Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

Annual Securities Report(Filed pursuant to Article 24, paragraph (1) of the Financial Instruments and Exchange Act ofJapan)
Business year
From January 1, 2021 To December 31, 2021
(103rd Fiscal Period)

Bridgestone Corporation(E01086)

103rd Fiscal Period (from January 1, 2021 to December 31, 2021)

Annual Securities Report1This document was prepared for printing by adding a table of contents and pages to the Annual Securities
Report, which is in accordance with Article 24, paragraph (1) of the Financial Instruments and ExchangeAct, submitted as data on March 23, 2022 using the Electronic Data Processing System for Disclosure(EDINET) prescribed in Article 27-30, paragraph (2) of the aforementioned act.

2

The document does not include the attachments to the Annual Securities Report submitted as describedabove, but the Audit Report is bound in an unpaginated booklet.

Bridgestone Corporation

Table of Contents
Annual Securities Report for the 103rd Fiscal Period
Cover ....................................................................................................................................................................................................1
Part I Information on the Company ......................................................................................................................................................2
I.
Overview of the Company ......................................................................................................................................................21.
Key financial data and trends .............................................................................................................................................22.
History................................................................................................................................................................................63.
Description of business ......................................................................................................................................................7
4.
Subsidiaries and associates .................................................................................................................................................95.
Employees ........................................................................................................................................................................12
II. Business Overview ...............................................................................................................................................................13
1.
Management policy, management environment and issues to be addressed .....................................................................13
2.
Business risks ...................................................................................................................................................................15
3.
Management analysis of financial position, operating results and cash flows ..................................................................20
4.
Important business contracts ............................................................................................................................................27
5.
Research and development activities ................................................................................................................................30
III. Facilities................................................................................................................................................................................32
1.
Overview of capital expenditures .....................................................................................................................................32
2.
Major facilities .................................................................................................................................................................33
3.
Plans for addition and retirement of facilities...................................................................................................................37
IV. Status of the Company ..........................................................................................................................................................38
1.
Shares of the Company ....................................................................................................................................................382.
Acquisition of treasury stock, etc. ....................................................................................................................................46
3.
Dividend policy ................................................................................................................................................................48
4.
Status of corporate governance ........................................................................................................................................49
V. Financial Information ...........................................................................................................................................................91
1. Consolidated Financial Statements, etc. ................................................................................................................................92
2.
Financial Statements ......................................................................................................................................................173
VI. Administrative Information on the Company’s Shares .......................................................................................................190
VII. Reference Information on the Company .............................................................................................................................191
1.
Information on the parent company or equivalent of the Company ...............................................................................191
2.
Other reference information ...........................................................................................................................................191
Part II Information About Company Which Provides Guarantee to Reporting Company ................................................................193

Audit ReportCover[Document Submitted]
Annual Securities Report[Article of the Applicable Law
Article 24, paragraph (1) of the Financial Instruments andRequiring Submission of This
Exchange Act
Document][Filed to]
Director of the Kanto Local Finance Bureau[Date of Submission]
March 23, 2022
[Business Year]
103rd Fiscal Period (from January 1, 2021 to December 31, 2021)[Company Name]
Bridgestone Corporation[Company Name (in English)]
BRIDGESTONE CORPORATION[Position and Name of Representative] Shuichi Ishibashi
Member of the Board
Global CEO and Representative Executive Officer[Location of Head Office]3-1-1 Kyobashi, Chuo-ku, Tokyo[Phone No.]+81-3 6836 3162
[Contact for Communications]
Keisuke Murakami, Director of G Financial Accounting Division[Nearest Contact]
3-1-1 Kyobashi, Chuo-ku, Tokyo[Phone No.]+81-3 6836 3162
[Contact for Communications]
Keisuke Murakami, Director of G Financial Accounting Division[Place Where Available for PublicTokyo Stock Exchange, Inc.
Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Fukuoka Stock Exchange(2-14-2 Tenjin, Chuo-ku, Fukuoka)

1

Part I Information on the Company
I. Overview of the Company
1. Key financial data and trends(1) Consolidated financial data
International Financial Reporting Standards
TermYear ended

Transition
date

101st

102nd

103rd

January 1,
2019

December
2019

December
2020

December
2021

Revenue

Yen in millions–

3,507,243

2,695,224

3,246,057

Profit before tax

Yen in millions–

335,510

27,412

377,594

Profit (loss) attributable toowners of parent

Yen in millions–

240,111(23,301)

394,037

Comprehensive income
attributable to owners ofparentYen in millions–

227,517(108,005)

581,731

Equity attributable toowners of parent

Yen in millions

2,439,799

2,349,378

2,149,958

2,629,883

Total assets

Yen in millions

4,252,677

4,277,016

4,189,327

4,574,892

Equity attributable toowners of parent per share

Yen

3,245.23

3,336.92

3,053.35

3,734.23

Basic earnings (loss) per
share

Yen

–

332.31(33.09)559.56

Diluted earnings (loss) per
share

Yen

–

331.76(33.09)558.71

Ratio of equity attributableto owners of parent to total
assets

%

57.4

54.9

51.3

57.5

Ratio of profit on equity
attributable to owners ofparent to total assets

%

–

10.0

(1.0)

16.5

Price earnings ratio

Times

–

12.2

–

8.8

Net cash provided by(used in) operating
activities

Yen in millions–

505,029

526,947

281,538

Net cash provided by(used in) investing
activities

Yen in millions–(261,875)(155,378)

131,701

Net cash provided by(used in) financing
activities

Yen in millions–(240,458)

18,077(379,321)

Cash and cash equivalents
at end of period

Yen in millions

433,916

432,924

810,546787,542

Persons

143,509

143,589

138,036

135,636

Number of employees(Notes) 1. The Group prepares its consolidated financial statements based on International Financial Reporting Standards (IFRS)
from the 102nd fiscal period.
2. Revenue does not include consumption taxes.
3. Price earnings ratio is not listed for the 102nd fiscal period due to there being a basic loss per share.
4. The average number of temporary employees is omitted since the number is below 10% of the number of employees.
5. On March 31, 2021, FIRESTONE BUILDING PRODUCTS COMPANY, LLC (hereinafter “FSBP”), the Company’s
subsidiary, was sold to Holcim Participations (US) Inc. FSBP thus been categorized as discontinued operations.
Accordingly, the amounts of revenue and profit before tax for the 102nd fiscal period have been reclassified to present
the respective amounts of continuing operations, excluding the discontinued operations.
6. On December 10, 2021, the Company decided to newly establish a wholly owned subsidiary through an absorptiontype company split which will succeed the Company’s anti-vibration rubber business, and after transferring allownership of the Group’s anti-vibration rubber business to the wholly owned subsidiary, it will sell all shares of stockin the wholly owned subsidiary to Anhui Zhongding Holding (Group) Co., Ltd. (hereinafter “AZ”). The anti- vibration
rubber business has thus been categorized as discontinued operations. Accordingly, the amounts of revenue and profit

2

before tax for the 102nd fiscal period have been reclassified to present the respective amounts of continuing operations,excluding the discontinued operations.
7. On December 10, 2021, the Company decided to newly establish a wholly owned subsidiary through an absorptiontype company split which will succeed the Company’s chemical products solutions business, and after transferring allownership of the Group’s chemical products solutions business to the wholly owned subsidiary, it will sell all sharesof stock in the wholly owned subsidiary to Endeavour United II Investment Business Limited Partnership (hereinafter“EU Investment Partnership”), which is organized, managed, and operated by an investment fund Endeavour UnitedCo., Ltd. (hereinafter “EU”). The chemical products solutions business has thus been categorized as discontinued
operations. Accordingly, the amounts of revenue and profit before tax for the 102nd fiscal period have been reclassified
to present the respective amounts of continuing operations, excluding the discontinued operations.

3

J-GAAP

Term
Year ended

99th

100th

101st

102nd

December
2017

December
2018

December
2019

December2020

Revenue

Yen in millions

3,643,427

3,650,111

3,525,600

2,999,018

Ordinary profit

Yen in millions

400,564

381,132

316,823

173,802

Profit (loss) attributable toowners of parent

Yen in millions

288,275

291,642

292,598(2,016)Comprehensive income

Yen in millions

325,654

162,160

237,629(99,079)

Net assets

Yen in millions

2,402,738

2,436,162

2,344,290

2,119,718

Total assets

Yen in millions

3,959,038

3,840,269

3,946,505

3,876,270

Net assets per share

Yen

3,115.69

3,163.71

3,250.37

2,942.56

Earnings (loss) per shareYen

375.67387.95404.95(2.86)

Diluted earnings per share

Yen

375.01387.28404.28–Equity ratio

%

59.2

61.9

58.0

53.5

Return on equity

%

12.5

12.4

12.5

(0.1)

Price earnings ratio

Times

13.9

10.9

10.0

–

Net cash provided by (usedin) operating activities

Yen in millions

418,109360,955

464,457

483,938

Net cash provided by (usedin) investing activities

Yen in millions(200,777)(243,061)(266,910)(157,772)

Net cash provided by (usedin) financing activities

Yen in millions(190,069)(159,094)(198,601)

61,086

Cash and cash equivalents
at end of period

Yen in millions

501,797433,916435,319

810,546

Persons

142,669

143,509

143,589

138,036

Number of employees(Notes) 1. Revenue does not include consumption taxes.
2. The average number of temporary employees is omitted since the number is below 10% of the number of employees.
3. At the beginning of the 101st fiscal period, the Group adopted the “Partial Amendments to Accounting Standard forTax Effect Accounting, etc.” (Accounting Standards Board of Japan (ASBJ) Statement No. 28, February 16, 2018).
This new standard was applied retrospectively to key financial data for the 100th fiscal period and the key financial
data reflects the retrospective adoption of these accounting standards, etc.
4. Various figures derived from generally accepted accounting principles in Japan (Japanese GAAP) for the 102nd fiscal
period have not been audited in accordance with the provisions of Article 193-2, paragraph (1) of the Financial
Instruments and Exchange Act.
5. Diluted earnings per share is not listed for the 102nd fiscal period due to there being a net loss per share despite their
being potential shares.
6. Price earnings ratio is not listed for the 102nd fiscal period due to there being a net loss per share.

4(2) Financial data for the Company
Term

99th

100th

101st

102nd

103rd

Year ended

December
2017

December
2018

December
2019

December
2020

December
2021

Revenue

Yen in millions

858,081889,413867,267

691,683

839,528

Ordinary profit

Yen in millions

249,871

218,951

203,233

96,155292,915

Profit for the year

Yen in millions

180,194

176,069

224,719

82,914

167,024

Common stock

Yen in millions

126,354

126,354

126,354

126,354

126,354

Total number of sharesissuedThousands ofshares813,102761,536

761,536

713,698

713,698

Net assets

Yen in millions

1,441,733

1,442,509

1,312,152

1,294,084

1,373,813

Total assets

Yen in millions

2,053,696

1,977,911

1,975,746

2,097,389

2,135,579

Net assets per share

Yen

1,913.06

1,914.12

1,859.05

1,833.40

1,946.44

Dividend per share

Yen

150

160

160

110

170

[Interim dividend amount]

Yen

[70]

[80]

[80]

[50]

[85]

Earnings per share

Yen

234.82234.21311.00117.76237.18

Diluted earnings per shareYen

234.41233.80310.49117.57236.83Equity ratio

%

70.0

72.8

66.2

61.6

64.2

Return on equity

%

12.3

12.2

16.4

6.4

12.5

Price earnings ratio

Times

22.3

18.1

13.1

28.7

20.9

Dividend payout ratio

%

63.9

68.3

51.4

93.4

71.7

Number of employees

Persons

13,706

14,075

14,567

14,85814,745

Total shareholder return[Comparative indicator:
TOPIX (dividend
included)]

%

127.9

107.9

107.7

94.1

135.2

%

[122.2][102.7][121.3][130.3][146.9]Highest share priceYen

5,605.0

5,515.0

4,734.0

4,082.0

5,467.0

Lowest share priceYen

3,973.0

3,906.0

3,888.0

2,861.5

3,307.0(Notes) 1. Revenue does not include consumption taxes.
2. The average number of temporary employees is omitted since the number is below 10% of the number of employees.
3. The highest share price and lowest share price are those recorded on the Tokyo Stock Exchange (First Section).
4. At the beginning of the 101st fiscal period, the Group adopted the “Partial Amendments to Accounting Standard forTax Effect Accounting, etc.” (Accounting Standards Board of Japan (ASBJ) Statement No. 28, February 16, 2018).
This new standard was applied retrospectively to key financial data for the 100th fiscal period and the key financial
data reflects the retrospective adoption of these accounting standards, etc.

5

2. History
Date
March 1931
October 1935
May 1937
September 1937
February 1942
October 1949
February 1951
October 1961
June 1967
September 1972
September 1973
December 1980
November 1982
April 1984
January 1988
May 1988
January 1989
January 1993
December 1994

December 1994
January 1997

July 1998
November 1999
March 2000
December 2001

February 2003
October 2004
August 2005
July 2006
May 2007June 2014
May 2017
April 2019
September 2021
December 2021

Event
Established Bridgestone Tire Co., Ltd in the city of Kurume, Fukuoka Prefecture in Japan. Commenced
production of automotive tires.
Commenced production of golf balls
Relocated head office to Tokyo
Commenced production of V-belts and rubber hoses
Changed name to Nippon Tire Co., Ltd.
Company split with the establishment of Bridgestone Cycle Company (now, Bridgestone Cycle
Corporation)
Renamed back to Bridgestone Tire Co., Ltd.
Listed on the Tokyo and Osaka Stock Exchanges
Established joint venture in Thailand, Thai Japan Tyre Co., Ltd. (now, Thai Bridgestone Co., Ltd.)
Established joint venture Bridgestone Spalding Co., Ltd. (now, Bridgestone Sports Co., Ltd.)
Established joint venture in Indonesia, P.T. Bridgestone Tire Indonesia
Acquired Uniroyal Holdings Limited (now, Bridgestone Australia Limited) in Australia
Established Bridgestone Tire Manufacturing (U.S.A.), INC. in the U.S. (May 1990, merged with
Bridgestone/Firestone, INC. (now, Bridgestone Americas Tire Operations, LLC))
Changed name to Bridgestone Corporation
Established Bridgestone Finance Europe B.V. in the Netherlands (now, such operations have beensucceeded by Bridgestone Treasury Singapore PTE. LTD. of Singapore)
Acquired the Firestone Tire & Rubber Company. (now, Bridgestone Americas Tire Operations, LLC)
Established Bridgestone Finance Co., Ltd.
Consolidated the sports business into Bridgestone Sports Co., Ltd.
Bridgestone/Firestone Europe S.A. (now, Bridgestone Europe NV/SA) became a holding-company
structure for European operations with sales and logistics functions in Europe consolidated in thatcompany
Established BMAH Corporation (now, Bridgestone Americas, Inc.) in the U.S.
Acquired Fedstone (Pty) Limited (now, Bridgestone South Africa Holdings (Pty) Ltd.), with theconsolidated subsidiary Firestone South Africa (Pty) Ltd. of South Africa (now, Bridgestone South Africa(Pty) Ltd.)
Established Bridgestone/Firestone Poland Sp. z o.o. (now, Bridgestone Poznan Sp. z o.o.) in Poland
Established Bridgestone Middle East FZE (now, Bridgestone Middle East & Africa FZE) in the United
Arab Emirates
Established Bridgestone Tire Manufacturing (Thailand) Co., Ltd. in Thailand
Bridgestone/Firestone, Inc. (now, Bridgestone Americas Tire Operations, LLC) split and reorganized bybusiness with Bridgestone/Firestone Americas Holding, Inc. (now, Bridgestone Americas, Inc.) as aholding company for management of businesses in the Americas
Established Bridgestone (Wuxi) Tire Co., Ltd. in China
Established Bridgestone (China) Investment Co., Ltd. in China
Acquired P.T. Goodyear Sumatra Plantation (now P.T. Bridgestone Sumatra Rubber Estate) in Indonesia
Established Bridgestone Asia Pacific Pte Ltd. in Singapore
Bridgestone Americas Holding, Inc. (now, Bridgestone Americas, Inc.) acquired Bandag, Incorporated(now, Bridgestone Bandag, LLC)
Acquired Masthead Industries, LLC (now Bridgestone Hose America, Inc.) in the U.S.
Bridgestone Europe NV/SA acquired Ets Paul Ayme (Holding) & Ayme er Fils SAS (now First Stop
Ayme SAS) in France
Bridgestone Europe NV/SA acquired Tom Tom Telematics B.V. (now Bridgestone Mobility Solutions
B.V.) in Netherlands
Bridgestone Americas, Inc. acquired Azuga Holdings, Inc.
Bridgestone Mining Solutions Australia Pty. Ltd. acquired Otraco International Pty. Ltd.

6

3. Description of business
The Bridgestone Group (the “Group”) comprises Bridgestone Corporation (the “Company”), 278 subsidiaries(of which 278 are consolidated subsidiaries), and 136 associates and joint ventures (of which 136 are accounted
for using the equity method). The Group is engaged in the businesses below through its reporting segments“Japan,” “Americas,” “Europe, Russia, Middle East, India and Africa,” and “China, Asia-Pacific,” as well as
through other segments.
Reporting segments were reorganized from the first quarter ended March 31, 2021. Details are described in “V.
Financial Information, 1. Consolidated Financial Statements, Etc., (1) Consolidated Financial Statements,
Notes to Consolidated Financial Statements, 6. Operating Segments.”
Name of segment

Japan

Americas

Major businesses

Major companies[Controlling, manufacturing
and sales]

Bridgestone Corporation[Controlling of tire sales]

BRIDGESTONE TIRE
SOLUTION JAPAN CO.,LTD.

[Tire sales]

BRIDGESTONE RETAILJAPAN CO., LTD.
BRIDGESTONE MINING
SOLUTIONS AUSTRALIA
PTY. LTD.

Tire business
Solutions business
Diversified products business [chemical andindustrial products, sporting goods, bicycles,[Chemical and industrial
etc.]
product sales][Manufacturing and sales ofsporting goods]

BRIDGESTONE SPORTS
CO., LTD.

[Manufacturing and sales ofbicycles, etc.]

BRIDGESTONE CYCLE
CO., LTD.

[Controlling]

BRIDGESTONEAMERICAS, INC.

[Manufacturing and sales oftires]BRIDGESTONE AMERICASTIRE OPERATIONS, LLC
BRIDGESTONE BANDAG,
LLC
BRIDGESTONE CANADA
INC.
BRIDGESTONE DE
MEXICO, S.A. DE C.V.
BRIDGESTONE DO
BRASIL INDUSTRIA E
COMERCIO LTDA.
BRIDGESTONE
ARGENTINA S.A.I.C.

[Tire sales]

BRIDGESTONE RETAILOPERATIONS, LLC[Manufacturing and sales ofraw materials for tires]

FIRESTONE POLYMERS,LLC[Controlling and sales]

BRIDGESTONE EUROPE
NV/SA[Manufacturing and sales oftires]BRIDGESTONE POZNANSP. Z O.O.
BRIDGESTONE HISPANIAMANUFACTURING S.L.U.
BRIDGESTONE INDIA
PRIVATE LTD.
BRIDGESTONE SOUTH
AFRICA (PTY) LTD.

[Tire sales]

BRIDGESTONE MIDDLE
EAST & AFRICA FZE

Tire business
Solutions business
Diversified products business [Air springs]

Europe, Russia,
Tire business
Middle East, India
Solutions businessand Africa

7

BRIDGESTONE
DIVERSIFIED PRODUCTS
JAPAN CO., LTD.

Name of segment

China, AsiaPacific

Other

Major businesses

Major companies[Controlling and sales]

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

[Manufacturing and sales oftires]BRIDGESTONE (WUXI)TIRE CO., LTD.
THAI BRIDGESTONE CO.,LTD.
BRIDGESTONE TIRE
MANUFACTURING(THAILAND) CO., LTD.
P.T. BRIDGESTONE TIRE
INDONESIA[Tire sales]

BRIDGESTONE
AUSTRALIA LTD.

[Finance]

BRIDGESTONE FINANCECORPORATIONBRIDGESTONE
TREASURY SINGAPORE
PTE. LTD.

Tire business
Solutions business

Diversified products business [Other](Notes) 1. The tire business mainly comprises tires and tubes for passenger cars, trucks, buses, construction and off-the-roadmining vehicles, industrial and agricultural machinery, aircraft, motorcycles, and scooters, as well as tire-related
products, automotive maintenance and repair services, raw materials for tires, and other products.
2. The solutions business utilizes tires and tire-related and mobility-related data to provide high added value and newvalue.

8

4. Subsidiaries and associates
Name

Location

Common stock /Ownership
Relationship
Investment inratio of
Description of major
Officers
capitalvotingBusinessbusinesses
serving
Loans(Yen inrightstransactions
concurrently
millions)(%)

Leasingoffacilities(Consolidated subsidiaries)

Chuo-ku, Tokyo

Controlling the salesof automotive tires
for the domestic
market, sales of710
automotive tires anddevelopment anddeployment ofsolutions business100.0 Yes

No

Purchase of
products fromthe Company

Businessfacilities

BRIDGESTONE RETAIL JAPANChuo-ku, Tokyo
CO., LTD.

Sales of automotive
300 tires and automotive
products(100.0)
Yes
100.0

No

No

Businessfacilities

BRIDGESTONE PLANT
ENGINEERING CO., LTD.

Hiki-gun,
SaitamaManufacturing,sales, installation and100 maintenance ofindustrial machinery,etc.

100.0 YesNo

Supply,installation andmaintenance of Businessindustrial
facilities
machinery, etc.
to the Company

BRIDGESTONE LOGISTICS
CO., LTD.

Chuo-ku, Tokyo

400

Shipping andwarehousing

100.0 YesNo

Shipping andwarehousing of Business
the Company’s facilities
products

BRIDGESTONE DIVERSIFIEDPRODUCTS JAPAN CO., LTD.

Chuo-ku, Tokyo

Sales of industrial
rubber products and400
sales and installationof building materials

100.0 Yes

No

Purchase of
products fromand supply of
products to theCompany

Businessfacilities

BRIDGESTONE SPORTS CO.,LTD.

Chuo-ku, Tokyo

Manufacturing and
3,000 sales of sporting
goods

100.0 Yes

No

No

Businessfacilities

BRIDGESTONE CYCLECORPORATION

Ageo, Saitama

1,870

Manufacturing andsales of bicycles

100.0 Yes

No

No

Businessfacilities

100.0 Yes

No

Settlement ofsome of theCompany’s
payables andNo
partially
entrusted service
for accounting

100.0 YesNo

No

BRIDGESTONE TIRE
SOLUTION JAPAN CO., LTD.

BRIDGESTONE FINANCE CO.,Kodaira, TokyoLTD.

BRIDGESTONE AMERICAS,
INC.

U.S.A.

Loaning of cash,
factoring and
50 entrusted service foraccounting andpayroll
USD in Controllingthousands businesses in
127,000 Americas

No

U.S.A.

USD in Manufacturing andthousands sales of automotive
1 tires(100.0)
Yes
100.0

No

Purchase of
products andraw materials
Nofrom and supplyof products to
the Company

U.S.A.

Sales of automotive
USD in tires, maintenancethousands and repairing of
1 vehicles and sale ofautomotive goods.

(100.0)
No
100.0

No

No

No

BRIDGESTONE BANDAG, LLC U.S.A.

Manufacturing and
USD insales of retread
thousandsmaterial and supply
1
of related techniques(100.0)
No
100.0

No

Supply of
products to theCompanyNo

FIRESTONE POLYMERS, LLC

U.S.A.

USD in Manufacturing andthousands sales of synthetic
1 rubber(100.0)
No
100.0

No

Supply of raw
materials to the No
Company

BRIDGESTONE CANADA INC. Canada

Manufacturing and
CAD insales of automotive
thousands
tires and automotive
127,553
parts(100.0)
No
100.0

No

Purchase of
products fromthe Company

No

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

MXN in Manufacturing andthousands sales of automotive
455,998 tires(100.0)
No
100.0

No

Purchase of
products fromthe Company

No

BRIDGESTONE AMERICASTIRE OPERATIONS, LLC

BRIDGESTONE RETAILOPERATIONS, LLC

Mexico9Name

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

BRIDGESTONE EUROPE
NV/SA

Location

Common stock /Ownership
Relationship
Investment inratio of
Description of major
Officers
capitalvotingBusinessbusinesses
serving
Loans(Yen inrightstransactions
concurrently
millions)(%)

No

Purchase of
products andraw materials
from theCompany

No

No

Purchase of
products fromthe Company

No

100.0 Yes

Yes

Purchase of
products fromand supply of
products to theCompanyNo

Brazil

BRL in Manufacturing andthousands sales of automotive
458,788 tires(100.0)No
100.0

Argentina

ARS in Manufacturing andthousands sales of automotive
201,242 tires(100.0)No
100.0

Belgium

Controllingbusinesses in
EUR in Europe, Russia,
thousands Middle East, India
2,063,963 and Africa, and salesof automotive tires

Leasingoffacilities

BRIDGESTONE POZNAN SP. Z
PolandO.O.

PLN in Manufacturing andthousands sales of automotive
558,059 tires(100.0)
No
100.0

No

Purchase of raw
materials from No
the Company

BRIDGESTONE STARGARD SP.
PolandZ O.O.

PLN in Manufacturing andthousands sales of automotive
572,650 tires(100.0)
No
100.0

No

No

No

BRIDGESTONE TATABANYATERMELO KFT.

Hungary

HUF in Manufacturing andthousands sales of automotive
30,938,000 tires(100.0)
No
100.0

No

No

No

BRIDGESTONE HISPANIAMANUFACTURING S.L.U.

Spain

EUR in Manufacturing andthousands sales of automotive
3 tires(100.0)
No
100.0

No

No

No

BRIDGESTONE MIDDLE EAST United Arab
& AFRICA FZEEmirates

AED inSales of automotive
thousands
tires
17,000(100.0)
No
100.0

No

No

No

BRIDGESTONE INDIA
PRIVATE LTD.

India

INR in Manufacturing andthousands sales of automotive
7,737,041 tires(100.0)
Yes
100.0

No

Purchase of
products fromand supply of
products to theCompanyNo

BRIDGESTONE SOUTH
AFRICA (PTY) LTD.

Republic ofSouth Africa

ZAR in Manufacturing andthousands sales of automotive
207 tires(75.0)
No
75.0

No

Purchase of
products andraw materials
from theCompany

No

SingaporeControlling tire
SGD in businesses in China
thousands and Asia-Pacific and1,623,782 sales of automotive
tires

100.0 Yes

No

Purchase of
products fromthe Company

No

BRIDGESTONE (CHINA)INVESTMENT CO., LTD.

China

Controlling tire
USD inbusinesses in China
thousands
and sales of347,665
automotive tires

100.0 Yes

No

Purchase of
products fromthe Company

No

BRIDGESTONE (SHENYANG)
TIRE CO., LTD.

China

USD in Manufacturing andthousands sales of automotive
183,180 tires(100.0)
Yes
100.0

No

No

No

BRIDGESTONE (WUXI) TIRE
CO., LTD.

China

USD in Manufacturing andthousands sales of automotive
255,040 tires(100.0)
Yes
100.0

No

Supply of
products to theCompanyNo

BRIDGESTONE (HUIZHOU)TIRE CO., LTD.

China

USD in Manufacturing andthousands sales of automotive
160,000 tires(10.0)
Yes
100.0

No

No

No

BRIDGESTONE TIRE
MANUFACTURING VIETNAM Vietnam
LLC

USD in Manufacturing andthousands sales of automotive
447,800 tires(100.0)
Yes
100.0

No

Supply of
products to theCompany

No

THAI BRIDGESTONE CO., LTD. Thailand

THB in Manufacturing andthousands sales of automotive
400,000 tires(69.2)
Yes
69.2

No

Supply of
products to theCompanyNo

BRIDGESTONE TIRE
MANUFACTURING(THAILAND) CO., LTD.

Thailand

THB in Manufacturing andthousands sales of automotive
6,921,000 tires(100.0)
Yes
100.0

No

Supply of
products to theCompanyNoIndonesia

IDR in Manufacturing andthousands sales of automotive
10,358,400 tires(54.3)
Yes
54.3

No

Purchase of raw
materials fromand supply ofNoproducts to theCompany

BRIDGESTONE ASIA PACIFIC
PTE. LTD.

P.T. BRIDGESTONE TIRE
INDONESIA

10

Name

Location

Common stock /Ownership
Relationship
Investment inratio of
Description of major
Officers
capitalvotingBusinessbusinesses
serving
Loans(Yen inrightstransactions
concurrently
millions)(%)

Leasingoffacilities

Australia

AUD inSales of automotive
thousands
tires
205,820(100.0)
No
100.0

No

No

No

Thailand

Manufacturing and
THB in sales of tires forthousands construction and
11,900,000 mining vehicles andaircraft tires

100.0 Yes

Yes

Supply of
products to theCompanyNo

BRIDGESTONE MINING
SOLUTIONS AUSTRALIA PTY. Australia
LTD.

Sales and supplying
related services of
AUD intires for construction
thousands
and mining vehicles
7,000
and conveyor belts,
etc.

100.0 No

No

Purchase of
products fromthe Company

No

BRIDGESTONE SINGAPORE
PTE LTD.

Singapore

USD inSales and purchase
thousandsof natural rubber
674

100.0 YesNo

Supply of raw
materials to the No
Company

Singapore

USD inLoaning of cash andthousands
factoring
450,700

100.0 Yes

No

Collection
agency for someof theNo
Company’s
receivables

U.S.A.

USD inSales of automotive
thousands
tires
20,862(50.0)
No
50.0

No

No

No

No

Purchase of
products andraw materials
from theCompanyNo

BRIDGESTONE AUSTRALIALTD.
BRIDGESTONE SPECIALTY
TIRE MANUFACTURING(THAILAND) CO., LTD.

BRIDGESTONE TREASURY
SINGAPORE PTE. LTD.

Other: 239 companies(Equity-method associates andothers)TIREHUB, LLC

BRISA BRIDGESTONESABANCI LASTIK SANAYI VE
TICARET A.S.
TurkeyTRY in Manufacturing andthousands sales of automotive
305,117 tires

43.6 Yes

Other: 134 companies(Notes) 1. BRIDGESTONE TIRE SOLUTION JAPAN CO., LTD., BRIDGESTONE AMERICAS, INC., BRIDGESTONEAMERICAS TIRE OPERATIONS, LLC, BRIDGESTONE CANADA INC., BRIDGESTONE ARGENTINA
S.A.I.C., BRIDGESTONE EUROPE NV/SA, BRIDGESTONE POZNAN SP. Z O.O., BRIDGESTONE STARGARD
SP. Z O.O., BRIDGESTONE TATABANYA TERMELO KFT., BRIDGESTONE INDIA PRIVATE LTD.,
BRIDGESTONE ASIA PACIFIC PTE. LTD., BRIDGESTONE (CHINA) INVESTMENT CO., LTD.,
BRIDGESTONE (SHENYANG) TIRE CO., LTD., BRIDGESTONE (WUXI) TIRE CO., LTD., BRIDGESTONE(HUIZHOU) TIRE CO., LTD., BRIDGESTONE TIRE MANUFACTURING VIETNAM LLC, BRIDGESTONETIRE MANUFACTURING (THAILAND) CO., LTD., BRIDGESTONE AUSTRALIA LTD., BRIDGESTONESPECIALTY TIRE MANUFACTURING (THAILAND) CO., LTD., BRIDGESTONE SINGAPORE PTE LTD., and
BRIDGESTONE TREASURY SINGAPORE PTE. LTD. are specified subsidiaries.
2. Figures in parentheses in the ownership ratio of voting rights column indicate indirect ownership ratio.
3. Revenues of BRIDGESTONE AMERICAS TIRE OPERATIONS, LLC (hereinafter “BATO”) and BRIDGESTONERETAIL OPERATIONS, LLC (hereinafter “BSRO”) (excluding internal sales from intercompany transactions within
the Group) exceed 10% of the consolidated revenue.
(Yen in millions)
Major financial
information

BATO(1) Revenue

840,596(2) Profit before tax

122,017(3) Profit

BSRO

93,417(4) Total equity

1,101,236(5) Total assets

1,338,965(1) Revenue

476,734(2) Profit before tax

35,982(3) Profit

26,869(4) Total equity

196,438(5) Total assets

256,94111

5. Employees(1) Consolidated companies(As of December 31, 2021)
Name of segment

Number of employeesJapan

34,960Americas49,803

Europe, Russia, Middle East, India and Africa

21,090China, Asia-Pacific

18,416

Other

8,117

Company-wide (common)

3,250

Total

135,636(Notes) 1. The number of employees represents the number of active employees.
2. The number of employees in the Japan segment includes the number of employees at the tire plants in Japan that
produce tires for other segments.

(2) Status of the Company(As of December 31, 2021)
Number of employees

Average age (Years)

Average length of service(Years)Average annual salary(Thousands of yen)

14,745

41.0

14.9

7,301

Name of segment

Number of employeesJapan

10,836

Other

659

Company-wide (common)

3,250

Total

14,745(Notes) 1. The number of employees represents the number of active employees.
2. The average annual salary includes bonuses and extra wages.

(3) Labor union
The Company’s labor union is a member of the Japanese Trade Union Confederation (JTUC-RENGO).
There are currently no particular matters concerning relations with the labor union that require mentioning.
Labor-management relations are founded on mutual trust and extremely amicable.
Stable labor-management relations are maintained at consolidated subsidiaries and there are no particularmatters that require mentioning.

12II. Business Overview
1. Management policy, management environment and issues to be addressed
Changes are accelerating in the surrounding business environment in a wide range of areas, includinginternational relations, politics, economy, environmental issues, and technological innovation. Specifically, theongoing COVID-19 pandemic since 2020 continues to have a tremendous impact on our economies and lives
worldwide. The world is paying more attention to climate change countermeasures as well. These trends are
driving the mobility industry to developments in CASE and MaaS, as seen in the accelerating shift to electricvehicles. Profits in the mobility industry as a whole had trended downward as it adjusted to structural changes
led by diversifying players in the industry, which also caused the structure of the tire industry to change. Whilethe industry went on a recovery track in 2021, changes are accelerating in the business environment. Survival
depends on strength and the ability to adapt to change.
Against this backdrop, the Group is pressing ahead with transforming to a “strong Bridgestone,” capable ofadapting to changes in the environment, in line with our Mid Term Business Plan (2021-2023). We are working
on this based on three axes. First, we will reflect on the period from 2015 to 2019 when profits were on adeclining trend, and “tackle past negative legacies without delay” Second, we will promptly respond to changes
in the business environment and “focus on execution and delivering results”. Third, with 2030 as our milestone,
we will “lay foundation for the future growth.” To promote this transformation, we have chosen return on
invested capital (ROIC) as our critical management index, and are also strengthening portfolio management.
The performance indicators forecast in the Mid Term Business Plan (2021-2023) are as follows for 2023:
revenue of 3,300 billion yen, adjusted operating profit of 450 billion yen, adjusted operating profit ratio of 13%,
ROIC of 10%, and ROE of 12%.
In order to tackle our past negative legacies, we are addressing the Group’s declining profits and working on
rebuilding our earning power. In the medium and long-term timespan, we are steadily restructuring
manufacturing footprints and the business portfolio in all of our business domains, including the tire business,diversified products business, and internal manufacturing business. This helps reduce fixed costs and promote
expense and cost structure reformation.
We are tackling current issues by promoting “Flexible Agile Management,” a method of supply chain
management that maximizes supply and sales opportunities by promptly responding to changes in the businessenvironment and tire demand at the global level. In addition, we have been promoting sales expansion of highvalue-added products such as passenger car high-rim diameter (HRD) tires, our new premium tires with theinnovative tire technology “ENLITEN,” which realizes both environmental and driving performance, and“Bridgestone MasterCore” off-the-road tires for mining vehicles. This is part of our relentless efforts tostrengthen our premium business strategy and improve the quality of business.
We will also strategically make investments for growth aimed at mid-long term growth, laying foundation for
the future. In our core business, we will rebuild our manufacturing footprints and supply system in the midlong term and work on the expansion of ENLITEN. While we are strengthening the development of ENLITEN
as an innovative tire technology optimized for EVs, we will expand its value to products and business models
as ENLITEN business strategy going forward. The ENLITEN business strategy will be developed as our new
premium strategy for EV era to simultaneously create value that can sometimes be contradictory, such as
reducing environmental footprint while achieving business growth, and customizing tire performance forindividual customers while streamlining the entire value chain from manufacturing to sales and optimizing
costs. We will work on growth businesses by continuing strategic growth investments in various regions withan eye to offering our solutions globally. We will conduct M&As to enhance mobility solutions and reinforce
retail service business based on the Group’s global retail network in a bid to expand the solutions business.
In order to ensure global optimization of these measures and investments, the Group has put in place afoundation for financial strategies through efforts such as establishing a new global controller function. The
global controller function will assist with prompt decision-making while strictly examining invested capital andassociated returns from individual investment activities, and rigorously monitor the progress after decisions
have been made to flexibly propose improvements as appropriate.
We have also launched exploratory businesses in domains where the Group’s strengths and core competencies
can be leveraged. We will start exploring recycle, soft-robotics, and guayule businesses, and continue searching13

technologies and business models toward commercialization based on co-creation. By doing so, we willcontinue to support the mobility and movement of people and objects.
We also continue to promote Bridgestone’s Human Resource Transformation (HRX) as human resources andorganizational structure to support the execution of Mid Term Business Plan. To enable the optimal allocationand success of diverse talent while maintaining a lean organizational structure, we are strengthening measures
such as introducing a job-based employment and a job-matching system where individuals register their skills
and experiences so they will be appointed to positions where the assets will be useful.
Regarding sustainability that we place at the core of management and business, we will advance our efforts
along the “Bridgestone E8 Commitment”. This commitment respresents 8 Bridgestone-like values that theGroup will commit to creating through Bridgestone-like “purpose” and “process,” and will serve as the axis todrive management while earning the trust of future generations. We will seek to create a unique Sustainability
Business Model in which our efforts toward achieving carbon neutrality and creating a circular economy
synergize with our business model. In 2012, we set a long-term environmental vision toward 2050, and toachieve this vision, we have formulated “Milestone 2030,” the mid-term environmental targets for 2030. We
are working on the reduction of CO2 emissions based on the Milestone, which sets forth clear-cut targets to
reduce total CO2 emissions (Scopes 1, 2) (Note) by 50% in 2030 compared to our emissions in 2011, and toachieve carbon neutrality by 2050. In 2021, we made a strong progress toward achieving the CO2 emissions(Scopes 1, 2) target, seeking further reductions such as by adopting renewable energy. As for the reduction of
CO2 emissions across the value chain (Scope 3) (Note), we will undertake further efforts with the target ofcontributing to the reduction of CO2 at least five times the sum of Scope 1 and Scope 2 emissions by 2030
(base year: 2020) through our product and service lifecycles by offering solutions. Furthermore, to ramp up ourcontributions toward a circular economy, we aim to increase our use of recycled and renewable materials to
40% of our resources by 2030.
Positioning sustainability at the core, the Group will continue to create both social and customer value, and gain
a competitive advantage, so that we can work with society, our partners, and customers to realize a sustainable
society.
(Note)

Scope 1 refers to CO2 emitted directly by a company (emissions from boilers at in-house plants, etc.),
and Scope 2 refers to indirect emissions from energy sources (CO2 emissions from energy, such as
electric power supplied by other companies and consumed in-house). Scope 3 refers to CO2emissions during the stages of procurement of materials, logistics, use by customers, and disposal or
recycling in the product lifecycle.

14

2. Business risks
The following provides an overview of risks concerning the state of business and financial information
described in this Annual Securities Report that may have a bearing on investors’ decisions. The Group is awareof these risks, and systematic efforts are made to prevent or minimize the impact of related adverse events on
operations.
Nonetheless, the potential exists for unforeseen or unpredictable risks other than those described below tonegatively affect the operations, business results, and financial position of the Group.
All references to possible future developments in the text are as of March 23, 2022, the filing date of this Annual
Securities Report.

(Processes for evaluating and managing risks)Every year, the Group evaluates and identifies risks faced by various regions and the Group as a whole in termsof their potential impact and likelihood of occurrence. By allowing management to be conducted in anautonomous and continuous manner through clarifying who is responsible for managing the risk, not only for
the Group as a whole, but also for every business, Strategic Business Unit (SBU), and division, our Group’s
risk evaluation and management system is able to deal with serious management risks under the directsupervision of the Global CEO.
(1) Risks related to demand and macroeconomic conditions
The Group conducts research and development (R&D), procurement, production, logistics, sales and otherbusiness activities on a global scale. Operating results and financial position are thus subject to trends indemand, interest rates, exchange rates, share prices, and other economic variables in the countries and regions
where we operate. In the fiscal year under review, the Group’s revenue by region was 46% from operationsin the Americas; 23% from Europe, Russia, Middle East, India and Africa; 17% from Japan; and 14% from
China and the Asia-Pacific region. An economic downturn in any of these regions could exert a major adverse
effect on the operating results and financial position of the Group.
The Group’s business is closely tied to the automobile industry, therefore, the operating results and financial
position of the Group are strongly affected by business conditions in the global automobile industry. Demand
for replacement tires in each country where the Group operates depends on national trends in consumer
spending, automotive fuel prices, and a range of other local market variables. Any combination of trends thatmight cause demand for replacement tires to decline, or to grow at a slower rate, could adversely affect theoperating results and financial position of the Group.
Furthermore, some of the Group’s products, such as hydraulic hoses and large and ultra-large off-the-roadradial tires for construction and mining vehicles, are affected by business conditions in the resources industry
and the civil engineering and construction industries. If these factors reduce demand or slow its projected
rise, the Group’s operating results and financial position may be adversely affected.
Moreover, demand for winter tires (which make a sizable contribution to sales in regions such as Japan,
Europe, and North America) is closely related to seasonal weather trends. A mild winter and a decline indemand in these regions could adversely affect, to some extent, the operating results and financial positionof the Group.
(2) Legal, regulatory, and litigation risk
The Group’s operations around the world are subject to diverse national (and, in Europe, supranational) laws
and regulations, including trade, investment, foreign exchange transactions, taxation systems (includingtransfer pricing), anticompetitive practices, environmental protection, and protection of personal information.
Laws and regulations that affect the Group’s business activities have been established and introduced. These
include labeling systems and regulations regarding tire performance and regulations regarding chemicals inJapan and overseas. Accordingly, new or revised laws and regulations could limit the scope of business15

activities, raise operating costs, or otherwise adversely affect the operating results and financial position of
the Group.
The Group could be subject to lawsuits or to investigations by governmental authorities with regard to its
business activities in Japan or in overseas markets. In the event that an important lawsuit is filed orinvestigation by governmental authorities has commenced, the Group’s operating results and financial
position could be affected.
(3) Risks related to operational disruption
・Natural disasters, wars, terrorist actions, civil strife, and social and political unrest
Globally dispersed operations expose the Group to a broad range of natural and man-made risks that could
constitute force majeure, including natural disasters, such as earthquakes and floods, wars, terrorist actions,civil strife, boycotts, epidemics, energy supply problems, and general social or political unrest. Such events
have the potential to adversely affect the operating results and financial position of the Group. Also, factors
such as abrupt, substantial fluctuations in political or economic matters in Japan or overseas could hinder thecontinuation of the Group’s business activities. Such events have the potential to affect the Group’s operating
results and financial position.
The risk of earthquakes is particularly high in Japan where the Group has numerous key facilities.
Management systematically promotes the seismic reinforcement of the Group’s facilities in Japan based onan order of priority determined from the results of site analyses using seismic diagnostics. In addition, abusiness continuity plan (hereinafter “BCP”) has been created in order to facilitate a swift response in eventof an earthquake and the quick restoration of operations. Operation of this BCP is subject to regular review
and improvement. The Group has also formulated a BCP designed to prioritize the wellbeing and safety of
employees, families, and all related parties while minimizing the Group’s losses stemming from the spreadof 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, suchserious 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 Group’s operating results
and financial position.
Operational disruptions at those plants where the production of certain products or materials is concentrated
have the potential to cause greater problems due to the increased 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 Group as a reliable source of supply. Any such developments could have a significantly
adverse impact on the operating results and financial position of the Group.
・Information technology (IT) systems failures
With the drastic rise in the importance of information systems in the Group’s business activities, the Group
is striving to protect systems and data through advancing security and other measures. However, failure ofsuch information systems due to external causes, such as natural disasters and cyberattacks, or throughhuman error, could result in the halt of major operations and services and theft or leakage of confidential or
personal information and data, with the possibility of hindering further business activities. Such incidents
bear the potential to damage the Group’s brand image and lower social trust, adversely affecting its operating
results and financial position.
・Industrial action
Prolonged strikes or other industrial action due to unfruitful labor-management negotiation could cause
operational disruptions, and thereby adversely affect the operating results and financial position of the Group.
Management strives to minimize the risk of labor unrest by fostering good labor-management relations
throughout global operations.

16

(4) Risks related to climate change
Amid growing global interest in climate change and an accelerated move toward a decarbonized society as
represented by the Paris Agreement, the Group recognizes the risks and opportunities related to climatechange and reflects them in its business strategy. The main risks we identify in this category are “physicalrisks due to climate change” and “risks associated with the transition to a decarbonized society.” Physicalrisks due to climate change include the risk of business activity interruption from stronger typhoons andincreased frequency of flooding and drought, risks related to the procurement raw materials from poor
harvests of natural rubber due to changes in rainfall patterns, and the risk that less snowfall will reducedemand for winter tires. Risks associated with the transition to a decarbonized society in Japan and overseas
in response to climate change involve the introduction of systems and regulations related to carbon taxes,
reduction obligations for CO2 emissions, emissions trading schemes, fuel-efficient tires, and the recycling ofused tires. If the R&D expenses required to meet the changing needs of society and customers do not produce
sufficient results, there is a risk that the Group’s operating results and financial position may be adversely
affected in ways that include limitations on business activities and increased costs. On the other hand, we
also see these changes in society and customer needs as new opportunities for growth.
Based on the Group’s awareness of the risks associated with the transition to a decarbonized society, theCompany has set a long-term goal for 2050 of becoming carbon neutral, with targets set for 2030 to 1) reduce
absolute CO2 emissions (Scope 1 and 2) by 50% compared with 2011 levels and 2) contribute to global CO2
emissions reductions across the lifecycles and value chains (Scope 3) of the Group’s products and services
that exceeds five times the amount of CO2 emissions (Scope 1 and 2) generated by the Group’s operations
by 2030 compared with 2020 levels. The Group is working to meet these targets with efforts that include
developing new technology that helps reduce CO2 emissions, reducing emissions at production bases,
promoting the development and sales of fuel-efficient tires, and expanding our retread tire business. In
making investment decisions, we take into account the cost of CO2 emissions and the benefits of reduction
on internal carbon pricing so that we can evaluate the risks associated with the transition to a decarbonizedsociety and assess opportunities. We are also working to reduce CO2 emissions across the value chain throughefforts to build a recycling business that converts used tires back into raw materials.
Concerning physical risks due to climate change and their associated opportunities, in line with our BCP, we
continue to set up systems to ensure an appropriate response should a crisis occur, as well as support forresumption of business activities. We are also working to diversify our sources of natural rubber throughefforts to commercialize guayule, a rubber-producing plant that grows in arid regions.
(5) Risks related to corporate and brand image
The Group strives to enhance its corporate and brand image consistently through global business activities.
Systematic efforts are made to ensure compliance with all applicable laws and regulations and to promote
the highest ethical standards. Programs are in place across the Group to prevent industrial incidents,
particularly fires and any accidents that could cause occupational injuries, and to 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 Group by damaging the image and reputation of the Group, diminishing the general public’s
confidence in the Group, or leading to a drop in share price.
(6) Currency risk
The global distribution of the Group’s R&D, production, logistics, procurement of raw materials and sales
activities requires business transactions in numerous currencies. The Group employs foreign currency
forward contracts to hedge foreign currency-denominated trade receivables and payables, and currency
swaps to hedge foreign currency-denominated loans and borrowings in an effort to minimize the effects ofshort-term exposure to exchange rate fluctuations. However, hedging cannot insulate the Group’s operations
completely from foreign exchange market trends since these operations include extensive import and export
activities worldwide. Fluctuations in exchange rates can thus have an adverse effect on the operating results
and financial position of the Group. Exchange rate fluctuations also affect the consolidated performance of17the Group because results are reported in yen. Changes in exchange rates affect the values recorded forrevenue, expenses, assets, and liabilities in all countries outside Japan when translated into yen. In generalterms, yen appreciation against other leading currencies tends to depress the financial results, while yen
depreciation tends to have a favorable impact.
(7) Risks related to competition
The Group encounters numerous competitors across its entire product lineup. Competitive price pressures
have the potential to adversely affect the operating results and financial position of the Group. In addition,
the Group faces a constant risk of demands for price reductions from large corporate clients. The Group
strives to maintain profitability in the face of downward price pressures by continually seeking to reduce thecost, raise productivity, enhance brand image, develop new markets, and launch new products that provide
greater value to customers. However, management cannot guarantee that such efforts will always be
sufficient to offset the effects of competition.
The Group’s strategy is based on maintaining a highly competitive technological edge. The Group targets
the development and introduction of products equipped with new and advanced technologies, and then aims
to persuade customers of the value inherent in such technical advances to secure prices sufficient to ensurethat profits fully offset the costs of development. Fierce competition in various fields can sometimes prevent
the Group from recovering development costs through pricing, which can also have an adverse effect on
operating results and financial position.
(8) Risks related to product defects
The Group holds customer safety as its highest priority. The Group invests considerable resources inestablishing and maintaining high quality standards for all products manufactured and sold. Management isparticularly sensitive to the importance of quality assurance in tires and other products closely associatedwith human safety. The Group has honed its quality assurance capabilities by upgrading information systems
related to product performance, collecting pertinent market 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 the complete prevention of product defects or eliminate the chance of an extensive
product recall because product defects could occur due to unpredictable factors. Any such defects or recalls
could result in customer claims for damages, as well as associated litigation costs, replacement costs, anddamage to the Group’s reputation. Product liability claims, class-action lawsuits, and other litigation pose aparticular risk in the U.S.
(9) Risks related to raw materials procurement
Disruption of supplies of raw materials has the potential to affect performance adversely. The Group uses
large quantities of natural rubber in tires and other rubber products, most of which are supplied fromSoutheast 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, other social or politicalunrest, and strikes in addition to the threat of poor harvests.
Supply shortages due to tight supply of raw materials or capacity constraints are also potential problems withother basic raw materials, and could adversely affect the Group’s operating results and financial position.
The Group relies 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 Group’s plants that use those raw materials could adversely affect the Group’s operating results andfinancial position.
Increases in the costs of raw materials due to tight supply, trade for speculative purposes, and other reasonsare also potentially detrimental to the operating results and financial position of the Group. Management
cannot guarantee that price rises can always be passed on to customers or that ongoing efforts to raise
productivity will be sufficient to compensate for any sharp increases in raw materials costs.
18

(10) Risks related to pension costs and obligations
Pension-related costs and obligations are reliant on actuarial assumptions concerning discount rates and anumber of other variables. If these assumptions were to change significantly as a result of changes in interest
rates or the fair value of plan assets (including pension assets), or other factors were to necessitate a change
in the underlying assumptions, there could be an increase in pension-related costs and obligations, as well asa material impact on the operating results and financial position of the Group.
(11) Risks related to intellectual property
The Group treats intellectual property as an important business resource. Systematic efforts are made to
employ intellectual property effectively in improving the competitive position of the Group, to protect
intellectual property rights from infringement, and to avoid infringing the intellectual property rights of otherparties. Despite such safeguards, any actual or alleged infringement of third-party intellectual property rights
by the Group could have a negative impact on the use of certain materials or technologies by the Group, andcould potentially also trigger the payment of compensatory damages. Any such outcome could have anegative effect on the operating results and financial position of the Group. Conversely, if claims by theGroup of intellectual property rights infringement against third parties are not upheld, the Group could also
suffer direct or indirect losses through the diminished differentiation or competitiveness of its products inglobal markets.

