<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
COMMISSION FILE NUMBER: 1-1927
THE GOODYEAR TIRE & RUBBER COMPANY
(Exact name of registrant as specified in its charter)
OHIO 34-0253240
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1144 EAST MARKET STREET, AKRON, OHIO 44316-0001
(Address of principal executive offices) (Zip Code)
(216) 796-2121
(Registrant's telephone number, including area code)
___________________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
___________________________________
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Number of Shares of Common Stock,
Without Par Value, Outstanding at October 31, 1995: 152,430,260
<PAGE> 2
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions, except per share)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $3,305.1 $3,115.8 $9,899.2 $9,077.7
Cost of Goods Sold 2,558.4 2,362.4 7,596.4 6,818.2
Selling, Administrative and General Expense 470.0 492.0 1,431.6 1,440.2
Interest Expense 33.2 32.6 101.5 100.3
Other (Income) and Expense 6.7 (4.1) 16.3 (35.7)
Foreign Currency Exchange (5.6) (4.2) 22.3 75.6
Minority Interest in Net Income of Subsidiaries 10.9 7.5 27.1 16.7
---------- --------- --------- ---------
Income before Income Taxes 231.5 229.6 704.0 662.4
United States and Foreign Taxes on Income 74.0 78.3 239.4 231.9
---------- --------- --------- ---------
Net Income $157.5 $151.3 464.6 430.5
========== =========
Retained Earnings at Beginning of Period 2,194.5 1,740.9
--------- ---------
2,659.1 2,171.4
Cash Dividends on Common Stock 106.3 83.1
--------- ---------
Retained Earnings at End of Period $2,552.8 $2,088.3
========= =========
Per Share of Common Stock $1.03 $1.00 $3.06 $2.85
Dividends per Share $0.25 $0.20 $0.70 $0.55
Average Shares Outstanding 152,295,197 151,305,777 151,845,157 151,150,871
</TABLE>
The accompanying notes are an integral part of this financial statement.
1.
<PAGE> 3
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions)
Sept. 30, December 31,
1995 1994
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $223.2 $250.9
Accounts and notes receivable, less
allowance 1995-$58.0, 1994- $54.0 1,935.0 1,524.7
Inventories
Raw materials 357.2 269.9
Work in process 86.4 69.8
Finished product 1,345.2 1,085.4
------------- -------------
1,788.8 1,425.1
Prepaid expenses 596.8 422.0
------------- -------------
TOTAL CURRENT ASSETS 4,543.8 3,622.7
OTHER ASSETS:
Investments in affiliates, at equity 121.2 133.4
Long term accounts and notes receivable 261.0 208.5
Deferred charges and other miscellaneous assets 776.7 775.9
------------- -------------
1,158.9 1,117.8
PROPERTIES AND PLANTS, less accumulated depreciation
1995-$4,751.5, 1994-$4,486.3 4,457.3 4,382.8
------------- -------------
$10,160.0 $9,123.3
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade $1,036.9 $1,013.9
Compensation and benefits 806.4 745.2
Other current liabilities 269.1 259.8
United States and foreign taxes 366.3 326.2
Notes payable to banks 495.9 213.0
Long term debt due within one year 30.3 13.9
------------- -------------
TOTAL CURRENT LIABILITIES 3,004.9 2,572.0
LONG TERM DEBT AND CAPITAL LEASES 1,288.2 1,108.7
COMPENSATION AND BENEFITS 2,193.3 2,173.4
OTHER LONG TERM LIABILITIES 326.6 322.1
MINORITY EQUITY IN SUBSIDIARIES 156.5 143.9
SHAREHOLDERS' EQUITY:
Preferred stock, no par value:
Authorized 50,000,000 shares, unissued - -
Common stock, no par value:
Authorized 300,000,000 shares
Outstanding shares 152,422,435 (151,407,285 in 1994)
after deducting 43,256,233 treasury shares
(44,271,227 in 1994) 152.4 151.4
Capital surplus 949.1 918.5
Retained earnings 2,552.8 2,194.5
------------- -------------
3,654.3 3,264.4
Foreign currency translation adjustment (424.4) (421.7)
Minimum pension liability adjustment (39.4) (39.5)
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 3,190.5 2,803.2
------------- -------------
$10,160.0 $9,123.3
============= =============
</TABLE>
The accompanying notes are an integral part of this financial statement.
