ANNUAL REPORT
2020

Financial Review

Contents 

1Management’s Discussion and Analysis

4

Eleven-Year Summary

6

Operational Risks

10

Remuneration for Directors and Executive Officers

12

Stock Holdings

16

Consolidated Statement of Financial Position

Management’s Discussion and Analysis 

Revenue

18

Consolidated Statement of Profit or Loss

The Group has prepared its consolidated financial statements in accordance with International Financial ReportingStandards (IFRS) beginning from fiscal 2020. Figures forfiscal 2019 are reclassified under IFRS and are stated
together for comparison.
Unless stated otherwise, all figures are taken from theconsolidated financial statements and notes. U.S. dollar
figures have been translated solely for the convenience ofreaders outside Japan at the rate of ¥103.50 to $1, theprevailing exchange rate on December 31, 2020.

19

Consolidated Statement of Comprehensive Income

Results of Operations

20

Consolidated Statement of Changes in Equity

Adjusted Operating Profit

21

Consolidated Statement of Cash Flows

Business environment
In terms of the Group’s operating environment, after a

2020

22

Notes to Consolidated Financial Statements

87

Independent Auditor’s Report

global decline in tire demand caused by the novel coronavirus disease (COVID-19) during the first and second quarterof fiscal 2020, the Group saw a recovery in demand during
the third quarter as restrictions on the movement of people
and goods were eased and economic activities resumed. In
the fourth quarter, a second wave of COVID-19 caused a
decline in demand for passenger vehicle tires, whereas
demand for truck and bus tires remained strong as thetrend of recovery continued. For the full year, the Groupexperienced a large decline in tire demand compared withthe previous fiscal year.

¥ billion

3,507.2

2019
2018

3,650.1

2017

3,643.4
3,337.0

2016
IFRS

J-GAAP¥ billion
222.9
343.1

2019

402.7

2018

419.0

2017

449.5

2016
IFRS

J-GAAP

Adjusted Operating Profit Margin

Revenue, adjusted operating profit, and operating profit
Revenue decreased by ¥512.7 billion ($4,954 million), or 15%,

from the previous fiscal year, to ¥2,994.5 billion ($28,933
million), primarily due to a drop in global demand for tires
as a result of COVID-19.
For the same reason, adjusted operating profit
decreased by ¥120.2 billion ($1,161 million), or 35%, from theprevious fiscal year, to ¥222.9 billion ($2,154 million). In
addition, operating profit decreased by ¥285.2 billion($2,756 million), or 82%, from the previous fiscal year, to¥64.1 billion ($619 million), due to the recording of impairment losses of ¥95.4 billion, of which ¥5.8 billion wasrecorded as business and plant restructuring expenses. As aresult, the adjusted operating profit margin dropped 2.3
percentage points, to 7.4%.
The average yen/dollar exchange rate in fiscal 2020 was¥107, compared with ¥109 in the previous fiscal year, while
the average yen/euro exchange rate in fiscal 2020 was ¥122,
compared with ¥122 in the previous fiscal year.

2,994.5

2020

2020

2019

2018

2017

IFRS

2016
J-GAAP% of net sales

7.4

9.8

11.0

11.5

13.5

Currency Exchange Rates
Annual average rates
180

130 ¥120/€1

80

127

130

122

122

¥109/$1

112

110

109

107

2016

2017

2018

2019

2020

The Bridgestone Corporation is referred to as the “Company,” and the Company
and its subsidiaries are referred to as the “Group” in this publication.
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 anduncertainties in regard to such factors as product liability, currency exchange
rates, raw material costs, labor-management relations, and political stability.
These and other variables could cause the Bridgestone Group’s actual
performance and results to differ from management’s projections and plans.

ANNUAL REPORT 2020 Financial Review

1Management’s Discussion and Analysis 

Revenue by Business Segment• Japan
In Japan, unit sales of tires for passenger cars and lighttrucks and unit sales of tires for trucks and buses decreased
substantially compared with fiscal 2019. As a result, revenue
decreased by 17%, to ¥762.6 billion ($7,368 million), andadjusted operating profit decreased by 41%, to ¥64.6 billion($624 million), from the previous fiscal year.

Composition of Revenue by Business Segment• Americas
In the Americas, unit sales of tires for passenger cars andlight trucks in North America and overall unit sales of tires
for trucks and buses decreased significantly compared withfiscal 2019. As a result, revenue decreased by 15%, to¥1,407.9 billion ($13,603 million), and adjusted operating
profit decreased by 24%, to ¥139.9 billion ($1,352 million),from the previous fiscal year.
• Europe, Russia, Middle East, India and Africa
In Europe, unit sales of tires for passenger cars and lighttrucks and unit sales of tires for trucks and buses decreased
considerably compared with fiscal 2019. As a result, revenue
decreased by 12%, to ¥564.3 billion ($5,452 million), andadjusted operating profit amounted to a loss of ¥17.6 billion($170 million), compared with a profit of ¥15.0 billion in theprevious fiscal year.

Net of inter-segment transactions• China, Asia-Pacific
In China and the Asia-Pacific region, unit sales of tires forpassenger cars and light trucks and unit sales of tires fortrucks and buses decreased substantially compared withfiscal 2019. As a result, revenue decreased by 15%, to ¥394.6
billion ($3,813 million), and adjusted operating profit
decreased by 32%, to ¥24.6 billion ($238 million), from theprevious fiscal year.

Bridgestone Corporation

2019

2020

¥ billion

Japan
Americas
Europe, Russia, Middle East, India and

762.6

918.1

1,407.9

1,661.7

564.3

640.1

394.6

462.8

AfricaChina, Asia-Pacific

Net of inter-segment transactions
2019

2020

% of net sales

Japan

24.4%

24.9%

Americas
Europe, Russia, Middle East, India and

45.0%

45.1%

AfricaChina, Asia-Pacific

18.0%

17.4%

12.6%

12.6%

Profit attributable to owners of parent
In fiscal 2020, profit attributable to owners of parent

decreased from a profit of ¥240.1 billion in fiscal 2019 to aloss of ¥23.3 billion ($225 million), due to the recording of adecrease in operating profit of ¥285.2 billion ($2,756 million)
and an impairment loss related to shares using equity
method of ¥18.2 billion ($176 million).

Profit Attributable to Owners of Parent¥ billion(23.3)

2020

288.3
265.6

2016
IFRS

Liabilities
Total current liabilities were ¥1,041.7 billion ($10,065 million),increasing by ¥146.4 billion ($1,415 million), or 16%, from theend of the previous fiscal year, as trade and other payables
decreased by ¥32.9 billion ($318 million), whereas bonds
and borrowings increased by ¥158.5 billion ($1,532 million).
Total non-current liabilities were ¥952.3 billion ($9,201
million), decreasing by ¥26.9 billion ($260 million), or 3%,
from the end of the previous fiscal year, as bonds andborrowings increased by ¥6.5 billion ($63 million), whereas
retirement benefit liabilities decreased by ¥19.9 billion ($193
million) and deferred tax liabilities decreased by ¥15.8
billion ($152 million).
Furthermore, total interest-bearing debt recorded inboth current liabilities and non-current liabilities increasedby ¥161.7 billion ($1,563 million), or 19%, from the end of theprevious fiscal year, to ¥1,006.2 billion ($9,722 million).

291.6

2017

J-GAAP

Total Assets¥ billion

AssetsTotal current assets were ¥2,054.5 billion ($19,851 million),increasing by ¥136.1 billion ($1,315 million), or 7%, from theend of the previous fiscal year, as trade and other receivables decreased by ¥87.6 billion ($846 million), andinventories decreased by ¥138.9 billion ($1,342 million),whereas cash and cash equivalents increased by ¥377.6
billion ($3,649 million).
Non-current assets were ¥2,134.8 billion ($20,626
million), decreasing by ¥223.8 billion ($2,162 million), or 9%,
from the end of the previous fiscal year, as property, plantand equipment decreased by ¥163.0 billion ($1,575 million),
mainly due to the recording of impairment losses.

Note: Interest-bearing debt includes bonds and borrowings and lease liabilities.

240.1

2019
2018

2

Financial Condition

Performance by business segment
The following business results for each segment reflect amajor decline in tire demand that took place over thecourse of fiscal 2020 in comparison with the previous fiscal
year, despite a definite recovery in demand in the third andfourth quarter of fiscal 2020 from a global decline in tire
demand caused by COVID-19 in the first and second quarter.
The segment results include inter-segment transactions
that are eliminated when calculating consolidated results.

4,189.3

2020

4,277.0

2019

3,840.3

2018

3,959.0

2017

3,716.0

2016
IFRS

J-GAAP

Total Equity¥ billion
2,195.3

2020

2,402.520192018

2,436.2

2017

2,402.7
2,345.9

2016
IFRS

J-GAAP

Ratio of Equity Attributable to Owners of Parent
%
70
61.5
60

61.9
59.2
54.9
51.3

50

40
IFRS

2016

2017

2018

2019

2020

J-GAAP

EquityTotal equity was ¥2,195.3 billion ($21,211 million), decreasingby ¥207.2 billion ($2,002 million), or 9%, from the end of theprevious fiscal year, as the Group recorded loss attributableto owners of parent of ¥23.3 billion ($225 million), due inpart to dividends paid (owners of parent) of ¥91.5 billion($884 million).
As a result, total assets at the end of fiscal 2020
amounted to ¥4,189.3 billion ($40,477 million), decreasingby ¥87.7 billion ($847 million), or 2%, from the end of theprevious fiscal year. Furthermore, the ratio of equity attributable to owners of parent to total assets for fiscal 2020
was 51.3%, down 3.6 percentage points from the end of theprevious fiscal year.

ANNUAL REPORT 2020 Financial Review

3Management’s Discussion and Analysis Cash Flow

Return on Invested Capital
2020

2019

2018

2017

2016

IFRS

J-GAAP% of net sales

7.4

5.5

—

—

—

2019

2018

2016
J-GAAP% of net sales

10.0

12.4

526.9

2020

505.0

2019
361.0
418.1

2017

2017

IFRS

–1.0

¥ billion

2018

Net Return on Shareholders’ Equity
2020

Net cash provided by operating activities

12.5

444.5

2016
IFRS

J-GAAP

11.8

Cash flow
Cash and cash equivalents (hereinafter “net cash”)

increased by ¥377.6 billion ($3,649 million) during fiscal
2020, to ¥810.5 billion ($7,831 million), compared with adecrease of ¥1.0 billion during the previous fiscal year.
Net cash provided by operating activities increased by¥21.9 billion ($212 million) compared with the previous fiscal
year, to ¥526.9 billion ($5,091 million). The principal reasonsfor this increase include profit before tax of ¥29.3 billion($283 million), compared with ¥335.5 billion in the previous
fiscal year; depreciation and amortization of ¥267.5 billion($2,584 million), compared with ¥269.7 billion in theprevious fiscal year; impairment losses of ¥89.6 billion($866 million), compared with ¥10.5 billion in the previous
fiscal year; decrease in trade and other receivables of ¥56.9
billion ($550 million), compared with ¥21.9 billion in theprevious fiscal year; and decrease in inventories of ¥128.8
billion ($1,245 million), compared with ¥7.3 billion in theprevious fiscal year. These contributors offset income taxes
paid of ¥71.7 billion ($693 million), compared with ¥79.6
billion in the previous fiscal year.
Net cash used in investing activities decreased by ¥106.5
billion ($1,029 million) compared with the previous fiscal
year, to ¥155.4 billion ($1,501 million). One of the principal
reasons for this decrease was payments for purchase ofproperty, plant and equipment of ¥200.7 billion ($1,939
million), compared with ¥270.5 billion in the previous
fiscal year.
Net cash provided by financing activities totaled ¥18.1
billion ($175 million), compared with net cash use infinancing activities of ¥240.5 in the previous fiscal year. The
principal reasons for this increase were proceeds fromshort-term debt of ¥309.4 billion ($2,990 million), comparedwith ¥292.9 billion in the previous fiscal year, and proceedsfrom long-term debt of ¥116.6 billion ($1,127 million),compared with ¥30 million in the previous fiscal year. These
contributors offset the repayments of short-term debt of¥248.4 billion ($2,400 million), compared with ¥257.7 billion
in the previous fiscal year; repayments of lease liabilities of¥57.1 billion ($552 million), compared with ¥55.0 billion in
the previous fiscal year; dividends paid to owners of parentof ¥91.5 billion ($884 million), compared with ¥117.7 billion
in the previous fiscal year; and dividends paid to noncontrolling interests of ¥7.5 billion ($72 million), comparedwith ¥10.0 billion in the previous fiscal year.
Capital financing and liquidity
In addition to borrowings from financial institutions, theCompanies will continue to diversify their means ofprocuring funds, which include direct financing, such as
domestic straight bonds and commercial paper, securitization of receivables, and utilization of leases in an effort todiversify risks and minimize interest costs.

Net cash will be used primarily to rebuild earning powerin the Group’s core businesses and to make strategic
growth investments toward expanding the solutions businesses and other exploratory business. At the same time,
net cash will be used to maintain an appropriate financial
structure and to provide shareholder returns.

Dividend
In determining dividend payments, the Company comprehensively evaluates factors including business results,financial positions for the relevant fiscal period, mediumterm earnings forecasts, investment plans, and cash flows.
Based on these considerations, the Company strives to live
up to the expectations of shareholders by striving toachieve stable and continuous increases of dividend
payments targeting a consolidated payout ratio of 40% by
sustainably enhancing our corporate value.
For the fiscal year ended December 31, 2020, theCompany achieved significant improvement in its adjusted
operating profit and profit compared to the previous forecast.
During fiscal 2020, the Company paid an interim dividendof ¥50.0 ($0.48) and a year-end dividend of ¥60.0 ($0.58)
per share, totaling ¥110.0 ($1.06) per share for the year.

Eleven-Year Summary 
Bridgestone Corporation and Subsidiaries
Years ended December 31
2020

2019

2018

IFRS

2017

2016

2015

2014

2013

2012

2011

J-GAAP

2010
J-GAAP

Millions of yen, except per share data and financial ratios

Millions of yen, except per share data and financial ratios¥2,994,524¥ 3,507,243¥ 3,650,111¥ 3,643,428¥ 3,337,017¥ 3,790,251¥ 3,673,965¥ 3,568,091¥ 3,039,738¥ 3,024,356¥ 2,861,615

Adjusted operating profit

222,932

343,122402,732

419,047

449,549

517,248

478,038

438,132

285,995

191,322

166,450

Profit (loss) attributable to owners of parent(23,301)

240,111

291,642

288,276

265,551

284,294

300,589

202,054

171,606

102,970

98,914

Total equity

2,195,291

2,402,477

2,436,162

2,402,739

2,345,900

2,282,012

2,146,658

1,862,964

1,417,348

1,165,672

1,176,147

Total assets

4,189,327

4,277,016

3,840,270

3,959,039

3,716,030

3,795,847

3,960,908

3,577,045

3,039,799

2,677,344

2,706,640

51.3

54.9

61.9

59.2

61.5

58.2

52.4

50.5

45.2

42.2

42.2

Revenue

Ratio of equity attributable to owners of parent
to total assets
Per share in yen:
Net income (loss)
		Basic(33.09)332.31387.95375.67339.04362.99383.84258.10219.26131.56126.19		Diluted(33.09)331.76387.28375.01

338.52362.52383.39257.81

219.10131.50126.16
1,458.01

3,053.35

3,336.92

3,163.71

3,115.69

2,915.85

2,820.48

2,650.47

2,305.64

1,754.30

1,444.53

Cash dividends

110.00160.00160.00150.00140.00130.00100.00

57.00

32.00

22.00

20.00

Capital expenditure

271,900

328,159

268,421234,850

194,111

253,581296,396

274,862

245,644

201,390

182,648

Depreciation and amortization

267,454269,749

200,477

200,377

188,062202,334

188,333

176,180

155,066

158,044

170,663

Research and development expenses

95,205106,202103,551

99,792

95,403

94,97894,14789,09882,801

83,98285,154Equity attributable to owners of parent per share

Note: Solely for the convenience of readers, the Japanese yen amounts in this annual report are translated into U.S. dollars at the rate of ¥103.50 to $1, the approximate year-end rate.

4

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

5Operational Risks The status of the Companies as documented in this report issubject to diverse risks from both operational andaccounting perspectives. This section provides an overview
of the major categories of risk that may have a bearing on
investors’ decisions.
Management is aware of these risks, and systematicefforts are made to prevent or minimize the impact ofrelated adverse events on operations. Nonetheless, thepotential exists for unforeseen or unpredictable events
related to the risk factors described below to affect theoperations, business results, and financial position of theCompanies. All references to possible future developmentsin the following text are as of March 26, 2021.

the Companies’ mining, manufacturing, and construction
solutions businesses—and for certain products, such as
conveyor belts, is affected by businesses in the resource
industries and in the civil engineering and constructionindustries. Trends in those business conditions that mightcause demand to decline, or to grow at a slower rate, could
adversely affect the operating results and financial positionof the Companies.
Moreover, demand for winter tires (which make a sizable
contribution to sales in regions such as Japan, Europe, andNorth America) is closely related to seasonal weather
trends. A mild winter and a decline in demand in theseregions could adversely affect to some extent the operating results and financial position of the Companies.

Major Categories of Operational Risk

6

Demand and macroeconomic conditions
The Companies conduct research and development (R&D),

Legal, regulatory, and litigation risk
The Companies’ operations around the world are subject topurchasing, manufacturing, logistics, marketing, sales,
procurement, and other functional activities on a global
basis. Operating results and financial position are thus
subject to trends in demand, interest rates, exchange rates,
share prices, and other economic variables in different
countries and regions. In fiscal 2020, the consolidated
revenue split by market (for external customers only) was
46% from operations in the Americas; 21% from Europe,
Russia, the Middle East, India and Africa; 19% from Japan;
and 14% from China, Asia-Pacific. An economic downturnin any of these regions could exert a major adverse effecton the operating results and financial position of theCompanies.
The Companies’ business is closely tied to the automobile industry, therefore, the operating results and financial
position of the Companies are strongly affected by businessconditions in the global automobile industry. Demand for
replacement tires in each country where the Companies
operate depends on national trends in consumer spending,automotive fuel prices, and a range of other local market
variables. Any combination of trends that might cause
demand for replacement tires to decline, or to grow at a
slower rate, could adversely affect the operating results
and financial position of the Companies.
Demand for large and ultra-large off-the-road radial tires
for construction and mining vehicles—which are the core ofdiverse national (and, in Europe, supranational) laws andregulations, including trade, investment, foreign exchangetransactions, taxation systems (including transfer pricing),
anticompetitive practices, environmental protection, andprotection of personal information.
Laws and regulations that affect the Companies’ business activities have been established and introduced. These
include labeling systems and regulations regarding tire
performance and regulations regarding chemicals in Japanand overseas. Accordingly, new or revised laws and regulations could limit the scope of business activities, raise
operating costs, or otherwise adversely affect the operating results and financial position of the Companies.
The Companies could be subject to lawsuits or to investigations by governmental authorities in regard to theirbusiness activities in Japan or in overseas markets. In theevent that an important lawsuit is filed or investigation by
governmental authorities has commenced, the Companies’
operating results and financial position could be affected.

Bridgestone Corporation

Operational Disruptions
Natural disasters, wars, terrorist actions, civil strife, andsocial and political unrest
Globally dispersed operations expose the Companies to a

as earthquakes and floods, wars, terrorist actions, civil
strife, boycotts, epidemics, energy supply problems, andgeneral social or political unrest. Such events have thepotential to adversely affect the operating results andfinancial position of the Companies.
Also, factors such as abrupt, substantial fluctuations inpolitical or economic matters in Japan or overseas could
hinder the continuation of the Companies’ business activities. Such events have the potential to affect theCompanies’ operating results and financial position.
The risk of earthquakes is particularly high in Japan
where the Companies have numerous key facilities.
Management systematically promotes the seismic reinforcement of the Companies’ facilities in Japan based on anorder of priority determined from the results of site analyses using seismic diagnostics. In addition, a business
continuity plan (BCP) has been created in order to facilitatea swift response to an earthquake and the early restorationof operations. Operation of this BCP is subject to regularreview and improvement. The Companies have also formulated a BCP designed to prioritize the wellbeing and safetyof employees, families, and all related people while minimizing Company losses stemming from the spread of H1N1
influenza, COVID-19, and other diseases caused by unknown
pathogens. The content of this BCP is continuously
expanded based on feedback from its implementation.
Despite the preventive measures, such serious risks
could disrupt or reduce the scale of operations or cause
damage to facilities, necessitating expensive repairs or
restoration work. The costs involved could adversely affect
the Companies’ operating results and financial position.
Operational disruptions at those plants where theproduction of certain products or materials is concentrated
have the potential to cause greater problems due to theincreased possibility of a supply interruption, which could
result in claims for compensation based on breach of supply
contracts, or in an erosion of customer confidence in the
Companies as a reliable source of supply. Any such developments could have a significantly adverse impact on theoperating results and financial position of the Companies.

Information Technology (IT) Systems Failures
The complex operations of the Companies are increasingly
dependent on the smooth, round-the-clock functioning ofvarious computing and IT systems. Failure of such technicalsystems due to external causes, such as natural disasters,
cyberattcks, or through human error, could result in the haltof major operations and services and theft or leakage ofconfidential or personal information and data, with thepossibility of hindering further business activities. Suchincidents bear the potential to damage the Companies’
brand image and lower social trust, with adverse effects on
performance and financial standing. The Companies haveinstituted comprehensive measures to safeguard IT andcomputing systems and related data, and to upgrade
network security on an ongoing basis in order to prevent
systemic failures.

Industrial Action
Prolonged strikes or other industrial action could cause
operational disruptions, and thereby adversely affect theoperating results and financial position of the Companies.
Management strives to minimize the risk of labor unrest by
fostering good labor management relations throughout
global operations.
Risks related to climate change
Amid growing global interest in climate change and an

accelerated move toward a low-carbon society as represented by the Paris Agreement, the Companies recognize
the risks and opportunities related to climate change andreflect them in their business strategy. These risks include
stronger typhoons and increased frequency of flooding anddrought, which pose the risk of interrupting business activities. There are also risks related to the procurement of raw
materials as a result of changing rainfall patterns leading topoor harvesting of natural rubber. Furthermore, reduced
snowfall bears the risk of lowering demand for winter tires.
Moreover, climate change has led to the ongoing introduction of systems and regulations related to carbon taxes,
reduction obligations for CO2 emissions, emissions trading
schemes, and fuel-efficient tires in Japan and overseas.

broad range of natural and man-made risks that could
constitute force majeure, including natural disasters, such

ANNUAL REPORT 2020 Financial Review

7Operational Risks 

If the R&D expenses required to meet the changing
needs of clients and customers do not produce sufficientresults, the Companies’ operating results and financial
position may be adversely affected in ways that include
limitations on business activities and increased costs.
Based on the Companies’ awareness of the risks andopportunities surrounding climate change, the Companies
have set a long-term goal for 2050 of becoming carbon
neutral, with targets set for 2030 to 1) reduce absolute CO2
emissions (Scope 1*1 and 2*2) by 50% compared with 2011
levels and 2) contribute to a global CO2 emissions reduction
across the lifecycles and value chains (Scope 3*3) of theCompanies’ products and services that exceeds five times
the amount of CO2 emissions generated by the Companies’
operations by 2030. The Companies are working to meetthese targets with efforts that include developing newtechnology that helps reduce CO2 emissions, reducing emissions at production bases, and promoting the development
and sales of fuel-efficient tires.

Companies employ foreign currency forward contracts tohedge foreign currency-denominated trade receivables andpayables, and currency swaps to hedge foreign currencydenominated loans and borrowings in an effort to minimize
the effects of short-term exposure to exchange rate fluctuations. However, hedging cannot insulate the Companies’
operations completely from foreign exchange market
trends since these operations include extensive import andexport activities worldwide. Fluctuations in exchange rates
can thus have an adverse effect on the operating results
and financial position of the Companies.
Exchange rate fluctuations also affect the consolidated
performance of the Companies because results arereported in yen. Changes in exchange rates affect thevalues recorded for revenue, expenses, assets, and liabilities in all countries outside Japan when translated into yen.
In general terms, yen appreciation against other leading
currencies tends to depress the financial results, while yen
depreciation tends to have a favorable impact.

*1 CO2 emissions produced directly by a company (boilers at company factories,etc.)*2 Indirect CO2 emissions generated from the production of energy by an
external provider and then utilized by a company*3 CO2 emissions produced throughout a product’s lifecycle, including
procurement of raw materials, logistics, customer use, and disposal/recycling

Competition
The Companies encounter numerous competitors acrossCorporate and brand image
The Companies strive to enhance their corporate and brandimage consistently through global business activities.
Systematic efforts are made to ensure compliance with allapplicable laws and regulations and to promote the highest
ethical standards. Programs are in place across the Companies to prevent industrial incidents, particularly fires andany accidents that could cause occupational injuries, andto respond immediately to any accidents that occur.
Despite such preventive measures, serious ethical lapses
or industrial accidents, which are by their nature unpredictable, have the potential to adversely affect the operating
results and financial position of the Companies by damaging
the image and reputation of the Companies, diminishing
the general public’s confidence in the Companies, or leading
to a drop in share price.
Currency risk
The global distribution of the Companies’ R&D, manufac-

turing, logistics, marketing, and sales facilities requires
business transactions in numerous currencies. The

8

Bridgestone Corporation

their entire product lineup. Competitive price pressures
have the potential to adversely affect the operating results
and financial position of the Companies. In addition, theCompanies face a constant risk of demands for price reductions from large corporate clients.
The Companies strive to maintain profitability in the faceof downward price pressures by continually seeking to raise
productivity, enhance brand image, develop new markets,and launch new products that provide greater value tocustomers. However, management cannot guarantee thatsuch efforts will always be sufficient to offset the effects ofcompetition.
The Companies’ strategy is based on maintaining ahighly competitive technological edge. The Companies
target the development and introduction of products
equipped with new and advanced technologies, and thenaim to persuade customers of the value inherent in suchtechnical advances to secure prices sufficient to ensurethat profits fully offset the costs of development. Fierce
competition in various fields can sometimes prevent theCompanies from recovering development costs throughpricing, which can also have an adverse effect on operating
results and financial position.

Product defects
The Companies hold customer safety as their highest
priority. The Companies invest considerable resources inestablishing and maintaining high quality standards for all
products manufactured and sold. Management is particularly sensitive to the importance of quality assurance intires and other products closely associated with humansafety. The Companies have honed their collective quality
assurance capabilities by upgrading information systems
related to product performance, collecting pertinentmarket information, and establishing systems to provide
early warning of any potential safety issues that may arise
before they become problems.
Nonetheless, such efforts cannot guarantee a zero levelof product defects or eliminate the chance of an extensive
product recall because product defects could occur due tounpredictable factors. Any such defects or recalls could
result in customer claims for damages, as well as associatedlitigation costs, replacement costs, and damage to theCompanies’ reputation. Product liability claims, class-action
lawsuits, and other litigation pose a particular risk in the U.S.
Raw materials procurement
Disruption of supplies of raw materials has the potential toaffect performance adversely. The Companies use large
quantities of natural rubber in tires and other rubber products, most of which are supplied from Southeast Asia.
The availability of natural rubber supplies in quantities
sufficient for manufacturing purposes is subject to disruption due to natural disasters, wars, terrorist actions, civil
strife, and other social or political unrest, in addition to thethreat of poor harvests. Supply shortages or capacity
constraints are also potential problems with other basic
raw materials.
The Companies rely on in-house upstream raw materials
operations and on third-party suppliers for important raw
materials. Any disruption of activity to those operations or
suppliers and any other events that impede the Companies’
plants that use those raw materials could adversely affect
the Companies’ operating results and financial position.
Increases in the costs of raw materials due to tight supply,
trade for speculative purposes, and other reasons are also
potentially detrimental to the operating results and financial position of the Companies. Management cannot

guarantee that price rises can always be passed on tocustomers or that ongoing efforts to raise productivity will
be sufficient to compensate for any sharp increases in raw
materials costs.
Pension costs and obligations
Pension-related costs and obligations are reliant on actu-

arial assumptions concerning discount rates and a numberof other variables. If these assumptions were to change
significantly as a result of changes in interest rates or thefair value of plan assets (including pension assets), or otherfactors were to necessitate a change in the underlying
assumptions, there could be an increase in pension-related
costs and obligations, as well as a material impact on theoperating results and financial position of the Companies.
Intellectual property
The Companies treat intellectual property as an importantbusiness resource. Systematic efforts are made to employ
intellectual property effectively in improving the competitive position of the Companies, to protect intellectual
property rights from infringement, and to avoid infringing
the intellectual property rights of other parties.
Despite such safeguards, any actual or alleged infringement of third-party intellectual property rights by theCompanies could have a negative impact on the use ofcertain materials or technologies by the Companies, andcould potentially also trigger the payment of compensatory
damages. Any such outcome could have a negative effecton the operating results and financial position of theCompanies.
Conversely, if claims by the Companies of intellectual
property rights infringement against third parties are notupheld, the Companies could also suffer direct or indirect
losses through the diminished differentiation or competitiveness of their products in global markets.

ANNUAL REPORT 2020 Financial Review

9Remuneration for Directors and Executive Officers The policy and process for determining remuneration for directors and executive officers is as follows.
1. The policy for setting remuneration for directors and executive officers:
Principles of Remuneration

Attract and cultivate superior talent
Support a competitive remuneration level
Provide motivation for the execution of business strategies
Provide motivation for enhancing shareholder value
Setting remuneration
The Company sets remuneration for members of the Board of Directors and executive officers based on the Company’s
performance results and business size and it is commensurate with roles and the level of responsibilities undertaken. The
policy is structured to consider the remuneration levels of other major global companies in Japan which were selected forcomparison from the point of view of sales volume, overseas sales ratio, and operating profit ratio.
Remuneration Composition
Item

Fixed
remuneration

Base remuneration• Monthly cash remuneration determined based on responsibilities and job
description

Additional allowance for members of
the Board of Directors with concurrent duties• Monthly cash remuneration for executive officers who serve concurrently as
members of the Board of Directors based on their role and responsibilities

Additional allowance for chairpersons• Monthly cash remuneration for an outside director based on their role andresponsibilities as chairperson of the Board of Directors

Additional allowance for committee chairs• Monthly cash remuneration for an outside director based on their role andresponsibilities as chairperson of a committee

Performance-based bonus (Groupwide)• Cash remuneration paid at the end of the fiscal year

(Determined byquantitative evaluation)

Type B(Determined by qualitativeevaluation)• With adjusted operating profit* used as an indicator, payment amounts are
determined according to the degree to which targets are achieved.
• 80% of Groupwide performance-based bonus• If the Compensation Committee sets remuneration for each position at 100%(the standard amount), the actual payout may range from 0% to 150% of thestandard amount, depending on business performance.
• Remuneration reflecting the degree of contribution to improving corporate
value, including Companywide performance and value from a mid-term
perspective, as discussed and decided by the Compensation Committee

Variable remuneration (performance-based)

Monthly remuneration(base remuneration and additional payment
for members of the Board of Directors
with concurrent duties)

Short-term incentives(Groupwide, performance-based bonus
plus performance-based bonus inarea of responsibility)

30%–45%31%–39%Long-term incentives(performance-based stockcompensation plan)
24%–31%

Performance-based bonus(area of responsibility)

Reasons for Selecting Performance Indicators
After discussions and deliberations among the Compensation Committee, it was decided that an appropriate director
incentive program would include a performance-based
bonus, with adjusted operating profit used as an indicator ofshort-term performance, in addition to performance-based
stock compensation. A combination of consolidated ROE
and consolidated ROIC, both of which are performance indicators that comprise the numerical targets for the Mid-TermBusiness Plan, serve as indicators for performance-based
stock compensation. These indicators were chosen for theirability to assess business strategy and compensation incentives, for their continuity as an indicator, and for ease of
explanation to stakeholders.

