2010 Non Consolidated Report 1

HYUNDAI MOBIS Co., Ltd.

Non-Consolidated Financial Statements

December 31, 2010 and 2009

(With Independent Auditors‟ Report Thereon)

Contents

Page Independent Auditors’ Report 1 Non-consolidated Statements of Financial Position 3

Non-consolidated Statements of Income 5

Non-consolidated Statements of Appropriation of Retained Earnings 6

Non-consolidated Statements of Changes in Equity 7

Non-consolidated Statements of Cash Flows 8

Notes to Non-consolidated Financial Statements 10

Independent Auditors’ Review Report on Internal Accounting Control System 64

Report on the Operations of Internal Accounting Control System 65

Independent Auditors’ Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders

HYUNDAI MOBIS Co., Ltd.:

We have audited the accompanying non-consolidated statements of financial position of HYUNDAI MOBIS Co., Ltd.

(the “Company”) as of December 31, 2010 and 2009, and the related non-consolidated statements of income,

appropriation of retained earnings, changes in equity and cash flows for the years then ended. These non-

consolidated financial statements are the responsibility of the Company's management. Our responsibility is to

express an opinion on these non-consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used

and significant estimates made by management, as well as evaluating the overall financial statement presentation. We

believe that our audits provide a reasonable basis for our opinion.

In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the

financial position of the Company as of December 31, 2010 and 2009 and the results of its operations, appropriation of

its retained earnings, the changes in its equity and its cash flows for the years then ended in conformity with accounting

principles generally accepted in the Republic of Korea.

Without qualifying our opinion, we draw attention to the following:

As discussed in note 2 to the non-consolidated financial statements, accounting principles and auditing standards and

their application in practice vary among countries. The accompanying non-consolidated financial statements are not

intended to present the financial position, results of operations, changes in equity and cash flows in accordance with

accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the

procedures and practices utilized in the Republic of Korea to audit such non-consolidated financial statements may

differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying

non-consolidated financial statements are for use by those knowledgeable about Korean accounting principles and

auditing standards and their application in practice.

Seoul, Korea

February 22, 2011

This report is effective as of February 22, 2011, the audit report date. Certain subsequent events or circumstances,

which may occur between the audit report date and the time of reading this report, could have a material impact on the

accompanying non-consolidated financial statements and notes thereto. Accordingly, the readers of the audit report

should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of

such subsequent events or circumstances, if any.


Non-consolidated Statements of Financial Position

As of December 31, 2010 and 2009

3

(In millions of won)

Note 2010 2009

Assets

Cash and cash equivalents 16 W 2,051,820 777,001

Short-term financial instruments 250,000 10,000

Accounts and notes receivable - trade, less allowance for

doubtful accounts of W938 million in 2010 and W20,621

million in 2009

8,16 2,156,067 2,198,424

Accounts and notes receivable - other, less allowance for

doubtful accounts of W9,049 million in 2010 and W3,683

million in 2009

8,16 47,262 35,442

Inventories 4 714,235 636,663

Current financial derivative assets 17 7,157 3,169

Current deferred income tax assets 24 21,636 10,128

Other current assets 5 13,682 9,340

Total current assets 5,261,859 3,680,167

Long-term financial instruments 3 4,023 4,023

Available-for-sale securities 6 134,076 140,618

Equity method accounted investments 7 6,427,536 5,227,795

Property, plant and equipment, net 9,31 1,414,246 1,362,714

Intangible assets, net 10,31 513,796 667,966

Non-current financial derivative assets 17 3,924 1,824

Other non-current assets 11 104,377 104,552

Total non-current assets 8,601,978 7,509,492

Total assets W 13,863,837 11,189,659

See accompanying notes to non-consolidated financial statements.


Non-consolidated Statements of Financial Position

As of December 31, 2010 and 2009

4


Note 2010 2009

Liabilities

Accounts and notes payable - trade 8,16 W 1,856,233 1,875,100

Accounts and notes payable - other 8,16 243,528 277,092

Short-term borrowings 13 - 110,000

Current portion of bonds, net of present value discount of W99

million in 2009 13 - 99,901

Advance from customers 64,060 41,372

Accrued expenses 53,677 45,943

Current provision for warranties 14 85,157 38,011

Income taxes payable 24 250,683 91,196

Current financial derivative liabilities 17 479 2,039

Other current liabilities 12 22,803 33,532

Total current liabilities 2,576,620 2,614,186

Bonds, net of discount of W725 million in 2010 and W627

million in 2009 13 299,275 199,373

Provision for retirement and severance benefits 15 69,078 52,037

Non-current provision for warranties 14 35,751 23,562

Non-current deferred income tax liabilities 24 705,230 447,917

Non-current financial derivative liabilities 17 2,561 2,456

Total non-current liabilities 1,111,895 725,345

Total liabilities 3,688,515 3,339,531

Stockholders’ equity

Common stock of W5,000 par value

Authorized – 275,000,000 shares

Issued and outstanding – 97,343,863 shares 18 490,969 490,969

Preferred stock 18 127 127

Capital surplus 18 1,361,124 1,342,035

Capital adjustments 19 (151,639) (165,054)

Accumulated other comprehensive income 27 209,339 185,667

Retained earnings 20 8,265,402 5,996,384

Total stockholders’ equity 10,175,322 7,850,128

Total stockholders’ equity and liabilities W 13,863,837 11,189,659



Non-consolidated Statements of Income

For the years ended December 31, 2010 and 2009

5

(In millions of won, except earnings per share) Note 2010 2009

Sales 8,21,31 W 13,695,717 10,633,020

Cost of sales 8,22 10,518,898 8,097,949

Gross profit 3,176,819 2,535,071

Selling, general and administrative expenses 23,30 1,373,529 1,112,777

Operating income 31 1,803,290 1,422,294

Interest income 48,808 33,919

Interest expense (20,742) (25,056)

Loss on impairment of available-for-sale securities - (4,595)

Loss on sale of equity method accounted investment 7 (7,204) (40)

Gain on equity method accounted investments, net 7 1,227,197 641,543

Foreign currency translation loss, net (314) (153)

Foreign currency transaction loss, net (1,669) (9,358)

Loss on sale of property, plant and equipment, net (6,352) (11,077)

Loss on sale of accounts and notes receivable – trade (17,527) (25,619)

Realized gain of financial derivatives, net 4,112 53,577

Unrealized gain (loss) of financial derivatives, net 17 1,013 (783)

Reversal of allowance for doubtful accounts 18,435 -

Donations (16,076) (11,357)

Other, net 16,277 59

Other income 1,245,958 641,060

Income before income taxes 3,049,248 2,063,354

Income taxes 24 625,953 448,134

Net income W 2,423,295 1,615,220

Earnings per share

Basic earnings per share 25 W 25,413 17,812



Non-consolidated Statements of Appropriation of Retained Earnings


6

Date of Appropriation for 2010: March 11, 2011

Date of Appropriation for 2009: March 12, 2010

(In millions of won) Note 2010 2009

Unappropriated retained earnings

Balance at beginning of year W 283 49

Changes in retained earnings of equity-method accounted

Investments, net of tax

(35,242) (53,660)

Net income 2,423,295 1,615,220

Balance at end of year before appropriation 2,388,336 1,561,609

Transfers from voluntary reserves

Reserve for research and human resource development 6,000 6,000

Unappropriated retained earnings available for

appropriation

2,394,336 1,567,609

Appropriation of retained earnings

Legal reserve 14,315 50,000

Dividends 26 143,140 119,035

Voluntary reserve 2,236,800 1,398,291

2,394,255 1,567,326

Unappropriated retained earnings to be carried over to

subsequent year

W 81 283



Non-consolidated Statements of Changes in Equity


7

(In millions of won) Capital

stock Capital

surplus Capital

adjustments

Accumulated

other

comprehensive

income Retained

earnings

Total

stockholders’

equity

Balance at January 1, 2009 W 442,332 314,245 (114,901) 240,896 4,520,569 5,403,141

Dividends - - - - (85,745) (85,745)

Retained earnings after appropriation - - - - 4,434,824 5,317,396

Net income - - - - 1,615,220 1,615,220

Issuance of common stock through

merger 48,764 1,028,190 (29,411) - - 1,047,543

Gain on valuation of available-for-sale

securities, net of tax - - - 2,041 - 2,041

Loss on valuation of available-for-sale

securities, net of tax - - - 23,247 - 23,247

Gain on valuation of financial derivative

instruments, net of tax - - - 3,878 - 3,878

Loss on valuation of financial

derivatives, net of tax - - - (359) - (359)

Adjustments of equity in equity method

accounted investments, net of tax - (400) (20,742) (84,036) (53,660) (158,838)

Balance at December 31, 2009 W 491,096 1,342,035 (165,054) 185,667 5,996,384 7,850,128

Balance at January 1, 2010 W 491,096 1,342,035 (165,054) 185,667 5,996,384 7,850,128

Dividends - - - - (119,035) (119,035)

Retained earnings after appropriation - - - - 5,877,349 7,731,093

Net income - - - - 2,423,295 2,423,295

Disposal of treasury stock and others, net

of tax - 19,089 13,415 - - 32,504

Gain on valuation of available-for-sale

securities, net of tax - - - (711) - (711)

Loss on valuation of available-for-sale

securities, net of tax - - - (1,804) - (1,804)

Gain on valuation of financial

derivatives, net of tax - - - 5,834 - 5,834

Loss on valuation of financial

derivatives, net of tax - - - (2,310) - (2,310)

Adjustments of equity in equity method

accounted investments, net of tax - - - 22,663 (35,242) (12,579)

Balance at December 31, 2010 W 491,096 1,361,124 (151,639) 209,339 8,265,402 10,175,322



Non-consolidated Statements of Cash Flows


8

(In millions of won) 2010 2009

Cash flows from operating activities

Net income W 2,423,295 1,615,220

Adjustments for:

Salaries 18,514 -

Accrual for retirement and severance benefits 60,718 32,448

Accrual for warranties 113,805 59,291

Depreciation 140,007 119,426

Amortization 163,627 111,005

Accrual for allowance for doubtful accounts - 4,443

Reversal of allowance for doubtful accounts (18,435) -

Interest expense 478 462

Loss on foreign currency translations, net 315 149

Loss on sale of accounts and notes receivable - trade 17,527 25,619

Loss on valuation of inventories 7,295 9,899

Loss on inventory obsolescence 12,685 28,072

Loss on impairment of available-for-sale securities - 4,595

Gain on equity method accounted investments, net (1,227,197) (641,543)

Loss on sale of equity method accounted investment 7,204 40

Loss on sale of property, plant and equipment, net 6,352 11,077

Loss (gain) on valuation of financial derivatives, net (1,013) 783

Others, net 11,015 1,890

(687,103) (232,344)

Changes in assets and liabilities:

Accounts and notes receivable - trade 42,118 (552,119)

Accounts and notes receivable - other (14,451) (3,887)

Accrued income (7,141) 3,389

Advance payments 381 (381)

Prepaid expenses 2,416 3,661

Financial derivative assets 1,426 (104)

Deferred income tax assets 2,471 8,702

Inventories (97,552) (100,096)

Accounts and notes payable - trade (18,630) 564,018

Accounts and notes payable - other (13,483) 65,717

Advances from customers 22,686 14,349

Accrued expenses 7,738 29,095

Provision for warranties (54,470) (30,288)

Income taxes payable 153,500 (182,529)

Deferred income tax liabilities 245,053 140,555

Financial derivative liabilities (3,343) (469)

Payments of retirement and severance benefits (18,082) (20,568)

Deposits for severance benefits (25,680) (10,061)

Dividend income 80,124 47,152

Others, net (10,644) 11,400

Net cash provided by operating activities W 2,030,629 1,370,412



Non-consolidated Statements of Cash Flows


9


Cash flows from investing activities

Decrease(increase) in short-tem financial instruments, net W (240,000) 70,000

Proceeds from sale of property, plant and equipment 5,490 40,623

Proceeds from sale of intangible assets - 199

Proceeds from sale of available-for-sale securities 1,686 33,702

Proceeds from sale of equity method investment securities 33,054 4,797

Increase in deposits provided, net (8,350) (5,545)

Increase (decrease) in guarantee deposits, net 6,954 (8,229)

Proceeds from government subsidy 168 -

Purchase of available-for-sale securities (276) (38,455)

Purchase of equity method investment securities (108,047) (1,536,048)

Purchase of property, plant and equipment (208,686) (113,287)

Purchase of intangible assets (8,759) (22,208)

Increase from merger - 6,099

Net cash used in investing activities (526,766) (1,568,352)

Cash flows from financing activities

Proceeds from short-term borrowings - 340,000

Proceeds from bonds 99,523 199,117

Exercise of stock options 468 -

Purchase of treasury stock - (3,471)

Repayment of short-term borrowings (110,000) (366,000)

Repayment of current portion of long-term debt (100,000) (180,000)

Dividends paid (119,035) (85,745)

Net cash used in financing activities (229,044) (96,099)

Net increase (decrease) in cash and cash equivalents 1,274,819 (294,039)

Cash and cash equivalents at beginning of year 777,001 1,071,040

Cash and cash equivalents at end of year W 2,051,820 777,001

See accompanying notes to non-consolidated financial statements


Notes to Non-consolidated Financial Statements


10

1. Organization and Description of Business

HYUNDAI MOBIS Co., Ltd. (the “Company”) was incorporated on June 25, 1977, under the laws of the Republic of

Korea, to engage in the auto parts business, mainly manufacturing parts and modules, for car production, after-sales

services, and others. The shares of the Company have been listed on the Korea Stock Exchange since 1989.

Under its Articles of Incorporation, the Company is authorized to issue to investors, other than current shareholders,

convertible bonds and bonds with warrants with face values of up to W1,000,000 million and W200,000 million,

respectively. The Company is also authorized, subject to the Board of Directors‟ approval, to issue shares of

common or preferred stock to investors other than current shareholders for issuance of depository receipts, attraction

of foreign capital, general public subscription, and shares to employee stock ownership associations.

Also, the Company has a stock option plan that provides for the granting of stock purchase options to employees or

directors who have contributed or are expected to contribute to the Company within fifteen percent of issued shares,

subject to the extraordinary approval of shareholders during a general shareholders‟ meeting or within one percent of

issued shares, subject to the Board of Directors‟ approval. There were no stock options granted as of and for the

years ended December 31, 2010 and 2009.

