Kia 2012 Annual Report Download - page 86
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Changes in provisions for the years ended December 31, 2012 and 2011 are summarized as follows:
(In millions of won)
2012 2011
Provision of Provision of
warranty Other warranty Other
for sale provision Total for sale provision Total
Balance at January 1 ₩ 1,643,068 32,093 1,675,161 1,261,789 25,620 1,287,409
Increase 1,040,461 4,029 1,044,490 1,088,844 12,363 1,101,207
Usage (830,845) (3,907) (834,752) (708,128) (5,588) (713,716)
Increase due to business combination - - - 1,997 - 1,997
Other decrease (49,701) (850) (50,551) (1,434) (302) (1,736)
Balance at December 31 ₩ 1,802,983 31,365 1,834,348 1,643,068 32,093 1,675,161
Thereof non-current ₩ 1,274,578 27,932 1,302,510 1,144,463 27,713 1,172,176
(a) The Company provides guarantees for certain customers’ financing relating to long-term installment sales. The oustanding amount
for which the Company has provided guarantees to the respective financial institutions is ₩ 9,345 million as of December 31, 2012.
These guarantees are covered by insurance contracts in which the Company is the beneficiary of the claim amount if the customer
defaults.
(b) As of December 31, 2012, one blank promissory note have been provided as collateral to Korea Defense Industry Association
(“KDIA”) for a performance guarantee on a contract.
(c) The Company is involved in several claims, litigations for alleged damages and product liabilities, which arose in the ordinary course
of business, as of December 31, 2012. Management is of the opinion that foregoing lawsuits and claims will not have a material
adverse effect on the Company’s financial position and results of operations since the incurrence is not probable nor amounts can
be reasonably estimated.
(d) In connection with long-term debt guaranteed by Hyundai Motor America, Inc. and Mobis America, Inc., Kia Motors Manufacturing
Georgia, Inc. (KMMG) should pay guarantor fees calculated at a rate of 0.15% per annum on the outstanding debt balance of
KMMG which should be paid biannually.
(e) On October 1, 2008, KMMG entered into an agreement with the West Point Development Authority to issue up to USD 1,100,000
thousand of taxable revenue bonds for a term through December 1, 2022, to fund the purchase of building, machinery and
equipment. As of December 31, 2012, approximately USD 757,216 thousand of taxable revenue bonds, net of redemptions have
been issued and sold to KMMG for these purchases.
(f) The Company acquired 5.23% of Hyundai Engineering & Construction Co., Ltd’s shares along with terms of a contract that
the Company is prohibited from selling the shares, offering it as collateral or split for two years from April 1, 2011, the date of
acquisition. 939,407 shares of the Company, which is approximately 10% of the share acquired, were deposited at escrow account
for execution of the contract.
For the years ended December 31, 2012 and 2011