EXHIBIT 99.1
MEDIA CONTACT: TRICIA INGRAHAM
330-796-8517
ANALYST CONTACT: BARB GOULD
330-796-8576
FOR IMMEDIATE RELEASE
GOODYEAR EARNS PROFIT FOR 2004 SECOND QUARTER
o REPORTS NET INCOME OF $25.1 MILLION, OR 14 CENTS PER SHARE
o INCREASES SEGMENT OPERATING INCOME BY 92 PERCENT
o DRIVES RECORD SALES OF $4.5 BILLION
o ACHIEVES RECORD SECOND QUARTER SALES IN NORTH AMERICAN TIRE BUSINESS
AKRON, Ohio, August 5, 2004 - With all seven businesses profitable, The
Goodyear Tire & Rubber Company today reported net income of $25.1 million (14
cents per share) for the second quarter of 2004, reflecting record sales and
increased unit volume. In the second quarter of 2003, the company had a net loss
of $53.0 million (30 cents per share). All per share amounts are diluted.
Sales of $4.5 billion were a record for any quarter, and a 20.1 percent
increase from $3.8 billion during the 2003 period. The increase in sales
reflects improved pricing and product mix as well as higher unit volume. It also
reflects the positive impact of the consolidation of two subsidiaries and the
favorable impact of currency translation.
Tire unit volume in the second quarter of 2004 was 55.0 million units,
compared to 52.8 million units in the 2003 period.
All seven of Goodyear's business units reported higher segment
operating income compared to the year-ago period. Total segment operating income
was $285.8 million, up 91.7 percent from last year.
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"With a relentless focus on delivering sustained growth and
profitability to our shareholders, we have been directing our attention toward
controlling costs, enhancing dealer relationships, focusing on high-margin
product lines and introducing new products designed to please customers around
the world," said Robert J. Keegan, Goodyear chairman and chief executive
officer. "This quarter's profitable results are a direct reflection of the
ongoing efforts of our associates and demonstrate that we are on the right
track," he said.
"While we still have work to do, we are pleased by the success we have
achieved to date, particularly the traction we are gaining in our North American
Tire business, which is reporting a quarterly profit for the first time in
nearly two years," Keegan added. "The company continues to work on improving
both its operating results and capital structure, however we are confident that
we are executing the right strategies. We expect our year-over-year momentum to
continue through the second half."
The second quarter of 2004 includes a $327 million positive impact on
sales, a 1.3 million unit increase in tire volume and a $4.4 million impact on
net income resulting from the consolidation of South Pacific Tyres Ltd. (SPT), a
tire manufacturer in Australia and New Zealand, and T&WA, a tire-mounting
operation in the United States. These operations were consolidated in accordance
with U.S. Financial Accounting Standards Board Interpretation No. 46 (FIN 46).
The 2004 second quarter also included after-tax rationalization charges
of $8.6 million (5 cents per share) and an after-tax charge of $9.0 million (5
cents per share) related to external professional fees associated with the
previously disclosed accounting investigation. The quarter also included an
after-tax gain of $1.7 million (1 cent per share) on asset sales.
The company estimates the effects of currency translation had a
positive impact on second quarter sales of approximately $86 million.
Raw material cost increases of approximately $41 million offset the
savings generated from rationalization actions and improved productivity.
The second quarter of 2003 included an after-tax rationalization charge
of $11.5 million (6 cents per share) and an after-tax loss of $6.2 million (3
cents per share) on asset sales.
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Goodyear recently announced additional plans to refinance and lengthen
the maturity of one of its U.S. credit facilities and the company will continue
to use specific strategies to address high levels of debt and unfunded pension
obligations. In addition to further refinancing to lengthen debt maturities,
Goodyear will explore potential asset sales and will ultimately seek increased
equity funding to improve its credit profile.
YEAR-TO-DATE RESULTS
Sales for the first six months of 2004 were a record $8.8 billion, an
increase of 20.6 percent from $7.3 billion in the 2003 period. Tire unit volume
was 110.7 million units, up from 105.4 million units a year ago.
The net loss for the first six months of 2004 was $51.8 million (30
cents per share), compared to a loss of $249.5 million ($1.42 per share) during
the year-ago period.