Under its Articles of Incorporation, the Company is authorized to issue shares of non-voting preferred stock up to 25

million shares. In case the Company is not able to pay the agreed additional dividends for preferred stock, the

preferred shareholders are given the voting rights from the date of the general shareholders‟ meeting which approves

the restraint of dividends to the preferred stock, to the date of the general shareholders‟ meeting which approves the

resumption of the dividends to the preferred stock. As of December 31, 2010 and 2009, the numbers of the issued

preferred stocks of the Company totaled 25,458 shares. The Company is authorized, subject to the Board of

Directors‟ approval, to retire treasury stock up to the maximum amount of certain undistributed earnings. Until

December 31, 2010, 850,000 shares of common stock have been retired (Note 18).

The Company‟s common stockholders as of December 31, 2010 and 2009 are as follows:

2010 2009

Stockholders

Number of

Shares

Percentage of

ownership

Number of

Shares

Percentage of

ownership

KIA Motors Corporation 16,427,074 16.88% 16,427,074 16.88%

Mong-Ku, Chung 6,778,966 6.96% 6,778,966 6.96%

Hyundai Steel Company 5,504,846 5.66% 5,504,846 5.66%

Glovis Co., Ltd. 656,293 0.67% 656,293 0.67%

Treasury stock 1,943,319 2.00% 2,142,450 2.20%

Others 66,033,365 67.83% 65,834,234 67.63%

97,343,863 100.00% 97,343,863 100.00%




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2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies

(a) Basis of Presenting Financial Statements

The Company maintains its accounting records in Korean won and prepares statutory non-consolidated financial

statements in the Korean language in conformity with accounting principles generally accepted in the Republic

of Korea. Certain accounting principles applied by the Company that conform with financial accounting

standards and accounting principles in the Republic of Korea may not conform with generally accepted

accounting principles in other countries. Accordingly, these financial statements are intended solely for use by

those who are informed about Korean accounting principles and practices. The accompanying non-consolidated

financial statements have been condensed, restructured and translated into English from the Korean language

non-consolidated financial statements.

Certain information included in the Korean language non-consolidated financial statements, but not required for

a fair presentation of the Company's financial position, results of operations, cash flows or changes in equity is

not presented in the accompanying non-consolidated financial statements.

The Company prepares the non-consolidated financial statements in accordance with generally accepted

accounting principles in the Republic of Korea, and the Company applied the same accounting policies that were

adopted in the previous year‟s non-consolidated financial statements.

(b) Revenue Recognition

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of

returns and allowances, trade discounts and volume rebates. Revenue is recognized when the significant risks

and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the

associated costs and possible return of goods can be estimated reliably, and there is no continuing management

involvement with the goods. Consequently, revenue from the sale of merchandise is recognized at the time of

delivery and revenue from the sale of finished goods is recognized upon completion of inspection by customers.

(c) Allowance for Doubtful Accounts

Allowance for doubtful accounts is estimated based on past experience of collection and future collectability and

presented as a deduction from related receivables.

(d) Trade Accounts and Notes Receivable Assigned or Discounted

When the Company sells or discounts certain accounts or notes receivable to others, the company treats the

transaction as a sale of the receivables which calculated by the differences between carrying amount and the

consideration received, if the contractual rights and obligations related to the receivables are substantially

transferred to the buyers.




12

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(e) Inventories

Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling

price in the ordinary course of business, less the estimated selling costs. The cost of inventories is determined

by the monthly-calculated weighted-average method for merchandise, finished goods, work-in-progress, raw

material and supplies, and by the moving-average method for auto parts for after sales service, and by the

specific identification method for materials in transit. Amounts of inventory written down to net realizable

value due to losses occurring in the normal course of business are recognized as cost of goods sold and are

deducted from the carrying value of inventories.

(f) Investments in Securities (Excluding Investments in Associates, Subsidiaries and Joint Ventures)

Upon acquisition, the Company classifies debt and equity securities (excluding investments in subsidiaries,

associates and joint ventures) into the following categories: held-to-maturity, available-for-sale or trading

securities.

Investments in debt securities where the Company has the positive intent and ability to hold to maturity are

classified as held-to-maturity. Securities that are acquired principally for the purpose of selling in the short term

are classified as trading securities. Investments not classified as either held-to-maturity or trading securities are

classified as available-for-sale securities.

Investments in securities (excluding investments in subsidiaries, associates and joint ventures) are initially

recognized at cost.

Trading securities are subsequently carried at fair value. Gains and losses arising from changes in the fair value

of trading securities are included in the income statement in the period in which they arise. Available-for-sale

securities are subsequently carried at fair value. Gains and losses arising from changes in the fair value of

available-for-sale securities are recognized as accumulated other comprehensive income, net of tax, directly in

equity. Investments in available-for-sale securities that do not have readily determinable fair values are

recognized at cost less impairment, if any. Held-to-maturity investments are carried at amortized cost with

interest income and expense recognized in the income statement using the effective interest rate method.

The fair value of marketable securities is determined using quoted market prices as of the period end. Non-

marketable debt securities are fair valued based on the standard trading price suggested by the investment

management companies.

The Company reviews investments in securities whenever events or changes in circumstances indicate that the

carrying amount of the investments may not be recoverable. Impairment losses are recognized when the

reasonably estimated recoverable amounts are less than the carrying amount and it is not obviously evidenced

that impairment is unnecessary.




13


(f) Investments in Securities (Excluding Investments in Associates, Subsidiaries and Joint Ventures),

Continued

Trading securities are presented as current assets. Available-for-sale securities, which mature within one year

from the balance sheet date or where the likelihood of disposal within one year from the balance sheet date is

probable, are presented as current assets. Held-to-maturity securities, which mature within one year from the

balance sheet date, are presented as current assets. All other available-for-sale securities and held-to-maturity

securities are presented as long-term investments.

(g) Equity Method Accounted Investments in Associates and Subsidiaries

Associates are entities on which the Company and its subsidiaries have the ability to significantly influence the

financial and operating policies. It is presumed to have significant influence if the Company holds directly or

indirectly 20 percent or more of the voting power unless it can be clearly demonstrated that this is not the case.

Subsidiaries are entities controlled by the Company.

Investments in associates and subsidiaries are accounted for using the equity method of accounting and are

initially recognized at cost. Under the equity method, the Company records changes in its proportionate

ownership in the book value of the associates and subsidiaries in current operations, as capital adjustments, as

adjustments to retained earnings or adjustments to equity in earnings or losses of associates and subsidiaries,

depending on the nature of the underlying change in the book value of the investee. When the Company‟s share

of losses in investees equals or exceeds its interest in the investees, including preferred stock or other long term

loans and receivables issued by the investees, the Company does not recognize further losses, unless it has

obligations or made payments on behalf of the investees. Gains and losses on transactions between the

Company and its investees are eliminated to the extent of the Company‟s interest in each investee.

The excess of the acquisition cost of an investment in an investee over the Company‟s interest of the fair value of

the identifiable net assets acquired is amortized using the straight-line method over its estimated useful life.

When acquisition cost of investments in an investee is less than the Company‟s interest on the fair value of the

identifiable net assets acquired, such difference is recognized using the straight-line method as a gain over the

weighted average period of useful lives of the depreciable and amortizable non-monetary assets. The remainder

over the fair value of identifiable non-monetary assets is recognized as a gain in the period of purchase. The

amount of unamortizable non-monetary assets is recognized as a gain in the period of disposal. Also, the

Company‟s interest on the difference between fair value and carrying value of identifiable assets and liabilities of

an investee, at the time of acquisition, is depreciated or reversed in accordance with accounting policies of related

assets or liabilities of an investee.

Foreign currency financial statements of associates and subsidiaries are translated into Korean won using the

exchange rates in effect as of the reporting period for assets and liabilities (the exchange rates on the acquisition

date for capital accounts), and annual average exchange rates for income and expenses. Cumulated translation

gains or losses are included in accumulated other comprehensive income, a component of stockholders‟ equity.




14


(g) Equity Method Accounted Investments in Associates and Subsidiaries, Continued

The Company‟s proportionate unrealized profit arising from sales by the Company to associates and subsidiaries,

sales by the associates and subsidiaries to the Company or sales between associates and subsidiaries are

eliminated to the extent of the Company‟s ownership in each associate or subsidiary.

If the investee is a subsidiary, net income and net assets of the Company‟s non-consolidated financial statements

should agree with the Company‟s share in the net income and net assets of the consolidated financial statements,

except when the Company discontinues the application of the equity method due to its investment in a subsidiary

being reduced to zero.

(h) Joint Venture

If the Company is a member of Jointly Controlled Entities, the Company accounts for its interest in a jointly

controlled entity using the equity method.

(i) Property, Plant and Equipment

Property, plant and equipment are stated at cost. Assets acquired through investment in kind or donations are

recorded at their fair value upon acquisition. For assets acquired in exchange for a non-monetary asset with

different function, the fair value of the asset given up is used to measure the cost of the asset received unless the

fair value of the asset received is more clearly evident. For assets acquired in exchange for a non-monetary

asset with similar function, the carrying amount of the asset given up is used to measure the cost of the asset.

Significant additions or improvements extending the useful life of assets are capitalized. Normal maintenance

and repairs are charged to expense as incurred.

Depreciation is computed by the straight-line method over the useful lives of the respective assets as follows:

Useful lives (years)

Buildings 10 ~ 30

Structures 10 ~ 30

Machinery and equipment 5 ~ 15

Vehicles 2 ~ 15

Tools 2 ~ 5

Furniture and fixtures 2 ~ 5

The Company recognizes interest costs and other financial charges on borrowings associated with the production,

Purchase or construction of property, plant and equipment as an expense in the period in which they are incurred.


(i) Property, Plant and Equipment, Continued

The Company reviews property, plant and equipment for impairment whenever events or changes in

circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is




15

recognized when the expected estimated undiscounted future net cash flows from the use of the asset and its

eventual disposal are less than its carrying amount.

(j) Goodwill and Negative Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets

acquired. Goodwill is amortized on a straight-line basis over its estimated useful life of 5 to 10 years. Where

it is no longer probable that goodwill will be recovered from the expected future economic benefits generated by

the acquisition, it is expensed immediately.

Negative goodwill is the excess of the fair value of identifiable net assets acquired in an acquisition over the

acquisition cost. Negative goodwill is presented as a reduction in intangible assets. The amount of negative

goodwill up to the fair value of identifiable non-monetary assets is recognized using the straight-line method as a

gain over the weighted average period of useful lives of the depreciable and amortizable non-monetary assets.

The remainder over the fair value of identifiable non-monetary assets is recognized as a gain in the period of

acquisition. Negative goodwill related to future losses and expenses that have been specifically identified in the

purchase agreement, is recognized as income as these are actually incurred.

(k) Intangible Assets

Intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Impairment

losses are determined as the amount required to reduce the carrying amount of an intangible asset to its

recoverable amount.

The criteria for determining whether an incurred cost qualifies as an intangible asset and the periods of

amortization for each classification of intangible asset are described below.

(i) Research and Development Costs

To assess whether an internally generated intangible asset meets the criteria for recognition, the Company

classifies the expense generation process into a research phase and a development phase. All costs incurred

during the research phase are expensed as incurred. Costs incurred during the development phase are

recognized as assets only if the following criteria are met for recognition in Statements of Korean

Accounting Standards (“SKAS”) No. 3 Intangible Assets: (1) completion of the intangible asset is

technically feasible so that it will be available for use or sale; (2) the Company has the intention and ability

to complete the intangible asset and use or sell it; (3) there is evidence that the intangible asset will generate

probable future economic benefit; (4) the Company has adequate technical, financial and other resources to

complete the development of the intangible asset and the intangible asset will be available; and (5) the

expenditures attributable to the intangible asset during its development can be reliably determined.


(k) Intangible Assets, Continued

If the costs incurred fail to satisfy these criteria, they are recorded as expenses as incurred. Where

development costs satisfy the criteria, they are capitalized and amortized on a straight-line basis over 5 years.

The expenditure capitalized includes the cost of materials, direct labor and an appropriate proportion of

overheads.




16

(ii) Other Intangible Assets

Other intangible assets, which consist of industrial property rights, software and other intangible assets, are

amortized using the straight-line method over their respective estimated useful lives as follows:

Useful lives (years)

Industrial rights 2 ~ 10

Software 2 ~ 5

Other intangible assets 6

The Company reviews intangible assets for impairment whenever events or changes in circumstances indicate

that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the

expected estimated undiscounted future net cash flows from the use of the asset and its eventual disposal are less

than its carrying amount.

(l) Government Grant Received for Capital Expenditure

Government grant received from third parties for capital expenditure are presented as a reduction of the

acquisition cost of the acquired assets and, accordingly, reduce depreciation expense related to the acquired assets

over their useful lives.

On the other hand, in case where the Company receives government grants and is obligated to repay certain

portion of government grant received upon their success of development activities, development expenditures are

accounted for guarantee deposits liabilities at the initial date of contract. With respect to government grant with

no obligation to repay, government grant is accounted for other income and expense in current year based on the

proportionate of expenditure on research and development.

(m) Cost of issuance of stock and debenture

Issuance costs for stock are deducted from capital in excess of par value and debenture issuance costs are

included in bond discounts or premium on bonds.

(n) Discount (Premium) on Debentures

Discount (premium) on debentures issued, which represents the difference between the face value and issuance

price of debentures, is amortized (accreted) using the effective interest rate method over the life of the debentures.

The amount amortized (accreted) is included in interest expense.

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17


(o) Retirement and Severance Benefits

Employees who have been with the Company for more than one year are entitled to lump-sum payments based

on salary rates and length of service at the time they leave the Company. The Company's estimated liability

under the plan, which would be payable if all employees left at the end of the reporting period, is accrued in the

accompanying non-consolidated statements of financial position. A portion of the liability is covered by an

employees‟ severance benefits trust where the employees have a vested interest in the deposit with the insurance

company or the bank in trust. The deposit for severance benefits held in trust is, therefore, reflected in the

accompanying non-consolidated statements of financial position as a reduction of the liability for retirement and

severance benefits.

Through March 1999, under the National Pension Scheme of Korea, the Company transferred a certain portion of

retirement allowances for employees to the National Pension Fund. The amount transferred reduced the

retirement and severance benefit amount to be paid to the employees when they leave the Company and is

accordingly reflected in the accompanying non-consolidated financial statements as a reduction of the retirement

and severance benefits liability. However, due to regulation effective April 1999, such transfers to the National

Pension Fund are no longer required.

