Goodyear is the world’s largest tire company, with operations in
most regions of the world. Together with its U.S. and international
subsidiaries and joint ventures, Goodyear develops, manufactures,
markets and distributes 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 chemical markets, and rubber-related chemicals for various appli-
cations. Goodyear is one of the world’s largest operators of commercial
truck service and tire retreading centers. In addition, it operates more
than 1,800 tire and auto service center outlets where it offers its prod-
ucts for retail sale and provides automotive repair and other services.
Goodyear manufactures its products in more than 100 facilities in 29
countries. It has marketing operations in almost every country around
the world.
On The Cover
Goodyear’s tires are winning prestigious product awards and endorse-
ments around the globe, and the company’s success with its many new,
high-impact tires has been a critical factor in its business turnaround.
Some of the recent award-winners are featured on the cover of this
report. From left: Goodyear’s Eagle F1 GS-D3, an ultra-performance
radial developed in Europe for driving enthusiasts around the world,
was Car and Driver’s top-rated ultra-performance tire. Fortera featuring
SilentArmor Technology, a strong, tough tire with quiet, comfortable
performance for SUVs, received recognition as one of Popular Science
magazine’s 20 Seriously Hot Products for 2005. Assurance featuring
TripleTred Technology, a premium passenger tire designed to provide
peace of mind for any driving condition, was rated the number
one all-season tire in the annual test by America’s leading consumer
magazine.
The Goodyear Tire & Rubber Company
1144 East Market Street
Akron, Ohio 44316-0001
www.goodyear.com
© 2006 The Goodyear Tire & Rubber Company
Financial Overview
(Dollars in millions, except per share)
Net Sales
Net Income
– Per diluted share
Total Assets
Consolidated Debt
Total Shareholders’ Equity
Debt to Debt and Equity
Average Shares Outstanding – basic
Average Shares Outstanding – diluted
Average Number of Associates
YEAR ENDED DEC. 31
2005
2004
$ 19,723
$ 18,353
228
1.16
115
0.63
$ 15,627
$ 16,101
5,423
73
98.7%
176
209
82,598
5,680
74
98.7%
175
192
84,786
Table of Contents
2
9
39
42
44
48
To Our Shareholders
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about
Market Risk
Forward-Looking Information
Consolidated Financial Statements
Notes to Consolidated Financial Statements
110
Management’s Report on Internal Control
Over Financial Reporting
111
Report of Independent Registered
Public Accounting Firm
113
116
118
Supplementary Data (unaudited)
Comparison with Prior Years
Board of Directors and Officers
119
Facilities
120
Shareholder Information
This Annual Report contains a number of forward-looking statements. For more information, please see pages 42 and 43.
G O O D Y E A R 2 0 0 5 | 1
To Our
Shareholders
W
ith numerous natural disasters, 2005 will likely be remembered more for
tragedy than triumph, but I am pleased to report that our company completed
another very good year despite significant challenges. Whether it was
hurricanes, earthquakes, rapidly rising raw material costs, or day-to-day competitive pressures,
our associates worldwide met every challenge and kept Goodyear’s turnaround on track.
Our hurricane recovery efforts in the Gulf Coast region of the United States symbolized
our preparedness and resolve to deal with adversity. During Hurricane Rita, 60 associates chose
to ride out the storm inside a concrete block building at our Beaumont, Texas, chemical plant.
They stayed so they could monitor damage, make repairs and prepare for startup much earlier
than any other facility of its type in the region. Plant manager Brad Ioerger never left the prop-
erty for 21 days. He wasn’t alone. When I visited Beaumont shortly after the storm I heard story
upon story of family displacement and extensive property damage, yet associates stayed focused
on getting Goodyear back up and running. When we restored power using our generator, the
lights of Goodyear became a “beacon of hope” for the darkened Beaumont community.
Our associates around the world worked night and day seeking alternative supplies of raw
materials and reallocating products to keep our tire plants running. Associates donated tens
of thousands of dollars to help stricken associates start to rebuild their lives. The courage,
teamwork and resourcefulness displayed in 2005 represent the best values of Goodyear.
Total Segment Operating Income
Dollars in millions
1200
1000
800
600
400
200
0
Total segment operating income is the sum of the segment operating income of each of our six business units.
For more information, please see “Results of Operations – Segment Information” on page 21.
2 | G O O D Y E A R 2 0 0 5
2005 Results
As we continue to improve our financial performance, we reached several important milestones:
• Record sales of $19.7 billion, a 7 percent increase from $18.4 billion in 2004
• Net income of $228 million, nearly double the 2004 level of $115 million
• Segment operating income increased 23 percent compared to 2004
• Full year sales records for all six of our businesses
• Full year segment operating income records for our international tire businesses;
European Union, Eastern Europe, Middle East and Africa, Latin America and
Asia Pacific
Innovation, quality and a sharp market focus have
driven Goodyear’s financial recovery and the referenced
milestones. We are extremely proud of our progress to
date and we are taking the required steps to reach the
next performance level. To do this, we will continue to
leverage the Seven Strategic Business Drivers that have
guided our progress thus far:
• Leadership
• A focus on cash
• A lower cost structure
• Fully leveraging our distribution network
• Building brand strength
• Product leadership
• Advantaged supply chain
I’d like to outline three examples of how elements
of our Seven Strategic Drivers drove 2005 results. Those
include: Leadership; Product Leadership created by inno-
vation; and Brand Building strength.
Leadership
I have commented frequently about the importance of
great people and the value of leadership in generating
business results. Today’s results from The Goodyear
Tire & Rubber Company are the product of outstanding
teamwork and execution.
R O B E R T J . K E E G A N
C h a i r m a n ,
C h i e f E x e c u t i v e O f f i c e r
& P r e s i d e n t
I believe that today we are a stronger competitor in our industry thanks to the efforts of
our 80,000 associates. Our progress in the last three years demonstrates that our objectives are
realistic and attainable. The will to win is becoming further ingrained in the culture of the “new”
Goodyear.
Our Goodyear leadership team is truly outstanding. At our September investor meeting
we showcased our leadership and gave investors and Wall Street analysts the opportunity to
engage in a serious dialogue with top executives and division presidents. Investors heard presen-
tations directly from the leaders of our two largest businesses: Jon Rich, president of North
American Tire, and Arthur de Bok, president of the European Union. They also heard presenta-
tions from Rich Kramer, our chief financial officer, and Larry Mason, president of the consumer
tire business in North America. I have a high degree of personal confidence in these leaders and
believe that nobody in this industry can match the quality of our team.
“The last three to
four years I’ve
noticed a dramatic
change. And now,
I’m proud to be a
Goodyear dealer.
I feel respected.”
Clayton Van Kleek,
Lake Katrine, N.Y. dealer
G O O D Y E A R 2 0 0 5 | 3
I could go on and on about our people and the positive changes they are driving at
Goodyear, but I would prefer that you hear it from those most important to us – our customers:
“For 50 years I’ve been in the tire business. I’ve lived through many, many regimes at Goodyear, many
new people coming and going. And today, the people who are running Goodyear are outstanding.”
– HAROLD FINKELSTEIN, Astoria, N.Y. dealer
“Now they’re market-driven. They’re going to the marketplace… finding out what customers want in
tires and they are bringing innovative new products to the marketplace based on demand of consumers.”
– DREW DAWSON, Akron, Ohio dealer
“They’ve got a totally different focus. They realize that we need innovative products, (and that) we
need a steady stream at a more rapid pace.” – BARRY LEVIN, Highland, Ind. dealer
“The last three to four years I’ve noticed a dramatic change. And now, I’m proud to be a Goodyear
dealer. I feel respected.” – CLAYTON VAN KLEEK, Lake Katrine, N.Y. dealer
“I’ve been around a long time and seen a lot of change in Goodyear. And Goodyear has come back.
With the new corporate leadership we have it’s more like a family-owned business again.”
– JIM MOODY JR., Franklin, Tenn. dealer
While these are comments from North American dealers, this is not just a North American
phenomenon. We are having similar successes around the world, and I encourage you as share-
holders not to take my word for it, but to talk to our customers and find out for yourselves how
they feel about Goodyear.
Product Innovation
Our innovative new products are the result of a market-back approach that puts the market and
consumer in the forefront of our decision-making process. Thanks to the capabilities of our
scientists, engineers and marketers we are creating relevant technology that consumers want,
playing to our brand strength and product leadership. We now have a proven new product
engine that is outstanding. I believe we are the industry leader in commercializing high impact
new products, and, we only look to improve our pace of execution.
In 2005, we continued to accumulate awards for performance, technology, innovation and
consumer preference headed by our TripleTred and SilentArmor with Kevlar technologies on
our Assurance and Fortera families of tires. We also earned additional awards and honors with
our Eagle tires in North America and Europe and our UltraGrip and Dunlop winter tires in
Europe.
We strongly believe that tires are not a commodity. The advances that we have made in
product performance – and innovation to come – are dramatic evidence that delivering products
that exceed consumers’ expectations will clearly continue to improve both value perceptions and
consumer satisfaction. Our product mix becomes richer each year.
ASSURANCE featuring
TripleTred Technology
“Rated No. 1
all-season tire
in annual test”
Leading U.S. Consumer
Magazine
4 | G O O D Y E A R 2 0 0 5
S
R
O
N
O
H
/
S
D
R
A
W
A
Goodyear Assurance featuring TripleTred Technology
R&D 100 Award for Innovation
R&D Magazine
Business Week
Silver Idea Award
“Leading U.S.
Consumer Magazine” Rated No. 1 all-season tire in annual test
Automotive News
Consumer Digest
TireRack.com
Pace Award Competition finalist (only tire selected)
“Best Buy”
Top-rated passenger all-season tire (through January 2006)
Goodyear Eagle F1 GSD3
Car and Driver
Eurotuner
TireRack.com
Top-rated ultra-performance tire
Top-rated ultra-performance tire
Top-rated maximum performance summer tire (through January 2006)
Goodyear Fortera featuring SilentArmor Technology
Popular Science
New York Magazine
Consumer Digest
Popular Mechanics
20 Seriously Hot Products for 2005
Best Bets selection
“Best Buy”
“Editor’s Choice”
Goodyear UltraGrip 7
ADAC
Top-rated in European ADAC winter performance testing
Dunlop SP Winter Sport 3D
Auto Motor and
Sport Magazine
Top-rated in Germany
Goodyear DuraSeal Commercial Tire Technology
Construction Equipment “Top 100 Award”
Heavy Duty Trucking
Road Star
“Nifty Fifty Award”
“Most Valuable Product”
Knowing what is coming in our product pipeline is exciting, but equally exciting are
unsolicited comments we receive from consumers. For those of you with a consumer product
background, you know that calls and letters from consumers are typically motivated by a
negative experience. Imagine the type of performance required to motivate consumers to offer
the following comments:
“On Oct. 29 I purchased a set of four Goodyear Assurance TripleTred tires… after considerable
research of published literature and online reports. Based on approximately 1,500 miles of city and
highway driving – in weather conditions ranging from warm sunshine to rain, snow, and ice – it is
my unqualified judgment that the Assurance TripleTred is the finest tire I have ever owned.
I have purchased innumerable sets of tires through the years – each time on the basis of extensive per-
sonal research. On each of these occasions after a few months of driving I have been disappointed with
one or more aspects of tire performance only to conclude that I would push on… to find a better tire
that would provide a more satisfying overall driving experience.
I cannot tell you how happy I am to have finally concluded my seemingly endless pursuit of excel-
lence. Simply put, the Goodyear Assurance TripleTred is the perfect tire for the discriminating driver. I
heartily congratulate your company on the innovative, award-winning TripleTred technology.”
– T.L., Attorney, Springfield, Ill.
FORTERA featuring
SilentArmor Technology
“20 Seriously
Hot Products
for 2005”
Popular Science
G O O D Y E A R 2 0 0 5 | 5
The letters and comments are not confined to consumer products. We have similar testi-
monials in the truck tire business where we have refocused and intensified our efforts:
“What makes Goodyear an exceptional supplier is that after 20 years, they take nothing for granted.
They approach the relationship as if they have to earn the business every day. Not just executing the
basics, but in the constant introduction and application of new ideas and technology.”
– STEVE GRAHAM, VP Corporate Purchasing, Schneider National, Inc.
These are just a sample of the type of responses we are receiving from consumers and end-
users. The market buzz on our product capabilities is continuing to gain momentum. We are
working hard to further enhance the performance advantage on all of our premium new product
offerings.
We just released our newest Goodyear-brand product for the North American market; a
performance-touring tire called Eagle with ResponsEdge and Carbon Fiber technology. During
the latter stage of the development process for this amazing new product, I was impressed by
the discernable performance difference between our new tire and the current competitive market
leader in the segment. I am not a professional test driver, so what I felt will be significantly more
apparent to those who push vehicles to the limit for a living. I believe that ResponsEdge will
reaffirm Goodyear Eagle as the clear leader among all performance touring tires when it is
available for sale in May. Its asymmetrical construction and tread design combine to provide a
smooth and comfortable ride from the inboard side of the tire and ultra-high performance grip
from the outer ResponsEdge of the tire.
Brand Building
Our successful efforts in brand building start with a thorough understanding of consumer
insights and the resulting knowledge of what is important to the consumer in tire performance.
Once we fully understand those insights, we connect that with “relevant technology” that makes
the product differentiation easy for consumers to understand. RunOnFlat in Europe addresses
consumer concerns of being stranded by a flat tire. TripleTred in North America reduces the
anxiety associated with rapidly changing weather conditions, while SilentArmor delivers a
durable, smooth ride for pickups and sport utility vehicles. Given our ability to identify these
consumer insights, we have been able to quickly capitalize on attractive market opportunities.
The result has been a richer product mix, richer brand mix and richer customer mix. We plan
to accelerate this enrichment.
Also critical to our brand building efforts has been our ability to target marketing initia-
tives to those most likely to respond. Through data-driven decisions on media, we direct our
messaging to those most receptive and most likely to purchase our products. Ultimately the
objective of our efforts is to drive consumers to retail outlets to ask for the latest Goodyear
products best suited to their needs. This is good for our company, and good for the unsurpassed
global network of retailers who carry our brands. We bring outstanding marketing programs to
our dealers to drive their revenue growth and profitability. Of all the elements instrumental in
our turnaround, our approach to marketing has changed most significantly during the past
three years.
6 | G O O D Y E A R 2 0 0 5
As we explored ways to drive the start of our turnaround, we could have been seduced
into cutting our marketing expenditures for enhanced short-term financial performance. That
would have been the wrong decision. We avoided this trap of short-term thinking and actually
increased investments in marketing and in our key leaders and their teams. We knew that suc-
cess is not solely based on having the best products. We needed to make the best products that
consumers wanted and effectively reach them with the right messages. I’m pleased to say we are
doing a much better job in all aspects of marketing today, and we know that we can do even
more.
The Road Ahead
As I mentioned, the road ahead is not paved with a new strategy. The strategic platform that
generated our turnaround in the past three years remains intact. The intensity of focus in key
areas will carry us confidently forward. Three years ago we presented a strategy to investors that
included critical performance commitments. We increased our revenue per tire. We cut costs
significantly. We improved our global return on sales. We reduced our debt. And we improved
our capital structure.
The following accomplishments are the direct result of fundamental changes we have
made to our company in both strategic and operational capability.
• We’ve strengthened our leadership team by blending the talents of people from inside
and outside the company. All but one of our top 24 jobs now have people new to those
positions in the past four years.
• We created a market-driven decision making process that has the consumer and cus-
tomer firmly in the center of the process.
• We reorganized to drive decisions closer to our product markets and to drive profit and
loss responsibility and accountability deeper into our organization.
• We dramatically changed our business models for original equipment, truck and private
label tires, focusing on high margin products and selectivity in our choice of customers.
• We began evaluating assets outside of our core consumer and commercial truck tire
businesses and moved forward with divesting selected operations. We sold our rubber
plantation, Wingtack resin business and North American farm tire assets.
• We identified and then capitalized on attractive market opportunities to provide a rich-
er product, brand and customer mix.
• We strengthened our new product capability with the ability to deliver the products
that consumers want much faster.
• We significantly increased our marketing investments at a time when it was appealing
to make cuts in those areas for short-term gain.
• We have improved our cost structure, although we know there are many more opportu-
nities ahead of us to operate more efficiently.
“Simply put,
the Goodyear
Assurance
TripleTred is the
perfect tire for
the discriminating
driver. I heartily
congratulate your
company on the
innovative, award-
winning TripleTred
technology.”
T.L., Attorney,
Springfield, Ill
G O O D Y E A R 2 0 0 5 | 7
While we are extremely proud of our progress in all of these areas, we will not allow our-
selves to grow complacent.
We will continue our revenue building through a richer mix, using the established plat-
form of the Seven Strategic Drivers to identify and capitalize on attractive market opportunities.
Our goal by 2008 is to further reduce our costs by $750 million to $1 billion, which will
be partially offset by higher raw material and other cost increases. About one-third of the cost
is expected to come from business process improvements and product reformulations. Through
improved productivity techniques, Six Sigma and Lean Manufacturing, we are working toward
producing more tires with fewer people and at a lower cost. We will drive lower inventory levels
while continuing to improve our customer service levels.
A second initiative will be a reduction in our global manufacturing footprint with an
anticipated savings of $100 million to $150 million per year. Our target is to reduce our
manufacturing capacity by 15 million to 20 million tires, or approximately 8 percent to
12 percent of our high cost capacity.
In 2005, we set up a new purchasing office in China to increase our low-cost sourcing
of tires, raw materials, indirect materials and capital equipment. Over the next three years, we
have targeted savings of between $150 million and $200 million.
There are also opportunities to further reduce costs by simplifying the way we process
transactions and the way we are organized. Another $150 million to $200 million cost reduction
is expected to come from reduced selling, administrative and general expenses.
Finally, we plan to reduce working capital requirements to run the business, freeing cash
that can be used to meet our financial obligations and invest in improving the performance
trajectory of our businesses. Shortening the cash cycle and improving cash flow from operations
creates financial flexibility.
Today we are a fundamentally different company than we were three years ago, and a con-
siderably stronger competitor. We certainly recognize that the challenges ahead are very real.
We embrace these challenges as opportunities. We look forward to each with the same capabili-
ty, passion, confidence and will-to-win that have created today’s business momentum.
“They’ve got a
totally different
focus. They realize
that we need inno-
vative products,
(and that) we need
a steady stream
at a more rapid
pace.”
Barry Levin
Highland, Ind. Dealer
Robert J. Keegan
Chairman, Chief Executive Officer & President
8 | G O O D Y E A R 2 0 0 5
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 recognizable brand names in the world. We have a broad global footprint with
102 manufacturing facilities in 29 countries. We operate our business through six operating segments: North
American Tire; European Union Tire; Eastern Europe, Middle East and Africa Tire (""Eastern Europe Tire'');
Latin American Tire; Asia PaciÑc Tire; and Engineered Products.
Since 2003 we have been implementing a turnaround strategy aimed at cost reductions, productivity
improvements, capital structure improvements and new product developments. Throughout 2005 we contin-
ued to make progress on this strategy. In 2005 we recorded net income of $228 million compared to net
income of $115 million in the comparable period of 2004. In addition, in 2005 our total segment operating
income increased to nearly $1.2 billion from $946 million in 2004, reÖecting an increase in segment operating
income in all Ñve of our tire segments. Total segment operating margin also improved to 5.9% in 2005 from
5.2% in 2004. See ""Results of Operations Ì Segment Information'' for additional information. Although
segment operating margin in North American Tire also improved in 2005 to 1.8% from 0.9% in 2004, segment
operating margin for North American Tire continues to lag behind that of our other tire segments. The
improvement was driven by our strategy to focus on the higher value replacement market and being more
selective in the OE market, strong performance of high performance and premium branded tires, our ability to
recover higher raw material costs through pricing actions and the results of our cost reduction programs. To
extend and enhance our turnaround strategy, in September 2005 we announced additional cost reduction
initiatives we plan to implement over the next several years. The initiatives include reducing our high-cost
manufacturing capacity by between 8 percent and 12 percent resulting in anticipated annual savings of
between $100 million and $150 million. In connection with the reduction in manufacturing capacity, we
anticipate incurring cash restructuring charges of approximately $150 million to $250 million over the next
three years.
In 2005, we continued our transformation to a market-driven, consumer-focused company with the
introduction in North America of the Fortera featuring TripleTred Technology, a premium SUV tire
incorporating the same technology we introduced with the successful launch of our Assurance line of tires in
2004. In Europe, we introduced two new high performance winter tires, the Goodyear Ultra Grip 7 and
Dunlop SP Winter Sport 3D, both of which have received highly favorable consumer reviews.
We also continued to make progress on our capital structure improvement plan in 2005 with the
completion of three asset dispositions: (i) the sale of our Indonesian natural rubber plantation at a sale price of
approximately $70 million, (ii) the sale of our Wingtack adhesive resin business in which we received
approximately $55 million in cash and retained about $10 million in working capital, and (iii) the sale of the
assets of our North American farm tire business to Titan International for approximately $100 million. We
also announced that we are exploring the possible sale of our Engineered Products business. We also
successfully lengthened a signiÑcant portion of our debt maturities with the reÑnancing of our primary credit
facilities in April 2005. While these and other activities have improved our liquidity position, we continue to
review potential divestitures of other non-core assets and other Ñnancing options, including the issuance of
additional equity.
As a result of our focus on the higher margin replacement products, in 2005 we estimate that we had a
slight increase in share of sales of replacement tires compared to 2004. In the OE market we estimate that our
share of sales increased primarily as a result of gains in our international markets. In 2006, we estimate that
industry volume for OE and replacement tires in the European Union will be Öat. In North America, we
estimate volume growth of about 5% for commercial OE tires and a slight decrease in volume for consumer
OE tires. We also anticipate approximately 2% of growth in industry volume in both consumer and
commercial replacement tires.
9
While our operating results continued to improve in 2005, we continue to face several challenges,
including rising raw material costs (for the full year 2005 raw material costs increased approximately 11%
compared to 2004), currency Öuctuations, increasing competition from low-cost manufacturers, a high level of
debt and signiÑcant pension funding requirements, including domestic pension funding obligations in 2006 of
as much as $750 million. Subject to the outcome of pending legislation, our domestic pension obligations are
expected to peak in 2006. However, we anticipate being subject to signiÑcant required pension funding
obligations in 2007 and beyond. Our ability to successfully implement our turnaround strategy will depend, in
large part, on our ability to address and manage these challenges. In the fourth quarter of 2005, our segment
operating income declined slightly compared to the prior year. This reduction was primarily due to the impact
of the hurricanes, higher than expected raw material costs and production adjustments to reduce tire
inventories, particularly in Europe and Latin America.
In the fall of 2005, we implemented temporary reductions in production at our North American Tire
facilities due to disruptions in the supply of certain raw materials resulting from the impact of Hurricanes
Katrina and Rita. The hurricanes had an adverse impact of approximately $31 million on our results of
operations in 2005 ($21 million of which related to the fourth quarter) primarily reÖecting the unabsorbed
Ñxed costs related to the temporary closures of our chemical plants on the Texas Gulf Coast and production
cuts at our North American Tire plants as well as the impairment of certain assets, and loss of inventories.
Out-of-period adjustments totaled $8 million in after-tax income in the fourth quarter of 2005 and
primarily related to income taxes. Of this amount, $3 million relates to prior quarters of 2005. For the year
ended December 31, 2005 we recorded approximately $3 million in net after-tax expense relating to prior
periods.
We remain subject to a Securities and Exchange Commission (SEC) investigation into the facts and
circumstances surrounding the restatement of our historical Ñnancial statements. In connection with this
investigation, we received a ""Wells Notice'' from the staÅ of the SEC in August 2005. The Wells Notice is
described more fully in ""Legal Proceedings'' in Item 3 of Part I of the 10-K Ñled on February 17, 2006. Also,
we remediated two material weaknesses in our internal control over Ñnancial reporting and have determined
that our internal control over Ñnancial reporting was eÅective as of December 31, 2005.
Beginning in 2006 we will be working with the United Steelworkers of America (""USW'') to extend or
renegotiate the master collective bargaining agreement that covers approximately 13,600 employees in the
United States and expires in July 2006. The outcome of these collective bargaining negotiations cannot
presently be determined. If we are unable to reach an agreement with the USW regarding the terms of a
collective bargaining agreement, we may be subject to work interruptions or stoppages that could have a
material adverse impact on our consolidated results of operations, Ñnancial positions and liquidity.
Our 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 the OE industry, which would result in
lower levels of plant utilization and an increase in unit costs. Also, we could experience higher raw material
and energy costs in future periods. These costs, if incurred, may not be recoverable due to pricing pressures
present in today's highly competitive market and we may not be able to continue improving our product mix.
Our future results of operations are also dependent on our ability to (i) successfully implement cost reduction
programs to address, among other things, higher wage and beneÑt costs, and (ii) where necessary, reduce
excess manufacturing capacity. We are unable to predict future currency Öuctuations. Sales and earnings in
future periods would be unfavorably impacted if the U.S. dollar strengthens against various foreign currencies,
or if economic conditions deteriorate in the economies in which we operate. Continued volatile economic
conditions or changes in government policies in emerging markets could adversely aÅect sales and earnings in
future periods. We may also be impacted by economic disruptions associated with global events including
natural disasters, war, acts of terror and civil obstructions. For additional factors that may impact our business
and results of operations please see ""Risk Factors'' in the 2005 Form 10-K.
10
RESULTS OF OPERATIONS Ì CONSOLIDATED
(All per share amounts are diluted)
2005 Compared to 2004
Net Sales
Net sales in 2005 were $19.7 billion, increasing $1.4 billion or 7% compared to 2004. Net income of
$228 million, or $1.16 per share, was recorded in 2005 compared to net income of $115 million, or $0.63 per
share in 2004.
Net sales in 2005 for our tire segments were impacted favorably by price and product mix by
approximately $737 million, primarily related to price increases to oÅset higher raw material costs, higher
volume of approximately $186 million and foreign currency translation of approximately $175 million. Sales
also increased approximately $158 million due to improvements in the Engineered Products Division,
primarily related to improved price and product mix of $65 million, increased volume of $59 million and
foreign currency translation of $35 million.
The following table presents our tire unit sales for the periods indicated:
Year Ended December 31,
2005
2004
% Change
(In millions of tires)
Replacement Units
North American Tire (U.S. and Canada) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
71.2
90.8
70.8
88.8
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
162.0
159.6
OE Units
North American Tire (U.S. and Canada) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
30.7
33.7
64.4
31.7
32.0
63.7
Goodyear worldwide tire units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
226.4
223.3
0.5%
2.2%
1.5%
(3.3)%
5.5%
1.1%
1.4%
Worldwide replacement unit sales in 2005 increased from 2004 due primarily to improvements in European
Union Tire. OE unit sales in 2005 increased from 2004 due primarily to improvements in Asia PaciÑc Tire,
Latin American Tire and Eastern Europe Tire.
Cost of Goods Sold
Cost of goods sold (CGS) was $15.8 billion in 2005, an increase of $1.1 billion, or 7% compared to the 2004
period. CGS decreased to 80.0% of sales in 2005 compared to 80.1% in 2004. CGS for our tire segments in
2005 increased due to higher raw material costs of approximately $526 million, higher volume of approxi-
mately $146 million, product mix-related manufacturing cost increases of approximately $141 million and
foreign currency translation of approximately $71 million. Partially oÅsetting these increases were decreased
costs of $37 million from rationalization activities and $42 million of lower other post-employment beneÑt
costs (OPEB). Also included in these costs were $21 million of hurricane related expenses. CGS also
increased by $168 million in the Engineered Products Division primarily related to higher conversion costs of
$33 million, increased raw material costs of $30 million, increased foreign currency translation of $28 million,
higher volume of $26 million and $21 million of mix.
Research and development expenditures are expensed in CGS as incurred and were $365 million in 2005,
compared to $364 million in 2004. Research and development expenditures in 2006 are expected to be
approximately $360 million to $370 million.
11
Selling, Administrative and General Expense
Selling, administrative and general expense (SAG) was $2.9 billion in 2005, an increase of $42 million or 1%
compared to 2004. SAG in 2005 was 14.6% of sales, compared to 15.4% in 2004. The increase in our tire
segments was driven primarily by wage and beneÑts expenses that increased by nearly $46 million, which
included an OPEB savings of $11 million, when compared to 2004. Foreign currency translation, primarily in
Latin American Tire, increased SAG in 2005 by approximately $14 million. In addition, SAG increased by
$16 million due to our acquisition and consolidation of the remaining 50% interest of a Swedish retail
subsidiary during the third quarter of 2004. $10 million of costs related to hurricanes also impacted SAG in
2005. SAG in 2005 included expenses for professional fees associated with the restatement and SEC
investigation as well as costs for Sarbanes-Oxley compliance. These costs decreased $26 million and
$11 million, respectively from 2004 levels. In addition, rationalization activities decreased SAG by $8 million.
Interest Expense
Interest expense increased by $42 million in 2005 from $369 million in 2004, primarily as a result of higher
average interest rates, debt levels and interest penalties. We expect interest expense to increase in 2006
primarily due to higher interest rates.
Other (Income) and Expense
Other (income) and expense was $70 million of expense in 2005, an increase of $47 million compared to
$23 million of expense in 2004. Income from settlements with certain insurance companies related to
environmental insurance coverage decreased $128 million in 2005 from 2004. General and product liability-
discontinued product expense decreased $44 million from 2004 primarily due to $32 million of insurance
settlements received in 2005. 2005 also included greater net losses on asset sales of $32 million, primarily due
to the $73 million loss on the sale of the Farm Tire business in North American Tire. These factors were
partially oÅset by insurance recoveries in 2005 related to Ñre losses experienced in 2004 at company facilities
in Germany, France and Thailand, which reduced expenses by $26 million from 2004. Interest income
increased $25 million in 2005 due to higher average cash balances and higher interest rates, and income from
equity in earnings of aÇliates increased by $3 million in 2005. Expense from Ñnancing fees and Ñnancial
instruments decreased $8 million compared to 2004.
For further information, refer to the Note to the Consolidated Financial Statements No. 3, Other
(Income) and Expense.
Income Taxes
For 2005, we recorded tax expense of $250 million on income before income taxes and cumulative eÅect of
accounting change and minority interest in net income of subsidiaries of $584 million. For 2004, we recorded
tax expense of $208 million on income before income taxes and minority interest in net income of subsidiaries
of $381 million.
The diÅerence between our eÅective tax rate and the U.S. statutory rate was due primarily to our
continuing to maintain a full valuation allowance against our net Federal and state deferred tax assets.
Income tax expense in 2005 and 2004 includes net favorable tax adjustments totaling $27 million and
$60 million, respectively. These adjustments related primarily to the release of certain foreign valuation
allowances for 2005 and primarily for the settlement of prior years' tax liabilities in 2004.
The American Job Creation Act of 2004 (the Act) was signed into law in October 2004 and replaces an
export incentive with a deduction from domestic manufacturing income. As we are both an exporter and a
domestic manufacturer and in a U.S. tax loss position, this change did not have a material impact on our
income tax provision for 2005. It also provided for a special one-time tax deduction of 85% of certain foreign
earnings that were repatriated no later than 2005. We evaluated the eÅects of this provision in light of our
2005 U.S. loss position and determined not to repatriate under the provisions of the Act as it would not provide
a tax beneÑt to us.
12
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax
regulations. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the
extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is
unnecessary, we reverse the liability and recognize a tax beneÑt during the period in which we determine that
the liability is no longer necessary. We also recognize tax beneÑts to the extent that it is probable that our
positions will be sustained when challenged by the taxing authorities. As of December 31, 2005, we had not
recognized tax beneÑts of approximately $157 million ($118 million net of minority interest in net income of
subsidiaries) relating to the reorganization of certain legal entities in 2001, which is the subject of a tax
examination that could be settled in 2006. Pursuant to the reorganization, our tax payments have been reduced
by approximately $67 million through December 31, 2005. Should the ultimate outcome be unfavorable, we
would be required to make a cash payment, with interest, for all tax beneÑts claimed as of that date.
For further information, refer to the Note to the Consolidated Financial Statements No. 13, Income
Taxes.
Rationalization Activity
To maintain global competitiveness, we have implemented rationalization actions over the past several years
for the purpose of reducing excess capacity, eliminating redundancies and reducing costs. We recorded net
rationalization costs of $11 million in 2005 and $56 million in 2004.
2005
Rationalization charges in 2005 consisted of manufacturing associate reductions, retail store reductions,
IT associate reductions, and a sales function reorganization in European Union Tire; manufacturing and
administrative associate reductions in Eastern Europe Tire; sales, marketing, and research and development
associate reductions in Engineered Products; and manufacturing and corporate support group associate
reductions in North American Tire.
For 2005, $11 million of net charges were recorded, which included $29 million of new rationalization
charges. The charges were partially oÅset by $18 million of reversals of rationalization charges no longer
needed for their originally-intended purposes. The $18 million of reversals consisted of $11 million of
associate-related costs for plans initiated in 2004 and 2003, and $7 million primarily for non-cancelable leases
that were exited during the Ñrst quarter related to plans initiated in 2001 and earlier. The $29 million of new
charges primarily represented associate-related costs and consist of $26 million for plans initiated in 2005 and
$3 million for plans initiated in 2004 and 2003. Approximately 900 associates will be released under the
programs initiated in 2005, of which approximately 425 were released by December 31, 2005.
In 2005, $35 million was incurred primarily for associate severance payments, $1 million for cash pension
settlement beneÑt costs, $1 million for non-cash pension and postretirement special termination beneÑt costs,
and $8 million was incurred primarily for non-cancelable lease costs.
The accrual balance of $34 million at December 31, 2005 includes approximately $10 million related to
long-term non-cancelable lease costs and approximately $24 million of employee severance and other costs
that are expected to be substantially utilized within the next twelve months.
2004
2004 rationalization activities consisted primarily of warehouse, manufacturing and sales and marketing
associate reductions in Engineered Products, a farm tire manufacturing consolidation in European Union Tire,
administrative associate reductions in North American Tire, European Union Tire and corporate functional
groups, and manufacturing sales and research and development associate reductions in North American Tire.
In Ñscal year 2004, net charges were recorded totaling $56 million. The net charges included reversals of
$39 million related to reserves from rationalization actions no longer needed for their originally-intended
purpose, and new charges of $95 million. Included in the $95 million of new charges was $77 million for plans
initiated in 2004. Approximately 1,165 associates will be released under programs initiated in 2004, of which
13
approximately 1,085 have been released to date (445 in 2005 and 640 in 2004). The costs of the 2004 actions
consisted of $40 million related to future cash outÖows, primarily for associate severance costs, including
$32 million in non-cash pension curtailments and postretirement beneÑt costs and $5 million of non-
cancelable lease costs and other exit costs. Costs in 2004 also included $16 million related to plans initiated in
2003, consisting of $14 million for non-cancelable lease costs and other exit costs and $2 million of associate
severance costs. The reversals are primarily the result of lower than initially estimated associate severance
costs of $35 million and lower leasehold and other exit costs of $4 million. Of the $35 million of associate
severance cost reversals, $12 million related to previously-approved plans in Engineered Products that were
reorganized into the 2004 warehouse, manufacturing, and sales and marketing associate reductions.
