10-Q 1 gt-q1201310q.htm QUARTERLY REPORT GT- Q1 2013 10Q


 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2013
Commission File Number: 1-1927
THE GOODYEAR TIRE & RUBBER COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Ohio
(State or Other Jurisdiction of
Incorporation or Organization)
 
34-0253240
(I.R.S. Employer
Identification No.)
 
 
 
200 Innovation Way, Akron, Ohio
(Address of Principal Executive Offices)
 
44316-0001
(Zip Code)
(330) 796-2121
(Registrant’s Telephone Number, Including Area Code)
1144 East Market Street, Akron, Ohio 44316-0001
(Registrant's former address)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerþ
 
Accelerated filero
 
Non-accelerated filero
 
Smaller reporting companyo
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Number of Shares of Common Stock,
Without Par Value, Outstanding at March 31, 2013:
 
245,690,730
 





TABLE OF CONTENTS






PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
Three Months Ended
 
March 31,
(In millions, except per share amounts)
2013
 
2012
Net Sales
$
4,853

 
$
5,533

Cost of Goods Sold
3,940

 
4,607

Selling, Administrative and General Expense
645

 
662

Rationalizations (Note 2)
7

 
15

Interest Expense
85

 
101

Other Expense (Note 3)
126

 
92

Income before Income Taxes
50

 
56

United States and Foreign Taxes (Note 4)
19

 
48

Net Income
31

 
8

Less: Minority Shareholders’ Net Income (Loss)
(2
)
 
12

Goodyear Net Income (Loss)
33

 
(4
)
Less: Preferred Stock Dividends
7

 
7

Goodyear Net Income (Loss) available to Common Shareholders
$
26

 
$
(11
)
Goodyear Net Income (Loss) available to Common Shareholders — Per Share of Common Stock
 
 
 
Basic
$
0.10

 
$
(0.05
)
Weighted Average Shares Outstanding (Note 5)
245

 
244

Diluted
$
0.10

 
$
(0.05
)
Weighted Average Shares Outstanding (Note 5)
248

 
244

The accompanying notes are an integral part of these consolidated financial statements.



- 1-



THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three Months Ended
 
March 31,
(In millions)
2013
 
2012
Net Income
$
31

 
$
8

Other Comprehensive Income:
 
 
 
Foreign currency translation, net of tax of $0 in 2013 ($0 in 2012)
(57
)
 
103

Reclassification adjustment for amounts recognized in income, net of tax of $0 in 2013 ($0 in 2012)
1

 

Defined benefit plans:
 
 
 
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost, net of tax of $4 in 2013 ($2 in 2012)
61

 
55

Decrease (increase) in net actuarial losses, net of tax of $0 in 2013 ($0 in 2012)
97

 
(2
)
Deferred derivative gains (losses), net of tax of $0 in 2013 ($0 in 2012)
4

 
(8
)
Reclassification adjustment for amounts recognized in income, net of tax of $0 in 2013 ($0 in 2012)

 
(1
)
Unrealized investment gains, net of tax of $0 in 2013 ($0 in 2012)
17

 
5

Other Comprehensive Income
123

 
152

Comprehensive Income
154

 
160

Less: Comprehensive Income (Loss) Attributable to Minority Shareholders
(15
)
 
40

Goodyear Comprehensive Income
$
169

 
$
120

The accompanying notes are an integral part of these consolidated financial statements.



- 2-



THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share data)
March 31,
 
December 31,
 
2013
 
2012
Assets:
 
 
 
Current Assets:
 
 
 
Cash and Cash Equivalents
$
2,386

 
$
2,281

Accounts Receivable, less Allowance — $96 ($99 in 2012)
3,021

 
2,563

Inventories:
 
 
 
Raw Materials
668

 
743

Work in Process
179

 
169

Finished Products
2,321

 
2,338

 
3,168

 
3,250

Prepaid Expenses and Other Current Assets
467

 
404

Total Current Assets
9,042

 
8,498

Goodwill
647

 
664

Intangible Assets
139

 
140

Deferred Income Taxes
195

 
186

Other Assets
534

 
529

Property, Plant and Equipment, less Accumulated Depreciation — $9,004 ($8,991 in 2012)
6,901

 
6,956

Total Assets
$
17,458

 
$
16,973

 
 
 
 
Liabilities:
 
 
 
Current Liabilities:
 
 
 
Accounts Payable-Trade
$
3,218

 
$
3,223

Compensation and Benefits (Notes 9 and 10)
687

 
719

Other Current Liabilities
1,156

 
1,182

Notes Payable and Overdrafts (Note 7)
107

 
102

Long Term Debt and Capital Leases due Within One Year (Note 7)
167

 
96

Total Current Liabilities
5,335

 
5,322

Long Term Debt and Capital Leases (Note 7)
6,307

 
4,888

Compensation and Benefits (Notes 9 and 10)
3,239

 
4,340

Deferred and Other Noncurrent Income Taxes
261

 
264

Other Long Term Liabilities
1,014

 
1,000

Total Liabilities
16,156

 
15,814

 
 
 
 
Commitments and Contingent Liabilities (Note 11)

 

 
 
 
 
Minority Shareholders’ Equity (Note 1)
515

 
534

 
 
 
 
Shareholders’ Equity:
 
 
 
Goodyear Shareholders’ Equity:
 
 
 
Preferred Stock, no par value: (Note 12)
 
 
 
Authorized, 50 million shares, Outstanding shares — 10 million (10 million in 2012), liquidation preference $50 per share
500

 
500

Common Stock, no par value:
 
 
 
Authorized, 450 million shares, Outstanding shares — 246 million (245 million in 2012) after deducting 5 million treasury shares (6 million in 2012)
246

 
245

Capital Surplus
2,818

 
2,815

Retained Earnings
1,396

 
1,370

Accumulated Other Comprehensive Loss
(4,424
)
 
(4,560
)
Goodyear Shareholders’ Equity
536

 
370

Minority Shareholders’ Equity — Nonredeemable
251

 
255

Total Shareholders’ Equity
787

 
625

Total Liabilities and Shareholders’ Equity
$
17,458

 
$
16,973

The accompanying notes are an integral part of these consolidated financial statements.

- 3-



THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(In millions)
Three Months Ended
 
March 31,
 
2013
 
2012
Cash Flows from Operating Activities:
 
 
 
Net Income
$
31

 
$
8

Adjustments to reconcile net income to cash flows from operating activities:
 
 
 
Depreciation and amortization
177

 
170

Amortization and write-off of debt issuance costs
5

 
33

Net rationalization charges (Note 2)
7

 
15

Rationalization payments
(24
)
 
(31
)
Net (gains) losses on asset sales (Note 3)
2

 
(4
)
Pension contributions and direct payments
(908
)
 
(114
)
Venezuela currency devaluation (Note 3)
115

 

Customer prepayments and government grants
29

 
38

Insurance proceeds
17

 
25

Changes in operating assets and liabilities, net of asset acquisitions and dispositions:
 
 
 
Accounts receivable
(500
)
 
(635
)
Inventories
31

 
(48
)
Accounts payable — trade
134

 
(84
)
Compensation and benefits
(23
)
 
(19
)
Other current liabilities
(4
)
 
(20
)
Other assets and liabilities
(26
)
 
(88
)
Total Cash Flows from Operating Activities
(937
)
 
(754
)
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(271
)
 
(276
)
Asset dispositions (Note 3)
5

 

Government grants received
4

 

Increase in restricted cash
(23
)
 
(21
)
Other transactions
2

 
2

Total Cash Flows from Investing Activities
(283
)
 
(295
)
Cash Flows from Financing Activities:
 
 
 
Short term debt and overdrafts incurred
30

 
57

Short term debt and overdrafts paid
(24
)
 
(31
)
Long term debt incurred
1,558

 
1,107

Long term debt paid
(78
)
 
(783
)
Common stock issued
2

 

Preferred stock dividends paid (Note 12)
(7
)
 
(7
)
Transactions with minority interests in subsidiaries
(4
)
 
(3
)
Debt related costs and other transactions
(15
)
 
(14
)
Total Cash Flows from Financing Activities
1,462

 
326

Effect of exchange rate changes on cash and cash equivalents
(137
)
 
34

Net Change in Cash and Cash Equivalents
105

 
(689
)
Cash and Cash Equivalents at Beginning of the Period
2,281

 
2,772

Cash and Cash Equivalents at End of the Period
$
2,386

 
$
2,083

The accompanying notes are an integral part of these consolidated financial statements.

