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Kia motors corporation
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Table of contents

  • Page 1
    annual report 2008 _ Kia motors corpor ation annual report 2008 | revealing the path revealing the path 231, Yangjae - Dong, Seocho - Gu, Seoul, 137- 938, Korea TEL : 82-2- 3464 -1114 www.kia.com www.kmcir.com

  • Page 2
    ...paid off by opening up new markets and attracting new customers to our products. 120 gloBal networK 122 Board of directors 123 corporate history Kia Motors is the pioneering force behind Korea's rising automotive industry, and it stands today as a part of that industry's living history. originally...

  • Page 3
    ...964,423 2004 975 2005 2006 2007 2008 2004 15,258 2005 2006 15,949 2008 2008 production rate By plants â-'Korea Plants â-'China Plants â-'Slovakia Plants retail sales By region 9.9% 14.4% â-'Korea â-'US â-'West Europe â-'China â-'Rest of World 697,181 (1,584,862) 1,112,642 686...

  • Page 4
    ... for growth. • optimizing global operations forging a truly global management system. • Meeting market needs with a focus on innovative products and strong brands. • Delivering sound performance with integrity to our shareholders as well as ourselves. • Building healthy relationships with...

  • Page 5
    ... of new markets, using the current crisis as an opportunity to raise Kia's brand recognition and brand value in regions that don't yet know us as well as they should. Of course, we will always keep in mind that earning stable profits is ultimately the best way to ensure our company's growth and...

  • Page 6
    ... Cerato) Coupe and the Forte LPI Hybrid. We will support these new models with creative marketing campaigns to position them as important growth drivers. In terms of brand management, Kia Motors will continue to aggressively promote itself as a design-centered company, building on a corporate image...

  • Page 7
    reshaping ideas to MAKe reAl DIFFerenCes For decades, Kia Motors has fostered a can-do spirit of innovation that has been a source of pride and differentiation. We share ideas and insights with each other so that we can share our gifts with our customers and shareholders.

  • Page 8
    recognizing excellence In explorInG neW opportunItIes Kia Motors is poised for action. We are a globally-focused company intent on becoming a world-class automotive giant.

  • Page 9
    reJoicing in the spirit oF sHArInG AnD CArInG Responsible corporate citizenship is a hallmark of Kia Motors' management. We demonstrate our commitment to our stakeholders and communities through eco-friendly operations, high ethical standards and investment in community initiatives.

  • Page 10
    KIA Motors AnnuAl report 2008 16 17 reveAlInG tHe pAtH operAtIon revIeW focus on innovation (pAGe 18) 20 DesIGn MAnAGeMent | 26 BrAnDInG | 30 MArKetInG operation REVIEW passion for excellence (pAGe 32) 34 DoMestIC BusIness perForMAnCe | 36 overseAs BusIness perForMAnCe investMent in future (...

  • Page 11
    KIA Motors AnnuAl report 2008 18 19 reveAlInG tHe pAtH operAtIon revIeW RCes of in ss fo no va tle n tio e l n e R n as ovatio inn thinking Design is our corporate philosophy. a min ds e tn ot of tive ea CR a ent Rtm pa de ne W W ay through our product design, automotive engineering ...

  • Page 12
    ... Kia's new line-up of automobiles. The opening of the Kia Design Center America in June of 2008 completed a design network that spans the world. It joins the Kia Design Center Europe, located in Kia Motors' European headquarters in Frankfurt, as part of a creative web joining America, Europe, Korea...

  • Page 13
    ... not just our own employees, but in the minds of the world's car-driving public. Our whole internal operating paradigm can now be summed up by the idea of 'Design Management'. Confident that we have taken the right path, we premiered a long line of new models last year, letting their stylish, fresh...

  • Page 14
    ...; 'brand value', which builds trust in our customers; and 'new corporate value', which makes us a sustainable enterprise. Peter Schreyer Chief Design officer 2008 doMestic MarKet share (%) 35.0 31.8 oct. nov. 31.0 Morning f/l Mohave sep. 31.5 Dec. 25.1 22.6 Jan. '08 Mar. 26.2 Jun. forte soul...

