The Goodyear Tire & Rubber Company
2003 Annual Report
Goodyear is the world’s largest tire company.
Together with its U.S. and international
subsidiaries and joint ventures, Goodyear
manufactures and markets tires for most
applications. It also manufactures and sells
several lines of power transmission belts, hose
and other rubber products for the transportation
industry and various industrial and consumer
markets, as well as rubber-related chemicals for
various applications. Goodyear is the world’s
largest operator of commercial truck service and
tire retreading centers. In addition, it operates
more than 1,600 tire and auto service center
outlets. Goodyear manufactures its products in
more than 80 facilities in 28 countries. It has
marketing operations in almost every country
around the world.
The Goodyear Tire & Rubber Company
1144 East Market Street
Akron, Ohio 44316-0001
www.goodyear.com
Trademarks owned by or licensed to The
Goodyear Tire & Rubber Company or its
subsidiaries mentioned in this report include:
Assurance, ComforTred Technology, Dunlop,
Eagle, Eagle F1, Fortera, Fulda, ,
Goodyear, HydraGrip, Kelly, Kristall Supremo,
Sport Maxx, TripleTred Technology and Wrangler.
Cover tire: Goodyear Assurance featuring
TripleTred Technology
G o o d y e a r 2 0 0 3
Table of Contents
2 To our Shareholders
7 Management’s Discussion and Analysis
of Financial Condition and
Results of Operations
37 Forward-Looking Information
39 Consolidated Financial Statements
43 Notes to Financial Statements
102 Report of PricewaterhouseCoopers LLP,
Independent Accountants
103 Supplementary Data (unaudited)
107 Comparison with Prior Years
109 Board of Directors and Officers
110 Facilities
inside back cover Shareholder Information
Financial Overview
(dollars in millions, except per share)
Net Sales
Net Loss
– Per diluted share
Total Assets
Consolidated Debt
Total Shareholders’ Equity
Debt to Debt and Equity
Cash Dividends per Share
Common Shares Outstanding
Average Number of Associates
Year ended December 31
2003
$
15,119.0
$
(802.1)
(4.58)
2002
as restated
13,856.2
(1,227.0)
(7.35)
$
15,005.5
$
13,038.7
5,077.4
(13.1)
100.3%
3,643.0
255.4
93.4%
$
–
$
0.48
175,326,429
175,307,433
89,293
94,122
G o o d y e a r 2 0 0 3 1
To Our Shareholders
O
ur energy, drive and determined
efforts are concentrated on
the continued transformation
of The Goodyear Tire & Rubber
Company into a market-
focused, cost-competitive
company that provides superior
products and services, along
with superior returns for our
shareholders.
• Six of our seven business units distinguished
themselves with continued strong financial
performance, resulting in an accelerated busi-
ness momentum that has provided both finan-
cial results and insights that are being applied
to our North American operational turnaround.
• We needed to rebuild relationships and credi-
bility with our large network of independent
dealers in North American Tire, and we
accomplished that huge task.
We are confident that we
• We launched a successful debt refinancing
early in the year to extend our obligations and
position our balance sheet to the point where
we had the capability to progress our turn-
around plan, and we succeeded with the
completion of a $3.3 billion refinancing.
This was a crucial first step in our refinancing
program.
have a winning strategy in place, and we are
aggressively executing against that strategy.
There remains much work to do, but the tide is
beginning to turn.
The year 2003 was one of many accomplish-
ments at Goodyear, with much of our focus direct-
ed toward the North American Tire business, the
nearly $7 billion operation that represents almost
half of our sales. Other initiatives addressed our
overall financial condition and sought to build
on our global brand, product and distribution
strengths. We adopted very aggressive market-
place and cost strategies to achieve our goals. We
made fact-based decisions with passion, with
speed, and with the courage that is necessary
when taking bold action.
2003 Actions
• We completed a restatement of our previously
reported financial results, which unfortunately
delayed the release of our 2003 financial state-
ments. As disappointing as it was for us to be
in this situation, it was a positive factor that
our people identified the accounting issues in
our overseas operations. We have taken steps
to address the issues identified during the
restatement process, and we are implementing
strengthened and improved controls to ensure
that these problems do not reoccur. The entire
company is committed to full and accurate
public reporting.
2 G o o d y e a r 2 0 0 3
Robert J. Keegan
Chairman, Chief Executive Officer & President
• We completed very painful, but critically neces-
sary job cuts to reduce our cost base. We did
what was necessary.
technology and extremely talented associates. We
fulfilled our promise.
The new tires are distinctive. They offer
• We concluded intense negotiations with the
United Steelworkers of America in which we
needed significant cost savings to provide the
Company the financial flexibility to support
our turnaround plans. Again, we met the
challenge.
We were able to meet our 2003 challenges
one-by-one. Today we are continuing to drive
improved results and accelerate the business
progress that we have established.
Business Momentum
Over the past three years, we’ve made significant
strides in terms of financial performance and
market position in six of our seven businesses.
Engineered Products, Chemical, European Union,
Eastern Europe, Africa and the Middle East, Asia
and Latin America have experienced both market
and financial success for the second year in a row.
We achieved this by focusing on the key features
of the Company’s turnaround strategy – leader-
ship, cash, cost and revenue growth. Our Six
Sigma initiatives continue to deliver for us as we
improve both our cost structure and our market
sensing.
While our seventh business – North American
Tire – is still in the early stages of recovery, we are
driving improvement in its key strategic areas.
Assurance
The exciting launch of the Assurance family of
tires is just one of the many positive actions that
helps illustrate the new direction of Goodyear.
This product family is a direct response to our
customers’ needs. At the 2003 North American
Tire dealer conference, we promised to help our
customers jump-start their businesses with new
products targeted at key consumer benefits. From
the very beginning, Assurance was a fully integrat-
ed endeavor between our technical, manufactur-
ing and marketing teams. The tire was developed
with unprecedented speed, utilizing our very best
industry-leading performance. Assurance featuring
ComforTred Technology offers a smooth and
quiet ride and provides the ultimate luxury driving
experience. Assurance featuring TripleTred
Technology is a premium all-season tire designed
to provide peace of mind in any driving conditions.
When we unveiled these tires to our North
American dealers in February, they immediately
realized they would be selling the best broad-
market passenger tires on the market. They
responded with excitement, enthusiasm and
support.
Consumers are contacting us to rave about
the Assurance ride; they tell us the ride from
Assurance with ComforTred feels like they’re
driving a new car. Assurance featuring TripleTred
Technology became available to consumers in late
April, and promptly was accorded prestigious
status as one of 20 hot new technology products
from Popular Science magazine. To quote this
popular magazine, “With three zones – one for
dry roads, one for rain and one for icy conditions –
the Goodyear Assurance tire with TripleTred
technology is the most complete approach to all-
season tires we’ve seen. The new kid in this tire
is the Ice Zone, whose embedded volcanic sand
supplies extra grip when plain old rubber just
won’t do.” The Assurance with TripleTred
Technology was one of just two products singled
out among the 20 as truly innovative.
Actual demand for the Assurance family is
three times our initial estimates and we have
expanded our production from Lawton, Oklahoma
to include our tire plants in Napanee, Ontario;
Gadsden, Alabama; and Tyler, Texas.
It is clear that Assurance is a brand that will be
a success, and it joins our existing strong portfolio
featuring Eagle, Wrangler and Fortera tires.
We couldn’t be more delighted. The same
is true with our dealers. However, the real benefi-
ciaries will be the car owners who purchase
Assurance tires.
G o o d y e a r 2 0 0 3 3
Segment Operating Income
Dollars in millions
200
150
100
50
0
4
3
1
0
0
1
4
4
7
4
1
8
4
1
3
9
7
0
1
5
8
2001*
2002*
2003
9
1
1
9
8
4
1
EEAME
EUROPEAN
UNION
0
4 5
4
8
4
1
4
2
4
0
2
5
1
LATIN
AMERICA
ASIA
EPD
CHEMICAL
*Restated
Business momentum in six of our seven businesses
Operationally, our cash focus is strong. We will
continue that effort through much better margins,
selective investment and working capital manage-
ment, with an overriding insistence that cash
expectations drive all our decisions.
A LOWER COST STRUCTURE
Our philosophy on cost is simple: If an activity
adds value, we will feed it. If it doesn’t, we will
seek to eliminate it. We have made difficult cost
choices, and we will continue to do so.
We have committed to having a competitive
cost structure in place, and have taken significant
actions over the past year to offset headwinds that
we face in rising raw material costs, energy costs,
health benefit and pension costs to help position
ourselves for the future. We closed manufacturing
facilities in Huntsville, Alabama; Cartersville,
Georgia; and Stow, Ohio.
Seven Reasons to Believe
Our positive business momentum is a direct result
of a plan based on seven strategic drivers of our
business – what we refer to as the Seven Reasons
to Believe in Goodyear. These seven strategies are
at the heart of all of our Company’s activities
moving forward, and we are fully focused on
their successful execution.
LEADERSHIP
These seven initiatives are not in rank order of
importance, with the single exception being
leadership. The rationale is simple: without the
right leadership, the other strategies could not be
successfully executed. We have taken major steps
globally. We have made both broad and deep
changes to our leadership teams and our organi-
zational structure. Particular attention has been
paid to North American Tire, to ensure that we
have the right people in the right positions
throughout the business unit. Our leadership
team has the right skills, the right experience, the
right mindset and the right incentives to execute
a significant turnaround of our Company.
A FOCUS ON CASH
In last year’s letter, we talked about the impor-
tance of the successful refinancing that was
completed in April 2003. That effort extended the
term of our financing and acted as an enabler for
our plan. In early 2004, we successfully refi-
nanced portions of that debt again, to increase
our financial flexibility. Going forward, we need to
refinance debt obligations before they mature,
and may seek access to the capital markets as part
of this effort. These efforts are necessary to the
continued execution of our plans. In addition to
addressing near-term obligations, we are also
reviewing transactions that would reduce the
Company’s debts. These measures will help the
Company address its financial challenges, includ-
ing increased interest costs, mandatory pension
contributions and large debt maturities in 2005
and 2006.
4 G o o d y e a r 2 0 0 3
We expanded production at low-cost facilities
in Debica, Poland; Kranj, Slovenia and Americana,
Brazil. We eliminated 500 salaried staff positions in
North American factories and reduced U.S.
salaried staffing by an additional 700. While some-
times painful, these cuts were necessary to restore
competitiveness and profitability. In the summer
of 2003, we faced critical negotiations with the
United Steelworkers of America in the United
States. The resulting three-year contract will
provide significant savings against those head-
winds as well as the financial flexibility to support
our plans. We are aggressively addressing cost
issues with productivity gains made through our
efforts in Six Sigma and Lean Manufacturing.
We will take greater advantage of Goodyear’s
global manufacturing footprint to compete with
the increasing volume of tires being imported
into the North American and Western European
markets.
LEVERAGE DISTRIBUTION
Goodyear has the broadest and deepest dealer
network in the industry, and we intend to leverage
this powerful asset more fully. One of our most
crucial objectives last year was to rebuild our rela-
tionships and our credibility with our network of
independent tire dealers in North America. In early
2003 we were struggling in our performance as a
supplier and in our overall dealer relationships.
We committed to improving those relation-
ships, and we changed our own emphasis to
building our customers’ businesses, not simply
selling tires to them. After more than a year of
hard work, the difference in these relationships
is unmistakable. We are living up to our commit-
ments, and we are implementing new initiatives
that leverage our relationships with dealers in
North America and around the world. Today, our
dealers have, once again, become Goodyear’s
most important external supporters.
BUILDING BRAND STRENGTH
We continue to improve our consumer market
share globally in the Goodyear brand business,
and a great portfolio of brands around the world
supports our flagship brand. We are now position-
ing all of our brands more effectively and investing
sufficient dollar weight to grow them.
We are making Dunlop a brand of choice for
the enthusiast market, and we are breathing new
life into the Kelly brand in North America through
new marketing initiatives and original equipment
opportunities. Future product launches will contin-
ue to help differentiate our brands in the market-
place, and they will be backed by fully integrated
marketing support. In Europe, the Dunlop brand
has been a huge success among the enthusiast
media and consumers with prestigious fitments
and outstanding performance on premier
European performance vehicles, further strength-
ening an already powerful European brand.
PRODUCT LEADERSHIP
Goodyear has never had a stronger product line-
up. As mentioned earlier, the Assurance tires are
quite simply the best-performing broad market
passenger tires you can buy. The Eagle F-1 also
has distinguished itself both in Europe and North
America as the top ultra-high performance tire,
and we are currently launching that product in
the Asia region where we expect similar accolades
and market success.
In Europe, we launched bold new products
designed to further differentiate our brands in
the market. The Goodyear HydraGrip is a high-
performance summer tire specially developed for
rainy and wet weather conditions. The Dunlop
Sport Maxx performance tire was designed for
superior dry handling, high-speed stability and
excellent acceleration and braking performance.
Fulda, our German-engineered brand, introduced
Fulda Kristall Supremo, a new-generation high-
performance winter tire offering outstanding
protection against ice, snow and hydroplaning.
G o o d y e a r 2 0 0 3 5
Within the past year, we have revitalized our
truck tire business with the launch of new prod-
ucts in all of our global markets, including nine
new commercial truck tires in Europe last fall. Our
customers tell us we have the best performing
truck tire package in the industry and, as a result,
we have won very significant new business. The
investments we made in this business two years
ago are now paying off.
Our technology and marketing teams have
been charged with continuing the new product
momentum by bringing forward more outstanding
new tires on greatly accelerated timelines. There is
a lot of excitement to come.
ADVANTAGED SUPPLY CHAIN
Our Company’s leadership team shares one
common trait – an unwavering commitment to
the customer. Our customers are critical to our
success, and through an advantaged supply
chain we are improving our service levels to
exceed their business requirements and improve
their businesses.
Our new supply chain organization was
designed, staffed and funded to create a
competitive advantage in our industry for our
customers and for Goodyear. We are implement-
ing a new customer ordering process that is
accurate, streamlined, simple and works with
unprecedented accuracy. It is designed to get
the right tire to the right place at the right time,
while keeping costs and inventories low.
Looking Forward
Our new and focused management team is
committed to winning with the strategies we are
putting in place. There is a great deal of positive
momentum and energy. We have set our expecta-
tions very high, and we plan to exceed them.
On behalf of the entire Company, I would
like to express my appreciation to the customers
and associates who are making the turnaround
happen. And thank you to our shareholders for
your continued confidence.
In the last 18 months, various audiences have
asked, “How can we help Goodyear’s turn-
around?” There’s one very simple way you can
help: Try one of our new products, and let us
know about your experiences. We are confident in
our new product lines, and our commitment to
quality, customer satisfaction and innovation. You
will not be disappointed. Then tell a friend. We’re
happy with success one customer at a time.
We believe in our ability to win with the excep-
tional assets we have at our disposal. The future –
our future – is promising.
Robert J. Keegan
Chairman, Chief Executive Officer & President
6 G o o d y e a r 2 0 0 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW
The Goodyear Tire & Rubber Company is one of the world's leading manufacturers of tires and rubber
products with one of the most recognized brand names in the world. We have a broad global footprint with 95
manufacturing facilities in 28 countries. Our business is run through seven operating segments: North
American Tire; European Union Tire; Eastern Europe, Africa and Middle East Tire; Latin America Tire; Asia
Tire; Engineered Products; and Chemical Products.
In each of the last three years we have experienced signiÑcant net losses. Our net losses for 2003, 2002
and 2001 were $802.1 million, $1,227.0 million (as restated and including a non-cash charge of $1.20 billion to
establish a tax valuation allowance) and $254.1 million (as restated), respectively. Our results are highly
dependent upon the results of our North American Tire segment, which accounted for approximately 45% of
our consolidated net sales in 2003. In recent years, North American Tire results have been negatively
impacted by several factors, including over-capacity which limits pricing leverage, weakness in the replace-
ment tire market, increased competition from low cost manufacturers, a decline in market share and increases
in medical and pension costs. In 2003, North American Tire has a segment operating loss of $128.7 million
compared to a segment operating loss of $57.1 million (as restated) for 2002 and segment operating income of
$100.9 million (as restated) for 2001. In our second largest segment, European Union Tire, we had segment
operating income of $133.5 million, $100.2 million (as restated) and $44.2 million (as restated) in 2003, 2002
and 2001, respectively. Approximately 29% of the increase in segment operating income from 2002 to 2003 is
attributable to the strength of the Euro. The segment operating income of our Ñve other operating segments
has remained strong and has increased each year since 2001.
In addition to the disappointing results of our North American Tire segment, increases in raw material
and energy costs have oÅset many of the beneÑts of the numerous cost reduction actions we have taken over
the past year. In particular, in 2003, the price of one of our most important raw materials, natural rubber,
increased approximately 36% and the cost of oil increased approximately 25% over the same period. We
estimate that the rise in raw material costs increased our Cost of Goods Sold by approximately $335 million in
2003. We expect that the price of oil and natural rubber will continue to increase in 2004. Increased interest
expense and Ñnancing fees also negatively impacted our results in 2003. Interest expense increased from
$241.7 million (as restated) in 2002 to $296.3 million in 2003 primarily due to our reÑnancing eÅorts. Fees
and expenses related to our reÑnancing eÅorts in 2003 totaled approximately $120 million, of which
$45.6 million was charged against income in 2003. The amount charged against income in 2003 of $45.6
million included the writeoÅ of unamortized fees associated with the facilities that were replaced. Financing
activities completed in the Ñrst quarter of 2004 will further increase our interest expense.
A key indicator of our operating performance is market share, especially in our two largest regions, North
America and western Europe. Listed below is our estimated market share in each of these two regions for our
two primary tire markets: Original Equipment and Replacement.
North
America
Estimated
Market Share
2002
2003
Western
Europe
Estimated
Market Share
2002
2003
Original Equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Replacement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
41.6% 41.3% 23.6% 25.5%
25.6
26.2
23.8
23.2
The above percentages are estimates only and are based on a combination of industry publications and surveys
and internal company surveys. In the North American replacement market, a signiÑcant increase in business
in our dealer channel was not enough to oÅset a large loss in the lower margin private label market primarily
due to aggressive competition by low cost foreign manufacturers. The North American original equipment
market remained steady even as we became more selective in the Ñtments we pursued with vehicle
manufacturers. In western Europe, the increase in the replacement market was due to the successful
7
introduction of several new products and an increased focus on sales by product. The reduction in our share of
the western European original equipment market is largely due to our strategy to be more selective in pursuing
original equipment Ñtments.
We reÑnanced most of our debt on April 1, 2003 with facilities that are secured by a substantial portion of
our assets. While we completed additional debt reÑnancing in the Ñrst quarter of 2004, we must take
additional actions, including accessing the capital markets or reÑnancing additional debt, to ensure that we
have suÇcient liquidity over the long term. For example, we have a number of obligations coming due over the
next few years, including substantial required domestic pension plan obligations of approximately $160 million
in 2004 and approximately $325 million to $350 million in 2005. In addition, after taking into account the
paydown of certain obligations in connection with our recent Ñnancing activities, we have an aggregate of
$1,343 million and $1,481 million of long-term debt coming due in 2005 and 2006, respectively. We expect to
meet our obligations as they come due through available cash and cash equivalents, internally generated funds
and borrowings. While new Ñnancing may be available to us, access to such Ñnancing cannot be assured given
the recent performance of our business, our current debt ratings and restrictions on our ability to pledge
additional assets as security. Failure to obtain new Ñnancing could have a material adverse eÅect on our
liquidity.
Given these and other obligations, unanticipated events could signiÑcantly impact our liquidity. For
example, although we have entered into a conditional settlement agreement to resolve a substantial portion of
product liability claims relating to a rubber hose product we previously manufactured, unless this settlement is
Ñnalized, we will be subject to numerous claims, the resolution of which could have a material adverse eÅect
on our results of operations, Ñnancial position and liquidity.
During the third quarter of 2003, our management and our Audit Committee determined that it was
appropriate to restate our previously issued Ñnancial results to record adjustments resulting from various
accounting matters. The results of an investigation into potential accounting improprieties in our overseas
operations led to an additional restatement. The impact of these restatements is described in Note 2 to our
Financial Statements. We are currently subject to an SEC investigation into the facts and circumstances
surrounding the restatement. We cannot predict the outcome of the investigation, and any adverse develop-
ments in connection with the investigation, including the initiation of an enforcement action, could be costly
and could seriously harm our business.
RESULTS OF OPERATIONS
(All per share amounts are diluted)
CONSOLIDATED
Net sales in 2003 were $15.12 billion, compared to $13.86 billion (as restated) in 2002 and $14.16 billion (as
restated) in 2001.
A net loss of $802.1 million, $4.58 per share, was recorded in 2003. A net loss of $1.23 billion (as
restated), $7.35 per share (as restated), was recorded in 2002, primarily resulting from a non-cash charge of
$1.20 billion (as restated) to establish a valuation allowance against Goodyear's net Federal and state deferred
tax assets. The valuation allowance was determined in accordance with the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), ""Accounting for Income Taxes.'' A net loss of $254.1
million (as restated), $1.59 per share (as restated), was recorded in 2001.
8
Net Sales
(In millions of tires)
North American Tire (U.S. and Canada) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Replacement tire units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
North American Tire (U.S. and Canada) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
OE tire units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
2001
2002
2003
68.6
82.0
150.6
32.6
30.3
62.9
69.8
77.9
147.7
34.1
32.5
66.6
79.7
75.5
155.2
32.3
31.8
64.1
Goodyear worldwide tire units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
213.5
214.3
219.3
Goodyear's worldwide tire unit sales decreased 0.3% in 2003 compared to 2002. North American Tire (U.S.
and Canada) volume decreased 2.5% in 2003, while international unit sales increased 1.7%. Worldwide
replacement unit sales increased 2.0% from 2002, due to increases in all regions except North American and
Asia Tire. Original equipment unit sales decreased 5.6% in 2003, due to decreases in all regions except Eastern
Europe, Africa and Middle East Tire and Asia Tire.
Goodyear's worldwide tire unit sales in 2002 decreased 2.3% compared to 2001. North American Tire
(U.S. and Canada) volume decreased 7.2% in 2002, while international unit sales increased 2.9%. Worldwide
replacement unit sales decreased 4.9% from 2001, due to decreases in North American Tire and European
Union Tire. Original equipment unit sales increased 4.0% in 2002, due to increases in all regions except Latin
American Tire and Eastern Europe, Africa and Middle East Tire. Unit sales in North American Tire in 2002
included approximately 500 thousand tires in connection with the Ford Motor Company (""Ford'') tire
replacement program, compared to approximately 5 million in 2001.
Revenues increased 9.1% in 2003 primarily due to favorable currency translation of approximately
$737 million, largely related to the strong Euro. Favorable pricing and product mix in all business units, but
primarily in Latin American Tire, Chemical Products and North American Tire, accounted for approximately
$418 million of the increase in revenues. In Europe, strong replacement sales also had a favorable impact on
2003 net sales of approximately $104 million.
Revenues (as restated) decreased 2.2% in 2002 compared to 2001 primarily due to lower tire unit volume
of approximately $250 million, largely in North American Tire, and the negative impact of currency
translation on international results of approximately $102 million (as restated), primarily in Latin American
Tire. Revenues in 2002 were also negatively impacted as a result of the sale of the Specialty Chemical
Business in the fourth quarter of 2001. The Specialty Chemical Business contributed approximately
$127 million of sales in 2001. Revenues were favorably aÅected by tire pricing and product mix improvements,
mainly in Latin American Tire, of approximately $167 million.
Cost of Goods Sold
Cost of goods sold (CGS) was 82.6% of sales in 2003, compared to 81.6% in 2002 and 82.5% in 2001. CGS in
2003 was adversely impacted by approximately $554 million due to currency movements, primarily in Europe,
and by approximately $335 million in higher raw material costs, largely natural and synthetic rubber. CGS in
2003 was also unfavorably impacted by approximately $133 million related to accelerated depreciation
charges, asset impairment charges and writeoÅs, related to the 2003 rationalization actions. Changes in
product mix of approximately $184 million, primarily in North American Tire and inÖationary cost increases
in Latin American Tire also negatively impacted 2003 CGS. Savings from rationalization programs of
approximately $61 million, mainly European Union Tire and North American Tire, and the change in
vacation policy described below of approximately $33 million favorably impacted 2003 CGS.
CGS (as restated) in 2002 beneÑted by approximately $204 million from lower raw material costs and
other purchasing savings. CGS also decreased by approximately $220 million (as restated) as a result of lower
9
sales volume compared to 2001 and the impact of the sale of the Specialty Chemical Business, which
contributed approximately $103 million of CGS in 2001. CGS beneÑted by approximately $82 million (as
restated) due to currency movements, primarily in Brazil, Argentina and South Africa partially oÅset by
unfavorable currency movements in European Union and by approximately $30 million due to lower
transportation costs in North American Tire. Savings from rationalization programs of approximately
$20 million also favorably impacted CGS in 2002. 2002 CGS increased approximately $238 million as a result
of changes in product mix, mainly North American Tire and inÖationary cost increases in Latin American
Tire. CGS was unfavorably impacted by $10 million related to the closure of Penske Automotive Centers in
2002. Compared to 2001, CGS in 2002 was adversely aÅected by lower demand and approximately
$76 million (as restated) in higher unit costs primarily resulting from signiÑcantly lower levels of plant
utilization. In addition, 2001 CGS included a charge of $30 million for a proactive tire replacement program
covering certain tires in service on 15-passenger vans and ambulances.
Research and development expenses are included in CGS and were $350.4 million in 2003, compared to
$385.8 million (as restated) in 2002 and $371.8 million (as restated) in 2001. Research and development
expenditures in 2004 are expected to be approximately $369 million.
Selling, Administrative and General Expense
Selling, administrative and general expense (SAG) in 2003 was 15.7% of sales, compared to 15.9% in 2002
and 15.7% in 2001. SAG increased in 2003 primarily due to foreign currency translation, mainly the Euro, of
approximately $132 million and higher wages and beneÑts of approximately $72 million. Also negatively
impacting SAG was increased advertising expense, largely in European Union Tire and North American Tire,
of approximately $29 million and increased corporate consulting fees of approximately $23 million. SAG was
favorably impacted by rationalization programs of approximately $74 million and by the change in vacation
policy described below of approximately $34 million.
SAG (as restated) decreased in dollars in 2002 compared to 2001 primarily as a result of the absence of
expenses for amortization of goodwill and intangible assets with indeÑnite useful lives of approximately
$19 million due to Goodyear's adoption of Statement of Financial Accounting Standards No. 142 (SFAS
142), ""Goodwill and Other Intangible Assets.'' SAG also decreased as a result of the impact of the sale of the
Specialty Chemical Business, which contributed approximately $12 million of SAG in 2001. In addition,
reductions in media expense of approximately $31 million (as restated) (including advertising and administra-
tive expenses), and reductions in computer related charges of approximately $20 million (as restated) also
beneÑted SAG. SAG was adversely impacted by increased wage and beneÑt costs of approximately $60
million (as restated) in 2002 compared to 2001.
Other Financial Information
Net loss in 2001 included expenses related to amortization of goodwill and intangible assets with indeÑnite
useful lives totaling $29.1 million before tax (as restated). In accordance with SFAS 142, amortization of
goodwill and intangible assets with indeÑnite useful lives ceased at January 1, 2002. For further information,
refer to the note to the Ñnancial statements No. 7, Goodwill and Other Intangible Assets.
During 2002, Goodyear announced the suspension of the matching contribution portion of its savings
plans for all salaried associates, eÅective January 1, 2003. EÅective April 20, 2003, the Company suspended
the matching contribution portion of the savings plan for bargaining unit associates including those covered by
Goodyear's master contract with the United Steelworkers of America (""USWA''). Goodyear contributed
approximately $38 million to the savings plans in 2002. In addition, the Company changed its vacation policy
for domestic salaried associates in 2002. As a result of the changes to the policy, the Company did not incur
vacation expense for domestic salaried associates in 2003. Vacation expense was approximately $67 million
lower in 2003 compared to 2002 due to this change in vacation policy.
10
Interest Expense
Interest expense in 2003 was $296.3 million, compared to $241.7 million (as restated) in 2002 and
$297.1 million (as restated) in 2001. Interest expense increased in 2003 due to higher average debt
outstanding. Interest expense decreased in 2002 compared to 2001 due to both lower average debt levels and
lower interest rates.
Other (Income) and Expense
Other (income) and expense was $267.3 million in 2003, compared to $56.8 million (as restated) in 2002 and
$40.8 million (as restated) in 2001. Other (income) and expense included accounts receivable sales fees, debt
reÑnancing fees and commitment fees totaling $99.4 million, $48.4 million and $50.1 million in 2003, 2002
and 2001, respectively. The increase in 2003 in Ñnancing fees and Ñnancial instruments is due to the costs
incurred in connection with the restructuring and reÑnancing of the Company's bank credit and receivables
securitization facilities discussed below. Financing fees and Ñnancial instruments included $45.6 million in
2003 related to the new facilities. Refer to Note 11, Financing Arrangements and Derivative Financial
Instruments, for further information about the restructuring and reÑnancing. Goodyear expects to incur
additional Ñnancing fees in the future related to reÑnancings or capital market transactions.
Other (income) and expense in 2003 included a loss of $17.6 million ($8.9 million after tax or $0.05 per
share) on the sale of 20,833,000 shares of Sumitomo Rubber Industries, Ltd. (""SRI'') in the second quarter.
2003 included a loss of $11.6 million ($11.2 million after tax or $0.07 per share) on the sale of assets in the
Engineered Products, North American Tire and European Union Tire Segments. 2003 also included a gain of
$7.7 million ($6.4 million after tax or $0.04 per share) resulting from the sale of land in the Asia Tire Segment
and assets in the Latin American and European Union Tire Segments.
Other (income) and expense also includes General and product liability-discontinued products which
includes charges for claims against Goodyear related to asbestos personal injury claims and for anticipated
liabilities related to Entran II claims, primarily for a proposed settlement of such claims. Goodyear recorded
net charges for General and product liability-discontinued products totaling approximately $145 million in
2003 which included recognition of a receivable of approximately $131 million from Goodyear's insurance
carriers. Refer to Note 20, Commitments and Contingent Liabilities, for further information about general
and product liabilities.
Other (income) and expense in 2002 included gains of $28.0 million (as restated) ($23.7 million after
tax or $0.14 per share (as restated)) resulting from the sale of land and buildings in the Latin American Tire,
Engineered Products and European Union Tire Segments. The writeoÅ of a miscellaneous investment of
$4.1 million ($4.1 million after tax or $0.02 per share) was also included in Other (income) and expense in
2002.
Other (income) and expense in 2001 included gains of $18.4 million (as restated) ($14.7 million after
tax or $0.09 per share (as restated)) resulting from the sale of land and buildings in the European Union Tire
Segment and $27.4 million ($16.9 million after tax or $0.10 per share) resulting from the sale of Goodyear's
Specialty Chemical Business.
For further information, refer to the note to the Ñnancial statements as restated No. 4, Other (Income)
and Expense.
Foreign Currency Exchange
Foreign currency exchange loss was $40.2 million in 2003, compared to a gain of $9.7 million (as restated) in
2002 and a loss of $10.0 million (as restated) in 2001. Foreign currency exchange in 2003 was adversely
impacted by approximately $48 million due to currency movements on U.S. dollar denominated monetary
items in Brazil and Chile. Foreign currency exchange in 2002 beneÑted by approximately $16 million from
currency movements on U.S. dollar denominated monetary items in Brazil. A loss of approximately $8 million
resulting from currency movements on U.S. dollar denominated monetary items in Argentina was also
incurred in 2002.
11
Equity in (Earnings) Losses of AÇliates
Equity in (earnings) losses of aÇliates was $12.1 million in 2003, compared to $13.2 million (as restated) and
$39.7 million (as restated) in 2002 and 2001, respectively. Equity in (earnings) losses of aÇliates improved in
2002 compared to 2001 due to the rationalization charges incurred in 2001 by South PaciÑc Tyres (SPT), an
Australian tire manufacturer in which Goodyear owns a 50% equity interest. Goodyear's share of a net
rationalization credit recorded by SPT was $1.1 million ($1.1 million after tax or $0.01 per share) in 2002.
Goodyear's share of rationalization charges recorded by SPT in 2001 totaled $24.0 million ($24.0 million after
tax or $0.15 per share).
Income Taxes
For 2003, Goodyear recorded tax expense of $112.2 million on a loss before income taxes and minority interest
in net income of subsidiaries of $654.9 million. The diÅerence between Goodyear's eÅective tax rate and the
U.S. statutory rate was primarily attributable to the Company continuing to maintain a full valuation
allowance against its net Federal and state deferred tax assets. In 2002, a non-cash charge of $1.20 billion (as
restated) ($6.86 per share (as restated)) was recorded to establish the valuation allowance against the net
Federal and state deferred tax assets. Goodyear had a tax beneÑt at an eÅective rate of 24.6% (as restated) for
2001.
In 2002, Goodyear also determined that earnings of certain international subsidiaries would no longer be
permanently reinvested in working capital. Accordingly Goodyear recorded a provision of $50.2 million for the
incremental taxes incurred or to be incurred upon inclusion of such earnings in Federal taxable income.
For further information, refer to the note to the Ñnancial statements No. 14, Income Taxes.
Rationalization Activity
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. Goodyear
recorded net rationalization costs of $291.5 million in 2003, $5.5 million (as restated) in 2002 and
$210.3 million (as restated) in 2001. As of December 31, 2003, Goodyear has reduced employment levels by
approximately 16,400 from December 31, 2000 and almost 25,400 since 1998, primarily as a result of
rationalization activities.
During 2003, net charges of $291.5 million ($267.1 million after tax or $1.27 per share) were recorded,
which included reversals of $15.7 million ($14.3 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 $307.2 mil-
lion ($281.4 million after tax or $1.34 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 outÖows, primarily
associate severance costs, and $132.4 million related primarily to non-cash special termination beneÑts and
pension and retiree beneÑt curtailments. In 2003, $200.4 million and $15.5 million, respectively, was incurred
primarily for severance payments and noncancellable lease costs. Approximately 4,400 associates will be
released under the programs initiated in 2003, of which approximately 2,700 were exited in 2003. The majority
of the remaining accrual balance for all programs of $141.9 million is expected to be utilized by the end of
2004.
As part of the 2003 rationalization program, Goodyear closed its Huntsville, Alabama tire facility in the
fourth quarter. Of the $307.2 million of new charges, approximately $138 million related to the Huntsville
closure primarily for associate-related costs, including severance, special termination beneÑts and pension and
retiree beneÑt curtailments. The Huntsville closure also resulted in approximately $35 million of asset
impairment charges and $85 million of accelerated depreciation charges and the writeoÅ of spare parts.
Approximately $8 million of construction in progress was written oÅ in the Ñrst quarter of 2003 related to the
research and development rationalization plan. Approximately $5 million of accelerated depreciation charges
were recorded for equipment taken out of service in the European Union related to two rationalization plans at
12
Goodyear's Wolverhampton facility. These amounts are recorded as CGS on the Consolidated Statement of
Operations.
Goodyear recorded a net rationalization charge totaling $5.5 million (as restated) ($6.4 million after tax
or $0.03 per share (as restated)) in 2002, which included reversals of $18.0 million (as restated)
($14.3 million after tax or $0.09 per share (as restated)) for reserves from rationalization actions no longer
needed for their originally intended purposes, new charges of $26.5 million ($23.0 million after tax or $0.14
per share) and other credits of $3.0 million (as restated) ($2.3 million after tax or $0.02 per share (as
restated)). The 2002 rationalization actions consisted of a manufacturing facility consolidation in Europe, the
closure of a mold manufacturing facility and a plant consolidation in the United States, and administrative
consolidations. Of the $26.5 million charge, $24.2 million related to future cash outÖows, primarily associate
severance costs, and $2.3 million related to a non-cash writeoÅ of equipment taken out of service in the
Engineered Products and North American Tire Segments.
Goodyear recorded net rationalization charges totaling $210.3 million (as restated) ($161.4 million after
tax or $1.00 per share (as restated)) in 2001, which included $4.1 million of reversals of prior year reserves no
longer needed for their originally intended purposes. These actions were in response to continued competitive
market conditions and worldwide economic uncertainty. Under these actions, Goodyear provided for
worldwide associate reductions through retail and administrative consolidation and manufacturing plant
downsizing and consolidation. Of this charge, $132.0 million (as restated) related to future cash outÖows,
primarily associate severance and noncancellable lease costs, and $82.4 million (as restated) related to non-
cash charges, primarily for the writeoÅ of equipment taken out of service. Goodyear completed these actions
during 2003 with the exception of ongoing severance and noncancellable lease payments.
Upon completion of the 2003 plans, the Company estimates that it will reduce annual operating costs by
approximately $280 million (approximately $70 million SAG and approximately $210 million CGS).
Goodyear estimates that SAG and CGS were reduced in 2003 by approximately $62 million as a result of the
implementation of the 2003 plans, approximately $41 million as a result of the implementation of the 2002
plans and approximately $76 million as a result of the implementation of the 2001 plans. Plan savings have
been substantially oÅset by higher SAG and conversion costs including increased compensation and beneÑt
costs.
The remaining reserve for costs related to the completion of the Company's rationalization actions was
$141.9 million at December 31, 2003, compared to $69.2 million at December 31, 2002.
For further information, refer to the note to the Ñnancial statements No. 3, Costs Associated with
Rationalization Programs.
UNION AGREEMENT
On September 15, 2003, the United Steelworkers of America (the ""USWA'') and Goodyear announced the
ratiÑcation of a new labor agreement. The agreement covers workers at 14 tire and engineered products plants
in the United States and contains provisions governing healthcare beneÑts, pension service and wages. The
agreement assigns protected plant status to 12 of the 14 plants and permits a 13th plant to achieve protected
status if certain productivity goals are met. A protected plant cannot be closed during the duration of the
agreement and Goodyear is generally required to maintain the current level of capital expenditures at these
plants. The agreement also gives Goodyear the option to reduce the hourly workforce at protected plants by
15% compared to August 2003 staÇng levels. Goodyear has also agreed to give USWA plants Ñrst
consideration on all new products intended for sale in North America to the extent covered plants have the
capacity and capability to manufacture the product. Goodyear retains the right to import tires from the
Company's plants outside of the United States to the extent the USWA plant that is manufacturing the
product is operating at full capacity. Under the agreement, the USWA has the right to nominate an individual
for a seat on Goodyear's Board of Directors. Goodyear has also agreed to remain neutral should the USWA
attempt to organize one of Goodyear's non-union facilities. Goodyear must also require a buyer of any of
Goodyear's plants to negotiate a labor agreement as a precondition of the sale.
