated production cycles. 39 2005 Annual Report

  • Page 40
    The Power to Grow The Power to Realize Obtaining authorizations from global customers 40 KIA MOTORS

  • Page 41
    ... compact SUV model, the Sportage; continuing on from the favorable ratings of the Sorento SUV. Edmunds.com reported that the Sportage handled itself superior to its competitors including the Honda CR-V, Jeep Liberty, and Ford Escape. The site praised the Sportage not only for being the best of its...

  • Page 42
    .... KIA Motors has developed and implemented a 'Global Quality Management System (GQMS).' The GQMS transparently registers and improves all quality related issues that arise in the entire life cycle of the vehicle, from the development stage to after service. This advanced quality management system...

  • Page 43
    The Pow er to Satisfy The Power to Excite Pursuing key opportunities in excellent technologies 43 2005 Annual Report

  • Page 44
    The Power to Grow The Power to Realize Boasting the world's most safety 44 KIA MOTORS

  • Page 45
    ... the eight current minivan designs the Institute has rated, the Carnival is the only one that earned " Good" ratings in all three Institute tests. The Opirus (Amanti) received the 'Good' standard in frontal crash tests for large sized sedans conducted by the IIHS in June 2005. It therefore obtained...

  • Page 46
    ... countries Top ranked sales growth rate in the Western Europe automobile market for the third year running (2003~ 2005) Kia web site (www.kia.com) is ranked the most useful automobile manufacturer web site Chosen as Best AD of 2004 Won " the Best Marketing award" Rated the most economical car...

  • Page 47
    The Pow er to Satisfy The Power to Excite Raising the bar in quality and service 47 2005 Annual Report

  • Page 48
    The Pow er to Excite > >

  • Page 49
    ... is at the heart of KIA Motors as we focus on generating a buzz for our vehicles that embodies sports and adventure. Our total customer service must bring warmth to our loyal drivers and a sense of excitement for what's to come. We are not doing our jobs well unless KIA drivers feel a tingle of...

  • Page 50
    The Power to Grow The Power to Realize We are actively molding our image around excitement and adventure. 50 KIA MOTORS

  • Page 51
    ... Open since 2002, this event has created plenty of enthusiasm for our cars and given us an outstanding opportunity to publicly showcase our top-rate technology. These promotional efforts are paying off handsomely. Commercial advertisements are making a positive impact with viewers as Kia cars...

  • Page 52
    The Power to Grow The Power to Realize Do you enjoy adventure and speed? Welcome to the world of KIA Motors which zooms you to a new space. 52 KIA MOTORS

  • Page 53
    ... and North America without strains. The vehicle tires were only replaced once in the Ukraine and its oil replaced only once in Korea, the mid-point of his journey. Gerlach's successful completion of this 27,000km race without any special maintenance teams was a loud reminder that KIA vehicles truly...

  • Page 54
    ... gains using company assets, and clearer policies regarding the public release of information. Our various efforts to be a fair partner within our communities have been recognized by others. In gratitude of our social outreach efforts, in December 2005 KIA Motors was deemed a superior corporation in...

  • Page 55
    The Power to Satisfy The Pow er to Excite KIA brings smiles and comfort to people. 55 2005 Annual Report

  • Page 56
    The Power to Grow The Power to Realize We've launched the world's first environment technology research center with the aim of producing more environmentally-friendly automobiles. 56 KIA MOTORS

  • Page 57
    ... of its kind in the automotive industry. The newly built Hyundai-KIA Environment Technology Research Center will allow us to execute a unified environmental policy that covers the entire production process, from product development t hrough A/S. We w ant t o keep abreast of fut ure environment al...

  • Page 58
    Financial Review > >

  • Page 59
    ... will indeed be an important turning point for KIA Motors as we attempt to secure stable growth for the next decades to come. 060 076 077 079 080 081 083 119 Management's Discussion & Analysis Independent Auditors' Report Non-Consolidated Balance Sheets Non-Consolidated Statements of Income Non...