  • Page 15
    KIA Motors AnnuAl report 2008 26 27 reveAlInG tHe pAtH operAtIon revIeW BRanDing Kia is an active and aggressive brand manager. We take risks, we try for the hard-to-reach customer segments, we use tactics other companies are afraid to try - and our brand value just keeps on growing. dynamic and...

  • Page 16
    KIA Motors AnnuAl report 2008 28 29 reveAlInG tHe pAtH operAtIon revIeW Known and recognized worldwide Kia automobiles can be found at showrooms almost anywhere in the world. We have some 4,000 dealers in 165 countries, and our products appear on television during the FIFA World Cup, NBA games,...

  • Page 17
    ... can be used to personalize the car for each customer. The campaign was a hit, driving initial sales beyond all expectations. Now Kia is steadily developing the global Kia brand through its presence at international industry trade shows like the Paris Motor Show and Auto Shanghai. Kia has been...

  • Page 18
    KIA Motors AnnuAl report 2008 32 33 reveAlInG tHe pAtH operAtIon revIeW enh an Cin g C Ct du o pR titivenes ompe s g global stan d vin aR hie ds aC f CHaLLEnGE for GroWtH With our quality products backed by strong r&D capabilities, we've set the new industry standard. our Business - oR ...

  • Page 19
    ...semi-mid-size' cars, and sporting high-tech touches like smart-key engine start and voice recognition navigation. Next, Soul was premiered as a concept car in the new 'CUV' market after causing sensations at international auto shows. Its unique box-car style has been called the climax of 'Design Kia...

  • Page 20
    ...-year. The news was less encouraging from the world's developed markets. North American sales totaled 310,917 units, an 8.6% decline, while European sales recorded 335,138 units, down 2.3%. In China, the world's largest car market after Europe and the US, Kia opened its second plant and re-designed...

  • Page 21
    ... markets. high quality standards recognized around the world 2008 was a landmark year in terms of reputation-building for Kia Motors. Consumer Reports ranked Kia in the top tier of its reliability study for the first time ever, noting that we showed the highest improvement rate in the second half...

  • Page 22
    ... Import vehicle RAMIA, Romania, September 2008 • Car of the Year 2008 Auto Mundial, UK, December 2008 Spectra / / • Best Bet Car Book, USA, March 2008 • towcar of the Year - All Wheel Drive over 1,800kg The Caravan Club, UK, February 2008 • Affordable Compact Wagon 2008 US News and World...

  • Page 23
    KIA Motors AnnuAl report 2008 42 43 reveAlInG tHe pAtH operAtIon revIeW m ai e apex of the R th Wo fo Rl d puRsuing Custo me R an lenges hal C d InnovatIon for HumanIty sa t s m We imagine and build innovative solutions that benefit our communities and environments where we operate. our...

  • Page 24
    KIA Motors AnnuAl report 2008 44 45 reveAlInG tHe pAtH operAtIon revIeW ReseaRch & Development Kia Motors is building an unassailable lead in R&D, investing in innovation and shortening the product development cycle to be the first to bring to market the cars that customers want. development ...

  • Page 25
    ... 20 years, Kia has been investing in R&D to make green vehicles that minimize fuel consumption and harmful emissions. As part of the Hyundai-Kia Automotive Group, Kia first supplied 50 Click-HEVs to public-sector purchasers in 2004. This was our first step into the important 'green car' market of...

  • Page 26
    ... Center 02 Kia design center europe situated within the new building of Kia Motors' european headquarters, the Kia Design Center europe is boosting Kia's design management on the continent. • location : Frankfurt, Germany • Facility : Design Center 09 Kia design center aMerica Boasting world...

  • Page 27
    ... features, Kia has thought of everything. Picanto is an eye-catcher; a well-dressed, sporty ride that perfectly balances cutting-edge design, technical innovation and the pure, simple joy of driving. sportage Designed for Challenge Sportage offers you a new start. Part car, part SUV, part MPV and...

