(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☑ |
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
Smaller reporting company |
Emerging growth company |
Number of Shares of Common Stock, Without Par Value, Outstanding at September 30, 2019: |
EX-101.INS INSTANCE DOCUMENT | ||
EX-101.SCH SCHEMA DOCUMENT | ||
EX-101.CAL CALCULATION LINKBASE DOCUMENT | ||
EX-101.DEF DEFINITION LINKBASE DOCUMENT | ||
EX-101.LAB LABELS LINKBASE DOCUMENT | ||
EX-101.PRE PRESENTATION LINKBASE DOCUMENT | ||
EX-104 |
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions, except per share amounts) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Net Sales (Note 2) |
$ |
$ |
$ |
$ |
|||||||||||
Cost of Goods Sold |
|||||||||||||||
Selling, Administrative and General Expense |
|||||||||||||||
Rationalizations (Note 3) |
|||||||||||||||
Interest Expense |
|||||||||||||||
Other (Income) Expense (Note 4) |
( |
) |
( |
) | |||||||||||
Income before Income Taxes |
|||||||||||||||
United States and Foreign Tax Expense (Note 5) |
|||||||||||||||
Net Income |
|||||||||||||||
Less: Minority Shareholders’ Net Income |
|||||||||||||||
Goodyear Net Income |
$ |
$ |
$ |
$ |
|||||||||||
Goodyear Net Income — Per Share of Common Stock |
|||||||||||||||
Basic |
$ |
$ |
$ |
$ |
|||||||||||
Weighted Average Shares Outstanding (Note 6) |
|||||||||||||||
Diluted |
$ |
$ |
$ |
$ |
|||||||||||
Weighted Average Shares Outstanding (Note 6) |
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Net Income |
$ |
$ |
$ |
$ |
|||||||||||
Other Comprehensive Income (Loss): |
|||||||||||||||
Foreign currency translation, net of tax of ($1) and $3 in 2019 ($0 and ($8) in 2018) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||
Defined benefit plans: |
|||||||||||||||
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost, net of tax of $8 and $24 in 2019 ($8 and $24 in 2018) |
|||||||||||||||
(Increase)/Decrease in net actuarial losses, net of tax of ($3) and $1 in 2019 (($4) and $2 in 2018) |
( |
) |
( |
) |
( |
) | |||||||||
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements, and divestitures, net of tax of $0 and $0 in 2019 ($2 and $4 in 2018) |
|||||||||||||||
Prior service (cost) credit from plan amendments, net of tax of $0 and $0 in 2019 ($0 and $0 in 2018) |
( |
) |
|||||||||||||
Deferred derivative gains (losses), net of tax of $4 and $4 in 2019 ($1 and $3 in 2018) |
|||||||||||||||
Reclassification adjustment for amounts recognized in income, net of tax of $0 and ($1) in 2019 ($0 and $2 in 2018) |
( |
) |
( |
) |
|||||||||||
Other Comprehensive Income (Loss) |
( |
) |
( |
) |
( |
) | |||||||||
Comprehensive Income |
|||||||||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders |
( |
) |
( |
) |
( |
) | |||||||||
Goodyear Comprehensive Income |
$ |
$ |
$ |
$ |
September 30, |
December 31, | ||||||
(In millions, except share data) |
2019 |
2018 | |||||
Assets: |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
$ |
|||||
Accounts Receivable, less Allowance — $114 ($113 in 2018) |
|||||||
Inventories: |
|||||||
Raw Materials |
|||||||
Work in Process |
|||||||
Finished Products |
|||||||
Prepaid Expenses and Other Current Assets |
|||||||
Total Current Assets |
|||||||
Goodwill |
|||||||
Intangible Assets |
|||||||
Deferred Income Taxes (Note 5) |
|||||||
Other Assets |
|||||||
Operating Lease Right-of-Use Assets (Note 8) |
|||||||
Property, Plant and Equipment, less Accumulated Depreciation — $10,457 ($10,161 in 2018) |
|||||||
Total Assets |
$ |
$ |
|||||
Liabilities: |
|||||||
Current Liabilities: |
|||||||
Accounts Payable — Trade |
$ |
$ |
|||||
Compensation and Benefits (Notes 11 and 12) |
|||||||
Other Current Liabilities |
|||||||
Notes Payable and Overdrafts (Note 9) |
|||||||
Operating Lease Liabilities due Within One Year (Note 8) |
|||||||
Long Term Debt and Finance Leases due Within One Year (Notes 8 and 9) |
|||||||
Total Current Liabilities |
|||||||
Operating Lease Liabilities (Note 8) |
|||||||
Long Term Debt and Finance Leases (Notes 8 and 9) |
|||||||
Compensation and Benefits (Notes 11 and 12) |
|||||||
Deferred Income Taxes (Note 5) |
|||||||
Other Long Term Liabilities |
|||||||
Total Liabilities |
|||||||
Commitments and Contingent Liabilities (Note 13) |
|||||||
Shareholders’ Equity: |
|||||||
Goodyear Shareholders’ Equity: |
|||||||
Common Stock, no par value: |
|||||||
Authorized, 450 million shares, Outstanding shares — 233 and 232 million in 2019 and 2018 |
|||||||
Capital Surplus |
|||||||
Retained Earnings |
|||||||
Accumulated Other Comprehensive Loss |
( |
) |
( |
) | |||
Goodyear Shareholders’ Equity |
|||||||
Minority Shareholders’ Equity — Nonredeemable |
|||||||
Total Shareholders’ Equity |
|||||||
Total Liabilities and Shareholders’ Equity |
$ |
$ |
Accumulated |
Minority |
||||||||||||||||||||||||||||||
Other |
Goodyear |
Shareholders' |
Total | ||||||||||||||||||||||||||||
Common Stock |
Capital |
Retained |
Comprehensive |
Shareholders' |
Equity — Non- |
Shareholders' | |||||||||||||||||||||||||
(Dollars in millions, except per share amounts) |
Shares |
Amount |
Surplus |
Earnings |
Loss |
Equity |
Redeemable |
Equity | |||||||||||||||||||||||
Balance at December 31, 2018 |
|||||||||||||||||||||||||||||||
(after deducting 46,292,384 common treasury shares) |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||||||||||
Net income (loss) |
( |
) |
( |
) |
|||||||||||||||||||||||||||
Foreign currency translation (net of tax of $4) |
|||||||||||||||||||||||||||||||
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $16) |
|||||||||||||||||||||||||||||||
Decrease in net actuarial losses (net of tax of $4) |
|||||||||||||||||||||||||||||||
Prior service costs from plan amendments (net of tax of $0) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Deferred derivative gains (net of tax of $0) |
|||||||||||||||||||||||||||||||
Reclassification adjustment for amounts recognized in income (net of tax of ($1)) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Other comprehensive income |
|||||||||||||||||||||||||||||||
Total comprehensive income |
|||||||||||||||||||||||||||||||
Adoption of new accounting standards update |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Stock-based compensation plans |
|||||||||||||||||||||||||||||||
Dividends declared |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Common stock issued from treasury |
( |
) |
|||||||||||||||||||||||||||||
Purchase of minority shares |
( |
) |
( |
) | |||||||||||||||||||||||||||
Balance at June 30, 2019 |
|||||||||||||||||||||||||||||||
(after deducting 45,942,257 common treasury shares) |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
Comprehensive income (loss): |
|||||||||||||||||||||||||||||||
Net income |
|||||||||||||||||||||||||||||||
Foreign currency translation (net of tax of ($1)) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $8) |
|||||||||||||||||||||||||||||||
Increase in net actuarial losses (net of tax of ($3)) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Deferred derivative gains (net of tax of $4) |
|||||||||||||||||||||||||||||||
Reclassification adjustment for amounts recognized in income (net of tax of $0) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Other comprehensive loss |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Total comprehensive income (loss) |
( |
) |
|||||||||||||||||||||||||||||
Stock-based compensation plans |
|||||||||||||||||||||||||||||||
Dividends declared |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Common stock issued from treasury |
|||||||||||||||||||||||||||||||
Balance at September 30, 2019 |
|||||||||||||||||||||||||||||||
(after deducting 45,899,918 common treasury shares) |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
Accumulated |
Minority |
||||||||||||||||||||||||||||||
Other |
Goodyear |
Shareholders' |
Total | ||||||||||||||||||||||||||||
Common Stock |
Capital |
Retained |
Comprehensive |
Shareholders' |
Equity — Non- |
Shareholders' | |||||||||||||||||||||||||
(Dollars in millions, except per share amounts) |
Shares |
Amount |
Surplus |
Earnings |
Loss |
Equity |
Redeemable |
Equity | |||||||||||||||||||||||
Balance at December 31, 2017 |
|||||||||||||||||||||||||||||||
(after deducting 38,308,825 common treasury shares) |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
Comprehensive income (loss): |
|||||||||||||||||||||||||||||||
Net income |
|||||||||||||||||||||||||||||||
Foreign currency translation (net of tax of ($8)) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $16) |
|||||||||||||||||||||||||||||||
Decrease in net actuarial losses (net of tax of $6) |
|||||||||||||||||||||||||||||||
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures (net of tax of $2) |
|||||||||||||||||||||||||||||||
Deferred derivative gains (net of tax of $2) |
|||||||||||||||||||||||||||||||
Reclassification adjustment for amounts recognized in income (net of tax of $2) |
|||||||||||||||||||||||||||||||
Other comprehensive loss |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Total comprehensive income (loss) |
( |
) |
|||||||||||||||||||||||||||||
Adoption of new accounting standards updates |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Stock-based compensation plans |
|||||||||||||||||||||||||||||||
Repurchase of common stock |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||
Dividends declared |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Common stock issued from treasury |
|||||||||||||||||||||||||||||||
Purchase of minority shares |
( |
) |
( |
) | |||||||||||||||||||||||||||
Balance at June 30, 2018 |
|||||||||||||||||||||||||||||||
(after deducting 41,447,682 common treasury shares) |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
Comprehensive income (loss): |
|||||||||||||||||||||||||||||||
Net income |
|||||||||||||||||||||||||||||||
Foreign currency translation (net of tax of $0) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $8) |
|||||||||||||||||||||||||||||||
Increase in net actuarial losses (net of tax of ($4)) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures (net of tax of $2) |
|||||||||||||||||||||||||||||||
Deferred derivative gains (net of tax of $1) |
|||||||||||||||||||||||||||||||
Reclassification adjustment for amounts recognized in income (net of tax of $0) |
|||||||||||||||||||||||||||||||
Other comprehensive loss |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||
Total comprehensive income (loss) |
( |
) |
|||||||||||||||||||||||||||||
Stock-based compensation plans |
|||||||||||||||||||||||||||||||
Repurchase of common stock |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||
Dividends declared |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Common stock issued from treasury |
|||||||||||||||||||||||||||||||
Balance at September 30, 2018 |
|||||||||||||||||||||||||||||||
(after deducting 45,453,381 common treasury shares) |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
Nine Months Ended | |||||||
September 30, | |||||||
(In millions) |
2019 |
2018 | |||||
Cash Flows from Operating Activities: |
|||||||
Net Income |
$ |
$ |
|||||
Adjustments to Reconcile Net Income to Cash Flows from Operating Activities: |
|||||||
Depreciation and Amortization |
|||||||
Amortization and Write-Off of Debt Issuance Costs |
|||||||
Provision for Deferred Income Taxes |
( |
) |
|||||
Net Pension Curtailments and Settlements |
|||||||
Net Rationalization Charges (Note 3) |
|||||||
Rationalization Payments |
( |
) |
( |
) | |||
Net (Gains) Losses on Asset Sales (Note 4) |
( |
) |
( |
) | |||
Gain on TireHub Transaction, Net of Transaction Costs (Note 4) |
( |
) | |||||
Operating Lease Expense (Note 8) |
— |
||||||
Operating Lease Payments (Note 8) |
( |
) |
— |
||||
Pension Contributions and Direct Payments |
( |
) |
( |
) | |||
Changes in Operating Assets and Liabilities, Net of Asset Acquisitions and Dispositions: |
|||||||
Accounts Receivable |
( |
) |
( |
) | |||
Inventories |
( |
) |
( |
) | |||
Accounts Payable — Trade |
( |
) |
|||||
Compensation and Benefits |
|||||||
Other Current Liabilities |
( |
) | |||||
Other Assets and Liabilities |
|||||||
Total Cash Flows from Operating Activities |
( |
) |
( |
) | |||
Cash Flows from Investing Activities: |
|||||||
Capital Expenditures |
( |
) |
( |
) | |||
Asset Dispositions (Note 4) |
|||||||
Short Term Securities Acquired |
( |
) |
( |
) | |||
Short Term Securities Redeemed |
|||||||
Notes Receivable |
( |
) |
( |
) | |||
Other Transactions |
( |
) |
( |
) | |||
Total Cash Flows from Investing Activities |
( |
) |
( |
) | |||
Cash Flows from Financing Activities: |
|||||||
Short Term Debt and Overdrafts Incurred |
|||||||
Short Term Debt and Overdrafts Paid |
( |
) |
( |
) | |||
Long Term Debt Incurred |
|||||||
Long Term Debt Paid |
( |
) |
( |
) | |||
Common Stock Issued |
|||||||
Common Stock Repurchased (Note 14) |
( |
) | |||||
Common Stock Dividends Paid (Note 14) |
( |
) |
( |
) | |||
Transactions with Minority Interests in Subsidiaries |
( |
) |
( |
) | |||
Debt Related Costs and Other Transactions |
( |
) |
( |
) | |||
Total Cash Flows from Financing Activities |
|||||||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash |
( |
) |
( |
) | |||