  • Page 60
    ... year, Hyundai and Kia Motors saw sales increases of 8.7% and 2.1%, respectively, thanks to their enhanced product quality and brand image. In Western Europe, their sales surpassed the 500,000-vehicle mark for the first time, boosted by the introduction of strategic new models and sports marketing...

  • Page 61
    ... of new models, aggressive advertising, and establishment of an after-sales service network. The concept of cost competitiveness encompasses new model development, mass production efficiency, indirect workforce productivity and financing; it affects both sales price competitiveness and profitability...

  • Page 62
    ... in Korea as 1,500cc or smaller can now be exported to Europe as 1,600cc or smaller. Thanks to the new legislation, domestic auto makers' international competitiveness is expected to climb, as we will be able to rationalize some of our R&D and test costs in the compact model segment. 62 KIA MOTORS

  • Page 63
    ... cars. And while many of the other players in the domestic RV market were hard hit, KIA's strong portfolio of customer preferred lines such as the Sportage, Sorento and Grand Carnival buffered us from severe losses. While we did experience lower RV sales compared to the previous year, our market...

  • Page 64
    ... our global management and through social welfare activities that remind consumers that we are a company that cares about communities. Overseas Business From the effects of the fall in exchange rates to the continual rise in oil and raw materials prices throughout the year, our management faced...

  • Page 65
    ...market share of 1.1% in 2004 and 0.8% in 2003. • European M/S 1.6% 1.1% 0.8% • European Market Retail Sales Volume (Units) 219,346 147,173 319,245 2003 * Source: ACEA 2004 2005 2003 * Source: Company data 2004 2005 Excluding the key regions of Europe and North America, 185,721 vehicles...

  • Page 66
    ...service involving our minivan models. To enhance sales promotions during the second quarter of 2006, our company will take a closer look at the factors that drive the replacement of old automobiles; we need better onsite support through front-line sales to better manage potential turnover customers...

  • Page 67
    ...vehicles. With the West European market now the largest trading bloc globally, KIA is keener than ever to penetrate this market. We will strengthen our brand image through diverse marketing and promotions activities linked to the 2006 World Cup in Germany. We are expanding the number of KIA dealers...

  • Page 68
    ... Regional Headquarters 18 Direct M anagement Branches 340 Dealerships 444 Worldw ide including North America ; overseas local sales companies as the strategic points Sex, age group, and income segments The continued rise in automobile purchases by females & their increased car usage rates...

  • Page 69
    ... the price tag of the vehicle. This in turn requires precise planning with regards to A/S maintenance and warranties; car makers must therefore offer a diverse range of after sales service solutions that meet the demands of various customer segments. New Business Prospects KIA is planning to...

  • Page 70
    ... our number 2 China plant will be completed in the second half of 2007. We will cap off further investments in a new US plant in the first half of 2009. These overseas plant investments will allow us to better hedge F/X risks, will lower logistics costs and enhance our image in these key markets by...

  • Page 71
    ... status in the future world markets based on improvements in quality and brand image. A stronger credit rating will strengthen our global positioning: it will allow us to borrow from capital markets at more favorable rates and offset some investment risks as we pursue more aggressive expansion plans...

  • Page 72
    ... cost-saving activities. Apart from the exchange rate impact, other causes of the fallen 2005 operating margin included a hike in raw material and secondary parts costs, a shrinking RV segment in the Korean market due to higher oil prices and tax, and the delayed launches of some of our new models...

  • Page 73
    ...able to pare down warranty expenses due to the replacement of old models by higher quality new models. As seen in the 'Initial Quality Study' (by JD. Power and Associates) survey, the quality of KIA products is continually improving. In the 2005 study, Kia's score (problems per 100 vehicles) was 140...

  • Page 74
    ... in the cash balance can be attributed to an increased working capital expenditure that resulted from keeping up investments such as R&D and other regular investments, as well as an increase in cash payments for materials for export vehicles. With the sales increase in the domestic market as well...

  • Page 75
    ...-out of new models such as new Carens and mid-large SUVs. Liabilities Current Liabilities Despite the increase in the production and sales of completely built-up vehicles, the trade payables turnover period decreased slightly due to a increase in 100% cash payment for material costs related to...