• Remuneration for members of the Board who do notconcurrently conduct business execution is fixed andcomprises base remuneration plus an allowance for themembers of the Board in the position of chairperson or thechair of a committee. The policy is structured to consider
the recipient’s contributions toward mid- to long-term business performance and the enhancement of corporate value
by overseeing the management and operations of theCompany without actually being involved in day-to-day
operations. “Members of the Board of Directors who do notconcurrently conduct business execution” refers to outside
directors, as well as internal directors who audit the execution of duties by executive officers and members of theBoard of Directors.

Remuneration for members of the Board of Directors• Remuneration for members of the Board of Directors who
concurrently conduct business execution comprises fixedand variable components.
Fixed remuneration is made up of base remuneration andremuneration for additional duties.
Variable remuneration consists of a Groupwide performance-based bonus and the Performance Share Unit
(PSU) plan, which is a performance-based stock compensation plan.

Remuneration for executive officers• Remuneration for executive officers comprises fixed andvariable components.
Fixed remuneration comprises base remuneration, whereas
variable remuneration is made up of a Groupwide performance-based bonus, a performance-based bonus in theofficer’s area of responsibility, and the PSU plan.

• 20% of Groupwide performance-based bonus• If the Compensation Committee sets remuneration for each position at 100%(the standard amount), the actual payout may range from 80% to 120% of thestandard amount, depending on business performance.
• Cash remuneration paid at the end of the fiscal year
• Payment amount is determined according to the degree of achievement
within recipient’s area of responsibility.
• If the Compensation Committee sets remuneration for each position at 100%(the standard amount), the actual payout may range from 80% to 130% of thestandard amount, depending on business performance in the recipient’s areaof responsibility.
• Remuneration provided for motivation to contribute toward achievement of
mid-term performance targets and the improvement of corporate value, in
addition to morale and shared value with shareholders

Performance-based
stock compensation

Fixed remuneration

Description

Type A

Variable remuneration(performance-based)

The remuneration composition ratio is set with reference to cases overseas, especially in U.S. and European markets, which
are of particular importance to the Company’s business. However, as a general rule, the ratio of performance-based remuneration within total remuneration is higher for higher-ranking positions, where there is a greater responsibility toward
performance and corporate value. The following table represents the composition ratio of remuneration for members of theBoard of Directors who concurrently conduct business execution and executive officers when performance-based remuneration is within the standard range, with the exact ratio depending on rank. The percentages may not apply when members of
the Board of Directors or executive officers hold concurrent positions as executives of subsidiaries and receive remunerationfrom those subsidiaries.

• Stock-based compensation issued according to business results over athree-year period
Performance Share Units (PSUs)• With consolidated ROIC and consolidated ROE used as indicators, the numberof shares given is determined based on the degree to which targets arereached.
• Remuneration is split 50-50 between monetary payment and shares at timeof delivery, with consideration given to income tax amounts borne by therecipient.

* To coincide with the voluntary adoption of IFRS beginning in fiscal 2020, adjusted operating profit has been adopted as an indicator instead of operating income, which
is used under JGAAP. Under IFRS, adjusted operating profit is determined by adding or subtracting certain adjustment items to or from pre-adjusted metrics.
(Adjusted items)
Business and plant restructuring income and expenses, impairment losses, loss on disaster, insurance claim income, and other gains and losses with huge amounts
related to one time event.

10

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

11Stock Holdings Standards and approach for classification of equity investments
The Company distinguishes between equity investments for pure investment purposes—shares held for gaining profit

Information on the number of specific investments and deemed shareholdings by security, and the amount recordedon the balance sheet

through changes in share value and dividends—and strategic shareholdings, which are all other shares held in accordancewith the Company shareholding policy. The Company does not hold any equity investments for pure investment purposes.

Specific Investments (Stock)
Fiscal year
under review

Equity investments held for purposes other than pure investment
Shareholding policy and method for checking rationale for holding as well as details regarding verification of theappropriateness of holding shares for each individual security performed by the Board of Directors and other parties
1. Shareholding policy for strategic shareholdings
The Company defines strategic shareholdings as holdings that contribute toward increased corporate value and are held outof necessity from a business strategy perspective or with the goal of maintaining or strengthening relationships with businesses or collaborative industries and are not held for reasons outside of this definition.
2. V erifying appropriateness of strategic shareholdings
The Company confirms the appropriateness of its holdings on an annual basis, including an assessment of securities forwhich there are holdings, number of shares held, holding ratios, and other factors. These assessments are then verified by
the Board of Directors. Appropriateness of holding is determined by operating divisions involved in business execution inaccordance with the shareholding policy of the Company, taking into account the objectives, the impact of holding shares,
and the cost of capital and other relevant factors for each individual stock listing. Shareholdings that are not judged as
appropriate based on the results of this verification process are reduced after establishing a dialogue and gaining theunderstanding of the business partner for the holding in question. As a result, the number of strategic shareholdings isdecreased year on year.

Number of shares
Name JSR CORPORATIONTOYOTA MOTOR CORPORATIONNOKIAN TYRES PLC

TOYO TIRE CORPORATION

45

683

Shares other than unlisted shares

35

69,631(Securities for which the number of shares was increased during the fiscal year under review)

Unlisted shares

Shares other than unlisted shares

Number of securities

Total acquisition price for the increase in
the number of shares (millions of yen)

Reason for increasing
number of shares

1—

Transferred from subsidiary shares asa result of business restructuring

195

Consolidation of shares held by Group
companies in order to maintain andstrengthen stock trading andcollaborative relationships

1(Securities for which the number of shares was decreased during the fiscal year under review)

Unlisted shares
Shares other than unlisted shares

Number of securities

Total selling price related to the decrease in
the number of shares (millions of yen)

3

36

13

12,9591,959,890

1,959,890

15,595

15,1184,167,653

4,167,653

15,24813,0895,000,000

5,000,000

1,792

2,270

2,780,580

2,780,580

1,268

1,649

244,510244,510

1,177

1,033

527,076

527,076

884

1,032

OTSUKA HOLDINGS CO., LTD.

200,000

400,000

884

1,953

FUKUYAMA TRANSPORTING CO., LTD.

200,162

200,162870

798

212,237

212,237646

534

SEINO HOLDINGS CO., LTD.

391,229391,229

569

577

KINTETSU GROUP HOLDINGS CO., LTD.

124,281

124,281562

735

313,632

313,632

448

539

171,200

171,200

389

518

270,970

270,970

375

452

SENKO GROUP HOLDINGS CO., LTD.

366,888366,888

369

342

NIIGATA KOTSU CO., LTD.

163,870

163,870

334

342

212,072

3,534,528

277

594

5,246,500

6,235,000

256

350

MITSUBISHI UFJ FINANCIAL GROUP, INC.

NISHI-NIPPON RAILROAD CO., LTD.

AUTOBACS SEVEN CO., LTD.

IDEMITSU KOSAN CO., LTD.

ISEKI & CO., LTD.

19,979INOUE RUBBER (THAILAND) PUBLIC CO., LTD.

Bridgestone Corporation

18,753

7,875

MIZUHO FINANCIAL GROUP, INC.*2

12

6,441,160

562,224

Balance sheet amounts (millions of yen)

Unlisted shares

6,525,160

7,840

YELLOW HAT LTD.

Number of securities

Balance sheet amount(millions of yen)562,224

SUMITOMO MITSUI FINANCIAL GROUP, INC.

FUJI KYUKO CO., LTD.

Number of securities and balance sheet amounts

Previous
fiscal year

Purpose of holding, quantitative effect of holding,*1
and reasons for the increase in the number of shares

Ownershipof theCompany’s
shares

Maintain/strengthen business and collaborative relationships
Reason for increase in the number of shares: consolidation ofshares held by Group companies

Yes

Maintain/strengthen business and collaborative relationships

Yes

Business strategy

No

Maintain/strengthen business and collaborative relationships

Yes

Business strategy

Yes

Business strategy

Yes

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

Yes

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

Yes

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Business strategy

Yes

Maintain/strengthen business and collaborative relationships

No

ANNUAL REPORT 2020 Financial Review

13

Stock Holdings 

Fiscal year
under review

Previous
fiscal year

Fiscal year
under review

Purpose of holding, quantitative effect of holding,*1
and reasons for the increase in the number of shares

Ownershipof theCompany’s
sharesName 

Maintain/strengthen business and collaborative relationships

No

EPCO CO., LTD.*3

Number of shares
Name 

51,51451,514201

283

57,98357,983

199

271

153,550

153,550

172

183

HIROSHIMA ELECTRIC RAILWAY CO., LTD.

120,000

120,000

118

134

ITOCHU ENEX CO., LTD.

101,386

101,386

103

93

5,000

5,000

73

110

121,536

121,53660

75

50,00050,00046

4442,00042,00038

48

S LINE CO., LTD.

29,70029,7002730

AIR WATER INC.

10,00010,000

18

16

KAMEI CORPORATION

12,10012,100

14

16

SAKAI HEAVY INDUSTRIES, LTD.

5,808

5,808

14

17

5,000

5,000

8

9

2,000

2,000

5

3

—

5,756,450—

17,839—1,817,910

SANKYU INC.

HANKYU HANSHIN HOLDINGS, INC.

SAN-AI OIL CO., LTD.

CENTRAL JAPAN RAILWAY COMPANYMIE KOTSU GROUP HOLDINGS, INC.

NISSIN SHOJI CO., LTD.

DAIWA MOTOR TRANSPORTATION CO., LTD.

ORIX CORPORATIONDAIYA TSUSHO CO., LTD.

HONDA MOTOR CO., LTD.*3

HINO MOTORS, LTD. *3

MAZDA MOTOR CORPORATION*3NIPPON EXPRESS CO., LTD.*3

HITACHI TRANSPORT SYSTEM, LTD.*3

14

Balance sheet amount(millions of yen)

Bridgestone Corporation

—

2,112

—

1,634,000

—

1,532

—

104,500—

670—

121,000—

372

Maintain/strengthen business and collaborative relationships

Maintain/strengthen business and collaborative relationships

No

No

COCA-COLA BOTTLERS JAPAN HOLDINGS
INC.*3

—

9,810

—

27

—

3,150

AUTOWAVE CO., LTD.*3

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

Maintain/strengthen business and collaborative relationships

No

—

Yes

—

No

—

No

—

Yes

—

No

58

32

No

Maintain/strengthen business and collaborative relationships

40,000—10,000

Maintain/strengthen business and collaborative relationships

No

—

—

TONAMI HOLDINGS CO., LTD.*3

Maintain/strengthen business and collaborative relationships

Balance sheet amount(millions of yen)—

HITACHI CONSTRUCTION MACHINERYCO., LTD.*3

No

No

Purpose of holding, quantitative effect of holding,*1
and reasons for the increase in the number of shares

Ownershipof theCompany’s
shares

—

No

—

No

—

No

—

No

—

No

Number of shares

Maintain/strengthen business and collaborative relationships

Maintain/strengthen business and collaborative relationships

Previous
fiscal year

—

17

—

5,000

—

0

*1	Although the quantitative effect of holding shares for each security is not published for the purpose of business confidentiality, the appropriateness of each individual
holding is determined by operating divisions involved in business execution in accordance with the shareholding policy of the Company, taking into account the costof capital and other relevant factors, and is then verified by the Board of Directors.
*2 MIZUHO FINANCIAL GROUP, INC. implemented a 1-for-10 share consolidation on October 1, 2020 .
*3 A dash (“—”) signifies that there are no holdings for the security in question.

Deemed Shareholdings
Not applicable.
Equity investments for pure investment purposes
Not applicable.
Equity investments for which the purpose of holding was changed from pure investment purposes during the fiscal year
under review
Not applicable.

ANNUAL REPORT 2020 Financial Review

15

Consolidated Statement of Financial Position 

Notes

As of December
31, 2020

As of December
31, 2019

As of January 1, 2019
(Transition date)

As of December
31, 2020

Millions of yen

Thousands of U.S. dollars

Notes

AssetsLiabilities and equity

Current assets

Liabilities

Cash and cash equivalents

As of December
31, 2020

As of December
31, 2019

As of January 1, 2019
(Transition date)

As of December
31, 2020

Millions of yen

Thousands of U.S. dollars

8¥  810,546¥  432,924¥  433,916$ 7,831,361

9, 34

667,761755,344781,916

6,451,800

		 Trade and other payables

19, 34¥  420,140¥  453,069¥  497,173$ 4,059,319

10491,240

630,162

645,924

4,746,278

		 Bonds and borrowings

20, 34

293,978

135,442

191,556

2,840,365

Other financial assets

11, 34

7,277

14,311

25,86770,313

		Lease liabilities

20, 3453,96652,82752,097

521,412

Other current assets

12

Trade and other receivables
Inventories

		Subtotal
Non-current assets held for sale

13

Current liabilities

76,27980,64378,435736,999

		 Income taxes payable

2,053,104

1,913,385

1,966,059

19,836,752

		 Other financial liabilities

1,425

5,023

1,788

13,7672,054,529

1,918,408

1,967,847

19,850,519

14, 16, 20

1,392,141

1,555,170

1,515,042

13,450,642

17

290,122

298,569

322,670

2,803,109

Goodwill

15, 16

97,646

98,346

41,382

943,440

Intangible assets

15, 16

117,481

113,664

49,7101,135,086

16

24,54347,071

48,014

237,127

11, 34113,222

140,462

217,306

1,093,937

18

49,40960,711

57,379477,382		 Retirement benefit liabilities

		 Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets

Investments accounted for using equity method
Other financial assets
Deferred tax assets
Other non-current assets

20, 3451,50635,404

337,954

29,342

27,62824,996

283,498

		Provisions

21

64,80634,931

33,080626,147

		 Other current liabilities

22

144,526

138,980

123,190

1,396,385

1,041,736

894,383

957,495

10,065,080

			Subtotal

12, 23

34,978		Liabilities directly associated with non-current
assets held for sale13

		 Total current liabilities

12

953

—

117

1,041,748

895,336

957,495

10,065,197

Non-current liabilities
		 Bonds and borrowings

20, 34412,060

405,514

209,977

3,981,252

		Lease liabilities

20, 34

246,187

250,685

271,179

2,378,616

		 Other financial liabilities

20, 34

13,937

12,937

11,824

134,656

23

191,679

211,619

207,928

1,851,971

50,23444,61633,327

485,350

		Provisions

21

23,73023,34824,212229,271

		 Total non-current assets

2,134,798

2,358,608

2,284,830

20,626,072

		 Deferred tax liabilities

18

28,491

44,243

46,613

275,274

Total assets¥4,189,327¥4,277,016¥4,252,677$40,476,592

		 Other non-current liabilities

36,20530,85629,077

349,809

Total non-current liabilities

952,288979,203

800,8109,200,849

1,994,036

1,874,539

1,758,306

19,266,046

			Total liabilities
Equity		Common stock24

126,354

126,354

126,354

1,220,812

		Capital surplus

24

122,116

121,998

121,998

1,179,867

		Treasury stock24(38,657)(232,330)(32,648)(373,493)

		 Other components of equity

24(59,851)

42,661

118,815(578,274)

		Retained earnings

24

1,999,996

2,290,696

2,105,280

19,323,633

2,149,958

2,349,378

2,439,799

20,772,545

45,33353,09954,572

438,001

		 Total equity attributable to owners of parent
		Non-controlling interests
			Total equity
Total liabilities and equity

16

Bridgestone Corporation

2,195,291

2,402,477

2,494,371

21,210,545¥4,189,327¥4,277,016¥4,252,677$40,476,592

ANNUAL REPORT 2020 Financial Review

17Consolidated Statement of Profit or Loss 

Revenue
Cost of sales

Notes

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars

6, 26¥2,994,524¥3,507,243$28,932,599

10, 14, 15, 23

1,906,553

2,182,554

18,420,799

Gross profit
Selling, general and administrative expenses
Other income
Other expenses

Consolidated Statement of Comprehensive Income Millions of yen

Thousands of U.S. dollars¥246,291$ (190,634)

10,511,801

Other comprehensive income

907,200

998,360

8,765,217

28

32,01947,606309,364

		Net change in fair value of financial assets measured through othercomprehensive income

30, 34

1,708

6,121

16,504

		 Remeasurements of defined benefit plans

23, 30

5,478

2,749

52,92716, 23, 28

Items that will not be reclassified to profit or loss

24,5991,436,487

349,336

619,460

29

8,431

17,74881,45723, 2923,65428,324

228,542

16

18,196—

175,803

Share of profit (loss) of investments accounted for using equity method(1,429)(3,251)(13,809)

Profit before tax

29,266

335,510

282,764

48,997

89,219473,397(19,731)

246,291(190,634)

Income tax expense

Fiscal year ended
December 31, 2020

1,324,689

64,114

Impairment loss related to shares using equity method¥ (19,731)

Fiscal year ended
December 31, 2019

1,087,971

148,676

Finance costs

Profit (loss)

Fiscal year ended
December 31, 2020

14, 15,23, 27, 33

Operating profit
Finance income

Notes

18

Profit (loss)
Profit (loss) attributable to Owners of parent(23,301)

Non-controlling interests
Profit (loss)

240,111

		Share of other comprehensive income of investments accounted forusing equity method

30

Total of items that will not be reclassified to profit or loss

(140)

(6)

(1,349)

7,046

8,864

68,082Items that may be reclassified to profit or loss
		 Exchange differences on translation of foreign operations

30(94,748)(16,191)(915,436)

		 Effective portion of change in fair value of cash flow hedges

30

79

(864)

763

		Share of other comprehensive income of investments accounted forusing equity method30(1,747)(2,105)(16,876)

Total of items that may be reclassified to profit or loss

(96,415)(19,159)(931,549)

Other comprehensive income, net of tax(89,369)(10,295)(863,467)(109,099)

235,995(1,054,101)(1,043,525)(225,134)

3,571

6,179

34,500¥    (19,731)¥  246,291$  (190,634)
Comprehensive income

Earnings (loss) per share

Comprehensive income attributable to

Basic earnings (loss) per share (Yen)31¥   (33.09)¥   332.31

Diluted earnings (loss) per share (Yen)31(33.09)331.76

Owners of parent(108,005)

227,517

Non-controlling interests(1,095)

8,478(10,576)

Comprehensive income¥(109,099)¥235,995$(1,054,101)

Earnings (loss) per share

18

Basic earnings (loss) per share (U.S. dollars)31$       (0.32)

Diluted earnings (loss) per share (U.S. dollars)

31(0.32)

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

19Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows 

Fiscal year ended December 31, 2020
Note

Equity attributable to owners of parent

Fiscal year ended
December 31, 2020

Other components of equity

Note

Commonstock

CapitalsurplusTreasury
stock

Stock
acquisitionrightsExchangedifferenceson translationof foreign
operations

Effective
portion ofchange in fairvalue of cash
flow hedges

Net change
in fair value offinancial assets
measuredthrough othercomprehensive income

Remeasurementsof defined
benefitplans¥126,354¥121,998¥(232,330)¥3,275¥ (18,968)¥(325)¥58,678¥   —Millions of yen

Thousands of U.S. dollars

Total

Retainedearnings

Total

Noncontrollinginterests

Profit before tax
Total¥ 42,661¥2,290,696¥2,349,378¥53,099¥2,402,477¥  29,266¥ 335,510$  282,764

Depreciation and amortization

267,454269,7492,584,101

Impairment losses

89,622

10,542865,910(13,196)

2,710(127,497)

—

—

—

—

—

—

—

—

—

(23,301)(23,301)

3,571(19,731)

Increase (decrease) in retirement benefit liabilities Other comprehensive income

—

—

—

—

(93,289)

315

1,706

6,564

(84,703)—(84,703)(4,665)(89,369)

Interest and dividend income(7,598)(16,626)(73,414)

Total comprehensive income

—

—

—

—

(93,289)

315

1,706

6,564

(84,703)(23,301)(108,005)(1,095)(109,099)

Interest expenses

13,426

16,020129,721

Profit (loss) Purchase of treasury stock

24

—

—

(3)

—

—

—

—

—

—

—

(3)

—

(3)

 Disposal of treasury stock

Foreign currency exchange loss (gain)

4,905

5,152

47,392

24——

193,677

(150)

—

—

—

—

(150)

(193,526)0—0Dividends
25 Changes in ownershipinterests of owners in
subsidiaries under control Transfer from othercomponents of equity toretained earnings
Other changes
Total transactions with owners,
etc.
Balance at December 31, 2020

—

—

—

—

—

—

—

—

—

(91,531)(91,531)(7,507)(99,037)

Impairment loss related to shares using equity method

18,196—

175,803

—

118

—

—

—

—

—

—

—

—

118

871

990

—

—

—

—

—

—

(11,094)(6,564)(17,659)

17,659

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(36)

(36)

—

118

193,674

(150)

—

—

(11,094)(6,564)(17,809)(267,398)(91,415)(6,672)(98,087)¥126,354¥122,116¥ (38,657)¥3,125¥(112,257)¥  (9)¥49,290¥   —¥(59,851) ¥1,999,996¥2,149,958¥45,333¥2,195,291

Fiscal year ended December 31, 2019
Equity attributable to owners of parent
Other components of equity
Net change
in fair value offinancial assets
measuredthrough othercomprehensive income

Remeasurementsof defined
benefit
plans

Total

Retainedearnings

Total

Noncontrollinginterests

Commonstock

CapitalsurplusTreasury
stock

Stock
acquisitionrights¥126,354¥121,998¥ (32,648)¥3,452¥    —¥ 1,742¥113,620¥   —¥118,815¥2,105,280¥2,439,799¥54,572¥2,494,371

—

—

—

—

—

—

—

—

—

240,111240,111

6,179

246,291 Other comprehensive income

—

—

—

—

(18,968)(2,066)

6,115

2,325

(12,594)—(12,594)

2,299(10,295)

Total comprehensive income

—

—

—

—

(18,968)(2,066)

6,115

2,325

(12,594)

240,111

227,5178,478

235,995

ProfitTotal Purchase of treasury stock

24

—

—

(200,004)

—

—

—

—

—

—

(234)

(200,237)— Disposal of treasury stock

24

—

—

322

(177)

—

—

—

—

(177)

(144)

0

—

0

Dividends
25 Transfer from othercomponents of equity
to retained earnings
Other changes
Total transactions with owners,
etc.
Balance at December 31, 2019

—

—

—

—

—

—

—

—

—

(117,701)(117,701)(10,028)(127,729)

—

—

—

—

—

—

—

¥126,354¥121,998¥(232,330)(61,058)(2,325)(63,383)

63,383——(200,237)

—

—

—

—

—

—

—

—

—

—

—

—

—

77

77

(199,682)

(177)

—

—

(61,058)(2,325)(63,560)(54,696)(317,938)(9,951)(327,889)¥3,275¥(18,968)¥  (325)¥  58,678¥   —¥ 42,661¥2,290,696¥2,349,378¥53,099¥2,402,477

Equity attributable to owners of parent
Other components of equity

Note

CapitalsurplusTreasury
stock

Stock
acquisitionrightsExchangedifferenceson translationof foreign
operations

Effective
portion ofchange in fairvalue of cash
flow hedges

Net change
in fair value offinancial assets
measuredthrough othercomprehensive income

Remeasurementsof defined
benefit
plans

Total

Retainedearnings

Total

Noncontrollinginterests

Total

Thousands of U.S. dollars

Balance at January 1, 2020

$1,220,812$31,646$  (183,267)$(3,137)$566,938$    —

—

—

—

—

—

—

—

—

—

(225,134)(225,134)

34,500(190,634) Other comprehensive income

—

—

—

—

(901,343)

3,047

16,481

63,424(818,391)—(818,391)(45,076)(863,467)

Total comprehensive income

—

—

—

—

(901,343)

3,047

16,481

63,424(818,391)(225,134)(1,043,525)(10,576)(1,054,101)

—

—

(30)

—

—

—

—

—

—

—

(30)

—

(30)

24
—
— 1,871,273
Dividends
25——— Changes in ownershipinterests of owners in
subsidiaries under control
—
1,142
—
 Transfer from othercomponents of equity toretained earnings———
Other changes———
Total transactions with owners,
etc.
—
1,142 1,871,243
Balance at December 31, 2020
$1,220,812 $1,179,867 $ (373,493)(1,448)

—

—

—

—

(1,448)(1,869,821)

4

—

4

—

—

—

—

—

—

(884,353)(884,353)(72,527)(956,881)

—

—

—

—

—

—

—

1,142

8,419

9,561

—

—

—

(107,191)(63,424)(170,615)

170,615

—

—

—

—

—

—

—

—

—

—

—

(351)

(351)

(1,448)——(107,191)(63,424)(172,063)(2,583,558)(883,236)(64,461)(947,696)$30,198$(1,084,610)$  (90)$476,228$    —

Profit (loss)

Purchase of treasury stock
Disposal of treasury stock

Bridgestone Corporation

24

3,251

13,809(24,192)(30,418)(233,744)

Business and plant restructuring expenses

42,821

2,635

413,727

Loss on retirement of fixed assets

6,905

5,718

66,717

Decrease (increase) in trade and other receivables

56,90821,875549,832

Decrease (increase) in inventories

1,244,800

128,837

7,292

Increase (decrease) in trade and other payables(7,524)(40,807)(72,699)

Increase (decrease) in consumption tax payables

14,340(4,543)

138,549

Other(16,806)(4,881)(162,379)

		Subtotal

604,791

583,179

5,843,391

7,835

16,53575,700(13,960)(15,096)(134,880)

Income taxes paid

(71,719)(79,589)(692,937)

Net cash provided by (used in) operating activities

526,947

505,029

5,091,274(1,938,912)

Cash flows from investing activities
Payments for purchase of property, plant and equipment(200,677)(270,530)

Proceeds from sale of property, plant and equipment

38,85738,758375,430

Payments for purchase of intangible assets(17,436)(11,256)(168,467)

Proceeds from sale of investment securities

19,75587,091

190,871

Payments of long-term loans receivable(4,450)(2,071)(42,992)

Collection of loans receivable

3,489

1,210

33,709(1,873)(110,354)(18,092)

6,957

5,275

67,220(155,378)(261,875)(1,501,234)

	Purchase of investments in subsidiaries resulting in change in scopeof consolidation
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities

Fiscal year ended December 31, 2020

Common
stock

1,429

Loss (gain) on sale of fixed assets

Interest paid

Millions of yen

Balance at January 1, 2019

Share of loss (profit) of investments accounted for using equity method

Interest and dividends received

Effective
portion ofchange in fairvalue of cash
flow hedges

Exchangedifferenceson translationof foreign
operations

Note

20

Fiscal year ended
December 31, 2020

Cash flows from operating activities

Millions of yen

Balance at January 1, 2020

Fiscal year ended
December 31, 2019

$1,178,724 $(2,244,736)$ 412,180 $22,132,325 $22,699,305$(578,274) $19,323,633 $20,772,545$513,037 $23,212,342

Proceeds from short-term debt

32

309,432

292,9432,989,682

Repayments of short-term debt

32

(248,436)(257,682)(2,400,344)

Proceeds from long-term debt

32

116,61530

1,126,719

Repayments of long-term debt

32

(3,353)(23,361)(32,398)

Proceeds from issuance of bonds

32—

200,000—

Redemption of bonds

32—(70,000)—

Repayments of lease liabilities

32(57,132)(55,002)(551,997)

Purchase of treasury stock(3)(200,004)(29)

Dividends paid to owners of parent(91,524)(117,679)(884,292)

Dividends paid to non-controlling interests(7,501)(9,954)(72,478)

(21)

251

(203)

18,077(240,458)

174,659

Effect of exchange rate changes on cash and cash equivalents(12,025)(1,293)(116,183)

Net increase (decrease) in cash and cash equivalents

377,621

1,403

3,648,516

Cash and cash equivalents at beginning of period

432,924

433,916

4,182,845—(2,395)—¥  810,546¥ 432,924$ 7,831,361

Other
Net cash provided by (used in) financing activities

Cash and cash equivalents included in assets held for sale
Cash and cash equivalents at end of period

8$438,001 $21,210,545

ANNUAL REPORT 2020 Financial Review

21Notes to Consolidated Financial Statements 

NOTE 1REPORTING ENTITY

Bridgestone Corporation (the “Company”) is a stockcompany located in Japan. The Company’s consolidated
financial statements, which were prepared for the reporting
period ended December 31, represent the Company and its

NOTE 2BASIS OF PREPARATION(1)	Statement of compliance with IFRS and matters related
to first-time adoption
The consolidated financial statements of the Group havebeen prepared in accordance with International Financial
Reporting Standards (“IFRS”) pursuant to the provisions ofArticle 93 of the Ordinance on Terminology, Forms, andPreparation Methods of Consolidated Financial Statements(Ordinance of the Ministry of Finance No. 28, 1976), as theGroup satisfies the requirements for “specified company
complying with designated international accounting standards” set forth in Article 1-2 of the same ordinance.
The consolidated financial statements were approvedon May 17, 2021 by Shuichi Ishibashi, Member of the Board,
Global CEO and Representative Executive Officer of theCompany, and Naoki Hishinuma, Corporate Executive
Manager, Financial Executive Manager and Global CFO of
the Company.
The Group adopted IFRS for the first time in the fiscal
year ended December 31, 2020, and the date of transition to
IFRS (the “transition date”) is January 1, 2019. Effects of thetransition to IFRS on the Group’s consolidated financial position, financial results and cash flows on the transition dateand in the comparative year are stated in Note “39. Firsttime Adoption of IFRS.”The Group’s accounting policies are in compliance withIFRS effective as of December 31, 2020, with the exception

NOTE 3of IFRS standards that have not been early adopted and theexemptions permitted under IFRS 1 “First-time Adoption ofInternational Financial Reporting Standards” (“IFRS 1”).
The exemptions adopted by the Group are described in
Note “39. First-time Adoption of IFRS.”(2) Basis of measurement
The consolidated financial statements of the Group havebeen prepared based on historical cost, except for items
such as financial instruments that are measured at fairvalue as stated in Note “3. Significant Accounting Policies.”(3) Functional currency and presentation currency
The consolidated financial statements of the Group arepresented in Japanese yen, which is the functional currency
adopted by the Company, and figures less than one million
yen are rounded off to the nearest million yen.
The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenienceof readers outside Japan and have been made at the rateof ¥103.50 to $1, the approximate rate of exchange on
December 31, 2020. Such translations should not be
construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any
other rate.