Net Change in Cash, Cash Equivalents and Restricted Cash |
( |
) | |||||
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period |
|||||||
Cash, Cash Equivalents and Restricted Cash at End of the Period |
$ |
$ |
Balance at |
Adjustment for |
Balance at | |||||||||
(In millions) |
December 31, 2018 |
New Standard |
January 1, 2019 | ||||||||
Deferred Income Taxes — Asset |
$ |
$ |
$ |
||||||||
Operating Lease Right-of-Use Assets |
|||||||||||
Property, Plant and Equipment, less Accumulated Depreciation |
( |
) |
|||||||||
Operating Lease Liabilities due Within One Year |
|||||||||||
Operating Lease Liabilities |
|||||||||||
Long Term Debt and Finance Leases |
|||||||||||
Other Long Term Liabilities |
( |
) |
|||||||||
Retained Earnings |
( |
) |
September 30, | |||||||
(In millions) |
2019 |
2018 | |||||
Cash and Cash Equivalents |
$ |
$ |
|||||
Restricted Cash |
|||||||
Total Cash, Cash Equivalents and Restricted Cash |
$ |
$ |
Three Months Ended September 30, 2019 | |||||||||||||||
Europe, Middle East |
|||||||||||||||
(In millions) |
Americas |
and Africa |
Asia Pacific |
Total | |||||||||||
Tire unit sales |
$ |
$ |
$ |
$ |
|||||||||||
Other tire and related sales |
|||||||||||||||
Retail services and service related sales |
|||||||||||||||
Chemical sales |
|||||||||||||||
Other |
|||||||||||||||
Net Sales by reportable segment |
$ |
$ |
$ |
$ |
Three Months Ended September 30, 2018 | |||||||||||||||
Europe, Middle East |
|||||||||||||||
(In millions) |
Americas |
and Africa |
Asia Pacific |
Total | |||||||||||
Tire unit sales |
$ |
$ |
$ |
$ |
|||||||||||
Other tire and related sales |
|||||||||||||||
Retail services and service related sales |
|||||||||||||||
Chemical sales |
|||||||||||||||
Other |
|||||||||||||||
Net Sales by reportable segment |
$ |
$ |
$ |
$ |
Nine Months Ended September 30, 2019 | |||||||||||||||
Europe, Middle East |
|||||||||||||||
(In millions) |
Americas |
and Africa |
Asia Pacific |
Total | |||||||||||
Tire unit sales |
$ |
$ |
$ |
$ |
|||||||||||
Other tire and related sales |
|||||||||||||||
Retail services and service related sales |
|||||||||||||||
Chemical sales |
|||||||||||||||
Other |
|||||||||||||||
Net Sales by reportable segment |
$ |
$ |
$ |
$ |
Nine Months Ended September 30, 2018 | |||||||||||||||
Europe, Middle East |
|||||||||||||||
(In millions) |
Americas |
and Africa |
Asia Pacific |
Total | |||||||||||
Tire unit sales |
$ |
$ |
$ |
$ |
|||||||||||
Other tire and related sales |
|||||||||||||||
Retail services and service related sales |
|||||||||||||||
Chemical sales |
|||||||||||||||
Other |
|||||||||||||||
Net Sales by reportable segment |
$ |
$ |
$ |
$ |
(In millions) |
|||
Balance at December 31, 2018 |
$ |
||
Revenue deferred during period |
|||
Revenue recognized during period |
( |
) | |
Impact of foreign currency translation |
|||
Balance at September 30, 2019 |
$ |
Associate- |
|||||||||||
(In millions) |
Related Costs |
Other Exit Costs |
Total | ||||||||
Balance at December 31, 2018 |
$ |
$ |
$ |
||||||||
2019 Charges |
|||||||||||
Incurred, including net Foreign Currency Translation of $(6) million and $0 million, respectively |
( |
) |
( |
) |
( |
) | |||||
Reversed to the Statement of Operations |
( |
) |
( |
) | |||||||
Balance at September 30, 2019 |
$ |
$ |
$ |
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Current Year Plans |
|||||||||||||||
Associate Severance and Other Related Costs |
$ |
$ |
$ |
$ |
|||||||||||
Benefit Plan Termination Benefits |
|||||||||||||||
Other Exit Costs |
|||||||||||||||
Current Year Plans - Net Charges |
$ |
$ |
$ |
$ |
|||||||||||
Prior Year Plans |
|||||||||||||||
Associate Severance and Other Related Costs |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) | |||||
Benefit Plan Termination Benefits |
|||||||||||||||
Other Exit Costs |
|||||||||||||||
Prior Year Plans - Net Charges |
|||||||||||||||
Total Net Charges |
$ |
$ |
$ |
$ |
|||||||||||
Asset Write-off and Accelerated Depreciation Charges |
$ |
$ |
$ |
$ |
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Gain on TireHub transaction, net of transaction costs |
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||
Non-service related pension and other postretirement benefits cost |
|||||||||||||||
Financing fees and financial instruments expense |
|||||||||||||||
Net foreign currency exchange (gains) losses |
( |
) |
( |
) |
( |
) | |||||||||
General and product liability expense - discontinued products |
|||||||||||||||
Royalty income |
( |
) |
( |
) |
( |
) |
( |
) | |||||||
Net (gains) losses on asset sales |
( |
) |
( |
) |
( |
) | |||||||||
Interest income |
( |
) |
( |
) |
( |
) |
( |
) | |||||||
Miscellaneous expense |
|||||||||||||||
$ |
$ |
( |
) |
$ |
$ |
( |
) |
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions, except per share amounts) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Earnings per share — basic: |
|||||||||||||||
Goodyear net income |
$ |
$ |
$ |
$ |
|||||||||||
Weighted average shares outstanding |
|||||||||||||||
Earnings per common share — basic |
$ |
$ |
$ |
$ |
|||||||||||
Earnings per share — diluted: |
|||||||||||||||
Goodyear net income |
$ |
$ |
$ |
$ |
|||||||||||
Weighted average shares outstanding |
|||||||||||||||
Dilutive effect of stock options and other dilutive securities |
|||||||||||||||
Weighted average shares outstanding — diluted |
|||||||||||||||
Earnings per common share — diluted |
$ |
$ |
$ |
$ |
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Sales: |
|||||||||||||||
Americas |
$ |
$ |
$ |
$ |
|||||||||||
Europe, Middle East and Africa |
|||||||||||||||
Asia Pacific |
|||||||||||||||
Net Sales |
$ |
$ |
$ |
$ |
|||||||||||
Segment Operating Income: |
|||||||||||||||
Americas |
$ |
$ |
$ |
$ |
|||||||||||
Europe, Middle East and Africa |
|||||||||||||||
Asia Pacific |
|||||||||||||||
Total Segment Operating Income |
$ |
$ |
$ |
$ |
|||||||||||
Less: |
|||||||||||||||
Rationalizations |
$ |
$ |
$ |
$ |
|||||||||||
Interest expense |
|||||||||||||||
Other (income) expense (Note 4) |
( |
) |
( |
) | |||||||||||
Asset write-offs and accelerated depreciation |
|||||||||||||||
Corporate incentive compensation plans |
( |
) |
|||||||||||||
Retained expenses of divested operations |
|||||||||||||||
Other |
|||||||||||||||
Income before Income Taxes |
$ |
$ |
$ |
$ |
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Rationalizations: |
|||||||||||||||
Americas |
$ |
$ |
$ |
$ |
|||||||||||
Europe, Middle East and Africa |
|||||||||||||||
Asia Pacific |
|||||||||||||||
Total Segment Rationalizations |
$ |
$ |
$ |
$ |
|||||||||||
Corporate |
|||||||||||||||
Total Rationalizations |
$ |
$ |
$ |
$ |
|||||||||||
Net (Gains) Losses on Asset Sales: |
|||||||||||||||
Americas(1) |
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||
Europe, Middle East and Africa |
( |
) |
|||||||||||||
Total Net (Gains) Losses on Asset Sales |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||
Asset Write-offs and Accelerated Depreciation: |
|||||||||||||||
Europe, Middle East and Africa |
$ |
$ |
$ |
$ |
|||||||||||
Total Asset Write-offs and Accelerated Depreciation |
$ |
$ |
$ |
$ |
(1) |
Americas Net (Gains) Losses on Asset Sales for the three and nine months ended September 30, 2018 include gains of $ |
Three Months Ended |
Nine Months Ended | ||||||
September 30, |
September 30, | ||||||
(In millions) |
2019 |
2019 | |||||
Operating Lease Expense |
$ |
$ |
|||||
Finance Lease Expense: |
|||||||
Amortization of ROU Assets |
|||||||
Interest on Lease Liabilities |
|||||||
Short Term Lease Expense |
|||||||
Variable Lease Expense |
|||||||
Sublease Income |
( |
) |
( |
) | |||
Total Lease Expense |
$ |
$ |
Nine Months Ended | |||
September 30, | |||
(In millions) |
2019 | ||
Cash Paid for Amounts Included in the Measurement of Lease Liabilities |
|||
Operating Cash Flows for Operating Leases |
$ |
||
Operating Cash Flows for Finance Leases |
|||
Financing Cash Flows for Finance Leases |
|||
ROU Assets Obtained in Exchange for Lease Obligations |
|||
Operating Leases |
|||
Finance Leases |
September 30, | |||
(In millions, except lease term and discount rate) |
2019 | ||
Operating Leases |
|||
Operating Lease ROU Assets |
$ |
||
Operating Lease Liabilities due Within One Year |
$ |
||
Operating Lease Liabilities |
|||
Total Operating Lease Liabilities |
$ |
||
Finance Leases |
|||
Property, Plant and Equipment, at cost |
$ |
||
Accumulated Depreciation |
( |
) | |
Property, Plant and Equipment, net |
$ |
||
Long Term Debt and Finance Leases due Within One Year |
$ |
||
Long Term Debt and Finance Leases |
|||
Total Finance Lease Liabilities |
$ |
||
Weighted Average Remaining Lease Term |
|||
Operating Leases |
|||
Finance Leases |
|||
Weighted Average Discount Rate |
|||
Operating Leases |
% | ||
Finance Leases |
% |
(In millions) |
Operating Leases |
Finance Leases | |||||
2019 (excluding the nine months ended September 30) |
$ |
$ |
|||||
2020 |
|||||||
2021 |
|||||||
2022 |
|||||||
2023 |
|||||||
Thereafter |
|||||||
Total Lease Payments |
|||||||
Less: Imputed Interest |
|||||||
Total |
$ |
$ |
2024 and |
|||||||||||||||||||||||||||
(In millions) |
2019 |
2020 |
2021 |
2022 |
2023 |
Beyond |
Total | ||||||||||||||||||||
Capital Leases |
|||||||||||||||||||||||||||
Minimum lease payments |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||
Imputed interest |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||
Present value |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||
Operating Leases |
|||||||||||||||||||||||||||
Minimum lease payments |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||
Minimum sublease rentals |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Imputed interest |
( |
) | |||||||||||||||||||||||||
Present value |
$ |
September 30, |
December 31, | ||||||
(In millions) |
2019 |
2018 | |||||
Chinese credit facilities |
$ |
$ |
|||||
Other domestic and foreign debt |
|||||||
Notes Payable and Overdrafts |
$ |
$ |
|||||
Weighted average interest rate |
% |
% | |||||
Chinese credit facilities |
$ |
$ |
|||||
8.75% note due 2020 |
|||||||
Other foreign and domestic debt (including finance leases) |
|||||||
Long Term Debt and Finance Leases due Within One Year |
$ |
$ |
|||||
Weighted average interest rate |
% |
% | |||||
Total obligations due within one year |
$ |
$ |
September 30, 2019 |
December 31, 2018 | ||||||||||||
Interest |
Interest | ||||||||||||
(In millions) |
Amount |
Rate |
Amount |
Rate | |||||||||
Notes: |
|||||||||||||
8.75% due 2020 |
$ |
$ |
|||||||||||
5.125% due 2023 |
|||||||||||||
3.75% Euro Notes due 2023 |
|||||||||||||
5% due 2026 |
|||||||||||||
4.875% due 2027 |
|||||||||||||
7% due 2028 |
|||||||||||||
Credit Facilities: |
|||||||||||||
First lien revolving credit facility due 2021 |
% |
||||||||||||
Second lien term loan facility due 2025 |
% |
% | |||||||||||
European revolving credit facility due 2024 |
% |
||||||||||||
Pan-European accounts receivable facility |
% |
% | |||||||||||
Mexican credit facilities |
% |
% | |||||||||||
Chinese credit facilities |
% |
% | |||||||||||
Other foreign and domestic debt(1) |
% |
% | |||||||||||
Unamortized deferred financing fees |
( |
) |
( |
) |
|||||||||
Finance lease obligations(2) |
|||||||||||||
Less portion due within one year |
( |
) |
( |
) |
|||||||||
$ |
$ |
(1) |
Interest rates are weighted average interest rates related to various foreign credit facilities with customary terms and conditions. |
(2) |
Includes finance lease obligations related to our Global and Americas Headquarters at September 30, 2019. |
September 30, |
December 31, | ||||||
(In millions) |
2019 |
2018 | |||||
Fair Values — Current asset (liability): |
|||||||
Accounts receivable |
$ |
$ |
|||||
Other current liabilities |
( |
) |
( |
) |
September 30, |
December 31, | ||||||
(In millions) |
2019 |
2018 | |||||
Fair Values — Current asset (liability): |
|||||||
Accounts receivable |
$ |
$ |
|||||
Other current liabilities |
( |
) |
( |
) | |||
Fair Values — Long term asset (liability): |
|||||||
Other assets |
$ |
$ |
|||||
Other long term liabilities |
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Amount of gains (losses) deferred to AOCL(1) |
$ |
$ |
$ |
$ |
|||||||||||
Reclassification adjustment for amounts recognized in Cost of Goods Sold ("CGS")(1) |
( |
) |
( |
) |
(1) |
Excluded components deferred to AOCL and excluded components reclassified from AOCL to CGS for the three and nine months ended September 30, 2019 were not material. |
Total Carrying Value in the Consolidated Balance Sheet |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 |
2019 |
2018 |
2019 |
2018 | |||||||||||||||||||||||
Assets: |
|||||||||||||||||||||||||||||||
Investments |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Foreign Exchange Contracts |
|||||||||||||||||||||||||||||||
Total Assets at Fair Value |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Liabilities: |
|||||||||||||||||||||||||||||||
Foreign Exchange Contracts |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Total Liabilities at Fair Value |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
September 30, |
December 31, | ||||||
(In millions) |
2019 |
2018 | |||||
Fixed Rate Debt:(1) |
|||||||
Carrying amount — liability |
$ |
$ |
|||||