  • Page 76
    ... respects, the financial position of Kia Motors Corporation as of December 31, 2005 and 2004, and the results of its operations, changes in its retained earnings and its cash flows for the years then ended in conformity with accounting principles generally accepted in the Republic of Korea (See Note...

  • Page 77
    Non-Consolidated Balance Sheets AS OF DECEM BER 31, 2005 AND 2004 Korean Won (In millions) Translation into U.S. Dollars (Note 2) (in thousands) 2005 ASSETS 2004 2005 2004 Current assets : Cash and cash equivalents Short-term financial instrum ents Trade notes and accounts receivable, net of...

  • Page 78
    ... thousands) 2005 LIABILITIES AND SHAREHOLDERS' EQUITY 2004 2005 2004 Current liabilities : Short-term borrow ings (Note 10) Current m aturities of long-term debt and debentures, net of discount on debentures issued of Decem ber 31, 2005 and 2004 (Note 11) Trade notes and accounts payable (Note...

  • Page 79
    ...Income FOR THE YEARS ENDED DECEM BER 31, 2005 AND 2004 Korean w on (In millions, except per share amounts) Translation into U.S.dollars (Note 2) (In thousands, except per chare amounts) 2005 Sales (Note 23) 2004 15,257,742 2005 15,794,034 2004 15,061,937 15,999,356 Cost of sales 13,732,641...

  • Page 80
    ... YEARS ENDED DECEM BER 31, 2005 AND 2004 Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) 2005 Unappropriated retained earnings : Beginning of year Cum ulative effect of accounting changes (Note 2) Changes in retained earnings using the equity m ethod Stock retirem...

  • Page 81
    ... issued, net Com pensation expenses on stock options, net Gain on valuation of derivatives Gain on valuation of investm ent securities qualified to be accounted for using the equity m ethod Loss on disposal of accounts receivable Miscellaneous loss Changes in operating assets and liabilities...

  • Page 82
    ...from investing activities : Acquisition of short-term financial instrum ents Acquisition of long-term investm ent securities Acquisition of equity securities accounted for using the equity m ethod Acquisition of property, plant and equipm ent Acquisition of intangibles Additions to other assets 270...

  • Page 83
    ... of the plant in Zilina is in progress and will roll off the line by the end of 2006. As of December 31, 2005, the largest shareholder is Hyundai Motor Company, which holds 38.7 percent of the Company's stock. 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES : BASIS OF FINANCIAL STATEMENT PRESENTATION...

  • Page 84
    ... Company sold in the European Union region to comply with a European Parliament directive regarding End-of-Life Vehicles (ELV), in which manufacturers are financially responsible for a portion of the cost of dismantling and recycling of the vehicles placed in service. If the effect of the time value...

  • Page 85
    ... of are within one year from the balance sheet date, which are classified as short-term investment securities. Valuation of Securities Investments in securities are initially measured at cost, which consists of the market price of the consideration given to acquire them and incidental expenses...

  • Page 86
    ... is computed using the straight-line method based on the estimated useful lives of the assets as follows : Useful lives (years) Buildings and structures Machinery and equipm ent Tools, dies and m olds Vehicles Office equipm ent 20~ 40 15 5 5 5 The Company charges all financing cost to current...

  • Page 87
    ... Company and its employees each pay 4.5 percent of monthly pay to the Fund. STOCK OPTIONS The Company computes total compensation expense to stock options, which are granted to employees and directors, by fair value method using the option-pricing model. The compensation expense has been accounted...

  • Page 88
    ... common share for the years ended December 31, 2005 and 2004 are computed as follows: Korean w on Translation into U.S.dollars (Note 2) (In millions except per share amounts) (In thousands except per share amounts) 2005 Net incom e and ordinary incom e available to com m on share Stock option com...

  • Page 89
    ... securities on weighted average number of common shares outstanding for the years ended December 31, 2005 and 2004 is computed as follows : 2005 Number of shares Stock options, not exercised (*1) Stock options, exercised (*2) 2004 Weighted average number of common shares outstanding 199,466 198...

