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8-K - FORM 8-K - GOODYEAR TIRE & RUBBER CO /OH/ | l41797e8vk.htm |
Exhibit 99.1
News Release | ||
Corporate Headquarters: 1144 East Market Street, Akron, Ohio 44316-0001
|
Media Website: www.GoodyearNewsRoom.com | |
MEDIA CONTACT: | Keith Price |
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330-796-1863 | ||||||
ANALYST CONTACT: | Pat Stobb |
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330-796-6704 | ||||||
FOR IMMEDIATE RELEASE | ||||||
Goodyear Reports Fourth Quarter, Full Year Results for 2010
| Fourth quarter 2010 sales up 14% from last year, increases in all 4 business units | ||
| Record price/mix drives fourth quarter revenue per tire up 12% over last year | ||
| Asia Pacific, Latin America regions achieve record sales for quarter, year | ||
| North American Tire improvement continues, profitable for quarter, year | ||
| 2010 cost savings of more than $460 million, on track to achieve 3-year target | ||
| North America plant closure achieves targeted reduction in high-cost capacity |
AKRON, Ohio, February 10, 2011 The Goodyear Tire & Rubber Company today reported fourth
quarter and full-year 2010 results with quarterly segment operating income of $224 million driving
full-year segment operating income of more than $900 million.
Im very pleased with Goodyears performance in the fourth quarter and the full year of 2010.
Our operating results reflect significant recovery, with improvement across all of our businesses
versus last year despite escalating raw material costs, said Richard J. Kramer, chairman and chief
executive officer.
The percentage of new products in our overall lineup is the highest ever and is driving
record revenue per tire increases and continued success in targeted markets, he added.
Our selective approach to the business continues to present strong profit growth
opportunities. Goodyears leading brands and technology offer customers in targeted segments with
an outstanding value proposition, Kramer said.
We also remain firmly committed to improving our competitiveness and, as a result, have
announced plans to close our Union City, Tenn. plant.
Goodyears fourth quarter 2010 sales were $5.1 billion, up 14 percent from the 2009 quarter.
Tire unit volumes totaled 45 million, up 4 percent from 2009.
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Fourth quarter sales reflect the $130 million impact of the increase in volume. Sales
benefited from record price/mix improvements, which drove revenue per tire, excluding the impact of
foreign currency translation, up 12 percent over the 2009 quarter. Sales were also impacted
positively by a $159 million increase in sales in other tire-related businesses, primarily
third-party chemical sales in North America. Unfavorable foreign currency translation reduced
sales by $111 million.
The company had segment operating income of $224 million in the fourth quarter of 2010, down
$25 million from the year-ago quarter. Segment operating income reflected improved price/mix of
$315 million and the benefits of higher volume, offset by $430 million in higher raw material costs
($397 million net of raw material cost reduction actions). Unfavorable foreign currency
translation reduced segment operating income by $17 million. Actions to reduce costs provided a
$119 million benefit.
The 2010 fourth quarter included total charges of $213 million (87 cents per share) due to
rationalizations, asset write-offs and accelerated depreciation, $20 million (8 cents per share)
related to the elimination of the subsidized essential goods exchange rate in Venezuela, and a
charge of $18 million (7 cents per share) related to a claim regarding the use of value-added tax
credits in prior periods; and gains of $31 million (13 cents per share) on asset sales, primarily
in Asia, and $22 million (9 cents per share) related to net tax benefits primarily due to tax law
changes in the U.S. and other countries. All amounts are after taxes and minority interest.
Goodyears fourth quarter 2010 net loss was $177 million (73 cents per share), compared with
net income of $107 million (44 cents per share) in the 2009 quarter. All per share amounts are
diluted.
See the table at the end of this release for a list of significant items impacting the 2010
and 2009 quarters.
Full-Year Results
Goodyears annual sales for 2010 were $18.8 billion, up 16 percent from $16.3 billion in the
2009 period. Sales reflect the $1 billion impact of an 8 percent improvement in tire unit volume
as well as a $582 million increase in sales in other tire-related businesses, primarily third-party
chemical sales by North American Tire. Sales also reflect price/mix improvements and unfavorable
currency translation. Revenue per tire, excluding the impact of foreign currency translation,
increased 6 percent over 2009.
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The companys 2010 segment operating income of $917 million is up from $372 million in 2009
reflecting improved profitability in all four of the companys business units. Compared to the
prior year, 2010 segment operating income reflects higher sales, actions that reduced costs by $467
million and a significant recovery in under-absorbed fixed costs. These improvements more than
offset higher marketing costs in support of the companys brands and emerging market growth, wage
inflation and foreign currency translation.