13
Goodyear also committed under the agreement to consummate the issuance or placement of at least
$250 million of debt securities and at least $75 million of equity or equity-linked securities by December 31,
2003. Goodyear did not meet this commitment. As a result, the USWA may Ñle a grievance and strike. In the
event of a strike, the Company's Ñnancial position, results of operations and liquidity could be materially
adversely aÅected. Goodyear has also committed to launch, by December 1, 2004, a reÑnancing of its U.S.
term loan and revolving credit facilities due in April 2005 with loans or securities having a term of at least
three years. If Goodyear fails to complete this reÑnancing commitment, the USWA would have the right to
strike and Goodyear would be required to pay each covered union employee (approximately 13,700 as of
December 31, 2003) $1,000 and each covered union retiree (approximately 13,800 as of December 31, 2003)
$500. Finally, Goodyear committed to remain in compliance with the Interest Expense Coverage Ratio,
Consolidated Net Worth, and Senior Secured Indebtedness Ratio covenants in its U.S. revolving credit
facility. If Goodyear fails to remain in compliance with these covenants, it has agreed to use its best eÅorts to
seek a substantial private equity investment. Such investment would be expected to provide the investor with
signiÑcant inÖuence in the management and direction of Goodyear.
CRITICAL ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND UNCERTAINTIES
General Market Uncertainties
Goodyear's results of operations, Ñnancial position and liquidity could be adversely aÅected in future periods
by loss of market share or lower demand in the replacement market or from the original equipment industry,
which would result in lower levels of plant utilization that would increase unit costs. Also, Goodyear could
experience higher raw material and energy prices in future periods. These costs, if incurred, may not be
recoverable due to pricing pressures present in today's highly competitive market. Goodyear is unable to
predict future currency Öuctuations. Sales and earnings in future periods would be unfavorably impacted if the
U.S. dollar strengthens versus various foreign currencies. A continuation of the current economic conditions in
the United States and Europe is likely to unfavorably impact Goodyear's sales and earnings in future periods.
Similarly, continued volatile economic conditions in emerging markets could adversely aÅect sales and
earnings in future periods. Goodyear may also be impacted by economic disruptions associated with global
events including war, acts of terror and civil obstructions.
Critical Accounting Policies, Use of Estimates and Assumptions
The preparation of Ñnancial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that aÅect the amounts reported in the consolidated Ñnancial
statements and related notes to Ñnancial statements. Actual results could diÅer from those estimates. On an
ongoing basis, management reviews its estimates, including those related to the allowance for doubtful
accounts, recoverability of intangibles and other long-lived assets, deferred tax asset valuation allowance,
warranty, workers' compensation, litigation, general and product liabilities, environmental liabilities, pension
and postretirement beneÑts, and various other operating allowances and accruals, based on currently available
information. Changes in facts and circumstances may alter such estimates and aÅect results of operations and
Ñnancial position in future periods.
General and Product Liability and Other Litigation. Goodyear had recorded liabilities totaling $491.7 million
at December 31, 2003 and $240.7 million (as restated) at December 31, 2002 for potential product liability
and other tort claims, including related legal fees expected to be incurred. Of these amounts, $142.5 million
and $75.4 million (as restated) were included in Other current liabilities at December 31, 2003 and 2002,
respectively. The amounts recorded were estimated on the basis of an assessment of potential liability using an
analysis of available information with respect to pending claims, historical experience and, where available,
recent and current trends. The Company had recorded insurance receivables for potential product liability and
other tort claims of $199.3 million at December 31, 2003 and $81.0 million at December 31, 2002. Of this
amount, $100.1 million and $24.7 million was included in Current Assets as part of Accounts and notes
receivable at December 31, 2003 and December 31, 2002, respectively.
Asbestos. Goodyear is a defendant in numerous lawsuits alleging various asbestos related personal injuries
purported to result from alleged exposure to asbestos in certain rubber encapsulated products or aircraft
14
braking systems manufactured by Goodyear in the past or to asbestos in certain Goodyear facilities. Typically,
these lawsuits have been brought against multiple defendants in state and Federal courts.
In connection with the preparation of its 2003 Ñnancial statements, the Company engaged an independent
asbestos valuation expert to assist the Company in reviewing its reserves for asbestos claims, and review the
Company's method of determining its receivables from probable insurance recoveries. Prior to the fourth
quarter of 2003, the Company's estimate for asbestos liability was based upon a review of the various
characteristics of the pending claims by an experienced asbestos counsel.
The Company, based on the advice of the valuation expert, has recorded liabilities for both asserted and
unasserted claims at December 31, 2003 totaling $131.1 million, inclusive of defense costs. The recorded
liability represents the Company's estimated liability through 2008, which represents the period over which
the liability can be reasonably estimated. Due to the diÇculties in making these estimates, analysis based on
new data and/or changed circumstances arising in the future could result in an increase in the recorded
obligation in an amount that cannot currently be reasonably estimated, and that increase could be signiÑcant.
The portion of the liability associated with unasserted asbestos claims at December 31, 2003 is $31.9 million.
Prior to the fourth quarter of 2003, the Company did not have an accrual for unasserted claims as suÇcient
information was deemed to be not available to reliably estimate such an obligation. This conclusion was
further conÑrmed by the valuation expert during the preparation of the 2003 Ñnancial statements. At
December 31, 2003, the Company's liability with respect to asserted claims and related defense costs was
$99.2 million compared to $139.2 million at December 31, 2002, notwithstanding an increase in the number of
pending claims between December 31, 2002 and December 31, 2003. The reduction in the amount recorded at
December 31, 2003 compared to December 31, 2002 is due to reÑnements in certain assumptions used by the
valuation expert.
After reviewing the Company's recent settlement history by jurisdiction, law Ñrm, disease type and
alleged date of Ñrst exposure, the valuation expert cited two primary reasons for the Company to reÑne its
valuation assumptions. First, in calculating the Company's estimated liability, the valuation expert determined
that the Company had previously assumed that it would resolve more claims in the foreseeable future than is
likely based on its historical record and nationwide trends. As a result, the Company now assumes that a
smaller percentage of pending claims will be resolved within the predictable future. Second, the valuation
expert determined that it was not possible to estimate a liability for as many non-malignancy claims as the
Company had done in the past. As a result, the Company's current estimated liability includes fewer liabilities
associated with non-malignancy claims.
Goodyear maintains primary insurance coverage under coverage-in-place agreements as well as excess
liability insurance with respect to asbestos liabilities. Goodyear records a receivable with respect to such
policies when it determines that recovery is probable and it can reasonably estimate the amount of a particular
recovery.
Prior to 2003, Goodyear did not record a receivable for expected recoveries from excess carriers in respect
of asbestos related matters. Goodyear has instituted coverage actions against certain of these excess carriers.
After consultation with its outside legal counsel and giving consideration to relevant factors including the
ongoing legal proceedings with certain of its excess coverage insurance carriers, their Ñnancial viability, their
legal obligations and other pertinent facts, Goodyear determined an amount it expects is probable of recovery
from such carriers. Accordingly, Goodyear recorded a receivable during 2003, which represents an estimate of
recovery from its excess coverage insurance carriers relating to potential asbestos related liabilities.
The valuation expert also reviewed the Company's method of valuing its receivables recorded for
probable insurance recoveries. Based upon the model employed by the valuation expert, as of December 31,
2003, the Company recorded a receivable related to asbestos claims of $110.4 million. Based on the
Company's current asbestos claim proÑle, the Company expects that approximately 85% of asbestos claim
related losses will be recoverable up to its accessible policy limits. The receivable recorded consists of an
amount the Company expects to collect under coverage-in-place agreements with certain primary carriers as
well as an amount it believes is probable of recovery from certain of its excess coverage insurance carriers. Of
this amount, $20.4 million was included in Current Assets as part of Accounts and notes receivable at
15
December 31, 2003. Goodyear had recorded insurance receivables of $69.7 million at December 31, 2002. Of
this amount, $20.0 million was included in Current Assets as part of Accounts and notes receivable.
Goodyear believes that its reserve for asbestos claims, and the insurance assets recorded in respect of
these claims, reÖect reasonable and probable estimates of these amounts, subject to the exclusion of claims for
which it is not feasible to make reasonable estimates. The estimate of the assets and liabilities related to
pending and expected future asbestos claims and insurance recoveries is subject to numerous uncertainties,
including, but not limited to, changes in (i) the litigation environment; (ii) federal and state law governing the
compensation of asbestos claimants; (iii) the Company's approach to defending and resolving claims; and
(iv) the level of payments made to claimants from other sources, including other defendants. As a result, with
respect to both asserted and unasserted claims, it is reasonably possible that the Company may incur a
material amount in excess of the current reserve, however such amount cannot be reasonably estimated.
Heatway (Entran II). The Company is a defendant in 22 class actions or potential class actions and four
other civil actions in various Federal, state and Canadian courts asserting non-asbestos property damage
claims relating to Entran II, a rubber hose product that it supplied from 1989-1993 to Chiles Power Supply,
Inc. (d/b/a Heatway Systems), a designer and seller of hydronic radiant heating systems in the United States.
The plaintiÅs in these actions are generally seeking recovery under various tort, contract and statutory causes
of action, including breach of express warranty, breach of implied warranty of merchantability, breach of
implied warranty of Ñtness for a particular purpose, negligence, strict liability and violation of state consumer
protection statutes. In one of the above mentioned class actions, on October 9, 2003, the United States District
Court for District Court of New Jersey preliminarily approved a proposed national settlement agreement (the
Proposed Settlement) for pending Entran II claims in the U.S. and Canada, except for claims related to
property in six New England states, two judgments in Colorado state court, two judgments in Colorado
Federal court, and any future judgments involving claimants that opt out of the Proposed Settlement.
Claimants had until May 7, 2004, to opt out of the Proposed Settlement. The Company has the right to
withdraw from the Proposed Settlement if it determines in good faith and in its sole discretion that an
excessive number of persons have opted out of the class and the Proposed Settlement. As of May 17, 2004, the
Company had received notice that at least 525 potential sites had been opted out of the Proposed Settlement.
The Company is currently assessing its options with respect to the Proposed Settlement and expects to decide
shortly whether or not to withdraw from the Proposed Settlement.
The ultimate cost of disposing of Entran II claims is dependent upon a number of factors, including the
Company's ability to satisfy the contingencies in any settlement, the number of claimants that opt out of any
settlement, Ñnal approval of the terms of any settlement. Goodyear's ability to resolve claims not subject to
any settlement (including the cases in which the Company received adverse judgments), and, in the event
Goodyear fails to consummate a settlement for any reason, future judgments by courts in other currently
pending or yet unasserted actions. Depending on the resolution of these uncertainties, the costs associated with
Entran II claims could be signiÑcant and could have a material adverse eÅect on the Company's results of
operations, Ñnancial position and liquidity in future periods. Due to the uncertainties inherent in Entran II
matters, it is reasonably possible that there exists material liability beyond what Goodyear has already reserved
for, but such amounts cannot be reasonably estimated.
Other Actions. The Company is currently a party to various claims and legal proceedings in addition to those
noted above. If management believes that a loss arising from these matters is probable and can reasonably be
estimated, the Company records the amount of the loss, or the minimum estimated liability when the loss is
estimated using a range, and no point within the range is more probable than another. As additional
information becomes available, any potential liability related to these matters is assessed and the estimates are
revised, if necessary. Based on currently available information, management believes that the ultimate
outcome of these matters, individually and in the aggregate, will not have a material adverse eÅect on the
Company's Ñnancial position or overall trends in results of operations. However, litigation is subject to
inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary
damages or an injunction prohibiting the Company from selling one or more products. If an unfavorable ruling
were to occur, there exists the possibility of a material adverse impact on the Ñnancial position and results of
operations of the period in which the ruling occurs, or future periods.
16
Environmental Matters. Goodyear had recorded liabilities totaling $32.8 million at December 31, 2003 and
$53.5 million at December 31, 2002 for anticipated costs related to various environmental matters, primarily
the remediation of numerous waste disposal sites and certain properties sold by Goodyear. Of these amounts,
$7.7 million and $21.4 million were included in Other current liabilities at December 31, 2003 and
December 31, 2002, respectively. The costs include legal and consulting fees, site studies, the design and
implementation of remediation plans, post-remediation monitoring and related activities and will be paid over
several years. The amount of Goodyear's ultimate liability in respect of these matters may be aÅected by
several uncertainties, primarily the ultimate cost of required remediation and the extent to which other
responsible parties contribute. The liability was reduced in 2003 by approximately $17 million due to the
resolution related to one site during the year.
Workers' Compensation. Goodyear had recorded liabilities, on a discounted basis, totaling $194.0 million
and $152.4 million (as restated) for anticipated costs related to workers' compensation at December 31, 2003
and December 31, 2002, respectively. Of these amounts, $112.7 million and $66.4 million (as restated) were
included in Current Liabilities as part of Compensation and beneÑts at December 31, 2003 and December 31,
2002, respectively. The costs include an estimate of expected settlements on pending claims, defense costs and
a provision for claims incurred but not reported. These estimates are based on Goodyear's assessment of
potential liability using an analysis of available information with respect to pending claims, historical
experience, and current cost trends. The amount of Goodyear's ultimate liability in respect of these matters
may diÅer from these estimates.
Goodwill.
In January 2002, Goodyear adopted Statement of Financial Accounting Standards No. 142
(SFAS 142), ""Goodwill and Other Intangible Assets.'' Under this standard, Goodyear no longer amortizes
goodwill, but tests it annually for impairment because it is an asset with an indeÑnite useful life. However, the
occurrence of a potential indicator of impairment, such as a signiÑcant adverse change in legal factors or
business climate, an adverse action or assessment by a regulator, unanticipated competition, loss of key
personnel or a more-likely-than-not expectation that a reporting unit or a signiÑcant portion of a reporting unit
will be sold or disposed of, would result in Goodyear's having to perform the impairment analysis more
frequently than on an annual basis. These types of events and the resulting analysis could result in goodwill
impairment charges in future periods.
The Company determined estimated fair values of the reporting units using a valuation methodology
based largely on comparable company analysis. Under this method, the Company used an EBITDA multiple
representative of the global automotive industry sector to arrive at the fair value of each reporting unit. The
EBITDA multiple was adjusted to reÖect local market conditions and recent transactions. The EBITDA of
the reporting units was adjusted to exclude certain non-recurring or unusual items and corporate charges.
Deferred Tax Asset Valuation Allowance. At December 31, 2003, Goodyear had valuation allowances
aggregating $2.00 billion against all of its net Federal and state and some of its international subsidiaries
deferred tax assets.
The net Federal and state deferred tax assets are almost entirely composed of deductions available to
reduce Federal and state taxable income in future years. The international deferred tax assets include loss
carryforwards as well as deductions available to reduce future international taxable income.
The valuation allowance was calculated in accordance with the provisions of SFAS 109 which requires an
assessment of both negative and positive evidence when measuring the need for a valuation allowance. In
accordance with SFAS 109, evidence, such as operating results during the most recent three-year period, is
given more weight than our expectations of future proÑtability which are inherently uncertain. Goodyear's
U.S. losses in recent periods represented suÇcient negative evidence to require a full valuation allowance
against its net Federal and state deferred tax assets under SFAS 109. Goodyear intends to maintain a
valuation allowance against its deferred tax assets until suÇcient positive evidence exists to support realization
of the Federal and state deferred tax assets.
Pensions and Postretirement BeneÑts. Goodyear's recorded liability for pensions and postretirement beneÑts
other than pensions is based on a number of assumptions, including future health care costs, maximum
17
company covered beneÑt costs, life expectancies, retirement rates, discount rates, long term rates of return on
plan assets and future compensation levels. Certain of these assumptions are determined with the assistance of
outside actuaries. Assumptions about health care costs, life expectancies, retirement rates and future
compensation levels are based on past experience and anticipated future trends, including an assumption about
inÖation. Discount rates are based on market indicators at the time these assumptions are established. These
assumptions are regularly reviewed and revised when appropriate, and changes in one or more of them could
aÅect the amount of Goodyear's recorded expenses for these beneÑts. If the actual experience diÅers from
expectations, Goodyear's Ñnancial position, results of operations and liquidity in future periods could be
aÅected.
As of December 31, 2003, the aggregate projected beneÑt obligation for Goodyear's pension plans was
$6.88 billion. A 25 basis point change in the U.S. discount rate would impact pension expense in 2004 by
approximately $8 million. As of December 31, 2003, Goodyear's accumulated postretirement beneÑt
obligation was $3.08 billion. A 25 basis point change in the discount rate for its main U.S. plans would impact
2004 postretirement beneÑt expense by approximately $2 million.
Goodyear's U.S. pension asset returns were 23.5% for the year ended December 31, 2003. The unfunded
amount of Goodyear's projected beneÑt obligation at December 31, 2003 was $2.75 billion, compared to
$2.46 billion (as restated) at December 31, 2002. For the year ended December 31, 2003, Goodyear recorded
a $128 million beneÑt to Accumulated Other Comprehensive Income (Loss) for unfunded pension beneÑt
obligations, compared to a $1.28 billion charge for the year ended December 31, 2002. If market conditions
deteriorate, charges could increase in future periods.
Although subject to change, based on current estimates, Goodyear expects to make contributions to its
domestic pension plans of approximately $160 million in 2004, and approximately $325 million to $350 million
in 2005 to satisfy statutory minimum funding requirements. Goodyear will be subject to additional statutory
minimum funding requirements after 2005. The amount of funding requirements could be substantial and will
be based on a number of factors, including the value of the pension assets at the time as well as the interest
rate for the relevant period.
SEGMENT INFORMATION
Segment information reÖects the strategic business units of Goodyear, which are organized to meet customer
requirements and global competition. The Tire business is managed on a regional basis. Engineered Products
and Chemical Products are managed on a global basis.
Results of operations in the Tire and Engineered Products Segments were measured based on net sales to
unaÇliated customers and segment operating income. Results of operations of the Chemical Products
Segment were measured based on net sales (including sales to other SBUs) and segment operating income.
Segment operating income included transfers to other SBUs. Segment operating income was computed as
follows: Net Sales less CGS (excluding accelerated depreciation charges, asset impairment charges and asset
writeoÅs) and SAG (excluding corporate administrative expenses). Segment operating income also included
equity (earnings) losses in aÇliates. Segment operating income did not include the previously discussed
rationalization charges and certain other items.
Total segment operating income was $516.0 million in 2003, $416.7 million (as restated) in 2002 and
$321.1 million (as restated) in 2001. Total segment operating margin (segment operating income divided by
segment sales) in 2003 was 3.3%, compared to 2.9% (as restated) in 2002 and 2.2% (as restated) in 2001.
Management believes that total segment operating income is useful because it represents the aggregate
value of income created by the Company's SBUs and excludes items not directly related to the SBUs for
performance evaluation purposes. Total segment operating income is the sum of the individual SBUs' segment
operating income as measured in accordance with Statement of Financial Accounting Standard No. 131,
""Disclosures about Segments of an Enterprise and Related Information.'' Refer to the note to the Ñnancial
statements No. 18, Business Segments, for further information and for a reconciliation of total segment
operating income to Income (loss) before income taxes.
18
North American Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating MarginÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
2002
2001
Restated
101.2
$6,745.6
(128.7)
(1.9)%
103.9
$6,703.0
(57.1)
(0.9)%
112.0
$7,170.2
100.9
1.4%
North American Tire Segment unit sales in 2003 decreased 2.7 million units or 2.5% from 2002 and
10.8 million units or 9.6% from 2001. Replacement unit sales in 2003 decreased 1.2 million units or 1.5% from
2002 and 11.1 million units or 13.9% from 2001. Original equipment volume in 2003 decreased 1.5 million
units or 4.5% from 2002 and increased 0.3 million units or 0.7% from 2001.
Revenues in 2003 increased 0.6% from 2002 and decreased 5.9% from 2001. Net sales increased in 2003
due to improved pricing and product mix of approximately $118 million, primarily in the consumer
replacement and original equipment markets, and lower product related adjustments of approximately $10
million. The production slowdown by automakers and a decrease in the consumer replacement custom brand
channel contributed to lower volume of approximately $86 million in 2003.
Revenues (as restated) in 2002 decreased 6.5% from 2001. Sales in 2002 decreased compared to 2001
due to reduced volume of approximately $435 million, primarily in certain segments of the replacement
market and the lower tire units delivered in connection with the Ford tire replacement program initiated in
2001, partially oÅset by increased sales to original equipment manufacturers in 2002 as automakers increased
production. Unfavorable product mix in consumer and commercial replacement of approximately $27 million
also negatively impacted sales compared to 2001.
During 2002, Goodyear supplied approximately 500 thousand tire units with a segment operating income
beneÑt of approximately $10 million in connection with the Ford tire replacement program. Ford ended the
replacement program on March 31, 2002. During 2001, Goodyear supplied approximately 5 million tire units
with a segment operating income beneÑt of approximately $95 million in connection with the Ford
replacement program.
North American Tire segment operating income in 2003 decreased signiÑcantly from 2002 and 2001.
Higher raw materials costs of approximately $151 million, higher manufacturing conversion costs of
approximately $86 million, primarily related to contractual increases, and lower consumer volume of
approximately $12 million adversely impacted 2003 segment operating income. Segment operating income
beneÑted by approximately $66 million in savings related to rationalization programs and by approximately
$37 million due to lower research and development expenditures. One-time beneÑts of approximately
$51 million due to the change in the salaried associates' vacation policy discussed above and insurance
recoveries related to general and product liabilities of approximately $20 million also positively impacted 2003
segment operating income.
North American Tire segment operating income (as restated) decreased substantially in 2002 from 2001
due to lower tonnage and higher plant compensation costs and operating expenses of approximately
$161 million (as restated). Segment operating income was also negatively impacted by lower replacement
sales volume, including the Ford program, of approximately $74 million (as restated). Product mix, primarily
replacement consumer and commercial, unfavorably impacted segment operating income by approximately
$122 million (as restated) as did the impact of the $10 million charge related to the closure of Penske
Automotive Centers. Segment operating income in 2002 was favorably impacted by a decrease in raw material
costs of approximately $120 million and lower transportation costs of approximately $30 million. Lower SAG
expenses, due primarily to reduced advertising and information technology expenses, of approximately
$20 million (as restated) and savings from rationalization programs of approximately $13 million also
beneÑted 2002 segment operating income. In addition, 2001 included a charge of $30 million for a proactive
tire replacement program covering certain tires in service on 15-passenger vans and ambulances.
19
Segment operating income in 2001 included expenses related to amortization of goodwill and intangible
assets with indeÑnite useful lives totaling $3.5 million. In accordance with SFAS 142, amortization of goodwill
and intangible assets with indeÑnite useful lives ceased at January 1, 2002.
Segment operating income did not include net rationalization charges (credits) totaling $191.9 million in
2003, $(1.9) million in 2002 and $31.6 million in 2001. Segment operating income also did not include the
loss on asset sales of $3.8 million in 2003 and the writeoÅ of a miscellaneous investment totaling $4.1 million
in 2002.
Revenues and segment operating income in the North American Tire Segment may be adversely aÅected
in future periods by the eÅects of continued competitive pricing conditions, reduced demand in the
replacement market, changes in product mix, continued increases in raw material and energy prices, higher
wage and beneÑt costs and general economic conditions.
European Union Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating MarginÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
2002
2001
Restated
62.2
$3,920.3
133.5
61.5
$3,319.4
100.2
3.4%
3.0%
61.1
$3,124.3
44.2
1.4%
European Union Tire Segment unit sales in 2003 increased 0.7 million units or 1.2% from 2002 and 1.1 million
units or 1.9% from 2001. Replacement unit sales in 2003 increased 2.6 million units or 6.3% from 2002 and
2.3 million units or 5.4% from 2001. Original equipment volume in 2003 decreased 1.9 million units or 9.2%
from 2002 and 1.2 million units or 5.7% from 2001.
Revenue in 2003 increased 18.1% from 2002 and 25.5% from 2001. Net sales increased in 2003 compared
to 2002 primarily due to the favorable impact of currency translation, mostly the Euro, of approximately
$587 million. Higher volume of approximately $42 million in the consumer replacement markets also
positively impacted 2003 sales, but were in part oÅset by approximately $30 million due to negative pricing
and product mix in the segment's retail operations.
Revenues (as restated) in 2002 increased 6.2% from 2001. Revenues increased in 2002 compared to 2001
primarily due to the favorable impact of currency translation of approximately $166 million (as restated).
Revenues were also positively impacted by higher volume of approximately $21 million in the original
equipment, high performance and winter tire markets.
European Union Tire segment operating income increased 33.2% from 2002 and substantially from 2001.
Segment operating income in 2003 increased primarily due to savings from rationalization programs of
approximately $57 million and the beneÑt from higher production tonnage and productivity improvements of
approximately $17 million. The favorable impact of currency translation of approximately $26 million,
improved volume of approximately $10 million, particularly in the replacement market, and favorable pricing
and product mix of approximately $5 million, mainly consumer replacement and original equipment, also
beneÑted 2003 segment operating income. Higher raw material costs of approximately $50 million, higher
pension costs of approximately $18 million and higher SAG costs due to increased advertising of approxi-
mately $13 million negatively impacted 2003 segment operating income. In addition, 2003 included a charge
of approximately $13 million for an unfavorable court settlement.
Segment operating income (as restated) increased substantially in 2002 from 2001. Segment operating
income increased in 2002 due primarily to lower raw material costs of approximately $28 million, savings from
rationalization programs of approximately $15 million, higher production tonnage and cost containment
programs of approximately $13 million (as restated), the favorable impact of currency translation of
approximately $6 million and higher volume of approximately $5 million. Higher SAG expenses of
approximately $19 million (as restated) adversely impacted segment operating income in 2002.
20
Segment operating income in 2001 included expenses related to amortization of goodwill and intangible
assets with indeÑnite useful lives totaling $13.0 million. In accordance with SFAS 142, amortization of
goodwill and intangible assets with indeÑnite useful lives ceased at January 1, 2002.
Segment operating income did not include net rationalization charges totaling $54.3 million and a gain on
asset sales of $2.1 million in 2003, net rationalization credits totaling $(0.4) million (as restated) and gains on
asset sales of $13.6 million (as restated) in 2002, and net rationalization charges totaling $84.2 million (as
restated) and gains on asset sales of $18.4 million (as restated) in 2001.
Revenues and segment operating income in the European Union Tire Segment may be adversely aÅected
in future periods by the eÅects of continued competitive pricing conditions, changes in mix, unanticipated
increases in raw material and energy prices, currency translation and the general economic slowdown in the
region.
Eastern Europe, Africa and Middle East Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating MarginÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
17.9
$1,073.4
146.6
13.7%
16.1
$807.1
93.2
11.5%
14.0
$703.1
14.0
2.0%
Eastern Europe, Africa and Middle East Tire Segment (""Eastern Europe Tire'') unit sales in 2003 increased
1.8 million units or 11.0% from 2002 and 3.9 million units or 28.3% from 2001. Replacement unit sales in 2003
increased 1.5 million units or 11.2% from 2002 and 3.6 million units or 33.3% from 2001. Original equipment
volume in 2003 increased 0.3 million units or 10.5% from 2002 and 0.3 million units or 8.3% from 2001.
Revenue in 2003 increased 33.0% from 2002 and 52.7% from 2001. Net sales increased in 2003 compared
to 2002 due largely to the favorable impact of currency translation, primarily in South Africa and Slovenia, of
approximately $156 million. Higher volume in both the consumer replacement and original equipment
markets of approximately $62 million and improved pricing and product mix, due primarily to higher sales of
winter and high performance tires, of approximately $48 million also positively impacted 2003 revenues.
Revenues in 2002 increased 14.8% from 2001. Revenues in 2002 increased from 2001 due to higher
consumer and commercial replacement volume of approximately $88 million, improved pricing and product
mix, including improved retail performance, of approximately $41 million. Currency translation, primarily in
South Africa, adversely impacted revenue in 2002 by approximately $25 million.
Eastern Europe Tire segment operating income in 2003 increased 57.3% from 2002 and signiÑcantly from
2001. Segment operating income increased in 2003 due to improved pricing and product mix of approximately
$33 million, higher volume of approximately $24 million and the positive impact of currency translation of
approximately $15 million, mainly in South Africa and Slovenia. Pricing, product mix and volume beneÑted
from price improvements and increased sales of winter and high performance tires. Higher raw material costs
of approximately $12 million and higher SAG costs of approximately $12 million, largely wages, beneÑts and
advertising, adversely impacted segment operating income in 2003.
Segment operating income (as restated) in 2002 increased signiÑcantly from 2001. Segment operating
income in 2002 increased due to the beneÑt of cost reduction programs and higher levels of plant utilization of
approximately $42 million (as restated), a change in mix to higher margin replacement tires of approximately
$20 million and higher replacement volume of approximately $19 million. Segment operating income was also
favorably aÅected by lower raw material costs of approximately $7 million and the impact of currency
translation of approximately $6 million mainly in South Africa. Higher SAG costs of approximately
$13 million adversely impacted segment operating income in 2002 mainly due to expanded operations and
increased distribution costs.
21
Segment operating income in 2001 included expenses related to amortization of goodwill totaling
$4.2 million. In accordance with SFAS 142, amortization of goodwill ceased at January 1, 2002.
Segment operating income did not include net rationalization charges (credits) totaling $(0.1) million in
2003, $(0.4) million in 2002 and $11.2 million in 2001.
Revenues and segment operating income in the Eastern Europe Tire Segment may be adversely aÅected
in future periods by the eÅects of continued competitive pricing conditions, changes in mix, unanticipated
increases in raw material and energy prices, continued volatile economic conditions and currency translation.
Latin American Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
18.7
$1,041.0
147.9
14.2%
19.9
$947.7
107.1
11.3%
20.0
$1,013.8
85.2
8.4%
Latin American Tire Segment unit sales in 2003 decreased 1.2 million units or 6.3% from 2002 and 1.3 million
units or 6.5% from 2001. Replacement unit sales in 2003 increased 0.1 million units or 0.4% from 2002 and
0.3 million units or 2.1% from 2001. Original equipment volume in 2003 decreased 1.3 million units or 23.1%
from 2002 and 1.6 million units or 26.8% from 2001.
Revenue in 2003 increased 9.8% from 2002 and 2.7% from 2001. Net sales increased in 2003 due to
improvements in price and product mix of approximately $212 million. The impact of foreign currency
translation of approximately $79 million, mainly in Brazil and Venezuela, and lower volume of approximately
$38 million, primarily in the consumer and commercial original equipment segments, negatively impacted
2003 sales.
Revenues (as restated) in 2002 decreased 6.5% from 2001. Revenues in 2002 were adversely impacted by
approximately $227 million due to the eÅects of currency translation, particularly in Argentina, Brazil and
Venezuela. Revenues were favorably impacted by price increases and improved replacement consumer and
commercial product mix of approximately $158 million to partially oÅset the eÅect of currency translation.
Latin American Tire segment operating income in 2003 increased 38.1% from 2002 and 73.6% from
2001. Segment operating income in 2003 was favorably aÅected by improvements in pricing and product mix
of approximately $134 million and higher replacement volume of approximately $3 million. Partially oÅsetting
these improvements were higher raw material costs of approximately $50 million, the negative impact of
currency translation of approximately $20 million, mainly Brazil and Venezuela, higher conversion costs
related to utilities of approximately $12 million and increased SAG costs of approximately $11 million, mainly
blimp-related expenses, increased reserve for doubtful accounts and increased wages and beneÑts due to
inÖationary cost increases.
Latin American Tire segment operating income (as restated) in 2002 increased 25.7% from 2001.
Segment operating income in 2002 was favorably impacted by approximately $45 million related to pricing
and product mix, approximately $20 million related to lower raw material costs and higher sales volume,
primarily in the replacement market, of approximately $4 million. Segment operating income in 2002 was
adversely impacted by the eÅects of currency translation of approximately $46 million, mainly in Argentina,
Brazil and Venezuela, and increased SAG expenses of approximately $3 million due to higher wages and
beneÑts largely due to inÖationary cost increases.
Segment operating income in 2001 included expenses related to the amortization of goodwill totaling
$0.1 million. In accordance with SFAS 142, amortization of goodwill ceased at January 1, 2002.
22
Segment operating income did not include net rationalization charges totaling $10.0 million and the gain
from asset sales of $2.0 million in 2003, the gain from the sale of land and buildings in Mexico totaling
$13.7 million in 2002 and rationalization charges totaling $0.2 million in 2001.
Revenues and segment operating income in the Latin American Tire Segment may be adversely aÅected
in future periods by the eÅects of continued competitive pricing conditions, changes in mix, unanticipated
increases in raw material and energy prices, continued volatile economic and government conditions, future
adverse economic conditions in the region and currency translation.
Asia Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
13.5
$581.8
49.8
8.6%
12.9
$531.3
43.7
8.2%
12.2
$494.6
20.3
4.1%
Asia Tire Segment unit sales in 2003 increased 0.6 million units or 4.7% from 2002 and 1.3 million units or
10.5% from 2001. Replacement unit sales in 2003 decreased 0.1 million units or 1.0% from 2002 and increased
0.3 million units or 2.6% from 2001. Original equipment volume in 2003 increased 0.7 million units or 18.9%
from 2002 and 1.0 million units or 31.3% from 2001.
Revenue in 2003 increased 9.5% from 2002 and 17.6% from 2001. Net sales increased in 2003 due to
increased volume of approximately $29 million primarily a result of strong original equipment demand.
Favorable currency translation, largely in India and Australia, of approximately $16 million also improved net
sales.
Revenues (as restated) in 2002 increased 7.4% from 2001. Revenues in 2002 increased compared to 2001
due primarily to higher original equipment and replacement volumes of approximately $26 million and
improved selling prices on replacement consumer and commercial tires of approximately $9 million. The
eÅects of currency translation also had a favorable impact on sales of approximately $2 million in 2002.
Asia Tire segment operating income in 2003 increased 14.0% from 2002 and substantially from 2001.
Segment operating income in 2003 increased primarily due to improvements in consumer and farm product
mix and higher selling prices in both replacement and original equipment markets of approximately $14
million, favorable currency translation of approximately $8 million, and increased volume of approximately
$7 million due to strong original equipment demand. Segment operating income in 2003 was favorably
impacted by approximately $3 million due to increased sales of miscellaneous products and improved equity
income. Higher raw material costs of approximately $27 million negatively impacted 2003 segment operating
income.
Segment operating income (as restated) in 2002 increased substantially from 2001. Segment operating
income in 2002 increased compared to 2001 due to lower raw material costs of approximately $8 million,
improved replacement consumer and commercial pricing and product mix of approximately $7 million, higher
original equipment and replacement volume of approximately $4 million and lower conversion costs as a result
of cost containment programs of approximately $3 million (as restated). Segment operating income in 2002
improved due to the favorable eÅects of currency translation of approximately $2 million and savings from
rationalization actions of approximately $3 million. Segment operating income in 2002 was adversely aÅected
by higher SAG expenses of approximately $5 million.
Segment operating income in 2001 included expenses related to the amortization of goodwill totaling
$1.7 million (as restated). In accordance with SFAS 142, amortization of goodwill ceased at January 1, 2002.
Segment operating income did not include the gain from asset sales of $2.1 million in 2003, rationaliza-
tion charges (credits) totaling $(1.7) million in 2002 and $47.0 million (as restated) in 2001.
23
Revenues and segment operating income in the Asia Tire Segment may be adversely aÅected in future
periods by the eÅects of continued competitive pricing conditions, changes in mix, unanticipated increases in
raw material and energy costs and currency translation.
In addition, Goodyear owns a 50% interest in SPT, the largest tire manufacturer, marketer and exporter
in Australia and New Zealand. Results of operations of SPT are not reported in segment results, and are
reÖected in Goodyear's Consolidated Statement of Operations using the equity method.
The following presents 100% of the sales and operating income of SPT:
(In millions)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
$642.0
9.9
$523.6
(7.1)
$481.3
(22.2)
SPT net sales in 2003 increased 22.6% from 2002 and 33.4% from 2001. SPT net sales in 2003 increased from
2002 primarily due to higher sales volume and the strengthening of the Australian dollar against the U.S.
dollar. SPT net sales in 2002 increased from 2001 due to the strengthening of the Australian dollar against the
U.S. dollar.
SPT operating income in 2003 increased substantially from 2002 and 2001. SPT operating income in
2003 increased from 2002 and in 2002 from 2001 due to the beneÑts of the rationalization programs in the
prior years.
SPT operating income did not include net rationalization charges (credits) totaling $4.9 million in 2003,
$(2.1) million in 2002 and $48.0 million in 2001.
SPT debt totaled $196.9 million at December 31, 2003, of which $72.0 million was payable to Goodyear.
SPT debt totaled $131.3 million at December 31, 2002, of which $26.3 million was payable to Goodyear.
Engineered Products
(In millions)
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating MarginÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
2002
2001
Restated
$1,203.7
47.5
3.9%
$1,126.5
40.9
3.6%
$1,122.3
14.6
1.3%
Engineered Products Segment sales in 2003 increased 6.9% from 2002 and 7.3% from 2001. Revenues in 2003
increased from 2002 due to the favorable impact of currency translation of approximately $39 million, mainly
in Canada, South Africa and Europe, and improved volume of approximately $30 million as a result of
increased military sales. Improved pricing and product mix, mainly industrial, of approximately $8 million also
positively impacted 2003 revenues.
Revenues in 2002 increased from 2001 due largely to increased volume of approximately $36 million,
mainly military and custom products. Partially oÅsetting this variance compared to 2001 is the unfavorable
eÅects of currency translation of approximately $24 million, mainly in Brazil, and unfavorable product mix of
approximately $8 million.
