Business Segments Business Segments (Notes)

12 Months Ended

Dec. 31, 2013

Business Segments [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 America; Europe, Middle East and Africa; Latin America; and Asia Pacific. 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 America 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 America 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 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 construction and mining equipment, and automotive maintenance and repair services. We expect to finalize decisions regarding the timing of our exit from the remainder of the farm tire business in EMEA during 2014.

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

Asia Pacific manufactures and sells tires for automobiles, trucks, farm, construction and mining equipment, and the aviation industry throughout the Asia Pacific region. Asia Pacific 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)	2013			2012			2011
Sales
North America	$	8,684		$	9,666		$	9,859
Europe, Middle East and Africa	6,567			6,884			8,040
Latin America	2,063			2,085			2,472
Asia Pacific	2,226			2,357			2,396
Net Sales	$	19,540		$	20,992		$	22,767
Segment Operating Income
North America	$	691		$	514		$	276
Europe, Middle East and Africa	298			252			627
Latin America	283			223			231
Asia Pacific	308			259			234
Total Segment Operating Income	1,580			1,248			1,368
Less:
Rationalizations	58			175			103
Interest expense	392			357			330
Other expense	97			139			73
Asset write-offs and accelerated depreciation	23			20			50
Corporate incentive compensation plans	108			69			70
Corporate pension curtailments/settlements	—			1			15
Intercompany profit elimination	(4		)	(1		)	5
Retained expenses of divested operations	24			14			29
Other	69			34			75
Income before Income Taxes	$	813		$	440		$	618

In 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)	2013		2012		2011
Assets
North America	$	4,979	$	5,170	$	5,744
Europe, Middle East and Africa	5,559		5,415		5,915
Latin America	2,402		2,367		2,141
Asia Pacific	2,624		2,601		2,482
Total Segment Assets	15,564		15,553		16,282
Corporate	1,963		1,420		1,347
	$	17,527	$	16,973	$	17,629

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)	2013		2012		2011
Net Sales
United States	$	7,820	$	8,416	$	8,397
Germany	2,372		2,541		2,962
Other international	9,348		10,035		11,408
	$	19,540	$	20,992	$	22,767
Long-Lived Assets
United States	$	2,389	$	2,424	$	2,367
China	821		796		711
Germany	891		788		691
Other international	3,219		2,948		2,606
	$	7,320	$	6,956	$	6,375

At December 31, 2013, significant concentrations of cash and cash equivalents held by our international subsidiaries included the following amounts:

• $696 million or 23% in Europe, Middle East and Africa, primarily Belgium ($418 million or 18% at December 31, 2012),

• $334 million or 11% in Asia, primarily China, Australia and Singapore ($370 million or 16%), and

• $603 million or 20% in Latin America, primarily Venezuela and Brazil ($622 million or 27%).

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)	2013		2012		2011
Rationalizations
North America	$	12	$	43	$	72
Europe, Middle East and Africa	26		100		15
Latin America	4		6		—
Asia Pacific	16		26		16
Total Segment Rationalizations	$	58	$	175	$	103

(In millions)	2013			2012			2011
Net (Gains) Losses on Asset Sales
North America	$	(4	)	$	(9	)	$	2
Europe, Middle East and Africa	(1		)	(9		)	(1		)
Latin America	(1		)	(4		)	(4		)
Asia Pacific	(2		)	(1		)	(9		)
Total Segment Asset Sales	(8		)	(23		)	(12		)
Corporate	—			(2		)	(4		)
	$	(8	)	$	(25	)	$	(16	)

(In millions)	2013		2012		2011
Asset Write-offs and Accelerated Depreciation
North America	$	—	$	1	$	43
Europe, Middle East and Africa	23		—		—
Asia Pacific	—		19		7
Total Segment Asset Write-offs and Accelerated Depreciation	$	23	$	20	$	50

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

(In millions)	2013		2012		2011
Capital Expenditures
North America	$	262	$	212	$	236
Europe, Middle East and Africa	332		344		240
Latin America	243		250		237
Asia Pacific	257		286		314
Total Segment Capital Expenditures	1,094		1,092		1,027
Corporate	74		35		16
	$	1,168	$	1,127	$	1,043

(In millions)	2013		2012		2011
Depreciation and Amortization
North America	$	275	$	275	$	286
Europe, Middle East and Africa	228		215		222
Latin America	84		72		73
Asia Pacific	93		89		73
Total Segment Depreciation and Amortization	680		651		654
Corporate	42		36		61
	$	722	$	687	$	715

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

(In millions)	2013			2012			2011
Equity in (Income)
North America	$	(8	)	$	(6	)	$	(5	)
Europe, Middle East and Africa	—			—			(1		)
Asia Pacific	(23		)	(28		)	(13		)
Total Segment Equity in (Income)	$	(31	)	$	(34	)	$	(19	)