Bridgestone 2002 Annual Report Download

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BridgestoneAnnualReport
2002

Table of contents

  • Page 1
    BridgestoneAnnualReport 2002

  • Page 2
    ... in Europe Focusing on high-value segments Taking a new look at globalization Pioneering important new tire technologies Building profitable business in new product sectors 18 Financial Section 51 Directors, Corporate Auditors and Corporate Officers 52 54 55 55 Major Subsidiaries and Affiliates...

  • Page 3
    ... Corporation and its subsidiaries are, collectively, the world's largest manufacturer of tires and other rubber products. Responsible for operations in the Americas is Nashville-based Bridgestone Americas Holding, Inc. Responsible for operations in Europe is Brussels-based Bridgestone Europe NV...

  • Page 4
    ...in our products and in our companies • establishing a clear vision for where we are headed, especially in regard to technology At that time, • our subsidiary in the Americas was still operating in the red • sales of Firestone-brand tires were still declining in the crucial U.S. market • some...

  • Page 5
    ... selective approach in original equipment business and by promoting high-end products effectively in the replacement market. A New Beginning in Europe We have abided by a policy of insisting that our subsidiary operations in each region pay their own way-that they finance their investment programs...

  • Page 6
    ...collective competitiveness in products and in manufacturing. The number of passenger car models factory equipped with our runï¬,at tires grew in 2002. BMW selected Bridgestone runï¬,ats for its new Z4 sports car. Production technology is another sector where the Bridgestone Group companies continue...

  • Page 7
    ...and Bridgestone/ Firestone Europe S.A. have become simply Bridgestone Americas Holding, Inc., and Bridgestone Europe NV/SA. Our principal subsidiaries already have adopted a common look at the portals to their corporate Web sites on the Internet. These changes are part of a concerted, global program...

  • Page 8
    ...general trend toward higher-value tires. The Firestone brand retains an extremely high profile in the replacement market, and Bridgestone Americas is making the most of that advantage through new-product introductions and vigorous marketing. Unit sales of Firestone-brand tires in the North American...

  • Page 9
    ... agreed sales targets for Bridgestone Americas' products. Essentially all of them remained loyal to the company through the trying ordeal of the 2000 product recall, and new retailers have continued to join the program. Family channel retailers in North America-including company-owned stores- number...

  • Page 10
    ...in the drivers' championship point totals. Truck and bus tires are a big part of the systematic measures under way to strengthen Bridgestone Europe's market presence. Along with expanding production capacity for passenger car tires at the Poznan Plant, in Poland (see page 13), Bridgestone Europe is...

  • Page 11
    ... its network of affiliated retailers of passenger car tires to about 1,600 outlets by 2008. In addition, Bridgestone Europe operates a retail network of about 230 company-owned stores in Spain, France, Germany, Switzerland and other nations. The company has an extensive network of truck tire dealers...

  • Page 12
    ... a big part of the Bridgestone Group's business worldwide. Expanded production capacity in Thailand, Indonesia, China, Costa Rica and Mexico will help the group supply those tires cost-competitively in emerging markets and in industrialized nations. Product Strategy Focusing on high-value seg...

  • Page 13
    ... industrialized nations are expanding their production capacity for high- and ultrahighperformance tires. The continued global popularity of sport-utility vehicles has produced a huge market for tires in large sizes. Bridgestone Group companies are generally well equipped with production resources...

  • Page 14
    .... Also in 2004, Bridgestone will complete a Thai plant for supplying carbon black to group plants in Asia, including Japan. The Bridgestone Group's tire operations in Southeast Asia also include two tire plants and a rubber plantation in Indonesia and a steel cord plant in Thailand. In addition, the...

  • Page 15
    ... emerging markets. That is because of their superior durability on rough roads and their price-competitiveness. The Bridgestone Group will maximize cost-competitiveness in bias tires by concentrating the production of those tires principally in Thailand and Indonesia. Similarly, plants in Costa Rica...

