Business Segments

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Business Segments

Note 8. Business Segments

Segment information reflects our strategic business units (“SBUs”), which are organized to meet customer requirements and global competition. For the year ended December 31, 2020, we operated our business through three operating segments representing our regional tire businesses: Americas; Europe, Middle East and Africa; and Asia Pacific. Segment information is reported on the basis used for reporting to our Chief Executive Officer. Each of the three regional business segments is involved in the development, manufacture, distribution and sale of tires. Certain of the business segments also provide related products and services, which include retreads and automotive and commercial truck maintenance and repair services. Each segment also exports tires to other segments.

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

services including retreaded tires, tread rubber, and automotive and commercial truck maintenance and repair services, as well as sells chemical and natural rubber products to our other business segments and to unaffiliated customers.

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

Asia Pacific manufactures and sells tires for automobiles, trucks, aircraft, farm, and earthmoving, mining and industrial equipment throughout the Asia Pacific region. Asia Pacific also provides related products and services including retreaded truck and aviation tires, tread rubber, and automotive maintenance and repair services.

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

(In millions)	2020			2019		2018
Sales
Americas	$	6,556		$	7,922	$	8,168
Europe, Middle East and Africa		4,020			4,708		5,090
Asia Pacific		1,745			2,115		2,217
Net Sales	$	12,321		$	14,745	$	15,475
Segment Operating Income (Loss)
Americas	$	9		$	550	$	654
Europe, Middle East and Africa		(72	)		202		363
Asia Pacific		49			193		257
Total Segment Operating Income (Loss)	$	(14	)	$	945	$	1,274
Less:
Goodwill and Other Asset Impairments (Notes 11 and 12)		330			—		—
Rationalizations (Note 3)		159			205		44
Interest expense (Note 4)		324			340		321
Other (income) expense (Note 5)		119			98		(174	)
Asset write-offs and accelerated depreciation (Note 3)		105			15		4
Corporate incentive compensation plans		44			50		13
Retained expenses of divested operations		8			10		9
Other(1)		37			50		46
Income (Loss) before Income Taxes	$	(1,140	)	$	177	$	1,011

(1) Primarily represents unallocated corporate costs and the elimination of $17 million, $17 million and $18 million for the years ended December 31, 2020, 2019 and 2018, respectively, of royalty income attributable to the strategic business units.

The following table presents segment assets at December 31:

(In millions)	2020		2019
Assets
Americas	$	6,666	$	7,606
Europe, Middle East and Africa		4,825		4,724
Asia Pacific		2,725		2,711
Total Segment Assets		14,216		15,041
Corporate(1)		2,290		2,144
	$	16,506	$	17,185

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

Results of operations are measured based on net sales to unaffiliated customers and segment operating income. Each segment exports tires to other segments. The financial results of each segment exclude sales of tires exported to other segments, but include operating income derived from such transactions. Segment operating income is computed as follows: Net sales less CGS (excluding asset write-offs and accelerated depreciation charges) and SAG (including certain allocated corporate administrative expenses). Segment operating income also includes certain royalties and equity in earnings of most affiliates. Segment operating income does not include net rationalization charges, asset sales, and certain other items.

The following table presents geographic information. Net sales by country were determined based on the location of the selling subsidiary. Long-lived assets consisted of property, plant and equipment. Besides Germany, management did not consider the net sales of any other individual countries outside the United States to be significant to the consolidated financial statements. For long-lived assets, only China and Germany were considered to be significant.

(In millions)	2020		2019		2018
Net Sales
United States	$	5,424	$	6,489	$	6,692
Germany(1)		705		979		1,691
Other international		6,192		7,277		7,092
	$	12,321	$	14,745	$	15,475
Long-Lived Assets
United States	$	2,517	$	2,681
China		742		722
Germany		729		653
Other international		3,085		3,152
	$	7,073	$	7,208

(1) The decrease in net sales from 2018 primarily related to a business reorganization that centralized our OE sales for EMEA in Luxembourg.

At December 31, 2020, significant concentrations of cash and cash equivalents held by our international subsidiaries included the following amounts:

• $387 million or 25% in Asia Pacific, primarily China and Japan ($337 million or 37% at December 31, 2019),

• $387 million or 25% in EMEA, primarily Belgium ($214 million or 24% at December 31, 2019), and

• $384 million or 25% in Americas, primarily Brazil, Canada and Chile ($190 million or 21% at December 31, 2019).

Goodwill and other asset impairments, as described in Notes to the Consolidated Financial Statements No. 11, Goodwill and Intangible Assets, and No. 12, Other Assets and Investments; rationalizations, as described in Note to the Consolidated Financial Statements No. 3, Costs Associated with Rationalization Programs; net (gains) losses on asset sales, as described in Note to the Consolidated Financial Statements No. 5, Other (Income) Expense, and asset write-offs and accelerated depreciation were not charged (credited) to the SBUs for performance evaluation purposes but were attributable to the SBUs as follows:

(In millions)	2020		2019		2018
Goodwill and Other Asset Impairments
Americas	$	148	$	—	$	—
Europe, Middle East and Africa		182		—		—
Total Segment Goodwill and Other Asset Impairments	$	330	$	—	$	—

(In millions)	2020		2019		2018
Rationalizations
Americas	$	94	$	90	$	3
Europe, Middle East and Africa		59		115		36
Asia Pacific		4		—		3
Total Segment Rationalizations	$	157	$	205	$	42
Corporate		2		—		2
	$	159	$	205	$	44

(In millions)	2020		2019			2018
Net (Gains) Losses on Asset Sales
Americas(1)	$	—	$	—		$	(275	)
Europe, Middle East and Africa		2		(16	)		2
Total Segment Asset Sales	$	2	$	(16	)	$	(273	)

(1) Americas Net (Gains) Losses on Asset Sales for the year ended December 31, 2018 includes the gain of $272 million related to the TireHub transaction, net of transaction costs.

(In millions)	2020		2019		2018
Asset Write-Offs and Accelerated Depreciation
Americas	$	103	$	13	$	—
Europe, Middle East and Africa		2		2		4
Total Segment Asset Write-Offs and Accelerated Depreciation	$	105	$	15	$	4

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

(In millions)	2020		2019		2018
Capital Expenditures
Americas	$	302	$	369	$	406
Europe, Middle East and Africa		235		227		180
Asia Pacific		91		141		188
Total Segment Capital Expenditures	$	628	$	737	$	774
Corporate		19		33		37
	$	647	$	770	$	811

(In millions)	2020		2019		2018
Depreciation and Amortization
Americas	$	490	$	430	$	414
Europe, Middle East and Africa		201		197		201
Asia Pacific		133		133		131
Total Segment Depreciation and Amortization	$	824	$	760	$	746
Corporate		35		35		32
	$	859	$	795	$	778

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

(In millions)	2020		2019		2018
Equity in (Income) Loss
Americas	$	31	$	32	$	11
Europe, Middle East and Africa		—		—		(1	)
Total Segment Equity in (Income) Loss	$	31	$	32	$	10