Compared to 2009, improved price/mix of $689 million offset $685 million in higher raw
material costs ($549 million net of raw material cost reduction actions).
Goodyears 2010 net loss of $216 million (89 cents per share) compares to a net loss of $375
million ($1.55 per share) in 2009. All per share amounts are diluted.
Business Segment Results
See the note at the end of this release for further explanation and a segment operating income
reconciliation table.
North American Tire
Fourth Quarter | Twelve Months | |||||||||||||||
(in millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Tire Units |
16.9 | 16.9 | 66.7 | 62.7 | ||||||||||||
Sales |
$ | 2,201 | $ | 1,884 | $ | 8,205 | $ | 6,977 | ||||||||
Segment Operating
Income (Loss) |
11 | (27 | ) | 18 | (305 | ) | ||||||||||
Segment Operating Margin |
0.5 | % | (1.4 | )% | 0.2 | % | (4.4 | )% |
North American Tires fourth quarter 2010 sales increased 17 percent from last year to $2.2 billion. Sales reflect improved price/mix, which drove a 12 percent increase in revenue
per tire, excluding the impact of foreign currency translation, compared to 2009s fourth quarter.
Original equipment unit volume decreased 4 percent. Replacement tire shipments were up slightly.
Sales were positively impacted by $167 million from higher sales in other tire-related businesses,
primarily third-party chemical sales.
Fourth quarter 2010 segment operating income of $11 million was a $38 million improvement over
the prior year. The 2010 quarter benefited from improved price/mix of $114 million, as well as
increased production levels, decreased workers compensation and pension expenses and actions to
reduce costs. These improvements were partially offset by $162 million of higher raw material
costs.
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Europe, Middle East and Africa Tire
Fourth Quarter | Twelve Months | |||||||||||||||
(in millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Tire Units |
17.7 | 16.2 | 72.0 | 66.0 | ||||||||||||
Sales |
$ | 1,727 | $ | 1,559 | $ | 6,407 | $ | 5,801 | ||||||||
Segment Operating Income |
60 | 125 | 319 | 166 | ||||||||||||
Segment Operating Margin |
3.5 | % | 8.0 | % | 5.0 | % | 2.9 | % |
Europe, Middle East and Africa Tires fourth quarter sales increased 11 percent from last year
to $1.7 billion. Sales reflect a 9 percent increase in tire unit volume and strong price/mix
performance. Original equipment unit volume increased 11 percent. Replacement tire shipments were
up 9 percent. Fourth quarter revenue per tire, excluding the impact of foreign currency
translation, increased 11 percent in 2010 compared to 2009. Unfavorable foreign currency
translation reduced sales by $122 million.
Fourth quarter 2010 segment operating income of $60 million was $65 million below the prior
year. The 2010 quarter was positively impacted by improved price/mix of $85 million, higher
volume, increased production levels and actions to reduce costs. Raw material costs increased
$158 million over last year. Unfavorable foreign currency translation reduced segment
operating income by $11 million.
Latin American Tire
Fourth Quarter | Twelve Months | |||||||||||||||
(in millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Tire Units |
5.2 | 5.3 | 20.7 | 19.1 | ||||||||||||
Sales |
$ | 582 | $ | 508 | $ | 2,158 | $ | 1,814 | ||||||||
Segment Operating Income |
93 | 81 | 330 | 301 | ||||||||||||
Segment Operating Margin |
16.0 | % | 15.9 | % | 15.3 | % | 16.6 | % |
Latin American Tires fourth quarter sales increased 15 percent from last year to $582 million
and were the highest ever achieved in any quarter. Sales reflect a 1 percent decrease in tire unit
volume and strong price/mix performance. Original equipment unit volume increased 2 percent.
Replacement tire shipments were down 2 percent. Unfavorable foreign currency translation reduced
sales by $26 million, driven by the currency devaluation in Venezuela.
Fourth quarter segment operating income of $93 million was $12 million higher than in 2009 and
a fourth quarter record. Segment operating income reflects strong volume and price/mix in Brazil
and other markets outside of Venezuela. Price/mix improvements of $78 million more than offset $32
million in raw material cost increases. Earnings in Venezuela were approximately equal to year-ago
levels.