2.
<PAGE> 4
THE GOODYEAR TIRE & RUBBER COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions) Nine Months Ended
September 30,
1995 1994
Cash Flows from Operating Activities: ---------- ---------
<S> <C> <C>
Net Income $464.6 $430.5
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 321.2 300.6
Accounts and notes receivable (380.5) (381.8)
Inventories (347.1) (19.0)
Accounts payable-trade 14.7 27.4
Domestic pension funding (231.4) (160.3)
Other assets and liabilities 137.8 179.6
---------- ---------
Total adjustments (485.3) (53.5)
---------- ---------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (20.7) 377.0
Cash Flows from Investing Activities:
Capital expenditures (373.5) (311.1)
Short term securities acquired (21.4) (241.3)
Short term securities redeemed 30.9 251.2
Other transactions 7.4 8.8
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES (356.6) (292.4)
Cash Flows from Financing Activities:
Short term debt incurred 625.2 412.4
Short term debt paid (222.8) (251.4)
Long term debt incurred 127.9 34.4
Long term debt and capital leases paid (98.1) (95.4)
Common stock issued 29.0 39.5
Dividends paid (106.3) (83.1)
---------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 354.9 56.4
Effect of Exchange Rate Changes on Cash and Cash Equivalents (5.3) (1.6)
---------- ---------
Net Change in Cash and Cash Equivalents (27.7) 139.4
Cash and Cash Equivalents at Beginning of the Period 250.9 188.5
---------- ---------
Cash and Cash Equivalents at End of the Period $223.2 $327.9
========== =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
3.
<PAGE> 5
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ADJUSTMENTS
- -----------
All adjustments, consisting of normal recurring adjustments, necessary for a
fair statement of the results of these unaudited interim periods have been
included.
PER SHARE OF COMMON STOCK
- -------------------------
Per share amounts have been computed based on the average number of common
shares outstanding.
4.
<PAGE> 6
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1995 1994 1995 1994
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
INDUSTRY SEGMENTS
SALES TO UNAFFILIATED CUSTOMERS
Tires $2,543.2 $2,401.0 $7,568.6 $6,940.9
Related products and services 307.4 276.1 883.0 820.0
--------- --------- ---------- ----------
Tires 2,850.6 2,677.1 8,451.6 7,760.9
General products 422.3 414.3 1,353.5 1,259.5
Oil transportation 32.2 24.4 94.1 57.3
--------- --------- ---------- ----------
NET SALES $3,305.1 $3,115.8 $9,899.2 $9,077.7
========= ========= ========== ==========
INCOME
Tires $250.7 $249.8 $759.6 $781.0
General products 34.9 31.3 129.2 133.0
Oil transportation 16.1 7.9 38.9 6.3
--------- --------- ---------- ----------
OPERATING INCOME 301.7 289.0 927.7 920.3
--------- --------- ---------- ----------
Exclusions from operating income (70.2) (59.4) (223.7) (257.9)
--------- --------- ---------- ----------
Income before income taxes $231.5 $229.6 $704.0 $662.4
========= ========= ========== ==========
GEOGRAPHIC SEGMENTS
SALES TO UNAFFILIATED CUSTOMERS
United States $1,835.6 $1,828.4 $5,503.2 $5,346.5
Europe 706.0 558.3 2,094.1 1,633.3
Latin America 376.8 383.4 1,178.8 1,107.2
Asia 216.9 177.8 610.3 515.2
Canada 169.8 167.9 512.8 475.5
--------- --------- ---------- ----------
$3,305.1 $3,115.8 $9,899.2 $9,077.7
========= ========= ========== ==========
OPERATING INCOME
United States $143.3 $151.4 $427.9 $466.5
Europe 79.3 50.3 232.0 157.5
Latin America 48.2 60.8 179.2 218.5
Asia 24.4 20.0 66.5 57.3
Canada 6.5 6.5 22.1 20.5
--------- --------- ---------- ----------
$301.7 $289.0 $927.7 $920.3
========= ========= ========== ==========
</TABLE>
5.
<PAGE> 7
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
CONSOLIDATED
- ------------
THIRD QUARTER: Sales of $3.31 billion increased 6.1 percent from $3.12
billion in the 1994 period. Net income was $157.5 million or $1.03 per share,
increasing 4.1 percent from $151.3 million or $1.00 per share in the 1994
period.
