Bridgestone 2003 Annual Report Download

Download and view the complete annual report

Please find the complete 2003 Bridgestone annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 60

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60

Annual Report 2003

Table of contents

  • Page 1
    Annual Report 2003

  • Page 2
    ...Industry Leadership Regional Review Our Corporate Moorings Financial Section Directors, Corporate Auditors, and Corporate Officers Major Subsidiaries and Affiliates Major Products Corporate Data Shareholder Information TABLE OF CONTENTS FINANCIAL HIGHLIGHTS Bridgestone Corporation and Subsidiaries...

  • Page 3
    The Bridgestone Group, which comprises Tokyo-based Bridgestone Corporation and its subsidiaries, is the world's largest manufacturer of tires and other rubber products. Bridgestone Group companies manufacture and market tires under the Bridgestone, Firestone, Dayton, and other well-known brands. ...

  • Page 4
    ... on high-performance tires and on other high-value-added products. That strategic shift and progress in strengthening sales channels contributed to the company's sales growth in 2003. Bridgestone Europe has also raised prices to offset the effect of rising raw material costs. Sales in Japan declined...

  • Page 5
    ... sales value. The strong yen, meanwhile, undercuts the competitiveness of our exports from Japan. We are taking full advantage of the global scope of our manufacturing network in distributing production in ways that neutralize the effect of currency ï¬,uctuations. You will be seeing a new dimension...

  • Page 6
    INDUSTRY LEADERSHIP Why Car owners and automakers are opting for high-performance tires on a growing range of vehicle models. Demand for high- and ultrahigh-performance tires is therefore rising rapidly in North America, Europe, and Japan. And we are moving aggressively to serve a growing share of ...

  • Page 7
    ...addition to Japan. That helps us to provide automakers and consumers with consistently cost-competitive products in this sector. Augmenting our strength in high-performance tires is our global development network. Technical centers operated by our Americas and European subsidiaries in Akron and Rome...

  • Page 8
    ... for small and medium-sized vehicles and for high-performance cars. Support Ring systems are a good choice for comfort-oriented cars and for sport-utility vehicles. Our strengths in runï¬,at technology extend to truck and bus tires. For example, we offer our GREATEC MEGA DRIVE tires for trucks and...

  • Page 9
    ... ) are the world's best-selling line of runï¬,at tires. The Bridgestone presence in the growing market for runï¬,ats also includes the Support Ring system (above, right ). GREATEC MEGA DRIVE tires save weight and improve fuel economy by replacing double tires on trucks and buses. Equipping GREATEC...

  • Page 10
    ...of our manufacturing and service network. In addition to manufacturing new tires for aircraft in Japan, we operate retreading plants for aircraft tires in Japan, the United States, Belgium, and Hong Kong. Industry Leadership: Aircraft Tires Aircraft tires have been part of the Bridgestone product...

  • Page 11
    ... with Boeing and our new supply relationship with Airbus also bode well for our business prospects in this product sector. We will need to cope with the appreciation of the yen, however, to reinforce the cost-competitiveness of our aircraft tires manufactured in Japan. 2003 ANNUAL REPORT 09

  • Page 12
    ...family-channel dealers. Our Chinese sales network gained an important new dimension in August 2003. That was when we opened the first outlet in our new franchise network of tire retailers, called Car Wings. Sales are booming at the inaugural outlet, which is in Guangzhou, and we plan to have 50 Car...

  • Page 13
    ..." in English. Car Wings is a new retail franchise chain that Bridgestone is building in China to market tires and related products and services. As the photos show, a Car Wings opening was cause for celebration in Qingdao. Bridgestone's plans call for opening 200 Car Wings outlets within three years...

  • Page 14
    ... soon after they started producing tires-golf ball production dates from 1935. Today, Bridgestone Group companies are leaders in automotive components, industrial rubber products, construction materials, chemical products, electro-materials, bicycles, and sporting goods. Ultrapure silicon carbide is...

