SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2004

Commission File Number: 1-1927

THE GOODYEAR TIRE & RUBBER COMPANY

(330) 796-2121
(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES

The accompanying notes are an integral part of these consolidated financial statements.

- 1 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES

The accompanying notes are an integral part of these consolidated financial statements.

- 2 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES

The accompanying notes are an integral part of these consolidated financial statements.

- 3 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES

The accompanying notes are an integral part of these consolidated financial statements.

- 4 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES

All per share amounts in these Notes to Consolidated Financial Statements are diluted unless otherwise indicated.

NOTE 1. ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2003 of The Goodyear Tire & Rubber Company. Refer to note 1A, Restatement, for further discussion.

     Operating results for the three and nine months ended September 30, 2004 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2004.

Consolidation of Variable Interest Entities

     In January 2003, the Financial Accounting Standards Board (the “FASB”) issued Interpretation No. 46, “Consolidation of Variable Interest Entities – an Interpretation of ARB No. 51,” as amended by FASB Interpretation No. 46 (revised December 2003) (collectively, “FIN 46”). FIN 46 requires companies to consolidate, at fair value, the assets, liabilities and results of operations of variable interest entities (VIEs) in which the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties or in which they hold a controlling financial interest through means other than the majority ownership of voting equity. Controlling financial interests typically are present when a company either 1) has the direct or indirect ability to make decisions about the VIE’s activities, 2) holds an obligation to absorb expected losses of a VIE, or 3) is entitled to receive the expected residual returns of a VIE. FIN 46 became effective immediately for all VIEs created after January 31, 2003, and required certain disclosures in financial statements issued after January 31, 2003, about the nature, purpose, size and activities of all VIEs covered by its provisions, and their maximum exposure to loss. FIN 46 also required companies to consolidate VIEs created before February 1, 2003, in financial statements for periods ending after June 15, 2003. During 2003, the FASB delayed the required implementation date of FIN 46 for entities that are not special purpose entities (SPEs) until the first reporting period ending after March 15, 2004.

     The Company applied the provisions of FIN 46, effective July 1, 2003, to those VIEs representing lease-financing arrangements with SPEs. The Company is a party to lease agreements with several unrelated SPEs that are VIEs as defined by FIN 46. The agreements are related to certain North American distribution facilities and certain corporate aircraft. The assets, liabilities and results of operations of these SPEs were consolidated in the third quarter of 2003.

     The Company had evaluated the impact of FIN 46 for entities that are not SPEs and deferred, until the first quarter of 2004, the application of FIN 46 to two previously unconsolidated investments; South Pacific Tyres (SPT), a tire manufacturer, marketer and exporter of tires in Australia and New Zealand, and T&WA, a wheel mounting operation in the United States which ships to original equipment manufacturers. The Company consolidated these investments effective January 1, 2004. This consolidation was treated as a non-cash transaction on the Consolidated Statements of Cash Flows with the exception of approximately $24 million of cash and cash equivalents from SPT and T&WA which is included in other assets and liabilities in the operating activities section of the statement. The consolidation of SPT and T&WA resulted in an increase in total assets of approximately $315 million and total liabilities of approximately $317 million. Net sales for both SPT and T&WA of approximately $315 million and $896 million were included in Goodyear’s total consolidated net sales for the third quarter and first nine months of 2004, respectively. SPT and T&WA both were near break-even for the third quarter of 2004. The net loss for both SPT and T&WA was approximately $1 million for the first nine months of 2004.

- 5 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     In connection with the consolidation of SPT and T&WA during the first quarter of 2004, Goodyear recorded approximately $5 million of goodwill. This increase in goodwill was partially offset by approximately $2 million of translation adjustments. Also, Goodyear’s other intangible asset for a supply agreement with SPT was eliminated upon consolidation of SPT. The supply agreement was recorded at $14.4 million on Goodyear’s Consolidated Balance Sheet at December 31, 2003.

     Goodyear and certain of its subsidiaries guarantee certain debt obligations of SPT and T&WA. Goodyear, Goodyear Australia PTY Limited, a wholly-owned subsidiary of Goodyear, and certain subsidiaries of Goodyear Australia Limited PTY guarantee SPT’s obligations under credit facilities in the amount of $74.0 million. The guarantees are unsecured. The SPT credit facilities are secured by certain subsidiaries of SPT. As of September 30, 2004, the carrying amount of the secured assets of these certain subsidiaries was $213.5 million, consisting primarily of accounts receivable, inventory and fixed assets. Goodyear guarantees an industrial revenue bond obligation of T&WA in the amount of $6.8 million. The guarantee is unsecured.