- 4-



THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1. ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared by The Goodyear Tire & Rubber Company (the “Company,” “Goodyear,” “we,” “us” or “our”) in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America ("US GAAP") and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”).
We are a party to shareholder agreements concerning certain of our less-than-wholly-owned consolidated subsidiaries. Under the terms of certain of these agreements, the minority shareholders have the right to require us to purchase their ownership interests in the respective subsidiaries if there is a change in control of Goodyear, a bankruptcy of Goodyear, or other circumstances. Accordingly, we have reported the minority equity in those subsidiaries outside of shareholders’ equity.
Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2013.
Recently Issued Accounting Standards
In March 2013, the Financial Accounting Standards Board ("FASB") issued an accounting standards update providing guidance with respect to the release of cumulative translation adjustments into net income when a parent sells either a part or all of its investment in a foreign entity. The update also requires the release of cumulative translation adjustments when a company no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, and provides guidance for the acquisition in stages of a controlling interest in a foreign entity. The standards update is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The adoption of this standards update will not have a material impact on our consolidated financial statements.
In February 2013, the FASB issued an accounting standards update requiring an entity to record obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. The standards update is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The adoption of this standards update will not have a material impact on our consolidated financial statements.
In July 2012, the FASB issued an accounting standards update with new guidance on annual impairment testing of indefinite-lived intangible assets. The standards update allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If based on its qualitative assessment an entity concludes it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if an entity concludes otherwise, quantitative impairment testing is not required. The standards update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We assess goodwill and intangible assets with indefinite useful lives for impairment annually as of July 31. The adoption of this standards update will not have an impact on our consolidated financial statements.
Recently Adopted Accounting Standards
Effective January 1, 2013, we adopted an accounting standards update with new guidance on the presentation of reclassifications from accumulated other comprehensive loss to net income. This standard requires an entity to present reclassifications from accumulated other comprehensive loss to net income either on the face of the statements or in the notes to the consolidated financial statements. Accordingly, we have presented such reclassifications in Note 14, Reclassifications Out Of Accumulated Other Comprehensive Loss, to the consolidated financial statements.
Effective January 1, 2013, we adopted accounting standards updates with new guidance on disclosures related to financial instruments and derivative instruments that are either offset by or subject to an enforceable master netting arrangement or similar agreement and have expanded our disclosure to discuss amounts eligible for offsetting under our master netting agreements.

- 5-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Reclassifications and Adjustments
Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation. In the first quarter of 2012, we recorded an out of period adjustment of $13 million of additional interest expense to correct capitalized interest recorded in prior periods.

NOTE 2. COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS
In order to maintain our global competitiveness, we have implemented rationalization actions over the past several years to reduce high-cost manufacturing capacity and associate headcount. The net rationalization charges included in Income before Income Taxes are as follows:

 
Three Months Ended
 
March 31,
(In millions)
2013
 
2012
New charges
$
10

 
$
16

Reversals
(3
)
 
(1
)
 
$
7

 
$
15


The following table shows the roll forward of our liability between periods:

 
Associate-
 
Other
 
 
(In millions)
Related Costs
 
Costs
 
Total
Balance at December 31, 2012
$
229

 
$
23

 
$
252

2013 Charges
3

 
7

 
10

Incurred
(24
)
 
(7
)
 
(31
)
Reversed to the statements of operations
(3
)
 

 
(3
)
Balance at March 31, 2013
$
205

 
$
23

 
$
228


During the first quarter of 2013, net rationalization charges of $7 million were recorded. New charges of $10 million related to plans initiated in prior years and consisted of $3 million of associate severance and other related costs and $7 million of other exit and non-cancelable lease costs. Substantially all of the new charges relate to future cash outflows. The net charges in 2013 also included the reversal of $3 million of charges for actions no longer needed for their originally intended purposes. Approximately 100 associates have been released during the quarter ended March 31, 2013. In total, approximately 1,700 associates remain to be released under prior year rationalization plans, including approximately 1,200 associates related to the announced plan to exit the farm tire business and close one of our facilities in Amiens, France.
In the first quarter of 2013, $24 million was incurred for associate severance and other related payments and $7 million was incurred for other exit and non-cancelable lease costs. Foreign currency translation of $6 million, also reducing the reserve balance, was included in incurred associate-related costs.
The accrual balance of $228 million at March 31, 2013 consists of $205 million for associate severance costs that are expected to be substantially utilized within the next 12 months and $23 million primarily for other exit and non-cancelable lease costs. At March 31, 2013, $166 million of the accrual balance relates to plans associated with the announced closure of one of our facilities in Amiens, France.
Accelerated depreciation charges of $5 million were recorded in cost of goods sold (“CGS”) in the first quarter of 2013 related primarily to property and equipment in one of our facilities in Amiens, France.
During the first quarter of 2012, net rationalization charges of $15 million were recorded. New charges of $16 million were comprised of $7 million for plans initiated in 2012, consisting of associate severance costs, and $9 million for plans initiated in prior years, consisting of $1 million of associate severance costs and $8 million of other exit and non-cancelable lease costs, primarily related to the July 2011 closure of our Union City, Tennessee manufacturing facility. Substantially all of these charges related to future cash outflows. The net charges in 2012 also included the reversal of $1 million of charges for actions no longer needed for their originally intended purposes.

- 6-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Accelerated depreciation charges of $2 million were recorded in CGS in the first quarter of 2012, and were primarily related to property and equipment in our Dalian, China manufacturing facility.

NOTE 3. OTHER EXPENSE
 
Three Months Ended
 
March 31,
(In millions) (Income) Expense
2013
 
2012
Net foreign currency exchange losses
$
123

 
$
11

Financing fees and financial instruments
13

 
95

Royalty income
(10
)
 
(9
)
Interest income
(5
)
 
(4
)
General and product liability — discontinued products
3

 
2

Net losses (gains) on asset sales
2

 
(4
)
Miscellaneous

 
1

 
$
126

 
$
92


Net foreign currency exchange losses were $123 million in the first quarter of 2013, compared to $11 million in the first quarter of 2012. Losses in 2013 included a net loss of $115 million resulting from the devaluation of the Venezuelan bolivar fuerte against the U.S. dollar. Effective February 13, 2013, Venezuela's official exchange rate changed from 4.3 to 6.3 bolivares fuertes to the U.S. dollar for substantially all goods. Foreign currency exchange also reflects net gains and losses resulting from the effect of exchange rate changes on various foreign currency transactions worldwide.
The $115 million remeasurement loss on bolivar-denominated net monetary assets and liabilities, including deferred taxes, was primarily related to cash deposits in Venezuela that were remeasured at the official exchange rate of 6.3 bolivares fuertes per U.S. dollar. We also recorded a one-time subsidy receivable of $13 million related to certain U.S. dollar-denominated payables that are expected to be settled at the official subsidy exchange rate of 4.3 bolivares fuertes per U.S. dollar applicable to certain import purchases prior to the devaluation date. A portion of this subsidy will reduce cost of goods sold in future periods when the related inventory is sold.
Financing fees were $13 million in the first three months of 2013, compared to $95 million in the first three months of 2012. Financing fees in the first three months of 2012 included $86 million related to the redemption of $650 million in aggregate principal amount of our outstanding 10.5% senior notes due 2016, of which $59 million related to cash premiums paid on the redemption and $27 million related to the write-off of deferred financing fees and unamortized discount. Financing fees and financial instruments also include the amortization of deferred financing fees, commitment fees and other charges incurred in connection with financing transactions.
Royalty income is derived primarily from licensing arrangements related to divested businesses. Interest income consists primarily of amounts earned on cash deposits.
General and product liability — discontinued products includes charges for claims against us related primarily to asbestos personal injury claims, net of probable insurance recoveries.

