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ANNUAL REPORT
2010
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Table of contents

  • Page 1
    ANNUAL REPORT 2010 _

  • Page 2
    ...Board of Directors 127 Contact Information EnginE for SuccESS, established design as our fuEl for innovation, and invested in new technologies - thE ignition KEy to SuStainability. The result has been one of our best years ever, and a clear path to sustainable growth. KIA MOTORS ANNUAL REPORT 2010...

  • Page 3
    ... the world's most successful carmakers, we are now eager to solidify our competencies in production, sales, product development, design, quality management and R&D. As a global leading company, we will make 2011 another outstanding year in our company's great history. Kia's unique corporate culture...

  • Page 4
    ... Kia Motors brand. Kia Motors' brand value has skyrocketed in recent years, thanks in large part to our strategic marketing activities. Kia remains a steadfast supporter of the national speed skating Hyoung-Keun Lee Vice Chairman 06 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010...

  • Page 5
    ...2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 0.7 1,195.2 Current Liabilities Long-term Debt total Stockholders' equity Net Income (Unit: KRW in billions) Operating Profit % of Revenue Sales by Plants total liabilities & Stockholders' equity d Summarized income Statement (KRW in millions...

  • Page 6
    ... to be such an eye-catcher that it recently brought home the globally renowned 2011 iF Product Design Award. This is where the search ends for the world's most confident and admired mid-size sedan. Stunning New Features The Forte GDI sports a gasoline direct injection engine with sixspeed automatic...

  • Page 7
    33.0% DoMestiC Market share (Excluding imported cars) 2.9% Global Market share 77.3% export to sales ratio (Export from Korea & overseas plants) 14 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 15

  • Page 8
    ..., boosting our brand image and building customer loyalty. We all win when communities prosper." B.M. Ahn Group President and CEO of Kia Motors America and Kia Moto rs Manufacturing Georgia we grow on global-scale. GLOBAL MANAGEMENT With strong brands and market-friendly products that are loved...

  • Page 9
    ... a 63% share of the domestic super-mini sector with sales of more than 100,000 units, ranking it as the 2nd best-selling car in Korea. The iconic Soul, which in 2009 brought home the Korean auto industry's first Red Dot design award, recorded sales of 21,000 units in 2010. Another Kia celebrity with...

  • Page 10
    Kia Motors stands atop the crest of a multi-year surge in the popularity of our cars. From Asia to Latin America, from the developing world to the most advanced countries, our vehicles are on a relentless drive to grow market share. With innovative design and bold brand management, Kia has rapidly ...

  • Page 11
    ... network and fine-tuning production systems in the US, China and Europe. In the US, the world's largest car market, we will compete aggressively while steadily introducing new models to boost our global market share. 2.1 global market Share (Unit: %) 2008 2009 2010 Global accolades - building...

  • Page 12
    ... best sUV under $40,000 DRIVE.com, Australia, November 2010 â- Most reliable new Car Which? Car, UK, July 2010 â- best Family saloon Wheels UAE, UAE, December 2010 â- 'red dot' Design award red dot, Germany, March 2010 â- Family Car award â- best Diesel Motors North, UK, February 2010 New...

  • Page 13
    2007 applYinG the 'FaMilY look' 2006 laUnCh oF oUr DesiGn ManaGeMent sYsteM 2009 MakinG DesiGn a kia hallMark 26 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 27

  • Page 14
    ... surge rapidly forward in the global market and secure lasting brand power was to focus our efforts on design. Kia has created not just a unique style, but a unique sense of pride and identity that no other car maker can match. 28 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 29

  • Page 15
    ... (K5) and Sportage (Sportage R) received the 2011 iF Design Award in the transportation category, the Korea 2010 Good Design (GD) Award and 2010 Good Design Awards in the US, thereby opening a new chapter for 'Design Kia'. 30 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 31

  • Page 16
    ... of Kia's new line-up of automobiles. 4. Establishing a Global Design Network 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...

  • Page 17
    ... brand identity (goal setting) Improving customer awareness + Establishing a differentiated image Securing consistency and continuity among sectors DeFinition oF branD ManaGeMent starting point Directions activities by sector 34 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010...

  • Page 18
    ... Bowl ad helped drive recordhigh sales in that vital market last year. The ad featured the Sorento (Sorento R) as part of a focused campaign to raise Kia's brand recognition and promote our sports marketing strategies in the US. In 2011, our plans include further Super Bowl advertising in support of...

