Bridgestone 2002 Annual Report Download - page 31

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Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000
NOTE 1—NATURE OF OPERATIONS
NOTE 2—BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
Bridgestone Corporation (the “Company”) and its subsidiaries
(hereinafter referred to collectively as the “Companies”) engage in
developing, manufacturing and marketing tires and other products.
They market their products worldwide and operate manufacturing
plants in every principal market. Development activities take place
primarily in Japan, the United States of America (the “U.S.”) and
Europe. Tire operations include automotive maintenance 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 with a merger between Bridgestone/Firestone, Inc.
(“BFS”), and its successor, Bridgestone/Firestone North American
Tire, LLC (“BFNT”), the latter’s sole shareholder became
Bridgestone/Firestone Americas Holding, Inc. (“BFAH”), the U.S.
holding company for, and a wholly owned subsidiary of, the
Company after November 2001.
Also, BFS Retail & Commercial Operations, LLC, a wholly
owned subsidiary of BFAH, has a 58.5% equity investment in
Morgan Tire & Auto, Inc. (“MTA”). MTA, which was one of the
largest independent retailers of tires in the U.S. with 558 locations
in 25 states and employing approximately 6,000 people nation-
wide, became a subsidiary of BFS, with BFS’s share of MTA
reaching 52.5% of shares outstanding in 2001.
Effective January 1, 2003, BFAH changed its company name to
Bridgestone Americas Holding, Inc. (“BSA”).
NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Consolidation
The consolidated financial statements include the accounts of the
Company and all of its subsidiaries in which the Company has
effective control. All significant intercompany balances and trans-
actions have been eliminated in consolidation. All material unreal-
ized profits included in assets resulting from transactions within the
Companies are eliminated.
Investments in affiliated companies, those owned 20% to 50%,
are accounted for under the equity method with appropriate adjust-
ments for intercompany profits and dividends. Equity in earnings of
the affiliated companies is included in other income (expenses) in
the consolidated statements of income.
(b) Cash equivalents
Cash equivalents are short-term investments that are readily con-
vertible into cash and that are exposed to insignificant risk of
changes in value. Cash equivalents include highly liquid investments
with original maturities of three months or less.
The consolidated financial statements have been prepared in accor-
dance with the provisions set forth in the Japanese Securities and
Exchange Law and its related accounting regulations, and in accor-
dance with accounting principles and practices generally accepted
and applied in Japan (“Japanese GAAP”), which are different
from the accounting principles generally accepted in the U.S.
(“U.S. GAAP”). The differences between Japanese GAAP and
U.S. GAAP are summarized in Note 18, together with the reconcil-
iation between Japanese GAAP and U.S. GAAP based net income
(loss) and shareholders’ equity.
It is common practice in Japan that the accounts of foreign sub-
sidiaries included in the consolidated financial statements are based
on their accounting records which are maintained in accordance
with accounting principles and practices generally accepted in their
respective countries of domicile.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the consol-
idated financial statements issued domestically in order to present
them in a form which is more familiar to readers outside Japan.
In accordance with accounting procedures generally accepted in
Japan, certain comparative disclosures are not required to be and
have not been presented herein.
The consolidated financial statements are stated in Japanese
yen, the currency of the country in which the Company is incorpo-
rated and operates. The translations of Japanese yen amounts into
U.S. dollar amounts are included solely for the convenience of
readers outside Japan and have been made at the rate of ¥119.90
to $1, the approximate rate of exchange at December 31, 2002.
Such translations should not be construed as representations that
the Japanese yen amounts could be converted into U.S. dollars at
that or any other rate.