(p) Foreign Currency Translation

Monetary assets and liabilities denominated in foreign currencies are translated into Korean won at the foreign

exchange rate on the end of the reporting period, with the resulting gains or losses recognized in the income

statement. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical

cost, are translated into Korean won at the foreign exchange rate on the date of the transaction.

Foreign currency assets and liabilities of foreign-based operations are translated at the rate of exchange at the end

of the reporting period. Foreign currency amounts in the statement of income are translated using an average

rate and foreign currency balances in the capital account are translated using the historical rate.




18


(q) Derivatives and Hedge Accounting

The Company holds financial derivatives to hedge its foreign currency risk exposures. Embedded derivatives

are separated from the host contract and accounted for separately if the economic characteristics and risks of the

host contract and the embedded derivative are not closely related, a separate instrument with the same terms as

the embedded derivative would meet the definition of a derivative and the hybrid instrument, which is composed

by embedded derivatives and host contract, is not measured at fair value with changes in fair value recognized in

profit or loss.

Where a derivative, which meets certain criteria, is used for hedging the exposure to the variability of the future

cash flows of a forecasted transaction it is designated as a cash flow hedge.

The Company documents, at the inception of the transaction, the relationship between hedging instruments and

hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions.

The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the

derivatives that are used in hedging transactions are highly effective in offsetting the changes in cash flows of

hedged items.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow

hedges are recognized in equity. The gain or loss relating to any ineffective portion is recognized immediately

in the statement of income. Amounts accumulated in equity are recycled to the income statement in the periods

in which the hedged item will affect income or expense. When a hedging instrument expires or is sold, or when

a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at the

time remains in equity and is recognized when the forecast transaction is ultimately recognized in the statement

of income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was

reported in equity is immediately transferred to the statement of income.

(r) Provisions, Contingent Assets and Contingent Liabilities

Provisions are recognized when all of the following are met: (1) an entity has a present obligation as a result of

the past event, (2) it is probable that an outflow of resources embodying economic benefits will be required to

settle the obligation, and (3) a reliable estimate can be made of the amount of the obligation.

Where the expenditure required to settle a provision is expected to be reimbursed by another party, the

reimbursement is recognized as a separate asset when, and only when, it is virtually certain that reimbursement

will be received if the Company settles the obligation. The expense generated by the provision is presented net

of the amount of expected reimbursement.




19


(s) Income Taxes

Income tax on the income or loss for the year comprises current and deferred tax. Income tax is recognized in

the statement of income except to the extent that it relates to items recognized directly in equity, in which case it

is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted.

Deferred tax is provided using the asset and liability method, providing for temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying

amount of assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period.

A deferred tax asset is recognized only to the extent that it is probable that future taxable income will be available

against which the unused tax losses and credits can be utilized. Deferred tax assets are reduced to the extent

that it is no longer probable that the related tax benefit will be realized.

Deferred tax assets and liabilities are classified as current or non-current based on the classification of the related

asset or liability for financial reporting or the expected reversal date of the temporary difference for those with no

related asset or liability such as loss carryforwards and tax credit carryforwards. The deferred tax amounts are

presented as a net current asset or liability and a net non-current asset or liability.

Changes in deferred taxes due to a change in the tax rate except for those related to items initially recognized

outside profit or loss (either in other comprehensive income or directly in equity) are recognized as income in the

current year.

(t) Use of Estimates

The preparation of non-consolidated financial statements in accordance with accounting principles generally

accepted in the Republic of Korea requires management to make estimates and assumptions that affect the

amounts reported in the non-consolidated financial statements and related notes to non-consolidated financial

statements. Actual results could differ from those estimates.

(u) Reclassification

Certain reclassifications have been made to the prior year non-consolidated financial statements to conform to

the 2010 presentation. Those reclassifications did not have any impact on the reported net income and net asset

as of and for the year ended December 31, 2009.




20

3. Restricted Deposits

Deposits which are restricted in use as of December 31, 2010 and 2009 are summarized as follows:


Long-term deposits W 4,023 4,023

4. Inventories

Inventories as of December 31, 2010 and 2009 are summarized as follows:


Merchandise W 474,404 399,905

Finished goods 22,968 23,663

Work-in-progress 60,732 41,554

Raw materials 116,048 102,180

Supplies 10,125 9,296

Materials-in-transit 41,276 61,023

Outsourcing 11,408 14,473

Less allowance for valuation loss (22,726) (15,431)

W 714,235 636,663

5. Other Current Assets

Other current assets as of December 31, 2010 and 2009 are summarized as follows:


Accrued income W 8,241 1,101

Advance payments - 381

Prepaid expenses 5,441 7,858

W 13,682 9,340




21

6. Available-for-sale Securities

Available-for-sale securities consist of marketable securities recorded at fair value and non-marketable securities

recorded at cost.

Available-for-sale securities as of December 31, 2010 and 2009 are summarized as follows:


Marketable securities W 115,894 118,666

Non-marketable securities 18,182 21,952

W 134,076 140,618

(a) Marketable securities recorded at fair value

Marketable securities recorded at fair value as of December 31, 2010 and 2009 are summarized as follows:

(In millions of won, except number of shares and percentage of ownership)

2010 2009

Number of

shares

Percentage

of

ownership

Acquisition

cost Book Value

Acquisition

cost Book Value

Hyundai Development Co.,

Ltd.

437,500 0.58% W 8,775 14,875 8,775 16,516

HMC Investment Securities Co.,

Ltd.

4,623,587 15.76% 114,045 98,020 114,045 100,332

Hyundai Merchant Marine Co.,

Ltd.

61,642 0.04% 1,402 2,376 1,402 1,646

Ssangyong Motor Co., Ltd. 60,127 0.16% 451 506 - -

Enova Systems, Inc. 80,000 0.39% 90 117 90 172

W 124,763 115,894 124,312 118,666




22

6. Available-for-sale Securities, Continued

(b) Non-marketable securities recorded at cost

Non-marketable securities recorded at cost as of December 31, 2010 and 2009 are summarized as follows:

(In millions of won, except number of shares and percentage of ownership)

2010 2009

Number of

shares

Percentage

of

ownership

Acquisition

cost Book Value

Acquisition

cost Book Value

China Millennium Corporation I,

Ltd.

- 10.10% W 2,099 2,099 2,099 2,099

China Millennium Corporation Ⅱ,

Ltd.

- 10.10% 2,089 2,089 2,089 2,089

China Millennium Corporation Ⅲ,

Ltd.

- 10.10% 4,873 4,873 4,873 4,873

Guangdong Hyundai Mobis - - - - 8,374 2,756

Gong-ju Environment Co., Ltd. - - - - 1,124 1,124

Haevichi Hotel and Resort Co.,

Ltd. (formerly, Haevichi Resort

Co., Ltd.)

310,000 10.00% 2,132 - 2,132 -

Global Information Technology

Co., Ltd.

900,000 9.76% 450 450 450 450

MTComm Co., Ltd. 26,668 17.58% 200 - 200 -

The Sign Co., Ltd. 417,000 10.69% 2,085 - 2,085 -

GTWeb Korea, Inc. 2,659 5.32% 835 - 835 -

Digital & Analog Co., Ltd. - - - - 22 9

Korea Auto Industries Coop.

Association

83 1.22% 15 15 15 15

The Korea Economic Daily 531,090 2.84% 2,656 2,656 2,656 2,656

Partecs Company., Ltd. 1,040,000 13.00% 5,200 5,200 5,200 5,200

ZF SACHS KOREA Co., Ltd. 908,960 8.55% 635 635 635 635

Daewoo Motor Co., Ltd. 2,569 - - - - -

Haevichi Country Club Ltd. 450,000 15.00% 2,274 - 2,274 -

Daewoo Automobiles trust

instrument

- - 44 44 44 44

Mediazen Co., Ltd. 209,339 9.83% 2 2 2 2

Easy Move Co., Ltd. 11,897 8.20% 119 119 - -

SB Telcom Co., Ltd. 100,965 0.79% - - - -

W 25,708 18,182 35,109 21,952

These non-marketable securities are recorded at cost less impairment since their fair value is not readily determinable.




23

7. Equity Method Accounted Investments

(a) Investment in companies accounted for using the equity method as of December 31, 2010 is summarized as

follows:

(In millions of won, except percentage of ownership)

Company

Percentage

of

ownership

Purchase

Cost Net assets

Balance at

December 31,

2010

Hyundai Motor Company(*1) 20.78% W 2,139,997 4,389,761 4,677,298

Autoever Systems Corporation 20.00% 1,000 26,598 26,598

ZF Lemfoerder Chassis Technology Korea

Co., Ltd.

27.34% 2,668 4,627 4,579

Hyundai Amco Co., Ltd.(*2) 19.99% 10,067 83,361 83,361

IHL Co., Ltd.(*3) 90.00% 25,322 27,801 27,147

Hyundai Powertech Co., Ltd. 24.85% 114,848 152,317 146,843

HMC Investment Union 38.89% 21,000 21,153 21,153

M&Soft 25.67% 8,817 13,180 13,167

HL Green Power Inc.(*4) 51.00% 14,790 13,523 13,523

Hyundai Motor (Shanghai) Co., Ltd. 100.00% 4,571 38,407 30,261

Shanghai Hyundai Mobis Automotive Parts

Co., Ltd.

87.50% 11,956 176,765 173,808

Jiangsu Mobis Automotive Parts Co., Ltd. 100.00% 22,927 153,454 135,538

Beijing Hyundai Mobis Automotive Parts Co.,

Ltd.

100.00% 12,002 313,240 280,085

Beijing Mobis Transmission Co., Ltd. 31.96% 30,365 69,465 67,556

Beijing Mobis Chonche Automotive Parts Co.,

Ltd.

60.00% 5,070 20,898 19,970

Beijing Hyundai Mobis Parts Co., Ltd. 50.00% 4,089 31,919 28,272

Hyundai Motor Group (China) Ltd. 20.00% 6,138 41,112 41,112

Wuxi Mobis Automotive Parts Co., Ltd. 33.75% 11,727 30,435 27,561

Mobis Parts Jiangsu Yueda Trading Co.,

Ltd.

50.00% 2,632 15,265 14,157

Tianjin Mobis Automotive Parts Co., Ltd. 100.00% 14,903 54,013 42,050

Hyundai Mobis (Hongkong) Co., Limited 100.00% 3 3 3

Mobis Parts Europe N.V.(*5) 100.00% 85,515 101,886 -

Mobis Slovakia s.r.o. 100.00% 107,095 57,786 50,115

Mobis Automotive Czech s.r.o. 100.00% 24,573 41,427 33,089

Mobis Module CIS, LLC 99.00% 39,545 29,890 28,737

Mobis America Inc. 100.00% 258,448 261,810 239,244

America Auto Parts Inc. 100.00% 14,736 33,934 33,704

Mobis Brasil Fabricacao De Auto Pecas

Ltda(*6)

100.00% 16,539 16,718 16,718

Mobis Parts Middle East FZE(*5) 100.00% 3,902 44,989 -

Mobis India, Ltd.(*7) 100.00% 58,538 129,804 118,166

Mobis India Research and Development

Private Limited(*8)(formerly, Hyundai

Autonet India Engineering PVT Limited)

100.00% 925 1,847 925

Mobis Parts Australia PTY., Ltd. 100.00% 12,502 33,997 32,796

3,087,210

6,431,385

6,427,536 W

7. Equity Method Accounted Investments, Continued




24

(*1) The fair value of Hyundai Motor Company, listed in KSE (Korea Stock Exchange), as of December 31,

2010 is W7,943,181 million.

(*2) The Company‟s percentage of ownership in Hyundai Amco Co., Ltd. is less than 20%. However, the

equity method was applied in accordance with Statements of Korea Accounting Standards (“SKAS”) No.

15 Equity Method because the Company has significant influence on the investee.

(*3) The Company sold 10% share of IHL Co., Ltd. on July 27, 2010.

(*4) HL Green Power Inc. was established on January 14, 2010 in accordance with the joint venture agreement

between the Company and LG Chem Ltd.

(*5) The Company discontinued the application of the equity method as the book values of the investments were

reduced to zero.

(*6) The Company acquired its entire share of Mobis Parts Brazil Intermediancao de Negocios Ltda, previously

a 100% owned subsidiary of Mobis Parts America, LLC on November 4, 2010. The entity changed its name

to Mobis Brasil Fabricacao De Auto Pecas Ltda.

(*7) Mobis India, Ltd. merged with Hyundai Autonet India PVT., Ltd. on January 1, 2010.

(*8) Investments in subsidiaries and associates whose total assets as of the previous year-end are less than

W10,000 million are stated at cost in accordance with accounting principles generally accepted in the

Republic of Korea.




25


Investment in companies accounted for using the equity method as of December 31, 2009 is summarized as

follows:

(In millions of won, except percentage of ownership)

Company

Percentage

of

ownership

Purchase

Cost Net assets

Balance at

December 31,

2009

Hyundai Motor Company(*1) 20.78% W 2,139,997 3,509,170 3,880,191

Autoever Systems Corporation 20.00% 1,000 21,425 21,425

ZF Lemfoerder Chassis Technology Korea Co.,

Ltd.

27.34% 2,668 4,570 4,492

Hyundai Amco Co., Ltd.(*2) 19.99% 10,067 80,843 80,843

IHL Co., Ltd. 100.00% 28,136 37,135 36,903

Hyundai Commercial Co., Ltd. 20.00% 20,000 21,979 21,979

Hyundai Powertech Co., Ltd. 24.85% 90,000 115,015 107,155

HMC Investment Union 20.00% 6,000 6,202 6,202

M&Soft 25.67% 8,817 10,498 10,621

Hyundai Motor (Shanghai) Co., Ltd. 100.00% 4,571 25,555 18,228

Shanghai Hyundai Mobis Automotive Parts Co.,

Ltd.

87.50% 11,956 121,310 120,009

Jiangsu Mobis Automotive Parts Co., Ltd. 100.00% 22,927 106,062 96,915


Ltd.

100.00% 12,002 250,563 223,061

Beijing Mobis Transmission Co., Ltd. 31.96% 30,365 63,442 61,433


Ltd.