Sales increased due primarily to worldwide pricing improvements and the
strengthening of various European currencies versus the dollar. Tire unit
sales decreased 1.4 percent from the 1994 period, due primarily to reduced
volume in the U.S. and in Latin America.
Cost of goods sold rose to 77.4 percent of sales from 75.8 percent in the
1994 period, primarily as a result of higher raw material and labor costs. Raw
material costs are not expected to increase significantly for the balance of
1995 but are expected to remain higher than in 1994. Manufacturing costs
reflected efficiencies resulting from continued high levels of capacity
utilization and ongoing cost containment measures.
Selling, administrative and general expense decreased to 14.2 percent of
sales from 15.8 percent in the 1994 period, reflecting increased sales, lower
compensation and benefit costs in the U.S. and ongoing cost containment
measures. Tax expense benefited from a reduction in the estimated annual
effective tax rate, due primarily to lower U.S. taxes on foreign source income.
Other income and expense was adversely impacted by lower interest income in
Latin America, resulting primarily from reduced levels of time deposits in
Brazil.
Operations in Brazil accounted for 4.3 percent of consolidated sales and
2.1 percent of consolidated operating income, compared to 5.0 percent and 11.1
percent, respectively, in the 1994 period. The decrease primarily affected the
tire segment and resulted from higher raw material and labor costs, reduced
tire unit sales and lower interest income. It is difficult to forecast future
levels of contribution due to Brazil's current economic downturn and the
general volatility of its economy.
6.
<PAGE> 8
NINE MONTHS: Sales of $9.90 billion increased 9.0 percent from $9.08
billion in the 1994 period. Net income was $464.6 million or $3.06 per share,
increasing 7.9 percent from $430.5 million or $2.85 per share in the 1994
period.
Sales increased due primarily to pricing improvements and the
strengthening of various European currencies versus the dollar. Tire unit
sales rose slightly from the 1994 period, reflecting increased volume in
international markets.
Cost of goods sold rose to 76.7 percent of sales from 75.1 percent in the
1994 period, primarily as a result of higher raw material and labor costs.
Manufacturing costs reflected efficiencies resulting from continued high levels
of capacity utilization and ongoing cost containment measures.
Selling, administrative and general expense decreased to 14.5 percent of
sales from 15.9 percent in the 1994 period, reflecting increased sales and
ongoing cost containment measures. The Company's effective tax rate decreased,
due primarily to lower U.S. taxes on foreign source income. Other income and
expense was adversely impacted by lower interest income in Latin America, but
foreign currency exchange expense was significantly lower, both of which were
due primarily to the effects of a Brazilian economic plan.
Effective July 1, 1994, the Brazilian government implemented a new
economic plan (the Real plan) designed to reduce inflation. The Real plan did
not adversely affect net income in Brazil or unit sales in either Brazil or its
export markets. However, while sales increased, segment operating income in
Brazil decreased due primarily to lower interest income on time deposits
resulting from the effects of the Real plan. In addition, raw material costs
were higher and increased labor costs could not be fully recovered due to
governmental controls on pricing.
Operations in Brazil accounted for 5.3 percent of consolidated sales and
6.6 percent of consolidated operating income, compared to 5.1 percent and 14.4
percent, respectively, in the 1994 period. The decrease was due primarily to
higher raw material and labor costs and lower interest income.
7.
<PAGE> 9
SEGMENT INFORMATION
- -------------------
THIRD QUARTER: Segment operating income was $301.7 million, increasing
4.4 percent from $289.0 million in the 1994 period. Segment operating income
decreased to 9.1 percent of sales from 9.3 percent in the 1994 period,
reflecting higher, although leveling, raw material costs and lower interest
income in Brazil.
NINE MONTHS: Segment operating income was $927.7 million, increasing
slightly from $920.3 million in the 1994 period. Segment operating income
decreased to 9.4 percent of sales from 10.1 percent in the 1994 period.
INDUSTRY SEGMENTS
- -----------------
Tires
- -----
THIRD QUARTER: Sales of $2.85 billion increased 6.5 percent from $2.68
billion in the 1994 period. Operating income of $250.7 million increased
slightly from $249.8 million in the 1994 period.
Sales increased due primarily to worldwide pricing improvements and the
strengthening of various European currencies versus the dollar. Tire unit
sales were lower, as discussed below.