Fair value — liability |
|||||||
Variable Rate Debt:(1) |
|||||||
Carrying amount — liability |
$ |
$ |
|||||
Fair value — liability |
(1) |
Excludes Notes Payable and Overdrafts of $ |
U.S. |
U.S. | ||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Service cost |
$ |
$ |
$ |
$ |
|||||||||||
Interest cost |
|||||||||||||||
Expected return on plan assets |
( |
) |
( |
) |
( |
) |
( |
) | |||||||
Amortization of net losses |
|||||||||||||||
Net periodic pension cost |
$ |
$ |
$ |
$ |
|||||||||||
Net curtailments/settlements/termination benefits |
|||||||||||||||
Total defined benefit pension cost |
$ |
$ |
$ |
$ |
Non-U.S. |
Non-U.S. | ||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
September 30, |
September 30, | ||||||||||||||
(In millions) |
2019 |
2018 |
2019 |
2018 | |||||||||||
Service cost |
$ |
$ |
$ |
$ |
|||||||||||
Interest cost |
|||||||||||||||
Expected return on plan assets |
( |
) |
( |
) |
( |
) |
( |
) | |||||||
Amortization of prior service cost |
|||||||||||||||
Amortization of net losses |
|||||||||||||||
Net periodic pension cost |
$ |
$ |
$ |
$ |
|||||||||||
Net curtailments/settlements/termination benefits |
|||||||||||||||
Total defined benefit pension cost |
$ |
$ |
$ |
$ |
Nine Months Ended |
Year Ended | ||||||
(Dollars in millions) |
September 30, 2019 |
December 31, 2018 | |||||
Pending claims, beginning of period |
|||||||
New claims filed |
|||||||
Claims settled/dismissed |
( |
) |
( |
) | |||
Pending claims, end of period |
|||||||
Payments (1) |
$ |
$ |
(1) |
Represents cash payments made during the period by us and our insurers on asbestos litigation defense and claim resolution. |
(In millions) Income (Loss) |
Foreign Currency Translation Adjustment |
Unrecognized Net Actuarial Losses and Prior Service Costs |
Deferred Derivative Gains (Losses) |
Total | |||||||||||
Balance at December 31, 2018 |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
( |
) | |||||
Other comprehensive income (loss) before reclassifications, net of tax |
( |
) |
( |
) | |||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax |
( |
) |
|||||||||||||
Balance at September 30, 2019 |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
( |
) | |||||
(In millions) Income (Loss) |
Foreign Currency Translation Adjustment |
Unrecognized Net Actuarial Losses and Prior Service Costs |
Deferred Derivative Gains (Losses) |
Total | |||||||||||
Balance at December 31, 2017 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
Other comprehensive income (loss) before reclassifications, net of tax |
( |
) |
( |
) |
( |
) | |||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax |
|||||||||||||||
Balance at September 30, 2018 |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
( |
) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||
(In millions) (Income) Expense |
Amount Reclassified |
Amount Reclassified |
Affected Line Item in the Consolidated Statements of Operations | |||||||||||||||
Component of AOCL |
from AOCL |
from AOCL |
||||||||||||||||
Amortization of prior service cost and unrecognized gains and losses |
$ |
$ |
$ |
$ |
Other (Income) Expense | |||||||||||||
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements, and divestitures |
Other (Income) Expense | |||||||||||||||||
Unrecognized Net Actuarial Losses and Prior Service Costs, before tax |
||||||||||||||||||
Tax effect |
( |
) |
( |
) |
( |
) |
( |
) |
United States and Foreign Taxes | |||||||||
Net of tax |
$ |
$ |
$ |
$ |
Goodyear Net Income | |||||||||||||
Deferred Derivative (Gains) Losses, before tax |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
Cost of Goods Sold | |||||||||
Tax effect |
( |
) |
United States and Foreign Taxes | |||||||||||||||
Net of tax |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
Goodyear Net Income | |||||||||
Total reclassifications |
$ |
$ |
$ |
$ |
Goodyear Net Income |
(i) |
The Goodyear Tire & Rubber Company (the “Parent Company”), the issuer of the guaranteed obligations; |
(ii) |
Guarantor Subsidiaries, on a combined basis, as specified in the indentures related to Goodyear’s obligations under the notes; |
(iii) |
Non-Guarantor Subsidiaries, on a combined basis; |
(iv) |
Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries, (b) eliminate the investments in our subsidiaries, and (c) record consolidating entries; and |
(v) |
The Goodyear Tire & Rubber Company and Subsidiaries on a consolidated basis. |
Condensed Consolidating Balance Sheet | |||||||||||||||||||
September 30, 2019 | |||||||||||||||||||
(In millions) |
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating Entries and Eliminations |
Consolidated | ||||||||||||||
Assets: |
|||||||||||||||||||
Current Assets: |
|||||||||||||||||||
Cash and Cash Equivalents |
$ |
$ |
$ |
$ |
$ |
||||||||||||||
Accounts Receivable, net |
|||||||||||||||||||
Accounts Receivable From Affiliates |
( |
) |
|||||||||||||||||
Inventories |
( |
) |
|||||||||||||||||
Prepaid Expenses and Other Current Assets |
|||||||||||||||||||
Total Current Assets |
( |
) |
|||||||||||||||||
Goodwill |
|||||||||||||||||||
Intangible Assets |
|||||||||||||||||||
Deferred Income Taxes |
|||||||||||||||||||
Other Assets |
|||||||||||||||||||
Investments in Subsidiaries |
( |
) |
|||||||||||||||||
Operating Lease Right-of-Use Assets |
|||||||||||||||||||
Property, Plant and Equipment, net |
( |
) |
|||||||||||||||||
Total Assets |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Liabilities: |
|||||||||||||||||||
Current Liabilities: |
|||||||||||||||||||
Accounts Payable — Trade |
$ |
$ |
$ |
$ |
$ |
||||||||||||||
Accounts Payable to Affiliates |
( |
) |
|||||||||||||||||
Compensation and Benefits |
|||||||||||||||||||
Other Current Liabilities |
( |
) |
|||||||||||||||||
Notes Payable and Overdrafts |
|||||||||||||||||||
Operating Lease Liabilities due Within One Year |
|||||||||||||||||||
Long Term Debt and Finance Leases due Within One Year |
|||||||||||||||||||
Total Current Liabilities |
( |
) |
|||||||||||||||||
Operating Lease Liabilities |
|||||||||||||||||||
Long Term Debt and Finance Leases |
|||||||||||||||||||
Compensation and Benefits |
|||||||||||||||||||
Deferred Income Taxes |
|||||||||||||||||||
Other Long Term Liabilities |
|||||||||||||||||||
Total Liabilities |
( |
) |
|||||||||||||||||
Commitments and Contingent Liabilities |
|||||||||||||||||||
Shareholders’ Equity: |
|||||||||||||||||||
Goodyear Shareholders’ Equity: |
|||||||||||||||||||
Common Stock |
|||||||||||||||||||
Other Equity |
( |
) |
|||||||||||||||||
Goodyear Shareholders’ Equity |
( |
) |
|||||||||||||||||
Minority Shareholders’ Equity — Nonredeemable |
|||||||||||||||||||
Total Shareholders’ Equity |
( |
) |
|||||||||||||||||
Total Liabilities and Shareholders’ Equity |
$ |
$ |
$ |
$ |
( |
) |
$ |
Condensed Consolidating Balance Sheet | |||||||||||||||||||
December 31, 2018 | |||||||||||||||||||
(In millions) |
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating Entries and Eliminations |
Consolidated | ||||||||||||||
Assets: |
|||||||||||||||||||
Current Assets: |
|||||||||||||||||||
Cash and Cash Equivalents |
$ |
$ |
$ |
$ |
$ |
||||||||||||||
Accounts Receivable, net |
|||||||||||||||||||
Accounts Receivable From Affiliates |
( |
) |
|||||||||||||||||
Inventories |
( |
) |
|||||||||||||||||
Prepaid Expenses and Other Current Assets |
|||||||||||||||||||
Total Current Assets |
( |
) |
|||||||||||||||||
Goodwill |
|||||||||||||||||||
Intangible Assets |
|||||||||||||||||||
Deferred Income Taxes |
|||||||||||||||||||
Other Assets |
|||||||||||||||||||
Investments in Subsidiaries |
( |
) |
|||||||||||||||||
Operating Lease Right-of-Use Assets |
|||||||||||||||||||
Property, Plant and Equipment, net |
( |
) |
|||||||||||||||||
Total Assets |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Liabilities: |
|||||||||||||||||||
Current Liabilities: |
|||||||||||||||||||
Accounts Payable — Trade |
$ |
$ |
$ |
$ |
$ |
||||||||||||||
Accounts Payable to Affiliates |
( |
) |
|||||||||||||||||
Compensation and Benefits |
|||||||||||||||||||
Other Current Liabilities |
( |
) |
|||||||||||||||||
Notes Payable and Overdrafts |
|||||||||||||||||||
Operating Lease Liabilities due Within One Year |
|||||||||||||||||||
Long Term Debt and Finance Leases Due Within One Year |
|||||||||||||||||||
Total Current Liabilities |
( |
) |
|||||||||||||||||
Operating Lease Liabilities |
|||||||||||||||||||
Long Term Debt and Finance Leases |
|||||||||||||||||||
Compensation and Benefits |
|||||||||||||||||||
Deferred Income Taxes |
|||||||||||||||||||
Other Long Term Liabilities |
|||||||||||||||||||
Total Liabilities |
( |
) |
|||||||||||||||||
Commitments and Contingent Liabilities |
|||||||||||||||||||
Shareholders’ Equity: |
|||||||||||||||||||
Goodyear Shareholders’ Equity: |
|||||||||||||||||||
Common Stock |
|||||||||||||||||||
Other Equity |
( |
) |
|||||||||||||||||
Goodyear Shareholders’ Equity |
( |
) |
|||||||||||||||||
Minority Shareholders’ Equity — Nonredeemable |
|||||||||||||||||||
Total Shareholders’ Equity |
( |
) |
|||||||||||||||||
Total Liabilities and Shareholders’ Equity |
$ |
$ |
$ |
$ |
( |
) |
$ |
Consolidating Statements of Operations | |||||||||||||||||||
Three Months Ended September 30, 2019 | |||||||||||||||||||
(In millions) |
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating Entries and Eliminations |
Consolidated | ||||||||||||||
Net Sales |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Cost of Goods Sold |
( |
) |
|||||||||||||||||
Selling, Administrative and General Expense |
|||||||||||||||||||
Rationalizations |
|||||||||||||||||||
Interest Expense |
( |
) |
|||||||||||||||||
Other (Income) Expense |
( |
) |
|||||||||||||||||
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries |
( |
) |
|||||||||||||||||
United States and Foreign Taxes |
|||||||||||||||||||
Equity in Earnings of Subsidiaries |
( |
) |
|||||||||||||||||
Net Income (Loss) |
( |
) |
|||||||||||||||||
Less: Minority Shareholders’ Net Income |
|||||||||||||||||||
Goodyear Net Income (Loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Comprehensive Income (Loss) |
$ |
$ |
$ |
( |
) |
$ |
$ |
||||||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders |
( |
) |
( |
) | |||||||||||||||
Goodyear Comprehensive Income (Loss) |
$ |
$ |
$ |
( |
) |
$ |
$ |
Consolidating Statements of Operations | |||||||||||||||||||
Three Months Ended September 30, 2018 | |||||||||||||||||||
(In millions) |
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating Entries and Eliminations |
Consolidated | ||||||||||||||
Net Sales |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Cost of Goods Sold |
( |
) |
|||||||||||||||||
Selling, Administrative and General Expense |
|||||||||||||||||||
Rationalizations |
|||||||||||||||||||
Interest Expense |
( |
) |
|||||||||||||||||
Other (Income) Expense |
( |
) |
( |
) | |||||||||||||||
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries |
( |
) |
|||||||||||||||||
United States and Foreign Taxes |
( |
) |
|||||||||||||||||
Equity in Earnings of Subsidiaries |
( |
) |
|||||||||||||||||
Net Income (Loss) |
( |
) |
|||||||||||||||||
Less: Minority Shareholders’ Net Income |
|||||||||||||||||||
Goodyear Net Income (Loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Comprehensive Income (Loss) |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
||||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders |
( |
) |
( |
) | |||||||||||||||
Goodyear Comprehensive Income (Loss) |
$ |
$ |
( |
) |
$ |
$ |
$ |
Consolidating Statements of Operations | |||||||||||||||||||
Nine Months Ended September 30, 2019 | |||||||||||||||||||
(In millions) |
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating Entries and Eliminations |
Consolidated | ||||||||||||||
Net Sales |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Cost of Goods Sold |
( |
) |
|||||||||||||||||
Selling, Administrative and General Expense |
|||||||||||||||||||
Rationalizations |
|||||||||||||||||||
Interest Expense |
( |
) |
|||||||||||||||||
Other (Income) Expense |
( |
) |
|||||||||||||||||
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries |
( |
) |
( |
) |
|||||||||||||||
United States and Foreign Taxes |
( |
) |
( |
) |
|||||||||||||||
Equity in Earnings of Subsidiaries |
( |
) |
( |
) |
|||||||||||||||
Net Income (Loss) |
( |
) |
|||||||||||||||||
Less: Minority Shareholders’ Net Income |
|||||||||||||||||||
Goodyear Net Income (Loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Comprehensive Income (Loss) |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders |
|||||||||||||||||||
Goodyear Comprehensive Income (Loss) |
$ |
$ |
( |
) |
$ |
$ |
$ |
Consolidating Statements of Operations | |||||||||||||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||||||
(In millions) |
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating Entries and Eliminations |
Consolidated | ||||||||||||||
Net Sales |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Cost of Goods Sold |
( |
) |
|||||||||||||||||
Selling, Administrative and General Expense |
|||||||||||||||||||
Rationalizations |
|||||||||||||||||||
Interest Expense |
( |
) |
|||||||||||||||||
Other (Income) Expense |
( |
) |
( |
) | |||||||||||||||