  • Page 28
    ...AnnuAl report 2008 54 52 53 reveAlInG tHe pAtH FInAnCIAl revIeW 2008 was an iMportant turning point for Kia Motors as we atteMpt to secure staBle growth for the next 2008 was an decades to coMe. iMportant ManageMent's discussion & analysis production Kia Motors has four assembly plants in Korea...

  • Page 29
    ... Korea'. We also gave financial support for school lunch programs through the Lotze Taxi Cup Soccer Games, and Kia volunteer technicians provided free vehicle check-ups on weekends. 2008 was also a good year for Kia in terms of industry recognition. We took first place in the Korea Standard-Service...

  • Page 30
    ...backed by Kia's increasing brand value, we are targeting 335,000 unit sales and 31% market share in 2009. 2009 will also see Kia Motors using active promotion strategies to w.europe MarKet share (%) support to them and increase foot traffic through their showrooms with increased NBA-linked TV ads...

  • Page 31
    ... AnnuAl report 2008 58 59 reveAlInG tHe pAtH FInAnCIAl revIeW ManageMent's discussion & analysis market potential of emerging markets such as Kazakhstan, and elevate the operating capabilities of Kia Motors Russia. The company's objectives in China for 2009 are to maintain a high rate of growth...

  • Page 32
    ... year. Accounts payable increased by KRW 193 billion in line with a year-onyear increase in production in the fourth quarter of 2008. Short-term debt increased by KRW 308 billion as the company accessed revolving facilities to maintain its cash balance. The current portion of long-term borrowings...

  • Page 33
    ... investment securities Property, plant and equipment, net Intangible assets Non-current deferred tax assets, net Other non-current assets total non-current assets total assets assets Cash and cash equivalents Short - term deposits Accounts and notes receivable - trade, less discount on present value...

  • Page 34
    ...sheets As at December 31, 2008 and 2007 non-consolidated stateMents of incoMe For the years ended December 31, 2008 and 2007 IN MILLIONS OF WON IN MILLIONS OF WON, ExCEPT EARNINGS PER SHARE Note liabilities Accounts and notes payable - trade Short-term borrowings Provision for warranties-current...

  • Page 35
    KIA MOTORS ANNUAL REPORT 2008 66 67 REVEALING THE PATH FINANCIAL REVIEW non-consolidated stateMents of disposition of accuMulated deficit For the years ended December 31, 2008 and 2007 Date of Disposition for 2008: March 6, 2009 Date of Disposition for 2007: March 21, 2008 non-consolidated ...

  • Page 36
    ... benefit insurance net cash used in investing activities cash flows from financing activities Proceeds from short-term borrowings, net Proceeds from long-term debt Proceeds from capital lease obligation Repayment of current portion of long-term debt Repayment of long-term debt Payment of capital...

  • Page 37
    ... in Europe. The construction of the plant in Zilina was completed and the production started from the end of 2008. Transfers of financial assets to third parties are accounted for as sales when control is surrendered to the transferee. The Bank derecognizes financial assets from the balance sheet...

  • Page 38
    ... one year from the balance sheet date, short-term deposits and short-term loans are combined and presented as current assets. All other available-for-sale securities and held-to-maturity securities are combined and presented as long-term investments. impairment The Company reviews investments in...

  • Page 39
    ... of long-term accounts receivable is included in current accounts and notes receivable - trade at present value. (p) Foreign Currency translation Monetary assets and liabilities denominated in foreign currencies are translated into Korean Won at the rates of exchange on the balance sheet date, with...

  • Page 40
    ... possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods; generally upon delivery to end customer. Revenue from other than the sale of vehicles and parts is recognized when the Company's revenue-earning activities have been substantially...