  • Page 90
    ...for-sale securities included in long-term investment securities as of December 31, 2005 consist of the following : Company Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) Acquisition cost Listed equity securities : KT Freetel Co., Ltd. Hyundai Developm ent Com pany...

  • Page 91
    ...The difference between the book value and the acquisition cost of available-for-sale securities as of December 31, 2005 and 2004 was accounted for gain on valuation of long-term investment securities reflected in capital adjustments, except for an impairment loss on investments of 2,000 million (US...

  • Page 92
    ... 2,692 (4) The Company has pledged the following long-term investment securities as collateral for respective investees and performance guarantees as of December 31, 2005 : Number of shares pledged SeAH Besteel Co., Ltd. Other Korean w on (In millions) Translation into U.S.dollars (Note 2) (In...

  • Page 93
    ... ent Co., Ltd. EUKOR Car Carriers, Inc. EUKOR Car Carriers Singapore Pte. China Millennium Corp. Hyundai- Motor Group Ltd. Partecs Com pany, Ltd. Haevichi Leisure Co., Ltd. Kia Motors Australia Pty Ltd. Yan Ji Kia Motors A/ S NGVTEK Com Book value Acquisition cost Net equity value 65,941 57,756 52...

  • Page 94
    ... Co., Ltd. Autoever System s Co., Ltd. EUKOR Car Carriers, Inc. EUKOR Car Carriers Singapore Pte. China Millennium Corp. Hyundai- Motor Group Ltd. Kia Motors Australia Pty Ltd. Yan Ji Kia Motors A/ S NGVTEK Com Kia Service Philippines Co. Book value Acquisition cost Net equity value 65,941 57,756...

  • Page 95
    ...to equity method accounting for the year ended December 31, 2005 are as follows : Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) Beginning of year Dong Feng Yueda-Kia Motors Co., Ltd. Hyundai MOBIS Kia Tigers Co., Ltd. Dym os Inc. WIA Corporation Haevichi Resort Co...

  • Page 96
    ...year Dong Feng Yueda-Kia Motors Co., Ltd. Hyundai MOBIS Kia Tigers Co., Ltd. Haevichi Resort Co., Ltd. Beijing Hyundai Mobis Autom otive Parts Co., Ltd. TRW Steering Co., Ltd. Dym os Inc. Hyundai Card Co., Ltd. Donghui Auto Co., Ltd. WIA Corporation Bontek Co., Ltd. Hyundai Hysco Co., Ltd. EUKOR Car...

  • Page 97
    ... Car Carriers Singapore Pte. (*) China Millennium Corp. Hyundai- Motor Group Ltd. Partecs Com pany, Ltd. (*) Haevichi Leisure Co., Ltd. (*) Kia Motors Australia Pty Ltd. (*) Yan Ji Kia Motors A/ S (*) NGVTEK Com (*) Acquisition / Disposition Gain / Loss Others (* * ) End of year End of year...

  • Page 98
    ... Car Carriers, Inc. EUKOR Car Carriers Singapore Pte. (*) China Millennium Corp. Hyundai- Motor group Ltd. (*) Kia Motors Australia Pty Ltd. (*) Yan Ji Kia Motors A/ S (*) NGVTEK Com (*) Kia Service Philippines Co. (*) Acquisition / Disposition Gain / Loss Others (* * ) End of year End of year...

  • Page 99
    ... financial information of the affiliates as of December 31, 2005 is described as follows : Company Assets Kia Motors Am erica, Inc. Kia Canada, Inc. Kia Motors Deutschland Gm bH Kia Motors Europe Gm bH Kia Japan Co., Ltd. Kia Motors Slovakia Dong Fen Yueda-Kia Motors Co., Ltd. Hyundai MOBIS Kia...

  • Page 100
    ... Financial Statements FOR THE YEARS ENDED DECEM BER 31, 2005 AND 2004 (6) The market price of listed equity securities as of December 31, 2005 is as follows : Company Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) Price per share Number of shares Hyundai...

  • Page 101
    ...). In addition, the Company carries general insurance for vehicles and workers' compensation and casualty insurance for employees. Also, the Company has insurance to cover potential product liability arising from its product liability claims in North America and Europe with maximum coverage of...

