THE GOODYEAR TIRE & RUBBER COMPANY

PARENT COMPANY STATEMENTS OF OPERATIONS



	Year Ended December 31,
(In millions, except per share amounts)	2013			2012			2011
Net Sales	$	8,324		$	8,898		$	9,027
Cost of Goods Sold	7,001			7,792			8,209
Selling, Administrative and General Expense	946			895			898
Rationalizations	6			38			70
Interest Expense	315			258			247
Other (Income) Expense	(251		)	(152		)	(218		)
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries	307			67			(179		)
United States and Foreign Taxes	22			23			37
Equity in Earnings of Subsidiaries	344			168			559
Net Income	629			212			343
Less: Preferred Stock Dividends	29			29			22
Net Income available to Common Shareholders	$	600		$	183		$	321
Net Income available to Common Shareholders — Per Share of Common Stock
Basic	$	2.44		$	0.75		$	1.32
Weighted Average Shares Outstanding	246			245			244
Diluted	$	2.28		$	0.74		$	1.26
Weighted Average Shares Outstanding	277			247			271

Cash Dividends Declared Per Common Share	$	0.05		$	—		$	—

Goodyear Comprehensive Income (Loss)	$	1,242		$	(362	)	$	(378	)

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

THE GOODYEAR TIRE & RUBBER COMPANY

PARENT COMPANY BALANCE SHEETS



	December 31,
(Dollars in millions, except share data)	2013			2012
Assets
Current Assets:
Cash and Cash Equivalents	$	1,269		$	802
Accounts Receivable, less allowance — $21 ($22 in 2012)	872			905
Inventories:
Raw Materials	204			290
Work in Process	55			56
Finished Goods	840			917
	1,099			1,263
Prepaid Expenses and Other Current Assets	68			64
Total Current Assets	3,308			3,034
Intangible Assets	111			110
Other Assets	288			240
Investments in Subsidiaries	4,325			3,986
Property, Plant and Equipment, less accumulated depreciation — $4,032 ($4,084 in 2012)	2,242			2,260
Total Assets	$	10,274		$	9,630
Liabilities
Current Liabilities:
Accounts Payable-Trade	$	833		$	779
Accounts Payable to Affiliates	275			485
Compensation and Benefits	373			384
Other Current Liabilities	347			350
Long Term Debt and Capital Leases Due Within One Year	8			9
Total Current Liabilities	1,836			2,007
Long Term Debt and Capital Leases	4,377			3,462
Compensation and Benefits	1,613			2,941
Deferred and Other Noncurrent Income Taxes	65			41
Other Long Term Liabilities	777			809
Total Liabilities	8,668			9,260
Commitments and Contingent Liabilities
Shareholders’ Equity
Preferred Stock, no par value:
Authorized, 50 million shares, Outstanding shares — 10 million (10 million in 2012)	500			500
Common Stock, no par value:
Authorized, 450 million shares, Outstanding shares — 248 million (245 million in 2012)	248			245
Capital Surplus	2,847			2,815
Retained Earnings	1,958			1,370
Accumulated Other Comprehensive Loss	(3,947		)	(4,560		)
Total Shareholders’ Equity	1,606			370
Total Liabilities and Shareholders’ Equity	$	10,274		$	9,630

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

THE GOODYEAR TIRE & RUBBER COMPANY PARENT COMPANY STATEMENTS OF SHAREHOLDERS’ EQUITY

													Accumulated
													Other			Total
	Preferred Stock			Common Stock			Capital			Retained			Comprehensive			Shareholders'
(Dollars in millions)	Shares	Amount		Shares	Amount		Surplus			Earnings			Loss			Equity

Balance at December 31, 2010
(after deducting 7,950,743 common treasury shares)	—	$	—	242,938,949	$	243	$	2,805		$	866		$	(3,270	)	$	644
Comprehensive income (loss):
Net income										343						343
Foreign currency translation (net of tax of $0)													(140		)
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $8)													157
Increase in net actuarial losses (net of tax benefit of $28)													(770		)
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures (net of tax of $1)													18
Deferred derivative gain (net of tax of $1)													3
Reclassification adjustment for amounts recognized in income (net of tax of $2)													6
Unrealized investment gains (net of tax of $0)													5
Other comprehensive income (loss)																(721		)
Total comprehensive income (loss)																(378		)
Stock-based compensation plans							13									13
Preferred stock issued	10,000,000	500					(16		)							484
Preferred stock dividends declared										(22		)				(22		)
Common stock issued from treasury				1,596,892	2		6									8
Balance at December 31, 2011
(after deducting 6,353,851 common treasury shares)	10,000,000	$	500	244,535,841	$	245	$	2,808		$	1,187		$	(3,991	)	$	749