  • Page 41
    ...balance sheets, on which the Company remains contingently liable as of December 31, 2008 and 2007 are summarized as follows: ￦ Prepaid expenses Guarantee deposits Derivative instruments (note 22) 118,952 6. long-term investment securities In millions of Won 2008 Trade accounts receivable Trade...

  • Page 42
    KIA MOTORS ANNUAL REPORT 2008 80 81 REVEALING THE PATH FINANCIAL REVIEW notes to non-consolidated financial stateMents December 31, 2008 and 2007 â'œ Available-for-sale securities (â...°) (â...²) Changes in unrealized holding gains > Marketable securities recorded at fair value as of December 31...

  • Page 43
    ... Co., Ltd. Hyundai-Motor Group Ltd. Donghee Auto Co., Ltd. WIA Automotive Engine(Shandong) Company•1 TRW Steering Co., Ltd. Haevichi Country Club., Ltd.•1 HMC Investment Securities Co., Ltd.•1 The Korea Economic Daily Co., Ltd.•1 HMC Win-Win Cooperation Fund Yanji Kia Motors A/S and Repair...

  • Page 44
    ... Steel Company WIA Corporation Hyundai Card Co., Ltd. Dymos Inc. Hyundai Hysco Co., Ltd. EUKOR Car Carriers, Inc. AMCO Corp. Beijing Hyundai Mobis Automotive Parts Co., Ltd. China Millennium Corp. Hyundai-Motor Group Ltd. Donghee Auto Co., Ltd. Chasan Co., Ltd. Hyundai Commercial Co., Ltd. The Korea...

  • Page 45
    KIA MOTORS ANNUAL REPORT 2008 86 87 REVEALING THE PATH FINANCIAL REVIEW notes to non-consolidated financial stateMents December 31, 2008 and 2007 â'¡ Changes in balance of investments in affiliated companies accounted for using the equity method as of December 31, 2008 are as follows: In ...

  • Page 46
    ... Co., Ltd. Hyundai-Motor Group Ltd. Donghee Auto Co., Ltd. WIA Automotive Engine (Shandong) Company TRW Steering Co., Ltd. Chasan Co., Ltd. (*1) Hyundai Commercial Co., Ltd. The Korea Economic Daily Co., Ltd.(*5) Yanji Kia Motors A/S and Repair(*2) NGVTEK.com(*2) EUKOR Car Carriers Singapore Pte...

  • Page 47
    ... ANNUAL REPORT 2008 90 91 REVEALING THE PATH FINANCIAL REVIEW notes to non-consolidated financial stateMents December 31, 2008 and 2007 (h) summarized financial information of the investees as of and for the year ended December 31, 2008 is as follows: In millions of Won (i) the market price...

  • Page 48
    ... of business with related companies for the year ended December 31, 2008 are summarized as follows: In millions of Won revenue naMe Hyundai Motor Company Kia Motors America, Inc. Kia Canada, Inc. Kia Motors Europe GmbH Kia Motors Australia Pty Ltd. Kia Motors Slovakia S.r.o. ￦ expenses other...

  • Page 49
    ... for the year ended December 31, 2007 are summarized as follows: In millions of Won (d) Account balances with related companies as of December 31, 2008 are as follows: In millions of Won revenue naMe Hyundai Motor Company Kia Motors America, Inc. Kia Canada, Inc. Kia Motors Europe GmbH Kia Motors...

  • Page 50
    ... s.r.o. Kia Motors (UK) Ltd. Kia Motors Europe GmbH Kia Motors Polska Sp.z.o.o. Kia Motors Manufacturing Georgia, Inc. Dongfeng Yueda Kia Motors Co., Ltd. type of borrowings Plant loan and general loan Payment of customs duties Guarantee for borrowings related to construction of new office building...

  • Page 51
    .... The Company maintains insurance to cover potential product liabilities up to USD 85,000 thousand in North America and Europe and ￦1,000 million in (c) Changes in property, plant and equipment for the year ended December 31, 2008 are as follows: Korea as of December 31, 2008. Book value as of...

