Second Quarter Highlights Include:
- Sales increased 6.5% to a record $5.2 billion
- Revenue per tire increased 9%
- Income from Continuing Operations up 159% to $75 million
- Segment operating income increased to $330 million
- International businesses' sales up 18%, segment operating income up 19%,
both records
- Raised 4-point cost savings plan target to more than $2 billion
- Announced multi-year investment strategies to modernize facilities,
increase high-value-added capacity and expand emerging markets businesses
AKRON, Ohio, July 31 /PRNewswire-FirstCall/ -- The Goodyear Tire &
Rubber Company (NYSE: GT) today reported record second quarter sales driven
by the performance of its international businesses.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050204/GTLOGO )
Goodyear's second quarter sales were a record $5.2 billion, up 6.5
percent from last year due to improved pricing, a richer product mix and
the impact of favorable foreign currency translation, which offset lower
volume in North America and Europe. Also impacting results was the 2007
divestiture of the company's T&WA tire mounting business, which had sales
of $186 million in last year's second quarter.
Revenue per tire, excluding the impact of foreign currency translation,
increased 9 percent over the 2007 quarter, reflecting worldwide gains in
pricing and product mix generated by the company's successful strategy to
focus on high-value-added tires. Year-over-year revenue per tire has
increased for 15 consecutive quarters.
The higher level of sales in 2008 reflects strong growth in Goodyear's
international businesses, which collectively increased sales 18 percent
over 2007's second quarter and represented approximately 60 percent of
total sales in the quarter. This growth helped to offset lower sales in
North American Tire, which declined 6 percent. Compared to 2007, North
American Tire's second quarter unit volume was down 12 percent, reflecting
the weak demand environment. The decline was most notable in the consumer
original equipment market and in low-value-added segments of the consumer
replacement market.
"Our strong second quarter and first half performance demonstrates the
successful execution of our strategies despite the significant economic
challenges we are facing, particularly in North America," said Robert J.
Keegan, chairman and chief executive officer.
"Robust growth in our international operations, especially in emerging
markets, more than offset the continuing weakness in the North American
market. Our strategy to invest in emerging markets has resulted in a
profitable and growing set of businesses," he said.
"We remain confident in our ability to manage through the challenging
near-term business conditions and are focused on maximizing business
performance given the environment," Keegan added. "At the same time, our
long-term investment strategy positions us to capitalize on available,
attractive market opportunities."
Total segment operating income from continuing operations was $330
million, up 6.5 percent from the year-ago period, driven by significant
improvement in the company's international business units, each of which
achieved record second quarter results.
Improved pricing and product mix of approximately $249 million in the
second quarter more than offset increased raw material costs of
approximately $124 million.
Second quarter 2008 net income from continuing operations was $75
million (31 cents per share). This compares to $29 million (14 cents per
share) in the year-ago quarter. Including discontinued operations, Goodyear
had net income of $56 million (26 cents per share) in the 2007 second
quarter. All per share amounts are diluted.
The 2008 quarter was impacted by after-tax rationalization and
accelerated depreciation costs of $87 million (36 cents per share)
primarily related to the planned closure of a tire plant in Australia. The
second quarter of 2007 included after-tax debt retirement expenses of $45
million (20 cents per share), rationalization and accelerated depreciation
costs of $15 million (6 cents per share) and an out-of-period tax benefit
to correct deferred taxes in Colombia of $11 million (5 cents per share).
See the table at the end of this release for a list of significant
items impacting continuing operations from the 2008 and 2007 quarters.
Goodyear said it made additional progress during the second quarter on
its four-point cost savings plan and increased its target to more than $2
billion in gross cost savings from 2006 through 2009. "We have achieved
more than $1.4 billion in savings since beginning this plan and remain on
target to reach this higher level of savings," Keegan said.
The company's strategy to drive profitable growth includes significant
plans to capitalize on worldwide increases in demand for its innovative,
high- value-added tires. The company also plans to build on its strength in
emerging markets in Latin America, Eastern Europe and Asia.
Business Segments
Segment operating income from continuing operations increased to $330
million representing the highest level ever achieved in a second quarter.
All three of the international businesses reported record second quarter
segment operating income, with Asia Pacific Tire setting a record for any
quarter.
