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, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Entries and Eliminations Consolidated Assets: Current Assets: Cash and Cash Equivalents $ 151 $ 26 $ 691 $ — $ 868 Accounts Receivable, net 808 154 1,786 — 2,748 Accounts Receivable From Affiliates 325 251 — (576 ) — Inventories 1,539 65 1,403 (42 ) 2,965 Prepaid Expenses and Other Current Assets 85 2 187 6 280 Total Current Assets 2,908 498 4,067 (612 ) 6,861 Goodwill 24 1 405 120 550 Intangible Assets 116 — 18 — 134 Deferred Income Taxes 1,448 24 363 4 1,839 Other Assets 494 51 510 — 1,055 Investments in Subsidiaries 3,732 431 — (4,163 ) — Operating Lease Right-of-Use Assets 548 12 268 — 828 Property, Plant and Equipment, net 2,418 432 4,204 (22 ) 7,032 Total Assets $ 11,688 $ 1,449 $ 9,835 $ (4,673 ) $ 18,299 Liabilities: Current Liabilities: Accounts Payable — Trade $ 869 $ 128 $ 1,654 $ — $ 2,651 Accounts Payable to Affiliates — — 576 (576 ) — Compensation and Benefits 296 15 228 — 539 Other Current Liabilities 306 (2 ) 386 — 690 Notes Payable and Overdrafts 20 — 466 — 486 Operating Lease Liabilities due Within One Year 109 5 83 — 197 Long Term Debt and Finance Leases due Within One Year 282 — 328 — 610 Total Current Liabilities 1,882 146 3,721 (576 ) 5,173 Operating Lease Liabilities 449 8 185 — 642 Long Term Debt and Finance Leases 3,662 167 1,751 — 5,580 Compensation and Benefits 513 87 644 — 1,244 Deferred Income Taxes — — 91 — 91 Other Long Term Liabilities 347 7 180 — 534 Total Liabilities 6,853 415 6,572 (576 ) 13,264 Commitments and Contingent Liabilities Shareholders’ Equity: Goodyear Shareholders’ Equity: Common Stock 233 — — — 233 Other Equity 4,602 1,034 3,063 (4,097 ) 4,602 Goodyear Shareholders’ Equity 4,835 1,034 3,063 (4,097 ) 4,835 Minority Shareholders’ Equity — Nonredeemable — — 200 — 200 Total Shareholders’ Equity 4,835 1,034 3,263 (4,097 ) 5,035 Total Liabilities and Shareholders’ Equity $ 11,688 $ 1,449 $ 9,835 $ (4,673 ) $ 18,299 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 $ 127 $ 30 $ 644 $ — $ 801 Accounts Receivable, net 672 110 1,248 — 2,030 Accounts Receivable From Affiliates 294 280 — (574 ) — Inventories 1,425 71 1,387 (27 ) 2,856 Prepaid Expenses and Other Current Assets 76 3 155 4 238 Total Current Assets 2,594 494 3,434 (597 ) 5,925 Goodwill 24 1 420 124 569 Intangible Assets 117 — 19 — 136 Deferred Income Taxes 1,422 27 395 3 1,847 Other Assets 524 48 564 — 1,136 Investments in Subsidiaries 3,758 445 — (4,203 ) — Operating Lease Right-of-Use Assets — — — — — Property, Plant and Equipment, net 2,482 430 4,371 (24 ) 7,259 Total Assets $ 10,921 $ 1,445 $ 9,203 $ (4,697 ) $ 16,872 Liabilities: Current Liabilities: Accounts Payable — Trade $ 960 $ 131 $ 1,829 $ — $ 2,920 Accounts Payable to Affiliates — — 574 (574 ) — Compensation and Benefits 286 14 171 — 471 Other Current Liabilities 310 (4 ) 431 — 737 Notes Payable and Overdrafts 25 — 385 — 410 Operating Lease Liabilities due Within One Year — — — — — Long Term Debt and Finance Leases Due Within One Year 2 — 241 — 243 Total Current Liabilities 1,583 141 3,631 (574 ) 4,781 Operating Lease Liabilities — — — — — Long Term Debt and Finance Leases 3,550 167 1,393 — 5,110 Compensation and Benefits 569 93 683 — 1,345 Deferred Income Taxes — — 95 — 95 Other Long Term Liabilities 355 8 108 — 471 Total Liabilities 6,057 409 5,910 (574 ) 11,802 Commitments and Contingent Liabilities Shareholders’ Equity: Goodyear Shareholders’ Equity: Common Stock 232 — — — 232 Other Equity 4,632 1,036 3,087 (4,123 ) 4,632 Goodyear Shareholders’ Equity 4,864 1,036 3,087 (4,123 ) 4,864 Minority Shareholders’ Equity — Nonredeemable — — 206 — 206 Total Shareholders’ Equity 4,864 1,036 3,293 (4,123 ) 5,070 Total Liabilities and Shareholders’ Equity $ 10,921 $ 1,445 $ 9,203 $ (4,697 ) $ 16,872 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 $ 1,862 $ 384 $ 2,383 $ (827 ) $ 3,802 Cost of Goods Sold 1,484 352 1,962 (833 ) 2,965 Selling, Administrative and General Expense 276 8 288 — 572 Rationalizations 8 — 13 — 21 Interest Expense 56 7 33 (8 ) 88 Other (Income) Expense (7 ) 4 21 17 35 Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries 45 13 66 (3 ) 121 United States and Foreign Taxes 11 3 17 — 31 Equity in Earnings of Subsidiaries 54 6 — (60 ) — Net Income (Loss) 88 16 49 (63 ) 90 Less: Minority Shareholders’ Net Income — — 2 — 2 Goodyear Net Income (Loss) $ 88 $ 16 $ 47 $ (63 ) $ 88 Comprehensive Income (Loss) $ 17 $ 14 $ (33 ) $ 18 $ 16 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders — — (1 ) — (1 ) Goodyear Comprehensive Income (Loss) $ 17 $ 14 $ (32 ) $ 18 $ 17 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 Nine Months Ended September 30, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Entries and Eliminations Consolidated Net Sales $ 5,328 $ 1,046 $ 6,945 $ (2,287 ) $ 11,032 Cost of Goods Sold 4,292 978 5,738 (2,309 ) 8,699 Selling, Administrative and General Expense 796 25 884 — 1,705 Rationalizations 17 — 111 — 128 Interest Expense 168 20 99 (26 ) 261 Other (Income) Expense 61 11 (59 ) 61 74 Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries (6 ) 12 172 (13 ) 165 United States and Foreign Taxes (21 ) 3 83 (2 ) 63 Equity in Earnings of Subsidiaries 66 (6 ) — (60 ) — Net Income (Loss) 81 3 89 (71 ) 102 Less: Minority Shareholders’ Net Income — — 21 — 21 Goodyear Net Income (Loss) $ 81 $ 3 $ 68 $ (71 ) $ 81 Comprehensive Income (Loss) $ 84 $ (3 ) $ 22 $ 2 $ 105 Less: Comprehensive Income (Loss) Attributable to Minority Shareholders — — 21 — 21 Goodyear Comprehensive Income (Loss) $ 84 $ (3 ) $ 1 $ 2 $ 84 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 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 $ 129 $ (14 ) $ (229 ) $ (25 ) $ (139 ) Cash Flows from Investing Activities: Capital Expenditures (215 ) (29 ) (317 ) — (561 ) Asset Dispositions — — 2 — 2 Short Term Securities Acquired — — (73 ) — (73 ) Short Term Securities Redeemed — — 67 — 67 Capital Contributions and Loans Incurred (319 ) — — 319 — Capital Redemptions and Loans Paid 203 — — (203 ) — Notes Receivable (7 ) — — — (7 ) Other Transactions — — (12 ) — (12 ) Total Cash Flows from Investing Activities (338 ) (29 ) (333 ) 116 (584 ) Cash Flows from Financing Activities: Short Term Debt and Overdrafts Incurred 374 — 1,077 — 1,451 Short Term Debt and Overdrafts Paid (379 ) — (978 ) — (1,357 ) Long Term Debt Incurred 2,340 — 2,457 — 4,797 Long Term Debt Paid (1,992 ) — (1,949 ) — (3,941 ) Common Stock Issued 1 — — — 1 Common Stock Repurchased — — — — — Common Stock Dividends Paid (111 ) — — — (111 ) Capital Contributions and Loans Incurred — 53 266 (319 ) — Capital Redemptions and Loans Paid — (15 ) (188 ) 203 — Intercompany Dividends Paid — — (25 ) 25 — Transactions with Minority Interests in Subsidiaries — — (26 ) — (26 ) Debt Related Costs and Other Transactions 1 — (26 ) — (25 ) Total Cash Flows from Financing Activities 234 38 608 (91 ) 789 Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash — 1 (14 ) — (13 ) Net Change in Cash, Cash Equivalents and Restricted Cash 25 (4 ) 32 — 53 Cash, Cash Equivalents and Restricted Cash at Beginning of the Period 168 30 675 — 873 Cash, Cash Equivalents and Restricted Cash at End of the Period $ 193 $ 26 $ 707 $ — $ 926 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 |