Restricted Cash

Restricted cash includes insurance proceeds related to Entran II litigation as well as cash deposited in support of trade agreements and performance bonds, and historically has included cash deposited in support of borrowings incurred by subsidiaries. Refer to Note 7, Commitments and Contingent Liabilities, for further information about Entran II claims. At September 30, 2004, cash balances totaling $85.6 million were subject to such restrictions, compared to $23.9 million at December 31, 2003.

Stock-Based Compensation

The Company uses the intrinsic value method to measure compensation cost for stock-based compensation. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company’s common stock at the date of grant over the amount an employee must pay to acquire the stock. Compensation cost for stock appreciation rights and performance units is recorded based on the quoted market price of the Company’s stock at the end of the reporting period.

     The following table presents the pro forma effect from using the fair value method to measure compensation cost:

Reclassification

     Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2004 presentation.

- 6 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1A. RESTATEMENT

The Company will file an amendment to its 2003 Form 10-K which will include a note to the financial statements containing summary financial information related to certain of the Company’s investments in affiliates, a restatement of the Company’s prior period financial statements to record certain out-of-period adjustments identified and recorded in 2004 and to correct the misclassification of certain balance sheet tax accounts at December 31, 2003. Additionally the Company will also amend its first and second quarter 2004 Form 10-Qs to reverse the effect of the out-of-period adjustments recorded in those periods and correct the misclassification of certain balance sheet tax accounts.

     Approximately $4 million of these adjustments were recorded and disclosed in the Company’s first and second quarter 2004 Form 10-Qs. During the first quarter of 2004, the Company disclosed that it had recorded approximately $5 million of out-of-period charges primarily related to the reassessment of the estimate of the discount rate used in determining net periodic pension cost and benefit obligations for two minor pension plans of $1.3 million, a clerical error in recording adjustments to the workers’ compensation reserve of $1.8 million as part of the Company’s restatement as of December 31, 2003, and the reconciliation of an intra-company account of $1.5 million. During the second quarter of 2004, the Company recorded approximately $1 million of out-of-period income primarily related to an international pension plan of $1.2 million. During the third quarter, the Company identified additional out-of-period adjustments of $5.3 million. The adjustments primarily related to the write-off of goodwill of approximately $4.1 million associated with certain retail stores previously sold in France and the write-off of deferred charges of approximately $2.9 million, offset in part by a favorable adjustment related to an over accrual for payroll deductions of approximately $3.3 million and additional equity in earnings of approximately $1.0 million. Also included in the out-of-period adjustments were an offsetting charge and credit of $2.7 million relating to a leased tire asset account. Since it was not possible to allocate these offsetting adjustments to the applicable periods, the Company recorded both adjustments in the first quarter of 2004. Most of the adjustments were identified through the implementation of the Company’s previously announced measures to improve account reconciliation procedures.

     In addition to the prior period adjustments, the Company identified a misclassification of deferred income tax assets and liabilities on the Company’s Consolidated Balance Sheet beginning at December 31, 2003. The Company recorded certain deferred tax assets and liabilities on a gross basis rather than netting short-term deferred tax assets with short-term deferred tax liabilities and long-term deferred tax assets with long-term deferred tax liabilities. The misclassification overstated total assets and total liabilities by $356.7 million beginning at December 31, 2003. As part of this restatement, the Company corrected the misclassification which had no impact on shareholders’ equity, net income, or cash flows.

     Additionally, during the third quarter of 2004, the Company identified an error related to intercompany transactions arising from a programming and systems interface change which caused sales and cost of goods sold in its North American Tire business unit to be understated by equal amounts. The restatement reflects an increase in sales and cost of goods sold during the first quarter of 2004 of $10.4 million each and an increase in sales and cost of goods sold during the second quarter of 2004 of $10.8 million each to correct this. There was no effect on income before taxes or net income in any period.

     The net impact of the restatement on net loss for the three and nine month periods ended September 30, 2003 was to increase the net loss by $1.2 million and $4.6 million, respectively.

- 7 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Income for the three-month period ended September 30, 2003.

- 8 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Income for the nine-month period ended September 30, 2003.

- 9 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Balance Sheet at December 31, 2003.

- 10 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Effect of restatement adjustments on Goodyear’s previously issued financial statements (Unaudited)

     (1)Tax adjustments. As a result of the restatement adjustments, an additional federal and state valuation allowance of $0.9 million was required to be recognized in 2002, the period in which the Company previously provided for its valuation allowance.

- 11 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Summary of adjustments by caption to the Consolidated Income
Statement – increase (decrease) (Unaudited)

Change in Shareholders’ Deficit (Unaudited)

- 12 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 2. COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS

To maintain global competitiveness, Goodyear has implemented rationalization actions over the past several years for the purpose of reducing excess capacity, eliminating redundancies and reducing costs.