The consolidation of SPT and T&WA increased tire unit volume by 3.1
million units, had a positive impact on sales of $581 million, and had a minimal
impact on the net loss.
The first six months of 2004 included the following after-tax items: a
rationalization charge of $29.1 million (16 cents per share); a charge of $24.3
million (14 cents per share) related to external professional fees associated
with the previously disclosed accounting investigation; an expense of $11.6
million (7 cents per share) relating primarily to a fire at a European tire
manufacturing facility, and $4.9 million (3 cents per share) for accelerated
depreciation primarily related to the closure of a Latin American tire
manufacturing facility. The half also included an after-tax gain on sale of
assets of $5.6 million (3 cents per share).
The 2003 year-to-date period included an after-tax rationalization
charge of $69.2 million (39 cents per share) and an after-tax loss on asset
sales of $5.1 million (3 cents per share).
The company estimates the effects of currency movements had a positive
impact on sales of approximately $286 million during the first half.
BUSINESS SEGMENTS
Second quarter total segment operating income was $285.8 million, an
increase of 91.7 percent compared to $149.1 million in the 2003 period. For the
first half, total segment operating income was $501.9 million, an increase of
162.6 percent from $191.1 million in 2003.
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See the note at the end of this release for further explanation and a
reconciliation table.
<Table>
<Caption>
NORTH AMERICAN TIRE SECOND QUARTER SIX MONTHS
(in millions) 2004 2003 2004 2003
Tire Units 25.7 25.3 50.4 50.1
Sales $ 1,982.0 $ 1,692.0 $ 3,745.5 $ 3,284.2
Segment Operating
Income (Loss) 30.4 (10.2) (1.3) (76.7)
Segment Operating Margin 1.5% (0.6)% (0.0)% (2.3)%
</Table>
North American Tire's unit volume increased 1.6 percent in the second
quarter of 2004, and 0.7 percent in the first six months. Replacement volume
increased 5.6 percent in the quarter and 2.4 percent in the six-month period,
while shipments to original equipment customers were down 5.9 percent in the
quarter and 2.7 percent in the first half compared to the 2003 periods.
Sales were a second quarter record, increasing 17.1 percent compared to
the 2003 period, and 14 percent for the first six months. Sales were positively
affected by the consolidation of T&WA; favorable pricing and product mix,
primarily in the replacement markets; as well as increased volume. Second
quarter results were driven by sustained improvement in Goodyear-brand tires, as
well as some stabilization in the company's private label business.
Second quarter segment operating income improved significantly compared
to the 2003 period due to improved pricing and product mix, as well as higher
volume in the consumer replacement and commercial original equipment markets.
Savings from rationalization programs partially offset higher raw material and
manufacturing costs.
Segment operating income for the first half improved 98.3 percent from
2003. Pricing and product mix, as well as volume improvements, were driven
primarily by the consumer replacement and commercial original equipment tire
markets, consistent with second-quarter drivers. Higher raw material costs, as
well as higher manufacturing costs, were partially offset by rationalization
savings.
The consolidation of T&WA increased sales by approximately $152 million
in the second quarter and $226 million in the first half. T&WA's results
included in segment operating income were approximately $1.0 million for both
the quarter and the half.
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<Table>
<Caption>
EUROPEAN UNION TIRE SECOND QUARTER SIX MONTHS
(in millions) 2004 2003 2004 2003
Tire Units 15.4 14.9 31.7 30.7
Sales $ 1,061.2 $ 961.4 $ 2,171.9 $ 1,889.7
Segment Operating Income 56.6 37.6 125.5 62.6
Segment Operating Margin 5.3% 3.9% 5.8% 3.3%
</Table>
European Union Tire's unit volume in the second quarter of 2004
increased 3.2 percent from 2003, and 3.1 percent for the first half. Replacement
volume increased 4.1 percent for the quarter and 5 percent for the first six
months. Shipments to original equipment customers were essentially flat in the
second quarter and the first half.
Sales increased 10.4 percent for a new second quarter record, and
increased 14.9 percent for the six months compared to 2003 due primarily to the
favorable effect of currency translation and higher volume. Improved pricing and
product mix also drove the sales increase in the 2004 first half.
The company estimates the effects of currency translation positively
impacted sales by approximately $65 million in the second quarter of 2004 and
$195 million in the first half.