  • Page 15
    ...potential competitive standing of our product entry. Meanwhile, demand remains strong for our PureBeta products of polycrystalline silicon carbide. We expect to achieve continuing sales growth in those products, especially as recovery in the semiconductor industry gains momentum. 2003 ANNUAL REPORT...

  • Page 16
    ... high-value items. Bridgestone's retail networks are the largest in Japan's tire industry. More than 600 neighborhood retailers strengthen their customer appeal with the company's Mr. Tire Man signage and service guidelines. Bridgestone's Tire Kan network of large, family-oriented stores comprises...

  • Page 17
    ... costs. In passenger car and light truck tires, a decline in original equipment sales offset growth in replacement tires. In truck and bus tires, unit sales rose in replacement tires and declined slightly in original equipment. Our main operating unit in the Americas is Nashville-based Bridgestone...

  • Page 18
    ...PLC. Nokian is the largest tire manufacturer in the Nordic region. Europe This tire store in Germany features the newly restyled appearance of Bridgestone Europe's First Stop network. That network consists of about 1,100 independent retailers of passenger car and light truck tires, and the company...

  • Page 19
    ...is of the opening ceremony 160 stores. for a new head office complex for Bridgestone Middle East. That company, a wholly owned subsidiary based in Dubai, is expanding its sales and service network steadily. The new complex includes a training center, warehouse, and tire service center (top), as well...

  • Page 20
    ...brand message. In 2003, we adopted the phrase Passion for Excellence as a unifying global slogan. All Bridgestone Group companies have adopted this phrase in their marketing. Corporate Philosophy Team members at Bridgestone long shared an unwritten set of values, centered on a commitment to quality...

  • Page 21
    ... our brand image. CEO Shigeo Watanabe fills the newly created post of chief risk management officer, which underlines the importance that we attach to this function. Governance Strengthening corporate governance is indispensable in fulfilling our mission as stated in the Bridgestone Way: Serving...

  • Page 22
    ...: "tires," 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 about 80% of the Companies' net sales...

  • Page 23
    ...Japanese exports of industrial products and chemical products also contributed to the overall sales gain. Outside Japan, the Companies' operations in the Americas have strong market positions in roofing materials and in air springs for trucks. The Companies also market rubber tracks, conveyor belts...

  • Page 24
    ... ($662 million), and advertising costs declined 4.7%, to ¥94.8 billion ($885 million). The number of employees at the Companies increased 1.8%, to 108,741 at year-end. Selling, general and administrative expenses (% of net sales) FY 2003 29.4 2002 29.3 2001 30.0 2000 28.3 1999 27.4 Operating...

  • Page 25
    ...through ï¬,uctuations in earnings. Annual dividends for 2003-comprising interim dividends and year-end dividends-remained at Â¥16 ($0.15) per share. Net return on sales (% of net sales) FY 2003 3.9 2002 2.0 2001 0.8 2000 0.9 1999 4.3 Financial Position Shareholders' equity increased 11.6%, to...

  • Page 26
    ... 1999 2000 2001 2002 2003 Cash Flow (net cash provided by operating activities) 300 ¥ billion 240 180 120 60 0 1999 2000 2001 2002 2003 Eleven-Year Summary Bridgestone Corporation and Subsidiaries Years ended December 31 Net sales: Tires Other Operating income Net income Net income per share (in...

  • Page 27
    ... cash ï¬,ow. Forward-Looking Statements 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...

  • Page 28
    Consolidated Balance Sheets Bridgestone Corporation and Subsidiaries At December 31, 2003 and 2002 Assets Millions of yen Thousands of U.S. dollars (Note 2) 2003 Current Assets: 2002 ¥ 206,520 2003 $ 2,784,141 Cash and cash equivalents Notes and accounts receivable (Note 6), less allowance ...

  • Page 29
    ..., issued-863,102,321 shares in 2003 and 861,252,261 shares in 2002 Capital surplus Retained earnings Minimum pension liability adjustments Net unrealized gains on securities Foreign currency translation adjustments Treasury stock-at cost, 23,270,247 shares in 2003 and 915,267 shares in 2002 (Note 18...