Engineered Products segment operating income in 2003 increased from 2002 and 2001. Segment
operating income in 2003 increased 16.1% from 2002 due to volume increases of approximately $7 million
related to military sales, lower raw material costs of approximately $5 million, and favorable eÅects of
currency translation of approximately $5 million. The change in salaried vacation policy described above also
favorably impacted 2003 segment operating income by approximately $8 million. Segment operating income
was adversely impacted by unfavorable price/mix of approximately $11 million due to increased sales of
original equipment and heavy duty product and higher SAG costs, excluding the impact of the vacation policy
change, of approximately $9 million, primarily related to increased sales eÅorts.
24
Segment operating income (as restated) in 2002 increased signiÑcantly from 2001 due to improved
productivity of approximately $13 million (as restated), volume increases of approximately $12 million and
decreased SAG expenses of approximately $12 million (as restated) primarily due to aggressive cost
containment measures. Segment operating income in 2002 was adversely impacted by an unfavorable change
in price/mix of approximately $5 million and the eÅects of currency translation of approximately $3 million.
Segment operating income in 2001 included expenses related to amortization of goodwill totaling
$1.0 million. In accordance with SFAS 142, amortization of goodwill ceased at January 1, 2002.
Segment operating income did not include a loss from the sale of assets totaling $6.3 million and
rationalization charges of $29.4 million in 2003, a gain from the sale of land and buildings totaling $0.6 million
and net rationalization charges of $4.6 million in 2002 and net rationalization charges of $1.5 million in 2001.
In conjunction with the restatement, certain adjustments related to Engineered Products were recorded.
It was not possible to allocate the amount of this adjustment to applicable periods and accordingly, Goodyear
recorded substantially all of this adjustment in the Ñrst quarter of 2003. This account reconciliation adjustment
includes the write-oÅ of $21.3 million consisting of $3.7 million in intercompany accounts and $17.6 million
related to payables and other accounts. Segment operating income was negatively impacted by approximately
$19 million in 2003 due to these adjustments. Several factors relating to the Company's ERP systems
implementation resulted in EPD's inability to locate or recreate account reconciliations for prior periods.
Revenues and segment operating income in the Engineered Products Segment may be adversely aÅected
in future periods by lower original equipment demand, competitive pricing pressures, expected continuing
unfavorable economic conditions in certain markets, adverse economic conditions globally in the mining,
construction and agriculture industries, unanticipated increases in raw material and energy prices, anticipated
higher wage and beneÑt costs and currency translation.
Chemical Products
(In millions)
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Segment Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
$1,220.8
119.4
9.8%
$940.2
88.7
9.4%
$1,036.5
41.9
4.0%
Chemical Products Segment sales in 2003 increased 29.8% from 2002 and 17.8% from 2001. Approximately
63% of the total pounds of synthetic materials sold by the Chemical Products segment in 2003 were to
Goodyear's other segments. Natural rubber plantations, a rubber processing facility and natural rubber
purchasing operations are included in the Chemical Products Segment.
Revenues in 2003 increased from 2002 largely due to higher net selling prices resulting from the pass
through of increased raw material and energy costs of approximately $145 million and increases in synthetic
rubber volume of approximately $42 million. Also favorably impacting 2003 revenues were higher pricing and
volume from the natural rubber operations of approximately $76 million and the relatively strong Euro of
approximately $18 million.
Revenues (as restated) in 2002 decreased from 2001 primarily due to the impact of selling the Specialty
Chemical Business in December 2001, which contributed approximately $127 million of revenue in 2001.
Revenues in 2002 were also unfavorably impacted approximately $33 million by lower net selling prices, which
were caused by decreased raw material costs. 2002 revenues were favorably impacted approximately
$37 million due to increased revenue for natural rubber operations, approximately $20 million due to increased
synthetic volume, and approximately $6 million in favorable currency translation largely a result of the strong
Euro.
Chemical Products segment operating income in 2003 increased signiÑcantly from 2002 and 2001.
Segment operating income increased in 2003 compared to 2002 primarily due to higher net selling prices of
approximately $145 million, currency translation of approximately $18 million and improved pricing and
25
volume for natural rubber operations of approximately $16 million. Increased raw material costs of
approximately $127 million and increased conversion costs of approximately $22 million unfavorably impacted
2003 segment operating income.
The Specialty Chemical Business was sold in December 2001. Segment operating income (as restated)
in 2002 increased substantially from 2001 despite the absence of approximately $12 million contributed by the
Specialty Chemical Business in 2001. Segment operating income in 2002 increased primarily due to lower raw
material costs of approximately $46 million and lower conversion costs of approximately $33 million (as
restated) partially oÅset by lower net selling prices of approximately $33 million.
Segment operating income did not include gains on asset sales of $27.4 million in 2001.
The Company is exploring the possible sale of its Chemical business, or portions thereof, to both enhance
its Ñnancial Öexibility and focus future investments on its core business.
Revenues and segment operating income in the Chemical Products Segment may be adversely aÅected in
future periods by competitive pricing pressures, lower aggregate demand levels for its products and
unanticipated increases in raw material and energy prices.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2003, the Company had $1.56 billion in cash and cash equivalents as well as $335.0 million
of unused availability under its various credit agreements. Based upon the Company's projected operating
results, the Company expects that cash Öow from operations together with available borrowing under its
restructured credit facilities and other sources of liquidity will be adequate to meet the Company's anticipated
cash and cash equivalent requirements including working capital, debt service and capital expenditures
through December 31, 2004. However, several contingencies could aÅect the Company's ability to meet its
future obligations, including (i) the failure to successfully implement its turnaround strategy for the North
American Tire Segment and restore the segment to proÑtability; (ii) a signiÑcant adverse ruling or
development in the Company's legal proceedings, especially with respect to the Company's Entran II
litigation; (iii) a further increase in our interest expense from an unexpected and signiÑcant increase in
interest rates; and (iv) the failure to reÑnance certain of our credit facilities maturing in 2005 and 2006.
Operating Activities
Net cash used in operating activities was $306.7 million during 2003, as reported on the Company's
Consolidated Statement of Cash Flows. Working capital increased $2.07 billion to $3.30 billion at Decem-
ber 31, 2003, from $1.23 billion (as restated) at December 31, 2002, due primarily to increased cash and cash
equivalents and accounts receivable. The increased accounts receivable is due primarily to the termination of
Goodyear's domestic accounts receivable securitization program eÅective April 1, 2003. For further informa-
tion, refer to the note to the Ñnancial statements, No. 5, Accounts and Notes Receivable.
Investing Activities
Net cash used in investing activities was $236.0 million during 2003. Capital expenditures in 2003 were
$375.4 million, of which $221.2 million was used on projects to increase capacity and improve productivity and
$154.2 million was used for tire molds and various other projects. Capital expenditures have been reduced in
response to current economic and business conditions. Capital expenditures are expected to approximate
$488 million in 2004, including approximately $294 million for manufacturing improvements and approxi-
mately $194 million for molds and various other projects.
(In millions)
Capital expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
DepreciationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
$375.4
686.4
6.9
$458.1
600.4
4.3
$435.5
597.7
40.4
26
Depreciation and amortization in 2003 included approximately $78 million of accelerated depreciation charges
related to the 2003 Huntsville and Wolverhampton restructuring plans. Depreciation and amortization in 2001
included $29.1 million (as restated) of amortization related to goodwill and intangible assets with indeÑnite
useful lives that are no longer amortized in accordance with SFAS 142.
Investing activities in 2003 included net proceeds from the sale of assets in the United States of
$85.8 million, in Latin America of $2.0 million, in Asia of $2.1 million and in Europe of $14.5 million.
Included in the United States total of $85.8 million is $82.9 million for the sale of 20.8 million shares of
Goodyear's investment in SRI. Goodyear also purchased Arkansas Best Corporation's 19% ownership interest
in Wingfoot Commercial Tire Systems, LLC (""Wingfoot'') for $71.2 million. Wingfoot was a joint venture
company formed by Goodyear and Arkansas Best Corporation to sell and service commercial truck tires,
provide retread services and conduct related business. Goodyear now owns 100% of Wingfoot.
At December 31, 2003, Goodyear had binding commitments for raw materials and investments in land,
buildings and equipment of $520.1 million and oÅ-balance-sheet Ñnancial guarantees written and other
commitments totaling $74.4 million.
For further information on investing activities, refer to the note to the Ñnancial statements No. 8,
Investments.
Financing Activities
Net cash from Ñnancing activities was $1,125.3 million during 2003.
(In millions)
Consolidated Debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Debt to Debt and Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
2002
2001
$5,077.4
$3,643.0
$3,568.3
100.3%
93.4%
57.6%
Certain of Goodyear's aÇliates are restricted from remitting funds to the parent company by means of
dividends, advances or loans, primarily due to credit facility restrictions currently in place in those locations.
At December 31, 2003, approximately $259 million of net assets were restricted.
December 31,
Restated
Credit Sources
Restructuring and ReÑnancing of Credit Facilities
On April 1, 2003, the Company completed a comprehensive restructuring and reÑnancing of its bank credit
and receivables securitization facilities which replaced a total of $2,938 million in Ñnance facilities with a total
of $3,345 million of the following Ñnance facilities:
‚ $750 million Senior Secured U.S. Revolving Credit Facility due April 2005;
‚ $645 million Senior Secured U.S. Term Facility due April 2005;
‚ $650 million Senior Secured European Facilities due April 2005; and
‚ $1.30 billion Senior Secured Asset-Backed Facilities due March 2006.
With the exception of approximately $700 million in domestic accounts receivable securitizations and
$63 million in Canadian accounts receivable securitizations, each of the replaced Ñnance facilities was
unsecured.
The accounts receivable and debt that are subject to the new $1.30 billion asset-backed facilities are
included on Goodyear's consolidated balance sheet at December 31, 2003. Accounts receivable subject to the
terminated $763 million domestic and Canadian accounts receivable programs were not included on the
consolidated balance sheet at December 31, 2002 due to the securitization programs which resulted in oÅ-
balance-sheet treatment.
27
At December 31, 2003, the Company had $125.6 million of committed credit available under the
facilities described above. In aggregate, the Company had committed and uncommitted credit facilities of
$5.90 billion available at December 31, 2003, of which $335.0 million were unused.
Recent Financing Activities
Subsequent to the Ñscal year end, on February 23, 2004, we completed the addition of a $650 million tranche
to our $1.30 billion Senior Secured Asset-Backed Facility. Approximately $335 million of the proceeds of the
tranche were used to partially reduce amounts outstanding under the U.S. term facility discussed below. On
March 12, 2004, we completed a private oÅering of $650 million in senior secured notes, consisting of
$450 million of 11% senior secured notes due 2011 and $200 million of Öoating rate notes at LIBOR plus 8%.
The proceeds of the notes were used to repay the remaining outstanding amount under the U.S. term facility,
to permanently reduce our commitment under the U.S. revolving credit facility by $70 million, and for general
corporate purposes. In connection with these Ñnancing activities, each of the above restructured credit
facilities was amended on February 19, 2004. The Company's credit agreements were further amended on
April 16, 2004, to extend until May 19, 2004, the deadline for Ñling the Company's Annual Report on
Form 10-K for the year ended December 31, 2003 and on May 18, 2004, to extend until June 4, 2004, the
deadline for providing audited Ñnancial statements for the year ended December 31, 2003 of Goodyear Dunlop
Tires Europe B.V. to lenders.
$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. The U.S. term facility was originally scheduled to mature on
April 30, 2005. In connection with our recent Ñnancing activities discussed above, on March 12, 2004, all
outstanding amounts under the facility were prepaid and the facility was retired.
$750 Million Senior Secured U.S. Revolving Credit Facility
The Company's $750 million revolving credit facility matures on April 30, 2005. Up to $600 million of the
facility is available for the issuance of letters of credit. Under the facility, as of December 31, 2003, there were
borrowings of $200.0 million and $485.4 million in letters of credit issued. The Company pays an annual
commitment fee of 75 basis points on the undrawn portion of the commitment under the U.S. revolving credit
facility. On March 12, 2004, in connection with our recent Ñnancing activities, our commitment under this
facility was permanently reduced to $680 million.
We may obtain loans under the U.S. revolving credit facility 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 U.S. revolving credit facility contains certain covenants that, among other things, limit our ability to
incur additional secured indebtedness (including a limit of 275 million Euros in accounts receivable
transactions), make investments, and sell assets beyond speciÑed limits. The facility prohibits us from paying
dividends on our common stock. We must also maintain a minimum consolidated net worth (as such term is
deÑned in the U.S. facility) of at least $2.80 billion and $2.50 billion for quarters ending in 2003 and 2004,
respectively, and $2.00 billion for the quarter ending March 31, 2005.
The facilities have customary representations, warranties and covenants including, as a condition of
borrowing, material adverse change representations in the Company's Ñnancial condition since December 31,
2002. In addition, under the facilities, Goodyear was not permitted to fall below a ratio of 2.25 to 1.00 of
consolidated EBITDA to consolidated interest expense (as such terms are deÑned in each of the restructured
credit facilities) for any period of four consecutive Ñscal quarters. On February 19, 2004, in connection with an
amendment to the credit facilities, the ratio was reduced to 2.00 to 1.00. In addition, Goodyear's ratio of
consolidated senior secured indebtedness to consolidated EBITDA (as such terms are deÑned in each of the
restructured credit facilities) is not permitted to be greater than 4.00 to 1.00 at any time. As of December 31,
2003, the Company was in compliance with the Ñnancial covenants under the credit facilities.
28
Consolidated EBITDA is a non-GAAP Ñnancial measure that is presented not as a measure of operating
results, but rather as a measure of the Company's ability to service debt. It should not be construed as an
alternative to either (i) income from operations or (ii) cash Öows from operating activities. The Company's
failure to comply with the Ñnancial covenants in the restructured credit facilities could have a material adverse
eÅect on Goodyear's liquidity and operations. Accordingly, management believes that the presentation of
consolidated EBITDA will provide investors with information needed to assess the Company's ability to
continue to comply with these covenants.
The following table presents the calculation of EBITDA and Consolidated EBITDA for 2003. Other
companies may calculate similarly titled measures diÅerently than Goodyear does. Certain line items are
presented as deÑned in the restructured credit facilities, and do not reÖect amounts as presented in the
Consolidated Statement of Operations.
(In millions)
Net Loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Consolidated Interest Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income Tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Depreciation and Amortization Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
$ (802.1)
314.6
112.2
693.3
EBITDA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
318.0
Credit Agreement Adjustments:
Other (Income) and Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign Currency Exchange ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity in (Earnings) Losses of AÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Interest in Net Income (Loss) of Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Non-cash Extraordinary Gains ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Non-cash Non-recurring Items ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Less Excess Cash Rationalization ChargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
284.5
40.2
12.1
35.0
Ì
54.7
291.5
(12.9)
Consolidated EBITDA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1,023.1
The U.S. facilities also limit the amount of capital expenditures the Company may make to $360 million,
$500 million, and $500 million in 2003, 2004 and 2005 ($200 million through April 30, 2005), respectively.
The amounts of permitted capital expenditures may be increased by the amount of net proceeds retained by
the Company from permitted asset sales and equity and debt issuances after application of the prepayment
requirement in the U.S. term facility described above. As a result of certain activities, the capital expenditure
limit for 2003 was increased from $360 million to approximately $381 million. In addition, to the extent the
Company does not reach the limit of permitted capital expenditures in any given year, such shortfall may be
carried over into the next year. The capital expenditure limit for 2004 has increased approximately
$270 million as a result of capital market transactions completed during the Ñrst quarter of 2004 and
carryovers from 2003.
$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. These facilities mature on April 30, 2005. As of
December 31, 2003, 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
29
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.
Consistent with the covenants applicable to Goodyear in the U.S. facilities, the European facilities
contain certain 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 speciÑed limits, pay dividends and make loans or advances
to Goodyear companies that are not subsidiaries of GDTE. The European facilities also contain certain
representations, warranties and 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 $180 million,
$250 million and $100 million in 2003, 2004 and 2005 (through April 30), respectively.
Subject to the provisions in the European facilities and agreements with Goodyear's joint venture partner,
SRI (which include limitations on loans and advances from GDTE to Goodyear and a requirement that
transactions with aÇliates be consistent with past practices or on arms-length terms), GDTE is permitted to
transfer funds to Goodyear.
$1.30 Billion Senior Secured Asset-Backed Credit Facilities
The Company has also 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. As of December 31, 2003, there were borrowings of $389.0 million and $800.0 million under the
revolving credit and term loan asset-backed facilities, respectively. The facilities mature on March 31, 2006
and contain certain representations, warranties and covenants which are materially the same as those in the
U.S. facility, with capital expenditures of $500 million and $150 million permitted in 2005 and 2006 (through
March 31), respectively. Goodyear must also maintain a minimum consolidated net worth (as such term is
deÑned in the U.S. facilities) of at least $2.80 billion and $2.50 billion for quarters ending in 2003 and 2004,
respectively, and $2.00 billion for the quarter ending March 31, 2005. On February 20, 2004, the Company
added a $650 million tranche to the existing $1.30 billion facility.
Foreign Credit Facilities
As of December 31, 2003, Goodyear had short term committed and uncommitted bank credit arrangements
totaling $347.0 million, of which $209.3 million were unused. The continued availability of these arrangements
is at the discretion of the relevant lender, and a portion of these arrangements may be terminated at any time.
Non-Domestic Accounts Receivable Securitization Facilities
Various international subsidiaries of the Company have also established accounts receivable continuous sales
programs whereunder these subsidiaries may receive proceeds from the sale of certain of their receivables.
These subsidiaries retain servicing responsibilities.
As of December 31, 2003, international subsidiaries of Goodyear had $122.8 million of available
borrowings under non-domestic accounts receivable securitization facilities.
As of December 31, 2003, the amount outstanding and fully utilized under the program maintained by
GDTE totaled $104.2 million. The Company is currently working to reÑnance this facility and the
commitment period has been extended to September 2004. If the Company is unable to replace this facility,
the Company would pursue short term Ñnancing alternatives.
In addition to the $104.2 million of GDTE receivable programs, the Company had an additional
$18.6 million outstanding under other non-domestic receivable Ñnancing programs.
At December 31, 2003, the net proceeds for all sales of receivables by Goodyear were $122.8 million. Net
cash outÖows of $831.8 million were recorded in 2003 for transfers of accounts receivable under these and
other programs. For further information, refer to the note to the Ñnancial statements No. 5, Accounts and
Notes Receivable.
30
Credit Ratings
The current credit ratings for the Company are presented below:
S&P
Moody's
Senior Secured Asset-Backed Facilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
U.S./European Facilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ B°/BB-
$650 million Asset-backed Tranche ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$650 million Senior Secured Notes due 2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate RatingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Senior Unsecured Debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
B°
*
BB-
B
BB°
B1
B1/B1
B2
B3
B1 (implied)
B3
* Private Rating
While Goodyear does not request ratings from Fitch, the rating agency rates the Company's secured facilities
""B'' and the Company's unsecured debt ""CCC°.'' Moody's currently maintains a negative outlook for the
Company, while S&P has placed us on ""credit watch.'' Unless the Company's debt credit ratings and
operating performance improve, its access to the credit markets in the future may be limited. Moreover, a
further reduction in the Company's credit ratings would further increase the cost of any Ñnancing initiatives
the Company may pursue.
As a result of these ratings and other related events, the Company believes that its access to capital
markets may be limited. In addition, Ñnancing and related expenses under some existing arrangements have
increased as a result of the Company's non-investment grade ratings.
A rating reÖects only the view of a rating agency, and is not a recommendation to buy, sell or hold
securities. Any rating can be revised upward or downward at any time by a rating agency if such rating agency
decides that circumstances warrant such a change.
Turnaround Strategy
The Company is currently implementing a turnaround strategy for the North American Tire Segment that will
require the Company to 1) stabilize margins and market shares, 2) simplify the sales and supply chain
process, 3) execute key cost-cutting, brand and distribution strategies and 4) grow the business through new
product introductions and new sales channels. The ability of the Company to successfully implement its cost-
cutting strategy is also dependent upon its ability to realize anticipated savings and operational beneÑts from
its recently ratiÑed new master contract with the USWA. There is no assurance that the Company will
successfully implement this turnaround strategy. In particular, this strategy and the Company's liquidity could
be aÅected adversely by trends that aÅected the North American Tire Segment negatively in 2003 and prior
years, including industry overcapacity which limits pricing leverage, weakness in the replacement tire market,
increased competition from low cost manufacturers and a related decline in Goodyear's market share, weak
U.S. economic conditions, and increases in medical and pension costs. In addition, the turnaround strategy has
been, and may continue to be, impacted negatively by higher than expected raw materials and energy prices.
The price of natural rubber, one of our most important raw materials, increased approximately 36% in 2003
and is expected to increase in 2004. In addition, the price of oil, an important feedstock for several other raw
materials, increased approximately 25% in 2003. Our turnaround plan could continue to be impacted by higher
raw material costs. Furthermore, market conditions may prevent us from passing these increases on to our
customers through timely price increases.
Future Liquidity Requirements
As of December 31, 2003, the Company had $1.56 billion in cash and cash equivalents, of which
$612.7 million was held in the United States and $432.8 million was in accounts of GDTE. The remaining
amounts were held in the Company's other non-U.S. operations. The Company's ability to move cash and
cash equivalents among its various operating locations is subject to the operating needs of the operating
31
locations as well as restrictions imposed by local laws and applicable credit facility agreements. As of
December 31, 2003, approximately $215 million of cash was held in locations where signiÑcant tax or legal
impediments would make it diÇcult or costly to execute monetary transfers. Based upon the Company's
projected operating results, the Company expects that cash Öow from operations together with available
borrowing under its restructured credit facilities and other sources of liquidity will be adequate to meet the
Company's anticipated cash and cash equivalent requirements including working capital, debt service and
capital expenditures through December 31, 2004.
At December 31, 2003, the Company also had $335.0 million of unused availability under its various
credit agreements.
The Company's restructured and reÑnanced credit facilities mature in 2005 and 2006 and the Company
would have to reÑnance these facilities in the capital markets if they were not renewed by the banks. After
taking into account the paydown of certain obligations in connection with recent Ñnancing activities, the
aggregate amount of long-term debt maturing in 2005 and 2006 is $1,343 million and $1,481 million,
respectively. Because of our debt ratings, recent operating performance and other factors, access to such
markets cannot be assured. The Company's ongoing ability to access the capital markets is highly dependent
on successfully implementing its North American Tire turnaround strategy. In addition to facilitating access to
the capital markets, successful implementation of the turnaround strategy is also crucial to ensuring that the
Company has suÇcient cash Öow from operations to meet its obligations. There is no assurance that the
Company will be successful in implementing its turnaround strategy. Failure to complete the turnaround
strategy successfully could have a material adverse eÅect on the Company's Ñnancial position, results of
operations and liquidity.
Although the Company is highly leveraged, it may become necessary for it to incur additional debt to
ensure that it has adequate liquidity. This additional debt would need to be secured or unsecured. A
substantial portion of the Company's assets are already subject to liens securing its indebtedness. The
Company is limited in its ability to pledge its remaining assets as security for additional secured indebtedness.
In addition, unless the Company's Ñnancial performance improves, its ability to raise unsecured debt may be
signiÑcantly limited.
Under the Company's master contract with the USWA, the Company committed to consummate the
issuance or placement of at least $250 million of debt securities and at least $75 million of equity or equity-
linked securities by December 31, 2003. It did not meet this commitment. As a result, the USWA may Ñle a
grievance and strike. In the event of a strike, the Company's Ñnancial position, results of operations and
liquidity could be materially adversely aÅected. The Company has also committed to launch, by December 1,
2004, a reÑnancing of its U.S. term loan and revolving credit facilities due in April 2005, with loans or
securities having a term of at least three years. If the Company fails to complete this reÑnancing commitment,
the USWA would have the right to strike and the Company would be required to pay each covered union
employee (approximately 13,700 as of December 31, 2003) $1,000 and each covered union retiree
(approximately 13,800 as of December 31, 2003) $500. In addition, if the Company failed to comply with the
covenants in its credit agreements, the lenders would have the right to cease further loans to the Company and
demand the repayment of all outstanding loans under these facilities.
The Company is subject to various legal proceedings, including the Entran II litigation described in Note
20, Commitments and Contingent Liabilities. The ultimate cost of disposing of Entran II claims is dependent
upon a number of factors, including the Company's ability to satisfy the contingencies in a proposed
settlement, the number of claimants that opt out of any settlement, Ñnal approval of the terms of the
settlement at a fairness hearing, Goodyear's ability to resolve claims not subject to the settlement (including
the cases in which the Company received adverse judgments), and, in the event Goodyear fails to
consummate the proposed settlement for any reason, future judgments by courts in other currently pending or
yet unasserted actions. Depending on the resolution of these uncertainties, the costs associated with Entran II
claims could be signiÑcant and could have a material adverse eÅect on the Company's results of operations,
Ñnancial position and liquidity in future periods. In the event the Company wishes to appeal any future adverse
judgment in any Entran II or other proceeding, it would be required to post an appeal bond with the relevant
32
court. If the Company does not have suÇcient availability under its U.S. revolving credit facility to issue a
letter of credit to support an appeal bond, it may be required to pay down borrowings under the facility in order
to increase the amount available for issuing letters of credit or deposit cash collateral in order to stay the
enforcement of the judgment pending an appeal. A signiÑcant deposit of cash collateral may have a material
adverse eÅect on the Company's liquidity.
A substantial portion of Goodyear's borrowings are at variable rates of interest and expose the Company
to interest rate risk. If interest rates rise, the Company's debt service obligations would increase. An
unanticipated signiÑcant rise in interest rates could have a material adverse eÅect on the Company's liquidity
in future periods.
In addition, Goodyear expects to make contributions to its pension plans of approximately $210 million in
2004. Contributions to domestic pension plans are expected to be approximately $160 million in 2004 and
approximately $325 million to $350 million in 2005 in order to satisfy statutory minimum funding
requirements.
Dividends
On February 4, 2003, the Company announced that it eliminated its quarterly cash dividend. The dividend
reduction was decided on by the Board of Directors in order to conserve cash. Under our restructured credit
agreements, we are not permitted to pay dividends on our common stock.
Commitments & Contingencies
The following table presents, at December 31, 2003, Goodyear's obligations and commitments to make future
payments under contracts and contingent commitments.
(In millions)
Contractual Obligations
Payment Due by Period as of December 31, 2003
Total
1 Year
2 Years
3 Years
4 Years
5 Years
After 5
Years
Long Term Debt (1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$5,029.3
$ 246.9
$2,004.7
$1,542.8
$302.5
$103.0
$ 829.4
Capital Lease Obligations (2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
74.2
Operating Leases (3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1,462.4
Binding Commitments (4)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
520.1
8.3
287.2
482.2
7.0
236.8
14.7
6.3
188.9
8.0
5.8
145.4
2.3
5.8
106.3
1.8
41.0
497.8
11.1
Total Contractual Cash Obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$7,086.0
$1,024.6
$2,263.2
$1,746.0
$456.0
$216.9
$1,379.3
(1) Long term debt payments include notes payable and reÖect long term debt maturities as of December 31,
2003. In connection with the Company's Ñnancing activities in the Ñrst quarter of 2004, our long term
debt commitments in 2005 and 2006 were reduced by $665 million and $64 million, respectively.
(2) The present value of capital lease obligations is $48.1 million.
(3) Operating leases do not include minimum sublease rentals of $43.8 million, $33.7 million, $25.0 million,
$18.0 million, $12.2 million, and $13.6 million in each of the periods above, respectively, for a total of
$146.3 million. Net operating lease payments total $1,316.1 million. The present value of operating leases
is $812.3 million. The operating leases relate to, among other things, computers and oÇce equipment,
real estate and miscellaneous other assets. No asset is leased from any related party.
(4) Binding commitments are for normal operations of the Company and include investments in land,
buildings and equipment and raw materials purchased through short term supply contracts at Ñxed prices
or at formula prices related to market prices or negotiated prices.
In addition to the commitments summarized above, Goodyear is required to make contributions to its
deÑned beneÑt pension plans. These contributions are required under the minimum funding requirements of
the Employee Retirement Pension Plan Income Security Act (""ERISA''). Subject to change, Goodyear
expects to make contributions to its domestic pension plans of approximately $160 million in 2004 and
approximately $325 million to $350 million in 2005 in order to satisfy these statutory minimum funding
requirements. These estimates reÖect legislation passed by Congress in 2004 providing for changes to ERISA
33
funding requirements to defer certain contributions to subsequent periods. Due to uncertainties regarding
signiÑcant assumptions involved in estimating future required contributions to its deÑned beneÑt pension
plans, such as interest rate levels and the amount and timing of asset returns, Goodyear is not able to
reasonably estimate its future required contributions beyond 2005.
In addition, the following contingent contractual obligations, the amounts of which can not be estimated,
are not included in the table above:
‚ The terms and conditions of Goodyear's global alliance with Sumitomo as set forth in the Umbrella
Agreement between Goodyear and Sumitomo provide for certain minority exit rights available to
Sumitomo commencing in 2009. In addition, the occurrence of certain other events enumerated in the
Umbrella Agreement, including certain bankruptcy events or changes in control of Goodyear, could
trigger a right of Sumitomo to require Goodyear to purchase these interests immediately. Sumitomo's
exit rights, in the unlikely event of exercise, could require Goodyear to make a substantial payment to
acquire Sumitomo's interest in the alliance.
‚ Pursuant to an agreement entered into in 2001, Ansell Ltd. (Ansell) has the right, during the period
beginning August 2005 and ending one year later, to require Goodyear to purchase Ansell's 50%
interest in SPT at a formula price based on the earnings of SPT. If Ansell does not exercise its right,
Goodyear may require Ansell to sell its interest to Goodyear during the 180 days following the
expiration of Ansell's right at a price established using the same formula.
‚ Pursuant to an agreement entered into in 2001, Goodyear shall purchase minimum amounts of carbon
black from a certain supplier from January 1, 2003 through December 31, 2006, at agreed upon base
prices that are subject to quarterly adjustments for changes in raw material costs and natural gas costs
and a one time adjustment for other manufacturing costs.
The Company does not engage in the trading of commodity contracts or any related derivative contracts.
The Company generally purchases raw materials and energy through short term, intermediate and long term
supply contracts at Ñxed prices or at formula prices related to market prices or negotiated prices. The
Company will, however, from time to time, enter into contracts to hedge its energy costs.
OÅ-Balance Sheet Arrangements
An oÅ-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an
unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent
interest in transferred assets, (3) an obligation under certain derivative instruments or (4) any obligation
arising out of a material variable interest in an unconsolidated entity that provides Ñnancing, liquidity, market
risk or credit risk support to the company, or that engages in leasing, hedging or research and development
arrangements with the company.
(In millions)
Amount of Commitment Expiration per Period
Total
1 Year
2 Years
3 Years
4 Years
5 Years
After 5
Years
OÅ-Balance-Sheet Arrangements (1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$74.4
$56.2
$0.7
$0.1
$4.9
$3.7
$8.8
(1) OÅ-balance-sheet arrangements include, at December 31, 2003, approximately $50.4 million related to
an option held by Goodyear's minority partner in Sava Tires to require Goodyear to purchase the
partner's 20% equity interest in Sava Tires. Goodyear has a similar call option on the remaining 20%
interest. The minority partner could exercise its option and Goodyear could exercise its call option during
various periods beginning in 2003 and extending through 2005. On April 7, 2004, Goodyear announced
that it would exercise its call option and purchase the remaining 20% of Sava Tires. The transaction is
expected to be completed in June 2004 and Goodyear expects to pay approximately $52 million at that
time.
34
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest Rate Risk
Goodyear continuously monitors its Ñxed and Öoating rate debt mix. Within deÑned limitations, Goodyear
manages the mix using reÑnancing and unleveraged interest rate swaps. Goodyear will enter into Ñxed and
Öoating interest rate swaps to alter its exposure to the impact of changing interest rates on consolidated results
of operations and future cash outÖows for interest. Fixed rate swaps are used to reduce Goodyear's risk of
increased interest costs during periods of rising interest rates, and are normally designated as cash Öow hedges.
Floating rate swaps are used to convert the Ñxed rates of long-term borrowings into short-term variable rates,
and are normally designated as fair value hedges. Interest rate swap contracts are thus used by Goodyear to
separate interest rate risk management from debt funding decisions. At December 31, 2003, the interest rates
on 47% of Goodyear's debt were Ñxed by either the nature of the obligation or through the interest rate swap
contracts, compared to 70% at December 31, 2002. The decrease in the percent of Ñxed rate debt was
primarily due to the maturity of the 81/8% notes during 2003. Goodyear also has from time to time entered into
interest rate lock contracts to hedge the risk-free component of anticipated debt issuances. As a result of credit
ratings actions and other related events, the Company's access to these instruments may be limited.
The following tables present information at December 31:
(Dollars in millions)
Interest Rate Swap Contracts
Fixed Rate Contracts:
2003
2002
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive variable LIBORÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$325.0
$325.0
5.00%
1.17
5.00%
1.40
Average years to maturity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma fair value Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
0.25
$ (3.1)
(3.1)
1.25
$(14.2)
(14.6)
Floating Rate Contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay variable LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$200.0
$250.0
2.96%
6.63
3.18%
6.63
Average years to maturity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value Ì asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma fair value Ì assetÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2.95
$ 13.0
12.3
3.95
$ 20.3
21.4
The pro forma fair value assumes a 10% increase in variable market interest rates at December 31 of each
year, and reÖects the estimated fair value of contracts outstanding at that date under that assumption.
Weighted average interest rate swap contract information follows:
(Dollars in millions)
Fixed Rate Contracts:
2003
2002
2001
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay Ñxed rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive variable LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$325.0
$325.0
$129.0
5.00%
1.24
5.00% 5.43%
1.91
3.58
Floating Rate Contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay variable LIBORÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$207.0
$210.0
3.03%
6.63
3.68%
6.63
Ì
Ì
Ì
35
The following table presents Ñxed rate debt information at December 31:
(In millions)
Fixed Rate Debt:
Fair value Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Carrying amount Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma fair value Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
2002
$2,107.9
2,228.7
2,183.9
$2,097.5
2,484.1
2,183.1
The pro forma information assumes a 100 basis point decrease in market interest rates at December 31 of each
year, and reÖects the estimated fair value of Ñxed rate debt outstanding at that date under that assumption.
The sensitivity to changes in interest rates of Goodyear's interest rate contracts and Ñxed rate debt was
determined with a valuation model based upon net modiÑed duration analysis. The model assumes a parallel
shift in the yield curve. The precision of the model decreases as the assumed change in interest rates increases.
Foreign Currency Exchange Risk
In order to reduce the impact of changes in foreign exchange rates on consolidated results of operations and
future foreign currency-denominated cash Öows, Goodyear enters into foreign currency contracts. These
contracts reduce exposure to currency movements aÅecting existing foreign currency-denominated assets,
liabilities, Ñrm commitments and forecasted transactions resulting primarily from trade receivables and
payables, equipment acquisitions, intercompany loans and royalty agreements and forecasted purchases and
sales. In addition, the principal and interest on Goodyear's Swiss franc bond due 2006 and Euro100 million of
the Euro Notes due 2005 are hedged by currency swap agreements.
Contracts hedging the Swiss franc bond and the Euro Notes are designated as cash Öow hedges.
Contracts hedging short-term trade receivables and payables normally have no hedging designation.
The following table presents foreign currency contract information at December 31:
(In millions)
Foreign Exchange Contracts
Fair value Ì asset (liability) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma change in fair value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Contract maturities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value Ì asset (liability):
Swiss franc swap-current ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Swiss franc swap-long term ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Euro swaps-current ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Euro swaps-long term ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other-current asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other-current (liability)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
2002
$71.7
(22.0)
1/04-7/19
$65.2
37.6
1/03-12/18
$(1.6)
46.8
20.5
13.2
7.2
(14.4)
$(2.8)
31.6
(1.1)
27.8
11.8
(2.1)
The pro forma change in fair value assumes a 10% change in foreign exchange rates at December 31 of each
year, and reÖects the estimated change in the fair value of contracts outstanding at that date under that
assumption.
At December 31, 2002, Goodyear held foreign currency Euro put options, exercisable during 2003, to
reduce exposure to currency movements on 2003 forecasted intercompany sales. These options were
designated as cash Öow hedges. At December 31, 2002, the underlying contract value of these options totaled
$42.6 million, and the fair value totaled $0.2 million. At December 31, 2003, the Company did not hold any
outstanding foreign currency options.
The sensitivity to changes in exchange rates of Goodyear's foreign currency positions was determined
using current market pricing models.
For further information on interest rate contracts and foreign currency exchange contracts, refer to the
note to the Ñnancial statements No. 11, Financing Arrangements and Derivative Financial Instruments.