See the note at the end of this release for further explanation and a
segment operating income reconciliation table.
North American Tire Second Quarter Six Months
(in millions) 2008 2007 2008 2007
Tire Units 18.3 20.8 36.1 40.1
Sales $2,130 $2,276 $4,127 $4,293
Segment Operating Income 24 53 56 33
Segment Operating Margin 1.1% 2.3% 1.4% 0.8%
North American Tire's second quarter sales were down 6 percent compared
to the 2007 period. Impacting results was the 2007 divestiture of the
company's T&WA tire mounting business, which had sales of $186 million in
the second quarter of 2007. Also, tire volume declined by 2.5 million units
reflecting significantly weaker demand compared to last year, particularly
in the consumer original equipment market and in low-value-added segments
of the consumer replacement market. Sales in the 2008 quarter were
positively impacted by improved pricing and product mix, market share gains
in Goodyear- branded consumer replacement tires, and the success of the
company's other high-value-added tire lines.
Second quarter segment operating income was $24 million, down from the
2007 quarter as continued improvements in pricing, product mix and
structural costs were more than offset by the effects of market weakness,
higher inflation and costs related to modernizing factories and training
new manufacturing associates. Improved pricing and product mix of $107
million more than offset increased raw material costs of $59 million.
Europe, Middle East Second Quarter Six Months
and Africa Tire
(in millions) 2008 2007 2008 2007
Tire Units 18.8 19.8 38.8 39.9
Sales $2,024 $1,759 $3,974 $3,447
Segment Operating Income 151 126 323 265
Segment Operating Margin 7.5% 7.2% 8.1% 7.7%
Europe, Middle East and Africa Tire's quarterly sales exceeded $2
billion for the first time, increasing 15 percent compared to the second
quarter of 2007. The increase resulted primarily from the favorable impact
of foreign currency translation and improved pricing and product mix that
more than offset lower volume resulting from softer market conditions.
Sales in the 2008 quarter were positively impacted by market share gains in
Goodyear- and Dunlop-branded consumer replacement tires.
Segment operating income increased 20 percent due in part to improved
pricing and product mix of $78 million that more than offset $37 million in
higher raw material costs. Favorable foreign currency translation also
benefited the 2008 period. These positive factors were partially offset by
lower volume and higher manufacturing costs partly related to a strike in
Turkey, ongoing labor issues in France and the impact of inflation.
Latin American Tire Second Quarter Six Months
(in millions) 2008 2007 2008 2007
Tire Units 5.4 5.4 10.6 10.7
Sales $572 $458 $1,102 $868
Segment Operating Income 103 90 217 168
Segment Operating Margin 18.0% 19.7% 19.7% 19.4%
Latin American Tire's second quarter sales increased 25 percent
compared to the 2007 quarter primarily due to improved pricing and product
mix and the favorable impact of foreign currency translation. Sales in the
2008 quarter were positively impacted by market share gains for
Goodyear-branded tires in premium market segments.
Segment operating income increased 14 percent from 2007 due to improved
pricing and product mix of $43 million that more than offset $17 million in
higher raw material costs. Higher inflation impacting manufacturing and
transportation costs as well as favorable foreign currency translation also
affected the quarter.
Asia Pacific Tire Second Quarter Six Months
(in millions) 2008 2007 2008 2007
Tire Units 5.4 4.8 10.3 9.3
Sales $513 $428 $978 $812
Segment Operating Income 52 41 101 70
Segment Operating Margin 10.1% 9.6% 10.3% 8.6%
Asia Pacific Tire's quarterly sales exceeded $500 million for the first
time, increasing 20 percent compared to the 2007 second quarter primarily
due to improved pricing and product mix, higher volume and the favorable
impact of foreign currency translation.
Segment operating income increased 27 percent in the 2008 quarter,
primarily due to improved pricing and product mix of $21 million, which
more than offset raw material cost increases of $11 million. Higher unit
volume also positively impacted the quarter.
Conference Call
Goodyear will hold an investor conference call at 10:30 a.m. today.
Prior to the commencement of the call, the company will post the financial
and other related information that will be presented on its investor
relations Web site: investor.goodyear.com.