     The following table shows the reconciliation of the liability balance between periods:

     2004 rationalizations consist primarily of administrative associate reductions, a manufacturing consolidation in the European Union Tire segment, warehouse, manufacturing and sales and marketing associate reductions in the Engineered Products segment and manufacturing, sales and research and development associate reductions in the Chemical Products segment. Approximately 1,100 associates will be released under programs initiated in 2004 (approximately 600 from plans initiated during the third quarter of 2004), of which approximately 375 were exited during the first nine months of 2004 (approximately 170 in the third quarter of 2004).

     During the third quarter of 2004, net charges of $28.8 million ($30.4 million after tax or $0.17 per share) were recorded, which included reversals of $15.4 million ($12.6 million after tax or $0.07 per share) for reserves from rationalization actions no longer needed for their originally intended purposes, and new charges of $44.2 million ($42.9 million after tax or $0.24 per share). Included in the $44.2 million of new charges are $2.5 million of expenses, consisting of $0.4 million of associate-related costs and $2.0 million of other than associate-related costs incurred in the third quarter of 2004 related to plans initiated in 2003, and $0.1 million of associate-related costs for a plan initiated in 2000. The $41.7 million of new charges for plans initiated in 2004 consisted of $31.1 million in non-cash pension curtailments and postretirement benefit costs, $7.9 million related to future cash outflows, primarily for associate severance costs, and $2.7 million of other exit costs.

     For the first nine months of 2004, net charges of $62.6 million ($59.4 million after-tax or $0.34 per share) were recorded, which included reversals of $15.8 million ($12.8 million after-tax or $0.07 per share) for reserves from rationalization actions no longer needed for their originally intended purpose, and new charges of $78.4 million ($72.3 million after tax or $0.41 per share). Included in the $78.4 million of new charges are $12.2 million of expenses, consisting of $2.4 million of associate-related costs and $8.7 million of other than associate-related costs incurred during the first nine months of 2004 related to plans initiated in 2003 and $1.1 million of associated-related costs for a plan initiated in 2000. The $66.2 million of new charges for plans initiated in 2004 consisted of $29.3 million related to future cash outflows, primarily for associate severance costs, $32.0 million in non-cash charges, primarily for pension curtailments and postretirement benefit costs, and $4.9 million in other exit costs.

     In the third quarter of 2004, $37.9 was incurred primarily for non-cash pension curtailments, postretirement benefit costs, and severance payments, while $6.5 million was incurred for non-cancelable lease costs and other costs. During the first nine months of 2004, $105.2 million was incurred primarily for non-cash pension curtailments, postretirement benefit costs, and severance payments, and $18.2 million was incurred for non-cancelable lease costs and other costs. The majority of the remaining $82.6 million accrual balance at September 30, 2004 for all programs is expected to be utilized within the next twelve months.

- 13 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Accelerated depreciation charges were recorded for fixed assets that will be taken out of service in connection with certain rationalization plans initiated in 2003 and 2004 in the European Union Tire, Latin America Tire, and Engineered Products segments. During the third quarter of 2004, $1.1 million was recorded as Costs of Goods Sold and $1.1 million was recorded as Selling, Administrative and General Expense for accelerated depreciation charges. For the first nine months of 2004, $5.6 million was recorded as Cost of Goods sold and $1.5 million was recorded as Selling, Administrative and General expense for accelerated depreciation charges.

     The following table summarizes, by segment, the total charges expected to be recorded and the total charges recorded in 2004, related to the new plans initiated in 2004:

     The additional restructuring costs not yet recorded are expected to be recorded primarily during the fourth quarter of 2004.

     During the full year 2003, net charges of $291.5 million ($267.1 million after tax or $1.52 per share) were recorded, which included reversals of approximately $16 million (approximately $14 million after tax or $0.08 per share) related to all plans for reserves from rationalization actions no longer needed for their originally intended purposes and new charges of $307.2 million ($281.4 million after tax or $1.60 per share). The 2003 rationalization actions consisted of manufacturing, research and development, administrative and retail consolidations in North America, Europe and Latin America. Of the $307.2 million of new charges, $174.8 million related to future cash outflows, primarily associate severance costs, and $132.4 million related primarily to non-cash special termination benefits and pension and retiree benefit curtailments. Approximately 4,400 associates will be released under the programs initiated in 2003, of which approximately 2,700 were exited in 2003 and approximately 900 were exited during the first nine months of 2004. The reversals are primarily the result of lower than initially estimated associate-related payments of approximately $12 million, favorable sublease contract signings in the European Union of approximately $3 million and lower contract termination costs in the United States of approximately $1 million. These reversals do not represent a change in the plan as originally approved by management. Of the $307.2 million of new charges recorded in 2003, $56.3 million, and $134.2 million, were recorded during the third quarter and the first nine months of 2003, respectively.

     The following table summarizes, by segment, the total charges expected to be recorded, the new charges recorded in 2004, the total charges recorded to date and the total amounts reversed to date, related to plans initiated in 2003:

     The additional restructuring costs not yet recorded are expected to be recorded primarily during the next twelve months.