60.00% 5,070 17,960 17,304

Beijing Hyundai Mobis Parts Co., Ltd. 50.00% 4,089 22,692 20,983

Hyundai Motor Group (China) Ltd. 20.00% 6,138 27,747 27,747

Wuxi Mobis Automotive Parts Co., Ltd. 33.75% 11,727 26,086 24,814

Mobis Parts Jiangsu Yueda Trading Co., Ltd. 50.00% 2,632 11,159 9,849

Tianjin Mobis Automotive Parts Co., Ltd. 100.00% 14,903 32,321 20,600

Hyundai Mobis (Hongkong) Co., Limited(*4) 99.99% 3 (77) -

Mobis Parts Europe N.V. (*4) 100.00% 54,364 80,778 -

Mobis Slovakia s.r.o. 100.00% 107,995 36,304 33,213

Mobis Automotive Czech s.r.o. 100.00% 24,573 26,493 20,503

Mobis Module CIS, LLC(*3) 99.00% 33,808 29,542 33,808

Mobis America Inc. 100.00% 258,767 211,519 195,332

America Auto Parts Inc. 100.00% 14,736 19,625 19,637

Mobis Parts Middle East FZE(*4) 100.00% 3,902 29,177 -

Mobis India, Ltd. 100.00% 54,133 94,223 84,059

Hyundai Autonet India PVT., Ltd. 100.00% 3,813 6,146 4,405

Hyundai Autonet India Engineering PVT

Limited(*3)

100.00% 925 1,519 925

Mobis Parts Australia PTY., Ltd. 100.00% 12,502 26,146 25,159

W 3,002,586 5,073,129 5,227,795




26


(*1) The fair value of Hyundai Motor Company, listed in KSE (Korea Stock Exchange), as of December 31,

2009 is W5,539,625 million.

(*2) The Company‟s percentage of ownership in Hyundai Amco Co., Ltd. is less than 20%. However, the

equity method was applied in accordance with Statements of Korea Accounting Standards (“SKAS”) No.

15 Equity Method because the Company has significant influence on the investee.

(*3) Investments in subsidiaries and associates whose total assets as of the previous year-end are less than

W10,000 million are stated at cost in accordance with accounting principles generally accepted in the

Republic of Korea.

(*4) The Company discontinued the application of the equity method as the book values of the investments were

reduced to zero.

.




27


(b) Changes in goodwill for equity method accounted investments for the year ended December 31, 2010 were as

follows:


Company

Balance at

Jan. 1, 2010

Increase

Amortized

amount

Balance at Dec.

31, 2010

Hyundai Motor Company W 372,286 - 83,095 289,191

Hyundai Powertech Co., Ltd. (7,388) - (2,687) (4,701)

M&Soft 193 - 43 150

Beijing Mobis Transmission Co.,

Ltd. (225) - (150) (75)

Tianjin Mobis Automotive Parts

Co., Ltd. (8,439) - (1,875) (6,564)

Mobis Slovakia s.r.o. 866 - 193 673

Mobis America Inc. (206) - (46) (160)

Mobis India, Ltd. (661) - (147) (514)

W 356,426 - 78,426 278,000

Changes in goodwill for equity method accounted investments for the year ended December 31, 2009 were as

follows:


Company

Balance at

Jan. 1, 2009

Increase

Amortized

amount

Balance at Dec.

31, 2009

Hyundai Motor Company W 14,898 383,453 26,065 372,286

Hyundai Amco Co., Ltd. (1,598) - (1,598) -

Hyundai Powertech Co., Ltd. (10,075) - (2,687) (7,388)

M&Soft - 214 21 193

Beijing Mobis Transmission Co.,

Ltd. (375) - (150) (225)

Beijing Mobis Chonche

Automotive Parts Co., Ltd. (157) - (157) -

Wuxi Mobis Automotive Parts Co.,

Ltd. 65 - 65 -

Tianjin Mobis Automotive Parts

Co., Ltd. - (9,376) (937) (8,439)

Mobis Slovakia s.r.o. - 962 96 866

Mobis America Inc. - (229) (23) (206)

Hyundai Autonet India PVT., Ltd. - (734) (73) (661)

2,758

374,290

20,622

356,426 W




28


(c) Details of eliminated unrealized gains (losses) from inter-company transactions as of December 31, 2010 and

2009 are summarized as follows:


Company 2010 2009

Hyundai Motor Company W 1,654 1,265

ZF Lemfoerder Chassis Technology Korea Co., Ltd. 48 78

IHL Co., Ltd. 654 232

Hyundai Powertech Co., Ltd. 773 472

M&Soft 163 70

Hyundai Motor (Shanghai) Co., Ltd. 8,146 7,327

Shanghai Hyundai Mobis Automotive Parts Co., Ltd. 2,957 1,301

Jiangsu Mobis Automotive Parts Co., Ltd. 17,916 9,147

Beijing Hyundai Mobis Automotive Parts Co., Ltd. 33,155 27,502

Beijing Mobis Transmission Co., Ltd. 1,834 1,784

Beijing Mobis Chonche Automotive Parts Co., Ltd. 928 656

Beijing Hyundai Mobis Parts Co., Ltd. 3,647 1,709

Wuxi Mobis Automotive Parts Co., Ltd. 2,874 1,272

Mobis Parts Jiangsu Yueda Trading Co., Ltd. 1,108 1,310

Tianjin Mobis Automotive Parts Co., Ltd. 5,399 3,282

Hyundai Mobis (Hongkong) Co., Limited - (77)

Mobis Parts Europe N.V. 73,688 192,098

Mobis Slovakia s.r.o. 8,344 6,666

Mobis Automotive Czech s.r.o. 8,338 5,990

Mobis Module CIS, LLC 1,153 -

Mobis America Inc. 22,406 17,515

America Auto Parts Inc. 230 (12)

Mobis Parts Middle East FZE 59,152 50,214

Mobis India, Ltd. 11,124 10,164

Hyundai Autonet India PVT., Ltd. - 1,080

Mobis Parts Australia PTY., Ltd. 1,201 987

266,892

342,032 W




29


(d) Changes in the opening and closing balances of investments in companies accounted for using the equity method

for the year ended December 31, 2010 were as follows:


Company

Balance at

Jan. 1,

2010

Net

income

(loss)

Accumulated

other

comprehensive

income

Other

increase

(decrease)

(*1)

Balance at

Dec. 31,

2010

Hyundai Motor Company W 3,880,191 803,819 64,565 (71,277) 4,677,298

Autoever Systems Corporation 21,425 6,249 (76) (1,000) 26,598

ZF Lemfoerder Chassis Technology

Korea Co., Ltd. 4,492 87 - -

4,579

Hyundai Amco Co., Ltd. 80,843 12,601 (5,085) (4,998) 83,361

IHL Co., Ltd. 36,903 (6,306) - (3,450) 27,147

Hyundai Commercial Co., Ltd.(*2) 21,979 6,598 8,051 (36,628) -

Hyundai Powertech Co., Ltd. 107,155 15,210 (370) 24,848 146,843

HMC Investment Union 6,202 263 - 14,688 21,153

M&Soft 10,621 2,652 - (106) 13,167

HL Green Power Inc. - (1,267) - 14,790 13,523

Hyundai Motor (Shanghai) Co., Ltd. 18,228 12,876 (843) - 30,261

Shanghai Hyundai Mobis Automotive

Parts Co., Ltd. 120,009 52,878 921 -

173,808

Jiangsu Mobis Automotive Parts Co.,

Ltd. 96,915 38,453 170 -

135,538

Beijing Hyundai Mobis Automotive

Parts Co., Ltd. 223,061 57,648 (624) -

280,085

Beijing Mobis Transmission Co., Ltd. 61,433 5,747 376 - 67,556

Beijing Mobis Chonche Automotive

Parts Co., Ltd. 17,304 4,320 207 (1,861)

19,970

Beijing Hyundai Mobis Parts Co.,

Ltd. 20,983 14,256 66 (7,033)

28,272

Hyundai Motor Group (China) Ltd. 27,747 21,764 662 (9,061) 41,112

Wuxi Mobis Automotive Parts Co.,

Ltd. 24,814 3,197 (450) -

27,561

Mobis Parts Jiangsu Yueda Trading

Co., Ltd. 9,849 7,575 (162) (3,105)

14,157

Tianjin Mobis Automotive Parts Co.,

Ltd. 20,600 21,408 42 -

42,050

Hyundai Mobis (Hongkong) Co.,

Limited - 2 1 -

3

Mobis Parts Europe N.V.(*3) - 15,538 (15,538) - -

Mobis Slovakia s.r.o. 33,213 20,472 (3,570) - 50,115

Mobis Automotive Czech s.r.o. 20,503 14,357 (1,771) - 33,089

Mobis Module CIS, LLC 33,808 (7,503) (3,306) 5,738 28,737

Mobis America Inc. 195,332 53,507 (7,586) (2,009) 239,244

America Auto Parts Inc. 19,637 12,386 (655) 2,336 33,704

Mobis Brasil Fabricacao De Auto

Pecas Ltda - (585) 1,090 16,213

16,718

Mobis Parts Middle East FZE(*3) W - 5,533 (5,533) - -




30



Company

Balance at

Jan. 1, 2010

Net

income

(loss)

Accumulated

other

comprehensive

income

Other

increase

(decrease)

(*1)

Balance at

Dec. 31,

2010

Mobis India, Ltd. W 84,059 29,002 700 4,405 118,166

Hyundai Autonet India PVT., Ltd. 4,405 - - (4,405) -


Private Limited(formerly, Hyundai

Autonet India Engineering PVT

Limited) 925 - - -

925

Mobis Parts Australia PTY., Ltd. 25,159 4,460 3,177 - 32,796

5,227,795

1,227,197

34,459

(61,915)

6,427,536 W

(*1) Other increase (decrease) is consisted of decrease upon receipt of the dividends, acquisition of new shares,

changes in the stockholders‟ equity and acquisition from the merger.

(*2) The Company sold its entire share of Hyundai Commercial Co., Ltd. on June 30, 2010.

(*3) The Company discontinued the application of the equity method as the book value of the investments was

reduced to zero. Changes in the Company‟s interest, which were not recognized, amounted to W69,576

million.

Changes in the opening and closing balances of investments in companies accounted for using the equity method

for the year ended December 31, 2009 were as follows:


Company

Balance at

Jan. 1, 2009

Net

income

(loss)

Accumulated

other

comprehensive

income

Other

increase

(decrease)

(*1)

Balance at

Dec. 31,

2009

Hyundai Motor Company W 2,241,846 367,351 (19,705) 1,290,699 3,880,191

Autoever Systems Corporation 16,019 5,532 (126) - 21,425

ZF Lemfoerder Chassis Technology

Korea Co., Ltd. 4,434 58 - -

4,492

Hyundai Amco Co., Ltd. 71,947 13,181 712 (4,997) 80,843

IHL Co., Ltd. 34,568 2,335 - - 36,903

Hyundai Commercial Co., Ltd. 14,976 5,719 1,284 - 21,979

Hyundai Powertech Co., Ltd. 93,393 13,005 757 - 107,155

HMC Investment Union 6,013 189 - - 6,202

M&Soft - 1,758 46 8,817 10,621

Hyundai Motor (Shanghai) Co., Ltd. W 16,494 2,867 (1,133) - 18,228




31



Company

Balance at

Jan. 1, 2009

Net

income

(loss)

Accumulated

other

comprehensive

income

Other

increase

(decrease)

(*1)

Balance at

Dec. 31,

2009

Shanghai Hyundai Mobis Automotive

Parts Co., Ltd. W 82,794 47,007 (9,792) -

120,009


Ltd. 54,473 50,356 (7,914) -

96,915

Beijing Hyundai Mobis Automotive

Parts Co., Ltd. 177,016 63,323 (17,278) -

223,061

Beijing Mobis Transmission Co., Ltd. 56,974 9,237 (4,778) - 61,433

Beijing Mobis Chonche Automotive

Parts Co., Ltd. 15,143 4,715 (1,448) (1,106)

17,304

Beijing Hyundai Mobis Parts Co.,

Ltd. 15,808 11,020 (1,693) (4,152)

20,983

Hyundai Motor Group (China) Ltd. 23,054 14,262 (2,442) (7,127) 27,747

Wuxi Mobis Automotive Parts Co., Ltd. 17,954 8,834 (1,974) - 24,814


Ltd. 7,572 4,720 (660) (1,783)

9,849

Tianjin Mobis Automotive Parts Co.,

Ltd. - 7,736 (2,039) 14,903

20,600

Hyundai Mobis (Hongkong) Co.,

Limited(*2) 3 (10) 7 -

-

Hyundai Electronics Tianjin Co., Ltd. - 78 - (78) -

Mobis Parts Europe N.V.(*2) - (4,328) 4,328 - -

Mobis Slovakia s.r.o. 16,822 1,823 (19,215) 33,783 33,213

Hyundai Autonet Europe - 900 - (900) -

Mobis Automotive Czech s.r.o. 2,997 18,694 (1,188) - 20,503

Mobis Module CIS, LLC 7,242 - - 26,566 33,808

Mobis America Inc. 160,716 (10,892) (17,871) 63,379 195,332

Hyundai Autonet America Corp. - 318 - (318) -

America Auto Parts Inc. 20,372 976 (1,711) - 19,637

Mobis Parts Middle East FZE(*2) - (2,695) 2,695 - -

Mobis India, Ltd. 88,772 (576) (4,137) - 84,059

Hyundai Autonet India PVT., Ltd. - 831 (239) 3,813 4,405

Hyundai Autonet India Engineering

PVT Limited - - - 925

925

Mobis Parts Australia PTY., Ltd. 18,085 3,219 3,855 - 25,159

W 3,265,487 641,543 (101,659) 1,422,424 5,227,795

(*1) Other increase (decrease) is consisted of decrease upon receipt of the dividends, acquisition of new shares,

changes in the stockholders‟ equity and acquisition from the merger.

(*2) The Company discontinued the application of the equity method as the book value of the investments was

reduced to zero. Changes in the Company‟s interest, which were not recognized, amounted to W184,865

million.