General
In 2006, we estimate savings of approximately $39 million (approximately $25 million in CGS and
approximately $14 million in SAG) for plans initiated in 2005. The savings realized in 2005 for the 2005 plans
totaled approximately $4 million. We estimate that CGS and SAG were reduced in 2005 by approximately
$19 million and $26 million, respectively, as a result of the implementation of the 2004 plans. 2005 savings
related to 2004 rationalization activities did not achieve expected levels primarily due to plan changes and
implementation delays.
For further information, refer to the Note to the Consolidated Financial Statements No. 2, Costs
Associated with Rationalization Programs.
Cumulative EÅect of Accounting Change
We adopted FASB Interpretation No. 47, ""Accounting for Conditional Asset Retirement Obligations''
(FIN 47) an interpretation of FASB Statement No. 143, ""Accounting for Asset Retirement Obligations''
(SFAS 143) on December 31, 2005. FIN 47 requires that the fair value of a liability for an asset retirement
obligation (ARO) be recognized in the period in which it is incurred and the settlement date is estimable, and
is capitalized as part of the carrying amount of the related tangible long-lived asset. Our AROs are primarily
associated with the cost of removal and disposal of asbestos.
Upon adoption of FIN 47, on December 31, 2005, we recognized a non-cash cumulative eÅect charge of
approximately $11 million, net of taxes and minority interest of $3 million.
2004 compared to 2003
Net Sales
Net sales in 2004 were $18.4 billion, an increase of $3.3 billion compared to 2003. Net income of $115 million,
or $0.63 per share, was recorded in 2004. A net loss of $807 million, or $4.61 per share, was recorded in 2003.
The 2004 net sales increase was primarily related to the consolidation of two aÇliates deemed to be variable
interest entities, SPT and Tire & Wheels Assemblies (T&WA), in January 2004. The consolidation of these
businesses increased net sales in 2004 by approximately $1.2 billion. Additionally, in our tire segments
improved price and product mix improvements, primarily in North American Tire, increased 2004 net sales by
approximately $762 million. Higher unit volume in North American Tire, Latin American Tire, Eastern
Europe Tire and European Union Tire had a favorable impact on 2004 net sales of approximately
$412 million. Currency translation, mainly in Europe, favorably aÅected 2004 net sales by approximately
$507 million. Sales also increased approximately $267 million due to improvements in the Engineered
Products Division, primarily related to improved volume of $194 million, price and product mix of $37 million
and currency translation of approximately $35 million.
14
The following table presents our tire unit sales for the periods indicated:
(In millions of tires)
Replacement Units
North American Tire (U.S. and Canada) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
2004
2003
% Change
70.8
88.8
68.6
82.0
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
159.6
150.6
OE Units
North American Tire (U.S. and Canada) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
31.7
32.0
63.7
32.6
30.3
62.9
Goodyear worldwide tire units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
223.3
213.5
3.2%
8.3%
6.0%
(2.6)%
5.4%
1.2%
4.6%
Worldwide replacement unit sales in 2004 increased from 2003, due primarily to the consolidation of SPT and
improvement in North American Tire, Latin American Tire and Eastern Europe Tire. OE unit sales in 2004
increased from 2003 due primarily to the consolidation of SPT and improvement in Eastern Europe Tire,
Latin American Tire and European Union Tire.
Cost of Goods Sold
Cost of goods sold (CGS) was $14.7 billion in 2004, an increase of $2.2 billion compared to 2003. CGS was
80.1% of sales in 2004, compared to 82.7% in 2003. CGS in 2004 increased by approximately $1.0 billion due
to the previously mentioned consolidation of SPT and T&WA in accordance with FIN 46R. CGS for our tire
segments in 2004 increased by approximately $310 million in 2004 due to higher volume and approximately
$382 million due to currency translation, primarily in Europe. Manufacturing costs related to changes in
product mix increased 2004 CGS by approximately $175 million. In addition, 2004 raw material costs
increased by approximately $268 million, although conversion costs were Öat. Savings from rationalization
programs totaling approximately $107 million favorably aÅected CGS in 2004. CGS in 2004 also includes a
fourth quarter beneÑt of approximately $23 million resulting from a settlement with certain suppliers of
various raw materials. CGS also increased $183 million in the Engineered Products Division primarily related
to higher volume of $119 million and translation of $27 million.
Research and development expenditures were $364 million in 2004, compared to $339 million in 2003.
Selling, Administrative and General Expense
Selling, administrative and general expense (SAG) was $2.8 billion in 2004, an increase of $0.5 billion
compared to 2003. SAG in 2004 was 15.4% of sales, compared to 15.7% in 2003. SAG increased by
approximately $200 million in 2004 due to the previously mentioned consolidation of SPT and T&WA in
accordance with FIN 46R. SAG in 2004 included expenses of approximately $30 million for professional fees
associated with the restatement and SEC investigation, and approximately $25 million for Sarbanes-Oxley
compliance. Currency translation, in our tire segments, primarily in Europe, increased SAG in 2004 by
approximately $98 million. Advertising expenses were approximately $46 million higher due in part to the
launch of the Assurance tire in North America, and wage and beneÑt costs rose by approximately $46 million.
SAG in 2004 beneÑted from approximately $28 million in savings from rationalization programs.
Interest Expense
Interest expense in 2004 was $369 million, an increase of $73 million compared to $296 million in 2003.
Interest expense increased in 2004 from 2003 due to higher average debt levels, higher average interest rates
and the April 1, 2003 restructuring and reÑnancing of our credit facilities.
15
Other (Income) and Expense
Other (income) and expense was $23 million of expense in 2004, a decrease of $294 million compared to
$317 million of expense in 2003. The decrease in expense was primarily due to settlements with certain
insurance companies related to environmental insurance coverage which provided additional income of
$157 million in 2004. General and product liability-discontinued product net expense in 2004 related to
Entran II decreased $138 million and net expense from asbestos claims increased by $53 million. Expense
from insurance Ñre deductible in 2004 was $12 million related to Ñres in 2004 at company facilities in
Germany, France and Thailand. Net loss on asset sales decreased $21 million in 2004, primarily related to a
loss of $18 million on the sale of 20,833,000 shares of common stock of Sumitomo Rubber Industries, Ltd. in
2003. Equity in earnings of aÇliates increased $23 million in 2004, primarily due to improved results at
Rubbernetwork.com and the consolidation of SPT. Our share of losses at SPT was included in 2003 in Equity
in earnings of aÇliates.
Income Taxes
For 2004, we recorded tax expense of $208 million on income before income taxes and minority interest in net
income of subsidiaries of $381 million. For 2003, we recorded tax expense of $117 million on a loss before
income taxes and minority interest in net income of subsidiaries of $657 million.
The diÅerence between our eÅective tax rate and the U.S. statutory rate was due primarily to our
continuing to maintain a full valuation allowance against our net U.S. Federal and state deferred tax assets.
Income tax expense in 2004 includes net favorable tax adjustments totaling $60 million. These
adjustments related primarily to the settlement of prior years' tax liabilities.
Rationalization Activity
To maintain global competitiveness, we have implemented rationalization actions over the past several years
for the purpose of reducing excess capacity, eliminating redundancies and reducing costs. We recorded net
rationalization costs of $56 million in 2004 and $291 million in 2003.
2004
2004 rationalization activities consisted primarily of warehouse, manufacturing and sales and marketing
associate reductions in Engineered Products, a farm tire manufacturing consolidation in European Union Tire,
administrative associate reductions in North American Tire, European Union Tire and corporate functional
groups, and manufacturing, sales and research and development associate reductions in North American Tire.
In Ñscal year 2004, net charges were recorded totaling $56 million. The net charges included reversals of
$39 million related to reserves from rationalization actions no longer needed for their originally-intended
purpose, and new charges of $95 million. Included in the $95 million of new charges were $77 million for plans
initiated in 2004. Approximately 1,165 associates will be released under programs initiated in 2004, of which
approximately 1,085 associates have been released to date (445 in 2005 and 640 in 2004). The costs of the
2004 actions consisted of $40 million related to future cash outÖows, primarily for associate severance costs,
including $32 million in non-cash pension curtailments and postretirement beneÑt costs and $5 million of non-
cancelable lease costs and other exit costs. Costs in 2004 also included $16 million related to plans initiated in
2003, consisting of $14 million for non-cancelable lease costs and other exit costs and $2 million of associate
severance costs. The reversals are primarily the result of lower than initially estimated associate severance
costs of $35 million and lower leasehold and other exit costs of $4 million. Of the $35 million of associate
severance cost reversals, $12 million related to previously-approved plans in Engineered Products that were
reorganized into the 2004 warehouse, manufacturing, and sales and marketing associate reductions.
2003
In 2003, net charges were recorded totaling $291 million. The net charges included reversals of $16 million
related to reserves from rationalization actions no longer needed for their originally intended purpose, and new
16
charges of $307 million. The 2003 rationalization actions consisted of manufacturing, research and develop-
ment, administrative and retail consolidations in North America, Europe and Latin America. Of the
$307 million of new charges, $175 million related to future cash outÖows, primarily associate severance costs,
and $132 million related primarily to non-cash special termination beneÑts and pension and retiree beneÑt
curtailments. Approximately 4,300 associates have been released under the programs initiated in 2003, of
which approximately 100 were exited in 2005, approximately 1,500 were exited during 2004 and 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, favorable sublease contract signings in the European Union of
approximately $3 million and lower contract termination costs in the United States of approximately
$1 million.
As part of the 2003 rationalization program, we closed our Huntsville, Alabama tire facility in the fourth
quarter of 2003. Of the $307 million of new rationalization charges in 2003, approximately $138 million
related to the Huntsville closure and were primarily for associate-related costs, including severance, special
termination beneÑts and pension and retiree beneÑt curtailments. The Huntsville closure also resulted in
charges to CGS of approximately $35 million for asset impairments and $85 million for accelerated
depreciation and the write-oÅ of spare parts. In addition, 2003 CGS included charges totaling approximately
$8 million to write-oÅ construction in progress related to the research and development rationalization plan,
and approximately $5 million for accelerated depreciation on equipment taken out of service at European
Union Tire's facility in Wolverhampton, England.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The FASB has issued Statement of Financial Accounting Standards No. 151, ""Inventory Costs Ì an
amendment of ARB No. 43, Chapter 4'' (SFAS 151). The provisions of SFAS 151 are intended to eliminate
narrow diÅerences between the existing accounting standards of the FASB and the International Accounting
Standards Board (IASB) related to inventory costs, in particular, the treatment of abnormal idle facility
expense, freight, handling costs and spoilage. SFAS 151 requires that these costs be recognized as current
period charges regardless of the extent to which they are considered abnormal. The provisions of SFAS 151
are eÅective for inventory costs incurred during Ñscal years beginning after June 15, 2005. We early adopted
SFAS 151 in 2005. The adoption of SFAS 151 did not have a signiÑcant impact on our results of operations or
Ñnancial position.
The FASB has issued Statement of Financial Accounting Standards No. 123 (revised 2004), ""Share-
Based Payment'' (SFAS 123R) which replaced SFAS 123 and superseded Accounting Principles Board
Opinion No. 25, ""Accounting for Stock Issued to Employees'' (APB 25). Under the provisions of
SFAS 123R, companies are required to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award (with limited exception). That
cost will be recognized over the period during which an employee is required to provide service in exchange for
the award, usually the vesting period. On April 14, 2005, the SEC approved a delay to the eÅective date of
SFAS 123R. Under the new SEC rule, SFAS 123R is eÅective for annual periods that begin after June 15,
2005. SFAS 123R applies to all awards granted, modiÑed, repurchased or cancelled by us after December 31,
2005 and to unvested awards at the date of adoption. We will adopt SFAS 123R in the Ñrst quarter of 2006. In
2006, we will recognize approximately $15 million in expense for stock options, which were previously not
expensed under APB 25.
The FASB issued FSP FAS 123R-2, ""Practical Accommodation to the Application of Grant Date as
DeÑned in FAS 123R'' (FSP 123R-2) in October 2005. FSP 123R-2 provides guidance on the application of
grant date as deÑned in SFAS No. 123R. In accordance with this standard, a grant date of an award exists if
a) the award is a unilateral grant and b) the key terms and conditions of the award are expected to be
communicated to an individual recipient within a relatively short time period from the date of approval. We
will adopt this standard when we adopt SFAS 123R, and it is not expected to have a material impact on our
consolidated Ñnancial position, results of operations or cash Öows.
17
In May 2005, the FASB issued SFAS No. 154, ""Accounting Changes and Error Corrections''
(SFAS 154). SFAS 154 is a replacement of Accounting Principles Board No. 20, ""Accounting Changes'' and
FASB Statement No. 3 ""Reporting Accounting Changes in Interim Financial Statements.'' SFAS 154
provides guidance on the accounting for and reporting of accounting changes and error corrections. It
establishes retrospective application as the required method for reporting a change in accounting principle.
SFAS 154 provides guidance for determining whether retrospective application of a change in accounting
principle is impracticable and for reporting a change when retrospective application is impracticable. The
reporting of a correction of an error by restating previously issued Ñnancial statements is also addressed by
SFAS 154. SFAS 154 is eÅective for accounting changes and corrections of errors made in Ñscal years
beginning after December 31, 2005. We will adopt this pronouncement beginning in Ñscal year 2006.
In June 2005, the FASB staÅ issued FASB StaÅ Position 143-1 ""Accounting for Electronic Equipment
Waste Obligations'' (FSP 143-1) to address the accounting for obligations associated with the Directive
2002/96/EC on Waste Electrical and Electronic Equipment (the ""Directive'') adopted by the European
Union (EU). The Directive eÅectively obligates a commercial user to incur costs associated with the
retirement of a speciÑed asset that qualiÑes as historical waste equipment. The commercial user should apply
the provisions of SFAS 143 and FIN 47. FSP 143-1 shall be applied the later of the Ñrst reporting period
ending after June 8, 2005 or the date of the adoption of the law by the applicable EU-member country. We
adopted the FSP at certain of our European operations where applicable legislation was adopted. The impact
of the adoption on the consolidated Ñnancial statements was not signiÑcant.
CRITICAL ACCOUNTING POLICIES
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 the Ñnancial statements. Actual results could diÅer from those estimates.
SigniÑcant estimates include:
‚ general and product liability and other litigation,
‚ workers' compensation,
‚ recoverability of goodwill and other intangible assets,
‚ deferred tax asset valuation allowance and uncertain income tax positions, and
‚ pension and other postretirement beneÑts.
On an ongoing basis, management reviews its estimates, 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. General and product liability and other recorded
litigation liabilities are recorded based on management's analysis that a loss arising from these matters is
probable. If the loss can be reasonably estimated, we record the amount of the estimated loss. If the loss is
estimated using a range and no point within the range is more probable than another, we record the minimum
amount in the range. As additional information becomes available, any potential liability related to these
matters is assessed and the estimates are revised, if necessary. Loss ranges are based upon the speciÑc facts of
each claim or class of claim and were determined after review by counsel. Court rulings on our cases or similar
cases could impact our assessment of the probability and estimate of our loss, which could have an impact on
our reported results of operations, Ñnancial position and liquidity. We record insurance recovery receivables
related to our litigation claims when it is probable we will receive reimbursement from the insurer.
SpeciÑcally, we are a defendant in numerous lawsuits alleging various asbestos-related personal injuries
purported to result from alleged exposure to asbestos 1) in certain rubber encapsulated products or aircraft
braking systems manufactured by us in the past, or 2) in certain of our facilities. Typically, these lawsuits have
been brought against multiple defendants in state and Federal courts.
We engage an independent asbestos valuation Ñrm to review our existing reserves for pending claims,
provide a reasonable estimate of the liability associated with unasserted asbestos claims, and determine our
receivables from probable insurance recoveries.
18
A signiÑcant assumption in our estimated liability is that it represents our estimated liability through
2009, 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 be reasonably estimated, and
that increase could be signiÑcant. We had recorded liabilities for both asserted and unasserted claims,
inclusive of defense costs, totaling $104 million at December 31, 2005 and $119 million at December 31, 2004.
The portion of the liability associated with unasserted asbestos claims and related defense costs was
$31 million at December 31, 2005 and $38 million at December 31, 2004. At December 31, 2005, our liability
with respect to asserted claims and related defense costs was $73 million, compared to $81 million at
December 31, 2004.
We maintain primary insurance coverage under coverage-in-place agreements as well as excess liability
insurance with respect to asbestos liabilities. We record a receivable with respect to such policies when we
determine that recovery is probable and we can reasonably estimate the amount of a particular recovery. This
determination is based on consultation with our outside legal counsel and giving consideration to relevant
factors, including the ongoing legal proceedings with certain of our excess coverage insurance carriers, their
Ñnancial viability, their legal obligations and other pertinent facts.
The valuation Ñrm also assisted us in valuing receivables recorded for probable insurance recoveries.
Based upon the model employed by the valuation Ñrm, as of December 31, 2005, (i) we had recorded a
receivable related to asbestos claims of $53 million, compared to $108 million at December 31, 2004, and
(ii) we expect that approximately 50% of asbestos claim related losses would be recoverable up to our
accessible policy limits. The receivable recorded consists of an amount we expect to collect under coverage-in-
place agreements with certain primary carriers as well as an amount we believe is probable of recovery from
certain of our excess coverage insurance carriers. Of this amount, $9 million was included in Current Assets as
part of Accounts and Notes receivable at December 31, 2005 and 2004.
In addition to our asbestos claims, we are a defendant in various lawsuits related to our Entran II rubber
hose product. During 2004, we entered into a settlement agreement to address a substantial portion of our
Entran II liabilities. The claims associated with the plaintiÅs that opted not to participate in the settlement
will be evaluated in a manner consistent with our other litigation claims. We had recorded liabilities related to
Entran II claims totaling $248 million at December 31, 2005 and $307 million at December 31, 2004.
Workers' Compensation. We recorded liabilities, on a discounted basis, totaling $250 million and $231 mil-
lion for anticipated costs related to workers' compensation at December 31, 2005 and 2004, 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 our assessment of potential liability using an analysis
of available information with respect to pending claims, historical experience, and current cost trends. The
amount of our ultimate liability in respect of these matters may diÅer from these estimates. We periodically
update our loss development factors based on actuarial analyses. At December 31, 2005, the liability was
discounted using the risk-free rate of return.
For further information on general and product liability and other litigation, environmental matters and
workers' compensation, refer to the Note to the Consolidated Financial Statements No. 17, Commitments and
Contingencies.
Recovery of Goodwill and Other Intangible Assets. Generally accepted accounting principles do not permit
goodwill or other intangible assets with indeÑnite lives to be amortized. Rather, these assets must be tested
annually for impairment. The impairment testing would have to be performed more frequently than on an
annual basis as a result of the occurrence of a potential indicator of impairment.
For purposes of our annual impairment testing, which is conducted during the third quarter each year, we
determine the estimated fair values of our reporting units using a valuation methodology based upon an
EBITDA multiple using comparable companies in the global automotive industry sector. The EBITDA
multiple is adjusted if necessary to reÖect local market conditions and recent transactions. The EBITDA of
the reporting units are adjusted to exclude certain non-recurring or unusual items and corporate charges.
19
EBITDA is based upon a combination of historical and forecasted results. SigniÑcant decreases in EBITDA in
future periods could be an indication of a potential impairment. Additionally, valuation multiples in the global
automotive industry sector would have to decline in excess of 50% to indicate a potential goodwill impairment.
Goodwill totaled $637 million and other intangible assets with indeÑnite lives totaled $110 million at
December 31, 2005. We completed our 2005 annual valuation during the third quarter of 2005. The valuation
indicated that there was no impairment of goodwill or other intangible assets with indeÑnite lives.
Deferred Tax Asset Valuation Allowance and Uncertain Income Tax Positions. At December 31, 2005 and
2004, we had valuation allowances aggregating $2 billion against all of our net Federal and state and some of
our foreign net deferred tax assets.
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. Our losses in
the U.S., and certain foreign locations in recent periods represented suÇcient negative evidence to require a
full valuation allowance against our net Federal, state and certain of our foreign deferred tax assets under
SFAS 109. We intend to maintain a valuation allowance against our net deferred tax assets until suÇcient
positive evidence exists to support realization of such assets.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax
regulations. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the
extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is
unnecessary, we reverse the liability and recognize a tax beneÑt during the period in which we determine that
the liability is no longer necessary. We also recognize tax beneÑts to the extent that it is probable that our
positions will be sustained when challenged by the taxing authorities. To the extent we prevail in matters for
which liabilities have been established, or are required to pay amounts in excess of our liabilities, our eÅective
tax rate in a given period could be materially aÅected. An unfavorable tax settlement would require use of our
cash and result in an increase in our eÅective tax rate in the year of resolution. A favorable tax settlement
would be recognized as a reduction in our eÅective tax rate in the year of resolution.
Pensions and Other Postretirement BeneÑts. Our recorded liability for pensions and postretirement beneÑts
other than pensions is based on a number of assumptions, including:
‚ life expectancies,
‚ retirement rates,
‚ discount rates,
‚ long term rates of return on plan assets,
‚ future compensation levels,
‚ future health care costs, and
‚ maximum company-covered beneÑt costs.
Certain of these assumptions are determined with the assistance of outside actuaries. Assumptions about
life expectancies, retirement rates, future compensation levels and future health care costs are based on past
experience and anticipated future trends, including an assumption about inÖation. The discount rate for our
U.S. plans is derived from a portfolio of corporate bonds from issuers rated AA- or higher by Standard &
Poor's as of December 31 and is reviewed annually. The total cash Öows provided by the portfolio are similar
to the timing of our expected beneÑt payment cash Öows. The long term rate of return on plan assets is based
on the compound annualized return of our U.S. pension fund over periods of 15 years or more, asset class
return expectations and long term inÖation. These assumptions are regularly reviewed and revised when
appropriate, and changes in one or more of them could aÅect the amount of our recorded net expenses for
these beneÑts. Other assumptions involving demographic factors such as retirement age, mortality and
turnover are evaluated periodically and are updated to reÖect our experience and expectations for the future. If
the actual experience diÅers from expectations, our Ñnancial position, results of operations and liquidity in
future periods could be aÅected.
20
The discount rate used in determining the total liability for our U.S. pension and postretirement plans was
5.50% at December 31, 2005, compared to 5.75% at December 31, 2004 and 6.25% for December 31, 2003.
The decrease in the rate was due primarily to lower interest rates on long term highly rated corporate bonds.
As a result, interest cost included in our net periodic pension cost decreased to $294 million in 2005, compared
to $300 million in 2004 and $295 million in 2003. Interest cost included in our worldwide net periodic
postretirement beneÑt cost was $149 million in 2005, compared to $188 million in 2004 and $174 million in
2003. Interest cost was lower in 2005 as a result of the reduction in the postretirement liability due to
Medicare Part D. The weighted average remaining service period for employees covered by our U.S. plans is
approximately 13 years.
The following table presents the sensitivity of our U.S. projected pension beneÑt obligation, accumulated
other postretirement obligation, shareholders' equity, and 2006 expense to the indicated increase/decrease in
key assumptions:
°/¿ Change at December 31, 2005
Change
PBO/ABO
(Dollars in millions)
Pensions:
Assumption:
Discount rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ °/¿ 0.5% $ 340
N/A
Actual return on assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ °/¿ 1.0%
N/A
Estimated return on assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ °/¿ 1.0%
Postretirement BeneÑts:
Assumption:
Discount rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ °/¿ 0.5% $ 103
11
Health care cost trends Ì total cost ÏÏÏÏÏÏÏÏÏÏÏÏ °/¿ 1.0%
Equity
2006 Expense
$ 340
30
N/A
N/A
N/A
$30
5
34
$ 2
1
The continuous decline in U.S. discount rates, have largely contributed to an unrecognized actuarial loss of
$1,646 million in our U.S. pension plans as of December 31, 2005. For purposes of determining 2005 U.S. net
periodic pension expense, our funded status was such that we recognized $86 million of the unrecognized
actuarial loss in 2005. We will recognize approximately $95 million of unrecognized actuarial losses in 2006.
Given no change to the assumptions at our December 31, 2005 measurement, actuarial loss recognition will
remain at an amount near that to be recognized in 2006 over the next few years before it begins to gradually
decline.
The actual rate of return on our U.S. pension fund was 8.5%, 12.1% and 23.5% in 2005, 2004 and 2003,
respectively, as compared to the expected rate of return of 8.5%.
This decline in U.S. discount rates also produced a large portion of the unrecognized actuarial loss of
$355 million in our worldwide postretirement plans as of December 31, 2005. The unrecognized actuarial loss
decreased from 2004 primarily due to a gain from the recognition of Medicare Part D. For purposes of
determining 2005 worldwide net periodic postretirement cost, we recognized $10 million of the unrecognized
actuarial loss in 2005. We will recognize approximately $13 million of unrecognized actuarial losses in 2006. If
our future experience is consistent with our assumptions as of December 31, 2005, actuarial loss recognition
will gradually decline from the 2006 levels.
For further information on pensions and postretirement beneÑts, refer to the Note to the Consolidated
Financial Statements No. 12, Pensions, Other Postretirement BeneÑts and Savings Plans.
RESULTS OF OPERATIONS Ì SEGMENT INFORMATION
Segment information reÖects our strategic business units (SBUs), which are organized to meet customer
requirements and global competition. The Tire business is managed on a regional basis. Engineered Products
is managed on a global basis.
21
EÅective January 1, 2005 our former Chemical Products Segment was integrated into North American
Tire. Intercompany sales from Chemical Products to other segments are no longer reÖected in our segment
sales. In addition, segment operating income from intercompany sales from Chemical Products to other
segments is no longer reÖected in our total segment operating income.
Results of operations are measured based on net sales to unaÇliated customers and segment operating
income. Segment operating income includes transfers to other SBUs. Segment operating income is computed
as follows: Net Sales less CGS (excluding accelerated depreciation charges and asset impairment charges)
and SAG (including certain allocated corporate administrative expenses). Segment operating income also
includes equity in (earnings) losses of most unconsolidated aÇliates. Equity in (earnings) losses of certain
unconsolidated aÇliates, including SPT (in 2003) and Rubbernetwork.com, are not included in segment
operating income. Segment operating income does not include rationalization charges (credits) and certain
other items. Segment assets include those assets under the management of the SBU.
Total segment operating income was nearly $1.2 billion in 2005, $946 million in 2004 and $419 million in
2003. Total segment operating margin (segment operating income divided by segment sales) in 2005 was
5.9%, compared to 5.2% in 2004 and 2.8% in 2003.
Management believes that total segment operating income is useful because it represents the aggregate
value of income created by our 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 determined 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 Consolidated Financial
Statements No. 15, Business Segments, for further information and for a reconciliation of total segment
operating income to Income (Loss) before Income Taxes and Cumulative EÅect of Accounting Change.
North American Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
2004
2003
2005
101.9
$9,091
167
1.8%
102.5
$8,569
74
0.9%
101.2
$7,279
(103)
(1.4)%
2005 Compared to 2004
North American Tire unit sales in 2005 decreased 0.6 million units or 0.6% from 2004. Replacement unit sales
in 2005 increased 0.4 million units or 0.5% from 2004. OE volume in 2005 decreased 1.0 million units or 3.3%
from 2004 due primarily to a slowdown in the automotive industry that resulted in lower levels of vehicle
production and our selective Ñtment strategy in the consumer OE business.
Net sales in 2005 increased $522 million or 6% from 2004. Net sales in 2005 increased approximately
$353 million due primarily to price increases to oÅset higher raw material costs and improved mix resulting
from our strategy to focus on the higher value consumer replacement market and greater selectivity in the
consumer OE market. Also, positively impacting sales in the period was a growth in other tire related
businesses including T&WA, our consolidated aÇliate, of approximately $167 million, as well as translation of
$33 million. The improvements were oÅset by a decrease in volume of approximately $31 million.
Operating income in 2005 increased $93 million or 126% compared to 2004. The improvement was due to
our tire business' improved price and product mix of approximately $244 million, driven by factors described
above, lower conversion costs of $85 million, primarily related to the implementation of cost reduction
initiatives resulting in productivity improvements, lower other post-employment beneÑt costs (OPEB) costs
and rationalization activities, and lower segment SAG costs of approximately $8 million. The decrease is SAG
costs was primarily related to lower OPEB and lower general and product liability expenses, partially oÅset by
higher wage and beneÑt costs. Also positively impacting our operating income was an approximate $46 million
22
improvement in the earnings of our retail, external chemicals and other tire related businesses. The 2005
period was unfavorably impacted by increased raw material costs of approximately $283 million in our tire
business and $25 million of costs associated with the hurricanes.
In connection with our master contract with the USW, employees represented by the USW did not
receive service credit under the U.S. hourly pension plan for a two year period ended October 2005. As a
result, pension expense was reduced in 2005 and 2004 by approximately $43 million and $44 million,
respectively.
Operating income did not include net rationalization charges (credits) totaling $(8) million in 2005 and
$9 million in 2004. In addition, operating income did not include losses on asset sales of $43 million in 2005
and $13 million in 2004.
2004 Compared to 2003
North American Tire unit sales in 2004 increased 1.3 million units or 1.3% from 2003. Replacement unit sales
in 2004 increased 2.2 million units or 3.2% from 2003. OE volume in 2004 decreased 0.9 million units or 2.6%
from 2003. Replacement unit volume in 2004 increased from 2003 due primarily to higher sales of Goodyear
brand tires. OE unit sales in 2004 decreased from 2003 due primarily to a slowdown in the automotive industry
that resulted in lower levels of vehicle production and our selective Ñtment strategy in the consumer
OE business.
Net sales in 2004 increased $1.3 billion or 18% from 2003. Net sales in 2004 increased $524 million from
2003 due to the consolidation of T&WA in January 2004 in accordance with FIN 46. Sales were also
favorably aÅected by approximately $312 million resulting from favorable price and product mix, due
primarily to strong sales of Goodyear brand consumer tires and commercial tires. In addition, net sales
beneÑted by approximately $271 million due to increased volume, mainly in the commercial OE and
consumer replacement and retail markets. External chemical sales increased approximately $189 million
primarily from increased price and improved volume.
Operating income in 2004 increased $177 million or 172% from 2003. Operating income in 2004 rose
from 2003 due primarily to improvements in price and product mix of approximately $201 million, primarily in
the consumer and commercial replacement markets. In addition, operating income beneÑted by approximately
$65 million from increased volume, primarily in the consumer replacement, commercial OE and retail
markets. Operating income was favorably aÅected by savings from rationalization programs totaling approxi-
mately $78 million. Operating income in 2004 was unfavorably impacted by increased raw material costs of
approximately $99 million and higher transportation costs of $32 million. SAG in 2004 was approximately
$58 million higher than in 2003, due in part to increased advertising costs of approximately $25 million and
increased compensation and beneÑts costs of approximately $12 million. External chemical operating income
improved approximately $14 million due to improved price and product mix and higher volume.
Operating income did not include net rationalization charges totaling $9 million in 2004 and $192 million
in 2003. In addition, operating income did not include losses on asset sales of $13 million in 2004 and
$4 million in 2003.
European Union Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
23
Year Ended December 31,
2004
2003
2005
64.3
$4,676
317
6.8%
62.8
$4,476
253
5.7%
62.3
$3,922
130
3.3%
2005 Compared to 2004
European Union Tire Segment unit sales in 2005 increased 1.5 million units or 2.4% from 2004. Replacement
unit sales increased 2.1 million units or 5.0% due primarily to share gains in the consumer market. OE volume
decreased 0.6 million units or 3.4% due to overall softness in markets in the region.
Net sales in 2005 increased $200 million or 4% from 2004. The increase was due primarily to price and
product mix of approximately $214 million, driven by price increases to oÅset higher raw material costs and a
favorable mix toward the consumer replacement and commercial markets. Also contributing to the sales
increase was a volume increase of approximately $95 million, largely due to increases in the consumer
replacement market. This improvement was partially oÅset by the lower sales in other tire related businesses
of $62 million, primarily due to the closure and sale of retail locations, and unfavorable currency translation
totaling approximately $43 million.
Operating income in 2005 increased $64 million or 25% compared to 2004 due to improvements in price
and product mix of approximately $145 million driven by price increases to oÅset higher raw material costs
and the continued shift towards high performance, ultra-high performance and commercial tires. Also
positively impacting operating income was higher volume of $23 million. Operating income was adversely
aÅected by higher raw material costs of approximately $60 million, higher pension costs in the
United Kingdom of $23 million, primarily due to a lower discount rate, and higher SAG expenses of
approximately $18 million, primarily related to higher distribution and advertising expenses.
Operating income did not include net rationalization charges totaling $8 million in 2005 and $23 million
in 2004. In addition, operating income did not include gains on asset sales of $5 million in 2005 and $6 million
in 2004.
European Union Tire's results are highly dependent upon the German market, which accounted for 38%
of European Union Tire's net sales in 2005. Accordingly, results of operations in Germany will have a
signiÑcant impact on European Union Tire's future performance.
2004 Compared to 2003
European Union Tire unit sales in 2004 increased 0.5 million units or 0.8% from 2003. Replacement unit sales
in 2004 approximated 2003 levels, reÖecting product shortages, especially in the Ñrst half of 2004. OE volume
in 2004 increased 0.5 million units or 2.4% from 2003, due primarily to increased sales of consumer tires and
improved conditions in the commercial market.
Net sales in 2004 increased $554 million or 14% from 2003. Net sales in 2004 increased from 2003 due
primarily to a beneÑt of approximately $382 million from currency translation, mainly from the Euro. Net
sales rose by approximately $130 million due to improved price and product mix, due primarily to price
increases and a shift in mix towards higher priced premium brands. Additionally, higher OE volume increased
2004 net sales by approximately $41 million.
Operating income in 2004 increased $123 million or 95% from 2003. Operating income in 2004 rose from
2003 due primarily to improvements in price and product mix of approximately $135 million. In addition,
higher sales volume beneÑted operating income by approximately $9 million, and higher production and
productivity improvements increased 2004 operating income by approximately $4 million. Savings from
rationalization actions beneÑted operating income by approximately $47 million. Operating income rose by
approximately $13 million from currency translation. Operating income was adversely impacted by higher raw
material costs totaling approximately $42 million. SAG rose by approximately $39 million, due primarily to
higher selling and advertising expenses related to premium brand tires.
Operating income did not include net rationalization charges totaling $23 million in 2004 and $54 million
in 2003. In addition, operating income did not include (gains) losses on asset sales of $(6) million in 2004 and
$1 million in 2003.
24
Eastern Europe, Middle East and Africa Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
2004
2003
2005
19.7
$1,437
198
13.8%
18.9
$1,279
194
15.2%
17.9
$1,073
147
13.7%
2005 Compared to 2004
Eastern Europe, Middle East and Africa Tire unit sales in 2005 increased 0.8 million units or 4.5% from 2004
primarily related to increased OE unit sales of 0.4 million or 13.9% primarily due to growth in the automotive
industry in South Africa. Replacement units sales increased 0.4 million units or 2.4% driven by growth in
emerging markets.