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries |
( |
) |
( |
) |
|||||||||||||||
United States and Foreign Taxes |
( |
) |
|||||||||||||||||
Equity in Earnings of Subsidiaries |
( |
) |
|||||||||||||||||
Net Income (Loss) |
( |
) |
|||||||||||||||||
Less: Minority Shareholders’ Net Income |
|||||||||||||||||||
Goodyear Net Income (Loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Comprehensive Income (Loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders |
( |
) |
( |
) | |||||||||||||||
Goodyear Comprehensive Income (Loss) |
$ |
$ |
$ |
$ |
( |
) |
$ |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||||
Nine Months Ended September 30, 2019 | |||||||||||||||||||
(In millions) |
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating Entries and Eliminations |
Consolidated | ||||||||||||||
Cash Flows from Operating Activities: |
|||||||||||||||||||
Total Cash Flows from Operating Activities |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||
Cash Flows from Investing Activities: |
|||||||||||||||||||
Capital Expenditures |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||
Asset Dispositions |
|||||||||||||||||||
Short Term Securities Acquired |
( |
) |
( |
) | |||||||||||||||
Short Term Securities Redeemed |
|||||||||||||||||||
Capital Contributions and Loans Incurred |
( |
) |
|||||||||||||||||
Capital Redemptions and Loans Paid |
( |
) |
|||||||||||||||||
Notes Receivable |
( |
) |
( |
) | |||||||||||||||
Other Transactions |
( |
) |
( |
) | |||||||||||||||
Total Cash Flows from Investing Activities |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||||||
Short Term Debt and Overdrafts Incurred |
|||||||||||||||||||
Short Term Debt and Overdrafts Paid |
( |
) |
( |
) |
( |
) | |||||||||||||
Long Term Debt Incurred |
|||||||||||||||||||
Long Term Debt Paid |
( |
) |
( |
) |
( |
) | |||||||||||||
Common Stock Issued |
|||||||||||||||||||
Common Stock Repurchased |
|||||||||||||||||||
Common Stock Dividends Paid |
( |
) |
( |
) | |||||||||||||||
Capital Contributions and Loans Incurred |
( |
) |
|||||||||||||||||
Capital Redemptions and Loans Paid |
( |
) |
( |
) |
|||||||||||||||
Intercompany Dividends Paid |
( |
) |
|||||||||||||||||
Transactions with Minority Interests in Subsidiaries |
( |
) |
( |
) | |||||||||||||||
Debt Related Costs and Other Transactions |
( |
) |
( |
) | |||||||||||||||
Total Cash Flows from Financing Activities |
( |
) |
|||||||||||||||||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash |
( |
) |
( |
) | |||||||||||||||
Net Change in Cash, Cash Equivalents and Restricted Cash |
( |
) |
|||||||||||||||||
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period |
|||||||||||||||||||
Cash, Cash Equivalents and Restricted Cash at End of the Period |
$ |
$ |
$ |
$ |
$ |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||||||
(In millions) |
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating Entries and Eliminations |
Consolidated | ||||||||||||||
Cash Flows from Operating Activities: |
|||||||||||||||||||
Total Cash Flows from Operating Activities |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||
Cash Flows from Investing Activities: |
|||||||||||||||||||
Capital Expenditures |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||
Asset Dispositions |
|||||||||||||||||||
Short Term Securities Acquired |
( |
) |
( |
) | |||||||||||||||
Short Term Securities Redeemed |
|||||||||||||||||||
Capital Contributions and Loans Incurred |
( |
) |
( |
) |
|||||||||||||||
Capital Redemptions and Loans Paid |
( |
) |
|||||||||||||||||
Notes Receivable |
( |
) |
( |
) | |||||||||||||||
Other Transactions |
( |
) |
( |
) | |||||||||||||||
Total Cash Flows from Investing Activities |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||||||
Short Term Debt and Overdrafts Incurred |
|||||||||||||||||||
Short Term Debt and Overdrafts Paid |
( |
) |
( |
) |
( |
) | |||||||||||||
Long Term Debt Incurred |
|||||||||||||||||||
Long Term Debt Paid |
( |
) |
( |
) |
( |
) | |||||||||||||
Common Stock Issued |
|||||||||||||||||||
Common Stock Repurchased |
( |
) |
( |
) | |||||||||||||||
Common Stock Dividends Paid |
( |
) |
( |
) | |||||||||||||||
Capital Contributions and Loans Incurred |
( |
) |
|||||||||||||||||
Capital Redemptions and Loans Paid |
( |
) |
( |
) |
( |
) |
|||||||||||||
Intercompany Dividends Paid |
( |
) |
|||||||||||||||||
Transactions with Minority Interests in Subsidiaries |
( |
) |
( |
) | |||||||||||||||
Debt Related Costs and Other Transactions |
( |
) |
( |
) | |||||||||||||||
Total Cash Flows from Financing Activities |
( |
) |
|||||||||||||||||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash |
( |
) |
( |
) |
( |
) | |||||||||||||
Net Change in Cash, Cash Equivalents and Restricted Cash |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period |
|||||||||||||||||||
Cash, Cash Equivalents and Restricted Cash at End of the Period |
$ |
$ |
$ |
$ |
$ |
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||
Percent |
Percent | ||||||||||||||||||||||||||||
(In millions) |
2019 |
2018 |
Change |
Change |
2019 |
2018 |
Change |
Change | |||||||||||||||||||||
Tire Units |
17.9 |
17.8 |
0.1 |
0.9 |
% |
51.7 |
51.8 |
(0.1 |
) |
(0.2 |
)% | ||||||||||||||||||
Net Sales |
$ |
2,049 |
$ |
2,107 |
$ |
(58 |
) |
(2.8 |
)% |
$ |
5,896 |
$ |
6,054 |
$ |
(158 |
) |
(2.6 |
)% | |||||||||||
Operating Income |
175 |
194 |
(19 |
) |
(9.8 |
)% |
398 |
475 |
(77 |
) |
(16.2 |
)% | |||||||||||||||||
Operating Margin |
8.5 |
% |
9.2 |
% |
6.8 |
% |
7.8 |
% |
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||
Percent |
Percent | ||||||||||||||||||||||||||||
(In millions) |
2019 |
2018 |
Change |
Change |
2019 |
2018 |
Change |
Change | |||||||||||||||||||||
Tire Units |
14.5 |
15.2 |
(0.7 |
) |
(5.6 |
)% |
42.1 |
44.1 |
(2.0 |
) |
(4.7 |
)% | |||||||||||||||||
Net Sales |
$ |
1,205 |
$ |
1,290 |
$ |
(85 |
) |
(6.6 |
)% |
$ |
3,567 |
$ |
3,880 |
$ |
(313 |
) |
(8.1 |
)% | |||||||||||
Operating Income |
66 |
111 |
(45 |
) |
(40.5 |
)% |
164 |
289 |
(125 |
) |
(43.3 |
)% | |||||||||||||||||
Operating Margin |
5.5 |
% |
8.6 |
% |
4.6 |
% |
7.4 |
% |
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||
Percent |
Percent | ||||||||||||||||||||||||||||
(In millions) |
2019 |
2018 |
Change |
Change |
2019 |
2018 |
Change |
Change | |||||||||||||||||||||
Tire Units |
7.9 |
7.5 |
0.4 |
5.4 |
% |
21.9 |
22.6 |
(0.7 |
) |
(3.0 |
)% | ||||||||||||||||||
Net Sales |
$ |
548 |
$ |
531 |
$ |
17 |
3.2 |
% |
$ |
1,569 |
$ |
1,665 |
$ |
(96 |
) |
(5.8 |
)% | ||||||||||||
Operating Income |
53 |
57 |
(4 |
) |
(7.0 |
)% |
141 |
203 |
(62 |
) |
(30.5 |
)% | |||||||||||||||||
Operating Margin |
9.7 |
% |
10.7 |
% |
9.0 |
% |
12.2 |
% |
September 30, |
December 31, | ||||||
(In millions) |
2019 |
2018 | |||||
First lien revolving credit facility |
$ |
1,411 |
$ |
1,633 |
|||
European revolving credit facility |
515 |
629 |
|||||
Chinese credit facilities |
285 |
199 |
|||||
Mexican credit facilities |
— |
140 |
|||||
Other domestic and international debt |
78 |
221 |
|||||
Notes payable and overdrafts |
232 |
329 |
|||||
$ |
2,521 |
$ |
3,151 |
• |
We become subject to the financial covenant contained in our first lien revolving credit facility when the aggregate amount of our Parent Company (The Goodyear Tire & Rubber Company) and guarantor subsidiaries cash and cash equivalents (“Available Cash”) plus our availability under our first lien revolving credit facility is less than $200 million. If this were to occur, our ratio of EBITDA to Consolidated Interest Expense may not be less than 2.0 to 1.0 for the most recent period of four consecutive fiscal quarters. As of September 30, 2019, our availability under this facility of $1,411 million, plus our Available Cash of $177 million, totaled $1,588 million, which is in excess of $200 million. |
• |
We become subject to a covenant contained in our second lien credit facility upon certain asset sales. The covenant provides that, before we use cash proceeds from certain asset sales to repay any junior lien, senior unsecured or subordinated indebtedness, we must first offer to use such cash proceeds to prepay borrowings under the second lien credit facility unless our ratio of Consolidated Net Secured Indebtedness to EBITDA (Pro Forma Senior Secured Leverage Ratio) for any period of four consecutive fiscal quarters is equal to or less than 3.0 to 1.0. |
• |
if we do not successfully implement our strategic initiatives, our operating results, financial condition and liquidity may be materially adversely affected; |
• |
we face significant global competition and our market share could decline; |
• |
deteriorating economic conditions in any of our major markets, or an inability to access capital markets or third-party financing when necessary, may materially adversely affect our operating results, financial condition and liquidity; |
• |
raw material and energy costs may materially adversely affect our operating results and financial condition; |
• |
if we experience a labor strike, work stoppage or other similar event our business, results of operations, financial condition and liquidity could be materially adversely affected; |
• |
we could be negatively impacted by the imposition of tariffs on tires and other goods; |
• |
our international operations have certain risks that may materially adversely affect our operating results, financial condition and liquidity; |
• |
we have foreign currency translation and transaction risks that may materially adversely affect our operating results, financial condition and liquidity; |
• |
our long term ability to meet our obligations, to repay maturing indebtedness or to implement strategic initiatives may be dependent on our ability to access capital markets in the future and to improve our operating results; |
• |
financial difficulties, work stoppages, supply disruptions or economic conditions affecting our major customers, dealers or suppliers could harm our business; |
• |
our capital expenditures may not be adequate to maintain our competitive position and may not be implemented in a timely or cost-effective manner; |
• |
we have a substantial amount of debt, which could restrict our growth, place us at a competitive disadvantage or otherwise materially adversely affect our financial health; |
• |
any failure to be in compliance with any material provision or covenant of our debt instruments, or a material reduction in the borrowing base under our revolving credit facility, could have a material adverse effect on our liquidity and operations; |
• |
our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly; |
• |
we have substantial fixed costs and, as a result, our operating income fluctuates disproportionately with changes in our net sales; |
• |
we may incur significant costs in connection with our contingent liabilities and tax matters; |
• |
our reserves for contingent liabilities and our recorded insurance assets are subject to various uncertainties, the outcome of which may result in our actual costs being significantly higher than the amounts recorded; |
• |
we are subject to extensive government regulations that may materially adversely affect our operating results; |
• |
we may be adversely affected by any disruption in, or failure of, our information technology systems due to computer viruses, unauthorized access, cyber-attack, natural disasters or other similar disruptions; |
• |
if we are unable to attract and retain key personnel, our business could be materially adversely affected; and |
• |
we may be impacted by economic and supply disruptions associated with events beyond our control, such as war, acts of terror, political unrest, public health concerns, labor disputes or natural disasters. |
(In millions) |
|||
Carrying amount — liability |
$ |
3,424 |
|
Fair value — liability |
3,477 |
||
Pro forma fair value — liability |
3,561 |
(In millions) |
|||
Fair value — asset (liability) |
$ |
39 |
|
Pro forma decrease in fair value |
(189 |
) | |
Contract maturities |
10/19-9/21 |
(In millions) |
|||
Current asset (liability): |
|||
Accounts receivable |
$ |
39 |
|
Other current liabilities |
(4 |
) | |
Long term asset (liability): |
|||
Other assets |
$ |
4 |
|
Other long term liabilities |
— |
Exhibit |
||||
Table |
||||
Item |
Exhibit | |||
No. |
Description of Exhibit |
Number | ||
31 |
Rule 13a-14(a) Certifications |
|||
(a) |
31.1 | |||
(b) |
31.2 | |||
32 |
Section 1350 Certifications |
|||
(a) |
32.1 | |||
101 |
Interactive Data Files |
|||
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.INS | |||
Inline XBRL Taxonomy Extension Schema Document. |
101.SCH | |||
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.CAL | |||
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.DEF | |||
Inline XBRL Taxonomy Extension Label Linkbase Document. |
101.LAB | |||
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
101.PRE | |||
104 |
Cover Page Interactive Data File |
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The cover page from the Company's Quarterly Report on Form10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL (included as Exhibit 101). |
THE GOODYEAR TIRE & RUBBER COMPANY |
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(Registrant) |