- 14 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 3. OTHER (INCOME) AND EXPENSE

Other (Income) and Expense for the third quarter of 2004 included a loss of $0.9 million ($0.9 million after tax or $0.00 per share) on the sale of assets in North American Tire segment and European Union Tire segment. Other (Income) and Expense for the third quarter of 2003 included a loss of $6.3 million (as restated) ($6.3 million after tax or $0.04 per share) on the sale of assets in the Engineered Products Segment (“EPD”) and a gain of $0.4 million (as restated) ($0.4 million after tax or $0.00 per share) on the sale of assets in the European Union Tire Segment. Other (Income) and Expense for the first nine months of 2004 included a gain of $9.5 million ($7.1 million after tax or $0.04 per share) on the sale of assets in North American Tire, European Union Tire and Engineered Products and a loss of $5.5 million ($5.0 million after tax or $0.03 per share) on the sale of corporate assets and assets in North American Tire and European Union Tire segments. Other (Income) and Expense in the first nine months of 2003 included a loss of $23.9 million ($15.2 million after tax or $0.09 per share) on the sale of 20,833,000 shares of Sumitomo Rubber Industries, Ltd. and the sale of assets in EPD and a gain of $3.6 million (as restated) ($2.9 million after tax of $0.02 per share) resulting from the sale of land in the Asia/Pacific Tire Segment and the sale of assets in the European Union Tire Segment.

     Financing fees and financial instruments included $4.2 million and $17.9 million, of deferred costs written off, in the three and nine months periods ended September 2004, respectively, in connection with the Company’s refinancing activities during 2004. Additionally, during the third quarter of 2004 the Company incurred higher amortization of financing fees of approximately $6.0 million related to higher debt levels. Refer to Note 5, Financing Arrangements, for further information on the Company’s 2004 refinancing activities.

     General & product liability–discontinued products includes charges for claims against Goodyear related to asbestos personal injury claims and for anticipated liabilities related to Entran II claims. Of the $7.7 million of expense, net of probable insurance recoveries, recorded in the third quarter of 2004, $5.5 million related to Entran II claims ($105.5 million of expense and $100.0 million of probable insurance recoveries) and $2.2 million related to asbestos claims ($4.6 million of expense and $2.4 million of probable insurance recoveries). Of the $27.5 million of expense, net of probable insurance recoveries, recorded in the first nine months of 2004, $15.4 million related to Entran II claims ($115.4 million in expense and $100.0 million in probable insurance recoveries) and $12.1 million related to asbestos claims ($18.7 million in expense and $6.6 million in probable insurance recoveries). Substantially all of the $62.5 million net charge for general & product liability-discontinued products in the third quarter of 2003 is related to Entran II claims. Goodyear recorded net charges for general & product liability-discontinued products totaling $72.5 million in the nine months ended September 30, 2003, which included recognition of a receivable of approximately $105 million, primarily from Goodyear’s excess insurance carriers. Refer to Note 7, Commitments and Contingent Liabilities, for further discussion.

- 15 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Other (Income) and Expense in the first nine months of 2004 includes $11.7 million ($11.6 million after tax or $0.07 per share) of expense for insurance fire loss deductibles related to fires at Company facilities in Germany, France and Thailand. During the nine months, approximately $23 million in insurance recoveries were received to cover expenses related to the fire losses in Germany. At September 30, 2004, Goodyear recorded an insurance receivable of approximately $27 million to recover additional expenses associated with the fire losses in Germany. Subsequent to September 30, 2004, Goodyear received approximately $4 million in insurance recoveries. At September 30, 2004, Goodyear did not record any insurance recoveries associated with the fixed assets destroyed. Additional insurance recoveries in future periods will be accounted for pursuant to FASB Statement No. 5, “Accounting for Contingencies.”

     Miscellaneous expense included approximately $8.3 million and $8.8 million of expense related to the potential sale of the Chemical Products segment in the third quarter and nine months of 2003, respectively. The Company subsequently determined to retain the business.

NOTE 4. EARNINGS PER SHARE

Basic earnings per share have been computed based on the average number of common shares outstanding. The following table presents the number of incremental weighted-average shares used in computing diluted per share amounts:

     In 2004 and 2003, approximately 28 million and 27 million, respectively, of stock options, restricted stock and performance grants with exercise prices that were greater than the average market price of the Company’s common shares were excluded from average shares outstanding — diluted, as inclusion would have been anti-dilutive. In addition, approximately 2 million of stock options, restricted stock and performance grants with exercise prices that were less than the average market price of the Company’s common shares were excluded from average shares outstanding — diluted for the nine-month period ended September 30, 2004 (less than one thousand shares for the three and nine-month periods ended September 30, 2003), as the Company was in a net loss position and, thus inclusion would also have been anti-dilutive.