NOTE 4. INCOME TAXES
In the first quarter of 2013, we recorded tax expense of $19 million on income before income taxes of $50 million. Income tax expense was favorably impacted by $12 million due primarily to recently enacted tax law changes.
In the first quarter of 2012, we recorded tax expense of $48 million on income before income taxes of $56 million. Income tax expense was unfavorably impacted by $3 million due primarily to the settlement of prior tax years.
We record taxes based on overall estimated annual effective tax rates. In addition to the discrete items noted above, the difference between our effective tax rate and the U.S. statutory rate was primarily attributable to continuing to maintain a full valuation allowance against our net Federal, State and certain foreign jurisdictions' deferred tax assets.


- 7-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


At January 1, 2013, we had unrecognized tax benefits of $82 million that if recognized, would have a favorable impact on our tax expense of $70 million. We had accrued interest of $20 million as of January 1, 2013. If not favorably settled, $24 million of the unrecognized tax benefits and all of the accrued interest would require the use of our cash. It is reasonably possible that our total amount of unrecognized tax benefits may change during the next 12 months. However, we do not expect these changes to have a significant impact on our financial position or results of operations.
Generally, years from 2006 onward are still open to examination by foreign taxing authorities, including in Germany. In the United States, we are open to examination for 2012.

NOTE 5. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) 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 (loss) per common share are calculated as follows:

 
Three Months Ended
 
March 31,
(In millions, except per share amounts)
2013
 
2012
Earnings (loss) per share — basic:
 
 
 
Goodyear net income (loss)
$
33

 
$
(4
)
Less: Preferred stock dividends
7

 
7

Goodyear net income (loss) available to common shareholders
$
26

 
$
(11
)
Weighted average shares outstanding
245

 
244

Earnings (loss) per common share — basic
$
0.10

 
$
(0.05
)
 
 
 
 
Earnings (loss) per share — diluted:
 
 
 
Goodyear net income (loss)
$
33

 
$
(4
)
Less: Preferred stock dividends
7

 
7

Goodyear net income (loss) available to common shareholders
$
26

 
$
(11
)
Weighted average shares outstanding
245

 
244

Dilutive effect of stock options and other dilutive securities
3

 

Weighted average shares outstanding — diluted
248

 
244

Earnings (loss) per common share — diluted
$
0.10

 
$
(0.05
)

Weighted average shares outstanding - diluted for the three months ended March 31, 2013 and 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, 2013 and 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.

Additionally, weighted average shares outstanding - diluted for the three months ended March 31, 2013 and 2012 excludes approximately 7 million and 11 million equivalent shares, respectively, 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 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.

- 8-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 6. BUSINESS SEGMENTS

 
Three Months Ended
 
March 31,
(In millions)
2013
 
2012
Sales:
 
 
 
North American Tire
$
2,166

 
$
2,497

Europe, Middle East and Africa Tire
1,607

 
1,938

Latin American Tire
513

 
521

Asia Pacific Tire
567

 
577

Net Sales
$
4,853

 
$
5,533

Segment Operating Income:
 
 
 
North American Tire
$
127

 
$
80

Europe, Middle East and Africa Tire
31

 
90

Latin American Tire
60

 
55

Asia Pacific Tire
84

 
67

Total Segment Operating Income
302

 
292

Less:
 
 
 
Rationalizations
7

 
15

Interest expense
85

 
101

Other expense
126

 
92

Asset write-offs and accelerated depreciation
5

 
2

Corporate incentive compensation plans
10

 
7

Intercompany profit elimination
3

 
10

Retained expenses of divested operations
4

 
4

Other
12

 
5

Income before Income Taxes
$
50

 
$
56


Rationalizations, as described in Note 2, Costs Associated with Rationalization Programs, net (gains) losses on asset sales, as described in Note 3, Other Expense, and asset write-offs and accelerated depreciation are not (credited) charged to the strategic business units (“SBUs”) for performance evaluation purposes, but were attributable to the SBUs as follows:


- 9-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



 
Three Months Ended
 
March 31,
(In millions)
2013
 
2012
Rationalizations:
 
 
 
North American Tire
$
2

 
$
6

Europe, Middle East and Africa Tire
3

 
5

Latin American Tire

 
2

Asia Pacific Tire
2

 
2

Total Segment Rationalizations
7

 
15

 
 
 
 
 
 
 
 
Net (Gains) Losses on Asset Sales:
 
 
 
North American Tire
$
1

 
$
(2
)
Europe, Middle East and Africa Tire
2

 
(1
)
Latin American Tire
(1
)
 

Total Segment Asset Sales
2

 
(3
)
Corporate

 
(1
)
 
$
2

 
$
(4
)

Asset Write-offs and Accelerated Depreciation:
 
 
 
Europe, Middle East and Africa Tire
$
5

 
$

Asia Pacific Tire

 
2

Total Segment Asset Write-offs and Accelerated Depreciation
$
5

 
$
2



NOTE 7. FINANCING ARRANGEMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
At March 31, 2013, we had total credit arrangements of $9,204 million, of which $2,289 million were unused. At that date, 38% of our debt was at variable interest rates averaging 5.46%.
Notes Payable and Overdrafts, Long Term Debt and Capital Leases due Within One Year and Short Term Financing Arrangements
At March 31, 2013, we had short term committed and uncommitted credit arrangements totaling $527 million, of which $420 million were unused. These arrangements are available primarily to certain of our international subsidiaries through various banks at quoted market interest rates.

- 10-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


The following table presents amounts due within one year:

 
March 31,
 
December 31,
(In millions)
2013
 
2012
Notes payable and overdrafts
$
107

 
$
102

Weighted average interest rate
4.24
%
 
4.29
%
Long term debt and capital leases due within one year
 
 
 
Other domestic and international debt (including capital leases)
$
167

 
$
96

Weighted average interest rate
6.45
%
 
6.88
%
Total obligations due within one year
$
274

 
$
198


Long Term Debt and Capital Leases and Financing Arrangements
At March 31, 2013, we had long term credit arrangements totaling $8,677 million, of which $1,869 million were unused.
The following table presents long term debt and capital leases, net of unamortized discounts, and interest rates:

 
March 31, 2013
 
December 31, 2012
 
 
 
Interest
 
 
 
Interest
(In millions)
Amount
 
Rate
 
Amount
 
Rate
Notes:
 
 
 
 
 
 
 
6.75% Euro Notes due 2019
$
321

 
 
 
$
330

 
 
8.25% due 2020
995

 
 
 
994

 
 
8.75% due 2020
266

 
 
 
266

 
 
6.5% due 2021
900

 
 
 

 
 
7% due 2022
700

 
 
 
700

 
 
7% due 2028
149

 
 
 
149

 
 
Credit Facilities:
 
 
 
 
 
 
 
$2.0 billion first lien revolving credit facility due 2017

 

 

 

$1.2 billion second lien term loan facility due 2019
1,194

 
4.75
%
 
1,194

 
4.75
%
€400 million revolving credit facility due 2016
256

 
2.62
%
 

 

Pan-European accounts receivable facility due 2015
186

 
2.97
%
 
192

 
3.00
%
Chinese credit facilities
505

 
5.71
%
 
471

 
6.38
%
Other domestic and international debt(1)
933

 
8.19
%
 
630

 
8.40
%
 
6,405

 
 
 
4,926

 
 
Capital lease obligations
69

 
 
 
58

 
 
 
6,474

 
 
 
4,984

 
 
Less portion due within one year
(167
)
 
 
 
(96
)
 
 
 
$
6,307

 
 
 
$
4,888

 
 
________________________________
(1)
Interest rates are weighted average interest rates related to various international credit facilities with customary terms and conditions and the Global and North American Tire Headquarters financing liability described below.