SIGNIFICANT ACCOUNTING POLICIES(1) Basis of consolidation
1) Subsidiaries

A subsidiary is an entity under the control of the Group. The
Group controls an entity when it is exposed to or has rights
to variable returns arising from its involvement in the entity
and has an ability to affect those returns through its powerover the entity.
The financial statements of subsidiaries are included in
the consolidated financial statements from the date theGroup gains control until the date that control is lost. If any
accounting policies applied by a subsidiary differ from thoseof the Group, adjustments are made to the subsidiary’s
financial statements where needed to bring them in linewith the Group’s accounting policies. The balances of
payables and receivables and transactions within theGroup, as well as unrealized gains or losses arising from22

subsidiaries (the “Group”) as well as the Company’s interests in its associates and joint ventures.
The detail of the Group’s business is stated in Note
“6. Operating Segments.”

Bridgestone Corporationinternal transactions within the Group, are eliminated when
preparing the consolidated financial statements.
Comprehensive income of subsidiaries is attributed toowners of parent and non-controlling interests, even if thisresults in a negative balance in non-controlling interests.
When the closing date of a subsidiary is different fromthat of the Group, the subsidiary implements its financial
statements based on the provisional accounting as of theGroup’s closing date. The main subsidiary with a different
closing date is BRIDGESTONE INDIA PRIVATE LTD., which
adopts a closing date of March 31 due to the local legal
system where it operates.
Changes in the Group’s ownership interest in subsidiaries
that do not result in a loss of control are accounted for as
equity transactions, and the difference between theamount by which non-controlling interests are adjusted andthe fair value of the consideration is directly recognized inequity as interests attributable to the shareholders of theCompany.
If the Group loses control over a subsidiary, gains andlosses derived from the loss of control are recognized in
profit or loss.
2) Associates
An associate is an entity which the Group does not control,
but exerts significant influence on financial and operating
policies thereof. The equity method is applied to associatesfrom the date that the Group has significant influence to thedate that it loses the significant influence.
3) Joint ventures
A joint venture is an entity jointly controlled by two or moreparties, including the Group under the contractually agreed
sharing of control over economic activities of the joint
venture, which exists only when strategic financial andoperating decisions related to the relevant activities require
unanimous consent of the parties sharing control.
The equity method is applied to joint ventures held by
the Group.
(2) Business combinations
Business combinations are accounted for by the acquisition

method. Consideration for acquisition is measured as thesum of the acquisition-date fair values of the assets transferred, liabilities assumed, and equity instruments issued
by the Company in exchange of control over the acquiredcompany. If consideration for acquisition exceeds the fairvalue of identifiable assets and liabilities, such excess isrecorded as goodwill in the consolidated statement offinancial position. Conversely, if the consideration turns out
to be less than the fair value, the difference is immediately
recognized in profit or loss in the consolidated statementof profit or loss. Acquisition costs that are attributable toa business combination are expensed as incurred.
If the initial accounting for a business combination isincomplete by the end of the fiscal year in which the business combination occurs, the Group reports provisionalamounts for the items for which the accounting is incomplete. The provisional values recognized at the acquisition
date are retrospectively adjusted to reflect new information obtained during a certain designated period (the“measurement period”) on facts and circumstances thatexisted at the acquisition date and, if known at the acquisition date, would have affected the measurement of theamounts recognized. Additional assets or liabilities arerecognized if this new information is known to haveresulted in the additional recognition of assets or liabilities.
The measurement period may not exceed one year.

The acquisition of additional non-controlling interests is
accounted for as an equity transaction, and accordingly, it
does not recognize goodwill attributable to such transactions.
Business combinations under common control (i.e.,transactions in which all of the combining entities and/or
businesses are ultimately controlled by the same party or
parties both before and after the business combination andthe common control is not transitory) are accounted for atcarrying amount.
(3) Foreign currency translation
1) Foreign currency transactions

Foreign currency transactions are translated into the functional currency of each entity of the Group by using theexchange rate at the date of the transaction or a rate thatapproximates such rate.
At the end of each reporting period, monetary items
denominated in foreign currencies are translated into functional currencies using the exchange rate at the end of eachreporting period. Non-monetary items at fair value denominated in foreign currencies are translated at an exchange
rate of the date when their fair values are measured.
Exchange differences arising from translation or settlement of monetary items denominated in foreign currencies
are recognized in profit or loss. However, those translationdifferences arising from financial assets measured throughother comprehensive income as well as from cash flow
hedges are recognized in other comprehensive income.
2) Financial statements of foreign operations
Assets and liabilities of foreign operations, including any
goodwill arising on the acquisition of a foreign operation
and any fair value adjustments, are translated into presentation currency using the exchange rate at the end of thereporting period. Additionally, income and expenses offoreign operations are translated into presentation
currency using average exchange rates during the period,
except where the exchange rates fluctuate significantly.
Exchange differences arising from translation of thefinancial statements of foreign operations are recognized inother comprehensive income. For disposals of entire interests in foreign operations and partial disposals of interests
resulting in loss of control or loss of significant influence,translation differences are recognized in profit or loss as
part of the gain or loss on disposal.
(4) Financial instruments
1) Financial assets other than derivatives(i) Initial recognition and measurement
Trade and other receivables are initially recognized on thedate when they are incurred. All other financial assets are
initially recognized on the date when the Group becomes aparty to the contract on such financial instruments.

ANNUAL REPORT 2020 Financial Review

23

Notes to Consolidated Financial Statements 

At initial recognition, financial assets other than derivatives, which meet both of the following requirements, areclassified as financial assets measured at amortized cost,
while the rests are classified as financial assets measured atfair value.
• The assets are held based on the business model whose
objective is to hold the assets in order to collect contractual cash flows.
• The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments ofprincipal and interest on the principal amountoutstanding.
Financial assets measured at fair value are classified intoeither financial assets whose changes in fair values after
acquisition are recognized in profit or loss (“financial assets
measured at fair value through profit or loss”) and financial
assets whose changes in fair values after acquisition arerecognized in other comprehensive income (“financial
assets measured at fair value through other comprehensive
income”).
At initial recognition, equity instruments that are notdesignated as financial assets measured at fair value
through other comprehensive income and debt instrumentsthat do not meet the requirements for the amortized costmeasurement are classified as financial assets measured atfair value through profit or loss.
Equity instruments that are not held for trading are, in
principle, designated as financial assets measured at fairvalue through other comprehensive income at initial recognition.
All the financial assets, except for those classified as
financial assets measured at fair value through profit orloss, are measured at fair value plus transaction costs
directly attributable to the acquisition of the assets.
(ii) Subsequent measurement
Financial assets after the initial recognition are as follows,
depending on respective classifications:(a) Financial assets measured at amortized cost
After initial recognition, financial assets measured at amortized cost are measured at amortized cost by using theeffective interest method.
(b) Financial assets measured at fair value through profit or loss
After initial recognition, financial assets measured at fairvalue through profit or loss are remeasured at fair value asof each closing date, and changes in fair values and dividends are recognized in profit or loss.
(c) Financial assets measured at fair value through othercomprehensive income
Changes in fair values measured after initial recognition arerecognized in other comprehensive income. Such amounts
are reclassified into retained earnings in case of derecognition or a significant decline in the fair values. Dividends

24

Bridgestone Corporationfrom such financial assets are recognized in profit or loss asfinance income in the period when the Group’s right toreceive payment of the dividends is established.
(iii) Derecognition
Financial assets are derecognized when the right to receive
benefits expires or all the risk and rewards of ownership ofthe financial assets are transferred to other entities.
2) Impairment of financial assets measured at amortized cost
To account for impairment of items such as financial assets
measured at amortized cost, the Group recognizes anallowance for doubtful accounts against expected credit
losses on such financial assets.
At each reporting date, financial assets are assessed
whether there has been a significant increase in credit risk
on financial instruments since initial recognition.
If credit risk on a financial instrument has not increased
significantly since initial recognition, the allowance for
doubtful accounts associated with the relevant financial
instrument is measured at an amount equal to 12-month
expected credit losses. On the other hand, if credit risk on afinancial instrument has increased significantly since initialrecognition, the allowance for doubtful accounts associatedwith the relevant financial instrument is measured at an
amount equal to lifetime expected credit losses.
However, the allowance for doubtful accounts for tradereceivables and the like are always measured at an amountequal to lifetime expected credit losses.
Expected credit losses of financial instruments are estimated in a way that reflect the following items:• Unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;• Time value of money• Reasonable and supportable information that is available
without undue cost or effort at the reporting date aboutpast events, current conditions and forecasts of future
economic conditions.
The amounts of these measurements are recognized in
profit or loss. If an event occurs after recognition of an
impairment loss that results in a decrease of the impairment loss, such decrease is reversed in profit or loss.
The carrying amount of these financial assets is directlyreduced for the impairment when they are expected to
become non-recoverable in the future, offsetting thecarrying amount by the allowance for doubtful accounts.
3) Financial liabilities other than derivatives(i) Initial recognition and measurement
Debt securities issued by the Group are initially recognizedat the date of issuance. All other financial liabilities arerecognized on the date when the Group becomes a party to
the contract on such financial instruments.

Financial liabilities other than derivatives are classified
into either financial liabilities measured at amortized costor financial liabilities measured at fair value through profit
or loss at initial recognition.
All the financial liabilities are initially measured at fairvalue, while financial liabilities measured at amortized cost
are measured at fair value less directly attributable transaction costs.
(ii) Subsequent measurement
Financial liabilities after the initial recognition are as
follows, depending on respective classifications:(a) Financial liabilities measured at amortized cost
After initial recognition, financial liabilities measured atamortized cost are measured at amortized cost by using
the effective interest method.
(b)	Financial liabilities measured at fair value through profit
or loss
After initial recognition, financial liabilities measured atfair value through profit or loss are remeasured at fair value
as of each closing date with any changes in fair values being
recognized in profit or loss.
(iii) Derecognition
Financial liabilities are derecognized when the obligation isdischarged, canceled or expired.
4) Derivatives and hedge accounting
The Group uses derivatives, including forward exchange
contracts and interest rate swap transactions, for the purposeof hedging foreign currency risk and interest rate risk.
At the inception of the hedge, the Group designates anddocuments the hedging relationship between a hedging
instrument and a hedged item as well as the Group’s risk
management objective and strategy concerning the hedge.
That documentation includes the hedging relationship, therisk management objective and strategy for undertaking thehedge, as well as the assessment of the hedge effectiveness.
These hedges are expected to be highly effective inoffsetting changes in the fair value or the cash flows;
however, the Group assesses, on an ongoing basis, whether
they actually remained highly effective throughout thehedge period.
Derivatives are initially recognized at fair value. Afterinitial recognition, derivatives are measured at fair value
and the subsequent changes in fair value are accounted for
as follows:(i) Fair value hedges
Fair value changes on derivatives are recognized in profit or loss.
Fair value changes on hedged items attributable tohedged risks are recognized in profit or loss with thecarrying amounts of the hedged items being adjusted.

(ii) Cash flow hedges
For the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge, changes
in fair value are recognized in other comprehensive income.
When cash flows of the hedged item affect profit or loss,
they, together with the hedged item, are immediately
recognized in profit or loss.
For the ineffective portion of hedge, the changes in fairvalue are recognized in profit or loss.
The Group discontinues hedging accounting when thehedging instrument is expired, sold, terminated, or exercised, when the hedge no longer qualifies for hedge
accounting, or when the hedge designation is revoked.
(iii) Derivatives not designated as hedging instruments
Fair value changes on derivatives are recognized in profit or loss.
5) Offsetting financial instruments
A financial asset and a financial liability are offset and the net
amount presented only when the Group currently has alegally enforceable right to set off the recognized amounts;
and intends either to settle on a net basis or to realize theasset and settle the liability simultaneously.
(5) Fair value measurement
Certain assets and liabilities are recognized at fair value.

The fair value of such assets and liabilities is determinedbased on market information, such as quoted market priceor valuation techniques including the market approach, theincome approach and the cost approach. The inputs used in
the fair value measurement are categorized into thefollowing three levels.
Level 1: F air value that is measured by using quoted prices
in active markets
Level 2: F air value, other than Level 1, that is determined bydirectly or indirectly using the observable price
Level 3: F air value determined by using valuation techniques that incorporate unobservable inputs(6) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, demand

deposits, and short-term investments with maturities notexceeding three months from the acquisition date, that arereadily convertible into cash and subject to an insignificant
risk of changes in value.
(7) Inventories
Inventories are measured at the lower of cost and net real-izable value. The cost of inventories includes costs ofpurchase, costs of conversion and other costs incurred inbringing the inventories to their present location and condition. The cost of inventories is calculated by primarily using
the moving-average method. Net realizable value is

ANNUAL REPORT 2020 Financial Review

25

Notes to Consolidated Financial Statements determined at the estimated selling price in the ordinary
course of business less estimated costs of completion andthe estimated costs necessary to make the sale.
(8) Property, plant and equipment
Property, plant and equipment are measured by using costmodel, and stated at cost less any accumulated depreciation and any accumulated impairment losses. The cost of an
item of property, plant and equipment includes any costs
directly associated with its acquisition, and the costs of
dismantling and removing the item and restoring the siteon which it is located, as well as the borrowing costs
eligible for capitalization.
The depreciation of property, plant and equipment otherthan land and construction in progress is calculated using
the straight-line method over the following estimateduseful lives. The estimated useful life of each main asset
item is as follows.
Buildings and structures:
10 to 50 years
Machinery and vehicles:
3 to 17 years
Tools, furniture and fixtures: 2 to 20 years
The depreciation method for property, plant and equipment is reviewed at the end of each reporting period, andany change thereof is accounted for as a change inaccounting estimate.
(9) Goodwill and intangible assets
1) Goodwill

The Group recognizes goodwill arising from businesscombinations as an asset as of the date when control is
obtained (the acquisition date). The measurement of goodwill at initial recognition is presented in “(2) Businesscombinations.”
Goodwill is stated at cost less accumulated impairment
losses. The Group does not amortize goodwill, but tests for
impairment annually or whenever there is any indication of
impairment. For the purpose of impairment test, goodwill
obtained in business combinations is allocated to a cashgenerating unit or groups of cash-generating units that are
expected to benefit from the synergies of the combination
on and after the acquisition date.
Impairment losses of goodwill are recognized in profit orloss and not reversed subsequently.
2) Intangible assets
The Group measures intangible assets using the cost modeland stated at cost less any accumulated amortization andany accumulated impairment losses.
Separately acquired intangible assets are initiallymeasured at cost, while the cost of intangible assets
acquired in a business combination is measured at fair value
as of the acquisition date. Expenditures for internallygenerated intangible assets are recognized as an expense

26

Bridgestone Corporation

incurred during the period, except for development costs
eligible for capitalization.
Intangible assets with finite useful lives are amortized byusing the straight-line method over their respective estimated useful lives. If there is an indication of impairment,
they are tested for impairment. The estimated useful life ofeach main asset item is as follows.
Software:1 to 10 years
Trademarks: 1 to 10 years
The amortization method for intangible assets withfinite useful lives is reviewed at the end of each reporting
period, and any change thereof is accounted for as a changein accounting estimate.
Intangible assets with indefinite useful lives are notamortized but subject to impairment test, and stated atcost less any accumulated impairment losses. Intangible
assets are tested for impairment individually or at cashgenerating unit level annually or whenever there is any
indication of impairment.
(10) Leases
1) Lessee

At inception of a contract, the Group recognizes a right-ofuse asset and a lease liability for lease components otherthan short-term leases and leases for which the underlying
asset is of low value. At the commencement date, the Groupmeasures the right-of-use asset at cost and the lease liability
at the present value of the lease payments that are not paid
at that date.
The lease term is determined as the non-cancellable
period of a lease, together with both: periods covered by anoption to extend the lease (if the Group is reasonably
certain to exercise that option); and periods covered by anoption to terminate the lease (if the Group is reasonably
certain not to exercise that option).
After the commencement date, the right-of-use asset ismeasured at cost less any accumulated depreciation andany accumulated impairment losses. The Group applies thedepreciation requirements in International AccountingStandards (IAS) 16 “Property, Plant and Equipment” indepreciating the right-of-use asset. The Group also applies
IAS 36 “Impairment of Assets” to determine whether theright-of-use asset is impaired and to account for any impairment loss identified.
If the lease transfers ownership of the underlying asset
to the Group by the end of the lease term, the Group depreciates the right-of-use asset from the commencement dateto the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from thecommencement date to the earlier of the end of the usefullife of the right-of-use asset or the end of the lease term.
After the commencement date, the Group measures thelease liability by:• increasing the carrying amount to reflect interest on thelease liability;• reducing the carrying amount to reflect the lease
payments made; and• remeasuring the carrying amount to reflect changes to thelease payments or a lease modification, or to reflectrevised in-substance fixed lease payments.
2) Lessor
Rental income is recognized on a straight-line basis overthe lease term. Rental income arising from subleased properties is recognized in other income.
(11) Impairment of non-financial assets
The Group assesses, for each fiscal year, whether there is

any indication that an asset may be impaired. If any such
indication exists (or if the impairment test is required eachyear), the Group estimates the recoverable amount of theasset. If it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates therecoverable amount of the cash-generating unit to which
the asset belongs. The recoverable amount of an asset or acash-generating unit is measured at the higher of its fairvalue less costs to sell and its value in use. When the
carrying amount of the asset or the cash-generating unit
exceeds the recoverable amount, the Group recognizes an
impairment loss for the asset and reduces the carrying
amount of the asset to its recoverable amount. In calculating the asset’s value in use, the estimated future cash
flows are discounted to the present value by using a pre-tax
discount rate that reflects current market assessments ofthe time value of money and other factors such as the risks
specific to the asset. The fair value less costs to sell is calculated by using an appropriate valuation model supported byindications of fair value available to the Group.
The Group assesses whether there is any indication thatan impairment loss recognized in prior years for asset otherthan goodwill may have decreased or may no longer exist
due to a change in assumptions used to determine therecoverable amount or other reasons. If any such indication
exists, the Group estimates the recoverable amount of theasset or the cash-generating unit. Then if such recoverable
amount exceeds the carrying amount of the asset or the
cash-generating unit, the Group reverses an impairment
loss to the extent not exceeding the lower of the estimatedrecoverable amount and the carrying amount that would
have been determined (net of amortization or depreciation)
had no impairment loss been recognized for the asset inprior years.
(12) Non-current assets held for sale
An asset or asset group that is expected to be recovered

use is classified as a non-current asset or disposal groupheld for sale if it is highly probable that the asset or asset
group will be sold within one year from the end of thereporting period; the asset or asset group is available for
immediate sale in its present condition; and the management of the Group is committed to such sale. A non-current
asset held for sale is not depreciated or amortized andmeasured at the lower of its carrying amount and fair valueless costs to sell.
(13) Employee benefits
1) Short-term employee benefits

The undiscounted amount of short-term employee benefits
is recognized as an expense in the period in which theemployees render related services. The bonuses and paidabsences are recognized as a liability and an expense when
the Group has a present legal or constructive obligation to
pay the benefits in return for the past services rendered by
employees, and the Group can make a reliable estimate of
the amount.
2) Post-employment benefits
The Group has adopted a defined benefit plan (such as acorporate pension plan and a lump-sum retirement benefitplan) and a defined contribution plan as the post-employment benefit plans for its employees.
The Group determines the present value of defined
benefit obligation as well as the related current service costand past service cost by using the projected unit credit
method. The discount rate is determined by first setting thediscount period based on the periods until the dates on
which the benefits for each fiscal year will be paid, and thenby referencing to market yields on high quality corporate
bonds and the like at the end of the reporting period corresponding the discount period. The defined benefit plan
liability or asset is determined by subtracting the fair valueof the plan assets from the present value of the defined
benefit obligation. Remeasurements of defined benefit
plans are recognized in a lump sum in other comprehensive
income when they arise, and reclassified to retained earnings immediately. Past service cost is recognized in profit orloss for the period in which it is incurred.
The Group accounts for the defined contribution plan byrecognizing an expense when the Group makes contribution to the plan.
Certain consolidated subsidiaries primarily in the UnitedStates have adopted a defined benefit retirement plan anda post-employment medical benefit plan to prepare for theretirement benefits to the employees. A post-employment
medical benefit plan in the United States is included in the
net defined benefit liability due to the nature similar to theretirement benefits.

through a sale transaction rather than through continuing

ANNUAL REPORT 2020 Financial Review

27

Notes to Consolidated Financial Statements (14) Share-based payment
The Group has adopted the stock option plan as an equity-

settled share-based payment plan as well as the
Performance Share Unit (PSU) plan as a cash-settled sharebased payment plan. Stock options are estimated at fairvalue at the date of grant, taking into account the estimated number of options to be vested, and recognized as
expenses over the vesting periods in the consolidated
statement of profit or loss while corresponding increases toequity are recognized in the consolidated statement offinancial position. Fair value of stock options granted is
calculated, in accordance with various terms of such
options, using the Black-Scholes model.
For the PSU plan, the Group recognizes awards as an
expense over the vesting period, recording the sameamount as an increase in a liability. As of the reporting date
and the settlement date, the Group remeasures the fairvalue of the liability and recognizes any changes in fairvalue in profit or loss.
(15) Provisions
The Group recognizes provisions when it has a present obli-

gation (legal or constructive) as a result of a past event;when it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation;
and when a reliable estimate can be made of the amount of
the obligation.
Where the effect of the time value of money is material,
the amount of a provision is measured at the present valueof the expenditures expected to be required to settle theobligation. The present value of the expenditures is calculated by using a pre-tax discount rate that reflects current
market assessments of the time value of money and therisks specific to the liability with uncertainty of the occurrence of obligating events being reflected in the estimatedfuture cash flows.
Provisions that the Group recognizes are mainly
as follows:
1) Provision for compensation for industrial accidents
The Group estimates and records an amount based on thepast and current experience to prepare for the payment of
the medical expenses, the absence from work compensation, etc. incurred as a result of industrial accidents.
2) Provision for loss on litigation
To prepare for the expenditures of litigation-related
expenses, the Group estimates and records an amount ofcompensation for damages, settlement package, etc. thatis currently expected to be incurred in the future.
3) Provision for business and plant restructuring expenses
Primarily due to the commencement of discussions for the
closure of overseas tire plants, the Group estimates and28

Bridgestone Corporation

records an amount that is currently expected to be incurredin the future to prepare for the related expenditures.
(16) Revenue
The Group recognizes revenue at an amount reflecting theamount of consideration to which the Group expects to beentitled in exchange for transferring the goods and services
to the customer based on the following five-step approach,except for interest and dividend income, etc. received
under IFRS 9 “Financial Instruments” (“IFRS 9”):
Step 1: Identify contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: A llocate the transaction price to performance obligations in the contract
Step 5: R ecognize revenue when (or as) the performanceobligation is satisfied.
Revenues from sale of goods are recognized when thecontrol over the goods is transferred to the customer andmeasured at an amount of consideration promised in acontract with a customer less estimated future returns,
discounts and rebates. The amount of returns is estimatedand calculated based on an expected return rate derived
from the past data and the like. As for discounts andrebates, the amount of future payments is estimated andcalculated based on contracts and the like until actual
results are confirmed.
(17) Government grants
Government grants are recognized at fair value whenconditions for the receipt of grants have been met andreasonable assurance for the receipt could be obtained.
When government grants are related to the items of
expense, government grants are recognized in profit or loss
on a systematic basis over the periods in which the Group
recognizes as expenses the related costs for which the
grant is intended to compensate. For grants related toassets, the amount of the grant is deducted from the cost of
the asset.
(18) Borrowing costs
Borrowing costs directly attributable to the acquisition,

construction, or production of a qualifying asset are capitalized and form part of the cost of the asset. A qualifying
asset is an asset that necessarily takes a substantial periodof time to get ready for its intended use or sale. Other
borrowing costs are recognized as expenses in the period
in which they are incurred.
(19) Income taxes
Income taxes consist of current tax and deferred tax. These

are recognized in profit or loss, excluding tax arising from theitems recognized in other comprehensive income or directlyin equity, and tax arising from business combinations.
Current taxes are measured at an expected amount oftaxes to be paid to or of refund from the taxation authorities. The amount of tax is calculated based on the tax rates
and the tax laws that have been enacted, or substantiallyenacted by the reporting date.
Deferred taxes are recognized for the temporary differences between the carrying amount of assets and liabilities
for accounting purposes and their tax bases, unused tax
losses carryforward and unused tax credits carryforward asof the reporting date.
Deferred tax assets and liabilities are not recognized forfollowing temporary differences:• Temporary differences arising from the initial recognitionof goodwill• Temporary differences arising from initial recognition ofassets and liabilities from transactions that are not business combinations and affect neither accounting profit or
taxable income (loss)• Deductible temporary differences arising from investments
in subsidiaries and associates, and interests in joint
arrangements when it is probable that the temporary
difference will not reverse in the foreseeable future orwhen it is not probable that taxable profit will be available
against which the temporary difference can be utilized.
• Taxable temporary differences arising from investments in
subsidiaries and associates, and interests in joint arrangement when the Group is able to control the timing of thereversal of the temporary difference and it is probablethat the temporary difference will not reverse in the foreseeable future.
A deferred tax liability is recognized for all taxable
temporary differences in principle, and a deferred tax asset
is recognized for all deductible temporary differences tothe extent that it is probable that taxable income will beavailable against which deductible temporary differences
can be utilized.
Carrying amount of deferred tax assets is reviewed eachperiod and reduced to the extent that it is no longer probable that sufficient taxable income will be available to use
all or part of the benefit of the deferred tax assets. Unrecognized deferred tax assets are reviewed each period andare recognized to the extent that it has become probablethat future taxable income will allow the deferred tax
assets to be recovered.
Deferred tax assets and liabilities are measured at the
tax rates and by the tax laws that are expected to apply tothe period when the assets are realized or the liabilities aresettled, based on the tax rates and tax laws enacted or
substantively enacted at the end of the reporting period.
For uncertain income tax positions, the Group recognizes an asset or a liability at a reasonably estimatedamount if the tax position has a high probability of being
accepted based on a tax law interpretation.
Deferred tax assets and liabilities are offset against eachother if the Group has a legally enforceable right to offset
current tax assets against current tax liabilities and when eitherof the following are met: income taxes are levied by the same
taxation authority on the same taxable entity; or income taxes
are levied by the same taxation authority on different taxable
entities, but they either have the intention to settle current
tax liabilities and current tax assets on a net basis or plan torealize assets and settle liabilities simultaneously.
(20) Treasury stock
Treasury stock is measured at cost and presented as adeduction from equity. No gain or loss is recognized on thepurchase, sale or retirement of treasury stock. The difference between the carrying amount and the consideration
thereof at the time of sale is recognized as equity.
(21) Dividends
Of the dividend distributions to the shareholders of theCompany, the year-end dividend is recognized as a liability
for the period that includes the date of resolution by theCompany’s shareholders’ meeting, while the interim dividend is recognized as a liability for the period that includes
the date of resolution by the Board of Directors.
(22) Earnings per share
Basic earnings per share are calculated by dividing profit orloss attributable to owners of parent by the weightedaverage number of shares of ordinary shares outstanding
adjusted by the number of shares of treasury stock during
the period. Diluted earnings per share are calculated taking
into consideration the effect of all potential shares withdilutive effect.
(23) Adjusted operating profit
Adjusted operating profit is determined by adding or

subtracting certain adjustment items to or from preadjusted metrics.
Reconciliations: Business and plant restructuring income
and expenses, impairment losses, loss on disaster, insurance claim income, and other gains and losses with large
amounts related to one time event
The management of the Group determines the adjustment items based on whether they can help provide
effective comparative information on the Group performance and appropriately reflect how the businesses aremanaged. The adjusted operating profit is presented in
Note “6. Operating Segments.”
Adjusted operating profit is not defined by IFRS and notnecessarily comparable to metrics similarly named by othercompanies.

ANNUAL REPORT 2020 Financial Review

29Notes to Consolidated Financial Statements 

NOTE 4SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS INVOLVING ESTIMATES

In preparing consolidated financial statements in accordance with IFRS, the Group is required to establish
judgments, estimates and assumptions that affect theapplication of accounting policies and the reported amountof assets, liabilities, revenues and expenses. Actual results
may differ from those estimates.
The estimates and their underlying assumptions arereviewed on an ongoing basis. The effect of any changes inaccounting estimates is recognized in the reporting period
in which the change was made and in future periods.
The items involving estimates and judgments that significantly affect the amounts in the consolidated financial
statements are listed as follows:• Impairment of non-financial assets (Note “16. Impairment
of non-financial assets”)• Recoverability of deferred tax assets (Note “18. Income
Taxes”)• Provisions (Note “21. Provisions”)• Measurements of defined benefit obligations (Note “23.
Employee Benefits”)• Fair value measurement of financial instruments (Note“34. Financial Instruments”)

The assumptions and estimates that have a significant
risk of causing a material adjustment in the future aremainly as follows:
Impairment for non-financial assets (property, plant andequipment; right-of-use assets; intangible assets; goodwill;
and investments accounted for using the equity method)
and recoverability of deferred tax assets are estimatedand assessed including the impacts of COVID-19. Given the
progress of the recovery in demand and changes in theenvironment of each region, the Group separately estimates the impact of COVID-19, assuming that it will have a
direct impact on the Group’s performance until the period
ending December 31, 2022 at the longest. Please refer tothe consolidated financial statements for the balances ofproperty, plant and equipment; right-of-use assets; intangible assets; goodwill; investments accounted for using theequity method; and deferred tax assets at the end of the
fiscal year ended December 31, 2020. As for impairment of
non-financial assets and the recoverability of deferred tax
assets, please refer to Note “16. Impairment of non-financial
assets” and Note “18. Income Taxes”, respectively.

Fiscal year ended December 31, 2020
Reportable segments

Japan

Americas

Europe, Russia,
Middle East,
India and Africa

China,
Asia-Pacific

Total

Others(Note 1)

Corporate or
elimination

Consolidated total
Millions of yen

Revenue
External revenue
Inter-segment revenue  Total revenue¥608,103¥1,402,147¥556,843¥345,664¥2,912,757¥ 81,735¥     32

154,531

5,797

7,505

48,946

216,779

39,359(256,138)¥2,994,524—

762,635

1,407,943

564,348394,6103,129,536

121,094(256,106)2,994,524¥ 64,621¥  139,862¥ (17,557)¥ 24,595¥   211,520¥  1,381¥ 10,030¥  222,932¥ 56,465¥  92,608¥ 49,289¥ 44,367¥  242,729¥ 11,383¥ 13,343¥  267,454

17,329710

21,40650,16189,605

16—

89,622—

17,501

694—

18,196——18,196

Others(Note 1)

Corporate or
elimination

Consolidated total

Segment profit (loss) Adjusted operating profit(loss)
Other items Depreciation andamortization
Impairment losses Impairment loss related toshares using equity
method(Note 1) “Others” includes the sporting goods business and the bicycles business that the Company operates.

Fiscal year ended December 31, 2019
Reportable segments

Japan

Americas

Europe, Russia,
Middle East,
India and Africa

China,
Asia-Pacific

Total

Millions of yen

Revenue

NOTE 5NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

While there are newly issued or revised standards andinterpretations that were issued on or before the date of
approval of the consolidated financial statements but have

NOTE 6

not yet been early adopted by the Group, none of them
have material impact on the Group’s consolidated financial
statements.

