Exhibit 99.1
MEDIA CONTACT: KEITH PRICE
330-796-1863
kprice@goodyear.com
ANALYST CONTACT: BARB GOULD
330-796-8576
goodyear.investor.relations@goodyear.com
FOR IMMEDIATE RELEASE
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GOODYEAR REPORTS RESULTS FOR 2002'S FOURTH QUARTER
- - NET LOSS PER SHARE, INCLUDING $6.17 NON-CASH CHARGE, IS $6.30 FOR THE
FOURTH QUARTER
- - INTERNATIONAL UNITS SHOW CONTINUING IMPROVEMENT
AKRON, Ohio, April 3, 2003 - The Goodyear Tire & Rubber Company today
reported a net loss of $1.1 billion ($6.30 per share) for the fourth quarter of
2002, compared with a net loss of $174.0 million ($1.07 per share) in the fourth
quarter of 2001. All per share amounts are diluted.
The quarter's results reflect continuing improvement in the company's
international tire business as well as its Engineered Products operation.
Business conditions, and results, in North America remain weak.
"The turnaround in six of our seven businesses continued in the fourth
quarter," said Robert J. Keegan, Goodyear president and chief executive officer.
"All four of our international tire businesses achieved a higher profit margin
compared to a year ago, with margins more than doubling in three of those
businesses. Our 2002 results, especially in our North American Tire business,
are extremely disappointing."
"However, we are beginning to make real and significant progress to improve
those results. With new bank agreements now in place, we have the financial
resources and stability necessary to support our turnaround," he said.
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Results for the fourth quarter of 2002 include a previously announced
non-cash charge of $1.08 billion ($6.17 per share) to establish a valuation
allowance against Federal and state deferred tax assets. The fourth quarter also
included after-tax gains of $11.1 million (6 cents per share) resulting from
asset sales and a net after-tax benefit of $1.4 million (1 cent per share) from
rationalization actions.
Fourth quarter 2001 results included a gain of $16.9 million (10 cents per
share) on the sale of the specialty chemicals business, rationalization charges
of $101.2 million (62 cents per share) and a charge of $18.6 million (11 cents
per share) against cost of goods sold for a proactive tire replacement program.
Equity in earnings of affiliates includes a charge of $24.0 million (15 cents
per share) for a rationalization program at the company's South Pacific Tyres
joint venture in Australia.
Goodyear reported sales of $3.53 billion for the fourth quarter of 2002, up
1.7 percent from $3.47 billion during the prior-year period. Tire unit volume in
2002's fourth quarter was 53.6 million units, down from 54.5 million units in
the 2001 period.
Interest expense decreased 17.6 percent to $58.9 million from $71.5 million
in the fourth quarter of 2001 due to lower interest rates and lower average debt
compared to the prior-year period. Depreciation and amortization expense was
$151.5 million in the fourth quarter of 2002, versus $159.6 million in the 2001
period. Capital expenditures increased in the fourth quarter of 2002, to $164.6
million compared with $119.5 million in the 2001 period.
YEAR-END RESULTS
Goodyear's net loss for 2002 was $1.1 billion ($6.62 per share). For 2001,
the company had a net loss of $203.6 million ($1.27 per share).
The 2002 results include the non-cash tax valuation allowance charge of
$1.08 billion or $6.17 per share ($6.48 per share on a year-to-date basis), a
net after-tax gain of $22.0 million (13 cents per share) resulting from asset
sales and net after-tax charges of $8.8 million (5 cents per share) from
rationalization actions.
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The 2001 results include net after-tax rationalization charges totaling
$158.3 million (99 cents per share), and an after-tax gain of $30.8 million (19
cents per share) resulting from the sale of assets. Also included were the
previously described charges of $18.6 million (11 cents per share) against cost
of goods sold for a proactive tire replacement program, as well as the charge of
$24 million (15 cents per share) against equity in earnings of affiliates for
restructuring at the company's South Pacific Tyres affiliate in Australia.
Net sales for 2002 were $13.9 billion, down 2.1 percent from $14.1 billion
in 2001. Tire volume was 214.3 million units, down 5.0 million units or 2.3
percent for the year. Goodyear estimates that currency movements negatively
affected sales by approximately $74.0 million in 2002, and decreased operating
income by approximately $33.0 million.
Revenue decreased in 2002 largely because of lower tire unit volume in
North America, lower revenues as a result of the December 2001 sale of the
specialty chemical business, and the effects of currency translation on
international results. The specialty chemical business contributed approximately
$127.0 million of sales in 2001.