- 11-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTES
$900 million 6.5% Senior Notes due 2021
On February 25, 2013, we issued $900 million aggregate principal amount of 6.5% senior notes due 2021. These notes were sold at 100% of the principal amount and will mature on March 1, 2021. These notes are unsecured senior obligations and are guaranteed by our U.S. and Canadian subsidiaries that also guarantee our obligations under our U.S. senior secured credit facilities described below.
We have the option to redeem these notes, in whole or in part, at any time on or after March 1, 2016 at a redemption price of 104.875%, 103.25%, 101.625% and 100% during the 12-month periods commencing on March 1, 2016, 2017, 2018 and 2019 and thereafter, respectively, plus accrued and unpaid interest to the redemption date. Prior to March 1, 2016, we may redeem these notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid interest to the redemption date. In addition, prior to March 1, 2016, we may redeem up to 35% of the original aggregate principal amount of these notes from the net cash proceeds of certain equity offerings at a redemption price equal to 106.5% of the principal amount plus accrued and unpaid interest to the redemption date.
The terms of the indenture for these notes, among other things, limit 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 affiliate 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 significant exceptions and qualifications. For example, if these notes are assigned an investment grade rating by Moody's and Standard & Poor's and no default has occurred or is continuing, certain covenants will be suspended. The indenture has customary defaults, including a cross-default to material indebtedness of Goodyear and our subsidiaries.
CREDIT FACILITIES
$2.0 billion Amended and Restated First Lien Revolving Credit Facility due 2017
Our amended and restated first lien revolving credit facility is available in the form of loans or letters of credit, with letter of credit availability limited to $800 million. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to $250 million. Our obligations under the facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries. Our obligations under the facility and our subsidiaries' obligations under the related guarantees are secured by first priority security interests in a variety of collateral. Amounts drawn under this facility will bear interest at LIBOR plus 150 basis points.
Availability under the facility is subject to a borrowing base, which is based primarily on eligible accounts receivable and inventory of The Goodyear Tire & Rubber Company and certain of its U.S. and Canadian subsidiaries. To the extent that our eligible accounts receivable and inventory decline, our borrowing base will decrease and the availability under the facility may decrease below $2.0 billion. As of March 31, 2013, our borrowing base, and therefore our availability, under this facility was $480 million below the facility's stated amount of $2.0 billion.
The facility has customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in our consolidated financial condition since December 31, 2011. The facility also has customary defaults, including a cross-default to material indebtedness of Goodyear and our subsidiaries.
At March 31, 2013 and December 31, 2012, we had no borrowings outstanding under the first lien revolving credit facility. Letters of credit issued totaled $394 million at March 31, 2013 and $407 million at December 31, 2012.
$1.2 billion Amended and Restated Second Lien Term Loan Facility due 2019
Our obligations under our amended and restated second lien term loan facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries and are secured by second priority security interests in the same collateral securing the $2.0 billion first lien revolving credit facility. This facility may be increased by up to $300 million at our request, subject to the consent of the lenders making such additional term loans. The term loan bears interest at LIBOR plus 375 basis points, subject to a minimum LIBOR rate of 100 basis points.
At March 31, 2013 and December 31, 2012, this facility was fully drawn.

- 12-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



€400 million Amended and Restated Senior Secured European Revolving Credit Facility due 2016
Our amended and restated €400 million European revolving credit facility consists of (i) a €100 million German tranche that is available only to Goodyear Dunlop Tires Germany GmbH (the “German borrower”) and (ii) a €300 million all-borrower tranche that is available to Goodyear Dunlop Tires Europe B.V. (“GDTE"), the German borrower and certain of GDTE's other subsidiaries. Up to €50 million in letters of credit are available for issuance under the all-borrower tranche. Amounts drawn under this facility will bear interest at LIBOR plus 250 basis points for loans denominated in U.S. dollars or pounds sterling and EURIBOR plus 250 basis points for loans denominated in euros.
GDTE and certain of its subsidiaries in the United Kingdom, Luxembourg, France and Germany provide guarantees to support the facility. The German guarantors secure the German tranche on a first-lien basis and the all-borrower tranche on a second-lien basis. GDTE and its other subsidiaries that provide guarantees secure the all-borrower tranche on a first-lien basis and do not provide collateral support for the German tranche. The Company and its U.S. subsidiaries and primary Canadian subsidiary that guarantee our U.S. senior secured credit facilities described above also provide unsecured guarantees in support of the facility.
The facility has customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in either our or GDTE's consolidated financial condition since December 31, 2010. The facility also has customary defaults, including a cross-default to material indebtedness of Goodyear and our subsidiaries.
At March 31, 2013, there were no borrowings outstanding under the German tranche and $256 million (€200 million) outstanding under the all-borrower tranche. At December 31, 2012, there were no borrowings under the revolving credit facility. Letters of credit issued under the all-borrower tranche totaled $10 million (€7 million) at March 31, 2013 and December 31, 2012.
International Accounts Receivable Securitization Facilities (On-Balance Sheet)
GDTE and certain of its subsidiaries are parties to a pan-European accounts receivable securitization facility that provides up to €450 million of funding and expires in 2015. Utilization under this facility is based on current available receivable balances. The facility is subject to the customary renewal of its back-up liquidity commitments. On October 18, 2012, the back-up liquidity commitments were renewed for a two-year period.
The facility involves an ongoing daily 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 retain servicing responsibilities. At March 31, 2013, the amounts available and utilized under this program totaled $333 million (€260 million) and $186 million (€145 million), respectively. At December 31, 2012, the amounts available and utilized under this program totaled $348 million (€264 million) and $192 million (€145 million), respectively. The program does not qualify for sale accounting, and accordingly, these amounts are included in Long Term Debt and Capital Leases.
In addition to the pan-European accounts receivable securitization facility discussed above, subsidiaries in Australia have an accounts receivable securitization program. At March 31, 2013, the amounts available and utilized under this program were $67 million. At December 31, 2012, the amounts available and utilized under this program were $99 million and $40 million, respectively. The receivables sold under this program also serve as collateral for the related facility. We retain the risk of loss related to these receivables in the event of non-payment. These amounts are included in Long Term Debt and Capital Leases due Within One Year.
For a description of the collateral securing the credit facilities described above as well as the covenants applicable to them, refer to the Note to the Consolidated Financial Statements No. 14, Financing Arrangements and Derivative Financial Instruments, in our 2012 Form 10-K.
Accounts Receivable Factoring Facilities (Off-Balance Sheet)
Various subsidiaries sold certain of their trade receivables under off-balance sheet programs. For these programs, we have concluded that there is generally no risk of loss to us from non-payment of the sold receivables. At March 31, 2013, the gross amount of receivables sold was $222 million, compared to $243 million at December 31, 2012.

- 13-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Other Foreign Credit Facilities
Our Chinese subsidiary has several financing arrangements in China. At March 31, 2013, these non-revolving credit facilities had total unused availability of 154 million renminbi ($25 million) and can only be used to finance the relocation and expansion of our manufacturing facility in China. Borrowings outstanding under these facilities were $505 million and $471 million at March 31, 2013 and December 31, 2012, respectively. The facilities ultimately mature in 2020 and principal amortization begins in 2015. The facilities contain covenants relating to our Chinese subsidiary and have customary representations and warranties and defaults relating to our Chinese subsidiary’s ability to perform its obligations under the facilities. At March 31, 2013, restricted cash of $24 million was related to funds obtained under these credit facilities. At December 31, 2012, there was no restricted cash related to funds obtained under these credit facilities.
OTHER DOMESTIC DEBT
Global and North American Tire Headquarters
We entered into agreements for the construction of a new Global and North American Tire Headquarters facility in Akron, Ohio. We concurrently entered into an agreement to occupy the facility under a 27-year lease, including the two-year construction period, with multiple renewal options available at our discretion. In addition, we entered into similar agreements for the construction and lease of a new parking deck adjacent to the Headquarters facility. Due to our continuing involvement with the financing during construction of the Headquarters facility and the parking deck, we recorded a non-cash increase to fixed assets and financing liabilities on our Consolidated Balance Sheets as costs were incurred during the construction period. The total financing liability is expected to be approximately $150 million of which $140 million has been recorded in Long Term Debt and Capital Leases at March 31, 2013. Completion of construction and the first payments under the leases will occur in the second quarter of 2013.
DERIVATIVE FINANCIAL INSTRUMENTS
We utilize derivative financial 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 financial instrument activities. We do not hold or issue derivative financial instruments for trading purposes.
Foreign Currency Contracts
We will enter into foreign currency contracts in order to manage the impact of changes in foreign exchange rates on our consolidated results of operations and future foreign currency-denominated cash flows. These contracts reduce exposure to currency movements affecting existing foreign currency-denominated assets, liabilities, firm commitments and forecasted transactions resulting primarily from trade purchases and sales, equipment acquisitions, intercompany loans and royalty agreements. Contracts hedging short term trade receivables and payables normally have no hedging designation.