NOTE 5. FINANCING ARRANGEMENTS

Goodyear had credit arrangements of $6.93 billion available at September 30, 2004, of which $830.1 million were unused.

Notes Payable and Long-term Debt Due Within One Year

At September 30, 2004, Goodyear had short-term committed and uncommitted credit arrangements totaling $317.7 million, of which $60.1 million ($10.4 million unused) related to the consolidation of VIEs. Of the total amount, $132.4 million was unused. These arrangements are available primarily to certain of the Company’s international subsidiaries through various banks at quoted market interest rates. There are no commitment fees associated with these arrangements.

- 16 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Goodyear had outstanding debt obligations, which by their terms are due within one year, amounting to $1,394.3 million at September 30, 2004 ($251.2 million at December 31, 2003), of which $54.3 million related to the consolidation of VIEs. Current maturities of long-term debt, which includes the maturity of the 6.375% Euro Note and European credit facilities, represents $1,209.0 million, with a weighted-average interest rate of 6.34% at September 30, 2004 ($113.5 million and 5.25% at December 31, 2003, respectively). The remaining $185.3 million, of which $49.7 million related to VIEs consolidated in the period, was short-term debt of international subsidiaries, with a weighted-average interest rate of 5.82% at September 30, 2004 ($137.7 million and 4.81% at December 31, 2003, respectively).

Long-term Debt and Financing Arrangements

At September 30, 2004, Goodyear had long-term credit arrangements totaling $6.61 billion, of which $697.7 million were unused.

The following table presents long-term debt at September 30, 2004 and December 31, 2003:

At September 30, 2004, the fair value of Goodyear’s long-term fixed rate debt amounted to $3.02 billion, compared to its carrying amount of $2.98 billion. At December 31, 2003, the fair value of Goodyear’s long-term fixed rate debt amounted to $2.11 billion, compared to its carrying amount of $2.23 billion. The increase of the carrying values and fair values in 2004 as compared to 2003 was primarily attributable to the issuance of the 11% Notes due 2011 and the 4% Convertible Notes due 2034. In addition, the increase in the fair value of the Company’s long-term fixed rate debt in 2004 as compared to 2003 was attributed to an improvement in the Company’s credit spreads. The fair value was estimated using quoted market prices or discounted future cash flows. The fair value of the 6 5/8% Notes due 2006 was hedged by floating interest rate contracts of $200 million at September 30, 2004 ($200 million at December 31, 2003).

- 17 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The fair value of Goodyear’s variable rate debt approximated its carrying amount at September 30, 2004 and December 31, 2003.

     The Notes and Euro Notes have an aggregate face amount of $2.97 billion and are reported net of unamortized discounts aggregating $3.87 million ($1.96 billion and $1.70 million, respectively, at December 31, 2003).

     At September 30, 2004, the bank term loans due 2005 and 2006 were comprised of $1.85 billion of variable rate agreements based upon LIBOR plus a fixed spread, bearing interest at a weighted-average rate of 6.06% per annum. At December 31, 2003, the bank term loans due 2005 and 2006 were comprised of $1.78 billion of variable rate agreements based upon LIBOR plus a fixed spread bearing interest at a weighted-average rate of 5.17% per annum, of which the interest rate on $325 million principal amount of bank term loans due 2005 and 2006 was hedged by interest rate contracts. There were no domestic short-term bank borrowings outstanding at September 30, 2004 or December 31, 2003.

     At September 30, 2004, borrowings under the revolving credit facilities due 2005 and 2006 were comprised of $250.0 million of variable rate agreements based upon LIBOR plus a fixed spread bearing interest at a weighted-average rate of 5.66% per annum ($839.0 million and 5.15% at December 31, 2003, respectively).

     Other domestic and international debt at September 30, 2004 and December 31, 2003, consisted of fixed and floating rate loans denominated in U.S. dollars and other currencies that mature in 2004-2023. The weighted-average interest rate in effect under these loans was 6.08% at September 30, 2004, compared to 6.25% at December 31, 2003. Of the long-term debt outstanding, $73.6 million is related to the consolidation of VIEs.

$350 Million Convertible Note Offering

     On July 2, 2004, the Company completed an offering of $350 million aggregate principal amount of 4.00% convertible senior notes due June 15, 2034. The notes are convertible into shares of the Company’s common stock initially at a conversion rate of 83.07 shares of common stock per $1,000 principal amount of notes, which is equal to an initial conversion price of $12.04 per share. The proceeds from the notes were used to temporarily repay a revolving credit facility and for working capital purposes.

     In September 2004, the Emerging Issues Task Force (EITF) reached a final consensus on EITF Issue No. 04-08 “Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per Share.” Under the EITF Issue, contingently convertible shares attached to a debt instrument, such as the 4% convertible senior notes discussed above, are to be included in the calculation of diluted earnings per share regardless of whether the contingency has been met. The provisions of EITF No. 04-08 are effective for reporting periods ending after December 15, 2004, including the retroactive restatement of previously reported earnings per share amounts. The adoption of this standard is expected to result in a decrease in diluted earnings per share of $.02 for the third quarter of 2004.