19

3. Management analysis of financial position, operating results and cash flows
BRIDGESTONE AMERICAS, INC., the Company’s U.S. subsidiary, has concluded an agreement with
LafargeHolcim Ltd., a Swiss building materials manufacturer, regarding the sale of FSBP, a subsidiary of
BRIDGESTONE AMERICAS, INC. in the Americas segment, to Holcim Participations (US) Inc., the U.S.
subsidiary of LafargeHolcim Ltd. It occurred on January 6, 2021 (local time), and the sale was completed on
March 31, 2021.
On December 10, 2021, the Company decided to establish a wholly owned subsidiary through an absorptiontype company split which will succeed the Group’s anti-vibration rubber business. After transferring allownership of that business to the wholly owned subsidiary, the Company will sell all of its shares of stock in
the new subsidiary to AZ.
On December 10, 2021, the Company also decided to establish a wholly owned subsidiary through anabsorption-type company split which will succeed the Group’s chemical products solutions business. Aftertransferring all ownership of that business to the wholly owned subsidiary, the Company will sell all of its
shares of stock in the new subsidiary to EU Investment Partnership, which is organized, managed, and operated
by EU.
As such, the US building materials business, anti-vibration rubber business and chemical products solutions
business have been categorized as discontinued operations effective from the current consolidated fiscal year.
The prior year’s figures have also been reclassified.
Details are described in “V. Financial Information, 1. Consolidated Financial Statements, Etc., (1) Consolidated
Financial Statements, Notes to Consolidated Financial Statements, 6. Operating Segments.”(1) Overview of operating results, etc.
Overview of the financial position, operating results, and cash flows of the Group for the fiscal year underreview is as follows.
1)

Financial position and operating results
Reporting segments were reorganized from the first quarter ended March 31, 2021. Furthermore, the figures
for the previous fiscal year have been reclassified in accordance with the new segment classifications for
year-on-year comparisons.
a. Overall performance
Increase (decrease)

Fiscal 2021

Fiscal 2020

Billions of yen

Billions of yen

Billions of yen%

3,246.1

2,695.2+550.8+20

Adjusted operating profit

394.3

207.4

+186.9+90

Operating profit

376.8

62.5

+314.3+503

Profit before tax

377.6

27.4

+350.2–

Profit (loss) attributable to owners ofparent394.0(23.3)+417.3–

RevenueAmount

Ratio

Under the mission of “Serving Society with Superior Quality” of the Bridgestone Essence, the Groupannounced its Mid Term Business Plan (2021-2023), which is currently underway, with the aim of realizing
its vision: “Toward 2050, Bridgestone continues to provide social value and customer value as a sustainable
solutions company,” in February 2021.
In the operating environment surrounding the Group during fiscal year 2021, the global economy headed forrecovery as countries around the world started to balance COVID-19 countermeasures and economic
20

activities, as well as made major progress in vaccinations. Global tire demand for new vehicles was impacted
by reduced vehicle production caused by semiconductor shortage from the third quarter. However, demand
for tires for replacement market remained robust thanks to a vigorous used vehicle market supported by theshortage of new vehicles in addition to economic activities rebounding in various countries. On the cost front,
natural rubber and crude oil prices remained high in line with the recovery of the global economy since 2020,
while costs including ocean freight unit prices, energy costs, and labor costs continued to soar, putting
downward pressure on the profitability of the Group. Furthermore, in North America, the tight supply due tomarket-wide labor shortages hampered the robust demand for replacement market tires, and suppliers
struggled to fulfill orders.
In this environment, the Group accelerated initiatives to improve profitability pivoting on expense and cost
structure reforms while strengthening its premium business strategy, which is aimed at rebuilding earning
power. The Group leveraged its strength in the global production system to flexibly manage supply andresponded in an agile manner to rising demand for replacement market tires. This led to expanded sales.
As a result, the Group’s consolidated revenue for the fiscal year 2021 was 3,246.1 billion yen (up 20% yearon-year), adjusted operating profit was 394.3 billion yen (up 90% year-on-year), operating profit was 376.8
billion yen (up 503% year-on-year), profit before tax was 377.6 billion yen (compared to profit of 27.4 billion
yen for the previous fiscal year). The Group recorded profit attributable to owners of parent of 394.0 billion
yen (compared to a loss of 23.3 billion yen for the previous fiscal year).
The Group is promoting business portfolio and manufacturing footprint restructuring as part of the rebuildingof earning power. In the current period, we carried out restructuring from a medium to long-term perspective
in all of our businesses, including tires, diversified products, and internal manufacturing, starting with theannouncement of the sale of our building products operations in the U.S. in January.
b. Performance by business segment
Increase (decrease)

Fiscal 2021

Fiscal 2020

Billions of yen

Billions of yen

Billions of yen%

Revenue

873.0

776.3

+96.7

+12

Adjusted operating profit

117.0

91.0

+25.9

+29

1,454.6

1,163.9+290.8+25

Adjusted operating profit

190.6

109.6

+81.1

+74

Europe, Russia,
Middle East,

Revenue

693.9

550.4

+143.5+26

India and Africa(loss)

42.1(20.9)+63.0–

China, Asia-

Revenue

386.9

323.6

+63.2

+20

Pacific

Adjusted operating profit

42.0

24.9

+17.1

+68

Revenue

66.4

51.5

+15.0

+29

Adjusted operating profit

5.1

0.5

+4.6

+981

3,246.1

2,695.2+550.8

+20

394.3

207.4

+186.9+90

Japan

Americas

Other

Revenue

Adjusted operating profit

Consolidated

Revenue

Results

Adjusted operating profit

AmountRatio

During fiscal year 2021, tire demand for new vehicles was adversely affected by reduced vehicle production
caused by semiconductor shortages. However, demand for replacement market tires remained robust thanks
to a vigorous used vehicle market, in addition to economic activities rebounding in various countries. Results
for fiscal year 2021 by segment are as follows:21

[Japan]
The unit sales of tires for passenger cars and light trucks trended favorably, surpassing the unit sales in fiscal
year 2020. The unit sales of tires for trucks and buses substantially exceeded the unit sales in fiscal year 2020.
As a result, revenue in the segment during fiscal year 2021 was 873.0 billion yen (up 12% year-on-year),while adjusted operating profit was 117.0 billion yen (up 29% year-on-year).
[Americas]
In North America, the unit sales of tires for passenger cars and light trucks trended favorably, surpassing theunit sales in fiscal year 2020. The unit sales of tires for trucks and buses substantially exceeded the unit sales
in fiscal year 2020. As a result, revenue in the segment during fiscal year 2021 was 1,454.6 billion yen (up
25% year-on-year), while adjusted operating profit was 190.6 billion yen (up 74% year-on-year).
[Europe, Russia, Middle East, India and Africa]
In Europe, the unit sales of tires for passenger cars and light trucks trended favorably, steadily surpassing theunit sales in fiscal year 2020. The unit sales of tires for trucks and buses substantially exceeded the unit sales
in fiscal year 2020. As a result, revenue in the segment during fiscal year 2021 was 693.9 billion yen (up
26% year-on-year), while adjusted operating profit was 42.1 billion yen (compared to a loss of 20.9 billion
yen in fiscal year 2020).
[China, Asia-Pacific]
The unit sales of tires for passenger cars and light trucks trended favorably, surpassing the unit sales in fiscal
year 2020. Similarly, the unit sales of tires for trucks and buses substantially exceeded the unit sales in fiscal
year 2020. As a result, revenue in the segment during fiscal year 2021 was 386.9 billion yen (up 20% yearon-year), while adjusted operating profit was 42.0 billion yen (up 68% year-on-year).
(Note)

The amounts for segment results include inter-segment transactions that have been eliminated whencalculating the consolidated results.

c. Financial position(Current assets)
Current assets were 2,292.9 billion yen, increasing by 238.3 billion yen (12% year-on-year) as cash and cash
equivalents decreased by 23.0 billion yen, but trade and other receivables increased by 73.9 billion yen andinventories increased by 138.9 billion yen.
(Non-current assets)
Non-current assets were 2,282.0 billion yen, increasing by 147.2 billion yen (7% year-on-year) as property,
plant and equipment increased by 35.8 billion yen, goodwill increased by 27.7 billion yen and deferred tax
assets increased by 27.4 billion yen.
(Current liabilities)
Current liabilities were 1,023.4 billion yen, decreasing by 18.3 billion yen (2% year-on-year) as trade andother payables increased by 96.9 billion yen and liabilities directly associated with assets held for saleincreased by 34.5 billion yen, but bonds and borrowings decreased by 144.0 billion yen.
(Non-current liabilities)
Non-current liabilities were 876.1 billion yen, decreasing by 76.2 billion yen (8% year-on-year) as deferred
tax liabilities increased by 15.3 billion yen, but bonds and borrowings decreased by 55.4 billion yen andretirement benefit liabilities decreased by 19.7 billion yen.
Furthermore, total interest-bearing debt(Note) recorded in both current liabilities and non-current liabilities
decreased by 195.1 billion yen (19% year-on-year) to 811.1 billion yen.
(Note)

Interest-bearing debt includes bonds and borrowings and lease liabilities.
22(Equity)
Total equity was 2,675.4 billion yen, increasing by 480.1 billion yen (22% year-on-year) as we recorded
profit attributable to owners of parent of 394.0 billion yen, despite a decrease of 102.1 billion yen due todividends (owners of parent).
As a result, total assets at the end of fiscal 2021 were 4,574.9 billion yen, increasing by 385.6 billion yen(9% year-on-year). Furthermore, the ratio of equity attributable to owners of parent to total assets for fiscal
2021 was 57.5%, increasing by 6.2 percentage points from the end of the previous fiscal year.

23

2)

Cash flows
Fiscal 2021

Increase (decrease)

Fiscal 2020

AmountBillions of yen

Billions of yen

Billions of yen

281.5

526.9

(245.4)131.7(155.4)+287.1

Net cash provided by (used in) financing
activities(379.3)18.1(397.4)

Effect of exchange rate changes on cash andcash equivalents

48.4(12.0)

+60.4

82.3

377.6

(295.4)

810.5

432.9

+377.6

Cash and cash equivalents included in assets
held for sale(105.3)–(105.3)

Cash and cash equivalents at end of period

787.5

810.5

(23.0)Net cash provided by (used in) operating
activities
Net cash provided by (used in) investing
activities

Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodThe Group’s cash and cash equivalents (hereinafter “net cash”) decreased by 23.0 billion yen during the
fiscal year 2021, to 787.5 billion yen, compared with an increase of 377.6 billion yen during the fiscal year
2020.
(Cash flows from operating activities)
Net cash provided by operating activities decreased 245.4 billion yen compared with the fiscal year 2020, to
281.5 billion yen. The principal contributors to the cash provided included profit before tax of 377.6 billion
yen, compared with 27.4 billion yen in fiscal year 2020, and depreciation and amortization of 250.4 billion
yen, compared with 267.5 billion yen in fiscal year 2020. These contributors offset an increase in trade andother receivables of 69.9 billion yen, compared with a decrease of 56.9 billion yen in fiscal year 2020, an
increase in inventories of 140.2 billion yen, compared with a decrease of 128.8 billion yen in fiscal year 2020,
and income taxes paid of 147.7 billion yen, compared with 71.7 billion yen in fiscal year 2020.
(Cash flows from investing activities)
Net cash provided by investing activities totaled 131.7 billion yen, compared with 155.4 billion yen used in
the fiscal year 2020. The principal contributors to the cash provided included proceeds from the sale ofdiscontinued operations of 363.8 billion yen, compared with no proceeds in fiscal year 2020; this offset thepurchase of property, plant and equipment of 161.0 billion yen, compared with 200.7 billion yen in fiscal
year 2020, and the purchase of intangible assets of 24.0 billion yen, compared with 17.4 billion yen in fiscal
year 2020.
(Cash flows from financing activities)
Net cash used in financing activities totaled 379.3 billion yen, compared with 18.1 billion yen provided infiscal year 2020. The principal contributors to the cash used were repayments of short-term borrowings of
220.3 billion yen, compared with 248.4 billion yen in fiscal year 2020, repayments of long-term borrowingsof 109.1 billion yen, compared with 3.4 billion in fiscal year yen 2020, repayments of lease liabilities of 59.7
billion yen, compared with 57.1 billion yen in fiscal year 2020, and dividends paid (owners of parent) of
102.1 billion yen, compared with 91.5 billion yen in fiscal year 2020. These contributors offset proceedsfrom short-term borrowings of 94.7 billion yen, compared with 309.4 billion yen in fiscal year 2020.

24

3)

Production, orders received and salesa. Production results
The production results by segment for the fiscal year under review were as follows.
Name of segment

Amount (Yen in millions)YoY Change (%)

Japan

659,448+15.6

Americas1,185,037+41.2

Europe, Russia, Middle East, India and Africa

610,490+43.3

China, Asia-Pacific311,842

+27.6

Total

2,766,817+33.0(Notes) 1. The amounts are based on selling prices.
2. The amounts do not include consumption taxes.

b. Orders received
Apart from undertaking made-to-order production for a small number of special products such as special
hoses, all the Group’s production is made to stock.
c. Sales results
The sales results by segment for the fiscal year under review were as follows.
Name of segment

Amount (Yen in millions)YoY Change (%)

Japan

767,138+10.2

Americas1,443,758+24.7

Europe, Russia, Middle East, India and Africa

686,140+25.5

China, Asia-Pacific328,817

+16.4

Other

20,175+67.8

28(10.3)

3,246,057+20.4

Corporate or elimination
Total(Note) The amounts do not include consumption taxes.

25

(2) Management’s analysis and discussion of the operating results, etc.
The following section describes management’s understanding, analysis and discussion of the Group’s
operating results, etc.
All references to possible future developments in the text are as of March 23, 2022, the filing date of thisAnnual Securities Report.
1)

Significant accounting estimates and assumptions used in such estimates
The consolidated financial statements of the Group have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) pursuant to the provisions of Article 93 of the Ordinance on
Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (hereinafter the“Ordinance on Consolidated Financial Statements”). Significant accounting policies, accounting estimates,
and assumptions used in such estimates for preparing the consolidated financial statements are described in“3. Significant Accounting Policies” and “4. Significant Accounting Estimates and Judgements Involving
Estimates” of “V. Financial Information, 1. Consolidated Financial Statements, Etc. (1) Consolidated
Financial Statements, Notes to Consolidated Financial Statements.”

2)

Understanding, analysis and discussion of the operating results, etc. for the fiscal year under review
The Group’s operating results, etc. for the fiscal year under review were as follows.
Factors that have a material impact on the Group’s operating results and measures taken to address suchfactors are described in “1. Management policy, management environment and issues to be addressed.”(Revenue, adjusted operating profit and operating profit)
Revenue increased by 550.8 billion yen (up 20% year-on-year) to 3,246.1 billion yen, driven by increased
demand for tires due to the recovery of economic activity worldwide.
Adjusted operating profit increased by 186.9 billion yen (up 90% year-on-year) to 394.3 billion yen, driven
by increased demand for tires due to the recovery of economic activity worldwide. In addition to the above,
operating profit increased by 314.3 billion yen (up 503% year-on-year) to 376.8 billion yen due to an
impairment loss of 73.3 billion yen and a decrease of 29.1 billion yen in business portfolio and plant
restructuring expenses.
As a result, the adjusted operating profit ratio was 12.1%, up 4.5 percentage points from fiscal year 2020.
Status by segment is described in “(1) Overview of operating results, etc.”(Profit (loss) attributable to owners of parent)
Profit (loss) attributable to owners of parent was 394.0 billion yen (compared to a loss of 23.3 billion yen in
fiscal year 2020). This was mainly due to an increase in operating profit of 314.3 billion yen.
3)

Capital financing and liquidity
Cash and cash equivalents decreased 23.0 billion yen to 787.5 billion yen compared to the end of fiscal year
2020. The status of cash flow by business activity is described in “(1) Overview of operating results, etc.”
Regarding financing, in addition to borrowing from financial institutions, we will continue to diversify ourfunding sources to diversify risks and reduce interest costs with methods such as direct financing throughdomestic corporate bonds and commercial paper, securitization of trade receivable, or using leasing.
Funds will primarily be used to rebuild earning power in our core businesses, for strategic growth investments
to expand our flourishing solutions business, and for exploratory businesses. We will do this while utilizing
funds to maintain a strong financial position and to return an appropriate level of profit to our shareholders.

26

4)

Objective indicators for assessing the status of achievement of the management policy, management
strategy and management goals
As described in “1. Management policy, management environment and issues to be addressed,” the Group’s
performance indicators forecast in the Mid-Term Business Plan (2021-2023) are as follows for 2023: revenueof 3,300 billion yen, adjusted operating profit of 450 billion yen, adjusted operating profit ratio of 13%,
ROIC of 10%, and ROE of 12%.
In fiscal year 2021, revenue was 3,246.1 billion yen (up 550.8 billion yen year-on-year), adjusted operating
profit was 394.3 billion yen (up 186.9 billion yen year-on-year), adjusted operating profit ratio was 12.1%(up 4.5 percentage points year-on-year), ROIC was 9.0% (up 3.9 percentage points year-on-year), and ROE
was 12.9% (compared with -0.9% in fiscal year 2020).
(Note) ROE is calculated based on the amount of profit attributable to owners of parent from continuing
operations.

4. Important business contracts(US building materials business)
BRIDGESTONE AMERICAS, INC., the Company’s U.S. subsidiary, has concluded an agreement with
LafargeHolcim Ltd., a Swiss building materials manufacturer, regarding the sale of FSBP, a subsidiary of
BRIDGESTONE AMERICAS, INC. in the Americas segment, to Holcim Participations (US) Inc., the U.S.
subsidiary of LafargeHolcim Ltd. It occurred on January 6, 2021 (local time), and the sale was completed on
March 31, 2021.
Details are described in “V. Financial Information, 1. Consolidated Financial Statements, Etc., (1) Consolidated
Financial Statements, Notes to Consolidated Financial Statements, 31. Discontinued Operations,” as well as in“37. Subsidiaries and Associates, Etc., (2) Loss of control of subsidiaries.”(Anti-vibration rubber business)
On December 10, 2021, the Company decided to newly establish a wholly owned subsidiary (hereinafter the“New Company”) through an absorption-type company split (hereinafter the “Company Split”), which will
succeed the Company’s anti-vibration rubber business (hereinafter the “Business Operations”), and after
integrating the Business Operations of the Group into the New Company, to transfer all shares of the stock of
the New Company to AZ (hereinafter the “Share Transfer,” and collectively with the Company Split, hereinafter
the “Business Transaction”).
Details are described in “V. Financial Information, 1. Consolidated Financial Statements, Etc., (1) Consolidated
Financial Statements, Notes to Consolidated Financial Statements, 31. Discontinued Operations.”
The outline of the Business Transaction is as follows.
1)

Method of the Company Split

Absorption-type split in which the Company becomes the splitting company in the absorption-type split and
New Company becomes the successor company.

2)

Business Transaction schedule

Date of the Share Transfer agreement

December 10, 2021

Conclusion date of the Company Split agreement

April 2022 (planned)

Effective date of the Company Split

July 2022 (planned)

Execution date of the Share Transfer

July 2022 (planned)

27

3)

Assets and liabilities to be split off and their respective carrying amounts
Item

Carrying amount

Total assets

14,648 million yen

Total liabilities

11,834 million yen

The above figures are as of December 31, 2021. The actual amounts of assets and liabilities to be split off will
be determined after adjusting the above figures for any increase or decrease up to the effective date.

4)

Details of the allotment concerning the Company Split

At the time of the Company Split, the New Company will not issue any monetary or other compensation to theCompany.
5)

Basis for calculation of the allotment of shares related to the Company Split

The valuation of the business to be succeeded will be calculated based on the carrying amount finalized after
the date of split.

6)

Overview of the successor company to the Company Split (as of December 31, 2021)

Name

Undecided

Location

Undecided

Position and Name of Representative

Undecided

Contents of business

Undecided

Common stock

Undecided(Chemical products solutions business)
On December 10, 2021, the Company decided to newly establish a wholly owned subsidiary (hereinafter the“New Company”) through an absorption-type company split (hereinafter the “Company Split”), which will
succeed the Company’s chemical products solutions business (hereinafter the “Business Operations”), and after
integrating the Business operations of the Group into the New Company, to transfer all shares of the stock of
the New Company to EU Investment Partnership, which is organized, managed, and operated by EU(hereinafter the “Share Transfer,” and collectively with the Company Split, hereinafter the “BusinessTransaction”).
Details are described in “V. Financial Information, 1. Consolidated Financial Statements, Etc., (1) Consolidated
Financial Statements, Notes to Consolidated Financial Statements, 31. Discontinued Operations.”
The outline of the Business Transaction is as follows.
1)

Method of the Company Split

Absorption-type split in which the Company becomes the splitting company of the absorption-type split and
New Company becomes the successor company.

28

2)

Business Transaction schedule

Date of the Share Transfer agreement

December 10, 2021

Conclusion date of the Company Split agreement

May 2022 (planned)

Effective date of the Company Split

August 2022 (planned)

Execution date of the Share Transfer

August 2022 (planned)

3)

Assets and liabilities to be split off and their respective carrying amounts
Item

Carrying amount

Total assets

14,128 million yen

Total liabilities

10,657 million yen

The above figures are as of December 31, 2021. The actual amounts of assets and liabilities to be split off will
be determined after adjusting the above figures for any increase or decrease up to the effective date.

4)

Details of the allotment concerning the Company Split

At the time of the Company Split, the New Company will issue 100 shares of common stock to the Company.

5)

Basis for calculation of the allotment of shares related to the Company Split

The valuation of the business to be succeeded will be calculated based on the carrying amount finalized after
the date of split.

6)

Overview of the successor company to the Company Split (as of December 31, 2021)

Name

Undecided

Location

Undecided

Position and Name of Representative

Undecided

Contents of business

Undecided

Common stock

Undecided29

5. Research and development activities
As steps toward realizing the vision of the Group, we are further reinforcing our core tire business, andleveraging its strength to expand our solutions business, which is our growth business, on a global scale. We
are also developing our exploratory businesses, including the recycle business that recovers and reuses tires as
raw material and the guayule business that seeks to diversify sources of natural rubber. In addition tostrengthening each of them, we sustainably reinvest value generated from each business throughout the value
chain and aim for amplifying value. These initiatives are all based on technology innovation. We will work on
R&D activities with a focus on technology innovation, and accelerate innovation by combining our strong “real,”
which we have long accumulated on site (genba), with "digital." Through this, we will develop Dan-Totsu
products and Dan-Totsu solutions.
In our tire business, we have developed “ENLITEN,” an innovative tire technology optimized for use on electricvehicles (EVs). ENLITEN contributes to reduce CO2 emissions and improve resource productivity through lessresource utilization and increased fuel efficiency, improve safety and peace of mind through enhanced driving
performance, and also increase driving range in electric vehicles. Tires with ENLITEN technology have alreadybeen adopted in electric vehicles and other vehicles of major new vehicle manufacturers in Japan and overseas,
and we have delivered them to emerging manufacturers as well. We will also work on co-creating value withnew partners.
A tire is made of the components casings and belts. We are driving the development of commonality andmodularity technology which simplifies case-belt combination by having common combination between
different products and differentiates ourselves by customizing the tread performance based on each customer’s
conditons of use. We call these development initiatives commonality and modularity technology. We will work
to maximize customer value while reducing the environmental footprint throughout our value chain, including
streamlining our development and manufacturing processes.
In our solutions business, a growth business, we are developing and expanding mobility solutions centered on
Webfleet Solutions, a digital fleet solutions provider in Europe. In September 2021, we completed theacquisition of Azuga Holdings Inc. in the U.S. We will scale up our mobility solutions development throughcollaboration with them. In mining solutions, we have combined “Bridgestone MasterCore,” the Dan-Totsu
product for off-the-road tires for mining vehicles, with digital tools for monitoring vehicles and tires, as part ofour efforts to develop mining solutions that optimize mining operations.
As an initiative to achieve sustainable and stable supply and improvement of productivity of natural rubber, wehave developed an optimization system for Para rubber tree plantation that utilizes big data through theacademic advice from the Institute of Statistical Mathematics at Research Organization of information andsystems in Japan, aiming for contribution to the realization of higher yield at rubber farms. We are working on
stably increasing the productivity of natural rubber without expanding the plantation area. Furthermore, todiversify our sources of natural rubber, we are also working to achieve practical use of natural rubber derived
from the guayule plant, which can be grown in dry regions. We have succeeded in developing a technology toefficiently and stably increase guayule seedlings from high-quality seeds through joint research with Kirin
Holdings Company, Limited. We are continuing co-creation with various partners to develop technologies andbusiness models to achieve practical use.
In order to promote Digital Transformation (DX), which is critical for the development of tires, solutions, andtechnology that combine “real” and “digital,” we are also training and hiring digital talent, including data
scientists who can analyze and develop advanced AI and algorithms. We established the “Bridgestone × Tohoku
University Co-creation Lab” on the Tohoku University campus as we strive to expand cooperation with external
entities in the digital field.
The Group has been participating in an international space exploration mission together with the Japan
Aerospace Exploration Agency (JAXA) and Toyota Motor Corporation that tackles the harsh surface of themoon, following the dream of humanity. In line with this initiative, the Group is developing tires for the manned
moon rover “LUNAR CRUISER.”
In order to promote these technology innovations, we have redeveloped our R&D base in Kodaira, Tokyo, tobuild “Bridgestone Innovation Park,” a global innovation hub. In December 2021, we completed construction30

of the innovation center “B-Innovation,” which materializes ideas through co-creation with external partners,
as well as the mini-test course “B-Mobility,” where engineers can experience their technologies come to life.
We are planning to hold opening ceremonies for these facilities in the first half of 2022, and will expand
activities that will lead to interaction with empathy and eventually co-creation with as more partners as possible.
With Bridgestone Innovation Park at the core, the Group’s innovation sites “Digital Garage” in Europe and“Mobility Lab” in the U.S. will collaborate drawing on their respective strengths to accelerate innovation.
R&D expenses for the Group as a whole for fiscal year 2021 totaled 95.5 billion yen.
(Note) Since some of the Group’s R&D activities are not tied to specific segments and the results of suchactivities may appear in multiple segments, the description of their status and amounts by segment havenot been included.

31

III. Facilities
1. Overview of capital expenditures
When considering capital investment, the Group carries out strategic investment activities while limiting
investees to a selected few with an eye towards maximizing return on capital investment. Based on this approach,
we focused on rebuilding our earning power during the period under review, by expanding the sales ratio ofpremium products, enhancing our cost competitiveness by making investments toward increased productivity
at existing plants, and making investments such as building our IT infrastructure. Furthermore, we continued
to invest in solution networks as a strategic growth investment and in the construction of the technologicalinnovation center Bridgestone Innovation Park, a project ongoing since the previous fiscal year. As a result,capital investment totaled 262.0 billion yen.
On a per-segment basis, the Group’s capital investment consisted of:Japan: 56.9 billion yen;
the Americas: 102.2 billion yen;
Europe, Russia, Middle East, India, and Africa: 43.4 billion yen;
China, Asia-Pacific: 20.1 billion yen;
Other: 39.3 billion yen.
In addition, in the Europe, Russia, Middle East, India and Africa segment, the plan was to cease activity at the
Bethune Plant owned by BRIDGESTONE FRANCE S.A.S. in the previous fiscal year, but the closure wascompleted in April 2021.

32

2. Major facilities(1) The Company(As of December 31, 2021)
Carrying amount (Yen in millions)
Name of business location

Kurume Plant
Tokyo AC Tire Plant
Yokohama Plant
Nasu Plant
Hikone Plant
Shimonoseki Plant
Tosu Plant
Tochigi Plant
Kumamoto Plant
Amagi Plant
Hofu Plant
Seki Plant
Iwata Plant
Saga Plant

Location

Kurume,Fukuoka
Kodaira,Tokyo
Totsuka-ku,
Yokohama
Nasushiobara,
Tochigi
Hikone, Shiga
Shimonoseki,
Yamaguchi
Tosu, Saga
Nasushiobara,
Tochigi
Tamana,Kumamoto
Asakura,Fukuoka
Hofu,
Yamaguchi
Seki, Gifu
Iwata,
Shizuoka
Miyaki-gun,
Saga

Name of Description
Land
Buildings Machinery
segment of facilities(Area inandandthousands ofstructures vehicles
m2)

Ku,

Production
facilities

8,031

3,980

1,043
(457)

721

30
(11)

13,806975

Japan

Production
facilities

1,760

1,124

–

75

1
(0)

2,960

181

Japan

Production
facilities

9,671

831

623
(167)

438

3,423
(–)

14,986545

Japan

Production
facilities

2,429

3,070

1,220
(195)

728

1,407
(40)

8,854

700

Japan

Production
facilities

10,681

17,027

1,166
(658)

1,956

1,133
(–)

31,964

1,439

Japan

Production
facilities

5,241

4,116

4,106
(285)

1,118

8
(–)

14,589736

Japan

Production
facilities

1,857

3,967

948
(182)

1,341

7
(–)

8,120

721

Japan

Production
facilities

4,460

7,075

1,372
(151)

839

3,926
(444)

17,672

837

Japan

Production
facilities

1,580

2,440

1,690
(142)

312

350
(6)

6,372

532

Japan

Production
facilities

2,711

4,181

911
(376)

370

8
(1)

8,182

827

Japan

Production
facilities

6,025

4,440

1,515
(482)

1,004

644
(–)

13,629907

Japan

Production
facilities

1,900

1,516

2,709
(150)

131

388
(–)

6,644

231

Japan

Production
facilities

3,161

83

4,531
(116)

93

18
(–)

7,887

318

Japan

Production
facilities

5,878

4,015

2,908
(236)

442

17
(–)

13,260543

Japan

Production
facilities

14,334

6,962

4,703
(374)

1,238

6
(–)

27,244488

Corporate

Other
facilities

37,481

9,157

2,000
(3,030)

5,937

2,837
(638)

57,412

2,460

Japan

Other
facilities

3,003

282

–

112

9
(–)

3,406

668

Corporate

Other
facilities

13,018114

26,198
(369)

911

6,039
(12)

46,279

1,637

Kitakyushu

Technical Center
Chemical & Industrial
Products Technology
CenterKodaira,Tokyo
Totsuka-ku,
Yokohama
Chuo-ku,

Headquarters and others

Tokyo andothers

Total

Number of
employees

Japan

Wakamatsu-

Kitakyushu Plant

Other

Right-of-use
assets(Area inthousands ofm2)

33

(2) Domestic subsidiaries(As of December 31, 2021)
Carrying amount (Yen in millions)Company nameLocation

Name of Description
Land
Buildings Machinery
segment of facilities(Area inandandthousands ofstructures vehicles
m2)

Other

Right-of-use
assets(Area inthousands of
m2)

Total

Number of
employees

BRIDGESTONE SPORTS
CO., LTD.

Chuo-ku,
Tokyo andothersJapan

Production
facilities
Other

879

217

2,286
(63)

250

919
(–)

4,550

307

BRIDGESTONE CYCLECORPORATION

Ageo,
Saitama andothersJapan

Production
facilities
Other

2,172

491

1,728
(130)

250

1,512
(–)

6,153

653

(3) Overseas subsidiaries(Americas)(As of December 31, 2021)
Carrying amount (Yen in millions)
Right-of-use
assets(Area inthousands ofm2)

Company name(Name of business location)

Location

BRIDGESTONEAMERICAS TIREOPERATIONS, LLC(La Vergne Plant)

U.S.A.

Americas

Production
facilities

2,757

8,004

39
(550)

166

147
(–)

11,113914

BRIDGESTONEAMERICAS TIREOPERATIONS, LLC(Wilson Plant)

U.S.A.

Americas

Production
facilities

10,19827,56815(1,803)

341

119
(–)

38,241

1,881

BRIDGESTONEAMERICAS TIREOPERATIONS, LLC(Warren Plant)

U.S.A.

Americas

Production
facilities

7,686

12,741461(3,662)

205

28
(–)

21,121

1,014

BRIDGESTONEAMERICAS TIREOPERATIONS, LLC(Aiken Plant)

U.S.A.

Americas

Production
facilities

17,002

22,883876(2,353)

672

178
(–)

41,611

1,546

BRIDGESTONEAMERICAS TIREOPERATIONS, LLC(Aiken Off Road Plant)

U.S.A.

Americas

Production
facilities

33,776

17,259305(2,206)

265

60
(–)

51,665507

BRIDGESTONECANADA INC.
(Joliette Plant)

CanadaAmericas

Production
facilities

8,300

19,408

6
(552)

622

52
(–)

28,3891,298

BRIDGESTONE DE
MEXICO, S.A. DE C.V.
(Cuernavaca Plant)

MexicoAmericas

Production
facilities

6,631

13,154

4
(368)

68

7
(–)

19,865

1,244

BRIDGESTONE DO
BRASIL INDUSTRIA E
COMERCIO LTDA.
(Sao Paulo Plant)

BrazilAmericas

Production
facilities

2,900

7,941

63
(408)

553

187
(–)

11,645

3,487

BRIDGESTONEAMERICAS TIREOPERATIONS, LLC(Technical Center)

U.S.A.

AmericasOtherfacilities

6,297

3,236

199
(26,247)

202

65
(–)

9,998

507

Name of Description
Land
Buildings Machinery
segment of facilities(Area inandandthousands ofstructures vehicles
m2)

34

Other

Total

Number of
employees

(Europe, Russia, Middle East, India and Africa)(As of December 31, 2021)
Carrying amount (Yen in millions)Company name(Name of business location)

BRIDGESTONEPOZNAN SP. Z O.O.
(Poznan Plant)

BRIDGESTONESTARGARD SP. Z O.O.
(Stargard Plant)

BRIDGESTONETATABANYA TERMELO
KFT.
(Tatabanya Plant)

BRIDGESTONEHISPANIAMANUFACTURING
S.L.U.
(Bilbao Plant)
BRIDGESTONEHISPANIAMANUFACTURING
S.L.U.
(Burgos Plant)

BRIDGESTONE INDIA
PRIVATE LTD.
(Pune Plant)

BRIDGESTONE EUROPE
NV/SA(Technical Center)

Location

Name of Description
Land
Buildings Machinery
segment of facilities(Area inandandthousands ofstructures vehicles
m2)

Other

Right-of-use
assets(Area inthousands of
m2)

Total

Number of
employees

PolandEurope,Russia,MiddleProduction
East,facilities
India andAfrica16,76011,957

167
(35)

1,798

1,252
(300)

31,933

1,975

PolandEurope,Russia,MiddleProduction
East,facilities
India andAfrica12,5296,487

500(1,000)

808

156
(–)

20,480999

Hungary

Europe,Russia,MiddleProduction
East,facilities
India andAfrica10,877

12,208

1,171
(659)

2,073

82
(–)

26,411

1,305

Spain

Europe,Russia,MiddleProduction
East,facilities
India andAfrica

2,585

8,245

8
(150)

1,419

189
(–)

12,446864

Spain

Europe,Russia,MiddleProduction
East,facilities
India andAfrica3,440

14,014

–
(301)

1,307

951
(–)

19,712

1,437

India

Europe,Russia,MiddleProduction
East,facilities
India andAfrica

6,425

7,611

–

614

2,909
(759)

17,559

1,897

Italy

Europe,Russia,MiddleOther
East,facilities
India andAfrica

5,080

3,380

986
(1,749)

143

215
(–)

9,805

559

35

(China, Asia-Pacific)(As of December 31, 2021)
Carrying amount (Yen in millions)
Right-of-use
assets(Area inthousands ofm2)

Company name(Name of business location)

Location

BRIDGESTONE(TIANJIN) TIRE CO.,LTD.
(Tianjin Plant)

China

China,
AsiaPacific

Production
facilities

5,629

16,678

–

1,691

677
(249)

24,675

1,443

BRIDGESTONE (WUXI)TIRE CO., LTD.
(Wuxi Plant)

China

China,
AsiaPacific

Production
facilities

6,998

13,987

–

2,472

492
(286)

23,9491,341

THAI BRIDGESTONE
CO., LTD.
(Nong Khae Plant)

ThailandChina,
AsiaPacific

Production
facilities

5,591

2,332

2,666
(1,215)

3,549–

14,1382,486

BRIDGESTONE TIRE
MANUFACTURING(THAILAND) CO., LTD.
(Chonburi Plant)

ThailandChina,
AsiaPacific

Production
facilities

4,756

8,334

2,908
(611)

2,877

86
(–)

18,962

1,947

BRIDGESTONESPECIALTY TIRE
MANUFACTURING(THAILAND) CO., LTD.

ThailandJapan

Production
facilities
and others

10,879

3,519

3,873
(822)

722

25
(–)

19,018693

Name of Description
Land
Buildings Machinery
segment of facilities(Area inandandthousands ofstructures vehicles
m2)

Other

Total

Number of
employees(Notes) 1. The amounts are based on carrying amounts excluding construction in progress.
2. Land for the Company’s Tokyo AC Tire Plant is presented as part of the Technical Center, because
their plots are not separated.
3. Land for the Company’s Technical Center includes 2,489,000 m2 of land, as well as 638,000 m2 ofland recorded as right-of-use assets, for test course sites under its management (located in Shibetsu,
Hokkaido and Nasushiobara, Tochigi).
4. Land for the Company’s Chemical & Industrial Products Technology Center is presented as part of
the Yokohama Plant, because their plots are not separated.
5. Land for BRIDGESTONE AMERICAS TIRE OPERATIONS, LLC’s Technical Center includes
24,281,000 m2 of land for test course sites.
6. No major facilities are currently idle.

36

3. Plans for addition and retirement of facilities
Plans for addition and retirement of facilities in the next fiscal year (January 1, 2022 to December 31, 2022)
are as follows.
(1) Additions
The breakdown by segment is as follows.
Name of segment

Amount of planned capital
expenditures(Yen in millions)

Key descriptions and purposes of facilities, etc.
Expansion of the sales ratio of premium products to rebuild

Japanearning power, enhancement of our cost competitivenessby making investments toward increased productivity at

62,000existing plants, investment in building our IT
infrastructure, and investment in solution networks as a
strategic growth investment

Americas122,000

The same as above

45,000The same as above

China, Asia-Pacific34,000The same as above

Other

42,000The same as above

Total

305,000–

Europe, Russia, Middle East,
India and Africa(Notes) 1. The amount of planned capital expenditures in the Japan segment includes the amounts of planned
capital expenditures at tire plants in Japan that produce tires for other segments.
2. Funds required for the planned capital expenditures are scheduled to be covered by funds on hand,borrowings and leases.
3. The amounts do not include consumption taxes.
(2) Retirements
In the Japan segment, the Company made the decision to transfer the chemical products solutions businessof Bridgestone Diversified Chemical Products Co., Ltd. and others to EU.
This transfer is scheduled to be completed by the end of August 2022, subject to regulatory approvals andother customary closing conditions.

37

IV. Status of the Company
1. Shares of the Company(1) Total number of shares authorized, etc.
1)2)

Total number of shares authorizedClass

Total number of shares authorized to be issued (Shares)

Common stock

1,450,000,000

Total

1,450,000,000

Total number of shares issued

Class

Number of shares issued Number of shares issued
as of the end of the fiscal
as of the filing dateyear (Shares)(Shares)(December 31, 2021)(March 23, 2022)

Common stock

713,698,221

713,698,221

Total

713,698,221

713,698,221

Stock exchange on
which the Company islisted or authorized
financial instruments
business association towhich the Company isregistered
Tokyo Stock Exchange
Fukuoka Stock
Exchange
Listed on the First
Section of the Tokyo
Stock Exchange (Note)–

Details

Number of shares perunit: 100 shares–(Note) The Company applied for delisting from the Nagoya Stock Exchange (First Section) on October 29,
2021 and was delisted on December 19, 2021.

38

(2) Stock acquisition rights
1)

Stock option plans

Date of resolution

March 26, 2009

March 30, 2010

March 29, 2011

Classification and number of
eligible individuals

Members of the Board of theCompany: 9
Vice President-Officers notconcurrently serving as
members of the Board of theCompany: 20

Members of the Board of theCompany: 8
Vice President-Officers notconcurrently serving as
members of the Board of theCompany: 25

Members of the Board of theCompany: 9
Vice President-Officers notconcurrently serving as
members of the Board of theCompany: 36

197 units [177 units]

370 units [345 units]

697 units [637 units]

Common stock
19,700 shares [17,700 shares]

Common stock
37,000 shares [34,500 shares]

Common stock
69,700 shares [63,700 shares]

Exercise price (Note 1)

1 yen

Same as left

Same as left

Exercise period(Note 1)
Issue price and amount ofcommon stock to be increased
when shares are issued upon
exercise of the stockacquisition rights (Note 1)
Exercise conditions(Note 1)

From May 1, 2009 to April 30,
2029

From May 6, 2010 to April 30,
2030

From May 2, 2011 to April 30,
2031

Issue price:
1,265 yenAmount of common stock to
be increased:
633 yenIssue price:
1,401 yenAmount of common stock to
be increased:
701 yenIssue price:
1,657 yenAmount of common stock to
be increased:
829 yen(Note 4)Same as left

Same as left

Matters concerning transfer ofstock acquisition rights (seeNote 1)

Any acquisition of the stockacquisition rights throughtransfer must be approved by
the Company’s Board of
Directors. (Note 5)

Same as left

Same as left

Matters concerning granting ofstock acquisition rights in theevent of reorganization(Note 1)–

Number of stock acquisitionrights(Notes 1 and 2)
Type, details, and number ofshares underlying the stockacquisition rights(Notes 1 and 3)

–

39

–

Date of resolution

March 27, 2012

March 26, 2013

March 25, 2014

Classification and number of
eligible individuals

Members of the Board of theCompany: 9
Vice President-Officers notconcurrently serving as
members of the Board of theCompany: 35

Members of the Board of theCompany excluding outside
directors: 4
Vice President-Officers notconcurrently serving as
members of the Board of theCompany: 36

Members of the Board of theCompany excluding outside
directors: 4
Vice President-Officers notconcurrently serving as
members of the Board of theCompany: 46

1,357 units [1,312 units]

1,575 units

1,150 units [1,133 units]

Common stock
135,700 shares [131,200
shares]Common stock 157,500
sharesCommon stock
115,000 shares [113,300
shares]Exercise price (Note 1)

1 yen

Same as left

Same as left

Exercise period(Note 1)
Issue price and amount ofcommon stock to be increased
when shares are issued upon
exercise of the stockacquisition rights (Note 1)
Exercise conditions(Note 1)

From May 1, 2012 to April 30,
2032

From May 1, 2013 to April 30,
2033

From May 1, 2014 to April 30,
2034

Issue price:
1,649 yenAmount of common stock to
be increased:
825 yenIssue price:
3,314 yenAmount of common stock to
be increased:
1,657 yen

Issue price:
3,154 yenAmount of common stock to
be increased:
1,577 yen

(Note 4)Same as left

Same as left

Matters concerning transfer ofstock acquisition rights (Note1)

Any acquisition of the stockacquisition rights throughtransfer must be approved by
the Company’s Board of
Directors. (Note 5)

Same as left

Same as left

Matters concerning granting ofstock acquisition rights in theevent of reorganization(Note 1)–

Number of stock acquisitionrights(Notes 1 and 2)
Type, details, and number ofshares underlying the stockacquisition rights(Notes 1 and 3)

–

40

–

Date of resolution

Classification and number of
eligible individuals

Number of stock acquisitionrights(Notes 1 and 2)
Type, details, and number ofshares underlying the stockacquisition rights(Notes 1 and 3)
Exercise price (Note 1)

March 24, 2015

April 21, 2016

April 27, 2017

Members of the Board of theCompany excluding outside
directors: 3
Vice President-Officers notconcurrently serving as
members of the Board of theCompany: 48

Members of the Board of theCompany excluding nonexecutive members of theBoard:
2
Executive officers of theCompany not concurrently
serving as members of theBoard: 8
Vice President-Officers of theCompany not concurrently
serving as executive officers:
41

Plan A
Members of the Board of theCompany excluding nonexecutive members of theBoard:
2
Executive officers of theCompany not concurrently
serving as members of theBoard: 5
Vice President-Officers of theCompany not concurrently
serving as executive officers:
45
Plan B
Executive officers of theCompany not concurrently
serving as members of theBoard: 1
Vice President-Officers of theCompany not concurrently
serving as executive officers:
2

1,224 units [1,205 units]

1,768 units [1,742 units]

Plan A 1,843 units
Plan B 71 units

Common stock
122,400 shares [120,500
shares]Common stock
176,800 shares [174,200
shares]Common stock
Plan A 184,300 shares
Plan B 7,100 shares

1 yenSame as left

Same as left
Plan A
From May 13, 2017 to May
12, 2037
Plan B
From July 6, 2017 to July 5,
2037
Plan A
Issue price:
3,578 yenAmount of common stock to
be increased:
1,789 yen
Plan B
Issue price:
3,672 yenAmount of common stock to
be increased:
1,836 yen

Exercise period(Note 1)

From May 1, 2015 to April 30,
2035

From May 7, 2016 to May 6,
2036

Issue price and amount ofcommon stock to be increased
when shares are issued upon
exercise of the stockacquisition rights (Note 1)

Issue price:
4,100 yenAmount of common stock to
be increased:
2,050 yen

Issue price:
2,885 yenAmount of common stock to
be increased:
1,443 yen

Exercise conditions(Note 1)

(Note 4)Same as left

Same as left

Matters concerning transfer ofstock acquisition rights (Note1)

Any acquisition of the stockacquisition rights throughtransfer must be approved by
the Company’s Board of
Directors. (Note 5)

Same as left

Same as left

Matters concerning granting ofstock acquisition rights in theevent of reorganization(Note 1)–––

(Notes) 1 The information is as of the end of the fiscal year under review (December 31, 2021). As for the information that haschanged between the end of the fiscal year under review and the last day of the month prior to the filing date (February41

28, 2022), the information as of the last day of the month prior to the filing date is presented in brackets. For all othermatters, there has been no change in the information since the end of the fiscal year under review.
2 The number of shares underlying each stock acquisition right is 100.
3 In case of the following events subsequent to the day of allotment, the number of shares to be granted shall be adjusted
accordingly.
(1) If the Company conducts a share split (including a gratis allotment of shares; hereinafter the same for share splits)
or share consolidation, the number of shares to be granted shall be adjusted in accordance with the following
formula, and the total number of shares underlying the stock acquisition rights shall be the number of shares tobe granted after adjustment multiplied by the total number of stock acquisition rights yet to be exercised or
acquired by the Company.
Number of shares to be granted after adjustment = Number of shares to be granted before adjustment × Ratioof share split or consolidation(Any fractions less than one share shall be rounded down when calculating the number of shares to be granted.)(2) In case of a compelling event that requires an adjustment to the number of shares to be granted, such as theCompany reducing its common stock or conducting a merger or company split, the number of shares to be granted
shall be adjusted to a reasonable extent, taking account of the factors such as the conditions of the reduction incommon stock, the merger or company split, and the total number of shares underlying the stock acquisition rights
shall be the number of shares to be granted after adjustment multiplied by the total number of stock acquisitionrights yet to be exercised or acquired by the Company. Any fractions less than one share shall be rounded downwhen calculating the number of shares to be granted.
4 (1) Even during the exercise period, a stock acquisition right holder may not exercise his/her stock acquisition rights
while he/she is holding a position of member of the Board, executive officer, or vice president-officer of theCompany (including the day on which he/she retires).
(2) Stock acquisition rights may not be exercised in part.
(3) Other exercise conditions are prescribed in the stock acquisition right allotment agreement executed between the
Company and the stock acquisition right holder.
5 Other details are prescribed in the subscription requirements and the stock acquisition right allotment agreement
executed between the Company and the stock acquisition right holder.