- 14-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


The following table presents fair values for foreign currency contracts not designated as hedging instruments:

 
March 31,
 
December 31,
(In millions)
2013
 
2012
Fair Values — asset (liability):
 
 
 
Accounts receivable
$
16

 
$
2

Other current liabilities
(10
)
 
(24
)

At March 31, 2013 and December 31, 2012, these outstanding foreign currency derivatives had notional amounts of $1,276 million and $1,289 million, respectively, and were primarily related to intercompany loans. Other Expense included net transaction gains of $20 million and net transaction losses of $24 million for the three months ended March 31, 2013 and March 31, 2012, respectively, on foreign currency derivatives. These amounts were substantially offset in Other Expense by the effect of changing exchange rates on the underlying currency exposures.
The following table presents fair values for foreign currency contracts designated as cash flow hedging instruments:

 
March 31,
 
December 31,
(In millions)
2013
 
2012
Fair Values — asset (liability):
 
 
 
Accounts receivable
$
2

 
$

Other current liabilities
(1
)
 
(5
)

At March 31, 2013 and December 31, 2012, these outstanding foreign currency derivatives had notional amounts of $127 million and $138 million, respectively, and primarily related to intercompany transactions.

We enter into master netting agreements with counterparties. The amounts eligible for offset under the master netting agreements are not material and we have elected a gross presentation of foreign currency contracts in the Consolidated Balance Sheets.

The following table presents the classification of changes in fair values of foreign currency contracts designated as cash flow hedging instruments (before tax and minority):
 
Three Months Ended
 
March 31,
(In millions) (Income) Expense
2013
 
2012
Amounts deferred to Accumulated Other Comprehensive Loss ("AOCL")
$
(4
)
 
$
8

Amount of deferred (gain) loss reclassified from AOCL into CGS

 
(1
)

The estimated net amount of the deferred losses on March 31, 2013 that is expected to be reclassified to earnings within the next twelve months is $1 million.
The counterparties to our foreign currency contracts were considered by us to be substantial and creditworthy financial institutions that are recognized market makers at the time we entered into those contracts. We seek to control our credit exposure to these counterparties by diversifying across multiple counterparties, by setting counterparty credit limits based on long term credit ratings and other indicators of counterparty credit risk such as credit default swap spreads, and by monitoring the financial strength of these counterparties on a regular basis. We also enter into master netting agreements with counterparties when possible. By controlling and monitoring exposure to counterparties in this manner, we believe that we effectively manage the risk of loss due to nonperformance by a counterparty. However, the inability of a counterparty to fulfill its contractual obligations to us could have a material adverse effect on our liquidity, financial position or results of operations in the period in which it occurs.


- 15-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 8. FAIR VALUE MEASUREMENTS
The following table presents information about assets and liabilities recorded at fair value on the Consolidated Balance Sheet at March 31, 2013 and December 31, 2012:


 
Total Carrying Value in the
Consolidated
Balance Sheet
 
Quoted Prices in Active Markets for Identical
Assets/Liabilities
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant Unobservable
Inputs
(Level 3)
(In millions)
2013
 
2012
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
$
62

 
$
45

 
$
62

 
$
45

 
$

 
$

 
$

 
$

Foreign Exchange Contracts
18

 
2

 

 

 
18

 
2

 

 

Total Assets at Fair Value
$
80

 
$
47

 
$
62

 
$
45

 
$
18

 
$
2

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign Exchange Contracts
$
11

 
$
29

 
$

 
$

 
$
11

 
$
29

 
$

 
$

Other
2

 
3

 

 

 
2

 
3

 

 

Total Liabilities at Fair Value
$
13

 
$
32

 
$

 
$


$
13

 
$
32

 
$

 
$


The following table presents supplemental fair value information about long term fixed rate and variable rate debt, excluding capital leases, at March 31, 2013 and December 31, 2012. The fair value was estimated using quoted market prices.

 
March 31,
 
December 31,
(In millions)
2013
 
2012
Fixed Rate Debt:
 
 
 
Carrying amount — liability
$
3,945

 
$
3,128

Fair value — liability
4,184

 
3,378

 
 
 
 
Variable Rate Debt:
 
 
 
Carrying amount — liability
$
2,460

 
$
1,798

Fair value — liability
2,431

 
1,808



- 16-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 9. PENSION, SAVINGS AND OTHER POSTRETIREMENT BENEFIT PLANS
We provide employees with defined benefit pension or defined contribution savings plans.
Defined benefit pension cost follows:

 
U.S.
 
Three Months Ended
 
March 31,
(In millions)
2013
 
2012
Service cost — benefits earned during the period
$
11

 
$
10

Interest cost on projected benefit obligation
61

 
66

Expected return on plan assets
(84
)
 
(75
)
Amortization of: — prior service cost
4

 
6

  — net losses
53

 
46

Total defined benefit pension cost
$
45

 
$
53

 
 
Non-U.S.
 
 
Three Months Ended
 
 
March 31,
(In millions)
 
2013
 
2012
Service cost — benefits earned during the period
 
$
10

 
$
8

Interest cost on projected benefit obligation
 
33

 
35

Expected return on plan assets
 
(28
)
 
(30
)
Amortization of: — prior service cost
 

 

— net losses
 
16

 
12

Total defined benefit pension cost
 
$
31

 
$
25

 
 
 
 
 

During the first quarter of 2013, we made $34 million of required contributions and $834 million of discretionary contributions to fully fund our frozen U.S. pension plans. Following these contributions, the Company changed its target asset allocation for these plans to a portfolio of substantially all fixed income securities designed to offset the future impact of discount rate movements on the plans' funded status. As a result of the asset allocation change, we were required to remeasure the benefit obligations and assets of the affected plans at February 28, 2013, which resulted in a reduction to net actuarial losses included in Accumulated Other Comprehensive Loss of $93 million. The weighted average discount rate used to measure the benefit obligations of the frozen U.S. pension plans at February 28, 2013 was 3.82% as compared to 3.61% at December 31, 2012. As a result of the change in target asset allocation for the frozen U.S. pension plans, the expected long term return on plan assets for these plans is 4.75% as of March 1, 2013. At February 28, 2013, these frozen U.S. pension plans had assets of $2,072 million.
In addition to the $834 million of discretionary contributions to our frozen U.S. pension plans in the first quarter of 2013, we expect to contribute approximately $275 million to $325 million to our funded U.S. and non-U.S. pension plans in 2013. For the three months ended March 31, 2013, we contributed $868 million and $30 million to our U.S. and non-U.S. plans, respectively.
The expense recognized for our contributions to defined contribution savings plans for the three months ended March 31, 2013 and 2012 was $26 million and $27 million, respectively.
We provide certain U.S. employees and employees at certain non-U.S. subsidiaries with health care benefits or life insurance benefits upon retirement. Postretirement benefit (credit) cost for the three months ended March 31, 2013 and 2012 was $(2) million and $3 million, respectively.
During the third quarter of 2012, we announced changes to our U.S. and Canadian salaried other postretirement benefit plans, effective January 1, 2013. The changes consisted primarily of eliminating coverage for participants who are or become at least age 65 and eligible for government subsidized programs and reduced our U.S. other postretirement benefit obligation by $56 million and our Canadian other postretirement benefit obligation by $18 million.