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Asia Pacific Tire
Fourth Quarter | Twelve Months | |||||||||||||||
(in millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Tire Units |
5.5 | 5.2 | 21.4 | 19.2 | ||||||||||||
Sales |
$ | 562 | $ | 486 | $ | 2,062 | $ | 1,709 | ||||||||
Segment Operating Income |
60 | 70 | 250 | 210 | ||||||||||||
Segment Operating Margin |
10.7 | % | 14.4 | % | 12.1 | % | 12.3 | % |
Asia Pacific Tires fourth quarter sales increased 16 percent from last year to $562 million,
which were the highest ever achieved in any quarter. Sales reflect a 5 percent increase in tire
unit volume. Original equipment unit volume increased 12 percent. Replacement tire shipments were
up 1 percent. Fourth quarter revenue per tire, excluding the impact of foreign currency
translation, increased 6 percent in 2010 compared to 2009. Favorable foreign currency translation
increased sales by $32 million.
Fourth quarter segment operating income of $60 million was $10 million lower than last year.
The 2010 quarter was positively impacted by improved price/mix of $38 million and higher volume.
Raw material costs increased $45 million over last year. Favorable foreign currency translation
increased segment operating income by $5 million. Costs related to the planned start up of a new
factory in China negatively impacted segment operating income by $5 million.
Tennessee Plant Closure
Goodyear today announced plans to close its Union City, Tenn., tire manufacturing facility by
the end of 2011 as part of its strategy to reduce high-cost manufacturing capacity globally and
provide cost effective high-value-added products that the market is demanding while continuing to
make high quality products for its customers.
While we are committed to manufacturing in North America, all of our plants must be cost
competitive and be able to demonstrate sustainable world-class productivity. That is not the case
with this plant, and as a result, the market has moved beyond what the factory is able to build,
said Kramer.
This closure, when complete, will eliminate approximately 12 million units of available
capacity and is the final action in plans announced in 2009 to eliminate 15 million to 25 million
units of high-cost capacity globally. This action is expected to provide annual cost savings of
approximately $80 million. The Union City plant currently employs approximately 1,900 associates.
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Goodyears fourth quarter 2010 after-tax restructuring charge related to this action was
approximately $160 million. Total after-tax restructuring, accelerated depreciation and asset
write-off charges for this action are estimated to be approximately $270 million, of which
approximately $140 million will be cash charges.
2011 Outlook
Goodyear expects the global tire industry to continue to grow in 2011, with volume expansion
across all regions and major segments.
In North America, the consumer replacement industry is expected to grow between 1 percent and
3 percent, consumer original equipment between 5 percent and 10 percent, commercial replacement
between 3 percent and 8 percent and commercial original equipment between
20 percent and 30 percent.
In Europe, the consumer replacement industry is expected to grow between 1 percent and
3 percent, consumer original equipment 0 percent to 5 percent, commercial replacement between
5 percent and 10 percent and commercial original equipment between 30 percent and 40 percent.
Goodyear anticipates its raw material costs in the first quarter of 2011 will increase
25 percent to 30 percent compared with the prior-year quarter.
We carry significant momentum into 2011 and expect industry growth in our targeted segments
will drive a 3 percent to 5 percent increase in Goodyears unit volume, said Kramer.
Additionally, we will maintain our focus on price/mix and expect continued benefits related to
cost performance and unabsorbed fixed cost recovery.
Conference Call
Goodyear will hold an investor conference call at 10:30 a.m. today to discuss 2010 results and
its outlook for 2011. Approximately 45 minutes prior to the commencement of the call, the company
will post the financial and other related information that will be presented on its investor
relations Web site: http://investor.goodyear.com.
Participating in the conference call will be Richard J. Kramer, chairman and chief executive
officer, and Darren R. Wells, executive vice president and chief financial officer.
Investors, members of the media and other interested persons may access the conference call on
the Web site or via telephone by calling (706) 643-2869 before 10:25 a.m. A taped replay will be
available later by calling (706) 645-9291 (Conference ID: 42038237). The replay will also remain
available on the Web site.
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Goodyear is one of the worlds largest tire companies. It employs approximately 72,000 people
and manufactures its products in 56 facilities in 22 countries around the world. Its two
Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art
products and services that set the technology and performance standard for the industry. For more
information about Goodyear and its products, go to www.goodyear.com.
Certain information contained in this press release may constitute forward-looking statements
for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995.
