Bridgestone 2004 Annual Report Download

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Annual Report 2004

Table of contents

  • Page 1
    Annual Report 2004

  • Page 2
    ... Officers Major Subsidiaries and Affiliates Major Products Corporate Data Shareholder Information Financial Highlights Bridgestone Corporation and Subsidiaries Years ended December 31, 2004 and 2003 Millions of yen Percent change Thousands of U.S. dollars Net sales Net income Total assets...

  • Page 3
    ... products. Bridgestone Corporation, headquartered in Tokyo, is the parent company of the group. Its subsidiaries Bridgestone Americas Holding, Inc., and Bridgestone Europe NV/SA have extensive operations in their markets. The group has also built a large presence in China and other Asian nations...

  • Page 4
    .... In carbon black, we reinforced our production capacity in Japan in the past year and opened a plant in Thailand. We are building a steel cord plant in China, and our U.S. production capacity for synthetic rubber is also undergoing expansion. A Technological Edge Asserting a technological edge is...

  • Page 5
    ... improved in-wheel motor drive system for electric vehicles • Announce collaboration with Continental AG in tirepressure monitoring systems for trucks • Hold official opening for third tire plant in China October • Establish Chinese tire headquarters • Hold official opening for carbon black...

  • Page 6
    ... in China, India, Russia, eastern Europe, and Latin America, and populations, too, continue to expand in most of those nations and regions. The authoritative market research firm LMC International projects average annual growth of 3.6% in global unit demand for tires between 2002 and 2008. That...

  • Page 7
    ..., and the second Bridgestone Group tire plant in Brazil will begin operation in the second half of 2006 in the state of Bahia. Expansion is also under way at plants in China, Thailand, Indonesia, and Costa Rica. In truck and bus tires and in off-the-road tires, we are investing about ¥50 billion...

  • Page 8
    ... Asia, for example, will supply tires mainly to export markets. We will be able to direct their output to Europe, Japan, North America, the Middle East, and other regions as market needs warrant. Our newest Chinese plant, in Wuxi, exports part of Flexibility 6 Bridgestone Annual Report 2004

  • Page 9
    ...Our new plant for truck and bus tires in Thailand's Chonburi Province augments our ï¬,exibility in serving demand worldwide. Bridgestone Group plants in Japan, Spain, Brazil, and other nations are also expanding production capacity for truck and bus tires. Right: A competitive edge in technological...

  • Page 10
    ... into commercial service in 2008, and we will begin delivering Dreamliner tires in 2007. We are the only company Boeing has contracted to supply Dreamliner tires as standard equipment. Boeing also equips other aircraft with Bridgestone tires. Aircraft tires 8 Bridgestone Annual Report 2004

  • Page 11
    .... The proving ground also includes sections for evaluating comfort, pass-by noise, and cornering. A second phase of construction will add tracks and facilities for wet-surface and other testing in 2006. H I G H L I G H T S 2004 The number of car models that leave the factory on our runï¬,at tires...

  • Page 12
    ... of raising quality and productivity in rubber processing. Working in close coordination with our field researchers are the materials engineering specialists at our technical center in Tokyo. Bridgestone Group companies produce carbon black in Japan and in Thailand. They also work closely with the...

  • Page 13
    ...; and head-tail functionalized elastomers from heteroatomic initiators that reduce wear and improve fuel economy in tires. H I G H L I G H T S 2004 Our new carbon black plant in Thailand's Rayong Province (right ) provides high-quality supplies of that raw material to Bridgestone tire plants in...

  • Page 14
    ... in industrial products, including rubber hoses. We supply tires for the powerful machines of MotoGP racing. On two wheels or on four, Bridgestone tires are consistent winners in international motorsports. Displays based on our Electronic Liquid Powder are rewritable. Used as electronic price tags...

  • Page 15
    ... affiliated networks of tire retailers- Tire Kan, Mr. Tireman, and Cockpit-have been strategically invaluable in shaping our marketing in Japan. We are concentrating our Japanese tire production on high-value-added products. The Tosu Plant, shown here, was the first plant in the Bridgestone Group...