36
New Tire Sales
The principal products of Goodyear's Tire Segments are new tires for most applications. Approximately
78.3% of our consolidated sales in 2003 were new tire sales (77.5% (as restated) in 2002 and 76.9% (as
restated) in 2001). The percentages of each Tire Segment's sales attributable to new tires during the periods
indicated were:
Sales of New Tires By
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EEAME TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
Restated
2003
2002
2001
86.3%
89.2%
94.1%
91.1%
97.7%
86.2%
85.6%
91.8%
90.6%
97.2%
87.1%
83.4%
91.6%
90.5%
97.1%
FORWARD-LOOKING INFORMATION Ì SAFE HARBOR STATEMENT
Certain information set forth herein (other than historical data and information) may constitute forward-
looking statements regarding events and trends which may aÅect our future operating results and Ñnancial
position. The words ""estimate,'' ""expect,'' ""intend'' and ""project,'' as well as other words or expressions of
similar meaning, are intended to identify forward-looking statements. You are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the date of this Annual Report. Such
statements are based on current expectations and assumptions, are inherently uncertain, are subject to risks
and should be viewed with caution. Actual results and experience may diÅer materially from the forward-
looking statements as a result of many factors, including:
‚ we have not yet completed the implementation of our plan to improve our internal controls and may be
unable to remedy certain internal control weaknesses identiÑed by our external auditors and take other
actions in time to meet the March 1, 2005 deadline for complying with Section 404 of the Sarbanes-
Oxley Act of 2002;
‚ pending litigation relating to our restatement could have a material adverse eÅect on our Ñnancial
condition;
‚ we must complete and deliver to our lenders the Ñnancial statements for our Goodyear Dunlop Tires
B.V. joint venture by June 4, 2004 in order to avoid defaults under our principal credit facilities;
‚ we have not yet Ñled our Form 10-Q for the Ñrst quarter of 2004, if we do not Ñle it by June 30, 2004
there could be an event of default under our principal credit facilities;
‚ an ongoing SEC investigation regarding our accounting restatement could materially adversely aÅect
us;
‚ we have experienced signiÑcant losses in 2001, 2002 and 2003. We cannot assure you that we will be
able to achieve future proÑtability. Our future proÑtability is dependent upon our ability to successfully
implement our turnaround strategy for our North American Tire segment and our previously
announced rationalization actions;
‚ we face signiÑcant global competition, including increasingly from lower cost manufacturers, and our
market share could decline;
‚ our secured credit facilities limit the amount of capital expenditures that we may make;
‚ higher raw material and energy costs may materially adversely aÅect our operating results and Ñnancial
condition;
‚ continued pricing pressures from vehicle manufacturers may materially adversely aÅect our business;
‚ our Ñnancial position, results of operations and liquidity could be materially adversely aÅected if we
experience a labor strike, work stoppage or other similar diÇculty and the United Steelworkers of
America currently has the right to strike after going through a grievance process;
37
‚ decline in the value of the securities held by our employee beneÑt plans or a decline in interest rates
would increase our pension expense and underfunding levels. Termination by the Pension BeneÑt
Guaranty Corporation of any of our U.S. pension plans would further increase our pension expense and
could result in additional liens on material amounts of our assets;
‚ our long-term ability to meet current obligations and to repay maturing indebtedness, including long-
term debt maturing in 2005 and 2006 of approximately $1,343 million and $1,481 million, respectively,
is dependent on our ability to access capital markets in the future and to improve our operating results;
‚ we have a substantial amount of debt, which could restrict our growth, place us at a competitive
disadvantage or otherwise materially adversely aÅect our Ñnancial health;
‚ any failure to be in compliance with any material provision or covenant of our secured credit facilities
and the indenture governing our senior secured notes could have a material adverse eÅect on our
liquidity and our operations;
‚ our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service
obligations to increase signiÑcantly;
‚ if we fail to manage healthcare costs successfully, our Ñnancial results may be materially adversely
aÅected;
‚ we may incur signiÑcant costs in connection with product liability and other tort claims;
‚ our reserves for product liability and other tort claims and our recorded insurance assets are subject to
various uncertainties, the outcome of which may result in our actual costs being signiÑcantly higher
than the amounts recorded;
‚ we may be required to deposit cash collateral to support an appeal bond if we are subject to a
signiÑcant adverse judgment, which may have a material adverse eÅect on our liquidity;
‚ we are subject to extensive government regulations that may materially adversely aÅect our ongoing
operating results;
‚ our international operations have certain risks that may materially adversely aÅect our operating
results;
‚ the terms and conditions of our global alliance with Sumitomo Rubber Industries, Ltd. (SRI) provide
for certain exit rights available to SRI upon the occurrence of certain events, which could require us to
make a substantial payment to acquire SRI's interest in certain of our joint venture alliances (which
include much of our operations in Europe);
‚ we have foreign currency translation and transaction risks that may materially adversely aÅect our
operating results; and
‚ if we are unable to attract and retain key personnel, our business could be materially adversely aÅected.
It is not possible to foresee or identify all such factors. We will not revise or update any forward-looking
statement or disclose any facts, events or circumstances that occur after the date hereof that may aÅect the
accuracy of any forward-looking statement.
38
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Consolidated Statement of Operations
(Dollars in millions, except per share)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cost of Goods Sold ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Selling, Administrative and General ExpenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations (Note 3)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest Expense (Note 15) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other (Income) and Expense (Note 4) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign Currency Exchange ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity in (Earnings) Losses of AÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Interest in Net Income (Loss) of Subsidiaries ÏÏÏÏÏ
Loss before Income Taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
United States and Foreign Taxes on Income (Loss) (Note 14)
Net Loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Loss Per Share Ì Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
Restated
2003
2002
2001
$
$
$
15,119.0
12,495.3
2,371.2
291.5
296.3
267.3
40.2
12.1
35.0
(689.9)
112.2
(802.1)
(4.58)
$
$
$
13,856.2
11,303.9
2,203.2
5.5
241.7
56.8
(9.7)
13.2
55.3
(13.7)
1,213.3
(1,227.0)
(7.35)
$
$
$
14,162.5
11,685.3
2,220.5
210.3
297.1
40.8
10.0
39.7
(3.3)
(337.9)
(83.8)
(254.1)
(1.59)
Average Shares Outstanding (Note 12) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Loss Per Share Ì Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
175,314,449
(4.58)
$
167,020,375
(7.35)
$
159,955,869
(1.59)
$
Average Shares Outstanding (Note 12) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
175,314,449
167,020,375
159,955,869
The accompanying notes are an integral part of this Ñnancial statement.
39
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
(Dollars in millions)
Assets
Current Assets:
Cash and cash equivalents (Note 1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short term securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accounts and notes receivable (Note 5) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Inventories (Note 6) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Prepaid expenses and other current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Current AssetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Accounts and Notes Receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investments in and Advances to AÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Assets (Note 8) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Goodwill (Note 7)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Intangible Assets (Note 7) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Income Tax (Note 14) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Prepaid and Deferred Pension Costs (Note 13) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Properties and Plants (Note 9) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Liabilities
Current Liabilities:
Accounts payable-trade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and beneÑts (Note 13) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
United States and foreign taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Notes payable (Note 11) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt due within one year (Note 11) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Current Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases (Note 11) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and BeneÑts (Note 13) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Long Term Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Equity in Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commitments and Contingent Liabilities (Note 20)
Shareholders' Equity
Preferred Stock, no par value:
December 31,
2003
Restated
2002
$ 1,564.9
Ì
2,621.5
2,465.0
336.7
6,988.1
255.0
177.5
74.9
622.5
161.8
397.5
868.3
252.7
5,207.2
$15,005.5
$ 1,572.9
983.1
572.2
306.1
137.7
113.5
3,685.5
4,826.2
4,540.4
1,140.8
825.7
15,018.6
$
918.1
24.3
1,438.1
2,346.2
453.7
5,180.4
242.8
139.2
253.0
602.6
161.4
187.0
913.4
202.7
5,156.2
$13,038.7
$ 1,515.4
913.6
512.3
358.2
283.4
369.8
3,952.7
2,989.8
4,497.3
615.7
727.8
12,783.3
Authorized, 50,000,000 shares, unissued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
Common Stock, no par value:
Authorized, 300,000,000 shares
Outstanding shares, 175,326,429 (175,307,433 in 2002) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital SurplusÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retained Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated Other Comprehensive Income (Loss) (Note 19) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Shareholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Liabilities and Shareholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
175.3
1,390.2
980.4
(2,559.0)
(13.1)
$15,005.5
175.3
1,390.1
1,782.5
(3,092.5)
255.4
$13,038.7
The accompanying notes are an integral part of this Ñnancial statement.
40
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Consolidated Statement of Shareholders' Equity
Common Stock
Shares
Amount
Capital
Surplus
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders'
Equity
(Dollars in millions, except per share)
Balance at December 31, 2000 as originally reported ÏÏÏ
157,603,962
$157.6
$1,092.4
$3,558.8
$(1,305.8)
$3,503.0
(after deducting 38,074,706 treasury shares)
EÅect of restatement on periods ending on or prior to
December 31, 2000ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Balance at December 31, 2000 as restated ÏÏÏÏÏÏÏÏÏÏÏÏ
Comprehensive income (loss):
Net loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation (net of tax beneÑt of
$6.3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for amounts
recognized in income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minimum pension liability (net of tax of $205.6) ÏÏ
Unrealized investment loss (net of tax of $4.1) ÏÏÏÏ
Transition adjustment from adoption of SFAS 133
Deferred derivative loss (net of tax of $18.1) ÏÏÏÏÏÏ
ReclassiÑcation adjustment for amounts
recognized in income (net of tax of $5.7) ÏÏÏÏÏ
Total comprehensive lossÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash dividends Ì $1.02 per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued from treasury:
Domestic pension funding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Conversion of 1.2% Convertible Note Payable ÏÏÏ
Stock compensation plans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Balance at December 31, 2001 as restated ÏÏÏÏÏÏÏÏÏÏÏÏ
(after deducting 32,512,970 treasury shares)
Comprehensive income (loss):
Net loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation (net of tax beneÑt
of $0) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minimum pension liability (net of tax of $42.4) ÏÏÏ
Unrealized investment gain (net of tax of $0) ÏÏÏÏÏ
Deferred derivative gain (net of tax of $0) ÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for amounts
recognized in income (net of tax of $0) ÏÏÏÏÏÏ
Total comprehensive lossÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash dividends Ì $0.48 per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued from treasury:
Domestic pension funding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued for acquisitions ÏÏÏÏÏÏÏÏÏÏ
Stock compensation plans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Balance at December 31, 2002 as restated ÏÏÏÏÏÏÏÏÏÏÏÏ
(after deducting 20,371,235 treasury shares)
Comprehensive income (loss):
Net loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation (net of tax beneÑt
of $0) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minimum pension liability (net of tax of $2.2) ÏÏÏÏ
Unrealized investment gain (net of tax of $0) ÏÏÏÏÏ
ReclassiÑcation adjustment for amounts
recognized in income (net of tax of $8.7) ÏÏÏÏÏ
Deferred derivative gain (net of tax of $0) ÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for amounts
recognized in income (net of tax of $1.9) ÏÏÏÏÏ
Total comprehensive lossÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued from treasury:
Stock compensation plans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Balance at December 31, 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(after deducting 20,352,239 treasury shares)
157,603,962
157.6
1,092.4
3,505.9
(1,301.6)
3,454.3
(52.9)
4.2
(48.7)
(254.1)
(162.5)
(186.3)
7.2
(367.9)
(6.6)
5.4
(29.5)
9.2
(822.6)
(162.5)
100.0
56.2
2.4
4,300,000
1,140,866
120,870
4.3
1.1
0.2
95.7
55.1
2.2
163,165,698
163.2
1,245.4
3,089.3
(1,870.1)
2,627.8
(1,227.0)
(79.8)
57.8
(1,283.6)
7.3
60.6
(64.5)
11,300,000
693,740
147,995
11.3
0.7
0.1
126.6
15.2
2.9
175,307,433
175.3
1,390.1
1,782.5
(3,092.5)
(802.1)
373.0
128.5
4.1
8.8
46.3
(27.2)
18,996
0.1
(2,449.4)
(79.8)
137.9
15.9
3.0
255.4
(268.6)
0.1
175,326,429
$175.3
$1,390.2
$ 980.4
$(2,559.0)
$ (13.1)
The accompanying notes are an integral part of this Ñnancial statement.
41
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Year Ended December 31,
Restated
2003
2002
2001
(Dollars in millions)
Cash Flows from Operating Activities:
Net Loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Adjustments to reconcile net loss to cash Öows from operating
$ (802.1)
$(1,227.0)
$ (254.1)
activities:
Depreciation and amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred tax provision (Note 14) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations (Note 3)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset sales (Note 4) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net cash Öows from sale of accounts receivable (Note 5)ÏÏÏÏ
Changes in operating assets and liabilities, net of asset
acquisitions and dispositions:
Accounts and notes receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accounts payableÓtradeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
PrepaidsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term compensation and beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated other comprehensive income (loss) Ì
deferred pension gain (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other long term liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other assets and liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total adjustmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total cash Öows from operating activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash Flows from Investing Activities:
Capital expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short term securities acquired ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short term securities redeemed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset dispositions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset acquisitionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other transactions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total cash Öows from investing activitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
693.3
(14.8)
132.4
13.7
(831.8)
(118.9)
41.6
(90.5)
201.6
169.1
(118.7)
191.0
193.4
34.0
495.4
(306.7)
(375.4)
0.5
26.1
104.4
(71.2)
79.6
(236.0)
Cash Flows from Financing Activities:
Short term debt incurredÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short term debt paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued (Notes 8, 12)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends paid to Sumitomo ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends paid to Goodyear shareholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(104.1)
Debt issuance costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
27.9
Other transactions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total cash Öows from Ñnancing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1,125.3
64.2
EÅect of Exchange Rate Changes on Cash and Cash Equivalents ÏÏÏ
Net Change in Cash and Cash Equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
646.8
Cash and Cash Equivalents at Beginning of the Period ÏÏÏÏÏÏÏÏÏÏÏÏ
918.1
Cash and Cash Equivalents at End of the PeriodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,564.9
323.1
(478.2)
2,983.8
(1,611.7)
0.2
(15.7)
Ì
The accompanying notes are an integral part of this Ñnancial statement.
604.7
1,116.6
2.4
(23.7)
34.8
47.2
59.7
93.4
(132.6)
347.4
1,284.5
(1,265.9)
(72.1)
(193.9)
1,902.5
675.5
(458.1)
(64.7)
38.5
55.6
(54.8)
(56.8)
(540.3)
84.1
(87.5)
38.4
(124.8)
18.7
(6.2)
(79.8)
Ì
Ì
(157.1)
(13.6)
(35.5)
953.6
918.1
$
638.1
(265.7)
36.5
(31.6)
249.1
243.1
454.7
(83.7)
(40.8)
(175.4)
824.9
(367.9)
85.8
19.4
1,586.5
1,332.4
(435.5)
(2.3)
1.9
119.6
Ì
(169.5)
(485.8)
83.8
(1,388.9)
1,510.2
(158.1)
1.7
(13.1)
(162.5)
Ì
Ì
(126.9)
(9.6)
710.1
243.5
953.6
$
42
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Note 1. Accounting Policies
A summary of the signiÑcant accounting policies used in the preparation of the accompanying Ñnancial
statements follows:
Principles of Consolidation
The consolidated Ñnancial statements include the accounts of all majority-owned subsidiaries in which no
substantive participating rights are held by minority shareholders. Goodyear has no majority-owned subsidiar-
ies in which substantive participating rights are held by minority shareholders. All intercompany transactions
have been eliminated.
Goodyear's investments in 20% to 50% owned companies in which it has the ability to exercise signiÑcant
inÖuence over operating and Ñnancial policies are accounted for using the equity method. Accordingly,
Goodyear's share of the earnings of these companies is included in consolidated net income (loss).
Investments in other companies are carried at cost.
Consolidation of Variable Interest Entities
In January 2003, the Financial Accounting Standards Board (the ""FASB'') issued Interpretation No. 46
(FIN 46), ""Consolidation of Variable Interest Entities Ó an Interpretation of ARB No. 51.'' 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 suÇcient to permit the entity to Ñnance its
activities without additional subordinated Ñnancial support from other parties or in which they hold a
controlling Ñnancial interest through means other than the majority ownership of voting equity. Controlling
Ñnancial 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 eÅective immediately for all VIEs created
after January 31, 2003 and required certain disclosures in Ñnancial 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
Ñnancial 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 Ñrst reporting
period ending after March 15, 2004.
The Company applied the provisions of FIN 46, eÅective July 1, 2003, to those VIEs representing lease-
Ñnancing arrangements with SPEs. The Company is a party to lease agreements with several unrelated SPEs
that are VIEs as deÑned by FIN 46. The agreements are related to certain North American distribution
facilities and certain corporate aircraft. The fair value of the assets and liabilities, and the Company's
maximum exposure to loss prior to insurance recoveries, is approximately $60 million in these SPEs. The
assets, liabilities and results of operations of these SPEs were consolidated in the third quarter of 2003
resulting in an increase in long-term liabilities of approximately $34 million and an increase in net property of
approximately $28 million. The Company also recorded a $6.1 million charge in other (income) and expense
due to the adoption of this new standard. Financing costs recognized in the Company's Ñnancial statements
are not expected to change signiÑcantly. Financing costs related to these SPEs were included in Selling,
Administrative & General Expense (SAG) prior to the third quarter 2003. EÅective with the third quarter
2003, the Ñnancing costs are recognized as Interest Expense.
The Company has evaluated the impact of FIN 46 for entities that are not SPEs and has elected to defer,
until the Ñrst quarter of 2004, the application of FIN 46 to two joint venture investments; South PaciÑc 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
43
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
Company will consolidate these joint venture investments eÅective January 1, 2004. The application of
FIN 46 in the Ñrst quarter of 2004 is not expected to have a material impact on the Company's results of
operations, cash Öows or Ñnancial position. For further information, refer to the notes to the Ñnancial
statements No. 20, Commitments and Contingent Liabilities Ì AÇliate Financing and No. 18, Business
Segments.
Cash and Cash Equivalents
The Company will from time to time maintain balances on deposit at various Ñnancial institutions primarily as
collateral for borrowings incurred by various subsidiaries. The availability of these balances is restricted to the
extent of the borrowings. At December 31, 2003, cash balances totaling $23.9 million were subject to such
restrictions.
Consolidated Statement of Cash Flows
Cash and cash equivalents include cash on hand and in the bank as well as all short term securities held for the
primary purpose of general liquidity. Such securities normally mature within three months from the date of
acquisition. Cash Öows associated with items intended as hedges of identiÑable transactions or events are
classiÑed in the same category as the cash Öows from the items being hedged. Book overdrafts are recorded
within accounts payable-trade and were $139.6 million at December 31, 2003, and $131.5 million at
December 31, 2002. Cash Öows related to such amounts are classiÑed as Ñnancing activities and, for the three
years ended December 31, 2003, totaled $8.1 million, $3.6 million and $23.9 million, respectively.
Revenue Recognition
Revenues are recognized when Ñnished products are shipped to unaÇliated customers and both title and the
risks and rewards of ownership are transferred, or services have been rendered and accepted. Appropriate
provision is made for uncollectible accounts.
Warranty
Goodyear oÅers warranties on the sale of certain of its products and services and records an accrual for
estimated future claims at the time revenue is recognized. Tire replacement under most of the warranties
oÅered by Goodyear is on a prorated basis. Warranty reserves are based on past claims experience, sales
history and other considerations. Refer to Note 20.
Rationalizations
The Company adopted Statement of Financial Accounting Standards No. 146 (SFAS 146), ""Accounting for
Costs Associated with Exit or Disposal Activities,'' eÅective for all exit or disposal activities initiated after
December 31, 2002. SFAS 146 requires, among other things, that liabilities for costs associated with exit or
disposal activities be recognized when the liabilities are incurred, rather than when an entity commits to an
exit plan. SFAS 146 changes the timing of liability and expense recognition related to exit or disposal
activities, but not the ultimate amount of such expenses. Refer to Note 3.
44
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
Shipping and Handling Fees and Costs
Expenses for transportation of products to customers are recorded as a component of cost of goods sold.
Legal Expenses
The Company records a liability for estimated legal and defense costs related to pending general and product
liability claims, environmental matters and workers' compensation claims. Refer to Note 20.
Inventories
Worldwide inventories are stated at the lower of cost or market. Cost is determined using FIFO or the average
cost method. Costs include direct material, direct labor and applicable manufacturing and engineering
overhead. Refer to Note 6.
Investments
Investments in marketable equity securities are stated at fair value. Fair value is determined using quoted
market prices at the end of the reporting period and, when appropriate, exchange rates at that date. Unrealized
gains and losses on marketable equity securities classiÑed as available-for-sale are recorded in Accumulated
Other Comprehensive Income (Loss), net of tax. Refer to Notes 8 and 19.
Goodwill and Other Intangible Assets
Goodyear adopted Statement of Financial Accounting Standards No. 142 (SFAS 142), ""Goodwill and Other
Intangible Assets,'' eÅective January 1, 2002. Goodwill is recorded when the cost of acquired businesses
exceeds the fair value of the identiÑable net assets acquired. Goodwill and intangible assets with indeÑnite
useful lives are tested for impairment annually or when events or circumstances indicate that impairment may
have occurred. Goodyear has elected to perform the goodwill impairment test annually as of July 31. If
considered impaired, the goodwill or intangible asset with an indeÑnite useful life is written down to fair value.
Prior to January 1, 2002, Goodyear was amortizing goodwill over its estimated useful life, based on an
evaluation of all relevant factors. The carrying amount and estimated useful life of goodwill were reviewed
whenever events or circumstances indicated that revisions might have been warranted. Refer to Note 7.
Properties and Plants
Properties and plants are stated at cost. Depreciation is computed using the straight-line method. Refer to
Note 9.
Advertising Costs
Costs incurred for producing and communicating advertising are generally expensed when incurred. Costs
incurred under Goodyear's cooperative advertising program with dealers and franchisees are recorded as
reductions of sales as related revenues are recognized. Refer to Note 17.
Foreign Currency Translation
Financial statements of international subsidiaries are translated into U.S. dollars using the exchange rate at
each balance sheet date for assets and liabilities and a weighted-average exchange rate for each period for
revenues, expenses, gains and losses. Where the local currency is the functional currency, translation
adjustments are recorded as Accumulated Other Comprehensive Income (Loss). Where the U.S. dollar is the
functional currency, translation adjustments are recorded in income.
45
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
Environmental Cleanup Matters
Goodyear expenses environmental expenditures related to existing conditions resulting from past or current
operations and from which no current or future beneÑt is discernible. Expenditures that extend the life of the
related property or mitigate or prevent future environmental contamination are capitalized. Goodyear
determines its liability on a site by site basis and records a liability at the time when it is probable and can be
reasonably estimated. Goodyear's estimated liability is reduced to reÖect the anticipated participation of other
potentially responsible parties in those instances where it is probable that such parties are legally responsible
and Ñnancially capable of paying their respective shares of the relevant costs. The estimated liability of
Goodyear is not discounted or reduced for possible recoveries from insurance carriers. Refer to Note 20.
Stock-Based Compensation
The Company used 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 the 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. Refer to Note 12.
The following table presents the pro forma eÅect from using the fair value method to measure
compensation cost:
(In millions, except per share)
Net income (loss) as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Add: Stock-based compensation expense (income) included in
net income (net of tax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deduct: Stock-based compensation expense calculated using
2003
2002
2001
Restated
$(802.1)
$(1,227.0)
$(254.1)
1.3
(5.6)
3.3
the fair value method (net of tax)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(28.0)
(28.7)
(33.8)
Net income (loss) as adjusted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(828.8)
$(1,261.3)
$(284.6)
Net income (loss) per share:
Basic Ì as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì as adjusted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted Ì as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì as adjusted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (4.58)
(4.73)
$ (4.58)
(4.73)
$
$
(7.35)
(7.55)
(7.35)
(7.55)
$ (1.59)
(1.78)
$ (1.59)
(1.78)
Per Share of Common Stock
Basic earnings per share has been computed based on the average number of common shares outstanding.
Diluted earnings per share reÖects the dilutive impact of outstanding stock options (computed using the
treasury stock method). All earnings per share amounts in these notes to Ñnancial statements are diluted,
unless otherwise noted. Refer to Note 12.
Income Taxes
Income taxes are recognized during the year in which transactions enter into the determination of Ñnancial
statement income, with deferred taxes being provided for temporary diÅerences between amounts of assets
and liabilities for Ñnancial reporting purposes and such amounts as measured by tax laws. Refer to Note 14.
46
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
Use of Estimates
The preparation of Ñnancial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that aÅect the amounts reported in the consolidated Ñnancial
statements and related notes to Ñnancial statements. Actual results could diÅer from those estimates. On an
ongoing basis, management reviews its estimates, including those related to the allowance for doubtful
accounts, recoverability of intangibles and other long-lived assets, deferred tax asset valuation allowances,
warranty, workers' compensation, litigation, general and product liabilities, environmental liabilities, pension
and postretirement beneÑts, and various other operating allowances and accruals, based on currently available
information. Changes in facts and circumstances may alter such estimates and aÅect results of operations and
Ñnancial position in future periods.
Derivative Financial Instruments and Hedging Activities
Derivative Ñnancial instrument contracts and nonderivative instruments are utilized by Goodyear to manage
interest rate, foreign exchange and commodity price risks. Goodyear has established a control environment
that includes policies and procedures for risk assessment and the approval, reporting and monitoring of
derivative Ñnancial instrument activities. Company policy prohibits holding or issuing derivative Ñnancial
instruments for trading purposes.
To qualify for hedge accounting, hedging instruments must be designated as hedges and meet deÑned
correlation and eÅectiveness criteria. These criteria require that the anticipated cash Öows and/or Ñnancial
statement eÅects of the hedging instrument substantially oÅset those of the position being hedged.
Derivative contracts are reported at fair value on the Consolidated Balance Sheet as both current and
long term Accounts Receivable or Other Liabilities. Deferred gains and losses on contracts designated as cash
Öow hedges are recorded in Accumulated Other Comprehensive Income (Loss) (OCI). IneÅectiveness in
hedging relationships is recorded as Other (Income) and Expense in the current period.
Interest Rate Contracts Ì Gains and losses on contracts designated as cash Öow hedges are initially
deferred and recorded in OCI. Amounts are transferred from OCI and recognized in income as Interest
Expense in the same period that the hedged item is recognized in income. Gains and losses on contracts
designated as fair value hedges are recognized in income in the current period as Interest Expense. Gains and
losses on contracts with no hedging designation are recorded in income in the current period as Other
(Income) and Expense.
Foreign Currency Contracts Ì Gains and losses on contracts designated as cash Öow hedges are initially
deferred and recorded in OCI. Amounts are transferred from OCI and recognized in income in the same
period and on the same line that the hedged item is recognized in income. Gains and losses on contracts with
no hedging designation are recorded in income currently as Foreign Currency Exchange.
Goodyear does not include premiums paid on forward currency contracts in its assessment of hedge
eÅectiveness. Premiums on contracts designated as hedges are recognized in income as Foreign Currency
Exchange over the life of the contract.
Net Investment Hedging Ì Nonderivative instruments denominated in foreign currencies are used to
hedge net investments in foreign subsidiaries. Gains and losses on these instruments are deferred and recorded
in OCI as Foreign Currency Translation Adjustment. These gains and losses are only recognized in income
upon the complete or partial sale of the related investment or the complete liquidation of the investment.
Termination of Contracts Ì Gains and losses (including deferred gains and losses in OCI) are
recognized in income as Other (Income) and Expense when contracts are terminated concurrently with the
47
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
termination of the hedged position. To the extent that such position remains outstanding, gains and losses are
amortized to Interest Expense or Foreign Currency Exchange over the remaining life of that position. Gains
and losses on contracts that Goodyear temporarily continues to hold after the early termination of a hedged
position, or that otherwise no longer qualify for hedge accounting, are recognized in income as Other
(Income) and Expense.
Refer to Note 11.
Concentrations of Labor
At December 31, 2003, approximately 60% of the Company's employees were covered by collective bargaining
agreements. 30% of the Company's employees were covered by collective bargaining agreements that will
expire in 2004. It is uncertain at this time whether agreements will be reached without interruption of
production, and the terms of the agreements ultimately reached could result in higher wage and beneÑt costs.
ReclassiÑcation
Certain items previously reported in speciÑc Ñnancial statement captions have been reclassiÑed to conform to
the 2003 presentation. Charges related to general and product liability-discontinued products for claims
against Goodyear related to asbestos personal injury claims and for other products no longer manufactured by
the Company have been reclassiÑed from Selling, Administrative & General Expense (SAG) to Other
(Income) and Expense due to the non-operational nature of these claims. Charges for general and product
liabilities related to ongoing operations continue to be recorded as SAG. Refer to Note 4, Other (Income) and
Expense and Note 20, Commitments and Contingent Liabilities, for further information about general and
product liabilities.
Note 2. Restatement
These Ñnancial statements have been restated to reÖect adjustments to the Company's Ñnancial information
previously reported on Form 10-K for the years ended December 31, 2002 and 2001. The Company's 2003 and
2002 quarterly Ñnancial information also has been restated to reÖect adjustments to the Company's previously
reported Ñnancial information on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003, and
September 30, 2003. Amounts disclosed in this note that are as of or for the periods ended March 31, 2003;
June 30, 2003; or September 30, 2003 are all unaudited. The restatement also aÅects periods prior to 2001.
The Company identiÑed adjustments through the current date that were required to be recorded which
reduced previously reported after-tax income by a total of $280.8 million. Of this amount, $56.2 million was
included in 2003 net income. The impact on net income for the years ended December 31, 2002 and 2001 was
$121.2 million and $50.5 million, respectively. The impact related to years prior to 2001 was a decrease in
retained earnings of $52.9 million at January 1, 2001. Total shareholders' equity at September 30, 2003 was
also reduced by adjustments to Accumulated Other Comprehensive Income (Loss) (OCI) of $183.9 million.
The restated Ñnancial statements have been prepared by management and reÖect all adjustments known to
management.
The total reductions in net income of $280.8 million include $31.3 million recorded in the quarter ended
June 30, 2003; $84.7 million in additional items previously reÖected in the restated Ñnancial results included in
the Form 8-K Ñled on November 20, 2003 and the Form 10-Q for the quarter ended September 30, 2003 Ñled
on November 19, 2003; and $164.8 million in additional items reÖected in the Ñnancial statements included in
the Form 10-K for the year ended December 31, 2003 Ñled on May 19, 2004.
The restatements initially arose out of an intensiÑed eÅort to reconcile certain general ledger accounts in
the second and third quarters of 2003. As a result of the Company's eÅorts to reconcile these accounts, the
48
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 2. Restatement (continued)
Company identiÑed various adjustments that were recorded in the second quarter and needed to be recorded
in the third quarter of 2003 arising out of account reconciliations. Based on an assessment of the impact of the
adjustments, management and the Audit Committee decided to restate the Company's previously issued
Ñnancial statements on the Form 10-Q for the quarter ended September 30, 2003 and for prior periods.
Following the identiÑcation of these adjustments, PricewaterhouseCoopers LLP (PwC) advised the Company
in October 2003 that the failure to identify or monitor certain conditions with respect to certain general ledger
accounts collectively resulted in a material weakness in internal controls that required strengthening.
In December 2003, the Company discovered accounting irregularities in its European Union Tire
business segment. The Audit Committee initiated a special investigation of these irregularities, and this
investigation was subsequently expanded to other overseas locations. The investigations identiÑed accounting
irregularities primarily related to earnings management whereby accrual accounts were improperly adjusted
between periods or expenses were improperly deferred. In the Ñrst and second quarters of 2004, the Company
identiÑed other adjustments. Some of these adjustments resulted from accounting irregularities resulting in
the understatement of workers' compensation liability and related to the valuation of real estate received in
payment of trade accounts receivable in Chile. The Audit Committee also initiated an investigation into these
adjustments. As a result of these investigations, management and the Audit Committee decided that a further
restatement was necessary.
In May 2004, PwC advised the Company that the circumstances it previously identiÑed to the Company
as collectively resulting in a material weakness had each individually become a material weakness. PwC
advised the Company that this determination was due to the number of previously undetected errors that were
attributable to the material weakness previously identiÑed. A signiÑcant portion of these errors were detected
by the Company. PwC further identiÑed an additional material weakness resulting from intentional overrides
of internal controls by those in authority, particularly related to the European Union Tire segment and
workers' compensation liability in the United States. These material weaknesses, if unaddressed, could result
in material errors in the Company's Ñnancial statements. In addition, PwC advised the Company that it had
identiÑed as reportable conditions the Company's need to enhance certain Ñnance personnel's knowledge of
U.S. GAAP and internal controls and the need to enhance controls related to the establishment of bank
accounts.
This Form 10-K for the year ended December 31, 2003 also includes changes to the timing of certain
previously recognized adjustments not arising from account reconciliations as well as other adjustments
identiÑed during the restatement process.
The adjustments resulting from the Company's initial restatement eÅorts, the special overseas accounting
and workers' compensation investigations, and the 2003 year-end closing process are described as follows:
Accounting Irregularities. This category includes adjustments reducing income before tax by a total of
$29.0 million related to periods ending September 30, 2003 and earlier. These adjustments resulted from the
overseas special accounting investigation, the understatement of the Company's liability for workers'
compensation payments, the improper deferral of manufacturing variances in 1998, and certain adjustments in
Chile, including the correction of the valuation of real estate received in payment for trade accounts
receivable.
Adjustments reducing income by a total of $9.2 million before tax were included in the restatement as a
result of the special accounting investigation in Europe and Asia. The majority of the adjustments addressed
accrual accounts that were improperly adjusted between periods or expenses that were improperly deferred
beyond the third quarter of 2003. These adjustments primarily related to accounts receivable, Ñxed assets,
accounts payable-trade and other long-term liability accounts that were improperly adjusted. As part of this
49
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 2. Restatement (continued)
investigation, an adjustment was made to defer income of $3.9 million before tax beyond the third quarter of
2003 that was improperly recognized in prior periods.
The workers' compensation adjustments totaled $17.7 million before tax related to periods ending on
September 30, 2003 and earlier. These adjustments resulted from an understatement of the Company's
potential liability for estimated payments relating to workers' compensation claims by employees. In the Ñrst
quarter of 2004, it was noted that claims arising from one of the Company's United States tire manufacturing
plants were under-reserved. As a result, the Company, with the assistance of the outside administrator,
reviewed approximately 85% of the open claims handled by this administrator at this plant as well as other
facilities and determined that reserves needed to be increased to accurately value the claims. The under-
reserving resulted in part from improper eÅorts to reduce, or restrict the amount of increase in, the reserves for
certain workers' compensation claims leading to claims data in the Company's workers' compensation claims
database that did not reÖect the probable ultimate exposure to the Company. Of the $17.7 million before tax
adjustment, $4.1 million aÅected income before tax for the nine months ended 2003, $5.6 million and
$2.3 million aÅected income before tax for the years ended December 31, 2002 and 2001, respectively, and
$5.7 million aÅected pre-2001 income before tax. In addition, in the fourth quarter of 2003, $6.2 million before
tax was recorded relating to the understatement.
In the second quarter of 1999, the Company discovered that $18.1 million of manufacturing variances at
one of its United States tire manufacturing plants had been improperly deferred from 1998 to 1999. When the
matter was discovered in the second quarter of 1999, the Company recorded the remaining costs that had not
previously been recorded. As part of this restatement, the Company reduced income before tax in 1998 by
$18.1 million and increased income before tax in 1999 by the same amount.
In 2000, the Company received approximately 13 acres of land in Santiago, Chile, in payment for trade
accounts receivable from one of its Chilean customers. At the time, the Company recorded the land based
upon an inappropriate appraisal. In the Ñrst quarter of 2004, the Company had an additional appraisal
performed that appropriately valued the land at a much lower value. The Audit Committee requested an
investigation into the matter, and as a result, the Company recorded an adjustment to reduce the valuation of
the land. The adjustment reduced income before tax by $1.5 million in 2000. The Company also identiÑed
other adjustments in Chile whereby accrual accounts were improperly adjusted between periods or expenses
were improperly deferred. Adjustments of $0.6 million before tax were recorded related to these accounts.
A summary of the accounting irregularities adjustments and the time periods aÅected follows:
(In millions, all amounts before tax)
Income (Expense)
Accruals and deferred expenses Ì Europe
and Asia ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred income Ì Europe ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Workers' compensation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accruals and deferred expenses Ì Chile ÏÏÏÏÏÏÏÏ
Land valuation Ì Chile ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Nine Months
Ended
September 30, 2003
(Unaudited)
Year Ended
December 31,
2001
2002
Pre-2001
Total
$4.5
Ì
(4.1)
Ì
Ì
$0.4
$ 0.5
(2.9)
(5.6)
4.5
Ì
$ (8.3) $ (2.0)
Ì
(5.7)
(3.5)
(1.5)
(1.0)
(2.3)
(1.6)
Ì
$ (5.3)
(3.9)
(17.7)
(0.6)
(1.5)
$(3.5)
$(13.2) $(12.7)
$(29.0)
50
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 2. Restatement (continued)
Account Reconciliations. This category includes adjustments totaling $144.9 million before tax resulting from
the failure to either reconcile accounts or resolve certain reconciliation issues in a timely manner. The most
signiÑcant adjustments in this category relate to certain reconciliations for accounts receivable, inventories,
Ñxed assets, intercompany accounts, prepaid expenses and accounts payable-trade. Certain of these adjust-
ments were associated with the integration of a new enterprise resource planning system (ERP) into the
Company's accounting processes beginning in 1999.
The following categories represent a majority of the account reconciliation adjustments included in the
restatement (all amounts are before tax unless otherwise noted):
A. Interplant. Goodyear uses an internal system, the Interplant System, to track the procurement and
transfer of Ñxed assets, raw materials and spare parts acquired or manufactured by Goodyear units in the
United States for its foreign manufacturing locations. The $28.8 million Interplant charge corrects an
overstatement of income and assets. The most signiÑcant items in this category are 1) Ñxed assets and
inventory of $26.0 million which were not properly relieved from the Interplant System when they were
billed to the foreign manufacturing locations and accordingly now have to be expensed and 2) the
correction of a failure to depreciate $2.8 million of Ñxed assets.
B. North American Tire (NAT) Receivables. The adjustment to accounts receivable of $25.0 million is
attributable to amounts erroneously recorded in Goodyear's general ledger during the period April 1999 to
November 2000. During this period, Goodyear implemented certain modules of an ERP accounting
system. These modules were not properly integrated with existing systems resulting in an overstatement of
sales and accounts receivable in the general ledger. This overstatement had to be reversed. Billings to
customers and cash collections were appropriate during this period.
C. Engineered Products (EPD).
It was not possible to allocate the amount of this adjustment to applicable
periods and accordingly, Goodyear recorded substantially all of this adjustment in the Ñrst quarter of 2003.
This adjustment includes the write-oÅ of $21.3 million consisting of $3.7 million in intercompany accounts
and $17.6 million related to payables and other accounts. Several factors relating to the Company's ERP
systems implementation resulted in EPD's inability to locate or recreate account reconciliations for prior
periods.
