THE GOODYEAR TIRE & RUBBER COMPANY

PARENT COMPANY STATEMENTS OF OPERATIONS



	Year Ended December 31,
(In millions, except per share amounts)	2014			2013			2012
Net Sales	$	7,915		$	8,324		$	8,898
Cost of Goods Sold	6,457			7,001			7,792
Selling, Administrative and General Expense	916			946			895
Rationalizations	(6		)	6			38
Interest Expense	332			315			258
Other (Income) Expense	(91		)	(251		)	(152		)
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries	307			307			67
United States and Foreign Tax (Benefit) Expense	(2,026		)	22			23
Equity in Earnings of Subsidiaries	119			344			168
Net Income	2,452			629			212
Less: Preferred Stock Dividends	7			29			29
Net Income available to Common Shareholders	$	2,445		$	600		$	183
Net Income available to Common Shareholders — Per Share of Common Stock
Basic	$	9.13		$	2.44		$	0.75
Weighted Average Shares Outstanding	268			246			245
Diluted	$	8.78		$	2.28		$	0.74
Weighted Average Shares Outstanding	279			277			247

Cash Dividends Declared Per Common Share	$	0.22		$	0.05		$	—

Goodyear Comprehensive Income (Loss)	$	2,257		$	1,242		$	(362	)

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)	2014			2013
Assets
Current Assets:
Cash and Cash Equivalents	$	674		$	1,269
Accounts Receivable, less allowance — $20 ($21 in 2013)	833			872
Inventories:
Raw Materials	193			204
Work in Process	55			55
Finished Goods	903			840
	1,151			1,099
Deferred Income Tax	496			33
Prepaid Expenses and Other Current Assets	39			35
Total Current Assets	3,193			3,308
Intangible Assets	114			111
Deferred Income Tax	1,633			—
Other Assets	234			288
Investments in Subsidiaries	4,054			4,325
Property, Plant and Equipment, less accumulated depreciation-$4,084 ($4,032 in 2013)	2,329			2,242
Total Assets	$	11,557		$	10,274
Liabilities
Current Liabilities:
Accounts Payable-Trade	$	910		$	833
Accounts Payable to Affiliates	557			275
Compensation and Benefits	392			373
Other Current Liabilities	350			347
Long Term Debt and Capital Leases Due Within One Year	6			8
Total Current Liabilities	2,215			1,836
Long Term Debt and Capital Leases	4,375			4,377
Compensation and Benefits	666			1,613
Deferred and Other Noncurrent Income Taxes	3			65
Other Long Term Liabilities	688			777
Total Liabilities	7,947			8,668
Commitments and Contingent Liabilities
Shareholders’ Equity
Preferred Stock, no par value:
Authorized, 50 million shares, Outstanding shares — none (10 million in 2013)	—			500
Common Stock, no par value:
Authorized, 450 million shares, Outstanding shares — 269 million (248 million in 2013)	269			248
Capital Surplus	3,141			2,847
Retained Earnings	4,343			1,958
Accumulated Other Comprehensive Loss	(4,143		)	(3,947		)
Total Shareholders’ Equity	3,610			1,606
Total Liabilities and Shareholders’ Equity	$	11,557		$	10,274

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, 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 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

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 benefit 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 gain (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 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, 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
Comprehensive income (loss):
Net income														2,452						2,452
Foreign currency translation (net of tax benefit of $46)																	(206		)
Reclassification adjustment for amounts recognized in income (net of tax of $0)																	3
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $36)																	74
Increase in net actuarial losses (net of tax of $129)																	(112		)
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures (net of tax of $13)																	31
Deferred derivative gains (net of tax of $1)																	13
Unrealized investment gains (net of tax of $1)																	2
Other comprehensive income (loss)																				(195		)
Total comprehensive income (loss)																				2,257
Purchase of subsidiary shares from minority interest											(4		)				(1		)	(5		)
Stock-based compensation plans											20									20
Repurchase of common stock						(8,955,107	)	(9		)	(225		)							(234		)
Dividends declared														(67		)				(67		)
Common stock issued from treasury						3,111,843		2			31									33
Preferred stock conversion	(10,000,000	)	(500		)	27,573,735		28			472									—
Balance at December 31, 2014
(after deducting 8,979,927 common treasury shares)	—		$	—		269,483,500		$	269		$	3,141		$	4,343		$	(4,143	)	$	3,610

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)	2014			2013			2012
Total Cash Flows from Operating Activities	$	(334	)	$	17		$	335
Cash Flows from Investing Activities:
Capital Expenditures	(303		)	(220		)	(231		)
Asset Dispositions	9			2			5
Decrease (Increase) in Restricted Cash	(1		)	—			1
Capital Contributions and Loans Incurred	(382		)	(91		)	(191		)
Capital Redemptions and Loans Paid	459			214			81
Other Transactions	13			—			4
Total Cash Flows from Investing Activities	(205		)	(95		)	(331		)
Cash Flows from Financing Activities:
Short Term Debt and Overdrafts Incurred	22			14			—
Short Term Debt and Overdrafts Paid	(14		)	(90		)	—
Long Term Debt Incurred	601			900			800
Long Term Debt Paid	(608		)	(11		)	(762		)
Common Stock Issued	39			26			3
Common Stock Repurchased	(234		)	(4		)	—
Common Stock Dividends Paid	(60		)	(12		)	—
Preferred Stock Dividends Paid	(15		)	(29		)	(29		)
Capital Contributions and Loans Incurred	457			170			150
Capital Redemptions and Loans Paid	(244		)	(403		)	(200		)
Transactions with Minority Interests in Subsidiaries	—			—			(17		)
Debt Related Costs and Other Transactions	—			(16		)	(63		)
Total Cash Flows from Financing Activities	(56		)	545			(118		)
Net Change in Cash and Cash Equivalents	(595		)	467			(114		)
Cash and Cash Equivalents at Beginning of the Year	1,269			802			916
Cash and Cash Equivalents at End of the Year	$	674		$	1,269		$	802

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, 2014, 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, 2014 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)	2015		2016		2017		2018		2019
Debt maturities	$	6	$	6	$	5	$	3	$	1,196

COMMITMENTS AND CONTINGENT LIABILITIES

At December 31, 2014, 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 2015 are expected to total approximately $127 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, 2014, 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 2014, 2013 and 2012.

The following table presents cash dividends received during 2014, 2013 and 2012:



(In millions)	2014		2013		2012
Consolidated subsidiaries	$	273	$	88	$	129

There were no stock dividends received from consolidated subsidiaries in 2014, 2013 and 2012.

SUPPLEMENTAL CASH FLOW INFORMATION

The Parent Company made cash payments for interest, net of amounts capitalized in 2014, 2013 and 2012 of $339 million, $293 million and $250 million, respectively. The Parent Company made net cash payments for income taxes in 2014, 2013 and 2012 of $34 million, $32 million and $28 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)	2014			2013			2012
Sales	$	1,378		$	1,384		$	1,657
Cost of Goods Sold	1,381			1,389			1,648
Interest Expense	19			15			24
Other (Income) Expense	(444		)	(529		)	(524		)
Income before Income Taxes	$	422		$	509		$	509