There are a variety of factors, many of which are beyond our control, that affect our operations,
performance, business strategy and results and could cause our actual results and experience to
differ materially from the assumptions, expectations and objectives expressed in any
forward-looking statements. These factors include, but are not limited to: our ability to realize
anticipated savings and operational benefits from our cost reduction initiatives or to implement
successfully other strategic initiatives; increases in the prices paid for raw materials and
energy; pension plan funding obligations; actions and initiatives taken by both current and
potential competitors; deteriorating economic conditions or an inability to access capital markets;
work stoppages, financial difficulties or supply disruptions at our suppliers or customers; the
adequacy of our capital expenditures; a labor strike, work stoppage or other similar event; our
failure to comply with a material covenant in our debt obligations; potential adverse consequences
of litigation involving the company; as well as the effects of more general factors such as changes
in general market, economic or political conditions or in legislation, regulation or public policy.
Additional factors are discussed in our filings with the Securities and Exchange Commission,
including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and
should not be relied upon as representing our estimates as of any subsequent date. While we may
elect to update forward-looking statements at some point in the future, we specifically disclaim
any obligation to do so, even if our estimates change.
(financial statements follow)
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The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Statement of Operations
Consolidated Statement of Operations
Three Months | Twelve Months | |||||||||||||||
Ended | Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
(In millions, except per share amounts) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
(Unaudited) | ||||||||||||||||
NET SALES |
$ | 5,072 | $ | 4,437 | $ | 18,832 | $ | 16,301 | ||||||||
Cost of Goods Sold |
4,190 | 3,581 | 15,452 | 13,676 | ||||||||||||
Selling, Administrative and General Expense |
715 | 640 | 2,630 | 2,404 | ||||||||||||
Rationalizations |
224 | 20 | 240 | 227 | ||||||||||||
Interest Expense |
75 | 83 | 316 | 311 | ||||||||||||
Other Expense |
13 | (26 | ) | 186 | 40 | |||||||||||
(Loss) Income before Income Taxes |
(145 | ) | 139 | 8 | (357 | ) | ||||||||||
United States and Foreign Taxes |
21 | 4 | 172 | 7 | ||||||||||||
Net (Loss) Income |
(166 | ) | 135 | (164 | ) | (364 | ) | |||||||||
Less: Minority Shareholders Net Income |
11 | 28 | 52 | 11 | ||||||||||||
Goodyear Net (Loss) Income |
$ | (177 | ) | $ | 107 | $ | (216 | ) | $ | (375 | ) | |||||
Goodyear Net (Loss) Income Per Share |
||||||||||||||||
Basic |
$ | (0.73 | ) | $ | 0.44 | $ | (0.89 | ) | $ | (1.55 | ) | |||||
Weighted Average Shares Outstanding |
242 | 242 | 242 | 241 | ||||||||||||
Diluted |
$ | (0.73 | ) | $ | 0.44 | $ | (0.89 | ) | $ | (1.55 | ) | |||||
Weighted Average Shares Outstanding |
242 | 245 | 242 | 241 |
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The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Balance Sheets
Consolidated Balance Sheets
December 31, | December 31, | |||||||
(In millions) | 2010 | 2009 | ||||||
Assets: |
||||||||
Current Assets: |
||||||||
Cash and Cash Equivalents |
$ | 2,005 | $ | 1,922 | ||||
Accounts Receivable, less Allowance $106 ($110 in 2009) |
2,736 | 2,540 | ||||||
Inventories: |
||||||||
Raw Materials |
706 | 483 | ||||||
Work in Process |
168 | 138 | ||||||
Finished Products |
2,103 | 1,822 | ||||||
2,977 | 2,443 | |||||||
Prepaid Expenses and Other Current Assets |
327 | 320 | ||||||
Total Current Assets |
8,045 | 7,225 | ||||||
Goodwill |
683 | 706 | ||||||
Intangible Assets |
161 | 164 | ||||||
Deferred Income Taxes |
58 | 43 | ||||||
Other Assets |
518 | 429 | ||||||
Property, Plant and Equipment |
||||||||
less Accumulated Depreciation $8,807 ($8,626 in 2009) |
6,165 | 5,843 | ||||||
Total Assets |
$ | 15,630 | $ | 14,410 | ||||
Liabilities: |
||||||||
Current Liabilities: |
||||||||
Accounts Payable-Trade |
$ | 3,107 | $ | 2,278 | ||||
Compensation and Benefits |