For the year, interest expense fell 17.5 percent to $241.3 million, versus
$292.4 million for 2001. Depreciation and amortization expense was $602.8
million in 2002, compared to $636.7 million in the prior 12-month period.
Capital expenditures for 2002 were $457.9 million, compared with $435.4 million
in 2001.
BUSINESS SEGMENTS
Fourth quarter operating income was $79.0 million in 2002, compared to $7.1
million in 2001. For the year, operating income increased 14.6 percent in 2002,
to $420.3 million, compared to $366.7 million in 2001. Operating income does not
reflect rationalizations and asset sales in 2002 and 2001.
NORTH AMERICAN TIRE FOURTH QUARTER TWELVE MONTHS
(in millions) 2002 2001 2002 2001
Tire Units 24.8 27.1 103.9 112.0
Sales $1,615.0 $1,742.7 $6,703.3 $7,152.3
Operating Income (Loss) (33.6) (44.5) (35.5) 107.8
Margin (2.1)% (2.6)% (0.5)% 1.5%
North American Tire's unit volume decreased 8.5 percent for the 2002 fourth
quarter and 7.2 percent for the year.
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Shipments to original equipment customers decreased 3.1 percent for the
quarter but increased 5.5 percent for the year, compared with 2001. Replacement
volume fell 11.0 percent for the quarter and 12.5 percent for the year.
Revenues for the 2002 fourth quarter and year decreased compared to 2001
due to reduced volume in the replacement market and fewer tire units delivered
in connection with the 2001 Ford tire replacement program. Unfavorable product
mix also negatively impacted sales for both periods compared to 2001.
The Ford tire replacement program, which ended March 31, 2002, benefited
the company in 2001 as well as the first quarter of 2002. During the fourth
quarter of 2001, Goodyear supplied approximately one million tires for this
program, with an operating income benefit of about $20.0 million. Goodyear
supplied approximately five million tires for this program in 2001, with a
benefit of about $95.0 million on operating income. In the first quarter of
2002, the company supplied approximately 500 thousand tires, with an operating
income benefit of approximately $10.0 million.
Operating losses were recorded for both the quarter and the year. Both
periods were affected by lower production, higher plant operating expenses and
increased compensation costs. Lower replacement sales volume, including the end
of the Ford program, also had a negative impact on results. Operating income
reflected a change in product mix toward lower-margin original equipment tires,
as well as a $10.0 million charge related to the closure of Penske Automotive
Centers in the United States in the first quarter of 2002. A decrease in raw
material costs and reduced selling, administrative and general expenses had a
favorable effect on income. The fourth quarter of 2001 included a pretax charge
of $30.0 million associated with the previously mentioned proactive tire
replacement program.
EUROPEAN UNION TIRE FOURTH QUARTER TWELVE MONTHS
(in millions) 2002 2001 2002 2001
Tire Units 16.2 15.5 61.5 61.1
Sales $916.4 $798.3 $3,314.9 $3,128.0
Operating Income 21.3 5.1 102.6 57.2
Margin 2.3% 0.6% 3.1% 1.8%
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European Union Tire's unit volume in 2002's fourth quarter was up 4.5
percent from 2001. Replacement volume increased 4.7 percent, while shipments to
original equipment customers were up 4.3 percent. For the year, volume was up
0.6 percent with replacement units down 0.9 percent and shipments to original
equipment customers up 3.8 percent.
Sales increased in the fourth quarter primarily due to the favorable impact
of currency translation as well as higher volume. Full-year revenues benefited
from currency translation, volume, improved pricing and product mix.
Operating income increased during the quarter and year due primarily to
higher volume, lower raw material costs, cost reduction programs and the impact
of currency translation.
EASTERN EUROPE, AFRICA, FOURTH QUARTER TWELVE MONTHS
MIDDLE EAST TIRE
(in millions) 2002 2001 2002 2001
Tire Units 4.4 3.7 16.1 14.0
Sales $228.1 $180.1 $807.1 $703.1
Operating Income 29.3 4.6 91.9 20.2
Margin 12.8% 2.6% 11.4% 2.9%
Eastern Europe, Africa and Middle East Tire's volume in 2002's fourth
quarter was up 18.6 percent from 2001. For the year, volume was up 15.5 percent.
Replacement volume increased 20.0 percent for both the quarter and the full
year. Shipments to original equipment customers increased 11.6 percent for the
quarter, but fell 2.0 percent for the year.
Sales increased from 2001 for both the quarter and the year due to higher
replacement volume and improved pricing. Currency adversely impacted revenue for
the year.