Segment operating income increased 50.5 percent during the second
quarter and doubled for the first six months of 2004 primarily due to improved
pricing and product mix, higher volume and the favorable impact of currency
translation. The first half also benefited from productivity and cost reduction
improvements.
<Table>
<Caption>
EASTERN EUROPE, MIDDLE SECOND QUARTER SIX MONTHS
EAST, AFRICA TIRE
(in millions) 2004 2003 2004 2003
Tire Units 4.6 4.7 9.2 8.7
Sales $ 300.8 $ 268.6 $ 583.8 $ 496.0
Segment Operating Income 45.8 34.4 88.4 55.3
Segment Operating Margin 15.2% 12.8% 15.1% 11.1%
</Table>
Eastern Europe, Middle East and Africa Tire's unit volume in the second
quarter of 2004 decreased 2.9 percent from the 2003 period, and increased 5.8
percent for the first half. Replacement volume was down 2.8 percent for the
quarter, but up 5.5 percent for the half. Shipments to original equipment
customers were down 3.5 percent compared to the second quarter of 2003, but up
6.9 percent for the half.
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Sales were up 12 percent in the quarter and 17.7 percent in the half
primarily due to improved pricing and product mix, largely the result of
increased sales of high performance and commercial truck tires, the impact of
price increases and the favorable impact of currency translation.
The company estimates currency translations had a positive impact on
sales of approximately $20 million in the second quarter, and $48 million in the
first half.
Segment operating income improved 33.1 percent in the quarter and 59.9
percent for the half due to improved pricing and product mix, as well as higher
volume.
<Table>
<Caption>
LATIN AMERICAN TIRE SECOND QUARTER SIX MONTHS
(in millions) 2004 2003 2004 2003
Tire Units 4.6 4.4 9.6 9.1
Sales $ 291.4 $ 258.3 $ 594.0 $ 490.0
Segment Operating Income 61.5 33.8 123.0 60.4
Segment Operating Margin 21.1% 13.1% 20.7% 12.3%
</Table>
Latin American Tire's unit volume increased 5.3 percent from the 2003
second quarter and 6.1 percent for the first half. Replacement volume was up
10.2 percent for the quarter and 11 percent for the half. Shipments to original
equipment customers were down 9.2 percent for the quarter and 8.4 percent for
the first six months.
Sales were favorably impacted in both periods by price increases and
improved product mix, primarily in the replacement market, as well as higher
volume. In the second quarter, these factors were partially offset by the
unfavorable impact of currency translation of approximately $8 million in the
quarter. The effects of currency translation had a positive impact on first half
sales of approximately $9 million.
Segment operating income increased significantly in both periods of
2004 due to improved pricing, product mix and volume, as well as savings from
cost reduction programs.
<Table>
<Caption>
ASIA/PACIFIC TIRE SECOND QUARTER SIX MONTHS
(in millions) 2004 2003 2004 2003
Tire Units 4.7 3.5 9.8 6.8
Sales $ 327.0 149.1 $ 649.6 $ 289.8
Segment Operating Income 16.3 12.7 26.6 25.9
Segment Operating Margin 5.0% 8.5% 4.1% 8.9%
</Table>
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Asia/Pacific Tire's unit volume was up 36.9 percent from the 2003
second quarter, and 44.3 percent for the first half of the year, driven largely
by the consolidation of SPT. Replacement volume increased 45.6 percent for the
quarter and 59.4 percent for the half. Shipments to original equipment customers
increased 18.8 percent for the quarter, and 13.9 percent for the first six
months.
Sales increased compared to the 2003 periods due primarily to the
consolidation of SPT. Improved pricing and product mix also had a positive
impact on sales during the quarter and half. The favorable impact of currency
translation on first-half sales was approximately $9 million.
Segment operating income increased for both the quarter and the half
compared to 2003 due to improved pricing and product mix, as well as lower
manufacturing costs due to improved productivity. The consolidation of SPT had a
slightly favorable impact on the quarter.
The consolidation of SPT increased units by 1.3 million in the second
quarter and 3.1 million in the first half, and increased sales by approximately
$173 million in the quarter and $353 million in the half. The impact on segment
operating income was an approximately $1.0 million increase in the second
quarter, with a minimal decrease in the first half.