756 | 635 | ||||||
Other Current Liabilities |
1,018 | 844 | ||||||
Notes Payable and Overdrafts |
238 | 224 | ||||||
Long Term Debt and Capital Leases due Within One Year |
188 | 114 | ||||||
Total Current Liabilities |
5,307 | 4,095 | ||||||
Long Term Debt and Capital Leases |
4,319 | 4,182 | ||||||
Compensation and Benefits |
3,415 | 3,526 | ||||||
Deferred and Other Noncurrent Income Taxes |
242 | 235 | ||||||
Other Long Term Liabilities |
842 | 793 | ||||||
Total Liabilities |
14,125 | 12,831 | ||||||
Commitments and Contingent Liabilities |
||||||||
Minority Shareholders Equity |
584 | 593 | ||||||
Shareholders Equity: |
||||||||
Goodyear Shareholders Equity: |
||||||||
Preferred Stock, no par value: |
||||||||
Authorized, 50 shares, unissued |
| | ||||||
Common Stock, no par value: |
||||||||
Authorized, 450 shares, Outstanding shares 243 (242 in 2009)
after deducting 8 treasury shares (9 in 2009) |
243 | 242 | ||||||
Capital Surplus |
2,805 | 2,783 | ||||||
Retained Earnings |
866 | 1,082 | ||||||
Accumulated Other Comprehensive Loss |
(3,270 | ) | (3,372 | ) | ||||
Goodyear Shareholders Equity |
644 | 735 | ||||||
Minority Shareholders Equity Nonredeemable |
277 | 251 | ||||||
Total Shareholders Equity |
921 | 986 | ||||||
Total Liabilities and Shareholders Equity |
$ | 15,630 | $ | 14,410 | ||||
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Non-GAAP Financial Measures
This earnings release presents total segment operating income, which is an important
financial measure for the company but is not a financial measure defined by U.S. GAAP.
Total segment operating income is the sum of the individual strategic business units segment
operating income as determined in accordance with U.S. GAAP. Management believes that total
segment operating income is useful because it represents the aggregate value of income created by
the companys SBUs and excludes items not directly related to the SBUs for performance evaluation
purposes. See the table below for the reconciliation of total segment operating income.
Total Segment Operating Income Reconciliation Table
Three Months | ||||||||||||||||
Ended | Twelve Months | |||||||||||||||
December 31, | Ended | |||||||||||||||
(unaudited) | December 31, | |||||||||||||||
(In millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Segment Operating Income |
$ | 224 | $ | 249 | $ | 917 | $ | 372 | ||||||||
Rationalizations |
(224 | ) | (20 | ) | (240 | ) | (227 | ) | ||||||||
Interest expense |
(75 | ) | (83 | ) | (316 | ) | (311 | ) | ||||||||
Other (expense) income |
(13 | ) | 26 | (186 | ) | (40 | ) | |||||||||
Asset write-offs and accelerated
depreciation |
(2 | ) | (3 | ) | (15 | ) | (43 | ) | ||||||||
Corporate incentive compensation plans |
(26 | ) | (12 | ) | (71 | ) | (41 | ) | ||||||||
Intercompany profit elimination |
(9 | ) | | (14 | ) | (13 | ) | |||||||||
Other |
(20 | ) | (18 | ) | (67 | ) | (54 | ) | ||||||||
(Loss) Income before Income Taxes |
$ | (145 | ) | $ | 139 | $ | 8 | $ | (357 | ) | ||||||
Fourth Quarter Significant Items (after tax and minority interest)
2010
| Rationalizations, asset write-offs and accelerated depreciation, $213 million (87 cents per share). | |
| Loss related to the elimination of the subsidized essential goods exchange rate in Venezuela, $20 million (8 cents per share). | |
| Charge related to a claim regarding the use of value-added tax credits in prior periods, $18 million (7 cents per share). | |
| Net gains on asset sales, primarily in Asia, $31 million (13 cents per share). | |
| Net tax benefits primarily due to tax law changes in the U.S. and other countries, $22 million (9 cents per share). |
2009
| Rationalizations, asset write-offs and accelerated depreciation, $20 million (8 cents per share). | |
| Expenses related to a legal reserve for a closed facility, $4 million (2 cents per share). | |
| Net tax benefits related to employee benefit plans, $64 million (26 cents per share). | |
| Net tax benefits primarily related to the release of a valuation allowance in Australia, $21 million (8 cents per share). | |
| Gain on insurance proceeds from the settlement of a claim related to a 2007 fire in Thailand, $13 million (5 cents per share). | |
| Net gain on asset sales, $2 million (1 cent per share). |
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