  • Page 19
    4.3% 2009 5.4% 2008 4.2% 2010 r&D inVestMent to sales ratio (non-consolidated basis) 38 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 39

  • Page 20
    ..., we play a critical role in meeting the unique and growing needs of customers throughout the world. to be a responsible corporation, we use that position to address important environmental issues with full-time commitment. 40 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 41

  • Page 21
    ...November 2010. In 2011, we expect to complete the development of a CUV electric vehicle, while in 2012 Kia will devote R&D resources to developing mass-production hybrid and all-electric cars as well as hydrogen fuel cell vehicles. 42 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010...

  • Page 22
    ...2009 2010 Launch of Forte LPi Hybrid Launch and small-scale distribution of light CUV electric cars Unveiling of Optima (K5) Hybrid in North America FCeV (Fuel Cell electric Vehicle) - The global Benchmark The ideal that all eco-friendly transportation developers strive for is a car that operates...

  • Page 23
    ...& Technical Center undertakes research into concept cars and development of mass-production cars suitable for the US market. 01 Europe technical center/ Hyundai design center Europe • Location: Irvine, California, US • Facilities: Design Studio 09 Kia design Center ameriCa Boasting world-class...

  • Page 24
    ...Kia Motors product to be released in the company's newly-developed semi large-size platform. The Cadenza is best known for its luxurious styling, in which the 'light' and the 'lines' stand boldly out, while its top-end power performance provides an exhilarating driving experience. The new 2011 model...

  • Page 25
    ...Kia Motors Corporation and subsidiaries (collectively, the "Company") as of December 31, 2010 and 2009, the related consolidated statements of income, changes in equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management...

  • Page 26
    ... and notes receivable - other, less allowance for doubtful accounts of ￦34,753 in 2010 and ￦38,537 in 2009 Inventories Current deferred tax assets, net Other current assets total current assets Long-term investment securities Equity method accounted investments Property, plant and equipment, net...

  • Page 27
    ... years ended December 31, 2010 and 2009 Consolidated Statements of Changes in Equity For the years ended December 31, 2010 and 2009 In millions of won, except earnings per share In millions of won Note Sales Cost of sales Gross ProFit Selling, general and administrative expenses oPerAtiNG iNcoMe...

  • Page 28
    ... financial statements. (1,778,092) (85,465) 902,381 (140,308) 1,239,469 320,818 (135,622) 279,024 363,091 (431,475) ￦ (216,713) (518,906) (142,001) 2,231,945 142,975 284,100 196,717 866,072 (25,036) 37 ,634 (457 ,279) (330,136) 56 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010...

  • Page 29
    ... FroM iNVestiNG ActiVities Increase of short-term financial instruments Increase in long-term financial instruments Proceeds from sale of long-term investment securities Proceeds from sale of equity method accounted investment securities Proceeds from sale of property, plant and equipment Receipt...

  • Page 30
    ... Statements in the Republic of Korea, the financial statements of the subsidiaries are excluded from the consolidated financial statements as their total assets, at the end of the prior fiscal year, were less than ￦10 billion. 60 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010...

  • Page 31
    ...'s credit rating as announced by accredited credit rating agencies in Korea. The fair value of investments in money market funds is determined by investment management companies. Pfesentation Trading securities, available-for-sale securities which mature within one year from the end of the reporting...

  • Page 32
    ... made under operating leases are charged to the statement of income on a straight-line basis over the period of the lease. Where the Company is a lessee under a capital lease, the present value of future minimum lease payments is capitalized and a corresponding liability is recognized. In a sale and...

  • Page 33
    ... company in trust. The deposit for severance benefits held in trust is, therefore, reflected in the accompanying consolidated statements of financial position as a reduction of the liability for retirement and severance benefits. 66 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010...

  • Page 34
    ... shares, which comprise stock options granted to employees. (r) Share-Based Payments For equity-settled share-based payment transactions, the Company measures the goods or services received, and the corresponding increase in equity as a capital adjustment at the fair value of the goods or services...

  • Page 35
    ...of won 7. Long-term investment securities 2010 2009 summarized as follows: 2010 2009 Trade accounts receivable Trade notes receivable ￦ 79,168 2,242,500 61,073 In millions of won 1,460,194 1,521,267 Available-for-sale securities Marketable securities Non-marketable securities ￦ 64 2,836...