2)

Shareholder rights plans
Not applicable.

3)

Other stock acquisition rights
Not applicable.

(3) Exercises of moving strike convertible bonds
Not applicable.
(4) Changes in the total number of shares issued, common stock and legal capital surplus

Date

Increase(decrease) in
the total
number ofshares issued(Thousands ofshares)Total number
Increase
Increase
Balance ofof shares
Balance of(decrease) in(decrease) inlegal capitalissuedcommon stock
legal capitalcommon stock
surplus(Thousands of(Yen in millions)surplus(Yen in millions)(Yen in millions)shares)(Yen in millions)January 19, 2018
(Note)(51,565)

761,536–

126,354–

122,079

January 21, 2020
(Note)(47,838)

713,698–

126,354–

122,079(Note) The decreases are due to retirements of treasury stock.

42

(5) Distribution of shares by shareholder category(As of December 31, 2021)
Status of shares (Number of shares per unit: 100 shares)
Category

Number ofshareholders
Number ofshare units

National
and local
governments

Financial
Financial instruments
institutions business
operators

Other
corporations

Foreign shareholders

Individuals
Other than
Individuals and others
individuals

Total

Number ofshares lessthan one unit
(shares)

–

244

51

822

937

139

86,59488,787––2,249,293

503,018

1,041,768

2,035,495

700

1,303,928

7,134,202

278,021

–

31.53

7.05

14.60

28.53

0.01

18.28

100.00–held
Ratio tototal shares(%)(Notes) 1. Treasury stock (9,431,214 shares) is included in “Individuals and others” (94,312 units) and “Number of shares lessthan one unit” (14 shares). All 9,431,214 shares of treasury stock were the shares effectively held as of December 31,
2021.
2. “Other corporations” and “Number of shares less than one unit” include 16 units and 20 shares registered in the nameof Japan Securities Depository Center, Inc., respectively.

43

(6) Major shareholders(As of December 31, 2021)
Ratio of the number of
Number ofshares held to the total
shares heldnumber of shares issued(Thousands(excluding treasury stock)of shares)
(%)

Name

Address

The Master Trust Bank of Japan,
Ltd. (Trust account)

2-11-3 Hamamatsucho, Minato-ku, Tokyo

93,176

13.23

Ishibashi Foundation

1-7-2 Kyobashi, Chuo-ku, Tokyo

76,693

10.89

Custody Bank of Japan, Ltd. (Trustaccount)

1-8-12 Harumi, Chuo-ku, Tokyo

30,766

4.37

Hiroshi Ishibashi

Minato-ku, Tokyo

21,0002.98

SMBC Nikko Securities Inc.

3-3-1 Marunouchi, Chiyoda-ku, Tokyo

17,685

2.51

Nagasaka Corporation

1-7-2 Kyobashi, Chuo-ku, Tokyo

16,325

2.32

Nippon Life Insurance Company

1-6-6 Marunouchi, Chiyoda-ku, Tokyo

13,218

1.88

Japan Securities Finance Co., Ltd.

1-2-10 Nihonbashi Kayabacho, Chuo-ku,
Tokyo11,122

1.58

1776 HERITAGE DRIVE, NORTHQUINCY, MA 02171, U.S.A.
(2-15-1 Konan, Minato-ku, Tokyo)

9,978

1.42

ONE LINCOLN STREET, BOSTON MA
USA 02111(3-11-1 Nihonbashi, Chuo-ku, Tokyo)

9,881

1.40

–

299,843

42.58

STATE STREET BANK WEST
CLIENT - TREATY 505234(Standing proxy: Settlement &Clearing Services Department,
Mizuho Bank, Ltd.)SSBTC CLIENT OMNIBUS
ACCOUNT(Standing proxy: Custody
Operations Department, Tokyo
Branch, The Hongkong andShanghai Banking Corporation
Limited)
Total(Notes) 1. Ishibashi Foundation is a public interest incorporated foundation, established for the purpose of contributing to thesound development of society through business that popularizes and improves fine arts as well as through donationand grants program that support artistic, cultural and educational activities.
2. Shares held by trust banks include shares owned in the trustees’ capacity.

44(7) Voting rights
1)

Total number of shares issued(As of December 31, 2021)
Category

Number of voting rights(Units)Number of shares

Shares without voting rights
Shares with restricted voting rights(Treasury stock, etc.)
Shares with restricted voting rights(Other)

–

–

–

–

–

–

–

–

–

(Own holdings of treasury
stock)
Shares with full voting rights(Treasury stock, etc.)

Commonstock

Details–

9,431,200–(Cross-shareholdings)
Commonstock

Shares with full voting rights

Common(Other)stock–

10,000703,979,000

7,039,790–

278,021––

Total number of shares issued

713,698,221––

Total number of voting rights–

7,039,790–

Shares less than one unit

Commonstock(Notes) 1. The number of shares in the “Shares with full voting rights (Other)” field includes 1,600 shares registered in the nameof Japan Securities Depository Center, Inc.
2. The number of voting rights in the “Shares with full voting rights (Other)” and “Total number of voting rights” fields
include 16 units of voting rights relating to shares registered in the name of Japan Securities Depository Center, Inc.

2)

Treasury stock(As of December 31, 2021)
Number of
Ratio of the number
shares held
Total number of shares held to theunder theof shares held total number ofnames ofshares issued (%)
othersAddress

Number ofshares held
under own
name

Bridgestone Corporation

3-1-1 Kyobashi, Chuo-ku,
Tokyo

9,431,200–

9,431,200

1.32

Bridgestone Tire Nagano

2-18-20 Koyaminami,

Hanbai Co., Ltd.

Matsumoto City, Nagano

10,000–10,0000.00

9,441,200–

9,441,200

1.32

Name of shareholder

Total

–

45

2. Acquisition of treasury stock, etc.
[Class of stock] Acquisition of common stock pursuant to Article 155, items (iii), (vii), and (xiii) of theCompanies Act(1) Acquisition by resolution of the Shareholders’ Meeting
Not applicable.
(2) Acquisition by resolution of the Board of Directors
Category
Resolution at the Board of Directors (February 15, 2022)(Timing: February 17 to December 13, 2022)

Number of shares

Total amount (Yen)

25,000,000 (up to)

100,000,000,000 (up to)Treasury stock acquired prior to the fiscal year under review––

Treasury stock acquired in the fiscal year under review

–

–

–

–

–

–

Total number of shares and total amount of outstanding sharesof resolution
Ratio of non-exercised portion at the end of the fiscal year
under review (%)
Treasury stock acquired during the period after the reporting
period to the Filing Date
Ratio of non-exercised portion as of the Filing Date (%)

1,314,100

6,564,176,000

94.7

93.4

(Note) Treasury stock acquired during the period after the reporting period to the Filing Date does not include shares acquired
through the purchase of treasury stock between March 1, 2022 and the Filing Date of the Annual Securities Report.

(3) Items not based on resolution of the Shareholders’ Meeting or Board of Directors
Acquisition of common stock pursuant to Article 155, item (vii) of the Companies Act
Category

Number of shares

Treasury stock acquired in the fiscal year under review

Total amount (Yen)

2,106

10,164,689

Treasury stock acquired during the period after the reporting
89
447,085
period to the Filing Date
(Note) Treasury stock acquired during the period after the reporting period to the Filing Date does not include shares acquired
through demand for purchase of shares from shareholders holding less than one unit of shares between March 1, 2022
and the Filing Date of the Annual Securities Report.

Acquisition of common stock pursuant to Article 155, item (xiii) of the Companies Act
Category

Number of shares

Treasury stock acquired in the fiscal year under review

300

Treasury stock acquired during the period after the reporting

Total amount (Yen)
1,212,600

1,000
4,042,000
period to the Filing Date
(Note) This was an acquisition without contribution of some common stock allocated to the corporate executive manager andexecutive managers as restricted stock compensation.
Treasury stock acquired during the period after the reporting period to the Filing Date does not include shares acquired
through acquisition without contribution between March 1 2022 and the Filing Date of the Annual Securities Report.

46

(4) Status of disposal and ownership of acquired treasury stock
The period after the reporting period to
the Filing Date
Total disposal amount Number of Total disposal amount(Yen)shares(Yen)

Fiscal year under review
Category

Number ofsharesAcquired treasury stock that was offered tosubscribers

–

–

–

–

Acquired treasury stock that was cancelled

–

–

–

–

Acquired treasury stock that was transferred due tomerger, share exchange, share issuance and

–

–

–

–

58,800237,674,875

21,20085,694,381

37,200156,426,174––

38,700150,363,516

104,800

423,621,512

9,431,214–

10,620,403–

company split
Other(Through exercise of stock option)(Through granting of performance-based stockcompensation)(Through granting of restricted stockcompensation)
Number of treasury stock held

(Note) The status of disposal and ownership of acquired treasury stock in the period after the reporting period to the Filing Datedoes not include treasury stock caused by the exercise of stock options between March 1, 2022 and the Filing Date of theAnnual Securities Report, and treasury stock from sales due to demand for sales of shares from shareholders holding lessthan one unit of shares.

47

3. Dividend policy
The Company regards the interests of shareholders as an important management priority and follows a basic
policy of strengthening our management base in preparation for future business developments while working
to improve business results. In regard to distributing profits to shareholders, the Company conducts shareholder
returns while maintaining an appropriate financial position and securing the internal reserves necessary torebuild earning power mainly in our core businesses and for strategic growth investments to expand oursolutions business, one of our growth businesses. In determining dividend payments, the Company
comprehensively evaluates factors including business results, financial positions for the relevant fiscal period,
medium-term earnings forecasts, investment plans, and cash flows. Based on these considerations, the Company
strives to live up to the expectations of shareholders by striving to achieve stable and continuous increases ofdividend payments targeting a consolidated payout ratio of 40% by sustainably enhancing our corporate value.
The Company pays dividends of surplus twice a year, comprising year-end and interim dividends. Year-end
dividends are subject to a resolution of the Annual Shareholders’ Meeting, while interim dividends are subject
to a resolution of the Board of Directors. In addition, the Articles of Incorporation prescribe that the Company
may, by resolution of the Board of Directors, distribute interim dividends with the date of record for such
dividends being June 30 each year.
Based on the above policy, the dividend for the 103rd Fiscal Period is set at an annual dividend of 170 yen per
share, comprising an interim dividend of 85 yen per share and a year-end dividend of 85 yen per share.
Further, the Company strives to strengthen the long-term stability of our management base by using internal
reserves to establish and strengthen production and sales systems and advance R&D activities in Japan andoverseas.
The appropriation of surplus through dividends relating to the fiscal year under review is as follows.
Date of resolution

Total dividend amount (Yen in millions)

August 10, 2021:
Resolution of the Board of Directors

Dividend per share (Yen)59,85985

59,86385

March 23, 2022:
Resolution of the Annual
Shareholders’ Meeting48

4. Status of corporate governance(1) Overview of corporate governance1)

Basic approach to corporate governance and implementation of measures(A) Basic approach to corporate governance
The Company considers the enhancement of corporate governance to be one of its most importantmanagement priorities. The Company believes that working to increase management quality and enhance thetransparency of decision-making is indispensable and, accordingly, continually strives to strengthen corporate
governance. This ensures that the Group continues to fulfill its founding mission as stated in its corporate
philosophy: “Serving Society with Superior Quality.”
Based on this approach, in accordance with the responsibility and authority delineated in the Administrative
Authority Rules, and in line with the Policy Management Rules, the Company is committed to developing,
communicating, and abiding by fair, transparent decision-making and management policies and governs the
behavior of the entire executive organization.
(B) Overview of the corporate governance system
In March 2016, the Company transitioned to the “Company with Nominating Committee, etc.” model ofcorporate governance, and has subsequently made continuous efforts to strengthen its corporate governancesystem. As part of these efforts, the Company amended its Articles of Incorporation at the Annual Shareholders’Meeting held on March 26, 2021, abolishing the Chairman of the Board system in favor of a system in which
the chairperson of the Shareholders’ Meeting and the chairperson of the Board of Directors are each appointed
according to their respective roles.
These changes were made to continue enriching explanations on the Company’s management to its
shareholders by selecting the chairperson of the Shareholders’ Meeting from among representative executive
officers at a meeting of the Board of Directors, and to further enhance the function of overseeing execution byappointing the chairperson of the Board of Directors from among members of the Board (including outside
directors) at a meeting of the Board of Directors.
These amendments also expressly state in the Articles of Incorporation that the Board of Directors will appoint
the persons that convene the Shareholders’ Meeting and meetings of the Board of Directors.
At the Annual Shareholders’ Meeting held on March 23, 2022, 12 members of the Board (ten men and two
women) were elected, including eight outside directors (six men and two women). In accordance with theaforementioned amendments to the Articles of Incorporation, the chairperson of the Shareholders’ Meeting,the chairperson of the Board of Directors, and the persons that convene Shareholders’ Meeting and meetingsof the Board of Directors are appointed via resolution by the Board of Directors.
In addition, items related to decisions on basic management policies, important business execution matters,
and other matters that must be determined by the Board of Directors are stipulated in the Articles ofIncorporation, the Board of Directors’ Rules, and Administrative Authority Rules. These matters are
determined after careful deliberations by the Board of Directors.
The Company has established and maintains a corporate governance system that functions through theappropriate, active performance of duties by the Nominating Committee, the Audit Committee, and theCompensation Committee, in conjunction with oversight of the executive officers and members of the Boardby the Board of Directors. The Nominating Committee has three members, all of whom are outside directors.
This committee determines standards and policies for the fair and transparent appointment and dismissal ofmembers of the Board and makes appropriate proposals to the Board of Directors for the appointment anddismissal of the representative executive officers under a fair and transparent succession plan. The Audit
Committee has seven members, consisting of five outside directors and two internal non-executive membersof the Board. This committee conducts audits regarding the business execution of executive officers and theexecution of duties of members of the Board. The two internal non-executive members of the Board has been
appointed as full-time members of the Audit Committee by the Audit Committee. The Compensation
Committee has three members, all of whom are outside directors. This committee deliberates on such matters49

as the details of remuneration for members of the Board and executive officers.
In addition, to further increase the transparency of corporate governance, the Governance Committee and theCompliance Committee have been established as advisory committees to the Board of Directors. These
advisory committees to the Board of Directors deliberate on the corporate governance system and related
matters and on future compliance activities as a whole and submit reports to the Board of Directors. Bothadvisory committees are each composed of all eight outside directors, and the internal non-executive membersof the Board, who are members of the Audit Committee, participate as observers.
The composition of the Board of Directors and each committee is as follows.
Name

Shuichi Ishibashi

Position
Member of the Board(Executive Officer)*

CompensaAudit
Governance Compliancetion
Committee Committee Committee
Committee

Board ofDirectors

Nominating
Committee

○

–

–

–

–

–

Masahiro Higashi

Member of the Board(Executive Officer)

○

–

–

–

–

–

Scott Trevor Davis

Outside Director

◎

○

○

–

◎

○

Yuri Okina

Outside Director

○

○

◎

–

○

○

Kenichi Masuda

Outside Director

○

◎

○

–

○

◎

Kenzo Yamamoto

Outside Director

○

–

–

◎

○

○

Keikou Terui

Outside Director

○

–

–

○

○

○

Seiichi Sasa

Outside Director

○

–

–

○

○

○

Yojiro Shiba

Outside Director

○

–

–

○

○

○

Yoko Suzuki

Outside Director

○

–

–

○

○

○

○

–

–

○

–

–

○

–

–

○

–

–

Member of the Board
Hideo Hara

(Non-executive
Officer)Member of the Board

Tsuyoshi Yoshimi(Non-executive
Officer)

As of March 23, 2022
(Note) 〇 indicates a member, ◎ indicates the chairperson of the body (the chairperson of the Board of Directors or thechairperson of the committee).
* indicates the chairperson of the Shareholders’ Meeting.

50

The following indicates attendance at meetings of the Board of Directors of members of the Board andstatutory committees during the fiscal year under review (January 1, 2021 to December 31, 2021) as of March
23, 2022.
Name
Shuichi Ishibashi
Masahiro Higashi

Board of Directors

Nominating Committee

Compensation
Committee

Audit Committee

–

–

–

–

–

–

16 of 16
(100%)
11 of 11
(100%)

Scott Trevor Davis

15 of 16(94%)

19 of 19
(100%)

14 of 14
(100%)–

Yuri Okina

16 of 16
(100%)

19 of 19
(100%)

14 of 14
(100%)–

16 of 16

19 of 19

14 of 14

(100%)(100%)(100%)––

Kenichi Masuda
Kenzo Yamamoto

16 of 16
(100%)–
18 of 18
(100%)

Keikou Terui

16 of 16
(100%)––

18 of 18
(100%)

Seiichi Sasa

16 of 16
(100%)––

18 of 18
(100%)––

Yojiro Shiba
Yoko Suzuki

16 of 16
(100%)
16 of 16–

(100%)–

18 of 18
(100%)
18 of 18
(100%)

Hideo Hara

16 of 16
(100%)––

18 of 18
(100%)

Tsuyoshi Yoshimi

16 of 16
(100%)––

18 of 18
(100%)(Note) Mr. Masahiro Higashi was newly elected as a Member of the Board at the 102nd Annual Shareholders’ Meeting held on
March 26, 2021, and accordingly, the total number of the Board of Directors meetings he was able to attend is different
from that of other members of the Board.

Operating divisions involved in business execution adopts a system where five executive officers, two ofwhom are representative executive officers responsible for handling business execution for the Group as
Global CEO and Global COO, make decisions on the execution of operations delegated by the Board of
Directors, assume responsibility for the execution of those decisions, and are collectively responsible formanagement. Moreover, the CEO and COO have been placed in charge of each strategic business unit (SBU),
which comprise domestic and overseas Group companies as well as internal companies and employ a system
of mutual checks. The Company has established a Global Executive Committee (hereinafter “Global EXCO”),
which comprises these executive officers of the Company as well as persons responsible for major business
entities, as the highest global level executive body within the Group. This committee aims to strengthen the
checks and balances of the Group by debating and discussing management strategy and issues (including
sustainability) from a global perspective, which improves the transparency of the decision-making process.
In addition, each operating division involved in business execution maintains a system for reporting to theappropriate representative executive officers of said divisions regarding the status of execution of duties. This
information is also regularly and promptly reported to the Board of Directors in order to aid in theirdeliberations, and these actions ensure that the Group maintains an effective supervisory function.

51

Global EXCO Members are as follows.
Name

Position

Shuichi Ishibashi

Global CEO (Representative Executive Officer)

Masahiro Higashi

Global COO (Representative Executive Officer)

Paolo Ferrari

Global CSO (Executive Vice President and Executive Officer)
BSAM CEO

Masuo Yoshimatsu

Global CFO (Senior Vice President and Executive Officer)

Masato Banno

Global CTO (Senior Vice President and Executive Officer)

Thomas Higgins

Global CBSO (Vice President and Senior Officer)
Secretary General of Global EXCO

Scott Damon

BSAM COO (Vice President and Senior Officer)

Laurent Dartoux

BSEMIA CEO (Vice President and Senior Officer)

Yoshikazu Shida

BSCAP CEO (Vice President and Senior Officer)

Emilio Tiberio

BSEMIA COO and CTO (Vice President and Senior Officer)

Nizar Trigui

BSAM CTO (Vice President and Senior Officer)
As of March 23, 2022

(Note) Meanings of abbreviations are as follows.
CSO: Chief Business Solutions Officer
CTO: Chief Technology Officer
CBSO: Chief Business Strategic Officer(C) Reasons for adopting current corporate governance system
Under the corporate mission, the Group has set forth a vision that states, “Toward 2050, Bridgestone continues
to provide social value and customer value as a sustainable solutions company.” Thus, building an optimal
corporate governance system is a top priority, and we believe that continually improving the quality ofmanagement and ensuring transparency in decision-making are absolutely essential. As part of thisenhancement of the governance system, the Company has adopted the current system to both further
strengthen internal controls and evolve into a sustainable solutions company capable of proactively addressing
the changing business environment.

52

The following chart provides an overview of the Company’s corporate governance system.

As of March 23, 2022

(D) Status of the development and implementation of internal control systems
At the Company’s Board of Directors’ meeting held on December 20, 2021, the following policies wereresolved regarding the development of internal control systems required pursuant to the provisions of Article
416, paragraph (1), items (i) (b) and (e) of the Companies Act.
1. Basic approach to the development and implementation of the Company’s internal control systems
Under the corporate mission of “Serving Society with Superior Quality,” the Company has set its visionin 2020 as: “Toward 2050, Bridgestone continues to provide social value and customer value as asustainable solutions company,” and has been engaged in management to realize the vision since.
As part of the initiatives, the Company maintains a basic approach of segregation between oversight andexecution of the duties, oversight of execution by the Board of Directors, and the realization of
appropriate and more efficient business operations by operating divisions involved in business execution
and will further refine its internal control systems.
The Company’s Board of Directors determines policies for development and implementation of internal
control systems, with the understanding of the above.
In order to further strengthen internal controls, evolve into a sustainable solutions company capable ofproactively addressing the changing business environment, and continue to implement the ever more
effective and efficient planning and execution of our business activities in accordance with the policies
for the development and implementation of internal control systems, the Company’s Board of Directors
delegates the development and implementation of internal control systems that are in line with the set
policies to the Representative Executive Officers and oversees the implementation work.
2. Matters that are necessary in the execution of duties by the Audit Committee(1) In order to assist the work of the Audit Committee, the Company appoints a corporate executive
53

manager dedicated to audit, and establishes a department led by such corporate executive manager
that is dedicated to assist the Audit Committee with their duties.
Decisions on the appointment and replacement of the corporate executive manager dedicated toaudit are made based on prior consultations with and consent of the Audit Committee. The same
applies when the Audit Committee requests replacement of the corporate executive manager.
The performance assessment of the corporate executive manager dedicated to audit is determinedby taking the performance evaluations conducted by the Audit Committee into consideration.
(2) A person designated by the Audit Committee is required to report on matters predetermined by the
Audit Committee thereto periodically or without delay.
The Company prohibits unfavorable treatment of Members of the Board, Executive Officers, Vice
President-Senior Officers, and employees of the Company, and the Members of the Board,
Corporate Auditors, Corporate Officers, and employees of subsidiaries for reporting matters to the
Audit Committee.
(3) All the expenses associated with the execution of duties by the Audit Committee are fullycompensated.
(4) In order to ensure an effective audit by the Audit Committee, opportunities are created for membersof the Audit Committee to gain an understanding of the flow of important decision-making practices
in the Company and the status of business operations.
3. Systems to ensure that the execution of duties by Executive Officers complies with relevant laws andregulations and the Articles of Incorporation, and matters that are necessary for the appropriate executionof business operations by the Company and the corporate group comprising the Company and its
subsidiaries(1) Information concerning execution of duties by Executive Officers is documented without delay andadequately retained. Any significant information related to the execution of business is reported to
the Board of Directors without delay.
(2) A risk management system is developed and implemented to manage risks of incurring losses.
(3) In order to ensure the efficient execution of duties by Executive Officers, under the appropriatedelegation of authority from the Board of Directors to the Representative Executive Officer,
policies are maintained, and appropriate authorities required for the execution of duties arereallocated in operating divisions involved in business execution.
(4) In order to ensure that execution of duties by the Executive Officers, Vice President-Senior Officers,
and employees complies with relevant laws and regulations and the Articles of Incorporation,systems for J-SOX Act compliance are developed and implemented in accordance with “Evaluationof the System for Ensuring the Appropriateness of Documents and Other Information Related to
Financial Accounting,” set forth in Article 24-4-4 of the Financial Instruments and Exchange Act
of Japan (the so-called “J-SOX Act”).
(5) In order to ensure proper execution of business operations at subsidiaries, policies arecommunicated across the Group; authorities are appropriately reallocated; a reporting frameworkfor subsidiaries to report their execution of business to the Company is developed and implemented;
and audits are conducted globally.
Risk management systems, compliance systems, systems against organized crime and other violent
groups, and systems for J-SOX Act compliance are developed and implemented within eachsubsidiary.
2)

Overview of agreement limiting damage compensation liability

The Company has entered into agreements with Members of the Board (excluding persons who are Executive
Members of the Board, etc.) that limits his/her damage compensation liability of Article 423, paragraph (1) of
54

the Companies Act, pursuant to Article 25, paragraph (2) of the Articles of Incorporation of the Company
based on the provision in Article 427, paragraph (1) of the Companies Act. The maximum amount of his/her
liability based on said agreement shall be the higher of either 10 million yen or the minimum liability amountprescribed in Article 425, paragraph (1) of the Companies Act.

3)

Overview of directors and officers liability insurance agreement with directors and officers as insureds

The Company has entered into a directors and officers liability insurance agreement provided for in Article
430-3, paragraph (1) of the Companies Act with an insurance company, insuring Members of the Board,
Executive Officers, and Vice President-Senior Officers to cover any liability or dispute resolution costs that
may result from claims for damages related to the performance of their duties. However, certain exclusions
apply, including for damages arising from actions taken with the knowledge that they violate laws or
regulations. The insurance premiums are fully borne by the Company.

4)

Number of Members of the Board

The Articles of Incorporation state that the number of Members of the Board of the Company shall be notmore than 15.
5)

Requirements for election of Members of the Board

The Articles of Incorporation state that the resolution for election of Members of the Board shall be made withshareholders present at a meeting who hold shares representing one-third (1/3) or more of the voting rights ofshareholders who are entitled to exercise voting rights, by a majority of the voting rights of the attending
shareholders.

6)

Matters to be resolved at the Shareholders’ Meeting that can be resolved at the Board of Directors

The Articles of Incorporation state that the following matters can be resolved at the Board of Directors without
resolution of the Shareholders’ Meeting.
1. The ability to purchase treasury stock(To enable a flexible response)
2. The ability to exempt Members of the Board from liability(To enable the full demonstration of capabilities expected in their roles)
3. The ability to exempt Executive Officers from liability(To enable the full demonstration of capabilities expected in their roles)
4. The ability to distribute interim dividends(To provide stable return of profits to shareholders)
The additional rule in the Articles of Incorporation state that the Company may exempt the liability of any
person who served as a Corporate Auditor prior to the transition to a Company with Nominating Committee,
etc.
7)Special resolution requirements for Shareholders’ Meetings

For the smooth operation of the Shareholders’ Meetings, the Articles of Incorporation state that with respect
to special resolution requirements for Shareholders’ Meetings set forth in Article 309, paragraph (2) of theCompanies Act, resolutions may be adopted by at least a two-thirds (2/3) majority vote of shareholders at suchmeeting and holding shares representing at least one-third (1/3) of the voting rights granted to all shareholders.
55(2) Members of the Board and Executive Officers
1)

List of Members of the Board and Executive Officers

Members of the Board and Executive Officers include 13 males and 2 females. (Percentage of female Membersof the Board and Executive Officers: 13.3%)(1) Members of the Board
Position

Name

Date of birth

Personal history
April 1977

Member of the Board

Shuichi Ishibashi

January 19, 1954

June 2003
January 2005
July 2012
January 2014
January 2016
March 2016
January 2019
March 2020

April 1985
January 2013

October 2013
March 2017
January 2019
Member of the Board

Masahiro Higashi

February 11, 1961

January 2020
July 2020
March 2021

September
2021
April 1990

April 2001
Member of the Board
Note 1

Scott Trevor
Davis

December 26, 1960 April 2006

March 2011

April 1984
April 1992
April 1994
April 2000
Member of the Board
Note 1

Yuri Okina

March 25, 1960

June 2006
March 2014

June 2014
April 2018

56

Term
Number ofofshares held
officeJoined Bridgestone Tire Co., Ltd.
(currently Bridgestone Corporation)
Director, Consumer Tires Business
Vice President and Officer
Vice President and Senior Officer
Senior Vice President
Note
Executive Vice President
2
Executive Vice President and Executive
Officer
Vice Chair and Representative Executive
OfficerMember of the Board and Representative
Executive Officer
Global CEO (present)
Joined Bridgestone Corporation
Director, Global Customer and Market
Research Division and Director,
Advanced Business Planning Division
Vice President and Officer
Vice President and Senior Officer
Senior Vice President and Executive
Officer
Vice Chair and Representative Executive Note2
Officer
Representative Executive Officer, Global
COO, and Global CAO
Member of the Board and Representative
Executive Officer
Global COO and Global CAO
Member of the Board and Representative
Executive Officer
Global COO (present)
Researcher, The Japan Institute ofLabour (currently The Japan Institute forLabour Policy and Training)
Professor, Department of International
Economics, Reitaku University
Note
Professor, Department of Global
2
Business, College of Business, Rikkyo
University (present)
Member of the Board as Outside
Director, Bridgestone Corporation(present)
Joined Bank of Japan
Joined The Japan Research Institute,
LimitedSenior Researcher, The Japan ResearchInstitute, Limited
Chief Researcher, The Japan ResearchInstitute, LimitedCounselor, The Japan Research Institute, Note
Limited2
Member of the Board as Outside
Director, Bridgestone Corporation(present)
Vice Chairman of the Institute, The
Japan Research Institute, Limited
Chairperson of the Institute, The Japan
Research Institute, Limited (present)

15,90012,4001,000–

Position

Name

Date of birth

Personal history
April 1988
January 1997

Member of the Board
Note 1

Kenichi Masuda

January 11, 1963

March 2011
March 2016

April 1976
December
2003
July 2005

July 2006
Member of the Board
Note 1

Kenzo Yamamoto

January 21, 1954
May 2008
June 2012
March 2016

June 2018
April 1979

July 2008

January 2011
April 2012
Member of the Board
Note 1

Keikou Terui

July 27, 1953

August 2013
October 2013
March 2016

June 2016
June 2020

April 1976

Member of the Board
Note 1

Seiichi Sasa

October 12, 1953

March 1983
June 2008
March 2016

April 1974
March 2003
Member of the Board
Note 1

Yojiro Shiba

August 7, 1950

May 2005
June 2007

57

Term
Number ofofshares held
officeAttorney-at-law (present)
Partner, Anderson Mori (Japanese law
firm: currently Anderson Mori &Tomotsune) (present)
Note
Outside Corporate Auditor, Bridgestone2
Corporation
Member of the Board as Outside
Director, Bridgestone Corporation(present)
Joined Bank of Japan
General Manager for the Americas andChief Representative in New York, Bankof Japan
Director-General, Payment andSettlement Systems Department, Bank ofJapan
Director-General, Financial System andBank Examination Department, Bank of NoteJapan
2
Executive Director, Bank of Japan
Chairman, NTT Data Institute ofManagement Consulting, Inc.
Member of the Board as Outside
Director, Bridgestone Corporation(present)
Representative, Office KY Initiative(present)
Joined Ministry of International Tradeand Industry (currently Ministry of
Economy, Trade and Industry (METI))
Director-General for Technology Policy
Coordination, Minister’s Secretariat,
METI
Director-General, Kanto Bureau of
Economy, Trade and Industry, METI
Director-General for Regional Economic
and Industrial Policy, METI
President, Japan Utility Telemetering
Note
Association (present)
2
Senior Research Associate, Chemicals
Evaluation and Research Institute, Japan
Member of the Board as Outside
Director, Bridgestone Corporation(present)
Director, Chemicals Evaluation andResearch Institute, Japan
Senior Managing Director, Japan
Chemical Innovation and Inspection
Institute (present)
Joined The Dai-Ichi Kangyo Bank,
Limited (currently Mizuho Bank, Ltd.)(Resigned in June 1978)
Certified Public Accountant (present)
Note
Executive Director, KPMG AZSA LLC
2Member of the Board as Outside
Director, Bridgestone Corporation(present)
Joined The Industrial Bank of Japan,
Limited (currently Mizuho Bank, Ltd.)Managing Executive Officer, Mizuho
Bank, Ltd.
Note
Executive Officer, Oriental Land Co.,
2
Ltd.
Executive Director and Senior Executive
Officer, Oriental Land Co., Ltd.

–

2,300

5,700

5,100

–

Position

Name

Date of birth

Personal history
April 2009

June 2019
June 2020
April 1998

Representative Director and Executive
Vice President Officer, Oriental Land
Co., Ltd.
External Director, AMUSE INC.
Director and Vice Chairman, AMUSE
INC.
Director, Vice Chairman, AMUSE INC.
Member of the Board as Outside
Director, Bridgestone Corporation(present)
Representative Director and President,
AMUSE INC.
Director, Vice Chairman, AMUSE INC.
Special Adviser, AMUSE INC.
Attorney-at-law (present)

April 1998

Joined Takagi Godo Law Office

June 2013
June 2015
June 2017
March 2018

April 2019

Member of the Board
Note 1

Yoko Suzuki

November
September 21, 1970 2002
March 2018

April 1977
January 2001

March 2006

Member of the Board

Hideo Hara

December 13, 1951
October 2006

March 2010
March 2015

March 2020
April 1988
January 2010

Member of the Board

Tsuyoshi Yoshimi

May 26, 1964

September
2012
October 2013
March 2017
March 2019

Total

Term
Number ofofshares held
officePartner, Suzuki Sogo Law OfficeNote(present)
2
Member of the Board as Outside
Director, Bridgestone Corporation(present)
Joined Bridgestone Tire Co., Ltd.
(currently Bridgestone Corporation)
Seconded to
BRIDGESTONE/FIRESTONE INC.
(currently BRIDGESTONEAMERICAS, INC.) (USA)Vice President and Officer
Seconded to BRIDGESTONEAMERICAS HOLDING, INC. (currently
BRIDGESTONE AMERICAS, INC.)
Note
(USA)
2
Vice President and Officer, Responsible
for Original Equipment Tire Sales;
Concurrently responsible for Motorsport
Seconded to BRIDGESTONEAMERICAS, INC. (USA)
Fellow (responsible for technology
public relations), Bridgestone
Corporation
Member of the Board (present)
Joined Bridgestone Corporation
Seconded to BRIDGESTONE ASIA
PACIFIC PTE. LTD. (Singapore)
Seconded to BRIDGESTONE (CHINA)Note
INVESTMENT CO., LTD. (Shanghai)
2
Director, Finance Division, Bridgestone
Corporation
Vice President and Officer
Member of the Board (present)

2,200

7,700

2,200

54,500(Notes) 1. Of the Members of the Board, Mr. Scott Trevor Davis, Ms. Yuri Okina, Mr. Kenichi Masuda, Mr. Kenzo Yamamoto,
Mr. Keikou Terui, Mr. Seiichi Sasa, Mr. Yojiro Shiba, and Ms. Yoko Suzuki are outside directors.
2. The terms of office of Members of the Board shall expire at the close of the Annual Shareholders’ Meeting relating to
the last business year that ends within one year after their election at the Annual Shareholders’ Meeting held on March
23, 2022.
3. The Company is a Company with Nominating Committee, etc. The structure of committees is described in “4 (1)Overview of corporate governance.”58

(2) Executive Officers
Position

Name

Date of birth

Personal history
April 1977

Representative Executive Officer
Global CEO

Shuichi Ishibashi

January 19, 1954

June 2003
January 2005
July 2012
January 2014
January 2016
March 2016
January 2019
March 2020

April 1985
January 2013

Representative Executive Officer andGlobal COO
Concurrently responsible for BSJP and
BSJP Tire Solutions Business
BSJP Tire Business CEO/COO
Chairman and Representative Board
Member of Bridgestone Tire Solution
Japan Co., Ltd.

October 2013
March 2017
January 2019
Masahiro Higashi

February 11, 1961

January 2020
July 2020
March 2021

September
2021

Executive Vice President andExecutive Officer
Global CSO
Responsible for BSAM
BSAM Member of the Board
CEO and President

September
2016

Paolo Ferrari

April 10, 1970

January 2017
January 2018
January 2019
June 2021

Senior Vice President and Executive
Officer
Global CFO

Senior Vice President and Executive
Officer
Responsible for Technology, Quality
Management
Global CTO

Masuo
Yoshimatsu

April 28, 1958

September
2021
January 2022
April 1986
July 2016

Masato Banno

September 18, 1963 January 2017
January 2018
January 2019

Total

Term
Number ofofshares held
officeJoined Bridgestone Tire Co., Ltd.
(currently Bridgestone Corporation)
Director, Consumer Tires Business
Vice President and Officer
Vice President and Senior Officer
Senior Vice President
Note
Executive Vice President
1
Executive Vice President andExecutive Officer
Vice Chair and Representative
Executive Officer
Members of the Board, Representative
Executive Officer and Global CEO(present)
Joined Bridgestone Corporation
Director, Global Customer and Market
Research Division and Director,
Advanced Business Planning Division
Vice President and Officer
Vice President and Senior Officer
Senior Vice President and Executive
Officer
Note
Vice Chair and Representative
1
Executive Officer
Representative Executive Officer,
Global COO, and Global CAO
Members of the Board, Representative
Executive Officer, Global COO andGlobal CAO
Members of the Board, Representative
Executive Officer and Global COO(present)
Joined BRIDGESTONE EUROPE
NV/SA
Members of the Board, President andCEO
Note
Vice President and Senior Officer
1
Senior Vice President and Executive
Officer
Executive Vice President andExecutive Officer (present)
Joined Bridgestone Corporation,
Associate Director
Vice President and Senior Officer
Note1Senior Vice President and Executive
Officer (present)
Joined Bridgestone Corporation
Director, Tire Development Division
No. 3
Note
Vice President and Officer
1
Vice President and Senior Officer
Senior Vice President and Executive
Officer (present)

15,90012,400

3,600

3,000

6,900

41,800(Notes) 1. The terms of office of Executive Officers shall expire at the close of the first meeting of the Board of Directors
convened after the close of the Annual Shareholders’ Meeting relating to the last business year that ends within one
year after their election.
2. Meanings of abbreviations are as follows.
CSO: Chief Business Solutions Officer
CTO: Chief Technology Officer
CAO: Chief Administrative Officer

59

2)

Outside Directors and Outside Corporate Auditors

The Company has elected eight outside directors (as of March 23, 2022).
The Company believes that outside directors contribute to the strengthening of corporate governance,
including maintaining appropriate decision-making at meetings of the Board of Directors. To that end, theoutside directors provide independent opinions concerning deliberations, etc. on proposals at the Board of
Directors that reflect their wealth of experience and expertise, which are based on their diverse backgrounds
and fields of specialization.
To ensure the appropriate composition of the Board of Directors, the nominees for the Company’s outside
directors are determined through strict appointment procedures at the Company’s Nominating Committee inaccordance with the “Nominating Policy for Appointment to the Board” (described at the end) prescribed by
the Company’s Nominating Committee, and the reasons for appointment are as follows.
Name

Main occupation

Reasons for appointment

Scott Trevor Davis

Professor, Department of Global
Business, College of Business, Rikkyo
University

Mr. Scott Trevor Davis has excellent academic
knowledge in the field of sociology and international
business administration, as well as abundant wisdom
regarding CSR and sustainability in Japan and overseas.
He has been contributing to appropriate decision makingof the Board of Directors as Outside Director of theCompany since 2011. He has also been playing a leadingrole in enhancing deliberations, etc. as Chairperson of theBoard of Directors and as Chairperson of the GovernanceCommittee, as well as participating in active
deliberations as a member of the Nominating Committee
and a member of the Compensation Committee. In viewof these experience, insights and achievements, Mr. Scott
Trevor Davis is expected to continue to fulfill these roles,
and the Company has determined that he would
appropriately execute the duties of an Outside Director.

Yuri Okina

Chairperson of the Institute, The Japan
Research Institute, Limited

Ms. Yuri Okina has significant research experience
regarding financial systems and financial administration,
as well as abundant knowledge of economics andfinancial situations. She has been contributing toappropriate decision making of the Board of Directors as
Outside Director of the Company since 2014. Since
2016, she has been playing a leading role in enhancing
deliberations, etc. as Chairperson of the Compensation
Committee, and participating in active deliberations as amember of the Nominating Committee. In view of theseexperience, insights and achievements, Ms. Yuri Okina is
expected to continue to fulfill these roles, and theCompany has determined that she qualifies for Outside
Director.

60

Name

Main occupation

Reasons for appointment

Kenichi Masuda

Attorney-at-law (Partner of Anderson
Mori & Tomotsune)

Mr. Kenichi Masuda has abundant professional careerand experience as an attorney at law firms in Japan andoverseas, as well as his expertise as represented by his
current experience of teaching corporate law at a
graduate school of law. He has been contributing tooverall audits as Outside Corporate Auditor of the Groupsince 2011. Since 2016, he has been contributing toappropriate decision making of the Board of Directors as
Outside Director. He has also been playing a leading rolein enhancing deliberations, etc. as Chairperson of theNominating Committee and Chairperson of theCompliance Committee, and participating in active
deliberations as a member of the Compensation
Committee. In view of these experience, insights andachievements, Mr. Kenichi Masuda is expected tocontinue to fulfill these roles, and the Company has
determined that he would appropriately execute theduties of an Outside Director.

Kenzo Yamamoto

Representative, Office KY Initiative

Mr. Kenzo Yamamoto has abundant expertise on
financial market and financial systems, as well as his
deep insight regarding corporate management and risk
management. Since 2016, he has been contributing toappropriate decision making of the Board of Directors as
Outside Director of the Company and playing a leadingrole in enhancing deliberations, etc. as Chairperson of the
Audit Committee. In view of these experience, insights
and achievements, Mr. Kenzo Yamamoto is expected tocontinue to fulfill these roles, and the Company has
determined that he qualifies for Outside Director.

Keikou Terui

Senior Managing Director, Japan
Chemical Innovation and Inspection
Institute

Mr. Keikou Terui has broad insight regarding industrial
technology fields, as well as his abundant administrative
experience in industrial policies at the Ministry of
Economy, Trade and Industry. Since 2016, he has been
contributing to appropriate decision making of the Boardof Directors as Outside Director of the Company andpromoting strengthening of the audit system as a memberof the Audit Committee. In view of these experience,
insights and achievements, Mr. Keikou Terui is expected
to continue to fulfill these roles, and the Company has
determined that he would appropriately execute the duties
of an Outside Director.

61

Name

Main occupation

Reasons for appointment

Seiichi Sasa

Certified Public Accountant

Mr. Seiichi Sasa has abundant professional career and(Representative of Sasa Seiichi Certified experience of accounting audit and consulting as a
Certified Public Accountant, as well as his expertise as
Public Accountant Office)represented by his current experience of teachingaccounting and audit at a university and graduate school
and former appointment as an Examiner of Certified
Public Accountant Examination. Since 2016, he has been
contributing to appropriate decision making of the Boardof Directors as Outside Director of the Company andpromoting strengthening of the audit system as a memberof the Audit Committee. In view of these experience,
insights and achievements, Mr. Seiichi Sasa is expected tocontinue to fulfill these roles, and the Company has
determined that he would appropriately execute the duties
of an Outside Director.

Yojiro Shiba–

Yoko Suzuki

Attorney-at-law (Partner of Suzuki Sogo Ms. Yoko Suzuki has high expertise as an attorney-at-law,
Law Office)and abundant experience and deep insight as an outside
auditor and auditor of other companies and various
associations. Since 2018, she has been contributing toappropriate decision making of the Board of Directors as
Outside Director of the Company and promoting
strengthening of the audit system as a member of the
Audit Committee. In view of these experience, insights
and achievements, Ms. Yoko Suzuki is expected tocontinue to fulfill these roles, and the Company has
determined that she would appropriately execute theduties of an Outside Director.

Mr. Yojiro Shiba has insights into the creation of value
and establishment of business from the perspective ofcustomers based on his deep insight as the result ofabundant corporate management experience in thefinancial industry and entertainment business industry.
Since 2018, he has been contributing to appropriate
decision making of the Board of Directors as Outside
Director of the Company and promoting strengthening of
the audit system as a member of the Audit Committee. Inview of these experience, insights and achievements, Mr.
Yojiro Shiba is expected to continue to fulfill these roles,
and the Company has determined that he qualifies for
Outside Director.

As a result of comparison with the Company’s Guidelines for Determining Whether Outside Directors are
Sufficiently Independent, Mr. Scott Trevor Davis, Ms. Yuri Okina, Mr. Kenichi Masuda, Mr. Kenzo Yamamoto,
Mr. Keikou Terui, Mr. Seiichi Sasa, Mr. Yojiro Shiba, and Ms. Yoko Suzuki, who are outside directors withno relationship of special interests with the Company, and there is no concern that conflicts of interest withgeneral shareholders would arise, the Company has designated them independent outside directors. The
Company’s Guidelines for Determining Whether Outside Directors are Sufficiently Independent is describedat the end.
In addition, outside directors’ holdings of the Company’s shares are described under “4 (2) 1) (1) Directors.”

62

[Nominating Policy for Appointment to the Board]
The nominated candidates shall possess the character and insight required to be able to put the Bridgestone
Essence (corporate philosophy) into practice, the experience necessary to supervise the execution of businessas a member of the Board, and the tenacity needed to perform the duties expected of a member of the Boardof the Company.

(Outside Directors)
The Company takes into account the following:(1) The candidate’s expertise, experience and ability to make judgments from an independent perspective.
(2) The candidate’s absence of connections with the Group that would undermine their independence fromthe Group.**Specifically, the candidate’s ability to meet the conditions for independence as set out in the Company’s“Guidelines for Determining Whether Outside Directors are Sufficiently Independent”(Members of the Board other than Outside Directors)
The Company takes into account the following:(1) The candidate’s scope of knowledge and experience regarding the business and its operations.
(2) The candidate’s managerial ability to delineate the Company’s ideal direction while taking action
informed by the changing business environment.