Net sales in 2005 increased by $158 million, or 12% compared to 2004 mainly due to price increases to
recover higher raw material costs and favorable product mix due to continued growth of high performance
tires and premium brands of approximately $60 million, favorable translation of $42 million, increased volume
of approximately $37 million, mainly in emerging markets, as well as increased South African retail sales of
approximately $15 million.
Operating income in 2005 increased by $4 million, or 2% from 2004. Operating income in 2005 was
favorably impacted by price and product mix of approximately $39 million due to factors described above,
improved volume of approximately $16 million primarily in emerging markets, foreign currency translation of
approximately $16 million and improvement in other tire related businesses of $4 million. Negatively
impacting operating income were higher raw material costs of approximately $40 million, higher conversion
costs of approximately $18 million primarily related to production adjustments in certain markets to reduce
inventory levels. Higher SAG costs also negatively impacted operating income by $15 million, primarily due to
increased selling activity in emerging markets.
Operating income did not include net rationalization charges totaling $9 million in 2005 and $4 million in
2004. In addition, operating income did not include losses on asset sales of $1 million in 2005.
2004 Compared to 2003
Eastern Europe, Middle East and Africa Tire unit sales in 2004 increased 1.0 million units or 5.2% from 2003.
Replacement unit sales in 2004 increased 0.6 million units or 4.0% from 2003 due primarily to growth in
emerging markets. OE volume in 2004 increased 0.4 million units or 10.7% from 2003 due primarily to growth
in the automotive industry in Turkey and South Africa.
Net sales in 2004 increased $206 million or 19% from 2003. Net sales in 2004 increased from 2003 due
primarily to a beneÑt of approximately $102 million from currency translation. In addition, net sales rose by
approximately $97 million on improved price and mix. Higher overall volume, mainly due to growth in
emerging markets and improved economic conditions, increased net sales by $41 million. Negative results in
our South African retail business adversely impacted net sales by approximately $32 million.
Operating income in 2004 increased $47 million or 32% from 2003. Operating income in 2004 rose from
2003 due primarily to a beneÑt of approximately $62 million resulting from price increases and a shift in mix
toward high performance tires. Operating income increased by approximately $16 million on higher volume,
and by approximately $11 million from the favorable eÅect of currency translation. Operating income was
adversely impacted by higher raw material and conversion costs totaling approximately $28 million. In
addition, SAG expense was approximately $16 million higher resulting primarily from increased selling
activity in growing and emerging markets.
Operating income did not include net rationalization charges totaling $4 million in 2004.
25
Latin American Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
2004
2003
2005
20.4
$1,466
295
20.1%
19.6
$1,245
251
20.2%
18.7
$1,041
149
14.3%
2005 Compared to 2004
Latin American Tire unit sales in 2005 increased 0.8 million units or 4.5% compared to 2004 primarily due to
an increase in OE volume of 0.8 million units or 18.9%. OE volume increased as a result of strong growth in
Latin American vehicle exports to Europe, Africa and North America. Replacement unit sales remained
relatively Öat, in line with a relatively Öat replacement market in Latin America.
Net sales in 2005 increased $221 million, or 18% compared to 2004. Net sales increased in 2005 due to
the favorable impact of currency translation, mainly in Brazil, of approximately $117 million, favorable price
and product mix of approximately $61 million, and increased volume of approximately $54 million. These
increases were partially oÅset by a reduction in sales of other tire related businesses of $15 million.
Operating income in 2005 increased $44 million, or 18% compared to 2004. Operating income was
favorably impacted by approximately $87 million primarily due to improved price, approximately $66 million
from the favorable impact of currency translation, and $16 million due to increased volumes. Increased raw
material costs of approximately $93 million, higher conversion costs and SAG expenses of approximately
$21 million and $8 million, respectively, due primarily to higher compensation costs, negatively impacted
operating income as compared to 2004. The reduction in sales of other tire related businesses reduced
operating income by approximately $7 million.
Operating income did not include net rationalization credits totaling $2 million in 2004. In addition,
operating income did not include gains on asset sales of $1 million in 2005.
Latin American Tire's results are highly dependent upon the Brazilian market, which accounted for 44%
of Latin American Tire's net sales in 2005. Accordingly, results of operations in Brazil will have a signiÑcant
impact on Latin American Tire's future performance. Moreover, given Latin American Tire's signiÑcant
contribution to our operating income, signiÑcant Öuctuations in their sales, operating income or operating
margins may have disproportionate impact on our consolidated results of operations.
2004 Compared to 2003
Latin American Tire unit sales in 2004 increased 0.9 million units or 5.0% from 2003. Replacement unit sales
in 2004 increased 0.8 million units or 5.3% from 2003 due primarily to improved commercial and consumer
demand. OE volume in 2004 increased 0.1 million units or 3.9% from 2003 reÖecting improved commercial
volume.
Net sales in 2004 increased $204 million or 20% from 2003. Net sales in 2004 increased from 2003 due
primarily to a beneÑt of approximately $134 million from price increases and improved product mix in the
replacement market. Net sales rose by approximately $60 million on higher volume and approximately
$7 million from currency translation.
Operating income in 2004 increased $102 million or 68% from 2003. Operating income in 2004 increased
from 2003 due primarily to a beneÑt of approximately $126 million from improved price and product mix in
the replacement market. Operating income beneÑted by approximately $13 million from higher volume and
$5 million from savings from rationalization programs. Operating income was adversely impacted by higher
raw material and conversion costs totaling approximately $41 million and approximately $2 million from
currency translation. In addition, SAG expense rose by approximately $11 million, due primarily to increased
wages and beneÑts and advertising expenses.
26
Operating income did not include net rationalization charges (credits) totaling $(2) million in 2004 and
$10 million in 2003. In addition, operating income did not include gains on asset sales of $2 million in 2003.
Asia PaciÑc Tire
(In millions)
Tire Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
2004
2005
2003
20.1
$1,423
84
5.9%
19.5
$1,312
60
4.6%
13.4
$ 582
49
8.4%
2005 Compared to 2004
Asia PaciÑc Tire unit sales in 2005 increased 0.6 million units or 2.5% compared to 2004. OE volume
increased 1.2 million units or 20.9% mainly due to improvements in the Chinese OE market. Replacement
units decreased 0.6 million units or 4.0% driven by increased competition with low cost imports.
Net sales in 2005 increased $111 million or 8% from 2004 due to favorable price and product mix of
approximately $49 million, driven by price increases to oÅset higher raw material costs, and to favorable price
in our oÅ-the-road business in response to strong market demand. Also favorably impacting sales was currency
translation of approximately $26 million and volume of approximately $31 million.
Operating income in 2005 increased $24 million or 40% from 2004 due primarily to improved price and
product mix of approximately $60 million, driven by factors described above, non-recurring FIN 46 related
charges of approximately $7 million in 2004, and lower research and development costs of $5 million. Also
positively impacting income for the period was increased volume of approximately $6 million and a $4 million
increase in other tire related businesses. These were oÅset in part by raw material cost increases of $50 million
and higher SAG costs of $8 million due primarily to development of our branded retail and global sourcing
infrastructure in China.
Operating income did not include net rationalization credits totaling $2 million in 2005.
See Note to the Consolidated Financial Statements No. 21, Subsequent Events for a discussion of the
acquisition of the remaining interest in SPT in January 2006.
2004 Compared to 2003
Asia PaciÑc Tire unit sales in 2004 increased 6.1 million units or 45.5% from 2003. Replacement unit sales in
2004 increased 5.4 million units or 60.0% from 2003. OE volume in 2004 increased 0.7 million units or 15.6%
from 2003. Unit sales in 2004 increased by 5.5 million replacement units and 0.8 million OE units due to the
consolidation of SPT, as discussed below. Excluding the impact of SPT, replacement unit volume increased
slightly, and OE volume decreased due primarily to lower consumer volume.
EÅective January 1, 2004, Asia PaciÑc Tire includes the operations of South PaciÑc Tyres, an Australian
Partnership, and South PaciÑc Tyres N.Z. Limited, a New Zealand company (together, ""SPT''), joint
ventures 50% owned by Goodyear and 50% owned by Ansell Ltd. SPT sells Goodyear brand, Dunlop brand
and other house and private brand tires through its chain of retail stores, commercial tire centers and
independent dealers.
Net sales in 2004 increased $730 million or 125% from 2003. Net sales in 2004 increased from 2003 due
primarily to the consolidation of SPT, which beneÑted 2004 sales by $707 million. Net sales also rose by
approximately $32 million due to improved price and product mix, but were adversely impacted by lower
volume, excluding SPT, of $18 million.
Operating income in 2004 increased $11 million or 22% from 2003. Operating income in 2004 increased
from 2003 due primarily to a beneÑt of approximately $25 million from price increases and improved product
27
mix, and a reduction in conversion costs of approximately $4 million. Operating income was adversely
impacted by higher raw material costs totaling approximately $22 million and approximately $3 million from
lower volume. In addition, SAG expenses rose by approximately $6 million. The consolidation of SPT
increased Asia PaciÑc Tire operating income by approximately $12 million in 2004; however, it reduced
operating margin to 4.6% in 2004 from 8.4% in 2003.
Operating income did not include gains on asset sales of $2 million in 2003.
Engineered Products
(In millions)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Margin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
2004
2003
2005
$1,630
103
6.3%
$1,472
114
7.7%
$1,205
47
3.9%
2005 Compared to 2004
Engineered Products sales increased $158 million, or 11% in 2005 compared to 2004 levels due to improved
price and product mix of approximately $65 million, increased volume of approximately $59 million, and
favorable currency translation of approximately $35 million. The growth in net sales was driven by an increase
in Industrial sales of approximately $144 million compared to 2004, primarily due to strong industry demand
from petrochemical and mining customers. Replacement product sales increased by approximately $16 million
compared to 2004 primarily due to increased market penetration. As anticipated, sales of Military products
declined by approximately $13 million compared to 2004.
Operating income in 2005 decreased $11 million, or 10% compared to 2004 due primarily to increased
conversion costs of approximately $33 million, related to the decline in our military business and OE
production shifts to Mexico. Also negatively impacting operating income were increased raw material costs of
approximately $30 million, higher SAG expenses of approximately $13 million due primarily to increased
compensation, consulting expense, and bad debt expense and higher freight costs of approximately $11 million
as a result of higher fuel costs. Partially oÅsetting these higher raw material and conversion costs were price
and product mix improvements of approximately $44 million and increased volume of approximately
$33 million.
Operating income did not include net rationalization charges totaling $4 million in 2005 and $23 million
in 2004. In addition, operating income did not include gains on asset sales of $3 million in 2004.
2004 Compared to 2003
Engineered Products sales increased $267 million or 22% in 2004 from 2003 due to improved volume of
approximately $194 million and improved price and product mix of approximately $37 million. This growth in
revenue was led by strong sales in Military and Industrial products. Net sales also rose by approximately
$35 million due to currency translation.
Operating income in 2004 increased $67 million or 143% from 2003. Increased Military and Industrial
volume contributed approximately $75 million to the improved proÑtability. Operating income also reÖected
savings from rationalization programs of approximately $24 million. SAG was approximately $18 million
higher and conversion costs rose approximately $10 million compared to 2003. Operating income in 2003 was
adversely impacted by charges totaling approximately $19 million related to account reconciliation adjust-
ments in the restatement reported in our 2003 Form 10-K.
Operating income did not include net rationalization charges totaling $23 million in 2004 and $29 million
in 2003. In addition, operating income did not include (gains) losses on asset sales of $(3) million in 2004 and
$6 million in 2003.
28
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2005, we had $2,178 million in cash and cash equivalents as well as $1,677 million of unused
availability under our various credit agreements, compared to $1,968 million and $1,116 million, respectively,
at December 31, 2004. Cash and cash equivalents do not include restricted cash. Restricted cash primarily
consists of Goodyear contributions made related to the settlement of the Entran II litigation and proceeds
received pursuant to insurance settlements. In addition, we will, from time to time, maintain balances on
deposit at various Ñnancial institutions as collateral for borrowings incurred by various subsidiaries, as well as
cash deposited in support of trade agreements and performance bonds. At December 31, 2005, cash balances
totaling $231 million were subject to such restrictions, compared to $152 million at December 31, 2004. The
increase was primarily due to the receipt of insurance settlements subject to restrictions.
Our ability to service our debt depends in part on the results of operations of our subsidiaries and upon the
ability of our subsidiaries to make distributions of cash to various other entities in our consolidated group,
whether in the form of dividends, loans or otherwise. In recent years, our foreign subsidiaries have been a
signiÑcant source of cash Öow. In certain countries where we operate, transfers of funds into or out of such
countries by way of dividends, loans or advances are generally or periodically subject to various restrictive
governmental regulations. In addition, certain of our credit agreements and other debt instruments restrict the
ability of foreign subsidiaries to make distributions of cash. At December 31, 2005, approximately $236 mil-
lion of net assets were subject to such restrictions, compared to approximately $221 million at December 31,
2004.
Operating Activities
Cash Öows from operations for 2005 of $885 million increased $100 million compared to $785 million in 2004.
Cash Öows from operations in 2004 of $785 million increased $1,054 million compared to cash used in
operations of $269 million in 2003. Improvements in operating cash Öows are primarily attributable to
improved operating results. Net income increased by $113 million as compared to 2004 and 2004 net income
increased by $922 million as compared to 2003. In 2005 and 2004 we received proceeds from insurance
settlements of $228 million and $175 million, respectively, which also contributed to the improvement in
operating cash Öows. Partially oÅsetting these improvements were increases in pension contributions of
$261 million in 2005 and $149 million in 2004. Cash Öows from operating activities in 2004 and 2003 included
net outÖows of $118 million and $840 million, respectively, due to the termination of our accounts receivable
securitization program. In 2004, we terminated certain of our oÅ-balance sheet account receivable securitiza-
tion programs in Europe and in 2003 we terminated our domestic accounts receivable securitization program.
Investing Activities
Net cash used in investing activities was $440 million during 2005, compared to $651 million in 2004 and
$290 million in 2003. Capital expenditures were $634 million, $529 million and $405 million in 2005, 2004 and
2003, respectively. Capital expenditures in 2005 of approximately $128 million were used on projects to
increase capacity, approximately $173 million were used to improve productivity and quality and approxi-
mately $333 million were used for tire molds and various other projects. Major investments in Ñscal year 2005
focused on growth in the Latin American Tire and Asia PaciÑc Tire Segments with several manufacturing
improvements in the North American Tire Segment. Capital expenditures are expected to be approximately
$720 million in 2006. This amount includes expenditures for capitalized software of approximately $55 mil-
lion, which are included in capital expenditures in our Consolidated Statements of Cash Flows; however, are
not treated as capital expenditures under our credit agreements. We expect to spend $65 million for projects to
increase capacity, $250 million for productivity and quality improvements, and $350 million for tire molds,
maintenance and other activities. During 2005, we revised the classiÑcation for certain items, including
changes in restricted cash, in our Consolidated Statements of Cash Flows. Restricted cash is now presented as
an investing activity. The revised classiÑcations have also been reÖected in the comparative prior year amounts
for purposes of consistency.
29
At December 31, 2005, we had binding commitments for raw materials and investments in land,
buildings and equipment of $1,288 million, and oÅ-balance-sheet Ñnancial guarantees written and other
commitments totaling $11 million.
Cash provided by asset dispositions in 2005 was $257 million, primarily from asset sales in the
North American Tire Segment, including net proceeds from the sales of our North American Farm Tire
business of $100 million, our Sumatran rubber plantation, of approximately $70 million and our Wingtack
adhesive resin business of $55 million. Cash used for asset acquisitions was $62 million in 2004. In June 2004,
we exercised our call option and a subsidiary in Luxembourg purchased the remaining 20% of outstanding
shares that it did not already own of Sava Tires d.o.o. (Sava Tires), a joint venture tire manufacturing
company in Kranj, Slovenia, for $52 million. On July 13, 2004, we purchased the remaining 50% ownership
interest that we did not already own of D ackia, a tire retail group in Sweden, for $10 million. During 2003,
cash Öows from asset sales of $104 million included net proceeds of $83 million for the sale of 20.8 million
shares of SRI. Cash used for asset acquisitions in 2003 included the purchase of Arkansas Best Corporation's
19% ownership interest in Wingfoot Commercial Tire Systems, LLC (""Wingfoot'') for $71 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.
Financing Activities
Net cash provided by (used in) Ñnancing activities was $(175) million in 2005, compared to $250 in 2004 and
$1,121 million in 2003. Consolidated debt and our ratio of debt to debt and equity follows:
(In millions)
Consolidated debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Debt to debt and equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
December 31,
2004
2003
2005
$5,423
$5,680
$5,087
98.7%
98.7% 100.7%
Consolidated debt decreased in 2005 compared to 2004 due primarily to a net repayment of debt of
$63 million in conjunction with our April 8, 2005 reÑnancing, the issuance of $400 million in senior notes due
in 2015 and the repayment of our 63/8% Euro Notes due in 2005. Consolidated debt increased in 2004 from
2003 due primarily to the net issuance of debt of $328 million in connection with certain Ñnancing actions in
2004 including the completion of a $350 million convertible senior notes oÅering, the completion of the pan-
European accounts receivable securitization facility and the consolidation of VIEs as deÑned by FIN 46. A net
issuance of debt of $1,220 million in 2003 was due primarily to the April 1, 2003 restructuring and reÑnancing
of our credit facilities, including the termination of our domestic oÅ-balance sheet accounts receivable
securitization program.
Credit Sources
In aggregate, we had committed and uncommitted credit facilities of $7,527 million available at December 31,
2005, of which $1,677 million were unused, compared to $7,295 million available at December 31, 2004, of
which $1,116 million were unused.
$650 Million Senior Secured Notes
On March 12, 2004, we completed a private oÅering of $650 million of senior secured notes, consisting of
$450 million of 11% senior secured notes due 2011 and $200 million of Öoating rate notes due 2011, which
accrue interest at LIBOR plus 8%. The proceeds of the notes were used to prepay the remaining outstanding
amount under the then-existing U.S. term loan facility, permanently reduce commitments under the then-
existing revolving credit facility by $70 million, and for general corporate purposes. The notes are guaranteed
by the same subsidiaries that guarantee our $1.5 billion Ñrst lien credit facility. The notes are secured by
perfected third-priority liens on the same collateral securing those facilities.
We have the right to redeem the Ñxed rate notes in whole or in part from time to time on and after
March 1, 2008. The redemption price, plus accrued and unpaid interest to the redemption date, would be
30
105.5%, 102.75%, and 100.0% on and after March 1, 2008, 2009 and 2010, respectively. We may also redeem
the Ñxed rate notes prior to March 1, 2008 at a redemption price equal to 100% of the principal amount plus a
make-whole premium. We have the right to redeem the Öoating rate notes in whole or in part from time to
time on and after March 1, 2008. The redemption price, plus accrued and unpaid interest to the redemption
date, would be 104.0%, 102.0%, and 100.0% on and after March 1, 2008, 2009 and 2010, respectively. In
addition, prior to March 1, 2007, we have the right to redeem up to 35% of the Ñxed and Öoating rate notes
with net cash proceeds from one or more public equity oÅerings. The redemption price would be 111% for the
Ñxed rate notes and 100% plus the then-applicable Öoating rate for the Öoating rate notes, plus accrued and
unpaid interest to the redemption date.
The Indenture for the senior secured notes contains restrictions on our operations, including limitations
on:
‚ incurring additional indebtedness or liens,
‚ paying dividends, making distributions and stock repurchases,
‚ making investments,
‚ selling assets, and
‚ merging and consolidating.
In the event that the senior secured notes have a rating equal to or greater than Baa3 from Moody's and
BBB- from Standard and Poor's, a number of those restrictions will not apply, for so long as those credit
ratings are maintained.
$350 Million Convertible Senior Note OÅering
On July 2, 2004, we completed an oÅering of $350 million aggregate principal amount of 4% Convertible
Senior Notes due June 15, 2034. The notes are convertible into shares of our common stock initially at a
conversion rate of 83.07 shares of common stock per $1,000 principal amount of notes, which is equal to an
initial conversion price of $12.04 per share. The proceeds from the notes were used to repay temporarily a
revolving credit facility and for working capital purposes.
$400 Million Senior Notes OÅering
On June 23, 2005, we completed an oÅering of $400 million aggregate principal amount of 9% Senior Notes
due 2015 in a transaction under Rule 144A and Regulation S of the Securities Act of 1933. The senior notes
are guaranteed by our U.S. and Canadian subsidiaries that also guarantee our obligations under our senior
secured credit facilities. The guarantees are unsecured. The proceeds were used to repay $200 million in
borrowings under our U.S. Ñrst lien revolving credit facility, and to replace $190 million of the cash, that we
used to pay the $488 million principal amount of our 63/8% Euro Notes due 2005 at maturity on June 6, 2005.
The remainder of the proceeds was used for general corporate purposes. In conjunction with the debt issuance,
we paid fees of approximately $10 million, which will be amortized over the term of the senior notes.
The Indenture governing the senior notes limits our ability and the ability of certain of our subsidiaries to
(i) incur additional debt or issue redeemable preferred stock, (ii) pay dividends, or make certain other
restricted payments or investments, (iii) incur liens, (iv) sell assets, (v) incur restrictions on the ability of our
subsidiaries to pay dividends to us, (vi) enter into aÇliate transactions, (vii) engage in sale and leaseback
transactions, and (viii) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets.
These covenants are subject to signiÑcant exceptions and qualiÑcations. For example, if the senior notes are
assigned an investment grade rating by Moody's and S&P and no default has occurred or is continuing, certain
covenants will be suspended.
31
April 8, 2005 ReÑnancing
On April 8, 2005 we completed a reÑnancing in which we replaced approximately $3.28 billion of credit
facilities with new facilities aggregating $3.65 billion. The new facilities consist of:
‚ a $1.5 billion Ñrst lien credit facility due April 30, 2010 (consisting of a $1.0 billion revolving facility
and a $500 million deposit-funded facility);
‚ a $1.2 billion second lien term loan facility due April 30, 2010;
‚ the Euro equivalent of approximately $650 million in credit facilities for Goodyear Dunlop Tires
Europe B.V. (""GDTE'') due April 30, 2010 (consisting of approximately $450 million in revolving
facilities and approximately $200 million in term loan facilities); and
‚ a $300 million third lien term loan facility due March 1, 2011.
In connection with the reÑnancing, we paid down and retired the following facilities:
‚ our $1.3 billion asset-based credit facility, due March 2006 (the $800 million term loan portion of this
facility was fully drawn prior to the reÑnancing);
‚ our $650 million asset-based term loan facility, due March 2006 (this facility was fully drawn prior to
the reÑnancing);
‚ our $680 million deposit-funded credit facility due September 2007 (there were $492 million of letters
of credit outstanding under this facility prior to the reÑnancing); and
‚ our $650 million senior secured European facilities due April 2005 (the $400 million term loan portion
of this facility was fully drawn prior to the reÑnancing).
In conjunction with the reÑnancing, we paid fees of approximately $57 million. In addition, we paid
approximately $20 million of termination fees associated with the replaced facilities. We recognized
approximately $47 million of expense in the second quarter to write-oÅ fees associated with the reÑnancing,
including approximately $30 million of previously unamortized fees related to the replaced facilities. The
remaining fees are being amortized over the term of the new facilities. The new facilities have customary
representations and warranties including, as a condition to borrowing, material adverse change representations
in our Ñnancial condition since December 31, 2004.
$1.5 Billion First Lien Credit Facility
The $1.5 billion Ñrst lien credit facility consists of a $1.0 billion revolving facility and a $500 million deposit-
funded facility. Our obligations under these facilities are guaranteed by most of our wholly-owned
U.S. subsidiaries and by our wholly-owned Canadian subsidiary, Goodyear Canada Inc. Our obligations under
this facility and our subsidiaries' obligations under the related guarantees are secured by Ñrst priority security
interests in a variety of collateral.
With respect to the deposit-funded facility, the lenders deposited the entire $500 million of the facility in
an account held by the administrative agent, and those funds are used to support letters of credit or borrowings
on a revolving basis, in each case subject to customary conditions. The full amount of the deposit-funded
facility is available for the issuance of letters of credit or for revolving loans. As of December 31, 2005, there
were $499 million of letters of credit issued under the deposit-funded facility and no borrowings under the
revolving facility.
$1.2 Billion Second Lien Term Loan Facility
Our obligations under this facility are guaranteed by most of our wholly-owned U.S. subsidiaries and by our
wholly-owned Canadian subsidiary, Goodyear Canada Inc. and are secured by second priority security
interests in the same collateral securing the $1.5 billion Ñrst lien credit facility. As of December 31, 2005 this
facility was fully drawn.
32
$300 Million Third Lien Secured Term Loan Facility
Our obligations under this facility are guaranteed by most of our wholly-owned U.S. subsidiaries and by our
wholly-owned Canadian subsidiary, Goodyear Canada Inc. and are secured by third priority security interests
in the same collateral securing the $1.5 billion Ñrst lien credit facility (however, the facility is not secured by
any of the manufacturing facilities that secure the Ñrst and second lien facilities). As of December 31, 2005,
this facility was fully drawn.
Euro Equivalent of $650 Million (7505 Million) Senior Secured European Credit Facilities
These facilities consist of (i) a 4195 million European revolving credit facility, (ii) an additional 4155 million
German revolving credit facility, and (iii) 4155 million of German term loan facilities. We secure the
U.S. facilities described above and provide unsecured guarantees to support these facilities. GDTE and certain
of its subsidiaries in the United Kingdom, Luxembourg, France and Germany also provide guarantees.
GDTE's obligations under the facilities and the obligations of subsidiary guarantors under the related
guarantees are secured by a variety of collateral. As of December 31, 2005, there were $4 million of letters of
credit issued under the European revolving credit facility, $183 million was drawn under the German term
loan facilities and there were no borrowings under the German or European revolving credit facilities.
For a description of the collateral securing the above facilities as well as the covenants applicable to them,
please refer to the Note to the Consolidated Financial Statements No. 10, Financing Arrangements and
Derivative Financial Instruments.
Consolidated EBITDA (per Credit Agreements)
Under our primary credit facilities we are not permitted to fall below a ratio of 2.00 to 1.00 of Consolidated
EBITDA to Consolidated Interest Expense (as such terms are deÑned in each of the relevant credit facilities)
for any period of four consecutive Ñscal quarters. In addition, our ratio of Consolidated Net Secured
Indebtedness to Consolidated EBITDA (as such terms are deÑned in each of the relevant credit facilities) is
not permitted to be greater than 3.50 to 1.00 at any time.
Consolidated EBITDA is a non-GAAP Ñnancial measure that is presented not as a measure of operating
results, but rather as a measure under our debt covenants. It should not be construed as an alternative to either
(i) income from operations or (ii) cash Öows from operating activities. Our failure to comply with the
Ñnancial covenants in our credit facilities could have a material adverse eÅect on our liquidity and operations.
Accordingly, we believe that the presentation of Consolidated EBITDA will provide investors with informa-
tion needed to assess our ability to continue to comply with these covenants.
33
The following table presents the calculation of EBITDA and Consolidated EBITDA for the periods
indicated. Other companies may calculate similarly titled measures diÅerently than we do. Certain line items
are presented as deÑned in the primary credit facilities and do not reÖect amounts as presented in the
Consolidated Statements of Operations.
(In millions)
Net Income (Loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Consolidated Interest ExpenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
U.S. and Foreign Taxes on Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Depreciation and Amortization Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EBITDA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Credit Agreement Adjustments:
Other (Income) and Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Interest in Net Income (Loss) of Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏ
Consolidated Interest Expense Adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Non-cash Non-recurring Items ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Less Excess Cash Rationalization Charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Year Ended December 31,
2004
2003
2005
$ 228
411
250
630
11
$ 115
369
208
629
Ì
$ (807)
296
117
692
Ì
1,530
1,321
298
70
95
5
Ì
11
Ì
1
58
11
Ì
56
Ì
343
33
18
55
291
(13)(1)
Consolidated EBITDAÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1,711
$1,447
$1,025
(1) ""Excess Cash Rationalization Charges'' is deÑned in our credit facilities, for the year ended Decem-
ber 31, 2003, only contemplates cash expenditures with respect to rationalization charges recorded on the
Consolidated Statements of Operations after April 1, 2003.
Other Foreign Credit Facilities
At December 31, 2005, we had short-term committed and uncommitted bank credit arrangements totaling
$415 million, of which $182 million were unused, compared to $413 million and $192 million at December 31,
2004. 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.
International Accounts Receivable Securitization Facilities (On-Balance-Sheet)
On December 10, 2004, GDTE and certain of its subsidiaries entered into a new Ñve-year pan-European
accounts receivable securitization facility. The facility provides 4275 million of funding and is subject to
customary annual renewal of back-up liquidity lines.
As of December 31, 2005, the amount available and fully utilized under this program was $324 million
compared to $225 million as of December 31, 2004.
In addition to the pan-European accounts receivable securitization facility discussed above, SPT and
other subsidiaries in Australia have accounts receivable programs totaling $67 million and $63 million at
December 31, 2005 and December 31, 2004, respectively.
International Accounts Receivable Securitization Facilities (OÅ-Balance-Sheet)
Various international subsidiaries sold certain of their trade receivables under oÅ-balance sheet programs
during 2005 and 2004. The receivable Ñnancing programs of these international subsidiaries did not utilize an
SPE. At December 31, 2005 and 2004, the value in U.S. dollars available to and utilized by these international
subsidiaries was $3 million and $5 million, respectively.
34
Registration Obligations
We are a party to three registration rights agreements in connection with the following transactions: (i) the
March 2004 issuance of $650 million of senior secured notes due 2011 (consisting of $450 million of
11% senior secured notes and $200 million of senior secured Öoating rate notes), (ii) the July 2004 issuance of
$350 million of 4% convertible senior notes due 2034, and (iii) the June 2005 issuance of $400 million of
9% senior notes due 2015.
The registration rights agreement for the convertible notes required us to pay additional interest to
investors since we did not Ñle a registration statement to register the convertible notes by November 7, 2004.
Additional interest was paid to investors at a rate of 0.25% per year for the Ñrst 90 days following November 7,
2004 and 0.50% per year thereafter, until December 13, 2005, when a registration statement on Form S-1
registering the convertible notes was declared eÅective. Following the eÅectiveness of the registration
statement, the additional interest ceased to accrue on the convertible notes.
On December 22, 2005, we completed an exchange oÅer related to the $450 million of 11% senior
secured notes due in 2011 and $200 million of senior secured Öoating rate notes due in 2011. The registration
rights agreement with respect to these notes required us to pay additional interest to investors since a
registered exchange oÅer was not completed by December 7, 2004. The additional interest payable to investors
increased in increments and reached a maximum of 2% per year immediately prior to the completion of the
exchange oÅer. Following the completion of the exchange oÅer, the additional interest of 2% on the notes
ceased to accrue and, pursuant to the terms of the registration rights agreement, additional interest of
0.25% per year began to accrue on the notes and will continue to accrue until payment in full of the principal
amount of the notes.
On January 12, 2006, we completed an exchange oÅer related to the $400 million of 9% senior notes due
in 2015.
Credit Ratings
Our credit ratings as of the date of this report are presented below:
S&P
Moody's
$1.5 Billion First Lien Credit Facility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1.2 Billion Second Lien Term Loan Facility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$300 Million Third Lien Secured Term Loan Facility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Facilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$650 Million Senior Secured Notes due 2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate Rating (implied) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Senior Unsecured DebtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Outlook ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Stable
BB
B°
B¿
B°
B¿
B°
B¿
Ba3
B2
B3
B1
B3
B1
Ì
Stable
Although we do not request ratings from Fitch, the rating agency rates our secured debt facilities (ranging
from B° to B¿ depending on facility) and our unsecured debt (""CCC°'').
As a result of these ratings and other related events, we believe that our access to capital markets may be
limited. Unless our debt credit ratings and operating performance improve, our access to the credit markets in
the future may be limited. Moreover, a reduction in our credit ratings would further increase the cost of any
Ñnancing initiatives we may pursue.
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.
35
Potential Future Financings
In addition to our previous Ñnancing activities, we plan to undertake additional Ñnancing actions in the capital
markets in order to ensure that our future liquidity requirements are addressed. These actions may include the
issuance of additional equity.
Because of our debt ratings, operating performance over the past few years and other factors, access to the
capital markets cannot be assured. Our ongoing ability to access the capital markets is also dependent on the
degree of success we have implementing our North American Tire turnaround strategy. Successful implemen-
tation of the turnaround strategy is also crucial to ensuring that we have suÇcient cash Öow from operations to
meet our obligations. While we have made progress in implementing the turnaround strategy, there is no
assurance that our progress will continue, or that we will be able to sustain any future progress to a degree
suÇcient to maintain access to capital markets and meet liquidity requirements. As a result, failure to
complete the turnaround strategy successfully could have a material adverse eÅect on our Ñnancial position,
results of operations and liquidity.
Future liquidity requirements also may make it necessary for us to incur additional debt. However, a
substantial portion of our assets is already subject to liens securing our indebtedness. As a result, we are
limited in our ability to pledge our remaining assets as security for additional secured indebtedness. In
addition, no assurance can be given as to our ability to raise additional unsecured debt.
Dividends
On February 4, 2003, we announced that we eliminated our quarterly cash dividend. The dividend reduction
was approved by the Board of Directors in order to conserve cash. Under our primary credit facilities we are
permitted to pay dividends on our common stock of $10 million or less in any Ñscal year. This limit increases
to $50 million in any Ñscal year if Moody's senior (implied) rating and Standard & Poor's (S&P) corporate
rating improve to Ba2 or better and BB or better, respectively.
Asset Dispositions
In 2005, we completed the sale of our natural rubber plantation in Indonesia at a sales price of approximately
$70 million. We also completed the sale of our Wingtack adhesive resins business to Sartomer Company, Inc.
in 2005. We received approximately $55 million in cash proceeds and retained approximately $10 million in
working capital in connection with the Wingtack sale. In connection with the transaction, we recorded a gain
of approximately $24 million on the sale. We may also receive additional consideration over the next three
years ($5 million per year, $15 million aggregate) based on future operating performance of the Wingtack
business. In 2005 we also completed the sale of assets of our North American farm tire business to Titan
International for approximately $100 million. In connection with the transaction, we recorded a loss of
approximately $73 million in the fourth quarter of 2005, primarily related to pension and retiree medical costs.
Also, we have announced that we are exploring the possible sale of our Engineered Products business.
Engineered Products manufactures and markets engineered rubber products for industrial, military, consumer
and transportation OE end-users. We continue to evaluate our portfolio of businesses and, where appropriate,
may pursue additional dispositions of non-core assets. Refer to the Note to the Consolidated Financial
Statements No. 20, Asset Dispositions.