  • Page 52
    ... investments Hana Bank and others Nong-hyup Bank Short-term borrowings Guarantee deposit for a lawsuit Guarantee deposit for tax payment Guarantee deposit for performance of contact Guarantee deposit for a lawsuit 50,000 15,000 ￦ (c) Research and development costs incurred for the years ended...

  • Page 53
    KIA MOTORS ANNUAL REPORT 2008 102 103 REVEALING THE PATH FINANCIAL REVIEW notes to non-consolidated financial stateMents December 31, 2008 and 2007 13. other current liabilities Other current liabilities as of December 31, 2008 and 2007 are as follows: In millions of Won 15. long-term debt (a)...

  • Page 54
    ... used machinery and equipment in 2008. As of December 31, 2008, the gross amount of machinery and equipment and related accumulated depreciation recorded under capital leases are as follows: Accounts receivable - other USD EUR AUD GBP Guarantee deposits In millions of Won USD USD EUR Long-term...

  • Page 55
    ...respectively. This deposit is to be used to guarantee the required payments to prior employees and accounted for as a reduction of the reserve balance. ￦ 1,973,927158 19. provision for warranties and card points Changes in provision for warranties for the years ended December 31, 2008 and 2007...

  • Page 56
    KIA MOTORS ANNUAL REPORT 2008 108 109 REVEALING THE PATH FINANCIAL REVIEW notes to non-consolidated financial stateMents December 31, 2008 and 2007 (a) Detail of range forwards, foreign exchange forwards, interest rate and currency swaps and interest rate swap as of Dcember 31, 2008 are as ...

  • Page 57
    KIA MOTORS ANNUAL REPORT 2008 110 111 REVEALING THE PATH FINANCIAL REVIEW notes to non-consolidated financial stateMents December 31, 2008 and 2007 24. capital surplus Capital surplus as of December 31, 2008 and 2007 are summarized as follows: In millions of Won 26. capital adjustments Details...

  • Page 58
    ... on equity method accounted investments Change in fair value of available-for-sale securities, net Effective portion of changes in fair value of cash flow hedges, net Effective portion of changes resulting from the changes in currency exchange rate of non-derivative financial instrument ￦ (385...

  • Page 59
    ...30. share-based payments The Company granted stock options to its executive officers and directors in accordance with the stock option plan approved by the Board of Directors. The details of the stock options granted are as follows: won (millions, except shares) 1st grant 2nd grant number of shares...

  • Page 60
    ... information The Company conducts business globally and is managed geographically. The following table provides information for each geographical segment for the years ended December 31, 2008 and 2007: In millions of Won 2008 net income Change in fair value of available-for-sale securities, net of...

  • Page 61
    ... in Korean report on the operations of internal accounting control systeM to the Board of Directors and Audit Committee of Kia Motors Corporation: I, as the Internal Accounting Control Officer ("IACO") of Kia Motors Corporation (the "Company"), have assessed the status of the design and operations...

  • Page 62
    ...) russia Kia Motors Central europe(Austria) Canada africa/Middle east (u.a.e,duBai) America central&south aMerica (MiaMi) asia/pacific (australia,sydney) Australia KMs (Kia Motors slovakia) • SOP: FY2006 • Capacity: 300K units new Zealand proDuCtIon plAnts reGIonAl HQ sAles suBsIDIArIes...

  • Page 63
    ... / Kia Motors America moves to new headquarters / Completion ceremony for Kia Design Center America / Forte (all-new Cerato) compact sedan introduced / Soul introduced / Ranked 1st in auto division by Korean Standard Service Quality for 5 years in a row / Design Management Award received from Korean...

  • Page 64
    KIA Motors AnnuAl report 2008 122 Board of directors (From March 6, 2009) 1. Sung-Eun Chung •Currently, CEO & Vice Chairman, Kia Motors Corp. •Vice Chairman, Kia Motors Corp. 2. Young-Jong Seo •Currently, CEO & President, Kia Motors Corp. •President, Kia Motors Corp. 3. Euisun Chung •...