Business Segments

Segment information reflects our strategic business units (“SBUs”), which are organized to meet customer requirements and global competition. Through December 31, 2015, we operated our business through four operating segments representing our regional tire businesses: North America; Europe, Middle East and Africa; Asia Pacific; and Latin America. 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, 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, buses, aircraft, motorcycles, earthmoving and mining equipment and industrial equipment throughout Europe, the Middle East and Africa. EMEA also sells retreaded aviation tires, retreading and related services for commercial truck and construction and mining equipment, and automotive maintenance and repair services.

Asia Pacific manufactures and sells tires for automobiles, trucks, aircraft, and farm, earthmoving and mining equipment 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.

Latin America manufactures and sells tires for automobiles, trucks, and earthmoving and mining equipment throughout Central and South America and in Mexico. Latin America also provides related products and services including retreaded tires and tread rubber for trucks. Latin America's 2015 segment sales and operating income include the results of our Venezuelan subsidiary, which was deconsolidated on December 31, 2015. Refer to Note 1. The deconsolidation of our Venezuelan subsidiary did not have an impact on segment sales or operating income for any of the periods presented.

Effective January 1, 2016, we combined our North America and Latin America strategic business units into one Americas strategic business unit. We have combined the North America and Latin America reportable segments effective on this date to align with the new organizational structure and the basis used for reporting to our Chief Executive Officer beginning in 2016. Our first quarter 2016 Form 10-Q will reflect the new segment structure with prior periods recast for comparable disclosure.

The following table presents segment sales and operating income, and the reconciliation of segment operating income to Income before Income Taxes:



(In millions)	2015				2014				2013
Sales
North America	$	7,774			$	8,085			$	8,684
Europe, Middle East and Africa	5,115				6,180				6,567
Asia Pacific	1,958				2,077				2,226
Latin America	1,596				1,796				2,063
Net Sales	$	16,443			$	18,138			$	19,540
Segment Operating Income
North America	$	1,108			$	803			$	691
Europe, Middle East and Africa	435				438				298
Asia Pacific	319				301				308
Latin America	160				170				283
Total Segment Operating Income	2,022				1,712				1,580
Less:
Rationalizations	114				95				58
Interest expense	412				428				392
Other (income) expense ⁽¹⁾	(115		)		302				97
Asset write-offs and accelerated depreciation	8				7				23
Corporate incentive compensation plans	103				97				108
Corporate pension curtailments/settlements ⁽²⁾	137				33				—
Intercompany profit elimination	3				(4		)		(4		)
Loss on deconsolidation of Venezuelan subsidiary	646			—	—			—	—
Retained expenses of divested operations	14				16				24
Other ⁽³⁾	92				51				69
Income before Income Taxes	$	608			$	687			$	813

(1) Refer to Note 4.

(2) Substantially all of the pension settlement charges of $137 million for the year ended December 31, 2015 and 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.

(3) Primarily represents unallocated corporate costs including, in 2015, certain costs for one-time strategic global initiatives. Also includes the elimination of $25 million, $24 million and $39 million for the years ended December 31, 2015, 2014 and 2013, respectively, of royalty income attributable to the strategic business units.

The following table presents segment assets at December 31:



(In millions)	2015		2014		2013
Assets
North America	$	4,808	$	4,929	$	4,977
Europe, Middle East and Africa	4,383		4,957		5,532
Asia Pacific	2,559		2,594		2,613
Latin America⁽¹⁾	1,469		2,090		2,384
Total Segment Assets	13,219		14,570		15,506
Corporate⁽²⁾	3,220		3,474		1,931
	$	16,439	$	18,044	$	17,437


(1)	Decrease in Latin America segment assets at December 31, 2015 was due primarily to the deconsolidation of our Venezuelan subsidiary on December 31, 2015. Refer to Note 1.


(2)	Corporate includes substantially all of our U.S. net deferred tax assets. Corporate assets increased in 2014 by $2,080 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)	2015		2014		2013
Net Sales
United States	$	7,338	$	7,558	$	7,820
Germany	1,905		2,288		2,372
Other international	7,200		8,292		9,348
	$	16,443	$	18,138	$	19,540
Long-Lived Assets
United States	$	2,468	$	2,464	$	2,389
China	766		809		821
Germany	778		833		891
Other international	2,765		3,047		3,219
	$	6,777	$	7,153	$	7,320

At December 31, 2015, significant concentrations of cash and cash equivalents held by our international subsidiaries included the following amounts:


•	$513 million or 35% in Europe, Middle East and Africa, primarily Belgium ($517 million or 24% at December 31, 2014),


•	$415 million or 28% in Asia, primarily China, India and Australia ($462 million or 21% at December 31, 2014), and


•	$114 million or 8% in Latin America, primarily Brazil ($409 million or 19% at December 31, 2014, which primarily related to Venezuela and Brazil).

Rationalizations, as described in Note 2, Costs Associated with Rationalization Programs, Net (gains) losses on asset sales, as described in Note 4, Other (Income) 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)	2015		2014			2013
Rationalizations
North America	$	9	$	(6	)	$	12
Europe, Middle East and Africa	95		89			26
Asia Pacific	4		9			16
Latin America	6		3			4
Total Segment Rationalizations	$	114	$	95		$	58



(In millions)	2015			2014			2013
Net (Gains) Losses on Asset Sales
North America	$	(1	)	$	(8	)	$	(4	)
Europe, Middle East and Africa	14			7			(1		)
Asia Pacific	(5		)	—			(2		)
Latin America	(1		)	—			(1		)
Total Segment Asset Sales	7			(1		)	(8		)
Corporate ⁽¹⁾	(78		)	(2		)	—
	$	(71	)	$	(3	)	$	(8	)


(1)	Corporate gain on asset sales in 2015 included a $48 million gain on the dissolution of our global alliance with SRI and a $30 million gain on the sale of our investment in shares of SRI. Refer to Note 5.



(In millions)	2015		2014		2013
Asset Write-offs and Accelerated Depreciation
Europe, Middle East and Africa	$	8	$	7	$	23
Total Segment Asset Write-offs and Accelerated Depreciation	$	8	$	7	$	23

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



(In millions)	2015		2014		2013
Capital Expenditures
North America	$	353	$	282	$	262
Europe, Middle East and Africa	223		266		332
Asia Pacific	124		154		257
Latin America	125		152		243
Total Segment Capital Expenditures	825		854		1,094
Corporate ⁽¹⁾	158		69		74
	$	983	$	923	$	1,168


(1)	Corporate capital expenditures in 2015 include approximately $140 million related to the construction of our new manufacturing facility in San Luis Potosi, Mexico.



(In millions)	2015		2014		2013
Depreciation and Amortization
North America	$	270	$	274	$	275
Europe, Middle East and Africa	186		220		228
Asia Pacific	114		105		93
Latin America	94		102		84
Total Segment Depreciation and Amortization	664		701		680
Corporate	34		31		42
	$	698	$	732	$	722

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



(In millions)	2015			2014			2013
Equity in (Income)
North America	$	(3	)	$	(5	)	$	(8	)
Europe, Middle East and Africa	(1		)	—			—
Asia Pacific⁽¹⁾	(12		)	(23		)	(23		)
Total Segment Equity in (Income)	$	(16	)	$	(28	)	$	(31	)


(1)	Substantially all of the Asia Pacific segment equity in income related to 25% interests in NGY and DGT which ceased to be recognized effective October 1, 2015 following the dissolution of the global alliance with SRI. Refer to Note 5.