$650 Million Senior Secured Notes

     On March 12, 2004, the Company completed a private offering of $650 million of senior secured notes, consisting of $450 million of 11% senior secured notes due 2011 and $200 million of floating rate notes due 2011, which accrue interest at LIBOR plus 8%. The proceeds of the notes were used to prepay the remaining outstanding amount under the U.S. term loan facility, permanently reduce commitments under the revolving credit facility by $70 million, and for general corporate purposes. The notes are guaranteed by the same subsidiaries that guarantee the U.S. deposit-funded credit facility and asset-backed credit facilities and are secured by perfected fourth-priority liens on the same collateral securing those facilities (pari-passu with the liens on that domestic collateral securing the parent guarantees of the European revolving credit facility).

     The Company has the right to redeem the fixed rate notes in whole or in part from time to time on and after March 1, 2008 at a redemption price, plus accrued and unpaid interest to the redemption date, of 105.5%, 102.75%, and 100.0% on and after March 1, 2008, 2009 and 2010, respectively. The Company may also redeem the fixed rate notes prior to March 1, 2008 at a redemption price equal to 100% of the principal amount plus a make-whole premium. The

- 18 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Company has the right to redeem the floating rate notes in whole or in part from time to time on and after March 1, 2008 at the redemption price, plus accrued and unpaid interest to the redemption date, of 104.0%, 102.0%, and 100.0% on and after March 1, 2008, 2009 and 2010, respectively. In addition, prior to March 1, 2007, the Company has the right to redeem up to 35% of the fixed and floating rate notes with net cash proceeds from one or more public equity offerings at a redemption price of 111% for the fixed rate notes and 100% plus the then applicable floating rate for the floating rate notes, of the principal amount thereof, plus accrued and unpaid interest to the redemption date.

     The indenture for the senior secured notes contains restrictions on the Company’s operations, including limitations on (i) incurring additional indebtedness or liens, (ii) making dividends, distributions and stock repurchases, (iii) making investments, (iv) selling assets and (v) merging and consolidating. In the event that the senior secured notes have a rating equal to or greater than Baa3 from Moody’s and BBB- from Standard and Poor’s, a number of those restrictions will not apply, for so long as those credit ratings are maintained.

$645 Million Senior Secured U.S. Term Facility

     As of December 31, 2003, the balance due on the U.S. term facility was $583.3 million due to a partial pay down of the balance during the second quarter of 2003. On March 12, 2004, all outstanding amounts under the facility were prepaid and the facility was retired. The U.S. term facility had a maturity date of April 30, 2005.

$650 Million Senior Secured European Facilities

Goodyear Dunlop Tires Europe B.V. (“GDTE”) is party to a $250 million senior secured revolving credit facility and a $400 million senior secured term loan facility (collectively, the “European facilities”). These facilities mature on April 30, 2005. As of September 30, 2004, there were borrowings of $250.0 million and $400.0 million under the European revolving and term facilities, respectively.

     GDTE pays an annual commitment fee of 75 basis points on the undrawn portion of the commitments under the European revolving facility. GDTE may obtain loans under the European facilities bearing interest at LIBOR plus 400 basis points or an alternative base rate (the higher of JPMorgan’s prime rate or the federal funds rate plus 50 basis points) plus 300 basis points.

     The collateral pledged under the European facilities includes:

•

all of the capital stock of Goodyear Finance Holding S.A. and certain subsidiaries of GDTE; and

•

a perfected first-priority interest in and mortgages on substantially all the tangible and intangible assets of GDTE in the United Kingdom, Luxembourg, France and Germany, including certain accounts receivable, inventory, real property, equipment, contract rights and cash and cash accounts, but excluding certain accounts receivable used in securitization programs.

     Consistent with the covenants applicable to Goodyear in the U.S. facilities, the European facilities contain certain representations, warranties and covenants applicable to GDTE and its subsidiaries which, among other things, limit GDTE’s ability to incur additional indebtedness (including a limit of 275 million Euros in accounts receivable transactions), make investments, sell assets beyond specified limits, pay dividends and make loans or advances to Goodyear companies that are not subsidiaries of GDTE. The European facilities also contain certain additional covenants applicable to the Company identical to those in the U.S. facilities. The European facilities also limit the amount of capital expenditures that GDTE may make to $250 million and $100 million in 2004 and 2005 (through April 30), respectively.

     Subject to the provisions in the European facilities and agreements with Goodyear’s joint venture partner, Sumitomo Rubber Industries, Ltd. (SRI) (which include limitations on loans and advances from GDTE to Goodyear and a requirement that transactions with affiliates be consistent with past practices or on arms-length terms), GDTE is permitted to transfer funds to Goodyear.