32

(e) Financial information of equity method accounted investees, which represents 100% of the entities‟ balances, as

of December 31, 2010 is summarized as follows:


Company(*) Total assets Total liabilities Sales Net income

Hyundai Motor Company W 41,067,680 13,720,878 36,769,426 5,266,971

Autoever Systems Corporation 292,895 159,910 563,150 31,421


Co., Ltd. 23,103 6,172 33,030 101

Hyundai Amco Co., Ltd. 918,280 501,210 1,241,477 63,649

IHL Co., Ltd. 130,735 99,845 257,009 (6,276)

Hyundai Powertech Co., Ltd. 1,528,043 915,038 1,980,163 50,715

HMC Investment Union 54,394 - 1,478 941

M&Soft 71,073 19,725 63,839 9,997

HL Green Power Inc. 29,549 3,033 1,875 (2,484)

Hyundai Motor (Shanghai) Co., Ltd. 56,420 20,185 59,894 11,689


Co., Ltd. 205,042 33,085 213,336 53,062


Ltd. 477,007 323,554 1,358,804 46,048

Beijing Hyundai Mobis Automotive Parts

Co., Ltd. 1,038,167 724,927 3,113,255 59,981

Beijing Mobis Transmission Co., Ltd. 319,904 102,547 380,830 17,008

Beijing Mobis Chonche Automotive Parts

Co., Ltd. 81,462 46,632 199,916 7,517

Beijing Hyundai Mobis Parts Co., Ltd. 123,233 59,398 232,449 31,898

Hyundai Motor Group (China) Ltd. 451,239 245,678 2,076,411 111,450

Wuxi Mobis Automotive Parts Co., Ltd. 151,663 59,873 247,389 13,713

Mobis Parts Jiangsu Yueda Trading Co., Ltd. 72,023 41,489 89,132 14,441

Tianjin Mobis Automotive Parts Co., Ltd. 201,494 147,482 503,945 21,105

Hyundai Mobis (Hongkong) Co., Limited 11,906 11,903 63,642 79

Mobis Parts Europe N.V. 679,081 577,195 731,503 4,374

Mobis Slovakia s.r.o. 426,233 366,400 1,078,910 21,537

Mobis Automotive Czech s.r.o. 199,351 157,924 671,244 16,190

Mobis Module CIS, LLC 102,965 72,728 579 (4,185)

Mobis America Inc. 762,166 499,056 2,350,730 57,959

America Auto Parts Inc. 209,789 175,187 1,137,095 12,682

Mobis Brasil Fabricacao De Auto Pecas

Ltda 16,796 78 345 (952)

Mobis Parts Middle East FZE W 231,355 186,366 320,584 16,869




Mobis India, Ltd. W 339,775 208,385 793,085 27,788




33


Private Limited (formerly, Hyundai

Autonet India Engineering PVT Limited) 3,201 1,354 3,638 306

Mobis Parts Australia PTY., Ltd. 82,134 48,136 44,864 4,619

W 50,358,158 19,535,373 56,583,027 5,960,213

(*) The Company accounted for its investment in certain investees by using equity method of accounting based

on the unaudited financial statements, and performed procedures to verify the unaudited financial

statements.

Financial information of equity method accounted investees, which represents 100% of the entities‟ balances, as

of December 31, 2009 is summarized as follows:



Hyundai Motor Company W 35,446,135 13,417,112 31,859,327 2,961,509



Co., Ltd. 25,205 8,487 30,765 78

Hyundai Amco Co., Ltd. 809,728 405,258 1,081,273 45,428

IHL Co., Ltd. 116,909 79,774 197,597 2,843

Hyundai Commercial Co., Ltd. 1,629,739 1,519,842 162,984 28,595

Hyundai Powertech Co., Ltd. 1,381,122 918,240 1,304,903 39,649

HMC Investment Union 31,012 - 1,335 947

M&Soft 46,188 5,291 43,964 9,239

Hyundai Motor (Shanghai) Co., Ltd. 41,753 23,696 47,219 5,316


Co., Ltd. 165,608 41,647 144,912 53,545


Ltd. 365,599 259,537 1,010,285 55,331


Co., Ltd. 808,397 557,834 2,643,431 78,723

Beijing Mobis Transmission Co., Ltd. 303,376 104,864 375,144 29,318

Beijing Mobis Chonche Automotive Parts

Co., Ltd. 80,847 50,914 214,818 8,480

Beijing Hyundai Mobis Parts Co., Ltd. 93,360 47,976 206,027 24,201

Hyundai Motor Group (China) Ltd. 401,462 262,722 1,579,501 71,304



Ltd. W 48,753 26,435 76,526 10,460




Tianjin Mobis Automotive Parts Co., Ltd. W 192,728 160,407 471,273 12,153

Hyundai Mobis (Hongkong) Co., Limited 22,584 22,661 11,511 (13)

Mobis Parts Europe N.V. 782,806 702,028 771,553 (3,359)

Mobis Slovakia s.r.o. 455,334 412,672 692,446 2,988

Mobis Automotive Czech s.r.o. 200,539 174,046 551,002 11,357




34

Mobis America Inc. 617,211 403,574 1,217,929 (1,872)

America Auto Parts Inc. 119,734 99,474 531,632 910

Mobis Parts Middle East FZE 211,367 182,190 298,241 2,554

Mobis India, Ltd. 356,945 261,033 768,618 15,440

Hyundai Autonet India PVT., Ltd. 26,349 20,203 60,275 2,054

Hyundai Autonet India Engineering PVT

Limited 1,961 442 1,718 158

Mobis Parts Australia PTY., Ltd. 69,496 43,350 34,747 3,548

45,246,746

20,421,793

47,140,897

3,523,329 W

(*) The Company accounted for its investment in certain investees by using equity method of accounting based

on the unaudited financial statements, and performed procedures to verify the unaudited financial

statements.




35


(f) The adjustments to the financial information of the investees‟ balance prior to applying the equity method for the

year ended December 31, 2010 are as follows:


Company

Net assets before

adjustments Adjustments (*1)

Net assets after

adjustments

Hyundai Motor Company(*2) W 4,420,208 (30,447) 4,389,761

Autoever Systems Corporation 26,598 - 26,598


Ltd. 4,627 - 4,627

Hyundai Amco Co., Ltd. 83,361 - 83,361

IHL Co., Ltd. 27,801 - 27,801

Hyundai Powertech Co., Ltd. 152,317 - 152,317

HMC Investment Union 21,153 - 21,153

M&Soft 13,180 - 13,180

HL Green Power Inc. 13,523 - 13,523

Hyundai Motor (Shanghai) Co., Ltd. 36,235 2,172 38,407


Ltd. 150,463 26,302 176,765

Jiangsu Mobis Automotive Parts Co., Ltd. 153,454 - 153,454


Co., Ltd. 313,240 - 313,240

Beijing Hyundai Mobis Transmission Co., Ltd. 69,465 - 69,465


Ltd. 20,898 - 20,898

Beijing Hyundai Mobis Parts Co., Ltd. 31,919 - 31,919

Hyundai Motor Group (China) Ltd. 41,112 - 41,112

Wuxi Mobis Automotive Parts Co., Ltd. 30,980 (545) 30,435

Mobis Parts Jiangsu Yueda Trading Co., Ltd. 15,265 - 15,265

Tianjin Mobis Automotive Parts Co., Ltd. 54,013 - 54,013

Hyundai Mobis (Hongkong) Co., Limited 3 - 3

Mobis Parts Europe N.V. 101,886 - 101,886

Mobis Slovakia s.r.o. 59,834 (2,048) 57,786

Mobis Automotive Czech s.r.o. 41,427 - 41,427

Mobis Module CIS, LLC 30,237 (347) 29,890

Mobis America Inc. 263,109 (1,299) 261,810

America Auto Parts Inc. 34,604 (670) 33,934

Mobis Brasil Fabricacao De Auto Pecas Ltda 16,718 - 16,718

Mobis Parts Middle East FZE 44,989 - 44,989

Mobis India, Ltd. 131,389 (1,585) 129,804

Mobis India Research and Development Private

Limited(formerly, Hyundai Autonet India

Engineering PVT Limited) 1,847 - 1,847

Mobis Parts Australia PTY., Ltd. 33,997 - 33,997

W 6,439,852 (8,467) 6,431,385





36

(*1) Adjustments are consisted of adjustments in the investees‟ accounting principles and estimates to be

consistent with those of the Company.

(*2) The Company adjusted the effects of the equity method of the circular investment in accordance with

SKAS No. 15, Equity Method.

The adjustments to the financial information of the investees‟ balance prior to applying the equity method for the

year ended December 31, 2009 are as follows:


Company

Net assets before


Net assets after

adjustments

Hyundai Motor Company(*2) W 3,560,667 (51,497) 3,509,170

Autoever Systems Corporation 21,425 - 21,425


Co., Ltd. 4,570 - 4,570

Hyundai Amco Co., Ltd. 80,843 - 80,843

IHL Co., Ltd. 37,135 - 37,135

Hyundai Commercial Co., Ltd. 21,979 - 21,979

Hyundai Powertech Co., Ltd. 115,015 - 115,015

HMC Investment Union 6,202 - 6,202

M&Soft 10,498 - 10,498

Hyundai Motor (Shanghai) Co., Ltd. 18,057 7,498 25,555


Co., Ltd. 108,466 12,844 121,310

Jiangsu Mobis Automotive Parts Co., Ltd. 106,062 - 106,062


Ltd. 250,563 - 250,563

Beijing Hyundai Mobis Transmission Co., Ltd. 63,442 - 63,442


Ltd. 17,960 - 17,960

Beijing Hyundai Mobis Parts Co., Ltd. 22,692 - 22,692

Hyundai Motor Group (China) Ltd. 27,747 - 27,747

Wuxi Mobis Automotive Parts Co., Ltd. 26,086 - 26,086

Mobis Parts Jiangsu Yueda Trading Co., Ltd. 11,159 - 11,159

Tianjin Mobis Automotive Parts Co., Ltd. 32,321 - 32,321

Hyundai Mobis (Hongkong) Co., Limited (77) - (77)

Mobis Parts Europe N.V. 80,778 - 80,778

Mobis Slovakia s.r.o. 42,662 (6,358) 36,304

Mobis Automotive Czech s.r.o. 26,493 - 26,493

Mobis Module CIS, LLC 29,542 - 29,542

Mobis America Inc. 213,637 (2,118) 211,519

America Auto Parts Inc. 20,260 (635) 19,625

Mobis Parts Middle East FZE 29,177 - 29,177

Mobis India, Ltd. 95,912 (1,689) 94,223

Hyundai Autonet India PVT., Ltd. W 6,146 - 6,146






37

Company

Net assets before


Net assets after

adjustments


Limited(formerly, Hyundai Autonet India

Engineering PVT Limited) W 1,519 - 1,519

Mobis Parts Australia PTY., Ltd. 26,146 - 26,146

W 5,115,084 (41,955) 5,073,129

(*1) Adjustments are consisted of adjustments in the investees‟ accounting principles and estimates to be

consistent with those of the Company.

(*2) The Company adjusted the effects of the equity method of the circular investment in accordance with

SKAS No. 15, Equity Method Accounting.

8. Transactions and Balances with Related Companies

(a) Details of parent and subsidiary relationships as of December 31, 2010 are as follows:




38

Controlled subsidiary Ownership (%)

IHL Co., Ltd. 90.00%

Beijing Hyundai Mobis Automotive Parts Co., Ltd. 100.00%

Jiangsu Mobis Automotive Parts Co., Ltd. 100.00%

Wuxi Mobis Automotive Parts Co., Ltd.(*1) 100.00%

Shanghai Hyundai Mobis Automotive Parts Co., Ltd.(*2) 100.00%

Hyundai Motor (Shanghai) Co., Ltd. 100.00%

Hyundai Mobis (Hongkong) Co., Limited 100.00%

Beijing Mobis Chonche Automotive Parts Co., Ltd. 60.00%

Tianjin Mobis Automotive Parts Co., Ltd. 100.00%

Mobis America Inc. 100.00%

Mobis Alabama, LLC(*3) 100.00%

Mobis Parts America, LLC(*3) 100.00%

Mobis Brasil Fabricacao De Auto Pecas Ltda 100.00%

America Auto Parts Inc. 100.00%

Mobis North America, LLC(*4) 100.00%

Mobis Parts Europe N.V. 100.00%

Mobis Parts CIS, LLC(*5) 100.00%

Mobis Slovakia, s.r.o. 100.00%

Mobis Automotive Czech s.r.o. 100.00%

Mobis Module CIS, LLC 100.00%

Mobis Parts Middle East FZE 100.00%

Mobis Auto Parts Middle East Egypt(*6) 100.00%

Mobis India, Ltd.(*7) 100.00%

Mobis India Research and Development Private Limited (formerly,

Hyundai Autonet India Engineering PVT Limited) 100.00%

Mobis Parts Australia PTY., Ltd. 100.00%

(*1) Subsidiary in which the Company and Shanghai Hyundai Mobis Automotive Parts Co., Ltd. own 33.75%

and 66.25%, respectively.

(*2) Subsidiary in which the Company and Hyundai Motor (Shanghai) Co., Ltd. own 87.5% and 12.5%,

respectively.

(*3) Subsidiary in which Mobis America Inc. owns 100%.

(*4) Ohio Module Manufacturing Co., LLC, previously a 100% owned subsidiary of America Auto Parts Inc.,

acquired Mobis North America, LLC, a 100% owned subsidiary of Mobis America Inc., in a merger on

April 1, 2010. The entity changed its name to Mobis North America, LLC.

(*5) Subsidiary in which Mobis Parts Europe N.V. owns 99%.

(*6) Subsidiary in which Mobis Parts Middle East FZE owns 100%.

(*7) Subsidiary in which acquired due to the merger with Hyundai Autonet India PVT., Ltd. in January, 2010.