Operating income increased significantly for both the quarter and the year
due to cost reduction programs, higher levels of plant utilization, a change in
product mix to higher-margin replacement tires, higher replacement volume and
the impact of currency translation. Lower raw material costs also had a positive
impact on operating income for the full-year period.
LATIN AMERICAN TIRE FOURTH QUARTER TWELVE MONTHS
(in millions) 2002 2001 2002 2001
Tire Units 4.9 5.2 19.9 20.0
Sales $228.0 $257.8 $947.6 $1,012.6
Operating Income 27.2 28.3 102.4 89.8
Margin 11.9% 11.0% 10.8% 8.9%
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Latin American Tire's volume decreased 3.6 percent from the 2001 fourth
quarter and was down 0.3 percent for the year. Replacement volume decreased 1.9
percent for the quarter but was up 1.7 percent for the 12 months. Shipments to
original equipment customers were down 8.3 percent for the quarter and 4.7
percent for the year.
Sales decreased in both 2002 periods as a result of currency translation.
Sales were favorably impacted by price increases and improved product mix.
Operating income decreased in the quarter largely due to currency
translation. For the full year, income benefited from pricing, product mix and
lower raw material costs.
ASIA TIRE FOURTH QUARTER TWELVE MONTHS
(in millions) 2002 2001 2002 2001
Tire Units 3.3 3.0 12.9 12.2
Sales $138.7 $123.7 $531.7 $493.9
Operating Income 12.3 4.2 43.9 19.9
Margin 8.9% 3.4% 8.3% 4.0%
Asia Tire's unit volume was up 8.5 percent from the 2001 fourth quarter
period and increased 5.5 percent for the year. Replacement volume was up 3.0
percent for the quarter and 3.6 percent for the 12 months. Shipments to original
equipment customers were up 23.4 percent for the quarter and 10.5 percent for
the year.
Sales increased in both periods compared to 2001 due primarily to higher
overall volume and improved selling prices for replacement tires.
Operating income increased substantially in both periods from 2001 due to
improved volume and cost reduction programs. Lower raw material costs also had a
positive impact on results for the year.
ENGINEERED PRODUCTS FOURTH QUARTER TWELVE MONTHS
(in millions) 2002 2001 2002 2001
Sales $265.0 $254.6 $1,126.5 $1,122.3
Operating Income (Loss) 7.6 (5.1) 45.6 11.6
Margin 2.9% (2.0)% 4.0% 1.0%
Engineered Products' sales in 2002's fourth quarter and 12 months increased
from 2001 due largely to strong demand for military and custom products.
Operating income increased significantly due to improved productivity, volume
and cost containment programs.
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CHEMICAL PRODUCTS FOURTH QUARTER TWELVE MONTHS
(in millions) 2002 2001 2002 2001
Sales $279.7 $213.2 $937.9 $1,037.3
Operating Income 14.9 14.5 69.4 60.2
Margin 5.3% 6.8% 7.4% 5.8%
Chemical Products' sales increased for the quarter due to higher volume and
pricing related to higher raw material costs, but decreased for the year due to
lower selling prices. Operating income for both periods increased due to higher
volume and cost reduction measures. Both periods were adversely impacted due to
the sale of the specialty chemicals business in December 2001.
Goodyear will hold an investor conference call at 10 a.m. EST today. Prior
to the commencement of the call, Goodyear will post the financial and other
statistical information that will be presented, on its investor relations Web
site: www.goodyear.com/investor.
Participating in the conference call with Keegan will be Robert W. Tieken,
executive vice president and chief financial officer. They will review
Goodyear's fourth quarter results and the new bank credit agreements.
Shareholders, members of the media, and other interested persons may access
the conference call on the Web site or via telephone by calling (706) 634-5954
before 9:55 a.m. today. A taped replay of the conference call will be available
at 2 p.m. by calling (706) 645-9291 and entering access code 9550124. The call
replay will also remain available on the Web site.
Goodyear is the world's largest tire company. The company manufactures
tires, engineered rubber products and chemicals in more than 90 facilities in 28
countries. It has marketing operations in almost every country around the world.
Goodyear employs about 92,000 people worldwide.
Certain information contained in this press release constitutes
forward-looking statements for purposes of the safe harbor provisions of The
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those indicated by such forward-looking statements as a result
of various economic, financial and industry factors including without limitation
the company's ability to implement its cost-cutting plans and achieve its sales
targets. Additional factors that may cause actual results to differ materially
from those indicated by such forward-looking statements are discussed in the
company's Form 10-K for the year ended Dec. 31, 2002 which is on file with the
Securities and Exchange Commission. In addition, any forward-looking statements
represent our estimates only as of today and should not be relied upon as
representing our estimates as of any subsequent date. While we may elect to
update forward-looking statements at some point in the future, we specifically
disclaim any obligation to do so, even if our estimates change.
