Earnings Per Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS 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				Six Months Ended
	June 30,				June 30,
(In millions, except per share amounts)	2012		2011		2012		2011
Earnings per share — basic:
Goodyear net income	$	92	$	47	$	88	$	150
Less: Preferred stock dividends	7		7		15		7
Goodyear net income available to common shareholders	$	85	$	40	$	73	$	143
Weighted average shares outstanding	245		244		244		244
Earnings per common share — basic	$	0.35	$	0.16	$	0.30	$	0.58
Earnings per share — diluted:
Goodyear net income	$	92	$	47	$	88	$	150
Less: Preferred stock dividends	—		7		15		—
Goodyear net income available to common shareholders	$	92	$	40	$	73	$	150
Weighted average shares outstanding	245		244		244		244
Dilutive effect of mandatory convertible preferred stock	34		—		—		15
Dilutive effect of stock options and other dilutive securities	2		3		2		3
Weighted average shares outstanding — diluted	281		247		246		262
Earnings per common share — diluted	$	0.33	$	0.16	$	0.30	$	0.57

Weighted average shares outstanding - diluted for the six months ended June 30, 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 six months ended June 30, 2012 is reduced by $15 million of preferred stock dividends since the inclusion of the related shares of preferred stock would have been anti-dilutive. Additionally, weighted average shares outstanding - diluted for the three and six months ended June 30, 2012 excludes approximately 11 million equivalent shares related to options with exercise prices greater than the average market price of our common shares (i.e., “underwater” options).

Weighted average shares outstanding - diluted for the three months ended June 30, 2011 excludes the effect of approximately 30 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 June 30, 2011 is reduced by $7 million of preferred stock dividends since the inclusion of the related shares of preferred stock would have been anti-dilutive. Additionally, weighted average shares outstanding - diluted for the three and six months ended June 30, 2011 excludes approximately 6 million and 7 million equivalent shares, respectively, related to options with exercise prices greater than the average market price of our common shares (i.e., “underwater” options).