[Guidelines for Determining Whether Outside Directors are Sufficiently Independent]
To ensure that the Company achieves the objectivity and transparency necessary for appropriate corporate
governance, it is best that outside directors be as independent as possible.
The Company has accordingly established these guidelines concerning the requisite independence of Outside
Directors in the Company. If any of the following items applies to an Outside Director (or to a candidate forsuch position. The same applies hereafter), they shall be deemed to lack the required level of independence
for the Company. A person who:
1. In the past was an Executing Person of the Company or a consolidated subsidiary of the Company(collectively, the “Group”) (Note 1)
2. Is a major shareholder of the Company (Note 2)
3. Is an Executing Person of a company or entity to which one of the following is applicable:(1)

A major supplier or customer of the Group (Note 3)(2)

A major lender to the Group (Note 4)(3)

A company or entity of which the Group holds 10% or more of the voting shares

4. Is a certified public accountant belonging to an auditing firm that is an accounting auditor of the Group
5. Is a professional, such as a consultant, accountant, tax accountant, attorney-at-law, judicial scrivener, or
patent attorney who has received a large amount (Note 5) of money or other assets from the Group
6. Is a person who has received a large amount of donation from the Group (Note 6)
7. Is an Executing Person of another company, which position constitutes an interlocking director or
corporate auditor position (Note 7) for the Outside Director
8. Has a close relative (Note 8) to which any of the above items 1 through 7 applies (but other than with63

respect to item 4 or 5, limited to a significant person (Note 9))
9. Is a person to which any of the above items 2 through 8 has applied within the last five years
10. Notwithstanding the above, is a person with respect to which any other particular factors exist that could
create a conflict of interest with the Company(Notes) 1. This means one who is currently an executive member of the Board, executive officer, vicepresident-officer or other similar person or employee (each, for purpose of these Guidelines, an“Executing Person”) or who has been an Executing Person of the Group at any time in the past.
2. A “major shareholder” shall mean a shareholder holding 5% or more of the voting shares, either
in their own name or a third party’s name, as of the end of the Company’s fiscal year. If the major
shareholder is an organization such as a company (or other legal entity) or partnership, it shallmean an Executing Person of the organization.
3. A “major supplier or customer” means a supplier or customer of the Group products whose annual
total transactions with the Group exceeds 2% of the Company’s consolidated aggregate sales or
2% of the consolidated aggregate sales of the other party. In addition, automobile manufacturers
which are customers of the Group tire products, and synthetic rubber manufacturers and steel cordmanufacturers which are suppliers to the Group are considered major suppliers or customers
regardless of actual annual transaction amounts.
4. A “major lender” means a financial institution from which the Group receives loans where theoutstanding loan amount as of the end of the Company’s fiscal year exceeds 2% of the Company’s
consolidated gross assets or 2% of the financial institution’s consolidated gross assets.
5. “Large amount” means the occurrence of either of the following in response to the professional’s
provision of services:(1) In the event that the professional is providing services to the Group as an individual, thereceipt by the professional from the Group of compensation (excluding remuneration forservices as a member of the Board or executive officer) of an amount exceeding 10 million
yen per year.
(2) In the event the professional services are provided to the Group by an organization such as acompany (or other legal entity) or a partnership, the receipt by the organization from theGroup of the total amount of compensation exceeding 2% of the annual aggregate income ofthe organization. Even if not more than 2%, if the organization receives more than 10 million
yen per year as compensation for services in which the professional was directly involved, it
is considered a “large amount.”
6. This means the recipient of a donation exceeding 10 million yen per year from the Group. If therecipient is an organization such as a company (or other legal entity) or a partnership, any memberof the organization who is directly involved with the research, education or other activity related
to the donation.
7. “Interlocking director or corporate auditor position” means an Executing Person of the Group who
is an Outside Director or Corporate Auditor for another company, where an Executing Person ofsuch other company is also an Outside Director of the Company.
8. A “close relative” means a spouse or a relative within two degrees of family relation.
9. A “significant person” means a member of the Board, executive officer, vice president-officer oran Executing Person who is a division manager or above, or an Executing Person with authority
similar to any of the foregoing.
3)

Mutual cooperation of oversight or audit performed by Outside Directors with internal audit, the Audit
Committee audit and accounting audit, as well as relationship with the internal control department

Outside Directors consider financial statements and policies for development of internal control systems, anddirectly or indirectly receive reports from the internal control department, through deliberation of proposals at
the Board of Directors such as information on operations based on such development policies, providing
effective oversight of executive officers and members of the Board. Mutual cooperation of oversight or audit
64performed by Outside Directors with internal audit, and the Audit Committee audit and accounting audit aredescribed in “4. (3) Status of audit.”65

(3) Status of audit
1)

Audit by the Audit Committee

The Company’s Audit Committee consists of a total of seven members, comprised of five outside directors
and two full-time members of the Audit Committee. Member of the Audit Committee Mr. Seiichi Sasa hasabundant professional career and experience of accounting audit and consulting as a Certified Public
Accountant and has considerable knowledge in finance and accounting. Full-time member of the Audit
Committee Mr. Tsuyoshi Yoshimi was in charge of accounting operations of the Company for many years andhas considerable knowledge in finance and accounting
In order to assist the duty of the Audit Committee, the Company has assigned a corporate executive manager
dedicated to audit, and established a department led by such corporate executive manager that is dedicated toassist the Audit Committee with their duties. Decisions on the appointment and replacement of the corporate
executive manager dedicated to audit are made with the consent of the Audit Committee, while theperformance assessment of such corporate executive manager is determined by taking the performance
evaluations conducted by the Audit Committee into consideration.
The Audit Committee convened a total of 18 meetings during the fiscal year under review. The total time of
the meetings came to 71 hours, which works out to around four hours per meeting. The status of attendanceby individual members of the Audit Committee is as follows.
Position

Name

Attendance at Audit Committee meetings

Chairperson of the Audit Committee

Kenzo Yamamoto

18 of 18 (100%)

Member of the Audit Committee

Keikou Terui

18 of 18 (100%)

Member of the Audit Committee

Seiichi Sasa

18 of 18 (100%)

Member of the Audit Committee

Yojiro Shiba

18 of 18 (100%)

Member of the Audit Committee

Yoko Suzuki

18 of 18 (100%)

Full-time member of the Audit Committee

Hideo Hara

18 of 18 (100%)

Full-time member of the Audit Committee

Tsuyoshi Yoshimi

18 of 18 (100%)

There were 10 resolutions passed by the Audit Committee during the fiscal year under review. The maincontent of these resolutions was related to audit policies and planning, assignment of duties of committee
members, agreement on audit fees of the accounting auditor, and reappointment of the accounting auditor.
There were also 141 reports. These reports included the audit report from the accounting auditor, reports fromthe Internal Auditing Department on internal audits and Group internal audit activities, risk management
activity reports from operating divisions involved in business execution, and reports on the activities of the
full-time members of the Audit Committee.

The Audit Committee conducts audits through cooperation with the Internal Auditing Department and theaccounting auditors. Key matters considered by the Audit Committee during the fiscal year under review wereas follows.
A) The auditing policy, audit plans and the distribution of duties
The Audit Committee has established an audit plan with the priority issue of the fiscal year under review
being to check the impact of manufacturing footprint and business restructuring and strategic growthinvestments that the Company is promoting within its medium- to long-term business plans on the
Company’s business and internal control system.

66B) Development and implementation status of internal control systems
Based on the “Three Lines of Defense” approach, the Audit Committee checks the status of
improvements made to the monitoring system for the Group’s internal control through cooperation with
the Internal Auditing Department and provides advice accordingly. The committee also receives direct
reports on and checks the status of internal control, including risk management, with respect to IT
security, human resources and labor, quality management, etc.
C) The development status of the Group’s internal audit systems
The Audit Committee checks the development status of the Group’s internal audit systems throughcooperation with local audit committees established at overseas SBUs and internal audit divisions inJapan and abroad as well as reports on the Group’s internal audit activities provided by the Internal
Auditing Department.
D) The appropriateness of the accounting auditor’s audit plans, audit methods, and results
The Audit Committee receives and checks the content of reports on audit plans, quarterly review results,
and accounting audit results provided by the accounting auditor. The committee also receives an
explanation of the key audit matters (KAM) from the accounting auditor in accordance with the processreviewed in the previous fiscal year and checks the status.
E) Evaluation of the accounting auditor
The Audit Committee deliberates on reports mainly on matters, including audit plans, auditing systems,
independence, specialization, and status of performance of duties that are received from the accounting
auditor and relevant internal departments.
E) The impact of COVID-19 and the status of the COVID-19 measures
The Audit Committee receives reports on risk management from the department in charge with respect
to the impact of COVID-19 on the business and the status of internal measures to prevent its spread,and attends internal meetings to confirm them.
The Audit Committee audits the execution of duties by Members of the Board and Executive Officers as wellas the internal control systems. These duties are performed under the auditing policy and audit plans
determined by the Audit Committee, and, among other actions, and involve inquiry into the status of businessexecution (including risk management), reviewing reports from the Internal Auditing Department and the fulltime members of the Audit Committee, engaging in opinion exchanges with Representative Executive Officers,
attending meetings of the Global EXCO and other important meetings, holding onsite visits at major Group
companies and business locations in Japan and overseas, and conducting interviews with members of therespective audit committees and corporate auditors at these sites. The Audit Committee also receives reports
and explanations on audit plans, audit methods, and results from the accounting auditor, and then verifies theappropriateness of the results.
In addition to the duties above, the full-time members of the Audit Committee engage in daily information
gathering in cooperation with the Internal Auditing Department and others to improve audit effectiveness.
Other members of the committee also attend Global EXCO and other meetings, and conduct onsite visits at
major domestic and overseas Group companies.
When there are spikes in COVID-19 infections, the Audit Committee uses web conferencing tools to hold its
meetings as a preventive measure. Some in-person visits to major Group companies in Japan and overseas
have not been possible due to COVID-19; however, web conferencing tools have been used to facilitate online
interviews as an alternative. The accounting auditors have also provided reports regarding the impact of
COVID-19 on accounting audits and the Company has confirmed the status of the accounting auditor’s
67

response to ensure appropriate auditing. Should another abnormal event that could hinder the performance ofaudits occur in the future, we will ensure that proper audits can still be performed by utilizing web
conferencing tools and other digital technologies and by further strengthening cooperation with accounting
auditors.
2)

Status of internal audits

The Group’s internal auditing organization is comprised of the Internal Auditing Department and the SBU
internal audit divisions established at each SBU. The Internal Auditing Department receives instruction fromand reports directly to the Audit Committee, independent of any operating divisions involved in businessexecution, from the perspective of ensuring effective audits. It also reports directly to the Global CEO.
The Internal Auditing Department formulates an annual audit plan, which it reports to the Audit Committee,
and conducts internal audits primarily of the effectiveness of Group governance and internal control on eachfunction, operating division, and Group companies in Japan and overseas. In addition, the Internal Auditing
Department supervises activities of the Group’s internal audit system and works with the internal audit
divisions at each SBU on activities aimed at establishing an optimal internal audit system for the Group.
Moreover, in January 2022, the internal audit functions that had been dispersed among the operating divisionsof the Company were consolidated into a new division to further strengthen the internal audit function within
Japan. As of March 23, 2022, the Internal Auditing Department had 30 employees (excluding those working
concurrently in other positions).
The Audit Committee, the Group’s internal auditing organization (comprising the Internal Auditing
Department and SBU internal audit divisions), and the accounting auditor exchange information and opinions
as necessary and generally maintain close contact, thereby working to further increase audit efficiency andeffectiveness. Each department in charge of internal control provides regular reports to the Audit Committee
concerning the status of the development and operational status of their assigned internal control.
3)

Status of accounting auditsa. Auditing firm
Deloitte Touche Tohmatsu LLC
b. Consecutive audit period
Since 2001
c. Certified public accountants who performed the audit
Mr. Yasuhiko Haga
Mr. Takuma Ueki
Ms. Akiko Fujiharu
d. Composition of assistants involved in auditing operations
12 certified public accountants, four associate members of the Japanese Institute of Certified Public
Accountants, and 17 other staff members are involved in the accounting auditing operations.
e. Policy and reasons for appointment of accounting auditor
To ensure the appropriate performance of duties by the accounting auditor, the Audit Committee appoints
an appropriate accounting auditor from perspectives such as the quality control system, auditing systems,
audit plans and audit fee levels.
As a result of receiving the necessary reports and evaluation based on predetermined evaluation criteria
concerning the auditing systems, independence, audit plans, and status of performance of duties of Deloitte
68Touche Tohmatsu LLC, the accounting auditor for the 103rd Fiscal Period, the Audit Committee hasreappointed the same firm as the accounting auditor for the 104th Fiscal Period.
The Audit Committee dismisses the accounting auditor with a unanimous resolution in the event where it
determines the accounting auditor falls under any items of Article 340, paragraph (1) of the Companies
Act. In this case, the members of the Audit Committee appointed by the Audit Committee must report its
decision and the reason for dismissal to the first Shareholders’ Meeting after the dismissal. In addition to
the above, in the circumstances where the Audit Committee deems it necessary for securing an appropriate
auditing system or for its improvement, the Audit Committee determines details of the proposal for nonreappointment of the accounting auditor, based on which the Board of Directors submits the proposal to
the Shareholders’ Meeting.
f. Evaluation of the accounting auditor
The Audit Committee prescribes evaluation criteria that conforms with the practical guidelines prescribedby the Japan Audit & Supervisory Board Members Association, and evaluates the accounting auditor
annually in light of such criteria. When conducting such evaluation, the Audit Committee deliberates onreports mainly on matters, including the auditing systems, independence, specialization, audit plans, andstatus of performance of duties that are received from the accounting auditors and relevant internal
departments.
From the standpoint of independence of the accounting auditor, the Audit Committee has established a
new policy unique to the Company to limit non-audit fees provided by the accounting auditor and its groupand receives regular reports from the accounting auditor to verify the status thereof.

69

4)

Audit fees
a. Fees to auditing certified public accountants, etc.
Previous fiscal year
Category

Fees for audit services(Yen in millions)

The Company
Consolidated
subsidiaries
Total

Fiscal year under review

Fees for non-audit
services (Yen in
millions)

Fees for audit services(Yen in millions)

Fees for non-audit
services (Yen in
millions)

229

2

233

2

231

–

234

–

460

2

467

2

(Notes) 1. The audit agreement entered into by the accounting auditors and the Company does not separately
stipulate the fee amounts for the audit under the Companies Act, the audit under the Financial
Instruments and Exchange Act, and the audit on consolidated financial statements in the English
language. Furthermore, those three amounts cannot be practically distinguished from one another, so
this report lists the total amount that should be paid to the accounting auditors.
2. The details of non-auditing services provided to the Company by auditing certified public accountants,
etc. are as follows.
(Previous fiscal year)
Services (non-auditing services) other than those set forth in Article 2, Paragraph (1) of the Certified
Public Accountants Act for which the Company has paid fees to the accounting auditors are theEnglish translation services for consolidated financial statements and other documents.
(Fiscal year under review)
Services (non-auditing services) other than those set forth in Article 2, Paragraph (1) of the Certified
Public Accountants Act for which the Company has paid fees to the accounting auditors are theEnglish translation services for consolidated financial statements and other documents.
3. In regard to fees for audit services in the previous fiscal year, additional fees other than the above
came to 4 million yen.
b. Fees to companies in the same network as the auditing certified public accountants, etc. (i.e., the Deloitte
network) (excluding a.)Previous fiscal year
Category

Fees for non-audit
services (Yen in
millions)

Fees for audit services(Yen in millions)

The Company
Consolidated
subsidiaries
Total

Fiscal year under review
Fees for non-audit
services (Yen in
millions)

Fees for audit services(Yen in millions)

–

106

–

30

2,151

1,449

1,937

964

2,151

1,555

1,937

994

(Note) The details of non-auditing services provided by companies in the same network as the auditing certified
public accountants, etc. (i.e., the Deloitte network) are as follows.
(Previous fiscal year)
Non-auditing services provided to the Company and consolidated subsidiaries are advisory services
concerning tax and IT, etc.
(Fiscal year under review)Non-auditing services provided to the Company and consolidated subsidiaries are advisory services
concerning tax and IT, etc.
c. Details of fees for other important audit services
Not applicable.
70

d. Policy for determining audit fees
The Company determines audit fees paid to its accounting auditors based on verification of the number ofrequired man-hours and the appropriateness of the amounts according to the audit plans. The consent of
the Audit Committee is obtained for such determination.
e. Reasons for the Audit Committee’s consent to the audit fees
As a result of confirmation and consideration of the details of the accounting auditors’ audit plans, thetrend of the previous audits and the actual fees, the basis of calculation for the fee quotation and non-audit
fees, the Audit Committee deems the fees for services set forth in Article 2, Paragraph (1) of the Certified
Public Accountants Act to be reasonable and provides the consent pursuant to Article 399, Paragraph (1)of the Companies Act.

71

(4) Remuneration for Members of the Board and Executive Officers
1)

The policy and process for determining remuneration for members of the Board and executive officers

A) The policy for setting remuneration for members of the Board and executive officers:a)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 valueb)

Important changes to the remuneration system in fiscal year 2022

The Company has taken another look at the remuneration system through discussion and review focusing
on its basic approach to and vision for remuneration and incentives to realize the management strategy.
In the past, only numerical targets such as consolidated ROIC and consolidated ROE were taken into
consideration for medium- to long-term incentives within variable remuneration. However, the decision
has been made to introduce a scheme that gives 50% weight to sustainability and the long-termtransformation strategy when determining medium- to long-term incentives.
c)

Setting remuneration and remuneration composition ratio

The Company sets remuneration for members of the Board 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 for comparison from the point of view of sales volume,
market capitalization, overseas sales ratio, and operating profit ratio. Fixed remuneration is set to such alevel as to ensure a certain level of competitiveness with respect to other companies used for comparison.
In principle, the Company believes that the ratio of variable remuneration should be higher as theofficer’s rank become higher, namely, their responsibilities for performance and corporate value increase,referencing the levels in place at European companies. The following charts represent the composition
ratio of remuneration for Executive Officers when variable remuneration is within the standard range,
with the exact ratio depending on rank. The percentages may not apply when Executive Officers holdconcurrent positions as executives of subsidiaries and receive remuneration from those subsidiaries.

<Representative Executive Officer and Global CEO/COO><Senior Vice President and Executive
Officer>
Fixed remuneration
Variable remuneration (Short-term
incentives)
Variable remuneration (Medium- to long-term
incentives)

72

d)

Remuneration composition○ means applicable, and (○) means only applicable to someMembers
Remuneration type

Detailsof theBoard

Executive
Officers(*)
Base remuneration
Additional allowance formembers of the Board
Fixed
remuneration

with concurrent duties
Additional allowance forchairpersons

○

(○)

–

(○)

(○)

–

(○)

–

・Cash remuneration paid at the end of the fiscal year–(○)

・Cash remuneration paid at the end of the fiscal year

–

(○)

–

○

–

○

responsibilities and job description
・Monthly cash remuneration for executive officers who
serve concurrently as members of the Board based on theirrole and responsibilities
・Monthly cash remuneration for an outside director based on
their role and responsibilities as chairperson of the Board of
Directors

Additional allowance for・Monthly cash remuneration for an outside director based oncommittee chairs

their role and responsibilities as chairperson of a committee

Performance-based bonus(Group-wide)
Shortterm(Determined byquantitative evaluation)

incentives

Performance-based bonus(area of responsibility)(Determined by qualitativeevaluation)

Variable
remuner-・Monthly cash remuneration determined based on・Remuneration provided for motivation to contribute toward

ation
Mediumto longterm
incentives

Performance Share Units(PSUs)

achievement of mid-term performance targets and theimprovement of corporate value from a long-term(Determined byquantitative evaluation)

perspective, in addition to morale and shared value withshareholders
・Comprises 50% of medium- to long-term incentives

Restricted stock units(RSU)(Determined by qualitativeevaluation)

・Introduced as 50% of medium- to long-term incentives tosupport the realization of sustainability and long-termbusiness strategies*This column represents the remuneration composition of members of the Board not serving concurrently as Executive Officerse)Approach to selecting performance indicators and evaluation items

Group-wide performance-based bonuses are short-term incentives. Consolidated adjusted operating
profit is used as the indicator to evaluate the degree of achievement of short-term performance. After
discussions and deliberations among the Compensation Committee, it was decided that an appropriate
incentive program for members of the Board and executive officers would include medium- to long-term
incentives. A combination of consolidated ROIC and consolidated ROE, both of which are performanceindicators that comprise the numerical targets for the Mid-Term Business Plan and serve as indicators
for PSU. These indicators were chosen for their ability to assess business strategy and compensation
incentives, for their continuity as an indicator, and for ease of explanation to stakeholders. Additionally,
important initiatives for the target period of the sustainability and transformation strategy are evaluatedfrom a long-term perspective for RSU.
B) Calculation method and target for variable remuneration
The calculation methods and targets for Group-wide performance-based bonus, performance-based bonus
in area of responsibility, PSU, and RSU, which are variable remuneration, are provided below. In addition,
the variable remuneration results from quantitative evaluation in the fiscal year under review are asprovided in “2) Content of remuneration paid to members of the Board and executive officers in the fiscal
73

year under review.”
Details on the formula used in quantitative evaluations for Group-wide performance-based bonus and PSU
are provided at the end of “(4) Remuneration for Members of the Board and Executive Officers.”a)Performance-based bonus (Group-wide)a. Overview
Group-wide performance-based bonuses are a performance-based remuneration plan in which
numerical targets obtained by using the indicator of the Company’s consolidated adjusted operating
profit (hereinafter “numerical targets for performance”) for the fiscal year (hereinafter“performance measurement period”) are set in advance, and cash is paid to the Company’s
Executive Officers in accordance with the rate of achievement of the target for such numericaltargets for performance at the end of the performance measurement period at predetermined levels
equivalent to the standard amount by position multiplied by a ratio of 0 to 150%.
b. Target

Consolidated adjusted
operating profit(X) Threshold(Y) Target(Z) Maximum

340.0 billion yen

425.0 billion yen (*)

510.0 billion yen*The target is set in the amount of the full-year profit forecast announced publicly in February 2022.
c. Calculation method
Payment amount=Standard amount by position

×

Payment rate (*)*Calculation method of payment rate
Payment rate of actual bonus(X) Threshold(Y) Target(Z) Maximum

Amount of consolidated adjusted operating profit

However, if the Compensation Committee determines that performance, corporate value or brandvalue have been or could potentially be significantly impacted by an event (including changes inthe external environment) that was not anticipated at the beginning of the period, the amount to be
paid may be adjusted (increased or decreased) regardless of the results of calculating the Groupwide performance-based bonus.
b)

Performance-based bonus (area of responsibility)
a. Overview
Performance-based bonuses in area of responsibility are a performance-based remuneration plan inwhich an annual policy/annual plan within the area of responsibility is established in advance forthe fiscal year (hereinafter “performance measurement period”), and cash is paid to the Company’s
Executive Officers in accordance with the rate of their achievement at the end of the performancemeasurement period at predetermined levels equivalent to the standard amount by position
multiplied by a ratio of 0 to 150%.
b. Calculation method
Payment amount=Standard amount by position

74

×

Payment rate (*)

*The payment rate is determined in accordance with the results of the individual qualitativeevaluation.

c)PSU
a. Overview• PSU is a performance-based stock compensation plan that predetermines numerical targets
obtained by using the indicators of consolidated ROIC and consolidated ROE (hereinafter“numerical performance targets”) during a certain period (hereinafter “performance measurement
period”), and grants the Company’s stock and pays cash to the Company’s Executive Officers(hereinafter “Eligible Executive Officers”) in accordance with the rate of achievement of thenumerical performance targets at the end of the performance measurement period at
predetermined levels equivalent to the standard number of shares multiplied by a ratio of 0 to
200%. The performance measurement period for PSU (hereinafter “the 2022 Plan”), which waslaunched in 2022, is from the fiscal year ending December 31, 2022 to the fiscal year ending
December 31, 2024, and the Company’s shares and cash will be granted/paid to Eligible Executive
Officers after this performance measurement period.
• In consideration of the income tax, etc. to be borne by Eligible Executive Officers, the assets to
be paid to Eligible Executive Officers under the PSU shall be weighted at 50% respectively forthe proportion of the Company’s stock and the proportion of cash.
<Performance measurement period of the plan by fiscal year>
Plan

2019

2019 Plan

2020

2021

Performance measurement period

2022

2023

●Grant & pay

Performance measurement period

2021 Plan

2025●Grant & pay

Performance measurement period2020 Plan

2024●Grant & pay

Performance measurement period2022 Plan●Grant & pay

b. Target(X) Threshold(Y) Target(Z) Maximum

6%

10%

14%

8%

12%

16%

Payment rate A(consolidated ROIC %)Payment rate B(consolidated ROE %)c. Calculation method
The number of stock granted to each individual Eligible Executive Officer (hereinafter “number ofstock granted to each individual”) and the amount of cash paid to each individual Eligible Executive
Officer (hereinafter “amount of cash paid to each individual”) are calculated according to thefollowing method.
•

Number of stock granted to each individualStandard number of sharesby position

•

×

×

50%

Payment
rate (*)

Amount of cash paid to each individualStandard number of sharesby position

×50%*Calculation method of payment rate

75

×Payment
rate (*)

×

Price of Company
sharesPayment rate A based on
consolidated ROIC
indicator

×

0.8

＋

Payment rate B
based onconsolidated ROE
indicator

×

0.2

Payment(X) Threshold(Y) Target(Z) Maximum

Actual ROIC/ROE %d)

RSUa. Overview• RSU is a restricted stock compensation plan in which the Company’s shares and cash are
granted/paid to the Company’s Executive Officers (hereinafter “Eligible Executive Officers”) at
predetermined levels equivalent to the standard amount of compensation by position multipliedby the sustainability evaluation (a non-financial evaluation between 0 and 120%) during a certain
period (hereinafter “evaluation determination period”). In order to support the promotion ofsustainability and transformation, the Company has redefined the concept of qualitative evaluationthat was implemented in short-term incentives until fiscal year 2021 and has reflected it as a newscheme in the medium- to long-term incentives to be introduced in fiscal year 2022.
• In consideration of the income tax, etc. to be borne by Eligible Executive Officers, the assets to
be paid to Eligible Executive Officers under the RSU shall be weighted at 50% respectively forthe proportion of the Company’s stock and the proportion of cash.
• For the purpose of improving corporate and shareholder value from a long-term perspective, thetransfer restriction period is from the date of granting of shares to when the Eligible Executive
Officer resigns, and the restriction is lifted the following day.
• The evaluation determination period for fiscal year 2022 is the one-year period beginning on thefirst day of fiscal year 2022. Grant of shares to Eligible Executive Officers takes place after theevaluation determination period, and cash payments are made when the transfer restriction is lifted.

76

<Evaluation determination period and transfer restriction period of the plan by fiscal year>
Plan

2022

2023

2024

●Share allocation

2022 Plan

Performancemeasurement
period…

Date ofresignation●Lifting oftransfer
restriction●Cash payment●Lifting of

Performancemeasurement
period2023 Plan●Share allocationtransfer
restriction●Cash payment●Lifting of

Performancemeasurement
period2024 Plan●Share allocationtransfer
restriction●Cash payment

b. Calculation method
The number of stock granted to each individual Eligible Executive Officer (hereinafter “number ofstock granted to each individual”) and the amount of cash paid to each individual Eligible Executive
Officer (hereinafter “amount of cash paid to each individual”) are calculated according to thefollowing method.
•

Number of stock granted to each individualStandard amountof compensation
by position

×

Payment rate
(sustainability
evaluation)

×

50%

÷

Price ofCompany
shares(*1)

×

50%

÷

Price ofCompany
shares(*1)

・ Amount of cash paid to each individualStandard amountof compensation
by position

×

Payment rate
(sustainability
evaluation)

×

Fair value whentransfer restriction islifted (*2)

*1 Price of Company shares
The daily average closing price of the Company’s stock on the Tokyo Stock Exchange for themonth preceding the day of the resolution made by the Company’s Board of Directors concerning
the new issuance of stock or disposal of treasury stock for payment according to this plan,following the evaluation determination period.
*2 Fair value when transfer restriction is lifted
Closing price of the Company’s stock on the Tokyo Stock Exchange on the date of resignation(day before lifting of transfer restriction).

C) Remuneration determination processa)Body with decision-making authority and policy/method of remuneration determination
The policy for setting remuneration by position and individual remunerations to the Company’s
Members of the Board and Executive Officers is determined by the Compensation Committee,
composed solely of Independent Outside Directors, by taking into account changes in the businessenvironment and opinions of our shareholders and investors, upon obtaining the information necessary
for deliberations from third-party human resources and remuneration consultants who possess abundant
global experience and insight. Based on that policy, the committee deliberates on the basic remuneration
principles, remuneration plans, and matters in general about monetary remuneration, etc., and77

determines the remuneration amounts for each position. If any Members of the Board or Executive
Officers of the Company hold concurrent positions as executives for any subsidiaries, theCompensation Committee also deliberates on the remuneration to be paid by those subsidiaries.
b)

Main activities of the Compensation Committee
a. Matters for resolution
・Determination policy for remuneration of Members of the Board and Executive Officers
・Details of remuneration for individual Members of the Board and Executive Officers based on the
aforementioned policy
・When an Executive Officer is concurrently an employee of the Company, the details of the
remuneration as such employee
b. Matters for deliberation
・In the event that Member of the Board or Executive Officer is concurrently an executive of aGroup company, the remuneration paid by such Group company
・Remuneration paid by Group companies for the Chair, CEO and COO of key overseas Group
companies
・Report on the status of execution of duties by the Compensation Committee reported to Membersof the Board
・Matters deemed necessary by the Compensation Committee

2)

Content of remuneration paid to members of the Board and executive officers in the fiscal year underreview

A) Total amount of remuneration by category of position, total amount of remuneration by type, and numberof recipients
Total amountof
Position category

remuneration(Yen inAmount of remuneration by type (Yen in millions)
Performance-based remuneration
Fixed remuneration

Number ofrecipients

Stock

Bonus

compensation

millions)
Members of the Board

267

267

-

-

14

of which Outside
Directors

139

139

-

-

8

595

139

241

215

4

Executive Officers(Notes) 1 The figures above include remuneration paid to two Members of the Board who resigned during the fiscal year
under review.
2 The amounts of remuneration for Members of the Board who are concurrently Executive Officers are separated
into remuneration as a Member of the Board and remuneration as an Executive Officer and included in therespective total amounts of remuneration.
3 Fixed remuneration and bonuses are fully paid in cash. The PSU, shown as performance-based stock compensation,
is a plan in which 50% is paid by the granting of the Company’s shares and 50% is paid in cash in accordancewith business performance (those retiring before the planned period ends are paid fully in cash).
4 The above performance-based stock compensation includes the amounts recorded as expense for each fiscal year
plan of the PSU up until the fiscal year under review. (However, this excludes amounts disclosed in the previous
fiscal year’s Annual Securities Reports.)78B) Total amount of consolidated remuneration for persons received consolidated remuneration of 100 million
yen or more.

Name

Company category

Total amount of consolidated remuneration
Total amountby type (Yen in millions)of
Performance-based
Position
consolidated
remuneration
category
remuneration
Fixed(Yen in
remuneration
Stockmillions)
Bonus
compensation
Member of

Shuichi Ishibashi

Masahiro Higashi

Bridgestone Corporation

Bridgestone Corporation

8

–

–

Executive
Officer

61

126

85
(Note 4)

Member of
the Board6––

the Board

Executive
Officer

Bridgestone Corporation

45

87

–

–

Executive

280

198

60
(Note 4)32

(Note 4)
Officer582
Bridgestone Americas Inc.
Member of
126
424–(Note 1)the Board(Note 2)
(Note 3)(Notes) 1 The remuneration of executives at consolidated subsidiaries is determined following investigation, analysis andconsideration of matters such as market levels for remuneration of directors and executive officers in theincumbent’s location of the United States when determining remuneration.

Paolo Ferrari

2 Fixed remuneration includes an amount equivalent to fringe benefits.
3 In addition to annual bonuses, the followings are listed: the confirmed amount paid for the long-term incentive
plan pertaining to FY2019 to FY2021; the amount recorded as expense relating to FY2020 to FY2021 for the
long-term incentive plan pertaining to FY2020 to FY2022; and the amount recorded as expense relating to FY2021
for the long-term incentive plan pertaining to FY2021 to FY2023. (However, this excludes amounts disclosed in
the previous fiscal year’s Annual Securities Reports)
4 The above performance-based stock compensation plan is one in which 50% is paid by the granting of theCompany’s shares and 50% is paid in cash in accordance with business performance (those retiring before theplanned period ends are paid fully in cash).
In addition, the amount recorded as expense in the fiscal year under review is provided. (However, this excludes
amounts disclosed in the previous fiscal year’s Annual Securities Reports)* Payment of the above performance-based remuneration is determined based on the evaluation results
below.
a) Group-wide performance-based bonus Type A (the target and result for the performancemeasurement period from January 1, 2021 to December 31, 2021)
Performance indicator for
fiscal year 2021

TargetResults

Consolidated adjusted
operating profit

260.0 billion yen

394.3 billion yen

Payment rate
150.0%b) PSU (the target and result for the performance measurement period of the 2019 Plan fromJanuary 1, 2019 to December 31, 2021)
Performance indicators forthe 2019 Plan

TargetActual (*)

Consolidated ROE
Consolidated operating
profit/Consolidated adjusted
operating profit

Payment rate

12%

8.1%

51.3%

423.8 billion yen

314.5 billion yen

0.0%

Total
41.0%
*3-year average for each fiscal year’s actuals

79

3)

Status of operations of the Compensation Committee in the fiscal year under review

A) Number of meetings held and attendance at Compensation Committee meetings
During the period from January to December 2021, the Compensation Committee held 14 meetings mainly
regarding the setting of remuneration paid to Members of the Board and Executive Officers for the fiscal
period under review, with full attendance for every meeting. In addition, a third-party human resources
and remuneration consultants attended the meetings to provide objective and specialized input, as
necessary.
Position

Committee member names and attendance

Chairperson of the Compensation
Committee

Yuri Okina

14 of 14 (100%)

Member of the Compensation
Committee

Scott Trevor Davis

14 of 14 (100%)

Member of the Compensation
Committee

Kenichi Masuda

14 of 14 (100%)B) Adequacy and appropriateness of individual remuneration for Members of the Board and Executive
Officers for the period under review
Individual remunerations for Members of the Board and Executive Officers for the period under review
are set by the Compensation Committee, composed solely of Independent Outside Directors, by carryingout multifaceted discussions including consistency of remunerations with the policy for setting
remunerations based on objective and specialized information necessary for deliberations, as described in1)-C)-a) above. Therefore, the Committee has determined that the individual remunerations for Membersof the Board and Executive Officers for the period under review are in line with the policy and adequate.
In addition, 2021 was a year in which the ideal remuneration and significance of incentives was called
into question as the unexpected abnormal situation arising from COVID-19 continued. While engaging in
discussions going back to the starting point in order to achieve the business strategy, the Company took
another look at the remuneration system, including the introduction of new medium- to long-term
incentives for 2022, and decided to pay individual remuneration for the year 2022 (Special Award(*)).
(*)

Over the past two years starting in 2020, COVID-19 has dramatically changed the business climate
unexpectedly and within a short period of time. We appreciate the fact that we are steadily
implementing various measures faster than originally planned while formulating business strategies
for the Third Foundation and setting specific targets. At the same time, with the expectation thatthese management initiatives will continue to contribute to further enhancement of corporate value,
we have decided to provide Special Awards in the form of restricted stock compensation with athree-year restriction.

<Details on the formula used in quantitative evaluations for Group-wide performance-based bonuses and PSU
for fiscal year 2022>
Group-wide performance-based bonus is to be calculated and determined in accordance with the following
calculation method at the meeting of the Compensation Committee scheduled for the first quarter of 2023. PSU
is to be calculated and determined in accordance with the following calculation method at the first meeting of
the Compensation Committee following the finalization of the consolidated financial statements for the fiscal
year ending December 2024.
a)Performance-based bonus (Group-wide)a. Calculation method
Payment amount=Standard amount by
position(*1)

80

×Payment
amount(*2)

*1Standard amount by position for Group-wide performance-based bonus
Representative Executive Officer Representative Executive Officer
Global CEO
Global COO
83.23 million yen*2

64.32 million yen

Executive Officer
Senior Vice President
22.46 million yen

The payment rate is calculated with the following formula. If fractions arise in calculating thepayment rate, the figure shall be rounded to the nearest second decimal place.

Payment rate of actual
bonus

340.0 billion yen
425.0 billion yen (*)
510.0 billion yen(*)Set as the full-year forecast profit amount publicly-

announced in February 2022

Amount of consolidated
adjusted operating profit

・0% if adjusted operating profit amount (consolidated) is less than 340.0 billion yen
・50% + {100% × (adjusted operating profit amount (consolidated) - 340.0 billionyen)/170.0 billion yen} if adjusted operating profit amount (consolidated) is 340.0
billion yen or more but less than 510.0 billion yen
・150% if adjusted operating profit amount (consolidated) is 510.0 billion yen or moreb. The upper limits per individual for the amount of payment by position for Group-wide
performance-based bonus are as follows.
Representative Executive Representative Executive
Officer
Officer
Global CEO

Global COO

124.85 million yen

96.48 million yen

Executive Officer
Senior Vice President
33.69 million yen

c. The performance measurement period is from January 1, 2022 until December 31, 2022.
d. The payment period is in March, following the end of the performance measurement period, withthe amount calculated with the above formula paid as Group-wide performance-based bonus.

b)

PSU (performance-based stock compensation)a. The Company’s PSU design
The specific design of the Company’s PSU is as follows.
(a) The Company predetermines indicators, etc. necessary for specific calculation of the number ofstock granted to each individual and the amount of cash paid to each individual such as theperformance indicators (calculated according to consolidated ROIC and consolidated ROE) andthe coefficients, etc. determined according to the performance indicators used in the PSU.
Specific indicators, etc. are listed in b. below.
(b) The Company determines, following the end of the performance measurement period, the81number of stock granted to each individual and amount of cash paid to each individual for each
Eligible Executive Officer according to the rate of achievement of the performance indicatorsfor such performance measurement period.
(c) The Company pays monetary compensation claims to provide in-kind contribution to each
Eligible Executive Officer taking the number of stock granted to each individual Eligible
Executive Officer determined in (b) above as the basis. The amount of such monetarycompensation claims is determined by the Compensation Committee to the extent that is notparticularly favorable to each Eligible Executive Officer subscribing to the Company’s stock.
(d) Each Eligible Executive Officer shall acquire the Company’s stock by making in-kind
contribution to the Company of the aforementioned monetary compensation claims to provide
in-kind contributions paid under (c) above when the Company issues new shares or disposes oftreasury stock.
b. Calculation method for the number of stock granted to each individual and amount of cash paid toeach individual according to the PSU
The number of stock granted to each individual and the amount of cash paid to each individual
pertaining to each Eligible Executive Officer are calculated according to the following method.
(a) number of stock granted to each individual (Rounding up units less than 100 shares)
Standard number of sharesby position(*1)

×

×

50%

Paymentrate(*2)(b) amount of cash paid to each individual (Rounding up amounts less than 10,000 yen)
Minimum number of sharesby position(*1)

50%

×

×

Paymentrate(*2)

Price of Company
shares(*3)×*1 Standard number of shares by position
Representative Executive Representative Executive
Officer
Global CEO

Officer
Global COO

Executive Officer

Executive Officer

Executive Vice President

Senior Vice President

12,400 shares

9,600 shares

6,700 shares

3,800 shares*2 Calculation method for the payment rate

Payment rate A based on
consolidated ROIC
indicator

×

0.8

＋

Payment rate B
based onconsolidated ROE
indicator

×

0.2

•

If fractions arise in calculating the payment rate, the payment rate A, and the payment rate B, therespective figures shall be rounded to the nearest second decimal place.

•

The payment rate A is calculated with the following formula. “Actual ROIC (%)” means theactual consolidated ROIC for the final fiscal year of the performance measurement period.

82

Payment rate A

Actual ROIC (%)

・0% if actual ROIC (%) is less than 6%
・50% + {50% × (actual ROIC (%) - 6%) / 4%} if actual ROIC (%) is 6% or more but lessthan 10%
・100% + {100% × (actual ROIC (%) - 10%) / 4%} if actual ROIC (%) is 10% or more but
less than 14%
・200% if actual ROIC (%) is 14% or more•

The payment rate B is calculated with the following formula. “Actual ROE (%)” means the actual
consolidated ROE for the final fiscal year of the performance measurement period.

Payment rate B

Actual ROE (%)

・0% if actual ROE (%) is less than 8%
・50% + {50% × (actual ROE (%) - 8%) / 4%} if actual ROE (%) is 8% or more but lessthan 12%
・100% + {100% × (actual ROE (%) - 12%) / 4%} if actual ROE (%) is 12% or more but
less than 16%
・200% if actual ROE (%) is 16% or more

*3 The Company’s stock priceThe daily average closing price of the Company’s stock on the Tokyo Stock Exchange for themonth preceding the day of the resolution made by the Company’s Board of Directors concerning
the new issuance of stock or disposal of treasury stock for payment according to this plan,following the performance measurement period.

83

c. The maximum number of stock granted and maximum amount of cash paid to each individual inaccordance with the PSU• The maximum number of stock granted to each individual Eligible Executive Officer shall be inaccordance with the position of the Eligible Executive Officer immediately following the Annual
Shareholders’ Meeting relating to the fiscal year prior to the performance measurement period,
and described in the following table.
Representative Executive Representative Executive
Officer
Global CEO

Officer
Global COO

12,400 shares

9,600 shares

Executive Officer
Executive Vice President

Executive Officer
Senior Vice President

6,700 shares

3,800 shares• The maximum amount of cash paid to each individual Eligible Executive Officer shall be inaccordance with the position of the Eligible Executive Officer immediately following the Annual
Shareholders’ Meeting relating to the fiscal year prior to the performance measurement period,
and described in the following table.
Representative Executive Representative Executive
Officer
Global CEO

Officer
Global COO

Executive Officer

Executive Officer

Executive Vice President

Senior Vice President

86.00 million yen

66.00 million yen

47.00 million yen

27.00 million yen• The “defined number” and “defined amount” prescribed in Article 34, paragraph (1), item (iii) (a)1. of the Corporation Tax Act are respectively the aforementioned “maximum number of stock”
and “maximum amount.”d. Performance measurement period
From January 1, 2022 to December 31, 2024.
e. Payment period
The Company shall grant and pay to the Eligible Executive Officers, the Company’s stock and cash
equivalent to the number of stock granted to each individual and amount of cash paid to eachindividual calculated with the aforementioned formula in May 2025.
f.

Conditions for granting the Company’s stock and paying cash
The Company’s stock shall be granted and cash paid if the Eligible Executive Officers meet thefollowing three conditions.
(a) Hold a position of Eligible Executive Officer during the period from the day of the Annual
Shareholders’ Meeting convened on March 23, 2022 until the day of the Annual Shareholders’Meeting scheduled to be convened in March 2025 (hereinafter “Relevant Period”)(b) No engagement in any of the following illegal acts
・Criminal conduct related to professional duties
・Breach of trust against the Company
・Acts that incur serious disciplinary measures or require censure(c) Other matters that the Company’s Compensation Committee and its Board for Directors deems
as necessary to be achieved for the stock compensation plang. Grant method
Granted through the new issuance of the Company’s stock or disposal of treasury stock. In addition,
if the total number of shares issued by the Company changes before the Company’s stock is granted
due to a consolidation of stock or stock split (including a free distribution of the Company’s common
stock; the same definition applies to stock splits described below), the number of shares granted to84each individual after adjustment shall be calculated by multiplying the number of stock granted toeach individual before adjustment by the ratio of such consolidation of stock or stock split.
h. Treatment if an Eligible Executive Officer changes roles during the Relevant Period(a) If a person becomes an Eligible Executive Officer or is promoted or demoted during the Relevant
Period, the standard number of shares by position for such person shall be the number calculatedwith the following formula irrespective of the table described in b. above.
Standard number ofshares by position under(a)+(Standard number of shares by
position prior to the change ofroles(*1)=

Standard number ofshares by position after
the change of roles-

Standard number ofshares by position prior
to the change of roles)×

Number of months
remaining in
Relevant Period(*2)/ 36(b) If an Eligible Executive Officer resigns or assumes a position that is not an Eligible Executive
Officer of the Company during the Relevant Period, the standard number of shares by position
for such person shall be the number calculated with the following formula irrespective of thetable described in b. above. The period for granting the Company’s stock and paying cash, etc.
are the same as for other incumbent Members of the Board and Executive Officers, as outlined
in e. above.
Standard number ofshares by position under(b)=Standard number of shares by
position during tenure(*3)×

Number of months in
Relevant Period(*2)/ 36*1 In the event of assuming office, calculated with the “Standard number of shares for the position prior to thechange of roles” set at 0.
*2 In the event of terms less than one month, calculated as one month.
*3 In the event of being promoted or demoted during the term of office, calculated in accordance with treatment
for (a).

i.

Treatment if there is a restructuring of the organization or abolition of the PSU during the Relevant
PeriodIf, during the Relevant Period, a resolution concerning a merger with the Company being the nonsurviving company, a company split with compensation for the split granted to the Company’s
shareholders, a share exchange or share transfer whereby the Company becomes a wholly-owned
subsidiary, the consolidation of stock for only the fractions held by Eligible Executive Officers, theacquisition of shares or sale of shares pursuant to whole acquisition clause is approved at the
Shareholders’ Meeting (or at the Board of Directors, if not convened) and becomes effective or if theabolition of the PSU is approved by the Company’s Compensation Committee and becomes effective,
the Company shall pay cash in the amount obtained by multiplying the number of months from thefirst month of the Relevant Period to the month in which such approval was made divided by 36 by
the standard number of shares by position(*1) for each Eligible Executive Officer on the day of suchapproval, the payment rate(*2) calculated at the time of such approval, and the daily average closing
price of the Company’s stock on the Tokyo Stock Exchange for the month preceding the day of suchapproval.
*1 If Eligible Executive Officers correspond to h. above, the outcome based on the formula in h.
shall be the standard number of shares by position for such Eligible Executive Officers.
*2 The payment rate is calculated according to b.*2 above based on the consolidated ROIC andconsolidated ROE for the most recent fiscal year listed in the Annual Securities Report filed by
the date of such approval.
85

(5) Stock holdings
1)Standards and approach for classification of investment stocks

The Company distinguishes between investment stocks for pure investment purposes—shares held for gaining
profit through changes in share value and dividends—and strategic shareholdings, which are all other shares
held in accordance with the Company shareholding policy. The Company does not hold any investment stocks
for pure investment purposes.
2)

Investment stocks held for purposes other than pure investmenta. Shareholding policy and method for verifying appropriateness for holding as well as details regarding
verification of the appropriateness of holding shares for each individual security performed by the Boardof Directors and other partiesi)

Shareholding policy for strategic shareholdings
The Company defines strategic shareholdings as holdings that contribute toward increased corporate
value of the Company and are held out of necessity from the Company’s business strategy perspective
or with the goal of maintaining or strengthening relationships with businesses or collaborative
industries. The Company will not hold strategic shareholdings for reasons outside of this definition.

ii) Verifying appropriateness of strategic shareholdings
The Company confirms the appropriateness of its holdings on an annual basis, including an assessmentof securities for which 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 iscomprehensively determined by operating divisions involved in business execution in accordance withthe shareholding policy of the Company, taking into account a quantitative evaluation of the economic
rationale corresponding to the cost of capital and other relevant factors for each individual stock holding.
Shareholdings that are not judged as appropriate based on the results of this verification process are
reduced after establishing a dialogue and gaining the understanding of the business partner for theholding in question. As a result, the number of strategic shareholdings is decreased year on year.
b. Number of securities and balance sheet amounts
Number of
securities

Balance sheet amounts (Yen in
millions)

Unlisted shares

43

672

Shares other than unlisted
shares34

88,775(Securities for which the number of shares increased during the fiscal year under review)
Total acquisition cost for the
Number ofincrease in the number of shares
securities(Yen in millions)
Unlisted shares

1

15

Shares other than unlisted
shares1–

86

Reason for increasing number of shares
To co-create further social and customer
value and improve corporate value
Increase by means of share split

(Securities for which the number of shares decreased during the fiscal year under review)
Number of
securities

Total sale value related to thedecrease in the number ofshares (Yen in millions)

Unlisted shares

4

11

Shares other than unlisted
shares2

151

87

c. Information on the number of specific investment stocks and deemed shareholdings by security, and theamount recorded on the balance sheet
Specific Investments Stocks

Name

Fiscal year underreview

Previous fiscal year

Number of shares

Number of shares

Balance sheet amount Balance sheet amount(Yen in millions)(Yen in millions)Purpose of holding, quantitative effect ofOwnership ofholding (Note 1) and reasons for the increase the Company’s
in the number of sharesshares6,525,160

6,525,160

28,54818,7539,799,450

1,959,890

Maintain/strengthen business andcollaborative relationships

20,633

15,595

Increase by means of share split

4,167,653

4,167,653

18,162

15,2485,000,000

5,000,000

8,970

7,840

562,224562,224

2,217

1,792

2,780,580

2,780,580

Financial Group, Inc.

1,738

1,268

FUJI KYUKO CO.,LTD.

244,510244,510

998

1,177

527,076

527,076

871

884

Otsuka Holdings Co.,Ltd.

200,000

200,000

834

Fukuyama

JSR Corporation
Toyota Motor
Corporation(Note 2)
Nokian Tyres PLC

Business strategy

Toyo Tire Corporation

Sumitomo Mitsui

Maintain/strengthen business andcollaborative relationships

Maintain/strengthen business andcollaborative relationships

No

Yes

No

Yes

Business strategy

Yes

Business strategy

Yes

Maintain/strengthen business andcollaborative relationships

No

Maintain/strengthen business andcollaborative relationships

Yes

No

884

Maintain/strengthen business andcollaborative relationships

200,162

200,162

Maintain/strengthen business and

786

870

212,237

212,237554

646

171,200

171,200

503

389

Seino Holdings Co.,Ltd.

391,229391,229

456

569

AUTOBACS SEVEN
Co., Ltd.

313,632

313,632

440

448

Financial Group, Inc.
Mitsubishi UFJ

Yellow Hat Ltd.

Transporting Co., Ltd.
Nishi-Nippon
Railroad Co., Ltd.
Idemitsu Kosan Co.,
Ltd.

88

collaborative relationships
Maintain/strengthen business andcollaborative relationships
Maintain/strengthen business andcollaborative relationships

No

No

No

Maintain/strengthen business andcollaborative relationships

No

Maintain/strengthen business andcollaborative relationships

No

Name

Fiscal year underreview

Previous fiscal year

Number of shares

Number of shares

Balance sheet amount Balance sheet amount(Yen in millions)(Yen in millions)
124,281

124,281400

562

270,970

270,970374

375

366,888366,888

Holdings Co., Ltd.