The following table presents changes in tire unit sales:
Increase (Decrease) in Company Tire Unit Sales - - Third Quarter
- ----------------------------------------------------------------
1995 vs. 1994
-------------
U.S. (3.0) %
International .7 %
Worldwide (1.4) %
Unit sales in the U.S. replacement market decreased, reflecting reduced
demand industrywide and competitive pricing pressures. Unit sales increased in
Europe, Asia and the North American (U.S. and Canada) original equipment
market.
Operating income increased due primarily to improved results in Europe,
efficiencies resulting from continued high levels of capacity utilization and
ongoing cost containment measures. Operating income reflected higher raw
material and labor costs, reduced unit sales and lower interest income in
Brazil.
Tire operations in Brazil accounted for 4.1 percent of tire segment sales
and .5 percent of tire segment operating income, compared to 5.0 percent and
10.0 percent, respectively, in the 1994 period, reflecting primarily a decrease
in Brazil's tire segment operating income due to higher raw material and labor
costs, lower sales and unit volume and reduced interest income.
8.
<PAGE> 10
NINE MONTHS: Sales of $8.45 billion increased 8.9 percent from $7.76
billion in the 1994 period. Operating income of $759.6 million decreased 2.7
percent from $781.0 million in the 1994 period.
Sales increased due primarily to pricing improvements and the
strengthening of various European currencies versus the dollar. Tire unit
sales increased slightly, as discussed below.
The following table presents changes in tire unit sales:
Increase (Decrease) in Company Tire Unit Sales - - Nine Months
- --------------------------------------------------------------
1995 vs. 1994
-------------
U.S. (2.9) %
International 5.5 %
Worldwide .8 %
Unit sales in the U.S. replacement market decreased, reflecting reduced
demand industrywide and competitive pricing pressures. Unit sales increased in
Europe, Latin America, Asia and the North American original equipment market.
Operating income decreased due primarily to higher raw material and labor
costs, reduced units sales in the U.S. and lower interest income in Brazil.
Operating income reflected improved results in Europe and in natural rubber
operations, efficiencies resulting from continued high levels of capacity
utilization and ongoing cost containment measures.
Tire operations in Brazil accounted for 5.1 percent of tire segment sales
and 5.4 percent of tire segment operating income, compared to 4.9 percent and
12.2 percent, respectively, in the 1994 period.
General Products
- ----------------
THIRD QUARTER: Sales of $422.3 million increased 1.9 percent from $414.3
million in the 1994 period. Operating income of $34.9 million increased 11.4
percent from $31.3 million in the 1994 period.
Sales and operating income in engineered products decreased, reflecting
reduced demand from U.S. original equipment manufacturers, higher raw material
and labor costs and lower interest income in Brazil. Sales and operating
income in chemical products increased due primarily to improved pricing and
volume, although raw material costs were higher.
General products operations in Brazil accounted for 6.3 percent of general
products segment sales and 14.7 percent of general products segment operating
income, compared to 5.8 percent
9.
<PAGE> 11
and 22.8 percent, respectively, in the 1994 period, reflecting primarily a
decrease in Brazil's general products segment operating income due to higher
raw material and labor costs and lower interest income.
NINE MONTHS: Sales of $1.35 billion increased 7.5 percent from $1.26
billion in the 1994 period. Operating income of $129.2 million decreased 2.9
percent from $133.0 million in the 1994 period.
Sales in engineered products increased due primarily to higher volume and
pricing improvements, but operating income was lower as a result of higher raw
material and labor costs and lower interest income in Brazil. Sales and
operating income in chemical products increased due primarily to improved
volume and pricing, although raw material costs were higher.
General products operations in Brazil accounted for 6.6 percent of general
products segment sales and 15.7 percent of general products segment operating
income, compared to 6.6 percent and 28.3 percent, respectively, in the 1994
period.
Oil Transportation
- ------------------
THIRD QUARTER: Sales of $32.2 million increased from $24.4 million in the
1994 period. Operating income of $16.1 million increased from $7.9 million in
the 1994 period. The improvement was due primarily to increased throughput in
the All American Pipeline System, higher average tariffs and ongoing cost
containment measures.
NINE MONTHS: Sales of $94.1 million increased from $57.3 million in the
1994 period. Operating income of $38.9 million increased from $6.3 million in
the 1994 period. The improvement was due primarily to increased throughput in
the All American Pipeline System, higher average tariffs and ongoing cost
containment measures. Operating income in the 1995 period included a charge of
$5.0 million for the writedown of surplus construction pipe, material and
equipment.