Participating in the conference call with Keegan will be W. Mark
Schmitz, executive vice president and chief financial officer, and Darren
R. Wells, senior vice president, finance and strategy.
Investors, 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 10:15 a.m. A taped replay will be available at noon by
calling (706) 645-9291. The replay will also remain available on the Web
site.
Goodyear is one of the world's largest tire companies. Fortune magazine
named Goodyear the World's Most Admired Motor Vehicle Parts Company in its
2008 list of the World's Most Admired Companies. The publication ranked
Goodyear No. 1 in innovation, people management, use of assets and global
orientation. The company is also listed on Forbes magazine's list of the
Most Respected Companies in America and its list of the Most Trustworthy
Companies in America and CRO magazine's ranking of the 100 Best Corporate
Citizens. Goodyear employs about 70,000 people and manufactures its
products in more than 60 facilities in 25 countries around the world. For
more information about Goodyear, go to http://www.goodyear.com/corporate.
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. There are a variety
of factors, many of which are beyond our control, which affect our
operations, performance, business strategy and results and could cause our
actual results and experience to differ materially from the assumptions,
expectations and objectives expressed in any forward-looking statements.
These factors include, but are not limited to: actions and initiatives
taken by both current and potential competitors; increases in the prices
paid for raw materials and energy; our ability to realize anticipated
savings and operational benefits from our cost reduction initiatives or to
implement successfully other strategic initiatives; whether or not the
various contingencies and requirements are met for the establishment of a
Voluntary Employees' Beneficiary Association (VEBA) to provide healthcare
benefits for current and future USW retirees; potential adverse
consequences of litigation involving the company; pension plan funding
obligations; as well as the effects of more general factors such as changes
in general market or economic conditions or in legislation, regulation or
public policy. Additional factors are discussed in our filings with the
Securities and Exchange Commission, including our annual report on Form
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. 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.
Media Contact: Keith Price
330-796-1863
Analyst Contact: Pat Stobb
330-796-6704
(financial statements follow)
The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Statements of Operations
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
(In millions, except
per share amounts) 2008 2007 2008 2007
NET SALES $5,239 $4,921 $10,181 $9,420
Cost of Goods Sold 4,196 3,967 8,157 7,708
Selling, Administrative
and General Expense 735 692 1,370 1,355
Rationalizations 87 7 100 22
Interest Expense 76 120 165 245
Other (Income) and
Expense (22) 39 (28) 19
Income from Continuing
Operations before
Income Taxes and
Minority Interest 167 96 417 71
United States and Foreign
Taxes 74 51 151 114
Minority Interest 18 16 44 38
Income (Loss) from
Continuing Operations 75 29 222 (81)
Discontinued Operations - 27 - (37)
NET INCOME (LOSS) $75 $56 $222 $(118)
Income (Loss) Per
Share - Basic
Income (Loss) from
Continuing
Operations $0.31 $0.15 $0.92 $(0.43)
Discontinued Operations - 0.13 - (0.20)
Net Income (Loss)
Per Share - Basic $0.31 $0.28 $0.92 $ (0.63)
Weighted Average
Shares Outstanding 241 196 240 188
Income (Loss) Per
Share - Diluted
Income (Loss) from
Continuing Operations $0.31 $0.14 $0.91 $(0.43)
Discontinued
Operations - 0.12 - (0.20)
Net Income (Loss)
Per Share - Diluted $0.31 $0.26 $0.91 $(0.63)
Weighted Average
Shares Outstanding 243 231 244 188
The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Balance Sheets
(unaudited)
June 30, December 31,
(In millions) 2008 2007
Assets:
Current Assets:
Cash and Cash Equivalents $2,069 $3,463
Restricted Cash 181 191
Accounts Receivable, less
Allowance - $93 ($88 in 2007) 3,630 3,103
Inventories:
Raw Materials 675 591
Work in Process 153 147
Finished Products 3,105 2,426
3,933 3,164
Prepaid Expenses and Other Current Assets 292 251
Total Current Assets 10,105 10,172
Goodwill 784 713
Intangible Assets 165 167
Deferred Income Tax 76 83
Other Assets 436 458
Property, Plant and Equipment
less Accumulated Depreciation -
$8,730 ($8,329 in 2007) 5,928 5,598