Balance at December 31, 2011
(after deducting 6,353,851 common treasury shares)	10,000,000	$	500	244,535,841	$	245	$	2,808		$	1,187		$	(3,991	)	$	749
Comprehensive income (loss):
Net income										212						212
Foreign currency translation (net of tax of $0)													51
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $9)													203
Increase in net actuarial losses (net of tax benefit of $44)													(898		)
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures (net of tax of $1)													9
Prior service credit from plan amendments (net of tax of $3)													72
Deferred derivative loss (net of tax of $0)													(4		)
Reclassification adjustment for amounts recognized in income (net of tax benefit of $3)													(7		)
Other comprehensive income (loss)																(574		)
Total comprehensive income (loss)																(362		)
Purchase of subsidiary shares from minority interest							(13		)				5			(8		)
Stock-based compensation plans							17									17
Preferred stock dividends declared										(29		)				(29		)
Common stock issued from treasury				704,921	—		3									3
Balance at December 31, 2012
(after deducting 5,648,930 common treasury shares)	10,000,000	$	500	245,240,762	$	245	$	2,815		$	1,370		$	(4,560	)	$	370

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

THE GOODYEAR TIRE & RUBBER COMPANY PARENT COMPANY STATEMENTS OF SHAREHOLDERS’ EQUITY - (Continued)

													Accumulated
													Other			Total
	Preferred Stock			Common Stock			Capital			Retained			Comprehensive			Shareholders'
(Dollars in millions)	Shares	Amount		Shares	Amount		Surplus			Earnings			Loss			Equity
Balance at December 31, 2012
(after deducting 5,648,930 common treasury shares)	10,000,000	$	500	245,240,762	$	245	$	2,815		$	1,370		$	(4,560	)	$	370
Comprehensive income (loss):
Net income										629						629
Foreign currency translation (net of tax of $0)													(153		)
Reclassification adjustment for amounts recognized in income (net of tax of $0)													1
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $9)													224
Decrease in net actuarial losses (net of tax of $33)													498
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures (net of tax of $1)													2
Prior service credit from plan amendments (net of tax of $0)													30
Deferred derivative gains (net of tax of $1)													1
Reclassification adjustment for amounts recognized in income (net of tax benefit of $0)													2
Unrealized investment gains (net of tax of $0)													8
Other comprehensive income (loss)																613
Total comprehensive income (loss)																1,242
Purchase of subsidiary shares from minority interest							(2		)							(2		)
Stock-based compensation plans							15									15
Dividends declared										(41		)				(41		)
Common stock issued from treasury				2,512,267	3		19									22
Balance at December 31, 2013
(after deducting 3,136,663 common treasury shares)	10,000,000	$	500	247,753,029	$	248	$	2,847		$	1,958		$	(3,947	)	$	1,606

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

THE GOODYEAR TIRE & RUBBER COMPANY

PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS



	Year Ended December 31,
(In millions)	2013			2012			2011
Total Cash Flows from Operating Activities	$	17		$	335		$	260
Cash Flows from Investing Activities:
Capital Expenditures	(220		)	(231		)	(210		)
Asset Dispositions	2			5			69
Decrease in Restricted Cash	—			1			(1		)
Capital Contributions and Loans Incurred	(91		)	(191		)	(14		)
Capital Redemptions and Loans Paid	214			81			—
Other Transactions	—			4			(1		)
Total Cash Flows from Investing Activities	(95		)	(331		)	(157		)
Cash Flows from Financing Activities:
Short Term Debt and Overdrafts Incurred	14			—			—
Short Term Debt and Overdrafts Paid	(90		)	—			—
Long Term Debt Incurred	900			800			400
Long Term Debt Paid	(11		)	(762		)	(750		)
Proceeds From Issuance of Preferred Stock	—			—			484
Preferred Stock Dividends Paid	(29		)	(29		)	(15		)
Common Stock Issued	22			3			8
Common Stock Dividends Paid	(12		)	—			—
Capital Contributions and Loans Incurred	170			150			(101		)
Capital Redemptions and Loans Paid	(403		)	(200		)	—
Transactions with Minority Interests in Subsidiaries	—			(17		)	(3		)
Debt Related Costs and Other Transactions	(16		)	(63		)	(2		)
Total Cash Flows from Financing Activities	545			(118		)	21
Net Change in Cash and Cash Equivalents	467			(114		)	124
Cash and Cash Equivalents at Beginning of the Year	802			916			792
Cash and Cash Equivalents at End of the Year	$	1,269		$	802		$	916