GEOGRAPHIC SEGMENTS
- -------------------
U.S. Operations
- ---------------
THIRD QUARTER: Sales of $1.84 billion increased slightly from $1.83
billion in the 1994 period. Operating income of $143.3 million decreased 5.3
percent from $151.4 million in the 1994 period.
Sales increased and operating income was favorably affected by pricing
improvements, increased throughput and higher average
10.
<PAGE> 12
tariffs in the All American Pipeline System, and higher unit sales of chemical
products.
Operating income decreased due primarily to higher raw material and labor
costs and reduced unit sales of tires in the replacement market and engineered
products in the original equipment market. Operating income reflected
efficiencies resulting from continued high levels of capacity utilization and
ongoing cost containment measures.
U.S. operations accounted for 55.5 percent of consolidated sales and 47.5
percent of consolidated operating income, compared to 58.7 percent and 52.4
percent, respectively, in the 1994 period.
NINE MONTHS: Sales of $5.50 billion increased 2.9 percent from $5.35
billion in the 1994 period. Operating income of $427.9 million decreased 8.3
percent from $466.5 million in the 1994 period.
Sales increased and operating income was favorably affected by pricing
improvements, increased throughput and higher average tariffs in the All
American Pipeline System, and higher unit sales of engineered and chemical
products.
Operating income decreased due primarily to increased raw material and
labor costs and lower replacement tire unit sales. Operating income reflected
efficiencies resulting from continued high levels of capacity utilization and
ongoing cost containment measures.
U.S. operations accounted for 55.6 percent of consolidated sales and 46.1
percent of consolidated operating income, compared to 58.9 percent and 50.7
percent, respectively, in the 1994 period.
International Operations
- ------------------------
THIRD QUARTER: Sales of $1.47 billion increased 14.1 percent from $1.29
billion in the 1994 period. Operating income of $158.4 million increased 15.1
percent from $137.6 million in the 1994 period.
In Europe, sales of $706.0 million increased 26.5 percent from $558.3
million in the 1994 period. Operating income of $79.3 million increased 57.5
percent from $50.3 million in the 1994 period.
Sales and operating income increased due primarily to pricing
improvements, the strengthening of various local currencies versus the dollar
and higher tire unit sales. Operating income also benefited from improved
productivity, although raw material costs were higher.
11.
<PAGE> 13
In Latin America, sales of $376.8 million decreased 1.7 percent from
$383.4 million in the 1994 period. Operating income of $48.2 million decreased
20.7 percent from $60.8 million in the 1994 period.
Sales and operating income decreased, especially in Brazil, due primarily
to increased raw material and labor costs, lower interest income and lower tire
unit sales.
In Asia, sales of $216.9 million increased 22.0 percent from $177.8
million in the 1994 period. Operating income of $24.4 million increased 22.1
percent from $20.0 million in the 1994 period.
Sales and operating income increased due primarily to improved results in
natural rubber operations, pricing improvements and higher tire unit sales.
Operating income also benefited from improved productivity, although raw
material costs were higher.
In Canada, sales of $169.8 million increased 1.1 percent from $167.9
million in the 1994 period. Operating income was $6.5 million, compared to
$6.5 million in the 1994 period.
Sales increased due primarily to pricing improvements. Operating income
reflected higher raw material costs and lower tire unit sales.
International operations accounted for 44.5 percent of consolidated sales
and 52.5 percent of consolidated operating income, compared to 41.3 percent and
47.6 percent, respectively, in the 1994 period.
NINE MONTHS: Sales of $4.40 billion increased 17.8 percent from $3.73
billion in the 1994 period. Operating income of $499.8 million increased 10.1
percent from $453.8 million in the 1994 period.
In Europe, sales of $2.09 billion increased 28.2 percent from $1.63
billion in the 1994 period. Operating income of $232.0 million increased 47.3
percent from $157.5 million in the 1994 period.
Sales and operating income increased due primarily to the strengthening of
various local currencies versus the dollar, higher tire unit sales and pricing
improvements. Operating income also benefited from improved productivity,
although raw material costs were higher.
12.
<PAGE> 14
In Latin America, sales of $1.18 billion increased 6.5 percent from $1.11
billion in the 1994 period. Operating income of $179.2 million decreased 18.0
percent from $218.5 million in the 1994 period.