  • Page 16
    .... Bridgestone Group tire manufacturing and marketing operations in Latin America contributed greatly to the group's operating income in the Americas in 2004. Shown here are a tire plant in Cuernavaca, Mexico, and a retail outlet for tires in São Paulo, Brazil. 14 Bridgestone Annual Report 2004

  • Page 17
    ... Rica. As in Mexico, Brazilians' impressive work ethic was a convincing factor in our decision to add a plant in Brazil. The Bridgestone Group's network of more than 2,200 company-owned stores in North America generates revenues and earnings through automotive service, as well as through tire sales...

  • Page 18
    ... raw material costs on earnings by achieving unit sales growth, by raising tire prices, and by successfully promoting high-performance tires and otherwise improving our sales portfolio. Our European unit sales increased in passenger car tires and in truck and bus tires. Those increases comprised...

  • Page 19
    ..., a new Bridgestone Group plant in Wolsztyn began producing air springs for truck trailers in December 2004. The new plant serves fast-growing European demand for those products. We are expanding our production capacity for truck and bus tires in Europe, as in other regions. Our main European plant...

  • Page 20
    ... start-up costs associated with plant construction and expansion projects, along with the adverse earnings effect of rising prices for raw materials. Sales in other regions increased 15%, to ¥405.4 billion ($3.9 billion). Bridgestone Group companies raised their tire prices during the year in all...

  • Page 21
    ...unit tire sales in those nations were basically unchanged despite robust demand. We are expanding production capacity for high-performance tires in South Africa, and we will begin producing runï¬,at tires there in 2005. Bridgestone Group operations in Africa include the world's largest rubber estate...

  • Page 22
    ... Way, as "serving society with superior quality." They continue working to upgrade their corporate governance in the spirit of fulfilling that mission more fully. Responsibility for management oversight at the Company resides in the Board of Directors, which presently has nine members. The...

  • Page 23
    ... to promote compliance with high standards of corporate ethics, ethical breaches have occurred at the Company. A recent breach consisted of anticompetitive behavior in bidding on tire-supply contracts with the Japan Defense Agency. The Company accepted a recommendation from the Japan Fair Trade...

  • Page 24
    ... rates, currency exchange rates, equity share prices, and other economic variables in different regions. Operations in the Americas accounted for 42% of the Companies' sales (for outside customers only) in the fiscal year under review, operations in Japan for 34%, and operations in Europe for...

  • Page 25
    ... in exchange rates, since the Companies' operations include extensive export and import activities worldwide. In addition, the Companies maintain their consolidated accounts in yen, and ï¬,uctuations in currency exchange rates affect the yen-converted values recorded for sales, expenses, assets, and...

  • Page 26
    ... condition. The Companies' strategy centers on maintaining 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...

  • Page 27
    ... of the Companies' products, which could adversely affect the Companies' operating results and financial condition. The Companies treat intellectual property as a crucial management resource. They work systematically to employ their intellectual property effectively in improving their competitive...

  • Page 28
    ... by Bridgestone Corporation (the "Company") is in accordance with accounting principles generally accepted in Japan ("Japanese GAAP"). Business and markets The business of the Company and its subsidiaries (the "Companies") comprises two main segments: "tires," including tires, tubes, wheels, related...

  • Page 29
    ... by the Companies' operations in the Americas in February 2004. In the previous year, the Companies recorded an extraordinary loss of ¥3.8 billion in connection with a fire at their Tochigi Plant, in Japan; an extraordinary gain of ¥4.3 billion in insurance claims Sales of Tires (net of...

  • Page 30
    ...in notes and accounts receivable, which resulted from growth in net sales, and an increase of ¥23.9 billion ($229 million) in inventories, which resulted from unit sales growth. Fixed assets-net property, plant and equipment and total investments and other assets- increased 8%, to ¥1,140.1 billion...

  • Page 31
    ...the Company of shares of some subsidiaries from minority shareholders. Shareholders' equity increased 5%, to ¥935.0 billion ($8,972 million) at year-end. That increase occurred despite expenditures of ¥67.9 billion ($651 million) for the purchase of treasury stock. Retained earnings increased ¥97...

  • Page 32
    ...% Net Assets per Share ¥ 1,163.8 1,056.5 38.2 34.2 40.0 37.1 40.1 904.4 970.2 924.5 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 Eleven-Year Summary Bridgestone Corporation and Subsidiaries Years ended December 31 Net sales: Tires (net of inter-segment accounts) Diversified products...

