Business Segments

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

BUSINESS SEGMENTS

Business Segments

Segment information reflects our strategic business units (“SBUs”), which are organized to meet customer requirements and global competition. We operate our business through four operating segments representing our regional tire businesses: North American Tire; Europe, Middle East and Africa Tire; Latin American Tire; and Asia Pacific Tire. Segment information is reported on the basis used for reporting to our Chairman of the Board, Chief Executive Officer and President. Each of the four regional business segments is involved in the development, manufacture, distribution and sale of tires. Certain of the business segments also provide related products and services, which include retreads, automotive and commercial truck repair services and merchandise purchased for resale. Each segment also exports tires to other segments.

North American Tire manufactures and sells tires for automobiles, trucks, motorcycles, buses, earthmoving and mining equipment, commercial and military aviation, and industrial equipment in the United States and Canada. North American Tire also provides related products and services including retread tires, tread rubber, automotive and commercial truck maintenance and repair services, as well as sells chemical and natural rubber products to our other business segments and to unaffiliated customers.

Europe, Middle East and Africa Tire manufactures and sells tires for automobiles, trucks, motorcycles, farm implements, and construction equipment throughout Europe, the Middle East and Africa. EMEA also sells new and retreaded aviation tires, retreading and related services for commercial truck and OTR tires, and automotive maintenance and repair services.

Latin American Tire manufactures and sells tires for automobiles, trucks, and aviation and construction equipment throughout Central and South America and in Mexico. Latin American Tire also provides related products and services including retreaded tires and tread rubber for truck tires.

Asia Pacific Tire manufactures and sells tires for automobiles, trucks, farm, construction and mining equipment, and the aviation industry throughout the Asia Pacific region. Asia Pacific Tire also provides related products and services including retreaded truck and aviation tires, tread rubber, and automotive maintenance and repair services.

The following table presents segment sales and operating income, and the reconciliation of segment operating income to Income before Income Taxes:

(In millions)	2012			2011		2010
Sales
North American Tire	$	9,666		$	9,859	$	8,205
Europe, Middle East and Africa Tire	6,884			8,040		6,407
Latin American Tire	2,085			2,472		2,158
Asia Pacific Tire	2,357			2,396		2,062
Net Sales	$	20,992		$	22,767	$	18,832
Segment Operating Income
North American Tire	$	514		$	276	$	18
Europe, Middle East and Africa Tire	252			627		319
Latin American Tire	223			231		330
Asia Pacific Tire	259			234		250
Total Segment Operating Income	1,248			1,368		917
Less:
Rationalizations	175			103		240
Interest expense	357			330		316
Other expense	139			73		186
Asset write-offs and accelerated depreciation	20			50		15
Corporate incentive compensation plans	69			70		71
Corporate pension curtailments/settlements	1			15		—
Intercompany profit elimination	(1		)	5		14
Retained expenses of divested operations	14			29		20
Other	34			75		47
Income before Income Taxes	$	440		$	618	$	8

In the fourth quarter of 2012, we negotiated a waiver of certain performance obligations under an offtake agreement for tires and recognized a $24 million reduction in CGS. The benefit was recognized in Corporate, which is excluded from segment operating income, and included in Other above.

The following table presents segment assets at December 31:

(In millions)	2012		2011		2010
Assets
North American Tire	$	5,170	$	5,744	$	5,243
Europe, Middle East and Africa Tire	5,415		5,915		5,266
Latin American Tire	2,367		2,141		1,809
Asia Pacific Tire	2,601		2,482		2,150
Total Segment Assets	15,553		16,282		14,468
Corporate	1,420		1,347		1,162
	$	16,973	$	17,629	$	15,630

Results of operations are measured based on net sales to unaffiliated customers and segment operating income. Each segment exports tires to other segments. The financial results of each segment exclude sales of tires exported to other segments, but include operating income derived from such transactions. Segment operating income is computed as follows: Net sales less CGS (excluding asset write-offs and accelerated depreciation charges) and SAG (including certain allocated corporate administrative expenses). Segment operating income also includes certain royalties and equity in earnings of most affiliates. Segment operating income does not include net rationalization charges, asset sales and certain other items.