36
COMMITMENTS AND CONTINGENT LIABILITIES
Contractual Obligations
The following table presents our contractual obligations and commitments to make future payments as of
December 31, 2005:
Payment Due by Period as of December 31, 2005
Total
1st Year
2nd Year
3rd Year
4th Year
5th Year
(In millions)
Long Term Debt(1) ÏÏÏÏÏÏÏÏÏÏ
Capital Lease Obligations(2) ÏÏÏ
Interest Payments(3) ÏÏÏÏÏÏÏÏÏ
Operating Leases(4) ÏÏÏÏÏÏÏÏÏÏ
Pension BeneÑts(5) ÏÏÏÏÏÏÏÏÏÏÏ
Other Post Retirement
BeneÑts(6) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Workers Compensation(7) ÏÏÏÏÏ
Binding Commitments(8)ÏÏÏÏÏÏ
$ 5,347
107
2,387
1,471
838
2,204
334
1,288
$ 674
13
389
315
838
254
86
1,020
$ 329
12
344
254
(5)
250
43
51
$102
12
332
193
(5)
245
32
32
$ 327
12
330
145
(5)
$1,385
12
249
109
(5)
After
5 Years
$2,530
46
743
455
(5)
236
23
30
227
17
26
992
133
129
$13,976
$3,589
$1,283
$948
$1,103
$2,025
$5,028
(1) Long term debt payments include notes payable and reÖect long term debt maturities as of December 31,
2005.
(2) The present value of capital lease obligations is $76 million.
(3) These amounts represent future interest payments related to our existing debt obligations based on Ñxed
and variable interest rates speciÑed in the associated debt agreements. Payments related to variable debt
are based on the six-month LIBOR rate at December 31, 2005 plus the speciÑed margin in the associated
debt agreements for each period presented. The amounts provided relate only to existing debt obligations
and do not assume the reÑnancing or replacement of such debt.
(4) Operating lease obligations have not been reduced by minimum sublease rentals of $51 million,
$42 million, $33 million, $24 million, $15 million, and $20 million in each of the periods above,
respectively, for a total of $185 million. Payments, net of minimum sublease rentals, total $1,286 million.
The present value of the net operating lease payments is $893 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.
(5) The obligation related to pension beneÑts is actuarially determined and is reÖective of obligations as of
December 31, 2005. Although subject to change, the amount set forth in the table represents the
midpoint of our estimated minimum funding requirements in 2006 for domestic deÑned beneÑt pension
plans under current ERISA law, and the midpoint of our expected contributions to our funded
non-U.S. pension plans in 2006. The expected contributions are based upon a number of assumptions,
including, an ERISA liability interest rate of 5.08% for 2006.
At the end of 2005, the interest relief rate measures used for pension funding calculations expired. Since
new legislation has not yet been enacted, the interest rate has reverted to a 30-year U.S. Treasury bond
basis beginning in 2006. Under this basis, we estimate that we will be required to contribute
approximately $700 million to $750 million to our domestic pension plans in 2006, as reÖected in the
table above. If new legislation is enacted in 2006, we expect the interest rate used for 2006 will be based
on a Corporate bond basis. Using an estimate of these rates would result in estimated U.S. contributions
during 2006 in the range of $550 million to $600 million. We are not able to reasonably estimate our
37
future required contributions beyond 2006 due to uncertainties regarding signiÑcant assumptions involved
in estimating future required contributions to our deÑned beneÑt pension plans, including:
‚ interest rate levels,
‚ the amount and timing of asset returns,
‚ what, if any, changes may occur in pending pension funding legislation, and
‚ how contributions in excess of the minimum requirements could impact the amounts and timing of
future contributions.
Subject to the outcome of pending legislation, our domestic pension obligations are expected to peak in
2006. However, we anticipate being subject to signiÑcant required pension funding obligations in 2007
and beyond.
(6) The payments presented above are expected payments for the next 10 years. The payments for other
postretirement beneÑts reÖect the estimated beneÑt payments of the plans using the provisions currently
in eÅect. Under the relevant summary plan descriptions or plan documents we have the right to modify or
terminate the plans. The obligation related to other postretirement beneÑts is actuarially determined on
an annual basis. The estimated payments have been reduced to reÖect the provisions of the Medicare
Prescription Drug, Improvement and Modernization Act of 2003.
(7) The payments for workers' compensation obligations are based upon recent historical payment patterns
on claims. The present value of anticipated claims payments for workers' compensation is $250 million.
(8) Binding commitments are for our normal operations and are related primarily to obligations to acquire
land, buildings and equipment. In addition, binding commitments includes obligations to purchase raw
materials through short term supply contracts at Ñxed prices or at formula prices related to market prices
or negotiated prices.
Additional other long-term liabilities include items such as income taxes, general and product liabilities,
environmental liabilities and miscellaneous other long-term liabilities. These other liabilities are not contrac-
tual obligations by nature. We cannot, with any degree of reliability, determine the years in which these
liabilities might ultimately be settled. Accordingly, these other long-term liabilities are not included in the
above table.
In addition, the following contingent contractual obligations, the amounts of which cannot be estimated,
are not included in the table above:
‚ The terms and conditions of our global alliance with Sumitomo as set forth in the Umbrella Agreement
between Sumitomo and us 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 us, could trigger a right of Sumitomo to
require us to purchase these interests immediately. Sumitomo's exit rights, in the unlikely event of
exercise, could require us to make a substantial payment to acquire Sumitomo's interest in the alliance.
‚ Pursuant to certain long term agreements, we shall purchase minimum amounts of a raw material at an
agreed upon base price that is subject to quarterly adjustments for changes in raw material costs,
natural gas costs, and market price adjustments.
We do not engage in the trading of commodity contracts or any related derivative contracts. We generally
purchase 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. We may, however, from time to time,
enter into contracts to hedge our energy costs.
38
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:
‚ made guarantees,
‚ retained or held a contingent interest in transferred assets,
‚ undertaken an obligation under certain derivative instruments, or
‚ undertaken 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.
We have also entered into certain arrangements under which we have provided guarantees, as follows:
(In millions)
Customer Financing GuaranteesÏÏÏ
AÇliate Financing Guarantees ÏÏÏÏ
Other Guarantees ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
OÅ-Balance Sheet Arrangements ÏÏ
Total
1st Year
2nd Year
3rd Year
4th Year
5th Year
Thereafter
Amount of Commitment Expiration per Period
$ 8
2
1
$11
$ 3
Ì
1
$ 4
$Ì
Ì
Ì
$Ì
$ 1
2
Ì
$ 3
$ 2
Ì
Ì
$ 2
$Ì
Ì
Ì
$Ì
$ 2
Ì
Ì
$ 2
For further information about guarantees, refer to the Note to the Consolidated Financial Statements No. 17,
Commitments and Contingent Liabilities.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest Rate Risk
We continuously monitor our Ñxed and Öoating rate debt mix. Within deÑned limitations, we manage the mix
using reÑnancing and unleveraged interest rate swaps. We will enter into Ñxed and Öoating interest rate swaps
to alter our 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 our 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 to separate interest rate risk management from
debt funding decisions. At December 31, 2005, the interest rates on 49% of our debt were Ñxed by either the
nature of the obligation or through the interest rate swap contracts, compared to 50% at December 31, 2004.
We also have 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, our access to these
instruments may be limited.
39
The following table presents information on interest rate swap contracts at December 31:
(Dollars in millions)
Fixed Rate Contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive variable Australian Bank Bill Rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average years to maturity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma fair valueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Floating Rate Contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay variable LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Average years to maturity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value Ì asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma fair value Ì assetÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$ Ì $ 15
Ì
Ì
Ì
5.94%
5.43%
0.50
$ Ì $ Ì
Ì
Ì
$ 200
$ 200
6.27% 4.31%
6.63% 6.63%
0.92
$ Ì $
Ì
1.92
6
5
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:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay Ñxed rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive variable LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Floating Rate Contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay variable LIBORÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
7
$ 96
$ 325
$
5.94% 5.14% 5.00%
5.66% 1.86% 1.24%
$ 200
$ 207
$ 200
4.92% 3.27% 3.03%
6.63% 6.63% 6.63%
The following table presents information about long term Ñxed rate debt, including capital leases, at
December 31:
(In millions)
Carrying amount Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma fair value Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$2,847
3,119
3,203
$3,055
3,388
3,467
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 of our interest rate contracts and Ñxed rate debt to changes in interest rates 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.
40
Foreign Currency Exchange Risk
We enter into 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. 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 our Swiss franc bonds due 2006 is hedged by currency swap agreements, as were
4100 million of the 63/8% Euro Notes until they matured in June 2005.
Contracts hedging the Swiss franc bonds are designated as cash Öow hedges, as were contracts hedging
4100 million of the 63/8% Euro Notes until they matured in June 2005. 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)
Fair value Ì asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pro forma decrease in fair value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Contract maturities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$40
(47)
1/06-10/19
$102
(71)
1/05-10/19
We were not a party to any foreign currency option contracts at December 31, 2005 or 2004.
The pro forma change in fair value assumes a 10% decrease 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. The sensitivity of our foreign currency positions to changes in exchange rates was determined
using current market pricing models.
Fair values are recognized on the Consolidated Balance Sheets at December 31 as follows:
(In millions)
Asset (liability):
2005
2004
$38
Swiss franc swap Ì current ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Swiss franc swap Ì long term ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
Euro swaps Ì currentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
3
Other Ì current asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2
Other Ì long term assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(1)
Other Ì current liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(2)
Other Ì long term liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$Ì
60
46
4
1
(6)
(3)
For further information on interest rate contracts and foreign currency contracts, refer to the Note to the
Consolidated Financial Statements No. 10, Financing Arrangements and Derivative Financial Instruments.
41
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 that 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:
‚ although we recorded net income in 2004 and 2005, we cannot provide assurance that we will be able to
achieve or sustain future proÑtability. Our future proÑtability is dependent upon, among other things,
our ability to continue to successfully implement our turnaround strategy for our North American Tire
segment;
‚ we face signiÑcant global competition, increasingly from lower cost manufacturers, and our market
share could decline;
‚ our pension plans are signiÑcantly underfunded and our required contributions to those plans are
substantial. Proposed U.S. legislation aÅecting pension plan funding could result in the need for
additional cash payments by us into our U.S. pension plans and increase the insurance premiums we
pay to the Pension BeneÑt Guaranty Corporation;
‚ 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;
‚ pending litigation relating to our 2003 restatement could have a material adverse eÅect on our Ñnancial
condition;
‚ an ongoing SEC investigation regarding our accounting restatement could materially adversely aÅect
us;
‚ our long-term ability to meet current obligations and to repay maturing indebtedness, 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 secured credit facilities limit the amount of capital expenditures that we may make;
‚ our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service
obligations to increase signiÑcantly;
‚ 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;
42
‚ we are subject to extensive government regulations that may materially adversely aÅect our operating
results;
‚ our international operations have certain risks that may materially adversely aÅect our operating
results;
‚ we have foreign currency translation and transaction 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 in 2009 or thereafter, 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);
‚ if we are unable to attract and retain key personnel, our business could be materially adversely
aÅected; and
‚ we may be impacted by economic and supply disruptions associated with global events including war,
acts of terror, civil obstructions and natural disasters.
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.
43
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in millions, except per share amounts)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cost of Goods SoldÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Selling, Administrative and General Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations (Note 2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest Expense (Note 14) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other (Income) and Expense (Note 3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Interest in Net Income of Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income (Loss) before Income Taxes and Cumulative EÅect of Accounting
Change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
United States and Foreign Taxes on Income (Loss) (Note 13) ÏÏÏÏÏÏÏÏÏÏÏ
Income (Loss) before Cumulative EÅect of Accounting ChangeÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change, net of income taxes and minority
Year Ended December 31,
2004
2003
2005
$19,723
15,772
2,875
11
411
70
95
$18,353
14,691
2,833
56
369
23
58
$15,102
12,481
2,374
291
296
317
33
489
250
239
323
208
115
(690)
117
(807)
interest (Note 19) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(11)
Ì
Ì
Net Income (Loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
228
$
115
$ (807)
Net Income (Loss) Per Share Ì Basic
Income (Loss) before cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏÏÏÏ
Cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
1.36
(0.06)
$
0.65
Ì
$ (4.61)
Ì
Net Income (Loss) Per Share Ì BasicÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
1.30
$
0.65
$ (4.61)
Weighted Average Shares Outstanding (Note 11)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
176
175
175
Net Income (Loss) Per Share Ì Diluted
Income (Loss) before cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏÏÏÏ
Cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
1.21
(0.05)
$
0.63
Ì
$ (4.61)
Ì
Net Income (Loss) Per Share Ì Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
1.16
$
0.63
$ (4.61)
Weighted Average Shares Outstanding (Note 11)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
209
192
175
The accompanying notes are an integral part of these consolidated Ñnancial statements.
44
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in millions)
Assets
Current Assets:
December 31,
2005
2004
Cash and cash equivalents (Note 1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restricted cash (Note 1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accounts and notes receivable (Note 4) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Inventories (Note 5) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Prepaid expenses and other current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 2,178
231
3,158
2,862
251
$ 1,968
152
3,398
2,784
272
Total Current AssetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Goodwill (Note 6)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Intangible Assets (Note 6)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Income Tax (Note 13) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Pension Costs and Other Assets (Note 7 and 12) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Properties and Plants (Note 8) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
8,680
637
159
102
870
5,179
8,574
717
169
83
1,105
5,453
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$15,627
$16,101
Liabilities
Current Liabilities:
Accounts payable-trade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and beneÑts (Note 11 and Note 12) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
United States and foreign taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Notes payable (Note 10) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt and capital leases due within one year (Note 10) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 1,945
1,121
671
393
233
448
Total Current Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases (Note 10) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and BeneÑts (Note 11 and Note 12)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred and Other Noncurrent Income Taxes (Note 13) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Long Term Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Equity in Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
4,811
4,742
4,480
304
426
791
$ 1,970
1,029
718
245
227
1,010
5,199
4,443
4,645
402
495
843
Total Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
15,554
16,027
Commitments and Contingent Liabilities (Note 17)
Shareholders' Equity
Preferred Stock, no par value:
Authorized, 50,000,000 shares, unissued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
Common Stock, no par value:
Authorized, 300,000,000 shares
Outstanding shares, 176,509,751 (175,619,639 in 2004) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital SurplusÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retained Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated Other Comprehensive Loss (Note 16) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
177
1,398
1,298
(2,800)
176
1,392
1,070
(2,564)
Total Shareholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
73
74
Total Liabilities and Shareholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$15,627
$16,101
The accompanying notes are an integral part of these consolidated Ñnancial statements.
45
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity (DeÑcit)
(Dollars in millions)
Balance at December 31, 2002
Common Stock
Shares
Capital Retained Comprehensive
Accumulated
Other
Amount Surplus Earnings
Loss
Total
Shareholders'
Equity (DeÑcit)
(after deducting 20,371,235 treasury shares) ÏÏÏÏÏÏÏÏÏ 175,307,433
Comprehensive income (loss):
$175
$1,390 $1,762
$(3,106)
$221
Net loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation (net of tax beneÑt of
$0) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minimum pension liability (net of tax of $2) ÏÏÏÏÏÏ
Unrealized investment gain (net of tax of $0) ÏÏÏÏÏ
ReclassiÑcation adjustment for amounts
recognized in income (net of tax of $9)ÏÏÏÏÏÏÏ
Deferred derivative gain (net of tax of $0) ÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for amounts
recognized in income (net of tax of $2)ÏÏÏÏÏÏÏ
Total comprehensive loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued from treasury:
(807)
393
128
4
9
46
(27)
(254)
Stock compensation plansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
18,996
Ì
Balance at December 31, 2003
(after deducting 20,352,239 treasury shares) ÏÏÏÏÏÏÏÏÏ 175,326,429
Comprehensive income (loss):
175
1,390
955
(2,553)
(33)
Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation (net of tax beneÑt of
$0) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minimum pension liability (net of tax of $34) ÏÏÏÏÏ
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 $(4))ÏÏÏÏÏ
Total comprehensive income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued from treasury:
115
254
(284)
13
30
(24)
Stock compensation plansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
293,210
1
2
Balance at December 31, 2004
(after deducting 20,059,029 treasury shares) ÏÏÏÏÏÏÏÏÏ 175,619,639
Comprehensive income (loss):
176
1,392
1,070
(2,564)
Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation (net of tax beneÑt of
$0) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
ReclassiÑcation adjustment for amounts
recognized in income (net of tax of $0)ÏÏÏÏÏÏÏ
Minimum pension liability (net of tax of $23) ÏÏÏÏÏ
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 $(1))ÏÏÏÏÏ
Total comprehensive loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued from treasury:
Stock compensation plansÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
890,112
1
6
Balance at December 31, 2005
228
(201)
48
(97)
18
(21)
17
104
3
74
(8)
7
(after deducting 19,168,917 treasury shares) ÏÏÏÏÏÏÏÏÏ 176,509,751
$177
$1,398 $1,298
$(2,800)
$ 73
The accompanying notes are an integral part of these consolidated Ñnancial statements.
46
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In millions)
Cash Flows from Operating Activities:
Year Ended December 31,
2004
2005
2003
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $
228
$
115
$ (807)
Adjustments to reconcile net income (loss) to cash Öows from operating
activities:
Depreciation and amortizationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of debt issuance costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred tax provision (Note 13) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net rationalization charges (Note 2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalization payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net loss on asset sales (Note 3)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net insurance settlement gains (Note 3)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Insurance recoveries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority interest and equity earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Proceeds from sales of accounts receivable (Note 4)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pension contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Changes in operating assets and liabilities, net of asset acquisitions and
dispositions:
Accounts and notes receivableÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accounts payable Ì trade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and beneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other current liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other long term liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other assets and liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total cash Öows from operating activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash Flows from Investing Activities:
Capital expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short term securities redeemed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset dispositions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset acquisitions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Increase in restricted cash ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other transactions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total cash Öows from investing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash Flows from Financing Activities:
630
76
(19)
5
(43)
38
(79)
228
91
11
2
(526)
(16)
(253)
44
439
(62)
(34)
125
885
(634)
Ì
257
(2)
(79)
18
(440)
629
74
(4)
48
(97)
8
(149)
175
59
Ì
(118)
(265)
(277)
(50)
153
474
145
(149)
14
785
(529)
Ì
19
(62)
(129)
50
(651)
692
62
(10)
267
(93)
16
Ì
20
54
Ì
(840)
(116)
(9)
39
(104)
387
70
115
(12)
(269)
(405)
27
104
(71)
(24)
79
(290)
Short term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short term debt paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issued (Note 11) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends paid to minority interests in subsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Debt issuance costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other transactions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total cash Öows from Ñnancing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EÅect of Exchange Rate Changes on Cash and Cash Equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Change in Cash and Cash Equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and Cash Equivalents at Beginning of the Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
169
(131)
2,289
(2,390)
7
(52)
(67)
Ì
(175)
(60)
210
1,968
169
(191)
1,899
(1,549)
2
(29)
(51)
Ì
250
38
422
1,546
323
(469)
2,978
(1,612)
Ì
(23)
(104)
28
1,121
64
626
920
Cash and Cash equivalents at End of the Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,178
$ 1,968
$ 1,546
The accompanying notes are an integral part of these consolidated Ñnancial statements.
47
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
A summary of the signiÑcant accounting policies used in the preparation of the accompanying consolidated
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. All intercompany transactions have been
eliminated. Our investments in companies in which we have the ability to exercise signiÑcant inÖuence over
operating and Ñnancial policies are accounted for using the equity method. Accordingly, our share of the
earnings of these companies is included in consolidated Net Income (Loss). Investments in other companies
are carried at cost.
The consolidated Ñnancial statements also include the accounts of entities consolidated pursuant to the
provisions of Interpretation No. 46 of the Financial Accounting Standards Board, ""Consolidation of Variable
Interest Entities Ì an Interpretation of ARB No. 51,'' as amended by FASB Interpretation No. 46 (revised
December 2003) (collectively, ""FIN 46''). FIN 46 requires companies to consolidate, at fair value, the assets,
liabilities and results of operations of variable interest entities (VIEs) in which the equity investment at risk is
not suÇcient to permit the entity to Ñnance its activities without additional subordinated Ñnancial support
from other parties. In addition, FIN 46 requires consolidation of VIEs in which a company holds a controlling
Ñnancial interest through means other than the majority ownership of voting equity.
EÅective January 1, 2004, we applied the provisions of FIN 46 to entities that are not special purpose
entities (SPEs). This resulted in the consolidation of 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 sells to original equipment (OE) manufacturers.
Refer to Note 7 and Note 9.
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:
‚ allowance for doubtful accounts,
‚ recoverability of intangibles and other long-lived assets,
‚ deferred tax asset valuation allowances and uncertain income tax positions,
‚ workers' compensation,
‚ general and product liabilities and other litigations,
‚ environmental liabilities,
‚ pension and other postretirement beneÑts,
‚ asset retirement obligations, 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.
48
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
Revenue Recognition
Revenues are recognized when Ñnished products are shipped to unaÇliated customers, both title and the risks
and rewards of ownership are transferred or services have been rendered and accepted, and collectibility is
reasonably assured. A provision for sales returns and allowances is recorded at the time of sale. Appropriate
provision is made for uncollectible accounts based on historical experience and speciÑc circumstances, as
appropriate.
Shipping and Handling Fees and Costs
Expenses for transportation of products to customers are recorded as a component of Cost of goods sold.
Research and Development Costs
Research and development costs include, among other things, materials, equipment, compensation and
contract services. These costs are expensed as incurred and included as a component of Cost of goods sold.
Research and development expenditures were $365 million, $364 million and $339 million in 2005, 2004 and
2003, respectively.
Warranty
We oÅer warranties on the sale of certain of our products and services and record an accrual for estimated
future claims at the time revenue is recognized. Tire replacement under most of the warranties we oÅer is on a
prorated basis. Warranty reserves are based on past claims experience, sales history and other considerations.
Refer to Note 17.
Environmental Cleanup Matters
We expense 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. We determine our liability
on a site by site basis and record a liability at the time when it is probable and can be reasonably estimated.
Our 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. Our estimated liability is not discounted or reduced for
possible recoveries from insurance carriers. Refer to Note 17.
Legal Expenses
We record 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 17.
Advertising Costs
Costs incurred for producing and communicating advertising are generally expensed when incurred. Costs
incurred under our cooperative advertising program with dealers and franchisees are generally recorded as
reductions of sales as related revenues are recognized. Advertising costs, including costs for our cooperative
advertising programs with dealers and franchisees, were $379 million, $383 million and $331 million in 2005,
2004 and 2003, respectively.
49
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
Rationalizations
We account for rationalizations in accordance with the provisions of Statement of Financial Accounting
Standards No. 146 (SFAS 146), ""Accounting for Costs Associated with Exit or Disposal Activities,'' which
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. Refer to Note 2.
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. Valuation
allowances are recorded to reduce net deferred tax assets to the amount that is more likely than not to be
realized. Refer to Note 13.
Cash and Cash Equivalents/Consolidated Statements 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 totaled $196 million and $181 million at December 31, 2005 and 2004,
respectively. Cash Öows associated with book overdrafts are classiÑed as Ñnancing activities. During 2005, we
revised the classiÑcation for certain items, including restricted cash, in our Consolidated Statements of Cash
Flows. Restricted cash is now presented as an investing activity. The revised classiÑcations have also been
reÖected in the comparative prior year amounts for purposes of consistency.
Restricted Cash and Restricted Net Assets
Restricted cash primarily consists of Goodyear contributions made related to the settlement of the Entran II
litigation and proceeds received pursuant to insurance settlements. Refer to Note 17 for further information
about Entran II claims. In addition, we will, from time to time, maintain balances on deposit at various
Ñnancial institutions as collateral for borrowings incurred by various subsidiaries, as well as cash deposited in
support of trade agreements and performance bonds. The availability of these balances is restricted to the
extent of borrowings.
In certain countries where we operate, transfers of funds into or out of such countries by way of dividends,
loans or advances are generally or periodically subject to various restrictive governmental regulations. In
addition, certain of our credit agreements and other debt instruments restrict the ability of foreign subsidiaries
to make distributions of cash. At December 31, 2005, approximately $236 million of net assets were subject to
such restrictions, compared to approximately $221 million at December 31, 2004.
Inventories
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.
We determine a provision for excess and obsolete inventory based on management's review of inventories on
hand compared to estimated future usage and sales. Refer to Note 5.
We early adopted the provisions of Statement of Financial Accounting Standards No. 151, ""Inventory
Costs Ì an amendment of ARB No. 43, Chapter 4'' (SFAS 151) in 2005. The adoption of SFAS 151 did not
50
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
have a signiÑcant impact on our results of operations or Ñnancial position. In accordance with SFAS 151, we
recognize abnormal manufacturing variances as period costs and allocate Ñxed manufacturing overheads based
on normal production capacity.
Goodwill and Other Intangible Assets
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 not amortized, but are tested for
impairment annually or when events or circumstances indicate that impairment may have occurred, as
provided in Statement of Financial Accounting Standards No. 142, ""Goodwill and Other Intangible Assets.''
We perform the goodwill and intangible assets with indeÑnite useful lives impairment tests annually as of
July 31. The impairment test uses a valuation methodology based upon an EBITDA multiple using
comparable companies in the global automotive industry sector. In addition, the carrying amount of goodwill
and intangible assets with indeÑnite useful lives is reviewed whenever events or circumstances indicated that
revisions might be warranted. Goodwill and intangible assets with indeÑnite useful lives would be written down
to fair value if considered impaired. Intangible assets with Ñnite useful lives are amortized to their estimated
residual values over such Ñnite lives, and reviewed for impairment in accordance with Statement of Financial
Accounting Standards No. 144, ""Accounting for the Impairment or Disposal of Long-Lived Assets.'' Refer to
Note 6.
Investments
Investments in marketable 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 securities classiÑed as available-for-sale are recorded in Accumulated Other
Comprehensive Income (Loss), net of tax. We regularly review our investments to determine whether a
decline in fair value below the cost basis is other than temporary. If the decline in fair value is judged to be
other than temporary, the cost basis of the security is written down to fair value and the amount of the write-
down is included in the Consolidated Statements of Operations. Refer to Notes 7 and 16.
Properties and Plants
Properties and plants are stated at cost. Depreciation is computed using the straight-line method. Additions
and improvements that substantially extend the useful life of properties and plants, and interest costs incurred
during the construction period of major projects, are capitalized. Repair and maintenance costs are charged to
income in the period incurred. Properties and plants are depreciated to their estimated residual values over
their estimated useful lives, and reviewed for impairment in accordance with Statement of Financial
Accounting Standards No. 144, ""Accounting for the Impairment or Disposal of Long-Lived Assets.'' Refer to
Notes 8 and 14.
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, adjustments are recorded in income.
51
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
Derivative Financial Instruments and Hedging Activities
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 Sheets 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.
We do not include premiums paid on forward currency contracts in our 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 from time
to time 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 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 we temporarily continue 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 10.
Stock-Based Compensation
We use the intrinsic value method prescribed in Accounting Principles Board (APB) Opinion No. 25,
""Accounting for Stock Issued to Employees,'' (APB 25) 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 our 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 our common stock at the end of the reporting period. Refer to Note 11.
We determined pro forma amounts as if the fair value method required by SFAS No. 123, ""Accounting
for Stock-Based Compensation,'' (SFAS 123) had been applied to our stock-based compensation. The fair
value of stock options was estimated on the date of grant using the Black-Scholes option pricing model.
52
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
The pro forma eÅect on net income (loss) as if the fair value of stock-based compensation had been
recognized as compensation expense on a straight-line basis over the vesting period of the stock option or
purchase right was as follows:
(In millions, except per share)
Net income (loss) as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Add: Stock-based compensation expense included in net income (loss)
(net of tax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deduct: Stock-based compensation expense calculated using the fair
Year Ended December 31,
2003
2004
2005
$ 228
$ 115
$ (807)
5
6
1
value method (net of tax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(21)
(20)
(28)
Net income (loss) as adjusted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 212
$ 101
$ (834)
Net income (loss) per share:
Basic Ì as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì as adjustedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Diluted Ì as reportedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì as adjustedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1.30
1.20
$1.16
1.09
$0.65
0.58
$0.63
0.56
$(4.61)
(4.76)
$(4.61)
(4.76)
Earnings Per Share of Common Stock
Basic earnings per share were computed based on the weighted average number of common shares
outstanding. Diluted earnings per share primarily reÖects the dilutive impact of outstanding stock options and
in 2005 and 2004, contingently convertible debt, regardless of whether the provision of the contingent features
had been met.
All earnings per share amounts in these notes to the Ñnancial statements are diluted, unless otherwise
noted. Refer to Note 11.
Asset Retirement Obligations
We adopted FASB Interpretation No. 47, ""Accounting for Conditional Asset Retirement Obligations''
(FIN 47) an interpretation of FASB Statement No. 143, ""Accounting for Asset Retirement Obligations''
(SFAS 143) on December 31, 2005. FIN 47 requires that the fair value of a liability for an asset retirement
obligation (ARO) be recognized in the period in which it is incurred and the settlement date is estimable, and
is capitalized as part of the carrying amount of the related tangible long-lived asset. The liability is recorded at
fair value and the capitalized cost is depreciated over the remaining useful life of the related asset. Refer to
Note 19.
ReclassiÑcation
Certain items previously reported in speciÑc Ñnancial statement captions have been reclassiÑed to conform to
the 2005 presentation.
Recently Issued Accounting Pronouncements
The provisions of SFAS 151 are intended to eliminate narrow diÅerences between the existing accounting
standards of the FASB and the International Accounting Standards Board (IASB) related to inventory costs,
in particular, the treatment of abnormal idle facility expense, freight, handling costs and spoilage. SFAS 151
requires that these costs be recognized as current period charges regardless of the extent to which they are
53
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 1. Accounting Policies (continued)
considered abnormal. The provisions of SFAS 151 are eÅective for inventory costs incurred during Ñscal years
beginning after June 15, 2005. We early adopted SFAS 151 in 2005. The adoption of SFAS 151 did not have a
signiÑcant impact on our results of operations or Ñnancial position.
The FASB has issued Statement of Financial Accounting Standards No. 123 (revised 2004),
""Share-Based Payment'' (SFAS 123R) which replaced SFAS 123 and superseded APB 25. Under the
provisions of SFAS 123R, companies are required to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value of the award (with limited
exception). That cost will be recognized over the period during which an employee is required to provide
service in exchange for the award, usually the vesting period. On April 14, 2005, the SEC approved a delay to
the eÅective date of SFAS 123R. Under the new SEC rule, SFAS 123R is eÅective for annual periods that
begin after June 15, 2005. SFAS 123R applies to all awards granted, modiÑed, repurchased or cancelled by us
after December 31, 2005 and to unvested awards at the date of adoption. We will adopt SFAS 123R in the
Ñrst quarter of 2006. In 2006, we will recognize approximately $15 million in expense for stock options, which
were previously not expensed under APB 25.
The FASB issued FSP FAS 123R-2, ""Practical Accommodation to the Application of Grant Date as
DeÑned in FAS 123R'' (FSP 123R-2) in October 2005. FSP 123R-2 provides guidance on the application of
grant date as deÑned in SFAS No. 123R. In accordance with this standard, a grant date of an award exists if
a) the award is a unilateral grant and b) the key terms and conditions of the award are expected to be
communicated to an individual recipient within a relatively short time period from the date of approval. We
will adopt this standard when we adopt SFAS 123R, and it will not have a material impact on our consolidated
Ñnancial position, results of operations or cash Öows.
In May 2005, the FASB issued SFAS No. 154, ""Accounting Changes and Error Corrections''
(SFAS 154). SFAS 154 is a replacement of Accounting Principles Board No. 20, ""Accounting Changes'' and
FASB Statement No. 3 ""Reporting Accounting Changes in Interim Financial Statements.'' SFAS 154
provides guidance on the accounting for and reporting of accounting changes and error corrections. It
establishes retrospective application as the required method for reporting a change in accounting principle.
SFAS 154 provides guidance for determining whether retrospective application of a change in accounting
principle is impracticable and for reporting a change when retrospective application is impracticable. The
reporting of a correction of an error by restating previously issued Ñnancial statements is also addressed by
SFAS 154. SFAS 154 is eÅective for accounting changes and corrections of errors made in Ñscal years
beginning after December 31, 2005. We will adopt this pronouncement beginning in Ñscal year 2006.
In June 2005, the FASB staÅ issued FASB StaÅ Position 143-1 ""Accounting for Electronic Equipment
Waste Obligations'' (FSP 143-1) to address the accounting for obligations associated with the Directive
2002/96/EC on Waste Electrical and Electronic Equipment (the ""Directive'') adopted by the European
Union (EU). The Directive eÅectively obligates a commercial user to incur costs associated with the
retirement of a speciÑed asset that qualiÑes as historical waste equipment. The commercial user should apply
the provisions of SFAS 143 and FIN 47. FSP 143-1 shall be applied the later of the Ñrst reporting period
ending after June 8, 2005 or the date of the adoption of the law by the applicable EU-member country. We
adopted the FSP at certain of our European operations where applicable legislation was adopted. The impact
of the adoption on the consolidated Ñnancial statements was not signiÑcant.
54
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 2. Costs Associated with Rationalization Programs
To maintain global competitiveness, we have 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 included in the Consolidated Statements of Operations were as follows:
(In millions)
New charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversals ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
$ 29
(18)
$ 95
(39)
$307
(16)
$ 11
$ 56
$291
The following table presents the reconciliation of the liability balance between periods:
(In millions)
Accrual balance at December 31, 2002ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003 chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to the statement of operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accrual balance at December 31, 2003ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2004 chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
FIN 46 adoption ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to the statement of operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accrual balance at December 31, 2004ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005 chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reversed to the statement of operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Associate-
related
Costs
Other Than
Associate-
related
Costs
$
25
295
(198)
Ì
(12)
110
76
(110)
Ì
(35)
41
26
(37)
(11)
$ 44
12
(16)
(3)
(4)
33
19
(23)
2
(4)
27
3
(8)
(7)
Total
$
69
307
(214)
(3)
(16)
143
95
(133)
2
(39)
68
29
(45)
(18)
Accrual balance at December 31, 2005ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
19
$ 15
$
34
Rationalization charges in 2005 consisted of manufacturing associate reductions, retail store reductions,
IT associate reductions, and a sales function reorganization in European Union Tire; manufacturing and
administrative associate reductions in Eastern Europe, Middle East and Africa Tire; sales, marketing, and
research and development associate reductions in Engineered Products; and manufacturing and corporate
support group associate reductions in North American Tire.
For 2005, $11 million ($5 million after-tax or $0.02 per share) of net charges were recorded, which
included $29 million ($20 million after-tax or $0.09 per share) of new rationalization charges. The charges
were partially oÅset by $18 million ($15 million after-tax or $0.07 per share) of reversals of rationalization
charges no longer needed for their originally-intended purposes. The $18 million of reversals consisted of
$11 million of associate-related costs for plans initiated in 2004 and 2003, and $7 million primarily for
non-cancelable leases that were exited during the Ñrst quarter related to plans initiated in 2001 and earlier.
The $29 million of charges primarily represented associate-related costs and consist of $26 million for plans
initiated in 2005 and $3 million for plans initiated in 2004 and 2003. Approximately 900 associates will be
55
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 2. Costs Associated with Rationalization Programs (continued)
released under the programs initiated in 2005, of which approximately 425 were released by December 31,
2005.
