EX-99.3 5 l25914aexv99w3.htm EX-99.3 EX-99.3
 

Exhibit 99.3
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT
THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY STATEMENTS OF OPERATIONS
                         
    Year Ended December 31,  
(In millions, except per share amounts)   2006     2005     2004  
Net Sales
   $ 7,914     $ 8,189     $ 7,627  
Cost of Goods Sold
     7,507       7,297       6,806  
Selling, Administrative and General Expense
     987       1,068       1,103  
Rationalizations
     129       (3 )     11  
Interest Expense
     410       364       326  
Other (Income) and Expense
     (265 )     (77 )     (198 )
 
                  
Loss from Continuing Operations before Income Taxes, Equity in Earnings of Subsidiaries and Cumulative Effect of Accounting Change
     (854 )     (460 )     (421 )
United States and Foreign Taxes
     (28 )     (10 )     (81 )
Equity in Earnings of Subsidiaries
     453       568       354  
 
                  
(Loss) Income from Continuing Operations
     (373 )     118       14  
Discontinued Operations
     43       115       101  
 
                  
(Loss) Income before Cumulative Effect of Accounting Change
     (330 )     233       115  
 
                        
Cumulative Effect of Accounting Change, net of income taxes and minority interest
     —       (5 )     —  
 
                  
 
                        
Net (Loss) Income
   $ (330 )   $ 228     $ 115  
 
                  
 
                        
Net (Loss) Income Per Share — Basic
                        
(Loss) Income from Continuing Operations
   $ (2.11 )   $ 0.67     $ 0.08  
Discontinued Operations
     0.25       0.66       0.57  
 
                  
(Loss) Income before Cumulative Effect of Accounting Change
     (1.86 )     1.33       0.65  
Cumulative Effect of Accounting Change
     —       (0.03 )     —  
 
                  
Net (Loss) Income
   $ (1.86 )   $ 1.30     $ 0.65  
 
                  
Weighted Average Shares Outstanding
     177       176       175  
 
                        
Net (Loss) Income Per Share — Diluted
                        
(Loss) Income from Continuing Operations
   $ (2.11 )   $ 0.63     $ 0.08  
Discontinued Operations
     0.25       0.55       0.57  
 
                  
(Loss) Income before Cumulative Effect of Accounting Change
   $ (1.86 )   $ 1.18     $ 0.65  
Cumulative Effect of Accounting Change
     —       (0.02 )     —  
 
                  
Net (Loss) Income
   $ (1.86 )   $ 1.16     $ 0.65  
 
                  
Weighted Average Shares Outstanding
     177       209       178  
The accompanying notes are an integral part of these financial statements.

 

 

THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY BALANCE SHEETS
                 
    December 31,  
(In millions)   2006     2005  
Assets
                
Current Assets:
                
Cash and Cash Equivalents
   $ 2,626     $ 1,065  
Restricted Cash
     202       228  
Accounts and Notes Receivable, less allowance — $24 ($29 in 2005)
     693       1,036  
Inventories:
                
Raw Materials
     338       256  
Work in Process
     44       46  
Finished Products
     649       864  
 
            
 
     1,031       1,166  
Prepaid Expenses and Other Current Assets
     142       86  
Current Assets of Discontinued Operations
     305       300  
 
            
Total Current Assets
     4,999       3,881  
Intangible Assets
     111       100  
Other Assets and Deferred Pension Costs
     255       615  
Long Term Assets of Discontinued Operations
     196       195  
Investments in Subsidiaries
     4,286       3,991  
Properties and Plants, less accumulated depreciation — $4,114 ($4,048 in 2005)
     1,860       1,889  
 
            
Total Assets
   $ 11,707     $ 10,671  
 
            
Liabilities
                
Current Liabilities:
                
Accounts payable-trade
   $ 436     $ 555  
Accounts payable to affiliates
     1,100       694  
Compensation and benefits
     585       1,297  
Other current liabilities
     562       471  
Current liabilities of discontinued operations
     74       66  
United States and foreign taxes
     59       64  
Long term debt and capital leases due within one year
     339       338  
 
            
Total Current Liabilities
     3,155       3,485  
Long Term Debt and Capital Leases
     5,647       4,118  
Compensation and Benefits
     3,301       2,592  
Long Term Liabilities of Discontinued Operations
     6       9  
Deferred and Other Noncurrent Income Taxes
     69       70  
Other Long Term Liabilities
     287       324  
 
            
Total Liabilities
     12,465       10,598  
 
                
Commitments and Contingent Liabilities
                
 
                