  • Page 36
    ...: 2010 2009 In millions of won BEGINNING BALANmE Realized gain on disposition of securities Changes in unrealized gain Ending balance Income tax effect NET BALANmE AT END OF YEAR ￦ 9 35 44 (10) 44 (35) 9 (2) 7 ￦ 34 72 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 73

  • Page 37
    ... Securities Co., Ltd. The Korea Economic Daily Co., Ltd. HMC Win-Win Cooperation Fund Kia Tigers Co., Ltd. Yanji Kia Motors A/S and Repair NGVTEK.com Co., Ltd. EUKOR Car Carriers Singapore Pte. Ltd. EUKOR Shipowning Singapore Pte. Ltd. Innocean World Americas, LLC Hyundai Information System North...

  • Page 38
    ...Hysco Co., Ltd. Hyundai Motor Group (China) Ltd. ￦ Company Increase Amortized amount Hyundai Mobis Co., Ltd. Hyundai Steel Company Hyundai WIA Corporation Hyundai Hysco Co., Ltd. EUKOR Car Carriers, Inc. Beijing Hyundai Mobis Automotive Parts Co., Ltd. HMC Investment Securities Co., Ltd. EUKOR...

  • Page 39
    ... procedures to verify the unaudited financial statements. Hyundai Information System North America Hyundai Capital America (HCA) (formely, HMFC) Hyundai Powertech Manufacturing America, Inc. Sewon America, Inc. ￦ 2,997 ,943 78 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 79

  • Page 40
    ...., Ltd. HMC Investment Securities Co., Ltd. The Korea Economic Daily Co., Ltd. HMC Win-Win Cooperation Fund Kia Tigers Co., Ltd. EUKOR Shipowning Singapore Pte. Ltd. Hyundai Motor Manufacturing Rus LLC Innocean World Americas, LLC Hyundai Information System North America Hyundai Capital America (HCA...

  • Page 41
    ... Securities Co., Ltd. The Korea Economic Daily Co., Ltd. HMC Win-Win Cooperation Fund Kia Tigers Co., Ltd. EUKOR Shipowning Singapore Pte. Ltd. Innocean World Americas, LLC Hyundai Information System North America Hyundai Capital America (HCA) (formerly, HMFC) Hyundai Powertech Manufacturing America...

  • Page 42
    ... Systems Co., Ltd. Hyundai-Motor Group (China) Ltd. Donghee Auto Co., Ltd. TRW Steering Co., Ltd. Others Other: Hyundai Motor America, Inc. Hyundai Motor Manufacturing Czech, Ltd. Hyundai Auto Canada, Inc. Mobis Parts Europe N.V Hyundai Capital Service, Inc. KEFICO Corporation METIA Corporation...

  • Page 43
    .... EUKOR Car Carriers, Inc. Hyundai AMCO Co., Ltd. Autoever Systems Co., Ltd. Hyundai-Motor Group (China) Ltd. Donghee Auto Co., Ltd. TRW Steering Co., Ltd. Others Other: Hyundai Motor America, Inc Hyundai Auto Canada, Inc Mobis Parts Europe N.V Hyundai Capital Service, Inc. KEFICO Corporation METIA...

  • Page 44
    ... the year ended December 31, 2009 are summarized as follows: In millions of won (d) Account balances with related companies as of December 31, 2009 are as follows: In millions of won Receivables Accounts and notes receivable -trade Payables Accounts and noted payable - trade Subsidiaries Sales...

  • Page 45
    Notes to Consolidated Financial Statements December 31, 2010 and 2009 (f) The Parent Company has provided guarantees for consolidated subsidiaries as of December 31, 2010 and 2009 as follows: (b) Changes in property, plant and equipment for the year ended December 31, 2010 are summarized as ...

  • Page 46
    Notes to Consolidated Financial Statements December 31, 2010 and 2009 (*1) The Company signed an agreement for investments with Government of the Slovak Republic and the related consideration received amounted to ￦360,878 million which was presented as a reduction of property, plant and equipment...

  • Page 47
    ... until Conversion price (in won) March 19, 2009 ￦ 400,000 million Face value March 19, 2012 February 19, 2012 ￦ 6,880 (*) The amount represents principal portion only and does not reflect discount on present value. 94 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 95

  • Page 48
    ..., reduction of capital, split of stock and consolidation of stock, and when the market price of the stock is decreased. 19. retirement and severance benefits Changes in retirement and severance benefits for the years ended December 31, 2010 and 2009 are summarized as follows: 2010 2009 In millions...