  • Page 33
    ... tires in Japan and in unit exports of tires. Management projects overall unit sales gains in passenger car, light truck, truck, and bus tires in the Americas and in Europe amid strong demand. Forward-looking statements The descriptions of projections and plans that appear in this annual report...

  • Page 34
    Consolidated Balance Sheets Bridgestone Corporation and Subsidiaries December 31, 2004 and 2003 Assets Millions of yen Thousands of U.S. dollars (Note 2) 2004 Current Assets: Cash and cash equivalents Notes and accounts receivable (Note 6), less allowance for doubtful accounts of ¥15,736 million...

  • Page 35
    ..., issued-863,102,321 shares in 2004 and 2003 Capital surplus Retained earnings Net unrealized gain on available-for-sale securities Foreign currency translation adjustments Treasury stock-at cost, 60,326,819 shares in 2004 and 23,270,247 shares in 2003 Total Shareholders' Equity Total ¥ 79,935 91...

  • Page 36
    Consolidated Statements of Income Bridgestone Corporation and Subsidiaries Years ended December 31, 2004, 2003 and 2002 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 16) Other ...

  • Page 37
    Consolidated Statements of Shareholders' Equity Bridgestone Corporation and Subsidiaries Years ended December 31, 2004, 2003 and 2002 Thousands Outstanding number of shares of common stock Millions of yen Net unrealized gain on Retained available-for-sale earnings securities Foreign currency ...

  • Page 38
    ...currency exchange loss Gain on sales of property, plant and equipment Gain on sales of investments in securities Insurance claims received Impairment losses on assets Loss on fire incident Loss on voluntary tire replacement Change in assets and liabilities: (Increase) decrease in notes and accounts...

  • Page 39
    ...maintenance and repairs, retail business and credit card management, as well as tire development, manufacturing and marketing. Diversified products include industrial products, chemical products, automotive components, construction materials, electronic equipment, bicycles and sporting goods. NOTE...

  • Page 40
    ... recorded by subsidiaries and the excess of cost of the Company's investments in subsidiaries and affiliated companies over its equity in the net assets at the respective dates of acquisition is mainly being amortized over a period of five years on the straight-line basis. (i) Provision for product...

  • Page 41
    ... offices at the balance sheet date. Any amounts payable to directors and corporate auditors upon retirement are subject to approval at the general shareholders meeting. Foreign subsidiaries The funded defined benefit pension plans for the employees of certain foreign subsidiaries are accounted...

  • Page 42
    ... at December 31, 2004 and 2003 is as follows: Millions of yen 2004 Cost Unrealized gains Unrealized losses Fair value Securities classified as: Available-for-sale: Equity securities Debt securities ¥46,662 3,000 ¥158,576 36 ¥(47) - ¥205,191 3,036 40 Bridgestone Annual Report 2004

  • Page 43
    ...Available-for-sale securities whose fair value is not readily determinable at December 31, 2004 and 2003 are mainly as follows: Carrying amount Millions of yen Thousands of U.S. dollars 2004 Available-for-sale: Equity securities ¥4,950 2003 ¥4,924 2004 $47,500 Proceeds from sales of available...

  • Page 44
    ...million ($287,880 thousand). The Company compensates banks for the lines of credit in the form of commitment fees, which were not material for the year ended December 31, 2004. Effective January 31, 2005, Bridgestone Americas Holding, Inc. ("BSAH") and its major subsidiaries in the U.S. entered into...

  • Page 45
    ... PLANS The Company and its domestic subsidiaries have severance payment plans for employees, directors (members of the Board of Directors) and corporate auditors. Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay...

  • Page 46
    ... of the Board of Directors, subject to certain limitations imposed by the Code. The Company issued 1,850 thousand shares and 6 thousand shares for the years ended December 31, 2003 and 2002, respectively, of common stock in connection with conversions of bonds. 44 Bridgestone Annual Report 2004

  • Page 47
    ... 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, 2004, 24 thousand shares which were granted at March 29, 2001 were exercised. At December 31, 2004, the balance of the exercisable options was...