In 2005, $35 million was incurred primarily for associate severance payments, $1 million for cash pension
settlement beneÑt costs, $1 million for non-cash pension and postretirement special termination beneÑt costs,
and $8 million was incurred primarily for non-cancelable lease costs.
The accrual balance of $34 million at December 31, 2005 includes approximately $10 million related to
long-term non-cancelable lease costs and approximately $24 million of other costs that are expected to be
substantially utilized within the next twelve months.
Accelerated depreciation charges totaling $5 million were recorded for Ñxed assets that will be taken out
of service in connection with certain rationalization plans initiated in 2005 and 2004 in the Engineered
Products and European Union Tire Segments. During 2005, $4 million was recorded as Cost of goods sold and
$1 million was recorded as Selling, administrative and general expense.
The following table summarizes, by segment, the total charges expected to be recorded and the total
charges recorded in 2005, related to the new plans initiated in 2005:
(In millions)
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East and Africa Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered ProductsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expected Total
Charge
Charges
Recorded in
2005
$ 3
9
14
7
$33
$ 3
9
10
4
$26
Additional rationalizations charges of $6 million and $1 million related to rationalization plans announced in
2005 and 2004, respectively, have not yet been recorded and are expected to be incurred and recorded during
the next twelve months. There are no remaining restructuring charges related to rationalization plans initiated
in 2003.
2004 rationalizations activities consisted primarily of warehouse, manufacturing and sales and marketing
associate reductions in Engineered Products, a farm tire manufacturing consolidation in European Union Tire,
administrative associate reductions in North American Tire, European Union Tire and corporate functional
groups, and manufacturing, sales and research and development associate reductions in North American Tire.
In Ñscal year 2004, net charges were recorded totaling $56 million ($48 million after-tax or $0.27 per
share). The net charges included reversals of $39 million ($32 million after-tax or $0.17 per share) related to
reserves from rationalization actions no longer needed for their originally-intended purpose, and new charges
of $95 million ($84 million after-tax or $0.44 per share). Included in the $95 million of new charges was
$77 million for plans initiated in 2004. Approximately 1,165 associates will be released under programs
initiated in 2004, of which approximately 1,085 have been released to date (445 in 2005 and 640 in 2004). The
costs of the 2004 actions consisted of $40 million related to future cash outÖows, primarily for associate
severance costs, including $32 million in non-cash pension curtailments and postretirement beneÑt costs and
$5 million for non-cancelable lease costs and other exit costs. Costs in 2004 also included $16 million related
to plans initiated in 2003, consisting of $14 million of non-cancelable lease costs and other exit costs and
$2 million of associate severance costs. The reversals are primarily the result of lower than initially estimated
associate severance costs of $35 million and lower leasehold and other exit costs of $4 million. Of the
$35 million of associate severance cost reversals, $12 million related to previously-approved plans in
56
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 2. Costs Associated with Rationalization Programs (continued)
Engineered Products that were reorganized into the 2004 warehouse, manufacturing, and sales and marketing
associate reductions.
In 2004, $75 million was incurred primarily for associate severance payments, $35 million for non-cash
pension curtailments and postretirement beneÑt costs, and $23 million was incurred for non-cancelable lease
costs and other costs. The accrual balance of $68 million at December 31, 2004 includes approximately
$17 million related to long term non-cancelable lease costs and approximately $51 million of associate and
other costs.
Accelerated depreciation charges totaling $10 million were recorded in 2004 for Ñxed assets that were
taken out of service in connection with certain rationalization plans initiated in 2003 and 2004 in European
Union Tire, Latin American Tire and Engineered Products. During 2004, $7 million was recorded as CGS and
$3 million was recorded as SAG.
In 2003, net charges were recorded totaling $291 million ($267 million after-tax or $1.52 per share). The
net charges included reversals of $16 million ($14 million after-tax or $0.08 per share) related to reserves from
rationalization actions no longer needed for their originally intended purpose, and new charges of $307 million
($281 million after-tax or $1.60 per share). The 2003 rationalization actions consisted of manufacturing,
research and development, administrative and retail consolidations in North America, Europe and Latin
America. Of the $307 million of new charges, $175 million related to future cash outÖows, primarily associate
severance costs, and $132 million related primarily to non-cash special termination beneÑts and pension and
retiree beneÑt curtailments. Approximately 4,300 associates have been released under the programs initiated
in 2003, of which approximately 100 were exited in 2005, approximately 1,500 were exited during 2004 and
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, favorable sublease contract signings in the
European Union of approximately $3 million and lower contract termination costs in the United States of
approximately $1 million.
As part of the 2003 rationalization program, we closed our Huntsville, Alabama tire facility in the fourth
quarter of 2003. Of the $307 million of new rationalization charges in 2003, approximately $138 million
related to the Huntsville closure and were primarily for associate-related costs, including severance, special
termination beneÑts and pension and retiree beneÑt curtailments. The Huntsville closure also resulted in
charges to CGS of approximately $35 million for asset impairments and $85 million for accelerated
depreciation and the write-oÅ of spare parts. In addition, 2003 CGS included charges totaling approximately
$8 million to write-oÅ construction in progress related to the research and development rationalization plan,
and approximately $5 million for accelerated depreciation on equipment taken out of service at European
Union Tire's facility in Wolverhampton, England.
57
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 3. Other (Income) and Expense
(In millions)
Financing fees and Ñnancial instrumentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Environmental insurance settlement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net loss on asset salesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency exchange ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Insurance Ñre (recovery)/loss deductible ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity in (earnings) losses of aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
General and product liability Ì discontinued products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Miscellaneous ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
$109
(59)
(29)
36
22
(14)
(11)
9
7
$ 117
(34)
(157)
4
23
12
(8)
53
13
$ 99
(28)
Ì
25
41
Ì
15
138
27
$ 70
$
23
$317
Financing fees and Ñnancial instruments in 2005 included $47 million of debt issuance costs written-oÅ in
connection with our reÑnancing activities during the second quarter of 2005. This includes approximately
$30 million of previously unamortized fees related to replaced facilities and $17 million of costs related to the
new facilities. In 2004, $21 million of deferred costs were written-oÅ in connection with our reÑnancing
activities. Refer to Note 10, Financing Arrangements and Derivative Financial Instruments, for further
information on the 2005 reÑnancing activities.
Interest income consisted primarily of amounts earned on cash deposits. The increase was due primarily
to higher levels of cash deposits in the United States. At December 31, 2005, signiÑcant concentrations of
cash, cash equivalents and restricted cash held by our international subsidiaries included the following
amounts:
‚ $673 million or 28% in Europe, primarily Western Europe, ($590 million or 28% at December 31,
2004),
‚ $213 million or 9% in Asia, primarily Australia, ($140 million or 7% at December 31, 2004), and
‚ $203 million or 8% in Latin America, primarily Brazil, ($198 million or 9% at December 31, 2004).
In 2005, we recorded a gain of $29 million ($29 million after-tax or $0.14 per share) from settlements
with certain insurance companies related to environmental coverage. Environmental insurance settlement in
2004 included a beneÑt of $157 million resulting from a settlement with certain insurance companies in
exchange for releasing the insurers from certain past, present and future environmental claims. A signiÑcant
portion of the costs incurred by us related to these claims had been recorded in prior years. See further
discussion on insurance settlements discussed in general and product liability Ì discontinued products below.
Net loss on asset sales in the 2005 included a loss of $73 million ($73 million after-tax or $0.35 per share)
on the sale of the Farm Tire business in North American Tire , a gain of $24 million ($24 million after-tax or
$0.12 per share) on the sale of the Wingtack adhesive resins business in North American Tire and net gains of
$13 million ($12 million after-tax or $0.06 per share) on the sales of other assets primarily in North American
Tire.
Net losses on asset sales in 2004 were $4 million ($8 million after-tax or $0.04 per share) on the sale of
assets in North American Tire, European Union Tire and Engineered Products. The net loss includes
$15 million on the write-down of assets of our natural rubber plantation in Indonesia.
Net losses on asset sales in 2003 included a loss of $18 million ($9 million after-tax or $0.05 per share)
on the sale of 20,833,000 shares of common stock of Sumitomo Rubber Industries, Ltd., for which we received
58
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 3. Other (Income) and Expense (continued)
$83 million. Also in 2003, net losses of $7 million ($7 million after-tax or $0.04 per share) was recorded on the
sale of assets in Engineered Products, North American Tire, European Union Tire, Asia PaciÑc Tire and Latin
American Tire.
Foreign currency exchange loss in 2004 was lower than in 2003, as 2003 reÖected the weakening of the
Brazilian real versus the U.S. dollar.
Insurance Ñre recovery of $14 million ($7 million after-tax or $0.03 per share) in 2005 was related to a
2004 Ñre at a company facility in Germany. The gain represents insurance recoveries in excess of the net book
value of assets destroyed. Goodyear has reached Ñnal settlement with its insurance providers.
Insurance Ñre loss deductible in 2004 included a charge of $12 million ($12 million after-tax or $0.07 per
share) related to Ñres at our facilities in Germany, France and Thailand. During 2004, approximately
$36 million in insurance recoveries were received related to these Ñre losses. At December 31, 2004 we had
recorded an insurance receivable of approximately $16 million to recover additional expenses associated with
the Ñre losses in Germany. We did not record any insurance recoveries in excess of the net book value of the
assets destroyed (less the insurance deductible limits) and other costs incurred.
Equity in (earnings) losses of aÇliates in 2004 compared to 2003 increased primarily due to improved
results at Rubbernetwork.com and the consolidation of SPT eÅective January 1, 2004. Our share of losses at
SPT was included in 2003.
General and product liability-discontinued products includes charges for claims against us related to
asbestos personal injury claims, and for liabilities related to Entran II claims, net of probable insurance
recoveries. During 2005, we recorded gains of $32 million ($32 million after-tax or $0.16 per share) from
settlements with certain insurance companies related to asbestos coverage. A portion of the costs incurred by
us related to these claims had been recorded in prior years. Refer to Note 17, Commitments and Contingent
Liabilities, for further information.
During 2004, $42 million of net expenses related to Entran II claims ($142 million of expense and
$100 million of insurance recoveries) and $11 million of net expenses related to asbestos claims ($13 million
of expense and $2 million of probable insurance recoveries). During 2003, $180 million of net expenses related
to Entran II claims ($255 million of expense and $75 million of insurance recoveries) was partially oÅset by
$42 million of net income related to asbestos claims ($24 million of expense and $66 million of probable
insurance recoveries).
Miscellaneous items included Ñnancial transaction taxes in Latin America of $8 million, $8 million, and
$13 million in 2005, 2004 and 2003, respectively. Costs related to the exploration of a possible sale of our
Chemical Products business totaling $4 million and $3 million were included in 2004 and 2003, respectively. A
$6 million charge for the adoption of FIN 46 for lease-Ñnancing SPEs was recorded in 2003.
Note 4. Accounts and Notes Receivable
(In millions)
Accounts and notes receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Allowance for doubtful accounts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$3,288
(130)
$3,542
(144)
$3,158
$3,398
Accounts and Notes Receivable included non-trade receivables totaling $300 million and $426 million at
December 31, 2005 and 2004, respectively. These amounts primarily related to value-added taxes, an
environmental receivable, derivative Ñnancial instruments, and tax receivables.
59
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 4. Accounts and Notes Receivable (continued)
The allowance for doubtful accounts represents an estimate of the losses expected from our accounts and
notes receivable portfolio. The level of the allowance is based on many quantitative and qualitative factors,
including historical loss experience by region, portfolio duration, economic conditions and credit risk quality.
The adequacy of the allowance is assessed quarterly.
Various international subsidiaries sold certain of their trade receivables under oÅ-balance sheet programs
during 2005 and 2004. The receivable Ñnancing programs of these international subsidiaries did not utilize an
SPE. At December 31, 2005 and 2004, the value in U.S. dollars available to and utilized by these international
subsidiaries was $3 million and $5 million, respectively.
During 2004, one of our international subsidiaries had established an accounts receivable continuous sales
program whereunder this subsidiary may receive proceeds from the sale of certain of its receivables to a SPE
aÇliates of a certain bank. This subsidiary retained servicing responsibilities. This program was terminated
during 2004.
The following table presents certain cash Öows related to this program:
(In millions)
Proceeds from collections reinvested in previous securitizationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reimbursement for rebates and discounts issued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash used for termination of programÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2004
$633
60
76
Prior to April 1, 2003, we maintained a program for the continuous sale of substantially all of our domestic
trade accounts receivable to Wingfoot A/R LLC, a wholly-owned limited liability subsidiary company that
was a bankruptcy-remote SPE. A similar program also was maintained for substantially all of the trade
accounts receivable of our wholly-owned subsidiary in Canada. The results of operations and Ñnancial position
of Wingfoot A/R LLC were not included in our consolidated Ñnancial statements as provided by Statement of
Financial Accounting Standards No. 140, ""Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities.'' This program was terminated on April 1, 2003. Our consolidated debt
increased by $578 million at April 1, 2003 in connection with the termination of this program.
The following table presents certain cash Öows related to this program:
(In millions)
Proceeds from collections reinvested in previous securitizations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Servicing fees received ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reimbursement for rebates and discounts issued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash used for termination of program ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
$1,089
1
28
545
Note 5.
Inventories
(In millions)
Raw materialsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Work in process ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Finished products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$ 639
137
2,086
$ 586
140
2,058
$2,862
$2,784
60
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 6. Goodwill and Other Intangible Assets
The net carrying amount of goodwill allocated by reporting unit, and changes during 2005, follows:
(In millions)
North American Tire ÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East
and Africa Tire ÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏ
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏ
Balance at
December 31, 2004
Purchase Price
Allocation
Divestitures
Translation &
Other
Adjustments
Balance at
December 31, 2005
$102
403
124
1
67
20
$717
$Ì
Ì
Ì
Ì
Ì
2
$ 2
$(8)
Ì
Ì
Ì
Ì
Ì
$
4
(60)
(13)
(1)
(3)
(1)
$(8)
$(74)
$ 98
343
111
Ì
64
21
$637
The net carrying amount of goodwill allocated by reporting unit, and changes during 2004, follows:
(In millions)
North American TireÏÏÏÏÏÏÏÏÏ
European Union TireÏÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East
and Africa TireÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏ
Asia PaciÑc TireÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏ
Balance at
December 31, 2003
Purchase Price
Allocation
FIN 46
Impact
Translation &
Other
Adjustments
Balance at
December 31, 2004
$101
355
110
1
63
20
$650
$Ì
17
1
Ì
Ì
Ì
$18
$ 3
Ì
Ì
Ì
2
Ì
$(2)
31
13
Ì
2
Ì
$ 5
$44
$102
403
124
1
67
20
$717
The following table presents information about other intangible assets:
2005
2004
Gross
Net
Gross
Net
(In millions)
Intangible assets with indeÑnite lives ÏÏÏÏÏÏ
Trademarks and Patents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Other intangible assetsÏÏÏÏÏÏÏÏÏÏÏ
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount
Amount
Amortization
Amortization
Amount
Amount
$119
48
28
$195
$ (9)
(20)
(7)
$(36)
$110
28
21
$159
$121
53
34
$208
$ (9)
(19)
(11)
$(39)
$112
34
23
$169
The carrying amount of intangible assets with indeÑnite lives totaled $110 million and $112 million at
December 31, 2005 and 2004, respectively. This amount is primarily comprised of the right to use certain
brand names and trademarks on a non-competitive basis related to our global alliance with Sumitomo Rubber
Industries, Ltd.
Amortization expense for intangible assets totaled $4 million, $4 million and $5 million in 2005, 2004 and
2003, respectively. We estimate that annual amortization expense related to intangible assets will range from
approximately $3 million to $4 million during each of the next Ñve years and the weighted average remaining
amortization period is approximately 20 years.
61
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 7.
Investments
Consolidation of Variable Interest Entities
We applied the provisions of FIN 46 for entities that are not SPEs eÅective January 1, 2004 and consolidated
two previously unconsolidated investments, 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 sells to OE
manufacturers. This consolidation was treated as a non-cash transaction on the Consolidated Statements of
Cash Flows with the exception of approximately $24 million of cash and cash equivalents from SPT and
T&WA, which was included in Other assets and liabilities in the Operating activities section of the statement.
In connection with the consolidation of SPT and T&WA, we recorded approximately $5 million of goodwill.
Investments and Acquisitions
We have funded approximately 40% of the obligations under our Supplemental Pension Plan as of
December 31, 2005 (approximately 47% at December 31, 2004) using a Trust. The Trust invests in debt and
equity securities and funds current beneÑt payments under the Supplemental Pension Plan. No contributions
were made to the Trust in 2005 or 2004. The debt securities have maturities ranging from August 15, 2008
through February 15, 2010. The fair value of the Trust assets was $26 million and $29 million at December 31,
2005 and 2004, respectively, and was included in Other Assets on the Consolidated Balance Sheets. We have
classiÑed the Trust assets as available-for-sale, as provided in Statement of Financial Accounting Standards
No. 115, ""Accounting for Certain Investments in Debt and Equity Securities'' (SFAS 115). Accordingly,
gains and losses resulting from changes in the fair value of the Trust assets are deferred and reported on the
Consolidated Balance Sheets as OCI. At December 31, 2005, OCI included a gross unrealized holding gain on
the Trust assets of $4 million ($1 million after-tax).
We owned 3,421,305 shares of Sumitomo Rubber Industries, Ltd. (""SRI'') at December 31, 2005 and
2004 (the ""Sumitomo Investment''). The fair value of the Sumitomo Investment was $49 million and
$32 million at December 31, 2005 and 2004, respectively, and was included in Other Assets on the
Consolidated Balance Sheets. We have classiÑed the Sumitomo Investment as available-for-sale, as provided
in SFAS 115. At December 31, 2005, OCI included gross unrealized holding gains on the Sumitomo
Investment of $32 million ($34 million after-tax), compared to $16 million ($17 million after-tax) at
December 31, 2004.
In July 2004, Goodyear Dunlop Tires Europe B.V. (""GDTE''), a 75% owned subsidiary, completed the
acquisition of the remaining 50% outstanding ownership interest of D ackia, a major tire retail group in
Sweden, for approximately $10 million. We originally acquired a 50% stake in 1995. As a result of this
transaction, we now indirectly own 75% of D ackia, with SRI owning the remaining 25%. The acquisition was
accounted for using the purchase method of accounting. The asset valuation and the purchase price allocation
were completed in 2004. Pursuant to the purchase and resulting consolidation, we recorded an addition to
goodwill of $17 million in 2004. We also recorded intangible assets, including customer relationships,
trademarks and partner relationships, totaling $8 million.
During 2003, we transferred our 80% ownership of Sava Tires Joint Venture Holding d.o.o (""Sava Tire''),
a tire manufacturing subsidiary in Slovenia, to GDTE, for $282 million. In June 2004, we exercised our call
option, purchased the remaining outstanding 20% ownership interest of Sava Tires for approximately
$52 million, and sold it to GDTE for approximately $85 million. As a result of these transactions, we now
indirectly own 75% of Sava Tire, with GDTE's joint venture partner, SRI, owning the remaining 25%. The
acquisition was accounted for using the purchase method of accounting. Pursuant to this transaction, we
recorded an addition to goodwill of $1 million in 2004. The purchase price allocation was completed at
December 31, 2004.
62
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 7.
Investments (continued)
In 2003, we purchased Arkansas Best Corporation's remaining 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 million.
Dividends received from our consolidated subsidiaries were $290 million, $155 million and $219 million
in 2005, 2004 and 2003, respectively. Dividends received from our unconsolidated aÇliates accounted for
using the equity method were $7 million, $3 million and $3 million in 2005, 2004 and 2003, respectively.
Note 8. Properties and Plants
(In millions)
Properties and plants, at cost:
2005
Capital
Leases
Owned
Total
Owned
2004
Capital
Leases
Total
Land and improvements ÏÏÏÏÏÏÏÏÏÏÏÏ
Buildings and improvementsÏÏÏÏÏÏÏÏÏ
Machinery and equipment ÏÏÏÏÏÏÏÏÏÏ
Construction in progress ÏÏÏÏÏÏÏÏÏÏÏÏ
$
415
1,856
9,982
445
$
9
91
110
Ì
$
424
1,947
10,092
445
$
360
1,778
10,479
449
$ 17
94
102
Ì
$
377
1,872
10,581
449
Accumulated depreciationÏÏÏÏÏÏÏÏÏÏÏÏÏ
12,698
(7,635)
210
(94)
12,908
(7,729)
13,066
(7,736)
213
(90)
13,279
(7,826)
$ 5,063
$116
$ 5,179
$ 5,330
$123
$ 5,453
The range of useful lives of property used in arriving at the annual amount of depreciation provided are as
follows: buildings and improvements, 8 to 45 years; machinery and equipment, 3 to 30 years.
Note 9. Leased Assets
Net rental expense charged to income follows:
(In millions)
Gross rental expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Sublease rental income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
$379
(76)
$349
(74)
$331
(65)
$303
$275
$266
We enter into leases primarily for vehicles, data processing equipment and our wholesale and retail
distribution facilities under varying terms and conditions. A portion of our domestic retail distribution network
is sublet to independent dealers. Many of the leases require us to pay taxes assessed against leased property
and the cost of insurance and maintenance.
While substantially all subleases and some operating leases are cancelable for periods beyond 2006,
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, we would normally
expect to evaluate such leases and either renew the leases or substitute another more favorable retail location.
63
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 9. Leased Assets (continued)
The following table presents minimum future lease payments:
(In millions)
Capital Leases
Minimum lease payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Imputed interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Executory costsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Present value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Leases
2006
2007
2008
2009
2010
2011 and
Beyond
Total
$ 13
$ 12
$ 12
$ 12
$ 12
$ 46
$ 107
(30)
(1)
$
76
Minimum lease payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minimum sublease rentals ÏÏÏÏÏÏÏÏÏÏÏÏÏ
$315
(51)
$254
(42)
$193
(33)
$145
(24)
$109
(15)
$455
$1,471
(20)
(185)
$264
$212
$160
$121
$ 94
$435
1,286
Imputed interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Present value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(393)
$ 893
At December 31, 2004, we were a party to lease agreements with an unrelated SPE that was a VIE as deÑned
by FIN 46. The agreements were related to certain North American distribution facilities. At December 31,
2004, the carrying amount of the warehouses that were pledged as collateral under the North American
distribution facilities agreements totaled $27 million. These agreements were terminated during 2005.
Note 10. Financing Arrangements and Derivative Financial Instruments
At December 31, 2005, we had total credit arrangements totaling $7,527 million, of which $1,677 million were
unused.
Notes Payable, Long Term Debt and Capital Leases due Within One Year and Short Term Financing
Arrangements
At December 31, 2005, we had short term committed and uncommitted credit arrangements totaling
$415 million, of which $92 million related to consolidated VIEs. Of these amounts, $182 million and
$18 million, respectively, were unused. These arrangements are available primarily to certain of our
international subsidiaries through various banks at quoted market interest rates. There are no commitment
fees associated with these arrangements.
64
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
The following table presents amounts due within one year at December 31:
(In millions)
Notes payable:
Amounts related to VIEs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other international subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$ 74
159
$233
$
91
136
$ 227
Weighted average interest rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
5.43%
6.72%
Long term debt and capital leases due within one year:
Amounts related to VIEs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
63/8% Euro Notes due 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
53/8% Swiss Franc Bond due 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
65/8% due 2006ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European credit facilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other (including capital leases) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 54
Ì
120
216
Ì
58
$448
$
24
542
Ì
Ì
400
44
$1,010
Weighted average interest rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total obligations due within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6.13%
$681
6.34%
$1,237
Amounts related to VIEs in Notes payable represent short term debt of SPT. Amounts related to VIEs in
Long term debt and capital leases due within one year represented amounts owed by T&WA and SPT.
Long Term Debt and Capital Leases and Financing Arrangements
At December 31, 2005, we had long term credit arrangements totaling $7,112 million, of which $1,495 million
were unused.
65
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
The following table presents long term debt and capital leases, net of unamortized discounts, and interest
rates at December 31:
(In millions)
Notes:
2005
Interest
Rate
2004
Interest
Rate
63/8% Euro Notes due 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
53/8% Swiss franc bonds due 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
65/8% due 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
81/2% due 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
63/8% due 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
76/7% due 2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Floating rate notes due 2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
11% due 2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
9% due 2015 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7% due 2028 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
4% Convertible Senior Notes due 2034 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ Ì
120
216
300
100
650
200
448
400
149
350
Ì $
*
*
*
*
*
12.31%
*
*
*
*
542
139
223
300
100
650
200
448
Ì
149
350
*
*
*
*
*
*
9.99%
*
Ì
*
*
Bank term loans:
$400 million senior secured term loan European
facilities due 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$800 million senior secured asset-based term loan due
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$650 million senior secured asset-based term loan due
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1.2 billion second lien term loan facility due 2010 ÏÏÏÏ
$300 million third lien secured term loan due 2011 ÏÏÏÏ
4155 million senior secured term loan European facility
due 2010ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pan-European accounts receivable facility due 2009ÏÏÏÏÏÏ
Other domestic and international debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amounts related to VIEs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital lease obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Less portion due within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
Ì
1,200
300
183
324
85
89
5,114
76
5,190
(448)
$4,742
Ì
Ì
Ì
7.06%
7.81%
4.85%
3.91%
6.20%
6.45%
400
6.33%
800
6.14%
650
Ì
Ì
Ì
225
123
94
7.03%
Ì
Ì
Ì
3.90%
6.19%
6.41%
5,393
60
5,453
(1,010)
$ 4,443
* Represents debt with Ñxed interest rate.
66
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
The following table presents information about long term Ñxed rate, including capital leases, debt at
December 31:
(In millions)
Carrying amount Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value Ì liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$2,847
3,119
$3,055
3,388
The fair value was estimated using quoted market prices or discounted future cash Öows. The fair value
exceeded the carrying amount at December 31, 2005 and 2004 due primarily to lower market interest rates.
The fair value of the 65/8% Notes due 2006 was partially hedged by Öoating rate swap contracts with notional
principal amounts totaling $200 million at December 31, 2005 and 2004, respectively. The fair value of our
variable rate debt approximated its carrying amount at December 31, 2005 and 2004.
$650 Million Senior Secured Notes
On March 12, 2004, we completed a private oÅering of $650 million of senior secured notes, consisting of
$450 million of 11% senior secured notes due 2011 and $200 million of Öoating rate notes due 2011, which
accrue interest at LIBOR plus 8%. The proceeds of the notes were used to prepay the remaining outstanding
amount under the then-existing U.S. term loan facility, permanently reduce commitments under the
then-existing revolving credit facility by $70 million, and for general corporate purposes. The notes are
guaranteed by the same subsidiaries that guarantee our $1.5 billion Ñrst lien credit facility. The notes are
secured by perfected third-priority liens on the same collateral securing those facilities.
We have the right to redeem the Ñxed rate notes in whole or in part from time to time on and after
March 1, 2008. The redemption price, plus accrued and unpaid interest to the redemption date, would be
105.5%, 102.75%, and 100.0% on and after March 1, 2008, 2009 and 2010, respectively. We may also redeem
the Ñxed rate notes prior to March 1, 2008 at a redemption price equal to 100% of the principal amount plus a
make-whole premium. We have the right to redeem the Öoating rate notes in whole or in part from time to
time on and after March 1, 2008. The redemption price, plus accrued and unpaid interest to the redemption
date, would be 104.0%, 102.0%, and 100.0% on and after March 1, 2008, 2009 and 2010, respectively. In
addition, prior to March 1, 2007, we have the right to redeem up to 35% of the Ñxed and Öoating rate notes
with net cash proceeds from one or more public equity oÅerings. The redemption price would be 111% for the
Ñxed rate notes and 100% plus the then-applicable Öoating rate for the Öoating rate notes, plus accrued and
unpaid interest to the redemption date.
The Indenture for the senior secured notes contains restrictions on our operations, including limitations on:
‚ incurring additional indebtedness or liens,
‚ paying dividends, making distributions and stock repurchases,
‚ making investments,
‚ selling assets, and
‚ merging and consolidating.
In the event that the senior secured notes have a rating equal to or greater than Baa3 from Moody's and
BBB¿ from Standard and Poor's, a number of those restrictions will not apply, for so long as those credit
ratings are maintained.
67
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
$350 Million Convertible Senior Note OÅering
On July 2, 2004, we completed an oÅering of $350 million aggregate principal amount of 4% Convertible
Senior Notes due June 15, 2034. The notes are convertible into share of our common stock initially at a
conversion rate of 83.07 shares of common stock per $1,000 principal amounts of notes, which is equal to an
initial conversion price of $12.04 per share. The proceeds from the notes were used to repay temporarily a
revolving credit facility and for working capital purposes.
$400 Million Senior Notes OÅering
On June 23, 2005, we completed an oÅering of $400 million aggregate principal amount of 9% Senior Notes
due 2015 in a transaction under Rule 144A and Regulation S under the Securities Act of 1933. The senior
notes are guaranteed by our U.S. and Canadian subsidiaries that also guarantee our obligations under our
senior secured credit facilities. The guarantees are unsecured. The proceeds were used to repay $200 million in
borrowings under our U.S. Ñrst lien revolving credit facility, and to replace $190 million of the cash, that we
used to pay the $488 million principal amount of our 63/8% Euro Notes due 2005 at maturity on June 6, 2005.
The remainder of the proceeds was used for general corporate purposes. In conjunction with the debt issuance,
we paid fees of approximately $10 million, which are being amortized over the term of the senior notes.
The Indenture governing the senior notes limits our ability and the ability of certain of our subsidiaries to
(i) incur additional debt or issue redeemable preferred stock, (ii) pay dividends, or make certain other
restricted payments or investments, (iii) incur liens, (iv) sell assets, (v) incur restrictions on the ability of our
subsidiaries to pay dividends to us, (vi) enter into aÇliate transactions, (vii) engage in sale and leaseback
transactions, and (viii) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets.
These covenants are subject to signiÑcant exceptions and qualiÑcations. For example, if the senior notes are
assigned an investment grade rating by Moody's and S&P and no default has occurred or is continuing, certain
covenants will be suspended.
April 8, 2005 ReÑnancing
On April 8, 2005 we completed a reÑnancing in which we replaced approximately $3.28 billion of credit
facilities with new facilities aggregating $3.65 billion. The new facilities consist of:
‚ a $1.5 billion Ñrst lien credit facility due April 30, 2010 (consisting of a $1.0 billion revolving facility
and a $500 million deposit-funded facility);
‚ a $1.2 billion second lien term loan facility due April 30, 2010;
‚ the Euro equivalent of approximately $650 million in credit facilities for Goodyear Dunlop Tires
Europe B.V. (""GDTE'') due April 30, 2010 (consisting of approximately $450 million in revolving
facilities and approximately $200 million in term loan facilities); and
‚ a $300 million third lien term loan facility due March 1, 2011.
In connection with the reÑnancing, we paid down and retired the following facilities:
‚ our $1.3 billion asset-based credit facility, due March 2006 (the $800 million term loan portion of this
facility was fully drawn prior to the reÑnancing);
‚ our $650 million asset-based term loan facility, due March 2006 (this facility was fully drawn prior to
the reÑnancing);
‚ our $680 million deposit-funded credit facility due September 2007 (there were $492 million of letters
of credit outstanding under this facility prior to the reÑnancing); and
68
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
‚ our $650 million senior secured European facilities due April 2005 (the $400 million term loan portion
of this facility was fully drawn prior to the reÑnancing).
In conjunction with the reÑnancing, we paid fees of approximately $57 million. In addition, we paid
approximately $20 million of termination fees associated with the replaced facilities. We recognized
approximately $47 million of expense in the second quarter to write-oÅ fees associated with the reÑnancing,
including approximately $30 million of previously unamortized fees related to the replaced facilities. The
remaining fees are being amortized over the term of the new facilities. The new facilities have customary
representations and warranties including, as a condition to borrowing, material adverse change representations
in our Ñnancial condition since December 31, 2004.
$1.5 Billion First Lien Credit Facility
The $1.5 billion Ñrst lien credit facility consists of a $1.0 billion revolving facility and a $500 million deposit-
funded facility. Our obligations under these facilities are guaranteed by most of our wholly-owned
U.S. subsidiaries and by our wholly-owned Canadian subsidiary, Goodyear Canada Inc. Our obligations under
this facility and our subsidiaries' obligations under the related guarantees are secured by collateral that
includes, subject to certain exceptions:
‚ Ñrst-priority security interests in certain U.S. and Canadian accounts receivable and inventory;
‚ Ñrst-priority security interests in and mortgages on our U.S. corporate headquarters and certain of our
U.S. manufacturing facilities;
‚ Ñrst-priority security interests in the equity interests in our U.S. subsidiaries and up to 65% of the
equity interests in our foreign subsidiaries, excluding GDTE and its subsidiaries and certain other
subsidiaries; and
‚ Ñrst-priority security interests in substantially all other tangible and intangible assets, including
equipment, contract rights and intellectual property.
The facility, which matures on April 30, 2010, contains certain covenants that, among other things, limit
our ability to incur additional unsecured and secured indebtedness (including a limit on accounts receivable
transactions), make investments and sell assets beyond speciÑed limits. Under certain circumstances,
borrowings under the facility are required to be prepaid with proceeds of asset sales greater than $15 million.
The facility limits the amount of dividends we may pay on our common stock in any Ñscal year to $10 million.
This limit increases to $50 million in any Ñscal year if Moody's public senior implied rating and Standard &
Poor's (S&P) corporate credit rating improve to Ba2 or better and BB or better, respectively. The facility also
limits the amount of capital expenditures we may make to $700 million in each year through 2010 (with
increases for the proceeds of equity issuances). Any unused capital expenditures for a year may be carried over
into succeeding years.
We are not permitted to allow the ratio of Consolidated EBITDA to Consolidated Interest Expense to fall
below a ratio of 2.00 to 1.00 for any period of four consecutive Ñscal quarters. In addition, our ratio of
Consolidated Secured Indebtedness (net of cash in excess of $400 million) to Consolidated EBITDA is not
permitted to be greater than 3.50 to 1.00 at the end of any Ñscal quarter.
Availability under the facility is subject to a borrowing base, which is based on eligible accounts
receivable and inventory, with reserves which are subject to adjustment from time to time by the
administrative agent and the majority lenders at their discretion (not to be exercised unreasonably).
Adjustments are based on the results of periodic collateral and borrowing base evaluations and appraisals. If at
any time the amount of outstanding borrowings and letters of credit under the facility exceeds the borrowing
69
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
base, we are required to prepay borrowings and/or cash collateralize letters of credit suÇcient to eliminate the
excess.
Interest rates on the facility are dependent on the amount of the facility that is available and unused.
‚ If the availability under the facility is greater than or equal to $400 million, then drawn amounts
(including amounts outstanding under the deposit-funded facility) will bear interest at a rate of
175 basis points over LIBOR, and undrawn amounts under the facilities will be subject to an annual
commitment fee of 50 basis points;
‚ If the availability under the facility is less than $400 million and greater than or equal to $250 million,
then drawn amounts (including amounts outstanding under the deposit-funded facility) will bear
interest at a rate of 200 basis points over LIBOR, and undrawn amounts under the facilities will be
subject to an annual commitment fee of 40 basis points; and
‚ If the availability under the facility is less than $250 million, then drawn amounts (including amounts
outstanding under the deposit-funded facility) will bear interest at a rate of 225 basis points over
LIBOR, and undrawn amounts under the facilities will be subject to an annual commitment fee of
37.5 basis points.
