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3.1.2. The second contention arises concerning valuation of seller’s receivables on the Viborg companies sold by it to Michelin Group by way of repayment of loans made by Michelin Group to seller. The €87.7 million amount claimed by Michelin Group in this connection takes into account an €40.2 million valuation difference corresponding, in Michelin Group’s opinion, to the amount of the over evaluation of financial debt sold to Michelin Group by seller as repayment of loans granted by Michelin to seller. This over estimation of financial debt, which results in a reduction in the net asset value of the acquired companies, was, at this stage, retained for the determination of the goodwill, a goodwill which was fully amortized in 2003. Notes to the consolidated balance sheet Strategy • Fundamentals • Businesses • Résultats Earnings Notes to the Consolidated Financial Statements The consolidated financial statements 2004 have been prepared in accordance with French generally accepted accounting principles, including standard CRC 99-02 published by Comité de la Réglementation Comptable dealing with consolidated financial statements. 1. Goodwill (in € thousand) Goodwill can be analyzed as follows: 3.2 Status of arbitration proceedings The arbitration court has been appointed and asked to solve the litigation submitted to it. Pursuant to the contractual provisions governing dispute between the parties concerning the acquisition price and the repayment of loans granted by Michelin Group to seller, an independent expert was appointed on February 18, 2004 to determine the amounts object of the above-described differences. The arbitration proceedings are under way and no decision as to the case have so far been rendered by the arbitration court. At this stage, Michelin Group’s accounting positions at December 31, 2003 remain unchanged. Cost Amortization Net book value and allowances Goodwill at January 1, 2003 569,140 (261,780) 307,360 Acquisition of Viborg group 306,549 (306,549) – Other increases 55,352 (29,373) 25,979 Decreases (1,395) 1,395 – Translation adjustments and other (69,039) 39,295 (29,744) Goodwill at December 31, 2003 860,607 (557,012) 303,595 Increases 8,353 (34,302) (25,949) Decreases (308,119) 308,119 – Translation adjustments and other (20,792) 15,183 (5,609) Goodwill at December 31, 2004 540,049 (268,012) 272,037 Downward changes recorded in the period correspond to deconsolidation of fully amortized goodwill. 76•77
2. Intangible assets Intangible assets can be analyzed as follows: (in € thousand) Cost Amortization Net book value and allowances Intangible assets at January 1, 2003 489,477 (354,082) 135,395 Increases 91,990 (52,389) 39,601 Decreases (27,357) 20,463 (6,894) Translation adjustments and other (7,353) 2,435 (4,918) Intangible assets At December 31, 2003 546,757 (383,573) 163,184 Increases 51,528 (58,247) (6,719) Decreases (34,064) 26,262 (7,802) Translation adjustments and other 19,673 (12,926) 6,747 Intangible assets at December 31, 2004 583,894 (428,484) 155,410 The main movements in 2004 concern software. The breakdown by category is as follows: Cost Amortization Net book value and allowances Software 491,751 (346,727) 145,024 Other intangible assets 92,143 (81,757) 10,386 Total 583,894 (428,484) 155,410 3. Property, plant and equipment Property, plant and equipment can be analyzed as follows: (in € thousand) Cost Amortization Net book value and allowances Property, plant and equipment at January 1, 2003 14,626,442 (8,854,285) 5,772,157 Increases 1,025,808 (776,589) 249,219 Change in scope 214,688 (101,971) 112,717 Decreases (690,962) 606,560 (84,402) Translation adjustments and other (903,640) 517,440 (386,200) Property, plant and equipment at December 31, 2003 14,272,336 (8,608,845) 5,663,491 Increases 1,065,253 (741,144) 324,109 Change in scope 21,625 (14,795) 6,830 Decreases (629,064) 542,334 (86,730) Translation adjustments and other (317,002) 179,174 (137,828) Property, plant and equipment at December 31, 2004 (1) 14,413,148 (8,643,276) 5,769,872 Capital expenditure for the year ended December 31, 2004 amounted to €1,065,253 thousand. The breakdown by category is as follows: Cost Amortization Net book value and allowances Land and buildings 3,376,336 (1,681,257) 1,695,079 Plant and equipment 9,073,853 (5,547,967) 3,525,886 Other 1,962,959 (1,414,052) 548,907 Total 14,413,148 (8,643,276) 5,769,872 (1) including assets acquired under finance leases at December 31, 2004 284,873 (86,272) 198,601
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Contents 1 • Michelin, a better w
Page 4 and 5:
Simplified corporate organization c
Page 6 and 7:
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
Page 12 and 13:
Message from Edouard Michelin “ i
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Management Managing Partners 1 •
Page 16 and 17:
Audit Supervisory Board* 1 • Eric
Page 18 and 19:
Financial year 2004 Key Figures Eco
Page 20 and 21:
Financial year 2004 Key Figures 399
Page 22 and 23:
Michelin Share Performance 3 rd bes
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Michelin’s Corporate Governance S
Page 26 and 27:
Michelin’s strategy Remain the le
Page 28 and 29:
World tire industry and markets Rep
Page 30 and 31:
World tire industry and markets The
Page 32 and 33: • Porsche France delivered its fi
Page 34 and 35: In North America, Michelin and BFGo
Page 36 and 37: • In the United States, the Miche
Page 38 and 39: • In an original equipment market
Page 40 and 41: 4,637 4,859 02 03 04 Net sales of O
Page 42 and 43: Agriculture gained market share in
Page 44 and 45: • During 2004, all of Viborg’s
Page 46 and 47: • Used with a GPS antenna, ViaMic
Page 48 and 49: Strategy ● Michelin is a world-cl
Page 50 and 51: 2004 Group earnings analysis Michel
Page 52 and 53: 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 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 104 and 105: 3.2.2. Impact on the presentation 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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