  • Page 102
    ... ent costs Accumulated Accumulated amortization impairment loss 5,297 9,423 247,022 261,742 7,703 7,703 Book value 5,834 9,239 596,171 611,244 Book value 5,759 9,121 588,520 603,400 11,131 18,662 850,896 880,689 The changes in book value of intangibles for the year ended December 31, 2005 are...

  • Page 103
    ... and development costs for the years ended December 31, 2005 and 2004 are as follows : Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) 2005 Developm ent costs Research costs (Manufacturing cost) Research costs (SG&A) 2004 294,334 80,787 163,573 538,694 2005 315...

  • Page 104
    ... : Annual interest rate (% ) Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) 2005 Reorganization claim s : Korea Developm ent Bank Kyobo Life Insurance Co. SG ABS Ltd. Korea Developm ent Leasing Corp. Hanaro Finance Nara Banking Hyundai Investm ent & Securities...

  • Page 105
    ... rate (% ) Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) 2005 Reorganization claim s : Korea Developm ent Bank Bankers Trust Com pany Woori Bank First Citicorp Leasing Inc. Korea Non-Bank Lease Financing Citibank Korea Developm ent Leasing Corp. Chohung Capital...

  • Page 106
    ... The Company made an agreement with its European sales subsidiaries and agents for them to be responsible for projected costs for dismantling and recycling vehicles sold in corresponding countries to comply with European Parliament directive regarding End-of-Life vehicles (ELV). 14. CAPITAL STOCK...

  • Page 107
    ..., the Company issued new common stock of 172,431,118 shares amounting to shares amounting to 938,656 million (US 926,610 thousand) and the Hyundai Motor Consortium acquired 153,000,000 841,500 million (US 830,701 thousand) for 51 percent as of March 30, 1999. Financial institutions, with loans to...

  • Page 108
    ... the payment of cash dividends, but may be transferred to capital stock through an appropriate resolution by the Company's Board of Directors or used to reduce accumulated deficit, if any, through an appropriate resolution by the Company's shareholders. 17. CAPITAL ADJUSTMENTS : Capital adjustments...

  • Page 109
    ... require at least two-year continued service, are exercised, new shares or treasury stock will be issued in accordance with the decision of the Board of Directors. The Company calculates the total compensation expense using the option-pricing model. In the model, the risk-free rate of 10.0 percent...

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    Notes to Non-Consolidated Financial Statements FOR THE YEARS ENDED DECEM BER 31, 2005 AND 2004 18. FOREIGN CURRENCY DENOMINATED ASSETS AND LIABILITIES : The assets and liabilities denominated in foreign currencies as of December 31, 2005 and 2004 are summarized below. Foreign currencies (In ...

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    The difference between income before tax in financial accounting and taxable income pursuant to Corporate Income Tax Law of Korea is as follows : Description Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) 2005 Incom e before tax Tem porary differences Non-tem ...

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    Notes to Non-Consolidated Financial Statements FOR THE YEARS ENDED DECEM BER 31, 2005 AND 2004 The components of deferred tax assets as of December 31, 2004 are as follows : Description Current Allow ance for doubtful accounts Equity securities accounted for using the equity m ethod Accrued w ...

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    ... with affiliated companies and related balances for the year ended and as of December 31, 2005 are summarized below. Description Revenues Hyundai Motor Com pany Hyundai MOBIS Hyundai Hysco Co., Ltd. Hyundai Capital Services, Inc. Hyundai Pow ertek Co., Ltd. Dym os Inc. WIA Corporation Bontec Co...

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    ... FOR THE YEARS ENDED DECEM BER 31, 2005 AND 2004 Description Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) Receivables Hyundai Motor Com pany Hyundai MOBIS Hyundai Hysco Co., Ltd. Hyundai Pow ertek Co., Ltd. Dym os Inc. INI Steel Co., Ltd. WIA Corporation Bontec...