  • Page 30
    Consolidated Statements of Income Bridgestone Corporation and Subsidiaries For the years ended December 31, 2003, 2002 and 2001 Millions of yen Thousands of U.S. dollars (Note 2) Net Sales (Note 16) Cost of Sales Gross profit Selling, General and Administrative Expenses Operating income (Note ...

  • Page 31
    Consolidated Statements of Shareholders' Equity Bridgestone Corporation and Subsidiaries For the years ended December 31, 2003, 2002 and 2001 Millions of yen Shares of common stock issued (Thousands) Minimum pension liability adjustments Net unrealized gains on securities Foreign currency ...

  • Page 32
    ... accounts receivable Sale-leaseback transactions Payments for purchase of treasury stock Repayments of lease obligations under capital lease Other Net Cash Provided by (Used in) Financing Activities Effect of Exchange Rate Changes on Cash and Cash Equivalents Net Increase (Decrease) in Cash and Cash...

  • Page 33
    ... 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...

  • Page 34
    ...(j) Retirement and pension plans Japanese domestic companies Employees serving with the Company and its domestic subsidiaries are generally entitled 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 service and...

  • Page 35
    ... hedged by foreign exchange forward contracts or currency option contracts. (q) Foreign currency financial statements The balance sheet accounts of foreign subsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet date except for shareholders' equity, which...

  • Page 36
    ... the new standard. Cash dividends per share presented in the consolidated statements of income are dividends applicable to the respective years, including dividends to be paid after the end of the year. (t) Reclassification Certain consolidated financial statement items previously reported have...

  • Page 37
    ... yen Thousands of U.S. dollars 2003 2002 2003 Borrowings from banks, insurance companies and others, weighted average interest rate of 1.8% at December 31, 2003 and 2.1% at December 31, 2002 denominated in mainly Japanese yen, U.S. dollars and euros: Secured Unsecured 1.9% yen convertible bonds...

  • Page 38
    ... certain other specified events, against all other debt payable to the banks. The Company has never been requested to provide any additional collateral. At December 31, 2003, the Company had unused committed lines of credit with various banks for short-term financing, amounting to ¥30,000 million...

  • Page 39
    ... 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 40
    ...resulting in all shares being recorded with no par value and at least 50% of the issue price of new shares is required to be recorded as common stock and the remaining net proceeds as additional paid-in capital, which is included in capital surplus. The Code permits Japanese companies, upon approval...

  • Page 41
    ... of either 1.05 times the monthly average closing market price of the Company's common stock traded in the Tokyo Stock Exchange during the month preceding the date of grant, or the closing market price on the date of grant. During the year ended December 31, 2003, the exercisable options were not...

  • Page 42
    ...Americas, due primarily to the decline in profitability owing to the voluntary tire recall in August 2000. North American plant restructuring costs In December 2001, a U.S. subsidiary closed its Decatur, Illinois, tire plant in the U.S. This action was taken due to the need to match tire production...

  • Page 43
    ... the consolidated statements of income for the years ended December 31, 2003, 2002 and 2001 is as follows: Normal effective statutory tax rate Expenses not deductible for income tax purpose Lower income tax rates applicable to income in certain foreign countries Loss on the transfer of subsidiaries...

  • Page 44
    ...risk. Derivative transactions entered into by the Companies have been made in accordance with internal policies which regulate the authorization and credit limit amounts. Foreign currency forward contracts and currency swap contracts which qualify for hedge accounting for the years ended December 31...

  • Page 45
    ...: U.S. dollar Euro Australian dollar British pound Other Buy: U.S. dollar Japanese yen Other Interest rate swap contracts: Floating rate receipt, fixed rate payment Floating rate receipt, ï¬,oating rate payment Commodity future contracts: Natural rubber: Buy $314,543 335,228 62,018 8,018 47,326 79...