340

369

Niigata kotsu Co.,Ltd.

163,870

163,870337

334

Mizuho Financial
Group, Inc.

212,072

212,072310

277

51,51451,514

246

Kintetsu Group
Holdings Co., Ltd.

ISEKI & CO., LTD.

SENKO Group

Ownership of
Purpose of holding, quantitative effect of
the Company’s
holding (Note 1) and reasons for the increase
sharesin the number of shares

Maintain/strengthen business andcollaborative relationships
Maintain/strengthen business andcollaborative relationships
Maintain/strengthen business andcollaborative relationships

No

Yes

No

Maintain/strengthen business andcollaborative relationships

No

Business strategy

Yes

No

201

Maintain/strengthen business andcollaborative relationships

153,550

153,550

Maintain/strengthen business and

205

172

Hankyu Hanshin

57,98357,983

Holdings, Inc.

189

199

2,781,600

5,246,500

171

256

ITOCHU ENEX CO.,LTD.

101,386

101,386

101

103

Hiroshima Electric
Railway Co., Ltd.

120,000

120,000

96

118

5,000

5,000

77

Sankyu Inc.

SAN-AI OIL Co., Ltd.

Inoue Rubber(Thailand) Public Co.,
Ltd.

Central Japan Railway
Company
Mie Kotsu Group
Holdings, Inc.

Ltd.

Maintain/strengthen business andcollaborative relationships
Maintain/strengthen business andcollaborative relationships

No

No

No

Maintain/strengthen business andcollaborative relationships

No

Maintain/strengthen business andcollaborative relationships

No

No

73

Maintain/strengthen business andcollaborative relationships

121,536

121,536

Maintain/strengthen business and

59

60

50,00050,00046

46

42,00042,00032

38

Nissin Shoji Co., Ltd.
Daiwa Motor
Transportation Co.,collaborative relationships

89

collaborative relationships
Maintain/strengthen business andcollaborative relationships
Maintain/strengthen business andcollaborative relationships

No

No

No

Name

Fiscal year underreview

Previous fiscal year

Number of shares

Number of shares

Balance sheet amount Balance sheet amount(Yen in millions)(Yen in millions)
29,70029,70027

27

10,00010,000

18

18

5,808

5,808

16

14

KAMEI
CORPORATION

12,10012,100

13

14

ORIX
CORPORATION

5,000

5,000

12

8

–

2,000

–

5

S LINE CO., LTD.

AIR WATER INC.

SAKAI HEAVY
INDUSTRIES, LTD.

CAPITA Inc.
(Notes 3 and 4)

Purpose of holding, quantitative effect ofOwnership ofholding (Note 1) and reasons for the increase the Company’s
in the number of sharesshares

Maintain/strengthen business andcollaborative relationships
Maintain/strengthen business andcollaborative relationships
Maintain/strengthen business andcollaborative relationships

No

No

No

Maintain/strengthen business andcollaborative relationships

No

Maintain/strengthen business andcollaborative relationships

No

–

No

(Notes) 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 comprehensively determined by operating divisions
involved in business execution in accordance with the shareholding policy of the Company, taking into account aquantitative evaluation of the economic rationale corresponding to the cost of capital and other relevant factors, and isthen verified by the Board of Directors.
2 *On October 1, 2021, Toyota Motor Corporation carried out a stock split on ordinary shares at a five for one ratio.
3 DAIYA TSUSHO CO., LTD. changed its name to CAPITA Inc. effective September 1, 2021.
4 A dash (“-”) signifies that there are no holdings for the security in question.

Deemed Shareholdings
Not applicable.
3)

Investment stocks for pure investment purposes

Not applicable.
4)

Investment stocks for which the purpose of holding was changed from pure investment purposes during
the fiscal year under review

Not applicable.

90

V. Financial Information
1.

Method for preparation of the consolidated financial statements and the non-consolidated financial
statements(1) The consolidated financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) pursuant to the provisions of Article 93 of theRegulation on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements(Ministry of Finance Order No. 28 of 1976; the “Regulation on Consolidated Financial Statements”).
(2) The non-consolidated financial statements of the Company have been prepared in accordance with theRegulation on Terminology, Forms, and Preparation Methods of Financial Statements (Ministry of
Finance Order No. 59 of 1963; the “Regulation on Financial Statements”).
The Company is allowed to file specified financial statements under the Financial Instruments andExchange Act and prepares non-consolidated financial statements pursuant to Article 127 of theRegulation on Financial Statements.

2.

Audit certification
The consolidated financial statements and the non-consolidated financial statements for the fiscal year fromJanuary 1, 2021 to December 31, 2021 were audited by Deloitte Touche Tohmatsu LLC in accordance with
Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act.

3.

Special effort to ensure the appropriateness of consolidated financial statements and others, anddevelopment of a system for preparing consolidated financial statements and others appropriately inaccordance with IFRSThe Company makes special effort to ensure the appropriateness of the consolidated financial statements
and others, and develop a system for preparing consolidated financial statements and others appropriately
in accordance with IFRS. The details are as follows:(1) In order to develop a system that ensures a proper understanding of the contents of accounting
standards, etc. and apply them to the consolidated financial statements, etc., the Company joins the
Financial Accounting Standards Foundation to gather information, and attends various seminars hosted
by said Foundation.
(2) In addition, the Company develops the Group’s accounting policy in accordance with IFRS andpractices accounting procedures based on the policy to appropriately prepare the consolidated financial
statements in accordance with IFRS. The Company obtains press releases and standards published by
the International Accounting Standards Board as needed, understands the latest standards and weighs
their implications to the Company, and updates the Group’s accounting policy in a timely manner.

91

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements
1) Consolidated Statement of Financial Position
Notes

Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets

8,20
9,35
10
11,35
12

810,546
667,761
491,240
7,277
76,279787,542
741,612630,140
11,76987,029Subtotal
Assets held for sale13

2,053,104
1,425

2,258,092
34,7782,054,529

2,292,870

1,392,141

1,427,903

290,122
97,646
117,481

294,065
125,393
134,719

16

24,54325,131

11,35
18
12,23

113,222
49,40950,234140,376
76,79057,644

Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Investments accounted for using
equity method
Other financial assets
Deferred tax assets
Other non-current assets

14,16,
20
17
15,16
15,16

Total non-current assets
Total assets

92

2,134,798

2,282,022

4,189,327

4,574,892

NotesLiabilities and equity
Liabilities
Current liabilities
Trade and other payables
Bonds and borrowings
Lease liabilities
Income taxes payable
Other financial liabilities
Provisions
Other current liabilities

Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

420,140
293,978
53,966
34,97829,34264,806
144,526

517,010
149,976
54,85340,32026,656
48,691
151,417

1,041,736

988,923

12

34,4781,041,748

1,023,401

412,060
246,187
13,937
191,679
23,73028,491
36,205356,672
249,638
15,339171,981
25,54043,81013,157

Total non-current liabilities

952,288876,137

Total liabilities
EquityCommon stock
Capital surplus
Treasury stock
Other components of equity
Retained earnings

1,994,036

1,899,538

126,354
122,116(38,657)(59,851)
1,999,996

126,354
122,126(38,123)
111,859
2,307,667

2,149,958

2,629,883

Subtotal
Liabilities directly associatedwith assets held for sale
Total current liabilities
Non-current liabilities
Bonds and borrowings
Lease liabilities
Other financial liabilities
Retirement benefit liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities

19,35
20,35
20,35
20,35
21
22
13

20,35
20,35
20,35
23
21
18

24
24
24
24
24

Total equity attributable to ownersof parent
Non-controlling interests
Total equity
Total liabilities and equity

93

45,33345,471

2,195,291

2,675,354

4,189,327

4,574,892

2) Consolidated Statement of Profit or Loss and Consolidated Statement of Comprehensive Income
Consolidated Statement of Profit or Loss
Notes
Continuing operations
Revenue
Cost of sales

Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

6,26
10,14,
15,17,
23

2,695,224

3,246,057

1,681,514

1,929,612

1,013,710

1,316,444

847,405

928,620

31,661

14,565

135,478

25,59029
23,29

62,488
8,267
23,718376,799
10,807
16,21916

18,196–(1,429)6,207

27,412
43,631

377,594
63,234(16,219)

314,360(3,511)

86,168(19,731)400,528(23,301)
3,571

394,037
6,491(19,731)400,52832
32(28.11)(4.99)

437.19122.3732(33.09)559.5632
32(28.11)(4.99)

436.53122.1832(33.09)558.71Gross profit
Selling, general and administrative
expenses
Other income
Other expenses
Operating profit
Finance income
Finance costs
Impairment losses related to sharesusing equity method
Share of profit (loss) of investments
accounted for using equity method
Profit before tax
Income tax expense

14,15,
17,23,
27,34
28
16,23,
28

18

Profit (loss) from continuing
operations
Discontinued operations
Profit (loss) from discontinued
operations

14,15,
16,17,
23,31

Profit (loss)
Profit (loss) attributable to
Owners of parent
Non-controlling interests
Profit (loss)
Earnings (loss) per share
Basic earnings (loss) per share (Yen)Continuing operations
Discontinued operations
Total
Diluted earnings (loss) per share (Yen)Continuing operations
Discontinued operations
Total

94

Consolidated Statement of Comprehensive Income
Notes

Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions(19,731)

Yen in millions
400,528

1,708

14,446

5,478

16,316

(140)

(18)

7,046

30,74330(94,748)

163,596

30

79

264

30

(1,747)(3,576)

Total of items that may be reclassified to
profit or loss

(96,415)160,285

Other comprehensive (loss) income, netof tax(89,369)

191,028

Comprehensive (loss) income(109,099)

591,557

Comprehensive income attributable to
Owners of parent
Non-controlling interests(108,005)(1,095)

581,731
9,826

Comprehensive (loss) income(109,099)

591,557

Profit (loss)
Other comprehensive income
Items that will not be reclassified to
profit or loss
Net change in fair value of financial
assets measured through other
30,35
comprehensive income
Remeasurements of defined benefit
23,30
plans
Share of other comprehensive
income of investments accounted for 30
using equity method
Total of items that will not bereclassified to profit or loss
Items that may be reclassified to profit
or loss
Exchange differences on translationof foreign operations
Effective portion of change in fairvalue of cash flow hedges
Share of other comprehensive
income of investments accounted forusing equity method953) Consolidated Statement of Changes in Equity
Previous Year (Year ended December 31, 2020)
Equity attributable to owners of parent
Other components of equity

Note

Balance at January 1, 2020
Profit (loss)
Other comprehensive income
Total comprehensive income
Purchase of treasury stock
Disposal of treasury stock
Dividends
Changes in ownership interests ofowners in subsidiaries undercontrol
Transfer from other components ofequity to retained earnings
Other changes

24
24
25

Total transactions with owners, etc.
Balance at December 31, 2020

Commonstock

CapitalsurplusTreasury
stock

Stock
acquisitionrightsExchangedifferencesontranslationof foreign
operations

Effective
portion ofchange infair value ofcash flow
hedgesNet change
in fair valueof financial
assetsmeasuredthroughothercomprehensive income

Yen inmillions
126,354––

Yen inmillions
121,998––

Yen inmillions(232,330)––

Yen inmillions
3,275––

Yen inmillions(18,968)–(93,289)

Yen inmillions
(325)
–
315

Yen inmillions
58,678
–
1,706

–

–

–

–

(93,289)

315

1,706

–
–
–

–
–
–

(3)
193,677
–

–
(150)
–

–
–
–

–
–
–

–
–
–

–

118

–

–

–

–

–

–

–

–

–

–

–

(11,094)

–

–

–

–

–

–

–

–

118

193,674

(150)

–

–

(11,094)

126,354

122,116(38,657)

3,125(112,257)(9)49,290Equity attributable to owners of parent
Other components of equity
Note

Balance at January 1, 2020
Profit (loss)
Other comprehensive income
Total comprehensive income
Purchase of treasury stock
Disposal of treasury stock
Dividends
Changes in ownership interests ofowners in subsidiaries undercontrol
Transfer from other components ofequity to retained earnings
Other changes
Total transactions with owners, etc.
Balance at December 31, 2020

24
24
25

Total

Noncontrollinginterests

Total

Yen inmillions
2,290,696(23,301)–

Yen inmillions
2,349,378(23,301)(84,703)

Yen inmillions
53,0993,571(4,665)

Yen inmillions
2,402,477(19,731)(89,369)(84,703)(23,301)(108,005)(1,095)(109,099)

–
–
–

–
(150)
–

–
(193,526)(91,531)(3)
0(91,531)––(7,507)(3)0(99,037)

–

–

–

118

871

990

(6,564)(17,659)

17,659–––Remeasurements ofdefinedbenefit plans

Total

Retainedearnings

Yen inmillions––
6,564

Yen inmillions
42,661–(84,703)

6,564

–

–

–

–

(36)

(36)

(6,564)(17,809)(267,398)(91,415)(6,672)(98,087)–(59,851)

1,999,996

2,149,958

45,333

2,195,291

96

Current Year (Year ended December 31, 2021)
Equity attributable to owners of parent
Other components of equity

Note

Balance at January 1, 2021
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury stock
Disposal of treasury stock
Dividends
Changes in ownership interests ofowners in subsidiaries undercontrol
Transfer from other components ofequity to retained earnings
Other changes

24
24
25

Total transactions with owners, etc.
Balance at December 31, 2021

Commonstock

CapitalsurplusTreasury
stock

Stock
acquisitionrightsExchangedifferencesontranslationof foreign
operations

Effective
portion ofchange infair value ofcash flow
hedgesNet change
in fair valueof financial
assetsmeasuredthroughothercomprehensive income

Yen inmillions
126,354––

Yen inmillions
122,116––

Yen inmillions(38,657)––

Yen inmillions
3,125––

Yen inmillions(112,257)–
156,939

Yen inmillions(9)–753

Yen inmillions
49,290–14,428––––

156,939753

14,428

–
–
–

–
–
–

(11)
544
–

–
(128)
–

–
–
–

–
–
–

–
–
–

–

10

–

–

–

–

–

–

–

–

–

–

–

(281)

–

–

–

–

–

–

–

–

10

533

(128)

–

–

(281)

126,354

122,126(38,123)

2,997

44,682744

63,436Equity attributable to owners of parent
Other components of equity
Note

Balance at January 1, 2021
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury stock
Disposal of treasury stock
Dividends
Changes in ownership interests ofowners in subsidiaries undercontrol
Transfer from other components ofequity to retained earnings
Other changes
Total transactions with owners, etc.
Balance at December 31, 2021

24
24
25

Total

Noncontrollinginterests

Total

Yen inmillions
1,999,996
394,037–

Yen inmillions
2,149,958
394,037
187,694

Yen inmillions
45,333
6,491
3,334

Yen inmillions
2,195,291
400,528
191,028

187,694

394,037

581,7319,826

591,557

–
–
–

–
(128)
–

–
(114)
(102,107)(11)
302(102,107)––(9,217)(11)
302(111,324)

–

–

–

10

(124)

(114)

(15,574)(15,855)

15,855

–

–

–

–

–

–

–

(347)

(347)

Remeasurements ofdefinedbenefit plans

Total

Retainedearnings

Yen inmillions––
15,574

Yen inmillions(59,851)–
187,694

15,574(15,574)(15,983)(86,366)(101,806)(9,688)(111,494)–

111,859

2,307,667

2,629,883

45,471

2,675,354

974) Consolidated Statement of Cash Flows
Note

Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Yen in millions

Cash flows from operating activities
Profit before tax
Profit before tax from discontinued operations
Depreciation and amortization
Impairment losses
Loss recognized upon having measured the disposalgroup consisting of discontinued operations at fairvalue less cost to sell
Increase (decrease) in accounts payable - bonuses
Increase (decrease) in retirement benefit liabilities
Interest and dividend income
Interest expenses
Foreign currency exchange loss (gain)
Share of profit (loss) of investments accounted forusing equity method
Loss (gain) on sale of fixed assets
Business and plant restructuring income
Business and plant restructuring expenses
Loss on retirement of fixed assets
Gains on sale of discontinued operations
Decrease (increase) in trade and other receivables
Decrease (increase) in inventories
Increase (decrease) in trade and other payables
Increase (decrease) in consumption tax payables
Increase (decrease) in provision related to businessand plant restructuring expenses
Other

Yen in millions

27,412
1,854
267,454
89,622

377,594
140,506
250,448
5,495–

142,712

3,328(13,196)(7,598)13,426
4,905

9,086(7,111)(10,888)
11,625(8,813)

1,429(6,207)(24,192)(162)
42,821
6,905–
56,908
128,837(7,524)
14,340(3,480)(2,562)25,2694,090(303,521)(69,927)(140,209)
91,617(12,136)

28,877(21,340)(30,653)(42,073)

SubtotalInterest and dividends received
Interest paid
Income taxes paid

604,791
7,835(13,960)(71,719)

430,173
12,418(13,372)(147,680)

Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments for purchase of property, plant andequipment
Proceeds from sale of property, plant and equipment
Payments for purchase of intangible assets
Purchase of investment securities
Payments of long-term loans receivableCollection of loans receivable
Proceeds from sale of discontinued operations
Other526,947

281,538(200,677)(161,040)

38,857(17,436)(1,030)(4,450)3,489–
25,8709,999(23,951)(4,356)(12,262)
14,102363,754(54,545)(155,378)

131,701

31

31

31

Net cash provided by (used in) investing activities

98

Note

Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of lease liabilities
Dividends paid to owners of parent
Dividends paid to non-controlling interests
Other

Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

309,432(248,436)
116,615(3,353)(57,132)(91,524)(7,501)(24)

94,667(220,281)
26,534(109,073)(59,689)(102,118)(9,218)(143)

Net cash provided by (used in) financing activities

18,077(379,321)

Effect of exchange rate changes on cash and cash
equivalents(12,025)

48,353

377,621432,924

82,271
810,546

13–(105,275)8

810,546787,542

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents included in assets held forsale
Cash and cash equivalents at end of period

33
33
33
33
33

99

Notes to Consolidated Financial Statements
1. Reporting Entity
Bridgestone Corporation (the “Company”) is a stock company located in Japan. The Company’s
consolidated financial statements, which were prepared for the reporting period ended December 31,
represent the Company and its 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”.
2. Basis of Preparation(1) Statement of compliance with IFRSThe consolidated financial statements of the Group have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) pursuant to the provisions of Article 93 of the Ordinance on
Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (Ordinance of the
Ministry of Finance No. 28, 1976), as the Group satisfies the requirements for “specified company
complying with designated international accounting standards” set forth in Article 1-2 of the sameordinance.
The consolidated financial statements were approved on March 23, 2022 by Shuichi Ishibashi, Memberof the Board, Global CEO and Representative Executive Officer of the Company, and Masuo
Yoshimatsu, Senior Vice President and Executive Officer, Global CFO of the Company.
(2) Basis of measurement
The consolidated financial statements of the Group have been prepared based on historical cost, except
for items such as financial instruments that are measured at fair value as stated in Note “3. Significant
Accounting Policies”.
(3) Functional currency and presentation currency
The consolidated financial statements of the Group are presented in Japanese yen, which is thefunctional currency adopted by the Company, and figures less than one million yen are rounded off tothe nearest million yen.
(4) Changes in presentations(Discontinued operations)
Profit or loss from businesses that have been classified as discontinued operations are presented as aseparate line item at the amount net of income tax expenses under profit from continuing operations in
the consolidated statement of profit or loss. For businesses that have been classified as discontinued
operations, consolidated statement of profit or loss, consolidated statement of cash flows, and related
notes to the consolidated financial statements for the fiscal year ended December 31, 2020, are partially
reclassified. In addition, cash flows from operating activities, cash flows from investing activities, andcash flows from financing activities in consolidated statement of cash flows are stated at the total
amount of cash flows generated from both continued and discontinued operations.
(Consolidated statement of cash flows)“Impairment losses related to shares using equity method” separately stated under “Cash flows fromoperating activities” for the fiscal year ended December 31, 2020, is included under “Other” from thefiscal year ended December 31, 2021, as its amount has become immaterial. “Increase (decrease) in
accounts payable – bonuses,” “Business and plant restructuring income,” and “Increase (decrease) in
provision related to business and plant restructuring expenses” that were included in “Other” under“Cash flows from operating activities” for the fiscal year ended December 31, 2020, are separately
stated from the fiscal year ended December 31, 2021, as their amounts have become material. The
consolidated financial statements of the previous fiscal year have been reclassified to reflect thesechanges in presentation.
100

As a result, 18,196 million yen stated in “Impairment losses related to shares using equity method” and(16,806) million yen stated in “Other” under “Cash flows from operating activities” for the fiscal year
ended December 31, 2020, were reclassified as “Increase (decrease) in accounts payable – bonuses” inthe amount of 3,328 million yen, “Business and plant restructuring income” in the amount of (162)
million yen, “Increase (decrease) in provision related to business and plant restructuring expenses” inthe amount of 28,877 million yen, and “Other” in the amount of (30,653) million yen.
“Proceeds from sales of investments in securities” and “Purchase of investments in subsidiaries resulting
in change in scope of consolidation” that were separately stated under “Cash flows from investing
activities” for the fiscal year ended December 31, 2020, are included in “Other” from the fiscal year
ended December 31, 2021, as their amounts have become immaterial. In addition, “Purchase ofinvestment securities” included in “Other” under “Cash flows from investing activities” for the fiscal
year ended December 31, 2020, is separately stated from the fiscal year ended December 31, 2021, as its
amount has become material. The consolidated financial statements of the previous fiscal year have been
reclassified to reflect these changes in presentation.
As a result, 19,755 million yen stated in “Proceeds from sales of investments in securities,” (1,873)
million yen stated in “Purchase of investments in subsidiaries resulting in change in scope of
consolidation,” and 6,957 million yen stated in “Other” under “Cash flows from investing activities” forthe fiscal year ended December 31, 2020, were reclassified as “Purchase of investment securities” in theamount of (1,030) million yen and “Other” in the amount of 25,870 million yen.
“Purchase of treasury stock” separately stated under “Cash flows from financing activities” for the fiscal
year ended December 31, 2020, is included under “Other” from the fiscal year ended December 31,
2021, as its amount has become immaterial. The consolidated financial statements of the previous fiscal
year have been reclassified to reflect these changes in presentation.
As a result, (3) million yen stated in “Purchase of treasury stock” and (21) million yen stated in “Other”
under “Cash flows from financing activities” for the fiscal year ended December 31, 2020, werereclassified as “Other” in the amount of (24) million yen.

101

3. 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 anability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the consolidated financial statements fromthe date the Group gains control until the date that control is lost. If any accounting policies applied
by a subsidiary differ from those of the Group, adjustments are made to the subsidiary’s financial
statements where needed to bring them in line with the Group’s accounting policies. The balancesof payables and receivables and transactions within the Group, as well as unrealized gains or losses
arising from internal transactions within the Group, are eliminated when preparing the consolidated
financial statements.
Comprehensive income of subsidiaries is attributed to owners of parent and non-controllinginterests, even if this results in a negative balance in non-controlling interests.
When the closing date of a subsidiary is different from that of the Group, the subsidiary
implements its financial statements based on the provisional accounting as of the Group’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 areaccounted for as equity transactions, and the difference between the amount by which noncontrolling interests are adjusted and the fair value of the consideration is directly recognized inequity as interests attributable to the shareholders of the Company.
If the Group loses control over a subsidiary, gains and losses derived from the loss of control arerecognized 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 associates from the datethat the Group has significant influence to the date that it loses the significant influence.

3)

Joint ventures
A joint venture is an entity jointly controlled by two or more parties, including the Group under thecontractually agreed sharing of control over economic activities of the joint venture, which exists
only when strategic financial and operating 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 ismeasured as the sum of the acquisition-date fair values of the assets transferred, liabilities assumed, andequity instruments issued by the Group in exchange of control over the acquired company. If
consideration for acquisition exceeds the fair value of identifiable assets and liabilities, such excess isrecorded as goodwill in the consolidated statement of financial position. Conversely, if the considerationis less than the fair value, the difference is immediately recognized in profit or loss in the consolidated
statement of profit or loss. Acquisition costs that are attributable to a business combination are expensed
as incurred.
If the initial accounting for a business combination is incomplete by the end of the fiscal year in which
the business combination occurs, the Group reports provisional amounts for the items for which theaccounting 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 that existed at the acquisition date and, if known at the acquisitiondate, would have affected the measurement of the amounts recognized. Additional assets or liabilities are102

recognized if this new information is known to have resulted 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, andaccordingly, 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 thebusiness combination and the common control is not transitory) are accounted for at carrying amount.
(3) Foreign currency translation1)

Foreign currency transactions
Foreign currency transactions are translated into the functional currency of each entity of theGroup by using the exchange rate at the date of the transaction or a rate that approximates suchrate.
At the end of each reporting period, monetary items denominated in foreign currencies aretranslated into functional currencies using the exchange rate at the end of each reporting 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 inforeign currencies are recognized in profit or loss. However, those translation differences arisingfrom financial assets measured through other 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 aforeign operation and any fair value adjustments, are translated into presentation currency using theexchange rate at the end of the reporting period. Additionally, income and expenses of foreign
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 the financial statements of foreign operations arerecognized in other 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 the date when they are incurred. Allother financial assets are initially recognized on the date when the Group becomes a party to
the contract on such financial instruments.
At initial recognition, financial assets other than derivatives, which meet both of the following
requirements, are classified as financial assets measured at amortized cost, while the rests areclassified as financial assets measured at fair value.
・ The assets are held based on the business model whose objective is to hold the assets inorder to collect contractual cash flows.
・ The contractual terms of the financial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value are classified into either financial assets whose changes
in fair values after acquisition are recognized in profit or loss (“financial assets measured atfair value through profit or loss”) and financial assets whose changes in fair values after
acquisition are recognized in other comprehensive income (“financial assets measured at fairvalue through other comprehensive income”).
At initial recognition, equity instruments that are not designated as financial assets measured atfair value through other comprehensive income and debt instruments that do not meet the103requirements for the amortized cost measurement 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 fair value through other comprehensive income at initial recognition.
All the financial assets, except for those classified as financial assets measured at fair value
through profit or loss, are measured at fair value plus transaction costs directly attributable tothe acquisition of the assets.
(ii) Subsequent measurement
Financial assets after the initial recognition are as follows, depending on respectiveclassifications:(a) Financial assets measured at amortized cost
After initial recognition, financial assets measured at amortized cost are measured atamortized cost by using the effective interest method.
(b) Financial assets measured at fair value through profit or loss
After initial recognition, financial assets measured at fair value through profit or loss are
remeasured at fair value as of each closing date, and changes in fair values and dividends arerecognized in profit or loss.
(c) Financial assets measured at fair value through other comprehensive income
Changes in fair values measured after initial recognition are recognized in othercomprehensive income. Such amounts are reclassified into retained earnings in case of
derecognition or a significant decline in the fair values. Dividends from such financial assets
are recognized in profit or loss as finance 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 andrewards of ownership of the 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 an allowance 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 incredit risk on financial instruments since initial recognition.
If credit risk on a financial instrument has not increased significantly since initial recognition, theallowance for doubtful accounts associated with the relevant financial instrument is measured at an
amount equal to 12-month expected credit losses. In contrast, if credit risk on a financial
instrument has increased significantly since initial recognition, the allowance for doubtful accounts
associated with the relevant financial instrument is measured at an amount equal to lifetime
expected credit losses.
However, the allowance for doubtful accounts for trade receivables and the like are always
measured at an amount equal 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 ofpossible outcomes;• Time value of money• Reasonable and supportable information that is available without undue cost or effort at thereporting date about past 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 isreversed in profit or loss.
104

The carrying amount of these financial assets is directly reduced for the impairment when they are
expected to become non-recoverable in the future, offsetting the carrying amount by the allowancefor doubtful accounts.
3)

Financial liabilities other than derivatives(i) Initial recognition and measurement
Debt securities issued by the Group are initially recognized at the date of issuance. All otherfinancial liabilities are recognized 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 cost or financial liabilities measured at fair value through profit or loss
at initial recognition.
All the financial liabilities are initially measured at fair value, 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 respectiveclassifications:(a) Financial liabilities measured at amortized cost
After initial recognition, financial liabilities measured at amortized cost are measured atamortized cost by using the effective interest method.
(b) Financial liabilities measured at fair value through profit or loss
After initial recognition, financial liabilities measured at fair 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 is discharged, canceled or expired.

4)

Derivatives and hedge accounting
The Group uses derivatives, including forward exchange contracts and interest rate swap
transactions, for the purpose of hedging foreign currency fluctuation risk and interest rate
fluctuation risk.
At the inception of the hedge, the Group designates and documents the hedging relationshipbetween 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, the risk
management objective and strategy for undertaking the hedge, as well as the assessment of thehedge effectiveness.
These hedges are expected to be highly effective in offsetting changes in the fair value or the cash
flows; however, the Group assesses, on an ongoing basis, whether they remained highly effective
throughout the hedge period.
Derivatives are initially recognized at fair value. After initial 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 to hedged risks are recognized in profit or loss
with the carrying 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 aneffective hedge, changes in fair value are recognized in other comprehensive income. When105

cash flows of the hedged item affect profit or loss, they, together with the hedged item, areimmediately recognized in profit or loss.
For the ineffective portion of hedge, the changes in fair value are recognized in profit or loss.
The Group discontinues hedging accounting when the hedging instrument is expired, sold,terminated, or exercised, when the hedge no longer qualifies for hedge accounting, or when thehedge 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 theGroup currently has a legally enforceable right to set off the recognized amounts; and intends
either to settle on a net basis or to realize the asset 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 isdetermined based on market information, such as quoted market price or valuation techniques including
the market approach, the income approach and the cost approach. The inputs used in the fair value
measurement are categorized into the following three levels.
Level 1: Fair value that is measured by using quoted prices in active markets
Level 2: Fair value, other than Level 1, that is determined by directly or indirectly using theobservable price
Level 3: Fair 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 withmaturities not exceeding three months from the acquisition date, that are readily convertible into cash
and subject to insignificant risk of changes in value.
(7) Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes
costs of purchase, costs of conversion and other costs incurred in bringing the inventories to theirpresent location and condition. The cost of inventories is calculated by primarily using the movingaverage method. Net realizable value is determined at the estimated selling price in the ordinary courseof business less estimated costs of completion and the estimated costs necessary to make the sale.
(8) Property, plant and equipment
Property, plant and equipment are measured by using the cost model, and stated at cost less any
accumulated depreciation and any accumulated impairment losses. The cost of an item of property, plantand equipment includes any costs directly associated with its acquisition, and the costs of dismantling
and removing the item and restoring the site on which it is located, as well as the borrowing costs
eligible for capitalization.
The depreciation of property, plant and equipment other than land and construction in progress iscalculated using the straight-line method over the following estimated useful lives. The estimated usefullife 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, and any change thereof is accounted for as a change in accounting estimate.
106

(9) Goodwill and intangible assets
1)

Goodwill
The Group recognizes goodwill arising from business combinations as an asset as of the date whencontrol is obtained (the acquisition date). The measurement of goodwill at initial recognition ispresented in “(2) Business combinations”.
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 or loss and not reversed subsequently.

2)

Intangible assets
The Group measures intangible assets using the cost model and stated at cost less any accumulated
amortization and any accumulated impairment losses.
Separately acquired intangible assets are initially measured 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 internally generated intangible assets are recognized as an expense incurred
during the period, except for development costs eligible for capitalization.
Intangible assets with finite useful lives are amortized by using the straight-line method over theirrespective estimated useful lives. If there is an indication of impairment, they are tested for
impairment. The estimated useful life of each main asset item is as follows.
Software:1 to 10 years
Trademarks:
1 to 10 years
The amortization method for intangible assets with finite useful lives is reviewed at the end of eachreporting period, and any change thereof is accounted for as a change in accounting estimate.
Intangible assets with indefinite useful lives are not amortized but subject to impairment test, andstated at cost less any accumulated impairment losses. Intangible assets are tested for impairment
individually or at cash-generating unit level annually whenever there is any indication of
impairment.

(10)
1)

LeasesLesseeAt inception of a contract, the Group recognizes a right-of-use asset and a lease liability for lease
components other than short-term leases and leases for which the underlying asset is of low value.
At the commencement date, the Group measures 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 an option to extend the lease (if the Group is reasonably certain to exercise that option);and periods covered by an option to terminate the lease (if the Group is reasonably certain not toexercise that option).
After the commencement date, the right-of-use asset is measured at cost less any accumulated
depreciation and any accumulated impairment losses. The Group applies the depreciation
requirements in International Accounting Standards (IAS) 16 “Property, Plant and Equipment” indepreciating the right-of-use asset. The Group also applies IAS 36 “Impairment of Assets” todetermine whether the right-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 date to the end of the usefullife of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from thecommencement date to the earlier of the end of the useful life of the right-of-use asset or the end of
the lease term.
After the commencement date, the Group measures the lease liability by:
107

•
•
•

2)

(11)

increasing the carrying amount to reflect interest on the lease liability;
reducing the carrying amount to reflect the lease payments made; andremeasuring the carrying amount to reflect changes to the lease payments or a leasemodification, or to reflect revised in-substance fixed lease payments.

LessorRental income is recognized on a straight-line basis over the lease term. Rental income arisingfrom subleased properties is recognized in other income.
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 each year), the Group estimates therecoverable amount of the asset. If it is not possible to estimate the recoverable amount of an individual
asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs. The recoverable amount of an asset or a cash-generating unit is measured at the higher of its
fair value less costs to sell and its value in use. When the carrying amount of the asset or the cashgenerating 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 ratethat reflects current market assessments of the 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 by indications of fair value available to the Group.
The Group assesses whether there is any indication that an impairment loss recognized in prior years for
asset other than goodwill may have decreased or may no longer exist due to a change in assumptions
used to determine the recoverable amount or other reasons. If any such indication exists, the Groupestimates the recoverable amount of the asset 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 estimated recoverable amount and thecarrying amount that would have been determined (net of amortization or depreciation) had no
impairment loss been recognized for the asset in prior years.
(12)

Assets held for sale and discontinued operations

An asset or asset group that is expected to be recovered through a sale transaction rather than throughcontinuing use is classified as an asset or disposal group held for sale if it is highly probable that theasset or asset group will be sold within one year from the end of the reporting period; the asset or asset
group is available for immediate sale in its present condition; and the management of the Group iscommitted to such sale. An asset held for sale is not depreciated or amortized and measured at the lowerof its carrying amount and fair value less costs to sell. A discontinued operation is recognized if theoperation includes a component of an entity that either has been disposed of or is classified as held for
sale, represents a separate line of business of the Group or geographical area, and is part of a plan todispose of a separate line of business of the Group or geographical area.
(13)
1)

Employee benefits
Short-term employee benefits
The undiscounted amount of short-term employee benefits is recognized as an expense in the
period in which the employees render related services. The bonuses and paid absences arerecognized 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 Groupcan make a reliable estimate of the amount.

108

2)

(14)

Post-employment benefits
The Group has adopted a defined benefit plan (such as a corporate pension plan and a lump-sum
retirement benefit plan) 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 cost and past service cost by using the projected unit credit method. The discount rate isdetermined by first setting the discount period based on the periods until the dates on which thebenefits for each fiscal year will be paid, and then by referencing to market yields on high-grade
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 value of 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, andreclassified to retained earnings immediately. Past service cost is recognized in profit or loss for theperiod in which it is incurred.
The Group accounts for the defined contribution plan by recognizing an expense when the Groupmakes contribution to the plan.
Certain consolidated subsidiaries primarily in the United States have adopted a defined benefit
retirement plan and a post-employment medical benefit plan to prepare for the retirement benefits
to the employees. A post-employment medical benefit plan in the United States is included in theretirement benefit liabilities due to the nature similar to the retirement benefits.
Share-based payment

The Group has adopted the stock option plan and restricted share-based remuneration plan as an equitysettled share-based payment plan as well as the Performance Share Unit (PSU) plan as a cash-settled
share-based payment plan. Stock options are estimated at fair value 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 to equity arerecognized in the consolidated statement of financial position. Fair value of stock options granted is
calculated, in accordance with various terms of such options, using the Black-Scholes model. Restricted
share-based remuneration is measured at fair value on the grant date and recognized in the consolidated
statement of profit or loss as expenses over the vesting period from the grant date, and the same amountis recognized as an increase in equity in the consolidated statement of financial position. The fair valueof restricted share-based remuneration is measured by reference to the fair value of granted shares of theCompany.
For the PSU plan, the Group recognizes awards as an expense over the vesting period, recording thesame amount as an increase in a liability. As of the reporting date and the settlement date, the Groupremeasures the fair value of the liability and recognizes any changes in fair value in profit or loss.
(15)

Provisions

The Group recognizes provisions when it has a present obligation (legal or constructive) as a result of apast 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 theobligation.
Where the effect of the time value of money is material, the amount of a provision is measured at thepresent value of the expenditures expected to be required to settle the obligation. The present value ofthe expenditures is calculated by using a pre-tax discount rate that reflects current market assessments ofthe time value of money and the risks specific to the liability with uncertainty of the occurrence ofobligating events being reflected in the estimated future 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 the past and current experience to prepare forthe payment of the medical expenses, the absence from work compensation, etc. incurred as aresult of industrial accidents.
109

2)

Provision for loss on litigation
To prepare for the expenditures of litigation-related expenses, the Group estimates and records anamount of compensation for damages, settlement package, etc. that is currently expected to be
incurred in the future.

3)

Provision for business and plant restructuring expenses
Due to the commencement of discussions for the closure of overseas tire plants, the Groupestimates and records an amount that is currently expected to be incurred in the future to prepare
for the related expenditures.
The Company recorded an estimate of the amount expected to be incurred in the future at this point
in time associated with the Company’s wholly owned subsidiary succeeding to the anti-vibration
rubber business and the chemical products solutions business through a company split (simplified
absorption-type company split) and the transfer of the shares of the said wholly owned subsidiary,
and the presentation of this amount is mainly included in “liabilities directly associated with assets
held for sale” of the consolidated statement of financial position.

(16)

Revenue

The Group recognizes revenue at an amount reflecting the amount of consideration to which the Group
expects to be entitled in exchange for transferring the goods and services to the customer based on thefollowing five-step approach, except for interest and dividend income, etc. received under IFRS 9“Financial Instruments”:
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: Allocate the transaction price to performance obligations in the contract
Step 5: Recognize revenue when (or as) the performance obligation is satisfied.
Revenues from sale of goods are recognized when the control over the goods is transferred to thecustomer and measured at an amount of consideration promised in a contract with a customer lessestimated future returns, discounts and rebates. The amount of returns is estimated and calculated basedon an expected return rate derived from the past data and the like. As for discounts and rebates, theamount of future payments is estimated and calculated based on contracts and the like until actual results
are confirmed.
(17)

Government grants

Government grants are recognized at fair value when conditions for the receipt of grants have been met
and reasonable 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 to assets, 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 period of time to get ready for its intended use or sale. Other borrowing costs arerecognized as expenses in the period in which they are incurred.

110

(19)

Income taxes

Income taxes consist of current tax and deferred tax. These are recognized in profit or loss, excluding tax
arising from the items recognized in other comprehensive income or directly in equity, and tax arisingfrom business combinations.
Current taxes are measured at an expected amount of taxes 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 beenenacted, or substantially enacted by the reporting date.
Deferred taxes are recognized for the temporary differences between the carrying amount of assets andliabilities for accounting purposes and their tax bases, unused tax losses carryforward and unused tax
credits carryforward as of the reporting date.
Deferred tax assets and liabilities are not recognized for following temporary differences:• Temporary differences arising from the initial recognition of goodwill• Temporary differences arising from initial recognition of assets and liabilities from transactions
that are not business combinations and affect neither accounting profit nor taxable income (loss)• Deductible temporary differences arising from investments in subsidiaries and associates, andinterests in joint arrangements when it is probable that the temporary difference will not reverse in
the foreseeable future or when 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, andinterests in joint arrangement when the Group is able to control the timing of the reversal of thetemporary difference and it is probable that the temporary difference will not reverse in theforeseeable 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 to the extent that it is probable that taxable
income will be available against which deductible temporary differences can be utilized.
Carrying amount of deferred tax assets is reviewed each period and reduced to the extent that it is nolonger probable that sufficient taxable income will be available to use all or part of the benefit of thedeferred tax assets. Unrecognized deferred tax assets are reviewed each period and are recognized to theextent that it has become probable that 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 toapply to the period when the assets are realized or the liabilities are settled 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 each other if the Group has a legally enforceable
right to offset current tax assets against current tax liabilities and when either of the following are met:
income taxes are levied by the same taxation authority on the same taxable entity; or income taxes arelevied by the same taxation authority on different taxable entities, but they either have the intention tosettle current tax liabilities and current tax assets on a net basis or plan to realize assets and settle
liabilities simultaneously.
(20)

Treasury stock

Treasury stock is measured at cost and presented as a deduction from equity. No gain or loss isrecognized on the purchase, 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.

111

(21)

Dividends

Of the dividend distributions to the shareholders of the Company, the year-end dividend is recognized as
a liability for the period that includes the date of resolution by the Company’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 or loss attributable to owners of parent by theweighted-average number of shares of common stock outstanding adjusted by the number of shares oftreasury stock during the period. Diluted earnings per share are calculated taking into consideration theeffect of all potential shares with dilutive 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
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 thebusinesses are managed. The adjusted operating profit is presented in Note “6. Operating Segments”.
Adjusted operating profit is not defined by IFRS and not necessarily comparable to metrics similarly
named by other companies.
4. Significant Accounting Estimates and Judgements Involving Estimates
In preparing the consolidated financial statements in accordance with IFRS, the Group is required toestablish judgments, estimates and assumptions that affect the application of accounting policies and thereported amount of assets, liabilities, revenues and expenses. Actual results may differ from those estimates.
The estimates and their underlying assumptions are reviewed on an ongoing basis. The effect of any changes
in accounting 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 “35. Financial Instruments”)
・ Uncertain income tax positions (Note “18. Income Taxes”)
・ Measurement of disposal groups classified as held for sale (Note “13. Assets Held for Sale”)
The assumptions and estimates that have a significant risk of causing a material adjustment in the future aremainly as follows:
The impact of COVID-19 is considered when estimating and making judgments concerning impairment of
non-financial assets (property, plant and equipment, right-of-use assets, intangible assets, goodwill,
investments accounted for using equity method) and recoverability of deferred tax assets. Given the progressof the recovery in demand and changes in the environment of each region, the Group separately estimatesthe 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 to the consolidated financial statements for thebalances of property, plant and equipment, right-of-use assets, intangible assets, goodwill, investments
accounted for using equity method, and deferred tax assets at the end of the fiscal year ended December 31,
112

2021. As for impairment of non-financial assets and the recoverability of deferred tax assets, please refer toNote “16. Impairment of Non-financial Assets” and Note “18. Income Taxes,” respectively.
5. New Standards and Interpretations Not Yet Adopted
While there are newly issued or revised standards and interpretations that were issued on or before the dateof approval of the consolidated financial statements but have not yet been early adopted by the Group, noneof them have a material impact on the Group’s consolidated financial statements.
6. Operating Segments(1) Description of reportable segments
The Group’s reportable segments are components of the Group 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 the allocation of management resource and assessing the segments’ performance.
The Group has four reportable segments: “Japan,” “Americas,” “Europe, Russia, Middle East, India andAfrica,” and “China, Asia-Pacific”. The reportable segments have been organized for the purpose of
disclosing business results more appropriately based on the Strategic Business Units (SBU)—theclassification of the Group’s businesses for management control purposes. In the aforementioned
segment structure, the Group engages in production and sale of tires and tubes, sale of wheels andaccessories, production and sale of retread material and services, auto maintenance and repair services,and products business including Chemical and Industrial Products.
Effective from the first quarter of the fiscal year ended December 31, 2021, the Group has changed its
organizational structure in order to better assess each segment based on ROIC, which serves as a new
KPI for its portfolio management. The Group has accordingly changed its segment classifications for its
specialty tire business and aircraft tire business, as well as part of its chemical and industrial products
business, sporting goods business and bicycles business. The specialty tire business, aircraft tirebusiness, and part of the chemical and industrial products business have been integrated into the “Japan”
segment, after having previously been classified according to the location of each subsidiary, associate,etc. into the respective “Japan,” “Americas,” “Europe, Russia, Middle East, India and Africa,” and“China, Asia-Pacific” segments. The sporting goods business and bicycles business have been shifted to
the “Japan” segment from the “Other” segment. For the same reasons, we have changed our approach to
calculating segment profit or loss, excluding export earnings from inter-SBU transactions in standard
tires, and have also changed our approach to allocating head office administrative expenses.
The Group has classified its US building materials business, anti-vibration rubber business, andchemical products solutions business as discontinued operations, thereby deducting such discontinued
operations from monetary amounts of the fiscal year ended December 31, 2020, and the fiscal year
ended December 31, 2021. Details on discontinued operations are presented in Note “31. Discontinued
Operations”.
(2) Revenues and performances of reportable segment
Revenue and business results of the continuing operations by reportable segment of the Group aredetailed in the table below. The Board of Directors assesses the segment performance and determines
resource allocation after reviewing revenues and adjusted operating profit. Internal sales or transfers
between segments are determined primarily 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).

113

Previous Year (Year ended December 31, 2020)(Yen in millions)
Reportable segments
Europe,Russia,China,
AmericasMiddleAsia-PacificEast, India
and Africa

Japan

Revenue
External revenue
Inter-segment revenue
Total revenue
Segment profit (loss)
Adjusted operating profit(loss)
Other items
Depreciation andamortization
Impairment losses
Impairment losses related toshares using equity method

Total

Other

Corporate
Consolior
dated totalelimination

12,02039,43951,45932 2,695,224(170,451)–(170,419) 2,695,224

695,931 1,157,990
80,4105,869
776,341 1,163,859

546,6443,731
550,375

282,608 2,683,173
41,002131,012323,609 2,814,184

91,024

109,558(20,862)

24,935

204,654

469

2,320

207,443

69,51082,01045,27135,397232,187

7,258

13,343

252,788

28,098300

19,88628,86977,153(85)–

77,068–17,501

694–

18,196––18,196

Current Year (Year ended December 31, 2021)(Yen in millions)Japan

Revenue
External revenue
Inter-segment revenue
Total revenue
Segment profit (loss)
Adjusted operating profit
Other items
Depreciation andamortization
Impairment losses

Reportable segments
Europe,Russia,China,
AmericasMiddleAsia-PacificEast, India
and Africa

Total

Other

Corporate
Consolior
dated totalelimination

28 3,246,057(228,825)–(228,797) 3,246,057

767,138 1,443,758
105,903
10,865873,041 1,454,624

686,140
7,781
693,921328,817 3,225,853
58,033
182,582
386,851 3,408,436

20,17546,243
66,418116,966

190,646

42,104

41,999391,715

5,071(2,447)394,340

61,98588,73143,14231,001

224,859

7,122

13,918245,899

962

1,111

–

1,662

3,734

–

–

3,734

Reconciliation from adjusted operating profit to profit before tax(Yen in millions)
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

207,443394,340

467
145,423

3,567
21,107

Operating profit
Finance income

62,488
8,267

376,799
10,807

Finance costs
Impairment losses related to shares using equity

23,718

16,21918,196–(1,429)6,207

27,412

377,594

Adjusted operating profit (Note 1)
Adjustment items (income) (Note 2)
Adjustment items (expenses) (Note 4)

methodShare of profit (loss) of investments accounted forusing equity method
Profit before tax(Note 1)

For adjusted operating profit, adjustment items (income and expenses) are excluded fromoperating profit.
114

(Note 2)

The major breakdown of adjustment items (income) is as follows:(Yen in millions)
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Insurance claim income

305

1,005

Business and plant restructuring income

162(Note 3) 2,562

Adjustment items (income)

467

3,567

(Note 3)This was primarily the recording of gain on sales of fixed assets, etc. due to the closure of bicycle
manufacturing plants in Japan.

(Note 4)The major breakdown of adjustment items (expenses) is as follows:(Yen in millions)
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Impairment losses (Note 5)
Cost of sales (loss on disaster)

77,068(Note 6) 10,636

3,734
637

Other expenses (loss on disaster)Business and plant restructuring expenses(Note 7) 3,488(Note 8) 42,821

419(Note 9) 13,757

Other expense with large amounts related to one
time event (Note 10)

11,4102,560

Adjustment items (expenses)

145,423

21,107(Note 5)The major breakdown of impairment losses is presented in Note “16. Impairment of Non-financial
Assets”.

(Note 6)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 andlocal governments to prevent the spread of COVID-19.

(Note 7)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 the direct result of the preparation
for and cancellation of events that were canceled due to official requests and declarations by thenational and local governments to prevent the spread of COVID-19.

(Note 8)This was primarily the recording of expenses, such as provisions relating to the commencement of
discussions for the closure of overseas tire plants and expenses for the transfer of the unit bathbusiness.

(Note 9)This was primarily the recording of expenses related to the closure of overseas tire plants,
expenses due to the withdrawal from the conveyor belt business and expenses related to the sale ofan overseas raw materials plant.