With respect to the deposit-funded facility, the lenders deposited the entire $500 million of the facility in
an account held by the administrative agent, and those funds are used to support letters of credit or borrowings
on a revolving basis, in each case subject to customary conditions. The full amount of the deposit-funded
facility is available for the issuance of letters of credit or for revolving loans. As of December 31, 2005, there
were $499 million of letters of credit issued under the deposit-funded facility. There were no borrowings under
the revolving facility.
$1.2 Billion Second Lien Term Loan Facility
At closing, we used the entire availability under this facility to pay down and retire our prior credit facilities.
Our obligations under this facility are guaranteed by most of our wholly-owned U.S. subsidiaries and by our
wholly-owned Canadian subsidiary, Goodyear Canada Inc. and are secured by second priority security
interests in the same collateral securing the $1.5 billion Ñrst lien credit facility. The facility contains covenants
similar to those in the $1.5 billion Ñrst lien credit facility. However, the facility contains additional Öexibility
for the incurrence of indebtedness, making of investments and asset dispositions, the payment of dividends and
the making of capital expenditures and does not contain the two Ñnancial covenants that are in the Ñrst lien
credit facility. Under certain circumstances, borrowings under the facility are required to be prepaid with
proceeds of asset sales greater than $15 million. Loans under this facility bear interest at LIBOR plus
275 basis points. As of December 31, 2005, this facility was fully drawn.
Euro Equivalent of $650 Million (7505 Million) Senior Secured European Credit Facilities
These facilities consist of (i) a 4195 million European revolving credit facility, (ii) an additional 4155 million
German revolving credit facility, and (iii) 4155 million of German term loan facilities. We secure the
U.S. facilities described above and provide unsecured guarantees to support these facilities. GDTE and certain
of its subsidiaries in the United Kingdom, Luxembourg, France and Germany also provide guarantees.
70
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
GDTE's obligations under the facilities and the obligations of subsidiary guarantors under the related
guarantees are secured by collateral that includes, subject to certain exceptions:
‚ Ñrst-priority security interests in the capital stock of the principal subsidiaries of GDTE; and
‚ Ñrst-priority security interests in and mortgages on substantially all the tangible and intangible assets of
GDTE and GDTE's subsidiaries 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 and cash accounts in subsidiaries that are or
may become parties to securitization programs.
The facilities contain covenants similar to those in the $1.5 billion Ñrst lien credit facility, with special
limits on the ability of GDTE and its subsidiaries to incur additional unsecured and secured indebtedness,
make investments and sell assets beyond speciÑed limits. The facilities also limit the amount of capital
expenditures that GDTE may make to $200 million in 2005, $250 million in 2006 and $300 million per year
thereafter, with the unused amount in any year carried forward to the succeeding years. In addition, under the
facilities we are not permitted to allow the ratio of Consolidated Indebtedness (net of cash in excess of
$100 million) to Consolidated EBITDA of GDTE to be greater than 2.75 to 1.00 at the end of any Ñscal
quarter. Under certain circumstances, borrowings under the term facility are required to be prepaid with
proceeds of asset sales by GDTE and its subsidiaries greater than $15 million. Loans under the term loan
facility bear interest at LIBOR plus 237.5 basis points. With respect to the revolving credit facilities, we pay
an annual commitment fee of 75 basis points on the undrawn portion of the commitments and loans bear
interest at LIBOR plus 275 basis points. As of December 31, 2005, there were $4 million of letters of credit
issued under the European revolving credit facility, $183 million was drawn under the German term loan
facilities and there were no borrowings under the German or European revolving credit facilities.
$300 Million Third Lien Secured Term Loan Facility
At closing, we used the availability under this facility to pay down and retire our prior credit facilities and pay
certain fees and expenses. Our obligations under this facility are guaranteed by most of our wholly-owned
U.S. subsidiaries and by our wholly-owned Canadian subsidiary, Goodyear Canada Inc. and are secured by
third priority security interests in the same collateral securing the $1.5 billion Ñrst lien credit facility (however,
the facility is not secured by any of the manufacturing facilities that secure the Ñrst and second lien facilities).
The liens are pari-passu with the liens securing our $650 million secured notes due 2011. The facility contains
covenants substantially identical to those contained in the $650 million secured notes due 2011, which limit
our ability to incur additional indebtedness or liens, pay dividends, make distributions and stock repurchases,
make investments and sell assets, among other limitations. Loans under this facility bear interest at LIBOR
plus 350 basis points. As of December 31, 2005, this facility was fully drawn.
International Accounts Receivable Securitization Facilities (On-Balance-Sheet)
On December 10, 2004, GDTE and certain of its subsidiaries entered into a new Ñve-year pan-European
accounts receivable securitization facility. The facility provides 4275 million of funding and is subject to
customary annual renewal of back-up liquidity lines.
71
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
The facility involves the twice-monthly sale of substantially all of the trade accounts receivable of certain
GDTE subsidiaries to a bankruptcy-remote French company controlled by one of the liquidity banks in the
facility. These subsidiaries retained servicing responsibilities. It is an event of default under the facility if:
‚ the ratio of our Consolidated EBITDA to our Consolidated Interest Expense falls below 2.00 to 1.00;
‚ the ratio of our Consolidated Secured Indebtedness (net of cash in excess of $400 million) to our
Consolidated EBITDA is greater than 3.50 to 1.00; or
‚ the ratio of GDTE's third party indebtedness (net of cash held by GDTE and its Consolidated
subsidiaries in excess of $100 million) to its Consolidated EBITDA is greater than 2.75 to 1.00.
The deÑned terms used in the events of default tests are similar to those in the European Credit Facilities.
As of December 31, 2005 and 2004, the amount available and fully utilized under this program totaled
$324 million and $225 million, respectively. The program did not qualify for sale accounting pursuant to the
provisions of Statement of Financial Accounting Standards No. 140, ""Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities'', and accordingly, this amount is included in Long
term debt and capital leases.
In addition to the pan-European accounts receivable securitization facility discussed above, SPT and
other subsidiaries in Australia have accounts receivable programs totaling $67 million and $63 million at
December 31, 2005 and 2004, respectively. These amounts are included in Notes payable.
Debt Maturities
The annual aggregate maturities of long term debt and capital leases for the Ñve years subsequent to
December 31, 2005 are presented below. Maturities of debt credit agreements have been reported on the basis
that the commitments to lend under these agreements will be terminated eÅective at the end of their current
terms.
(In millions)
Domestic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2006
2007
2008
2009
2010
$345
103
$448
$305
33
$338
$107
4
$111
$
5
330
$335
$1,206
187
$1,393
Derivative Financial Instruments
We utilize derivative Ñnancial instrument contracts and nonderivative instruments to manage interest rate,
foreign exchange and commodity price risks. We have 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.
Interest Rate Exchange Contracts
We manage our Ñxed and Öoating rate debt mix, within deÑned limitations, using reÑnancings and unleveraged
interest rate swaps. We 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 our 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. We use
72
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
interest rate swap contracts to separate interest rate risk management from the debt funding decision. At
December 31, 2005, the interest rate on 49% of our debt was Ñxed by either the nature of the obligation or
through the interest rate contracts, compared to 50% at December 31, 2004.
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.
(Dollars in millions)
Fixed rate contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive variable Australian Bank Bill Rate ÏÏÏÏÏ
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:
Current asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
December 31, 2004
Settled
December 31, 2005
$ 15
5.94%
5.43%
0.50
$ Ì
Ì
Ì
$ 200
4.31%
6.63%
1.92
6
$
4
2
$ 15
5.94%
5.43%
Ì
$ Ì
Ì
Ì
$ Ì
Ì
Ì
Ì
$ Ì
Ì
Ì
$ Ì
Ì
Ì
Ì
$ Ì
Ì
Ì
$ 200
6.27%
6.63%
0.92
$ Ì
Ì
Ì
Weighted average interest rate swap contract information follows:
(Dollars in millions)
Fixed rate contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay Ñxed rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive variable LIBOR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Floating rate contracts:
Notional principal amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pay variable LIBORÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Receive Ñxed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Twelve Months Ended
December 31,
2004
2005
2003
7
$ 96
$ 325
$
5.94% 5.14% 5.00%
5.66% 1.86% 1.24%
$ 207
$ 200
$ 200
4.92% 3.27% 3.03%
6.63% 6.63% 6.63%
Interest Rate Lock Contracts
We 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
73
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
and losses on these contracts are amortized to income over the life of the debt. No contracts were outstanding
at December 31, 2005 or 2004.
Foreign Currency Contracts
We will enter into 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. 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, royalty agreements and forecasted purchases and sales.
In addition, the principal and interest on our Swiss franc bonds due 2006 is hedged by currency swap
agreements, as were 4100 million of the 63/8% Euro Notes until they matured in June 2005.
Contracts hedging the Swiss franc bonds are designated as cash Öow hedges, as were contracts hedging
4100 million of the 63/8% Euro Notes until they matured in June 2005. 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 hedged amounts of principal and interest of the Swiss franc bonds and, through June 2005,
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 contract information at December 31:
(In millions)
Buy currency:
EuroÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Swiss franc ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Japanese yenÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
U.S. dollarÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
All other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
Fair
Value
Contract
Amount
Fair
Value
Contract
Amount
$ 34
120
30
127
3
$314
$ 34
82
31
126
2
$275
$159
140
23
144
13
$479
$116
81
22
145
13
$377
Contract maturity:
Swiss franc swap ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Euro swap ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
All other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
3/06
Ì
1/06 Ì 10/19
3/06
6/05
1/05 Ì 10/19
74
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 10. Financing Arrangements and Derivative Financial Instruments (continued)
(In millions)
Sell currency:
British pound ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Swedish krona ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Canadian dollar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
EuroÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
All other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
Fair
Value
Contract
Amount
Fair
Value
Contract
Amount
$ 41
13
64
120
11
$249
$ 41
13
65
120
11
$250
$217
34
62
77
24
$414
$219
34
63
74
24
$414
Contract maturityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1/06 Ì 9/06
1/05 Ì 12/05
The following table presents foreign currency contract carrying amounts at December 31:
2005
2004
Carrying amount Ì asset (liability):
Swiss franc swap Ì current ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$38
Swiss franc swap Ì long term ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
Euro swaps Ì currentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
3
Other Ì current asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2
Other Ì long term assetÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(1)
Other Ì current liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(2)
Other Ì long term liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$Ì
60
46
4
1
(6)
(3)
We were not a party to any foreign currency option contracts at December 31, 2005 or 2004.
The counterparties to our interest rate 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, we consider 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
have a material eÅect on our consolidated Ñnancial position, results of operations or liquidity in the period in
which it occurs.
Note 11. Stock Compensation Plans and Dilutive Securities
Our 1989 Performance and Equity Incentive Plan, 1997 Performance Incentive Plan, 2002 Performance Plan,
and 2005 Performance Plan 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, the 1997 Plan expired on December 31, 2001, and the 2002 Plan
expired on April 15, 2005, except, in each case, with respect to grants and awards outstanding. The 2005 Plan
will expire on April 26, 2008, except with respect to grants and awards then outstanding. A maximum of
12,000,000 shares of our Common Stock are available for issuance pursuant to grants and awards made under
the 2005 Plan through April 26, 2008. 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 under the 2002 Plan 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%)
75
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 11. Stock Compensation Plans and Dilutive Securities (continued)
over a three year performance period beginning January 1 of the year subsequent to the year of grant. Any
additional grants made during the three year period are earned over the remaining portion of the period. 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 our Common
Stock and payable in cash, shares of our Common Stock or a combination thereof at the election of the
participant. As of December 31, 2005, all performance units granted under the 2002 Plan are earned and are
subject to payment in 2006.
On December 4, 2000, we 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 our Common Stock
may be granted. We also adopted on that date the Hourly and Salaried Employee Stock Option Plan, under
which options in respect of up to 600,000 shares of our 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.
Stock-based compensation activity for the years 2005, 2004 and 2003 follows:
2005
2004
2003
Shares
SARs
Shares
SARs
Shares
SARs
Outstanding at January 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29,323,012
2,038,050
(1,151,743)
Options granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Options without SARs exercised ÏÏÏÏÏÏÏÏ
Options with SARs exercised ÏÏÏÏÏÏÏÏÏÏÏ
SARs exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Options without SARs expired ÏÏÏÏÏÏÏÏÏÏ
Options with SARs expiredÏÏÏÏÏÏÏÏÏÏÏÏÏ
Performance units grantedÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Performance unit shares issuedÏÏÏÏÏÏÏÏÏÏ
Performance units cancelled ÏÏÏÏÏÏÏÏÏÏÏÏ
5,863,250
453,425
26,999,985
4,149,660
Ì (293,799)
(16,300)
(360)
Ì (1,105,094)
(149,010) (149,010)
(17,060)
(17,060)
(951,599)
(238,326) (238,326)
Ì
Ì
Ì
Ì
Ì (222,149)
(155,330)
(29,953)
Ì
4,965,789
1,103,052
Ì
(16,300)
(360)
24,476,229
3,907,552
Ì
Ì
Ì
Ì (1,011,943)
4,110,830
1,009,588
Ì
Ì
Ì
Ì
(154,629) (154,629)
Ì
Ì
Ì
(188,931) (188,931)
8,500
Ì
Ì
Ì
Ì (225,724)
Outstanding at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏ 28,668,041
5,912,279
29,323,012
5,863,250
26,999,985
4,965,789
Exercisable at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21,333,128
3,985,595
20,362,573
3,517,595
18,697,146
2,899,381
Available for grant at December 31ÏÏÏÏÏÏÏÏ
10,301,344
965,138
4,846,238
76
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 11. Stock Compensation Plans and Dilutive Securities (continued)
SigniÑcant option groups outstanding at December 31, 2005 and related weighted average price and remaining
life information follows:
Grant Date
12/06/05(1)
12/09/04
12/03/03
12/03/02
12/03/01
12/04/00
12/06/99
11/30/98
12/02/97
12/03/96
All other
Options
Outstanding
1,605,936
3,718,590
2,906,667
1,972,317
2,724,939
5,205,334
2,923,658
1,916,352
1,687,837
1,404,255
2,229,454
Options
Exercisable
Ì
867,392
1,249,495
1,428,863
2,724,939
5,205,334
2,923,658
1,916,352
1,687,837
1,404,255
1,925,003
Exercisable
Price
Remaining
Life (Years)
$17.15
12.54
6.81
7.94
22.05
17.68
32.00
57.25
63.50
50.00
34.07
10
9
8
7
6
5
4
3
2
1
3
(1) The number of options granted in 2005 decreased in comparison to 2004 and 2003, as we expect to grant
performance units to certain employees in 2006 in lieu of a portion of their 2005 option grant.
The 2,229,454 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 $31.21. All options, SARs and performance units were
granted at an exercise price equal to the fair market value of our Common Stock at the date of grant.
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
$24.96
17.15
8.03
25.11
29.49
$26.90
12.54
7.61
24.96
31.02
$30.28
6.81
Ì
26.90
33.80
2005
2004
2003
Forfeitures and cancellations were insigniÑcant.
Weighted average fair values at date of grant for grants in 2005, 2004 and 2003 follow:
2005
2004
2003
OptionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Performance units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 8.61
Ì
$ 6.36
Ì
$3.41
6.81
The above fair value of options at date of grant was estimated using the Black-Scholes model with the
following weighted average assumptions:
2005
2004
2003
6.25
5.00
Expected life (years) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
4.35% 3.55% 3.41%
Interest rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
54.7
Volatility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
44.7
Ì
Dividend yield ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
54.0
Ì
5.00
77
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 11. Stock Compensation Plans and Dilutive Securities (continued)
Earnings Per Share Information
Basic earnings per share have been computed based on the weighted average number of common shares
outstanding.
There are contingent conversion features included in our $350 million 4% Convertible Senior Notes due
2034 (the ""Notes''), issued on July 2, 2004. Accordingly, weighted average shares outstanding Ì diluted in
2005 and 2004 included approximately 29.1 million and 14.5 million, respectively, contingently issuable
shares. Net income per share Ì diluted in 2005 and 2004 also included an earnings adjustment representing
avoided after-tax interest expense of $14 million and $7 million, respectively, resulting from the assumed
conversion of the Notes.
The Notes became convertible on July 18, 2005 and remained convertible through September 30, 2005.
The Notes became convertible again on October 18, 2005 and remained convertible through December 31,
2005. No Notes were converted in 2005. If all outstanding Notes are surrendered for conversion, the aggregate
number of shares of common stock issued would be approximately 29 million shares. The Notes became
convertible on January 17, 2006 and will remain convertible through March 31, 2006. The Notes could be
convertible after March 31, 2006 if the sales price condition is met in any future Ñscal quarter or if any other
conditions to conversion set forth in the indenture governing the Notes is met.
The following table presents the number of incremental weighted average shares used in computing
diluted per share amounts:
2005
2004
2003
Weighted average shares outstanding Ì basic ÏÏÏÏÏÏ
4% Convertible Senior Notes due 2034ÏÏÏÏÏÏÏÏÏÏÏÏ
Stock options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
176,107,411
29,069,767
3,553,194
175,377,316
14,534,884
2,346,070
175,314,449
Ì
Ì
Weighted average shares outstanding Ì dilutedÏÏÏÏÏ
208,730,372
192,258,270
175,314,449
In 2005, 2004 and 2003, approximately 23.1 million, 23.1 million and 21.4 million, respectively, of equivalent
shares related to stock options with exercise prices that were greater than the average market price of our
common shares, and performance grants, were excluded from weighted average shares outstanding-diluted, as
inclusion would have been anti-dilutive. In addition, in 2003, the earnings per share calculation does not
include approximately 1 million equivalent shares of stock options with exercise prices that were less than the
average market price of our common shares, and performance grants, in weighted average shares outstand-
ing Ì diluted as we were in a net loss position and inclusion would also have been anti-dilutive.
The following table presents the computation of adjusted net income (loss) used in computing net
income (loss) per share Ì diluted.
(In millions)
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
After-tax impact of 4% Convertible Senior Notes due 2034 ÏÏÏÏÏÏÏÏÏÏÏ
$228
14
Adjusted Net Income (Loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$242
2005
2004
2003
$115
7
$122
$(807)
Ì
$(807)
Note 12. Pension, Other Postretirement BeneÑt and Savings Plans
We 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
78
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 12. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
plans receive higher beneÑts. EÅective January 1, 2005, the U.S. salaried pension plan was closed to new
participants and eÅective October 1, 2005, our UK pension plans were closed to new participants. Other
pension plans provide beneÑts similar to the principal domestic plans as well as termination indemnity plans at
certain non-U.S. subsidiaries.
We also provide substantially all domestic employees and employees at certain non-U.S. 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 us. BeneÑt
payments are funded from operations.
On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act (the
""Act'') was signed into law. The Act provides plan sponsors a federal subsidy for certain qualifying
prescription drug beneÑts covered under the sponsor's postretirement health care plans. On May 19, 2004, the
FASB issued StaÅ Position No. FAS 106-2, ""Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003'' (FSP 106-2), which requires
measures of the accumulated postretirement beneÑt obligation and net periodic postretirement beneÑt costs to
reÖect the eÅects of the Act in the Ñrst interim or annual period beginning after June 15, 2004. On January 21,
2005, Ñnal regulations under the Act were issued. Based on the clariÑcations provided in the Ñnal regulations,
our total periodic postretirement cost was lowered by $64 million in 2005. This change increased pre-tax
income (loss) by $53 million in 2005. The diÅerence between the net periodic postretirement cost and pre-tax
income (loss) amounts represents the portion of net periodic postretirement cost that is carried in inventory at
December 31, 2005. The accumulated postretirement beneÑt obligation was reduced by $529 million. This
reduction in the obligation is amortized as a reduction of expense over the average remaining service life of
active employees.
We use a December 31 measurement date for the majority of our plans.
Pension cost follows:
(In millions)
Service cost Ì beneÑts earned during the periodÏÏÏÏÏÏÏÏ
Interest cost on projected beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏ
Expected return on plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of unrecognized: Ì prior service cost ÏÏÏÏÏÏ
Ì net (gains) losses ÏÏÏÏÏ
Ì transition amount ÏÏÏÏÏ
2005
$
56
294
(258)
63
86
Ì
U.S.
2004
2003
2005
Non-U.S.
2004
$
41
300
(234)
71
79
Ì
$
83
295
(211)
70
96
Ì
$
49
128
(115)
3
59
1
$
45
121
(116)
4
39
1
2003
$
40
105
(100)
4
30
1
Net periodic pension cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Curtailments/settlements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Special termination beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
241
13
15
257
14
4
333
40
43
125
2
Ì
94
(7)
Ì
80
5
Ì
Total pension cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 269
$ 275
$ 416
$ 127
$
87
$ 85
79
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 12. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
Postretirement beneÑt cost follows:
(In millions)
Service cost Ì beneÑts earned during the period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest cost on accumulated beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Amortization of unrecognized: Ì net losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì prior service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net periodic postretirement cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Curtailments/settlementsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Special termination beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
With
Without
Medicare Medicare
Subsidy
Subsidy
2005
2005
$ 23
149
10
43
225
25
Ì
$ 28
178
41
43
290
24
Ì
2004
2003
$ 25
188
35
45
293
12
Ì
$ 24
174
32
17
247
24
20
Total postretirement cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$250
$314
$305
$291
80
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 12. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
The change in beneÑt obligation and plan assets for 2005 and 2004 and the amounts recognized in our
Consolidated Balance Sheets at December 31, 2005 and 2004 are as follows:
(In millions)
Change in beneÑt obligation:
Pension Plans
U.S.
Non-U.S.
Other BeneÑts
2005
2004
2005
2004
2005
2004
Beginning balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Newly adopted plans ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Service cost Ì beneÑts earned ÏÏÏÏÏ
Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Plan amendmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Actuarial (loss) gain ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employee contributions ÏÏÏÏÏÏÏÏÏÏÏ
Curtailments/settlements ÏÏÏÏÏÏÏÏÏ
Special termination beneÑts ÏÏÏÏÏÏÏ
Divestitures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation ÏÏÏÏÏÏÏ
BeneÑt payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(5,191)
Ì
(56)
(294)
Ì
(174)
(11)
Ì
(15)
Ì
Ì
334
$(4,887)
Ì
(41)
(300)
1
(301)
(10)
(2)
(4)
Ì
Ì
353
$(2,529)
(1)
(49)
(128)
Ì
(273)
(8)
1
Ì
9
203
129
$(1,996)
(87)
(45)
(121)
Ì
(231)
(9)
Ì
Ì
Ì
(172)
132
$(3,218)
Ì
(23)
(149)
Ì
532
(19)
(7)
Ì
Ì
(5)
260
$(3,079)
Ì
(25)
(188)
4
(165)
(9)
Ì
Ì
Ì
(14)
258
Ending balanceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(5,407)
$(5,191)
$(2,646)
$(2,529)
$(2,629)
$(3,218)
Change in plan assets:
Beginning balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Newly adopted plans ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Actual return on plan assets ÏÏÏÏÏÏÏ
Company contributions to pension
$ 3,046
Ì
261
$ 2,886
Ì
330
$ 1,552
Ì
206
$ 1,243
84
149
$ Ì $ Ì
Ì
Ì
Ì
Ì
funds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
407
157
81
67
Cash funding of direct participant
payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Employee contributions ÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency translation ÏÏÏÏÏÏÏ
BeneÑt payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ending balanceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Funded statusÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrecognized prior service cost ÏÏÏÏÏÏ
Unrecognized net loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrecognized net obligation at
13
11
Ì
(334)
16
10
Ì
(353)
25
8
(105)
(129)
25
9
107
(132)
Ì
Ì
Ì
Ì
Ì
Ì
Ì
Ì
Ì
Ì
$ 3,404
$ 3,046
$ 1,638
$ 1,552
$ Ì $ Ì
(2,003)
325
1,646
(2,145)
401
1,561
(1,008)
20
1,025
(977)
17
987
(2,629)
359
355
(3,218)
420
895
transition ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Ì
Net amount recognized ÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
(32)
$ (183)
$
2
39
$
3
30
Ì
Ì
$(1,915)
$(1,903)
81
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 12. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
Amounts recognized in the Consolidated Balance Sheets consist of:
(In millions)
Prepaid beneÑt cost Ì long term ÏÏÏÏÏÏÏÏÏÏ
Accrued beneÑt cost Ì current ÏÏÏÏÏÏÏÏÏÏÏ
Ì long term ÏÏÏÏÏÏÏÏÏ
Intangible asset included in other assets ÏÏÏÏ
Deferred income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated other comprehensive income
Pension Plans
U.S.
Non-U.S.
Other BeneÑts
2005
2004
2005
2004
2005
2004
$ Ì $ Ì $
(192)
(1,725)
329
210
28
(58)
(2,006)
405
210
25
17
(21)
(848)
22
117
143
$
19
(27)
(817)
25
95
146
$ Ì $ Ì
(303)
(1,600)
Ì
Ì
Ì
(254)
(1,661)
Ì
Ì
Ì
(OCI) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1,318
1,241
609
589
Ì
Ì
Net amount recognized ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
(32)
$ (183)
$
39
$
30
$(1,915)
$(1,903)
The increase (decrease) in minimum pension liability adjustment (net of tax) included in OCI follows:
(In millions)
Increase (decrease) in minimum pension
Pension Plans
U.S.
2005
2004
2003
2005
Non-U.S.
2004
2003
Other BeneÑts
2004
2003
2005
liability adjustment included in OCIÏÏÏÏÏ
$77
$126
$(176) $20
$158
$48 N/A N/A N/A
The following table presents signiÑcant weighted average assumptions used to determine beneÑt obligations at
December 31:
Pension Plans
2004
2005
Other BeneÑts
2004
2005
Discount rate: Ì U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì Non-U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rate of compensation increase: Ì U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì Non-U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
5.50% 5.75% 5.50% 5.75%
4.96
4.04
3.64
6.13
4.08
4.27
5.41
4.04
3.48
6.91
4.00
4.67
The following table presents signiÑcant weighted average assumptions used to determine net periodic
pension/postretirement cost for the years ended December 31:
Pension Plans
2004
2005
2003
2005
Other BeneÑts
2004
2003
Discount rate: Ì U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.75% 6.25% 6.75% 5.75% 6.25% 6.75%
Ì Non-U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.41
Expected long term return on plan assets: Ì U.S. ÏÏÏÏÏ 8.50
7.49
Rate of compensation increase: Ì U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.04
Ì Non-U.S. ÏÏÏÏÏÏÏÏÏ 3.48
Ì Non-U.S.
5.93
8.50
8.03
4.00
3.43
6.20
8.50
8.03
4.00
3.50
6.91
Ì
Ì
4.00
4.67
7.22
Ì
Ì
4.00
4.47
7.48
Ì
Ì
4.00
4.80
For 2005, an assumed long-term rate of return of 8.5% was used for the U.S. pension plans. In developing this
rate, we evaluated the compound annualized returns of our U.S. pension fund over periods of 15 years or more
(through December 31, 2004). In addition, we evaluated input from our pension fund consultant on asset class
return expectations and long-term inÖation. For our non-U.S. locations, a weighted average assumed
82
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 12. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
long-term rate of return of 7.49% was used. Input from local pension fund consultants concerning asset class
return expectations and long-term inÖation form the basis of this assumption.
The following table presents estimated future beneÑt payments from the plans as of December 31, 2005.
BeneÑt payments for other postretirement beneÑts are presented net of retiree contributions:
(In millions)
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2010 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2011-2015 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Pension Plans
U.S.
Non-U.S.
Other BeneÑts
Without Medicare Medicare Part D
Subsidy Receipts
Part D Subsidy
$ 332
342
352
362
383
2,072
$116
117
120
124
128
727
$ 272
272
270
264
258
1,181
$ (18)
(22)
(25)
(28)
(31)
(189)
The following table presents selected information on our pension plans:
(In millions)
All plans:
U.S.
Non-U.S.
2005
2004
2005
2004
Accumulated beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$5,315
$5,104
$2,464
$2,344
Plans not fully-funded:
Projected beneÑt obligationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated beneÑt obligation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Fair value of plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$5,407
5,315
3,404
$5,191
5,104
3,046
$2,499
2,332
1,486
$2,368
2,199
1,385
Certain non-U.S. subsidiaries maintain unfunded pension plans consistent with local practices and require-
ments. At December 31, 2005, these plans accounted for $221 million of our accumulated pension beneÑt
obligation, $235 million of our projected pension beneÑt obligation and $49 million of our minimum pension
liability adjustment ($233 million, $247 million and $43 million, respectively, at December 31, 2004).
Our pension plan weighted average asset allocation at December 31, by asset category, follows:
U.S.
Non-U.S.
2005
2004
2005
2004
69% 71% 48% 52%
Equity securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Debt securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
31
Cash and short term securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
28
1
45
3
50
2
TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
100% 100% 100% 100%
At December 31, 2005 and 2004, we did not directly hold any of our Common Stock.
Our 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 we have established individually with investment managers. The
manager guidelines prohibit the use of any type of investment derivative without our prior approval. 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. We periodically undertake
83
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 12. Pension, Other Postretirement BeneÑt and Savings Plans (continued)
asset and liability modeling studies to determine the appropriateness of the investments. The portfolio includes
holdings of domestic, non-U.S., and private equities, global high quality and high yield Ñxed income securities,
and short-term interest bearing deposits. The target asset allocation of the U.S. pension fund is 70% equities
and 30% Ñxed income.
We expect to contribute approximately $800 million to $875 million to our funded major U.S. and
non-U.S. pension plans in 2006.
Assumed health care cost trend rates at December 31 follow:
2005
2004
Health care cost trend rate assumed for the next year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) ÏÏ
Year that the rate reaches the ultimate trend rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
11.5% 12.0%
5.0
2013
5.0
2013
A 1% change in the assumed health care cost trend would have increased (decreased) the accumulated
postretirement beneÑt obligation at December 31, 2005 and the aggregate service and interest cost for the year
then ended as follows:
(In millions)
Accumulated postretirement beneÑt obligationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Aggregate service and interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1% Increase
1% Decrease
$39
3
$(33)
(3)
Savings Plans
Substantially all employees in the U.S. and employees of certain non-U.S. locations are eligible to participate
in a savings plan. EÅective January 1, 2005, all newly hired salaried employees in the U.S. are eligible for a
Company-funded contribution into the Salaried Savings Plan, as they are not eligible to participate in our
deÑned beneÑt pension plan. The expenses recognized for contributions were $21 million, $18 million and
$15 million for 2005, 2004 and 2003, respectively.
Note 13.
Income Taxes
The components of Income (Loss) before Income Taxes and Cumulative EÅect of Accounting Change,
adjusted for Minority Interest in Net Income of Subsidiaries, follow:
(In millions)
U.S. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Interest in Net Income of Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
$(278)
767
$(329)
652
$(1,048)
358
489
95
323
58
(690)
33
$ 584
$ 381
$ (657)
84
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 13.
Income Taxes (continued)
A reconciliation of income taxes at the U.S. statutory rate to income taxes provided before cumulative eÅect
of accounting change follows:
(In millions)
U.S. Federal income tax at the statutory rate of 35% ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Adjustment for foreign income taxed at diÅerent rates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
U.S. loss with no tax beneÑtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
State income taxes, net of Federal beneÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign operating losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Release of valuation allowances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Settlement of prior years' liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Provision for repatriation of foreign earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
$204
(16)
69
(3)
21
(20)
(4)
3
(4)
$133
(12)
98
(1)
45
Ì
(46)
(5)
(4)
$(230)
Ì
359
(4)
47
(11)
(44)
8
(8)
United States and Foreign Taxes on Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$250
$208
$ 117
The components of the provision (beneÑt) for income taxes by taxing jurisdiction before cumulative eÅect of
accounting change follow:
(In millions)
Current:
2005
2004
2003
Federal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
State ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(26)
297
(2)
$(60)
273
(1)
$(49)
180
(4)
Deferred:
Federal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
State ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
269
212
127
(2)
(16)
(1)
(19)
(1)
(3)
Ì
(4)
(8)
(2)
Ì
(10)
United States and Foreign Taxes on Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$250
$208
$117
85
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 13.
Income Taxes (continued)
Temporary diÅerences and carryforwards giving rise to deferred tax assets and liabilities at December 31
follow:
(In millions)
Postretirement beneÑts and pensions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax credit and operating loss carryforwards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capitalized expenditures for tax reportingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accrued expenses deductible as paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Alternative minimum tax credit carryforwards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Vacation and sick pay ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations and other provisionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Valuation allowance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Tax on undistributed subsidiary earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total deferred tax liabilities:
2005
2004
$ 1,306
454
232
270
63
54
7
81
$ 1,235
457
259
277
62
52
17
101
2,467
(2,052)
2,460
(2,072)
415
(18)
388
(18)
Ì property basis diÅerencesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(448)
(482)
Total net deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
(51)
$ (112)
At December 31, 2005, we had $299 million of tax assets for net operating loss and tax credit carryforwards
related to certain international subsidiaries, some of which are subject to expiration beginning in 2006. A
valuation allowance totaling $247 million has been recorded against these and other deferred tax assets where
recovery of the asset or carryforward is uncertain. In addition, we had $155 million of Federal and state tax
assets for net operating loss and tax credit carryforwards, some of which are subject to expiration beginning in
2006. A full valuation allowance has also been recorded against these deferred tax assets as recovery is
uncertain.
No provision for Federal income tax or foreign withholding tax on undistributed earnings of international
subsidiaries of $1,839 million 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.
On June 30, 2005, the State of Ohio enacted signiÑcant changes to its tax system that will be phased in
over a Ñve year period including repealing the Corporate Ohio Franchise/Income Tax, repealing the Tangible
Personal Property Tax on business equipment, inventory and Ñxtures, and enacted a new commercial activity
tax based on Ohio gross receipts. The eÅect of these changes is not expected to have a material impact on our
results of operations, Ñnancial position or liquidity.
The American Job Creation Act of 2004 was signed into law in October 2004 and replaces an export
incentive with a deduction from domestic manufacturing income. As we are both an exporter and a domestic
manufacturer and in a U.S. tax loss position, this change did not have a material impact on our income tax
provision for 2005. It also provides for a special one-time tax deduction of 85% of certain foreign earnings that
were repatriated no later than 2005. We evaluated the eÅects of this provision in light of our 2005 U.S. loss
position and determined not to repatriate under the provisions of the Act as it would not provide a tax beneÑt
to us.
86
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 13.
Income Taxes (continued)
Net cash payments for income taxes were $239 million, $201 million and $73 million in 2005, 2004 and
2003, respectively.
Note 14.
Interest Expense
Interest expense includes interest and amortization of debt discounts, less amounts capitalized as follows:
(In millions)
Interest expense before capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capitalized interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
$418
(7)
$376
(7)
$304
(8)
$411
$369
$296
Cash payments for interest were $401 million, $357 million and $283 million in 2005, 2004 and 2003,
respectively.