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    ... with affiliated companies and related balances for the year ended and as of December 31, 2004 are summarized below. Description Revenues Hyundai Motor Com pany Hyundai MOBIS Hyundai Hysco Co., Ltd. Hyundai Capital Services, Inc. Hyundai Pow ertek Co., Ltd. Dym os Inc. WIA Corporation Bontec Co...

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    ... THE YEARS ENDED DECEM BER 31, 2005 AND 2004 Description Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) Receivables Hyundai Motor Com pany Hyundai MOBIS Hyundai Hysco Co., Ltd. Hyundai Capital Services, Inc. Hyundai Pow ertek Co., Ltd. Dym os Inc. WIA Corporation...

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    24. SELLING AND ADMINISTRATIVE EXPENSES : Selling and administrative expenses in 2005 and 2004 are as follows: Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) 2005 Salaries and w ages Sales prom otion Travel Com m unications Utilities Taxes and dues Rent ...

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    ...2004 25. GEOGRAPHIC SEGMENT INFORMATION : The following is a summary of sales by geographic area in 2005 and 2004: Korean w on (In millions) Translation into U.S.dollars (Note 2) (In thousands) 2005 Dom estic sales Export sales North Am erica Europe Asia The Middle East Middle and south Am erica...

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    ... accounting control system ("IACS") of Kia Motors Corporation (the "Company") as of December 31, 2005. In accordance with Article 2-2 of the Act on External Audit for Stock Companies (the "External Audit Law") of the Republic of Korea, the Company's management is responsible for assessing the design...

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    ... in London and Tokyo by UBS Decem ber • Year-end Small Group M eetings w ith Investors MAJOR FINANCIAL INDICATORS 2005 No. of Shares (in thousands) Stock Price (Based on the Closing price, KRW) Liability / Equity Total Debt / Total Asset Net Debt / Equity Total Debt / EBITDA EBITDA / Interest...

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    ... shares 28.2% End of 2005 28.3% 145 135 125 115 105 95 2004-12-30 2005-02-28 2005-04-30 2005-06-30 2005-08-30 2005-10-30 2005-12-30 High (Jan. 12) 132.53 million shares 38.2% The stock price of Kia Motors surged 144% during 2005, way above the growth rate of KOSPI, which increased by 54%. Sales...

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    ...Years Summary (Units, Korean w on in m illions) 2005 Sales...,984 459,421 529,151 Total Assets Current Assets Non-current Assets 11,241,785 2,912,851 8,...992,054 2,535,958 2,456,096 Total Shareholders' equity Capital Stock Capital Surplus Retained Earnings Capital Adjustm ents 5,252,368 1,848,652 ...

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    ..., there's Kia Motors. In January, 2005, Hyundai-Kia Automotive Group announced the launch of its new global brand management strategy, in which Hyundai and Kia will pursue differentiated brand images as a means of boosting the Group's overall market share by targeting very different customers with...

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    ...Center The Europe Engineering Center is located in Russelsheim (Germany) and its range of research activities include product planning and power train development. The center is also responsible for autom obile appraisals, legal certifications and technical support activities for the European plant...

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    Product Development Results KIA Motors is operating several research centers to advance the technological com petitiveness of its cars. We aim to be on the frontier of next-generation environmentally-friendly innovations. Taking the initiative in finding new energy solutions, KIA will continue to ...

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    ...from the University of San Francisco • Itochu Corporation, New York, USA • Deputy Head of Hyundai Motor Dom estic Sales Division • Deputy Head of Hyundai Motor/ Kia Motors After-Sales Division • Deputy Head of Hyundai Motor/ Kia Motors Planning Division • Head of Kia Motors Planning Office...

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    Global Networks With operations in 180 countries around the world, Kia Motors is a true global player. Kia is expanding its global capabilities to answer customer needs around the world. Korea Regional HQ Overseas Corporation Overseas • Mid-South America, Africa-Mid Asia, Eastern Europe/CIS, ...

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    For Environmental protection, this catalog can be recycled Copyright 2005 by KIA MOTORS Corp. Produced by IR-Plus 231, Yangjae-Dong, Seocho-Gu, Seoul, Korea, 137-938 TEL : 82-2-3464-1114 www.kia.co.kr www.kmcir.com