Sales increased due primarily to higher tire unit sales and pricing
improvements. Operating income was lower, reflecting increased raw material
and labor costs and lower interest income.
In Asia, sales of $610.3 million increased 18.5 percent from $515.2
million in the 1994 period. Operating income of $66.5 million increased 16.0
percent from $57.3 million in the 1994 period.
Sales and operating income increased due primarily to improved results in
natural rubber operations, pricing improvements and higher tire unit sales.
Operating income also benefited from improved productivity, although raw
material costs were higher.
In Canada, sales of $512.8 million increased 7.8 percent from $475.5
million in the 1994 period. Operating income of $22.1 million increased 7.5
percent from $20.5 million in the 1994 period.
Sales and operating income increased due primarily to higher unit sales of
tires and engineered products, although raw material costs were higher.
International operations accounted for 44.4 percent of consolidated sales
and 53.9 percent of consolidated operating income, compared to 41.1 percent and
49.3 percent, respectively, in the 1994 period.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net cash used in operating activities was $20.7 million during the first
nine months of 1995, as reported on the Consolidated Statement of Cash Flows.
Working capital requirements increased for accounts receivable, reflecting
higher selling prices and increased unit sales volume, and inventories,
reflecting higher raw material costs and increased finished goods quantities.
Cash was also used for pension funding.
Net cash used in investing activities was $356.6 million during the first
nine months of 1995. Capital expenditures of $373.5 million were the primary
use of cash for investing activities. Capital expenditures were primarily for
plant modernizations and expansions and new tire molds and are expected to
total approximately $600 million in 1995.
13.
<PAGE> 15
Net cash provided by financing activities was $354.9 million during the
first nine months of 1995, primarily to support the previously mentioned
increased working capital requirements. Consolidated debt at September 30,
1995 was $1,814.4 million, an increase of $478.8 million from December 31,
1994. Consolidated debt represents 36.3 percent of total debt plus
shareholders' equity, compared to 32.3 percent at December 31, 1994.
In order to reduce the impact of changes in variable interest rates on
consolidated results of operations and future cash outflows for interest, the
Company has entered into various interest rate contracts. These contracts
limit the effect of market fluctuations on the interest cost of floating rate
debt. A summary of contracts in place and related weighted average interest
rates follows:
(dollars in millions) Fixed Rate Floating Rate
Contracts Contract
---------- -------------
September 30, 1995:
- Notional principal amount $ 395.0 $ 50.0
- Pay fixed rate 9.15 % -
- Receive variable LIBOR 5.95 % -
- Pay variable LIBOR - 5.81 %
- Receive fixed rate - 6.69 %
- Average years to maturity 1.1 2.47
- Fair value: favorable (unfavorable) $ (12.3) $ 1.0
Third quarter - Rate paid 8.95 % 6.38 %
- Rate received 6.08 % 6.69 %
Nine months - Rate paid 8.94 % 6.14 %
- Rate received 6.34 % 6.69 %
At September 30, 1995, the interest rate on 56 percent of the Company's
debt was fixed by either the nature of the obligation or through the interest
rate contracts, compared to 73 percent at December 31, 1994.
Substantial short term and long term credit sources are available to the
Company globally under normal commercial practices. At September 30, 1995 the
Company had short term credit lines and overdraft arrangements totaling $1.7
billion, of which $573.1 million were unused. The Company also had available
long term credit sources at September 30, 1995 totaling $2.26 billion, of which
$1.57 billion were unused.
Funds generated by operations, together with funds available under
existing credit arrangements, are expected to be sufficient to meet currently
anticipated funding requirements.
14.
<PAGE> 16
PART II. OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
Reference is made to the Annual Report of The Goodyear Tire & Rubber
Company (the "Registrant") on Form 10-K for the year ended December 31, 1994
(the "Annual Report"), wherein at Item 3, pages 16, 17 and 18, Registrant
reported certain legal proceedings. Reference is also made to Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 (the "First
Quarter Report") and to Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 (the "Second Quarter Report"). In the First
Quarter Report, at Item 1 of Part II, page 12, Registrant reported additional
information regarding the legal proceeding described at paragraph (C) of Item 3
of the Annual Report. In the Second Quarter Report, at Item I of Part II,
pages 15 and 16, Registrant reported additional information regarding the legal
proceedings described at paragraph (A) of Item 3 of the Annual Report and a new
legal proceeding.