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Date: |
October 25, 2019 |
By |
/s/ EVAN M. SCOCOS |
|
Evan M. Scocos, Vice President and Controller (Signing on behalf of the Registrant as a duly authorized officer of the Registrant and signing as the Principal Accounting Officer of the Registrant.) |
1. |
I have reviewed this Quarterly Report on Form 10-Q of The Goodyear Tire & Rubber
Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles; |
c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over
financial reporting; and |
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal control over financial
reporting. |
/s/ R
ICHARD J.
KRAMER |
|
Richard J. Kramer Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) |
1. |
I have reviewed this Quarterly Report on Form 10-Q of The Goodyear Tire & Rubber
Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles; |
c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over
financial reporting; and |
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal control over financial
reporting. |
/s/
DARREN R. WELLS |
|
Darren R. Wells Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
(1) |
the 10-Q Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and |
(2) |
the information contained in the 10-Q Report fairly presents, in all material respects, the financial
condition and results of operations of the Company. |
Dated: |
October 25, 2019 |
/s/ R
ICHARD J.
KRAMER |
|
Richard J. Kramer Chairman of the Board, President and Chief Executive Officer The Goodyear Tire & Rubber
Company |
|||
Dated: |
October 25, 2019 |
/s/
DARREN R. WELLS |
|
Darren R. Wells Executive Vice President and Chief Financial Officer The Goodyear Tire & Rubber Company |
Fair Value Measurements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following table presents information about assets and liabilities recorded at fair value on the Consolidated Balance Sheets at September 30, 2019 and December 31, 2018:
The following table presents supplemental fair value information about long term fixed rate and variable rate debt, excluding finance leases, at September 30, 2019 and December 31, 2018:
Long term debt with fair values of $3,717 million and $3,496 million at September 30, 2019 and December 31, 2018, respectively, were estimated using quoted Level 1 market prices. The carrying value of the remaining long term debt approximates fair value since the terms of the financing arrangements are similar to terms that could be obtained under current lending market conditions.
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Net Sales |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET SALES | NET SALES The following tables show disaggregated net sales from contracts with customers by major source:
Tire unit sales consist of consumer, commercial, farm and off-the-road tire sales, including the sale of new Company-branded tires through Company-owned retail channels. Other tire and related sales consist of aviation, race, motorcycle and all-terrain vehicle tire sales, retread sales and other tire related sales. Sales of tires in this category are not included in reported tire unit information. Retail services and service related sales consist of automotive services performed for customers through our Company-owned retail channels, and includes service related products. Chemical sales relate to the sale of synthetic rubber and other chemicals to third parties, and exclude intercompany sales. Other sales include items such as franchise fees and ancillary tire parts, such as tire rims, tire valves and valve stems. When we receive consideration from a customer prior to transferring goods or services under the terms of a sales contract, we record deferred revenue, which represents a contract liability. Deferred revenue included in Other Current Liabilities in the Consolidated Balance Sheets totaled $32 million and $39 million at September 30, 2019 and December 31, 2018, respectively. Deferred revenue included in Other Long Term Liabilities in the Consolidated Balance Sheets totaled $30 million and $39 million at September 30, 2019 and December 31, 2018, respectively. We recognize deferred revenue after we have transferred control of the goods or services to the customer and all revenue recognition criteria are met. The following table presents the balance of deferred revenue related to contracts with customers, and changes during the nine months ended September 30, 2019:
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Earnings Per Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share are computed based on the weighted average number of common shares outstanding. Diluted earnings per share are calculated to reflect the potential dilution that could occur if securities or other contracts were exercised or converted into common stock. Basic and diluted earnings per common share are calculated as follows:
Weighted average shares outstanding - diluted excludes approximately 3 million and 2 million equivalent shares related to options with exercise prices greater than the average market price of our common shares (i.e., "underwater" options) for the three and nine months ended September 30, 2019, respectively. There were approximately 2 million equivalent shares related to options with exercise prices greater than the average market price of our common shares for the three and nine months ended September 30, 2018.
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Pension Savings And Other Postretirement Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Cost | Defined benefit pension cost follows:
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Business Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Reporting Information |
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Charges and Credits Attributable to the SBUs | Rationalizations, as described in Note to the Consolidated Financial Statements No. 3, Costs Associated with Rationalization Programs, in this Form 10-Q, net (gains) losses on asset sales, as described in Note to the Consolidated Financial Statements No. 4, Other (Income) Expense, in this Form 10-Q, and asset write-offs and accelerated depreciation were not charged to the strategic business units ("SBUs") for performance evaluation purposes but were attributable to the SBUs as follows:
(1) Americas Net (Gains) Losses on Asset Sales for the three and nine months ended September 30, 2018 include gains of $287 million and $273 million, respectively, related to the TireHub transaction, net of transaction costs.
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Leases - Supplemental Cash Flow Information (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Cash Paid for Amounts Included in the Measurement of Lease Liabilities | |
Operating Cash Flows for Operating Leases | $ 201 |
Operating Cash Flows for Finance Leases | 16 |
Financing Cash Flows for Finance Leases | 5 |
ROU Assets Obtained in Exchange for Lease Obligations | |
Operating Leases | 124 |
Finance Leases | $ 34 |
Commitments and Contingent Liabilities - Summary of Asbestos Claims Activity (Details) - Asbestos Related Product Liability $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2019
USD ($)
claim
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Dec. 31, 2018
USD ($)
claim
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Number of claims filed | ||
Pending claims, beginning of period | 43,100 | 54,300 |
New claims filed | 1,200 | 1,300 |
Claims settled/dismissed | (4,400) | (12,500) |
Pending claims, end of period | 39,900 | 43,100 |
Payments | $ | $ 17 | $ 18 |
Pension, Savings and Other Postretirement Benefit Plans - Defined Benefit Pension Cost (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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U.S. | ||||
Defined Benefit Plan, Net Periodic Benefit Cost | ||||
Service cost | $ 0 | $ 1 | $ 2 | $ 3 |
Interest cost | 44 | 39 | 130 | 118 |
Expected return on plan assets | (56) | (55) | (167) | (164) |
Amortization of net losses | 28 | 28 | 84 | 84 |
Net periodic pension cost | 16 | 13 | 49 | 41 |
Net curtailments/settlements/termination benefits | 1 | 0 | 1 | 3 |
Total defined benefit pension cost | 17 | 13 | 50 | 44 |
Non-U.S. | ||||
Defined Benefit Plan, Net Periodic Benefit Cost | ||||
Service cost | 6 | 7 | 20 | 21 |
Interest cost | 17 | 17 | 52 | 52 |
Expected return on plan assets | (14) | (17) | (44) | (53) |
Amortization of prior service cost | 0 | 0 | 1 | 0 |
Amortization of net losses | 8 | 7 | 22 | 22 |
Net periodic pension cost | 17 | 14 | 51 | 42 |
Net curtailments/settlements/termination benefits | 0 | 10 | 0 | 10 |
Total defined benefit pension cost | $ 17 | $ 24 | $ 51 | $ 52 |
Consolidating Financial Information - Narrative (Details) - Senior Notes - USD ($) |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
8.75% due 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 282,000,000 | |
Interest rate, stated percentage | 8.75% | 8.75% |
5.125% due 2023 | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 1,000,000,000.0 | |
Interest rate, stated percentage | 5.125% | 5.125% |
5% due 2026 | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 900,000,000 | |
Interest rate, stated percentage | 5.00% | 5.00% |
4.875% due 2027 | ||
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 700,000,000 | |
Interest rate, stated percentage | 4.875% | 4.875% |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 9 Months Ended | |||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Other Comprehensive Income (Loss): | ||||||
Foreign currency translation, tax | $ (1) | $ 0 | $ 4 | $ (8) | $ 3 | $ (8) |
Defined benefit plans: | ||||||
Amortization of prior service cost and unrecognized gains and (losses) included in total benefit cost, tax | 8 | 8 | 16 | 16 | 24 | 24 |
(Increase)/Decrease in net actuarial losses, tax | (3) | (4) | 4 | 6 | 1 | 2 |
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements, and divestitures, tax | 0 | 2 | 2 | 0 | 4 | |
Prior service (cost) credit from plan amendments, tax | 0 | 0 | 0 | 0 | 0 | |
Deferred derivative gains (losses), tax | 4 | 1 | 0 | 2 | 4 | 3 |
Reclassification adjustment for amounts recognized in income, tax | $ 0 | $ 0 | $ (1) | $ 2 | $ (1) | $ 2 |
Accounting Policies - Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Accounting Policies [Abstract] | ||||
Cash and Cash Equivalents | $ 868 | $ 801 | $ 896 | |
Restricted Cash | 58 | 66 | ||
Total Cash, Cash Equivalents and Restricted Cash | $ 926 | $ 873 | $ 962 | $ 1,110 |
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long term debt | $ 3,717 | $ 3,496 |
Financing Arrangements and Derivative Financial Instruments - Other Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Notes payable | $ 3,302 | $ 3,314 |
Credit arrangements | 9,036 | |
Credit arrangements, unused amount | $ 2,521 | |
Debt, percentage bearing variable interest rate | 42.00% | |
Long-term Debt | ||
Debt Instrument [Line Items] | ||
Credit arrangements | $ 8,301 | |
Credit arrangements, unused amount | 2,289 | |
Short-term Debt | ||
Debt Instrument [Line Items] | ||
Credit arrangements | 735 | |
Credit arrangements, unused amount | $ 232 | |
Variable Rate Credit Arrangements | ||
Debt Instrument [Line Items] | ||
Interest rate | 4.18% |
Capital Stock |
9 Months Ended |
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Sep. 30, 2019 | |
Captial Stock [Abstract] | |
CAPITAL STOCK | CAPITAL STOCK Dividends In the first nine months of 2019, we paid cash dividends of $111 million on our common stock. This amount excludes dividends earned on stock based compensation plans of $1 million for the first nine months of 2019. On October 7, 2019, the Board of Directors (or duly authorized committee thereof) declared cash dividends of $0.16 per share of common stock, or approximately $37 million in the aggregate. The dividend will be paid on December 2, 2019, to stockholders of record as of the close of business on November 1, 2019. Future quarterly dividends are subject to Board approval. Common Stock Repurchases On September 18, 2013, the Board of Directors approved our common stock repurchase program. From time to time, the Board of Directors has approved increases in the amount authorized to be purchased under that program. On February 2, 2017, the Board of Directors approved a further increase in that authorization to an aggregate of $2.1 billion. This program expires on December 31, 2019, and is intended to be used, subject to our cash flow, to repurchase shares of common stock in open market transactions in order to offset new shares issued under equity compensation programs and to provide for additional shareholder returns. During the first nine months of 2019, we did not repurchase any common stock. Since 2013, we repurchased 52,905,959 shares at an average price, including commissions, of $28.99 per share, or $1,534 million in the aggregate. In addition, we may repurchase shares delivered to us by employees as payment for the exercise price of stock options and the withholding taxes due upon the exercise of stock options or the vesting or payment of stock awards. During the first nine months of 2019, we did not repurchase any shares from employees.