OPERATING SEGMENTS(1) Description of reportable segments
The Group’s reportable segments are components of theGroup for which separate financial information is available,
and which are subject to regular review by the Board of
Directors for the purpose of making decisions about theallocation of management resource and assessing thesegments’ performance.
From the first quarter ended March 31, 2020, the Grouphas consolidated the reportable segments, which werepreviously divided into two “business segments” and four“geographical segments,” into the following four segments:“Japan,” “Americas,” “Europe, Russia, Middle East, India andAfrica,” and “China, Asia-Pacific.” The consolidation of thereportable segments has been made for the purpose of
disclosing business results more appropriately based on the
SBU (Strategic Business Units) —the classification of theGroup’s businesses for management control purposes. In
the aforementioned new segment structure, the Group

engages in production and sale of tires and tubes, sale ofwheels and accessories, production and sale of retreadmaterial and services, auto maintenance and repair
services, and Diversified products business including Chemical and Industrial Products and BSAM Diversified Products.

External revenue¥718,485¥1,652,845¥630,625¥402,711¥3,404,667¥102,536¥     41

Inter-segment revenue

199,629

8,835

9,494

60,079278,037

70,505(348,542)—

918,114

1,661,680

640,119462,790

3,682,703

173,041(348,501)

3,507,243¥ 108,810¥  184,264¥ 15,034¥ 36,232¥  344,340¥     3,792¥  (5,010)¥  343,122¥  55,648¥   94,535¥ 38,717¥ 54,437¥  243,337¥     13,168¥  13,244¥ 269,749

7,050

221

—

764

8,035

2,508

—

10,542Others(Note 1)

Corporate or
elimination

Consolidated total  Total revenue
Segment profit (loss)
Adjusted operating profit
Other items Depreciation andamortization
Impairment losses(Note 1) “Others” includes the sporting goods business and the bicycles business that the Company operates.

Fiscal year ended December 31, 2020
Reportable segments

Japan(2) Revenues and Performances of Reportable Segment
Revenue and business results of the continuing operations

by reportable segment of the Group are detailed in thetable below. The Board of Directors assesses the segment
performance and determines resource allocation after
reviewing revenues and adjusted operating profit. Internalsales or transfers between segments are determinedprimarily at selling prices based on arm’s length transaction
prices or total cost. Also, figures for the previous fiscal year
have been reclassified in accordance with the new segment
structure described in (1).

¥3,507,243

Americas

Europe, Russia,
Middle East,
India and Africa

China,
Asia-Pacific

Total

Thousands of U.S. dollars

Revenue
External revenue
Inter-segment revenue  Total revenue$5,875,396$13,547,309$5,380,128$3,339,747$28,142,581$ 789,714

1,493,057

56,00872,508472,9072,094,479

380,281$      305 $28,932,599(2,474,760)—

7,368,452

13,603,317

5,452,636

3,812,655

30,237,060

1,169,995(2,474,456)

28,932,599$  624,353$ 1,351,324$ (169,635)$  237,634$ 2,043,676$  13,345$   96,912$ 2,153,933$  545,555$  894,765$  476,218$  428,670$ 2,345,209$ 109,978$  128,914$ 2,584,101

167,428

6,862

206,818

484,645865,753157—

865,910—

69,096

6,708—

175,803——

175,803

Segment profit (loss) Adjusted operating profit(loss)
Other items Depreciation andamortization
Impairment losses Impairment loss related toshares using the equity
method(Note 1) “Others” includes the sporting goods business and the bicycles business that the Company operates.

30

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

31Notes to Consolidated Financial Statements 

Reconciliation from adjusted operating profit to profit before tax

Non-current assets
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars

Adjusted operating profit (Note 2)¥222,932¥343,122$2,153,933

Adjusted items (income) (Note 3)467

27,396

4,515

159,285

21,181

1,538,988

Adjusted items (expenses) (Note 5)
Operating profit

64,114349,336

619,460

Finance income

8,431

17,74881,457

Finance costs

23,65428,324

228,542

Impairment loss related to shares using equity method

18,196—

175,803

Share of profit (loss) of investments accounted for using the equity method(1,429)(3,251)(13,809)¥ 29,266¥335,510$   282,764

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Profit before tax(Note 2) For adjusted operating profit, adjusted items (i.e., income and expenses) are excluded from operating profit.
(Note 3) The major breakdown of adjusted items (i.e., income) are as follows:
Fiscal year ended
December 31, 2020

Insurance claim income
Business and plant restructuring income
Other gain with large amounts related to one time event
Adjusted items (income)Millions of yen

Thousands of U.S. dollars¥305¥    130$2,946

162

14

1,569

—

(Note 4) 27,252

—

¥467

¥27,396$4,515

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥ 89,622¥10,542$  865,910

Cost of sales (i.e., loss on disaster)(Note 7) 11,685—

112,902

Other expenses (i.e., loss on disaster)(Note 8) 3,747

584

36,207(Note 10) 42,821(Note 9) 2,635

413,727

11,4107,420

110,242¥159,285¥ 21,181$1,538,988

Business and plant restructuring expenses
Other expense with large amounts related to one time event (Note 11)
Adjusted items (expenses)(Note 6) The major breakdown of impairment losses is presented in Note “16. Impairment of non-financial assets.”(Note 7)	This was primarily the recording of fixed costs, etc. arising from the period when operations were temporarily suspended at plants, etc. due to official requests
and declarations by the national and local governments to prevent the spread of COVID-19.
(Note 8)	This was primarily the recording of fixed costs, incurred over the period of the suspended operations of retail stores, etc., and expenses, etc., which were thedirect result of the preparation for and cancellation of events that were canceled due to official requests and declarations by the national and local governments
to prevent the spread of COVID-19.
(Note 9) This was primarily the recording of expenses relating to the sale of an overseas raw materials plant.
(Note 10)	T his was primarily the recording of expenses, such as provisions relating to the commencement of discussions for the closure of overseas tire plants andexpenses for the transfer of the unit bath business.
(Note 11)	T his was the recording of expenses relating to inspections, repairs, etc. of the affected standard and power assist bicycles following the recall of certain modelsof standard and power assist bicycles manufactured by Bridgestone Cycle Corporation, a Bridgestone consolidated subsidiary.

(3) Information about geographical areas
The breakdown of revenue from external customers and non-current assets by geographical area is as follows:
Revenue from external customers
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥  564,864¥  649,294$  5,457,624

Americas1,386,353

1,657,251

13,394,717(Of which, the U.S.)(1,137,636)(1,353,971)(10,991,654)

Japan

Europe, Russia, Middle East, India and Africa

631,602710,177

6,102,432

China, Asia-Pacific411,705

490,5213,977,827¥ 2,994,524¥ 3,507,243$ 28,932,599

Total

As of
December 31, 2019

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥  526,026¥  538,829¥  540,397$ 5,082,378

Americas749,935

805,822794,794

7,245,745

Europe, Russia, Middle East, India and Africa

394,585364,901

231,256

3,812,415

China, Asia-Pacific

255,687

389,299

390,5612,470,403¥1,926,232¥2,098,850¥1,957,008$18,610,941

Japan

Total

(Note) N on-current assets are broken down by location of each asset and do not include financial instruments, deferred tax assets and assets associated with employee
benefits.

(4) Information about major customers
Disclosures are omitted because there are no external customers for which sales account for 10% or more of revenue in the
consolidated statement of profit or loss.

NOTE 7

BUSINESS COMBINATIONSFiscal year ended December 31, 2019(1) Overview of business combinations
1) Name and business of the acquiree(Note 4) Gains on the sale of land are recorded in here.
(Note 5) The major breakdown of adjusted items (i.e., expenses) are as follows:

Impairment losses (Note 6)

As ofDecember 31, 2020

Name of the acquiree	TOMTOM TELEMATICS B.V. (the company name was changed to WEBFLEET SOLUTIONS B.V. on
October 1, 2019)
Description of business
Digital fleet solutions business
2) Acquisition date
April 1, 20193) Percentage of voting equity interests acquired
100%4) Primary reasons for the business combination
The acquired digital fleet solution business offers a leading data platform in the transportation and personal mobility industries, which enables safer driving and improves efficiency and productivity for personal and commercial mobility throughcontrolling and providing various driving data. Going forward, combining this digital fleet solutions business with the Company’s tire expertise and global service network accelerates its effort to expand solution business.
5) Acquisition method
Acquisition of shares through cash consideration(Note) Revenues are broken down by location of sales destination.

32

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

33

Notes to Consolidated Financial Statements (2) Fair values of the total consideration transferred, assets acquired, and liabilities assumed as of acquisition date

NOTE 8Amount

CASH AND CASH EQUIVALENTS

The breakdown of “Cash and cash equivalents” is as follows:

Millions of yen

Fair value of the total consideration transferred (cash)¥113,575—

10,000—¥810,546¥432,924¥433,916$7,831,361

As ofDecember 31, 2020

As ofDecember 31, 2019

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥668,980¥743,814¥770,775$6,463,575

Other

36,03743,92640,813

348,186

Allowance for doubtful accounts(37,256)(32,396)(29,672)(359,961)¥667,761¥755,344¥781,916$6,451,800

Cash and deposits (maturing within three months)

Inventories

1,216

Marketable securities (maturing within three months)

Property, plant and equipment

1,660

Goodwill

184(18,500)
57,497¥ 56,078(3) Fair value of the receivables
The fair values of the trade and other receivables acquired are as follows:
AmountFair value of the trade and other receivables

NOTE 9Notes and accounts receivable¥2,144305¥1,839Trade and other receivables are presented net of allowance for doubtful accounts in the consolidated statement of financial position.
Trade and other receivables are classified as financial assets measured at amortized cost.
The changes in allowance for doubtful accounts are presented in Note “34. Financial Instruments (3) Credit risk management 2) Changes in allowance for doubtful accounts.”(4) Cash flows arising from the acquisition
AmountMillions of yen

Cash and cash equivalents paid for the acquisition

NOTE 10INVENTORIESThe breakdown of “Inventories” is as follows:¥113,575

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥432,006$3,065,948

As ofDecember 31, 2020

As ofDecember 31, 2019

Finished products¥317,326¥436,034(5) Effect on business performance
Profit and loss information after the acquisition date of this business combination and profit and loss information as though

Work in process

32,62538,69137,877315,215

Raw materials and supplies

138,319

152,164

172,204

1,336,412

this business combination had been completed at the beginning of the fiscal year, are not disclosed because the impact on
the consolidated financial statements is immaterial.

Other

2,971

3,273

3,837

28,705

Total¥491,240¥630,162¥645,924$4,746,278

Cash and cash equivalents held by the acquiree at the time of acquisition
Payments for acquisition of subsidiaries

Fiscal year ended December 31, 2020
Not applicable.

34

TRADE AND OTHER RECEIVABLES

The breakdown of “Trade and other receivables” is as follows:

Total

Millions of yen

The best estimate at the acquisition date of the contractual cash flows not expected to be collected

Total

66,867

The acquisition-related costs for this business combination are ¥1,620 million, all of which are included in “Selling, generaland administrative expenses” in the consolidated statement of profit or loss.
Goodwill represents excess earning power that would be expected through its future business development.

The gross contractual amounts$7,831,361

—

1,839

Fair value of assets acquired and liabilities assumed as of acquisition date, net

Thousands of U.S. dollars¥423,916¥432,924

4,230

Trade and other receivables

Trade and other payables

Millions of yen¥810,546

Cash and cash equivalents

Other assets

As ofDecember 31, 2020

As ofDecember 31, 2019

Fair value of assets acquired and liabilities assumed as of acquisition date

Intangible assets

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Bridgestone Corporation

4,230¥109,345

The amounts of inventories recognized as expenses during the fiscal years ended December 31, 2020 and 2019 are¥1,508,515 million ($14,575,027 thousand) and ¥1,814,009 million, respectively.

ANNUAL REPORT 2020 Financial Review

35

Notes to Consolidated Financial Statements 

NOTE 11

OTHER FINANCIAL ASSETSNOTE 12

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥175,799$  794,916

56,122

67,374369,333¥154,773¥243,173

As of
December 31, 2020

As ofDecember 31, 2019¥    82,274¥ 98,650

Others38,226

Total¥120,500

Equity instruments

Current assets
Non-current assets
Total

OTHER ASSETS

The breakdown of “Other current assets” and “Other non-current assets” are as follows:(1) Other current assets(1) Breakdown of other financial assets
The breakdown of “Other financial assets” is as follows:

18,58027,82523,672

179,521$1,164,250

Others34,262

27,84034,081331,034

Total¥76,279¥80,643¥78,435$736,999

As of
December 31, 2020

As ofDecember 31, 2019

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars

Retirement benefit assets (Note 1)¥21,392¥  11,514¥   5,123$206,686

Others (Note 2)

28,842

33,102

28,205

278,664¥50,234¥44,616¥33,327$485,350

25,86770,313

217,306

1,093,937¥120,500¥154,773¥243,173$1,164,250

Prepaid expenses(2) Other non-current assets

Equity instruments are categorized as financial assets measured at fair value through other comprehensive income.
(2) Financial assets measured at fair value through other comprehensive income
Major issuers of financial assets measured at fair value through other comprehensive income and their fair value are as

follows:
As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars$ 181,191

JSR Corporation¥18,753¥12,960¥37,016

Toyota Motor Corporation

15,595

15,11912,555

150,675

Nokian Tyres PLC

15,24813,08935,764

147,325

Toyo Tire Corporation

7,840

7,875

13,75075,749Sumitomo Mitsui Financial Group, Inc.

1,792

2,270

2,049

17,318Mitsubishi UFJ Financial Group, Inc.

1,268

1,649

1,496

12,253

Fuji Kyuko Co., Ltd.

1,177

1,033

792

11,375

Yellow Hat Ltd.

884

1,032

691

8,545

These stocks are designated as financial assets measured at fair value through other comprehensive income as they areheld for the purpose of mainly maintaining and strengthening business and collaborative relationship and for their strategic
importance to the Group.
(3) Derecognition of financial assets measured at fair value through other comprehensive income
To improve its asset efficiency and to review its business relationship and for other purposes, the Group derecognizes thefinancial assets measured at fair value through other comprehensive income by selling a portion of those assets.
The fair values at the time of sale and cumulative gains (losses) recognized in other comprehensive income are as follows:
Fiscal year ended December 31, 2019

Fiscal year ended December 31, 2020

Fair value Cumulative gains (losses)

Fair value Cumulative gains (losses)

Fair value Cumulative gains (losses)

Millions of yen¥20,509¥17,290¥87,095¥76,642

Thousands of U.S. dollars$198,155$226,444

Consumption tax receivables

14,311

Fiscal year ended December 31, 2020

Thousands of U.S. dollars¥20,682¥24,978

140,462

Issuers

Millions of yen¥23,437

7,277

As of
December 31, 2019

As ofDecember 31, 2020

As ofDecember 31, 2019113,222

As ofDecember 31, 2020

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Total

(Note 1)	The details of retirement benefit assets are presented in Note “23. Employee Benefits (1) Post-employment benefits 3) Reconciliation of defined benefit
obligations and plan assets.”(Note 2) “Others” mainly consists of spare parts.

NOTE 13

NON-CURRENT ASSETS HELD FOR SALE

Non-current assets held for sale as of January 1, 2019 (transition date) mainly relates to property, plant and equipmentfrom the Americas segment. They were classified into
assets held for sale as the Group has made the decision tosell these assets.
Non-current assets held for sale as of January 1, 2019(transition date) were sold during the fiscal year ended
December 31, 2019.
Non-current assets held for sale and liabilities directly
associated with non-current assets held for sale for the
fiscal year ended December 31, 2019 represent certain itemsof other assets and liabilities mainly in the Japan segmentthat belong to the unit bath business to be transferred.
They were classified into the held-for-sale category as theGroup has made a decision to sell.

Non-current assets held for sale and liabilities directly
associated with non-current assets held for sale as of the
fiscal year ended December 31, 2019 were already soldduring the fiscal year ended December 31, 2020.
Non-current assets held for sale and liabilities directly
associated with non-current assets held for sale for the
fiscal year ended December 31, 2020 represent certain
items of property, plant and equipment and other liabilities
mainly in the Americas segment. They were classified into
the held-for-sale category as the Group has made a decision to sell within one year from the end of this reporting
period.

$167,052

When financial assets measured at fair value through other comprehensive income are derecognized or the fair value
declines significantly, cumulative gains (losses) recognized in other comprehensive income are reclassified to retained earnings. The amounts of cumulative gains (losses), net of tax, which were recognized in other comprehensive income andsubsequently reclassified into retained earnings, are ¥11,094 million ($107,191 thousand) and ¥61,058 million for the fiscal
years ended December 31, 2020 and 2019, respectively.

36

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

37

Notes to Consolidated Financial Statements 

NOTE 14

PROPERTY, PLANT AND EQUIPMENT

Accumulated depreciation and impairment losses

The changes in the carrying amount of “Property, plant and equipment,” as well as cost, accumulated depreciation and accumulated impairment losses are as follows:
Carrying amount

Buildings andstructures

Machineryand equipment

Tools, furnitureand fixtures

Land

Constructionin progress

Others

Total

Balance at January 1, 2019

¥558,331¥513,344¥93,824¥161,815¥172,989¥14,739¥1,515,042

—

—

—

—

268,431—

268,431

Depreciation (Note 1)(38,038)(107,586)(47,907)——(4,845)(198,376)

Impairment losses(3,348)(4,323)

(618)

(976)

(1,113)(59)(10,437)(16,688)

Tools, furnitureand fixtures

Constructionin progress

Land

OthersTotal¥572,693¥1,634,515¥463,687¥6,738¥6,238¥39,635

Balance at December 31, 2019

601,140

1,678,988

478,826

7,047

6,515

40,7322,813,247

Balance at December 31, 2020

632,651

1,762,182

493,383

5,771

17,25642,313

2,953,555

Buildings andstructures

Machineryand equipment

Tools, furnitureand fixtures

Land

Constructionin progress

Others

Total

Balance at January 1, 2019

Accumulated depreciation and impairment losses¥2,723,506

Thousands of U.S. dollars

Balance at December 31, 2020

$6,112,567$17,025,912$4,766,982$55,757$166,728$408,817 $28,536,762

Sale or disposal(3,262)(7,372)(1,296)(1,500)(2,842)(416)

Transfer from construction in progress

60,059128,273

45,764

8,361(246,653)

4,196

—

Other changes (Note 2)(5,428)(2,662)

8,123

(140)

(2,294)(401)(2,802)¥568,314¥519,674¥97,890¥167,560¥188,518¥13,214¥1,555,170

—

—

—

—

191,657—

191,657(1) Changes during the period
The changes in the carrying amount of “Goodwill” and “Intangible assets” as well as cost, accumulated amortization and

Depreciation (Note 1)(38,469)(105,371)(45,411)——(4,885)(194,136)

accumulated impairment losses are as follows:

Impairment losses(18,840)(52,198)(8,004)

216(12,182)(412)(91,420)

Carrying amountSale or disposal(2,146)(4,379)(1,812)(2,165)(2,838)(530)(13,870)

Balance at December 31, 2019
Acquisition

Transfer from construction in progress

46,12083,88328,172

4,922(167,225)

4,128

—

Exchange difference(20,493)(19,145)(3,058)(3,126)(11,177)(259)(57,258)

Other changes(4,034)2,564

12,167(786)(8,201)

289

1,998

¥530,452¥425,028¥79,944¥166,621¥178,552¥11,545¥1,392,141

Balance at December 31, 2020

(Note 1)	Depreciation of property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated statement of
profit or loss.
(Note 2) Exchange difference in the fiscal year ended December 31, 2019 is included in “Other changes.”

NOTE 15GOODWILL AND INTANGIBLE ASSETS

Carrying amount

Buildings andstructures

Machineryand equipment

Tools, furnitureand fixtures

Land

Constructionin progress

Others

Total

Thousands of U.S. dollars

Trademarks

Software

Others (Note 2)

Total¥41,382¥12,090¥12,091¥25,529———

11,133

11,133

57,633

4,493

22,05140,418

124,595

Amortization (Note 1)

—

(662)

(7,980)(5,848)(14,490)

Sale and retirement

—

—

(33)

(25)

(58)

Impairment losses

—

—

(137)

(33)

(170)

Balance at January 1, 2019
Acquisition
Acquisition due to business combinations

Transfer of accounts¥ 91,092——

14,714(14,714)

—

(669)

204

395

(22)

(93)
¥212,009¥98,346¥16,125¥41,101¥56,438

Acquisition

169

—

—

17,267

17,436

Amortization (Note 1)

—

(487)

(9,436)(5,887)(15,810)

Balance at December 31, 2019$5,490,953$  5,021,001$ 945,798$  1,618,937$ 1,821,430$127,673

—

—

—

—

1,851,761—

1,851,761

Sale and retirement

—

(3)

(33)

(122)

(158)

Depreciation (Note 1)(371,683)(1,018,078)(438,757)——(47,191)(1,875,708)

Impairment losses(1,839)

—

(215)

(50)

(2,104)

Impairment losses(182,026)(504,330)(77,338)

2,085(117,701)(3,980)(883,289)

Transfer of accounts
OthersBalance at December 31, 2019
Acquisition$ 15,025,793

Goodwill

Millions of yen

OthersSale or disposal(20,731)(42,304)(17,506)(20,920)(27,423)(5,131)(134,014)

Transfer from construction in progress

445,609810,460

272,198

47,558(1,615,699)

39,874—

Exchange difference(198,002)(184,974)(29,550)(30,203)(107,992)(2,495)(553,216)

Other changes(38,978)

24,771

117,559(7,592)(79,234)

2,791

19,316$5,125,144$ 4,106,546$772,404$1,609,865$1,725,143$ 111,541$13,450,642

Balance at December 31, 2020

(Note 1)	Depreciation of property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated statement of profit
or loss.

Balance at December 31, 2020

Cost

Buildings andstructures

Machineryand equipment

Tools, furnitureand fixtures

Carrying amount

Balance at January 1, 2019

¥ 1,131,025¥ 2,147,859¥ 557,511

Land

OthersTotal¥ 168,553¥ 179,227¥ 54,373¥ 4,238,548

Millions of yen

Balance at December 31, 2019

1,169,453

2,198,661

576,716

174,607

195,033

53,946

4,368,416

Balance at December 31, 2020

¥1,163,103¥2,187,209¥573,326¥172,392¥195,809¥53,857¥4,345,696

Cost

Buildings andstructures

Machineryand equipment

Tools, furnitureand fixtures

Land

Constructionin progress

Others

Total

Balance at December 31, 2020

Bridgestone Corporation$11,237,711$21,132,458$5,539,386$1,665,622$1,891,870$520,359

10,659(10,659)—

5,937(2,745)

3,754¥97,646¥15,226¥48,013¥54,242¥215,127

Goodwill

Trademarks

Software

Others (Note 2)

Total$  950,200$155,796$     397,109$ 545,296

1,629

—

—

166,839

168,467—(4,702)(91,166)(56,888)(152,755)

Sale and retirement

—

(30)

(321)

(1,177)(1,527)

Impairment losses(17,772)—(2,081)(471)(20,324)

Amortization (Note 1)

Transfer of accounts
OthersBalance at December 31, 2020

Thousands of U.S. dollars

—
(409)

Thousands of U.S. dollars

Acquisition

Constructionin progress—
970(Note 1) Amortization of intangible assets is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated statement of profit or loss.
(Note 2) “Software in progress” is included in “Others.”

Balance at December 31, 201938

Machineryand equipment

Millions of yen

Millions of yen

Acquisition

Buildings andstructures$ 2,048,400——

102,987(102,987)

—

9,384

(3,950)57,361(26,530)

36,264$943,440$147,115$463,890$ 524,081$2,078,526(Note 1) Amortization of intangible assets is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated statement of profit or loss.
(Note 2) “Software in progress” is included in “Others.”$41,987,405

ANNUAL REPORT 2020 Financial Review

39

Notes to Consolidated Financial Statements 

Cost

Goodwill

Trademarks

Software

OthersSegments

Total

Japan

Americas

Europe, Russia,
Middle East,
India and Africa¥    —¥ —¥10,068¥    —¥10,068¥—

Indian tire business

—

—

6,598

—

6,598

—

6,598

Chinese truck and bus tire business

—

—

—

19,581

19,581—

19,581

Vietnamese passenger vehicle tire business
Thai small and medium mining andconstruction vehicle tire businessJapanese Anti-vibration rubber business

—

—

—

9,196

9,196

—

9,196

—

—

—

17,442

17,442—

17,442

6,210

—

—

—

6,210

—

6,210

Aircraft tires business

2,517

410

1,520

3,850

8,296

—

8,296

Millions of yen

Balance at January 1, 2019¥  41,382¥  12,153¥ 27,518¥ 42,501¥  123,554

Balance at December 31, 2019

¥ 98,599¥ 16,909¥ 67,150¥79,243¥   261,901

Balance at December 31, 2020
Cost

¥99,776¥16,520¥82,761¥81,580

Goodwill

Trademarks

Software

Others$964,020$159,616$799,624$788,211

Goodwill

Trademarks

Software

Others¥280,637
Total
Thousands of U.S. dollars

Balance at December 31, 2020
Accumulated amortization and impairment losses$2,711,470
Total
Millions of yen

Balance at January 1, 2019¥    —¥   63¥  15,427¥  16,972¥32,462

Balance at December 31, 2019¥  253¥  784¥ 26,049¥ 22,805¥49,892

Balance at December 31, 2020

¥2,130¥1,294¥34,748¥27,338¥65,510

Accumulated amortization and impairment losses

Goodwill

Trademarks

Software

OthersTotal$20,580$12,501$335,734$264,129

Thousands of U.S. dollars

Balance at December 31, 2020

$632,944

Cash-generating unit

the goodwill recognized through the acquisition of WEBFLEET SOLUTIONS B.V. completed during the fiscal year ended
December 31, 2019 and the carrying amounts of the goodwill are ¥56,209 million ($543,080 thousand) and ¥55,168 million asof December 31, 2020 and 2019, respectively. In addition, the goodwill recognized by this acquisition was allocated to cashgenerating units which were expected to benefit from the synergies and belongs to WEBFLEET SOLUTIONS cash-generating
unit and BRIDGESTONE EUROPE cash-generating unit.

NOTE 16

IMPAIRMENT OF NON-FINANCIAL ASSETS(1) Impairment loss
For measuring an impairment loss, the Group groups assets for business based on the segments, which are adopted forinternal management purposes, while grouping assets to be disposed of (i.e., assets planned to be disposed of by retirement, sale, etc.) and idle assets individually.
As for impairment losses in the fiscal year ended December 31, 2019 of ¥10,620, including ¥78 million of that recorded asbusiness and plant restructuring expenses, which are mainly on assets for business of which profitability had declined, assets
planned to be disposed of or sold, and idle assets not planned to be used in future, the Group reduced the carrying amountsof the assets to their recoverable amounts and recorded in “other expenses” as impairment losses.
In addition, the recoverable amounts of the assets are principally measured at their fair value.
Impairment losses in the fiscal year ended December 31, 2020 of ¥95,376 million ($921,505 thousand), including ¥5,754
million ($55,595 thousand) of that recorded as business and plant restructuring expenses were recorded in “other expenses”
as impairment losses.
The components of the impairment losses of ¥95,376 million by item are ¥91,420 million ($883,289 thousand) for property,
plant and equipment, ¥2,104 million ($20,324 thousand) for goodwill and intangible assets, and ¥1,852 million ($17,892 thousand) for others. The breakdown by segment (excluding the amount recorded in business and plant restructuring expenses)
is as follows:

Total

Other

Other

8,602

300

3,220

92

12,21416

12,231¥17,329¥710¥21,406¥50,161¥89,605¥16¥89,622Japan

Americas

Europe, Russia,
Middle East,
India and Africa

China,
Asia-Pacific

Total

Other

Consolidated
total$      —

$    —$ 97,274$     —

$ 97,274$ —Indian tire business——

63,748—63,748—63,748Chinese truck and bus tire business

—

—

—

189,190

189,190—

189,190

Vietnamese passenger vehicle tire business
Thai small and medium mining andconstruction vehicle tire businessJapanese Anti-vibration rubber business

—

—

—

88,85588,855—88,855———

168,526

168,526—

168,526

60,002———60,002—60,002

Aircraft tires business

24,3153,960

14,682

37,19680,152—80,152

Other

83,1102,903

31,114878

118,005

157

118,163

Total$167,428$6,862$206,818$484,645$865,753$157$865,910

Segments

Cash-generating unit

Thousands of U.S. dollars$ 97,274

The major reasons for the impairment losses are as follows:
1) “Europe, Russia, Middle East, India and Africa” segment
The carrying amount of assets for business use in the Russian passenger vehicle tire business was reduced by ¥10,068 million($97,274 thousand) to the recoverable amount because the intended revenue is no longer expected as a result of changes inthe business environment, such as the impacts of COVID-19. The recoverable amount of these assets was measured by value
in use, which was calculated by discounting future cash flows at a discount rate of 10.3%.
The carrying amount of assets for business use in the Indian tire business was reduced by ¥6,598 million ($63,748 thousand) to the recoverable amount because the intended revenue is no longer expected as a result of changes in the businessenvironment, such as the impacts of COVID-19. The recoverable amount of these assets was measured by value in use, which
was calculated by discounting future cash flows at a discount rate of 13.5%.
The breakdown of these impairment losses is as follows:
Cash-generating unit

Segment

Type of Assets

AmountMillions of yen

Russian passenger vehicle tire business

Buildings and structures¥  3,982

Machinery and equipment

3,489

Other
Europe, Russia, Middle East, India and Africa

Indian tire business

2,596
1,345

Machinery and equipment

2,021

Construction in progress

2,589

Subtotal
Total

10,068

Buildings and structures

Other

Bridgestone Corporation¥10,068

Total

Subtotal

40

Consolidated
total
Millions of yen

Russian passenger vehicle tire business

Russian passenger vehicle tire business(2) Material goodwill and intangible assets
The material goodwill and intangible assets recorded in the consolidated statement of financial position primarily represents

China,
Asia-Pacific

643
6,598
¥16,666

ANNUAL REPORT 2020 Financial Review

41

Notes to Consolidated Financial Statements Cash-generating unit

Segment

Type of Assets

AmountThousands of U.S. dollars

Buildings and structures
Russian passenger vehicle tire business

33,712

Other

25,085

Subtotal
Europe, Russia, Middle East, India and Africa
Indian tire business$  38,478

Machinery and equipment

97,274

Buildings and structures

12,996

Machinery and equipment

19,529Construction in progress

25,013

Other
Subtotal

Cash-generating unit

Segment

Type of Assets

AmountMillions of yen

6,211
63,748$161,022

Total

3) “Japan” segment
The carrying amount of assets for business use in the Japanese anti-vibration rubber business was reduced by ¥6,210 million($60,002 thousand) to the recoverable amount because the intended revenue is no longer expected as a result of changes inthe business environment. The recoverable amount of these assets was measured at their fair value after deducting theirdisposal cost, and is mainly calculated based on the value of a third-party appraisal determined using the market approach.
The fair value hierarchy level is 3.
The breakdown of this impairment loss is as follows:

Japanese Anti-vibration rubber businessJapan

Buildings and structures¥1,322

Machinery and equipment

3,517

Other

1,371
¥6,210Total

2) “China, Asia-Pacific” segment
The carrying amount of assets for business use in the Chinese truck and bus tire business was reduced by ¥19,581 million($189,190 thousand) to the recoverable amount because the intended revenue is no longer expected as a result of changes inthe business environment, such as the impacts of COVID-19. The recoverable amount of these assets was measured at theirfair value after deducting their disposal cost, and is mainly calculated based on the value of a third-party appraisal using themarket approach. The fair value hierarchy level is 3.
The carrying amount of idle assets in the Vietnamese passenger vehicle tire business was reduced by ¥9,196 million($88,855 thousand) to the recoverable amount, because we do not expect these idle assets to be used for business purposes.
The recoverable amount of these assets was measured at their fair value after deducting their disposal cost; however,
because these assets would be difficult to sell, their fair value after deducting their disposal cost was deemed to be zero.
The fair value hierarchy level is 3.
The carrying amount of assets for business use in the Thai small and medium mining and construction vehicle tire business was reduced by ¥17,442 million ($168,526 thousand) to the recoverable amount because the intended revenue is nolonger expected as a result of changes in the business environment. The recoverable amount of these assets was measured
at their fair value after deducting their disposal cost, and is mainly calculated based on the value of a third-party appraisal
determined using the market approach. The fair value hierarchy level is 3.
The breakdown of these impairment loss is as follows:
Cash-generating unit

Segment

Type of Assets

Cash-generating unit

Other

Chinese truck and bus tire business

Subtotal
Vietnamese passenger vehicle tire business China, Asia-PacificJapanese Anti-vibration rubber business

Thai small and medium mining andconstruction vehicle tire businessJapan

Cash-generating unit

Segments

Japan

9,196
4,610

Buildings and structures
Vietnamese passenger vehicle tire business China, Asia-PacificConstruction in progress
SubtotalThai small and medium mining andconstruction vehicle tire business
Total

42

Bridgestone Corporation

Machinery and equipment
Other
Subtotal

1,249

Other

296

Subtotal

2,517
135

Other

Subtotal¥  972

255

12,833

Other

Buildings and structures
Machinery and equipment

Tools, furniture and fixtures

Americas
Aircraft tires business
Europe, Russia, Middle East, India and Africa

19
410

Machinery and equipment

280

Tools, furniture and fixtures

721

Other

518

Subtotal

Amount$172,730

Other
Subtotal

17,442Thousands of U.S. dollars

Chinese truck and bus tire businessAmountMillions of yen

Machinery and equipment

Machinery and equipment

Machinery and equipment

Type of Assets

1,704
5,515

Type of Assets

13,2494) Aircraft tires business
The carrying amount of assets for business use in the aircraft tire business was reduced by ¥8,296 million ($80,152 thousand)to the recoverable amount because the intended revenue is no longer expected as a result of changes in the business environment, such as the impacts of COVID-19. The recoverable amount of these assets was measured at their fair value after
deducting their disposal cost, and is mainly calculated based on the value of a third-party appraisal determined using themarket approach. The fair value hierarchy level is 3.
The breakdown of this impairment loss is as follows:¥46,220

Segment

33,981$60,002

China, Asia-PacificCash-generating unit

$ 12,771

Machinery and equipment

19,581
3,681

Total

Buildings and structures

Total¥17,878

Construction in progress

Subtotal

AmountOther

AmountBuildings and structures
SubtotalType of Assets

Thousands of U.S. dollars

Millions of yen

Machinery and equipment

Segment

Machinery and equipment

2,357

Tools, furniture and fixtures

1,102

Other
Subtotal

Total

1,520

391
3,850
¥8,296

16,460189,190
53,28535,57088,855
123,987
44,539168,526$446,571

ANNUAL REPORT 2020 Financial Review

43

Notes to Consolidated Financial Statements Cash-generating unit

Segments

Type of Assets

AmountThousands of U.S. dollars

Japan

Buildings and structures$ 9,389

Machinery and equipment

12,068

Other

1,308

(1) Items related to right-of-use assets
The carrying amount, depreciation and additions to “Right-of-use assets” are as follows:

Tools, furniture and fixtures

2,467

Carrying amount

Subtotal

Europe, Russia, Middle East, India and Africa(2) Impairment test of goodwill
The Group conducts an impairment test on goodwill every

year or whenever there is any indication of impairment.
Among goodwill allocated to each cash-generating unit in
the fiscal year ended December 31, 2020, the principal goodwill is recognized in WEBFLEET SOLUTIONS cash-generating
unit and the impairment test was conducted as follows.
The recoverable amount of goodwill in the impairment
test is calculated based on value in use. The value in use
reflects past experience and external sources of information and is based on the Group’s business plan for the next 3
years (2019: 3 years) as approved by the management. Afterthe three-year plan, the Company discounts the future cash
flows to the present value using a discount rate of 8.1% of
the cash-generating unit (2019: 8.1%), using the future
growth rate reduced from 11.1% in the 4th year (2019: 7.3%)
to 2% in the 10th year (2019: 2%) and the same 2% on andafter the 11th year as the continuous growth rate considering inflation.
There is a risk of impairment when key assumptions used
for impairment test change. However, as the value in use
sufficiently exceeds the carrying amount of the cashgenerating unit, the Group determines that it is highly
unlikely that value in use falls below the carrying amounteven if key assumptions used in the impairment test fluctuates by a reasonably foreseeable extent.

44

Bridgestone Corporation

Land

Others

Total
Millions of yen

3,960

As of January 1, 2019

¥ 243,572¥ 44,364¥ 34,734

2,706

As of December 31, 2019¥  230,961¥ 39,452¥  28,157¥298,569

Tools, furniture and fixtures

6,968

As of December 31, 2020

¥228,987¥36,428¥24,707¥290,122

Buildings and structures

Land

Others

Other

5,008
14,682

Machinery and equipment

22,770Tools, furniture and fixtures

10,648

Other

3,777

Subtotal
Total

Buildings and structures

184

Machinery and equipment

Subtotal

China, Asia-Pacific2,859
24,315

Other

Aircraft tires business

LEASE TRANSACTIONS

Machinery and equipment

Subtotal

Americas

NOTE 17

LesseeThe Group enters into lease contracts for buildings and structures, land, etc.

Carrying amountIn addition, out of the total goodwill related to the acquisition of WEBFLEET SOLUTIONS B.V. of ¥56,209 million($543,080 thousand) (2019: 55,168 million), the carrying
amount allocated to WEBFLEET SOLUTIONS cash-generating
unit as of December 31, 2020 is ¥50,311 million ($486,093
thousand) (2019: ¥48,563 million). The group determines thatthe amount of the goodwill allocated to cash-generating
units other than WEBFLEET SOLUTIONS is not material
compared to the amount recorded in the consolidated
statement of financial position.
(3) Impairment of investments accounted for using theequity method
Impairment loss on investments accounted for using theequity method recognized in the fiscal year ended December
31, 2020 of ¥18,196 million ($175,803 thousand) is mainly
relating to the carrying amount of assets of TIREHUB, LLC,
which is a jointly controlled entity in the “Americas”
segment. The carrying amount was reduced by ¥17,032
million ($164,559 thousand) to the recoverable amountbecause the intended revenue is no longer expected as aresult of changes in the business environment, such as theimpacts of COVID-19. The recoverable amount of these assets
was measured by value in use, which was calculated bydiscounting future cash flows at a discount rate of 11.5%. In
addition, this impairment loss was recorded in “impairment
loss related to shares using the equity method” in the
consolidated statement of profit or loss.

Total
Thousands of U.S. dollars$2,212,431$351,962$238,715

Buildings and structures

Land

Others

As of December 31, 2020
Depreciation

37,196$80,152¥322,670$2,803,109
Total
Millions of yen

Fiscal year ended December 31, 2019

¥ 44,192¥  2,831¥ 9,860¥ 56,883

Fiscal year ended December 31, 2020

¥45,180¥2,773¥9,555¥57,508

Buildings and structures

Land

OthersDepreciation

Total
Thousands of U.S. dollars

Fiscal year ended December 31, 2020

$436,525

Additions to right-of-use assets$26,793$92,319$555,637

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥61,811¥48,176$597,205

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

(2) Expenses and cash outflows for leases
The lease expenses are as follows:

Millions of yen

Thousands of U.S. dollars¥6,956¥6,317$  67,204

Recognition exemptions: expenses for short-term leases

1,718

4,551

16,596

Recognition exemptions: expenses for leases of low-value assets

664

308

66,416

Expense relating to variable lease payments not included in the measurementof lease liabilities

2,636

2,991

225,467

Gains or losses arising from sale and leaseback transactions (losses)

7,770

—

75,069Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥62,143$593,709

Interest expense on lease liabilities

Total cash outflows for leases are as follows:

Total cash outflow for leases¥61,449(3) Maturity analysis for lease liabilities
The details are presented in Note “34. Financial Instruments (4) Liquidity risk management.”

ANNUAL REPORT 2020 Financial Review

45

Notes to Consolidated Financial Statements 

NOTE 18

Fiscal year ended December 31, 2020

INCOME TAXESAs ofJanuary 1, 2020

(1) Deferred tax assets and deferred tax liabilities
The breakdown of items giving rise to “Deferred tax assets” and “Deferred tax liabilities” and the changes thereof are as follows:

Fiscal year ended December 31, 2020
Recognized in net
profit or loss

Recognized in othercomprehensive income

Others

As ofDecember 31, 2020
Millions of yen

Deferred tax assets¥   9,473¥ 3,807¥    —¥  (749)¥ 12,531

Net defined benefit liability

50,961(5,519)(3,776)(1,207)40,459Unrealized gains

18,231(5,900)——12,331Others

As ofDecember 31, 2020
Thousands of U.S. dollars

Accrued expenses$  91,526$ 36,787$     —$ (7,239)$  121,073

Net defined benefit liability

492,379(53,328)(36,482)(11,658)

390,910

Unrealized gains

176,148(57,005)——

119,143

Unused tax losses carryforward

109,365(31,443)—(5,110)72,811Others321,905

111,357

9,718(15,164)

427,816

1,191,322

6,368(26,764)(39,172)

1,131,754

605,565

10,305—(35,623)580,247

197,477—(39,368)—

158,110

151,817

14,970——166,787

77,355(46,251)—(6,601)

24,503   Total deferred tax assets

Deferred tax liabilities Property, plant and equipment, andintangible assets
Financial assets Reserve for tax purpose reduction entry
of non-current assets
Others62,676

1,067—(3,687)60,056

Deferred tax liabilities Property, plant and equipment, andintangible assets
Financial assets Reserve for tax purpose reduction entry
of non-current assets
Others

20,439—(4,075)—

16,364   Total deferred tax liabilities

1,032,214(20,977)(39,368)(42,224)929,646

15,713

1,549

—

—

17,262

Net deferred tax assets$  159,108$ 27,344$ 12,604$  3,052$ 202,108

8,006(4,787)

—

(683)

2,536

   Total deferred tax liabilities

106,834(2,171)(4,075)(4,370)96,218Net deferred tax assets¥ 16,468¥ 2,830¥ 1,305¥   315¥  20,918

Unused tax losses carryforward

11,319(3,254)

—

(529)

7,536

Others33,318

11,525

1,006(1,570)44,279123,302659(2,770)(4,055)

117,136   Total deferred tax assets

The breakdown of deferred tax assets and liabilities in the consolidated statement of financial position are as follows:

As ofJanuary 1, 2019

Recognized in net
profit or loss

Recognized in othercomprehensive income

Others

As ofDecember 31, 2019
Millions of yen

Deferred tax assets
Accrued expenses¥  8,080¥ 1,385¥    —¥      8¥  9,473

Net defined benefit liability

52,459515(1,641)(372)

50,961

Unrealized gains

18,847

(616)

—

—

18,231

Unused tax losses carryforward

10,357

1,159

—

(197)

11,319Others34,334

2,417(2,690)(743)

33,318   Total deferred tax assets

124,077

4,860(4,331)(1,304)

123,302

Deferred tax liabilities Property, plant and equipment, andintangible assets
Financial assets Reserve for tax purpose reduction entry
of non-current assets
Others50,690(593)—

12,57962,67636,606—(16,167)—

20,43910,159

5,554

—

—

15,71315,856(6,703)(1,008)

(139)

8,006

   Total deferred tax liabilities

113,311(1,742)(17,175)

12,440106,834

Net deferred tax assets¥   10,766¥  6,602¥ 12,844¥(13,744)¥ 16,468

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥57,379$477,382

As of
December 31, 2019

Deferred tax assets¥49,409¥60,711

Deferred tax liabilities

28,491

44,243

46,613

275,274

Net deferred tax assets¥ 20,918¥16,468¥10,766$202,108

Deferred tax assets belonging to the taxable entities, which recorded loss during the fiscal year ended December 31, 2019or 2020, out of deferred tax assets as of December 31, 2020, December 31, 2019 and January 1, 2019 (transition date) are¥31,583 million ($305,152 thousand), ¥2,204 million and ¥1,725 million, respectively. For recognizing these deferred tax
assets, the Group considers if deductible temporary differences and a part or all of unused tax losses carryforward can beused for future taxable income. For an assessment of the recoverability of deferred tax assets, the Group considers deferred
tax liabilities planned to be reversed and expected future taxable income and tax planning. As for recognized deferred tax
assets, the Group determines that tax benefits will be highly likely realized based on the taxable income level in the past andthe prediction of future taxable income in the period during which deferred tax assets can be recognized.
The deductible temporary differences and unused tax losses carryforward for which deferred tax assets were not recognized are as follows:
As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥ 21,944$1,138,939

As ofDecember 31, 2020

As ofDecember 31, 2019

Deductible temporary differences¥   117,880¥ 28,291

Unused tax losses carryforward

208,785

122,029

117,3442,017,244¥326,665¥150,320¥139,288$3,156,183

Total

Bridgestone Corporation

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Fiscal year ended December 31, 201946

Recognized in othercomprehensive income

Deferred tax assets
As ofJanuary 1, 2020

Accrued expenses

Recognized in net
profit or loss

ANNUAL REPORT 2020 Financial Review

47

Notes to Consolidated Financial Statements 

The unused tax losses carryforward and unused tax credits carryforward for which deferred tax assets were not recognized will expire as follows:
As of
December 31, 2020

As ofDecember 31, 2019

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars

Unused tax losses carryforward
Within 5 years¥ 39,579¥  42,233¥  43,903$  382,405

After 5 years

169,206

79,79673,441

1,634,839¥208,785¥122,029¥117,344$ 2,017,244

Within 5 years

4,407

255

505

42,576After 5 years

6,174

9,938

11,40659,651¥  10,581¥ 10,193¥  11,911$   102,227   Total unused tax losses carryforward
Unused tax credits carryforward   Total unused tax credits carryforward

Total temporary differences arising from the investments in subsidiaries and associates or interests in joint arrangements,
which are not recognized as deferred tax liabilities for the fiscal year ended December 31, 2020 amount to ¥338,229 million($3,267,915 thousand), ¥474,565 million and ¥462,204 million, as of December 31, 2020, December 31, 2019 and January 1,
2019 (transition date), respectively.
Deferred tax liabilities related to the above temporary differences are not recognized as the Group is able to control thetiming of the reversal of the temporary differences and it is probable that they will not reverse it in the foreseeable future.

(3) Reconciliation of effective tax rate
The breakdown of the primary factors contributing to differences between the statutory effective tax rates and the effective

income tax rates after adjustments for tax effects is as follows:
The Company is subject to corporation tax, inhabitant tax and business tax. The statutory effective tax rates calculated
based on these taxes are 30.6% and 30.6% for the fiscal years ended December 31, 2020 and 2019, respectively. Overseas
consolidated subsidiaries, however, are subject to local corporate and other taxes.
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

30.6

30.6

%

Statutory effective tax rate
(Adjustments)
Items not categorized as temporary differences

(9.6)

1.2

Effects from reassessment of the recoverability of deferred tax assets

157.5

1.3

Tax credits for experiment and research expenses of domestic companies(12.5)(1.4)

Differences in applicable tax rates of consolidated subsidiaries

1.3

(3.1)

Tax adjustments for overseas subsidiaries

(3.6)

(1.4)

Others

3.7

(0.6)

167.4

26.6

As of
January 1, 2019
(Transition date)

As ofDecember 31, 2020

Effective income tax rates after adjustments for tax effect accounting

NOTE 19

TRADE AND OTHER PAYABLES

The breakdown of “Trade and other payables” is as follows:(2) Income tax expense
The breakdown of “Income tax expense” is as follows.
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars

Notes and accounts payable

As ofDecember 31, 2020

As ofDecember 31, 2019

Millions of yen

Thousands of U.S. dollars¥188,932¥202,077¥233,996$1,825,429
1,346,954

Current income tax expense¥52,792¥96,234$510,069

Other payables

139,410161,223

169,818

Deferred income tax expense(3,796)(7,015)(36,672)

Accrued expenses

91,79889,77093,359886,936

Total income tax expense¥48,997¥89,219$473,397¥420,140¥453,069¥497,173$4,059,319

Total

Trade and other payables (excluding accrued expenses) are classified as financial liabilities measured at amortized cost.
Income taxes recognized on sale of the financial assets measured at fair value through other comprehensive income areas follows:
Fiscal year ended
December 31, 2020

Income tax expense

48

Bridgestone Corporation¥5,177

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥18,158$50,012ANNUAL REPORT 2020 Financial Review

49

Notes to Consolidated Financial Statements 

BONDS AND BORROWINGS (INCLUDING OTHER FINANCIAL LIABILITIES)NOTE 20

NOTE 21(1) Breakdown of financial liabilities
The breakdown of “Bonds and borrowings,” “Lease liabilities” and “Other financial liabilities” are as follows:
As of
December 31, 2020

Short-term borrowing

As ofDecember 31, 2019

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Averageinterest rate
(Note 1)Millions of yen

Thousands of U.S. dollars%¥ 131,753¥ 97,339$ 1,794,134

0.7—

108,285

3,688

24,244

1,046,231

0.3

—

—

—

69,973——62,61756,16260,241

604,999

2.7

349,442

349,352

149,736

3,376,253

0.2—
January 2022
– June 2025
April 2022
– April 2029

53,96652,82752,097

521,412

2.2

Long-term borrowing
Bonds
Short-term lease liabilities

246,187

250,685

271,179

2,378,616

2.1—
January 2022
– October 2105

Other

43,27940,56536,820418,154

—

—

Total

¥1,049,469¥885,033¥761,629$10,139,800——

377,286

215,897

268,649

3,645,276——

Long-term lease liabilities

Current liabilities
Non-current liabilities
Total

672,183

669,136492,979

6,494,524——¥1,049,469¥885,033¥761,629$10,139,800——(Note 1) “Average interest rate” represents the weighted average interest rates for the balances at December 31, 2020.
(Note 2) Bonds and borrowings are categorized as financial liabilities measured at amortized cost.

The terms for the different bonds that have been issued are summarized below:

Company name

Bridgestone
Corporation
Bridgestone
Corporation
Bridgestone
Corporation
Bridgestone
Corporation
Bridgestone
Corporation
Bridgestone
Corporation
Bridgestone
Corporation

Issue

The 8thunsecured bonds
The 9thunsecured bonds
The 10th
unsecured bonds
The 11th
unsecured bonds
The 12th
unsecured bonds
The 13th
unsecured bonds
The 14th
unsecured bonds

Total

Issuance date

September 26,
2014
April 21, 2017

As ofDecember 31,
2020

As of
December 31,
2019

As of
January 1, 2019
(Transition
date)

As of
December 31,
2020

Interest rate(%)

Collateral

Maturity date

September 26,
2019
April 21, 2022

Millions of yen

Thousands of
U.S. dollars¥     —

¥      —

¥ 69,973$       —

0.2

None

39,97939,96839,952386,267

0.1

None

April 21, 201749,94149,93049,912

482,526

0.2

None

April 19, 2024

April 21, 201759,89859,88759,872578,725

0.3

None

April 21, 2027

April 19, 201949,93549,917—482,463

0.1

None

April 19, 2024

April 19, 2019

49,90649,891—

482,1880.2

None

April 17, 2026

April 19, 201999,78399,759—964,083

0.4

None

April 19, 2029—

¥349,442¥349,352¥219,709$3,376,253

—

—

—

50

Others

Total

Balance at January 1, 2020

¥15,109¥12,935¥   390¥ 29,846

Increase

6,419

12,893

28,91725,03573,264

Decrease (used)(8,346)(5,999)(40)(19,397)(33,781)(627)(2,395)—(4,958)(7,980)(816)(1,295)

1,129

(513)

(1,495)

—

—

—

248

248

¥11,739¥16,139¥30,396¥ 30,261¥ 88,536

Provision forcompensation forindustrial accidents

Provision for loss on
litigation

Provision for businessand plant restructuring
expenses

OthersDecrease (reversed)
Exchange differences on translation offoreign operations
OthersBalance at December 31, 2020

¥ 58,280

Fiscal year ended December 31, 2019
Total
Millions of yen

Balance at January 1, 2019¥14,291¥12,536¥ 4,335¥ 26,130

Increase

7,231

5,824

—

18,299¥ 57,292
31,354

Decrease (used)(4,879)(3,598)(1,497)(10,792)(20,766)

Decrease (reversed)
Exchange differences on translation offoreign operations
Others(1,345)(1,348)(2,447)(4,282)(9,421)

(189)

(479)

—

404

(264)

—

—

—

86

86

Balance at December 31, 2019¥15,109¥12,935¥  390¥ 29,846¥ 58,280

Provision forcompensation forindustrial accidents

Provision for loss on
litigation

Provision for businessand plant restructuring
expenses

OthersFiscal year ended December 31, 2020
Total
Thousands of U.S. dollars

Balance at January 1, 2020

$145,981$124,976$  3,768$ 288,364

Increase

62,017

124,574

279,393

241,881$ 563,089
707,865

Decrease (used)(80,638)(57,957)(384)(187,408)(326,387)

Decrease (reversed)
Exchange differences on translation offoreign operations
Others(6,054)(23,143)—(47,907)(77,105)(7,883)(12,513)

10,908(4,953)(14,441)

—

—

—

2,395

2,395

$113,423$155,937$293,685$ 292,373$ 855,418

As ofDecember 31, 2020

As ofDecember 31, 2019

expenses, the absence from work compensation, etc. incurred as a result of industrial accidents. The outflow of theeconomic benefits is supposed to occur mainly within one year from the end of the fiscal year 2020.

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars

¥186

¥  —

¥  —

$1,798Property, plant and equipment

491

494

496

4,748

¥678

¥494

¥496

$6,546

Bridgestone Corporation

Provision for businessand plant restructuring
expenses(1) Provision for compensation for industrial accidents
The Group estimates and records an amount based on past and current experience to prepare for the payment of the medical

Cash and cash equivalents
Total

Provision for loss on
litigation

Millions of yen

Balance at December 31, 2020

(2) Assets pledged as collateral for liabilities
Assets pledged as collateral for liabilities are as follows:

Assets pledged as collateral for liabilities

Provision forcompensation forindustrial accidents

Repayment
deadline¥     185,693

Current portion of long-termborrowing
Current portion of bonds

PROVISIONS“Provisions” is recorded as current liabilities and non-current liabilities in the consolidated statement of financial position.
The breakdown of “Provisions” and the changes are as follows:
Fiscal year ended December 31, 2020

(2) Provision for loss on litigation
To prepare for the expenditures of litigation-related expense, the Group estimates and records an amount of compensation

for damages, settlement package, etc. that is currently expected to be incurred in the future. The outflow of the economic
benefits is supposed to occur mainly within one year from the end of the fiscal year 2020.

ANNUAL REPORT 2020 Financial Review

51

Notes to Consolidated Financial Statements (3) Provision for business and plant restructuring expenses
Due to the commencement of discussions for the closure of its overseas tire plants, the Group estimates and records an1) Reconciliation of defined benefit obligations
The changes in the defined benefit obligations are as follows:amount that is currently expected to be incurred in the future to prepare for the related expenditures. The outflow of theeconomic benefits is supposed to occur mainly within one year from the end of the fiscal year 2020.
(4) Others“Others” includes asset retirement obligations, provision for environmental expenses and provision for product warranties.

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥878,484¥819,430$8,487,769

Service cost

15,433

14,550149,114

Interest expense

16,882

23,324

163,111

Present value of defined benefit obligations at beginning of period (Note)

Remeasurements

NOTE 22OTHER CURRENT LIABILITIESThe breakdown of “Other current liabilities” is as follows:(2,852)

7,244(27,551)   Actuarial gains and losses arising from changes in financial assumptions

50,74566,968490,287
106,412   Actuarial gains and losses arising from experience adjustments
As ofDecember 31, 2020

Bonuses to officers and employees   Actuarial gains and losses arising from changes in demographic assumptions

As ofDecember 31, 2019

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥  33,883$  351,000¥ 36,329¥ 34,674

Refund liabilities

35,682

33,17728,141

344,752

Provision for unused paid absences

22,266

21,94520,925215,129

Contract liabilities

13,976

16,517

15,788135,037

Consumption tax payables

12,461

8,445

8,538

120,400

Others23,812

24,221

15,914230,066

Total¥144,526¥138,980¥123,190$1,396,385

11,014

1,905

Past service cost and gains and losses on settlement(8,276)(439)(79,963)

Benefits paid

(56,872)(52,809)(549,493)

Exchange differences on translation of foreign operations(32,393)(5,529)(312,971)(1,363)

3,840(13,173)¥870,802¥878,484$8,413,542

OthersPresent value of defined benefit obligations at end of period (Note)(Note) T he weighted-average durations of the defined benefit obligations of the Group are 12.6 years, 12.5 years and 11.9 years, as of December 31, 2020, December 31,
2019 and January 1, 2019 (transition date), respectively.

2) Reconciliation of plan assets
The changes in the plan assets are as follows:
Fiscal year ended
December 31, 2020

The details of contract liabilities are presented in Note “26. Revenue.”
Fair value of the plan assets at beginning of period

NOTE 23

EMPLOYEE BENEFITS(1) Post-employment benefits
The Group has adopted both funded and unfunded defined benefit plans and defined contribution plans as retirement bene-fits for its employees. The funded defined benefit plans are managed by pension funds that are legally segregated from theGroup. The board of directors of pension funds and pension trustees are required by law to act in the best interests of theparticipants and are responsible for managing the plan assets in accordance with the prescribed policies.
The Group’s defined benefit plans are exposed to the following risks:(i) Investment risk
The present value of the defined benefit obligations is calculated based on a discount rate that is determined by reference tomarket yields on high quality corporate bonds at the fiscal year-end. In the event that the investment yields for the plan
assets fall below the discount rate, there is a risk of reduction in equity due to a deterioration of the funded status.
(ii) Interest rate risk
In the event that the discount rate is reduced due to a decline in market yields on high quality corporate bonds, the present valueof the defined benefit obligations increases, resulting in a risk of reduction in equity because of the worsened funded status.

Interest revenue

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥678,705¥616,920$6,557,533

12,832

17,779123,976
675,273

Remeasurements   Return on plan assets

69,89180,961

Contribution from employers (Note 1) (Note 2)

18,281

13,431

176,624

Benefits paid

(53,381)(48,751)(515,762)

Exchange differences on translation of foreign operations(28,079)(4,511)(271,291)

2,633

2,876

25,457¥700,882¥678,705$6,771,809

OthersFair value of the plan assets at end of period(Note 1)	The Group and its pension funds, in accordance with the laws and regulations, periodically conduct financial verifications and recalculate the amount ofcontributions for the purpose of appropriating funds for future benefit accruals and maintaining a balanced pension fund in case of a deficit.
(Note 2) The Group plans to make contribution of ¥20,290 million in the fiscal year ending December 31, 2021.

3) Reconciliation of defined benefit obligations and plan assets
The relationship between the defined benefit obligations, the plan assets and the retirement benefit liabilities (assets) on the
consolidated statement of financial position are as follows:
As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥ 743,837$ 7,666,136(678,705)(616,920)(6,771,809)

92,563

123,820

126,917894,328

77,35775,95975,593

747,412

367

326

295

3,546

¥ 170,287¥ 200,105¥ 202,805$ 1,645,285

Retirement benefit liabilities

191,679

211,619

207,928

1,851,971

Retirement benefit assets(21,392)(11,514)(5,123)(206,686)¥ 170,287¥ 200,105¥ 202,805$ 1,645,285

As ofDecember 31, 2020

As ofDecember 31, 2019

Present value of the funded defined benefit obligations¥ 793,445¥ 802,525

Fair value of the plan assets(700,882)  Subtotal
Present value of the unfunded defined benefit obligations
Effect of asset ceiling
Retirement benefit liabilities (assets)
Amounts on the consolidated statement of financial position

Retirement benefit liabilities (assets) on the consolidated
statement of financial position

52

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

53

Notes to Consolidated Financial Statements 4) Major components of plan assets
The major components of plan assets by category are as follows:

Quoted pricein active markets

Debt instruments

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2019

As ofDecember 31, 2020

Quoted pricein active markets

6) Items related to actuarial assumptions
Significant actuarial assumptions as of December 31, 2020, December 31, 2019 and January 1, 2019 (transition date) are as
follows:

Quoted pricein active markets

QuotedUnquoted

Total

QuotedUnquoted

Total

QuotedUnquoted¥364,854¥  5,532¥370,386¥371,189¥   4,484¥375,673¥291,664¥   4,060

As ofDecember 31, 2020
Quoted pricein active markets

Total

QuotedUnquoted

Millions of yen

Thousands of U.S. dollars¥295,724$3,525,155 $   53,444 $3,578,599

Japan

10,085

2,083

12,168

11,061

1,452

12,513

9,481

1,446

10,927

97,43920,122

117,561354,7693,449

358,218

360,128

3,032

363,160

282,1832,614

284,797

3,427,716

33,322

3,461,038

32,045

19,28351,32837,212

23,39560,60732,85919,71352,572309,607

186,313495,920

Japan

1,466

—

1,466

8,580

2,853

11,433

6,902

2,318

9,220

14,161—

14,161

Overseas

30,57919,28349,862

28,632

20,542

49,17425,957

17,39543,352295,445

186,313481,758

Discount rate

26,387

29,69056,077

11,69023,86135,551

6,984

19,227

26,211

254,950

286,863541,813

Alternative investments(Note)

52,404

116,816

169,220

43,291

110,806

154,097

44,192

145,790

189,982

506,320

1,128,660

1,634,979

8,379

512,119

520,498

867

53,00453,871

987

51,79052,777

181

52,25052,431

Total¥476,557¥224,325¥700,882¥464,369¥214,336¥678,705¥375,880¥241,040¥616,920$4,604,411 $2,167,398 $ 6,771,809(Note) Alternative investments include investments such as trusteed pension assets, real estate fund, and hedge fund.