D. Wingfoot Commercial Tire Systems, LLC. On November 1, 2000, Goodyear made a contribution, which
included inventory, to Wingfoot Commercial Tire Systems, LLC, a consolidated subsidiary. On a
consolidated basis, the inventory was valued at Goodyear's historical cost. Upon the sale of the inventory,
consolidated cost of goods sold was understated by $11.0 million. Additionally, inventory and Ñxed asset
losses totaling $4.2 million were not expensed as incurred and were written oÅ in connection with the
restatement.
E. Fixed Assets. The adjustments to other Ñxed assets totaled $13.1 million and related primarily to the
understatement of depreciation expenses and the write-oÅ of assets previously disposed.
F. General and Product Liability. The expense for general and product claims increased $11.6 million for
the third quarter and nine months ended September 30, 2003, and related to the timing of the recognition
of certain liabilities for Entran II claims. Goodyear reached Ñnal agreement with one of its insurers in
November 2003, prior to Ñling the third quarter 10-Q, and recorded both a receivable and separately a
corresponding liability related to Entran II matters. This amount will be reÖected in the Company's
amended quarterly report on Form 10-Q for the period ended September 30, 2003 when Ñled.
In addition, adjustments totaling $23.0 million were recorded in OCI. An adjustment was made to record
an $18 million charge to deferred derivative losses, with an oÅsetting credit to liabilities. This adjustment was
associated with three interest rate swaps and a cross-currency contract for the period March 2001 through
51
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 2. Restatement (continued)
March 2003. An adjustment was also made to record a $6.8 million charge to currency translation, with an
oÅsetting credit to long-term assets. The adjustment aÅected the period from January 1, 2003 to Septem-
ber 30, 2003. These adjustments were identiÑed in conjunction with the completion of account reconciliations.
Out-of-Period Adjustments. This category includes adjustments previously identiÑed but deemed to be
immaterial and recorded in the period the Company identiÑed the error or in a subsequent period.
Adjustments in this category change the timing of income and expense items that were previously recognized.
The cumulative amount of out-of-period adjustments was a decrease to income before tax of $0.6 million.
The most signiÑcant item in this category relates to the timing of the recognition of certain SAG
expenses. As a result of the integration of the new enterprise resource planning system into the Company's
accounting processes beginning in 1999, certain expenses were incorrectly capitalized in inventory during
2001, 2000 and 1999. The Company recorded an adjustment totaling $16.8 million before tax during 2002 to
correct the impact on prior years. Of this amount, $13.9 million before tax applied to 2001.
Discount Rate Adjustments. In preparing the 2003 Ñnancial statements, the Company reassessed the estimate
of the discount rate used in determining the net periodic beneÑt cost and beneÑt obligations of the Company's
domestic pension, workers' compensation and other postretirement beneÑt plans. Consistent with that eÅort
and the restatement process, the Company determined that it would be appropriate to make similar
reassessments for discount rates for all periods presented. As a result, the discount rate was revised to 6.75%,
7.25% and 7.50% from 7.25%, 7.75% and 8.00% for 2003, 2002 and 2001, respectively. Total reductions to
income before tax for 2000-2003 were $18.9 million, of which $13.0 million decreased income before tax for
the nine months ended September 30, 2003, and $14.9 million and $5.5 million decreased income before tax
for the years ended December 31, 2002 and 2001, respectively. Pre-2001 income before tax was increased by
$14.5 million as a result of these adjustments. This change also resulted in a charge to deferred pension costs
in accumulated other comprehensive income (loss) (OCI) totaling $150.1 million for the years ended
December 31, 2002 and 2001. Additionally, in 2002, the Company had established a valuation allowance
against its net Federal and state deferred tax assets. Accordingly, this restatement includes a charge to income
tax expense of $81.2 million to provide a valuation allowance against the tax beneÑt included in the
adjustment to OCI in 2001, and a charge to OCI of $10.8 million to provide a valuation allowance against the
tax beneÑt included in the adjustment to OCI in 2002.
Chemical Products Segment. This category primarily includes adjustments identiÑed as a result of a stand-
alone audit conducted in 2003 of a portion of the Chemical Products business segment. The most signiÑcant
adjustments in this category relate to the timing of the recognition of manufacturing variances to reÖect the
actual cost of inventories, the fair value adjustment of a hedge for natural gas, and the correction of
intercompany proÑt elimination in inventory to eliminate selling and administrative expenses in inventory. The
cumulative eÅect of Chemical Product segment adjustments at September 30, 2003 was a decrease to income
before tax of $7.7 million.
Tax Adjustments. As a result of the restatement adjustments, an additional Federal and state valuation
allowance of $121.6 million (including the $81.2 million charge for discount rate adjustments) was required to
be recognized in 2002, the period in which the Company previously provided for its valuation allowance. The
remaining amounts relate to the correction of errors in the computation of deferred tax assets and liabilities.
52
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 2. Restatement (continued)
EÅect of restatement adjustments on Goodyear's previously issued Ñnancial statements
Increase (decrease) in Income (loss)
(In millions, except per share)
Net loss as originally reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Adjustments (pretax):
Accounting Irregularities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Account Reconciliations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Out-of-Period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Discount Rate Adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products Segment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total adjustments (pretax)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax eÅect of restatement adjustments ÏÏÏÏÏÏÏÏÏÏÏÏ
Tax adjustmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Years Ended December 31,
2002
2001
Pre-2001
Total
$(1,105.8)
$(203.6)
(3.5)
(6.8)
15.2
(14.9)
14.2
4.2
(2.9)
(122.5)
(13.2)
(12.8)
(14.5)
(5.5)
(18.9)
(64.9)
17.9
(3.5)
14.4
$(12.7)
(82.5)
(2.1)
14.5
(3.6)
(86.4)
32.3
1.2
33.5
$ (29.4)
(102.1)
(1.4)
(5.9)
(8.3)
(147.1)
47.3
(124.8)
(77.5)
Total taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(125.4)
Total net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(121.2)
(50.5)
$(52.9)
$(224.6)
Net loss as restated ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(1,227.0)
$(254.1)
Per Share of Common Stock:
Net loss Ì Basic as originally reportedÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÅect of net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net loss Ì Basic as restated ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net loss Ì Diluted as originally reported ÏÏÏÏÏÏÏÏÏÏÏÏ
EÅect of net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
$
$
(6.62)
(0.73)
(7.35)
(6.62)
(0.73)
$ (1.27)
(0.32)
$ (1.59)
$ (1.27)
(0.32)
Net loss Ì Diluted as restatedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
(7.35)
$ (1.59)
The following table sets forth the eÅects of the restatement adjustments discussed above on the Consolidated
Statement of Operations for each of the years ended December 31, 2002 and 2001, respectively.
53
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 2. Restatement (continued)
(In millions, except per share)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cost of Goods Sold ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Selling, Administrative and General Expense
RationalizationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other (Income) and Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign Currency Exchange ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity in Earnings of AÇliatesÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority InterestÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$13,850.0
11,313.9
2,223.9
8.6
241.3
25.8
(10.2)
8.8
55.8
Loss before Income TaxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
U.S. and Foreign Taxes on Income (Loss)ÏÏÏ
(17.9)
1,087.9
Year Ended December 31, 2002
As Originally
Reported
As Restated
Year Ended December 31, 2001
As Originally
Reported
As Restated
$13,856.2
11,303.9
2,203.2
5.5
241.7
56.8
(9.7)
13.2
55.3
(13.7)
1,213.3
$14,147.2
11,619.5
2,248.8
206.8
292.4
11.8
0.1
40.6
0.2
(273.0)
(69.4)
$14,162.5
11,685.3
2,220.5
210.3
297.1
40.8
10.0
39.7
(3.3)
(337.9)
(83.8)
Net Loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(1,105.8)
$(1,227.0)
$ (203.6)
$ (254.1)
Net Loss per share Ì Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average Shares Outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Loss per share Ì DilutedÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average Shares Outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
$
(6.62)
167.0
(6.62)
167.0
$
$
(7.35)
167.0
(7.35)
167.0
$
$
(1.27)
160.0
(1.27)
160.0
$
$
(1.59)
160.0
(1.59)
160.0
The following table sets forth the eÅects of the restatement adjustments discussed above on the Consolidated
Balance Sheet at December 31, 2002.
(Dollars in millions)
Assets
Current Assets:
December 31, 2002
As Originally Reported
As Restated
Cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short term securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accounts and notes receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Prepaid expenses and other current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Current AssetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Accounts and Notes Receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Investments in and Advances to AÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other AssetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Intangible AssetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Income Tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Prepaid and Deferred Pension Costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Properties and PlantsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
923.0
24.3
1,459.7
2,371.6
448.1
5,226.7
236.3
141.7
254.9
607.4
161.3
207.5
913.4
205.1
5,192.3
$13,146.6
$
918.1
24.3
1,438.1
2,346.2
453.7
5,180.4
242.8
139.2
253.0
602.6
161.4
187.0
913.4
202.7
5,156.2
$13,038.7
54
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 2. Restatement (continued)
(Dollars in millions)
Liabilities
Current Liabilities:
December 31, 2002
As Originally Reported
As Restated
Accounts payable-trade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
United States and foreign taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Notes payableÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt due within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Current Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and BeneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Long Term Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Equity in Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total LiabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 1,502.2
961.2
481.6
473.2
283.4
369.8
4,071.4
2,989.0
4,194.2
501.2
740.2
12,496.0
$ 1,515.4
913.6
512.3
358.2
283.4
369.8
3,952.7
2,989.8
4,497.3
615.7
727.8
12,783.3
Commitments and Contingent Liabilities
Shareholders' Equity
Preferred Stock, no par value:
Authorized, 50,000,000 shares, unissued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
Common Stock, no par value:
Authorized, 300,000,000 shares
Outstanding shares, 175,309,002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Surplus ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retained Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated Other Comprehensive Income (Loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Shareholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Liabilities and Shareholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
175.3
1,390.3
2,007.1
(2,922.1)
650.6
$13,146.6
175.3
1,390.1
1,782.5
(3,092.5)
255.4
$13,038.7
Note 3. 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 net
amounts of rationalization charges to the Consolidated Statement of Operations were as follows:
(In millions)
Restated
2003
2002
2001
New charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversals ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other credits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$307.2
(15.7)
Ì
$26.5
(18.0)
(3.0)
$214.4
(4.1)
Ì
$291.5
$ 5.5
$210.3
55
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 3. Costs Associated with Rationalization Programs (continued)
The following table shows the reconciliation of the liability balance between periods:
Associate-
related Costs
Other Than Associate-
related Costs
(In millions)
Accrual balance at December 31, 2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2001 chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Charge to goodwillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to the income statementÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accrual balance at December 31, 2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2002 chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to the income statementÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accrual balance at December 31, 2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003 chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to the income statementÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$104.5
127.3
5.7
(159.5)
(5.0)
(3.9)
69.1
19.5
(49.5)
(0.5)
(13.3)
25.3
295.3
(200.4)
Ì
(11.7)
Accrual balance at December 31, 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$108.5
$32.9
87.1
Ì
(66.0)
(0.5)
(0.2)
53.3
7.0
(11.7)
Ì
(4.7)
43.9
11.9
(15.5)
(2.9)
(4.0)
$33.4
Total
$137.4
214.4
5.7
(225.5)
(5.5)
(4.1)
122.4
26.5
(61.2)
(0.5)
(18.0)
69.2
307.2
(215.9)
(2.9)
(15.7)
$141.9
During 2003, net charges of $291.5 million ($267.1 million after tax or $1.27 per share) were recorded, which
included reversals of $15.7 million ($14.3 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 $307.2 million ($281.4 mil-
lion after tax or $1.34 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 outÖows, primarily associate severance
costs, and $132.4 million related primarily to non-cash special termination beneÑts and pension and retiree
beneÑt curtailments. Approximately 4,400 associates will be released under the programs initiated in 2003, of
which approximately 2,700 were exited in 2003. The reversals are primarily the result of lower than initially
estimated associate-related payments of approximately $12 million, 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.
In 2003, $200.4 million and $15.5 million, respectively, was incurred primarily for severance payments
and noncancellable lease costs. The majority of the remaining accrual balance for all programs of $141.9 mil-
lion is expected to be utilized by the end of 2004.
As part of the 2003 rationalization program, Goodyear closed its Huntsville, Alabama tire facility in the
fourth quarter. Of the $307.2 million of new rationalization charges, approximately $138 million related to the
Huntsville closure primarily for associate-related costs for approximately 1,100 associates, including sever-
ance, special termination beneÑts and pension and retiree beneÑt curtailments. The Huntsville closure also
resulted in approximately $35 million of asset impairment charges and $85 million of asset writeoÅs and
accelerated depreciation charges. These amounts are recorded as cost of goods sold (CGS) on the
Consolidated Statement of Operations. The accelerated depreciation charges were recorded on the machinery
56
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 3. Costs Associated with Rationalization Programs (continued)
& equipment and spare parts that were being disposed as of the date of the shutdown for the period from the
date the shutdown was announced to the date the plant was closed. An asset impairment charge was recorded
for the land and buildings to write down the balance to fair value based on expected future cash Öows.
Approximately $8 million of construction in progress was written oÅ in CGS in the Ñrst quarter 2003
related to the research and development rationalization plan. CGS also included accelerated depreciation
charges of approximately $5 million for equipment taken out of service in the European Union related to two
rationalization plans in 2003 at Goodyear's Wolverhampton facility.
Goodyear recorded a net rationalization charge totaling $5.5 million (as restated) ($6.4 million after tax
or $0.03 per share (as restated)) in 2002, which included reversals of $18.0 million (as restated)
($14.3 million after tax or $0.09 per share (as restated)) for reserves from rationalization actions no longer
needed for their originally intended purposes, new charges of $26.5 million ($23.0 million after tax or $0.14
per share) and other credits of $3.0 million (as restated) ($2.3 million after tax or $0.02 per share (as
restated)). The 2002 rationalization actions consisted of a manufacturing facility consolidation in Europe, the
closure of a mold manufacturing facility and a plant consolidation in the United States, and administrative
consolidations. Of the $26.5 million charge, $24.2 million related to future cash outÖows, primarily associate
severance costs, and $2.3 million related to a non-cash writeoÅ of equipment taken out of service in the
Engineered Products and North American Tire Segments. The reversals are primarily the result of lower than
initially estimated associate-related payments of approximately $6 million, lower lease cancellation fees in the
European Union of approximately $6 million and sublease contract signings in North America of approxi-
mately $3 million. $1.7 million of the reversals represents a portion of a legal reserve related to a previous
rationalization plan in the Asia region, determined to be no longer necessary as a result of a court ruling in
Goodyear's favor. The $3.0 million of other credits to restructuring expense represent the writeoÅ of a deferred
gain from a sale leaseback transaction. Goodyear exited the location in the fourth quarter of 2002 and wrote
oÅ the remaining deferred gain against restructuring to oÅset the restructuring charge recorded for that
location. The reversals do not represent a change in the plan originally approved by management. Goodyear
provided for the release of approximately 1,000 manufacturing and administrative associates in Europe and the
United States under the programs initiated in 2002. As of December 31, 2003, approximately 810 associates
have been released, including approximately 540 associates in 2003.
Goodyear recorded net rationalization charges totaling $210.3 million (as restated) ($161.4 million after
tax or $1.00 per share (as restated)) in 2001, which included $4.1 million of reversals of prior year reserves no
longer needed for their originally intended purposes. These actions were in response to continued competitive
market conditions and worldwide economic uncertainty. Under these actions, Goodyear provided for
worldwide associate reductions through retail and administrative consolidation and manufacturing plant
downsizing and consolidation. Of this charge, $132.0 million (as restated) related to future cash outÖows,
primarily associate severance and noncancellable lease costs, and $82.4 million (as restated) related to non-
cash charges, primarily for the writeoÅ of equipment taken out of service. Goodyear provided for the release of
approximately 3,700 associates around the world, primarily production and administrative associates under the
programs initiated in 2001. As of December 31, 2003, approximately 3,570 associates have been released, as
opposed to the 3,700 originally planned for, including approximately 70 associates in 2003. Goodyear
completed these actions during 2003 with the exception of ongoing severance and noncancellable lease
payments.
57
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 3. Costs Associated with Rationalization Programs (continued)
The following table summarizes, by segment, the total charges expected to be recorded, the total amounts
recorded in 2003, the total costs incurred in 2003 and the total amounts reversed in 2003, related to the new
charges taken in 2003:
(In millions)
North American Tire ÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Charge
Expected to be
Recorded
Total Charge
Recorded in 2003
Total Amount
Incurred in 2003
Total Amount
Reversed in 2003
$220.0
63.0
12.0
32.0
8.0
$335.0
$200.7
59.3
10.4
29.4
7.4
$307.2
$144.6
15.1
5.5
18.7
3.9
$187.8
$ 8.8
1.0
0.4
Ì
0.2
$10.4
The additional restructuring costs not yet recorded are expected to be incurred and recorded in 2004 and
subsequent periods.
Note 4. Other (Income) and Expense
(In millions)
Restated
2003
2002
2001
Asset sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Financing fees and Ñnancial instruments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
General and product liability Ì discontinued products ÏÏÏÏÏÏÏÏÏÏÏÏ
Miscellaneous ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 21.5
(25.9)
99.4
145.4
26.9
$(28.0)
(18.8)
48.4
33.8
21.4
$(45.8)
(13.5)
50.1
31.1
18.9
$267.3
$ 56.8
$ 40.8
Other (Income) and Expense in 2003 included a loss of $17.6 million ($8.9 million after tax or $0.05 per
share) on the sale of 20,833,000 shares of Sumitomo Rubber Industries, Ltd. (""SRI'') in the second quarter.
2003 included a loss of $11.6 million ($11.2 million after tax or $0.07 per share) on the sale of assets in the
Engineered Products, North American Tire and European Union Tire Segments. 2003 also included a gain of
$7.7 million ($6.4 million after tax or $0.04 per share) resulting from the sale of land in the Asia Tire Segment
and assets in the Latin American and European Union Tire Segments. During 2002, Goodyear recorded a gain
of $28.0 million (as restated) ($23.7 million after tax or $0.14 per share (as restated)) resulting from the sale
of land and buildings in the Latin American Tire, Engineered Products and European Union Tire Segments.
2002 also included the writeoÅ of a miscellaneous investment of $4.1 million ($4.1 million after tax or $0.02
per share). In 2001, Goodyear recorded a gain of $18.4 million (as restated) ($14.7 million after tax or $0.09
per share (as restated)) resulting from the sale of land and buildings in the European Union Tire Segment in
the Ñrst quarter. Additionally, Goodyear recorded a gain of $27.4 million ($16.9 million after tax or $0.10 per
share) resulting from the sale of the Specialty Chemical Business in the 2001 fourth quarter. Refer to Note 18
for further information on Business Segments.
Interest income consists of amounts earned on deposits. At December 31, 2003, $648.6 million or 41.4%
of Goodyear's cash, cash equivalents and short term securities was concentrated in Europe, primarily western
Europe, ($354.2 million or 37.6% at December 31, 2002), $176.3 million or 11.3% was concentrated in Latin
America, primarily Brazil, ($142.6 million or 15.1% at December 31, 2002) and $116.8 million or 7.5% was
concentrated in Asia ($68.8 million (as restated) or 7.3% at December 31, 2002).
58
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 4. Other (Income) and Expense (continued)
Financing fees and Ñnancial instruments increased in 2003 due to the costs incurred in connection with
the restructuring and reÑnancing of the Company's bank credit and receivables securitization facilities.
Financing fees and Ñnancial instruments included $45.6 million in 2003 related to the new facilities. Refer to
Note 11, Financing Arrangements and Derivative Financial Instruments, for further information about the
restructuring and reÑnancing.
General and 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, primarily for a
proposed settlement of such claims. Goodyear recorded net charges for General and product liability-
discontinued products totaling approximately $145 million in 2003 which included recognition of a receivable
of approximately $131 million from Goodyear's insurance carriers. Refer to Note 20, Commitments and
Contingent Liabilities, for further information about general and product liabilities.
Note 5. Accounts and Notes Receivable
(In millions)
Accounts and notes receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Allowance for doubtful accounts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
Restated
2002
$2,749.7
(128.2)
$1,540.2
(102.1)
$2,621.5
$1,438.1
Accounts and Notes Receivable includes other non-trade receivables of $363.2 million and $253.2 million (as
restated) at December 31, 2003 and 2002, respectively.
Prior to April 1, 2003, Goodyear maintained a program for the continuous sale of substantially all of its
domestic trade accounts receivable to Wingfoot A/R LLC, a wholly-owned limited liability subsidiary
company that was a bankruptcy-remote special purpose entity. A similar program also was maintained for
substantially all of the Company's Canadian trade accounts receivable. The results of operations and Ñnancial
position of Wingfoot A/R LLC were not included in the consolidated Ñnancial statements of Goodyear as
provided by Statement of Financial Accounting Standards No. 140, ""Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities.'' Wingfoot A/R LLC purchased Goodyear's receiv-
ables with (a) the cash proceeds of borrowings from a group of four bank-aÇliated issuers of commercial
paper, which borrowings ($624.1 million at December 31, 2002) were secured by the trade accounts
receivable purchased from Goodyear, (b) the proceeds of Goodyear's equity investment in Wingfoot A/R
LLC, and (c) a subordinated note payable to Goodyear. Goodyear retained the responsibility for servicing the
receivables. As the receivables were collected, the cash proceeds were used to purchase additional receivables.
Goodyear paid fees under the program based on certain variable market interest rates and other agreed
amounts. These fees were reported as Other (Income) and Expense. Wingfoot A/R LLC could borrow up to
$700 million from the note purchasers. The amount that could be borrowed from time to time by Wingfoot A/
R LLC depended on, among other things, the total uncollected balance of receivables owned by it. The
Company retained the risk of the non-payment of receivables it sold to Wingfoot A/R LLC to the extent of its
investment in the equity of Wingfoot A/R LLC and in the subordinated note issued by Wingfoot A/R LLC to
Goodyear. The aggregate amount of Goodyear's investments in Wingfoot A/R LLC was $313.1 million at
December 31, 2002. This program was terminated on April 1, 2003. Accordingly, accounts receivable sold
under this program are now recognized on Goodyear's Consolidated Balance Sheet, and the related
subordinated note receivable and investment in the equity of Wingfoot A/R LLC were derecognized.
Goodyear's consolidated debt increased by $577.5 million and Wingfoot A/R LLC transferred cash to
Goodyear totaling $32.2 million at April 1, 2003. This cash represented collections of accounts receivable
which had not yet been reinvested in additional Goodyear receivables prior to the termination of the program.
59
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 5. Accounts and Notes Receivable (continued)
The following table presents certain cash Öows related to this program:
(In millions)
2003
2002
Proceeds from collections reinvested in previous securitizationsÏÏÏÏÏÏÏÏÏÏÏ
Servicing fees received ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reimbursement for rebates and discounts issued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash used for termination of programÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1,089.1
1.2
28.2
545.3
$5,835.4
6.3
116.8
Ì
International subsidiaries of Goodyear have established accounts receivable continuous sales programs
whereunder these subsidiaries may receive proceeds from the sale of certain of their receivables to aÇliates of
certain banks. These subsidiaries retained servicing responsibilities. At December 31, 2003, the value in U.S.
dollars of which these international subsidiaries could borrow was $104.2 million, compared to $283.5 million
at December 31, 2002. The following table presents certain cash Öows related to these programs:
(In millions)
2003
2002
Proceeds from collections reinvested in previous securitizationsÏÏÏÏÏÏÏÏÏÏÏ
Reimbursement for rebates and discounts issued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1,440.3
76.5
$2,015.8
54.2
In addition, various other international subsidiaries of Goodyear sold certain of their trade receivables during
2003 and 2002. The receivable Ñnancing programs of these international subsidiaries did not utilize an SPE at
December 31, 2003. At December 31, 2003, the value in U.S. dollars of which these international subsidiaries
could borrow was $18.6 million, compared to $129.8 million at December 31, 2002. The total amount of
Ñnancing provided from all domestic and international agreements worldwide was $122.8 million at December
31, 2003, compared to $916.1 million at December 31, 2002.
Note 6.
Inventories
(In millions)
2003
Raw materialsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Work in process ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Finished products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 459.2
112.2
1,893.6
Restated
2002
$ 459.2
97.4
1,789.6
$2,465.0
$2,346.2
Note 7. Goodwill and Other Intangible Assets
Goodyear adopted SFAS 142 eÅective January 1, 2002. This standard speciÑes, among other things, that
goodwill no longer be amortized. The standard requires goodwill to be periodically tested for impairment and
written down to fair value if considered impaired. In accordance with the provisions of SFAS 142, Goodyear
completed the initial impairment testing by June 30, 2002. Based on the results of the testing, no impairment
was indicated. In addition, Goodyear completed the required annual impairment testing of goodwill as of
July 31, 2003 and 2002, and based on the results of the testing, no impairment was indicated.
SFAS 142 also required Goodyear to reassess the useful lives of intangible assets and adjust the
remaining amortization periods accordingly. For those intangible assets deemed to have indeÑnite lives,
amortization ceased eÅective January 1, 2002, and the intangible assets will be periodically tested for
impairment and written down to fair value if considered impaired. Goodyear has ceased amortization related
to $107.1 million of intangible assets as a result of this reassessment.
60
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 7. Goodwill and Other Intangible Assets (continued)
The following table presents goodwill, intangible assets and accumulated amortization balances at
December 31, 2003 and 2002:
December 31, 2003
Restated
December 31, 2002
Gross
Net
Gross
Net
(In millions)
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount
Amount
Amortization
Amortization
Amount
Amount
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$745.6
$(123.1)
$622.5
$721.2
$(118.6)
$602.6
Intangible assets with indeÑnite lives ÏÏÏÏÏÏ
Trademarks and Patents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$114.4
44.6
35.8
$
(7.3)
(16.8)
(8.9)
$107.1
27.8
26.9
$114.4
35.2
35.0
$
(7.3)
(11.6)
(4.3)
$107.1
23.6
30.7
Total other intangible assets ÏÏÏÏÏÏÏÏÏÏÏ
$194.8
$ (33.0)
$161.8
$184.6
$ (23.2)
$161.4
During 2003, net goodwill increased by approximately $23 million due to currency translation.
During the fourth quarter of 2002, Goodyear recorded $10.4 million of goodwill and other intangible
assets in connection with the acquisition of a chain of retail outlets, which was assigned to the North American
Tire Segment. During the second quarter of 2002, Goodyear's minority partner in Sava Tires, a tire
manufacturing subsidiary in Slovenia, exercised its option to sell equity interests to Goodyear representing a
20% interest in Sava Tires for $38.9 million, which increased Goodyear's ownership interest to 80%. Goodyear
recorded $6.8 million of goodwill related to this transaction, which was assigned to the Eastern Europe, Africa
and Middle East Tire Segment.
The net carrying amount of goodwill allocated by reporting unit is as follows:
(In millions)
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle
East Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American TireÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
Balance at
December 31, 2002
Purchase Price
Adjustment
Reversals
Translation &
Other
Adjustments
Balance at
December 31, 2003
$ 98.5
305.3
115.9
1.2
63.7
18.0
Ì
$ Ì
(2.9)
Ì
Ì
Ì
Ì
Ì
$ 0.5
11.2
10.4
(0.3)
0.1
0.9
Ì
$602.6
$(2.9)
$22.8
$ 99.0
313.6
126.3
0.9
63.8
18.9
Ì
$622.5
61
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 7. Goodwill and Other Intangible Assets (continued)
(In millions)
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle
East Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American TireÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Balance at
December 31, 2001
Goodwill
Acquired
Translation &
Other
Adjustments
Balance at
December 31, 2002
Restated
$ 84.5
293.3
101.4
1.2
62.8
18.3
Ì
$ 9.5
Ì
6.8
Ì
Ì
Ì
Ì
$ 4.5
12.0
7.7
Ì
0.9
(0.3)
Ì
$561.5
$16.3
$24.8
$ 98.5
305.3
115.9
1.2
63.7
18.0
Ì
$602.6
Also, during the fourth quarter of 2002, Goodyear recorded AUD$28.5 million (approximately US$16 million
at December 31, 2002) of other intangible assets for a supply agreement with South PaciÑc Tyres (SPT), a
tire manufacturer in Australia and New Zealand in which Goodyear owns a 50% interest. The agreement
provides that Goodyear will be the exclusive provider of certain tires to SPT for the ten-year period ending
December 31, 2012. The AUD$28.5 million will be amortized over the ten-year life of the agreement.
Amortization expense for intangible assets totaled $6.6 million, $4.3 million (as restated) and $2.4 mil-
lion for 2003, 2002 and 2001, respectively. Goodyear estimates that annual amortization expense related to
intangible assets will range from approximately $4 million to $6 million during each of the next Ñve years and
the weighted average remaining amortization period is approximately 17 years.
The total carrying amount of intangible assets not subject to amortization totaled $107.1 million at
December 31, 2003 and 2002. This amount is related to a non-compete agreement resulting from the global
alliance with Sumitomo Rubber Industries, Ltd. that commenced operations on September 1, 1999 and a
trademark in Europe. In accordance with SFAS 142, Goodyear completed the initial impairment testing prior
to March 31, 2002. Based on the results of the testing, no impairment was indicated. In addition, Goodyear
completed the required annual impairment testing for 2003 and 2002, and based on the results of the testing,
no impairment was indicated.
62
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 7. Goodwill and Other Intangible Assets (continued)
The following table presents the transitional disclosures required by SFAS 142:
(In millions, except per share)
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Add back: Amortization of goodwill and intangible assets with
Year Ended December 31,
Restated
2003
2002
2001
$(802.1) $(1,227.0)
$(254.1)
indeÑnite lives (net of tax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
27.5
Adjusted net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(802.1)
$(1,227.0)
$(226.6)
Basic earnings per share:
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Add back: Amortization of goodwill and intangible assets with
$ (4.58) $
(7.35)
$ (1.59)
indeÑnite lives (net of tax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
0.17
Adjusted net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (4.58)
$
(7.35)
$ (1.42)
Diluted earnings per share:
Restated net income (loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Add back: Amortization of goodwill and intangible assets with
$ (4.58)
$
(7.35)
$ (1.59)
indeÑnite lives (net of tax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
0.17
Adjusted net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (4.58)
$
(7.35)
$ (1.42)
Note 8.
Investments
Investments
The Company owns 3,421,305 shares of Sumitomo Rubber Industries, Ltd. (""SRI'') at December 31, 2003
(the ""Sumitomo Investment'') (24,254,306 shares at December 31, 2002). The fair value of the Sumitomo
Investment was $18.6 million and $97.5 million at December 31, 2003 and 2002, respectively, and is included
in Other Assets on the Consolidated Balance Sheet. Goodyear has classiÑed the Sumitomo Investment as
available-for-sale, as provided in Statement of Financial Accounting Standards No. 115, ""Accounting for
Certain Investments in Debt and Equity Securities.'' Changes in the fair value of the Sumitomo Investment
are reported in the Consolidated Balance Sheet as OCI. At December 31, 2003, the gross unrealized holding
gain on the Sumitomo Investment totaled $2.1 million ($3.6 million after tax), compared to the unrealized
holding loss of $19.5 million ($9.3 million after tax) at December 31, 2002.
During 2003, the Company sold 20,833,000 shares of SRI for approximately $83 million and recorded a
loss of $17.6 million ($8.9 million after tax or $0.05 per share). Goodyear had acquired a 10% ownership of
SRI as part of the 1999 global alliance between the two companies. Goodyear now holds approximately 1.5%
of SRI's outstanding shares. Also during 2003, the Company transferred its 80% ownership of Sava Tires Joint
Venture Holding d.o.o. (""Sava Tire''), a tire manufacturing subsidiary in Slovenia, to Goodyear Dunlop Tires
Europe B.V. (""GDTE'') for $282.3 million. Goodyear owns 75% of GDTE. As a result of this transaction,
Goodyear now indirectly owns 60% of Sava Tire. Refer to Note 23, Subsequent Events, for further information
about Sava Tire. Additionally in 2003, the Company purchased Arkansas Best Corporation's 19% ownership
interest in Wingfoot Commercial Tire Systems, LLC, a joint venture company formed by Goodyear and
Arkansas Best Corporation to sell and service commercial truck tires, provide retread services and conduct
related business, for $71.2 million.
63
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 8.
Investments (continued)
During 2002, the Company acquired additional shares of Sava Tire at a cost of $38.9 million. The
Company's ownership of this subsidiary increased from 60% to 80%. Also, during 2002, the Company acquired
additional shares of its tire manufacturing subsidiary in Turkey at a cost of $15.9 million. The Company's
ownership of this subsidiary increased from 59.4% to 74.6%.
Dividends received by the Company from its consolidated subsidiaries for 2003, 2002 and 2001 were
$219.0 million, $113.1 million and $114.8 million, respectively. Dividends received by the Company from its
unconsolidated aÇliates accounted for using the equity method for 2003, 2002 and 2001 were $2.8 million,
$1.6 million and $3.0 million, respectively.
Non-cash Investing and Financing Activities
The Consolidated Statement of Cash Flows is presented net of the following transactions:
On July 7, 2000, Goodyear and Sumitomo amended the Note Agreement and on August 15, 2000:
(1) Sumitomo converted Í6,536,535,167 principal amount of the Company's Note into approximately
1,138,030 shares of the Common Stock of the Company; (2) the Company paid Í223,933,167 of interest on
the Note; and (3) Sumitomo surrendered the Note and the Company issued a replacement note in the
principal amount of Í6,536,535,767 due on August 16, 2001 and payable at the Company's option in cash or in
shares of Common Stock at a conversion price of Í5,731, subject to adjustment. The replacement note bore
interest at the rate of 1.2% per annum from August 15, 2000 until the Ñfteenth day prior to its conversion into
1,140,866 shares of the Company's Common Stock on February 6, 2001.
In 2002, the Company issued 11.3 million shares of its Common Stock and recorded $137.9 million as a
contribution to certain domestic pension plans. In 2001, the Company issued 4.3 million shares of its Common
Stock and recorded $100.0 million as a contribution to certain domestic pension plans.
Note 9. Properties and Plants
(In millions)
Properties and plants, at cost:
2003
Capital
Leases
Owned
Total
Owned
Restated
2002
Capital
Leases
Total
Land and improvements ÏÏÏÏÏ
Buildings and improvements ÏÏ
Machinery and equipment ÏÏÏ
Construction in progress ÏÏÏÏÏ
$
341.6
1,651.8
9,872.4
418.9
$
9.3
67.9
92.1
Ì
$
350.9
1,719.7
9,964.5
418.9
$
384.4 $ 15.9
109.2
88.4
Ì
1,643.1
9,019.9
467.8
$
400.3
1,752.3
9,108.3
467.8
Accumulated depreciationÏÏÏÏÏÏ
12,284.7
(7,162.9)
169.3
(83.9)
12,454.0
(7,246.8)
11,515.2
(6,491.2)
213.5
(81.3)
11,728.7
(6,572.5)
$ 5,121.8
$ 85.4
$ 5,207.2
$ 5,024.0
$132.2
$ 5,156.2
64
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 9. Properties and Plants (continued)
The weighted average useful lives of property used in arriving at the annual amount of depreciation provided
are as follows: buildings and improvements, approximately 18 years; machinery and equipment, approximately
10 years.
Note 10. Leased Assets
Net rental expense charged to income follows:
(In millions)
Gross rental expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Sublease rental incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
$330.5
(64.9)
$298.8
(68.4)
$290.3
(67.8)
$265.6
$230.4
$222.5
Goodyear enters into capital and operating leases primarily for its vehicles, data processing equipment and its
wholesale and retail distribution facilities under varying terms and conditions. Goodyear subleases some of its
domestic retail distribution network to independent dealers. Many of the leases provide that Goodyear will pay
taxes assessed against leased property and the cost of insurance and maintenance.
While substantially all subleases and some operating leases are cancellable for periods beyond 2004,
management expects that in the normal course of its business nearly all of its independent dealer distribution
network will be actively operated. As leases and subleases for existing locations expire, Goodyear would
normally expect to renew the leases or substitute another more favorable retail location.
The following table presents minimum future lease payments:
(In millions)
Capital Leases
Minimum lease paymentsÏÏÏÏÏÏÏÏ
Imputed interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Executory costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Present value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Leases
2004
2005
2006
2007
2008
2009 and
Beyond
Total
$
8.3
$
7.0
$
6.3
$
5.8
$
5.8
$ 41.0
$
74.2
(24.9)
(1.2)
$
48.1
Minimum lease paymentsÏÏÏÏÏÏÏÏ
Minimum sublease rentals ÏÏÏÏÏÏÏ
$287.2
(43.8)
$236.8
(33.7)
$188.9
(25.0)
$145.4
(18.0)
$106.3
(12.2)
$497.8
$1,462.4
(13.6)
(146.3)
$243.4
$203.1
$163.9
$127.4
$ 94.1
$484.2
$1,316.1
Imputed interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Present value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(503.8)
$ 812.3
65
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 10. Leased Assets (continued)
The Company is a party to lease agreements with several unrelated SPEs that are VIEs as deÑned by FIN 46.
The agreements are related to certain North American distribution facilities and certain corporate aircraft.
The fair value of the assets and liabilities, and the Company's maximum exposure to loss prior to insurance
recoveries, is approximately $60 million in these SPEs. The assets, liabilities and results of operations of these
SPEs were consolidated in the third quarter of 2003 resulting in an increase in long term liabilities of
approximately $34 million and an increase in net property of approximately $28 million. The Company also
recorded a $6.1 million charge in other (income) and expense due to the adoption of this new standard.
Financing costs recognized in the Company's Ñnancial statements are not expected to change signiÑcantly.
Financing costs related to these SPEs were included in SAG prior to the third quarter 2003. EÅective with the
third quarter 2003, the Ñnancing costs are recognized as Interest Expense.
Note 11. Financing Arrangements and Derivative Financial Instruments
Goodyear had credit arrangements of $5.90 billion available at December 31, 2003, of which $335.0 million
were unused.