  • Page 49
    ... Company's financial position, operating results or cash flows. (d) Kia Motors Manufacturing Georgia, Inc. (KMMG) entered into agreements with a construction companies amounting to USD 618 thousand for the construction as of December 31, 2010. In connection with long-term debt guaranteed by Hyundai...

  • Page 50
    ... million and the net loss of ￦213 million as other income (loss) for the year ended December 31, 2010 on valuation of the ineffective portion of such instruments and the other derivative instruments in current operations. 100 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 101

  • Page 51
    ...exchange rate of non-derivative financial instrument Valuation of investments in securities Revaluation surplus ￦ 1,777 8,543 (376,493) (1,288,235) 391 1,879 (91,171) (283,412) (372,313) ￦ (1,654,408) ￦ 6,356,249 102 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 103

  • Page 52
    ... useful lives of related finished goods in 2010. As a result of this change in accounting estimate, net income for the year ended December 31, 2010 increased by ￦80,117 million and inventories decreased by ￦4,031 million. 104 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 105

  • Page 53
    ...716) 387 ,995,332 5,000 5% 96,999 In millions of won Construction-in-progress transferred to property, plant and equipment Capital lease assets transferred to property, plant and equipment ￦ 693,983 178,113 1,051,524 - 106 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 107

  • Page 54
    ... at the end of the reporting period 35. subsequent event The Company which is a part of Hyundai Motor Group Consortium, signed a stock acceptance contract to acquire shares of Hyundai Engineering & Construction Co., Ltd. with the shareholder council of Hyundai Engineering & Construction Co., Ltd...

  • Page 55
    ... the straight-line method over its estimated useful life The Board of Directors and Stockholders Kia Motors Corporation: We have audited the accompanying non-consolidated statements of financial position of Kia Motors Corporation (the "Company") as of December 31, 2010 and 2009 and the related non...

  • Page 56
    ... and notes receivable - other, less allowance for doubtful accounts of ￦32,697 in 2010 and ￦33,981 in 2009 Inventories Current deferred tax assets, net Other current assets total current assets Long-term investment securities Equity method accounted investments Property, plant and equipment, net...

  • Page 57
    ... At eNd oF yeAr beFore APProPriAtioN APProPriAtioN oF retAiNed eArNiNGs Legal reserve Reserve for research and human resources development Reserve for technological development Cash dividend -10.00% of par value of ￦ 5,000 per share in 2010 and 5.00% of par value of ￦ 5,000 per share in 2009...

  • Page 58
    ... Statements of Appropriation of Changes in Equity For the years ended December 31, 2010 and 2009 Non-consolidated Statements of Appropriation of Changes in Equity For the years ended December 31, 2010 and 2009 In millions of won In millions of won Common stock Capital surplus Capital...

  • Page 59
    ... method accounted investments Purchase of property, plant and equipment Additions to intangible assets Payment of security deposits Increase of long-term loans Net cAsh used iN iNVestiNG ActiVities cAsh FLoWs FroM FiNANciNG ActiVities Proceeds from short-term borrowings Proceeds from long-term debt...

  • Page 60
    ... of the non-consolidated financial statements as of December 31, 2010 and the rebiew of internal accounting control system pursuant to Article 2-3 of the Act on External Audit for Stock Companies of the Republic of Korea. 120 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 121

  • Page 61
    ...R&D Center Asia Office Australia / Asia Pacific Regional HQ New Zealand USA Canada north america north america 3 3 4 R&D Center 21 America Technical Center Kia Design Center America 17 Kia Motors Manufacturing Georgia 122 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010 123

  • Page 62
    ...Kia Motors Europe (KME) established 1998. 01 Forte (all-new Cerato) compact sedan introduced 09 Carnival (Sedona), Korea's first minivan, introduced Soul introduced 11 Design Management Award received from Korean Design Awards 124 COMPONENTS OF SUSTAINABLE GROWTH KIA MOTORS ANNUAL REPORT 2010...

  • Page 63
    ... Education, Korea University • Currently, President of APAIE (Asia-Pacific Association for International Education) won-Jun Kim • Currently, Advisor at Kim & Chang Law Firm • Executive Director of Market Oversight at the Fair Trade Commission 126 COMPONENTS OF SUSTAINABLE GROWTH

  • Page 64
    231, Yangjae - Dong, Seocho- Gu, Seoul, 137- 938, Korea TEL: +82-2- 3464 -1114