- 17-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 10. STOCK COMPENSATION PLANS
Our Board of Directors granted 2.0 million stock options and 0.2 million performance share units during the three months ended March 31, 2013 under our 2008 Performance Plan. Unless earlier terminated, the 2008 Performance Plan will expire on April 8, 2018. The weighted average exercise price per share and weighted average fair value per share of the stock option grants during the three months ended March 31, 2013 were $12.98 and $5.97, respectively. We estimated the fair value of the stock options using the following assumptions in our Black-Scholes model:
Expected term: 6.25 years
Interest rate: 1.04%
Volatility: 46.87%
Dividend yield: Nil
We measure the fair value of grants of performance share units based primarily on the closing market price of a share of our common stock on the date of the grant, modified as appropriate to take into account the features of such grants. The weighted average fair value per share was $13.65 for grants made during the three months ended March 31, 2013.
We recognized stock-based compensation expense of $2 million and $1 million during the three months ended March 31, 2013 and 2012, respectively. At March 31, 2013, unearned compensation cost related to the unvested portion of all stock-based awards was approximately $33 million and is expected to be recognized over the remaining vesting period of the respective grants, through February 2017.

NOTE 11. COMMITMENTS AND CONTINGENT LIABILITIES
Environmental Matters
We have recorded liabilities totaling $43 million at both March 31, 2013 and December 31, 2012, 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, $9 million were included in Other Current Liabilities at both March 31, 2013 and December 31, 2012. The costs include legal and consulting fees, site studies, the design and implementation of remediation plans, post-remediation monitoring and related activities, and will be paid over several years. The amount of our ultimate liability in respect of these matters may be affected by several uncertainties, primarily the ultimate cost of required remediation and the extent to which other responsible parties contribute. We have limited potential insurance coverage for future environmental claims.
Since many of the remediation activities related to environmental matters vary substantially in duration and cost from site to site and the associated costs for each vary depending on the mix of unique site characteristics, in some cases we cannot reasonably estimate a range of possible losses. Although it is not possible to estimate with certainty the outcome of all of our environmental matters, management believes that potential losses in excess of current reserves for environmental matters, individually and in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations.
Workers’ Compensation
We have recorded liabilities, on a discounted basis, totaling $309 million and $307 million for anticipated costs related to workers’ compensation at March 31, 2013 and December 31, 2012, respectively. Of these amounts, $74 million and $57 million were included in Current Liabilities as part of Compensation and Benefits at March 31, 2013 and December 31, 2012, 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 differ from these estimates. We periodically, and at least annually, update our loss development factors based on actuarial analyses. At March 31, 2013 and December 31, 2012, the liability was discounted using a risk-free rate of return. At March 31, 2013, we estimate that it is reasonably possible that the liability could exceed our recorded amounts by approximately $40 million.

- 18-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


General and Product Liability and Other Litigation
We have recorded liabilities totaling $302 million and $298 million, including related legal fees expected to be incurred, for potential product liability and other tort claims, including asbestos claims, presently asserted against us at March 31, 2013 and December 31, 2012, respectively. Of these amounts, $41 million and $40 million were included in Other Current Liabilities at March 31, 2013 and December 31, 2012, 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. Based upon that assessment, at March 31, 2013, we do not believe that estimated reasonably possible losses associated with general and product liability claims in excess of the amounts recorded will have a material adverse effect on our financial position, cash flows or results of operations. However, the amount of our ultimate liability in respect of these matters may differ from these estimates.
Asbestos. We are a defendant in numerous lawsuits alleging various asbestos-related personal injuries purported to result from alleged exposure to asbestos in certain products manufactured by us or present 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 106,000 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, by us and our insurers totaled approximately $412 million through March 31, 2013 and $407 million through December 31, 2012.
A summary of recent approximate asbestos claims activity follows. Because claims are often filed 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 fluctuate significantly.

 
Three Months Ended
 
Year Ended
(Dollars in millions)
March 31, 2013
 
December 31, 2012
Pending claims, beginning of period
73,200

 
78,500

New claims filed
700

 
2,200

Claims settled/dismissed
(400
)
 
(7,500
)
Pending claims, end of period
73,500

 
73,200

Payments (1)
$
5

 
$
18

________________________________
(1)
Represents amount spent by us and our insurers on asbestos litigation defense and claim resolution.
We periodically, and at least annually, review our existing reserves for pending claims, including a reasonable estimate of the liability associated with unasserted asbestos claims, and estimate our receivables from probable insurance recoveries. We had recorded gross liabilities for both asserted and unasserted claims, inclusive of defense costs, totaling $138 million and $139 million at March 31, 2013 and December 31, 2012, respectively.
We recorded a receivable related to asbestos claims of $74 million and $73 million as of March 31, 2013 and December 31, 2012, respectively. We expect that approximately 50% of asbestos claim related losses will be recoverable through insurance during the ten-year period covered by the estimated liability. Of these amounts, $10 million was included in Current Assets as part of Accounts Receivable at March 31, 2013 and December 31, 2012. The recorded receivable 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.
We believe that, at March 31, 2013, we had approximately $160 million in limits of excess level policies potentially applicable to indemnity and defense costs for asbestos products claims. We also had coverage under certain primary policies for indemnity and defense costs for asbestos products claims under remaining aggregate limits, as well as coverage for indemnity and defense costs for asbestos premises claims on a per occurrence basis pursuant to a coverage-in-place agreement.
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 amounts cannot be reasonably estimated. Coverage under insurance policies is subject to varying characteristics of asbestos claims including, but not limited to, the type of claim (premise vs. product exposure), alleged date of first 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.

- 19-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


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 effect on our financial position or overall trends in results of operations.
Our recorded liabilities and estimates of reasonably possible losses for the contingent liabilities described above are based on our assessment of potential liability using the information available to us at the time and, where applicable, any past experience and recent and current trends with respect to similar matters. Our contingent liabilities are subject to inherent uncertainties, and unfavorable judicial or administrative decisions could occur which we did not anticipate. Such an unfavorable decision could include monetary damages, fines or other penalties or an injunction prohibiting us from taking certain actions or selling certain products. If such an unfavorable decision were to occur, it could result in a material adverse impact on our financial position and results of operations in the period in which the decision occurs, or in future periods.
Income Tax and Other 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 benefit during the period in which we determine that the liability is no longer necessary. We also recognize income tax benefits to the extent that it is more likely than not that our positions will be sustained when challenged by the taxing authorities. We derecognize income tax benefits when based on new information we determine that it is no longer more likely than not that our position will be sustained. To the extent we prevail in matters for which liabilities have been established, or determine we need to derecognize tax benefits recorded in prior periods, our results of operations and effective tax rate in a given period could be materially affected. An unfavorable tax settlement would require use of our cash, and lead to recognition of expense to the extent the settlement amount exceeds recorded liabilities and, in the case of an income tax settlement, result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction of expense to the extent the settlement amount is lower than recorded liabilities and, in the case of an income tax settlement, would result in a reduction in our effective tax rate in the period of resolution.
While the Company applies consistent transfer pricing policies and practices globally, supports transfer prices through economic studies, seeks advance pricing agreements and joint audits to the extent possible and believes its transfer prices to be appropriate, such transfer prices, and related interpretations of tax laws, are occasionally challenged by various taxing authorities globally. We have received various tax assessments challenging our interpretations of applicable tax laws in various jurisdictions. Although we believe we have complied with applicable tax laws, have strong positions and defenses and have historically been successful in defending such claims, our results of operations could be materially adversely affected in the case we are unsuccessful in the defense of existing or future claims.
In September 2011, the State of Sao Paulo, Brazil issued an assessment to us for allegedly improperly taking tax credits for value-added taxes paid to a supplier of natural rubber during the period from January 2006 to August 2008. The assessment, including interest and penalties, totals 92 million Brazilian real (approximately $46 million). We received similar assessments from the State of Sao Paulo, Brazil in December 2010 for allegedly improperly taking tax credits for value-added taxes paid to other suppliers of natural rubber during the period from January 2006 to October 2009. These assessments, including interest and penalties, totaled 88 million Brazilian real (approximately $43 million). We have filed responses contesting all of the assessments and are defending these matters. In the event we are unsuccessful in defending one or more of these assessments, our results of operations could be materially affected.    