The investment management policy of the Group for the major plans are as follows:(Japan)The Company’s policy aims for managing plan assets to secure stable returns over the medium to long term so that it canensure payment of defined benefit obligations in the future, in accordance with internal regulations. More specifically, theGroup sets a target return and asset allocation that is within the range of tolerable risk defined annually, and it manages its
managing assets by keeping such allocation. When assessing the asset allocation, the Group examines whether to introduce
the type of plan assets that is closely linked to changes in defined benefit obligations.
Furthermore, in the event of an unexpected event in the market environment, the Group is able to temporarily adjust theweighting of risk assets in accordance with the internal regulations.
(Overseas)
The policies for managing plan assets of the foreign subsidiaries are established by pension trustees and the managementsof the foreign subsidiaries are in accordance with the laws of each country. The objective of such policies is to secure investment income that exceeds the changes in the value of liabilities while managing the risks arising from defined benefit
obligations.
The core part of the plan assets is invested in bonds linked to the defined benefit obligations. The remaining part of theplan assets is invested mainly in the stocks to earn long-term income.
5) Reconciliation of the effect of the asset ceiling
The changes in the effect of the asset ceiling are as follows:
Fiscal year ended
December 31, 2020

Effect of asset ceiling at beginning of period¥326

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥295$3,151

Exchange differences on translation of foreign operations
Effect of asset ceiling at end of period

Bridgestone Corporation

2.4

3.2

Changes in base rate

As ofDecember 31, 2020

As ofDecember 31, 2019

0.5% increase¥(62,657)¥(62,307)

0.5% decrease

69,074

68,962As of January 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥(54,131)$(605,385)

59,633

667,379

7) Defined contribution plan
The amounts of contributions paid to the defined contribution plan are ¥14,312 million ($138,284 thousand) and ¥16,119
million for the fiscal years ended December 31, 2020 and 2019, respectively.
(2) Employee benefit expenses
Employee benefit expenses that are included in “Cost of sales,” “Selling, general and administrative expenses,” “Other

expenses” and “Finance costs” in the consolidated statement of profit or loss are as follows:
Fiscal year ended
December 31, 2020

Employee benefit expenses

NOTE 24¥11,207

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥19,656$108,276

EQUITY AND OTHER COMPONENTS OF EQUITY(1) Common stock and capital surplus
The Companies Act provides that at least half of the paid-in capital shall be appropriated as common stock, and theremaining amount may be appropriated as legal capital surplus within capital surplus. The Companies Act also provides thatlegal capital surplus may be appropriated as common stock pursuant to a resolution at the shareholders’ meeting.
1) Number of shares authorized
The numbers of authorized shares are 1,450,000,000 shares, 1,450,000,000 shares and 1,450,000,000 shares as of January 1,
2019 (transition date), December 31, 2019 and December 31, 2020, respectively.
2) Number of shares issued and fully paid
The changes in the number of shares issued and the balances of common stock and capital surplus are as follows:
Number of issued sharesof ordinary shares

45

27

437

(4)

4

(42)

¥367

¥326

$3,546

As of January 1, 2019 (Transition date)
Increase (decrease)
As of December 31, 2019
Increase (decrease) (Note 2)
As of December 31, 2020

54

1.8

Common stock

SharesRemeasurements   Change in the effect of asset ceiling

As of January 1, 2019
(Transition date)(Note) V aluation of the defined benefit obligations includes a judgment of future uncertain events. Sensitivity of the defined benefit obligation to changes in the majorbase rate as at the end of the fiscal year is as follows: Although the sensitivity assumes that all the other variables remain constant, practically they do not always
change independently. Negative figures represent a decrease in the defined benefit obligations and positive figures an increase in them.

Discount rate

Cash and cash equivalents

Other

As of
December 31, 2019

%

Total

Overseas
Equity instruments

As ofDecember 31, 2020

Capital surplus
Millions of yen

761,536,421¥126,354¥121,998—¥      —

¥     —

761,536,421¥126,354¥121,998(47,838,200)¥      —

¥    118

713,698,221¥126,354¥ 122,116

ANNUAL REPORT 2020 Financial Review

55

Notes to Consolidated Financial Statements 

Common stock

Capital surplus
Thousands of U.S. dollars

As of December 31, 2019

$1,220,812$1,178,724

—

1,142

$1,220,812$1,179,867

Increase (decrease) (Note 2)
As of December 31, 2020

(4) Retained earnings
The Companies Act provides that an amount equal to 10% of the dividends paid from surplus shall be transferred to legal

capital surplus and legal retained earnings until the aggregate amount of legal capital surplus and legal retained earnings
equals 25% of the nominal value of common stock. The amount accumulated in legal retained earnings may be used to offset
deficit. Furthermore, such legal retained earnings may be reversed pursuant to a resolution at the shareholders’ meeting.

(Note 1) The shares issued by the Company are ordinary shares with no par value and have no restrictions on any rights.
(Note 2) The decrease in the number of issued shares during the fiscal year ended December 31, 2020 is due to retirement of treasury stock.

NOTE 25(2) Treasury stock
The changes in the number of shares and balance of treasury stock are as follows:

As of January 1, 2019 (Transition date)
Increase (decrease) (Note 2)
As of December 31, 2019
Increase (decrease) (Note 2)
As of December 31, 2020

DIVIDENDS(1) The amount of dividends paid
Fiscal year ended December 31, 2020
Number of shares

AmountSharesMillions of yen

9,726,528¥   32,648

47,754,726

199,682

57,481,254¥ 232,330(47,914,746)(193,674)

9,566,508¥   38,657

Classes of shares(Resolution)

Total amount ofdividends

Dividend pershare Record dateMillions of yen

Effective date

Yen

Annual Shareholders’ Meeting held on March 24, 2020 Ordinary shares¥56,325¥80 December 31, 2019

March 25, 2020

Board Meeting held on August 7, 2020

35,20650 June 30, 2020

September 1, 2020

Ordinary sharesFiscal year ended December 31, 2019
AmountThousands of U.S. dollars

As of December 31, 2019
Increase (decrease) (Note 2)
As of December 31, 2020

$ 2,244,736

Classes of shares(Resolution)

Dividend pershare Record dateMillions of yen

Effective dateYen

(1,871,243)

Annual Shareholders’ Meeting held on March 22, 2019 Ordinary shares¥60,145¥80 December 31, 2018

March 25, 2019$   373,493

Board Meeting held on August 9, 201957,55680 June 30, 2019

September 2, 2019

(Note 1)	The Company has adopted the stock option plan and appropriated shares of treasury stock for the delivery of shares upon exercise of these options. The termsof the contract and the amounts, etc. are presented in Note “33. Share-based Payment.”(Note 2)	The number of treasury stock acquired based on the resolution of the Board of Directors for the fiscal year ended December 31, 2019 was 47,838,200 shares andthe total acquisition amount was ¥200,000 million, while the number of shares retired in the fiscal year ended December 31, 2020 was 47,838,200 shares and thetotal retirement amount was ¥193,364 million ($1,868,250 thousand). The increases by purchase of shares less than one unit were 916 shares and 842 shares,
and the decreases due to the exercise of stock options etc. were 84,390 shares and 77,388 shares for the fiscal years ended December 31, 2019 and 2020,
respectively.

Ordinary sharesFiscal year ended December 31, 2020
Classes of shares

Total amount ofdividends
Thousands of U.S.
dollars(Resolution)

Dividend pershare Record date

Effective date

U.S. dollars

Annual Shareholders’ Meeting held on March 24, 2020 Ordinary shares$544,200$0.77 December 31, 2019

March 25, 2020(3) Other components of equity
1) Stock acquisition rights

Board Meeting held on August 7, 2020

340,1540.48 June 30, 2020

September 1, 2020

The Company has adopted the stock option plan and issued stock acquisition rights in accordance with the Companies Act.
The terms of the contract and the amounts, etc. are presented in Note “33. Share-based Payment.”(2) Dividends that will be effective in the following fiscal year of the record dateFiscal year ended December 31, 2020

2) Exchange differences on translation of foreign operations
The exchange differences on translation of foreign operations occur when the financial statements of the foreign operations
prepared using foreign currencies are consolidated.
3) Effective portion of change in fair value of cash flow hedges
The Company hedges the risk of variability in future cash flows through hedges, and this is the portion of the changes in fairvalue of the derivative instruments designated as cash flow hedges, which are deemed to be effective.

Ordinary sharesClasses of shares(Resolution)4) Net change in fair value of financial assets measured through other comprehensive income
This is the valuation difference of the fair values of financial assets measured through other comprehensive income.
5) Remeasurements of defined benefit plans
Remeasurements of defined benefit plans result actuarial gains and losses and arise from the present value of defined
benefit obligations, return on plan assets (except for amounts included in net interest), and changes in the effect of the asset
ceiling (except for amounts included in net interest). They are recognized in other comprehensive income when they arise,
and reclassified from other components of equity to retained earnings immediately.

Bridgestone Corporation

Total amount ofdividends
Millions of yen

Annual Shareholders’ Meeting held on March 26, 2021 Ordinary shares¥42,248

Dividend pershare Record date

Effective dateYen

¥60 December 31, 2020

March 29, 2021

Fiscal year ended December 31, 2019
Classes of shares(Resolution)

56

Total amount ofdividends

Total amount ofdividends
Millions of yen

Annual Shareholders’ Meeting held on March 24, 2020 Ordinary shares¥56,325

Dividend pershare Record date

Effective dateYen

¥80 December 31, 2019

March 25, 2020

Fiscal year ended December 31, 2020
Classes of shares(Resolution)
Annual Shareholders’ Meeting held on March 26, 2021 Ordinary shares

Total amount ofdividends
Thousands of U.S.
dollars$408,194

Dividend pershare Record date

Effective date

U.S. dollars$0.58 December 31, 2020

March 29, 2021

ANNUAL REPORT 2020 Financial Review

57

Notes to Consolidated Financial Statements 

NOTE 26

Total beginning balances of the contract liabilities for the fiscal years ended December 31, 2019 and 2020 are recognized asrevenue in each fiscal year. The amount of revenue recognized from performance obligations satisfied in the previous
periods is not material for the fiscal year ended December 31, 2020.
The contract liabilities are presented as “Other current liabilities” and “Other non-current liabilities” in the consolidated
statement of financial position.
Contract liabilities primarily relate to advances received from customers.

REVENUE(1) Disaggregation of revenue
The breakdown of revenue is as follows:

Fiscal year ended December 31, 2020
Reportable segments

Japan

Americas

Europe, Russia,
Middle East,
India and Africa

China, AsiaPacific

Total

OthersCorporate or
elimination

Consolidated
total
Millions of yen

Tires¥423,217¥1,154,105¥553,495¥342,870¥2,473,687¥15,278¥32

Others (Note 1)

184,887

248,042

3,348

2,794

439,070

66,457—505,527¥608,103¥1,402,147¥556,843¥345,664¥2,912,757¥81,735¥32¥2,994,524

607,443

1,395,051

544,203

340,5422,887,239

81,73532

2,969,006

660

7,096

12,6405,122

25,518——25,518

Total external revenue Revenue recognized fromcontracts with customers Revenue recognized fromother sources (Note 2)¥2,488,997(Note 1) “Others” includes businesses such as Chemical and Industrial Products, BSAM Diversified Products, sporting goods and bicycles that the Company operates in.
(Note 2) Revenue recognized from other sources includes lease income based on IFRS 16.

Fiscal year ended December 31, 2019
Reportable segments

Japan

Americas

Europe, Russia,
Middle East,
India and Africa

Tires¥493,873¥1,394,453¥626,215¥398,987¥ 2,913,528¥ 28,442¥41

Others (Note 1)

224,613258,392

4,410

3,724

491,139

74,094—565,233¥ 718,485¥1,652,845¥630,625¥  402,711¥3,404,667¥102,536¥41¥3,507,243

718,485

1,641,932

612,650

393,927

3,366,994

102,53641

3,469,571—

10,913

17,975

8,785

37,672——

37,672China, AsiaPacific

Total

OthersCorporate or
elimination

Consolidated
total(3) Transaction price allocated to the remaining performance obligations
The amount of revenue related to the unsatisfied performance obligations (or partially unsatisfied) that is expected to berecognized in the future at the end of the fiscal year ended December 31, 2020 is as follows:
As of
December 31, 2020

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars

Within one year

¥24,513$236,842

Over one year and within five years

32,792

316,829

As the Group has applied the practical expedient provided in paragraph C5(d) of IFRS 15, it does not disclose the amount of
the transaction price allocated to the remaining performance obligations and an expectation of when the entity recognizes
that amount for the fiscal year ended December 31, 2019.
As the Group has also applied the practical expedient provided in paragraph 121 of IFRS 15, it does not disclose information
about the remaining performance obligation that has an original expected duration of one year or less.

Millions of yen

Total external revenue Revenue recognized fromcontracts with customers Revenue recognized fromother sources (Note 2)¥2,942,010(Note 1) “Others” includes businesses such as Chemical and Industrial Products, BSAM Diversified Products, sporting goods and bicycles that the Company operates in.
(Note 2) Revenue recognized from other sources includes lease income based on IFRS 16.

Fiscal year ended December 31, 2020
Reportable segments

Japan

Americas

Europe, Russia,
Middle East,
India and Africa

China, AsiaPacific

Total

OthersCorporate or
elimination

Consolidated
total

Thousands of U.S. dollars

Tires$4,089,049$11,150,772$5,347,779$3,312,754$23,900,355$147,618$305

Others (Note 1)

1,786,346

2,396,537

32,34926,9944,242,226

642,096—

4,884,322$5,875,396$13,547,309$5,380,128$3,339,747$28,142,581$789,714$305$28,932,599

5,869,019

13,478,752

5,258,000

3,290,258

27,896,029

789,714305

28,686,048

6,377

68,557122,128

49,489246,551——

246,551

Total external revenue Revenue recognized fromcontracts with customers Revenue recognized fromother sources (Note 2)

NOTE 27

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The breakdown of “Selling, general and administrative expenses” is as follows:
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥155,546¥182,756$1,502,856

Advertising and sales promotional expenses

97,442

115,168

941,467

Employee benefit expenses

264,847

279,158

2,558,912

Depreciation and amortization

89,90689,534

868,656

Research and development expenses (Note)

95,205106,202919,859

Others204,254

225,543

1,973,466

Total¥907,200¥998,360$8,765,217

Freight(Note) All research and development expenses recognized as expenses are included in “Selling, general and administrative expenses.”$24,048,278

NOTE 28

OTHER INCOME AND OTHER EXPENSES

The breakdown of “Other income” and “Other expenses” are as follows:(1) Other income(Note 1) “Others” includes businesses such as Chemical and Industrial Products, BSAM Diversified Products, sporting goods and bicycles that the Company operates in.
(Note 2) Revenue recognized from other sources includes lease income based on IFRS 16.

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars(Note 2) ¥24,192(Note 1) ¥30,418(Note 2) $233,744

804

5,738

7,764

(2) Contract balances
Contract balances of the Group consist of receivables, contract assets and contract liabilities arising from contracts with

Gain on sale of fixed assets

customers. In the consolidated statement of financial position, receivables arising from contracts with customers arepresented as “Trade and other receivables,” while the contract liabilities are as follows:

Others

7,023

11,45067,856

Total¥32,019¥47,606$309,364

Contract liabilities

58

Fiscal year ended
December 31, 2019

Bridgestone Corporation

As ofDecember 31, 2020

As ofDecember 31, 2019¥39,277¥43,032

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars¥41,548$379,485

Settlement package and compensation(Note 1) Mainly relates to gains on the sale of land.
(Note 2) Mainly relates to gains on the sale of warehouses.

ANNUAL REPORT 2020 Financial Review

59Notes to Consolidated Financial Statements (2) Other expenses

NOTE 30
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥ 89,622¥10,542$  865,910

Business and plant restructuring expenses (Note 2)

42,821

2,635

413,727

Loss on retirement of fixed assets

6,905

5,718

66,717

Others

9,329

5,704

90,133

Total¥148,676¥24,599$1,436,487

Impairment losses (Note 1)(Note 1) The breakdown of “Impairment losses” is presented in Note “16. Impairment of non-financial assets.”(Note 2) The breakdown of “Business and plant restructuring expenses” is presented in Note “6. Operating Segments.”

NOTE 29

FINANCE INCOME AND FINANCE COSTS

The breakdown of “Finance income” and “Finance costs” are as follows:(1) Finance income
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars

Interest income (Note 1)¥4,958¥10,269$47,908

Dividend income (Note 1)

2,640

6,357

25,506

Others

832

1,122

8,043

Total

¥8,431¥17,748$81,457

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥13,426¥16,020$ 129,721

3,742

5,216

36,157

Foreign exchange loss

3,188

3,772

30,804

Others

3,298

3,315

31,860

Total¥23,654¥28,324$228,542

Fiscal year ended
December 31, 2020

Net interest of defined benefit plans (Note 2)(Note 1)	“Interest income” and “Interest expenses” arise from financial assets and financial liabilities measured at amortized cost respectively.
In addition, “Dividend income” arises from financial assets measured at fair value through other comprehensive income.
(Note 2) The details of net interest of defined benefit plans are presented in Note “23. Employee Benefits.”

60

Bridgestone Corporation

Amount that occurred
during the period

Reclassification
adjustment

Before tax effectTax effect

After tax effectMillions of yen

Items that will not be reclassified to
profit or loss
 Net change in fair value of financial assets
measured through other comprehensive
income¥  2,478¥ —¥  2,478¥  (770)¥   1,708

Remeasurements of defined benefit plans

9,254

—

9,254

(3,776)

5,478

(140)

—

(140)

—

(140)

11,592—

11,592(4,546)

7,046(94,748)—(94,748)—(94,748)

(36)

159

124

(45)

79

(1,713)(34)(1,747)—(1,747) Share of other comprehensive income ofinvestments accounted for using theequity method  Total of items that will not be reclassified to profit or loss
Items that may be reclassified to profit
or loss Exchange differences on translation offoreign operations Effective portion of change in fair value ofcash flow hedges Share of other comprehensive income ofinvestments accounted for using theequity method  Total of items that may be reclassified
to profit or loss
Total(2) Finance costs

Interest expenses (Note 1)

OTHER COMPREHENSIVE INCOME

The analysis of “Other comprehensive income” by item in terms of the amount that occurred during each fiscal year, theamount reclassified to profit or loss and the impact of tax effects are as follows:
Fiscal year ended December 31, 2020

(96,496)125(96,371)(45)(96,415)¥(84,904)¥125¥(84,779)¥(4,590)¥(89,369)

Amount that occurred
during the period

Reclassification
adjustment

Before tax effectTax effect

After tax effectFiscal year ended December 31, 2019

Millions of yen

Items that will not be reclassified to
profit or loss
 Net change in fair value of financial assets
measured through other comprehensive
income¥  8,486¥   —¥  8,486¥(2,365)¥  6,121

Remeasurements of defined benefit plans

4,389

—

4,389

(1,641)

2,749

(6)

—

(6)

—

(6)

12,869—12,869(4,005)

8,864(16,191)—(16,191)—(16,191)367(1,627)(1,260)

396

(864)

(1,958)(147)(2,105)—(2,105) Share of other comprehensive income ofinvestments accounted for using theequity method  Total of items that will not be reclassified to profit or loss
Items that may be reclassified to profit
or loss Exchange differences on translation offoreign operations Effective portion of change in fair value ofcash flow hedges Share of other comprehensive income ofinvestments accounted for using theequity method  Total of items that may be reclassified
to profit or loss

(17,782)(1,774)(19,555)396(19,159)

Total¥ (4,913)¥(1,774)¥ (6,686)¥(3,609)¥(10,295)

ANNUAL REPORT 2020 Financial Review

61

Notes to Consolidated Financial Statements 

Fiscal year ended December 31, 2020
Amount that occurred
during the period

Reclassification
adjustment

Fiscal year ended
December 31, 2020
Before tax effectTax effect

After tax effectThousands of U.S. dollars

Items that will not be reclassified to
profit or loss
 Net change in fair value of financial assets
measured through other comprehensive
income$  23,941$  —$    23,941$ (7,437)$  16,504

Remeasurements of defined benefit plans

89,409—89,409(36,482)

52,927(1,349)—(1,349)—(1,349)Profit (loss) used for calculating basic earnings (loss) per share (Thousands of U.S. dollars)—Profit (loss) used to calculate diluted earnings (loss) per share (Thousands of U.S. dollars)(225,134)

Diluted earnings (loss) per share (U.S. dollars) Share of other comprehensive income ofinvestments accounted for using theequity method  Total of items that will not be reclassified to profit or loss
Items that may be reclassified to profit
or loss Exchange differences on translation offoreign operations Effective portion of change in fair value ofcash flow hedges Share of other comprehensive income ofinvestments accounted for using theequity method  Total of items that may be reclassified
to profit or loss

(16,550)(326)(16,876)—(16,876)(932,329)

1,211(931,119)(430)(931,549)

Total$(820,328)$1,211$ (819,118)$(44,349)$(863,467)

112,001—

112,001(43,919)

68,082(915,436)—(915,436)—(915,436)

(344)

1,537

1,193

(430)

(0.32)(Note) I n the fiscal year ended December 31, 2020, because the 1,084 thousand shares in stock options have a reverse-dilution effect, they have not been included in thecalculation of diluted loss per share.

NOTE 32

CASH FLOW INFORMATION

Changes in liabilities arising from financing activities
The changes in liabilities arising from financing activities are as follows:
Fiscal year ended December 31, 2020
Changes without cash flows
As ofJanuary 1,
2020

Acquisition

Exchange differenceson translation offoreign operations

Changes with cash
flows

Others

As ofDecember 31,
2020¥ 59,850¥113,262¥    —¥ (2,210)¥—¥   170,902

Short-term debt
Bonds

131,753

60,997—(7,057)—

185,693349,352

—

—

—

90

349,442

Lease liabilities

303,512(57,132)

66,270(12,498)—

300,153¥844,468¥117,127¥66,270¥(21,765)¥ 90¥1,006,190

Others763

Millions of yen

Long-term debt

Total liabilities related tofinancing activities

NOTE 31(225,134)

Adjustment to profit (Thousands of U.S. dollars)

EARNINGS PER SHARE

Fiscal year ended December 31, 2019(1) Basic earnings (loss) per share
Basic earnings (loss) per share and its calculation basis are as follows:

Changes without cash flows

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019(23,301)

240,111——

Profit (loss) used for calculating basic earnings (loss) per share (Millions of yen)

(23,301)

240,111Weighted-average number of shares of ordinary shares (Thousands of shares)

704,108

722,557(33.09)332.31

Profit (loss) attributable to owners of parent (Millions of yen)
Profit not attributable to ordinary shareholders of parent (Millions of yen)

Basic earnings (loss) per share (Yen)

Fiscal year ended
December 31, 2020

Profit (loss) attributable to owners of parent (Thousands of U.S. dollars)(225,134)

Profit not attributable to ordinary shareholders of parent (Thousands of U.S. dollars)

As ofJanuary 1,
2019

Changes with cashflows

Acquisition

Exchange differenceson translation offoreign operations

Long-term debt

¥ 84,485¥(23,332)¥    —¥ (1,304)¥  —

Short-term debt

97,33935,261

—

(846)

—

131,753

Bonds

219,709130,000

—

—

(357)

349,352

Lease liabilities

323,276(55,002)48,221(13,642)659

303,512

Total liabilities related tofinancing activities¥724,809¥ 86,928¥48,221¥(15,791)¥ 302¥844,468

OthersMillions of yen

Changes without cash flows(225,134)

Basic earnings (loss) per share (U.S. dollars)¥ 59,850

Fiscal year ended December 31, 2020—

Profit (loss) used for calculating basic earnings (loss) per share (Thousands of U.S. dollars)

As ofDecember 31,
2019

As of
January 1,
2020

Changes with cashflows

Acquisition

Exchange differenceson translation offoreign operations

Long-term debt$   578,262$1,094,321$     —$ (21,352)$ —Short-term debt

1,272,980

589,338—(68,185)—

1,794,134

Bonds

3,375,381

—

—

—

872

3,376,253

Lease liabilities

2,932,486(551,997)

640,292(120,753)—

2,900,028

Total liabilities related tofinancing activities$ 8,159,109$1,131,662$640,292$(210,289)$872$9,721,646(0.32)

As ofDecember 31,
2020
Thousands of U.S. dollars(2) Diluted earnings (loss) per share
Diluted earnings (loss) per share and its calculation basis are as follows:

Profit (loss) used for calculating basic earnings (loss) per share (Millions of yen)
Adjustment to profit (Millions of yen)

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019(23,301)

240,111——

Profit (loss) used to calculate diluted earnings (loss) per share (Millions of yen)

(23,301)

240,111Weighted-average number of shares of ordinary shares (Thousands of shares)

704,108

722,557$ 1,651,231

Increase in ordinary shares
Increase from stock options (Thousands of shares)
Weighted-average number of shares of ordinary shares after dilution (Thousands of shares)
Diluted earnings (loss) per share (Yen)62

Bridgestone Corporation

—

1,194

704,108

723,751(33.09)331.76

ANNUAL REPORT 2020 Financial Review

63Notes to Consolidated Financial Statements 

NOTE 33SHARE-BASED PAYMENTThe Company has adopted the stock option plan and the PSU. The stock option plan is an equity-settled share-based
compensation plan for directors, executive officers and corporate officers. The PSU is a performance-based stock compensation plan for executive officers of the Company (“officers eligible for the grant”) under which the Company presets numericaltargets of the Company’s performance, etc. (“performance indicators”) for a certain period (“performance measuring
period”) and delivers the Company’s shares and cash, which are equivalent to the amount calculated by multiplying a ratefrom 0% to 200% ,depending on a target achievement rate at the end of the performance measuring period, on the basenumber of shares which are also preset by the Company.
In addition, the performance measuring period of the PSU for the fiscal year ended December 31, 2020 is from the fiscal
year ending December 31, 2021 to the fiscal year ending December 31, 2023, and the Company’s shares and cash will be delivered after this performance measuring period.
The estates delivered to the officers eligible for the grant based on the PSU consist of the Company’s shares by 50% andcash by 50% considering individual income tax paid by the officers and other factors.
Furthermore, whether the Company’s shares and cash are delivered, the officers eligible for the grant of the Company’s
shares and cash, and the number of shares and the amount of cash delivered to them are not determined at the time of introduction of the PSU because, as mentioned above, the delivery of the Company’s shares and cash depends on an achievement
rate of the performance indicators under this plan.
(1) Stock option plan
The Group has not granted any new stock options since July 5, 2017.

Resolution at Annual
Shareholders’ Meeting and
Board Meeting held on
March 30, 2010

Resolution at Annual
Shareholders’ Meeting and
Board Meeting held on
March 29, 2011

Resolution at Annual
Shareholders’ Meeting and
Board Meeting held on
March 27, 2012

Nine directors of
the Company and 20
corporate officers notconcurrently serving as
directors of the Company
Class and number of shares granted Ordinary shares:
110,000 shares
Date of grantMay 1, 2009

Eight directors of
the Company and 25
corporate officers notconcurrently serving as
directors of the Company
Ordinary shares:
118,500 shares
May 6, 2010

Nine directors of
the Company and 36
corporate officers notconcurrently serving as
directors of the Company
Ordinary shares:
154,500 shares
May 2, 2011

Nine directors of
the Company and 35
corporate officers notconcurrently serving as
directors of the Company
Ordinary shares:
202,000 shares
May 1, 2012

No vesting conditions

No vesting conditions

No vesting conditions

Persons granted

Vesting conditions

No vesting conditions

Target service period

No specified service period No specified service period No specified service period No specified service period

Exercise period

From May 1, 2009 to
April 30, 2029

From May 6, 2010 toApril 30, 2030

From May 2, 2011 toApril 30, 2031

From May 1, 2012 toApril 30, 2032

Resolution at Annual
Shareholders’ Meeting and
Board Meeting held on
March 26, 2013

Resolution at Annual
Shareholders’ Meeting and
Board Meeting held on
March 25, 2014

Resolution at Annual
Shareholders’ Meeting and
Board Meeting held on
March 24, 2015

Resolution at
Board Meeting held on
April 21, 2016

Four directors of
the Company and 36
corporate officers notconcurrently serving as
directors of the Company

Four directors of
the Company and 46
corporate officers notconcurrently serving as
directors of the Company

Three directors of
the Company and 48
corporate officers notconcurrently serving as
directors of the Company

Persons granted

64

Class and number of shares granted Ordinary shares:
196,000 shares
Date of grantMay 1, 2013

Ordinary shares:
131,900 shares
May 1, 2014

Ordinary shares:
142,500 shares
May 1, 2015

Two directors of
the Company excluding
non-executive directors,
eight executive officers notconcurrently serving as
directors and 41 corporate
officers
Ordinary shares:
208,800 shares
May 6, 2016

No vesting condition

No vesting condition

No vesting condition

Vesting conditions

No vesting condition

Target service period

No specified service period No specified service period No specified service period No specified service period

Exercise period

From May 1, 2013 toApril 30, 2033

Bridgestone Corporation

From May 1, 2014 toApril 30, 2034

Resolution at Board Meeting heldon April 27, 2017
Plan BTwo directors of theCompany excluding
non-executive directors,
five executive officers notconcurrently serving as
directors and 45 corporate
officers
Class and number of shares granted Ordinary shares:
206,500 shares
Date of grantMay 12, 2017

One executive officer notconcurrently serving as
director and two corporate
officers

Vesting conditions

No vesting condition

No vesting condition

Target service period

No specified service period No specified service period

Exercise period

From May 13, 2017 to
May 12, 2037

Persons granted

From May 1, 2015 toApril 30, 2035

Ordinary shares:
14,300 shares
July 5, 2017

From July 6, 2017 toJuly 5, 2037

2) Changes in the number of stock options
Fiscal year ended December 31, 2020
Number of shares

Weighted-average
exercise priceFiscal year ended December 31, 2019
Number of shares

Weighted-average
exercise price

SharesYen (U.S. dollars)

SharesYen

1,161,300¥1 ($0.01)

1,245,600¥1Effect of share split

—

—

—

—

Granted

—

—

—

—

Exercised

77,300

1 ($0.01)

84,3001

Forfeited

—

—

—

—

Balance at end of period

1,084,000¥1 ($0.01)

1,161,300¥1

Exercisable balance as of end of period

1,084,000¥1 ($0.01)

1,161,300¥1

Balance at beginning of period

1) Terms of the contracts, etc.
Resolution at Annual
Shareholders’ Meeting and
Board Meeting held on
March 26, 2009

Resolution at Board Meeting heldon April 27, 2017
Plan A(Note 1) The number of stock options is presented by converting it into the number of shares.
(Note 2) All the stock options have been granted at an exercise price of ¥1 ($0.01) per share.
(Note 3) T he weighted-average stock price of the exercised stock options at exercise during the period is ¥3,523 ($34) for the fiscal year ended December 31, 2020. As forthe fiscal year ended December 31, 2019, it was ¥4,321.
(Note 4) The weighted-average remaining contractual lives of the outstanding stock options as of December 31, 2020 and 2019 were 13.4 years and 14.2 years, respectively.

(2) PSUAs previously mentioned, the Company has discontinued the share-based stock options plans and introduced the PSU in

March 2018.
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2019

Number of shares granted (Shares)——

Weighted-average fair value at grant date (Yen)——(Note) T he carrying amounts of liabilities arising from share-based remuneration transactions are ¥1,013 million and ¥432 million as at December 31, 2019 and January 1,
2019 (transition date), respectively. This is not applicable for the fiscal year ended December 31, 2020.

(3) Share-based remuneration expenses
Share-based remuneration expenses included in the “Selling, general and administrative expenses” in the consolidated

statement of profit or loss are ¥1,013 million ($9,783 thousand) as reversal for the fiscal year ended December 31, 2020 and¥581 million for the fiscal year ended December 31, 2019.

