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13.5. Changes in financial statements 13.5.1. Balance sheet Strategy • Fundamentals • Businesses • Résultats Earnings Notes to the Consolidated Financial Statements (in € thousand) Defined Other Total Total Benefit Defined Benefit 2004 2003 pension pension plans plans (including medical care) At January 1, 2004 136,306 1,666,626 1,802,932 2,213,854 Exchange rate variations 22,736 (67,202) (44,466) (166,626) Charges recognized for the year 158,001 172,833 330,834 347,440 Contributions paid to fund managers (205,748) – (205,748) (128,502) Benefits directly paid to beneficiaries (18,200) (138,147) (156,347) (209,613) Variation of scope of consolidation (41) (379) (420) 23,350 Benefit plan changes recorded as exceptional gain 1,876 – 1,876 (276,971) At December 31, 2004 94,930 1,633,731 1,728,661 1,802,932 Annual charges are determined by independent actuaries at the start of the financial year, as follows: • charges corresponding to acquisition of an additional year of rights (“Cost of services rendered during the financial year”), • charge corresponding to annual discount (“Financial cost”), • income from estimated return on assets (“Expected return from plan assets”), • gain/loss from changes in plan services (“Cost of passed services”), • gain/loss from any reduction or liquidation of plan. 13.5.2. Consolidated statement of income In 2004, net charges recorded in the consolidated statement of income amounted to €348.5 million, breaking down as follows (based on the average rate for the period): Net charges recorded in the consolidated statement of income 2004 2003 Cost of service 154,197 178,130 Interest Costs 418,679 440,462 Expected asset return (291,709) (275,474) Actuarial gain/loss generated in the year 74,205 53,970 Cost of past services (10,360) (2,269) Effect of reductions or liquidations of benefit plans 1,527 (27,032) Sub-total recorded under payroll costs 346,539 367,787 Plan changes recognized as exceptional gain 2,004 (306,570) Total 348,543 61,217 13.6. Share Option Plans Share Option Plan Situation as at December 31, 2004: Date Number of options call Allocation Call Expiry Allocated called cancelled balance price in euros May 2002 May 2006 May 2011 716,600 0 17,100 699,500 44.00 May 2003 May 2007 May 2012 243,000 0 4,200 238,800 32.25 Nov. 2003 Nov. 2007 Nov. 2012 226,200 0 2,000 224,200 34.00 May 2004 May 2008 May 2013 179,900 0 0 179,900 40.00 July 2004 July 2008 July 2013 129,100 0 1,200 127,900 44.50 88•89
14. Subordinated debt and other long and short-term debt (in € thousand) At Dec. 31, 2004 Due within Due in Due in more At Dec. one year 1 to 5 than five 31, 2003 years years Subordinated debt 500,000 – – 500,000 500,000 Other long and short-term debt: 500,000 – – 500,000 500,000 Other long and short-term debt: - Convertible bonds 1,824,919 70,021 1,254,898 500,000 1,890,161 - Trade receivable securitizations (note 7) 675,066 675,066 – – 788,976 - Lease purchases 246,020 57,908 107,707 80,405 257,286 - Other long and short-term debt 1,632,718 1,202,027 408,491 22,200 1,777,095 Subtotal, other long and short-term debt 4,378,723 2,005,022 1,771,096 602,605 4,713,518 Total 4,878,723 2,005,022 1,771,096 1,102,605 5,213,518 Debt secured by collateral at December 31, 2004 excluding lease purchases and trade receivable securitizations: 76,594 Subordinated debt On December 3, 2003, the Group made a 30-year €500 million last-ranking subordinated issue (TSDR – Titres Subordonnés de Dernier Rang), callable from December 3, 2013 at the Group’s sole discretion, at par and in cash, in quarterly payments. Initially fixed at 6.375%, the coupon will be calculated from December 3, 2013, based on 3-month Euribor plus 2.95%. Where no Compagnie Générale des Etablissements <strong>Michelin</strong> dividend distributions or prepayments are made, the TSDRs provide for a differed coupon payment option. Bond issue In April 2002, the Group launched a bond issue in two tranches: • €1 billion tranche with a 6.125% coupon, maturing in April 2009, • €500 million tranche with a 6.5% coupon, maturing in April 2012. In November 2004, the Group bought up and cancelled an €50 million block from the bond tranche due to mature in April 2009. Net debt at December 31, 2004 breaks down as follows (in € thousand): - Subordinated debt 500,000 - Long and short-term debt 4,378,723 - Cash equivalents and other short-term investments (235,258) - Cash (1,420,140) Total 3,223,325
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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
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 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 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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