Note 15. Business Segments
Segment information reÖects our strategic business units (SBUs), which are organized to meet customer
requirements and global competition.
EÅective January 1, 2005 our former Chemical Products Segment was integrated into North American
Tire. Intercompany sales from Chemical Products to other segments are no longer reÖected in our segment
sales. In addition, segment operating income from intercompany sales from Chemical Products to other
segments is no longer reÖected in our total segment operating income.
The Tire business is comprised of Ñve regional SBUs. Engineered Products is managed on a global basis.
Segment information is reported on the basis used for reporting to our Chairman of the Board, Chief
Executive OÇcer and President.
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 OE and replacement tires for autos, motorcycles, trucks, aviation 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. North American Tire information in 2005 and 2004 includes T&WA,
which was consolidated eÅective January 1, 2004 pursuant to FIN 46. Refer to Note 7.
European Union Tire provides OE and replacement tires for autos, motorcycles, trucks, farm and
construction applications in Western Europe and export markets. European Union Tire also provides related
products and services including tread rubber, retread truck and aviation tires, automotive repair services and
merchandise purchased for resale.
Eastern Europe, Middle East and Africa Tire provides OE and replacement tires for autos, trucks, farm,
bicycle, construction and mining applications in Eastern Europe, the Middle East, Africa and export markets.
Latin American Tire provides OE and replacement tires for autos, trucks, tractors, aviation and
construction applications in Central and South America, Mexico and export markets. Latin American Tire
also provides related products and services including tread rubber, retreaded tires, automotive repair services
and merchandise purchased for resale.
87
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 15. Business Segments (continued)
Asia PaciÑc Tire provides OE and replacement tires for autos, trucks, farm, aviation and construction
applications in Asia, the PaciÑc and export markets. Asia PaciÑc Tire also provides related products and
services including tread rubber, retread aviation tires, automotive repair services and merchandise purchased
for resale. Asia PaciÑc Tire information in 2005 and 2004 includes SPT, which was consolidated eÅective
January 1, 2004 pursuant to FIN 46. Refer to Note 21.
Engineered Products develops, manufactures and sells belts, hoses, molded products, airsprings, tank
tracks and other products for OE and replacement transportation applications and industrial markets
worldwide.
88
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 15. Business Segments (continued)
The following table presents segment sales and operating income, and the reconciliation of segment
operating income to Income (Loss) before Income Taxes and Cumulative EÅect of Accounting Change:
(In millions)
Net Sales
2005
2004
2003
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East and Africa TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 9,091 $ 8,569
4,476
1,279
1,245
1,312
4,676
1,437
1,466
1,423
Total TiresÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
18,093
1,630
16,881
1,472
$ 7,279
3,922
1,073
1,041
582
13,897
1,205
Total Segment Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$19,723
$18,353
$15,102
Segment Operating Income
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East and Africa TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
167 $
317
198
295
84
Total TiresÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segment Operating IncomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations and asset salesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accelerated depreciation, asset impairment and asset write-oÅs ÏÏ
Interest expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Foreign currency exchangeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority interest in net income of subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Financing fees and Ñnancial instruments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
General and product liability Ì discontinued products ÏÏÏÏÏÏÏÏÏ
Recovery (expense) for Ñre loss deductibles ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Professional fees associated with the restatement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Professional fees associated with Sarbanes-Oxley ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expenses for environmental remediation at non-operating sites ÏÏ
Environmental insurance recoveries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1,061
103
1,164
(47)
(5)
(411)
(22)
(95)
(109)
(9)
14
(4)
(4)
(8)
29
(4)
74
253
194
251
60
832
114
946
(60)
(10)
(369)
(23)
(58)
(117)
(53)
(12)
(30)
(18)
(12)
157
(18)
$ (103)
130
147
149
49
372
47
419
(316)
(133)
(296)
(41)
(33)
(99)
(138)
Ì
(6)
Ì
Ì
Ì
(47)
Income (Loss) before Income Taxes and Cumulative EÅect of
Accounting ChangeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
489
$
323
$ (690)
89
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 15. Business Segments (continued)
The following table presents segment assets at December 31:
(In millions)
Assets
North American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East and Africa Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segment Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$ 5,438
3,690
1,227
900
1,126
12,381
799
13,180
2,447
$ 5,504
4,056
1,315
846
1,154
12,875
764
13,639
2,462
$15,627
$16,101
Results of operations are measured based on net sales to unaÇliated customers and segment operating income.
Segment operating income includes transfers to other SBUs. Segment operating income is computed as
follows: Net Sales less CGS (excluding accelerated depreciation charges and asset impairment charges) and
SAG (including certain allocated corporate administrative expenses). Segment operating income also
includes equity in (earnings) losses of most unconsolidated aÇliates. Equity in (earnings) losses of certain
unconsolidated aÇliates, including SPT (in 2003) and Rubbernetwork.com, are not included in segment
operating income. Segment operating income does not include rationalization charges (credits) and certain
other items. Segment assets include those assets under the management of the SBU.
For 2003, results of operations of SPT and T&WA were not reported in segment results, but were
reÖected in our Consolidated Statements of Operations using the equity method.
The following table presents segment investments in and advances to aÇliates at December 31:
(In millions)
Investments in and Advances to AÇliates
2005
2004
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East and Africa Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$16
3
3
13
Total Segment Investments in and Advances to AÇliatesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
35
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
$14
2
3
16
35
Ì
$35
$35
The following table presents 100% of the sales and operating income of SPT for 2003:
(In millions)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Operating Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2003
$640
8
90
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 15. Business Segments (continued)
SPT operating income did not include net rationalization charges of approximately $9 million in 2003. SPT
debt totaled $255 million at December 31, 2003, of which $72 million was payable to Goodyear. Refer to
Note 21.
The following table presents geographic information. Net sales by country were determined based on the
location of the selling subsidiary. Long-lived assets consisted of properties and plants. 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
2005
2004
2003
United StatesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 9,048
10,675
$ 8,459
9,894
$ 7,194
7,908
$19,723
$18,353
$15,102
Long-Lived Assets
United StatesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 2,313
2,866
$ 2,407
3,046
$ 5,179
$ 5,453
Portions of the items described in Note 2, Costs Associated with Rationalization Programs, and Note 3,
Other (Income) and Expense, were not charged (credited) to the SBUs for performance evaluation purposes
but were attributable to the SBUs as follows:
(In millions)
Rationalizations
2005
2004
2003
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$(8)
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
8
9
Eastern Europe, Middle East and Africa Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
(2)
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7
4
Total Segment Rationalizations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
11
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
9
23
4
(2)
Ì
34
23
57
(1)
$192
54
Ì
10
Ì
256
29
285
6
$11
$ 56
$291
91
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 15. Business Segments (continued)
(In millions)
Other (Income) and Expense(1)
2005
2004
2003
$43
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(5)
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1
Eastern Europe, Middle East and Africa Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(1)
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
38
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì
Total Segment Other (Income) and Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
38
21
$ 13
(6)
Ì
Ì
Ì
7
(3)
$
4
1
Ì
(2)
(2)
1
6
4
4
8
7
254
$261
$59
$
(1) Excludes equity in (earnings) losses of aÇliates and foreign currency exchange.
The following table presents segment capital expenditures, depreciation and amortization:
(In millions)
Capital Expenditures
North American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East and Africa Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segment Capital Expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Depreciation and Amortization
North American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe, Middle East and Africa Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Tires ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Engineered Products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Segment Depreciation and Amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
$237
126
51
72
70
556
33
589
45
$176
103
56
65
66
466
30
496
33
$153
87
41
35
49
365
19
384
21
$634
$529
$405
$296
121
45
29
55
546
36
582
48
$303
130
46
24
52
555
33
588
41
$314
120
44
20
31
529
39
568
124
$630
$629
$692
92
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 15. Business Segments (continued)
Out-of-period adjustments totaled $8 million in after-tax income in the fourth quarter of 2005 and primarily
related to income taxes. Of this amount, $3 million relates to prior quarters of 2005. For the year ended
December 31, 2005 we recorded approximately $3 million in net after-tax expense relating to prior periods.
Note 16. Accumulated Other Comprehensive Loss
The components of Accumulated Other Comprehensive Income (Loss) follow:
(In millions)
Foreign currency translation adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minimum pension liability adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Unrealized investment gainÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred derivative gain ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$ (910)
(1,927)
35
2
$ (757)
(1,830)
17
6
$(2,800)
$(2,564)
Note 17. Commitments and Contingent Liabilities
At December 31, 2005, we had binding commitments for raw materials and investments in land, buildings and
equipment of $1,288 million and oÅ-balance-sheet Ñnancial guarantees written and other commitments
totaling $11 million.
Warranty
At December 31, 2005 and 2004, we had recorded, in Other current liabilities, $18 million and $18 million,
respectively, for potential claims under warranties oÅered by us. Tire replacement under most of the
warranties we oÅer is on a prorated basis. Warranty reserves are based on past claims experience, sales history
and other considerations. The amount of our ultimate liability in respect of these matters may diÅer from
these estimates.
The following table presents changes in the warranty reserve during 2005 and 2004:
(In millions)
Balance at January 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Payments made during the period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Expense recorded during the periodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Translation adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
FIN 46 impact ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
$ 18
$ 13
(38)
39
(1)
Ì
(28)
31
Ì
2
Balance at December 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 18
$ 18
Environmental Matters
We had recorded liabilities totaling $43 million and $40 million at December 31, 2005 and 2004, respectively,
for anticipated costs related to various environmental matters, primarily the remediation of numerous waste
disposal sites and certain properties sold by us. Of these amounts, $12 million and $9 million were included in
Other current liabilities at December 31, 2005 and 2004, respectively. The costs include:
‚ legal and consulting fees,
‚ site studies,
93
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 17. Commitments and Contingent Liabilities (continued)
‚ the design and implementation of remediation plans, and
‚ post-remediation monitoring and related activities.
These costs will be paid over several years. The amount of our 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. During 2004, we reached a settlement with certain
insurance companies under which we will receive approximately $159 million. We have received $116 million
in 2005 with the balance due in 2006. A signiÑcant portion of the costs incurred by us related to these claims
had been recorded in prior years. See ""Asbestos'' below for information regarding insurance settlements
completed during the second and third quarters of 2005 related to both asbestos and environmental matters.
Workers' Compensation
We had recorded liabilities, on a discounted basis, totaling $250 million and $231 million for anticipated costs
related to workers' compensation at December 31, 2005 and December 31, 2004, respectively. Of these
amounts, $103 million and $99 million were included in Current Liabilities as part of Compensation and
beneÑts at December 31, 2005 and December 31, 2004, 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 our assessment of potential liability using an analysis of available information
with respect to pending claims, historical experience, and current cost trends. The amount of our ultimate
liability in respect of these matters may diÅer from these estimates. We periodically update our loss
development factors based on actuarial analyses. The increase in the liability from 2004 to 2005 was due
primarily to an increase in reserves for existing claims and revised actuarial estimates of our ultimate liability.
At December 31, 2005 and 2004, the liability was discounted using the risk-free rate of return.
General and Product Liability and Other Litigation
We had recorded liabilities totaling $467 million at December 31, 2005 and $549 million at December 31,
2004 for potential product liability and other tort claims, including related legal fees expected to be incurred.
Of these amounts, $247 million and $266 million were included in Other current liabilities at December 31,
2005 and 2004, respectively. The amounts recorded were estimated based on 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. We had recorded insurance receivables for potential product
liability and other tort claims of $53 million at December 31, 2005 and $117 million at December 31, 2004. Of
these amounts, $9 million and $14 million were included in Current Assets as part of Accounts and notes
receivable at December 31, 2005 and 2004, respectively.
Asbestos. We are 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 us in the past, or to asbestos in certain of our facilities. Typically, these
lawsuits have been brought against multiple defendants in state and Federal courts. To date, we have disposed
of approximately 34,700 claims by defending and obtaining the dismissal thereof or by entering into a
settlement. The sum of our accrued asbestos-related liability and gross payments to date, including legal costs,
totaled approximately $233 million through December 31, 2005 and $226 million through December 31, 2004.
94
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 17. Commitments and Contingent Liabilities (continued)
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.
(Dollars in millions)
Pending claims, beginning of yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
New claims Ñled during the year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Claims settled/dismissed during the yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
127,300
6,200
(8,000)
118,000
12,700
(3,400)
99,700
26,700
(8,400)
Pending claims, end of yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
125,500
127,300
118,000
Payments(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
22
$
30
$
30
(1) Represents amount spent by us and our insurers on asbestos litigation defense and claim resolution.
We engaged an independent asbestos valuation Ñrm to review our existing reserves for pending claims, provide
a reasonable estimate of the liability associated with unasserted asbestos claims, and determine our receivables
from probable insurance recoveries.
We had recorded gross liabilities for both asserted and unasserted claims, inclusive of defense costs,
totaling $104 million and $119 million at December 31, 2005 and 2004, respectively. The recorded liability
represents our estimated liability over the next four years, 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 a change in circumstances arising in the future could result in an increase in the recorded obligation in
an amount that cannot be reasonably estimated, and that increase could be signiÑcant. The portion of the
liability associated with unasserted asbestos claims and related defense costs was $31 million at December 31,
2005 and $38 million at December 31, 2004. At December 31, 2005, our liability with respect to asserted
claims and related defense costs was $73 million, compared to $81 million at December 31, 2004.
We maintain primary insurance coverage under coverage-in-place agreements, and also have excess
liability insurance with respect to asbestos liabilities. We have instituted coverage actions against certain of
these excess carriers. After consultation with our outside legal counsel and giving consideration to relevant
factors including the ongoing legal proceedings with certain of our excess coverage insurance carriers, their
Ñnancial viability, their legal obligations and other pertinent facts, we determine an amount we expect is
probable of recovery from such carriers. We record a receivable with respect to such policies when we
determine that recovery is probable and we can reasonably estimate the amount of a particular recovery.
Based upon a model employed by the valuation Ñrm, as of December 31, 2005, (i) we had recorded a
receivable related to asbestos claims of $53 million, compared to $108 million at December 31, 2004, and
(ii) we expect that approximately 50% of asbestos claim related losses would be recoverable up to our
accessible policy limits through the period covered by the estimated liability. Of this amount, $9 million was
included in Current Assets as part of Accounts and notes receivable at December 31, 2005 and 2004. The
receivable recorded consists of an amount we expect to collect under coverage-in-place agreements with
certain primary carriers as well as an amount we believe is probable of recovery from certain of our excess
coverage insurance carriers. During the second quarter of 2005, as a result of a court determination, we further
reÑned our method of allocating losses to excess coverage policies, resulting in a reduction in available
insurance coverage over the period covered by the estimated liability. The recorded receivable also declined
during the second and third quarters due to settlements with certain excess insurance carriers, as discussed
below.
95
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 17. Commitments and Contingent Liabilities (continued)
We believe that, at December 31, 2005, we had approximately $179 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
$53 million insurance receivable recorded at December 31, 2005. We also had approximately $20 million in
aggregate limits for products claims, as well as coverage for premise claims on a per occurrence basis and
defense costs, available with our primary insurance carriers through coverage-in-place agreements at
December 31, 2005.
We reached an agreement eÅective April 13, 2005, to settle our claims for insurance coverage for asbestos
and pollution related liabilities with respect to pre-1993 insurance policies issued by certain underwriters at
Lloyd's, London, and reinsured by Equitas. The settlement agreement generally provides for the payment of
money to us in exchange for the release by us of past, present and future claims under those policies and the
cancellation of those policies; agreement by us to indemnify the underwriters from claims asserted under those
policies; and includes provisions addressing the impact on the settlement should federal asbestos reform
legislation be enacted on or before January 3, 2007.
Under the agreement, Equitas paid $22 million to us and placed $39 million into a trust. The trust funds
may be used to reimburse us for a portion of costs we incur in the future to resolve certain asbestos claims. Our
ability to use any of the trust funds is subject to speciÑed conÑdential criteria, as well as limits on the amount
that may be drawn from the trust in any one month. If federal asbestos reform legislation is enacted into law
on or prior to January 3, 2007, then the trust would repay Equitas any amount it is required to pay with respect
to our asbestos liabilities as a result of such legislation up to the amount remaining in the trust at that time. If
such legislation is not enacted by that date, any funds remaining in the trust will be disbursed to us to enable
us to meet future asbestos-related liabilities or for other purposes.
We also reached an agreement eÅective July 27, 2005, to settle our claims for insurance coverage for
asbestos and pollution related liabilities with respect to insurance policies issued by certain other non-Equitas
excess insurance carriers which participated in policies issued in the London Market. The settlement
agreement generally provided for the payment of $25 million to us in exchange for the release by us of past,
present and future claims under those policies and the cancellation of those policies; and agreement by us to
indemnify the underwriters from claims asserted under those policies.
We believe that our reserve for asbestos claims, and the receivable for recoveries from insurance carriers
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:
‚ the litigation environment,
‚ Federal and state law governing the compensation of asbestos claimants,
‚ recoverability of receivables due to potential insolvency of carriers,
‚ our approach to defending and resolving claims, and
‚ 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 we may
incur a material amount of cost in excess of the current reserve, however, such amount cannot be reasonably
96
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 17. Commitments and Contingent Liabilities (continued)
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 our
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 us.
Heatway (Entran II). On June 4, 2004, we entered into an amended settlement agreement that was
intended to address the claims arising out of a number of Federal, state and Canadian actions Ñled against us
involving a rubber hose product, Entran II. We supplied Entran II from 1989 to 1993 to Chiles Power Supply,
Inc. (d/b/a Heatway Systems), a designer and seller of hydronic radiant heating systems in the United States.
Heating systems using Entran II are typically attached or embedded in either indoor Öooring or outdoor
pavement, and use Entran II hose as a conduit to circulate warm Öuid as a source of heat. We had recorded
liabilities related to Entran II claims totaling $248 million and $307 million at December 31, 2005 and 2004,
respectively.
On October 19, 2004, the amended settlement received court approval. As a result, we have made, or will
make annual cash contributions to a settlement fund of $60 million, $40 million, $15 million, $15 million and
$20 million in 2004, 2005, 2006, 2007 and 2008, respectively. In addition to these annual payments, we
contributed approximately $174 million received from insurance contributions to the settlement fund pursuant
to the terms of the settlement agreement. We do not expect to receive any additional insurance reimburse-
ments for Entran II related matters.
Forty-one sites remain opted-out of the amended settlement. One action involving approximately nine of
these sites is currently pending against us, and additional actions may be Ñled against us in the future.
Although any liability resulting from the opt-outs will not be covered by the amended settlement, we will be
entitled to assert a proxy claim against the settlement fund for the payment such claimant would have been
entitled to under the amended settlement.
In addition to the sites that have been opted-out of the amended settlement, any liability related to six
actions in which we have received adverse judgments also will not be covered by the amended settlement.
With respect to three of these matters, however, we will be entitled to assert a proxy claim against the
settlement fund for amounts (if any) paid to plaintiÅs in these actions.
The ultimate cost of disposing of Entran II claims is dependent upon a number of factors, including our
ability to resolve claims not subject to the amended settlement (including the cases in which we have received
adverse judgments), the extent to which the liability, if any, associated with such a claim may be oÅset by our
ability to assert a proxy claim against the settlement fund and whether or not claimants opting-out of the
amendment settlement pursue claims against us in the future.
Other Actions. We are 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, we record 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 our 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 us 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.
97
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 17. Commitments and Contingent Liabilities (continued)
Tax Matters
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax
regulations. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the
extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is
unnecessary, we reverse the liability and recognize a tax beneÑt during the period in which we determine that
the liability is no longer necessary. We also recognize tax beneÑts to the extent that it is probable that our
positions will be sustained when challenged by the taxing authorities. As of December 31, 2005 we had not
recognized tax beneÑts of approximately $157 million ($118 million net of minority interests) relating to the
reorganization of legal entities in 2001, which is now the subject of a tax examination that could be settled in
2006. Pursuant to the reorganization, our tax payments have been reduced by approximately $67 million
through December 31, 2005. Should the ultimate outcome be unfavorable, we would be required to make a
cash payment, with interest, for all tax beneÑts claimed as of that date.
Union Matters
Beginning in 2006 we will be working with the United Steel Workers (""USW'') to extend or renegotiate the
master collective bargaining agreement that covers approximately 13,600 employees in the United States and
expires in July 2006. The outcome of these collective bargaining negotiations cannot presently be determined.
If we are unable to reach an agreement with the USW regarding the terms of a collective bargaining
agreement, we may be subject to work interruptions or stoppages that could have a material adverse impact on
our consolidated results of operations, Ñnancial position and liquidity.
Guarantees
We are a party to various agreements under which we have undertaken obligations resulting from the issuance
of certain guarantees. Guarantees have been issued on behalf of certain of our aÇliates and customers.
Normally there is no separate premium received by us as consideration for the issuance of guarantees. Our
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 us under these agreements
were not signiÑcant.
Subsidiary Guarantees
Certain of our subsidiaries guarantee certain debt obligations of SPT and T&WA. Goodyear, Goodyear
Australia Limited, a wholly-owned subsidiary of Goodyear, and certain subsidiaries of Goodyear Australia
Limited guarantee SPT's obligations under credit facilities in the amount of $108 million, which expire at
various times through 2007. The maximum potential amount of payments totaled $42 million. The guarantees
are unsecured. The SPT credit facilities are secured by certain subsidiaries of SPT. As of December 31, 2005,
the carrying amount of the secured assets of these certain subsidiaries was $199 million, consisting primarily of
accounts receivable, inventory and Ñxed assets. We guarantee an industrial revenue bond obligation of T&WA
in the amount of $5 million. The guarantee is unsecured.
Other Financing
We will from time to time issue guarantees to Ñnancial institutions on behalf of certain of our unconsolidated
aÇliates or our customers. We generally do not require collateral in connection with the issuance of these
guarantees. In the event of non-payment by an aÇliate, we are obligated to make payment to the Ñnancial
98
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 17. Commitments and Contingent Liabilities (continued)
institution, and will typically have recourse to the assets of that aÇliate or customer. At December 31, 2005,
we had aÇliate and customer guarantees outstanding under which the maximum potential amount of
payments totaled $2 million and $8 million, respectively. The aÇliate and customer guarantees expire at
various times through 2008 and 2019, respectively. We are unable to estimate the extent to which our
aÇliates' or customers' assets, in the aggregate, would be adequate to recover the maximum amount of
potential payments with that aÇliate or customer.
IndemniÑcations
At December 31, 2005, we were a party to various agreements under which we had assumed obligations to
indemnify the counterparties from certain potential claims and losses. These agreements typically involve
standard commercial activities undertaken by us in the normal course of business; the sale of assets by us; the
formation of joint venture businesses to which we had contributed assets in exchange for ownership interests;
and other Ñnancial transactions. IndemniÑcations provided by us 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, our potential liability under certain indemniÑcations is subject to maximum
caps, while other indemniÑcations are not subject to caps. Although we have been subject to indemniÑcation
claims in the past, we 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, our
maximum exposure to loss under these agreements cannot be estimated.
We have determined that there are no guarantees other than liabilities for which amounts are already
recorded or reserved in our consolidated Ñnancial statements under which it is probable that we have incurred
a liability.
Note 18. Consolidating Financial Information
Certain of our subsidiaries have guaranteed Goodyear's obligations under the $650 million of Senior Secured
Notes issued in March 2004 and the $400 million aggregate principal amount of 9% Senior Notes due 2015
issued on June 23, 2005. The following presents the condensed consolidating Ñnancial information separately
for:
(i) The Goodyear Tire & Rubber Company (the ""Parent Company''), the issuer of the guaranteed
obligations;
(ii) Guarantor subsidiaries, on a combined basis, as speciÑed in the Indenture related to Goodyear's
obligations under the $650 million of Senior Secured Notes issued on March 12, 2004 ($450 million of
11% Senior Secured Notes due 2011 and $200 million Senior Secured Floating Rate Notes due 2011)
and the Indenture related to Goodyear's obligation under the $400 million aggregate principal amount of
9% Senior Notes due 2015 issued on June 23, 2005 (the ""Notes'');
(iii) Non-guarantor subsidiaries, on a combined basis;
99
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 18. Consolidating Financial Information (continued)
(iv) Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany
transactions between or among the Parent Company, the guarantor subsidiaries and the non-guarantor
subsidiaries, (b) eliminate the investments in our subsidiaries and (c) record consolidating entries; and
(v) The Goodyear Tire & Rubber Company and Subsidiaries on a consolidated basis.
Each guarantor subsidiary is 100% owned by the Parent Company at the date of each balance sheet
presented. The Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor
subsidiary. Each entity in the consolidating Ñnancial information follows the same accounting policies as
described in the consolidated Ñnancial statements, except for using the equity method of accounting to reÖect
ownership interests in subsidiaries which are eliminated upon consolidation.
Certain non-guarantor subsidiaries of the Parent Company are restricted from remitting funds to it by
means of dividends, advances or loans, primarily due to restrictions in credit facility agreements entered into
by those subsidiaries.
100
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 18. Consolidating Financial Information (continued)
Consolidating Balance Sheet
Parent
Guarantor
December 31, 2005
Non-
Guarantor
Consolidating
Entries and
Company Subsidiaries Subsidiaries Eliminations Consolidated
(In millions)
Assets:
Current Assets:
Cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,066
218
Restricted cash ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1,137
Accounts and notes receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accounts and notes receivable from aÇliates ÏÏ
Ì
1,290
Inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
107
Prepaid expenses and other current assets ÏÏÏÏ
3,818
Total Current Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
100
Intangible Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Ì
Deferred Income Tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Pension Costs and Other Assets ÏÏÏÏÏÏ
632
4,011
Investments in SubsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2,018
Properties and Plants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $10,579
595
595
785
483
65
Ì
338
2,861
4,118
3,117
86
324
Ì
10,506
Liabilities:
Current Liabilities:
Accounts payable-trade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $
Accounts payable to aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
United States and foreign taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Notes payableÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt and capital leases due within
one yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Current Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases ÏÏÏÏÏÏÏÏÏÏ
Compensation and BeneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred and Other Noncurrent Income Taxes ÏÏ
Other Long Term Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Equity in Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commitments and Contingent Liabilities
Shareholders' Equity (DeÑcit):
Preferred Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital SurplusÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retained Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated Other Comprehensive Income
(Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Shareholders' Equity (DeÑcit) ÏÏÏÏÏÏ
Total Liabilities and Shareholders' Equity
$
35
Ì
238
667
270
11
1,221
32
35
35
43
469
296
$2,131
$
73
Ì
50
11
31
Ì
Ì
165
1
200
5
9
Ì
380
$ 1,077
13
1,783
Ì
1,340
125
4,338
409
58
67
195
3,195
2,845
$11,107
$ 1,277
72
286
177
297
233
110
2,452
623
1,163
206
93
606
5,143
Ì
4,285
869
2,240
Ì
177
1,398
1,298
Ì
617
5
1,483
(2,800)
73
(354)
1,751
(1,430)
5,964
$ Ì
Ì
Ì
(667)
(38)
8
(697)
196
(34)
Ì
Ì
(7,675)
20
$(8,190)
$ Ì
(667)
Ì
Ì
Ì
Ì
Ì
(667)
Ì
Ì
7
Ì
185
(475)
$ 2,178
231
3,158
Ì
2,862
251
8,680
637
159
102
870
Ì
5,179
$15,627
$ 1,945
Ì
1,121
671
393
233
448
4,811
4,742
4,480
304
426
791
15,554
Ì
(4,902)
(874)
(3,723)
1,784
(7,715)
Ì
177
1,398
1,298
(2,800)
73
(DeÑcit) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $10,579
$2,131
$11,107
$(8,190)
$15,627
101
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 18. Consolidating Financial Information (continued)
(In millions)
Assets:
Current Assets:
Cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Restricted cash ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accounts and notes receivable ÏÏÏÏÏÏÏÏÏÏÏ
Accounts and notes receivable from
aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Prepaid expenses and other current assets
Total Current Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Intangible Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Income Tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred Pension Costs and Other Assets ÏÏÏ
Investments in SubsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Properties and Plants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Liabilities:
Current Liabilities:
Accounts payable-trade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accounts payable to aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏ
Compensation and beneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
United States and foreign taxes ÏÏÏÏÏÏÏÏÏÏ
Notes payable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long term debt and capital leases due
within one yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Current Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases ÏÏÏÏÏÏÏ
Compensation and BeneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Deferred and Other Noncurrent Income
Taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other Long Term LiabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Equity in Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏ
Total Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Commitments and Contingent Liabilities
Shareholders' Equity (DeÑcit):
Preferred Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital SurplusÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Retained Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accumulated Other Comprehensive Income
(Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Shareholders' Equity (DeÑcit) ÏÏÏ
Total Liabilities and Shareholders'
Consolidating Balance Sheet
Parent
Company
Guarantor
Subsidiaries
December 31, 2004
Non-
Guarantor
Subsidiaries
Consolidating
Entries and
Eliminations
Consolidated
$ 1,004
137
1,209
Ì
1,162
98
3,610
Ì
101
Ì
843
3,943
2,088
$10,585
$
529
528
648
426
63
Ì
562
2,756
4,010
3,323
31
391
Ì
10,511
Ì
176
1,392
1,070
$
50
Ì
203
612
250
13
1,128
35
41
14
44
465
332
$2,059
$
62
Ì
46
9
31
Ì
Ì
148
2
156
7
18
Ì
331
Ì
669
12
1,318
$
914
15
1,986
Ì
1,425
151
4,491
467
67
69
218
3,080
3,009
$11,401
$ 1,379
84
335
283
151
227
448
2,907
431
1,166
355
86
629
5,574
Ì
4,191
866
2,087
(2,564)
74
(271)
1,728
(1,317)
5,827
$ Ì
Ì
Ì
(612)
(53)
10
(655)
215
(40)
Ì
Ì
(7,488)
24
$(7,944)
$ Ì
(612)
Ì
Ì
Ì
Ì
Ì
(612)
Ì
Ì
9
Ì
214
(389)
$ 1,968
152
3,398
Ì
2,784
272
8,574
717
169
83
1,105
Ì
5,453
$16,101
$ 1,970
Ì
1,029
718
245
227
1,010
5,199
4,443
4,645
402
495
843
16,027
Ì
(4,860)
(878)
(3,405)
1,588
(7,555)
Ì
176
1,392
1,070
(2,564)
74
Equity (DeÑcit)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$10,585
$2,059
$11,401
$(7,944)
$16,101
102
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 18. Consolidating Financial Information (continued)
(In millions)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cost of Goods SoldÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Selling, Administrative and General Expense ÏÏÏ
Rationalizations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other (Income) and Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Interest in Net Income of Subsidiaries ÏÏ
Income (Loss) before Income Taxes, Equity in
(Earnings) Loss of Subsidiaries and
Cumulative EÅect of Accounting Change ÏÏÏÏ
United States and Foreign Taxes on Income
(Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity in (Earnings) Loss of Subsidiaries ÏÏÏÏÏÏ
Income (Loss) before Cumulative EÅect of
Accounting ChangeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change, net of
income taxes and minority interest ÏÏÏÏÏÏÏÏÏÏ
Consolidating Statements of Operations
Twelve Months Ended December 31, 2005
Parent
Guarantor
Non-
Guarantor
Consolidating
Entries and
Company Subsidiaries Subsidiaries Eliminations Consolidated
$9,398
8,377
1,134
(1)
365
(77)
Ì
$2,257
1,980
197
2
37
(58)
Ì
$16,035
13,556
1,553
10
186
(139)
95
$(7,967)
(8,141)
(9)
Ì
(177)
344
Ì
$19,723
15,772
2,875
11
411
70
95
(400)
99
(10)
(623)
233
(5)
14
(50)
135
Ì
774
244
Ì
530
16
2
673
(659)
489
250
Ì
239
(6)
Ì
(11)
Net Income (Loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 228
$ 135
$
524
$ (659)
$
228
(In millions)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cost of Goods SoldÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Selling, Administrative and General Expense ÏÏÏ
Rationalizations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other (Income) and Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Minority Interest in Net Income of Subsidiaries ÏÏ
Income (Loss) before Income Taxes and Equity
in (Earnings) Loss of Subsidiaries ÏÏÏÏÏÏÏÏÏ
United States and Foreign Taxes on Income
(Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity in (Earnings) Loss of Subsidiaries ÏÏÏÏÏÏ
Twelve Months Ended December 31, 2004
Parent
Guarantor
Non-
Guarantor
Consolidating
Entries and
Company Subsidiaries Subsidiaries Eliminations Consolidated
$8,728
7,740
1,165
41
326
(200)
Ì
$2,120
1,839
183
(6)
37
2
Ì
$14,902
12,564
1,507
21
242
(76)
56
$(7,397)
(7,452)
(22)
Ì
(236)
297
2
$18,353
14,691
2,833
56
369
23
58
(344)
65
(53)
(406)
26
(30)
588
236
Ì
352
14
(1)
436
$ (421)
$
323
208
Ì
115
Net Income (Loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 115
$
69
$
103
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 18. Consolidating Financial Information (continued)
Consolidating Statements of Operations
Twelve Months Ended December 31, 2003
Consolidating
Entries and
Eliminations
Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Consolidated
$1,950
1,698
$11,599
9,879
$(6,245)
(6,303)
$15,102
12,481
1,140
201
183
(91)
33
254
151
Ì
103
(13)
Ì
(175)
392
Ì
2,374
291
296
317
33
(146)
(690)
2
(15)
117
Ì
$ (133)
$ (807)
(In millions)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cost of Goods SoldÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Selling, Administrative and General
Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Rationalizations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Interest Expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other (Income) and Expense ÏÏÏÏÏÏÏÏÏÏ
Minority Interest in Net Income of
Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income (Loss) before Income Taxes and
Equity in (Earnings) Loss of
Subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
United States and Foreign Taxes on
Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Equity in (Earnings) Loss of Subsidiaries
Parent
Company
$7,798
7,207
1,071
75
252
6
Ì
176
15
36
10
Ì
(813)
15
(38)
32
2
(17)
Net Income (Loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ (807)
$
30
$
104
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 18. Consolidating Financial Information (continued)
Condensed Consolidating Statement of Cash Flows
(In millions)
CASH FLOWS FROM OPERATING
ACTIVITIES:
TOTAL CASH FLOWS FROM
Parent
Company
Twelve Months Ended December 31, 2005
Consolidating
Entries and
Eliminations
Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Consolidated
OPERATING ACTIVITIESÏÏÏÏÏ $
190
$ 46
$1,028
$(379)
$
885
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset dispositions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset acquisitions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Redemptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Increase in restricted cash ÏÏÏÏÏÏÏÏÏÏÏ
Other transactions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
TOTAL CASH FLOWS FROM
(249)
248
Ì
(11)
59
(81)
5
(16)
1
Ì
Ì
Ì
Ì
(1)
(362)
14
(8)
(202)
93
2
14
(7)
(6)
6
213
(152)
Ì
Ì
(634)
257
(2)
Ì
Ì
(79)
18
INVESTING ACTIVITIES ÏÏÏÏÏ
(29)
(16)
(449)
54
(440)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Short-term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term debt paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issuedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Redemptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends paid to minority interests in
subsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Debt issuance costsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
TOTAL CASH FLOWS FROM
9
Ì
1,921
(1,969)
7
Ì
Ì
Ì
(67)
7
Ì
Ì
(1)
Ì
Ì
(51)
Ì
Ì
153
(131)
368
(420)
Ì
207
(97)
(436)
Ì
FINANCING ACTIVITIES ÏÏÏÏÏ
(99)
(45)
(356)
EÅect of Exchange Rate Changes on
Cash and Cash Equivalents ÏÏÏÏÏÏÏÏÏÏ
Net Change in Cash and Cash
Equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and Cash Equivalents at Beginning
Ì
62
of the Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
1,004
50
Cash and Cash Equivalents at End of
Ì
(60)
(15)
163
914
Ì
Ì
Ì
Ì
Ì
(207)
148
384
Ì
325
Ì
Ì
Ì
169
(131)
2,289
(2,390)
7
Ì
Ì
(52)
(67)
(175)
(60)
210
1,968
the Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 1,066
$ 35
$1,077
$ Ì
$ 2,178
105
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 18. Consolidating Financial Information (continued)
Condensed Consolidating Statement of Cash Flows
(In millions)
CASH FLOWS FROM OPERATING
ACTIVITIES:
TOTAL CASH FLOWS FROM
Parent
Company
Twelve Months Ended December 31, 2004
Consolidating
Entries and
Eliminations
Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Consolidated
OPERATING ACTIVITIESÏÏÏÏÏ $
208
$ 42
$ 854
$(319)
$
785
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset dispositions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset acquisitions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Redemptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Increase in restricted cash ÏÏÏÏÏÏÏÏÏÏÏ
Other transactions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
TOTAL CASH FLOWS FROM
(174)
106
(51)
(9)
6
(119)
33
(12)
1
Ì
(3)
Ì
Ì
Ì
(343)
14
(113)
(31)
116
(10)
14
Ì
(102)
102
43
(122)
Ì
3
(529)
19
(62)
Ì
Ì
(129)
50
INVESTING ACTIVITIES ÏÏÏÏÏ
(208)
(14)
(353)
(76)
(651)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Short-term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term debt paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Common stock issuedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Redemptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends paid to minority interests in
subsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Debt issuance costsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
TOTAL CASH FLOWS FROM
44
Ì
1,671
(1,247)
2
Ì
Ì
Ì
(51)
Ì
(3)
Ì
Ì
Ì
Ì
Ì
Ì
Ì
125
(188)
228
(302)
Ì
35
(117)
(342)
Ì
FINANCING ACTIVITIES ÏÏÏÏÏ
419
(3)
(561)
EÅect of Exchange Rate Changes on
Cash and Cash Equivalents ÏÏÏÏÏÏÏÏÏÏ
Net Change in Cash and Cash
Equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and Cash Equivalents at Beginning
of the Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and Cash Equivalents at End of
Ì
419
585
Ì
25
25
38
(22)
936
Ì
Ì
Ì
Ì
Ì
(35)
117
313
Ì
395
Ì
Ì
Ì
169
(191)
1,899
(1,549)
2
Ì
Ì
(29)
(51)
250
38
422
1,546
the Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 1,004
$ 50
$ 914
$ Ì
$ 1,968
106
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 18. Consolidating Financial Information (continued)
Condensed Consolidating Statement of Cash Flows
(In millions)
CASH FLOWS FROM OPERATING
ACTIVITIES:
TOTAL CASH FLOWS FROM
Parent
Company
Twelve Months Ended December 31, 2003
Consolidating
Entries and
Eliminations
Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Consolidated
OPERATING ACTIVITIESÏÏÏÏÏ $ (700)
$(67)
$ 749
$(251)
$ (269)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term securities redeemedÏÏÏÏÏÏÏ
Asset dispositions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset acquisitions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Redemptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Increase in restricted cash ÏÏÏÏÏÏÏÏÏÏÏ
Other transactions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
(179)
Ì
368
(71)
(31)
44
(18)
1
TOTAL CASH FLOWS FROM
INVESTING ACTIVITIES ÏÏÏÏÏ
114
CASH FLOWS FROM FINANCING
ACTIVITIES:
Short-term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏ
Short-term debt paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt incurred ÏÏÏÏÏÏÏÏÏÏÏÏ
Long-term debt paidÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Capital Redemptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Dividends paid to minority interests in
subsidiariesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Debt issuance costsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Other transactions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
8
Ì
2,380
(1,510)
Ì
Ì
Ì
(104)
28
TOTAL CASH FLOWS FROM
FINANCING ACTIVITIES ÏÏÏÏÏ
802
EÅect of Exchange Rate Changes on
Cash and Cash Equivalents ÏÏÏÏÏÏÏÏÏÏ
Net Change in Cash and Cash
Equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and Cash Equivalents at Beginning
of the Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cash and Cash Equivalents at End of
Ì
216
369
(5)
Ì
Ì
Ì
Ì
16
Ì
4
15
Ì
Ì
Ì
Ì
49
Ì
2
Ì
Ì
51
2
1
24
(215)
27
19
(282)
Ì
162
(6)
142
(6)
Ì
(283)
282
31
(222)
Ì
(68)
(405)
27
104
(71)
Ì
Ì
(24)
79
(153)
(266)
(290)
315
(469)
598
(102)
31
(205)
(417)
Ì
Ì
(249)
62
409
527
Ì
Ì
Ì
Ì
(80)
205
392
Ì
Ì
517
Ì
Ì
Ì
323
(469)
2,978
(1,612)
Ì
Ì
(23)
(104)
28
1,121
64
626
920
the Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
585
$ 25
$ 936
$ Ì
$ 1,546
107
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 19. Adoption of New Accounting Standard
We adopted FASB Interpretation No. 47, ""Accounting for Conditional Asset Retirement Obligations''
(FIN 47) an interpretation of FASB Statement No. 143, ""Accounting for Asset Retirement Obligations''
(SFAS 143) on December 31, 2005. FIN 47 requires that the fair value of a liability for an asset retirement
obligation (ARO) be recognized in the period in which it is incurred and the settlement date is estimable, and
is capitalized as part of the carrying amount of the related tangible long-lived asset. Our AROs are primarily
associated with the cost of removal and disposal of asbestos.