Short Term Debt and Financing Arrangements
At December 31, 2003, Goodyear had short term committed and uncommitted credit arrangements totaling
$347.0 million, of which $209.3 million were unused. These arrangements are available to the Company or
certain of its international subsidiaries through various domestic and international banks at quoted market
interest rates. There are no commitment fees associated with these arrangements.
Goodyear had outstanding debt obligations, which by their terms are due within one year, amounting to
$251.2 million at December 31, 2003, compared to $653.2 million at December 31, 2002. Current maturities
of long term debt represented $113.5 million of this total, with a weighted average interest rate of 5.25% at
December 31, 2003 ($369.8 million and 7.83% at December 31, 2002, respectively). The remaining
$137.7 million was short term debt of international subsidiaries, with a weighted average interest rate of 4.81%
at December 31, 2003 ($283.4 million and 5.31% at December 31, 2002, respectively).
66
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
Long Term Debt and Financing Arrangements
At December 31, 2003, Goodyear had long term credit arrangements totaling $5.55 billion, of which
$125.6 million were unused.
The following table presents long term debt at December 31:
(In millions)
5.375% Swiss franc bond due 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.375% Euro Notes due 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Notes:
8±% due 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6µ% due 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
8¥% due 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6≥% due 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7 6/7% due 2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7% due 2028 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Bank term loans:
$645 million senior secured U.S. term facility due 2005ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$650 million senior secured European facilities due 2005ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1.30 billion senior secured asset-backed credit facilities due 2006 ÏÏÏÏÏÏ
Bank term loans due 2004 and 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Revolving credit facilities due 2005 and 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other domestic and international debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital lease obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Less portion due within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
Restated
2002
$ 128.0
504.6
$ 114.0
418.8
Ì
264.5
300.0
99.8
650.0
149.1
583.3
400.0
800.0
Ì
839.0
173.3
300.0
269.2
300.0
99.8
650.0
149.0
Ì
Ì
Ì
850.0
Ì
145.0
4,891.6
48.1
4,939.7
113.5
3,295.8
63.8
3,359.6
369.8
$4,826.2
$2,989.8
At December 31, 2003, the fair value of Goodyear's long term Ñxed rate debt amounted to $2.11 billion,
compared to its carrying amount of $2.23 billion. At December 31, 2002, the fair value of Goodyear's long
term Ñxed rate debt amounted to $2.10 billion, compared to its carrying amount of $2.48 billion. The
diÅerence between the carrying value in 2003 and 2002 was attributable primarily to lower long term Ñxed rate
debt resulting from the maturity of notes in March of 2003. The diÅerence between the fair market and
carrying values year over year was attributable to lower yields in 2003. The fair value was estimated using
quoted market prices or discounted future cash Öows. The fair value of the 6µ% Notes due 2006 was hedged
by Öoating interest rate contracts of $200 million and $250 million at December 31, 2003 and 2002,
respectively. The fair value of Goodyear's variable rate debt approximated its carrying amount at Decem-
ber 31, 2003 and 2002.
The Notes and Euro Notes have an aggregate face amount of $1.96 billion and are reported net of
unamortized discounts aggregating $1.7 million ($2.17 billion and $2.2 million, respectively, at December 31,
2002).
67
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
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 Ñxed spread, bearing interest at a weighted average rate of
5.17% per annum, of which the interest rate on $325.0 million principal amount of bank term loans due 2005
and 2006 was hedged by Ñxed interest rate contracts. At December 31, 2002, the bank term loans due 2004
and 2005 were comprised of $850.0 million of variable rate agreements based upon LIBOR plus a Ñxed spread
bearing interest at a weighted average rate of 3.82% per annum, of which the interest rate on $325 million
principal amount of bank term loans due 2004 and 2005 was hedged by interest rate contracts. There were no
domestic short term bank borrowings outstanding at December 31, 2003 or 2002.
At December 31, 2003, borrowings under the revolving credit facilities due 2005 and 2006 were
comprised of $839.0 million of variable rate agreements based upon LIBOR plus a Ñxed spread bearing
interest at a weighted average rate of 5.15% per annum.
Other domestic and international debt at December 31, 2003, consisted of Ñxed and Öoating rate loans
denominated in U.S. dollars and other currencies that mature in 2004-2023. Other domestic and international
debt that was outstanding at December 31, 2002, was scheduled to mature in 2003-2012. The weighted
average interest rate in eÅect under these loans was 6.25% at December 31, 2003, compared to 6.15% at
December 31, 2002.
On April 1, 2003, the Company completed a comprehensive restructuring and reÑnancing of its bank
credit and receivables securitization facilities. After completing the restructuring and reÑnancing, the
Company replaced a total of $2,938 million in Ñnance facilities with a total of $3,345 million of Ñnance
facilities including:
‚ $750 million Senior Secured U.S. Revolving Credit Facility due April 2005;
‚ $645 million Senior Secured U.S. Term Facility due April 2005;
‚ $650 million Senior Secured European Facilities due April 2005; and
‚ $1.30 billion Senior Secured Asset-Backed Facilities due March 2006.
The accounts receivable and debt that are subject to the new $1.30 billion asset-backed facilities are
included on Goodyear's consolidated balance sheet at December 31, 2003. Accounts receivable subject to the
terminated $763 million domestic and Canadian accounts receivable programs were not included on the
consolidated balance sheet at December 31, 2002.
$750 Million Senior Secured U.S. Revolving Credit Facility
The Company's amended and restated senior secured $750 million revolving credit facility provides for
borrowing up to the $750 million commitment at any time until April 30, 2005. Up to $600 million of the
facility is available for the issuance of letters of credit. Under the facility, as of December 31, 2003, there were
borrowings of $200.0 million and $485.4 million in letters of credit issued. The Company pays an annual
commitment fee of 75 basis points on the undrawn portion of the commitment under the U.S. revolving credit
facility. On March 12, 2004, in connection with the Company's recent Ñnancing activities, $70.0 million of the
outstanding balance was prepaid and the bank commitments under this facility were permanently reduced to
$680 million.
$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. In connection with the Company's recent Ñnancing
68
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
activities, 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.
In 2003, the Company obtained loans under the U.S. revolving credit facility and the U.S. term facility
(collectively, the ""U.S. 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 U.S. facilities includes:
‚ subject to certain exceptions, all of the capital stock of the Company's domestic subsidiaries and 65%
of the capital stock of its direct-owned foreign subsidiaries;
‚ perfected Ñrst-priority security interests in and mortgages on certain property, plant and equipment
with a book value of at least $1.00 billion;
‚ perfected Ñrst-priority security interests in and mortgages on substantially all of Goodyear's other
tangible and intangible assets including equipment, contract rights and intellectual property; and
‚ perfected third-priority security interests in all accounts receivable and inventory pledged as security
under the Company's $1.30 billion senior secured asset-backed facilities, cash and cash accounts, and
65% of the capital stock of Goodyear Finance Holding S.A.
The indenture for the Company's Swiss franc denominated bonds limits its ability to use its domestic tire
and automotive parts manufacturing facilities as collateral for secured debt without triggering a requirement
that bond holders be secured on an equal and ratable basis. The manufacturing facilities indicated above will
be pledged to ratably secure the Company's Swiss franc denominated bonds to the extent required under the
applicable indenture. However, the aggregate amount collateralized by these manufacturing facilities will be
limited to 15% of the Company's shareholders' equity, in order that the security interests granted to the
lenders under the restructured facilities will not be required to be shared with the holders of indebtedness
outstanding under the Company's other existing bond indentures.
The facilities have customary representations and warranties including, as a condition of borrowing,
material adverse change representations in the Company's Ñnancial condition since December 31, 2002. In
addition, the U.S. facilities contain certain covenants that, among other things, limit the Company's ability to
incur additional secured indebtedness (including a limit, subject to certain exceptions, of 275 million Euros in
accounts receivable transactions), make investments, and sell assets beyond speciÑed limits. The facilities
prohibit Goodyear from paying dividends on its common stock. Goodyear must also maintain a minimum
consolidated net worth (as such term is deÑned in the U.S. facilities) of at least $2.80 billion and $2.50 billion
for quarters ending in 2003 and 2004, respectively, and $2.00 billion for the quarter ending March 31, 2005.
Under the facilities, Goodyear was not permitted to fall below a ratio of 2.25 to 1.00 of consolidated EBITDA
to consolidated interest expense (as such terms are deÑned in each of the restructured credit facilities) for any
period of four consecutive Ñscal quarters. On February 19, 2004, in connection with an amendment to the
credit facilities, the ratio was reduced to 2.00 to 1.00. In addition, Goodyear's ratio of consolidated senior
secured indebtedness to consolidated EBITDA (as such terms are deÑned in the U.S. facilities) is not
permitted to be greater than 4.00 to 1.00 at any time. As of December 31, 2003, the Company was in
compliance with the Ñnancial covenants under the credit facilities.
The U.S. facilities also limit the amount of capital expenditures the Company may make to $360 million,
$500 million, and $500 million in 2003, 2004 and 2005 ($200 million through April 30, 2005), respectively.
The amounts of permitted capital expenditures may be increased by the amount of net proceeds retained by
the Company from permitted asset sales and equity and debt issuances after application of the prepayment
requirement in the U.S. term facility. As a result of certain activities, the capital expenditure limit for 2003
69
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
was increased from $360 million to approximately $381 million. In addition, to the extent the Company does
not reach the limit of permitted capital expenditures in any given year, such shortfall may be carried over into
the next year. With respect to 2004, increases totaling $270 million are permitted as a result of capital market
transactions completed during the Ñrst quarter 2004 and unused allowances from 2003.
$650 Million Senior Secured European Facilities
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
December 31, 2003, 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 Ñrst-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 speciÑed limits, pay
dividends and make loans or advances to Goodyear companies that are not subsidiaries of GDTE. The
European facilities also contain certain 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
$180 million, $250 million and $100 million in 2003, 2004 and 2005 (through April 30), respectively.
Subject to the provisions in the European facilities and agreements with Goodyear's joint venture partner,
SRI (which include limitations on loans and advances from GDTE to Goodyear and a requirement that
transactions with aÇliates 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:
‚ 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.
$1.30 Billion Senior Secured Asset-Backed Credit Facilities
The Company has also 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
70
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
facility. As of December 31, 2003, there were borrowings of $389.0 million and $800.0 million under the
revolving credit and term loan asset-backed facilities, respectively. The facilities mature on March 31, 2006.
Availability under the facilities is limited by a borrowing base equal to the sum of (a) 85% of adjusted
eligible accounts receivable and (b) (i) if the eÅective 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
of such inventory, or (ii) if the eÅective 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 Ñnished goods relating to the North
American Tire Segment, and 60% of adjusted eligible Ñnished 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.
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 exceeds the
borrowing base, the Company will be required to prepay borrowings suÇcient to eliminate the excess or
maintain compensating deposits with the agent bank.
The facilities are collateralized by a Ñrst-priority security interest 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, eÅective as of February 20, 2004, second-
priority security interest 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. On February 20, 2004, the Company added a $650 million tranche to the facility, not subject to
the borrowing base, and with junior lien on the collateral securing the facility.
Terminated or Amended Facilities
Until April 1, 2003, the Company was a party to two revolving credit facilities, consisting of a $750 million
Ñve-year revolving credit facility and a $575 million 364-day revolving credit facility. The Company was also a
party to an $800 million term loan agreement, a $50 million term loan agreement, a $700 million accounts
receivable facility with respect to its domestic trade accounts receivable and an aggregate of $346 million of
non-domestic accounts receivable facilities. With the exception of (i) $275 million of the non-domestic
accounts receivable facilities, which remained in place as of April 1, 2003, and (ii) the $750 million Ñve-year
revolving credit facility, which was amended and restated, each of these arrangements was terminated as of
April 1, 2003, in connection with the restructuring and reÑnancing.
Refer to Note 5 for further information on the accounts receivable facilities.
71
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
Debt Maturities
The annual aggregate maturities of long term debt and capital leases for the Ñve years subsequent to 2003 are
presented below. Maturities of debt supported by the availability of the revolving credit agreements have been
reported on the basis that the commitments to lend under these agreements will be terminated eÅective at the
end of their current terms.
(In millions)
Debt incurred under or supported by
2004
2005
2006
2007
2008
revolving credit agreements ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Ì international ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Ì domestic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 70.0
40.8
2.7
$ 450.0
437.9
1,120.0
$ 319.0
2.0
1,224.6
$ Ì $ Ì
3.6
101.9
1.2
303.7
$113.5
$2,007.9
$1,545.6
$304.9
$105.5
In connection with the Company's Ñnancing activities during the Ñrst quarter of 2004, Goodyear's long-term
debt commitments in 2005 and 2006 were reduced by $665 million and $64 million, respectively. Refer to
Note 23 for further information about the Company's Ñnancing activities in 2004.
Derivative Financial Instruments
Goodyear adopted Statement of Financial Accounting Standards No. 133, ""Accounting for Derivative
Instruments and Hedging Activities,'' as amended and interpreted, on January 1, 2001.
Interest Rate Exchange Contracts
Goodyear manages its Ñxed and Öoating rate debt mix, within deÑned limitations, using reÑnancings and
unleveraged interest rate swaps. Goodyear will enter into Ñxed and Öoating interest rate swaps to hedge against
the eÅects of adverse changes in interest rates on consolidated results of operations and future cash outÖows
for interest. Fixed rate swaps are used to reduce Goodyear's risk of increased interest costs during periods of
rising interest rates, and are normally designated as cash Öow hedges. Floating rate swaps are used to convert
the Ñxed rates of long term borrowings into short term variable rates, and are normally designated as fair value
hedges. Interest rate swap contracts are used by Goodyear to separate interest rate risk management from the
debt funding decision. At December 31, 2003, the interest rate on 47% of Goodyear's debt was Ñxed by either
the nature of the obligation or through the interest rate contracts, compared to 70% at December 31, 2002.
72
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
The following tables present contract information and weighted average interest rates. Current market
pricing models were used to estimate the fair values of interest rate exchange contracts.
December 31, 2002
Settled
December 31, 2003
(Dollars in millions)
Fixed rate contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive variable LIBORÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average years to maturity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value: asset (liability) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Carrying amount:
Current liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Floating rate contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay variable LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average years to maturity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value: asset (liability) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Carrying amount:
Ì
Ì
Ì
$50.0
3.35%
6.63
$325.0
5.00%
1.40
1.25
$(14.2)
(11.6)
(2.6)
$250.0
3.18%
6.63
3.95
$ 20.3
$325.0
5.00%
1.17
0.25
$ (3.1)
(3.1)
Ì
$200.0
2.96%
6.63
2.95
$ 13.0
7.4
5.6
Current asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
8.4
11.9
Weighted average information during the years 2003, 2002 and 2001 follows:
(Dollars in millions)
Fixed rate contracts:
2003
2002
2001
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay Ñxed rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive variable LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$325.0
$325.0
$129.0
5.00%
1.24
5.00%
1.91
5.43%
3.58
Floating rate contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay variable LIBORÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$207.0
$210.0
3.03%
6.63
3.68%
6.63
Ì
Ì
Ì
Interest Rate Lock Contracts
Goodyear will use, when appropriate, interest rate lock contracts to hedge the risk-free rate component of
anticipated long term debt issuances. These contracts are designated as cash Öow hedges of forecasted
transactions. Gains and losses on these contracts are amortized to income over the life of the debt. No
contracts were outstanding at December 31, 2003 or 2002.
Foreign Currency Contracts
In order to reduce the impact of changes in foreign exchange rates on consolidated results of operations and
future foreign currency-denominated cash Öows, Goodyear will enter into foreign currency contracts. These
73
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
contracts reduce exposure to currency movements aÅecting existing foreign currency-denominated assets,
liabilities, Ñrm commitments and forecasted transactions resulting primarily from trade receivables and
payables, equipment acquisitions, intercompany loans, royalty agreements and forecasted purchases and sales.
In addition, the principal and interest on Goodyear's Swiss franc bond due 2006 and Euro100 million of Euro
Notes due 2005 are hedged by currency swap agreements.
Contracts hedging the Swiss franc bond and the Euro Notes are designated as cash Öow hedges.
Contracts hedging short term trade receivables and payables normally have no hedging designation.
Amounts are reclassiÑed from OCI into earnings each period to oÅset the eÅects of exchange rate
movements on the principal and interest of the Swiss franc bond and the Euro Notes. Amounts are also
reclassiÑed concurrently with the recognition of intercompany royalty expense and sales of intercompany
purchases to third parties.
The following table presents foreign currency contracts at December 31:
(In millions)
Buy currency:
2003
Restated
2002
Fair
Value
Contract
Amount
Fair
Value
Contract
Amount
EuroÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Swiss franc ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Brazilian real ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Japanese yenÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
U.S. dollarÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Czech krona ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
British pound ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$155.1
125.8
Ì
13.0
127.9
Ì
Ì
$119.2
80.6
Ì
16.7
128.4
Ì
Ì
$353.4
140.3
42.4
14.4
13.7
13.3
2.1
$320.6
111.2
40.0
15.2
14.2
13.5
2.1
$421.8
$344.9
$579.6
$516.8
Contract maturity:
Swiss franc swapÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Euro swap ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
All other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
3/06
6/05
1/04 Ó 7/19
3/06
6/05
1/03 Ó 12/18
74
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
(In millions)
Sell currency:
2003
Restated
2002
Fair
Value
Contract
Amount
Fair
Value
Contract
Amount
British pound ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Brazilian real ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Swedish krona ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Canadian dollar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EuroÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
All other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$157.9
Ì
44.2
93.0
71.3
19.8
$155.2
Ì
44.3
91.7
70.0
19.8
$ 52.6
42.4
35.4
23.4
13.6
8.7
$ 53.1
43.6
35.6
23.7
13.4
9.1
$386.2
$381.0
$176.1
$178.5
Contract maturityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2/04
1/03
Carrying amount Ì asset (liability):
Swiss franc swap Ì current ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Swiss franc swap Ì long term ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Euro swaps Ì currentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Euro swaps Ì long termÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Ì current asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Ì current (liability) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
$(1.6)
46.8
20.5
13.2
7.2
(14.4)
Restated
2002
$(2.8)
31.6
(1.1)
27.8
11.8
(2.1)
At December 31, 2002, Goodyear held foreign currency Euro put options, exercisable during 2003, to reduce
exposure to currency movements on 2003 forecasted intercompany sales. These options were designated as
cash Öow hedges. At December 31, 2002, the underlying contract value of these options totaled $42.6 million
and the fair value totaled $0.2 million. At December 31, 2003, the Company did not hold any outstanding
foreign currency options.
The counterparties to Goodyear's interest rate swaps and foreign exchange contracts were substantial and
creditworthy multinational commercial banks or other Ñnancial institutions that are recognized market
makers. Due to the creditworthiness of the counterparties, Goodyear considers the risk of counterparty
nonperformance associated with these contracts to be remote. However, the inability of a counterparty to
fulÑll its obligations when due could be material relative to the consolidated Ñnancial position, results of
operations or liquidity of Goodyear in the period in which it occurs.
Hedges of Net Investment in Foreign Operations
In order to reduce the impact of changes in foreign exchange rates on consolidated shareholders' equity,
Goodyear has designated certain foreign currency-denominated non-derivative instruments as hedges of its net
investment in various foreign operations.
Throughout 2002, Euro100 million of Goodyear's 6.375% Euro Notes due 2005 was designated as
hedging Goodyear's net investment in certain European subsidiaries that have the Euro as the functional
currency. During 2003, the Company eliminated this hedge in order to more eÅectively manage other foreign
currency exposures.
75
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 11. Financing Arrangements and Derivative Financial Instruments (continued)
Results of Hedging Activities
IneÅectiveness and premium amortization pretax charges totaled $1.0 million and $0.5 million during the
twelve months ended December 31, 2003 and 2002, respectively. Deferred net pretax losses totaling
$3.3 million on hedges of forecasted transactions are anticipated to be recognized in income during the twelve
months ending December 31, 2004, due to pay/receive interest rate diÅerentials on Ñxed rate interest rate
contracts. It is not practicable to estimate the amount of deferred gains and losses that will be recognized in
income resulting from the remeasurement of certain long term currency exchange agreements.
Deferred pretax losses totaling $4.2 million and gains totaling $16.0 million were recorded as Foreign
Currency Translation Adjustment during the twelve months ended December 31, 2003 and 2002, respectively,
as a result of the designation of nonderivative instruments as net investment hedges. These gains and losses are
only recognized in earnings upon the complete or partial sale of the related investment or the complete
liquidation of the investment.
Note 12. Stock Compensation Plans and Dilutive Securities
The Company's 1989 Goodyear Performance and Equity Incentive Plan, the 1997 Performance Incentive Plan
of The Goodyear Tire & Rubber Company and the 2002 Performance Plan of The Goodyear Tire & Rubber
Company provide for the granting of stock options and stock appreciation rights (SARs), restricted stock,
performance grants and other stock-based awards. For options granted in tandem with SARs, the exercise of a
SAR cancels the stock option; conversely, the exercise of the stock option cancels the SAR. The 1989 Plan
expired on April 14, 1997, and the 1997 Plan expired on December 31, 2001, except, in each case, with respect
to grants and awards outstanding. The 2002 Plan will expire by its terms on April 15, 2005, except with respect
to grants and awards then outstanding. A maximum of 12,000,000 shares of the Company's Common Stock
are available for issuance pursuant to grants and awards made under the 2002 Plan through April 15, 2005.
Stock options and related SARs granted under the above plans generally have a maximum term of ten years
and vest pro rata over four years.
Performance units granted during 2002 and 2001 are earned based on Return on Invested Capital and
Total Shareholder Return relative to the S&P Auto Parts & Equipment Companies (each weighted at 50%)
over a three year performance period beginning January 1 of the year subsequent to the year of grant. To the
extent earned, a portion of the performance units will generally be paid 50% in cash and 50% in stock (subject
to deferral under certain circumstances). A portion may be automatically deferred in the form of units until
the participant is no longer an employee of the company. Each unit is equivalent to a share of the Company's
Common Stock and payable in cash, shares of the Company's Common Stock or a combination thereof at the
election of the participant.
On December 4, 2000, the Company adopted The Goodyear Tire & Rubber Company Stock Option Plan
for Hourly Bargaining Unit Employees, under which options in respect of up to 3,500,000 shares of the
Common Stock of the Company may be granted, and the Hourly and Salaried Employee Stock Option Plan,
under which options in respect of up to 600,000 shares of the Company's Common Stock may be granted.
Stock options granted under these plans generally have a maximum term of ten years and vest over one to
three years. The Hourly Bargaining Unit Plan expired on September 30, 2001, and the Hourly and Salaried
Plan expired on December 31, 2002, except, in each case, with respect to options then outstanding.
76
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 12. Stock Compensation Plans and Dilutive Securities (continued)
Stock-based compensation activity for the years 2003, 2002 (as restated) and 2001 follows:
2003
Restated
2002
2001
Shares
SARs
Shares
SARs
Shares
SARs
Outstanding at January 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24,476,229
4,110,830
21,841,798
3,398,781
19,054,838
2,783,983
Options granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,907,552
1,009,588
3,454,724
863,372
3,208,270
732,248
Options without SARs exercised ÏÏÏÏÏÏÏÏÏ
Options with SARs exercised ÏÏÏÏÏÏÏÏÏÏÏÏ
SARs exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
Ì
Ì (110,642)
Ì (105,360)
Ì
Ì
Ì
(6,439)
(6,439)
(6,665)
(6,665)
(400)
(400)
(13,500)
(13,500)
Options without SARs expired ÏÏÏÏÏÏÏÏÏÏÏ (1,011,943)
Ì (509,313)
Ì (345,151)
Ì
Options with SARs expiredÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(154,629) (154,629)
(144,484) (144,484)
(97,285)
(97,285)
Performance units grantedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Performance unit shares issuedÏÏÏÏÏÏÏÏÏÏÏ
8,500
Ì
Ì
Ì
227,100
(28,196)
Ì
Ì
283,300
Ì
Performance units cancelled ÏÏÏÏÏÏÏÏÏÏÏÏÏ
(225,724)
Ì (247,919)
Ì (136,649)
Ì
Ì
Ì
Outstanding at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26,999,985
4,965,789
24,476,229
4,110,830
21,841,798
3,398,781
Exercisable at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18,697,146
2,899,381
15,205,724
2,314,354
12,217,868
1,809,894
Available for grant at December 31ÏÏÏÏÏÏÏÏÏ 4,846,238
8,497,830
486,130
SigniÑcant option groups outstanding at December 31, 2003 and related weighted average price and remaining
life information follows:
Grant
Date
12/03/03
12/03/02
12/03/01
12/04/00
12/06/99
11/30/98
12/02/97
12/03/96
1/09/96
All other
Options
Outstanding
3,850,350
2,852,209
2,866,659
5,565,588
3,038,882
1,985,082
1,724,537
1,463,898
1,114,990
1,963,669
Options
Exercisable
Ì
883,110
1,759,012
5,117,938
3,038,882
1,985,082
1,724,537
1,463,898
1,114,990
1,609,697
Exercisable
Price
Remaining
Life (Years)
$6.81
7.94
22.05
17.68
32.00
57.25
63.50
50.00
44.00
32.89
10
9
8
7
6
5
4
3
2
4.3
The 1,963,669 options in the ""All other'' category were outstanding at exercise prices ranging from $5.52 to
$74.25, with a weighted average exercise price of $29.45. All options and SARs were granted at an exercise
price equal to the fair market value of the Company's Common Stock at the date of grant.
77
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 12. Stock Compensation Plans and Dilutive Securities (continued)
Weighted average option exercise price information follows:
Outstanding at January 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Granted during the year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Exercised during the yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Outstanding at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Exercisable at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$30.28
6.81
Ì
26.90
33.80
$33.87
7.94
17.78
30.28
38.13
$35.54
22.05
20.53
33.87
41.34
2003
2002
2001
Forfeitures and cancellations were insigniÑcant.
Weighted average fair values at date of grant for grants in 2003, 2002 and 2001 follow:
2003
2002
2001
OptionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Performance units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$3.41
6.81
$3.59
7.94
$6.95
22.05
The above fair value of options at date of grant was estimated using the Black-Scholes model with the
following weighted average assumptions:
2003
2002
2001
5
Expected life (years) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
3.41% 3.18% 4.48%
Interest rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Volatility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
47.5
54.0
Dividend yield ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
25.2
Ì 3.18
5
5
The fair value of performance units at date of grant was equal to the market value of the Company's Common
Stock at that date.
Stock-based compensation expense (income) included in income before tax for 2003, 2002 and 2001 was
$1.3 million, $(5.6) million and $5.3 million, respectively.
Basic earnings per share has 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:
2003
2002
2001
Average shares outstanding Ì basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Stock options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
175,314,449
Ì
167,020,375
Ì
159,955,869
Ì
Average shares outstanding Ì diluted ÏÏÏÏÏÏÏÏÏÏÏÏ
175,314,449
167,020,375
159,955,869
The average shares outstanding-diluted totals for 2003, 2002 and 2001 do not include the antidilutive impact
of 0.1 million, 0.8 million and 1.8 million shares, respectively, of potential common stock associated with stock
options. 2001 does not include 0.1 million shares associated with the Sumitomo 1.2% Convertible Note
Payable.
Refer to Note 1 for additional information on stock-based compensation.
78
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 13. Pension, Other Postretirement BeneÑt and Savings Plans
Goodyear and its subsidiaries provide substantially all employees with pension beneÑts. The principal domestic
hourly plan provides beneÑts based on length of service. The principal domestic plans covering salaried
employees provide beneÑts based on Ñnal Ñve-year average earnings formulas. Salaried employees making
voluntary contributions to these plans receive higher beneÑts. Other plans provide beneÑts similar to the
principal domestic plans as well as termination indemnity plans at certain international subsidiaries. At the
end of 2003 and 2002, assets exceeded accumulated beneÑts in certain plans and accumulated beneÑts
exceeded assets in others.
The Company and its subsidiaries provide substantially all domestic employees and employees at certain
international subsidiaries with health care and life insurance beneÑts upon retirement. Insurance companies
provide life insurance and certain health care beneÑts through premiums based on expected beneÑts to be paid
during the year. Substantial portions of the health care beneÑts for domestic retirees are not insured and are
paid by Goodyear. BeneÑt payments are funded from operations. The December 31, 2003, beneÑt obligation
for other postretirement beneÑts includes $11.0 million for the increase in the Company's contribution
requirements based upon the attainment of certain proÑt 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. In accordance with FASB StaÅ Position 106-1, all amounts are presented without reÖecting
any potential eÅects of the Act. SpeciÑc authoritative guidance on the accounting implications of the Act is
pending. Such guidance, when issued, may require restatement of previously disclosed amounts.
The Company uses a December 31 measurement date for the majority of its plans.
Net periodic pension cost follows:
(In millions)
Service cost Ó beneÑts earned during the period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest cost on projected beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expected return on plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of unrecognized: Ì prior service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì net (gains) losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì transition amountÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
$122.2
400.0
(310.6)
74.2
125.1
1.1
$116.3
385.1
(391.1)
81.6
35.9
0.6
$116.6
372.7
(441.0)
84.1
7.1
0.6
$412.0
$228.4
$140.1
Goodyear recognized a settlement loss of $7.1 million, a curtailment loss of $38.1 million and a special
termination loss of $43.0 million during 2003. Goodyear recognized a curtailment loss of $0.3 million and a
special termination loss of $0.8 million during 2002. During 2001, Goodyear recognized a settlement gain of
$1.1 million, a curtailment gain of $0.8 million and a special termination loss of $25.1 million. Refer to Note 3.
Net periodic postretirement beneÑt cost follows:
(In millions)
Service cost Ó beneÑts earned during the period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest cost on accumulated beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of unrecognized: Ì net lossesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì prior service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
$ 24.1
174.0
32.0
17.0
$ 19.5
186.9
26.2
19.4
$ 19.2
179.3
19.7
10.4
$247.1
$252.0
$228.6
79
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 13. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
As a result of rationalization actions in 2003, Goodyear recognized a curtailment loss of $23.6 million and a
loss from special termination beneÑts of $20.0 million. Goodyear recognized a curtailment gain of $0.2 million
and a special termination loss of $6.5 million as a result of rationalization actions in 2001. Refer to Note 3.
The change in beneÑt obligation and plan assets for 2003 and 2002 and the amounts recognized in
Goodyear's Consolidated Balance Sheet at December 31, 2003 and 2002 are as follows:
(In millions)
Change in beneÑt obligation:
Pension Plans
Other BeneÑts
2003
Restated
2002
2003
Restated
2002
Beginning balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Service cost Ì beneÑts earned ÏÏÏÏÏÏÏÏ
Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Plan amendmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Actuarial loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employee contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Curtailments/settlements ÏÏÏÏÏÏÏÏÏÏÏÏ
Special termination beneÑts ÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation ÏÏÏÏÏÏÏÏÏÏ
BeneÑt payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(6,059.3)
(122.2)
(400.0)
(112.4)
(360.0)
(18.8)
16.3
(42.9)
(257.6)
473.4
$(5,443.0)
(116.3)
(385.1)
(5.4)
(323.8)
(19.7)
1.6
Ì
(126.6)
359.0
$(2,723.1)
(24.1)
(174.0)
(275.8)
(88.9)
(6.6)
(15.0)
(21.3)
(22.9)
273.1
$(2,565.0)
(19.5)
(186.9)
(127.0)
(111.3)
(4.8)
Ì
Ì
1.8
289.6
Ending balanceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(6,883.5)
(6,059.3)
(3,078.6)
(2,723.1)
Change in plan assets:
Beginning balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Actual return on plan assets ÏÏÏÏÏÏÏÏÏÏ
Company contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employee contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation ÏÏÏÏÏÏÏÏÏÏ
BeneÑt payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ending balanceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Funded status ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrecognized prior service cost ÏÏÏÏÏÏÏÏÏ
Unrecognized net loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrecognized net obligation at transition
$ 3,602.4
707.4
115.7
18.8
158.2
(473.4)
$ 4,129.1
(2,754.4)
503.4
2,195.4
3.9
$ 4,176.2
$
(535.7)
226.9
19.7
74.3
(359.0)
$
$ 3,602.4
(2,456.9)
492.3
2,298.9
4.4
Ì $
Ì
Ì
Ì
Ì
Ì
Ì $
(3,078.6)
480.9
763.1
Ì
Ì
Ì
Ì
Ì
Ì
Ì
Ì
(2,723.1)
229.3
704.3
Ì
Net amount recognized ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $
(51.7)
$
338.7
$(1,834.6)
$(1,789.5)
80
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 13. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
Amounts recognized in the statement of Ñnancial position consist of:
(In millions)
Prepaid beneÑt cost Ì current ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì long term ÏÏÏÏÏÏÏÏÏÏÏ
Accrued beneÑt cost Ì current ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì long term ÏÏÏÏÏÏÏÏÏÏÏ
Intangible assetÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated other comprehensive incomeÏÏÏÏ
Net amount recognized on the Consolidated
Pension Plans
Other BeneÑts
2003
$
87.7
345.1
(110.8)
(2,830.6)
512.4
273.0
126.5
1,545.0
Restated
2002
$
303.9
369.6
(26.3)
(2,866.5)
499.7
260.0
124.8
1,673.5
2003
$
Restated
2002
Ì $
Ì
Ì
Ì
(287.4)
(1,547.2)
Ì
Ì
Ì
Ì
(315.4)
(1,474.1)
Ì
Ì
Ì
Ì
Balance SheetÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
(51.7)
$
338.7
$(1,834.6)
$(1,789.5)
The accumulated beneÑt obligation for all deÑned beneÑt pension plans was $6,508 million and $5,769 million
(as restated) at December 31, 2003 and 2002, respectively.
For pension plans that are not fully funded:
(In millions)
Projected beneÑt obligationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value of plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
$6,768.7
6,507.6
4,020.5
$6,024.6
5,768.7
3,566.4
Certain international subsidiaries maintain unfunded pension plans consistent with local practices and
requirements. At December 31, 2003, these plans accounted for $208.3 million of Goodyear's accumulated
beneÑt obligation, $215.9 million of its projected beneÑt obligation and $22.0 million of its minimum pension
liability adjustment ($177.0 million, $187.2 million and $16.9 million, respectively, at December 31, 2002).
The increase (decrease) in minimum liability (net of tax) included in other comprehensive income
follows:
(In millions)
Increase (decrease) in minimum
liability included in other
comprehensive income ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pension Plans
Restated
Other BeneÑts
2003
2002
2001
2003
2002
2001
$(128.5)
$1,283.6
$367.9 N/A N/A N/A
81
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 13. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
The following table presents signiÑcant weighted-average assumptions used to determine beneÑt obligations at
December 31:
Pension Plans
Other BeneÑts
Discount rate Ì U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rate of compensation increase Ì U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.25% 6.75% 6.25% 6.75%
5.93
4.00
3.43
7.48
4.00
4.80
7.22
4.00
4.47
6.20
4.00
3.50
Restated
2002
2003
Restated
2002
2003
The following table presents signiÑcant weighted-average assumptions used to determine net periodic
pension/beneÑt cost for the years ended December 31:
Pension Plans
Other BeneÑts
Restated
Restated
2003
2002
2001
2003
2002
2001
Discount rate Ì U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì InternationalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expected long term return on plan assets Ì U.S. ÏÏÏÏÏÏÏÏÏÏ
Ì International ÏÏÏ
Rate of compensation increase Ì U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì International ÏÏÏÏÏÏÏÏÏÏÏÏ
6.75% 7.25% 7.50% 6.75% 7.25% 7.50%
6.20
8.50
8.03
4.00
3.50
6.70
10.00
8.50
4.00
3.50
6.50
9.50
8.50
4.00
3.50
7.50
Ì
Ì
4.00
4.50
7.70
Ì
Ì
4.00
4.60
7.48
Ì
Ì
4.00
4.80
For 2003, an assumed long-term rate of return of 8.50% was used for the U.S. pension plans. In developing this
rate, the Company evaluated the compound annualized returns of its U.S. pension fund over periods of
15 years or more (through December 31, 2002). In addition, the Company evaluated input from its pension
fund consultant on asset class return expectations and long-term inÖation. For the Company's international
locations, a weighted average assumed long-term rate of return of 8.40% was used. Input from local pension
fund consultants concerning asset class return expectations and long-term inÖation form the basis of this
assumption.
Assumed health care cost trend rates at December 31 follow:
2003
2002
Health care cost trend rate assumed for next year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) ÏÏÏÏÏÏÏÏ
Year that the rate reaches the ultimate trend rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
12.5%
5.0
2013
7.0%
5.0
2007
A 1% change in the assumed health care cost trend would have increased (decreased) the accumulated
beneÑt obligation at December 31, 2003 and the aggregate service and interest cost for the year then ended as
follows:
(In millions)
1% Increase
1% Decrease
Accumulated beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Aggregate service and interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$36.8
1.9
$(36.2)
(1.6)
82
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 13. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
Goodyear's pension plan weighted-average asset allocation at December 31, 2003 and 2002, by asset category,
are as follows:
Asset Category
Plan Assets at
December 31,
2002
2003
Equity securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Debt securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short term and cash ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
69%
30
1
66%
32
2
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
100% 100%
The Company's pension investment policy recognizes the long-term nature of pension liabilities, the beneÑts
of diversiÑcation across asset classes and the eÅects of inÖation. The diversiÑed portfolio is designed to
maximize returns consistent with levels of liquidity and investment risk that are prudent and reasonable. All
assets are managed externally according to guidelines established individually with investment managers. The
manager guidelines prohibit the use of any type of investment derivative without prior approval of the
Company. Portfolio risk is controlled by having managers comply with guidelines, establishing the maximum
size of any single holding in their portfolios and by using managers with diÅerent investment styles. The
Company periodically undertakes asset and liability modeling studies to determine the appropriateness of the
investments. The portfolio includes holdings of domestic, international, and private equities, global high
quality and high yield Ñxed income, and short-term interest bearing deposits. The target asset allocation of the
U.S. pension fund is 70% equities and 30% Ñxed income.
Equity securities include the Company's common stock in the amounts of $35.6 million (0.9% of total
plan assets) and $104.7 million (2.9% of total plan assets) at December 31, 2003 and 2002, respectively.