(Note 10) This was the recording of expenses relating to inspections, repairs, etc. of the affected standard andpower assist bicycles following the recall of certain models of standard and power assist bicycles
manufactured by Bridgestone Cycle Corporation, a consolidated subsidiary of the Company.

115

(3) Information about geographical areas
The breakdown of revenue from external customers and non-current assets by geographical area is asfollows:
Revenue from external customers(Yen in millions)
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Japan
Americas507,400
1,218,459

537,879
1,518,554[of which, the U.S.]
Europe, Russia, Middle East, India and Africa[985,776]
588,990[1,223,980]
743,607

China, Asia-Pacific

380,375

446,016

2,695,224

3,246,057

Total(Note) Revenues are broken down by location of sales destination.
Non-current assets(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Japan
Americas526,026
749,935

522,891
829,166

Europe, Russia, Middle East, India and Africa
China, Asia-Pacific394,585
255,687405,778
253,636

1,926,232

2,011,470

Total(Note) Non-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% ormore of revenue in the consolidated statement of profit or loss.

116

7. Business Combinations
Previous Year (Year ended December 31, 2020)
Not applicable
Current Year (Year ended December 31, 2021)
As stated in Note “37. Subsidiaries and Associates, etc. (2) Loss of control of subsidiaries”.
8. Cash and Cash Equivalents
The breakdown of “Cash and cash equivalents” is as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Cash and deposits (maturing within three months)

810,546787,542

Total

810,546787,542

9. Trade and Other Receivables
The breakdown of “Trade and other receivables” is as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Notes and accounts receivable
Accounts receivable – other

668,980
30,038

721,796
50,638

Other
Allowance for doubtful accounts

5,999(37,256)

6,920(37,742)

667,761

741,612

Total

Trade 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 “35. Financial Instruments (3) Credit
risk management 2) Changes in allowance for doubtful accounts”.
10. Inventories
The breakdown of “Inventories” is as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Finished products

317,326

401,545

Work in process
Raw materials and supplies

32,625
138,319

35,604
189,802

Other
Total

2,971

3,189

491,240

630,140

The amounts of inventories recognized as expenses during the fiscal years ended December 31, 2020 and
2021 are 1,508,515 million yen and 1,894,207 million yen, respectively.

11711. Other Financial Assets(1) Breakdown of other financial assets
The breakdown of “Other financial assets” is as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Equity instruments
Other
Total
Current assets
Non-current assets
Total

82,274
38,226

107,81444,332

120,500

152,146

7,277
113,222

11,769140,376

120,500

152,146

Equity instruments are categorized as financial assets measured at fair value through othercomprehensive 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 theirfair value are as follows:

Issuers

Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

JSR Corporation

18,75328,548

Toyota Motor Corporation
Nokian Tyres PLC

15,595
15,24820,633
18,162

Toyo Tire Corporation
Sumitomo Mitsui Financial Group, Inc.

7,840
1,792

8,970
2,217

Mitsubishi UFJ Financial Group, Inc.
Fuji Kyuko Co., Ltd.

1,268
1,177

1,738
998

884

871

Yellow Hat Ltd.

These stocks are designated as financial assets measured at fair value through other comprehensive
income as they are held for the purpose of mainly maintaining and strengthening business andcollaborative relationship and for their strategic importance to the Group.

118

(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 Groupderecognizes the financial assets measured at fair value through other comprehensive income by sellinga portion of those assets.
The fair values at the time of sale and cumulative gains (losses) recognized in other comprehensive
income are as follows:(Yen in millions)
Previous Year
(Year ended December 31, 2020)
Fair value

Current Year
(Year ended December 31, 2021)

Cumulative gains (losses)
20,509Fair value

17,290

Cumulative gains (losses)
78

71

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, whichwere recognized in other comprehensive income and subsequently reclassified into retained earnings,
are 11,094 million yen and 281 million yen for the fiscal years ended December 31, 2020 and 2021,
respectively.
12. Other Assets
The breakdown of “Other current assets” and “Other non-current assets” is as follows:(1) Other current assets
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Prepaid expenses

23,43732,590Consumption tax receivables
Other

18,58034,262

27,87826,561

Total

76,27987,029(2) Other non-current assets
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Retirement benefit assets (Note 1)
Other (Note 2)
Total

21,392
28,842

28,25429,38950,23457,644(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)“Other” mainly consists of spare parts.

11913. Assets Held for Sale
The breakdown of assets held for sale and liabilities directly associated with assets held for sale is asfollows.
(1) Assets held for sale
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Cash and cash equivalents
Trade and other receivables––

105,275
24,955–
1,323

16,511
24,594

Other
Loss recognized upon having measured the

102

6,154

disposal group consisting of discontinued
operations at fair value less cost to sell–

(142,712)

1,425

34,778Inventories
Property, plant and equipment

Total(2) Liabilities directly associated with assets held for sale
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Trade and other payables–

18,314Other

12

16,164

12

34,478Total

Assets held for sale and liabilities directly associated with assets held for sale for the previous fiscal year
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 decided to sell, and their salehas been completed within one year from December 31, 2020.
Assets held for sale and directly associated liabilities for the current fiscal year, mainly in the anti-vibration
rubber business and the chemical products solutions business, have been classified as assets held for sale as
the Group decided to sell those operations, and their sale is expected to be completed within one year from
December 31, 2021. Details are provided in Note “31. Discontinued Operations”.
The disposal groups classified as assets held for sale are measured at fair value less cost to sell as the fairvalue less cost to sell is less than the carrying amount. As a result, a recognized loss of 142,712 million yen
was recorded in “profit (loss) from discontinued operations” in the consolidated statement of profit or loss.
The fair value has been classified as Level 3 in the hierarchy because it was assessed based on the selling
price.

120

14. Property, Plant and Equipment
The changes in the carrying amount of “Property, plant and equipment,” as well as cost, accumulated
depreciation and accumulated impairment losses are as follows:
Buildings
andstructures
Yen inmillions
568,314

Machineryandequipment
Yen inmillions
519,674

Tools,
furniture andfixtures
Yen inmillions
97,890Land

Constructionin progress

Other

Total

Yen inmillions
167,560

Yen inmillions
188,518

Yen inmillions
13,214

Yen inmillions
1,555,170

Acquisition
Depreciation (Note 1)–(38,469)–(105,371)–(45,411)––

191,657––(4,885)

191,657(194,136)

Impairment losses
Sale or disposal(18,840)(2,146)(52,198)(4,379)(8,004)(1,812)216(2,165)(12,182)(2,838)

(412)
(530)

(91,420)(13,870)

Transfer from constructionin progress

46,12083,88328,172

4,922(167,225)

4,128

–

Foreign exchange
differences(20,493)(19,145)(3,058)(3,126)(11,177)(259)(57,258)

Other changes (Note 2)(4,034)2,564

12,167(786)(8,201)

289

1,998

Balance at December 31,
2020

530,452

425,028

79,944

166,621

178,552

11,545

1,392,141

Carrying amount

Balance at January 1, 2020

Acquisition

–

–

–

–

177,335–

177,335

Depreciation (Note 1)
Impairment losses(37,643)(2,655)(96,453)(4,939)(40,267)
(964)

–
(620)

2,158
(314)

(4,125)(54)(176,330)(9,546)

Sale or disposal
Decrease by sale of(2,383)(1,704)(1,755)(916)(2,331)(313)(9,402)(3,955)(10,335)(1,454)(957)(2,181)(19)(18,901)

60,451

111,00333,883–(208,533)

3,196

–

34,594

31,526

4,185

5,134

11,542676

87,656(9,886)(8,228)(1,172)(3,396)

(702)

(136)

(23,520)

(304)

3,364

3,324

(216)

2,458

(157)

8,470

568,671449,262

75,724

165,650

157,984

10,613

1,427,903

subsidiary
Transfer from constructionin progress
Foreign exchange
differences
Transfer to assets held for
sale
Other changes
Balance at December 31,
2021(Note 1) Depreciation of property, plant and equipment is included in “Cost of sales,” “Selling, general andadministrative expenses” and “Profit (loss) from discontinued operations” in the consolidated statementof profit or loss.
(Note 2) “Decrease by sale of subsidiary” and “Transfer to assets held for sale” in the fiscal year ended
December 31, 2020 are included in “Other changes”.
Cost

Balance at January 1, 2020
Balance at December 31,
2020
Balance at December 31,
2021

Buildings
andstructures
Yen inmillions
1,169,453

Machineryandequipment
Yen inmillions
2,198,661

Tools,
furniture andfixtures
Yen inmillions
576,716Land

Constructionin progress

Other

Total

Yen inmillions
174,607

Yen inmillions
195,033

Yen inmillions
53,946

Yen inmillions
4,368,416

1,163,103

2,187,209

573,326

172,392

195,80953,857

4,345,696

1,228,916

2,255,923

567,266

171,359

172,456

56,2544,452,174

121

Accumulated depreciation andimpairment losses

Balance at January 1, 2020
Balance at December 31,
2020
Balance at December 31,
2021

Buildings
andstructures
Yen inmillions
601,140

Machineryandequipment
Yen inmillions
1,678,988

Tools,
furniture andfixtures
Yen inmillions
478,826

Land

Constructionin progress

Other

Total

Yen inmillions
7,047

Yen inmillions
6,515

Yen inmillions
40,732

Yen inmillions
2,813,247

632,651

1,762,182

493,383

5,771

17,25642,313

2,953,555

660,246

1,806,661

491,542

5,709

14,47145,642

3,024,270

15. Goodwill and Intangible Assets(1) Changes during the period
The changes in the carrying amount of “Goodwill” and “Intangible assets” as well as cost, accumulated
amortization and accumulated impairment losses are as follows:
Goodwill

Trademarks

Software

Other(Note 2)Total

Yen in millions

Yen in millions

Yen in millions

Yen in millions

Yen in millions

98,346
169

16,125–

41,101–

56,43817,267

212,009
17,436

–
–

(487)
(3)

(9,436)(33)(5,887)(122)(15,810)(158)(1,839)
–

–
–

(215)
10,659(50)(10,659)(2,104)
–

970

(409)

5,937

(2,745)

3,754

97,646

15,22648,01354,242

215,127–

2–

23,94923,95133,454

1,396

102

14,92849,880–(400)(11,350)(4,804)(16,554)

–
–

–
–

(657)
(78)

(85)
(75)

(742)
(153)

Decrease by sale of subsidiary
Transfer of accounts(11,980)–(4,710)–(184)
16,479(5,132)(16,479)(22,006)–

Foreign exchange differences
Other

6,283
(10)

1,230
(22)

1,543
6,226

2,705
(7,345)

11,761(1,152)

Balance at December 31, 2021

125,393

12,72260,094

61,904

260,112

Carrying amount

Balance at January 1, 2020
Acquisition
Amortization (Note 1)
Sale and retirement
Impairment losses
Transfer of accounts
Other (Note 3)
Balance at December 31, 2020
Acquisition
Acquisition due to businesscombinations
Amortization (Note 1)
Sale and retirement
Impairment losses(Note 1) Amortization of intangible assets is included in “Cost of sales,” “Selling, general and administrative
expenses” and “Profit (loss) from discontinued operations” in the consolidated statement of profit orloss.
(Note 2) “Software in progress” is included in “Other”.
(Note 3) “Acquisition due to business combinations,” “Decrease by sale of subsidiary” and “Exchange
difference” in the fiscal year ended December 31, 2020 are included in “Other”.
Cost

Goodwill

Trademarks

Software

Other

Total

Yen in millions

Yen in millions

Yen in millions

Yen in millions

Yen in millions

98,59916,90967,15079,243261,901

Balance at December 31, 2020

99,776

16,52082,761

81,580280,637

Balance at December 31, 2021

127,602

14,455

104,438

91,296

337,791

Balance at January 1, 2020122

Accumulated amortization andimpairment losses

Goodwill

Trademarks

Software

Other

Total

Yen in millions
253

Yen in millions
784

Yen in millions
26,049

Yen in millions
22,805

Yen in millions
49,892

Balance at December 31, 2020

2,130

1,294

34,74827,33865,510

Balance at December 31, 2021

2,209

1,733

44,34429,392

77,679Balance at January 1, 2020

(2) Material goodwill and intangible assets
The material goodwill and intangible assets recorded in the consolidated statement of financial position
primarily represents the goodwill recognized through the acquisition of BRIDGESTONE MOBILITY
SOLUTIONS B.V. and the carrying amounts of the goodwill are 56,209 million yen and 57,768 million
yen as of December 31, 2020 and 2021, respectively. In addition, the goodwill recognized by thisacquisition was allocated to cash generating units which were expected to benefit from the synergies andbelongs to WEBFLEET SOLUTIONS cash-generating unit and BRIDGESTONE EUROPE cashgenerating unit.
16. Impairment of Non-financial Assets(1) Impairment losses
For measuring an impairment loss, the Group groups assets for business based on the segments, which
are adopted for internal 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.
Impairment losses of 95,376 million yen recognized in the previous fiscal year consisted of 82,822
million yen recorded as “other expenses” (of which, “business and plant restructuring expenses” are5,754 million yen) and 12,554 million yen recorded as “profit (loss) from discontinued operations”.
The components of the impairment losses of 95,376 million yen by item are 91,420 million yen forproperty, plant and equipment, 2,104 million yen for goodwill and intangible assets, and 1,852 million
yen for others. The breakdown by segment (excluding the amount recorded in business and plant
restructuring expenses and profit (loss) from discontinued operations) is as follows:(Yen in millions)Cash-generating unit

Russian passenger vehicle tirebusiness
Indian tire business
Chinese truck and bus tire business
Vietnamese passenger vehicle tirebusiness
Thai small and medium mining andconstruction vehicle tire businessAircraft tires business
Other
Total

Japan

Americas

Segments
Europe,Russia,China, AsiaMiddle East,
Pacific
India andAfricaTotal

Consolidated
total

Other

–

–

10,068–10,068–10,068

–
–

–
–

6,598
–

–
19,581

6,598
19,581––

6,598
19,581

–

–

–

9,196

9,196

–

9,196

17,442–––

17,442–

17,4428,296
2,359
28,098

–
300
300

–
3,220
19,886–92
28,8698,296
5,972
77,153

–
(85)
(85)

8,296
5,887
77,068The major reasons for the impairment losses recorded in “other expenses” are as follows:
The carrying amount of assets for business use in the Russian passenger vehicle tire business was
reduced by 10,068 million yen 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 by value in use, which was calculated bydiscounting future cash flows at a discount rate of 10.3%.
123

The carrying amount of assets for business use in the Indian tire business was reduced by 6,598
million yen to the recoverable amount because the intended revenue is no longer expected as a resultof changes in the business environment, such as the impacts of COVID-19. The recoverable amountof 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:(Yen in millions)Cash-generating
unit

Segment

Type of assets

Russian passenger
vehicle tire business

Buildings and structures

3,982

Machinery and vehicles

3,489

Other

2,596
Subtotal

Europe, Russia, Middle East, India andAfricaIndian tire businessAmount10,068

Buildings and structures

1,345

Machinery and vehicles

2,021

Construction in progress

2,589

Other

643
Subtotal

Total

6,598
16,666The carrying amount of assets for business use in the Chinese truck and bus tire business was
reduced by 19,581 million yen 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 carrying amount of idle assets in the Vietnamese passenger vehicle tire business was reduced by
9,196 million yen to the recoverable amount because we do not expect these idle assets to be used forbusiness purposes. The recoverable amount of these assets was measured at their fair value after
deducting their disposal cost; however, their fair value after deducting their disposal cost was deemed
to be zero because these assets would be difficult to sell. The fair value hierarchy level is 3.
The breakdown of these impairment losses is as follows:124

(Yen in millions)Cash-generating
unit

Segment

Type of assets

Chinese truck andbus tire business

Machinery and vehicles

17,878

Other

1,704
Subtotal

China, Asia-PacificVietnamese
passenger vehicle
tire businessAmount19,581

Buildings and structures

5,515

Construction in progress

3,681

Subtotal

9,196

Total

28,778The carrying amount of assets for business use in the Thai small and medium mining andconstruction vehicle tire business was reduced by 17,442 million yen to the recoverable amountbecause the intended revenue is no longer expected as a result of changes in the businessenvironment. 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 determinedusing the market approach. The fair value hierarchy level is 3.
The carrying amount of assets for business use in the aircraft tire business was reduced by 8,296
million yen to the recoverable amount because the intended revenue is no longer expected as a resultof changes in the business environment, such as the impacts of COVID-19. The recoverable amountof 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 losses is as follows:(Yen in millions)Cash-generating
unit

Segment

Type of assets

Thai small andmedium mining andconstruction vehicle
tire business

Machinery and vehicles

12,833

Other

4,610
SubtotalJapan
Aircraft tires
business

17,442

Buildings and structures

1,012

Machinery and vehicles

4,021

Tools, furniture andfixtures, and molds

2,375

Other

889
Subtotal

Total

Amount8,296
25,738The major reasons for the impairment losses recorded in “profit (loss) from discontinued operations”
are as follows:
The carrying amount of assets for business use in the Japanese anti-vibration rubber business was
reduced by 6,210 million yen to the recoverable amount because the intended revenue is no longer
expected as a result of changes in the business environment. The recoverable amount of these assets
125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 losses is as follows:(Yen in millions)Cash-generating
unit
Japanese Antivibration rubber
business

Segment

Type of assets

Japan

Total

AmountBuildings and structures

1,322

Machinery and vehicles

3,517

Other

1,371
6,210

Impairment losses of 10,651 million yen recognized in the current fiscal year consist of 7,689 million
yen recorded as “other expenses” (of which, “business and plant restructuring expenses” are 3,955
million yen) and 2,962 million yen recorded as “profit (loss) from discontinued operations”. Inrecording these impairment losses, the carrying amounts have been reduced to the recoverable
amounts mainly for operating assets with reduced profitability, assets to be disposed of throughretirement or sale, and idle assets with no plans for use. The recoverable amounts of the assets are
principally measured at their fair value. The fair value hierarchy level is 3.
Loss recognized upon having measured the disposal group consisting of discontinued operations atfair value less cost to sell is presented in Note “31. Discontinued Operations”.
(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, 2021, theprincipal 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’sbusiness plan for the next two years as approved by management. After the two-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, using the future growth rate reduced from 9.9% in the third year to 2% in the ninth year and thesame 2% on and after the tenth year as the continuous growth rate considering inflation.
The value in use in the previous fiscal year reflects past experience and external sources of informationand is based on the Group’s business plan for the next three years as approved by the management. Afterthe three-year plan, the Company discounts the future cash flows to the present value using a discountrate of 8.1% of the cash-generating unit, using the future growth rate reduced from 11.1% in the fourthyear to 2% in the tenth year and the same 2% on and after the eleventh year as the continuous growthrate considering inflation.
There is a risk of impairment when key assumptions used for impairment test change. However, as thevalue in use sufficiently exceeds the carrying amount of the cash generating unit, the Group determinesthat it is highly unlikely that value in use falls below the carrying amount even if key assumptions usedin the impairment test fluctuates by a reasonably foreseeable extent.
In addition, out of the total goodwill related to the acquisition of BRIDGESTONE MOBILITY
SOLUTIONS B.V. of 57,768 million yen (2020: 56,209 million yen), the carrying amount allocated to
WEBFLEET SOLUTIONS cash-generating unit as of December 31, 2021 is 51,722 million yen (2020:
50,311 million yen). The group determines that the 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 statements.

126

(3) Impairment of investments accounted for using equity method
Impairment loss on investments accounted for using equity method recognized in the fiscal year ended
December 31, 2020 of 18,196 million yen 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 yen 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 by value in use, which was calculated by discounting
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.

127

17. Lease Transactions
LesseeThe Group enters into lease contracts for buildings and structures, etc.
(1) Items related to right-of-use assets
The carrying amount, depreciation and additions to “Right-of-use assets” are as follows:
Carrying amount

Buildings and structures

Other

Total

Yen in millions

Yen in millions

Yen in millions

Balance at December 31, 2020

228,987

61,135

290,122

Balance at December 31, 2021

235,404

58,662

294,065

Depreciation (Note)

Buildings and structures

Other

Total

Yen in millions

Yen in millions

Yen in millions

Previous Year
(Year ended December 31, 2020)

45,18012,32857,508Current Year
(Year ended December 31, 2021)

45,284

12,201

57,485(Note) Depreciation of right-of-use assets is included in “Cost of sales,” “Selling, general and administrative
expenses” and “Profit (loss) from discontinued operations” in the consolidated statement of profit orloss.

Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

Additions to right-of-use assets

61,811

60,275Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

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

Interest expense on lease liabilities

6,935

5,707

Recognition exemptions: expenses for short-term leases
Recognition exemptions: expenses for leases of low-value

1,701

1,555

662

482

2,636

2,747

7,770

–

Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

assetsExpense relating to variable lease payments not included in
the measurement of lease liabilities
Gains (losses) arising from sale and leaseback transactions

Total cash outflows for leases are as follows:

Total cash outflow for leases

61,449128

64,507

(3) Maturity analysis for lease liabilities
The details are presented in Note “35. Financial Instruments (4) Liquidity risk management”.
18. Income Taxes(1) Deferred tax assets and deferred tax liabilities
The breakdown of items giving rise to “Deferred tax assets” and “Deferred tax liabilities” and thechanges thereof are as follows:
Previous Year (Year ended December 31, 2020)
As of January 1, Recognized in2020
net profit or loss

Recognized inothercomprehensive
incomeOther

As of December
31, 2020

Yen in millions

Yen in millions

Yen in millions

Yen in millions

Yen in millions

9,473

3,807

–

(749)

12,531Retirement benefit liabilities
Unrealized gains

50,961
18,231(5,519)(5,900)(3,776)–(1,207)–40,45912,331

Unused tax losses carryforward
Other

11,31933,318(3,254)
11,525

–
1,006

(529)
(1,570)7,536
44,279Total deferred tax assets

123,302659(2,770)(4,055)

117,136

62,676

1,067–(3,687)60,056

20,439–(4,075)–

16,364

15,713

1,549

–

–

17,262

8,006(4,787)

–

(683)

2,536

106,834(2,171)(4,075)(4,370)96,21816,468

2,830

1,305

315

20,918

As of January 1, Recognized in
2021
net profit or loss

Recognized inothercomprehensive
incomeOther

As of December
31, 2021

Yen in millions

Yen in millions

Yen in millions

Yen in millions

Yen in millions

12,531

(7)

–

1,847

14,371Retirement benefit liabilities
Unrealized gains

40,45912,331(1,975)
4,081(3,425)–

1,479–

36,53816,412

Unused tax losses carryforward
Other

7,536
44,2795,797
23,843

–
(143)

651
(5,884)

13,98462,095

Total deferred tax assets

117,136

31,739(3,568)(1,907)

143,400

60,056

4,121

–

6,397

70,574

16,364

–

5,994

–

22,35817,262(3,145)––

14,118Deferred tax assets
Accrued expenses

Deferred tax liabilities
Property, plant and equipment, andintangible assets
Financial assets
Reserve for advanced depreciation of
fixed assets
Other
Total deferred tax liabilities
Net deferred tax assets

Current Year (Year ended December 31, 2021)

Deferred tax assets
Accrued expenses

Deferred tax liabilities
Property, plant and equipment, andintangible assets
Financial assets
Reserve for advanced depreciation of
fixed assets
Other
Total deferred tax liabilities
Net deferred tax assets

2,536

1,051

(21)

(197)

3,369

96,218

2,027

5,973

6,201

110,419

20,91829,712(9,541)(8,108)32,981

129

The breakdown of deferred tax assets and liabilities in the consolidated statement of financial position
are as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Deferred tax assets
Deferred tax liabilities

49,40928,491

76,79043,810Net deferred tax assets

20,91832,981

Deferred tax assets belonging to the taxable entities, which recorded loss during the fiscal year ended
December 31, 2020 or 2021, out of deferred tax assets as of December 31, 2020 and 2021, are 31,583
million yen and 6,215 million yen, respectively. For recognizing these deferred tax assets, the Groupconsiders 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 Groupconsiders deferred tax liabilities planned to be reversed and expected future taxable income and tax
planning. As for recognition of deferred tax assets, the Group determines it is highly probable that thesetax benefits will be realized based on the taxable income level in the past and the prediction of futuretaxable 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:(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Deductible temporary differences

117,880

101,371

Unused tax losses carryforward

208,785

182,290326,665

283,661Total

The unused tax losses carryforward and unused tax credits carryforward for which deferred tax assets
were not recognized will expire as follows:(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Unused tax losses carryforward
Within five years

39,57927,500After five years

169,206

154,790

208,785

182,290

Within five years

4,407

4,679

After five years

6,174

6,902

10,581

11,580Total 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 injoint arrangements, which are not recognized as deferred tax liabilities as of December 31, 2020 and
December 31, 2021 amounts to 338,229 million yen and 330,749 million yen, respectively.

130

Deferred tax liabilities related to the above temporary differences are not recognized as the Group is able
to control the timing of the reversal of the temporary differences and it is probable that they will notreverse it in the foreseeable future.
(2) Income tax expense
The breakdown of “Income tax expense” is as follows.
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

Current income tax expense
Deferred income tax expense
Total income tax expense

47,356(3,725)68,552(5,318)43,631

63,234

Income taxes recognized on sale of the financial assets measured at fair value through othercomprehensive income are as follows:
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

Income tax expense

5,177

95

(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 effect accounting 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 2021, respectively. However, overseas consolidated subsidiaries are subject to local corporate andother taxes.
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)%%

Statutory effective tax rate
(Adjustments)
Effects from reassessment of the recoverability ofdeferred tax assets
Differences in applicable tax rates of consolidated

30.6

30.6

155.0

(1.3)

0.0

(3.9)

subsidiaries
Tax adjustments for overseas subsidiaries

(4.5)

1.2

Repayment of capital from a consolidated subsidiary
Other–(21.9)

(8.2)
(1.7)

Effective income tax rates after adjustments for tax effectaccounting

159.2

16.7

Effective income tax rates after adjustments for tax effect accounting, which factors in discontinued
operations for the fiscal years ended December 31, 2020 and 2021, were 167.4% and 22.7%,
respectively.
(4) Uncertain income tax positions
In December 2021, the Company received 34,214 million yen from BRIDGESTONE AMERICAS,
INC., the Company’s consolidated subsidiary, as repayment of capital associated with sale of the roofing
business. For tax purposes, the transaction is to be accounted for by recognizing deductible expenses as131

loss on transfer of shares. The Company excluded some deductible expenses to calculate its taxable
income, for accounting purposes, which gives rise to some uncertain tax treatments under the Japan’s
tax law. The Company had engaged third-party legal, tax professionals, etc. to consider plausible tax
treatments and estimated its taxable income using either the expected value method or the most likely
amount method considering various scenarios and assumptions. As a result, although income tax
expense would be 91,100 million yen lower on the basis of lower income taxes payable and higher
deferred tax assets if all the deductible expenses were included in calculate taxable income, theCompany has lowered its deferred tax assets by 60,000 million yen and increased its income tax expense
by the same amount, relative to amounts under the aforementioned treatment.
A potential situation whereby such uncertain tax treatment differs from the final interpretation ofJapanese tax law according to the tax authorities could materially affect the income tax expense amountin the subsequent fiscal year.
19. Trade and Other Payables
The breakdown of “Trade and other payables” is as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Notes and accounts payable

188,932

237,516

Accounts payable - otherAccrued expenses

139,410
91,798171,203108,292

420,140

517,010

Total

Trade and other payables (excluding accrued expenses) are classified as financial liabilities measured atamortized cost.
20. Bonds and Borrowings (Including Other Financial Liabilities)(1) Breakdown of financial liabilities
The breakdown of “Bonds and borrowings,” “Lease liabilities” and “Other financial liabilities” are as
follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions
185,693

Yen in millions
62,996

Current portion of longterm borrowings

108,285

Current portion of bonds

Short-term borrowings

Average interest
rate(Note 1)

Repayment
deadline%
0.9–

46,985

3.1––

39,9950.1

Long-term borrowings

62,617

47,1120.3–
March 2023 –Bonds

349,442

309,560

0.3

Short-term lease liabilities

53,96654,853

2.2

Long-term lease liabilities

246,187249,638

2.5

January 2023 –October 2105

Other
Total
Current liabilities
Non-current liabilities
Total(Note 1)

June 2025
April 2024 –April 2029–

43,27941,995––

1,049,469

853,134––

377,286
672,183

231,485621,649––––

1,049,469

853,134––“Average interest rate” represents the weighted average interest rates for the interest rates andbalances at December 31, 2021.
132

(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:(Yen in millions)Company
namePrevious Year
Current Year
Interest
Issuance date (As of December 31, (As of December 31,
rate
2020)
2021)
(%)

Issue

The 9thBridgestone
unsecured
Corporation
bonds

Collateral

Maturity date

April 21, 2017

39,97939,9950.1

None

April 21, 2022

April 21, 201749,941

49,9590.2

None

April 19, 2024

April 21, 201759,89859,9140.3

None

April 21, 2027

The 12th
Bridgestone
unsecured
Corporation
bonds

April 19, 201949,93549,9540.1

None

April 19, 2024

The 13th
Bridgestone
unsecured
Corporation
bonds

April 19, 2019

49,90649,9240.2

None

April 17, 2026

April 19, 201999,78399,8080.4

None

April 19, 2029–

349,442

349,554––

Bridgestone

The 10th

Corporation

unsecuredbonds

Bridgestone

The 11th
unsecured

Corporation

Bridgestone
Corporation

bonds

The 14th
unsecured
bonds
Total

–

(2) Assets pledged as collateral for liabilities
Assets pledged as collateral are as follows:
Assets pledged as collateralPrevious Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Cash and cash equivalents
Property, plant and equipment
Total

133

186
491

209
494

678

703

21. Provisions“Provisions” is recorded as current liabilities and non-current liabilities in the consolidated statement offinancial position.
The breakdown of “Provisions” and the changes are as follows:
Previous Year (Year ended December 31, 2020)
Provision for
Provision forcompensation for Provision for loss business and plant
industrial
restructuring
on litigation
accidents
expenses

Other

Total

Yen in millions

Yen in millions

Yen in millions

Yen in millions

Yen in millions

Balance at January 1, 2020
Increase during period

15,1096,419

12,935
12,893

390
28,917

29,84625,03558,28073,264

Decrease (used)
Decrease (reversed)(8,346)(627)(5,999)(2,395)(40)–(19,397)(4,958)(33,781)(7,980)Exchange difference
Other

(816)
–

(1,295)
–

1,129
–

(513)
248

(1,495)248

11,73916,13930,39630,261

88,536

Balance at December 31, 2020

Current Year (Year ended December 31, 2021)
Provision for
Provision forcompensation for Provision for loss business and plant
industrial
restructuring
on litigation
accidents
expenses

Other

Total

Yen in millions

Yen in millions

Yen in millions

Yen in millions

Yen in millions

Balance at January 1, 2021
Increase during period

11,7398,229

16,1399,557

30,396
8,027

30,261
19,22388,53645,036

Decrease (used)
Decrease (reversed)(8,231)(972)(5,405)(2,306)(21,874)(1,530)(15,279)(5,163)(50,789)(9,971)

Exchange difference
Other (Note)

1,253
–

1,696
(80)

757
(4,220)

1,756
258

5,461
(4,042)

Balance at December 31, 2021

12,01819,601

11,556

31,056

74,231(Note)“Other” are mainly transfer to “Liabilities directly associated with assets held for sale”.

(1) Provision for compensation for industrial accidents
The Group estimates and records an amount based on the past and current experience to prepare for thepayment of the medical expenses, the absence from work compensation, etc. incurred as a result ofindustrial accidents. The outflow of the economic benefits is supposed to occur mainly within one year
from the end of the fiscal year 2021.
(2) Provision for loss on litigation
To prepare for the expenditures of litigation-related expenses, the Group estimates and records anamount of compensation for damages, settlement package, etc. that is currently expected to be incurredin the future. The outflow of the economic benefits is supposed to occur mainly within one year from theend of the fiscal year 2021.
(3) Provision for business and plant restructuring expenses
Due to the commencement of discussions for the closure of overseas tire plants, the Group estimates andrecords an amount that is currently expected to be incurred in the future to prepare for the related134

expenditures. The Company recorded an estimate of the amount expected to be incurred in the future at
this point in time associated with a company split which entails establishment of a new wholly owned
subsidiary of the Company succeeding the anti-vibration rubber business and the chemical products
solutions business, to integrate the aforementioned businesses of the Group and transfer of the shares ofthe said wholly owned subsidiary. The presentation of this amount is mainly included in “liabilities
directly associated with assets held for sale” of the consolidated statement of financial position. The
outflow of the economic benefits is supposed to occur mainly within one year from the end of the fiscal
year 2021.
(4) Other“Other” includes asset retirement obligations, provision for environmental expenses and provision for
product warranties.
22. Other Current Liabilities
The breakdown of “Other current liabilities” is as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Bonuses to officers and employees
Refund liabilities

36,32935,682

46,60633,347

Provision for unused paid absences
Contract liabilities

22,266
13,97623,125
14,548Consumption tax payables
Other

12,461
23,812

9,228
24,563

144,526

151,417Total

The details of contract liabilities are presented in Note “26. Revenue”.
23. Employee Benefits(1) Post-employment benefits
The Group has adopted both funded and unfunded defined benefit plans and defined contribution plans
as retirement benefits for its employees. The funded defined benefit plans are managed by pension funds
that are legally segregated from the Group. The board of directors of pension funds and pension trustees
are required by law to act in the best interests of the participants and are responsible for managing theplan 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 isdetermined by reference to market yields on high-grade corporate bonds at the end of fiscal year.
In the event that the investment yields for the plan assets fall below the discount rate, there is arisk of reduction in equity because of the worsened funded status.
(ii) Interest rate risk
In the event that the discount rate is reduced due to a decline in market yields on high-grade
corporate bonds, the present value of the defined benefit obligations increases, resulting in a riskof reduction in equity because of the worsened funded status.

1351) Reconciliation of defined benefit obligations
The changes in the defined benefit obligations are as follows:
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

Present value of defined benefit obligations at beginning of

878,484

period (Note 1)
Service cost

870,802

15,433

15,872

16,882

12,769Actuarial gains and losses arising from changes indemographic assumptions(2,852)

6,306

Actuarial gains and losses arising from changes infinancial assumptions

50,745(20,456)

Actuarial gains and losses arising from experience
adjustments

11,014

1,191

Past service cost and settlement of plan
Benefits paid

(8,276)(56,872)(Note 2) (119,466)

Exchange differences on translation of foreign operations
Other(32,393)(1,363)58,674(16,395)

870,802737,616

Interest expense
Remeasurements

Present value of defined benefit obligations at end of period(Note 1)

(71,681)(Note 1)

The weighted-average durations of the defined benefit obligations of the Group are 12.6 years and13.0 years, as of December 31, 2020 and 2021, respectively.

(Note 2)The decrease was mainly due to buyout of a part of the retirement benefits of a US subsidiary.

2) Reconciliation of plan assets
The changes in the plan assets are as follows:
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

Fair value of the plan assets at beginning of period
Interest revenue

678,705
12,832700,882
10,089Remeasurements
Return on plan assets

69,891

6,235

Contribution from employers (Note 1) (Note 2)
Benefits paid

18,281(53,381)

22,545(67,740)

Settlement of plan (Note 3)
Exchange differences on translation of foreign operations–(28,079)(115,097)
49,830

2,633(12,459)

700,882594,285

Other
Fair value of the plan assets at end of period(Note 1)The Group and its pension funds, in accordance with the laws and regulations, periodicallyconduct financial verifications and recalculate the amount of contributions for the purpose of
appropriating funds for future benefit accruals and maintaining a balanced pension fund in case ofa deficit.

(Note 2)The Group plans to make contribution of 12,958 million yen in the fiscal year ending December
31, 2022.

(Note 3)The decrease was due to a buyout of part of retirement benefits conducted by a US subsidiary.
1363) Reconciliation of defined benefit obligations and plan assets
The relationship between the defined benefit obligations, the plan assets and the defined benefit
liabilities (assets) in the consolidated statement of financial position is as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

Present value of the funded defined benefit obligations
Fair value of the plan assets

793,445(700,882)

658,773(594,285)

SubtotalPresent value of the unfunded defined benefit obligations

92,56377,35764,48878,843367

396

170,287

143,727

191,679(21,392)

171,981(28,254)

170,287

143,727

Effect of asset ceiling
Defined benefit liabilities (assets)
Amounts on the consolidated statement of financial position
Retirement benefit liabilities
Retirement benefit assets
Defined benefit liabilities (assets) in the consolidated
statement of financial position

4) Major components of plan assets
The major components of plan assets by category are as follows:
Previous Year(As of December 31, 2020)
Quoted price in active markets
QuotedCurrent Year(As of December 31, 2021)
Total

Unquoted

Quoted price in active markets
QuotedTotal

Unquoted

Yen in millions Yen in millions Yen in millions Yen in millions Yen in millions Yen in millions
Debt instruments
Japan
Overseas
Equity instruments
Japan
Overseas
Cash and cash equivalents
Alternative investments (Note)
Other
Total

(Note)

364,854
10,085354,769
32,045
1,466
30,57926,38752,404867
476,557

5,532
2,083
3,449
19,283–
19,28329,690116,816
53,004
224,325

370,386
12,168358,218
51,3281,466
49,86256,077
169,22053,871
700,882

294,715
10,034
284,681
29,373
1,157
28,21625,08751,7541,010
401,939

5,222
1,066
4,156
12,853–
12,85332,56090,312
51,399192,346

299,937
11,100288,837
42,226
1,157
41,06957,647142,066
52,409594,285

Alternative investments include investments, such as trusteed pension assets, real estate fund, andhedge fund, etc.
The investment management policy of the Group for the major plans is as follows:(Japan)The Company’s policy aims for managing plan assets to secure stable returns over the medium tolong term so that it can ensure payment of defined benefit obligations in the future, in accordancewith internal regulations. More specifically, the Group sets a target return and asset allocation that iswithin 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 thetype 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 totemporarily adjust the weighting of risk assets in accordance with the internal regulations.

137

(Overseas)
The policies for managing plan assets of these foreign subsidiaries are established by pension
trustees and the managements of these foreign subsidiaries are in accordance with the laws of eachcountry. The objective of such policies is to secure investment income that exceeds the changes inthe 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 the plan 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:
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

Effect of asset ceiling at beginning of period

326

Remeasurements
Change in the effect of asset ceiling

45

(8)

Exchange differences on translation of foreign operations

(4)

37

367

396

Effect of asset ceiling at end of period3676) Items related to actuarial assumptions
Significant actuarial assumptions as of December 31, 2020 and 2021 are as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)%%

Discount rate

(Note)

1.8

2.1

Valuation of the defined benefit obligations includes a judgment of future uncertain events.
Sensitivity of the defined benefit obligation to changes in the major base 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.
Changes in base rate

Discount rate

Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

0.5% increase(62,657)(58,154)

0.5% decrease

69,07461,552

7) Defined contribution plan
The amounts of contributions paid to the defined contribution plan are 14,312 million yen and
14,819 million yen for the fiscal years ended December 31, 2020 and 2021, respectively.

138

(2) Employee benefit expenses
Employee benefit expenses that are included in “Cost of sales,” “Selling, general and administrative
expenses,” “Other expenses,” “Finance costs” and “Profit (loss) from discontinued operations” in the
consolidated statement of profit or loss are as follows:
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

Employee benefit expenses

11,207

14,183

24. 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 the remaining amount may be appropriated as legal capital surplus within capital surplus. The
Companies Act also provides that legal 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 and 1,450,000,000 shares as ofDecember 31, 2020 and December 31, 2021, 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 shares ofcommon stock

Common stock

Capital surplus

SharesYen in millions

Yen in millions

Beginning of the Previous Year(As of January 1, 2020)

761,536,421

126,354

121,998

Increase (decrease) (Note 2)(47,838,200)–

118

713,698,221

126,354

122,116––10

713,698,221

126,354

122,126

Previous Year(As of December 31, 2020)
Increase (decrease)
Current Year(As of December 31, 2021)(Note 1)
(Note 2)The shares issued by the Company are shares of common stock with no par value and have norestrictions on any rights.
The decrease in the number of issued shares during the fiscal year ended December 31, 2020 isdue to retirement of treasury stock.

139

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

AmountSharesYen in millions

Beginning of the Previous Year(As of January 1, 2020)

57,481,254

232,330

Increase (decrease) (Note 2)(47,914,746)(193,674)

9,566,508

38,657(132,294)(533)

9,434,214

38,123

Previous Year(As of December 31, 2020)
Increase (decrease) (Note 2)
Current Year(As of December 31, 2021)(Note 1)The Company has adopted the stock option plan and appropriated shares of treasury stock for thedelivery of shares upon exercise of these options. The terms of the contract and the amounts, etc.
are presented in Note “34. Share-based Payment”.

(Note 2)The number of treasury stock retired based on the resolution of the Board of Directors in the fiscal
year ended December 31, 2020 was 47,838,200 shares and the total retirement amount was
193,364 million yen.
The increases by purchase, etc. of shares less than one unit were 842 shares and 2,406 shares, andthe decreases due to the exercise of stock options, etc. were 77,388 shares and 134,700 shares forthe fiscal years ended December 31, 2020 and 2021, respectively.

(3) Other components of equity
1) Stock acquisition rights
The Company has adopted the stock option plan and issued stock acquisition rights in accordancewith the Companies Act. The terms of the contract and the amounts, etc. are presented in Note “34.
Share-based Payment”.
2) Exchange differences on translation of foreign operations
The exchange differences on translation of foreign operations occur when the financial statements ofthe foreign operations prepared using foreign currencies are consolidated.
3) Effective portion of change in fair value of cash flow hedges
The Company hedges the fluctuation risk of variability in future cash flows through hedges, and thisis the portion of the changes in fair value of the derivative instruments designated as cash flow
hedges, which are deemed to be effective.
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 othercomprehensive 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 othercomponents of equity to retained earnings immediately.
140

(4) Retained earnings
The Companies Act provides that an amount equal to 10% of the dividends paid from surplus shall betransferred to legal capital surplus and legal retained earnings until the aggregate amount of legal capitalsurplus and legal retained earnings equals 25% of the nominal value of common stock. The amountaccumulated 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.
25. Dividends(1) The amount of dividends paid
Previous Year (Year ended December 31, 2020)
Classes of shares(Resolution)

Total amount ofdividends

Dividend per share

Yen in millions

Yen

Record date

Effective date

Annual Shareholders’ Meeting,March 24, 2020

Common stock

56,32580

December 31,
2019

March 25, 2020

Board of Directors’ Meeting,
August 7, 2020

Common stock

35,20650

June 30, 2020

September 1,
2020

Total amount ofdividends

Dividend per share

Record date

Effective date

Yen in millions

Yen

Current Year (Year ended December 31, 2021)
Classes of shares(Resolution)
Annual Shareholders’ Meeting,March 26, 2021

Common stock

42,24860

December 31,
2020

March 29, 2021

Board of Directors’ Meeting,
August 10, 2021

Common stock

59,85985

June 30, 2021

September 1,
2021

Record date

Effective date(2) Dividends that will be effective in the following fiscal year of the record datePrevious Year (Year ended December 31, 2020)
Classes of shares(Resolution)
Annual Shareholders’ Meeting,March 26, 2021

Total amount ofdividends

Dividend per share

Yen in millions

Yen

Common stock

42,24860

Total amount ofdividends

Dividend per share

Yen in millions

Yen

December 31,
2020

March 29, 2021

Current Year (Year ended December 31, 2021)
Classes of shares(Resolution)
Annual Shareholders’ Meeting,March 23, 2022

Common stock

59,863141

85

Record date

December 31,
2021

Effective date

March 24, 2022

26. Revenue(1) Disaggregation of revenue
The breakdown of revenue from continuing operations is as follows.
The Group has changed its segment classifications effective from the first quarter of the fiscal year
ended December 31, 2021. Figures for the previous fiscal year have been reclassified in accordance with
the new segment structure. The details are stated in Note “6. Operating Segments”.
Previous Year (Year ended December 31, 2020)(Yen in millions)

Japan

Reportable segments
Europe,Russia,China, AsiaAmericas Middle East,
Pacific
India andAfricaTotal

Corporate or Consolielimination dated total

Other

523,125
172,807

1,125,592
32,397546,644–282,608–

2,477,969
205,204

10,991
1,029

32–

2,488,991
206,233

Total external revenue

695,931

1,157,990

546,644282,608

2,683,173

12,02032

2,695,224

Revenue recognized fromcontracts with customers

682,235

1,153,821

538,992

282,608

2,657,655

12,02032

2,669,706

Revenue recognized fromother sources (Note 2)

13,696

4,169

7,653

–

25,518––25,518Tires
Other (Note 1)(Note 1)“Other” includes businesses such as Chemical and Industrial Products, sporting goods and bicycles
that the Company operates in.

(Note 2)

Revenue recognized from other sources includes lease income based on IFRS 16 “Leases”.

Current Year (Year ended December 31, 2021)(Yen in millions)
Reportable segments

Japan

Europe,Russia,China, AsiaAmericas Middle East,
Pacific
India andAfrica567,266
199,871

1,404,814
38,944686,140–

328,817–

2,987,038
238,816

19,1591,016

28–3,006,225
239,832

Total external revenue

767,138

1,443,758

686,140

328,8173,225,853

20,17528

3,246,057

Revenue recognized fromcontracts with customers

750,688

1,439,323

677,524

328,817

3,196,352

20,17528

3,216,555

Revenue recognized fromother sources (Note 2)

16,450

4,436

8,616

–

29,502––29,502

Tires
Other (Note 1)

Total

Corporate or Consolielimination dated total

Other(Note 1)“Other” includes businesses such as Chemical and Industrial Products, sporting goods and bicycles
that the Company operates in.

(Note 2)

Revenue recognized from other sources includes lease income based on IFRS 16.

142

(2) Contract balances
Contract balances of the Group consist of receivables, contract assets and contract liabilities arising fromcontracts with customers. In the consolidated statement of financial position, receivables arising fromcontracts with customers are presented as “Trade and other receivables,” while the contract liabilities are
as follows:
Beginning of the PreviousYear(As of January 1, 2020)
Contract liabilities

Previous Year(As of December 31,
2020)

43,032

39,277(Yen in millions)
Current Year(As of December 31,
2021)
18,404

A significant change in the balance of contract liabilities during the fiscal year ended December 31,
2021, was due to the sale of FSBP classified as discontinued operations which accounted for a decreaseof 25,643 million yen. Details are presented in Note “31. Discontinued Operations” and Note “37.
Subsidiaries and Associates, etc. (2) Loss of control of subsidiaries”. Total beginning balances of thecontract liabilities for the fiscal years ended December 31, 2020 and 2021 are recognized as revenue ineach fiscal year. The amount of revenue recognized from performance obligations satisfied in theprevious periods is not material for the fiscal year ended December 31, 2021.
The contract liabilities are presented as “Other current liabilities” and “Other non-current liabilities” inthe consolidated statement of financial position.
Contract liabilities primarily relate to advances received from customers.
(3) Transaction price allocated to the remaining performance obligations
The amounts of revenue from continuing operations related to the unsatisfied (or partially unsatisfied)
performance obligations that is expected to be recognized in the future at the end of the fiscal year are as
follows:(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Within one year

22,18025,725

Over one year and within five years

24,70536,503As the Group has applied the practical expedient provided in paragraph (121) of IFRS 15, it does notdisclose information about the remaining performance obligation that has an original expected durationof one year or less.

14327. Selling, General and Administrative Expenses
The breakdown of “Selling, general and administrative expenses” is as follows:(Yen in millions)
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Freight

138,489

187,315Advertising and sales promotional expenses

86,18384,409

Employee benefit expenses

252,476

279,533

Depreciation and amortization

86,652

89,785

Research and development expenses (Note)

87,287

95,480Other

196,318

192,099

847,405

928,620

Total(Note) All research and development expenses recognized as expenses are included in “Selling, general andadministrative expenses”.
28. Other Income and Other Expenses
The breakdown of “Other income” and “Other expenses” is as follows:(1) Other income(Yen in millions)
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Gain on sale of fixed assets(Note 1)Business and plant restructuring income
Other
Total

24,180

3,470

162

2,562

7,319

8,532

31,661

14,565(Note 1) Mainly relates to gains on the sale of warehouses.
(2) Other expenses(Yen in millions)
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Business and plant restructuring expenses (Note 2)

42,821

13,757

Loss on retirement of fixed assets

6,827

4,031

Impairment losses (Note 3)

77,068

3,734

Other

8,763

4,068

135,478

25,590Total(Note 2) The breakdown of “Business and plant restructuring expenses” is presented in Note “6. Operating
Segments”.