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Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The cumulative effect of the changes made to our January 1, 2019 balance sheet for the adoption of the standards update was as follows:
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Schedule of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of Cash, Cash Equivalents and Restricted Cash as reported within the Consolidated Statements of Cash Flows:
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Restrictions on Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of Cash, Cash Equivalents and Restricted Cash as reported within the Consolidated Statements of Cash Flows:
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Fair Value Measurements - Fair Value of Long-Term Fixed Rate and Variable Rate Debt Excluding Capital Leases (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying amount — liability | $ 5,945 | $ 5,316 |
Notes Payable and Overdrafts | 486 | 410 |
Fixed Rate Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying amount — liability | 3,424 | 3,609 |
Fair value — liability | 3,477 | 3,443 |
Notes Payable and Overdrafts | 224 | 230 |
Variable Rate Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying amount — liability | 2,521 | 1,707 |
Fair value — liability | 2,497 | 1,689 |
Notes Payable and Overdrafts | $ 262 | $ 180 |
Commitments and Contingent Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | COMMITMENTS AND CONTINGENT LIABILITIES Environmental Matters We have recorded liabilities totaling $49 million and $45 million at September 30, 2019 and December 31, 2018, respectively, for anticipated costs related to various environmental matters, primarily the remediation of numerous waste disposal sites and certain properties sold by us. Of these amounts, $12 million and $10 million was included in Other Current Liabilities at September 30, 2019 and December 31, 2018, respectively. The costs include legal and consulting fees, site studies, the design and implementation of remediation plans, post-remediation monitoring and related activities, and will be paid over several years. The amount of our ultimate liability in respect of these matters may be affected by several uncertainties, primarily the ultimate cost of required remediation and the extent to which other responsible parties contribute. We have limited potential insurance coverage for future environmental claims. Since many of the remediation activities related to environmental matters vary substantially in duration and cost from site to site and the associated costs for each vary depending on the mix of unique site characteristics, in some cases we cannot reasonably estimate a range of possible losses. Although it is not possible to estimate with certainty the outcome of all of our environmental matters, management believes that potential losses in excess of current reserves for environmental matters, individually and in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations. Workers’ Compensation We have recorded liabilities, on a discounted basis, totaling $220 million and $224 million for anticipated costs related to workers’ compensation at September 30, 2019 and December 31, 2018, respectively. Of these amounts, $35 million and $42 million were included in Current Liabilities as part of Compensation and Benefits at September 30, 2019 and December 31, 2018, respectively. The costs include an estimate of expected settlements on pending claims, defense costs and a provision for claims incurred but not reported. These estimates are based on our assessment of potential liability using an analysis of available information with respect to pending claims, historical experience, and current cost trends. The amount of our ultimate liability in respect of these matters may differ from these estimates. We periodically, and at least annually, update our loss development factors based on actuarial analyses. At September 30, 2019 and December 31, 2018, the liability was discounted using a risk-free rate of return. At September 30, 2019, we estimate that it is reasonably possible that the liability could exceed our recorded amounts by approximately $30 million. General and Product Liability and Other Litigation We have recorded liabilities totaling $340 million and $322 million, including related legal fees expected to be incurred, for potential product liability and other tort claims, including asbestos claims, at September 30, 2019 and December 31, 2018, respectively. Of these amounts, $72 million and $57 million were included in Other Current Liabilities at September 30, 2019 and December 31, 2018, respectively. The amounts recorded were estimated based on an assessment of potential liability using an analysis of available information with respect to pending claims, historical experience and, where available, recent and current trends. Based upon that assessment, at September 30, 2019, we do not believe that estimated reasonably possible losses associated with general and product liability claims in excess of the amounts recorded will have a material adverse effect on our financial position, cash flows or results of operations. However, the amount of our ultimate liability in respect of these matters may differ from these estimates. We have recorded an indemnification asset within Accounts Receivable of $5 million and within Other Assets of $26 million for Sumitomo Rubber Industries, Ltd.'s ("SRI") obligation to indemnify us for certain product liability claims related to products manufactured by a formerly consolidated joint venture entity, subject to certain caps and restrictions. Asbestos. We are a defendant in numerous lawsuits alleging various asbestos-related personal injuries purported to result from alleged exposure to asbestos in certain products manufactured by us or present in certain of our facilities. Typically, these lawsuits have been brought against multiple defendants in state and federal courts. To date, we have disposed of approximately 151,600 claims by defending, obtaining the dismissal thereof, or entering into a settlement. The sum of our accrued asbestos-related liability and gross payments to date, including legal costs, by us and our insurers totaled approximately $557 million through September 30, 2019 and $545 million through December 31, 2018. A summary of recent approximate asbestos claims activity follows. Because claims are often filed and disposed of by dismissal or settlement in large numbers, the amount and timing of settlements and the number of open claims during a particular period can fluctuate significantly.
We periodically, and at least annually, review our existing reserves for pending claims, including a reasonable estimate of the liability associated with unasserted asbestos claims, and estimate our receivables from probable insurance recoveries. We recorded gross liabilities for both asserted and unasserted claims, inclusive of defense costs, totaling $161 million and $166 million at September 30, 2019 and December 31, 2018, respectively. In determining the estimate of our asbestos liability, we evaluated claims over the next ten-year period. Due to the difficulties in making these estimates, analysis based on new data and/or a change in circumstances arising in the future may result in an increase in the recorded obligation, and that increase could be significant. We maintain certain primary and excess insurance coverage under coverage-in-place agreements, and also have additional excess liability insurance with respect to asbestos liabilities. After consultation with our outside legal counsel and giving consideration to agreements with certain of our insurance carriers, the financial viability and legal obligations of our insurance carriers and other relevant factors, we determine an amount we expect is probable of recovery from such carriers. We record a receivable with respect to such policies when we determine that recovery is probable and we can reasonably estimate the amount of a particular recovery. We recorded a receivable related to asbestos claims of $103 million and $108 million at September 30, 2019 and December 31, 2018, respectively. We expect that approximately 65% of asbestos claim related losses would be recoverable through insurance during the ten-year period covered by the estimated liability. Of these amounts, $13 million was included in Current Assets as part of Accounts Receivable at both September 30, 2019 and December 31, 2018, respectively. The recorded receivable consists of an amount we expect to collect under coverage-in-place agreements with certain primary and excess insurance carriers as well as an amount we believe is probable of recovery from certain of our other excess insurance carriers. We believe that, at December 31, 2018, we had approximately $565 million in excess level policy limits applicable to indemnity and defense costs for asbestos products claims under coverage-in-place agreements. We also had additional unsettled excess level policy limits potentially applicable to such costs. We had coverage under certain primary policies for indemnity and defense costs for asbestos products claims under remaining aggregate limits pursuant to a coverage-in-place agreement, as well as coverage for indemnity and defense costs for asbestos premises claims pursuant to coverage-in-place agreements. With respect to both asserted and unasserted claims, it is reasonably possible that we may incur a material amount of cost in excess of the current reserve; however, such amounts cannot be reasonably estimated. Coverage under insurance policies is subject to varying characteristics of asbestos claims including, but not limited to, the type of claim (premise vs. product exposure), alleged date of first exposure to our products or premises and disease alleged. Recoveries may be limited by insurer insolvencies or financial difficulties. Depending upon the nature of these characteristics or events, as well as the resolution of certain legal issues, some portion of the insurance may not be accessible by us. Amiens Labor Claims Approximately 850 former employees of the closed Amiens, France manufacturing facility have asserted wrongful termination or other claims totaling approximately €120 million ($131 million) against Goodyear Dunlop Tires France. We intend to vigorously defend ourselves against these claims, and any additional claims that may be asserted against us, and cannot estimate the amounts, if any, that we may ultimately pay in respect of such claims. Other Actions We are currently a party to various claims, indirect tax assessments and legal proceedings in addition to those noted above. If management believes that a loss arising from these matters is probable and can reasonably be estimated, we record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no point within the range is more probable than another. As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Based on currently available information, management believes that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in results of operations. Our recorded liabilities and estimates of reasonably possible losses for the contingent liabilities described above are based on our assessment of potential liability using the information available to us at the time and, where applicable, any past experience and recent and current trends with respect to similar matters. Our contingent liabilities are subject to inherent uncertainties, and unfavorable judicial or administrative decisions could occur which we did not anticipate. Such an unfavorable decision could include monetary damages, fines or other penalties or an injunction prohibiting us from taking certain actions or selling certain products. If such an unfavorable decision were to occur, it could result in a material adverse impact on our financial position and results of operations in the period in which the decision occurs, or in future periods. Income Tax Matters The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We also recognize income tax benefits to the extent that it is more likely than not that our positions will be sustained when challenged by the taxing authorities. We derecognize income tax benefits when based on new information we determine that it is no longer more likely than not that our position will be sustained. To the extent we prevail in matters for which liabilities have been established, or determine we need to derecognize tax benefits recorded in prior periods, our results of operations and effective tax rate in a given period could be materially affected. An unfavorable tax settlement would require use of our cash, and lead to recognition of expense to the extent the settlement amount exceeds recorded liabilities and, in the case of an income tax settlement, result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction of expense to the extent the settlement amount is lower than recorded liabilities and, in the case of an income tax settlement, would result in a reduction in our effective tax rate in the period of resolution. While the Company applies consistent transfer pricing policies and practices globally, supports transfer prices through economic studies, seeks advance pricing agreements and joint audits to the extent possible and believes its transfer prices to be appropriate, such transfer prices, and related interpretations of tax laws, are occasionally challenged by various taxing authorities globally. We have received various tax assessments challenging our interpretations of applicable tax laws in various jurisdictions. Although we believe we have complied with applicable tax laws, have strong positions and defenses and have historically been successful in defending such claims, our results of operations could be materially adversely affected in the case we are unsuccessful in the defense of existing or future claims. Guarantees We have off-balance sheet financial guarantees and other commitments totaling approximately $71 million and $73 million at September 30, 2019 and December 31, 2018, respectively. We issue guarantees to financial institutions or other entities on behalf of certain of our affiliates, lessors or customers. We generally do not require collateral in connection with the issuance of these guarantees. In 2017, we issued a guarantee of approximately PLN165 million ($41 million) in connection with an indirect tax assessment in EMEA. We have concluded our performance under this guarantee is not probable and, therefore, have not recorded a liability for this guarantee. In 2015, as a result of the dissolution of the global alliance with SRI, we issued a guarantee of approximately $46 million to an insurance company related to SRI's obligation to pay certain outstanding workers' compensation claims of a formerly consolidated joint venture entity. As of September 30, 2019, this guarantee amount has been reduced to $29 million. We have concluded the probability of our performance to be remote and, therefore, have not recorded a liability for this guarantee. While there is no fixed duration of this guarantee, we expect the amount of this guarantee to continue to decrease over time as the formerly consolidated joint venture entity pays its outstanding claims. If our performance under these guarantees is triggered by non-payment or another specified event, we would be obligated to make payment to the financial institution or the other entity, and would typically have recourse to the affiliate, lessor, customer, or SRI. Except for the workers' compensation guarantee described above, the guarantees expire at various times through 2020. We are unable to estimate the extent to which our affiliates’, lessors’, customers’, or SRI's assets would be adequate to recover any payments made by us under the related guarantees.