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

THE GOODYEAR TIRE & RUBBER COMPANY

NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

LONG TERM DEBT AND FINANCING ARRANGEMENTS

At December 31, 2013, the Parent Company was a party to various long term financing facilities. Under the terms of these facilities, the Parent Company has pledged a significant portion of its assets as collateral. The collateral includes first and second priority security interests in current assets, certain property, plant and equipment, capital stock of certain subsidiaries, and other tangible and intangible assets. In addition, the facilities contain certain covenants that, among other things, limit the Parent Company’s ability to incur additional debt or issue redeemable preferred stock, make certain restricted payments or investments, incur liens, sell assets, incur restrictions on the ability of the Parent Company’s subsidiaries to pay dividends to the Parent Company, enter into affiliate transactions, engage in sale and leaseback transactions, and consolidate, merge, sell or otherwise dispose of all or substantially all of the Parent Company’s assets. These covenants are subject to significant exceptions and qualifications. The primary credit facilities permit the Parent Company to pay dividends on its common stock as long as no default will have occurred and be continuing, additional indebtedness can be incurred by the Parent Company under the facilities following the dividend payment, and certain financial tests are satisfied.

In addition, in the event that the availability under the Parent Company’s first lien revolving credit facility plus the aggregate amount of Available Cash is less than $200 million, the Parent Company will not be permitted to allow the ratio of EBITDA to Consolidated Interest Expense to be less than 2.0 to 1.0 for any period of four consecutive fiscal quarters. “Available Cash,” “EBITDA” and “Consolidated Interest Expense” have the meanings given them in the first lien revolving credit facility. As provided in the Parent Company’s second lien term loan facility, if the Pro Forma Senior Secured Leverage Ratio (the ratio of Consolidated Net Secured Indebtedness to EBITDA) for any period of four consecutive fiscal quarters is greater than 3.0 to 1.0, before the Parent Company may use cash proceeds from certain asset sales to repay any junior lien, senior unsecured or subordinated indebtedness, the Parent Company must first offer to prepay borrowings under the second lien term loan facility. “Pro Forma Senior Secured Leverage Ratio,” “Consolidated Net Secured Indebtedness” and “EBITDA” have the meanings given them in the second lien term loan facility. For further information, refer to the Note to the Consolidated Financial Statements No. 14, Financing Arrangements and Derivative Financial Instruments.

The first lien revolving credit 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 financial condition since December 31, 2011. The facility also has customary defaults, including a cross-default to material indebtedness of the Parent Company and its subsidiaries.

The annual aggregate maturities of long term debt and capital leases for the five years subsequent to December 31, 2013 are presented below. Maturities of debt credit agreements have been reported on the basis that the commitments to lend under these agreements will be terminated effective at the end of their current terms.



(In millions)	2014		2015		2016		2017		2018
Debt maturities	$	8	$	6	$	6	$	5	$	3

COMMITMENTS AND CONTINGENT LIABILITIES

At December 31, 2013, the Parent Company had binding commitments for raw materials, capital expenditures, utilities and various other types of contracts. Total commitments on contracts that extend beyond the year 2014 are expected to total approximately $116 million. The Parent Company also has off-balance sheet financial guarantees written and other commitments totaling approximately $3 million. In addition, the Parent Company has other contractual commitments, the amounts of which cannot be estimated, pursuant to certain long term agreements under which the Parent Company will purchase varying amounts of certain raw materials and finished goods at agreed upon base prices that may be subject to periodic adjustments for changes in raw material costs and market price adjustments, or in quantities that may be subject to periodic adjustments for changes in the Parent Company's or its suppliers’ production levels.

THE GOODYEAR TIRE & RUBBER COMPANY

NOTES TO PARENT COMPANY FINANCIAL STATEMENTS — (Continued)

At December 31, 2013, the Parent Company had recorded costs related to a wide variety of contingencies. These contingencies included, among other things, environmental matters, workers’ compensation, general and product liability and other matters. For further information, refer to the Note to the Consolidated Financial Statements No. 18, Commitments and Contingent Liabilities.

DIVIDENDS

The Parent Company used the equity method of accounting for investments in consolidated subsidiaries during 2013, 2012 and 2011.

The following table presents cash dividends received during 2013, 2012 and 2011:



(In millions)	2013		2012		2011
Consolidated subsidiaries	$	88	$	129	$	172

There were no stock dividends received from consolidated subsidiaries in 2013, 2012 and 2011.

SUPPLEMENTAL CASH FLOW INFORMATION

The Parent Company made cash payments for interest, net of amounts capitalized in 2013, 2012 and 2011 of $293 million, $250 million and $246 million, respectively. The Parent Company made net cash payments for income taxes in 2013, 2012 and 2011 of $32 million, $28 million and $47 million, respectively.

INTERCOMPANY TRANSACTIONS

The following amounts included in the Parent Company Statements of Operations have been eliminated in the preparation of the consolidated financial statements:



(In millions)	2013			2012			2011
Sales	$	1,384		$	1,657		$	1,764
Cost of Goods Sold	1,389			1,648			1,773
Interest Expense	15			24			19
Other (Income) Expense	(529		)	(524		)	(547		)
Income before Income Taxes	$	509		$	509		$	519