Kia 2013 Annual Report Download - page 53

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For the years ended December 31, 2013 and 2012
18. Commitments and Contingencies
(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 ₩ 8,367 million as of December 31, 2013. 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, 2013, one certificate deposit of ₩ 1,369 million has been provided as collateral to Korea Defense Industry Association
(“KDIA”) for a performance guarantee on a contract.
(c) The Company provides guarantees for employees relating to borrowings to acquire shares of the Parent Company. The outstanding
amount for which the Company has provided collective guarantees to the Korea Securities Finance Corporation is ₩ 298,591 million
as of December 31, 2013. Management is of the opinion that afore mentioned guarantees will not have a material adverse effect on the
Company’s credit risk since the Company has pledged its acquired shares as collateral for the borrowings.
(d) 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, 2013. 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 likelihood of unfavorable outcome is not probable nor
amounts can be reliably estimated. In addition, on December 18, 2013, the Supreme Court of Korea made a ruling regarding the scope
of Ordinary Wage which could be the basis for overtime payment, allowance for night work and others. As of December 31, 2013,
management cannot reliably estimate the potential impacts, if any, on the Company’s financial position, financial performance and
cashflows.
(e) 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.
(f) As of December 31, 2013, KMMG entered into an agreement with the West Point Development Authority and Troup Country
Development Authority to issue up to USD 2,700,000 thousand of taxable revenue bonds for a term through December 1, 2022, to fund
the purchase of building, machinery and equipment
19 . Equity
(a) The number of shares to issue, the number of shares issued and the par value of a share of the Parent Company are 820,000,000
shares, 405,363,347 shares and ₩ 5,000 as of December 31, 2013, respectively.
The Parent Company retired 10 million and 12.5 million shares of treasury stock on July 2, 2003 and May 28, 2004, respectively. Due to
these stock retirements, the aggregate par value of issued shares differs from the common stock amount.
(b) Accumulated other comprehensive income and loss as of December 31, 2013 and 2012 are summarized as follows:
(g) Sensitivity analysis of defined obligations from changes of assumptions for the year ended December 31, 2013 is summarized as follows:
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 
Discount rate ₩(142,639) 170,273
Rate of salary growth 170,074 (145,033)
(In millions of won)
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Gain on valuation of available-for-sale financial assets ₩410,194 553,593
Change in capital adjustments - increase in gain of
equity method accounted investments, net of tax of nil 111,759 120,008
Change in capital adjustments - increase in loss of
equity method accounted investments, net of tax of nil (171,983) (136,031)
Foreign currency translation difference, net of tax of nil (247,994) (203,539)
₩101,976 334,031
(In millions of won)
17. Provisions
The Company provides general warranty to the ultimate consumer for each product sold and accrues warranty expense at the time of
sale based on the history of actual claims. Also, the Company accrues potential expenses, which may occur due to replacement of
parts or voluntary recalls pending as of the end of the reporting period.
Other provision are comprised of provision related to loss on lawsuits.
Changes in provisions for the years ended December 31, 2013 and 2012 are summarized as follows:
Changes in provisions for the years ended December 31, 2013 and 2012 are summarized as follows, continued:
(*) Other decrease is mainly related to foreign currency translation impact.
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Balance at January 1 ₩1,802,983 31,365 1,834,348 1,643,068 32,093 1,675,161
Increase 1,050,494 641 1,051,135 1,040,461 4,029 1,044,490
Usage (835,862) (383) (836,245) (830,845) (3,907) (834,752)
Other decrease(*) (6,359) (2,086) (8,445) (49,701) (850) (50,551)
Balance at December 31 ₩2,011,256 29,537 2,040,793 1,802,983 31,365 1,834,348
Thereof current ₩612,312 5,657 617,969 528,405 3,433 531,838
Thereof non-current ₩1,398,944 23,880 1,422,824 1,274,578 27,932 1,302,510
(In millions of won)
(c) Other equity as of December 31, 2013 and 2012 are summarized as follows:
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Gain on retirement of capital stock ₩119,859 119,859
Other capital surplus 55,613 55,613
Treasury stock (24,432) (24,432)
₩151,040 151,040
(In millions of won)
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