Michelin couv courteGB

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3.2.2. Impact on the presentation of the statement of income (IAS 1) IAS 1 allows for: • Earnings to be presented by nature or by function; • The structure of the statement of income to be freely split between sales and net interest income (expense). On the other hand, the concepts of operating income and nonrecurring items are not covered by IFRS. So as to maintain the transparency necessary for the assessment of its business activities and to facilitate comparability with its main listed competitors, Michelin made the following choices: • To present the statement of income by function; • To separately identify non-recurring items, with income from operations before and after non-recurring items. However, since the 2004 accounts under French standards were presented by nature, the 2004 earnings reconciliation table has been prepared by nature. The 2005 IFRS statements of income at June 30 and December 31 will be published by function, with comparatives for the corresponding 2004 periods. 4. Reconciliation tables (in millions of euros) 4.1. Reconciliation of Shareholders’ equity at January 1, 2004 Strategy • Fundamentals • Businesses • Résultats Earnings International Financial Accounting Standards Shareholders’ equity French GAAP as Nature of differences Gross amounts Deferred tax Net amounts at December 31, 2003 under IFRS presentation 4,404 Adjustments Employee benefits: Recognition of actuarial gains and losses not recognized at December 31, 2003. (1,577) 422 (1,155) Impairment of assets: – Impairment of Cash Generating Units. – Adjustment of impairment losses (160) 52 (108) previously recognized. 12 – 12 Finance leases: Difference between the amounts recorded as property, plant and equipment and the present value of future lease payments. (69) 27 (42) Change of consolidation method: 3.2.3. Impact on balance sheet presentation (IAS 1) Under IAS 1, the balance sheet presentation must be based on the maturity of assets and liabilities, which will therefore be classified as “current” and “non-current”, depending, generally, on whether they mature in less than one year or more than one year. A number of headings classified as “deferred income and accrued expenses” or “prepaid expenses and accrued income” under French GAAP must, under IFRS, be reclassified under other headings. This is particularly the case with “assets” in respect of employee benefits and deferred tax assets. Moreover, provisions, under IFRS, must in future be classified as long-term liabilities. 3.2.4. Impact on cash flow statement presentation (IAS 7) The main change resulting from the application of IAS 7 concerns the use of the average exchange rate, rather than the closing rate, for the determination of cash flows denominated in euros. This change, and the other changes resulting from the application of IAS 7, are not considered significant for Michelin at December 31, 2004. The tire fitting and repair businesses, held jointly with Continental, are consolidated by the equity method. (12) – (12) Other adjustments (33) (6) (27) IFRS as at January 1, 2004 3,072 98•99
4.2. Reconciliation of 2004 statement of income by nature of income/expense Simplified income statement 2004 Note Simplified income statement under IFRS 2004 under French GAAP Net sales 15,689 1 Net sales 15,048 Operating expenses (14,390) Operating expenses (13,745) Operating income 1,299 2 Operating result before non-recurring items 1,303 Non-recurring items (64) 2 Operating result 1,239 Financial income and expense (213) 3 Net financial income and expense (235) Net non-recurring income and expense (206) Income tax (316) 4 Income tax (331) Other (37) 5 Other (19) Net income 527 Net income 654 Note 1 Reclassifications Restatements TOTAL Net sales under French GAAP 15,689 Sales-related incentive campaigns (390) (390) Proceeds from non-sales activities (251) (251) Net sales under IFRS 15,048 Note 2 Reclassifications Restatements TOTAL Operating income under French GAAP 1,299 Elimination of amortization of actuarial gains and losses 74 74 Impact of finance leases 5 5 Stock-option plan expenses Reclassification and restatement of non-recurring items under French GAAP as recurring operational expenses: (2) (2) - impairment of assets 11 15 26 - restructuring (36) 10 (26) - other non-recurring items (73) (73) Operating income before non-recurring items 1,303 Reclassification and restatement of French Gaap non-recurring income as non-recurring charges - probable capital loss on disposal of Michelin Wheel Businesses (108) 44 (64) Reclassification and restatement of goodwill amortization (35) 35 – Operating result under IFRS 1,239 Note 3 Reclassifications Restatements TOTAL Financial income and expense under French GAAP (213) Charge to reverse the discounting of provisions (10) (10) Interest expense on finance lease liabilities (12) (12) Net financial income and expense under IFRS (235) Note 4 Reclassifications Restatements TOTAL Income tax under French GAAP (316) Adjustments for deferred tax on restatements (15) (15) Income tax under IFRS (331) Note 5 Reclassifications Restatements TOTAL Other under French GAAP (37) Reclassification of goodwill amortization Restatement of the Shareholders’ equity 35 35 of a joint venture pursuant to IFRS application (17) (17) Other under IFRS (19)
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Contents 1 • Michelin, a better w
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Simplified corporate organization c
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China, India, Russia: The Group ope
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The safer the factory, the more eff
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Cut pollution, promote safety: We a
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Message from Edouard Michelin “ i
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Management Managing Partners 1 •
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Audit Supervisory Board* 1 • Eric
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Financial year 2004 Key Figures Eco
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Financial year 2004 Key Figures 399
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Michelin Share Performance 3 rd bes
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Michelin’s Corporate Governance S
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Michelin’s strategy Remain the le
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World tire industry and markets Rep
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World tire industry and markets The
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• Porsche France delivered its fi
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In North America, Michelin and BFGo
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• In the United States, the Miche
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• In an original equipment market
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4,637 4,859 02 03 04 Net sales of O
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Agriculture gained market share in
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• During 2004, all of Viborg’s
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• Used with a GPS antenna, ViaMic
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Strategy ● Michelin is a world-cl
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2004 Group earnings analysis Michel
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Operating Income: year-on-year chan
Page 54 and 55: 4,926 4,881 00 01 02 03 04 Net long
Page 56 and 57: Prospects for 2005 In 2004, in a ch
Page 58 and 59: 2001 2000 1999 1999* 1998* 1997* 19
Page 60 and 61: Strategy • Fundamentals • Busin
Page 62 and 63: The dividends paid for the three pr
Page 66 and 67: • Latest Technology Center innova
Page 68 and 69: segregation of functions and strict
Page 70 and 71: CONSOLIDATED STATEMENTS STATUTORY A
Page 76 and 77: c) Property, plant and equipment Pr
Page 82 and 83: 3.1.2. The second contention arises
Page 84 and 85: 4. Investments Strategy • Fundame
Page 86 and 87: 10. Changes in Shareholders’ equi
Page 88 and 89: The following table presents a reco
Page 90 and 91: 13.3. Summary of the financial situ
Page 92 and 93: 13.4.1. Regional breakdown of the f
Page 94 and 95: 13.5. Changes in financial statemen
Page 98 and 99: 21. Segment information Strategy
Page 102 and 103: Michelin Group used the following o
Page 106 and 107: 4.3. Reconciliation of balance shee
Page 112 and 113: Stock options Since the stock optio
Page 114 and 115: Managing Partners’ special Report
Page 116 and 117: Risk Management Michelin adopts a p
Page 118 and 119: Future cash flows from these long-t
Page 120 and 121: Limited industrial hazards The main
Page 122 and 123: Economic performance target Since 1
Page 124 and 125: Spanish plans, as well as payment o
Page 126 and 127: Fixed-term Contracts In 2004, fixed
Page 128 and 129: up of negotiating groups on sub-con
Page 130 and 131: • provide education and training
Page 132 and 133: 3 - Data recap table 2004 2003 Obse
Page 134: Individual Shareholder Relations An
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