Business Segments Business Segments (Notes)

12 Months Ended

Dec. 31, 2014

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 Chief Executive Officer. 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 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.

Latin America manufactures and sells tires for automobiles, truck 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)	2014			2013			2012
Sales
North America	$	8,085		$	8,684		$	9,666
Europe, Middle East and Africa	6,180			6,567			6,884
Latin America	1,796			2,063			2,085
Asia Pacific	2,077			2,226			2,357
Net Sales	$	18,138		$	19,540		$	20,992
Segment Operating Income
North America	$	803		$	691		$	514
Europe, Middle East and Africa	438			298			252
Latin America	170			283			223
Asia Pacific	301			308			259
Total Segment Operating Income	1,712			1,580			1,248
Less:
Rationalizations	95			58			175
Interest expense	428			392			357
Other expense	302			97			139
Asset write-offs and accelerated depreciation	7			23			20
Corporate incentive compensation plans	97			108			69
Corporate pension curtailments/settlements	33			—			1
Intercompany profit elimination	(4		)	(4		)	(1		)
Retained expenses of divested operations	16			24			14
Other (1)	51			69			34
Income before Income Taxes	$	687		$	813		$	440

_____________________________

(1) For the years ended December 31, 2014, 2013, and 2012, Other includes the elimination of $24 million, $39 million, and $26 million, respectively, of royalty income attributable to the strategic business units. 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.

Substantially all of the pension curtailment charges of $33 million for the year ended December 31, 2014 noted above related to our North America SBU; however, such costs were not included in North America segment operating income for purposes of management's assessment of SBU operating performance.

The following table presents segment assets at December 31:

(In millions)	2014		2013		2012
Assets
North America	$	4,929	$	4,979	$	5,170
Europe, Middle East and Africa	4,996		5,559		5,415
Latin America	2,104		2,402		2,367
Asia Pacific	2,603		2,624		2,601
Total Segment Assets	14,632		15,564		15,553
Corporate (1)	3,477		1,963		1,420
	$	18,109	$	17,527	$	16,973

__________________

(1) Corporate includes substantially all of our U.S. net deferred tax assets.   Corporate assets have increased by $2,084 million due primarily to the release of substantially all of the valuation allowance on our net U.S. deferred tax assets.

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)	2014		2013		2012
Net Sales
United States	$	7,558	$	7,820	$	8,416
Germany	2,288		2,372		2,541
Other international	8,292		9,348		10,035
	$	18,138	$	19,540	$	20,992
Long-Lived Assets
United States	$	2,464	$	2,389	$	2,424
China	809		821		796
Germany	833		891		788
Other international	3,047		3,219		2,948
	$	7,153	$	7,320	$	6,956

At December 31, 2014, significant concentrations of cash and cash equivalents held by our international subsidiaries included the following amounts:

• $517 million or 24% in Europe, Middle East and Africa, primarily Belgium ($696 million or 23% at December 31, 2013),

• $462 million or 21% in Asia, primarily China, India and Australia ($334 million or 11%), and

• $409 million or 19% in Latin America, primarily Venezuela and Brazil ($603 million or 20%).

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)	2014			2013		2012
Rationalizations
North America	$	(6	)	$	12	$	43
Europe, Middle East and Africa	89			26		100
Latin America	3			4		6
Asia Pacific	9			16		26
Total Segment Rationalizations	$	95		$	58	$	175

(In millions)	2014			2013			2012
Net (Gains) Losses on Asset Sales
North America	$	(8	)	$	(4	)	$	(9	)
Europe, Middle East and Africa	7			(1		)	(9		)
Latin America	—			(1		)	(4		)
Asia Pacific	—			(2		)	(1		)
Total Segment Asset Sales	(1		)	(8		)	(23		)
Corporate	(2		)	—			(2		)
	$	(3	)	$	(8	)	$	(25	)

(In millions)	2014		2013		2012
Asset Write-offs and Accelerated Depreciation
North America	$	—	$	—	$	1
Europe, Middle East and Africa	7		23		—
Asia Pacific	—		—		19
Total Segment Asset Write-offs and Accelerated Depreciation	$	7	$	23	$	20

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

(In millions)	2014		2013		2012
Capital Expenditures
North America	$	282	$	262	$	212
Europe, Middle East and Africa	266		332		344
Latin America	152		243		250
Asia Pacific	154		257		286
Total Segment Capital Expenditures	854		1,094		1,092
Corporate	69		74		35
	$	923	$	1,168	$	1,127

(In millions)	2014		2013		2012
Depreciation and Amortization
North America	$	274	$	275	$	275
Europe, Middle East and Africa	220		228		215
Latin America	102		84		72
Asia Pacific	105		93		89
Total Segment Depreciation and Amortization	701		680		651
Corporate	31		42		36
	$	732	$	722	$	687

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

(In millions)	2014			2013			2012
Equity in (Income)
North America	$	(5	)	$	(8	)	$	(6	)
Asia Pacific	(23		)	(23		)	(28		)
Total Segment Equity in (Income)	$	(28	)	$	(31	)	$	(34	)