144

(Note 3) The breakdown of “Impairment losses” is presented in Note “16. Impairment of Non-financial
Assets”.
29. Finance Income and Finance Costs
The breakdown of “Finance income” and “Finance costs” is as follows:(1) Finance income(Yen in millions)
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Interest income (Note)

4,811

8,502

Dividend income (Note)

2,631

2,222

825

83

8,267

10,807

Other
Total

(2) Finance costs(Yen in millions)
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Interest expenses (Note)

13,136

11,299Net interest of defined benefit plans

3,571

2,481

Foreign currency exchange loss

3,765

899

Other

3,246

1,539

23,718

16,219Total(Note)“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 othercomprehensive income.

14530. Other Comprehensive Income
The analysis of “Other comprehensive income” by item in terms of the amount that occurred during eachfiscal year, the amount reclassified to profit or loss and the impact of tax effects are as follows:
Previous Year (Year ended December 31, 2020)
Amount that
occurred during
the period

Reclassification
Before tax effectadjustment

Yen in millions

Yen in millions

2,478

Tax effect

After tax effectYen in millions

Yen in millions

Yen in millions

–

2,478

(770)

1,708

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)

Total of items that may bereclassified to profit or loss

(96,496)125(96,371)(45)(96,415)

Total(84,904)

125(84,779)(4,590)(89,369)

Items that will not be reclassified to
profit or loss
Net change in fair value of financial
assets measured through othercomprehensive income
Remeasurements of defined benefit
plans
Share of other comprehensive incomeof investments accounted for using
equity method
Total of items that will not bereclassified to profit or loss
Items that may be reclassified to profit
or loss
Exchange differences on translationof foreign operations
Effective portion of change in fairvalue of cash flow hedges
Share of other comprehensive incomeof investments accounted for using
equity method

146

Current Year (Year ended December 31, 2021)
Amount that
occurred during
the period

Reclassification
Before tax effectadjustment

Yen in millions

Yen in millions

19,701

Tax effect

After tax effectYen in millions

Yen in millions

Yen in millions–

19,701(5,255)

14,446

19,741–

19,741(3,425)

16,316

(18)

–

(18)

–

(18)

39,424–39,424(8,681)30,743

163,596–

163,596–

163,596(2,612)

2,974

362

(98)

264

(3,489)(87)(3,576)–(3,576)

157,496

2,887

160,383(98)

160,285

196,920

2,887

199,807(8,779)191,028

Items that will not be reclassified to
profit or loss
Net change in fair value of financial
assets measured through othercomprehensive income
Remeasurements of defined benefit
plans
Share of other comprehensive incomeof investments accounted for using
equity method
Total of items that will not bereclassified to profit or loss
Items that may be reclassified to profit
or loss
Exchange differences on translationof foreign operations
Effective portion of change in fairvalue of cash flow hedges
Share of other comprehensive incomeof investments accounted for using
equity method
Total of items that may bereclassified to profit or loss
Total

147

31. Discontinued Operations(1) US building materials business
BRIDGESTONE AMERICAS, INC., a U.S. subsidiary of the Company, has concluded an agreementwith LafargeHolcim Ltd., a Swiss building materials manufacturer, regarding the sale of FIRESTONEBUILDING PRODUCTS COMPANY, LLC (hereinafter “FSBP”), a subsidiary of BRIDGESTONEAMERICAS, INC. in the Americas segment, to Holcim Participations (US) Inc., the U.S. subsidiary of
LafargeHolcim Ltd., on January 6, 2021 (local time), and the sale was completed on March 31, 2021.
Therefore, for the fiscal year ended December 31, 2021, FSBP and its subsidiaries are classified as
discontinued operations, and a restated presentation is provided for the fiscal year ended December 31,
2020, with those operations classified as discontinued operations.
1) Profit or loss from discontinued operations
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Yen in millions

Yen in millions

Profit or loss from discontinued operations
Income (Note)
Expenses

189,839(161,289)

352,134(41,822)

28,550310,312

Profit before tax from discontinued operations
Income tax expense (Note)(6,602)(78,331)

Profit from discontinued operations

21,948

231,980(Note)A gain on sale of 303,521 million yen relating to the transfer of FSBP is included in the fiscal year
ended December 31, 2021.
The income tax expense corresponding to that is 71,045 million yen.

2) Cash flow from discontinued operations

Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Yen in millions

Yen in millions

Cash flow from discontinued operations
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities

5,122(3,404)

Net cash provided by (used in) financing activities
Total

148

(307)
356,520

1,064

–

2,782

356,213

(2) Anti-vibration rubber business
On December 10, 2021, the Company made the decision to transfer its anti-vibration rubber business(hereinafter the “Business Operations”) to Anhui Zhongding Holding (Group) Co., Ltd. (hereinafter“AZ”). This entails the Company establishing a new wholly-owned subsidiary (hereinafter the “NewCompany”) to which it transfers the Business Operations by carrying out an absorption-type demerger(hereinafter the “Corporate Demerger”), then integrating the Business Operations of the Group into the
New Company, and subsequently transferring all shares of the New Company to AZ (hereinafter the“Share Transfer,” with the Corporate Demerger and the Share Transfer hereinafter referred to as the“Business Transaction”). The Company expects to complete the Business Transaction by the end of July
2022 upon having satisfied conditions that include gaining approval from regulatory authorities withrespect to the Business Transaction.
For the fiscal year ended December 31, 2021, the Company has accordingly classified the Business
Operations of the Company, BRIDGESTONE APM COMPANY (hereinafter “BAPM”), and
BRIDGESTONE NCR CO., LTD. (hereinafter “BSNCR”) as discontinued operations as well as
BRIDGESTONE ELASTECH CO., LTD., BRIDGESTONE NTEC CO., LTD., BRIDGESTONEINDIA AUTOMOTIVE PRODUCTS PRIVATE LIMITED, and BRIDGESTONE CHANGZHOUAUTOMOTIVE PRODUCTS CO., LTD. A restated presentation has also accordingly been given for the
fiscal year ended December 31, 2020, with those operations classified as discontinued operations.
1) Profit or loss from discontinued operations
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Yen in millions

Yen in millions

Profit or loss from discontinued operations
IncomeExpenses (Note 1)

54,616(71,045)

58,583(173,471)

Loss before tax from discontinued operations
Income tax expense (Note 2)(16,429)814(114,888)
18,394

Loss from discontinued operations(15,615)(96,494)(Note 1)

Expenses for the current fiscal year include a loss on business transfer of 7,452 million yen and aloss of 97,715 million yen recognized upon having measured the disposal group consisting of
discontinued operations at fair value less cost to sell, both of which were recognized upon having
concluded a contract with AZ.

(Note 2)

Income tax expense for the current fiscal year includes effects of 18,372 million yen recognized asdeferred tax assets against a loss on business transfer incurred upon having concluded a contract
with AZ and a loss recognized upon having measured the disposal group consisting of
discontinued operations at fair value less cost to sell. In addition, the Company turns to external
tax professionals to determine whether loss for tax purposes against loss on business transfer
incurred when executing the business transfer should be recognized (applicability of deductible
temporary difference).

2) Cash flow from discontinued operations
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Yen in millions

Yen in millions

Cash flow from discontinued operations
Net cash provided by (used in) operating activities(7,428)(12,973)

Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities(1,966)(144)(2,527)(142)(9,538)(15,642)

Total

149

(3) Chemical products solutions business
On December 10, 2021, the Company made the decision to transfer its chemical products solutions
business (hereinafter the “Business Operations”) to Endeavour United II Investment Business Limited
Partnership (hereinafter “EU Investment Partnership”), which is structured, managed, and operated byEndeavour United Co., Ltd. (hereinafter “EU”). This entails the Company establishing a new whollyowned subsidiary (hereinafter the “New Company”) to which it transfers the Business Operations bycarrying out an absorption-type demerger (hereinafter the “Corporate Demerger”), then integrating theBusiness Operations of the Group into the New Company, and subsequently transferring all shares of the
New Company to EU Investment Partnership (hereinafter the “Share Transfer,” with the Corporate
Demerger and the Share Transfer hereinafter referred to as the “Business Transaction”). The Company
expects to complete the Business Transaction by the end of August 2022 upon having satisfied
conditions that include gaining approval from regulatory authorities with respect to the BusinessTransaction.
For the fiscal year ended December 31, 2021, the Company has accordingly classified Business
Operations of the Company, BAPM, BSNCR, Bridgestone Precision Molding Philippines, Inc., asdiscontinued operations as well as Bridgestone Chemitech Co., Ltd., Bridgestone Diversified Chemical
Products Co., Ltd., Bridgestone Electronic Materials (Hong Kong) Ltd., Bridgestone Chemical Products
Malaysia Sdn. Bhd., Guangzhou Bridgestone Chemical Products Co., Ltd., Bridgestone (Kaiping)
Diversified Products Co., Ltd., and Bridgestone Wuhan Chemical Products Co., Ltd. Accordingly, arestated presentation has also been provided for the fiscal year ended December 31, 2020, with those
operations classified as discontinued operations.
1) Profit or loss from discontinued operations
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Yen in millions
Profit or loss from discontinued operations
IncomeYen in millions
56,15856,132

Expenses (Note 1)(66,425)(111,049)

Loss before tax from discontinued operations(10,267)(54,918)

Income tax expense (Note 2)
Loss from discontinued operations

422

5,600

(9,844)(49,317)(Note 1)

Expenses for the current fiscal year include a loss on business transfer of 4,056 million yen and aloss of 44,996 million yen recognized upon having measured the disposal group consisting of
discontinued operations at fair value less cost to sell, both of which were recognized upon having
concluded a contract with EU.

(Note 2)

Income tax expense for the current fiscal year includes effects of 5,362 million yen recognized asdeferred tax assets against a loss on business transfer incurred upon having concluded a contract
with EU and a loss recognized upon having measured the disposal group consisting of
discontinued operations at fair value less cost to sell. In addition, the Company turns to external
tax professionals to determine whether loss for tax purposes against loss on business transfer
incurred when executing the business transfer should be recognized (applicability of deductible
temporary difference).

2) Cash flow from discontinued operations
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Yen in millions

Yen in millions

Cash flow from discontinued operations
Net cash provided by (used in) operating activities(187)(5,225)

Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities(2,399)(802)(3,459)(846)(3,389)(9,530)

Total

150

32. Earnings per Share(1) Basic earnings (loss) per share
Basic earnings (loss) per share and its basis for the calculation are as follows:
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Profit (loss) attributable to owners of parent (Yen in millions)(23,301)

394,037––(23,301)

394,037(19,790)

307,868(3,511)

86,168704,108

704,192

Continuing operations (Yen)(28.11)437.19

Discontinued operations (Yen)(4.99)

122.37

Basic earnings (loss) per share (Yen)(33.09)559.56

Profit not attributable to common shareholders of parent (Yenin millions)
Profit (loss) used for calculating basic earnings (loss) per
share (Yen in millions)
Profit (loss) from continuing operations used for calculating
basic earnings (loss) per share(Yen in millions)
Profit (loss) from discontinued operations used for calculating
basic earnings (loss) per share(Yen in millions)
Weighted-average number of shares of common stock(Thousands of shares)
Basic earnings (loss) per share151

(2) Diluted earnings (loss) per share
Diluted earnings (loss) per share and its basis for the calculation are as follows:
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Profit (loss) used for calculating basic earnings (loss) per(23,301)

394,037––(23,301)

394,037(19,790)

307,868(3,511)

86,168704,108

704,192–

1,067

704,108705,258

Continuing operations (Yen)(28.11)436.53

Discontinued operations (Yen)(4.99)

122.18

Diluted earnings (loss) per share (Yen)(33.09)558.71share (Yen in millions)
Adjustment to profit (Yen in millions)
Profit (loss) used to calculate diluted earnings (loss) per share(Yen in millions)
Profit (loss) from continuing operations used to calculate
diluted earnings (loss) per share(Yen in millions)
Profit (loss) from discontinued operations used to calculate
diluted earnings (loss) per share(Yen in millions)
Weighted-average number of shares of common stock(Thousands of shares)
Increase in common stock
Increase from stock options (Thousands of shares)
Weighted-average number of shares of common stock after
dilution (Thousands of shares)
Diluted earnings (loss) per share(Note)In 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 the calculation of diluted loss per
share.

152

33. Cash Flow Information
Changes in liabilities arising from financing activities
The changes in liabilities arising from financing activities are as follows:
Previous Year (Year ended December 31, 2020)
Changes without cash flows
Exchange
As ofDecember 31,
differences on
Acquisitiontranslation of
2020
Other
foreign
operations
Yen in millions Yen in millions Yen in millions Yen in millions Yen in millions Yen in millions
59,850113,262–(2,210)–170,902
As of January
1, 2020

Changes withcash flows

Short-term borrowings
Bonds

131,753
349,352

60,997–––(7,057)––
90

185,693
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

Long-term borrowings

Total liabilities related tofinancing activities

Current Year (Year ended December 31, 2021)
Changes without cash flows
As ofExchange
December 31,
differences on
Acquisition
2021
translation of
Otherforeign
operations
Yen in millions Yen in millions Yen in millions Yen in millions Yen in millions Yen in millions
As of January
1, 2021

Changes withcash flows

Long-term borrowings
Short-term borrowings

170,902
185,693(82,539)(125,614)

–
–

5,734
2,918

–
–

94,09762,996

Bonds
Lease liabilities

349,442
300,153–(59,689)–
62,354–
12,124112(10,451)

349,554304,491

1,006,190(267,842)

62,354

20,775(10,339)

811,139

Total liabilities related tofinancing activities15334. Share-based Payment
The Company has adopted the stock option plan, the PSU and restricted share-based remuneration plan. The
details of the stock option plan are presented in “1. Information on Stock, etc.” of “IV. Information about
Reporting Company,” and those of the PSU in “4. Corporate Governance, etc.” of “IV. Information about
Reporting Company”.
(1) Stock option plan
The Group has not granted any new stock options since July 5, 2017.
1) Terms of the contracts, etc.
Resolution at Annual
Shareholders’ Meeting
and Board of Directors’Meeting held on March
26, 2009

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

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

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

Persons granted

Nine directors of theCompany and 20
corporate officers notconcurrently serving as
directors of the Company

Eight directors of theCompany and 25
corporate officers notconcurrently serving as
directors of the Company

Nine directors of theCompany and 36
corporate officers notconcurrently serving as
directors of the Company

Nine directors of theCompany and 35
corporate officers notconcurrently serving as
directors of the Company

Class and number ofshares granted

Common stock: 110,000
sharesCommon stock: 118,500
sharesCommon stock: 154,500
sharesCommon stock: 202,000
sharesDate of grantMay 1, 2009

May 6, 2010

May 2, 2011

May 1, 2012

Vesting conditions

No vesting condition

No vesting condition

No vesting condition

No vesting condition

Target service period

No specified service
periodNo specified service
periodNo specified service
periodNo specified service
periodExercise 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 of Directors’Meeting held on March
26, 2013

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

Resolution at Annual
Shareholders’ Meeting
and Board of Directors’Meeting held on March24, 2015

Resolution at Board of
Directors’ Meeting heldon April 21, 2016

Persons granted

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

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

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

Two directors of theCompany excluding nonexecutive directors, eightexecutive officers notconcurrently serving as
directors and 41
corporate officers

Class and number ofshares granted

Common stock: 196,000
sharesCommon stock: 131,900
sharesCommon stock: 142,500
sharesCommon stock: 208,800
sharesDate of grantMay 1, 2013

May 1, 2014

May 1, 2015

May 6, 2016

Vesting conditions

No vesting condition

No vesting condition

No vesting condition

No vesting condition

Target service period

No specified service
periodNo specified service
periodNo specified service
periodNo specified service
periodExercise period

From May 1, 2013 toApril 30, 2033

From May 1, 2014 toApril 30, 2034

From May 1, 2015 toApril 30, 2035

From May 7, 2016 to
May 6, 2036

154

Resolution at Board of
Directors’ Meeting heldon April 27, 2017
Plan A

Resolution at Board of
Directors’ Meeting heldon April 27, 2017
Plan B

Persons granted

Two directors of theCompany excluding nonexecutive directors, fiveexecutive officers notconcurrently serving as
directors and 45
corporate officers

One executive officer notconcurrently serving as
director and two
corporate officers

Class and number ofshares granted

Common stock: 206,500
sharesCommon stock: 14,300
sharesDate of grantMay 12, 2017

July 5, 2017

Vesting conditions

No vesting condition

No vesting condition

Target service period

No specified service
periodNo specified service
periodExercise period

From May 13, 2017 to
May 12, 2037

From July 6, 2017 to July
5, 20372) Changes in the number of stock options
Previous Year
(Year ended December 31, 2020)
Number of shares

Weighted-average
exercise price

Weighted-average
exercise price

Shares
1,084,000

–
–

–
–

–
–

–
–

77,300–1–58,800–

1–

Balance at end of period

1,084,000

1

1,025,200

1

Exercisable balance as of end of period

1,084,000

1

1,025,200

1Effect of share split
GrantedExercised
Forfeited

Yen

Number of shares

1

Balance at beginning of period

Shares1,161,300

Current Year
(Year ended December 31, 2021)

Yen(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 yen per share.

(Note 3)

The weighted-average stock price of the exercised stock options at exercise during the period is
4,991 yen for the fiscal year ended December 31, 2021. As for the fiscal year ended December 31,
2020, it was 3,523 yen.

(Note 4)

The weighted-average remaining contractual lives of the outstanding stock options as of December
31, 2020 and 2021 were 13.4 years and 12.5 years, respectively.

155

1

(2) PSU
As previously mentioned, the Company has discontinued the share-based stock options plans andintroduced the PSU in March 2018.
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Number of shares granted (Shares)–

37,200Weighted-average fair value at grant date (Yen)

–

4,393

(Note) There were no carrying amounts of liabilities arising from share-based remuneration transactions as ofDecember 31, 2020. As of December 31, 2021, it was 1,243 million yen.
(3) Restricted share-based remuneration plan
The Company has introduced a share-based remuneration plan to grant restricted shares to corporate
executive managers and executive managers from January 2021 with the aim of sharing values withshareholders regarding stock price fluctuation, thereby incentivizing them to make a contribution
towards an increase in the stock price and corporate values of the Company.
This plan grants allotment of the Company’s common stock to those eligible for the allotment by
providing monetary remuneration claim and the benefits all of said monetary remuneration claim in theform of contribution in kind. The Company concludes with those eligible for the allotment a restricted
share allotment agreement whereby those eligible for the allotment are restricted to transfer the allottedcommon stock of the Company to a third party, pledge them as collateral and dispose of them for acertain period prescribed in the allotment agreement (hereinafter, the “Transfer Restriction Period”)(such restrictions are hereinafter referred to as the “Transfer Restriction”).
The Transfer Restriction shall be lifted for all of the restricted shares as of the expiry of the Transfer
Restriction Period on condition that those eligible for the allotment continued to assume the positions ofcorporate executive manager and executive manager (hereinafter, the “Positions Eligible for Allotment)
during the Transfer Restriction Period. However, when those eligible for the allotment lose the status of
Positions Eligible for Allotment of the Company before the expiry of the Transfer Restriction Periodwith a reason deemed valid by the Global CEO following the deliberations of Officer Nomination andCompensation Meeting of the Company, the Transfer Restriction shall be lifted at a point in time
immediately following the said loss of the positions. Meanwhile, when there are shares for which theTransfer Restriction is not lifted as of the expiry of the Transfer Restriction Period, the Company will
acquire such restricted shares without consideration per its scheme.
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Date of grant–May 31, 2021

Number of shares granted (Shares)–

38,700Fair value at grant date (Yen) (Note)

–

3,578

Settlement method–

Equity-settled

Transfer Restriction Period–

From May 31, 2021
to December 31, 2023

(Note) Fair value is measured basis on the average of the daily closing prices of the Company’s common
stock on the Tokyo Stock Exchange for the one month immediately preceding the resolution date of
the Board of Directors.

156

(4) 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 as follows:
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Stock option
PSU
Restricted share-based remuneration

157

–

–

(1,013)

1,407

–

138

35. Financial Instruments(1) Capital management
The Group conducts capital management with the aim of increasing capital efficiency to realize
maintaining a proper financial constitution and return to stockholders, while securing the internal
reserves necessary for “Restructuring of 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 restructure 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 earning power” using ROIC and conducting a financial
assessment at the planning and acting stage of investments.
(2) Matters related to risk management
The Group is exposed to financial risks (credit risk, liquidity risk, foreign exchange fluctuation risk,interest rate fluctuation risk and market price fluctuation risk) in the process of its management activities
and it manages risks based on a specific policy in order to avoid said risks.
(3) Credit risk management
The Group is exposed to credit risk such as a counterparty’s default on contractual obligations resulting
in financial losses to the Group. With respect to trade receivables, the Group regularly monitors thefinancial position of significant customers and manage the due dates and the receivables balance of eachcustomer to promptly detect and minimize the risk of defaults resulting from deterioration of acustomer’s financial position, and when full or partial collection of the receivables is considered
impossible, or extremely difficult, it is deemed to be a default. The Group enters into derivativetransactions only with highly rated financial institutions in order to minimize counterparty risk.
The carrying amount of the financial assets after impairment presented in the consolidated statement offinancial position represent the Group’s maximum exposure to credit risk of financial assets.
The Group’s credit risk exposure related to notes and accounts receivable, etc. is as follows: The Groupmeasures the future expected credit losses to record allowance for doubtful accounts on notes andaccounts receivable, etc., taking into accounts probability of recoverability and if there has been asignificant increase in credit risk, etc. Whether credit risk increases significantly or not, it is assessed
based on the changes in the default risk. For this purpose, the financial condition of the counterpart, pastexperience, provisions that have already been recorded and past due information is taken into
consideration. Allowance for doubtful accounts on trade receivables is always measured at an amountequal to lifetime expected credit losses, which may be measured either on an individual or collective
basis, depending on the nature and size of the transaction. If one or several of the following events that
can affect the estimated future cash flows of the trade receivables adversely occur, the Group assesses
expected credit losses on an individual receivable basis as credit-impaired 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 or other financial reorganization

1581) Credit risk exposure related to trade and other receivables, etc.
Notes and accounts receivable, etc.
(Yen in millions)
Financial assets for whichallowance for doubtful
accounts is always
Credit-impaired financial
measured at an amountassetsequal to lifetime expectedcredit losses
Previous Year(As of December 31, 2020)
Current Year(As of December 31, 2021)

Total

661,226

16,969678,195

714,695

17,146

731,840

Other financial assets(Yen in millions)
Allowance for doubtful accounts
Financial assets formeasured at an amount equal towhich allowance
lifetime expected credit losses
for doubtful
accounts is
Financial assets formeasured at an
which credit risk
Credit-impaired
amount equal tohas increased
financial assets
12-month expected significantly sincecredit losses
initial recognition
Previous Year(As of December 31, 2020)
Current Year(As of December 31, 2021)

Total

58,8183,290

622

62,72987,2232,364

600

90,1882) Changes in allowance for doubtful accounts
Allowance for doubtful accounts against notes and accounts receivable, etc.
(Yen in millions)
Financial assets for whichallowance for doubtful
accounts is always
Credit-impaired financial
measured at an amountassetsequal to lifetime expectedcredit losses

Total

Balance at January 1, 2020

18,79516,08634,881

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)

Balance at December 31, 2020

21,184

16,70537,889

Increase during period

3,179

998

4,177

Decrease during period (utilized)(1,001)(1,074)(2,075)Decrease during period (reversed)(3,021)(1,132)(4,153)

754

1,591

2,345

21,09417,08838,182

Other

Other
Balance at December 31, 2021

159

Allowance for doubtful accounts against other financial assets(Yen in millions)
Allowance for doubtful accounts
Financial assets formeasured at an amount equal towhich allowance
lifetime expected credit losses
for doubtful
accounts is
Financial assets formeasured at an
which credit risk
Credit-impaired
amount equal tohas increased
financial assets
12-month expected significantly sincecredit losses
initial recognition

Total

Balance at January 1, 2020

71

377

26

474

Increase during period

1

144

575

719

Decrease during period (utilized)

–

–

(3)

(3)

Decrease during period (reversed)

(5)

(173)

–

(177)

Other

–

–

22

22

Balance at December 31, 2020

67

348

620

1,035

Increase during period

–

118

–

118

Decrease during period (utilized)

–

–

(37)

(37)

Decrease during period (reversed)

(1)

(146)

–

(147)

Other

–

–

17

17

Balance at December 31, 2021

66

320

600

987

160

(4) Liquidity risk management
The Group is exposed to liquidity risk when it is not able to repay liabilities on the due date due todeterioration of the financing environment. Payment terms of payables, such as notes and accounts
payable, and accounts payable - other are approximately within one year.
Based on a cash flow plan that incorporates estimated cash inflows and outflows arising from businessactivities, the Group practices fund management effectively by recognizing the future fund position inadvance based on cash flow projections. The Group also strives to diversify sources of financing such as
borrowings or bonds in order to reduce liquidity risk. In addition, the Group keeps necessary credit
facilities to manage liquidity risk by having commitment lines with several financial institutions.
Balances of financial liabilities (including derivative financial instruments) by due date as of the end ofeach fiscal year are as follows:
Previous Year (As of December 31, 2020)(Yen in millions)Due after
Due after one Due after two
Due after four
three years
Due after five
year through years throughyears throughthrough fouryears
two years
three years
five years
years

Carrying
amountContractual
cash flows

Due within
one year

Trade and other payables

420,140

420,140

420,140

–

–

–

–

–

Bonds and borrowings

706,037

706,595

293,978

81,61815,425

100,380

5,063

210,131

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

Forward exchange contracts

3,635

3,635

3,635

–

–

–

–

–

Currency swap contracts

4,715

4,715

1,522

(144)

442

2,895

–

–

Commodity swap contracts

(351)

(351)

(351)

–

–

–

–

–

Subtotal

7,999

7,999

4,806

(144)

442

2,895

–

–

Total

1,434,329

1,474,523

779,928

134,299

57,765

135,751

30,397336,383

Non-derivative financial liabilities

Subtotal
Derivative financial liabilities (Note)161

Current Year (As of December 31, 2021)(Yen in millions)Due after
Due after one Due after two
Due after four
three years
Due after five
year through years throughyears throughthrough fouryears
two years
three years
five years
years

Carrying
amountContractual
cash flows

Due within
one year

Trade and other payables

517,010517,010517,010

–

–

–

–

–

Bonds and borrowings

506,648

507,093

149,981

16,044

126,322

4,584

50,000160,162

Lease liabilities

304,491

343,981

59,52950,09740,16732,27725,932

135,979

1,328,149

1,368,084

726,520

66,141

166,489

36,86175,932

296,141

Forward exchange contracts

2,570

2,570

2,570

–

–

–

–

–

Currency swap contracts

3,561

3,561

(1,041)

74

4,528

–

–

–

Commodity swap contracts

(54)

(54)

(54)

–

–

–

–

–

Interest rate swap contracts

(124)

(124)

–

–

(124)

–

–

–

Subtotal

5,953

5,953

1,475

74

4,404

–

–

–

Total

1,334,102

1,374,037

727,995

66,215

170,893

36,86175,932

296,141

Non-derivative financial liabilities

Subtotal
Derivative financial liabilities (Note)(Note) Receivables and payables incurred by derivative transactions are presented in net amount.
Total amount of committed line and the amount undrawn are as follows:(Yen in millions)
Previous Year(As of December 31, 2020)
Total amount of committed line

Current Year(As of December 31, 2021)

139,512

153,385

The amount drawn

1,967

863

The amount undrawn

137,546

152,522162

(5) Foreign currency risk management
The Group engages in business, such as development, purchase, production, distribution and sales,
globally and conducts international transactions in regions around the world, and therefore, thefluctuation of foreign currency rates has an impact on the Group’s performance.
The Company and certain subsidiaries use mainly forward exchange contracts to hedge foreign currency
fluctuation risk identified by currency on a monthly basis for receivables and payables in foreign
currencies. When receivables and payables in foreign currencies are expected from forecasted
transactions, forward exchange contracts and currency option contracts may be used, depending on
exchange rate conditions. In addition, currency swap contracts are used to hedge foreign currency
exchange fluctuation risk associated with loans and borrowings denominated in foreign currencies.
The Group limits derivative transactions to actual demand under internal regulations and does not enter
into derivative transactions for speculative purposes.
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 yen on profit before tax is as follows:
The figures below do not include the impact of translation of financial instruments denominated infunctional currencies, assets and liabilities as well as revenues and costs of foreign operations intoyen. This analysis is based on the assumption that other variable factors (such as balances, interest
rate, etc.) are constant.
(Yen in millions)
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Profit before tax

(65)

(104)

(6) Interest rate risk management
Some of borrowings, etc. with floating interest rates in the Group are exposed to interest rate fluctuation
risk. The Group uses interest rate swap transactions for the purpose of hedging interest rate fluctuation
risk on borrowings.
The Group limits derivative transactions to actual demand under internal regulations and does not enter
into derivative transactions for speculative purposes.
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 other variable factors such as the effects of the changes in currency rates remain
constant.
(Yen in millions)
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Profit before tax

(93)

163

(270)

(7) Market price fluctuation risk management
Investment securities in the Group consist primarily of equity securities of business partners and are
exposed to market price fluctuation risk.
The Group regularly monitors market prices and financial positions of the issuers with whom it has
business relations, and appropriately reviews the status of these securities considering the relationships
with the issuers.
Sensitivity of share price fluctuation risk
The sensitivity analysis of the listed stocks the Group holds to share price fluctuation risk is asfollows: The analysis shows the impact of drops in market prices of the listed stocks by 1% on othercomprehensive income before tax effect, assuming other variables remain constant.
(Yen in millions)
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Other comprehensive income

(714)

(912)

(8) Fair value measurement
The fair value hierarchy of the financial instruments is categorized into the following three levels basedon the inputs to the valuation techniques used.
Level 1: Fair value that is measured by using quoted prices in active markets
Level 2: Fair value, other than Level 1, that is determined by directly or indirectly using theobservable price
Level 3: Fair value determined by using valuation techniques that incorporate 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 otherfinancial liabilities, respectively, and those are classified as derivative assets and derivative
liabilities measured at fair value through profit or loss. These are forward exchange contracts,
currency swap contracts and interest rate swap contracts, etc., which are measured based on themodel using largely observable inputs such as foreign currency rates and interest rates.
(ii) Shares
Shares are included in other financial assets, classified into financial assets measured at fairvalue 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 assetsof the share issuing company, adjusted for any items that should be adjusted due to marked-tomarket, if any).

164

The fair value hierarchy of financial instruments measured at fair value is as follows:
Previous Year (As of December 31, 2020)
Level 1

Level 2

Level 3Total

Yen in millions–

Yen in millions
2,992

Yen in millions–

Yen in millions
2,992

71,383–

10,891

82,274

Total

71,383

2,992

10,891

85,266–

10,991–

10,991

Total–

10,991–

10,991

Derivative assets
SharesDerivative liabilities

Current Year (As of December 31, 2021)
Level 1

Level 2

Level 3Total

Yen in millions–

Yen in millions
2,586

Yen in millions–

Yen in millions
2,586

91,164–

16,650107,814

Total

91,164

2,586

16,650110,400

–

8,538

–

8,538

Total

–

8,538

–

8,538

Derivative assets
SharesDerivative liabilities

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, 2020
and 2021.
The changes in assets and liabilities measured at fair value by using Level 3 inputs on a recurring
basis from the beginning to the end of the fiscal years ended December 31, 2020 and 2021 are as
follows:
Previous Year
Current Year
(Year ended December 31, 2020) (Year ended December 31, 2021)
Yen in millions
Balance at beginning of period

Yen in millions
9,559

10,891

Total gains and losses
Other comprehensive income (Note)

108

1,637

Purchases
Sale and collection

529
(25)

3,870
(117)

Other

720

368

10,891

16,650

Balance at end of period(Note)

Amount is included in “Net change in fair value of financial assets measured through othercomprehensive income” in the consolidated statement of comprehensive income.
The financial instruments categorized as Level 3 in the fair value hierarchy are financial assets
measured at fair value through other comprehensive income for which quoted market prices are notreadily 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 most appropriate
valuation technique considering the nature of the assets, etc. with reasonably estimated input.

165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 the fair values and it is not material.
Bonds and borrowings
The fair values of bonds are based on the market prices. The fair values of the borrowings arecalculated based on the present value and by discounting the total principal and interest over theremaining term at an interest rate that would be applied if similar borrowings were newly made.
Previous Year (As of December 31, 2020)
Carrying amount

Level 1

Level 2

Level 3

Total

Bonds and borrowings

Yen in millions
412,060

Yen in millions–

Yen in millions
413,610

Yen in millions–

Yen in millions
413,610

Total

412,060–

413,610–413,610

Current Year (As of December 31, 2021)
Carrying amount

Level 1

Level 2

Level 3

Total

Bonds and borrowings

Yen in millions
356,672

Yen in millions–

Yen in millions
358,550

Yen in millions–

Yen in millions
358,550

Total

356,672–358,550–

358,550(9) Hedge accounting
Risk management strategy
The Group uses, as derivative transactions, such as forward exchange contracts and currency swap
contracts to hedge against foreign currency fluctuation risk associated with the foreign currencydenominated receivables and payables as well as foreign currency-denominated forecast 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 ininterest rate swap contracts, if required, to hedge against risk of changes in interest rate of theborrowings. It uses commodity swap contracts, if required, to mitigate price fluctuation risk from raw
materials. With respect to the execution and management of derivative transactions, the Group complies
with the internal regulations that stipulate transaction authority, and engages in the derivativetransactions 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 andhedged 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.
The Group uses derivatives when it is economically rational to do so, including the cases where thehedging relationship does not meet the requirements to qualify for hedge accounting.

166

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

Contract amount
AssetsCash flow hedges

Foreign currency
derivatives

Total

Liabilities

42,229218

957

42,229218

957

Current Year (As of December 31, 2021)(Yen in millions)
Carrying amount (Note)
Hedging typeHedging instruments

Contract amount
AssetsForeign currency
Cash flow hedges

derivatives
Interest rate derivatives

Total

Liabilities

35,7485535

26,102

124–

61,850129535(Note) The 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.
The expected duration of cash flows from the cash flow hedges is approximately four months to eightmonths for foreign currency contracts, which is expected to be largely the same as the expected durationof the impact on net profit or loss.
For the fiscal years ended December 31, 2020 and 2021, there are no material amounts recognized in
profit or loss, which are related to the ineffective portions of hedges and portions excluded fromassessment of hedge effectiveness.

167

The changes in the cash flow hedge reserve arising from the hedging instruments designated as cash
flow hedges are as follows:
Previous Year (Year ended December 31, 2020)
Effective portion of change in fair value of cash flow hedges
Foreign currency risk

Commodity-related risk

Total

Yen in millions

Yen in millions

Yen in millions

Balance at January 1, 2020
Other comprehensive income

(325)

–

(325)

198
159

4
–

202
159

Tax effect

(45)

–

(45)

Balance at December 31, 2020

(13)

4

(9)

Amount that occurred during the period (Note 1)
Amount of reclassification adjustment (Note 2)

Current Year (Year ended December 31, 2021)
Effective portion of change in fair value of cash flow hedges
Foreign currency
riskInterest rate risk

Commodity-relatedrisk

Yen in millions(13)

Yen in millions

Yen in millions–

4

Yen in millions(9)

Other comprehensive income
Amount that occurred during the period (Note 1)(2,284)165(4)(2,123)

Amount of reclassification adjustment (Note 2)
Tax effect

2,974
(57)

–
(41)

–
–

2,974
(98)

620

124

–

744

Balance at January 1, 2021

Balance at December 31, 2021

Total

(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.

(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 other receivables” at the amount of 117,969 million yen and 108,876 million yen as ofDecember 31, 2020 and 2021, respectively. In addition, the proceeds arising upon the transfer of theassets are recorded at the amount of 20,700 million yen and 23,004 million yen, respectively, as therelated liabilities in “Bonds and borrowings” as at the above dates.

16836. Related Party(1) Related party transactions
Previous Year (Year ended December 31, 2020)
Not applicable
Current Year (Year ended December 31, 2021)
Not applicable(2) Remuneration for key management personnel
The remuneration for key management personnel of each fiscal year is as follows:
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Yen in millions

Yen in millions

Remuneration and bonuses
Share-based payment
Total

503
–

647
215

503

862

37. Subsidiaries and Associates, etc.
(1) Information on significant subsidiaries
The significant subsidiaries and associates of the Group at December 31, 2021 are presented in “4.
Information on Associates” of “I. Overview of the Company” of “Part I Information on the Company”.
(2) Loss of control of subsidiaries
Previous Year (Year ended December 31, 2020)
Not applicable
Current Year (Year ended December 31, 2021)
BRIDGESTONE AMERICAS, INC., a U.S. subsidiary of the Company, has concluded an agreementwith LafargeHolcim Ltd., a Swiss building materials manufacturer, regarding the sale of FSBP, asubsidiary of BRIDGESTONE AMERICAS, INC. in the Americas segment, to Holcim Participations(US) Inc., the U.S. subsidiary of LafargeHolcim Ltd., on January 6, 2021 (local time), and the sale wascompleted on March 31, 2021.
As a result of the sale, BRIDGESTONE AMERICAS, INC. has lost its control of FSBP and its
subsidiaries.

169

The breakdown of assets and liabilities at the time of loss of control of FSBP, consideration received andthe balance of proceeds from sale are as follows.
(Yen in millions)
Current Year
(Year ended December 31, 2021)
Breakdown of assets at time of loss of control
Current assets
Non-current assets

64,084
52,118

Breakdown of liabilities at time of loss of control
Current liabilities

31,777

Non-current liabilities

30,834(Yen in millions)
Current Year
(Year ended December 31, 2021)
Consideration received in cash

383,374

Of assets at time of loss of control, cash and cash
equivalents

2,708

Proceeds from sale of discontinued operations

380,666(Note 1)

Cash flows associated with loss of control are recorded in “Proceeds from sale of discontinued
operations” under cash flows from investing activities in consolidated statement of cash flows.

(Note 2)

Gains arising from loss of control of 303,521 million yen and the associated income tax expense of
71,045 million yen are recorded under “Profit (loss) from discontinued operations” in consolidated
statement of profit or loss.

(3) Significant associates and jointly controlled entities
There are no significant associates and jointly controlled entities of the Group.
(4) Impairment of investments in a jointly controlled entity
The details are presented in Note “16. Impairment of Non-financial Assets”.
38. Commitments
Commitments for the acquisition of assets after the closing date of each fiscal year are as follows:
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Yen in millions

Yen in millions

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

170

49,0662,235

39,665
1,510

51,30041,175

39. Subsequent Events(Acquisition of treasury stock)
The Company has resolved to acquire its treasury stock at the Board of Directors meeting held on February
15, 2022, as per the provisions of Article 156 of the Companies Act as applied by replacing certain terms
under the provisions of Article 165, paragraph (3) of the same Act.
(1) Reason of acquisition of treasury stock As an agile management for improving capital efficiency(2) Kind of shares to acquire
Common stock of the Company(3) Total number of shares to acquire
25 million shares (up to)(% of issued shares (not including treasury stock): 3.5%)(4) Total acquisition cost
100.0 billion yen (up to)(5) Procedure
Market purchases based on the discretionary dealing contract
regarding acquisition of treasury stock(6) Timing
February 17, 2022 to December 13, 2022
(7) Other
Based on the resolution of the Board of Directors above, theCompany has acquired 1,314,000 shares of its common stocks(acquisition amount of 6.6 billion yen) during a period fromFebruary 21, 2022, through February 28, 2022.
(Unauthorized access at a U.S. subsidiary)
It has been confirmed on February 27, 2022 (U.S. Time), BRIDGESTONE AMERICAS, INC., a U.S.
subsidiary of the Company, was the subject of unauthorized access to the internal network by a third party.
The subsidiary immediately reported this to the local authorities, disconnected the system that was subject
to the unauthorized access from the network, and conducted an overall inspection. The system has since
been restored. As a result of the investigation carried out afterwards, the cause of this incident ofunauthorized access was identified on March 17 (Japan time) to be an attack by ransomware (virus
demanding ransom payment). The Group continues to closely cooperate with specialist organizations inorder to provide a response to such threats.
The impact that this incident may have on the Group’s operating results of the next fiscal year is currently
under review. Going forward, if a significant impact on operating results is expected, the Group willpromptly report such information.
(Suspension of production in Russia and tire exports to Russia)
The Company resolved to suspend production in Russia and tire exports to Russia on March 14, 2022.
The impact of this decision on the Group’s operating results of the next fiscal year is currently underreview. Going forward, if a significant impact on operating results is expected, the Group will promptly
report such information.

171

(2)

Other
Quarterly information for the fiscal year ended December 31, 2021
Three months ended
March 31, 2021

Six months ended
June 30, 2021

Nine months ended
September 30, 2021

Fiscal year ended
December 31, 2021

Revenue (Yen in millions)

727,223

1,510,429

2,317,698

3,246,057

Profit before tax (Yen in millions)

84,064177,051

276,220

377,594285,247

352,320422,848

394,037405.10500.35600.49559.56(Cumulative period)

Profit attributable to owners of parent(Yen in millions)
Basic earnings per share (Yen)(Accounting period)
Basic earnings (loss) per share (Yen)First quarter

Second quarter

405.10172

95.25

Third quarter
100.15

Fourth quarter(40.91)

2. Financial Statements(1) Non-consolidated Financial Statements
1) Non-consolidated Balance Sheet(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

420,718
1,256*1 241,831
29,598
5,688
20,859349,998
1,251*1 301,816
41,822
7,323
31,415*1

42,046*1

13,871–*1
6,779(3,332)
779,313*1

19,439
8,872
*1
4,648
(12,719)792,392

90,353
6,575
41,3801,278
11,461
63,46231,082245,592
10,879104,726
8,187
43,6301,082
12,35363,426
24,798258,203
14,582

71,257
836,414

90,615
799,371

55,37755,024

AssetsCurrent assets
Cash and deposits
Notes receivable
Accounts receivable
Finished products
Work in process
Raw materials and supplies
Short-term loans receivable for subsidiaries andassociates
Accounts receivable - other
Income taxes refund receivable
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Property, plant and equipment
Buildings, net
Structures, net
Machinery and equipment, net
Vehicles and carriers, net
Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment in securities
Investments in subsidiaries and associates
Investments in subsidiaries and associates,
other than stockLong-term loans receivable for subsidiaries
and associates
Deferred tax assets
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets*1*1

84,681

10,7203,173(17)1,061,605
1,318,076
2,097,389

173*1

38,52786,89335,6202,904(26)1,070,402
1,343,187
2,135,579

(Yen in millions)
Previous Year(As of December 31, 2020)
Liabilities
Current liabilities
Accounts payable
Current portion of bonds
Short-term borrowings
Short-term borrowings to subsidiaries andassociates
Current portion of long-term borrowings
Current portion of long-term borrowings to
subsidiaries and associates
Lease obligations
Accounts payable - otherAccrued expenses
Income taxes payable
Deposits received
Allowance for losses on business transfer
Other current liabilities
Total current liabilities
Long-term liabilities
Bonds
Lease obligations
Accrued pension and liability
for retirement benefits
Provision for environmental remediation
Asset retirement obligation
Other long-term liabilities
Total long-term liabilities
Total liabilities*1

82,338–100,000*1 105,258
40,000
–

*1

233

–

100,000

–

1,341

–

*1
*1
*1

174

Current Year(As of December 31, 2021)

138
57,963
28,684
15,948
6,030
–
4,345
397,018*1*1

163
74,40029,941–
6,061
133,5654,744
394,133

350,000
174

310,000
242

49,44247,782

259
2,881
3,530
406,286
803,305

263
2,910
6,435
367,633
761,766

(Yen in millions)
Previous Year(As of December 31, 2020)
EquityShareholders’ equity
Common stock
Capital surplus
Capital reserve
Total capital surplus
Retained earnings
Legal reserve
Other retained earnings
Reserve for special depreciation
Reserve for advanced depreciation of fixed
assetsReserve for special account for advanced
depreciation of fixed assets
General reserve
Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders’ equity
Net unrealized gain (loss) and translation
adjustments
Net unrealized gain (loss) on available-for-salesecurities
Deferred gain (loss) on derivative instruments
Total net unrealized gain (loss) and translation
adjustments
Stock acquisition rights
Total equity
Total liabilities and equity

175

Current Year(As of December 31, 2021)

126,354

126,354

122,079
122,079

122,079
122,079

31,27931,2790–26,43031,806

10,037–789,311
189,979
1,047,037(38,656)
1,256,814

789,311
259,445
1,111,840(38,123)
1,322,151

34,55848,950

(414)

(285)

34,144

48,665

3,125
1,294,084
2,097,389

2,997
1,373,813
2,135,579

2) Non-consolidated Statement of Profit or Loss
(Yen in millions)
Previous Year
(Year ended December 31,
2020)

Current Year
(Year ended December 31,
2021)*1 691,683*1 453,712
237,971*2 172,594
65,377*1 839,528*1 527,034
312,493*2 208,539
103,954

*1
*1
*1

1,766
36,9582,840
41,564*1
1,141*1 194,960*1
2,146
198,247

*1

1,342
–
864
1,215
2,961
4,403
10,785
96,155*1

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Other
Total non-operating income
Non-operating expenses
Interest expense
Loss on forgiveness of debt
Removal and disassembly expense
Loss on retirement of fixed assets
Foreign currency exchange loss
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of fixed assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary loss
Impairment loss
Loss on business transfer
Loss on business of subsidiaries and associates
Total extraordinary loss
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit8,576
17,584
26,160

–
–
–

1,396
–
*5 17,961
19,357
102,959
17,1782,867
20,04582,914*3
2,025*3,*4 141,074*5 10,816
153,915
139,000
1,689(29,714)(28,025)
167,024

*3

176

988
1,522
1,469
987
1,624
2,696
9,286
292,915

3) Non-consolidated Statement of Changes in Equity
Previous Year (Year ended December 31, 2020)(Yen in millions)Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Common stock

Beginning balance

126,354

Capital reserve Legal reserve

122,079

Reserve for
specialdepreciation

Reserve foradvanceddepreciationof fixed
assets3

25,97731,279Reserve for
specialaccount foradvanced General reserve
depreciationof fixed
assets9,421

989,311Retainedearnings
brought
forward193,191

Changes in the year
Cash dividends(91,531)

Reversal of reserve for
special depreciation
Provision of reserve foradvanced depreciation of
fixed assets
Provision of reserve for
special account foradvanced depreciation of
fixed assets

(2)

2
453

(453)

616

Reversal of general reserve(616)(200,000)

Profit200,000
82,914Purchase of treasury stock
Disposal of treasury stock(163)

Cancellation of treasurystock
Net changes in items otherthan shareholders’ equity
Total changes in the year
Ending balance(193,364)

–

–

–

(2)

453

616

(200,000)(3,211)

126,354

122,079

31,279026,43010,037789,311

189,979

Net unrealized gain (loss) andtranslation adjustments
Net
Deferred gain
Total
unrealized(loss) on
Treasury stock shareholders’ gain (loss) on
derivative
equityavailable-forinstruments
sale securities

StockacquisitionrightsShareholders’ equity

Beginning balance(232,329)

1,265,284

44,107

(515)

3,275

(9,549)

101

(150)

Changes in the year
(91,531)

Cash dividends
Reversal of reserve for
special depreciation
Provision of reserve foradvanced depreciation of
fixed assets
Provision of reserve for
special account foradvanced depreciation of
fixed assets–––

Reversal of general reserve–
82,914

ProfitPurchase of treasury stock

(3)

(3)

Disposal of treasury stock

313

150

193,364–

Cancellation of treasurystock
Net changes in items otherthan shareholders’ equity
Total changes in the year

193,674(8,470)(9,549)

101

(150)

Ending balance(38,656)

1,256,814

34,558

(414)

3,125

177

Current Year (Year ended December 31, 2021)(Yen in millions)Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Common stock

Beginning balance

126,354

Capital reserve Legal reserve

122,079

Reserve for
specialdepreciation

Reserve foradvanceddepreciationof fixed
assets026,43031,279Reserve for
specialaccount foradvanced General reserve
depreciationof fixed
assets10,037789,311Retainedearnings
brought
forward
189,979

Changes in the year
Cash dividends(102,107)

Reversal of reserve for
special depreciation
Provision of reserve foradvanced depreciation of
fixed assets
Reversal of reserve for
special account foradvanced depreciation of
fixed assets

(0)

0
5,375

(5,375)(10,037)

10,037

Profit167,024

Purchase of treasury stock
Disposal of treasury stock(114)

Net changes in items otherthan shareholders’ equity
Total changes in the year
Ending balance

–

–

–

(0)

5,375

(10,037)–

69,466

126,354

122,079

31,279–31,806–789,311

259,445

Net unrealized gain (loss) andtranslation adjustments
Net
Deferred gain
Total
unrealized(loss) on
Treasury stock shareholders’ gain (loss) on
derivative
equityavailable-forinstruments
sale securities

StockacquisitionrightsShareholders’ equity

Beginning balance(38,656)

1,256,814

34,558

(414)

3,125

14,392

128(128)

Changes in the year
Cash dividends(102,107)

Reversal of reserve for
special depreciation
Provision of reserve foradvanced depreciation of
fixed assets
Reversal of reserve for
special account foradvanced depreciation of
fixed assets–––

Profit167,024

Purchase of treasury stock

(11)

(11)

Disposal of treasury stock

544

431

Net changes in items otherthan shareholders’ equity
Total changes in the year
Ending balance

533

65,336

14,392

128(128)(38,123)

1,322,151

48,950

(285)

2,997

178

Notes to Non-consolidated Financial Statements(Significant accounting policies)
1.