Registrant reports the following developments in respect of the legal
proceeding described at paragraph (H) of Item 3 of the Annual Report:
As reported at paragraph (H) of Item 3, at page 16, of the Annual
Report, the United States Environmental Protection Agency (the "USEPA"), Region
II, initiated administrative proceedings against Registrant under the
Comprehensive Environmental Response, Compensation and Liability Act and the
Emergency Planning and Community Right-to-Know-Act in respect of the alleged
late reporting of regulated air emissions at its Niagara Falls plant. On
October 31, 1995, Registrant entered into a settlement agreement with the USEPA
whereunder Registrant paid $75,000 to the USEPA as a civil penalty and agreed
to spend approximately $95,000 to purchase emergency equipment for three
Niagara Falls area fire departments. The equipment will be used by the three
fire departments to improve their ability to respond to releases of hazardous
substances into the environment.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) EXHIBITS. See the Index of Exhibits at page E-1, which is by
specific reference incorporated into and made a part of this Quarterly Report
on Form 10-Q.
(b) REPORTS ON FORM 8-K. No Current Report on Form 8-K was filed by
Registrant during the quarter ended September 30, 1995.
- 15 -
<PAGE> 17
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GOODYEAR TIRE & RUBBER COMPANY
(Registrant)
Date: November 13, 1995 By /s/ George E Strickler
--------------------------------
George E Strickler,
Vice President and
Comptroller
(Signing on behalf of Registrant as a
duly authorized officer of Registrant
and signing as the Principal Accounting
Officer of Registrant.)
- 16 -
<PAGE> 18
THE GOODYEAR TIRE & RUBBER COMPANY
QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED SEPTEMBER 30, 1995
INDEX OF EXHIBITS (1)
EXHIBIT
- -------
Table EXHIBIT
Item -------------
No. (2) No. Description of Exhibit Letter Page
- ------------ --------------------------------------- ------ ----
4 INSTRUMENTS DEFINING
THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
---------------------------------------
4.1 Certificate of Amended Articles of
Incorporation of Registrant, dated
December 20, 1954, and Certificate of
Amendment to Amended Articles of
Incorporation of Registrant, dated
April 6, 1993 (two documents comprising
Registrant's Articles of Incorporation
as amended to date) (incorporated by
reference, filed with the Securities
and Exchange Commission as Exhibit A
to Registrant's Quarterly Report on
Form 10-Q for the quarter ended
March 31, 1993).
4.2 Code of Regulations of The Goodyear
Tire & Rubber Company, adopted
November 22, 1955, and amended April 5,
1965, April 7, 1980, April 6, 1981 and
April 13, 1987 (incorporated by
reference, filed as Exhibit 4.1(B) to
Registrant's Registration Statement
on Form S-3, File No. 33- 43144).
__________
(1) See, Part II, Item 6, Part (a).
(2) Pursuant to Item 601 of Regulation S-K
E-1
<PAGE> 19
EXHIBIT
- -------
Table EXHIBIT
Item -------------
No. (2) No. Description of Exhibit Letter Page
- ------------ --------------------------------------- ------ ----
4.3 Conformed Copy of Rights Agreement,
dated as of July 2, 1986, between
Registrant and Manufacturers Hanover
Trust Company, Rights Agent and a copy
of the Appointment of Successor Rights
Agent, dated March 21, 1990, whereunder
Registrant appointed First Chicago Trust
Company of New York as the Successor
Rights Agent under the Rights Agreement
(incorporated by reference, filed with the
Securities and Exchange Commission as
Exhibit 4.3 to Registrant's Registration
Statement on Form S-3, File No. 33-43144).
4.4 Conformed Copy of Amendment to Rights
Agreement dated as of April 6, 1993
between Registrant and First Chicago Trust
Company of New York (incorporated by
reference, filed with the Securities and
Exchange Commission as Exhibit B to
Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1993).
4.5 Specimen nondenominational Certificate
for shares of the Common Stock, Without
Par Value, of the Registrant; one
certificate, First Chicago Trust Company
of New York as transfer agent and registrar,
effective for issuances of new certificates
on or after May 4, 1993 (incorporated by
reference, filed with the Securities and
Exchange Commission as Exhibit C to
Registrant's
__________
(2) Pursuant to Item 601 of Regulation S-K
E-2
<PAGE> 20
EXHIBIT
- -------
Table EXHIBIT
Item -------------
No. (2) No. Description of Exhibit Letter Page
- ------------ --------------------------------------- ------ ----
Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993).