Total Assets $17,494 $17,191
Liabilities:
Current Liabilities:
Accounts Payable-Trade $2,787 $2,422
Compensation and Benefits 930 897
Other Current Liabilities 812 753
United States and Foreign Taxes 235 196
Notes Payable and Overdrafts 300 225
Long Term Debt and Capital Leases due
within one year 101 171
Total Current Liabilities 5,165 4,664
Long Term Debt and Capital Leases 3,668 4,329
Compensation and Benefits 3,245 3,404
Deferred and Other Noncurrent Income Taxes 305 274
Other Long Term Liabilities 657 667
Minority Equity in Subsidiaries 1,101 1,003
Total Liabilities 14,141 14,341
Commitments and Contingent Liabilities
Shareholders' Equity:
Preferred Stock, no par value:
Authorized, 50 shares, unissued - -
Common Stock, no par value:
Authorized, 450 shares, Outstanding
shares - 241 (240 in 2007)
after deducting 10 treasury
shares (10 in 2007) 241 240
Capital Surplus 2,694 2,660
Retained Earnings 1,824 1,602
Accumulated Other Comprehensive Loss (1,406) (1,652)
Total Shareholders' Equity 3,353 2,850
Total Liabilities and Shareholders' Equity $17,494 $17,191
Non-GAAP Financial Measures
This earnings release presents total segment operating income and net
debt, each of which are important financial measures for the company but
are not financial measures defined by GAAP.
Total segment operating income is the sum of the individual strategic
business units' segment operating income as determined in accordance with
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Management believes
that total segment operating income is useful because it represents the
aggregate value of income created by the company's SBUs and excludes items
not directly related to the SBUs for performance evaluation purposes. See
the table below for the reconciliation of total segment operating income.
Net debt is total debt (the sum of long term debt and capital leases,
notes payable, and long-term debt and capital leases due within one year)
minus cash and cash equivalents. Management believes net debt is an
important measure of liquidity, which it uses as a tool to assess the
company's capital structure and measure its ability to meet its future debt
obligations. Cash and cash equivalents are subtracted from the GAAP measure
because they could be used to reduce our debt obligations. See the table
below for the reconciliation of net debt.
Total Segment Operating Income Reconciliation Table
(In millions)
Quarter Ended
June 30,
(unaudited)
2008 2007
Total Segment Operating Income $ 330 $ 310
Rationalizations (87) (7)
Accelerated depreciation (4) (8)
Interest expense (76) (120)
Corporate incentive and stock-based
compensation plans (11) (26)
Intercompany profit elimination (4) 4
Retained net expenses of
discontinued operations -- (9)
Other income and (expense) 22 (39)
Other (3) (9)
Income from continuing operations
before income taxes and minority
interest 167 96
US and foreign taxes 74 51
Minority interest in net income
of subsidiaries 18 16
Income from continuing operations 75 29
Discontinued operations -- 27
Net Income $ 75 $ 56
Net Debt Reconciliation Table
(In millions)
June 30, Dec. 31,
2008 2007
Long term debt and capital leases $ 3,668 $ 4,329
Notes payable and overdrafts 300 225
Long term debt and capital leases
due within one year 101 171
Total debt 4,069 4,725
Less: cash and cash equivalents 2,069 3,463
Net debt $2,000 $1,262
Change in net debt $738
Second Quarter Significant Items (After Tax and Minority Interest)
Impacting Continuing Operations
2008
- Rationalization and accelerated depreciation charges, $87 million (36
cents per share)
- Gain on asset sales, $2 million (1 cent per share)
2007
- Debt retirement expenses, $45 million (20 cents per share)
- Rationalization and accelerated depreciation charges, $15 million (6
cents per share)
- Costs related to fire at factory in Thailand, $4 million (2 cents per
share)
- Impact of USW strike due to lost sales, $5 million (2 cents per share)
- Out of period tax benefit to correct deferred taxes in Colombia, $11
million (5 cents per share)
- Gain on asset sales, $9 million (4 cents per share)
SOURCE The Goodyear Tire & Rubber Company
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Related links:
http://www.goodyear.com
http://www.GoodyearNewsRoom.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20050204/GTLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Keith Price, +1-330-796-1863; Pat Stobb,
+1-330-796-6704, both of The Goodyear Tire & Rubber Company
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