  • Page 46
    ...,209 $ 974,358 $ 1,462,448 - - 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. 44 BRIDGESTONE

  • Page 47
    ...,917 ¥2,120,623 ¥ 183,294 ¥2,220,613 Japan The Americas Europe Other Total Elimination or corporate Consolidated Net sales: External customers Inter-segment Total Operating expenses Operating income Identifiable assets Year ended December 31, 2001 ¥ 827,620 206,010 ¥ 1,033,630 ¥ 897...

  • Page 48
    ...Company intend to vigorously defend each of the certified and purported class action lawsuits in the absence of a reasonable and approved settlement. In fiscal years 2003 and 2002, BSA has paid $96 million and $245 million, respectively, for the direct cost of voluntary tire recall and for product...

  • Page 49
    ... average closing market price of the Company's common stock traded in the Tokyo Stock Exchange in the month preceding the date of grant, or the closing market price of that on the date of grant. The exercise period of the stock options is from April 1, 2006 to March 31, 2011. 2003 ANNUAL REPORT 47

  • Page 50
    ...shareholders' equity to U.S. GAAP Shareholders' equity reported in the consolidated financial statements under Japanese GAAP Adjustments required to conform with U.S. GAAP: (a) Employers' accounting for pensions (b) Business...income for the year ended December 31, 2001 is reconciled to a loss of ¥24...

  • Page 51
    ... 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 52
    ...: (h) Free share distributions As permitted by the Code prior to April 1, 1991, the Company had made free share distributions which were accounted for by a transfer from capital surplus to common stock or without any transfers in the capital accounts. Companies in the U.S. issuing shares in similar...

  • Page 53
    ...addresses accounting for a transfer to the Japanese government of a substitutional portion of an Employee Pension Fund Plan ("EPF"), which is a contributory funded defined benefit pension plan established under the Japanese Welfare Pension Insurance Law. EITF No.03-02 requires employers to account...

  • Page 54
    ... subsidiaries in the Americas are involved in significant legal matters related to tires which have been voluntarily recalled as announced in August 2000. As discussed in Note 18 to the consolidated financial statements, in connection with the contributory funded defined benefit pension plan...

  • Page 55
    ... of Bridgestone Tire Operations in China Executive Vice President Chief Financial Officer and Chief Compliance Officer Responsible for Americas and Europe Operations Minekazu Fujimura Seconded to Bridgestone Europe NV/SA Chairman, CEO and President of Bridgestone Europe NV/SA Board of Corporate...

  • Page 56
    ... Aircraft Tire Company (Asia) Limited Costa Rica France Germany India Indonesia Italy Japan Bridgestone/Firestone de Costa Rica, S.A. Bridgestone France S.A. Bridgestone Deutschland G.m.b.H. Bridgestone India Private Ltd. P.T. Bridgestone Tire Indonesia Bridgestone Italia S.p.A. Bridgestone Cycle...

  • Page 57
    ... resin products Retread and sale of aircraft tires Manufacture and sale of tires E2,515 E225 NZ$42,349 Zl 558,058 New Zealand Poland Portugal Russia Singapore South Africa Spain Sweden Switzerland Taiwan Thailand Bridgestone New Zealand Ltd. Bridgestone Poland Sp. z o.o Bridgestone Portugal...

  • Page 58
    ... • golf swing diagnostic system Industrial Products Belts • steel cord conveyor belts • fabric conveyor belts • belt-related commodities • pipe conveyor systems Hoses • braided hoses • hydraulic hoses • automobile hoses Antivibration and Noise-Insulating Materials • air springs...

  • Page 59
    ... Auditors Deloitte Touche Tohmatsu/Tohmatsu & Co. Technical Centers Bridgestone Corporation: Tokyo and Yokohama, Japan Bridgestone Americas: Akron, Ohio, U.S.A. Bridgestone Europe: Rome, Italy Consolidated Subsidiaries 424 companies Shareholder Information Paid-in Capital ¥126,354 million...

  • Page 60
    10-1, Kyobashi 1-chome, Chuo-ku, Tokyo 104-8340, Japan www.bridgestone.co.jp April 2004 Printed in Japan with vegetable-based ink on recycled paper