CONSOLIDATING FINANCIAL INFORMATION | CONSOLIDATING FINANCIAL INFORMATION Certain of our subsidiaries have guaranteed our obligations under the $282 million outstanding principal amount of 8.75% notes due 2020 , the $1.0 billion outstanding principal amount of 5.125% senior notes due 2023 , the $900 million outstanding principal amount of 5% senior notes due 2026 and the $700 million outstanding principal amount of 4.875% senior notes due 2027 (collectively, the “notes”). The following presents the condensed consolidating financial information separately for: (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. Each guarantor subsidiary is 100% owned by the Parent Company at the date of each balance sheet presented. The notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use by the Parent Company and guarantor subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation. Changes in intercompany receivables and payables related to operations, such as intercompany sales or service charges, are included in cash flows from operating activities. Intercompany transactions reported as investing or financing activities include the sale of capital stock, loans and other capital transactions between members of the consolidated group. Certain Non-Guarantor Subsidiaries of the Parent Company are limited in their ability to remit funds to it by means of dividends, advances or loans due to required foreign government and/or currency exchange board approvals or limitations in credit agreements or other debt instruments of those subsidiaries. Condensed Consolidating Balance Sheet September 30, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Entries and Eliminations Consolidated Assets: Current Assets: Cash and Cash Equivalents $ 127 $ 26 $ 743 $ — $ 896 Accounts Receivable, net 732 166 1,772 — 2,670 Accounts Receivable From Affiliates 235 192 — (427 ) — Inventories 1,506 71 1,393 (32 ) 2,938 Prepaid Expenses and Other Current Assets 78 2 165 4 249 Total Current Assets 2,678 457 4,073 (455 ) 6,753 Goodwill 24 1 423 124 572 Intangible Assets 118 — 19 — 137 Deferred Income Taxes 1,487 30 388 3 1,908 Other Assets 554 51 484 — 1,089 Investments in Subsidiaries 3,943 516 — (4,459 ) — Property, Plant and Equipment, net 2,455 434 4,268 (25 ) 7,132 Total Assets $ 11,259 $ 1,489 $ 9,655 $ (4,812 ) $ 17,591 Liabilities: Current Liabilities: Accounts Payable-Trade $ 921 $ 121 $ 1,777 $ — $ 2,819 Accounts Payable to Affiliates — — 427 (427 ) — Compensation and Benefits 278 16 223 — 517 Other Current Liabilities 359 (7 ) 443 — 795 Notes Payable and Overdrafts 25 — 420 — 445 Long Term Debt and Capital Leases Due Within One Year 58 — 413 — 471 Total Current Liabilities 1,641 130 3,703 (427 ) 5,047 Long Term Debt and Capital Leases 3,873 167 1,564 — 5,604 Compensation and Benefits 575 97 678 — 1,350 Deferred Income Taxes — — 95 — 95 Other Long Term Liabilities 370 9 116 — 495 Total Liabilities 6,459 403 6,156 (427 ) 12,591 Commitments and Contingent Liabilities Shareholders’ Equity: Goodyear Shareholders’ Equity: Common Stock 233 — — — 233 Other Equity 4,567 1,086 3,299 (4,385 ) 4,567 Goodyear Shareholders’ Equity 4,800 1,086 3,299 (4,385 ) 4,800 Minority Shareholders’ Equity — Nonredeemable — — 200 — 200 Total Shareholders’ Equity 4,800 1,086 3,499 (4,385 ) 5,000 Total Liabilities and Shareholders’ Equity $ 11,259 $ 1,489 $ 9,655 $ (4,812 ) $ 17,591 Condensed Consolidating Balance Sheet December 31, 2017 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Entries and Eliminations Consolidated Assets: Current Assets: Cash and Cash Equivalents $ 176 $ 32 $ 835 $ — $ 1,043 Accounts Receivable, net 649 116 1,260 — 2,025 Accounts Receivable From Affiliates — 254 71 (325 ) — Inventories 1,444 43 1,329 (29 ) 2,787 Prepaid Expenses and Other Current Assets 59 3 157 5 224 Total Current Assets 2,328 448 3,652 (349 ) 6,079 Goodwill 24 1 444 126 595 Intangible Assets 119 — 20 — 139 Deferred Income Taxes 1,549 35 424 — 2,008 Other Assets 221 51 518 2 792 Investments in Subsidiaries 4,424 503 — (4,927 ) — Property, Plant and Equipment, net 2,491 420 4,569 (29 ) 7,451 Total Assets $ 11,156 $ 1,458 $ 9,627 $ (5,177 ) $ 17,064 Liabilities: Current Liabilities: Accounts Payable-Trade $ 927 $ 115 $ 1,765 $ — $ 2,807 Accounts Payable to Affiliates 325 — — (325 ) — Compensation and Benefits 322 15 202 — 539 Other Current Liabilities 323 2 701 — 1,026 Notes Payable and Overdrafts — — 262 — 262 Long Term Debt and Capital Leases Due Within One Year 60 — 331 — 391 Total Current Liabilities 1,957 132 3,261 (325 ) 5,025 Long Term Debt and Capital Leases 3,544 152 1,380 — 5,076 Compensation and Benefits 682 109 724 — 1,515 Deferred Income Taxes — 1 99 — 100 Other Long Term Liabilities 370 8 120 — 498 Total Liabilities 6,553 402 5,584 (325 ) 12,214 Commitments and Contingent Liabilities Shareholders’ Equity: Goodyear Shareholders’ Equity: Common Stock 240 — — — 240 Other Equity 4,363 1,056 3,796 (4,852 ) 4,363 Goodyear Shareholders’ Equity 4,603 1,056 3,796 (4,852 ) 4,603 Minority Shareholders’ Equity — Nonredeemable — — 247 — 247 Total Shareholders’ Equity 4,603 1,056 4,043 (4,852 ) 4,850 Total Liabilities and Shareholders’ Equity $ 11,156 $ 1,458 $ 9,627 $ (5,177 ) $ 17,064 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 $ 1,922 $ 342 $ 2,373 $ (709 ) $ 3,928 Cost of Goods Sold 1,547 319 1,879 (717 ) 3,028 Selling, Administrative and General Expense 239 8 306 — 553 Rationalizations 1 — 4 — 5 Interest Expense 55 6 28 (7 ) 82 Other (Income) Expense (295 ) 3 11 28 (253 ) Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries 375 6 145 (13 ) 513 United States and Foreign Taxes 111 1 48 (1 ) 159 Equity in Earnings of Subsidiaries 87 10 — (97 ) — Net Income (Loss) 351 15 97 (109 ) 354 Less: Minority Shareholders’ Net Income — — 3 — 3 Goodyear Net Income (Loss) $ 351 $ 15 $ 94 $ (109 ) $ 351 Comprehensive Income (Loss) $ 290 $ (5 ) $ (3 ) $ 2 $ 284 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders — — (6 ) — (6 ) Goodyear Comprehensive Income (Loss) $ 290 $ (5 ) $ 3 $ 2 $ 290 Consolidating Statements of Operations Three Months Ended September 30, 2017 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Entries and Eliminations Consolidated Net Sales $ 1,790 $ 294 $ 2,448 $ (611 ) $ 3,921 Cost of Goods Sold 1,393 261 2,021 (621 ) 3,054 Selling, Administrative and General Expense 225 9 311 — 545 Rationalizations 20 — 26 — 46 Interest Expense 62 2 34 (14 ) 84 Other (Income) Expense (37 ) (5 ) 9 63 30 Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries 127 27 47 (39 ) 162 United States and Foreign Taxes 9 6 12 3 30 Equity in Earnings of Subsidiaries 11 (3 ) — (8 ) — Net Income (Loss) 129 18 35 (50 ) 132 Less: Minority Shareholders’ Net Income — — 3 — 3 Goodyear Net Income (Loss) $ 129 $ 18 $ 32 $ (50 ) $ 129 Comprehensive Income (Loss) $ 166 $ 16 $ 86 $ (98 ) $ 170 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders — — 4 — 4 Goodyear Comprehensive Income (Loss) $ 166 $ 16 $ 82 $ (98 ) $ 166 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 $ 5,440 $ 980 $ 7,236 $ (2,057 ) $ 11,599 Cost of Goods Sold 4,376 927 5,756 (2,106 ) 8,953 Selling, Administrative and General Expense 756 26 950 — 1,732 Rationalizations 6 — 34 — 40 Interest Expense 165 16 73 (18 ) 236 Other (Income) Expense (271 ) 13 19 68 (171 ) Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries 408 (2 ) 404 (1 ) 809 United States and Foreign Taxes 71 (1 ) 140 1 211 Equity in Earnings of Subsidiaries 246 44 — (290 ) — Net Income (Loss) 583 43 264 (292 ) 598 Less: Minority Shareholders’ Net Income — — 15 — 15 Goodyear Net Income (Loss) $ 583 $ 43 $ 249 $ (292 ) $ 583 Comprehensive Income (Loss) $ 476 $ 25 $ 29 $ (64 ) $ 466 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders — — (10 ) — (10 ) Goodyear Comprehensive Income (Loss) $ 476 $ 25 $ 39 $ (64 ) $ 476 Consolidating Statements of Operations Nine Months Ended September 30, 2017 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Entries and Eliminations Consolidated Net Sales $ 5,420 $ 883 $ 7,066 $ (2,063 ) $ 11,306 Cost