EX-99.4 7 l36123aexv99w4.htm EX-99.4 EX-99.4
Exhibit 99.4
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)   2008     2007     2006  
Net Sales
   $ 7,833     $ 7,944     $ 7,914  
Cost of Goods Sold
     7,248       7,096       7,504  
Selling, Administrative and General Expense
     882       1,053       987  
Rationalizations
     43       —       129  
Interest Expense
     251       435       426  
Other (Income) and Expense
     (244 )     (230 )     (260 )
 
                  
Loss from Continuing Operations before Income Taxes and Equity in Earnings of Subsidiaries
     (347 )     (410 )     (872 )
United States and Foreign Taxes
     10       30       (28 )
Equity in Earnings of Subsidiaries
     280       560       453  
 
                  
Income (Loss) from Continuing Operations
     (77 )      120       (391 )
Discontinued Operations
     —       463       43  
 
                  
 
                        
Net Income (Loss)
   $ (77 )   $ 583     $ (348 )
 
                  
 
                        
Net Income (Loss) Per Share — Basic
                        
Income (Loss) from Continuing Operations
   $ (0.32 )   $ 0.60     $ (2.21 )
Discontinued Operations
     —       2.30       0.25  
 
                  
Net Income (Loss)
   $ (0.32 )   $ 2.90     $ (1.96 )
 
                  
Weighted Average Shares Outstanding
     241       201       177  
 
                        
Net Income (Loss) Per Share — Diluted
                        
Income (Loss) from Continuing Operations
   $ (0.32 )   $ 0.59     $ (2.21 )
Discontinued Operations
     —       2.25       0.25  
 
                  
Net Income (Loss)
   $ (0.32 )   $ 2.84     $ (1.96 )
 
                  
Weighted Average Shares Outstanding
     241       205       177  
The accompanying notes are an integral part of these financial statements.

1

 

THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY BALANCE SHEETS
                 
    December 31,  
(Dollars in millions)   2008     2007  
Assets
                
Current Assets:
                
Cash and cash equivalents
   $ 822     $ 2,516  
Restricted cash
     6       178  
Accounts receivable, less allowance — $26 ($24 in 2007)
     763       837  
Inventories:
                
Raw materials
     295       256  
Work in process
     44       57  
Finished products
     1,245       1,043  
 
            
 
     1,584       1,356  
Prepaid expenses and other current assets
      124       97  
 
            
Total Current Assets
     3,299       4,984  
Intangible Assets
     110       110  
Other Assets
     173       221  
Investments in Subsidiaries
     4,216       4,842  
Property, Plant and Equipment, less accumulated depreciation — $4,402 ($4,250 in 2007)
     2,167       1,967  
 
            
Total Assets
   $ 9,965     $ 12,124  
 
            
Liabilities
                
Current Liabilities:
                
Accounts payable-trade
   $ 648     $ 680  
Accounts payable to affiliates
     714       989  
Compensation and benefits
     362       552  
Other current liabilities
     269       520  
United States and foreign taxes
     51       66  
Long term debt and capital leases due within one year
     501       102  
 
            
Total Current Liabilities
     2,545       2,909  
Long Term Debt and Capital Leases
     3,300       3,750  
Compensation and Benefits
     2,450       2,053  
Deferred and Other Noncurrent Income Taxes
     38       76  
Other Long Term Liabilities
     610       486  
 
            
Total Liabilities
     8,943       9,274  
Commitments and Contingent Liabilities
     —       —  
Shareholders’ Equity
                
Preferred Stock, no par value:
                
Authorized, 50,000,000 shares, unissued
     —       —  
Common Stock, no par value:
                
Authorized, 450,000,000 shares in 2008 and 2007
                
Outstanding shares, 241,289,921 (240,122,374 in 2007)
     241       240  
Capital Surplus
     2,764       2,722  
Retained Earnings
     1,463       1,540  
Accumulated Other Comprehensive Loss
     (3,446 )     (1,652 )
 
            
Total Shareholders’ Equity
     1,022       2,850  
 
            
Total Liabilities and Shareholders’ Equity
   $ 9,965     $ 12,124  
 
            
The accompanying notes are an integral part of these financial statements.