From May 7, 2016 to
May 6, 2036

ANNUAL REPORT 2020 Financial Review

65Notes to Consolidated Financial Statements 

NOTE 34

Other financial assets

FINANCIAL INSTRUMENTS(1) Capital management
The Group conducts capital management with the aim ofincreasing capital efficiency to realize maintaining a proper
financial constitution and return to stockholders, while
securing the internal reserves necessary for “Restructuringof the earning power on our core business,” “Strategic
investments for growth for the expansion of our growing
solution business” and “Strategic investments for growth
on exploring businesses.”
As management indicators, the Group utilizes ROE and
ROIC as items to be managed for measuring capital efficiency. The Group will also enhance to restruct and act
based on a financial strategic foundation which supports
the Mid-Term Management Plan through the realization of
portfolio management by “Restructuring of the earing
power” using ROIC and conducting a financial assessment at
the planning and acting stage of investments without fail.
(2) Matters related to risk management
The Group is exposed to financial risk (credit risk, liquidity

risk, currency fluctuation risk, interest rate fluctuation risk,
and market price fluctuation risk) in the course of performing
operation activities. To avoid such financial risks, the Grouphas managed these risks in accordance with certain policies.
(3) Credit risk management
The Group is exposed to the credit risk—a risk of financial

loss if the counterpart to the financial assets held by theGroup fails to fulfill its obligations. With respect to tradereceivables, the Group regularly monitors the status of its
major suppliers or customers, managing due dates andbalances on an individual supplier or customer. Furthermore,
to mitigate risk, the Group promptly detects unrecoverable
amount due to a deterioration of the financial position of its
supplier or customer, or other reasons, and deems suchreceivables to be in default when all or part of them aredetermined to be uncollectible or extremely difficult tocollect. When using derivative transactions, the Group
engages in transactions with only highly rated financial institutions to mitigate counterparty risk.
The carrying amount of the financial assets after impairment presented in the consolidated statement of financial
position is the maximum value of the exposure against thecredit risk of the Group’s financial assets.
The Group’s credit risk exposure related to notes andaccounts receivable, etc. are as follows: The Groupmeasures the future expected credit losses to record allowance for doubtful accounts on notes and accounts
receivable, etc., taking into accounts probability of recoverability and if there has been a significant increase in credit
risk, etc. Whether credit risk increases significantly or not, it
is assessed based on the changes in the default risk. For thispurpose, the financial condition of the counterpart, pastexperience, provisions that have already been recorded andpast due information is taken into consideration. Allowancefor doubtful accounts on trade receivables is always
measured at an amount equal to lifetime expected credit
losses, which may be measured either on an individual orcollective basis, depending on the nature and size of thetransaction. If one or several of the following events that
can affect the estimated future cash flows of the tradereceivables adversely occur, the Group assesses expectedcredit losses on an individual receivable basis as creditimpaired trade receivables. The Group does not expose
itself to significant concentrations of credit risk from
specific supplier or customer.
• significant financial difficulty of the debtor• a breach of contract such as a default or past due event• the probability that the debtor will enter bankruptcy orother financial reorganization1)	Credit risk exposure related to trade and other receivables, etc.

Financial assets forwhich allowance for
doubtful accounts ismeasured at an amountequal to 12-month
expected credit losses¥766,228

Credit-impaired
financial assets

Total

As of January 1, 2019 (Transition date)¥70,503¥ 4,185¥ 24

As of December 31, 2019

¥ 79,312¥ 1,887¥ 26¥ 81,225

As of December 31, 2020

¥ 58,818¥3,290¥622¥62,729

Financial assets forwhich allowance for
doubtful accounts ismeasured at an amountequal to 12-month
expected credit losses¥ 74,712

Allowance for doubtful accounts measured at an
amount equal to lifetime expected credit losses
Financial assets forwhich credit risk has
increased significantly
since initial recognition

Credit-impaired
financial assets

Total
Thousands of U.S. dollars

As of December 31, 2020

$568,288$31,787$6,006

Financial assets forwhich allowance for
doubtful accounts isalways measured at an
amount equal tolifetime expectedcredit losses

Credit-impaired
financial assets$606,081

2) Changes in allowance for doubtful accounts
Allowance for doubtful accounts against notes and accounts receivable, etc.

Total
Millions of yen

Balance at January 1, 2019¥18,250¥ 14,817

Increase during period

3,832

2,419

6,251

Decrease during period (utilized)(1,403)(830)(2,233)

Decrease during period (reversed)(1,764)(318)(2,083)

(120)

(1)

(121)

¥18,795¥16,086¥34,881

OthersBalance at December 31, 2019

¥33,067

Increase during period

5,592

6,144

11,736

Decrease during period (utilized)(773)(2,864)(3,637)

Decrease during period (reversed)(1,636)(1,664)(3,300)

(794)

(997)

(1,791)¥ 21,184¥16,705¥37,889

Financial assets forwhich allowance for
doubtful accounts isalways measured at an
amount equal tolifetime expectedcredit losses

Credit-impaired
financial assets

OthersBalance at December 31, 2020

Total
Thousands of U.S. dollars

Credit-impaired
financial assets

Balance at December 31, 2019
Total
Millions of yen

As of January 1, 2019 (Transition date)Financial assets forwhich credit risk has
increased significantly
since initial recognition

Millions of yen

Notes and accounts receivable, etc.
Financial assets forwhich allowance for
doubtful accounts isalways measured at an
amount equal tolifetime expectedcredit losses

Allowance for doubtful accounts measured at an
amount equal to lifetime expected credit losses¥15,365¥781,593

As of December 31, 2019

¥735,945¥ 17,175¥ 753,121

As of December 31, 2020

¥ 661,226¥16,969¥678,195

Financial assets for whichallowance for
doubtful accounts isalways measured at an
amount equal tolifetime expectedcredit losses

Credit-impaired
financial assets$  181,596$155,423$337,019

Increase during period

54,02959,358113,387

Decrease during period (utilized)(7,467)(27,673)(35,140)

Decrease during period (reversed)(15,811)(16,076)(31,886)

OthersBalance at December 31, 2020

(7,673)(9,632)(17,304)$204,676$ 161,400$366,075

Total
Thousands of U.S. dollars

As of December 31, 2020

66

Bridgestone Corporation$6,388,653$163,953$6,552,606

ANNUAL REPORT 2020 Financial Review

67Notes to Consolidated Financial Statements Allowance for doubtful accounts against other financial assets
Financial assets forwhich allowance for
doubtful accounts ismeasured at an amountequal to 12-month
expected credit losses

Balances of financial liabilities (including derivative financial instruments) by due date as of the end of each fiscal year are
as follows:
As of December 31, 2020

Allowance for doubtful accounts measured at an
amount equal to lifetime expected credit losses
Financial assets forwhich credit risk has
increased significantly
since initial recognition

Credit-impaired
financial assets

Carrying
amountTotal

Contractual
cash flows

Due within
one year

Due after one
year throughtwo years

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

Millions of yen

Balance at January 1, 2019

¥ 74

¥ 382

Increase during period

11

Decrease during period (utilized)(1)

Decrease during period (reversed)(14)

OthersDue after
five years
Millions of yen¥ 24¥  480

199

4

214

Trade and other payables¥  420,140¥  420,140¥420,140¥     —

¥    —¥     —

¥    —

—

(1)

(1)

Bonds and borrowings

706,037

706,595

293,978

81,61815,425

100,380

5,063

210,131

(205)

—

(219)

Lease liabilities

300,153

339,789

61,00452,82541,89832,47625,334

126,252

1,426,330

1,466,524

775,122

134,443

57,323

132,856

30,397336,383

Non-derivative financial liabilities¥         —

(0)

—

(0)

(0)

¥ 71

¥ 377

¥ 26

¥  474

Increase during period

1

144

575

719

Forward exchange contracts

3,635

3,635

3,635

—

—

—

—

—

Decrease during period (utilized)

—

—

(3)

(3)

Currency swap contracts

4,715

4,715

1,522

(144)

442

2,895

—

—

Decrease during period (reversed)

(5)

(173)

—

(177)

Others

—

—

22

22

¥ 67

¥ 348

¥620

¥1,035

Balance at December 31, 2019

Balance at December 31, 2020

Financial assets forwhich allowance for
doubtful accounts ismeasured at an amountequal to 12-month
expected credit losses

Commodity swap contracts  Subtotal  TotalIncrease during period

(351)

—

—

—

—

—

4,806

(144)

442

2,895

—

—

¥1,434,329¥1,474,523¥779,928¥134,299¥57,765¥135,751¥30,397¥336,383

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

Due after
five years

Total

$685

$ 3,641$  256$ 4,581

7

1,390

5,553

6,950

Decrease during period (utilized)

—

—

(32)

(32)

Decrease during period (reversed)(44)(1,671)—(1,715)

Others

—

—

217

217

$648

$ 3,360$5,994$10,001

Balance at December 31, 2020

(351)
7,999

As of December 31, 2019
Credit-impaired
financial assets

Carrying
amountThousands of U.S. dollars

Balance at December 31, 2019

(351)
7,999

(Note) Receivables and payables incurred by derivative transactions are presented in net amount.

Allowance for doubtful accounts measured at an
amount equal to lifetime expected credit losses
Financial assets forwhich credit risk has
increased significantly
since initial recognition  Subtotal
Derivative financial liabilities (Note)

Contractual
cash flows

Due within
one year

Due after one
year throughtwo years

Millions of yen

Non-derivative financial liabilities
Trade and other payables¥  453,069¥  453,069¥453,069¥    —¥     —

¥    —¥     —

Bonds and borrowings

540,955

541,603

135,4428,326

84,115

2,928

100,446

210,346

Lease liabilities

303,512344,833

59,746

51,64043,466

34,76826,249128,964

1,297,536

1,339,505

648,257

59,966

127,581

37,696

126,695

339,310

Forward exchange contracts

2,972

2,972

2,972

—

—

—

—

—

Currency swap contracts

(625)

(625)

(1,444)

1,510

(542)

—

(149)

—

  Subtotal¥     —

Derivative financial liabilities (Note)(4) Liquidity risk management
The Group is exposed to liquidity risk which is the risk of being unable to make payments on due dates because of a deterio-ration of the funding environment. Notes and accounts payable and accounts payable, which are trade payable, are largely due
within one year.
Based on a cash flow plan that incorporates estimated cash inflows and outflows arising from business activities, theGroup mitigates liquidity risk by understanding its future cash position in advance and managing cash position efficiently
while diversifying funding options, which include bank borrowings and bond issuance. To mitigate for liquidity risk, theGroup has established a required borrowing facility by entering into a commitment line agreement with several financial
institutions.

Commodity swap contracts  Subtotal  Total

(263)

(263)

(263)

—

—

—

—

—

2,084

2,084

1,265

1,510

(542)

—

(149)

—

¥1,299,620¥1,341,589¥649,522¥61,476¥127,039¥37,696¥126,546¥339,310

Contractual
cash flows

Due within
one year

Due after one
year throughtwo years

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

Due after
five years

As of January 1, 2019 (Transition date)
Carrying
amountMillions of yen

Non-derivative financial liabilities
Trade and other payables¥ 497,173¥ 497,173¥497,173¥     —

¥     —

¥     —

¥     —

Bonds and borrowings

401,533

401,824

191,583

2,801

8,552

84,8593,046

110,983

Lease liabilities

323,276

366,908

60,12855,16945,85338,20230,331

137,225

1,221,982

1,265,905

748,884

57,97054,405123,061

33,377248,208

Forward exchange contracts(3,425)(3,425)(3,425)

—

—

—

—

—

Currency swap contracts(1,503)(1,503)500(2,172)

388

(220)

—

—

  Subtotal¥     —

Derivative financial liabilities (Note)

Commodity swap contracts  Subtotal  Total68

Bridgestone Corporation

197

197

197

—

—

—

—

—

(4,731)(4,731)(2,728)(2,172)

388

(220)

—

—

¥1,217,251¥1,261,174¥746,156¥55,798¥54,793¥122,841¥33,377¥248,208

ANNUAL REPORT 2020 Financial Review

69Notes to Consolidated Financial Statements 

As of December 31, 2020
Carrying
amountContractual
cash flows

Due within
one year

Due after one
year throughtwo years

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years(6) Interest rate risk management
A part of the borrowings, etc. of the Group has a variable rate, which exposes the Group to the risk of changes in interest
Due after
five years

Thousands of U.S. dollars

Non-derivative financial liabilities
Trade and other payables$ 4,059,319$ 4,059,319$4,059,319$      —

$     —

$      —

$     —

$      —

Bonds and borrowings

6,821,618

6,827,007

2,840,365

788,579

149,034

969,860

48,9222,030,248

Lease liabilities

2,900,028

3,282,981

589,412510,389404,811313,777

244,769

1,219,822

13,780,965

14,169,307

7,489,097

1,298,967

553,845

1,283,637

293,691

3,250,070  Subtotal
Derivative financial liabilities (Note)
Forward exchange contracts

35,12035,12035,120

—

—

—

—

—

Currency swap contracts

45,55345,553

14,706(1,387)

4,268

27,976——

Commodity swap contracts(3,394)(3,394)(3,394)

—

—

—

—

—

77,27977,27946,432(1,387)

4,268

27,976——$13,858,244$14,246,586$7,535,529$1,297,580$558,112$1,311,613$293,691$3,250,070  Subtotal  Total

Total amount of committed line and the amount undrawn are as follows:

Total amount of committed line

As ofDecember 31, 2019

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

Millions of yen

Thousands of U.S. dollars$1,347,943¥139,512¥144,754¥165,060

The amount drawn

1,967

2,629

3,488

19,000

The amount undrawn

137,546

142,124

161,572

1,328,943(5) Foreign currency risk management
As the Group engages in several business activities such as development, manufacture, distribution, sales and procurement

globally, which entail cross-border transactions, exchange rate fluctuations affect Group’s business performance.
With respect to the trade receivables and payables denominated in foreign currencies, the Company and some of its
consolidated subsidiaries use forward exchange contracts to hedge against currency risk recognized by currency on amonthly basis. The Company and some of its consolidated subsidiaries may enter into forward exchange contracts andcurrency option contracts for foreign currency-denominated trade receivables and payables that are surely expected to
be incurred from the forecast transactions related to imports and exports, depending on exchange rate conditions. The
Company and some of its consolidated subsidiaries may also enter into currency swap contracts, if required, to hedge
against currency risk associated with loans and borrowings denominated in foreign currencies.
Derivative transactions are limited to transactions within the scope of immediate needs in accordance with the internal
regulations; therefore, the Group does not engage in speculative transactions.
Foreign currency sensitivity analysis
For the financial instruments held by the Group at each fiscal year-end, the impact of appreciation of the foreign currencies
against the yen by ¥1 on profit before tax is as follows:
The figures below do not include the impact of translation of financial instruments denominated in functional currencies,
assets and liabilities as well as revenues and costs of foreign operations into yen. This analysis is based on the assumptionthat other variable factors (such as balances, interest rate, etc.) are constant.
Fiscal year ended
December 31, 2020

Profit before tax

70

Bridgestone Corporation

Interest rate sensitivity analysis
As for the financial instruments held by the Group at each fiscal year-end, the impact of interest rate hikes by 1% on profit
before tax is as follows:This analysis is applicable to the financial instruments subject to the effects of changes in interest rates, assuming othervariable factors such as the effects of the changes in currency rates remain constant.
Fiscal year ended
December 31, 2020

Profit before tax(Note) Receivables and payables incurred by derivative transactions are presented in net amount.

As of
December 31, 2020

rates. The Group enters into interest rate swap contracts, if required, to hedge the risk of interest rate fluctuation risk on its
borrowings.
Derivative transactions are limited to transactions within the scope of immediate needs in accordance with the internal
regulations, and the Group does not engage in speculative transactions.

¥(65)

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥(51)$(629)¥(93)

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥(161)$(903)(7) Market price fluctuation risk management
The investment securities the Group holds are mostly stocks of its supplier or customer, which are subject to the risk ofchanges in market price.
The Group regularly monitors those fair values, the financial status of the issuers, such as supplier or customer, etc. while
reviews its holdings as appropriate in light of its relationships with them.
Sensitivity of share price fluctuation risk
The sensitivity analysis of the listed stocks the Group holds to share price fluctuation risk is as follows: The analysis shows
the impact of drops in market prices of the listed stocks by 1% on other comprehensive income before tax effect, assuming
other variables remain constant.
Fiscal year ended
December 31, 2020

Other comprehensive income¥(714)

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥(890)$(6,897)(8) Fair value measurement
The fair value hierarchy of the financial instruments is categorized into the following three levels based on the inputs to thevaluation techniques used.
Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities
Level 2: F air value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: F air value measurements are those derived from valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs)
1) Financial instruments measured at fair value
The methods for measuring of major financial instruments measured at fair value are as follows:(i) Derivative assets and derivative liabilities
Derivative assets and derivative liabilities are included in other financial assets and other financial liabilities, respectively,
and those are classified as derivative assets and derivative liabilities measured at fair value through profit or loss. These areforward exchange contracts, currency swap contracts and interest rate swap contracts, etc., which are measured based on
the model using largely observable inputs such as foreign currency rates and interest rates.

ANNUAL REPORT 2020 Financial Review

71Notes to Consolidated Financial Statements (ii) Shares
Shares are included in other financial assets, classified into financial assets measured at fair value through other comprehensive income. The shares categorized in Level 1 are the listed stocks traded in active market, which are measured at a quoted
price on the exchange. The shares categorized in Level 3 are unlisted stocks, which are primarily measured by using the net
asset-based valuation model (i.e., a method of measuring enterprise value based on the net assets of the share issuing
company, adjusted for any items that should be adjusted due to marked-to-market, if any).

The changes in assets and liabilities measured at fair value by using Level 3 inputs on a recurring basis from the beginningto the end of the fiscal years ended December 31, 2020 and 2019 are as follows:
Fiscal year ended
December 31, 2020

Balance at beginning of period¥ 9,559

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥8,035$92,354

Total gains and losses
Other comprehensive income (Note 1)

The fair value hierarchy of financial instruments measured at fair value are as follows:
As of December 31, 2020
Level 1

Level 2

Level 3Total

Derivative assets¥    —¥ 2,992¥    —¥ 2,992

Shares71,383—

10,891

82,274

Total¥71,383¥ 2,992¥10,891¥85,266—

10,991—

10,991¥    —¥10,991¥    —¥   10,991

Level 1

Level 2

Level 3

Millions of yen

Derivative liabilities
Total

As of December 31, 2019¥     —

¥4,223¥   —¥   4,223

Shares

88,966—

9,559

98,525

Total¥88,966¥4,223¥9,559¥102,748

Derivative liabilities
Total

—

6,307

—

6,307

¥     —

¥6,307¥   —¥   6,307

Level 1

Level 2

Level 3As of January 1, 2019 (Transition date)
Total
Millions of yen

Derivative assets¥     —

¥ 7,471¥    —¥  7,471

Shares167,770—

8,035

175,805

Total¥167,770¥ 7,471¥8,035¥183,276

—

2,739

—

2,739

¥     —

¥2,739¥    —¥    2,739

Derivative liabilities
Total

Level 1

Level 2

Level 3

Derivative assets$      —

$ 28,903$     —

5,108

Sold and collection

(25)

(149)

(246)

Transfer from Level 3 (Note 2)

—

(2)

—

720

131

6,959

¥10,891¥9,559$105,223

Other
Balance at end of period(Note 1)	Amount is included in “Net change in fair value of financial assets measured through other comprehensive income” in the consolidated statement ofcomprehensive income.
(Note 2) The transfer from Level 3 recognized in the fiscal year ended December 31, 2019 was attributable to the listing of the investee on the stock exchange.

The financial instruments categorized as Level 3 in the fair value hierarchy are financial assets measured at fair value throughother comprehensive income for which quoted market prices are not readily available. The fair values of such financial instruments are calculated based on the Group’s accounting policy. When measuring the fair values, the Group determines the mostappropriate valuation technique considering the nature of the assets, etc. with reasonably estimated input.
2) Financial instruments measured at amortized cost
The valuation technique for the fair value of the financial instruments measured at amortized cost is as follows:
The table below does not include financial instruments where the carrying amounts of which reasonably approximate thefair values and it is not material.
Bonds and borrowings
The fair value of bonds are based on market prices. The fair values of the borrowings are calculated based on the present
value and by discounting the total principal and interest over the remaining term at an interest rate that would be applied if
similar borrowings were newly made.
As of December 31, 2020
Carrying amount

Level 1

Level 2

Level 3

Total
Millions of yen

Bonds and borrowings
Total¥412,060¥—¥413,610¥—¥413,610¥412,060¥—¥413,610¥—¥413,610

Carrying amount

Level 1

Level 2

Level 3

Total

$ 28,903

Shares689,693—

105,223

794,916

Total$689,693$ 28,903$105,223$823,820—

106,192—

106,192$      —

$106,192$     —

$ 106,192

Thousands of U.S. dollars

Total

1,048

1,804

As of December 31, 2019

As of December 31, 2020

Derivative liabilities

(260)

529

Total
Millions of yen

Derivative assets

108

Purchases

Total
Millions of yen

Bonds and borrowings
Total¥405,514¥—¥406,462¥—¥406,462¥405,514¥—¥406,462¥—¥406,462

Carrying amount

Level 1

Level 2

Level 3As of January 1, 2019 (Transition date)
Total
Millions of yen

Transfers between levels of the fair value hierarchy are recognized at the end of each fiscal year. There was no transfer
between Level 1 and Level 2 for the fiscal years ended December 31, 2019 and 2020.

72

Bridgestone Corporation

Bonds and borrowings
Total¥209,977¥—¥209,953¥—¥209,953¥209,977¥—¥209,953¥—¥209,953

ANNUAL REPORT 2020 Financial Review

73Notes to Consolidated Financial Statements 

As of December 31, 2020
Carrying amount

Level 1

Level 2

Level 3

Total
Thousands of U.S. dollars

Bonds and borrowings
Total$3,981,258$—$3,996,231$—$3,996,231$3,981,258$—$3,996,231$—$3,996,231

The expected duration of cash flows from the cash flow hedges is approximately 3 months to 11 months for foreign
currency contracts, which is expected to be largely the same as the expected duration of the impact on net profit or loss.
For the fiscal years ended December 31, 2019 and 2020, there are no material amounts recognized in profit or loss, which
are related to the ineffective portions of hedges and portions excluded from assessment of hedge effectiveness.
The changes in the cash flow hedge reserve arising from the hedging instruments designated as cash flow hedges are
as follows:
Fiscal year ended December 31, 2020

(9) Hedge accounting
Risk management strategy

The Group uses, as derivative transactions, such as forward exchange contracts and currency swap contracts to hedge against
currency risk associated with the foreign currency-denominated receivables and payables as well as foreign currency-denominatedforecast transaction. It uses currency swap contracts, if required, to hedge against risk of changes in currency rate and interest rate
associated with the foreign currency-denominated loans and borrowings. The Group also engages in interest rate swap contracts, if
required, to hedge against risk of changes in interest rate of the borrowings. It uses commodity swap contracts, if required, to mitigate
price risk from raw materials. With respect to the execution and management of derivative transactions, the Group complies with theinternal regulations that stipulate transaction authority, and engages in the derivative transactions with only highly rated financial
institutions to mitigate counterparty credit risk. Hedge ratio is appropriately determined based on the economic relationship between
the hedging instrument and hedged item as well as its risk management strategies. There is no material ineffective portion of hedge
as the Group applies hedge accounting only when the critical terms of hedging instruments and hedged items match exactly.

Effective portion of change in fair value of cash flow hedges
Foreign currency risk

Commodity-related risk

Total
Millions of yen

Balance at January 1, 2020
Other comprehensive income¥(325)¥—¥(325)

Amount that occurred during the period (Note 1)

198

4

202

Amount of reclassification adjustment (Note 2)

159

—

159

Tax effect

(45)

—

(45)

¥ (13)¥  4¥  (9)

Balance at December 31, 2020

Fiscal year ended December 31, 2019

The Group uses derivatives when it is economically rational to do so, including the cases where the hedging relationshipdoes not meet the requirements to qualify for hedge accounting.

Effective portion of change in fair value of cash flow hedges
Foreign currency risk

Commodity-related risk

Total
Millions of yen

The carrying amounts and changes in fair value of the hedging instruments that qualify for hedge accounting in each fiscal
year are as follows:
As of December 31, 2020
Carrying amount (Note)
Hedging typeHedging instrument

Cash flow hedges

Foreign currency derivatives

Contract amount

AssetsLiabilities¥42,229

¥218

¥957

¥42,229

¥218

¥957

Balance at January 1, 2019

¥ 1,767¥(25)¥ 1,742

Amount that occurred during the period (Note 1)

(861)

25

(836)

Amount of reclassification adjustment (Note 2)(1,627)—(1,627)

Other comprehensive income

Tax effectBalance at December 31, 2019

396

—

396

¥ (325)¥  —¥ (325)

Millions of yen

Total

Fiscal year ended December 31, 2020
Effective portion of change in fair value of cash flow hedges
Foreign currency risk

As of December 31, 2019
Hedging instrument

Contract amount

AssetsLiabilities
Millions of yen

Cash flow hedges

Foreign currency derivatives

Total¥42,533¥—¥759¥42,533¥—¥759

Balance at January 1, 2020
Other comprehensive income$(3,137)$—$(3,137)

Amount that occurred during the period (Note 1)

1,903

37

1,940

Amount of reclassification adjustment (Note 2)

1,537

—

1,537

Tax effect

(430)

—

(430)

$  (126)$37$  (90)

Balance at December 31, 2020

As of January 1, 2019 (Transition date)
Carrying amount (Note)
Hedging type

Total
Thousands of U.S. dollars

Carrying amount (Note)
Hedging type

Commodity-related risk

Hedging instrument

Contract amount

AssetsLiabilities(Note 1)	The changes in fair value of the hedged items used as the basis for recognizing the ineffective portion matches the changes in fair value of the hedging
instruments.
(Note 2)	The amount was reclassified as the hedged items affected net profit or loss, and it was recognized as “Other income,” “Other expenses” or “Finance income” and“Finance costs” in the consolidated statement of profit or loss.

Millions of yen

Cash flow hedges

Foreign currency derivatives

Total¥31,547¥552¥14¥31,547¥552¥14

As of December 31, 2020
Carrying amount (Note)
Hedging typeHedging instrument

Contract amount

AssetsLiabilities
Thousands of U.S. dollars

Cash flow hedges
Total

Foreign currency derivatives$408,012$2,101$9,248$408,012$2,101$9,248(10) Transfer of financial instruments
The Group liquidates a part of its trade receivables. Some of these trade receivables entail a payment obligation on the Group

if the debtor fails to make a payment. The Group does not derecognize those trade receivables because they do not qualify
for derecognition of financial assets.
The trade receivables transferred in such a way that did not qualify for derecognition are recorded as “Trade and otherreceivables” at the amount of ¥117,969 million ($1,139,796 thousand), ¥158,091 million and ¥167,828 million as of December 31,
2020, December 31, 2019 and January 1, 2019 (transition date), respectively. In addition, the proceeds arising upon thetransfer of the assets are recorded at the amount of ¥20,700 million ($200,000 thousand), ¥21,912 million and ¥22,200
million, respectively, as the related liabilities in “Bonds and borrowings” as at the above dates.

(Note) T he carrying amounts of these derivatives are recorded in “Other financial assets” or “Other financial liabilities” in the consolidated statement of financial position,and the amounts due for more than one year are categorized as non-current assets or non-current liabilities.
74

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

75Notes to Consolidated Financial Statements 

NOTE 35

RELATED PARTY

Ownership ratioof voting rights(%)(1) Related party transactions
Fiscal year ended December 31, 2020

Name

Location

Description of major businesses

BRIDGESTONE CANADA INC.

CanadaManufacturing and sales of automotive tires and automotive parts

Not applicable

BRIDGESTONE DE MEXICO, S.A. DE C.V.

MexicoManufacturing and sales of automotive tires

BRIDGESTONE DO BRASIL INDUSTRIA E COMERCIOLTDA.
BRIDGESTONE ARGENTINA S.A.I.C.

BrazilManufacturing and sales of automotive tires

Argentina

Manufacturing and sales of automotive tires

BRIDGESTONE EUROPE NV/SA

Belgium

BRIDGESTONE POZNAN SP. Z O.O.

PolandControlling businesses in Europe, Russia, Middle East, India and Africa,and sales of automotive tires
Manufacturing and sales of automotive tires

BRIDGESTONE STARGARD SP. Z O.O.

PolandManufacturing and sales of automotive tires

BRIDGESTONE TATABANYA TERMELO KFT.

Hungary

Manufacturing and sales of automotive tires

BRIDGESTONE HISPANIA MANUFACTURING S.L.U.

Spain

Manufacturing and sales of automotive tires

BRIDGESTONE MIDDLE EAST & AFRICA FZEThe United
Sales of automotive tires
Arab Emirates
India
Manufacturing and sales of automotive tires

Fiscal year ended December 31, 2019
Not applicable
As of January 1, 2019 (Transition date)
Not applicable(2) Remuneration for key management personnel
The remuneration for key management personnel of each fiscal year is as follows:
Fiscal year ended
December 31, 2020

Remuneration and bonuses¥503

Share-based remuneration
Total

NOTE 36

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥587$4,857

—

195

—

¥503

¥782

$4,857
BRIDGESTONE ASIA PACIFIC PTE. LTD.
BRIDGESTONE (CHINA) INVESTMENT CO., LTD.

China

Controlling tire businesses in China and sales of automotive tires

100.0

BRIDGESTONE (SHENYANG) TIRE CO., LTD.

China

Manufacturing and sales of automotive tires

BRIDGESTONE (WUXI) TIRE CO., LTD.

China

Manufacturing and sales of automotive tires

BRIDGESTONE (HUIZHOU) TIRE CO., LTD.

China

Manufacturing and sales of automotive tires

BRIDGESTONE TIRE MANUFACTURING VIETNAM LLC

Vietnam

Manufacturing and sales of automotive tires

100.0

THAI BRIDGESTONE CO., LTD.

Thailand

Manufacturing and sales of automotive tires(100.0)100.0

BRIDGESTONE TIRE MANUFACTURING (THAILAND)
CO., LTD.

Thailand

Manufacturing and sales of automotive tires

P.T. BRIDGESTONE TIRE INDONESIA

Indonesia

Manufacturing and sales of automotive tires

BRIDGESTONE AUSTRALIA LTD.

Australia

Sales of automotive tires

BRIDGESTONE SPECIALTY TIRE MANUFACTURING(THAILAND) CO., LTD.
BRIDGESTONE MINING SOLUTIONS AUSTRALIA PTY.
LTD.
BRIDGESTONE (HUIZHOU) SYNTHETIC RUBBER
CO., LTD.
BRIDGESTONE SINGAPORE PTE LTD.

Thailand

China

Manufacturing and sales of tires for construction and mining vehicles andaircraft tires
Sales and supplying related services of tires for construction and mining vehicles
and conveyor belts, etc.
Manufacturing and sales of synthetic rubber(100.0)100.0(100.0)100.0(10.0)
100.0(100.0)100.0(69.2)
69.2(100.0)100.0(54.3)
54.3(100.0)
100.0
100.0

Singapore

Sales and purchase of natural rubber

100.0

BRIDGESTONE TREASURY SINGAPORE PTE.LTD.

Singapore

Loaning of cash and factoring

100.0

SUBSIDIARIES AND ASSOCIATES, ETC.

Location

Description of major businesses

Chuo-ku,Tokyo
Chuo-ku,Tokyo
Hiki-gun,
SaitamaChuo-ku,Tokyo
Chuo-ku,Tokyo
Minato-ku,
Tokyo
Kakegawa,
Shizuoka
Nabari, MieControlling the sales of automotive tires for the domestic market and sales ofautomotive tires
Sales of automotive tires and automotive products

Ownership ratioof voting rights(%)

BRIDGESTONE SOUTH AFRICA (PTY) LTD.