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Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | The accompanying unaudited consolidated financial statements have been prepared by The Goodyear Tire & Rubber Company (the “Company,” “Goodyear,” “we,” “us” or “our”) in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America ("US GAAP") and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to fairly state the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”). Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2019.
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Recently Issued and Adopted Accounting Standards | Effective January 1, 2019, we adopted an accounting standards update with new guidance intended to increase transparency and comparability among organizations relating to leases. The new guidance requires lessees to recognize a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. The standards update retained a dual model for lease classification, requiring leases to be classified as finance or operating leases to determine recognition in the statements of operations and cash flows; however, substantially all leases are now required to be recognized on the balance sheet. The standards update also requires quantitative and qualitative disclosures regarding key information about leasing arrangements. We elected the optional transition method and applied the new guidance at the date of adoption, without adjusting the comparative periods presented. We also elected the practical expedients permitted under the transition guidance that retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard, and we have elected to not evaluate land easements that existed as of, or expired before, adoption of the new standard. In addition, we did not reassess whether any contracts entered into prior to adoption are leases. The adoption of this standards update had a material impact on our Consolidated Balance Sheets and related disclosures. In addition to recognizing right-of-use assets and lease liabilities for our operating leases, we recorded $23 million as a cumulative effect adjustment to decrease Retained Earnings as a result of using the modified retrospective adoption approach. The adoption of this standards update did not have a material impact on our results of operations or cash flows. The cumulative effect of the changes made to our January 1, 2019 balance sheet for the adoption of the standards update was as follows:
Effective January 1, 2019, we adopted an accounting standards update with new guidance intended to reduce complexity in hedge accounting and make hedge results easier to understand. This includes simplifying how hedge results are presented and disclosed in the financial statements, expanding the types of hedge strategies allowed and providing relief around the documentation and assessment requirements. The adoption of this standards update did not have a material impact on our consolidated financial statements. Effective January 1, 2019, we adopted an accounting standards update that allows an optional one-time reclassification from Accumulated Other Comprehensive Income (Loss) ("AOCL") to Retained Earnings for the stranded tax effects resulting from the new corporate tax rate under the Tax Cuts and Jobs Act (the "Tax Act") that was enacted on December 22, 2017 in the United States. We have elected not to reclassify the income tax effects of the Tax Act from AOCL to Retained Earnings. As such, the adoption of this standards update did not impact our consolidated financial statements. Our policy is to utilize an item-by-item approach to release stranded income tax effects from AOCL. Under this approach, the stranded income tax effects are released from AOCL when the related item ceases to exist. Recently Issued Accounting Standards In August 2018, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update with new guidance requiring a customer in a cloud computing arrangement that is a service contract to follow existing internal-use software guidance to determine which implementation costs to capitalize as an asset. The standards update is effective for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted, and may be applied retrospectively or as of the beginning of the period of adoption. The adoption of this accounting standards update is not expected to have a material impact on our consolidated financial statements. In January 2017, the FASB issued an accounting standards update with new guidance intended to simplify the subsequent measurement of goodwill. The standards update eliminates the requirement for an entity to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, an entity will perform its annual, or interim, goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount by which the carrying amount exceeds the fair value. The standards update is effective prospectively for annual and interim goodwill impairment testing performed in fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of this standards update is not expected to have a material impact on our consolidated financial statements. In June 2016, the FASB issued an accounting standards update with new guidance on accounting for credit losses on financial instruments. The new guidance includes an impairment model for estimating credit losses that is based on expected losses, rather than incurred losses. The standards update is effective prospectively for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted. The adoption of this standards update is not expected to have a material impact on our consolidated financial statements.
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Principles of Consolidation | The consolidated financial statements include the accounts of all legal entities in which we hold a controlling financial interest. A controlling financial interest generally arises from our ownership of a majority of the voting shares of our subsidiaries. We would also hold a controlling financial interest in variable interest entities if we are considered to be the primary beneficiary. Investments in companies in which we do not own a majority interest and we have the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. Investments in other companies are carried at cost. All intercompany balances and transactions have been eliminated in consolidation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash | Restricted Cash, which is included in Prepaid Expenses and Other Current Assets in the Consolidated Balance Sheets, primarily represents amounts required to be set aside in connection with accounts receivable factoring programs. The restrictions lapse when cash from factored accounts receivable is remitted to the purchaser of those receivables.
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Reclassifications and Adjustments | Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation. |
Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTING POLICIES | ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by The Goodyear Tire & Rubber Company (the “Company,” “Goodyear,” “we,” “us” or “our”) in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America ("US GAAP") and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to fairly state the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”). Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2019. Recently Adopted Accounting Standards Effective January 1, 2019, we adopted an accounting standards update with new guidance intended to increase transparency and comparability among organizations relating to leases. The new guidance requires lessees to recognize a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. The standards update retained a dual model for lease classification, requiring leases to be classified as finance or operating leases to determine recognition in the statements of operations and cash flows; however, substantially all leases are now required to be recognized on the balance sheet. The standards update also requires quantitative and qualitative disclosures regarding key information about leasing arrangements. We elected the optional transition method and applied the new guidance at the date of adoption, without adjusting the comparative periods presented. We also elected the practical expedients permitted under the transition guidance that retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard, and we have elected to not evaluate land easements that existed as of, or expired before, adoption of the new standard. In addition, we did not reassess whether any contracts entered into prior to adoption are leases. The adoption of this standards update had a material impact on our Consolidated Balance Sheets and related disclosures. In addition to recognizing right-of-use assets and lease liabilities for our operating leases, we recorded $23 million as a cumulative effect adjustment to decrease Retained Earnings as a result of using the modified retrospective adoption approach. The adoption of this standards update did not have a material impact on our results of operations or cash flows. The cumulative effect of the changes made to our January 1, 2019 balance sheet for the adoption of the standards update was as follows:
Effective January 1, 2019, we adopted an accounting standards update with new guidance intended to reduce complexity in hedge accounting and make hedge results easier to understand. This includes simplifying how hedge results are presented and disclosed in the financial statements, expanding the types of hedge strategies allowed and providing relief around the documentation and assessment requirements. The adoption of this standards update did not have a material impact on our consolidated financial statements. Effective January 1, 2019, we adopted an accounting standards update that allows an optional one-time reclassification from Accumulated Other Comprehensive Income (Loss) ("AOCL") to Retained Earnings for the stranded tax effects resulting from the new corporate tax rate under the Tax Cuts and Jobs Act (the "Tax Act") that was enacted on December 22, 2017 in the United States. We have elected not to reclassify the income tax effects of the Tax Act from AOCL to Retained Earnings. As such, the adoption of this standards update did not impact our consolidated financial statements. Our policy is to utilize an item-by-item approach to release stranded income tax effects from AOCL. Under this approach, the stranded income tax effects are released from AOCL when the related item ceases to exist. Recently Issued Accounting Standards In August 2018, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update with new guidance requiring a customer in a cloud computing arrangement that is a service contract to follow existing internal-use software guidance to determine which implementation costs to capitalize as an asset. The standards update is effective for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted, and may be applied retrospectively or as of the beginning of the period of adoption. The adoption of this accounting standards update is not expected to have a material impact on our consolidated financial statements. In January 2017, the FASB issued an accounting standards update with new guidance intended to simplify the subsequent measurement of goodwill. The standards update eliminates the requirement for an entity to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, an entity will perform its annual, or interim, goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount by which the carrying amount exceeds the fair value. The standards update is effective prospectively for annual and interim goodwill impairment testing performed in fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of this standards update is not expected to have a material impact on our consolidated financial statements. In June 2016, the FASB issued an accounting standards update with new guidance on accounting for credit losses on financial instruments. The new guidance includes an impairment model for estimating credit losses that is based on expected losses, rather than incurred losses. The standards update is effective prospectively for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted. The adoption of this standards update is not expected to have a material impact on our consolidated financial statements. Principles of Consolidation The consolidated financial statements include the accounts of all legal entities in which we hold a controlling financial interest. A controlling financial interest generally arises from our ownership of a majority of the voting shares of our subsidiaries. We would also hold a controlling financial interest in variable interest entities if we are considered to be the primary beneficiary. Investments in companies in which we do not own a majority interest and we have the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. Investments in other companies are carried at cost. All intercompany balances and transactions have been eliminated in consolidation. Restricted Cash The following table provides a reconciliation of Cash, Cash Equivalents and Restricted Cash as reported within the Consolidated Statements of Cash Flows:
Restricted Cash, which is included in Prepaid Expenses and Other Current Assets in the Consolidated Balance Sheets, primarily represents amounts required to be set aside in connection with accounts receivable factoring programs. The restrictions lapse when cash from factored accounts receivable is remitted to the purchaser of those receivables. Reclassifications and Adjustments Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation.
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Income Taxes |
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Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES For the third quarter of 2019, we recorded tax expense of $31 million on income before income taxes of $121 million. For the first nine months of 2019, we recorded tax expense of $63 million on income before income taxes of $165 million. Income tax expense for the three months ended September 30, 2019 was favorably impacted by $6 million of various discrete tax adjustments. Income tax expense for the nine months ended September 30, 2019 includes net discrete charges of $7 million, primarily related to a charge of $6 million to adjust our deferred tax assets in Luxembourg for a newly enacted tax rate during the second quarter of 2019. In the third quarter of 2018, we recorded tax expense of $159 million on income before income taxes of $513 million. For the first nine months of 2018, we recorded tax expense of $211 million on income before income taxes of $809 million. Income tax expense for the three and nine months ended September 30, 2018 includes net discrete charges of $31 million and $10 million, respectively. Net discrete tax charges for the three months ended September 30, 2018 include a charge of $25 million due to proposed regulations released in the third quarter of 2018 that required the reversal of the benefit for foreign tax credits on dividends, primarily from subsidiaries in Japan and Singapore, to the United States recorded in the second quarter of 2018. Net discrete tax charges for the three and nine months ended September 30, 2018 also include charges of $11 million and $14 million, respectively, to adjust our provisional tax obligation for the one-time transition tax imposed by the Tax Act, and benefits of $5 million and $4 million, respectively, for various other discrete tax adjustments. We record taxes based on overall estimated annual effective tax rates. The difference between our effective tax rates and the U.S. statutory rate of 21% for the three and nine months ended September 30, 2019 and September 30, 2018 primarily relates to the discrete items noted above and an overall higher effective tax rate in the foreign jurisdictions in which we operate, partially offset by a benefit from our foreign derived intangible income deduction provided for in the Tax Act. At September 30, 2019, our valuation allowance on certain of our U.S. federal, state and local deferred tax assets was $114 million, primarily related to deferred tax assets for foreign tax credits, and our valuation allowance on our foreign deferred tax assets was $226 million. At December 31, 2018, our valuation allowance on certain U.S. federal, state and local deferred tax assets was $113 million, and our valuation allowance on our foreign deferred tax assets was $204 million. Our net deferred tax assets include approximately $637 million of foreign tax credits, net of valuation allowances of $103 million, generated primarily from the receipt of foreign dividends. Our earnings and forecasts of future profitability along with three significant sources of foreign income provide us sufficient positive evidence to utilize these credits, despite the negative evidence of their limited carryforward periods. Those sources of foreign income are (1) 100% of our domestic profitability can be re-characterized as foreign source income under current U.S. tax law to the extent domestic losses have offset foreign source income in prior years, (2) annual net foreign source income, exclusive of dividends, primarily from royalties and (3) tax planning strategies, including capitalizing research and development costs, accelerating income on cross border sales of inventory or raw materials to our subsidiaries and reducing U.S. interest expense by, for example, reducing intercompany loans through repatriating current year earnings of foreign subsidiaries, all of which would increase our domestic profitability. We considered our current forecasts of future profitability in assessing our ability to realize our foreign tax credits. These forecasts include the impact of recent trends, including various macroeconomic factors such as raw material prices, on our profitability, as well as the impact of tax planning strategies. Macroeconomic factors, including raw material prices, possess a high degree of volatility and can significantly impact our profitability. As such, there is a risk that future foreign source income will not be sufficient to fully utilize these foreign tax credits. However, we believe our forecasts of future profitability along with the three significant sources of foreign income described above provide us sufficient positive evidence to conclude that it is more likely than not that the remaining foreign tax credits, net of valuation allowances, will be fully utilized prior to their various expiration dates. Currently, we are also evaluating the feasibility of certain tax planning actions that would increase the likelihood that we would be able to fully utilize our foreign tax credits prior to their expiration, as well as the related tax consequences. If implemented, these tax planning actions may result in a non-cash increase in tax expense in the period implemented, partially offset by a reduction of our valuation allowances related to foreign tax credits. Our losses in various foreign taxing jurisdictions in recent periods represented sufficient negative evidence to require us to maintain a full valuation allowance against certain of our net deferred tax assets. Each reporting period we assess available positive and negative evidence and estimate if sufficient future taxable income will be generated to utilize these existing deferred tax assets. We do not believe that sufficient positive evidence required to release valuation allowances having a significant impact on our financial position or results of operations will exist within the next twelve months. For the nine months ending September 30, 2019, changes to our unrecognized tax benefits did not, and for the full year of 2019 are not expected to, have a significant impact on our financial position or results of operations. We are open to examination in the United States for 2018 and in Germany from 2016 onward. Generally, for our remaining tax jurisdictions, years from 2013 onward are still open to examination.
