Bridgestone 2002 Annual Report Download - page 38

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The Company and its domestic subsidiaries are subject to the Code
to which certain amendments became effective from October 1,
2001. Prior to October 1, 2001, the Code required at least 50% of
the issue price of new shares, with a minimum of the par value
thereof, to be designated as stated capital as determined by resolu-
tion of the Board of Directors. Proceeds in excess of amounts des-
ignated as stated capital were credited to additional paid-in capital.
Effective October 1, 2001, the Code was revised and common stock
par values were eliminated, resulting in all shares being recorded
with no par value.
Prior to October 1, 2001, the Code also provided that an
amount at least equal to 10% of the aggregate amount of cash div-
idends and certain other cash payments which are made as an
appropriation of retained earnings applicable to each fiscal period
shall be appropriated and set aside as a legal reserve until such
reserve equals 25% of stated capital. Effective October 1, 2001,
the revised Code allows for such appropriations to be set aside as a
legal reserve until the total additional paid-in capital and legal
reserve equals 25% of stated capital. The amount of total addition-
al paid-in capital and legal reserve which exceeds 25% of stated
capital can be transferred to retained earnings by resolution of the
shareholders, which may be available for dividends. The Company’s
legal reserve amount, which is included in retained earnings, totals
¥31,279 million ($260,876 thousand) and ¥31,279 million at
December 31, 2002 and 2001, respectively.
Under the Code, companies may issue new common shares to
existing shareholders without consideration as a stock split pur-
suant to a resolution of the Board of Directors. Prior to October 1,
2001, the amount calculated by dividing the total amount of share-
holders’ equity by the number of outstanding shares after the stock
split could not be less than ¥50. The revised Code eliminated this
restriction.
Prior to October 1, 2001, the Code imposed certain restrictions
on the repurchase and use of treasury stock. Effective October 1,
2001, the Code eliminated these restrictions allowing companies to
repurchase treasury stock by a resolution of the shareholders at the
general shareholders’ meeting and dispose of such treasury stock by
resolution of the Board of Directors after March 31, 2002. The
repurchased amount of treasury stock cannot exceed the amount
available for future dividend plus amount of stated capital, addi-
tional paid-in capital or legal reserve to be reduced in the case
where such reduction was resolved at the general shareholders’
meeting. The Company holds 911,067 shares and 449,877 shares
of treasury stock and its affiliated companies hold 14,000 shares
and 19,000 shares of treasury stock at December 31, 2002 and
2001, respectively.
The Code permits companies to transfer a portion of additional
paid-in capital and legal reserve to stated capital by resolution of
the Board of Directors. The Code also permits companies to trans-
fer a portion of unappropriated retained earnings, available for div-
idends, to stated capital by resolution of the shareholders.
Dividends are approved by the shareholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable.
Semiannual interim dividends may also be paid upon resolution of
the Board of Directors, subject to certain limitations imposed by
the Code.
The amount of retained earnings available for dividends under
the Code is based on the amount recorded in the Company’s general
NOTE 8—SHAREHOLDERS’ EQUITY
Net periodic benefit costs noted above for certain subsidiaries do not include pension costs for defined contribution pension plans of
¥3,692 million ($30,792 thousand) and ¥4,106 million for the years ended December 31, 2002 and 2001, respectively.
The components of the net periodic benefit costs for the years ended December 31, 2002 and 2001 are as follows:
Thousands of
Millions of yen U.S. dollars
2002 2001 2002
Service cost ¥19,152 ¥21,806 $159,733
Interest cost 27,305 25,728 227,731
Expected return on plan assets (30,396) (40,098) (253,511)
Amortization of transitional obligation 1,969 1,973 16,422
Recognized actuarial gain or (loss) 1,494 (8,237) 12,461
Amortization of prior service cost 2,510 2,979 20,934
Net periodic benefit costs ¥22,034 ¥4,151 $183,770
Assumptions used for the years ended December 31, 2002 and 2001 are set forth as follows:
2002 2001
Discount rate Principally 2.5% Principally 3.0%
Expected rate of return on plan assets Principally 3.0% Principally 3.0%
Amortization period of prior service cost 3 to 12 years 3 to 12 years
Recognition period of actuarial gain or loss Principally 10 years Principally 10 years
Amortization period of transitional obligation 10 years 10 years