The Company expects to contribute approximately $210 million to its major U.S. and international
pension plans in 2004.
Substantially all domestic employees are eligible to participate in one of seven savings plans. 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 eÅective January 1, 2003. Goodyear's domestic
matching contributions were $9.8 million, $41.9 million and $40.2 million for 2003, 2002 and 2001,
respectively.
In addition, deÑned contribution pension plans are available for certain foreign employees. Company
contributions for these plans were $5.2 million, $3.8 million (as restated), and $3.8 million (as restated) in
2003, 2002 and 2001, respectively.
83
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 14.
Income Taxes
The components of Income (Loss) before Income Taxes, adjusted for Minority Interest in Net Income
(Loss) of Subsidiaries, follow:
(In millions)
2003
2002
2001
Restated
U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(1,051.0)
361.1
$(421.4)
407.7
$(391.3)
53.4
Minority Interest in Net Income (Loss) of Subsidiaries ÏÏÏÏÏÏ
(689.9)
35.0
(13.7)
55.3
(337.9)
(3.3)
$ (654.9)
$
41.6
$(341.2)
A reconciliation of income taxes at the U.S. statutory rate to income taxes provided follows:
(In millions)
Restated
2003
2002
2001
U.S. Federal income tax at the statutory rate of 35% ÏÏÏÏÏÏÏÏÏÏ
Adjustment for foreign income taxed at diÅerent rates ÏÏÏÏÏÏÏÏÏ
Valuation allowance for U.S. tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
U.S. loss with no tax beneÑtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
State income taxes, net of Federal beneÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign operating loss with no tax beneÑt providedÏÏÏÏÏÏÏÏÏÏÏÏ
Settlement of prior years' liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for repatriation of foreign earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(229.2)
1.1
Ì
357.6
(4.2)
30.0
(44.2)
7.7
(6.6)
$
14.6
(20.7)
1,203.1
Ì
(4.3)
5.6
(36.4)
50.2
1.2
$(119.4)
(12.2)
Ì
Ì
(22.4)
72.0
Ì
0.1
(1.9)
United States and Foreign Taxes on Income (Loss) ÏÏÏÏÏÏÏÏÏÏ
$ 112.2
$1,213.3
$ (83.8)
The components of the provision (beneÑt) for income taxes by taxing jurisdiction follow:
(In millions)
Current:
Federal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign income and withholding taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
State ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
$(49.2)
180.4
(4.2)
127.0
$ (46.6)
150.9
$
(7.6)
96.7
48.1
131.6
2.2
181.9
Deferred:
Federal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
State ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(9.9)
(4.9)
Ì
1,014.3
(16.2)
118.5
(204.4)
(25.3)
(36.0)
(14.8)
1,116.6
(265.7)
United States and Foreign Taxes on Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏ
$112.2
$1,213.3
$ (83.8)
84
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 14.
Income Taxes (continued)
Temporary diÅerences and carryforwards giving rise to deferred tax assets and liabilities at December 31, 2003
and 2002 follow:
(In millions)
Postretirement beneÑts and pensions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax credit and operating loss carryforwards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capitalized expenditures for tax reportingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accrued expenses deductible as paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Alternative minimum tax credit carryforwards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Vacation and sick pay ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations and other provisionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Valuation allowance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total deferred tax liabilities:
2003
$1,163.8
426.6
324.7
210.5
68.2
39.0
25.9
84.4
Restated
2002
$1,023.7
256.8
457.0
135.7
68.2
70.4
15.1
120.7
2,343.1
(1,998.3)
2,147.6
(1,781.3)
344.8
366.3
Ì property basis diÅerencesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì inventory ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì tax on undistributed subsidiary earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(448.3)
Ì
(22.9)
(470.0)
(10.9)
(13.9)
Total deferred tax assets (liabilities) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (126.4)
$ (128.5)
In the fourth quarter of 2002, Goodyear recorded a non-cash charge of $1.20 billion (as restated), or $6.86 (as
restated) per share ($7.20 (as restated) per share on a year to date basis), to establish a valuation allowance
against net Federal and state deferred tax assets. In addition, a valuation allowance of $352.9 million (as
restated) was established against tax beneÑts that were recorded in OCI in 2002. Goodyear intends to
maintain a valuation allowance until suÇcient positive evidence exists to support realization of the Federal and
state deferred tax assets.
At December 31, 2003, Goodyear had $286.7 million of tax assets for net operating loss carryforwards
related to certain international subsidiaries, some of which are subject to expiration beginning in 2004. A
valuation allowance totaling $209.0 million has been recorded against these and other deferred tax assets
where recovery of the asset or carryforward is uncertain. In addition, Goodyear had $139.9 million of tax assets
for tax credit carryforwards, some of which are subject to expiration beginning in 2007. A full valuation
allowance has been recorded against these deferred tax assets as recovery is uncertain.
Goodyear determined that earnings of certain international subsidiaries would no longer be permanently
reinvested in working capital. Accordingly, Goodyear recorded a provision of $50.2 million in 2002 for the
incremental taxes incurred or to be incurred upon inclusion of such earnings in Federal taxable income.
No provision for Federal income tax or foreign withholding tax on undistributed earnings of international
subsidiaries of $1.73 billion is required because the amount has been or will be reinvested in properties and
plants and working capital. It is not practicable to calculate the deferred taxes associated with the remittance
of these investments.
Goodyear made net cash payments for income taxes in 2003, 2002 and 2001 of $73.0 million,
$125.9 million and $50.8 million, respectively.
85
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 15.
Interest Expense
Interest expense includes interest and amortization of debt discounts, less amounts capitalized as follows:
(In millions)
Interest expense before capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capitalized interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restated
2003
2002
2001
$304.3
(8.0)
$248.9
(7.2)
$298.8
(1.7)
$296.3
$241.7
$297.1
Goodyear made cash payments for interest in 2003, 2002 and 2001 of $280.6 million, $260.6 million (as
restated) and $292.6 million, respectively.
Note 16. Research and Development
Research and development costs for 2003, 2002 and 2001 were $350.4 million, $385.8 million (as restated)
and $371.8 million (as restated), respectively.
Note 17. Advertising Costs
Advertising costs, including costs for Goodyear's cooperative advertising programs with dealers and franchis-
ees, for 2003, 2002 and 2001 were $331.3 million, $281.4 million (as restated) and $292.8 million (as
restated), respectively.
Note 18. Business Segments
Segment information reÖects the strategic business units of Goodyear (SBUs), which are organized to meet
customer requirements and global competition.
The Tire business is comprised of Ñve regional SBUs. The Engineered Products and Chemical Products
businesses are each managed on a global basis. Segment information is reported on the basis used for reporting
to Goodyear's President and Chief Executive OÇcer.
Each of the Ñve regional tire business segments is involved in the development, manufacture, distribution
and sale of tires. Certain of the tire business segments also provide related products and services, which
include retreads, automotive repair services and merchandise purchased for resale.
North American Tire provides original equipment and replacement tires for autos, motorcycles, trucks,
farm, aircraft and construction applications in the United States, Canada and export markets. North
American Tire also provides related products and services including tread rubber, tubes, retreaded tires,
automotive repair services and merchandise purchased for resale.
European Union Tire provides original equipment and replacement tires for autos, motorcycles, trucks,
farm and construction applications in western Europe and export markets. European Union Tire also retreads
truck and aircraft tires.
Eastern Europe, Africa and Middle East Tire provides original equipment and replacement tires for
autos, trucks, farm, bicycle, construction and mining applications in Eastern Europe, Africa, the Middle East
and export markets.
Latin American Tire provides original equipment and replacement tires for autos, trucks, tractors, aircraft
and construction applications in Central and South America, Mexico and export markets. Latin American
Tire also manufactures materials for tire retreading.
86
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 18. Business Segments (continued)
Asia Tire provides original equipment and replacement tires for autos, trucks, farm, aircraft and
construction applications in Asia, the PaciÑc and export markets. Asia Tire also retreads aircraft tires.
Engineered Products develops, manufactures and sells belts, hoses, molded products, airsprings, tank
tracks and other products for original equipment and replacement transportation applications and industrial
markets worldwide.
Chemical Products develops, manufactures and sells synthetic rubber and rubber latices, synthetic resins,
and other organic chemical products for internal and external customers worldwide. Chemical Products also
engages in plantation and natural rubber purchasing operations.
(In millions)
Sales
2003
2002
2001
Restated
North American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical ProductsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 6,745.6
3,920.3
1,073.4
1,041.0
581.8
13,362.1
1,203.7
1,220.8
$ 6,703.0
3,319.4
807.1
947.7
531.3
12,308.5
1,126.5
940.2
$ 7,170.2
3,124.3
703.1
1,013.8
494.6
12,506.0
1,122.3
1,036.5
Total Segment Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Inter-SBU SalesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
15,786.6
14,375.2
14,664.8
(687.2)
19.6
(545.5)
26.5
(521.0)
18.7
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$15,119.0
$13,856.2
$14,162.5
87
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 18. Business Segments (continued)
(In millions)
Segment Operating Income
2003
2002
2001
Restated
North American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (128.7)
133.5
146.6
147.9
49.8
$
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical ProductsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segment Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations and asset sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accelerated depreciation charges and asset writeoÅsÏÏÏÏÏ
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency exchange ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority interest in net income of subsidiariesÏÏÏÏÏÏÏÏÏÏ
Inter-SBU income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Financing fees and Ñnancial instrumentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity in earnings (losses) of corporate aÇliates ÏÏÏÏÏÏÏ
Corporate goodwill amortizationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
General and product liability Ó discontinued productsÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
349.1
47.5
119.4
516.0
(313.0)
(132.8)
(296.3)
(40.2)
(35.0)
(87.7)
(99.4)
(15.2)
Ì
(145.4)
(40.9)
(57.1)
100.2
93.2
107.1
43.7
287.1
40.9
88.7
416.7
22.4
Ì
(241.7)
9.7
(55.3)
(54.7)
(48.4)
(12.9)
Ì
(33.8)
(15.7)
$
100.9
44.2
14.0
85.2
20.3
264.6
14.6
41.9
321.1
(164.5)
Ì
(297.1)
(10.0)
3.3
(32.3)
(50.1)
(44.3)
(5.6)
(31.1)
(27.3)
Income (Loss) before Income Taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (689.9)
$
(13.7)
$ (337.9)
(In millions)
Assets
2003
Restated
2002
North American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical ProductsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segment Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 4,467.7
3,996.8
1,100.8
710.0
666.5
10,941.8
680.9
632.8
12,255.5
2,750.0
$ 4,553.6
3,111.4
899.4
631.0
592.5
9,787.9
675.0
627.1
11,090.0
1,948.7
Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$15,005.5
$13,038.7
88
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 18. Business Segments (continued)
Results of operations in the Tire and Engineered Products Segments were measured based on net sales to
unaÇliated customers and segment operating income. Results of operations of the Chemical Products
Segment were measured based on net sales (including sales to other SBUs) and segment operating income.
Segment operating income included transfers to other SBUs. Segment operating income was computed as
follows: net sales less cost of goods sold (excluding accelerated depreciation charges, asset impairment charges
and asset writeoÅs) and selling, administrative and general expense (excluding corporate administrative
expenses). Segment operating income also included equity (earnings) losses in aÇliates. Inter-SBU sales by
Chemical Products were at a formulated price or market. Purchases from Chemical Products were included in
the purchasing SBU's segment operating income at Chemical Products cost. Segment assets included those
assets under the management of the SBU.
(In millions)
Investments and Advances in AÇliates
2003
Restated
2002
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 57.8
11.8
2.3
11.2
94.4
$ 66.5
11.7
1.8
8.1
51.1
Investments in AÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $177.5
$139.2
In addition to its consolidated operations in the Asia region, Goodyear owns a 50% interest in SPT, a
partnership with Ansell Ltd. of Australia. SPT is the largest tire manufacturer, marketer and exporter in
Australia and New Zealand. Results of operations of SPT are not reported in segment results, but are reÖected
in Goodyear's Consolidated Statement of Operations using the equity method.
The following table presents 100% of the sales and operating income (loss) of SPT:
(In millions)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $642.0
Operating Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
9.9
2003
Restated
2002
2001
$523.6
(7.1)
$481.3
(22.2)
SPT operating income (loss) did not include net rationalization charges (credits) of approximately
$4.9 million in 2003, $(2.1) million in 2002 and $48.0 million in 2001. SPT debt totaled $196.9 million at
December 31, 2003, of which $72.0 million was payable to Goodyear. SPT debt totaled $131.3 million at
December 31, 2002, of which $26.3 million was payable to Goodyear.
Portions of the items described in Note 3, Rationalizations, and Note 4, Other (Income) and Expense,
were not charged (credited) to the SBUs for performance evaluation purposes but were attributable to the
SBUs as follows:
89
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 18. Business Segments (continued)
(In millions)
Rationalizations
Restated
2003
2002
2001
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 191.9
54.3
(0.1)
10.0
Ì
$ (1.9)
(0.4)
(0.4)
Ì
(1.7)
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
256.1
29.4
Ì
285.5
6.0
RationalizationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 291.5
Other (Income) and Expense
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
3.8
(2.1)
Ì
(2.0)
(2.1)
(2.4)
6.3
Ì
Total Segments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
3.9
263.4
(4.4)
4.6
Ì
0.2
5.3
5.5
4.1
(13.6)
Ì
(13.7)
Ì
$
$
(23.2)
(0.6)
Ì
(23.8)
80.6
$ 31.6
84.2
11.2
0.2
47.0
174.2
1.5
Ì
175.7
34.6
$210.3
$ Ì
(18.4)
Ì
Ì
Ì
(18.4)
Ì
(27.4)
(45.8)
86.6
Other (Income) and Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 267.3
$ 56.8
$ 40.8
Capital Expenditures
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 131.0
84.5
31.7
35.3
48.7
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segment Capital Expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
331.2
16.8
13.0
361.0
14.4
$229.2
84.8
20.2
19.3
30.2
383.7
21.3
21.3
426.3
31.8
$198.9
71.1
37.7
24.8
16.1
348.6
29.0
26.9
404.5
31.0
Capital Expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 375.4
$458.1
$435.5
90
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 18. Business Segments (continued)
(In millions)
Depreciation and Amortization
Restated
2003
2002
2001
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 279.9
120.0
44.1
19.9
30.9
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segment Depreciation and AmortizationÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
494.8
39.0
33.8
567.6
125.7
$275.0
119.2
44.2
23.4
29.5
491.3
32.9
35.0
559.2
45.5
$286.2
116.3
53.3
28.7
33.4
517.9
34.4
38.7
591.0
47.1
Depreciation and Amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 693.3
$604.7
$638.1
Segment operating income in 2003 and 2002, compared to 2001, beneÑted from the non-amortization of
goodwill and intangible assets with indeÑnite useful lives under the provisions of SFAS 142. Segment
operating income in 2001 included amortization expense for goodwill and intangible assets with indeÑnite
useful lives as follows:
(In millions)
Restated
2001
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Africa and Middle East Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
3.5
13.0
4.2
0.1
1.7
22.5
1.0
Ì
23.5
5.6
Amortization Expense of Goodwill and Intangible Assets with IndeÑnite
Useful Lives ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 29.1
The following table presents geographic information. Net sales by country were determined based on the
location of the selling subsidiary. Long-lived assets consisted primarily of properties and plants, deferred
91
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 18. Business Segments (continued)
charges and other miscellaneous assets. Management did not consider the net sales or long-lived assets of
individual countries outside the United States to be signiÑcant to the consolidated Ñnancial statements.
(In millions)
Net Sales
2003
2002
2001
Restated
United States ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 7,210.4
7,908.6
$ 7,144.5
6,711.7
$ 7,672.9
6,489.6
$15,119.0
$13,856.2
$14,162.5
Long-Lived Assets
United States ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 3,143.6
3,229.9
$ 3,552.5
2,863.8
$ 6,373.5
$ 6,416.3
Note 19. Accumulated Other Comprehensive Income (Loss)
The components of Accumulated Other Comprehensive Income (Loss) follow:
(In millions)
2003
Restated
2002
Foreign currency translation adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minimum pension liability adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrealized investment gain (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred derivative gain (loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(1,017.9)
(1,545.0)
3.6
0.3
$(1,390.9)
(1,673.5)
(9.3)
(18.8)
$(2,559.0)
$(3,092.5)
Note 20. Commitments and Contingent Liabilities
At December 31, 2003, Goodyear had binding commitments for raw materials and investments in land,
buildings and equipment of $520.1 million, and oÅ-balance-sheet Ñnancial guarantees written and other
commitments totaling $74.4 million.
Warranty
At December 31, 2003, Goodyear recorded, in other current liabilities, $12.3 million ($11.0 million (as
restated) at December 31, 2002) for potential claims under warranties oÅered by the Company. Tire
replacement under most of the warranties oÅered by Goodyear is on a prorated basis. Warranty reserves are
based on past claims experience, sales history and other considerations. The amount of Goodyear's ultimate
liability in respect of these matters may diÅer from these estimates.
92
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 20. Commitments and Contingent Liabilities (continued)
The following table presents changes in the warranty reserve during 2003 and 2002:
(In millions)
Balance at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Settlements made during the period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Additional accrual for warranties issued during the period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Miscellaneous adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
$11.0
(17.0)
18.3
Ì
Restated
2002
$
6.1
(11.5)
17.1
(0.7)
Balance at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$12.3
$ 11.0
Environmental Matters
Goodyear had recorded liabilities totaling $32.8 million at December 31, 2003 and $53.5 million at
December 31, 2002 for anticipated costs related to various environmental matters, primarily the remediation
of numerous waste disposal sites and certain properties sold by Goodyear. Of these amounts, $7.7 million and
$21.4 million were included in Other current liabilities at December 31, 2003 and December 31, 2002,
respectively. The costs include legal and consulting fees, site studies, the design and implementation of
remediation plans, post-remediation monitoring and related activities and will be paid over several years. The
amount of Goodyear's ultimate liability in respect of these matters may be aÅected by several uncertainties,
primarily the ultimate cost of required remediation and the extent to which other responsible parties
contribute. The liability was reduced in 2003 by approximately $17 million due to the resolution related to one
site during the year.
Workers' Compensation
Goodyear had recorded liabilities, on a discounted basis, totaling $194.0 million and $152.4 million (as
restated) for anticipated costs related to workers' compensation at December 31, 2003 and December 31,
2002, respectively. Of these amounts, $112.7 million and $66.4 million (as restated) were included in Current
Liabilities as part of Compensation and beneÑts at December 31, 2003 and December 31, 2002, respectively.
The costs include an estimate of expected settlements on pending claims, defense costs and a provision for
claims incurred but not reported. These estimates are based on Goodyear's assessment of potential liability
using an analysis of available information with respect to pending claims, historical experience, and current
cost trends. The amount of Goodyear's ultimate liability in respect of these matters may diÅer from these
estimates. The restatement included an aggregate adjustment of $23.9 million before tax to address an
understatement of the Company's potential workers' compensation liability. Refer to Note 2 for additional
information on adjustments to the Company's workers' compensation liabilities.
General and Product Liability and Other Litigation
Goodyear had recorded liabilities totaling $491.7 million at December 31, 2003 and $240.7 million (as
restated) at December 31, 2002 for potential product liability and other tort claims, including related legal fees
expected to be incurred. Of these amounts, $142.5 million and $75.4 million (as restated) were included in
Other current liabilities at December 31, 2003 and 2002, respectively. The amounts recorded were estimated
on the basis of an assessment of potential liability using an analysis of available information with respect to
pending claims, historical experience and, where available, recent and current trends. The Company had
recorded insurance receivables for potential product liability and other tort claims of $199.3 million at
December 31, 2003 and $81.0 million at December 31, 2002. Of this amount, $100.1 million and $24.7 million
93
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 20. Commitments and Contingent Liabilities (continued)
was included in Current Assets as part of Accounts and notes receivable at December 31, 2003 and
December 31, 2002, respectively.
Asbestos. Goodyear is a defendant in numerous lawsuits alleging various asbestos related personal injuries
purported to result from alleged exposure to asbestos in certain rubber encapsulated products or aircraft
braking systems manufactured by Goodyear in the past or to asbestos in certain Goodyear facilities. Typically,
these lawsuits have been brought against multiple defendants in state and Federal courts. To date, Goodyear
has disposed of approximately 25,300 cases by defending and obtaining the dismissal thereof or by entering
into a settlement. The sum of the Company's accrued asbestos related liability and gross payments to date,
including legal costs, totaled approximately $208 million through December 31, 2003 and approximately $187
million through December 31, 2002.
A summary of approximate asbestos claims activity in recent years follows. Because claims are often Ñled
and disposed of by dismissal or settlement in large numbers, the amount and timing of settlements and the
number of open claims during a particular period can Öuctuate signiÑcantly from period to period.
Year Ended December 31,
Restated
2003
2002
2001
Pending claims, beginning of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
New claims Ñled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Claims settled/dismissed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
100,600
24,300
(10,100)
64,500
39,800
(3,700)
58,500
17,100
(11,100)
Pending claims, end of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(In millions)
Payments (2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
114,800
100,600(1)
64,500(1)
$
29.6
$
18.8
$
14.4
(1) Changes in claims tracking methods resulted in a modiÑcation of previously reported pending claims. The
number of pending claims was previously reported as 97,000 and 62,000 at December 31, 2002 and 2001,
respectively.
(2) Represents amount spent on asbestos litigation defense and claim resolution before recovery of insurance
proceeds.
In connection with the preparation of its 2003 Ñnancial statements, the Company engaged an independent
asbestos valuation expert to assist the Company in reviewing its reserves for asbestos claims, and review the
Company's method of determining its receivables from probable insurance recoveries. Prior to the fourth
quarter of 2003, the Company's estimate for asbestos liability was based upon a review of the various
characteristics of the pending claims by an experienced asbestos counsel.
The Company, based on the advice of the valuation expert, has recorded liabilities for both asserted and
unasserted claims at December 31, 2003 totaling $131.1 million, inclusive of defense costs. The recorded
liability represents the Company's estimated liability through 2008, which represents the period over which
the liability can be reasonably estimated. Due to the diÇculties in making these estimates, analysis based on
new data and/or changed circumstances arising in the future could result in an increase in the recorded
obligation in an amount that cannot currently be reasonably estimated, and that increase could be signiÑcant.
The portion of the liability associated with unasserted asbestos claims at December 31, 2003 is $31.9 million.
Prior to the fourth quarter of 2003, the Company did not have an accrual for unasserted claims as suÇcient
information was deemed to be not available to reliably estimate such an obligation. This conclusion was
further conÑrmed by the valuation expert during the preparation of the 2003 Ñnancial statements. At
December 31, 2003, the Company's liability with respect to asserted claims and related defense costs was
94
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 20. Commitments and Contingent Liabilities (continued)
$99.2 million compared to $139.2 million at December 31, 2002, notwithstanding an increase in the number of
pending claims between December 31, 2002 and December 31, 2003. The reduction in the amount recorded at
December 31, 2003 compared to December 31, 2002 is due to reÑnements in certain assumptions used by the
valuation expert.
After reviewing the Company's recent settlement history by jurisdiction, law Ñrm, disease type and
alleged date of Ñrst exposure, the valuation expert cited two primary reasons for the Company to reÑne its
valuation assumptions. First, in calculating the Company's estimated liability, the valuation expert determined
that the Company had previously assumed that it would resolve more claims in the foreseeable future than is
likely based on its historical record and nationwide trends. As a result, the Company now assumes that a
smaller percentage of pending claims will be resolved within the predictable future. Second, the valuation
expert determined that it was not possible to estimate a liability for as many non-malignancy claims as the
Company had done in the past. As a result, the Company's current estimated liability includes fewer liabilities
associated with non-malignancy claims.
Goodyear maintains primary insurance coverage under coverage-in-place agreements as well as excess
liability insurance with respect to asbestos liabilities. Goodyear records a receivable with respect to such
policies when it determines that recovery is probable and it can reasonably estimate the amount of a particular
recovery.
Prior to 2003, Goodyear did not record a receivable for expected recoveries from excess carriers in respect
of asbestos related matters. Goodyear has instituted coverage actions against certain of these excess carriers.
After consultation with its outside legal counsel and giving consideration to relevant factors including the
ongoing legal proceedings with certain of its excess coverage insurance carriers, their Ñnancial viability, their
legal obligations and other pertinent facts, Goodyear determined an amount it expects is probable of recovery
from such carriers. Accordingly, Goodyear recorded a receivable during 2003 which represents an estimate of
recovery from its excess coverage insurance carriers relating to potential asbestos related liabilities.
Based upon the model employed by the valuation expert, as of December 31, 2003, the Company
recorded a receivable related to asbestos claims of $110.4 million. Based on the Company's current asbestos
claim proÑle, the Company expects that approximately 85% of asbestos claim related losses will be recoverable
up to its accessible policy limits. The receivable recorded consists of an amount the Company expects to
collect under coverage-in-place agreements with certain primary carriers as well as an amount it believes is
probable of recovery from certain of its excess coverage insurance carriers. Of this amount, $20.4 million was
included in Current Assets as part of Accounts and notes receivable at December 31, 2003. Goodyear had
recorded insurance receivables of $69.7 million at December 31, 2002. Of this amount, $20.0 million was
included in Current Assets as part of Accounts and notes receivable.
The Company believes that at December 31, 2003, it had approximately $410 million in aggregate limits
of excess level policies potentially applicable to indemnity payments for asbestos products claims in addition to
limits of available primary insurance policies. Some of these excess policies provide for payment of defense
costs in addition to indemnity limits. A portion of the availability of the excess level policies is included in the
$110.4 million insurance receivable recorded at December 31, 2003. The Company also had approximately
$30 million in aggregate limits for products claims as well as coverage for premise claims on a per occurrence
basis and defense costs available with its primary insurance carriers through coverage-in-place agreements at
December 31, 2003.
Goodyear believes that its reserve for asbestos claims, and the insurance receivables recorded in respect of
these claims, reÖect reasonable and probable estimates of these amounts. The estimate of the assets and
liabilities related to pending and expected future asbestos claims and insurance recoveries is subject to
numerous uncertainties, including, but not limited to, changes in (i) the litigation environment; (ii) federal
95
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 20. Commitments and Contingent Liabilities (continued)
and state law governing the compensation of asbestos claimants; (iii) the Company's approach to defending
and resolving claims; and (iv) the level of payments made to claimants from other sources, including other
defendants. As a result, with respect to both asserted and unasserted claims, it is reasonably possible that the
Company may incur a material amount in excess of the current reserve, however such amount cannot be
reasonably estimated. Coverage under insurance policies is subject to varying characteristics of asbestos claims
including, but not limited to, the type of claim (premise vs. product exposure), alleged date of Ñrst exposure to
the Company's products or premises and disease alleged. Depending upon the nature of these characteristics,
as well as the resolution of certain legal issues, some portion of the insurance may not be accessible by the
Company.
Heatway (Entran II). The Company is a defendant in 22 class actions or potential class actions and three
other civil actions in various Federal, state and Canadian courts asserting non-asbestos property damage
claims relating to Entran II, a rubber hose product that it supplied from 1989-1993 to Chiles Power Supply,
Inc. (d/b/a Heatway Systems), a designer and seller of hydronic radiant heating systems in the United States.
The plaintiÅs in these actions are generally seeking recovery under various tort, contract and statutory causes
of action, including breach of express warranty, breach of implied warranty of merchantability, breach of
implied warranty of Ñtness for a particular purpose, negligence, strict liability and violation of state consumer
protection statutes. In one of the above mentioned class actions, on October 9, 2003, the United States District
Court in New Jersey preliminarily approved a proposed national settlement agreement (the Proposed
Settlement) for pending Entran II claims in the U.S. and Canada, except for claims related to property in six
New England states, two judgments in Colorado state court, two judgments in Colorado Federal court and any
future judgments involving claimants that opt out of the Proposed Settlement. The Company has the right to
withdraw from the Proposed Settlement if it determines in good faith and in its sole discretion that an
excessive number of persons have opted out of the class and the Proposed Settlement. Potential claimants had
until May 7, 2004 to exercise their right to opt out of the Proposed Settlement. As of May 17, 2004, the
Company had received notice that at least 525 potential sites had been opted out of the Proposed Settlement.
The Company is currently assessing its options with respect to the Proposed Settlement and expects to decide
shortly whether or not it will withdraw from the Proposed Settlement.
Under the Proposed Settlement, Goodyear will make annual cash contributions to a settlement fund of
$40 million, $6 million, $6 million, $8 million and $16 million in 2004, 2005, 2006, 2007 and 2008,
respectively. Goodyear will also make an additional contingent payment of $10 million in each of 2005, 2006,
2007 and 2008 if Goodyear meets the following EBITDA target for such year: $1.2 billion in 2004 and
$1.4 billion in each of 2005, 2006 and 2007. For purposes of the Proposed Settlement, EBITDA is deÑned by
reference to the deÑnition of ""Consolidated EBITDA'' in Goodyear's $645 million U.S. term loan agreement.
In the event the EBITDA target is not met in any given year, the contingent payment will remain payable in
the Ñrst subsequent year in which the following cumulative EBITDA targets are met: $2.6 billion in 2005, $4.0
billion in 2006 and $5.4 billion in 2007. In addition to the required contributions of Goodyear, 80% of
Goodyear's insurance recoveries from Entran II claims will be paid into the settlement fund. The Company
estimates that contributions to the settlement fund from insurance recoveries could total $120 million.
Because the insurance recoveries were less than $120 million at February 27, 2004, the terms of the Proposed
Settlement give the plaintiÅs the right to withdraw from the settlement. Nevertheless, the parties have jointly
requested that the court stay all Entran II litigation (with certain exceptions) pending Ñnal approval of the
settlement.
In 2002, two state courts in Colorado entered judgments against the Company in Entran II cases of
$22.7 million and $1.3 million, respectively. These cases are excluded from the Proposed Settlement, and the
Company will continue to pursue appeals of these judgments.
96
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 20. Commitments and Contingent Liabilities (continued)
On June 19, 2003, a jury in Colorado Federal court awarded a judgment in an Entran II case against the
Company of $4.1 million. An additional $5.7 million in prejudgment interest was awarded on September 8,
2003. Post-trial motions have been Ñled by all parties seeking modiÑcations to the judgment. On May 13,
2004, in another Entran II case, a federal jury in Colorado awarded a judgment against the Company of
$3.2 million. These cases are also excluded from the Proposed Settlement.
The ultimate cost of disposing of Entran II claims is dependent upon a number of factors, including the
Company's ability to satisfy the contingencies in any settlement, the number of claimants that opt out of any
settlement, Ñnal approval of the terms of any settlement, Goodyear's ability to resolve claims not subject to
any settlement (including the cases in which the Company received adverse judgments), and, in the event
Goodyear fails to consummate a settlement for any reason, future judgments by courts in other currently
pending or yet unasserted actions. Depending on the resolution of these uncertainties, the costs associated with
Entran II claims could have a material adverse eÅect on the Company's results of operations, Ñnancial
position and liquidity in future periods.
Load Range D and E. On December 5, 2003, a conditional settlement agreement resolving a national class
action with respect to certain allegedly defective Load Range E light truck and recreational vehicle tires was
preliminarily approved. On April 28, 2004, the settlement received Ñnal court approval. The Company has
accrued for the cost of the settlement, including legal fees. The cost of the settlement did not have a material
impact on the Company's Ñnancial statements. Refer to Item 3, Legal Proceedings, for further information
about Load Range E claims. During the fourth quarter of 2003, actions related to alleged breaches of warranty
or product defects relating to certain of Goodyear's Load Range D light truck tires, previously reported by
Goodyear, were dismissed.
Other Actions. The Company is currently a party to various claims and legal proceedings in addition to those
noted above. If management believes that a loss arising from these matters is probable and can reasonably be
estimated, the Company records the amount of the loss, or the minimum estimated liability when the loss is
estimated using a range, and no point within the range is more probable than another. As additional
information becomes available, any potential liability related to these matters is assessed and the estimates are
revised, if necessary. Based on currently available information, management believes that the ultimate
outcome of these matters, individually and in the aggregate, will not have a material adverse eÅect on the
Company's Ñnancial position or overall trends in results of operations. However, litigation is subject to
inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary
damages or an injunction prohibiting the Company from selling one or more products. If an unfavorable ruling
were to occur, there exists the possibility of a material adverse impact on the Ñnancial position and results of
operations of the period in which the ruling occurs, or future periods.
Guarantees
The Company is a party to various agreements under which it has undertaken obligations resulting from the
issuance of certain guarantees. Guarantees have been issued on behalf of the Company's aÇliates or
customers of the Company. Normally there is no separate premium received by the Company as consideration
for the issuance of guarantees. The Company's performance under these guarantees would normally be
triggered by the occurrence of one or more events as provided in the speciÑc agreements. Collateral and
recourse provisions available to the Company under these agreements were not signiÑcant.
Customer Financing
At December 31, 2003, the Company had guarantees outstanding under which the maximum potential
amount of payments totaled $4.1 million, and which expire at various times through 2012.
97
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 20. Commitments and Contingent Liabilities (continued)
AÇliate Financing
The Company will from time to time issue guarantees to Ñnancial institutions on behalf of certain of its
aÇliates, which are accounted for using the equity method. The Ñnancing arrangements of the aÇliates may
be for either working capital or capital expenditures. The Company generally does not require collateral in
connection with the issuance of these guarantees. In the event of non-payment by an aÇliate, the Company is
obligated to make payment to the Ñnancial institution, and will typically have recourse to the assets of that
aÇliate. At December 31, 2003, the Company had guarantees outstanding under which the maximum
potential amount of payments totaled $17.5 million, and which expire at various times through 2011. The
Company is unable to estimate the extent to which its aÇliates' assets would be adequate to recover the
maximum amount of potential payments with that aÇliate.
The Company holds a 50% equity interest in South PaciÑc Tyres (SPT), a partnership in Australia that
manufactures and distributes tires. The terms of the partnership agreement provide that the Company is
jointly and severally liable for all liabilities of the partnership. At December 31, 2003, SPT had debt totaling
$196.9 million, of which $72.0 million was payable to Goodyear. The Company also owns a 50% undivided
interest in all of the assets of the partnership.
The Company's percentage ownership of the net assets of the above aÇliates is included on the
Consolidated Balance Sheet as Investments in and Advances to AÇliates.
IndemniÑcations
At December 31, 2003, the Company was a party to various agreements under which it had assumed
obligations to indemnify the counterparties from certain potential claims and losses. These agreements
typically involve standard commercial activities undertaken by the Company in the normal course of business;
the sale of assets by the Company; the formation of joint venture businesses to which the Company has
contributed assets in exchange for ownership interests; and other Ñnancial transactions. IndemniÑcations
provided by the Company pursuant to these agreements relate to various matters including, among other
things, environmental, tax and shareholder matters; intellectual property rights; government regulations and
employment-related matters; and dealer, supplier and other commercial matters.
Certain indemniÑcations expire from time to time, and certain other indemniÑcations are not subject to
an expiration date. In addition, the Company's potential liability under certain indemniÑcations is subject to
maximum caps, while other indemniÑcations are not subject to caps. Although the Company has been subject
to indemniÑcation claims in the past, the Company cannot reasonably estimate the number, type and size of
indemniÑcation claims that may arise in the future. Due to these and other uncertainties associated with the
indemniÑcations, the Company's maximum exposure to loss under these agreements cannot be estimated.
The Company has determined that there are no guarantees other than liabilities for which amounts are
already recorded or reserved in its Ñnancial statements under which it is probable that it has incurred a
liability.
Note 21. Preferred Stock Purchase Rights Plan
In June 1996, the Company authorized 7,000,000 shares of Series B Preferred Stock (""Series B Preferred'')
issuable only upon the exercise of rights (""Rights'') issued under the Preferred Stock Purchase Rights Plan
set forth in the Rights Agreement dated June 4, 1996, and amended and restated on April 15, 2002. Each
share of Series B Preferred issued would be non-redeemable, non-voting and entitled to (i) cumulative
quarterly dividends equal to the greater of $25.00 or, subject to adjustment, 100 times the per year amount of
98
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 21. Preferred Stock Purchase Rights Plan (continued)
dividends declared on Goodyear Common Stock (""the Common Stock'') during the preceding quarter and
(ii) a liquidation preference.
Under the Rights Plan, each shareholder of record on July 29, 1996 received a dividend of one Right per
share of the Common Stock. Each Right, when exercisable, will entitle the registered holder thereof to
purchase from the Company one one-hundredth of a share of Series B Preferred Stock at a price of $250 (the
""Purchase Price''), subject to adjustment. The Rights will expire on July 29, 2006, unless earlier redeemed at
$.001 per Right. The Rights will be exercisable only in the event that an acquiring person or group purchases,
or makes Ì or announces its intention to make Ì a tender oÅer for, 15% or more of the Common Stock.
In the event that any acquiring person or group acquires 15% or more of the Common Stock (20% for
certain institutional investors), each Right will entitle the holder to purchase that number of shares of
Common Stock (or in certain circumstances, other securities, cash or property) which at the time of such
transaction would have a market value of two times the Purchase Price.
If the Company is acquired or a sale or transfer of 50% or more of the Company's assets or earnings
power is made after the Rights become exercisable, each Right (except those held by an acquiring person or
group) will entitle the holder to purchase common stock of the acquiring entity having a market value then
equal to two times the Purchase Price. In addition, when exercisable the Rights under certain circumstances
may be exchanged by the Company at the ratio of one share of Common Stock (or the equivalent thereof in
other securities, property or cash) per Right, subject to adjustment.
On March 1, 2004, the Rights Plan was amended to accelerate the expiration date of the Rights Plan to
June 1, 2004 from July 29, 2006. As a result, the Rights Plan will be eÅectively terminated on June 1, 2004.