Upon adoption of FIN 47, on December 31, 2005, we recorded a liability of approximately $16 million
and recognized a non-cash cumulative eÅect charge of approximately $11 million, net of taxes and minority
interest of $3 million.
We are legally obligated by various country, state, or local regulations to incur costs to retire certain of our
assets. A liability is recorded for these obligations in the period in which sufficient information regarding timing
and method of settlement becomes available to make a reasonable estimate of the liability's fair value. We have
identified certain other AROs, such as asbestos remediation activities to be performed in the future, for which
information regarding the timing and method of potential settlement is not available as of December 31, 2005,
and therefore, we are not able to reasonably estimate the fair value of these liabilities at this time.
The following table sets forth information for the years ended December 31, 2005, 2004, and 2003,
adjusted for the recognition of depreciation expense related to the cost of asset retirements and accretion
expense had we accounted for AROs in accordance with FIN 47 in those periods:
(In millions)
Asset retirement obligation Ì beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asset retirement obligation Ì end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Reported net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative eÅect of accounting change, net of taxes and minority
interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Depreciation expense, net of taxes and minority interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accretion expense, net of taxes and minority interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
2005
2004
2003
$ 15
16
$ 228
$ 14
15
$ 115
$
13
14
$ (807)
11
(1)
(1)
Ì
(1)
(1)
Ì
(1)
(1)
Adjusted income (loss) before cumulative eÅect of accounting change ÏÏ
$ 237
$ 113
$ (809)
Income (loss) per share Ì Basic
As reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative eÅect of accounting change, net of taxes and minority
interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Depreciation expense, net of taxes and minority interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accretion expense, net of taxes and minority interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1.30
$0.65
$(4.61)
0.06
Ì
Ì
Ì
Ì
Ì
Ì
Ì
Ì
Income (loss) before cumulative eÅect of accounting change Ì BasicÏÏÏ
$1.36
$0.65
$(4.61)
Income (loss) per share Ì Diluted
As reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative eÅect of accounting change, net of taxes and minority
interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Depreciation expense, net of taxes and minority interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Accretion expense, net of taxes and minority interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$1.16
$0.63
$(4.61)
0.05
Ì
Ì
Ì
Ì
Ì
Ì
Ì
Ì
Income (loss) before cumulative eÅect of accounting change Ì Diluted
$1.21
$0.63
$(4.61)
108
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 20. Asset Dispositions
On August 9, 2005, we completed the sale of our 95% ownership in Goodyear Sumatra Plantations, our
natural rubber plantation in Indonesia, to Bridgestone Corporation at a sales price of approximately
$70 million. The net assets of Goodyear Sumatra Plantations were previously reported as assets held for sale as
of December 31, 2004. As a result, we recorded an impairment charge of approximately $15 million during the
fourth quarter of December 2004.
On September 1, 2005, we completed the sale of our Wingtack adhesive resins business to Sartomer
Company Inc., a unit of the French energy Ñrm Total, S.A. We received approximately $55 million in cash
proceeds and retained an additional $10 million of working capital and recorded a gain within Other (Income)
and Expense of approximately $24 million on the sale. We may also receive additional consideration over the
next three years ($5 million per year, $15 million aggregate) based on future operating performance of the
Wingtack business.
On December 28, 2005, we completed the sale of our North American farm tire assets to Titan Tire
Corporation, a subsidiary of Titan International, Inc. The sale included our farm tire manufacturing plant,
property and equipment in Freeport, Ill., and inventories. It also included a license agreement with Titan to
pay a royalty to manufacture and sell Goodyear branded farm tires in North America. We received
$100 million from Titan for these assets and recorded a loss within Other (Income) and Expense in the fourth
quarter of approximately $73 million on the sale, primarily related to pension and retiree medical costs.
Note 21. Subsequent Events
In January 2006, we acquired Ansell Limited's interest in our South PaciÑc Tyres (SPT) joint ventures in
both Australia and New Zealand. We now own 100% of both of these operations. In connection with the
acquisition we paid Ansell approximately $40 million for its 50% ownership and repaid approximately
$50 million of outstanding loans from Ansell to SPT. SPT has approximately 4,000 associates. SPT's results
have been consolidated in our Ñnancial statements since January 2004.
109
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and maintaining adequate internal control over
Ñnancial reporting as such term is deÑned under Rule 13a-15(f) promulgated under the Securities Exchange
Act, 1934, as amended.
Internal control over Ñnancial reporting is a process designed to provide reasonable assurance regarding
the reliability of Ñnancial reporting and the preparation of the Company's consolidated Ñnancial statements for
external purposes in accordance with generally accepted accounting principles.
Internal control over Ñnancial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reÖect the transactions and dispositions
of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit the preparation of the consolidated Ñnancial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are being made only in accordance
with appropriate authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material eÅect on the consolidated Ñnancial statements.
Because of its inherent limitations, internal control over Ñnancial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of eÅectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management conducted an assessment of the Company's internal control over Ñnancial reporting as of
December 31, 2005 using the framework speciÑed in Internal Control Ì Integrated Framework, published by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment,
management has concluded that the Company's internal control over Ñnancial reporting was eÅective as of
December 31, 2005.
Management's assessment of the eÅectiveness of the Company's internal control over Ñnancial reporting
as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public
accounting Ñrm, as stated in their report which is presented in this Annual Report.
110
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Shareholders
of The Goodyear Tire & Rubber Company
We have completed integrated audits of The Goodyear Tire & Rubber Company's 2005 and 2004
consolidated Ñnancial statements and of its internal control over Ñnancial reporting as of December 31, 2005,
and an audit of its 2003 consolidated Ñnancial statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented
below.
Consolidated Ñnancial statements
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of
operations, shareholders' equity (deÑcit) and cash Öows present fairly, in all material respects, the Ñnancial
position of The Goodyear Tire & Rubber Company and its subsidiaries at December 31, 2005 and 2004, and
the results of their operations and their cash Öows for each of the three years in the period ended
December 31, 2005 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 of Ñnancial statements 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
FASB Interpretation No. 46R (revised December 2003), ""Consolidation of Variable Interest Entities,'' as of
January 1, 2004.
As discussed in Note 19 to the consolidated Ñnancial statements, the Company adopted the provisions of
FASB Interpretation No. 47, ""Accounting for Conditional Asset Retirement Obligations, an interpretation of
FASB Statement No. 143,'' as of December 31, 2005.
Internal control over Ñnancial reporting
Also, in our opinion, management's assessment, included in the accompanying Management's Report on
Internal Control over Financial Reporting, that the Company maintained eÅective internal control over
Ñnancial reporting as of December 31, 2005 based on criteria established in Internal Control -Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is
fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company
maintained, in all material respects, eÅective internal control over Ñnancial reporting as of December 31, 2005,
based on criteria established in Internal Control -Integrated Framework issued by the COSO. The Company's
management is responsible for maintaining eÅective internal control over Ñnancial reporting and for its
assessment of the eÅectiveness of internal control over Ñnancial reporting. Our responsibility is to express
opinions on management's assessment and on the eÅectiveness of the Company's internal control over
Ñnancial reporting based on our audit. We conducted our audit of internal control over Ñnancial reporting 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 eÅective
internal control over Ñnancial reporting was maintained in all material respects. An audit of internal control
over Ñnancial reporting includes obtaining an understanding of internal control over Ñnancial reporting,
evaluating management's assessment, testing and evaluating the design and operating eÅectiveness of internal
control, and performing such other procedures as we consider necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinions.
111
A company's internal control over Ñnancial reporting is a process designed to provide reasonable
assurance regarding the reliability of Ñnancial reporting and the preparation of Ñnancial statements for external
purposes in accordance with generally accepted accounting principles. A company's internal control over
Ñnancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reÖect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ñnancial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a material eÅect on the Ñnancial
statements.
Because of its inherent limitations, internal control over Ñnancial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of eÅectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
PRICEWATERHOUSECOOPERS LLP
Cleveland, Ohio
February 17, 2006
112
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Supplementary Data
(Unaudited)
Quarterly Data and Market Price Information
(In millions, except per share amounts)
2005
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Gross ProÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income (Loss) before Cumulative EÅect of
Accounting Change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change ÏÏÏÏÏÏÏÏÏ
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
Net Income (Loss) Per Share Ì Basic
Income (Loss) before Cumulative EÅect of
Accounting Change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change ÏÏÏÏÏÏÏ
$
0.39
Ì
First
Second
Third
Fourth
Year
Quarter
$ 4,767
948
$ 4,992
1,047
$ 5,030
1,022
$ 4,934
934
$19,723
3,951
$
68
Ì
68
$
$
$
69
Ì
69
0.39
Ì
$
$
$
142
Ì
142
$
$
$
(40)
(11)
239
(11)
(51)
$
228
0.81
Ì
$ (0.23)
(0.06)
$
1.36
(0.06)
Net Income (Loss) Per Share Ì Basic ÏÏÏÏÏÏÏÏÏ
$
0.39
$
0.39
$
0.81
$ (0.29)
$
1.30
Net Income (Loss) Per Share Ì Diluted(a)
Income (Loss) before Cumulative EÅect of
Accounting Change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change ÏÏÏÏÏÏÏ
$
0.35
Ì
$
0.34
Ì
$
0.70
Ì
$ (0.23)
(0.06)
$
1.21
(0.05)
Net Income (Loss) Per Share Ì Diluted ÏÏÏÏÏÏÏ
$
0.35
$
0.34
$
0.70
$ (0.29)
$
1.16
Weighted Average Shares Outstanding Ì Basic ÏÏÏ
Ì DilutedÏÏ
Price Range of Common Stock: * High ÏÏÏÏÏÏÏÏÏÏ
Low ÏÏÏÏÏÏÏÏÏÏÏ
176
208
$ 16.08
13.11
176
208
$ 15.46
11.24
176
209
$ 18.59
15.00
176
176
$ 18.18
13.00
176
209
$ 18.59
11.24
Selected Balance Sheet Items at Quarter-End:
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Debt and Capital Leases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Shareholders' EquityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$15,849
5,664
43
$15,573
5,500
44
$15,807
5,448
296
$15,627
5,423
73
(a) Quarterly earnings per share amounts do not add to the full year amounts due to the averaging of shares.
* New York Stock Exchange Ì Composite Transactions
Net income per share Ì reÖects the dilutive impact of the assumed conversion of our $350 million
Convertible Senior Notes into shares of our Common Stock. The Notes were issued on July 2, 2004. Net
income per share Ì diluted in 2005 included a pro forma earnings adjustment representing avoided after-tax
interest expense of $4 million in each of the Ñrst, second, third quarters and $2 million in the fourth quarter.
Weighted average shares outstanding Ì diluted included 29 million shares in each of the Ñrst, second, third
and fourth quarters, resulting from the assumed conversion. Refer to Note 11.
113
The Ñrst quarter of 2005 included net after-tax gains of $11 million on the sale of assets and net after-tax
charges of $12 million related to general product liability Ì discontinued products.
The second quarter of 2005 included after-tax gains of $19 million related to an environmental insurance
settlement. The second quarter also included after-tax charges of $47 million related to the write-oÅ of debt
issuance costs.
The third quarter of 2005 included after-tax gains of $14 million related to the receipt of insurance
proceeds and $28 million from asset sales. The third quarter also included an after-tax charge of $10 million
related to temporary reductions in production resulting from the impact of hurricanes.
The fourth quarter of 2005 included after-tax gains of $12 million related to favorable settlements with
certain chemical suppliers and $29 million related to favorable tax adjustments. The fourth quarter of 2005
also included a $21 million after-tax charge related to temporary reductions in production resulting from the
impact of hurricanes, a $78 million after-tax loss on the sale of assets, and $11 million of expense related to the
cumulative eÅect of adopting FIN 47.
114
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
Supplementary Data
(Unaudited)
Quarterly Data and Market Price Information
(In millions, except per share amounts)
2004
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Gross ProÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ 4,302
825
(78)
$
Net Income (Loss) Per Share Ì Basic ÏÏÏÏÏÏÏÏÏ
$ (0.45)
Net Income (Loss) Per Share Ì Diluted(a) ÏÏÏÏ
$ (0.45)
Weighted Average Shares Outstanding Ì Basic ÏÏÏÏ
Ì Diluted ÏÏ
Price Range of Common Stock: * High ÏÏÏÏÏÏÏÏÏÏ
Low ÏÏÏÏÏÏÏÏÏÏÏ
175
175
$ 11.97
7.06
Selected Balance Sheet Items at Quarter-End:
First
Second
Third
Fourth
Year
Quarter
$ 4,519
929
30
$
$
$
0.17
0.17
175
177
$ 10.45
7.66
$ 4,700
950
38
$
$
$
0.22
0.20
175
207
$ 12.00
8.70
$ 4,832
958
125
$
$
$
0.71
0.62
175
208
$ 15.01
9.15
$18,353
3,662
115
$
$
$
0.65
0.63
175
192
$ 15.01
7.06
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Debt and Capital Leases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Shareholders' Equity (DeÑcit) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$14,749
5,401
(145)
$14,581
5,317
(168)
$15,358
5,661
(49)
$16,101
5,680
74
(a) Quarterly earnings per share amounts do not add to the full year amounts due to the averaging of shares.
* New York Stock Exchange Ì Composite Transactions
Net income per share Ì diluted as restated in the third and fourth quarters of 2004 reÖected the dilutive
impact of the assumed conversion of our $350 million Convertible Senior Notes into shares of our Common
Stock. The Notes were issued on July 2, 2004. Net income per share Ì diluted in 2004 included a pro forma
earnings adjustment representing avoided after-tax interest expense of $4 million in each of the third and
fourth quarters. Weighted average shares outstanding Ì diluted included 29 million shares in each of the third
and fourth quarters, and 14 million shares in the full year, resulting from the assumed conversion. Refer to
Note 11.
The Ñrst quarter of 2004 included net after-tax charges of $20 million for rationalizations, $15 million
related to external professional fees associated with an accounting investigation, and $12 million for insurance
Ñre loss deductibles.
The third quarter of 2004 included net favorable tax adjustments of $44 million and net after-tax charges
of $32 million for rationalizations.
The fourth quarter of 2004 included net after-tax gains of $157 million from an environmental insurance
settlement, $10 million related to favorable tax adjustments, and $19 million from favorable settlements with
certain suppliers. The fourth quarter also included net after-tax charges of $27 million for general and product
liability-discontinued products and $12 million for asset sales.
115
Comparison with Prior Years
(In millions, except per share amounts)
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Income (Loss) before Cumulative EÅect of
Accounting Change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change ÏÏÏÏÏÏÏÏÏ
$
239
(11)
Net Income (Loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$
228
Net Income (Loss) Per Share Ì Basic
Income (Loss) before Cumulative EÅect of
Accounting Change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change ÏÏÏÏÏÏÏ
$
1.36
(0.06)
2005
Year Ended December 31,
2003
2002
2004
2001
$19,723
$18,353
$15,102
$13,828
$14,140
$
$
$
115
Ì
115
0.65
Ì
$ (807)
$(1,247)
$ (255)
Ì
Ì
Ì
$ (807)
$(1,247)
$ (255)
$ (4.61)
$ (7.47)
$ (1.59)
Ì
Ì
Ì
Net Income (Loss) Per Share Ì Basic ÏÏÏÏÏÏÏÏÏ
$
1.30
$
0.65
$ (4.61)
$ (7.47)
$ (1.59)
Net Income (Loss) Per Share Ì Diluted
Income (Loss) before Cumulative EÅect of
Accounting Change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Cumulative EÅect of Accounting Change ÏÏÏÏÏÏÏ
$
1.21
(0.05)
$
0.63
Ì
$ (4.61)
$ (7.47)
$ (1.59)
Ì
Ì
Ì
Net Income (Loss) Per Share Ì Diluted ÏÏÏÏÏÏÏ
$
1.16
$
0.63
$ (4.61)
$ (7.47)
$ (1.59)
Dividends Per Share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases due Within
One Year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Long Term Debt and Capital Leases ÏÏÏÏÏÏÏÏÏÏÏÏÏ
Shareholders' Equity (DeÑcit) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
$ Ì $ Ì $ Ì $
15,627
16,101
14,285
0.48
12,461
$
1.02
13,565
448
4,742
73
1,010
4,443
74
114
4,826
(33)
370
2,990
221
110
3,203
2,597
(1) Refer to ""Principles of Consolidation'' in the Note to the Consolidated Financial Statements No. 1,
Accounting Policies.
(2) Net Income in 2005 included net after-tax charges of $68 million, or $0.33 per share-diluted, due to
reductions in production resulting from the impact of hurricanes, Ñre loss recovery, favorable settlements
with certain chemical suppliers, rationalizations, receipt of insurance proceeds for an environmental
insurance settlement, general and product liability Ì discontinued products, asset sales, write-oÅ of debt
fees, the cumulative eÅect of adopting FIN 47, and the impact of certain tax adjustments.
(3) Net sales in 2004 increased $1 billion resulting from the consolidation of two businesses in accordance
with FASB Interpretation No. 46R (revised December 2003) ""Consolidation of Variable Interest
Entities'' (FIN 46R). Net Income in 2004 included net after-tax charges of $154 million, or $0.80 per
share-diluted, for rationalizations and related accelerated depreciation, general and product liability-
discontinued products, insurance Ñre loss deductibles, external professional fees associated with an
accounting investigation, and asset sales. Net income in 2004 also included net after-tax beneÑts of
$239 million, or $1.24 per share-diluted, from an environmental insurance settlement, net favorable tax
adjustments and a favorable lawsuit settlement.
(4) Net Loss in 2003 included net after-tax charges of $516 million, or $2.93 per share-diluted, for
rationalizations, general and product liability-discontinued products, accelerated depreciation and asset
write-oÅs, net favorable tax adjustments, and an unfavorable settlement of a lawsuit. In addition, we
recorded account reconciliation adjustments related to Engineered Products in the restatements totaling
$19 million or $0.11 per share in 2003.
(5) Net Loss in 2002 included net after-tax charges of $24 million, or $0.14 per share-diluted, for general and
product liability Ì discontinued products, asset sales, rationalizations, and the write-oÅ of a miscellane-
116
ous investment. Net loss in 2002 also included a non-cash charge of $1.2 billion, or $7.31 per share-
diluted, to establish a valuation allowance against net federal and state deferred tax assets.
(6) Net Loss in 2001 included net after-tax charges of $187 million, or $1.18 per share-diluted, for
rationalizations, asset sales, general and product liability Ì discontinued products, rationalization costs at
an equity aÇliate and costs related to a tire replacement program.
The principal products of our Tire Segments are new tires for most applications. Approximately 78.2% of our
consolidated sales in 2005 were of new tires, compared to 77.6% in 2004 and 78.3% in 2003. The percentages
of each Tire Segment's sales attributable to new tires during the periods indicated were:
Sales of New Tires By
Year Ended December 31,
2003
2004
2005
North American Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
European Union Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Eastern Europe Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Latin American TireÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Asia PaciÑc Tire ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
87.8% 87.9% 86.3%
87.4
89.5
94.6
95.0
92.5
92.2
82.2
80.7
89.2
94.1
91.1
97.7
117
Directors and Officers
BOARD OF DIRECTORS
CORPORATE OFFICERS
Gary A. Miller, 59
Vice President & Chief
Procurement Officer
38 years of service, officer since 1992
Richard J. Noechel, 37
Vice President & Assistant Controller
One year of service, officer since 2004
Damon Audia, 35
Assistant Treasurer, Capital Markets
One year of service, officer since 2005
Bertram Bell, 54
Assistant Secretary &
Associate General Counsel
23 years of service, officer since 2000
Anthony E. Miller, 55
Assistant Secretary &
Associate General Counsel
20 years of service, officer since 2000
BUSINESS UNIT OFFICERS
Pierre E. Cohade, 44
President, Asia Pacific Region
One year of service, officer since 2004
Arthur de Bok, 43
President, European Union
Four years of service, officer since 2005
Eduardo A. Fortunato, 52
President, Latin American Region
31 years of service, officer since 2003
Jarro F. Kaplan, 58
President, Eastern Europe,
Middle East & Africa Region
36 years of service, officer since 2001
Lawrence D. Mason, 45
President, Consumer Tires
North American Tire
Two years of service, officer since 2003
Jonathan D. Rich, 50
President, North American Tire
Five years of service, officer since 2001
Timothy R. Toppen, 50
President, Engineered Products
27 years of service, officer since 2000
James C. Boland
Vice Chairman
Cavaliers Operating Company, LLC.
Elected 2002 1, 2, 4
Robert J. Keegan, 58
Chairman of the Board,
Chief Executive Officer & President
Five years of service, officer since 2000
John G. Breen
Joseph M. Gingo, 61
Retired Chairman of the Board
The Sherwin-Williams Co.
Elected 1992 1, 2, 4
Executive Vice President, Quality
Systems & Chief Technical Officer
39 years of service, officer since 1996
Gary D. Forsee
Richard J. Kramer, 42
Chief Executive Officer & President
Sprint Nextel Corporation
Elected 2002 1, 2, 3
Executive Vice President
& Chief Financial Officer
Six years of service, officer since 2000
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
Denise M. Morrison
President-Campbell USA
Campbell Soup Company
Elected 2005 2, 5
Rodney O’Neal
President and Chief Operating Officer
Delphi Corporation
Elected 2004 4, 5
Shirley D. Peterson
Retired Partner
Law firm of Steptoe & Johnson LLP
Elected 2004 1, 3, 5
Thomas H. Weidemeyer
Retired Senior Vice President
& Chief Operating Officer
United Parcel Service,
and President, UPS Airlines
Elected 2004 3, 4
Michael R. Wessel
Executive Vice President
Downey McGrath Group
Elected 2005 3
SENIOR VICE PRESIDENTS
Christopher W. Clark, 54
Senior Vice President,
Global Sourcing
33 years of service, officer since 2000
Darren R. Wells, 40
Senior Vice President,
Business Development & Treasurer
Three years of service, officer since 2002
Kathleen T. Geier, 49
Senior Vice President,
Human Resources
27 years of service, officer since 2002
C. Thomas Harvie, 62
Senior Vice President,
General Counsel & Secretary
10 years of service, officer since 1995
Charles L. Sinclair, 54
Senior Vice President,
Global Communications
21 years of service, officer since 2003
VICE PRESIDENTS
Thomas A. Connell, 57
Vice President & Controller
Two years of service, officer since 2003
Donald D. Harper, 59
Vice President, Human Resources
North America Shared Services
37 years of service, officer since 1998
William M. Hopkins, 61
Vice President, Technology &
Strategic Initiatives
38 years of service, officer since 1998
1 Audit Committee
2 Compensation Committee
3 Committee on Corporate Responsibility
Isabel H. Jasinowski, 57
Vice President, Government Relations
24 years of service, officer since 2001
and Compliance
4 Finance Committee
5 Governance Committee
1 1 8 | G O O D Y E A R 2 0 0 5
Facilities
NORTH AMERICA
United States
Akron, Ohio
World headquarters, North American
Tire headquarters, Engineered
Products headquarters, technical cen-
ter, racing tires, tire proving grounds,
global purchasing, airship operations,
research and development facilities
Asheboro, North Carolina Steel tire cord
Bayport, Texas Chemicals
Beaumont, Texas Synthetic rubber
Carson, California Airship operations
Danville, Virginia Tires
Decatur, Alabama Textiles
Fayetteville, North Carolina Tires
Gadsden, Alabama Tires
Green, Ohio Technical center
Hannibal, Missouri Hose products
Houston, Texas Synthetic rubber
Huntsville, Alabama,
Tire proving grounds
Kingman, Arizona Aero retread facility
Lawton, Oklahoma Tires
Lincoln, Nebraska Power transmission
belts, hose products
Marysville, Ohio Conveyor belts
Mount Pleasant, Iowa Hose products
Niagara Falls, New York Chemicals
Norfolk, Nebraska Hose products
Pompano Beach, Florida
Airship operations
Radford, Virginia Retread materials
St. Marys, Ohio Molded rubber prod-
ucts, military track, rubber track
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
Stockbridge, Georgia
Aero retread facility
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
Canada
Bowmanville, Ontario Conveyor belts
Collingwood, Ontario Hose products
Granby, Quebec Hose products
Medicine Hat, Alberta Tires
Napanee, Ontario Tires
North Bay, Ontario OTR retread facility
Owen Sound, Ontario
Power transmission belts
Quebec City, Quebec
Molded rubber products
Valleyfield, Quebec Tires
Mexico
Chihuahua Molded rubber products,
power transmission belts
Delicias Hose products
San Luis Potosi
Air springs, hose products
EUROPE
Belgium
Brussels Goodyear Dunlop Tires Europe
headquarters; European Union Tire
headquarters; Eastern Europe, Middle
East & Africa Tire headquarters
France
Amiens Tires
Mireval Tire proving grounds
Montlucon Tires, air springs
Germany
Fuerstenwalde Tires
Fulda Tires
Hanau Tires
Philippsburg Tires
Riesa Tires
Wittlich Tires
Luxembourg
Colmar-Berg Tires, technical center, tire
proving grounds, tire molds, textiles,
steel tire cord
Netherlands
Tilburg Aero retread facility
Poland
Debica Tires, tubes
Slovenia
Kranj Tires, air springs, power transmis-
sion belts, hose products
Turkey
Adapazari Tires
Izmit Tires
United Kingdom
Birmingham Tires
Washington Tires
Wolverhampton Mixing center
LATIN AMERICA
Brazil
Americana Tires, tire proving grounds,
textiles, films
Osasco Hose products
Santa Barbara Retread materials, textiles
Santa de Parnaiba Hose products
Sao Paulo Latin American Tire
headquarters, tires, tire molds,
conveyor belts, power transmission
belts, aero retread facility
Sertaozinho Air springs
Chile
Santiago Tires, conveyor belts, hose
products
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
Shanghai Asia Pacific Tire headquarters
India
Aurangabad Tires
Ballabgarh Tires
Indonesia
Bogor Tires
Japan
Tatsuno Tires
Malaysia
Kuala Lumpur Tires
New Zealand
Upper Hutt Tires
Philippines
Las Pinas Tires
Singapore
Singapore Natural rubber purchasing,
testing and research facility
Taiwan
Taipei Tires
Thailand
Bangkok Tires, Aero retread facility
AUSTRALIA
Bayswater Conveyor belts
Melbourne Aero retread facility
Somerton Tires
G O O D Y E A R 2 0 0 5 | 11 9
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 February 16, 2006, there were 26,003 shareholders
of record of Goodyear common stock. The closing price
of Goodyear common stock on the NYSE composite
transactions tape on February 16, 2006, was $14.51.
Goodyear’s primary credit facilities limit the amount of
cash dividends it may pay to $10 million or less in any
fiscal year. This limit increases to $50 million in any fiscal
year in which Moody’s senior (implied) rating and
Standard & Poor’s (S&P) corporate rating improve to Ba2
or better and BB or better, respectively. Goodyear has
not declared any cash dividends in the three most recent
fiscal years.
ANNUAL MEETING
9 a.m.,Tuesday, April 11, 2006, at the Corporate Offices.
SHAREHOLDER INQUIRIES
Transfer Agent and Registrar:
Computershare Trust Company, N.A.
P.O. Box 43069
Providence, RI 02940-3069
(800) 317-4445
www.computershare.com/equiserve
Inquiries concerning the issuance or transfer of stock cer-
tificates or share account information should be directed
to Computershare. Provide Social Security number,
account number and Goodyear’s ID number, 5721.
Hearing-impaired shareholders can communicate
directly with Computershare via a TDD by calling
(800) 952-9245. 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
FORM 10-K AND OTHER REPORTS
Paper copies of the Company’s Annual Report on Form
10-K are available upon request. Quarterly reports on
Form 10-Q are also available on request. 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 (330) 796-3751
Goodyear has included as Exhibits 31.1 and 31.2 to its
Annual Report on Form 10-K for fiscal year 2005 filed
with the Securities and Exchange Commission certificates
of Goodyear’s Chief Executive Officer and Chief Financial
Officer certifying the quality of the company’s public
disclosure. We have also filed with the New York Stock
Exchange the most recent annual CEO certification as
required by Section 303A.12(a) of the NYSE Listed
Company Manual.
CD RECORDING
A CD recording of the 2005 Annual Report is available
for visually impaired shareholders by contacting Goodyear
Investor Relations at (330) 796-3751.
DIRECTSERVICE™ INVESTMENT PROGRAM
Computershare 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 —
For Goodyear Shareholders
Computershare
P.O. Box 43081
Providence, RI 02940-3081
(800) 317-4445
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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.
1 2 0 | G O O D Y E A R 2 0 0 5
Trademarks owned by or licensed to The Goodyear Tire & Rubber Company or its subsidiaries mentioned in this report include:
Assurance, ComforTred Technology, Dunlop, DuraSeal, Eagle, Eagle F1, Fortera, Fulda,
, Kelly, ResponsEdge,
RunOnFlat, SilentArmor Technology, TripleTred Technology, Ultra Grip, Winter Sport and Wrangler.
W W W . G O O D Y E A R . C O M
700-862-928-71000
GBS #198213