Bridgestone 2004 Annual Report Download - page 26

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Bridgestone Annual Report 2004
liabilities in nations other than Japan. The appreciation of the yen against other currencies generally
tends to adversely affect the Companies’ yen-converted results; the depreciation of the yen against
other currencies generally tends to favorably affect the Companies’ yen-converted results.
The Companies encounter numerous competitors in every market for the Companies’ entire prod-
uct line, and competitive price pressures could adversely affect the Companies’ operating results and
financial condition. In addition, large corporate customers occasionally demand price reductions.
The Companies strive to maintain profitability levels in the face of downward price pressures by
lowering costs, raising efficiencies, enhancing brand image, and continuing to introduce new prod-
ucts that provide greater customer value. However, management cannot guarantee that these efforts
will always be sufficient to offset the effects of competitive pricing pressures.
Inability to completely recover product development costs could also adversely affect the
Companies’ operating results and financial condition. The Companies’ strategy centers on main-
taining a competitive technological edge. The Companies are active in deploying new products
equipped with new technologies. Developing new products and technologies entails significant
investment and current expenditures. The Companies strive to persuade customers of the value of
technological advances and to thereby secure prices for their products that are commensurate with
the cost of developing the products. However, escalating competition and other factors could pre-
vent the Companies from recovering their development costs completely through product pricing.
A determination that a product may contain defects or a product recall could adversely affect the
Companies’ operating results and financial condition. Any such defects or recalls could occasion
replacement costs, damage to the Companies’ reputation, customer claims for compensation and
damages, and legal and litigation costs. Especially in the United States, those product liability claims
and lawsuits, including possible class action litigation, could have significant adverse effects. The
Companies strive systematically to ensure the quality of the products that they sell.
Management is especially sensitive to the importance of quality assurance in tires and in other
products that figure in personal safety, and the Companies have enhanced their quality-assurance
capabilities by refining their information-gathering systems related to the performance of their
products and by establishing an “early warning” system to identify potential issues before they
become problems. However, these efforts cannot ensure absolutely that no product defects will
occur or that no extensive product recalls will become necessary.
Information about voluntary tire recall costs and legal liabilities in the United States appears in
Note 17 in the Notes to Consolidated Financial Statements.
Any events that impede the Companies’ access to raw materials sufficiently to affect their manufac-
turing operations could adversely affect the Companies’ operating results and financial condition.
The Companies use large quantities of natural rubber in tires and in other rubber products, and
they obtain most of that natural rubber from nations in Southeast Asia. Natural disasters, war, ter-
rorist actions, civil strife, social or political unrest, or poor harvests could affect the availability of
natural rubber in quantities sufficient for the Companies’ purposes. In addition, supply shortages of
basic materials or capacity constraints of suppliers could affect the availability of raw materials other
than natural rubber in quantities sufficient for the Companies’ purposes.
The Companies rely on their operations that produce raw materials and on third-party suppliers
for important raw materials. Any interruption of activity at those operations or suppliers and any
other events that impede the Companies’ access to raw materials from those sources could adversely
affect manufacturing activity at the Companies’ plants that use those raw materials and, conse-
quently, could adversely affect the Companies’ operating results and financial condition.
Increases in the cost of raw materials could adversely affect the Companies’ operating results and
financial condition. The cost of raw materials could increase for many different reasons, including
the tightening of supply and demand. The Companies strive to absorb increases in the cost of raw
materials by raising productivity and, sometimes, by raising the prices of their products, but increas-
es in raw material costs may occur that are too large for the Companies to absorb completely
through those and other efforts.
Competition
Product defects
Procurement of
raw materials