  • Page 48
    ... the Company recorded an insurance claims received with respect to the fire of ¥4,340 million. Gains on sales of property, plant and equipment Gains on sales of property, plant and equipment for the year ended December 31, 2004 mainly consist of gains on sales of land. Impairment losses on assets...

  • Page 49
    ... Tax credit for research and development costs of domestic companies Change in valuation allowance for deferred income tax assets Other-net Actual effective tax rate 2004 41.9% 3.3 (2.7) (3.7) (4.5) 0.4 34.7% 2003 41.9% 3.6 (2.3) - 1.6 (2.4) 42.4% 2002 41.9% 3.3 (0.3) - 7.2 3.0 55.1% Financial...

  • Page 50
    ... 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, 2004 and 2003 are excluded from the disclosure of market value information. The contract or notional amounts of...

  • Page 51
    ... dollars 2004 Contract amount Fair value Unrealized gains (losses) Foreign currency forward contracts: Sell: U.S. dollar Euro Australian dollar British pound Other Buy: U.S. dollar Japanese yen Other Currency swap contracts: Indian rupee receipt, Japanese yen payment Interest rate swap contracts...

  • Page 52
    ... (a) Information by industry segment Year ended December 31, 2004 Tires Diversified products Millions of yen Total Elimination or corporate Consolidated Net sales: External customers Inter-segment Total Operating expenses Operating income Identifiable assets Depreciatio n and amortization Capital...

  • Page 53
    (b) Information by geographic segment Year ended December 31, 2004 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, 2003 ¥ ...

  • Page 54
    ..., Mexico, Brazil, Argentina, etc. Europe: Germany, United Kingdom, France, Italy, Spain, etc. Other: Asia Pacific, Middle East, Africa, etc. NOTE 17-VOLUNTARY TIRE RECALL COSTS AND LEGAL LIABILITIES BSAH and/or certain of its subsidiaries (collectively, "BSA") are defendants in numerous product...

  • Page 55
    ... provides options to purchase 300 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 Company's common stock traded in the Tokyo Stock Exchange...

  • Page 56
    Independent Auditors' Report To the Board of Directors of Bridgestone Corporation: We have audited the accompanying consolidated balance sheets of Bridgestone Corporation and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, shareholders' equity, and ...

  • Page 57
    ... Bridgestone (China) Investment Co., Ltd. Jiro Asada Industrial Products, Civil Engineering and Building Materials & Equipment Sugio Fukuoka Original Equipment Sales Concurrently Director, Original Equipment Tire Sales Division Minekazu Fujimura Seconded to Bridgestone Europe NV/SA Chairman, CEO...

  • Page 58
    ...Aircraft Tire Company (Asia) Limited Costa Rica France Germany India Indonesia Italy Japan Bridgestone/Firestone de Costa Rica, S.A. Bridgestone France S.A.S. Bridgestone Deutschland G.m.b.H. Bridgestone India Private Ltd. P.T. Bridgestone Tire Indonesia Bridgestone Italia S.p.A. Bridgestone Cycle...

  • Page 59
    ... Ticaret A.S. Bridgestone Tire Manufacturing (Thailand) Co., Ltd. 100.0% United Kingdom Bridgestone U.K. Ltd. Bridgestone Industrial Ltd. U.S.A. Bridgestone Americas Holding, Inc. Bridgestone/Firestone North American Tire, LLC BFS Retail & Commercial Operations, LLC BFS Diversified Products, LLC...

  • Page 60
    ... Office Equipment Components • water stoppers • waterproof sheets for civil engineering Rubber Tracks Inï¬,atable Rubber Dams Multi-Rubber Bearings • semiconductive rollers • other semiconductive components Performance Film Products Automotive Parts wheels for passenger cars, trucks...

  • Page 61
    ... Technical Centers Bridgestone Corporation: Tokyo and Yokohama, Japan Bridgestone Americas: Akron, Ohio, U.S.A. Bridgestone Europe: Rome, Italy Consolidated Subsidiaries 435 companies (as of December 31, 2004) Common Stock Price Range (Tokyo Stock Exchange) (Â¥) High Low 1999 4,120 2,170 2000...

  • Page 62
    10-1, Kyobashi 1-chome, Chuo-ku, Tokyo 104-8340, Japan www.bridgestone.co.jp April 2005 Printed in Japan with vegetable-based ink on recycled paper