39

8. Transactions and Balances with Related Companies, Continued

(b) Significant transactions which occurred in the normal course of business with related companies for the years

ended December 31, 2010 and 2009 are as follows:

(In millions of won) Sales and

other income

Purchase and

other expenses

Company 2010 2009 2010 2009

Associates

M&Soft W - - 25,190 5,820

Hyundai Amco Co., Ltd. 54 5 40,319 3,846


HL Green Power Inc. 182 - 1,801 -

ZF Lemfoerder Chassis Technology Korea Co., Ltd. - - 29,011 28,803

Hyundai Motor Company 3,871,194 3,487,187 583,440 508,952

Hyundai PowerTech Co., Ltd. 9 9 410,065 264,302

Beijing Hyundai Mobis Parts Co., Ltd. 32,634 26,455 - -

Beijing Mobis Transmission Co., Ltd. 174,670 142,969 - -

Mobis Parts Jiangsu Yueda Trading Co., Ltd. 12,582 12,447 - -

4,092,481 3,670,086 1,125,893 844,994

Subsidiaries

IHL Co., Ltd. 423 208 178,636 51,919

Beijing Hyundai Mobis Automotive Parts Co., Ltd. 876,782 622,114 255 -

Beijing Mobis Chonche Automotive Parts Co., Ltd. 30,590 29,307 2,113 1,899

Hyundai Autonet Europe - 159 - -


Limited

4 - 3,603 759

Hyundai Mobis (Hongkong) Co., Limited. - 5,234 202 606

Hyundai Motor (Shanghai) Co., Ltd. 41,125 33,591 285 341

Jiangsu Mobis Automotive Parts Co., Ltd. 351,372 205,545 14 127

Mobis Alabama, LLC 480,962 168,118 268 14

Mobis Auto Parts Middle East Egypt 50,811 7,610 - -

Mobis Automotive Czech s.r.o. 190,173 109,408 52 -

Mobis India, Ltd. 208,047 150,335 140 115

Mobis Module CIS, LLC 8,088 23 - -

Mobis North America, LLC(*1) 33,312 17,248 3,617 2,214

Mobis Parts America, LLC 109,626 84,774 3,923 352

Mobis Parts Australia PTY., Ltd. 4,772 3,753 32 -

Mobis Parts CIS, LLC 85,364 81,104 - -

Mobis Parts Europe N.V. 284,930 336,858 3,345 20

Mobis Parts Middle East FZE 240,457 271,717 - -

Mobis Slobakia, s.r.o. 370,846 144,680 56 149

Shanghai Hyundai Mobis Automotive Parts Co., Ltd. 43,728 34,945 110 225



W 3,706,100 2,471,048 233,455 87,786




40



ended December 31, 2010 and 2009 are as follows, Continued:


other income

Purchases and

other expenses

Company 2010 2009 2010 2009

Affiliates

Glovis Co., Ltd. W 57,766 11,679 236,145 173,793

Kia Motors Corporation 2,692,194 1,681,674 83,225 63,467

Kia Tigers Co., Ltd. - - 33 30

Metia Corporation - - 31,989 17,127

Automobile Industrial Ace - - 41,140 30,473

Ngibe Co., Ltd. - - 62 41

Mseat Co., Ltd. - - 2,326 1,766

Wistco Co., Ltd. - - 4,928 6,254

Hyundai Wia., Corp. 86,901 57,996 221,061 128,231

Innocean Worldwide., Inc. 27 54 4,004 3,583

Samwoo., Inc. - - 422 474

Carnes Company Ltd. 309 59 - -

Kefico Corporation 2,354 3,599 22,202 18,995

Partecs Company., Ltd. - - 4,831 3,577

Haevichi Hotel and Resort Co., Ltd.

(formerly, Haevichi Resort Co., Ltd.)

- - 675 4,500

Haevichi Country Club Ltd. - - 606 709

Hyundai Dymos., Inc. 6,269 4,530 204,634 138,075

Hyundai-Rotem Company 205 204 461 976

Hyundai Autonet Co.,Ltd.(*2) - 588 - 280,867

Hyundai Card Co., Ltd. 120 190 1,219 971

Hyundai Capital Services, Inc. - - 34 22

Hyundai Hysco Corporation - 2 11,238 10,190

Dongfeng Yueda Kia Motors Co., Ltd. - - 504 682

Glovis Alabama. LLC - - 12 -

Hyundai-Assan Otomotiv Sanayi Ve Ticaret A.S. 55,400 32,757 - -

Hyundai Auto Canada Corp. 50,264 54,739 - -

Hyundai Motor America 168,730 153,931 - -

Hyundai Motor Company Australia Pty Ltd. 20,180 17,257 - -

Hyundai Motor India Ltd. 29 - - 829

Hyundai Motor Japan 980 966 - 825

Hyundai Motor Japan R&D Center, Inc 180 - - -

Hyundai Motor Manufacturing Rus LLC 613 - - -

Hyundai Translead 7,852 7,266 - -

Kia Japan Co., Ltd. 1 - - -

Kia Motors America, Inc. 122,719 119,585 - -

Kia Motors Australia Pty Ltd. 8,967 9,531 - -

Kia Motors New Zealand Ltd. W 848 891 - -





41


ended December 31, 2010 and 2009 are as follows, Continued:


other income

Purchases and

other expenses

Company 2010 2009 2010 2009

Affiliates

Kia Canada Inc. W 20,332 26,513 - -

Kia Motors Sales Slovensko s.r.o. - 4 - -

Kia Motors (UK) Ltd. - 11 - -

Kia Motors France S.A.S. - 239 - -

Kia Motors Italia S.P.A - 15 - -

Wia Automotive Engine - - - 11

3,303,240 2,184,280 871,751 886,468

W 11,101,821 8,325,414 2,231,099 1,819,248

(*1) Ohio Module Manufacturing Co., LLC acquired Mobis North America, LLC in a merger on April 1, 2010.

The entity changed its name to Mobis North America, LLC.

(*2) The Company merged with Hyundai Autonet Co., Ltd. in June 2009.

(c) Account balances with related companies as of December 31, 2010 and 2009 are as follows:

(In millions of won) Receivables Payables

Company 2010 2009 2010 2009

Associates M&Soft W - - 11,862 4,792

Hyundai Amco Co., Ltd. 1 1 21,792 454

Autoever Systems Corporation 176 34 15,133 13,750

HL Green Power Inc. 17 - 1,579 -


Ltd.

2 - 4,750 7,945

Hyundai Motor Company 824,905 1,071,786 131,872 253,085

Hyundai PowerTech Co., Ltd. 61 - 79,392 57,687

Beijing Hyundai Mobis Parts Co., Ltd. 7,307 156 1 -

Beijing Mobis Transmission Co., Ltd. 6,554 2,558 4 54

Mobis Parts Jiangsu Yueda Trading Co., Ltd. 28 11 - 3

W 839,051 1,074,546 266,385 337,770





42

(c) Account balances with related companies as of December 31, 2010 and 2009 are as follows, Continued:


Company 2010 2009 2010 2009

Subsidiaries

IHL Co., Ltd. W 760 225 71,111 26,573


Ltd.

32,149 20,377 290 11


Ltd.

1,878 1,610 - 232

Hyundai Autonet Europe - 264 - -


Limited

- - 607 149

Hyundai Mobis (Hongkong) Co., Limited. - 3,512 31 7

Hyundai Motor (Shanghai) Co., Ltd. 506 84 9 15

Jiangsu Mobis Automotive Parts Co., Ltd. 18,259 2,401 89 1

Mobis Alabama, LLC 10,976 11,721 6,174 344

Mobis Auto Parts Middle East Egypt 1,031 - - -

Mobis Automotive Czech s.r.o. 5,361 3,186 430 160

Mobis India, Ltd. 7,087 3,290 109 30

Mobis Module CIS, LLC 1,935 23 - -

Mobis North America, LLC(*1) 7,403 3,192 816 1,055

Mobis Parts America, LLC 1,460 5,490 723 370

Mobis Parts Australia PTY., Ltd. 175 323 32 -

Mobis Parts CIS, LLC 2,399 819 - -

Mobis Parts Europe N.V. 17,641 15,750 1,113 -

Mobis Parts Middle East FZE 2,720 2,743 8 -

Mobis Slovakia, s.r.o. 13,193 7,868 748 474


Ltd.

5,412 4,610 14 16



W 144,301 114,689 90,531 34,627






43


Company 2010 2009 2010 2009

Affiliates

Glovis Co., Ltd. W 5,406 3,346 21,694 16,947

Kia Motors Corporation 614,277 510,330 73,950 58,767

Kia Tigers Co., Ltd. - - - 33

Metia Corporation 25 - 7,561 6,987

Automobile Industrial Ace 14 - 15,705 13,451

Ngibe Co., Ltd. - - - 10

Mseat Co., Ltd. 1 - 1,149 869

Wistco Co., Ltd. - - 1,094 2,604

Hyundai Wia., Corp. 31,799 21,449 44,941 39,911

Innocean Worldwide., Inc. - 38 22,155 14,371

Samwoo., Inc. - - 144 188

Carnes Company Ltd. 28 26 - -

Kefico Corporation 37 428 4,858 5,936

Partecs Company., Ltd. - - 2,008 2,069

Haevichi Hotel and Resort Co., Ltd.

(formerly, Haevichi Resort Co., Ltd.)

- - 377 354

Haevichi Country Club Ltd. - - 412 520

Hyundai Dymos., Inc. 709 533 39,685 37,391

Hyundai-Rotem Company 96 - 43 46

Hyundai Card Co., Ltd. - 90 489 358

Hyundai Capital Services, Inc. - - - 1

Hyundai Hysco Corporation - - 4,981 4,270

Dongfeng Yueda Kia Motors Co., Ltd. - - 20 10

Hyundai-Assan Otomotiv Sanayi Ve Ticaret A.S. 813 219 82 -

Hyundai Auto Canada Corp. 5,773 8,540 - -

Hyundai Motor America 2,077 3,372 - -

Hyundai Motor Company Australia Pty Ltd. 355 278 - -

Hyundai Motor India Ltd. - - - 158

Hyundai Motor Japan 24 31 - -

Hyundai Motor Manufacturing Alabama, LLC - - 13 2

Hyundai Motor Manufacturing Rus LLC 27 - - -

Hyundai Translead 1,474 398 - -

Kia Motors America, Inc. 2,147 1,065 37 67

Kia Motors Australia Pty Ltd. 219 208 - -

Kia Motors New Zealand Ltd. 68 56 - -

Kia Canada Inc. 176 1,233 18 3

Kia Motors Slovakia s.r.o. - - 43 36

Kia Motors France S.A.S. - 56 - -

665,545 551,696 241,459 205,359

W 1,648,897 1,740,931 598,375 577,756



(*1) Ohio Module Manufacturing Co., LLC acquired Mobis North America, LLC in a merger on April 1, 2010.

The entity changed its name to Mobis North America, LLC.




44

(d) The Company has securities and financial instruments amounting to W190,231 million at HMC investment

securities Co., Ltd. For the year ended December 31, 2010, the Company recorded salaries of W22,225 million

and severance benefits of W14,561 million as key management compensation. Key management consists of

executive officers who have the authority and responsibility in the planning, directing and control of the

Company‟s operations. The Company provided payment guarantees to related parties amounting to USD

1,217,162 thousand as of December 31, 2010.

9. Property, Plant and Equipment

(a) Property, plant and equipment at December 31, 2010 and 2009 are summarized as follows:


Property, plant and equipment at cost W 1,951,777 1,811,363

Government grant (983) (1,048)

Accumulated depreciation (536,548) (447,601)

W 1,414,246 1,362,714

(b) Changes in property, plant and equipment for the year ended December 31, 2010 were as follows:


Book value as

of

Jan. 1 Acquisitions Disposals Depreciation Other

Book value

as of

Dec. 31

Land W 362,774 135 (2,222) - 1,209 361,896

Buildings 549,621 547 (3,691) (24,070) 10,403 532,810

Structures 26,909 318 (39) (1,326) 2,195 28,057

Machinery 278,933 18,210 (3,819) (71,011) 116,112 338,425

Vehicles 29,838 6,045 (200) (4,688) - 30,995

Others 91,751 17,541 (1,871) (38,912) 11,414 79,923

Construction-in-

progress 22,888 165,722 - - (146,470) 42,140

W 1,362,714 208,518 (11,842) (140,007) (5,137) 1,414,246

9. Property, Plant and Equipment, Continued

Changes in property, plant and equipment for the year ended December 31, 2009 were as follows:


Book value

as of

Jan. 1 Acquisitions

Increases

due to the

merger Disposals Depreciation Other

Book value

as of

Dec. 31

Land W 314,106 2,427 45,091 (7,276) - 8,426 362,774




45

Buildings 441,270 1,096 105,330 (31,538) (20,814) 54,277 549,621

Structures 23,397 1,735 4,129 (527) (1,172) (653) 26,909

Machinery 230,366 19,894 37,131 (6,449) (56,117) 54,108 278,933

Vehicles 8,471 2,201 317 (532) (4,319) 23,700 29,838

Others 75,405 29,311 29,855 (5,378) (37,004) (438) 91,751

Construction-

in-progress 47,134 56,623 344 - - (81,213) 22,888

W 1,140,149 113,287 222,197 (51,700) (119,426) 58,207 1,362,714

(c) Insurance

As of December 31, 2010 and 2009, inventories, machinery, equipment and tools amounted W1,230,843 million

and W1,329,595 million were insured against property all risks policy up to W760,027 million and W818,791

million, respectively.

(d) The officially declared value of land at December 31, 2010 and 2009, as announced by the Ministry of Land,

Transport and Maritime Affairs, were as follows:


Book value Declared value Book value Declared value

Land W 361,896 414,058 362,774 393,792

The officially declared value, which is used for government purposes, is not intended to represent fair value.

10. Intangible Assets

(a) Changes in intangible assets for the year ended December 31, 2010 were as follows:


Goodwill

Development

costs Software

Industrial

Rights Total

Net balance as of

January 1, 2010 W 588,395 40,777 35,460 3,334 667,966

Additions - 2,784 5,282 693 8,759




46

Other - - 5,135 - 5,135

Amortization (130,755) (16,210) (16,052) (610) (163,627)

Disposals - (3,735) (156) - (3,891)

Impairment loss - - - (546) (546)

Net balance as of

December 31, 2010 W 457,640 23,616 29,669 2,871 513,796

Changes in intangible assets for the year ended December 31, 2009 were as follows:


Goodwill Development

costs Software

Industrial

Rights Total

Net balance as of

January 1, 2009 W 15,285 36,110 30,589 4,471 86,455

Additions - 11,975 9,240 993 22,208

Increases due to the merger 653,772 7,074 8,093 968 669,907

Other - - 1,377 - 1,377

Amortization (80,662) (14,273) (13,672) (2,274) (110,881)

Disposals - (109) (167) (3) (279)

Impairment loss - - - (821) (821)

Net balance as of

December 31, 2009 W 588,395 40,777 35,460 3,334 667,966

(b) Research and development costs incurred for the years ended December 31, 2010 and 2009 were W274,388

million and W185,300 million, respectively.