2

 

THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
                                                 
                                    Accumulated        
                                    Other     Total  
    Common Stock     Capital     Retained     Comprehensive     Shareholders’  
(Dollars in millions)   Shares     Amount     Surplus     Earnings     Loss     Equity (Deficit)  
Balance at December 31, 2005 as reported
(after deducting 19,168,917 treasury shares)
     176,509,751     $ 177     $ 1,398     $ 1,298     $ (2,800 )   $ 73  
Adjustment to initially apply FASB Staff Position APB 14-1 for convertible debt
                     60       (25 )             35  
 
                                    
Balance at December 31, 2005 as restated
(after deducting 19,168,917 treasury shares)
     176,509,751       177       1,458       1,273       (2,800 )     108  
Comprehensive income (loss):
                                                
Net loss
                             (348 )             (348 )
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 $37)
                                     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 (loss)
                                             668  
 
                                              
Total comprehensive income (loss)
                                             320  
Adjustment to initially apply FASB Statement No. 158 for pension and OPEB (net of tax of $47)
                                     (1,199 )     (1,199 )
Common stock issued from treasury:
                                                
Stock-based 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     $ 1,487     $ 925     $ (3,331 )   $ (741 )
The accompanying notes are an integral part of these financial statements.

3

 

THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) (continued)
                                                 
                                    Accumulated        
                                    Other     Total  
    Common Stock     Capital     Retained     Comprehensive     Shareholders’  
(Dollars in millions)   Shares     Amount     Surplus     Earnings     Loss     Equity (Deficit)  
Balance at December 31, 2006
(after deducting 17,459,698 treasury shares)
     178,218,970     $ 178     $ 1,487     $ 925     $ (3,331 )   $ (741 )
 
Adjustment for adoption of FIN 48 (Note 15)
                             32               32  
Comprehensive income (loss):
                                                
Net income
                             583               583  
Foreign currency translation (net of tax of $1)
                                     482          
Reclassification adjustment for amounts recognized in income (net of tax of $0)
                                     (13 )        
Prior service credit from defined benefit plan amendments (net of tax of $0)
                                     488          
Amortization of prior service cost and unrecognized gains and losses included in net periodic benefit cost (net of tax of $8)
                                     154          
Decrease in net actuarial losses (net of tax of $12)
                                     445          
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures (net of tax of $10)
                                     137          
Unrealized investment loss (net of tax of $0)
                                     (14 )        
Other comprehensive income (loss)
                                             1,679  
 
                                              
Total comprehensive income (loss)
                                             2,262  
Issuance of shares for public equity offering
     26,136,363       26       808                       834  
Issuance of shares for conversion of debt
     28,728,852       29       309                       338  
Common stock issued from treasury:
                                                
Stock-based compensation plans
     7,038,189       7       96                       103  
Stock-based compensation
                     22                       22  
 
                                    
Balance at December 31, 2007
(after deducting 10,438,287 treasury shares)
     240,122,374     $ 240     $ 2,722     $ 1,540     $ (1,652 )   $ 2,850  
The accompanying notes are an integral part of these financial statements.

4

 

THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) (continued)
                                                 
                                    Accumulated        
                                    Other     Total  
    Common Stock     Capital     Retained     Comprehensive     Shareholders’  
(Dollars in millions)   Shares     Amount     Surplus     Earnings     Loss     Equity (Deficit)  
Balance at December 31, 2007
(after deducting 10,438,287 treasury shares)
     240,122,374     $ 240     $ 2,722     $ 1,540     $ (1,652 )   $ 2,850  
 
Comprehensive income (loss):
                                                
Net loss
                             (77 )             (77 )
Foreign currency translation (net of tax of $0)
                                     (488 )        
Reclassification adjustment for amounts recognized in income (net of tax of $0)
                                     (15 )        
Amortization of prior service cost and unrecognized gains and losses included in net periodic benefit cost (net of tax of $8)
                                     99          
Increase in net actuarial losses (net of tax of $11)
                                     (1,452 )        
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments and settlements (net of tax of $0)
                                     67          
Unrealized investment loss (net of tax of $0)
                                     (5 )        
Other comprehensive income (loss)
                                             (1,794 )
 
                                              
Total comprehensive income (loss)
                                             (1,871 )
Issuance of shares for conversion of debt
     328,954       —       4                       4  
Common stock issued from treasury:
                                                
Stock-based compensation plans
     838,593       1       4                       5  
Stock-based compensation
                     34                       34  
 
                                    
Balance at December 31, 2008
(after deducting 9,599,694 treasury shares)
     241,289,921     $ 241     $ 2,764     $ 1,463     $ (3,446 )   $ 1,022  
 
                                    
The accompanying notes are an integral part of these financial statements.