Valuation policies and methods for assets(1) Valuation policies and methods for investments in securities
Investments in subsidiaries and associates — The moving-average cost method
Available-for-sale securities
With market value— Fair value based on the market price, etc., at the closing date(unrealized gain and loss, net of tax is recorded in equity, and the movingaverage method is used to calculate the cost of securities sold)Without market value — Primarily the moving-average cost method.
Note that investments provided to limited investment partnerships andother organizations are based on the most recent available financial
statements according to the financial reporting date specified in contracts
with the partnership. They incorporate a net amount of equivalent equity.
(2) Valuation policies and methods for derivatives
Fair value(3) Valuation policies and methods for inventories
The moving-average cost method (for carrying amounts on the balance sheet, method in which carrying
amounts are lowered based on a decline in profitability)2.

Depreciation method for fixed assets(1) Property, plant and equipment
The declining-balance method(2) Intangible assets
The straight-line method
3.

Accounting policies for reserves and allowances(1) Allowance for doubtful accounts
In order to reserve for loss from the nonpayment of claims, the actual credit loss rate is used to calculate
the amount to be recorded for general claims, and for designated claims for which there is a concern of
nonpayment, an amount based on the evaluation of potential loss in the receivables outstanding isrecorded.
(2) Allowance for losses on business transfer
In order to reserve for loss arising from a business transfer, the estimated amount to be incurred in the
future is recorded.

179

(3) Accrued pension and liability for retirement benefits
In order to reserve for retirement benefits for employees, an amount based on the estimated amount ofprojected benefit obligations and pension plan assets as of the current fiscal year end is recorded.
1) Method of attributing projected benefits to periods
Projected benefits are attributed to periods of service up to the end of the current fiscal year on abenefit formula basis.
2) Method of recognizing unrecognized actuarial gain/loss and past service cost
Past service cost is treated as an expense using the straight-line method over a fixed number ofyears (10 years) within the average remaining years of service of the employees in the year inwhich the past service costs occur.
Actuarial gain/loss is treated as an expense using the straight-line method over a fixed number ofyears (10 years) within the average remaining years of service of the employees in the year inwhich the gain/loss occurs, recorded from the following fiscal year.
(4) Provision for environmental remediation
In order to reserve for outlays for legally required removal and disposal of PCB, etc., the estimatedamount of future obligations is recorded.
4.

Accounting policies for the translation of foreign currency-denominated assets and liabilities
into Japanese yen

Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at theexchange rate at the end of the fiscal year. The foreign currency exchange gain and loss from translation arerecognized in income.
5.

Hedge accounting(1) Hedge accounting method
Deferred hedge accounting is applied.
(2) Hedging instruments and items covered
Instruments

Items covered

Forward foreignexchange contracts

Foreign currency-denominated monetary claims andobligations and forecasted foreign currencydenominated transactions

Foreign currency swaps

Borrowings and bonds

Interest rate swaps

Borrowings

Commodity swaps

Raw materials(3) Hedging policy
Forward exchange contracts are used only to cover actual foreign exchange needs, and foreign exchange
swaps are made to match the principal amount and term of the hedged foreign currency-denominatedobligation. Interest rate swaps are entered into for the amount of borrowings only. Commodity swaps areentered into for the trade amount of raw materials. It is the Company’s policy not to use any derivativetransactions for speculative purposes.

180

(4) Method for evaluating the effectiveness of hedges
The validity of hedges is evaluated based on a comparison of total fluctuations in the cash flow or
fluctuations in the market value of the hedged item with the total fluctuations in the cash flow or
fluctuations in the market value of the hedging instrument.
6.

Accounting treatment of consumption tax

Consumption tax and local consumption taxes are excluded. Suspense consumption taxes paid and received
are offset and net amount is recorded within accounts receivable-other in current assets.
(Significant accounting estimates)
1.

Impairment on fixed assets(1) Amount recorded in the financial statements for the current fiscal year
Property, plant and equipment
Intangible assets

258,203 million yen
14,582 million yen(2) Other information that contributes to understanding of users of the financial statements
The notes have been omitted since the same information has been provided in “3. Significant
Accounting Policies (11) Impairment of non-financial assets” in the notes to the consolidated financial
statements.
2.

Recoverability of deferred tax assets(1) Amount recorded in the financial statements for the current fiscal year
Deferred tax assets

35,620 million yen(2) Other information that contributes to understanding of users of the financial statements
The notes have been omitted since the same information has been provided in “3. Significant
Accounting Policies (19) Income taxes” in the notes to consolidated financial statements. In addition, for
repayment of capital received from a subsidiary in the current fiscal year, the Company has estimatedtaxable profit, which affects calculation of deferred tax assets. A potential situation whereby theaccounting estimate differs from the final interpretation of Japanese tax law according to the tax
authorities could materially affect the amount of taxable profit for the subsequent fiscal year. For details,
please refer to “(Additional information) 1. Repayment of capital from a subsidiary”.
3.

Accrued pension and liability for retirement benefits(1) Amount recorded in the financial statements for the current fiscal year
Accrued pension and liability
for retirement benefits

47,782 million yen(2) Other information that contributes to understanding of users of the financial statements
The notes have been omitted since the same information has been provided in “3. Significant
Accounting Policies (13) Employee benefits 2) Post-employment benefits” in the notes to theconsolidated financial statements.

181

4.

Allowance for losses on business transfer(1) Amount recorded in the financial statements for the current fiscal year
Allowance for losses on business transfer

133,565 million yen(2) Other information that contributes to understanding of users of the financial statements
In order to reserve for a loss expected to be incurred in connection with a transfer of the anti-vibration
rubber business and the chemical products solutions business to a wholly-owned subsidiary of theCompany through an absorption-type demerger (simplified absorption-type demerger) and a transfer ofshares of the wholly-owned subsidiary, the amount expected to be incurred in the future was recorded
for such losses that can be reasonably estimated at the end of the current fiscal year.
Note that any unpredictable change in the external environment and other factors may materially affectthe amount of losses on business transfer to be recognized in the financial statements of the subsequentfiscal year.
5.

Valuation of investments in subsidiaries and associates and investments in subsidiaries and associates, otherthan stock(1) Amount recorded in the financial statements for the current fiscal year
Investments in subsidiaries and associates and investments in subsidiaries and associates, other thanstock whose market value is deemed extremely difficult to determine was 839,150 million yen.
(2) Other information that contributes to understanding of users of the financial statements
For investments in subsidiaries and associates and investments in subsidiaries and associates, other thanstock whose market value is deemed extremely difficult to determine, the Company’s policy is tocompare the carrying amount of investments to the actual value based on the net asset amount of eachcompany, and recognize an impairment loss when the actual value declines by 50% or more compared tothe carrying amount of investments. Note that in cases where any change in the external environmentand other factors materially affects the actual value, this may also affect valuation of investments in
subsidiaries and associates and investments in subsidiaries and associates, other than stock for thesubsequent fiscal year.

(Changes in presentations)(Application of “Accounting Standard for Disclosure of Accounting Estimates”)
The Company has applied the “Accounting Standard for Disclosure of Accounting Estimates” (AccountingStandards Board of Japan Statement No. 31, March 31, 2020)” from the current fiscal year, and provided
notes on significant accounting estimates.
However, the details of the previous fiscal year are not stated in the notes in accordance with the transitional
treatment provided for in the proviso to paragraph (11) of said accounting standard.
(Non-consolidated statement of profit or loss)
In the previous fiscal year, “Removal and disassembly expense” and “Loss on retirement of fixed assets”
were included in “Other” in the “Non-operating Expenses” section. During the current fiscal year, theamounts have become material and such amounts are disclosed separately. The non-consolidated financial
statements of the previous fiscal year have been reclassified to reflect these change in presentation.
As a result, 6,482 million yen presented as “Other” in the “Non-operating Expenses” section in the nonconsolidated statement of profit or loss for the previous fiscal year has been restated as 864 million yen in“Removal and disassembly expense,” 1,215 million yen in “Loss on retirement of fixed assets” and 4,403
million yen in “Other”.

182

(Additional information)
1.

Repayment of capital from a subsidiary
In December 2021, the Company received 34,214 million yen from BRIDGESTONE AMERICAS, INC.,
the Company’s subsidiary, as repayment of capital associated with sale of the roofing business. For tax
purposes, the transaction is to be accounted for by recognizing deductible expenses as loss on transfer ofshares, while the Company’s investments in subsidiaries and associates are reduced by the same amount foraccounting purposes. The Company excluded some deductible expenses to calculate its taxable income withrespect to this matter which gives rise to some uncertain tax treatments under the Japan’s tax law. The
Company had engaged third-party legal, tax professionals, etc. to consider plausible tax treatments andestimate reasonably its taxable income considering various scenarios and assumptions. As a result, althoughincome taxes – deferred would be 91,100 million yen lower on the basis of lower income taxes payable andhigher deferred tax assets if all the deductible expenses were included in calculate taxable income, theCompany has lowered its deferred tax assets by 60,000 million yen and increased its income taxes – deferredby the same amount, relative to amounts under the aforementioned treatment.

2.

Impact of the COVID-19
The impact of COVID-19 is considered when estimating and making judgments concerning impairment ofproperty, plant and equipment, intangible assets and recoverability of deferred tax assets. Regarding theimpact of COVID-19, the Company considers the recovery of market demand and changes in the market
environment and makes individual estimates on the impact. However, it is assumed that the direct impact of
COVID-19 will continue into the subsequent fiscal year.

183

(Non-consolidated balance sheet)*1 Monetary receivables from and payables to subsidiaries and associates(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Short-term monetary receivables

246,697298,794

Long-term monetary receivables

84,68186,893

Short-term monetary payables

68,36273,5182 Guarantees(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)(1) Guarantees on commercial papers
issued by BRIDGESTONEEUROPE NV/SA(2) Guarantees on bank borrowings of
employees in consolidated subsidiary(1) Guarantees on commercial papers
53,82725(mortgages), etc.
(3) Guarantees on borrowings andaccounts payable of
BRIDGESTONE HUIZHOU

issued by BRIDGESTONEEUROPE NV/SA(2) Guarantees on bank borrowings of
employees in consolidated subsidiary21(mortgages), etc.
(3) Guarantees on borrowings and
938

SYNTHETIC RUBBER CO., LTD.
Total

40,980accounts payable of
BRIDGESTONE HUIZHOU–SYNTHETIC RUBBER CO., LTD.
54,790Total

41,0013 Balance of trade notes (without letter of credit) discounted(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)
157

184

129

(Non-consolidated statement of profit or loss)*1 Transactions with subsidiaries and associates(Yen in millions)
Previous Year
(Year ended December 31, 2020)
Net sales
Purchases, etc.
Transactions other thanoperating transactions

Current Year
(Year ended December 31, 2021)

507,800
194,762

637,949
252,685

56,782

214,233*2 Selling, general and administrative expenses
Major items and amounts are as follows:(Yen in millions)
Previous Year
(Year ended December 31, 2020)

Current Year
(Year ended December 31, 2021)

Freight

45,27975,859Retirement benefit expenses
Depreciation

895
3,579

924
4,038

Research and development
expenses

61,10963,916In the previous fiscal year, selling expenses accounted for approximately 40% of selling, general andadministrative expenses, and in the current fiscal year, selling expenses again accounted for approximately
40%.
*3 Impairment losses
Previous Year (Year ended December 31, 2020)
The Company classifies the assets it uses for its business based on the categories used within the Company
to manage those assets. Assets to be disposed of (assets that are scheduled to be scrapped, sold off, etc.) andidle assets are grouped by property.
In fiscal year 2020, the carrying amount of business-use assets whose profitability decreased and assets to bedisposed of which are scheduled to be scrapped or sold off were reduced to recoverable amounts. Those
reductions were recognized as an impairment loss of 1,396 million yen under Extraordinary Losses.
A breakdown of that impairment loss is: 850 million yen for construction in progress; 426 million yen formachinery and equipment; 79 million yen for tools, furniture and fixtures; 28 million yen for vehicles andcarriers; and 14 million yen for buildings and structures.
(Yen in millions)PurposeType of assets

Locations

Assets used in thecourse of business

Machinery and equipment; Construction in progress;

Tamana, Kumamoto; andand some others

othersConstruction in progress

Hikone, Shiga

operations
Assets to bedisposed ofAmount848

548

The recoverable amounts for business-use assets were primarily estimated based on their value-in-use. Theirfuture cash flow was calculated at a discount rate of 6.5%. Of the assets to be disposed of, the recoverable
amount for assets to be sold off was measured based on their net selling price. The recoverable amount for
assets to be scrapped was evaluated based on their memorandum value.

185

Current Year (Year ended December 31, 2021)
The Company classifies the assets it uses for its business based on the categories used within the Company
to manage those assets. Assets to be disposed of (assets that are scheduled to be scrapped, sold off, etc.) andidle assets are grouped by property.
In fiscal year 2021, the carrying amount of business-use assets whose profitability decreased and assets to bedisposed of which are scheduled to be scrapped or sold off were reduced to recoverable amounts. Those
reductions were recognized as an impairment loss of 2,025 million yen and a loss on business transfer of 545
million yen, totaling 2,570 million yen.
A breakdown of that impairment loss is: 1,619 million yen for machinery and equipment; 343 million yen
for buildings and structures; 214 million yen for tools, furniture and fixtures; 209 million yen for
construction in progress; and 185 million yen for others.
(Yen in millions)PurposeType of assets

Locations

Assets used in thecourse of business
operations
Assets to be

Totsuka, Yokohama; andMachinery and equipment; and some others

othersTotsuka, Yokohama;
Kodaira, Tokyo; andMachinery and equipment; and some others

disposed ofAmount

1,551

1,020

others

The recoverable amounts for business-use assets were primarily estimated based on their value-in-use andmemorandum value. Future cash flows in measurement of the value-in-use were calculated using thediscount rate of 7.0%. Of the assets to be disposed of, the recoverable amount for assets to be sold off wasmeasured based on their net selling price. The recoverable amount for assets to be scrapped was evaluatedbased on their memorandum value.
*4 Loss on business transfer
Current Year (Year ended December 31, 2021)
Based on the decision to transfer the anti-vibration rubber business and the chemical products solutions
business, the related following expenses were recorded.
(Yen in millions)
Anti-vibration rubber business
Provision of allowance for losses on
business transfer
Loss on valuation of shares ofsubsidiaries and associates
Impairment losses
Other
Total

Chemical products solutions business

105,762

27,803

2,586

1,675

545

–

1,572

1,130

110,465

30,609*5 Loss on business of subsidiaries and associates
Previous Year (Year ended December 31, 2020)
Taking into consideration the financial condition of certain subsidiaries and associates, related losses havebeen recorded.

186

Current Year (Year ended December 31, 2021)
Taking into consideration the financial condition of certain subsidiaries and associates, related losses havebeen recorded.
(Tax effect accounting)1

Major components of deferred tax assets and liabilities(Yen in millions)
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

15,132

14,621

51,276

14,98812,252
5,471

11,944
5,357––

21,541
6,189

Deferred tax assets
Accrued pension and liability
for retirement benefits
Investments in subsidiaries and associates (Note 1)
Depreciable assets (Note 1)
Accrued expenses
Allowance for losses on business transfer (Note 1)
Unused tax losses carryforward (Note 2)

11,484

13,815

Deferred tax assets subtotal
Valuation allowance

95,615(55,061)

88,456(19,786)

Total deferred tax assets

40,554

68,670(11,654)(14,024)(4,426)–(13,463)(18,221)

Other

Deferred tax liabilities
Reserve for advanced depreciation of fixed assets
Reserve for special account for advanced
depreciation of fixed assets
Net unrealized gain on available-for-sale securities

(291)

(806)

Total deferred tax liabilities(29,834)(33,051)

Deferred tax assets, net

10,72035,620

Other(Note 1)This includes deferred tax assets associated to loss on business transfer recorded in the current
fiscal year, which consist of the anti-vibration rubber business of 18,171 million yen and thechemical products solutions business of 5,362 million yen.

(Note 2)In the current fiscal year, the result of reasonably estimating tax deductible expenses arising fromrepayment of capital from BRIDGESTONE AMERICAS, INC. was taken into consideration.
For details, please refer to “(Additional information) 1. Repayment of capital from a subsidiary”.

187

2

Reconciliation of the statutory effective tax rate and the effective income tax rates after adjustments for tax
effect accounting
Previous Year(As of December 31, 2020)

Current Year(As of December 31, 2021)

Statutory effective tax rate

30.6%

30.6%

(Adjustments)
Items not categorized as temporary differences(9.2)(40.2)

Valuation allowance
Tax credits for experiment and research expenses

3.8
(3.5)

(3.0)
–

Repayment of capital from a subsidiary (Note 1)
Loss on business transfer (Note 2)––(22.3)
13.9

Other

(2.2)

0.8

Effective income tax rates after adjustments for tax
effect accounting

19.5(20.2)(Note 1)This is due to the repayment of capital from BRIDGESTONE AMERICAS, INC.

(Note 2)This is due to losses on the transfer of the anti-vibration rubber business and the chemical products
solutions business.

(Significant subsequent events)
Acquisition of treasury stock
The Company has resolved to acquire its treasury stock at the Board of Directors meeting held on February 15,2022, as per the provisions of Article 156 of the Companies Act as applied by replacing certain terms under theprovisions of Article 165, paragraph (3) of the same Act.
(1) Reason of acquisition of treasury stock

As an agile management for improving capital efficiency(2) Kind of shares to acquire

Common stock of the Company(3) Total number of shares to acquire

25 million shares (up to)(% of issued shares (not including treasury stock): 3.5%)(4) Total acquisition cost

100.0 billion yen (up to)(5) Procedure

Market purchases based on the discretionary dealing contract
regarding acquisition of treasury stock(6) Timing

February 17, 2022 to December 13, 2022

(7) Other

Based on the resolution of the Board of Directors above, theCompany has acquired 1,314,000 shares of its common stocks(acquisition amount of 6.6 billion yen) during a period fromFebruary 21, 2022, through February 28, 2022.

(Other notes)
Presentation of stated amounts
Figures less than one million yen are rounded to the nearest million yen.

1884) Non-consolidated supplementary schedules
Schedule of property, plant and equipment, etc.
(Yen in millions)Category

Property,plant andequipment

Type of assets

Beginningbalance

Increase

Decrease

Depreciation
andamortization

EndingbalanceAccumulated
depreciation

Buildings

90,35322,311

350
(238)

7,588

104,726

199,293

Structures

6,575

2,678

151
(105)

915

8,187

30,697

Machinery andequipment

41,38022,551

1,746(1,619)18,555

43,630672,178

Vehicles and carriers

1,278

407

34
(22)

569

1,082

10,982Tools, furniture andfixtures11,461

12,214431(214)

10,891

12,353

158,662Land

63,462

–

36
(36)

–

63,426–

Construction in progress

31,082

54,79561,079(209)–

24,798–

Total

245,592

114,957

63,827(2,443)38,519258,203

1,071,812

Total

10,879

6,562

206
(127)

2,653

14,582

7,414

Intangible
assets(Note) The figures in parentheses in the “Decrease” column represent the amount of impairment losses recorded,
and are included in the figures outside the parentheses.
Schedule of allowances(Yen in millions)
Account item
Allowance for doubtful accounts
Allowance for losses on business
transfer
Provision for environmental
remediation

Beginning balance

Increase

Decrease

Ending balance

3,349

10,957

1,560

12,746–

133,565–

133,565

259

69

65

263

(2) Details of Major Assets and Liabilities
This information is omitted as the consolidated financial statements are prepared.
(3) Other
Not applicable189VI. Administrative Information on the Company’s SharesBusiness year

From January 1 to December 31

Annual Meeting of
Shareholders

March

Record date

December 31

Record dates for dividendsof surplus

June 30 (Interim dividend)
December 31 (Year-end dividend)

Number of sharesconstituting one unit
Sale or purchase of sharesless than one unit

100 shares

Handling office(Special account)
Sumitomo Mitsui Trust Bank, Limited Stock Transfer Agency Business Planning
Department
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Administrator ofshareholders’ register(Special account)
Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Forwarding office–Handling charge forselling or purchase

The amount separately stipulated as the amount equivalent to share brokerage fees

Method of public notice

The method of public notices of the Company shall be electronic public notices;
provided, however, that if the Company is unable to give an electronic public noticebecause of an accident or any other unavoidable reason, public notices of theCompany may be given in “The Nikkei” newspaper published in Tokyo.
(URL for public notice: https://www.bridgestone.co.jp/)

Special benefits forNoneshareholders(Note) With regard to shares less than one unit held by the shareholder, a shareholder of the Company may not
exercise any rights other than rights provided in each item of Article 189, paragraph (2) of theCompanies Act, and the right to claim that which is set forth in the Company’s Articles of Incorporation(to claim the right to make additional purchase of shares less than one unit).

190

VII. Reference Information on the Company
1. Information on the parent company or equivalent of the Company
The Company does not have a parent company or equivalent.

2. Other reference information
From the beginning of the fiscal year ended December 31, 2021 until the filing date of this securities report,
the Company has filed the following documents.
(1) Annual securities report andappendices, and written
confirmation(The 102nd Fiscal
Period)From January 1, 2020
to December 31, 2020(2) Internal control system
report and appendices(3) Quarterly securities reports
and written confirmations

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
March 26, 2021.
Filed to DirectorGeneral of Kanto Local
Finance Bureau on
March 26, 2021.

(First quarter of the
103rd Fiscal Period)

From January 1, 2021
to March 31, 2021

Filed to DirectorGeneral of Kanto Local
Finance Bureau on May
17, 2021.

(Second quarter ofthe 103rd Fiscal
Period)From April 1, 2021
to June 30, 2021

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
August 10, 2021.

(Third quarter of the
103rd Fiscal Period)

From July 1, 2021
to September 30, 2021

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
November 11, 2021.

(4) Extraordinary securities
reportExtraordinary securities report based on Article
19, paragraph (2), item (xii) of the Cabinet
Office Ordinance on Disclosure of Corporate
Affairs, etc.

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
March 30, 2021.

(5) Extraordinary securities
reportExtraordinary securities report based on Article
19, paragraph (2), item (ix)-2 of the Cabinet
Office Ordinance on Disclosure of Corporate
Affairs, etc.

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
March 31, 2021.

(6) Extraordinary securities
reportExtraordinary securities report based on Article
19, paragraph (2), item (iii) of the Cabinet
Office Ordinance on Disclosure of Corporate
Affairs, etc.

Filed to DirectorGeneral of Kanto Local
Finance Bureau on June15, 2021.

(7) Extraordinary securities
reportExtraordinary securities report based on Article
19, paragraph (2), items (iii), (vii), (xii) and(xix) of the Cabinet Office Ordinance on
Disclosure of Corporate Affairs, etc.

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
December 10, 2021.

(8) Extraordinary securities
reportExtraordinary securities report based on Article
19, paragraph (2), items (iii) and (vii) of the
Cabinet Office Ordinance on Disclosure of
Corporate Affairs, etc.

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
December 10, 2021.

(9) Extraordinary securities
reportExtraordinary securities report based on Article
19, paragraph (2), item (xii) of the Cabinet
Office Ordinance on Disclosure of Corporate
Affairs, etc.

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
December 17, 2021.

191

(10) Securities registration
statement (Disposal oftreasury stock as part ofperformance-based stockcompensation plan) andappendices

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
April 26, 2021 andMarch 23, 2022.

(11) Securities registration
statement (Disposal oftreasury stock as restricted
share-based remuneration)
and appendices

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
January 28, 2022.

(12) Notification for revision of
securities registration
statement

Notification for revision pertaining to thesecurities registration statement filed on April
26, 2021

Filed to DirectorGeneral of Kanto Local
Finance Bureau on May
17, 2021.

(13) Notification for revision of
securities registration
statement

Notification for revision pertaining to thesecurities registration statement filed on April
26, 2021, and the notification for revision of
securities registration statement filed on May
17, 2021

Filed to DirectorGeneral of Kanto Local
Finance Bureau on June15, 2021.

(14) Notification for revision of
securities registration
statement

Notification for revision pertaining to thesecurities registration statement filed on
January 28, 2022

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
February 15, 2022.

(15) Amended shelf registration
statement (Straight bonds)

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
January 8, 2021; March
30, 2021; March 31,
2021; June 15, 2021;
December 10, 2021;
and December 17,
2021.

(16) Share buyback report

Filed to DirectorGeneral of Kanto Local
Finance Bureau on
March 15, 2022.

192

Part II Information About Company Which Provides Guarantee to Reporting Company
Not applicable

193

(TRANSLATION)

INDEPENDENT AUDITOR'S REPORTMarch 23, 2022
To the Board of Directors ofBridgestone Corporation:
Deloitte Touche Tohmatsu LLC
Tokyo office
Designated Engagement Partner,
Certified Public Accountant:
Yasuhiko Haga
Designated Engagement Partner,
Certified Public Accountant:
Takuma Ueki
Designated Engagement Partner,
Certified Public Accountant:
Akiko Fujiharu
Audit of Financial Statements
OpinionPursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited
the consolidated financial statements of Bridgestone Corporation and its consolidated subsidiaries (the "Group")
included in the Financial Information, namely, the consolidated statement of financial position as of December 31,
2021, and the consolidated statement of profit or loss, consolidated statement of comprehensive income,consolidated statement of changes in equity and consolidated statement of cash flows for the fiscal year fromJanuary 1, 2021 to December 31, 2021, and a summary of significant accounting policies and other explanatory
information, and the consolidated supplementary schedules.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as of December 31, 2021, and its consolidated financial performanceand its consolidated cash flows for the year then ended in accordance with International Financial ReportingStandards pursuant to the provisions of Article 93 of the Ordinance on Terminology, Forms and Preparation
Methods of Consolidated Financial Statements.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the provisions of
the Code of Professional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of ouraudit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters.
The accounting for the transfer of the anti-vibration rubber business and the chemical products solutions
business
Key Audit Matter Description
As described in Note 31, "Discontinued Operations," tothe consolidated financial statements, on December 10,
2021, Bridgestone Corporation (the "Company") enteredinto an agreement to transfer its anti-vibration rubber
business to Anhui Zhongding Holding (Group) Co., Ltd.,and concurrently, entered into an agreement to transfer its
chemical products solutions business to Endeavor
United II Investment Business Limited Partnership, a fundwhich is structured, managed and operated by Endeavor
United Co., Ltd.

How the Key Audit Matter Was
Addressed in the Audit
Our audit procedures related to the accounting
treatment of the business transfer included thefollowing, among others:(1) Evaluation of internal controls
Tested the design and operating effectivenessover the Company's internal controls on theaccounting treatment of the business transfer.
Especially, we focused on the following
controls:

In the consolidated statement of profit or loss, from thecontract of transfer of the anti-vibration rubber business,• Controls to assess the economic rationale
the Company recognized a loss on business transfer ofand viability of the business transfers
7,452 million yen, a loss of 97,715 million yen recognized
upon having measured the disposal group consisting of• Controls to review the appropriateness of
discontinued operations at fair value less cost to sell andthe accounting treatment related to estimate
related income tax benefit of 18,372 million yen. From thelosses arising from the business transfers
contract of transfer of the chemical products solutions
and related income tax expensebusiness, the Company recognized a loss on business
transfer of 4,056 million yen, a loss of 44,996 million yen (2) Validation of the accounting treatment of therecognized upon having measured the disposal groupbusiness transfer
consisting of discontinued operations at fair value less costto sell and related income tax benefit of 5,362 million yen,
To evaluate the accounting treatment of theand those were recorded in "profit from discontinued
business transfer, the following procedures
operations".
were performed:
The process to transfer each business will be that theCompany will establish a new wholly-owned subsidiary(the "New Company") to which it transfers the business
operations by carrying out an absorption-type demerger,
then integrating the business operations of the group into
the New Company. In both transfers, the process tocalculate the cost of transferring the target assets andliabilities is complex and involves significant assumptions
and judgments by management because the Company
carves out the target assets and liabilities, and expects toincrease the share capital and extend loans to the New
Company and its consolidated subsidiaries during thetransfer. In addition, the Company engaged external tax
professionals to determine whether loss for tax purposes
against loss on business transfer incurred when executing
the business transfer (applicability of deductible
temporary difference) should be recognized because thetax technical knowledge is required for the judgment.
Therefore, it involves significant assumptions andjudgments by management.

• Inspected relevant supporting documents
including the contracts for the business
transfer and the board of directors' meeting
minutes to understand the outline of thetransactions, and evaluated the economic
rationale of the terms of the transactions
based on the contracts, such as thetransaction prices.
• Assessedtheappropriatenessofmanagement's key assumptions andjudgments related to the likelihoods of theexecutions of the transfers in accordancewith the terms of the contracts from theperspective of legal binding force andobtaining regulatory approval from thesupervisory authorities with the assistanceof our legal specialists.

As the process for calculating the transfer cost is complex
and it involves significant assumptions and judgments bymanagement, and the transaction is quantitatively
material, we identified the accounting for the transfer of
the anti-vibration rubber business and the chemical
products solutions business as a key audit matter.

• Regarding the reasonability of the transfer
cost calculation method, in order toexamine if the transferred assets andliabilities are properly classified andaggregated based on the business transfer
contracts, inspected relevant supporting
documents, inquired of management tounderstand the process to transfer thebusiness to the New Company and assessed
if the transfer cost calculated is appropriate
and in accordance with the applicableaccounting standards through inspecting of
supporting calculations and by performing
independent re-computation as well as
considering other relevant documents.
• Assessedthereasonablenessofmanagement’s key assumptions andjudgments in determining whether loss fortax purposes against loss on business
transfer incurred when executing thebusiness transfer should be recognized withthe assistance of our tax specialists.

The assessment of tax uncertainty associated with the repayment of capital from its consolidated
subsidiary
Key Audit Matter Description
As described in Note 18, "Income Taxes," to theconsolidated financial statements, in December 2021, theCompany
received
34,214 million
yen
from
BRIDGESTONE AMERICAS, INC., the Company's
consolidated subsidiary, as repayment of capital
associated with sale of the roofing business. For tax
purposes, this transaction is to be accounted for byrecognizing deductible expenses as a loss on transfer ofshares.
There are uncertainties with respect to the calculation of
its taxable income as the tax treatment may give rise tosome uncertain tax treatments under Japan's tax law andthe final interpretation according to the tax authorities may
differ from the tax treatment. The Company had engaged
third-party legal, tax professionals and so forth to consider
plausible tax treatments and estimated its taxable income
using either the expected value method or the most likely
amount method considering various scenarios. Therefore,
the accounting estimate involves significant assumptions
and judgments by management.

How the Key Audit Matter Was
Addressed in the Audit
Our audit procedures related to the assessment of
the uncertainty of tax treatment associated with therepayment of capital included the following,among others:(1) Evaluation of internal controls
Tested the design and operating effectivenessover the Company's internal controls on theuncertain
tax
treatment
toensurereasonableness. Especially, we focused on thefollowing controls:• Controls to consider and evaluate plausible
tax treatments.
• Controls to review the reasonableness of the
scenarios considered to assess theuncertainty and the estimation of the impactof the uncertainty.
(2) Assessment of the uncertainty of tax treatment
To evaluate the reasonableness with respect tothe uncertain tax treatment arising from therepayment of capital, we performed thefollowing procedures:

Although income tax expense would be 91,100 million
yen lower on the basis of lower income taxes payable andhigher deferred tax assets if all the deductible expenses
were included in calculating taxable income, the Company
excluded some deductible expenses to calculate its taxable
income for accounting purposes. In its consolidated
statements of financial position and profit or loss, theCompany has lowered its deferred tax assets by
60,000 million yen and increased its income tax expense
by the same amount, relative to amounts under the
aforementioned treatment.
As the estimation of the impact of the uncertainty involves
significant assumptions and judgments by management
and the amount is quantitatively material, we identified theassessment of tax uncertainty associated with therepayment of capital from its consolidated subsidiary as a
key audit matter.

• Assessed the Company's compliance withthe tax laws and regulations related toplausible tax treatments with the assistanceof our legal and tax specialists.
• Assessedthereasonablenessofmanagement’s key assumptions andjudgments relating to the tax scenarios andthe estimation of monetary impact arisingfrom the uncertain tax treatment withrespect to the interpretation of the tax laws
and regulations with the assistance of ourlegal and tax specialists.
• Evaluated the accuracy of the calculation
methodology and the calculation result withregards to the calculation of taxable incomeof the expected scenarios in accordancewith the interpretation of the tax laws andregulations with the assistance of our tax
specialists.

Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with International Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern in accordance with
International Financial Reporting Standards.
The Audit Committee is responsible for overseeing the Officers and Directors' execution of duties relating to thedesign and operating effectiveness of the controls over the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes
our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis ofthese consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks. The procedures selected dependon the auditor's judgment. In addition, we obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are inaccordance with International Financial Reporting Standards, as well as the overall presentation, structure andcontent of the consolidated financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with it all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicatedin our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Audit of Internal Control
OpinionPursuant to the second paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited
management's report on internal control over financial reporting of Bridgestone Corporation as of December 31,
2021.
In our opinion, management's report on internal control over financial reporting referred to above, which
represents that the internal control over financial reporting of Bridgestone Corporation as of December 31, 2021,
is effectively maintained, presents fairly, in all material respects, the results of the assessment of internal control
over financial reporting in accordance with assessment standards for internal control over financial reporting
generally accepted in Japan.
Basis for Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial
reporting generally accepted in Japan. Our responsibilities under those standards are further described in the
Auditor's Responsibilities for the Internal Control Audit section of our report. We are independent of the Group inaccordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our other ethicalresponsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

Responsibility of Management and the Audit Committee for Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and forthe preparation and fair presentation of its report on internal control in accordance with assessment standards forinternal control over financial reporting generally accepted in Japan. The Audit Committee is responsible foroverseeing and verifying the design and operating effectiveness of internal control over financial reporting. Thereis a possibility that misstatements may not be completely prevented or detected by internal control over financial
reporting.
Auditor's Responsibilities for the Internal Control Audit
Our objectives are to obtain reasonable assurance about whether management's report on internal control overfinancial reporting is free from material misstatement and to issue an auditor's report that includes our opinion.
As part of an audit in accordance with auditing standards for internal control over financial reporting generally
accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit.
We also:• Perform audit procedures to obtain audit evidence regarding the results of the assessment of internal control
over financial reporting in management's report on internal control. The procedures selected depend on theauditor's judgment, including the significance of effects on reliability of financial reporting.
• Examine representations on the scope, procedures and results of the assessment of internal control over financial
reporting made by management, as well as evaluating the overall presentation of management's report oninternal control.
• Obtain sufficient appropriate audit evidence regarding the results of the assessment of internal control overfinancial reporting. We are responsible for the direction, supervision and performance of the internal control
audit. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of theinternal control audit, result of the internal control audit, including any identified material weakness which should
be disclosed and the result of remediation.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with it all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Notes to the Readers of Independent Auditor's Report
This is an English translation of the independent auditor's report as required by the Financial Instruments andExchange Act of Japan for the conveniences of the reader.

(TRANSLATION)
INDEPENDENT AUDITOR'S REPORTMarch 23, 2022
To the Board of Directors ofBridgestone Corporation:
Deloitte Touche Tohmatsu LLC
Tokyo office
Designated Engagement Partner,
Certified Public Accountant:
Yasuhiko Haga
Designated Engagement Partner,
Certified Public Accountant:
Takuma Ueki
Designated Engagement Partner,
Certified Public Accountant:
Akiko Fujiharu
OpinionPursuant to the first paragraph of Article 193 2 of the Financial Instruments and Exchange Act, we have audited
the non-consolidated financial statements of Bridgestone Corporation (the "Company") included in the Financial
Section, namely, the non-consolidated balance sheet as of December 31, 2021, and the non-consolidated statementof profit or loss and non-consolidated statement of changes in equity for the 103rd fiscal year from January 1,
2021 to December 31, 2021, and a summary of significant accounting policies and other explanatory information,and the supplementary schedules.
In our opinion, the accompanying non-consolidated financial statements present fairly, in all material respects, thefinancial position of the Company as of December 31, 2021, and its financial performance and for the year thenended in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the Non-consolidated
Financial Statements section of our report. We are independent of the Company in accordance with the provisionsof the Code of Professional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the non-consolidated financial statements of the current period. These matters were addressed in the context of
our audit of the non-consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.

The accounting for the transfer of the anti-vibration rubber business and the chemical products solutions
business
Key Audit Matter Description

How the Key Audit Matter Was
Addressed in the Audit

As described in "Notes to the non-consolidated Our audit procedures related to the accounting treatment ofstatement of profit or loss" to the the business transfer included the following, among others:
non-consolidated financial statements, on
December 10, 2021, the Company entered into an (1) Evaluation of internal controls
agreement to transfer its anti-vibration rubber
business to Anhui Zhongding Holding (Group)
Tested the design and operating effectiveness over theCo., Ltd., and concurrently, entered into an
Company's internal controls on the accounting
agreement to transfer its chemical products
treatment of the business transfer. Especially, we
solutions business to Endeavor United II
focused on the following controls:
Investment Business Limited Partnership, a fundwhich is structured, managed, and operated by• Controls to assess the economic rationale andEndeavor United Co., Ltd.
viability of the business transfers
In the non-consolidated statement of profit or• Controls to review the appropriateness of theloss, the Company recognized a loss on businessaccounting treatment related to estimate losses
transfer of 110,465 million yen from the transfer
arising from the business transfers and relatedof the anti-vibration rubber business,
income taxes
30,609 million yen from the transfer of thechemical products solutions business in the loss (2) Validation of the accounting treatment of the businesson business transfer in extraordinary loss. Also,transfer
the Company recognized the income tax
benefit—deferred of 18,171 million yen from theTo validate the accounting treatment of the businessloss on business transfer of the anti-vibrationtransfer, the following procedures were performed:
rubber business, and 5,362 million yen from theloss on business transfer of the chemical products• Inspected relevant supporting documents including
solutions business.
the contracts for the business transfer and the boardof directors' meeting minutes to understand the
The process to transfer each business will be thatoutline of the transactions, and evaluated thethe Company will establish a new wholly-owned
economic rationale of the terms of the transactions
subsidiary (the "New Company") to which it
based on the contracts, such as the transaction prices.
transfers the business operations by carrying out
an absorption-type demerger, then integrating the• Assessed the appropriateness of management's key
business operations of the group into the New
assumptions and judgments related to theCompany. In both transfers, the process tolikelihoods of the executions of the transfers incalculate the allowance for losses on businessaccordance with the terms of the contracts from thetransfer based on the cost of transferring theperspective of legal binding force and obtaining
shares of the New Company is complex andregulatory approval from the supervisory authorities
involves significant assumptions and judgmentswith the assistance of our legal specialists.
by management because the Company carves out
the target assets and liabilities, and expects to• Regarding the reasonability of the calculation
increase the share capital and extend loans to themethod of the allowance for losses on business
New Company and its consolidated subsidiaries
transfer, in order to examine if the transferred assets
during the transfer. In addition, the Company
and liabilities are properly classified and aggregatedengaged external tax professionals to determine
based on the business transfer contracts, inspected
whether loss for tax purposes against loss on
relevant supporting documents, inquired ofbusiness transfer incurred when executing themanagement to understand the process to transfer
business transfer (applicability of deductible
the business to the New Company and assessed if thetemporary difference) should be recognizedtransfer cost calculated is appropriate and in
because the tax technical knowledge is required
accordance with the applicable accounting standards
for the judgment. Therefore, it involves
through inspecting of supporting calculations and bysignificant assumptions and judgments byperforming independent re-computation as well as
management.
considering other relevant documents.

As the process for calculating the transfer cost iscomplex and it involves significant assumptions
and judgments by management, and thetransaction is quantitatively material, we
identified the accounting for the transfer of theanti-vibration rubber business and the chemical
products solutions business as a key audit matter.

• Assessed the reasonableness of management’s key
assumptions and judgments in determining whether
loss for tax purposes against loss on business transfer
incurred when executing the business transfer should
be recognized with the assistance of our tax
specialists.

The estimation of the tax treatment associated with the repayment of capital from its subsidiary
Key Audit Matter Description
As described in "Additional information" to thenon-consolidated financial statements, in
December 2021, the Company received
34,214 million yen from BRIDGESTONEAMERICAS, INC., the Company's consolidated
subsidiary, as repayment of capital associatedwith sale of the roofing business. For tax
purposes, this transaction is to be accounted forby recognizing deductible expenses as a loss ontransfer of shares.

How the Key Audit Matter Was
Addressed in the Audit
Our audit procedures related to the estimation of the tax
treatment associated with the repayment of capital included
the following, among others:(1) Evaluation of internal controls
Tested the design and operating effectiveness over theCompany's internal controls on the estimation of the
tax treatment to ensure reasonableness. Especially, we
focused on the following controls:

There are uncertainties with respect to the• Controls to consider and evaluate plausible tax
calculation of its taxable income as the final
treatments.
interpretation according to the tax authorities may
differ from the tax treatment. The Company• Controls to review the reasonableness of theengaged third-party legal, tax professionals andscenarios considered to assess the estimate ofso forth to consider plausible tax treatments andtaxable income.
various scenarios. Therefore, the accounting
estimate involves significant assumptions and (2) Assessment of the estimate of the tax treatment
judgments by management.
To evaluate the reasonableness with respect to the
Although income tax benefit—deferred would be
estimate of the tax treatment arising from the91,100 million yen lower on the basis of lower
repayment of capital, we performed the following
income taxes payable and higher deferred tax
procedures:assets if all the deductible expenses were included
in calculating taxable income, the Company• Assessed the Company's compliance with the tax
excluded some deductible expenses to calculate
laws and regulations related to plausible tax
its taxable income for accounting purposes. In its
treatments with the assistance of our legal and tax
non-consolidated balance sheet and statement ofspecialists.
profit or loss, the Company has lowered its
deferred tax assets by 60,000 million yen and• Assessed the reasonableness of management’s key
increased its income tax benefit—deferred by theassumptions and judgments relating to the tax
same amount, relative to amounts under the
scenarios and the estimation of monetary impact
aforementioned treatment.
arising from the estimate of the taxable income withrespect to the interpretation of the tax laws andAs the accounting estimate involves significant
regulations with the assistance of our legal and tax
assumptions and judgments by management andspecialists.
the amount is quantitatively material, we
identified the estimation of the tax treatment• Evaluated the accuracy of the calculation
associated with the repayment of capital from its
methodology and the calculation result with regards
subsidiary as a key audit matter.
to the calculation of taxable income of the expectedscenarios in accordance with the interpretation of the
tax laws and regulations with the assistance of our
tax specialists.

Responsibilities of Management and the Audit Committee for the Non-consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the non-consolidated financial statementsin accordance with accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of non-consolidated financial statements that are free frommaterial misstatement, whether due to fraud or error.
In preparing the non-consolidated financial statements, management is responsible for assessing the Company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordancewith accounting principles generally accepted in Japan.
The Audit Committee is responsible for overseeing the Officers and Directors' execution of duties relating to thedesign and operating effectiveness of the controls over the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Non-consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the non-consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually orin the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basisof these non-consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the non-consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks. The procedures selected dependon the auditor's judgment. In addition, we obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company's ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
non-consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate whether the overall presentation and disclosures of the non-consolidated financial statements are inaccordance with accounting principles generally accepted in Japan, as well as the overall presentation, structure
and content of the non-consolidated financial statements, including the disclosures, and whether the
non-consolidated financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with it all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of most significancein the audit of the non-consolidated financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matteror when, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefitsof such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Notes to the Readers of Independent Auditor's Report
This is an English translation of the independent auditor's report as required by the Financial Instruments andExchange Act of Japan for the conveniences of the reader.

Cover[Document Submitted][Article of the Applicable Law Requiring
Submission of This Document][Filed to][Date of Submission][Company Name][Company Name (in English)][Position and Name of Representative][Position and Name of Chief Financial
Officer][Location of Head Office][Place Where Available for Public
Inspection]

Internal Control System Report
Article 24-4-4, paragraph (1) of the Financial Instruments andExchange Act
Director of the Kanto Local Finance Bureau
March 23, 2022
Bridgestone Corporation
BRIDGESTONE CORPORATION
Shuichi Ishibashi
Member of the Board
Global CEO and Representative Executive Officer
Masuo Yoshimatsu
Senior Vice President and Executive Officer
Global CFO
3-1-1 Kyobashi, Chuo-ku, Tokyo
Tokyo Stock Exchange, Inc.
(2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Fukuoka Stock Exchange(2-14-2 Tenjin, Chuo-ku, Fukuoka)

1 Basic Framework of Internal Control over Financial Reporting
Member of the Board, Global CEO and Representative Executive Officer Shuichi Ishibashi, as well as SeniorVice President and Executive Officer, Global CFO Masuo Yoshimatsu are responsible for designing andoperating the Company’s internal control over financial reporting. They design and operate internal control
over financial reporting in accordance with the basic framework of internal control presented in “On the Settingof the Standards and Practice Standards for Management Assessment and Audit concerning Internal Control
Over Financial Reporting (Council Opinions)” issued by the Business Accounting Council.
Internal control achieves its objectives to a reasonable extent given that all individual components of internal
control are integrated and function as a whole. Therefore, internal control over financial reporting may not fully
prevent or detect misstatements.

2 Scope of Assessment, Assessment Date and Assessment Procedure
Assessment of internal control over financial reporting was carried out as of December 31, 2021, which is the
final day of the Company’ fiscal year, in accordance with generally accepted assessment standards for internal
control over financial reporting.
In this assessment, the business processes to be assessed are selected after an assessment of internal control thathas a significant impact on overall financial reporting on a consolidated basis (company-level internal control)
is carried out, and in consideration of the results of the said assessment. In assessing the said businessprocesses, an assessment of the effectiveness of internal control is conducted by identifying the key controlsthat would have a material impact on the reliability of financial reporting after analyzing the selected businessprocesses and by assessing the status of design and operation of the said key controls.
The scope of assessment of internal control over financial reporting is determined to be the scope that isnecessary from the viewpoint of materiality of the impact on the reliability of financial reporting regarding theCompany, its consolidated subsidiaries and its equity-method affiliates. The materiality of the impact on thereliability of financial reporting is determined in consideration of the materiality of quantitative and qualitative
impacts. The scope of assessment of business process-level internal control is determined reasonably in light of
the results of an assessment of company-level internal control carried out with respect to all business locations
excluding immaterial locations.
To determine the scope of assessment of business process-level internal control, “significant business locations”
are selected. They are composed of business locations whose revenue (before elimination of intra-grouptransactions) reaches approximately two thirds of the revenue in the previous fiscal year, as well as otherqualitatively significant business locations. At the selected significant business locations, business processes
leading to revenue, accounts receivable and inventories which are deemed as accounting items that are closely
associated with a company’s business purpose, are included in the scope of the assessment. In addition, thescope of assessment includes other business locations as well as selected significant business locations withrespect to certain business processes. Specifically, business processes that have a high risk of misstatement andrelate to significant accounting items involving estimates and forecasts, and business processes relating to abusiness or operation dealing with high-risk transactions, are added to the scope of assessment as businessprocesses with substantial significance in terms of effects on financial reporting, regardless of whether theyoccur at selected significant business locations.

3 Assessment Result
As a result of the above assessment, we judge that the Company’s internal control over its financial reporting iseffective as of the end of the current fiscal year.

4 Additional Matters
Not applicable.

5 Significant Matters
Not applicable.

Cover[Document Submitted][Article of the Applicable Law Requiring
Submission of This Document][Filed to][Date of Submission][Company Name][Company Name (in English)][Position and Name of Representative][Position and Name of Chief Financial
Officer][Location of Head Office][Place Where Available for Public
Inspection]

Written Confirmation
Article 24-4-2, paragraph (1) of the Financial Instruments andExchange Act
Director of the Kanto Local Finance Bureau
March 23, 2022
Bridgestone Corporation
BRIDGESTONE CORPORATION
Shuichi Ishibashi
Member of the Board
Global CEO and Representative Executive Officer
Masuo Yoshimatsu
Senior Vice President and Executive Officer
Global CFO
3-1-1 Kyobashi, Chuo-ku, Tokyo
Tokyo Stock Exchange, Inc.
(2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Fukuoka Stock Exchange(2-14-2 Tenjin, Chuo-ku, Fukuoka)

1 Appropriateness of Descriptions in Annual Securities Report
Member of the Board, Global CEO and Representative Executive Officer Shuichi Ishibashi, as well as SeniorVice President and Executive Officer, Global CFO Masuo Yoshimatsu have confirmed that this Annual
Securities Report for the 103rd fiscal year (January 1, 2021 through December 31, 2021) is reasonably andfairly stated in accordance with the Financial Instruments and Exchange Act.

2 Significant Matters
There are no significant matters to report.