(financial statements follow) (more)
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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share) THREE MONTHS TWELVE MONTHS
ENDED DEC. 31 ENDED DEC. 31
2002 2001 2002 2001
(unaudited)
NET SALES $3,530.4 $3,472.6 $13,850.0 $14,147.2
Cost of Goods Sold 2,910.5 2,927.5 11,313.9 11,619.5
Selling, Administrative and
General Expense 580.2 567.1 2,223.9 2,248.8
Rationalizations (3.4) 127.8 8.6 206.8
Interest Expense 58.9 71.5 241.3 292.4
Other (Income) Expense (1.9) (11.4) 25.8 11.8
Foreign Currency Exchange 8.6 18.0 (10.2) 0.1
Equity in (Earnings) Loss of Affiliates 0.8 26.6 8.8 40.6
Minority Interest in
Net Income of Subsidiaries 14.6 (19.4) 55.8 0.2
----------------------- --------------------
LOSS BEFORE INCOME TAXES (37.9) (235.1) (17.9) (273.0)
United States and Foreign Taxes
on Income (Loss) 1,067.3 (61.1) 1,087.9 (69.4)
----------------------- --------------------
NET LOSS $ (1,105.2) $(174.0) $(1,105.8) $(203.6)
======================= ====================
PER SHARE OF COMMON STOCK - BASIC
NET LOSS $ (6.30) $ (1.07) $ (6.62) $(1.27)
======================= ====================
Average Shares Outstanding 175.3 163.1 167.0 160.0
PER SHARE OF COMMON STOCK - DILUTED
NET LOSS $ (6.30) $ (1.07) $ (6.62) $(1.27)
===================== ====================
Average Shares Outstanding 175.3 163.1 167.0 160.0
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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In millions) DEC. 31 DEC. 31
ASSETS 2002 2001
CURRENT ASSETS:
Cash and Cash Equivalents $ 923.0 $ 959.4
Short Term Securities 24.3 --
Accounts and Notes Receivable, less allowance - $99.9 ($84.9 in 2001) 1,459.7 1,475.3
Inventories
Raw Materials 451.0 398.8
Work in Process 100.0 112.5
Finished Product 1,820.6 1,869.6
-----------------------
2,371.6 2,380.9
Prepaid Expenses and Other Current Assets 448.1 448.6
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TOTAL CURRENT ASSETS 5,226.7 5,264.2
Long Term Accounts and Notes Receivable 236.3 132.3
Investments in Affiliates 141.7 101.2
Other Assets 254.9 251.9
Goodwill and Other Intangible Assets 768.7 706.3
Deferred Income Taxes 207.5 924.7
Prepaid and Deferred Pension Cost 913.4 1,021.5
Deferred Charges 205.1 215.3
Properties and Plants,
Less Accumulated Depreciation - $6,571.6 ($6,058.2 in 2001) 5,192.3 5,166.0
-----------------------
TOTAL ASSETS $13,146.6 $13,783.4
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LIABILITIES
CURRENT LIABILITIES:
Accounts Payable - Trade $ 1,502.2 $ 1,359.2
Compensation and Benefits 961.2 897.2
Other Current Liabilities 481.6 479.6
United States and Foreign Taxes 473.2 347.7
Notes Payable 283.4 255.0
Long Term Debt due within One Year 369.8 109.7
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TOTAL CURRENT LIABILITIES 4,071.4 3,448.4
Long Term Debt and Capital Leases 2,989.0 3,203.6
Compensation and Benefits 4,194.2 2,848.9
Other Long Term Liabilities 501.2 630.9
Minority Equity in Subsidiaries 740.2 787.6
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TOTAL LIABILITIES 12,496.0 10,919.4
Commitments and Contingent Liabilities
SHAREHOLDERS' EQUITY
Preferred Stock, no par value:
Authorized 50 shares, unissued -- --
Common Stock, no par value:
Authorized 300 shares
Outstanding Shares - 175.3 (163.2 in 2001)
After Deducting 20.4 Treasury Shares (32.5 in 2001) 175.3 163.2
Capital Surplus 1,390.3 1,245.4
Retained Earnings 2,007.1 3,192.7
Accumulated Other Comprehensive Income (2,922.1) (1,737.3)
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TOTAL SHAREHOLDERS' EQUITY 650.6 2,864.0
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,146.6 $13,783.4
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