5

 

THE GOODYEAR TIRE & RUBBER COMPANY
PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS
                         
    Year Ended December 31,  
(In millions)   2008     2007     2006  
Cash Flows from Operating Activities:
                        
Total operating cash flows from continuing operations
   $ (1,770 )   $ (363 )   $ 233  
Operating cash flows from discontinued operations
     —       (4 )     64  
 
                  
Total cash flows from operating activities
     (1,770 )     (367 )     297  
 
                        
Cash Flows from Investing Activities:
                        
Capital expenditures
     (444 )     (289 )     (244 )
Asset dispositions
     193       107       49  
Asset acquisitions
     (1 )     —       (71 )
Capital contributions to subsidiaries
     (131 )     (476 )     (1 )
Capital redemptions from subsidiaries
     603       701       —  
Decrease (increase) in restricted cash
     (3 )     24       26  
Investment in The Reserve Primary Fund
     (360 )     —       —  
Return on investment in The Reserve Primary Fund
     284       —       —  
Other transactions
     —       —       26  
 
                  
Total investing cash flows from continuing operations
      141       67       (215 )
Investing cash flows from discontinued operations
     —       1,060       (20 )
 
                  
Total Cash Flows From Investing Activities
     141       1,127       (235 )
 
                        
Cash Flows from Financing Activities:
                        
Short term debt and overdrafts paid
     (20 )     (6 )     (64 )
Long term debt incurred
     700       —       1,970  
Long term debt paid
     (750 )     (1,790 )     (402 )
Common stock issued
     5       937       12  
Debt related costs and other transactions
     —       (11 )     (15 )
 
                  
Total financing cash flows from continuing operations
     (65 )     (870 )     1,501  
Financing cash flows from discontinued operations
     —       —       (3 )
 
                  
Total cash flows from Financing Activities
     (65 )     (870 )     1,498  
Net Change in Cash of Discontinued Operations
     —       —       1  
 
                  
Net Change in Cash and Cash Equivalents
     (1,694 )     (110 )     1,561  
Cash and Cash Equivalents at Beginning of the Year
     2,516       2,626       1,065  
 
                  
Cash and Cash Equivalents at End of the Year
   $ 822     $ 2,516     $ 2,626  
 
                  
The accompanying notes are an integral part of these financial statements.

6

 

THE GOODYEAR TIRE & RUBBER COMPANY
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
LONG TERM DEBT AND FINANCING ARRANGEMENTS
At December 31, 2008, 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 included 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 (excluding the sale of properties located in Akron, Ohio), 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 facility plus the aggregate amount of Available Cash is less than $150 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 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. 12, Financing Arrangements and Derivative Financial Instruments.
     The first lien 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 our financial condition since December 31, 2006.
     The annual aggregate maturities of long term debt and capital leases for the five years subsequent to December 31, 2008 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)   2009     2010     2011     2012     2013  
Debt maturities
   $ 501     $ 4     $ 978     $ 3     $ 703  
 
                              
COMMITMENTS AND CONTINGENT LIABILITIES
At December 31, 2008, the Parent Company did not have off-balance sheet financial guarantees written and other commitments.
     At December 31, 2008, 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. 20, Commitments and Contingent Liabilities.

7

 

DIVIDENDS
The Parent Company used the equity method of accounting for investments in consolidated subsidiaries during 2008, 2007 and 2006.
     The following table presents dividends received during 2008, 2007 and 2006:
                         
(In millions)   2008     2007     2006  
Consolidated subsidiaries
   $ 209     $ 562     $ 247  
 
                  
There were no stock dividends received from consolidated subsidiaries in 2008, 2007 and 2006.
SUPPLEMENTAL CASH FLOW INFORMATION
The Parent Company made cash payments for interest in 2008, 2007 and 2006 of $298 million, $455 million and $410 million, respectively. The Parent Company had net cash payments for income taxes in 2008 of $14 million and net cash receipts for income taxes in 2007 and 2006 of $4 million and $6 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)   2008     2007     2006  
Sales
   $ 1,134     $ 1,165     $ 1,166  
Cost of Goods Sold
     1,159       1,157       1,160  
Interest Expense
     23       36       33  
Other (Income) and Expense
     (559 )     (437 )     (422 )
 
                  
Income before Income Taxes
   $ 511     $ 409     $ 395  
 
                  

8