(Consolidated subsidiaries)
BRIDGESTONE TIRE SOLUTION JAPAN CO., LTD.
BRIDGESTONE RETAIL JAPAN CO., LTD.
BRIDGESTONE PLANT ENGINEERING CO., LTD.
BRIDGESTONE LOGISTICS CO., LTD.
BRIDGESTONE DIVERSIFIED CHEMICAL PRODUCTS
CO., LTD.
BRIDGESTONE DIVERSIFIED PRODUCTS JAPANCO., LTD.
BRIDGESTONE ELASTECHBRIDGESTONE CHEMITECH CO., LTD.
BRIDGESTONE SPORTS CO., LTD.

Manufacturing, sales, installation and maintenance of industrial machinery, etc.

100.0

Shipping and warehousing

100.0

Manufacturing and sales of synthetic resin products

100.0

Sales of industrial rubber products and sales and construction of building
materials
Manufacturing of antivibration products and metal fittings for automotive andgeneral industries
Manufacturing and sales of synthetic resin products

100.0

100.0

Manufacturing and sales of sporting goods

100.0

Manufacturing and sales of bicycles

100.0

Loaning of cash, factoring and entrusted service for accounting and payroll

100.0

100.0

BRIDGESTONE AMERICAS, INC.

Minato-ku,
Tokyo
Ageo,
Saitama
Kodaira,Tokyo
U.S.A.

Controlling businesses in Americas

100.0

BRIDGESTONE AMERICAS TIRE OPERATIONS, LLC

U.S.A.

Manufacturing and sales of automotive tires

BRIDGESTONE RETAIL OPERATIONS, LLC

U.S.A.

BRIDGESTONE BANDAG, LLC

U.S.A.

Sales of automotive tires and products and, maintenance and repairing ofvehiclesManufacturing and sales of retread material and supply of related techniques(100.0)100.0(100.0)
100.0

FIRESTONE POLYMERS, LLC

U.S.A.

Manufacturing and sales of synthetic rubber

FIRESTONE BUILDING PRODUCTS COMPANY, LLC

U.S.A.

Manufacturing and sales of roofing materials, etc.

BRIDGESTONE CYCLE CORPORATIONBRIDGESTONE FINANCE CO., LTD.

(75.0)
75.0

The Republic Manufacturing and sales of automotive tiresof SouthAfricaSingaporeControlling tire businesses in China and Asia-Pacific and sales of automotive tires(1) Information on significant subsidiaries
The significant subsidiaries and associates of the Group at December 31, 2020 are as follows:

Name

BRIDGESTONE INDIA PRIVATE LTD.

(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0(100.0)100.0

Australia

100.0

100.0
100.0

Other: 236 companies(Associates accounted for using the equity method, U.S.A.
etc.)
TIREHUB, LLC
BRISA BRIDGESTONE
TurkeySABANCI LASTIK SANAYIVE TICARET A.S.
Other: 135 companies

Sales of automotive tires
Manufacturing and sales of automotive tires(50.0)
50.0
43.6(Note) Figures in parenthesis in the ownership ratio of voting rights column indicates indirect ownership ratio.

(2) Significant associates and jointly controlled entities
There are no significant associates and jointly controlled entities of the Group.
(3) Impairment of investments in a jointly controlled entity
The details are presented in Note “16. Impairment of non-financial assets.”

76

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

77Notes to Consolidated Financial Statements 

NOTE 37

COMMITMENTSNOTE 39

Commitments for the acquisition of assets after the closing date of each fiscal year are as follows:
As of
December 31, 2020

Millions of yen

Thousands of U.S. dollars¥36,590$474,063

As ofDecember 31, 2019

¥49,066¥77,260

2,235

1,200

155

21,591¥51,300¥78,460¥36,745$495,655

Acquisition of property, plant and equipment
Acquisition of intangible assets
Total

NOTE 38

As ofJanuary 1, 2019
(Transition date)

As ofDecember 31, 2020

SIGNIFICANT SUBSEQUENT EVENTS(Sale of subsidiary)
BRIDGESTONE AMERICAS, INC., a U.S. subsidiary of theCompany, has concluded an agreement with LafargeHolcim
Ltd., a Swiss building materials manufacturer, regarding thesale of FIRESTONE BUILDING PRODUCTS COMPANY, LLC(hereinafter “FSBP”), a subsidiary of BRIDGESTONE AMERICAS, INC. in the Americas segment, to Holcim Participations(US) Inc., a U.S. subsidiary of LafargeHolcim Ltd., on January
6, 2021 (local time). And the transaction has been
completed on March 31, 2021.
In accordance with the Company’s decision for the sale,
the Company has categorized FSBP and its subsidiaries as
discontinued operations for the 2021 fiscal year(January 1,
2021 to December 31, 2021).
Accordingly, profit from discontinued operations on the
consolidated statement of profit or loss has been presented
separately from the continuing operations.
1. Reasons for the sale of the subsidiary
Founded in 1980, FSBP is a leading company in building
materials including roofing materials.

As a result of a detailed consideration of FSBP’s future
positioning from the standpoint of the Company’s mid-longterm business strategy, the Company deemed that the best
course of action was to sell FSBP to Holcim Participations(US) Inc., the U.S. subsidiary of LafargeHolcim Ltd., a global
leader in building solutions.
As a result of the sale, more growth opportunities will becreated for FSBP under LafargeHolcim Ltd, and theCompany will be able to rebuild the earning power of its tireand rubber businesses and to make strategic investments in
its solutions business.
Furthermore, following this sale, the Company has removed
FSBP and its subsidiaries from the Company’s consolidated
subsidiaries.
2. Period for the sale of the subsidiary
Resolution date at the Company’s Board of Directors
January 6, 2021
Contract conclusion date for the sale of the subsidiary
January 6, 2021 (local time)
Execution date for the sale of the subsidiary		
March 31, 2021

3. Name and contents of business of the subsidiary being soldName

FIRESTONE BUILDING PRODUCTS COMPANY, LLC

Contents of business

Manufacturing and sales of roofing materials for building and related products

FIRST-TIME ADOPTION OF IFRSThe Group prepared its consolidated financial statements inaccordance with IFRS from the fiscal year ended December
31, 2020. The most recent consolidated financial statements
prepared in accordance with Japanese GAAP are those forthe fiscal year ended December 31, 2019, and the date oftransition to IFRS is January 1, 2019.
(1) Exemption in IFRS 1IFRS requires, as a general rule, a company adopting IFRS

for the first time to apply the provisions required under IFRS
retrospectively. However, IFRS 1 allows exemptions for
retrospective application of some IFRS requirements on
first-time adoption of IFRS. The Group elected to apply thefollowing exemptions for the transition from Japanese
GAAP to IFRS:
1) Business combinations
The Group elected not to apply IFRS 3 “Business Combinations” retrospectively to business combinations that
occurred before the transition date. Consequently, theamount of goodwill arising from business combinations
before the transition date is based on the carrying amountat the transition date under Japanese GAAP.
	 Further, the Group performed an impairment test on
goodwill at the transition date regardless of whether there
was any indication that the goodwill may be impaired.
2) Exchange differences on translation of foreign operations
The Group elected to deem all cumulative exchange differences on translation of foreign operations as zero at thetransition date.
3)	Designation of financial assets recognized prior to thetransition date
The Group assessed the classification of financial assets
under IFRS 9 “Financial Instruments” on the basis of facts
and circumstances existing at the transition date and designated some equity financial assets as financial assets
measured through other comprehensive income.

4) Leases
The Group assessed whether a contract existing at thetransition date contains a lease on the basis of facts andcircumstances existing at the transition date. The Groupmeasured a lease liability at the present value of theremaining lease payments, discounted using the lessee’s
incremental borrowing rate at the transition date. In addition, the Group measures, on a lease-by-lease basis, aright-of-use asset at either: (i) its carrying amount as if IFRS
16 had been applied since the commencement date oflease, but discounted using the lessee’s incremental
borrowing rate at the transition date; or (ii) an amountequal to the lease liability. Further, the Group expensed thelease payments associated with leases for which the leaseterm ends within 12 months of the transition date andleases for which the underlying asset is of low value.
(2) Mandatory exception under IFRS 1IFRS 1 prohibits retrospective application of IFRS withrespect to “estimates,” “derecognition of financial assets
and financial liabilities,” “hedge accounting,” “non-controlling interests,” “classification and measurement of financial
instruments,” etc. Thus, the Group applied IFRS to these
items from the transition date and onwards.
(3) Reconciliations
The reconciliations required to be disclosed on the first-

time adoption of IFRS are as follows.
In the reconciliations below, “Reclassification” includes
items that do not affect retained earnings and comprehensive income, while “Differences in recognition andmeasurement” include items that affect retained earnings
and comprehensive income.

Contents of transactions with the company The Company has no transactions with the relevant subsidiary

4.	Sales value, gain (loss) on sales, and equity ratio before and after sale
Sales value

Pre-sale equity ratio

The Company will determine the sales value after adjusting FSBP’s operating capital and other factors to acompany value of 3.4 billion U.S. dollars.
The Company records net profit from discontinued operations of 225.3 billion yen as a gain on sales(after tax) in our first quarter of fiscal 2021 consolidated statements of profit or loss.
100%

Sale equity ratio

100%

Post-sale equity ratio

0%Gain (loss) on sales

78

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

79Notes to Consolidated Financial Statements 

Reconciliations of equity as of January 1, 2019 (transition date)Line items under Japanese GAAP

Japanese GAAP

Reclassification

Differences inrecognition andmeasurement

Line items under Japanese GAAPIFRSMillions of yen

AssetsCurrent assets   Cash and deposits

Current assets¥ 440,378¥  (6,462)¥     —¥   433,916   Notes and accounts receivable

603,119

19,091

159,705

781,916(1) (2)    Trade and other receivables  Finished products

406,964204,240

34,720645,924(1) (3)   Inventories   Cash and cash equivalents   Work in process

37,904(37,904)

—

—

(1)

   Raw materials and supplies

171,720(171,720)

—

—

(1)

  Marketable securities

153,853

15,528(143,514)

25,867(2)    Other financial assets   Other current assets

123,188(41,916)(2,838)78,435(1)    Other current assets  Allowance for doubtful
accounts(21,729)

21,729——Total current assets
Total current assets

1,915,400

2,586

48,073

1,966,059

—

1,788

—

1,788

1,915,400

4,374

48,073

1,967,847

Subtotal   Non-current assets held for sale
Total current assets

Fixed assets   Property, plant and equipment

Non-current assets
1,524,681(86,526)

76,886

1,515,042(1) (4)    Property, plant and equipment—

80,087

242,583

322,670(1) (5)   Right-of-use assets  Intangible assets
41,381   Other intangible fixed assets——

41,382

48,987

4,137(3,414)49,710—47,839175

48,014   Investments in securities

219,970(7,668)5,004

217,306   Long-term loans receivable

11,465(11,465)——   Deferred tax assets

65,698—(8,319)57,379

371

(371)

—

—

65,376(28,859)(3,190)33,327  Other assets

Total fixed assets
Total assets

IFRS

Liabilities

Current liabilities   Notes and accounts payable

Current liabilities¥  233,970¥ 264,236¥  (1,033)¥   497,173

100,627

90,955(27)

191,556  Commercial paper

20,955(20,955)——   Current portion of bonds

70,000(70,000)——  Lease obligations

11,495—40,60152,097   Income taxes payable

15,073

11,314

9,016

35,404   Income taxes payable—

24,996—24,996   Other financial liabilities

3,531

32,910(3,362)

33,080  Provisions   Provision for sales returns  Provision for reorganization of
R&D and manufacturing base(1)    Bonds and borrowings(1)(1)(5)   Lease liabilities

4,333(4,333)——  Accounts payable

186,677(186,677)

—

—

(1)

  Accrued expenses

190,754(190,754)

—

—

(1)

   Other current liabilities

61,21554,455

7,519

123,190

Total current liabilities

898,633

6,147

52,715

957,495

—

—

—

—

898,633

6,147

52,715

957,495

150,000(150,000)——

Total current liabilities(1)    Other current liabilities
Subtotal  Liabilities directly associated with non-current
assets held for sale
Total current liabilities(1)(1,524)

1,524

—

—

1,976,407(1,302)309,724

2,284,830¥3,891,808¥  3,072¥357,797¥4,252,677

Non-current liabilities  Bonds  Intangible assets  Long-term debt

38,041150,000

21,936

209,977  Investments accounted for using equity
method  Lease obligations

68,975—202,203271,179—

11,824—

11,824

196,005

7,862

4,061

207,928

2,999(2,999)

—

—

1,511

(1,511)——(1)    Other financial assets(6)    Deferred tax assets   Other non-current assets   Net defined benefit liability  Provision for productwarranties  Provision for environmental
remediation  Provision for reorganization of
R&D and manufacturing baseTotal non-current assets
Total assets(1)(1) (2)    Bonds and borrowings(5)   Lease liabilities   Other financial liabilities   Retirement benefit liabilities—

23,072

1,141

24,212

27,723—18,89046,613   Other long-term liabilities

73,524(41,321)(3,126)29,077

Total long-term liabilities

558,781(3,075)245,104

800,810

1,457,414

3,072

297,819

1,758,306  Common stock

126,354——

126,354  Common stock  Capital surplus

121,997——

121,998  Capital surplus  Treasury stock(32,648)——(32,648)

108,888(305,364)

315,291

118,815

1,730(1,730)——(174,850)

174,850——(135,696)

135,696

—

—

3,452

(3,452)——2,360,967—(255,687)

2,105,280   Deferred tax liabilities

Total liabilities  Net unrealized gain (loss) on
available-for-sale securities  Deferred gain (loss) on
derivative instruments  Foreign currency translation
adjustments  Remeasurements of defined
benefit plans   Stock acquisition rights  Retained earnings  Non-controlling interests
Total equity
Total liabilities and equity  Provisions(6)    Deferred tax liabilities   Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity2,439,799

Bridgestone Corporation(1)    Trade and other payables  Short-term debt

Equity80

Notes Line items under IFRS

Liabilities  Goodwill   Investments and other assets  Allowance for doubtful
accounts

Differences inrecognition andmeasurement

Long-term liabilities  Goodwill   Net defined benefit asset

Reclassification

Millions of yen

Notes Line items under IFRS

AssetsJapanese GAAP

54,198—374

54,572

2,434,393—

59,9782,494,371¥3,891,808¥   3,072¥ 357,797¥4,252,677  Treasury stock(7)    Other components of equity(7) (8)   Retained earnings   Total equity attributable to owners of parent  Non-controlling interests
Total equity
Total liabilities and equity

ANNUAL REPORT 2020 Financial Review

81Notes to Consolidated Financial Statements 

Reconciliations of equity as of the end of the previous fiscal year (December 31, 2019)Line items under Japanese GAAP

Japanese GAAP

Reclassification

Differences inrecognition andmeasurement

Line items under Japanese GAAPIFRSMillions of yen

AssetsCurrent assets   Cash and deposits

Current assets¥  441,255¥  (8,331)¥     —¥  432,924   Notes and accounts receivable583,223

22,608

149,513755,344(1) (2)    Trade and other receivables  Finished products

406,119

190,999

33,044

630,162(1) (3)   Inventories   Work in process

39,360(39,360)

—

—

(1)

   Raw materials and supplies

150,943(150,943)

—

—

(1)

  Marketable securities

136,044

14,107(135,841)

14,311(2)    Other financial assets   Other current assets

135,496(51,685)(3,168)80,643(1)    Other current assets  Allowance for doubtful
accounts(21,377)

21,377——

1,871,066(1,228)43,547

1,913,385

—

5,023

—

5,023

1,871,066

3,795

43,547

1,918,408

Total current assets
Total current assets
Fixed assets   Property, plant and equipment   Cash and cash equivalents

Subtotal   Non-current assets held for saleNon-current assets(79,452)

72,461

1,555,170(1) (4)    Property, plant and equipment—

74,035

224,535

298,569(1) (5)   Right-of-use assets  Goodwill

91,410—6,935

98,346  Goodwill   Other intangible fixed assets

113,639

3,219(3,195)

113,664  Intangible assets  Intangible assets—

46,873

198

47,071  Investments accounted for using equity(1)
method   Investments and other assets
141,820(6,065)

4,706

140,462   Long-term loans receivable

7,980(7,980)——   Deferred tax assets

77,081—(16,371)

60,711   Net defined benefit asset

7,797(7,797)——  Other assets

74,686(25,980)(4,090)44,616  Allowance for doubtful
accounts(1,138)

1,138

—

—

Total fixed assets
Total assets

2,075,438(2,010)285,180

2,358,608¥3,946,505¥   1,785¥328,727¥4,277,016(1)    Other financial assets(6)    Deferred tax assets   Other non-current assets

Total non-current assets

Liabilities
Current liabilities¥  202,048¥ 250,207¥     814¥   453,069

76,74558,696—

135,442

58,696(58,696)——  Lease obligations

12,094—40,73352,827   Income taxes payable

40,497

4,209

6,800

51,506   Income taxes payable—

27,628—27,628   Other financial liabilities   Provision for sales returns

3,337

33,789(2,194)34,931  Provisions   Provision for recall

4,534(4,534)——(1)    Bonds and borrowings(1)(5)   Lease liabilities  Accounts payable

175,562(175,562)

—

—

(1)

  Accrued expenses

193,756(193,756)

—

—

(1)

   Other current liabilities

71,03960,655

7,286

138,980

Total current liabilities

838,3122,634

53,438894,383(1)    Other current liabilities
Subtotal  Liabilities directly associated with non-current
assets held for sale

—

953

—

953

838,3123,586

53,438895,336  Bonds

350,000(350,000)——  Long-term debt

34,249350,000

21,264

405,514  Lease obligations

65,673—

185,011

250,685—

12,937—

12,937   Other financial liabilities

201,412

7,001

3,206

211,619   Retirement benefit liabilities

2,687(2,687)——

Total current liabilities

Total current liabilities

Long-term liabilities   Net defined benefit liability  Provision for environmental
remediation

Non-current liabilities(1)(1) (2)    Bonds and borrowings(5)   Lease liabilities

874

(874)

—

—

—

22,510838

23,34834,977—

9,266

44,243   Other long-term liabilities

74,026(40,686)(2,485)30,856

Total long-term liabilities

763,902(1,800)217,100

979,2031,602,215

1,785

270,538

1,874,539  Common stock

126,354——

126,354  Common stock  Capital surplus

121,997——

121,998  Capital surplus  Treasury stock(232,330)——(232,330)  Treasury stock

55,363(315,393)

302,691

42,661

(342)

342

—

—

(189,271)

189,271——(129,054)

129,054

—

—

3,275

(3,275)——2,535,720—(245,025)

2,290,696   Deferred tax liabilities

Equity   Stock acquisition rights  Retained earnings  Non-controlling interests
Total equity
Total liabilities and equity  Provisions(6)    Deferred tax liabilities   Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity2,349,378
52,576—523

53,0992,344,290—

58,1882,402,477¥3,946,505¥   1,785¥328,727¥4,277,016

Notes on reconciliations of equity(1) Reclassifications
The Group reclassified the following items between Japanese GAAP and IFRS to comply with the provisions of IFRS.
The major reclassifications are as follows:1)	Accounts receivable - other, which was included in andpresented as “Other current assets” in current assets
Bridgestone Corporation(1)    Trade and other payables  Commercial paper  Net unrealized gain (loss) on
available-for-sale securities  Deferred gain (loss) on
derivative instruments  Foreign currency translation
adjustments  Remeasurements of defined
benefit plans

82

Notes Line items under IFRS  Short-term debt

Total liabilities
Total assets

IFRS

Current liabilities   Notes and accounts payable   Provision for product warranties   Investments in securities

Differences inrecognition andmeasurement

Liabilities

Total current assets

1,562,160

Reclassification

Millions of yen

Notes Line items under IFRS

AssetsJapanese GAAP(7)    Other components of equity(7) (8)   Retained earnings   Total equity attributable to owners of parent  Non-controlling interests
Total equity
Total liabilities and equity

under Japanese GAAP, are reclassified and presented as“Trade and other receivables” under IFRS.
2)	“Finished products,” “Work in process,” and “Raw materials and supplies,” which were separately presented
under Japanese GAAP, are presented in aggregate as“Inventories” under IFRS.

ANNUAL REPORT 2020 Financial Review

83Notes to Consolidated Financial Statements 3)	Right-of-use assets, which were included in andpresented as “Property, plant and equipment” underJapanese GAAP, are separately presented as “Right-ofuse assets” under IFRS.
4)	Equity method investments, which were included in andpresented as “Investments in securities” in Fixed assets
under Japanese GAAP, are separately presented as“Investments accounted for using the equity method”
under IFRS.
5)	“Notes and accounts payable,” “Accounts payable,” and“Accrued expenses,” which were separately presented
under Japanese GAAP, are presented as “Trade and otherpayables” and “Other current liabilities” under IFRS.
6)	“Short-term debt,” “Commercial paper,” and “Current
portion of bonds,” which were separately presented
under Japanese GAAP, are presented in aggregate as“Bonds and borrowings” in current liabilities under IFRS.
7)	“Bonds” and “Long-term debt,” which were separately
presented under Japanese GAAP, are presented in aggregate as “Bonds and borrowings” in non-current liabilities
under IFRS.

(4) Property, plant and equipment
Under Japanese GAAP, depreciation of “Property, plant and(2) Trade and other receivables
For liquidated receivables that were derecognized and(7) Other components of equity
The Group applied the exemption set forth under IFRS 1 andincluded in and presented as “Marketable securities” incurrent assets under Japanese GAAP, those that do notsatisfy the derecognition criteria under IFRS are included inand presented as “Trade and other receivables” in accordance with provisions of IFRS 9. In addition, liabilities
associated with the proceeds from the transfer of such
assets are included in and presented as “Bonds and borrowings” in non-current liabilities.

transferred all “Foreign currency translation adjustments”
under Japanese GAAP to “Retained earnings” on the transition date.
Under Japanese GAAP, the Group prorated the amount of
remeasurements of net defined benefit liability (assets) ona straight-line method over a certain number of years
within the average remaining service period of employees
when it was incurred, and expensed the prorated amountfrom the fiscal year following the year in which it wasincurred. However, under IFRS, the Group recognized suchamount in other comprehensive income when it was incurred,and immediately transferred it to “Retained earnings.”(3) Inventories
The Group changed the valuation method of “Inventories”

from the last-in, first-out method to the moving-averagemethod for the Americas operations in accordance with
provisions of IAS 2 “Inventories” (hereinafter “IAS 2”).

equipment” of the Company and its domestic subsidiaries
was computed by the declining-balance method, while thestraight-line method was applied to property, plant andequipment of the Company’s overseas subsidiaries.
However, under IFRS, the straight-line method is consistently applied to property, plant and equipment of theentire Group.
(5) Right-of-use assets and lease liabilities
The Group newly recognized “Right-of-use assets” and“Lease liabilities” principally for buildings and land as alessee of such leases principally in Japan and the Americas
in accordance with provisions of IFRS 16.
(6) Deferred tax assets and deferred tax liabilities
The Group reconciled the amounts of “Deferred tax assets”

and “Deferred tax liabilities” principally for the temporary
differences resulting from the reconciliations from Japanese GAAP to IFRS.

Reconciliations of profit or loss and comprehensive income for the fiscal year ended December 31, 2019 (January 1, 2019 December 31, 2019)Japanese GAAP

Reclassification

Differences inrecognition andmeasurement

IFRS

Net sales¥3,525,600¥  (18,061)¥   (296)¥3,507,243

Cost of sales

2,201,684(18,722)(408)

2,182,554(2) (3) Cost of sales

Gross profit

1,323,916

660

112

1,324,689

Gross profit

997,817

13,169(12,626)

Line items under Japanese GAAP

Millions of yen

Selling, general and administrative
expenses

Revenue

998,360 (1) (3) (4) Selling, general and administrative expenses—

47,615(9)47,606(1) Other income—

23,547

1,052

24,599(1) Other expenses

Operating income

326,098

11,56011,678349,336

Non-operating income

28,018(28,018)

—

—

(1)
(1)

Operating profit

Non-operating expenses

37,293(37,293)——

Ordinary income

316,823(316,823)——

Extraordinary income

116,134(116,134)——

Extraordinary loss

25,706(25,706)———

94,366(76,617)

17,748(1) (5) Finance income—

21,582

6,741

28,324(1) (6) Finance costs—(3,190)(61)(3,251)

407,251—(71,742)

335,510(1) Share of profit (loss) of investments accounted forusing equity method
Profit before tax(7) Income tax expense

Income before income taxes andnon-controlling interests
Income taxes
Income before non-controllinginterests

108,303—(19,085)

89,219¥  298,947¥      —

¥(52,657)¥   246,291

292,598—(52,487)

240,111

6,349

—

(170)

6,179

298,947—(52,657)

246,291(1)(1)

ProfitProfit attributable toProfit attributable to owners ofparentProfit attributable to non-controlling interests
Income before non-controllinginterests
Other comprehensive income

Owners of parent
Non-controlling interests
ProfitOther comprehensive income
Items that will not be reclassified to profit or loss

Net unrealized gain (loss) on
available-for-sale securities
Remeasurements of defined
benefit plans(53,518)—

59,639

6,121

6,926

—

(4,177)

2,749

—

(6)

(6)
8,864

(7)  Net change in fair value of financial assets
measured through other comprehensive income(7)  Remeasurements of defined benefit plans Share of other comprehensive income ofinvestments accounted for using equity method
Total of items that will not be reclassified to profit
or loss
Items that may be reclassified to profit or loss(8) Retained earnings
The effect of the reconciliations upon adoption of IFRS on retained earnings is as follows:
As of January 1, 2019
(Transition date)

As of December
31, 2019

Foreign currency translation
adjustments
Deferred gain (loss) on derivative
instruments
Share of other comprehensive
income in affiliates(11,647)—(4,544)(16,191)

(864)

—

—

(864)

(2,213)—108(2,105)(19,159)

Millions of yen¥  (5,745)¥  (7,592)¥   (61,317)¥      —¥  51,022¥   (10,295)

34,72033,044Comprehensive income

237,629—(1,634)

235,995

Comprehensive income(4) Reconciliation of property, plant and equipment

76,886

72,461

Comprehensive income attribute toowners of parent
Comprehensive income attribute to
non-controlling interests

229,223—(1,706)

227,517

8,406

—

72

8,478

Comprehensive income attributable to
Owners of parent
Non-controlling interests(5) Reconciliation of right-of-use assets and lease liabilities(221)(1,209)(7) Reconciliation of exchange differences on translation of foreign operations(174,850)(174,850)(7) Reconciliation of remeasurements of defined benefit plans(135,696)(129,054)

Other(23,198)(11,665)  Subtotal(228,104)(218,865)(6) Reconciliation of tax effects(27,209)(25,637)

Reconciliation of non-controlling interests  TotalBridgestone Corporation

(374)

(523)

¥(255,687)¥(245,025)

Total other comprehensive income Exchange differences on translation of foreign
operations Effective portion of change in fair value of cash
flow hedges Share of other comprehensive income ofinvestments accounted for using equity method
Total of items that may be reclassified to profit
or loss
Other comprehensive income, net of tax(3) Reconciliation of inventories(2) Reconciliation of trade and other receivables

84

Notes Line items under IFRSANNUAL REPORT 2020 Financial Review

85Notes to Consolidated Financial Statements Notes on reconciliations of profit or loss and comprehensive
income(1) Reclassifications
Items presented in “Non-operating income,” “Non-operating expenses,” “Extraordinary income,” and“Extraordinary losses” under Japanese GAAP are reclassified as follows under IFRS: Items of financial profit or loss
are presented as “Finance income” or “Finance costs,”
respectively, and the other items are presented as “Selling,
general and administrative expenses,” “Other income,”“Other expenses,” or “Share of profit (loss) of investments
accounted for using equity method.”(6) Finance costs
Under Japanese GAAP, the Group calculated the interest(2) Cost of sales
The Group reconciled “Cost of sales” since it has changed

profit or loss and income taxes on such gain under Japanese
GAAP, the Group reconciled “Income tax expense” and “Netchange in fair value of financial assets measured throughother comprehensive income” since it did not recognize
gain or loss on sales of certain equity instruments designatedas financial assets measured at fair value through othercomprehensive income in profit or loss under IFRS.
In addition, under Japanese GAAP, the Group prorated
the amount of remeasurements of net defined benefit
liability (assets ) on a straight-line method over a certain
number of years within the average remaining service
period of employees when it was incurred, and recognized
the prorated amount in profit or loss from the fiscal year
following the year in which it was incurred. However, under
IFRS, the Group recognized such amount in other comprehensive income when it was incurred, and reconciled“Remeasurements of defined benefit plans” in order totransfer such amount to “Retained earnings” immediately.

the valuation method of “Inventories” from the last-in,
first-out method to the moving-average method for theAmericas operations in accordance with the provisionsof IAS 2.
(3)	Cost of sales and selling, general and administrative
expenses
Under Japanese GAAP, depreciation of property, plant andequipment of the Company and its domestic subsidiaries
was computed by the declining-balance method, while thestraight-line method was applied to property, plant andequipment of the Company’s overseas subsidiaries.
However, under IFRS, the straight-line method is consistently applied to property, plant and equipment of theGroup. Due to this change, the Group reconciled “Cost of
sales” and “Selling, general and administrative expenses”
that include depreciation.
(4) Selling, general and administrative expenses
Under Japanese GAAP, goodwill was amortized on astraight-line method over the period for which goodwill is
expected to have an effect. However, under IFRS, the Groupdiscontinued the amortization of goodwill on and after thetransition date.
(5) Finance income
Under Japanese GAAP, the Group recognized gain or loss on

sales of equity instruments in profit or loss. However, under
IFRS, the Group recognized any change in fair value as othercomprehensive income for equity instruments designatedas those measured at fair value through other comprehensive income, and reconciled “Finance income” in order totransfer the change to retained earnings immediately whenthe equity instruments are sold.

86

Bridgestone Corporation

cost by multiplying the defined benefit obligations by thediscount rate and the expected return on plan assets bymultiplying the plan assets by the expected rate of returnon plan assets to recognize them as retirement benefit
expenses. However, under IFRS, the Group reconciled“Finance costs” as it recognized net interest by multiplying
the defined benefit obligation net of plan assets by thediscount rate.
(7) Income tax expense and other comprehensive income
For gain or loss on sales of equity instruments recognized in

Reconciliations of cash flows for the fiscal year ended
December 31, 2019 (from January 1, 2019 to December
31, 2019)
The major difference between the consolidated statement of cash flows disclosed in accordance with theJapanese GAAP and the consolidated statement of cash
flows disclosed under IFRS is that “Lease payments associated with operating leases” previously included in “Cashflows from operating activities” are now included in “Cashflows from financing activities” as “Repayments of leaseliabilities” due to the application of IFRS 16. As a result, net
cash provided by operating activities increased by ¥41,914
million, and net cash used in financing activities increasedby ¥41,914 million.

ANNUAL REPORT 2020 Financial Review

87

88

Bridgestone Corporation

ANNUAL REPORT 2020 Financial Review

89Bridgestone Corporation
1-1, Kyobashi 3-chome, Chuo-ku, Tokyo 104-8340, Japan
https://www.bridgestone.com

June 2021