  • Page 16
    ...business for its air spring technology in passenger cars. Future Tech These Bridgestone engineers are evaluating an extrawide GREATEC tire for replacing double tires on trucks and buses. The engineers are at Bridgestone's Tokyo Technical Center, the hub of the Bridgestone Group's global R&D network...

  • Page 17
    ...tire, which permits increased freedom in using the space inside vehicles. In early 2002, the Bridgestone Group and Continental AG began sharing information in regard to Self Supporting and Support Ring runï¬,at technologies, which are compatible with conventional wheels. In December, Yokohama Rubber...

  • Page 18
    ... is a line of ceramic items for semiconductor manufacturing. Bridgestone has become a leading supplier of precision rollers, meanwhile, to manufacturers of copy machines and other office equipment. New products announced in 2002 include an electronic display technology (above) and an additive for...

  • Page 19
    ... the nation. The company markets a full line of bicycles for shopping, commuting and recreation. It manufactures its bicycles in China and Japan. Bridgestone Sports, another Bridgestone Group company, continues to enjoy huge success with its Precept line of golf balls. The company also markets...

  • Page 20
    ...," including tires, tubes, wheels, related accessories and automotive maintenance, and "other," which consists mainly of chemical products, industrial rubber products, sporting goods, bicycles and industrial machines. The "tires" segment accounted for approximately 80% of the Companies' net sales in...

  • Page 21
    ... regions. The Company continued to strengthen its affiliated tire retail channels in Japan during the year. Those channels center on largevolume tire and automotive maintenance stores operated directly by regional domestic sales companies under the Tire Kan name; neighborhood tire shops operated by...

  • Page 22
    ...industrial rubber products, including conveyor belts, marine hoses and crawler tracks; chemical products, including urethane foam for automotive seats and for electrical appliance insulation; precision components for electronic equipment; bicycles; sporting goods, including golf and tennis equipment...

  • Page 23
    ...in the charge for minimum pension liability adjustments, to Â¥39.5 billion ($329 million). Those adjustments reï¬,ected the effect of declining stock prices on the value of pension plan assets at the Companies' operations in the Americas. The decline in shareholders' equity also included an increase...

  • Page 24
    .... In Europe, management projects an increase in unit sales of tires. They expect their European operations to achieve that increase despite an expected small decline in unit demand. Their plans for promoting growth center on stepped-up, pan-European marketing focused on high-value products. Other...

  • Page 25
    ... The descriptions of projections and plans that appear in this annual report are "forward-looking statements." They involve known and unknown risks and uncertainties in regard to such factors as product liability, currency exchange rates, raw material costs, labor-management relations and political...

  • Page 26
    Consolidated Balance Sheets Bridgestone Corporation and Subsidiaries At December 31, 2002 and 2001 Assets Millions of yen Thousands of U.S. dollars (Note 2) 2002 Current Assets: ¥ 206,520 2001 ¥ 238,913 2002 $ 1,722,435 Cash and cash equivalents (Note 6) Notes and accounts receivable (Note ...

  • Page 27
    ..., issued- 861,252,261 shares in 2002 and 861,245,547 shares in 2001 Additional paid-in capital Retained earnings Minimum pension liability adjustments Net unrealized gains on securities Foreign currency translation adjustments Treasury stock, at cost Total Shareholders' Equity Total 125,120 120...

  • Page 28
    Consolidated Statements of Income Bridgestone Corporation and Subsidiaries For the years ended December 31, 2002, 2001 and 2000 Millions of yen Thousands of U.S. dollars (Note 2) 2002 Net Sales (Note 15) Cost of Sales ¥2,247,769 1,405,391 842,378 658,516 183,862 2001 ¥2,133,825 1,376,439 757,...

  • Page 29
    ... Statements of Shareholders' Equity Bridgestone Corporation and Subsidiaries For the years ended December 31, 2002, 2001 and 2000 Number of shares of common stock issued (thousands) Common stock Additional paid-in capital Retained earnings Millions of yen Minimum pension liability adjustments...

  • Page 30
    ... pension and liability for retirement benefits Interest and dividend income Interest expense Gain on sales of property, plant and equipment Gain on sales of investments in securities Impairment losses on assets North American plant restructuring costs Loss on voluntary tire recall Changes in assets...

