Bridgestone 2004 Annual Report Download - page 46

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Bridgestone Annual Report 2004
The components of the net periodic benefit costs for the years ended December 31, 2004, 2003 and 2002 are as follows:
Thousands of
Millions of yen U.S. dollars
2004 2003 2002 2004
Service cost ¥ 17,514 ¥ 20,090 ¥ 19,152 $ 168,064
Interest cost 25,306 25,656 27,305 242,837
Expected return on plan assets (24,270) (22,958) (30,396) (232,895)
Amortization of transitional obligation 1,968 1,969 1,969 18,885
Recognized actuarial loss 7,750 12,290 1,494 74,369
Amortization of prior service cost (1,252) 1,279 2,510 (12,014)
Net periodic benefit costs ¥ 27,016 ¥38,326 ¥ 22,034 $ 259,246
Net periodic benefit costs noted above for certain foreign subsidiaries do not include pension costs for defined contribution pension
plans of ¥4,011 million ($38,490 thousand), ¥4,110 million and ¥3,692 million for the years ended December 31, 2004, 2003 and 2002,
respectively.
Assumptions used for the years ended December 31, 2004, 2003 and 2002 are set forth as follows:
2004 2003 2002
Discount rate Principally 2.5% Principally 2.5% Principally 2.5%
Expected rate of return on plan assets Principally 3.0% Principally 3.0% Principally 3.0%
Amortization period of prior service cost 3 to 12 years 3 to 12 years 3 to 12 years
Recognition period of actuarial gain or loss Principally 10 years Principally 10 years Principally 10 years
Amortization period of transitional obligation 10 years 10 years 10 years
NOTE 8—SHAREHOLDERS’ EQUITY
The Company and its domestic subsidiaries are subject to the Code to which certain amendments became effective from October 1,
2001. The Code was revised whereby common stock par value was eliminated, 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 addi-
tional paid-in capital, which is included in capital surplus. The Code permits Japanese companies, upon approval of the Board of
Directors, to issue shares to existing shareholders without consideration as a stock split. Such issuance of shares generally does not give
rise to changes within the shareholders’ accounts.
The revised Code also provides that an amount at least equal to 10% of the aggregate amount of cash dividends and certain other
appropriations of retained earnings associated with cash outlays applicable to each period shall be appropriated as a legal reserve (a
component of retained earnings) until such reserve and additional paid-in capital equals 25% of common stock. The amount of total
additional paid-in capital and legal reserve that exceeds 25% of the common stock may be available for dividends by resolution of the
shareholders. In addition, the Code permits the transfer of a portion of additional paid-in capital and legal reserve to the common
stock by resolution of the Board of Directors. The Company’s legal reserve amount, which is included in retained earnings, totals
¥31,279 million ($300,154 thousand) and ¥31,279 million at December 31, 2004 and 2003, respectively.
The revised Code eliminated restrictions on the repurchase and use of treasury stock, allowing Japanese 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 beginning April 1, 2002. The repurchased amount of treasury stock cannot exceed the amount available for
future dividend plus amount of common stock, capital surplus or legal reserve to be reduced in the case where such reduction was
resolved at the general shareholders meeting.
The amount of retained earnings available for dividends under the Code at December 31, 2004 was ¥586,254 million
($5,625,698 thousand) based on the amount recorded in the parent company’s general books of account. In addition to the provision
that requires an appropriation for a legal reserve in connection with the cash payment, the Code imposes certain limitations on the
amount of retained earnings available for dividends.
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 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.