Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE

Basic earnings per share are computed based on the weighted average number of common shares outstanding. Diluted earnings per share are calculated to reflect the potential dilution that could occur if securities or other contracts were exercised or converted into common stock.

Basic and diluted earnings per common share are calculated as follows:

	Three Months Ended
	March 31,
(In millions, except per share amounts)	2012			2011
Earnings (loss) per share — basic:
Goodyear net (loss) income	$	(4	)	$	103
Less: Preferred stock dividends	7			—
Goodyear net (loss) income available to common shareholders	$	(11	)	$	103
Weighted average shares outstanding	244			243
Earnings (loss) per common share — basic	$	(0.05	)	$	0.42
Earnings (loss) per share — diluted:
Goodyear net (loss) income	$	(4	)	$	103
Less: Preferred stock dividends	7			—
Goodyear net (loss) income available to common shareholders	$	(11	)	$	103
Weighted average shares outstanding	244			243
Dilutive effect of stock options and other dilutive securities	—			3
Weighted average shares outstanding — diluted	244			246
Earnings (loss) per common share — diluted	$	(0.05	)	$	0.42

Weighted average shares outstanding - diluted for the three months ended March 31, 2012 excludes the effect of approximately 34 million equivalent shares related to the mandatory convertible preferred stock as their inclusion would have been anti-dilutive. In addition, Goodyear net income used to compute earnings per common share - diluted for the three months ended March 31, 2012 is reduced by $7 million of preferred stock dividends since the inclusion of the related shares of preferred stock would have been anti-dilutive. The dividends and dilutive effect of the mandatory convertible preferred stock were de minimis on the earnings per share calculation for the three months ended March 31, 2011 since the preferred shares were issued on March 31, 2011.

Additionally, weighted average shares outstanding - diluted for the three months ended March 31, 2012 excludes approximately 3 million equivalent shares related to options with exercise prices less than the average market price of our common shares (i.e., "in-the-money" options), as their inclusion would have been anti-dilutive due to the Goodyear net loss. Weighted average shares outstanding - diluted for the three months ended March 31, 2012 and March 31, 2011 excludes approximately 11 million and 9 million equivalent shares, respectively, related to options with exercise prices greater than the average market price of our common shares (i.e., “underwater” options).