11. Other Non-current Assets

Other non-current assets as of December 31, 2010 and 2009 are summarized as follows:


Deposits provided W 97,719 90,940

Guarantee deposits 6,658 13,612

104,377

104,552 W

12. Other Current Liabilities

Other current liabilities as of December 31, 2010 and 2009 are summarized as follows:


Withholding deposits W 15,567 18,002

Withholdings 5,848 4,233

Taxes withheld 500 10,198

Unearned revenues 888 1,099

22,803 33,532




47

W

13. Borrowings

(a) Short-term borrowings as of December 31, 2010 and 2009 are summarized as follows:


Lender Annual interest rate 2010 2009

Shinhan Bank 3.03% W - 100,000

Samsung Securities Co., Ltd. 3.07% - 10,000

-

110,000 W

(b) Bonds as of December 31, 2010 and 2009 are summarized as follows:


Lender Maturity

Annual

interest rate 2010 2009

The 141st Unsecured bond 2010.8.8 5.49% W - 100,000

The 142nd

Unsecured bond 2012.1.23 7.08% 200,000 200,000

The 143rd

Unsecured bond 2013.6.30 4.69% 100,000 -

300,000 300,000

Less current portion of bonds - (100,000)

Less discount (725) (627)

299,275

199,373 W

(c) Aggregate maturities of the Company‟s long-term debt as of December 31, 2010 are summarized as follows:


Periods Amount

2012.1.1~2012.12.31 W 200,000

2013.1.1~2013.12.31 100,000

300,000 W

13. Borrowings, Continued

(d) Current portion of bonds as of December 31, 2010 and 2009 are summarized as follows:


Current portion of bonds W - 100,000

Less discount - (99)

W - 99,901

14. Provision for warranties




48

Changes in provision for warranties for the years ended December 31, 2010 and 2009 were as follows:


Provision for warranties at beginning of the year W 61,573 20,371

Accrual for warranties 113,805 59,291

Increase due to the merger - 10,747

Decrease (54,470) (28,836)

Provision for warranties at end of the year 120,908 61,573

Current provision for warranties (85,157) (38,011)

Non-current provision for warranties W 35,751 23,562

The Company recognizes a provision for warranties based on past experience and projected costs during the coverage

period of one to five years, including costs due to quality assurance guarantees, returns, touch-ups and after service.

15. Retirement and Severance Benefits

Changes in retirement and severance benefits for the years ended December 31, 2010 and 2009 were as follows: (In millions of won) 2010 2009

Estimated retirement and severance benefits at beginning of year W 191,417 152,634


Transfer from related companies 79 120

Increase due to the merger - 26,783

Payments (18,082) (20,568)

Estimated retirement and severance benefits at end of year 234,132 191,417

Transfer to National Pension Fund (415) (499)

Deposit for severance benefit insurance (164,639) (138,881)

Net balance at end of year W 69,078 52,037

15. Retirement and Severance Benefits, Continued

The Company maintains an employees‟ severance benefit trust arrangement with Kyobo Life Insurance Co., Ltd. and

others. Under this arrangement, the Company has made a deposit in the amount equal to 70.32 % and 72.55% of the

reserve balances of retirement and severance benefits as of December 31, 2010 and 2009, respectively. This deposit

is to be used to guarantee the required payments to the retirees and is accounted for as a reduction in the reserve

balance.

16. Assets and Liabilities Denominated in Foreign Currency

Assets and liabilities denominated in foreign currency as of December 31, 2010 and 2009 are summarized as follows:

(In millions of won, thousands of USD) 2010 2009

Foreign

currency

Won

equivalent

Foreign

currency

Won

equivalent

Assets:




49

Cash and cash equivalents USD 10,613 W 12,087 USD 29,290 W 34,198

Accounts and notes receivable -

trade

USD 144,145 164,167 USD 116,727 136,291

Accounts and notes receivable -

other

USD 6,811 7,757 USD 293 342

USD 161,569 W 184,011 USD 146,310 W 170,831

Liabilities:

Accounts and notes payable -

trade

USD 102,666 W 116,926 USD 113,164 W 132,131

Accounts and notes payable -

other

USD 42,790 48,734 USD 20,753 24,231

USD 145,456 W 165,660 USD 133,917 W 156,362




50

17. Commitments and Contingencies

(a) As of December 31, 2010, the Company is provided with guarantees by Korea Exchange Bank and other

financial institutions, amounted to W6,936 million (2009: W9,463 million) and USD 1,171 thousand (2009: USD

1,023 thousand).

(b) As of December 31, 2010, the Company has provided payment guarantees amounted to W401,233 million (2009:

W358,281 million) and USD 1,217,162 thousand (2009: USD 1,291,725 thousand) for various borrowings and

business transactions of related parties.

(c) As of December 31, 2010, the outstanding balance of the accounts and notes receivable sold to financial

institutions with recourse but not yet matured amounted to W1,111,701 million.

(d) As of December 31, 2010, the Company has contracts for the development of new technology related to airbags

and others with 29 companies including Bosch, Dolby. In connection with these contracts, the Company

recognized royalties amounted to W36,332 million and W16,020 million for the years ended December 31, 2010

and 2009, respectively.

(e) As of December 31, 2010, the Company has been named as a defendant in legal actions. The aggregate amount

of domestic claims as a defendant amounted to approximately W60,757 million. The ultimate effect of these

cases cannot be presently determined. Accordingly, no provision for potential losses arising from these cases

has been reflected in the accompanying non-consolidated financial statements.

(f) As of December 31, 2010, the Company entered into bank overdraft agreements for borrowings up to W226,000

million with Korea Exchange Bank and others, and also entered into general term loan agreements up to

W150,000 million with Standard Chartered First Bank Korea Ltd. and others. The Company has

accommodation note discounting agreements of up to W19,000 million with Citibank Korea Inc. and others, and

has an agreement to open letters of Usance credit up to USD 55,000 thousand and W8,000 million with Shinhan

Bank and others. In addition, the Company has agreements with Korea Exchange Bank and others to open

documents against acceptance and documents against payment up to USD1,334,609 thousand and W81,000

million, respectively. Further, the Company has an agreement with Korea Exchange Bank and others for the

trade receivable-collateralized loans without recourse for up to W400,000 million and has an agreement with

Hana Bank and others for the buy-back card for up to W370,000 million.

(g) The Company has provided guarantees for Mobis North America, LLC(formerly, Ohio Module Manufacturing

Company with Daimler Chrysler) for the long-term auto parts supply and land-lease contracts as approved by the

Board of Directors on April 28, 2005.

(h) On January 21 and November 30, 2000, the Company acquired the auto parts for after-sales service divisions of

Hyundai Motor Company and KIA Motors Corporation, respectively. The assets and liabilities acquired from

Hyundai Motor Company amounted to W437,315 million and W40,892 million, respectively, and those from

KIA Motors Corporation amounted to W271,742 million and W6,937 million, respectively, with goodwill arising

from these transactions amounting to W50,000 million and W45,300 million, respectively. In addition, the

Company agreed to pay royalties of 10.0% of the annual ordinary income from the acquired business divisions

for ten years starting from 2000. The Company recognized royalties amounted to W30,539 million and

W82,422 million for the years ended December 31, 2010 and 2009, respectively. The royalty contract which

provides in the Hyundai Motor Company and KIA Motors Corporation was ended at January, 2010 and

November, 2010, respectively.




51

17. Commitments and Contingencies, Continued

(i) The Company entered into the financial derivative contracts to manage the exposure to changes in currency

exchange rates with foreign currency receivables. The Company recognized realized gains and losses on

valuation of the financial derivatives amounted W2,791 million and W1,778 million, respectively, for the year

ended December 31, 2010, and recorded unrealized gains and losses on valuation of the financial derivatives

(before income tax effect) amounted W12,683 million and W3,438 million, respectively, as other comprehensive

income as of December 31, 2010

Details of financial derivative contracts are as follows:

(In thousands of foreign currency)

Currency Amount Strike Price in won Maturity

USD 464,793 1,135 ~ 1,275 January 28, 2011 ~ December 30, 2015

EUR 27,280 1,535 ~ 1,796 January 28, 2011 ~ December 28, 2012

JPY 9,610,974 13.57 ~ 15.04 January 31, 2011 ~ December 30, 2015

18. Stockholders’ Equity

(a) The Company‟s capital stock as of December 31, 2010 and 2009 are as follows:

2010 2009

Common stock

Preferred

stock Common stock Preferred stock

Authorized number of shares 275,000,000 25,000,000 275,000,000 25,000,000

Par value per share in won W 5,000 5,000 5,000 5,000

Issued number of shares 97,343,863 25,458 97,343,863 25,458

Capital stock in millions of won W 490,969 127 490,969 127

As approved by the Board of Directors on March 15, 2003, the Company retired 850,000 treasury shares

recording ￦18,813 million in gain. Accordingly, the number of shares issued has been decreased but the

amount of paid up capital stock has not been affected.

(b) The Company‟s capital stock and capital surplus for the years ended December 31, 2010 and 2009 are as follows:

(in millions of won) Common Stock Preferred Stock Additional

Paid-in

Capital

Number of

shares Amount

Number of

shares Amount

Balance at January 1, 2010 97,343,863 W 490,969 25,458 W 127 ￦ 1,282,845

Balance at December 31, 2010 97,343,863 W 490,969 25,458 W 127 ￦ 1,283,312




52

18. Stockholders’ Equity, Continued

(c) Capital surplus as of December 31, 2010 and 2009 are summarized as follows:


Additional paid-in capital W 1,283,312 1,282,845

Revaluation reserve 30,945 30,945

Other capital surplus 46,867 28,245

1,361,124

1,342,035 W

19. Capital Adjustments

Details of capital adjustments as of December 31, 2010 and 2009 were as follows:


Treasury stock W 130,896 144,309

Other capital adjustments 20,743 20,745

151,639

165,054 W

20. Retained Earnings

Retained earnings as of December 31, 2010 and 2009 are summarized as follows:


Legal reserve W 200,000 150,000

Voluntary reserve 5,677,066 4,284,775

Unappropriated retained earnings 2,388,336 1,561,609

8,265,402

5,996,384 W

(a) Legal reserve

The Korean Commercial Code requires the Company to appropriate a legal reserve in an amount equal to at least

10% of cash dividends for each accounting period until the reserve equals 50% of stated capital. The legal

reserve may be used to reduce a deficit or may be transferred to common stock in connection with a free issue of

shares.

(b) Voluntary Reserve

Under the Special Tax Treatment Control Law and others, the Company appropriates a certain portion of retained

earnings, pursuant to a shareholder resolution, as a voluntary reserve. This reserve may be reversed and

transferred to unappropriated retained earnings by the resolution of shareholders, and be distributed as dividends

after its reversal.




53

21. Sales

Details of sales for the years ended December 31, 2010 and 2009 are summarized as follows:


Sales of merchandise (domestic) W 2,574,196 2,231,487

Sales of merchandise (overseas) 5,027,145 3,516,387

Sales of finished goods (domestic) 2,655,287 2,603,248

Sales of finished goods (overseas) 3,439,089 2,281,898

W 13,695,717 10,633,020

22. Cost of Sales

Details of cost of sales for the years ended December 31, 2010 and 2009 were as follows:


Inventories, beginning balance W 414,877 358,497

Cost of goods purchased or manufactured 10,587,687 8,154,329

Inventories, ending balance (483,666) (414,877)

W 10,518,898 8,097,949

23. Selling, General and Administrative Expenses

Details of selling, general and administrative expenses for the years ended December 31, 2010 and 2009 were as

follows:


Salaries W 234,915 220,686


Other employee benefits 46,622 41,767

Service fees 113,301 154,941

Exporting expense 170,058 114,249

General development expense 274,388 185,300

Depreciation and amortization 185,851 137,548

Advertising 54,175 47,364

Transportation 56,564 50,035

Rent 15,800 14,683

Warrant expense 113,805 59,291

Supplies expense 5,421 5,226

Bad and doubtful debts - 4,443

Others 64,342 58,505

W 1,373,529 1,112,777




54

24. Income Taxes

(a) The Company was subject to income taxes on taxable income at the following normal tax rates.

Tax rate

Taxable income 2009 2010 2011 Thereafter

Up to W200 million 12.1% 11.0% 11.0% 11.0%

Over W200 million 24.2% 24.2% 24.2% 22.0%

(b) The components of income tax expense for the years ended December 31, 2010 and 2009 were as follows:


Current W 381,612 249,772

Deferred 248,413 170,151

Items credited (charged) directly to stockholders‟ equity (4,072) 28,211

625,953

448,134 Income tax expense W

(c) The income tax expense calculated by applying statutory tax rates to the Company‟s income before income taxes

for the year differs from the actual tax expense in the non-consolidated statement of income for the years ended

December 31, 2010 and 2009 for the following reasons:


Income before income taxes W 3,049,248 2,063,354

Tax calculated at statutory tax rate 737,898 499,332

Adjustment for :

Non-taxable income (4,509) (2,574)

Non-deductable expense 210 6,686

Tax credit (66,205) (47,935)

Others, net (41,441) (7,375)

(111,945) (51,198)

Income tax expense W 625,953 448,134

Effective tax rate % 20.53 21.72

(d) Deferred tax assets have been recognized as the Company has determined it is probable that future profits will be

available against which the Company can utilize the related benefit.




55

24. Income Taxes, Continued

(e) Deferred taxes that were directly (charged) credited to shareholders‟ equity as of December 31, 2010 and 2009

are as follows:


Changes in retained earnings of equity-method Investments, net W 14,536 18,831

Unrealized gain (loss) on valuation of available-for-sale

securities 709 (7,133)

Unrealized gain on valuation of financial derivatives (1,092) (1,110)

Unrealized gain (loss) of equity method accounted investments (12,163) 17,623

Unrealized gain on sale of treasury stock (6,062) -

(4,072)

28,211 W

(f) In accordance with SKAS No. 16 Income Taxes, deferred tax amounts should be presented as a net current asset

or liability and a net non-current asset or liability. In addition, the Company is required to disclose gross

deferred tax assets (liabilities). As of December 31, 2010, details of gross deferred tax assets (liabilities) are as

follows:

(In millions of won) Temporary

differences at

December 31, 2010

Deferred tax assets (liabilities)

Current Non-current

Provision for warranties W 120,908 20,608 7,865

Allowance for valuation of inventories 22,726 5,500 -

Provision for retirement and severance benefits 163,478 - 35,965

Changes in retained earnings of equity-method

investments, net

159,093

- 41,621

Impairment losses on available-for-sale securities 37,542

- 8,259

Deposits for retirement and severance benefits (163,478) - (35,965)

Reserve for research and development (734,991) (1,452) (160,378)

Gain of equity method accounted investments, net

(3,673,647)

- (649,920)

Unrealized in net gain of equity method accounted

investments

(265,947)

- (56,733)

Goodwill (457,640) - -

Others 560,347 (3,020) 104,056

Net deferred tax asset (liability) W (4,231,609) 21,636 (705,230)




56

25. Earnings Per Share

(a) Basic earnings per share for the years ended December 31, 2010 and 2009 were as follows:

(In millions of won, except share information)

2010 2009

Net income W 2,423,295 1,615,220

Dividends on preferred stock (40) (33) Additional income available for dividends allocated to preferred

stock (608) (400)

Net income attributable to common stocks 2,422,647 1,614,787

Weighted average number of common shares outstanding(*) 95,330,130 90,656,309

Earnings per share W 25,413 17,812

(*) Weighted average number of common shares outstanding:

(In shares) 2010 2009

Weighted average number of common shares issued 97,343,863 92,667,836

Weighted average number of treasury stock (2,013,733) (2,011,527)

Weighted average number of common shares outstanding at

December 31 95,330,130 90,656,309

(b) Diluted earnings per share are not calculated on December 31, 2010 and 2009, because there are no diluted shares

as of December 31, 2010 and 2009.