Shareholders’ (Deficit) Equity
                
Preferred Stock, no par value:
                
Authorized, 50 shares, unissued
     —       —  
Common Stock, no par value:
                
Authorized, 450 shares (300 in 2005); Outstanding shares, 178 (177 in 2005)
     178       177  
Capital Surplus
     1,427       1,398  
Retained Earnings
     968       1,298  
Accumulated Other Comprehensive Loss
     (3,331 )     (2,800 )
 
            
Total Shareholders’ (Deficit) Equity
     (758 )     73  
 
            
Total Liabilities and Shareholders’ (Deficit) Equity
   $ 11,707     $ 10,671  
 
            
The accompanying notes are an integral part of these financial statements.

1

 

THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY
                                                 
                                    Accumulated        
                                    Other     Total  
    Common Stock     Capital     Retained     Comprehensive     Shareholders’  
(Dollars in millions)   Shares     Amount     Surplus     Earnings     Loss     (Deficit) Equity  
Balance at December 31, 2003
                                                
(after deducting 20,352,239 treasury shares)
     175,326,429     $ 175     $ 1,390     $ 955     $ (2,553 )   $ (33 )
Comprehensive income (loss):
                                                
Net income
                             115               115  
Foreign currency translation (net of tax of $0).
                                     254          
Minimum pension liability (net of tax of $34)
                                     (284 )        
Unrealized investment gain (net of tax of $0)
                                     13          
Deferred derivative gain (net of tax of $0)
                                     30          
Reclassification adjustment for amounts recognized in income (net of tax of $(4))
                                     (24 )        
 
                                              
Other comprehensive loss
                                             (11 )
 
                                              
Total comprehensive income
                                             104  
Common stock issued from treasury:
                                                
Stock compensation plans
     293,210       1       2                       3  
 
                                    
Balance at December 31, 2004
                                                
(after deducting 20,059,029 treasury shares)
     175,619,639       176       1,392       1,070       (2,564 )     74  
Comprehensive income (loss):
                                                
Net income
                             228               228  
Foreign currency translation (net of tax of $0).
                                     (201 )        
Reclassification adjustment for amounts recognized in income (net of tax of $0)
                                     48          
Minimum pension liability (net of tax of $23)
                                     (97 )        
Unrealized investment gain (net of tax of $0)
                                     18          
Deferred derivative loss (net of tax of $0)
                                     (21 )        
Reclassification adjustment for amounts recognized in income (net of tax of $(1))
                                     17          
 
                                              
Other comprehensive loss
                                             (236 )
 
                                              
 
                                                
Total comprehensive loss
                                             (8 )
Common stock issued from treasury:
                                                
Stock compensation plans
     890,112       1       6                       7  
 
                                    
Balance at December 31, 2005
                                                
(after deducting 19,168,917 treasury shares)
     176,509,751       177       1,398       1,298       (2,800 )     73  
Comprehensive income (loss):
                                                
Net loss
                             (330 )             (330 )
Foreign currency translation (net of tax of $0).
                                     233          
Reclassification adjustment for amounts recognized in income (net of tax of $0)
                                     2          
Additional pension liability (net of tax of $38)
                                     439          
Unrealized investment loss (net of tax of $0)
                                     (4 )        
Deferred derivative gain (net of tax of $0)
                                     1          
Reclassification adjustment for amounts recognized in income (net of tax of $(3))
                                     (3 )        
 
                                              
Other comprehensive income
                                             668  
 
                                              
 
                                                
Total comprehensive income
                                             338  
Adjustment to initially apply FASB Statement No. 158 for pensions and OPEB (net of tax of $49)
                                     (1,199 )     (1,199 )
Common stock issued from treasury:
                                                
Stock compensation plans
     1,709,219       1       11                       12  
Stock-based compensation
                     18                       18  
 
                                    
Balance at December 31, 2006
                                                
(after deducting 17,459,698 treasury shares)
     178,218,970     $ 178     $ 1,427     $ 968     $ (3,331 )   $ (758 )
 
                                    
The accompanying notes are an integral part of these financial statements.