of Goods Sold 4,230 818 5,655 (2,104 ) 8,599 Selling, Administrative and General Expense 731 26 943 — 1,700 Rationalizations 22 — 80 — 102 Interest Expense 196 6 96 (38 ) 260 Other (Income) Expense (50 ) 1 (6 ) 109 54 Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries 291 32 298 (30 ) 591 United States and Foreign Taxes 69 6 61 — 136 Equity in Earnings of Subsidiaries 220 28 — (248 ) — Net Income (Loss) 442 54 237 (278 ) 455 Less: Minority Shareholders’ Net Income — — 13 — 13 Goodyear Net Income (Loss) $ 442 $ 54 $ 224 $ (278 ) $ 442 Comprehensive Income (Loss) $ 625 $ 57 $ 426 $ (456 ) $ 652 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders — — 27 — 27 Goodyear Comprehensive Income (Loss) $ 625 $ 57 $ 399 $ (456 ) $ 625 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 $ 815 $ (5 ) $ (295 ) $ (539 ) $ (24 ) Cash Flows from Investing Activities: Capital Expenditures (248 ) (55 ) (311 ) (1 ) (615 ) Asset Dispositions — 2 — — 2 Short Term Securities Acquired — — (61 ) — (61 ) Short Term Securities Redeemed — — 61 — 61 Capital Contributions and Loans Incurred (597 ) — (213 ) 810 — Capital Redemptions and Loans Paid 193 — 430 (623 ) — Notes Receivable (50 ) — — — (50 ) Other Transactions 3 — (4 ) — (1 ) Total Cash Flows from Investing Activities (699 ) (53 ) (98 ) 186 (664 ) Cash Flows from Financing Activities: Short Term Debt and Overdrafts Incurred 800 — 658 — 1,458 Short Term Debt and Overdrafts Paid (775 ) — (492 ) — (1,267 ) Long Term Debt Incurred 2,305 15 2,384 — 4,704 Long Term Debt Paid (1,982 ) — (2,010 ) — (3,992 ) Common Stock Issued 4 — — — 4 Common Stock Repurchased (200 ) — — — (200 ) Common Stock Dividends Paid (100 ) — — — (100 ) Capital Contributions and Loans Incurred 213 52 545 (810 ) — Capital Redemptions and Loans Paid (430 ) (14 ) (179 ) 623 — Intercompany Dividends Paid — — (540 ) 540 — Transactions with Minority Interests in Subsidiaries — — (27 ) — (27 ) Debt Related Costs and Other Transactions 16 — (19 ) — (3 ) Total Cash Flows from Financing Activities (149 ) 53 320 353 577 Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash — (1 ) (36 ) — (37 ) Net Change in Cash, Cash Equivalents and Restricted Cash (33 ) (6 ) (109 ) — (148 ) Cash, Cash Equivalents and Restricted Cash at Beginning of the Period 201 32 877 — 1,110 Cash, Cash Equivalents and Restricted Cash at End of the Period $ 168 $ 26 $ 768 $ — $ 962 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2017 (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 $ 179 $ — $ (303 ) $ (30 ) $ (154 ) Cash Flows from Investing Activities: Capital Expenditures (247 ) (115 ) (323 ) 2 (683 ) Asset Dispositions 1 — 8 — 9 Short Term Securities Acquired — — (51 ) — (51 ) Short Term Securities Redeemed — — 51 — 51 Capital Contributions and Loans Incurred (75 ) — (41 ) 116 — Capital Redemptions and Loans Paid 21 — 61 (82 ) — Other Transactions — — (1 ) — (1 ) Total Cash Flows from Investing Activities (300 ) (115 ) (296 ) 36 (675 ) Cash Flows from Financing Activities: Short Term Debt and Overdrafts Incurred 175 — 369 — 544 Short Term Debt and Overdrafts Paid (145 ) — (378 ) — (523 ) Long Term Debt Incurred 2,597 52 2,323 — 4,972 Long Term Debt Paid (2,310 ) — (1,883 ) — (4,193 ) Common Stock Issued 12 — — — 12 Common Stock Repurchased (205 ) — — — (205 ) Common Stock Dividends Paid (75 ) — — — (75 ) Capital Contributions and Loans Incurred 41 62 13 (116 ) — Capital Redemptions and Loans Paid (61 ) (21 ) — 82 — Intercompany Dividends Paid — — (28 ) 28 — Transactions with Minority Interests in Subsidiaries — — (6 ) — (6 ) Debt Related Costs and Other Transactions (38 ) — (31 ) — (69 ) Total Cash Flows from Financing Activities (9 ) 93 379 (6 ) 457 Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash — 3 48 — 51 Net Change in Cash, Cash Equivalents and Restricted Cash (130 ) (19 ) (172 ) — (321 ) Cash, Cash Equivalents and Restricted Cash at Beginning of the Period 210 55 924 — 1,189 Cash, Cash Equivalents and Restricted Cash at End of the Period $ 80 $ 36 $ 752 $ — $ 868 |