57

26. Dividends

(a) Details of dividends for the years ended December 31, 2010 and 2009 were as follows:

(In millions of won, except share information)

2010 2009

Common

stock

Preferred

stock Total

Common

stock

Preferred

stock Total

Number of shares 95,400,544 25,458 95,426,002 95,201,413 25,458 95,226,871

Par value per share W 5,000 5,000 - 5,000 5,000 -

Dividends as a

percentage of par

value 30.00% 31.00% - 25.00% 26.00% -

Dividend per share 1,500 1,550 - 1,250 1,300 -

Cash dividends W 143,100 40 143,140 119,002 33 119,035

(b) Dividends as a percentage of net income and par value for the years ended December 31, 2010 and 2009 were as

follows:


Dividend amount W 143,140 119,035

Net income W 2,423,295 1,615,220

Dividends as a percentage of net income 5.91% 7.37%

(c) Dividend yield ratio for the years ended December 31, 2010 and 2009 was as follows:

(In won) 2010 2009

Common

stock

Preferred

stock

Common

stock

Preferred

stock

Dividend per share W 1,500 1,550 1,250 1,300

Market price as of year end W 284,500 186,500 171,000 85,100

Dividend yield ratio 0.53% 0.83% 0.73% 1.53%




58

27. Comprehensive Income

Comprehensive income for the years ended December 31, 2010 and 2009 was as follows:


Net income W 2,423,295 1,615,220

Unrealized in net gain (loss) on valuation of available-for-sale

securities, net of tax (2,515) 25,288

Unrealized in net gain on valuation of financial derivative assets,

net of tax 3,524 3,519

Adjustments of equity in equity method accounted investments,

net of tax 22,663 (84,036)

2,446,967

1,559,991 Comprehensive income W

28. Non-cash Investing and Financing Activities

Significant non-cash investing and financing activities for the years ended December 31, 2010 and 2009 were as

follows:


Disposal of treasury stock W 19,952 -

Changes in accumulated other comprehensive income on valuation

of equity method accounted investments 22,663 84,036

Changes in capital surplus on valuation of equity method accounted

investments 40 20,742

Changes in retained earnings on valuation of equity method

accounted investments 35,242 72,491

Transfer from construction-in-progress to property, plant and

equipment W 146,470 81,213




59

29. Employee Welfare and Others

In order to enhance the welfare of employees, the Company provides fringe benefits to its employees, such as meal

allowance and insurance, among others. Employee benefits expensed by the Company amounted to W84,609

million and W67,129 million for the years ended December 31, 2010 and 2009, respectively. In addition, the

Company contributed donations amounted to W16,076 million and W11,357 million for the years ended December

2010 and 2009, respectively.

30. Value Added Information

Details of accounts included in the computation of value added for the years ended December 31, 2010 and 2009 are

as follows:


Salaries and wages W 455,307 388,521


Other employee benefits 84,709 67,129

Rent 19,352 18,201

Depreciation 140,007 119,426

Amortization 163,627 111,005

Taxes and dues 7,815 6,049

931,535

742,779 W

31. Segment Information

The Company has two reportable operating segments – auto parts business, mainly the manufacturing parts and

modules for car production and after-sales services. The following table provides information for each operating

segment as of and for the years ended December 31, 2010 and 2009.


Auto parts

After sales

services Total Auto parts

After sales

services Total

Sales W 9,844,179 3,851,538 13,695,717 7,193,911 3,439,109 10,633,020

Operating income 863,455 939,835 1,803,290 551,837 870,457 1,422,294

Tangible and

intangible assets 1,423,301 504,741 1,928,042 1,525,128 505,552 2,030,680

Depreciation W 274,853 28,781 303,634 183,498 46,935 230,433




60

32. Merger

On June 25, 2009, the Company merged with Hyundai Autonet Co., Ltd. which is engaged in the auto parts business,

mainly on manufacturing and sales of auto parts. Acquired assets, liabilities and good will which resulted from the

merger were as follows:

(In millions of won) Amount

Assets

Current assets W 383,457

Non-current assets 360,283

743,740

Liabilities

Current liabilities 326,013

Long-term liabilities 10,829

336,842

Net assets 406,898

Unidentifiable asset deducted (8,916)

Identifiable net assets 397,982

Less considerations given

Common stock (issued 9,752,856 shares in W110,500, par value W5,000) 1,077,691

Treasury stock (25,937)

Total consideration 1,051,754

Goodwill W 653,772

33. Results of Operations for the Last Interim Period

(In millions of won, except earnings per share) 2010 2009

4th Quarter 4th Quarter

Revenue W 3,652,712 3,180,773

Operating income 482,821 349,837

Net income for the period 591,611 474,986

Earnings per share W 6,200 5,022




61

34. Date of Authorization for Issue

The 2010 financial statements were authorized for issue on January 27, 2011, at the Board of Directors Meeting.

35. Subsequent Event

On January 14, 2011, the Company which is a part of Hyundai Motor Group Consortium, signed a memorandum of

understanding with the approval of the stockholders‟ council of Hyundai Engineering & Construction Co., Ltd.

(„Hyundai E&C”) for the acquisition of shares of Hyundai E&C.

36. Planning and Adoption of K-IFRS (International Financial Reporting Standards)

(a) The Company plans to issue financial statements prepared in accordance with K-IFRS from 2011. The

Company organized a Task Force Team to perform preliminary analysis of the effects of K-IFRS adoption and

establish accounting systems to apply the new accounting treatments, and trained its relevant personnel internally

and externally. The Company has completed the design and implementation of its individual and integrated

systems for preparing financial statements under K-IFRS, and carries out K-IFRS training for domestic and

overseas subsidiaries. The details of the K-IFRS Adoption Plan to date are as follows:

Time frame Activities

April 2008 - Selection of an external advisor

May-November 2008 - Analysis of GAAP differences and establishment of global accounting

standards based on K-IFRS

May-July 2009 - Establish standards for K-IFRS transition

August-December 2009 - Individual system modification and integrated system development

Ongoing - Calculate K-IFRS financial information

- K-IFRS related on-site training, web-based training, and group training

sessions

36. Planning and Adoption of K-IFRS (International Financial Reporting Standards), Continued




62

(b) Differences between accounting under K-IFRS and under K-GAAP expected to have a material effect on the

Company are as follows:

Area Current K-GAAP K-IFRS

Goodwill Goodwill is amortized over the useful

life of the asset

The Company tests goodwill for

impairment annually

Retirement

obligations

The Company recognizes a liability equal

to the amount which would be payable

if all eligible employees left at the end

of the reporting period

The Company calculates its present

benefit obligation based on an

actuarial method and recognizes a

provision amounting to the present

value of the obligation

Classification of

club

memberships

The Company classifies club

memberships in non-current assets as

guarantees

The Company classifies club

memberships as intangible assets with

an unlimited useful life

Elimination of

financial assets

Assignments of receivables are treated as

sales transactions

The assignment of receivables with

recourse is treated as a borrowing

Capitalization of

borrowing costs

All borrowing expenses are treated as

period expenses

Borrowing costs that are directly related

to a qualifying asset, which takes a

substantial period to get ready for the

intended purpose, are capitalized.

Scope of

consolidation

Under the Act on External Audit of Stock

Companies, subsidiaries with total

assets of less than W10 billion are

exempted from consolidation

requirements

Without regard to the size of a

subsidiary, any entity which the

Company controls in fact is included

in the scope of consolidation

(c) Changes in scope of consolidation

Consolidated Subsidiaries under K-GAAP

Consolidated Subsidiaries under K-IFRS

IHL Co., Ltd. IHL Co., Ltd.

Mobis America Inc. Mobis America Inc.

Mobis Alabama, LLC Mobis Alabama, LLC

Mobis Parts America, LLC Mobis Parts America, LLC

Mobis North America, LLC Mobis North America, LLC

Mobis Brasil Fabricacao De Auto Pecas Ltda Mobis Brasil Fabricacao De Auto Pecas Ltda

America Auto Parts Inc. America Auto Parts Inc.

Ohio Module Manufacturing Co., LLC Ohio Module Manufacturing Co., LLC

Mobis Parts Europe N.V. Mobis Parts Europe N.V.

Mobis Module CIS, LLC Mobis Module CIS, LLC

Mobis Parts CIS, LLC Mobis Parts CIS, LLC

Mobis Automotive Czech s.r.o. Mobis Automotive Czech s.r.o.

Mobis Slovakia, s.r.o. Mobis Slovakia, s.r.o.

Hyundai Motor (Shanghai) Co., Ltd. Hyundai Motor (Shanghai) Co., Ltd.


Ltd.


Ltd.

Wuxi Mobis Automotive Parts Co., Ltd. Wuxi Mobis Automotive Parts Co., Ltd.

Jiangsu Mobis Automotive Parts Co., Ltd. Jiangsu Mobis Automotive Parts Co., Ltd.

36. Planning and Adoption of K-IFRS (International Financial Reporting Standards), Continued

(c) Changes in scope of consolidation, continued




63

Consolidated Subsidiaries under K-GAAP

Consolidated Subsidiaries under K-IFRS


Ltd.


Ltd.


Ltd.


Ltd.

Tianjin Mobis Automotive Parts Co., Ltd. Tianjin Mobis Automotive Parts Co., Ltd.

Hyundai Mobis (Hongkong) Co., Limited Hyundai Mobis (Hongkong) Co., Limited

Mobis Parts Middle East FZE Mobis Parts Middle East FZE

Mobis Auto Parts Middle East Egypt Mobis Auto Parts Middle East Egypt

Mobis India, Ltd. Mobis India, Ltd.

(*) Mobis India Research and Development Private

Limited

Mobis Parts Australia PTY., Ltd. Mobis Parts Australia PTY., Ltd.

(*) Under Art. 1-3 par. 2 of the Presidential Decree enacting the Act on External Audit of Stock Companies,

Mobis India Research and Development Private Limited was excluded from consolidation, however under

K-IFRS it is a consolidated subsidiary

64

Independent Auditors’ Review Report on Internal Accounting Control System

English translation of a Report Originally Issued in Korean

To the President of


We have reviewed the accompanying Report on the Operations of Internal Accounting Control System (“IACS”) of

HYUNDAI MOBIS Co., Ltd. (the “Company”) as of December 31, 2010. The Company's management is

responsible for designing and maintaining effective IACS and for its assessment of the effectiveness of IACS. Our

responsibility is to review management's assessment and issue a report based on our review. In the accompanying

report of management‟s assessment of IACS, the Company‟s management stated: “Based on the assessment on the

operations of the IACS, the Company‟s IACS has been designed and is operating effectively as of December 31, 2010,

in all material respects, in accordance with the IACS Framework issued by the Internal Accounting Control System

Operation Committee.”

We conducted our review in accordance with IACS Review Standards, issued by the Korean Institute of Certified

Public Accountants. Those standards require that we plan and perform the review to obtain assurance of a level less

than that of an audit as to whether Report on the Operations of Internal Accounting Control System is free of material

misstatement. Our review consists principally of obtaining an understanding of the Company‟s IACS, inquiries of

company personnel about the details of the report, and tracing to related documents we considered necessary in the

circumstances. We have not performed an audit and, accordingly, we do not express an audit opinion.

A company's IACS is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted

accounting principles. Because of its inherent limitations, however, IACS may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may

deteriorate.

Based on our review, nothing has come to our attention that Report on the Operations of Internal Accounting Control

System as of December 31, 2010 is not prepared in all material respects, in accordance with IACS Framework issued

by the Internal Accounting Control System Operation Committee.

This report applies to the Company‟s IACS in existence as of December 31, 2010. We did not review the Company‟s

IACS subsequent to December 31, 2010. This report has been prepared for Korean regulatory purposes, pursuant to

the External Audit Law, and may not be appropriate for other purposes or for other users.

February 22, 2011

Notice to Readers

This report is annexed in relation to the audit of the non-consolidated financial statements as of December 31, 2010

and the review of internal accounting control system pursuant to Article 2-3 of the Act on External Audit for Stock

Companies of the Republic of Korea.

65

Report on the Operations of Internal Accounting Control System

To the Board of Directors and Audit Committee of

HYUNDAI MOBIS Co., Ltd.:

1. I, as the Internal Accounting Control Officer (“IACO”) of HYUNDAI MOBIS Co., Ltd. (the “Company”), have

assessed the status of the design and operations of the Company‟s internal accounting control system (“IACS”) as

of December 31, 2010 and the Company‟s management including IACO is responsible for designing and

operating IACS.

2. Major examinations for the operations of the Company‟s IACS.

1) Report on result of the operations of IACS.

2) Check and finalize the financial statements for the year ended December 31, 2010.

3. Results of the Examination

1) The major examinations above properly express all subjects that the Company has to include or reflect in

accordance with IACS standards of the Acts on External Audit for Stock Companies in Korea and manages

public announcement certifying system to ensure the accuracy and propriety of public announcement.

2) Based on its assessment of the operations of the IACS, the Company‟s IACS has been designed and is

operating effectively as of December 31, 2010, in all material respects, in accordance with the IACS standards

established by the IACS Operations Committee.

3) In order to ensure that the Company takes the appropriate steps in adopting K-IFRS, the Company has

educated the employees and CFOs of subsidiaries and established accounting systems to apply the new

accounting treatments in 2010.

January 27, 2011

Choi Byung-Chul, Internal Accounting Control Officer

Chung Suk-Soo, Chief Executive Officer and President

Documents

2010 Non Consolidated Report 1