4.6 Conformed Copy of Revolving Credit
Facility Agreement, dated as of July 15,
1994, among Registrant, the Lenders
named therein and Chemical Bank, as
Agent (incorporated by reference, filed
as Exhibit A to Registrant's Quarterly
Report on Form 10-Q for the quarter
ended September 30, 1994, File No. 1-1927).
No instrument defining the rights of
holders of long-term debt which relates
to securities having an aggregate principal
amount in excess of 10% of the consolidated
assets of Registrant and its subsidiaries
was entered into during the quarter ended
September 30, 1995.
In accordance with paragraph (iii) to Part 4
of Item 601 of Regulation S-K, agreements and
instruments, if any, defining the rights of
holders of long term debt entered into during
the quarter ended September 30, 1995 which
relate to securities having an aggregate
principal amount less than 10% of the
consolidated assets of Registrant and its
Subsidiaries are not filed herewith. The
Registrant hereby agrees to furnish a copy
of any such agreements or instruments to
the Securities and Exchange Commission upon
request.
__________
(2) Pursuant to Item 601 of Regulation S-K
E-3
<PAGE> 21
EXHIBIT
- -------
Table EXHIBIT
Item -------------
No. (2) No. Description of Exhibit Letter Page
- ------------ --------------------------------------- ------ ----
11 STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS
---------------------------
Statement setting forth the computation A X-A-1
of per share earnings.
27 FINANCIAL DATA SCHEDULE
-----------------------
Financial Data Schedule for the B X-B-1
quarter ended September 30, 1995.
__________
(2) Pursuant to Item 601 of Regulation S-K
E-4
<PAGE> 1
EXHIBIT A
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Set forth below are computations, on a primary basis and on a fully
diluted basis in accordance with subparagraph (b) (11) of Item 601 of
Regulation S-K of the Securities and Exchange Commission, of earnings per share
of the Common Stock, without par value, of Registrant.
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary:
Net Income $157.5 $151.3 $464.6 $430.5
Adjusted average number of
shares outstanding 154,286,528 152,733,606 153,593,401 153,113,257
PRIMARY EARNINGS PER SHARE $1.02 $0.99 $3.03 $2.81
Fully Diluted:
Net Income $157.5 $151.3 $464.6 $430.5
Adjusted average number
of shares outstanding 154,286,528 152,733,606 153,836,488 153,113,257
FULLY DILUTED EARNINGS PER SHARE $1.02 $0.99 $3.02 $2.81
</TABLE>
The foregoing computations do not reflect any significant potentially
dilutive effect Registrant's Preferred Stock Purchase Rights Plan could have in
the event such Rights become exercisable and any such shares of either Series A
Preferred Stock or Common Stock of Registrant are issued upon the exercise of
such Rights. Reference is made to the Note captioned 'Preferred Stock Purchase
Rights Plan' in the Notes to Financial Statements set forth in Item 8 of the
Registrant's Annual Report on form 10-K for the year ended December 31, 1994 at
page 49.
X - A - 1.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Consolidated
Statement of Income and Retained Earnings and the Consolidated Balance Sheet and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 223
<SECURITIES> 0
<RECEIVABLES> 1,993
<ALLOWANCES> 58
<INVENTORY> 1,789
<CURRENT-ASSETS> 4,544
<PP&E> 9,209
<DEPRECIATION> 4,751
<TOTAL-ASSETS> 10,160
<CURRENT-LIABILITIES> 3,005
<BONDS> 1,288
<COMMON> 152
0
0
<OTHER-SE> 3,038
<TOTAL-LIABILITY-AND-EQUITY> 10,160
<SALES> 9,899
<TOTAL-REVENUES> 9,899
<CGS> 7,596
<TOTAL-COSTS> 7,596
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102
<INCOME-PRETAX> 704
<INCOME-TAX> 239
<INCOME-CONTINUING> 465
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 465
<EPS-PRIMARY> 3.06
<EPS-DILUTED> 0
<FN>
<F1> This schedule shall not be deemed filed for purposes of Section 11 of the
Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934.
</FN>
</TABLE>