  • Page 31
    ... and repairs, retail business and credit card management, as well as tire development, manufacturing and marketing. Other products include industrial products, chemical products, automotive components, construction materials, electronic equipments, bicycles and sporting goods. In connection...

  • Page 32
    ... to lump-sum severance and, in certain cases, annuity payments on retirement, based on the rates of pay at the time of termination, years of services and certain other factors. Such benefits are principally provided by funded, defined benefit pension plans. Effective January 1, 2001, the Company...

  • Page 33
    ... funded defined benefit pension plans for the employees of certain foreign subsidiaries are accounted for in accordance with SFAS No.87, "Employers' Accounting for Pensions," while the postretirement benefits other than pensions for all health care and life insurance benefit plans are accounted...

  • Page 34
    ... the potential dilution as a result of issuance of shares upon conversion of the Company's convertible bonds and exercise of stock options. Effective January 1, 2002, the Company adopted a new accounting standard for computation of earning per share. The principal change to the former standard is...

  • Page 35
    NOTE 5-INVESTMENTS IN SECURITIES Information regarding each category of available-for-sale securities at December 31, 2002 and 2001 is as follows: Millions of yen 2002 Cost Unrealized gains Unrealized losses Fair value Securities classified as: Available-for-sale: Equity securities Debt ...

  • Page 36
    ..., 1,859 thousand additional shares of common stock of the Company would have been issued upon full conversion at the current conversion price. The bonds are redeemable, at the option of the Company, in whole or in part at 100% of the principal amount plus interest accrued. Annual maturities of long...

  • Page 37
    ... return on plan assets Foreign currency exchange rate changes Employer contribution Plan participants' contributions Settlements Benefits paid Fair value of plan assets at end of year Funded status Unrecognized transitional obligation Unrecognized actuarial loss Unrecognized prior service cost...

  • Page 38
    ... Expected rate of return on plan assets Amortization period of prior service cost Recognition period of actuarial gain or loss Amortization period of transitional obligation 2001 Principally 3.0% Principally 3.0% 3 to 12 years Principally 10 years 10 years NOTE 8-SHAREHOLDERS' EQUITY The Company...

  • Page 39
    ... 29, 2001 Directors Selected employees March 28, 2002 Directors Selected employees Total The exercise price is equal to the higher of either 1.05 times the monthly average closing market price of the Company's common stock traded in the Tokyo Stock Exchange of the month preceding the date of...

  • Page 40
    ..., certain subsidiaries in Europe recognized an impairment loss for property, plant and equipment for the manufacturing locations, due to their inability to cope with the rapid change in the European market. During the year ended December 31, 2001, certain subsidiaries in the Americas recognized an...

  • Page 41
    ... Lower income tax rates applicable to income in certain foreign countries Loss on the transfer of subsidiaries' stock Change in valuation allowance for deferred income tax assets Other-net Actual effective tax rate 41.9% 3.3 - - - 7.2 2.7 55.1% NOTE 13-DERIVATIVES The Companies enter into foreign...

  • Page 42
    ...dollar receipt, Spanish peseta payment U.S. dollar receipt, Deutsche mark payment U.S. dollar receipt, U.S. dollar payment Interest rate swap contracts: Floating rate receipt, fixed rate payment Floating rate receipt, ï¬,oating rate payment Commodity future contracts: Natural rubber: Sell Buy - 281...

  • Page 43
    ... receipt, Spanish peseta payment U.S. dollar receipt, Deutsche mark payment U.S. dollar receipt, U.S. dollar payment Interest rate swap contracts: Floating rate receipt, fixed rate payment Floating rate receipt, ï¬,oating rate payment Commodity future contracts: Natural rubber: Sell Buy - 2,344...

  • Page 44
    ...items of bank borrowings Total ¥8,105 968 ¥9,073 (b) Operating lease commitments The Companies lease certain land, machinery, vehicles, computer equipment, office space and other assets. The lease payments under noncancelable operating leases for the years ended December 31, 2002 and 2001 are as...