     Any amount outstanding under the term facility is required to be prepaid with:

- 19 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

•

75% of the net cash proceeds of all sales and dispositions of assets by GDTE and its subsidiaries greater than $5 million; and

•

50% of the net cash proceeds of debt and equity issuances by GDTE and its subsidiaries.

The U.S. and European facilities can be used, if necessary, to fund ordinary course of business needs, to repay maturing debt, and for other needs as they arise.

U.S. Deposit-Funded Credit Facility

On August 18, 2004, Goodyear refinanced its then existing $680 million senior secured U.S. revolving credit facility with a U.S. deposit-funded credit facility, which is a synthetic revolving credit and letter of credit facility, pursuant to which the lenders deposited the entire $680 million of the facility in an account held by the administrative agent, and those funds are used to support letters of credit or borrowings on a revolving basis, in each case subject to customary conditions. The lenders under the new facility will receive annual compensation on the amount of the facility equivalent to 450 basis points over LIBOR. The full amount of the facility is available for the issuance of letters of credit or for revolving loans. The $500.7 million of letters of credit that were outstanding under the U.S. revolving credit facility as of June 30, 2004 were transferred to the deposit-funded credit facility. As of September 30, 2004, there were $500.5 million of letters of credit issued under the facility. The facility matures on September 30, 2007.

     Goodyear’s obligations under the deposit-funded credit facility are guaranteed by most of its wholly-owned U.S. subsidiaries and by its direct Canadian subsidiary, Goodyear Canada Inc. Goodyear’s obligations under this facility and its subsidiaries’ obligations under the related guarantees are secured by collateral that includes:

•

subject to certain exceptions, perfected first-priority security interests in the equity interests in its U.S. subsidiaries and 65% of the equity interests in its non-European foreign subsidiaries;

•

a perfected second-priority security interest in 65% of the capital stock of Goodyear Finance Holding S.A.;

•

perfected first-priority security interests in and mortgages on its U.S. corporate headquarters and certain of its U.S. manufacturing facilities;

•

perfected third-priority security interests in all accounts receivable, inventory, cash and cash accounts pledged as security under the Company’s asset-backed facilities; and

•

perfected first-priority security interests in substantially all other tangible and intangible assets, including equipment, contract rights and intellectual property.

     The bond agreement for Goodyear’s Swiss Franc bonds limits the Company’s ability to use its U.S. tire and automotive parts manufacturing facilities as collateral for secured debt without triggering a requirement that holders of the Swiss Franc bonds be secured on an equal and ratable basis. The manufacturing facilities indicated above were pledged to ratably secure Goodyear’s Swiss Franc bonds to the extent required by the bond agreement. However, the aggregate amount of debt secured by these manufacturing facilities is limited to 15% of Goodyear’s positive consolidated shareholders’ equity, in order that the security interests granted to the lenders under the U.S. senior secured funded credit facility not be required to be shared with the holders of debt outstanding under the Company’s other existing unsecured bond indentures.

     The deposit-funded credit facility contains certain covenants that, among other things, limit Goodyear’s ability to incur additional unsecured and secured indebtedness (including a limit, subject to certain exceptions, of 275 million euros in accounts receivable transactions), make investments and sell assets beyond specified limits. The facility prohibits Goodyear from paying dividends on its common stock. Goodyear must also maintain a minimum consolidated net worth (as such term is defined in the deposit-funded credit facility) of at least $2.0 billion for quarters ending in 2004 and 2005 and the first quarter of 2006 and $1.75 billion for the last three quarters of 2006 and the first three quarters of 2007. Goodyear is not permitted to allow the ratio of Consolidated EBITDA to consolidated interest

- 20 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

expense to fall below 2.00 to 1.00 for any period of four consecutive fiscal quarters. In addition, Goodyear’s ratio of consolidated senior secured indebtedness to Consolidated EBITDA is not permitted to be greater than 4.00 to 1.00 at any time. As of September 30, 2004, the Company was in compliance with each of the financial covenants.

$1.95 Billion Senior Secured Asset-Backed Credit Facilities

In April 2003 the Company entered into senior secured asset-backed credit facilities in an aggregate principal amount of $1.30 billion, consisting of a $500 million revolving credit facility and an $800 million term loan facility. On February 20, 2004, the Company added a $650 million term loan tranche to the facility, not subject to the borrowing base, and with junior liens on the collateral securing the facility. As of September 30, 2004, there were no borrowings and $800.0 million drawn under the revolving credit and term loan asset-backed facilities, respectively. As of September 30, 2004, the $650.0 million tranche was fully drawn. The facilities mature on March 31, 2006.