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Financing Arrangements and Derivative Financial Instruments |
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Financing Arrangements and Derivative Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCING ARRANGEMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS | FINANCING ARRANGEMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS At September 30, 2019, we had total credit arrangements of $9,036 million, of which $2,521 million were unused. At that date, 42% of our debt was at variable interest rates averaging 4.18%. Notes Payable and Overdrafts, Long Term Debt and Finance Leases due Within One Year and Short Term Financing Arrangements At September 30, 2019, we had short term committed and uncommitted credit arrangements totaling $735 million, of which $232 million were unused. These arrangements are available primarily to certain of our foreign subsidiaries through various banks at quoted market interest rates. The following table presents amounts due within one year:
Long Term Debt and Finance Leases and Financing Arrangements At September 30, 2019, we had long term credit arrangements totaling $8,301 million, of which $2,289 million were unused. The following table presents long term debt and finance leases, net of unamortized discounts, and interest rates:
NOTES At September 30, 2019, we had $3,302 million of outstanding notes, compared to $3,314 million at December 31, 2018. CREDIT FACILITIES $2.0 billion Amended and Restated First Lien Revolving Credit Facility due 2021 Our amended and restated first lien revolving credit facility is available in the form of loans or letters of credit, with letter of credit availability limited to $800 million. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to $250 million. Our obligations under the facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries. Our obligations under the facility and our subsidiaries' obligations under the related guarantees are secured by first priority security interests in a variety of collateral. Based on our current liquidity, amounts drawn under this facility bear interest at LIBOR plus 125 basis points, and undrawn amounts under the facility will be subject to an annual commitment fee of 30 basis points. Availability under the facility is subject to a borrowing base, which is based primarily on (i) eligible accounts receivable and inventory of The Goodyear Tire & Rubber Company and certain of its U.S. and Canadian subsidiaries, (ii) the value of our principal trademarks, and (iii) certain cash in an amount not to exceed $200 million. To the extent that our eligible accounts receivable and inventory and other components of the borrowing base decline in value, our borrowing base will decrease and the availability under the facility may decrease below $2.0 billion. As of September 30, 2019, our borrowing base, and therefore our availability, under this facility was $252 million below the facility's stated amount of $2.0 billion. The 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 business or financial condition since December 31, 2015. The facility also has customary defaults, including a cross-default to material indebtedness of Goodyear and our subsidiaries. At September 30, 2019, we had $300 million of borrowings and $37 million of letters of credit issued under the revolving credit facility. At December 31, 2018, we had no borrowings and $37 million of letters of credit issued under the revolving credit facility. Amended and Restated Second Lien Term Loan Facility due 2025 Our amended and restated second lien term loan facility matures on March 7, 2025. The term loan bears interest, at our option, at (i) 200 basis points over LIBOR or (ii) 100 basis points over an alternative base rate (the higher of (a) the prime rate, (b) the federal funds effective rate or the overnight bank funding rate plus 50 basis points or (c) LIBOR plus 100 basis points). In addition, if the Total Leverage Ratio is equal to or less than 1.25 to 1.00, we have the option to further reduce the spreads described above by 25 basis points. "Total Leverage Ratio" has the meaning given it in the facility. Our obligations under our second lien term loan facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries and are secured by second priority security interests in the same collateral securing the $2.0 billion first lien revolving credit facility. At September 30, 2019 and December 31, 2018, the amounts outstanding under this facility were $400 million. €800 million Amended and Restated Senior Secured European Revolving Credit Facility due 2024 On March 27, 2019, we amended and restated our European revolving credit facility. Significant changes to the European revolving credit facility include extending the maturity to March 27, 2024, increasing the available commitments thereunder from €550 million to €800 million, decreasing the interest rate margin by 25 basis points and decreasing the annual commitment fee by 5 basis points to 25 basis points. Loans will now bear interest at LIBOR plus 150 basis points for loans denominated in U.S. dollars or pounds sterling and EURIBOR plus 150 basis points for loans denominated in euros. The European revolving credit facility consists of (i) a €180 million German tranche that is available only to Goodyear Dunlop Tires Germany GmbH (“GDTG”) and (ii) a €620 million all-borrower tranche that is available to Goodyear Europe B.V. (“GEBV”), GDTG and Goodyear Dunlop Tires Operations S.A. Up to €175 million of swingline loans and €75 million in letters of credit are available for issuance under the all-borrower tranche. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to €200 million. GEBV and certain of its subsidiaries in the United Kingdom, Luxembourg, France and Germany provide guarantees to support the facility. The German guarantors secure the German tranche on a first-lien basis and the all-borrower tranche on a second-lien basis. GEBV and its other subsidiaries that provide guarantees secure the all-borrower tranche on a first-lien basis and generally do not provide collateral support for the German tranche. The Company and its U.S. and Canadian subsidiaries that guarantee our U.S. senior secured credit facilities described above also provide unsecured guarantees in support of the facility. The 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 business or financial condition since December 31, 2018. The facility also has customary defaults, including a cross-default to material indebtedness of Goodyear and our subsidiaries. At September 30, 2019, there were $100 million (€92 million) of borrowings outstanding under the German tranche, $256 million (€235 million) of borrowings outstanding under the all-borrower tranche and no letters of credit outstanding under the European revolving credit facility. At December 31, 2018, there were no borrowings and no letters of credit outstanding under the European revolving credit facility. Accounts Receivable Securitization Facilities (On-Balance Sheet) GEBV and certain other of our European subsidiaries are parties to a pan-European accounts receivable securitization facility that expires in 2023. The terms of the facility provide the flexibility to designate annually the maximum amount of funding available under the facility in an amount of not less than €30 million and not more than €450 million. For the period from October 18, 2018 through October 15, 2020, the designated maximum amount of the facility is €320 million. The facility involves the ongoing daily sale of substantially all of the trade accounts receivable of certain GEBV subsidiaries. These subsidiaries retain servicing responsibilities. Utilization under this facility is based on eligible receivable balances. The funding commitments under the facility will expire upon the earliest to occur of: (a) September 26, 2023, (b) the non-renewal and expiration (without substitution) of all of the back-up liquidity commitments, (c) the early termination of the facility according to its terms (generally upon an Early Amortisation Event (as defined in the facility), which includes, among other things, events similar to the events of default under our senior secured credit facilities; certain tax law changes; or certain changes to law, regulation or accounting standards), or (d) our request for early termination of the facility. The facility’s current back-up liquidity commitments will expire on October 15, 2020. At September 30, 2019, the amounts available and utilized under this program totaled $306 million (€281 million). At December 31, 2018, the amounts available and utilized under this program totaled $335 million (€293 million). The program does not qualify for sale accounting, and accordingly, these amounts are included in Long Term Debt and Finance Leases. For a description of the collateral securing the credit facilities described above as well as the covenants applicable to them, refer to Note to the Consolidated Financial Statements No. 15, Financing Arrangements and Derivative Financial Instruments, in our 2018 Form 10-K. Accounts Receivable Factoring Facilities (Off-Balance Sheet) We have sold certain of our trade receivables under off-balance sheet programs. For these programs, we have concluded that there is generally no risk of loss to us from non-payment of the sold receivables. At September 30, 2019, the gross amount of receivables sold was $539 million, compared to $568 million at December 31, 2018. Other Foreign Credit Facilities A Mexican subsidiary and a U.S. subsidiary have several financing arrangements in Mexico. At September 30, 2019, the amounts available and utilized under these facilities were $200 million. At December 31, 2018, the amounts available and utilized under these facilities were $340 million and $200 million, respectively. The facilities ultimately mature in 2020. The facilities contain covenants relating to the Mexican and U.S. subsidiary and have customary representations and warranties and default provisions relating to the Mexican and U.S. subsidiary’s ability to perform its respective obligations under the applicable facilities. A Chinese subsidiary has several financing arrangements in China. At September 30, 2019 and December 31, 2018, the amounts available under these facilities were $717 million and $672 million, respectively. At September 30, 2019, the amount utilized under these facilities was $342 million, of which $140 million was notes payable and $202 million was long term debt. At September 30, 2019, $99 million of the long term debt was due within a year. At December 31, 2018, the amount utilized under these facilities was $341 million, of which $122 million was notes payable and $219 million was long term debt. At December 31, 2018, $32 million of the long term debt was due within a year. The facilities contain covenants relating to the Chinese subsidiary and have customary representations and warranties and defaults relating to the Chinese subsidiary’s ability to perform its obligations under the facilities. Certain of the facilities can only be used to finance the expansion of our manufacturing facility in China and, at September 30, 2019 and December 31, 2018, the unused amounts available under these facilities were $107 million and $116 million, respectively. DERIVATIVE FINANCIAL INSTRUMENTS We utilize derivative financial instrument contracts and nonderivative instruments to manage interest rate, foreign exchange and commodity price risks. We have established a control environment that includes policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. We do not hold or issue derivative financial instruments for trading purposes. Foreign Currency Contracts We enter into foreign currency contracts in order to manage the impact of changes in foreign exchange rates on our consolidated results of operations and future foreign currency-denominated cash flows. These contracts may be used to reduce exposure to currency movements affecting existing foreign currency-denominated assets, liabilities, firm commitments and forecasted transactions resulting primarily from trade purchases and sales, equipment acquisitions, intercompany loans and royalty agreements. Contracts hedging short term trade receivables and payables normally have no hedging designation. The following table presents the fair values for foreign currency hedge contracts that do not meet the criteria to be accounted for as cash flow hedging instruments:
At September 30, 2019 and December 31, 2018, these outstanding foreign currency derivatives had notional amounts of $1,616 million and $1,240 million, respectively, and were primarily related to intercompany loans. Other (Income) Expense included net transaction gains on derivatives of $31 million and $40 million for the three and nine months ended September 30, 2019, respectively, and net transaction gains on derivatives of $7 million and $52 million for the three and nine months ended September 30, 2018, respectively. These amounts were substantially offset in Other (Income) Expense by the effect of changing exchange rates on the underlying currency exposures. The following table presents the fair values for foreign currency hedge contracts that meet the criteria to be accounted for as cash flow hedging instruments:
At September 30, 2019 and December 31, 2018, these outstanding foreign currency derivatives had notional amounts of $345 million and $347 million, respectively, and primarily related to U.S. dollar denominated intercompany transactions. We enter into master netting agreements with counterparties. The amounts eligible for offset under the master netting agreements are not material and we have elected a gross presentation of foreign currency contracts in the Consolidated Balance Sheets. The following table presents the classification of changes in fair values of foreign currency hedge contracts that meet the criteria to be accounted for as cash flow hedging instruments (before tax and minority):
The estimated net amount of deferred gains at September 30, 2019 that are expected to be reclassified to earnings within the next twelve months is $12 million. The counterparties to our foreign currency contracts were considered by us to be substantial and creditworthy financial institutions that were recognized market makers at the time we entered into those contracts. We seek to control our credit exposure to these counterparties by diversifying across multiple counterparties, by setting counterparty credit limits based on long term credit ratings and other indicators of counterparty credit risk such as credit default swap spreads, and by monitoring the financial strength of these counterparties on a regular basis. We also enter into master netting agreements with counterparties when possible. By controlling and monitoring exposure to counterparties in this manner, we believe that we effectively manage the risk of loss due to nonperformance by a counterparty. However, the inability of a counterparty to fulfill its contractual obligations to us could have a material adverse effect on our liquidity, financial position or results of operations in the period in which it occurs.
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Commitments and Contingent Liabilities (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Asbestos Claims Activity | A summary of recent approximate asbestos claims activity follows. Because claims are often filed and disposed of by dismissal or settlement in large numbers, the amount and timing of settlements and the number of open claims during a particular period can fluctuate significantly.
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | The components of lease expense included in Income before Income Taxes are as follows:
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Direct Financing Lease, Lease Income | Supplemental cash flow information related to leases is as follows:
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Operating Lease, Lease Income | Supplemental cash flow information related to leases is as follows:
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Lessee, Balance Sheet Information | Supplemental balance sheet information related to leases is as follows:
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Lessee, Operating Lease, Liability, Maturity | Future maturities of our lease liabilities, excluding subleases, as of September 30, 2019 are as follows:
Future maturities of our lease liabilities as of December 31, 2018 were as follows:
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Finance Lease, Liability, Maturity | Future maturities of our lease liabilities, excluding subleases, as of September 30, 2019 are as follows:
Future maturities of our lease liabilities as of December 31, 2018 were as follows:
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