  • Page 45
    ... $ 1,533,462 $ 17,880,967 $ 996,380 $ 994,179 The major products and business of each industry segment are as follows: Tires: Tires and tubes, wheels and accessories, auto maintenance, etc. Other: Chemical products, industrial rubber products, sporting goods, bicycles, industrial machines, etc. 43

  • Page 46
    ... Information by geographic segment Year ended December 31, 2002 Japan The Americas Europe Millions of yen Other Total Elimination or corporate Consolidated Net sales: External customers Inter-segment Total Operating expenses Operating income Identifiable assets Year ended December 31, 2001 Japan...

  • Page 47
    ... for the direct costs of voluntary tire recall and for product liability suits and claims, class actions and the Attorneys General settlements, net of proceeds from product liability insurance recoveries. As a result of the payments, as of December 31, 2002 and 2001, BFA has recorded liabilities for...

  • Page 48
    ...In addition, a stock option plan was approved, which provides options to purchase up to 270 thousand shares of the Company's common stock by directors and selected employees of the Company. The exercise price is equal to the higher of either 1.05 times the monthly average closing market price of the...

  • Page 49
    ...' equity Net income (loss) 2001 Shareholders' equity Amounts reported in the consolidated financial statements under Japanese GAAP Adjustments-income (loss) before income taxes and minority interests: (a) Employers' accounting for pensions (b) Business combinations (c) Functional currency in...

  • Page 50
    ... retirement benefits, with certain minor exceptions, resulting from companies' defined benefit pension plans have been determined based on the projected benefit obligation and plan assets at the balance sheet date. Net periodic pension costs are attributed to each year of an employee's service...

  • Page 51
    ... GAAP, impairment losses on assets, loss on voluntary tire recall and North American plant restructuring costs, totaling ¥36,935 million ($308,049 thousand) and ¥203,164 million, are reported as other expenses for the years ended December 31, 2002 and 2001, respectively, whereas such expenses...

  • Page 52
    ..., all expressed in Japanese yen. The consolidated statements of income, shareholders' equity, and cash ï¬,ows of Bridgestone Corporation and subsidiaries for the year ended December 31, 2000 were audited by other auditors whose reports, dated March 29, 2001 expressed an unqualified opinion on those...

  • Page 53
    ... for Replacement Tire Sales Human Resources and General Affairs Concurrently Director of Executive Office Shoji Mizuochi Finance and IT & Network Kaoru Fujioka Steel Cord Manufacturing Concurrently Plant Manager, Kuroiso Plant Yasuo Asami Industrial Products and Building Materials & Equipment...

  • Page 54
    ... hydraulic hoses Manufacture and sale of vibrationisolating rubber for automobiles and other industrial applications Manufacture and sale of sporting goods Production and sale of carbon black Sale of tires Sale of tires Sale of tires Sale of tires Sale of tires Belgium Bridgestone/Firestone Europe...

  • Page 55
    ... sale of tires The Netherlands Bridgestone/Firestone Benelux B.V.* Bridgestone Finance Europe B.V. E2,515 E225 NZ$42,349 Zl 558,058 New Zealand Poland Portugal Russia Singapore South Africa Bridgestone/Firestone New Zealand Ltd. Bridgestone/Firestone Poland Limited Liability Company* Bridgestone...

  • Page 56
    ... for civil engineering Rubber Tracks for bedding, furniture, vehicles, industry Ceramic Foam Inï¬,atable Rubber Dams Lenear Light Guide Multi-Rubber Bearings Automotive Parts wheels for passenger cars, trucks, buses Marine Products Sporting Goods • golf balls • golf clubs • tennis shoes...

  • Page 57
    ...Co. Technical Centers (as of January 1, 2003) Bridgestone Corporation: Tokyo, Japan Bridgestone Americas: Akron, Ohio, U.S.A. Bridgestone Europe: Rome, Italy Consolidated Subsidiaries 436 companies Paid-in Capital ¥125,120 million Shares Authorized: 1,500,000,000 Issued: 861,252,261 Transfer Agent...