<Table>
<Caption>
ENGINEERED PRODUCTS SECOND QUARTER SIX MONTHS
(in millions) 2004 2003 2004 2003
Sales $ 368.1 $ 299.0 $ 712.7 $ 590.9
Segment Operating Income 32.2 20.2 54.6 11.6
Segment Operating Margin 8.7% 6.8% 7.7% 2.0%
</Table>
Engineered Products' sales in the second quarter of 2004 increased 23.1
percent due largely to higher volume and favorable product mix related to
military, original equipment and replacement sales. Strong military, industrial
and original equipment sales drove the 20.6 percent increase in sales during the
first half. Currency translation favorably impacted sales by approximately $5
million in the quarter and $22 million in the first half.
Segment operating income increased in both periods due to higher
volume, primarily in the military business. Savings from rationalization actions
also improved segment operating income in the second quarter.
<Table>
<Caption>
CHEMICAL PRODUCTS SECOND QUARTER SIX MONTHS
(in millions) 2004 2003 2004 2003
Sales $ 377.0 $ 303.6 $ 735.0 $ 603.1
Segment Operating Income 43.0 20.6 85.1 52.0
Segment Operating Margin 11.4% 6.8% 11.6% 8.6%
</Table>
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Chemical Products' sales increased in both the quarter and the half due
to higher volume and higher selling prices resulting primarily from the pass
through of increased raw material and energy costs.
Segment operating income increased significantly in both periods due to
improved price and mix, higher volume and plant efficiencies.
The company announced last month that it has concluded its exploration
into the possible sale of the Chemicals Business, determining that the business
remains more valuable to Goodyear and its stakeholders if retained than if sold.
CONFERENCE CALL
Goodyear will hold an investor conference call at 9 a.m. EDT today.
Prior to the commencement of the call, the company will post the financial and
other statistical information that will be presented on its investor relations
Web site: investor.goodyear.com.
Participating in the conference call with Keegan will be Richard J.
Kramer, executive vice president and chief financial officer.
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 8:55 a.m. A taped replay of the conference call will be
available at 2 p.m. today by calling (706) 634-4556. 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 80 facilities in 28
countries around the world. Goodyear employs about 86,000 people worldwide.
Certain information contained in this press release may constitute
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 factors, including, without limitation, the ongoing investigation by
the SEC regarding Goodyear's accounting restatement. Additional factors that may
cause actual results to differ materially from those indicated by such
forward-looking statements are discussed in the company's filings with the
Securities and Exchange Commission, including its Form 10-K for the year ended
December 31, 2003 and Form 10-Q for the quarter ended June 30, 2004. 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.
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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<Table>
<Caption>
(In millions, except per share) SECOND QUARTER SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
2004 2003 2004 2003
NET SALES $ 4,508.9 $ 3,753.3 $ 8,799.8 $ 7,299.1
Cost of Goods Sold 3,582.8 3,038.8 7,048.5 6,001.6
Selling, Administrative and
General Expense 689.7 594.0 1,374.6 1,165.3
Rationalizations 10.0 15.4 33.8 76.1
Interest Expense 87.0 82.4 171.2 140.8
Other (Income) Expense 37.5 29.4 80.6 73.0
Foreign Currency Exchange (2.2) 18.1 3.7 19.0
Equity in (Earnings) Loss of Affiliates (1.9) 0.9 (3.7) 4.3
Minority Interest in
Net Income of Subsidiaries 20.3 13.3 26.6 23.5
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES 85.7 (39.0) 64.5 (204.5)
United States and Foreign Taxes
on Income 60.6 14.0 116.3 45.0
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 25.1 $ (53.0) $ (51.8) $ (249.5)
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE OF
COMMON STOCK - BASIC $ 0.14 $ (0.30) $ (0.30) $ (1.42)