2

 

THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY STATEMENTS OF CASH FLOWS
                         
    Year Ended December 31,  
(In millions)   2006     2005     2004  
Cash Flows from Operating Activities:
                        
Total operating cash flows from continuing operations
   $ 233     $ 98     $ 131  
Operating cash flows from discontinued operations
     64       93       79  
 
                  
Total Cash Flows from Operating Activities
     297       191       210  
 
                        
Cash Flows from Investing Activities:
                        
Capital expenditures
     (244 )     (229 )     (156 )
Asset dispositions
     49       248       104  
Asset acquisitions
     (71 )     —       (51 )
Capital contributions to subsidiaries
     (1 )     (11 )     (3 )
Capital redemptions from subsidiaries
     —       59       6  
Decrease (increase) in restricted cash
     26       (82 )     (121 )
Other transactions
     26       5       33  
 
                  
Total investing cash flows from continuing operations
     (215 )     (10 )     (188 )
Investing cash flows from discontinued operations
     (20 )     (20 )     (22 )
 
                  
Total Cash Flows From Investing Activities
     (235 )     (30 )     (210 )
 
                        
Cash Flows from Financing Activities:
                        
Short term debt and overdrafts incurred
     —       6       52  
Short term debt and overdrafts paid
     (64 )     —       —  
Long term debt incurred
     1,970       1,921       1,671  
Long term debt paid
     (402 )     (1,969 )     (1,247 )
Common stock issued
     12       7       2  
Debt issuance costs
     (15 )     (67 )     (51 )
 
                  
Total financing cash flows from continuing operations
     1,501       (102 )     427  
Financing cash flows from discontinued operations
     (3 )     3       (8 )
 
                  
Total Cash Flows from Financing Activities
     1,498       (99 )     419  
Net Change in Cash of Discontinued Operations
     1       (1 )     —  
 
                  
Net Change in Cash and Cash Equivalents
     1,561       61       419  
Cash and Cash Equivalents at Beginning of the Year
     1,065       1,004       585  
 
                  
Cash and Cash Equivalents at End of the Year
   $ 2,626     $ 1,065     $ 1,004  
 
                  
The accompanying notes are an integral part of these financial statements.

3

 

THE GOODYEAR TIRE & RUBBER COMPANY
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
LONG TERM DEBT AND FINANCING ARRANGEMENTS
At December 31, 2006, the Parent Company was a party to various long term financing facilities. Under the terms of these facilities, the Parent Company pledged a significant portion of its assets as collateral. The collateral included first, second, and third 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 secure additional indebtedness, make investments, and sell assets beyond specified limits. The facilities limit the Parent Company’s ability to pay dividends on its common stock and limit the amount of capital expenditures the Parent Company, together with its consolidated subsidiaries, may make. The facilities also contain certain financial covenants including the maintenance of a ratio of Consolidated EBITDA to Consolidated Interest Expense, and a ratio of net Consolidated Senior Secured Indebtedness to Consolidated EBITDA (as such terms are defined in the respective facility agreements). For further information, refer to the Note to the Consolidated Financial Statements No. 11, Financing Arrangements and Derivative Financial Instruments.
     The annual aggregate maturities of long term debt and capital leases for the five years subsequent to December 31, 2006 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)   2007     2008     2009     2010     2011  
Debt maturities
   $ 339     $ 102     $ 497     $ 2,039     $ 2,101  
 
                              
     Our U.S. Revolving Credit Facility is due 2010, as such, the borrowings outstanding are presented in the table as maturing in 2010. However, in January 2007, we repaid outstanding amounts under the revolving credit facility.
COMMITMENTS AND CONTINGENT LIABILITIES
At December 31, 2006, the Parent Company did not have off-balance-sheet financial guarantees written and other commitments.
     At December 31, 2006, 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 2006, 2005 and 2004.
     The following table presents dividends received during 2006, 2005 and 2004:
                         
(In millions)   2006     2005     2004  
Consolidated subsidiaries
   $ 247     $ 290     $ 155  
50% or less-owned persons
     —       1       1  
 
                  
 
   $ 247     $ 291     $ 156  
 
                  
There were no stock dividends received from consolidated subsidiaries in 2006. Dividends received from consolidated subsidiaries included stock dividends of $16 million and $15 million in 2005 and 2004, respectively.
SUPPLEMENTAL CASH FLOW INFORMATION
The Parent Company made cash payments for interest in 2006, 2005 and 2004 of $410 million, $349 million and $308 million, respectively. The Parent Company had net cash receipts for income taxes in 2006, 2005 and 2004 of $6 million, $19 million and $10 million, respectively.

4

 

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)   2006     2005     2004  
Sales
   $ 1,166     $ 1,236     $ 1,169  
Cost of Goods Sold
     1,160       1,240       1,164  
Interest Expense
     33       22       15  
Other (Income) and Expense
     (422 )     (391 )     (378 )
 
                  
Income before Income Taxes
   $ 395     $ 365     $ 368  
 
                  

5