Note 22. Future Liquidity Requirements
As of December 31, 2003, the Company had $1.56 billion in cash and cash equivalents, of which
$612.7 million was held in the United States and $432.8 million was in accounts of GDTE. The remaining
amounts were held in the Company's other non-U.S. operations. The Company's ability to move cash and
cash equivalents among its various operating locations is subject to the operating needs of the operating
locations as well as restrictions imposed by local laws and applicable credit facility agreements. As of
December 31, 2003, approximately $215 million of cash was held in locations where signiÑcant tax or legal
impediments would make it diÇcult or costly to execute monetary transfers. Based upon the Company's
projected operating results, the Company expects that cash Öow from operations together with available
borrowing under its restructured credit facilities and other sources of liquidity will be adequate to meet the
Company's anticipated cash and cash equivalent requirements including working capital, debt service and
capital expenditures through December 31, 2004.
At December 31, 2003, the Company also had $335.0 million of unused availability under its various
credit agreements.
The Company's restructured and reÑnanced credit facilities mature in 2005 and 2006 and the Company
would have to reÑnance these facilities in the capital markets if they were not renewed by the banks. After
taking into account the pay down of certain obligations in connection with recent Ñnancing activities, the
aggregate amount of long-term debt maturing in 2005 and 2006 is $1,343 million and $1,481 million,
respectively. Because of the Company's debt ratings, recent operating performance and other factors, access to
such markets cannot be assured. The Company's ongoing ability to access the capital markets is highly
dependent on successfully implementing its North American Tire turnaround strategy. In addition to
facilitating access to the capital markets, successful implementation of the turnaround strategy is also crucial
to ensuring that the Company has suÇcient cash Öow from operations to meet its obligations. There is no
99
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 22. Future Liquidity Requirements (continued)
assurance that the Company will be successful in implementing its turnaround strategy. Failure to successfully
complete the turnaround strategy could have a material adverse eÅect on the Company's Ñnancial position,
results of operations and liquidity.
Although the Company is highly leveraged, it may become necessary for it to incur additional debt to
ensure that it has adequate liquidity. This additional debt would need to be secured or unsecured. A
substantial portion of the Company's assets are already subject to liens securing its indebtedness. The
Company is limited in its ability to pledge its remaining assets as security for additional secured indebtedness.
In addition, unless the Company's Ñnancial performance improves, its ability to raise unsecured debt may be
signiÑcantly limited.
Under the Company's master contract with the USWA, the Company committed to consummate the
issuance or placement of at least $250 million of debt securities and at least $75 million of equity or equity-
linked securities by December 31, 2003. It did not meet this commitment. As a result, the USWA may Ñle a
grievance and strike. In the event of a strike, the Company's Ñnancial position, results of operations and
liquidity could be materially adversely aÅected. The Company has also committed to launch, by December 1,
2004, a reÑnancing of its U.S. term loan and revolving credit facilities due in April 2005 with loans or
securities having a term of at least three years. If the Company fails to complete this reÑnancing commitment,
the USWA would have the right to strike and the Company would be required to pay each covered union
employee (approximately 13,700 as of December 31, 2003) $1,000 and each covered union retiree
(approximately 13,800 as of December 31, 2003) $500. In addition, if the Company failed to comply with the
covenants in its credit agreements, the lenders would have the right to cease further loans to the Company and
to demand the repayment of all outstanding loans under these facilities.
The Company is subject to various legal proceedings, including the Entran II litigation described in Note
20, Commitments and Contingent Liabilities. The ultimate cost of disposing of Entran II claims is dependent
upon a number of factors, including the Company's ability to satisfy the contingencies in a proposed
settlement, the number of claimants that opt out of any settlement, Ñnal approval of the terms of the
settlement at a yet-to-be scheduled fairness hearing, Goodyear's ability to resolve claims not subject to the
settlement (including the cases in which the Company received adverse judgments), and, in the event
Goodyear fails to consummate the proposed settlement for any reason, future judgments by courts in other
currently pending or yet unasserted actions. Depending on the resolution of these uncertainties, the costs
associated with Entran II claims could be signiÑcant and could have a material adverse eÅect on the
Company's results of operations, Ñnancial position and liquidity in future periods. In the event the Company
wishes to appeal any future adverse judgment in any Entran II or other proceeding, it would be required to
post an appeal bond with the relevant court. If the Company does not have suÇcient availability under its U.S.
revolving credit facility to issue a letter of credit to support an appeal bond, it may be required to pay down
borrowings under the facility in order to increase the amount available for issuing letters of credit or deposit
cash collateral in order to stay the enforcement of the judgment pending an appeal. A signiÑcant deposit of
cash collateral may have a material adverse eÅect on the Company's liquidity.
A substantial portion of Goodyear's borrowings are at variable rates of interest and expose the Company
to interest rate risk. If interest rates rise, the Company's debt service obligations would increase. An
unanticipated signiÑcant rise in interest rates could have a material adverse eÅect on the Company's liquidity
in future periods.
In addition, Goodyear expects to make contributions to its pension plans of approximately $210 million in
2004. Contributions to domestic pension plans are expected to be approximately $160 million in 2004 and
approximately $325 million to $350 million in 2005 in order to satisfy statutory minimum funding
requirements.
100
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 23. Subsequent Events
Recent Financing Activities
On February 23, 2004, Goodyear completed the addition of a $650 million tranche to the Company's
$1.30 billion Senior Secured Asset-Backed Facility. Approximately $335 million of the proceeds of the
tranche were used to partially reduce amounts outstanding under the U.S. term facility. On March 12, 2004,
Goodyear completed a private oÅering of $650 million in senior secured notes, consisting of $450 million of
11% senior secured notes due 2011 and $200 million of Öoating rate notes at LIBOR plus 8% due 2011. The
proceeds of the notes were used to repay the remaining outstanding amount under the U.S. term facility, to
permanently reduce the Company's commitment under the U.S. revolving credit facility by $70 million, and
for general corporate purposes. In connection with these Ñnancing activities, each of the restructured credit
facilities discussed in Note 11 was amended on February 19, 2004, principally to permit additional Ñnancings.
The Company's credit agreements were further amended on April 16, 2004, to extend until May 19, 2004, the
deadline for Ñling the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Refer
to Note 11 for further information on the Company's credit facilities and term loan agreements.
Late Form 10-Q Filing and Bank Amendments
On May 11, 2004, the Company announced that it would not Ñle the Ñrst quarter 2004 Form 10-Q by May 30,
2004, as required in the Company's loan agreements, and that it would initiate discussions with its lenders to
extend the deadline for Ñling by 30 days. While Goodyear does not expect to need to access the facilities
during this 30-day period, in the absence of an extension, the Company would not be able to access them. If
Goodyear does not obtain an extension, it would still have until June 30 to Ñle the Form 10-Q and regain
access, but if it does not Ñle the Form 10-Q by then, there could be an event of default under the loan
agreements and thereafter under other debt instruments.
On May 18, 2004, Goodyear obtained an amendment from the European credit facility lenders to allow
until June 4, 2004 for delivery to the lenders of the 2003 audited Ñnancial statements for the Company's
Goodyear Dunlop Tires Europe B.V. joint venture. These Ñnancial statements, which have historically been
completed after the Form 10-K was Ñled, were previously required to be delivered by May 19, 2004. Goodyear
must complete these Ñnancial statements by June 4, 2004 in order to avoid defaults under the principal credit
facilities.
Sava Tires d.o.o.
On April 7, 2004, the Company announced that it will exercise its call option and purchase the remaining
20 percent of Sava Tires d.o.o. (Sava Tire), a joint venture tire manufacturing company in Kranj, Slovenia, for
approximately $52 million. The transaction is expected to be completed in June 2004. Goodyear's stake in
Sava Tire is held by GDTE.
Dackia
On April 16, 2004, the Company announced that it will purchase the remaining 50 percent of Dackia, one of
Sweden's major retail tire groups, for approximately $10 million. The transaction is expected to be completed
in June 2004.
101
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
of The Goodyear Tire & Rubber Company
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of
operations, shareholders' equity, and cash Öows present fairly, in all material respects, the Ñnancial position of
The Goodyear Tire & Rubber Company and Subsidiaries at December 31, 2003 and December 31, 2002, and
the results of their operations and their cash Öows for each of the three years in the period ended
December 31, 2003 in conformity with accounting principles generally accepted in the United States of
America. These Ñnancial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on these Ñnancial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the Ñnancial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the Ñnancial statements, assessing the accounting
principles used and signiÑcant estimates made by management, and evaluating the overall Ñnancial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 7 to the consolidated Ñnancial statements, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142, ""Goodwill and Other Intangible Assets,'' as of
January 1, 2002.
As described in Note 2, ""Restatement'' the Company has restated its previously issued consolidated Ñnancial
statements.
PricewaterhouseCoopers LLP
Cleveland, Ohio
May 18, 2004
102
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Supplementary Data
(Unaudited)
Quarterly Data and Market Price Information
(In millions, except per share)
2003
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Gross ProÑtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Quarter
First
Restated
Second
Third
Fourth
Year
$3,545.8
583.0
$ (196.5)
$3,753.3
714.5
$ (53.0)
$3,906.1
711.7
$ (118.2)
$3,913.8
614.5
$ (434.4)
$15,119.0
2,623.7
$ (802.1)
Net Loss Per Share Ì Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (1.12)
$ (0.30)
$ (0.67)
$ (2.49)
$
(4.58)
Ì DilutedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(1.12)
(0.30)
(0.67)
(2.49)
Average Shares Outstanding Ì Basic ÏÏÏÏÏÏÏÏÏ
Ì Diluted ÏÏÏÏÏÏÏ
175.3
175.3
175.3
175.3
175.3
175.3
175.3
175.3
(4.58)
175.3
175.3
Price Range of Common Stock:*
High ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Low ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
7.33
3.35
$
7.35
4.55
$
8.19
4.49
$
7.94
5.55
$
8.19
3.35
(In millions, except per share)
2003
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Gross ProÑtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
As Originally Reported
Quarter
Second
First
Third
$3,545.5
621.1
$ (163.3)
$3,758.2
707.2
$ (73.6)
$3,906.0
719.4
$ (105.9)
Net Loss Per Share Ì Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (0.93)
$ (0.42)
$ (0.60)
Ì DilutedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(0.93)
(0.42)
(0.60)
Average Shares Outstanding Ì Basic ÏÏÏÏÏÏÏÏÏ
Ì Diluted ÏÏÏÏÏÏÏ
175.3
175.3
175.3
175.3
175.3
175.3
Price Range of Common Stock:*
High ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Low ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
7.33
3.35
$
7.35
4.55
$
8.19
4.49
103
EÅect of restatement adjustments on Goodyear's previously issued 2003 quarterly Ñnancial statements
Increase (decrease) in Income (loss)
(In millions, except per share)
Net loss as originally reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Adjustments (pretax):
Accounting IrregularitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Account Reconciliations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Out-of-Period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Discount Rate Adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products Segment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total adjustments (pretax)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax eÅect of restatement adjustmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unaudited
Quarter Ended
March 31
June 30
September 30
Total
$(163.3)
$(73.6)
$(105.9)
(1.6)
(27.7)
0.7
(4.3)
2.4
(30.5)
(2.7)
Ì
(2.7)
(2.9)
20.9
(0.2)
(4.4)
(0.7)
12.7
3.7
4.2
7.9
20.6
4.9
(10.5)
0.4
(4.3)
(1.1)
(10.6)
(1.7)
Ì
(1.7)
$
0.4
(17.3)
0.9
(13.0)
0.6
(28.4)
(0.7)
4.2
3.5
(12.3)
$(24.9)
Total net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(33.2)
Net loss as restated ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(196.5)
$(53.0)
$(118.2)
Per Share of Common Stock:
Net loss Ì Basic as originally reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÅect of net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (0.93)
(0.19)
$(0.42)
0.12
$ (0.60)
(0.07)
Net loss Ì Basic as restatedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (1.12)
$(0.30)
$ (0.67)
Net loss Ì Diluted as originally reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÅect of net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (0.93)
(0.19)
$(0.42)
0.12
$ (0.60)
(0.07)
Net loss Ì Diluted as restated ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (1.12)
$(0.30)
$ (0.67)
The second quarter of 2003 (as originally reported) included net charges for adjustments totaling $25.6 mil-
lion before tax ($31.3 million after tax). These adjustments related primarily to Interplant, Engineered
Products and Tax adjustments, and have been restated to prior periods. Several factors relating to Goodyear's
enterprise resource planning systems implementation resulted in Engineered Products' inability to locate or
recreate account reconciliations for prior periods in the amount of $19.0 million before tax ($18.6 million after
tax). As a result, Engineered Products was unable to allocate the amount to applicable periods and
accordingly, recorded this adjustment in the Ñrst quarter of 2003.
The Ñrst quarter included a net after-tax charge of $19.1 million resulting from general and product
liability Ì discontinued products and a net after-tax charge of $57.7 million for rationalizations. The second
quarter included a net after-tax gain of $9.1 million resulting from general and product liability Ì
discontinued products, a net after-tax charge of $11.5 million for rationalizations and an $8.8 million after-tax
loss on the sale of 20,833,000 shares of SRI. The third quarter included a net after-tax charge of $62.5 million
resulting from general and product liability Ì discontinued products and a net after-tax charge of $44.8 mil-
lion for rationalizations. The fourth quarter included a net after-tax charge of $72.9 million from general and
product liability Ì discontinued products and a net after-tax charge of $153.1 million for rationalizations. The
fourth quarter also included accelerated depreciation charges, asset writeoÅs and impairment charges of
$131.4 million after tax. Additionally, the fourth quarter included $9.5 million after tax related to a labor
litigation judgment against Goodyear in European Union Tire.
104
(In millions, except per share)
First
Second
Third
Fourth
Year
2002
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Gross ProÑtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$3,319.2
563.8
$ (59.0)
$3,490.8
694.8
24.7
$
$3,538.5
666.4
28.2
$
$ 3,507.7
627.3
$(1,220.9)
$13,856.2
2,552.3
$(1,227.0)
Restated
Quarter
Net Income (Loss) Per Share Ì Basic ÏÏÏÏÏÏ
$ (0.36)
$
Ì DilutedÏÏÏÏÏ
(0.36)
Average Shares Outstanding Ì Basic ÏÏÏÏÏÏÏÏ
Ì Diluted ÏÏÏÏÏÏ
163.2
163.2
Price Range of Common Stock:*
0.15
0.15
163.3
164.3
$
0.17
0.17
166.5
166.5
High ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Low ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends Per Share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 28.31
21.29
0.12
$
$ 23.70
18.50
0.12
$
$ 18.52
8.49
0.12
$
$
$
$
(6.96)
$
(7.35)
(6.96)
(7.35)
175.3
175.3
9.36
6.60
0.12
167.0
167.0
28.31
6.60
0.48
$
$
(In millions, except per share)
First
Second
Third
Fourth
Year
2002
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Gross ProÑtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$3,311.2
550.1
$ (63.2)
$3,478.8
691.4
28.9
$
$3,529.6
674.7
33.7
$
$ 3,530.4
619.9
$(1,105.2)
$13,850.0
2,536.1
$(1,105.8)
As Originally Reported
Quarter
$
(6.30)
$
(6.62)
(6.30)
(6.62)
175.3
175.3
9.36
6.60
0.12
167.0
167.0
28.31
6.60
0.48
$
$
Net Income (Loss) Per Share Ì Basic ÏÏÏÏÏÏ
$ (0.39)
$
Ì DilutedÏÏÏÏÏ
(0.39)
Average Shares Outstanding Ì Basic ÏÏÏÏÏÏÏÏ
Ì Diluted ÏÏÏÏÏÏ
163.2
163.2
Price Range of Common Stock:*
0.18
0.18
163.3
164.3
$
0.20
0.20
166.5
166.5
High ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Low ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends Per Share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 28.31
21.29
0.12
$
$ 23.70
18.50
0.12
$
$ 18.52
8.49
0.12
$
$
$
* New York Stock Exchange Ì Composite Transactions
105
EÅect of restatement adjustments on Goodyear's previously issued 2002 quarterly Ñnancial statements
Increase (decrease) in income (loss)
(In millions, except per share)
Net income (loss) as originally reported ÏÏÏÏ
Adjustments (pretax):
Accounting Irregularities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Account Reconciliations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Out-of-PeriodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Discount Rate Adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Chemical Products Segment ÏÏÏÏÏÏÏÏÏÏÏÏ
Total adjustments (pretax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax eÅect of restatement adjustments ÏÏÏÏ
Tax adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unaudited
Quarter Ended
March 31
June 30
September 30
December 31
Total 2002
$(63.2)
$28.9
$33.7
$(1,105.2)
$(1,105.8)
(2.2)
9.4
2.8
(3.7)
2.3
8.6
1.9
(6.3)
(4.4)
4.2
(4.3)
2.9
5.8
(4.1)
(1.0)
(0.7)
(0.1)
(3.4)
(3.5)
(4.2)
(2.4)
0.5
5.7
(3.9)
(8.2)
(8.3)
1.9
0.9
2.8
(5.5)
5.4
(19.6)
0.9
(3.2)
21.1
4.6
(6.6)
(113.7)
(120.3)
(115.7)
(3.5)
(6.8)
15.2
(14.9)
14.2
4.2
(2.9)
(122.5)
(125.4)
(121.2)
Net income (loss) as restated ÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(59.0)
$24.7
$28.2
$(1,220.9)
$(1,227.0)
Per Share of Common Stock:
Net income (loss) Ì Basic as
originally reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÅect of net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(0.39)
0.03
$0.18
(0.03)
Net income (loss) Ì Basic as restated ÏÏÏÏÏ
$(0.36)
$0.15
Net income (loss) Ì Diluted as
originally reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÅect of net adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(0.39)
0.03
$0.18
(0.03)
Net income (loss) Ì Diluted as restatedÏÏÏÏ
$(0.36)
$0.15
$0.20
(0.03)
$0.17
$0.20
(0.03)
$0.17
$
$
$
$
(6.30)
(0.66)
(6.96)
(6.30)
(0.66)
(6.96)
$
$
$
$
(6.62)
(0.73)
(7.35)
(6.62)
(0.73)
(7.35)
The restated 2002 net income (loss) for all quarters diÅers from that which was originally reported due
primarily to amounts related to the Chemical Products business segment. Certain items were identiÑed as a
result of a stand-alone audit conducted in 2003 of a portion of the Chemical Products business segment which
were recorded in 2002 but which related to prior periods and were restated out of 2002. The most signiÑcant
adjustments related to the timing of the recognition of manufacturing variances to reÖect the actual cost of
inventories and the fair value adjustment of a hedge for natural gas.
The second quarter included a net after-tax gain of $0.8 million (as restated) resulting from asset sales.
The third quarter included a net after-tax gain of $10.7 million resulting from asset sales and a net after-tax
charge of $8.9 million for rationalizations. The third quarter also included the writeoÅ of a miscellaneous
investment of $2.5 million after tax. The fourth quarter included a net after-tax gain of $12.0 million (as
restated) resulting from asset sales and a net after-tax beneÑt of $3.8 million (as restated) from rationalization
actions and reversals. The fourth quarter also included a non-cash charge of $1.20 billion (as restated) to
establish a valuation allowance against net Federal and state deferred tax assets.
Quarterly per share amounts do not add to the year 2002 per share amount due to issuance of 11.3 million
shares of common stock in the third quarter.
106
COMPARISON WITH PRIOR YEARS
(In millions, except per share)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Per Share of Common Stock:
Net Income (Loss) Ì Basic ÏÏÏÏÏÏÏÏÏÏÏÏ
Net Income (Loss) Ì Diluted ÏÏÏÏÏÏÏÏÏÏ
Dividends Per Share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases ÏÏÏÏÏ
Shareholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Notes:
Year Ended December 31,
Restated
2003
2002
2001
2000
1999
$15,119.0
$ (802.1)
$13,856.2
$(1,227.0)
$14,162.5
$ (254.1)
$14,445.9
51.3
$
$13,324.3
225.0
$
$
$
$
(4.58)
(4.58)
$
$
(7.35)
(7.35)
Ì $
15,005.5
4,826.2
(13.1)
0.48
13,038.7
2,989.8
255.4
$
$
$
(1.59)
(1.59)
1.02
13,768.6
3,203.6
2,627.8
$
$
$
0.33
0.32
1.20
13,576.7
2,349.6
3,454.3
$
$
$
1.43
1.42
1.20
13,248.8
2,347.9
3,729.2
The information contained in the following notes has been restated. Refer to Note 2 to the Ñnancial statements
for further information.
(1) Information on the impact of the restatement follows:
Year Ended December 31,
2001
As
Previously
Reported
2001
As
Restated
2000
As
Previously
Reported
(In millions, except per share)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $14,147.2
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (203.6) $ (254.1) $
$14,162.5
$14,417.1
40.3
2000
As
Restated
1999
As
Previously
Reported
1999
As
Restated
$14,445.9
51.3
$
$13,355.4
243.2
$
$13,324.3
225.0
$
Per Share of Common Stock:
Net Income (Loss) Ì Basic ÏÏÏÏÏÏÏ $
(1.27) $
(1.59) $
Net Income (Loss) Ì Diluted ÏÏÏÏÏ $
(1.27) $
(1.59) $
0.26
0.25
Dividends Per Share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases
Shareholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1.02
13,783.4
3,203.6
2,864.0
$
1.02
13,768.6
3,203.6
2,627.8
$
1.20
13,568.0
2,349.6
3,503.0
$
$
$
0.33
0.32
1.20
13,576.7
2,349.6
3,454.3
$
$
$
1.55
1.53
1.20
13,278.1
2,347.9
3,792.6
$
$
$
1.43
1.42
1.20
13,248.8
2,347.9
3,729.2
As discussed in Note 2, restatement adjustments were classiÑed as ""Accounting Irregularities,'' ""Account
Reconciliations,'' ""Out-of-Period,'' ""Discount Rate,'' ""Chemical Products Segment'' and ""Tax Adjustments.''
The decrease in net income of $50.5 million in 2001 was principally the result of the timing of the
recognition of manufacturing variances to reÖect the actual cost of inventories of the Chemical Products
Segment, the erroneous recording of cost of goods sold for the sale of inventory at Wingfoot Commercial Tire
Systems, LLC, Accounting Irregularities adjustments and other Account Reconciliation adjustments. On
November 1, 2000, Goodyear made a contribution, which included inventory, to Wingfoot Commercial Tire
Systems, LLC, a consolidated subsidiary. On a consolidated basis, the inventory was valued at Goodyear's
historical cost. Upon the sale of the inventory, consolidated cost of goods sold was understated by $11 million.
Additionally, inventory and Ñxed asset losses totaling $4.2 million were not expensed as incurred and were
written oÅ. The Chemical Products Segment adjustments were the result of a stand-alone audit conducted in
2003 of a portion of the Chemical Products business segment.
107
For the restatement of 2001, pretax income was reduced by $12.8 million due to the impact of Account
Reconciliations, $13.2 million due to Accounting Irregularities, $18.9 million due to Chemical Products
Segment, $14.5 million due to Out-of-Period and $5.5 million due to Discount Rate. The tax eÅect of
restatement adjustments was a beneÑt of $14.4 million.
The increase in net income of $11.0 million in 2000 was principally the result of the Chemical Products
Segment adjustments and the Account Reconciliation adjustments, primarily Interplant and Wingfoot
Commercial Tire Systems, LLC.
For the restatement of 2000, pretax income was reduced by $21.7 million due to the impact of Account
Reconciliations. Pretax income increased by $19.1 million due to the impact of Chemical Products Segment,
$14.5 million due to Discount Rate, $5.8 million due to Out-of-Period and $0.6 million due to Accounting
Irregularities. The tax eÅect of restatement adjustments was an expense of $7.3 million.
The decrease in net income of $18.2 million in 1999 was principally the result of the erroneous recording
of accounts receivable, the improper deferral of manufacturing variances at one of the Company's United
States tire manufacturing plants in 1998 which was recorded in 1999 when it was discovered, and which was
adjusted in the 1998 results in this restatement, and other Account Reconciliation adjustments. The
adjustment to accounts receivable was attributable to amounts erroneously recorded in the Company's general
ledger. Goodyear had implemented certain modules of an ERP accounting system, which were not properly
integrated with existing systems and resulted in an overstatement of sales and accounts receivable in the
general ledger. However, billings to customers and cash collections were appropriate.
For the restatement of 1999, pretax income was reduced by $38.0 million due to the impact of Account
Reconciliations and $4.9 million due to Chemical Products Segment. Pretax income was increased by
$13.1 million due to the impact of Accounting Irregularities and $6.4 million due to Out-of-Period. The tax
eÅect of restatement adjustments was a beneÑt of $5.2 million.
(2) See ""Principles of Consolidation'' at Note 1 (""Accounting Policies'') to the Financial Statements.
(3) Net Loss in 2003 included net after-tax charges of $524.5 million, or $2.73 per share-diluted, for
rationalizations, asset sales, general and product liability-discontinued products, accelerated depreciation,
asset impairments, asset writeoÅs, favorable settlement of prior year tax liability and rationalization costs
at Goodyear's SPT equity investment.
(4) Net Loss in 2002 included net after-tax beneÑt of $14.3 million (as restated), or $0.09 per share-diluted
(as restated) for rationalizations, asset sales, writeoÅ of a miscellaneous investment and a net
rationalization reversal at Goodyear's SPT equity investment. Net loss in 2002 also included a non-cash
charge of $1.20 billion (as restated), or $6.86 per share-diluted (as restated), to establish a valuation
allowance against its net federal and state deferred tax assets.
(5) Net Loss in 2001 included net after-tax charges of $172.4 million (as restated), or $1.08 per share-
diluted (as restated), for rationalizations, the sale of the Specialty Chemical Business and other asset
sales, costs related to a tire replacement program and rationalization costs at Goodyear's SPT equity
investment.
(6) Net Income in 2000 included a net after-tax charge of $62.0 million (as restated), or $0.39 per share-
diluted (as restated), for rationalizations and asset sales, change in Goodyear's domestic inventory
costing method from LIFO to FIFO and rationalization costs at Goodyear's SPT equity investment.
(7) Net Income in 1999 included net after-tax beneÑt of $14.9 million (as restated), or $0.08 per share-
diluted (as restated), resulting from the net after-tax gains of $154.8 million, or $0.97 per share-diluted,
from the change in control of the businesses contributed by the Company to the Goodyear Dunlop joint
venture in Europe and the sale of certain rubber chemical assets and net rationalization charges of
$139.9 million after tax (as restated), or $0.89 per share-diluted (as restated).
108
Board of Directors
Susan E. Arnold
President, Global Personal Beauty Care
& Global Feminine Care,
The Procter & Gamble Company
Elected 2003 3, 4, 5
James C. Boland
Vice Chairman, CAVS/Gund Arena Co.
Elected 2002 1, 2, 4
John G. Breen
Retired Chairman of the Board
The Sherwin-Williams Co.
Elected 1992 1, 2, 4
Gary D. Forsee
Chairman of the Board &
Chief Executive Officer,
Sprint Corporation
Elected 2002 1, 2, 3
William J. Hudson Jr.
Retired Vice Chairman,
AMP Incorporated
Elected 1995 1, 2, 4
Robert J. Keegan
Chairman of the Board,
Chief Executive Officer & President
The Goodyear Tire & Rubber Company
Elected 2000
Steven A. Minter
Retired Executive Director & President,
The Cleveland Foundation
Elected 1985 3, 5
Rodney O’Neal
President - Dynamics, Propulsion,
Thermal & Interior Sector,
Delphi Corporation
Elected 2004 4, 5
Shirley D. Peterson
Retired Partner in law firm of
Steptoe & Johnson LLP
Elected 2004 1, 3, 5
Agnar Pytte
Retired President,
Case Western Reserve University
Elected 1988 3, 5
James M. Zimmerman
Retired Chairman of the Board
Federated Department Stores
Elected 2001 2, 5
CORPORATE OFFICERS
Robert J. Keegan, 56*
Chairman of the Board,
Chief Executive Officer & President
Three years of service, officer since 2000
Joseph M. Gingo, 59
Executive Vice President, Quality Systems &
Chief Technology Officer
37 years of service, officer since 1996
Robert W. Tieken, 65†
Executive Vice President
& Chief Financial Officer
10 years of service, officer since 1994
SENIOR VICE PRESIDENTS
Christopher W. Clark, 52
Senior Vice President,
Global Sourcing
31 years of service, officer since 2000
Kathleen T. Geier, 47
Senior Vice President, Human Resources
25 years of service, officer since 2002
C. Thomas Harvie, 61
Senior Vice President,
General Counsel & Secretary
Eight years of service, officer since 1995
Richard J. Kramer, 40†
Senior Vice President,
Strategic Planning & Restructuring
Four years of service, officer since 2000
Ricardo A. Navarro, 53
Senior Vice President,
Business Development & Integration
Eight months of service, officer since 2003
Charles L. Sinclair, 52
Senior Vice President,
Global Communications
19 years of service, officer since 2003
VICE PRESIDENTS
Thomas A. Connell, 55
Vice President & Controller
Nine months of service, officer since 2003
Donald D. Harper, 57
Vice President, Human Resources
North America Shared Services
35 years of service, officer since 1998
William M. Hopkins, 59
Vice President, Global Product
Marketing & Technology Planning
36 years of service, officer since 1998
Isabel H. Jasinowski, 55
Vice President, Government Relations
22 years of service, officer since 2001
Gary A. Miller, 57
Vice President and Chief
Procurement Officer
36 years of service, officer since 1992
Darren R. Wells, 38
Vice President & Treasurer
Two years of service, officer since 2002
Bertram Bell, 52
Assistant Secretary &
Associate General Counsel
21 years of service, officer since 2000
Anthony E. Miller, 53
Assistant Secretary &
Associate General Counsel
18 years of service, officer since 2000
BUSINESS UNIT OFFICERS
M. Joseph Copeland, 42
President, Chemical Division
Three years of service, officer since 2002
Eduardo A. Fortunato, 50
President, Latin America Region,
29 years of service, officer since 2003
Jarro F. Kaplan, 57
President, Eastern Europe,
Africa & Middle East Business
34 years of service, officer since 2001
Lawrence D. Mason, 43
President, Consumer Tires,
North American Tire
Eight months of service, officer since 2003
Hugh D. Pace, 52
President, Asia Region
29 years of service, officer since 1998
Jonathan D. Rich, 48
President, North American Tire
Three years of service, officer since 2001
Michael J. Roney, 49
President, European Union Business
22 years of service, officer since 1999
Timothy R. Toppen, 49
President, Engineered Products
25 years of service, officer since 2000
1 Audit Committee
2 Compensation Committee
3 Committee on Corporate Responsibility
4 Finance Committee
5 Nominating and Board Governance Committee
* Also a director
† Richard J. Kramer was named executive vice president
and chief financial officer effective June 1, 2004,
replacing Robert W. Tieken, who retired on
May 31, 2004.
G o o d y e a r 2 0 0 3 1 0 9
Facilities
NORTH AMERICA
United States
Akron, Ohio
World headquarters, North American Tire headquarters, Asia Tire
headquarters, Latin America Tire headquarters, Chemical
Products headquarters, Engineered Products headquarters,
technical center, racing tires, chemicals, tire proving grounds,
global purchasing, airship operations, research and
development facilities
Asheboro, North Carolina Steel tire cord
Atlanta, Georgia Aero retread facility
Bayport, Texas Chemicals
Beaumont, Texas Synthetic rubber,
hydrocarbon resins
Carson, California Airship operations
Danville, Virginia Tires
Decatur, Alabama Textiles
Fayetteville, North Carolina Tires
Freeport, Illinois Tires
Gadsden, Alabama Tires
Green, Ohio Technical center
Hannibal, Missouri Hose products
Houston, Texas Synthetic rubber
Kingman, Arizona Aero retread facility
Lawton, Oklahoma Tires
Lincoln, Nebraska Power transmission belts, hose products,
technical center
Marysville, Ohio Conveyor belts, technical center, sheet rubber
Mount Pleasant, Iowa Hose products
Niagara Falls, New York Chemicals
Norfolk, Nebraska Hose products
Pompano Beach, Florida Airship operations
Radford, Virginia Tread rubber
St. Marys, Ohio Molded rubber products,
military track, rubber track, technical center
San Angelo, Texas Tire proving grounds
Social Circle, Georgia Tread rubber
Spartanburg, South Carolina Tread rubber
Spring Hope, North Carolina Conveyor belts
Statesville, North Carolina Tire molds
Sun Prairie, Wisconsin Hose products
Tonawanda, New York Tires
Topeka, Kansas Tires
Tyler, Texas Tires
Union City, Tennessee Tires
Utica, New York Textiles
West Amherst, New York Goodyear Dunlop Tires
North America headquarters
1 1 0 G o o d y e a r 2 0 0 3
Canada
Bowmanville, Ontario Conveyor belts
Collingwood, Ontario Hose products
Granby, Quebec Hose products
Medicine Hat, Alberta Tires
Napanee, Ontario Tires
Owen Sound, Ontario Power transmission belts
Quebec City, Quebec Molded rubber
products
Valleyfield, Quebec Tires
Mexico
Chihuahua Molded rubber products, power transmission belts
San Luis Potosi Air springs, hose products
Delicias Hose products
EUROPE
Belgium
Brussels Goodyear Dunlop Tires Europe headquarters; European
Union Tire headquarters; Eastern Europe, Africa & Middle East
Tire headquarters
France
Amiens Tires
Mireval Tire proving grounds
Montlucon Tires, air springs
Germany
Fulda Tires
Fuerstenwalde Tires
Hanau Tires
Philippsburg Tires
Riesa Tires
Wittlich Tires, tire proving grounds
Luxembourg
Colmar-Berg Tires, textiles, steel tire cord, tire molds, technical
center, tire proving grounds
Netherlands
Tilburg Aero retread facility
Poland
Debica Tires, tubes
Slovenia
Kranj Tires, power transmission belts, air springs, hose products
Turkey
Adapazari Tires
Izmit Tires
United Kingdom
Birmingham Racing tires
Washington Tires
Wolverhampton Tires
LATIN AMERICA
Brazil
Americana Tires, textile preparation, films, tire proving grounds
Osasco Hose products
Santa Barbara Tread rubber
Sao Paulo Tires, tire molds, conveyor belts, power transmission belts,
hose products, aero retread facility
Sertaozinho Air springs
Chile
Santiago Tires, batteries, conveyor belts, hose products,
power transmission belts
Colombia
Cali Tires
Peru
Lima Tires
Venezuela
Tinaquillo Hose products, power
transmission belts
Valencia Tires
AFRICA
Morocco
Casablanca Tires
South Africa
Uitenhage Tires, conveyor belts, power
transmission belts
United Arab Emirates
Dubai Regional tire sales and distribution
ASIA
China
Dalian Tires
Qingdao Hose products
India
Aurangabad Tires
Ballabgarh Tires
Indonesia
Aek Tarum Estate Rubber plantation
operations
Bogor Tires
Dolok Merangir Estate Rubber plantation operations
Japan
Tatsuno Tires
Malaysia
Kuala Lumpur Tires
New Zealand
Upper Hutt Tires*
Philippines
Las Pinas Tires
Singapore
Singapore Natural rubber purchasing, testing and
research laboratory
Taiwan
Taipei Tires
Thailand
Bangkok Tires, Aero retread facility
AUSTRALIA
Bayswater Conveyor belts
Somerton Tires*
* 50-50 Joint Ventures
G o o d y e a r 2 0 0 3 1 1 1
Shareholder Information
CORPORATE OFFICES
The Goodyear Tire & Rubber Company
1144 East Market Street
Akron, Ohio 44316-0001
(330) 796-2121
www.goodyear.com
GOODYEAR COMMON STOCK
The principal market for Goodyear common stock is the New York
Stock Exchange (symbol GT).
On May 10, 2004, there were 28,443 shareholders of record of
Goodyear common stock. The closing price of Goodyear common
stock on the NYSE composite transactions tape on May 10,
2004, was $8.00. Certain of its loan agreements prohibit
Goodyear from paying dividends on its common stock.
ANNUAL MEETING
9 a.m., Wednesday, June 30, 2004, at the Corporate Offices.
SHAREHOLDER INQUIRIES
Transfer Agent and Registrar:
EquiServe Trust Company, N.A.
P.O. Box 43069
Providence, RI 02940-2500
(800) 317-4445
www.equiserve.com
Inquiries concerning the issuance or transfer of stock certificates
or share account information should be directed to EquiServe
Trust Company, N.A. Provide Social Security number, account
number and Goodyear’s ID number, 5721.
Hearing-impaired shareholders can communicate directly
with EquiServe via a TDD by calling (201) 222-4955. Other
shareholder inquiries should be directed to:
Investor Relations,
Dept. 635
The Goodyear Tire & Rubber Company
1144 East Market Street
Akron, Ohio 44316-0001
(330) 796-3751
E-mail: goodyear.investor.relations@goodyear.com
PUBLICATIONS
The Company’s Form 10-K Annual Report to the Securities and
Exchange Commission for 2003 is available in May. The Form
10-Q Quarterly Reports to the Securities and Exchange
Commission during 2004 will be available in June, August
and November.
Copies of any of the above or the Company’s Proxy Statement
may be obtained without charge by writing:
Investor Relations, Dept. 635
The Goodyear Tire & Rubber Company
1144 East Market Street
Akron, Ohio 44316-0001
or by calling our Financial Report Distribution Center at
(515) 263-6408
CASSETTE RECORDING
An audiocassette recording of the 2003 Annual Report is
available for visually impaired shareholders by contacting
Goodyear Investor Relations at (330) 796-3751.
DIRECTSERVICE ™ INVESTMENT PROGRAM
EquiServe Trust Company, N.A. sponsors and administers a
DirectSERVICE Investment Program for current shareholders and
new investors in Goodyear common stock. A brochure explaining
the program may be obtained by contacting:
The DirectSERVICE Investment Program — (800) 317-4445
For Goodyear Shareholders
EquiServe Trust Company, N.A.
P. O. Box 43081
Providence, RI 02940-3081
(800) 317-4445
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
BP Tower
200 Public Square, 27th Floor
Cleveland, Ohio 44114-2301
ENVIRONMENTAL REPORT
A report pertaining to Goodyear’s environmental policies and
activities may be obtained by contacting Goodyear Corporate
Environmental Engineering at (330) 796-7377.
G o o d y e a r 2 0 0 3
W W W . G O O D Y E A R . C O M
700-862-928-68200
GBS #190415