Business Segments

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Business Segments

Note 9. Business Segments

Segment information reflects our strategic business units (“SBUs”), which are organized to meet customer requirements and global competition. For the year ended December 31, 2021, we operated our business through three operating segments representing our regional tire businesses: Americas; Europe, Middle East and Africa; and Asia Pacific. Segment information is reported on the basis used for reporting to our Chief Executive Officer. Each of the three 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 and automotive and commercial truck maintenance and repair services. Each segment also exports tires to other segments. Since the Closing Date, Cooper Tire's operating results have been incorporated into each of our SBUs.

Americas manufactures and sells tires for automobiles, trucks, buses, earthmoving, mining and industrial equipment, aircraft, and for various other applications throughout North, Central and South America. Americas also provides related products and services including retreaded tires, tread rubber, and 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.

EMEA manufactures and sells tires for automobiles, trucks, buses, aircraft, motorcycles, and earthmoving, mining and industrial equipment throughout Europe, the Middle East and Africa. EMEA also sells retreaded aviation tires, retreading and related services for commercial truck and earthmoving, mining and industrial equipment, and automotive maintenance and repair services.

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

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

(In millions)	2021		2020			2019
Sales
Americas	$	10,051	$	6,556		$	7,922
Europe, Middle East and Africa		5,243		4,020			4,708
Asia Pacific		2,184		1,745			2,115
Net Sales	$	17,478	$	12,321		$	14,745
Segment Operating Income (Loss)
Americas	$	914	$	9		$	550
Europe, Middle East and Africa		239		(72	)		202
Asia Pacific		135		49			193
Total Segment Operating Income (Loss)	$	1,288	$	(14	)	$	945
Less:
Goodwill and Other Asset Impairments (Notes 12 and 13)		—		330			—
Rationalizations (Note 4)		93		159			205
Interest expense (Note 5)		387		324			340
Other (income) expense (Note 6)		94		119			98
Asset write-offs and accelerated depreciation (Note 4)		1		105			15
Corporate incentive compensation plans		87		44			50
Retained expenses of divested operations		12		8			10
Other(1)		101		37			50
Income (Loss) before Income Taxes	$	513	$	(1,140	)	$	177

(1)Primarily represents unallocated corporate costs and the elimination of $22 million, $17 million and $17 million for the years ended December 31, 2021, 2020 and 2019, respectively, of royalty income attributable to the SBUs. The increase for the year ended December 31, 2021 was driven by the acquisition of Cooper Tire.

The following table presents segment assets at December 31:

(In millions)	2021		2020
Assets
Americas	$	10,874	$	6,666
Europe, Middle East and Africa		4,953		4,825
Asia Pacific		3,125		2,725
Total Segment Assets		18,952		14,216
Corporate(1)		2,450		2,290
	$	21,402	$	16,506

(1)Corporate includes substantially all of our U.S. net deferred tax assets.

Increases in total segment assets for 2021 were driven by the acquisition of Cooper Tire.

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, goodwill and other asset impairment charges 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. Management did not consider the net sales of any

individual country outside the United States to be significant to the consolidated financial statements. For long-lived assets, only the United States, China and Germany were considered to be significant.

(In millions)	2021		2020		2019
Net Sales
United States	$	8,480	$	5,424	$	6,489
Other international		8,998		6,897		8,256
	$	17,478	$	12,321	$	14,745
Long-Lived Assets
United States	$	3,717	$	2,517
China		833		742
Germany		679		729
Other international		3,116		3,085
	$	8,345	$	7,073

At December 31, 2021, significant concentrations of cash and cash equivalents held by our international subsidiaries included the following amounts:

•$320 million or 29% in Americas, primarily Chile, Mexico, Brazil and Canada ($384 million or 25% at December 31, 2020),

•$317 million or 29% in Asia Pacific, primarily China, Japan and India ($387 million or 25% at December 31, 2020), and

•$161 million or 15% in EMEA, primarily England and Poland ($387 million or 25% at December 31, 2020).

Goodwill and other asset impairments, as described in Notes to the Consolidated Financial Statements No. 12, Goodwill and Intangible Assets, and No. 13, Other Assets and Investments; rationalizations, as described in Note to the Consolidated Financial Statements No. 4, Costs Associated with Rationalization Programs; net (gains) losses on asset sales, as described in Note to the Consolidated Financial Statements No. 6, 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)	2021		2020		2019
Goodwill and Other Asset Impairments
Americas	$	—	$	148	$	—
Europe, Middle East and Africa		—		182		—
Total Segment Goodwill and Other Asset Impairments	$	—	$	330	$	—

(In millions)	2021		2020		2019
Rationalizations
Americas	$	38	$	94	$	90
Europe, Middle East and Africa		49		59		115
Asia Pacific		—		4		—
Total Segment Rationalizations	$	87	$	157	$	205
Corporate		6		2		—
	$	93	$	159	$	205

(In millions)	2021			2020		2019
Net (Gains) Losses on Asset Sales
Americas	$	(1	)	$	—	$	—
Europe, Middle East and Africa		(13	)		2		(16	)
Total Segment Asset Sales	$	(14	)	$	2	$	(16	)
Corporate		(6	)		—		—
	$	(20	)	$	2	$	(16	)

(In millions)	2021		2020		2019
Asset Write-Offs and Accelerated Depreciation
Americas	$	—	$	103	$	13
Europe, Middle East and Africa		1		2		2
Total Segment Asset Write-Offs and Accelerated Depreciation	$	1	$	105	$	15

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

(In millions)	2021		2020		2019
Capital Expenditures
Americas	$	537	$	302	$	369
Europe, Middle East and Africa		270		235		227
Asia Pacific		135		91		141
Total Segment Capital Expenditures	$	942	$	628	$	737
Corporate		39		19		33
	$	981	$	647	$	770

(In millions)	2021		2020		2019
Depreciation and Amortization
Americas	$	486	$	490	$	430
Europe, Middle East and Africa		213		201		197
Asia Pacific		146		133		133
Total Segment Depreciation and Amortization	$	845	$	824	$	760
Corporate		38		35		35
	$	883	$	859	$	795

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

(In millions)	2021			2020		2019
Equity in (Income) Loss
Americas	$	(18	)	$	31	$	32
Asia Pacific		(4	)		—		—
Total Segment Equity in (Income) Loss	$	(22	)	$	31	$	32

Increases in total segment equity in (income) loss for 2021 were driven by improved profitability of our TireHub joint venture in Americas and the addition of our ACTR Company Limited joint venture in Asia Pacific as a result of the acquisition of Cooper Tire.