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 property, plant and equipment. Besides Germany, management did not consider the net sales of any other individual countries outside the United States to be significant to the consolidated financial statements. For long-lived assets only China and Germany were considered to be significant.

(In millions)	2012		2011		2010
Net Sales
United States	$	8,416	$	8,397	$	7,104
Germany	2,541		2,962		2,229
Other international	10,035		11,408		9,499
	$	20,992	$	22,767	$	18,832
Long-Lived Assets
United States	$	2,424	$	2,367	$	2,411
China	796		711		508
Germany	788		691		676
Other international	2,948		2,606		2,570
	$	6,956	$	6,375	$	6,165

At December 31, 2012, significant concentrations of cash and cash equivalents held by our international subsidiaries included the following amounts:

• $418 million or 18% in Europe, Middle East and Africa, primarily Belgium and Poland ($793 million or 29% at December 31, 2011),

• $370 million or 16% in Asia, primarily China, Australia and Singapore ($430 million or 16% at December 31, 2011), and

• $622 million or 27% in Latin America, primarily Venezuela and Brazil ($527 million or 19% at December 31, 2011).

Rationalizations, as described in Note 2, Costs Associated with Rationalization Programs, net (gains) losses on asset sales, as described in Note 4, Other Expense, and Asset write-offs and accelerated depreciation were not charged (credited) to the SBUs for performance evaluation purposes but were attributable to the SBUs as follows:

(In millions)	2012		2011		2010
Rationalizations
North American Tire	$	43	$	72	$	184
Europe, Middle East and Africa Tire	100		15		41
Latin American Tire	6		—		5
Asia Pacific Tire	26		16		11
Total Segment Rationalizations	175		103		241
Corporate	—		—		(1		)
	$	175	$	103	$	240

(In millions)	2012			2011			2010
Net (Gains) Losses on Asset Sales
North American Tire	$	(9	)	$	2		$	(2	)
Europe, Middle East and Africa Tire	(9		)	(1		)	(6		)
Latin American Tire	(4		)	(4		)	(7		)
Asia Pacific Tire	(1		)	(9		)	(58		)
Total Segment Asset Sales	(23		)	(12		)	(73		)
Corporate	(2		)	(4		)	—
	$	(25	)	$	(16	)	$	(73	)

(In millions)	2012		2011		2010
Asset Write-offs and Accelerated Depreciation
North American Tire	$	1	$	43	$	2
Europe, Middle East and Africa Tire	—		—		1
Asia Pacific Tire	19		7		12
Total Segment Asset Write-offs and Accelerated Depreciation	$	20	$	50	$	15

The following tables present segment capital expenditures, depreciation and amortization:

(In millions)	2012		2011		2010
Capital Expenditures
North American Tire	$	212	$	236	$	319
Europe, Middle East and Africa Tire	344		240		183
Latin American Tire	250		237		135
Asia Pacific Tire	286		314		281
Total Segment Capital Expenditures	1,092		1,027		918
Corporate	35		16		26
	$	1,127	$	1,043	$	944

(In millions)	2012		2011		2010
Depreciation and Amortization
North American Tire	$	275	$	286	$	295
Europe, Middle East and Africa Tire	215		222		209
Latin American Tire	72		73		57
Asia Pacific Tire	89		73		63
Total Segment Depreciation and Amortization	651		654		624
Corporate	36		61		28
	$	687	$	715	$	652

The following table presents segment equity in the net income of investees accounted for by the equity method:

(In millions)	2012			2011			2010
Equity in (Income)
North American Tire	$	(6	)	$	(5	)	$	(4	)
Europe, Middle East and Africa Tire	—			(1		)	—
Asia Pacific Tire	(28		)	(13		)	(7		)
Total Segment Equity in (Income)	$	(34	)	$	(19	)	$	(11	)