- 20-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Guarantees
We have off-balance sheet financial guarantees written and other commitments totaling approximately $28 million at March 31, 2013, compared to $45 million at December 31, 2012, primarily related to our obligations in connection with the financing of the construction of our new Global and North American Tire Headquarters facility. In addition, we will from time to time issue guarantees to financial institutions or other entities on behalf of certain of our affiliates, lessors or customers. Normally there is no separate premium received by us as consideration for the issuance of guarantees. We also generally do not require collateral in connection with the issuance of these guarantees. If our performance under these guarantees is triggered by non-payment or another specified event, we would be obligated to make payment to the financial institution or the other entity, and would typically have recourse to the affiliate, lessor or customer. The guarantees expire at various times through 2023. We are unable to estimate the extent to which our affiliates’, lessors’ or customers’ assets would be adequate to recover any payments made by us under the related guarantees.

NOTE 12. MANDATORY CONVERTIBLE PREFERRED STOCK
At March 31, 2013, 10,000,000 shares of our 5.875% mandatory convertible preferred stock, without par value, were outstanding. Quarterly dividends on each share of the mandatory convertible preferred stock will accrue at a rate of 5.875% per year on the initial liquidation preference of $50.00 per share. Dividends will accrue and accumulate from the date of issuance and, to the extent that we are legally permitted to pay a dividend and the Board of Directors declares a dividend payable, we will pay dividends in cash on January 1, April 1, July 1 and October 1 of each year, commencing on July 1, 2011 and ending on April 1, 2014.
Unless converted earlier, each share of the mandatory convertible preferred stock will automatically convert on April 1, 2014 into between 2.7454 and 3.4317 shares of common stock, depending on the market value of our common stock for the 20 consecutive trading day period ending on the third trading day prior to April 1, 2014, subject to customary anti-dilution adjustments. At any time prior to April 1, 2014, holders may elect to convert shares of the mandatory convertible preferred stock at the minimum conversion rate of 2.7454 shares of common stock, subject to customary anti-dilution adjustments.
In the first quarter of 2013, we paid cash dividends of $7 million on our mandatory convertible preferred stock. On February 28, 2013, the Company’s Board of Directors (or a duly authorized committee thereof) declared cash dividends of $0.7344 per share of mandatory convertible preferred stock or $7 million in the aggregate. The dividend was paid on April 1, 2013 to stockholders of record as of the close of business of March 15, 2013.

- 21-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



NOTE 13. CHANGES IN SHAREHOLDERS’ EQUITY
The following tables present the changes in shareholders’ equity for the three months ended March 31, 2013 and 2012:
 
March 31, 2013
 
March 31, 2012
(In millions)
Goodyear
Shareholders’ Equity
 
Minority
Shareholders’
Equity – Nonredeemable
 
Total
Shareholders’ Equity
 
Goodyear
Shareholders’ Equity
 
Minority
Shareholders’
Equity – Nonredeemable
 
Total
Shareholders’ Equity
Balance at beginning of period
$
370

 
$
255

 
$
625

 
$
749

 
$
268

 
$
1,017

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
33

 
6

 
39

 
(4
)
 
8

 
4

Foreign currency translation (net of tax of $0 in 2013 and $0 in 2012)
(40
)
 
(2
)
 
(42
)
 
73

 
13

 
86

Reclassification adjustment for amounts recognized in income (net of tax of $0 in 2013 and $0 in 2012)
1

 

 
1

 

 

 

Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $4 in 2013 and $2 in 2012)
59

 

 
59

 
53

 

 
53

Decrease (increase) in net actuarial losses (net of tax of $0 in 2013 and $0 in 2012)
96

 

 
96

 
(1
)
 

 
(1
)
Deferred derivative gains (losses) (net of tax of $0 in 2013 and $0 in 2012)
3

 

 
3

 
(5
)
 

 
(5
)
Reclassification adjustment for amounts recognized in income (net of tax of $0 in 2013 and $0 in 2012)

 

 

 
(1
)
 

 
(1
)
Unrealized investment gains (net of tax of $0 in 2013 and $0 in 2012)
17

 

 
17

 
5

 

 
5

Other comprehensive income (loss)
136

 
(2
)
 
134

 
124

 
13

 
137

Total comprehensive income (loss)
169

 
4

 
173

 
120

 
21

 
141

Purchase of subsidiary shares from minority interest
(2
)
 
(2
)
 
(4
)
 

 

 

Dividends declared to minority shareholders

 
(2
)
 
(2
)
 

 
(1
)
 
(1
)
Stock-based compensation plans (Note 10)
4

 

 
4

 
2

 

 
2

Preferred stock dividends declared
(7
)
 

 
(7
)
 
(7
)
 

 
(7
)
Common stock issued from treasury
2

 

 
2

 

 

 

Other

 
(4
)
 
(4
)
 
(1
)
 

 
(1
)
Balance at end of period
$
536

 
$
251

 
$
787

 
$
863

 
$
288

 
$
1,151



- 22-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


The following table presents changes in Minority Equity presented outside of Shareholders’ Equity:

 
Three Months Ended
 
March 31,
(In millions)
2013
 
2012
Balance at beginning of period
$
534

 
$
607

Comprehensive income (loss):
 
 
 
Net income (loss)
(8
)
 
4

Foreign currency translation, net of tax of $0 in 2013 ($0 in 2012)
(15
)
 
17

Amortization of prior service cost and unrecognized gains and losses included in total benefit cost, net of tax of $0 in 2013 ($0 in 2012)
2

 
2

Decrease (increase) in net actuarial losses, net of tax of $0 in 2013 ($0 in 2012)
1

 
(1
)
Deferred derivative gains (losses), net of tax of $0 in 2013 ($0 in 2012)
1

 
(3
)
Other comprehensive income (loss)
(11
)
 
15

Total comprehensive income (loss)
(19
)
 
19

Balance at end of period
$
515

 
$
626



- 23-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



NOTE 14. RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents changes in Accumulated Other Comprehensive Loss (AOCL), by component, for the three months ended March 31, 2013:

(In millions) Income (Loss)
Foreign Currency Translation Adjustment
 
Unrecognized Net Actuarial Losses and Prior Service Costs
 
Deferred Derivative Gains (Losses)
 
Unrealized Investment Gains
 
Total
Balance at beginning of period
$
(538
)
 
$
(4,044
)
 
$
(4
)
 
$
26

 
$
(4,560
)
Other comprehensive income (loss) before reclassifications
(40
)
 
96

 
3

 
17

 
76

Amounts reclassified from accumulated other comprehensive loss
1

 
59

 

 

 
60

Balance at end of period
$
(577
)
 
$
(3,889
)
 
$
(1
)
 
$
43

 
$
(4,424
)

The following table presents reclassifications out of Accumulated Other Comprehensive Loss for the three months ended March 31, 2013:
(In millions) (Income) Expense
 
Affected Line Item in the Consolidated Statements of Operations
 
Amount Reclassified from AOCL
Foreign Currency Translation Adjustment
 
Other Expense (net of tax of $0 and minority shareholders' equity of $0)
 
$
1

 
 
 
 
 
Unrecognized Net Actuarial Losses and Prior Service Costs
 
 
 
 
Amortization of prior service cost and unrecognized gains and losses
 
Total benefit cost (net of tax of $4 and minority shareholders' equity of $2)
 
59

 
 
 
 
 
Total reclassifications
 
Net of tax and Minority Shareholders' Equity
 
$
60


Amortization of prior service cost and unrecognized gains and losses are included in the computation of total benefit cost. For further information, refer to Note to the Consolidated Financial Statements No. 9, Pension, Savings and Other Postretirement Benefit Plans in this Form 10-Q and No. 16, Pension, Other Postretirement Benefits and Savings Plans, in our 2012 Form 10-K.