========== ========== ========== ==========
Average Shares Outstanding 175.3 175.3 175.3 175.3
NET INCOME (LOSS) PER SHARE OF
COMMON STOCK - DILUTED $ 0.14 $ (0.30) $ (0.30) $ (1.42)
========== ========== ========== ==========
Average Shares Outstanding 176.8 175.3 175.3 175.3
</Table>
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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (unaudited)
<Table>
<Caption>
(In millions) JUNE 30 DEC. 31
2004 2003
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,300.6 $ 1,541.0
Restricted Cash 85.1 23.9
Accounts and Notes Receivable, less allowance - $131.4 ($128.2 in 2003) 3,148.8 2,621.5
Inventories 2,677.8 2,465.0
Prepaid Expenses and Other Current Assets 263.5 336.7
---------- ----------
TOTAL CURRENT ASSETS 7,475.8 6,988.1
Long Term Accounts and Notes Receivable 226.5 255.0
Investments in Affiliates 34.9 177.5
Other Assets 83.3 74.9
Goodwill 624.6 622.5
Other Intangible Assets 146.8 161.8
Deferred Income Taxes 397.5 397.5
Prepaid and Deferred Pension Cost 865.3 868.3
Deferred Charges 245.9 252.7
Properties and Plants, less Accumulated Depreciation - $7,321.5 ($7,246.8 in 2003) 5,161.2 5,207.2
---------- ----------
TOTAL ASSETS $ 15,261.8 $ 15,005.5
LIABILITIES
CURRENT LIABILITIES:
Accounts Payable - Trade $ 1,688.1 $ 1,572.9
Compensation and Benefits 1,050.2 983.1
Other Current Liabilities 526.5 572.2
United States and Foreign Taxes 356.7 306.1
Notes Payable 145.3 137.7
Long Term Debt due within One Year 1,195.8 113.5
---------- ----------
TOTAL CURRENT LIABILITIES 4,962.6 3,685.5
Long Term Debt and Capital Leases 3,916.0 4,826.2
Compensation and Benefits 4,639.5 4,540.4
Other Long Term Liabilities 1,117.8 1,140.8
Minority Equity in Subsidiaries 773.4 825.7
---------- ----------
TOTAL LIABILITIES 15,409.3 15,018.6
SHAREHOLDERS' EQUITY
Preferred Stock, no par value:
Authorized 50 shares, unissued -- --
Common Stock, no par value:
Authorized 300 shares
Outstanding Shares - 175.3 (175.3 in 2003)
After Deducting 20.3 Treasury Shares (20.4 in 2003) 175.3 175.3
Capital Surplus 1,390.3 1,390.2
Retained Earnings 928.6 980.4
Accumulated Other Comprehensive Income (Loss) (2,641.7) (2,559.0)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY (147.5) (13.1)
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 15,261.8 $ 15,005.5
========== ==========
</Table>
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TOTAL SEGMENT OPERATING INCOME RECONCILIATION TABLE (UNAUDITED)
<Table>
<Caption>
(In millions) SECOND QUARTER SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
2004 2003 2004 2003
TOTAL SEGMENT OPERATING INCOME $ 285.8 $ 149.1 $ 501.9 $ 191.1
Rationalizations and asset sales (7.6) (29.8) (27.3) (89.1)
Accelerated depreciation charges
and asset writeoffs (0.6) (0.7) (4.9) (8.2)
Interest Expense (87.0) (82.4) (171.2) (140.8)
Foreign Currency Exchange 2.2 (18.1) (3.7) (19.0)
Minority Interest in Net Income of Subsidiaries (20.3) (13.3) (26.6) (23.5)
Inter-SBU income (31.7) (18.2) (64.5) (36.0)
Financing fees and financial instruments (28.1) (25.1) (61.7) (53.1)
Equity in earnings (loss) of affiliates 0.7 (2.2) 0.6 (6.4)
General and product liability, discontinued products (12.1) 9.1 (19.8) (10.0)
Expenses for insurance fire loss deductible -- -- (11.7) --
Professional fees associated with restatement (9.0) -- (24.3) --
Other (6.6) (7.4) (22.3) (9.5)
------- ------- ------- -------
Income (loss) before Income Taxes 85.7 (39.0) 64.5 (204.5)
United States and Foreign Taxes on loss (60.6) (14.0) (116.3) (45.0)
NET INCOME (LOSS) $ 25.1 $ (53.0) $ (51.8) $ (249.5)
======= ======= ======= =======
</Table>
Management believes that total segment operating income is useful because it
represents the aggregate value of income created by the company's strategic
business units ("SBUs") and excludes items not directly related to the SBUs for
performance evaluation purposes. Total segment operating income is the sum of
the individual SBU's segment operating income as determined in accordance with
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information."
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