     Availability under the facilities, other than the $650 million term loan tranche, is limited by a borrowing base equal to the sum of (a) 85% of adjusted eligible accounts receivable and (b)(i) if the effective advance rate for inventory is equal to or greater than 85% of the recovery rate (as determined by a third party appraisal) of such inventory, 85% of the recovery rate multiplied by the inventory value or (ii) if the effective advance rate for inventory is less than 85% of the recovery rate, (A) the sum of 35% of eligible raw materials, 65% of adjusted eligible finished goods relating to the North American Tire segment, and 60% of adjusted eligible finished goods relating to the retail division, Engineered Products segment and Chemical Products segment minus (B) a rent reserve equal to three months’ rent and warehouse charges at facilities where inventory is stored minus (C) a priority payables reserve based on liabilities for certain taxes or certain obligations related to employees that have a senior or pari passu lien on the collateral.

     The calculation of the borrowing base and reserves against inventory and accounts receivable included in the borrowing base are subject to adjustment from time to time by the administrative agent and the majority lenders in their discretion (not to be exercised unreasonably), based on the results of ongoing collateral and borrowing base evaluations and appraisals. Availability under the facilities is further limited by a $50 million availability block. If at any time the amount of outstanding borrowings under the facilities subject to the borrowing base exceeds the borrowing base, the Company will be required to prepay borrowings sufficient to eliminate the excess or maintain compensating deposits with the agent bank.

     The facilities are collateralized by first and second priority security interests in all accounts receivable and inventory of Goodyear and its domestic and Canadian subsidiaries (excluding accounts receivable and inventory related to the Company’s North American joint venture with SRI) and, effective as of February 20, 2004, second and third priority security interests on the other assets securing the U.S. facilities. The facilities contain certain representations, warranties and covenants which are materially the same as those in the U.S. facilities, with capital expenditures of $500 million and $150 million permitted in 2005 and 2006 (through March 31), respectively.

- 21 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Debt Maturities

The annual aggregate maturities of long-term debt and capital leases for the five years subsequent to September 30, 2004 are presented below. Maturities of debt credit agreements have been reported on the basis that the commitments to lend under these agreements will be terminated effective at the end of their current terms.

NOTE 6. PENSION, OTHER POSTRETIREMENT BENEFIT AND SAVINGS PLANS

Goodyear and its subsidiaries provide substantially all employees with pension benefits and substantially all domestic employees and employees at certain international subsidiaries with health care and life insurance benefits upon retirement. The benefit obligation for other postretirement benefits includes $15.3 million for the increase in the Company’s contribution requirements based upon the attainment of certain profit levels by certain businesses in 2004 and 2005. On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act (the “Act”) was signed into law. The Act will provide plan sponsors a federal subsidy for certain qualifying prescription drug benefits covered under the sponsor’s postretirement health care plans. FASB Staff Position No. FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (the FSP), was issued on May 19, 2004. The FSP provides guidance on accounting for the effects of the new Medicare prescription drug legislation by employers whose prescription drug benefits are actuarially equivalent to the drug benefit under Medicare Part D. It also contains basic guidance on related income tax accounting, and complex rules for transition that permit various alternative prospective and retroactive transition approaches. During the third quarter of 2004 the Company determined the overall impact of the adoption of the FSP was a reduction of expense of approximately $2 million on an annual basis of which approximately $1 million was recorded in the third quarter. The adoption of the FSP also reduced the accumulated postretirement benefit obligation by approximately $19.7 million.

     Pension cost follows:

     For the three and nine month periods ended September 30, 2004, the Company contributed $60.6 million and $73.9 million, respectively, to domestic plans and $15.0 million and $45.5 million, respectively, to its foreign plans. Refer to note 11, Future Liquidity Requirements, for further discussion.

- 22 -

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Postretirement benefit cost follows:

     In the third quarter of 2004, pension curtailments, settlements, and special termination benefits of $31.1 million related to the Chemical and EPD segments rationalization initiatives were recorded as further discussed in Note 2, Rationalizations.

     Substantially all domestic employees are eligible to participate in a savings plan. The main Hourly Bargaining Plans provided for matching contributions, through April 20, 2003, (up to a maximum of 6% of the employee’s annual pay or, if less, $12,000) at the rate of 50%. Goodyear suspended the matching contributions for all participants in the main Salaried Plan effective January 1, 2003. The expenses recognized for Goodyear domestic contributions for the three and nine month periods ended September 30, 2004 were $1.0 million and $3.1 million (($0.5) million and $7.6 million for the three and nine months ended September 30, 2003), respectively.

     In addition, defined contribution pension plans are available for certain foreign employees. The expenses recognized for Company contributions for these plans for the three and nine month periods ended September 30, 2004 were $2.9 million and $9.5 million ($0.8 million and $3.1 million for the three and nine months ended September 30, 2003), respectively. The 2004 amounts have increased over 2003 primarily due to the inclusion of contributions for SPT due to the adoption of FIN 46.