- 24-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 15. CONSOLIDATING FINANCIAL INFORMATION
Certain of our subsidiaries have guaranteed our obligations under the $1.0 billion outstanding principal amount of 8.25% senior notes due 2020, the $282 million outstanding principal amount of 8.75% notes due 2020, the $900 million outstanding principal amount of 6.5% senior notes due 2021, and the $700 million outstanding principal amount of 7% senior notes due 2022 (collectively, the “notes”). The following presents the condensed consolidating financial 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 specified in the indentures related to Goodyear’s obligations under the notes;
(iii)
Non-guarantor Subsidiaries, on a combined basis;
(iv)
Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between 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. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use by the Parent Company and guarantor subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation. Changes in intercompany receivables and payables related to operations, such as intercompany sales or services charges, are included in cash flows from operating activities. Intercompany transactions reported as investing or financing activities include the sale of the capital stock of various subsidiaries, loans and other capital transactions between members of the consolidated group. Effective in the second quarter of 2012, Wingfoot Mold Leasing Company became a guarantor subsidiary. All periods presented have been restated to reflect Wingfoot Mold Leasing Company as a guarantor subsidiary.
Certain non-guarantor subsidiaries of the Parent Company are limited in their ability to remit funds to it by means of dividends, advances or loans due to required foreign government and/or currency exchange board approvals or limitations in credit agreements or other debt instruments of those subsidiaries.
During the first quarter of 2013, we revised the presentation of eliminations of certain intercompany transactions solely between Non-guarantor Subsidiaries within the condensed consolidating balance sheet as of December 31, 2012 and within the consolidating statements of operations for the three months ended March 31, 2012. The revision did not impact the presentation of amounts in previously issued consolidating financial statements for the Parent Company or Guarantor Subsidiaries columns, nor did it impact amounts previously reported in the Company's Consolidated Statements of Operations or Consolidated Balance Sheets.
Certain eliminations solely between Non-guarantor Subsidiaries that were previously presented within the Consolidating entries and eliminations column are now presented within the Non-guarantor Subsidiaries column. Under the prior presentation, the Non-guarantor Subsidiaries column in the consolidating statement of operations was $2,597 million higher for both net sales and cost of goods sold and was $37 million higher for both interest expense and other (income) expense, and the Non-guarantor Subsidiaries column in the condensed consolidating balance sheet was $4,576 million higher for both investments in subsidiaries and Goodyear shareholders' equity, with corresponding offsetting adjustments presented on the same line items in the Consolidating entries and eliminations column. We do not consider these changes in presentation to be material to any previously issued financial statements as the purpose of this footnote is to provide our noteholders with visibility into the entities that provide guarantees in support of the notes, which is disclosed in the Parent Company and Guarantor Subsidiaries columns and are not affected by the revisions described above.
Additionally, to conform to revisions in presentation made in the fourth quarter of 2012, certain intercompany loans for the three months ended March 31, 2012, previously reported as cash flows from operating activities in the Parent Company and Non-guarantor Subsidiaries columns within the condensed consolidating statement of cash flows have been revised to be reported as investing and financing activities. Under the revised presentation, operating, investing and financing cash flows for the Parent Company increased (decreased) by $(50) million, $(11) million and $61 million, respectively; operating, investing and financing cash flows for Non-guarantor Subsidiaries increased (decreased) by $50 million, $(42) million and $(8) million, respectively; and amounts presented in the eliminations column for investing and financing cash flows increased (decreased) by $53 million and $(53) million, respectively. This revision did not impact amounts previously reported in the Company's Consolidated Statement of Cash Flows.

- 25-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


The Company will revise prior period condensed consolidating financial statements to reflect the revisions discussed above as such financial statements are included in future reports.

 
Condensed Consolidating Balance Sheet
 
March 31, 2013
(In millions)
Parent Company
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating Entries and Eliminations
 
Consolidated
Assets:
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
$
1,084

 
$
67

 
$
1,235

 
$

 
$
2,386

Accounts Receivable
903

 
213

 
1,905

 

 
3,021

Accounts Receivable From Affiliates

 
780

 

 
(780
)
 

Inventories
1,231

 
180

 
1,846

 
(89
)
 
3,168

Prepaid Expenses and Other Current Assets
72

 
10

 
376

 
9

 
467

Total Current Assets
3,290

 
1,250

 
5,362

 
(860
)
 
9,042

Goodwill

 
25

 
501

 
121

 
647

Intangible Assets
110

 
1

 
28

 

 
139

Deferred Income Taxes

 
47

 
133

 
15

 
195

Other Assets
268

 
66

 
200

 

 
534

Investments in Subsidiaries
4,026

 
271

 

 
(4,297
)
 

Property, Plant and Equipment
2,246

 
143

 
4,534

 
(22
)
 
6,901

Total Assets
$
9,940

 
$
1,803

 
$
10,758

 
$
(5,043
)
 
$
17,458

Liabilities:
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
Accounts Payable-Trade
$
795

 
$
223

 
$
2,200

 
$

 
$
3,218

Accounts Payable to Affiliates
675

 

 
105

 
(780
)
 

Compensation and Benefits
350

 
31

 
306

 

 
687

Other Current Liabilities
316

 
54

 
798

 
(12
)
 
1,156

Notes Payable and Overdrafts

 

 
107

 

 
107

Long Term Debt and Capital Leases Due Within One Year
9

 

 
158

 

 
167

Total Current Liabilities
2,145

 
308

 
3,674

 
(792
)
 
5,335

Long Term Debt and Capital Leases
4,370

 

 
1,937

 

 
6,307

Compensation and Benefits
2,029

 
189

 
1,021

 

 
3,239

Deferred and Other Noncurrent Income Taxes
41

 
11

 
217

 
(8
)
 
261

Other Long Term Liabilities
819

 
32

 
163

 

 
1,014

Total Liabilities
9,404

 
540

 
7,012

 
(800
)
 
16,156

Commitments and Contingent Liabilities

 

 

 

 

Minority Shareholders’ Equity

 

 
314

 
201

 
515

Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
Goodyear Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
Preferred Stock
500

 

 

 

 
500

Common Stock
246

 
319

 
995

 
(1,314
)
 
246

Other Equity
(210
)
 
944

 
2,186

 
(3,130
)
 
(210
)
Goodyear Shareholders’ Equity
536

 
1,263

 
3,181

 
(4,444
)
 
536

Minority Shareholders’ Equity — Nonredeemable

 

 
251

 

 
251

Total Shareholders’ Equity
536

 
1,263

 
3,432

 
(4,444
)
 
787

Total Liabilities and Shareholders’ Equity
$
9,940

 
$
1,803

 
$
10,758

 
$
(5,043
)
 
$
17,458


- 26-


THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



 
Condensed Consolidating Balance Sheet
 
December 31, 2012
(In millions)
Parent Company
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidating Entries and Eliminations
 
Consolidated
Assets:
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
$
802

 
$
68

 
$
1,411

 
$

 
$
2,281

Accounts Receivable
905

 
212

 
1,446

 

 
2,563

Accounts Receivable From Affiliates

 
668

 

 
(668
)
 

Inventories
1,263

 
176

 
1,893

 
(82
)
 
3,250

Prepaid Expenses and Other Current Assets
64

 
10

 
321

 
9

 
404

Total Current Assets
3,034

 
1,134

 
5,071

 
(741
)
 
8,498

Goodwill

 
25

 
516

 
123

 
664

Intangible Assets
110

 
1

 
29

 

 
140

Deferred Income Taxes

 
56

 
130

 

 
186

Other Assets
240

 
61

 
228

 

 
529

Investments in Subsidiaries
3,986

 
299

 

 
(4,285
)
 

Property, Plant and Equipment
2,260

 
151

 
4,565

 
(20
)
 
6,956

Total Assets
$
9,630

 
$
1,727

 
$
10,539

 
$
(4,923
)
 
$
16,973

Liabilities:
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
Accounts Payable-Trade
$
779

 
$
214

 
$
2,230

 
$

 
$
3,223

Accounts Payable to Affiliates
485

 

 
183

 
(668
)
 

Compensation and Benefits
384

 
31

 
304

 

 
719

Other Current Liabilities
350

 
32

 
808

 
(8
)
 
1,182

Notes Payable and Overdrafts

 

 
102

 

 
102

Long Term Debt and Capital Leases Due Within One Year
9

 

 
87

 

 
96

Total Current Liabilities
2,007

 
277

 
3,714